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 elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

What is done as per the basic concepts of accounts?

  1. Book keeping

  2. Accounting

  3. Preparation of balance sheet

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

Book-keeping is the basis for accounting. It is because it is responsible for the proper recording of financial transactions.

Accounting begins with book keeping and ends with preparation of financial accounts.

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

Which of the following highlights the correct order of the stages in the accounting cycle?

  1. Journalizing, final accounts, posting to the ledger and trial balance

  2. Journalizing, posting to the ledger, trial balance and final accounts

  3. Posting to the ledge, trial balance, final accounts and journalizing

  4. Posting to the ledger, journalizing, final accounts and trial balance
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The accounting cycle begins with journalizing transactions, followed by posting them to the ledger, preparing a trial balance, and finally generating financial statements (final accounts). This sequence ensures data is captured, organized, and verified before reporting.

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

______ refers to the specific accounting principles and the methods of applying those principles adopted by the enterprise in the preparation and presentation of financial statements.

  1. Accounting methods

  2. Accounting policies

  3. Accounting concepts

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

Accounting policies represent the specific principles and methods chosen by an entity to prepare and present its financial statements. These choices are necessary when accounting standards allow for different approaches.

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

Modern Method of Accounting was introduced by _____________.

  1. M. S. Gosav

  2. Wheldon

  3. Luca Pacioli

  4. R. N. Carter
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The first book on double entry system was written by an Italian mathematician Fra Luca Pacioli and his close friend Leonardo da Vinci. The book was entitled as “Summa de arithmetica, geometria, proportioni et proportionalita” and was first published in Venice in 1494.

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

Book-keeping is often confused with _____________.

  1. Algebra

  2. Statistics

  3. Cashier

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

Book Keeping and Accountancy are often used interchangeably, but it is not true. These two terms are not identical. Book Keeping is an art but the accountancy is a science. Book keeping is usually done by the junior employees of the organization where he records the transactions in books of accounts i.e. journal and ledger. But information recorded in books does not give any idea about the financial position of the company. 


Hence in order to make a judgement regarding the financial position of the concern, the recorded information has to be analysed and interpreted where accountancy comes in the picture.

 

Therefore, this can be said that where book keeping ends, accountancy starts.

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

The statistical yardstick that provides a measure of the relationship between two accounting figures is _____________.

  1. The accounting ratio

  2. Capital output ratio

  3. A current ratio

  4. Pay out ratio
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A Ratio is a statistical Yardstick to measure relationship between two accounting figures.It is very useful for the investors, suppliers, creditors. It is used as a mirror to reflect financial status of a particular company or group of company, firms, business houses.

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

"Book-keeping is the science and art of correctly recording in the books of accounts, all those business transactions that result in transfer of money or money's worth" is the definition given by ___________.

  1. Northcott

  2. R.N.Carter

  3. Spicer and Peglar

  4. J.R.Batliboi
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Book-keeping is an art and science of recording business transactions in the appropriate books of accounts in accordance with the principles of accountancy for the purpose of ascertaining the profits or losses and the financial position of the business. Every businessman wants to know the profits of his business for a certain period. In order to ascertain the profits and loss of the business, he has to remember all the transactions of his business for a defined period of time. The system which is derived to record all the business transactions is known as book-keeping. According to R.N.Carter, "Book-keeping is the science and art of correctly recording in the books of accounts of all those business transactions that result in the transfer of money or money's worth".

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

The language of a business is ________.

  1. accounting

  2. book-keeping

  3. golden rule of debit and credit

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

A business itself can not depict anything until is has an accounting base. Any analysis is possible for the business only when it has proper accounting of the business. Hence accounting is always considered a back bone of any business. All interpretations are based on the accounting. 

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

______ is the summarizing phase of accounting system.

  1. Book keeping

  2. Ledger posting

  3. Balancing

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

Accounting is the systematic and comprehensive recording of financial transactions pertaining to a business, and it also refers to the process of summarizing, analyzing and reporting these transactions to oversight agencies and tax collection entities. 

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

Accounting in modern age is regarded as ___________.

  1. the art of recording, classifying and summarizing the business transactions in monetary units

  2. the languages of business

  3. the source of business information

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

Accounting is an art of recording, classifying and summarizing the monetary business transactions. Accounting provides detailed information to the respective stake holders. Interested stake holders are creditors, lenders, customers, present and potential investors. Accounting is a language of business. Financial Statements provides the necessary business information to the management and other stake holders. 

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

Accounting is "the are of recording, classifying and summarizing in  a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof". This definition is given by ______________.

  1. The Institute of Chartered Accountant of India (ICAI)

  2. The Institute of Chartered Accountant of England

  3. American Institute of Certified Public Accountants

  4. The Institute of Chartered Accountant of Pakistan
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The definition of accounting as the art of recording, classifying, and summarizing transactions in a significant manner is the classic definition provided by the American Institute of Certified Public Accountants (AICPA).

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

Accounting makes _____________________.

  1. Decision making for the management easy as financial results can be compared

  2. The records being put is a systematic pattern so that any point of time they can be used

  3. The financial information being stored in a meaningful way for taxation purpose

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

Accounting serves multiple purposes, including facilitating management decision-making, maintaining systematic records for future reference, and organizing information for taxation purposes. All these are valid functions of an accounting system.

Multiple choice elements of accounts ancient indian accounting meaning of accounting introduction to book-keeping and accounting book-keeping - ledger

_________ is an art of recording, classifying, summarising transactions and events which are of financial character in terms of money and interpreting the result thereof.

  1. Accountancy

  2. Accounting

  3. Book-Keeping

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

Accounting is defined by the American Institute of Certified Public Accountants(AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof."

Multiple choice book keeping and accountancy accounting procedures - rules of debit and credit modern approach of rules of accounts meaning and classification of accounts classification of accounts

Single entry system is known as incomplete system of recording accounting information.

  1. True

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

The single entry system is considered incomplete because it does not record both aspects (debit and credit) of every transaction, unlike the double entry system.