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 business purchasing and stores definition and functions of purchasing and storage department product life cycle e-marketing

______ is the process of recording details of stock movements and balances in terms of financial value.

  1. Book-keeping

  2. Financial accounting

  3. Stores accounting

  4. Management accounting
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Stores accounting specifically deals with recording the financial value of stock movements and current inventory balances.

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 Principle is general law or rule followed in the preparation of financial statements.

  1. True

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

Accounting principles are the fundamental rules and guidelines that provide a framework for consistent financial reporting and preparation 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

In cash accounting system __________________________.

  1. Revenues of assets are shown only when cash is received irrespective of the period

  2. Revenues of assets are shown only of the cash received for the transactions of the financial year

  3. Revenues of assets are shown only of the cash received for the current year

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

The cash basis of accounting records transactions only when cash is actually received or paid, regardless of the accounting period to which they relate.

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 characteristic feature of dual aspect concept of accounting is?

  1. The total amount debited is always equal to total amount credited

  2. All the transactions are settled in cash

  3. Cost of the various asset is taken on the basis of actual amount spent on it

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

The dual aspect concept states that every financial transaction has two sides, meaning that for every debit entry, there must be a corresponding credit entry of equal value.

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 is correct?

  1. Accounting profit is the difference between cash receipts and cash paid in a period

  2. Accounting profit is the total of cash sales in the year less the expenses for the period

  3. Accounting profit is the difference between revenue income and expenses for the period

  4. Accounting profit is the difference between revenue income and cash payments for the period
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Accounting profit is defined as the difference between total revenue earned and the total expenses incurred during a specific accounting period.

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

Accounts which represent a certain person or group of persons are termed as ___________________.

  1. Artificial or legal persons account

  2. Natural persons personal account

  3. Representative personal accounts

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

Representative Personal Accounts are accounts which represent a certain person or group of people. Accounts relating to outstanding and prepaid items are called representative personal accounts. For example, prepaid insurance, outstanding rent, outstanding wages/salaries etc. Outstanding salaries is one such account.

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

A change in accounting policy is justified ______________________.

  1. To comply with accounting standard

  2. To ensure more appropriate presentation of the financial statement of the enterprise.

  3. To comply with law

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

Accounting policies can be changed if required by new accounting standards, by law, or to provide a more accurate and fair presentation of the financial position of the enterprise.

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

All of the following are limitations of Accounting Standards except ______________________.

  1. The choice between different alternative accounting treatments is difficult.

  2. There may be trend towards rigidity.

  3. Accounting Standards cannot override the statute.

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