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 business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Secretarial Audit is also known as - 

  1. Complementary Audit

  2. Corporate Governance audit

  3. Compliance Audit

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

Secretarial Audit is a process of verification of compliance with the provisions of various laws and rules by a company. It is essentially a compliance audit performed by a practicing company secretary.

Multiple choice book keeping and accountancy bases of accounting cash and mercantile system basis of accounting basis of accounting system

Under cash basis of accounting, revenue is recognized when _____________.

  1. Sale is made

  2. Cash is received

  3. Goods are delivered

  4. Services are rendered
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cash basis accounting recognizes revenue only when cash is actually received, regardless of when the sale occurred or services were rendered.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Cash book is a _______( journal).

  1. Subsidiary

  2. Purchase

  3. Sales

  4. Purchase and Sales Return
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A cash book is a subsidiary to the general ledger in which all cash transactions during a period are recorded.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

In the particulars account the name of the account to be credited is entered at ___________ place with a prefix 'To'.

  1. in confirmation of the name of the account to be debited

  2. next line to the account name that is to debited

  3. anywhere in the journal

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Which of the following will disturb the balancing of the trial balance?

  1. Error in adding up a book of prime entry

  2. Entering an acquisition of an asset, on credit terms, in the Purchases Day Book

  3. Posting to an asset account instead of an expenditure account

  4. Entering a wrong amount in a book of prime entry
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An error in casting (adding up) a book of prime entry will result in an incorrect total being posted to the corresponding ledger account (e.g., Purchases Account), while the individual ledger accounts of suppliers are posted with correct individual amounts. This creates a one-sided error that prevents the trial balance from balancing.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Location of the debit column is ____________.

  1. in contravention with particulars

  2. in front of the particulars column where the amount is debited

  3. in front of the particulars column where the amount is credited

  4. not present anywhere in the journal
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In a standard journal format, the debit column is located directly to the right of (in front of) the particulars column, aligning with the row where the debited account name is written.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Book keeping is meant to show all the transactions.

  1. Of the whole year

  2. Of the accounting period

  3. Of half year

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

Bookkeeping is designed to systematically record all financial transactions that occur within a defined accounting period, which could be a month, quarter, or financial year.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

The total of the purchases day book is posted periodically to the debit of ________________.

  1. Purchases account

  2. Cash book

  3. Journal proper

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

The Purchases Day Book records all credit purchases of goods. Periodically, the total of this book is posted to the debit side of the Purchases Account in the general ledger to reflect the total increase in purchases.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Purchases day book records ________________.

  1. All cash purchases

  2. All credit purchases

  3. Credit purchases of trading goods

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

The Purchases Day Book is a subsidiary book used exclusively to record credit purchases of trading goods (inventory intended for resale). Cash purchases are recorded in the Cash Book, and credit purchases of assets like machinery are recorded in the Journal Proper.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Cash sales are recorded in ___________.

  1. Journal proper

  2. Sales Book

  3. Cash Book

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

All transactions involving the immediate receipt or payment of cash, including cash sales, must be recorded in the Cash Book. The Sales Book is reserved solely for credit sales of goods.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Cash purchases are recorded in _____________.

  1. Purchases Book

  2. Cash Book

  3. Purchases Returns Book

  4. Partly in Cash Book and partly in Journal Proper
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cash purchases involve an immediate outflow of cash, meaning they must be recorded directly in the Cash Book. The Purchases Book is strictly used for credit purchases of goods.

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

When obsolete assets are sold on credit, these are originally recorded in the _____________.

  1. Sales day book

  2. Sale account

  3. General journal

  4. Any of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Credit sales of assets other than trading goods (such as obsolete machinery or furniture) cannot be recorded in the sales day book, which is reserved exclusively for credit sales of inventory. Instead, these transactions must be recorded in the general journal (journal proper).

Multiple choice elements of book keeping and accountancy recording and posting of cash transactions explain the purpose of maintaining a cash book introduction, meaning and importance of cash book meaning and advantages of cash book

Cash Book is in the form of ___________.

  1. Journal

  2. An account

  3. Statement

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

Although the cash book serves the purpose of a journal, it is prepared in the form of a ledger account with debit and credit sides. Transactions are recorded directly into it with 'To' and 'By' prefixes, just like in a T-account. Therefore, its physical layout and structure are in the form of an account.