Commerce Accountancy

Accounting Principles and Practices

2,324 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 elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

State whether the following statement is True or False.
In trial balance purchases returns are recorded on Debit side.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Purchases returns (or return outwards) represent a reduction in purchases. Since purchases are debited, purchases returns are credited in the ledger and thus appear on the credit side of the trial balance.

Multiple choice elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

If 'Prepaid Wages' is given in Trial Balance,it is shown in_______________.

  1. Debit of Trading A/c

  2. Debit of Trading A/c and Assets side of B/S

  3. Debit of P & L A/c

  4. Asset side of the B/S
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Wages are an obligation on the part of the company. When an obligation is met in advance its a right. Hence, wages paid in advance is a right and a right is an asset of the company.  

Multiple choice elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Apprenticeship Premium received appearing in the Trial Balance are shown:

  1. on the debit side of Profit and Loss A/c

  2. on the credit side of Profit and Loss A/c

  3. on the Assets side of the Balance Sheet

  4. on the liabilities side
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Apprenticeship premium received is an income for the business. All incomes are credited to the Profit and Loss account.

Multiple choice elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Carriage outwards appearing in the Trial balance are shown________________.

  1. on the debit side of Profit and Loss Account

  2. on the debit side of Trading Account

  3. on the liabilities side of the Balance Sheet

  4. on the credit side of P&L A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Carriage outwards is the seller's expense to transfer the goods to the customer. It is selling expense and therefore an indirect expense. Hence, carriage outwards appearing the trial balance will appear on the debit side of P & L A/c.

Multiple choice elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Wages and salaries appearing in Trial Balance are shown_____________.

  1. on the debit side of Profit and Loss Account

  2. on the debit side of Trading Account

  3. on the liabilities side of the Balance Sheet

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

Wages and salaries appearing in trial balance are expenses made on wages and salaries by the company during the year. They are to be shown in the debit side of Trading account as all expenses and losses are debited.

 Wages and salaries is the remuneration paid to factory workers and hence, is to shown in Trading account. 

Multiple choice book keeping and accountancy accounting equation and business transactions 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

Left side of balance sheet states the ______________.

  1. appreciated earnings

  2. liabilities

  3. assets

  4. stocks earnings
Reveal answer Fill a bubble to check yourself
B Correct answer
Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

Which of the following is prepared only at the time of dissolution of the firm?

  1. Revaluation Account

  2. Realization Account

  3. Profit & Loss Adjustment Account

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

A Realization Account is specifically prepared at the time of dissolution to determine the profit or loss on the sale of assets and settlement of liabilities.

Multiple choice book keeping and accountancy principles of double entry system objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

Personal Account relates to  ____________.

  1. Persons

  2. All artificial and natural persons

  3. Representative Personal Accounts

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

Personal accounts in accounting include natural persons (individuals), artificial persons (companies, institutions), and representative personal accounts (outstanding expenses, prepaid expenses). Therefore, all these categories fall under the umbrella of personal accounts.

Multiple choice history economic system and economic policies american dominance, neo-imperialism and new economic policy insights on lpg changing economic policies

The financial results of banks and other organisations normally are expressed in quarters. What does Q-1 mean?

  1. Results of January-March

  2. Performance during April-June

  3. Profits during July-September

  4. The period when the profits are highest
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

First Quarter $(Q _1)$ : April-June
Second Quarter $(Q _2)$ : July-September
Third Quarter $(Q _3)$ : October-December
Fourth Quarter $(Q _4)$ : January-March

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

If the total of the credit side of the profit and loss account is more than the total of the debit side, the difference is the net profit.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Excess of credit over debit in profit and loss account is net profit generated by the business. This can be shown as follows:


                                                 Profit & Loss Account
Particulars                               Amount                Particulars                 Amount
To Rent                                    5000                 By Gross Profit             75000
To Rent                                   15000
To Insurance                           12000
To Stationery                            4000
To Other Expense                    4000
To Net Profit                            35000
                                              --------------                                                 --------------
                                                 75000                                                     75000
                                              --------------                                                 ---------------

Multiple choice elements of accounts company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

___________ is the part of income statement, which is prepared to ascertain the profit/loss for a given accounting period.

  1. Manufacturing A/c

  2. Profit & Loss A/c

  3. Balance Sheet

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

The Profit and Loss Account is the specific financial statement used to summarize revenues and expenses over a period to determine the net profit or loss of a business.

Multiple choice elements of accounts company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

The ___________ measure net profit/loss by matching revenues and expenses according to the accounting principles.

  1. Trading A/c

  2. Manufacturing Account

  3. Profit & Loss A/c

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

The P&L statement reveals the company's realized profits or losses for the specified period of time by comparing total revenues to the company's total costs and expenses. Over time, it can show a company's ability to increase its profit, either by reducing costs and expenses, or by increasing sales.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

EBIT stands for ____________.

  1. Earning Before Interest and Tax

  2. Equity Before Interest and tax

  3. Earning Before Insurance and tax

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

Earning before Interest and Tax is termed as "EBIT" in short. 


Earning before Interest and Tax means the situation where the interest paid and taxes are not considered while deducting the expenses from the income. 

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Select the most appropriate alternative from those given below:
Gross Profit or Gross Loss is transferred to _______ Account.

  1. Profit and Loss

  2. Trading

  3. Profit and Loss Appropriation

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

Trading account is prepared to know the profit earned by the firm through the trading activity. Trading account is prepared by considering only direct expenses. Gross Profit depicts the direct profit earned by the firm through trading of goods.


Gross Profit or Gross Loss is transferred to profit & loss account. 

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Select the most appropriate alternative from those given below:
Credit balance of Profit and Loss A/c indicates _______ .

  1. Gross Profit

  2. Gross Loss

  3. Net Profit

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

Net Profit is a profit which is generated by deducting all the indirect expenses from gross profit . Excess of  income over  expenditure in profit & loss account is called as net profit. 

                                                  Profit & Loss Account
Particulars                          Amount                      Particulars              Amount
To Salary                               10000                     By Gross Profit        70000
To Rent                                  35000                    
To Insurance                         10000 
To Indirect Expenses            10000
To Net profit                           5000
                                              -------------                                                 ----------------
                                              70000                                                     70000
                                            ---------------                                                ------------------