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 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

Manufacturing a/c is prepared by the enterprise engaged in________.

  1. trading activities

  2. manufacturing activities

  3. mining activities

  4. overseas export-import
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Manufacturing a/c is prepared by the enterprises engaged in manufacturing activities. This financial statement does not show profit and loss figures but rather the cost of direct materials and labour. A manufacturing account also includes production overhead. 

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

Which of the following statements about Money is incorrect?

  1. There are many assets which carry the attribute of money.

  2. Money is what money does.

  3. Value of money remains constant at all periods of time

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

The value of money is inversely related to the price level. Because price levels fluctuate due to inflation or deflation, the value of money does not remain constant over time.

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

When a firm is dissolved, the piecemeal distribution of cash should be done in such a manner that final unpaid amount are in the:

  1. Capital ratio

  2. Profit sharing ratio

  3. Sacrificing ratio

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

The rule to follow in piecemeal distribution is that the partners whose capitals are more than proportionate to other partner's capital should first be refunded so much as to bring down their capitals to proportionate levels. After this, the cash available should be distributed in the profit -sharing ratio. Each partner's position has to be compared with position of other partners. 

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

Which of the following is not correct statement ?

  1. On dissolution of a firm, realisation account is debited with all assets to be realised.

  2. General reserve appearing in Balance Sheet is transferred to partner's capital account in profit sharing ratio.

  3. On dissolution of a firm, Cash balance in hand is transferred to realisation account.

  4. Dissolution of partnership firm and dissolution of a firm are different.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

All those assets which can be converted into cash are transferred to realisation account such as Building, Plant and Machinery, Land etc. Because the main object of this account is to find out the profit or loss on realisation of assets and payment of liabilities. 

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

Under ________ company sells all its assets.

  1. Liquidation

  2. Bankruptcy

  3. Turnaround

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

Liquidation is the process in which company stops operating and sell its assets so that cash can be arranged to pay its debts. It is an event that occurs when a company is insolvent and can not pay its obligations when due. The business is no longer in existence once the liquidation process is complete.

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

Unrecorded liability when paid on dissolution of a firm is debited to ____________ .

  1. realisation A/c

  2. partner's A/c

  3. partner's Capital A/cs

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

When an unrecorded liability is paid during the dissolution of a firm, it is treated as a realization expense and debited to the Realisation Account.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

Which of the following is an accounting equation?

  1. Capital = Assets + Liabilities

  2. Capital = Assets - Liabilities

  3. Assets = Liabilities - Capital

  4. Liabilities = Assets + Capital
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Accounting Equation :


Capital+Liabilities=Total Assets
Therefore, 
Capital= Total Assets- Liabilites.

Multiple choice commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

No profit should be anticipated but every possible loss should be provided for.

  1. True

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

The given statement is true. The reason is that every business involves the element of risk.Business risks implies uncertainty in profits or danger of losses due to some unforeseen events.