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 economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

_______ investment refers to the investment made without reference to income or profit.

  1. Induced

  2. Autonomous

  3. Inventory

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

Autonomous investment is done without taking into account the income of the investor or the profit that can be generated from investment. This type of investment is majorly done with the objective of public welfare or infrastructure development by the government or public sector.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

When interest on capital is allowed _________ is credited.

  1. Capital A/c

  2. Profit and loss A/c

  3. Cash A/c

  4. None
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Journal entries for Interest on Capital: 

Interest on capital is an appropriation (setting apart) of profit. If a firm has earned profit, it will have a credit balance in the P & L Appropriation A/c.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Commission due but not paid to the manager at d end of the years appears under __________ side.

  1. Asset

  2. Liability

  3. Trading A/c Debit side

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

The Outstanding Expense A/c appears on the liability side of the Balance Sheet. While preparing the Trading and Profit and Loss A/c we need to add the amount of outstanding expense to that particular expense.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Interest on capital is ______ for a business concern.

  1. Expense

  2. Income

  3. Asset

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

Interest on capital is a charge on the profits of a firm and it is debited to the P&L account to recognise as an expense (and a charge on the profits).

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

The adjustment to be made for interest on drawings is ________________.

  1. Debit profit and loss account and add interest to drawings

  2. Credit profit and loss account and add interest to drawings

  3. Debit profit and loss account and deduct interest from drawings

  4. Credit profit and loss account and deduct interest from drawings
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Interest on drawings is income for the business, so it is credited to the Profit and Loss account. It is then added to the drawings account, which reduces the capital.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

If Capital = $70,000$; Liability = $40,000$. 

Find Assets.

  1. $30,000$
  2. $1,10,000$
  3. $40,000$
  4. $70,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Capital Employed is the total amount of investment made for running the business.

Capital Employed = Assets - Current Liabilities
OR
Assets = Capital Employed+Current Liabilities
Hence 
1,10,000 = 70,000 + 40,000.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Creating Reserve for Discount on Creditors is an example of __________.

  1. Increase in Asset & Owner's Liability

  2. Decrease in Asset & Owner's Liability

  3. Increase in Liability & Owner's Liability

  4. Decrease in Liability & Increase in Owner's Liability

  5. Increase in Liability & Decrease in Owner's Liability
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A reserve for discount on creditors reduces the liability (creditors) and increases the owner's equity (profit/gain).

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

Auction Rated Debentures (ARDs) are a hybrid of _________________.

  1. Shares and Debentures

  2. Shares and Commercial Papers

  3. Commercial Papers and Debentures

  4. Zero Interest Bonds and Deep Discount Bonds
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Auction Rated Debentures (ARDs) are a specific financial instrument that combines features of commercial paper and debentures.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

Balance of Debenture Redemption Fund Account is transferred to _____________.

  1. Capital Reserve A/c

  2. Profit and Loss A/c

  3. General Reserve A/c

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

Once the debentures are fully redeemed, the balance remaining in the Debenture Redemption Fund (DRF) is no longer required for that purpose and is transferred to the General Reserve.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

Discount on issue of debentures is a:

  1. revenue loss to be charged in the year of issue

  2. capital loss to be written off from capital reserve

  3. capital loss to be written off over the tenure of the debenture

  4. capital loss to be shown as goodwill
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Discount on the issue of debentures is a capital loss because it relates to the cost of raising long-term capital. It is amortized over the tenure of the debenture rather than being written off entirely in the year of issue.