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 a company's current ratio?

  1. Current assets / Current liabilities

  2. Current assets / Total liabilities

  3. Total assets / Current liabilities

  4. Total assets / Total liabilities
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The current ratio measures a company's ability to meet its short-term obligations.

Multiple choice

Which valuation method is commonly used to determine the value of an income-producing property?

  1. Cost Approach

  2. Income Approach

  3. Sales Comparison Approach

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

The Income Approach is commonly used to determine the value of an income-producing property by analyzing its rental income and expenses to estimate its net operating income (NOI).

Multiple choice

Which valuation method is commonly used to determine the value of a vacant land?

  1. Cost Approach

  2. Income Approach

  3. Sales Comparison Approach

  4. Depreciation Approach
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Sales Comparison Approach is commonly used to determine the value of a vacant land by comparing it to similar vacant land that have recently sold in the same area.

Multiple choice

What is the term used to describe the process of estimating the depreciation of a property?

  1. Depreciation Approach

  2. Income Approach

  3. Sales Comparison Approach

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

The Depreciation Approach is used to estimate the depreciation of a property, taking into account factors such as the property's age, condition, and expected useful life.

Multiple choice

Which property characteristic is typically considered the most important factor in determining its depreciation?

  1. Location

  2. Age

  3. Square Footage

  4. Number of Bedrooms
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Age is typically considered the most important factor in determining the depreciation of a property, as older properties tend to depreciate more quickly than newer properties.

Multiple choice

Which valuation method is commonly used to determine the value of a special-purpose property?

  1. Cost Approach

  2. Income Approach

  3. Sales Comparison Approach

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

The Cost Approach is commonly used to determine the value of a special-purpose property, as it is difficult to find comparable sales or rental data for such properties.

Multiple choice

What is the concept of 'set-off' and 'carry forward' of losses in the context of business taxation?

  1. Set-off allows losses to be adjusted against current year's profits, while carry forward allows losses to be carried forward to future years

  2. Set-off allows losses to be carried forward to future years, while carry forward allows losses to be adjusted against current year's profits

  3. Both set-off and carry forward allow losses to be adjusted against current year's profits

  4. Both set-off and carry forward allow losses to be carried forward to future years
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Set-off allows losses to be adjusted against current year's profits, while carry forward allows losses to be carried forward to future years, subject to certain conditions.

Multiple choice

Which of the following is an example of a control activity related to fixed assets?

  1. Physical inspection of fixed assets

  2. Reconciliation of fixed asset records to the general ledger

  3. Periodic review of fixed asset additions and disposals

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

Physical inspection of fixed assets, reconciliation of fixed asset records to the general ledger, and periodic review of fixed asset additions and disposals are all examples of control activities related to fixed assets.

Multiple choice

What is the purpose of a deferred tax asset?

  1. To recognize a future tax benefit

  2. To recognize a future tax expense

  3. To recognize a future tax loss

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

The purpose of a deferred tax asset is to recognize a future tax benefit.

Multiple choice

What is the purpose of a deferred tax liability?

  1. To recognize a future tax benefit

  2. To recognize a future tax expense

  3. To recognize a future tax loss

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

The purpose of a deferred tax liability is to recognize a future tax expense.

Multiple choice

What are the consequences of not deducting TDS or TCS?

  1. Penalty

  2. Interest

  3. Both penalty and interest

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

The consequences of not deducting TDS or TCS include penalty and interest.

Multiple choice

What is the Bank of Canada's total assets?

  1. $1 trillion
  2. $2 trillion
  3. $3 trillion
  4. $4 trillion
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As of 2021, the Bank of Canada's total assets were approximately $2 trillion.