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

Which tax form is used to report capital gains and losses?

  1. Schedule D

  2. Schedule E

  3. Schedule F

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

Schedule D is used by individuals to report capital gains and losses from the sale or exchange of capital assets, such as stocks, bonds, and real estate.

Multiple choice

Can gambling winnings be used to offset losses incurred in previous years?

  1. Yes, gambling winnings can be used to offset losses incurred in previous years.

  2. No, gambling winnings cannot be used to offset losses incurred in previous years.

  3. It depends on the nature of the losses.

  4. It depends on the amount of the losses.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Gambling winnings in India cannot be used to offset losses incurred in previous years.

Multiple choice

Which of the following is not a method of depreciation?

  1. Straight-line

  2. Declining-balance

  3. Units-of-production

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

Sinking fund is a method of saving money over time to pay for a future expense, not a method of depreciation.

Multiple choice

The straight-line method of depreciation allocates the cost of an asset evenly over its:

  1. Useful life

  2. Salvage value

  3. Book value

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

The straight-line method of depreciation allocates the cost of an asset evenly over its useful life.

Multiple choice

The declining-balance method of depreciation allocates a larger portion of the cost of an asset to the:

  1. Beginning of its useful life

  2. End of its useful life

  3. Middle of its useful life

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

The declining-balance method of depreciation allocates a larger portion of the cost of an asset to the beginning of its useful life.

Multiple choice

The units-of-production method of depreciation allocates the cost of an asset based on the:

  1. Number of units produced

  2. Number of hours used

  3. Number of years of service

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

The units-of-production method of depreciation allocates the cost of an asset based on the number of units produced.

Multiple choice

The sinking fund method of depreciation involves setting aside a:

  1. Fixed amount of money each year

  2. Variable amount of money each year

  3. Lump sum of money at the end of the asset's useful life

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

The sinking fund method of depreciation involves setting aside a fixed amount of money each year to pay for the replacement of the asset at the end of its useful life.

Multiple choice

The cost of an asset is allocated to the periods in which it is used through the process of:

  1. Depreciation

  2. Amortization

  3. Depletion

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

Depreciation, amortization, and depletion are all methods of allocating the cost of an asset to the periods in which it is used.

Multiple choice

Depreciation is a non-cash expense, which means that it:

  1. Does not affect the company's cash flow

  2. Reduces the company's cash flow

  3. Increases the company's cash flow

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

Depreciation is a non-cash expense, which means that it does not affect the company's cash flow.

Multiple choice

The salvage value of an asset is the:

  1. Estimated value of the asset at the end of its useful life

  2. Original cost of the asset

  3. Book value of the asset

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

The salvage value of an asset is the estimated value of the asset at the end of its useful life.

Multiple choice

The book value of an asset is the:

  1. Original cost of the asset

  2. Salvage value of the asset

  3. Cost of the asset less accumulated depreciation

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

The book value of an asset is the cost of the asset less accumulated depreciation.

Multiple choice

The depreciation period is the:

  1. Time period over which an asset is depreciated

  2. Time period over which an asset is used

  3. Time period over which an asset is owned

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

The depreciation period is the time period over which an asset is depreciated.

Multiple choice

What is the tax treatment of withdrawals from a traditional IRA?

  1. Taxed as ordinary income

  2. Taxed as capital gains

  3. Tax-free

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

Withdrawals from a traditional IRA are taxed as ordinary income.

Multiple choice

What is the tax treatment of withdrawals from a Roth IRA?

  1. Taxed as ordinary income

  2. Taxed as capital gains

  3. Tax-free

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

Withdrawals from a Roth IRA are tax-free.

Multiple choice

The net present value (NPV) of a project is:

  1. The difference between the present value of the project's cash inflows and the present value of the project's cash outflows.

  2. The difference between the project's total cost and the project's total revenue.

  3. The difference between the project's operating costs and the project's maintenance costs.

  4. The difference between the project's initial investment and the project's salvage value.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The net present value (NPV) of a project is the difference between the present value of the project's cash inflows and the present value of the project's cash outflows.