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

What is the formula for calculating the Net Present Value (NPV) in LCCA?

  1. NPV = Initial investment cost - Sum of discounted future cash flows

  2. NPV = Sum of discounted future cash flows - Initial investment cost

  3. NPV = Sum of all costs over the life cycle of the asset

  4. NPV = Initial investment cost + Sum of discounted future cash flows
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The formula for calculating the Net Present Value (NPV) in LCCA is: NPV = Sum of discounted future cash flows - Initial investment cost.

Multiple choice

What is the importance of considering the salvage value of an asset in LCCA?

  1. It reduces the initial investment cost

  2. It increases the overall cost of the asset

  3. It affects the calculation of the Net Present Value (NPV)

  4. It has no impact on the LCCA results
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The salvage value of an asset is important in LCCA because it represents the value of the asset at the end of its life cycle. It affects the calculation of the Net Present Value (NPV) by reducing the overall cost of the asset.

Multiple choice

Which of the following is NOT a typical output of LCCA?

  1. Net Present Value (NPV)

  2. Internal Rate of Return (IRR)

  3. Payback Period

  4. Life Cycle Cost (LCC)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Life Cycle Cost (LCC) is not typically an output of LCCA. Instead, LCCA provides metrics such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period, which help decision-makers evaluate the cost-effectiveness of an asset or project.

Multiple choice

What is the term used to describe the government's sale of assets to raise revenue?

  1. Privatization

  2. Nationalization

  3. Confiscation

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

Privatization refers to the sale of government-owned assets to private individuals or companies.

Multiple choice

What are the consequences of not deducting TCS?

  1. Penalty

  2. Interest

  3. Both penalty and interest
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The consequences of not deducting TCS include both penalty and interest.

Multiple choice

What are the consequences of not filing TCS returns?

  1. Penalty

  2. Interest

  3. Both penalty and interest
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The consequences of not filing TCS returns include both penalty and interest.

Multiple choice

What is the term used to describe the process of multinational corporations reinvesting their profits in host countries?

  1. Retained earnings

  2. Capital accumulation

  3. Foreign direct investment

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

Retained earnings is the term used to describe the process of multinational corporations reinvesting their profits in host countries.

Multiple choice

What is the formula for calculating a company's current ratio?

  1. (Current assets / Current liabilities)

  2. (Total assets / Current liabilities)

  3. (Long-term assets / Current liabilities)

  4. (Total debt / Current liabilities)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The current ratio is calculated by dividing current assets by current liabilities.

Multiple choice

What is the formula for calculating a company's quick ratio?

  1. (Current assets - Inventory) / Current liabilities

  2. (Total assets - Inventory) / Current liabilities

  3. (Long-term assets - Inventory) / Current liabilities

  4. (Total debt - Inventory) / Current liabilities
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The quick ratio is calculated by dividing current assets minus inventory by current liabilities.

Multiple choice

What is the term used to describe the illegal practice of using a company's assets or resources for personal gain?

  1. Embezzlement

  2. Insider Trading

  3. Bribery

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

Embezzlement refers to the illegal practice of misappropriating or converting company assets or resources for personal use.

Multiple choice

What is Investment?

  1. The value of all new buildings and equipment purchased by businesses

  2. The value of all new inventory purchased by businesses

  3. The value of all new research and development spending by businesses

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

Investment is the value of all new buildings and equipment purchased by businesses, the value of all new inventory purchased by businesses, and the value of all new research and development spending by businesses.

Multiple choice

Which of the following is not a capital good eligible for accelerated depreciation under GST?

  1. Plant and machinery

  2. Office furniture

  3. Motor vehicles

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

Office furniture is not a capital good eligible for accelerated depreciation under GST.

Multiple choice

Which of the following is not a condition for claiming accelerated depreciation on capital goods under GST?

  1. The capital goods must be new

  2. The capital goods must be used for manufacturing or processing

  3. The capital goods must be acquired on or after 1st July 2017

  4. The capital goods must be acquired before 31st March 2020
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The condition that the capital goods must be acquired before 31st March 2020 is not applicable for claiming accelerated depreciation on capital goods under GST.

Multiple choice

Which of the following is NOT deductible from interest income?

  1. Investment expenses

  2. Mortgage interest

  3. Student loan interest

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

Gambling losses are not deductible from interest income.

Multiple choice

What is the maximum rate of depreciation that can be claimed on plant and machinery?

  1. 15%

  2. 25%

  3. 30%

  4. 40%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The maximum rate of depreciation that can be claimed on plant and machinery is 25%.