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 accounts sub-division of journal - 2 (subsidiary books) sales book or sales journal introduction, meaning, types and advantages of subsidiary books meaning and types of subsidiary books

Which is NOT a subsidiary book?

  1. Sales book

  2. Salary book

  3. Purchase book

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

Sales book, Purchase book, and Cash book are standard subsidiary books. A 'Salary book' is not a standard subsidiary book used for recording primary transactions in the same way.

Multiple choice elements of accounts sub-division of journal - 2 (subsidiary books) sales book or sales journal introduction, meaning, types and advantages of subsidiary books meaning and types of subsidiary books

Which of the following statements is/ are true?
    (i)  An error in casting the subsidiary books is an error of commission.
    (ii) An error in wrong casting of the sales day book will not affect the personal                    accounts of debtors.
     (iii) Mistake in transferring the balance of an accounts of debtors.
     (iv) The mistake of treating a liability as an income or vice versa will not affect the             agreement of a trial balance.

  1. Only (i) above

  2. Only (ii) above

  3. Both (i) & (ii) above

  4. (i), (ii) and (iv) above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All statements (i), (ii), and (iv) are correct. (i) is commission, (ii) is correct as casting error affects the total but not individual debtor accounts, and (iv) is correct as it doesn't affect the trial balance totals.

Multiple choice elements of accounts sub-division of journal - 2 (subsidiary books) sales book or sales journal introduction, meaning, types and advantages of subsidiary books meaning and types of subsidiary books

Under Sales or Return or approval basis when the transactions are moderate and the seller sends the goods on approval or return basis, the accounting treatment will be ________________.

  1. No Journal Entry

  2. Entry in Sales or Return Journal

  3. Entry in Sales or Return Day Book

  4. Sundry Debtors A/c Dr

    To Sales A/c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When transactions are moderate, businesses use a specific 'Sales or Return Journal' to track goods sent on approval until they are formally accepted or returned.

Multiple choice elements of accounts sub-division of journal - 2 (subsidiary books) sales book or sales journal introduction, meaning, types and advantages of subsidiary books meaning and types of subsidiary books

If two or more transactions of same nature are journalized together it is known as ________________.

  1. Compound journal entry

  2. Separate journal entry

  3. Posting

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

If two or more transactions of the same nature occur on the same day and either debit account and/or credit account are common in them, then instead of passing a separate entry for each such transaction, one combined entry may be passed. Such type of entry is known as compound journal entry.

Multiple choice elements of accounts sub-division of journal - 2 (subsidiary books) sales book or sales journal introduction, meaning, types and advantages of subsidiary books meaning and types of subsidiary books

In the Sale or Return Ledger _______________________.

  1. All the customers are individually debited and the sale or return account is credited with the periodical total of the Sale or Return Day Book.

  2. all the customers are debited in total and the sale or return account is credited with the periodical total of the Sale or Return Day Book.

  3. all the customers are individually debited and the sale or return account is credited with the individual total of the Sale or Return Day Book.

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

In terms of goods sent numerously, goods returned by the customer within the specified time limit are first recorded in the Sale or Return Day Book. After this, the customer’s accounts are individually credited in the Sale or Return Ledger while the Sale or Return A/c is debited with the total of the Sale or Return Day Book.


Multiple choice elements of accounts sub-division of journal - 2 (subsidiary books) sales book or sales journal introduction, meaning, types and advantages of subsidiary books meaning and types of subsidiary books

Proprietor's account is ___ account.

  1. Real

  2. Nominal

  3. Personal

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

The proprietor represents a person or a group of persons (the owner). In accounting, accounts related to persons are classified as personal accounts.

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Which of the following is considered a capital receipt?

1. Loan recoveries

2. Provident funds deposits

3. Grants

  1. 1 and 2 only

  2. 1 and 3 only

  3. 2 and 3 only

  4. 1, 2 and 3
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Capital receipts: This is the income flow from one of the following sources. Cash from the sale of fixed assets, Cash from the sale of shares in the business, Cash from the issuance of a debt instrument which includes loans and bonds and also grants. Among the given options, provident fund deposits are not included under capital receipts.

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Capital receipt is shown in the balanced sheet on _______.

  1. asset side

  2. debit side

  3. liability side

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

A balance sheet is a statement of the assets, liabilities, and capital of a business or other organization at a particular time, which details the balance of income and expenditure over the preceding period. On a balance sheet capital receipt is shown on the liability side. 

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Money spent by a student on buying an application form adds to ______.

  1. tax revenue

  2. non-tax revenue

  3. profit

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

Money spent by a student on buying an application form adds to non-tax revenue. Non Tax Revenue Receipts are those revenue receipts which are not generated by taxing the public.

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

Capital receipts are credited to _______.

  1. respective account of capital nature

  2. trading and profit and loss account

  3. both a and b

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

Capital receipt includes cash from the sale of fixed assets (either tangible or intangible), cash from the sale of shares in the business, cash from the issuance of a debt instrument. The receipts are directly credited to the respective account which is capital in nature.

Multiple choice social science government budget and taxation indian taxation system taxation : need, principles and importance tax and its importance

In the statement of financial position we record.

1. Capital receipts

2. Revenue expenditure

3. Deferred revenue expenditure

Which of the above statement is true?

  1. Only 1

  2. 1 and 2

  3. 1 and 3

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

Capital receipts and deferred revenue expenditure are recorded in the statement of financial position.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

 Bank statement must tally with the balance of ___________.

  1. Sales book

  2. Purchase book

  3. Cash book

  4. Journal proper
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The cash book serves the purpose of both the cash account and the bank account and shows he balance at the end of the period. Once the cash book is balance, the details with the records of the firm's bank transactions as recorded  by the bank are checked. 

A bank statement or a bank passbook is a copy of a bank account as shown by the bank records. It enables the bank customers to check their funds in the bank regularly and update their own records of transactions that have occurred. The amount of balance shown in the passbook or the bank statement must tally with the balance as shown in the cash book.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

A Bank Reconciliation Statement is prepared by _________.

  1. creditors

  2. debtors

  3. business

  4. any of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A bank reconciliation statement is generally prepared by the company accountant or book keeper to reconcile the closing balance of cash book (bank column) in own records  as per the bank's records (pass book). Thus, it is prepared by the account holders or customers i.e business and not the bankers. It is normally prepared at the end of the month.

Multiple choice elements of book keeping and accountancy bank reconciliation statement understand the concept of bank reconciliation statemen bank balance, bank overdraft, meaning, and bank reconciliation statement accounting records

A bank reconciliation statement can be prepared by ___________.

  1. Partnership firm

  2. Sole proprietary concern

  3. Companies

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

Bank Reconciliation is a business exercise and not a compulsion by any act or rule. This reconciliation helps in knowing where is the business money going and how much is  in form of liquid cash and lying in the bank. If the balances does not tally there are possibilities of fraud or error.

Hence, be it Partnership firm, sole traders or corporate, they need to know the status of their money and bank reconciliation helps in determining it.

Multiple choice accountancy accounting software - tally concept of entity and relationship designing and creating simple tables, forms, and queries objective in dbms

The report design prepared is saved as __________ by design.

  1. balance sheet

  2. profit and loss

  3. trial balance

  4. both a and b
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In specific database accounting tutorials or models, the report design for a trial balance is often saved under that specific name to distinguish it from other financial reports.