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

If an asset is charged to depreciation by straight line method instead of diminishing balance method at the same rate of depreciation, which of the following will be the effect at the time of its sale?

  1. It will show lower profit at the time of sale.

  2. It will show more loss at the time of sale.

  3. It will show higher profit at the time of sale.

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The amount of depreciation is charged in straight line method. Thus, it will result in lower WDV and higher profits at the time of sale.

Multiple choice

Provident Fund dues is an example of

  1. current assets

  2. current liability

  3. fixed asset

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It is an example of current liability. It is the amount payable to concerned department or employee in the current accounting period.

Multiple choice

Which of the following transactions results in inflow or outflow of cash?

  1. The acquisition of assets by assuming directly related liabilities.

  2. The acquisition of an enterprise by issuing of shares.

  3. Conversion of debt to equity.

  4. Amount received from debtors.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

It is a cash transaction. As the amount is received from debtors, they would pay us the cash. Hence, it is a cash transaction. As there is inflow or coming in of cash, it is a cash transaction.

Multiple choice

Surplus not distributed (retained earnings) could contribute to

  1. financial disaster for a company

  2. financial soundness of a company

  3. discredit of a company in the eyes of public

  4. liabilities of a company
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Retained earnings refer to the percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business or to pay debt. Retained earnings contribute to the financial soundness of the company.

Multiple choice

If assets are overvalued, the result would be

  1. more surplus

  2. less surplus

  3. more or less surplus

  4. new business strain
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As a result of over valuation of all the assets of an insurance company, the company's financial statements would show more surplus than the actual one.

Multiple choice

When the securitisation company or reconstruction company issues security receipts, the holder thereof is entitled to a ____________ in the financial asset.

  1. divided interest

  2. undivided interest

  3. divided and undivided interest

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

"Securitisation" means acquisition of financial assets by any securitisation company or reconstruction company from any originator, by raising of funds by such securitisation company or reconstruction company from qualified institutional buyers by issue of security receipts representing undivided interest in such financial assets.