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 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.

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 are features of computerised accounting system?

  1. Online input and storage of accounting data.

  2. Printout of purchase and sales invoice.

  3. Grouping of accounts is done from the very beginning.

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

Computerized accounting systems automate data entry, storage, and reporting. They allow for efficient invoice generation and structured account grouping from the start, making all listed options correct.

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 equation does the chart of accounts tie-in with?

  1. Accounting equation

  2. Wave equation

  3. The origin of complex numbers

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

A chart of accounts (COA) is a financial organizational tool that provides a complete listing of every account in an accounting system. An account is a unique record for each type of asset, liability, equity, revenue and expense.

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

Name the five main categories that the ledger accounts are grouped under:

  1. Assets, credit cards, liabilities, money, contact cards

  2. Assets, production, bank register, purchases, sales

  3. Assets, liabilities, equity, income, expenses

  4. Assets, credit cards, purchases, money, bank register
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The fundamental accounting equation and the structure of the general ledger are based on five core categories: Assets, Liabilities, Equity, Income (Revenue), and Expenses.

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

In addition to the standard chart of accounts for a specific industry, you will likely want to expand and/or modify the chart of accounts to fit your business. One tool that would be helpful in determining the accounts for your company would be your company's ___________ chart.

  1. profit

  2. loss

  3. cash

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

An organization chart provides a clear view of the business structure, departments, and reporting lines, which helps in determining how accounts should be categorized to reflect the business's operational structure.

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

When scrap is sold ________ account is credited.

  1. Asset A/c

  2. Bank A/c

  3. Scrap A/c

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

Scrap value is the estimated cost that a fixed asset can be sold for after providing in for full depreciation.  When an asset is purchased, asset account is debited as assets have debit balance. So when scrap is sold, asset account is credited with the amount received on sale. 

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Give journal entries for:
Transfer of balance in asset account in case of loss.

  1. Profit and Loss A/c Dr.

    To Asset A/c

  2. Asset A/c Dr.

    To Profit and Loss A/c

  3. Bank A/c Dr.

    To Asset A/c

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

If the asset is disposed off, the profit or loss generated on account of sale has to be transferred to the respective asset a/c. If the sale proceed is more than the written down value of the asset, there will be profit and if the sale proceed is lower than the written down value, there will be loss on sale of asset. 


For example , WDV of the machine is Rs.5000 which is sold for Rs.4500. There is a loss of Rs.500 on sale of asset. Following entry will be passed in the books of account for loss:

Profit & Loss A/c                            Dr.   500
Bank A/c                                         Dr. 4500
       To Asset A/c                                                5000

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

___________ is designed to provide a complete and clear view of all the transactions involved in the sale of asset under one account head.

  1. Asset sale A/c

  2. Asset Clear A/c

  3. Asset Disposal A/c

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

Asset Disposal A/c.

Asset Disposal A/c is designed to provide a complete and clear view of all the transaction involved in gthe sale of asset unfer one acount head. The original cost of asset being sold is debited to the asset disposal account and accumulated depreciation amount appearing in provision for depreciation account relating to that asset till the date of disposal is credited to the asset disposal account. The net amount realised from the sale of the asset is also crerdited to this account. The balance of asset disposal account shows profit or loss which is transferred to profit and loss account. The advantage of this method is that it gives full picture of all the transactions related to asset disposal at one place.

Multiple choice elements of business sources of business finance - 1 classification & choice of sources of funds classification of sources of finance owned funds and borrowed funds

$\frac{Shareholder's funds}{total assets}\100$ is a ____________.

  1. liquidity ratio

  2. solvency ratio

  3. profitability ratio

  4. credibility ratio
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Share holder's funds = equity share capital + Pref. shares + reserves and surplus - losses
Share holder's fund = net worth = proprietary fund = equity
Equity share holder's fund = share holders fund - pref. shares.