School of Distance Education

UNIVERSITY OF CALICUT
School of Distance Education

III SEMESTER

B Com
Core Course BCM3 B04

CBCSS UG (2019 Admissions Onwards)

CORPORATE ACCOUNTING
MULTIPLE CHOICE QUESTIONS

1. When all debentures are redeemed, balance in the Debenture Redemption Fund
Account is transferred to:
(a) Capital Reserve (c) Profit & Loss Appropriation A/c
(b) General Reserve (d) None of these.

2. According to SEBI guidelines, a Company will have to create debenture redemption

reserve equivalent to the amount of the following percentage of debenture issued:
(a) 50% (c) 70%
(b) 25% (d) 100%

3. The balance of ‘Sinking Fund Account’ after the redemption of debentures is

transferred to :
(a) Profit & Loss Account (c) General Reserve Account
(b) Profit & Loss Appropriation Account (d) Sinking Fund Account

4. Profit on cancellation of own debentures is transferred to:

(a) Profit & Loss Account (c) General Reserve Account
(b) Profit & Loss Appropriation Account (d) Capital Reserve Account

5. If debenture of ` 1,00,000 were issued for discount of ` 10,000, which are redeemable
after four years. Then amount of discount to be written off from P. & L. Account each year is
(a) `3,000 (c) ` 2,500
(b) ` 4,000 (d) ` 5,000

6. Debentures can be redeemed out of:

(a) Profit (c) Provision
(b) Capital (d) All of the above

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7. Premium on redemption of debentures is a :

(a) Personal A/c (c) Nominal A/c
(b) Real A/c (d) Suspense A/c

8. Premium on redemption of debentures is generally provided at the time of …………

(a) Issue of debentures (c) Writing off
(b) Redemption of debentures (d) After 10 years

9. Debentures cannot be redeemed at:

(a) Par (c) Discount
(b) Premium (d) More than 10% premium

10. If debentures purchased in open market are not immediately cancelled, they are treated as
(a) Current Assets (c) Investment
(b) Current Liabilities (d) Capita

11. Sources of finance of the redemption of debentures are:

(a) Redemption out of profits
(b) Redemption out of capital
(c) The proceeds from fresh issue of shares/debentures
(d) All the above

12. A company issued 1,000, 12% debentures of ₹100 each at 10% premium. 12%
stand for:
(a) Rate of dividend (c) Rate of interest
(b) Rate of Tax (d) None of these

13. A company should transfer to Debenture Redemption Reserve A/c at least what
percent of the amount of debentures issued before the commencement of redemption of
debentures-
(a) 50% (c) 15%
(b) 25% (d) 100%

14. If redemption of debentures is made by conversion method, the amount to be

transferred to ‘Debenture Redemption Reserve Account’ will be equal to…….percent of
converted amounted.
(a) 40 (c) 60
(b) 50 (d) Not required

15. Loss on Issue of Debenture Account is shown:

(a) On Assets side of Balance Sheet (c) On Credit side of P & L Account
(b) On Liabilities side of Balance Sheet (d) None of these

16. Profit on sale of Sinking Fund Investment is transferred to:

(a) Profit & Loss Account (c) Sinking Fund Account
(b) General Reserve (d) Capital Reserve

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17. Premium on Redemption of Debentures A/c is:

(a) Asset (c) Liability
(b) Expenses (d) Revenue

18. Interest on sinking fund investment is credited to :

(a) Profit & Loss A/c (c) General Reserve A/c

(b) Sinking Fund A/c (d) Sinking Fund Investment A/c

19. Sinking fund investment is:

(a) An Income (c) An Asset
(b) An expense (d) A Liability

20. When debentures are issued at par and are redeemable at a premium, the loss on such
an issue is debited to :
(a) Profit & Loss A/c (c) Loss on Issue of Debentures A/c
(b) Debenture Application and Allotment A/c (d) Premium on Redemption A/c

21. Own debentures are those debentures of the company which ?

(a) The company allots to its own promotors
(b) The company allots to its directors
(c) The company purchases from the markets and hold them as investments
(d) None of these

22. When debentures are redeemed out of profits, an equivalent amount is transferred to :
(a) General Reserve (c) Capital Reserve
(b) Debenture Redemption Reserve (d) Profit & Loss A/c

23. Profit on sale of debentures redemption fund investment in the first instance in
credited to :
(a) Debenture Redemption Fund A/c (c) General Reserve A/c
(b) Profit & Loss Appropriation A/c (d) Sinking Fund A/c

24. When debentures are issued at a discount and are redeemable at a premium, which of
the following accounts is debited at the time of issue ?
(a) Debentures A/c
(b) Premium on Redemption of Debentures A/c
(c) Loss on Issue of Debentures A/c
(d) Profit & Loss A/c

25. According to SEBI guidelines what percentage of the amount of debentures must be
transferred to Debenture Redemption Reserve, before the commencement of redumption of
debentures, in case of convertible debentures ?
(a) 25% (c) 100%
(b) 50% (d) zero

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26. Profit on redemption of debentures in transferred to which account ?

(a) Capital Reserve Account (c) General Reserve Account
(b) Sinking Gund Account (d) Profit & Loss Account

27. Profit on cancellation of own debentures is :

(a) Revenue Profit (c) Operating Profit
(b) Capital Profit (d) Trading Profit

28. A Sinking Fund is a part of:

(a) Fixed Liabilities (c) Reserves and Surplus
(b) Current Liabilities (d) Fixed Assets

29. ‘Premium on Redemption of Debentures A/c is in the nature of:

(a) Personal A/c (c) Nominal A/c
(b) Real A/c (d) None of these

30. Debenture is a :
(a) Loan certificate (c) Credit certificate
(b) Cash certificate (d) None of these

31. Which of the following rules do not apply to banking companies?

a) Companies Act c) Reserve Bank of India Act
b) Banking Regulation Act d) All of the above

32. Discount on issue of Debentures is a .

a) Capital loss c) Capital profit
b) Revenue loss d) Revenue profit

33. Bonus shares cannot be issued by capitalizing

a) Revaluation reserve c) Securities premium
b) Capital Reserve d) General Reserve

34. A company can issue

a) Only redeemable preference shares c) Only irredeemable preference shares
b) only Deferred shares d) All of the above

35. The income of the banking interest comes from

a) Deposit Received c) Interest on Loan
b) Interest on Deposit d) All of the above

36. Credit can be created by:

a) RBI c) Commercial banks
b) Foreign banks d) Private banks

37. Repo Rate means?

a) Rate offered by banks to their premium customers.

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b) Rate at which RBI offers loan facilities to commercial banks against government
securities, with the condition that banks need to repurchase the securities in a short period.
c) Banks having excess cash can buy securities from RBI with a condition of reselling
securities to RBI on a prefixed day and price.
d) Banks can discount bills of exchange and avail loan from RBI at times when cash is
needed.

38. Which of the following rules do not apply to banking companies?

a) Companies Act c) Reserve Bank of India Act
b) Banking Regulation Act d) All of the above

39. Increase in cash reserve ratio (CRR) by the RBI will result in:
a) Initially increase the supply but later on decrease automatically.
b) No impact on the supply of money in the economy
c) Decrease the supply of money in the economy
d) Increase the supply of money in the economy

40. Which among these is not a monetary tool?

a) SLR c) Open market operations
b) Deficit financing d) CRR

41. HDFC bank is an example of?

a) Foreign Bank c) Private Bank
b) Public Bank d) None of these

42. Rate of interest is increased by RBI at times of:

a) Lower inflation c) From the pressure of commercial banks
b) Higher inflation d) All of the above

43. This is not a function of the RBI?

a) Printing of currency c) Issuance of coins
b) Controller of credit d) Custodian of foreign currency

44. The Indian Insurance Act was enacted in the year

a) 1938 c) 1972
b) 1956 d) 2002

45. Life insurance corporation (LIC) was nationalized in the year

a) 1935 c) 1956
b) 1950 d) 1964

46. Insurance business in india is regulated by:

a) SEBI c) IRDA
b) RBI d) Government

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47. Fixed payment at regular intervals made by the insured for a contract of insurance is
called
a) commission c) Bonus
b) Premium d) Sum Assured

48. Life insurance contract is a contract of

a) Indemnity c) Both of the above
b) Guarantee d) None of the above

49. A valuation balancesheet is prepared by

a) A trading company c) A life insurance company
b) A banking company d) A manufacturing company

50. Which of the following are the statutory books of insurance companies?
a) Register of policies
b) The register of claims
c) The register of Licensed Insurance agents
d) All of the above

51. In case of life insurance companies, premium shall be recognized as income when?
a) It is received c) When policy comes into force
b) It is true d) Premium is not an income

52. In case of life insurance companies, which account is prepared to ascertain profit?
a) Revenue account c) Valuation balancesheet
b) Profit and loss account d) None of these

53. Valuation Balancesheet is

a) A statement of assets and liabilities on a particular date.
b) Prepared to determine profit by comparing life insurance fund with net liability
c) A statement of all assets and liabilities as market value
d) None of the above

54. In life insurance business, claims may arise on account of ;

a) Death of policy holder c) Death or maturity
b) Maturity d) None of these

55. The agreement of insurance between insurer and insured is called as

a) Policy c) Annuity
b) Premium d) None of these

56. Double insurance common in ………..

a) life insurance d) Health insurance
b) Fire insurance
c) Marine insurance

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57. The consideration in insurance for covering the risk is called:

a) Claim c) Annuity
b) Premium d) None of these

58. An arrangement between two insurance companies whereby one transfers a part of risk
to other company is called:
a) Reinsurance c) Joint insurance
b) Double insurance d) Maha Insurance

59. Revenue account is also called

a) Profit and loss account c) Policy holders account
b) Shareholder’s Account d) Creditors account.

60. The Accounting Standards related with “Earnings per Share.”

a) Ind As -33 c) AS -20
b) IAS-33 d) AS-21

61. When the goodwill is attached to the person rather than the place it is known as
a) Cat goodwill c) Dog goodwill
b) Rat goodwill d) None of these

62. According to the valuation based on price earnings ratio, the market value of share is
given by:
a) Price earnings ratio x Earning per share
b) Profit available for equity shareholders/ No. of equity shares
c) Normal rate of return/100
d) None of the above

63. Factory closure cost will be shown in statement of profit and loss (Division 1) Schedule
3 of Companies act 2013, under the head of _____________.
a) Other Expenses c) Extraordinary items
b) Finance Cost d) None of these

64. The requirement for final account of companies are specified in Schedule___________
a) I c) XII
b) VI d) III

65. The unpaid interest on loan is ________

a) Loan c) Reserve
b) Current Liabilities d) Contingent Liabilities

66. Any amount payable within 12 months form date of Balance Sheet is called______
a) Capital c) Contingent Liabilities
b) Loan d) Current Liabilities

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67. Fixed deposit with bank is a part of______

a) Investment c) Fixed Assets
b) Bank Balance d) Loans & Advances

68. The debit balance in profit & loss Account is to be _____

a) Reduced from Share capital c) Disclosed as miscellaneous expenditure
b) Reduced from Reserve d) Shown as a note to account
e)

69. Dividend paid on share capital is to be ________

a) Shown as Finance Expenses c) Shown in Manufacturing Account
b) Shown as appropriations of profit d) Shown as reduction in Capital

70. The uncalled amount in investment in shares is shown as______

a) Investment c) Current Liabilities
b) Contingent Liabilities d) Current Assets

71. The interest accrued on investment appears in the Balance Sheet under the head_____
a) Other Current Assets c) Loans & Advances
b) Fixed Assets d) Investments

72. In Balance Sheet, securities premium should be shown under______

a) Share Capital c) Current Liabilities
b) Reserves & Surplus d) Fixed Assets

73. Which of the following items do not come under, reserves & Surplus
a) Capital redemption reserve c) Provident Fund
b) General Reserve d) Sinking Fund

74. Retained earnings is the amount of ______

a) Profit after tax less dividend c) Profit before depreciation
b) Profit before tax less dividend d) Profit after depreciation

75. Unclaimed dividend is shown under_______

a) Other Current Liability c) Provision
b) Secured Loans d) Reserves

76. Which of the following items appears on the assets side of Balance Sheet?
a) Capital Reserve c) Sinking Fund Investment
b) Security Premium d) Specific Reserve

77. Which of the following is shown under Reserves & Surplus?

a) Calls in Advance c) Securities premium
b) Calls in Arrears d) bonus

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78. Which is deducted from share capital to get paid up capital?

a) Calls in arrears c) Bonus
b) Calls in advance d) Reserves

79. Payment of dividend is based on_______

a) Paid up capital c) Issued Capital
b) Authorized Capital d) Reserve Capital

80. Final Dividend can be declared by______

a) Shareholders only c) Stock Exchange
b) Directors only d) None of the above

81. Recommendation and Declaration is necessary for ______

a) Final Dividend c) Interest on debentures
b) Interim dividend d) None of the above

82. Following is not a fixed asset:

a) Goodwill c) Vehicles
b) Machinery d) Loose Tools

83. Following is not a secured loan:

a) Debentures c) Public Deposits
b) Bank Loans d) None of the above

84. Forfeited shares is_____

a) Added to paid up share capital c) Shown under reserve & Surplus
b) Deducted form paid up capital d) None of the above

85. Arrears of preference dividend is a ______

a) Contingent Liabilities c) Fixed Liabilities
b) Current Liabilities d) None of the above

86. Unpaid call is______

a) Added to issued capital and paid up capital
b) Shown as a current and paid up capital
c) Deducted from issued, subscribed and paid up capital
d) Added to authorized capital

87. Unclaimed dividend is shown under______

a) Share Capital c) Provision
b) Other Current Liabilities d) Unsecured loans

88. Prepaid insurance is shown under______

a) Current Assets c) Current Liabilities
b) Other Current Assets d) Secured Loans

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89. Uncalled amount on partly paid shares is shown under______

a) A note to Balance Sheet c) Share Capital
b) Investment d) Provision

90. Arrears of preference dividend is shown as a _______

a) Current Liability
b) Note to Balance sheet as contingent liabilities
c) Deduction form preference share capital
d) Addition to preference share capital

91. The following is not shown under share capital of a company______

a) Calls in Arrears c) Forfeited shares A/c
b) Preference Share Capital d) Preference dividend

92. Interim dividend of a company can be declared by_____

a) Shareholder c) M.D.
b) Board of Directors d) SEBI

93. Following is not a contingent liability_______

a) Interim Dividend c) Liability under guarantee
b) Bills Discounted d) Arrears of preference dividend

94. Which of the following types of companies/organization issue ULIP?

a) Insurance companies c) NABARD
b) Banks d) RBI

95. Which of the following is the only public sector company in the field of life insurance
a) General insurance company c) Oriental insurance company
b) New india Insurance Company d) Life insurance corporation of india

96. Which of the following is the regulator of Insurance Sector in India?

a) RBI c) IRDA
b) AMFI d) SEBI

97. Which of the following term is NOT related to the insurance sector?
a) Indemnity c) Misuse alert
b) Coverage d) Annuity

98. Expand the term CCEA as used in administrative circles

a) Cabinet Committee on External Affairs
b) Cabinet Committee on Economic Affairs
c) Cabinet Council on External Affairs
d) Cabinet Council on Economic Affairs

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99. Foreign exchange reserves of india are kept in the custody of which of the following?
a) Reserve bank of india
b) All public sector banks
c) Foreign banks in india.
d) Government Treasury

100. Which of the following was the parent company of New India Assurance?
a) LIC
b) GIC
c) Oriental Insurance Company Ltd
d) United India Insurance Company Ltd

ANSWER KEY
Qn.No Ans Qn.No Ans Qn.No Ans Qn.No Ans Qn.No Ans
1 A 21 C 41 C 61 C 81 A
2 B 22 B 42 A 62 A 82 D
3 C 23 A 43 C 63 C 83 C
4 D 24 C 44 A 64 D 84 A
5 C 25 D 45 C 65 B 85 A
6 D 26 A 46 C 66 D 86 C
7 C 27 B 47 B 67 B 87 B
8 B 28 C 48 B 68 B 88 B
9 C 29 C 49 C 69 B 89 A
10 C 30 A 50 D 70 B 90 B
11 D 31 A 51 B 71 A 91 D
12 C 32 A 52 C 72 B 92 B
13 B 33 A 53 B 73 C 93 A
14 D 34 A 54 C 74 A 94 A
15 A 35 A 55 A 75 A 95 D
16 C 36 C 56 A 76 C 96 C
17 C 37 C 57 B 77 C 97 C
18 B 38 A 58 A 78 A 98 D
19 C 39 C 59 B 79 A 99 A
20 C 40 B 60 A 80 A 100 B

Prepared By
Sri. Rajan P
Assistant Professor of Commerce
School of Distance Education
University of Calicut

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