Commerce Accountancy

Accounting Principles and Practice

1,241 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

Depletion is concerned with

  1. the usage of natural resources

  2. the usage of a fixed asset

  3. both (1) and (2)

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

Depletion is the term which is concerned with the use and exhaustion of natural resources like oil, coal, gold, iron etc.

Multiple choice

Amortization refers to

  1. the decrease in value of a fixed asset due to its use.

  2. exhaustion of natural resources such as oil, coal, iron etc.

  3. writing off intangible assets such as patents, copyrights, franchise etc.

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

The writing off intangible assets such as patents, copyrights, leasehold mines etc is known as amortization.

Multiple choice

Depreciation is not affected by

  1. wear and tear

  2. expiration of legal rights

  3. obsolescence

  4. financial position of a business
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Depreciation is not affected by a financial position of a business, since it does not affect the fixed assets.

Multiple choice

Assets are also known as

  1. sources of funds

  2. application of funds

  3. summary of revenue expenses

  4. all of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Assets are application of funds.

Multiple choice

Which of the following is a current asset?

  1. Petty cash balance

  2. Machinery

  3. Investment in F.D. of two years

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

Only petty cash balance from above is a current asset. Machinery is a fixed asset. Investment in FD for more than one year is treated as non current assets.  Petty Cash is reported on the balance sheet as a current asset.  

Multiple choice

Which of the following methods of the inventory record system ensures greater accuracy?

  1. Standard valuation system

  2. Market value system

  3. Periodic inventory system

  4. Perpetual inventory system

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Perpetual system is the method where record is updated after each receipt and issue; it ensures greater accuracy. Standard valuation is the method of recording material issue at pre-determined standard price while in market value system; they are recorded at market price. In periodic inventory system, periodic record of inventory is maintained.

Multiple choice

If COGS is Rs. 85,000, opening stock is twice more than the closing stock and purchases are Rs. 60,000, then the closing stock will be

  1. Rs. 12,500

  2. Rs. 37,500

  3. Rs. 25,000

  4. Rs. 75,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

COGS = opening stock + Purchases - closing stock Let closing stock = X, So opening stock = X + 2X = 3X 85,000 = 3X + 60,000 - X X = closing stock = Rs.12,500 Opening stock is thus Rs.37,500. If you wrongly assume opening stock = 2X, then closing stock = Rs.25,000 and opening stock Rs.75,000.

Multiple choice

Accumulated profits should be

  1. debited to old and new partners in the profit sharing ratio

  2. debited to new partner only

  3. debited to old partners in old profit sharing ratio

  4. credited to old partners in the old profit sharing ratio
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The accumulated profits should be credited to old partners in old ratio.

Multiple choice

Quantum Meruit means

  1. as much as is decided

  2. as much as is earned

  3. sufficient amount of damages

  4. as much as is loss

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It implies that the party is entitled to claim the payment as much as it has earned.