For More Material Visit Techshristi.

Com
(1) (2) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (13) (14) (15) (16) (17)

:: 1 ::

Special donations are carried to the.of the balance sheet. Ans. liabilities side Any profit on the sale of a cricket bat of a club will be taken to. Ans. income and expenditure account Cash paid to creditors can be calculated from.. Ans. creditors account Under the net worth method of single entry the net profit is calculated by comparing capital in the beginning and capital. Ans: at the end Credit sales is computed from....... Ans. total creditors account Capital in the beginning is ascertained from . Ans. opening balance sheet. Bills receivable endorsed but dishonoured is debited to Ans. debtors account Bills receivable received during the year is credited to . Ans. debtors' account Bills receivable as endorsed is debited to .. Ans. creditors' account Bills payable honoured during the year will be debited to Ans. bills payable account Bills payable dishonoured during the year will be credited to Ans. creditors account. The amount of interest is credited by the buyer to... Ans.vendor account The depreciation in the books of buyer is charged on.. Ans.the cash price Stock at the shop is debited to Ans.shop stock account The goods with customers are transferred from stock in shop account. Ans. at hire-purchase price If the rate of gross profit for department X is 25% of the cost and its sales amount to Rs. 1,00,000, then the amount of gross profit will be equal to Ans.Rs. 20,000 Repairs to machines in different departments are to be allocated on the basis of.... Ans: actual cost Under debtors system, the branch account is.. Ans. nominal account. Petty expenses paid by the branch out of petty cash maintained on imprested system will be shown on the ..branch account. Ans.debit side Under the branch trading and profit and loss account system, the branch account is of the nature of . Ans.personal account Under trading and profit and loss system, the remittances made to the branch are to the branch account Ans. Credited Under trading and profit and loss system, the profits of a branch are.branch account

For More Material Visit Techshristi.Com

:: 2 ::

Ans.debited to branch account (18) The difference of the two sides of the branch account, under branch trading and profit and loss account system, shows .. from the branch. Ans.amount due (19) Branch adjustment account is in the nature of.. Ans.nominal account (20) If the branch has collected money from a customer of the head office, then (in the head office books) branch account is.. Ans.debited (21) In case of foreign branches, the remittances to and from head office should be converted at Ans.actual rate at which the remittances were made. (22) Cash remitted by branch but not received by the head office is debited by the head office to Ans.cash-in-transit account. (23) Goods sent by the head office to the branch not received by the branch are credited by H.O. to Ans.branch account (24) Goods sent by branch x to branch y, will be debited to Ans.branch y (25) Closing stock + cost of goods soldPurchases = Ans.opening stock (26) The main object of the average clause is to discourage.. Ans.under insurance (27) Under the average clause, the loss is suffered by both insurer and insured a. Ans.in the ratio of risk covered (28) Royalty account is in the nature of.. a. Ans.nminal account (28) If the right to recoup the shortcomings has expired, they are transferred by the lessee to Ans.Profit and loss account (29) The receipts and payments account records receipts and payments of both apital and .nature. Ans.revenue (30) Income and Expenditure accunt is a Ans. nominal account (31) The income and expenditure account begins with . Ans. no balance (16) When the lessor receives payment, the credits (i) Lessee account (ii) Royalty account (iii) Short workings account. Ans.(i) Lessee account Royalty earned by the lessee is credited to (i) Sub-lessee account (ii) Profit and loss account (iii) Royalty receivable account. Ans.(iii) Royalty receivable account.

(17)

For More Material Visit Techshristi.Com

(18)

:: 3 ::

(19)

(20)

(21)

(22)

(23)

(24)

(25)

(26)

The balance of royalty payable account is transferred to (i) Profit and loss account (ii) Royalties suspense account (iii) Production account. Ans.(iii) Production account. The balance of royaltys receivable account is transferred to (i) Profit and loss account (ii) Royalties suspense account (iii) Production account. Ans.(i) Profit and loss account Under the double account system, the profit and loss account is called 1. Profit and loss account 2. Income and expenditure account 3. Revenue account. Ans.(iii) Revenue account. Under the double account system, the profit and loss appropriation account is called (i) Net revenue account (ii) Profit and loss appropriation account (iii) Profit and loss account. Ans. (i) Net revenue account The depreciation on the fixed assets, under the double account system, is shown as 4. Depreciation reserve on the liabilities side of the general balance sheet 5. A deduction from the fixed assets 6. An expenditure on capital account in the first section of the balance sheet. Ans. (i) Depreciation reserve on the liabilities side of the general balance sheet Under the double account system, interest on debentures is shown in (i)Revenue account (ii) Net revenue account (iii) Profit and loss account. Ans.(ii) Net revenue account Share forfeited account is shown on 7. Liabilities side of the general balance sheet 8. Credit side of the net revenue account 9. Credit side of the receipts and expenditures on capital account Ans.(iii) Credit side of the receipts and expenditures on capital account 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) Rs. 30,000. 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 10. Rs. 20,000 11. Rs. 50,000

For More Material Visit Techshristi.Com

:: 4 ::

(27)

(28)

(29)

12. Rs. 30,000. Ans.(i) Rs. 20,000 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) Rs. 28,000 Calls in advance are shown on the 13. Liabilities side of the general balance sheet 14. Expenditure side of receipts and expenditures on capital account 15. Receipts side of receipts and expenditures on capital account. Ans.(iii) Receipts side of receipts and expenditures on capital account. Plant and machinery is shown on the (i) Assets side of the general balance sheet (ii) Expenditure side of the receipts and expenditures on capital account (iii) Receipts side of the receipts and expenditures on capital account. Ans.(ii) Expenditure side of the receipts and expenditures on capital account

For More Material Visit Techshristi.Com

(30)

:: 5 ::

(31)

(32)

(33)

(34)

(35)

(36)

(37)

The value of goodwill, according to the simple profit method, is 16. The product of current year's profit and number of years 17. The product of last year's profit and number of years 18. The product of average profits of the given years and number of years. Ans.(iii)The product of average profits of the given years and number of years. 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) Rs. 18,000 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) Rs. 37,500 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 (i) Rs. 10,000 (ii) Rs. 9,000 (iii) Rs. 15,000. Ans.(ii) Rs. 9,000 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 (i)Rs. 60,000 (ii) Rs. 600 (iii) Neither of the two. Ans.(i)Rs. 60,000 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 (i) Rs. 2 per share (ii) Rs. 4 per share (iii) Rs. 5 per share. Ans.(ii) Rs. 4 per share It is given that net assets available for equity and preference shares amount to Rs. 1,87,000. The paid-up capitals are10,000 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) Rs. 20 per share. 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 19. Rs. 25 20. Rs. 50

For More Material Visit Techshristi.Com

:: 6 ::

(38)

(39)

(40)

(41)

(42)

(43)

(44)

(45)

21. Rs. 100. Ans.(i) Rs. 25 For calculating the value of an equity share by intrinsic value method, it is essential to know (i) Normal rate of return (ii) Expected rate of return (iii) Net equity. Ans.(iii) Net equity. For calculating the value of an equity share by yield method, it is essential to know (i)Expected rate of return (ii) Called-up equity share capital (iii) Capital employed. Ans. (i) Expected rate of return For calculating price-earnings ratio, it is essential to know (i) Market value per share (ii) Nominal value per share (iii) Paid-up value per share. Ans.(i) Market value per share 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) Rate of earning A Ltd. and B Ltd. go into liquidation and a new company X Ltd. is formed. It is a case of (i) Absorption (ii) External reconstruction (iii) Amalgamation. Ans.(iii) Amalgamation. 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 (i) Absorption (ii) External reconstruction (iii) Amalgamation. Ans.(ii) External reconstruction X Ltd. goes into liquidation and an existing company Z Ltd. purchases the business of X Ltd. It is a case of (i) Absorption (ii) External reconstruction (iii) Amalgamation. Ans.(i) Absorption Accumulated profits include (i) Provision for doubtful debts (ii) Superannuation fund (iii) Workmen's compensation fund. Ans.(iii) Workmen's compensation fund.

For More Material Visit Techshristi.Com

(46)

:: 7 ::

(47)

(48)

(49)

(50)

(51)

(52)

(53)

Liabilities (not accumulated profits) of a company include (i) General reserve (ii) Pension fund (iii) Dividend equalisation fund. Ans. (ii) Pension fund When the expenses of liquidation are to be borne by the vendor company, then the vendor company debits (i) Realisation account (ii) Bank account (iii) Goodwill account. Ans. (i) Realisation account When the expenses of liquidation are to be borne by the purchasing company, then the purchasing company debits (i) Vendor company's account (ii) Bank account (iii) Goodwill account. Ans. (iii) Goodwill account. When the purchasing company makes payment of the purchase consideration, it debits (i) Business purchase account (ii) Assets account (iii) Vendor company's account. Ans. (iii) Vendor company's account. The vendor company transfers preliminary expenses (at the time of absorption) to (i) Equity shareholders' account (ii) Realisation account (iii) Purchasing company's account. Ans. (i) Equity shareholders' account For paying liabilities not taken over by the purchasing company, the vendor company credits (i) Realisation account (ii) Bank account (iii) Liabilities account. Ans.(ii) Bank account 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 (i) Vendor company's account (ii) Shares in the vendor company account (iii) Share capital account. Ans.(ii) Shares in the vendor company account The share capital, to the extent already held by the purchasing company, is closed by the vendor company by crediting it to (i) Share capital account (ii) Purchasing company's account (iii) Realisation account. Ans.(iii) Realisation account.

For More Material Visit Techshristi.Com

(54)

:: 8 ::

(55)

(56)

(57)

(58)

(59)

(60)

(61)

In case of sub-division of share capital the total number of shares (i) Increases (ii) Decreases (iii) Does not change. Ans.(i) Increases 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 (i) Consolidation of share capital (ii) Sub-division of share capital (iii) Decrease in unissued share capital. Ans.(i) Consolidation of share capital When a company converts its equity shares into the capital stock, then the account to be credited is (i)Equity share capital account (ii) Equity capital stock account (iii) No entry is required. Ans.(ii) Equity capital stock account 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 (i) Reducing share capital by returning the excess capital (ii) Reducing the liability on account of uncalled capital (iii) Reducing the paid-up capital. Ans.(i) Reducing share capital by returning the excess capital For writing off the accumulated Josses under the scheme of capital reduction, we debit (i) Share capital account (ii) Accumulated losses account (iii) Capital reduction account. Ans.(iii) Capital reduction account. If there is any balance in the capital reduction account after writing off all the accumulated losses, then the same is transferred to 22. Share capital account 23. Capital reserve account 24. General reserve account. Ans.(ii) Capital reserve account 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 (i) Consolidation of share capital (ii) Sub-division of share capital (iii) Decrease in unissued share capital. Ans.(ii) Sub-division of share capital If the creditors are willing to reduce their claims against the company, (hen the amount of reduction in their claim will be transferred to (i) Share capital account (ii) Creditors account (iii) Capital reduction account. Ans.(iii) Capital reduction account.

For More Material Visit Techshristi.Com

(62)

:: 9 ::

(63)

(64)

(65)

(66)

(67)

(68)

(69)

Any loss on revaluation of the assets at the time of internal reconstruction, will be charged from (i) Revaluation account (ii) Share capital account (iii) Capital reduction account. Ans.(iii) Capital reduction account. 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 (i) Rs. 600 (ii) Rs. 400 (iii) Rs. 1,000. Ans.(ii) Rs. 400 A banking company can pay dividend on its shares without writing off (i) Preliminary expenses (ii) Brokerage (iii) The bad debts (provided adequate provision has been made). Ans.(iii) The bad debts (provided adequate provision has been made). 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 (i) Rs. 30,000 to statutory reserve (ii) Rs. 25,000 to statutory reserve (iii) May be exempted from making such transfer. Ans.(iii) May be exempted from making such transfer. Provision for bad debs and doubtful debts is (i) Not shown anywhere in the published accounts of a banking company (ii) Shown on the debit side of the profit and loss account (iii) Shown as a deduction from the interest and discount income on the credit side of profit and loss account. Ans.(i) Not shown anywhere in the published accounts of a banking company Rebate on biffs discounted account is a (i) Real account (ii) Personal account (iii) Nominal account. Ans.(ii) Personal account If the balance of rebate on bills discounted is given in the trial balance, it will be taken to (i) Debit side of the profit and Joss account (ii) Credit side of the profit and loss account as a deduction from interest and discount (iii) Liabilities side of the balance-sheet. Ans.(iii) Liabilities side of the balance-sheet. Money at call and short notice is shown (i) On the liability side of the balance sheet (ii) On the asset side of the balance sheet (iii) It is a contra item. Ans.(ii) On the asset side of the balance sheet

For More Material Visit Techshristi.Com

(70)

:: 10 ::

(71)

(72)

(73)

(74)

(75)

(76)

(77)

Provision for taxation is shown (i) On the debit side of the profit and loss account (ii)As a deduction from interest and discount on the credit side of the profit and loss account (iii)On the asset side of the balance sheet. Ans. (ii) As a deduction from interest and discount on the credit side of the profit and loss account Loans, cash credits and overdrafts are shown (i) On the asset side of the balance sheet (ii) On the liability side of the balance sheet (iii) These are contra items. Ans.(i) On the asset side of the balance sheet Bills discounted and purchased are shown (i) On the asset side of the balance sheet (ii) On the liability side of the balance sheet (iii) Neither of the two sides. Ans.(i) On the asset side of the balance sheet Deposits and other accounts are shown (i) On the asset side of the balance sheet (ii) On the liability side of the balance sheet (iii) These are contra items. Ans.(ii) On the liability side of the balance sheet A general insurance company carrying on two or more types of business prepares only (i) Revenue accounts in respect of different businesses (ii) Profit and loss account (including appropriation account) (iii) Separate revenue accounts for each type of business and combined profit and loss account. Ans.(iii) Separate revenue accounts for each type of business and combined profit and loss account. Reserve for unexpired risks appearing outside the trial balance under adjustments is 25.Shown on the debit side of the revenue account and liabilities side of the balance sheet 26. Shown on the credit side of the revenue account and asset side of the balance sheet 27. Shown as a contra item in the balance sheet. Ans. (i) Shown on the debit side of the revenue account and liabilities side of the balance sheet Reinsurance premium is shown 28. On the debit side of revenue account 29. On the liability side of the balance sheet 30. As deduction from the premiums on the credit side of the revenue account. Ans.(iii) As deduction from the premiums on the credit side of the revenue account. Expenses of management (not applicable to any particular business) are shown in (i) Revenue account (ii) Profit and loss account

For More Material Visit Techshristi.Com

:: 11 ::

(78)

(79)

(80)

(81)

(82)

(83)

(84)

(iii) Profit and loss appropriation account. Ans.(ii) Profit and loss account Transfer fees are credited to (i) Revenue account (ii) Profit and loss account (iii) Profit and loss appropriation account. Ans.(ii) Profit and loss account Legal fees in respect of claims are shown in (i) Revenue account (ii) Profit and loss account (iii) Profit and loss appropriation account. Ans.(i) Revenue account It is given that claims paid during the year amounted to Rs. 1,00,000. The claims outstanding in 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) Rs. 95,000. 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) Rs. 70,000. 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) Rs. 65,000 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 31. Rs.10,00,000 32. Rs. 9,50,000 33. Rs. 9,20,000. Ans.(ii) Rs. 9,50,000 Postulates of Accounting are: (i) Exchange (ii) Period (iii) Unit of measure (iv) All of these Ans.(iv) All of these

For More Material Visit Techshristi.Com

(85)

:: 12 ::

(86)

(87)

(88)

(89)

(90)

(91)

(92) (93)

Meaning of Net Assets is : (i) Total Assets Total Liabilities (ii) Fixed Assets + Current Assets (iii) Total Assets Current Liabilities (iv) Total Assets Outside Liabilities Ans.(iv) Total Assets Outside Liabilities Valuation of closing stock is to be made: (i) on cost price (ii) on market price (iii) cost price or market price, whichever is less (iv) None of these Ans.(iii) cost price or market price, whichever is less According to the cost concept, the assets are always valued at : 34. on cost price 35. on market price 36. on purchase price 37. None of these Ans.(iii) on purchase price Under Hire Purchase System depreciation is charged : (i) On cash price (ii) Hire purchase price (iii) Market price (iv) None of these Ans.(i) On cash price Hirer charges depreciation on: (i) Hire purchase price (ii) Cash price. (iii) Lower of the two (iv) None of these Ans.(ii) Cash price. What is transferred to Hirer under hire purchase system : (i) Ownership of assets (ii) Possession of asset (iii) Ownership and possession of asset (iv) None of these Ans.(ii) Possession of asset Hire Purchase Act is : (i) 1932 (ii) 1956 (iii) 1972 (iv) 1872 Ans.(iii) 1972 The Sale of Goods Act is applicable in: (i) Credit Purchases (ii) Cash Purchases (iii) Cash Sales (iv) None of these Ans.(i)Credit Purchases What is transferred to Hirer under Instalment Payment system : (i) Ownership of Assets (ii) Possession of Assets (iii) Ownership and Possession of assets

For More Material Visit Techshristi.Com

:: 13 ::

(iv) None of these. Ans.(iii) Ownership and Possession of assets (94) Branch Adjustment Account is prepared: (i) By Dependent Branch (ii) By H.O. of Dependent Branch (iii)By H.O. of Independent Branch (iv) None of these Ans.(ii) By H.O. of Dependent Branch (95) Which account is prepared to find out the amount of closing stock: (i) Head Office A/c (ii) Branch A/c (iii) Memorandum Stock A/c (iv) None of these Ans.(iii) Memorandum Stock A/c) (96) Branch account under debtor system is: (i) Real account (ii) Personal account (iii) Nominal account (iv) None of these Ans.(iii) Nominal account (97) Branch Adjustment account is in the nature of : (i) Real account (ii) Nominal account (iii) Personal account (iv) None of these Ans.(ii) Nominal account (98)In foreign branch fixed assets shall be converted at: (i) Opening rate (ii) Average rate (iii) Rate of the date of purchase (iv) None of these Ans.(i) Opening rate (99) By what rate the balance of H.O. a/c is converted in foreign branch : (i) Opening rate (ii) Closing rate (iii) Average rate (iv) None of these Ans.(iv) None of these (100) 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) Rs. 15,000 (101) Loss of Profit Policy indemnity : (i) Capital Loss (ii) Revenue Loss (iii) Budgeted Loss

For More Material Visit Techshristi.Com

:: 14 ::

(102)

(103)

(104)

(105)

(106)

(107)

(108)

(109)

(iv) Gross Loss. Ans.(iii) Budgeted Loss 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) Rs. 47,250 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) Rs. 20,000 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) Rs. 20,000 Excess of assets over liabilities is called : (i) Creditors (ii) Profit (iii) Capital (iv) Goodwill Ans.(iii) Capital Amount of Drawings is added at the time of finding out profit in single entry system: (i) In closing capital (ii) In opening capital (iii) Not in any capital. Ans. (i) In closing capital The amount of additional capital is deducted at the time of finding out profit in Single Entry System: (i) from closing capital (ii) from opening capital (iii) not from any capital. Ans.(i) from closing capital Following records are made in single entry system, give correct answer: (i) Only in cash book (ii) In ledger, posting of personal accounts only (iii) records in cash book and posting of only personal accounts in ledger. Ans.(iii). records in cash book and posting of only personal accounts in ledger. Meaning of single entry system of Book-keeping is: (i) Only one entry for each transaction.

For More Material Visit Techshristi.Com

:: 15 ::

(110)

(111)

(112)

(113)

(114)

(115)

(116)

(117)

(ii) Incomplete double entry system (iii) Both entries only in accounts Ans.(ii). Incomplete double entry system Single entry system of book-keeping system: (i) is best system (ii) is scientific system (iii) is incomplete system (iv) is most popular system. Ans.(iii) is incomplete system Liabilities and assets respectively are Rs. 87,000 and Rs. 92,000. Amount of difference will be: (i) Creditors (ii) Debentures (iii) Profit (iv) Capital (v) None out of these. Ans.(iv) Rs. 5,000 Capital. To find out the opening and closing capitals, statement of affairs are prepared: (i) One (ii) Two (iii) Four. Ans.(ii) Two. The expenses which are not departmental: (i) are charged to departments in sales ratio. (ii) are charged to departments in the ratio of assets employed thereto. (iii) are charged to general profit and loss account. Ans. (iii) are charged to general profit and loss account. Cum-dividend quotation of shares means that the quotation includes: (i) dividend which may be declared in future. (ii) dividend declared recently but not yet paid. (iii) nothing else but the price of the share. Ans. (ii) dividend declared recently but not yet paid. A quotation is ex-interest when : (i) the interest to the date of transaction is to be paid in addition to the settled price. (ii) interest has already been deducted from the price. (iii) 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. Interest is calculated on: (i) market price of securities (ii) purchase price of securities (iii) book value of securities (iv) face value of securities. Ans.(iv) face value of securities. Meaning of ex-interest price of investment is : (i) market price + interest (ii) market price interest (iii) market price (iv) none out of these

For More Material Visit Techshristi.Com

(118)

:: 16 ::

(119)

(120)

(121)

(122)

(123)

(124)

(125)

Ans.(ii) market price interest The amount of goodwill is paid by the new partner: (i) For getting share in future profits (ii) For Paying Entry Fee (iii) For Paying Capital (iv) For getting right over assets. Ans.(i) For getting share in future profits The value of goodwill is the highest of: (i) Dog Goodwill (ii) Rat Goodwill (iii) Cat Goodwill (iv) All the above Ans.(iii) Cat Goodwill The present value of annuity of Re. 1 for 8 years at 10% is Rs. 2.487. Super profit is Rs. 22,000. The amount of goodwill will be : (i) Rs. 5,471 (ii) Rs. 2,200 (iii) Rs. 71,745 (iv) Rs. 54,714 Ans.(iv) Rs. 54,714 Weighted average profit method is suitable : (i) When there is stability in profits (ii) When there is unstability in profits (iii) When there is increase in profits gradually (iv) When there is decrease in profits gradually Ans.(iii) When there is increase in profits gradually The method of valuation of shares is: (i) Goodwill Valuation Method (ii) Income Valuation Method (iii) Profit Valuation Method (iv) All the above Ans.(ii) Income Valuation Method In comparison to face value, the valuation of shares is usually: (i) More (ii) Less (iii) Equal (iv) Less or More. Ans.(iv) Less or More When value of shares is found out on the basis of its dividend or expected dividend, it is called : (i) Asset Valuation Method (ii) Yield or Income Valuation Method (iii) Fair Value Method (iv) None of the above. Ans.(ii) Yield or Income Valuation Method The most appropriate method of valuation of shares from the point of view of investor is : (i) Net Assets method (ii) Income Valuation Method

For More Material Visit Techshristi.Com

:: 17 ::

(126)

(127)

(128)

(129)

(iii) Net Asset and Income Method (iv) None of the above. Ans.(ii) Income Valuation Method In respect of the valuation of shares, the employed capital means: (i) Cost price of all the assets (ii) Market value of all the assets (iii) Book value of all the assets] (iv) All the above values Ans.(ii) Market value of all the assets The value of per shares on division of amount of net assets by number of share will be : (i) Intrinsic Value (ii) Book Value (iii) Cost Price (iv) Market Value Ans.(i) Intrinsic Value When one company goes in liquidation and a new company is formed to take over the business of the company which goes in liquidation, this is called : (i) Amalgamation (ii) Absorption (iii) External Reconstruction (iv) Internal Reconstruction Ans.(iii) External Reconstruction In internal reconstruction : (i) No company goes into liquidation (ii) Only one company goes into liquidation (iii) Two or more companies are liquidated (iv) One or more companies go into liquidation Ans.(i) No company goes into liquidation.

For More Material Visit Techshristi.Com

:: 18 ::

(130) If the net assets taken over by the company are less than the purchase consideration, the difference shall be treated as : (i) Secret Reserve (ii) Goodwill (iii) Capital Reserve (iv) General Reserve Ans.(ii) Goodwill (131) Interest on debentures is recorded in : (i) Capital account (ii) Net Revenue account (iii) Revenue account (iv) Not in any account Ans.(ii) Net Revenue account (132) Interest on bank loan is recorded in : (i) Revenue account (ii) Net revenue account (iii) Capital Account (iv) Not in any account Ans.(ii) Net revenue account (133) Equity share capital is recorded in : (i) General balance Sheet (ii) Net Revenue account (iii) Capital account (iv) Not in any account Ans.(iii) Capital account (134) When was banking company regulation act implemented? (i) 1947 (ii) 1949 (iii) 1950 (iv) 1956 Ans.(ii) 1949 (135) How many schedules are there in the amended from of Final Account of Banking Company: (i) 8 (ii) 10 (iii) 12 (iv) 16 Ans.(iv) 16 (136) What is the rate of statutory reserve to be maintained under section 17 of Banking Company Act? (i) 10% of Net Profit (ii) 15% of Net Profit (iii) 20% of Net Profit (iv) 30% of Net Profit Ans.(iii) 20% of Net Profit (137) In which year 14 Banks were Nationalised? (i) 1969

For More Material Visit Techshristi.Com

:: 19 ::

(138)

(139)

(140)

(141)

(142)

(143)

(215)

(ii) 1971 (iii) 1973 (iv) 1977 Ans.(i) 1969 Paid up capital of a bank should not be less then the following percentage of subscribed capital : (i) 25% (ii) 50% (iii) 75% (iv) 100% Ans.(ii) 50% If nothing is given) What is the percentage maintained by Marine Insurance companies for Reserve for Unexpired Risk : (i) 40% of Net Premium (ii) 50% of Net Premium (iii) 60% of Net Premium (iv) 100% of Net Premium. Ans.(iv) 100% of Net Premium. When were General Insurance Companies nationalised: 38. 1955 39. 1969 40. 1971 41. 1973 Ans.(iii) 1971 (If nothing is given) What is the percentage maintained for Additional Reserve : (i) 10% of Net Premium (ii) 20% of Net Premium (iii) 0% of Net Premium (iv) 25% of Net Premium Ans.(iii) 0% of Net Premium (If nothing is given) What is the percentage maintained by Insurance Companies other than Marine Insurance Company for Reserve for unexpired risk: (i) 40% of Net Premium (ii) 50% of Net Premium (iii) 45% of Net Premium (iv) 100% of Net Premium Ans.(ii) 50% of Net Premium Medical expenses regarding claims are added to: (i) Claims (ii) Premium (iii) Management Exp. (iv) None of above Ans.(i) Claims Livestock in the case of mixed farming is i. a fixed asset. ii. a current asset iii. a wasting asset. iv. a tangible asset. Ans. ii. a current asset

For More Material Visit Techshristi.Com

:: 20 ::

(216) Crops are valued at i. market price. ii. cost price. iii. capitalised value. iv. economic value. Ans. i. market price. (217) Final accounts of a farmer can be prepared under i. single entry method. ii. double entry method. iii. both single and double entry methods. iv. none of the above. Ans. iii. both single and double entry methods. (218) The cash book usually maintained by the fanner is i. petty cash book. ii. two-column cash book. iii. analytical cash book. iv. three column cash book. Ans. iii. analytical cash book. (219) Livestock purchased will figure in i. the balance sheet. ii. the trading account. iii. the profit and loss account. iv. the current account. Ans. ii. the trading account. (220) Grain consumed by livestock will figure i. in the livestock account. ii. in the crop account. iii. both in the livestock and crop account. iv. none of the above. Ans. iii. both in the livestock and crop account. (221) Which one of the following is the criterion, as per AS-7, for determining the percentage of completion of contract? i. Proportion of progress payments received to total contract price. ii. Proportion of work certified to total contract price. iii. Proportion of costs Incurred to date to the estimated total contract costs. iv. Proportion of time taken so far to the total estimated time needed to complete the contract. Ans. iii. Proportion of costs incurred to date to the estimated total contract costs. (222) Notional profit on a contract is Rs. 90,000 and 60% of contract is completed. The customer pays 80% of work certified. The amount of profit to be reserved for contingencies is i. Rs. nil. ii. Rs.36.000. iii. Rs. 18.000. iv. Rs. 42.000. Ans. iv. Rs. 42.000. (223) The estimated loss on a contract is Rs. 100 lakhs. For the accounting year ended 31st December 1999, the loss computed on the contract which is 70% completed is Rs. 60 lakh. The loss to be provided as per AS-7 is

For More Material Visit Techshristi.Com

:: 21 ::

(224)

(225)

(226)

(227)

(228)

(229)

(230)

i. Rs. 100 lakhs. ii. Rs. 40 lakh. iii. Rs. 30 lakhs. iv. Rs. nil. Ans. ii. Rs. 40 lakh. Progress payments and advances received from customers, in respect of contracts in relation to work performed, are disclosed in financial statements as i. a liability. ii. a deduction from the work-in-progress of the contract. iii. (i) or (ii). iv. suspense account. Ans. iii. (i) or (ii). Consequential loss policy indemnifies i. Capital losses ii. Revenue losses iii. Budgeted losses iv. Capital and revenue losses Ans. ii. Revenue losses Fire Insurance provides cover for i. Tangible assets ii. Intangible assets iii. Fictitious assets iv. both tangible and Intangible Ans. i. Tangible assets With the opening stock at Rs. 13,500, purchases at Rs. 82,500. sales at Rs. l,20,000and stock salvaged at Rs. 1,260, the rate of gross profit being 50% on cost, the stock destroyed in fire will be i. Rs. 14,740 ii. Rs. 24,740 iii. Rs. 36,000 iv. Rs. 40,000 Ans. i. Rs. 14,740 The average clause in a loss of profits policy protects the i. Insured ii. Insurer iii. Workers iv. Tax authorities Ans. ii. Insurer If indemnity period is six months, standard turnover Rs. 20,000, annual turnover Rs. 50,000, turnover during indemnity period Rs. 8,000. short sales will amount to i. Rs. 30,000 ii. Rs. 12,000 iii. Rs. 42,000 iv. Rs. 50,000 Ans. ii. Rs. 12,000 A fire insurance policy is taken up to indemnify i. Capital losses to tangible property ii. Revenue losses to tangible property iii. Capital losses to intangible property

For More Material Visit Techshristi.Com

:: 22 ::

(231)

(232)

(233)

(234)

(235)

(236)

(237)

iv. Revenue losses to intangible property. Ans. i. Capital losses to tangible property Rent and rates are apportioned to different departments on the basis of i. Floor area occupied ii. number of workers iii. sales of each department iv. value of the assets kept Ans. i. Floor area occupied The turnover ratio is used for the allocation of i. income tax ii. bad debts iii. depreciation iv. staff welfare expenses Ans. ii. bad debts Department A produced 1,000 units at a cost of Rs. 2,000 (excluding interdepartmental transfer costs) and B produced 2,000 units at a cost of Rs. 10,000 (excluding inter-departmental transfer costs). Each department transferred to the other department at cost one-fourth of its production to be used as raw material. Total cost of department A is i. Rs.4.500 ii. Rs.4.625 iii. Rs.3.200 iv. Rs.4,800 Ans. iv. Rs.4,800 Provision for unrealised profit with respect to stocks when transfers are effected at transfer price is to be charged to i. departmental trading account ii. departmental profit and loss account iii. either (i) or (ii) iv. general profit and loss account Ans. iv. general profit and loss account Branch account under debtors system is a i. real account ii. nominal account iii. personal account iv. representative personal account. Ans. ii. nominal account Branch account under stock and debtors system is a i. real account ii. nominal account iii. personal account iv. representative personal account Ans. i. real account When branch 'A' sends goods to branch 'B' in the books of branch 'A' debit is given too i. head office account ii. branch 'B' account

For More Material Visit Techshristi.Com

:: 23 ::

(238)

(239)

(240)

(241)

(242)

(243)

(244)

iii. sales return account iv. sales returns account Ans. i. head office account The cash and credit sales of a branch are Rs, 5,000 and Rs. 10,000 respectively. The amount collected from debtors is Rs. 10.000. Under debtors system the amount credited to branch will be i. Rs. 20,000 ii. Rs. 15,000 iii. Rs. 25,000 iv. Rs. 10,000 Ans. ii. Rs. 15,000 Goods are sent to the branch at 20% margin on selling price. When branch stock discloses a surplus of Us. 2.000 the amount to be credited to branch adjustment account (above the line) will be i. Rs. 2,000 ii. Rs. 400 iii. Rs. 333 iv. Rs. 1,600 Ans. ii. Rs. 400 Goods sent by the head office to the branch but not received by the branch before the close of financial year are credited by head office to i. branch account ii. trading account iii. goods sent to branch account iv. goods-in-transit account Ans. i. branch account When a branch purchases fixed assets and the asset account is to be kept in the books of head office, the branch makes the following entry. i. debits head office credits bank ii. debits branch credits head office iii. debits head office credits branch asset iv. debits branch asset credits bank Ans. i. debits head office credits bank Depreciation on branch assets under debtors system is i. not shown separately in branch account ii. shown in branch account iii. not accounted iv. shown in the profit and loss account of head office. Ans. i. not shown separately in branch account Stock reserve in relation to closing stock appears i. on the debit side of branch account ii. on the credit side of branch account iii. on the debit side of profit and loss account iv. on the credit side of the profit and loss account Ans. i. on the debit side of branch account The lessee's right to recover the short working is related lo i. first five years ii. last three years iii. terms of the agreement

For More Material Visit Techshristi.Com

:: 24 ::

(245)

(246)

(247)

(248)

(249)

(250)

(251)

iv. none of the above. Ans. iii. terms of the agreement In the books of lessee, short workings recoverable in future years are i. a revenue expense ii. a normal loss iii. an asset iv. a liability. Ans. iii. an asset In the event of recoupment of short workings, the lessor i. debits landlord's account ii. credits sub-lessee's account iii. debits short workings account iv. debits profit, and loss account. Ans. iii. debits short workings account In the books of lessor short workings irrecoverable are to be i. credited to profit and loss account ii. debited to profit and loss account iii. credited to Trading account iv. credited to short workings account. Ans. iv. credited to short workings account. In case the right to recoup short workings has expired the balance in short workings account is transferred by lessee to i. profit and loss account ii. landlord's account iii. minimum rent account iv. short workings suspense account. Ans. i. profit and loss account When short workings are lo be recovered by a sublessee the account to be debited is i. lessee's account ii. short workings account iii. profit and lessee's account iv. none of the above. Ans. i. lessee's account Under instalment system of purchase, interest suspense account in the books of the buyer is i. Debited with the difference between instalment price and cash price. ii. Credited with the difference between instalment price and cash price. iii. Debited with the interest payable in respect of instalments due. iv. Debited with the interest payable in respect of instalments not due. Ans. i. Debited with the difference between instalment price and cash price. Under the hire-purchase system the buyer becomes the owner of goods : i. Immediately after the delivery of goods. ii. Immediately after the down payment. iii. Immediately after the first instalment is paid. iv. Immediately after the payment of last instalment. Ans. iv. Immediately after the payment of last instalment.

For More Material Visit Techshristi.Com

:: 25 ::

(252) A Ltd. sells 100 machines Costing Rs. l,000 at Rs. 1,500 each on Hire-purchase basis instalment due and received during the period Rs. 9,00,000. The Hirepurchase profit for the period is i. Rs. 9,00,000 ii. Rs. 50,000 iii. Rs. 30,000 iv. Rs. 15,00,000 Ans. iii. Rs. 30,000 (253) Stock out on hire at cost price is ascertained by i. Deducting the gross profit margin from instalments not due and unpaid. ii. Taking the cost in the proportion of paid instalments to total instalments. iii. Taking the cost in the proportion of value of unpaid instalments to HirePurchase price. iv. None of the above. Ans. i. Deducting the gross profit margin from instalments not due and unpaid. (254) A Ltd. sells 100 machines at Hire-purchase price of Rs. 1,500 payable Rs. 300 Cash down and the balance in 12 instalments equally. 400 instalments became due. Cash received was Rs. 65,000. instalments due and unpaid are i. Rs. 40,000 ii. Rs. 5,000 iii. Rs. 80,000 iv. Rs. 85,000 Ans. ii. Rs. 5,000 (255) A tape-recorder was sold at a hire-purchase price of Rs. 1,200, payable in 12 equal instalments. The buyer paid 4 instalments and the tape-recorders was repossessed after 7th instalment balance due. The repossessed tape-recorders were valued at Rs. 850 and its original cost was Rs. 900. Profit on repossession is i. Rs. 50 ii. () Rs. 50 iii. 400. iv. Rs. 350. Ans. i. Rs. 50 (256) Under the net worth method the bases for ascertaining the profit is i. the difference between the capital on two dates ii. the difference between the gross assets on two dates iii. the difference between the liabilities on two dates. iv. the difference between capital assets and liabilities at close Ans. i. the difference between the capitals on two dates (257) Under the net worth method any additions to capital during the accounting period must be i. added to profit ii. subtracted from profit iii. added to capital iv. deducted from capital. Ans. ii. subtracted from profit (258) Cash received from debtors needed for the construction of cash account can be had from. i. total debtors account ii. balance sheet

For More Material Visit Techshristi.Com

:: 26 ::

(259)

(260)

(261)

(262)

(263)

(264)

iii. analysis of cash book iv. pass book. Ans. i. total debtors account Given the opening and closing balances of debtors and the figure of credit sales, the balancing figure of total debtors account will give i. bill retired during the year ii. cash received from debtors iii. closing balance of bills receivable iv. bills received during the year. Ans. ii. cash received from debtors The closing balance of trade debtors can be located from i. total debtors account ii. balance sheet iii. bills receivable account iv. cash book Ans. i. total debtors account An estimate of assets and liabilities as on a dates is called i. balance sheet ii. statement of affairs iii. statement of capital iv. trial balance. Ans. ii. statement of affairs In the case of highly autonomous branches which make use of local currency substantially the method of translation most suitable is i. Temporal method ii. Current/Non-current method iii. Closing rate method iv. Opening rate method. Ans. iii. Closing rate method The gain or loss due to difference in exchange is to be adjusted in the i. Reserves ii. Income statement iii. Retained profits iv. Branch current account. Ans. ii. Income statement The currency into which the trial balance of the branch is translated is known as i. Reporting currency ii. Local currency iii. Foreign currency iv. Translated currency. Ans. i. Reporting currency

(265) Which one of the following combinations of accounting assumptions are fundamental as per AS1? i. Going concern, consistency, and accrual ii. Going concern, conservatism, and historic cost iii. Historic cost, consistency and conservatism iv. Conservatism, consistency and accrual Ans. i. Going concern, consistency, and accrual

For More Material Visit Techshristi.Com

:: 27 ::

(266) Any change in the accounting policy relating to inventories which has a material effect in the current or later periods should be disclosed. This is in accordance with the accounting principle of: i. Going concern ii. Conservatism iii. Consistency iv. Disclosure Ans. iii. Consistency (267) Historical cost of inventories should normally be determined by using i. FIFO, or Weighted average cost formula ii. FIFO, Base Stock, or Adjusted Selling price formula iii. FIFO, LIFO or Latest Purchase Price formula iv. LIFO, Base Stock or Adjusted Selling Price formula Ans. i. FIFO, or Weighted average cost formula (268) Which one of the following formulae is not based on historic cost? i. FIFO ii. LIFO iii. Latest Purchase Price iv. Specific Identifications Ans. iii. Latest Purchase Price (269) Which one of the following methods is best suited to retail business? i. FIFO ii LIFO iii. Latest Purchase Price iv. Retail price method Ans. iv. Retail price method (270) Selling and distribution costs are not included in cost of inventories because they i. are negligible ii. do not relate to bringing the inventories in their present location and condition iii. are period costs iv. are in relation to specific customers Ans. ii. do not relate to bringing the inventories in their present location and condition (271) Cash flows arising from interest paid in the case of a financial enterprise is a cash flow from i. operating activities ii. financing activities iii. both (i) and (ii) iv. investing activities Ans. i. operating activities (272) Interest and dividends received in the case of a manufacturing enterprise should be classified as cash flow from i. operating ii. financing iii. Investing iv. both (ii) and (iii) Ans. iii. Investing

For More Material Visit Techshristi.Com

:: 28 ::

(273) If net profit is taken as the basis to ascertain cash flow from operations, which one of the following adjustments is correct and proper? i. add decrease in current assets and current liabilities ii. add increase in current liabilities and current assets iii. add increase in current assets and deduct decrease in current liabilities. iv. add decrease in current assets and add increase in current liabilities. Ans. iv. add decrease in current assets and add increase in current liabilities. (274) The conversion of debt to equity: i. must be shown on a notional basis as a financing cash flow ii. must be shown on a notional basis as an investment cash flow iii. must not be shown as it is a non-cash transaction iv. none of the above Ans. iii. must not be shown as it is a non-cash transaction (275) The cash flows associated with extraordinary items should be separately classified as a cash flow from i. operating activities ii. investing activities iii. financing activities iv. under (i) or (ii) or (iii) as is appropriate Ans. iv. under (i) or (ii) or (iii) as is appropriate (276) Profit or loss for the period includes i. Ordinary activities ii. Extraordinary activities iii. Prior period Items iv. All the above. Ans. iv. All the above. (277) The perception of extraordinary events must be made with reference to i. Business ordinarily carried on by an enterprise ii. The frequency with which such events are expected to occur iii. Both (i) and (ii) iv. The size of the transaction. Ans. i. Business ordinarily carried on by an enterprise (278) Prior period Items must be shown i. In the current profit and loss account along with the ordinary activities ii. In the current profit and loss account in a manner that their impact on the current profit or loss can be perceived iii. As adjustments to reserves iv. As a separate Item in the balance sheet. Ans. ii. In the current profit and loss account in a manner that their impact on the current profit or loss can be perceived. (279) A change in the estimated life of the asset, which necessitates adjustment in the depreciation is an example of i. Prior period item ii. Ordinary Item iii. Extraordinary item iv. Change in the accounting estimate. Ans. iv. Change in the accounting estimate.

For More Material Visit Techshristi.Com

:: 29 ::

(280) A change in the accounting policy should be made i. When state so directs ii. For compliance with an accounting standard iii. For better presentation of financial statements iv. All the above. Ans. iv. All the above. (281) Depreciable assets are assets which i. are expected to be used during more than one accounting period ii. have a limited useful life iii. are held by the enterprise for use in the production or supply of goods and services iv. all the above Ans. iv. all the above (282) AS-6 is applicable to which one of the following assets? i. Goodwill ii. Livestock iii. Plantation iv. Plant and Machinery. Ans. iv. all the above. (283) A change in the method of depreciation is made only i. If the adoption of new method is required by statute ii. for compliance with an accounting standard iii. If the change would result in better presentation of the financial statements iv. all the above. Ans. iv. all the above. (284) When a change in the method of depreciation is effected the deficiency or surplus arising from retrospective re-computatlon of depreciation in accordance with new method is i. to be ignored ii. to be adjusted in the accounts in the year in which the change is effected iii. to be spread over the remaining period of the life of (he asset. iv. to be charged or credited to capital reserve. Ans. ii. to be adjusted in the accounts in the year in which the change is effected (285) The following factor is to be considered for estimating the useful life of a depreciable asset i. Expected physical wear and tear ii. obsolescence iii. legal or other limits on the use of assets iv. all the above. Ans. iv. all the above. (286) The stage of completion of a contract is determined on the basis of : i. proportion of costs incurred to date to the estimated total contract costs ii. survey of work performed iii. completion of physical proportion of the contract work iv. either (i) or (ii) or (iii) Ans. iv. either (i) or (ii) or (iii) (287) Revenue is recognised on the basis of: i. percentage of contract completion ii. architect's certificates

For More Material Visit Techshristi.Com

:: 30 ::

(288)

(289)

(290)

(291)

(292)

(293)

(294)

iii. payments received from the customer iv. either (i) or (iii) Ans. i. percentage of contract completion Which one of the following is an example of a direct cost of a contract? i. selling costs ii. research and development costs iii. cost of hiring plant and equipment for the contract iv. general administration cost Ans. iii. cost of hiring plant and equipment for the contract Which one of the following is a cost that may be allocated to contracts as it is attributable to contract activity? i. insurance ii. claims from third parties iii. research and development iv. selling costs Ans. i. insurance Estimated total loss on the contract: i. spread over accounting periods equally ii. must be recognised as an expense immediately iii. allocated on the basis of architects certificates iv. allocated on the basis of percentage of completion Ans. ii. must be recognised as an expense immediately Which one of the following is excluded in research and development costs? i. Amortisation of patent and licences ii. Payment to outside bodies for research and development projects related to the enterprise iii. Cost of materials and services consumed. iv. Costs incurred on research to maintain existing products. Ans. iv.Costs incurred on research to maintain existing products. The benchmark treatment of research and development costs is i. to expense it in the year in which it is incurred ii. to treat such expenditure as deferred revenue expenditure iii. (i) or (ii) iv. to capitalise such expenditure and provide depreciation Ans. i. to expense it in the year in which it is incurred Deferred research and development costs are amortised on the basis of i. sales of the product ii. use of the product or process iii. time basis (time during which the product is used or sold) iv. all the above Ans. iv. all the above Research and development costs should be expensed in the year in which it is incurred if i. estimated research and development costs exceed the future revenues ii. the technical feasibility of the product has not been established. iii. the management has no intention to produce the product

For More Material Visit Techshristi.Com

:: 31 ::

(295)

(296)

(297)

(298)

(299)

(300)

(301)

iv. adequate revenues do not exist to complete the project and market the product or process v. all the above. Ans. v. all the above. Which one of the following items is not dealt with by AS-9? i. Revenue recognition on sale of goods ii. Revenue recognition on rendering of services iii. Revenue recognition on the use of resources of the enterprise iv. Unrealised gains on the holding of current assets. Ans. iv.Unrealised gains on the holding of current assets. Which one of the following items is dealt with by AS-9? i. Realised and unrealised holding gains in relation to fixed assets ii. Unrealised holding gains in relation to current assets iii. Revenue recognised on rendering of services iv. Realised or unrealised gains from foreign currency translation. Ans. iii. Revenue recognised on rendering of services Completed service contract method is applicable to which one of the following? i. Sale of software products ii. Sale of software development iii. Installation fees iv. Royalties. Ans. iii. Installation fees In the case of consignment sales revenue is to be recognised on i. Preparation of pro-forma invoice by the consignor ii. Receipt of goods by the consignee iii. Receipt of cash by the consignor iv. Sale of goods to a third party Ans. iv. Sale of goods to a third party Which one of the following is not a component of the cost of fixed asset? i. Installation costs ii. Financing costs iii. Administration and general expenses iv. Start up and commissioning costs. Ans. iii. Administration and general expenses A decrease in net book value arising on revaluation of fixed assets is to be debited to be i. revaluation reserve ii. Profit and loss account iii. General reserve iv. Capital reserve. Ans. ii. Profit and loss account Items of fixed assets that have been retired from active use and are held for disposal should be stated at : i. Net book value ii. Net realisable value iii. Lower of the net book value and net realisable value iv. Higher of the net book value and net realisable value. Ans. iii. Lower of the net book value and net realisable value

For More Material Visit Techshristi.Com

:: 32 ::

(302) Fixed assets purchased on hire-purchase terms are recorded at: Ans. cash value (303) When an asset is revalued at higher than original cost, the accumulated depreciation is Ans.credited to revaluation reserve (304) While translating the financial statements of foreign branches, fixed assets are translated by applying .. Ans. rate at the date of transaction. (305) Exchange differences arising on repayment of fixed asset-linked liabilities should be adjusted to i. Profit and loss account ii. Fixed asset account iii. Revaluation reserve iv. Capital reserve. Ans. ii. Fixed asset account (306) Closing rate is used for translating Ans. Monetary items. (307) The carrying amount for current investments is. Ans.lower of cost and fair value (308) Investments in properties are to be shown under Ans. long-term investments. (309) Amalgamation adjustment account is opened in the books of the transferee company to incorporate Ans. the statutory reserves of the transferor company (310) As per AS-14, purchase consideration is the amount agreed payable to Ans. shareholders. (311) Under the 'Purchase Method of Accounting', the transferee company incorporates in Its books Ans. the assets, liabilities and statutory reserve of the transferor company (312) Under the pooling of interests method the difference between the purchase consideration and share capital of the transferee company should be adjusted to Ans. general reserve (313) As per AS-14 purchase consideration is what is payable to i. Shareholders ii. Shareholders and debenture holders iii. Shareholders and creditors iv. Debenture holders and creditors Ans. i. Shareholders (314) When amalgamation is in the nature of merger, the accounting method to be followed is: i. Equity method ii. Purchase method iii. Pooling of interests method iv. Consolidated method Ans. iii. Pooling of interests method (315) Amalgamation adjustment account is opened in the books of transferee company to incorporate i. The assets of the transferor company

For More Material Visit Techshristi.Com

:: 33 ::

(316)

(317)

(318)

(319)

(320)

ii. The liabilities of the transferor company iii. The statutory reserves of the transferor company iv. The non-statutory reserves of the transferor company Ans. iii. The statutory reserves of the transferor company Under the purchase method of accounting, the transferee company incorporates in its books: i. The assets and liabilities of the transferor company ii. The assets, liabilities and statutory reserves of the transferor company iii. The assets, liabilities and non-statutory reserves of the transferor company iv. The assets, liabilities and reserves of the transferor company. Ans. ii. The assets, liabilities and statutory reserves of the transferor company Under the pooling of interests method the differences between the purchase consideration and share capital of the transferee company should be adjusted to; i. General reserve ii. amalgamation adjustment account iii. Goodwill or capital reserve iv. Either (ii) or (iii) Ans. i. General reserve Any balance is the capital reduction account after writing off lost capital is transferred to i. Capital reserve account ii. Share surrendered account iii. Capital reorganisation account iv. Contingency reserve Ans. i. Capital reserve account In a scheme of reorganisation amount of shares surrendered by shareholders is transferred to i. Capital reduction account ii. Share surrendered account iii. Capital reorganisation account iv. Capital reserve Ans. ii. Share surrendered account Amounts sacrificed by shareholders are credited to i. Capital reserve account ii. General reserve account iii. Capital reduction account

For More Material Visit Techshristi.Com

:: 34 ::

(321)

(322)

(323)

(324)

(325)

(326)

(327)

(328)

iv. Contingency reserve account Ans. iii. Capital reduction account For a company to carry out capital reduction, permission is required from i. The competent court ii. Controller of Capital issues iii. Company Law Board iv. Central Government. Ans. i. The competent court Consent of the creditors is required for i. Sub-dividing the shares ii. Consolidation of shares iii. Increasing share capital iv. Return of capital. Ans. iv. Return of capital. Capital reduction account is used in the case of i. internal reconstruction ii. external reconstruction iii. amalgamation of Companies iv. absorption of one company by another Ans. i. internal reconstruction Banks prepare the accounts for the i. Calendar year ii. Financial year iii. Cooperative year iv. Diwali year Ans. ii. Financial year Banks show the provision for income-tax under the head i. Contingency accounts ii. Contingent liabilities iii. Other liabilities and provisions iv. Borrowings Ans. iii. Other liabilities and provisions The heading other assets does not include i. Silver ii. Interest accrued iii. Inter-office adjustment (Dr.) iv. Gold Ans. iv. Gold Rebate on bills discounted is i. An item of income ii. A liability iii. income received in advance iv. Income Outstanding Ans. iii. income received in advance A non-banking asset is i. An item of office equipment ii. Any asset acquired from the debtors in satisfaction of claim iii. Money at call and short notice

For More Material Visit Techshristi.Com

:: 35 ::

(329)

(330)

(331)

(332)

(333)

(334)

(335)

iv. Furniture and fixtures Ans. ii. Any asset acquired from the debtors in satisfaction of claim A non-performing asset is i. Money at call and short notice ii. An asset that ceases to generate income iii. Cash balance in till iv. Cash balance with RBI Ans. ii. An asset that ceases to generate income When income is to be recognised on cash basis, a distinction should be made between i. Performing and non-performing assets ii. Banking and non-banking assets iii. Monetary and non-monetary assets iv. Current and non-current assets Ans. i. Performing and non-performing assets A valuation balance sheet is prepared by a i. trading company ii. banking company iii. manufacturing company iv. life insurance company Ans. iv. life insurance company A general insurance business carrying on more than one type of insurance business prepares i. a separate revenue account for each type of business. ii. a separate profit and loss account for each type of business. iii. a separate revenue account and combined profit and loss account. iv. a separate revenue account and profit and loss account for each type of business. Ans. iii. a separate revenue account and combined profit and loss account. Survey expenses for marine insurance claims must be i. added to claims ii. added to law charges iii. added to management expenses iv. shown as a separate item Ans. i. added to claims Expenses of management must be i. charged to Profit and Loss Appropriation A/c . ii. charged to different revenue accounts iii. charged to profit and loss account iv. reduced from investment income Ans. ii. charged to different revenue accounts During a year a general insurance company ha. the following details : Lakh of Rs. Premiums received 500 Premiums on re-insurance accepted 100 Premiums on re-insurance ceded 200 The amount to be credited as premium to revenue account should be i. Rs. 500 lakhs ii. Rs. 600 lakhs

For More Material Visit Techshristi.Com

:: 36 ::

(336)

(337)

(338)

(339)

(340)

(341)

(342)

iii. Rs. 700 lakhs iv. Rs. 400 lakhs Ans. iv. Rs. 400 lakhs Income tax on interest, dividend and rent should be i. debited to provision for taxation ii. debited to profit and loss account iii. debited to profit and loss appropriation account iv. deducted from interest, dividends and rents Ans. iv. deducted from interest, dividends and rents Cash at call and short notice will appear in the Balance Sheet i. as a separate item ii. under the heading 'Cash' iii. under the heading 'other accounts' iv. either (i) or (ii) Ans. ii. under the heading 'Cash' When an asset is replaced; i. the current cost of replacement is written off to revenue. ii. the original cost of the asset is written off to revenue. iii. the original cost reduced by the amount of depreciation is written off to revenue. iv. the lower of (i) or (ii). Ans. i. the current cost of replacement is written off to revenue. Original cost of an asset Rs. 5,00,000. Present cost of replacement Rs. 6,50,000. Amount spent on replacement Rs. 7,60,000. The amount chargeable to revenue will be: i. Rs. 6,50,000 ii. Rs. 5,00,000 iii. Rs. 7,60,000 iv. Rs. 2,60,000 Ans. i. Rs. 6,50,000 Interest on debentures is shown in: i. Revenue account ii. Capital account iii. Net revenue account iv. Capital account Ans. iii. Net revenue account When an asset is replaced, any amount realised on sale of old materials will be credited to i. Replacement account ii. Asset account iii. Revenue account iv. Net revenue account Ans. i. Replacement account Cost of license is shown in the i. Capital account ii. Revenue account iii. General balance sheet iv. Net revenue account Ans. i. Capital account

For More Material Visit Techshristi.Com

:: 37 ::

(343) Contingencies reserve is created: i. to declare dividends during years when profits are inadequate. ii. to meet abnormal expenses which are beyond the control of management. iii. strengthen generally the financial position of the company. iv. either (ii) or (iii) Ans. iv. either (ii) or (iii) (344) The essential feature of the double account system is: i. for every debit there is a corresponding credit. ii. the presentation of capital receipts and capital expenditure in a separate account. iii. the presentation of assets at original cost, the depreciation to date being shown to the credit of depreciation reserve account. iv. all the above Ans. iv. all the above (345) Under double account system, depreciation is credited to Ans. depreciation reserve account.