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

The charging of depreciation in the books

  1. reduces the tax liability

  2. increases the tax liability

  3. does not make any difference to tax liability

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

The charging of depreciation reduces the profits as well as tax burden.

Multiple choice

For stock query, which of the following procedures needs to be followed?

  1. Display > Statements of Inventory > Stock Query

  2. Display > Inventory Books > Stock Query

  3. Display > Inventory Info > Stock Query

  4. Display > Inventory Vouchers > Stock Query

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

For stock query, we have to select display, then statements of inventory and then stock query. Stock query screen appears.

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

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

Which of the following is the correct formula for Absolute Acid Test Ratio?

  1. Liquid Assets/Current Liabilities

  2. Absolute liquid assets/current assets

  3. Current assets/current liabilities

  4. Absolute liquid assets/current liabilities

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Absolute liquid assets are equal to liquid assets minus accounts receivables (including bills receivables). Some examples of absolute liquid assets are cash, bank balance and marketable securities, etc.

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