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 elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

A journal is also known by_____.

  1. Account current

  2. Book of original entry

  3. Purchase day book

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

Every business transaction must first be recorded in journal. Hence all original entries are found in journal itself which is a subsidiary books.

 Subsidiary books of accounts are also called book of original entry as all the transactions are recorded originally or at the first instance in these books.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Which of these is/are subsidiary books?

  1. Sales day book

  2. Purchase day book

  3. Cash book

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

Subsidiary books are those books where the original entry of a transaction is recorded. Sales day book records credit sales , all credit purchases are recorded in purchase day book and all cash transactions are recorded in cash book. 

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Books of original entry is also known as _______.

  1. Invoice book

  2. Journal

  3. Debit/Credit note book

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

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Which of the following is not a book of original entry?

  1. The Journal

  2. The Ledger

  3. The Cash Book

  4. The Bill Receivable Book
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Insurance unexpired account is a __________.

  1. Real account

  2. Personal account

  3. Nominal account

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

Unexpired insurance is an another term which is used for prepaid insurance. Prepaid insurance is deducted from the insurance premium expenses account in profit & loss account and shown in balance sheet as current assets.  These accounts are not in the name of a specific person but are represented as personal account.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

L.F. (i.e., Ledger Folio) column in the journal is filled at the time of _________.

  1. journalising

  2. balancing

  3. posting

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

 Ledger Folio , abbreviated as L.F., is a column in the journal where in the page number of the ledger book on which the relevant account appears is recorded. In the journal, this column is filled up at the time of posting and not at the time of making journal entry.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

_____ is a book of account; in which all types of accounts relating to assets, liabilities, capital, expenses and revenues are maintained.

  1. Ledger

  2. Journal

  3. Primary entry book

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

A ledger is the principal book of account in double-entry bookkeeping where all types of accounts related to assets, liabilities, capital, expenses, and revenues are maintained in classified form. The journal is merely a book of original entry where transactions are recorded chronologically first.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

The total of the amount of the bills receivable book is posted to the ______ in the ledger.

  1. Dr. of bills payable account

  2. Cr. of bills payable account

  3. Dr. of bills receivable account

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

The total of the bills receivable book represents the total value of bills received. This total is posted to the debit side of the Bills Receivable account in the ledger to increase the asset balance.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Cash account is ______________.

  1. Personal account

  2. Real account

  3. Nominal account

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

It's the real accounts that show the assets, liabilities and owner's equity in a company. 

Cash, accounts receivable, accounts payable, notes payable and owner's equity are all real accounts that are found on the balance sheet.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Journal is the book of _______ in which every transaction is recorded before being posted into the ledger.

  1. Primary entry

  2. Secondary entry

  3. Third entry

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

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

_______ is a book in which all the business transactions are originally recorded in chronological order and from which they are posted to the ledger accounts at any convenient time.

  1. Ledger

  2. Journal

  3. Purchases returns books

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

Journal is a book of accounts in which all day to day business transactions are recorded in a chronological order i.e. in the order of their occurence. 

Transactions when recorded in a Journal are known as entries.It is the book in which transactions are recorded for the first time.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Accounts relating to properties or assets are known as ______________.

  1. Real Accounts

  2. Personal Accounts

  3. Nominal Accounts

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

Accounts relating to properties or assets are known as "Real accounts". A separate account is maintained for each asset e.g. Cash, Machinery, Building, etc. Real accounts can be further classified into tangible and intangible.


1. Tangible real accounts: These accounts represent assets and properties which can be seen, touched, felt, measured, purchased and sold. For e.g. Machinery account, Cash account, Furniture account.


2. Intangible real account: These accounts represent assets and properties which cannot be seen, touched and felt but can be measured in terms of money. For e.g, Goodwill account, Patents account, etc.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Outstanding wages is a ______________.

  1. Real Account

  2. Personal Account

  3. Nominal Account

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

 Outstanding Salary A/c is a Representative Personal Account as it represents a group of people to whom some amount of salary is payable. 

Similarly other outstanding and prepaid expenses also fall under the category of representative personal accounts.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Provision for doubtful debts account, stock reserve account etc. are ________________.

  1. Valuation (Personal) accounts

  2. Artificial or legal persons personal account

  3. Tangible real accounts

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

Provisions and reserves are created against specific assets or liabilities. In accounting classification, they are often treated as valuation accounts that reduce the book value of an asset, which is a form of personal or representative personal account logic.

Multiple choice elements of book keeping and accountancy nature of accounts and rules of debit and credit meaning, advantages and limitations of journals understand the classification of accounts introduction to books of prime entry

Which of the following account is the artificial person account?

  1. ICICI Bank A/c

  2. Neelam A/c

  3. Wages A/c

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

 An Artificial person is an entity that is recognized by the law as a Legal Person i.e. an entity holding legal rights and duties distinct from the individuals whom comprise it.

For example: A registered company is a person in the sense that it can sue or be sued, as well hold property etc. in it’s own name.

A company is not however, an individual or natural person.