Q1] Which accounting concept satisfy the valuation criteria
A] Going concern, Realisation, Cost
b) Going concern, Cost, Dual aspect
c) Cost, Dual aspect, Conservatism
d) Realisation, Conservatism, Going concerned.
Ans. A
Q2] A trader has made a sale of Rs.75,500 out of which cash sales amounted to
Rs.25,500. He showed trade receivables on 31-3- 2014 at Rs.25,500. Which concept is followed by him?
a) Going concern
b) Cost
c) Accrual
d) Money measurement
Ans. c
Q3] In which of the following cases, accounting estimates are needed?
a) Employs benefit schemes
b) Impairment of losses
c) Inventory obsolescence
d) All of the above
Ans.d
Q4] Deewali advance given to an employee is
a) Revenue Expenditure
b) Capital Expenditure
c) Deferred Revenue Expenditure
d) Not an Expenditure
ans.d
Q5] A firm has reported a profit of Rs.1,47,000 for the year ended 31-3-2014 after taking into consideration the following items.
(i)The cost of an asset Rs.23,000 has been taken as an expense
(ii)The firm anticipated a profit of Rs.12,000 on the sale of an old furniture
(iii)Salary of Rs.7,000 outstanding for the year has not been taken into account.
(iv)An asset of Rs.85,000 was purchased for Rs.75,000 and was recorded in the books at Rs.85,000.
What is the correct amount of profit to be reported in the books?
a) Rs.1,47,000
b) Rs. 1,51,000
c) Rs.1,63,000
d) Rs.1,41,000
ans.a
Q6] The process of recording financial data upto trial balance is
a) Book keeping
b) Classifying
c) Summarising
d) Analyzing
ans. a
Q7] Rohit carrying on real estate business sold a piece of land for Rs.4,00,00,000 (cost Rs.3,50,00,000) then the type of receipt is
nature and profit on sale is
a) Capital & transferred to capital reserve
b) Revenue & transferred to P & L a/c
c) Capital & transferred to P & L a/
d) Revenue & transferred to general reserve
ans.b
Q8]. Following are essential elements of a partnership firm except: (CPT; June 2012)
(A) At least two persons
(B) There is an agreement between all partners
(C) Equal share of profits and losses
(D) Partnership agreement is for some business.
Ans.c
Q9] Interpretation means
(a)Explanation of meaning and significance of the data in Financial Statements.
(b)Concerned with preparation and presentation of classified data
(c)Systematic analysis of recorded data
(d)Methodical classification of data given in Financial Statements.
Ans.a
Q10] A trader purchases goods for Rs. 2500000, of these 70% of goods were sold during the year. At the end of 31st December 2009, the market value of such goods were Rs. 500000. But the trader recorded in his books for Rs. 750000. Which of the following concept is violated.
(a)Money measurement
(b)Conservatism
(c)Consistency
(d)None of these
Ans.b
Q11] Which of the following is wrong?
(a)All real and personal accounts are transferred to balance sheet
(b)Nominal accounts are transferred to P & L account
(c)Each account is opened separately in ledger
(d)Rent is a personal account, outstanding rent is nominal account
Ans.d
Q 12] is root cause for financial accounting
(a)Stewardship accounting
(b)Social accounting
(c)Management accounting
(d)Human resource accounting
Ans.a
Q 13]If nothing is given in the financial statements about the three accounting assumptions then it is to be treated as it
a)Is assumed that it is not followed
b)Is assumed to be followed
c)Is assumed to be followed to some extent
d)None of the above
Ans.b
Q14] The proprietor of the business is treated as creditor for the capital introduced by him due to
concept.
a) Money measurement
b) Cost c) Entity
d) Dual aspect
ans.c
Q15] Fixed assets are held by business for
a) Converting into cash
b) Generating revenue
c) Resale
d) None of the above
ans.b Q16] Which accounting concept specifies the practice of crediting closing stock to the trading account?
a) Cost
b) Realisation
c) Going concern
d) Matching
ans.d
Q17] Amount spent to increasing the earning capacity is a expenditure
a) Capital
b) Revenue
c) Deferred revenue
d) Capital Loss
ans.a
Q18] Change in the capital A/c of proprietor may occur due to
a) Profit earned
b) Loss incurred
c) Capital Introduced
d) All of the above
ans. d
Q19] Consistency with reference to application of accounting procedures means
a)All companies in the same Industry should use identical accounting procedures
b)Income & assets have not been overstated
c)Accounting methods & procedures shall be followed uniform basis year after year
d)Any accounting method can be followed as per convenience
Ans.c
Q20] If one of the cars purchased by a car dealer is used for business purpose, instead of resale, then it should be recorded by
a) Dr Drawing A/c & Cr Purchases A/c
b) Dr Office Expenses A/c & Cr Motor Car A/c
c) Dr Motor Car A/c & Cr Purchases A/c
d) Dr Motor Car & Cr Sales A/c
ans. c
Q21] If wages are paid for construction of business premises A/c is credited and A/c is debited.
a) Wages, Cash
b) Premises, Cash
c) Cash, Wages
d) Cash, Premises
ans. d
Q22] Human resources will not appear in the balance sheet according to
a) Accrual
b) Going concern
c) Money measurement concept
d) None
ans. c
Q23] Provision for discount on debtors is calculated on the amount of debtors.
a)Before deducting provision for doubtful debts.
b)After deducting provision for doubtful debts.
c)Before deducting actual debts and provision for doubtful debts.
d)After adding actual bad and doubtful debts.
Ans.b
Q24] Which of the following is not a Real Account?
a) Cash A/c
b) Investments A/c
c) Out standing rent A/c
d) Purchases A/c
ans. c
Q25] Value of goods withdrawn by the proprietor for his personal use should be credited to
a) Capital A/c
b) Sales A/c
c) Drawings A/c
d) Purchases A/c
ans.d Q26] Which of the following is incorrect?
a) Good will intangible asset
b) Sundry debtors - current asset
c) Loose tools tangible fixed asset
d) Outstanding expenses -current asset.
Ans. d Q27] M/s Stationery Mart will debit the purchase of stationery to
a) Purchases A/c
b) General Expenses A/c
c) Stationery A/c
d) None
ans.a
Q28] Small items like, pencils, pens, files, etc. are written off within a year according to _ concept.
a) Materiality
b) consistency
c) Conservatism
d) Realisation
ans.a
Q29] Business enterprise is separate from its owner according to concept.
a) Money measurement concept
b) Matching concept
c) Entity concept
d) Dual aspect concept
ans.c
Q30] The policy of anticipate no profit and provide for all possible losses arise due to the concept of
a) Consistency
b) Disclosure
c) Conservatism
d) Matching
ans.c
Q31] According to which concept, the proprietor pays interest on drawings
a) Accrual concept
b) Conservatism concept
c) Entity concept
d) Dual Aspect concept
ans.c Q32] Cost concept basically recognises
a) Fair Market value
b) Historical cost
c) Realisable value
d) Replacement cost
ans.b
Q33] If the Market value of closing Inventory is less than its cost price, inventory will he shown at
a) Marketable value
b) Fair Market value
c) Both
d) none
ans. a
Q34] The Market price of good declined than the cost price. Then the concept that plays a key role is a) Materiality
b) Going concern concept
c) Realization
d) Consistency
ans.c
Q35] Fixed assets are double the current assets and half the capital. The current assets are Rs.3,00,000 and investments are Rs.4,00,000. Then the current liabilities recorded in balance sheet will be
a) 2,00,000
b) 1,00,000
c) 3,00,000
d) 4,00,000
ans.b
Q36] Which of the following provide frame work and accounting policies so that the financial statements of different enterprises become comparable.
a) Business Standards
b) Accounting Standards
c) Market Standards
d) None
ans.b
Q37] Which of the following factor is not considered while selecting accounting policies?
a) Prudence
b) Substance over form
c) Accountancy
d) Materiality
ans.c Q38] Debit the receiver & credit the giver is
account
a) Personal
b) Real c) Nominal
d) All the above
ans.a Q39] Cash a/c is a
a) Real a/c
b) Nominal
c) Personal
d) None
ans.a
Q40] As per accrual concept, which of the followings is not true
a) revenue – expenditure = profit
c) sales + gross profit = revenue
d) revenue = profit + expenditure
ans.c
b) revenue – profit = expenditure
Q41] Mr. X sold goods to Mr. Y ask Mr. X to keep the goods with him for some time
a) symbolic delivery
b) actual delivery
c) constructive delivery
d) none of these
ans.a
Q42] If nothing is written about the accounting assumption to be followed it is presumed that
a) They have been followed
b) They have not been followed
c) They are followed to some extent
d) none of these
ans.b
Q43]Capital A/c is a A/c.
a) Personal
b) Real c) Nominal
d) None
ans.a Q44] Cash A/c is a A/c.
a) Personal
b) Real c) Nominal
d) None
ans.b
Q45] The principle “Debit the receiver and credit the giver” is related to
a) Personal a/c
b) Real a/c
c) Nominal a/c
d) None
ans.a
Q46] As per the Matching concept, Revenue – ? = Profit
a) Expenses
b) Liabilities
c) Losses
d) Assets
ans.a
Q47] Sales – Gross Profit =
a) Cost of goods sold
b) Net sales
c) Gross Sales
d) Liabilities
ans.a Q48] Which of the following is a Real A/c?
a) Building A/c
b) Capital A/c
c) Shyam A/c
d) Rent A/c
ans.a
Q49] Valuation of stock in accounting follows the principle of cost price or which ever is lower.
a) Market Price
b) b) Average Price
c) c) Net realizable Value
d) d) None of these.
Ans.c
Q50] Which of the following is not a nominal Account?
A] Outstanding salaries Account
B] Salaries account
C] Interest paid
D] Commission received
Ans.a
Q51] Mr. X is a dealer in electronic goods (refrigerator, washing machine, air conditioners, televisions, etc.) He purchased two air conditioners and installed in his showroom. In the books of X the cost two air conditioners will be debited to
A] Drawing account
B] Capital Account
C] Fixed assets
D] Purchases account
Ans.c
Q52] A trader calculated his profit as Rs.150000 on 31/03/2014. It is an A] Transaction
B] Event
C] Transaction as well as event
D] Neither transaction nor event
Ans.b Q53] For every debit there will be an equal credit according to A] Matching concept
B] cost concept
C] Money measurement concept
D] Dual aspect concept
Ans.d
Q54] Historical cost concept requires the valuation of an asset at A] Original cost
B] Replacement value
C] Net realizable value
D] Market value
Ans.a
Q55] The comparison of financial statement of one year with that of another is possible only when concept is followed
A] Going concern
B] Accrual
C] Consistency
D] Materiality
Ans.c
Q56] Profit and loss is calculated at the stage of A] Recording
B] Posting
C] Classifying
D] Summarising
Ans.d
Q57] Which of the following is not the main objective of accounting? A] Systematic recording of transactions
B] Ascertaining profit or loss
C] Ascertainment of financial position
D] Solving tax disputes with tax authorities
Ans.d Q58] An asset was purchased for Rs.1000000 with the down payment of Rs.200000 and bills accepted for Rs.800000/-. What would be the effect on the total asset and total liabilities in the balance sheet?
A] Assets increased by Rs.800000 and liabilities decreased by Rs.800000
B] Assets decreased by Rs.800000 and liabilities increased by Rs.800000
C] Assets increased by Rs.1000000 and liabilities increased by Rs.800000
D] Assets increased by Rs.800000 and liabilities increased by Rs.800000
Ans.d
Q59] The rule debit all expenses and losses and credit all income and gains relates to A] Personal account
B] Real account
C] Nominal accounts
D] All
Ans. c
Q60] Matching concept means
A] Assets = capital + liabilities
B] Transactions recorded at accrual concept
C] Anticipate no profit but recognize all losses
D] Expenses should be matched with the revenue of the period.
Ans.d
Q61]. Reduction in the book value of an asset over a period of time is called-
1. Appreciation
2. Depreciation
3. Proportion
4. Depletion
Ans.2
Q62]. Which among the following is not a reason for depreciation
1. Use of asset
2. Passage of time
3. Obsolescence
4. Repair of an asset
Ans.4
Q63]. Depreciation is charged on
1. Current asset
2. Fixed asset
3. Intangible asset
4. Current liability
Ans.2
Q64]. Depreciation helps in determining
1. Accurate level of profit
2. Increases the value of asset
3. Revenue generation
4. increase the burden of tax
ans.1
Q65].The asset which is an exception from depreciation is
1.Computer
2.Furniture
3.Land
4.ATM Machine
Ans.3
Q66].Which of the following is true about the straight-line method?
1.Complex method
3.Cost of depreciation changes every year
4.P&L account debited with different amount every year
Ans.2
2.Cost of depreciation remains constant
Q67].Bank purchased a computer on 1.03.2015 at a cost Rs. 50000, estimated life is 8 years, cost of depreciation under straight-line method will be-
1. 6250
2. 7430
3. 5000
4. 4590
Ans.1
Q68]. Annual depreciation of machine is 40000, cost of machine is 500000, rate of depreciation according to straight-line method will be-
1. 9%
2. 18%
3. 16%
4. 8%
Ans.1
Q69].Value of an asset is 9 lakh, scrap value is 125000, estimated life is 10 years the cost of depreciation under straight-line method will be-
1. 65000
2. 89000
3. 77500
4. 67880
Ans.3
Q70]. Depreciation is a process of
1. Valuation of asset
2. Allocation of cost
3. Both A& B
4. Only A
Ans.2
Q71]. Cost of the asset minus scrap value/ Life of the asset is the formula of
1. Diminishing balance method
2. Annuity method
3. Straight line method
4. Sum of digits method
Ans.3
Q74]. The Diminishing balance method means a method by which-
1.The rate of depreciation falls year by year
2.The amount on which depreciation is calculated falls year by year
3.The rate and amount which is applied falls year by year
4.None of the above
Ans.2
Q75].Which among the following is false about Diminishing balance method-
1.the amount of depreciation is high in the initial years
2.Depreciation is calculated on the original cost of the asset
3.the value of the asset cannot be reduced to zero
4.Cost of depreciation remains constant
Ans.4
Q76]. Which of the following accounting concepts or principles require the calculation of depreciation of the fixed assets?
A)Prudence concept
B)Accrual concept
C)Consistency concept
D)Matching concept
Ans.d
Q77].Depreciation is an
1.Income
2.Expense
3.Asset
4.Liability
Ans.2
Q78].The cost of the asset is 60000 and depreciated at 12% p.a. using the written down method. at the end of three years, it will have a net book value of –
1. 40888.32
2. 43888.90
3. 45322
4. 40000
Ans.1
Q79].The vehicle costs Rs. 150000; it charges 20% depreciation according to written down value method estimate the value of the vehicle after depreciation at the end of three years.
1. 68000
2. 56000
3. 78000
4. 76800
Ans.4
Q80].The loss on sale of an asset is debited to
1.Reserves
2.Depreciation fund
3.Profit & Loss account
4.Asset’s account
Ans.3
Q81].Under the diminishing balance method, depreciation is calculated on
1.Scrap value
2.Book value
3.Original value
4.All of these
Ans.2
Q82].A boiler was purchased from abroad for Rs. 10000. Shipping and forward charges Rs. 2000 and expenses of installation amounts to Rs. 8000. Find the balance after three years @10% on diminishing balance method.
1. 12400
2. 14580
3. 13800
4. 11800
Ans.2
Q83].The amount of depreciation charged on machinery is debited to
1.Depreciation account
2.Machinery account
3.Provision for depreciation account
4.Expense account
Ans.1
Q84)Which of the following is not a Capital Expenditure?
a)Money spent to purchase the Furniture
b)Money spent to purchase the Building
c)Money spent to pay the salary to the employees
d)Money spent to purchase the Land
Ans.c
Q85)Which of the following is not a Revenue Expenditure?
a)Money spent towards acquiring the Furniture
b)Money spent to pay salary to the employees
c)Money spent towards electricity bill
d)Money spent towards interest on deposits
Ans.a
Q86)What is Accounting Equation?
a)Assets = Capital + Liabilities
b)Assets = Capital – Liabilities
c)Liabilities = Capital + Assets
d)Capital = Liabilities – Assets
Ans.a
Q87)How would you classify the Depreciation?
a)Asset to the bank
b)Expense to the bank
c)Income to the bank
d)Liability to the bank
Ans.b
Q88) How would you classify the ‘wages paid for construction of building’?
a)Revenue Receipt
b)Revenue Expenditure
c)Capital Expenditure
d)Revenue Expenditure
Ans.b
Q89) Which of the following best describes a trial balance?
a)It shows the profit or loss of the organization
b)It is a list of balances of ledger accounts
c)Shows the financial position of a business
d)It is a Ledger Account
Ans.b
Q90) Contingent liabilities are those and are shown under.
a)Which are never payable and shown outside the balance sheet
b)Which may or may not arise and shown liabilities side of the balance sheet
c)Which crystallize at the time of liquidation of a company and shown in the asset side of the balance sheet
d)Which may or may not arise and shown outside of the balance sheet
Q91) Which of the following is a Capital Expenditure?
B)Purchase of machinery
C)Interest on loan
D)Depreciation on machinery
Ans.b 92) How would you journalise the depreciation charged on the asset?
A)Debiting cash account and crediting depreciation account.
B)Debiting depreciation account and crediting cash account.
C)Debiting depreciation account and crediting asset account.
D)Debiting cash account and crediting asset account
Ans.c
93)Which of the following convention says that “Once an entity follows a particular method of accounting it should use the same method for all
Ans.d
A)Purchase of raw material
subsequent transactions and events of the same nature”.
A)Conservatism
B)Full Disclosure
C)Consistency
D)Materiality
Ans.c
94)Interest earned in bank final statement is explained through ——-
A)Schedule 13
B)Schedule 1
C)Schedule 15
D)Schedule 2
Ans.a
95)How would you treat the purchase of software that will be used for more than 12 months should be regarded as:
A) A revenue expenditure
B) A capital expenditure
C) A long term expense
D) A capital receipt
Ans.b
96)Which of the following is a double entry for depreciation expenses?
A) Accumulated depreciation debit and depreciation expenses Credit
B)Depreciation expenses Debit and provision for depreciation Credit
C)Cash Debit and depreciation expenses Credit
D)Depreciation expenses Debit and cash Credit
Ans.b
97) Which among the following represents the balance in the Capital account of the business?
(A) The amount of cash introduced by the owner at the commencement of business
(B)Total liabilities of the business
(C)The total of all assets of the business
(D)Total assets of the business minus its external liabilities
Ans.a
98) Which of the following statements states the meaning of Trial Balance?
(A) Lists the balances of the ledger accounts of asset accounts and liability accounts for a particular period
(B) Lists the balances of all the ledger accounts for a particular period
(C) It reveals how profitable a business has been
(D) It balances even if the bookkeeper forgets to post a payment
Ans.b
99) In the case of a partnership the act of any partner is : (C.S. Foundation Dec. 2012)
(A) Binding on all partners
(B) Binding on that partner only
(C) Binding on all partners except that particular partner
(D) None of the above
Ans.a
100) How would you classify the summary statement of the tabulation of balances of all the ledger accounts?
(A)Reconciliation Statement
(B)Trial Balance
101).Recording, classifying and summarizing in a significant manner of financial transactions is known as –
A)Accounting
B)Analyzing
C)Managing
D)Dealing with finance
Answer .(A)
102).Which kind of transactions are recorded in accounting
A)Transactions having financial and physical character
B)Transactions having financial character
C)Dealings having financial and social implications
D)Transactions having social and money matters
E)All the above
Answer. (B)
103).A firm obtains a loan of Rs. 37 lac from its bankers and purchases raw material stocks. The transactions would be recorded as a part of ...
A)Accounting
B)Analysis
C)Management information system
D)Cost accounting
E)A and B
Answer . (A)
104).Recording of a financial transaction can be done in which of the following books:
A)Journal
B)Cash book
C)Purchase book
D)Sale book
E)Any of the above
Answer.(E)
105) .The process of grouping of transactions or entries of one nature is called ....
A)Accounting
B)Classifying
C)Summarizing
D)Recording
E)All the above
Answer . (B)
106).For the purpose of classifying the financial transactions appropriately, which of the following books are used
A)Cash book
B)Journal
C)Purchase book
D)Sales book
E)Ledge Answer .(E)
107).Presentation of classified data in a manner that is understandable and useful to management and other parties is called
A)Classifying
B)Recording
C)Summarizing
D)Analyzing
E)All the above
Answer .(C)
108).Summarizing is done through preparation of which of the following types of account
A)Cash book and journal
B)Trading and profit and loss account
C)Balance sheet
D)A to C all
E)B and C
Answer is (E)
109).A financial happening that affects the finance of the business is called
A)Transaction
B)Entry
C)Book keeping
D)Give and take
E)None of the above
Answer .(A)
110).Which of the following is not a part of the accounting process
A)Recording
B)Classifying
C)Summarizing
D)Analyzing and interpreting
E)None of the above
Answer . (E)
111).Which of the following statement is true? (A) a minor cannot be admitted as a partner (B) a minor can be admitted as a partner, only into the benefits of the partnership
(C) a minor can be admitted as a partner but his rights and liabilities are same of adult partner D) none of the above
Ans.b
112).Which of the following statements is true?
A. A debenture holder is an owner of the company
B. A debenture holder can get his money back only on the liquidation of the company
C.A debenture issued at a discount can be redeemed at a premium
D.A debenture holder receives interest only in the event of profits
Ans.c
113.Which of the following is False:
A.Debenture is written instrument acknowledging a debt under the common seal of the company.
B.Debenture is a part of owned capital.
C.The payment of interest on debentures is a charge on the profits of the compny.
D.Redeemable debentures are those debentures, which are payable on the expiry of the specific period.
Ans.b
114.Which of the following statement is true:
A.The debentures cannot be issued at a discount of more than 10% of the face value.
B.Perpetual debentures are also known as irredeemable debentures.
C.Debentures cannot be converted into shares.
D.Debentures cannot be issued at a premium.
Ans.b
115. Oustensible partners are those who (A) do not contribute any capital but get some share of profit for lending their name to the business (B) contribute very less capital but get equal profit (C) do not contribute any capital and without having any interest in the business, lend their name to the business (D) contribute maximum capital of the business
Ans. c
116.Which of the following statements is false?
A.A company can issue convertible debentures
B.Debentures cannot be secured
C.A company can issue redeemable debentures
D.Debentures have no right to participate in profits over and above their fixed interest
Ans.b
117.Debenture premium cannot be used to .
A.Write off the discount on issue of shares or debentures
B.Write off the premium on redemption of shares or debentures
C.Pay dividends
D.Write off capital loss
Ans.c
118.Which of the following statements is false?
A.At maturity, debenture holders get back their money as per the terms and conditions of redemption
B.Debentures can be forfeited for non payment of call money
C.In company’s balance sheet, debentures are shown under secured loans
D.Interest on debentures is charged against profits
Ans. b
119.Loss on issue of debentures is treated as .
A.Intangible asset
B.Current asset
C.Current liability
D.Miscellaneous expenditure
Ans.d
120.Which of the following is not true about debenture stock:
A.It must be fully paid.
B.Debenture Stock can be transferred in fraction.
C.Debenture stock are identified by their distinct number
Ans .c
121.Which of the following is false?
A.A company can issue irredeemable debentures
B.A company can issue debentures with voting rights
C.A company can buy its own shares
D.A company can buy its own debentures
Ans.b
122.Which of the following is not a characteristic of Bearer Debentures?
A.They are treated as negotiable instruments
B.Their transfer requires a deed of transfer
C.They are transferable by mere delivery
D.The interest on it is paid to the holder irrespective of identity
Ans.b
123.Which of the following is/are true with respect to debentures?
A.They can be issued for cash
B.They can be issued for consideration other than cash
C.They cannot be issued as collateral security
D.Both a and b above
Ans.d
124.When debentures are issued as collateral security, the final entry for recording the transaction in the books is .
A.Credit debentures a/c. and debit cash a/c.
B.Debit debenture suspense a/c. and credit cash a/c.
C.Debit debenture suspense a/c. and credit debentures a/c.
D.Debit cash a/c. and credit the loan a/c. for which security is given
Ans.c
125.Which of the following is false with respect to debentures?
A.They can be issued for cash
B.They can be issued for consideration other than cash
C.They can be issued as collateral security
D.They can be issued in lieu of dividends
Ans.d
126.Debentures can be .
A.Mortgage Debentures or Simple Debentures.
B.Registered Debentures Or Bearer Debentures.
C.Redeemable Debentures or Irredeemable Debentures.
D.Convertible Debentures or Non-convertible Debentures.
A.Both (I) and (II) above
B.Both (I) and (III) above
C.Both (II) and (III) above
D.All of (I), (II), (III) and (IV) above.
Ans.d
127.Which of the following statements is false?
A.Debenture is a form of public borrowing
B.It is customary to prefix debentures with the agreed rate of interest
C.Debenture interest is a charge against profits
D.The issue price and redemption value of debentures cannot differ.
Ans.d
128.Which of the following is true with regard to 10% Debentures issued at a discount of 20%?
A.The carrying amount of debentures gets reduced each year at a rate of 20%
B.Issue price and the carrying amount of debentures are equal
C.At the time of redemption, the debenture holder will be paid the issue price
D.The face value and the carrying amount of debentures are equal.
Ans.d
129.Which of the following is false?
A.Equity is owners’ stake and the debenture is a debt
B.Rate of interest on debentures is fixed
C.Debenture holders get preferential treatment over the equity holders at the time of liquidation
D.Interest on debentures is an appropriation of profits.
Ans.d
130.Discount on issue of debentures is a .
A.Revenue loss to be charged in the year of issue
B.Capital loss to be written off from capital reserve
C.Capital loss to be written off over the tenure of the debentures
D.Capital loss to be shown as goodwill
131.Premium on redemption of debentures account is .
A.A real account
B.A nominal account - income
C.A personal account
D.A nominal account – expenditure
Ans.c
Ans.d
132.Which of the following is not true about Debenture redemption reserve(DRR):
A.DDR created @ 50% of the amount of debentures issued before commencement of redemption.
B.Withdrawal fromm DRR can be made only after 10% of debenture liability has been redeemed.
C.DRR is required in case of Fully convertible debenture.
D.DRR is not required in case of debentures with a maturity period of 18 months or less.
Ans.c
133.When all the debentures are redeemed, balance in the debentures redemption fund account is transferred to :
A.Capital reserve,
B.General reserve,
C.Profits and loss appropriation account.
Ans.b
134.Debentures can be redeemed out of:
A.Profits
B.Capital
C.Provisions made for redemption
D.By converting them into shares or new debentures
E.All of the above
Ans.e
135.Own debentures are those debentures of the company which:
A.The company allots to its own promoters,
B.The company allots to its Director,
C.The company purchases from the market and keeps them as investments.
Ans.c
136.Profit on cancellation of own debentures is transferred to :
A.Profit and loss appropriation a/c,
B.Debenture redemption reserve,
C.Capital reserve.
Ans.c
137.When debentures are redeemed out of profits, an equal amount is transferred to :
A.General reserve,
B.Debenture redemption reserve,
C.Capital reserve.
Ans.b
138.Profit on sale of debenture redemption fund investments in the first instance is credited to :
A.Debenture redemption fund account,
B.Profit and loss appropriation account,
C.General reserve account.
Ans.a
139.The balance of sinking fund investment account after the realisation of investments is transferred to:
A.Profit and loss account,
B.Debentures account,
C.Sinking fund account.
Ans.c
140.Excess value of net assets over purchase consideration at the time of purchase of business is credited to :
A.General reserve,
B.Capital reserve,
C.Vendors’ account
D.Goodwill
Ans.b
141.Excess value of Purchase consideration over net assets at the time of purchase of business is credited to :
A.General reserve,
B.Capital reserve,
C.Vendors’ account
D.Goodwill
Ans.d
142.The balance of royalty‟s receivable account is transferred to —
A.Profit and loss account
B.Royalties suspense account
C.Production account.
Ans.A
143.Under the double account system, the profit and loss account is called—
A.Profit and loss account
B.Income and expenditure account
C.Revenue account.
Ans.C
144.Under the double account system, the profit and loss appropriation account is called —
A.Net revenue account
B.Profit and loss appropriation account
C.Profit and loss account.
Ans. A
145.The depreciation on the fixed assets, under the double account system, is shown as—
a.Depreciation reserve on the liabilities side of the general balance sheet
b.A deduction from the fixed assets
c.An expenditure on capital account in the first section of the balance sheet.
Ans.a
146.Under the double account system, interest on debentures is shown in—
a.Revenue account
b.Net revenue account
c.Profit and loss account.
Ans.b
147.Share forfeited account is shown on—
a.Liabilities side of the general balance sheet
b.Credit side of the net revenue account
c.Credit side of the receipts and expenditures on capital account
Ans.c
148.A fixed asset originally acquired for Rs. 20,000 is to be replaced by new one. The estimated cost of replacement of the original asset is Rs. 30,000. Hence, the revenue charge equals —
(i) Rs. 20,000
(ii) Rs. 10,000
(iii)Rs. 30,000.
Ans. (iii)
149.A fixed asset originally acquired for Rs. 20,000 is replaced by a new asset costing Rs. 50,000. But the estimated cost of replacement of the original asset is B Rs. 30,000. Hence, the capital charge equals—
a. Rs. 20,000
b. Rs. 50,000
c. Rs. 30,000.
Ans.a
150.A fixed asset originally acquired for Rs. 20,000 is replaced by a new asset. The estimated cost of the replacement of the original asset is Rs. 30,000. The sale proceeds of old material amounted to Rs. 2,000.Hence, the revenue charge equals
(i) Rs. 28,000
(ii) Rs. 18,000
(iii) Rs. 30,000.
Ans.(i)
151.Calls in advance are shown on the—
a.Liabilities side of the general balance sheet
b.Expenditure side of receipts and expenditures on capital account
c.Receipts side of receipts and expenditures on capital account.
Ans.c
152.Plant and machinery is shown on the—
a.Assets side of the general balance sheet
b.Expenditure side of the receipts and expenditures on capital account
c.Receipts side of the receipts and expenditures on capital account.
Ans.c
153.The value of goodwill, according to the simple profit method, is—
a.The product of current year's profit and number of years
b.The product of last year's profit and number of years
c.The product of average profits of the given years and number of years.
Ans.c
154.The goodwill of a business is to be valued at 3 years' purchase of the average profits of the last three years. The profits of the last three years are Rs. 5,000, Rs. 6,000 and Rs. 7,000 respectively. Hence, the goodwill be valued at—
(i) Rs. 18,000
(ii) Rs. 12,000
(iii) Rs. 15,000.
Ans. (i)
155.A business has a capital of Rs. 40,000 at the end. It had earned profits of Rs. 5,000 during the year. Hence, the average capital of the business will be —
(i) Rs. 42,500
(ii) Rs. 37,500
(iii) Rs. 35,000
Ans.(ii)
156.If the average capital of a business is Rs. 60,000 and the normal rate of profit is 15%, then the normal profits will amount to—
a. Rs. 10,000
b.Rs. 9,000
c.Rs. 15,000.
Ans..b
157.If the super-profits of a business are Rs. 6,000 and the normal rate of profit is 10%, then the amount of goodwill as per the capitalisation method will be—
a.Rs. 60,000
b.Rs. 600
c.Neither of the two.
Ans.a
158.It is given that net assets available for equity and preference shares amount to Rs. 90,000. The paid up capitals are 10,000 equity shares of Rs. 2 each and 5,000 preference shares of Rs. 10
each. Therefore, value of an equity share will be—
a.Rs. 2 per share
b.Rs. 4 per share
c.Rs. 5 per share.
Ans.b
159.It is given that net assets available for equity and preference shares amount to Rs. 1,87,000. The paid-up capitals are—10,000 equity shares of Rs. 4 each and 5,000 preference shares of Rs. 10 each. Therefore, value of a preference share will be— (i) Rs. 10 per share
(ii) Rs. 8 per share
(iii) Rs. 20 per share.
Ans.(iii)
160.Under the yield method of valuation of equity share capital, if for an equity share of Rs. 50, the normal rate of return is 10% and the expected rate of return is 5%, then the value of an equity share will be—
a. Rs. 25
b. Rs. 50 21. Rs. 100.
Ans.a
161.For calculating the value of an equity share by intrinsic value method, it is essential to know—
a.Normal rate of return
b.Expected rate of return
c.Net equity.
Ans.c
162.For calculating the value of an equity share by yield method, it is essential to know—
a.Expected rate of return
b.Called-up equity share capital
c.Capital employed.
Ans. a
162For calculating price-earnings ratio, it is essential to know—
a.Market value per share
b.Nominal value per share
c.Paid-up value per share.
Ans.a
163.For calculating the value of an equity share by earning capacity method, it is essential to know
(i) Nominal value per share
(ii) Rate of earning
(iii) Dividend per share.
Ans.(ii)
164.A Ltd. and B Ltd. go into liquidation and a new company X Ltd. is formed. It is a case of—
a.Absorption
b.External reconstruction
c.Amalgamation.
Ans.c
165. X Ltd. goes into liquidation and a new company Z Ltd. is formed to take over the business of X Ltd. It is a case of—
a.Absorption
b.External reconstruction
c.Amalgamation.
Ans.b
166.X Ltd. goes into liquidation and an existing company Z Ltd. purchases the business of X Ltd. It is a case of—
a.Absorption
b.External reconstruction
c.Amalgamation.
Ans.a
167.Accumulated profits include—
a.Provision for doubtful debts
b.Superannuation fund
c.Workmen's compensation fund.
Ans.c
168.Liabilities (not accumulated profits) of a company include—
a.General reserve
b.Pension fund
c.Dividend equalisation fund.
Ans. b
169.When the expenses of liquidation are to be borne by the vendor company, then the vendor company debits—
a.Realisation account
b.Bank account
c.Goodwill account.
Ans.a
170.When the expenses of liquidation are to be borne by the purchasing company, then the purchasing company debits—
a.Vendor company's account
b.Bank account
c.Goodwill account.
Ans. c
171.When the purchasing company makes payment of the purchase consideration, it debits—
a.Business purchase account
b.Assets account
Ans.c
172.The vendor company transfers preliminary expenses (at the time of absorption) to—
a.Equity shareholders' account
b.Realisation account
c.Purchasing company's account.
Ans. a
172.For paying liabilities not taken over by the purchasing company, the vendor company credits—
Ans.b
173.In case of inter-company holdings, the purchasing company, at the time of payment of the purchase consideration, surrenders the shares in the vendor company by crediting—
a.Vendor company's account
b.Shares in the vendor company account
c.Vendor company's account.
a.Realisation account
b.Bank account
c.Liabilities account.
c.Share capital account.
Ans.b
174.The share capital, to the extent already held by the purchasing company, is closed by the vendor company by crediting it to—
a.Share capital account
b.Purchasing company's account
c.Realisation account.
Ans.c
175.In case of sub-division of share capital the total number of shares—
a.Increases
b.Decreases
c.Does not change.
Ans.a
176.If the shares of smaller denomination-are converted into the shares of higher denomination without changing the total amount of share capital, then it is a case of—
a.Consolidation of share capital
b.Sub-division of share capital
c.Decrease in unissued share capital.
Ans.a
177.When a company converts its equity shares into the capital stock, then the account to be credited is—
a.Equity share capital account
b.Equity capital stock account
c.No entry is required.
Ans.b
178.A Ltd. with a share capital of 10,000 equity shares of Rs. 10 each fully paid decides to repay Rs. 5 per share thus making each share of Rs. 5 fully paid. It is a case of—
a.Reducing share capital by returning the excess capital
b.Reducing the liability on account of uncalled capital
c.Reducing the paid-up capital.
Ans.a
179.For writing off the accumulated Josses under the scheme of capital reduction, we debit—
a.Share capital account
b.Accumulated losses account
c.Capital reduction account.
Ans.c
180.If there is any balance in the capital reduction account after writing off all the accumulated losses, then the same is transferred to —
1. Share capital account
2. Capital reserve account
3. General reserve account.
Ans.2
181.A company has issued capital of 10,000 equity shares of Rs. 10 each fully paid. It decides to convert its capital into 20,000 equity shares of Rs. 5 each. It is a case of
a.Consolidation of share capital
b.Sub-division of share capital
c.Decrease in unissued share capital.
Ans.b
182.If the creditors are willing to reduce their claims against the company, (hen the amount reduction in their claim will be transferred to
a.Share capital account
b.Creditors account
c.Capital reduction account.
Ans.c
183.Any loss on revaluation of the assets at the time of internal reconstruction, will be charged from—
a.Revaluation account
b.Share capital account
c.Capital reduction account.
Ansc
184.A contingent liability, not provided for, materialised to the extent of Rs. 1,000. The insurance company paid Rs. 600 in respect of this liability. Hence, the amount to be charged from the capital reduction account will be —
a.Rs. 600
b.Rs. 400
c.Rs. 1,000.
Ans.b
185.A banking company can pay dividend on its shares without writing off —
a.Preliminary expenses
b.Brokerage
c.The bad debts (provided adequate provision has been made).
Ans.c
186.It is given that the paid-up capital, reserves and share premium account have balances amounting to Rs. 10,00,000 Rs. 9,00,000 and Rs. 1,50,000 respectively. It is also given that the profits of the company for the current year are Rs. 1,00,000. ft should make a transfer of—
a.Rs. 30,000 to statutory reserve of
b.Rs. 25,000 to statutory reserve
c.May be exempted from making such transfer. Ans.c
187. Provision for bad debs and doubtful debts is —
a.Not shown anywhere in the published accounts of a banking company
b.Shown on the debit side of the profit and loss account
c.Shown as a deduction from the interest and discount income on the credit side of profit and loss account.
Ans.a
188.Rebate on biffs discounted account is a—
a.Real account
b.Personal account
c.Nominal account.
Ans.b
189.If the balance of rebate on bills discounted is given in the trial balance, it will be taken to —
a.Debit side of the profit and Joss account
b.Credit side of the profit and loss account as a deduction from interest and discount
c.Liabilities side of the balance-sheet. Ans.(iii) Liabilities side of the balance-sheet.
190.Money at call and short notice is shown—
a.On the liability side of the balance sheet
b.On the asset side of the balance sheet
c.It is a contra item.
Ans.(ii) On the asset side of the balance sheet
191.Provision for taxation is shown—
a.On the debit side of the profit and loss account
b.As a deduction from interest and discount on the credit side of the profit and loss account
c.On the asset side of the balance sheet.
Ans. B
192.Loans, cash credits and overdrafts are shown—
a.On the asset side of the balance sheet
b.On the liability side of the balance sheet
c.These are contra items.
Ans.a
193.Bills discounted and purchased are shown—
a.On the asset side of the balance sheet
b.On the liability side of the balance sheet
c.Neither of the two sides.
Ans.a
194.Deposits and other accounts are shown —
a.On the asset side of the balance sheet
b.On the liability side of the balance sheet
c.These are contra items.
Ans.b
195.A general insurance company carrying on two or more types of business prepares only—
a.Revenue accounts in respect of different businesses
b.Profit and loss account (including appropriation account)
c.Separate revenue accounts for each type of business and combined profit and loss account.
Ans.c
196.Reserve for unexpired risks appearing outside the trial balance under adjustments is
1. Shown on the debit side of the revenue
account and liabilities side of the balance sheet
2. Shown on the credit side of the revenue account and asset side of the balance sheet
3. Shown as a contra item in the balance
sheet.
Ans.1
197.Reinsurance premium is shown—
1. On the debit side of revenue account
2. On the liability side of the balance sheet
3. As deduction from the premiums on the
credit side of the revenue account.
Ans.3
198.Expenses of management (not applicable to any particular business) are shown in—
a.Revenue account
b.Profit and loss account
c.Profit and loss appropriation account.
Ans.b
199.Transfer fees are credited to—
a.Revenue account
b.Profit and loss account
c.Profit and loss appropriation account.
Ans.b
200. Legal fees in respect of claims are shown in—
a.Revenue account
b.Profit and loss account
c.Profit and loss appropriation account.
Ans.a
(C) Balance
Ans.a
201.It is given that claims paid during the year amounted to Rs. 1,00,000. The claims outstanding i the beginning and at the end were Rs. 15,000 and Rs. 10,000 respectively. Hence, the amount to be debited to revenue account will be—
(i) Rs. 1,00,000
(ii) Rs. 1,15,000
(iii) Rs. 95,000.
Ans.(iii)
202.It is given that additional reserve for unexpired risks was Rs. 50,000 in the beginning of the year. The net premium for the current year were Rs. 4,00,000 and the additional reserve for unexpired risks was to be increased by 5% of the net premiums. Hence, the amount of the additional reserve will be—
(i) Rs. 20,000
(ii) Rs. 50,000
(iii) Rs. 70,000.
Ans.(iii)
203.It is given that the balance being profit of the last year amounted to Rs. 80,000. During the current year, the business suffered a loss of Rs. 20,000 and dividends amounting to Rs. 15,000 were paid in respect of the previous year. Hence, the profit and loss appropriation account will be credited by—
(i) Rs. 65,000
(ii) Rs. 45,000
(iii) Rs. 80,000.
Ans.(i)
204.It is given that premiums, reinsurance premiums and commission on reinsurance ceded amounted to Rs. 10,00,000, Rs. 50,000 and Rs. 30,000 respectively. Hence, premiums will be shown in the revenue account at—
1. Rs.10,00,000
2. Rs. 9,50,000
3. Rs. 9,20,000.
Ans.(ii) Rs. 9,50,000
205.Postulates of Accounting are:
a.Exchange
b.Period
c.Unit of measure
d.All of these
Ans.d
206. Meaning of Net Assets is :
a.Total Assets − Total Liabilities
b.Fixed Assets + Current Assets
c.Total Assets − Current Liabilities
d.Total Assets − Outside Liabilities
Ans.d
207.Valuation of closing stock is to be made:
a.on cost price
b.on market price
c.cost price or market price, whichever is less
d.None of these
Ans.c
208.According to the cost concept, the assets are always valued at :
a.on cost price
b.on market price
c.on purchase price
d.None of these
Ans.3
209.Under Hire Purchase System depreciation is charged :
a.On cash price
b.Hire purchase price
c.Market price
d.None of these
Ans.a
210.Hirer charges depreciation on:
a.Hire purchase price
b.Cash price.
c.Lower of the two
d.None of these
Ans.b
211. What is transferred to Hirer under hire purchase system :
a.Ownership of assets
b.Possession of asset
c.Ownership and possession of asset
d.None of these
Ans.b
212.Hire Purchase Act is :
(i) 1932
(ii) 1956
(iii) 1972
(iv) 187 Ans.(iii)
213. The Sale of Goods Act is applicable in:
(i) Credit Purchases
(ii) Cash Purchases
(iii) Cash Sales
(iv) None of these
Ans.(i)
214.What is transferred to Hirer under Instalment Payment system :
a.Ownership of Assets Possession of Assets
b.Ownership and Possession of assets
c.None of these.
Ans.c
215.Branch Adjustment Account is prepared:
a.By Dependent Branch
b.By H.O. of Dependent Branch
c.By H.O. of Independent Branch
d. None of these
Ans.b
216.Which account is prepared to find out the amount of closing stock:
a.Head Office A/c
b.Branch A/c
c.Memorandum Stock A/c
d.None of these
Ans.c
217.Branch account under debtor system is:
A.Real account
B.Personal account
C.Nominal account
D.None of these
Ans.C
218. Branch Adjustment account is in the nature of :
A.Real account
B.Nominal account
C.Personal account
D.None of these
Ans.B
219.In foreign branch fixed assets shall be converted at:
a.Opening rate
b.Average rate
c.Rate of the date of purchase
d.None of these
Ans.a
220.By what rate the balance of H.O. a/c is converted in foreign branch :
a.Opening rate
b.Closing rate
c.Average rate
d.None of these
Ans.d
221.The Gross Profit of a business being Rs. 3 lakh and the amount of loss of Profit Policy being Rs.1,50,000 then the claim for loss Rs. 20,000 will reduce to :
(i) Rs. 12,000
(ii)Rs. 15,000
(iii) Rs. 20,000
(iv) None of these.
Ans.(ii)
222.Loss of Profit Policy indemnity :
a.Capital Loss
b.Revenue Loss
c.Budgeted Loss
d.Gross Loss.
Ans.c
223.The value of closing stock Rs. 72,000, the amount of the Policy was Rs. 63,000, the Actual loss of stock Rs. 54,000, there was an average clause in the Policy. Calculate the amount of claims: (i) Rs. 47,250
(ii)Rs. 54,000
(iii)Rs.72,000
(iv) None of these
Ans.(i)
224.The rate of Gross Profit on sales is 20%. Sales up to date of fire amounted to Rs. 1,00,000. Find Amount of Gross Profit:
(i) Rs. 20,000
(ii) Rs. 25,000
(iii)Rs. 50,000
(iv) None of these
Ans.(i)
225.The rate of Gross Profit on cost of sales is 25%. Sales up to date of fire amounted to Rs. 1,00,000. Find amount of Gross Profit:
(i) Rs. 20,000
(ii) Rs. 25,000
(iii) Rs. 50,000
(iv) None of these
Ans.(i)
226.Excess of assets over liabilities is called :
a.Creditors
b.Profit
c.Capital
d.Goodwill
Ans.c
226.Amount of Drawings is added at the time of finding out profit in single entry system:
a.Creditors
b.Debentures
c.Profit
d.Capital
e.None out of these.
Ans.d
227.To find out the opening and closing capitals, statement of affairs are prepared:
a.One
b.Two
c.Four.
Ans.b
228.The expenses which are not departmental:
a.are charged to departments in sales ratio.
b.are charged to departments in the ratio of assets employed thereto.
c.are charged to general profit and loss account.
Ans. c
229.Cum-dividend quotation of shares means that the quotation includes:
a.dividend which may be declared in future.
b.dividend declared recently but not yet paid.
c.nothing else but the price of the share.
Ans. b
230.A quotation is ex-interest when :
a.the interest to the date of transaction is to be paid in addition to the settled price.
b.interest has already been deducted from the price.
c.no adjustment is necessary for interest. Ans.(i) the interest to the date of transaction is to be paid in addition to the settled price.
231.Interest is calculated on:
a.market price of securities
b.purchase price of securities
c.book value of securities
d.face value of securities.
Ans.d
232.Preparation of consolidated Balance Sheet of Holding Co. and its subsidiary company as per
a. As 11
b. AS – 22
c. AS 21
d. AS – 23
Ans.c
233.The share of outsiders in the Net Assets in subsidiary company is known as under :
a.outsiders liability
b.Assets
c.subsidiary company's liability
d.Minority Interest
Ans. b
235.234.Pre-acquisition profit in subsidiary company is considered as :
e. Revenue profit
f. Capital profit
g. Goodwill
h. Non of the above
Ans.b
236.Excess of cost of investment over paid up value of the shares is considered as:
a.Goodwill
b.Capital Reserve
c.Minority Interest
d.Non of above
Ans. d
237.Excess of paid up value of the shares over cost of investment is considered as:
a.Goodwill
b.Capital Reserve
c.Minority Interest
d.Non of above
ans.d
238.Profit earned before acquisition of share is treated as
a.Capital profit
b.Revenue profit
c.General Reserve
d.Revaluation Loss
ans.b
239.Profit earned after acquisition of share is treated as
a.Capital profit
b.Revenue profit
c.General Reserve
d.Revaluation Loss
ans.b
240.Preparation of consolidated statement as per AS 21 is
a.Optional
b.Mandatory for listed Companies
c.Mandatory for Pvt. Ltd.
d.Companies Ltd. partnership firm
ans.b
241.Holding Co. share in capital profits of subsidiary company is adjusted in :
a.Cost of control
b.Shown on Assets side of Balance sheet
c.Revenue profit
d.None of above
ans.c
242.Holding Co. share in revenue profits of subsidiary company is adjusted in :
a. Cost of control
b.Shown on Assets side of Balance sheet
c.Profit and loss account
d.None of above
ans.c
243.Unrealised profit on goods sold and included in stock is deducted from :
a.Capital Profit
b.Revenue Profit
c.Fixed Assets
d.Minority interest
ans .b
244.Face value debentures of subsidiary co. held by Holding Company is deducted from :
a.Debentures
b.Cost of control
c.Minority interest
d.Debentures in consolidated balance sheet
ans.b
245.Which of the following statement is true:
a.There is no change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of pre-acquisition profit.
b.There is change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of post-acquisition profit.
c.There is change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of pre-acquisition profit.
d.There is no connection between the issue of bonus shares and the calculation of capital reserve.
Ans.a
246.Consolidated financial statements are prepared on the principle:
a.In form the companies are one entity; in substance they are separate.
b.In form the companies are separate; in substance they are one.
c.In form and substance the companies are one entity.
d.In form and substance the companies are separate.
Ans.c
247.Minority Interest includes :
a. Share in share capital
b. Share in Capital profit
c. Share in Revenue profit
d. All of the above
Ans.d
248.The Time interval between the date of acquisition of shares in subsidiary company and date of Balance Sheet of Holding Company is known as :
a.Pre-acquisition period
b.Post-acquisition period
c.Pre-commencement period
d.Pre-incorporation period.
Ans.b
249.Pre-acquisition dividend received by Holding company is credited to
a.profit & loss A/c
b.Capital profit
c.Investment A/c
d.non of the above
ans.c
250.Post Acquisition dividend received by Holding Company is debited to :
a.Bank A/c
b.profit & loss A/c
c.Dividend A/c
d.Investment A/c
ans.b
251.Which Exchange rate will be considered for conversion of share capital of subsidiary company.
a.Opening Rate
252.A subsidiary company shall be excluded from consolidation when:
a.Control is intended to be temporary
b.It operates under severe long-term restrictions which significantly impair its ability to transfer funds to the parent
a) Inventory control
b) Management control
c) Ascertainment of cost
b.closing rate
c.Average Rate
d.Rate of which date share acquired (actual)
ans.d
c.Always included for consolidation
d.Both a and b.
ans.d
253.Costing is a technique of
d) Calculation of cost
e) Reduction of cost
Ans.c
254.Cost accounting has been developed because of of financial accounting.
a) limitations
b) expenditure
c) statutory requirements
d) both (a) and (b)
e) None of these
Ans.a
255.Cost accountancy is the science, art and of cost accountant.
a) Profession
b) Management
c) Administration
d) Practice
e) All of these
Ans.d
256.In automobile industry cost unit is
a) Number
b) Automobile quality
c) Number of automobile industry
d) Either (a) or (c)
e) None of these
Ans.b
257.Cost unit in a college may be
a) teacher
b) Non teacher staff
c) Student
d) Number of departments
e) None of these
Ans.c
258.costing is suitable for mines, quarries, cement works etc. a) Process
b) Contract
c) Batch
d) Operation
e) Job
Ans. b
259.is an extension of job costing.
a) Process costing
b) Batch costing
c) Contract costing
d) Operation costing
e) None of these
Ans.e
260.When job is very big and spread over long periods of time the method of costing adopted is
a) Process
b) Job
c) Contract
d) Operation
e) Batch
Ans.b
261.Continuous costing is also called
a) Operation costing
b) Process costing
c) Batch costing
d) Contract costing
e) None of these
Ans.e
262.The main types of costing for ascertaining costs do not include
a) Uniform costing
b) Standard costing
c) Marginal costing
d) Historical costing
Ans.c
263.Cost accounting is based on figures.
a) Approximated
b) Estimated
c) Historical
d) Either (a) or (c)
e) None of these
Ans.c
264.costing is used in transport undertaking.
a) Operating
b) Standard
c) marginal
d) Absorption
e) Service
Ans.a
265.In costing the cost of a group of products is ascertained.
a) Process
b) Job
c) Batch
d) Service
e) Marginal
Ans. d
266.The total of all direct expenses Is known as
a) Total cost
b) Overhead
c) Prime cost
d) Work cost
e) None of these
ans.c
267.Work cost is the total of
a) Direct cost
b) Indirect cost
c) Variable cost
d) Controllable cost
e) Uncontrollable cost
Ans.e
268.Opportunity cost does not involve
a) Cash inflow
b) Cash outflow
c) Cash outlay
d) Either (a) or (b)
e) None of these
Ans.b
269.Depreciation is expenditure.
A) variable
b) Fixed
c) Direct
d) Indirect
e) Semi-variable
Ans.b
270.Out of pocket payment involves payment to
a) Managers
b) Promoters
c) Directors
d) Shareholders
e) Outsiders
Ans.d
271.Value added is the change in
a) Face value
b) Market value
c) Book value
d) Realizable value
e) None of these
Ans.a
272.The two aspects of material control are accounting aspect and aspect.
a) Financial
b) Economic
C) social
d) Operational
e) None of these
Ans.b
273.Material control aims at achieving effective
management.
a) Marketing
b) Production
c) Organization
d) Material
e) None of these
Ans. a
274.Stores ledger is maintained in the
department.
a) Cost accounting
b) Stores
c) Purchase
d) Production
e) None of these
Ans.d
275.Bin card is a record of only.
a) Quality
b) quanity
c) Numbers
d) Value
e) None
Ans.d
276.Bin card is maintained by
a) Purchase department
b) Production department
c) Marketing department
d) Stores keeper
e) None of these
Ans.a
277.With regard to break –even charts and break- even analysis, which of the following is true ?
a. It is assumed that variable cost
fluctuates in direct proportion to output
b. The break the break-even point is at the intersection of the sales line and the variable cost line
c. A break-even chart shown the
maximum profit possible
d. A break-even chart is capable of
dealing with any change of product mix
Ans.b
278.The following data relate to two output levels of a department : Machine hours 17,000 18,500
Overheads (`) 2, 46,500 2,51,750
The variable overhead rate per hour is ` 3.50. The amount of fixed overheads is:
a. 5,250
b. 59,500
c. 1,87,000
d. 2, 46,500
ans.d
279.The following data relate to two activity levels of an out-patients‘department in a hospital : No. of consultations per patient 4,500 5,750
Overheads ` 2,69,750 ` 2,89,125
Fixed overheads are ` 2,00,000 per period. The variable cost per consultation is
a. 15.50
b. 44.44
c. 59.94
d. none of the above
ans.a
280.Break-even analysis assumes that over the relevant range:
a. Total costs are unchanged
b. Unit variable costs are unchanged
c. Variable costs are non-linear
d. Unit fixed costs are unchanged
Ans.b
281.ABC Ltd. Has fixed costs of ` 60,000 p.a.. It manufactures a single product, which it sells for
` 20 per unit. Its contribution to sales ratio is 40%. ABC Ltd‘s break-even point in units is : sts of
a.2,000
b 3,000
c. 5,000
d. 7,500
ans.d
282.Sun Ltd. Makes a single product which it sells for ` 10 per unit. Fixed costs are ` 48,000 per month and the product has a contribution to sales ratio of 40%. In a period when actual sales were
` 1, 40,000. Sun Ltd.‘s margin of safety in units was :
a. 2,000
b. 6,000
c. 8,000
d. 12,000
ans.a
283.A company produced 500 units of a product and incurred the following costs: ` Direct materials 8,000
Direct wages 10,000
Overheads (20% fixed) 45,000
If the sales value of 500 units was ` 1,02,000, what is contribution margin ?
a. 44%
b. 47%
c. 53%
d. 74%
ans.b
-Use the following data for questions 38 and 39:
Budget data for the Happy Ltd. Sales (1,00,000 units) ` 10,00,000 Costs : Variable ` 7,00,000
Fixed ` 2,10,000 9,10,000
Operating profit ` 90,000
284.If fixed costs increased by ` 31,500 with no other cost or revenue factors changing, the break- even sales in units would be :
a. 34,500
b. 80,500
c. 69,000
d. 94,500
ans.d
284.If Happy Ltd. Is subject to an effective income tax rate of 40%, the number of units Happy Ltd. Would have to sell to earn an after-tax profit of ` 90,000 is :
a. 1,00,000 units
b. 1,20,000 units
c. 1,12,000 units
d. 1,45,000 units
ans.a
285.Selling a product at a price equivalent to or below marginal cost is recommended for a short period in certain special circumstances, such as
a. Introducing a new product
b. Exploring foreign market
c. Driving out a weaker competitor
d. All of the above
Ans.c
286.Which of the following is not a relevant cost information in a make or buy decision?
a. Variable cost of making
b. General fixed cost
c. Purchase price
d. Loss of contribution to make the
product
Ans. a
287.Which of the following factors are not qualitative factors in a make or buy decision ?
a. Doubt as to the ability of the
subcontractor to meet delivery dates
b. Doubt as to ability of the
subcontractor to maintain quality
c. The case with which improvements
can be made to the product
d. The effect of redundancy on labour
relations
Ans.b
288.The process of distribution of overheads allotted to a particular department or cost center over the units produced is called:
a. Allocation
b. Apportionment
c. Absorption
d. Departmentalization
Ans. d
289.Angle of incidence defines:
a. Systematic risk in CAPM model
b. Post BEP relationship between total
cost and total revenue
c. Incidental factors in investments
d. Marginal cost of production
Ans.a
290.A Ltd. Has sales of ` 2,200, total fixed cost of ` 570, variable cost of ` 1,540, raw material consumed of ` 1,100, number of units sold 22,000.
What shall be the BEP 9in units) if raw material price is reduced by 2%?
a. 18,387
b. 18,560
c. 18,750
d. 19,000
ans.b
291.If an item of overhead expenditure is charged specifically to a single department this would be an example of:
a. Apportionment
b. Allocation
c. Re-apportionment
d. Absorption
292.Interest on own capital is a:
a. Cash cost
b. Notional cost
c. Sunk cost
d. Part of prime cost
Ans.a
293.Objectives of research and development costs include:
a. Maintaining present competitive
position
b. Improving enterprise‘s competitive
position
c. Exploring now market/products
d. All of the above
Ans.d
294.Normal stores losses are:
a. Part of prime cost
b. Part of production overheads
c. Part of selling and distribution
overheads
d. Written-off to costing and profit and
loss account
Ans. a
295.Secondary packing expenses are:
a. Part of prime cost
b. Part of production overheads
c. Part of distribution overheads
d. Written-off to costing profit and loss
account
Ans.d
296.If you know that with 8 units of output, average fixed cost is `12.50 and average variable cost is ` 81.25, then total cost at this output level is: a. 93.75.
b .97.78.
c. 750.
d. 880.
Ans.c
297.The methods of treating cost of small tools in cost accounts include
a. Charging to expense
b. Charging to stores
c. Capitalizing in a small tools account
d. All of the above
Ans.c
298.under marginal costing:
a. All costs are classified into two groups
– variable and fixed
b. Variable costs form part of the product
cost and inventory valuation
c. Fixed costs are treated as period costs
d. All of the above
Ans.c
299.Which of the following definitions describe marginal cost?
a. The variable cost of one unit of
product or service
b. A principle whereby variable costs are
charged to cost units and the fixed costs attributable to the relevant period are written-off in full against the contribution for that period
c. Costs appropriate to aiding the making
of specific management decisions
d. The price at which material identical to
that which is used up could be replaced on the date of usage
Ans. c
300. According to Rowan premium plan, which of the following formula is used to calculate the bonus rate?
a. (Time saved/time allowed) x 100
b. (Time allowed/time saved) x 100
c. (Actual time taken/time allowed) x 100
d. (Time allowed/actual time taken) x 100
Ans.b