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 recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

The purchase of supplies for cash will result in an _______________.

  1. Increase in cash and a decrease in capital

  2. Increase in cash and an increase in supplies

  3. Increase in supplies and a decrease in cash

  4. Increase in equipment and an increase in capital
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When supplies are purchased for cash, the asset 'Supplies' increases because you have acquired more of them, and the asset 'Cash' decreases because you paid money out. This is a direct asset exchange.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Admission fees received during the year should be treated ______________.

  1. As capital income

  2. As revenue income

  3. As revenue, unless the amount involved is large

  4. As capital, except for large amounts involved
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Admission fees (or entrance fees) received by non-profit organizations are generally recurring in nature as new members join regularly, so they are typically treated as revenue income. However, if the amount is exceptionally large or if the organization's policy dictates otherwise, it may be capitalized. Thus, the standard accounting practice is to treat it as revenue unless the amount involved is significantly large.

Multiple choice commerce marketing mix marketing environment meaning and definition of marketer role of marketing

Profitability Index is equal to______________.

  1. MPV> Zero, accept

  2. MPV, zero, reject
  3. $\cfrac { Present\quad value\quad of\quad cash\quad flows }{ Future\quad value\quad of\quad cash\quad flows } $
  4. $\cfrac { Present\quad value\quad of\quad cash\quad inflows }{ Present\quad value\quad of\quad cash\quad outflows } $
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Profitability Index (PI) is a capital budgeting tool calculated by dividing the present value of future cash inflows by the initial cash outflow (present value of cash outflows). A PI greater than 1 indicates a profitable project.

Multiple choice

What does surplus mean?

  1. Extra

  2. A little

  3. None

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

A surplus is an amount of something left over when requirements have been met. In agriculture, a food surplus means having extra food beyond what is needed for immediate survival.

Multiple choice

The personal net worth equation =

  1. Total liabilities - Total assets

  2. Networth - Total liabilities

  3. Total assets - Total Liabilities

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

Net worth is defined as the total value of assets owned minus the total value of liabilities owed. This formula represents the individual's or business's equity.

Multiple choice

An example of a business assets would be

  1. Bank loans

  2. accounts receivable

  3. inventory on hand

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

Assets are resources owned by a business that have economic value. Inventory on hand is a current asset, whereas bank loans and salaries payable are liabilities.

Multiple choice

Something of measurable value is called 

  1. None

  2. Considerable Asset

  3. Collateral

  4. Consideration
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In contract law, consideration is the value exchanged between parties, such as money, goods, or services. It is a necessary element to make a contract legally binding.

Multiple choice

surplus means

  1. not enough

  2. special

  3. organized

  4. extra
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A surplus refers to an amount that is more than what is needed or used. It is an excess supply.

Multiple choice

Owner's interest in the assets of a business is called:

  1. Cash Flow

  2. Debits

  3. Revenue

  4. Owner's Equity
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Owner's equity represents the owner's residual claim on the assets of the business after all liabilities have been paid. It is the net value of the business to the owner.

Multiple choice

Resources owned by a business are called:

  1. Assets

  2. Liabilities

  3. Revenue

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

Assets are items of value owned by a business, such as cash, equipment, and inventory. Liabilities are what the business owes to others.

Multiple choice

Obligations or debts of a business are called:

  1. Assets

  2. Liabilities

  3. Owner's Equity

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

Liabilities are the legal debts or obligations that a business must pay to creditors. Assets are what the business owns, and equity is the owner's claim.