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 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 is recorded in the purchases ledger?

  1. Cash paid to a creditor

  2. Cash purchases

  3. Cheque received from a debtor

  4. Purchase of fixed assets
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The purchases ledger tracks transactions with creditors. Cash paid to a creditor is a transaction that affects the creditor's account, so it is recorded in the purchases ledger.

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

Which of the following is not a book of prime entry?

  1. Cash book

  2. Returns Inwards Day Book

  3. The Petty Cash Book

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

Books of prime entry (or original entry) are where transactions are first recorded, such as the Journal or Day Books. The Ledger is a book of secondary entry where information is posted from the books of prime entry.

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.

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.