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 commercial studies cash book and bank related transactions objectives and importance of bank reconciliation statement meaning of petty cash book bank balance, bank overdraft, meaning, and bank reconciliation statement

Bank reconciliation statement is prepared by _________.

  1. accountant of the business

  2. manager of the business

  3. controller of the bank

  4. accountant of the bank
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A bank reconciliation statement is prepared to reconcile the balnaces as per cash book (bank column) with the balances as per pass book (bank statement). 

It is done by the accountant of the business as it is the business which needs to find the causes of differences between the two balances in order to present a true and fair view of it's financial statements and books of accounts to it's various stakeholders.

Multiple choice commercial studies cash book and bank related transactions objectives and importance of bank reconciliation statement meaning of petty cash book bank balance, bank overdraft, meaning, and bank reconciliation statement

Bank reconciliation statement is prepared on________________.

  1. yearly basis from Jan to December

  2. certain period basis

  3. as on particular date

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

Bank reconciliation statement is a statement prepared by the business to reconcile the differences between the balances as per cash book and pass book on periodic basis. Generally it is done on monthly basis when the business receives the bank statement. It may also be prepared on yearly basis from January to December or some other certain period basis.

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

A true and usual method of paying dividend is _______.

  1. stock dividend

  2. cash dividend

  3. profit dividend

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

Cash dividends are the most standard and common form of dividend payment, where the company distributes a portion of its earnings directly to shareholders in the form of cash.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

Noting charges are considered as expense by the party, who makes the payment.

  1. True

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

When a Bill of Exchange (BOE) is dishonoured, then in order to prove this fact, the drawer (or the bill holder) may get it noted and protested through a public official known as 'Notary Public' for which it charges its fees which is called Noting Charges.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

Which of the following statements is true?

  1. Noting charge is an expense to be borne by drawer

  2. Noting charge is an expense to be borne by drawee

  3. Noting charge is an expense to be borne by payee

  4. Noting charge is an expense to be borne by bank.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Noting charges are incurred due to the drawee's failure to pay the bill on the due date; therefore, the drawee is ultimately responsible for this expense.

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.