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 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

If an organisation has followed the _______ entry system they must prepare a trial balance for checking the accuracy of the ledger accounts.

  1. single

  2. double

  3. manual

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

In a double entry system, every transaction has two effects. One is debit and other is credit. In Trial Balance, balances of all the ledger accounts are recorded. If debit side of trial balance matches with credit side it shows the mathematical accuracy of all the accounts. 

So, if an organisation has followed the double entry system they must prepare a trial balance.

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

Which statement are prepared by the Not-for-profit Organisations?

  1. Receipt and Payment Account

  2. Income and Expenditure Account

  3. Balance Sheet

  4. All of the above
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 accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Not for profit organisation do not have to manufacture,purchase or sell goods and may not have credit transactions so they don't have to maintain _________account.

  1. trading Account

  2. balance sheet

  3. profit and Loss Account

  4. all of the above
Reveal answer Fill a bubble to check yourself
A,C Correct answer
Explanation

Non for profit organisations do not manufacture, purchase or sell goods and may not have credit transactions so they do not have to maintain trading account and profit and loss account. 

The financial statements prepared by Non for profit organisations are Receipts and payment account, income and expenditure account and balance sheet. 

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 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

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.

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

Finalizing the report is the _______ step in the steps involved in designing accounting reports from accounting data.

  1. first

  2. second

  3. third

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

Finalizing the report is the concluding step in the design process, where the output is reviewed, formatted, and approved for distribution to the intended users.

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

The accounting Sub-system transaction cycle would not include the processing of purchase orders.

  1. True

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

The accounting Sub-system transaction cycle would include the processing of purchase orders, advance to suppliers/vendors, inventory status updation, account payable etc.

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

Bad debts report for a given product, Stock valuation report are prepared under ________ reports.

  1. summary

  2. demand

  3. exception

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

 Demand Reports This reports are prepared only when the management request them, e.g,Bad Debts Report for a given product ,Stock Valuation Report.

Multiple choice elements of accounts computerised accounting system accounting systems - manual and computerized difference between manual and computerised accounting meaning and importance of computerised accounting system

The computerised accounting system are ________.

  1. Scalable

  2. Less scalable

  3. Highly scalable

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

In a computerised accounting system, the requirement of additional manpower is confined to data entry operators for storing additional vouchers. The additional cost of processing additional transactions is almost negligible because of which the computerised accounting system is highly scalable.