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 elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Provision for Depreciation Account is ________________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

  4. An Expense Account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Provision for depreciation is a contra-asset account. It reduces the book value of the asset, effectively functioning as a negative asset.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Goods destroyed by Fire is _______________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

  4. An Expense Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Goods destroyed by fire represent a loss to the business. Losses are treated similarly to expenses in accounting, making this an expense account.

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Current assets are those assets which get converted into cash ___________ .

  1. within six months

  2. within one year

  3. between one and three years

  4. between three and five years
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Current assets are assets that can be converted into cash within one fiscal year or one operating cycle. Current assets are used to facilitate day-to-day operational expenses and investments. As a result, short-term assets are liquid meaning they can be readily converted into cash.

Hence, current assets which get converted into cash within one year.

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Fresh capital introduction will increase _______________.

  1. Assets and Liabilities

  2. Assets and Equity

  3. Liabilities and equity and bank balance

  4. Capital and Liabilities
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When fresh capital is introduced into a business, the cash (an asset) increases and the owner's capital (equity) also increases to maintain the accounting equation: Assets = Liabilities + Equity.

Multiple choice book keeping and accountancy accounting equation and business transactions meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Financial assets _________.

  1. directly contribute to the country's productive capacity

  2. indirectly to the country's productive capacity

  3. contribute to the country's productive capacity both directly and indirectly

  4. do not contribute to the country's productive capacity either directly or indirectly
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Financial assets, such as stocks and bonds, represent claims on future income and facilitate the flow of funds to productive sectors, thereby directly contributing to the country's productive capacity.

Multiple choice economics ancient indian economic concepts goods, wealth and welfare major definitions of economics wealth, capital and money

Wealth cannot be classified as __________.

  1. Private Wealth

  2. Assertive Wealth

  3. Negative Wealth

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

Wealth: it is defined as the stock of resources which can be used at present or in the future.

All the given options are the classifications of wealth:

  • Private wealth: This includes all material and non material goods of an individual which can convert into money. 
  • Public wealth: This includes all material and non material goods owned by a community together
  • Negative Wealth: it is owned by an individual for a particular time period and then returned.
  • National Wealth: it is the wealth owned by nation.

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

Identify the correct term for the following definition: It is any asset donated to and for the perpetual benefit of a non-profit institution. The donation is usually made with the requirement that the principal remain intact and money earned from investing the principal be used for a specific purpose.

  1. Scholarship fund

  2. Sinking fund

  3. Endowment

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

"It is any asset donated to and fro for the perpetual benefit of a non-profit institution. The donation is usually made with the requirement that the principal remain intact and money earned from investing the principal be used for a specific purpose".

Correct term for he above defination is the Endowment.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Operating leverage examines _________________________.

  1. The effect of the change in the quantity on EBIT

  2. The effect of the change in EBIT on the EPS of the company

  3. The effect of the change in output to the EPS of the company

  4. The effect of change in EPS on the output of the company
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Operating leverage measures how a company's operating income (EBIT) changes in response to a change in sales volume or quantity of output.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

While calculating operating profit, the incomes and expenses of purely financial nature are ________into account.

  1. taken

  2. not taken

  3. partially taken

  4. both a and c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Financial items, such as interest expenses or investment income, are not part of the core operating activities of a business and are therefore excluded when calculating operating profit.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Loss on sale of asset is ____________ while calculating operating profit from net profit.

  1. added

  2. ignored

  3. deducted

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

Operating profit is calculated by deducting the operating expenses from the operating income. Operating expenses are those which are directly related to the core business activity. 

Loss on sale of asset is to be added while calculating operating profit from net profit.