R.

Gupta's ®
Popular Master Guide

NATIONAL TESTING AGENCY (NTA)

CUET-UG
Common University Entrance Test for
Under Graduate Courses/Programmes

SECTION-II
DOMAIN SPECIFIC SUBJECT

Accountancy/Book Keeping
by
RPH Editorial Board
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 EXAMINATION STRUCTURE

SECTION-II: DOMAIN SPECIFIC SUBJECTS

No. of Questions Subject Time

40 Questions  Input text can be used for
to be MCQ Based Questions 45 minutes for
attempted out  MCQs based on NCERT Class XII each Domain
of 50 Syllabus only Specific Subjects

 Mode of the Test : Computer Based Test (CBT)

 Test Pattern : Objective type with Multiple Choice Questions
 Medium of Exam : 13 Languages (Tam il, Telugu, Kannada,
Malayalam, Marathi, Gujarati, Odiya, Bengali,
Assamese, Punjabi, English, Hindi and Urdu)

(iii)
 CONTENTS

SAMPLE PAPER

CUET (UG) – Accountancy/Book Keeping ........................................................................ 1-8

ACCOUNTANCY/BOOK KEEPING

(Multiple Choice Questions) ................................................... 1-108

 Accounting for Not-for-Profit Organisations and Partnership Firms—

Accounting Not-for-Profit Organisation; Accounting for Partnership;
Reconstitution of Partnership; Dissolution of Partnership Firm

 Company Accounts and Financial Statement Analysis—Accounting for Share

and Debenture Capital; Analysis of Financial Statements; Statement of Changes
in Financial Position

 Computerized Accounting System—Passage Based Multiple Choice

Questions.

    

(iv)
 EXAM BITES

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 SAMPLE PAPER (SOLVED)
CUET-UG
ACCOUNTANCY/BOOK KEEPING*
SECTION-II : DOMAIN SPECIFIC SUBJECT
1. A business has earned average profits of ` 4,50,000
during the last few years and the normal rate of return
in a similar line of business is 15%. The value of net
assets of the business is ` 25,00,000. What will be the
value of goodwill of the business if it is to be valued
by capitalization of average profits method.
A. ` 3,00,000
B. ` 2,50,000
C. ` 5,00,000
D. ` 3,75,000
2. X and Y are partners sharing profits and losses in the
ratio of 3 : 2. The balance of their capital as on 01st
April, 2020 – X : ` 5,00,000 and Y : ` 3,00,000. They
are allowed interest on capital @ 20% p.a. The profits
for the year ending 31st March, 2021 ` 80,000 (before
charging interest on capital). The profits of the
partners to be allocated to X and Y as:
A. X : ` 40,000 & Y : ` 40,000
B. X : ` 50,000 & Y : ` 30,000
C. X : ` 48,000 & Y : ` 32,000
D. None of these
3. A partner of the firm drew ` 10,000 in the middle
of each quarter for personal purpose against the
profits. As per the Partnership Deed, interest on
drawings to be charged @ 10% p.a. Interest on
drawings will be:
A. ` 500 B. ` 1,000
C. ` 3,000 D. ` 2,000
4. Pick the odd one out:
A. Interest on partner’s capital
B. Interest on partner’s loan
C. Salary to partner
D. Interest on partner’s drawings
Directions (Qs. No. 5-7): There are two statements marked
as Assertion (A) and Reason (R). Read the statements and
choose the appropriate option from the options given below
for the question.
*40 Questions to be attempted out of 50
Sample Paper 1
A. Both Assertion (A) and Reason (R) are true and
Reason (R) is the correct explanation of Assertion
(A)
B. Both Assertion (A) and Reason (R) are true, but
Reason (R) is not the correct explanation of
Assertion (A)
C. Assertion (A) is false, but Reason (R) is true
D. Assertion (A) is true, but Reason (R) is false
5. Assertion (A) : In the case of change in profit-sharing
ratio, there was a balance in Workmen
Compensation Reserve ` 30,000 and
till the date of reconstitution, the
claim for workmen compensation is
` 12,000. Partners of the firm decided
to distribute between them ` 30,000
in their profit-sharing ratio.
Reason (R) : Workmen Compensation Reserve is
the part of profits. Therefore, it should
be distributed between the partners in
their profit-sharing ratio.
6. Assertion (A) : At the time of change in profit-sharing
ratio, assets are revalued and liabilities
are reassessed.
Reason (R) : The change in the value of assets and
liabilities belongs to the period prior
to reconstitution and gain or loss on
revaluation is shared in the sacrificing
ratio by the partners.
7. Assertion (A) : In the case of change in profit-sharing
ratio between partners, goodwill to be
valued and adjustment to be made in
capital / current accounts of partners
with sacrificing and gaining share of
valued goodwill.
Reason (R) : V alued goodw ill to be debited/
credited in capital / current account
of partners with gaining / sacrificing
share of valued goodwill.
1 3998 (SP)—1
 2 Sample Paper

8. ________ goodwill is the excess of desired total Directions (Qs. No. 13 – 15): There are two statements
capital of the firm over the actual combined capital marked as Assertion (A) and Reason (R). Read the statements
of all partners. and choose the appropriate option from the options given
A. Existing B. Premium below for the question.
C. Valued D. Hidden A. Both Assertion (A) and Reason (R) are true and
Reason (R) is the correct explanation of Assertion
9. Match the columns for the situations at the time of
(A)
admission of new partner:
B. Both Assertion (A) and Reason (R) are true, but
Column-I Column-II
Reason (R) is not the correct explanation of
(a) Goodwill brought (i) Old Ratio
Assertion (A)
in by new partner
C. Assertion (A) is false, but Reason (R) is true
(b) Employee Provident (ii) Sacrificing Ratio
D. Assertion (A) is true, but Reason (R) is false
Fund
(c) Profit & Loss (iii) New Ratio 13. Assertion (A) : Equity shares does not carry fixed rate
Suspense A/c of dividend and they are the ultimate
(d) Profit & Loss (Cr.) A/c (iv) Not to be distributed risk bearer.
Reason (R) : Equity shareholders are getting
Codes: dividend from residule part of profits
(a) (b) (c) (d) and in the case of windup of the
A. (i) (iv) (ii) (iii) company, invested money will be
B. (ii) (iv) (iii) (i) refunded at the last.
C. (ii) (i) (iii) (iv) 14. Assertion (A) : Cumulative preference share capital
D. (i) (ii) (iii) (iv) is the share capital in which unpaid
Directions (Qs. No. 10 and 11): There are two statements amount of dividend to be paid in the
marked as Assertion (A) and Reason (R). Read the statements next year along with unpaid amount
and choose the appropriate option from the options given of dividend of previous year.
below for the question. Reason (R) : Participative preference share capital
A. Both Assertion (A) and Reason (R) are true and holders have right to participate in
Reason (R) is the correct explanation of Assertion the decision making activities relating
(A) to their interest.
B. Both Assertion (A) and Reason (R) are true, but 15. Assertion (A) : A company must receive minimum
Reason (R) is not the correct explanation of subscription on public issue of shares.
Assertion (A) Reason (R) : In default to receive m inimum
C. Assertion (A) is false, but Reason (R) is true subscription, company could not allot
D. Assertion (A) is true, but Reason (R) is false its shares.
10. Assertion (A) : If the am ount of any asset was Directions (Qs. No. 16 and 17): Read the information
undervalued, then revaluation account given below and give the answer for the questions.
will be credited to restore the asset’s X Ltd issued 50,000 shares of ` 100 per share for
amount to its actual asset value. public subscriptions at 20% premium.
Reason (R) : Increase in the amount of asset is a
gain for the firm. Amount payable as under:
On Application : ` 40 per share (including 10%
11. Assertion (A) : On admission of a new partner,
premium)
received amount from a debtor which
was written off in earlier, credited to On Allotment : ` 40 per share (excluding 10%
revaluation account. premium)
Reason (R) : It is a loss on reconstitution of On First & Final Call : ` Balance
partnership.
Application received for 75,000 shares. Allotment was
12. The part of un-called capital, to be called only in the made to 60,000 share applicants. All due money was duly
liquidation of a company is called: received except from a shareholder (Ashok) allotted to
A. Un-reserved Capital whom 12,000 shares, failed to pay allotment and calls.
B. Reserve Capital These shares were forfeited.
C. Capital Reserve Out of the forfeited shares, 9,000 shares re-issued at
D. Calls-in Arrears ` 80 fully paid.
3998 (SP)—1-II
 Sample Paper 3
16. Which of following amount received on allotment? 21. Outstanding Salary will be shown under which of the
A. ` 15,96,000 following sub-head of the head Current Liabilities on
B. ` 21,00,000 the Equity & Liability side of the Balance Sheet.
C. ` 5,04,000 A. Short-term borrowings
D. ` 4,00,000 B. Trade payables
C. Short-term provision
17. Which of the following amount to be transferred to
D. Other current liabilities
Capital Reserve A/c?
A. ` 4,80,000 22. Match the columns with reference to the analysis of
B. ` 3,96,000 financial statements of a company:
C. ` 2,76,000 Column-I Column-II
D. ` 1,62,000 (a) Firm (i) Does not consider price
level changes
18. Match the columns with reference to the financial
(b) Types of Analysis (ii) Intra-firm and Inter-firm
statements of a company:
Analysis
Column-I Column-II (c) Tools of Analysis (iii) Horizontal and Vertical
(a) Proposed Dividend (i) Financial Cost Analysis
(b) Staff Welfare (ii) Long-Term (d) Limitation (iv) Comparative and Com-
Expenses Borrowings mon Size Statements
(c) Interest paid on (iii) Contingent Liability
Debentures Codes:
(d) Public Deposits (iv) Employee Benefit (a) (b) (c) (d)
Expenses A. (iii) (iv) (i) (ii)
B. (ii) (iii) (iv) (i)
Codes: C. (ii) (i) (iii) (iv)
(a) (b) (c) (d) D. (i) (ii) (iii) (iv)
A. (iii) (iv) (i) (ii)
B. (ii) (iv) (i) (iii) 23. The technique of studying the operational results and
C. (ii) (i) (iii) (iv) financial position over a series of years is known as:
A. Ratio Analysis
D. (i) (ii) (iii) (iv)
B. Common Size Analysis
Directions (Qs. No. 19 and 20): There are two statements C. Trend Analysis
marked as Assertion (A) and Reason (R). Read the statements D. Cash Flow Analysis
and choose the appropriate option from the options given
Directions (Qs. No. 24 and 25): There are two statements
below for the question.
marked as Assertion (A) and Reason (R). Read the statements
A. Both Assertion (A) and Reason (R) are true and
and choose the appropriate option from the options given
Reason (R) is the correct explanation of Assertion
below for the question.
(A)
A. Both Assertion (A) and Reason (R) are true and
B. Both Assertion (A) and Reason (R) are true, but
Reason (R) is the correct explanation of Assertion (A)
Reason (R) is not the correct explanation of
B. Both Assertion (A) and Reason (R) are true, but
Assertion (A)
Reason (R) is not the correct explanation of
C. Assertion (A) is false, but Reason (R) is true Assertion (A)
D. Assertion (A) is true, but Reason (R) is false C. Assertion (A) is false, but Reason (R) is true
19. Assertion (A) : Bills payable are shown as trade D. Assertion (A) is true, but Reason (R) is false
payables in the balance sheet of the 24. Assertion (A) : Issue of Bonus Shares will not be
company. affected to Debt-Equity Ratio.
Reason (R) : Creditors and Bills payable forms the Reason (R) : Issue of Bonus Shares increase the
part of Trade Payables. amount of Equity.
20. Assertion (A) : Bank charges charged by the bank 25. Assertion (A) : Current Ratio is computed to assess
are included in finance cost. the short-term financial position of the
Reason (R) : Bank charges are an expense not business firm.
incurred in connection with raising Reason (R) : Current Ratio express the competency
finance but for availing the services of a business firm to meet the short-
of the bank. term payment obligation.
 4 Sample Paper
26. Cost of Goods Sold ` 1,50,000; Closing Stock
` 60,000; Excess of Closing Stock over Opening
Stock ` 20,000. What is the Inventory Turnover Ratio?
A. 4 times B. 3 times
C. 2.14 times D. 1.5 times
27. What will be the Current Ratio of a company whose
net working capital is zero?
A. Can’t say B. 0
C. 1 : 1 D. 1 : 5
28. Gain/loss on revaluation at the time of change in
profit sharing ratio of existing partners is shared by
___(i)___ whereas in case of admission of a partner
it is shared by ___(ii)___.
A. (i) Remaining Partners, (ii) All Partners.
B. (i) All Partners, (ii) Old Partners.
C. (i) New Partner, (ii) All Partner.
D. (i) Sacrificing Partner, (ii) Incoming Partner
29. What will be the correct sequence of events?
(i) Forfeiture of shares.
(ii) Default on Calls.
(iii) Re-issue of shares.
(iv) Amount transferred to capital reserve.
A. (i), (iv), (ii), (iii) B. (ii), (iv), (i), (iii)
C. (ii), (i), (iii), (iv) D. (iii), (iv), (i) (ii)
30. Which of the following is true regarding Salary to a
partner, when the firm maintains fluctuating capital
accounts?
A. Debit Partner’s Loan A/c and Credit P & L
Appropriation A/c.
B. Debit P & L A/c and Credit Partner’s Capital A/c.
C. Debit P & L Appropriation A/c and Credit
Partner’s Current A/c.
D. Debit P & L Appropriation A/c and Credit
Partner’s Capital A/c
31. At the time of reconstitution of a partnership firm,
recording of an unrecorded liability will lead to:
A. Gain to the existing partners
B. Loss to the existing partners
C. Neither gain nor loss to the existing partners
D. None of the above
32. Revaluation of assets at the time of reconstitution is
necessary because their present value may be different
from their:
A. Market Value B. Net Value
C. Cost of Asset D. Book Value
33. In which of the following situation Companies Act
2013 allows for issue of shares at discount?
A. Issued to vendors
B. Issued to public
C. Issued as sweat equity
D. None of the above
34. As per Section 52 of Companies Act 2013, Securities
Premium Reserve cannot be utilised for:
A. Writing off capital losses
B. Issue of fully paid bonus shares
C. Writing off discount on issue of securities
D. Writing off preliminary expenses
35. Net Assets minus Capital Reserve is:
A. Purchase consideration
B. Goodwill
C. Total assets
D. Liquid assets
36. Given below are two statements, one labelled as
Assertion (A) and the other labelled as Reason (R):
Assertion (A) : Revaluation A/c is prepared at the time
of Admission of a partner.
Reason (R) : It is required to adjust the values of
assets and liabilities at the time of
admission of a partner, so that the
true financial position of the firm is
reflected.
In the context of the above two statements, which of
the following is correct?
Codes:
A. Both (A) and (R) are correct and (R) is the correct
reason of (A).
B. Both (A) and (R) are correct but (R) is not the
correct reason of (A).
C. Only (R) is correct.
D. Both (A) and (R) are wrong
37. Which of the following statement is/are true?
(i) Authorized Capital < Issued Capital
(ii) Authorized Capital Issued Capital
(iii) Subscribed Capital Issued Capital
(iv) Subscribed Capital > Issued Capital
A. (i) only B. Both (i) and (iv)
C. Both (ii) and (iii) D. (ii) only
Directions (Qs. No. 38 and 39): These questions are based
on the hypothetical situation given below.
Bright Star Limited is engaged in manufacture of high-
end medical equipment. Considering the prospects of high
growth in this segment the company has decided to expand
and for this purpose additional investm ent of
` 50,00,00,000 is required. Directors have decided that
20% of this requirement would be financed by raising long
term debts and balance by issue of Equity shares.
As per memorandum of association of the company the
face value of Equity shares is ` 100 each. Also, considering
the market standing of the company these shares would be
issued at a premium of 25%. Directors decided to issue
sufficient shares to collect the desired amount (including
premium).
 Sample Paper 5
The prospectus was issued to public, and the issue was the amount of interest that Partner will receive for the
over subscribed by 2,00,000 shares which were issued letters current accounting period:
of regret. Answer the below mentioned questions considering A. ` 4,200 B. ` 1,400
that the entire amount was payable on application. C. ` 1,575 D. ` 800
38. What is the total amount collected on application? 43. Which of the following are included in traditional
A. ` 42,50,00,000 classification of ratios?
B. ` 40,00,00,000 (i) Liquidity Ratios
C. ` 32,00,00,000 (ii) Statement of Profit and Loss Ratios
D. None of the above (iii) Balance Sheet Ratios
39. How many Equity shares were offered for issue by (iv) Profitability Ratios
Bright Star Ltd? (v) Composite Ratios
A. 40,00,000 shares B. 50,00,000 shares (vi) Solvency Ratios
C. 35,00,000 shares D. 32,00,000 shares A. (ii), (iii) and (v)
B. (i), (iv) and (vi)
Directions (Qs. No. 40 – 42): These questions are based on C. (i), (ii) and (vi)
the hypothetical situation given below. D. All (i), (ii), (iii), (iv), (v), (vi)
On 1st September 2020, twenty students of Modern 44. The following groups of ratios primarily measure risk:
College started their Partnership Firm in the name of “Be A. solvency, activity, and profitability
Safe” for selling sanitisers on digital mode. Since they were B. liquidity, efficiency, and solvency
good friends of each other, they were not having any explicit C. liquidity, activity, and profitability
agreement in place. All of them have agreed to invest D. liquidity, solvency, and profitability
` 15,000/- each as capital. The books were closed on 31st
March 2021, on which date the following information was 45. Which one of the following is correct?
provided by the firm: (i) A ratio is an arithmetical relationship of one
number to another number.
Particulars Amount (`) (ii) Liquid ratio is also known as acid test ratio.
Sale of Sanitisers 1,20,000 (iii) Ideally accepted current ratio is 1 : 1.
Cost of goods sold 50,000 (iv) Debt equity ratio is the relationship between
outsider’s funds and shareholders’ funds?
Total Remuneration to partners 2,000 per month
In the context of the above two statements, which of
Rent to a partner 1,000 per month
the following options is correct?
Manager’s Commission 5,000 A. All (i), (ii), (iii) and (iv) are correct
Closing Stock 9,000 B. Only (i), (ii) and (iv) are correct
C. Only (ii), (iii) and (iv) are correct
as on March 31, 2021
D. Only (ii) and (iv) are correct
6% Fixed Deposit 20,000
(made on 31.3.2021) 46. Which of the following are the tools of Vertical
Analysis?
40. Calculate the amount of profits to be transferred to (i) Ratio Analysis.
Profit and Loss Appropriation Account: (ii) Comparative Statements.
A. Profit ` 58,000 B. Profit ` 44,000 (iii) Common Size Statements.
C. Profit ` 59,200 D. Profit ` 58,700 A. Only (iii) B. Both (i) and (iii)
41. On 31st March 2021, Remuneration to Partners will C. Both (i) and (ii) D. Only (i)
be provided to the partners of “Be Safe” but only out 47. Match the items given in Column-I with the
of: headings/subheadings (Balance sheet) as defined in
A. Profits for the accounting year Schedule III of Companies Act 2013.
B. Reserves Column-I Column-II
C. Accumulated Profits (a) Loose Tools (i) Intangible fixed assets
D. Goodwill (b) Patents (ii) Other current assets
42. On 01st December 2020 one of the partners of the (c) Prepaid Insurance (iii) Long term Borrowings
firm introduced additional capital of ` 30,000 and (d) Debentures (iv) Inventories
also advanced a loan of ` 40,000 to the firm. Calculate (e) Machinery (v) Tangible Fixed assets
 6 Sample Paper

Choose the correct option: Reason (R) : A high operating ratio leaves a high
(a) (b) (c) (d) (e) margin to meet non-operating
A. (i) (ii) (iv) (iii) (v) expenses.
B. (iv) (i) (ii) (iii) (v)
In the context of the above two statements, which of
C. (iv) (i) (ii) (v) (iii)
the following is correct?
D. (v) (iv) (i) (ii) (iii)
Code:
48. Given below are two statements, one labelled as
A. (A) and (R) both are correct and (R) correctly
Assertion (A) and the other labelled as Reason (R):
Assertion (A) : Increasing the value of closing explains (A)
inventory increases profit. B. Both (A) and (R) are correct but (R) does not
Reason (R) : Increasing the value of closing explain (A)
inventory reduces cost of goods sold. C. Both (A) and (R) are incorrect.
D. (A) is correct but (R) is incorrect
In the context of the above two statements, which of
the following is correct? 50. Current ratio of Adaar Ltd. is 2.5 : 1. Accountant
Codes: wants to maintain it at 2 : 1.
A. Both (A) and (R) are correct and (R) is the correct Following options are available.
reason of (A). (i) He can repay Bills Payable
B. Both (A) and (R) are correct but (R) is not the
(ii) He can purchase goods on credit
correct reason of (A).
C. Only (R) is correct. (iii) He can take short term loan
D. Both (A) and (R) are wrong. Choose the correct option:
49. Given below are two statements, one labelled as A. Only (i) is correct
Assertion (A) and the other labelled as Reason (R): B. Only (ii) is correct
Assertion (A) : A high operating ratio indicates a C. Only (i) and (iii) are correct
favourable position. D. Only (ii) and (iii) are correct

ANSWERS
1 2 3 4 5 6 7 8 9 10
C B D B C D B D B A
11 12 13 14 15 16 17 18 19 20
D B A B B A D A A C
21 22 23 24 25 26 27 28 29 30
D B C D A B C B C D
31 32 33 34 35 36 37 38 39 40
B A C A A A C A D A
41 42 43 44 45 46 47 48 49 50
A D A D B B B A C D
 7 Sample Paper 7

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1 (2715) Accountancy—1
2 Accountancy/Book Keeping
 Accountancy/Book Keeping 3

Accountancy

1. Debit means: 10. According to which of the following concepts even

A. Decrease in asset the owner of the business who provides capital treated
B. Increase in liability as a creditor of the business?
C. An entry on the left hand side of an account A. Entity concept
D. Moderate increase in liability B. Cost concept
C. Money measurement concept
2. Drawings account is related to:
D. Convention of disclosure
A. Nominal account
B. Personal account 11. In book-keeping posting means:
C. Real account A. to record the transactions from the journal to
D. Company drawings account ledger
B. to record the transactions in the journal
3. Which of the following is related to nominal account?
C. to record the transactions in the subsidiary books
A. Bank account
D. to record the transactions in the cash book
B. Commission account
C. Furniture account 12. The basic rule of book-keeping, debit the receiver
D. Interest received account and credit the giver is applicable to:
A. nominal account B. real account
4. Goodwill account is related to:
C. personal account D. drawing account
A. Nominal account B. Personal account
C. Real account D. Tangible account 13. Goods of the value of ` 1500 taken by the proprietor
for his personal use should be debited to:
5. Prepaid insurance is:
A. drawing account B. sales account
A. Nominal account B. Personal account
C. purchases account D. stock account
C. Real account D. Prepaid account
14. Goods destroyed by fire should be credited to:
6. According to the going concern concept, a business A. purchases account
entity is assumed to have: B. sales account
A. a long life B. a very short life C. loss of goods by fire account
C. an indefinite life D. a medium life D. insurance account
7. Contingent liability is shown in the balance sheet 15. The credit balance of bank account indicates:
because of: A. amount payable by the bank
A. Convention of consistency B. amount payable to the bank
B. Convention of materiality C. cash at bank
C. Convention of disclosure D. loan from bank
D. Convention of adventure
16. Which of the following accounts will invariably have
8. Revenue is considered as being earned when: a debit balance?
A. cash is received A. Bank account
B. production is done B. Accounts receivable account
C. sale is effected C. Accounts payable account
D. purchase is done D. Loan account
9. Accounting does not record non-financial transactions 17. Which of the following accounts will invariably have
because of: a credit balance?
A. Entity concept A. Discount account
B. Accrual concept B. Account payable account
C. Measurement concept C. Cash account
D. Double entry concept D. Purchases account
3
 4 Accountancy/Book Keeping

18. Which of the following accounts have only credit B. deducted to the balance as per cash book to arrive
balance? at the balance as per pass book
A. Accounts payable account C. divided to the balance as per cash book to arrive
B. Salaries outstanding account at the balance as per pass book
C. Reserve fund account D. multiplied to the balance as per cash book to
D. All of the above accounts arrive at the balance as per pass book
19. Which of the following accounts may have a debit or 28. Errors which affect one account can be ............
credit balance? A. errors of omission B. errors of principle
A. Discount received account C. errors of posting D. errors of commission
B. Sales account 29. Errors of carry forward from one year to another year
C. Trade expenses account affect ................ .
D. Loan account A. personal account
20. Which of the following books should be used to B. real account
record purchase of furniture on credit? C. nominal account
A. Cash book B. Journal proper D. both personal and real account
C. Purchases book D. Sales book 30. Which of the following errors is an error of omission?
21. Which of the following accounts is increased by debit A. Sale of ` 800 was written in the purchase journal
entries? B. Wages paid to Sohan have been debited to his
A. Machinery account account
B. Purchases return account C. The total of sales journal has not posted to the
C. Discount received account sales account
D. Commission received account D. The total of sales journal has posted to the sales
account
22. The credit balance in the bank account is:
A. an asset B. a liability 31. Which of the following errors in an error of principle?
C. an expense D. contingent liability A. ` 1000 received from Ganesh has been debited to
his account
23. Returns outward book makes a record of: B. Purchase of ` 3000 has been entered in the sales
A. goods returned to the suppliers journal
B. goods returned to customers C. Repairs to machinery have been debited to
C. goods returned to proprietor machinery account
D. goods returned to neighbours D. Repairs to scooter have been debited to repairs
24. Cash book prepared on imprest system is: account
A. two column cash book 32. Error of commission do not allow ............ .
B. cash book A. correct totalling of the balance sheet
C. petty cash book B. correct totalling of the trial balance
D. purchase book C. the trial balance to agree
25. The statement sent along with purchase return is: D. correct totalling of the day book
A. credit note B. bills payable book 33. Assets are held for the purpose of ............... .
C. debit note D. purchases return book A. earning revenue B. resale
26. A bank reconciliation statement is prepared by C. conversion into cash D. personal purpose
................. . 34. Stock is valued at ................. .
A. customer of the bank A. cost price
B. bank B. market price
C. Reserve Bank of India C. cost of market price whichever is lower
D. Either B or C D. odd price
27. While preparing bank reconciliation statement, 35. Unearned income account is.............. .
cheques paid into bank but not yet cleared are A. Asset
..................... . B. Liability
A. added to the balance as per cash book to arrive C. Expense
at the balance as per pass book D. Income received in advance
 Accountancy/Book Keeping 5
36. Depreciation is provided on ................. . 46. Noting charges account is debited by ......... .
A. fixed assets B. outward charges A. the presenter of bill
C. current assets D. intangible assets B. the discounting banker
C. the acceptor
37. Heavy advertising to launch a new product is a
................. . D. the endorser
A. capital expenditure 47. While discounting the bill, debit should be given to
B. revenue expenditure .................. .
C. deferred revenue expenditure A. bank account
D. other expenditure B. bill receivable account
38. Accounts receivable includes ................. . C. acceptor’s account
D. cash account
A. sundry debtors B. bill receivable
C. promissory note D. all of the above 48. Cancelling the original bill and drawing a fresh
acceptance is known as ............... .
39. Provision for bad debts is calculated on ................... .
A. Retiring under rebate
A. Creditors B. Sales
C. Purchases D. Debtors B. Renewal
C. Discounting
40. An example of revenue expenditure is .................. . D. Bill sent to bank for collection
A. Purchase of land
49. At the time of endorsement of a bill, the drawer credits
B. Salaries
.................. .
C. Lease
D. Purchase of buildings A. the drawee
B. endorsee personal account
41. When a bill is drawn by A on B, it is debited in the C. bills receivable account
books of A to ................ . D. bills for collection account
A. Cash account
50. When a bill is discharged, the acceptor debits
B. B’s account
C. Bills Receivable account .................... .
A. Creditor’s account
D. Bills Payable account
B. Cash account
42. When a bill drawn by A on B (and retained till the C. Bills payable account
date of maturity is dishonoured on the due date), it D. Bills receivable account
is debited (in the books of A) to .................. .
A. Bill Receivable Account 51. Base date is otherwise called as ............... .
A. zero date B. leave date
B. B’s Account
C. working days D. grace days
C. Bills Payable Account
D. Cash Account 52. Average due date can be called as............ .
A. mean due date B. median due date
43. When a bill drawn by A and B endorsed to C is
dishonoured on the due date, it is credited in the C. mode due date D. zero date
books of A to .............. . 53. Account current is a journal is .............. .
A. Bank account A. True B. False
B. Bills receivable account C. Partly true D. Partly false
C. Bank for collection of bills account
54. Which is the accounting concept that requires the
D. C’s account practice of crediting closing stock to the trading
44. When a bill is drawn by A on B and before the date account?
of maturity, B becomes insolvent then in the books A. Going concern B. Cost
of A it is debited to ......... C. Realization D. Matching
A. Bills receivable account
55. Assets in the balance sheet are shown at cost less
B. Bank account depreciation rather than their replacement cost because
C. B’s account
of the accounting convention .................. .
D. Bank for collection of bills
A. going concern
45. Bills are drawn by ................ . B. matching
A. Creditors B. Debtors C. realization
C. Agent D. Brokers D. money measurement
 6 Accountancy/Book Keeping

56. According to money measurement concept, which one 65. The excess of current assets over current liabilities is
of the following will be recorded in the books of called ............... .
accounts .................. . A. Net tangible worth B. Networth
A. excellent morale of workers C. Gross working capital D. Net working capital
B. quality control in the business
66. The discount column of a triple column cash book
C. managing ability of the manager
records ................ .
D. cost of machinery
A. trade discount B. cash discount
57. Contingent liability appears as a footnote in the C. quantity discount D. seasonal discount
balance sheet. This is in accordance with the
67. Journal proper is issued to record ............... .
accounting principle of ............... .
A. all purchases of goods
A. Consistency B. Disclosure
B. all sales of goods
C. Materiality D. Conservatism
C. all business expenses paid in cash
58. The policy to anticipate no profit and provide for all D. all adjusting and rectification entries
possible losses arises due to convention of ..................
68. Which one of the following entry is not recorded in
A. Consistency B. Disclosure
the residuary journal?
C. Matching D. Conservatism
A. Opening entry B. Closing entry
59. Revenue is generally recognised being earned at the C. Adjustment entry D. Credit sales
point of time when ............... .
69. When furniture is sold for cash, the entry should be
A. sale is effected
made in .................. .
B. cash is received
C. production is completed A. sales book B. cash book
D. goods are delivered C. journal D. petty cash book

60. Which one of the following arrangements represents 70. Which one of the following is an example of personal
the order of liquidity? account?
A. Cash, Bills Receivable, Stock, Debtors A. Capital account B. Building account
B. Cash, Bills Receivable, Debtors, Stock C. Cash account D. Investment account
C. Cash, Stock, Bills Receivable, Debtors 71. The appropriate book to record credit purchase of
D. Cash, Debtors, Bills Receivable, Stock machinery is ................. .
61. Balance sheet is prepared primarily with the following A. purchases book B. journal
group in view of ............... . C. cash book D. petty cash book
A. Owners B. Creditors 72. Bills payable book is a ................ .
C. Government D. Management A. subsidiary book B. principal book
62. Which one of the following is an example of an C. ledger D. memorandum book
intangible asset? 73. The balance of the petty cash book is ...........
A. Preliminary expenses A. an asset B. a liability
B. Discount on issue of debentures C. an income D. an expenditure
C. Investments
D. Copyrights 74. Sales A/c Dr To Trading A/c Is an example of ................
A. closing entry B. adjusting entry
63. Both assets and owners equity would be increased by C. opening entry D. transaction entry
................. .
A. capital brought in 75. The balance of cash account indicates ...........
B. purchase of an asset on credit A. net income for the period
C. payment of creditors B. net loss for the period
D. proprietors drawings C. net worth of the business
D. net cash on hand
64. If a companies tangible networth is a positive amount,
it indicates: 76. The process of transferring the credit and debit items
A. the probability of the company form a journal to their respective accounts in the
B. the liquidity of the company ledger is termed as ........... .
C. the solvency of the company A. Balancing B. Invoicing
D. Both A and B C. Double entry D. Posting

77. Which account is generally used for rectification of
errors?
A. Memorandum account
B. Suspense account
C. Rectification account
D. Adjustment account
78. Which one of the following errors is an error of
principle?
A. Debiting repairs account instead of furniture
account
B. Sale of ` 200 entered in the books as ` 2000
C. Cash sale of ` 500 wrongly entered in sales book
D. Purchase transaction entered in purchases return
book
79. Which one of the following error will affect the
agreement of the trial balance?
A. A sale of ` 20 to Ram entered in the sales book
as ` 200
B. Purchase of ` 500 credited to Ram instead of
Shyam
C. Sale returns of ` 1000 correctly entered in the
sales returns book but posted to the debit of
Sundar
D. Cash sale of furniture credited to sales account
80. Preparation of trial balance helps in the deduction of
................ .
A. error of principle
B. compensating errors
C. errors of whole omission
D. clerical errors
81. Errors of principle arise when .................. .
A. proper distinction is not made between capital
and revenue.
B. there is an omission of transaction
C. wrong amounts are entered in the subsidiary books
D. transactions are entered in the wrong subsidiary
books
82. Goods worth ` 200 returned by Mohan were taken
into stock, but no entry was passed, is an error of
..................... .
A. Commission
B. Principle
C. Omission
D. Compensatory
83. The main purpose of preparing a bank reconciliation
statement is .................. .
A. to know the bank balance
B. to compare the entries in the cash and pass books
C. to correct the cash after comparing with pass books
D. to reconcile cash balance as per pass book with
the balance in the pass book
Accountancy/Book Keeping 7
84. Bank Reconciliation statement is ............ .
A. ledger account
B. part of the cash book
C. a separate statement
D. a sub division of the journal
85. A Cheque received and paid into the bank on the
same day is recorded in the ............ .
A. cash column of the cash book
B. bank column of the cash book
C. both the cash and bank columns of the book
D. the credit balance as per pass book
86. The payment side of the cash book is undercast by
` 200. When overdraft as per pass book is the
starting point, to get the overdraft as per cash book
................... .
A. ` 200 will be deducted
B. ` 200 will be added
C. ` 400 will be added
D. ` 400 will be deducted
87. Which one of the following is not taken into account
in adjusting the cash balance?
A. Mistakes in the cash book
B. Mistakes in the pass book
C. Bank charges debited in pass book
D. Interest and dividend credited in pass book
88. An amount of ` 1000 is debited twice in the pass
book. When overdraft as per the cash book is the
starting point .................... .
A. ` 1000 will be deducted
B. ` 1000 will be added
C. ` 2000 will be deducted
D. ` 2000 will be added
89. Amount spent on advertisement campaign, the
benefit of which is likely to last for three years, is
.....................
A. capital expenditure
B. deferred revenue expenditure
C. revenue expenditure
D. deferred capital expenditure
90. Revenue expenditure is intended to benefit .................
A. current period
B. future period
C. past period
D. both A and B
91. The distinction between capital and revenue is
necessary for the preparation of ............... .
A. fund flow statement
B. receipts and payment account
C. final accounts
D. cash flow statement
 8 Accountancy/Book Keeping

92. Any expenditure incurred in order to reduce the 100. If payment is made on the average due date it results
operating expenses is ................ . in ............... .
A. capital expenditure A. loss of interest to the creditor
B. revenue expenditure B. loss of interest to the debtor
C. deferred revenue expenditure C. no loss of interest to either of them
D. promotional expenditure D. loss of interest to both the creditor and debtor
93. Wages paid for erection of machinery are debited to 101. Overcasting of purchases journal would affect
................ . ..................... .
A. Wages account A. Sales account B. Purchase account
B. Machinery account C. Suppliers account D. Sales returns account
C. Profit and loss account
D. Deferred wages account 102. Sales to Benson ` 500 posted to his account as ` 50
would affect .................. .
94. Premium received on issue of shares is a .................... A. Sales account B. Bensons account
A. capital receipt C. Cash account D. Purchases account
B. revenue receipt
C. deferred capital receipt 103. Sales to Mr. Gill recorded in purchase journal would
D. deferred revenue receipt affect ................... .
A. Sales account
95. Amount paid for acquiring goodwill is ................ .
B. Sales account, purchases account and Mr. Gill’s
A. revenue expenditure
account
B. deferred revenue expenditure
C. Purchases account and sales account
C. capital expenditure
D. Journal proper
D. deferred capital expenditure
104. Purchases made on credit not recorded at all would
96. Where separate set of books are maintained, the ledger
affect ................. .
accounts required are ................ .
A. Purchases account
A. Memorandum joint venture and joint venture
account with the other party B. Suppliers account
B. Joint venture account and the personal account of C. Purchases account and suppliers account
the other party D. Wages account
C. Joint bank account, co-venturer capital accounts 105. Journal Proper is meant for recording .............. .
and joint bank account A. credit purchase of fixed assets
D. Joint bank account and joint venture account B. return of goods
with the other party C. all such transactions for which no special journal
97. When A advances money to B in the course of joint has been kept by the business
venture then A debits such money to ................... . D. supply of goods
A. Joint bank account 106. Purchase journal is kept to record .............. .
B. Joint venture account A. cash sales B. credit sales of assets
C. B’s personal account C. credit sales of goods D. credit purchases
D. Expenses account
107. A credit sale of goods to Shiva should be debited to
98. The account current method in which the days are ................... .
calculated from the date of transaction to the A. Sales account B. Goods account
commencement date is known as ................ . C. Shiva account D. Purchase account
A. Forward method
B. Epoch method 108. A sale of goods to Vidhya for cash should be debited
C. Daily balance method to ................ .
D. Backward method A. Vidhya’s account B. Cash account
C. Sale of goods account D. Purchases account
99. The method of current account usually employed by
the banker is known as ........... 109. The preparation of a Trial balance helps in ..................
A. Daily balance method A. locating errors in principle
B. Red ink interest B. locating errors of omission
C. Current account C. locating clerical errors
D. Product method D. locating compensatory errors
 Accountancy/Book Keeping 9
110. A Cheque received and deposited in the bank on the 119. Which one of the following is capital expenditure?
same day is recorded in the ............. . A. Cost of advertisement
A. cash column of the cash book B. Purchase of a delivery van
B. bank column of the cash book C. Purchase of raw material
C. credited in the cash book D. Purchase of machine oil
D. debited in the cash book 120. Which one of the following is treated as revenue
111. Insurance unexposed account is a ............... . expenditure?
A. Real account A. Cost incurred for a new exit as required under the
local bodies by laws
B. Personal account
B. Interest paid on loan during the construction of
C. Nominal account
works
D. Representative account
C. Cost of pulling down an old building
112. Petty cash may be used to pay .................... . D. A dealer in purchasing sewing machines and spent
A. the expenses relating to postage and conveyance some money on the repairs
B. salaries and wages to the final staff 121. Expenditure incurred on research is an example of
C. for the purchase of furniture and fittings ................ .
D. other recurring expenses A. capital expenditure
113. Which item is shown on the debit side of a trial B. revenue expenditure
balance? C. deferred revenue expenditure
A. Rent outstanding D. partly capital expenditure
B. Prepaid expenses 122. Payment of compensation to a worker who has been
C. Purchases returns discharged from service is a ......... .
D. Excess of income over expenses by the firm A. capital expenditure
B. revenue expenditure
114. Purchases for office furniture on account is recorded
C. deferred revenue expenditure
in .............. . D. partly capital expenditure
A. general journal B. cash book
C. purchases book D. sales book 123. Which English alphabet is similar to the shape of an
account?
115. What does GAAP represents? A. I B. T
A. Generally Accepted Audit Procedure C. H D. Y
B. Generally Accepted Accounting Principles
124. How many sides does an account have?
C. General Agreement on Audit Principles
A. One B. Two
D. General Agreement on Accounting Principles
C. Three D. Four
116. Any donation received for a specific purpose is a
125. The ................ in a ledger helps in locating the accounts
................ . contained in it.
A. liability B. assets A. folio B. pages
C. revenue receipts D. capital receipts C. serial numbers D. part numbers
117. Expenditure incurred by a publisher for acquiring 126. Ledger is also called ................. .
copyrights is a ................. . A. principal book of accounts
A. capital expenditure B. cash books
B. reserve expenditure C. subsidiary books
C. deferred reserve expenditure D. petty cash book
D. capital receipts 127. Purchase of Typewriter would result in ........... of fund.
118. Which one of the following should be considered as A. Change B. Application
revenue expenditure? C. Service D. No flow
A. ` 1000 paid for the execution of a new plant 128. The following items are shown in profit and loss
B. Loss of ` 10000 incurred in increasing the sitting appropriation account as ................. .
accommodation of hotel A. Dividend declared
C. Damage paid on account of breach of a contract B. Discount on issue of shares
to supply certain goods C. Non-operating expenses
D. Repairs to machinery purchased D. Current assets
(2715) Accountancy—2
 10 Accountancy/Book Keeping

129. The assets of a business can be classified as ................... . 138. In case of retirement of a partner, the partner’s loan
A. only fixed assets account would be shown
B. only current assets A. in his capital account
C. fixed and current assets B. in his wife’s loan account
D. fictitious assets C. in his loan account
130. If the rate of gross profit is 25% on cost by goods sold D. in the total amount due to him
and the sales are ` 200000, the amount of profit will 139. As per Garner V Murray Rule, the loss resulting from
be ................. . a partner’s insolvency is borne by other partners in
A. ` 50000 B. ` 40000 A. equal ratio
C. ` 45000 D. ` 65000 B. their capital ratio
C. their profit sharing ratio
131. The balance sheet is a ................. of the assets, liabilities
D. 3 : 1 ratio
and capital of a concern as on particular date.
A. Statement B. Document 140. The movement of securities from one stock exchange
C. Picture D. Balance to another with the object of reaping a profit from the
132. A gross profit is transferred to the ............... side of the disparity in share prices is called
profit and loss account. A. Averaging B. Arbitraging
C. Back wardation D. Forward trading
A. Debit B. Credit
C. Current D. Asset 141. The balance left in the capital accounts on dissolution
of a firm is transferred to
133. If net profits are ` 30,000 and expenses not resulting
A. Realisation Account
in the application of fund are ` 10,000, then the
B. Profit and loss Account
funds from operation will be
C. Bank Account
A. ` 30,000 B. ` 40,000
C. ` 10,000 D. ` 20,000 D. None of these
142. A cartel is a combination firms
134. Cost of goods purchased for resale is an example of
A. Capital expenditure A. Which are functioning in a particular industry
B. Whose combined assets are worth more than 90%
B. Revenue expenditure
of total assets of the industry
C. Deferred revenue expenditure
C. Who control major chunk of the market
D. None of these
D. Whose combined profits are enormous
135. Which one of the following is treated as revenue
143. The following items are shown in profit and loss
expenditure?
appropriation account:
A. Cost incurred for a new exit as required under the
A. Dividend declared
local bodies by laws
B. Discount on issue of shares
B. Interest paid on loan during the construction of
C. Non-operating expenses
works
D. Current assets
C. Cost of pulling down an old building
D. A dealer in purchasing sewing machines and spent 144. The take over of a company in which most of the
some money on the repairs purchase price is paid with borrowed money is referred
to as
136. Expenditure incurred on research is an example of
A. hostile takeover B. illegal takeover
................... .
C. lever aged buy-out D. management buy-out
A. capital expenditure
B. revenue expenditure 145. One of the major difficulties in improving the
C. deferred revenue expenditure industrial efficiency in enterprises is
D. partly capital expenditure A. low investment
B. low productivity
137. Payment of compensation to a worker who has been
C. ineffective marketing
discharged from service is a ................ .
D. poor inventory control
A. capital expenditure
B. revenue expenditure 146. In life insurance,the risk insured is
C. deferred revenue expenditure A. certain to occur and also the timing of its
D. partly capital expenditure occurrence is known
 Accountancy/Book Keeping 11
B. certain to occur,but its timing of occurrence is not 157. Excess of income over expenditure is shown on the
known ........... side of income and expenditure account.
C. not certain to occur and also the timming of its A. Credit B. Debit
occurrence is not known C. Upper D. Lower
D. not likely to occur 158. Income and expenditure account is prepared by ..............
147. The loss on the sale of old furniture is debited to concerns.
A. Profit and loss Account A. non-trading B. trading
B. Furniture Account C. partnership D. sole proprietor
C. Trading Account 159. Life membership fee received by a club are shown in
D. Depreciation Account ................ .
148. ` 500 spent on servicing office typewriter should be A. balance sheet
debited to ............... . B. profit and loss account
A. Expenses account B. Typewriter account C. income and expenditure account
C. Repairs account D. Services account D. revenue account

149. Wages paid to workers must be debited to ................... 160. A receipts and payments account, the payments are
account recorded on the ............... side.
A. Credit B. Debit
A. Wages B. Machinery
C. Upper D. Lower
C. Factory expenses D. Offices expenses
161. The closing debit balance in the receipts and payments
150. Interest on capital is credited to .................. account.
account indicates the ............. balance at the end of
A. Expenses account B. Income account
the year.
C. Capital account D. Asset account
A. Opening B. Closing
151. Depreciation deducted from the concerned ................... C. Trading D. Cash
.
162. The income and expenditure account is prepared on
A. Liability B. Asset the basis of ............... system of accounting.
C. Expenses D. Incomes A. Basic B. Main
152. Receipts and payments account is a ........... . C. Cash D. Mercantile
A. Personal account 163. A debit balance in the income and expenditure
B. Nominal account account denotes excess of ............ over .......... .
C. Real account A. income, expenditure B. assets, liabilities
D. Representative account C. liabilities, assets D. expenditure, incomes
153. Receipts and payment account record receipt and 164. Income and expenditure matches all ............. receipts
payments of ................ . against ............. payments pertaining to the relevant
A. revenue nature only accounting years.
B. capital nature only A. revenue, revenue B. cash, cash
C. both revenue and capital nature C. cash, credits D. credit, cash
D. capital receipts
165. Any amount received towards endowment fund is a
154. The receipts and payments account begins with .................. receipt.
................. . A. Ordinary B. Special
A. debit balance B. credit balance C. Revenue D. Capital
C. no balance D. normal balance
166. Interest received on special fund investments will be
155. Non-trading institutions prepare ................. . added to .............. fund in the balance sheet.
A. Income and expenditure account A. investment fund B. bank fund
B. Trading and profit and loss account C. general D. special
C. Only trading account 167. Subscriptions received in advance will figure in the
D. Only revenue account .................. .
156. Subscription received in advance by a club is shown A. balance sheet
on the ............ side of the balance sheet. B. receipts and payment account
A. Liabilities B. Assets C. income and expenditure account
C. Credit D. Debit D. revenue account
 12 Accountancy/Book Keeping

168. Any revenue expenditure relating to special fund must 178. Subscriptions for the current year received during the
be deducted from .................. . current year are to be ................ .
A. last fund B. special fund A. credited to receipts and payments account
C. annual fund D. entrance fee B. debited to income and expenditure account
C. credited to income and expenditure account
169. Any revenue expense for when a separate fund is
D. credited to revenue account
available will be ................ .
A. debited to the separate fund 179. Non-trading institutions prepare ............... .
B. debited to income and expenditure account A. profit and loss account
C. capital issued and shown in the balance sheet B. trading account
D. credited to the separate fund C. manufacturing account
D. income and expenditure account
170. Sales of old material must be shown on the credit side
of ................ . 180. Receipts and payment account shows .............. .
A. cash book A. income and expenditure
B. income and expenditure account B. cash receipts and payments
C. balance sheet C. assets and liabilities
D. trading account D. profit on sale
171. The information for the preparation of receipt and 181. Income and expenditure account reveals ................. .
payments account is taken from .......... . A. cash in hand B. surplus or deficiency
A. cash book C. capital account D. revenue account
B. income and expenditure 182. Income and expenditure account records transaction
C. cash book and balance sheet of ................ .
D. revenue account A. revenue nature only
172. Income and expenditure account is a .......... . B. capital nature only
A. Real account B. Nominal account C. both capital and revenue nature
C. Personal account D. Representative account D. personal nature

173. Which of the following items should not be entered 183. Subscription received in advance is ............. .
in receipts and payments account of a club? A. an income B. an asset
A. Sale of old newspaper C. a liability D. an expense
B. Loss on sale of old furniture 184. Subscription in arrears (given in adjustment) is shown
C. Subscriptions received in advance on the ................. .
D. Expenses for previous year A. credit side of income and expenditure account
174. Donations received by a non-profit organisation are and assets side of balance sheet
usually a ................. . B. debit side of the income and expenditure and
A. revenue receipt B. capital receipt liabilities side of the balance sheet
C. capital expenditure D. revenue expenditure C. only in the assets side of balance sheet
D. only in the liabilities side of balance sheet
175. Sale of old newspaper is to be shown on the credit
185. Donation received for a specific purpose:
side of the ................... .
A. should be credited to a separate account and
A. cash book B. income and expenditure
shown on the liabilities side of the balance sheet
C. balance sheet D. trading account
B. should be credited to income and expenditure
176. Specific donations received by a non-trading concern account
are usually .............. . C. should not be recorded at all
A. revenue receipt B. capital receipt D. should be debited to income and expenditure
C. capital expenditure D. revenue expenditure account
177. Any profit on the sale of furniture of a cricket club 186. If there is a prize fund and prizes are awarded, expenses
will be taken to ................. . and income are transferred to ........... .
A. income and expenditure account A. income and expenditure account
B. cash account B. assets side of the balance sheet
C. profit and loss account C. the liabilities side of the balance sheet
D. furniture account D. trading account
 Accountancy/Book Keeping 13
187. Admission fee income should be ............... . 196. Bills Receivable book is to keep record of .................
A. capitalized A. bills received from customers
B. treated as a revenue B. bills received from supplier
C. treated as revenue unless the amount is pretty C. credit purchases
large D. credit sales
D. treated as a liability 197. Bills Payable book is to keep a record of ...................
188. The main purpose of this ............. accounting is to A. bills payable to creditors
ascertain profit or loss during a specific period, to B. bills received from supplier
show financial position of the business. C. credit purchases
A. financial accounting D. credit sales
B. cost accounting 198. The prime function of accounting is to:
C. management account A. record economic data
D. human resource accounting B. provide the informational basis for action
189. The main aim of ............... accounting is to ascertain C. classifying and recording business transactions
cost relating to the various activities of the business D. attain non-economic goals
and to have cost control. 199. The basic function of financial accounting is to:
A. financial accounting A. record all business transactions
B. cost accounting B. interpret the financial data
C. management account C. assist the management in performing functions
D. human resource accounting effectively
190. ................ supplies the management significant D. information to management
information in order to assist the management to 200. Book-keeping is mainly concerned with:
discharge its various functions such as planning, A. recording of financial data relating to business
control and decision making. operations
A. Financial accounting B. designing the system in recording, classifying,
B. Cost accounting summarizing the recorded data
C. Management account C. interpreting the data for internal and external end
D. Human resource accounting users
D. only for internal purposes
191. Any written document in support of a business
transaction is called a .................. . 201. Accounting principles are generally based on:
A. Voucher B. Bill A. practicability
C. Carbon copy D. Expense bill B. subjectivity
C. convenience in recording
192. If some goods from business are given away as charity
D. applicability
to a particular person or institution, it should be
................. . 202. The system of recording transactions based on dual
A. debited to charity account aspect concept is called:
B. credited to charity account A. double account system
C. debit sales account B. double entry system
D. debit to donation account C. single entry system
D. single account system
193. ................ is given to promote sales.
A. Cash discount B. Trade discount 203. The convention of conservatism is applicable:
C. Quantity discount D. Price discount A. in providing for discount on creditors
B. in making provision for bad debts and doubtful
194. .................. is allowed to encourage early cash payment. debts
A. Cash discount B. Trade discount C. in making provision for depreciation
C. Quantity discount D. Price discount D. in making provision for contingencies
195. The process of recording financial transactions in the 204. The amount brought in by the proprietor in the
journal is called ................. business should be credited to:
A. Journalizing B. Utilizing A. cash account B. capital account
C. Posting D. Balancing C. drawing account D. bank account
 14 Accountancy/Book Keeping

205. Ledger is a book of: 217. State which of the following errors will not be revealed
A. original entry B. final entry by the trial balance?
C. all cash entry D. all credit entry A. errors of complete omission
206. Purchase of machinery is recorded in: B. errors of carrying forward
A. sales book B. journal proper C. wrong totalling of the purchases book
C. purchases book D. sales returns book D. error of partial omission

207. Credit sales are recorded in: 218. Cost of goods purchased for resale is an example of:
A. sales book B. cash book A. Deferred Revenue Expenditure
C. journal proper D. purchases book B. Revenue Expenditure
C. Capital Expenditure
208. The cash book records: D. Common Expenditure
A. all cash payments
B. all cash receipts 219. Revenue receipts are ............... in the business.
C. all cash receipts and payments A. non-recurring
D. only credit payments B. Recurring
C. Accumulating
209. If a cheque sent for collection is dishonoured, the
D. non-accumulating
debit is given to:
A. suppliers account B. bank account 220. Shankar introduces ` 5000 as additional capital in
C. customers account D. cash account the business. This amount will be considered as:
A. capital receipt
210. In triple column cash book, cash withdrawn from
B. revenue receipt
bank for office use will appear in:
C. capital and revenue receipt
A. debit side of the cash book only
D. deferred revenue expenditure
B. both sides of the cash book
C. credit side of the cash book only 221. Preliminary expenses are an example of:
D. credit side of the bank account A. Deferred Revenue Expenditure
B. Revenue Expenditure
211. Bank reconciliation statement is prepared by the:
A. bank B. creditors of a business C. Capital Expenditure
C. customer of a bank D. suppliers D. Common Expenditure

212. Debit balance in cash book means: 222. An expenditure is treated as capital nature, when:
A. overdraft as per pass book A. the receiver of the amount is going to use it for
B. overdraft as per cash book the purchase of fixed assets
C. credit balance as per pass book B. it increases the quantity of fixed assets
D. debit balance as per day book C. it is paid for meeting the normal expenses of the
business
213. A bank pass book is a copy of: D. it decreases the quantity of other assets
A. the cash column of a customers cash book
B. the bank column of a customers cash book 223. Trading account is prepared to find out:
C. the customer’s account in the banks ledger A. gross profit or loss
D. the customer’s account in the suppliers ledger B. net profit or loss
C. financial position
214. Errors which affect one side of an account are called: D. position of the partners
A. single sided errors B. double sided errors
C. triple sided errors D. compensation errors 224. Outstanding salaries are shown as:
A. an expense B. a liability
215. A Purchases returns of ` 200 to Mr. P if entered in the
C. an asset D. an income
sales book would affect:
A. P’s account 225. Interest on drawings is:
B. purchases returns account A. expenditure for the business
C. sales account B. expense for the business
D. purchases returns account and sales account C. gain for the business
D. loss for the business
216. Sales to Ram ` 336 posted to his account as ` 363
would effect: 226. Balance sheet is a:
A. sales account B. Ram’s account A. Statement B. Account
C. cash account D. bank account C. Ledger D. Book
 Accountancy/Book Keeping 15
227. Wages is an example of: 239. Del Credere commission is allowed to the consignee
A. capital expenses B. indirect expenses to bear:
C. direct expenses D. revenue expenses A. normal loss
228. A bill of exchange payable after a certain period is B. abnormal loss
known as ................. bill. C. loss on account of bad debts
A. Time B. Accommodation D. profit on account of sender
C. Revenue D. Dishonored 240. The abnormal loss debited to:
229. A bill drawn and accepted for a genuine trade A. profit & loss account
transaction is termed as a .............. bill. B. consignee’s account
A. Trade B. Time C. consignor’s account
C. Inland D. Personal D. consignment account

230. A bill which is not an inland bill is a ............... bill. 241. Jay account is:
A. Outward B. Inward A. a nominal account B. a personal account
C. Foreign D. New C. a real account D. a trading account

231. A person who draws a bill of exchange is known as 242. Cash purchase in the account of:
the: A. purchases account B. joint venture account
A. Drawee B. Drawer C. venturers account D. cash account
C. Payer D. Payee 243. Final Account is:
232. A person named in the negotiable instrument to whom A. one account B. two account
or to whose order the money in the instrument is C. three account D. four account
directed to be paid is called as the: 244. Donations received for a special purpose will be taken
A. Payer B. Payee to:
C. Consignor D. Consignee A. income and expenditure account
233. Noting charges are paid in the event of ............... of a B. asset side of the balance sheet
bill. C. liabilities side of the balance sheet
A. Withdrawal B. Payment D. debit side of the ledger
C. Dishonour D. Deposit 245. Legacies are generally:
234. In case of accommodation bills, if one party becomes A. capitalized and taken to balance sheet
insolvent then that party credits the short remittance B. treated as income
to: C. treated as expenditure
A. deficiency account B. cash account D. treated as other incomes
C. loan account D. bill account 246. Income and expenditure account is:
235. At the time of the renewal of a bill, interest account A. a real account B. a nominal account
is .............. in the books of the drawee. C. a personal account D. cash account
A. Credited B. Totalled 247. In case a sports fund is kept expenses on account of
C. Debited D. Posted sports events should be:
236. ............... days of grace are allowed in case of time A. charged to sports fund
bills for calculation date of maturity. B. charged to the income and expenditure account
A. Five B. Seven C. Taken to the balance sheet on the asset side
C. Three D. Two D. Taken to the balance sheet on the liability side
237. A bill drawn and accepted for providing funds to a 248. Profits can be fraudulently inflated by:
friend in need is known as: A. Suppression of sales returns
A. cheque B. Treating capital expenditure as revenue
B. promissory note C. Overestimation of liabilities
C. accommodation bill D. Omission of prepaid expenses
D. demand bill 249. A credit sale of goods to Shivendra should be debited
238. Salary account is of the nature of a: to:
A. real account B. nominal account A. Sales Account B. Goods Account
C. personal account D. trading account C. Shivendra’s Account D. Purchase Account
 16 Accountancy/Book Keeping

250. Which of the following assets does not depreciate? C. No effect will be in the pass book
A. Machinery and equipment D. None of these.
B. Patents 260. An amount of ` 300 is debited twice in the pass book
C. Land when overdraft as per the cash book is the starting
D. Furniture point:
251. Valuing the stock in trade at market price or cost A. ` 600 will be added
price which is less is an example of the convention of: B. ` 500 will be deducted
A. consistency B. disclosure C. No effect will be in the cash book
C. knowing the value D. None of these D. None of these
252. Double entry principle means: 261. Expenditure incurred by a publisher for acquiring
A. Having debit for every credit and similarly credit copy rights is a:
for each debit. A. Capital expenditure
B. Writing all the entries twice in the book. B. Revenue expenditure
C. Maintaining the double account for all business C. Deferred revenue expenditure
transactions. D. None of these
D. Writing two times the same entry. 262. Immediately after purchasing a new truck ` 1,000 is
253. A sale of goods to Vaibhav Deep for cash should be paid to have the name of the company and other
advertising material painted on the truck this ` 1,000
debited to:
is a:
A. Vaibhav’s A/c B. Cash A/c
A. Capital expenditure
C. Sale of goods A/c D. None of these
B. Deferred revenue expenditure
254. A withdrawal of cash from business by the proprietor C. Revenue expenditure
of the firm should be credited to: D. None of these
A. Capital Account B. Cash Account
263. A return Inwards book is kept to record:
C. Drawing Account D. Proprietor’s Account
A. return of goods sold
255. The preparation of a trial balance helps in: B. returns of anything purchased
A. Locating errors of principle C. returns of goods purchased
B. Locating errors of ommission D. returns of anything sold
C. Locating clerical errors 264. Bill Receivable Book is a part of the:
D. Locating compensatory errors A. Ledger
256. A cheque received and deposited in the bank on the B. Balance Sheet
same day is recorded in the: C. Journal
A. Cash column of the cash book D. Profit and Loss Account
B. Bank column of the cash book 265. A sales of ` 2000 wrongly entered in the purchase
C. Credited in the cash book book:
D. Debited in the cash book A. decreases the gross profit by ` 2000
257. Petty cash may be used to pay: B. increases the gross profit by ` 2000
A. the expenses relating to postages and conveyance C. increases the gross profit by ` 4000
B. salaries and wages to the final staff D. none of these
C. for the purchase of furniture and fittings 266. Which of the following are current assets?
D. None of these A. Bank loan for three years
258. A reserve is charge against: B. Account receivable
C. Long-term investments
A. Trading account
D. Debentures sinking fund investments
B. Profit and loss account
C. Profit and loss appropriation account 267. Insurance unexpires accounts is a:
D. None of these A. Real account B. Personal account
C. Nominal account D. None of these
259. The payment side of cash book is under cost by ` 200
when over draft as per pass book is the starting point: 268. Goodwill account is a:
A. ` 200 will be deducted A. Nominal Account B. Real Account
B. ` 200 will be added C. Personal Account D. None of these
 Accountancy/Book Keeping 17
269. Bank overdraft account is a: 281. If a receipt of ` 200 from Rajesh out debtor has not
A. Personal Account B. Real Account been recorded in the books, the profit would show:
C. Nominal Account D. All of these A. an increase of ` 200
B. a decrease of ` 200
270. Contingent liability is shaken due to:
C. neither an increase nor a decrease
A. Convention of full disclosure
D. None of these
B. Convention of conservatism
C. Convention of materiality 282. Closing stock is valued at:
D. Dual aspect concept A. Market price
B. Cost price
271. Which item is shown on the debit side of a trial
C. Cost price or market price whichever is lower
balance?
D. Cost price or market price whichever is higher
A. Rent outstanding
B. Prepaid expenses 283. Unearned income account is:
C. Purchases A. an asset B. a liability
D. Excess of income over expenses by the firm C. an expense D. an income
272. Purchase for office furniture is recorded in: 284. Depreciation is provided on:
A. General Journal B. Cash book A. Current Assets B. Liquid Assets
C. Purchase book D. Sales book C. Fictitious Assets D. Fixed Assets
273. Sales on account is recorded in: 285. A bill of exchange is drawn by a:
A. Cash book B. Journal A. Creditor B. Debtor
C. Sales book D. General Journal C. Shareholder D. Debentureholder
274. The credit balance in the bank account is: 286. Bills receivable account is:
A. capital B. a liability A. an expense Account B. an asset Account
C. an asset D. an expense C. a liability Account D. a revenue Account
275. Cash sales are recorded in: 287. When goods are purchased for the joint venture out
A. Sales book B. Cash book of joint bank A/c the amount is debited to:
C. Journal D. Purchase book A. Joint bank A/c B. Joint venture A/c
C. Purchases account D. None of these
276. Error of commission does not permit :
A. The trial balance to agree 288. Bills receivable endorsed are debited to:
B. Correct the total of balance sheet A. Debtor’s Account
C. Correct totalling of trial balance B. Creditor’s Account
D. None of these C. Bills payable Account
D. Bills receivable Account
277. An item of ` 72 has been debited to a personal account
as ` 27, is an error of: 289. Subscription received during the year were ` 800 for
A. Commission B. Omission the current year. ` 100 for the previous year and
C. Principle D. None of these ` 100 for the next year. In the receipts and payments
account the receipts from subscriptions would appear
278. Sales to Shyam of ` 500 not recorded in the books at:
would affect: A. ` 700 B. ` 800
A. Shyam’s account B. Purchase account C. ` 900 D. ` 1000
C. Sales account D. Cash account
290. Any donation received for a specific purpose is a:
279. Which of the following accounts is increased by credit A. Liability B. Assets
entries? C. Revenue receipts D. Capital receipts
A. Bank Overdraft B. Purchases Account
C. Goodwill Account D. Sales Returns Account 291. The convention of conservatism will have the effect
of:
280. Profit and loss account of business shows the: A. Over statement of assets
A. Net profit earned B. Under statement of assets
B. Gross profit earned C. Under statement of liabilities
C. Balance of all accounts D. Under statement of provision for bad and doubtful
D. Capital employed in business debts
(2715) Accountancy—3
 18 Accountancy/Book Keeping

292. An accountant is mainly concerned with: 301. LIFO inventory method was used in year I, FIFO in
A. Audit work year II and weighted average in year III. Which
B. Preparation of budget for his employees accounting principle is violated?
C. Management Constancy Services A. Cost principle
D. Filling tax returns B. Consistency
C. Materiality
293. Expenses incurred on research and development is an
D. No principle of accounting is violated
example of:
A. Capital expenditure 302. Land was reported at its selling price which is
B. Revenue expenditure substantially higher than its cost. The increase in
C. Deferred revenue expenditure value was included in the income statement, which
D. None of these accounting principle is violated?
A. Cost principle
294. Amount spent on increasing the seating capacity in a
B. Going concern concept
cinema hall is:
C. Entity concept
A. Capital expenditure
D. Conservatism
B. Revenue expenditure
C. Deferred revenue expenditure 303. The cost of three small files (of ` 4 each) was charged
D. None of these to expenses when purchased even though they had a
useful life of several years. This was done according
295. Which of the following is not capital expenditure?
to the:
A. Cost of issuing shares and debentures
A. Cost principle B. Conservatism principle
B. Wages paid for construction of building
C. Full disclosure D. Materiality
C. Repairs on a second-hand machinery newly
purchased 304. The amount spent on unsuccessful patent rights is a:
D. Purchase of new spark plug at a cost of ` 8.50 for A. Capital expenditure
a two-year old car B. Deferred revenue expenditure (if the amount is
large)
296. Window dressing is prohibited due to:
C. Revenue expenditure (even though the amount is
A. Convention of conservatism
large)
B. Convention of disclosure
D. None of these
C. Convention of materiality
D. Accrual concept 305. Double entry system of bookkeeping refers to a system
where:
297. Quantitative transactions are not recorded in accounts
A. the number of accounts with a debit balance must
due to:
agree with the number of accounts with the credit
A. dual concept
balance
B. accrual concept
B. each transaction is recorded twice, once in journal
C. money measurement concept
and then in ledger
D. None of these
C. equal debit and credit entries are made for each
298. Concept of Realisation implies: transaction
A. When cash is received from debtors D. each transaction is recorded in two set of account
B. When goods are delivered to customer books
C. When order is received
306. An entry of ` 500 was wrongly posted to wages
D. None of these
account instead of machinery account, as wages are
299. Which of the following are not current liabilities? to be capitalised. It is an error of:
A. Bank overdraft A. Commission B. Omission
B. Redeemable debentures C. Principle D. Clerical error
C. Provision for doubtful debts
307. Which of the following statements best explains the
D. Accounts payable
relationship between journal and ledger?
300. Provision for doubtful debts account is a: A. First recording in journal and then posting to
A. Personal account ledger com pletes the double entry of the
B. Real account transaction.
C. Nominal account B. The journal is the book of original entry where
D. None of these as the ledger is the book of second entry.
(2715) Accountancy—3-II

C. The journal is the book for analytical record and
ledger is the book for chronological record.
D. The process of recording, in the journal is called
journalising, the process of recording in the ledger
is called posting.
308. In order to determine the amount of sales, to which of
the following records one should refer?
A. Sales book B. Sales account
C. Journal D. Total debtors account
309. Which of the following errors is revealed by trial
balance?
A. Wrong amount entered in the book of original
entry
B. Wrong amount entered in a ledger account
C. Complete omission of an entry from the book of
original entry
D. All of these
310. Which of the following errors are revealed by trial
balance?
A. Omission of an amount from the trial balance
B. Posting of the wrong amount
C. Wrong totalling of the book of original entry
D. None of these
311. Which of the following errors will cause the trial
balance to be out of balance?
A. The total of the Purchase book is ` 1000 short
B. Goods received back from Mahesh, ` 250 have
not been entered in the Returns Inward book
C. Office furniture purchased from Ravi and Co.
` 950 has been entered in the Purchase book
D. A purchase of ` 251 from Gopal and Co. has been
entered in the Purchase book as ` 215.
312. Which of the following errors will not cause the trial
balance to be out of order?
A. ` 590 received from P. Das has been debited to
(b) ` 10 Das
B. A purchase of ` 258 from Lekhi has been debited
to his account as ` 285
C. The total of the discount columm of the cash
book (cr.) is ` 20 short
D. An invoice for ` 460 is entered in the sales book
as ` 640
313. Which of the following errors will not cause the trial
balance to be out of balance?
A. ` 310 for goods sold, was posted to the credit of
charges
B. Purchases returns book for December 1978 was
overcast by ` 220
C. Sales book carried forward ` 2400 instead of
` 2004
D. All of these
Accountancy/Book Keeping 19
314. An invoice of ` 560 is entered in the sales book as
` 650. The total of the debit side of the trial balance
is ` 21,440. Assuming no other error what is the total
of the credit side of the trial balance?
A. ` 21,240 B. ` 21,350
C. ` 21,330 D. None of these
315. Which of the following books should be used to
record purchase of a type writer on account?
A. Cash books B. Purchase book
C. Sales book D. Journal
316. Which of the following books should be used to
record purchase of merchandise an account?
A. Cash book B. Purchase book
C. Sales book D. Journal
317. Agreement of the trial balance may not indicate that:
A. no error remains undetected
B. double entry has been completed
C. arithmetic accuracy is reasonably proved
D. all ledger accounts have been correctly posted
318. Use of subsidiary books can be made by:
A. Only large business concerns
B. Only small business concerns
C. Only medium size business concerns
D. All of these
319. Petty cash system is designed:
A. to meet the needs of small businesses
B. to cover small and miscellaneous income
C. to cover the small expenditure to be paid in cash
D. to cover both small incomes and expenditures
320. The term “Imprest system” is used in relation to:
A. Purchase book B. Sales book
C. Cash book D. Petty cash book
321. Trial balance is a proof that:
A. every transaction is recorded twice
B. no error remains in the books of accounts
C. books are authentically and correctly written
D. None of these
322. Which of the following is an error of commission?
A. A sale of ` 560 ommitted to be recorded
B. A purchase of ` 840 was wrongly posted
C. Treating charges as addition to asset
D. Sales book over cost by ` 600 and purchase book
was under cost by the same amount
323. Which of the following errors is disclosed by trial
balance?
A. Error of principle
B. Wrong amount posted in ledger account
C. Non-recording of a transaction in the book of
original entry
D. None of these
 20 Accountancy/Book Keeping

324. ‘Bank over draft’ should be classified as: 333. From the following find out the correct equation:
A. Current asset B. Current liability I. A represents opening stock
C. Intengible asset D. Intangible asset II. B represents purchases
325. Assets appearing in the book but having no value are III. C represents closing stock
known as: IV. D represents cost of goods sold
A. Wasting assets B. Intangible assets A. A – C = D – B B. A + B = D – C
C. Current assets D. Fictitious assets C. D – A = B + C D. None of these

326. Which of the following is an accounting equation? 334. While assertaining profit in single entry system the
A. Assets – Capital – Liabilities amount of additional capital introduced is:
B. Capital – Assets – Liabilities A. added to the capital in the beginning
C. Assets – Liabilities – Capital B. deducted from the capital in the beginning
D. Liabilities – Assets – Capital C. added to the capital at the end
D. deducted from the capital at the end
327. Which of the following is an equation?
A. Assets = Equities 335. When capital at the end is ` 21,500 drawings ` 4,300
B. Assets = Liabilities – Capital and capital in the beginning ` 19,400, what is the
C. Assets = Liabilities – Equities amount of profit or loss?
D. Assets = Equities + Liabilities A. ` 2,200 (profit) B. ` 2,200 (loss)
C. ` 6,400 (profit) D. ` 6,400 (loss)
328. The capital in a business on Jan. 1 and Jan. 31 is
` 17,000 and ` 17,200 respectively. Investment by 336. Generally, under single entry system:
owner and withdrawal by owner during Jan. amount A. only personal accounts are maintained
to ` 1,000 and ` 700 respectively. What is the net B. only personal, cash and bank accounts are
income for January? maintained
A. ` 100 (Loss) B. ` 300 C. all accounts are maintained
C. ` 200 D. ` 500 D. no account is maintained
329. Which of the following transactions will result in 337. Opening debtors ` 12,000, closing debtors ` 15,000
decrease in assets and decrease in liabilities? cash received from debtors ` 25,000 what is the
A. Payment of a promissory note with cash amount for sales?
B. Materials returned to supplier on account A. ` 22,000 B. ` 28,000
C. Redemption of debentures C. ` 2,000 D. None of these
D. All of these
338. If the rate of gross profit on sales is 25% and the cost
330. Cost of goods sold – ` 13,300, Gross Profit – ` 3,200, of goods sold is ` 75,000, then the amount of total
Netprofit – ` 700, what is the amount of sales? sales will be:
A. ` 14,000 B. ` 10,100 A. ` 1,00,000 B. ` 93,750
C. ` 16,500 D. ` 17,200 C. ` 92,150 D. Cannot be known
331. Select the correct amount of purchases, given on the 339. Total debtors account will be affected by:
following information: A. Cash sales B. Credit sales
Cost of goods sold – ` 1,20,000; C. B/R closing balance D. All of these
Carriage inwards – ` 1,890;
Opening stock – ` 43,640; 340. If the cost of goods sold is ` 1,20,000 and the rate of
Closing stock – ` 38,500; gross loss is 1/4 on sales, the amount of sales is:
Purchase returns – ` 2,150; A. ` 1,20,000 B. ` 90,000
Sales – ` 2,82,650 C. ` 80,000 D. ` 96,000
A. ` 1,15,120 B. ` 62,650 341. Cost of goods sold is ` 1,00,000 rate of gross profit
C. ` 1,10,420 D. None of these on sales is 20%. What is the amount of sales?
332. Depreciation is appearing in the trial balance of a A. ` 1,20,000 B. ` 80,000
company. While making final accounts, it should be C. ` 1,25,000 D. None of these
shown in: 342. The single entry system is defective because—
A. the profit and loss account I. only one account is maintained
B. the balance sheet as a deduction from the asset II. the trial balance cannot be prepared
concerned III. the net profit cannot be accurately calculated
C. the profit and loss account and balance sheet IV. the possibility of fraud and misappropriation is
D. the profit and loss account or balance sheet great
 Accountancy/Book Keeping 21
Select the correct answer from the following: 351. Stock as on January 5 – ` 27,000; purchases between
A. I, III and IV B. I and II Dec. 31st and Jan. 5 – ` 700; cost of sales between
C. II, III and IV D. I only Dec. 31st and Jan. 5 – ` 1,500 what was the stock on
Dec. 31?
343. Assets in the beginning of the year ` 10,000, Assets
A. ` 27,800 B. ` 26,200
at the end of the year ` 18,000 Drawing during the
C. ` 26,300 D. ` 28,500
year ` 2,000. Therefore the profit is:
A. ` 6,000 B. ` 8,000 352. Which method of inventory valuation is most widely
C. ` 10,000 D. None of these used in accounting?
A. Cost price
344. Depreciation, as the term is used in accounting, means:
B. Market price
A. physical deterioration of a fixed asset
C. Cost or market price whichever is greater
B. decline in the market value of an asset
D. Cost or market price whichever is lower
C. allocation of the cost of fixed asset over its useful
life 353. A company may resort to “window dressing” by
D. making a provision for the replacement of the manipulating the data such as:
fixed asset I. inventory valuation
II. omission of liability for goods purchased
345. The term depletion is used in relation to:
III. treating a short-term liability long-term debt
A. Fixed assets B. Wasting assets
IV. recording in advance cash receipts applicable
C. Current assets D. Intangible assets
to next accounting period
346. Under the annuity method the amount of total A. I, III and IV B. II and IV
depreciation is determined by: C. I, II and III D. I, II, III and IV
A. deducting the scrap value from the cost of the
354. Match List-I with List-II and select the correct answer
asset
using the codes given below the list:
B. deducting the amount of interest from the cost of
List-I List-II
the asset
I. Compensating (a) Not recording a business
C. adding the cost of the assets and interest there on
errors transaction
D. adding the cost of the assets and expected cost of II. Errors of (b) Charging a
maintenance omission Revenue item to capital
347. Which method of depreciation is suggested for coal III. Errors of principle (c) Writing a debit item on
mines? the credit side and a credit
A. Diminishing balance item on the debit side of
B. Fixed instalment method equal amount
C. Sum of years’ digits method IV. Errors of (d) Posting a correct amount
D. Depletion method commission to a wrong account
348. In which of the following methods, the asset account Codes:
appears at its original cost through out its life? A. I -(c), II-(a), III-(d), IV-(b)
A. Annuity method B. I- (b), II-(a), III-(d), IV-(c)
B. Depreciation fund method C. I- (c), II-(a), III-(b), IV-(d)
C. Sum of years, digits method D. I- (b), II-(a), III-(c), IV-(d)
D. Machine hour rate method Directions (Qs. 355 and 356): These questions consist of
349. The amount of depreciation provided in the sinking two statements, Assertion (A) and Reason (R). You have to
fund method when compared to annuity method is: examine these two statements and select your answers to
A. higher B. lower these items using the codes given below:
C. equal D. unpredictable Codes:
350. The cost of a machine having a span of life of 5 years A. Both A and R are true, and R is the correct
is ` 1,00,000. It has a scrap value of `10,000. The explanation of A
amount of depreciation under the sum of years, digit B. Both A and R are true, but R is not a correct
method will be: explanation of A
A. ` 16,000 B. ` 18,000 C. A is true, but R is false
C. ` 25,000 D. ` 30,000 D. A is false, but R is true
 22 Accountancy/Book Keeping

355. Assertion (A) : Amount realised on the disposal (sale C. only profit realised
of a discarded) machine of the factory D. profit realised and all possible losses
should be treated as revenue receipt 362. Which one of the following accounting standards is
Reason (R) : Sale proceeds are usually of revenue not mandatory in India?
in nature A. Fixed assets accounting and revenue recognition
356. Assertion (A) : An accounting principle is that the B. Inventory and depreciation accounting
relatively small item and values C. Non-monetary assets and fixed assets
should be ignored from accounts D. Monetary assets and depreciation accounting
Reason (R) : The cost of the effort in the 363. If the total charge of depreciation and maintenance is
allocation of small items over a long considered as the method which would provide a
period does not justify the benefit unifrom charge is:
derived from this operation and the A. annuity method
cost of such items is treated as B. straight line method
expense for the period in which they C. diminishing balance method
are incurred D. insurance policy method
357. A second hand machinery was purchased for 364. Which of the following expenditures are to be treated
` 1,00,000 five years ago and was overhauled by as revenue expenditure?
carrying out some current repairs at a cost of ` 10,000. I. Interest paid on m oney borrow ed during
It has also an accumulated depreciation of ` 50,000. construction period
It has been disposed of in the beginning of the sixth II. Cost of patent rights
year for ` 60,000. Profit/loss on such disposal shall III. Loss of uninsured stock due to fire
be IV. Retirement gratuity paid to an employee
A. Profit of ` 10,000 B. Loss of ` 50,000 Select the correct answer using the codes given below:
C. Loss of ` 40,000 D. No profit, no loss
Codes:
358. Match List-I with List-II and select the correct answer A. I, II and III B. II, III, and IV
using the codes given below the lists: C. III and IV D. I and II
List-I List-II
365. Payment of compensation to a worker, who has been
I. Income (a) Accrues to owner’s
discharged from service, is a:
measurement equity
A. Capital expenditure
II. Expense recognition (b) Revenue recognition
B. Revenue expenditure
III. Basis for realisation (c) Matching
C. Deferred – revenue expenditure
in accounting revenues
D. Non-business expenditure
IV. Recognised revenue (d) Accounting period
366. Book-keeping is often confused with:
Codes: A. Algebra B. Statistics
A. I-(c), II-(d), III-(b), IV-(a) C. Cashier D. Accounting
B. I-(c), II-(d), III-(a), IV-(b)
C. I-(b), II-(c), III-(d), IV-(a) 367. If the operating expenses exceed gross profit, the
D. I-(b), II-(c), III-(a), IV-(d) excess is referred to as:
A. Operating income
359. Charging a period for the proportionate cost of an B. Operating loss
Intangible asset is termed as: C. Non-operating expenses
A. depreciation B. diminution D. Non-operating income
C. amortisation D. expiration
368. On using reducing balance method on an asset of `
360. Obsolescence means decline in the value due to: 20,000 at the rate of 10% per annum, depreciation of
A. Fall in the market price 3rd year will be:
B. Physical wear and tear A. ` 6,000 B. ` 1,800
C. Innovations and inventions C. ` 1,620 D. ` 2,000
D. Efflux of time
369. ` 19,500 debited to building repairs on 31st Dec.
361. Concept of conservatism refers to taking into account: 1993 included ` 9,500 as the cost of building a small
A. all profit room for the watch man. A bill of ` 800 for colour
B. only cash profit wash of the whole building during the year was not
 Accountancy/Book Keeping 23
received till 1993 Dec. The amount to be debited to 374. In stock valuation, appilcation of the principle ‘at
profit and loss account would be: cost price or market price whichever is lower’ will
A. ` 20,300 B. ` 19,500 result in the valuation of stock sometimes at cost
C. ` 10,800 D. ` 9,500 price and at other times at market price. This is an
application of the principle of:
370. The term loan of ` 5,00,000 was received from IFCI.
It was used as under: A. Consistency
B. Materiality
I. ` 2,00,000 was advanced to suppliers for capital-
C. Conservatism
work-in-progress and
II. ` 3,00,000 was used for financing the working D. Disclosure
capital 375. Match List-I with List-II and select the correct answer
using the codes given below the lists:
The interest payable would be treated:
List-I List-II
A. on both I and II as capital expenditure
B. on I as capital expenditure and on II as revenue I. Heavy amount of (a) Capital
premium on redemption expenditure
expenditure
of preference shares
C. on I as deferred expenditure and on II as revenue
expenditure II. Excess of sale proceeds (b) Deferred revenue
fixed assets over their expenditure
D. on I as deferred revenue expenditure and on II as
original cost
capital expenditure
III. Cost of installation (c) Capital gain
371. Accounting is: of an old machine
A. the art of recording, classifying and summarising IV. Freight paid on (d) Revenue of
in a significant manner and in terms of money, purchase of raw material expenditure
transactions and events which are, in part at best
financial in character, and interpreting there of Codes:
A. I-(b), II-(c), III-(d), IV-(a)
B. a systematic and regular record of events affecting
B. I-(c), II-(b), III-(d), IV-(a)
a firm with a view to obtaining a clear financial
picture C. I-(b), II-(c), III-(a), IV-(d)
D. I-(c), II-(b), III-(a), IV-(d)
C. preparation of various financial statements over a
period of time of a firm to measure its performance 376. Amount spent on an advertisement campaign,
in monetary terms the benefit of which is likely to last for three years
D. nothing but book-keeping is a:
A. Capital expenditure
372. Ayush started business on 1st April, 1995 with a
B. Revenue expenditure
capital of ` 25,000 and a loan of ` 12,500. Total
assets and liabilities at the end of 31st March, 1996 C. Deferred revenue expenditure
D. Contingent expenditure
amounted to ` 75,000 and ` 12,500 respectively. He
invested a further capital of ` 12,500 during the year 377. Match List-I with List-II and select the correct answer
and withdrew ` 7,500 during the relevant financial, using the codes given below the lists:
period. His closing capital and profits would be List-I List-II
respectively: I. Preliminary expense (a) Capital expenditure
A. ` 62,500 and ` 32,500 II. Travelling expenses (b) Revenue
B. ` 50,000 and ` 40,000 of the salesman expenditure
C. ` 70,000 and ` 47,500 III. Profit on sale of a (c) Capital gain
D. ` 55,000 and ` 42,500 part of the business
373. A person started business with a cash of ` 22,000 and building
IV. Nazrana paid on (d) Deferred revenue
stock of ` 3,000 on 1st January, 1996. During the
the purchase of
year he made a profit of ` 6,000. His creditors were
paid ` 4,500 for the office furniture supplied. He took land for business
goods worth ` 3,500 for his daugher’s wedding on Codes:
30th June, 1996. The gross assets of his business on A. I-(d), II-(b), III-(c), IV-(a)
31st December, 1996 was: B. I-(d), II-(b), III-(a), IV-(c)
A. ` 27,500 B. ` 26,500 C. I-(b), II-(d), III-(c), IV-(a)
C. ` 23,500 D. ` 20,500 D. I-(b), II-(d), III-(a), IV-(c)
 24 Accountancy/Book Keeping

378. Revenue is generally recognised as being earned at Amount paid for medicines
that point of time when: during the years 15,000
A. Sale is effected Value of medicines spoiled
B. Cash is received during the year stock of
C. Production is completed medicines 400
D. Debts are collected On 31st December, 1995 3,500
379. Which one of the following will be treated as revenue The amount to be debited to income and expenditure
expenditure? account would be
A. Cost incurred for a new exit as required under the A. ` 15,000 B. ` 18,500
local bodies, by laws C. ` 18,000 D. ` 13,500
B. Interest paid on loan during the construction of
385. Which one of the following statements is correct?
works
A. Depreciation is not the process of valuation of
C. Cost of pulling down on old building as also the
asset–it is a process of allocation of cost of asset
payment made to the architect for the plan of a
to the period of its economic life
new building
B. If the cost of machinery is more than the book
D. A dealer in purchases sewing machines and spends
value, then depreciation need not be provided
some money on the repair of the machines damaged
C. When the plant and machinery and maintained in
while goods in transit
good condition, through repairs and renewals,
380. Which one of the following is capital expenditure? depreciation need not be provided
A. Cost of advertisement D. In the absence of any legal provisions, if the
B. Purchase of a delivery van auditor finds that provision made for depreciation
C. Purchase of raw material is inadequate, then he is not required to refer to
D. Purchase of machine oil it in his report
381. Which one of the following depreciation methods is 386. Which of the following items should be entered in the
most suitable for a coal mine? receipts and payments account of a club?
A. Diminishing balance method I. Sale of old newspapers
B. Depletion method II. Loss on sale of some asset
C. Fixed instalment method III. Payments for investment
D. Sum of year’s digits method
Select the correct answer using the codes given below
382. In the case of a sole proprietorship, Assets in Balance Codes:
sheet items are conveniently shown in: A. I, II and III B. I and III
A. Order of fixity C. I and II D. II and III
B. Order of liquidity
C. Alphabetical order 387. A cultural club discloses that subscriptions received
D. Order of dates of acquisition during a particular accounting period as per receipts
and payments account am ount to ` 57,360.
383. A business concern provides the following details— Subscription outstanding (opening and closing) was
Cost of goods sold ............. ` 1,50,000 ` 4,800 and ` 6,000 respectively. Subscription
Sales ............. ` 2,00,000 received in advance (opening balance and closing
Opening stock .............. ` 60,000 balance) amounted to ` 3,600 and ` 2,160 respectively.
Closing stock .............. ` 40,000 The amount to be posted to income and expenditure
Debtors ............... ` 45,000 account would be
Creditors ............... ` 50,000 A. ` 57,360 B. ` 54,000
The concerns, purchses would amount to (in `): C. ` 60,000 D. ` 63,360
A. 1,30,000 B. 2,20,000 Directions (Qs. 388-391): These questions consist of four
C. 2,60,000 D. 2,90,000 statements, Assertion (A) and Reason (R). You have to
384. The following figures (all in `) relate to non-trading examine these four statements and select your answers to
concern: these items using the codes given below:
1st January, 1995 stock of medicines 5,000 Codes:
1st January,1995 outstanding A. Both A and R are true, and R is the correct
creditors for medicines 3,000 explanation of A
 Accountancy/Book Keeping 25
B. Both A and R are true, but R is NOT a correct 395. Money measurement concept of accounting theory is
explanation of A based on the assumption that the value of money
C. A is true, but R is false will:
D. A is false, but R is true A. remain constant
B. fluctuate
388. Assertion (A) : In accounting, a distinction is made
C. decrease
between the business and the owner
D. go up
Reason (R) : Accounting concepts are based on
adjectivity and not on subjectivity 396. Match List-I (Items of expenditure and receipt) with
List-II (Nature of expenditure and receipt) and select
389. Assertion (A) : Materiality concept refers to the state
the correct answer using the codes given below the
of ignoring relatively small items and
lists:
values from accounts
List-I List-II
Reason (R) : The effort involved in allocating the
I. Premium paid for a (a) Revenue
cost of a small item over a long period
lease hold property expenditure
should be justified in terms of the
II. Insurance premium paid (b) Capital
benefit derived from this operation. for risks against accidental receipt
Therefore, cost of such items may be losses of properties (fixed
treated as expenses for the period in assets)
which they are acquired III. Amount realised from the (c) Deferred
390. Assertion (A) : The balance sheet fails to reveal the sale of securities revenue
worth of a business (investment)\purchased earlier expenditure
Reason (R) : Assets are merely unamortised costs IV. Huge sales promotion (d) Capital
expenses expenditure
391. Assertion (A) : The cost of demolishing an old
Codes:
building preparatory to the
A. I-(d), II-(b), III-(a), IV-(c)
construction of a new building in that
B. I-(c), II-(b), III-(a), IV-(d)
place is to be treated as capital
C. I-(d), II-(a), III-(b), IV-(c)
expenditure D. I-(c), II-(a), III-(b), IV-(d)
Reason (R) : Such cost is not incidental to the
construction of the new building 397. Match List-I (Items of expenditure and receipt) with
List-II (Nature of expenditure and receipt) and select
392. The fundamental accounting equation, Assets = the correct answer using the codes given below the
Equities + liabilities is the formal expression of: lists:
A. dual aspect concept List-I List-II
B. matching concept I. Compensation paid (a) Capital
C. going – concern concept to retrenched workers expenditure
D. money measurement concept of the factory for the
393. A business is considered to be having and indefinite loss of service
life according to: II. Legal expenses incurred in (b) Capital
A. accounting period concept connection with the purchase receipt
B. cost concept of a plot of land
C. going concern concept III. Compensation received from (c) Revenue
D. dual aspect concept the government for the expenditure
compulsory removal
394. Which of the following pairs are correctly matched? of a business premises
I. Business entity – Accounting standard to another place
II. Stock valuation – Consistency IV. Sale proceeds of merchandise (d) Revenue
III. Capital – Drawings (goods) receipt
IV. Going concern – Assumption
Codes:
Select the correct answer using the codes given below: A. I-(a), II-(c), III-(d), IV-(b)
Codes: B. I-(a), II-(c), III-(b), IV-(d)
A. I, III and IV B. I, II and III C. I-(c), II-(a), III-(d), IV-(b)
C. I, II and IV D. I, III and IV D. I-(c), II-(a), III-(b), IV-(d)
(2715) Accountancy—4
 26 Accountancy/Book Keeping

398. The cash price of a machine is ` 1,20,000 and its hire 403. A trader maintains his books of accounts on Single
purchase price is ` 1,50,000 to be paid in five equal Entry basis. His books of accounts show that his total
yearly instalments. If a company purchases the purchases during the year were ` 90,000 of which he
machine on hire purchase basis, the amount of capital returned goods worth ` 10,000. His credit sales were
expenditure will be: ` 50,000 and cash sales were ` 80,000 of the total
A. ` 1,20,000 sales goods returned were ` 30,000. Closing stock is
B. ` 1,35,000 1
C. ` 1,50,000 ` 12,000. He sells his goods at cost plus 33 %. His
3
D. ` 1,60,000 opening stock is:
399. Which one of the following is a capital expenditure? A. ` 12,000 B. ` 10,000
A. Compensation paid to directors on termination of C. ` 8,000 D. ` 7,000
their services 404. A firm which keeps its books of accounts on single
B. Expenditure incurred in connection with the
entry system has opening balance and closing balance
renewal of a Trademark
of Bills Receivable as ` 9,000 and `11,000
C. Gratuities paid to employees on their retirement
respectively. Bills collected during the financial
D. Royalty paid in instalments for the purchase of
period amount to ` 20,000. Bills receivable received
rights to manufacture and sell patient medicines
during the financial period amount to:
400. The following information pertains to a cultural club: A. ` 22,000
Stock of tinned provisions : ` 25,000 B. ` 18,000
(as on 1.4.94) C. ` 12,000
Purchased during the year : ` 1,50,000 D. ` 11,000
Stock of tinned provisions : ` 50,000
405. Which preparing accounts from incomplete records,
(as on 31.3.95)
the amount of credit sales is determined by?
Sale of tinned provisions : ` 1,50,000
A. preparing total creditors account
during the year
B. preparing total debtors account
The amounts to be debited and credited respectively C. ascertaining the balance in trading account other
to the Income and Expenditure account would be: than closing stock
A. ` 1,75,000 and ` 1,50,000 D. ascertaining the balance in debtors account and
B. ` 1,25,000 and ` 1,75,000 cash book
C. ` 1,25,000 and ` 1,50,000
D. ` 1,75,000 and ` 1,25,000 406. An asset is purchased for ` 50,000 on which
depreciation is to be provided annually according to
401. A cricket club has 50 members and each member pays the straight line method. The useful life to the asset
` 200 as monthly subscription 5 members paid is 10 years and the residual value is ` 10,000. The
advance subscription for the financial year 1994–95 rate of depreciation is:
and 10 members failed to pay subscription for the A. 20 % B. 18 %
year 1993–94. The amount to be credited as C. 10 % D. 8 %
subscription to income and expenditure account would
be: 407. An asset is never reduced to zero in the:
A. ` 12,000 B. ` 10,000 A. fixed instalment method
C. ` 9,600 D. ` 8,000 B. reducing balance method
C. annuity method
402. The following information is provided by a cultural
D. sum of years method
club:
Stock of sports goods : ` 20,000 408. The main objective of providing depreciation is to:
Purchase of sports goods : ` 80,000 A. create secret reserves
during the accounting period B. reduce the book value of assets
Sports goods sold as scrap : ` 500 C. value the assets properly
Closing balance : ` 30,000 D. allocate cost of the assets
The amount to be charged to Income and Expenditure 409. Match List-I (financial statements and accounts) with
Accounts as sports goods consumed will be: List-II (special matters associated with statements and
A. ` 69,500 B. ` 70,000 accounts) and select the correct answer using the codes
C. ` 70,500 D. ` 80,000 given below the lists:
 Accountancy/Book Keeping 27
List-I List-II 414. Given that the value of furniture on 1.1.93 is ` 8,000,
I. Receipts and payments (a) Revenue account furniture purchased during the year is ` 4,000, sale of
II. Income and expenditure (b) Cash furniture no loss no profit basis is ` 2,000, and the
account furniture is valued at ` 7,000 on 31.12.93, the
III. Dividend equalisation (c) Liability depreciation for the year 1993 will be:
reserve A. ` 1,000 B. ` 3,000
IV. Club subscription received (d) Balancesheet C. ` 5,000 D. ` 7,000
in advance account 415. Which of the following are applicable to sinking fund
(e) General reserve method of depreciation?
Codes: I. Periodic depreciation is smaller than the assets,
A. I-(b), II-(a), III-(d), IV-(c) actual annual depreciable cost
B. I-(c), II-(b), III-(d), IV-(e) II. Amount of interest constantly declines due to
C. I-(b), II-(a), III-(e), IV-(c) assets, reducing balances
D. I-(a), II-(b), III-(d), IV-(e) III. Annual net incidence on profit and loss account
410. Profit under single entry system of Book Keeping remains constant due to incorporation of only
means: fixed depreciation
A. the difference between opening and closing cash IV. Periodic depreciation is recorded through the assets
balances and reduced by fresh capital introduced account
B. the difference between opening net assets and Select the correect answer using the codes given
closing net assets as increased by drawings and below:
reduced by new capital introduced Codes:
C. profit shown by Trading and Profit and Loss A. II and IV B. I and III
Account and Balance sheet C. I, II and III D. II, III and IV
D. the amount of closing cash balance as reduced by 416. Match List-I with List-II and select the correct answer
expenses using the codes given below the lists:
411. Given that List-I List-II
Opening capital : ` 5,000 I. Amortisation (a) Diminition in the life of the
Closing capital : ` 6,000 assets due to excessive use
Drawings : ` 1,000 II. Depreciation (b) Exhaustion of natural
New capital invested : ` 500 resource
III. Depletion (c) Expiration of tangible assets
The profit for the year will be: IV. Obsolescence (d) Expiration of intangible
A. ` 2,000 B. ` 1,500 assets
C. ` 1,000 D. ` 500 (e) Economic deterioration due
412. W hich of the follow ing are prepared by the to improved inventions
organisations keeping only incomplete accounting Codes:
records? A. I-(a), II-(b), III-(c), IV-(d)
I. Cash book B. I-(a), II-(b), III-(d), IV-(e)
II. Customer’s Accounts C. I-(e), II-(b), III-(c), IV-(d)
III. Expenses Accounts D. I-(d), II-(c), III-(b), IV-(e)
IV. Day Books 417. Match List-I with List-II and select the correct answer
Choose the correct answer using the codes given using the codes given below the lists:
below: List-I List-II
(Accounting concept) (Principle involved)
Codes:
I. Consistency (a) Losses are anticipated and
A. I, II and III B. I, II and IV
accounted for in advance but
C. I, III and IV D. II, III and IV
profits are not accounted for
413. Depreciation Accounting is a process of: until realised
A. allocation of cost II. Comparability (b) All the relevant financial
B. valuation of assets inform ations should be
C. provision for replacement of assets summarised and presented in
D. estimation of net profit the accounting statements
 28 Accountancy/Book Keeping

III. Conservatism (c) Accounting procedures in an Codes:

entity should be followed
uniform ly from period to
period
IV. Disclosure (d) A ccounting statem ent of
different periods of an entity
and those of different entities
of a period should be based
on the sam e accounting
principles and procedures.
(e) Personal Judgem ent of
accountants should not
influence accounting
measurements.
Codes:
A. I-(d), II-(c), III-(e), IV-(b)
B. I-(c), II-(d), III-(a), IV-(b)
C. I-(d), II-(c), III-(a), IV-(e)
D. I-(c), II-(d), III-(b), IV-(e)
A. I-(b), II-(c), III-(a), IV-(e)
B. I-(d), II-(b), III-(e), IV-(a)
C. I-(c), II-(d), III-(a), IV-(e)
D. I-(d), II-(c), III-(a), IV-(e)
421. While preparing the annual financial statements, the
balance of rent account should be treated as the
balance of a:
A. Personal Account
B. Nominal Account
C. Real Account
D. Deferred Expenditure Account
422. What is the correct sequence of the preparation of the
following accounts and statement of a non–profit
organisation?
I. Income and expenditure account
II. Receipts and payment account
III. Balance sheet

418. Which one of the following should be considered as Select the correct answer from the codes given below:
a revenue expenditure? Codes:
A. I, II, III B. I, III, II
A. ` 1,000 paid for the erection of a new plant
C. II, I, III D. II, III, I
B. Cost of ` 10,000 incurred in increasing the sitting
accommodation of a hotel 423. Profit as per accounts from incomplete records may
C. Damages paid on account of breach of a contract constructed as equivalent of:
to supply certain goods A. Excess of assets over liabilities at the close of the
D. Repairs to machinery purchased second hand period
B. Excess of capital at the end over the capital at the
419. The written down value of a plant is 6,000 (the
beginning
original value being `10,000). It is sold for ` 12,000
C. Excess of assets over liabilities at the
during the current financial year. Which one of the
commencement of the period
following is true in this regard?
D. Excess of capital at the beginning over the capital
A. Capital profit = ` 6,000
at the end
B. Revenue profit = ` 6,000
C. Capital profit = ` 2,000 424. According to records of a firm which not keep its
D. Revenue profit = ` 4,000 accounts on double entry systems, all sales were made
420. Match List-I (Item of expenditure/receipt) with List- 1
on credit so as to realise a profit of 33 per cent on
II (Nature of expenditure/receipt)and select the correct 3
answer using the codes given below the lists: sales proceeds. The stock of unsold goods at the
List-I List-II beginning and at the end of the trading period were
I. Carriage charges on a new (a) Revenue valued at ` 21,000 and 18,000 respectively. Goods
machine purchased for factory receipt worth ` 1,39,500 were purchased for resale during the
II. Legal expenses incurred in (b) Revenue period
defending a case of violation expenditure
of a provision of Factories Act The proprietor withdraw goods worth ` 1,500 during
accounting period for personal use. What were the
III. Grant-in-aid received from the (c) Deferred
total sales during the period?
Goverment for the construction revenue
A. ` 1,80,000 B. ` 2,11,500
of a building expenditure
C. ` 2,25,000 D. ` 2,31,500
IV. Amount received for a part of (d) Capital
the office building sublet expenditure 425. Consider the following statement, while preparing
(e) Capital annual financial statements, the balance of bills
receipt receivable account can be treated as—
 Accountancy/Book Keeping 29
I. an accrued income 432. A business entity has assets of ` 26,000 and liabilities
II. an item of assets of ` 6,000. Owner’s equity in this case is:
III. a “personal account” balance A. ` 32,000 B. ` 26,000
C. ` 20,000 D. ` 6,000
Of these statement:
A. II and III are correct 433. Accounting records transactions in terms of:
B. I and III are correct A. Commodity units B. Monetary units
C. I and II are correct C. Production units D. None of these
D. None of these 434. Market price or actual cost, whichever is less, is the
426. On January 1, 1992 there was a balance of ` 4,000 in generally accepted accounting principle for valuation
the plant and machinery account. An addition of of:
` 2,000 was made on July 1, 1992. Accounts were A. Stock-in-trade B. Fixed assets
closed for the year on December 31, 1992. If C. Current assets D. All of these
depreciation was charged at 10% per annum, the 435. Match List-I with List-II and select the correct answer
balance in the plant and machinery account on the using the codes given below the lists:
closing date would be: List-I List-II
A. ` 5,300 B. ` 5,400 (Types of accounts) (Principles)
C. ` 5,500 D. ` 5,600 I. Real Accounts (a) D ebit the receiver
427. A machinery having a residual value of ` 5,000 was credit the giver
purchased on 1.1.1998 for ` 1,00,000 and was II. Nominal Accounts (b) Debit what comes in
depreciated @ 9.5% on a straight line method. On credit what goes out
1.1.1998, it was estimated that its useful life has been III. Personal Accounts (c) D ebit all expenses
reduced to eight years. Under the changed circum- credit all gains
stances, the annual depreciation charges for the year Codes:
1991 and onwards will be: A. I-(c), II-(b), III-(a) B. I-(a), II-(c), III-(b)
A. ` 11,875 B. ` 13,300 C. I-(b), II-(c), III-(a) D. I-(a), II-(b), III-(c)
C. ` 9,500 D. ` 12,500 436. Renewal fee for patents is a:
428. In which one of the following methods of charge A. Capital expenditure
depreciation shall be balance never be reduced to B. Revenue expenditure
zero? C. Deferred revenue expenditure
A. Fixed instalment method D. Development expenditure
B. Depreciation fund method 437. A manufacturing company spent the following
C. Diminishing balance method amounts on the import and installation of machine:
D. Depletion unit method (a) ` 50,000 : Price of the machine
429. “Holding gains in relation to stocks should not be (b) ` 5,000 : Freight
used for payment of dividend.” Which one of the (c) ` 1,050 : Insurance premium
following accounting principles is involved in this? (d) ` 6,000 : Replacement of a part damaged
A. Consistency B. Cost intransit, not covered under the
C. Materiality D. Realisation insurance policy
430. X started business with a capital of ` 20,000 and Based on the above data, capital expenditure would
purchased goods worth ` 2,000 on credit. These be:
transactions may be expressed in the from of A. ` 50,000 B. ` 56,050
‘Accounting equation’ such as: C. ` 62,050 D. ` 51,050
A. ` 22,000 = ` 20,000 + ` 2,000 438. If trial a balance does not tally inspite of through
B. ` 20,000 = ` 22,000 – ` 2,000 scruting and the diffrence is substantial, then which
C. ` 22,000 = ` 22,000 + 0 one of the following courses would be accountant
D. ` 22,000 = 0 + ` 22,000 adopt?
431. Long-term liabilities are: A. Defer preparation of financial statements
A. Fixed assets minus current assets B. Open suspense A/c
B. Fixed assets minus current liabilities C. Write off the difference to profit and loss A/c
C. Current assets plus current liabilities D. Ignore the difference and prepare financial
D. Total liabilities minus current liabilities statements
 30 Accountancy/Book Keeping

439. Given, subscription received in 1990: 444. Trade discount allowed on sales is:
For the year 1989 – ` 500 A. debited to customer’s account
For the year 1990 – ` 7,000 B. credited to customer’s account
For the year 1991 – ` 400 C. debited to profit and loss account
D. None of these
1990 – subscription outstanding on 31st December,
1990 : ` 250 445. Accounting principles represent:
A. a consensus at a particular time to the recording
The amount of subscription to be posted to income of accounting transactions
and expenditure account of 1990 is: B. inviolable laws fixed by the legal boards
A. ` 7,000 B. ` 7,250 C. laws fixed by accounting experts
C. ` 7,900 D. ` 8,150 D. laws fixed by the respective governments
440. Assertion (A) : The matching concept requires that 446. How does an over costing of purchase day book affect
costs should be recognised as the cost of sales and profit?
expenses in the period in which A. Cost of sales is decreased while profit is increased
revenue is realised B. Cost of sales is increased while profit is decreased
Reason (R) : There m ay not be a m atching C. Both cost of sales and profit are increased
between expenditure and expense D. Cost of sales is increased, gross profit is decreased,
over a short period but net profit remains unaffected
In the context given above, which one of the following 447. Consistency w ith reference to application of
is correct ? accounting principles refers to the fact that:
A. Both A and R are true, and R is the correct A. Companies in the same industry use identical
explanation of A accounting procedures and methods, and are
B. Both A and R are true, but R is not a correct consistent
explanation of A B. Income and assets have not been over stated
C. A is true, but R is false C. Accounting methods and procedures used have
D. A is false, but R is true been consistently applied from year to year
D. All methods and procedures have been utilised
441. In financial statements, adequate disclosure is ensured
by companies as per the requirements of: 448. What is the correct sequence of the following in the
I. management policies preparation of periodical financial statements?
II. materiality concept I. preparation of Balancesheet
III. disclosure concept II. preparation of Funds flow statement
III. preparation of Trial balance
IV. relevant provision of the Companies Act
IV. preparation of Profit/Loss statement
V. internal control
Select the correct answer from the codes given below
Of these statements:
and mark your answer sheet accordingly.
A. I and III are correct
Codes:
B. I, II and III are correct
A. IV, II, I, III B. III, IV, I, II
C. II, III and V are correct C. II, IV, III, I D. I, III, II, IV
D. II, III and IV are correct
449. Depreciation is:
442. The proprietor of a business is treated as a creditor for A. A source of fund
capital introduced by him according to: B. A use of fund
A. money measurement concept C. Neither a source nor a use of fund
B. cost concept D. Partly a source and partly an application of fund
C. business entity concept
450. The following are the figures relating to a trader:
D. dual aspect concept
Opening stock – ` 10,000
443. Which one of the following statements is correct? Closing stock – ` 11,000
A. Capital of a firm is reduced by borrowing Purchase – ` 70,000
B. When there is no change in proprietor’s capital it The goods are sold at a profit of 30% on cost. The
is an indication of loss in business amount of sales will be:
C. Nominal accounts refer to false transactions A. ` 1,04,000 B. ` 91,000
D. Real accounts relate to assets of a business C. ` 89,700 D. ` 21,000
 Accountancy/Book Keeping 31
451. Subscriptions amounting to ` 7,500 appear on the 456. The amount of depreciation under straight line method
credit side of income and expenditure account after vis-a-vis written down value method, when the rate of
adjusting subscriptions out standing ` 600 and depreciation is same, would be:
subscriptions received in advance ` 450. The amount A. equal in all years
of subscriptions to be shown in the receipts and B. equal in the first year but higher is subsequent
payments account for the same year will be: years
A. ` 6,450 B. ` 7,350 C. equal in the first year but lower in subsequent years
C. ` 7,650 D. ` 8,550 D. lower in the first year but equal in subsequent
years
452. Which of the following item/items will be included in
income and expenditure account? 457. If on January 1, 1983 a plant is purchased for
I. Accrued expenses ` 1,20,000, its estimated life is ten years and its
II. Credit purchases salvage value is ` 10,000 under which one of the
following method would the 1983 depreciation be
III. Prepaid expenses
the largest?
IV. Opening cash balance
A. Straight line method
Select the correct answer from the codes given below B. Double-declining balance method
and mark your answer sheet accordingly. C. Sum of the year’s digits method
Codes: D. 15% on original cost
A. I B. I and II 458. Accumulated depreciation account is shown in the
C. II and III D. III and IV final accounts:
453. If, A. on the liability side of the balance sheet
Capital at the end = ` 7,000 B. on the debit side of the profit and loss account
Capital introduced = ` 5,000 C. by deducting from the related asset account in the
Drawings = ` 8,000 balance sheet
Loss = ` 10,000 D. on the credit side of the profit and loss account

Then capital in the beginning is equal to:
A. ` 12,000 B. ` 16,000
C. ` 20,000 D. ` 30,000
454. Company accounting conforms more to dual aspect
concept than to incomplete recording system because:
I. Companies Act insists upon the adoption of
double entry systems of book keeping
II. Balance sheet could not be preprared under sec.
211 of Com pany’s A ct according to the
incomplete recording system
III. To show true and fair view of the affairs of the
company
IV. To ensure adequate disclosure
Select the correct answer from the codes given below
and mark your answer sheet accordingly.
Codes:
A. I and II
B. II and III
C. II, III and IV
D. I, II and III
455. The purpose of depreciation is to:
A. reduce fixed assets to market value each year
B. save income tax and wealth tax
C. reduce fixed assets to nil as soon as possible
assets top expense over their working lives
D. allocate the cost of fixed
459. A particular firm provided the following data for an
accounting year
Current ratio ........................... 2.5 : 1
Liquid ratio ............................ 1.5 : 1
Net working capital ............... ` 6,00,000
Current assets and current liabilities of the firm are,
respectively:
A. ` 9,00,000 and ` 3,00,000
B. ` 10,00,000 and ` 4,00,000
C. ` 8,50,000 and ` 2,50,000
D. ` 7,50,000 and ` 1,50,000
460. When shares are forfeited, the share capital account is
debited by:
A. Paid-up amount
B. Called-up amount
C. Nominal value of the shares
D. Market value of the shares
461. When one of the following reflects the over all
efficiency with which capital is used?
A. Return on shareholders funds
B. Investment turnover ratio
C. Earning per share
D. Operating ratio
462. A company pays dividend out of:
A. Profits of the company for year for which
dividends are to be paid
B. Undistributed profit of the previous financial years
 32 Accountancy/Book Keeping

C. M oney provided by the central and state Codes:

governments for the payment of dividends in A. I-(d), II-(c), III-(a), IV-(b)
pursuance of their guaranters B. I-(a), II-(b), III-(d), IV-(c)
D. All of these C. I-(d), II-(b), III-(a), IV-(c)
463. A limited company has to redeem redeemable D. I-(a), II-(c), III-(d), IV-(b)
preference shares of the value of ` 1,00,000 for which 468. In a partnership business if there is no specific
the company has issued 3000 equity shares of ` 10 agreement among partners, profit is distributed in the:
each at a premium of 10 %. The amount to be A. ratio of capital contributions
transferred to capital redemption reserve account will B. ratio of time spent in the business
be: C. ratio to be decided by the court
A. ` 1,00,000 B. ` 97,000 D. equal ratio
C. ` 70,000 D. ` 67,000
469. Consider the following statements:
464. To test the liquidity of a concern, which of the I. In case of the marine insurance, the insurable
following ratios are useful? interest must exist at the time the loss occurs
I. Acid test ratio II. In case of fire insurance, insurable interest must
II. Capital turnover ratio exist both at the time of the contract and at the
III. Bad debts to sales ratio time of loss
IV. Inventory turnover ratio
Which of the statements given above is/are correct?
Select the correct answer using the codes given below: A. I only B. II only
A. I and III B. I and IV C. Both I and II D. Neither I nor II
C. II and IV D. II and III
470. Consider the following statements:
465. The following figures are taken from a balance sheet: I. Workm en’s com pensation and third party
(`) insurance are examples of guarantee insurance
Equity share capital................ 1,10,000 II. Re-insurance is more common under fire and
6% preference share capital... 30,000 marine insurance
General reserve.................... 50,000
Reserve for contingencies...... 20,000 Which of the statements given above is/are correct ?
6% mortgage debentures...... 50,000 A. I only B. II only
Sundry creditors.................. 20,000 C. Both I and II D. Neither I nor II
Preliminary expenses............ 5,000 471. The dividend per share in a company is ` 2, earning
Prepaid expenses.................. 4,000 per share is ` 5, and the market value is ` 25. What
In this case, the debt equity ratio is: will be its yield?
A. 1 : 2 B. 2 : 1 A. 20 per cent B. 12.5 per cent
C. 24 : 1 D. None of these C. 8 per cent D. 25 per cent

466. Who among the following is a bear operator? 472. When an incoming partner purchases his share from
A. A stock broker who sells shares now and buys the any one of the existing partners, then:
same shares later A. total assets of the firm do not change
B. An investor who expects the price of a security or B. total assets of the firm will be augmented to the
that of the whole securities market to rise extent of payment received from the new partner
C. An investor who sells securities anticipation of C. total assets of the firm will be reduced to the
being able to repurchase them later at a lower extent of payment received from the new partner
price D. change in total assets of the firm will depend
D. A broker who indulges in rigging of share prices upon the new profit sharing ratio of the partners
467. Match List-I with List-II and select the correct answer 473. If the good will raised at the time of retirement of
using the codes given below the lists: a partner is to be written off, then the capital accounts
List-I List-II of the remaining partners are debited in:
I. Financial leverage (a) Efficiency A. New profit sharing ratio
II. Quick ratio (b) Profitability B. Capital ratio
III. Stock turnover (c) Liquidity C. Old profit sharing ratio
IV. Margin on sales (d) Risk D. Sacrificing ratio
 Accountancy/Book Keeping 33
474. Match List-I with List-II and select the correct answer A. Matured debentures of a company
using the codes given below the Lists: B. Tax arrears
List-I List-II C. Proceeds of sale of property
I. Partner’s current (a) Dissolution of D. Provision for doubtful debts
accounts partnership 479. Match List-I with List-II and select the correct answer
II. Goodwill account (b) Admission of a partner using the codes given below the lists:
III. Partner’s drawings (c) Fixed capital of List-I List-II
account partners I. Uncertain liability (a) Amortisation
IV. Realisation (d) Goods taken by a partner II. Expiry of tangible (b) Long-term
account for self- consumption asset liability
Codes: III. Basis for all (c) Research and
A. I-(a), II-(d), III-(b), IV-(c) valuations in the development
B. I-(c), II-(b), III-(d), IV-(a) balancesheet
C. I-(a), II-(b), III-(d), IV-(c) IV. Accounting (d) Estimated
D. I-(c), II-(d), III-(b), IV-(a) standard-As-8 obligation
475. Which one of the following securities cannot be issued (e) Conservatism
by a public limited company in India? convention
A. Participating preference shares Codes:
B. Redeemable preference shares A. I-(e), II-(a), III-(b), IV-(c)
C. Deferred shares B. I-(d), II-(c), III-(e), IV-(a)
D. Debentures C. I-(e), II-(c), III-(d), IV-(a)
D. I-(d), II-(a), III-(e), IV-(c)
476. Match List-I with List-II and select the correct answer
using the codes given below the lists: 480. Consistency w ith reference to application of
List-I List-II accounting principles refer to the fact that:
I. Receipts and payments account (a) Revenue A. Companies in the same industry use identical
II. Income and expenditure account (b) Cash accounting procedures and methods
III. Dividend equalization reserve (c) Liability B. Income and assets have not been over stated
IV. Subscription received in (d) General C. Accounting methods and procedures used have
advance account reserve been consistently applied from year to year
Codes: D. All the methods and procedures have been utilised
A. I-(b), II-(a), III-(d), IV-(c) 481. A company purchased the following assets and paid
B. I-(c), II-(d), III-(a), IV-(b) through 1,00,000 fully paid equity shares of ` 10 at
C. I-(b), II-(d), III-(a), IV-(c) a premium of ` 2:
D. I-(c), II-(a), III-(d), IV-(b) Building ` 5,00,000
477. Which one of the following is not a valid observation Machinery ` 4,00,000
with reference to the declaration or payment of Stock in trade ` 1,00,000
dividend for any financial year? In the context of funds flow statement, this transaction
(a) Depreciation for the current financial year must will result in:
be provided A. Funds in flow of ` 10,00,000
(b) Arrears of depreciation must be provided B. Funds in flow of ` 12,00,000
(c) Losses incurred in previous year(s) must be set off C. Funds in flow of ` 1,00,000
(d) 10% of the profit must be transferred to the reserves D. Funds in flow of ` 9,00,000
in all cases
482. Call option is:
Codes:
A. a contract to buy a certain number of shares at a
A. I-(b), II-(a), III-(d), IV-(c)
stated price within a specified period of time
B. I-(c), II-(d), III-(a), IV-(b)
B. a contract to sell a certain number of shares at a
C. I-(b), II-(d), III-(a), IV-(c)
stated price within a specified period of time
D. I-(c), II-(a), III-(d), IV-(b)
C. the option of the issuing company to demand the
478. Which of the following amounts shall be credited to shareholders to pay for the partly paid shares
Investor Education and Protection Fund, if they remain D. the option available to the convertible
unpaid/unclaimed for seven years from the date they debenture holders to demand equity shares in
become due? conversion of debentures
(2715) Accountancy—5-II
 34 Accountancy/Book Keeping
Directions (Q. 483-485): The questions consist of two
statements, one labelled as (Assertion (A) and the other
labelled as ‘Reason (R)’. You are to examine these two
statements carefully and select the answers to these items
using the codes.
483. Assertion (A) : Holding company is a partial consoli-
dation
Reason (R) : If company C is the subsidiary of B,
and B is a subsidiary of A, then C
will be deemed to be a subsidiary of
A through the medium of B
Codes:
A. Both A and R are true, and R is the correct
explanation of A
B. Both A and R are true, but R is not a correct
explanation of A
C. A is true, but R is false
D. A is false, but R is true
484. Assertion (A) : While preparing trading and profit
and loss A/c and balancesheet, the
adjustments given out side the trial
balance are to be shown in final
accounts at two places, if treated
directly
Reason (R) : Adjustment are to be made to comply
with the matching principle.
Codes:
A. Both A and R are true, and R is the correct
explanation of A
B. Both A and R are true, but R is not a correct
explanation of A
C. A is true, but R is false
D. A is false, but R is true
485. Assertion (A) : Current ratio shows the ability of
the firm to m eet its short-term
obligations.
Reason (R) : Current ratio is also used in inventory
valuation.
Codes:
A. Both A and R are true, and R is the correct
explanation of A
B. Both A and R are true, but R is not a correct
explanation of A
C. A is true, but R is false
D. A is false, but R is true
486. Making the provision for bad and doubtful debts in
anticipation of actual bad debts is on basis of:
A. Convention of disclosure
B. Convention of consistency
C. Convention of conservatism
D. Conventions of disclosures and consistency
487. Following data appear in the books of XY & Co. as
on 31-03-2003
Capital account....................... ` 13,00,000
Drawings account................... ` 12,000
Land & building account.... ` 10,00,000
Goodwill account................... ` 3,50,000
Suspense account (Dr).......... ` 50,000
Loss by theft account........... ` 20,000
Business loss........................... ` 50,000
Loan given to AB & Co..... ` 60,000
What will be the amount of sundry creditors?
A. ` 2,30,000 B. ` 1,72,000
C. ` 3,42,000 D. ` 2,42,000
488. Under the accrual concept, which one of the following
will not be shown as an asset/liability in the
balancesheet of an entity?
A. Interest due but not paid
B. Interest due but not received
C. Interest due and paid
D. Interest paid but not due
489. A Company purchased 8% bonds at a cost of
`12,00,000 (face value `10,00,000) on January 1,
2003. Half yearly interest is payable on this investment
on June 30 and December 31st each year. The
company closes its accounts on 31-3-2003. The
amount of accured interest shown in profit and loss
account for the year ended is:
A. ` 40,000 B. ` 60,000
C. ` 20,000 D. ` 80,000
490. Goods worth ` 24,000 were returned by X. The
accountant, however, credited the sales returns
account by ` 42,000. In order to rectify this error,
what should be done?
A. Debit the sales return account by ` 42,000
B. Credit the sales return account by ` 24,000
C. Debit the sales return account by ` 66,000
D. Debit the sales return account by ` 18,000
491. A machine with a written down value of ` 10,000 has
been sold for ` 13,000. The amount realized is a:
A. Capital receipt and profit involved should be
transferred to capital reserve
B. Revenue receipt
C. Capital receipt and profit involved should be
transferred to General Reserve
D. Capital receipt and profit involved should be
transferred to profit and loss A/c
492. ` 10,000 spent on the replacement of worn-out parts
of an electronic machinery is treated as:
A. Capital expenditure
B. Revenue expenditure
C. Deferred revenue expenditure
D. Capital loss
 Accountancy/Book Keeping 35
493. Preliminary expenses are an example of: 498. Given the following data extracted from the book of
A. Revenue expenditure Abdul traders:
B. Capital expenditure (`)
C. Deferred revenue expenditure Opening stock.................... 30,000
D. All of these Closing stock..................... 40,000
494. Which of the following is/are capitalised along with Purchases........................... 1,25,000
Carriage inwards................ 2,000
the purchase price a fixed asset?
Carriage outwards.............. 3,000
I. Import duty
II. Delivery and handling cost Return outwards................. 5,000
Sales................................... 1,50,000
III. Cash discount
IV. Cost of installation The cost of goods sold will be
A. ` 1,30,000 B. ` 1,12,000
Select the correct answer using the codes given below:
A. III only B. II and III C. ` 1,20,000 D. ` 1,15,000
C. I, II and IV D. I, II, III and IV 499. Consider the following statements:
495. Match List-I (Items) with List-II (Standards) and select A credit purchase during the accounting year which
the correct answer using the codes given below the was not recorded in the books of account but included
lists: in the closing stock is to be:
List-I List-II I. added to the credit purchases account
(Items) (Standards) II. added to the creditors account
I. Accounting for fixed assets (a) AS-9 III. subtracted from the closing stock
II. Revenue recognition (b) AS-10 IV. added to the opening stock
III. Depreciation accounting (c) AS-3
Which of the statements given above is/are correct?
IV. Cash flow statement (d) AS-6
A. III only B. I and II
Codes: C. II and III D. II, III and IV
A. I-(b), II-(c), III-(d), IV-(a)
B. I-(d), II-(a), III-(b), IV-(c) 500. Match List-I (Items) with List-II (Headings) and select
C. I-(b), II-(a), III-(d), IV-(c) the correct answer using the codes given below the
D. I-(d), II-(c), III-(b), IV-(a) lists:
List-I List-II
496. Accounting standard-AS-2 provides that inventories
(Items) (Headings)
should be valued at
I. Provision for (a) Miscellaneous expenses
A. lower of historical cost and net realisable value income tax not written off
B. lower of historical cost and market value
II. Share premium (b) Current liabilities
C. only estimated selling price
III. Unclaimed dividend (c) Reserves and surplus
D. All of these IV. Discount issue (d) Profit and loss account
497. While making an adjustment entry in respect of of shares
interest on capital, credit is made to: Codes:
A. Capital account A. I-(d), II-(c), III-(b), IV-(a)
B. Interest on capital account B. I-(b), II-(c), III-(d), IV-(a)
C. Profit & loss account C. I-(d), II-(a), III-(b), IV-(c)
D. Interest account D. I-(b), II-(a), III-(d), IV-(c)

ANSWERS
1 2 3 4 5 6 7 8 9 10
C B B C B A C C C A
11 12 13 14 15 16 17 18 19 20
A C A A B B B D D B
21 22 23 24 25 26 27 28 29 30
A B A C A A B C A C
36 Accountancy/Book Keeping

31 32 33 34 35 36 37 38 39 40
C C A C B A C D D B
41 42 43 44 45 46 47 48 49 50
C B D C A A A C C C
51 52 53 54 55 56 57 58 59 60
A A B D A D B D A B
61 62 63 64 65 66 67 68 69 70
A D A C C B D D B A
71 72 73 74 75 76 77 78 79 80
B A A A C D B A C D
81 82 83 84 85 86 87 88 89 90
A C D C B A B B B A
91 92 93 94 95 96 97 98 99 100
B A B A C C B B A C
101 102 103 104 105 106 107 108 109 110
B B B C C C C B C B
111 112 113 114 115 116 117 118 119 120
B A B A B D A C B A
121 122 123 124 125 126 127 128 129 130
C B B B A A C A C B
131 132 133 134 135 136 137 138 139 140
A B B B A C B D B B
141 142 143 144 145 146 147 148 149 150
C A A C B C A C A C
151 152 153 154 155 156 157 158 159 160
B B C A A A B A A A
161 162 163 164 165 166 167 168 169 170
D A D A A D A B A B
171 172 173 174 175 176 177 178 179 180
A B B A B B A C D B
181 182 183 184 185 186 187 188 189 190
B A C A A C C A B C
191 192 193 194 195 196 197 198 199 200
A A B A A A A C A A
201 202 203 204 205 206 207 208 209 210
A B B B B B A C C B
211 212 213 214 215 216 217 218 219 220
C C C A D B A B B A
221 222 223 224 225 226 227 228 229 230
B B A B C A C A A C
231 232 233 234 235 236 237 238 239 240
B B C A C C C B C A
241 242 243 244 245 246 247 248 249 250
A D C A A B A A C C
251 252 253 254 255 256 257 258 259 260
D A B B C B A C B B
261 262 263 264 265 266 267 268 269 270
A C A C D B B B B A
 Accountancy/Book Keeping 37
271 272 273 274 275 276 277 278 279 280
B A C C B A A C A A
281 282 283 284 285 286 287 288 289 290
C C B D A B B B D D
291 292 293 294 295 296 297 298 299 300
B A C A D A C B B B
301 302 303 304 305 306 307 308 309 310
B B D C C C D C B C
311 312 313 314 315 316 317 318 319 320
A D D B D B D D C D
321 322 323 324 325 326 327 328 329 330
A B B B D B D A D C
331 332 333 334 335 336 337 338 339 340
D A A D C B B A B C
341 342 343 344 345 346 347 348 349 350
C C C C B C D B A D
351 352 353 354 355 356 357 358 359 360
B D C C B A D A C C
361 362 363 364 365 366 367 368 369 370
D C B C B D B C C B
371 372 373 374 375 376 377 378 379 380
A A A C C C A A A B
381 382 383 384 385 386 387 388 389 390
B B A D A B C B A D
391 392 393 394 395 396 397 398 399 400
C A C D A C D A A C
401 402 403 404 405 406 407 408 409 410
B A D A B D B D A B
411 412 413 414 415 416 417 418 419 420
B B A B B D B C A B
421 422 423 424 425 426 427 428 429 430
A C B B A C A C D A
431 432 433 434 435 436 437 438 439 440
D C B A C B C B B B
441 442 443 444 445 446 447 448 449 450
D C D C A B C B A C
451 452 453 454 455 456 457 458 459 460
B B C D D B C A B B
461 462 463 464 465 466 467 468 469 470
A D C B D C A D C C
471 472 473 474 475 476 477 478 479 480
A A C B C A D A D C
481 482 483 484 485 486 487 488 489 490
C A D C C C D C C C
491 492 493 494 495 496 497 498 499 500
A B C C C A A B B A
  
38 Accountancy/Book Keeping

Cost Accounting

1. ................. provides inform ation for incom e 9. In automobile, ................. costing is used.
determination. A. process B. batch
A. Financial accounting C. multiple D. job
B. Cost accounting
10. Service costing is used in industries producing
C. Management accounting
.................
D. None of these
A. products B. service
2. ................. helps in ascertaining costs beforehand. C. Both A & B D. None of these
A. Financial accounting
11. ................. costing is applicable to printers.
B. Cost accounting
A. Process B. Batch
C. Management accounting
C. Multiple D. Job
D. None of these
12. Process costing is also known as ............. costing.
3. The scope of cost accounting include ............., .............
and .............. A. continuous B. batch
A. cost ascertainment, cost presentation, cost control C. multiple D. job
B. tax planning, tax accounting, financial accounting 13. Operating costing is also known as ............. costing.
C. presentation of accounting information, creation A. service B. batch
of policy, day-to-day operation C. multiple D. job
D. None of the above
14. ................. costing is a type or technique of costing.
4. Cost accounting disclose ................. A. Marginal B. Batch
A. the financial position C. Multiple D. Job
B. profit/loss of a product, job or service
15. ............ costing is a type or technique of costing.
C. effect and impact of cost on business
A. Absorption B. Batch
D. None of these
C. Multiple D. Job
5. ................. is a post mortem of past costs.
A. Financial accounting B. Cost accounting 16. ............. is not the scope of Cost Accountancy.
C. Both A & B D. None of these A. Ascertaining cost
B. Cost accounting
6. ................. aids in price fixation. C. Cost control
A. Financial accounting D. Tax planning
B. Cost accounting
C. Management accounting 17. Cost Accounting has been developed because of
D. None of these ................ of Financial Accounting.
A. limitations B. advantages
7. ................. is the oldest branch of accounting. C. Both A & B D. None of these
A. Financial accounting
B. Cost accounting 18. Cost Accountancy is the science, art and ................ of
C. Management accounting a cost accountant.
D. None of these A. practice B. exercise
C. hard work D. effort
8. ................. includes financial and cost accounting, tax
planning and tax accounting. 19. The ordinary trading account is a locked storehouse
A. Financial accounting of most valuable information to which cost system is
B. Cost accounting the ................
C. Management accounting A. key B. lock
D. None of these C. house D. None of these

38
 Accountancy/Book Keeping 39
20. Cost accounts deal partly with facts and figures and 34. Cost of production is equal to ................
partly with ................ A. works cost plus administration overheads
A. estimates B. costs B. prime cost plus works cost
C. income D. revenue C. prime cost plus works overhead
21. Cost accounting provides data for managerial ................ D. works overhead plus administration overheads
A. decision making B. recruitment 35. Variable cost increases with ........... in output.
C. retrenchment D. None of the above A. increase
22. Cost accounting is based on ................ figures. B. decrease
A. estimated B. historical C. increase or decrease
C. actual D. None of these D. None of these
23. Cost accounting provides detailed information about 36. ................ Accounting provides information for cost
................ of various products, processes, services and control.
operations. A. Financial B. Cost
A. costs B. income C. Human Resource D. None of these
C. Either A or B D. None of these
37. ................ is one which can be conveniently identified
24. Cost accounting records both monetary and ................ with and charged to a particular unit of cost.
units. A. Direct cost B. Indirect cost
A. physical B. cost C. Overhead D. None of these
C. Both A & B D. None of these
38. Cost centre and cost unit are ................
25. The method of costing used in a refinery is ................ A. not the same B. the same
costing. C. not related D. None of these
A. process B. batch
C. multiple D. job 39. Fixed cost per unit ................ with rise in output and
................ with fall in output.
26. ................ costing is used in transport undertakings. A. decreases, increases
A. Process B. Service B. increases, decreases
C. Multiple D. Job
C. is constant, remains same
27. The total variable cost ................ in total proportion to D. None of the above
output.
40. Period costs charged to ................
A. increases B. does not increase
A. cost of production B. products
C. decreases D. None of these
C. period D. None of these
28. Variable cost per unit ................
A. remains constant B. varies 41. Standard costs is ................
C. decreases D. increases A. predetermined cost B. budgeted cost
C. actual cost D. None of these
29. Sunk costs are ................ for decision-making
A. irrelevant B. relevant 42. .............. are costs which have been applied against
C. useful D. None of these revenue of particular accounting period.
A. Expenses B. Income
30. Costing and cost accounting are ................ C. Loss D. None of these
A. not the same B. one and the same
C. not related at all D. None of these 43. ................ is the smallest segment of activity or area or
responsibility for which costs are accumulated.
31. Fixed cost ................ in the same proportion in which
A. Cost object B. Cost centre
output changes.
C. Cost driver D. None of the above
A. does not change B. changes
C. increases D. None of these 44. The primary emphasis of ................ cost is on the
32. Administration expenses are mostly ............ planning function of management.
A. semi-variable B. variable A. budgeted B. standard
C. fixed D. None of these C. period D. None of these

33. Abnormal cost is ................ 45. ................ cost is irrecoverable cost.

A. uncontrollable B. controllable A. Marginal B. Out of pocket
C. fixed D. None of these C. Sunk D. None of these
40 Accountancy/Book Keeping

46. ................ is the value of a benefit where no actual cost 58. Out of pocket costs involve payment to ................
is incurred. A. outsiders B. self
A. Imputed B. Sunk C. employees D. None of the above
C. Out of pocket D. None of these 59. Added value is the change in ................
47. ................ is the cost which involves payment to A. market value B. cost
outsiders. C. income D. None of the above
A. Out of pocket cost B. Imputed cost 60. ................ Accounting is not only a positive science
C. Notional cost D. None of these but also a normative science because it includes
48. ................ is the maximum possible alternative earning techniques of budgetary control and standard costing.
that might have been earned if the productive capacity A. Financial B. Cost
is put to some alternative use. C. Both A & B D. None of these
A. Opportunity B. Incremental revenue 61. Material control does not cover the following stage:
C. Alternative revenue D. None of these A. purchase of materials B. storing of materials
49. An item of cost that is direct for one business may be C. issue of materials D. production
................ for another business. 62. Material control aims at achieving effective ................
A. important B. direct A. material management
C. indirect D. None of the above B. quality control
50. The total of all direct expenses is known as ................ C. accounting of material
cost. D. material supply
A. prime B. works 63. Stores Ledger is maintained in the ..............
C. production D. Both A & B A. store
51. ................ costs are partly fixed and partly variable in B. finance department
relation to output. C. cost accounting department
A. Variable B. Fixed D. Both A & B
C. Semi-variable D. Both A & B 64. Stock verification sheets are maintained to record the
results of ……….
52. An opportunity cost is ................
A. physical verification B. financial control
A. the advantage foregone
C. financial verification D. quality verification
B. the cost
C. the income 65. Stock Adjustment Account is debited with ............
D. None of the above and credited with ............
A. surplus, shortage of stock
53. Works cost is a total of .................
B. shortage of stock, surplus
A. indirect material, indirect labour
C. excess, loss
B. direct material, direct labour, direct or chargeable
D. None of these
expenses and works expenses
C. direct material, direct labour 66. Bin card is a record of ............ only.
D. indirect material, indirect labour, indirect expenses A. cost B. value
C. quantity D. expense
54. An opportunity cost does not involve ............
A. cash outlays B. direct cost 67. Bin card is maintained by the .................
C. indirect cost D. None of the above A. Cost accountant B. Clerk
C. Storekeeper D. Branch accountant
55. Variable costs change ................ with change in output.
A. proportionately B. inversely 68. Material abstract is also known as ..............
C. disproportionately D. sometimes A. material issue analysis sheet
B. bill of materials
56. Fixed cost per unit ................ with increase in output. C. stores ledger
A. decreases B. increases D. None of the above
C. changes D. sometimes
69. Material should be issued by the store keeper against
57. Depreciation is ................ expenditure. .................
A. fixed B. variable A. material requisition B. bill of materials
C. adjustable D. semi-variable C. Both A & B D. None of these
 Accountancy/Book Keeping 41
70. First in first out method of valuing material issues is 80. ................. represents that quantity of material which is
suitable in times of ................. normally ordered when a particular material reaches
A. rising prices B. falling prices re-ordering level.
C. fluctuating prices D. None of these A. Maximum level B. Re-order level
71. Last in first out method is suitable in times of ................. C. Minimum level D. Re-order quantity
A. rising prices B. falling prices 81. The principle types of inventories are raw materials
C. fluctuating prices D. None of these and, ................. and finished goods.
72. Average cost method of valuing material issues is A. processed materials B. goods-in-progress
suitable when ................. C. stored goods D. goods for dispatch
A. prices rise 82. Re-ordering level = Maximum consumption × ..............
B. prices fall A. Average re-order period
C. prices fluctuate considerably B. Maximum usage
D. None of these C. Maximum re-order period
73. Inflated price method of valuing material issues is D. Normal usage
suitable when ................. 83. Inventory turnover ratio = Cost of inventory consumed
A. materials are subject to natural wastage during the period ÷ Cost of ............... held during the
B. prices rise period
C. prices fall A. average inventory B. minimum inventory
D. None of these C. maximum inventory D. None of these
74. Specific price method of valuing material issue is 84. Inventory turnover in days = Days during the period
used when…………. ÷ .................
A. materials are purchased for specific job or work A. inventory turnover ratio
order B. material consumed during the period
B. materials are subject to natural wastage C. cost of average stock during the period
C. prices fluctuate D. None of these
D. None of these
85. ................. is a technique of material cost control which
75. Market price method is considered to be the best leads to low carrying cost as a result of low investment
method when ................. in inventory.
A. quotations have to be sent A. ABC Analysis
B. prices fluctuate B. JIT Inventory System
C. materials are subject to natural wastage C. VED Analysis
D. None of these D. Perpetual Inventory System
76. A bill of material serves the purpose of ................. 86. ................. is a technique of stock control which leads
A. material requisition to saving of time of the management because attention
B. stores ledger is required to be paid only to some of the items rather
C. material issue analysis sheet than on all the items.
D. None of these A. ABC Analysis
77. A bill of material is prepared in case of a .............. job. B. JIT Inventory System
A. standard job B. non-standardized job C. VED Analysis
C. Both A & B D. None of these D. Perpetual Inventory System
78. Stock verification sheets are maintained to record the 87. ................. is used primarily for control of spare parts.
results of ................. A. ABC Analysis
A. physical verification B. financial control B. JIT Inventory System
C. financial verification D. quality verification C. VED Analysis
79. The quantity of material to be ordered at one time is D. Perpetual Inventory System
known as ................. 88. Inventory turnover ratio = Cost of ................. during
A. ordering quantity the period ÷ Cost of average inventory held during
B. commercial order quantity the period.
C. economic order quantity A. inventory consumed B. minimum inventory
D. None of these C. maximum inventory D. None of these
(2715) Accountancy—6
42 Accountancy/Book Keeping

89. Re-ordering level = ................. × Maximum re-order 99. For conducting ................. workers are studied at their
period jobs and all their movements and motions are noted.
A. Average re-order period A. time study B. motion study
B. Maximum usage C. merit rating D. None of these
C. Maximum consumption 100. ................. is the assessment of the relative worth of
D. Normal usage jobs within a company whereas ................. is the
90. ................. obviates the necessity for the physical assessment of the relative worth of man behind the
checking of all items of stores at the end of the year job.
and thereby avoids dislocation of production. A. Job evaluation, merit rating
A. ABC Analysis B. Job analysis, job evaluation
B. JIT Inventory System C. Job analysis, merit rating
C. VED Analysis D. None of these
D. Perpetual Inventory System
101. ................. is maintained to know how the worker’s
91. ................. forms part of cost of production. time shown by the time card is spent on various jobs.
A. Abnormal waste B. Normal waste A. Daily time sheets B. Weekly time sheets
C. Both A & B D. None of these C. Job cards D. None of the above
92. .............. does not form part of production. 102. In time wage system, wages are paid according to the
A. Abnormal waste B. Normal waste .................
C. Both A & B D. None of these A. production B. time
93. Material losses due to abnormal reasons should be C. Both A & B D. None of these
transferred to ................. 103. Under piece rate system of wage payment, payment is
A. Profit and loss account made according to the ...............
B. Costing Profit and Loss Account A. quantity of work done
C. Trading Account B. time
D. None of these C. Both A & B
94. Defectives are that portion of production which can D. None of these
be ................. at some extra cost of re-operation. 104. For a work order, standard time and time taken are 20
A. sold B. rectified hours and 15 hours respectively. Time rate being ` 2
C. purchased D. None of these per hour, total wages payable under Rowan Premium
95. ................. is a method of evaluating the job in terms Plan will be:
of its money value. A. 40 B. 37.50
A. Job analysis B. Job evaluation C. 35 D. None of these
C. Work measurement D. Motion study 105. Taylors differential piece rate system provides for
96. The requirements of a particular job are known as higher rate to ................. workers.
................. A. inefficient B. efficient
A. job description B. job specifications C. Both A & B D. lazy
C. job evaluation D. Both A & B 106. ................. is most suitable when quality of work is of
97. Qualities demanded from the job holder is technically prime importance.
known as ................. A. Piece rate system B. Time wage system
A. job description C. Both A & B D. None of these
B. job specifications 107. Formula of calculation of wages under Halsey Premium
C. job evaluation System is ...............
D. Both A & B
A. R + %(S – T)R B. T × R + % (S – T) R
98. ................. is concerned with discovery of facts
ST
concerning a job and ................. is concerned with C. ×T×R D. R × S × T
ascertaining the money value of a job. S
A. Job description, job evaluation 108. Under Merrick’s multiple piece rate system, 110% of
B. Job specifications, job evaluation the ordinary piece rate is given to workers whose
C. Job analysis, job evaluation level of performance is between ................ of the
D. None of these standard output.
 Accountancy/Book Keeping 43
A. 83% and 100% B. 100% and 120% 117. ................ is the amount by which the absorbed
C. 0% and 83% D. None of these overheads fall short of the actual amount of overheads
109. Under Merrick’s multiple piece rate system, 120% of incurred.
the ordinary piece rate is given to workers whose A. Over absorption of overheads
level of performance is between ................ of the B. Under absorption of overheads
standard output. C. Overheads absorption
A. 83% and 100% B. 100% and 120% D. None of these
C. 0% and 83% D. None of these 118. ................ is the excess of overheads absorbed over the
110. Under Merrick’s multiple piece rate system, ordinary actual amount of overheads incurred.
piece rate is given to workers whose level of A. Over absorption of overheads
performance is between ................ of the standard B. Under absorption of overheads
output. C. Overheads absorption
A. 0% and 100% B. 0% and 120% D. None of these
C. 0% and 83% D. None of these 119. When ................ is used on the basis of budgeted
111. In ................, two piece rates are set for each job. overheads and the rate is applied to the actual base,
A. Merrick’s multiple piece rate system the actual overhead expenses may be different from
B. Rowan’s Premium Plan the charged overheads.
C. Taylor’s differential piece rate system A. a predetermined rate
D. None of these B. actual rate method of absorption
C. Both A & B
112. Basis of apportionment of stores service expenses is D. None of these
................
A. value of materials consumed 120. Expenses incurred during production other than direct
B. units of material consumed materials and direct labour are called ................ factory
C. products produced expenses; those charged to production on estimated
D. None of these basis are called ................
A. actual, applied B. applied, actual
113. Basis of apportionment of welfare department expenses
C. indirect, direct D. None of these
is ................
A. wages of each department 121. The per unit expense of the ................ portion factory
B. number of employees overhead varies with the volume of production while
C. materials consumed ............ portion remains the same with volume.
D. number of machineries A. fixed, variable
114. Basis of apportionment of crèche expenses is ................ B. variable, fixed
A. number of employees C. variable, semi-variable
B. number of female employees D. None of these
C. number of male employees 122. ................ expenses are excluded from cost.
D. Both B & C A. Normal B. Abnormal
115. Under step method of re-apportionment of costs of C. Both A & B D. None of these
service departments, the cost of last service department 123. Such expenses which are included (even though they
is apportioned only to the ................ are not incurred) for taking managerial decisions are
A. production departments called ................
B. service departments A. notional expenses B. actual expenses
C. Both A & B C. imputed D. None of these
D. None of these
124. ................ expenses are partly fixed and partly variable.
116. Machine hour rate is obtained by dividing the total A. All expenses B. Variable
running expenses of a machine during a particular C. Fixed D. Semi-variable
period by the ................
A. number of hours 125. Unsuccessful research expenditure should be ................
B. number of products produced cost accounts.
C. number of workers A. excluded from B. included in
D. wages C. apportioned in D. None of these
 44 Accountancy/Book Keeping

126. Salary paid to general manager is an item of ................ 137. Each job has a ................ prepared for it that bears the
expenses. job number and which is used to collect all cost data
A. fixed B. variable relating to job.
C. semi-variable D. estimated A. Job Time Sheet B. Job Cost Card
C. Job Ticket D. Job Account
127. Fancy packing is an example of ................ expenses.
A. selling B. distribution 138. An automobile service unit uses ................ costing.
C. administration D. factory A. specific order B. batch
C. job D. contract
128. Telephone expense is ................ expense.
A. variable B. semi-variable 139. Where the work is undertaken to Customers’ special
C. fixed D. None of these requirements and each order is of comparatively short-
duration, it is called ................ costing.
129. Primary packing is an item of ................
A. job B. batch
A. selling overheads
C. operation D. output
B. prime cost
C. distribution overheads 140. Economic Batch Quantity is an important point to be
D. factory overheads determined in industries where ................ costing is
employed.
130. When factory overhead control account has an ending
A. job B. batch
debit balance, factory overhead was................
C. operation D. output
A. over applied B. under applied
C. Both A & B D. None of these 141. Economic Batch Quantity depends on .............. and
............. costs.
131. Under applied or over applied factory overhead should
A. material, labour
be:
B. set-up costs, carrying
A. carried forward to next year
C. transportation, carrying
B. shown as an extraordinary item
D. warehousing, labour
C. apportioned among cost of goods sold and
applicable to inventory 142. The ................ costing is applied when a quantity of
D. written off similar and identical products are manufactured
together as one Job.
132. Credit and collection cost is an item of:
A. job B. batch
A. selling overhead
C. operation D. output
B. office overhead
C. prime cost 143. The loss incurred on an incomplete contract is
D. administrative overhead transferred to ................ account.
A. costing profit and loss account
133. Warehousing cost is an item of: B. profit and loss account
A. office overhead C. trading account
B. distribution overhead D. deferred to next year
C. material cost
D. works overhead 144. When the completion stage of the contract is more
than half, the profit to be credited to Profit and Loss
134. In ................ each job is a cost unit to which all costs account will be equal to ................
are assigned.
1 Cash received
A. Batch costing B. Job costing A. rd of Notional Profit 
3 Work certified
C. Process costing D. Operation costing
1 Cash received
135. Material Costs of each job are determined from B. of Notional Profit 
2 Work certified
................
2 Cash received
A. material requisition notes C. rd of Notional Profit 
3 Work certified
B. bill of materials
D. Full Notional Profit
C. Both A & B
D. None of these 145. When the completion stage of a contract is less than
136. Printers use ................ costing. 1
, the total expenditure on the contract is transferred
A. Process B. Batch 4
C. Job D. Contract to ............ account.
 Accountancy/Book Keeping 45
A. Work-in-progress 156. Boiler house costing is an example of ............. costing.
B. Profit and loss account A. operation B. process
C. Miscellaneous account C. service D. None of these
D. None of these
157. In service costing, fixed charges are also called as
146. If the amount of work certified is less than ................. .............
of the contract price, then no profit should be taken A. standing charges B. variable charges
to Profit & Loss Account. C. fixed charges D. None of these
A. 20% B. 25%
158. Service costing is not used in one of the following:
1 A. Electricity B. Hospitals
C. 33 % D. 40%
3 C. Transport D. Electronics
147. Contract costing is not used in one of the following 159. If the present cost of the car is ` 1,00,000 residual
industries: value at the end of the 5th year is ` 20,000, the
A. Ship building monthly depreciation is .............
B. Civil construction A. ` 20,000 B. ` 16,000
C. Automobiles C. ` 1,333 D. ` 17,333
D. Construction of bridges
160. A bus carries 25 passengers daily for 25 days and its
148. The sum of value of work certified and uncertified mileage per month is 1000 kms. Its passenger miles
appearing in the Contract Account is called ............. are ...............
A. Work in Progress B. Work in Process A. 30,000 B. 12,500
C. Work Completed D. Work Done C. 20,000 D. 25,000
149. ................. is the most suitable method in a transport 161. In ............... costing where standardized goods or
industry. services result from a sequence of repetitive and more
A. Operation costing B. Service costing or less continuous operations to which costs are
C. Process costing D. Job costing collected and averaged over the units produced during
150. Room/day is the cost unit used in ............. the year:
A. hotels B. hospitals A. Multiple B. Process
C. schools D. None of these C. Operation D. Single

151. Maintenance charges are in the nature of ............. 162. The method of costing applied in biscuit industries is
expenses. ............... costing and in steel industry ............... costing.
A. Fixed B. Variable A. job, process B. job, contract
C. Semi-variable D. None of these C. batch, multiple D. process, operation

152. In transport costing ............. charges vary more or less 163. Average unit cost for each process is calculated by
in direct proportion to kilometers run. dividing the ............... by ...............
A. running B. petrol A. Total cost, number of units
C. drivers salary D. tax B. Total process cost, number of units in process
C. Total process cost, number of finished goods
153. Service costing is called as ............. D. Total cost, number of units produced
A. Operation costing B. Operating costing
C. Multiple costing D. None of these 164. Where raw material is to pass certain stages, before it
is converted into finished goods, the method of costing
154. In electricity supply company uses ............. as cost used is ...............
unit. A. Job costing
A. kilo watt hour B. per household B. Operating costing
C. voltage D. None of these C. Process costing
155. In transportation costing a composite unit such as D. Both B and C
............. is used. 165. When the actual loss is more than the estimated loss,
A. passenger mile/km or Ten kilometer the difference between the two is considered to be
B. per km ...............
C. per passenger A. abnormal loss B. normal loss
D. per stop C. loss D. None of these
 46 Accountancy/Book Keeping

166. When actual loss is less than the estimated loss, the 177. ............... arises where the actual process loss is less
difference between the two is considered to be ............... than the normal predetermined process loss.
A. abnormal gain B. abnormal loss A. Normal loss B. Abnormal loss
C. normal loss D. income C. Abnormal gain D. None of these
167. When actual loss is ............... than the estimated loss, 178. An input of 5000 kg of material introduced into the
the difference between the two is considered to be process and the expected loss is 8% and if the actual
abnormal gain. output from the process is 4300, the abnormal loss is
A. more B. less ............... kg.
C. higher D. None of these A. 400 B. 300
168. When actual loss is ............... than the estimated loss, C. 500 D. 600
the difference between the two is considered to be 179. Budgeting system ............... key managerial functions.
abnormal loss. A. dismisses B. integrates
A. more B. less C. discharges D. None of these
C. Both A & B D. None of these
180. ............... is a budget which is updated continuously
169. When 1000 units are 60% complete in a process, it is by adding a further period (a month/quarter) and
equivalent to ............... completed units. deducting a corresponding earlier period.
A. 60 B. 600
A. Rolling budget B. Continuous budget
C. 6000 D. 1000
C. Annual budget D. Both A & B
170. Equivalent units represent the production of a process
181. The budget relating to ............... must be prepared first
in terms of ............... units.
and the other budgets should be prepared in the light
A. completed B. total production
of that factor.
C. semi-finished D. Both A & C
A. limiting factor B. materials
171. ............... process loss should be transferred to costing C. labour D. production
profit & loss account.
A. abnormal B. normal 182. ............... budget is the most important budget and it
C. Both A & B D. None of these forms the basis on which all the other budgets are
built up.
172. The cost of ............... process loss is absorbed in the A. Production B. Material
cost of production of good units. C. Cash budget D. Sales
A. abnormal B. normal
C. Both A & B D. None of these 183. ............... budget may be classified into material cost
budget, labour cost budget and overhead budget.
173. In inter process profits, the output of one process is A. Cost of production B. Purchase
transferred from one process to another not at ............... C. Sales D. Cash
but at ...............
A. market price, actual cost 184. ............... budget gives an estimate of the anticipated
B. actual cost, market price receipts and payment of cash during the budget period.
C. Both A & B A. Sales B. Production
D. None of these C. Cash D. Master
174. Where actual loss in a process is less than the 185. ............... is the consolidated summary of the various
anticipated loss, the difference between the two is functional budgets.
considered to be ............... A. Master budget B. Sales budget
A. abnormal loss B. normal loss C. Performance budget D. Cash budget
C. abnormal gain D. normal gain
186. ............... budget is designed to remain unchanged
175. In process costing, the abnormal loss is treated as irrespective of the volume of output or turnover
............... cost and written off to profit & loss account. attained.
A. unit B. period A. Master B. Fixed
C. future D. process C. Flexible D. All of these
176. The process costing is not used in one of the 187. ............... budget gives different budgeted costs for
following: different levels of activity.
A. chemical B. textiles A. Master B. Fixed
C. cement D. oil refining C. Flexible D. All of these
 Accountancy/Book Keeping 47
188. ............... budget is the preparation of budget starting 193. .................. is a summary of all function budgets in a
from a clean state. Capsule form.
A. Performance B. Zero Base A. Master budget B. Sales budget
C. Cash D. None of these C. Performance budget D. Cash budget
189. Calendar Ratio = 194. ................. determines the priorities of functional
Number of actual working days in a period budget.
A. Number of working days in the budget period × 100 A. Principal Budget Factor
B. Limiting Factor
Actual hours worked C. Both A & B
B.  100
Budgeted hours D. None of the above
195. Cash Budget is a .............. budget.
Standard hours for actual production
C.  100 A. long-term B. very long-term
Actual hours worked C. short-term D. very short-term
Standard hours for actual production 196. The primary difference between a fixed budget and a
D.  100
Budgeted standard hours variable(flexible) budget is that a fixed budget:
A. Includes only fixed costs, while a variable budget
190. Capacity Ratio =
includes only variable costs.
Number of actual working days in a period B. Is concerned only with future acquisitions of fixed
A. Number of working days in the budget period × 100
assets, while a variable budget is concerned with
expenses which vary with sales.
Actual hours worked
B.  100 C. Cannot be changed after the period begins, while
Budgeted hours a variable budget can be changed after the period
begins.
Standard hours for actual production
C.  100 D. Is a plan for a single level of sales (or other
Actual hours worked
measure of activity), while a variable budget
Standard hours for actual production consists of several plans, one for each of several
D.  100 levels of sales (or other measure of activity)
Budgeted standard hours
197. Sales budget is a:
191. Efficiency Ratio =
A. Functional budget B. Master budget
Number of actual working days in a period C. Expenditure budget D. None of these
A. Number of working days in the budget period × 100
198. In the case of plant, the limiting factor may be:
Actual hours worked A. insufficient capacity
B.  100
Budgeted hours B. shortage of experienced salesmen
C. general shortage of power
Standard hours for actual production
C.  100 D. shortage of materials
Actual hours worked
199. The difference between fixed and variable cost has a
Standard hours for actual production special significance in the preparation of:
D.  100
Budgeted standard hours A. flexible budget B. master budget
C. cash budget D. sales budget
192. Activity Ratio =
200. The budget that is prepared first of all is ..................
Number of actual working days in a period
A. Number of working days in the budget period × 100 A. cash budget
B. master budget
Actual hours worked C. budget for the key factor
B.  100
Budgeted hours D. sales budget
201. In case of materials the key factor may be.
Standard hours for actual production
C.  100 A. insufficient advertising
Actual hours worked
B. restrictions imposed by quota
Standard hours for actual production C. low market demand
D.  100
Budgeted standard hours D. shortage of power
 48 Accountancy/Book Keeping

202. The budget which commonly takes the form of 211. Idle time variance is ..................
budgeted profit and loss account and balance sheet A. Idle time × actual labour
is: B. Idle time × standard rate
A. cash budget B. master budget C. Idle time × budgeted labour rate
C. flexible budget D. fixed budget D. Idle time × historical cost
203. Standard cost is a .............. cost. 212. Volume variance is divided into .................
A. predetermined B. historical A. Capacity variance, calendar variance and
C. actual D. final expenditure variance
B. Capacity variance, calendar variance and
204. The limitations of .............. has led to the development
efficiency variance
of standard costing system.
C. Capacity variance, expenditure variance and
A. historical costing system
efficiency variance
B. cost accounting
D. Calendar variance, expenditure variance and
C. management accounting
efficiency variance
D. None of these
213. Standards set provide yardsticks against which
205. Standard costing is more widely applied in ..............
................. are compared.
industries.
A. Budgeted costs B. Estimated costs
A. process and engineering
C. Actual costs D. None of these
B. jobbing industries
C. construction industry 214. The technique of standard costing may not be
D. All of these applicable in case of:
A. Large concerns B. Small concerns
206. Three types of standards are ..............
C. All concerns D. Both B & C
A. Current standard, basic standard and normal
standard 215. Total Material cost variance =
B. Currency standard, basel standard and actual A. Standard cost of materials–actual cost of materials
standard B. Budgeted cost of materials–actual cost of materials
C. Actual standard, estimated standard and expected C. Standard cost of materials–budgeted cost of
standard materials
D. Expected standard, ideal standard and current D. Actual cost of materials–budgeted cost of materials
standard 216. Material usage variance = Material mix variance +
207. The deviation of the actual cost or profit or sales from ................
the standard cost or profit or sale is known as .............. A. Material yield variance
A. Difference B. Variance B. Material cost variance
C. Discrepancy D. Inconsistency C. Material price variance
D. Material quantity variance
208. Management by exception is exercising control over
................ 217. Material price variance = Actual usage (.......................)
A. Costs B. Favourable items A. Standard price
C. Unfavourable items D. All of these B. Standard unit price–actual unit price
C. Actual price
209. Material price variance is the difference between
standard and actual prices of materials used multiplied D. Standard usage
by .................. 218. Material usage variance = standard price (.......................)
A. Actual quantity of materials used A. Standard usage–actual usage
B. Budgeted quantity of materials used B. Standard unit price–actual unit price
C. Standard quantity of materials used C. Standard quantity
D. Either A or B D. Actual quantity
210. Labour cost variance is the difference between 219. Material mix variance = standard cost of standard mix
standard cost of labour and .................. – ....................
A. Budgeted cost of labour A. Actual cost of actual mix
B. Estimated cost of labour B. Actual cost of standard mix
C. Actual cost of labour C. Standard cost of actual mix
D. None of these D. Standard cost of budgeted mix
 Accountancy/Book Keeping 49
220. Total Labour cost variance = 226. Volume variance arises because of:
A. Standard cost of labour – actual cost of labour A. Increase in overhead rate per hour
B. Standard rate (standard time for actual output – B. Decrease in overhead rate per hour
actual time worked) C. Increase or decrease in actual output as compared
C. Standard rate (standard time for actual output – to the budgeted output
actual time paid for) D. Difference in budgeted overheads and actual
D. Actual time taken (standard rate – actual rate) overheads
221. Volume Variance = 227. Labour rate variance is computed by multiplying
A. Standard rate (Actual output–budgeted output) the:
B. Actual output × standard rate–budgeted fixed A. Standard labour rate w ith the difference
overheads
between standard labour hours and actual
C. Standard rate per hour (Standard hours produced–
labour hours
actual hours)
B. A ctual labour hours with the difference
D. All of the above
between standard labour hours and actual labour
222. A favourable variance will arise when capital revenues hours
are ............. than expected. C. Actual labour rate with the difference between
A. more B. less standard labour rate and actual labour hours.
C. lesser D. None of the above D. None of the above
223. An unfavourable material price variance occurs 228. .............. is an example of long-term budget.
because of: A. Cash budget
A. Price increase in raw materials
B. Capital expenditure budget
B. Price decrease in raw materials
C. Research and development budget
C. Less than anticipated normal wastage in the
D. Both B & C
manufacturing process
D. More than anticipated normal wastage in the 229. ............. is an example of short-term budget.
manufacturing process A. Cash budget
224. The type of standard best suitable for cost control B. Capital expenditure budget
purpose is: C. Material budget
A. Basic standard B. Ideal standard D. Both A & C
C. Normal standard D. Expected standard 230. The control ratios used by the management to know
225. An unfavourable material usage arises because of: whether the deviations of the actual performance from
A. Price increase in raw materials the budgeted performance are favourable or
B. Price decrease in raw materials unfavourable are .............
C. Less than anticipated normal wastage in the A. Capacity ratio, activity ratio
manufacturing process B. Efficiency ratio, calendar ratio
D. More than anticipated normal wastage in the C. Both A & B
manufacturing process D. None of the above

ANSWERS
1 2 3 4 5 6 7 8 9 10
A B A B A B A C C B
11 12 13 14 15 16 17 18 19 20
D A A A A D A A A A
21 22 23 24 25 26 27 28 29 30
A A A A A B A A A A
31 32 33 34 35 36 37 38 39 40
A C A A A B A A A C
41 42 43 44 45 46 47 48 49 50
A A B A C A A A C A
(2715) Accountancy—7
50 Accountancy/Book Keeping

51 52 53 54 55 56 57 58 59 60
C A B A A A D A A B
61 62 63 64 65 66 67 68 69 70
D A C A B C C A C B
71 72 73 74 75 76 77 78 79 80
A C A A A A B A A D
81 82 83 84 85 86 87 88 89 90
B C A A B A C A C D
91 92 93 94 95 96 97 98 99 100
B A B B B A B C B A
101 102 103 104 105 106 107 108 109 110
C B A B B B B A B C
111 112 113 114 115 116 117 118 119 120
C A B B A A B A A A
121 122 123 124 125 126 127 128 129 130
A B A D A A A B B B
131 132 133 134 135 136 137 138 139 140
C A B B C C B C A B
141 142 143 144 145 146 147 148 149 150
B B B C A B C A B A
151 152 153 154 155 156 157 158 159 160
C A B A A C A D C D
161 162 163 164 165 166 167 168 169 170
C A B C A A B A B A
171 172 173 174 175 176 177 178 179 180
A B B C B C C B B D
181 182 183 184 185 186 187 188 189 190
A D A C A B C B A B
191 192 193 194 195 196 197 198 199 200
C D A C C D A A A C
201 202 203 204 205 206 207 208 209 210
B B A A A A B C A C
211 212 213 214 215 216 217 218 219 220
B B C D A A B A C A
221 222 223 224 225 226 227 228 229 230
D A A D D C D D D C

  

(2715) Accountancy—7-II
 Accountancy/Book Keeping 51

Corporate Accounting

1. Which of the following is not shown on the liability 12. After completing .............. years a company can issue
side of a balance sheet of a company? shares at discount.
A. Authorized capital B. Issued capital A. 2 B. 3
C. Paid up capital D. Reserve capital C. 1 D. 4
2. Share application account is a ............. 13. The profit on re-issue of shares is transferred to
A. nominal B. real ..............
C. personal D. None of these A. general reserve
3. Penalty for delay in refunding application money: B. capital reserve
A. 6% B. 5% C. P/L account
C. 15% D. 20% D. P/L appropriation account

4. Conversion of physical shares into electronic securities 14. When shares are forfeited, share capital account is
is called .............. debited by ..............
A. dematerialization B. price rigging A. paid up amount of shares
C. re-materialization D. None of these B. called up amount of shares
C. face value of shares
5. Public limited companies cannot issue ........
D. uncalled capital
A. equity shares B. deferred shares
C. preference shares D. right shares 15. Voluntary return of shares by shareholders to the
company for cancellation is called:
6. Preference shareholders are .............. of the company:
A. transfer of shares B. forfeiture of shares
A. creditors B. owners
C. surrender of shares D. buyback of shares
C. customers D. borrowers
16. The minimum amount of capital which must be
7. The minimum share application money is ..............
subscribed by the public before allotment is called:
A. ` 1 /share
A. allotment money B. minimum subscription
B. 5% of the face value of share
C. subscribed capital D. None of these
C. 10% of the issue price of share
D. None of these 17. Stock is a consolidation of .............. shares.
8. The difference between subscribed capital and called A. partly paid B. fully paid
capital is known as .............. C. equity D. sweat
A. calls in advance B. paid up capital 18. That part of the capital which will be called up only
C. uncalled capital D. calls in arrear in the event of winding up of the company is called
9. The rate of discount on issue of shares should not .............. capital.
exceed .............. % of the nominal value of shares. A. issued B. paid-up
A. 10 B. 2 C. reserve D. uncalled
C. 4 D. 5 19. Preference shareholders are entitled to a fixed rate of
10. On calls in advance, interest is payable @ .............. ..............
A. 5% B. 6% A. interest B. dividend
C. 4% D. Nil C. coupon D. capital

11. Right shares are those shares which are issued to: 20. Those preference shares which do not carry the right
A. directors of share in excess profits are known as ..............
B. promoters preference shares.
C. existing shareholders A. irredeemable B. non-cumulative
D. None of these C. non-convertible D. non-participating

51
52 Accountancy/Book Keeping

21. .............. is deducted from the called-up capital in 32. Capital redemption reserve is created out of:
order to calculate paid-up capital. A. Dividend equalization fund
A. calls in arrear B. calls in advance B. P/L account
C. uncalled capital D. reserve capital C. General reserve account
22. Forfeiture of shares results in compulsory termination D. All of these
of .............. due to non-payment of allotment/call 33. Capital redemption reserve can be utilized for ..............
money. A. declaring dividend
A. allotment B. membership B. writing of capital losses
C. subscription D. issue C. issue of fully paid up bonus shares
23. On forfeiture of shares, which of the following account D. None of these
is credited with the amount of money already received
34. .............. profit means profit which would otherwise be
on such shares?
available for distribution of dividend.
A. shares forfeited A/c B. share capital A/c
A. Capital B. Gross
C. unpaid calls A/c D. share premium A/c
C. Net D. Divisible
24. The discount on re-issue of forfeited shares is debited
to .............. A/c. 35. Which of the following is not a source of redemption
A. share capital of preference shares?
B. shares forfeited A. divisible profit
C. bank B. securities premium A/c
D. discount on issue of shares C. realization of asset
D. proceeds of fresh issue
25. ..............implies issue and allotment of shares to a
selected group of persons and not to general public. 36. The nominal value of preference shares to be redeemed
A. Initial public offer B. Right issue can be provided out of ..............
C. Private placement D. Pre-emptive right A. general reserve B. capital reserve
C. CRR D. securities premium
26. Right shares are issued to ..............
A. directors B. promoters 37. Redemption of preference shares should not be
C. existing share holders D. debenture holders regarded as reduction of .............. capital of the
27. Shares which carry preferential rights are called company.
.............. A. paid-up B. called-up
A. equity shares B. preference shares C. subscribed D. authorized
C. sweaty equity D. green shoe 38. Buyback of shares should not exceed .............. of paid
28. A company cannot issue redeemable preference shares up capital and free reserve of the company.
for a period exceeding .............. A. 50% B. 10%
A. 6 years B. 7 years C. 5% D. 25%
C. 10 years D. 20 years 39. Under the scheme of buyback of shares, the company
29. Preference shares can be redeemed .............. in order to perform its obligations, is required to open
A. if they are fully paid up an .............. account.
B. if they are partly paid up A. fixed deposit B. escrow deposit
C. if they are convertible C. savings deposit D. current deposit
D. None of these
40. Debenture represents .......... of the company.
30. Premium on redemption of preference shares can be A. deposit B. overdraft
provided out of .............. C. loan D. None of these
A. securities premium account
B. capital reserve account 41. Debenture holders are .............. of the company.
C. general reserve account A. owners B. creditors
D. All of these C. Both A and B D. None of these
31. At present, a company limited by shares cannot issue 42. Loss on issue or discount on issue of debenture is a
.............. preference shares. .............. asset.
A. redeemable B. irredeemable A. tangible B. current
C. convertible D. None of these C. fictitious D. None of these
 Accountancy/Book Keeping 53
43. When debentures are redeemed out of profits, an equal 54. After the redemption of debentures, any credit balance
amount is transferred to .............. in the Sinking Fund A/c is transferred to .............. A/c.
A. CRR A. general reserve B. capital reserve
B. capital reserve C. P&L D. None of these
C. revenue reserve 55. Dividend is paid on .............. capital.
D. debenture redemption reserve A. called B. paid up
44. Profit on sale of sinking fund investment is credited C. issued D. None of these
to .............. 56. In the case of joint stock companies, the assets and
A. general reserve B. capital reserve liabilities in B/S are arranged in the order of ..............
C. sinking fund D. None of these A. serial number B. performance
C. availability D. None of these
45. When own debentures are cancelled any profit on
cancellation is transferred to .............. 57. Dividend declared in between two annual general
A. general reserve B. capital reserve meeting is called ..............
C. P/L Account D. None of these A. unclaimed dividend B. interim dividend
C. proposed dividend D. scrip dividend
46. Premium on issue of debentures is a ..............
A. capital loss B. capital profit 58. The amount set aside to meet the loss of bad debt is
C. revenue profit D. revenue loss ..............
A. liability B. reserve
47. .............. is a document which either creates or C. provision D. contingent liability
acknowledges a debt.
59. Unclaimed dividend is shown in ..............
A. Debenture B. Trust deed
A. P/L account
C. Security D. Articles of Association B. P/L appropriation account
48. .............. debentures are secured by a charge on the C. Balance sheet
assets of the company. D. None of these
A. Naked B. Simple 60. Advance payment of tax is a ..............
C. Unsecured D. Mortgage A. prepaid expense B. general reserve
49. .............. is a document prepared by the company before C. interim dividend D. provision for taxation
the issue of prospectus to the public for subscription 61. When the proposed dividend exceeds 20% of paid up
of debentures. capital, percentage of profit transferred to general
A. Debenture B. Trust deed reserve is ..............
C. Abridged prospectus D. Call letter A. 2.5% B. 5%
C. 7.5% D. 10%
50. Companies may issue debentures as security against
loans taken from banks/financial institutions. 62. Which of the following represents source of fund in
A. principal B. primary the balance sheet of a company?
C. collateral D. chargeable A. secured loan B. share capital
C. reserves & surplus D. All of these
51. Discount on issue of debentures is a ..............
A. capital loss B. capital profit 63. Which of the following does not represent application
C. revenue loss D. revenue profit of fund of a company?
A. fixed asset B. good will
52. Which of the following is a method of redemption of C. debentures D. debtors
debentures?
64. Which of the following reserves cannot be distributed
A. draw of lots
as dividend to share holders?
B. conversion A. securities premium
C. open market purchase B. profit on forfeiture of shares
D. all of these C. profit on sale of fixed assets
53. Interest on debenture is .............. D. All of these
A. an appropriation of profit 65. Which of the following reserve does not appear in the
B. a charge against profit balance sheet of a company?
C. an adjustment of profit A. secret reserve B. general reserve
D. None of these C. capital reserve D. specific reserve
54 Accountancy/Book Keeping

66. Fictitious assets are shown on the asset side of the 76. When an existing company takes over the business of
balance sheet of a company under the heading .............. one or more existing companies, it is called ..............
A. fixed asset B. current asset A. amalgamation
C. foot note D. None of these B. absorption
67. Unclaimed dividend is shown on the liability side of C. internal reconstruction
the balance sheet of a company as .............. D. None of these
A. Share capital 77. Accounting for amalgamation is given in….
B. Current liabilities A. AS 14 B. AS 16
C. Reserves & Surplus C. AS 20 D. None of these
D. Non-current liability
78. Liquidation expenses paid by the transferee company
68. Dividend may be declared out of .............. is debited to ..............
A. current profit A. General reserve account
B. past reserves B. P/L Account
C. money provided by government C. Goodwill account
D. All of these D. None of these
69. Financial statement in relation to a company includes: 79. Which of the following fictitious assets is not taken
A. Balance sheet B. Statement of P&L over by the transferee company?
C. Cash flow statement D. All of these A. Preliminary expenses
70. Which of the following is not a long-term borrowing B. Underwriting commission
of a company? C. Discount on issue of shares
A. Debentures D. All of these
B. Term loans 80. Which of the following is considered as an asset
C. Loans repayable on demand from banks while calculating purchase consideration?
D. Long-term finance lease obligations A. Goodwill B. Patent
71. Calls in advance is shown in the balance sheet as C. Trademark D. All of these
.............. 81. The accumulated losses and fictitious assets of the
A. current liabilities transferor company are transferred to .............. A/c.
B. added to called-up capital A. equity share holders
C. current assets B. transferee company
D. deduction from called-up capital C. equity capital
72. The difference between gross dividend receivable and D. realization
dividend received is debited to .............. 82. Which of the following A/c is debited when statutory
A. interim dividend B. tax deducted at source reserve of the transferor company is taken over by the
C. net dividend D. difference adjustment transferee company?
73. Pooling of interest m ethod is applicable for A. Goodwill A/c
amalgamation in the nature of .............. B. Amalgamation adjustment A/c
A. merger B. consolidation C. Capital reserve A/c
C. reconstruction D. realization D. Statutory reserve
74. For amalgamation in the nature of merger, the 83. Under purchase method of amalgamation, .............. of
shareholders holding at least .............. or more of the the transferor company continues to appear in the
equity shares of the transferor company becomes the balance sheet of the transferee company.
equity shareholders of the transferee company. A. capital reserve B. general reserve
A. 90% B. 80% C. statutory reserve D. specific reserve
C. 100% D. None of these 84. While preparing the transferee company’s financial
75. Realization loss is transferred to .............. statement under amalgamation in the nature of merger,
A. preference shareholders A/c the assets and liabilities taken over from the transferor
B. equity shareholders A/c company should be incorporated at ..............
C. creditors A/c A. cost B. book value
D. None of these C. revised value D. None of these
 Accountancy/Book Keeping 55
85. While preparing the transferee company’s financial 94. Alteration of shares of smaller amounts into shares of
statement under amalgamation in the nature of larger amount is called .............. of share capital.
purchase, the assets and liabilities taken over from A. surrender B. subdivision
the transferor company should be incorporated at C. consolidation D. None of these
.............. 95. The amount of surrendered shares is credited to ..............
A. cost B. book value A. CRR
C. revised value D. None of these B. sinking fund
86. Which of the following should not be considered as C. capital reduction account
a part of purchase consideration? D. reserve
A. Payment to equity shareholders 96. Amount sacrificed by shareholders are credited to
B. Payment to preference shareholders ..............
C. Payment to debentureholders A. capital reserve B. general reserve
D. Cash payment to shareholders C. capital reduction D. None of these
87. Which of the following is considered while calculating 97. Capital reduction account is used to ..............
purchase consideration under Net asset method? A. write off losses B. transfer to capital
A. Assets taken over B. Liabilities taken over C. issue bonus shares D. None of these
C. Goodwill taken over D. All of the above 98. Any increase in the value of assets is .............. to
88. Under net payment method, purchase consideration capital reduction.
includes all payments made to the shareholders in the A. debited B. credited
form of .............. C. ignored D. None of these
A. equity share B. preference share 99. .............. is the account created in connection with
C. cash D. All of these internal reconstruction.
A. Realization A/c B. Capital reduction A/c
89. Which of the following is a statutory reserve?
C. Adjustment A/c D. CRR A/c
A. Development Allowance Reserve
B. Capital Reserve 100. Alteration of shares of larger denominations into
C. Workmen’s Compensation Fund smaller denominations is called .............. of shares.
D. CRR A. consolidation B. surrender
C. sub-division D. valuation
90. Any excess amount paid to preference share holders
is debited to .............. account 101. Which of the following does not involve liquidation
A. realisation B. preference shareholders of any company?
C. P&L D. preference share capital A. internal reconstruction
B. amalgamation
91. While preparing the books of the transferee company C. absorption
in purchase method, the difference between purchase D. external reconstruction
consideration and share capital of the transferor
102. Under which of the following circumstances can a
company should be adjusted in ..............
company resort to internal reconstruction?
A. share capital B. reserves
A. accumulated huge losses
C. assets D. liabilities
B. shortage of capital
92. The excess of purchase consideration over net assets C. over valued assets
of the transferor company acquired by the transferee D. All of these
company should be recognized as .............. in purchase 103. The balance in capital reduction A/c after writing off
method. all accumulated loss, fictitious assets and overvalued
A. capital reserve B. general reserve assets are transferred to ..............
C. goodwill D. P&L A. capital reserve B. general reserve
93. In purchase method, the excess of net asset of the C. reserve capital D. goodwill
transferor company acquired by the transferee company 104. Which of the following result in reduction of capital?
over the purchase consideration should be recognized A. Reducing share capital
as .............. B. Reducing the amount payable to creditors
A. P&L B. goodwill C. Appreciation in the value of assets
C. general reserve D. capital reserve D. All of these
 56 Accountancy/Book Keeping

105. Which of the following is not an alteration of capital? 116. Rebate on bills discounted is .............. from interest
A. Consolidation of shares and discount in the P/L account
B. Sub-division of shares A. added B. deducted
C. Conversion of shares into stock C. not deducted D. None of these
D. Paid offpaid up capital in excess of needs of the
117. .............. represents that part of discount received during
company
the year by a bank which relates to the next accounting
106. Internal reconstruction can be done by ........... year.
A. alteration of share capital A. Trade discount B. Normal discount
B. reduction of share capital C. Unexpired discount D. Cash discount
C. issue of share capital
118. A scheduled bank is required to maintain with RBI
D. All of these
.............. at a prescribed percentage of their total time
107. Which of the following is not a case of combination? and demand deposit.
A. external reconstruction A. SLR B. CRR
B. internal reconstruction C. statutory reserve D. branch adjustment
C. amalgamation
119. Every bank is required to maintain .............. with RBI
D. absorption
in the form of cash, gold and securities an amount not
108. The term banking is defined in section .............. less than 25% of their demand and time liabilities.
A. Section 5 of Banking Regulation Act A. CRR B. SLR
B. Section 4 C. statutory reserve D. branch adjustment
C. Section 7
120. Which of the following is not an advance given by
D. None of these
a bank?
109. A bank can open a branch only at the permission of A. loan B. overdraft
the .............. C. deposit D. cash credit
A. SBI B. RBI
121. .............. is a liability which may or may not arise in
C. Government D. None of these
future depending on happening of some uncertain
110. Schedule 16 relates to .............. future event.
A. interest earned B. interest expended A. contingent liability
C. operating expenses D. None of these B. bills for collection
111. Schedule 9 relates to .............. C. non-banking liability
A. fixed assets B. borrowings D. bills payable
C. advances D. capital 122. Acceptances, endorsements and obligations on behalf
112. Banks are required to transfer .............. of their profits of a customer will be shown as .............. in the balance
to statutory reserve. sheet of a company.
A. 20% B. 25% A. other asset B. other liability
C. 10% D. None of these C. borrowings D. contingent liability
113. Assets acquired by a bank in satisfaction of a claim 123. NPA for a period not exceeding 12 months is called
are known as .............. as .............. asset.
A. non-banking assets A. loss B. standard
B. performing assets C. sub-standard D. doubtful
C. standard assets 124. Advanced tax paid by a banking company is shown
D. None of these as .............. in the Balance Sheet.
114. Assets which do not carry more than normal credit A. advance B. investment
risk is known as .............. C. other assets D. contingent liability
A. loss asset B. risk asset 125. Provision for Income tax is shown in a bank’s Balance
C. standard asset D. None of these Sheet as ..............
115. On standard asset a minimum provision of .............. is A. contingent liability
required. B. contingent asset
A. .25% B. .10% C. borrowings
C. .40% D. None of these D. other liabilities and provisions
 Accountancy/Book Keeping 57
126. Rebate on bills discounted is shown in the Balance 138. .............. is a reserve created to meet any loss due to
Sheet as .............. natural calamities.
A. advances A. Revenue reserve B. Capital reserve
B. other liabilities & provisions C. Catastrophe reserve D. None of these
C. other income
139. Life insurance is a contract of ..............
D. reserves & surplus A. indemnity B. guarantee
127. Rebate on bills discounted is also called .............. C. contribution D. None of these
A. unexpired discount B. earned discount 140. General insurance is a contract of……
C. expired discount D. received discount A. contribution B. indemnity
128. While preparing P/L account, rebate on bills C. guarantee D. None of these
discounted to be provided shall be deducted from 141. Reinsurance is common in ..............
discount received in .............. A. life insurance B. general insurance
A. Schedule 16 B. Schedule 15 C. marine insurance D. None of these
C. Schedule 14 D. Schedule 13
142. In the case of marine insurance reserve for unexpired
129. Which of the following are performing assets? risk is ..............
A. Loss asset B. Standard asset A. 50% B. 100%
C. Sub-standard asset D. Doubtful asset C. 40% D. None of these
130. Interest on non-performing assets should be recognized 143. Valuation balance sheet is prepared by a life insurance
on .............. basis. company to find out:
A. actually received B. accrual A. profit or loss B. financial position
C. standard D. None of these C. surplus or deficiency D. net liability
131. Interest on performing assets should be recognized on 144. Insurance Regulatory and Development Authorities
.............. basis. Act came in to effect in:
A. actually received B. standard A. 2001 B. 2004
C. accrual D. None of these C. 1999 D. None of these
132. Which of the following represents term deposit? 145. .............. of net surplus of a life insurance company is
A. Savings deposit B. Current deposit given to policyholders as bonus.
C. Fixed deposit D. None of these A. 90% B. 80%
133. The short-term advances made by a bank to the stock C. 95% D. None of these
brokers and bill brokers are called ................. 146. Bonus payable on maturity of the policy is termed as:
A. money at call B. short loan A. cash bonus B. capital bonus
C. short provision D. inter-office adjustment C. reversionary bonus D. None of these
134. .............. is an annual payment made by a life insurance 147. Insurance Act came in to effect in ..............,
company in consideration form a lump sum received. A. 1956 B. 1972
A. Claim B. Annuity C. 1938 D. None of these
C. Bonus D. Premium
148. Valuation balance sheet is prepared by ..............
135. Which of the following represents policy holders A/c? A. general insurance company
A. P/L A/c B. Revenue A/c B. life insurance company
C. Balance sheet D. None of these C. joint stock company
136. .............. is a device of reducing the risk undertaken D. banking company
by an insurance company. 149. Legal expenses in respect of claims of an insurance
A. Re-insurance B. Double insurance company is shown in ..............
C. Risk insurance D. None of these A. P&L A/c B. Revenue A/c
137. Under .............. policy, the sum assured becomes C. Balance sheet D. Surplus A/c
payable on the attainment of a specific age or on 150. Bonus in reduction of premium appears in the revenue
death whichever is earlier. A/c as ..............
A. whole time life policy B. endowment policy A. an income B. an expense
C. with profit policy D. None of these C. no where D. profit
(2715) Accountancy—8
58 Accountancy/Book Keeping

ANSWERS
1 2 3 4 5 6 7 8 9 10
D C C A B B B C A B
11 12 13 14 15 16 17 18 19 20
C C B B C B B C B D
21 22 23 24 25 26 27 28 29 30
A B A B C C B D A D
31 32 33 34 35 36 37 38 39 40
B D C D C A D D B C
41 42 43 44 45 46 47 48 49 50
B C D C B B A D B C
51 52 53 54 55 56 57 58 59 60
A D B A B B B C C A
61 62 63 64 65 66 67 68 69 70
D D C D A A B D D C
71 72 73 74 75 76 77 78 79 80
A B A A B B A C D D
81 82 83 84 85 86 87 88 89 90
A B C B C C D D A A
91 92 93 94 95 96 97 98 99 100
B C D C C C A B B C
101 102 103 104 105 106 107 108 109 110
A D A D D D B A B C
111 112 113 114 115 116 117 118 119 120
C B A C C B C B B C
121 122 123 124 125 126 127 128 129 130
A D C C D B A D B A
131 132 133 134 135 136 137 138 139 140
C C A B B A B C B B
141 142 143 144 145 146 147 148 149 150
B B C C C C C B B B

  
 Accountancy/Book Keeping 59

Accounting for Business Decision

1. Managerial accounting information is generally 9. An accounting that deals with the accounting and
prepared for ................ reporting of information to management regarding
A. Shareholders B. Creditors the detail information is:
C. Managers D. Regulatory agencies A. Financial accounting
B. Management accounting
2. Which of the following is not an internal user of
C. Cost accounting
management information?
D. Real accounting
A. Creditor B. Department manager
C. Controller D. Treasurer 10. The primary objective of management accounting is:
A. Prepare final A/c
3. Management accounting is applicable to:
B. Provide m anagement com plete and true
A. Service entities
B. Manufacturing entities information
C. Non-profit entities C. Both A & B
D. None of these
D. All of these
4. Creating Provision against fluctuation in the price of 11. Bad debt amount should be credited to:
A. Debtors account B. Bad debts account
investment is an example of which accounting
C. Sales account D. Creditors account
convention:
A. Convention of conservatism 12. Identify which is wrong rule?
B. Convention of full disclosure A. Nominal account – debit all expenses & losses
C. Convention of materiality B. Real account – credit what comes in
D. Convention of consistency C. Nominal account – credit all incomes & gains
5. The work of factory employees that can be physically D. Personal account – debit the receiver
associated with converting raw material into finished 13. Cost of goods sold = opening stock + net purchases
goods is classified as: + expenses on purchases – sales Which part of formula
A. Manufacturing overhead is wrong?
B. Indirect materials A. opening stock B. net purchases
C. Indirect labour C. expenses on purchases D. sales
D. Direct labour
14. Return of goods by a customer should be debited to
6. Double entry system is used in which type of ................
accounting: A. Customers account B. Sales return account
A. Cost B. Financial C. Goods account D. Purchase account
C. Management D. All of these 15. Sales made to Mahesh for cash should be debited to
7. Management accounting concentrates on ................ ................
A. Opening books of account A. Cash account B. Mahesh account
B. Preparation of financial statements C. Sales account D. Purchase account
C. Control of business activities
16. Rent paid to landlord should be credited to:
D. None of these
A. Landlords account B. Rent account
8. Which type of asset class includes those assets which C. Cash account D. Expense account
have only definite use and become valueless when
17. Cash discount allowed to a debtor should be credited
the yield is over?
to:
A. Fixed asset B. Current asset A. Discount account B. Customer’s account
C. Fictitious asset D. Wasting asset C. Sales account D. Cash account

59
60 Accountancy/Book Keeping

18. Opening stock + ................ + Direct Expenses (Carriage 29. Amortization of intangible Asset such as Goodwill
on Raw material) – Closing Stock = ................ which has indefinite life is an example of accounting
A. Sales, Purchases concept:
B. Sales, Sales return A. Conservatism Concept
C. Purchases, Cost of goods produced B. Continuity Concept
D. Purchases, Cost of goods sold C. Realisation Concept
19. Financial accounting is concerned with: D. Measurement Concept
A. Recording of business expenses and revenue 30. If loan have been guaranteed by managers and directors
B. Recording of costs of products and services is called as:
C. Recording of day to day business transactions A. Loan
D. None of the above B. Unsecured Loan
20. The nature of financial accounting is: C. Secured Loan
A. Historical B. Forward looking D. Advance by Manager & Director
C. Analytical D. Social 31. ................ cost will still be incurred although a plant
21. The main object of cost accounting is: is shut down temporarily.
A. To record day to day transactions of the business A. Cost of raw material B. Advertising
B. To reveal managerial efficiency C. Depreciation D. Carriage
C. To ascertain true cost of products and services 32. Accounting principles are generally based upon:
D. To determine tender price A. Practicability
22. Cost accounting emerged mainly on account of: B. Subjectivity
A. Statutory requirements C. Convenience in recording
B. Competition in the market D. None of the above
C. Labour unrest 33. The system of recording based on dual aspect concept
D. Limitations of financial accounting is called:
23. Advantages of cost accounting accrue: A. Double account system
A. Only to workers B. Double entry system
B. Only to government C. Single entry system
C. Only to consumers D. All the above
D. To m anagem ent, w orkers, consum ers and
34. The practice of appending notes regarding contingent
government
liabilities in accounting statements is in pursuance
24. Cost accounting is applied to: to:
A. Public undertakings only A. Convention of consistency
B. Large business enterprise only B. Money measurement concept
C. Small business concerns only C. Convention of conservatism
D. Manufacturing and service concern D. Convention of disclosure
25. Marginal costing is concerned with: 35. Sales are equal to:
A. Fixed cost B. Variable cost A. Cost of goods sold + gross profit
C. Semi-variable cost D. None of the above B. Cost of goods sold – gross profit
26. ................ is a person or item for which cost may be C. Gross profit – Cost of goods sold
ascertained. D. None of the above
A. Cost unit B. Cost centre 36. Interest on drawings is:
C. Cost object D. Cost estimation A. Expenditure for the business
27. Salary paid to factory manager is an item of: B. Cost for the business
A. Prime cost B. Factory overhead C. Gain for the business
C. Selling overhead D. Office overhead D. None of the above
28. ................ cost refers to those cost which have already 37. Goods given as samples should be credited to:
been incurred and cannot be altered by any decision A. Advertisement account
in the future. B. Sales account
A. Opportunity cost B. Sunk cost C. Purchase account
C. Incremental cost D. Decremental cost D. None of the above
 Accountancy/Book Keeping 61
38. Outstanding salaries are shown as: 47. Carriage outward is charged to:
A. Added to salaries while preparing Profit & Loss A. Debit side Profit & Loss A/c
account B. Debit side Trading A/c
B. Shown in liability side of Balance sheet under C. Credit side of Profit & Loss A/c
Current Liability D. Credit side of Trading A/c
C. A & B above
48. Cash Purchases:
D. None of the above
A. Increases assets
39. Income tax paid by a sole proprietor on his business B. Results in no change in the total assets
income should be: C. Decreases assets
A. Debited to trading account D. Increases liability
B. Debited to profit and loss account
C. Deducted from capital account in the balance 49. Purchases of goods on credit from A is recorded as:
sheet A. Debit purchases A/c; credit cash A/c
D. None of the above B. Debit A A/c; credit purchases A/c
C. Debit purchases A/c; credit A A/c
40. All direct & indirect expenses related to business are D. Debit A A/c; credit stock A/c
charged:
A. Profit and loss account 50. Which of the following is not an example of real a/c:
B. Trading account A. Machinery B. Building
C. Trading account and Profit & Loss account C. Cash D. Creditor
D. Directly to Balance sheet 51. Payment received from debtor:
41. According to schedule VI Companies Act which item A. Decreases the total assets
is not shown on Asset side of Balance sheet: B. Increases the total assets
A. Investment C. Results in no change in total assets
B. Current Loan & Advances D. Increase the total liabilities
C. Provision
52. Payment of salary is recorded by:
D. Lease Holds
A. Debiting salary A/c; crediting cash A/c
42. Trade Payables are recorded in ................ B. Debiting cash A/c; crediting salary A/c
A. Asset side of B/S B. Liability side of B/S C. Debiting employee A/c; crediting cash A/c
C. P & L A/c D. None of the above D. Debiting employee A/c; crediting salary A/c
43. Investment of X company profit in shares of other 53. Cost of asset should always be equal to the cost of the
company PQR Pvt. Ltd are recorded in ................ liabilities. This concept is:
A. Asset side of Balance sheet A. Double Entry Book-keeping
B. Liability side of Balance sheet B. Matching Concept
C. Profit & Loss A/c C. Consistency
D. Not recorded in Balance sheet D. Money Measurement Concept
44. Preliminary expenses are recorded in ........... 54. Which of the following is not a fixed asset?
A. Equity and liabilities – Liability side of B/S A. Building B. Bank Balance
B. Current liabilities – Liability side of B/S C. Plant Patents D. Goodwill
C. Fixed assets – Asset side of B/S
D. Asset side of B/S 55. The basic concepts related to P & L A/c are:
A. Realization Concept B. Matching Concept
45. Variable cost per unit: C. Cost Concept D. Both A and B above
A. Remains fixed
B. Fluctuates with volume of production 56. P & L A/c is prepared for a period of one year by
C. Varies in consideration with the volume of sales following:
D. None of the above A. Consistency concept
B. Conservatism concept
46. The books to be compulsorily maintained by a
C. Accounting period concept
company are:
D. Cost concept
A. Cash book and ledger
B. Sales and purchase book 57. Insurance prepaid is shown as:
C. Journal A. Current assets B. Current liabilities
D. All of the above C. Fixed asset D. Fixed liability
62 Accountancy/Book Keeping

58. Outstanding salary is shown as: 68. Payment received from Debtor:
A. An asset in the balance sheet A. Decreases the Total Assets
B. A liability B. Increases the Total Assets
C. By adjusting it in the P & L A/c C. Results in no change in the Total Assets
D. Both B and C D. Increases the Total Liabilities
59. Reserve for doubtful debts appearing in the trial 69. Book-keeping is an ................ of correctly recording
balance should be: of business transition.
A. Credited to P & L A/c A. Art and Science B. Art
B. Shown as liability side in balance sheet C. Science D. Art or Science
C. Reduced from related asset in the balance sheet
D. Both A and C 70. Journal Entries are known as book of ................ Entry.
A. Original B. Duplicate
60. All those to whom business owes money are: C. Personal D. Nominal
A. Debtors B. Investors
C. Creditors D. Shareholders 71. What comes in is to be debited, what goes out is to
be credited?
61. According to which concept business is treated as a A. Rules of Personal B. Rules of Real
unit apart from owner: C. Rules of Nominal D. All of these
A. Dual concept B. Divider concept
C. Entity concept D. Landlord concept 72. Which of the following account balance will be shown
on debit side of Trial Balance?
62. Authorized capital, also known as:
A. Outstanding expenses B. Cash A/c
A. Nominal capital B. Paid up capital
C. Short-term loan D. Creditors
C. Issues capital D. None of these
73. The reduction in the value of the fixed assets which
63. True & Fair profit and loss A/c of a company is
can arise due to time factor is:
known by:
A. Discount B. Depreciation
A. Preparing trial balance
C. Reduction D. None of these
B. Preparing respective ledger of account
C. Preparing trading A/c 74. If closing stock appears in the trial balance, it should
D. Preparing trading and profit & loss A/c be:
64. Credit balance of profit & loss A/c shown on: A. Credited to the trading account
A. Asset side of balance sheet B. Credited to the profit and loss account
B. Liability side of balance sheet C. Deducted from the purchases in the trading account
C. Not shown in balance sheet D. Shown on the liability side of the balance sheet
D. Half on asset side and half on liability side 75. Outstanding expenses are charged to:
65. Under which concept it is assumed that the enterprises A. Asset side of balance sheet
has neither the intention nor the necessity of B. Liability side of balance sheet
liquidation or of curtailing materiality the scale of C. Not charged to balance sheet
operation? D. None of these
A. Revenue realization concept 76. Liabilities in balance sheet include the following
B. Matching cost concept items:
C. Going concern concept A. Long-term loan B. Short-term loan
D. None of these C. Owner’s fund D. All of these
66. Making the provision for doubtful debts and discount 77. Prepaid expense is treated as:
on debtors in anticipation of actual bad debts and
A. Current asset B. Current liability
discount is an example for which concept?
C. Short-term liability D. None of these
A. Conservatism concept
B. Continuity concept 78. Cost accounting aims at ascertain ................ of product.
C. Realization concept A. Cost B. Net profit
D. All of these C. Gross profit D. Selling price
67. Financial accounting use data: 79. The purpose of financial accounts is reporting to:
A. Projected data B. External data only A. Management only B. Government only
C. Historic data D. Manager data only C. Investor only D. All of these
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 Accountancy/Book Keeping 63
80. Accounting does not record non-financial transactions 90. Which of the following best describes a trial balance?
because of: A. It is a list of balances on the books
A. Accrual concept B. It is a special account
B. Cost concept C. Shows the financial position of a business
C. Continuity concept D. Shows all the entries in the books
D. Money measurement concept
91. Net profit is calculated in:
81. ‘Proposed dividends’ is shown in the Balance Sheet A. Trading A/c B. Balance sheet
of a company under the head: C. Profit & loss A/c D. Trial balance
A. Provisions B. Reserves and Surplus
92. The concept of separate entity is applicable to which
C. Current Liabilities D. Other Liabilities
of following types of businesses?
82. Fixed assets and current assets are categorized as per A. Sole proprietorship B. Corporation
concept of: C. Partnership D. All of them
A. Separate entity B. Going concern
C. Consistency D. Time period 93. Which of the following is time span into which the
total life of a business is divided for the purpose of
83. Proprietor (owner) is treated as creditor of business preparing financial statements?
due to: A. Fiscal year B. Calendar year
A. Periodicity Concept B. Materiality Principle C. Accounting period D. Accrual period
C. Entity Concept D. Consistency Concept
94. Interest, rent, electricity bill are types of account
84. Which financial statement represents the accounting A. Personal A/c B. Impersonal A/c
equation C. Real A/c D. Nominal A/c
ASSETS = LIABILITIES + OWNER’S EQUITY?
A. Income Statement B. Cash Flow Statement 95. Which of the following should not be called sales?
C. Balance Sheet D. Fund Flow Statement A. Good sold on credit
B. Office fixtures sold
85. Which of the following is a liability?
C. Sale of item previously included in purchase
A. Loan from Mr. Y B. Loan to Mr. Y
D. Good sold for cash
C. Both A & B D. None of these
96. Material concept tell about:
86. Calculate the prim e cost from the follow ing
A. Disclosure of loss
information:
B. Disclosure of profit
Direct material purchased: ` 1,00,000
C. Disclosure of all information which are important
Direct material consumed: ` 90,000
Direct labour: ` 60,000 for investor
Direct expenses: ` 20,000 D. Disclosure of all information which are important
Manufacturing overheads: ` 30,000 for management
A. ` 1,80,000 B. ` 2,00,000 97. Which of the following is not regarded as the
C. ` 1,70,000 D. ` 2,10,000 fundamental accounting concept?
87. Accounting does not record non-financial transactions A. The going concern concept
because of: B. The separate entity concept
A. Accrual concept C. The prudence (conservatism) concept
B. Cost concept D. Correction concept
C. Continuity concept 98. Using “lower of cost and net realisable value (Market
D. Money measurement concept Value)” for the purpose of inventory valuation is the
88. Fixed assets and current assets are categorized as per implementation of which of the following concepts?
concept of: A. The going concern concept
A. Separate entity B. Going concern B. The separate entity concept
C. Consistency D. Time period C. The prudence concept
D. Matching concept
89. Which of the following is correct?
A. Profit does not alter capital 99. The concept of separate entity is applicable to which
B. Capital can only come from profit of following types of businesses?
C. Profit reduces capital A. Sole proprietorship B. Corporation
D. Profit increases capital C. Partnership D. All of them
 64 Accountancy/Book Keeping

100. The revenue recognition principal dictates that all 108. Which of the following is not related with Money
types of incomes should be recorded or recognized Measurement Concept?
when: A. All business transaction should be expressed only
A. Cash is received in money
B. At the end of accounting period B. The transactions which cannot be expressed in
C. When they are earned money, will not be recorded in accounting books
D. When interest is paid C. Business is treated as separate from the proprietor
101. The allocation of owner’s private expenses to his/her D. None of these
business violates which of the following? 109. Which of the following equation is related with Dual
A. Accrual concept Aspect Concept?
B. Matching concept A. Total Assets = Total Liabilities
C. Separate business entity concept B. Total Assets = Capital + Outsider’s Liabilities
D. Consistency concept C. Capital = Total Assets – Outsider’s Liabilities
102. The going concern concept assumes that: D. All of the above
A. The entity continue running for foreseeable future 110. If the total assets of the company amount to ` 1,50,000
B. The entity continue running until the end of and owner’s equity is ` 70,000, the amount of
accounting period liabilities will be:
C. The entity will close its operating in 10 years A. ` 70,000 B. ` 80,000
D. The entity can’t be liquidated C. ` 90,000 D. ` 1,00,000
103. Which of the following is time span into which the 111. Profit from sale of assets is example for:
total life of a business is divided for the purpose of A. Revenue Profit B. Capital Profit
preparing financial statements? C. Loss D. None of these
A. Fiscal year B. Calendar year
C. Accounting period D. Accrual period 112. Depreciation is a charge against:
A. Profit B. Assets
104. Showing purchased office equipments in financial C. Company D. Books of A/c
statements is the application of which accounting
concept? 113. Which expenses is a Capital Nature?
A. Historical cost convention A. Depreciation B. Wages
B. Materiality C. Salary D. Stationary
C. Prudence 114. Balance Sheet is a statement of ...............
D. Matching concept A. Assets B. Liabilities
105. Information about an item is .............. if its omission C. Capital D. All of these
or misstatement might influence the financial decision 115. Accounting is the process of matching...............
of the users taken on the basis of that information A. Benefits & Costs
A. Concrete B. Revenues & Costs
B. Complete C. Cash Inflow & Cash Outflow
C. Immaterial D. Potential & Real Performance
D. Material
116. Which one of the following is not an example of
106. “Financial information should be neutral and bias
Intangible Assets?
free” is the dictation of which one of the following?
A. Patents B. Trademarks
A. Completeness concept
C. Copyright D. Land
B. Faithful representation concept
C. Objectivity concept 117. The prime function of accounting is to:
D. Duality concept A. To record economic data
B. Provide the information basis of action
107. Accounting principles are divided into two types.
C. Classifying and recording business transaction
These are ..............
D. Attainment of economic goal
A. Accounting Concepts
B. Accounting Conventions 118. The basic function of financial accounting is to:
C. Accounting Standards A. Record all business transaction
D. Accounting Concepts & Accounting Conventions B. Interpret financial data
 Accountancy/Book Keeping 65
C. Assist the management in performing function C. Providing depreciation
effectively D. None of these
D. None of these
127. The amount brought in by the proprietor in the
119. Management Accounting provides invaluable services business should be credited to:
to management in performing: A. Cash A/c B. Capital A/c
A. All management function C. Drawing A/c D. Bank A/c
B. Interpret financial data
128. The amount of salary paid to Suresh should be debited
C. Controlling function
to:
D. None of these
A. The account of Suresh
120. Book-keeping is mainly concerned with: B. Salaries A/c
A. Recording of financial data relating to business C. Cash A/c
operation D. Bank A/c
B. Designing the systems in recording classifying,
129. The return of goods by the customer should be debited
summarizing the recorded data
to:
C. Interpreting the data for internal and external users
A. Customer A/c B. Sales return A/c
D. None of these
C. Goods A/c D. Purchase return A/c
121. Accounting principles are generally based on:
130. Sales made by Mahesh for cash should be debited to:
A. Practicability
A. Cash A/c B. Mahesh A/c
B. Subjectivity
C. Sales A/c D. Sales return A/c
C. Convenience in recording
D. None of these 131. The rent paid to land lord to be credited to:
A. Land lord A/c B. Rent A/c
122. The system of recording transaction based on dual
C. Cash A/c D. Tenant A/c
aspect concept is called:
A. Double account system 132. The cash discount allowed to a debtor should be
B. Double entry system credited to:
C. Single entry system A. Discount A/c B. Customer A/c
D. None of these C. Sales A/c D. None of these
123. The practice of appending notes regarding contingent 133. In case of a debt becoming bad, the amount should
liabilities in accounting statement is pursuant of: be credited to:
A. Convention of consistency A. Debtors Accounts B. Bad debts A/c
B. Money measurement concept C. Sales A/c D. None of these
C. Convention of conservatism 134. The primary objective of cost accounting is:
D. Convention of disclosure A. Ascertain the cost of goods and services
124. According to the money measurement concept, the B. Ascertain the profit
following will be recorded in the books of accounts C. Presentation of all data
of the business: D. None of these
A. Health of the managing director of the company 135. Creating provision against fluctuation in the price of
B. Quality of company goods investment is application of accounting concept:
C. Value of plant and machinery A. Convention of conservatism
D. Health of labour in factory B. Convention of full disclosure
125. The convention of conservatism when applied to the C. Convention of consistency
balance sheet result in: D. None of these
A. Understand the asset 136. Accountant should follow the same principles of
B. Understand the liabilities accounting continuously is as per which accounting
C. Overstatement of capital convention:
D. None of these A. Convention of conservatism
126. The convention of conservatism is applicable: B. Convention of full disclosure
A. In providing for discount on creditors C. Convention of consistency
B. In making provision for bad doubtful debts D. None of these
(2715) Accountancy—9
 66 Accountancy/Book Keeping

137. Accounting principles are ............... which are adopted 146. Debit all expenses and losses Credit all gains and
by the accountant universally while recording income.
accounting transaction. A. Real A/c B. Personal A/c
A. Rules of action or conduct C. Nominal A/c D. None of these
B. Which you can change as per accountant 147. A book containing a chronological record of business
C. Which keep changing every year transaction & original record:
D. None of these A. Journal B. Ledger
138. The convention of disclosure implies that all material C. Trial balance D. None of these
information should be: 148. Transferring the debit and credit item from the journal
A. Disclosed in the account to the respective accounts is called:
B. Disclosed in the accounts which is required to A. Compound journal B. Ledger
owner C. Trial balance D. None of these
C. Not disclosed 149. A statement containing the various ledgers balances
D. None of these on particular date:
139. In accounting all business transaction are recorded as A. Compound journal B. Ledger
having: C. Trial balance D. None of these
A. Single aspect B. Dual aspect 150. The transferring of debit and credit items from journal
C. Triple aspect D. None of these to the respective accounts in the ledger is called as:
140. Custom and traditions which guide the accountant A. Ledger B. Posting
while preparing the accounting statements: C. Forward journal D. None of these
A. Accounting convention 151. Which of the following items would not fall under the
B. Accounting concepts definition of an asset?
C. Accounting principles A. Land B. Machine
D. None of these C. Cash D. Owner Equity
141. Rules of action or conduct adopted by the accountants 152. Which one of the following items would fall under
universally while recording accounting transaction: the definition of a liability?
A. Accounting convention A. Cash B. Debtor
B. Accounting concepts C. Owner’s equity D. None of these
C. Accounting principles 153. Which of the following statements are false?
D. None of these A. All liability is a debt for your business
B. Debtors are asset for business
142. Basic assumptions or conditions upon which the
C. The accounting equation shows how much of
science of accounting is based:
your assets belong to the owner, and how much
A. Accounting convention
belong to people outside business
B. Accounting concepts
D. None of the above
C. Accounting principles
D. None of these 154. A business has the following items in it:
Land ` 1,000,000
143. A system in which accounting entries are made on the Machinery ` 20,000
basis of amounts having become due for payment or Cash ` 10,000
receipt is called: Debt ` 0
A. Cash concept Owner’s equity?
B. Accrual concept
What is the valve of owner’s equity?
C. Matching concept
A. ` 1020000 B. ` 1010000
D. On-going concept
C. ` 1030000 D. None of the above
144. Debit the receiver credit the giver rule for:
155. A business has the following items in it:
A. Real A/c B. Personal A/c Owners’ equity ` 6,00,000
C. Nominal A/c D. None of these Liabilities ` 14,00,000
145. Debit what come in Credit what goes out rule for: What is the value of Assets?
A. Real A/c B. Personal A/c A. 600,000 B. 1,400,000
C. Nominal A/c D. None of these C. 2,000,000 D. None of these
(2715) Accountancy—9-II
 Accountancy/Book Keeping 67
156. A business has the following items in it: Accounts Payable ` 200
Land ` 1,500,000 Bank Loan ` 1,000
Machinery ` 80,000 Based on the information provided, how much are
Cash ` 20,000 XYZ Ltd. total liabilities?
Owners equity ` 900,000 A. ` 200 B. ` 1900
Loan ` 500,000 C. ` 1200 D. ` 1700
Creditors?
A. ` 200,000 B. ` 700,000 163. The full disclosure principle, as adopted by the
C. ` 800,000 D. ` 1,100,000 accounting profession, is best described by which of
the following?
157. A business has following items in it A. All information related to an entity’s business
Land? and operating objectives is required to be
Vehicles ` 600,000 disclosed in the financial statements
Debtors ` 1,20,000 B. Information about each account balance appearing
Cash ` 30,000 in the financial statements is to be included in the
Owners’ Equity ` 1,000,000 notes to the financial statements
Loan ` 5,00,000 C. Enough information should be disclosed in the
Creditors ` 50,000 financial statements so a person wishing to invest
What is the value of the land? in the stock of the company can make a profitable
A. 1,000,000 B. 1,550,000 decision
C. 800,000 D. None of these D. Disclosure of any financial facts significant enough
to influence the judgment of an informed reader
158. Which of the following equations properly represents
a derivation of the fundamental accounting equation? 164. Which of the following is a real (permanent) account?
(a) Assets + Liabilities = Owner Equity A. Goodwill
(b) Asset = Owner Equity B. Sales
(c) Cash = Assets C. Accounts Receivable
D. Both Goodwill and Accounts Receivable
(d) Assets – Liabilities = Owner Equity
A. Only (a) B. Both (a) & (b) 165. Which of the following statements is not an objective
C. All (a), (b), (c), (d) D. None of these of financial reporting?
A. Provide information that is useful in investment
159. Retained earnings will change over time because of
and credit decisions.
several factors. Which of the following factors would
B. Provide inform ation regarding policy of
explain an increase in retained earnings?
organisation
A. Net loss
C. Provide information that is useful in assessing
B. Net income
cash flow prospective
C. Dividend
D. None of these
D. Investment by shareholder
166. The Cash account on the balance sheet should not
160. Which of these items would be accounted for as an
include which of the following items?
expense? A. Travel advances to employees
A. Repayment of bank loan B. Currency
B. Dividend to stock holders C. Money orders
C. The purchase of land D. Deposits in transit
D. Payment of current period rent
167. Of the following account types, which would be
161. Which of the following would not be included on a increased by a debit?
balance sheet? A. Liabilities and expenses
A. Accounts payable B. Accounts receivable B. Assets and equity
C. Sales D. Cash C. Assets and expenses
162. XYZ Ltd. has provided the following information D. Equity and revenues
about its balance sheet: 168. The following comments all relate to the recording
Cash ` 100 process. Which of these statements is correct?
Accounts Receivable ` 500 A. The general ledger is a chronological record of
Stock holder equity ` 700 transactions
 68 Accountancy/Book Keeping
B. The general ledger is posted from transactions
recorded in the general journal
C. The trial balance provides the primary source
document for recording transactions into the
general journal
D. Transposition is the transfer of information from
the general journal to the general ledger
169. The following comments each relate to the recording
of journal entries. Which statement is true?
A. For any given journal entry, debits must exceed
credits
B. It is customary to record credits on the left and
debits on the right
C. The chart of accounts reveals the amount to debit
and credit to the affected accounts
D. Journalization is the process of converting
transactions and events into debit/credit format
170. The trial balance is .................. .
A. is a formal financial statement.
B. is used to prove that there are no errors in the
journal or ledger.
C. provides a listing of every account in the chart of
accounts.
D. provides a listing of the balance of each account
in active use.
171. Which of the following errors will be disclosed in the
preparation of a trial balance?
A. Recording transactions in the wrong account
B. Duplication of a transaction in the accounting
records
C. Posting only the debit portion of a particular
journal entry
D. Recording the wrong amount for a transaction to
both the account debited and the account credited
172. The basic sequence in the accounting process can
best be described as:
A. Transaction, journal entry, source document, ledger
account, trial balance
B. Source document, transaction, ledger account,
journal entry, trial balance
C. Transaction, source document, journal entry, trial
balance, ledger account
D. Transaction, source document, journal entry, ledger
account, trial balance
173. Inventory accounts should be classified in which
section of a balance sheet?
A. Current assets
B. Investments
C. Property, plant and equipment
D. Intangible assets
174. Investment in Bonds should be disclosed on the
balance sheet
A. On Liability side of balance sheet
B. On Assets side of balance sheet
C. On both side of balance sheet
D. None of these
175. Contingent liabilities should be recorded in the
accounts when:
A. It is probable that the future event will occur
B. The amount of the liability can be reasonably
estimated
C. Both A and B
D. Either A or B
176. Which of the following functions is managerial
accounting intended to facilitate?
A. Planning B. Decision making
C. Control D. All of these
177. Which of the following statements about differences
between financial and managerial accounting is
incorrect?
A. Managerial accounting information is prepared
primarily for external parties such as stockholders
and creditors; financial accounting is directed at
internal users
B. Financial accounting is aggregated; managerial
accounting is focused on products and departments
C. Managerial accounting pertains to both past and
future items; financial accounting focuses
primarily on past transactions and events
D. Financial accounting is based on generally
accepted accounting practices; m anagerial
accounting faces no similar constraining factors
178. Cost accounting information can be used for:
A. Budget control and evaluation
B. Determining standard costs and variances
C. Pricing and inventory valuation decisions
D. All of these
179. Manufacturing costs are also known as product costs.
Which of the following best describes those costs
which are considered to be manufacturing costs?
A. Direct materials, direct labour, and factory
overhead
B. Direct materials and direct labour only
C. Direct materials, direct labour, factory overhead
and administrative overhead
D. Direct labour and factory overhead
180. A company’s telephone bill consisting of a ` 200
monthly base amount, plus long distance charges,
would be classified as a:
A. Variable cost B. Committed fixed cost
C. Direct cost D. Semi variable cost
 Accountancy/Book Keeping 69
181. Accounting principles are: 192. Financial account record only:
A. As definite as principles of physics and chemistry A. Actual figures B. Budgeted figures
B. Unlike principles of physical sciences. C. Standard figures D. Management figures
C. Verifiable through observations and records 193. The term Management Accounting was first used in:
D. Thoughts of accountant A. 1910 B. 1939
182. Accounting concepts are based on: C. 1950 D. 1960
A. Certain assumptions 194. Management Accounting relates to:
B. Certain facts and figures A. Recording of accounting data
C. Certain accounting records B. Recording of cost data
D. Practice experience C. Presentation of account data
D. None of the above
183. Business entity concept distinguishes between:
A. Individual and business 195. The use of management accounting is:
B. Business and business A. Compulsory B. Optional
C. Owners C. Obligation D. Statutory requirement
D. Debtors and creditors 196. Content of income statement
184. The cost concept records the figures at: A. Trading account B. Profit and loss account
A. Market values C. Balance sheet D. All of the above
B. Actual amount paid 197. Which does not come under the head of asset?
C. Actual amount or market values whichever is less A. Fixed asset B. Investment
D. MRP maximum retail price C. Current asset D. Owner’s equity
185. Going concern concept assumes: 198. Financial account state the .............. position of a
A. Business as a dissolving concern concern.
B. Business on relishing values A. Financial B. Economic
C. Business as a going concern C. Non-financial D. None of these
D. Asset = liability 199. Which items does not come under the balance sheet?
186. Financial account provide summary of: A. Sales B. Share capital
A. Asset B. Liability C. Reserves and surplus D. Unsecured loan
C. Accounts D. None of these 200. The word accounting can be classified into:
187. Financial statements are: A. Financial accounting and management accounting
A. Estimates of facts B. Anticipated facts B. Financial accounting and cost accounting
C. Financial accounting, management accounting
C. Recorded facts D. None of these
and cost accounting
188. Retained earnings statement depicts: D. Cannot be classified
A. Appropriation of profits
201. If a company has contingent liabilities, they appear
B. Estimates of profits
in the ................
C. Estimates of costs A. Balance sheet
D. None of these B. Director’s report
189. User of financial statement is: C. Foot note down the balance sheet
A. Management B. Creditors D. Chairman’s report
C. Bankers D. All of the above 202. Modern Method of Accounting was introduced by:
190. Current liability does not include: A. M. S. Gosav B. Wheldon
A. Sundry creditors C. Luco Pacioli D. R. N. Carter
B. Acceptances 203. The work of a book keeper is ............. in nature.
C. Unclaimed dividend A. Analytical B. Clerical
D. Short-term investment C. Executive D. Non-executive
191. Financial accounting deals with: 204. Depreciation is a .................. .
A. Determination of cost A. Cash operating expenditure
B. Determination of profit B. Non-cash operating expenditure
C. Determination of price C. Cash non-operating expenditure
D. Determination of selling price D. Non-cash non-operating expenditure
 70 Accountancy/Book Keeping

205. ................... system records only actual cash receipts C. Indirect labour
and payments. D. Direct labour
A. Cash basis B. Accrual basis 216. Which one of the following would not be classified
C. Mercantile basis D. Single entry basis
as manufacturing overhead?
206. Which of the following is true for: — “In accounts A. Indirect labour
recording is done of ................ ” B. Direct materials
A. only financial transaction C. Insurance on factory building
B. only non-financial transaction D. Indirect materials
C. Both A and B
217. In manufacturing a product, prime costs are:
D. Personal transaction of Proprietor A. Raw materials and manufacturing overhead
207. Salary is one of the ............... expenses. B. Indirect materials and manufacturing overhead
A. Capital B. Revenue C. Indirect labour and manufacturing overhead
C. Direct D. Non-cash D. Direct materials and direct labour
208. Outstanding salary account is a ......... account. 218. A manufacturing process requires small amounts of
A. Nominal account glue. The glue used in the process is classified as:
B. Real account A. A prime cost B. An indirect material
C. Artificial person’s account C. A direct material D. Miscellaneous expense
D. Representative personal account 219. Lubricants, used regularly in a production process,
209. ................ is a summary of all transactions relating to are classified as:
particular account. A. Miscellaneous expense
A. Balance sheet B. Trial balance B. Direct materials
C. Ledger D. Journal C. Indirect materials
D. Immaterial items
210. Amount brought in by proprietor should be credited
to: 220. Because of automation, which component of product
A. cash account B. capital account cost is declining?
C. drawings account D. creditors account A. Direct labour
B. Direct materials
211. Amount of salary paid to Suresh should be debited to
C. Manufacturing overhead
....................
A. Account of Suresh B. Salaries account D. Advertising
C. Cash account D. Outstanding expenses 221. Aggregate of direct costs is known as:
A. Direct material costs B. Direct wages
212. All costs other than direct materials cost, direct labour
C. Direct expenses D. Prime cost
cost and direct expenses are known as:
A. Indirect material cost B. Overhead 222. Aggregate of prime cost and Factory overhead is
C. Indirect labour cost D. Indirect expenses known as:
A. Work on Cost B. Work Cost
213. A company’s telephone bill consisting of a ` 200
C. Cost of Production D. Direct Cost
monthly base amount, plus long distance charges,
would be classified as a: 223. Salary paid to factory manager is an item of:
A. Variable cost B. Committed fixed cost A. Prime Cost B. Factory Overhead
C. Direct cost D. Semi-variable cost C. Selling Overhead D. Office Overhead
214. Cost accounting information can be used for: 224. Aggregate of cost of goods sold and selling and
A. Budget control and evaluation distribution overheads is known as:
B. Determining standard costs and variances A. Total Cost B. Office Cost
C. Pricing and inventory valuation decisions C. Cost of Sales D. Selling Overhead
D. All of these
225. Conversion cost includes cost of converting ……….
215. The work of factory employees that can be physically into ……..
associated with converting raw material into finished A. Raw material, WIP
goods is classified as: B. Raw material, Finished goods
A. Manufacturing overhead C. WIP, Finished goods
B. Indirect materials D. Finished goods, Saleable goods
 Accountancy/Book Keeping 71

ANSWERS
1 2 3 4 5 6 7 8 9 10
C A D A D B C D B B
11 12 13 14 15 16 17 18 19 20
A B D B A C B C C A
21 22 23 24 25 26 27 28 29 30
C D D D B B B B A C
31 32 33 34 35 36 37 38 39 40
C A B D A C C C C C
41 42 43 44 45 46 47 48 49 50
C B A D B D A C C D
51 52 53 54 55 56 57 58 59 60
C A B B D C A D D C
61 62 63 64 65 66 67 68 69 70
C A D B C A C C B A
71 72 73 74 75 76 77 78 79 80
B D B A B D A A D D
81 82 83 84 85 86 87 88 89 90
A B C C A C D B D A
91 92 93 94 95 96 97 98 99 100
C D C D A, B C D C D C
101 102 103 104 105 106 107 108 109 110
C A C B D C D B D B
111 112 113 114 115 116 117 118 119 120
B A A D B D C B A A
121 122 123 124 125 126 127 128 129 130
A B C C A B B B B A
131 132 133 134 135 136 137 138 139 140
C B A A A C A A B C
141 142 143 144 145 146 147 148 149 150
C B B B A C A B C B
151 152 153 154 155 156 157 158 159 160
D C D C C A C D B D
161 162 163 164 165 166 167 168 169 170
C B D D B A C B D D
171 172 173 174 175 176 177 178 179 180
C D A B C D A D C D
181 182 183 184 185 186 187 188 189 190
B B A B C C C A D D
191 192 193 194 195 196 197 198 199 200
B A C C B D D A A C
201 202 203 204 205 206 207 208 209 210
A C B B A A B D C B
211 212 213 214 215 216 217 218 219 220
B B D D D B D B C A
221 222 223 224 225
D B B A B
  
72 Accountancy/Book Keeping

Corporate Regulations

1. The concept of DIN (Directors Identification Number) 8. A private company is required compulsorily to limit
was brought into force w.e.f.: through its articles, the number of members to
A. 1-4-2006 B. 1-1-2006 ..................
C. 1-11-2006 D. 1-7-2006 A. 20 B. 50
C. 200 D. 500
2. Limited Liability Partnership Act came into effect in
the year: 9. The committee to recommend formation of OPC (One
A. 2005 B. 2006 Person Company) in India is ..........
C. 2007 D. 2008 A. Alagh B. J.J. Irani
C. H.C. Baba D. None of these
3. Section 3 of the companies Act 2013 allows formation
of ............. 10. Which one of the following is not a relaxation given
A. One person Company to an OPC?
B. Private Company A. Need not prepare Cash Flow Statement
C. Public Company B. Annual report can be signed by Director
D. None of these C. No need to hold AGM
D. No need to appoint Company Secretary
4. In case of issue of shares by a company to the public,
if minimum subscription, as stated in prospectus has 11. In case of public company total managerial remunera-
not been received in 30 days of issue of prospectus tion can’t exceed ............... per cent of the net profits.
or such other period as specified by SEBI, then the A. 5 B. 7
application money shall be repaid within a period of C. 11 D. 12
............ days from the closure of the issue. 12. With regard to government company, identify the
A. 21 B. 15 statement representing correct feature of Government
C. 12 D. 7 company:
5. “A company remains free from the hazards of all A. Govt company can’t sue the government in its
personal misfortunes of its members” is derived from own name as litigant
the benefit of incorporation of company being............. B. Employees of government company are not
employees of central/state government
A. Limited liability
C. A government company can’t wound like any
B. Perpetual succession
other company
C. Infinite membership
D. A government company must use either limited
D. Independent legal entity
or Private Limited at the end of its name
6. The powers of a company are contained in the ........
13. Which one of the following financial institutions shall
clause of memorandum of association.
not be regarded as Public financial institutions as per
A. Capital B. Object
section 2(72) of Companies Act 2013?
C. Membership D. None of these
A. LIC
7. Restrictions on transferability of shares is relevant in B. IDFCL
case of: C. Institutions notified by central government in
A. Only private company having share capital consultation with RBI
B. Private company incorporated as a pure guarantee D. KFC
company 14. An unregistered company can’t have more than
C. Private company having either Share capital or ............... members.
Guarantee company A. 20 B. 25
D. None of these C. 50 D. 100
72
 Accountancy/Book Keeping 73
15. Section 9 of Companies Act describes ............. 24. Section 13 provides that the name of company may
A. Allotment of CIN be changed at any time by:
B. Filing of documents for registration A. Passing special resolution at general meeting of
C. Remuneration of promoters company
D. Effect of certificate of incorporation B. Passing ordinary resolution at general meeting
16. The Companies (Amendment) Act 2015 omitted C. Passing either ordinary or special resolution at
section ............. of Company’s Act 2013 that provides general meeting
all companies whether private or public to commence D. Can’t be changed
business immediately after obtaining certificate of 25. Who among the following are not proper authority to
incorporation. call a meeting?
A. 10 B. 11 A. Board of directors
C. 12 D. 13 B. Shareholders
17. Which one of the following need permission from C. Tribunal
central government to make alteration in the D. Company secretary
memorandum of association? 26. When a company changes its name or obtains a new
A. Alteration in name clause name under sub-section(1) of section 16, it shall
B. Shift registered office from one state to other within a period of ............. days from the date of
C. Alteration of object clause such change, give notice of the change to the
D. Alteration of capital clause registrar.
18. Section 12 requires that One Person company shall A. 15 B. 16
mention along with its name (in brackets) ..................... C. 21 D. 7
A. One Person Company 27. Within 30 days of passing the resolution, a notice of
B. OPC increase in the share capital along with an altered
C. One Person Company Pvt Ltd or Ltd memorandum must be filed with the .............
D. None of the above A. Ministry of Corporate affairs
19. The clause that states the name of state where B. SEBI
registered office of the company is situated. C. Board of Directors
A. Object B. Capital D. Registrar of Companies
C. Registered office D. Name 28. ............. defines the company’s objects and various
20. A company must file prescribed documents stating its powers it possesses.
registered office within ................ days of its A. Articles
incorporation. B. Memorandum
A. 21 B. 27 C. Prospectus
C. 30 D. 40 D. Annual report
21. The term ultra virus means: 29. Which of the following is incorrect statement as to
A. Against power B. Beyond power memorandum and articles of association?
C. Against authority D. Beyond authority A. Act done by company beyond the scope of
memorandum is ultra virus
22. In case of a company limited by shares, a shareholder
B. Memorandum may include any clause contrary to
has paid full on his shares, his liability will be:
provisions of Companies Act.
A. as decided by directors
C. Generally articles can be altered by the members
B. an equal amount to already paid up value of share
by passing a special resolution only
C. Nil
D. The articles are subsidiary to Companies Act and
D. None of these
memorandum
23. As per sec 4(1) (e) of Companies Act 2013, a company
30. Section 14 of Companies Act 2013 allows companies
having a share capital, the memorandum of association
to alter:
must state the amount of .............
A. Articles
A. Authorised/registered capital
B. Memorandum
B. Paid-up share capital
C. Both articles and memorandum
C. Called-up capital
D. None of these
D. Reserved capital
(2715) Accountancy—10
74 Accountancy/Book Keeping

31. Section 17, Rule 34 of company (incorporation rules) the days for which the issue is kept open in case of
2014 provides that a company shall on payment of revision in price band.
prescribed fee send a copy of each of memorandum A. 5 B. 6
or association to a member within ............. days of the C. 7 D. 10
request. 40. In the event of non-receipt of minimum subscription,
A. 3 B. 5 all application money received shall be refunded to
C. 7 D. 10 the applicants forth with, not later than ............. days
32. Section 33 of the Companies Act 2013 provides that of closure of issue in case of non-underwritten issue.
no form of application for the purchase of the securities A. 10 B. 15
of a company shall be issued unless it is accompanied C. 70 D. 90
by: 41. FPO stands for:
A. Draft prospectus A. Forward Public Offer
B. Abridged prospectus B. First Public Offer
C. Redherring prospectus C. Future Public Offer
D. Shelf prospectus D. Further Public Offer
33. No prospectus shall be issued after ............. days from 42. The basic purpose of Green shoe option is to act as
the date on which a copy of it was delivered to the stabilizing force when issue is ...........
registrar. A. Under subscribed
A. 21 B. 43 B. Over subscribed
C. 75 D. 90 C. Either Under or Over subscribed
34. Which of the following is incorrect as to a share? D. None of these
A. It has a nominal value 43. An amount payable on application shall not be less
B. It has a distinct number than ........... per cent of the share or other percentage
C. It may be transferred in fractions specified by SEBI.
D. All shares of a class are of equal denominations A. 25 B. 20
35. No company limited by shares can issue any preference C. 5 D. 10
shares which are irredeemable as per section. 44. Which of the following condition is incorrect as to
A. 34 B. 46 buy back of shares?
C. 55 D. 72 A. Buy back is authorised by articles
36. The process by which demand for the securities B. Buy back is 20 per cent or less of the aggregate
proposed to be issued by a body corporate is elicited of paid up capital
and built up and the price for such securities is C. Shares/securities specifies for buy back are fully
assessed for the determination of the quantum of such paid up
securities is called ............. D. Buy back is out of free reserves
A. Offer for sale B. Private placement 45. To issue sweat equity shares, company shall ensure
C. Book building D. None of these that it has elapsed at least ........... year after
37. The cap on the price band (in book building) shall be commencement of business.
less than or equal to ............. per cent of floor price. A. 5 B. 7
A. 100 B. 120 C. 1 D. 10
C. 200 D. 500 46. Right issue of shares is concerned with section:
38. An issue shall be opened after at least 3 working days A. 62 B. 56
from the date of registering the ............. with the C. 46 D. 54
registrar of companies. 47. A bonus share is always:
A. Draft prospectus A. issued free of charge B. fully paid
B. Abridged prospectus C. partly paid D. Both A and B
C. Redherring prospectus
48. Diminution of capital denotes:
D. Shelf prospectus
A. Cancellation of unsubscribed part of issued capital
39. Except otherwise provided in the regulations a public B. Reduction of capital under the maning of Act
issue shall be kept open for atleast 3 working days C. Write of past losses against capita
but not more than ............. working days including D. None of these
 Accountancy/Book Keeping 75
49. In case of forfeiture of shares, a notice requiring 50. The company liquidator must submit a preliminary
payment of the amount together with any interest report to the tribunal within ........... days from the
accured must be served mentioning a further day winding up order.
not less than ............... from date of service of the A. 16
notice. B. 15
A. 7 B. 10 C. 60
C. 14 D. 15 D. 50

ANSWERS
1 2 3 4 5 6 7 8 9 10
C D A B D B A C B D
11 12 13 14 15 16 17 18 19 20
C B D C D B A&B A C C
21 22 23 24 25 26 27 28 29 30
B C A A D A D B B A
31 32 33 34 35 36 37 38 39 40
C B D C C C B C D B
41 42 43 44 45 46 47 48 49 50
D B C B C A D A C C

  
76 Accountancy/Book Keeping

Auditing

1. An auditor is like a: B. His opinion is no guarantee to future viability of

A. Blood haunt business
B. Watch dog C. He is responsible for detection and prevention of
C. May both according to situation frauds and errors in financial statements
D. None of these D. H e should exam ine w hether recognised
2. The term ‘Audit’ is derived from a Latin word accounting principle have been consistently
“audire” which means: 10. A sale of ` 25,000 to A was entered as a sale to B.
A. To inspect B. To examine This is an example of:
C. To hear D. To investigate A. Error of omission B. Error of commission
3. Process of verifying the documentary evidences of C. Compensating error D. Error of principle
transactions are known as: 11. ‘Goods sent on approval basis’ have been recorded as
A. Auditing B. Testing ‘Credit sales’. This is an example of:
C. Vouching D. Verification A. Error of principle B. Error of commission
4. Auditing is compulsory for: C. Error of omission D. Error of duplication
A. Small scale business 12. Which of the following statements is not true?
B. Partnership firms A. Management fraud is more difficult to detect than
C. Joint stock companies employee fraud
D. Proprietary concerns B. Internal control system reduces the possibility of
5. The main object of an audit is: occurrence of employee fraud and management
A. Expression of expert opinion fraud
B. Detection and prevention of fraud and error C. The auditor’s responsibility for detection and
C. Both A and B prevention of errors and frauds is similar
D. Depends on the type of audit D. All statements are correct.

6. Concealment of shortage by delaying the recording 13. As per AAS4, if auditor detects an error then:
of cash receipts is known as: A. He should inform the management
A. Embezzlement B. Misappropriation B. He should communicate it to the management if
C. Lapping D. None of these it is material
C. The auditor should ensure financial statements
7. The title of AAS2 issued by Council of ICAI is:
are adjusted for detected errors.
A. Objective and Scope of the Financial Statements
D. Both B and C
B. Objective and Scope of the Audit of Financial
Statements 14. Which of the following is not a limitation of audit as
C. Objective and Scope of Business of an Entity per AAS4?
D. Objective and Scope of Financial Statements A. Objectivity of auditor’s judgment
Audit B. Selective testing
C. Persuasiveness of evidence
8. Lapping is also known as:
D. Limitations of internal control system.
A. Teeming and lading B. Embezzlement
C. Looping D. Hacking 15. Internal audit is undertaken
A. By independent auditor
9. Which of the following is not true about opinion on
B. Statutorily appointed auditor
financial statements?
C. By a person appointed by the management
A. The auditor should express an opinion on financial
D. By a government auditor
statements.

76
 Accountancy/Book Keeping 77
16. The scope of internal audit is decided by the: 27. Which of the following statements is not correct about
A. Shareholders B. Management materiality?
C. Government D. Law A. Materiality is a relative concept
B. Materiality judgments involve both quantitative
17. Audit of banks is an example of:
and qualitative judgments
A. Statutory audit
C. A uditor’s consideration of m ateriality is
B. Balance sheet audit
influenced by the auditor’s perception of the needs
C. Concurrent audit
of an informed decision maker who will rely on
D. All of the above
the financial statements
18. Concurrent audit is a part of: D. At the planning state, the auditor considers
A. Internal check system materiality at the financial statement level only
B. Continuous audit
28. ........ the audit risks ........ the materiality and ........ the
C. Internal audit system
audit effort.
D. None of these A. Lower, higher, lower
19. In India, balance sheet audit is synonymous to: B. Lower, lower, higher
A. Annual audit B. Continuous audit C. Higher, lower, lower
C. Detailed audit D. Statutory audit D. Lower, higher, higher
20. Audit in depth is synonymous for: 29. When issuing unqualified opinion, the auditor who
A. Complete audit B. Completed audit evaluates the audit findings should be satisfied that
C. Final audit D. Detailed audit the:
A. Amount of known misstatement is documented in
21. Institute of Chartered Accountants of India was
working papers
established:
B. Estimates of the total likely misstatement is less
A. 1956 B. 1949
than materiality level
C. 1958 D. 1948
C. Estimate of the total likely misstatement is more
22. Which of the following statements is not true about than materially level
continuous audit? D. Estimates of the total likely misstatement cannot
A. It is conducted at regular interval be made
B. It may be carried out on daily basis 30. In determining the level of materiality for an audit,
C. It is needed when the organization has a good what should not be considered?
internal control system A. Prior year’s errors
D. It is expensive B. The auditor’s remuneration
23. Internal check is carried on by: C. Adjusted interim financial statements
A. Staff specially appointed for the purpose D. Prior year’s financial statements
B. Internal auditor 31. Analytical procedures issued in the planning stage of
C. Supervisor of the staff an audit, generally:
D. Members of the staff A. Helps to determine the nature, timing and extent
24. Errors of Omission are: of other audit procedures
A. Technical errors B. Errors of principle B. Directs attention to potential risk areas
C. Compensating errors D. None of the above C. Indicates important aspects of business
D. All of the above
25. Window dressing implies:
A. Curtailment of expenses 32. Which of the following statements is most closely
B. Checking of wastages associated with analytical procedure applied at
C. Under valuation of assets substantive stage?
D. Over valuation of assets A. It helps to study relationship among balance sheet
accounts
26. Test Checking refers to: B. It helps to discover material misstatements in the
A. Testing of accounts and records financial statements
B. Checking of selected number of transactions C. It helps to identify possible oversights
C. Examination of adjusting and closing entries D. It helps to accumulate evidence supporting the
D. Checking of all transactions recorded validity of a specific account balance
78 Accountancy/Book Keeping

33. For all audits of financial statements made in accor-
dance with AAS14, the use of analytical procedures
is at the discretion of the auditor in which stage?
A. Substantive testing
B. Planning stage
C. Overall review stage
D. All of the above
34. Verification refers to:
A. Examining the physical existence and valuation
of assets
B. Examining the journal and ledger
C. Examination of vouchers related to assets
D. None of the above
35. Stock should be valued at:
A. Cost
B. Market price
C. Cost or Market price whichever is lower
D. Cost less depreciation
36. ‘Auditor is not a valuer’, was stated in:
A. Kingston Cotton Mills case
B. London Oil Storage Co. case
C. London and General Bank case
D. None of the above
37. Floating assets are valued at:
A. cost
B. Market price
C. Cost or market price whichever is lower
D. Cost less depreciation
38. Goods sold on the basis of ‘sales or return’ should:
A. Be included in the stock
B. Not be included in the stock
C. Not be checked by auditor
D. None of the above
39. Of the following, which is the least persuasive type of
audit evidence?
A. Bank statements obtained from the client
B. Documents obtained by auditor from third parties
directly.
C. Carbon copies of sales invoices inspected by the
auditor
D. Computations made by the auditor
40. Which of the following statements is, generally, correct
about the reliability of audit evidence?
A. To be reliable, evidence should conclusive rather
than persuasive
B. Effective internal control system provides reliable
audit evidence
C. Evidence obtained from outside sources routed
through the client
D. All are correct
41. In an audit of financial statements, substantive tests
are audit procedures that:
A. may be eliminated for an account balance under
certain conditions
B. are designed to discover significant subsequent
events
C. will increase proportionately when the auditor
decreases the assessed level of control risk
D. may be test of transactions, test of balance and
analytical procedures
42. The nature, tim ing and extent of substantive
procedures is related to assessed level of control risk:
A. Randomly
B. Disproportionately
C. Directly
D. Inversely
43. Which of the following factors is most important in
determining the appropriations of audit evidence?
A. The reliability of audit evidence and its relevance
in meeting the audit objective
B. The objectivity and integrity of the auditor
C. The quantity of audit evidence
D. The independence of the source of evidence
44. When is evidential matter, generally, considered
sufficient?
A. When it constitutes entire population
B. When it is enough to provide a basis for giving
reasonable assurance regarding truthfulness
C. When it is objective and relevant
D. W hen auditor collects and evaluates it
independently
45. Which of the following is not corroborative evidence?
A. Minutes of meetings
B. Confirmations from debtors
C. Inform ation gathered by auditor through
observation
D. Worksheet supporting consolidated financial
statements
46. Which of the following statements is not true with
respect to management representations obtained as
per AAS11?
A. Authenticated copy of relevant minutes of
meetings may be regarded as management
representation
B. It should always be in working
C. It may be dated prior to the report date
D. It should be addressed to the auditor
47. What would most appropriately describe the risk of
incorrect rejection in terms of substantive testing?
A. The auditor concludes balance is materially
correct when in actual fact it is not

B. The auditor concludes that the balance is
materially misstated when in actual fact it not
C. The auditor has rejected an item for sample which
was material
D. None of the above
48. Which of the following affects audit effectiveness?
A. Risk of over reliance
B. Risk of incorrect rejection
C. Risk of incorrect acceptance
D. Both A and C
49. What would most effectively describe the risk of
incorrect acceptance in terms of substantive audit
testing?
A. The auditor has ascertained that the balance is
materially correct when in actual fact it is not
B. The auditor concludes the balance is materially
misstated when in actual fact is not
C. The auditor has rejected an item from sample
which w as not supported by documentary
evidence
D. He applies random sampling on data which is
inaccurate and inconsistent
50. Which of the following Auditing Assurance Standard
deals with Audit Planning?
A. AAS7 B. AAS8
C. AAS9 D. AAS3
51. Audit programme is prepared by:
A. The auditor
B. The client
C. The audit assistants
D. The auditor and his audit assistants
52. The working papers which auditor prepares for
financial statements audit are:
A. Evidence for audit conclusions
B. Owned by the client
C. Owned by the auditor
D. Retained in auditor’s office until a change in
auditors
53. The quantity of audit working papers complied on
engagement would most be affected by:
A. Management’s integrity
B. Auditor’s experience and professional judgment
C. Auditor’s qualification
D. Control risk
54. Which of the following best describes the primary
purpose of audit programme preparation?
A. To detect errors or fraud
B. To comply with GAAP
C. To gather sufficient appropriate evidence
D. To assess audit risk
Accountancy/Book Keeping 79
55. Which of the following is not an advantage of the
preparation of working paper?
A. To provide a basis for review of audit work
B. To provide a basis for subsequent audits
C. To ensure audit work is being carried out as per
programme
D. To provide a guide for advising another client on
similar issues
56. The auditor’s permanent working paper file should
not normally, include:
A. Extracts from client’s bank statements
B. Past year’s financial statements
C. Attorney’s letters
D. Debt agreements
57. For what minimum period should audit working papers
be retained by audit firm?
A. For the time period the entity remains a client of
the audit firm
B. For a period of ten years
C. For a period auditor opines them to be useful in
servicing the client
D. For the period the audit firm is in existence
58. Which of the following factors would least likely
affect the quantity and content of an auditor’s working
papers?
A. The assessed level of control risk
B. The possibility of peer review
C. The nature of auditor’s report
D. The content of management representation letter
59. Which of the following statement is true regarding an
auditor’s working papers?
A. They document the level of independence
maintained by the auditor
B. They should be considered as the principle support
for the auditor’s report
C. They should not contain details regarding
weaknesses in the internal control system
D. They help the auditor to monitor the effectiveness
of the audit firm’s quality control
60. Which of the following statement best describes the
understanding with respect to ownership and custody
of working papers prepared by an auditor?
A. The working papers may be obtained by third
parties when they appear to be relevant to issues
raised in litigation
B. The safe custody of working papers is the
responsibility of client, if kept at his premises
C. The working papers must be retained by an audit
firm for a period of 10 years
D. Successor auditors may have access to working
papers of the predecessor auditors. The approval
of client is not required.
80 Accountancy/Book Keeping

61. The current file of the auditor’s working papers, 69. Depreciation does not arise form ...............
generally, should include: A. Effluxion of time
A. A flowchart of the internal controls B. Use
B. Organisation charts C. Obsolescence through technology be market
C. A copy of financial statements changes
D. Copies of bond and debentures D. Remarket expectation
62. Knowledge of the entity’s business does not help the 70. Which of the following Schedule of the Companies
auditor to: Act, 2013 deals with depreciations?
A. Reduce inherent risk A. Schedule II B. Schedule V
B. Identify problem areas C. Schedule XIII D. Schedule X
C. Evaluate reasonableness of estimates
71. Schedule II of the Companies Act, 2013 has prescribed
D. Evaluate appropriates of GAAP
rates of depreciation for double shift and triple shift
63. Payment for wage should be vouched with the help working for which one of the following assets?
of: A. Building B. Plant and Machinery
A. Piece work statement B. Wage sheets C. Furniture and fittings D. Ships
C. Minutes book D. Bank pass book 72. If the book value of an asset stands at ............. per cent
64. Payment for building purchased should be vouched of the original cost, a company need not provide
with the help of: depreciation on it.
A. Title Deed A. Two B. Fifteen
B. Correspondence with the brokers C. Five D. None of these
C. Building Account 73. A company has bought patents. Which of the
D. Cash book following methods is most suitable for providing
65. Purchase returns should be vouched with the help of: depreciation on them?
A. Bought notes A. SLM B. WDV
B. Credit notes C. Sum of year digits D. Any of the above
C. Goods inward book 74. Which of the following is a revenue reserve?
D. Cash book A. Capital redemption reserve
66. Receipts from sale of investments should be vouched B. Security premium account
with the help of: C. Debenture redemption reserve
A. Broker’s bought notes D. Capital reserve
B. Broker’s sold notes 75. Which of the following will not lead to creation of
C. Minutes book secret reserve?
D. Inventory of investment A. Undervaluation of closing stock
67. Which of the following expenses should not be treated B. Charging capital expenditure to revenue
as capital expenditure? C. Goods sent on consignment being shown as actual
A. Expenses paid on installation of a plant. sales
B. Cost of dismantling a building in case a new D. Charging higher rates of depreciation on fixed
building is to be constructed on the land assets than actually required
C. Legal expenses incurred to defend a suit related 76. Who is responsible for the appointment of statutory
to title of patent. The suit has been lost auditor of a limited company?
D. The fees paid to engineer who constructed the A. Directors of the company
plant B. Members of the company
68. Which of the following is not a revenue expense? C. The Central Government
A. Cost of raising a loan D. All of the above
B. Cost of accessories of motor vehicles spent at the 77. Which of the following sections of the Companies
time of purchase Act, 2013 deals with qualifications of the auditor?
C. Expenses incurred for laying of sewers on land A. Section 141
purchased B. Section 224(1) and section 224(2)
D. Insurance premium paid at the time of registration C. Section 226(3) and section 226(4)
of the ship D. Section 224(3) and section 224
 Accountancy/Book Keeping 81
78. Which of the following statement is not true? A. Board meeting
A. A partnership firm can be appointed as a statutory B. Extraordinary general meeting
auditor of limited company C. General meeting
B. Appointment can be made in the name of the firm D. Annual general meeting
C. Majority of the partners should be practicing in 85. Internal check is meant for ............ .
India A. prevention of frauds
D. All partners should be chartered accountants B. detection of frauds
79. As per the requirements of section 141(3) a person is C. helping audit is depth
disqualified from being appointed as a statutory D. detection of errors
auditor if he holds: 86. Purchase of machinery is a ............ .
A. Equity shares or debentures of the company A. revenue receipt B. capital receipt
B. Equity shares carrying voting of the company C. capital expenditure D. revenue expenditure
C. Shares carrying voting rights of the company
87. Sale of land is a ............ .
D. Security of the company
A. revenue receipt B. capital receipt
80. The board of directors shall appoint first auditor of a C. capital expenditure D. revenue expenditure
company:
88. When a transaction has not been recorded in the
A. Within one month of completion of capital
books of account either wholly or partially such errors
subscription state of the company are called ............ .
B. Within one month of the promotion of the A. errors of commission B. errors of omission
company C. compensating error D. error of principle
C. Within one month of the commencement of the
business of the company 89. The auditor of a Government company is appointed
D. Within one month of incorporation of the by the C & AG. His remuneration is fixed by:
company A. The C & AG
B. The shareholders
81. The term of the auditorship of first auditor would be C. The shareholders at an annual general meeting
from the date of appointment till: D. The board of directors
A. the conclusion of statutory meeting
90. The section of the companies Act, 2013 which contains
B. the conclusion of first annual general meeting
provisions regarding remuneration of the auditor is:
C. the conclusion of next annual general meeting
A. Section 139 B. Section 141
D. the date of removal
C. Section 142 D. Section 148
82. In case the directions fail to appoint first auditor (s),
91. The authority to remove the first auditor before the
the shareholders shall appoint them at ............ by
expiry of term is with:
passing a resolution.
A. The shareholders in a general meeting
A. a general meeting
B. The shareholders in the first annual general
B. first annual general meeting meeting
C. statutory meeting C. The board of directors
D. annual general meeting D. The Central Government
83. Which of the following statement is not true regarding 92. Which of the following statements is not correct
appointment of auditor by the Central Government? regarding removal of first auditor before expiry of the
A. Such powers have been conferred upon it by term?
section 139(7) A. He is removed at a general meeting
B. If a company fails to appoint an auditor at a B. The shareholders are authorized to do so
general meeting C. The approval of the Central Government is
C. If an auditor refuses to accept appointment, the required for such removal
powers of the Central Government can be D. None of these
exercised
93. The retiring auditor does not have a right to
D. None of the above
A. make written representations
84. If a casual vacancy in the office of auditor arises by B. get his representations circulated
his resignation it should only be filled by the C. be heard at the meeting
company in a…….. D. speak as a member of the company
(2715) Accountancy—11
 82 Accountancy/Book Keeping
94. Who out of the following cannot be appointed as a
statutory auditor of the company?
A. Erstwhile director
B. Internal auditor
C. Relative of a director
D. Only B and C
95. A statutory auditor has a right of access at all times
to:
A. Books and accounts of a company
B. Books, accounts and documents of the company
C. Books, accounts and vouchers of the company
D. Notices and documents of the company
96. The auditor has a right to:
A. Obtain information and explanation
B. Obtain information and explanation from the
employees and officers
C. Obtain information and explanation necessary for
the purpose of audit
D. Both B and C
97. The principal auditor, as per clarification issued by
the ICAI, does not have any right to:
A. Inspect working papers of the branch auditor
B. Visit branches
C. Seek information necessary for audit purposes
D. Incorporate the branch audit report in his audit
report
98. Verification of the value of assets, liabilities, the
balance of reserves, provision and the amount of profit
earned or loss suffered a firm is called ............ .
A. continuous audit B. balance sheet audit
C. interim audit D. partial audit
99. A sale of ` 50000 to Mr. A was entered as a sale to
Mr. B. This is an example of what?
A. Error of omission
B. Error of commission
C. Compensating error
D. Error of principle
100. Recording a transaction twice in the books of original
entry is an error of ............ .
A. principle B. commission
C. duplication D. omission
101. Which of the following statements with regard to
rules regarding exemption from branch audit is not
true?
A. A branch office of a company can be granted
exemption on the basis of quantum of activity
criterion
B. If a satisfactory arrangement of scrutiny check of
the books of account of a branch office of a
manufacturing company has been made, it can be
exempted from branch audit
C. Cost consideration should be considered as an
important factor/ground for exemption from
branch audit
D. The auditor should state in his audit report that
branch office is exempted by virtue of quantum
of activity or any other basis
102. The branch auditor is appointed by:
A. Shareholders in an annual general meeting
B. Shareholders in general meeting
C. Board of directors in board meeting
D. Any of the above
103. Errors and frauds already committed can be discovered
under the system of ............ .
A. internal audit, internal check, internal control
B. external check
C. statutory audit
D. interim audit
104. Who among the following can be appointed as special
auditor by the Central Government?
A. The statutory auditor
B. Chartered accountant in practice
C. Any chartered accounted who is not in practice
D. Both A and B
105. The scope of the audit including reference to the
pronouncements of the ICAI, which the auditor adheres
to, generally is communicated to the client in the
.......... (i) auditor’s report (ii) engagement letter (iii)
representation letter
A. (i) only B. Both (i) and (ii)
C. Both (i) and (iii) D. All of the above
106. If any director is disqualified from being appointed
under section 274(1) (g), the auditor should mention
this fact in his audit report. For this purpose, how
does he determine their eligibility
A. He obtains a representation from each director
B. He obtains a management representation
C. He enquiries from Registrar of Companies
D. Any one of the above
107. Treating revenue expenditure as capital expenditure
is a case of .............. .
A. fraud
B. misappropriation of cash
C. misappropriation of goods
D. manipulation of accounts
108. The date on auditor’s report should not be
A. The data of AGM
B. Later than the date on which the accounts are
approved in board’s meeting
C. Earlier than the date on which the accounts are
approved by the management
D. Both A and B
(2715) Accountancy—11-II

109. Special audit is necessary for ............... .
A. inefficient concern
B. processing concern
C. trading concern
D. manufacturing concern
110. When restrictions that significantly affect the scope
of the audit are imposed by the client, the auditor
generally should issue which of the following
opinion?
A. Qualified opinion
B. Disclaimer of opinion
C. Adverse opinion
D. Unqualified report with ‘an emphasis of matter’
paragraph
111. W hich of the follow ing report not result in
qualification of the auditor’s opinion due to a scope
limitation?
A. Restrictions the client imposed
B. Reliance on the report of other auditor
C. Inability to obtain sufficient appropriate evidential
matter
D. Inadequacy of accounting records
112. The inventory consists of about one per cent of all
assets. The client has imposed restriction on auditor
to prohibit observation of stock take. The auditor
cannot apply alternate audit procedures.
A. Unqualified opinion
B. Qualified opinion
C. Disclaimer of opinion
D. Adverse opinion
113. The auditor has serious concern about the going
concern of the company. It is dependent on company’s
obtaining a working capital loan from a bank which
has been applied for. Then management of the
company has made full disclosure of these facts in the
notes to the balance sheet. The auditor is satisfied
with the level of disclosure. He should issue
A. Unqualified opinion
B. Unqualified opinion with reference to notes to
the accounts
C. Qualified opinion
D. Disclaimer of opinion
114. Which of the following is true about explanatory
notes?
A. These are given by the directors of the company
B. These are given to adhere to requirements of
section 211
C. These are given by auditors of the company in
auditor’s report
D. All of the above
Accountancy/Book Keeping 83
115. The client changed method of depreciation from
straight line to written down value method. This has
been disclosed as a note to the financial statements.
It has an immaterial effect on the current financial
statements. It is expected, however, that the change
will have a significant effect on future periods. Which
of the following option should the auditor express?
A. Unqualified opinion
B. Qualified opinion
C. Disclaimer of opinion
D. Adverse opinion
116. The first auditors appointed by head office ................
A. for a period of one year
B. for a period of two years
C. for a period of three years
D. till the conclusion of the first annual general
meeting
117. The management of a company, to which AS3 is not
applicable, does not include statement of cash flows
in its annual report. The auditor should express:
A. Unqualified opinion
B. Qualified opinion
C. Adverse opinion
D. Any of these depending upon materiality and
pervasiveness and adequacy of disclosure
118. In case the auditor gives a disclaimer of opinion in
the audit report which of the following paragraph(s)
of a standard unqualified audit report are modified?
A. Scope paragraph
B. Opinion paragraph
C. Scope and opinion paragraphs
D. Introductory, scope and opinion paragraph
119. A departure from recognized accounting principle is
disclosed in a note to the financial statements. The
auditor should:
A. Issue a standard unqualified audit report
B. Issue a qualified report
C. Issue an unqualified report with ‘emphasis of
matter’ paragraph
D. Disclaim opinion
120. The auditor should state the reasons for his reservations
in audit report and should try to quantify the effect
on them. This should be done in case he has
expressed—
(i) A qualified opinion
(ii) An unqualified opinion with emphasis of matter
paragraph
(iii) An adverse opinion
(iv) A disclaimer of opinion
A. (i) only B. (i) and (iv) only
C. (i), (iii) and (iv) only D. All of the above
 84 Accountancy/Book Keeping

121. Which of the following documents is not relevant for
vouching cash sales?
A. Daily cash sales summary
B. Salesmen’s summary
C. Monthly statements sent to customers
D. Bank statement
122. The auditor should examine subsequent realization of
revenue such as dividends, interest, commission, etc.
to:
A. Identify cases of unrecorded revenue
B. Ensure proper disclosure in the balance sheet
C. Recomputed accrued income on the data of
balance sheet
D. Any of these
123. To test whether sales have been recorded, the auditor
should draw a sample from a file of:
A. Purchase orders B. Sales orders
C. Sales invoices D. Bill of loading
124. For vouching of which item, the auditor is most likely
to examine cost records?
A. Commission earned
B. Bad debts recorded
C. Credit sales
D. Sale of scrap
125. The “Guidance Note on Revenue” issued by the ICAI
does not deal with:
A. Sales revenue
B. Revenue rendering service
C. Revenue from sale of fixed assets
D. Income from interest, dividend
126. An auditor conducts a surprise check on the pay day
(i.e.) the day wages and salaries are paid. The primary
purpose of this audit procedure is:
A. To ensure that there are no ghost workers
B. To ensure the casual workers employed are
authorized by the supervisor
C. To test procedures for distributing pay cheques
D. To obtain understanding of internal control
system
127. Which of the following would prevent double
payment of the same voucher?
A. The person signing the cheque should cancel the
supporting documents
B. Cheques should be signed by at best two persons
C. The data of payment of vouchers of similar nature
should be the same or close to each other
D. All of the above
128. In case of unclaimed wages, the auditor should
examine whether:
A. The amount has been deposited in a separate
bank account
B. Deposited with the cashier
C. Held in a safe deposit box
D. All of these
129. While vouching wages, auditor should examine
whether there is proper segregation of duties. Which
of the following activities should not be done by
same department?
A. Maintaining personnel records and approving
changing in wages rates
B. Proposing pay roll summary and disbursement of
wages
C. Making salary statements and filing tax returns
D. Comparing time clock records with time reports
prepared by supervisors and preparing list of
workers employed along with the units of
production for each one of them
130. In order to vouch, which of the expenses, the auditor
will examine Bill of Entry?
A. Custom
B. Excise duties
C. Sales tax
D. Income tax
131. While vouching, how will the auditor ensure himself
that all credit sales transactions have been recorded
by the entity?
A. Examining cut-off points
B. Matching entries in the sales book against
renumbered sales invoices and goods outward
notes
C. Counting the number of invoices and matching
the number with entries on sales book
D. Both A and B
132. In case of sales return, the auditor should examine
which documents?
A. Credit notes, advice notes and inward return notes
B. Debit notes, advice notes and inward return notes
C. Purchase invoices, advice notes and inward return
notes
D. Credit notes, inspection report and inward return
notes
133. An internal auditor discovered that fictitious purchases
have been recorded by the purchase clerk. This
indicates absence of which control?
A. Purchase invoices are independently matched with
purchase orders and goods received notes
B. Goods received notes requires the signature of
individual who authorized the purchase
C. Routine checks are performed by internal auditor
fortnightly
D. Purchase function and production function are
clubbed in one department
 Accountancy/Book Keeping 85
134. Which of the following is most crucial to a purchase C. The auditor has to form an opinion on different
department? aspects
A. Reducing the cost of acquisition D. All are true
B. Selecting supplies
141. Which of the following statements is not true?
C. Authorizing the acquisition of goods
A. Valuation of assets is the responsibility of
D. Assuring the quality of goods
management
135. The auditor is most likely to examine related party B. The auditor can rely on a certificate issued by an
transactions very carefully while vouching: authorized valuationer as to the valuation of assets
A. Credit sales in the balance sheet
B. Sales returns C. The auditor should value the asset as per generally
C. Credit purchases accepted accounting principle
D. Cash purchases D. Valuation is no part of auditor’s duty
136. In order to vouch bought ledger, the auditor obtain 142. An auditor is verifying valuation of building which
confirmations from creditors. The principal reason for has been self-constructed by the client. Which of the
the auditor to examine suppliers statements at balance following documents is least relevant to the auditor
sheet date is to obtain evidence that: for verification purposes?
A. The supplier exist A. Bills of contractor
B. There are no unrecorded liabilities B. Minutes of meeting of board of directors
C. Recorded purchases actually occurred C. Certificates of engineer and architect
D. To link creditors with cash book entries D. Loan agreement
137. The creditor’s accounts, generally, have credit balance. 143. Which of the following assets is least likely to be
Debit balance may be due to: subjected to lien?
A. Advance paid against an order A. Freehold land
B. Goods returned B. Plant and machinery
C. Wrong debit to supplier account C. Leasehold property
D. Any of these D. Motor vehicles
138. In case of vouching, the auditor is least likely to 144. An analysis of fixed assets account has revealed
examine authorization by appropriate authority in possibility of unrecorded sale of plant and machinery.
case of Which of the following audit procedures may be
A. Bad debts written off adopted to discover it?
B. Sales return
A. Examination of property tax files
C. Purchase return
B. Inquiry of plant manager
D. D iscount allow ed to custom ers as per
C. Exam ination of debits to accum ulated
organizational policy
depreciation
139. Vendors should be approved by Management before D. All of the above
purchase department executes an order. If this is not
145. The auditor has noticed existence of recurring losses
done, then which of the following situations may
sale of fixed assets this indicates:
arise?
A. Depreciation charges are insufficient
A. Purchases could be made from vendors whose
B. Policy of sale or disposal of fixed assets needs to
product quality may not be good
be reviewed
B. Purchases may be made from related parties
C. The sale of assets have not been properly
without management’s knowledge
authorized
C. Purchases could be made from vendors who may
have offered price to manager purchases D. Accounting errors
D. Any of these 146. Which of the following financial statements assertions
140. Which of the following is not true with regard to are addressed by testing the cut off for plant asset
verification of assets? addition?
A. It invoices substantiation of occurrence of A. Existence and ownership
transactions B. Valuation and disclosure
B. Its objective is to establish existence, ownership, C. Possession and ownership
possession, valuation and disclosure of assets D. Completeness and valuation
 86 Accountancy/Book Keeping
147. The auditor while verifying prepaid insurance has
concluded that there is inadequate insurance of
building, He should:
A. Modify his audit report
B. Insist it should be disclosed in the notes to
financial statements
C. Write it in letter of weakness
D. Both B and C
148. While verifying intangible assets, an auditor would
recomputed amortization charges and determines
whether amortization period is reasonable. The auditor
tries to establish .............. by doing it
A. Valuation
B. Existence
C. Disclosure
D. Possession
149. When auditing prepaid insurance, an auditor discovers
that the insurance policy bond on building is not
available for inspection. This may indicate:
A. No insurance has been undertaken for building
B. Lien on building
C. Insurance premium has not been paid
D. Insurance premium paid but not recorded
150. Which of the following controls would ensure that
securities are not lost, stolen or diverted?
A. Establish physical barriers over investment
securities
B. Maintain files of authorized signatures
C. Segregate investment approval from accounting
and from custody of securities
D. All of the above
151. Which of the following would give the assurance that
debtors mentioned on the date of balance sheet
actually exist?
A. Sending debtor’s confirmation letters
B. Reviewing subsequent collection
C. Verify debtors against sales document
D. Both A and B
152. Tests of control are not concerned with:
A. Existence of controls
B. Effectiveness of controls
C. Continuity of controls
D. Designing of controls
153. The sequence of steps in the auditor’s consideration
of internal control is as follows:
A. Obtain an understanding, design substantive test,
perform tests of control, and make a preliminary
assessment of control risk
B. Design substantive tests, obtain an understanding,
perform tests of control, and make a preliminary
assessment of control risk
C. Obtain an understanding, make a preliminary
assessment of control risk, perform tests of control,
design substantive procedures.
D. Perform tests of control, obtain and understanding,
make a preliminary assessment of control risk,
design
154. Which of the following is not an inherent limitation
of internal control system?
A. Management override
B. Collusion among employees
C. Inefficiency of internal auditor
D. Abuse of authority
155. An auditor should study and evaluate internal controls
to
A. Determine whether assets are safeguarded
B. Suggest improvements in internal control
C. Plan audit procedures
D. Express and opinion
156. The primary purpose of performing tests of control is
to provide reasonable assurance that:
A. There are no material misstatements due to fraud
or error in financial statement
B. Accounting system is well documented
C. Written evidence is there to support transactions
D. If internal control is effective
157. If the auditor assesses control risk as high….
A. Document the conclusions
B. Documents the reasons along with conclusions
C. Perform tests of control
D. Perform walk through tests
158. The overall attitude and awareness of an entity’s board
of directors concerning the importance of internal
control is reflected in
A. Accounting controls B. Control environment
C. Control procedures D. Supervision
159. Which of the following are included in test of control?
A. Reperformance and observation
B. Inquiry and analytical procedures
C. Comparison and conformation
D. Inspection and verification
160. Control risk is assessed at:
A. Overall financial statements level
B. Fraud risk factor level
C. Financial statement assertion level
D. Control environment level
161. An auditor assesses control risk because it:
A. Affects the audit risk
B. Affects the level of detection risk that auditor
may accept

C. Helps him to fix materiality level for each
financial assertion
D. Is directly related to inherent risk
162. A flow chart, made by the auditor, of an entity’s
internal control system is a graphic representation
that depicts the auditor’s:
A. Understanding of the system
B. Understanding of fraud risk factors
C. Documentation of assessment of control risk
D. Both A and C
163. The performance of tests of control is documented in:
A. Audit programme B. Flow charts
C. Working papers D. Any of the above
164. The independence of an internal auditor will most
likely be assured if he reports to the:
A. President Finance B. President System
C. Managing Director D. CEO
165. In comparison to the independent auditor, an internal
auditor is more likely to be concerned with:
A. Cost accounting system
B. Internal control system
C. Legal compliance
D. Accounting system
166. When an independent auditor relies on the work of an
internal auditor, he or she should:
A. Examine the scope of internal auditor’s work
B. Examine the system of supervising review and
documentation of internal auditor’s work
C. Adequacy of related audit programme
D. All of the above
167. Proper segregation of duties reduces the opportunities
in which a person would both:
A. Establish controls and executes them
B. Records cash receipts and cash payments
C. Perpetuate errors and frauds and conceals them
D. Record the transaction in journal and ledger
168. Analytical procedures are least likely to be use in the
audit of:
A. Cash balance B. Investments
C. Bills receivables D. Debtors
169. Which of the following statements is not true with
regard to teeming and lading?
A. It results in the deliberate misappropriation of
cash receipts
B. It is associated with cash receipts
C. If same individual maintains cash receipts and
cash payments teeming and lading is likely to exist
D. To conceal the shortage, the defraud, usually,
tries to keep bank and book amounts in daily
agreement so that a bank reconciliation will not
detect the irregularity.
Accountancy/Book Keeping 87
170. The balance of cash in often between one to five per
cent of total assets. Tick the most appropriate statement
with regard to verification of cash in context of this:
A. Cash in always m aterial as m ateriality is
qualitative concept
B. No audit of cash is needed when, in auditor’s
opinion, cash is immaterial. Materiality is a
relative concept
C. The cash balance need only be audited if the
balance is in overdraft
D. Cash is to be verified if control risk is assessed as
high
171. When counting cash on hand the auditor should:
A. Ensure presence of somebody from management
B. Obtain a receipt from custodian as to its return
C. Ensure postage and revenue stamps are not
counted in physical count
D. Temporary advances to employees are counted to
calculate balance of cash in hand
172. Which of the following statement is not true regard to
auditor’s attendance at stock taking?
A. Auditor should attend physical stock taking only
if inventory is material
B. Auditor may not attend physical verification of
stock by management, if he does not find it
appropriate to rely on it
C. If inventory is material, even when the auditor is
not placing reliance on the physical verification
by the management, he should attend it
D. The primary objective of an auditor’s observation
of an entity’s observation of an entity’s stock
take is to obtain direct knowledge that the stock
and has been property counted
173. While observing a client’s annual physical inventory,
an auditor conducted test counts for certain test counts
were higher than the recorded quantities in the client’s
perpetual records. This situation could be the result
of the client’s failure to record:
A. Purchase returns
B. Sales returns
C. Goods with consignor
D. Purchase discounts
174. Inspection report/receiving report supports entries in:
A. Sales book and sales return book
B. Purchase book and sales return book
C. Cash book and purchase book
D. Sales book and purchase return book
175. ............ starts where ............ ends.
A. Accounting, auditing
B. Auditing, accounting
C. Vouching, auditing
D. Accounting, vouching
 88 Accountancy/Book Keeping

176. ............ means “proving the truth or confirmation”. 184. This kind of audit is conducted generally between
A. Vouching B. Verification two annual audit ............ .
C. Inspection D. Auditing A. Internal Audit B. Interim Audit
177. Civil liability of an auditor implies liability for: C. Final Audit D. Continuous Audit
A. misappropriation of cash 185. Management audit otherwise called as ............ .
B. misappropriation of goods A. Final Audit B. Efficiency Audit
C. fraud C. Cost Audit D. Cash Audit
D. misfeasance
186. Before the work of audit is commenced, the auditor
178. An auditor is held criminally liable for: plans out the whole of audit work is called ............ .
A. Loss to his client A. Audit Plan B. Audit Note
B. Neglect of his duty C. Audit Programme D. Audit Control
C. Offence against statutory provisions
187. A number of checks and controls exercised in a
D. Frauds
business to ensure its efficient working are known as
179. An auditor is held liable under C.A Act 1949 for: ............ .
A. negligence A. Internal Check B. Internal Control
B. misfeasance C. Internal Audit D. Interim Check
C. professional misconduct
188. A Voucher is a ............ .
D. breach of contract
A. document for support of an entry made in books
180. .............. is a systematic examination of the books and of accounts
records or a business. B. invoice received from suppliers
A. Auditing B. Vouching C. receipt issued to a customer for cash
C. Verification D. Checking D. dispatch Receipt
181. An audit which is compulsory by the law is ............ . 189. Voucher relates to ............ .
A. Government Audit B. Internal Audit A. Cash receipt & payments, credit transactions
C. Cost Audit D. Statutory Audit B. Cash payment only
182. Instruction of audit issued by controller and auditor C. Credit transactions only
general of India ............ . D. Cash receipt only
A. Statutory Audit B. Final Audit 190. When banks invest their deposit accruals in
C. Management Audit D. Government Audit Government securities, it is called:
183. Audit done by the employees of the business A. Asset Securitization
undertaking is called ............ . B. Hedging
A. Final Audit B. Management Audit C. Narrow Banking
C. Government Audit D. Internal Audit D. Forfeiting

ANSWERS
1 2 3 4 5 6 7 8 9 10
B C C C D C B A C B
11 12 13 14 15 16 17 18 19 20
A B D A C B D C A D
21 22 23 24 25 26 27 28 29 30
B C D A D B D A C B
31 32 33 34 35 36 37 38 39 40
D D A A C A C A C B
41 42 43 44 45 46 47 48 49 50
D C A B D B B D A B
51 52 53 54 55 56 57 58 59 60
D C B C D A C D B A
 Accountancy/Book Keeping 89
61 62 63 64 65 66 67 68 69 70
C A B A B B C B D A
71 72 73 74 75 76 77 78 79 80
B C A C C B A C D D
81 82 83 84 85 86 87 88 89 90
B A B C A C B B B C
91 92 93 94 95 96 97 98 99 100
A C D B C D A B B C
101 102 103 104 105 106 107 108 109 110
B B A D B A D C A A
111 112 113 114 115 116 117 118 119 120
B C B B A D A C B A
121 122 123 124 125 126 127 128 129 130
C A C D C C A A B A
131 132 133 134 135 136 137 138 139 140
D D A C C B D D D A
141 142 143 144 145 146 147 148 149 150
C B C D A D D A B D
151 152 153 154 155 156 157 158 159 160
D D C C C D A B A C
161 162 163 164 165 166 167 168 169 170
B A C C B D C A C A
171 172 173 174 175 176 177 178 179 180
C C B B B B D C C A
181 182 183 184 185 186 187 188 189 190
D D D B B C B A A C

  

(2715) Accountancy—12
90 Accountancy/Book Keeping

Computerized Accounting System

1. What are the features of a computerized accounting 8. What are the features of computerized accounting
system? software?
A. It facilitates off-line input and storage of A. storage of accounting data and on-line input
accounting data B. instantly produces different reports
B. This system never fails C. group different account
C. It generates a print-out of purchase and sale D. All of the above
invoices
9. The ……….of a vendor is also an important factor to
D. None of the above
consider while opting for a computerized accounting
2. What is not an advantage of a com puterized software.
accounting system? A. Level of profit B. Honesty
A. High Speed B. High Reliability C. Capability D. None of the above
C. Reduced training cost D. None of the above
10. Software must be easy to…….
3. What are the types of a computerized accounting A. Install B. Adapt
system? C. Understand D. All of the above
A. Ready to use Software B. Customized Software
11. Accounting Packages are developed on the basis of:
C. Tailor-made Software D. All of the above
A. Accounting concepts
4. What are the advantages of tailor-made software? B. Accounting conventions
A. These are ready-made softwares C. Both Accounting concepts and Conventions
B. Low cost D. None of the above
C. High secrecy of data
12. What type of Software is an Accounting Package?
D. None of the above
A. System Software B. Application Software
5. What are the factors to be considered while source C. Utility Software D. Basic
accounting software?
13. The components of computerised accounting system
A. Flexibility
are:
B. Adaptability
C. Interest of management A. Data, Report, Ledger, Software, Hardware
D. Both (A) & (B) B. Software, Hardware, People, Procedure, Data
C. Data, Coding, Procedure, Objective, Output
6. Ram want to install a computerised accounting system D. People, Procedure, Hard ware, software
but his budget is low. Which software he should opt
for? 14. Grouping of Accounts means the classification of data
A. Ready to use Software from:
B. Customized Software A. Assets, Capital, and Liabilities
C. Tailor-made Software B. Assets, Capital, Liabilities, Revenues & Expenses
D. He can buy any of above, all cost same C. Assets, Owners equity, Revenue & Expenses
D. Capital, Liabilities, Revenues & Expenses
7. If an organisation want to develop a computerised
accounting system according to its need as the business 15. Codification of Accounts required for the purpose of:
of organisation is complex. Which software it should A. Hierarchical relationship between groups and
opt for? components
A. Ready to use Software B. Data processing faster and preparing of final
B. Customized Software accounts
C. Tailor-made Software C. Keeping data and information secured
D. Any of above D. None of the above

90
 Accountancy/Book Keeping 91
16. Method of codification should be: C. Retail or point of Sale
A. Such that it leads to grouping of accounts D. All of the above
B. An identification mark
25. Features of computerised accounting system:
C. Easy to understand and leads to grouping of accounts
A. Complete visibility
D. None of the above
B. Fast, powerful, simple and integrated
17. Final account subsystem in Accounting Information C. Accuracy and speed
System (AIS) deals with: D. All of the above
A. Preparation of budgets
B. Preparation of Pay Roll 26. When different accounts are clubbed on the basis of
C. Preparation of Final Accounts some common characteristics that are shared by them,
D. None of the above the concept is known as_______.
A. Asset B. Liability
18. Pick the odd one out: C. Income D. Grouping
A. Password security B. Data Audit
C. Data Bank D. Data vault 27. _________ is the systematic assignment of number to
items to classify and organise them.
19. Which among the following is an example of
A. Codification B. Coding
mnemonic codes?
C. Grouping D. Recording
A. AS03, AS04, AS05
B. 1925, 1926, 1927, 1928 28. Most organisations use __________ for coding their
C. ACC, ECO, ENG, MAL accounts.
D. 001-100, 101-200, 201-300, 301-400 A. Block code B. Block number
20. Which among the following deals with generation of C. Block group D. Block section
reports that are vital for management decision making? 29. Computers can be used in accounting in different
A. Costing sub system number of ways:
B. Pay Roll Accounting Sub system A. Utility in batch processing
C. Budget Sub System B. Utility in Online/Interactive Processing
D. Management Information System C. Utility in Wage/Payroll System
21. The need of codification is: D. All of the above
A. Easy to process data 30. Such systems also generate reports which allow the
B. Keeping proper records accounting professionals to have a proper view of
C. The generation of block codes different transactions in a comprehensive manner.
D. The encryption of data A. Enterprise Resource Planning software
22. Choose the correct pair: B. Pre-packaged accounting software
A. Cash and Bank sub system – Deals with receipts C. Spreadsheet software
and payments of cash D. Customised accounting packages
B. Inventory subsystem – deals with recording of
31. This software is a package which is used for managing
sales
the entire organisation in a comprehensive.
C. Payroll Accounting sub system – deals with the
preparation of final accounts A. Enterprise Resource Planning software
D. Accounts receivable sub system – deals with B. Pre-packaged accounting software
expenses C. Spreadsheet software
D. Customised accounting packages
23. It refers to the system of recording, organising, sum-
marising, analysing, interpreting and communicating 32. The individual field in the sheet is known as a
the financial data of a business. ________.
A. Manual Accounting A. Row B. Cell
B. Computerised Accounting C. Column D. Group
C. Auditing 33. Such kind of software offers various functionalities
D. Human Resource Accounting such as cell content, pivot table, formulas and macros:
24. Following businesses generally require customised A. Enterprise Resource Planning software
software: B. Pre-packaged accounting software
A. Banking C. Spreadsheet software
B. Medical D. Customised accounting packages
92 Accountancy/Book Keeping

34. The software may also allow for graphical rendering 42. Accounting standards issued by ICAI are mandatory
of data, which is useful for carrying out analysis: in India:
A. Enterprise Resource Planning software A. True B. False
B. Spreadsheet software C. (A) and (B) D. None of these
C. Pre-packaged accounting software
43. Which shortcut key is used in ‘Company Feature’s
D. Customised accounting packages
screen to use Accounting Features in Tally?
35. This is the kind of software which is specifically A. F1 B. F2
designed for meeting the requirements of a particular C. F3 D. F4
business:
44. Which of the follow ing is true statement for
A. Enterprise Resource Planning software
computerised accounting system?
B. Customised accounting packages
(a) The computer accounting system is based on the
C. Pre-packaged accounting software
concept of database.
D. Spreadsheet software
(b) Computer accounting system does not away with
36. The components of Computerised Accounting System the concept of creating and maintaining journals,
are: ledger etc.
A. Data, Report, Ledger, Hardware, Software A. Only (a) B. Only (b)
B. Data, People, Procedure, Hardware, Software C. Both (a) and (b) D. None of the above
C. People, Procedure, Ledger, Data, Chart of
45. Which shortcut key is used in ‘Company Features’
Accounts
screen to use Inventory Features in Tally?
D. Data, Coding, Procedure, Rules, Output
A. F1 B. F2
37. The Computerised Accounting System refers to: C. F3 D. F4
A. Printing of Balance Sheet and Profit and Loss
46. Which shortcut key is pressed to display Part No. for
Accounts using computer
automobile industries?
B. Processing of accounting transaction through
A. F1 B. F2
computer and produce records and reports
C. F11 D. F12
C. Processing of accounting related data and printing
reports 47. Application softwares:
D. None of the above A. Can operate on its own
38. The components of Computerised Accounting System B. Cannot operate without Operating Software
refers to: C. Both (A) and (B)
A. Business transactions are analysed, transactions D. None of these
recorded, prepare trial balance, preparation of 48. Accounting software requires:
balance sheet and profit and loss account A. Transactions to be entered once
B. From data entry to preparation of final statements B. Transactions to be entered at each stage i.e.
C. Transformation of manual accounting system to recording and posting into accounts
CAS C. Both (A) and (B)
D. None of the above D. None of the above
39. The CAS should be: 49. Accounting softwares available are:
A. Simple and integrated, transparent, accurate, A. Readymade or off-the-shelf software
scalability, reliability B. Tailor-made software
B. Complex, Accurate, Transparent, Faster to work C. Customised Software
C. Able to transform the manual accounting system D. All of these
to computerised accounting system
50. Which of the following software is not operating
D. None of the above.
software?
40. 44. Where do we record all type of adjustment entry A. MS DOS B. Windows XP
in Tally? C. MS Word D. None of these
A. F5 : Payment B. F6 : Receipt
51. What type of application software is Tally?
C. F7 : Journal D. F4 : Contra
A. Statistics Package
41. Control unit works as ___________ of the computer. B. Spreadsheet Package
A. Monitor B. Brain C. Accounting Package
C. Component D. Part D. All of these
 Accountancy/Book Keeping 93
52. Tally package is developed by: 59. Which option is used to view list of Primary and
A. Peutronics B. Tally Solutions Secondary groups in Tally?
C. Coral Softwares D. Vedika Softwares A. List of Accounts B. Accounts
53. Which option is used to place data taken in pen drive C. List D. None of these
or CD to Appropriate place in Tally? 60. Which ledger is created by Tally automatically as
A. Backup B. Restore soon as we create a new company?
C. Split Company Data D. None of these A. Cash B. Profit & Loss A/c
54. Which option is used in Tally to close opened C. Capital A/c D. A and B both
Company? 61. Which option is used to make changes in created
A. Alter B. Shut Company Groups of Ledgers in Tally?
C. Create Company D. Select Company
A. Create B. Display
55. Which shortcut key is used to take print of any report C. Alter D. Change
in Tally?
62. Which voucher type is used to transfer amount from
A. Ctrl + P B. Shift + P
one bank to another?
C. Alt + P D. Alt + Ctrl + P
A. Contra B. Payment
56. Which shortcut key is used to export data of any C. Receipt D. Post-Dated
company in Microsoft Excel spreadsheet or in any
other company? 63. Where do we record transactions of salary, rent or
A. Alt + P B. Alt + E interest paid?
C. Alt + O D. Alt + S A. Contra B. Journal
C. Receipt D. Payment
57. Which submenu is used to create new ledgers, groups
and voucher types in Tally? 64. Where do we record credit purchase of furniture in
A. Account Info. Tally?
B. Inventory Info. A. Purchase B. Payment
C. Accounting Vouchers C. Receipt D. Journal
D. Inventory Vouchers 65. Where do we record purchase return, sales return,
58. Which submenu is used for voucher entry in Tally? depreciation, bad debts etc. in Tally?
A. Vouchers B. Account Vouchers A. Journal B. Payment
C. Accounts Info D. None of these C. Contra D. Receipt

ANSWERS
1 2 3 4 5 6 7 8 9 10
C C D C D A C D C D
11 12 13 14 15 16 17 18 19 20
C B B B A C C C C D
21 22 23 24 25 26 27 28 29 30
D A B D D D B A D B
31 32 33 34 35 36 37 38 39 40
A B C B B B B A A C
41 42 43 44 45 46 47 48 49 50
B A A A B D B A D C
51 52 53 54 55 56 57 58 59 60
C A B B C B A B A D
61 62 63 64 65
C A D D A
  
 94 Accountancy/Book Keeping

Passage Based Questions

Directions (Qs. No. 1-135): Read the following passages On allotment ` 3 per share and The balance on first
based on the information given, you are required to answer. and final call.
Passage-1 Applications for 90,000 shares w ere received.
Janta Ltd. had an authorized capital of 2,00,000 equity Applications for 5,000 shares were rejected and pro-rata
shares of ` 10 each. The company offered to the public for allotment was made to the remaining applicants. Over
subscription 1,00,000 shares. Applications were received payments received on application was adjusted towards
for 97,000 shares. The amount was payable as follows on sums due on allotment. All Calls were made and were duly
application was ` 2 per share, ` 4 was payable each on received except the allotment and first and final call on
allotment and first and final call. Shankar, a shareholder 1,600 shares allotted to Vijay. These shares were forfeited
holding 600 shares failed to pay the allotment money. His and the forfeited shares were re-issued for ` 18,400 fully
shares were forfeited. The company did not make the first paid up.
and final call. 5. Name the kind of subscription in the above case.
1. Name the type of share capital which is shown in the A. Minimum subscription
Memorandum of Association of the company: B. Under subscription
A. Issued capital B. Subscribed Capital C. Over subscription
C. Authorised Capital D. Paid up capital D. Full subscription
2. The amount forfeited on forfeiture of Shankar’s shares 6. State the total overpayments received on application
is: adjusted towards sums due on allotment:
A. ` 6,000 B. ` 1,200 A. ` 60,000 B. ` 30,000
C. ` 3,600 D. ` 2,400 C. ` 15,000 D. ` 50,000
3. Janta Ltd is: 7. Number of shares applied by Vijay is:
A. Private Company A. 2000 B. 1600
B. Public Company C. 1800 D. 1700
C. Government Company 8. How much is the share forfeited amount transferred to
D. Public Corporation Capital Reserve?
4. When shares are forfeited, the Share Capital Account A. ` 2,400 B. ` 7,000
is debited with ___________ and the Share Forfeiture C. ` 6,400 D. ` 18,400
Account is credited with ____________. Passage-3
A. Paid up capital of shares forfeited; Called up
capital of shares forfeited JK Ltd invited applications for issuing 50,000 equity
B. Called up capital of shares forfeited; Calls in shares of ` 10 each at par. The amount was payable as
arrear of shares forfeited follows:
C. Called up capital of shares forfeited; Amount On Application: ` 2 per share
received on shares forfeited
ON Allotment: ` 4 per share
D. Calls in arrears of shares forfeited; Amount
received on shares forfeited On First and Final Call: Balance amount
Passage-2 The issue was oversubscribed three times. Applications
for 30% shares were rejected and money was refunded.
X Ltd. invited applications for issuing 80,000 equity
shares of ` 10 each at a premium of 20%. The amount was Allotment was made to the remaining applicants as follows:
payable as follows: Category I Applicants for 80,000 allotted 40,000
On application ` 6 (including premium) per share. Category II Applicants for 25,000 allotted 10,000

94
 Accountancy/Book Keeping 95
Excess application paid by the applicants who were 16. The balance left in forfeiture account after reissue of
allotted shares adjusted towards the sums due on allotment. shares is:
A. ` 7,200 B. ` 20,000
Deepak a shareholder belonging to category I who had
C. ` 10,800 D. ` 2,000
applied for 1,000 shares failed to pay the allotment money.
Raju a shareholder holding 100 shares also failed to pay Passage-5
the allotment money, belonged to the category II. Rohit Ltd. Invited applications for 30,000 equity shares
Shares of both were forfeited immediately after of ` 100 each at a premium of ` 20 per share. The amount
allotment. Afterwards, First and final call was made and was payable as follows:
was duly received. The forfeited shares of Deepak and Raju On Application ` 40 (including ` 10 as premium)
were reissued at ` 11 per share fully paid up.
On Allotment ` 40 (including ` 10 as premium)
9. How many shares applied by public were rejected?
On First call ` 20
A. 50000 B. 45000
C. 55000 D. 100000 On Second and Final call ` 20
10. What is the amount unpaid by Deepak on allotment? Applications for 40,000 shares received and pro-
A. ` 2000 B. ` 4,000 rata allotment was made on the applications for 35,000
C. ` 500 D. ` 1,000 shares. Excess application money is to be utilized towards
allotment.
11. Number of shares applied by Raju was:
A. 210 B. 250 Rohan to whom 600 shares were allotted failed to pay
C. 300 D. 150 the allotment money and his shares were forfeited after
allotment, Aman who applied for 1,050 shares failed to pay
12. The total amount received on allotment was: the first call and his shares were forfeited after first call.
A. ` 2,00,000 B. ` 90,000
C. ` 88,900 D. ` 85,600 The second and final call was not yet made. Of the
shares forfeited 1,000 shares were reissued as fully paid for
Passage-4 ` 80 per share which included whole of Rohan’s shares.
Manvet Ltd. invited applications for issuing 10,00,000 17. Application money transferred to Share Capital A/c
equity shares of 10 each payable as follows: is:
On application and allotment 4 per share (including A. ` 9,00,000 B. ` 12,00,000
premium 1) C. ` 16,00,000 D. ` 3,00,000
On first call 4 per share, 18. Excess application money utilized towards allotment
is:
On second and final call 3 per share.
A. ` 4,00,000 B. ` 2,00,000
Applications for 15,00,000 shares were received and C. ` 1,50,000 D. ` 1,00,000
pro-rata allotment was made to all the applicants. Excess
19. The amount debited to securities premium reserve
application money was adjusted on the sums due on calls.
account on forfeiture of Rohan’s shares is:
A shareholder who had applied for 6,000 shares did not
A. ` 12,000 B. ` 7,000
pay the first, and the second and final call.
C. ` 6,000 D. ` 3,00,000
His shares were forfeited. 90% of the forfeited shares
20. The amount transferred to Capital Reserve on reissue
were reissued at 8 per share fully paid up.
of is:
13. The amount credited to Securities Premium Reserve A. ` 24000 B. ` 22,000
is: C. ` 10,000 D. ` 34000
A. ` 15,00,000 B. ` 5,00,000
Passage-6
C. ` 10,00,000 D. ` 40,00,000
Y Ltd. invited applications tor issuing 15,000 equity
14. The total amount of calls in arrear is:
shares of ` 10 each on which ` 6 per share were called up
A. ` 28,000 B. ` 20,000
which were payable as follows:
C. ` 8,000 D. ` 42,000
On application ` 2 per shale
15. How many shares were reissued?
A. 4,000 B. 6,000 On allotment ` 1 per share
C. 3,600 D. 3,200 On first call ` 3 per share
 96 Accountancy/Book Keeping

The Issue was fully subscribed and the amount was 25. What is the amount of application money refunded?
received as follows: A. ` 30,000 B. ` 80,000
C. ` 60,000 D. Nil
On 10,000 shares ` 6 per share
On 3,000 shares ` 3 per share 26. What is the amount unpaid on allotment by Tammana?
A. ` 7,200 B. ` 6,000
On 2,000 shares ` 2 per share C. ` 5,200 D. ` 800
The directors forfeited those shares on which less than 27. Which account is to be debited on forfeiture of
` 6 per share received. Tammana’s Shares?
The forfeited shares were reissued at ` 9 per share as A. Bank A/c B. Calls in Arrear
` 6 per share paid up. C. Share capital A/c D. Share Forfeiture A/c

21. Amount received on allotment is: 28. What is the amount due on first call debited to Share
A. ` 12,000 B. ` 10,000 first Call A/c?
C. ` 15000 D. ` 13,000 A. ` 1,60,000 B. ` 1,56,000
C. ` 1,55,200 D. ` 1,55,000
22. Amount Received on first call is:
A. ` 45,000 B. ` 30,000 Passage-8
C. ` 39,000 D. ` 36,000 X Ltd. invited applications for issuing 50,000 equity
23. Number of shares forfeited is: shares of ` 10 each. The amount was payable as follows:
A. 2000 B. 3000 On Application: ` 2 per share
C. 5000 D. 10000
On Allotment: ` 2 per share
24. Amount credited to capital reserve on reissue of shares
On First Call: ` 3 per share
is:
A. ` 7,000 B. ` 13,000 On Second and Final Call: Balance amount
C. ` 15,000 D. ` 6,000 Applications for 70,000 shares w ere received.
Passage-7 Applications for 10,000 shares were rejected and the
application money was refunded.
Khyati Ltd. issued a prospectus inviting applications
for 80,000 equity shares of ` 10 each payable as follows: Shares were allotted to the remaining applicants on a
pro-rata basis and excess money received with applications
` 2 on application was transferred towards sums due on allotment and calls, if
` 3 on allotment any. Gopal, who applied for 600 shares, paid his entire
share money with application. Ghosh, who had applied for
` 2 on first call
6,000 shares, failed to pay the allotment money and his
` 3 on final call shares were immediately forfeited. These forfeited shares
Applications were received for 1,20,000 equity shares. were reissued to Sultan for ` 20,000; ` 4 per share paid up.
It was decided to adjust the excess amount received on The first call money and the second and final call money
account of over subscription till allotment only. Hence was called and duly received.
allotment was made as under: 29. Which account is debited when application money
(i) To applicants for 20,000 shares – in full refunded?
A. Bank A/c B. Share Capital A/c
(ii) To applicants for 40,000 shares – 10,000 shares C. Share allotment A/c D. Share application A/c
(iii) To applicants for 60,000 shares – 50,000 shares
30. What is the amount of application money transferred
Allotment was made and all shareholders except to Calls in Advance (from Gopal)?
Tammana, who had applied for 2,400 shares out of the A. ` 4,800 B. ` 4,000
group (iii), could not pay allotment money. C. ` 800 D. ` 6000
Her shares were forfeited immediately, after allotment. 31. For calls in advance adjusted _______ .
Another shareholder Chaya , who was allotted 500 shares A. Calls in arrear A/c is debited
out of group (ii), failed to pay first call. 50% of Tamanna’s B. Call in advance is debited
shares were reissued to Satnaam as ` 7 paid up for payment C. Calls in advance A/c is Credited
of ` 9 per share. D. Bank A/c is debited
 Accountancy/Book Keeping 97
32. After reissue of shares, for transfer of balance in share Applications for 3,00,000 shares were received.
forfeiture A/c: Allotment was made to the applicants as follows:
A. Bank A/c is Credited Category No. of Shares No. of Shares
B. Share forfeiture is credited Applied Allotted
C. Capital Reserve A/c is credited I 2,00,000 1,50,000
D. Capital Reserve A/c is debited II 1,00,000 50,000
Passage-9 Excess money received with applications was adjusted
towards sums due on allotment and calls. Namita, a
Megha Ltd. invited applications for issuing 90,000
shareholder of Category I, holding 3,000 shares failed to
equity shares of ` 100 each at a premium of ` 60 per share.
The amount was payable as follows: pay the allotment money. Her shares were forfeited
immediately after allotment. Manav, a shareholder of
On Application – ` 30 per share (including premium Category II, who had applied for 1,000 shares failed to pay
` 10) the first and final call. His shares were also forfeited. All the
On Allotment – ` 70 per share (including premium forfeited shares were reissued at ` 60 per share fully paid
` 50) up.

On First and Final Call – Balance amount 37. Excess application money adjusted towards allotment
is:
Applications for 1,00,000 shares were received. Shares A. ` 5,00,000
were allotted on pro-rata basis to all the applicants. Excess B. ` 7,50,000
money received with application was adjusted towards sums C. ` 12,50,000
due on allotment. Sudha, a shareholder holding 4,500 D. ` 15,00,000
shares, failed to pay the allotment money. Her shares were
forfeited immediately after allotment. Afterwards the first 38. Amount unpaid by Namita on allotment is:
and final call was made. Rajat, a holder of 3,600 shares, A. ` 3,000 B. ` 15,000
failed to pay the first and final call. His shares were also C. ` 30,000 D. ` 60,000
forfeited. All the forfeited shares were reissued for ` 90 per 39. Forfeited Shares were reissued at:
share fully paid up. A. par B. discount
33. Amount of application money transferred to share C. premium D. loss
allotment is: 40. Number of shares reissued is:
A. ` 9,00,000 B. ` 30,00,000 A. 3000 B. 1000
C. ` 3,00,000 D. ` 2,00,000 C. 4000 D. 3500
34. Amount of application money transferred to securities Passage-11
premium reserve is:
Raghuram Limited company has an Authorized capital
A. ` 9,00,000 B. ` 10,00,000
of 1,00,000 shares of ` 10 each as per the Capital clause
C. ` 54,00000 D. ` 60,00,000
of the Memorandum of Association of the company. The
35. Amount debited to securities premium reserve debited company issued 5,000 shares to the promoters of the
on forfeiture of Sudha’s shares is: company in consideration for their services.
A. ` 2,70,000 B. ` 2,25,000
The company further issued 10,000 shares to the
C. ` 45,000 D. ` 3,00,000
vendors for the purchase of Machinery costing ` 1,20,000.
36. Amount due on first and final call is: The remaining shares are issued at ` 10 each at a premium
A. ` 54,00,000 B. ` 60,00,000 of ` 2 and shares are fully subscribed.
C. ` 51,30,000 D. ` 49,14,000 A shareholder holding 500 shares failed to pay the first
Passage-10 and final call. His shares were forfeited and later on reissued
at ` 8 per share fully paid up.
Sunstar Ltd. invited applications for issuing 2,00,000
equity shares of ` 50 each. The amount was payable as 41. Which one of the following is the registered capital
follows: of the company?
A. Paid up capital
On Application – ` 15 per share
B. Uncalled capital
On Allotment – ` 10 per share C. Authorized capital
On First and Final Call – ` 25 per share D. Issued capital
(2715) Accountancy—13
 98 Accountancy/Book Keeping

42. The company issued ` 1,00,000 worth of shares Passage-13

towards the purchase price of machinery costing Mr. Ramesh worked as a lower division clerk in a state
` 90,000. The excess of ` 20000 is transferred to:
government office in the state of Telangana. He is very
A. Share Capital A/c
much interested in investing his savings in shares of limited
B. Capital Reserve A/c
companies. He applied for 300 shares from Reliance
C. Securities Premium Reserve A/c
Industries Ltd. He was allotted all shares. Due to some
D. Cash A/c
financial constraints he failed to pay the allotment money
43. What entry you will pass if asset is purchased and of ` 5 (including premium of ` 2) and first and final call
shares are issued at premium? of ` 3. The company after giving due notices, forfeited all
A. Vendor A/c Dr To share capital the shares of ` 10 each issued at a premium of ` 2. 1/3rd
B. Assets A/c Dr To share capital To share premium of the forfeited shares were reissued at 11 per share fully
C. Vendor A/c Dr share premium A/c Dr To Share paid up to Mr. Ram.
capital
49. The total amount debited to share capital account
D. Vendor A/c Dr To share capital To share
while forfeiting the shares is:
premium
A. ` 2,500
44. If shares are issued to promoters for their services then B. ` 3,000
the account debited will be: C. ` 4,000
A. Goodwill A/c B. Promoters A/c D. ` 5,000
C. Asset A/c D. Expenses A/c
50. What entry will you pass to transfer forfeiture A/c to
Passage-12 Capital reserve?
A company issued 25,000 equity shares of ` 10 each A. Share forfeiture A/c Dr 400 To Capital reserve
at a premium of ` 3 per share payable as follows: A/c 400
B. Share forfeiture A/c Dr 450 To Capital reserve
On Application ` 2
A/c 450
On Allotment ` 5 (including premium) C. Share forfeiture A/c Dr 600 To Capital reserve
On First call ` 1 Balance on final call A/c 600
The company received ` 1,00,000 towards application D. Share forfeiture A/c Dr 360 To Capital reserve
money. Of which 10000 applications are rejected and the A/c 360
remaining applications are adjusted towards allotment. A 51. How much amount is received on reissue of forfeited
shareholder holding 3000 shares paid the first call and shares?
final call along with allotment money. A. ` 3,000 B. ` 3,300
45. H ow many applications are received by the C. ` 3,600 D. ` 1,100
company? 52. How much amount is shown in the balance sheet
A. 25,000 B. 50,000 under share forfeiture account?
C. 75,000 D. 1,00,000 A. ` 800 B. ` 880
46. How much application money is adjusted towards C. ` 400 D. ` 650
allotment? Passage-14
A. 30,000 B. 40,000
A MBA graduate from IIT Kharagpur instead of going
C. 15,000 D. 10,000
to America and Canada decided to become an entrepreneur
47. After allotment how much net allotment money is in India and decided to start a Public Limited Company in
received by the company? the city of Kolkota. After preparing the Memorandum of
A. 1,13,000 B. 1,25,000 Association for the company he got the permission from
C. 1,40,000 D. 95,000 the Comptroller of Capital Issues to issue 1,00,000 Equity
48. What journal entry you will pass for excess application shares of ` 10 each at a premium of ` 2. The pubic
rejected? subscribed for 95000 applications. The company decided
A. Share application A/c Dr To Bank to allot the shares on 1-4-2021. The company made all the
B. Share application A/c Dr To Share allotment calls and all the money is received except on 2000 shares
C. Share application A/c Dr To Share capital which are forfeited and later on reissued at ` 9 per share
D. Share application A/c Dr To Share first call fully paid up.
(2715) Accountancy—13-II

53. Minimum subscription amount of 90% is related to
which share capital?
A. Authorised Capital B. Issued Capital
C. Paid up Capital D. Reserve Capital
54. As per SEBI guidelines, Application money should
not be less than ____ of each share.
A. 10% of the issue price
B. 15% of the issue price
C. 25% of the issue price
D. 50% of the issue price
55. Which clause in the Memorandum of Association
states about authorized capital of the company?
A. Name clause B. Object clause
C. Capital clause D. Association clause
56. If the shares are forfeited how much money should be
returned to the defaulting shareholders?
A. Nothing
B. All calls paid
C. Only application money
D. Application and allotment money.
Passage-15
Soon after incorporation of Arvind Ltd. decided to
issue 80,000 equity shares of ` 10 each at a premium of
` 5 per share. Instead of collecting all the capital in the
form of cash/bank they have decided to go for the purchase
of assets in return pay them in the form of issue of shares.
They approached a businessman who sells machinery which
is very must useful in production of that material. The
company purchased Machinery worth ` 5,50,000 and in
return they issued equity shares of ` 10 each at a premium
of 10%. Further they issued shares to the public for
subscription. The issue is over subscribed to the extent of
10%. To the surprise one shareholder who got 1000 shares
paid all the money due on allotment ` 3 and call money
` 2 along with allotment money.
57. Select the type of allotment of shares made to the
company against the purchase of Machinery.
A. Issue against consideration other than cash
B. Initial public offer
C. Issue for cash
D. Preferential allotment
58. If the shares are issued at premium of 10% against the
purchase of an asset, then how many shares are issued?
A. 45,000 shares B. 55,000 shares
C. 45,000 shares D. 50,000 shares
59. Which option is not available to adjust the excess
applications received on issue of equity shares?
A. Excess applications can be rejected
B. Excess applications can be adjusted towards
allotment
Accountancy/Book Keeping 99
C. Excess applications can be partly rejected and
partly adjusted towards allotment
D. Excess applications can be allotted with preference
shares
60. How much amount is received as calls in advance?
A. ` 5000 B. ` 3000
C. ` 2000 D. ` 1000
Passage-16
Ravi Industries Ltd. A company in the manufacture of
computers decided to issue for public subscription 40000
equity shares of ` 10 each at a premium of ` 2 payable as:
On Application –` 2 per share
On Allotment – ` 5 per share(including premium)
On first call – ` 2 per share
On Second and final call – ` 3 per share,
Applications were received for 60000 shares. Allotment
was made on pro-rata basis to the applicants for 48000
shares, the remaining applications being refused. Money
overpaid on applications was utilized towards sum due on
allotment. Ram applied for 2400 shares failed to pay the
allotment money due and shyam to whom 2000 shares were
allotted filed to pay the two calls. These shares were
subsequently forfeited after the second and final call was
made. All the forfeited shares were reissued as fully paid at
` 8 per share.
61. The excess applications and application money
adjusted towards allotment is:
A. 8000, ` 16000 B. 12000, ` 24000
C. 20000, ` 40000 D. 16000, ` 32000
62. How many applications are rejected and how much
money is returned?
A. 12000, ` 24000 B. 8000, ` 16000
C. 20000, ` 40000 D. 16000, ` 32000
63. How many shares are allotted to Ram?
A. 2000 shares B. 2400 shares
C. 600 shares D. 1800 shares
64. The total forfeiture amount before reissue of forfeited
shares is:
A. ` 14800 B. ` 18400
C. ` 16400 D. ` 14600
Passage-17
Ambala Ltd. was registered with an authorized capital
of ` 2,00,000 in ` 10 per equity share, of these 6000 equity
shares of ` 10 each issued as fully paid to the vendor for
purchase of building, at a premium of ` 2 per share. 8000
equity shares were issued for subscription and during the
first year ` 5 per equity share were called-up, payable ` 2
on application, ` 1 on allotment, ` 1 on first call and
100 Accountancy/Book Keeping

` 1 on final call. The amount received in respect of these C. The difference between market price and issue
shares was: price of the share
On 6000 Equity shares the full amount was received. D. The face or par value of the shares

On 1250 shares ` 4 per Equity share, 72. What name is given for the shares issued to the
promoters of the company as remuneration for
On 500 shares ` 3 per Equity share, incorporation of the company?
On 250 shares ` 2 per Equity share A. Sweat Equity
The company forfeited 750 equity shares on which less B. Salary shares
than ` 4 per share has been paid. C. Remuneration shares
D. Normal issue of shares
65. What is the price of the building purchased against
issue of equity shares? Passage-19
A. ` 72000 B. ` 60000 Nitro Paints Ltd. Invited applications for issuing
C. ` 75000 D. ` 66000 1,60,000 equity shares of ` 10 each at a premium of ` 3
per share. The amount payable as follows:
66. How many shares are not still issued by the company?
A. 6000 B. 5000 On Application ` 6 per share (including premium ` 1)
C. 7000 D. 10000 On Allotment ` 3 per share (including premium ` 1);
67. How many shareholders did not pay the first call and The Balance on First and Final call.
final call money only? Applications for 1,80,000 shares were received.
A. 750 B. 2000 Applications for 10,000 shares were rejected and pro-rata
C. 1250 D. 500 allotment was made to the remaining applications. Over
68. On forfeiture how much money is credited to share payment received on application was adjusted towards sum
forfeiture account? due on allotment and calls. All calls were made and duly
A. ` 2000 B. ` 250 received except allotment and final call from Aditya who
C. ` 500 D. ` 750 was allotted 3200 shares. His shares were forfeited. Half of
the forfeited shares were reissued for ` 43000 as fully paid
Passage-18
up.
Raman is a shareholder who works in a Maruti Udyog
73. How many shares were applied by Aditya to get 3200
Ltd. Which is a pioneer in manufacturing small cars got an
shares allotted?
invitation from the company to buy shares issued by the
A. 3400 B. 4300
company under the Employees Stock Option Plan. At first
C. 2300 D. 3400
he is not interested in buying the shares but after compulsion
from his friends he exercised his option to buy shares from 74. How much allotment money is in arrears on Aditya’s
the company. Afterwards he came to know this type of default?
issue can be made to the promoters of the company for the A. ` 8400 B. ` 4800
services rendered by them to the company. He purchased C. ` 6400 D. ` 4600
200 shares of ` 10 each at a premium of ` 25 whereas the 75. What amount of the forfeited shares is transferred to
current market value of the share is ` 150. capital reserve?
69. The shares issued to the employees of the company A. ` 8600 B. ` 6800
are called as: C. ` 7800 D. ` 8700
A. ESOP B. IPO 76. Mention the total amount of premium to be shown in
C. Preferential allotment D. Public issue the Balance sheet?
70. What type of shares can be issued under ESOP? A. ` 500600 B. ` 600500
A. It should of the same class of shares already C. ` 650500 D. ` 560600
issued Passage-20
B. It should be a new issue of shares
Max Ltd., invited applications for 2,00,000 Equity
C. It should be of preference shares only
shares of ` 10 each to be issued at 20% premium. The
D. It can of any type of shares.
money payable per share was: On Application ` 5, on
71. The value of option is: allotment ` 4 (including premium of ` 2), First call ` 2 and
A. The issue price of the shares Final call ` 1. Applications were received for 2,40,000
B. The market price of the shares shares and allotment was made as:

(i) To applicants for 1,00,000 shares in FULL
(ii) To applicants for 80,000 shares –60,000 shares,
(iii) To applicants for 60,000 shares—40,000 shares.
Applications of 1000 shares falling in category (i) and
applicants of 1200 shares falling in category (ii) failed to
pay allotment money. These shares were forfeited on failure
to pay the first call. Holders of 1200 shares failing in
category (iii) failed to pay the first and final call and these
shares were forfeited after final call. 1300 shares (1000 of
category (i) and 300 of category (ii) were reissued at ` 8
per share as fully paid up.
77. How much is the total forfeited money on all categories
of shares?
A. ` 19,400 B. ` 11,000
C. ` 8,400 D. ` 20,000
78. Mention the paid up capital of the company after all
the calls is made:
A. ` 19,94,400 B. ` 19,00,000
C. ` 20,00,000 D. ` 20,94,400
79. How much balance is shown in the balance sheet
under the head shareholders funds?
A. ` 23,95,000 B. ` 24,95,000
C. ` 25,95,000 D. ` 2,95,000
80. The journal entry for allotment money received is:
A. Bank A/c Dr 5,93,900 To Share Allotment A/c
5,93,900
B. Bank A/c Dr 6,00,000 To share Allotment A/c
6,00,000
C. Bank A/c Dr 5,95,000 To Share Allotment A/c
5,95,000
D. Bank A/c Dr 6,05,000 To share Allotment A/c
6,05,000
Passage-21
In 2019, India’s ten largest trading partners were USA,
China, UAE, Saudi Arabia, Hong Kong, Iraq, Singapore.
Germany, South Korea and Switzerland. In 2018-19, the
Foreign Direct Investment (FDI) in India was $64.4 billion
with service sector, computer and telecom industry remains
leading sectors for FDI inflows. India has free trade
agreements with several nations, including ASEAN, SAFTA,
Mercosur, South Korea, Japan and few others which are in
effect or under negotiating stage.
The service sector makes up 55.6% of GDP and remains
the fastest growing sector, while the industrial sector and
the agricultural sector employs a majority of the labour
force. The Bombay Stock Exchange and National Stock
Exchange are one of the World’s largest stock exchanges
by market capitalisation. India is the world’s sixth-largest
manufacturer, representing 3% of global manufacturing
Accountancy/Book Keeping 101
output and employs over 57 million people. Nearly 66% of
India’s population is rural whose primary source of
livelihood is agriculture and contributes less than 50% of
India’s GDP. It has the world’s fifth-largest foreign-exchange
reserves worth ` 38,832.21 billion (US $540 billion). India
has a high national debt with 68% of GDP, while its fiscal
deficit remained at 3.4% of GDP. However, as per 2019
CAG report, the actual fiscal deficit is 5.85% of GDP.
India’s government—owned banks faced mounting bad
debt, resulting in low credit growth; simultaneously the
NBFC sector has been engulfed in a liquidity crisis. India
faces high unemployment, rising income inequality and
major slump in aggregate demand.
81. India has significant trading partners from which of
the following regions:
(a) Europe
(b) America
(c) Asia
(d) Africa
Choose the correct answer from the options given
below:
A. (a), (b), (c) only
B. (b), (c), (d) only
C. (a), (b), (d) only
D. (a) and (d) only
82. Which of the following sectors have significant
Foreign Direct Investment (FDI) in India?
(a) Service Sector
(b) Secondary Sector
(c) Primary Sector
(d) Fisheries and Animal Husbandry
Choose the correct answer from the options given
below:
A. (a) and (b) only
B. (b) and (c) only
C. (c) and (d) only
D. (a) and (d) only
83. Which among the following statements is the correct
one? (Choose the most appropriate one)?
A. India has a better trade relations with European
countries.
B. MSE is the largest stock exchange in the world.
C. Indian primary sector is contributing less as
compared to other sectors.
D. India attracts highest FDI from USA.
84. The Comptroller and Auditor General has reported a
different estimate than of governments, in terms of:
A. GDP
B. Fiscal Deficit
C. FDI
D. Liquidity of private banks
102 Accountancy/Book Keeping

85. Which of the following has not been articulated in Passage-23

the passage?
Burnout is a psychological syndrome emerging as a
(a) GDP Growth (b) Currency flows
prolonged response to chronic interpersonal stressors on
(c) Liquidity (d) Demographics
the job. The three key dimensions of this response are an
Choose the correct answer from the options given overwhelming exhaustion, feelings of cynicism and
below: detachment from the job and a sense of ineffectiveness and
A. (a) and (b) only B. (b) and (c) only lack of accomplishment. The significance of this three-
C. (b) only D. (c) and (d) only dimensional model is that it clearly places the individual
Passage-22 stress experience within a social context and involves the
person’s conception of both self and others.
X YZ Ltd. funrnished you with the follow ing
information: The exhaustion dimension was also described as
wearing out, loss of energy, depletion, debilitation, and
Budget Actual (in a fatigue. The cynicism dimension was originally called
particular depersonalization (given the nature of human services
month)
occupations), but was also described as negative or
No. of working days 25 27 inappropriate attitudes towards clients, irritability, loss of
Production (in units) 20,000 22,000 idealism, and withdrawal. The inefficacy dimension was
originally called reduced personal accomplishment, and
Fixed overhead 30,000 31,000 was also described as reduced productivity or capability,
(in Rupees) low morale, and an inability to cope.
Budgeted overhead rate is ` 1 per unit. In a particular There have been various conceptual models about the
month the actual hours worked were 31,500. development of burnout and its subsequent impact. At first,
the focus was on the relationship between the three
86. What is the total overhead variance in the given
month experienced by the XYZ Ltd? dimensions of burnout, which was often described in
A. ` 4,000 (Favourable) B. ` 2,000 (Adverse) sequential stages. Exhaustion was assumed to develop first,
C. ` 1,000 (Adverse) D. ` 2,000 (Favourable) in response to high demands and overload, and then this
would precipitate detachment and negative reactions to
87. What is the expenditure variance of XYZ Ltd as on people and the job (depersonalization or cynicism). If this
given month? continued, then the next stage would be feelings of
A. ` 1,000 (Adverse) inadequacy and failure (reduced personal accomplishment
B. ` 1,500 (Adverse) or professional inefficacy).
C. ` 2,000 (Favourable)
D. ` 1,500 (Favourable) More recently, burnout models have been based on
theories about job stress, and the notion of imbalances
88. From given information in the passage, what leading to strain. Its three stages are: (a) Job stressors, (b)
is the volume variance of XYZ Ltd in given month? individual strain, and (c) defensive coping. Subsequently,
A. ` 3,000 (Favourable) two developmental models of the demands-resources
B. ` 2,000 (Adverse) imbalance have emerged: the Job Demands-Resources (JD-
C. ` 1,500 (Favourable)
R) model and the conservation of Resources (COR) model.
D. ` 1,500 (Adverse)
The JD-R model focuses on the notion that burnout arises
89. Find the capacity variance for the month from the when individuals experience incessant job demands and
information given in the passage. have inadequate resources available to address and to reduce
A. ` 1,000 (Favourable) those dem ands. The CO R model follow s a basic
B. ` 900 (Adverse) motivational theory assuming that burnout arises as a result
C. ` 1,500 (Favourable) of persistent threats to available resources. A different
D. ` 1,000 (Adverse) variation of an imbalance model of burnout is the Areas of
90. Given the information in the passage, what is the Worklife (AW) model, which frames job stressors in terms
calendar variance for the month? of person-job imbalances, or mismatches, but identifies six
A. ` 2,000 (Favourable) key areas in which these imbalances take place: workload,
B. ` 3,000 (Adverse) control, rew ard, com munity, fairness and values.
C. ` 2,400 (Favourable) Mismatches in these areas affect an individual’s level of
D. ` 1,000 (Adverse) experienced burnout, which in turn determines various
 Accountancy/Book Keeping 103
outcomes, such as job performance, social behaviours, and Passage-24
personal wellbeing. It is desirable for consumers to be aware of their rights,
91. Which of the following has the correct sequence of and to exercise those rights responsibly and intelligently.
the stages of burnout? In these days of audio-video publicity on the public and
A. Fatigue due to excessive work, dislike for work. private media, it is indeed very difficult, if not impossible,
failure to achieve targets to verify the exaggerated or false claims made by producers,
B. Negative feelings about work, dislike for work, manufacturers, distributors and dealers of various goods
effort to quit work and services. The all-pervasive, exaggerated and often false
C. Initial good interpersonal relations, claims, made for services and goods, emphasize the
depersonalization, loss of idealism imperative need for Consumer Protection Legislation and
D. Cynicism, inadequacy, inefficiency creation of awareness about it among the general public.
92. Given below are two statements. In this connection, there are a number of enactments,
Statement (I) : Cynicism stage of Burnout is often in India such as the prevention of Food Adulteration Act,
experienced by employees, engaged 1954, the Essential Commodities Act, 1955, the Hire
in production activity, due to Purchases Act, 1972, the Standards Weight and Measure
excessive work pressure. Act, 1976 etc. However, the remedies prescribed there under
Statement (II) : In Cynicism stage of Burnout, person are time-consuming, inadequate and expensive. As in other
withdraws from others and shows areas of Judicial Processes, the offenders are hardly caught,
lack of interest towards them. proceeded against and rarely, if ever, got convicted. When
violators go scot-free, the victims have no remedy and gets
In the light of the above statements, choose the correct frustated.
answer from the options given below:
A. Both Statement (I) and Statement (II) are true 96. Which among the following is a correct statement
B. Both Statement (I) and Statement (II) are false based on the passage?
C. Statement (I) is correct, but Statement (II) is false A. Consumers’ laws are not explained well in India
D. Statement (I) is incorrect, but Statement (II) is true B. Indian Judiciary System needs a drastic reform to
facilitate consumers’ welfare
93. Match List-I with List-II: C. Indian manufacturers are clever
List-I List-II D. The Indian Consumers have no remedy and get
(a) Exhaustion (i) Not able to complete work frustated
(b) Cynicism (ii) No energy for work
(c) Inefficiency (iii) No interest in customer 97. Which among the following is a correct statement
based on the passage?
Choose the correct answer from the options given A. Consumers in India are aware of their rights
below: B. Consum ers in India exercise their rights
(a) (b) (c) responsibly
A. (i) (ii) (ii) C. Consumers in India are unaware of their rights
B. (iii) (ii) (i) and hence, they do not exercise them
C. (ii) (iii) (i) D. None of the above could be ascertained on the
D. (ii) (i) (iii) basis of paragraph given here above
94. Which of the following is not a resource- imbalance 98. Which among the following is a correct statement
model of Burnout? based on the passage?
A. Job Demands-Resources Model A. The Government of India has enacted sufficient
B. Conservation of Resources Model number of laws for protection of consumer interests
C. Three Dimensional Model B. The paragraph does not give comprehensive list
D. Areas of Worklife Model of laws in favour of consumers
95. Which of the following are caused by Burnout? C. Legal environment for consumers in India is not
(a) Concern for clients conducive
(b) Negative Social Behaviour D. Legal environment for consumers in India is
(c) Physical and Mental Strain conducive

Choose the most appropriate answer from the options 99. Who among the followings could be considered at
given below: the center point in the passage?
A. (a) only B. (a) and (b) only A. Consumers B. Judicial Process
C. (b) and (c) only D. (a) and (c) only C. Manufacturers D. Government
104 Accountancy/Book Keeping
100. Which among the following is a correct statement
based on the passage?
A. Producers and manufacturers are sensitive about
consumers’ rights.
B. Producers and manufacturers are insensitive about
consumers rights.
C. Producers and manufacturers are neutral about
consumers’ rights.
D. Producers and manufacturers are basically
governed by ethics and values.
Passage-25
Life Insurance in its modern form came to India from
England in the year 1818. The Oriental Insurance Company
started by Europeans in Calcutta was the first life insurance
company on Indian soil. All the insurance companies
established during that period were brought up with the
purpose of looking after the needs of the European
community and Indian natives were not being insured by
these companies. However, later with the efforts of eminent
people like Babu Muttylal Seal, foreign insurance
companies started insuring Indian lives too. But Indian
lives were being treated as sub standard lives and heavy
extra premium were being charged upon them. The Bombay
Mutual Life Assurance Society heralded the birth of the
first Indian life insurance company in the year 1870 and
covered Indian lives at normal rates. Starting as an Indian
enterprise with highly patriotic motives, insurance
companies came into existence to carry the message of
insurance and social security through insurance to various
sectors of society. In 1907, the Hindustan Co-operative
Insurance Company took birth in one of the rooms of ‘The
Jorsanko’, house of the great poet Rabindranath Tagore in
Calcutta. The Indian Mercantile, General Assurance and
Swadeshi Life (later Bombay Life) were some of the
companies established during the same period. Prior to
1912, India had no legislation to regulate the insurance
business. In the year 1912, Life Insurance Companies Act
and Provident Fund Act were passed. The Life Insurance
Companies Act, 1912 made it necessary that the premium
rate tables and periodical valuations of companies should
be certified by an actuary. But the Act discriminated
between foreign and Indian Companies on many accounts,
putting Indian Companies at a disadvantage.
101. The insurance business in India was started first by
which one of the following?
A. Americans
B. Indian merchants
C. Europeans
D. Afro-Indians
102. Identify the correct statement from the following:
A. Initially, insurance companies used to discriminate
Indian and European clients
B. There was no discrimination in Indian and
European clients by the insurance companies
initially
C. Indian clients were charged lower premium by the
insurance companies in the beginning
D. Indian insurance companies charged higher
premium to Europeans at a later stage
103. The paragraph is about which of the following?
A. Genesis of insurance in India
B. Struggle of insurance business
C. Conflict of insurance business
D. Complications of insurance business
104. Which one among the following grew along with
insurance business in India?
A. Pension Fund
B. Provident Fund
C. Gratuity
D. Arbitrage
105. Which among the following was later renamed as
Bombay Life?
A. The Indian Mercantile General Assurance
B. The Oriental Life Insurance Company
C. National Insurance
D. Swadeshi Life
Passage-26
Companies often define themselves in terms of
products: They are in the “auto business” or the “clothing
business”. ‘Market definitions of a business, however,
describe the business as a customer-satisfying process.
Products are transient, basic needs and customer groups
endure forever. Transportation is a need: the horse and
carriage, automobile, railroad, airline, ship and truck are
products that meet the need. Viewing business in terms of
customers can suggest additional growth opportunities,
There exists a difference between a target market definition
and a strategic market definition. To define its mission, a
company should address Peter Drucker’s classic question:
What is our business?
106. Which of the following is NOT a major characteristic
of a good mission statement?
A. They have very limited words
B. They focus on a limited number of goals
C. They stress the company’s major competitive
spheres in which company will operate
D. They have a long term view
107. Which of the following is the correct product
definition of ‘Blue Star’?
A. We provide climate control in homes and offices
B. We supply air conditioners
C. We make air cooling systems
D. We make air conditioners
 Accountancy/Book Keeping 105
108. Which of the following is the correct market definition C. ` 1200 and ` 800 respectively
of ‘BPCL’? D. ` 1600 and ` 2400 respectively
A. We distribute oil products 113. What is the amount of commission payable to Y?
B. We are the largest oil supply company in India A. ` 15000 B. ` 16500
C. We supply energy C. ` 20800 D. None of these
D. Bharat’s own oil distribution company
114. What is X’s share in the net divisible profit?
109. Pepsi could define its ‘target market’ as: A. ` 124400 B. ` 83600
A. Everyone who drinks carbonated soft drinks and C. ` 91200 D. ` 60800
are competitors
B. Anyone who drinks liquid 115. What will be the closing capital of X after all
adjustments?
C. Everyone who drinks non-milk drinks
A. ` 422200 B. ` 401400
D. Anyone who drinks competitor’s drinks
C. ` 300000 D. ` 423000
110. Which of the following is the correct combination
Passage-28
Product Definition and Market Definition of Xerox
Company? A, B and C were partners sharing profits in the ratio of
A. Product Definition - We sell photocopies 1 : 2 : 3. Their fixed capitals on 1st April, 2020 were: A
Market Definition - We help improve office ` 3,00,000; B ` 4,50,000 and C ` 10,00,000. Their
efficiency partnership deed provided the following:
B. Product Definition - We make photo machines (i) A provides his personal office to the firm for business
Market Definition - We improve copy speeds use charging yearly rent of ` 1,50,000.
C. Product Definition - We sell copying equipment
(ii) Interest on capitals @8% p.a. and interest on drawings
Market Definition - We make office more efficient
@ 10% p.a.
D. Product Definition - We make copying equipment
Market Definition - We help improve office (iii) A was allowed a salary @ 10,000 per month.
productivity (iv) B was allowed a commission of 10% of net profit as
Passage-27 shown by Profit and Loss account, after charging
such commission.
X and Y are partners in 3 : 2. Their capital balances as
on 1st April, 2020 amounting to ` 2,00,000 each. On 1st (v) C was guaranteed a profit of ` 3,00,000 after making
February, 2021, X contributed an additional capital of all adjustments.
` 1,00,000. Following are the terms of deed: The net profit for the year ended 31st march, 2021 was
(a) Interest on capital @ 6% per annum ` 10,30,000 before making above adjustments.

(b) Interest on drawings @ 8% per annum You are informed that A has withdrawn ` 5,000 in the
beginning of each month, B has withdrawn ` 5,000 at the
(c) Salary to X ` 1500 per month end of each month and C has withdrawn ` 24,000 in the
(d) Commission to Y @10% on net profit after charging beginning of each quarter.
interest on capital, salary and his commission. 116. A’s rent will be shown in:
Drawings of the partners were ` 20,000 and ` 30,000 A. Profit and Loss account
respectively during the year. Net profit earned by the firm B. Profit and Loss Appropriation account
was ` 2,08,000. C. A’s Capital account
D. None of the above.
111. What is the amount of Interest on capitals of X and
Y? 117. Net profit for the year is:
A. ` 12,000 each A. ` 10,30,000 B. ` 11,80,000
B. ` 12,000 to X and ` 13,000 to Y C. ` 7,30,000 D. ` 8,80,000
C. ` 13,000 to X and ` 12,000 to Y 118. What will be the divisible profit?
D. None of the above A. ` 5,56,000 B. ` 5,50,000
C. ` 5,52,000 D. ` 5,53,000
112. What is the amount of interest on drawings of X and
Y? 119. What will be the total interest on drawings?
A. ` 1200 and ` 1800 respectively A. ` 24,000 B. ` 12,000
B. ` 800 and ` 1200 respectively C. ` 36,000 D. ` 48,000
(2715) Accountancy—14
106 Accountancy/Book Keeping

120. What will be the commission of B? agreed to it. She approached health department of the town
A. ` 8,00,000 B. ` 96,000 with her proposal which was accepted and an initial one
C. ` 80,000 D. ` 72,000 time grant of ` 2,00,000 was sanctioned immediately for
purchase of medical equipment and test kits for pathological
Passage-29
tests. 10 members of the apartment contributed ` 20,000
Amit and Mahesh were partners in a fast-food corner each as lifetime subscription to the clinic. Rajni decided to
sharing profits and losses in ratio 3 : 2. They sold fast food charge ` 10 as one time registration fee from patients. Apart
items across the counter and did home delivery too. Their from above Rajni made following transactions for first year:
initial fixed capital contribution was ` 1,20,000 and
` 80,000 respectively. S.No. Particulars Amount in (`)

At the end of first year their profit was ` 1,20,000 1. Purchased Equipment 1,20,000
before allowing the remuneration of ` 3,000 per quarter to 2. Purchased Medicines 95,000
Amit and ` 2,000 per half year to Mahesh. Such a promising
performance for first year was encouraging, therefore, they 3. Purchased Furniture 10,000
decided to expand the area of operations. 4. Rent paid 12,000
For this purpose, they needed a delivery van, a few
5. Fee received for medical tests 45,000
Scotties and an additional person to support. Six months
into the accounting year they decided to admit Sundaram 6. Honorarium paid to Yoga teacher 35,000
as a new partner and offered him 20% as a share of profits
7. Honorarium paid to
along with monthly remuneration of ` 2,500. Sundaram
physiotherapist and sports teacher 38,000
was asked to introduce ` 1,30,000 for capital and ` 70,000
for premium for goodwill. Besides this Sundaram was Rajni informed that during the first year 10,500 patients
required to provide ` 1,00,000 as loan for two years. were registered for treatment and for other services. Taking
reference from the above, answer following questions.
Sundaram readily accepted the offer. The terms of the
offer were duly executed and he was admitted as a partner. 123. Not for profit organization prepares
(i) Income and Expenditure account
121. Remuneration will be transferred to _______________
(ii) Trading and Profit loss account
of Amit and Mahesh at the end of the accounting
(iii) Receipt and Payment account
period.
(iv) None of the above
A. Capital account
B. Loan account Options:
C. Current account A. Only (ii)
D. None of the above B. Only (iii)
C. Both (i) and (ii)
122. Upon the admission of Sundaram the sacrifice for D. Both (i) and (iii)
providing his share of profits would be done:
A. by Amit only 124. Honorarium paid to Physiotherapist and sports teacher
B. by Mahesh only Will be posted to:
C. by Amit and Mahesh equally A. Debit side of Income and Expenditure Account.
D. by Amit and Mahesh in the ratio of 3 : 2 B. Debit side of Receipt and Payment Account.
C. Debit side of Profit and Loss Account.
Passage-30 D. Credit side of Income And Expenditure account
Dr. Rajani Mehta a qualified M.B.B.S. doctor got 125. Lifetime subscription paid by 10 members will be
voluntary retirement at the age of 50 years from a renowned posted in:
hospital. She was residing in a flat of a wide apartment A. Expenditure side of Income and Expenditure
which is surrounded by a slum which is inhabited by Account
economically weaker strata of the society. As the people in B. Liability side of closing Balance Sheet
that area were not aware about importance of health care, C. Income side of Income and Expenditure Account
a widespread ailment had been persistently prevailing. D. Assets side of closing Balance Sheet
Rajani met with some of the well-off people of apartment
and decided to open a dispensary named as ‘LOCAL Clinic’ Passage-31
to provide them cost free medical assistance and make Talent Sports Club is engaged in the activity of
them aware about hygienic living, physical fitness, and identifying and promoting sports talent from rural and
economic balance diet. Many of the apartment members tribal areas of the country. Identifying with this Noble
 Accountancy/Book Keeping 107
cause Mr Manohar a renowned industrialist donated 129. The amount of subscription in arrears on 31st March
` 50,00,000 on 1st July, 2020, for the construction of a 2021 is:
new hostel and mess for upcoming sportsmen. A. ` 2,20,000 B. ` 3,60,000
Besides this Mr Manohar offered the services of his C. ` 3,20,000 D. ` 1,80,000
personal chartered accountant, free of charge, to streamline 130. The amount of subscription in advance on 31st March,
the account of Total Sports Club. The chartered accountant 2021 is:
visited the office of the NPO on 31st March 2021 and A. ` 40,000 B. ` 50,000
found that till date rupees 35,00,000 had been spent on C. ` 10,000 D. None of these
construction of hostel and mess building. He also noted 131. The amount of subscription to be transferred to income
that the NPO had a capital fund of ` 1,20,00,000 in the and expenditure account for the year ended 31st
beginning of the year. Other important points that he noted March, 2021 is:
were that NPO had 2000 regular members each having an A. ` 40,00,000 B. ` 20,00,000
annual subscription of ` 2000 per annum. C. ` 43,20,000 D. ` 43,60,000
On 1st April, 2020, 180 members had not paid for
Passage-32
subscription of previous year and 20 members had paid for
2020-2021 in advance (out of which 5 had paid advance Nidiya limited was incorporated on 1st April, 2017
of 2021- 2022 as well). with registered office in Mumbai. The capital clause of
Memorandum of Association reflected a registered capital
31st March, 2021, 110 Members he had outstanding of 8,00,000 Equity shares of ` 10 each and 1,00,000
balance (they including 50 who had not paid for 2019-20 preference shares of ` 50 each.
as well) and 25 members had paid for 2021- 2022 in advance
(including all 5 who had paid in advance in 2019-20). Since some large investments were required for building
and machinery the company in consultation with vendors,
Since the accountant of NPO was not clear about how Ms.VPS Enterprises, issued 1,00,000 Equity shares and
to deal with all the above information he drafted a set of 20,000 preference shares at par to them in full consideration
questions for guidance. of assets acquired. Besides this the company issued 2,00,000
Considering that you are the Chartered Accountant of equity shares for cash at par payable as ` 3 on application,
Mr. Manohar. 2 on allotment, 3 on first call and 2 on second call.
126. The amount of ` 50,00,000 received from Mr Manohar Till date second call has not yet been made and all the
towards building and mess should be transferred to: shareholders have paid except Mr. Ajay who did not pay
A. Capital fund allotment and calls on his 300 shares and Mr. Vipul who
B. General fund did not pay first call on his 200 shares. Shares of Mr. Ajay
C. Income and Expenditure account were then forfeited and out of them 100 shares were reissued
D. Building fund at ` 12 per share.
127. The amount of ` 35,00,000 spent on construction of 132. Shares issue to vendors of building and machinery,
building should be: Ms. VPS Enterprises, would be classified as:
I. reflected on debit side of income and expenditure A. Preferential Allotment
account as an expense. B. Employee Stock Option Plan
II. reflected on asset side of Balance Sheet. C. Issue for Consideration other than cash
III. reflected as a deduction from Building fund and D. Right Issue of Shares
addition to capital fund. 133. How many equity shares of the company have been
IV. Not be recorded till the building is complete. subscribed?
On basis of given information choose which of the A. 3,00,000 B. 2,99,500
following stands true: C. 2,99,800 D. None of these
A. Only IV 134. What is the amount of security premium reflected in
B. Both I and IV the balance sheet at the end of the year?
C. Both II and III A. ` 200 B. ` 600
D. None of these C. ` 400 D. ` 1,000
128. The amount of subscription in arrears on 1st April 135. What amount of share forfeiture would be reflected in
2020 is: the balance sheet?
A. ` 3,60,000 B. ` 3,00,000 A. ` 600 B. ` 900
C. ` 2,000 D. ` 1,80,000 C. ` 200 D. ` 300
108 Accountancy/Book Keeping

ANSWERS
1 2 3 4 5 6 7 8 9 10
C B B C C B D B B D
11 12 13 14 15 16 17 18 19 20
B C C B C D A B C D
21 22 23 24 25 26 27 28 29 30
D C C B A C C B D B
31 32 33 34 35 36 37 38 39 40
B C C A B C C B C D
41 42 43 44 45 46 47 48 49 50
C C D A B A A A B A
51 52 53 54 55 56 57 58 59 60
D A B C C A A D D A
61 62 63 64 65 66 67 68 69 70
A A A A A A A A A A
71 72 73 74 75 76 77 78 79 80
C A A A A A A A A A
81 82 83 84 85 86 87 88 89 90
A A C B C D A A B C
91 92 93 94 95 96 97 98 99 100
A D C C C B D B A B
101 102 103 104 105 106 107 108 109 110
C A A B D A D C A D
111 112 113 114 115 116 117 118 119 120
C B A C B A D B C C
121 122 123 124 125 126 127 128 129 130
C D D A B D C A C B
131 132 133 134 135
A C C C A

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