Lesson 5.3.1

5.3.1 Accounting concepts Quiz: OCR Business, Unit 5

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 5.3.1, Accounting concepts: 20 multiple choice questions for the OCR Business (H431), Unit 5: Accounting and finance, written with Revision Ninja.

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The 20 questions

  1. What requirement ensures financial statements accurately reflect a business without misleading stakeholders?

    • True and fair
    • Tax minimisation
    • Cash flow guarantee
    • Profit maximisation

  2. What framework of standardised accounting rules must businesses follow when preparing financial accounts?

    • GDPR
    • HMRC
    • GAAP
    • ACAS

  3. Which convention assumes that a business will continue trading for the foreseeable future?

    • Prudence
    • Realisation
    • Objectivity
    • Going concern

  4. Which convention requires revenues and costs to be recognised when earned or incurred, not paid?

    • Realisation
    • Materiality
    • Accruals
    • Consistency

  5. Which accounting convention states that revenue is only recorded when a transaction is completed?

    • Realisation
    • Going concern
    • Prudence
    • Accruals

  6. Which convention advises accountants to anticipate losses immediately but only record profits when realised?

    • Consistency
    • Prudence
    • Objectivity
    • Materiality

  7. Which convention requires a firm to use the same accounting methods from year to year?

    • Consistency
    • Going concern
    • Realisation
    • Objectivity

  8. Which convention allows minor, insignificant financial items to be omitted or grouped together?

    • Prudence
    • Objectivity
    • Accruals
    • Materiality

  9. Which convention requires financial data to be based on verifiable, bias-free factual evidence?

    • Consistency
    • Prudence
    • Materiality
    • Objectivity

  10. A business prepaid £1,200 insurance for next year. Which convention excludes this from current expenses?

    • Realisation
    • Going concern
    • Accruals
    • Materiality

  11. A firm buys a stapler for £5 and records it as an expense rather than an asset. Why?

    • Materiality
    • Realisation
    • Consistency
    • Prudence

  12. A customer orders £5,000 of goods in January, delivered in February. When is revenue recognised?

    • December
    • January
    • March
    • February

  13. An auditor relies on receipts rather than manager estimates for vehicle valuations. Which convention is applied?

    • Matching
    • Materiality
    • Objectivity
    • Going concern

  14. A firm values unsold inventory at cost price rather than higher expected market price due to which concept?

    • Prudence
    • Realisation
    • Consistency
    • Materiality

  15. Changing depreciation methods every year to inflate reported profits breaks which accounting convention?

    • Materiality
    • Going concern
    • Consistency
    • Accruals

  16. If a firm faces immediate liquidation, which accounting concept can no longer be applied?

    • Accruals
    • Objectivity
    • Materiality
    • Going concern

  17. Why do external investors rely heavily on standardised GAAP accounting rules?

    • Zero tax
    • Guaranteed dividends
    • Standardised comparability
    • Eliminated debt

  18. Applying prudence consistently helps a business avoid which potential financial risk?

    • Understating liability
    • Losing revenue
    • Paying no tax
    • Overstating profits

  19. Why might strictly applying the historical cost convention reduce the usefulness of balance sheets?

    • Causes losses
    • Increases tax
    • Ignores inflation
    • Violates GAAP

  20. Who enforces the legal requirement for large UK companies to present true and fair accounts?

    • Trade Unions
    • Bank of England
    • ACAS
    • Companies Act

All OCR Business quizzes