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 book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

Premium received on Issue of Debentures is?

  1. Capital profit

  2. Revenue profit

  3. Both A and B

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

Premium received on the issue of debentures is a capital receipt, as it is not derived from the company's normal trading operations. Therefore, it is a capital profit.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

Premium received on issue of Debenture is shown in ____________.

  1. Profit and Loss A/c

  2. Balance Sheet

  3. Contingent Assets

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

Premium received on issue of debentures is capital profit, therefore, this will appear in the liabilities side of the Balance Sheet under the head 'Reserve and Surplus'.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

As per the Companies Act, "Interest accrued but not due on debentures" should be shown.

  1. Under Debentures

  2. As Current Liabilities

  3. As Miscellaneous Exps.

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

Interest accrued but not due is a liability that the company owes to debenture holders, and since it is expected to be paid within the next accounting cycle, it is classified as a current liability.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

When debentures are issued at discount. Such discount ____________.

  1. may be written off against revenue profits

  2. may be written off against capital profits

  3. Both A & B

  4. shown on debit side of balance sheet
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The discount on the issue of debentures is a capital loss and can be written off against either capital profits or revenue profits of the company.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

Calculating the amount of profit to be set aside annually with the help of sinking fund table, is the ____ step involved in the working of sinking fund method.

  1. first

  2. second

  3. third

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

The first step in the sinking fund method is to determine the annual amount to be set aside using the sinking fund table, which calculates the annuity required to reach the target sum.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

When debentures are issued at discount. Such discount_________.

  1. May be written off against revenue profits

  2. May be written of against capital profit

  3. Both a & b

  4. Shown at debit side of balance sheet
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Similar to question 537045, the discount on the issue of debentures is a capital loss that can be written off against either capital or revenue profits.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

Whenever debentures are cancelled, any profit on cancellation is transferred to _________________.

  1. Profit and Loss Account

  2. Sinking Fund Account

  3. Capital Redemption Reserve Account

  4. Capital Reserve Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Whenever debentures are transferred, and profit is earned it is capital profit. Hence, any capital profit should be transferred to Capital reserve, and if sinking fund exists, it should be transferred to sinking fund account. 

Multiple choice

What is the rate of return on T-Bills?

  1. Fixed

  2. Variable

  3. Floating

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

The rate of return on T-Bills is fixed at the time of issuance and remains constant until maturity.

Multiple choice

Which of the following is NOT a type of capital accumulation?

  1. Investment in physical capital

  2. Investment in human capital

  3. Saving

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

Wealth is not a type of capital accumulation, but rather a result of capital accumulation.

Multiple choice

What factors are considered in the Means Test?

  1. The debtor's income.

  2. The debtor's expenses.

  3. The debtor's assets.

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

The Means Test considers all of the debtor's income, expenses, and assets when determining eligibility for Chapter 7 bankruptcy.

Multiple choice

What assets are exempt under the Means Test?

  1. A home up to a certain value.

  2. A car up to a certain value.

  3. Personal belongings.

  4. Retirement accounts.

  5. All of the above.
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

All of the above assets are exempt under the Means Test.

Multiple choice

What are the three main approaches to real estate appraisal?

  1. Cost approach, income approach, and sales comparison approach

  2. Market approach, cost approach, and capitalization approach

  3. Sales comparison approach, income approach, and replacement cost approach

  4. Depreciation approach, cost approach, and income approach
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The three main approaches to real estate appraisal are the cost approach, income approach, and sales comparison approach.

Multiple choice

What is a market value appraisal?

  1. An appraisal that estimates the value of a property based on recent sales of similar properties in the same area

  2. An appraisal that estimates the value of a property based on its income-producing potential

  3. An appraisal that estimates the value of a property based on the cost to replace it with a new property of similar quality

  4. An appraisal that estimates the value of a property based on its size and location
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A market value appraisal is an appraisal that estimates the value of a property based on recent sales of similar properties in the same area.

Multiple choice

What is a capitalization rate?

  1. The rate of return on an investment property

  2. The rate of depreciation on an investment property

  3. The rate of appreciation on an investment property

  4. The rate of interest on a mortgage loan
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A capitalization rate is the rate of return on an investment property, calculated by dividing the net operating income by the purchase price.

Multiple choice

What is a net operating income?

  1. The income from a property after deducting operating expenses

  2. The income from a property after deducting mortgage payments

  3. The income from a property after deducting taxes and insurance

  4. The income from a property after deducting all expenses
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A net operating income is the income from a property after deducting operating expenses, such as property taxes, insurance, and maintenance costs.