Commerce Accountancy

Accounting Principles and Practice

1,227 Questions

Accounting principles and practice questions cover core concepts like assets, depreciation, financial statements, and ledger adjustments. These topics are essential for commerce students preparing for academic and competitive exams. Regular practice ensures a strong grasp of standard accounting standards and business operations.

Asset depreciationFinancial statement adjustmentsAccounting standardsSingle entry systemCapital expenditure

Accounting Principles and Practice Questions

Multiple choice six-sigma green-belt

Which one of the following is not considered as a Tangible Benefit

  1. Cost Avoidance

  2. Incremental revenue

  3. Cost Savings

  4. Interest
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Tangible benefits are quantifiable in monetary terms, such as incremental revenue, cost savings, and interest earned. Cost avoidance is also often considered a tangible benefit in Six Sigma/Project Management as it represents future costs that will not be incurred. This question is highly debatable depending on the specific framework used.

Multiple choice general knowledge

Return On Assets is

  1. Net income ? Total Assets

  2. A measure of the return generated by the assets

  3. A and B

  4. A ratio that measures the return to the organization’s shareowners
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Return On Assets (ROA) is calculated as Net Income divided by Total Assets, which measures how efficiently a company uses its assets to generate earnings. The correct answer combining both the formula and the conceptual meaning is appropriate. Option D describes Return on Equity, not ROA, making it incorrect.

Multiple choice general knowledge

The Trading A/c gives you which of the following?

  1. Net Profit/Loss

  2. Gross Profit/Loss

  3. Total Assets

  4. Total Liabilities
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Trading Account is specifically designed to calculate Gross Profit or Gross Loss, which is the difference between net sales and cost of goods sold. Net Profit/Loss is calculated in the Profit and Loss Account after deducting all expenses. Total Assets and Liabilities appear in the Balance Sheet, not Trading Account.

Multiple choice general knowledge

Excess of Profit and Loss A/c is treated as what for the business?

  1. Expense

  2. Asset

  3. Nothing, it just adds to the cash balance

  4. Liability
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When Profit and Loss Account shows a credit balance (excess), it represents accumulated profits that belong to the owners/shareholders. From the business entity perspective, this is a liability because the business owes these profits to its owners. It's not an expense (which reduces profit), an asset, or simply cash.

Multiple choice general knowledge

ITC Says "Enduring Value "

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

ITC Limited, one of India's largest conglomerates, uses the corporate tagline 'Enduring Value'. This reflects their commitment to sustainable business practices and long-term stakeholder value creation across their diversified businesses.

Multiple choice general knowledge

What does ROA stand for?

  1. Return on Assurance

  2. Return on Allowance

  3. Return on Assets

  4. Return on Action
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

ROA is a key financial ratio standing for Return on Assets. It measures a company's profitability relative to its total assets, indicating how efficiently management is using assets to generate earnings. The other options (Assurance, Allowance, Action) are not standard financial abbreviations.

Multiple choice general knowledge

Calculate the Net Assets employed for a business with the following balances: Fixed Assets $ 270,000;Stocks $65,000;Bank Overdraft $115,000;Trade Debtors $150,000;Trade Creditors $80,000
  1. $680,000
  2. $405,000
  3. $290,000
  4. $20,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Net Assets Employed = Total Assets - Current Liabilities. Total Assets = Fixed Assets (270,000) + Stocks (65,000) + Trade Debtors (150,000) = 485,000. Current Liabilities = Bank Overdraft (115,000) + Trade Creditors (80,000) = 195,000. Net Assets = 485,000 - 195,000 = 290,000.

Multiple choice general knowledge

Floating assets are also known as ________.

  1. Current assets

  2. Tangible assets

  3. Fixed assets

  4. Intangible asstes
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Floating assets are indeed another name for current assets in accounting terminology. These include assets that are expected to be converted to cash within one year, such as cash, inventory, and accounts receivable.

Multiple choice general knowledge

The net loss which arises in a business is an example of?

  1. Capital loss

  2. Revenue loss

  3. Both

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A net loss from regular business operations is classified as a revenue loss because it arises from revenue expenditure exceeding revenue receipts. Capital losses only occur when selling fixed assets for less than their book value.

Multiple choice general knowledge

What are Tangible Assets?

  1. Assets involved in the resale of goods and services

  2. Assets involved in the resale of goods and services rather than being held for production

  3. Assets involved in the production of goods and services rather than being held for resale

  4. Assets involved in the resale of goods rather than being held for production
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Tangible assets are physical assets used in the production process (machinery, buildings, equipment) rather than inventory held for resale. They are productive assets, not trading assets.

Multiple choice general knowledge

What are Term Assets?

  1. Tangible or intangible assets usually involved in the production of goods and services rather than held for resale

  2. Tangible assets usually involved in the production of goods and services rather than held for resale

  3. Intangible assets usually involved in the production of goods and services rather than held for resale

  4. Tangible or intangible assets usually involved in the resale of goods and services rather than being held for production
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Term Assets encompass both tangible and intangible assets used in production operations rather than held for resale. This broad category includes equipment, buildings, patents, and copyrights.

Multiple choice general knowledge

The company Acts allow Payment of divend Out of Capital Reserves.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Company law explicitly prohibits payment of dividends out of capital reserves. Dividends can only be paid from profit reserves - specifically from current year profits after providing for depreciation, or from accumulated profits. Capital reserves (like share premium, revaluation reserves) must be maintained to protect creditors and cannot be distributed as dividends. This is a fundamental principle of corporate capital maintenance.

Multiple choice general knowledge

What are Tangible Assets?

  1. Assets involved in the resale of goods and services

  2. Assets involved in the resale of goods and services rather than being held for production

  3. Assets involved in the production of goods and services rather than being held for resale

  4. Assets involved in the resale of goods rather than being held for production
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Tangible assets are physical assets used in the production of goods and services rather than being held for resale. Examples include machinery, buildings, and equipment. Inventory held for sale is NOT considered a tangible asset in this context - it's current assets or inventory.

Multiple choice general knowledge

What are Term Assets?

  1. Tangible or intangible assets usually involved in the production of goods and services rather than held for resale

  2. Tangible assets usually involved in the production of goods and services rather than held for resale

  3. Intangible assets usually involved in the production of goods and services rather than held for resale

  4. Tangible or intangible assets usually involved in the resale of goods and services rather than being held for production
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Term assets (fixed assets) include both tangible assets like equipment and buildings, and intangible assets like patents and trademarks - all used in production rather than held for resale. Options B and C are incomplete, while D incorrectly states resale.

Multiple choice general knowledge

What is full form of AMC?

  1. Asset Managed by Company

  2. Asset Management Company

  3. Asset Management Cost

  4. Asset Management Companies
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

AMC stands for Asset Management Company, which is a company that pools money from investors and invests it in securities like stocks, bonds, and money market instruments. SEBI regulates AMCs in India. The other options are either grammatically incorrect or don't represent the standard industry terminology.