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 elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

When does a entry termed as a combined entry ____________________.

  1. If two transactions of one company are involved

  2. If there is debit and credit both

  3. Transactions are of the same nature and they take place on the same day.

  4. An the accounts are debited the very same day
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A combined entry (or compound entry) is used when multiple accounts are affected by transactions of the same nature occurring on the same day.

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

The accounting equation is based on __________.

  1. Going concern concept

  2. Dual aspect concept

  3. Money measurement concept

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

Dual aspect concept is the basic concept of accounting, According to which every business transactions has a dual effect. As the name implies , the entry made for each transaction is composed of two parts- one for the debit and the other for the credit. Every debit has an equal amount of credit. So, the total of all debits equal to the total of all credits. This gives basic accounting equation:

Assets = Liabilities + Capital.

Multiple choice elements of book keeping and accountancy accounting equation explain the concept of accounting equation usefulness of an accounting equation accounting equations and transactions

The accounting equation is based on _________________.

  1. Going concern concept

  2. Dual aspect concept

  3. Money measurement concept

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

Dual aspect is the foundation or basic principle of accounting. This concept states that every transaction has a dual or two-fold effect and should therefore be recorded at two places.

The duality principle is commonly expressed in terms of fundamental Accounting Equation, which is as follows :

Assets = Liabilities + Capital

In other words, the equation states that the assets of a business are always equal to the claims of owners and the outsiders. The claims also called equity of owners is termed as Capital(owners’ equity) and that of outsiders, as Liabilities(creditors equity).

Multiple choice commercial studies sources of business finance - 2 preference shares equity and preference shares equity shares and preference shares

Securities premium account must be shown separately on the liabilities side of the balance sheet under  _______ with the account name  _________. 

  1. Share Capital; Shareholders Funds

  2. Reserves & Surplus; Shareholders Funds

  3. Secured Loan; Reserves & Surplus

  4. Unsecured Loan; Profit or Loss
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Reserve and Surplus:-
Reserve means a provision for a specific purpose. There are lots of unknown expenditures which can occur in current year or in future. To meet such type of expenses the business firm has to make the reserves. 
By maintaining the reserves, actual position of the profit and loss of any accounting year does not disturb. For example:- share premium account, provision for bad debts or capital redemption reserves. Capital redemption reserve can be used as bonus shares and converted into share capital. Reserves are also the part of capital of company other than share capital. These reserves can not be distributed among the shareholders as dividend.

Surplus is the credit balance of the Profit and Loss Account after providing for dividends, bonus, provision for taxation and general reserves etc.  Surplus profit may also be earmarked for special purposes such as reserves for obsolescence of plant and machinery. Balance of profit is carried forward in next year as retained earning. General reserve can be used for distribution of dividend among shareholders when profit is insufficient.
Reserves and surpluses are shown in liabilities side of balance sheet.
Multiple choice maturity value of recurring deposits banking maths

______ type of account is operated by salaried persons and petty traders.

  1. fixed deposit

  2. save deposit

  3. recurring deposit

  4. current deposit
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Recurring deposit type of account is operated by salaried persons and petty traders.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

Purchase book is maintained to record _______________.

  1. All credit purchases

  2. All cash purchases

  3. Purchases of goods

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

A purchase book is a special journal used specifically to record all credit purchases of goods that the business deals in.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

____________ is one of the records of circulation section.

  1. Accession Register

  2. Day book

  3. Catalogue Card

  4. AACR-2 (R)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Accession Register is the primary record in the circulation or acquisition section of a library, used to track all items added to the collection.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

______records the details of goods returned by the business organization to the supplier(s). 

  1. Sales Return Book

  2. Purchase returns books

  3. Journal proper

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

When the goods purchased on credit are returned to the supplier, these are recorded in the Purchase return book. Sometimes, goods purchased can be defective or of low quality, etc. and hence, need to be returned.

A separate book is maintained for the purchase return and these are not deducted from the purchases in the Purchase book. Also, Purchase return is recorded at the net amount on the invoice.

Multiple choice elements of book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

In the purchase book, the record is in respect of _________.

  1. Cash purchase of goods

  2. Credit purchase of goods dealt in

  3. All purchases of goods dealt in

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

The purchase book is exclusively used to record credit purchases of goods that the business deals in for resale.

Multiple choice elements of book keeping and accountancy sub-division of journal - 2 (subsidiary books) explain the importance of preparing subsidiary books meaning and advantages of subsidiary books purchase book or purchase journal

Under sales or return on approval basis, when the transactions are few and the customer accepts the goods on approval or return basis, the accounting treatment will be __________________.

  1. No Journal Entry

  2. Entry in Sales or Return Journal

  3. Entry in Sales or Return Day Book

  4. Sundry Debtors A/c Dr.

    To Sales A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

No Entry is made, as it has been already recorded as sales when the goods were sent to customer.

Multiple choice elements of business recent trends in marketing product life cycle e-marketing role of a marketer definition and functions of purchasing and storage department purchasing and stores

The time taken to convert raw materials into finished product is referred to as the 

  1. Life cycle

  2. Product cycle

  3. Operating cycle

  4. Product cycle or operating cycle
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The operating cycle is the time it takes for a company to purchase goods, sell them, and collect cash. It is often synonymous with the product cycle in manufacturing contexts.

Multiple choice income tax direct taxes commerce black money and tax evasion meaning of tax

The Previous Year in case of newly started business shall be the period between commencement of business and 31st March of the following year.

  1. True

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

The starting of an assessment year is counted from 1st April. Hence the previous year of a newly started business would be date of commencement of the business and 31st March of the following year.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

State True or False:
Scholarships granted to students out of funds provided by government will be debited to Income and Expenditure Account. 

  1. True

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

False. Scholarships granted to students out of funds provided by government will be deducted from the fund provided by government. If there appears any fund respective incomes/expenses will added/deducted from the respective fund. 

Multiple choice book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

If there appears a sports fund, the expenses incurred on sports activities will be shown on the debit side of Income and Expenditure Account. 

  1. True

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

False. If there appears a sports fund, the expenses incurred on sports activities will be deducted from the sports fund. If there appears any fund respective incomes/expenses will added/deducted from the respective fund. 

Multiple choice book keeping and accountancy accounting for not-for-profit organisation financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations prepration of income and expenditure account

Income and expenditure accounts show ______________.

  1. Cash available to an organization

  2. Closing capital of an organization

  3. Cash available in the bank account

  4. Surplus or deficit for the current accounting Period
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Income and Expenditure account is prepared to calculate the surplus or deficit with the company for current accounting period. The previous year transaction and the various cash transactions are not considered while preparing this account beacuse such transaction are related to receipt and payment account.