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 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

This is NOT the function of ledger.

  1. To classify all the items

  2. To put all the items at application accounts

  3. Both a & b

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

Classifying items and maintaining application accounts are both fundamental functions of the ledger. Therefore, none of the options provided are 'NOT' a function.

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

Ledger is a book of _________.

  1. original entry

  2. all cash transactions

  3. secondary entry

  4. all non-cash transactions
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A ledger is the principal book of accounts where transactions previously recorded in journals or subsidiary books are classified and summarized, making it a book of secondary 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

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 

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)

Provision for bad and doubtful debts appearing in the books at the time of dissolution of firm is transferred to :

  1. Capital accounts of the partners

  2. Debtors account

  3. Bad Debts account

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

Realisation account is prepared to find out the profit or loss on realisation of assets and payment of liabilities.To calculate the actual profit or loss it is necessary that all the assets should be transferred to realisation account at its gross figure. That's why provision is not shown as a deduction from debtors.It is transferred to credit side of realisation account like other liabilities.

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)

What journal entry is passed for realising assets to provide cash for payment of liabilities?

  1. Respective Asset A/c (Book value) Dr.Profit and loss A/c (profit) Dr. To Bank A/c (sale proceeds) To Profit and loss A/c (Loss)

  2. Profit and loss A/c (Loss) Dr. To Respective Asset A/c (Book value)

  3. Bank A/c (Sale proceeds) A/c To Profit and loss (Loss) A/c

  4. Realisation A/c Dr.
    To Assets A/c

    Cash/Bank A/c Dr. To Realisation A/c

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

Following entry is made for transfer of assets to realisation account
Realisation A/c Dr.   
         To Assets A/c 
(Being assets are sold)
Cash/Bank A/c Dr. 

     To Realisation A/c 
(Being cash received on realisation of assets)