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 standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Which is/are limitation of Accounting Standards?

  1. The choice between different alternative accounting treatments is difficult.

  2. There may be trend towards rigidity.

  3. Accounting Standards cannot override the statute.

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

Accounting standards have limitations including the difficulty of choosing between alternatives, the potential for rigidity, and the fact that they cannot override legal statutes.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

In reference to the accounting standards, choose the correct statement _______________________.

  1. Accounting standards codify the generally accepted accounting principles.

  2. They law down the norms of accounting policies and practices by way of codes or guideline.

  3. The main purpose of accounting standards is to provide information to the used as to the basis on which the accounts have been prepared.

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

Accounting standards serve to codify principles, establish norms for policies, and provide a basis for financial reporting, making all the provided statements correct.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Accounting standards are issued for the purpose of :
(a) Improving dependability of financial statements
(b) Auditing work becomes easy task for the auditor
(c) Elimination of non-comparability between financial statements
The correct answer is ____________.

  1. (a) only

  2. (b) only

  3. (c) only

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

Accounting standards are authoritative statements of how financial transactions should be reported. They are issued to improve the dependability of financial statements, make auditing easier by providing guidelines, and eliminate non-comparability between different financial statements, meaning all the listed statements are correct.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Accounting Standards (ASs) are written policy documents may be issued by :
X. Expert accounting body
Y. Government
Z. Other regulatory body
Select the correct answer from the options given below _______________.

  1. X but not Y and Z

  2. Y but not X and Z

  3. Z but not X and Y

  4. All X, Y & Z
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting standards can be issued by professional bodies (like ICAI), government agencies, or other regulatory bodies depending on the jurisdiction and the specific standard.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Accounting standards are ____________________.

  1. Written policy documents issued by expert accounting body

  2. Set of broad accounting policies to be followed by an entity.

  3. Set in the form of general principles

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

Accounting standards are comprehensive documents that include policies, principles, and guidelines to ensure consistency in financial reporting.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

How many accounting standards presently issued by ICAI and notified by CG?

  1. $29$
  2. $32$
  3. $31$
  4. $19$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Institute of Chartered Accountants of India (ICAI) constituted the Accounting Standards Board (ASB) on 21st April, 1977 ) to harmonise the diverse accounting policies and practices in use in India. ASB of the ICAI has been issuing accounting standards.

Since then, it has issued 32 Accounting Standards so far, out of which 29 are notified by Central Government.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Accounting Standards in India are issued by _________________.

  1. The Board of Studies - ICAI

  2. The Accounting Standards Board-ICAI

  3. The Expert Advisory Committee - ICAI

  4. The International Accounting Standards Committee (IASC)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Institute of Chartered Accountants of India (ICAI) constituted the Accounting Standards Board (ASB) on 21st April, 1977 ) to harmonise the diverse accounting policies and practices in use in India. 

ASB of the ICAI has been issuing accounting standards.

Since then, it has issued 32 Accounting Standards so far.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

AS - 3 deals with __________________.

  1. Accounting for government grants

  2. Accounting for amalgamations

  3. Cash Flow statement

  4. Fund Flow statement
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Accounting standards are rules and guidelines set up by the governing bodies, to keep accounting practices consistent and understandable across all companies and industries. 

Accounting standards in India are issued by the Institute of Chartered Accountants of India. At present, there are 30 Accounting Standards. 
Out of these, AS- 3 deals with Cash Flow Statement. 

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

The current ratio of a company is 2: 1 which of the following suggestions would Improve, reduce and net change it. I. Payment to trade creditors II. Sell machinery for cash Ill. Purchased goods for cash IV. Issue of equity shares ________________________.

  1. Decrease, Increase, Increase, No effect

  2. No effect, Increase, Decrease, Increase

  3. Increases, Increase, No effect, Increase

  4. Increase, No effect, Decrease, Increase
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Current ratio = Current Assets / Current Liabilities. (I) Payment to creditors reduces both by same amount, increasing ratio. (II) Selling machinery for cash increases current assets, increasing ratio. (III) Purchasing goods for cash has no effect on total current assets. (IV) Issuing equity shares increases cash, increasing ratio.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Amit is recording sales transactions in the  accounting system so that they can be summarized in a logical manner for the purpose of providing financial statement for decision-making. Amit is doing________.

  1. management consulting

  2. review

  3. accounting

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

Accounting is defined as the process of identifying, measuring, recording, and communicating financial information to enable informed judgments and decisions by users of the information.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

An adjusting entry to accrue wages earned but not yet paid is an example of ______________________________.

  1. Adjusting recorded costs with the appropriate accounting periods

  2. Adjusting recorded revenue with the appropriate accounting periods

  3. Reflecting unrecorded expenses incurred during the accounting period

  4. Reflecting unrecorded revenue earned during the accounting period
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Accruing wages means recognizing an expense that has been incurred but not yet paid or recorded. This is a classic adjusting entry to match expenses to the period they relate to.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

______ attempt to record the financial effects of the transactions, events, and circumstances of an enterprise in the period in which they occur rather than recording them in period(s) in which cash is received or paid by the enterprise.

  1. Accrual system of accounting

  2. Cash basis of accounting

  3. Hybrid system of accounting

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

The accrual system of accounting recognizes financial effects of transactions in the period they occur, regardless of when cash is exchanged.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Which accounting system best reflect the time picture of organization?

  1. Accrual system of accounting

  2. Cash system of accounting

  3. Receipts & expenditure accounts

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

The accrual system provides a more accurate picture of an organization's performance over a specific period by matching revenues and expenses to the time they actually occur.

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Which of the following is/are the essential features accrual basis of accounting? 
(I) Revenue is recognized only when cash is received.
(II) Costs are matched against revenues on the basis of relevant time period to determine periodic income.
(III) Costs which are not charged to income are carried forward and are kept under continuous review.
(IV) Receipts or incomes are recorded as and when cash is received or becomes due on the other hand payments are recorded only when cash is actually paid.
The correct answer is:

  1. (I) & (IV) only

  2. (I), (III) & (IV) only

  3. (III) & (IV) only

  4. (I) & (III) only
Reveal answer Fill a bubble to check yourself
D Correct answer