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 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.

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

The series, to find the total amount by which the accounts have been debited is used in database design for ________.

  1. Model-I

  2. Model-II

  3. Model-III

  4. Model-IV
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Model-I is a specific design convention in database accounting tutorials used to handle debits and credits by assigning signs to amounts.

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

The steps required in data processing cycle, when thought of in the context of accounting are _____________________.

  1. Data capturing, Source documents, Data storage, Generating and Input of data.

  2. Source documents, Input of data, Data storage, Manipulation of data and Output of data.

  3. Source documents, Data capturing, Collecting, Manipulation of data and Interpreting.

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

Data processing cycle, when thought of in the context of accounting, requires a series of steps that are source documents, input of data, data storage, manipulation of data and output of data.

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

Accounting transactions of an organisation are documented using a _________.

  1. Bill

  2. Invoice

  3. Voucher

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

The first step to capture accounting data from transaction(s) so as to prepare a document, is called voucher that expresses and document an accounting transaction.

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

The _________ are used for storing accounting data.

  1. Data storage

  2. Databases

  3. Computers

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

Both computerised and computer-based AIS require a definite data structure for storing the accounting data. The databases are used for storing accounting data.

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

A positive net amount implies a _________ and _________ amount implies a credit.

  1. debit, positive

  2. debit, credit

  3. debit, negative

  4. credit, positive
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In accounting database models, positive values are typically assigned to debits, while negative values are assigned to credits to allow for simple summation.

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

__________ report design appears on the RHS of Database Window as object under reports.

  1. Balance sheet

  2. Trial balance

  3. Profit and loss

  4. Both a and c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the context of the specific database accounting model being referenced, the trial balance report is the object saved and displayed under the reports list.