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 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 details of goods returned by the customers to the business organization are recorded in ________ book. 

  1. Sales Returns Book

  2. Purchase Returns Books

  3. Journal Proper

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

When customers return goods that were previously sold to them on credit, these transactions are recorded in the sales returns book (also known as the return inwards book). The purchase returns book is used for goods returned by the business to its suppliers. Journal proper is used for transactions that do not fit into any other subsidiary books.

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 amount column of the sales return books is _________________.

  1. Credited to purchases return account

  2. Debited to sales return account

  3. Credited to sales return account

  4. Debited to purchases returns account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Sales return is an expense/contra-revenue account, which carries a normal debit balance. Therefore, at the end of a period, the total of the sales returns book is debited to the sales return account in the ledger. Individual customer accounts are credited to reduce their outstanding balances.

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

_______is the book in which all transactions concerning cash receipts and cash payments are recorded.

  1. Journal proper

  2. Cash book

  3. Sales book

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

The cash book is a specialized subsidiary book used exclusively to record all cash receipts and cash payments. Journal proper is used for transactions that cannot be recorded in any other subsidiary book, and the sales book is used only 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

Contra entry appears in ______________.

  1. Purchases Returns book

  2. Cash book

  3. Journal proper

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

A contra entry occurs when a transaction affects both the cash and bank columns of a double or triple-column cash book simultaneously (such as depositing cash into the bank or withdrawing cash from the bank for office use). Because both aspects of the transaction are recorded within the same cash book, no posting to the ledger is required for these entries.

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

Total of debit side discount column of cash book is posted to ______________.

  1. Cr. of Discount Received A/c

  2. Dr. of Discount Received A/c

  3. Cr. of Discount Allowed A/c

  4. Dr. of Discount Allowed A/c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The debit side of the cash book records cash receipts, and any discount column on this side represents discount allowed to customers to encourage prompt payment. Since discount allowed is an expense, its total is posted to the debit (Dr.) side of the Discount Allowed Account in the ledger.

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

_______are passed for rectifying errors which might have committed in the books of account.

  1. Transfer Entries

  2. Adjustment Entries

  3. Rectification Entries

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

Rectification entries are specific journal entries passed to correct errors made during the recording, classifying, or posting of transactions in the books of accounts. Adjustment entries are used for accruals and prepayments, while transfer entries move balances between accounts.

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 for Rs $5,00,000$ will be recorded in __________.

  1. Ledger

  2. Cash Book

  3. General Book

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

Cash sales involve the immediate receipt of cash, so they are recorded directly in the cash book. The sales book is reserved exclusively for credit sales of goods, and the ledger is a book of final entry rather than original entry.

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

Accounting for recovery from Mr. C of an amount of Rs $2,000$ earlier written off as bad debt will be recorded in _____________.

  1. Sales Book

  2. Purchase Book

  3. Journal Proper(General Journal)

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

Recovering a previously written-off bad debt in cash represents a cash receipt. Since all cash receipts are recorded in the Cash Book, this transaction must be entered there.

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 purchase is accounted in the _______ account. 

  1. Purchases

  2. Joint venture

  3. Private

  4. Cash

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

Cash purchase will affect two accounts i,e. goods and cash. Cash purchases will be recorded in cash book.

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. Sales Book

  2. Cash book

  3. Journal

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

All the cash transactions are recorded in cash book. 

Sales against cash will increase the cash and decrease the goods.

Accounting entry will be passed as under:

Cash A/c                                Dr,
           To Sales/Goods A/c

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

Current account is more useful to businessman.

  1. True

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

A Current Account is highly useful for business owners because it has no transaction limits on deposits and withdrawals, and it offers essential business features like overdraft facilities.

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

Goods worth Rs.15,000 purchased from Tarun for cash will be recorded in________.

  1. Cash book credit side

  2. Sales book

  3. Journal book

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

The Journal Entry that should be entered in books :-

(i) Purchase A/c Dr.      15000
     To Cash A/c                              15000
(Being goods purchased for cash)
Hence, This will be shown in credit side of cash book.
By Purchase A/c     15000

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 Cash Book records ________________.

  1. All Cash Receipts

  2. All Cash Payments

  3. All Cash Receipts and Payments

  4. Cash and Credit Sale of Goods.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Cash Book functions as a subsidiary book that records all cash and bank transactions, which includes both cash receipts (debits) and cash payments (credits).

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

Balance in the Cash Book shows net income.

  1. True

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

The balance in the Cash Book represents the cash in hand and cash at bank at a specific point in time. It does not show net income, which is calculated by subtracting total expenses from total revenues in the Income Statement.

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 type of _______ but it is considered a ___________ of account.

  1. subsidiary book, principal book

  2. principal book, subsidiary book

  3. subsidiary book, subsidiary book

  4. principal book, principal book.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Cash Book is a subsidiary book because transactions are recorded directly in it first. However, because it also serves as the cash and bank ledger accounts, eliminating the need for separate ledger accounts, it is also considered a principal book.