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 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.

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

_________ is not an advantage of computerised accounting system.

  1. Speed

  2. Cost of Training

  3. Accuracy

  4. Up-to-Date Information
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The advantages of computerised accounting system are speed, accuracy and up-to-date information, whereas cost of training is a limitation of computerised accounting system.

Multiple choice introduction of business laws business law and contract act business studies

Purchase book records signify :

  1. All purchases made by the firm

  2. All purchases of fixed asset used by the firm

  3. Credit purchases of goods dealt in by the firm

  4. Cash purchases of goods dealt in by the firm
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Purchase Day book or a Purchase Register is the book of original entry in which all the transactions relating to only credit purchase are recorded. Cash purchases do not find place in purchase day book as they are recorded in Cash book.

Multiple choice introduction of business laws business law and contract act business studies

CA/CS book is prepared ______.

  1. On the basis of Cash Book

  2. On the basis of copies of invoices

  3. Both (a) and (b)

  4. On the basis of ca/cs order
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

CA/CS book or Sales book records all credit sales made by a business. It is one of the secondary book of accounts and unlike cash sales which are recorded in cash book, sales book is only to record credit sales. The amount entered in the sales book is on behalf of invoices supplied to purchasers.

Multiple choice introduction of business laws business law and contract act business studies

Which of the following accounts will be credited, when the goods are purchased for cash?

  1. Stock Account

  2. Cash Account

  3. Supplier's Account

  4. Work in progress Account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cash account is the account that records details of all amounts paid or received in cash in arrangements for payment by customers, an account that is settled quickly in cash, rather than one which is paid later or in several payments another name. So, cash A/c will be credited.

Multiple choice elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

The main books of accounts in a business is ____________.

  1. Account

  2. Journal

  3. Ledger

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

The book of original entry or prime entry is journal in which all day to day transactions are recorded. All the transactions from journal are posted to ledger which consists of different accounts on the basis of transactions recorded in journal. 

Hence, it is regarded as the second important stage in the accounting process and also considered as the main books of account.

Multiple choice elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

Which of the following books serves both as journal and ledger?

  1. Cash book

  2. Sales Return book

  3. Sales journal

  4. Purchase returns book
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Cash book is a book which contains records about the receipt and payments of the firm. It also deals with all the bank deposits as well as withdrawals made. Entries in the cash book made are posted into general ledger so that cash in hand or cash at bank can be ascertained. It is the same as journal and then posting into ledger. Hence, cash book serves both as journal and ledger.

Multiple choice elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

Every financial transaction is recorded first in the journal.

  1. True

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

A transaction is recorded first in a journal because journal provides complete details of a transaction in one entry. 

Further, a journal forms the basis for posting the transactions into their respective accounts into ledger. 
Transactions are recorded in journal in chronological order, i.e. in the order of occurrence with the help of source documents. 
Journal is known as 'book of original entry', because with the help of source document, transactions are originally recorded in books. The process is of recording the transactions in journal and then in ledger.

Multiple choice elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

Left hand side of an account is ________.

  1. Debit side

  2. Credit side

  3. Income side

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

Debt and credit are two important terms used in Book-keeping and Accountancy. These two terms form the very basis of recording transactions in the books of accounts. 

Left hand side of the account is called debit side. Hence, to debit an account means to record the transaction on the left hand side of the account. It is abbreviated as 'Dr.' The word 'debit' is originated from the Latin word 'Debitum' and it means what is due.
Whenever an asset increases, or equity or a liability decreases, a debit entry will be made in the appropriate account. Whenever an asset decreases, or equity or a liability increases, a credit entry will be made in the appropriate account. the difference between the two sides of an account can be calculated. This difference is called the balance of an account.

Multiple choice elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

Transferring journal entry from journal to ledger is called journalising. 

  1. True

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

The process of recording transaction in the book of original entry is known as Journalising. The transactions are recorded in the form of a journal entry. Recording is made following the double-entry system of accounting. Thus, it records the two-fold effect of every transaction in the process of journalising, the transaction is first analysed in order to decide the account to be debited and credited by ascertaining the rule of debit and credit. After this, entries are recorded in the books of accounts. Once the entry is recorded in books, it is further posted from the journal to the ledger accounts which is called posting of entries.

Multiple choice elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

The accounting entries passed to transfer balance from the closed account to another account are called transfer entries, e.g. transfer of net profit to Capital A/c.

  1. True

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

Transfer entries, are entries intended to transfer an item from one head of account to another. 

Transfer entries are passed in the journal for transferring an account from one account to another account. E.g. Drawing account is transferred to Capital account at the end of the accounting year. Accounts relating to operation of business like sales, income, expenses are closed at the end of the year and their total or balances are transferred to Trading and Profit and Loss Account after recording journal entries.