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 accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

When fixed assets or stationeries are purchased on credit, the entries are passed in the _____________.

  1. General journal

  2. Purchase day book

  3. Purchase account

  4. Any of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Purchase Day Books are only for credit purchases of inventory. Credit purchases of fixed assets or stationery are recorded in the General Journal.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

Credit purchase of plant and machinery is recorded in which of the following specialized journals?

  1. General Journal

  2. Cash Journal

  3. Purchase Journal

  4. Purchase return Journal
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Specialized purchase journals are for inventory. Plant and machinery are fixed assets, so their credit purchase is recorded in the General Journal.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

A subsidiary book which is used to record all those business transactions which do not find any place in the purchase book, sales book, return books, cash book, bills receivable and payable book, etc. is called journal proper..

  1. True

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

Journal proper is book of original entry (simple journal) in which miscellaneous credit transactions which do not fit in any other books are recorded. It is also called miscellaneous journal. The form and procedure for maintaining this journal is the same that of simple journal.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

Main object of preparing a 'Journal' is to __________.

  1. ascertain the financial position of the business

  2. journalise the cash transactions

  3. make posting in the ledger

  4. record the business transactions first of all
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Main objectives of preparing journal: To make permanent and systematic record of all the financial transactions. 

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

Journal is book of _____________.

  1. Analytical record

  2. Chronological record

  3. Alphabetical record

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

A journal is known as the original book of entry and is also called the prime entry. All the accounting transactions are first recorded in journal in the order of the transactions taking place. Such order is called a chronological order.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

 A journal entry in which two or more account is debited or credited is referred as ________.

  1. Journal entry

  2. Multi entry

  3. Additional entry

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

A compound entry is a journal entry that involves more than two accounts, where either the debit or credit side (or both) has multiple entries.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

The other name of journal is ________.

  1. Ledger

  2. T account

  3. Day book

  4. Cash book
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The other name of Journal is Day Book. 

A journal is also named the book of original entry, from when transactions were written in a journal prior to manually posting them to the accounts in the general ledger or subsidiary ledger.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

Errors are corrected via the Journal because  ____________________.

  1. It saves entering them in the ledger

  2. It is much easier to do

  3. It provides a good record explaining the double entry records

  4. It saves the bookkeepers time
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Journal provides a narrative or explanation for each entry, making it the ideal place to document the correction of errors to maintain an audit trail.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

The reason for totaling at the end of the page of a journal is ______________.

  1. It makes whole system more convenient

  2. As the calculations are lengthy it is more comfortable

  3. It is a general practice

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

Totaling at the end of a page is standard practice to ensure accuracy, facilitate carry-forward to the next page, and maintain a running total of debits and credits.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

The following comments all relate to the recording process. Which of these statements is correct?

  1. The general journal is a chronological record of transactions.

  2. The general ledger is posted from transactions recorded in the general journal.

  3. The trial balance provides the primary source document for recording transactions into the general journal.

  4. Transposition is the transfer of information from the general journal to the general ledger.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The general journal is the book of original entry where transactions are recorded in chronological order. The general ledger is posted from the journal, not the other way around, and the trial balance is a summary report, not a source document.