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

AS 11 requires the enterprise to disclose

  1. the amount of exchange differences including the net profit or loss for the period

  2. the amount of exchange differences adjusted in the carrying amount of fixed assets

  3. the amount of exchange differences in respect of forward exchange contracts to be recognized in the profit or loss in one or more subsequent accounting period (over the life of the contract)

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

Correct Answer: All of the above

Multiple choice

AS 28 should be applied in accounting for impairment of all assets, except

  1. inventories (AS 2) and assets arising under construction contracts (AS 7)

  2. financial assets including investment covered under AS 13 and deferred tax assets (AS 22)

  3. Both (1) and (2)

  4. financial assets
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

AS 28 should be applied in accounting for impairment of all assets except options 1 and 2 because they are not considered under assets. They are considered under inventories.

Multiple choice

AS 7 deals with accounting for

  1. construction contracts

  2. research and development

  3. government grants

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

AS 7 deals with accounting for construction contracts in the financial statements of enterprises undertaking such contracts (hereafter referred to as 'contractors'). The statement also applies to enterprises undertaking construction activities of the type dealt with in this statement not as contractors but on their own account as a venture of a commercial nature where the enterprise has entered into agreements for sale.

Multiple choice

If the Going Concern concept is no longer valid, which of the following is true?

  1. All prepaid assets would be completely written off immediately.

  2. Total contributed Capital and Retained Earnings would remain unchanged.

  3. Intangible Assets would continue to be carried at net amortized historical cost.

  4. Land held as an investment would be valued at its realizable value.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Financial statements are prepared assuming that a business entity will continue to operate in the foreseeable future without the need or intention on the part of management to liquidate the entity or to significantly curtail its operational activities. If the Going Concern concept is no longer valid, all the assets would be recorded at realisable value, not at cost.

Multiple choice

Which of the following statements is true?

  1. Going concern concept assumes that business will be carried on for a definite period.

  2. The capital losses need not be deducted to ascertain net income.

  3. Provision for bad and doubtful debts is created according to the concept of conservatism.

  4. Materiality concept states that all business transactions are to be recorded however insignificant they may be.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Going concern concept assumes that business will be carried on for an INDEFINITE period. Capital losses need to be deducted to ascertain net income. The provision for bad debts is made in accordance with the concept of conservatism. Materiality concept states that transactions of insignificant value need not be recorded.

Multiple choice

The prescribed form of the Balance Sheet requires that under the head Issued Capital, _______ should be stated.

  1. the different classes of share capital

  2. the sub-classes of preference shares

  3. Either (1) or (2)

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

Under the head Issued Capital should be stated if the shares are issued, then all the classes of shares. If it's preference share, then all the sub-classes of preference share should be stated. 

Multiple choice

Capital employed =

  1. Net Fixed Assets + Working Capital

  2. Net Fixed Assets – Working Capital
  3. Net Fixed Assets $ \times $Working Capital
  4. Net Fixed Assets $ \div $ Working Capital
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Capital Employed = Total Assets - Current Liabilities                            = Fixed Assets + Current Assets - Current Liabilities                           = Fixed Assets + Working Capital