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 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 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. 

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

The accounting information provided by such organisations is meant for the _______ and potential contributors meet the statutory requirement.

  1. past

  2. present

  3. future

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

Not-for-Profit organisations refer to the organisations that are used for the welfare of the society and are set up as charitable institutions which function without any profit motive. Their main aim is to provide service to a specific group or the public at large. Normally, they do not manufacture, purchase or sell goods and may not have credit transactions. Hence, they need not maintain many books of account (as the trading concerns do) and Trading and Profit and Loss Account. The funds raised by such organisations are credited to capital fund or general fund. The major sources of their income usually are subscriptions from their members, donations, grants-in-aid, income from investments, etc.

The main characteristic of such organisation is the accounting information provided by such organisations is meant for the present and potential contributors and to meet the statutory requirement.

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

The surplus generated in the form of excess of income over expenditure is simply ________ in the capital fund.

  1. added

  2. subtracted

  3. divided

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

Not-for-Profit organisations refer to the organisations that are used for the welfare of the society and are set up as charitable institutions which function without any profit motive. Their main aim is to provide service to a specific group or the public at large. Normally, they do not manufacture, purchase or sell goods and may not have credit transactions. Hence, they need not maintain many books of account (as the trading concerns do) and Trading and Profit and Loss Account.

The surplus generated in the form of excess of income over expenditure is not distributed amongst the members. It is simply added in the capital fund. This is one of the main characteristic of such organisations

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

Accounting information system is important component of the organisational MIS in an organisation. 

  1. True

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

Accounting information system is important component of the organisational MIS in an organisation. It receives information and provides information and provides information to the other functional MIS.

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

Which are the various steps involved in designing accounting reports from accounting data? 

  1. Definition of objective, Structure of the report, Querying with the database, finalising the report

  2. Definition of data, Structure of the data, Querying with the database, finalising data

  3. Definition of data, Structure of the report, Querying with the database, finalising report

  4. Definition of objective, Structure of the data, Querying with the database, finalising data
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The various steps involved in designing accounting reports from accounting data are as follows:
1) Definition of objective: The objective of the report must be clearly defined.
2) Structure of the report: The information to be contained therein and the style of presentation.
3) Querying with the database: The accounting information queries must be clearly defined and methodology to be adopted while interacting with the database.
4) Finalising the report.

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

The reports prepared upon the conditions or exceptions are called as __________ reports.

  1. summary

  2. demand

  3. exception

  4. customer/supplier
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Exception reports are designed to highlight data that falls outside of predefined parameters or conditions. They allow management to focus on areas that require attention or corrective action.

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

Which of the following criterion are needed to be fulfilled for every accounting report?

  1. Relevance

  2. Timeliness

  3. Accuracy

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

Accounting reports must be relevant to the decision-making process, timely to be useful, and accurate to ensure reliability. Therefore, all these criteria are essential.

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

The accounting reports generated by the accounting software may be either routine reports or on the specific requirements of the user.

  1. True

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

When the related information is summarized to meet a particular need, it is called as a Report. The content and design of the reports is expected to vary depending up on the level to which it is submitted and decision to made on the basis of the report. The accounting reports generated by the accounting software may be either routine reports or on the specific requirements of the user. For example, the ledger is a routine report while a report on supplies of a particular item by a given party is an on-demand report.

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

Statement of account, Purchase Analysis and Vendor Analysis report are prepared under _________ reports.

  1. summary

  2. demand

  3. customer/supplier

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

Customer/Supplier reports are specifically designed to analyze interactions, balances, and transactions related to external entities like vendors and clients.

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

Which of the following criterion are required to be fulfilled by every accounting report?

  1. Reliability, Timeliness, Accuracy, Completeness, Summarisation

  2. Relevance, Timeliness, Accuracy, Completeness, Summarisation

  3. Relevance, Timeliness, Accountability, Completeness, Summarisation

  4. Reliability, Timeliness, Accountability, Completeness, Summarisation
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When the related information is summarized to meet a particular need, it is called as a Report. The content and design of the reports is expected to vary depending up on the level to which it is submitted and decision to made on the basis of the report. Hence, a report must be effective and efficient to the user and should substantiate the decision-making process. Every accounting report must be able to fulfill the following criterion:
1) Relevance
2) Timeliness
3) Accuracy
4) Completeness
5) Summarisation

Multiple choice elements of accounts using computerised accounting system grouping and codification of accounting steps in installation of cas accounting information system

Querying with the database is the _______ step under the steps involved in designing accounting reports from the accounting data.

  1. first

  2. second

  3. third

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

In the standard process of designing accounting reports, querying the database to extract the necessary raw data is typically the third step, following the definition of objectives and structure.