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

Which of these are recorded in journal proper?

  1. Transfer entry

  2. Opening/Closing entry

  3. Rectifying entry

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

When the journal is sub-divided into various subsidiary books, such as sales book, Purchase book, etc.,the journal becomes the residuary book in which only those transactions are recorded that cannot be recorded in any subsidiary book. This type of journal is called Journal proper. The following types of entries are recorded in Journal proper:

1. Closing entry
2. Opening entry
3. Rectification entries
4. Transfer entries
5. Adjustment entries
6. Miscellaneous entries
Thus, cash discount received or allowed is 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

Closing entries are recorded in __________.

  1. cash book

  2. ledger

  3. journal proper

  4. balance sheet
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Journal is sub-divided into various subsidiary books  such as Sales book, Purchase book, Cash book etc., The journal becomes the residuary book in which only those transactions are recorded that cannot be recorded in any other subsidiary book. This type of journal is called Journal Proper. The following types of entries are recorded in journal proper:

a. Closing entries
b. Opening entries
c. Rectification entries
d. Adjustment entries
e. Transfer entries etc.

Multiple choice elements of accounts subsidiary books - 1 introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

Users of subsidiary books of accounts are ________.

  1. Financial Journalists.

  2. Risk Analysts.

  3. Cost Accountants.

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

Financial consultants often utilize subsidiary books to analyze the detailed transactional data of a business. These books provide the granular information necessary for professional financial assessment and reporting.

Multiple choice elements of accounts subsidiary books - 1 introduction, meaning, types and advantages of subsidiary books journal proper or general journal meaning and types of subsidiary books

The mistakes in the total of the subsidiary book will _____________.

  1. not affect the personal account of customers

  2. will affect the personal account of customers

  3. both a and b

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

A mistake in the total of a subsidiary book affects the ledger account (like the Sales Account) but does not impact the individual personal accounts of customers, as those are posted from the individual entries, not the total.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

In preparation of final accounts, preparation of manufacturing account is mandatory for all types of business organisation.

  1. True

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

Final accounts consist mainly of trading, profiit and loss account along with balance sheet. Manufacturing is generally prepared when the business is about manufacturing any product and it shows every information related to manufacturing.

Thus every is not related to manufacturing of products and hence, maufacturing account is not prepared by every firm. So, the statement is false.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Steps of preparing Final Accounts is -
(a) Trading Account 
(b) Profit and Loss Account
(c) Balance Sheet

  1. True

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

Final accounting is the last step of accountancy in any business. It involves three series of steps or three accounts, Trading account, Profit and Loss account and then Balance sheet. This order must remain same under any situation.

The order of preparing accounts must be same because first gross profit/loss has to be calculated and then only net profit/loss will be calculated and after that all assest and liablilities will be presented. Hence, the statement is true.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

While making an adjustment entry in respect of interest on capital, credit is made to _______________.

  1. Capital account

  2. Interest on capital account

  3. Profit & loss account

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

 Interest on Capital has the following two effects on final accounts: It is an expense of the business, therefore; it will be recorded on the debit side of Profit and Loss Account. On the other hand, it is an income of the owner, therefore; it will be added in the Capital Account in Balance Sheet.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Provision for Discount on Debtors is ___________ to Profit and loss account.

  1. Debited

  2. Credited

  3. Not recorded

  4. No entry
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
The double effect of Provision for Discount on Debtors is:
It is shown on the debit side of Profit and Loss Account. 
It is shown as deduction from Debtors in Balance Sheet.
Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Commission to manager is __________ to Profit and loss Account.

  1. Debited

  2. Credited

  3. Added

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

Manager's commission is an operating expense just as any other expense like salary, rent etc. Manager's commission paid is shown on the debit side of the profit and loss account as it is an expense for the company.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

While preparing final account, to record commissions payable to manager- which of the following adjustment entry will be passed?

Profit & Loss A/cTo Commission Payable A/c Dr.
Commission Payable A/cTo Profit & Loss A/c Dr.
Manager A/cTo Commission Payable A/c Dr.
Profit & Loss A/cTo Manager A/c Dr.

  1. A

  2. B

  3. C

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

The adjustment entry for manager's commission is to debit the Profit and Loss account (as it is an expense) and credit the Commission Payable account (as it is a liability).

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

When receipts of foreign exchange are more than payments of foreign exchange, BOP is ____________.

  1. Balanced

  2. Surplus

  3. Deficit

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

When receipts (inflows) exceed payments (outflows) of foreign exchange, the balance of payments is in a surplus state. A deficit occurs when payments exceed receipts.

Multiple choice business economics and quantitative methods balance of payments exchange rate balance of payments and exchange rate balance of trade and balance of payments

Foreign exchange transactions dependent on other foreign exchange transactions are called ________________.

  1. Current Account Transactions

  2. Capital Account Transactions

  3. Autonomous Transactions

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

Accommodating transactions are those undertaken to cover the deficit or surplus in the balance of payments, making them dependent on the autonomous transactions that created the imbalance.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

If debentures are issued as consideration for purchase of any fixed asset, the entry is _________________.

  1. Debit asset A/c; Credit vendor A/c

  2. Debit asset A/c; Credit bank A/c

  3. Debit asset A/c; Credit debenture A/c

  4. Debit debenture A/c; Credit asset A/c
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When a fixed asset is purchased using debentures, the asset account is debited to record the increase in assets, and the debenture account is credited to record the liability created.

Multiple choice elements of accounts accounts from incomplete records - single entry system stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs

Credit purchase, during the year is ascertained by preparing ________.

  1. Total creditor's account

  2. Total debtor's account

  3. Cash account

  4. Opening statement of affairs
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation


Creditor's account is prepared to record the transaction of payment made to the supplier against the credit purchases and discount allowed by them. Credit purchases are recorded by debiting the purchases account and crediting the creditors account. Creditors account can be presented as:


 Particulars  Amount  Particulars   Amount
 To Cash/Bank    By Opening Balance B/f  
 To Discount    By Credit Purchases  
 To Closing Balance c/d      
   xxxx    xxxx