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 business organisation origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents petty cash book

For auditing the business transactions, __________ voucher is the document which gives proper information to the auditor of every accounting transaction.

  1. Cash

  2. Memo

  3. Receipt

  4. Journal
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A journal voucher is a very helpful document in auditing as it is a voucher that consists of all the details of transactions like the date of transactions, amount, etc. A journal voucher is prepared for every transaction. They are serially numbered for convenience purpose so that journal can be prepared.  

Multiple choice business organisation origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents petty cash book

It is not possible to make a journal entry without a proper ___________ voucher which gives all details of an accounting transaction.

  1. Cash

  2. Debit

  3. Credit

  4. Journal
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A Journal voucher is a voucher that consists of all the details of transactions like the date of transactions, amount, etc. A journal voucher is prepared for every transaction. It is the basis for making a journal. They are serially numbered for convenience purpose so that journal can be prepared.  A journal voucher keeps a record of all the transactions hence helps in the recording or transactions and making of journal.

Multiple choice book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

Goods destroyed by fire should be credited to______.

  1. Purchases account

  2. Sales account

  3. Loss of goods by fire account

  4. Insurance account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Loss of goods by fire, it is just possible that some goods may catch fire and result in loss to the business. This is definitely loss, so "Loss of goods by fire" account will be debited. Such goods have been destroyed, not sold, so their  valuation will be made at cost price. So, purchases account will be credited. The journal entry for this transaction will be made as under:


Loss of goods by fire A/c       Dr.
       To Purchases A/c

Multiple choice book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

Which of the following account may have a debit or credit balance?

  1. Discount received account

  2. Sales account

  3. Trade expenses account

  4. Loan account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A debit balance increases the balance in an expense account and a credit balance decreases the balance. Loan account may have debit or credit balance i.e. when a business secures a loan it records it as an increases in the appropriate asset account and corresponding increases in an account called loan. 

Multiple choice book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

When A advances money to B in the course of joint venture then A debits such money to a _________.

  1. Joint bank account

  2. Joint venture account

  3. B's personal account

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

A joint venture is an entity which is created by two or more parties to accomplish a particular project. For this a joint venture account is separately maintained. If any amount is spent for joint venture, this will be debited to joint venture account.

Multiple choice book keeping and accountancy origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

Which of the following accounts have only credit balance?

  1. Accounts payable account

  2. Salaries outstanding account

  3. Reserve fund account

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

An accounts assigned normal balance is on the side where increases go because the increases in any account are usually greater than the decreases. Therefore, asset, expense, and owner's drawing accounts normally have debit balances. Liabilities, revenue, and owner's capital accounts normally have credit balances.

Multiple choice business organisation and correspondence middlemen 2 - retailer types of retail organisation types of retailing retail trade

To ensure fair management of funds the accounts of the stores are audited by _______.

  1. Registrar of Cooperative Societies

  2. Registrar of Companies

  3. Registrar of Retail Stores

  4. Joint Stock Company
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise.

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

Accounting entry for recording loss on the realization of sinking fund investment is:

  1. Sinking fund account Sinking fund investment account Dr. Cr.
  2. Sinking fund investment account Sinking fund account Dr. Cr.
  3. Profit an loss account Sinking fund investment account Dr. Cr.
  4. Sinking fund investment account Profit and Loss account Dr. Cr.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If Sinking fund investments are sold—at loss:

Sinking fund a/c Dr. (with amount of loss)

To Sinking fund investment a/c (with book value of investments sold)

(Being sinking fund investments sold at loss)

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

Accounting entry for making the provision for the redemption of debentures is:

  1. Profit and loss accountSinking fund account Dr. Cr.
  2. Profit and loss appropriation accountSinking fund account Dr. Cr.
  3. Profit and loss adjustment accountSinking fund account Dr. Cr.
  4. Debentures accountSinking fund account Dr. Cr.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The provision for the redemption of debentures via a sinking fund involves appropriating profits. The Profit and Loss Appropriation account is debited to set aside funds, and the Sinking Fund account is credited.

Multiple choice elements of accounts company accounts - redemption of debentures redemption by payment in lump sum accounting effects for redemption of debentures redemption of debentures

When debenture sinking fund is created ___________________.

  1. Both the accounts involved belong to current category

  2. Both the accounts involved belong to non-current category

  3. One is current item and another is non-current category

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

A sinking fund involves setting aside assets (investments) and creating a reserve (liability/equity). Both the investment (non-current asset) and the sinking fund reserve (non-current liability/equity) are non-current items.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

The letter of credit includes all of the following documents except ___________.

  1. a commercial invoice

  2. a transport document

  3. a certificate of origin

  4. a certificate of investment
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. 

To receive payment, an exporter or shipper must present the documents required by the LC. Typically the letter of credit will request an original bills of lading as the use of a title document such as this is critical to the functioning of the Letter of Credit. However, the list and form of documents is open to negotiation and might contain requirements to present documents issued by a neutral third-party evidencing the quality of the goods shipped, or their place of origin or place. Typical types of documents in such contracts might include:

  • Financial Documents such as bill of exchange or co-accepted draft
  • Commercial Documents such as invoice. 
  • Shipping Documents
  • License, embassy legalization, origin certificate, 
  • Insurance Documents

Multiple choice book keeping and accountancy subsidiary books - 2 petty cash book meaning, importance and components of voucher bank book and petty cash book

In analytical petty cash book, for what purpose separate column is provided?

  1. To record particular item of expenditure.

  2. To record particular item of receipts.

  3. Both (a) and (b)

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

An analytical petty cash book uses multiple columns to categorize various types of small expenditures (like postage, stationery, or travel) for easier tracking and ledger posting.

Multiple choice elements of accounts cash book and its types petty cash book meaning, importance and components of voucher bank book and petty cash book

Perpetual inventory system involves ____________.

  1. bincard and stores ledger

  2. bill of material and material requisition

  3. purchase requisition and purchase order

  4. inward and outward invoices
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A perpetual inventory system maintains continuous records of inventory levels. This is achieved by tracking every receipt and issue of stock using documents like bincards and stores ledgers.

Multiple choice book keeping and accountancy accounts of 'not for profit' concerns accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Funds raised by Not-for-Profit Organisations through various sources is __________account.

  1. credited to capital fund

  2. debited to capital fund

  3. credited to assets

  4. debited to assets
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Funds raised by Non-for-Profit organisations through various sources is credited to capital fund. Capital fund is the excess of assets over liabilities.  So, the excess amount which is mostly the income of organisation is the funds raised by them. Any addition in funds will be added ro capital fund/general fund.