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

Adjustments in the final acount are made either in trading A/c, profit and loss A/c and balance sheet because

  1. the principle of single entry has to be followed

  2. the principle of double entry has to be followed

  3. the principle of revenue and capital has to be followed

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

 This principle must be followed because the amount has to be debited at one place and credited at the another, otherwise the balance sheet would not tally.

Multiple choice

Four columns are made in the Trial Balance under

  1. the Totals Method

  2. the Balances Method

  3. the Totals and Balances Method

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 In this method, the totals as well as balances are entered. There are four columns. First one of the totals of the debit side, second one for the totals of credit side, third one for debit balances and fourth one for credit balances.

Multiple choice

The debit balance of cash book is a/an

  1. current asset

  2. current liability

  3. income

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

 It is a current asset, since the debit balance is the closing balance of cash account. It is shown in assets side of Balance Sheet.

Multiple choice

Which of the following is not an objective of preparing the Trial Balance?

  1. To ascertain arithmetical accuracy

  2. To help in preparation of final accounts

  3. Summary of each account

  4. To ascertain the financial position of the business
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

 It is not the objective of preparing the Trial Balance, as the assets and liabilities are shown in the balance sheet. Hence, the financial position is ascertained by the balance sheet.

Multiple choice

Which of the following is a limitation of the use of a journal?

  1. It reduces the possibility of error.

  2. It provides an explanation of the transactions.

  3. It becomes very bulky.

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

 This is the limitation of journal, since if all the transactions are recorded, it becomes very bulky and lengthy process.

Multiple choice

You want to give contact details in ledger accounts. For this you need to activate

  1. F11 > F1: Accounting features.

  2. F12 > Voucher entry.

  3. F12 > Accts / Inventory info.

  4. F12 > Invoice / Orders entry.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 F12 > Accts / Inventory Info. is used to configure masters setting and in this dialogue box you need to activate the below option for Contact Details for ledger accounts. Use CONTACT DETAILS for Ledger Accounts.

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.