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 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 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.

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

In case a sports fund is kept, expenses on account of sports events should be ____________.

  1. charged to sports fund

  2. charged to the income and expenditure account

  3. taken to the balance sheet on the asset side

  4. taken to the balance sheet on the liability side
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Specific funds are utilized for the specific activities only. If any sports events is organized, all expenses pertains to such event should be debited to sports fund account.

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

Which of the following consisting  the final account of a non-profit organization_____________.

  1. Trading and Profit & Loss A/c and Balance Sheet

  2. Income Statement and Statement of Financial Position

  3. Receipts & Payments A/c and Income & Expenditure A/c

  4. Receipts & Payments A/c Income & Expenditure A/c and Balance Sheet
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
The statements prepared by Non-for-profit organisations are:-
1) Receipt and payments account - It is a real account just like cash account. Its prepared at the end of the year. All receipts are recorded on the debit side and expenses on the credit side. 
2) Income and expenditure account - Its a nominal account and is just like a profit and loss account. All the expenses are recorded on the debit and side and incomes on the credit side. 
3) Balance sheet - Balance sheet is prepared normally. The difference between assets and liabilities is shown as capital fund or general fund. 
Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

Statement I: Receipt & Payment A/c starts with the opening balance of cash in hand and at bank.
Statement II: Income & Expenditure A/c have no opening balance.
Select the correct answer the options given below.

  1. Statement I is Correct while statement II is Incorrect.

  2. Both Statement I and II are incorrect

  3. Statement II is Correct while statement I is incorrect.

  4. Both Statement I and II are correct
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Receipt and Payment account is a summary of cash transactions and starts with an opening cash/bank balance. Income and Expenditure account is like a Profit and Loss account, which is prepared for a specific period and does not carry forward an opening balance.

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

An advance receipt of subscription from a member of the non profit organization is considered as a/an _______________.

  1. Expense

  2. Liability

  3. Equity

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

Subscription is the amount that is paid by members of NPO every year. It is the primary source of income of NPO. It is generally paid every month. It is the amount paid by members to keep their membership alive. An advance receipt of subscription from a member is an income received in advance. So it is treated as liability. 

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns financial accounting and reporting prepration of income and expenditure account and balance sheet accounting procedure for not-for-profit organisations receipts and payments receipts and payments account

The ______________ is the summary of cash and bank transactions which helps the preparation of Income and Expenditure account and Balance Sheet.

  1. income and expenditure account

  2. balance sheet

  3. receipts and payments account

  4. both a and b
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Not-for-Profit Organisations are required to prepare financial statements at the end of the each accounting period and the general principles of accounting  are fully applicable in their preparation. The final accounts of a not-for-profit organisations consist of the following:

(i) Receipt and Payment Account
(ii) Income and Expenditure Account
(iii) Balance Sheet
The Receipt and Payment account is the summary of cash and bank transactions which helps in the preparation of Income and Expenditure Account and the Balance Sheet. Besides, it is a legal requirement as the Receipts and Payments Account has also to be submitted to the Registrar of Societies along with the Income and Expenditure Account, and the Balance Sheet.

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

On the death of a partner, credit balance of Profit and Loss Account appearing in, the Balance sheet, should be credited to the Capital Accounts of ______________ .

  1. all partners including the deceased partner in their profit-sharing ratio

  2. the remaining partners in the new profit-sharing ratio

  3. neither the deceased partner nor the remaining partners.

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

When a partner dies, the accumulated profits in the Profit and Loss Account belong to all partners based on their profit-sharing ratio, as it was earned during their tenure.

Multiple choice adjustment of partners capital and death of a partner retirement/ death of a partner elements of accounts

What balance does a Partners Current Account has?

  1. Debit balance.

  2. Credit balance.

  3. Either (a) or (b).

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

The partnership capital account is an equity account in the accounting records of a partnership. It

contains the following types of transactions:

1.  Initial and subsequent contributions by partners to the partnership, in the form of either cash or the market value of other types of assets.

2. Profits and losses earned by the business, and allocated to the partners based on the provisions of the partnership agreement.

3. Distributions to the partners.

The ending balance in the account is the undistributed balance to the partners as of the current date.   

Partner's capital account can either have a credit balance or debit balance.

A capital account having a credit balance means business owes partners that much amount, while if a capital account has a debit balance it means partners owe business that much amount or we can also say that partners have overdrawn their capital account.