Question

Match the items of the following two lists and indicate the correct answer:

List - I	List - II
(i) Earning ability of firm	(a) Basis of Accounting
(ii) Conservation	(b) P/V ratio
(iii) Cash profit	(c) Cash flow statement
(iv) Cash and Accrual	(d) Prudence

• A. $\left(i\right)-\left(b\right),\left(ii\right)-\left(d\right),\left(iii\right)-\left(c\right),\left(iv\right)-\left(a\right)$
• B. $\left(i\right)-\left(b\right),\left(ii\right)-\left(a\right),\left(iii\right)-\left(d\right),\left(iv\right)-\left(c\right)$
• C. $\left(i\right)-\left(c\right),\left(ii\right)-\left(d\right),\left(iii\right)-\left(a\right),\left(iv\right)-\left(b\right)$
• D. $\left(i\right)-\left(c\right),\left(ii\right)-\left(d\right),\left(iii\right)-\left(b\right),\left(iv\right)-\left(a\right)$

Answer 1

Answer: (A)

$\left(i\right)-\left(b\right),\left(ii\right)-\left(d\right),\left(iii\right)-\left(c\right),\left(iv\right)-\left(a\right)$

• A basis of accounting is the time various financial transactions are recorded. The cash basis (EU VAT vocabulary Cash accounting) and the accrual basis is the two primary methods of tracking income and expenses in accounting.
• In accounting, the convention of conservatism, also known as the doctrine of prudence, is a policy of anticipating possible future losses but not future gains.
• Profitability ratio is used to evaluate the company's ability to generate income as compared to its expenses and other cost associated with the generation of income during a particular period.
  
• The cash flow statement or statement of cash flows measures the sources of a company's cash and its uses of cash over a specific time period.