Objective Questions: Synopsis

Objective Questions 1
Objective
Questions
SYNOPSIS
I. MULTIPLE CHOICE QUESTIONS
Chapter 1 : Amalgamation of Companies 274
Chapter 2 : Capital Reduction and Internal Reconstruction 280
Chapter 3 : Investment Accounting 283
Chapter 4 : Final Accounts of Companies 287
Chapter 5 : Introduction to IFRS 293
II. FILL IN THE BLANKS WITH SUITABLE WORDS
III. MATCH THE COLUMNS
IV. STATE WHETHER THE STATEMENTS ARE
TRUE OR FALSE
V. THEORY QUESTIONS - SHORT NOTES
VI. SHORT QUESTIONS
2 Financial Accounting (T.Y. B.Com.) (Sem. – V)
I. MULTIPLE CHOICE QUESTIONS
Chapter 1 : Amalgamation of Companies

1. Amalgamation of companies is governed by _____.
a) AS–13 b) AS–14
c) AS–9 d) AS–11
2. The scheme of amalgamation can involve _____ companies
a) none b) two
c) one d) three
3. The amalgamation requires approval of _____.
a) High Court b) Registrar of Companies
c) Central Government d) Directors
4. Approval by ____ a shareholders is necessary for treatment as in nature of merger.
a) 51% b) 75%
c) 90% d) 80%
5. Approval by _____ % of shareholders is required for implementation of the scheme of
amalgamation.
a) 51% b) 75%
c) 80% d) 90%
6. In case of purchase method, transferee company should record assets at _____.
a) book value b) cost
c) market value d) agreed value
7. In case of pooling of interest method, transferee company should record assets at
_____.
a) cost b) market value
c) agreed value d) book value
8. Amalgamation Adjustment Account is required in respect of _____.
a) general reserve b) statutory reserve
c) security premium d) capital reserve
9. The excess of net asset value over consideration is _____.
a) capital reserve b) security premium
c) profit or loss d) goodwill
10. AS–14 covers amalgamation of _____.
a) companies b) firms
c) firms and company d) Directors and Partners
11. On amalgamation, the transferer company transfer its assets to Realisation Account
at _____.
a) agreed value b) book value
c) market value d) original cost
12. X Ltd. And Y Ltd form into a new company XY Ltd.
X Ltd. Y Ltd.
` `
Net Assets 5,50,000 6,00,000
Purchase consideration 10,00,000 8,00,000
The purchase consideration is to be settled by issue (` 100) of fully paid shares of XY
Ltd at par. The number of shares issued to XY Ltd. will be _____.
a) 1,00,000 shares b) 2,00,000 shares
c) 45,000 shares d) 55,000 shares
13. On 31st March, 2009; X Ltd. Acquired Y Ltd. The Balance Sheet of Y Ltd. was as
follows :
Liabilities ` Assets `
Equity Capital 3,00,000 Fixed Assets 13,00,000
Reserves 9,50,000 Current Assets 5,70,000
Current Liabilities 7,20,000 Preliminary Expenses 1,00,000
19,70,000 19,70,000
If all the assets & Liabilities are taken at Book values the purchase consideration
payable by X Ltd is _____.
a) ` 11,50,000 b) ` 19,70,000
c) ` 20,70,000 d) `10,28,000
14. Pooja Ltd. purchased Rita Ltd. and agreed to pay the following to Rita Ltd. for the
acquisition :
i) 2 equity shares of Pooja Ltd. for ` 20 each, fully paid for every equity share of
Rita Ltd. and cash ` 4 per share held. Total equity shares of Rita Ltd. are 5000
shares.
ii) Discharge of Rita Ltd.’s 20,000 10% Debentures by issued of 15,000 12%
debentures of Pooja Ltd. and cash at ` 5 per debentures held. The purchase
consideration payable by Pooja Ltd. to Rita Ltd. is _____.
a) ` 20,20,000 b) ` 20,35,000
c) ` 20,38,000 d) ` 20, 32,000
15. Universal Ltd.
Balance Sheet
as on 31st March, 2009
Liabilities ` Assets `
10,000 Equity Shares of Fixed Assets 2,00,000
` 10 each 1,00,000 Current Assets 1,70,000
Profit & Loss Account 2,20,000
Creditors 50,000 –
3,70,000 3,70,000
On 1st April, 2009; Omega Ltd. took over the business of Universal Ltd. for a
consideration of ` 3,75,000. Profit or loss on realization was :
a) ` 55, 000 (Profit) b) ` 55,000 (Loss)
c) ` 80,000 (Profit) d) ` 50,000 (Profit)
16. Purchase consideration as per AS–14 is the amount payable to _____.
a) shareholders and debentureholders
b) shareholders and creditors
c) shareholders
d) none of the above
17. For accounting mergers, the method followed is _____.
a) Pooling of Interest Method b) Equity Method
c) Purchase Method d) none of the above
18. Under Pooling of Interest Method, the difference between purchase consideration and
share capital of transferee company should be adjusted to _____.
a) General Reserve Account
b) Goodwill Account
c) Amalgamation Adjustment Account
19. Pooling of Interest is a method of _____.
a) providing depreciation b) valuation of inventory
c) accounting for amalgamation d) none of the above
20. Under Purchase Method, any excess of purchase consideration over net assets
acquired should be recognised as _____.
a) goodwill b) capital reserve
c) Profit & Loss Account d) none of the above
21. Profit on Realisation Account is transferred by transferor company to _____.
a) Equity Shareholders Account
b) Preference Shareholders Account
c) Profit & Loss Account
22. The asset, which is not taken under Net Asset Method of calculation of purchase
consideration, is _____.
a) discount on issue of shares b) loose tools
c) furniture d) bills receivable
23. Companies may combine by _____.
a) Amalgamation b) Absorption
c) External reconstruction d) Any of the above
24. If Vijay Ltd. and Vishakha Ltd. are taken over by Swati Ltd. a new company it is
called _____.
a) Absorption b) External reconstruction
c) Amalgamation d) Internal reconstruction
25. If Deepa Ltd. is taken over by Ranbhir Ltd. it is called as
a) Amalgamation b) External reconstruction
c) Absorption d) Merger
26. If Santosh Ltd. and Kumari Ltd. are taken over by Santosh Kumar Ltd a new
company _____.
a) Santosh Ltd. and Kumari Ltd. are Vendor Companies
b) Santosh Ltd. and Santoshkumar Ltd. are Vendor Companies
c) Kumari Ltd. is a purchasing Company
d) Kumar Ltd. is a purchasing company
27. If Santoshkumari Ltd. is taken over by Santoshkumar Ltd. a new company it is
called _____.
a) Internal reconstruction
b) External reconstruction
c) Absorption
d) Merger
28. On amalgamation business is taken over by _____.
a) New company b) Existing company
c) weak company d) Holding company
29. As per AS 14 amalgamation is of two types :
a) Merger b) Purchase of business
c) Merger of purchase of business d) None of the above
30. On merger, vendor companies are _____.
a) Liquidated b) Formed
c) Dissolved d) None of the above
31.The common feature in merger, purchase of business is _____.
a) Liquidation of at least two companies
b) Liquidation of at least one company
c) Purchase of one company by another company
d) Combination of at least two companies
32. As per Companies Act 1956, _____.

a) Amalgamation includes absorption
b) Absorption includes amalgamation
c) Amalgamation excludes absorption
d) Internal reconstruction includes external reconstruction.
33. Accounting for amalgamation is governed by _____.
a) AS 1 b) AS 14
c) AS 13 d) AS 11
34. Accounting for absorption is governed by _____.
a) AS 1 b) AS 13
c) AS 14 d) AS 11
35. Accounting for amalgamation by merger is as per _____.
a) AS 1 b) AS 13
c) AS 14 d) AS 11
36. Accounting for amalgamation by purchase is as per _____.
a) AS 1 b) AS 13
c) AS 14 d) AS 11
37. As per AS 14 transferor company means the company _____.
a) which is amalagamated into another company
b) which is newly registered
c) which is none of the above
d) Into which a company is amalgamated.
38. Transferee company as per AS 14 is _____.
a) Vendor company b) Purchasing company
c) Liquidated company d) None of the above
39. On amalgamation preliminary expenses in Balance Sheet of Vendor Company are
debited to _____.
a) Realisation A/c b) Equity shareholders A/c
c) Cash A/c d) Preference shareholder A/c
40. On amalgamation Profit and Loss A/c debit balance in Balance Sheet of Vendor
Company is transferred to _____.
a) Realisation A/c b) Cash A/c
c) Equity shareholders A/c d) Preference shareholders A/c
41. On amalgamation Debentures Account appearing in the Balance Sheet of Vendor
Company is closed by _____.
a) Crediting to Realisation Account, whether debentures are taken over or not
b) Crediting to Realisation Account when debentures are taken over
c) Crediting to Realisation Account when Debentures are not taken over
d) None of the above
42. On amalgamation Provident Fund Account in the Balance Sheet of Vendor Company
is transferred to _____.
a) Realisation Account b) Purchasing co's Account
c) Equity Shareholders Account d) Preference Shareholders Account
43. Sinking Fund appearing in the Balance Sheet of Vendor Company is transferred to
_____.
a) Realisation Account c) Preference Shareholders Account
b) Equity Shareholders Account d) Purchasing Companies Account
44. On amalgamation if preference shares are settled at a premium, the premium is
_____.
a) Debited to Realisation Account
b) Credited to Realisaiton Account
c) Credited to securities premium Account

d) Debited to Profit and Loss Account
45. Accounting for amalgamation in the books of a Vendor Company is _____.
a) The same in all types of amalgamation
b) The different in all types of amalgamation
c) Dependent on the type of company
d) Dependent on purchase consideration
46. On amalgamation, accounting for amalgamation in the books of purchasing company
is _____.
a) The same in all types of amalgamations
b) The different in all types of amalgamation depending on the type of
amalgamation.
c) Dependent on the type of companies
d) Dependent on the purchase consideration
47. In amalgamation as a merger all the assets and liabilities of vendor company become
the assets and liabilities of _____.
a) Transferee company b) Vendor Company
c) Holding company d) Subsidiary company
48. Shareholders holding not less than 90% of the face value of equity share capital in
the Vendor Company become the equity shareholders in the purchasing company if
amalgamation is _____.
a) In the nature of merger
b) In the nature of purchase of business
c) In the nature of absorption
d) In the nature of internal reconstruction
49. On amalgamation as a merger all assets and liabilities of the transferor company are
incorporated in the books of transferee company at _____.
a) Market value
b) Book value
c) Market value or Book value which ever is less
d) Agreed value
50. On amalgamation as a purchase of business assets and liabilities are transferred to
the books of transferee company at _____.
a) Market Value b) Book Value
c) Agreed Value d) Cost
51. Under amalgamation as a purchase of business the reserves carried in the books of
transferee company are _____.
a) Statutory reserves only b) General reserve
c) Profit and Loss Account d) All of the above
52. Amalgamation Adjustment Account is opened in the books of transferee company to
incorporate _____.
a) Liabilities of Transferor company
b) Assets of Transferor company
c) Statutory reserves of transferor company
53. Under amalgamation as a purchase of business the transferee company incorporates
in its books only _____.
a) Assets and liabilities of transferor company
b) Assets, liabilities and statutory reserves of transferor company.
c) Assets, liabilities and reserves of transferor company
54. Goodwill arising on amalgamation is to be ______.

a) Amortized on a systematic basis
b) Adjusted against general reserves
c) Retained in the books of transferee company
55. As per AS 14, payment of expenses on amalgamation _____.
a) Becomes part of purchase consideration
b) Does not become part of purchase consideration
c) Appears in the books of transferor company only
56. The asset which is not considered under Net Asset method of calculation of purchase
consideration is _____.
a) Underwriting commission
b) Plant and machinery
c) Bills receivable
d) Stock
57. 'Pooling of Interest' is a method of _____.
a) Accounting for amalgamation
b) Calculation of purchase consideration
c) Stock valuation
58. Under 'Purchase Method', excess of purchase consideration over the net assets taken
over is accounted as _____.
a) Goodwill b) Capital Reserve
c) Profit and Loss Account d) None of the above
59. In case provision for doubtful debts is against the debtors, the debtors are
transferred to Realisation Account at _____.
a) Gross amount b) Net amount
c) Market value d) None of the above
60. Purchase consideration under payment method in amalgamation is ____.
a) Payment to shareholders
b) Payment to debentureholders
c) Payment to preference shareholders
d) Payment of expenses
61. Under amalgamation profit on Relisation is transferred to _____.
a) Equity shareholders A/c b) Preference shareholders A/c
c) Debentureholders A/c d) Creditors A/c
62. Under amalgamation Loss on Realisation is debited to _____.
a) Equity shareholders A/c
b) Preference shareholders A/c
c) Profit and Loss Appropriation A/c
63. As per AS 14 amalgamation under Net payment method payment to creditors by
Transferee company _____.
a) Forms part of purchase consideration
b) Does not form part of purchase consideration
c) Debited to Realisation A/c
Chapter 2 : Capital Reduction and Internal Reconstruction

1. Capital reduction is implemented per Section _____ of Companies Act.
a) 77 b) 75 c) 80 d) 100
2. The scheme of capital reduction is to be approved by _____.
a) High Court b) SEBI
c) Central Government d) Shareholders
3. The scheme of internal reconstruction involves _____ company.
a) one b) two
c) three d) many
4. Fictitious assets are to be transferred to _____.
a) internal reconstruction b) security premium
c) share capital d) capital reserve
5. Balance in Capital Reduction should be transferred to _____.
a) security premium b) capital reserve
c) share capital d) Profit & Loss Account
6. The cancellation of contingent liability is _____ for company
a) profit b) loss
c) no profit – no loss d) nil
7. The payment for contingent liability should be debited to _____.
a) capital reduction b) capital reserve
8. “And Reduced” words are to be shown as in Balance Sheet as per _____ requirement.
a) company law b) AS
c) income tax d) stock exchange
9. XYZ Ltd. had on 31st December, 2008; 80,000 equity shares at ` 10 each. It was
decided to reduce shares to ` 8 each. The reduction is _____.
a) ` 1,60,000 b) ` 80,000
c) ` 2,00,000 d) ` 1,50,000
10. Creditors of the company are ` 50,00,000 one creditor for ` 20,00,000 decided to
forego 40% of his claim. He is allotted 30,000 equity shares of ` 40 each in full
satisfaction. The amount transferred to capital reduction is _____.
a) ` 8,00,000 b) ` 10,00,000
c) ` 4,00,000 d) ` 5,00,000
11. The preference shareholders agree to forego arrears of preference dividend of
` 72,000. The amount transferred to Capital Reduction Account is _____.
a) Nil b) ` 72,000
c) ` 36,000 d) ` 70,000
12. Creditors are ` 3,00,000. They are given the option to either accept 50% of their
claim in cash in full settlement or to convert their claim in to equity shares of ` 10
each. Creditors of ` 2,00,000 opt for shares in satisfaction of the claim. Capital
reduction Account is credited by ` _____.
a) ` 1,00,000 b) ` 1,50,000
c) ` 50,000 d) ` 2,00,000
13. Investment costing of ` 24,000 given to Bank for bank overdraft of ` 16,800. The
capital reduction is debited by ` _____.
a) ` 4,000 b) ` 8,000
c) ` 7,200 d) ` 4,500
14. Y Ltd. has 8,000 equity shares of ` 100 each fully paid. Each share is sub-divided
into 10 equity shares of ` 10 each. The number of shares after sub-division will be
_____.
a) 8,000 b) 80,000
c) 75,000 d) 60,000
15. Provision for taxation is ` 1,00,000. The tax liability of the company is settled at
` 80,000 & it is paid immediately. Amount credited to capital reduction is _____.
a) ` 80,000 b) ` 1,00,000
c) ` 20,000 d) ` 60,000
16. 6% debentures of ` 100 each ` 1,00,000 to be converted into such number of 8%
debentures of ` 50 each as to generate the same amount of interest as before. The
amount of 8% debentures will be _____.
a) ` 1,00,000 b) ` 25,000
c) ` 75,000 d) ` 1,20,000
17. In internal reconstruction, method of calculation of purchase consideration is by
_____.
a) Net Asset Method
b) Net Payment Method
c) no purchase consideration required
18. On internal reconstruction, assets are written off except _____.
a) land & building b) goodwill
c) preliminary expenses d) Profit & Loss Account
19. Payment of reconstruction expenses is debited to _____.
a) Profit & Loss Account b) Capital Reduction Account
c) Cash Account d) Goodwill Account
20. The Court Confirmation Order may direct the management to add to its name ____.
a) limited b) unlimited
c) and reduced d) none of the above
21. Credit balance on Capital Reduction Account is utilised for _____.
a) issue of bonus shares b) writing off fictitious assets
c) paying shareholders d) none of the above
22. The scheme of internal reconstruction requires sanction from _____.
a) shareholders b) A/A
c) Court d) all the above
23. Internal Reconstruction is governed by section _____.
a) 494 b) 801 c) 804 d) 809
24. Surrender of fully paid shares amounts to _____.
a) Alteration of share capital
b) Reduction of share capital
c) Arrangement
d) Variation of shareholder's rights
25. Debentureholders accepting less than the face value of their debentures amounts to
_____.
a) Compromise b) Reduction of share capital
c) Alteration of share capital d) Variation of shareholder's rights
26. Creditors accepting part payment of their claims amounts to _____.
a) Reduction of Share Capital c) Compromise
b) Variation of Shareholders Rights d) Alteration of share capital
27. Share Capital A/c Dr. (` 100)
To Share Capital A/c (` 10)
The above entry in the scheme of reconstruction records :
a) Consolidation of share capital
b) Sub-division of share capital
c) Conversion of shares into stock
d) Conversion of stock into shares
28. In Internal Reconstruction _____.

a) Only one company is liquidated
b) One or more companies are liquidated.
c) Two or more companies are liquidated.
d) No company is liquidated.
29. Reduction in Share capital of a company means reduction in _____.
a) Paid up capital b) Called up capital
c) Authorized capital d) Uncalled capital
30. Share Capital A/c Dr. (` 10)
To Share Capital A/c (` 100)
The above entry is the entry of _____.
a) Sub-division of share capital
b) Consolidation of share capital
c) Internal reconstruction
d) Amalgamation
31. A Ltd. company may alter its share capital to _____.
a) Increase reserve capital b) Sub-divide share capital
c) Consolidate share capital d) b and c
32. The existing 1,000 shares of ` 100 each altered to 10,000 shares of ` 10 each is
_____.
a) Consolidation b) Sub-division
c) Conversion d) Surrender
33. Balance on Capital Reduction is utilized to _____.
a) Write off preliminary expenses c) Pay dissentient shareholders
b) Issue bonus shares d) None of the above
34. Internal Reconstruction requires _____.
a) Ordinary resolution passed at General meeting
b) Special resolution passed at General meeting
c) Special resolution passed at Board meeting
d) Ordinary resolution passed at Board meeting
35. Capital Reduction requires _____.
a) Court order b) Order of the Registrar
c) Order of the SEBI d) Order of stock exchange
36. Amicable settlement of differences by mutual consent by parties is _____.
a) Arrangement b) Compromise
c) Confirmation d) Merger
37. Re-arrangement of rights or liabilities without any dispute is _____.
a) Amalgamation b) Arrangement
c) Compromise d) Merger
38. Creditors foregoing their claims in whole or in part is _____.
a) Compromise b) Arrangement
c) Consolidation d) Sub-division
Chapter 3 : Investment Accounting

1. Investments intended to be held for less than 12 months is called _____ investment.
a) annual b) current c) long-term d) trade
2. Fixed return bearing investment are _____.
a) equity shares b) debentures
c) jewellery d) machinery
3. The requirements regarding investment are specified in as _____.

a) 3 b) 11 c) 13 d) 14
4. Rights shares are offered in ratio of _____.
a) number shares held c) face value of shares
b) cost of shares d) paid up value of share
5. The cost of investment sold is to be calculated as per _____ Method.
a) FIFO b) LIFO
c) Weighted Average d) Simple Average
6. The interest up to the date of transaction is paid in addition to the price in case of
_____ quotation.
a) cum-interest b) ex-interest
c) fixed price d) all types of
7. The interest on bonds is to be calculated on _____.
a) cost b) face value
c) number of bands d) market value
8. The carrying amount of current investment is to be shown at _____.
a) face value b) cost
c) market value d) lower of cost or market value
9. Each side of Investments Account have _____ columns of amount.
a) 2 b) 3 c) 4 d) 1
10. The carrying amount of long-term investment is to be shown at _____.
a) cost b) face value
c) market value d) paid up value
11. On 1st July, 2008; Jayshree Ltd. purchased 100 of its own 12% debentures for a
price of ` 9,900 which is cum interest price. Interest is paid on 30th September and
31st March every year. The acquisition cost of 100 debentures is _____.
a) ` 9,600 b) ` 9,700
c) ` 10,300 d) ` 10,000
12. Rajashree Ltd. holds 14% debentures of the face value of ` 5,000 in RJ. Ltd. Interest
is payable on 30th June and 31st December every year. The debentures were
purchased on 1st July, 2007. Accounts are closed on 31st March every year. The
accrued interest on 31st March, 2008 was_____.
a) ` 175 b) ` 525 c) ` 325 d) ` 350
13. Y Ltd. purchased 10,000 shares @ ` 120 each and paid brokerage @ 2% The cost of
acquisition is _____.
a) ` 1,20,000 b) ` 2,400
c) ` 1,22,400 d) ` 1,25,000
14. Z Ltd. purchased 10,000 shares of ` 10 each at ` 25 per share of A Ltd. during the
year 2002-03. During the year 2006–07, A Ltd. offered rights issues at one share for
every two shares held at a price of ` 20 per share. Right shares were subscribed. The
carrying cost of investment is _____.
a) ` 2,50,000 b) ` 1,00,000
c) ` 2,50,000 d) ` 3,50,000
15. Long-term investments are carried out at _____.
a) cost b) fair value
c) market value d) cost or market value whichever is less
16. Short-term investments are carried at _____.
a) market value
b) cost
c) cost or market value whichever is less
17. Cost of right shares is _____.

a) added to cost of investment
b) deducted from cost of investment
c) ignored
18. Sale of right shares is _____.
a) credited to Investment Account
b) debited to Investment Account
c) not entered in Investment Account
19. Cost of investment includes _____.
a) purchase price b) stamp duty
c) brokerage d) all the above
20. Investment in immovable properties shown under _____.
a) fixed asset b) current asset
c) current investment d) long-term investment
21. Interest on securities is paid on due date to the _____.
a) holder on the due date in respect of actual holding period
b) original buyer
c) holder on the due date irrespective of the period of holding
22. When bonus shares are received, _____.
a) nominal value is entered in nominal value column of Investment Account
b) cost is entered in cost column of Investment Account
c) ignored
23. Interest on securities is always calculated on _____.
a) cost price b) market price
c) face value d) all of the above
24. Securities can be purchased at _____.
a) cum-interest price b) ex-interest price
c) cost + brokerage + interest d) any of the above
25. Equity shares is a _____.
a) Fixed income bearing security
b) Fluctuating income bearing security
c) Safe security
26. Interest is always calculated on the _____.
a) M.V. of the security c) Face Value of the security
b) Cost of the security d) Realisable value of the security
27. Interest is paid to the _____.
a) holder of the security on the due date irrespective of the actual period of holding
b) original holder
c) buyer of the security on the due date
28. On sale of investment Profit / Loss is calculated by the equation _____.
a) sale – average cost
b) sale – weighted average cost
c) sale – cost as per FIFO basis
d) sale – cost as per LIFO basis
29. Profit on sale of investment is transferred to _____.

a) Profit and Loss A/c
b) Investment A/c
c) Capital Reserve A/c
30. Dividend on shares accrues on the _____.
a) due date
b) date of declaration
c) date fixed in advance
d) last day of the year
31. Current Investments are valued on the closing date at _____.
a) Cost
b) Market value
c) Cost or Market value whichever is lower
d) Cost or Market value whichever is higher
32. Issue of bonus shares is entered in _____.
a) N.V. column on Debit side of investment A/c
b) Capital column on Debit side of Investment A/c
c) N.V. column on credit side of Investment A/c
33. Rights shares subscribed are entered in _____.
a) N.V. column (Dr.) cost is entered in capital column Debit of the Investment A/c
b) N.V. column (Cr.) cost in cost column Credit of Investment A/c
c) Cost is entered in capital column on Debit side of Investment A/c
34. Sale of rights shares is entered in investment A/c on _____.
a) Debit side of Investment A/c in cost column.
b) Debit side of Investment A/c in N.V. column.
c) Entered in Investment A/c
d) Sale proceeds credited to Profit and Loss A/c
35. Cost of Rights shares is _____.
a) added to cost of investments
b) deducted from cost of investments
c) added to N.V. of investments
36. Accounting for investment is dealt with by _____.
a) AS 9 b) AS 13 c) AS 11 d) AS 29
37. Cost of acquisition of debentures in the case of cum interest price is _____.
a) cum interest price – interest for expired period
b) cum interest price + interest for expired period
c) cum interest price only
38. Loss on sale of investment is _____.
a) W.A. cost of investment – Net sales
b) W.A. cost of investment + Net sales
c) Simple average cost of investment – Net sales
39. Loss on sale of investment is _____.
a) debited to Investment A/c
b) debited to Profit and Loss A/c
c) credited to Profit and Loss A/c

40. X purchased 2,000 equity shares of Y Ltd. at cost of ` 125 per share on 1st March
2010. Theses shares are held as current investment. On 31st March 2010 M.V. of
shares was ` 115 per share. The carrying amount of investment is ____.
a) ` 2,50,000
b) ` 2,30,000
c) ` 4,80,000
d) ` 2,00,000
41. Refer to Question No 40. If the M.V. of shares on 31st March 2011 is ` 135 per share
the carrying amount is _____.
a) ` 2,50,000
b) ` 2,00,000
c) ` 2,70,000
d) ` 4,50,000
42. On sale of equity shares the equity shares A/c is credited by _____.
a) cost price
b) Net selling price
c) M.V.
d) Nominal value
43. Bonus shares received increases _____.
a) Nominal value of shares held
b) Cost of shares held
c) M.V. of shares held
Chapter – 4 : Final Accounts of Companies

1. The requirements for final account of companies are specified in Schedule _____.
a) I b) VI c) XIII d) XIV
2. The Schedule VI is divided into _____ Parts.
a) 4 b) 2 c) 3 d) 1
3. The unpaid interest on loan is _____.
a) loan b) current liabilities
c) reserve d) contingent liabilities
4. Any amount payable within 12 months from date of Balance sheet is called _____.
a) capital b) loan
c) contingent liabilities d) current liabilities
5. Fixed deposit with bank is a part of _____.
a) investment b) bank balance
c) fixed assets d) loans & advances
6. Calls in arrears is to be _____.
a) shown as debtors b) reduced from share capital
c) shown as investments d) ignored
7. The liabilities of companies are divided _____ needs.
a) 4 b) 5 c) 6 d) 3
8. The assets of companies are dividend in _____ heads.
a) 5 b) 3 c) 4 d) 6
9. The debit balance in Profit & Loss Account is to be _____.
a) reduced from share capital
b) reduced from reserve
c) disclosed as miscellaneous expenditure

d) shown as a note to account
10. Part 3 of Schedule VI provides interpretations of _____.
a) reserve b) capital c) loans d) assets
11. Dividend paid on share capital is to be _____.
a) shown as finance expenses
b) shown as appropriations of profit
c) shown in Manufacturing Account
d) shown as reduction in capital
12. The Part I of Schedule VI requires Profit & Loss Account to be prepared in _____.
a) horizontal forms b) vertical forms
c) convenient forms d) columnar form
13. The extract of Balance Sheet and business profile is specified in Part _____ of VI.
a) 1 b) 2 c) 3 d) 4
14. The uncalled amount in investment in shares is shown as _____.
a) investment b) contingent liabilities
c) current liabilities d) current assets
15. The compulsory transfer to reserve 10% of profit, if dividend declared is _____ %
a) 10% b) 15% c) 20% d) 25%
16. The interest accrued on investment appears in the Balance Sheet under the head :
a) current assets b) fixed assets
c) loans & advances d) investments
17. In Balance Sheet, securities premium should be shown under _____.
a) share capital b) reserves & surplus
c) current liabilities d) fixed assets
18. Which of the followingitems do not come under, reserves & surplus _____.
a) capital redemption reserve b) general reserve
c) provident fund d) sinking fund
19. Opening balance of Profit & Loss A/c was ` 7,500, dividend paid ` 1,500 ending
balance of Profit & Loss A/c was ` 5000. Net income / net loss was _____.
a) loss ` 1,000 b) net loss ` 2,000
c) net income ` 1,000 d) net income ` 6,500
20. Retained earnings is the amount of _____.
a) profit after tax less dividend b) profit before tax less dividend
c) profit before depreciation d) profit after depreciation
21. Which of the following is not an example of fixed assets ?
a) plant & machinery b) buildings
c) royalty d) patents
22. Unclaimed dividend is shown under _____.
a) current liability b) secured loans
c) provisions d) reserves
23. Balance Sheet as on 31st March, 2009 _____.
Share Capital ` 20,00,000
Profit & Loss Account (1.4.2008) ` 67,000
Profit for the year ` 1,90,610
The company wants to transfer ` 50,000 to debenture redemption reserve and
declare 10% dividend. The balance in the Profit & Loss Appropriation Account is
_____.
a) ` 7,610 b) ` 1,88,549 c) ` 8,610 d) ` 1,81,849
24. Which of the following items appears on the assets side of Balance Sheet?
a) capital reserve b) security premium
c) sinking fund investment d) specific reserve
25. Ravi Ltd. proposed a dividend of 15% The called up equity capital of the company is
` 3,00,000 calls in arrears amounted to ` 20,000 and calls in advance amounted to
` 50,000. Dividend payable is _____.
a) ` 42,000 b) ` 49,500 c) ` 39,000 d) ` 34,500
No dividend is payable on calls in advance.
26. The example of accounting policy is _____.
a) consistency b) going concern
c) accrual d) depreciation
27. The example of accounting policy is _____.
a) realisation b) dual aspect
c) maturity d) valuation of inventory
28. As per AS–1, disclosure should be made of _____.
a) all accounting principles
b) all accounting policies
c) all accounting concepts
d) all significant accounting policies
29. Which of the following is shown under Reserves & Surplus?
a) calls in advance b) calls in arrears
c) securities premium d) bonus
30. Which is deducted from share capital to get paid up capital?
a) calls in arrears b) calls in advance
c) bonus d) reserves
31. Payment of dividend is based on _____.
a) paid up capital b) authorised capital
c) issued capital d) reserve capital
a) current liabilities b) current assets
c) reserves and surplus d) none of the above
33. Final dividend can be declared by _____.
a) shareholders only b) directors only
c) stock exchange d) none of the above
34. Recommendation and declaration is necessary for _____.
a) final dividend b) interim dividend
c) interest on debentures d) none of the above
35. Following is not a fixed asset :
a) goodwill b) machinery
c) vehicles d) loose tools
36. Following is an appropriation of profit :
a) interest on loan b) provision for dividend
c) audit fees d) none of the above
37. Following is not a secured loans :
a) debentures b) bank loans
c) public deposits d) none of the above
38. Following is not shown under provisions :
a) provision for taxation b) provision for dividend
c) provision for depreciation d) none of the above
39. Forfeited shares is _____.

a) added to paid up share capital
b) deducted from paid up capital
c) shown under reserves & surplus
40. The company has 5% Government Securities having face value of ` 1,00,000 and
cost ` 95,000. The interest on Government Securities will be _____.
a) ` 5,000 b) ` 4,750 c) ` 9,750 d) none of the above
41. Arrears of preference dividend is a _____.
a) contingent liability b) current liability
c) fixed liability d) none of the above
42. Balance sheet of a company must be prepared in _____.
a) horizontal form only
b) vertical form only
c) either in Vertical or Horizontal form
d) either in Vertical or Horizontal form as per schedule VI
43. Profit and Loss Account of a company must be as per _____.
a) part II of schedule VI of Companies Act
b) Part I of schedule VI of Companies Act
c) vertical form only
d) horizontal form only
44. Repairs to building must be shown as a _____.
a) separate item on debit side of profit and loss A/c
b) separate item on credit side of profit and loss A/c
c) addition to other expenses on debit side of profit and loss A/c
45. Remuneration to M.D. should be shown as a separate item on debit side of _____.
a) Trading A/c
b) Profit and Loss A/c
c) Profit and Loss appropriation A/c
46. Payment to auditor should be shown on debit side of _____.
a) Profit and Loss A/c b) Trading A/c
c) Profit and Loss Appropriation d) None of the above
47. Unpaid call is _____.
a) added to issued capital and paid up capital
b) shown as a current liabilities
c) deducted from issued, subscribed and paid up capital
d) added to authorised capital
48. Interest accrued but not due on Loans is shown under _____.
a) current liabilities b) secured loans
c) unsecured loans d) none of the above
49. Interest accrued and due on loans is shown under _____.
a) current liabilities b) secured loans
c) unsecured loans d) none of the above
a) share capital b) current liabilities
c) provisions d) unsecured loans
51. Live stock is shown under _____.
a) current Assets b) fixed Assets
c) investments d) current liabilities
52. Interest accrued on investment is shown under _____.

a) current assets b) current liabilities
c) investments d) loans and advances
53. Public deposits accepted by companies are shown under _____.
a) loans and advances b) investments
c) secured loans d) unsecured loans
54. Bills Receivable is shown under _____.
a) loans and advances b) current assets
c) current liabilities d) contingent liabilities
55. Bills payable is shown under _____.
a) current assets b) loans and advances
c) current liabilities d) secured loans
56. Prepaid insurance is shown under _____.
a) current assets b) loans and advances
c) current liabilities d) secured loans
57. Interest out of capital during construction period is shown under _____.
a) Miscellaneous expenditure b) Capital W.I.P.
c) Profit and Loss A/c d) Share capital
58. Development expenditure is shown under _____.
a) Miscellaneous expenditure
b) Capital W.I.P.
c) Debit side of Profit and Loss A/c
d) Loans and advances.
59. Uncalled amount on partly paid shares is shown under _____.
a) a note to Balance Sheet b) investment
c) share capital d) provision
60. Arrears of preference dividend is shown as a _____.
a) current liability
b) none to Balance sheet
c) deduction from preference share capital
d) addition to preference share capital
61. Unexecuted contracts on capital A/c is shown under _____.
a) a note to Balance sheet as contingent liabilities
b) capital work in progress
c) share capital
d) current liabilities
62. Net Block of fixed assets is shown under _____.
a) Horizontal Balance sheet
b) Vertical Balance sheet
c) Schedule of capital
63. Net Block is _____.
a) Current Assets – Current Liabilities
b) Gross Block – Accumulated depreciation
c) Net Block + Depreciation accumulated
64. Unpaid dividend A/c is transferred to _____.
a) Special Bank Account within 7 days from the expiry of 30 days from the date of
declaration.
b) Special Bank Account within 30 days from the expiry of 7 days from the date of
declaration
c) Investor education and protection fund within 7 days from the expiry of 30 days
from the date of declaration.
65. Short term loan is the loan due for not more than _____.
a) 2 years b) 1 year c) 5 years d) 3 years
66. In a fixed asset schedule Gross Block Closing is equal to _____.
a) Opening Gross Block purchases
b) Opening WDV + purchases
c) Opening WDV + sales – purchases
d) Closing WDV + depreciation
67. In a schedule of fixed assets closing depreciation is equal to _____.
a) opening depreciation + Depreciation provided during the year – depreciation on
asset sold
b) opening depreciation + closing WDV
c) closing WDV + opening WDV
d) cost – depreciation
68. When demand for tax is raised by the Income tax department _____.
a) no entry is passed
b) it is shown as a contingent liability
c) it is debited to profit and loss A/c
d) it is debited to tax paid A/c
69. When demand for tax is raised and it is disputed by the company through an appeal
it is _____.
a) shown as a current liability
b) shown as a contingent liability
c) not entered in the books
d) debited to profit and loss A/c
70. When the demand for tax is raised by the Income tax department and it is accepted
by the company it is _____.
a) debited to Profit and loss A/c and credited to provision for tax A/c
b) not entered in the books
c) shown as a contingent liability
d) debited to tax paid account
71. When the assessed tax is less than the provision made, it is _____.
a) debited to tax paid A/c and credited to Profit and Loss A/c
b) not entered in the books
c) debited to provision for tax A/c and credited Profit and Loss A/c
72. Dividend is calculated on _____.
a) paid up capital b) called up capital
c) calls in arrears d) none of the above
73. Accounting policies are prescribed by _____.
a) Companies Act b) AS 1
c) Income tax Act d) Sales tax Act
74. The following is not shown under share capital of a company _____.
a) calls in arrears b) preference share capital
c) forfeited shares A/c d) preference dividend
75. The following item is not shown as a Reserve _____.
a) Securities premium b) Capital Reserve
c) General Reserve d) None of the above
76. Interim dividend of a company can be declared by _____.

a) Shareholders b) Board of directors
c) M.D d) SEBI
77. Following is not a contingent liability _____.
a) Interim dividend b) Bills discounted
c) Liability under guarantee d) Arrears of preference dividend
78. Following item cannot be shown under provision _____.
a) provision for bad debts b) provision for taxation
c) provision for dividend d) unclaimed dividend
79. Following is not a secured loans _____.
a) Public Deposits b) Debentures
c) Loans from Banks d) None of the above
80. Following is not shown under Current Asset, Loans and Advances _____.
a) Closing Stock b) Bills Receivable
c) Bank balance d) Preliminary expenses
81. The following is not a fixed asset _____.
a) Live stock b) Patents
c) Loose Tools d) Machinery
82. The following is an appropriation of profit
a) Audit fees b) Provision for tax
c) Proposed dividend d) Director's fees
83. The following is a charge against income _____.
a) audit fees
b) provision for dividend
c) provision for dividend distribution tax
d) interim dividend
84. Advance tax is shown under _____.
a) Current liabilities b) Provisions
c) Loans and Advances d) Current Assets
85. The asset which is shown under fixed asset is _____.
a) Loose Tools b) Vehicles
c) Stock d) Investment
86. The asset which is intangible is _____.
a) Railway siding b) Patents and copyrights
c) Building d) Vehicles
87. Long term investments are shown in the company Balance sheet under _____.
a) Fixed assets b) Investments
c) Current Assets d) Miscellaneous Expenditure
Chapter – 5 : Introduction to IFRS

1. IFRS are issued by
a) IASB b) ICAI
c) FASB d) IASC
2. The ICAI has decided to adopt IFRS wef.
a) 1-4-2012 b) 1-4-2011
c) 1-4-2013 d) 1-1-2011
3. US GAAP are issued by
a) ICAI b) IASB
c) FASB d) IASC
4. The countries which have adopted IFRS are

a) Africa b) West Asia
c) Asia pacific d) All of the above
5. IFRS are the
a) Sets of financial Reporting standards
b) Rules of accounting
c) Sets of auditing standards
6. The objective of IFRS is to
a) ensure preparation of financial statements
b) ensure that the financial statements contain high quality information.
c) ensure uniformity in financial statements at national level
7. IFRS will facilitate
a) better access and reduction in cost of capital raised from global market.
b) easy borrowing from Indian Capital market.
c) improvement in comparability of financial information.
d) a + c
8. IFRS are applicable to All the entries having networth in excess of
a) ` 500 crores b) ` 1000 crores
c) ` 100 crores d) ` 10,000 crores
9. IASC was formed on
a) 1-1-2008 b) 1-7-2007
c) 1-7-2005 d) 1-4-2010
10. Till date the IFRS are
a) 18 b) 9 c) 25 d) 5
11. The IAS issued so far are
a) 46 b) 45 c) 41 d) 51
12. As on today the IAS in force are
a) 25 b) 21 c) 12 d) 29
13. The number of IAS withdrawn amounted to
a) 11 b) 15 c) 12 d) 18
14. Interpretations on application of IFAS are issued by
a) SIC b) IFRIC
c) IASB d) ICAI
15. Till date the number of IFRI interpretation issued is
a) 12 b) 18
c) 16 d) 21
16. Time frame for convergence to IFRS commences on
a) 1-5-2010 b) 1-4-2010
c) 1-10-2010 d) 1-7-2010
17. The first reporting period as per IFRS is
a) 2009-10 b) 2011-12
c) 2008-09 d) 2012-13
18. The first reporting date as IFRS is
a) 31-3-2011 b) 31-3-2010
c) 31-3-2012 d) 31-3-2013
19. The core group issued press release as on
a) 1-1-2010 c) 25-1-2011
b) 22-1-2010 d) 28-5-2010
20. The core group has decided to converge to IFRS IN

a) 2 phases b) 3 phases
c) 4 phases d) 5 phases
21. The first phase begins on
a) May 2010 b) April 2011
c) July 2011 d) Oct, 2010
22. The second phase begins on
a) May 2011 b) March, 2011
c) April 2013 d) July, 2011
23. SME are those organizations whose turnover does not exceed.
a) 101 crores b) ` 100 crores
c) ` 200 crores d) 250 crores
24. Snakall enterprises are those enterprises whose investment in plant & machinery
does not exceed.
a) ` 2 crores b) ` 2.5 crores
c) ` 3 crores d) ` 5 crores
25. Medium enterprises are those enterprises whose investment in plant & Machinery is
a) More than ` 5 crores but less than ` 10 crores
b) More than ` 5.5 crores but less than ` 15 crores
c) More than ` 7.5 crores but less than ` 20 crores
d) More than ` 10 crores but less than ` 25 crores
26. Financial statements as per IFRS are presented at
a) historical cost b) market value
c) Fair value d) replacement value
27. As per Indian GAAP financial statements are presented at
a) market value b) historical cost
c) Fair value d) replacement value
28. Fair value represents
a) transaction value b) average value
c) market value d) none of the above
29. Financial statements as per IFRS include
a) Balance sheet b) Profit & Loss A/c
c) Application A/c d) All of the above
30. Financial statements as per IFRS include
a) Cash flow statement
b) Summary of significant accounting policies
c) Balance sheet & Profit & Loss A/c
d) All of the above
31. Presentation of financial statements should be in compliance with
a) IAS
b) IFRS
c) IFRS, IAS and IFRIC interpretations
32. Current Assets are expected to realize within
a) 12 months b) 20 months
c) 24 months d) 36 months
33. Non current assets include
a) tangible assets b) intangible assets
c) financial assets d) all of the above
34. Intangible assets include

a) software b) website
c) patent d) all of the above
35. Property includes
a) Freeholder land b) Building
c) plant & equipment d) a & b
36. Biological assets include
a) Building b) machinery
c) Living animals d) none of the above
37. Current liabilities are those liabilities which are to be settled within a period of
a) 18 months b) 12 months
c) 21 months d) 24 months
38. Equity comprises
a) Equity instruments b) Share premium
c) Retained earnings d) all of the above
39. Incomes are
a) increases in the economic benefits b) decreases in the economic benefits
c) increases in net profit d) none of the above
40. Expenses are
a) increases in the economic benefits b) decreases in the economic benefits
c) decreases in cost d) none of the above
41. Fair value may be
a) market price b) Transaction price
c) P. V. of future cash flow d) all of the above
42. The approaches to fair valuation include :
a) 'In use' valuation premise b) In exchange valuation premises
c) a & b d) none of the above
43. The methods of valuation include :
a) Market approach b) cost approach
c) Income approach d) all of the above.
44. While applying the P. V. techniques the factors to be considered include :
a) Risk b) Uncertainity
c) Risk & uncertainty d) none of the above
45. The process of conversion to IFRS include
a) initial phase b) planning
c) execution d) all of the above
46. Total number of IAS are
a) 41 b) 40
c) 32 d) 20
47. Total number of IFRS are
a) 42 b) 9
c) 32 d) 20
48. IFRS 1 was issued in
a) June 2003 b) January 2003
c) June 2011 d) January 2005
49. In General terms, convergence means
a) achievement of compliance with IFRS
b) achievement of harmony in relation to IFRS
c) achievement of identity with IFRS
d) naming local accounting standards as IFRS
50. Convergence of Indian Accounting Standards with IFRS implies that

a) Indian Accounting Standards will be known as IFRS
b) IFRS will adopt Indian Accounting Standards
c) Indian Accounting Standards I will be known as IFRS 1.
d) Indian Accounting Standards will achieve harmony in relation to IFRS
II. FILL IN THE BLANKS WITH SUITABLE WORDS.

1. Amalgamation is covered under _____.
2. Amalgamations are of _____ types.
3. Amalgamation needs to be approved by _____ % of shareholders.
4. AS–14 covers only amalgamation of _____.
5. The payment made to debenture holders should _____ included in consideration.
6. The approval by _____ of shareholders is necessary for amalgamation in the nature of
_____.
7. The two methods of accounting for amalgamation are relevant for _____ company.
8. _____ method provides that assets and liabilities should be recorded at book value by
a new company.
9. Purchase method requires accounting for assets and liabilities at _____ by transferee
company.
10. Amalgamation Adjustment Account is applicable per _____ method of accounting.
11. Amalgamation includes _____ reconstruction.
12. Amalgamation of _____ is not covered under AS–14.
13. Arrangement between _____ or more companies is necessary for amalgamation.
14. Merger or absorption are schemes of _____.
15. Reserves of transferor company is required to be adjusted under_____ method of
accounting.
16. Unrecorded assets cannot be accounted per _____ method.
17. Amalgamation which does not fulfill conditions of merger is called _____.
18. Capital Reduction is _____ a variety of amalgamation.
19. The accounting for transferor company is in _____ manner irrespective of type of
amalgamation.
20. Goodwill or capital reserve can arise under _____ method of accounting.
21. In merger, all assets and liabilities are taken over at _____.
22. In amalgamation, the purchasing company is called as _____ company.
23. In amalgamation, the vendor company is called as _____ company.
24. _____ _____ _____ Method is followed for accounting merger.
25. Payment to _____ does not form part of purchase consideration.
26. Payment of liquidation expenses does not form part of _____.
27. As per AS–14, goodwill arising on amalgamation should be written off within _____
years.
28. Dissolution expenses paid by purchasing company are debited to _____ Account in
purchase.
29. Dissolution expenses paid by purchasing company are debited to _____ in merger.
30. In merger, shareholders holding _____% of the face value of equity shares become
equity shareholders of the transferee company.
31. Preliminary expenses are transferred to _____ Shareholders Account.
32. In merger, vendor companies are _____.
33. The company amalgamated into another company is _____ company.
34. Purchasing company is called as _____ company.

35. On amalgamation preliminary expenses are debited to _____ _____ _____.
36. Premium on settlement of preference shares is debited to _____ A/c.
37. Amalgamation Adjustment A/c appears in the Balance sheet under _____ _____.
38. Profit on Realisation is transferred to _____ _____ A/c.

1. The reduction of capital is permitted under _____ of Companies Act.
2. The Capital reduction means reduction in _____ value of shares.
3. The Sub – division of shares does not result in _____ of capital.
4. The Shareholders can surrender shares for _____ or _____.
5. The internal reconstruction results in proper valuation of _____ and _____ of
companies.
6. The scheme of internal reconstruction requires approval of _____.
7. _____ resolution is to be passed by shareholders for approval of scheme of
reconstruction.
8. The fictitious debit balances are to be transferred to _____ Account.
9. The difference in revaluation of assets is to be transferred to _____ Account.
10. A scheme of _____ or _____ mean the scheme having same effect.
11. The full balance of capital is to be debited, if _____ value is reduced
12. Shareholders not approving scheme is called _____ shareholders.
13. The Balance Sheet prepared after implementation of the scheme is to be suffixed by
words _____.
14. The expenses for forming and implementing scheme should be debited to _____.
15. The scheme of internal reconstruction can be utilized to provide _____ for the
company.
16. Capital Reduction Account is _____ by payment of reconstruction expenses.
17. The objective of reconstruction is to write off _____.
18. Court Confirmation Order has to be registered with the _____ of companies.
19. In _____, no new company is formed.
20. Appreciation in the value of land & building is recorded on _____ side of Capital
Reduction Account.
21. Any credit balance on Capital Reduction Account after writing off losses is
transferred to_____
Account.
22. In re-organisation, shares surrendered are transferred to _____ _____ A/c.
23. Payment for contingent liability is debited to _____ _____ A/c.
24. Fictitous assets are written off to _____ _____ A/c.
25. The objective of capital reduction scheme is to w/off _____.
26. In capital Reduction all the adjustments are made in _____ _____ A/c.
27. Reconstruction expenses are debited to _____ _____ A/c.
28. Appreciation in land and building is credited to _____ _____ A/c.
29. Internal Reconstruction is governed by section _____ of Companies Act.
30. Capital Reduction requires _____ _____.
31. Amicable settlement of differences by mutual consent by parties is _____.
32. Creditors foregoing their claims in whole or in part is _____.

1. The investment intended to be held for less than _____ months is called _____
investment as per AS–13.
2. The carrying amount of current investment is to be shown at _____ or _____ which

ever is lower.
3. The interest due upto date of purchase is to segregated from total price of
investment, if price is _____
4. The interest on investment is to be calculated on _____ of investment.
5. AS–13 provides for accounting for investment in _____ or _____.
6. Cost of investment includes purchase price and _____.
7. The brokerage and stamp duty paid at the time of purchase is _____.
8. The brokerage is calculated on _____ price of investment.
9. The cost of investment sold is to be ascertained as per AS–13 _____ method.
10. The premium received on sale of Rights is credited to _____.
11. In case of _____ interest due upto date of transaction is payable extra.
12. The receipt of bonus shares is to be shown in _____ column of investment.
13. The Investment Account is prepared in _____ column.
14. The difference between cost of debentures and amount received on redemption is
transferred to _____ Account.
15. Investment Account is debited for _____ on sale of investment.
16. The dividend received for pre-acquisition period is credited to _____ Account.
17. The balance in interest column in Investment Account is transferred to _____.
18. Ex-interest price includes _____ only.
19. The value of shares allotted on conversion of debentures is credited in _____ Account.
20. The right shares are shown in investment only when right is _____.
21. Cost of investment includes purchase price and _____.
22. Interest is always calculated on _____ _____ of securities.
23. Interest is paid to the holder on due date irrespective of his _____ period of holding.
24. Dividend on shares accrues on the date of _____.
25. Dividend is paid to the holder of shares on the date of _____ irrespective of actual
period of holding.
26. Equity share is a _____ income bearing security.
27. Interest is always calculated on _____ _____ of the security.
28. As per AS 13 on sale of investment profit or loss is calculated by deducting _____
_____ _____ of investment from sales.
29. Profit on sale of investment is transferred to _____ A/c.
30. Current investments are valued at cost or M.V. whichever is _____.
31. Sale proceeds of rights shares is credited to _____ A/c.
32. In the case of cum interest price cost of acquisition is cum interest price less _____.
33. On sale of equity shares the equity shares A/c is credited by _____ _____ _____.
34. _____ shares received increase Nominal Value of shares held.

1. The final accounts of companies are to be prepared in accordance with the provision
of _____ of the Companies Act.
2. The company’s final accounts can be prepared in _____ form or in _____ form.
3. The summarised Balance Sheet in _____ form is supplemented by schedules giving
detailed information.
4. The specific form of Profit & Loss Account is ___ provided under the Companies Act.
5. The terms of Balance Sheet should be shown in _____ order / sequence.
6. The additional information for specific items specified in Schedule VI should be _____
to the extent applicable.
7. The _____ value of investment should be indicated by way of a note.
8. The balance in Share Forfeiture Account after reissue of forfeited shares is to be

shown as _____.
9. The exchange difference for repayment of liability relating to purchase of fixed assets
is to be disclosed as change on _____.
10. The amount of debtors due for more than _____ months is to be shown separately.
11. Current liabilities means liabilities payable within _____ months form the date of
Balance Sheet.
12. Fixed deposits with banks should be shown as _____.
13. Immovable properties held for companies operation is to be shown as _____.
14. Immovable properties held for source of additional income is to be shown as ____.
15. The interest on loan which has accrued and due is shown as _____.
16. Debit balance in Profit & Loss Account can be shown as _____.
17. Uncalled amount on shares held as investment is shown under the heading _____.
18. Bills discounted is to be shown as _____.
19. The value of secured loan should also show particulars of _____ offered.
20. The capital work in progress is added to _____ in Balance Sheet.
21. Loose tools are shown under _____ assets.
22. Live stock is shown under _____ assets.
23. Bills receivable is shown under _____.
24. Arrears of preference dividend is shown under _____ liabilities.
25. Interest accrued but not due on secured loans is shown under _____ _____.
26. Unclaimed dividend is shown under _____ _____.
27. Profit and Loss of a company must be as per part _____ of schedule VI of Companies
Act.
28. Repairs to building must be shown as a _____ _____ on debit side of Profit and
Loss A/c.
29. Public deposits accepted by companies must be shown under _____ _____.
30. Development expenditure is shown under _____ _____.
31. Short term loan is the loan due for not more than _____ year.
32. Remuneration to MD must be shown as a _____ item in Profit and Loss A/c.
33. Bills Receivable is shown under _____ in Balance sheet.
34. Net Block of fixed assets is shown _____ Balance sheet.
35. Net Block is Gross Block _____ _____.
36. Income tax under dispute is shown under _____ _____.
37. Dividend is calculated on _____ capital.
38. Accounting policies are prescribed by _____.
39. Dividend is declared by _____.
40. Live stock is shown under _____assets.
41. Provision for dividend is an _____ of profit.
Chapter 5 : Introduction IFRS

1. IFRS stands for ______ ______ ______ ______.
2. IFRS enhances ______ in accounting principles.
3. Financial statements based on IFRS become ______.
4. Companies Act ______ IFRS.
5. A core group is constituted by ______.
6. Companies having net worth in excess of ______ crore are covered at the first phase.
7. Under IFRS assets are classified as ______ ______ and ______.
8. Living animals are classified as ______ assets.
9. Contractual obligations are ______ liabilities.
10. Current assets are primarily held for ______.

11. Fair value is the ______ ______ value of assets.
12. The process of convergence to IFRS include ______ ______ and ______ phase.
III. MATCH THE COLUMNS.
1. Group 'A' Group 'B'

1. Amalgamation a) Pooling of interest
2. Merger type b) Purchase type
3. Consideration c) AS–14
4. Approval by 90% shareholders d) Merger type
5. Approval by 75% shareholders e) Payment for shareholders

1. Purchase Method a) Book value
2. Amalgamation Adjustment Account b) Revised value
3. Capital reserve c) Excess of consideration
4. Merger Method d) Excess of net asset taken over
5. Goodwill e) Purchase Method

1. Transferor company a) Covered as amalgamation
2. Transferee company b) Can be only one
3. Can be one or more c) Not covered as amalgamation
4. Absorption of company d) To be liquidated
5. Sale of specific asset e) Transferor company

1. Preference share capital a) Credit Equity Shareholders’ A/c
2. General reserve b) Debit Equity Shareholders A/c
3. Profit & Loss A/c debit balance c) Credit Realisation Account
4. Unsecured loans d) Credit Preference Shareholders
Account
5. Bank Account (not taken over) e) Debit Bank Account

1. Amalgamation Adjustment A/c a) Debited to Goodwill Account
2. Goodwill / capital reserve b) Arises under Purchase Method
3. Dissolution expenses paid by c) Amount payable to shareholders
purchasing company
4. Purchase consideration d) Disclosed under ‘Miscellaneous
Expenses’
5. Two types of amalgamation under e) Merger and purchase
AS–14

1. Deepika Ltd. takes over Ranbir Ltd. a) Governed by AS 14
2. Accounting for amalgamation b) are liquidated
3. On merger vendor cos c) Purchasing company
4. Transferee Company d) Preliminary expenses are
debited to equity shareholders
5. On amalgamation e) amortised on systematic basis
6. Goodwill on amalgamation f) shown under miscellaneous
expenses
7. Amalgamation Adjustment A/c g) vendor co's books are closed
8. on amalgamation h) is an absorption
i) Capital Reserve
j) purchase consideration

1. Capital reduction a) Transfer to capital reduction
2. Fictitious balance b) Section 100
3. Capital reduction scheme c) No reduction of capital
4. Consolidation of shares d) Internal reconstruction
5. Subdivision of shares e) No change in capital

1. Surrender of shares a) Credit – capital reduction
2. Cancellation of surrendered shares b) Unchanged capital
3. Surplus on revaluation of asset c) Transfer to capital reserve
4. Loss on revaluation of asset d) Transfer to capital reduction
5. Credit balance in capital reduction e) Debit capital reduction

1. Balance Sheet after reduction a) Not transferable to capital
reduction
2. Statutory reserve b) Transfer difference to capital
reserve
3. Expenses for scheme c) Cancel present capital, raise
new capital and difference to
reduction
4. Reduction in paid up value of d) Indicate, ‘and reduced’
shares
5. Reduction in face value of e) Debit capital reduction account
debentures

1. Internal reconstruction a) Provisions of company law
2. External reconstruction b) Section 494
3. Alteration of share capital c) Section 94, 95 and 97
4. Variation of shareholders’ rights d) Section 106
5. Compromise with creditors e) Section 391 to 393 and 394A
f) Section 100

1. Internal Reconstruction a) Compromise
2. Creditors accepting part payment b) Compromise
3. Debentureholders accepting part c) Utilised to write off preliminary
payment expenses
4. Internal Reconstruction d) No company liquidated
5. Capital Reduction balance e) Special resolution by
shareholders
6. Internal Reconstruction requires f) Requires court–order
7. Capital Reduction g) Arrangement
8. Rearrangement of rights without h) Surrender
any dispute
i) Merger
j) sector 494

1. Debentures a) AS–13
2. Investment Account b) Securities with fixed income
3. Shares c) Fixed income
4. Cost of investment d) No fixed income
5. Sold bonds e) Weighted Average Method

1. Investment for over 12 months a) Current investment
2. Investment to be traded b) Face value
3. Cum interest price c) No cost
4. Interest calculation d) Long term
5. Bonus shares e) Includes interest

1. Pre-acquisition income a) Profit & Loss Account
2. Receipt on sale of rights b) Credit interest column
3. Interest after purchase c) Three columns
4. Investment Account d) Credit to Investment Account
5. Different types of investment e) Separate account for each

1. Current investment a) Investment held for less than 12
months
2. Long-term investment b) Investment held for more than
12 months
3. Variable income bearing securities c) Equity shares
4. Fair value d) Includes purchase price &
brokerage
5. Acquisition cost e) Value at which asset could be
exchanged

1. Rights Shares a) is transferred to Profit and Loss
A/c
2. Interest is calculated b) are valued at cost of MV
whichever is less
3. Profit on sale of investment c) credited to Profit and Loss A/c
4. Current Investments d) on face value of securities
5. Sale of rights shares e) is debited to Profit and Loss
A/c
6. Loss on sale of Investment f) increase Face value of
investment
7. Bonus shares issued g) issued to existing shareholders
8. AS 13 h) deals with accounting for
Investment
i) AS 14
j) Cost of investment

1. Balance Sheet a) Not per specified form
2. Contingent liabilities b) Per specified form
3. Profit & Loss Account c) Part IV of Schedule VI
4. Company profile d) Not to be allotted
5. Previous year amount e) Not for first year

1. Unpaid investors loan a) Loan
2. F. D. with Bank b) Balance Sheet
3. Accrued interest on loan c) Profit & Loss Account
4. Miscellaneous expenditure d) Bank balance
5. Miscellaneous expenses e) Current liability

1. Prior period items a) Payment to auditors
2. Audit fee b) Current liability
3. Note to Balance Sheet c) Appropriation Account
4. Unpaid assessed tax d) Investment
5. Building let out to earn rent e) Contingent liability

1. Unsecured loans a) Current assets
2. Loose tools b) Public deposits
3. WIP c) Current assets
4. Live stock d) Fixed assets
5. Trade marks e) Fixed assets
1. Proposed dividend a) Miscellaneous expenditure

2. Interest out of capital b) Contingent liability
3. Disputed tax demand c) Current liabilities
4. Interest accrued but not due d) Secured loans
5. Interest on debentures accrued e) Provisions
and due

1. Due for more than 6 months a) Share capital
2. Issue of bonus shares b) Share capital
3. Issue of shares for consideration c) Audit fees
other than cash
4. Payment of taxation work d) Bank balance
5. Balance with scheduled bank e) Sundry debtors

1. Profit and Loss A/c must be a) is shown under current liability
2. Repairs to building b) is shown under current liability
3. Interest accrued but not due on c) is shown under fixed asset
Loan
4. Unclaimed dividend d) is shown under Loans and
advances
5. Live stock e) is shown under miscellaneous
expenditure
6. Prepaid Insurance f) is shown as a note to Balance
sheet
7. Interest out of capital during g) preference share capital
construction period
8. Arrears of preference dividend h) as per part II of Schedule- VI
Chapter 5 : Introduction to IFRS
Column A Column B
1. IFRS a) Companies having Net worth in
excess of ` 1000/- crore
2. IFRS enhances b) Biological assets
3. Decision to Converge c) July 2011
4. Core group d) Constituted by MCA
5. First phase of Implementation e) International Financial Reporting
Standard
6. Living Animals f) Uniformity in Accounts
7. Fair Value g) Present Realizable Value of
Assets
8. Three Phases of Convergence h) Initial, Planning and Execution
i) Market Approach
IV. STATE WHETHER THE FOLLOWING STATEMENTS ARE TRUE OR

FALSE.

1. Accounting for amalgamation is governed by AS–14.
2. Amalgamation involves two or more companies.
3. Amalgamation includes reconstruction.
4. Scheme of amalgamation requires approval by 75% of shareholders of every company
involved.
5. The payment made to debenture holders is a part of purchase consideration.
6. The two varieties of accounting methods are applicable for transferor companies.
7. Pooling of interest method requires the modification of balance in reserves.
8. If payment of consideration to shareholders is partly by cheque, the method of
accounting applicable is purchase of business.
9. Amalgamation Adjustment Account is applicable under purchase method.
10. Capital reserve or goodwill can arise in pooling of interest method.
11. Dissenting holders claim to be paid as per the decision of directors.
12. Amalgamation and demerger indicates dissimilar schemes.
13. Internal reconstruction is one of the variety of amalgamation.
14. Accounting for absorption or take over is not covered under AS–14.
15. Payment to preference shareholders for unpaid dividend is to be included in
consideration.
16. Partly paid shares cannot be issued as consideration.
17. The shares of transferor company should always be fully paid up.
18. The final accounts of amalgamated company should suffix the words “And
increased”.
19. In a scheme of amalgamation unusable assets may not be transferred to amalga-
mated company.
20. Amalgamation becomes merger only when assets and liabilities taken over become
the assets and liabilities of transferee company.
21. Purchase consideration includes payment to creditors also.
22. Under purchase method, excess of net assets over purchase consideration is
transferred to capital reserve.
23. On amalgamation, transferor company cannot be dissolved.
24. Fictitious assets appearing in the Balance Sheet of transferor company are
transferred to Realisation Account.
25. In amalgamation, two or more companies are liquidated and one is formed.
26. Goodwill arising on amalgamation as per AS–14 is retained in the books till
liquidation.
27. Under Pooling of Interest Method, the transferee company incorporates in its books
only the external liabilities and assets of the transferor company.
28. In Net Asset Method of purchase consideration, even fictitious assets are considered.
29. In external reconstruction, there is one liquidation and one formation.
30. In Pooling of Interest Method, all assets and liabilities are incorporated in the books
of transferee company at book value.
31. AS–14 does not make any distinction between amalgamation and absorption.
32. Absorption takes place when an existing company takes over two or more companies.
33. Takeover of Santoshkumari Ltd. by Santoshkumar Ltd. a new company is external
recontruction.
34. On merger vendor companies are not liquidated.
35. Transfree company is a vendor company on amalgamation of companies.
36. On amalgamation preliminary expenses are debited to Realisation A/c.
37. In Merger assets and liabilities of vendor company are transferred to purchasing
company at book value.
38. Goodwill on amalgamation is the excess of purchase consideration over net assets
taken over.
39. Under amalgamation profit on Realisation is transferred to preference shareholders
A/c.
40. On amalgamation payment of liquidation expenses does not form part of purchase
consideration.
41. In Merger all the assets and Liabilities are not transferred to Transfree company.
42. On amalgamation debentures of transferor company are credited to Realisation A/c

1. Capital reduction and internal reconstruction is synonym.
2. Capital reduction is one variety of capital restructuring.
3. Consolidation of shares result in profit for a company.
4. Sub-division of shares result in gain for a company.
5. Fictitious balances are to be transferred to Capital Reduction Account.
6. Accounting for unrecorded assets and appreciation of assets results in credit to
Reconstruction Account.
7. Provision for unrecorded liability indicates loss to a company.
8. Accounting for internal and external reconstruction is in identical manner.
9. The reduction in paid up value should not be coupled with reduction in face value of
shares.
10. If shareholders surrender shares to the company, it is capital profit to the company.
11. Re-classification of surrendered shares should not be accounted.
12. Cancellation of contingent liability is treated as profit to the company.
13. Transfer of assets to creditors at book value is benefit to the company.
14. The expenses for scheme should be debited to preliminary expenses.
15. Statutory reserve can be utilized to set-off loss under the scheme.
16. The final accounts prepared after reconstruction should be suffixed by words “and
reduced”.
17. The requirements of Schedule VI is to be complied while preparing account after
internal reconstruction.
18. Authorised share capital is to be reduced to the extent of capital reduction.
19 Internal reconstruction scheme cannot be prepared to cover capital reconstruction.
20. The debit balance in capital reduction should be transferred to Goodwill Account.
21. Credit balance on Capital Reduction Account is utilised to write off accumulated
losses.
22. After internal reconstruction, Balance Sheet of a company cannot reflect true and
fair view.
23. Profit on sale of asset is credited to Capital Reduction Account.
24. A company cannot subdivide shares.
25. Only sick companies undertake capital reduction.
26. No journal entry is required for cancellation of unissued share capital.
27. Central Government permission is required for internal reconstruction.
28. Amount sacrified by shareholders in a scheme of reconstruction is transferred to
Capital Reserve Account.
29. Securities Premium Account can be transferred to Capital Reduction Account.
30. The object of reconstruction is to reorganise capital of the company.
31. Internal Reconstruction is governed by section 809 of the Company Law.
32. Creditors accepting part payment of their claims is a compromise.
33. Capital Reduction A/c balance is utilized for issue of bonus shares.
34. Internal Reconstruction requires ordinary Resolution of the Board of Directors.
35. Capital Reduction requires court order.
36. Creditors foregoing the claim is an arrangement.
37. Amicable settlement of differences by mutual consent by parties is a merger.
38. A company going for internal reconstruction must add the words, and reduced after
its name.

1. The investments as per AS–13, is under only financial investment.
2. The account for investments should have separate columns for cost and for number.
3. The income for pre acquisition period should be credited to Investment Account.
4. All Investment transactions are presumed cum-interest unless otherwise stated.
5. It is compulsory to sell current investments within 12 months after the date of
purchase.
6. Long term investments can never be sold within 12 months.
7. Current investment are to be carried at lower of cost or market value.
8. The difference between cost and market value in all cases is transferred to Profit &
Loss Account.
9. Investment Fluctuation Reserve Account is maintained to transfer difference between
cost and market value of investment.
10. Cost of investment includes expenses incidental to purchase (like brokerage, stamp
duty, taxes).
11. Separate account for each item of investment is necessary.
12. The receipt of bonus share certificates is not to be considered in account.
13. The money received on renunciation of rights shares is to be credited to Investment
Account.
14. The brokerage is payable on face value of investments.
15. The brokerage & expenses for investments are always added to transaction
value.
16. Assets, which are held as stock in trade, are investments.
17. Pre-acquisition dividend is entered in cost column of Investment Account.
18. Sale of rights entitlements is entered in the Investment Account.
19. Interest is always calculated on face value of the securities.
20. Ex-interest price includes interest accrued.
21. Cum-interest price excludes interest accrued.
22. Dividend on shares accrues on the date of closure of books.
23. In the case of bonus issue, only nominal value is entered in nominal value column of
the Investment Account.
24. When rights shares are sold (without subscribing), no entry is made in the
Investment Account.
25. When rights shares are sold without subscribing, sale proceeds are credited to Profit
& Loss Account.
26. Long-term investments are always valued at cost at the end of the year.
27. Whether the quotation is ex-interest or cum-interest, accrued interest is always
calculated and entered in the income column of the Investment Account.
28. Nominal value column of Investment Account represents Memorandum column.
29. Investments held for less than 12 months are current investments.
30. Investments held for more than 12 months are long-term investments.
31. Equity share is a fixed income bearing security.
32. Interest on Debentures is paid to the original holder.
33. Profit on sale of investment is transferred to Profit and Loss A/c.
34. Dividend on shares accrues on due date.
35. Current investments are valued at cost.
36. Sale of rights shares is credited to Investment A/c.
37. Loss on sale of investment is simple average cost less net sale.
38. Loss on sale of investment is debited to profit and loss A/c.
39. Issue of bonus shares is entered in N.V. column of Investment A/c
Chapter 4 : Final Accounts of Companies

1. The company’s final accounts should be prepared in the form prescribed under
Companies Act.
2. Accounting policies adopted by a company should be disclosed as per AS–1.
3. Provision for contingent liabilities should be made in accounts.
4. Immovable property can be included as investments.
5. Fictitious balances are shown as assets.
6. For a company preparation of Manufacturing and Trading Account is optional.
7. For a company, dividend paid is an expense.
8. The cost and WDV of each class of fixed assets is to be disclosed.
9. The mode of valuation of inventory is to be disclosed.
10. The Companies Act does not prescribe form of Profit & Loss Account.
11. The form of presentation of final account may be horizontal or vertical.
12. The prior period provision for tax should be disclosed in Profit & Loss Account.
13. Payment of fees for taxation consultation paid to auditor should be shown as
professional fees.
14. The depreciation on assets to be provided as per Schedule XIV of the Companies Act.
15. The compulsory transfer to reserve is required whether a company declares dividend
or not.
16. Unpaid balance for expenses is shown as current Liabilities.

17. Authorised capital is disclosed only for information.
18. Contingent liabilities does not result in losses in all cases.
19. The balances in various types of account with banks are to be disclosed.
20. Change in accounting policy adopted should be disclosed.
21. Profit & Loss Account must comply with the requirements under Schedule VI of the
Companies Act, 1956.
22. Any dividend remaining unpaid after 3 years from its due date can be transferred to
capital reserve.
23. Capital profit received in cash can be used for payment of dividend.
24. Dividend can be paid out of capital.
25. Goodwill is not depreciated.
26. Amount paid on forfeited shares is added to paid up capital.
27. Calls in arrears are added back to authorised capital.
28. Sundry debtors are classified as institutional debtors and individual debtors.
29. Unclaimed dividend is shown under ‘Reserves’.
30. Public deposits are disclosed under ‘Unsecured Loans’.
31. Net current assets are disclosed under horizontal format of Balance Sheet.
32. Companies must prepare their financial statements in vertical format only.
33. Separate schedules are not necessary under vertical format.
34. Provision for bad debts is shown under ‘Provisions’.
35. Capital work in progress is shown under ‘Share Capital’.
36. Calls in advance are disclosed in the Balance Sheet separately.
37. Export of goods calculated on CIF basis is disclosed as a note to Profit & Loss
Account.
38. Brokerage on issue of shares is disclosed under ‘Miscellaneous Expenditure’.
39. Loose tools are shown under ‘Fixed Assets’.
40. Balance sheet shows the result of activities conducted during the year.
41. Public deposit is secured loan.
42. Development expenditure is shown under fixed assets.
43. Arrears of preference dividend is shown under current liabilities.
44. Net Block is Gross Block plus accumulated depreciation.
45. Short term loan is the loan due for more than 5 years.
46. Dividend is calculated on issue price of shares.
47. Interim dividend is declared by Board of directors.
48. Bills under discount is a contingent liability.
49. Loose tools are shown under current liabilities

1. IFRS are the Financial Reporting Standards issued by IASB.
2. The objective of IFRS is to ensure that financial statements report high quality
information.
3. IFRS enhances uniformity in the accounting principles.
4. Due to IFRS, cost of raising funds in the foreign market will be higher.
5. Investors will rely on financial statements prepared as per IFRS.
6. IFRS will override company law.
7. ICAI has decided to have convergence of AS with IFRS in July 2011.
8. A core group is constituted by MCA.
9. The first phase of implementation of IFRS was for those companies having net worth
over 1,000 crores.
10. Under IFRS assets are classified as Financial Assets, Current Assets and Non-
Current Assets.
11. Living animals are classified as Biological assets.
12. Contractual obligations are financial liabilities.
13. Current liabilities are primarily held for trading.
14. Equity comprises equity instruments, share premium and retained earnings.
15. Fair value is the present realizable value of assets and liabilities.
16. There are three techniques i.e. Market Approach, Cost Approach and Income
Approach for the purpose of valuation.
17. The process of convergence to IFRS include three phases i.e. initial phase, planning
and execution.
V. THEORY QUESTIONS - SHORT NOTES

1. Merger.
2. Purchase of business.
3. Pooling of Interest method.
4. Purchase consideration.
5. Goodwill.
6. Capital Reserve A/c.
7. Amalgamation adjustment A/c.
8. Disclosure under AS 14.
9. Treatment of Debentures.
10. Treatment of Amalgamation Expenses.

1. Need for internal reconstruction.
2. Alteration of Share capital.
3. Consolidation of share capital.
4. Sub-division of share capital.
5. Conversion of shares into stock.
6. Capital Reduction.
7. Surrender of shares.

1. Long Term Investment.
2. Current Investment.
3. Cost of Investment.
4. Disposal of Investment.
5. Carrying amount of Investment.
6. Weighted average method.
7. Cum-Interest quotation.
8. Ex-Interest quotation.
9. Pre-acquisition dividend.
10. Bonus Shares.
11. Rights shares.
12. Valuation of Investment.

1. Share Capital
2. Long Term Borrowings
3. Long Term Provisions
4. Short Term Borrowing
5. Short Term Provisions
6. Trades payables
7. Tangible Assets
8. Intangible Assets
9. Non – Current Investment
10. Current Investments
11. Trade Receivables
12. Cash and Cash Equivalents
13. Finance Cost
14. Share Application money pending Allotment
15. Deferred Tax liabilities
16. Deferred Tax Assets
17. Capital Advances
18. Capital Work in Progress
19. Employee benefit expenses
20. Exceptional items
21. Extra – ordinary items
22. Amortization
VI. SHORT QUESTIONS

1. What is Amalgamation of Companies?
2. What are the types of Amalgamation as per AS 14?
3. What is Merger?
4. What is purchase of business?
5. Who is a Transferor or Company?
6. Who is a Transferee Company?
7. What is Amalgamation Adjustment A/c?
8. What is Purchase Consideration?
9. How is Purchase Consideration calculated as per Net Asset method?
10. How is Purchase Consideration calculated as per Net Payment method?
11. What do you mean by Accumulated Profits?
12. What do you mean by Accumulated Losses?
13. Mention any five items of Accumulated Profits.
14. Which funds are strictly liabilities?
15. Which funds are accumulated profits?
16. What is Intrinsic value of a share?
17. How are Realisation expenses treated in Amalgamation of Companies?
18. How is the claim of Equity Shareholders settled?
Chapter 2 : Capital Reduction & Internal Reconstruction

1. What is Internal Reconstruction?
2. Why is Internal Reconstruction needed?
3. What is consolidation of Share Capital?
4. What is sub-division of Share Capital?
5. What is surrender of shares?
6. To which A/c balance on Capital Reduction A/c is transferred?
7. Why, the words 'And Reduced' added to the name of the company after
reconstruction?
8. What is alteration of share capital?

1. Which AS govern personal Investment A/c?
2. Which three factors should be considered while doing investment?
3. What is liquidity?
4. What is long-term investment?
5. What is current investment?
6. What do you mean by variable earning securities?
7. What do you mean by fixed earning securities?
8. What is cost of Investment?
9. What is fair value?
10. What is the basis of calculation of brokerage?
11. What is carrying amount of investment?
12. How the long-term investments are carried in the books?
13. How the current investments are carried in the books?
14. What is average cost?
15. How the proceeds on Right Entitlement dealt with?
16. What is cum-interest price?
17. What is Ex-interest price?
18. How bonus shares received are dealt with?
19. What is Pre-acquisition dividend? How is it dealt with?

1. What is Equity?
2. What is Shareholders Fund?
3. Which type of format is provided by Companies Act for final accounts of Companies?
4. What is the date of application of Revised Schedule VI?
5. What is Rounding off provision?
6. What is Non current liability?
7. What is Current Liability?
8. What is Operating Cycle?
9. What is long term borrowings?
10. What is Deferred Tax Liability?
11. What is Deferred Tax Asset?
12. What is Current Asset?
13. What is Fixed Asset?
14. What is Intangible Fixed Asset?
15. What is Tangible Fixed Asset?
16. What is Trade Payables?

17. Mention any three items which are disclosed under other current liabilities.
18. What is Short–term provision?
19. What is Non Current Investment?
20. What is Current Investment?
21. What is Trade Receivables?
22. What is Cash and Cash Equivalent?
23. What is Contingent Liability?
24. What is other Income?
25. Mention any five items which are disclosed under other Income.
26. What is Extra–ordinary item?
27. Mention any two items which are no longer mandatory for disclosure.

1. What is IFRS ?
2. Who decides IFRS ?
3. What is the date of implementation of IFRS ?
4. Who issues USGAAP ?
5. Which Countries have adopted IFRS ?
6. What is the objective of IFRS ?
7. What is the benefit of IFRS ?
8. Mention one Challenge posed by IFRS.
9. To which enterprise IFRS are applicable?
10. Which enterprises are called as small enterprises ?
11. Which enterprises are called as medium enterprises ?
12. How many IFRS are issued so far ?
13. How many IAS are issued so far ?
14. How many IAS are in force now ?
15. What is the IFRIC ?
16. What is the Job of IFRIC ?
17. How many AS are issued so far ?
18. What is the date of commencement of time frame for convergence to IFRS ?
19. What is the first reporting period as per IFRS ?
20. What is a Core Group ?
21. What is the job of a Core Group ?
22. In how many phases the convergence to IFRS will take place ?
23. When will the first phase of convergence take place ?
24. What are medium enterprises ?
25. As what value financial statements as per IFRS are presented ?
26. What is the difference between presentation of financial statement as per IAS and
IFRS ?
27. What is fair Value ?
28. What statements are included as per IFRS in financial statements ?
29. What is a current asset as per IFRS ?
30. What is a current liability as per IFRS ?
31. What is non-current asset ?
32. Give three examples of intangible assets ?
33. What is Property as per IFRS ?
34. What is biological asset ?
35. What are the components of equity ?

36. What is an income as per IFRS ?
37. What is an expense as per IFRS ?
38. What is fair value ?
39. What are the approaches to fair valuation ?
40. What is the process of conversion to IFRS ?

Objective Questions: Synopsis

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Objective Questions 1

I. MULTIPLE CHOICE QUESTIONS

Chapter 1 : Amalgamation of Companies

32. As per Companies Act 1956, _____.

c) Credited to securities premium Account

54. Goodwill arising on amalgamation is to be ______.

Chapter 2 : Capital Reduction and Internal Reconstruction

28. In Internal Reconstruction _____.

Chapter 3 : Investment Accounting

3. The requirements regarding investment are specified in as _____.

17. Cost of right shares is _____.

29. Profit on sale of investment is transferred to _____.

c) credited to Profit and Loss A/c

Chapter – 4 : Final Accounts of Companies

c) disclosed as miscellaneous expenditure

39. Forfeited shares is _____.

52. Interest accrued on investment is shown under _____.

76. Interim dividend of a company can be declared by _____.

Chapter – 5 : Introduction to IFRS

4. The countries which have adopted IFRS are

20. The core group has decided to converge to IFRS IN

34. Intangible assets include

50. Convergence of Indian Accounting Standards with IFRS implies that

II. FILL IN THE BLANKS WITH SUITABLE WORDS.

Chapter 1 : Amalgamation of Companies

34. Purchasing company is called as _____ company.

Chapter 2 : Capital Reduction and Internal Reconstruction

Chapter 3 : Investment Accounting

2. The carrying amount of current investment is to be shown at _____ or _____ which

Chapter – 4 : Final Accounts of Companies

8. The balance in Share Forfeiture Account after reissue of forfeited shares is to be

Chapter 5 : Introduction IFRS

10. Current assets are primarily held for ______.

III. MATCH THE COLUMNS.

Chapter 1 : Amalgamation of Companies

1. Group 'A' Group 'B'

2. Group 'A' Group 'B'

3. Group 'A' Group 'B'

4. Group 'A' Group 'B'

5. Group 'A' Group 'B'

6. Group 'A' Group 'B'

Chapter 2 : Capital Reduction and Internal Reconstruction

1. Group 'A' Group 'B'

2. Group 'A' Group 'B'

3. Group 'A' Group 'B'

4. Group 'A' Group 'B'

5. Group 'A' Group 'B'

Chapter 3 : Investment Accounting

1. Group 'A' Group 'B'

2. Group 'A' Group 'B'

3. Group 'A' Group 'B'

4. Group 'A' Group 'B'

5. Group 'A' Group 'B'

Chapter – 4 : Final Accounts of Companies

1. Group 'A' Group 'B'

2. Group 'A' Group 'B'

3. Group 'A' Group 'B'

4. Group 'A' Group 'B'

5. Group 'A' Group 'B'

1. Proposed dividend a) Miscellaneous expenditure

6. Group 'A' Group 'B'

7. Group 'A' Group 'B'

Chapter 5 : Introduction to IFRS

2. The carrying amount of current investment is to be shown at _ or _ which