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 elements of accounts overview of computerised accounting system accounting software concepts and types of computerized accounting system types of accounting software

A simple computerised accounting system accepts the complete transaction data as output.

  1. True

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

A simple computerised accounting system accepts the complete transaction data as input; stores such data in computer storage media (say hard disk) and retrieves the accounting data for processing as and when required for generating an accounting report, as output. 

Multiple choice elements of accounts overview of computerised accounting system accounting software concepts and types of computerized accounting system types of accounting software

Accounting information system identifies, collects, processes, and communicates economic information about an entity to a wide variety of users. 

  1. True

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

Accounting Information System (AIS) identifies, collects, processes, and communicates economic information about an entity to a wide variety of users. Such information is organised in a manner that correct decisions can be based on it. 

Multiple choice elements of accounts overview of computerised accounting system accounting software concepts and types of computerized accounting system types of accounting software

The scope of financial accounting is confined to _______ transactions only

  1. internal

  2. external

  3. inter-departmental

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

A transaction could be internal or external. When a department requisitions material supplies from store, an internal transactions is said to have occurred. However, when the purchase department purchases materials from a supplier, an external transaction take place. The scope of financial accounting is confined to external transactions only.

Multiple choice elements of accounts overview of computerised accounting system accounting software concepts and types of computerized accounting system types of accounting software

Every accounting system is essentially a part of the _________.

  1. Accounting Internal System (AIS)

  2. Accounting Information System (AIS)

  3. Accounting Informal System (AIS)

  4. Accounting Interactive System (AIS)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Accounting Information System (AIS) identifies, collects, processes, and communicates economic information about an entity to a wide variety of users. Every accounting system is essentially a part of the Accounting Information System (AIS) which in turn is a part of the broader system, viz. the organisation's Management Information System.

Multiple choice elements of accounts overview of computerised accounting system accounting software concepts and types of computerized accounting system types of accounting software

The accounting information system (AIS) receives and provides information to the various sub-systems of the institutional/integrated MIS.

  1. True

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

The accounting information system (AIS) receives and provides information to the various sub-systems of the institutional/integrated MIS. Accounting information system (AIS) is a collection of resources, designed to transform financial and other data into information.

Multiple choice elements of accounts overview of computerised accounting system accounting software concepts and types of computerized accounting system types of accounting software

Under ____________, processed actions which culminate into financial transaction data  describe the withdrawal of money by a particular customer.

  1. data entry

  2. storage

  3. information

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

Storage involves keeping transaction data securely. In the context of an ATM, the record of the withdrawal is stored in the database for future reference and reporting.

Multiple choice elements of accounts overview of computerised accounting system accounting software concepts and types of computerized accounting system types of accounting software

'Exporting/Importing data facility' is one of the factors affecting the selection of accounting software.

  1. True

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

The ability to import and export data is a critical feature for accounting software, as it allows for integration with other systems and data portability.

Multiple choice elements of accounts overview of computerised accounting system accounting software concepts and types of computerized accounting system types of accounting software

Which of the following factors affect the selection of accounting software?

  1. Flexibility

  2. Size of the organisation

  3. Expected level of secrecy (software and data)

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

When selecting accounting software, factors like flexibility, the size of the organization, and security/secrecy are all essential considerations to ensure the software meets business needs.

Multiple choice book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

Where the provision for depreciation account appears in Balance sheet?

  1. Liabilities side

  2. Asset side

  3. Trading account

  4. Profit & loss account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under provision for depreciation method of recording depreciation, Fixed asset is shown at its original cost on the asset side in balance sheet and depreciation till date is accumulated in provision for depreciatiion account which is shown on liabilities side in balance sheet.

Multiple choice book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

In plant account repair comes on ______side.

  1. Debit

  2. Credit

  3. Either Debit or Credit

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

None of the above. 

Repairs and maintenance are expenses a business incurs to restore an asset to a previous operating condition or to keep an asset in its current operating condition. Under generally accepted accounting principles – GAAP  you must record repairs and maintenance expenses in your records and report them on your financial statements in the period in which they were incurred. 

Journal entry to record repairs is :

Repairs A/c        Dr.

     To Cash/ Bank/ Creditors for expense A/c

Multiple choice book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

In plant account installation expenses comes on ______ side.

  1. Debit

  2. Credit

  3. Either debit or credit

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

The cost of installation must be added to the cost of assets itself. According to IFRS standard on PPE, the cost and incidental costs like installation cost to bring the asset into use must be measured and accounted for in order to determine the actual cost of any PPE. Hence you will debit Property, plant and equipment (PPE) and credit cash/ bank.

Remember the PPE must be debited under the correct asset category.

In this situation, the journal entry would be :

Plant A/c       Dr.

      To Bank A/c

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

Goods sold by other co-venturer is debited to which account ________________.

  1. Joint venture A/c

  2. Other co-venturer's personal A/c

  3. Joint bank A/c

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

In a joint venture, when one co-venturer sells goods, the transaction is recorded in the joint venture account, but the personal account of the other co-venturer is debited to track the liability or settlement between them.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

Goods given as charity should be credited to _______________.

  1. Purchases account

  2. Charity account

  3. Sales account

  4. Trading A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Purchases will be credited if goods are given as charity. When accounting for goods given as charity, purchases are reduced with the exact cost of goods contributed. The amount is reduced from purchases in the trading account. It is shown as an expense on the debit side of the income statement and the purchase account is credited.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

While making an adjusting entry in respect of closing stock, we debit ______________.

  1. Closing stock

  2. Trading account

  3. Purchases account

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

The closing stock is the unsold goods lying in the concern. Generally, the firm takes out a list of all stocks, remaining unsold along with their value. The stock is always valued at cost or market price whichever is lower. Generally, the closing stock will not appear in the Trial Balance and it lies in the adjustment. When it lies in the adjustment, adjustment entry has to be passed before the preparation of Final Accounts. The Entry will be

Closing stock A/c    Dr.        xx

        To Trading A/c                  xx