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

The method of current ratio is

  1. current assets/current liabilities

  2. liquid asset/current liabilites

  3. current liabilities/liquid assets

  4. current liabilities/current assets
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Right answer because current ratio means condition of current assets to current liability. It tests out capabilities to pay the liability. So, we can find the current ratio by this method.

Multiple choice

Directions: State whether the following statement is True Or False. Accelerated depreciation, which means a large amount of depreciation is claimed as a deduction in the early years of a project’s life is not legally valid.

  1. True

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

Accelerated depreciation is a perfectly legal accounting method allowed by tax authorities in many jurisdictions to encourage investment by providing larger tax shields in the early years of an asset's life.

Multiple choice

What is full form of PA?

  1. Performing Assets

  2. Public Act

  3. Public Assets

  4. All of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In the context of banking assets, PA stands for Performing Assets, which are loans that are generating interest income as scheduled.

Multiple choice

AS-3 is concerned with

  1. disclosure of accounting policies

  2. valuing inventories

  3. fixed assets

  4. cash flow statement
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Disclosure of accounting policies - AS-1 Valuation of inventories - AS-2 Fixed assets - AS-10 Cash flow statement - AS-3

Multiple choice

By calculating the present value of an ordinary annuity,

  1. one may come to know today’s value of a series of future payments

  2. one may come to know the present value of the coupon payments that he will be receiving in future

  3. Both (1) and (2)

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

Correct Answer: Both (1) and (2)

Multiple choice

An entity under AS 10 should disclose the information relating to

  1. the gross and net book values of fixed assets at beginning and end of an accounting period showing additions, disposals, acquisitions and other movements

  2. expenditure incurred on account of fixed assets in the course of construction or acquisition

  3. revalued amounts substituted for historical costs of fixed assets with the method applied in computing the revalued amount in the financial statements

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct Answer: revalued amounts substituted for historical costs of fixed assets with the method applied in computing the revalued amount in the financial statements

Multiple choice

Capital expenditure is an expenditure which

  1. benefits the current accounting period

  2. will benefit the next accounting period

  3. will benefit the current as well as future accounting periods

  4. results in the acquisition of a current asset
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital expenditure results in benefit in more than one accounting period.

Multiple choice

Which of the following will lead to understatement of net profit?

  1. Amortization of fictitious assets

  2. Treating capital expenditure as revenue expenditure

  3. Treating revenue expenditure as capital expenditure

  4. Creation of general reserve
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Correct Answer: Treating capital expenditure as revenue expenditure will lead to more expenditures and thus, profits would be understated.

Multiple choice

Capital Reserve comes under

  1. part of uncalled capital

  2. reserve and surplus

  3. accumulated profits

  4. reserve capital
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Correct Answer: reserve and surplus