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 business organisation mercantile agents and account sales course of business transaction in home trade documents and procedure used in home trade home trade: agents and procedures

When a customer returns goods a statement called " ________" is sent to him. This informs the customer that his account has been credited to the extent of value of the goods returned.

  1. discount note

  2. cash sales note

  3. debit note

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

A credit note or credit memorandum is a commercial document issued by a seller to a buyer. Credit notes act as a Source document for the Sales return journal. In other words the credit note is evidence of the reduction in sales.

Multiple choice business organisation mercantile agents and account sales course of business transaction in home trade documents and procedure used in home trade home trade: agents and procedures

It is interesting to note that _______ as well as _______ are similar insofar as both give the details of goods.

  1. invoices, delivery challans

  2. delivery challans, Statement of Account

  3. statement of account, credit/debit notes

  4. credit notes, statement of account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A Delivery Challan is created in situations where goods are being transported from one place to another which may or may not result in sales. Example: Transfer of goods from the Head Office to its branches. Delivery Challans are sent along with the shipment of goods.

An invoice, bill or tab is a commercial document issued by a seller to a buyer, relating to a sale transaction and indicating the products, quantities, and agreed prices for products or services the seller had provided the buyer. Payment terms are usually stated on the invoice.

Multiple choice accountancy accounting and database system applications of dbms in generating accounting information accounting and database management system accounting using data base management system (dbms)

A basic requirement which consist a set of principles, coding and grouping structure of accounting is _______________.

  1. Operating Procedure

  2. Accounting Framework

  3. Data Processing

  4. Back-end Database
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Accounting Framework consist a set of principles, coding and grouping structure of accounting.

Multiple choice accountancy accounting and database system applications of dbms in generating accounting information accounting and database management system accounting using data base management system (dbms)

The recording of financial transactions through books of original entries is followed in ________ accounting system.

  1. Computerised

  2. Manual

  3. Both manual and computerised

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

The recording of financial transactions, in manual accounting system is through books of original entries while the data content of such transactions is stored in a well-designed accounting database in computerised accounting system.

Multiple choice accountancy accounting using data base management system (dbms) applications of dbms in generating accounting information accounting and database management system accounting and database system

Some accounting software will classify some accounts as "income" accounts, while accountants might refer to these accounts as "revenue" accounts. Justify your answer with the correct option.

  1. True

  2. False

  3. Can't say

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

In accounting software, the terms income and revenue are often used interchangeably, although some accountants distinguish them based on specific reporting standards.

Multiple choice accountancy accounting using data base management system (dbms) applications of dbms in generating accounting information accounting and database management system accounting and database system

The accounts shown in the chart of accounts can be broadly classified into two categories: Balance sheet accounts and ___________ accounts.

  1. Income statement

  2. Expense

  3. Revenues

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

The chart of accounts is divided into balance sheet accounts (assets, liabilities, equity) and income statement accounts (revenues, expenses).

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

The credit balance in the bank account is_______.

  1. An asset

  2. A liability

  3. An expense

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

A credit balance in bank account means that the person in whose account this belongs to is under an obligation to pay the bank back the entitlement of such balances. This money has been owned to the account holder by the bank and must be repaid i.e. it is a liability.

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 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.