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

Revenue expenditures are shown on the

  1. debit side of profit and loss account.

  2. credit side of profit and loss account.

  3. liabilities side of balance sheet.

  4. assets side of balance sheet.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Revenue expenses should be shown on the debit side of Pand L account and revenue income on credit side of it.

Multiple choice

Capital expenditures are shown on the

  1. debit side of profit and loss account.

  2. credit side of profit and loss account.

  3. liability side of balance sheet.

  4. assets side of balance sheet.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Capital expenses should be shown on the assets side of Balance Sheet and capital income on liabilities side.

Multiple choice

If the revaluation reveals the overvaluation of a liability existing in the books, the entry will be to

  1. credit the liability and debit the revaluation account

  2. debit the liability and credit the revaluation account

  3. credit the liability and debit the partner capital account

  4. credit the liability and debit the profit and loss account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The liability should be debited and revaluation should be credited because it is a profit.

Multiple choice

The debit balance of profit and loss account should be

  1. debited to old and new partners in the profit sharing ratio

  2. debited to new partner only

  3. credited to old partners in old profit sharing ratio

  4. debited to old partners in the old profit sharing ratio
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The P and L account should be debited to old partners in old ratio. 

Multiple choice

If the revaluation reveals the overvaluation of a liability existing in the books, the entry will be to

  1. credit the liability and debit the revaluation account

  2. debit the liability and credit the revaluation account

  3. credit the liability and debit the partner capital account

  4. credit the liability and debit the profit and loss account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The liability should be debited and revaluation should be credited because it is a profit.

Multiple choice

Which category of accounts is Rotary Club classified under?

  1. Real account

  2. Natural personal account

  3. Representative personal account

  4. Artificial personal account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Any non trading organisations, companies, government organisations are all examples of artificial personal accounts. Real accounts are concerned with tangible/intangible items such as furniture, machinery, goodwill etc. Natural personal accounts are Madhav's, Divesh's and Radha's account etc. Representative personal accounts include outstanding expenses, capital account etc.

Multiple choice

The journal entry with two or more debits or credits is known as 

  1. rectified entry

  2. opening entry

  3. closing entry

  4. compound entry
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The entry with two or more debits/credits is a compound entry. Opening entry is one which is passed to carry forward the previous year's balances to current year. Closing entry is one which is passed to carry forward the current year's balances to next year. Rectified entry is meant for making rectification of the errors made in account books.

Multiple choice

Which of the following accounts always shows debit balance?

  1. Real account

  2. Personal account

  3. Nominal account

  4. Natural personal account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Real accounts such as machinery, furniture, cash always show debit balance. Personal accounts, Nominal accounts, Natural personal accounts may show both debit and credit balance.