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 commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

An in-depth examination to detect a suspected fraud in an enterprise may be termed as ___________.

  1. Internal audit

  2. Management audit

  3. Financial audit

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

An investigation is a specialized, in-depth examination conducted to uncover specific facts, such as suspected fraud, which differs from a routine financial or management audit.

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Accounting principles are generally based on _________.

  1. Practicability

  2. Subjectivity

  3. Convenience in Recording

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

Certain accounting principle concepts and conventions are formulated which are not static and are adaptable to changes according to the changing need of the business. 

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Accounting principles are generally based upon _________________.

  1. Practicability

  2. Subjectivity

  3. Convenience in recording

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

Accounting principles can be defined as rule of conduct or action. These are the general laws used with the theory and practices of accounting. These are broad guidelines and adaptability of the same depends on the the internal characteristics of the firm. 

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Accounting principles are divided into two types. These are _________.

  1. Accounting Concepts

  2. Accounting Conventions

  3. Accounting Standards

  4. Accounting Concepts & Accounting Conventions
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounting principles can be defined as rule of conduct. These are general laws used with the theory and practices of accounting. These are the broad guidelines, and adaptability of the same depends on the nature of the firm or business.


These principles can be classified into two parts:
1) Accounting Concepts
2) Accounting Conventions

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Rules of action or conduct adopted by the accountants universally while recording accounting transaction _______________.

  1. Accounting convention

  2. Accounting concepts

  3. Accounting principles

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

Accounting is based on certain concepts and conventions which are called as generally accepted accounting principles. On the basis of these principles, whole accounting function is performed. These can be classified as:

Concepts:
1) Separate Entity Concept
2) Money measurement Concept
3) Periodicity Concept
4) Dual Aspect Concept
5) Going Concern Concept
6) Cost Concept
7) Realization Concept
8) Matching Concept
Conventions:
 1) Full Disclosure
2) Materiality
3) Consistency
4) Conservatism

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Custom and traditions which guide the accountant while preparing the accounting statements _______________.

  1. Accounting convention

  2. Accounting concepts

  3. Accounting principles

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

Accounting is based on certain concepts and conventions which are called as generally accepted accounting principles. On the basis of these principles, whole accounting function is performed. These can be classified as:

Concepts:
1) Separate Entity Concept
2) Money measurement Concept
3) Periodicity Concept
4) Dual Aspect Concept
5) Going Concern Concept
6) Cost Concept
7) Realization Concept
8) Matching Concept
Conventions:
 1) Full Disclosure
2) Materiality
3) Consistency
4) Conservatism

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Accounting principles are ________ which are adopted by the accountant universally while recording accounting transaction.

  1. Rules of action or conduct

  2. Which you can change as per accountant

  3. Which keep changing every year

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

Accounting principles may be defined as, "those rules of conduct or procedure which are adopted by the accountants universally, while recording the accounting transactions." 

The accounting principles can be classified into two categories: 
I. Accounting Conventions;
II. Accounting Concepts.

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Accounting principles are__________________.

  1. As definite as principles of physics and chemistry

  2. Unlike principles of physical sciences.

  3. Verifiable through observations and records

  4. Thoughts of accountant
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Accounting principles are the rules and guidelines that companies must follow at the time of preparation of financial reporting statement.

These principles followed by accountants universally.
Generally Accepted Accounting Principles (GAAP) refers to the rules or guidelines adopted for recording and reporting of business transactions, in order to bring uniformity in the preparation and the presentation of financial statements.

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Accounting principles represent_____________________________.

  1. A consensus at a particular time to the recording of accounting transactions.

  2. Inviolable laws fixed by the legal boards.

  3. Laws fixed by accounting experts.

  4. Laws fixed by the respective governments.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Accounting principles represent a consensus at a particular time to the recording of accounting transactions. Accounting principles are the rules and guidelines that companies must follow when reporting financial data. 

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Rules of conduct accepted universally to record business transactions are known as ___________.

  1. Accounting Principle

  2. Accounting Standards

  3. Accounting Concepts

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

In order to maintain uniformity and consistency in accounting records, certain rules or principles have been developed which are generally accepted by the accounting profession. These rules are called by different names such as principles, concepts, conventions, postulates, assumptions and modifying principles. The term 'principle' has been defined by AICPA as 'A general law or rule adopted or professed as a guide to action, a settled ground or basis of conduct or practice'. The word 'generally' means 'in a general manner', i.e. pertaining to many persons or cases or occasions. Thus, Generally Accepted Accounting principles (GAAP) refers to the rules or guidelines adopted for recording and reporting of business transactions, in order to bring uniformity in the preparation and the presentation of financial statements.

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

The general acceptance of an accounting principle usually depends on how well it meets the criteria of _________.

  1. Relevance

  2. Feasibility

  3. Objectivity

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

Accounting is based on certain principle which are collectively known as GAAP. 

While adopting any principle, objective must be defined, need to ensure that it has some relevance along with the feasibility.

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Accounting principles and policies are to be standardised to achieve __________.

  1. Transparency

  2. Consistency

  3. Comparability

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

Accounting principles and policies are to be standardised to achieve transparency, consistency and comparability. 

Transparency means, the extent to which the financial users of statement have access to the financial statements. 
Consistency is a quality that enables the comparison of financial statements from one accounting period to another by using the same accounting treatments for similar transactions. 

Comparability means financial statements that help in easy inter-firm and intra-firm comparison.

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Generally accepted accounting principles ___________.

  1. define accounting practice at a point in time

  2. are similar in nature to the principles of chemistry or physics

  3. are rarely changed

  4. are not affected by changes in the way business operates
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

GAAP (generally accepted accounting principles) is a collection of commonly-followed accounting rules and standards for financial reporting. The acronym is pronounced "gap." GAAP specifications include definitions of concepts and principles, as well as industry-specific rules.

These "principles" are not like the unchangeable laws of nature in chemistry or physics.
They encompass conventions ,rules,and procedures,necessary to define accepted accounting practice at a particular time.

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

It is essential to standardize the accounting principles and policies in order to ensure _____________.

  1. Transparency

  2. Consistency

  3. Comparability

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

Standardizing accounting principles ensures that financial statements are transparent, consistent over time, and comparable between different entities. All these attributes are essential for reliable financial reporting.

Multiple choice commercial applications basic accounting principles and concepts meaning and purposes of accounting need and basic principles of accounting generally accepted accounting principles

Which of the following statements describes GAAP properly?

  1. Generally accepted accounting principles (GAAP) compries a set of rules, concepts and guidelines used in preparing financial accounting reports

  2. Generally accepted accounting principles (GAAP) incorporate the consensus at any time as to which economic resources and obligations should be recorded as assets and liabilities

  3. What information should be disclosed and how it should be disclosed, and which financial statements should be prepared

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

GAAP refers to the collection of rules, procedures, and guidelines that accountants must follow when preparing financial statements to ensure uniformity and reliability.