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 book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Donations received for a special purpose will be transferred to the ___________.

  1. Income and expenditure account

  2. Asset side of the balance sheet

  3. Liabilities side of the balance sheet

  4. Debit side of the ledger
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The amount of general donation is an income and we credit it to Income and Expenditure Account. 

Specific Donation: It means the donation should be used only for the library, i.e., it is a specific donation. 
Specific donations are capitalized and are shown on the liabilities side of the Balance Sheet.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Which of the following items should not be entered in receipts and payments account of a club?

  1. Sale of old newspaper

  2. Loss on sale of old furniture

  3. Subscriptions received in advance

  4. Expenses for previous year
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

"A receipt and payment account is a summarized cash book (cash and bank) for a given period". 

It prepared to list down all the receipts and payments. There is no outflow of cash due to loss on sale of old furniture, hence not to be recorded in receipts and payments account.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Any profit on the sale of furniture of a cricket club will be taken in the _________.

  1. income and expenditure account

  2. cash account

  3. profit and loss account

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

Any revenue generated out of the business will be taken in income and expenditure account. Furniture is an asset for the organization. If any assets is sold, profit or loss on sale should be recorded in income and expenditure account. Profit will be taken as income and loss will be taken as expenditure. 
Profit on sale of furniture is an income and it should taken as Income in the income & expenditure account. 

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Which of the following items should be entered in the receipts and payments account of a club?
I. Sale of old newspapers
II. Loss on sale of some asset
III. Payments for investment
Select the correct answer using the codes given.

  1. I, II and III

  2. I and III

  3. I and II

  4. II and III
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Receipts and payments account record all the cash transactions that take place in the current year whether related to this year or not. All the receipts and payments of current year are recorded in the account. 
I - Sale of old newspapers is an item that comes in receipts and payments account as cash is received when newspapers are sold.
II - Loss on sale of an asset is an item of nominal account. Income and expenditure is a nominal account and includes loss, expense, income, gains. loss on sale is a loss on the account of sale of an item which will come in income and expenditure account and not receipts and payments account.
III - Payments for investment is a capital expenditure, It is a cash expenditure hence will be shown in receipts and payments account. 
Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Income and Expenditure Account of non-profit organisation is a ________________.

  1. Real account

  2. Nominal Account

  3. Personal Account

  4. Representative Personal Account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Income and expenditure account of a non-profit organisation is a nominal account. Nominal account record all the revenues, losses, gain and expenses. An income and expenditure account is just like a profit and loss account. Nominal accounts have no balance at the end of the year.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Receipts and Payments Account is prepared by _________________.

  1. Manufacturing concerns

  2. Non-Trading concerns

  3. Trading concerns
  4. Companies registered under Companies Act. $1956$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Receipts and payments Account is prepared by Non-Trading concerns. It acts like a cash account for the Non-Trading Concerns and helps in the making of income and expenditure of account which will show the deficit and surplus of the concern.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Final accounts prepared for professionals is termed as __________ Account and not Income and Expenditure Account.

  1. Profit and loss

  2. Receipt and expenditure

  3. Profit and loss appropriation

  4. Capital Revenue
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Receipt and Expenditure is simply a summary of the cash transactions as in the cash book, analyzed and classified under suitable heading, including the opening and closing balances.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

The Receipt and Payment Account ending with the closing balance of _______ and _______.

  1. Bank, bond

  2. Cash, bank

  3. Cash, receivable

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

The Receipt and Payment account starts with opening balance of cash and bank and end with the closing balance of cash and bank. 

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

The receipt and payment account generally shows _________________.

  1. A surplus

  2. A credit balance

  3. A debit balance

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

A receipt and payment account generally shows a debit balance. To ascertain any missing item of receipt or payment, generally cash book summary is prepared.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

The receipt and payment account records both ______ and  _____ nature items.

  1. Capital, Revenue

  2. Revenue, Deferred

  3. Deferred, Capital

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

Receipt and Payment account is a summary of cash/bank transactions of NPO for specialized accounting period. This Statement records both capital and revenue nature items.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

In receipt and Payment account cash transactions are recorded where as in Income and expenditure account:

  1. Cash transactions are recorded.

  2. Non-cash transactions are recorded.

  3. Both (a) and (b) are correct.

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

Receipt and Payment account is a summarized statement of all cash transactions during an accounting year. Income and Expenditure account is the account through which surplus or deficit of a non-profit-seeking concern is ascertained.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

The Income and Expenditure account records:

  1. Income on the left hand side and expenditure on the right hand side of A/c.

  2. Income on the right hand side and expenditure on the left hand side of A/c.

  3. Income on any side of the account and expenditure on the other side of A/c.

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

Income and expenditure account records income on the right hand side and expenditure on the left hand side. An Income and expenditure account is just like Profit and Loss account  where expenses and losses are debited and income and gains are credit. 

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Receipt and Payment account is prepared on the ______ day of accounting year.

  1. middle

  2. satarting

  3. last

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

Receipt and Payment account is prepared on the last day of accounting year. This account records transaction related to cash in the accounting year.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Receipts are recorded on the _______ side while payments are entered on the ______ side.

  1. credit, debit

  2. debit, credit

  3. debit, debit

  4. credit, credit
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Receipt and Payment account is a summary of cash book where receipts are recorded on debit side and payments are recorded on credit side.

Multiple choice book keeping and accountancy accounting for not-for-profit organisation accounting record of non-trading organisations features of not-for-profit organisation meaning and characteristics of not-for-profit organisation

Debit balance of receipts and Payments account indicate:

  1. The loss incurred during the period.

  2. The excess of incomes over expenditure of the period.

  3. The total cash payments during the period.

  4. Cash in hand or bank balance on the date of the balance.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A receipts and payment account is just like a cash account hence it begins with opening balance and ends with closing balance of cash. Hence the debit balance of receipts and payments account just like cash account reflects closing balance of cash at the end of the year after taking into account all the payments and receipts.