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

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.

Multiple choice

Which of the following correctly explains about adjunct account?

  1. It increases book value of liability account.

  2. It increases book value of asset account.

  3. It increases book value of expense account.

  4. It increases book value of income account.

  5. It decreases book value of liability account.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An account in financial reporting that increases the book value of a liability account. An adjunct account is a valuation account from which credit balances are added to another account. For example, if a company issues bonds, the unamortized premium on bonds payable account (sometimes called bond premium) is an adjunct account because its credit balance is added to the bonds payable account.

Multiple choice

Accounting standards are issued by

  1. Central Government

  2. State Government

  3. Institute of Chartered Accountants of India

  4. Reserve Bank of India
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct Answer: Institute of Chartered Accountants of India

Multiple choice

Which of the following is/are the advantage(s) of Accounting Standards?

  1. To eliminate or reduce variation in accounting treatments

  2. To facilitate comparison of financial statements of different companies

  3. To make financial statements more informative

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

Correct Answer: To eliminate or reduce variation in accounting treatments

Multiple choice

Which of the following is a liability of a firm?

  1. Debit balance of analytical Petty Cash Book

  2. Credit balance of Bank Pass book

  3. Debit balance of Bank column of Cash Book

  4. Credit balance of Bank column of Cash Book
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Correct Answer: Credit balance of Bank column of Cash Book means overdraft and thus, a liability.

Multiple choice

Personal accounts can take the form of

  1. natural person accounts like proprietor’s account, suppliers account, receivers account (like Mohan’s a/c, Shashi’s A/c, Naresh’s a/c), etc.

  2. artificial persons’ and body of persons’ accounts like limited company’s account, bank account, insurance company’s account any governments account, etc.

  3. representative personal accounts like salaries outstanding accounts, unexpired insurance account, interest received in advance account, etc.

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

Correct Answer: All of the above