ACCOUNTS

1Whenmoneyi sgivenonl
oan,
afeei
schar
gedbyt
hel
ender
,whi
chi
scal
l
ed:
A.commi ssi
on
B.fee
C.i
nt er
est
D.discount
CWhenmoneyi sgi
venonl
oan,af
eei
schar
gedbyt
hel
ender
,whi
chi
scal
led,
int
erest
.

2Simpler ateofinter
estorflatr
ateofi
nter
esti
stheamountofi
nter
estwhi
chi
spai
dev
eryyear
asa_ ____ofthe
amountbor r
owed:
A.fi
xedper centage
B.var
y i
ngper centage
C.fl
uctuatingpercentage
D.percentageasperdi scret
ionofthel
ender
ASimpl erateofinter
estorflatr
ateofi
nter
esti
stheamountofi
nter
estwhi
chi
spai
dever
yyear
asafixedper centageoftheamountborrowed

3Simplei
nteresti
scalcul
atedas:
A.pr
inci
palxrate
B.pr
oductxratextime
C.pr
inci
palxratexti
me
D.pr
inci
palxtime
CSimpleint
eresti
scalcul
atedaspri
nci
pal
xrat
ext
ime

4LoanisobtainedbyXforpurchaseofacarf
orRs.
1.50l
acat12%i
nter
estr
ateov
ert
woy
ear
s.
Whatistheamountoftotal
simpleint
erest
?
A.42000
B.36000
C.30000
D.24000
BAmountofi nter
est=(
1.50lacx12x2)/100=36000

5LoanisobtainedbyXforpurchaseofacarforRs.
1.50l
acat12%inter
estr
ateov
ert
woy
ear
s.
Whatistheamountoftotalamounttobepaidatsimpler
ateofi
nter
est?
A.186000
B.172000
C.160000
D.150000
APrinci
pal+inter
est=150000+36000[ (
1.50lacx12x2)/100=36000]=186000

6Loanisobtai
nedbyXf orpur
chaseofacarforRs.
1.50l
acat12%i
nter
estrat
eovert
woyear
s.
Whatistheamountofweeklypaymentatsimpl
erateofi
nter
est
?
A.3398.
12
B.3458.
19
C.3576.
92
D.3697.
02
CTotalamountpayabl
e150000+36000[ (1.
50lacx12x2)/100=36000]=186000/52=
3576.
92
7Compoundi nt
erestispaidonwhichofthefol
l
owing:
A.pr
incipalamount
B.i
nterestamount
C.pr
incipalamountandi nter
estalr
eadyaccr
ued
D.pr
incipalamountandi nter
esttoaccr
ue
CCompoundi nt
erestiscalcul
atedonthepri
nci
pal
amountandint
erestal
readyaccr
uedt
il
ldat
e
of
compoundingofi nt
erest.Theperi
odofcompoundi
ngmaydiff
er.

8Ifinterestist obecompoundedannuall
y,whichofthefol
lowingwi l
lbeused:
A.P( 1+r)n
B.P( 1+r/2)nx2
C.P( 1+r/ 4)nx4
D.P( 1+r/ 12)nx12
AForannual compoundi
ngthefor
mulaP( 1+r)nisused.Forhalf
-yearl
ycompoundingri
s
di
videdby2andni smul
ti
pli
edby2.Forquarterl
ycompoundingri sdivi
dedby4andni s
multipl
iedby4.Formont hlycompoundingrisdivi
dedby12andni smul t
ipl
iedby12.

9Ifinterestistobecompoundedhal
f-
year
ly,whichofthef ol
l
owingwi l
lbeused:
A.P( 1+r)n
B.P( 1+r/2)nx2
C.P( 1+r/ 4)nx4
D.P( 1+r/ 12)nx12
BForannual compoundi
ngthefor
mulaP( 1+r)nisused.Forhalf
-year
lycompoundi
ngri
s
di
videdby2andni smul
ti
pli
edby2.Forquarterl
ycompoundi ngrisdivi
dedby4andnis
multipl
iedby4.Formonthlycompoundi
ngri sdivi
dedby12andni smult
ipl
i
edby12.

10Ifi
nteresti st
obecompoundedquarter
ly,whichofthefoll
owingwil
lbeused:
A.P(1+r)n
B.P(1+r/2)nx2
C.P(1+r/ 4)nx4
D.P(1+r/ 12)nx12
CForannual compoundi
ngthefor
mulaP( 1+r)nisused.Forhal
f-y
ear
lycompoundi
ngri
s
di
vi
dedby2andni smulti
pli
edby2.Forquarterl
ycompoundingrisdivi
dedby4andnis
multi
pli
edby4.Formont hlycompoundi
ngri sdivi
dedby12andni smult
ipl
i
edby12.

11Ifi
nteresti st
obecompoundedmont hl
y,whi chofthefol
lowingwill
beused:
A.P(1+r)n
B.P(1+r/2)nx2
C.P(1+r/ 4)nx4
D.P(1+r/ 12)nx12
DForannual compoundi
ngthefor
mulaP( 1+r)nisused.Forhalf-
year
lycompoundi
ngri
s
di
vi
dedby2andni smulti
pli
edby2.Forquarterlycompoundingrisdivi
dedby4andnis
multi
pli
edby4.Formont hlycompoundi
ngri sdiv i
dedby12andni smult
ipl
i
edby12.

12XinvestedRs.
100000i
nabankFDRat6%p.a.f
oroney
ear
.Ifi
nter
esti
scompoundedon
hal
f-
yearl
ybasis,
theamountpay
abl
eshal
lbe?
A.106000
B.106090
C.106130
D.106160
BP(
1+r
/2)
nx2=100000x1.
03x1.
03=106090

13Xi nv
estedRs.100000i
nabankFDRat6%p.a.f
oroney
ear.I
fint
eresti
scompoundedon
quart
erl
ybasis,
theamountpayabl
eshal
lbe?
A.100600
B.106090
C.106130
D.106160
CP( 1+r/
4)nx4=100000x1. 015x1.
015x1.015x1.
015=106130

14Thecompoundi nt
erestequat
ionP=Aer
tisappl
i
cabl
eincaseof:
A.conti
nuouscompounding
B.dai
lycompounding
C.weeklycompoundi
ng
D.for
tni
ghtl
ycompounding

AIncont
inuouscompoundi
ng(
wher
enappr
oachesi
nfi
nit
y),
thecompoundi
nter
estequat
ion
t
akestheP=Aer tfor
m.

15Inacompoundinterestequat
ion P=Aert e,t
heexponenti
alnumberi
sapproxi
mately:
A.2.
82776
B.2.
71728
C.2.
77221
D.2.
82179
BInacompoundinterestequati
onP=Aerte,
theexponent
ial
numberisapproxi
matel
y2.71728.

16Ther ul
eof72det er
minest
heno.ofyear
sduringwhichanamount_
___atagi
venr
ateof
i
nterest
:
A.becomesdoubl e
B.becomeshal f
C.remainssame
D.becomest r
ipl
e
ATheamountbecomesdoubl e,atagi
venint
erestrat
e.

17Aninvest
orwanttoinvestRs.
20000t
ogetdoubl
eamountat8%r
ateofi
nter
est
.Forhow
manyyears,
heshouldinv
estthemoney?
A.10
B.9
C.8
D.6
B72/rateofint
erest=72/8=9

18Ani nv
estorwanttoinv
estRs.
30000togetdoubl
eamountatt
heendof6year
s.Heshoul
d
i
nvestthefundsat___r
ateofint
erest
.
A.6%
B.8%
C.10%
D.12%
D72/
20Whichoft hef
oll
owingfor
mulaecanbeusedforcal
acul
ati
onofequat
edmont
hlyi
nst
alment
(EMI)
?
A.Pxr[(1+r )
nx(1+r)n-
1]
B.Pxr[(1+r )
n/(1+r)
n+1]
C.Pxr[(1+r )
n/(1+r)
n-1]
D.Pxr[(1+r )
n/(1+r)
n]
CTocalculateEMI,t
heformulaePxr[( 1+r
)n/(1+r
)n-1]i
sused.I
nt hi
sformul
ae,
Pisthe
amountofloan,ri
stherateofint
erestperi
nst
almentperi
od(i
fint
erestis12%pa,
r=0.
01)
,ni
s
no.ofi
nstalmenti
nthetenure.

21XborrowedRs.
10000fr
om thebankat12%p.a.f
oroney
ear
,pay
abl
eonequat
edmont
hly
i
nstal
mentbasi
s.Whatist
heamountofEMI ?
A.888.
50
B.877.
50
C.880.
30
D.878.
20
A10000x0.01[(
1.01)
12/(1.
01)12-1]=888.
50

22Zr ai
sedahouseloanofRs.
10lacat12%rat
eofinterestr
epay
ablein10year
s.Cal
cul
atet
he
EMI?
A.10654.17
B.10799.21
C.10987.11
D.11281.34
C1000000x0.01[(1.
01)120/(
1.01)
120-1]=1000x(3.300387/0.300387=10.
98711)=
10987.11

23Whi choft hef ol

lowingst at
ementi snotcor rectr egardingint
erestrat
es:
A.fi
xedi nt
erestr emainsfixedthroughoutt heper iodoft heloan
B.fl
oatinginterestisrequiredtober e-setperiodicallythroughouttheperi
odoft heloan
C.tot
al amountofi nterestislowerifinterestratei ssimpl ewhencompar edt ocompoundr at
e
D.tot
al amountofi nterestislowerifinterestratei scompounded, whencompar edtosimple
rat
e
DTotal amountofi nt
erestishigherwhencal culatedwi thcompoundi ngeffect.I
tislowerwhen
cal
culatedwit houtcompoundi ngef f
ect .

24Thef loat
ingr ateofint
erest(
a)increases(
b)decr
eases(c)r
emainsconst
ant:
A.aandbar ecor rect
B.aandcar ecor r
ect
C.bandcar ecor rect
D.all
ar ecorrect
AThef loati
ngr ateismarketrel
ated,duetowhichi
tcanincr
easeordecr
ease.I
twil
lnotr
emai
n
constant.

25Repay mentofhouseloani
nstal
mentforapr
e-det
erminedperi
odonEMIbasisisanexample
of:
A.singlecashfl
ow
B.annuity
C.perpetuit
y
D.anyoft hese
BAnnui tymeansaseri
esoffi
xedpaymentstobemadeort oberecei
vedoverapre-
deter
mined
peri
od
(si
mi l
artopaymentofEMIofhouseloanorr
ecei
ptoffi
xedint
erestonater
m deposi
t).
26Annuitymeans( a)aser
iesofpayments(b)paymentsoff
ixedamount(c)pay
mentstobe
recei
vedormade( d)
paymentforaf i
xedper i
od.
A.atoconl y
B.a,banddonl y
C.b,canddonl y
D.atodal lt
ogether
DAnnuityincl
udesal lt
hesefeatur
esi.
e.(a)i
tisaser
iesofpayments(
b)thepaymentsi
sof
fi
xedamount( c)thepay mentscanbereceiv
edormade( d)t
hepaymentareforafi
xedper
iod.

27Whent heannui
tiesar
emadeorr ecei
vedint hebegi
nni
ngoft
heperi
od,
thesearecal
led:
A.ordi
naryannuiti
es
B.annuit
iesdue
C.ini
ti
alannuiti
es
D.baseper i
odannuiti
es
BThebegi nningoftheperi
odannui
tiesarecal
ledAnnuit
yDueandwhenpaymentsareatendof
theperi
od, t
heseareknownasor di
naryannuit
ies.

28Whent heannui
tiesar
emadeorr ecei
vedattheendofaper
iod,
thesear
ecall
ed:
A.ordi
naryannuiti
es
B.annuit
iesdue
C.ini
ti
alannuiti
es
D.baseper i
odannuiti
es
AThebegi nningoftheperi
odannuit
iesar
ecall
edAnnuit
yDueandwhenpay ment
sareatendof
theperi
od, t
hesearecall
edordi
naryannui
ti
es.
.

29Zr entedhi shousefor2year

satamonthl
yrentofRs.
15000tober
ecei
vedi
nadv
ance.Thi
s
i
sanexampl eof?
A.ordinaryannuiti
es
B.annuitiesdue
C.ini
ti
al annuiti
es
D.baseper i
odannuiti
es
BThebegi nningoftheper
iodannui
ti
esar
ecal
ledAnnuit
yDue.

30Zi stor eceiveint

erestongovt.bondseachyear
,byy
earendfor7y
ear
s.Thi
sisan:
A.ordinaryannui t
ies
B.annuitiesdue
C.ini
ti
al annuiti
es
D.baseper i
odannui t
ies
AThebegi nningoftheperiodannuit
iesar
ecall
edAnnui
tyDue.

31Futur
ev alueofanordinar
yannuit
ycanbecalcul
atedas:
A.C[(1+r)
n- 1]xr
B.C[(1+r)
n- 1]/r
C.C[(1+r)
n+1]/r
D.C[(1+r)
n+1]xr
BIti
scalculatedasC[( 1+r
)n-1]/rwhereCst
andsforcashfl
owperper
iod,
rst
andsf
orr
ateof
i
nter
estandnst andsf
orno.ofpayments.

32Zi
stoi
nvest
sRs.
100000byendofeachy
earf
or5y
ear
sat5%r
ateofi
nter
est
.Howmuch
amounthewil
lrecei
ve?
A.Rs.
555236
B.Rs.
562461
C.Rs.
552563
D.Rs.
526477
CC[(1+r)
n-1]/r=100000[(
1+0.
05)
5-1]/0.
05=Rs.
552563

33Thepresentvalueofordi
naryannui
tycanbecal
culat
edas:
A.C[(1+r
)n-1]/r
B.C[(
1+r)n-1]/r( 1+r
)n
C.C[(1+r
)n-1]xr( 1+r
)n
D.C[(1+r
)n-1]/r( 1+r
)
BThepresentvalueofanordinar
yannuit
yiscal
cul
atedasC[(1+r
)n-
1]/r(
1+r
)n

34Zi storeceiveRs.10000,asint
erestonbondsbyendofeachyearf
or5y ear
sat5%rat
eof
i
nterest.Cal
culatethepresentval
ueoftheamountheistorecei
ve?
A.Rs.43492.60
B.Rs.42397.70
C.Rs.43294.80
D.Rs.43249.22
CC[( 1+r)n-1]/r(1+r)n=10000[( 1+0.
05)
5- 1]/0.
05(
1+0.05)
5=Rs.43294.80
A
35Popul at
ionofat owni s100000.Therat
eofchangeis4%perannum.Whatitwil
lbeaf
ter5
year
s.
A.129205
B.121665
C.122165
D.121601
BC( 1+r)n=100000( 1+0.
04)5=100000x1. 21665=121665.

36Populati
onofat
ownis100000.Ther
ateofchangei
s4%perannum.Whati
twas5y
ear
s
ago?
A.82193
B.82257
C.80493
D.82121
AC/( 1+r)
n=100000/(
1+0.04)
5=100000/1.21665=82193

37XYZpurchasedmachi
neryofRs.
100000.Rat
eofdepreci
ati
onis10%.AtWDVv al
uemethod,
whatist
heamountofdepreci
ati
onfor4year
s.
A.34390
B.33291
C.33109
D.33012
ADepreci
atedval
ue=C(1-r)n=100000(0.
9)4=100000x0.6561=65610.Depr
eciat
ion=
100000-65610=34390

38XYZpurchasedmachiner
yofRs.
100000.Rateofdepr
eci
ati
oni
s10%.AtWDVv
aluemet
hod,
whatist
hedepreci
atedv
alueatt
heendof4y ears?
A.65386
B.65610
C.65780
D.65920
BDepreci
atedv
alue=C(
1-r
)n=100000(
0.9)
4=100000x0.
6561=65610.

39XYZpur chasedmachi
neryofRs.100000.Rat
eofdepreci
ati
onis10%.Whatisaverager
ateof
depreciat
ion?
A.12.251%
B.12.965%
C.13.756%
D.13.981%
CDepr eci
atedv al
ue=C(1-r)n=100000( 0.
9)4=100000x0.6561=65610.Depreci
ation=
100000-65610=34390Av eragedepreci
ati
on=(34390/100000)/(100/4)=13.756%

40Xwant stobor r
owRs. 25000immedi atel
yandanot herRs. 20000af t
eraperiodof2y earsat
10%i nter est.Hewant stopayi ti
nmont hlyinst
alment sfor5y ears.Cal
culat
etheamountof
mont hlypay ment?
A.Rs. 879. 38
B.Rs. 897. 54
C.Rs. 882. 31
D.Rs. 863. 78
AWeshal lusetheformulaA{ r/[1-{1/( 1+r)n]}wher eRi stheamountperpay mentperi
od,n
=no.of
periods, r=r ateperperiod.Rateofint
er estbei
ngp. a.andcal cul
ationtobemademont hly
,the
ROI=
0.10/12andno.oft imeper i
od=5x12=15.Bef or ecal culat
ion,weshallconvertthefut
ure
valueRs. 24000t opresentval
ue=24000/1/( 1+0. 10/ 12)24=16388. 19.
Hencet otal amount=16388. 19+25000=41388. 19
EMI=41388. 19x(0.10/12)/([1-{1/(1+0.10/12)60} ]=Rs. 879.
38

41Aper sonwant st orecei

veRs.1250ev er
yquar t
erfor5yearsat12%p.a.rat
eofint
erest.How
muchheshoul dinvestnow.
A.Rs.18969.85
B.Rs.18956.58
C.Rs.18596.85
D.Rs.18695.85
CWewi l
luset heformulaA( [1-{
1/( 1+r)n}]/r)whereRist heamountperpaymentperi
od,n=
no.of
peri
ods,r=rateperper i
od.Rateofinter
estbeingp.a.andcalculat
iont
obemadequar ter
ly,t
he
ROI=12/ 4=3%andno.oft i
meper iod=5x4=20
=1250( [1-{1/(1+0. 03)20}]/0.
03)=18596. 85

42Xbor r
owedanamountofRs. 50000for8yearsat18%rateofi
nter
est.Whatshal
lbethe
monthl
ypay ment.
A.Rs.
986.11
B.Rs.
968.16
C.Rs.
968.11
D.Rs.
986.16
DWeuset hefor
mulaA{ r/[1-{1/(1+r)n]}whereRistheamountperpaymentper
iod,
n=no.
ofper
iods,r=rateperperi
od.Rateofinter
estbeingp.
a.andcal
culat
iontobemadequarter
ly,
theROI=18/ 12=1.5%andno.oft i
meper i
od=8x12=96
=50000x0. 015(
[1-{1/(1+0.03)20}]=Rs.986.
16
43Xwant storeceiveRs.40000perannum for20yearsbyinvest
ingat5%.Howmuchwi l
lhave
toi
nvestnow?
A.Rs.498488
B.Rs.489495
C.Rs.493128
D.Rs.489954
AWehav etofi
ndpr esentval
ueofanannuitybyusingthefor
mulaA=R[ 1-
(1+r
)-
n]/rorA( [1-
{1/(1+r)n}]/r).whereRi stheamountperpaymentperiod,
n=no.ofper i
ods,r=r
ateper
per
iod
=40000( [1-{
1/( 1+0.05)20}
]/0.05)=Rs.498488

44Xwant stor ecei

veaf i
xedamountfor15year
sbyinvesti
ngRs.9lacat9%interestr
ate.How
muchhewi l
lrecei
veannually
.
A.Rs.101659
B.Rs.110983
C.Rs.111653
D.Rs.114282
CWeshal luset heformul
aA{ r/[1-{
1/(1+r)n]
}whereRi stheamountperpay ment
per
iod,n=no.ofper i
ods,r=rat
eperperi
od.=900000x( 0.
09)/([1-{
1/(1+0.09)15}]=
Rs.
111653

45Whichofthefollowi
ngfor
mulaisusedforcal
cul
ati
onofpr
esentval
ueofanannui
ty?
A.A/{r/[1-{1/(1+r)n]}
B.A{r/[1-{
1/( 1+r)n]}
C.A{r[1-{
1/( 1+r)n]}
D.A{r/[1+r)n]}
BTocalcul
atepresentval
ueofanannuit
y,t
heformul
aisA{r/[1-{1/(1+r
)n]
}.I
tcanbe
shownasA=R[ 1-(1+r
)-
n]/ralso.

46Whichofthef ol
l
owingfor
mul
aisusedforcal
cul
ati
onoff
utur
eval
ueofanannui
ty:
A.A[{(1+r
)n- 1}/r]
B.A/[{(1+r)n-1}/r]
C.A[{(1+r
)n+1}/r ]
D.A[{(1+r)n-1}xr]
AThefoll
owingformulai
susedA[{(1+r
)n-1}/r]

47Whenaf undiscreatedtomeett heneedofaspeci fi

edamountinfut
ureandi
tis
accumul at
edbymeansofequal periodi
cdeposits,i
tiscal
led___f
und:
A.mut ualfund
B.sinki
ngf und
C.accumul atedfund
D.anyoft heabov e
BWhenaf undiscreatedtoreceiv
easpeci fi
edamounti nfutur
eanditi
saccumul
atedby
meansofequal peri
odicdeposits,i
tiscall
edsinkingfund.

48Tocalculat
ev al
ueofasi
nki
ngf
und,
whi
choft
hef
oll
owi
ngf
ormul
aecanbeused:
A.A[{(1+r)n-1}/r]
B.A/[{(1+r)n-1}/r]
C.A[{(1+r)n+1}/r ]
D.A[{(1+r)n-1}xr]
AIti
sbasi
cal
lythefutureval
ueofanannui
tyandt
hef
oll
owi
ngf
ormul
aisusedA[{(
1+r
)n-
1}/
r
]tomakethecalcul
ation.

49Af ir
m needRs.170000torepl
aceit
smachineryatt
heendof5year
s.At12%r
ateofi
nter
est
,
howmuchi tshoul
dcontri
buteever
ymonth?
A.Rs.2051.65
B.Rs.2101.51
C.Rs.2081.56
D.Rs.2057.64
CThecal culat
ionshal
lbemadebyusingtheformulaA[{(
1+r
)n-1}/r]
170000=A[{( 1+0.
01)60-1}/0.
01]=Rs.
2081.56

50Forcarr
yingouthisstudies,astudentbor r
owsRs.3lacf
rom abankatconcessi
onal
rat
eof
5%p.a.f
or4y earsofhisprofessionalcourse.Whatist
hetot
alamountpayabl
ebyhim att
he
endof4thyear.
A.Rs.
1284039.65
B.Rs.
1286031.75
C.Rs.
1290006.84
D.Rs.
1293037.50
DThecalcul
ationshall
bemadebyusi ngt hefor
mulaFV=A[{( 1+r
)n-1}/r]
FV=300000[{( 1+0.
05)4-1}/0. 05]=Rs. 1293037.
50

51Xwant st
osendhi sdaught
ertoamanagementschool af
ter5yearsandwi
l
lbeneedingone
ti
mepaymentofchar gesamount
ingtoRs.7lac.At12%,
howmuchheshoul di
nvestannual
l
y?
A.Rs.
111105.21
B.Rs.
110186.81
C.Rs.
109672.22
D.Rs.
109486.89
BThecalcul
ationshall
bemadebyusingthef or
mulaA=FV[r /(1+r
)n-1]
=700000[0.12/(1+0.12)
5-1]=Rs.
110186.81

52Xopenedar ecur
ri
ngaccountwit
habanktodeposi
tRs.
16000bytheendofeachy
earat
10%interestrate.Howmuch
hewouldgetatt heendof3rdyear
?
A.Rs.
59260
B.Rs.
56920
C.Rs.
52690
D.Rs.
52960
DCalculati
oncanbemadebyusi ngthefor
mul
a=A[{( 1+r
)n-1}/r
]
16000[{( 1+0.10)3-1}/0.
10]=Rs.52960

53Zbor rowedRs.65600for2yearsat5%p.a.,t
oberet
urnedin2equal
annual
inst
alment
s.
Whatwi l
lbetheamountofi nst
alment?
A.Rs.35280
B.Rs.
35320
C.Rs.35690
D.Rs.35820
AItcanbecal cul
atedbyusingthefor
mula=Pxr[( 1+r
)n/(1+r)
n-1]
65600x0. 05[(1+0.05)
2/(1+0.05)
2-1]=Rs.35280
54Xobt ainedaloanofRs.92820at10%,whi
chheistopayi
n4equalannual
inst
alment
.
Calcul
atetheamountofi nstal
ment
?
A.Rs.28283
B.Rs.29282
C.Rs.29476
D.Rs.29822
BItcanbecal cul
atedbyusingthefor
mula=Pxr[(1+r)
n/(1+r
)n-
1]
92820x0. 10[(1+0.10)
4/( 1+0.
10)
4-1]=Rs.
29282

55Thecompoundi nt
erestonasum f or2yearsisRs.
153andsimpleint
erestisRs.
225for3
year
s.Whatisrateofinterestandthepri
ncipal
amount?
A.4%,Rs.
1875
B.3%,Rs.
1875
C.4%,Rs.
2075
D.3%,Rs.
2075
ASimplei
nterestfor2y ears=Rs.150andcompoundRs. 153.Thedi
ff
erenceofRs.3repr
esent
s
i
nter
estonRs.75( gapofRs. 225-
150).HenceRoI=3/75x100=4%.Thepr i
ncipal=(
225x100)/
(4x3)=Rs.1875

56Xpur chasedahouseandt hepay mentt ermsar e(

a)Rs.10lacimmediat
elyandbal
ance
Rs.
7.50lacafter2y ears.Therat
eofi nterestis6%p.a.andtobecompoundedsemi -
annual
ly.
Whatisthecashv alueoft hehouse.
A.Rs.1696395
B.Rs.1669760
C.Rs.1666365
D.Rs.1663635
CRs.7.50lacdiscountedat6%onhal f-
y earl
ybasisbyusingthefor
mula=FV/( 1+r
)n
=750000/( 1+0.03)4=750000/( 1+r)n=Rs. 666365Totalcashvalue=Rs.
10lac+Rs.666365=
Rs.
1666365

57Xhadt opaycer tai

namountt oZandhadt woopt i
ons( a)tomakepay mentoflumpsum
amountofRs. 120000i mmedi atelyor(
b)topayRs.150000i n5y earsat5%p.a.rat
eofi
nter
est
(hal
f-
yearl
ycompoundi ng).Whi chopti
onismor ebenefi
cialforX.
A.Heshoul doptfor( a)beingloweramount
B.Heshoul doptfor( b)beingloweratRs.117179
C.Heshoul doptfor( b)beingloweratRs.119197
D.Heshoul doptf or(b)beingloweratRs.117971
BThepr esentvalueRs. 150000=FV/( 1+r
)n=150000/( 1+0. 025)
10=Rs. 117179

58Thepossi bi
l
ityoflossonaccountofdef
aultbyabor r
owerinr
epay
mentofhisobl
igat
ionon
ti
me, i
scal l
ed:
A.creditri
sk
B.mar ketri
sk
C.defaultri
sk
D.oper at
ionalr
isk
ACredi tr
iskistheriskonaccountofpossi
bledefaul
tinrepay
mentbythebor
rower
s.

101Debtscanbeacti
veorpassi
ve.Whichoft
hefoll
owingexpl
anat
ionmatchesi
nthi
scont
ext
:
A.acti
vedebt
smeanswhichweowe
B.passi
vedebtsmeanswhatisduetous
C.passi
vedebtsmeanswhichweoweandactivedebtsmeanswhatisduetous
D.acti
vedebt
smeanswhichweoweandpassi vedebt
smeanswhati
sduet
ous
CDebtscanbeacti
veorpassi
ve.Thepassi
vedebtsmeanswhi
chweowe(l
i
abi
l
ity
)andact
ive
debtsmeanswhati
sduetous( asset
).

102Thev aluestatedonthebondcert
if
icat
eiscall
ed:
A.mar ketv al
ue
B.redempt ionvalue
C.facev alue
D.netpr esentvalue
CThev aluestat
edont hebondcert
if
icatei
scall
edfacev
alue.I
trepr
esentt
heamount
borrowed.

103Couponr at
eofabondmeans:
A.t
hemat uri
tyvalue
B.t
heint
erestratepayabl
eont hebond
C.t
hevalueaccept edatt
hetimeofissueofthebond
D.t
hemar ketval
ueatagi venpoi
ntoftime.
BCouponr at
eofabondmeanst heinter
estr
atepayabl
eont
hebond.

104Thev al
uewhichaninv
estorrecei
vesonmaturi
tyofabondiscal
led,
A.mar ketv al
ue
B.redempt i
onval
ue
C.facev alue
D.netpr esentval
ue
BThev aluewhichaninv
estorrecei
vesonmatur
ityofabondiscal
ledredempt
ionv
alue.

105Whi choft hefoll

owingstatementisnotcorrecti
nconnect
ionwi t
hthemarketval
ueofa
bond:
A.i
tisthepr i
ceatwhi chthebondi susual
lypurchasedorsol
d
B.i
tcanbedi f
ferentfrom t
hef aceval
ue
C.i
tcanbedi f
ferentfrom t
her edempti
onvalue
D.noneoft heabov e
DItist
hepr iceatwhi chthebondi susual
l
ypurchasedorsold.Itcanbedif
fer
entfr
om thef
ace
val
ueordi f
ferentfrom theredemptionval
ue

106Thepresentval
ueofabondisequal to:
A.t
heamountofinteresti
twi
ll
earn
B.t
heamountoff ut
urecasht
ober ecei
v edinfutur
etil
lmatur
it
yofthebond
C.t
hepresentval
ueofcashtobereceivedinfutureti
l
lmaturi
tyoft
hebond
D.t
heamountt obereceiv
edonmat ur
it
y
CThepresentval
ueofabondisequal t
ot hepresentval
ueofcashtoberecei
vedi
nfut
uret
il
l
matur
it
yofthebond.

107____valueofanasseti sequalt
othepresentvalueoft
hebenef
it
sassoci
atedwit
hit
.
A.marketv alue
B.sal
eorpur chaseval
ue
C.int
ri
nsicv alue
D.netpresentv alue
CThei nt
rinsicvalueofanasseti
sequalt
ot hepresentval
ueoft
hebenef
it
sassociat
edwit
hit
.

108Thehol
dingper
iodofbondf
orwhi
cht
hei
nter
estr
ater
iskdi
sappear
siscal
l
ed:
A.yiel
dtomat uri
ty
B.durati
onofthebond
C.mat ur
it
yperiodoft
hebond
D.redemptionperi
odoft
hebond
BThehol di
ngper i
odf
orwhicht
hei
nter
estr
ater
iskdi
sappear
siscal
l
ed,
thedur
ati
onoft
he
bond.

109Abondhasbeeni ssuedwi thafacev al

ueofRs. 1000at8%couponf or3y ear
s.The
requi
redrateofr eturnis7 %.Whati sthev alueofthebond?
A.Rs.1026.25
B.Rs.1006.55
C.Rs.1087.45
D.Rs.1011.25
AThecashf lowf ordif
ferentyearswil
lbedi scountedat7%andpr esentv al
uecalcul
atedas
under:1styear =(80x1/1. 07=74.77)+2ndy ear=(80x1/( 1.
07x1. 07)=69.88)+3rdyear=
(1080x1/( 1.07x1. 07x1. 07)=881.60)=1026. 25(i
nthe3rdyearbotht hecouponofRs.80
andfacev alueofRs. 1000wi ll
bereceived,whileinthe1stand2ndy earonlythecouponof
Rs.80willber eceiv
ed).

110Abondhasbeeni ssuedwi thafacev al

ueofRs.20000at12%couponf or3y ears.The
requir
edr at
eofr eturnis10%.Whati sthevalueofthebond?
A.Rs.20689.70
B.Rs.20988.80
C.Rs.20898.30
D.Rs.20918.40
BThecashf lowwi ll
bedi scountedat10%f or3y ear
s,separ at
elyforcouponf or3y earsand
facev al
ue
receiv
ableatt heendof3r dyear.Thepresentvaluefact
or( PVIFA)forregularcashf l
owf or3
yearsof
Rs.2400at10%i s2.487andpr esentval
uefactor(PVIF)for3y ear
sf orsinglefl
owofRs. 20000
i
s0. 751.Value=( 2400x2. 487)+(20000x0. 751)=5968. 80+15020=20988. 80.

111Abondhasbeeni ssuedwi t
haf acev alueofRs. 1000at10%couponf or3y ears.The
requir
edrateofr eturnis8%.Whati st hev alueofthebondi fthecouponamounti spay abl
eon
half
-yearl
ybasis?
A.Rs.1025.47
B.Rs.1035.32
C.Rs.1042.84
D.Rs.1052.37
DThecashf lowwi llbediscountedat8f or3y ears,separatelyforcouponf or6halfy earsand
facevaluereceivableattheendof3r dy ear.Thepr esentv al
uef actor(
PVIFA)f orregularcash
fl
owf or6hal fyearsofRs. 50at4%( beinghal fof8%)i s5.24124andpr esentvaluefactor(PVIF)
for3y ear
sf orsingleflowofRs.1000i s0.79031.Val ue=( 50x5. 24124)+( 1000x0. 79031)=
262.62+790. 31=Rs. 1052.37

112Ther ateofr etur

nearnedonabondwhenpur
chasedati
tscur
rentpr
icewhencoupon
i
nterestisr eceivediscal
led:
A.rateofr et ur
n
B.currenty ieldofthebond
C.yiel
dt omat uri
ty
D.anyoft heabov e
BTherateofret
urnear
nedonabondwhenpurchasedati
tscur
rentpr
icewhencouponi
nter
est
i
srecei
vediscal
ledcur
renty
iel
doft
hebond.

113Currentyieldofabondcanbecal cul
atedasunder
:
A.curr
entinterest/curr
entmar ketpri
ce
B.couponinterest/facev al
ue
C.couponinterest/currentmarketpri
ce
D.curr
entinterest/facevalue
CCurrentyiel
dofabondcanbecal culat
edascouponint
erest/cur
rentmar
ketpr
ice.

114A10%bondwit
hfacev
alueofRs.
1000i
spur
chasedatRs.
900.Whati
sthecur
renty
iel
d?
A.11.11%
B.10.00%
C.9.09%
D.8.71%
A100/900=11.
11%

115A10%bondwit
hfacev
alueofRs.
1000i
spur
chasedatRs.
1100.Whati
sthecur
renty
iel
d?
A.11.11%
B.10.00%
C.9.09%
D.8.71%
C100/1100=9.
09%

116Ther ateofr et
urnearnedbyani
nvestorwhopurchasesthebondandholdsi
ttil
li
ts
maturesiscal led:
A.rateofr etur
n
B.currenty i
eldoft hebond
C.yiel
dt omat urity
D.anyoft heabov e
CTher at
eofr eturnearnedbyaninv
estorwhopurchasesthebondandholdsitt
il
li
tsmatur
es
i
scal l
edy iel
dt omat uri
ty.

117A10%, 6y earsbond,withfacev al
ueofRs.1000hasbeenpur chasedbyZf orRs.900.What
i
shi sy ieldt
ill
mat uri
ty.
A.12. 50%
B.12. 20%
C.11. 80%
D.11. 60%
AI fcostofcapi tali
.e.kd,
isthey i
eldtomaturit
yt hen900=100( PVIFAkd%, 9years)+10000
(PVIFkd, 9years).Morethanonev alueshavetobet ri
ed.
1stcal culat
ionatPVI FA6y earsat12%f act
or=4. 11141andPVIF6y earsat12%fact or=
0.50663.The
value=( 100x4. 11141=411. 14)+(1000x0. 50663=506. 63)=917.77( v
aluemoret hanthe
cur r
entmar ketpr i
ce)
1stcal culat
ionatPVI FA6y earsat15%f actor=3. 78448andPVIF6y ear
sat12%f actor=
0.43233.The
value=( 100x3. 78448=378. 45)+(1000x0. 43233=432. 33)=810.78( v
aluel
esst hanthe
cur r
entmar ket
price).
YTM =12%+( 15%-12%)x[ (
917.77-900)/(917. 77-810.78)]
YTM =12%+( 3%)x[ 17.
77/106.99]
YTM =12%+( 3%)x0. 166
YTM =12%+0. 498=12. 498say12.50%
118Whent her equiredrateofret
urnisequalt
othecouponrate,
theval
ueoft
hebondis:
A.lessthanf acev alue
B.mor ethanf acev alue
C.equal t
of acev alue
D.mat ur
ityvalue
CTheor y-Whent her equir
edrateofret
urnisequal
tothecouponrat
e,t
heval
ueofthebondi
s
equaltofacev alueorparv al
ue

119Whent her equiredr at

eofr et
urni
smor et
hanthecouponrat
e,t
heval
ueofthebondi
s:
A.l
essthanf acev alue
B.morethanf acev alue
C.equalt
of acev alue
D.matur
ityvalue
ATheory-Whent her equiredrateofr
etur
n(kd)i
smorethanthecouponr
ate,
theval
ueofthe
bondisl
esst hant hef acev al
ueorparval
ue

120Whent her equiredrateofretur

nisl
esst hanthecouponrat
e,t
heval
ueofthebondi
s:
A.l
essthanf acev alue
B.morethanf acev alue
C.equalt
of acev alue
D.maturi
tyvalue
BTheory-Whent her equi
redrateofret
urn(kd)islesst
hanthecouponr
ate,
theval
ueoft
he
bondisgreaterthant hefacevalueorparval
ue

121Whent herequir
edrateofr et
urn(kd)isgreat
ert
hanthecouponrate,
thedi
scountonthe
bond____,asmat uri
tyapproaches.
A.incr
eases
B.decli
nes
C.remainssame
D.noneoft heabov e
BTheory-Whent herequir
edr ateofret
urn(kd)isgr
eat
erthanthecouponrat
e,t
hediscounton
thebonddecl i
nes,asmaturit
yappr oaches.

122Whent herequi
redrat
eofr et
urn(
kd)isl
essthanthecouponrate,
thepremium onthebond
___,asmat uri
ty
approaches:
A.increases
B.decl i
nes
C.remai nssame
D.noneoft heabove
BTheor y-Whentherequi
redrateofr
etur
n(kd)i
slessthanthecouponrat
e,thepremium onthe
bond
declines,asmaturi
tyappr
oaches.

123Themar ketpri
ceofabondi
s__
__t
oit
syi
eldt
omat
uri
ty:
A.i
nversel
yproport
ional
B.posi
tiv
elypropor
ti
onal
C.equal
D.noneoftheabov
e
ATheory-Themarketpr
iceofabondi
sinv
ersel
ypr
opor
ti
onal
toi
tsy
iel
dtomat
uri
ty.

124Foragi vendi ff
erencebet weent heYTM andt hecouponrateofabond,thelongert heter
m
tomat uri
ty,
the_ ____withachangei nYTM:
A.smal l
erwill
bet hechangei nthepr i
ce
B.gr eaterwil
lbet hechangei ntheprice
C.gr eaterwil
lbet hechangei nthemat uri
tyvalue
D.smal l
erwillbethechangei nthemat urit
yvalue
BTheor y-Foragi vendi ff
erencebet weentheYTM andt hecouponrateofabond, thelongerthe
termt omat uri
ty ,
thegr eaterwil
l bethechangei nthepri
cewit
hachangei nYTM.I tisduet othe
reasont hatincaseofl ongmat urit
ybonds, achangeinYTM iscumulati
vel
yappliedtot heentir
e
seri
esofcoupon
payment sandt heprincipalpaymenti sdiscountedatthenewratef
ortheentir
eno.ofy ear
sto
mat urity
.

125Foragivenmat ur
it
y,t
hechangei nbondpricewil
lbe____wit
ht hedecreaseintheYTM of
thebondthant hechangeinbondpricewithanequalincr
easeintheYTM oft hebond.
A.small
er
B.great
er
C.equal
D.noneoftheabov e
BTheory-Foragi venmaturi
ty,
thechangei nbondpricewil
lbegreaterwiththedecreaseinthe
YTM ofthebondt hanthechangeinbondpr i
cewi t
hanequal i
ncr
easei ntheYTM oft hebond.
Whichmeanst hatforequalsi
zedincreaseanddecreasesintheYTM, thepri
cemov ementar e
notsymmet r
ical.

126ForanygivenchangeinYTM, t
he%agepri
cechanges,i
ncaseofbondsofahi ghcoupon
rat
e,wil
lbe___thanincaseofbondsofalowcouponrat
e,othert
hingsremainingt hesame.
A.small
er
B.great
er
C.equal
D.noneoftheabov e
ATheory-ForanygivenchangeinYTM,the%agepri
cechanges,i
ncaseofbondsofahi gh
couponrat
e,wil
l besmall
ert
hanincaseofbondsofalowcouponr ate,
otherthingsremaini
ng
thesame.

127Achangei nt
heYTM affect
sthepriceofthebondswitha__
__YTM moret
hanitdoesthe
pri
ceofbondswi tha____YTM.
A.lower,higher
B.higher,l
ower
C.lower,l
ower
D.higher,higher
BTheor y-Achangei ntheYTM affect
st hepr
iceofthebondswi
thahi
gherYTM morethanit
doest hepriceofbondswithalowerYTM.

128Xpur chasedtwobondsBond-
1andBond-2withfacev
alueofRs.
1000eachandcouponof
8%andmat ur
ityof4year
sand6year
srespect
ivel
y.I
fYTM i
sincr
easedby1%,the%changei
n
pri
ceofBond- 1wouldbe:
A.3.04%
B.3.12%
C.3.
17%
D.3.
24%
DAt8%YTM, t
hemarketpr
iceof4yearBond-1i
sRs.1000.I
fYTM i
sincr
easedby1%it
spr
ice
wil
lbe=80PVIFA(
9%,4)+1000(9%,4y ear
s)=80x3.2397)+1000x0.7084=259.
17+
708.
40=967.
57.So%change=32.43/1000=3.24%

129Xpur chasedtwobondsBond-1andBond- 2wi t

hf aceval
ueofRs.1000eachandcouponof
8%andmat ur
ityof4yearsand6yearsrespect
ivel
y.IfYTM isincr
easedby1%,the%changein
pri
ceofBond- 2wouldbe:
A.4.48%
B.4.37%
C.4.27%
D.4.14%
AAt8%YTM, t
hemar ketpr
iceof6yearBond-2isRs.1000.IfYTM isi
ncr
easedby1%itspri
ce
wil
lbe=80PVI FA(9%,6)+1000(9%,6y ear
s)=80x4. 4859)+1000x0.5963=358.87+
596.30=955.17.So%change=44. 83/1000=4. 48%

130Xpur chasedaBondwi thfacev al

ueofRs.
1000andcouponof8%andmat ur
it
yof6years.
I
fYTM isincreasedby1%, t
hechangei npri
ceofBond-2woul
dbe:
A.Rs.
44.83increase
B.Rs.
44.83decr ease
C.Rs.
48.33increase
D.Rs.
48.33decr ease
BAt8%YTM, t
hemar ketpr
iceof6y earBondi
sRs.1000.I
fYTM i
sincreasedby1%it
spri
cewill
be=80PVI FA( 9%, 6)+1000( 9%,6y ear
s)=80x4.4859)+1000x0.5963=358.87+596.30=
955.
17.Sochangei npr i
ce=Rs.44.83

131Xpur chasedabondwi thfacevalueofRs.1000andcouponof8%andmat ur

it
yof4years.I
f
YTM i
sincreasedby1%, thechangeinpr i
ceofBond-1wouldbe:
A.Rs.
42.83increase
B.Rs.
42.83decr ease
C.Rs.
32.43increase
D.Rs.
32.43decr ease
DAt8%YTM, t
hemar ketpr
iceof4y earBondisRs.1000.I
fYTM i
sincreasedby1%it
spri
cewi l
l
be=80PVI FA( 9%, 4)+1000( 9%,4y ear
s)=80x3. 2397)+1000x0.7084=259.17+708.40=
967.
57.Sochange=Rs. 32.
43.

132Xpur chasedabondwithfacevalueofRs.1000andcouponof8%andmat ur
it
yof4years.If
YTM i
sreducedby2%, thechangeinpr i
ceofBondwoul dbe:
A.Rs.
61.81
B.Rs.
62.11
C.Rs.
69.18
D.Rs.
79.81
CAt8%YTM, t
hemarketpri
ceof4y earBondisRs.1000.IfYTM i
sreducedby1%it
spri
cewi l
l
be=80PVI FA( 6%,
4)+1000( 6%,4y ears)=80x3.4651)+1000x0. 7921=277.
08+792.10=
1069.
18.Sochange=Rs. 69.
18.

133Thedur
ationofabondcanbecal
cul
atedby
:
A.(summati
onpvxT)x( summati
onpv)
B.(summati
onpvxT)/( summat
ionpv)
C.(summat
ionpvxT)x(summationf
v)
D.(summat ionpvxT)/( summat i
onfv)
BThedur ati
onofabondcanbecal cul
atedbyusingtheformulae(summat i
onpvxT)/
(summationpv )
134Zi nv
estedi n10%3y earbondoffacev al
ueofRs.1000each.Theexpectedmarketrat
eis
12%.Whati sthedurati
onoft hebond.
A.2.73years
B.2.93years
C.2.63years
D.2.83years
A(summat i
onpvxT)/( summat ionpv)=2597.67/951.99=2.73y ears.
(summat ionpvxT)=Pr esentval
ueofal l
cashflowsinthreeyear
sxwei ghtagei
nyears=
2597.67
(summationpv )=Presentv al
ueofallcashf l
owsint
hreeyears=951. 99

135Zinvest
edin12.
5%5y earbondoffacev
alueofRs.
100each.Theexpect
edmar
ketr
atei
s
15%.Whatisthedur
ati
onofthebond.
A.3yr4mont hs
B.3yr6mont h
C.3yr9mont h
D.4years
D375.11/94.
11

136Whi chofthef oll

owi ngisnotcor rectregardingdurat
ion?
A.dur at
ionislesst hant hetermt omat uri
ty
B.Incaseofzer ocouponbonds, t
hedur ati
on=t ermtomat ur
it
y
C.dur at
ionandYTM ar eposi ti
velycorr el
ated
D.noneoft heabov e
Cdur ati
onandYTM ar einverselycorrelated.Otheropti
onsarecorrect
137Whi chofthef oll
owi ngiscor r
ectr egardingdurat
ion?
A.Dur ati
onofper petual bond=1+r/r
B.longertheterm ofacouponpay i
ngbondt omaturi
ty,t
hegreaterthedi
ff
erencebet
weeni
ts
ter
mt omat ur
ity
anddur ati
on
C.largerthecouponr ate,smallerthedur ationofthebond
D.alltheabove
DAl ltheabovest atement sarecor rect.

138Ani ncreaseint hef r

equencyofcouponpay ments___
_thedurat
ionandadecreasei
n
fr
equencyofcoupons_ ___it.
A.decr eases, i
ncreases
B.decr eases,decr eases
C.increases, i
ncreases
D.increases, decreases
ATheor y-Ani ncreasei nthefrequencyofcouponpaymentsdecr
easesthedur
ati
onanda
decreasei n
fr
equencyofcouponsi ncreaseit.

139Dur at
ionofbond_
___,
ast
hebondappr
oachesmat
uri
ty.
A.i
ncreases
B.remainssame
C.decreases
D.noneoft heabov e
CTheor y-Dur ati
onofbonddecl i
nes, asthebondappr oachesmat uri
ty.
140Thesensi ti
vit
yoft hebondpr i
cet ochangesint heinterestrat
ei scalled:
A.dur ationoft hebond
B.bondv ol
at i
lit
y
C.yieldt omat uri
tyoft hebond
D.intrinsicv alueoft hebond
BThesensi tivi
tyoft hebondpr icetochangesi ntheint
erestr at
eiscal l
edbondv olat
il
it
y.
141I nterestr ateelasticit
y(IE)i scalculatedas:
A.%agechangei nthepr i
cef orbond/%agechangei nyieldtomat urit
yf orbond
B.%agechangei ny iel
dt omat uri
tyforbond/%agechangei nthepr i
ceforbondi nper i
odt
C.%agechangei nthepr i
cef orbondi nperiodt/%agechangei nyiel
dt omat ur
it
yf orbond
D.act ual changei nt hepr i
cef orbondi nperiodt/actualchangei ny i
eldt omaturit
yforbond
CInter estrat eelastici
ty(IE)iscal culatedas%agechangei nt hepriceforbondi nperiodt/
%agechangei ny i
eldt omat urityforbond.

142DxYTM/ 1+YTM gi ves:(

Dmeansdur at
ionandYTM meansy i
eldtomatur
it
y)
A.dur ati
onoft hebond
B.bondpr i
ceelasticity
C.y ieldt omat urit
yoft hebond
D.int erestr ateelasticit
y
DI nter estr at
eelasticitycanbecal cul
atedasDxYTM/ 1+YTM wher eDmeansduration.
143Zpur chased8%, 3yearsbondsofRs. 10lac,wit
hannual i
nter
estpaymentandfacevalue
pay abl eonmat urit
y .TheYTM isassumedat6%.Cal culatethedurat
ion.
A.2. 69%
B.2. 79%
C.2. 87%
D.2. 99%
BExpl anat ion:(summat ionpvxT)/( summat i
onpv)=2938181/ 1053441=2.79years.
(summat ionpvxT)=Pr esentvalueofallcashflowsint hreeyearsxweight
ageinyears=
2938181
(summat ionpv )=Pr esentval
ueofal l
cashf l
owsi nthreey ear
s=1053441

144Zpur chased8%, 5yearsbondsofRs.10l

ac,withannuali
nterestpaymentandf acev al
ue
pay ableonmat urit
y.TheYTM isassumedat6%.Cal culat
ethemodi f
ieddur
ationi
fdur at
ionis
2.79%.
A.2. 63%
B.2. 73%
C.2. 83%
D.2. 93%
AModi fieddur at i
on=Dur ati
on/(1+y i
eld)=2.
79/1. 06=2.63%
145Zpur chased8%, 5yearsbondsofRs.10l
ac,withannuali
nterestpaymentandf acev al
ue
pay ableonmat urit
y.TheYTM isassumedat6%, .Calcul
atepercentagechangeinthepr i
ceof
thebondwhent hedecreaseinYTM is100basispointsfr
om 6%t o5%andt hedur
at i
onis2.79%
andmodi fieddur ati
onis2.63%.
A.2. 63%
B.2. 73%
C.2. 83%
D.2. 93%
APer cent agechangecanbecal cul
atedas=-MDxchangei nther ate
-2.63x0. 01=0.0263=2. 63%
14612%, 4yearbondsofRs.100eachwer
epurchasedbyXf orRs.100.Calcul
atet
heYTM f
orX.
A.12.30%
B.12.00%
C.11.90%
D.11.80%
BSincethepurchasepr
iceandfaceval
ueoft
hebondi sequali
.e.Rs.100,
theYTM wil
lbeequal
tothecouponrate.

14712%, 4yearbondsofRs.100eachwerepurchasedbyXf orRs.

100.I
fthemarketi
nter
est
rat
eincreaseby1%whatwi ll
bemar ketpr
ice?
A.Rs.101.49
B.Rs.102.14
C.Rs.102.69
D.Rs.103.09
D12xPVI FA(11%,4)+100x( 13%,4year
s)=12x( 3.10245)+100x(0.65873)=37.
22+65.87
=Rs.103.09

148Thepr esentvalueofacashflowtoberecei
vedinfuture,canbecalcul
atedas:
A.C/( 1+r)
n-1
B.C/( 1+r)
n
C.Cx( 1+r)n
D.C/( 1+r)
n-1
BThef utureval
ueofacashf l
owcanbecal cul
atedbyusingthef or
mulaeC/( 1+r)
n,wher
eCi
s
thecashf l
ow,risrateofdi
scountandntheno.ofti
mei nterv
als.

149Forcompar i
ngthef uturecashf l
owsofdi ff
erentti
mesi nfut
ure:
A.theseareconv ert
edint opresentvalues
B.theseareincreasedbyaddi ngt heinter
est
C.thesearetakenatt heiraccountingvalue
D.anyoft heabov ecanbeused.
AWhent hecashf l
owsr elat
ingtodi f
ferentt
imei nt
erval
sar etobecompar
ed,
thesear
e
convert
edt opresentvaluebydi scountingatthegivendiscountrat
e.

150Zi storecei
veRs.
60000fr
om bankattheendof3year
s,bei
ngt
hemat
uri
tyv
alueofat
erm
deposit
.Howmuchhei sdeposit
ingnow,
ifthei
nter
estr
atei
s10%?
A.Rs.44097
B.Rs.45079
C.Rs.47075
D.Rs.49059
BC/( 1+r)n=60000/(1+0.
10)3=60000/1.331=45079

151Thecashf l
owexpectedfrom aprojecti
sRs.
700,Rs.
1000andRs. 1200inthe1st
,2ndand
3rdyear.Thediscounti
ngfactorat10%r at
eofi
nter
esti
s1.10,1.
21and1. 331.Whati
sthetot
al
presentvalueofthesecashfl
ows?
A.Rs.2634.32
B.Rs.2463.88
C.Rs.2364.38
D.Rs.2261.72
CC/( 1+r)
n=1sty ear-700/(1+0.10)
1=700/1. 1=636.36+2ndy ear(1000/(1+0.
10)2=
1000/1. 21=)
826.44+3r dyear(1200/(1+0.10)3=1200/1.331=)901.58Total
=Rs. 2364.38
152Forpr oj
ectapprai
sal,whichofthef oll
owi ngpairs,aredi
scounti
ngtechniques?
A.netpresentvalue&internalr
ateofreturn
B.netpresentvalue&account i
ngrateofr et urn
C.paybackper i
od&account i
ngrateofr etur n
D.paybackper i
od&i nternalr
ateofreturn
ANetpr esentval
ue&i nternalr
ateofreturnar ethediscount
ingt
echniquesforproj
ector
i
nvestment
apprai
sal.Paybackperi
odandaccount i
ngr ateofreturnarenon-
discount
ingtechni
ques.

153Undernetpr esentvaluemet hodofpr ojectappr aisal,

A.t
hef utur
ecashf lowiscompar edwit
ht hei nit
iali
nv estmentmadei nthepr oject
B.t
henetpr esentvalueiscompar edwit
ht hei ni
tiali
nv estmentmadei nthepr oject
C.t
hepr esentvalueiscompar edwi tht
hei nit
ialinvestmentmadei ntheproject
D.t
hepr esentvalueiscompar edwi tht
heabsol utev alueoffutur
ecashf l
ows
CUndernetpr esentv al
uemet hodofprojectappr ai
sal ,t
hepresentvalueiscompar edwi
tht
he
i
nit
ial
i
nvestmentmadei ntheproject.Thedif
ferencebet weent wo, i
sthenetpresentv al
uewhi
chcan
bepositi
veornegat iv
eorzer o.

154Thenetpr esentv
alueofani
nvest
mentatagivendiscountr
atecanbe:
A.posit
ive
B.negati
ve
C.zero
D.anyofthese
DThenetpr esentval
ueofaninv
estmentatagi
vendiscountrat
ecanbeposit
ive,
negat
iveor
zer
o.

155Thenetpresentvalueofani nvest
mentcanbecal culatedbyusi
ngt
hefor
mula:
A.summation*C1/(1+r )
1+C2/( 1+r)2+……Cn/( 1+r)n++1
B.summation*C1/(1+r )
1+C2/( 1+r)2+……Cn/( 1+r)n+- 1
C.*C1/(1+r)
1xC2/( 1+r)
2x……Cn/( 1+r)
n+-1
D.summation*C1/(1+r )
1-C2/( 1+r)
2-……Cn/( 1+r)n+- 1
BNetpresentval
ue=summat i
on* C1/( 1+r
)1+C2/(1+r )2+……Cn/( 1+r
)n+-1.Her
e1
standsf
orini
ti
ali
nvestment .

156Ifthenetpresentvalueofaninv est
mentorpr ojectisnegat i
ve,i
tmeans:
A.theproj
ectcannotbet akenup,asi twouldreducet hewealthoft heshar
eholder
B.theproj
ectcanbet akenup, asitwouldincreaset hewealt
hoft heshareholder
C.theproj
ectcannei t
herbetakenupnori tcanbel eft,
asitcouldpr ov
etober emunerati
ve
D.noneoftheabov e
AIfthenetpresentvalueofani nv
est mentorprojectisnegative,i
tmeanst hatthepr
oject
cannotbetakenup, asitwouldreducet hewealthoft heshareholder

157I fthenetpresentv al
ueofani nvest
mentorpr ojecti spositi
ve,i
tmeans:
A.t heproj
ectcannotbet akenup, asitwouldreducet heweal thofthesharehol
der
B.t heproj
ectcanbet akenup, asitwouldincreaset heweal t
hoft heshar
eholder
C.t heproj
ectcanneitherbet akenupnori tcanbel eft,asitcouldprovet
ober emunerat
ive
D.noneoft heabov e
BI fthenetpresentvalueofani nvestmentorprojectisposi t
ive,i
tmeans,theproj
ectcanbe
takenup, asi
twoul dincreasetheweal t
hoft heshar eholder.
158I fthenetpresentv al
ueofaninvest
mentorpr oj
ectiszer
o,itmeans:
A.t heproj
ectcannotbet akenup
B.t heproj
ectcanbet akenup
C.t heproj
ectcanneitherbetakenupnori tcanbelef
t
D.noneoft heabov e
BI fthenetpresentvalueofaninvestmentorproj
ectiszero,
itmeans,t
hatt
hepr
ojectcanbe
takenup.

159Thenetpr esentvaluefrom proj

ectAis+Rs. 505andf r
om pr
ojectB,i
tis(-)Rs.
505.
A.proj
ectAcannotbet akenupf orinv
estmentbutprojectBcanbe
B.proj
ectBcannotbet akenupf ori
nvestmentbutproj
ectAcanbe
C.noneofthepr oject
scanbet akenupf orinvest
ment
D.anyofthepr oj
ectscanbet akenupf orinvest
ment
BThepr oj
ectwi t
hpositivenetpresentval
uecanbet akenupasthataddstot hewealt
hof
shar
eholders.Proj
ectwi t
hnegativenetpresentval
uereducesthewealthofsharehol
ders.

160Ani nvestorinvestedRs.7.50lacinaprojectthatgivesprofi
tofRs.2lacint he1styear,
Rs.2.60laci nthe2ndy earandRs.4.50laci
nt he3rdy ear.At10%discountrate, whati
st he
presentv al
ueoft hecashi nf
lows?
A.Rs. 7.
15l ac
B.Rs. 7.
25l ac
C.Rs. 7.
35l ac
D.Rs. 7.
45l ac
CThepr esentv al
ueofcashi nfl
owwi l
lbeRs.1.82lacf or1styear
,Rs.
2.15lacf or2ndy earand
Rs.3.38lacf or3rdy ear,t
otalbeingRs.7.
35lac.

161Ani nvestorinvestedRs.7.50lacinaprojectthatgivesprofi
tofRs. 2lacinthe1styear,
Rs.2.60laci nthe2ndy earandRs.4.50laci
nt he3rdy ear.At10%di scountrate,whati
st henet
presentv al
ueoft hepr oject?
A.Rs. 0.
45l acposi t
ive
B.Rs. 0.
45l acnegat i
ve
C.Rs. 0.
15l acposi t
ive
D.Rs. 0.
15l acnegat i
ve
DThepr esentv alueofcashi nfl
owwi l
lbeRs.1.82lacf or1styear,
Rs. 2.
15lacf or2ndyearand
Rs.3.38lacf or3rdy ear,tot
albeingRs.7.
35lac.HenceRs. 7.
35lessRs. 7.
50lac=0. 15l
ac

162Int
ernal
rateofret
urncanbecalculat
edas:
A.0=summat i
on*C1/( 1+r
)1+C2/( 1+r)2+……Cn/(1+r)
n++1
B.0=summat i
on*C1/( 1+r
)1+C2/( 1+r)2+……Cn/(1+r)
n+-1
C.0=summat i
on*
C1/( 1+r
)1xC2/( 1+r)2x……Cn/(1+r
)n+-
1
D.0=summat ion*
C1/( 1+r
)1-C2/(1+r )
2-……Cn/(1+r)
n+-1
B0=summat ion*C1/(1+r)
1+C2/( 1+r )
2+……Cn/( 1+r
)n+-
1wher
e0i
sIRR,
C1meanscash
i
nfowof1sty
l earandsoon, andri
sdiscountrat
e.

163Whi chofthef ol
lowi
ngmeet sthedefi
nit
ionrequir
ementofInter
nalRateofReturn?
A.costofcapitalofaproj
ect
B.di
scountr at
eatwhi chnetpresentval
ueiszero
C.di
scountr at
eatwhi chnetpresentval
uemustbeposi ti
ve
D.discountrat
eatwhi chnetpresentval
uemustbenegat ive
BThedi scountrateatwhichnetpresentval
ueiszero,i
scalledi
nter
nal
r at
eofreturn.
164Thenetpr esentv alueofapr oj
ectisRs.1.20lacat10%di scountr at
eand( -
)Rs.0.
20at11%
discountr at
e.Thei nter
nal rateofreturnofthepr ojectis:
A.10.50%
B.11.71%
C.11.00%
D.12.00%
BLowdi scountr at
e+[ differencebetween2di scountratesx( NPVatl owerdiscount/absolute
diff
erencebet ween2NPVs)=10%+[ 2x( 1.
20/1. 40)]=11. 71%
165Zmadeani nvestmentofRs. 18000andheexpect sareturnofRs. 3000perannum f or12
years.Whati sthepr esentv alueofthecashf lowat10%di scountr at
e?
A.Rs.20244
B.Rs.20364
C.Rs.20442
D.Rs.20544
CThecal cul
ationcanbemadebyusi ngAnnui tyformul ai.
e.PV=C[ (1+r)n-
1]/[r(
1+r)n]=
Rs.20442
166Zmadeani nvestmentofRs. 18000andheexpect sareturnofRs. 3000perannum f or12
years.Whati sthenetpr esentv al
ueoft hecashf l
owat10%di scountrate?
A.Rs.2244
B.Rs.2364
C.Rs.2442
D.Rs.2544
CThecal cul
ationcanbemadebyusi ngAnnui tyformul ai.
e.PV=C[ (1+r)n-
1]/[r(
1+r)n]=
Rs.20442-18000=Rs. 2442

167Zmadeani nv
estmentofRs.18000andheexpect
saretur
nofRs. 3000perannum for12
years.Whatisthepresentv
alueofthecashfl
owat15%discountr
ate?
A.Rs.16263
B.Rs.16675
C.Rs.16968
D.Rs.17214
AThecal cul
ati
oncanbemadebyusi ngAnnui
tyfor
mulai
.e.PV=C[ (1+r)n-
1]/[r
(1+r
)n]=
Rs.16263

168Zmadeani nvestmentofRs. 18000andheexpectsaretur

nofRs. 3000perannum f or12
years.Whatisthenetpr esentvalueofthecashfl
owat15%di scountrate?
A.-1737
B.-1637
C.+1737
D.+1637
AThecal cul
ationcanbemadebyusi ngAnnuit
yformulai
.e.PV=C[ (
1+r)n-1]/[
r(
1+r)n]=
Rs.16263NPV=16263-18000=- 1737
A
169Acompanyi nvestsRs.2l
aconanewmachi netobeusedf orjobwor k.I
twil
lbe
depreciat
edat20%onSLM basi s.Theexpect
edearningi
sRs.1.60lacperannum for5y ears.
Thef i
rm wil
lhavetoi ncur40%asoper ati
ngexpensesandshallpay10%t ax.Cal
culat
et hecash
fl
owperannum.
A.Rs.43200
B.Rs.48200
C.Rs.50400
D.Rs.51900
CRevenue-(
oper
ati
ngexpenses+depr
eci
ati
on+t
ax)=160000-(
64000+40000+5600)=
Rs.
50400

170Acompanyi nvestsRs.2laconanewmachi netobeusedf orjobwork.I

twil
lbe
depreciatedat20%onSLM basi s.Theexpectedearningi
sRs.1.60lacperannum f
or5years.
Thef i
rm willhavetoincur40%asoper at
ingexpensesandshallpay10%tax.Cal
culatet
he
presentv al
ueoft hecashflowbydi scounti
ngitat10%.
A.Rs.191056
B.Rs.192252
C.Rs.193086
D.Rs.193151
ACashi nfl
ow=Rev enue-(operat
ingexpenses+depr eci
ati
on+t ax)=160000-(64000+40000
+5600)=Rs. 50400
PV=C[ (1+r)n-1]/[r(
1+r)
n]=50400[ (
1+0.1)
n-1]/[0.
1(1+0.
1)5]=Rs.191056

171Acompanyi nvestsRs.2laconanewmachi netobeusedf orjobwork.I

twil
lbe
depreciatedat20%onSLM basi s.Theexpectedearningi
sRs.1.60lacperannum f
or5year
s.
Thef i
rm willhavetoincur40%asoper at
ingexpensesandshallpay10%tax.Cal
culatet
henet
presentv al
ueoft hecashflowbydi scounti
ngitat10%.
A.Rs.8944negat i
ve
B.Rs.8944posi ti
ve
C.Rs.9348negat i
ve
D.Rs.9348posi ti
v e
ACashi nfl
ow=Rev enue-(operati
ngexpenses+depr eci
ati
on+t ax)=160000-(64000+40000
+5600)=Rs. 50400
PV=C[ (1+r)n-1]/[r(
1+r)
n]=50400[ (
1+0.1)
n-1]/[0.
1(1+0.
1)5]=Rs.191056
NPV=191056-200000=-Rs. 8944

172Ori
ginal costofamachiner
yisRs.2l
acandi t
ssalvagevalueRs.
40000af
teri
tsusebyt
he
fi
rmfor5y ears.Theamountofdepreci
ationshal
lbe:
A.Rs.
40000
B.Rs.
36000
C.Rs.
32000
D.noneoft heabove
C(Ori
ginalcost-salvagev
alue)/no.ofyears=Rs.200000-40000=160000/5=Rs.32000

173Or i
ginalcostofamachi neryi
sRs. 2l
acanditssalv
agevalueRs.40000afteri
tsusebythe
fi
rmf or5y ears.Thedepreciatedvalueatt
heendof4t hshal
lbe:
A.Rs.72000
B.Rs.70000
C.Rs.68000
D.Rs.66000
AAnnual Depr eciat
ion=(Original
cost-salvagev
alue)/no.ofyear
s=Rs. 200000-40000=
160000/5=
Rs.32000Tot aldepreciat
ionfor4y ears=32000x4=128000.Hencet hedepreci
atedval
ue=2
l
ac–128000=Rs. 72000.

174Afir
m purchasedamachi
ner
yforRs.2l
ac.I
tist
obedepreci
atedby20%atwr
it
tendown
val
uemethod.Whatwill
betheamountofdepr
eci
ati
onf
or3rdyear?
A.Rs.
40000
B.Rs.
32000
C.Rs.
25200
D.Rs.
21600
C1styear=200000x20%=400002ndy
ear=160000x20%=320003r
dyear=128000x20%
=25200

175Af ir
m purchasedamachi
neryf
orRs.2l
ac.I
tistobedepr
eciat
edby20%atwr i
tt
endown
val
uemet hod.Whatwill
bethedepr
eci
atedval
ueattheendof3rdyear?
A.Rs.112200
B.Rs.
102800
C.Rs.102100
D.Rs.101200
B1sty ear=200000x20%=400002ndy ear=160000x20%=320003r dy
ear=128000x20%
=25200
Total
depr eci
ati
on=40000+32000+25200=97200.Depreci
atedvalue=Rs.
2lac-97200=
Rs.
102800

176Af ir
m pur chasedamachi
ner
yforRs.
2lac.Iti
stobedepr
eciat
edby20%atwr i
tt
endown
val
uemet hod.I tsol
dthe machi
ner
yforRs.1lacatt
heendof3rdyear
.Whatwill
betheprof
it
orl
ossont hesale?
A.Rs.3300pr ofit
B.Rs.
3300l oss
C.Rs.2800pr ofit
D.Rs.2800l oss
D1sty ear=200000x20%=400002ndy ear=160000x20%=320003r dyear=128000x20%
=25200
Total
depr eciati
on=40000+32000+25200=97200.Depreci
atedval
ue=Rs.2lac-97200=
Rs.
102800.Loss=102800-100000=Rs. 2800

177Acomput ingmachi necost

sRs. 10000.Thelif
eoft hemachineryis3y ears.Whatisthe
amountofdepr eci
ationi
nthe2ndy earasperdoubl edecli
ningbalancemet hod?
A.1667
B.3333
C.6667
D.noneoft heabov e
BRat eofdepr eci
ati
onunderSLM =100/3=33. 33%.Sor ateofdepreciat
ionunderdouble
decli
ningmet hod=33. 33x2=66. 67%.1sty eardepreci
ati
on=10000x66. 67%=6667.WDV=
10000-6667=3333.2ndy eardepreciat
ionasperdoubl edecli
ningbalancemet hod=3333x
66.67%=2222.Butt hedepreci
ati
onunderSLM f or2ndy earisRs.3333.Hencehi gheroftwoi
s
tobet aken.Hencef or2ndyear
,thedepreciati
on=3333

178Underdoubl edecl i
ningmet hodofdepreciati
on,
ift
heamountofdepr eci
ati
oninanyyearis
l
esst hant
heamountofdepr eciati
oncalcul
atedasperSLM:
A.theamountcal culatedasperSLM t obetaken
B.theamountcal culatedasperdoubledecliningbal
ancemethodtobet aken
C.thelowerofthet woamount stobetaken
D.noneoftheabov e
AIftheamountofdepr eci
ati
oncalcul
atedasperdoubledecli
ningmethodofdepreci
ati
oni n
anyyear,i
slessthant heamountofdepr eci
ationcal
cul
atedasperSLM, theamountcal
culated
asperSLM tobet aken.
179Wher etheequi pmentmayber equir
edt obereplacedear l
ierthanit
susefulli
fe(asi
ncase
ofcomput ers)
,whi chofthefol
lowingmet hodsofdepr eci
ation,ismoresui
table?
A.doubledeclini
ngbal ancemethod
B.accel
erateddepr eci
ationmethod
C.WDVmet hod
D.SLM met hod
BWher etheequi pmentmayber equir
edtober eplacedear l
i
ert hanit
suseful
life(asincaseof
computers),accelerat
eddepreciat
ionmet hodismor esuitable.

180Whi chmethodofdepr eciat

ionprov i
desgr eat
ertaxshiel
dingeffectt
hantheSLM methodof
depreci
ati
on?
A.doubledecli
ningbalancemet hod
B.accel
erateddepreci
ationmet hod
C.WDVmet hod
D.sum oftheyearsdigit
s
BTheaccel er
ateddepreciati
onmet hodpr ovi
desgr eat
ertaxshiel
dingeffectt
hantheSLM
methodof
depreci
ati
on.Themet hodi spopularforwrit
ingofftheequipmentwhi chmayber epl
acedbef
ore
theendofitsusefull
if
e, asincaseofcomput ers.

181Wher eanassetassumeshi gherdepreci

ati
onandgreatert
axbenefi
tintheearlyyearsof
l
if
eoft heasset ,whichofthefollowi
ngmet hodsofdepreci
ati
onismoresuitable?
A.doubledecl i
ningbalancemet hod
B.accelerateddepreciati
onmet hod
C.WDVmet hod
D.sum oft heyearsdigits
DSum oft heyearsdigit
smet hodisusedwher eanassetassumeshigherdepreci
ationand
great
ert axbenefiti
nt heear
lyyearsoflif
eoftheasset.

182Anasset( sayacomput er)hasalif

eof5y ears.Whatwi l
lbedepreci
ati
on%ageinthe2nd
year
, onthebasisofsum ofy ear
sdigi
tsmethod.
A.20.25%
B.25.57%
C.26.67%
D.29.61%
C5+4+3+2+1=15Hencei nthe2ndyearitwillbe4/15=26.67%
183Acomput erispurchasedf orRs.
50000andi t
ssal vageval
ueisassumedasRs.2000.What
wil
lbeamountof
depreci
ationi
nt he2ndy ear,onthebasisofsum ofy earsdi
git
smet hod.
A.Rs.12802
B.Rs.12076
C.Rs.11985
D.Rs.11845
ARat eofdepreciat
ion=5+4+3+2+1=15Hencei nthe2ndyearitwi
llbe4/
15=26.67%.
Amountof
depreci
ation=(50000-2000)x26. 67%=12802

184Acomputerispur
chasedforRs.
50000andit
ssal
vageval
ueisassumedasRs.2000.What
wil
lbedepr
eci
atedval
ueattheendof2ndyear,
onthebasi
sofsum ofyear
sdi
git
smet hod.
A.Rs.
37918
B.Rs.
37198
C.Rs.38146
D.Rs.38262
BRat eofdepr
eci
ati
on=5+4+3+2+1=15Hencei nthe2ndyeari
twi
l
lbe4/15=26.67%.
Amountof
depreci
ati
on=(50000-2000)x26.
67%=12802.Depr
eci
ati
onval
ue=50000-12802=
Rs.37198

185Acomput eri
spur chasedforRs.50000anditssalv
agev alueisassumedasRs.
2000.What
wil
l beamountofpr ofi
torloss,i
fthecomputerissoldforRs.35000attheendof2ndyear.The
cal
culati
onistobemadeont hebasisofsum ofyearsdigi
tsmet hod.
A.Rs.2846profit
B.Rs.2846loss
C.Rs.2198profit
D.Rs.2198loss
DRat eofdepreciat
ion=5+4+3+2+1=15Hencei nt he2ndy eari
twil
lbe4/15=26.67%.
Amountof
depreci
ati
on=( 50000-2000)x26. 67%=12802.Depreciati
onv al
ue=50000-12802=
Rs.37198.Loss=
37198-35000=2198

186Thehomecur r
encypriceofoneunitoff
oreigncurrencyi
scall
ed:
A.selli
ngr ate
B.buy i
ngr ate
C.directrate
D.indirectrate
CThehomecur r
encypriceofoneunitoffor
eigncurr
encyi scal
l
eddir
ectr
ate,
wherethehome
currencyuni ti
svariabl
eandf or
eigncurr
encyuniti
sfixed.Example1USD=Rs.46.
10

1871USD=Rs. 45.
90isanexampleof:
A.selli
ngr ate
B.buy i
ngr ate
C.directr ate
D.indirectr at
e
CInadi rectrate,t
hehomecurrencyuni
tisv
ari
abl
eandf
orei
gncur
rencyuni
tisf
ixed.Exampl
e1
USD=Rs. 46.10

188Thef oreigncurr
encypr i
ceofoneunitofHomecur r
encyiscall
ed:
A.selli
ngr ate
B.buy i
ngr ate
C.directrate
D.indirectrate
DThef oreigncurr
encypr i
ceofoneunitofhomecurrencyiscal
ledindi
rectr
ate,
wher
ethe
homecur rencyuniti
sfixedandforei
gncurrencyuni
tisvar
iabl
e.ExampleRs.100=USD2.
13

189Whendi rectr
ateofafor
eigncur
rencyi
snotav
ail
abl
e,t
her
atecal
cul
atedt
hrougha
commoncur rency,i
scall
ed:
A.fl
oati
ngrate
B.cr
ossr at
e
C.fi
xedrate
D.di
rectrat
e
BIti
scalledcrossrate.
190USDi sav
ail
abl
einDelhi
at1USD=46.
10.USDr
atei
nLondoni
s1USD=0.
75Eur
o.What
wil
lbetheEuro/Rerate?
A.Rs.
61.47
B.Rs.
64.17
C.Rs.
35.48
D.Rs.
34.58
A1Euro€=46. 10/0.75=Rs.61.
47

191Anexpor terhassubmit
tedanexportbil
lof£10000.Thei nt
er-
bankforei
gncurrencyrat
es
forspotdeli
veryare1USD=Rs.45.32.I
nLondont he£rateis=USD1. 832.Howmuchamount
i
nI ndi
anRupeeswi ll
bepaidtotheexport
er.
A.Rs.836202.80
B.Rs.834026.30
C.Rs.830262.40
D.Rs.832026.70
CCr ossrat
e=45. 32x1.832=83.02624.Totalamount83.02624x10000=Rs. 830262.40

192Thechai nrulemethodisusedi
ncaseofwhi chofthef ol
l
owingty
pesofr
ates?
A.fl
oati
ngr at
e
B.cr
ossr ate
C.fi
xedrate
D.di
rectrate
BThechai nrulemethodisusedincaseofcrossrate.I
facustomersubmi
tsanexpor
tbi
l
l i
n
£andnodi rectratei
savail
abl
efor£,thecal
culat
ionwillbemadethr
oughacommoncurrency
,
sayUSD.

193Thetermvaluedat
emeans:
A.thedat
eonwhi cht
hebil
lorcur
rencyi
sactual
l
ypurchased
B.thedat
eonwhi cht
heexchangeofcur
renci
esact
uall
ytakespl
ace.
C.thedat
eonwhi cht
hebil
lorcur
rencyi
sactual
l
ysold
D.noneoftheabove
BThedateonwhi cht
heexchangeofcur
renci
esact
uall
ytakespl
ace,
iscal
l
edv
aluedat
e.

194Whent heexchangeofcurr
enciestakesplaceondat
eofdeal,whi
chofthefol
lowi
ngtypeof
exchangeratewi l
lbeappl
i
cable?
A.cashorr eadyrate
B.TOM rate
C.spotrate
D.forwardrate
AWhent heexchangeofcurr
enciestakesplaceondateofdeal
,cashorr
eadyexchanger
ate
wil
lbeappl i
cable.

195Whent heexchangeofcurr
enciestakesplaceonnextwor ki
ngday(T+1)i.
e.tomorr
ow,
whichofthefoll
owingt
ypeofexchanger at
ewi l
lbeappl
icable?
A.cashorreadyrate
B.TOM rate
C.spotrate
D.forwardrat
e
BWhent heexchangeofcurr
enciestakesplaceonnextwor ki
ngday(T+1)i.
e.tomorr
ow, TOM
exchangeratewil
lbeappl
i
cable.
196Whent heexchangeofcurrenciestakesplaceon2ndworki
ngday(T+2),whi
chofthe
fol
lowingtypeofexchangeratewi l
lbeapplicabl
e?
A.cashorr eadyrate
B.TOM rate
C.spotrate
D.forwardrate
CWhent heexchangeofcurrenciestakesplaceon2ndworki
ngday(T+2),t
hespotexchange
rat
ewi l
lbeapplicabl
e.

197Whent heexchangeofcurr
enciestakesplaceaft
erthespotdat
e,whichofthefol
lowi
ng
ty
peofexchanger at
ewil
lbeapplicabl
e?
A.cashorr eadyrate
B.TOM rate
C.spotrate
D.forwardrate
DWhent heexchangeofcurr
enciestakesplaceaft
erthespotdate,
theForwardexchangerat
e
wil
lbe
appli
cable.

198Acur r
encyissaidtobeatapremium, when:
A.fut
ureratei
slowerandspotrateishi
gher
B.fut
urerat
eishigherandspotrat
eislower
C.fut
urerateandspotrat
earesame
D.noneoftheabov e
BAcur r
encyissaidtobeatapremium, whenfut
urer
atei
shi
gherandspotr
atei
slower
.

199Tocalculat
eaforwardr
ateincaseofdi rectquot
e,i
fthereispremium:
A.t
hepremi um i
saddedtopurchaserateanddeductedfrom sell
ingrate
B.t
hepremi um i
sdeduct
edfrom purchaserateandaddedtosel l
i
ngr ate
C.t
hepremi um i
saddedtopurchaserateandsel l
i
ngrat
e
D.t
hepremi um i
sdeduct
edfrom purchaserateandsell
i
ngr ate
CTocalculateafor
wardrat
eincaseofdi rectquotet
hepremi um isaddedt
opur
chaser
ateand
sel
li
ngr
ate.

200Tocalcul
ateafor
war drat eincaseofdirectquot
e,i
fthereisdiscount
:
A.t
hediscounti
saddedt opur chaserateanddeductedfrom sel
li
ngr at
e
B.t
hediscounti
sdeductedf rom purchaserateandaddedtoselli
ngr at
e
C.t
hediscounti
saddedt opur chaserateandselli
ngrat
e
D.t
hediscounti
sdeductedf rom purchaserateandsell
i
ngr at
e
DTocalculat
eaforwar
dr ate, i
ncaseofdi r
ectquote,
thediscountisdeductedf
rom t
he
pur
chaserateandsel
li
ngr ate.

201SpotEuro=USD1.3200/10.Onemont hfor
ward40-35,2monthfor
ward75-
70,3mont
h
for
ward105-
100.2mont hUSDcanbepurchasedat:
A.Eur
o1=USD1. 3235
B.Eur
o1=USD1. 3175
C.Eur
o1=USD1. 3160
D.Eur
o1=USD1. 3240
BEuroisatadi
scountandUSDisatapremi um.HenceEuro=1.3210-0.
0035=1.3175
202SpotEur
o=USD1. 3200/10.Onemonthforwar
d40-35,2monthfor
war
d75-
70,
3mont
h
for
ward105-
100.1monthEurocanbesoldat:
A.Eur
o1=USD1. 3160
B.Eur
o1=USD1. 3165
C.Eur
o1=USD1. 3175
D.Eur
o1=USD1. 3240
AEuroisatadi
scountandUSDisatapremium.Euro=1.3200-0.
0040=1.
3160

203Theforwar
dratehas_ __componentsnamel y_ __
:
A.t
wocomponent s,sal
eandpur chase
B.t
wocomponents, spotr
ateandf orwar
dpoints
C.t
hreecomponents,spotrat
e,premium anddiscount
D.t
hreecomponents,spotrat
e,forwardpoint
s,forwardload
BTheforwardr
atehast wocomponent snamel y
, spotrat
eandf
orwar
dpoi
nts.

204Thespotrat
eisEuro1=USD1. 3200and2monthf or
war
dEuro1=USD1.3325.The
for
wardpoi
ntsareequalt
o:A.125
B.250
C.320
D.325
AThespotrat
eisEuro1=USD1. 3200and2mont hfor
wardEur
o1=USD1.3325.Theforwar
d
poi
ntsar
eequalto125i.
e.dif
fer
encebetweenspotr
ateandf
orwar
drat
e.

205Whi chofthefoll
owingisnotafactort
hatcontr
ibut
estodet
ermi
netheforwar
dpoi nt
sfor
cal
culat i
onofforwardrate?
A.demandandsuppl ypositi
onfort
heset t
lementdate
B.mar ketexpectat
ionaboutthefut
uredevelopments
C.i
nter estrat
ediff
erenti
albet
weentwocount ri
es
D.noneoft heabove
DAllthesear ethefactor
sthatcont
ributet
odeterminethef
orwar
dpoint
sforcal
culat
ionof
for
war dr at
e.

206_ __
_ __
_i sanoperat
ion,t
hroughwhichapersoncanmaker
iskfreeprof
itsbyunder
taking
off
setti
ngt ransact
ions(sayborrowf
oreigncur
rencyi
nonemarketandlendinothermarket)
.
A.swap
B.arbit
rage
C.forward
D.spot
BAr bi
trageisanoper at
ion,t
hroughwhichapersoncanmaker
iskfreeprof
it
sbyundertaking
off
setti
ngt ransact
ions(sayborrowf
oreigncur
rencyi
nonemarketandlendinothermarket)
si
mul t
aneousl y.

207Thef orwardpointscanbecal culat

edas:
A.(spotrat
exi nter
estrat
ediff
erential/for
wardperi
od)/(100xno.ofdaysintheyear
)
B.(spotr
ate/i nter
estrat
ediff
erentialxfor
wardperi
od)/(
100xno.ofday sinthey
ear)
C.(spotrat
exi nter
estrat
ediff
erentialxfor
wardperi
od)/(100xno.ofdaysintheyear
)
D.(spotrat
exi nter
estrat
ediff
er ent
ialxfor
wardperi
od)x(100xno.ofdaysintheyear)
CFor war
dpoi nts=(spotrat
exi nterestr
atedi
ffer
ent
ialxf
orwardperi
od)/(100xno.ofday
sin
theyear)
.
208For warddif
ferenti
ali
sknownas:
A.swapr ate
B.arbit
ragerate
C.forwardrate
D.spotrate
AFor warddif
ferenti
ali
salsoknownasSwapRat
e.

209Ifspotexchangerate=2.0000, i
nter
estrat
edif
ferenti
al=4%p.a.,f
orwar
dperi
od=60day
s,
cal
culatethef
orwardpointsbytakingany ear=360day s.
A.0.011111
B.0.012222
C.0.013333
D.0.014444
C(spotratexint
erestrat
ediff
erentialxf
orwardperi
od)/( 100xno.ofdaysi
ntheyear
).
(2.
0000x4x60)/( 100x360)=0. 013333

210Inter
estdif
ferenti
alcanbecalcul
atedas:
A.(100xno.ofday sintheyearxforwardpoi
nts)/(spotrat
exf or
wardperi
od)
B.(100xno.ofday sintheyearx)/(spotr
atexforwardperiod)
C.(100xno.ofday sintheyearx)/(for
wardpointsxforwardperi
od)
D.(100xno.ofday sintheyearxforwardper
iod)/(spotratexfor
wardpoint
s)
AInter
estdif
ferenti
al=(100xno.ofday si
nthey earxforwardpoi
nts)/(
spotrat
exf
orwar
d
per
iod)

211Ifspotexchanger ate=2.0000,f
orwardpoint
s=0.016666.
,forwardper
iod=60days,
cal
culatetheint
erestdiffer
ent
ialbyt
akinganyear=360days.
A.3%
B.4%
C.5%
D.6%
CInterestdi
ff
erenti
al=( 100xno.ofday si
ntheyearxfor
wardpoints)/(
spotrat
exfor
ward
peri
od).
Int
erestdif
fer
enti
al =(100x360x0. 016666)/(2.
0000x60)=5%

212Ifspotr
ateEuro1=USD1. 3200/10,
onemonthfor
ward=25-20,2monthf
orward=30-
25
and3mont hforward=35-30.Whatis3monthbi
drate(buy
ingrat
e)?
A.Euro1=USD1. 3170
B.Euro1=USD1. 3165
C.Euro1=USD1. 3230
D.Euro1=USD1. 3235
BForwardbidrate=Spotbidrate-f
orwar
dpoi
ntsEur
o1=1. 3200-0.
0035=USD1.3165

213Ifspotr
ateEuro1=USD1. 3200/10,
onemonthfor
ward=25-20,2mont
hfor
war
d=30-25
and3mont hforward=35-30.Whatis3monthof
ferrat
e(sel
l
ingrat
e)?
A.Euro1=USD1. 3240
B.Euro1=USD1. 3220
C.Euro1=USD1. 3200
D.Euro1=USD1. 3180
DForwardofferrat
e=Spotofferrat
e-for
war
dpoint
sEuro1=1.3210-0.
0030=USD1.
3180

214Costaccount
ingi
sconcer
nedwi
tht
heappl
i
cat
ionof_
___f
orascer
tai
ningt
hecost
,wi
tha
viewt ocontr
olli
ngthem andassessi
ngtheprofi
tabil
i
tyandeffi
ciencyoftheenterpri
se.
A.cost i
ngprinci
ples
B.cost i
ngmet hods
C.cost i
ngtechniques
D.alltheabov e
DCostaccount i
ngisconcernedwit
htheappli
cationofcost
ingpr i
nci
ples,methodsand
techniquesfor
ascertai
ningthecost,withaviewtocont
rol
l
ingthem andassessingthepr of
it
abil
ityand
effi
ciencyoftheenterpr
ise.

215_ __accounti
ngisassociat
edwiththeneedofthebusi
nessowner
stokeeprecor
dsofthei
r
tr
ansactions,t
hepropert
yandt ool
stheyown,thedebt
stheyoweanddebtsot
herowethem.
A.stewardshipaccount
ing
B.fi
nancialaccounti
ng
C.costaccounting
D.managementaccount ing.
ASt ewardshi
paccounti
ngi sassoci
atedwit
htheneedofthebusi
nessowner
stokeeprecords
oftheir
tr
ansactions,t
hepropert
yandt ool
stheyown,thedebt
stheyoweanddebtsot
herowethem.

216Whi chofthef ol
lowingtypesofaccount i
ngsystem i
sassoci
atedwi t
hthepreparat
ionand
present at
ionofaccount i
ngandcont rol
li
nginfor
mation,i
naformt hatassi
ststhemanagement,
i
nt hef ormulati
onofpol i
ciesandindecisionmaking,onthevar
iousmat t
ersconnectedwit
h
oper at
ionsoft hebusinessenterpr
ise.
A.st ewardshipaccounting
B.financialaccounting
C.soci alr
esponsi bi
l
ityaccounti
ng
D.managementaccount ing.
DTheexpl anationgiveninthequestionabove,r
elat
estomanagementaccount i
ng.

217Themanagement sofbusi nessesareheldresponsibl

eforwhatthebusi
nesscontr
ibut
esto
thesocialwell
-beingandpr ogress,underanaccounti
ngsy st
em cal
led:
A.stewardshipaccounting
B.humanr esour cesaccount i
ng
C.socialr
esponsi bi
li
tyaccount i
ng
D.managementaccount i
ng.
CUndersoci alresponsibi
li
tyaccount i
ng,t
hemanagement sofbusi
nessesar
eheldresponsi
ble
forwhatthebusi nesscontributestothesoci
alwell-
beingandprogr
ess.

218Theaccount ingsy st
em thatinv
olvesaccounti
ngforinvest
mentinpeopleandr epl
acement
costsaswellastheaccount i
ngfortheeconomi cv
aluesofpeopletoanorganisati
on,i
scall
ed:
A.inf
lati
onaccounting
B.humanr esour
cesaccount i
ng
C.socialr
esponsibil
it
yaccount i
ng
D.managementaccount ing.
BUnderhumanr esourcesaccount i
ng,theaccount
ingsystem i
nvol
vesaccountingfor
i
nvestmentinpeopl eandr epl
acementcost saswellastheaccount
ingfortheeconomicv al
ues
ofpeopletoanor ganisati
on.

219___
_accounti
ngi
sconcernedwit
htheadj
ust
menti
nthev
alueofasset
sandofpr
ofi
ts,
in
thel
i
ghtofchangesi
nthepri
celev
el.
A.inf
lati
onaccount i
ng
B.humanr esour
cesaccounti
ng
C.socialresponsi
bil
it
yaccounti
ng
D.managementaccount i
ng.
AThei nfl
at i
onaccounti
ngisconcernedwi
ththeadj
ust
menti
nthev
alueofasset
sandof
profi
ts,i
nt heli
ghtofchangesi
nt hepri
cel
evel.

220Themachi ner yisrecordedinthebooksofaf irm att

hepri
cepaidtothesuppl
ier+the
expensesofbringi ngandinstal
li
ngthemachi nery
.Thisisduetoappl
icat
ionof:
A.moneymeasur ementconcept
B.costconcept
C.businessenti
t yconcept
D.reali
zati
onconcept
BEv erybusi
nesst r
ansacti
onisrecordedinthebooksofaccountatcostpri
ce.Thesecostsar
e
requir
edtoputt hemachi neryinworkingorder.

221Themonet aryval
ueassi gnedt
ov ar
iousassetsi
sderi
vedfr
om:
A.moneymeasur ementconcept
B.costconcept
C.businessentit
yconcept
D.real
izati
onconcept
BThecostconceptsay sthatanassetisworththepr
icepai
dforort
hecosti
ncur
redt
oacqui
re
i
t.Hencei tshoul
dber ecordedaccordi
ngly.

222Whent hepromoterofabusinesswit
hdrawscertai
ngoodsfr
om thebusinessf
orhi
s
personaluse,hi
sdrawingaccountisdebi
ted.Thi
sisdoneduetoapplicat
ionof:
A.goingconcernconcept
B.costconcept
C.businessenti
tyconcept
D.reali
zati
onconcept
CThebusi nessandpromot erar
etwodiff
erententi
ti
es.Moneyputinbythepromot
erin
business,i
sli
abil
it
yofthebusiness.Si
mil
arly,
asset
sdr awnf
rom busi
nessbythepromoterwi
l
l
bedebi t
edtohisaccount.

223Thepr ofi
tmadebyaf ir
mi sal i
abi
l
ityforthebusinessandlossmadebyafir
misanasset
.
Thisisduetoapplicat
ionof:
A.goingconcernconcept
B.costconcept
C.businessenti
tyconcept
D.reali
zati
onconcept
CThepr ofi
tistheamountt hatthepromoterisenti
tledtowithdr
awfrom t
hebusi
nessduet
o
whichitis
l
iabil
i
tyofthebusiness.Lossist heamountthatisrecoverabl
ebythebusi
nessfr
om t
he
promoterduetowhi chitbecomesassetf orthebusiness.

224Whi choft hefoll

owingt r
ansacti
onisnotcoveredbyt heappli
cat
ionofgoi
ngconcer
n
concept:
A.futureincomenott obet akenint
oaccount
B.fi
xedasset sarev al
uedatt hei
rcostandnotthemar ketvalue
C.currentassetsarevaluedatmar ketpri
ceorcost,whicheveri
sless
D.provisi
onsar ecreatedtomeetanyf utur
eli
abil
it
y
ANofuturei
ncomeistakeni
ntoaccountduet
oappl
i
cat
ionofr
eal
i
zat
ionconceptandnotdue
t
othegoingconcer
nconcept
.

225Theaccount i
ngconceptsusedi npreparat
ionofaccount
sare:
A.met hodsforpresentati
onoff i
nanci
alstat
ement s
B.broadassumpt ionforpreparat
ionofaccounts
C.basicrul
esf orpreparat
iontheaccounts
D.al
l t
heabov e
BThesear ebroadassumpt i
onsthataretakenintoaccountf
orprepar
ati
onofaccount
sbyt
he
busi
nessf i
rms.

226Inabusi nessf i
rm,theassets=capital
+liabi
l
ity
.Itisdueto:
A.goingconcer nconcept
B.moneymeasur ementconcept
C.mat chingconcept
D.dual aspectconcept
DInt hedual concepteveryt
ransact
ionhasdoubleeffecti
.e.debi
tandcredi
t.Whencapi
tal
was
broughtinorsomel i
abi
lit
ywascontracted,i
tmusthav egivenri
setosomeasset.

227Abusi nessfi
rm hastomakealladj
ust
ment
sforpr
epaidexpensesandout
standi
ng
expensesduet oappli
cat
ionof:
A.goingconcer nconcept
B.account i
ngperiodconcept
C.mat chingconcept
D.dual aspectconcept
CAspermat chi
ngconcept ,
thei
ncomeofapar
ti
cul
arper
iodisrequi
redtobematchedwi
tht
he
expensesoft hesameper iod.

228Inthebalancesheetofaf i
rm,t
henot esrel
ati
ngtothosef
act
sareincl
uded,t
hatdonotfi
nd
aplaceintheaccounti
ngst atements.Thisisdueto:
A.convent
ionofmat er
iali
ty
B.convent
ionofconservatism
C.convent
ionofaccount i
ngoff ul
ldiscl
osure
D.convent
ionofconsistency
CTheconceptoff ul
ldisclosuresuggeststhatal
lmater
ialf
act
saff
ect
ingabusinessshoul
dbe
di
sclosed.

229Manysmal ltr
ansactionsar enotr ecordedsepar atel
yint heaccountsofaf i
rm.Theseare
i
ncludedinthemiscell
aneousi temsf orrecor di
ngpur poses.Thisisdonebecauseofuseof:
A.conventi
onofmat eri
ali
ty
B.conventi
onofconservatism
C.conventi
onofaccountoff ulldisclosur e
D.conventi
onofconsistency
AAsperconv enti
onofmat er
iali
ty,allmat eriali
nformat i
onshoul dberecorded.I
tdependsupon
thenatur
eofbusinessandci rcumst ancesast owhati smat eri
alandwhati snot.Recordi
ngof
smalltr
ansacti
onsseparatelyinvolveshugecostduet owhicht hesearegroupedt oget
her.
Thesedonothav esigni
ficantbear i
ngont hebusi ness.

230Whichamongt hefol
l
owingaccountconcept
sisobser
vedatt
her
ecor
dingst
age(
andnot
ther
eport
ingst
age)ofthetr
ansact
ions:
A.matchi
ngconcepts
B.busi
nessentit
yconcept
C.materi
ali
tyconcept
D.matchingconcept
BBusinessenti
tyconceptr
elat
est
other
ecor
dingst
agewhi
l
eal
lot
her
srel
atet
other
epor
ti
ng
st
age.

231Ifafir
m hasbeenf ollowingthestraightli
nemet hodofdepreciati
on,itshouldconti
nuet
o
fol
lowthesamer at
herthanchangi ngtot hewrit
tendownv al
uemet hod.Thisi sduet
o:
A.conventi
onofmateriality
B.convent
ionofconserv atism
C.conventi
onofaccountoff ull
discl
osure
D.conventi
onofconsistency
DConv ent
ionofconsi
st encysuggest sthataccountingpract
icesshouldbef oll
owed
conti
nuouslysot
hatfairpi ctur
eoff i
nancialposi
tionofthebusinessisreflected.

232The_ __ _conceptmakesadi st
incti
onbetweenthereceiptofcashandrightt orecei
veitor
paymentofcashandobl i
gationtopaycash:
A.real
izat
ionsy stem
B.cashconcept
C.accrualconcept
D.consist
encyconcept
CTheaccr ual conceptrecognizesthati
nactualbusi
nessoper at
ions,
thereceiptorpay mentof
cashmaynotcoi ncide,butforfai
raccounti
ng,i
fther
eisrighttorecei
veorobligat i
ontopay,it
shouldber ecorded.Incashconceptt heaccount
ingisdoneont hebasisofact ualrecei
ptof
cash.

233Whi choft hef ol

lowingaccounti
ngconcepti
sobser
vedatt
herepor
ti
ngstageofaccount
ing
andnotatt her ecordingstage:
A.businessent it
yconcept
B.costconcept
C.consistencyconcept
D.hist
or i
calrecordconcept
CConsi stencyconcepti susedattherepor
ti
ngstagewhi
let
heother
sareusedatt
herecordi
ng
stage.

234Whi choft hefoll

owingconceptforbi
dstheincl
usi
onofunreal
i
zedgainsbutadv
ocatesthe
provi
sionf orpossi bl
elosses:
A.consist encyconcept
B.conser vatism concept
C.businessent i
tyconcept
D.historicrecordconcept
BTheconser vat
ism conceptinsi
stt
hatunreal
i
zedgainsshoul
dnotbetakenint
oaccountbut
possiblelossesshoul dbepr ovi
dedfortoshowfairpi
ctur
eoft
hebusiness.

235The_ _ _
_conceptrefer
stotheexpectati
onthattheorgani
sati
onwi
llhav
ei ndefi
nit
eli
fedue
towhichithasbear i
ngonthevaluat
ionofassets:
A.consistencyconcept
B.businessentit
yconcept
C.goingconcernconcept
D.hi
st or
icrecordconcept
CInthegoi ngconcernconcept
,theexpectat
ionisthator
ganisat
ionwi
l
lrunindefini
tel
ydueto
whi
cht
hev
aluat
ionofasset
swi
l
lbeont
hebasi
soft
hei
rcostpr
ice.

236Theaccount i
ngper i
odofaf ir
m cl
osesonMar31ev eryyear.Nei
theritdi
dpaytherentof
Rs.30000r elati
ngt othelastmonthoftheyearandnoraccountedforinthebooks.I
tvi
olat
ed
whichoft hef ol
lowing:
A.costconcept
B.mat chingconcept
C.account i
ngper iodconcept
D.dual aspectconcept
BInt hemat chingconcept ,al
lthecost
sandrevenuesrel
ati
ngtoapar ti
cularper
iodar
etobe
account edfor.

237Thebooksofbusi nessshouldbeclosedandreopenedaft
erregulart
imeperi
odasper:
A.consistencyconcept
B.businessent i
tyconcept
C.goingconcer nconcept
D.account i
ngper i
odconcept
DAccount ingperiodconceptsuggestthatthoughthebusi
nessisgoingconcernbutaf
tera
shortperi
od, ofsay,oney ear
,theposi
ti
onofbusinessshoul
dbeascer tai
ned.

238Int hebalancesheetofaf ir
m, theamountofst ockshasbeentakenasRs. 50000whichis
notthecostpr icebuttheexpectedpriceatwhichitmaybesold.Iti
sv i
olat
ionof:
A.consistencyconcept
B.conservatism concept
C.goingconcer nconcept
D.histori
crecor dconcept
BTheconser vati
sm conceptsuggeststhattheunreali
zedgai
nsshouldnotber ecorded.Her
e
thesalepriceincludestheunreal
izedprofi
tswhichshouldnotbeshownaspr ofi
t.

239Af i
rm suppli
edgoodst oanotherfir
m wor t
hRs. 5000butt hepaymenthasnotbeen
recei
vedasont hedat eofannual cl
osingofaccount ing:
A.theamountofRs. 5000shoul dnotbet akeni
nsal e
B.theamountofRs. 5000shoul dbet akenaspar tofst ock
C.theamountshoul dber ecordedassal eandtakent opr ofi
tandlossaccount
D.theamountshoul dbeshownasconsi gnmentst ock
CAsperaccr ualsystem ofaccounting,iftheri
ghttor ecoverhasaccrued,i
tshoul
dbetaken
i
ntopr ofi
tandlossaccount .Her eactualsalehastakenpl aceandshouldber ecor
dedassal
e
only.

240InIndi a,theaccount i
ngstandardsaref
ormulat
edby
:
A.RegistrarofCompani es
B.Account ingSt andar
dsBoar dofICAI
C.Securiti
es&ExchangeBoar dofIndia
D.all
theabov e
BInIndia,theaccount ingstandardsarefor
mulat
edbyAccount
ingSt
andar
dsBoar
dofI
CAI
whichwas
consti
tutedi nApr i
l1977.

241Whereaf ir
m orcompanydoesnotfol
lowamandatoryaccount
ingst
andar
d,t
heaudi
tor
sof
thatf
ir
m orcompany :
A.havetopreparet
hef r
eshaccount
sonthebasi
sofaccounti
ngstandar
d
B.hav etoqualifythei
rauditrepor
t
C.cannotunder takingaudit
ingassignment
D.hav etoseekper missionofAccountingSt andardBoardofICAI
.
BWher eaf i
rm orcompanydoesnotf oll
owamandat oryaccount
ingst
andard,
theaudi
tor
sof
thatfi
rm orcompany ,havetoquali
fytheirauditrepor
t,f
ail
i
ngwhichtheywil
lbegui
lt
yof
professionalmisconduct.

242Wher eacompanydoesnotf oll

owanaccountingstandar
d,ithast
odisclosethef
oll
owing
i
nformat i
on:
A.thedev i
ati
onfr
om t heaccountingst
andards
B.thereasonsforsuchadev iati
on
C.thefinanci
alef
fects,i
fany,ari
singoutofsuchdeviati
on
D.allt
heabov e
DWher eacompanydoesnotf ol
lowanaccountingstandard,
ithastodi
scloseall
theabove
i
nformat i
on.

243Whichoft
hef
oll
owingaccount
ingst
andar
d,r
elat
est
oval
uat
ionofi
nvent
ori
es:
A.AS-
2
B.AS-
5
C.AS-
9
D.AS-
11
AAS2relat
est
oval
uati
onofinvent
ori
es.

244Whichoft hefollowi ngdoesnotmat ch?

A.AS-
1: Discl
osureofaccount i
ngpolici
es
B.AS-
3: Cashf l
owst atements
C.AS-
6: Accountingf orf i
xedassets
D.AS-
9: Revenuer ecogni ti
on
CAS-6relatestodepr eciat
ionaccounti
ngandnott
hef
ixedasset
saccount
ing.

245Whi choft hef ollowingaccount i

ngstandar dsdoesnotmat ch:
A.AS- 17:segmentr epor t
ing
B.AS- 20:Consol idatedfinancialaccount ing
C.AS- 26:Intangibleasset s
D.AS- 29:Prov i
sions, conti
ngentl i
abili
ti
esandcont ingentassets
BAS- 20relatest oear ni
ngpershar e.Consol i
datedfi
nancialaccountingi
scoveredunderAS-
21.
246Whi choft hef ollowingaccount i
ngstandar dshelpsinbetterunderst
andi
ngoffinanci
al
stat
ement s:
A.AS- 1:Disclosur eofaccount ingpolici
es
B.AS-3: Cashf lowst at
ement s
C.AS- 6:Account ingf orfi
xedasset s
D.AS- 9:Revenuer ecognition
AAS- 1ondi sclosur eofaccount i
ngpol i
cieshelpsinbetterunderstandi
ngoffi
nancial
stat
ement s.

247Ifsomei mpor
tantev
enthashappenedaf
tert
heaccount
ingdat
e(suchasi
mposi
ti
onof
penalt
ybytheTax
author
iti
es)
,iti
sdeal
twit
hasper:
A.AS-2
B.AS-4
C.AS-7
D.AS-9
BAS-4deal
swit
himport
anteventhappenedaf
tert
heaccount
ingdat
e(suchasi
mposi
ti
onof
penal
tybyt
heTaxaut
hori
ti
es)
.

248Theaccount i
ngrul
esusedt opreparefinanci
alst
atementsf
orthepubl
i
clyt
raded
companiesarecall
ed:
A.Accounti
ngStandards
B.General
lyAcceptedAccounti
ngPr i
nci
ples
C.General
lyfol
l
owedaccount i
ngstandard
D.anyoftheabov e
BGenerall
yAcceptedAccountingPri
nciplesaretheaccount
ingr
ulesusedt
opreparef
inanci
al
stat
ementsforthepubli
clyt
radedcompani es.

249AsperGenerall
yAcceptedAccounti
ngPr i
nci
ples,thefi
nanci
alst
atement
sshouldbe(
a)
rel
evant(
b)r
eli
able(c)comparabl
e(d)consist
ent:
A.atodall
B.atoconly
C.btodonly
D.a,canddonly
AAsperGenerall
yAcceptedAccounti
ngPrincipl
es,thefi
nancial
stat
ementsshoul
dbe(a)
rel
evant(
b)r
eli
able(c)comparabl
e(d)consist
ent.

250Whi chofthef ol
lowingor ganisati
oninUSofAmer i
ca,i
nfl
uencesthedevel
opmentof
Gener
allyAcceptedAccount i
ngPr i
nci
ples:
A.USSecuriti
esandExchangeCommi ssion(
SEC)
B.AmericanInsti
tuteofCer ti
fiedPubl i
cAccountants
C.Fi
nancialAccountingSt andar dsBoard
D.al
ltheabov e
DAllt
heabov eor ganisati
ons, infl
uencethedevelopmentofGeneral
lyAccept
edAccount
ing
Pri
nci
ples.

251Thesy stem f ol
lowedforpri
cingofgoodsandservi
ceswithi
namulti
-di
visi
onalor
gani
sat
ion
i
scal l
ed:
A.Gener allyAccept edAccount
ingPri
ncipl
es
B.TransferPr icing
C.Account i
ngSt andard
D.Anyoft heabov e
BTr ansferpr icingmeanst hesystem f
oll
owedinpri
cingofgoodsandservi
ceswithi
na
multi-
divisional
organisation.

252Whi choft hefol

lowingisamet hodusedunderTransf
erPri
cing:
A.compar abl
euncont r
olledpr
icemet hod
B.costplusmet hod
C.resalepri
cemet hod
D.allt
heabov e
DThemet hodsusedunderTr ansferPrici
ngincl
udecomparabl
euncont
rol
l
edpr
icemet
hod,
costplusmet hodandr esal
epricemet hod.

253Whichmet
hodcompar
esthepr
iceatwhichacont
rol
l
edtransacti
oni
sconduct
edt
othe
pri
ceatwhi
chacompar
abl
euncont
rol
ledt
ransact
ioni
sconducted.
A.compar abl
euncont r
oll
edpricemet
hod
B.costplusmet hod
C.resal
epr i
cemet hod
D.noneoft heabov e
AThecompar ableuncontr
oll
edpri
cemethod,compar
esthepri
ceatwhi
chacontrol
l
ed
tr
ansactionis
conductedtothepr i
ceatwhichacomparabl
euncontr
oll
edtr
ansact
ioni
sconduct
ed.

254Gener al
lythe___methodisusedfort
het
radeoffi
nishedgoods,undertr
ansferpri
cing:
A.compar ableuncontr
oll
edpri
cemethod
B.costplusmet hod
C.resal
epr i
cemet hod
D.noneoft heabov e
BGenerallythecostplusmethodisusedf
ort
hetradeoffini
shedgoods,undert
ransferprici
ng

255Intheresal
epricemet hodunderTransf
erPrici
ng:
A.thepri
ceisdeter
mi nedbysubtracti
nganappropri
ategrossmar kupfr
om thesal
epri
ce.
B.thepri
ceisdeter
minedbyaddi ti
onanappr opr
iat
egrossmar kupfrom t
hesalepri
ce.
C.thepri
ceisdeter
mi nedequaltothesalepri
ce.
D.noneoftheabove
AIntheresalepr
icemet hod,t
hepr i
ceisdetermi
nedbysubtracti
nganappropri
ategr
ossmark
upfrom t
hesalepri
ce.

256Inthecostplusmet hodunderTransf
erPrici
ng:
A.thepri
ceisdeter
mi nedbysubtracti
nganappropri
ategrossmar
kupfr
om thesalepri
ce.
B.thepri
ceisdeter
mi nedbyadditi
onanappropriat
egrossmarkupfr
om thesalepr
ice.
C.thepri
ceisdeter
mi nedequaltothesal
epri
ce.
D.noneoftheabov e
BInthecostplusmet hod,t
hepriceisdet
erminedbyaddit
ionanappr
opr
iategrossmarkup
fr
om thesal
epr i
ce.

257Thepr i
ceatwhi cht
wounrelat
edandnon-
desper
atepart
ieswouldagreet
oat r
ansact
ioni
s
cal
led:
A.transferpri
cing
B.arml engthprice
C.standardpricing
D.concessional pr
ici
ng.
BThear mlengthpr i
cei
sthepr
iceatwhi
chtwounrel
atedandnon-desper
atepar
ti
eswould
agreetoa
tr
ansact i
on.

258TheHeadOf fi
ceofabankev al
uatestheperf
ormanceofit
sbranches,byusing:
A.general
lyacceptedaccount
ingpract
ices
B.accounti
ngstandards
C.tr
ansferpri
cemechani sm
D.anyoftheabov e.
CTheHeadOf fi
ceofabankev al
uatestheperf
ormanceofit
sbranches,byusingtransf
erpr
ice
mechanism.

259TheTransferpri
cemechani
sm usedi
nbanksmeans:
A.t
heint
erestchargedbyt
hesurpl
usfundsbr
ancht
othedef
ici
tfundsbr
anchont
ransf
erof
funds.
B.theint
erestchargedbyt heheadof f
icetothedefici
tfundsbr anchont ransferoffunds.
C.theint
erestchargedbyt hesurpl
usf undsbranchtotheheadof fi
ceont ransferoffunds.
D.theint
erestandot hercostschargedbyt hesurpl
usfundsbr ancht othedeficitf
undsbr anch
ontransf
erof
funds.
ATheTr ansferpri
cemechani sm usedi nbanksmeans, theinterestchargedbyt hesurpl
us
funds brancht othedefici
tfundsbranchont ransf
eroff unds.

260Whi choft hef ol

lowi
ngunconventionalmet
hodsundertr
ansf
erpri
cingist
heunif
iedver
sion
ofresalepr icemet hodandcostplusmet hod:
A.compar ableuncont r
oll
edpri
cemet hod
B.profitsplitmet hod
C.transact i
onal netmarginmethod
D.alltheabov e
CThet ransactionalnetmargi
nmet hodi st
heunif
iedv
ersi
onofresal
epr i
cemethodandcost
pl
usmet hod.

261Whi chofthefol
lowingisdescr i
pti
onofthenomi nal account
?
A.anaccountofaper sonfrom whom t hefi
rm purchasedgoods
B.accountofmachinery
C.accountofwagespai dtoal abourer
,whil
ehisser viceswer eusedf orconst
ructi
onoffact
ory
bui
lding.
D.noneoftheabov e
DNoneoft heseaccountsfallsundernominalcategor y.Wagespai dtol abour
erforusi
nghis
ser
v i
cesforconst
ructi
onoff actorybui
ldi
ng,arear eal account(assetaccount).

262Debi twhatcomesi nandcr edi

tthegiv
eraretherulestodebi
tandcr edi
tinrespectof
:
A.realaccount ,
nomi nal account
B.realaccount ,
personal account
C.nomi nalaccount,per sonal account
D.personal account,real account
BDebi twhatcomesi nist heruleappli
cabl
eforrealaccountandcredi
tthegiveristherul
est
o
credi
ta
personalaccount .

263Debi tallexpensesandcr edi

twhatgoesout
,ar
et herul
es,fordebi
tandcr
editt
o:
A.nomi nalaccount,personalaccount
B.realaccount ,
nomi nalaccount
C.nomi nalaccount,realaccount
D.personal account,nominalaccount
CDebi tall
expensesi sther ul
eappli
cabl
etoanominalaccountandcredi
twhatgoesout
,ist
he
rul
es,forcredittorealaccount.

264Fir
m soldoldmachi nerytoXYZ,forcash.Thistr
ansact
ioni
nvol
ves:
A.onerealaccountandot herper
sonalaccount
B.bot
ht herealaccounts
C.bot
ht hepersonalaccounts
D.onerealaccountandot hernominalaccount
BOldmachi ner
yandcash, bot
harerealaccounts.
265Af ir
m madepr ofi
tsandtheowner sdidnotwi
thdr
awtheseprof
it
stoful
lext
ent.The
ret
ainedamountofpr ofit
swillbeshownas:
A.partofassets
B.partofcurr
entl i
abil
it
ies
C.partofcapitaloftheowners
D.partofthereserves
DRet ai
nedprof i
tsbecomepar tofthereserv
esandnotofcapi
tal
.Thesear
eli
abi
li
ti
esofthe
fi
rmt owardsthepr omotersofthefir
m.

266Theaccount ingconceptsarepar tofwhi

chofthef
oll
owi
ng:
A.formatofpresentationofaccounti
ngbooks
B.formatforpreparat
ionoff i
nalaccounts
C.broadassumpt ions
D.parti
cul
arsetofgui deli
nes
CTheaccount i
ngconcept sar
ebr oadassumpti
ons.

267Cashbookkeepsr ecordsof:
A.al
lbusinesstransact
ions
B.al
lcashr ecei
ptsandcashpay ments
C.al
lcashandnon- casht r
ansactions
D.onl
ytradingrelat
edcashr eceiptsandpay ments.
BCashbookkeepsr ecordsofal lcashrecei
ptsandcashpay
ment
s,i
rr
espect
ivewhet
hert
hese
areonrevenueaccountorcapi talaccount.

268Whi chofthefol
lowingiscor
recti
nt hecontextofcashbook:
A.al
lreceipt
sarerecordedonthecreditsideandpay mentsonthedebi
tsi
de.
B.al
lreceipt
sarerecordedonthedebitsideandpay mentsonthecredi
tsi
de.
C.al
lreceipt
sandpay mentsarerecor
dedont hecredi
tside
D.al
lreceipt
sandpay mentsarerecor
dedont hedebitsi
de
BInacashbook, allr
eceipt
sarerecordedont hedebitsi
deandpaymentsonthecr
edi
tsi
de.

269Cashbookmai ntainedbyaf ir
mi sa:
A.bookoforigi
nalentryonly
B.l
edgeraccountonly
C.boththebookofor i
ginalentr
yandledgeraccount
D.nei
therbookoforiginalentr
ynorledgeraccount
CCashbookmai nt
ainedbyaf irmisboth,t
hebookofor
igi
nal
ent
ryandl
edgeraccount
.

270Fr om thejournal
,theamountpay ablet oorreceiv
ablefrom apar
ti
cul
arper
soncanbe
calcul
atedbyaddi ngalltheentr
ies,
whichi sadi f
ficul
ttask.Thi
sismadeeasybywhichoft
he
foll
owingbooks:
A.ledger
B.cashbook
C.journali
tself
D.anyoft heabov e
AThel edgerpr ov
idesdet ai
l
sofindivi
dual accountswher ei
namountpayabl
etoorr
eceiv
abl
e
from a
parti
cularpersonisautomat i
cal
lyavai
lable.

271Whichofthefol
lowingiscor
rectsequenceofbookkeepi
ngorr
ecor
dkeepi
ng:
A.cl
assi
fyi
ng,
recording,summari
zing
B.recor
ding,classifyi
ng, summar i
zing
C.summar i
zi
ng, recording,cl
assif
ying
D.summar i
zi
ng, classif
y i
ng,recor
ding,
BThecor rectsequencei srecordi
ng,cl
assi
fyi
ng,
summar
izi
ng.

272Pr eparingoftr
ialbal
anceandfi
nalaccount
s,wi
thaviewtoascer
tai
nprof
it
sfr
om the
business,iscall
ed:
A.recording
B.classi
fying
C.summar izi
ng
D.noneoft heabove
CSummar i
zingmeanst oprepar
etr
ial
balanceandf
inal
account
s,wit
hav i
ewtoascer
tai
n
profi
tsfrom thebusiness.

273Thepr ocessofrecor
dingtransacti
onsint
hebookofori
ginal
ent
ryi
scal
l
ed:
A.recor
ding
B.j
ournali
zing
C.posti
ng
D.summar izi
ng
BThepr ocessofrecordi
ngtransacti
onsiscal
l
edjour
nal
izi
ng.

274Thepr ocessofrecor
dingtransacti
oni
ntheledgeri
scall
ed:
A.recor
ding
B.j
ournali
zing
C.posti
ng
D.summar izi
ng
CThepr ocessofrecordi
ngtransacti
onint
heledgeriscal
l
edposti
ng.

275Whichofthefol
lowi
ngisabookofanal
yti
cal
recor
ds?
A.cashbook
B.j
ournal
C.l
edger
D.noneoftheabove
CLedgerisabookofanaly
tical
recor
ds.

276Whi choft hef oll

owingisabookofchr onol
ogi
calr
ecord?
A.cashbook
B.j
our nal
C.l
edger
D.noneoft heabov e
BJour nal isthebookofchr onological
record.
277Thepr ocessofequal izi
ngthet wosidesofanaccountbyputt
ingthedif
ferenceonthesi
de
wheret heamounti sshort,i
scalled:
A.balanci ng
B.j
our nalizing
C.post i
ng
D.summar izi
ng
AThepr ocessofequal izi
ngthet wosidesofanaccountbyputt
ingthedif
ferenceontheside
wheret he
amounti sshor t
,iscalledbalancing.
278Int hepr ocessofbalancing,i
fthedebitsi
deofanaccounti
smorethanthecreditsi
de,the
di
fferenceisputon:
A.debitside
B.creditsi
de
C.eithercreditordebi
tside
D.neitherside.
BInt heprocessofbal anci
ng, i
fthedebitsi
deofanaccountismor
ethanthecreditsi
de,the
di
fferenceisputoncr editside.

279Thedebi tbalanceofanaccounti srepr esent edby( a)liabili

ty(b)expenses(c)asset(d)
i
ncome:
A.bandc
B.bandd
C.aandc
D.aandb
AThedebi tbalanceofanaccounti srepr esent edbyexpensesorasset s
280Thecr editbalanceofanaccounti srepr esent edby( a)liabil
it
y( b)expenses(c)asset(d)
i
ncome:
A.bandc
B.bandd
C.aandc
D.aandd
DThedebi tbalanceofanaccounti srepr esent edbyl iabili
tyori ncome.
281I fbalanceisi ndebi ti
naper sonal accounti trepr esent s:
A.creditors
B.debt ors
C.li
abilit
ies
D.expenses
BIfbal anceisdebi tinaper sonal accounti trepresent sdebt ors.
282I fbalanceiscr editinanomi nal account ,itrepr esent s:
A.debt or
B.creditor
C.income
D.expenses
CThecr editbalancei nanomi nal account ,isincome
283I fbalanceisdebi tinanomi nal account , i
trepr esent s:
A.debt or
B.creditor
C.income
D.expenses
DThedebi tbalancei nanomi nal account ,isexpense.
284I fbalanceinar ealaccounti scr edit
,itrepr esent s:
A.li
abilit
y
B.asset s
C.income
D.noneoft heabov e
DTher ecannotbeacr edi
tbalancei nar eal account .Ar eal accounti sanassetandcannot
carrycredit
bal
ance.I talway shasdebi tbal ance.

285Whi
chamongt
hef
oll
owi
ngi
saper
sonal
account
?
A.cash
B.bankov erdraft
C.wagespai d
D.machi ner y
BBankov er drafti
sanaccountwi thabank.Henceaper sonalaccount.
286Whi choft hef ollowi ngi saper sonal account ?
A.salarypai d
B.rentrecei vable
C.vehicle
D.wagepai d
BRentr ecei vableisaper sonalaccountunderr epresentati
vepersonalaccountcat
egory.
287Whi choft hef ollowi ngi snotar eal account ?
A.cash
B.machi ner y
C.land
D.bankt erml oan
DBankt er ml oani saper sonalaccountwhi leal l
other,arealaccount.
288Whi choft hef ollowi ngi sanomi nal account ?
A.rentpay abl e
B.salaryr ecei vable
C.commi ssionout standi ng
D.noneoft heabov e
DAl lt
heaccount sar eper sonalaccount s.
289Whi choft hef ollowi ngi snotav al
uat i
onaccountoracont r
aaccount?
A.provisionf ordepr eci ation
B.provisionf ordoubt fuldebt s
C.stockr eser veaccount
D.noneoft heabov e
DAl lt
hesear ev aluationaccount s,whi char eal socal l
edcontraaccounts
290Ifther ei sdebi tbal ancei naper sonal accountandonemor eentryiswri
ttenonthedebit
si
de, t
hissi gnifi
es:
A.theamountduef r
om t heper sonhasi ncr eased
B.theamountduef r
om t heper sonhasdecr eased
C.theamountpay abl et otheper sonhasdecr eased
D.theamountpay abl et ot hepersonhasi ncr eased
AIftherei sdebi tbal ancei naper sonal account( i
.e.debtoraccount)andonemor eentryis
wri
ttenont hedebi tside, thissi
gni f
iest hatt heamountduef r
om thepersonhasincreased.

291I fthereiscreditbalancei
naper sonalaccountandoneentryi
swr i
tt
enonthedebitside,
thissignif
ies:
A.t heamountduef rom thepersonhasincreased
B.theamountduef rom thepersonhasdecr eased
C.t heamountpay abletothepersonhasdecr eased
D.t heamountpay abletothepersonhasincr eased
CI fthereiscreditbalanceinapersonalaccountandoneentryi
swr i
tt
enonthedebitside,thi
s
signifi
esthattheamountpay abletothepersonhasdecreased.

292Adebi
tent
ryintherealaccountsi
gni
fi
esthat(a)t
heval
ueofassethasdecr
eased(b)the
val
ueoft
heassethasincreased(c)anewassethasbeenacqui
red(
d)anoldassethasbeen
sol
d:
A.aandc
B.bandc
C.candd
D.aandd
BAdebi tent
ryi
nthereal
accountsi
gni
fi
est
hatt
hev
alueoft
heassethasi
ncr
easedoranew
assethasbeenacqui
red.

293Acr edi
tentryi
nther ealaccountsi
gni
fi
esthat(
a)theval
ueofassethasdecreased(
b)the
val
ueoft heassethasincreased(c)anewassethasbeenacqui
red(d)anoldassethasbeen
sold:
A.aandc
B.bandc
C.candd
D.aandd
DAdebi tent
ryintherealaccountsigni
fi
esthatt
heval
ueoftheassethasdecreasedoraan
assethasbeensold.

294Adebitentr
ytoanomi nalaccountmeans(a)someexpensehasbeenincur
red(
b)some
i
ncomehasbeenr ecei
ved(c)somel osshastakenpl
ace(d)somegai
nhasbeenmade.
A.aandc
B.bandc
C.bandd
D.aandd
AAdebitentr
ytoanomi nalaccountmeanssomeexpensehasbeenincurr
edorsomelosshas
takenpl
ace

295Acreditentr
ytoanomi nalaccountmeans(a)someexpensehasbeenincur
red(
b)some
i
ncomehasbeenr ecei
ved(c)somelosshastakenplace(
d)somegainhasbeenmade.
A.aandc
B.bandc
C.bandd
D.aandd
CAcreditentr
ytoanomi nalaccountmeanssomei ncomehasbeenrecei
vedorsomegainhas
beenmade.

296Thear tofr ecordingbusi

nesstransact
ionswi t
hav iewtohaveaper
manentrecor
dofthem
andofshowi ngtheireff
ectonwealth,i
scalled:
A.accounting
B.book-keepi ng
C.analy
sisofaccount s
D.managementaccount i
ng
BBook-keepi ngreferstorecor
dingthebusinesstransacti
onswit
htheobj
ect
iveofhavi
ng
permanentr ecordoft hetr
ansacti
onsandt heiref
fectonwealt
h.

297Whi chofthefol
l
owingisnotpartofaccount
ingcycl
e:
A.analyzing
B.recording
C.classifyi
ng
D.summar izi
ng
AAnal yzingisanacti
vi
tywhichi
susedaf t
ertheaccount
ingcy
clei
scompl
ete.Theot
herar
e
opti
onspar toftheaccount
ingcycl
e.
298Whi chofthefol
lowingisnotcorrectr
egardi
ngthecashbookofaf i
rm:
A.itisabookofsecondar yentr
y
B.itkeepsrecordofallcasht r
ansacti
ons
C.itisdivi
dedintotwosi desli
kesaledger
D.thecashbooki sl
edgeraccountalso
ACashbooki sabookofor i
ginalent
rybecauseall
thecasht
ransact
ionsar
eor
igi
nal
l
yrecor
ded.
Other
featuresarecorrect
.

299Thepr ocessofequal izi

ngt hetwosi desofanaccountbyput t
ingthedi
ff
erenceont heside
wher etheamounti sshor t,i
scal l
ed:
A.squar i
ng
B.bal ancing
C.post ing
D.summar izing
BBal ancingr efer
stoequal i
zi
ngt het wosi desofanaccountbyput ti
ngthedi
fferenceont he
sidewher et heamounti sshor t
,soast hemaket hetot
aloftr
ansacti
onsonbot hthesidesof
theaccountequal .
300Whi choft hefoll
owi ngst at
ementdoesmat ch:
A.debi tbalancei ntheaccount siseitheranassetoranexpense
B.bal ancei nt hepersonal accountsi sei t
heraliabi
li
tyoranasset
C.nomi nalaccountr epresent sassetorl i
abil
i
ty
D.r ealaccountnor mall
yr epresentst heasset
CBal ancei nt henomi nal accountr epresenteitheranexpenseorincome.Nomi nalaccounts
relatetot r
adi ng,manuf acturi
ngorpr ofitandlossaccount

301Accountsareclassi
fi
edint ofollowingcat egories:
A.t
wocat egori
esnamelyper sonal accountsandi mper sonal account
s
B.t
hreecategori
esnamel ypersonal accounts, noti
onal accountsandrealaccounts
C.t
wocat egori
esnamelynomi nalaccount sandr eal account
D.f
ourcategori
esnamel ypersonal, i
mper sonal,nomi nal andr eal
ATherearetwobr oadcategoriesnamel ypersonal account sandi mpersonalaccounts.
I
mpersonalaccountsarefurt
hersub- di
videdintor eal accountsandnomi nalaccounts.

302Whi chofthef oll

owingstatementdoesnotmat cht het ypeofaccount :
A.accountsofpersonst hatarecreationofGod-nat ural personal accounts
B.accountsofbusi nessenti
ti
escr eatedt hroughsomel aw-ar ti
fi
ci alpersonalaccounts
C.accountsthatrepresentacer t
ainper sonorgr oupofper sons-nomi nalaccount
D.accountsthatrepresentthetangiblear ti
cleslikecash-r ealaccount s
CTheaccount sthatr epr
esentacer tainper sonorgr oupofper sonsar ecall
edr epr
esentat
ive
personalaccountsuchasr entpay able,commi ssionrecei v
ableet c.

303Theaccount soft hingsthatcannotbetouchedbutcanbemeasuredi

nmoneyter
msare
cal
led:
A.nomi nalaccount s
B.tangiblereal account s
C.intangibl
er eal accounts
D.representativeper sonalaccounts
CTheaccount soft hingsthatcannotbetouchedbutcanbemeasuredinmoneyt
ermsar
e
cal
ledr eal
i
ntangibleaccount ssuchasgoodwi l
l,
patents.
304Whi choft hef ol
lowi ngaccount sisnotaper sonal account:
A.bankl oanaccount
B.rentpay ableaccount
C.trademar k
D.capi talaccountoft hepar tner
CTr ademar kisar ealint angibleaccount .Otheraccount sfal
linthecategoryofpersonal
account s
305Thecl assifi
cat i
onofwhi choft hef oll
owingaccount si
snotcor r
ect:
A.landandbui lding-real t
angi bleaccount
B.bankaccount-ar ti
fi
ci alper sonal account
C.capit alaccountoft hepar tner-nat uralpersonal account
D.wagespay able-nomi nal expenseaccount
DWagespay ableisar epr esent ati
v eper sonalaccount .Wagespai disanomi nalexpenses
account .
306Ther ulesofdebi torcr editinwhi choft hefoll
owi ngiscorrect:
A.debi twhatcomesi n-per sonal account
B.creditt hegi ver-real account
C.debi tall expenses-nomi nal account
D.credi twhatgoesout-nomi nal account
CDebi twhatcomesi n, relatest or eal accounts,creditthegiv
errelatestopersonalaccount
s
andcr editwhatgoesoutr elatest or eal account.

307Firm Xpurchasedgoodsf rom Fir

m Yoncashbasi
s.Int
hispr
ocess,whi
choft
hef
oll
owi
ng
stat
ementisnotcor r
ect:
A.goodsaccountisar ealt
angibleaccount
B.Fir
m Yaccountisaper sonalaccount
C.cashaccountisar ealt
angibleaccount
D.noneoft heabove
DAllthestatementsarecorrect.Hencedoesnotr
equi
reanyexpl
anat
ion.

308Whensal aryispaidtoanempl oyeeinafi

rmi ncash,t
hecashaccountiscredit
edby
fol
lowingthefoll
owingprinci
ple:
A.sincesalar
yaccountisdebi t
ed,theot
heraccounthastobecredit
ed
B.creditt
hegiver,ascashisgiven
C.creditwhatgoesout
D.anyoft heabove
CCashaccounti sar ealaccountandthedebi
tandcr edi
trul
eappl
icabl
eforrealaccounti
s
debitwhatcomesi nandcr edi
twhatgoesout.

309Adebitinarealaccountimpl i
es( whichisnotcorr
ect)
:
A.theval
ueoftheassethasincr eased
B.thebusi
nesshasdisposedtheexi stingassets
C.thebusi
nesshasacquiredmor eoft hatasset
D.noneoftheabove
BWhenassetisdisposedof f
,itimpliest hatt
heaccountwil
lbecredi
tedandnotdebi
ted.When
val
ueofassetincr
easesormor eofthatasseti sacqui
red,i
timpl
i
esdebitinareal
account.

310Fir
m Apurchasedgoodsfr
om Fir
m B.Whichofthef
oll
owi
ngent
ri
eswi
l
lbemadei
nthe
booksofFi
rm A:
A.debi
tpur
chaseaccountandcredi
tgoodsaccount
B.debi
tFi
rm Baccountandcr edi
tpurchaseaccount
C.debi
tgoodsaccountandcreditcashaccount
D.debi
tgoodsaccountandcreditFir
m Baccount
DGoodsisarealaccountduet owhichitwil
lbedebit
edbyfol
l
owingtherul
e,debi
twhatcomes
i
n.Fir
m Bisapersonalaccountanditwillbecr
edit
edbyfol
l
owingtherul
ecreditt
hegi
ver.

311Firm Xmadepay mentofr enttoi

tslandl
ordincash.Whichofthefol
lowi
ngiscor
rect
j
ournalent r
yint hebooksof
Fir
mA
A.debitcashandcr edi
tr entaccount
B.debitlandlordandcr editrentaccount
C.debitrentaccountandcr editcashaccount
D.debitrentaccountandcr editlandl
ordaccount
CRenti sanomi nalexpenseaccountduet owhichi
twillbedebi
ted.Cashisareal
accountdue
towhichi twill
becr edi
tedascashhasgoneout .

312Whi chofthefollowingexpl anati

ondoesnotmat ch:
A.asummar i
zedrecordoft ransactions-anaccount
B.thebookthatcont ai
nsall t
heaccount s-ledger
C.processoftransferr
ingthet ransacti
onfrom ajour
naltoaledger-journal
i
zing
D.thenetdiff
erenceofdebi tandcr editt
otalofanaccount-balance
CThepr ocessoftransferr
ingt hetransacti
onfrom ajour
naltoal edgeri
scall
edpost
ing.

313Thedescripti
ongivent owhichoft hefol l
owingtransacti
ondoesnotmat ch:
A.tr
adediscountisthediscountgivenf orpurchasesmadei nlar
gequantit
y
B.cashdi
scountreceivedrepresentsthedi scountonaccountofbul kpurchasesmadebyt he
fi
rm
C.tr
ial
bal
ancei sthestatementt hatshowsal ll
edgerbalancesasonapar ti
culardate
D.cashdi
scountallowedi sthediscountgiv enwhenpay mentisrecei
vedbeforetheduedate.
BCashdiscountreceivedrepresentsthediscountwhenpay mentismadebef oretheduedate.

314Whatistheappropri
ateexplanati
onofthejour
nal:
A.i
tisbookofdoubleentr
y
B.i
tisabookofsecondaryent ry
C.i
tisabookoforigi
nalentry
D.i
tisabookofduplicat
eentry
CAj our
nali
sbookofor i
ginalentryasal
ltr
ansacti
onsint
hebusi
nessar
erecor
dedf
ir
sti
nthe
j
ournal(
forcasht
ransacti
onsi nthecashbook).

315Theexpl anationgiventowhi choft hef ol

lowingisnotcorr
ect:
A.whentotal ofthedebitsideisgr eaterthant hetot
alofcredi
tside-Debi tbalance
B.whentotal ofcreditsi
dei sequal t
ot otalofdebitsi
de-zerobal ance
C.theaccountbookwher et hecasht ransactionsarerecor
dedfirst-j our
nal
D.accountbookwher ether ecordsofnomi nalaccountsar
emai nt ained-ledger
CThecasht ransact i
onsar erecordedf i
rstinthecashbookwhi chi salsoabookofori
ginal
ent
ry.Non-casht ransacti
onsar erecordedi nthejournal
.

316Thecr edi
tbalancei nthecapi
tal
accounti
s:
A.li
abil
i
tyinthebal ancesheet
B.assetinthebalancesheet
C.showsdebi tbalance
D.noneoftheabove
AItwil
lbeshownasl iabi
li
tyinthebalancesheet .I
twil
lhav
ecredi
tbal
ance.
317The3-columncashbookr ecor
dswhi choft hefol
l
owing:
A.cashandbanktransactionsincl
udi
ngdi scounts
B.cashandbanktransactionsexcl
udingdiscount s
C.cashtr
ansacti
onsonl y
D.banktr
ansacti
onsonl y
AItwil
li
ncludeboththecashaswel l
asbankt r
ansacti
onsincl
udi
ngdi
scount
s.

318Thenamegi v ent owhi choft hef ol

lowi ngexpl anati
onsdoesnotmat ch:
A.accountbookwher ethet ransactionisent er edfir
st-bookofsecondar yentr
y
B.totalofcr edi tsidei sgr eaterthant het otal ofdebi tsi
deofaccount-cr editbalance
C.discountt hati sr ecor dedi nthebooksofaccount-cashdi scount
D.ledgeri st hepr inci pal bookofaccount s-Tr ue
ATheaccountbookwher ethet r
ansact ioni sr ecordedf i
rsti
scalledbookofor iginalentr
y.
319Whi choft hef ol l
owi ngi snotacor rectst at ement :
A.allexpensesar er ecor dedont hecredi tsi deoft hecashbook
B.allreceiptsar er ecor dedont hedebi tsi deoft hecashbook
C.cashcol umnoft hecashbookcannev erhav eadebi tbalance
D.adebi tint henomi nal accountdenot esanexpense
CThecashcol umnoft hecashbookwi llalway shav eadebitbalance.Itcannothav ecredit
balance, ascashi sar eal account .
320I nat wocol umnarcashbook:
A.thecashcol umni scashbookandcashaccountanddi scountcolumni snott hediscount
account
B.thecashcol umni scashbookandcashaccountanddi scountcolumni sthedi scount
account
C.thecashcol umni scashbookbutnotcashaccountanddi scountcolumni snott hediscount
account
D.thecashcol umni scashbookbutnotcashaccountanddi scountcolumni sthedi scount
account
AI ntwocol umnarcashbook, thecashcol umni scashbookandal sothecashaccountbut
discountcol umni snott hedi scountaccount .Itismai ntai
nedsepar at
ely.

321I nat hr
eecol umnarcashbook, whichofthefoll
owingisnotshown:
A.cashcol umn,
B.discountcol umn
C.bankcol umn
D.noneoft heabov e
DInat hreecol umnarcashbook, all
theabovei.e.cashcolumn,discountcol
umn,bankcol umn
areshown.
322Whenbankcol umni srecordedi nthe3columnarcashbook, thebankaccountis:
A.nomi nalaccount
B.per sonal account
C.real account
D.bot hr ealandper sonalaccount
BWhenbankcol umni srecordedi nthe3columnarcashbook, thebankaccountisaper sonal
account .
323I na3col umnarcashbook, ifatransact
ioninvolvesbotht
hecashandbankaccount( a)iti
s
enteredonbot ht hesides
(b)oneent ryismadei ncashcol umn( c)anotheropposit
eentryismadei nthebankcolumn( d)
i
tiscal
ledcontraentry
.
A.atodallcorr
ect
B.atoconlycorrect
C.btodonlycor r
ect
D.canddonl ycorrect
AAllt
heabov estatement
sgi
veni
nthequest
ionar
ecor
rect
.

324Ina3col umnarcashbook,ifatransacti
oni
nvolvescashandbankaccountandthecash
accountistobedebi t
ed:
A.onlydebitentr
ywi l
lbemadet ocashaccount
B.debitentrywil
lbemadet ocashaccountaswel lasbankaccount
C.creditentr
ywillbemadetocashaccountaswel l asbankaccount
D.creditentr
ywillbemadetobankaccountanddebi tent
ryt
ocashaccount
DIna3col umnarcashbook,ifatransacti
oninv
olv
escashandbankaccountandt hecash
accountistobedebi t
ed,cr
edi
tentrywi l
lbemadetobankaccountanddebitentryt
ocash
account.

325Ina3col umnarcashbook,ifatransacti
oni
nvolvescashandbankaccountandthebank
accountistobedebi t
ed:
A.onlydebitentr
ywi l
lbemadet ocashaccount
B.debitentrywil
lbemadet ocashaccountaswel lasbankaccount
C.creditentr
ywillbemadetocashaccountanddebi tentryt
obankaccount
D.creditentr
ywillbemadetobankaccountanddebi tentryt
ocashaccount
CIna3col umnarcashbook,ifatransacti
oninv
olv
escashandbankaccountandt hebank
accountistobedebi t
ed,cr
edi
tentrywi l
lbemadetobankaccountanddebitentryt
obank
account.

326Apet tycashbooki sa:

A.bookofor igi
nal entr
y
B.subsidi
arybook
C.pri
mar ybook
D.anyoft heabov e
BApet tycashbooki sasubsidiarybookinwhichsmal l
pay mentsar erecorded.
327Wher ethechi efcashierdisbursessomecasht othejuniorcashierandaf t
eraf
ixedper
iod,
thechi
efcashi ermakesupt heamountspentbyt hej
uniorcashier
,itiscall
ed:
A.imprestsystem
B.cashadv ancesy stem
C.suspenseaccount i
ng
D.anyoft heabov e
AItiscall
edimpr estsy st
em.Undert hi
ssyst
em, thechi
efcashierdisbursessomecasht ot
he
j
uniorcashierandaf terafixedperiod,t
hechiefcashi
ermakesupt heamountspentbyt he
j
uniorcashier.

328Whi choft hef

oll
owingstatementisnotcorrect?
A.inthepurchasebookonlycr edi
tpurchaseofgoodsi srecorded
B.inthesalesbook,onl
ythecr edi
tsal
eofgoodsi sr ecor
ded
C.inthesalesbooksandpur chasebookal lt
heentrieswhetherpurchaseorsal
eoncashand
credi
tisrecorded.
D.noneoft heabove
CI nt
hepur chasebookonlycreditpur
chaseofgoodsi sr
ecordedandi nthesal
esbook,onl
ythe
credi
tsaleofgoodsisrecorded.Cashsal esorpurchasesarer ecor
dedinthecashbook.
329Acompoundj ournalentr
ymeans:
A.j
ournalent
ryi
nvolvi
ngadebi tandacredit
B.j
ournalent
ryi
nvolvi
nginter
connectedtransact
ions
C.j
ournalent
ryi
nvolvi
ngmor ethanoneent ry
D.noneoftheabove
BAcompoundj ournalentr
ymeansaj ournalentr
yinv ol
vi
ngi
nterconnect
edt r
ansact
ionsi
.e.
morethanoneentryonthedebi tsi
deandormor et hanoneentr
yont hecredi
tside.

330Wher enospeci albookexistsforatransacti

on,iti
srecordedbywayof :
A.directpost i
ng
B.cashbook
C.journal
izing
D.anyoft heabov e
CWher enospeci albookexistsforatransacti
on,itisr
ecordedbywayofj our
nalizi
ng.
331Ent ri
esr el
at i
ngt ogoodsar emadei n(a)salesaccount(b)purchaseaccount(c)sales
ret
urnsaccount( d)purchaseretur
nsaccount( e)stockaccount?
A.at oeal l
B.at odonl y
C.at oconl y
D.bt odonl y
AEnt ri
esrelatingt ogoodsar emadei n(a)salesaccount(b)purchaseaccount(c)salesret
urns
account(d)pur chasereturnsaccount(e)stockaccount.

332Thecashbooksare(a)si
mplecashbook(b)doubl
ecolumnarcashbook(c)t
hree
columnarcashbook
A.aandbonl y
B.bandconl y
C.aandconl y
D.atocall
DThecashbooksar e(
a)simpl
ecashbook(b)doublecol
umnarcashbook(c)thr
eecolumnar
cashbook.

333IfZ, t
hepr opri
etorshipfi
rm br
ingscash,i
tist
obecr edit
edto:
A.bankaccount
B.cashaccount
C.capitalaccount
D.drawingaccount
CIfZ, t
hepr opri
etorshipfi
rm br
ingscash,iti
stobecredit
edtohiscapit
alaccount
.
334Salaryispaidt oX, acler
kinthef i
rm.Theamountshallbecredit
edto:
A.accountofX
B.salar
yaccount
C.bankaccount
D.noneoft heabov e
DSalaryispai dtoX, aclerki
nthef i
rm.Theamountshallbecredit
edtocashaccount
.

335GoodsweresoldbyABCf i
rmt
oanot
herf
ir
m,butt
heot
herf
ir
m hasr
etur
nedt
hesame.The
amountshal
lbecredi
tedto:
A.sal
esaccount
B.sal
esret
urnsaccount
C.accountofot herfirm
D.purchaseaccount
CTheamountwi l
l bedebitedt osalesreturnsaccountandcr edit
edt oaccountofot herfir
m.
336Af irmr eturnedt hegoodsi tpurchasedt ot hesellerfi
rm.Theamountshal lbecr edi
tedto:
A.sell
erf i
rm account
B.buyerf i
rm account
C.purchaseaccount
D.purchaser et
urnsaccount
DAmountshal lbecr edit
edt opurchaser eturnsaccountanddebi t
edt osell
erf i
rm account.
.
337Af irm want st owr i
teoffabaddebt .Itshall:
A.debittheamountt obaddebtpr ovi
sionaccountandcr edi
ttoconcer neddebtoraccount
B.credittheamountt obaddebtpr ovisionaccountanddebi ttoconcer neddebtoraccount
C.debittheamountt oprofitandlossaccountandcr edittoconcerneddebt oraccount
D.credittheamountt oprofitandlossaccountanddebi ttoconcerneddebt oraccount
AAf ir
m want stowr iteoffabaddebt .Itshalldebitt
heamountt obaddebtpr ovi
sionaccount
andcredittoconcer neddebt oraccount .
338Af irm hast akenl oanfrom oneMr .Sushil,whoisal sopartnerinthefir
m.Theamountwi l
l
becreditedt o:
A.cashaccount
B.l
oanaccountofSushi l
C.partnercapi t
al account
D.noneoft heabov e
BTheamountwi l
l bedebitedt ocashaccountandcr edi t
edtoloanaccountofSushi l.

339Goodsar epurchasedincashbyXYZf i
rmf r
om ABCfirm.Whi choft hefol
lowi
ngt
wo
account
sareinvolvedinthis transacti
oninthebooksofXYZFi rm?
A.cashaccountandABCf ir
m account
B.GoodsaccountandABCf i
rm account
C.goodsaccountandcashaccount
D.cashaccountandXYZf i
rm account
CGoodsandcashaccount ,aretwoaccount s,t
hatareinv
olvedint hetransact
ion.
340Goodsar epurchasedincashbyXYZf i
rmf r
om ABCfirm.Inthiscase,
A.goodsaccountisar ealaccountandcashaccounti sapersonal account
B.goodsaccountisaper sonalaccountandcashaccounti srealaccount
C.botht
heaccount sarepersonal accounts
D.boththeaccountsarerealaccount s
DGoodsandcashaccountar erealaccounts.

341Thel eftsideentryinanaccountmeans:
A.debitt oanaccount
B.creditt oanaccount
C.decr easei nbalanceinanaccount
D.increasei nbalanceinanaccount
AThel ef tsideentryinaccountmeansdebitt
oanaccount.
342Ther ightsideentryinanaccountmeans:
A.debitt oanaccount
B.creditt oanaccount
C.decr easei nbalanceinanaccount
D.increasei nbalanceinanaccount
BTher ightsideentryinaccountmeanscredi
ttoanaccount
.
343Thenomi nalaccountsaretransf
err
edto___aty
earend:
A.bal ancesheet
B.fundsf low
C.prof itandl ossaccount
D.anyoft heabov e
CThenomi nal account sar etransferr
edtopr of
itandlossaccount,
atyearend.
344Thebal ancesi nt her ealorpersonalaccountsare:
A.transf erredt obal ancesheet
B.transf erredt oprof i
tandl ossaccount
C.car riedov ert onexty ear
D.closedatt hey earend
CThebal ancesi nther eal orpersonalaccountsarecarri
edovertonextyear.
345I ft herei sanov erdraft,t
hebankcol umnoft hecashbookshows_ __
_:
A.credi tbal ance
B.debi tbal ance
C.debi torcr edi tbalance
D.nei therdebi tnorcr editbalance
AIft her eisov erdraf t
, t
hebankcol umnoft hecashbookshowsacr edi
tbalance.
346I fapet tycashbookhasmul ti
plecolumns,itiscall
ed:
A.i
mpr estcashbook
B.pet tycashbook
C.col umnarcashbook
D.noneoft heabov e
CIfapet t
ycashbookhasmul ti
plecolumns,iti
scal l
edcolumnarcashbook.

347Whi chofthef oll

owingstatementisnott r
ue:
A.jour nal i
sabookofsecondar yent r
y
B.bankaccounti saper sonalaccount
C.cashbooki sal edgeraccountalso
D.cr editsalesar enotrecordedinthecashbook
AJour nal i
sabookofor igi
nalentryandnotofsecondar yentry.
348Whi chofthef oll
owingstatementist rue:
A.ifclosi ngbalanceappear sont hecreditsideofanaccount ,iti
ssaidtohavedebitbal
ance
B.cashaccountcanshowadebi tbalanceoracr editbal
ance
C.thei mpor tantbusinesst r
ansacti
onsar edi r
ectl
ydebi t
edtoledger
D.cashaswel l ascredi
tsalesarerecordedi nsalesbook
ACashaccountcanshowonl ydebitbalance,businesstransacti
onsarerout
edthroughthe
j
our nal andint hesalesbookonl ycreditsalesarer ecor
ded.

349Forwhi choft hefoll

owingr easons,thebankreconci
l
iat
ioni
snotrequir
ed.
A.chequeissuedbutnotpr esentedforpay ment
B.i
nterestcredi
tedbyt hebank
C.amountpai dont hebasisofst andinginstr
ucti
on
D.chequeissuedbyt hef i
rm andpai dbyt hebank
DIfanent r
yhasbeenpassedbyt hefir
m andt hebankal
so,i
twil
lnotrequi
rer
econci
l
iat
ion.
Reconcil
iat
ionisrequiredforthosei t
emsonl ywhichhavebeencompletedbyonepar
tyandnot
completedbyot herparty.

350Reconcili
ati
onshall
berequi
redforwhi
chofthef oll
owi
ngtr
ansact
ions:
A.chequedepositedi
ntobankbutbankdi
dnotcr edi
titsof
ar
B.i
nterestchar
gedbythebankintheover
draft
C.acustomeroft hef
ir
m hasdir
ectl
ydeposi
tedtheamountinbank
D.al
loftheabove
DIfanentr
yhasbeenpassedbyt hefi
rm andt
hebankal
so,i
twil
lnotrequi
rer
econci
l
iat
ion.
Reconci
l
iati
onisrequir
edfort
hoseit
emsonlywhi
chhavebeencompletedbyonepar
tyandnot
complet
edbyot herpart
y.

351Whi chofthefoll
owi ngt
ransactionar i
sefi
rstinthebooksofthebankandlat
eroninthe
booksofthefirm:
A.chequeissuedbutnotpai dbyt hebank
B.cashdepositedbutnotcreditedinthebank
C.dir
ectdepositofamounti nthebank, byacust omerofthefi
rm
D.chequedepositedbutnotcredi t
edint hebank
CIfacustomerhasdi rectl
ydeposi t
edtheamounti nthebank,
thi
sentrywil
lar
isefi
rsti
nthe
bankbooks.Otherentrieswil
lariselat
er.

352Whichofthefol
lowi
ngstat
ementi
sacor rect
:
A.whenbalancei
nthepassbooki
scredi
t,iti
screditincashbookoft hefi
rm also
B.whenbalancei
nthepassbooki
sdebit
,itisdebi
tincashbookoft hef i
rm also
C.whenbalancei
nthepassbooki
scredi
t,iti
sdebitincashbookoft hefir
m
D.whenbalancei
nthepassbooki
scredi
t,ithasnor el
ati
onshi
pwitht hebalanceinthecash
book
CThebalanceint
hepassbookandthecashbookmai ntai
nedbythef i
rmisopposi t
ebalance.

353Whichofthef ol
lowingst at
ement sisacor
rectstat
ement :
A.whenthereisoverdraft
,itappearsascredi
tbalanceinthecashbook
B.whenthereisoverdraft
,itappearsascredi
tbalanceinthepassbook
C.whenthereiscurrentaccount,itappear
sascreditbalanceinthecashbook
D.whenthereiscurrentaccount,itappear
sasdebitbalanceinthepassbook
AThecurrentaccounthascr editbalancei
nthepassbookanddebi tbal
ancei
nthecashbook.
Over
draf
thasdebi tbalanceinthepassbookandcr edi
tbalanceinthecashbook.

354Whi choft hef oll

owingdoesnotmat ch:
A.thecr editbalancei nthecashbooki ndicat
esexcessofdeposi tsov erwithdrawals-false
B.directdeposi tbyt hecustomerr educesthebankbal ancei nacur rentaccountatbank-Tr ue
C.directpay ment sbyt hebankar erecordedont hewi thdrawal sideoft hepassbook.-Tr ue
D.bankr econcili
ationstatementshowst hecausesofdi fferencebet weent wobal ances-true
BDi r
ectdeposi tbyt hecustomerincreasesthebankbal ance.Buti ncaseofov erdrafti
treduces
thebankbal ance.
355Whi choft hef oll
owingstatementdoesnotmat ch:
A.directdeposi tbyt hecustomeroft hefir
mi srecor dedf i
rstbyt hebank-t rue
B.directdeposi tbyt hecustomeroft hefir
mi ncreasest hebal ancei nt hebankov erdraft
account-t rue
C.directdeposi tbyt hecustomeroft hefir
mi srecor dedont hedebi tsideoft hecashbook-
true
D.noneoft heabov e
BDi r
ectdeposi ti
sr ecordedfir
stbyt hebank,itr
educest hebal ancei nov er
dr af
taccountand
i
ncreasest hebalancei ncurrentaccountatbank.I tisrecordedi nt hecashbookont hedebi t
sidetodebi tthebankaccount .

356Whi choft
hefoll
owingst
atementisnotcor
rect:
A.normall
ythecashbookshowsdebitbal
ance-true
B.thecashbookshowsdebitbal
anceincaseofov er
draf
t-t
rue
C.normal l
ythepassbookshowscr editbalance-true
D.thecashbookshowsdebi tbalanceincaseofov er
draf
t-true
BWhent hereisoverdraft
,thecashbookshowscr edi
tbalance.Otheropti
onsarecorrect
.
357Balancei nthecashbooki sRs. 12000.AchequeofRs. 1000depositedwiththebankhas
beendishonour edandbankhasdebi tedRs. 20aschequer et
urni
ngchar ges.Thebal
anceint
he
passbookshoul dbe:
A.11980
B.11020
C.10980
D.incompleteinformation
CAmountofchequeandr etur
ningchar geswillbededuct
edf rom thecashbookbalanceof
Rs.12000,toreacht hebalanceinthepassbook.

358Thecashbookhasbeenshowi ngabal anceofRs. 55000.AchequeofRs. 3000i ssuedby

thef i
rm hasbeenent eredt wiceinthecashbook.Acust omeroft hef ir
m hasdeposi tedRs. 2000
dir
ect l
yi nthebank.Whatwi l
lbebal ancei nthepassbook.
A.60000
B.56000
C.54000debi t
D.54000cr edit
ABal anceaspercashbooki sRs. 55000.Tomat chthi swiththepassbook, t
heamountof
chequeent eredt wi
ceshal lbeaddedandamountdi r ectl
ydeposi t
edbyt hecust omerwi llalsobe
added.
359Thepassbookhasbeenshowi ngabal anceofRs. 15000.Achequei ssuedbyt hef i
rmf or
Rs.1000hasbeendebi tedbyt hebankt oanotheraccountandachequeofRs. 3000deposi tedin
theaccounthasbeendi shonouredandbankhasdebi tedRs.30asr eturni
ngchar ges.The
balanceaspercashbookshoul dbe:
A.16970
B.12970
C.13070
D.17030
DTot allythepassbookbal ancewi thcashbook, t
heamountofchequei ssuedbyt hef i
rm shal l
ber educed, t
heamountofchequedi shonouredshal l beaddedandt heamountofchar gesshal l
beadded.
360Bal ancei nthecashbookoft hef ir misRs.25000.I tisovercastbyRs. 1000.Outofcheques
ofRs. 12000deposi t
edwi t
hthebank, chequesofRs. 10000onl yhav ebeencr editedsof ar .Out
ofchequesofRs. 10000i ssued,chequesofRs. 3000hav enotbeenpr esented.Thebal anceas
perpassbookshoul dbe:
A.24000
B.27000
C.25000
D.26000
CAmountov ercastwil
lbededuct ed, t heamountofchequenotcr edi
tedsof arRs. 2000wi llbe
deduct edandamountofRs. 3000ofchequesnotpr esentedsof arwi l
lbeadded.
361Thecashbookoft hef i
rm hasbeenshowi ngacr edi
tbalanceofRs. 22300.I tisobser v ed
thatanamountofRs. 120hasbeendebi t
edbybank.Fur ther,
achequeofRs. 3000deposi tedi n
thebankhasnotbeencr edi
tedsof ar .Whatist hebal anceasperpassbook?
A.25280
B.25420
C.19280
D.19420
BTheov er
draf
tbalancei
sgiv
enaspercashbook.Tomat chi
twiththepassbook,
theamount
ofchequedeposi
tedandnotcredi
tedandamountdebi
tedbythebankistobeaddedint
he
bal
ance.

362Thebalancei nthecurr
entaccountofthef i
rm atbankisRs.56219.I
tisobserv
edthatbank
hascredi
tedadi v
idendamountofRs. 320.Outoft otal
chequesofRs.12000issuedbythefi
rm,
chequesofRs.9000hav ebeenpaid.Whatist hebalanceinthecashbook.
A.68219
B.52899
C.55219
D.65899
BThebalancei nthepassbookistobemat chedwi t
ht hebal
anceinthecashbook.Theamount
ofchequesissuedandt heamountofdirectcreditbythebankwi l
lbededuct
ed.

363I ti sobser v edbyt hef i

r mthatthebankhasdebi t
edRs. 200asser vi
cechar gesandan
amountnotr elatedt ot hef ir
m Rs.2000, hasbeencr editedbyt hebank.Fi rm hadi ssueda
chequeofRs. 3000whi chhasbeendebi tedt otheaccountofpar tner.Thebal ancei nt he
over dr aftaccountatbanki sRs.34500.Whatwi llbebal ancei nthecashbook.
A.32900
B.33300
C.39300
D.30900
CTomat cht hebal ancewi thcashbook, theamountofchar geswi l
lbededuct ed,theamount
credit edbybanki ncor rectly,wi
llbeaddedandt heamountofchequedebi tedtoaccountof
partnershal lbeadded.
364AchequeofRs. 3300wasdeposi tedwi tht hebankbyt hefir
m whi chhasbeencol l
ectedby
thebankandcr editedt oaccountofanot herpar t y.AchequeofRs. 1200i ssuedbyt hef i
rm has
beendebi t
edbyt hebankt oaccountofanot herpar ty
.Thebal anceaspercashbooki s
Rs.12000ov er draft.Whati sthebalanceasperpassbook.
A.14100
B.15300
C.9900
D.8700
AWhenbal anceaspercashbooki sov er draft,tor eacht hepassbookbal ance,theamountof
cheque
deposi tedbutcr editedt oaccountshal lbededuct edandamountofchequei ssuedbutnot
debi tedt otheaccountoft hepartyshal lbeadded.
365Whi choft hef ollowi ngent ri
esappear sfirsti nt hebooksoft hefirm andt heni nt hebooks
oft hebank?
A.bankdebi tedchar ges
B.par tyissuedacheque
C.bankcr editedi nter est
D.bankpai damountont hebasi sofst andi ngi nst ruction.
BTwoent ri
esappeari nt hebooksoft hef i
rmf i
r sti .
e.par t
yissuedchequeorpar tydeposi ted
cheque.Ot heri t
emsappear sfi
rstinthebooksoft hebank.
366I ft herei sposi tivebal ance,itappear sasa:
A.debi tbal ancei nt hecashbookandcr edi tbal ancei nt hepassbook
B.cr edi tbal ancei nt hecashbookanddebi tbal ancei nt hepassbook
C.cr edi tbal ancei nt hecashbookandcr edi tbal ancei nt hepassbook
D.debi tbal ancei nt hecashbookanddebi tbal ancei nt hepassbook
AI fther eisaposi ti
v ebal ance, i
tappear sasadebi tbal ancei nthecashbookandcr editbalance
i
nthepassbook.

367I fther ei sov erdr awnbal ance, i

tappear sasa:
A.debi tbal ancei nt hecashbookandcr editbal ancei nt hepassbook
B.creditbal ancei nthecashbookanddebi tbal ancei nt hepassbook
C.credi tbal ancei nt hecashbookandcr editbal ancei nt hepassbook
D.debi tbal ancei nt hecashbookanddebi tbal ancei nt hepassbook
BIfther ei saov er draf tbal ance, itappear sasacr editbal ancei nt hecashbookanddebi t
balancei nthepassbook.
368St at ewhi choft hef ollowi ngi strue?
A.bankr econci liationst atementi sanaccount
B.acr edi tbal ancei nt hepassbooki ndicatest hatt hedeposi tsar emor ethanwi thdrawal
C.acr edi tbal ancei nt hecashbooki ndicatest hatt hedeposi tsar emor ethanwi thdrawal
D.noneoft heabov e
BBankr econci liat i
onst atementi snotanaccount .Acr editbalancei nthecashbooki ndi
cates
thatthe
depositsar el esst hant hewi thdr awal .
369Whi choft hef ollowi ngst atementi snott r
ue?
A.debi tbal ancei nt hebankpassbookmeanscr editbal ancei nt hecashbook
B.whenachequei sr ecei vedf rom apar ty,i
ti sr ecor dedont her eceiptsideoft hecashbook
C.cashbookandpassbookbal ancecanal soagr ee
D.interestpai dbyt hebanki ncr easest hebal ancei nt hepassbook.
DI nt
erestpai dbyt hebanki ncr easest hebal ancei nt hepassbooki fthereisposi ti
vebalance.I
t
reducest hebal ancei nt hepassbook, iftherei snegat i
v ebalance.
370Di rectpay ment smadebyt hebankar erecor ded:
A.ont hedeposi tsi deoft hepassbook
B.ont hewi thdr awal si deoft hepassbook
C.ont hel eftsi deoft hecashbook
D.noneoft heabov e
BDi r
ectpay ment smadebyt hebankar er ecor dedont hewi t
hdr awal si
deoft hepassbook.
371I fther ei sov ercast tingofr ecei ptsideoft hecashbook:
A.itincreasest hebankbal ancei nthepassbook
B.itreducest hebankbal ancei nt hecashbook
C.itincreasest hebankbal ancei nthecashbook
D.itdoesnotaf fectt hebal ancei nt hepassbook
CI ft
her ei sov er cast tingofr ecei ptsideoft hecashbook, iti
ncreaset hebankbal anceinthe
cashbook.
372Whi choft hef ollowi ngst atement sdonotmat ch?
A.ifther ei scr edi tbal ancei nt hepassbook, thismeansov erdraft
B.ifther ei sdebi tbal ancei nt hecashbook, thismeansov erdraft
C.interestcr edi tedbyt hebank, isincomef ort hebankandexpendi tureforthef i
rm
D.noneoft heabov e
DI ft
her ei scr edi tbal ancei npassbookordebi tbal ancei nthecashbook, i
tmeansposi t
ive
balance.I nt erestcr edi tedbybanki sexpendi tureoft hebankandi ncomeoft hepar t
y.

373Ifacustomerofthef ir
m directl
ydeposi
tsanamountwit
hthebank:
A.i
tisrecor
dedoncr editsideoft hecashbook
B.i
tisrecor
dedoncr edi
tsi deofthepassbook
C.i
tisrecor
dedondebi tsideoft hepassbook
D.i
tisrecor
dedont hecr editsi
deofcashbookandpassbook.
BIfacustomerdir
ectlydeposi t
sanamountwi tht
hebank,i
tisr
ecor
dedondebi
tsi
deoft
he
cashbookandoncr editsideoft hepassbook.
374I fachequei si ssuedandnotpr esent edatbank, i
tsamounti s:
A.deduct edi nt hebankr econciliationst atement ,
wheni tisst artedasov erdraftincashbook.
B.addedi nt hebankr econci l
i
ationst at ement ,wheni tisst art
edasov erdraftincashbook.
C.addedi nt hebankr econci l
iat
ionst at ement ,wheni tisst art
edasposi ti
vebal ancei npass
book.
D.addedi nt hebankr econci l
iat
ionst at ement ,wheni tisst art
edasov er
draftinpassbook.
AI fachequei si ssuedandnotpr esent edatbank, itsamounti s,deductedi nthebank
reconcili
ation
statement ,wheni ti sstart
edasov er draftincashbook.
375I fachequei sdeposi t
edint hebankandi t
samounti snotcr edit
ed,theamounti s:
A.addedi nt hebankr econci l
iat
ionst at ement ,wheni tisst art
edasov er
draftinpassbook.
B.deduct edi nt hebankr econcili
at ionst atement ,
wheni tisst artedasov erdraftinpassbook.
C.deduct edi nt hebankr econciliationst atement ,
wheni tisst artedasov erdraftincashbook.
D.addedi nt hebankr econci l
iat
ionst at ement ,wheni tisst art
edasposi tiv
ebal ancei npass
book.
BI fachequei sdeposi t
edi nthebankandi tsamounti snotcr edi t
ed,theamounti s,deduct
edin
thebank r econci li
ationstatement , wheni tisst artedasov erdraftinpassbook.
376I fachequei si ssuedandnotpr esent edatbank, i
tsamounti s:
A.addedi nt hebankr econci l
iat
ionst at ement ,wheni tisst art
edasov er
draftincashbook.
B.addedi nt hebankr econci l
i
ationst at ement ,wheni tisst art
edasposi ti
vebal anceincash
book.
C.addedi nt hebankr econci l
iat
ionst at ement ,wheni tisst art
edasposi ti
vebal ancei npass
book.
D.noneoft heabov e
BI fachequei si ssuedandnotpr esent edatbank, it
samounti s,addedi nthebank
reconcili
ationst at ement ,wheni tisst artedasposi tivebal ancei ncashbook. .
377Whenanent ryi spassedont hewi thdrawal si
deoft hepassbook, t
hebankbal ance:
A.declines
B.increases
C.r emainssame
D.noneoft heabov e
AWhenanent ryi spassedont hewi thdr awal sideoft hepassbook, thebankbal ancedecli
nes.
378Thedebi tbal ancer epresents:
A.ov erdraftint hecashbookandposi tivebal ancei nt hepassbook
B.positivebal ancei nthepassbookandov erdr aftbal ancei nthecashbook
C.ov erdraftint hepassbookandposi t i
vebal ancei nt hecashbook
D.ov erdraftint hepassbookandov er draftint hecashbook
CThedebi tbal ancer epresentsov erdr aftint hepassbookandposi t
ivebalanceint hecash
book.

379Thecr editbalancerepresents:
A.overdraf
tint hecashbookandposi t
ivebal anceinthepassbook
B.posi
tivebalancei nthepassbookandov erdraf
tbalanceinthecashbook
C.overdraf
tint hepassbookandposi ti
vebal anceinthecashbook
D.overdraf
tint hepassbookandov erdraftinthecashbook
BThecr editbalancerepresentsoverdrafti
nt hecashbookandposi t
ivebal
ancei
nthepass
book.
380Whi choft hefoll
owinghav etoprepar ebankr econci
li
ati
onstatement?
A.abusinessf irm mai
ntaini
ngbankaccount
B.thebankwhi chhasopenedt heaccount
C.thedebt orsandt hecr edit
ors
D.allt
heabov e
AThebankr econci
liati
onst at
ementispreparedbyt hebusi nessf
ir
m, maint
aini
ngbankaccount
.
381Whent hebal anceast hepassbookisstarti
ngpoint ,
thechequesissuedandnotpr esented
are:
A.added
B.deducted
C.keptconst ant
D.noneoft heabov e
BWhent hebal anceast hepassbookisstart
ingpoint,thechequesissuedandnotpr esented
arededucted.
382Whent hepay mentsi deofthecashbooki sovercast,thepassbookisthestart
ingpoint ,
the
amount:
A.shallbeadded
B.shallbededuct ed
C.shallbekeptconst ant
D.anyoft heabov e
BWhent hepay mentsi deoft hecashbookisov ercast,
thepassbooki sthestart
ingpoint,the
amountshal lbededuct ed.

383Whi choft hef ollowi

ngi saf eatureoft het r
ialbal
ance(whi choneisnotcorr
ect)
:
A.itisal i
stofdebi tandcr editbal
ancest akenf r
om theledger
B.itdoesnoti ncludecashandbankbal ances
C.mai nobj ectiv
ei st oestabli
shar i
thmetical accuracyoftransactions
D.itisusual l
ypr epar edattheendoft hey ear .
BI ti
ncludescashandbankbal ancesalso.I tcanbepr eparedanyt imebutusual
lypr
epar
edat
theendoft hey ear.
384Whi choft hef ollowi
ngi snotat y
peofcl eri
calerr
or:
A.errorofomi ssion
B.errorofcommi ssion
C.errorofpr inciple
D.compensat i
nger ror
CEr rorofpr i
nciplei sasepar atesetoferror sandi snotpar tofcleri
caler
ror
s.Ot
her3are
cleri
calerrors.

385Apur chasef r
om Xhasbeenr ecor
dedi
nthepurchasebookbuti
tremai
nst obepost
edi
n
theaccountofMr .X.Thi
sis
classi
fi
edas:
A.errorofomission
B.errorofcommi ssi
on
C.errorofpri
ncipl
e
D.compensat i
nger r
or
AWhenanent ryiscomplet
elyorpartl
yomi
tt
ed,i
tisclassi
fi
edaserr
orofomissi
on.

386Whi choft
hefol
lowi
ngisanerrorofcommi ssi
on:
A.posti
ngofcorr
ectamountonthewr ongside
B.posti
ngofwrongamountonthecor r
ectside
C.posti
ngofwrongamountonthewr ongside
D.al
ltheabove
DAlltheabovety
pesoferr
orsar
eer r
or sofcommissi
on.
387Thereisanerr
orinasubsidi
arybookatthet
imeoft
otal
i
ng.Thi
siscal
l
edan:
A.err
orofomissi
on
B.err
orofcommission
C.err
orofpri
nci
ple
D.compensati
ngerror
BSucherrori
scall
edanerrorofcommi ssi
on.

388Onemi st
akehasnulli
fi
edthewrongeff
ectofanothermist
ake.I
tiscal
led:
A.err
orofomission
B.err
orofcommi ssi
on
C.err
orofpri
ncipl
e
D.compensati
nger r
or
DWhenoneer rorhappensinsuchawaythati
tnull
i
fiesthewrongeff
ectofanothermi
stake,
it
i
scalleda
compensati
nger r
or.

389Thewagespai df orinstal
l
ationofmachi
ner
ybyaf i
rm hav
ebeendebitedtot
hewages
accountinsteadoft he
machineryaccount .Thi sis:
A.err
orofomi ssi
on
B.err
orofcommi ssi on
C.err
orofpr inci
ple
D.compensat i
ngerror
CThisiser r
orofpr inciplebecausethebasi
caccount
ingpri
nci
plehasnotbeenobser
ved.An
entr
yrelati
ngt oassetorl i
abil
it
yhasbeenrecor
dedforthenominal
account.

390Whi choft hef ol

lowinger r
orwillaffectnotthet ri
albalance:
A.anamountofRs. 900hasbeenpost edinawr ongaccount
B.anamountofRs. 900hasbeenpost edont hewr ongsideofanaccount
C.Totalofdebi tsideoft heaccountnotdonecor r
ectly
D.posti
ngofwr ongamounti nt heaccount .
AWhenpost ingofanamounti smadet oawr ongaccount ,i
twillnotaf
fectover
all
bal
ancein
theaccounts.
Page74of165
391Ifthereisaonesi deer r
or,i
tcanbecor rected:
A.bydeleti
ngt heent r
y
B.thr
oughaj ournalent r
y
C.bysimplycor rectingthepost i
ng
D.inanyoft heabov emanner
CIfthereisonesi deerror,i
tcanbecor r
ectedbysi mpl ycorrect
ingtheposti
ngi.
e.bydel
eti
ng
thewrong
posti
ngandmaki ngf r
eshpost i
ngwi thcorrectent r
y:

392Af i
rm haspaidrentofRs.900butposteditasRs.9000.Howdoest hi
serrorberect
if
ied:
A.thr
oughaj our
nalentrybydebit
ingtherentaccountforRs.
8100
B.thr
oughaj our
nalentrybydebit
ingtherentaccountandcredi
ti
ngthecashaccount
C.bycorrect
ingthepostingfr
om Rs.9000toRs.900
D.i
nanyoft heabovemanner
CThisisaonesi deerror
.Itwil
lbecorrect
edbycor r
ecti
ngtheposti
ng.
393Thef i
rm hadpaidsalaryofRs.2000toastaffmemberbuthispersonalaccounthasbeen
debi
ted.Whattypeofer r
ori
tis.
A.err
orofomission
B.err
orofcommi ssion
C.err
orofpri
nciple
D.compensati
nger ror
CThisisanerrorthati
nvolv
esnomi
nal
account(
expense)andper
sonal
account(
li
abi
l
ity
).
Henceiti
saner rorofpri
nci
ple.

394Thef ir
m hadpaidsalaryofRs. 5000t oastaf
fmemberbuthisper
sonalaccounthasbeen
debi
ted.Passthejournalentryforrectif
icat
ionoft
hisent
ry.
A.debitsal
aryaccountandcr editcashaccount
B.debi
tcashaccountandcr edi
tst affmemberaccount
C.debitsal
aryaccountandcr editstaffmemberaccount
D.debitsal
aryaccountandcr editcashaccount
CTheper sonalaccountthathasbeendebi t
edhastobecredit
edandthesal
aryaccountwhich
wasnot
debi
tedhast obedebited.

395I fthereisanerrorthatisdetectedafterprepar
ati
onofthet
ri
albal
ance,i
tcanberemov
ed
i
nt hef ol
lowingmanner :
A.bycut tingtheentry
B.byj ournalentr
ytodebitt her
elevantaccount
C.t hr
oughat emporaryaccountcalledSUSPENSEaccount
D.inanyoft heabovemanner
CWher etheer r
orisdetectedaft
ert hepreparati
onofthet
ri
albal
anceitcanberemov
edby
tempor ari
ly
transferr
ingittoanewaccountcal l
edSUSPENSEaccount .

396Thet otalofcreditsideofthetr
ialbalanceisRs.1lac.Iti
sobservedthatt
heamountin
accountofabuy er ( debtor)hasbeent akenasRs.10000i nst
eadofRs.1000.Whatist
he
actualbal
anceoft hecr edi
tside.
A.Rs.1lac
B.Rs.109000
C.Rs.101000
D.Rs.91000
ATher ewil
l benochange.Thedebt or
shav eadebi
tbal anceduetowhichitwil
laf
fectt
hedebi
t
si
deoft he t r
ialbalance.Hencethecr editsi
detot
al will
remainunchanged.

397Thef i
rm hasbeenabletorecoveramountf r
om adebt orwhichwaswr it
tenoff
.Theamount
i
screditedtopersonal
accountofthedebtor.Howt heerr
orshal lberemoved.
A.bycredit
ingtheamounttosundrydebtoraccount
B.bycredit
ingtheamounttocashaccount
C.bydebiti
ngthedebtoraccountandcredi
ti
ngt heprof
itandl ossaccount
D.bydebiti
ngthedebtoraccountandcredi
tingtheprovi
sionsaccount
CAst heamounthasbeencr edit
edt ot
heper sonal
account ,i
twil
l havet
ober ev
ersedandt
he
prof
itandlossaccount,woul
dbecr edi
ted.

398Whi chofthef oll

owingstatementi
snotcorrect:
A.i
npr eparat
ionofgr osstr
ialbal
ance,l
edgeraccountbalancesar
eextr
acted
B.fi
xeddeposi twiththebankwi l
lbeshownont hedebitsideoft
ri
albal
ance
C.purchasesar eshownont hedebitsi
deoftri
al bal
ance
D.salesar eshownont hecr edi tsideoft hetri
albalance
AInpr eparationofgr osst ri
al balance, l
edgeraccountbal ancesar enotext r
acted.Rathert
hese
aretakenonagr ossbasi s.
399Whi choft hefollowi ngst at ementi snotcor r
ect:
A.errorsthatar erectifiedwi thoutpassi ngjournalentries-onesi dederror
B.errorsthatar erectifiedbypassi ngj ournalentri
es-t wosi deder r
ors
C.anaccountt owhi chdi ff
er encei nt ri
al bal
ancei stempor ari
lytransferred-suspenseaccount
D.aner rorinwhi chthet ransact i
oni snotr ecordedint hebooksofaccount-er rorof
commi ssion
DSucher r
or sar ecalleder rorofomi ssionasi thasbeenomi t
tedt ober ecorded.
400Inwhi choft hefol l
owi ng, thest atementdoesmat ch:
A.agreementoft r
ialbal ancei ndi catest hatthereisnoer r
or-true
B.repairtobui ldi
ngshoul dbedebi tedt obui l
dingaccount-t rue
C.compensat inger r
ordonotaf f
ectt heagr eementoft ri
albalances-t r
ue
D.suspenseaccounti sthebal ancingf igurefort r
ialbalance-f al
se
AWi thagr eementoft rialbalanceonl yar i
thmet i
caccur acyisensur ed.Repairstobuildi
ngaret
o
bedebi t
edt or epairaccount .Suspenseaccounti sthebal ancingf i
gurefortri
albalance.

401Tr i
al balancesar eoff ollowi ngt ypes(a)grosstri
al bal
ance(b)nett
rialbal
ance(c)general
tr
ialbalance?
A.aandbonl y
B.aandconl y
C.bandconl y
D.at ocal l
ATr i
albal ancesareei thergr osst ri
albalanceornettrialbal
ance
402Int hegr osst r
ialbalancesy st em:
A.thegr ossbal ancei nthel edgeraccounti staken
B.onlythet otalofdebi tsidei st aken
C.onlyt hetotalofcr editsidei st aken
D.totalofcr edi
tsideanddebi tsi deist aken
DInt hegr osstrialbalancesy stem, t
otalofcredi
tsideanddebi tsi
deistaken.Thenetbalance
i
snott aken.Netbal ancei st akeni ncaseofnett r
ialbalance.

403Int henett rialbalancesy stem:

A.thenetbal ancei nthel edgeraccounti st aken
B.thenett otal ofcreditsi deist aken
C.thenett otal ofdebitsi dei staken
D.thenett otal ofdebitandcr editsidei staken
AInthenett ri
al balancesy stem, thenetbal ancei ntheledgeraccounti staken.
404Tr ial balancesar epr epar edwi t
ht heobj ect i
veof :
A.li
stingt het otalsofdebi tandcr editsideofv ari
ousaccount s
B.verifyingt hear i
thmet ical accur acyoft het ransactionsrecordedinthebooks
C.ensur ingcompi l
ati
onofbooksasperaccount i
ngst andardsandpr acti
ces
D.alltheabov e
BTr i
al bal ancesar epr epar edwi tht heobj ect i
v eofv eri
fyi
ngt hear
it
hmet icalaccur
acyoft
he
tr
ansact i
onsr ecor dedi nt hebooks.
405Whi choft hef oll
owi ngi saner rorofpr inci pl
e?
A.post ingofcor rectamountont hewr ongsi deoft heaccount
B.mist akecommi t
tedi nt hebal ancingofl edgeraccount
C.debi ti
ngt hedepr eciationt omachi neryaccounti nsteadofdepreciati
onaccount
D.totalinger rorint hesubsi di
arybooks
CDebi tthedepr eciat i
ont omachi ner yaccounti saner rorofprinciple.Ot herer rorsar eerrorsof
commi ssi on.
406Theaccount antoft hef i
r m post edt hewr ongamountonwr ongsi deofanaccount .Thi sis
errorof :
A.compensat ion
B.pr inci ple
C.commi ssi on
D.omi ssion
CPost ingwr ongamountonwr ongsi deofanaccounti saner rorofcommi ssion.
407Tot al rentamounti sunder castbyRs. 300andt otal ofpri
ntingandst at i
oner yaccounti s
over castbyRs. 300.Thi si saner rorof :
A.compensat ion
B.pr inci ple
C.commi ssi on
D.omi ssion
AI ner rorofcompensat ion, theef f
ectofoneer rorisnegat edbyanot herer ror.
408Onesi deer rorcanber ect i
fi
edby :
A.passi ngaj our nal ent ry
B.cor rectingt hepost ing
C.del et ingt heent ry
D.anyoft heabov e
BOnesi deer rorcanber ect i
f i
edbycor rectingthepost ing.Noj our nal entryi srequi redtobe
passedasi taf fect sonl yoneaccount .
409AnamountofRs. 1000pai dasr enthasbeenpost edasRs. 10000.Ther ecti
f i
cationoft he
errorcanbedoneby :
A.r entaccountwi l
l becr edi t
edf orRs. 9000
B.ent r yofRs. 10000wi llbedel etedandanot herent rywi llbepost edasRs. 1000
C.nomodi ficat i
onwi l
l ber equiredasi taf f
ect sonlyoneaccount
D.noneoft heabov e
ATher entaccountwi l
l becr editedf orRs. 9000bei ngt hedi f
ferencebet weenRs. 10000and
Rs.1000, asexcess
amounthasbeendebi tedt ot heaccount .
410Goodspur chasedf r om Rameshf orRs. 3000wer er ecordedi nt hesal esbookbydebi ting
accountofRamesh.Ther ectifi
cat i
onent ryshal lbe:
A.debi tsal esandcr editpur chaseaccount
B.debi tpur chaseaccountandcr editsalesaccount
C.debi tpur chaseandsal esaccountf orRs. 3000eachandcr editRameshf orRs. 6000
D.debi tpur chaseandsal esaccountf orRs. 3000i nal landcr editRameshf orRs. 3000
CThej our nal ent rywoul dbedebi tpur chaseandsal esaccountf orRs. 3000eachandcr edit
Rameshf or
Rs.6000.Sal esaccountwaswr ongl ycr editedandpur chaseaccountwasnotdebi ted.Hence,
theset wo
account swoul dbedebi ted.AccountofRameshwi llstartshowi ngcor rectbal anceofRs. 3000
credi t
.
411Thef irm pai dsal aryt ooneofi t
sempl oy eesanddebi tedhisper sonal account .Whati st he
rectificat i
onent ry ?
A.debi tcashandcr edi tsal ar i
esaccount
B.debi tsal ar yaccountandcr editcashaccount
C.debi tsal ar yaccountandcr editempl oyeeaccount
D.debi tcashaccountandcr editempl oyeeaccount
CTheer rorwi llber emov edbydebi ti
ngsal aryaccountandcr edi ti
ngt heempl oy eeaccount .
Sal
aryshoul
dhav
ebeendebi
tedt
osal
aryaccountandnott
otheper
sonal
accountofempl
oyee.

412Af t
erpr eparat ionoft ri
al bal ance, i
ft her ei sdi f f
erence:
A.t hedi ff
erencei skeptasi ti s
B.t hedi f f
erencei st empor ar i
lyt ransf erredt oanaccountcal l
edsuspenseaccount
C.aj our nal entryispassedf ort hedi fference
D.anyoft heabov e
BAf t
erpr epar ati
onoft r
ialbal ance, i
ft her ei sdi ffer ence, t
hedi ff
erencei st empor ari
ly
transf erredt oan
accountcal ledsuspenseaccount .
413I ft het r
ialbal ancedebi tsidei smor et hant hecr edi tsidet otal,thedi f
ference:
A.wi llbepl acedont hecr edi tsideoft het rial bal ance
B.wi llbepl acedont hecr editsi deoft hesuspenseaccount
C.wi llbepl acedont hedebi tsideoft het r i
al bal ance
D.wi llbepl acedont hedebi tsideoft hesuspenseaccount
BI fthet ri
al balancedebi tsidei smor et hant hecr edi tsidet otal,t
hedi fference, wil
lbepl acedon
thecr edi tsi deoft hesuspenseaccount .Ifthecr edi tsi dei smor et hanthedebi tside,the
differencewi llbepl acedont hedebi tsi deoft hesuspenseaccount .
414I ft het r
ialbal ancecr edi tsidei smor et hant hedebi tsidet otal,thedi f
ference:
A.wi llbepl acedont hecr edi tsideoft het rial bal ance
B.wi llbepl acedont hecr editsi deoft hesuspenseaccount
C.wi llbepl acedont hedebi tsideoft het r i
al bal ance
D.wi llbepl acedont hedebi tsideoft hesuspenseaccount
DI fthet ri
al balancedebi tsi dei smor et hant hecr editsi det otal,thedifference, will
bepl acedon
thecr edi tsi deoft hesuspenseaccount .Ifthecr edi tsi dei smor et hanthedebi tside,the
differencewi llbepl acedont hedebi tsi deoft hesuspenseaccount .
415Att het imeofpr epar ati
onoff inal account ,ifanybal ancer emai nsint hesuspenseaccount :
A.itwi l
l beshownont heassetsi deoft hebal ancesheet
B.itwi l
l beshownont hel i
abi l
itysi deoft hebal ancesheet
C.itwi l
l beshownont hel i
abi l
itysi deoft hebal ancesheeti fbal ancei sindebi tandont heasset
sideoft he
balancesheeti fbal ancei sincr edi t
D.itwi l
l beshownont heassetsi deoft hebal ancesheeti fbal ancei sindebi tandont heliabi
l
ity
sideoft he
balancesheeti fbal ancei sincr edi t
DAtt het i
meofpr eparationoff inal account ,ifanybal ancer emai nsinthesuspenseaccount ,i
t
wi l
lbeshownont heassetsi deoft hebal ancesheeti fbal ancei si ndebitandont heliabil
i
ty
sideoft hebal ancesheeti fbal ancei si ncr edi t.
416I nt hebooksofaf ir
m, thet otal ofdebi tsi deoft rialbal ancei sl essthant hecr editside.One
off ewent ri
esi ndicat es
thatt otal ofsal esr etur
ni sshor tbyRs. 3200.Howi twi llber ect i
fi
ed?
A.t hesal esr eturnaccountwi l
l becr editedbyRs. 3200
B.debi tsuspenseaccountandcr edi tsal esr et urnsaccount
C.debi tsal esr etur naccountandcr editsuspenseaccount
D.pl acet heamountont hel iabilitysideoft hebal ancesheet .
CThesal esr eturnaccountshal l bedebi tedandt hesuspenseaccountwi llbecr edited.

417At ri
albalancecanbepr
epar
edon(
a)mont
hlybasi
s(b)quar
ter
lybasi
s(c)hal
f-
year
lybasi
s
(d)annualbasis.
A.onlyd
B.banddonl y
C.bt odonl y
D.at odany
DAt rial bal ancecanbepr epar edonmont hly,
quar ter l
y ,hal f-year lyoronannual basis.General
l
y
thi
s
prepar edonanannual basis.
418Whi choft hef oll
owi ngst at ementi snotcor rect, i
nt hecont extoft ri
al balance?
A.wr ongbal ancingofanaccount ,
af fect sthet ri
al bal ance
B.trial bal ancet akescar eofar ithmet icaccur acy
C.trial bal ancecanbepr epar edatt heendofaccount ingy earonl y
D.ifdebi tandcr editsideoft r
ial bal ancedoesnott ally,ther ewi l
l beneedt oopenasuspense
account
CTr ial bal ancecanbepr epar edanyt i
meandnotnecessar i
ly,att heendofaccount i
ngy ear.
419Whi choft hef oll
owi ngst at ementi sacor rectst atement ,
int hecont extoft ri
albalance?
A.pur chasesar eshownont hecr edi tsideoft het ri
al bal ance
B.bankaccounti sshownont hecr edi tsideoft het rial bal ance
C.trial bal ancei sprepar edaf terpr epar i
ngt hef inal account
D.secur i
t ydeposi t
edbyaf ir
m, isshownont hedebi tsi deoft het ri
al balance
DPur chasesar eshownondebi tsi de, bankaccountondebi tsi deandf i
nal account sare
prepar edaf tertrialbalance.
420Whi choft hef oll
owi ngdoesnotmat chint hecont ex toft r i
al balance?
A.whengr osst rialbalancei spr epar ed, thenetbal anceofeachaccounti st aken-cor rect
B.debi tbal anceofal edgeraccounti sshownoncr edi tsi deoft het r
ial balance-i ncorrect
C.ov er dr aftisshownoncr editsi deoft rialbalance-cor rect
D.ledgerbal ancesar ecar riedt ot r
ial balance-cor r
ect
AI ngr osst ri
albal ance, t
het ot al ofdebi tandcr edi tsi dei st akent ot het ri
al balance, i
nsteadof
netbal ancei nt heaccount .
421Ast atementorl i
stshowi ngdebi tandcr editbal ancesofv ariousl edgeraccount si scall
ed:
A.trial bal ance
B.final account
C.suspenseaccount
D.anyoft heabov e
AThet rial balancemeansast at ementorl istshowi ngdebi tandcr editbal ancesofv ari
ous
l
edgeraccount s.

422Balancesi nt hel i
abi li
tyaccount sarerecordedon_ _
_si deandbal anceinassetaccounts
arerecordedon_ __si deoft hetrial
balance:
A.credit
,debi t
B.debit,
cr edi t
C.debit,
debi t
D.credit
,cr edit
AThebal ancesi nt hel iabil
ityaccountsarer ecordedoncr editsideandbal ancei
nasset
accountsar er ecor dedondebi tsideofthet r
ialbal
ancebecause, l
iabi
lit
ieshavecredi
tbalance
andasset shav edebi tbal ance.
423Ifthecr editsi deoft het ri
albalanceiscastshor t,
thedi ff
erenceisplacedon:
A.debitsideoft hesuspenseaccount
B.credi
tsi deoft hesuspenseaccount
C.debitsideoft het rialbalance
D.anyoft heabov e
BIfthecr edi tsideoft hetrialbalanceiscastshor t
,thedifferenceisplacedoncreditsi
deoft he
suspenseaccount .
424Whi choft hef ollowi ngi sacor r
ectstatement ?
A.whi ler ecor dingat ransact ioni fthebookkeepi ngpr i
ncipl
esar enotf ollowed, i
tisanerrorof
omi ssion
B.tr i
albal ancescandi scl oseer r
orofpr incipl
e
C.ift r
ialbal ancesagr ee, thismeans, thereisnoer ror
D.incor rectt otalingofsubsi diarybooks, aff
ectstheagr eementoft rialbalances
DI fprinciplesofbookkeepi ngar enotf ollowed,i
tiser rorofpr i
nciple.Trialbalancedonot
discloset heer rorofpr inci pl
eandi ftr
ialbalancesagr ee,sti
llt
her ecanbeer r
ors.
425Whi choft hef oll
owi ngi snott her evenueexpendi ture?
A.itisshowni nt heprof itandl ossaccount
B.thebenef i
ti sav ail
ablef oral ongper i
od
C.t heexpendi tur eisforwor ki ngcapi talandmai ntaini
ngt hefixedasset s
D.t heamountspenti sr elati
v elysmal l.
BThebenef itoft hisexpendi turei sforashor tperiod,ofsay ,oney ear .
426Theexpendi tureforwhi chpay menthasbeenmadeoral iabil
ityhasbeeni ncurr
ed.Butiti
s
carriedf orwar dont heassumpt i
ont hatbenef i
twillbeav ail
ableforano.ofy ears,i
scall
ed:
A.r ecurringexpendi t
ure
B.def erredr ev enueexpendi tur e
C.r evenueexpendi t
ure
D.capi tal expendi t
ure
BSuchexpendi tureiscal leddef erredrevenueexpendi t
ure.Itiswr i
ttenof ffrom fut
ureprofi
ts.

427Whi choft hef ollowi ngi snotanexampl eofdef erredr evenueexpendi tur
e:
A.largeexpendi tureonadv erti
sement
B.expendi turef ori ssueofr aisingloan
C.expensesr elat i
ngt of ormat i
onofacompany
D.pur chaseoff i
xedasset s
DAl ltheseexpensesatopt ion(a)t o(c)ar einthenat ureofdef erredrevenueexpendi t
ure.I
tem
(d)isacapi tal expendi t
ur e.
428Ther ecei ptsofabusi nesst hatdonotar iseinnor mal courseofbusi ness.Rathertheseare
ofunusual nat ure.These ar ecalled:
A.revenuer ecei pts
B.capi t
alrecei pt s
C.def err
edr ecei pts
D.noneoft heabov e
BSuchr eceipt sar ecal ledcapi talreceipts.Thesei ncludeamountofcapi tali
ssue,debenture,
terml oanrai sedet c.
429Whi choft hef ollowi ngi snotpar tofr evenuer eceipts:
A.interestonbankt erm deposi t
B.commi ssiononsal es
C.capi t
alcont ri
but edbyt hepar t
ner
D.noneoft heabov e
CCapi t
alcont ribut edbyt hepar tnerisacapi tal
receipt.Other sarerevenuer ecei
pts.
430Whi choft hef ollowi ngi snotacapi tal recei
pt:
A.shar ecapi tal
B.shar epremi um
C.tradecr edi t
or
D.debent ure
CTr adecr edi t
or si sar ev enuer eceipt.Itisav ail
ableonar ecur r
ingbasis.
431Thecl assi ficationofwhi choft hefol l
owi ngiscor rect:
A.freightpai donbr ingi
ngt hemachi neryt ot hefactorpr emises-r evenueexpenditure
B.labourwel fareexpenses-def er
redr ev enueexpendi ture
C.lossofgoodsduet of ire-capi t
al expendi ture
D.r enov ationexpensesofol dmachi nesbef oreinst allati
on-capi talexpenses
AFr eightonbr ingingmachi ner yiscapi talexpendi ture, l
abourwel fareexpensesar edef er
red
revenue
expendi tur eandl ossofgoodsduet of i
reisr evenueexpendi ture.
Page82of165
432Whi choft hef ol l
owi ngi sar evenueexpendi tur e( a)whi chi sfrequent lytakingpl ace(b)
purchaseofmachi ner y( c)pur chaseofr awmat er i
al ?
A.at ocal l
B.onl yaandb
C.onl ybandc
D.onl yaandc
DPur chaseofmachi ner yi sacapi t
al expendi ture, whi letheot her sar erev enueexpenses.
433I fanexpendi tur ehel psi ngener at i
ngr ev enueov erano.ofy ears, i
tis:
A.capi tal expendi t
ur e
B.r ev enueexpendi tur e
C.def erredr ev enueexpendi t
ur e
D.anyoft heabov e
AI tisacapi tal expendi ture, suchaspur chaseofl andorconst ructionofbui l
ding.
434Whi choft hef ol l
owi ngdoesnotmat chi nthecont extofcl assificati
onofr evenueand
capi tal expendi tur e?
A.amounti snor mal l
yv er ylarge-capi talexpendi ture
B.pur posei st oenhancet hecapaci t y-r ev enueexpendi ture
C.amounti sr elativ elysmal ler-revenueexpendi t ure
D.expendi tur ei snon- recur ring-capi tal expendi ture
BWhent hepur posei st oenhancet hecapaci t
y,itiscapi talexpendi ture.
435Whi choft hef ol l
owi ngdoesmat chi nt hecont extofr evenueandcapi talexpendi t
ure?
A.iti sshowni nt hebal ancesheet-capi tal expendi tur e
B.iti sshowni nt hepr of itandl ossaccount-r evenueexpendi ture
C.t hebenef itisf oral ongper iod-r ev enueexpendi ture
D.iti sr ecur ring-r ev enueexpendi t
ur e
CThebenef itisav ailabl ef oral ongper iodi ncaseofcapi talexpendi tureandf orshor tperi
od,in
caseof
revenueexpendi ture.
436Whi choft hef ol l
owi ngi sar evenuer ecei pt?
A.r ecei ptagai nstsuppl yofgoods
B.r ecei ptagai nstr ender ingofser vices
C.r ecei ptr elatingt ot hesameper i
odf orwhi chaccount sar ebei ngpr epar ed
D.al lt heabov e
DAl lthesear er ev enuer ecei pts.
437Anol dmachi ner yi ssol dbyaf irmf orRs. 3lacwhi lethebookv alueisRs. 2.00lac.
A.t heent ireamountofRs. 3l aciscapi t
al recei pt
B.theent ireamountofRs. 3l acisr ev enuer eceipt
C.t heamountupt oRs. 2l aci scapi tal recei ptandbal anceRs. 1laci srev enuer ecei
pt
D.t heamountupt oRs. 1l aci scapi tal recei ptandbal anceRs. 2laci srev enuer eceipt
CThev aluer eal i
sedov ert hebookv al uei sr evenuer eceiptandv aluer ealisedupt obookv alue
i
scapi tal
recei pt .
Page83of165
438I famachi ner yor iginal lycost i
ngRs. 4l aci ssol df orRs. 5lacwhi leit
sbookv al
uewasRs. 3
l
aconl y:
A.t heent i
reamountofRs. 5l aci scapi tal recei pt
B.theent i
reamountofRs. 5l aci sr evenuer ecei pt
C.t heamountupt oRs. 1l aci srev enuer eceiptandbal anceRs. 4l aciscapi talrecei pt
D.t heamountupt oRs. 3l aci scapi talrecei ptandbal anceRs. 2laci srev enuer ecei pt
CTheamountequal tobookv aluei scapi t
al recei pts+amountr eal i
sedabov et hecosti scapi
tal
recei pt.
Amountr ecei v edasdi f
f erenceofbookv alueandcostpr i
ce, i
sr evenuer ecei pts.
439Whi choft hef oll
owi ngi sar evenuer ecei pt?
A.capi tal introducedbyt hepr omot ers
B.loanr aisedf rom t hebank
C.pr emi um r ecei v edonshar es
D.noneoft heabov e
DAl ltheabov ear ecapi tal recei pts.Thesear enon- recurringnatur e.Further,thef undsar e
avai l
abl eov eral ongper iod.
440Af i
rmi ncur redl egal expensesi nconnect ionwi th(a)f i
li
ngofsui ttor ecov ert heduesoft he
fi
rm( b)r aisingapubl i
ci ssue( c)def endi ngasui tbythef irm.Whi choft hesei scapi tal
expendi tur e?
A.bonl y
B.conl y
C.aandconl y
D.aandbonl y
AExpensesi ncur redonf il
ingofsui tordef endi ngt hesui tarerev enueexpenseswhi lethe
expensesonpubl ic i ssuear ecapi tal expenses.
441Anexpendi tur ehasbeeni ncur redt omai ntaingoodwor ki
ngcondi ti
onsoft hemachi nes.I
t
i
s?
A.r ev enueexpendi t
ure
B.capi tal expendi ture
C.def erredr ev enueexpendi ture
D.anyoft heabov e
AI tisr ev enueexpendi ture.I fitwasf orpur chaseofmachi ner
yorf ormaj orr enov at i
on,itwoul
d
hav ebeencapi tal expendi ture.
442Af i
rm acqui redl easehol dpr emi sesandpai dcer t
ainpr ofessional f
ee.Theamountof
prof essi onal feei s:
A.r ev enueexpendi t
ure
B.capi tal expendi ture
C.def erredr ev enueexpendi ture
D.anyoft heabov e
BTheexpendi tur ei sofnon- recur ri
ngnat ureandal soincur redasi nci
dent altoacqui ringthe
asset , duet owhi chi tiscapi tal expendi ture.
Page84of165
443Fi rm Zpur chasedgoodswor thRs. 4000, whi chisar ev enueexpendi turebecause:
A.t heamounti ssmal l
B.iti sr ecur ringi nnat ure
C.t hepur chasebenef itst hef i
rm
D.noneoft heabov e
BThepur chaseofgoodsi sar ecur ri
ngt ransact i
on.Theamountdoesnotmat ter ,inthiscase.
Ther ecur ri
ngpur chasecanbeofsmal l amountorofl argeamount .
444Fi rm Xpur chasedacarf ori tspar t
ner si ncur ri
ngRs. 6l ac,whi chisacapi tal expendi t
ure
because:
A.t heamounti sl arge
B.thebenef itwoul dbeav ailabl eforano.ofy ears
C.itwi l
lincreaset heear ningcapaci tyofthef i
rm
D.aandbbot h
BThebenef itoftheexpendi t
ur ewoul dbeav ail
ableforano.ofy ear
s.Theamountdoesnot
mat terinthiscase.
445Wagespai dtol abour erforconst ructi
onoff actorybui l
dingisacapi t
alexpenditurebecause:
A.itincreasest heear ningcapaci t
y
B.thebenef itisforal ongper iod
C.itisnon- recur r
ing
D.all t
heabov e
DAl ltheser easonsar ecor r
ect .
446Whent hebusi nessi scommencedbyaf ir
m andcashi sbrought,whichofthefollowing
j
our nalent r
iesi spassed( whi chonei smor eappropriate):
A.debi tcashandcr editcapi t
al accountoranyot herassetaccount
B.debi tcashandcr editcapi t
al account
C.debi tcashandcr editcapi t
al accountoranyot herliabil
it
yaccount
D.debi tanyl iabil
ityaccountandcr editcashaccount
CWhenbusi nessi scommenced, cashcomesi nduet owhi chitisdebit
edandal i
abil
ity
accountsuchascapi tal accountoranyot heraccount , suchasl oanaccountofapar t
ner,may
becr edited.Hencet hisopt i
oni smor eappr opri
ate.
447Whengoodsar epur chasedbyt hef i
rm outoft hecashbr oughtinascapi t
al,
whatj ournal
entryisrequi redt obepassed:
A.debi tcashandcr editthest ockaccount
B.debi tpurchaseaccountandcr editcashaccount
C.debi tpurchaseaccountandcr editcapitalaccount
D.debi tcashaccountandcr editpurchaseaccount
BWhengoodsar epur chased, thegoodsar ecomi nginandcashi sgoi
ngout .Hencegoodsor
purchaseaccounti sdebi t
edandcashaccounti scredi t
ed.

448Whensal eofgoodst akesplaceoncashbasi st oanot herf i

rm, whatjour nalentryi
spassed:
A.debittheotherfir
m accountandcr edi tcashaccount
B.debi
tt hegoodsaccountandcr editcashaccount
C.debitthecashaccountandcr editsal esaccount
D.debitthecashaccountandcr edittheaccountofot herf i
rm
CWhent hegoodshav ebeensol d,thesal esaccountwi l
l becr editedandt hecashaccountwi l
l
bedebited.
449Whensal eofgoodst akesplaceoncr editbasist oanot herfirm( sayFirm A) ,whatjournal
entr
yispassed:
A.debitFir
m Aaccountandcr editsalesaccount
B.debi
tt hegoodsaccountandcr editcashaccount
C.debitthecashaccountandcr editsal esaccount
D.debitthecashaccountandcr editot herfirm account
AWhent hegoodshav ebeensol doncr edit
, t
hesal esaccountwi l
l becr edi
tedandt heaccount
of
AThel easecanbef inanceorcapi t
al lease, operati
ngl ease, servicel easeandl ever
agedl ease.
455Af ir
m hasf i
xedasset sofRs.3l aconwhi chitprov i
desdepr eciat i
onat10%.Theaudi tors
wantthatthedepr eciationshoul dbe15%.Fi r
m agreest omaket headj ustment .Whatjour nal
entr
yshal l
bepassed:
A.debitthedepreciationaccountandcr editthefixedasset saccountf orRs. 45000
B.debi
tt hedepreciationaccountandcr editthefixedasset saccountf orRs. 15000
C.debitthefi
xedassetaccountandcr edi tthedepr eciat
ionaccountf orRs. 15000
D.nobookent ryisr equiredt obepassedast hedepr eciationisanon- cashexpendi ture
BThedi f
fer
enceamountofdepr eci
ati
onat5%i
.e.Rs.
15000wi
l
lbedebi
tedt
odepr
eci
ati
on
accountand
credi
tedtofi
xedassetaccount
.

456Inor dertoreduceitsprofi
ts,
Firm Bhaspr ovideddepr eciati
ononf i
xedassetsat20%
i
nsteadofusual 15%average.Theamountoff ixedasset si sRs.5lac.Whatadjustmententry
shall
ber equiredtomaket hepositi
oncor r
ect .
A.debitdepreciati
onaccountandcr edi
tfixedasset saccountf orRs.25000
B.debitthefixedassetsaccountanddi r
ect l
ycr edittheprofitandlossaccountforRs.25000
C.debitthefixedassetsaccountandcr editthedepr eciat
ionaccountf orRs.25000
D.Depr eci
ati
onbei nganon-cashexpendi t
ure,noadj ust
mentent r
yshallberequi
red.
CDepr eciat
ionisanexpendi t
ureandifithasbeenpr ovi
dedexcess, italsor
equiresadjust
ment.
Bydebi ti
ngfixedassetaccount,t
hedepr eciati
onaccountshal l
becreditedf
ortheamountof
dif
ference.

457Par t
ner-Boft heABCf irm hast akencer t
aingoodsf orhi
sper sonal
usefrom theavai
labl
e
stockswiththefirm.Whatadj ust mentshal lberequir
ed:
A.Sincegoodshav ebeent akenbyt hepartner,noadjustmentshallberequi
red.
B.debitgoodsaccount sandcr edi
tcapi tal
accountoft hepartner
C.debitdrawingsaccountandcr editt hepurchaseaccount
D.debitthecapitalaccountandcr editthesalesaccount
CWhent hegoodshav ebeent akenbyt hepartnerforhispersonaluse,
hisdrawingaccountwil
l
bedebitedandt hepur chaseorgoodsaccountshal lbecredited.

458Whatj ournalent
ryisrequi r
edtobemadet omakepr ovi
sionforbook-
debts?
A.debitbook-debi
tsandcr editprovi
sion
B.debittheexpensesprovisiononbookdebt sandcr
editprovi
siononbookdebtaccount
C.debitprovi
sionsandcreditbookdebtaccount
D.debittheexpensesprovisiononbookdebt sandcredi
ttheconcernedbookdebtaccount
BWhenpr ovi
sionisrequi
redt obemadeonbookdebt ,t
heexpensesprovi
siononbookdebt
accountistobedebitedandt heprovi
siononbookdebtaccountistobecredi
ted.

459Fir
m Bhasbookdebt sofRs.3l
ac.Duetorecessi
oncondi t i
ons,someofitsbookdebtsare
l
ikel
ytobebecomedi ff
icultofr
ecover
y.I
twantstomakepr ov i
sionat2%.Whatj our
nal
entry
wil
lbepassed.
A.debi
ttheexpensespr ovisi
ononbookdebt sandcreditprovisi
ononbookdebtaccount
B.debi
ttheprovisi
ononbookdebt sandcredi
tbookdebtaccountconcer ned
C.debi
ttheexpensespr ovisi
ononbookdebt sandcreditrel
atedbookdebtaccount
D.debi
ttheprovisi
onaccountandcr edi
ttheexpensespr ovi
siononbookdebtaccount
ATheexpensespr ovi
siononbookdebtaccountshal lbedebitedf orRs.6000andtheamount
shal
lbecredi
tedt oprovisi
ononbookdebtaccountwhi chwi l
l beusedforwr i
teofft
hebook
debti
fanyinfuture.

460Firm Bhadmadepr ov
isi
ononbookdebt sat5%,whichwasf oundt obeexcessivebythe
audit
orsinthelightofi
mprov edeconomi
ccondi
ti
ons.Hesuggest sthatapr ovi
sionof4%is
adequate.Presentl
y,t
heamountofbookdebtsisRs.10lac.Whatjournalentrywill
berequi
red.
A.debittheprovisi
ononbookdebtaccountandcredi
ttheexpensespr ovi
sionaccountfor
Rs.40000.
B.debittheprovisi
ononbookdebtaccountandcredi
ttheexpensespr ovi
sionaccountfor
Rs.10000.
C.debittheexpensesprovi
siononbookdebtaccountandcredi
tthepr ovi
sionaccountfor
Rs.
10000.
D.debitt
heexpensesprov
isi
ononbookdebtaccountandcredi
ttheprov
isi
onaccountf
or
Rs.
40000.
BTheexcesspr ov
isi
onwil
lhavetober
ever
sedbydebi t
ingt
heprovisi
ononbookdebtaccount
andcredi
tingt
heexpensesprov
isi
ononbookdebtaccount.

461Fi r
m- Bwant stowr i
teoffbal anceofadebt oramount i
ngt oRs.10000.Whatjournalentr
y
shallbepassed.
A.debittheexpensespr ovisiononbookdebtandcr editt
her el
atedbookdebtaccountf or
Rs.10000
B.debitther el
atedbookdebtaccountandcr edittheexpensespr ovi
siononbookdebtaccount
forRs.10000
C.debitther el
atedbookdebtaccountandcr edittheprovi
siononbookdebtaccountf or
Rs.10000
D.debitthepr ovi
siononbookdebtaccountandcr edi
ttherelatedbookdebtaccountf or
Rs.10000.
DTowr it
eof ftheaccount,thepr ov i
siononbookdebtaccountshal lbedebitedandther el
ated
bookdebt
accountshal lbecredit
ed.
462Fort ransferofclosi
ngofst ocksofgoodsf r
om tr
adingaccount ,whatj
ournalentr
yshall be
requi
red?
A.debittradingaccountandcr editthebal ancesheetst ock
B.debitclosingstockaccountandcr edittradingaccount
C.debittradingaccountandcr editthest ockaccount
D.debitthest ockaccountandcr editthepr ofitandlossaccount
BFort ransferr
ingtheclosi
ngst ockf r
om t het radi
ngaccount ,t
heclosingstockwil
lbedebi t
ed
andthet radingaccountshal lbecr edited.

463Whent heprov i
sionforoutstandingexpensesismade, whi
choft
hef ol
l
owingisnotcor
rect
,
regardi
ngitseffect:
A.theprofi
tdeclines
B.theli
abil
ityinthebalancesheetdecl i
nes
C.theprofi
tsdecl i
nesandl i
abil
ityincreases
D.thebalancesheetandpr ofi
tlossaccountar eaffect
ed
BWhenout standingexpensesar epr ovi
ded,theprofi
tscomedowntothatext
entandinthe
balancesheetexpensespay abl
eappearasal i
abi
l
ity.

464Wheni ncomeaccr uedbutnotrecei vedi

saccountedfor,whichoft
hefol
lowi
ngef
fect
s
doesnott akepl ace:
A.profi
tsoft hef i
rmincrease
B.theli
abili
tiesinthebalancesheetincrease
C.theprofitsincreaseandassetsalsoincrease
D.theprofitandl ossaccountandbalancesheetbot hareaff
ected
BWhent heaccr uedincomeisaccount edfor,i
tincr
easesprofi
tontheonehandandt
he
accruedincomeappear sasanasseti nthebalancesheet.

465Ifint
erestoncapitalofthepar
tnershasnotbeenpai d,whatadjust
mentent
ryshal
lbe
requi
red.
A.debitt
hecapi tal
accountandcredittheint
erestoncapit
alaccount
B.debiti
nterestoncapital
accountandcr edi
tthecapi
talaccount
C.debitt
heint er
estaccountandcredittheexpensespayabl
eaccount
D.noadj ustmentent r yshallberequir
edasi tisinternalmat t
erf ort hef i
rm
BTopayi nterest,thei nt er
estoncapital accountshal lbedebi t
edandt hecapitalaccountshal
l
becr edit
ed.
466Whi choft hefol l
owi ngaccounti
ngst andar disappl i
cablef ori nventoryval
uat i
on?
A.AS- 1
B.AS- 2
C.AS- 9
D.AS- 12
BAccount ingSt andar dAS- 2isappli
cablef orinventoryvaluation.
BI nacaseofdecr easi ngpr i
cesofmat er ial
,thepr ofit
swi l
lbehi gherunderLI FO, asthemateri
al
consumedwi l
lhavel owercostandmat er i
alinhandwi llhavehi gherpr ice.
490Asperr equi r
ementofSchedul eVIofCompani esAct ,t
hei nv entori
esarecl assif
iedas(a)
storesandspar es( b)l oosetools(c)stocki ntrade( d)wor kinpr ogr ess.
A.a, banddonl y
B.b, canddonl y
C.at odal l
D.a, canddonl y
CThei nvent ori
esar ecl assi
fi
edinalltheabov e4cat egor i
es.

491Thet estofobj ect i

vityandv erifi
abil
ityistakencar eof ,
ifthestockv al
uat ionismadeat :
A.cur rentr epl acementpr i
ce
B.hi stor i
cal cost
C.netr eal i
sabl eval ue
D.anyoft hese
BThet estofobj ect ivi
tyandv eri
fiabil
it
yist akencar eof,ifthestockv al
uat i
oni smadeat
histor i
cal cost .
492Whent hev alueofi nv entoryisascer tainedf r
om booksofst ock,iti
scal led:
A.per i
odi ci nv entor y
B.firsti nf irstouti nv entor y
C.per petual invent ory
D.lasti nfirstouti nv entor y
CWhent hev alueofi nv ent oryisascer tainedf r
om booksofst ock,i
tiscalledper petual i
nventory
.
493Account ingSt andar dAS- 2r ecommendswhi choft hefollowinginventoryv aluationmet hod?
A.wei ghtedav eragesonl y
B.lasti nfirstout
C.lat estpur chasepr ice
D.firsti nf irstoutorwei ght edav erage
DAccount ingSt andar dAS- 2r ecommendsf i
rstinfi
rstoutorwei ghtedav eragei nv entory
valuat ionmet hod.
494Thev al uat i
onofi nvent oryis_ _
_asi tdependsupont heaccount i
ngpol iciesf oll
owedbyt he
fi
rm /account ant.
A.obj ect i
v e
B.subj ective
C.bi ased
D.per fect
BThev al
uat i
onofi nv ent oryissubj ecti
v ebecausei tdependsupont heaccount i
ngpol icies
foll
owedbyt hef irm /account ant .
495Thehi st oricalcostconcepti ninventor yvaluati
onar ereducedt onetr ealisablev alueduet o
whi choft hef ollowi ngaccount i
ngconv ention?
A.real isation
B.account ingper iod
C.consist
ency
D.conservatism
DItisduet oconser v
ati
sm conventi
on.
496Ifthemet hodofvaluati
onofinvent
oryischangedfrequent
ly,
itwil
lvi
olat
e,whi
choft
he
fol
lowi
ngconv enti
onofaccounting:
A.real
isat
ion
B.accounti
ngper i
od
C.consist
ency
D.conservatism
CTheconv entionofconsist
encyrequir
esthattheaccounti
ngpracti
cesonceadopt
edshoul
dbe
fol
lowedconsi stent
ly.

497Whi choft hef ol

lowi ngi snotanexampl eofdef erredr evenueexpendi tur
e:
A.largeexpendi tureonadv erti
sement
B.expendi turef ori ssueofr aisingl oan
C.expensesr elat i
ngt of ormat i
onofacompany
D.pur chaseoff i
xedasset s
DAl ltheseexpensesatopt ion(a)t o( c)ar eint henat ureofdef erredrevenueexpendi t
ure.It
em
(d)isacapi tal expendi t
ur e.
498Ther ecei ptsofabusi nesst hatdonotar isei nnor mal courseofbusi ness.Rathertheseare
ofunusual nat ure.Thesear ecal led:
A.revenuer ecei pt s
B.capi t
alrecei pt s
C.def err
edr ecei pts
D.noneoft heabov e
BSuchr eceipt sar ecalledcapi tal recei pts.Thesei ncl udeamountofcapi tali
ssue,debenture,
terml oanrai sedet c.
499Whi choft hef ol
lowi ngi snotpar tofr evenuer ecei pts:
A.interestonbankt erm deposi t
B.commi ssiononsal es
C.capi t
alcont ri
but edbyt hepar t
ner
D.noneoft heabov e
CCapi t
alcont ribut edbyt hepar tneri sacapi talrecei pt.Other sarerevenuer ecei
pts.
500Whi choft hef ol
lowi ngi snotacapi tal receipt:
A.shar ecapi tal
B.shar epremi um
C.tradecr edi t
or
D.debent ure
CTr adecr edi t
or si sar ev enuer ecei pt .Itisav ail
ableonar ecur r
ingbasis.
501Thecl assi ficat i
onofwhi choft hef ol l
owi ngi scor rect:
A.freightpai donbr ingi
ngt hemachi ner yt ot hef act orpr emises-r evenueexpenditure
B.labourwel fareexpenses-def erredr ev enueexpendi ture
C.lossofgoodsduet of ire-capi tal expendi t
ure
D.renov ati
onexpensesofol dmachi nesbef or einst all
at i
on-capi t
alexpenses
AFr eightonbr ingi ngmachi neryi scapi tal expendi ture, l
abourwel fareexpensesar edeferred
revenue
expendi t
ureandl ossofgoodsduet of i
r ei srev enueexpendi tur
e.

502Whichofthefol
lowi
ngisacorrectstatement?
A.bi
ll
ofexchangeisanegoti
abl
einstrument
B.dr
aweeistheperson,
whoistoobt ai
nt hepaymentasperor
deroft
hedr
awer
C.pay eei st heper son, whoi smaket hepay mentasperor deroft hedrawer
D.draweri st heper son, whoi st omaket hepay ment
ADr aweei st heper sont omaket hepay ment , thepay eei st ogett hepay mentanddr awer
makesor dert omaket hepay ment .
503Onceausancebi l
lofexchangei saccept ed:
A.thedr aweebecomespr imar i
lyli
abl eoni t
B.thedr aweri ssecondar ilyl i
ableoni t
C.thedr aweei scalledaccept or
D.alltheabov e
DAl ltheabov estatement sar ecor rect .
504Apr omi sorynot ehast hef oll
owi ngpar ti
es( a)maker( b)drawee( c)pay ee( d)dr
awer.
A.aanddonl y
B.bandconl y
C.aandconl y
D.canddonl y
CApr omi ssor ynot ehasmaker( t
heper sonwhosi gns)andt hepay ee( thepersonwhoi s
enti
tledt ogetpay ment ).
505Abi llofexchangehast hef ollowi ngpar ties( a)maker( b)drawee( c)pay ee(d)drawer
.
A.aanddonl y
B.a,bandconl y
C.aandconl y
D.b, canddonl y
DAbi l
lofexchangehas3par tiesnamel ydr awer ,draweeandt hepay ee.
506Whent hesal eofgoodst akespl aceoncr editbasi s:
A.thesel lerbecomescr edit orandbuy erbecomesdebt or
B.thesel lerbecomesdebt orandbuy erbecomescr editor
C.thesel lerbecomesdebt orandbuy erbecomesagent
D.noneoft heabov e
AWhent hesal eofgoodst akespl aceoncr edi tbasis, thesel lerbecomescr edit
orandbuy er
becomesdebt or.
507Whi choft hef ollowingst atementi snott ruei nregar dt oaccomodat ionbil
l?
A.itisdr awnwi t
houtanyconsi derat ion
B.theobj ectiveistopr ovidet empor aryf i
nance
C.accomodat i
onbi llshoul dbeaccompani edbyar ai l
wayr eceiptorgoodsr eceipt
D.noneoft heabov e
CAccomodat ionbi l
l i
snotaccompani edbyar ail
wayr ecei ptorgoodsr eceipt.
Page101of165
508Whent heaccomodat i
onbi lli
sdi scount ed, t
hedi scounti s:
A.bor nebyt hedr awer
B.bor nebyt hedr awee
C.shar edbyt hepar ti
esi nt heirshar i
ngr ati
o
D.shar edbyt hepar ti
esi nequal r
at i
o
CWhent heaccomodat ionbi l
l i
sdi scount ed,t hedi scounti sshar edbyt hepar ti
esinthei
r
sharingr atio.
509Whi choft hef ollowingdoesnotmat chi nt hecont ex tofbi l
lofexchange?
A.thebi l
lswhi char edr awnwi thoutanysal e-demandbi l
ls
B.theamountr eceivedf rom t hepr ivateest ateofi nsol v entper son-dividend
C.theamountnotr ecov erabl ef r
om t hei nsolv ent-baddebt
D.noneoft heabov e
AThebi ll
swhi char edr awnwi thoutanysal ear ecal ledaccomodat i
onbi ll
s
510Wher et hedr aweeofabi llmakespay mentoft hebi llonduedat e,thebilli
st r
eat
edas:
A.paid
B.reti
red
C.honour ed
D.anyoft heabov e
CHonour i
ngofbi l
lmeansmaki ngpaymentbythedr awee, onduedate.
511Whenabi ll
ofexchangeispaidbefor
eduedat e,itiscall
ed:
A.paid
B.reti
red
C.honour ed
D.anyoft heabov e
BWhenabi ll
ofexchangeispaidbeforeduedate,i
tiscal l
edret
iri
ngoft hebil
l
.
512Ondi shonourofbil
lofexchangeorpromissorynot e,whentheholdercausessuch
dishonourt obenotedandcertif
iedbyanotarypubli
c, suchcert
ifi
cateiscal
led:
A.noting
B.protest
C.dishonour
D.anyoft heabov e.
BOndi shonourofbil
lofexchangeorpromissorynote, whentheholdercausessuchdishonour
tobenot edandcer ti
fi
edbyanot arypubl
ic,
suchcertifi
cateiscall
edprotest.

513Xhaddr awnabi ll
onY, whichi
fdulyacceptedbyY.Thebil
lisendor
sedbyXinfavourofZ.
Whatwill
bejour nalentryonthi
sendorsement,inthebooksofX:
A.debi
tY-credi tZ
B.debi
tZ-credi tY
C.debi
tZ-credi tbi
ll
sr ecei
vabl
e
D.debi
tbil
lsreceivable-credi
tZ
CIfbil
li
sendor sed,theendorseeaccountisdebit
edandbill
srecei
vabl
eaccounti
scredi
ted.

514Xhaddr awnabi llonYwhi chYaccept ed.Xendor sedthebillinfavourofZ.Whatwi l

lbe
j
our nal ent ryint hebooksofY:
A.debi tZ, creditbi l
lsrecei vable
B.debi tX, creditbi l
lspay able
C.debi tZ, creditbi l
lspay able
D.debi tbill
spay able, creditX
BI fbillhasbeenaccept ed, thedr awerwi l
l bedebitedandbi l
lspay ableaccountiscredit
ed.
515Thebi l
lst hatar edr awnbyot herpar t
iesonabusi nessfi
rm, whichmakest hepurchases,
arer ecor dedi nwhi choft hef ol
lowi ng:
A.sal esl edger
B.bi l
lsr eceiv ablebook
C.bi l
lspay abl ebook
D.pur chasebook
CThebi ll
st hatar edr awnbyot herpar tiesonaccountofpur chasesmadebyonef irm are
recor dedi nt hebi ll
spay ablebookf r
om wher ethesear edi
rectl
ypost edtotheaccountof
respect i
vecust omer s.
516Whi choft hef ollowi ngst at
ementi snotcor rect?
A.t hedat eonwhi cht hebi lli
stobepai di scall
edduedat e
B.3day sofgr acear eaddedt ocal culatetheduedat e
C.ifduedat ef allsonahol iday,thebi l
lsispayabl eont henextbusinessday
D.noneoft heabov e
CI fduedat ef al
lsonahol i
day ,
thebi lli
spay ableont henextprecedi ngbusinessdayi .
e.
prev i
ousbusi nessday .I
fabi l
lfallsdueonSunday ,t
hepay mentt obemadeonSat urday.
583Whi chofthefol
lowi
ngi snotacor r
ectstat
ementregardi
ngdepreci
ati
on:
A.i
tisachargeont heprofi
tandlossaccountf orf
all
invalueofanasset.
B.i
tispartoftheoperat
ingcost
C.i
tisreducti
oninthevalueofthefixedasset
D.i
tisthereducti
oninthev al
uecreatedonlybytheuseofasset
DThereductioninthevalueiscr
eatedbyuseofasset ,wearandtearorbyot
herr
easons.

584Forwhi choft hef ol

lowi ng,thedepr eci
ati
onisnotcharged:
A.forascer tai
ningt hecor r
ectpr of
it
s
B.forshowi ngcor rectfinancial positi
on
C.formaki ngpr ovisionsforr eplacementofasset
D.forinsuringagai nstfuturei nnovations
DDepr eciationischar gedf orascer taini
ngthecorr
ectprof
its,
toshowt hecor
rectf
inanci
al
posit
ionandf ormaki ngpr ov i
sionsf orrepl
aceofassetandnotforinsuri
ngagai
nstfutur
e
i
nnov ati
ons.

585Whi lecal cul

ati
ngdepreci
ati
on,whichofthef
oll
owi
ngfact
orsar
enottakenint
oaccount
:
A.ori
ginal costoftheasset
B.scr
apv alueoftheasset
C.mar ketv al
ueoft hef
ixedassetoverthey
ears
D.no.ofusef uly
earsofli
feoftheasset
CMar ketv alueofthefi
xedassetovertheyearsi
snotacr
it
eri
aforf
ixat
ionofdepr
eci
ati
on.

586Whendepr eciati
onischar gedt oanasset:
A.itcanbecredit
edt otheassetaccount
B.i
tcanbecr edit
edt oprovi
sionf ordepreci
ati
onaccount
C.valueofassetremainssamei fitiscr
edit
edtotheprovisi
onfordepr
eci
ationaccount
D.Theprovisi
onf ordepreci
ati
onwi l
lnotappeari
nthebalancesheet
DWher ethedepreciati
oniscreditedt oprov
isi
onfordepreci
ati
onaccount
,theprovi
sionfor
depreci
ati
onwillappearinthebal ancesheetandthevalueoffi
xedassetwil
l r
emainthesame.

587Depr eciat
ionisrecordedont he:
A.debitsi deofthepr ofi
tandl ossaccount
B.creditsideoft heprofitandlossaccount
C.notr ecordedint heprofitandlossaccountasiti
snotacashexpense
D.di
r ectl
yi nthebalancesheetasdeduct i
onfr
om theval
ueoffixedasset
ADepr eciationisrecordedont hedebitsi
deoft
heprofi
tandlossaccount.

588Depr eciationi scal

culat
edonthebookvalue(
dimi
nishingvalue)i
ncaseof:
A.str
aightlinemet hod
B.wri
ttendownv al
uemet hod
C.si
nkingf undmet hod
D.deplet
ionmet hod
BInthewr ittendownv aluemethod,
thedepr
eciat
ioni
scalculat
edont hebookval
ueor
depr
eciatedv alue.

589Whena2ndhandmachi ner
yispur
chased,
whi
choft
hef
oll
owi
ngi
snoti
ncl
udedi
nthe
ori
ginalcost:
A.agreementpri
ce
B.renovati
onorover
haul
i
ngbef
orei
nstal
l
ati
on
C.i
nstall
ati
onandcarr
iage
D.noneoftheabove
DAllthesearei
ncl
udedinthecostofa2ndhandmachi
ner
y.

590Whenscr apvalueofthemachi neryi

sindicated,thedepreci
ati
oni
scalcul
atedas:
A.ori
ginalcost/no.ofexpectedy earsofl
ife
B.(or
iginalcost+scrapvalue)/no.ofexpect edyearsoflif
e
C.(or
iginalcost-scrapval
ue)/no.ofexpect edy earsofli
fe
D.anyoft heabov emethods
CWhenscr apvalueofthemachiner yisi
ndicated,thedepreci
ati
oniscal
culat
edas(or
igi
nal
cost-scrapv al
ue)/no.ofexpectedy ear
sofl if
e.

591Amachi neryispurchasedforRs.2l
acwithausefull
if
eof5y ears.Thescr apval
ueis
Rs.20000.Whatwi llbethebookv al
ueaft
er3y ear
sifdepr
eci
ati
oni scalculat
edatSLM method.
A.Rs.92000
B.Rs.72000
C.Rs.68000
D.insuff
icientinformation
AAnnual depreciati
onwi l
lbe(200000-20000)/5=36000.Depreciati
onf or3y ear
sshal
lbe
36000x3=
108000.TheWDVshal lbe200000-108000=92000

592Amachi neryispur
chasedf orRs.4l
acwi t
hanexpectedli
feof10y ear
s.Attheendof6y
ear
themachineryissol df
orRs.150000.Whatistheprof
itorlossonsaleofmachinery
.
A.Rs.20000pr ofi
t
B.Rs.10000loss
C.Rs.10000pr ofi
t
D.inadequateinformat
ion.Cannotbecalculat
ed
BAnnual depreciati
onisRs.40000.For6years=240000.Bookvalueis400000-240000-
160000.IfsaleisforRs.1.
50lac,ther
eisloss160000-150000=10000

593Amachi neryi
spur chasedonJune12, 2006forRs.60000.Anot hermachi
ner
yi spurchased
onJanuar y22,2007f or
Rs.40000.Thedepr eciati
onrateis10%SLM.Whati sthebookv al
ueasatMar31, 2009( i
tis
annual closingperi
od).
A.79000
B.76000
C.73000
D.69000
CBookv alueof1stmachi nery60000-18000( 3yeardepr eci
ati
on)=42000.2ndmachi nery
40000-9000
(depreciationfor2year sandonequar ter)=31000.Totalbookv al
ue=42000+31000=73000.
Minimum
depreciationofonequar t
erischargeablewhereperi
odi slessthanaquarter.

594Af ir
mi susingSLM f orchar
gingdepreci
ati
ononmachiner
yofRs.
2lacat10%.Form 3rd
year
,itchangest hemet hodofdepreci
ati
ontowr i
tt
endownval
ue.Whatwi
llbechangei
nt he
prof
itandlossposi t
ion.
A.4200,incr
easei nprofit
B.4200,decreaseinpr ofi
t
C.4000,incr
easei nprofit
D.insuffi
cienti
nfor
mati
on.Calcul
ati
onnotpossi
ble
CDepr eciati
onfor3rdy
earasperSLM =20000.Depreciat
ionasperWDV=16000.The
di
fferenceamountofRs. 4000i
stheincr
easeinpr
ofitastheamountofdepr
eci
ati
onhas
decli
ned.

595Fi r
m Apur chasedcer tai
nmachiner
yforRs.2laconJuly01,2006.Ther at
eofdepr eciat
ion
i
s10%.Whatwi l
lbet otalamountofdepr
eci
ati
onatWDVt il
lDec31,2008.Thef i
rm cl
osesi t
s
booksason31stDecember .
A.46100
B.56100
C.66100
D.insufficientinfor mat i
on
A1sty eardepr eciationf or6months=10000.2ndy ear19000and3rdy earRs.17100.Total
depreciation=46100
596Whi choutoft hef oll
owingmethodsofdepreci
ati
onisrecogni
zedforIncomeTaxpur pose
andbyt heCompani esAct
A.Strai
ghtLi neMet hod
B.Wr i
ttenDownVal uemet hod
C.Sum ofdi gi
tsmet hod
D.machi nehourr atemet hod
BWDVmet hodisr ecogni zedfori
ncometaxpurposeandalsobytheCompani esAct .

597Thewr it
tendownv al
ueofzerocanneverbether
einwhi
chofthefol
lowi
ngmet
hodsof
deprecation:
A.StraightLi
neMet hod
B.Wr i
ttenDownVal uemethod
C.Sum ofdi git
smet hod
D.si
nki ngfundmethod
BSincet heamountofdepr eci
ati
oni
scalcul
atedonthedepr
eci
atedval
ue,t
heWDVcannev
er
bezer oinWDVmet hod.

598Inthesinkingf undmet hodofdepr eciati

on,whichofthefol
l
owingjour
nalent
riesi
smadeto
prov
idethedepr eciati
on:
A.debi
tdepreciationandcr editfi
xedassetaccount
B.debi
tdepreciationandcr editbankaccount
C.debi
tdepreciationandcr editsinki
ngfundaccount
D.nojournalentryisrequir
ed.I nv
estmenti sdir
ectl
ymade
CThesi nki
ngfundi scredi
tedtot hedebitofdepreciat
ion.Tomakeinv
estment,t
hesinki
ngf
und
i
sdebitedandbankaccounti scredit
ed.

599Whenpr ovisi
onfordepreciat
ionaccounti
scr eated,whichoft hefol
l
owingisnotcorrect
?
A.depreci ati
onaccountgoest othedebitofpr
of i
tandl ossaccount
B.thev alueoff i
xedassetisshownatt heori
ginalcosti nt
hebal ancesheet
C.inthej ournalentr
y,thedepreci
ati
onaccountisdebi tedandfixedassetaccountiscredi
ted
D.thepr ov i
sionfordepreci
ati
onappearsinthebal ancesheetasdeduct i
onfrom val
ueoft he
fi
xedasset s.
CInt hejour nalent
ry,t
hedepreciati
onaccountisdebi t
edandpr ov i
sionf
ordepreci
ati
onaccount
i
scr edi
ted

600Whichofthefol
lowi
ngmet hodsofdepreci
ati
ondoesnotmat
cht
oit
sexpl
anat
ion:
A.f
ixedper
centageonori
ginal
cost-str
aightli
nemethod
B.fi
xedinst
alment-wr i
tt
endownv aluemet hod
C.fi
xedpercentageonthedimini
shingvalue-wr i
tt
endownv al
uemet
hod
D.creat
ingfundforrepl
acement-sinki
ngf undmet hod
BFixedinst
almentdepreciat
ioni
sthestraightl
inemethod.

601Origi
nal
costofanequipmenti
sRs.1.
60lacanduseful
li
feof5year
s.I
fthescr
apv
aluei
s
Rs.
10000,whati
stheamountofdepreci
ati
onfor3year
s,underSLM?
A.100000
B.90000
C.70000
D.60000
BDepreci
ati
on=(1.60-0.
10)=1.50/5=0.30x3=0. 90lac

602Origi
nalcostofanequipmenti
sRs.
1.60lacandusef
ull
if
eof5y ear
s.Ifthescr
apvaluei
s
Rs.
10000, whati
sthewrit
tendownval
ueattheendof3rdyearunderSLM?
A.100000
B.90000
C.70000
D.60000
CDepreciati
on=(1.60-0.
10)=1.50/5=0.30x3=0. 90l
acDepreciatedvalue=1.60-
.090=
0.
70lac

603Or i
ginal costofanequipmentisRs.1.
60lacanduseful
li
feof5y ear
s.Ifthescr
apv aluei
s
Rs.10000, andmachi ner
yissoldattheendof3rdyearf
orRs.75000,whatisthegainorlosson
sale,underSLM? .
A.Rs. 10000pr ofi
t
B.Rs.10000l oss
C.Rs. 5000l oss
D.Rs. 5000pr ofi
t
DDepr eciation=( 1.
60-0.10)=1.50/5=0. 30x3=0.90lacDepreci
atedvalue=1.60-.
090=
0.70lac.Pr of i
torloss=0.75-0.70=0.05lac.

604Originalcostofanequi
pmenti sRs.2.
00l
acanddepreci
ati
onrat
eis20%I fmachineryi
s
soldattheendof3r dyearf
orRs.1lac,whati
sthegainorl
ossonsale,
underWDVmet hod?.
A.2000pr ofi
t
B.2000l oss
C.6000pr ofi
t
D.6000l oss
BBookv al
ueatendof3r dyear=(1styear
)2.
00-0.40(20%ofRs.
2.00lac)=1.60(2ndyear
1.60-0.32(1.60x20%)=1.28( 3r
dy ear1.
28-0.26(
1.28x20%)=1.02Loss=1. 02-1.00=0.02
l
ac.

605Whatj ournalent
rywillbepassedatt heendof1sty earifthesinki
ngfundmethodof
depreci
ati
oni sused,t
omakei nvest
mentoff undsinsecuriti
es?
A.debitdepreci
ati
oncreditsinkingfund
B.debitsi
nkingfundandcr editdepreciati
onaccount
C.debitsi
nkingfundinvestmentandcr editbankaccount
D.debitbankaccountandcr edi tsi
nkingfundi nvest
ment
CFormaki nginvestmentoff undst r
ansferredf r
om depreciati
onaccounttosinki
ngfund,the
j
ournalentryattheti
meofi nv estmentshal lbedebitsi
nkingf undinvest
mentandcreditbank
account.
606Int heyearofrepl
acementoff i
xedasset ,underthesinki
ngfundmethodofdepr
eci
ati
on,
whatjournalentr
yispassedf orsaleofi nvestment?
A.debitsinki
ngfundinvestmentaccount ,cr
editsi
nkingfundaccount
B.debitbankaccount,credi
tsinkingfundi nvestmentaccount
C.debitsinki
ngfundaccount, cr
editsinkingfundinvestmentaccount
D.debitdepreci
ati
onaccount, cr
editsinkingfundinvestmentaccount
BForsel l
inginv
estment,thejournalentrywi l
lbedebitbankaccountandcredi
tsi
nki
ngf
und
i
nvestmentaccount .

607Anysy stem ofaccountingwhi chi

snotexact
lythedoubleent
rysyst
em i
scall
ed?
A.singl
eentrysystem ofaccounting
B.semi-si
ngleentr
ysy stem ofaccounti
ng
C.semi-doubleentr
ysy stem ofaccounti
ng
D.non-doubleentr
ysyst em ofaccounti
ng.
ASingleentrysyst
em ofaccount ingisanysy
stem ofaccounti
ngwhichi
snotexact
lyt
hedoubl
e
entr
ysy st
em.

608Thesi ngleent rysystem doesnotconsi stofwhichofthefoll

owing:
A.doubl eent ryforcertaintransactions
B.singleent ryforcertaintransactions
C.noent r
yf orcertaintransactions
D.noneoft heabov e
DThesi ngleent r
ysy stem consi st
sofdoubl eent
ryf
orcertai
ntransacti
onssuchasdebt
ors,
credit
ors,singleent ryforcer t
aintransact
ionssuchascashpur chaseorcashsal
eandnoentry
forcertaintransactionssuchasdepr eci
ati
on,baddebtetc.

609Whi chofthefol
lowingisasal i
entfeatur
eoft hesi
ngleentryaccount
ingsy
stem (a)no
uni
formity(
b)maintenanceofper sonalaccounts(c)maintenanceofcashbook(d)suit
abi
li
ty(
e)
dependenceonorigi
nal voucher
s.
A.atoeal l
B.a,canddonl y
C.b,dandeonl y
D.btoeonl y
AAlltheabovearefeaturesofsingleentryaccounti
ngsystem.

610Whi chofthef ol
lowingi
snotalimit
ationofsingl
eent
ryaccount
ingsy
stem?
A.trueprof
itscannotbeknown
B.arit
hmeti
cal accuracycanbechecked
C.fi
nancialpositi
onofthebusi
nesscannotbej udged
D.thetaskofpl anni
nganddecisi
onmaki ngbecomesdiff
icul
t
BAr i
thmeti
calaccuracycannotbechecked.

611Thepr
ofitandlosscanbecomput edundersi ngleentr
ybookkeepingsystem byusing(
a)
networ
thmethod( b)conversi
onmethod(c)interpol
ati
onmet hod.
A.atocal
l
B.aandbonly
C.aandconly
D.bandconly
BTheprof
itandlosscanbecomput edundersi ngleentr
ybookkeepingsystem byusingnet
wort
hmethodandconv er
sionmethod.Ther
ei snomet hodlikei
nter
polat
ionmet hod.
612Thecapi talofabusinesswasRs.2laci
nthebegi
nningoftheyearandi tincr
easedt
o
Rs.2.30lacatt heendoft heyear
.Whatisamountofpr
ofitduri
ngthey earundernetwort
h
met hodi nsingleent
ryaccounti
ngsystem.
A.Rs. 30000
B.Rs. 2lac
C.Rs. 2.
30l ac
D.unascer tainabl
e
AThepr ofi
tiscalcul
atedbycompar i
ngtheopeni
ngandclosingbalanceofnetwor t
h.Hence
thepr ofi
t=2. 30lac-2.
00=0. 30lac

613Thecapi talofabusi nesswasRs. 2laci

nthebeginni
ngoftheyearanditincreasedto
Rs.2.
30l acattheendoft heyear
.Dur i
ngtheyear
,ther
eweredrawingsofRs.40000.Whati s
amountofpr ofitduri
ngt heyearundernetworthmethodinsi
ngleentr
yaccount i
ngsy st
em.
A.30000
B.70000
C.2.30lac
D.unascertai
nable.
BThepr ofiti
scalculatedbycompar ingtheopeni
ngandclosi
ngbalanceofnetwor t
h+t he
amountof
drawings.Hencet hepr ofi
t=2.30lac-2.00=0.30+0.40=0.70lac

614Thecapi talofabusi nesswasRs. 2l

acinthebegi
nningoftheyearandi ti
ncr
easedto
Rs.2.30lacatt heendoft heyear.
Duringthey ear,therewer edrawi
ngsofRs.40000andcapitali
ntr
oduct i
onwasRs.20000.What
i
samountofpr ofit
duringthey earundernetwor thmethodinsi
ngleent
ryaccounti
ngsy stem.
A.30000
B.50000
C.70000
D.cannotbecal culated
BThepr of
itiscal cul
atedbycompar ingt
heopeningandclosi
ngbal anceofnetwort
h+t he
amountof
drawings-amountofcapi tali
ntr
oduced.Hencetheprof
it=2.30lac-2. 00=0.
30+0.40=0. 70
l
ac-0. 20=0. 50l ac

615I nsi ngl

eent r
yaccountingsy st
em underconversi
onmethod,
whi chofthefol
lowingisa
cor
r ectst at
ement ?
A.trialbalancehast obepr epar ed.
B.topr eparet r
ialbal
ance,doubl eentrymethodisrequir
edtobeusedf orcer
tai
ntransacti
ons
C.thef inalaccountscanbepr eparedintheusualwayaf t
ert
hetr
ialbalance
D.all t
heabov e
DAl lthesest at
ement sarecorr ectstat
ements.

616Underasingleentrysyst
em, thestatementofaf f
air
si sastatement:
A.t
hatgivesdet
ailsofallr
eceiptsandpay mentsincash
B.t
hatgiv
esdetailsofassetsandl i
abil
it
iesasonapar t
iculardate
C.t
hatgivesi
ncomeandexpendi turedetai
lsforaparti
cularperiod
D.t
hatgivesi
ncomeandexpendi ture,
assetsandl i
abil
it
iesandr ecei
ptandpaymentposi
ti
on.
BThestatementofaf f
air
sisast atementthatgivesdetail
sofasset sandli
abi
l
iti
esasona
par
ti
cul
ardate.Iti
slikethebalancesheetofthef ir
m.
617Whi choft hefoll
owi nggr oupsofratiodoesmat ch:
A.li
quidi
tyratios-curr
entr atio,debtequityrati
o
B.solv
encyr atios-debtequi tyrati
o,debtorturnoverrati
o
C.acti
vityr
atios-debtorv elocityrat
io,stockturnoverrati
o
D.profi
tabi
li
tyr at
ios-returnoncapi talempl oyedrati
o,returnonnetwor t
hr ati
o
CDebtequi t
yr ati
oisnotpar tofli
quidi
tyr at
ios,i
tisasol vencyrati
o.Debtorturnov
err
ati
oisan
acti
vi
tyrati
o.Debtser vicecov erageratioispartofsolvencyr at
ios.

618Whi choft hefollowi ngiscor recti nregar dtol i

quidityr at
ios:
A.objecti
veofl i
quidityratiosi stocheckl ongt er m solvencyoft hef i
rm
B.currentrati
oexami nest hel i
quidityposi t
ioni naoney earper i
od
C.quickratioexami nest hel iqui
dityposi ti
onof9- 10mont hs
D.networ kingcapi t
al i
ndicat estheav ail
abili
tyoff undsf orrepaymentofter mloan
BLiquidit
yr at
iosar eusedt oexami net heliquidityposi t
ion.Forv er
yshortterml i
quidit
yposit
ion,
qui
ckr ati
oi sused.Networ kingcapi talindicates, t
heposi ti
onofav ail
abi
l
ityofmar ginfor
worki
ngcapi t
al.
619Thef ormul aforwhi choft hef oll
owi ngr ati
osi scor rect:
A.currentrati
o=cur r
entasset s/cur r entli
abili
ties
B.qui
ckr atio=qui ckasset s/qui ckliabili
ti
es
C.networ kingcapital =cur rentli
abili
ties+cur rentasset s
D.noneoft heabov e
AQuickr ati
oi scalculatedasqui ckasset s/cur rentliabilit
iesandnetwor kingcapitali
s
cal
culatedascur rentasset slesscur rentliabili
tiesorl ongt erm sourcesl
essl ongterm uses.

620Tocal cul
atequickassets,
whichofthef
oll
owingisnotr
educedfr
om curr
entasset
s:
A.stocks
B.i
nv entories
C.pre-paidexpenses
D.tr
adedebt ors
DTradedebt orsarepartofqui
ckasset
sbutotherasset
sinthequest
ionar
enotquickasset
s
al
thought hesear ecurr
entassets.

621Af i
rm hasstocksof10,
debtors12,t
radecr
edi
tor
sof7,
cash1,
bankoverdr
aft4,
prepai
d
expenses2andexpensesout standi
ng2.Whichoft
hefol
l
owingi
snotcor
rect
:
A.quickassets=12
B.currentassets=25
C.currentli
abil
i
ties=13
D.quickratio=1:1
AQuickasset sshouldbe13.(25-12).

622Thedet ail
sofasset sandl i
abil
it
iesofaf ir
m ar easunder :stocks15, debtors16( i
ncl
uding
thoseout standingmor et han6mont hs3) ,
terml oan24( i
ncludingi nstal
mentpay ablewit
hin12
mont hs6) ,bankov erdraft8,cashinhand4, pr
epai dexpenses4, outst
andingexpenses5and
provi
sions2.( whichoft hefoll
owingi snotcorrect)
A.currentasset s=36andcur rentli
abil
i
ties=22
B.currentr ati
o=1. 72:1
C.quickrat io=0. 81
D.networ kingcapital=15
ACur rentliabil
iti
eswillbe21( 6+8+5+2)f orcurrentrati
opurposeandcur rentassets36
(15+13+4+4) .AmountofTLi nstalmentwi l
lbeaddedt ocur r
entl iabil
it
iesandamountofol d
bookdebt
swi
l
lnotbei
ncl
udedi
ncur
rentasset
s.Qui
ckasset
sar
e17(
36-15-4)

623Cur rentrati
oofaf i
rm was1. 33:1i nthepr eviousy earwhichcont i
nuest obesame.Butt he
quickratiohaschangedf rom 0.69:1t o0.97:1.Thechangewi l
lbeonaccountof :
A.%ageofst ocksintot al curr
entasset sincreased
B.%ageofqui ckasset sint otalcurrentasset sincreased
C.%ageofst ocksintot al curr
entasset sincreasedslightl
y
D.%ageofqui ckasset si ntotalcurrentasset sdecr eased
BI f%ageofqui ckasset si nthet otalcur r
entasset sincreasesandt hatofcur r
entassets
i
ncr eases,t
hecur rent r at i
oremai ningsame, thequi ckrati
ocani ncrease.
624Networ kingcapital ofaf ir
mi s80andcur rentratio1.5:
1.Itscurrentli
abil
it
iesandassets
are:
A.80, 120
B.160, 240
C.240, 320
D.120, 200
BAspercur rentrati
o,cur rentasset sar e1.5andcur r
entliabil
i
ties1.0,whichmeansNWC=0. 5.
IfNWCi s0.5thecur r
entasset sar e1.5i .
e.3t i
mes, ifNWCi s80,currentassetsshouldbethree
timesi .
e.240.Inthismannercur rentliabil
iti
escanbecal culat
ed.

625Capi tal ofaf i

rmi s35, reserves11.I tsdebenturesar e80andpr el
iminar
yexpenses6.The
debtequi t
yr atiowi l
lbe:
A.0.5:
1
B.2:1
C.1.7:
1
D.noneoft heabov e
BLongt erml iabili
tiesar e80andt angi blenetwor th40( 35+11-6)
.Hencer at
ioi
s2( 80/
40)
626Whi choft hef oll
owi ngf ormulaf orsol vencyrati
osisnotcor r
ect:
A.debtequi tyratio=l ongter mliabilit
ies/networ th
B.proprietaryr atio=t angi
bleasset s/t angiblenetwor t
h
C.tangiblenetwor th=networ th-int angibleassets
D.tangibleasset s=t otalassets-i ntangi bl
eassets
ADebtequi tyr atioiscal culatedwi tht angiblenetwor t
hasdenomi nat
orandnotnetworth.
627Thedebtequi tyr atiois3:1andcur rentrati
o1.5:1.I
fcurrentassetsare45andlongter
m
l
iabil
it
iesar e45, whi choft hef oll
owi ngi scor r
ect:
A.currentliabilit
iesar e15andt angibl enetwor th30
B.currentliabilit
iesar e30andt angibl enetwor th15
C.currentliabilit
iesar e30andt angibl enetwor th30
D.currentliabilit
iesar e15andt angi blenetwor th15
BCur r
entl iabilit
ies=45/1. 5andt angi blenetwor t
h=45/3

628Debtserv
icecover
agerat
ioiscalcul
atedas:
A.(
netprof
it+depreci
ati
on+ter
ml oaninterest
)/termloani nstalment
B.(
netprof
it+depreci
ati
on+ter
ml oaninstalment
)/terml oani nterest
C.(
netprof
it+depreci
ati
on+ter
ml oaninterest
)/(ter
ml oani nstalment+ter
ml oanint
erest
)
D.(
netprof
it+depreci
ati
on+ter
ml oaninterest
)/(ter
ml oani nstalment+depreci
ati
on)
CDSCRiscalculat
edasperopti
onC.

629Netpr
ofi
tofafi
rmis45,
depr
eci
ati
on20andt
erml
oani
nter
est15.I
fter
mloani
nst
alment
i
s25,whatwi
llbeDSCR:
A.1.
5
B.2
C.2.
5
D.3
BDSCR=(
45+20+15)/(
15+25)=2

630DSCRcov er
ager ati
oisusedforwhichoft
hefol
lowingpurposes:
A.tocal
culat
et heamountoft ermloan
B.tocal
cul
atewor ki
ngcapitall
imi
ts
C.todeci
dewhet hertosancti
onatermloanandtof
ixinstalment
s
D.all
theabov e
CDSCRi scalculatedtodecidewhethert
osancti
onaterml oanandal
sot
ofi
xinst
alment
.

631Whi choft hef

ollowi
ngrati
osi
snotcorrect
lyshownastheideal
lev
eloft
heconcer
nedr
ati
o:
A.currentr
atio=1.33:1
B.debtequity=2:1
C.debtservi
cecov eragerat
io=2
D.quickrati
o=1: 1
DTher eisnoideallevel
forqui
ckrat
io.Ot
heropti
onsarecor
rect.

632Fi r
m- Ahassal esof5000andst ocksof400.Fi r
m-Bhasstocksof600andsalesof7200.
I
nt hisconnect i
onwhi chofthefol
lowingisnotcorrect:
A.stockt urnoverrati
oofFirm-A=12. 5
B.stockt urnoverrati
oofFir
m- B=12
C.stockt urnoverrati
oofFirm-AisbetterthanofFirmB
D.Stockut il
isati
onofFirm-Bisbettert
hanofFi rm-A.
DSt ockut i
li
sationissli
ght
lybett
erofFi r
m- A.Thehigherst
ocktur
noverr
ati
oindi
catesbet
ter
useofst ocks.

633Whichofthef oll
owingi scorrectwithregardtodebtort
urnov
errat
io:
A.rat
ioi
scalculatedas=debt or
s/sal es
B.rat
ioi
ndicat
escr edi
tper i
odext endedbyt hefir
mtoi t
scustomer
C.rat
ioi
ndicat
est heeffi
ciencyofr ecoveryofdebtors
D.debtvel
ocit
yr ati
oisanot hervari
antofthisrati
o
ARatioi
scalculatedassal es/debt or
s.

634Firm-Ahassal esof4000anddebt orsof200.Fir

m-Bhasdebt
orsof500andsal
esof8000.
I
nthisconnect i
onwhi chofthefoll
owingisnotcorr
ect:
A.debtorturnoverr
atioofFirm-A=20
B.debtorturnoverr
atioofFir
m- B=16
C.debtorrecoveryperfor
manceofFi r
m- Aisbett
erthanofFi
rmB
D.debtorrecoveryperfor
manceofFi r
m- Bisbet
terthanofFi
rm-
A.
DAhi gherdebtorturnoverr
atioisbet
ter.

635Whendebt ortur
noveriscal
culatedint
ermsofti
meperi
od: (
whi
chonei
sincor
rect
):
A.i
tiscalleddebtorvel
ocit
yrati
o
B.i
tiscalculatedasdebtor/sal
esx12
C.i
tiscalculatedassales/debtor
sx12
D.i
tiscalleddebtcoll
ecti
onperiod
COptionsat( a),(
b)and(d)arecorrect
.Requi
renoexpl
anat
ion.

636Fi
rm-
Ahassal
esof4000anddebt
orsof200.Fi
rm-
Bhasdebt
orsof500andsal
esof8000.
I
nthisconnectionwhichoft hefoll
owingisnotcorr
ect
:
A.debt
orv el
ocityrat
ioofFirm A=0. 6months
B.debt
orv el
ocityr
atioofFirm B=0. 75months
C.debt
orcollecti
oneffici
encyofFirm Aisbett
erthanFi
rm-
B
D.debt
orcollecti
oneffici
encyofFirm Bisbett
erthanFi
rm-
A
DShorterdebtcoll
ectionperiodisbett
erwhichindi
cat
esqui
ckerr
ecov
eryofdebt
ors.

637Salesofaf i
rm are6000anditsdebt ors300.Debtorvel
ocityoft
hefi
rmi
ntheprev
iousy
ear
was0.8mont hs.Whichofthefol
lowingst atementsi
snotcor rect
:
A.debtort
urnoverrat
iois20times
B.debtorv
elocit
yrati
ois0.6mont hs
C.debtcol
lecti
onhasi mprov
edov erthepr evi
ousyear
D.debtcol
lecti
onhasshowndet erior
ationov ert
hepreviousyear
DDebtorveloci
tyrati
ointheprevi
ousy earwas0. 8mont hswhichhascomedownto0.6month,
whichmeansi mprovementindebtcollecti
on.

638Ther eturnonequi t
yorreturnonnetworthiscalcul
atedas:
A.netprofi
t/networ t
h
B.netprofi
t/l ongterm sour
ces
C.netprofi
t/t angibl
enetwor t
h
D.grossprofit/networ th
CRat i
oiscalculatedwithref
erencetotangi
blenetwor t
h.
639Af ir
m hasnetpr ofit
sof40andi t
scapitalandreservesare210.Ifithasgoodwil
lof10,
whatisreturnonnetwor t
h.
A.25%
B.20%
C.18.5%
D.17.5%
BTocal cul
atet herati
othetangibl
enetworthwillbe200( 200-
10).Calculat
ionwi
llbeas40/
200x100=20%

640Ret urnoncapi talemployed( ROCE)i scalcul

atedas:
A.netpr of
it/networ th
B.netpr of
it/tangi blenetworth
C.netpr of
it/longt er
m sources
D.netpr of
it/(tangi bl
enetwor th+l ongt ermloans)
DROCEi scalculatedasnetpr ofi
t/( tangibl
enetwor th+longterml
oans
641Af irm hasnetpr ofi
tsof40.I tcapitalandreserv
esar e150andlongt er
ml oans260.I
fthe
fi
rm hasgoodwi ll
of10, whatisther eturnoncapitalemployed.
A.10%
B.12%
C.20%
D.40%
ARat i
oi scalculatedasnetpr ofit/(tangiblenetworth+longtermli
abil
i
ties).Hence40/400=
10%.(Tangi bl
enetwor t
h=150- 10=140)

642Thet r
adi
ti
onalclassi
fi
cationofr
ati
osincl
ude:
A.profitandl
ossaccountr at
ios
B.balancesheetrat
ios
C.profitandl
osscum balancesheetrat
ios
D.al
l theabove
DThetradi
ti
onal
classi
fi
cat
ionofr
ati
osconsistsofprofi
tandlossaccountr
ati
os,
bal
ance
sheetr
ati
osandprofi
tandl
ossaccountcum balancesheetr
atios.

643 Thef unctionalclassifi

cati
onofr atiosincl
ude(a)profi
tabil
i
tyrati
os(b)tur
nov eroracti
vi
ty
rati
os( c)fi
nanci alorsol vencyrati
os
A.aandbonl y
B.bandconl y
C.at ocal l
D.aandconl y
CThef unctional cl
assificati
onofr at
iosincludeprofi
tabi
l
ityrati
os,t
urnoveroractiv
ityrati
osand
fi
nancial orsolvencyr atios.
644Theshor t
-term solvencyr at
iosinclude:
A.currentr ati
o
B.quickr atio
C.acidt estrati
o
D.alltheabov e
DShor tt er
m sol vencyr ati
osincludecur r
entr at
ioandquickrati
o.Quickrat
ioisalsocalledaci
d
testratios.

645Ther et
urnoni nvestmentiscal culatedas:
A.netprofi
tbeforeinterestandtax/( tangi
blenetworth+longt ermliabi
lit
ies)
B.netprofi
taft
erinterestandt ax/( tangibl
enetworth+longt erml i
abil
it
ies)
C.netprofi
tbeforeinterestandtax/( tangi
blenetworth+outsidel i
abil
it
ies)
D.netprofi
tbeforeinterestandtax/( networth+longtermliabili
ti
es)
ATher etur
noni nvestmenti scalculatedasnetpr of
itbef
oreinterestandt ax/(tangi
blenet
worth+longterml i
abili
ties)
.

646Thenetpr of
itbef
oretaxofafi
rmis200.Theinter
estamountis20.Thet
angibl
enetwort
h
i
s300andl ongtermliabi
l
iti
esof400.Theret
urnoninvest
mentshallbe:
A.29.
5%
B.29.
5%
C.31.
4%
D.32.
8%
CTher at
ioiscal
culat
edasnetprofi
tbefor
einter
estandtax/(
tangibl
enetwort
h+longter
m
l
iabi
li
ti
es).(
200+20)/( 300+400)=220/700=31. 4%

647Theear ni
ngpersharecanbecal culatedwit
ht hehel
poffollowing?
A.netprofi
taft
ertaxandpref
erencedi v
idend/no.oft ot
alshares
B.netprofi
taft
ertaxandpref
erencedividend/no.ofequityshar es
C.netprofi
taft
ertax/no.oft
otalshares
D.netprofi
tbefor
etax/no.oftotalshares
BTher ati
ocanbecalculat
edasnetpr ofitaft
ertaxandprefer
encedi vi
dend/no.ofequi
ty
shares.

648Acompanyhas2lacshar
esandi t
snetprofi
taft
ert
axisRs.
10lac.Theearni
ngpershareis:
A.Rs.
20
B.Rs.
10
C.Rs.
5
D.Rs.
2
CCalcul
ati
onshal
lbemadeasnetprofi
taf
tertaxandpr
efer
encedi
vidend/no.ofequi
tyshares.
Hence10lac/2lac=Rs.
5pershar
e
649Acompanyhas2l acsharesincl
udi
ng40000prefer
encesharesanditsnetpr
ofi
taft
ertaxis
Rs.
10lacandpr ef
erencedi
videndisRs.
1lac.Theear
ningpershareis
A.Rs.
8.10
B.Rs.
7.05
C.Rs.
5.63
D.Rs.
4.98
CCalculat
ionshal
lbemadeasnetpr ofi
taft
ertaxandpref
erencedivi
dend/no.ofequi
tyshares.
Hence(10-1lac)/( 200000-40000)=900000/160000=Rs. 5.63

650Priceear ningrat
iocanbecalculatedas:
A.tot
al no.ofequityshare/earni
ngpershar e.
B.marketpr iceofequit
yshare/totalno.ofequit
yshares.
C.marketpr iceofequit
yshare/earningpershare.
D.Total no.ofshares/earni
ngpershar e.
CPERi scal culat
edasmar ketpri
ceofequityshare/earni
ngpershar
e.

651Acompanyhas2l acsharesandit
snetprofi
taft
ert
axisRs.
10lac.Thecurrentmar
ket
pri
ceoftheshareisRs.60.The
pri
ceearni
ngrati
ois:
A.12
B.11
C.10
D.9
AEarningpershare=10l ac/2lac=Rs.5pershar
e.ThePER=marketpriceofequit
yshar
e/
earni
ngpershare.Hence60/5=12.

652Thedebtequi t
yrat i
ocanbecal cul
atedas:
A.externalequi
ti
es/i nternalequit
ies
B.longterml i
abi
li
ties/networ t
h-intangibleassets
C.longterml i
abil
i
ties/t angi
blenetwor t
h
D.anyoft heabove
DDERat i
ocanbecal culat
edinanyoft heabovemanner .Exter
nal
equi
ti
esmeansl
ongt
erm
l
iabil
it
iesandinternalequiti
esmeanst het angi
blenetworth.

653Fixedchar gescov ercanbecal culatedas:

A.i
ncomeaf teri
nter estandt ax/i nterestchar ges
B.i
ncomebef oreint erestandt ax/i nter
estchar ges
C.i
ncomebef oreint erest/i nterestchar ges
D.incomebef oretax/i nterestchar ges
BFixedchar gescov ercanbecal culat edasi ncomebef orei
nter
estandtax/int
erestcharges.
654Di vi
dendy i
eldr atioi scal culat edas:
A.mar ketpri
cepershar e/di videndpershar e
B.divi
dendpershar e/mar ketpr icepershar e
C.Earningpershar e/mar ketpr icepershar e
D.Total di
vi
dend/mar ketpr icepershar e
BDi vi
dendy i
eldratiocanbecal culat edasdi vi
dendpershare/mar ketpri
cepershare.
655Inwhi choft hef ollowi ngcases, howt hecur r
entr
atiowil
lmove(whichoneiswr ong)
:
A.paymentofcr edi tors-decl ine
B.purchaseofmachi ner y-nochange
C.recoveryofdebt or s-nochange
D.i
ssueofnewshar
es-nochange
AIfcr
edi
tor
sarepai
d,t
hecurr
entl
iabi
l
iti
eswi
l
ldecl
i
ne.Thi
swi
l
lincr
easet
hecur
rentr
ati
o.

656Whi choft hef oll

owi ngst atementi snotcor r
ectr egardingbalancesheetequati
ons?
A.asset sar eequal tol iabil
ities
B.l
iabi l
it
iesar ecl aimsofowner sandout siders,ont hebusi ness
C.transact ionsar erecor dedi nthebooksofbusi nessf rom thepointofvi
ewofbusi ness
D.noneoft heabov e
DAl lthest at ement sgi venabov ear ecor r
ect.
657Whi choft hef oll
owi ngequat i
oni snotcor rect?
A.asset s=equi t
ies( totalclai ms)
B.asset s-l iabilit
ies=capi tal
C.asset s=capi tal +liabi l
i
ties
D.capi t
al =asset s+l iabi l
i
ties
DCapi t
al=asset s-liabi l
it
ies
658Whi choft hef oll
owi ngst atementr egardingbal ancesheeti scorr
ect?
A.amounti nv estedbyt heowner swhi chi sacl ai
m ont hefirm -capi
tal
B.amountt hatf i
rmsowest oout siders-l i
abili
ty
C.thev alueoft hingsownedbyt hef i
rm -asset s
D.alltheabov e
DAl ltheabov est atement sar ecor r
ect .
659Fi rm Xhasasset sofRs. 5lacandl iabil
it
iesofRs. 2lac.Theamountofcapi tal
wi l
lbe:
A.Rs.7l ac
B.Rs.3l ac
C.Rs.2l ac
D.inadequat ei nfor mat ion
BAsset s-liabi li
ties=capi t
al.Hence5- 2=3l ac.
660Fi ndoutt hei ncor rectst atementoutoft hef ollowi ng?
A.capi t
al wi l
l ber educedi ft hef i
rm bor rowsamountf rom outsider
s-fal
se
B.i
ft hef i
rm hasnol iabi l
ity,i
twi llhav enoasset s-t rue
C.asset smi nuscapi tal =l i
abi l
it
ies-t rue
D.noneoft heabov e
BIffirm hasnol iabil
ity,theasset swi l
lbeequal tocapi tal
.
661Whi choft hef oll
owi ngi sacor rectstatement ?
A.creditor sar et heper sonswhoowemoneyt othef irm
B.debt orsar et heper sonst owhom moneyi sowedbyt hefir
m
C.thedi fferencebet weenr ev enueandexpensei scal ledincome
D.noneoft heabov e
CCr editorsar et heper sons, towhom moneyi sowedbyt hef i
rm anddebtor
saretheper sons
whoowe
moneyt ot hef i
rm.

662Onwhi choft hef ol

lowingbasist
hepar tnersmaint
aincapi
talinapart
nershi
pfir
m( whi
ch
onei snotcor r
ect) :
A.fixedcapi t
almet hod
B.fl
uctuatingcapi tal method
C.Ifapart i
cularmet hodisstated,
aspert hatmethod
D.Ifnothingisst atedasperFi xedcapitalmethod
DIfnot hi
ngi sstat ed,capit
alismaint
ainedasperf l
uctuati
ngmet hod.
663Undert hefixedcapi talmethod,t
hef oll
owingtypesofaccountsaremaintai
ned(whi
chis
notcorrect):
A.capi tal accountoft hepar tner
B.cur rentaccountoft hepar tner
C.incapi tal account ,thepar tnercont ributest hecapi tal
D.int hecur rentaccount ,cont r
ibut edcapi tal,int erestoncapi t
al anddr awingset c.arerecorded.
DInt hecur r
entaccountadj ustment sr egar dingi nter estoncapi tal,interestondr awing,sharein
profitofl oss
accountar er ecor ded.
664Whati scor rectregar dingr ateofi nterestt obepai doncapi talorl oan:
A.inter estonl oanshal lbeequal tobankr at eofRBI
B.inter estonl oanshal lbeequal to6%p. a.
C.inter estoncapi talshal lbeequal tobankr at eofRBI
D.int erestoncapi talshal lbeequal to6%p. a.
BInt erestonl oanshal l beequal to6%.Oncapi tal itisasperagr eementbet weent hepartners.
665Underwhi chmethodofcal culationofgoodwi ll,thepr ofit
sear nedbyt hefir
m ar etakeninto
accountandt henor mal rateofr et urni nsuchbusi nessi snott akeni ntoaccount .
A.av er agepr of i
tmet hod
B.superpr of i
tmet hod
C.capi talizat i
onofpr of i
tmet hod
D.noneoft heabov e
AInav er agepr of i
tmet hod, theav eragepr of itsoft hef ir
m ar ethebasi sforcalculati
onof
goodwi ll.Inot hert womet hods, thenor mal rateofpr of i
tsoft hei ndust ryistakeni nt
oaccount .
677Whi choft hef ol
lowi ngf eat ur edoesnotexi stincaseofapar tner ship?
A.itisagr eementbet ween2ormor eper sons
B.theagr eementcanbei nwr i
ti
ngonl y
C.theagr eementi sforshar ingpr ofi
tsf r
om busi ness
D.thebusi nesscanbeconduct edbyoneormor epar tnersonbehal fofal lpart
ners
BTheagr eementcanbeor al agr eementori nwr it
ingi nt hef orm ofpar tnershi
pdeed.
678Whi choft hef ol
lowi ngst atementi scor r
ectr egar dingapar tner shipandacompany ?
A.apar tner shi pandacompanyar esepar at elegal ent i
ti
es
B.theno.ofpar tnersisl imitedwhi letheno.ofshar ehol derscanbeunl i
mi t
ed
C.thepar tner sar eli
ablet oanyext entwhi let heshar ehol derisliablet ot heextentofunpai d
valueoft heshar es
ownedbyhi m
D.thepar tner sandt heshar ehol der sar eagent sofeachot her.
CPar tner shi pi snotasepar atel egal ent it
y .Theno.ofshar eholdersi slimitedto50i ncaseofa
pri
v ate
company ,thought herei snocei li
ngi ncaseofapubl iccompany .Theshar eholdersar enot
agentofeachot heral thought hepar tnersar eagent s.

679Af i
rm createsgoodwill
inwhichofthefoll
owingsi
tuat
ions(a)changeinpr
ofi
tshar
ingr
ati
o
(b)admi ssi
onofanew
partner(c)reti
rement,expul
sionordeathofapartner(
d)saleofbusiness.
A.a, canddonl y
B.b, canddonl y
C.a, bandconl y
D.at odal l
DThegoodwi l
liscr
eatedinalltheabov
esituati
ons.

680Inwhichofthef
ollowi
ngmethodsofcr
eat
ionofgoodwi
ll
,thegoodwil
li
screatedtaki
ng
i
ntoaccountt
hediff
erencebet
weentheact
ualpr
ofi
tsandnor
mal expect
edprofi
tinthetr
ade.
A.av
erageprofi
tmethod
B.superprof
itmethod
C.capit
ali
zat
ionofpr of
it
smet hod
D.all
theabov e
BInthesuperpr of
itmethod,t
hegoodwil
li
scalculat
edonthebasi
sofsuperprof
it
scal
cul
ated
asthe
di
ffer
encebetweent heactualprof
it
sandnor
mal expect
edprof
iti
nthet
rade.

681Whenanewpar tnermakespay mentofgoodwi llprivately,t

otheexi st
ingpart
ners,the
j
our nalentrywoul dbe:
A.debi tcashaccountandcr edi tbankaccount
B.debi tbankaccountandcr edi tnewpar tneraccount
C.debi tnewpar tnerandcr edi texi stingpartnersaccount
D.noj ournal entrywi l
l ber equi red
DNoj ournal entryisrequi red, ifthepay menti smadepr i
vately.
709Asperpr ovi
sionsofSect ion2ofBanker sBookEv idenceAct ,
thebankerbookdoesnot
i
nclude, whi choft hef ollowing?
A.ledger s
B.daybookorcashbook
C.accountbookandanyot herbookusedi ntheor di
nar ybusi nessofabank
D.noneoft heabov e
DAl ltheabov ear ebookswi thint hemeani ngofBanker sBookEv i
denceAct .
710Sl ipsy stem ofpost ing,int hecont extofbanki ngt r
ansact i
onmeanswhi chofthefollowing?
A.whenpayi nslipisf irstent eredi nbookofor i
ginalent ry
B.whenpost ingofledger sisdoneont hebasisofpayi nsl i
psorwi t
hdrawalsli
pratherthan
fr
om bookofor iginal
entry
C.whenpost ingofl edger sisdoneaf terpositi
ngint heor iginalentry
D.anyoft heabov e
BSl i
psy stem ofpost ing, i
nt hecont extofbankingt ransact ionmeans, whenpost i
ngofl edgers
i
sdoneont hebasi sofpayi nsl i
psorwi t
hdrawal sli
pr athert hanfrom bookofor i
ginalentr
y.

711Banksgener al
lymai ntaint hef ol
lowingtypesofbooks( a)pri
ncipalbooksofaccount( b)
subsi
diar
ybooks( c)st atisti
cal records
A.aandbonl y
B.bandconl y
C.aandconl y
D.atocal l
DBanksgener allymai nt ainprincipal booksofaccount ,subsi diar
ybooksandst ati
sti
calrecords.
712Theliabil
i
tiesint hebankbal ancear erecordedin5di fferentschedulesinForm A.The
corr
ectorderoft heseschedul esi s:
A.capi
tal
,reserves, borrowi ng, deposi t
s,otherli
abil
it
iesandpr ovisi
ons
B.capi
tal
,reserves,deposi ts,bor rowing,otherli
abil
it
iesandpr ovisi
ons
C.capi
tal
,reserves, deposi ts,ot herli
abili
ti
esandpr ovisions, borr
owing
D.capi
tal
,reserves, otherl i
abiliti
esandpr ovi
sions,borrowing, deposit
s
BThecor r
ector derisSchedul e1- capit
al,2-r
eservesandsur plus,3-
deposits,
4-bor
rowing,
5-ot
herli
abil
it
iesandpr ovisions.

713Theasset sarerecordedin6dif
ferentschedul
es(6to11)i
nthebalancesheetofabank.
Thecorrectorderoftheseschedul
esis:
A.cash&bal anceswithRBI,bal
anceswi t
hotherbanks,
inv
estment
s,advances,f
ixedasset
s,
otherasset
s
B.cash&bal anceswi t
hRBI ,
bal anceswi thotherbanks, adv ances,investments,fixedasset s,
otherasset s
C.adv ances, cash&bal anceswi t
hRBI ,
bal anceswi t
hot herbanks, investments,fixedasset s,
otherasset s
D.cash&bal anceswi thRBI ,bal anceswi thotherbanks, f
ixedasset s,i
nv estments, advances,
otherasset s
AThecor rector deri sSchedul e6-cash&bal anceswi thRBI ,7-balanceswi thotherbanks,
8-i
nv est ment s, 9-adv ances, 10- fixedasset s,11-ot
herasset s.
714Schedul e12t oFor m A, thebal ancesheetofaBanki ngCompany , asperBanki ng
Regul at i
onAct ,relatest owhi chof
thef ollowi ng:
A.inv est ment smadebyt hebank
B.tot al i
ncome
C.ot herl iabiliti
esandpr ov isions
D.noneoft heabov e
DI trelat est ocont ingentl iabilities.
715Thecapi tal i
nSchedul e1, i
nt hebal ancesheetofabanki sshowni nthefoll
owi ngorder:
A.pai dupcapi tal,issuedcapi tal,subscr ibedcapi t
al,call
edupcapi tal
B.pai dupcapi tal,subscr ibedcapi tal,i
ssuedcapi t
al,call
edupcapi tal
C.pai dupcapi tal,subscr ibedcapi tal,calledupcapi t
al,issuedcapi tal
,
D.pai dupcapi tal,issuedcapi tal,subscr ibedcapi t
al,call
edupcapi tall
esscal l
sunpai dplus
forfeitedshar es
DThecapi tal isshownaspai dupcapi t
al, i
ssuedcapi t
al,subscribedcapi tal
,cal
ledupcapi tal
l
esscal l
sunpai dpl usf orfeitedshar es.Theno.ofshar esandamountofeachi sal sogiven.
716I nSchedul e11ofBankBal ance, whi choft hefoll
owi ngi snotincl
uded?
A.inter -officeadj ustment s
B.inter estaccr ued
C.t axpai dinadv anceorTDS
D.noneoft heabov e
DAl l
theabov ear ei ncludedi naddi tiontost ati
oneryandst ampsi nhand, non-
banki ngasset s
andot her si nSchedul e11( Ot herasset s).

717Whi chofthef ol
lowi
ngwillnotbetakeni
nSchedule12(Conti
ngentLi
abil
it
ies)i
nthe
bal
ancesheetofabank?
A.claimsagai nstthebankacknowledgedasdebts
B.li
abi l
it
yforpartypaidinv
estment
C.guar anteesgivenonbehalfofcustomers
D.noneoft heabov e
DAll theabov earetaken,i
nadditi
ontotheli
abi
l
ityonaccountofout
standi
ngforwardexchange
contracts,acceptancesandendorsementsandotherobl
igat
ions,
andotheri
tems.

718Thebal anceofpr ofi

t,will
beshowni nthebal
ancesheetofabank,aspartofwhi
choft
he
fol
lowingreserv
es?
A.statut
oryorcapitalreserves
B.sharepremium reserve
C.revenueorotherreser ve
D.noneoft heabove
DItwillbeshownasbal anceofprofi
tunderReservesandSurplusi
nSchedul
e2.
719Deposi t
sinSchedul e3ofBankbal ancesheetareclassi
fi
edas:
A.demanddeposi t
sandt i
medeposit
s
B.demanddeposi t
s, savingbankdepositsandter
m deposits
C.demanddeposits,term deposi
tsandotherdeposi
ts
D.cur
rentdeposi
t,savingdeposit
s,ter
m deposit
sandotherdeposi
ts
BThedepositsar
ecl assif
iedasdemanddeposi t
s,savi
ngbankdeposit
sandt
erm deposi
ts.

720Theot herli
abil
it
iesinthebal ancesheetofabanki nSchedule5ar eclassif
iedas(a)bi
ll
s
payable(b)interoffi
ceadjust ment( c)i
nterestaccrued( d)ot
hersincl
udingpr ovisi
ons
A.atoconl y
B.a,canddonl y
C.atodal l
D.btodal l
CAlltheabov earetakenintoaccount .
721Ifabankhast omakepr ovi
sionf orbaddebt s,i
tcandoso:
A.bydebi ttobaddebtaccounti nt hebalancesheet
B.bydebitt obaddebtpr ovisionint heprofi
tandl ossaccount
C.bydebi ttoprovisi
onsandcont ingenciesinthepr of
itandlossaccount
D.anyoft heabov e
CThepr ov i
sionsonbaddebtar ecr eat
edbyt hebankbydebi ttopr ov
isionsandcont i
ngenci
es
i
nthepr ofitandlossaccount .

722I fthereisanyunear neddi scountt akenbyt hebankt opr ofi

tandlossaccountasincomein
afinancialyear ,
itwil
lbe
rev
er sedbypassi ngthefoll
owi ngj ournalentr
y?
A.debi tdi
scountaccount ,creditr ebateonbi l
l
sdi scountedaccount
B.debi ti
nterestaccount,creditr ebateonbi l
l
sdi scountedaccount
C.debi tbi
llsdiscountedaccount ,creditdi
scountaccount
D.noent r
yisr equir
edtobepassed.
ADi scountaccountshal lbedebi tedandr ebateonbi l
lsdiscountedaccountshal
lbecredit
ed.
723Rebat eonbi ll
sdiscountedaccountshal lappear :
A.asanexpendi t
ureinthepr ofitandl ossaccount
B.asi ncomei nt heprofi
tandl ossaccount
C.asal i
abili
tyinthebalancesheet
D.asanasseti nthebalancesheet
CRebat eonbi ll
sdiscountedaccountshal lappearasal i
abil
ityi
nthebalancesheet.

724InFor m B,prof
itandl ossaccountofabanki ngcompanies,t
hereare4schedules(13to16)
whichappearint hefoll
owi ngorder:
A.int
erestearned,int
erestexpended, otheri
ncomes,operati
ngexpenses
B.int
erestearned,i
nterestexpended, operati
ngexpenses,ot
heri
ncomes,
C.int
erestearned,otherincomes, i
nterestexpended,
operati
ngexpenses
D.int
erestearned,otherincomes, i
nterestexpended,oper
ati
ngexpenses,netprof
it
CTheor deris13-interestearned,14-otherincomes,15-i
nter
estexpended,16-operat
ing
expenses.

725Oper ati
ngexpenses( Schedul e16)ofabankbalancesheetdoesnoti
nclude,whi
chofthe
fol
l
owi ng?
A.payment stoandpr ovi
sionsf oremployees
B.rents,t
axes,l
i
ght i
ng,pri
ntingandst at
ioner
y
C.repair
sanddepr eciat
ion
D.noneoft heabove
DAl lt
heabov ei
temsar ecov eredunderoperati
ngexpensesinaddit
iont
of ewotheri
tems.
726Endor sementsandaccept ancesar etheli
abi
li
ti
esassumedbyt hebanksonbehalfoft
hei
r
cust
omer sinthefol
lowingmanner(
a)byopeni ngLCs( b)byaccepti
ngbi
ll
sonbehalfoft
he
cust
omer s(c)bymakingendorsementsonpromi ssor
ynot esprepar
edbythecust
omers(d)by
i
ssui
ngbankguar anteestomakepayment s,
ifcustomer sf
ailt
opay .
A.atodal l
B.aanddonl y
C.a,banddonl y
D.b,canddonl y
AAlltheaboveareincludedi
ntheendorsementsandaccept ances.

727Schedul e17t ot hebal ancesheetofabankr el

atest
owhichofthefoll
owing:
A.contingentli
abilit
ies
B.di
scl osureasnot est oaccount s
C.detailsofunrealisedincome
D.detailsofprovi
si onsmade
BSchedul e17t othebal ancesheetofabankr elatestodi
scl
osureasnotestoaccount s.
728Theconv ersi
onofr eservesintosharecapi
tal i
sdonethr
oughwhichoft hefol
lowing:
A.bonusshar es
B.ri
ghtsshar es
C.preferenceshar esissue
D.equityshareissue
AThebonusshar esar eissuedbydebi t
ingthereservesandcredi
ti
ngthecapital
.Iti
sal socal
l
ed
capi
talizati
onofreser ves.

729Thepr efer
enceshar esofacompanyhaspr eferenti
alri
ghtsinr
espectof(whichofthe
fol
lowingisnotcorrect
):
A.pay mentofdivi
dendataf ixedrate
B.returnofcapit
alonwi ndi
ngupofacompany
C.ifdivi
dendisskippedinoney earitbecomespay ableinnextyear
D.noneoft heabov e
CTheshar eholdershavepreferenceinpaymentofdi vi
dendataf i
xedrate.I
fdivi
dendisnot
declared,
theycannotclaimthedi vi
dendunlessthesharesarecumul at
ivepref
erenceshares.

730Whi choft hef ollowingshar esf alli

nt hecat egoryofpr eferenceshar es:
A.cumul ati
v epr eferenceshar es
B.redeemabl epr eferenceshar es
C.par ti
cipatingpr eferenceshar es
D.alltheabov e
DAl ltheabov et ypeofshar esf al lt
hecat egoryofpr ef erenceshar es.
688I fonadmi ssionofanewpar tner ,
onr evaluation, thev al
ueofexi st
ingasset sdeclines(a)i
t
i
sapr ofi
t( b)itisal oss( c)itgoest oaccountofexi stingpar tners(d)itgoest oaccountofal l
partnersi ncludingt hei ncomi ngpar tner:
A.aanddcor rect
B.bandccor rect
C.candacor rect
D.at odal lcorrect
BIfonadmi ssionofanewpar t
ner ,thev alueofexi stingasset sonr evaluati
on,decreasesitisa
l
ossandi tgoest oaccountofexi st
ingpar tnersandnott hei
ncomi ngpar tner
.
689Thei ncr easeordecr easei nv alueofasset sonr ev al
uati
on, whenanewpar t
nerent er
s,is
adj
ust edt ot heaccountofexi stingpar tner sthroughanaccountcal l
ed( a)profi
tandl oss
adj
ust mentaccount( b)revaluationaccount( c)r evaluat i
onadj ustmentaccount :
A.aandb
B.aonl y
C.bandconl y
D.bonl y
ATheadj ust menti smadet hroughpr of i
tandl ossadj ust mentaccountorr ev aluati
onaccount .
690Whi choft hef ollowi ngj our nalent ryisnotcor rectonr evaluat ionofasset sandl iabili
ti
es?
A.f orincr easei nv alueofasset s-debi tassetaccount ,cr editrev al uationaccount
B.f orincr easei namountofl iabili
ty-debi tr evaluationaccount ,cr editliabil
ityaccount
C.f orpr of i
tonr ev aluat i
on-debi trevaluat ionaccount ,cr editcapi talaccountofal lpar tners
D.noneoft heabov e
CI ft her ei spr of itonr ev aluation, debitt her ev al
uat ionaccountandcr editcapi talaccountofol d
part ners
(andnotal l partner s).
Page135of165
6
ed.
695Whenapr omi nentper sonsl endshi snamet oaf irm sot hatt hef irm enj oy shisgoodwi l
l,
suchper soni scal l
ed:
A.sl eepi ngpar tner
B.nomi nal par tner
C.r egul arpar t
ner
D.anout sider ,notapar tner
BHei scal l
edanomi nal par tnerorquasi par t
ner .
Page136of165
696I faper sonhasmadei nvest menti napar t
nershi p( wi t
houti nv olvinghi msel findayt oday
wor k)whi let heot her
part nersagr eet owor k,hei sknownas:
A.sl eepi ngpar tner
B.nomi nal par tner
C.quasi par tner
D.anout sider ,notapar tner
AHei scal ledsl eepi ngpar tner .Nomi nal orquasi par tneri st heper son, whosi mpl ylendshi s
nameandi snota
part ner.
697Whati st hel iabilityofasl eepingpar t
neroraquasi par t
ner s?
A.t heyar eequal lyliabl eamongt hemsel ves
B.theyar ef ull
yl iabl et oout siders, j
ointlyaswel lassev erall
y
C.sl eepi ngpar tneri sequal lyl i
ablet oout si dersbutquasi par t
neri snotl iablet oout siders
D.quasi par tneri sequal lyliablet oout sider sbutsl eepi ngpar t
neri snotl iablet oout siders
Bquasi par tneri sequal lyliabl etoout sider sbutsl eepi ngpar tneri snotl i
ablet oout sider s
698Whi choft hef ollowi ngst atementdoesnotmat ch?
A.par tner shi pi sasepar atel egal entity-f alse
B.ifpar tner shi pdeeddoesnotment iont hemet hodofmai ntaini ngcapi talaccount s,thef i
xed
capi tal met hod
shal lbef ollowed-f alse
C.t hereshoul dbemaxi mum 10par tner sf orbanki ngbusi nessasperpr ovisionsofI ndi an
Par tner shi pAct-Tr ue
D.Ifaf irmi sf ol lowi ngf i
xedcapi talmet hodandsal aryi spai dt oapar t
ner ,itwillbecr editedto
hiscur rent
account-Tr ue
CThepr ov isionsar ei nCompani esActSect ion11andnoti nI ndi anPar tnershi pAct .
699Whi choft hef ollowi ngst atementi scor rect?
A.Ifapar t
nershi
pfi
rmi ssilentoncer t
ainissues,t
herel
ev antpr
ov i
sionsofIndi
anPart
nershi
p
Actwi l
lprevai
l
B.drawingsmadebypar tnersareenteredintoprofi
tandlossappr opri
ati
onaccount
C.allexist
ingfi
rmsmusthav egoodwill
account
D.theshar ewhichanewpar tnerget
s, i
scalledhi
ssacrif
icerati
o
ADr awingsarenotenteredi ntoprof
itandlossaccount.Itisnotcompul sor
ytohavegoodwil
l
account.Thesharewhichanewpar tnersgets,i
scall
edshar eofincomingpar t
ner
,whi
chisa
sacri
ficeofoldpart
ners.

700Thefi
nalaccount
sofbanki
ngcompani
esaret
obeprepar
edasperprovi
sionsof
:
A.CompaniesAct
B.Banki
ngRegulat
ionAct
C.RBIAct
D.All
theabove
BThef i
nal
accountsofbanki
ngcompani
esar
etobepr
eparedasperpr
ovi
sionsofBanki
ng
Regul
ati
onAct.

701WefMar31, 1992,thebalancesheetofabankingcompanyi
stobepreparedasper
:
A.Form AofCompaniesAct
B.Form BofCompaniesAct
C.Form Aof3rdscheduletoBankingRegulat
ionAct
D.Form Bof3rdscheduletoBankingRegulat
ionAct
CBalancesheetofabankingcompanyi stobepreparedasperr
evi
sedForm Aof3rdSchedul
e
ofBanki
ngRegulati
onAct ,
asperRBIdi r
ecti
ons.

702WefMar31, 1992,thepr
ofi
tandlossaccountofabanki
ngcompanyi
stobepreparedas
per:
A.Form AofCompaniesAct
B.Form BofCompaniesAct
C.Form AofBankingRegul
ati
onAct
D.Form BofBankingRegul
ati
onAct
DProf i
tandl
ossaccountofabankingcompanyistobeprepar
edasperr
evi
sedForm Bof
BankingRegul
ati
onAct,asperRBIdir
ecti
ons.

703Bankspr epar
eaudi tedbalancesheetandpr
ofitandlossaccountasonMar31stev
eryyear,
asper :
A.directi
onsofGov t
.ofIndia
B.regulationsofReser v
eBankofI ndi
a
C.prov i
sionsofRBIAct
D.alltheabov e
ABankspr epareauditedbalancesheetandprof
itandlossaccountasonMar31stever
yyear,
asper
di
rectionsofGov t.ofIndia

704Account sofbanksshoul
dbeauditedbyapersondulyqual
ifi
edunderanylaw,t
obe
audi
torsofthecompany ,
asperprovi
sionsof__
__andwithapproval
of____:
A.BankingRegulat
ionActSecti
on29,RBI
B.BankingRegulat
ionActSecti
on30,RBI
C.BankingRegulat
ionActSecti
on30,Centr
alGovt
.
D.BankingRegulat
ionActSecti
on29,Centr
alGovt
.
BAccount sofbanksshouldbeaudi
tedbyapersondulyqual
ifi
edunderanylaw,tobeaudi
tor
s
oft
he
company
,asperpr
ovi
sionsofBanki
ngRegul
ati
onActSect
ion30andwi
thappr
oval
ofRBI
.

705Whichoft hefoll
owingprovi
sioniscorr
ectregardi
ngfi
nalaccount
sofabanki
ngcompany
?
A.3copiesofthefinalaccount
sar etobesubmittedbybankstoRBI
B.per
iodofsubmi ssionofcopi
esoff i
nalaccountstoRBIi
s3mont hs
C.RBIcanextendt heperi
odby3mont hs
D.al
ltheabove
DAllt
heabov estatementsarecorrect.

706UnderRul e15ofBanki ng(Regulati

ng( Company )Rules1949banksar etopubli
shtheirf
inal
accountsandaudi torreportinanewspaperwi thin___mont hsfrom t
heperi
odtowhi cht
hese
rel
ate?
A.onemont h
B.3mont hs
C.6mont hs
D.9mont hs
CTheser eport
sar etobepubl i
shedwit hi
n6mont hsfrom theperiodtowhi
chtheserelat
e.
707Whi chofthef ollowi
ngi snotadebi tvoucherforabankbr anch?
A.chequeissuedbyt hecustomerf orpay mentfrom hisaccount
B.chequedeposi tedbyt hecustomerf orcredi
ttohisaccount
C.demanddr aftissuedbyonebr anchf orpaymentatanot herbranch
D.noneoft heabov e
BChequedeposi t
edbyt hecust omerforcr edi
ttohisaccounti fdrawnonanotherbank,i
snota
debitv
oucherf orthecollecti
ngbankbr anch.

708Whi chofthefoll
owingcanbet r
eatedasacr editvoucherforabankbr
anch?
A.applicati
onforissueofademanddr af
t
B.payinsl i
pusedbyt hecustomerfordepositofchequei nhisaccount
C.creditvoucherspreparedbythebranchonitsprintedstat
ionery
.
D.al
l t
heabov e
DAll t
hesef or
ms/aut hori
tyl
ett
ersarecredi
tvoucher s.

731Wher ethepr eferenceshar eholder

scant akepar
tinthemanagementofacompany,such
sharesarecal l
ed:
A.cumulat i
vepr eferenceshar es
B.redeemabl epr eferenceshar es
C.parti
cipatingpr eferenceshar es
D.managementpr eferenceshar es
CSuchshar esar ecal l
edpar t
icipati
ngpref
erenceshares,wher
etheshar
ehol
der
sgettheright
tovotei.
e.tot akepar tinmanagementoft hecompany .

732Whi chofthefoll
owingiscor r
ectregardi
ngtheauthor
isedcapit
alofacompany:
A.iti
sment i
onedinMemor andum ofAssoci ati
onofacompany
B.iti
sdivi
dedintoequit
yandpr eferencesharesandisthemaximum amountupt owhi
cht
he
companycanr ai
se
capit
al.
C.iti
scall
ednomi nalorregisteredcapital
D.allt
heabovear ecorr
ectst atement s
DAl l
thestat
ement sat(a),(
b)and( c)arecorr
ect.Hencenoexplanati
oni
srequi
red.
733Againstsubscri
ption,
theamountofcapi
talwhi
chi
sact
uall
yaskedforpay
mentby
shar
eholdersi
scalled:
A.authori
sedcapit
al
B.paidupcapit
al
C.subscri
bedcapit
al
D.call
edupcapital
DItiscall
edupcapi t
alandtheamountwhichispai
dbyt
hesharehol
der
siscal
ledpai
dup
capi
tal.

734Whati smeantbyt erm CALLi nthecont extofi

ssueofsharesbyacompany:
A.amountof feredforsubscr i
pti
on
B.amountcal l
edwi thapplicati
on
C.amountwhi chisdemandedaf terall
otment
D.amountwhi chbecomesduebef oreall
otment
CCal lmeanst heamountwhi chbecomesduef r
om shar
ehol
dersandcall
edaft
erall
otment
.
735Whenapubl ici
ssueismadebyt hecompanyandmoneyi srecei
vedal
ongwit
happli
cat
ion
(whichoft hef ol
lowingisnotcor rect
):
A.itiskeptinat emporaryaccount
B.itcanbeusedbef or
eal l
otmentofshar es
C.itiscreditedtoshareappl icat
ionmoneyaccount
D.itisdebitedt obankaccount
BThemoneycannotbeusedbef oreall
otmentandbef or
esubmi ssi
onofcer
ti
fi
cateof
commencementofbusi ness.

736Wher eal
lappli
cationsar eaccept edforall
otmentonapr o-
rat
abasisdueto
oversubscri
pti
on,thef ol
lowingjournal entr
yismadef orrefundoradj
ustmentagainstfut
ure
duesonshar es:
A.debitbankaccount ,credi
tshar ecapi t
alaccount
B.debitshareappli
cat i
onaccount ,creditsharecapi
talaccountandbankaccount
C.debitshareapplicati
onaccount ,cr edi
tsharecapi
talaccount
D.debitsharecapitalaccount,creditbankaccount
BSincet heexcessamounti stober efundedandsharesaret obeall
ott
ed,theshareappl
icat
ion
moneyi sdebit
edandshar ecapitalaccounti scredi
tedfortheaccept
edshar esandbank
accountiscredit
edf ortherefundedamount .

737Theamountofacal l cannotexceedwhi choft hefoll

owing:
A.10%oft hef acev alueoft heshar e
B.20%oft hef acev alueoft heshar e
C.25%oft hef acev alueoft heshar e
D.30%oft hef acev alueoft heshar e
CTheamountofasi nglecal lcannotexceed25%oft hefacev al
ueoftheshare.
738Acompanycal led1stcal l amountf rom t heshar eholdersfor10000sharesatRs.3per
share,butitdi
dr eceivetheamountf or9500shar es.Whatj ournalent
rywil
lbepassed:
A.debit1stcallaccount ,cr editsharecapi tal account-Rs. 30000
B.debitbankaccount ,cr
edi tshar ecapi t
al account-Rs. 28500
C.debitbankaccount ,credi t1stcallaccount-Rs. 28500
D.debit1stcallaccount ,cr editsharecapi tal account-Rs. 28500
CWhent hemoneyi snotr ecei vedforalltheshar es, onlythatamountiscredit
edto1stcal
l
accountwhi chisact uall
yr ecei vedinsteadoff ullamountal thoughthe1stcall
accountwas
debitedforthefullamount .Thust hereissomeout standi
ngamounti nthe1stcall
account.
739Ifthereisanyamounti ndefaultthatsharehol dershavenotpaideitheronallot
mentoron
1stcal
l,theamounti srequiredtobet ransfer
redt oasepar ateaccount.Whatjournalentr
ywill
bepassedf orthi
spur pose.
A.Debitamounti ndefaultaccount,creditshareallotmentaccount
B.debitamountindef aultaccount,credi
t1stcal lall
otmentaccount
C.debitcall
sinarrearaccount,creditshareallotmentand1stcal laccount
D.debitshareall
otmentand1stcal laccount,creditcall
sinarrearaccount.
CWher eacompanydeci destotransfertheamounti narrear
sinasepar ateaccount,t
hejournal
entr
yisdebi tcal
l
si narrearaccountandcr editshar eall
otmentand1stcal laccount
.Itisnota
l
egalrequirementtotransfertheamounti ncallsinarrears.

740Whi choft hef ol l

owi ngst atement si snotcor rectr egardingcal lsinadv ance:
A.amountcanbecal l
ed, iftheAr ticlesofAssoci ationper mi t
.
B.whenamounti sr ecei v edi tiscr edi tedt ocal l
si nadv anceaccount
C.interestcanbepai doncal lsi nadv ance
D.interestcanbeequal t
opr ev ai l
ingbankr ate
DThei nter estcanbemaxi mum 6%perannum.
741Thepr emi um col lect edbyacompanyonshar es, cannotbeusedf orwhi choft hefollowi
ng
purposes:
A.buybackofshar esorpay mentofpr emi um onr edempt i
onofpr eferenceshar esordebent ure
B.issueoff ullypai dbonusshar es
C.wr i
t i
ngof fthepr el i
mi nar yexpensesordi scountoni ssueofshar esordebent ures
D.noneoft heabov e
DTheamountofpr emi um col l
ect edbyt hecompanycanbeusedbyanyoft hepur poses
ment ionedat( a),(b)or( c) .
742Whent heshar esar ei ssuedatadi scount ,themaxi mum di scountcanbe:
A.5%oft hef acev al ueoft heshar e
B.5%oft hemar ketv alueoft heshar e
C.10%oft hef acev alueoft heshar e
D.20%oft hef acev alueoft heshar e
CShar escanbei ssuedatadi scountont hebasi sofr esoluti
onpassedbyt heshar eholdersi
na
gener albodymeet i
ng.I tcannotbemor et han10%oft hef acev alueoft heshar e.
743Wheni ssuei satadi scount , whi choft hef oll
owi ngi snotacor r
ectstatement :
A.discountoni ssueofshar esaccounti sdebi ted
B.discountamounti sadj ust edi ntobooksatt het imeofpassi ngj ournalent r
ywhenal l
otment
moneybecomes
due.
C.discountamounti sr ecor dedont heassetsi deundert heheaddi scountofshar es.
D.amountofdi scounti swr i
ttenof fov eraper iodoft ime
CThedi scountamounti sr ecor dedont heasset ssi deundert heheadMI SC.EXPENSES.
744Whent hepar tlypai dshar esar ef or f
eited,whi chamounti sf orfeit
ed:
A.facev alueoft heshar e
B.paidupv alueoft heshar e
C.facev aluel esspai dupv alue
D.anyoft heabov e, whi chev eri shi gher
AThef acev alueoft heshar ei sf or feited.
745I fshar esar ef or feited, whatj our nal ent ryi
spassed:
A.debi tshar ef or feitur eaccount ,cr edi tshar ecapit al account
B.debi tshar ef or feitureaccountandcal lsinar rearaccount ,creditshar ecapi t
al account
C.debi tshar ecapi t
al account , credi tcal lsinar rearaccountandf orfei
tedshar esaccount
D.debi tshar ecapi t
al account , credi tbankaccountandf orfeit
edshar esaccount
CWhenshar esar eforfeited, thef acev al
uei sforfei
ted.Hencet heshar ecapi tal accounti s
debitedandcal l
sinar rearaccountandf or fei
tedshar esaccounti scr editedf ortheamount
alr
eadyr ecei
vedagai nstt heshar est obef orfei
ted.
7461000shar es,withaf acev alueofRs. 10each, againstwhichRs. 6hav eal readybeen
recei
v ed, ar
eissuedatRs. 8pershar e.Whatamountwi llbecredi t
edt oCapi t
al reserveaccount :
A.Rs. 8pershar ei.e.Rs. 8000
B.Rs. 6pershar ei.e.Rs.6000
C.Rs. 4pershar ei.e.Rs. 4000
D.Rs. 2pershar ei.e.Rs. 2000
CTot al amountr eceivedpershar ei sRs.14( Rs.6+Rs. 8)againstt hef acev alueofRs. 10.Hence
Rs.4pershar ewillbecr edi tedt ot heCapi t alreserveaccount .
747Ifacompanyi st or e-issue200f orf
eitedshar eswi thfacev alueofRs. 10eachatadi scount
ofRs. 2,forwhichal l
otmentmoneyofRs. 4hasnotbeenr ecei
v ed, whatamountwi l
lbecr edit
ed
toforfeitedsharesaccount :
A.Rs. 200
B.Rs. 800
C.Rs. 1200
D.Rs. 1600
CThecompanyhasr ecei vedRs. 6pershar e( becauseallotmentmoneyofRs. 4i spendi ngfor
paymentagai nstthef acev alueofRs. 10).HenceRs. 1200( 200x6)wi ll
becr editedtot he
forf
eitedshar esaccount .
748Whati smeantbyt het ermt hatt hecompanyhasaper petual successi on?
A.thecompanyi sasepar atelegal entit
y
B.thedeat horinsolvencyoft heshar eholder sdoesnotaf fectexist enceoft hecompany
C.thedeat hofthedi r
ect or saf fectt heexi stenceoft hecompany
D.alltheabov e
BThecompanyhasaper pet ual successi onwhi chmeanst hatt hedeat hori nsol vencyoft he
sharehol dersdoesnotaf fectexi stenceoft hecompany .

749Thel iabil
it
yofmemberofacompany:
A.li
mi tedt otheshar ehol dingofthecompany
B.li
mi tedt othepai dupv alueoft
heshar e
C.li
mi tedt otheunpai damountoft hefacev al
ueofshar esheldbythemember
D.unlimi ted
CThel i
abi l
it
yofmemberofacompanyi tli
mi t
edtotheunpai damountoft hefaceval
ueof
shareshel dbyt hemember .
750Basedont hei ncor porati
on,t
hecompani escanbecl assifi
edasunder( whi
choneisnot
correct):
A.char teredcompany
B.statut or ycompany
C.regist eredcompany
D.holdi ngcompany
DAcompanyi sclassi fi
edassubsi di
aryorholdingcompanyont hebasi
sofowner shi
p.
751Whi choft hefol l
owi ngclassi
fi
cati
oniswr ongont hebasi sofownershi
p?
A.pr i
vat ecompany ,
B.publ i
ccompany ,
C.gov t.company
D.foreigncompany
DThecl assi fi
cati
onf oreigncompanyi sbasedont heincorporati
onandnotont hebasi
sof
owner shi p.
752Thecompanyt hatiscr eat
edbyaspeci alActofthePar l
iamentiscall
ed:
A.char teredcompany
B.statut orycompany
C.registeredcompany
D.holdingcompany
BSt atutorycompanieslikeStat
eBankofI ndiaarecreatedbyaspecialStatute(Act)passedby
thePar li
ament .
753Compani esl
ikeReli
anceIndustri
esLtd,TATAConsul t
ancyServi
cesLimited,WIPROLt dar
e
exampl esof :
A.char teredcompany
B.statut orycompany
C.registeredcompany
D.holdingcompany
CRegi steredcompani esmeanst hecompani esincor
por at
edunderCompani esAct1956.
754Acompanyhav i
ngapl aceofbusinessinIndiabutnothavingit
sincorporati
oninIndiai
s
call
ed:
A.privatecompany ,
B.publ i
ccompany ,
C.gov t.company
D.foreigncompany
DFor eigncompanyi sacompany ,havi
ngplaceofbusi nessinIndi
abutincorporatedoutsi
de
Indi
a.

755Acompanyi sagov t.companywhere:

A.atleast51%ofitstotalnetwort
hiswiththegov
t.
B.maj orporti
onofi
tsshar esi
sheldbygovt.
C.govt .i
smanagingthatcompany
D.noneoft heabove
DAcompanyi sagovt.companyifatl
east51%ofitspai
dupcapi
tal
ishel
dbyGov
t.(
Cent
ral
or
Stat
e,any ).

756I fmember sofacompanyunder taketopayupt oacer tainf i

xedamount ,i
ncaseof
l
iquidationofacompany ,whi chisnor el
ati
onshipwi t
htheno.ofshar esheldbyt hem, such
companyi scal l
ed:
A.companyl imitedbyshar es
B.companyl imitedbyguar ant ee
C.companywi thunli
mitedl iabil
i
ty
D.noneoft heabov e
BIfmember sofacompanyunder taketopayacer tainamount , i
ncaseofl i
quidati
onofa
company ,
whi chis
notrest r
ictedt ono.ofshar esheldbyt hem, suchcompanyi scal l
edcompanyl imitedbyshares.
757Acompanyi sapr i
vatecompanywher eitsAr t
iclesrestri
ct( a)no.ofmember st o50( b)
Rightoft ransf erofshares( c)invit
ationtopublictosubscr ibef ortheshares(d)obt ai
n
certi
ficateofi ncorporation:
A.at odal l
B.at oconl y
C.aandbonl y
D.bandconl y
BAcompanyi saprivatecompanywher eitsArticl
esr estr
ict(a)no.ofmember st o50( b)Ri
ght
oftransf erof shar es( c)inv i
tat
iont opubl
ictosubscr i
bef ortheshar es.

758Acompanyt
hathol
dsmaj
ori
tyshar
esofanot
hercompanyi
.e.notl
esst
han_
__%,
iti
s
cal
led____
:
A.26%,holdi
ngcompany
B.49%,subsi
diarycompany
C.51%,holdi
ngcompany
D.74%,subsidi
arycompany
CAcompanyt hatholdsmaj ori
tyshar
esofanot
hercompanyi .
e.notl
essthan51%,i
tiscal
l
ed
holdi
ng
company.
759Ifmajori
tysharesi.e._
__ofacompanyar eheldbyanothercompany,suchcompanywhose
sharear
eheldi scal
led:
A.26%,holdi
ngcompany
B.49%,holdi
ngcompany
C.51%,subsidi
arycompany
D.74%,subsidi
arycompany
CIfmajori
tysharesi.e.51%ofacompanyar eheldbyanothercompany,suchcompanywhose
sharear
eheld,iscall
edsubsi di
arycompany.

760Amountdueonshar escanbecalledupi
nt hefol
lowingmanner(a)inonelot(b)cert
ain
amountwi t
happli
cation( b)
cert
ainamountonal l
ot ment(d)bal
anceamountoncal ls
A.aonly
B.b,canddonl y
C.atodal l
D.aanddonl y
CAmountdueonshar escanbecalledupinthefol
lowingmanner(a)inonelot(b)cert
ain
amountwi t
h
appli
cati
on(b)cert
ainamountonal lotment(
d)balanceamountoncal l
s,dependinguponthe
ter
ms
mentionedintheprospect us.

761Acompanyhasi ssuedsharesatRs.20wi t
hf acevalueofRs.20.Thesharesareissued:
A.atpar
B.atpr emi um
C.atdi scount
D.anyoft heabov e
AWhenamountofi ssueisequaltofacevalue,i
tiscall
edi ssuedatpar.
762Equi tysharesissuedbyacompanyt oitsdirector
sorempl oy
eesatadiscountfora
consi derati
onot herthancashar e
called:
A.gol denshar es
B.sweatequi tyshares
C.empl oyeesstockopt ionshares
D.anyoft heabov e
BSweatequi t
yshar esmeanst heequitysharesissuedbyacompanyt oitsdi
rect
or sor
empl oy eesata
discountf oraconsi derati
onotherthancash,forprovi
dingknowhowormaki ngav ail
abl
e
i
nt ell
ectual
proper tyri
ghtset c.

763I
facompanypermit
sitsempl
oyeestoappl
ysharesatapredet
ermi
nedpr
ice(
nor
mal
l
ya
l
owerthanmar
ketpr
ice)
,duri
ngaspeci
fi
edperi
od,t
hesearecall
ed:
A.gol
denshar es
B.sweatequityshares
C.employeesstockoptionshares
D.anyoftheabov e
CIfacompanyper mit
sitsemployeest
oapplyshar
esatapr
edet
ermi
nedpr
ice,
dur
inga
speci
fi
edperiod,thesearecal
ledsweatequi
tyshar
es.

764Ifacompanyf or
feit
sasharewithaf
acevalueofRs.10,f
orwhichRs.5hav
eal readybeen
recei
vedandthenre-i
ssuestheshar
eatadi
scountofRs.1,howmuchamountwi l
lbecr edi
ted
tocapit
alr
eserveaccount?
A.Rs.5
B.Rs.4
C.Rs.1
D.Rs.9
BAmountr ecei
vedRs.5+9=14.Amountusedforcredi
ttosharecapi
tal
=10,balanceamount=
4

765Whati sthemaxi mum ext entuptowhi chacompanycani ssueequi

tyshareswithoutvoti
ng
ri
ghts?
A.25%ofi t
spai dupcapi tal
B.20%ofi t
spaidupcapi tal
C.25%ofi t
saut hori
sedcapi tal
D.20%ofi t
saut hori
sedcapi tal
AAcompanycani ssuemaxi mum 25%ofi tspaidupcapi tal,
asequi t
yshareswithoutvoti
ng
ri
ghts.
766Whi chofthef ol
lowingst atementisnotcorrectregardingv oti
ngshar
es?
A.thesharesissuedwi thv ot
ingr i
ghtscannotbeconv ert
edi ntoshareswithoutv
ot i
ngright
s
B.suchshareholdersar eenti
tledtoallotherri
ghtsofequi tysharehol
ders
C.suchshareshol dersareent it
ledtobonusshar es
D.anycompanycani ssuesuchshar es.
DSuchshar escanbei ssuedbypubl iccompanyl imi
tedbyshar es.

767Ifsharesatadiscountaretobeissued,i
trequi
respermi
ssionofwhichofthefol
l
owi
ng?
A.Registr
arofCompanies
B.Securit
yandExchangeBoar dofI
ndia
C.CompanyLawBoar d
D.Ministr
yofCorporat
eAf f
air
s
CPermi ssi
onofCompanyLawBoar disrequi
redforissui
ngsharesatadiscount
.

768Bal ancesheetofacompanyi spreparedintheform setout

:
A.inSchedul e2t oBankingRegul ationAct
B.inSchedul e5t oCompani esAct
C.inPar tIofSchedul eVItoCompani esAct
D.inPar tIIofScheduleVItoCompani esAct
CU/ s211ofCompani esAct,thecompani esarerequi
redtoprepar
ethei
rbal
ancesheetasper
form setouti nPartIofSchedul eVIt oCompani esAct
769Thepr ofi
tandl ossaccounti stobepr eparedincaseofacompanythatmustmeetthe
requi
rementof :
A.Schedul e2t oBankingRegul ati
onAct
B.Schedul e5t oCompani esAct
C.Par tIofScheduleVIt oCompani esAct
D.PartIIofScheduleVItoCompani esAct
DThepr of i
tandlossaccountistobeprepar
edincaseofacompanyt hatmustmeetthe
requi
rementofPar tIIofSchedul
eVItoCompaniesAct.Theschedul
edoesnotprescr
ibeany
format.Itonlysuggestst
hatrequi
rementshoul
dbemet .

770Par tIofSchedul eVItoCompani

esActprescri
best
woal
ter
nat
ivef
ormsf
orpr
epar
ati
onof
bal
ancesheetbya
company ,whi chare:
A.paper,electroni
c
B.hori
zont al,
v er
ti
cal
C.di
rect,indir
ect
D.noneoft heabov e
BThef ormatsuggest edar
ehori
zont
alandvert
ical
.

771Whi choft hefol

lowingisnotshownaspar toff ixedassetinthebal ancesheetofa
company ?
A.goodwi l
l
B.li
vest ock
C.pat ents,t
rademarksanddesi gns
D.noneoft heabov e
DAl lthesear eshownaspar toffixedasset s.
772Whi choft hefol
lowingisnott obei ncludedi ncur rentassetsforthepur poseofbalance
sheetofacompany ?
A.adv ancesr ecover
ablei ncashorki nd
B.looset ools
C.wor ki nprogress
D.noneoft heabov e
DAl ltheabov earetobeshownaspar tofcur rentasset s.
773Whi choft hefol
lowingistobeshowni nthemi sc.expendit
ure(asasset )inthebalance
sheetofacompany ?
A.preliminaryexpenses
B.discountal l
owedoni ssueofshar esordebent ure
C.dev elopmentexpensesnotadj usted
D.alltheabov e
DAl ltheabov earetobeshownasmi sc.expenses.
774I fanasseti spurchasedf rom abroadandl ateroni fthereisreductionorincreasei
nt he
for
eignexchanger ate,howi twil
laffectthev alueofasset ?
A.thev alueofassett ober educedori ncreasedaccor dingly
B.thev alueofassetal r
eadypur chasedwi llnotbeaf fected
C.thev alueofassetshal lbeincreasedift hereisr eductioninexchanger at
e
D.thev alueofassetshal lbereducedi fthereisi ncreasei nexchanger ate
AThev alueofassetshal lbereducedori ncr easedwi threduct
ionorincr easerespect
ivel
yinthe
for
eignexchangel at
eron.

775Ifanyamounthasbeenwr it
tenof
fonreduct
ionareduct
ionofcapi
tal
orr
eval
uat
ionof
assets,i
tshal
lbest
atedinthe
subsequentbal
ancesheetofthecompanyforaper
iodof:
A.2y ear
s
B.3years
C.4y ear
s
D.5y ear
s
DIfanyamounthasbeenwrit
tenoffonreduct
ionareducti
onofcapi
talorr
eval
uat
ionofasset
s,
i
tshall
bestat
edinthesubsequentbal
ancesheetsofthecompanyforaperi
odoffi
veyear
s.

776Whi choft hef oll

owingstat
ementiscorr
ectregardingthelegalrequirementrelatingt o
sharecapi tal?
A.companyshoul dment i
onundereachheadtheclassesofshar esi.e.prefer
enceshar es,
equityshar es.
B.shar esal l
ottedasf ul
lypai
d,forconsi
der
ati
onot herthancashmustbespeci f
icallystated
C.shar esal l
ottedasbonusshar esmustbesepar atel
ystatedandsour ceshouldbest ated
D.alltheabov e
DAl ltheabov estatementsarecorrect
.
777Pr ofi
tandl ossaccountofacompanymustdi sclose(a)profi
tbef oretax(b)prov i
sionf or
tax(c)pr ofi
taf tertax.
A.aonl y
B.aandconl y
C.bandconl y
D.at ocal l
DPr ofitandl ossaccountofacompanymustdi sclose(a)prof
itbefor etax(b)provisionf ortax
(c)prof i
tafter
tax.

778Cl assi ficationofwhi choft hef ollowi ngasset sisnotcor r

ect,asperprovisi
onsofSchedul
e
VIofCompani esAct :
A.leasehol ds-f ixedasset
B.l
oansandadv ancest osubsi diary-cur rentasset
C.balanceswi thCust om Dept t.-intangi bleasset
D.noneoft heabov e
CItisacur rentasset .Ther ei snosub- classificat
ionlikeint
angibleassets.
779Whi choft hef ollowi ngcl assificat i
oni snotcor rect,asperprovi
sionsofScheduleVIof
Compani esAct ?
A.sundr ycr editor-cur rentliabili
ty
B.sinkingf und-r eser vesandsur plus
C.prov isionf ort ax-expendi ture
D.alltheabov e
CPr ovisi onsf ort axi sacur rentliability.
780Uncl ai
meddi videndi stobecl assi fi
edas_ __
,inthebalancesheetofacompany ?
A.partofr eser ves
B.partofcur rentl i
abi l
ity
C.partofnetwor th
D.partofpr ofit
BItwi l
l beshownaspar tofcur rentl iabil
ity.
91Theheal t
hcondi t
ionoft hepr opr ietoroft hef i
rm ort heeff
ectofdisputewi t
hLabourUni
onis
notrecor dedi nt heaccountbooksofaf i
rm duet oapplicat
ionof:
A.moneymeasur ementconcept
B.goingconcer nconcept
C.businessent i
tyconcept
D.realizat i
onconcept
AInaccount i
ng, onl ythosei temsar et ober ecordedt hatcanbeexpr essedintermsofmoney.
Thei t
emsshownabov ear enotexpr essedi ntermsmoneyal thoughthesehav emonetar
y
eff
ects.
792Thepr omot er sorshar ehol dersofabusi nessrequiretheaccount antt
oreportt
othem the
changesi nt heweal thandf inanci al positionf ortheshor tterm per iodonar egularbasi s.Itis
applicat ionoft heconceptof :
A.goi ngconcer nconcept
B.account ingper i
odconcept
C.mat chi ngconcept
D.dual aspectconcept
BInt heaccount ingper iodconcept ,therunni ngt imeofbusi nessi sdi videdindi fferentpar t
st o
knowt heweal thandf inanci alposi tionf rom t imet ot i
meorar egul arbasis.
793Whi choft hef ollowi ngconcept sstatest hatt het ransactionsshoul dber ecordedint he
booksofaccountasandwhen
theyt akepl ace:
A.consi stencyconcept
B.conser vatism concept
C.goi ngconcer nconcept
D.hist or i
cr ecor dconcept
DI nthehi st oricr ecor dconcept , thet ransact ionsar er ecordedi nt hechr onological manneri .e.
date-wi se
Page150of165
794Whi choft hef ollowi ngi snotcor rectst atementi nconnect ionwi t
ht heledgerandt he
j
our nal.
A.transact i
onsar efirstrecor dedi nt heledger
B.jour nal isabookofchr onol ogical r
ecor d
C.jour nal ismor er eli
abl e
D.thel edgeri sbookofanal yti
cal recor d
ATr ansact i
onsar efirstr ecordedi nt hejour nal andt henpost edt ot heledger .Otheropt i
onsar e
correct .
795Whi choft hef ollowi ngaccount sisnotanomi nal account :
A.wagespai d
B.rentpai d
C.discountpay able
D.commi ssionr eceiv ed
CDi scountpay abl eisar epr esent at i
veper sonal account .Otheraccount sarenomi nalexpense
ornomi nal i
ncomeaccount .
796Adebi tt oanomi nal account ,signifi
eswhi choft hef ol
lowing:
A.ther ei spur chaseofsomeasset
B.ther ei ssomeexpense
C.ther ei ssomepay mentt oacr edi t
or
D.ther ei ssomepr ofittot hebusi ness
BInanomi nal account , t
hedebi ti smadeonaccountofsomeexpenseoronaccountofl ossin
thebusi ness.
797Whi choft hef ollowi ngent r
iesappearf i
rstint hebooksoft hef irmi.e.incashbook:
A.inter estdebi t edt oov er draftaccount
B.bankdebi tedcer tainchar ges
C.firmi ssuedt hecheque
D.dishonouroft hechequebybank
CTher ear et woent r
iest hatnor mal l
yar i
sef i
rstint hebooksoft hef ir
mi .e.chequedeposi t
edor
cash
deposi tedandchequei ssued.Ot herent ri
esshowni nt hequest i
onar i
sef ir
statt hebank.
798Thebankst atementhasbeenshowi ngabal anceofRs. 31200ov erdraft.Iti
sobser vedt hat
achequei ssuedbyt hef i
r mf orRs. 2000hasbeendi shonour edbybankandchar gesofRs. 20
havebeenr ecov ered.Whatwi ll
bebal ancei nt hecashbook.
A.33180debi t
B.33180cr edi t
C.29180debi t
D.29180cr edit
BBal anceasperpassbooki sRs.31200.Toadj ustitwi thcashbook, theamountofcheque
i
ssuedwi llbeaddedandt heamountofbankchar gesshal lber educed.
Page151of165
799Thegoodshav ebeenr eturnedbyt hecust omeroft hef ir
m.
A.salesaccountshal l becr edited
B.accountoft hecust omershoul dbecr edited
C.accountoft hecust omershoul dbedebi t
ed
D.pur chaseaccountshoul dbedebi t
ed
BTheaccountoft hecust omershal l
becr editedf orret urnofgoodsandsal er et
urnsaccount
shallbedebi ted.
800Whi choft hef ollowi ngi snotacor rectst atement :
A.thel ef tsideofal edgeraccounti scal l
eddebi tent ry
B.ther ightsi deofal edgeraccounti scal l
edcr editent ry
C.nomi nal account sar etransfer r
edt obal ancesheetatt heendoft hef i
nanci alyear
D.pet tycashbooki sgener all
ymai nt
ainedoni mpr estsy stem
CNomi nal account sar et ransferredt opr ofitandl ossaccountatt heendoft hey ear.
801Ami stakehasbeencommi ttedint hebal anci ngoft hel edgeraccount .Whatt ypeofer r
orit
i
s:
A.errorofomi ssion
B.errorofcommi ssion
C.errorofpr i
nci ple
D.compensat inger ror
BThi sisaner r
oratt het i
meofbal ancingofl edgerwhi chf allsinthecat egor yofer rorof
commi ssi on.
802Thet ot alofsal ar yaccounthasbeenunder -
castandt het otalofcar riageaccounthasbeen
overcastf orasi milaramount .Thi sisa:
A.errorofomi ssion
B.errorofcommi ssion
C.errorofpr i
nci ple
D.compensat inger ror
DWhenoneer rorhappensi nsuchawayt hati tnulli
fiest hewr ongef fectofanot hermi stake,i
t
i
scal ledacompensat inger ror.
803Thet ot alofdebi tsi deoft het ri
albal ancei sRs. 2l ac.I tisobser vedt hatwagesamount i
ng
toRs. 5400hav ebeenr ecor dedi nt hewagesaccountasRs. 4500.Whatshoul dbeact ual
balance.
A.Rs. 199100
B.Rs.205400
C.Rs. 204500
D.Rs. 200900
DTheamountofwagesi srecor dedatal oweramountduet owhi cht hetot alofdebi tsideof
tr
ialwi l
l be
short.Sot hedi f
ferenceamounthast obeaddedt ot het rialbalanceamount .
804Whi choft hef ollowi ngi snotanexampl eofcapi tal expendi ture?
A.amounti susual lylar ge
B.itisr ecur ri
ngi nnat ur e
C.itisshowni nt hebal ancesheet
D.noneoft heabov e
BI
tisnotr
ecur
ri
ngi
nnat
urei
.e.i
tisnotdoneagai
nandagai
nfort
hesamepur
pose.

805Sal eofgoods, commi ssi onear nedet c.ar ether eceipt

s,thatf allin__ _category:
A.rev enuer eceipts
B.capi talreceipts
C.def erredr eceipts
D.noneoft heabov e
AThesear er evenuer eceiptswhi char eav ai
lableonar ecurri
ngbasi s.Thesebr oadlyrel
ateto
profitandl ossaccount .
806Thel i
abilit
yonausancebi l
lofexchangei sthatof( whichonei snotcor rect
):
A.thedr awerbef oreitisaccept ed
B.thepay ee
C.thedr awee, afteraccept ance
D.af teraccept ancepr imar yliabili
tyoft hedr aweeandsecondar yliabil
ityofthedr awer
BThepay eei snotl i
ableont hebi llofexchange.Af t
eracceptance, thepr imar yl
iabil
i
tyisofthe
draweeandSecondar yliabilityisoft hedr awer .
807Abi l
lofexchangeofRs. 10000hasbeendr awnbyZonY.I tisdi scountedbyZ.What
j
our nal entrywi l
lbemadebyZi n
hi
sbooks:
A.debi t-cashaccount ,credit-bi l
lsdi scount edaccount
B.debi t-bankaccount ,credit-bi l
lsr eceivabl eaccount
C.debi t-bankanddi scountaccount ,credit-billsreceivabl
eaccount
D.debi t-bi l
lsreceivableaccount ,credit-bankaccount
COndi scount ,t
hecashorbankaccountwoul dbedebi ted.Fordi scount ingchar ges,the
di
scountaccountwoul dbedebi tedandbi ll
sr ecei v
ableaccountwi llbecr editedfortheentire
amountoft hebi l
l.
815I ncaseofanewmachi nery,whi choft hef ollowingisnoti ncludedi nt heor i
ginalcost:
A.inv oicepr i
ceoft hemachi nery
B.taxes
C.car ri
agecost+i nstall
ationcost
D.noneoft heabov e
DI ncaseofnewmachi ner y,allthesear eincluded.

816Abusi nessdoesnottakeintoaccount,thef
utureincome.Simil
arlythegoodssol
don
approvalarenoti
ncludedinthesal
esbutt hesearetakenatcostonly.Thisi
sbecauseof
appli
cati
onof :
A.goingconcernconcept
B.moneymeasur ementconcept
C.businessenti
tyconcept
D.reali
zati
onconcept
DTheconceptexpl ainst
hattherevenueistobetreatedasreal
izedwhenpr opert
yint
hegoods
passestothebuy erandhebecomesl iabl
etopay.

817Whi choft hefollowingisnotcoveredbyt heappl

icat
ionofconv enti
onofconserv
atism:
A.creationofprovisionforbaddebt s
B.iftherearealargeno.ofsmal li
tems,theseareshownasami sc.group
C.takingvalueofst ockatmar ketpri
ceorcostpricewhicheverislower
D.showi ngthejoi
ntl if
epolicyatsurr
enderv al
ueonassetsider atherthanthepai
dupamount
BThisi spartofconv entionofmateri
ali
tyandnotofconser v
atism.Ot heri
temsarepartof
conservati
sm.
818Lossonsal eofaf i
xedassetswoul dbereflect
ing:
A.debitbalanceinthepr of
itandlossaccount
B.credi
tbal ancei
nt herealaccount
C.creditbalancei
nt hepersonalaccount
D.debitbalanceintherealaccount
BNor mallytherealaccountshavedebitbalance.Butift
her
eisl
ossonsal
eoff
ixedasset
s,i
t
wil
lshowcr editbal
ancei ntherealaccount
.

819Thei denti
fi
cati
onoft hetypeofaccountinwhi chofthefoll
owingt r
ansacti
onisnotcor
rect
:
A.sal
arypaidt othestaff-cashaccountandsal aryaccount
B.purchaseofgoodsf rom Firm A-GoodsaccountandFi r
m Aaccount
C.sal
eofol dmachi neryincashtoFir
m B-machi neryaccountandFir
m Baccount
D.depreciat
ionchargedonaf i
xedasset-Depreciati
onandf i
xedassetaccount
CSaleofol dmachineryincasht oFi
rm Binvol
v escashduet owhicht heaccountshoul
dbe
cashaccountinsteadofFi r
m Baccount.Whenat ransacti
onisincash,thecashaccounti
s
aff
ected.

820AtruckwaspurchasedforRs.8l
acwi t
hexpectedli
feof8years.Attheendof5thyearit
wassoldforRs.
312000.Whatistheprof
itorl
ossonsal eofthi
svehicle.
A.pr
ofi
tRs.10000
B.l
ossRs.10000
C.pr
ofi
tRs.12000
D.l
ossRs.10000
CBookv al
ueatendof5thyear800000-500000( depr
eciat
ionof5y earsatRs.
1lacperannum)
=300000. Profi
t=312000-3lac=12000

821St atewhi chofthefol

lowingdoesnotmat ch:
A.bankr econcili
ati
onstat
ementi sanaccount-Fal se
B.bankr econcili
ati
onstat
ementi snotpreparedbyt hebank-False
C.nor mallythebankreconcil
i
ationstat
ementi spr eparedattheendofthemonth-True
D.ifreceiptsideofthecashbooki sovercast
,itincreasesthebankbalancei
nthecashbook-
tr
ue
BBankr econcil
iat
ionst
atementi spr
eparedbyt hef i
rm onl
yandnotbythebank.Ot
her
statement sare
correctl
ygi v
en

822AchequeofRs. 540deposi
tedwiththebankwasent er
edtwiceint
hecashbook.Bankpai d
asubscript
ionofRs.200.ThebalanceinthepassbookisRs.23400.Whatwil
lbethebalanceas
percashbook?
A.23200
B.23600
C.24140
D.23740
CTor eachthebalanceaspercashbookf r
om thepassbook,t
heamountofchequedeposi t
ed
andenteredtwice(oneentr
yofchequeonl yshallber
espondedbythebankandotherentryhas
tobereversedbythepartyini
tsbooks)wi l
lhavetobeadded.Amountofdir
ectdebiti
nthe
for
m ofsubscri
ptionalsohastobeadded.

823Whenanent r
yispar
tl
yomi
tt
ed,
iti
scl
assi
fi
edas:
A.er
rorofomissi
on
B.er
rorofcommissi
on
C.err
orofpri
ncipl
e
D.compensati
ngerror
AWhenanent ryiscompl
etel
yorpar
tl
yomi
tt
ed,
iti
scl
assi
fi
edaser
rorofomi
ssi
on.

824Fir
m Ahadpur chasedgoodsf r om Firm BforRs.500buti tr
ecordediti
nthesal
esledger.
Therecti
fi
cati
onwi l
lbeasunder:
A.sal
esaccountdebi t
,Fi
rm Baccountcr editforRs.500
B.debi
tpurchaseaccountandcr editFirm BaccountRs. 1000
C.debi
tsalesRs.500anddebitpur chasesRs. 500andcr editRs.
1000t oFir
mB
D.debi
tsalesRs.1000andcreditpur chasesRs. 500andRs. 500toFirmB
CThesalesaccounthasbeenwr ongl ycredit
edbutpur chaseaccounthasnotbeendebited.
AccountofFir
m Bhasbeenwr ongl ydebi tedinsteadofcredit
ingit
.

825Whi chofthefol
l
owi ngstatementdoesnotmat ch:
A.wrongbalanci
ngofaccount sdoesnotaf fectthetri
albal
ance
B.tr
ialbal
anceensuresthear i
thmeticaccuracy
C.debitbal
anceofal edgeraccountisshowni nthedebitsi
deofthetri
albal
ance.
D.cl
osingstockdoesnotappeari nthet r
ial
balance
AWr ongbalanci
ngofaccount saffectsthetri
albal
ance.Closi
ngstockdoesnotappeari
nthe
tr
ial
balance.

826Theexpendi t
ur e,thebenefi
tofwhi
chisnotconsumedinjustoneyearandisav
ailabl
efora
no.ofyear si
scalled:
A.recurri
ngexpendi t
ure
B.deferredrevenueexpendi tur
e
C.revenueexpendi ture
D.capitalexpenditure
DSuchexpendi t
urei scall
edcapital
expendi
tur
e.It
sbenef
iti
sav ai
labl
eforano.ofyear.
Exampleexpendi tureonpur chaseoffi
xedasset.

827Wher et hedrawerofabi
l
l fai
l
stomaket hepaymentforf
ullamountandmakesrequestt
o
thedrawert oacceptpar
tamountandf ort
hebalanceamountandint
erest
,maydrawanother
bil
l,
itiscall
ed:
A.honouringofbi l
l
B.dishonouringofthebi
ll
C.renewal ofthebil
l
D.pay mentoft hebil
l
CSuchpr ocessi sknownasrenewalofthebi
ll
.

828Inwhi choft hefol

lowingmet hodsofdepreci
ati
on,
theamounti
skeptasi
detorepl
acet
he
machinerywheni ti
swornout .
A.Str
aightLineMet hod
B.Writt
enDownVal uemet hod
C.Sum ofdi git
smet hod
D.si
nkingf undmet hod
DInthesinki ngfundmet hod,theamountiskeptinv
est
edinasepar
atefundf
oruseatthet
ime
ofpurchaseofnewmachi nerytorepl
acet
hewor noutmachi
nery
.

829Thebill
sthatar
erecei
vedf
rom suppl
i
ersbyabusi
nessf
ir
m,ar
erecor
dedi
nwhi
choft
he
fol
l
owing:
A.sal
esledger
B.bil
lsrecei
v abl
ebook
C.bil
lspayabl ebook
D.purchasebook
CAl l
bil
lsinwar drecei
vedf
rom suppl
ier
sar
er ecor
dedinthebil
l
spay
abl
ebookf
rom wher
e
thesearedirectl
ypostedtotheaccount
sofrespect
ivesuppl
i
ers.

834Whent heamountofdepr eciati

oniscalcul
atedonthebasi
sofor i
ginalcostofthefi
xed
asset
sasaf i
xedamount ,i
tiscalled:
A.str
aightlinemethod
B.fi
xedinst al
mentmet hod
C.fi
xed%ageont heoriginalcostmet hod
D.anyoft heabove
DWhent heamountofdepr eciat
ioniscalculat
edonthebasisofori
ginalcostofthefi
xed
asset
sasaf i
xedamount ,i
tiscalledstrai
ghtli
nemethod,f
ixedinst
almentmet hodorfi
xed
%ageont heori
ginal
costmet hod.

835Af ir
m purchasedmachineryofRs.200000onJanuar y10, 2009.Theusefulli
feofthe
machineryis5y ear
s.Whatisamountofannual depr
eciat
ionifthescrapval
uei sRs.20000.
A.Rs.40000
B.Rs.36000
C.Rs.35000
D.i
nsuf f
ici
entinfor
mation
BTocal cul
atetheamountofdepr eciat
ionfi
rstdeducttheamountofscr apvaluefrom the
purchase costandt hendiv
idebyt heno.ofyears.Annualdepreci
ationwil
lbe(200000-20000)
/5=36000

836Af ir
mi s cal culatingdepr eciati
ononwr itt
endownv aluebasi soni t
smachi neryofRs.2lac
at10%.Fr om 3r ditchangest hemet hodofdepr eciat i
onf rom WDVt oSLM.Whatwi l
lbechange
i
nt hepr ofitandl ossposi tion.
A.Rs.4000, decreasei npr of i
t
B.Rs.4000, i
ncreasei npr of i
t
C.Rs.3800, i
ncreasei npr of i
t
D.Rs.3800, decreasei npr of i
t
CDepr eci ati
oni nthe3r dy earatWDV=16200andatSLM Rs. 20000.Thedi f
ferenceofRs.3800
i
st heincr easei namountofdepr eciat
ionwhi chmeansdecl i
nei nprofi
t
837Wi thregar dtot hef luct uati
ngcapi talmethod, whi choft hef oll
owingiscor rect:
A.alltransact i
onsr elat i
ngt oapar tnerareent ered
B.capital accounti scr editedwi t
hcapi talcontri
but ionandi nterestoncapi talandshareofpr ofi
t
C.capital accounti sdebi t
edf ordrawings, shareofl oss
D.alltheabov e
DAl lt
heabov estatement sar ecor r
ect.Hencenoexpl anationisr equir
ed.
838Af ir
m hasi nvest edRs. 1lacinbusi nessandi tisear ningav eragepr of
itofRs. 28000.I
nt he
i
ndustr y,thenor mal r ateofpr ofi
tis10%.Whati st heamountofgoodwi ll
,ifthesuperpr of
it
sar e
purchasedf or3y ear s.
A.Rs.28000
B.Rs.42000
C.Rs.54000
D.insuf f
icientinformat ionf orcalculat
ion
CThesuperpr of i
tsar eRs. 18000(28000-10%ofRs. 1l ac).Wi t
h3y ear
spur chaseofpr ofi
ts,
theamountofgoodwi l
lwi l
l beRs. 54000( 18000x3) .
845Whi chofthef ol
lowingi snotthecorrectclassi
fi
cati
onofreceipt
sandexpenses:
A.legalexpensesincurr
edonpubl ici
ssue-r evenueexpendi
ture
B.purchaseofmachi nery-capi t
alexpenditure
C.paymentofwages-r ev enueexpenditure
D.expenditur
eonr emov ingt heol
dbuildingforconstr
ucti
ngthenewbui l
dingonthatpl
ace-
capit
alexpenditur
e
AThel egalexpensesincur r
edonpubl i
ci ssuearecapit
alexpendit
ureandnotrev
enue
expenditur
e.

846Tot ransfertoopeningst ocktothetradi

ngaccount ,whatjournalent
ryshall
ber equir
ed:
848Whenaf ir
m changest hemet hodofchargi
ngdepr eciati
onfrom writ
tendownv alueto
str
aightli
nemet hodorvicev er
sa,whichofthef ol
l
owingaccount ingconventi
onsisv i
olat
ed:
A.reali
zation
B.consistency
C.mat er
ialit
y
D.conserv ati
sm
BTheconv entionofconsistencyrequi
resthattheaccount i
ngpolici
esshouldnotbechanged
andshoul dbecont i
nuedoncet heyareadoptedinapar t
icularmanner.

849Thebal anceaspercashbookoft hefi

rmi sRs.40000overdraft.I
tisobservedthatthefi
rm
hadissuedt wochequesofRs. 3000eachandonl yoneofthesehasbeenencashed.Thebank
al
socr edi
tedRs.1000asdi vi
dendreceiv
edt hr
oughECS- Cr
edit.Thebal anceasperpassbook
shouldbe:
A.36000
B.38000
C.42000
D.44000
AWhenbal ancei
sov erdr
afti
ncashbook, theamountofchequei ssuedandnotpai dbybank
andtheamountdi rectl
ycredi
tedbythebanki stodeductedfrom theopeni ngbalance.Hence
40000-30000-1000=36000

850Thedebi tsi
deofTr i
albalanceofthef i
rm showsabal anceofRs.185500.Theamountof
depreciationamount ingtoRs.2500hasnotbeenpr ovidedinthebooks.Thedebitbalancei
nthe
tri
albalanceshoul dbei ft
heamounti sprovi
ded:
A.Rs. 183000
B.Rs. 185500
C.Rs. 188000
D.Rs. 190500
BWhent hedepreciati
onwillbeprovided,thedebitbalancei
ndepreciat
ionaccountwi l
li
ncr
ease
andt hedebi tbalanceinfi
xedassetaccountwi l
ldecl
ine.Thenetchangewi l
lbezero.Hence
therewi l
l benochangei nthedebittotalofthetri
albalance.

851Afir
m hadpur chasedmachineryofRs.
2lacwithexpect
edlif
eof6y ear
s.Thescrapv aluei
s
Rs.
20000.Themachi neryi
ssoldattheendof4thyear,f
orRs.85000.Whati
stheprofitorloss,
onsal
eofmachi nery.
A.Rs.
15000profit
B.Rs.
5000profi
t
C.Rs.
10000loss
D.Rs.
15000loss
BThebookv al
ueofmachi ner
yatt heendof4thyearshal
lbeRs.80000.(2l
ac-depreciat
ionat
Rs.
30000x4y
ear
s).Wheni
tissol
dforRs.
85000,
thef
ir
m shal
lmakepr
ofi
tofRs.
5000.

852Af irm hastot

albookdebt sofRs.2lac.I
thastokeepprovisionof3%onthesebookdebt s
whichitalr
eadyhas.Itwr i
tesof fadebtorofRs.4000.Whatwil
l beamountofaddi
tional
provi
siontobepr ovi
dedaf terthewr i
teoffto
maintain3%balancei nthepr ovi
sionaccount:
A.4680
B.4280
C.4000
D.3880
DAmountofpr ovisi
oni sRs.6000( 2l
acx3%) .I
tusesRs.4000outoft hi
sandlef
twi t
ha
provi
sionofRs.2000onl y.Thebalanceamountofdebt orsaft
erwr i
teoff
,shal
lbeRs.196000(2
l
ac-4000)onwhi chpr ovi
sionat3%shal lbeRs.5880.Hencetheadditi
onalpr
ovi
sionshallbe
Rs.3880(5880-2000) .

853Wagespai df ori nst allat i

onofmachi neryRs. 300hav ebeenpai dtot hedebi tofwages
account .Whatt ypeofer rorhast akenpl aceandwhatj our nalentrywill
bepassedt or emov ethe
err
or .
A.er r
orofcommi ssi on, debi tmachi neryaccountandcr editwagesaccount
B.compensat inger ror ,debi tmachi neryaccountandcr editwagesaccount
C.er r
orofpr i
nci ple, debi tmachi ner yaccountandcr editwagesaccount
D.clericaler r
or ,debi twagesaccountandcr editmachi ner yaccount
CItisaner rorofpr inci plewher eanomi nalaccounthasbeendebi t
edinst eadofdebi tingar eal
account .Theer rorcanber ect ifi
edbydebi t
ingt hemachi neryaccountandcr edi
ti
ngt hewages
account .
854Whi choft hef ollowi ngcl assi fi
cat i
onofcapi t
alandr evenueexpendi turei snotcor r
ect:
A.pur chaseofmachi ner y-capi talex pendit
ure
B.freightpai donbr i
ngi ngt hemachi nef ori
nstal l
ati
on-r evenueexpendi ture
C.expensesr elatingt or emov al ofst ocksfrom ol dsit
et onewsi te-revenueexpendi ture
D.pay mentofl abourwel f
ar eexpenses-r evenueexpendi t
ure
BFr eightpai df orbr ingi ngt hemachi neforinstall
ati
oni sacapi t
alexpendi tureandwi llbe
debitedt ot hemachi ner yaccount .
855Thepr eferenceshar es, t
heamountofwhi chi sreturnedbyt hecompanyasperpr e-fi
xed
ter
msar ecal led:
A.cumul ati
v epr ef erenceshar es
B.redeemabl epr ef erenceshar es
C.par ti
cipat i
ngpr ef erenceshar es
D.repay ablepr ef er enceshar es
BSuchshar esar ecal ledr edeemabl epreferenceshar esbutt hesearesubj ecttocondi ti
onsas
perSect ion80ofCompani esAct1956.

856Theamountofshar ecapitalt
hatisof
fer
edtotheprospectiv
eshar ehol
dersforsubscri
pti
on,
i
scalled:
A.authori
sedcapi t
al
B.i
ssuedcapi tal
C.subscri
bedcapi tal
D.cal
ledupcapi tal
BTheamountofcapi talwhichisoff
eredt
oprospect
iveshareholdersf
orsubscri
ptioniscal
led
i
ssuedcapi tal
.
857Whent heBoar dofDir
ectorofacompanyacceptstheappli
cationsforal
lot
ment ,t
he
fol
l
owi ngjournalentr
yispassed:
A.debitbankaccount,credi
tsharecapitalaccount
B.debitbankaccount,credi
tshareapplicati
onaccount
C.debitshar
ecapitalaccount,cr
editshareapplicati
onaccount
D.debitshar
eapplicati
onaccount ,
creditsharecapital
account
DWhent heappl
icati
onsar eacceptedforall
otmentandt heshareholder
sareal
l
ott
edt
heshar
es,
theshareappli
cati
onaccounti sdebit
edt ocredittheshar
ecapit
al account
.

858Whent heBoardofacompanydeci dedtocall

shareallot
mentmoney ,t
hefoll
owingjour
nal
entr
yispassed,
beforethemoneyi sactuall
ydemandedandr ecei
ved:
A.debi
tbankaccount,credi
tshar
ecapi tal
account
B.debi
tbankaccount,cr
editshar
eallotmentaccount
C.debi
tshareal
lot
mentaccount ,
creditsharecapi
talaccount
D.debi
tshareal
lot
mentaccount ,
creditbankaccount
CWhent heshareall
otmentamountismadeduef orpay mentbyshar ehol
ders,
theentr
yt obe
passedi
sdebitshareall
otmentaccountandcr edi
tthesharecapitalaccount
.

859Whenacompanydeci destocall t
he1stor2ndcal lamount,whatjournalentr
yispassed
beforethemoneyisactual
lydemandedandr eceived.
A.debitsharecapi
tal
,cr
edit1stcall
or2ndcal l
B.debitthe1stcal
lor2ndcall
,credi
tshar eappl
icati
onaccount
C.debitthe1stcal
lor2ndcall
,credi
tt hebankaccount
D.debitthe1stcal
lor2ndcall
,credi
tt hesharecapital
account
DOncet hemoneyon1stor2ndcal lismadedue, the1stcallor2ndcallaccountisdebi
tedand
sharecapital
accounti
scredit
edbef orethemoneyi scall
edandactuall
yr ecei
ved.

860Whenacal lisreceivedi nadvanceandl aterontheamountoft hatcall

ismadeduebyt he
company ,whatjournal entr
yi spassedinrespectoft hatamountrecei
vedinadvance:
A.debitcall
saccount ,creditcall
sinadvanceaccount
B.debitcall
sinadvanceaccount ,credi
tcall
saccount
C.debitcall
sinadv anceaccount ,credi
tbankaccount
D.debitbankaccount ,creditcall
saccount
BSincet heamounthasal readybeenr ecei
v ed,theamounti st
obet r
ansferr
edfr
om call
sin
advanceaccountt ocal l
saccount .Thejournal ent
ryshallbe-debi
tthecall
sinadvanceaccount
andcreditcall
saccount .

861Whenapr emi um i srecei vedbyt hecompanyitiscredi

tedto_ __andshownon_ __si
deof
thebalancesheet :
A.reservesandsur plusaccount ,liabi
li
ty
B.capitalaccount ,l
iabilit
y
C.bankaccount ,asset
D.provisi
onaccount , l
iabil
it
y
ATheamountofpr emi um r eceivedi sshownaspartofreservesandsur pl
usi
nthel i
abi
li
tysi
de
ofthebal ancesheet .
862Whent hecompanydeci dedtoi ssuesharesatadiscount
, t
heseshouldbeissuedwithi
n___
mont hsaf t
erper mi ssionf rom _ ___:
A.2mont hs, sharehol ders
B.2mont hs, companyl awboar d
C.2mont hs, regi
st r
arofcompani es
D.1mont h, sharehol derresol uti
on
BThei ssueatadi scountshoul dbecompl etedwit
hin2mont hsf rom dat
eofpermissi
onof
CompanyLawBoar dort het i
meext endedbyCompanyLawBoar d.
863Thecapi t
ali
zationofpr ofi
tscanbemadebyacompanyt
hroughwhi
chofthef
oll
owi
ng
(whichismoreappr opri
ateanswer )
:
A.bymakingpar t
lypaidupshar esf
ull
ypai
dup
B.byissui
ngnewshar escal l
edbonusshar
es
C.byissui
ngsharesatadi scount
D.(a)and(b)both
DThecapi t
ali
zati
onofpr ofitscanbebothbymaki
ngpar
tl
ypai
dupsharesf
ull
ypai
duporby
i
ssuingbonusshar es.

864I ftheforfei
tedshar esar etober ei
ssuedatadi scount
,whichoft hefoll
owingst
atementis
correct:
A.thedi scountcanbemaxi mum 10%oft hef
acevalue
B.theamountofr e-
issuedpr icecannotbel owert
hant heamountinar rear
s.
C.theamountofr e-
issuedpr icecanbel owerthantheamounti narrears
D.thecompanycannotr e-
issuet hesharesatadiscountasiti
st othedet r
imentofexi
sti
ng
shareholderswhi ch
havebeenal l
ottedsharesatpar .
BTheamountatwhi cht hefor f
eit
edshar escanbeissuedcannotbel owerthantheamountin
arr
ear s.Inotherwordst hemaxi mum discountcanbet otheextentofamountal r
eadyrecei
ved.

865I facompanyi stor e-i

ssuepar tl
ypai dshar ewi t
hf acev alueofRs. 100, whatjour
nal ent
ryof
thefol l
owingi snot
correct,ifthefirstandf i
nal cal
lisRs.30pershar eandt hedi scountis10%.
A.Debi tshar ecapital Rs.100
B.Cr edit1standf i
nal callRs.30
C.Cr editdiscountoni ssueofshar eaccountRs. 10
D.Cr editForfeitedshar esaccountRs. 70
DFor feitedshar esaccountwi l
lbecr edi t
edf orRs. 60( 100-30- 10).Rs.10i sthe10%di scount
forthe
calculationgiveni nthebr acket.
ARecei ptandpay mentaccounti sar eal account .Otheropt i
onsar ecor rect.
868I nt hecont extofpay mentofi nterestont hecapi tal orloansofpar tners,whichofthe
fol
lowi ngisnotcor r
ect :
A.interestoncapi t
al shal lbepaidifpr ov i
dedi ntheagr eement
B.int heabsenceofanyagr eement,noi nterestshall bepai doncapi tal
C.int heabsenceofanyagr eement ,
int erestont hel oanf rom par tnershall bepaid
D.ifther eisnopr ofit
, interestonloanorcapi talshallnotbepai d.
DIft hereisnopr ofi
t,interestonl oanf rom par tnerwi llhavet obepai dat6%.