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 sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Those transactions for which there is no separate book, are recorded in the __________.

  1. Cash book

  2. Bills receivable book

  3. Bills payable book

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

Transactions that do not fit into specialized books like the cash book, sales book, or purchase book are recorded in the Journal Proper.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Wages paid for repairing a machine should be debited to ___________.

  1. Repair account

  2. Machine account

  3. Cash account

  4. Furniture account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Amount paid as repairs of a machine is a capital expenditure and should have been debited to Machine A/c and not repair A/c.


Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Goods brought in by the proprietor as his capital contribution are recorded in _______.

  1. Purchases Book.

  2. Cash Book.

  3. Journal Proper.

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

When a proprietor brings assets or goods as capital, it is not a purchase or a cash transaction. Such entries are recorded in the Journal Proper.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Interest accrued for the month of March will be recorded in:

  1. Purchases Book.

  2. Sales Book.

  3. Cash Book.

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

Accrued interest is an adjusting entry. Adjusting entries that do not involve cash or routine credit sales/purchases are recorded in the Journal Proper.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Journal proper is issued to record __________.

  1. All purchases of goods

  2. All sales of goods

  3. All business expenses paid in cash

  4. All adjusting and rectification entries
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A book maintained to record transactions, which do not find place in special journals, is known as journal proper. In order to update ledger account on accrual basis such adjusting entries are made at the end of the accounting period. such as rent outstanding, prepaid insurance, depreciation and commission received in advance. To rectify errors in recording transactions in the books of original entry and their posting to ledger accounts this journal is used. 

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Journal proper maintained to record transactions which _______.

  1. Do not find place

  2. Have large amount

  3. Special in nature

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

Journal proper is a residuary book wherein all those transactions are recorded which cannot be recorded in any of the subsidiary books namely purchase book , purchase return book , sales book , sales return books , cash book. In other words all those transactions which do not find place anywhere are recorded in Journal proper.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Transaction in respect of consignment and joint venture are recorded in______.

  1. Cash book

  2. Purchase book

  3. Journal proper

  4. Sales book
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Consignment and joint venture transactions are specific business arrangements that do not have dedicated special journals. They are recorded in the Journal Proper.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Credit purchase of machinery is recorded in the ___________.

  1. Purchase book

  2. Cash book

  3. Journal proper

  4. Return outward book
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A book maintained to record transactions, which do not find place in special journals, is known as Journal Proper or Journal Residual.

Following transactions are recorded  in this journal:

1. Opening entry: In order to open a new set of books in the beginning of new accounting year and record therein opening balances of assets, liabilities and capital, the opening entry is made in the journal.

2. Adjustment Entries: In order to update ledger account on accrual basis, such entries are made at the end of the accounting period, such as Rent outstanding, Prepaid insurance, Depreciation and Commission received in advance.

3. Other entries: The following transactions is done in the journal proper:
(i) At the time of dishonor of a cheque the entry for cancellation for discount received or discount allowed
(ii) Purchase/sale of items on credit other than goods
(iii) Goods withdrawn by the owner for personal use
(iv) Goods distributed as samples for sales promotion
(v) Endorsement and dishonour of bills of exchange
(vi) Loss of goods by fire/theft/spoilage

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

An additional information provided below the Trial balance is known as ________.

  1. Information

  2. Adjustments

  3. Rectification

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

The additional information that is provided after the completion of the trial balance are known as adjustments. 

Sometimes, When financial statements are prepared, some items are either not recorded in the books. Hence, financial  statements do not depict the true and fair view of the financial position of the business. 
Thus, in order to get a clear financial picture, these adjustments are provided as additional information and entries passed for such transactions are called adjusting entries.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Ledger posting is not necessary for journal proper.

  1. True

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

A journal proper is the residual book that records all the transactions that cannot be recorded in any other subsidiary book. 

For example, if machinery is purchased on credit, it can neither be recorded in the cash book nor the purchase book. 
The reason is that the cash book only records cash transactions and the purchase book records only credit purchase of goods and not the purchase of assets. 
Therefore, purchase of machinery on credit will be recorded in the journal proper. Once the entry is recorded in the journal proper, it will be posted in the respective ledger accounts.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Purchases for office furniture on account is recorded in ___________.

  1. general journal

  2. cash book

  3. purchases book

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

Cash purchases are recorded in the Cash Book. Other purchases such as purchases of office equipment, furniture, building, are recorded in the journal proper if purchased on credit or in the cash book if purchased for cash.  On account is an accounting term that denotes the furniture or asset or service is purchased on credit.

Multiple choice book keeping and accountancy sub-division of journal - 2 (subsidiary books) introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Total of journal proper will be debited to __________.

  1. cash account

  2. customer's account

  3. supplier's account

  4. none of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Journal Proper does not have a single total that is posted to a specific account like the Sales or Purchase books. Each entry is posted individually to the respective ledger accounts.