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 of the following is a correct way to calculate long term liability?

  1. Total liabilities - current liabilities

  2. Revenue - expenses

  3. Net working capital + current liabilities

  4. Current assets - current liabilities

  5. Current assets/current liability
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is the correct way to calculate long term liability. Long term liabilities are liabilities with future benefit of 1 year, such as notes payable that mature after one year.

Multiple choice

Interest on capital is payable out of profit

  1. True

  2. False

  3. Partly true

  4. Cannot say
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under partnership law, interest on capital is only payable out of profits. If the firm incurs losses, no interest can be claimed on capital. This is a standard provision to ensure partners share both profits and losses fairly.

Multiple choice

A company purchased an asset at a cost of 2400 on 18/9/2012. The end of the first period of the asset is on 31/12/2012. The salvage value for the asset is 500 and the depreciation on the asset is 20%. Which function can be used to calculate the first period depreciation?

  1. ACCRINT function

  2. AMORLINC function

  3. ATAN function

  4. ACCRINTM function

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

This is the function in excel, which calculates the first depreciation period.

Multiple choice

A company purchased an asset at a cost of 2400 on 18/9/2012. The end of the first period of the asset is on 31/12/2012. The salvage value for the asset is 500 and the depreciation on the asset is 20%. Which function can be used to calculate the depreciation for each accounting period?

  1. AMORLINC function

  2. DURATION function

  3. AMORDEGRC function

  4. ABS function

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

This function will calculate the depreciation for each accounting period.

Multiple choice

A company has purchased an asset at a cost of 2400 on 18/9/2012. The end of first period of the asset is 31/12/2012. The salvage value for the asset is 500 and the depreciation on the asset is 20%. Which function can be used, if the results are needed in the flexible or floating decimals places?

  1. DB function

  2. B. DISC function

  3. C. DDB function

  4. DGET function

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

This function will provide the required result with flexible or floating decimals.

Multiple choice

Winding up of a business involves

  1. realising the assets of the business

  2. paying its liabilities

  3. distributing the surplus, if any, among the partners

  4. All of the above

  5. Both (1) and (2)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Winding up of a business is a process of selling all the assets of the business, paying off creditors, distributing any remaining assets or surpluses to the partners and dissolving the business.

Multiple choice

How to reduce the risk of Death Spiral in Accounting?

  1. By increasing price

  2. By decreasing price

  3. By using of activity based costing

  4. By keeping the stock dead for sometime

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Death spiral term is taken from cost accounting. It is bad situation of company when company's sale decreases rapidly.  The cost of each of these activities will be assigned only to the products that demanded the activities.

Multiple choice

When Provision for Depreciation Account is maintained, the annual charge for depreciation shall be ____________.

  1. debited to Provision for Depreciation Account and credited to profit and loss acount

  2. debited to Asset Account and credited to profit and loss appropriation account

  3. credited to profit and loss account and debited to asset account

  4. debited to Profit and loss Account and credited to Provision for Depreciation Account

  5. debited to profit and loss account and credited to asset account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

To record annual charges of depriciation profit and loss account will be debited and provision for depreciation account will be credit because we are maintaining it and is just like liability of business. Like other liabilities, this liability account will be credit.

Multiple choice

The accounting measurement that is not consistent with the Going Concern concept is __________.

  1. historical cost

  2. realization

  3. the transaction approach

  4. liquidation value

  5. none of these

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Liquidation value is the value of the business when the business is wound up and is under liquidation whereas the going concern concept assumes that the business will continue over a long time and therefore the accounting measurement “Liquidation Value” is inconsistent with going concern concept.

Multiple choice

Borrowings from foreigner's arc known as:

  1. Export of goods

  2. Unrequited receipts

  3. Capital receipts

  4. Current receipts
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Borrowings from foreigners are classified as capital receipts in the balance of payments accounting because they create a liability that must be repaid in the future. Capital receipts include loans, foreign investments, and other borrowing, as opposed to current receipts which are from ongoing transactions like trade.

Multiple choice

Capital is the difference between :

  1. Income and expenses

  2. Sales and cost of goods sold

  3. Assets and Liabilities

  4. Only Income

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The difference between the assets and the liabilities is known as equity or the net assets or the net worth

Multiple choice

Goodwill is :

  1. Current Asset

  2. Tangible fixed Asset

  3. Intangible fixed Asset

  4. Investment

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Defined as non-financial fixed Assets that do nothave physical substance but are identifiable

Multiple choice

The term fixed Assets include :

  1. Stock-in-trade

  2. Cash

  3. Advance payment

  4. Office Furniture

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Office Furniture can be used for a longer periodand not meant for resale. Hence it is a Fixed Asset.