Commerce Accountancy

Accounting Principles and Practices

2,416 Questions

Accounting principles and practices involve the preparation of trial balances, ledgers, and bank reconciliation statements. This area tests your knowledge of fundamental accounting concepts and routine business transactions. It is a core section in commerce exams and various competitive tests.

Ledger accountsTrial balance preparationBank reconciliation statementAccounting conceptsPrimary books of accounts

Accounting Principles and Practices Questions

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

____________ are those entries which are passed at the end of each accounting period for the purpose of adjusting various nominal and other accounts so that true net profit or loss is indicated in profit and loss account and the balance sheet represents a true and fair view of the financial position of an enterprise.

  1. Opening entries

  2. Adjustment entries

  3. Closing entries

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

Adjustment entries are made at the end of an accounting period to ensure that revenues and expenses are matched correctly, reflecting the true profit or loss and the accurate financial position.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

In case of final accounts of manufacturing concerns closing stock of finished goods appears in __________ & ____________.

  1. Manufacturing Account, Balance Sheet

  2. Trading Account, Balance Sheet

  3. Profit & Loss Account, Balance Sheet

  4. Manufacturing Account, Trading Account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Closing stock of finished goods is an asset at the end of the period, so it appears in the Balance Sheet. It is also credited to the Trading Account to determine the cost of goods sold.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

While preparing final account, to record closing stock which of the following adjustment entry will be passed?

Purchases A/cTo Stock A/c Dr.
Trading A/cTo Stock A/c Dr.
Stock A/cTo Trading A/c Dr.
Stock A/cTo Capital A/c Dr.

  1. A

  2. B

  3. C

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

To record closing stock, the stock account is debited (as an asset) and the Trading Account is credited (to reduce the cost of goods sold).

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

In the case of continuing business we are required to pass an entry in the journal to brought forward all assets and liabilities as appearing in the books on the last day of the previous year. This entry is known as.

  1. Opening entries

  2. Adjustment entries

  3. Closing entries

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

Opening entries are passed at the beginning of a new financial year to bring forward the balances of assets and liabilities from the previous year's closing balance sheet.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

If goods are sold to customers on approval basis and consent is not received during the accounting periods which of the following adjustment entries are passed?

Debtors A/c Dr.To Sales A/c & Trading A/c Dr.To Stock A/c
Sales A/c Dr.To Debtors A/c & Stock A/c Dr.To Trading A/c
Sales A/c Dr.To Stock A/c & Debtors A/c Dr.To Stock A/c
Debtors A/c Dr.To Trading A/c & Trading A/c Dr.To Stock A/c

  1. A

  2. B

  3. C

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

When goods are sent on approval and not yet accepted, the sale must be reversed (Sales Dr. to Debtors) and the goods must be included in closing stock (Stock Dr. to Trading).

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

While preparing final account, to record goods are distributed as free samples- which of the following adjustment entry will be passed?

Advertisement A/cTo Capital A/c Dr.
Advertisement A/cTo Purchase A/c Dr.
Advertisement A/cTo Trading A/c Dr.
(B) or (C)

  1. A

  2. B

  3. C

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

Free samples are an advertisement expense. The entry is Advertisement A/c Dr. to Purchases A/c (to reduce cost of goods) or Trading A/c (to reduce stock). Both are valid representations.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

While preparing final account, to record outstanding expenses which of the following adjustment entry will be passes?

Expenses A/cTo Outstanding Expenses A/c Dr.
Outstanding Expenses A/cTo Expenses A/c Dr.
Profit & Loss A/cTo Outstanding Expenses A/c Dr.
Outstanding Expenses A/cTo Profit & Loss A/c Dr.

  1. A

  2. B

  3. C

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

Outstanding expenses are liabilities. The entry is to debit the expense account (to increase the expense) and credit the Outstanding Expenses account (to create the liability).

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

When the opening and closing stocks are adjusted through purchases, the trial balance does not show any __________. 

  1. Opening stock

  2. Closing stock

  3. Purchases

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

The closing stock represents the cost of unsold goods lying in the stores at the end of the accounting period. The closing stock of the year becomes the opening stock of the next year and is reflected in the trial balance of the next year. Sometimes, the opening and closing stock are adjusted through purchases account. In this regard, the entry recorded is as follows: 

Closing Stock A/c Dr. 
          To Purchases A/c
This entry reduces the amount in the purchases account and is also known as adjusted purchases which is shown on the debit side of the trading and profit and loss account. Another important point is when the opening and closing stocks are adjusted through purchases, the trial balance does not show any opening stock. Instead, the closing stock appears in the trial balance and so also the adjusted purchases.

Multiple choice book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

The unadjusted and unrecorded items relating to a period are recorded in the journal by passing __________.

  1. transfer entry

  2. adjustment entry

  3. rectification entry

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

The matching principle states expenses must be matched with the revenue generated during the period. The purpose of adjusting entries is to ensure that all revenue and expenses from the period are recorded. Many adjusting entries deal with balances from the balance sheet, typically assets and liabilities, which must be adjusted. In addition to ensuring that all revenue and expenses are recorded, we are also making sure that all asset and liability accounts have the proper balances. Adjusting entries are dated for the last day of the period.

Multiple choice business organisation and correspondence partnership 3 - registration of a partnership firm partnership deed registration of partnership registration of partnership firm

E-form no 18 is filled for _____________________.

  1. registered address, of company

  2. head office address, of company

  3. regional office address of company

  4. fall the address of company
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Form INC-18 (often referred to as Form 18 in older contexts) is used to notify the Registrar of Companies about the situation or change of the registered office of a company.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Rs. 500 spent on servicing office type writer should be debited to _________.

  1. Expenses Account

  2. Type writer Account

  3. Repairs Account

  4. Services Account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Amount spend on normal servicing or repair of any asset is a revenue expenditure and should be debited to repairs account in profit & loss account. Any amount spent which improves the life of any asset, should be capitalized.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

The process of recording financial transactions in the journal is called ___________.

  1. Journalizing

  2. Utilizing

  3. Posting

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

All business transactions are to be first recorded in journal in chronological order. Process of recording the transaction is called journalizing.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

$1.$ Providing only for the holding company's share of unrealised profit is more popular.
$2.$ The holding company's share of the unrealised profit should be reduced from the stock on the asset's side of the consolidated Balance Sheet
$3.$ The holding company's share of unrealised profit should be reduced from the profit and loss account on the liabilities side of the consolidated Balance Sheet.
$4.$ The approach of making a provision for the entire profit included in the stock is preferred by the American Institute of Certified Public Accountants (AICPA)
Of these.

  1. $1$ and $3$ are correct
  2. $2$ and $4$ are correct
  3. $1$ and $4$ are correct

  4. All are correct
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Because

1. In order words, for you to realize profits from an investment you've made, you  Popular Stocks . Because you would still be holding on to all of your 1,000 shares, you .To learn more about profit realization and its implications for ... This unrealized gain would become realized only if you sell the security.
2.In short, holding company's share of unrealized profit should be deducted from the Consolidated Stock in the assets side of the Consolidated Balance Sheet ... of Goodwill will be reduced by the amount of increased value of paid-up shares.
3.In short, holding company's share of unrealized profit should be deducted from the Consolidated Stock in the assets side of the Consolidated Balance Sheet and the same amount should also be deducted from the Profit and Loss Account in the Consolidated Balance Sheet.
4.The American Institute of CPAs (AICPA) is a non-profit organization of Certified Public Accountants. Learn which job is right for you: salary, personality, skills, certifications etc. in the United States. It was established in 1887, and its role is to create and grade the Certified Public Accountant (CPA) examinations.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

'Manufacturing Account' is prepared by _________.

  1. Pharma Industry

  2. Cement Industry

  3. Iron Industry

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

Every business have to prepare financial statements at the end of every financial year to know the profitability and financial position of the business. In case of trading concern, business need to prepare trading account and Profit & Loss account and the Balance Sheet. In case of manufacturing concern, business need to prepare manufacturing account, trading account and Profit & Loss account and the Balance Sheet.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Period of time for which accounts of the business are prepared is _____________.

  1. Financial year

  2. Calendar year

  3. Assessment year

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

Every organization surely want to analyse the overall business performance. Normally this is 12 month or a period of a year. This year is called accounting year, also termed as financial year.