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

The process of transferring the transactions relating to changes in a particular item at one place in the form of an account is called _________.

  1. Journalising

  2. Balancing

  3. Posting

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

Posting is the accounting process of transferring transactions to their specific accounts in the ledger to maintain a record of changes for each item.

Multiple choice elements of book keeping and accountancy accounting from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs ascertaining profit or loss from incomplete records introduction to single entry system and difference between single entry and double entry system

Trading and Profit and Loss Account cannot be prepared from books maintained on single entry basis because :

  1. Nominal accounts are not maintained in the ledger.

  2. Real accounts are not maintained in the ledger.

  3. Personal accounts are not maintained in the ledger.

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

In a single entry system, only personal accounts and cash books are typically maintained. Nominal accounts (expenses, incomes) are not recorded, making it impossible to calculate profit or loss through a traditional Trading and Profit and Loss account.

Multiple choice elements of book keeping and accountancy accounting from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs ascertaining profit or loss from incomplete records introduction to single entry system and difference between single entry and double entry system

Profit, under Single Entry System is ascertained ____________ .

  1. by preparing Profit and Loss Account.

  2. by preparing Statement of Affairs

  3. by preparing Cash Account

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

Since a full set of accounts is not maintained in a single entry system, profit is typically ascertained by comparing the capital at the beginning and end of the period, often using a Statement of Affairs.

Multiple choice elements of book keeping and accountancy accounting from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs ascertaining profit or loss from incomplete records introduction to single entry system and difference between single entry and double entry system

A statement of affairs is a summarised statement of an estimated _____________.

  1. Financial position

  2. Profit

  3. Income

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

To ascertain the Capital, Statements of affairs are prepared.
Capital = Assets - Liabilities
The above equation under which statement of affairs are prepared reflects the financial position of the business.

Multiple choice elements of book keeping and accountancy accounting from incomplete records preparation of final accounts from incomplete records preparation of statement of affairs ascertaining profit or loss from incomplete records introduction to single entry system and difference between single entry and double entry system

The capital at the end of the accounting year is ascertained by preparing _______.

  1. Cash Account

  2. Closing statement of affairs

  3. Total debtors account

  4. Opening statement of affairs
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Statement of Affairs is Based under Accounting Equation " Assets = Capital + Liabilities"
thus to ascertain the Closing Capital at the end of the year  Closing Liabilities are deducted from closing assets.

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

Which of the following is not a correct statement ?

  1. A bill given to a creditor is called Bill Payable

  2. Del-Credere commission is normally calculated o total sales

  3. Discount at the time of retirement of a Bill is a given for the drawee

  4. The owner of a shop feels that he has made a loss due to closing stock being zero
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Closing stock is an asset. If it is zero, it does not represent a loss in the accounting sense; rather, it reflects that all goods were sold or otherwise disposed of. The other statements are standard accounting definitions.

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

Bills receivable discounted but not done till the date of final accounts is shown in ___________.

  1. profit & loss account

  2. assets

  3. liabilities

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

A discounted bill is a contingent liability for the drawer until the date of maturity. Since it is not yet matured, it is disclosed as a note to the accounts rather than a direct entry in the balance sheet assets or liabilities.

Multiple choice elements of book keeping and accountancy commission,brokerage and discount advantages of bill of exchange definition, characteristics and parties of bills of exchange simple transactions related to bills of exchange

Which of these accounts is debited by a drawee of a bill of exchange on its discounting?

  1. Bills Receivable

  2. Cash

  3. Discount

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

The drawee of a bill of exchange is the person who accepts the bill (the debtor). When the drawer discounts the bill, the drawee is not involved in that transaction and does not record any entry for the discounting.

Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

______________ a snapshot of the financial condition of the firm at a particular time.

  1. The balance sheet provides

  2. The income statement provides

  3. The cash flow statement provides

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

The balance sheet provides a snapshot of the financial condition of the firm at a particular time. It shows the balance of assets, equities and liabilities at a single moment of time. 


The Income Statement is one of a company's core financial statements that shows their profit and loss. The P&L statement shows a company's ability to generate sales, manage expenses, and create profits. over a period of time.

Cash flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.

Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

Comparative Statements is prepared to check _______.

  1. increase or decrease as on different dates

  2. balances of account as on different dates

  3. summaries of different operational activities of different periods

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

Comparative analysis is comparison of various ratios balances of different years. It is basically done to understand the trend off the company. Comparative statements is prepared to check increase or decrease as on different dates, balances of accounts as on different dates and summaries of different operational activities of different periods. 

Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

Comparative Financial Statements mean comparative study of items or components of financial statements for two or more years or with that of other enterprises.

  1. True

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

True. Comparative Financial statements mean comparative study of items or components of financial statements of two or more years with that of the same or other company. It is comparison of various ratios, balances, statements of different years of the company. It is basically done to understand the trend off the company.

Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

Comparative financial statements are prepared for ____________ comparison.

  1. inter-firm

  2. intra-firm

  3. both (a) and (b)

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Comparative financial statements are used to compare the performance of the same firm over different periods (intra-firm) or to compare different firms within the same industry (inter-firm).

Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

____________ statements refer to the Profit and Loss Account and Balance Sheet prepared by providing columns for the figures for both the current year as well as for the previous year and for the changes during the year.

  1. Common size

  2. Comparative

  3. Income

  4. Both A and C
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Comparative statements refers to the profit and loss account and balance sheet prepared by providing columns for the figures for both current year as well as for the previous year for the changes during the year. Comparative statements are prepared basically to understand the trend of the company. Hence, its also known as trend analysis. 

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

A financial statement that shows both rupees and percentages in the report is referred to as ______________.

  1. A Balance sheet

  2. A Common size statement

  3. A Proportional financial statement

  4. A Relative statement of equity
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A common size statement expresses each item in the financial statement as a percentage of a base figure (like total assets or total revenue), allowing for easier comparison.

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

Common-size Balance Sheet shows _______________.

  1. Assets, Equity and Liabilities in absolute values.

  2. Assets and Liabilities as percentage of total assets or total equity and liabilities.

  3. Both (a) and (b)

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

A common-size balance sheet expresses all items as a percentage of a common base, typically total assets or total equity and liabilities. This allows for easier comparison between companies of different sizes or over different time periods.