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 book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

__________ does not help in assuming accuracy of balances of various accounts and preparation of the financial statements.

  1. Totals Method

  2. Balances Method

  3. Totals-cum-balances Method

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

In total method, total of each side in the ledger is ascertained separately and shown in the trial balance in the respective columns. However, this method is not widely used in practice, as it does not help in assuming accuracy of balances of various accounts and preparation  of financial statements.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

______ is time consuming and hardly serves any addition or special purpose.

  1. Total Method

  2. Balances Method

  3. Totals-cum-balances Method

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

Total-cum-balances Method is a combination of totals method and balances method.  Under this method four columns for amount are prepared. Two columns for writing the debit and credit totals of various accounts and two columns for writing the debit and credit balances of these accounts. This method is time consuming and hardly serves any additional or special purpose.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

_______ is the most widely used method in practice.

  1. Total Method

  2. Balance Method

  3. Totals-cum-balances Method

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

Under balances method trial balance is prepared by showing the balances of all ledger accounts and then totalling up the debit and credit columns of the trial balance to assure their correctness. Balances Method is the most widely used method in practice.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Where is the closing stock appearing in the Trial Balance is shown?

  1. On the Dr. side of Trading A/c.

  2. On the Cr. side of Trading A/c.

  3. On the Assets side of Balance Sheet.

  4. On the Cr. side of Trading A/c and on the assets side of Balance Sheet.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Closing stock is usually not shown in the trial balance and is shown as an adjustment below the trial balance. Hence. when its shown in the trial balance it will only appear in the balance sheet on the assets side and not in the trading account.  It is the stock left in business at the end of the year. 

It is basically the inventory the company has hands on at the end of the year or is unsold. It includes work-in-progress, raw materials, finished goods etc .

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

If 'Prepaid Wages' is given in Trail Balance, it is shown in _____________.

  1. Debit of Trading A/c

  2. Debit of Trading A/c and Assets

  3. Debit of P&L A/c

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

At the end of the financial year, adjustment entries are also need to be passed for various adjustments. These adjustments are like outstanding expenses, prepaid expenses etc. Once these adjustment entries are passed, a final trial balance is prepared. 

Prepaid expenses appearing in trial balance will be shown in asset side of the balance sheet. 

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

The post-closing trial balance will __________.

  1. contain only income statement accounts

  2. contain only balance sheet accounts

  3. contain both income statement and balance sheet accounts

  4. be prepared before closing entries are posted to the ledger
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The post-closing trial balance will contain only balance sheet accounts. A Post-closing trial balance is prepared after all the adjusting entries are passed. Basically, it contains all the balances of permanent account i.e., balance sheet. 

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Balance appearing on the debit side of the trial balance is _________.

  1. A loss

  2. A expense

  3. An asset

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

Debit balances in a trial balance represent assets, expenses, or losses. Since all three are listed, 'All of these' is the correct answer.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

The preparation of a trial balance is for________________.

  1. Locating errors of commiission

  2. Locating errors of principle

  3. Locating clerical errors

  4. All of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The trial balance is primarily designed to check the arithmetical accuracy of the ledger postings. It helps identify clerical errors, but it cannot detect errors of principle or omission.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Which of the following is the objective of trial balance?

  1. To ascertain the geometrical accuracy of the ledger accounts.

  2. To help in locating errors.

  3. To help in the preparation of the accounting report.

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

The trial balance is prepared to fulfill the following objectives:
1. To ascertained the arithmetical accuracy of the ledger accounts.
2. To help in locating errors.
3. To help in the preparation of the financial statements.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Which of the following is/are method for preparation of trial balance?

  1. Balances Method

  2. Totals Method

  3. Both (A) & (B)

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

Trial balance is normally prepared at the end of the financial year to check whether all entries are posted in the ledger. If trial balance agrees, it proves that books are arithmetically correct. Trial balance can be prepared by various methods:

1) Balance method in which only net balances of each account are carried to trial balance depend on the balance i.e. debit or credit.
2) Totals method in which the total of both the sides i.e. debit and credit are carried to the trial balance.  

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Which of this A/c appearing in trial balance is NOT transferred to income statement?

  1. Salary A/c

  2. Purchase A/c

  3. Accumulated Depreciation A/c

  4. Bad Debts A/c
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

There are two ways to record the depreciation in the books of account. 

1) Depreciation a/c is debited and the respective asset a/c will be credited. In such case, depreciation is recorded in the profit & loss a/c and assets are shown in the balance sheet on the net value i.e. gross value- depreciation. 

2) In the second method, assets are always kept in the books on their original value. Depreciation is routed through accumulated depreciation a/c. In such case, assets are shown in the balance sheet as Gross assets minus accumulated depreciation. 

Accumulated depreciation a/c is not to be transferred to income statement and to be shown in the balance sheet. 

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

In the trial balance the balance of the Provision for Depreciation Account is _______.

  1. Shown as a credit item

  2. Shown as a debit item

  3. Sometimes shown as a credit, sometimes as a debit

  4. Not shown, as it is part of depreciation
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

All the liabilities and provisions account are always having a credit balance. When the depreciation is provided in the books by creating a depreciation provision account, following entry will be passed:


Depreciation A/c                 Dr.
  To Provision for Depreciation A/c 

Provision for depreciation will be shown as credit item in the trial balance. 

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

What is UNCOMMON in trial balance?

  1. Balances of personal, real and nominal account are shown

  2. Closing stock appears in trial balance

  3. Statement of assets and liabilities

  4. Both b & c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

What is uncommon in the trial balance is closing stock appears in the trial balance and statement of assets and liabilities. The trial balance has balances of personal, nominal and real accounts. 

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

The closing entry for transfer of Salaries Paid A/c appearing in the Trial Balance will be _________________.

  1. debit Salaries A/c, Credit P&L A/c

  2. debit Salaries A/c, Credit Trading A/c

  3. debit Trading A/c, Credit Salaries A/c

  4. debit P&L A/c, Credit Salaries A/c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Before finalization of account, closing entries are required to be passed in the books of account by transferring all the nominal accounts i.e. account of expenses and incomes to the respective a/c.  At the end of the financial year, all nominal accounts will not be carried over to the next financial year. 


Following closing entry will be passed for transfer of salaries:
Profit & Loss A/c                           Dr.
       To Salaries A/c 

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Which of the following errors are revealed are by the trial balance?

  1. Errors in balancing account

  2. Errors of principle

  3. Errors of complete omission

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

Error in balancing an account is an error of commission. In such situation, trial balance will not be tallied. Hence these kind of errors can be revealed by the trial balance.