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 accountancy provisions and reserves reserves provisions provision and reserves

Provision for income tax is shown in bank's Balance Sheet as _______.

  1. Contingent liability

  2. Contingent asset

  3. Borrowings

  4. Other liabilities and provisions
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The provision for income taxes on an income statement is the amount of income taxes a company estimates it will pay in a given year.In the Balance sheet of bank it shown under the head other Liabilities and Provission.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

_________ is made to know liability or expense pertaining to current accounting period.

  1. Provision

  2. Reserve

  3. Appropriation

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

The term provision refers to any of the following amounts :

1. The amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets; or
2. The amount retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy.

Provision is created to cover a loss in the value of assets, or a loss or expenses, the amount of which cannot be determined with substantial accuracy.

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 Payments Account is summary of all capital receipts and payments.

  1. True

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

False. Receipts and payment account records the receipts and payments of all nature. Receipts and payments account records all the cash transactions of the business. It is basically a summary of cash transactions all incomes are recorded on the credit side and expenses are shown on the debit 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

Receipts and Payment Account does not differ between capital and revenue receipts.

  1. True

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

True. Receipts and payments Account does not differ between capital and revenues receipts. Receipts and payment account records the receipts and payments of all nature. It records all the cash transactions of the business and is basically a summary of cash transactions. All incomes are recorded on the credit side and expenses are shown on the debit 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

State True or False:
Receipt and Payment Account records the receipts and payments of revenue nature only.

  1. True

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

This statement is false. A receipt and payment account is a summarized cash book. It records all cash transactions whether it is revenue nature or capital nature. The Receipt and Payment account has debit side to record all receipts and credit side to record all payments made by not for profit organisation during a year. It records all the receipts and payments during a year whether related to current year, previous year or next 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

Receipt and payment Account is equivalent to profit and loss account. 

  1. True

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

False. Receipts and payments accounts is equivalent to cash account. Receipts and payment account records the receipts and payments of all nature. It records all the cash transactions of the business. It is basically a summary of cash transactions all incomes are recorded on the credit side and expenses are shown on the debit 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

The Receipt and Payment account starts with the opening balance of ______ and _____.

  1. cash, bank

  2. bank, bills receivable

  3. bills receivable, bills payable

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

Receipt and Payment is a summarized statement of all cash transactions during an accounting year. Only cash transactions are recorded in Receipt and Payment accounts. 

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 the Receipt and Payment account both capital and revenue transactions are recorded, whereas in Income and Expenditure account ________ transactions are recorded.

  1. Capital

  2. Deferred

  3. Revenue

  4. Cash
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. The account through which surplus or deficit of a non-profit-seeking concern is ascertained is called Income and 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 are not considered in Receipt & Payment A / c but are considered Income & Expenditure A / c?

  1. Outstanding and prepaid

  2. Capital & revenue

  3. Both (A) and (B)

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

The item to be mentioned in income & expenditure account is outstanding or prepaid expenses. But it is not recorded in receipt & payments account because such type of entries are of revenue nature and revenue nature entries cannot be recorded in receipt & 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

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.