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 depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

Under which schedule is the depreciation rate mentioned?

  1. Schedule X

  2. Schedule XII

  3. Schedule XIV

  4. Schedule XV
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Depreciation is the process of systematic allocation of the depreciable amount of an asset over it's useful life.

Earlier as per Companies Act 1956 schedule XIV was applicable, but with the introduction of Company’s Act 2013, method for calculating depreciation has changed from schedule XIV to schedule II.

Multiple choice depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

Amortization refers to writing off:

  1. Depleting assets

  2. Wasting assets

  3. Intangible assets

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

The practice of reducing the value of assets to reflect their reduced worth over time. The term means the same as depreciation, though in practice amortisation tends to be used for the write-off of intangible assets, such as goodwill, while either term is used for the write-off of fixed capital.

Multiple choice depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

Charging a period for the proportionate cost of an Intangible asset is termed as:

  1. Depreciation

  2. Diminution

  3. Amortisation

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

Fixed Assets are classified as tangible assets and intangible assets. Tangible assets are those which can be touched, felt but intangible assets are those which can not be seen, touched or felt.


Intangible assets are having some fictitious assets like preliminary expenses, deferred revenue expenditure which can not be charged fully in the year of expense but a portion of which is charged to profit & loss account every year. The process of charging these expense to profit & loss account is called Amortisation. 

Multiple choice depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

The term "___________" is used for the process of writing down long term investment in intangible.

  1. Depreciation

  2. Depletion

  3. Amortization

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

Amortisation is an accounting term that refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principle over time.

Multiple choice depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

____________ is/are subject to amortization rather than depreciation.

  1. Goodwill

  2. Copyright

  3. Patents

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

Amortisation is most commonly used for the gradual write-down of the cost of those intangible assets that have a specific useful life. Examples of intangible assets are patents, copyrights, trademarks, goodwill etc.

Multiple choice depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

In case of mineral resources __________.

  1. depreciation is provided as per SLM

  2. depreciation is provided as per WDV

  3. depletion is charged

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

Depletion is similar to  depreciation in that it is a cost recovery system for accounting and tax reporting. Depletion is the exhaustion of natural resources as a result of their removal. examples are oil, minerals, and timber etc.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

The gross decreases in economic benefits for the business are what?

  1. Expenses

  2. Obligations

  3. Creditors

  4. Income or gain
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Expenses are defined as decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrence of liabilities.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

______ is not available in the Financial Statements of a company.

  1. Total sales

  2. Total profit and loss

  3. Capital

  4. Cost of production
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

"Cost of production" is meant the total sum of money required for the production of a specific quantity of output. However, cost of production is not recorded in the financial statements of a company. 

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

The expired portion of capital expenditure shown in the financial statement is _________.

  1. an income

  2. an expense

  3. an asset

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

When a capital expenditure (like an asset) is used, the portion that expires or is consumed during the period is recorded as an expense (e.g., depreciation).

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment is called ________.

  1. capital expenditure

  2. revenue expenditure

  3. both A and B

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

Capital expenditure are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm. 

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Capital expenditure is categorised as ________.

  1. planned

  2. unplanned

  3. both A and B

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

Any expenditure that is incurred on programmes which are detailed to state for their plans is called planned expenditure. The estimated expenditure provided in the budget for spending during the year on routine functioning of the government is unplanned expenditure. So capital expenditure comprises both.

Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

When AR is falling, MR will be ___________.

  1. equal to AR

  2. less than AR

  3. more than AR

  4. either more or equal to AR
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When the average revenue (price) is falling, the marginal revenue must be lower than the average revenue because the firm must reduce the price on all previous units to sell the additional unit.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

Value of money is dependent on holding power of money .It is

  1. Transaction approach

  2. Cash balance approach

  3. Debit balance approach

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

The cash balance approach (often associated with the Cambridge equation) focuses on the demand for money based on the desire to hold money for transactions and as a store of value.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

The amount saved under transaction motive depends on the level of ____________. 

  1. savings

  2. income

  3. interest

  4. rent
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Transaction motive basically relates to the desire of the public to let the cash move freely in the economy through depositing it into the banks and initiating the process of credit creation in the economy. Transaction motive even relates to the motive of not influencing the price changes in the capital market. Therefore, the amount of money saved under transaction motive depends upon the level of income in the economy.