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 book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

It is a check on the accuracy of posting. If the trial balance agrees it proves that - 
1. The books are arithmetically accurate 
2. Both the aspects of the transactions have correctly recorded in the books of original entry as well as in the ledger. 
The correct answer is ___________________.

  1. $1$ but not $2$
  2. $2$ but not $1$
  3. Both $1$ & $2$
  4. Either $1$ or $2$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A trial balance only checks the arithmetic accuracy of the ledger balances. It does not guarantee that transactions were recorded in the correct accounts or that the original entries were conceptually correct.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Which of the following involves the preparation of reports and statements from the classified data (ledger) understandable and useful to management and other interested parties? 

  1. Classifying

  2. Recording

  3. Summarizing

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

Summarizing is the stage in the accounting cycle where ledger balances are used to prepare financial statements and reports for management. Recording is the initial entry, and classifying involves posting to the ledger.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Ledger book is popularly known as ____________.

  1. Secondary book of accounts

  2. Principal book of accounts

  3. Subsidiary book of accounts

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

The ledger is referred to as the principal book of accounts because it contains all the final accounts of a business, whereas the journal is the book of original entry.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

At the end of the accounting year all the nominal accounts of the ledger book are ______________________.

  1. Balanced but not transferred to profit and loss account .

  2. Not balanced and also the balance is not transferred to the profit and loss account.

  3. Balanced and the balance is transferred to the balance sheet.

  4. Not balanced and their balance is transferred to the profit and loss account.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Nominal accounts represent revenues and expenses. At the end of the year, these accounts are closed by transferring their balances to the profit and loss account to determine net income.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

The total of the amount of the bills payable book is posted to the _____ in the ledger.

  1. Dr. of bills payable account

  2. Cr. of bills payable account

  3. Cr. of bills receivable account

  4. Dr. of bills receivable account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Bills payable is a liability. The total of the bills payable book represents an increase in liabilities, which is recorded on the credit side of the bills payable account.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

At the end of the accounting year all the nominal accounts of the ledger book are _________________.

  1. Balanced but not transferred to profit and loss account

  2. Not balanced and also the balance is not transferred to the profit and loss account

  3. Balanced and the balance is transferred to the balance sheet

  4. Not balanced and their balance is transferred to the profit and loss account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is a duplicate of question 425066 with identical content and answer. Nominal accounts are not balanced at year-end. Their balances are transferred to the Trading and Profit and Loss Account to determine profit or loss.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Which of the following statements best explains the relationship between journal and ledger?

  1. First recording in journal and then positing to ledger completes the double entry of the transaction

  2. The journal is the book of original entry, where as the ledger is the book of second entry

  3. The journal is the book for analytical record and ledger is the book for chronological record

  4. The process of recording, in the journal is called journalising, the process of recording in the ledger is called posting
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Book of original entry refers to journal where all the business transactions are recorded first in chronological order whereas ledger is a book which records all journal entries in individual ledger account. 

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

A bound book of account is __________.

  1. Ledger

  2. Journal

  3. Subsidiary Book

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

The ledger is the principal book of accounting system. It contains different accounts where transactions relating to that account are recorded. A ledger is the collection of all the accounts, debited or credited, in the journal proper and various special journal.  

It is very useful and is of utmost importance in the organisation. 
The net result of all transactions in respect of a particular account om a given date can be ascertained only from the ledger.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

_________ is concerned with the classification process of Accounting.

  1. Ledger

  2. Preparation of profit and loss a/c

  3. Journalising

  4. Balancing of leger
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Once the business transactions are recorded in journal, this has to be posted in ledger. Posting of transaction in a ledger depends on the nature of transaction. Hence this is very much desired to have a proper classification of ledger. This may be classified in the form of personal ledger and impersonal ledger. 

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Main object of preparing a Ledger is ____________.

  1. to ascertain the debtors and creditors of the business

  2. to ascertain the financial position of the business

  3. to ascertain the profit or loss of the business

  4. to ascertain the collective effect of all transactions pertaining to a particular account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The primary purpose of a ledger is to organize transactions by account, allowing one to see the collective effect of all transactions related to a specific person, asset, or expense.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Ledger book is popularly known as _________.

  1. secondary book of accounts

  2. principal book of accounts

  3. subsidiary book of accounts

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

This is a duplicate of question 425065 with identical content but different capitalization. The ledger is called the Principal Book of Accounts because it contains all accounts in classified form and is the main reference for financial information.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

_________ is the principal book of accounts where similar transactions relating to a particular person or property or revenue or expense are recorded.

  1. Ledger

  2. Journal

  3. Purchases returns books

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

The ledger is the principal book of accounts where transactions from the journal are posted to specific accounts.