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 ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Bills Payable book is to keep a record of ____________.

  1. Bills Payable to Creditors

  2. Bills Received From Supplier

  3. Credit Purchases

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

There are various subsidiary journals maintained to record various transactions. This includes sales day book, purchase day book, bills receivable book, bills payable book etc. 

Bills payable book is a subsidiary book which is used to records all bills payable to creditors.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Bills Receivable book is to keep record of ___________.

  1. Bills Received From Customers

  2. Bills Received From Supplier

  3. Credit Purchases

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

There are various subsidiary books. Bills receivable book is also a subsidiary book which is used to records all bills received from customers.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

____________ is designed as a summary of all the bills accept by the firm for which payment has to be made on specified dates of maturity in future.

  1. Bill receivable book

  2. Bill Payable Book

  3. Cash Book

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

The Bills Payable Book is a subsidiary book used to record all bills accepted by the firm, which represent future payment obligations.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Consider the following statement, while preparing annual financial statements, the balance of bills receivable account can be treated as.
I. An accrued income
II. An item of assets
III. A "personal account" balance
Of these statement.

  1. II and III are correct

  2. I and III are correct

  3. I and II are correct

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


  • Accounts receivable represents revenue that has been both earned and billed but not yet received.
  • Accounts receivable is recorded as an asset on the balance sheet.
  • These B/R and B/P are not assets because they are not yet acquired as like Plant, building etc. 
  • They are yet to be encashed. Asset means which has been acquired and has some value. Hence, Bills Receivable and Bills Payable are Representative Personal A/cs.


Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

While preparing the Annual Financial Statement, the balance of Bills Receivable Account can be treated as a(n) 
1. Accrued Income
2. Item of Asset
3. Personal Account Balance
of these statements

  1. 2 and 3 are correct

  2. 1 and 3 are correct

  3. 1 and 2 are correct

  4. None is correct
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Bills Receivable represents a claim against a person (the drawee), making it a personal account. It is also an asset for the business as it represents a future cash inflow.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Bills receivable account is _____________.

  1. an expense account

  2. an assets account

  3. a liability account

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

A Bills Receivable is a written promise to receive money, which constitutes a current asset for the holder. Therefore, it is classified as an asset account.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Bills receivable account is a __________.

  1. nominal account

  2. personal account

  3. real account

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

While Bills Receivable is a personal account (representing the debtor), it is often categorized as a real account in some traditional accounting classifications because it represents a tangible legal document/asset.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Bills payable book is a ____________.

  1. subsidiary book

  2. principal book

  3. ledger

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

There are various subsidiary books which are used to record the specific transaction pertaining to the specific activity. 

Credit sales are recorded in sales book while bills payable are recorded in bills payable book which is a subsidiary book.

Multiple choice trend analysis tools for financial analysis analysis of financial statements financial statement analysis accountancy

Financial statement analysis helps to identify the areas where the managers have been efficient and the areas where they have been lacking behind.

  1. True

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

True. Financial statements helps to understand the financial position of the company. It helps to understand the deviation between the actual position and the position that the company had planned. By looking at the deviation the company can understand how efficiently the managers have worked. 

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

Where will you record interest on drawings in the final accounts of the firm ? 

  1. Debit side of Profit & Loss Appropriation Account

  2. Credit side of Profit & Loss Appropriation Account

  3. Credit side of Profit & Loss Account

  4. Debit side of Capital/ Current Account only
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Interest on drawings is an income for the firm, so it is credited to the Profit and Loss Appropriation Account.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

Which of the following does not appear in the Profit & Loss Appropriation Account? 

  1. Salary/Commission to a partner.

  2. Salary/Commission to a manager.

  3. Interest on capital of a partner.

  4. Interest on loan of a partner.

  5. (a) & (c).

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A Profit and loss Appropriation account is an account which is prepared after profit and loss account and is usually prepared by partnership firms for distribution/allocation of profit earned by the firm to partners. Salary/commission to manager is an item of Profit and loss account. Only items relating to partners will be entered in Profit and loss Appropriation like interest on capital, profit, interest on drawings, salary/commission to partners. 

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

Which of the following appear in the Profit & Loss Appropriation Account? 

  1. Salary/Commission to a partner.

  2. Salary/Commission to a manager.

  3. Interest on capital of a partner.

  4. Interest on loan of a partner.

  5. (a) & (c).

Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation
A AND C.
A Profit and loss Appropriation account is an account which is prepared after profit and loss account and is usually prepared by partnership firms for distribution/allocation of profit earned by the firm to partners. Only items relating to partners will be entered in Profit and loss Appropriation like interest on capital, profit, interest on drawings, salary/commission to partners. 
Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

When Profit & Loss Appropriation Account is prepared? 

  1. For Proprietorship.

  2. For Partnership firm.

  3. Both (a) and (b).

  4. None of the above.

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Profit and loss Appropriation account is prepared for partnership firm. It is an extension of profit and loss account. It is used for allocation and distribution of Net profit among partners, reserves and dividends. It Is usually prepared after preparing Profit and loss account. 

Multiple choice civics scope and significance of political science introduction to political science meaning and importance of political science study of political science

'Budget' is known as _________________.

  1. Annual financial statement

  2. Annual Budget

  3. Financial statement of the year

  4. It has no other name
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Article 112 of the Indian Constitution refers to the 'Annual Financial Statement' as the document commonly known as the Budget.