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 book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Income earned and collected results in _________________.

  1. Increase of assets and increase in capital

  2. Decrease in assets and increase in capital

  3. Increase in assets and decrease in liability

  4. Decrease in assets and increase in liability
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When income is earned and collected, cash (an asset) increases. Since income increases the owner's equity (capital), both assets and capital increase.

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Capital brought in by the proprietor will result in _______________.

  1. Increase in asset and increase in liability

  2. Increase in liability and decrease in asset

  3. Increase in asset and decrease in liability

  4. Increase in one asset and decrease in another asset
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Loss on sale of machinery will be ________.

  1. debited on Machinery A/c

  2. credited to Machinery A/c

  3. credited to Profit and Loss A/c

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

Loss on sale. Debit cash for the amount received, debit all accumulated depreciation, debit the loss on sale of asset account, and credit the Machinery A/c.

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Income earned which is yet to be a collected result in ________________.

  1. Increase in capital and increase in a liability

  2. Decrease in liability and increase in capital

  3. Increase in assets and increase in liability

  4. Increase in capital and increase in asset
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Income earned but not yet collected is an accrued asset. Since the income was earned, it increases the owner's capital. Therefore, both assets and capital increase.

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Money obtained through the issues of debenture is ______.

  1. revenue receipt

  2. capital receipt

  3. revenue profit

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

Money obtained through the issues of debenture is capital receipt. It is the amount received from the sale of assets, shares and debentures. Nature of the capital receipt is that it is non-recurring. This should result either in the reduction in government assets (sale of share, disinvestment) or increase in some liability (government borrowings).

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Amount received from IDBI as a medium-term loan for augmenting working capital is _____.

  1. capital expenditure

  2. revenue expenditure

  3. capital receipts

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

Amount received from IDBI as a medium-term loan for augmenting working capital is a capital receipt. Cash from the sale of fixed asset; cash from the sale of shares in the business; cash from the issuance of a debt instrument which includes loans and bonds are also included in capital receipts.

Multiple choice accountancy accounting software - tally concept of entity and relationship designing and creating simple tables, forms, and queries objective in dbms

Under Model-I, the sum of amount generated by sum (amount) is multiplied by ____ so that the final amount assigned to total field is always negative.

  1. 1

  2. -1

  3. -2

  4. 2
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Similar to Model-II, Model-I requires multiplying the sum of certain amounts by -1 to ensure the total field reflects the correct negative balance for credits.

Multiple choice economics public finance and budget black money and tax evasion meaning of tax direct taxes

Amount received from which of the following is not a capital receipt?

  1. sale of assets

  2. sale of shares

  3. sale of goods and services

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

Capital receipts: This is the income flow from the sale of fixed assets, cash from the sale of shares in the business, cash from the issuance of a debt instrument which includes loans and bonds. The sale of goods and services is not a capital receipt.

Multiple choice business organisation and correspondence banking and bank transactions nature, advantages and types of cheques bills of exchange and promissory note meaning and types of banks bills of exchange, promissory notes and hundis cheques

Amounts on the withdrawal slips are to be mentioned in figures as well as words.

  1. True

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

True. The amounts on the withdrawal slips are to be mentioned in figures as well as words. Both are to be mentioned to confirm the figures and to ensure that the banker is able to read properly. The cheque will be passed only when both the figures match. 

Multiple choice economics international economics indian economy during reforms liberalization, privatisation and globalisation: an appraisal structural changes in indian economy after liberalization

Which of the following is true regarding disinvestment?

  1. Assets of PSUs were sold at correct value

  2. Proceeds from disinvestment were used to build social infrastructure

  3. Proceeds from disinvestment were used to offset the shortage of government revenues

  4. There was a substantial loss to the government due to disinvestment
Reveal answer Fill a bubble to check yourself
C,D Correct answer
Explanation
The assets of PSUs have been undervalued and sold to the private sector. This means that there has been a substantial loss to the government. Moreover, the proceeds from disinvestment were used to offset the shortage of government revenues rather than using it for the development of PSUs and building social infrastructure in the country.
Multiple choice economics international economics indian economy during reforms liberalization, privatisation and globalisation: an appraisal structural changes in indian economy after liberalization

How did disinvestment cause loss to the government? 

  1. Proceeds from disinvestment were used to offset the shortage of government revenues

  2. Proceeds from disinvestment were not used to development of PSUs and building social infrastructure

  3. Assets of PSUs were undervalued and sold to the private sector

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
The assets of PSUs have been undervalued and sold to the private sector. This means that there has been a substantial loss to the government. Moreover, the proceeds from disinvestment were used to offset the shortage of government revenues rather than using it for the development of PSUs and building social infrastructure in the country.
Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

On the death of a partner, his executor is paid the share of profits of the died partner for the relevant period. This payment is recorded in Profit & Loss _______ A/c

  1. Adjustment

  2. Appropriation

  3. Suspense

  4. Reserve
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
A P&L suspense account is used to record some fictitious profits for the purpose of settlement of share of profits to a deceased partner. Later, such errors are identified and rectified and accordingly adjusted in the books of accounts so that the balance of the P&L suspense a/c is zero.
In case of a death of a partner, share of deceased partner in the profit or losses of the firm (till the death of his/her death) is paid through profit and loss suspense account. At the time of the death of the partner, profit and loss account will not be debit or credit because, it is not possible for the firm to alter the books during the year, thus on the date of a death of a partner profit and loss account is debited or credited.
Multiple choice book keeping and accountancy accounting for retirement and death of partner reconstitution of partnership (retirement of partner) accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

When the goodwill is raised at its full value and written off at retirement of a partner, the remaining partners share goodwill in _________.

  1. old profit sharing ratio

  2. new profit sharing ratio

  3. gaining ratio

  4. sacrificing ratio
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
The retiring partner is entitled to his/her share of goodwill at the time of retirement because the goodwill is the result of the efforts of all the partners
including the retiring one in the past. When a partner retires from the firm, the continuing partner will gain in future profits. The retiring partner is compensated for his/her share of goodwill by the continuing partners who gains in their gaining ratio.
Journal entry when goodwill adjustment entry need to be made through partner's capital accounts without raising goodwill in the book:
 Continuing partner's capital A/c          Dr.       (in gaining ratio)
               To  Retiring partner's capital A/c        (with his share of goodwill)