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 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 elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

A bank reconciliation statement can be prepared by.

  1. Partnership firm

  2. Sole propriety concern

  3. Companies

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

Bank reconciliation statement is prepared by p'ship firms, sole traders and companies i.e ones which have businesses.

It is an important exercise to reconcile balance between bank pass book and bank column in cash book and other cash adjustments.

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 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)
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

The balance of joint life policy account as shown in the balance sheet represent ___________.

  1. the surrender value of a policy

  2. annual premium of JLP

  3. total premium paid by the firm

  4. amount receivable on the maturity of the policy
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
This is the case when Joint Life Policy Reserve account is maintained. In this case insurance premium paid is debited to joint life policy account and credited to bank account. At the end of the year, the amount in excess of surrender value is treated as loss and is transferred to profit and loss account and the surrender value is shown in the balance sheet every year.
Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Capital receipts are regular and recurring in nature.

  1. True

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

False. 

Capital receipts are all those money receipts of the government that either create a liability for the government or reduce an asset of the government. These receipts are not recurring in nature as it is related to the valuation of assets and liabilities of the government. 

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

Discount at the time of retirement of a Bill is a gain for the drawee.

  1. True

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

Due to the premature payment done by the drawee, the drawer allows some discount as consideration. 

Such a discount at the time of retirement of a bill is an income for the drawee and is an expense for the drawer.

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

An item of fixed assets which has retired from active use and is held for disposal is ______________.

  1. not shown in the financial statement

  2. shown at net book value

  3. shown at net realizable value

  4. shown at lower of net book value and net realizable value
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

As the assets is already retired from active use, the valuation has to be shown on the basis of net book value or net realizable value whichever is lower. 

This is based on the concept of conservatism. 

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

 Account appear under Use of Asset Disposal Account are ____________________.

  1. Original cost of the asset

  2. Sale price of the asset

  3. Value of the parts of the asset retained for use

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

Option D is the correct one.

  1. No proceeds, fully depreciated. Debit all accumulated depreciation and credit the fixed asset.
  2. Loss on sale. Debit cash for the amount received, debit all accumulated depreciation, debit the loss on sale of asset account, and credit the fixed asset.
  3. Gain on sale.


Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Disposal of asset can be done________.

  1. at the end of its useful life

  2. during its useful life due to obsolescence

  3. during its useful life due to abnormal factor

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

An asset can be disposed off due to the following reasons:

  • at the end of its useful life
  • during its useful life due to obsolescence
  • during its useful lie due to abnormal factors like technological changes. 

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

The amount incurred on asset additions/extensions is _____.

  1. Added to assets

  2. Deducted from assets

  3. Added to liabilities

  4. Deducted from liabilities
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Any addition done in fixed asset should be added to the asset a/c. Depreciation on addition has to be provided on pro-rata basis i.e. depending on the utilization of assets. For example, if an addition is done on 1st Oct 2017, than depreciation will be charged for 6 months only on the additions.