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 banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

When does a entry termed as a combined entry ___________.

  1. if two transactions of one company are involved

  2. if there is debit and credit both

  3. transactions are of the same nature and they take place on the same day.

  4. all the accounts are debited the very same day
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A combined entry (or compound entry) is used when multiple accounts are debited or credited for transactions of the same nature occurring on the same day.

Multiple choice book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

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

All the options are correct from accounting point of view.


If the journal entries are recorded on several pages then both the amount column of each page should be totaled. The balance should be written at the end of that page. Also, the same total is to be carried forward at the beginning of the next page.

Multiple choice book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

Statement I:
Receipts & Payment A / c starts with the opening balance of cash in hand and at bank.
Statement II :
Income & Expenditure A / c have no opening balance.
Select the correct answer from the options given below.

  1. Statement I is correct while statement II is incorrect.

  2. Both Statement I and II are incorrect.

  3. Statement II is correct while statement I is incorrect.

  4. Both Statement I and II are correct.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
  • Receipts and Payment A/c. is an account which record the payments done and receipts received in cash. It is similar to the cash account maintained in a business. The entries found in this account are opening balance of cash, to this the cash receipts are added and the cash payments are deducted and the remaining figure is the closing cash balance.
  • Income and Expenditure A/c. is nothing but another name for a Profit & Loss account. Income and Expenditure name is mostly used by non-business entities, but still all the principles are same as a Profit & Loss account. This account only records the expenses and income for a particular financial year and hence doesnt have any opening balance of any sorts.
Multiple choice elements of accounts ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Loose-Leaf Ledgers are also known as _____________.

  1. Impersonal Ledgers

  2. Personal Ledgers

  3. Perpetual Ledgers

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

Loose-leaf ledgers are designed to allow for the addition or removal of pages, which is why they are often referred to as perpetual ledgers.

Multiple choice elements of accounts ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

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 also credited with the individual total of the Sale or Return Day Book.

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

In a Sale or Return Ledger, individual customer accounts are debited for goods sent on sale or return, and the total is credited to the Sale or Return account to track the status of these goods.

Multiple choice elements of accounts 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 where all transactions are classified and summarized by account type, making it the central record for all financial data.

Multiple choice elements of accounts ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

_______ is the principal book of accounts where similar transactions relating to a particular person or property or revenue or expense are recorded. 

  1. Ledger

  2. Journal

  3. Purchases return books

  4. Sales book
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The ledger is the principal book of accounts because it contains all the accounts of a business, allowing for the classification of transactions by person, property, revenue, or expense.

Multiple choice elements of accounts ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Which ONE of the following, in a classified form, contains permanent records of all transactions?

  1. Cash Book

  2. Sales Day Book

  3. Journal

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

The ledger is the final book of entry where transactions from the journal are posted and classified into permanent accounts, providing a summarized record of all business activities.

Multiple choice elements of accounts 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
B Correct answer
Explanation

A ledger is an accounting book that facilitates the transfer of all journal entries in a chronological sequence to individual accounts. The process of recording journal entries into the ledger is called posting.

Multiple choice elements of accounts ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Process of recording transaction in ledger is known as ____________.

  1. Balancing

  2. Posting

  3. Journalizing

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

Posting is the accounting process of transferring information from the journal (or books of original entry) to the appropriate accounts in the ledger.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

A credit note is prepared for __________ the account of the counterpart.

  1. Debiting

  2. Crediting

  3. Nulifying

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

A credit note is prepared for crediting the account of the counter part. A credit note is prepared when less credit is given or extra debit is given. It is issued by the supplier when the goods are returned by the buyer. It gives additional credit or cancels the excess credit by issuing a debit note.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

A journal entry cannot be passed in a journal proper with the debit and credit note.

  1. True

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

False. A debit or credit note is used to rectify the extra short debit or credit is given. They have an advantage of not editing the books of original entry. A journal entries are passed with the help of journal voucher.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

On the basis of _______________,the buyer records Purchase Returns Book.

  1. Debit note

  2. Credit note

  3. Receipt

  4. Bank advice
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The purchaser or buyer would always issue a debit note to the vendor whenever he would return goods to the vendor. Hence, whenever there will be purchase returns the buyer would issue a debit note which will help to record the transactions for the same.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

It is not possible to pass journal entries using the debit and credit note which will help in correcting the books of accounts.

  1. True

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

False.  Debit and credit notes are issued to correct the issues of short debit or short credit given earlier. They give an advantage of not editing the books of original entry and still altering the accounts by either debiting or crediting the accounts so needed respectively. 

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers meaning, importance and components of voucher bank book and petty cash book source documents

Cash sales, accounts receivables and rental receipts all are known as _____________.

  1. cash receipts

  2. budget receipts

  3. goods manufactured

  4. total goods sold
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Cash sales, accounts receivables and rental receipts all are known as cash receipts. A cash receipt is a printed statement of the amount of cash received in a cash sale transaction.