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

State True or False:
Receipts and payments account highlights total income and expenditure.

  1. True

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

Receipt and Payments account is a summary of all cash or bank receipts and payments over a certain period with a cash bank balance at the beginning as well as at the end of the period.

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

Which of the following statement is correct and which is incorrect ?
(I) In Receipt & Payment A/c all receipts and payments are shown irrespective of the year to which they pertain.
(II) The difference at Dr. side of Receipt & Payment A/c account is known as surplus or deficit and deducted from capital fund.
(III) Income & Expenditure A/c is always accompanied by balance sheet.
(IV) Going concern assumption is not relevant for accounting of non-profit organization.
Select the correct answer from the options given below.  

  1. (I) - correct, (II) - incorrect (IIl) - correct, (IV) - incorrect

  2. (I) - incorrect, (II) - correct (II) - incorrect, (IV) - correct

  3. (I) - incorrect, (II) - incorrect (II) - correct, (IV) - correct

  4. (I) - incorrect, (II) - incorrect (II) - correct, (IV) - incorrect
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
(I) Correct- In Receipts and payments account only cash transactions are taken in account whether or not they are related to this year.
(ii) Incorrect- The difference at the debit side of receipts and payments account is balance of cash at the end of the year, Receipts and payments account is just like a cash account. Hence, after taking into account all the transactions what is left is balance of cash at the end of the year. 
(iii) Correct- Income and  expenditure account is always accompanied by  balance sheet because it contains the balance that occur in the year end. Income and expenditure doesn't account for advances and outstanding payments.
(iv) Incorrect - Going concern means it is assumed that the business will go on forever. This accounting assumption is relevant for all companies without any exception.
Multiple choice business organisation and correspondence negotiable instruments 1 - cheque meaning and types of banks banking and bank transactions bills of exchange, promissory notes and hundis

Some of the transaction that is dependent on bank statement are __________.

  1. collection charges

  2. dividends received

  3. rent received

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

Bank statements often include transactions like collection charges, dividends received, and rent received that the account holder may not have recorded in their books until they see the statement.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

Which of the following is not correct ?

  1. A joint venture business has a definite life.

  2. No cancellation entry is required when a bill is renewed.

  3. The gain from side of capital assets need not be added to revenue to ascertain the net profit of a business.

  4. If the amount is posted in the wrong account or it is written on the wrong side of an account, it is called error of commission.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When a bill is renewed, the old bill is cancelled and a new one is drawn. Therefore, a cancellation entry is indeed required in the books of both parties.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

Accounting software is used to perform the function of ________.

  1. auditing

  2. accounting

  3. taxation

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

Accounting software is specifically designed to automate and manage the recording, processing, and reporting of accounting transactions.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

Accounting is concerned with recording of ____________ transactions and events.

  1. social

  2. legal

  3. financial

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

Accounting is defined as the process of identifying, measuring, and communicating financial information about an economic entity.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

Broadly, the components of Computerised Accounting System are :

  1. Computer Hardware

  2. Software

  3. Financial Data

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

A computerized accounting system requires hardware to run, software to process data, and the financial data itself to be effective.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

What is a computerized accounting system?

  1. It's a system that teaches accounting courses.

  2. It is a program that counts the currency that comes into a business.

  3. It's a computer that is dedicated to accounting entries.

  4. A software package that manages the financial activities and records of a business.
Reveal answer Fill a bubble to check yourself
B Correct answer
Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

Which of the following is not included in components of computerised accounting system?

  1. Computer Hardware

  2. Software

  3. Financial Data

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

All the listed options (computer hardware, software, and financial data) are components of a computerized accounting system. Since all options are included, the correct choice is None of the above meaning none of these are excluded from the components.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

The accounting software is so designed that a transaction, once entered, is automatically transported or transferred or posted to the ledger account.

  1. True

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

One of the primary benefits of computerized accounting software is the automation of posting transactions to the general ledger once they are entered in a journal or voucher.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

Which of the following is not the feature of Computerised Accounting System?

  1. Online Input and Storage of Accounting Data.

  2. Printout of Vouchers and Invoices.

  3. Recording of Bank Receipts.

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

All options listed (online input and storage, printout of vouchers and invoices, recording of bank receipts) are indeed features of computerized accounting systems. Since all are features, the correct answer is None of the above, meaning none of these are excluded as features.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

Which of the following is the feature of computerised accounting system?
a. Online input and storage of accounting data.
b. Printout of purchase and sales invoices.

  1. Only a

  2. Only b

  3. Both a and b

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

The computer accounting system is based on the concept of databases. Typically computerised accounting system offers the following features:
1) Online input and storage of accounting data.
2) Printout of purchase and sales invoices.
3) Logical scheme for codification of accounts and transactions. Every account and transaction is assigned a unique code.
4) Grouping of accounts is done from the very beginning.
5) Instant reports for management.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

Which of the following is true statement for computerised accounting system?
a. the computer accounting system is based on the concept of database.
b. Computer accounting system does not away with the concept of creating and maintaining journals, ledger etc.

  1. Only a

  2. Only b

  3. Both a and b

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

Accounting software is used to implement a computerised accounting system. The computer accounting system is based on the concept of databases. It does away with the concept of creating and maintaining journals, ledgers, etc.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

Which of the following is an example of "Instant reports for management" feature provided by computerised accounting system?

  1. Aging Statement

  2. Bank Reconciliation Statement

  3. Journal

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

The examples of feature "Instant reports for management" provided by computerised accounting system are as follows: Aging Statement, Trial Balance, Trading and Profit and Loss Account, Balance Sheet, Stock Valuation, Value Added Tax (VAT), Returns, Payroll Report, etc.

Multiple choice elements of accounts applications of computers in accounting introduction to computer and accounting information system meaning of computerised accounting system application of computerised accounting system

Accounting software is not used to implement a computerised accounting system. 

  1. True

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

Accounting software is used to implement a computerised accounting system. The computer accounting system is based on the concepts of database.