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 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

When the form and flow of operations of an entity are so devised that automatic checks are carried out as the transaction occurs, it is called _________________.

  1. Test check

  2. Internal check

  3. Internal control

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

Internal check refers to an arrangement of duties where the work of one person is automatically checked by another, ensuring that no single person has control over all aspects of a transaction.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Prepaid Salary Account is _____________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

  4. An Expense Account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A prepaid salary is an amount paid in advance for services not yet received. According to accounting principles, it represents a future economic benefit to the business, classifying it as an asset.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Which of the following is (are) benefits of subsidiary ledger accounts to business?

  1. It tells about customer attitude of payments

  2. It can be checked against the control account to pick up recording errors

  3. It tells about the complete history of transactions of business client

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

Subsidiary ledgers provide detailed information about individual accounts (like specific customers or suppliers), which helps in tracking payment history, identifying recording errors by reconciling with control accounts, and managing client relationships.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Outstanding Salary Account is ______________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

  4. An Expenses Account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An outstanding salary is an amount owed to employees for services already rendered but not yet paid. This represents a financial obligation of the business, making it a liability.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Interest Received Account is ________________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

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

Interest received is income earned by the business, which classifies it as a revenue account. It increases the equity of the business.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Which of the following is an item of a creditors control account?

  1. Cash purchases

  2. Cash sales

  3. Credit sales

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

A creditors control account (accounts payable control account) records transactions related to trade creditors, such as credit purchases, payments made, and discounts received. Cash purchases do not affect creditors.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Which of the following is (are) benefit/s of subsidiary ledger accounts to business?

  1. It tells about customer attitude of payments

  2. It can be checked against the control account to pick up recoding errors

  3. It tells about the complete history of transactions of business client

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

Subsidiary ledgers provide detailed customer payment history showing payment patterns and attitudes, maintain complete transaction records for each client, and allow verification against control accounts to identify recording errors. All three benefits listed are genuine advantages of maintaining subsidiary ledgers. The comprehensive nature of these benefits means the correct answer must encompass all the listed functions.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Salary Account is _______________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

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

Salaries represent the cost of labor incurred by the business to generate revenue, making them an expense account.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Which of the following is an item of a debtors control account?

  1. Cash sale

  2. Credit sales

  3. Credit purchase

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

A debtors control account (accounts receivable control account) summarizes transactions involving trade debtors, including credit sales, cash received from debtors, and returns inwards.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Which of the following types of information are found in subsidiary ledgers, but not in the general ledger?

  1. Total cost of goods sold for the period.

  2. The quantity of a particular product sold during the period.

  3. The amount owed to a particular creditor.

  4. The portion of total current assets that consist of cash.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

General ledgers contain summary totals for financial reporting. Subsidiary ledgers contain the granular, itemized details, such as specific quantities sold or specific amounts owed by individual clients.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Bill Payable Account _______________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

  4. An Expense Account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Bills payable represent a formal written promise to pay a debt, which constitutes a liability for the business.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Drawing Account is in the nature of ________________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

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

Drawings represent the withdrawal of assets by the owner, which directly reduces the owner's equity (capital) in the business.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

ICICI Bank Account is _______________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

  4. An Expense Account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A bank account represents cash held by the business at a financial institution, which is an asset.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Personal Income Tax Account is ______________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

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

Personal income tax paid by the proprietor using business funds is treated as a withdrawal of capital, thus it is in the nature of a capital account.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Bill Receivable Account is _______________.

  1. An Asset Account

  2. A liability Account

  3. A Revenue Account

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

Bills receivable represent a formal written promise from a customer to pay, which is a right to receive cash and thus an asset.