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

Double Entry system was introduced by

  1. American Merchant

  2. Italian Marchant

  3. British Merchant

  4. Indian Merchant
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The double entry system of bookkeeping was developed by Italian merchants, notably Luca Pacioli in 1494 who documented the system. This innovation became the foundation of modern accounting. American, British, and Indian merchants adopted it later.

Multiple choice

Accounts is classified into

  1. 3 types

  2. 2 types

  3. 1 type

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

Accounts are classified into three main types: Personal accounts (relating to individuals/firms), Real accounts (relating to assets), and Nominal accounts (relating to expenses/income/gains/losses). This classification is fundamental to applying debit and credit rules correctly.

Multiple choice

Accounting cycles Starts from

  1. Transaction to Trail balance

  2. journal to Trail Balance

  3. Transation to Balance Sheet

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

The complete accounting cycle starts from recording transactions and ends with the Balance Sheet. The process includes journal entries, ledger posting, trial balance preparation, adjusting entries, and financial statements. Transaction to trial balance alone is incomplete.

Multiple choice

---------- Establishes the relationship between the items of the profit &Loss account and the Balance sheet

  1. Recording

  2. Summarising

  3. Analysing

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

Analysis establishes relationships among financial statement items, such as linking profit and loss figures with balance sheet items through ratios and comparisons. Summarising prepares the statements, while the stated interpreting step is not this linking function.

Multiple choice

Real Account is always Shows

  1. Debit Balance

  2. credit Balance

  3. Nil Balance

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

Real accounts represent assets and always have a debit balance because assets cannot have a negative balance. Real accounts are debited when assets increase and credited when they decrease, but they normally show debit balances.

Multiple choice

Ledger is also called as

  1. Book of Final Entry

  2. Pass Book

  3. Balnce Sheet

  4. Subsidary Book
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The ledger is called the Book of Final Entry (or Principal Book) because it contains the classified and summarized accounts from the journal. All final balances for preparation of trial balance and financial statements are drawn from the ledger.

Multiple choice

In receipts and payments a/c

  1. all the expenses and income is shown

  2. only the cash receipts and cash payments are shown

  3. all the assets are shown

  4. liabilities are shown
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The incoming and outgoing cash (receipts and payments) whether of the current year or previous year is shown in receipts and payments A/c.