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

Which is a Final account of a bank?

  1. Profit and Loss A/c

  2. Balance Sheet

  3. Trading A/c

  4. A and B
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The final accounts of a bank consist of the Profit and Loss Account (to show performance) and the Balance Sheet (to show financial position).

Multiple choice

Directions: Choose the correct option for the given question.

Limitation of auditing is

  1. that it does not reveal complete picture of busines

  2. that it does not guarantee accuracy of accounts

  3. that auditor may be biased

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

Auditing has inherent limitations, including the inability to provide an absolute guarantee of accuracy, the potential for auditor bias, and the fact that it does not provide a complete, exhaustive picture of all business operations. Since all listed options represent recognized limitations, 'all of the above' is the correct choice.

Multiple choice

A business accounting system includes

  1. order entry

  2. sales analysis

  3. shipping / billing

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

A comprehensive business accounting system integrates various modules, including order entry, sales analysis, and shipping/billing, to manage financial data effectively.

Multiple choice

Books of account for a proprietary concern

  1. may have subsidiary ledgers

  2. may not have subsidiary ledgers

  3. both (1) and (2)

  4. neither (1) and (2)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Proprietary concerns can maintain subsidiary ledgers to track specific details like accounts payable or receivable. Since both options are valid possibilities for accounting systems, the combined choice is correct.

Multiple choice

Home Finance Programs are

  1. project management programs

  2. accounting programs

  3. inventory management programs

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

Home finance programs are specialized software designed to help individuals track income, expenses, and budgets, which is a form of accounting.

Multiple choice

In the balance sheet of a bank, the off-balance sheet items are shown as

  1. asset

  2. liability

  3. asset or liability as per its nature

  4. footnotes to the balance sheet
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Off balance sheet (OBS) items refer to assets or liabilities that do not appear on a company's balance sheet but are nonetheless effectively assets or liabilities of the company. Footnotes to the financial statements refer to additional information provided in a company's financial statements. Footnotes to the financial statements report the details and additional information that are left out of the main reporting documents, such as the balance sheet and income statement.

Multiple choice

Financial year is

  1. a calender year

  2. not a calender year

  3. period in respect of which any profit and loss account is prepared

  4. Both (2) and (3)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The balance sheets and income statements of companies across the globe are usually prepared for a period of one year, called financial year.

Multiple choice

Management accounting reports can be described as

  1. General-purpose

  2. Macro-reports

  3. Special-purpose

  4. Classified financial statements

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

 Management accounting reports provides special purpose information for a particular user for a specific reason.

Multiple choice

What does Aging of Accounts means?

  1. It is to classify the transactions.

  2. It is to classify the accounts on the basis of nature of company.

  3. It is to classify the accounts on the basis of different ledgers.

  4. It is to classify the accounts on the basis of billing or due date.

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

AGING OF ACCOUNTS is the classification of accounts by the time elapsed after the date of billing or the due date. The longer a customers account remains uncollected or the longer inventory is held, the greater is its realization risk.

Aging of accounts is the technique to classify accounts according to billing or due date. In this classification, we get the idea to whom, we have to get first and to whom, we have to pay first.