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 commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

Under single entry system, there is no provision to make adjustments, while under double entry system, adjustments are made at the time of preparing final accounts.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Preparation of the profit and loss account cannot be prepared through the information assembled through the single entry system. This means that this system cannot help the organization to determine its financial position because there is no provision to make adjustments.

On the other hand, the double entry system of recording financial transactions of the organization is useful in the preparation of trading profit and loss accounts as adjustments are made at the time of preparing final accounts.

Multiple choice commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

_____________ has defined Single Entry System as, 'A system of book keeping in which as a rule only records of cash and personal accounts are maintained, it is always incomplete double entry varying with the circumstances."

  1. Kohler

  2. Smith and Ashburne

  3. L.C. Copper

  4. Institute of Charted Accountants of India (ICAI)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The definition provided is the standard one attributed to Kohler regarding the Single Entry System of bookkeeping.

Multiple choice commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

Under double entry system both aspects of transaction are recorded, while Under single entry system, both aspects of transaction are not recorded.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In single entry system, incomplete records are maintained while in double entry system complete recording of transactions is there. In single entry system comparison between two accounting periods is very difficult.

Multiple choice commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

Company accounting conforms more to dual aspect concept than to incomplete recording system because.
I. Companies Act insists upon the adoption of double entry systems of book keeping.
II. Balance sheet could not be prepared under sec. $211$ of Company's Act according to the incomplete recording system
III. To show true and fair view of the affairs of the company
IV. To ensure adequate disclosure.
Select the correct answer from the codes given and mark your answer sheet accordingly.

  1. I and II

  2. II and III

  3. II, III and IV

  4. I, II and III
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The dual aspect concept states that every business transaction requires recordation in two different accounts. This concept is the basis of double entry accounting, which is required by all accounting frameworks in order to produce reliable financial statements.

Multiple choice commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

Which of the following are prepared by the organisations keeping only incomplete accounting records?
I. Cash book
II. Customer's Accounts
III. Expenses Accounts
IV. Day Books
Choose the correct answer using the codes given.

  1. I, II and III

  2. I, II and IV

  3. I, III and IV

  4. II, III and IV
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A single entry book-keeping system or single-entry accounting system is a method of bookkeeping relying on a one sided accounting entry to maintain financial information.

In single entry system following things are prepared:

1. Cash book - to record all cash transaction

2. Customer's book - to record balances of debtors

3. Day Books - in which all day to day transactions or activities are recorded

4. Statement of profit and loss to arrive at profit or loss.

5. Statement of affairs to arrive at closing capital at the year end.

Multiple choice commercial studies single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

An accounting system where debit and credit rule is not followed.

  1. Double entry system

  2. Single entry system

  3. Financial accounting

  4. Book keeping accountancy
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A system were Profit or loss earned by the business  is based on the difference between its Opening and closing capital. is called Single entry system
In order to find the  capitals , Statement of affairs are prepared which are based on an equation Capital = Assets - Liabilities
Hence, basic accounting aspects of debit and credit are not followed.

Multiple choice commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

In single entry system only ________________ accounts are opened.

  1. Real

  2. Nominal

  3. Personal

  4. Real and personal
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under Single entry System only personal accounts and cash A/c are opened. 

Only personal and cash accounts and the cash and credit transactions (related to personal accounts) are recorded under this system.

Multiple choice commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

In single entry system it is not possible to prepare _____.

  1. Balance sheet

  2. Receipts and payments account

  3. Trial balance

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

Under single entry system Books of accounts are not maintained hence, Trial Balance is not Possible to Prepare.

Multiple choice commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

A statement of ____________ is to be prepared in order to find out the profit and loss under a single entry system.

  1. Income

  2. Affairs

  3. Revenue

  4. Profit and loss
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Profit or loss earned by the business under single entry system is based on the difference between its Opening and closing capital.
To ascertain this capital Statement of affairs are prepared.

Multiple choice commercial applications single entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records meaning of incomplete records, reasons for incompleteness and its limitations ascertaining profit or loss from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs double entry system

__________system is usually adopted by traders who have less knowledge of Accounting.

  1. Double entry system

  2. Single entry system

  3. Dual aspect system

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

Single Entry System of Accounting, also known as Accounting from Incomplete Records, is a non-standard and non-scientific system of accounting. This system is adopted by small businessmen as they do not have enough capital and expertise to employ the standard double entry system of accounting in their business.

Multiple choice organisation of commerce and management sources of business finance - 1 finance and accounts meaning and functions of finance and accounts department nature, need and significance of business finance

American Depository Receipts (ADRs) are divided into __________ number of levels.

  1. 1

  2. 2

  3. 3

  4. 4

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

ADR is a dollar denominated negotiable certificate, it represents non-US company;'s Publicly traded equity. ADRs are divided into three levels based on the regulations and privilege of each company's issue. 

Multiple choice commercial studies finance and accounts meaning and functions of finance and accounts department nature, need and significance of business finance introduction to business capital/finance

Which of the following is the external user of financial statements?

  1. Manager of the business

  2. CEO of the business

  3. Creditor of the business

  4. Controller of the business
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

External users are those outside the organization who use financial statements to make decisions. Creditors use these statements to assess the creditworthiness of the business, unlike managers, CEOs, or controllers who are internal.

Multiple choice commercial studies finance and accounts meaning and functions of finance and accounts department nature, need and significance of business finance introduction to business capital/finance

Which of the following is said to be the lifeblood of an organization?

  1. Debentures

  2. Finance

  3. Material

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

Finance is regarded as the lifeblood of a business enterprise. It is the basic foundation of all kinds of economic activities. Finance is the master key that provides access to all the sources for being employed in manufacturing and merchandising activities. The success of an organization largely depends on efficient management of its finances.

Multiple choice commercial applications financial accounting and reporting balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations accounting procedure for not-for-profit organisations prepration of income and expenditure account and balance sheet income and expenditure account prepration of income and expenditure account accounting treatment for npo's

Surplus revealed by Income and expenditure account ___________.

  1. is shown as deduction in accumulated fund at the balance sheet

  2. is transferred to an account called capital fund

  3. is distrusted among the members of the non-profit organization

  4. must be donated to other non-profit organization
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

b'Income and expenditure account can be defined as an account that reveals surplus or deficit of a non-trading concern by matching incomes and expenses of a specified accounting period. The balance of income and expenditure account is transferred to the balance sheet. Surplus balance is added to the capital fund in balance sheet. '

Multiple choice commercial applications financial accounting and reporting balance sheet, classification of assets and liabilities accounting records of not-for-profit organisations accounting procedure for not-for-profit organisations prepration of income and expenditure account and balance sheet income and expenditure account prepration of income and expenditure account accounting treatment for npo's

Income and Expenditure Account is prepared on ____________.

  1. Cash basis

  2. Accrual basis

  3. Hybrid basis

  4. Either (A) or (B)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Income and expenditure account is prepared on Accrual basis. Accrual basis of accounting is wherein all the expenses that are actually incurred and incomes actually earned are recorded. Its recorded when its realised and not when received.