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

Ledger is the ____ of accounts where similar transactions relating to a particular person or property or revenue or expense are recorded.

  1. Principal book

  2. Primary entry book

  3. Third entry book

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

The ledger is the principal book of accounts because it provides the final classification of all transactions.

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 is book for _________________.

  1. Analytical record

  2. Chronological record

  3. Alphabetical record

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

The ledger provides an analytical record by grouping transactions into specific accounts, allowing for the analysis of individual items.

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 ledger is made _____________.

  1. to classify all items appearing in Journal

  2. to record the transaction

  3. Both (a) and (b)

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

Ledger sorts out all the entries in journal under appropriate accounts for example all transactions related to cash are put in one 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

Posting is ___________________.

  1. The process of displaying results in balance sheet

  2. The process of displaying results in profit and loss account

  3. The process of recording the transactions in journal

  4. The process of recording the transactions in ledger
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Posting is the process of transferring entries from the journal (book of original entry) to the respective accounts in 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

Pick out the wrong one from the following statements.

  1. In ledger account debit is one left hand side and credit on right hand side.

  2. Ledger takes care of only real and nominal accounts of an enterprise.

  3. Name of the account in ledger is written in the top middle of the account.

  4. Ledger account is divided into two sides.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The ledger takes care of all types of accounts: personal, real, and nominal. The statement claiming it only takes care of real and nominal is incorrect.

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

What is uncommon in ledger?

  1. Name of the accounts used in journal are different from ledger

  2. Account which is credited in journal debited in ledger

  3. Both a & b

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

The account names are the same in both journal and ledger, and the debit/credit relationship is preserved (a credit in the journal is posted to the credit side of the ledger account). Thus, both A and B are false statements, making C the correct choice for 'what is uncommon'.

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 information that is not provided in the ledger is a _______________.

  1. Information regarding debtors

  2. Every information is provided with narration

  3. Information regarding creditors

  4. Information regarding purchases
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Ledgers do not contain narrations. Narrations are written in the journal to explain the nature of the transaction.

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

Function of the ledger is _____________.

  1. to calculate the total debit and credit of the company

  2. to prepare the summary of each account

  3. to record all the transactions in a period.

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

The ledger's primary function is to summarize all transactions related to a specific account, providing a clear view of that account's status.

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

If there is a debit balance in ledger accounts than ___________.

  1. debit side of an account exceeds the credit side

  2. credit side of an account exceeds the debit side

  3. total of the debit side is more

  4. both a & c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A debit balance occurs in an account when the total of the debit side is greater than the total of the credit side.

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

Cash book is a form of _____________.

  1. Trial balance

  2. Ledger

  3. Journal

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

A cash book is a specialized journal that records all cash receipts and payments. Because it serves the function of both a journal and a ledger (as it acts as the cash account), it is classified as a 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 is an account book in which ______________.

  1. only real accounts are opened

  2. only real and personal accounts are opened

  3. all the real, personal and nominal accounts are opened

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

Business transactions are first entered in Journal or Special Purpose Subsidiary Books. The next step is to transfer the entries to respective accounts in ledger. In other word, all entries recorded in journal or special purpose subsidiary books are classified and in order to ascertain the position of a particular account, all transactions relating to that particular account are collected at one place in the ledger. In short, a ledger is a book which contains all accounts of the business enterprise whether Real, Personal or Nominal. Ledger is called the "Principal Book'. It is also called the book of final entry because the transactions which are first entered in journal or subsidiary books are finally incorporated in the ledger.

Multiple choice book keeping and accountancy dissolution of firm accounting record at the time of dissolution procedure of settlement of accounts partnership account (dissolution of partnership)

When a firm is dissolved, Goodwill a/c is closed by transferring to:

  1. Capital account of the partners

  2. Revaluation account

  3. Realisation account

  4. Profit & loss account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

All the assets of the firm which can be converted into cash are transferred to Realisation Account. If goodwill is already appearing in the Balance Sheet, it is treated like any other asset, and is transferred to the Realisation Account at the value given in the Balance sheet. Following entry is passed for it:
Realisation A/c Dr. 
    To Goodwill A/c