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 book keeping and accountancy meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system

Which of the following is/are merit of double entry system?

  1. It keeps a complete record of business transactions.

  2. It provides a check on the arithmetical accuracy of accounts.

  3. The detailed profit and loss account can be prepared to show profit earned or loss suffered during any given period.

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

The double entry system is comprehensive; it ensures complete records, allows for arithmetical accuracy checks via a trial balance, and facilitates the preparation of detailed financial statements.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

In Double Entry System, if one account is debited the other account must be credited with equal amount.

  1. True

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

The fundamental principle of the double entry system is that every transaction has a dual effect, meaning for every debit, there must be an equal and corresponding credit.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

The job of recording transaction has been called as "Book-keeping"

  1. True

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

Book-keeping is defined as the process of recording, classifying, and summarizing financial transactions in a systematic manner.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Filing is an important aspect of ____________.

  1. record keeping

  2. book keeping

  3. house-keeping

  4. time keeping
Reveal answer Fill a bubble to check yourself
C Correct answer
Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Double entry system of book-keeping refers to a system where, _____________________.

  1. the number of accounts with a debit balance must agree with the number of accounts with the credit balance

  2. each transaction is recorded twice, once in journal and then in ledger

  3. equal debit and credit entries are made for each transaction

  4. each transaction is recorded in two set of account book
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Double Entry System of accounting is based on the dual aspect of accounting. It says that every transaction will have two effects in books of account.

For every debit , there will a credit of similar amount and vice versa. 

For example, Goods worth Rs. 1000 purchased for cash. There are 02 accounts which are affecting here i.e. cash is going out of Rs.1000 and Goods are coming for Rs.1000.

Hence, it is true that equal debit and credit entries are made for each transaction. 

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Double entry book keeping system is most scientific system of recording business transactions.

  1. True

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

"The specific technique which reflects the concept of duality is known as double entry book-keeping."-Lewis and Gillespie.

It is the most common system of bookkeeping whereby the two aspects of every transaction i.e., the receiving aspect (debit) and the giving aspect (credit) are recorded in the books of accounts. It is based on the 'dual aspect concept'.
This method of writing every transaction in two different accounts on opposite sides for equal value is known as the double entry system of book keeping. This is the most accurate, complete and scientific system of accounting. 

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Double Entry Principle means _____________________.

  1. having debit for every credit and similarly, credit for each debit

  2. writing all the entries twice in the book

  3. maintaining the double account for all business transactions

  4. writing two times the same entry
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Double entry means that every transaction will involve at least two accounts. For example, if your company borrows money from the bank, the company's asset Cash is increased and the company's liability Notes Payable is increased. ... Double entry also requires that one account be debited and the other account be credited.
Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

In double entry system of book-keeping every business transaction affects _____________.

  1. two accounts

  2. two sides of the same account

  3. the same account on two different dates

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

Because every business transaction affects at least two accounts, our accounting system is known as a double-entry system.  For example, when a company borrows $1,000 from a bank, the transaction will affect the company's Cash account and the company's Notes Payable account.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

The accounting system which records both the aspects i.e. debit and credit, of all the transactions is known as _____________.

  1. Double entry system

  2. Single entry system

  3. Double account system

  4. Inflation accounting system
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 Double-entry bookkeeping, in accounting, is a system of bookkeeping so named because every entry to an account requires a corresponding and opposite entry to a different account. The double-entry has two equal and corresponding sides known as debit and credit. The left-hand side is debit and right-hand side is credit.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

In double Entry system of Book-keeping every business transaction affects __________.

  1. Two accounts.

  2. Two sides of the same account.

  3. The same account on two different dates.

  4. All of these.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Because every business transaction affects at least two accounts, our accounting system is known as a double-entry system. 

For example, when a company borrows $1,000 from a bank, the transaction will affect the company's Cash account and the company's Notes Payable account.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

The system of recording transactions based on dual aspect concept is _____________.

  1. Double account system

  2. Double entry system

  3. Single entry system

  4. Incomplete system
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The system of recording transactions based on dual aspect is called as double entry system.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

The term "Double Entry System" implies that __________.

  1. It records two-fold effect of every transaction

  2. Every financial transaction is recorded twice

  3. Two accounts are maintained for each financial transaction

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

The double-entry system of accounting or bookkeeping means that for every business transaction, amounts must be recorded in a minimum of two accounts. The double-entry system also requires that for all transactions, the amounts entered as debits must be equal to the amounts entered as credits.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

State with reasons whether the following statement is true or false.
In double account, all business transactions are recorded as having dual aspect.

  1. True

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

The dual aspect concept indicates that each transaction made by a business needs to be recorded in two separate accounts.

Whenever a transaction occurs there is a two-sided effect, one is credit and the other is debit for a similar amount.

In double account, all business transactions are recorded as having dual aspect.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

In double entry system of book-keeping every business transaction affects ________________________.

  1. Two accounts with equal but opposite effect.

  2. Two sides of the same account.

  3. The same account on two different dates.

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

 The double entry system of bookkeeping is based on the fact that every transaction has two parts and that this will therefore affect two ledger accounts. Every transaction involves a debit entry in one account and a credit entry in another account.

Multiple choice commercial applications meaning and fundamentals of double entry book-keeping double entry system meaning, definition, and advantages of double entry book-keeping meaning, definition, need, objectives and limitations of double entry system introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

Which system of accounts recognizes the fact that every transaction has two aspects and records both aspects of each and every transaction?

  1. Single entry system

  2. Double entry system

  3. Double account system

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

On the other hand, the double entry system is based on scientific principles and is, therefore, used by most of the business houses. 

The system recognizes the fact that every transaction has two aspects and records both aspects of each and every transaction.