Section C

Explanation
SEBI Grade A questions

Question 1 – Which of the following is not a qualitative characteristic of accounting information?? SEBI Grade
A – Phase 1 - 2022

A. Accountability
B. Consistency
C. Verifiability
D. Relevance
E. Comparability

Answer – Option A

Explanation -

Qualitative characteristics of accounting information assist management, investors and accountants in making
important decisions and predicting financial outcomes. Learning the different characteristics can help you
understand how to produce accurate, reliable financial documents that can improve your company's financial
well-being. Qualitative characteristics of accounting information are traits that allow financial professionals to
more easily understand and make decisions on accounting reports.

There are various qualitative characteristics of Accounting Information:

1. Consistency: Consistency of method over a period of time is a valuable quality that makes accounting
numbers more useful. Consistent use of accounting principles from one accounting period to another
enhances the utility of financial statements to users by facilitating analysis and understanding of
comparative accounting data. Hence, Option B is incorrect.

2. Verifiability: To create accurate financial predictions, a company ensures that its financial information is
verifiable. Verifiability involves authenticating financial information and calculations by using several
independent sources to develop the same results. Hence, Option C is incorrect.

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 3. Relevance: Relevance is closely and directly related to the concept of useful information Relevance
implies that all those items of information should be reported that may aid the users in making decisions
and/or predictions. Hence, Option D is incorrect.

4. Comparability: Comparability is the degree to which accounting standards and policies are consistently
applied from one period to another. Financial statements that are comparable, with consistent
accounting standards and policies applied throughout each accounting period, enable users to draw
insightful conclusions about the trends and performance of the company over time. Hence, Option E is
incorrect.

Accountability is the acceptance good or bad of your personal actions that contributed to attaining or failing to
meet an intended goal. Hence, it doesn’t help in accounting information, but it helps in management. So, it is
not a qualitative characteristic of accounting information. Hence, Option A is the correct answer.

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 Section C

Explanation
SEBI Grade A questions

Question 1 – Debit what comes in, credit what goes _______ SEBI Grade A – Phase 1 - 2020

A. Up
B. Down
C. Out
D. Diagonal
E. None of the above

Answer – Option C

Explanation -

The Golden Rules of Accounting

1. Debit The Receiver, Credit The Giver

This principle is used in the case of personal accounts. When a person gives something to the organization, it
becomes an inflow and therefore the person must be credit in the books of accounts. The converse of this is
also true, which is why the receiver needs to be debited.

2. Debit What Comes In, Credit What Goes Out

This principle is applied in case of real accounts. Real accounts involve machinery, land and building etc. They
have a debit balance by default. Thus, when you debit what comes in, you are adding to the existing account
balance. This is exactly what needs to be done. Similarly, when you credit what goes out, you are reducing the
account balance when a tangible asset goes out of the organization.

Hence, Option C is the correct answer.

3. Debit All Expenses and Losses, Credit All Incomes and Gains

This rule is applied when the account in question is a nominal account. The capital of the company is a liability.
Therefore, it has a default credit balance. When you credit all incomes and gains, you increase the capital and
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by debiting expenses and losses, you decrease the capital. This is exactly what needs to be done for the system
to stay in balance.

The golden rules of accounting allow anyone to be a bookkeeper. They only need to understand the types of
accounts and then diligently apply the rules.

All other options are irrelevant.

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 Section C

Explanation
SEBI Grade A questions

Question 1 – Rent Expenses were charged to the books of accounts for 11 months but it was not charged in the
12th month. Which type of error is this? SEBI Grade A – Phase 1 - 2020

A. Errors of Commission
B. Errors of Omission
C. Errors of Principle
D. No Error
E. None of the above

Answer – Option B

Explanation –
The error of omission refers to the error in which a transaction is not at all recorded in the books, either
completely or partially. Hence, Option B is the correct answer.
Additional Information:
Errors of Omission:
• The errors of omission may be committed at the time of recording the transaction in the books of original
entry or while posting to the ledger.
• These can be of two types:
o error of complete omission
o error of partial omission
• When a transaction is completely omitted from recording in the books of original record, it is an error of
complete omission.
• For example, credit sales to Mohan Rs 10,000, not entered in the sales book.
• When the recording of a transaction is partly omitted from the books, it is an error of partial omission.
• If in the above example, credit sales had been duly recorded in the sales book but the posting from sales
book to Mohan’s account has not been made, it would be an error of partial omission.
Errors of Commission:

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 • These are the error that are committed due to wrong posting of transactions, wrong totalling or wrong
balancing of the accounts, wrong casting of the subsidiary books, or wrong recording of amount in the
books of original entry, etc.
• For example: Raj Hans Traders paid Rs 25,000 to Preetpal Traders (a supplier of goods). This transaction
was correctly recorded in the cashbook. But while posting to the ledger, Preetpal’s account was debited
with Rs 2,500 only. This constitutes an error of commission. Such an error by definition is of clerical
nature and most of the errors of commission affect in the trial balance.
Errors of Principle:
• Accounting entries are recorded as per the generally accepted accounting principles. If any of these
principles are violated or ignored, errors resulting from such violation are known as errors of principle.
• An error of principle may occur due to incorrect classification of expenditure or receipt between capital
and revenue. This is very important because it will have an impact on financial statements.
• It may lead to under/over-stating of income or assets or liabilities, etc.
• For example, the amount spent on additions to the buildings should be treated as capital expenditure
and must be debited to the asset account. Instead, if this amount is debited to the maintenance and
repairs account, it has been treated as a revenue expense. This is an error of principle.
• Similarly, if a credit purchase of machinery is recorded in the purchases book instead of the journal
proper or rent paid to the landlord is recorded in the cash book as payment to the landlord, these errors
of principle. These errors do not affect the trial balance.

All other options are incorrect.

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 SEBI Grade A questions

Question Number Answer

Question 1 Option A
Question 2 Option A

Section C

Explanation
SEBI Grade A questions

Question 1 – Bill of exchange drawn in parts is known as __________? SEBI Grade A – Phase 1 - 2020

A. Bill in Sets
B. Bill in Quarters
C. Bill in Bricks
D. Bill in Parts
E. Bill in Cases

Answer – Option A

Explanation -
• Bills of exchange may be drawn in parts. All the parts together make a set, but the whole set constitutes
only one bill.
• All the parts so drawn are referred as bill 'drawn in sets'.
• The drawer of the 'bills in sets' has to sign all the parts and deliver all the parts but the acceptance should
be written only on one part. Hence, Option A is correct.

All other options are irrelevant.

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Question 2– If the due date of a bill is after the date of closing the account, then we write the interest from the
date of closing as ____________ in the relevant side of the ‘Account current SEBI Grade A – Phase 1 - 2022

A. Red Ink Interest

B. Green Ink Interest
C. Black Ink Interest
D. Blue Ink Interest
E. Yellow Ink Interest
Answer- Option A

Explanation –

• If the due date of a bill is after the date of closing the account, then we charge no interest for that.
• However, we write the interest from the date of closing to the due date in “Red-Ink” in the relevant side
of the ‘Account current’.
• This interest is known as Red-Ink interest. Red-ink interest is treated as negative interest.

Hence, Option A is the correct answer. All other options are irrelevant.

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 Section B

Answer Key

SEBI Grade A questions

Question Number Answer

Question 1 Option A
Question 2 Option C

PFRDA Grade A questions

Question Number Answer
Question 1 Option B

Section C

Explanation
SEBI Grade A questions

Question 1 – If the total Assets are – Rs 36,000; Liabilities are – Rs 16,000; What is the amount of Equity? SEBI
Grade A – Phase 1 - 2020

A. Rs 20,000
B. Rs 52,000
C. Rs 56,000
D. Rs 10,000
E. None of the above

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Answer – Option A

Explanation –
Fundamental Accounting Equation:
Assets = Liabilities + Equity
=> Rs 36,000 = Rs 16,000 + Equity
=> Rs 36,000 – Rs 16,000 = Equity
Therefore, Rs 20,000 = Equity
Hence, Option A is the correct answer. All other options are incorrect.

Question 2 – Current assets are assets expected to be realized within ________ SEBI Grade A – Phase 1 - 2020

A. 90 days
B. 180 days
C. 1 year
D. 2 years
E. None of the above

Answer – Option C

Explanation:

Any asset which is expected to last or be in use for less than one year is considered as current assets. In other
words current assets are those assets which are held by the business with the purpose of converting them into
cash within a short period, i.e., one year. For e.g., Debtors, Bill receivables, Stock etc.

Hence, Option C is the correct answer. All other options are incorrect.

Explanation
PFRDA Grade A questions

Question 1 – XYZEE Ltd. has sales of $300,400, cost of $200,070, depreciation expense of $28,600, interest
expense of $1,000, and a tax rate of 34%. The firm paid out $16,000 in dividends. What is the addition to retained
earnings? PFRDA Grade A – Phase 1 - 2021

A. Rs 25,500
B. Rs 30,681
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C. Rs 42,270
D. Rs 33,000
E. None of the above
Answer – Option B

Explanation:

Income Statement
Sales 300,400
Cost of Goods Sold 200,070
Gross Profit 100,330
Operating Expense
Depreciation 28,600
Total Operating Expense (28600)
Operating Income (EBIT) 71,730
Non-Operating or Other
Interest Expense (1000)
Total Non-Operating Income (1000)
Profit Before taxes (EBT) 70,730
Taxes (34%) 34% of 70,730 = 24,048.2
PAT or Net Income 46,682
Remarks: The values in ( ) indicates the negative value or the expenses

If 16,000 of the net profits after tax was paid out in dividends, then 30,681 (46,682 - 16,000) was left over for
the retained earnings account

Note: This is not the exact numerical. We have recreated this based on the feedback from students.

Hence, Option B is the correct answer. All other options are incorrect.

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 Question 1 Option B
Question 2 Option B
Question 3 Option C
Question 4 Option A
Question 5 Option E
Question 6 Option A

Section C

Explanation
SEBI Grade A questions

Question 1 – What kind of ratio is a Current Ratio? SEBI Grade A – Phase 1 - 2020

A. Liquidity
B. Activity
C. Profitability
D. Solvency
E. None of the above

Answer – Option A

Explanation –
• The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or
those due within one year.
• It tells investors and analysts how a company can maximize the current assets on its balance sheet to
satisfy its current debt and other payables.
Hence, Option A is the correct answer. All other options are incorrect.

Additional Information:
• Activity Ratio: This refers to the ratios that are calculated for measuring the efficiency of operations of
business based on effective utilisation of resources. Hence, these are also known as ‘Efficiency Ratios’.

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 • Profitability Ratio: It refers to the analysis of profits in relation to revenue from operations or funds (or
assets) employed in the business and the ratios calculated to meet this objective are known as
‘Profitability Ratios’.
• Solvency Ratio: Solvency of business is determined by its ability to meet its contractual obligations
towards stakeholders, particularly towards external stakeholders, and the ratios calculated to measure
solvency position are known as ‘Solvency Ratios’. These are essentially long-term in nature.

Question 2 – Net Profit Ratio is 5%. Total Assets = Rs 90,00,000. Return on Assets = 9%. Find the total assets
turnover ratio. SEBI Grade A – Phase 2 - 2020

A. 1.7
B. 1.8
C. 2.3
D. 3.6
E. None of the above

Answer – Option B

Explanation –
ROTA= PAT/ Total Assets
ROTA = 9% or .09
Total Assets= 90,00,000
PAT= 90,00,000*0.09
= Rs 8,10,000
Net Profit Margin = PAT/Sales
Net Profit Margin= 5% or .05
PAT= 8,10.000
.05= Rs 8,10,000/ Sales
Sales= Rs 1,62,00,000
Total Assets Turnover Ratio = Sales/ Total Assets
Total Assets Turnover Ratio= Rs 1,62,00,000/ Rs 90,00,000
= 1.8
Hence, Option B is the correct answer. All other options are incorrect.

Question 3 – Using the information given below, calculate the Interest Coverage Ratio. SEBI Grade A – Phase 2
- 2022
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 Net Profit After Tax Rs. 60,000

Tax Rate 40%

15% Long Term Debt Rs. 10,00,000

A. 1.35
B. 1.5
C. 1.67
D. 1.98
E. None of the above
Answer – Option C
Explanation –
Interest Coverage Ratio= Earnings before Interest and Taxes (EBIT)/ Interest Expense
Net Profit after Tax = Rs 60,000
Tax rate = 40% = 0.4
Therefore, Profit before tax = 60,000/ (1-0.4) =Rs. 1,00,000
Interest on Long term Debt (Interest Expense) = 15% of 10,00,000 = Rs 1,50,000
EBIT = Profit Before Tax + Interest = 100000+150000 = 2,50,000
Interest coverage Ratio = 250000/150000 = 1.67
Hence, Option C is the correct answer. All other options are incorrect.

Question 4 – Calculate the Book value per share of ABC limited using the information given below: SEBI Grade
A – Phase 2 - 2022

Profit After Tax Rs 1,75,000

Issued Share Capital 70,000 shares @10 each

Market Value of share Rs 13

A. 11
B. 12.5
C. 9.5
D. 14
E. None of the above
Answer – Option B

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Explanation –
The book value per share formula is used to calculate the per share value of a company based on its equity
available to common shareholders.

In the given question, Equity Capital = 70,000 X 10 = 7,00,000

A reserve or Accumulated Profits or Losses refers to the share of profit saved by the business/firm for future
growth or expansion and to handle the situation of losses in the future.
Therefore, Accumulated Reserves = Profit after tax = Rs 1,75,000
Therefore, Book Value per share = (700000+175000)/70000 = 12.5
Hence, Option B is the correct answer. All other options are incorrect.

Explanation
PFRDA Grade A questions

Question 1 – Which of the following is a type of liquidity ratio? PFRDA Grade A – Phase 1 - 2021

A. Debt-Equity Ratio
B. Acid Test Ratio
C. ROCE Ratio
D. Interest Coverage Ratio
E. ROI Ratio

Answer – Option B
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Explanation –

• Acid Test Ratio is a type of liquidity ratio.

• It is also known as the Quick or Liquidity Ratio.
• Quick ratio = Quick Assets : Current Liabilities or Quick Assets/Current Liabilities
• The quick assets are defined as those assets which are quickly convertible into cash.
• While calculating quick assets we exclude the inventories at the end and other current assets such as prepaid
expenses, advance tax, etc., from the current assets.

Hence, Option B is the correct answer. All other options are incorrect.
Additional Information:

• Return on Investment (ROI) or Return on Capital Employed (ROCE) is a type of Profitability Ratio. Hence,
Option C and E are incorrect.
• Debt-Equity Ratio and Interest Coverage Ratio are types of Solvency Ratio. Hence, Option A and Option
D are incorrect.

Question 2 – Calculate the current ratio from the following given information. PFRDA Grade A – Phase 2 -
2021

A. 2.26
B. 3.07
C. 1.66
D. 2.05
E. 6.74
Answer – Option B
Explanation –

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Current Ratio = Current Assets / Current Liabilities
Current Assets = Sundry Debtors + Cash in Hand + Inventories = ₹ (20,00,000 + 10,00,000 + 1,00,000) = ₹
31,00,000
Current Liabilities = Sundry Creditors + Bank Overdraft = ₹ (5,50,000 + 4,60,000) = ₹ 10,10,000
Therefore, Current Ratio = ₹ 31,00,000 / ₹ 10,10,000 = 3.069 or 3.07 approx
Hence, Option B is the correct answer. All other options are incorrect.
NOTE: The figures of the given question are not an exact replica of the question as it appeared in the exam.
We have tried to incorporate the question with the limited data available to us in a way that carries the
essence or the main part of the question as it appeared in the examination.

Question 3 – From the given information calculate the Asset Coverage Ratio. PFRDA Grade A – Phase 2 – 2021

Cash & Equivalents = $50m

Accounts Receivable = $30m

Property, Plant & Equipment = $100m

Intangible Assets = $20m

Accounts Payable = $60m

Short-Term Debt = $20m

Long-Term Debt = $40m

A. 1.0
B. 1.5
C. 2.0
D. 2.5
E. 3.0

Answer – Option C
Explanation –

• The Asset Coverage Ratio measures the number of times a company could hypothetically repay its debt
obligations post-liquidation of its tangible assets.
• Higher asset coverage ratios imply lower financial risk associated with the borrower in question.
• The asset coverage ratio determines if a company’s liquidated assets can sufficiently cover its debt
obligations and liabilities in case its earnings falter unexpectedly.

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• Asset Coverage Ratio = [(Total Assets – Intangible Assets) – (Current Liabilities – Short-Term Debt)] / Total
Debt
• The asset coverage ratio represents the number of times that a company can repay its debt using the
proceeds from the liquidation of its tangible assets.
• The rationale behind leaving out intangible assets from the calculation is that intangibles cannot be easily
sold (or even be valued objectively).
• The subsequent step is to subtract current liabilities on the numerator, but note that short-term debt is NOT
included.
• Current liabilities refer to non-financial, short-term obligations such as accounts payable (A/P), which are
payments owed to suppliers/vendors.
• As for the denominator, the calculation should be straightforward, as it is simply the short-term debt plus
long-term debt.
• Here, in this question, the company has current assets of $80m and total assets of $200m – of which $20m
are from intangible assets.
• The tangible assets amount to $180m ($200m – $20m).
• On the other side, the company has $80m in current liabilities and $120m in total liabilities, with $20m in
short-term debt and $40m in long-term debt.
• Written out, the formula for calculating the asset coverage ratio is as follows:
• Asset Coverage Ratio = [($200m – $20m) – ($60m – $20m)] / ($40m + $20m)
• The asset coverage comes out to 2.0x. In other words, if the company’s tangible assets were liquidated and
current liabilities were taken care of, the short-term and long-term debt obligations could be paid off twice.
To reiterate from earlier, the higher the asset coverage ratio, the less risk there is for the company (i.e., the
borrower has sufficient proceeds post-liquidation to cover its outstanding debt), the company appears to
be financially sound.
Hence, Option C is the correct answer. All other options are incorrect.
NOTE: The figures of the given question are not an exact replica of the question as it appeared in the exam.
We have tried to incorporate the question with the limited data available to us in a way that carries the
essence or the main part of the question as it appeared in the examination.

Question 4 – Company X has reported the below figures: PFRDA Grade A – Phase 2 – 2021

Equity Share Capital: ₹500000

Preference Share Capital: ₹600000

Long Term Debentures: ₹200000

EBIT: ₹90000

Based on the above information, you are required to calculate ROCE.

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A. 6.92
B. 4.51
C. 5.36
D. 4.25
E. 6.13

Answer – Option A
Explanation –
The Capital employed can be calculated as per below:
Capital Employed = 500000 + 600000 + 200000
Capital Employed = 1300000
Calculation of return on capital employed (ROCE) can be done as follows:
ROCE = 90,000 /1300000
Return on Capital Employed will be = 6.92 (approx)
Hence, Option A is the correct answer. All other options are incorrect.
NOTE: The figures of the given question are not an exact replica of the question as it appeared in the exam.
We have tried to incorporate the question with the limited data available to us in a way that carries the
essence or the main part of the question as it appeared in the examination.

Question 5 – EBIT to Sales Ratio is also known as _________ PFRDA Grade A – Phase 2 – 2021

A. Interest Coverage Ratio

B. Proprietary Ratio
C. Assets Turnover Ratio
D. Return on Capital Employed Ratio
E. Operating Profit Ratio

Answer – Option E
Explanation –

• EBIT to Sales Ratio is also known as Operating Profit Ratio

• Operating Profit Margin is a profitability or performance ratio that reflects the percentage of profit a
company produces from its operations, prior to subtracting taxes and interest charges.
• It is calculated by dividing the operating profit by total revenue and expressing as a percentage. The
margin is also known as EBIT (Earnings Before Interest and Tax) Margin.
Hence, Option E is the correct answer. All other options are incorrect.

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Additional Information:

• Interest Coverage Ratio: It is a ratio which deals with the servicing of interest on loan. It is a measure of
security of interest payable on long-term debts. It expresses the relationship between profits available
for payment of interest and the amount of interest payable. Hence, Option A is incorrect.
• Proprietary Ratio: It expresses relationship of proprietor’s (shareholders) funds to net assets. Hence,
Option B is incorrect.
• Assets Turnover Ratio: It reflects relationship between revenue from operations and net assets (capital
employed) in the business. Hence, Option C is incorrect.
• Return on Capital Employed Ratio: It explains the overall utilisation of funds by a business enterprise.
Capital employed means the long-term funds employed in the business and includes shareholders’
funds, debentures and long-term loans. Alternatively, capital employed may be taken as the total of non-
current assets and working capital. Profit refers to the Profit Before Interest and Tax (PBIT) for
computation of this ratio. Hence, Option D is incorrect.

Question 6 – Calculate the Average age of Receivable. From the following data, PFRDA Grade A – Phase 2 –
2021

Credit Sales = ₹72,00,000

Average Accounts Receivable = ₹12,00,000

A. 60 days
B. 45 days
C. 90 days
D. 180 days
E. 72 days

Answer – Option A
Explanation –
Average age of Receivables = 360 / Debtor Turnover Ratio
(No. of days in a Financial Year is 365 days but we generally calculate the aging by multiply of 360 days to avoid
fractions.)
Debtor’s Turnover Ratio = Credit Sales / Average Accounts Receivables
=> Debtor’s Turnover Ratio = ₹72,00,000 / ₹12,00,000 = 6
Therefore, Average age of receivables = 360 / 6 = 60 days.
Hence, Option A is the correct answer. All other options are incorrect.

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NOTE: The figures of the given question are not an exact replica of the question as it appeared in the exam.
We have tried to incorporate the question with the limited data available to us in a way that carries the
essence or the main part of the question as it appeared in the examination.

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 Section C

Explanation
SEBI Grade A questions

Question 1 – Net Profit = Rs 30,000. Collection from debtors = Rs 2500. Paid to creditors = Rs 7500. What is the
net cash flow from operations? SEBI Grade A – Phase 2 - 2020

A. Rs 32,500
B. Rs 25,000
C. Rs 27,500
D. Rs 35,000
E. None of the above

Answer – Option B

Explanation –
Net Cash Flows from Operations = Net Profit + Collection from Debtors (inflow) - Paid to Creditors (outflow)
= Rs 30,000 + Rs 2,500 – Rs 7,500
= Rs 25,000
Hence, Option B is the correct answer. All other options are incorrect.

Question 2 – Which of the following is not a component of cash flow from operations? SEBI Grade A – Phase 2
- 2020

A. Settling off trade payables

B. Collection from debtors
C. Both A and B
D. Payment to supplier of machinery
E. None of the above

Answer – Option D

Explanation –

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 • Cash flow from operating activities (CFO) indicates the amount of money a company brings in from its
ongoing, regular business activities, such as manufacturing and selling goods or providing a service to
customers. It is the first section depicted on a company's cash flow statement.
• Cash flow from operating activities does not include long-term capital expenditures or investment
revenue and expense.
• CFO focuses only on the core business, and is also known as operating cash flow (OCF) or net cash from
operating activities.
• Payment to supplier of machinery is a long-term capital expenditure and will not appear in cash flow
from operations. Hence, Option D is not a component of cash flow from Operations.
• Setting of Trade Payables and Collection from debtors are components of cash flow from operations.

Hence, Option D is the correct answer. All other options are incorrect.

Question 3 – Calculate Net Profit from below cash basis of accounting for 31/03/2021. SEBI Grade A – Phase 2
- 2022

Particulars Amount

Sales Credit 90,000

Cash paid in salary 25,000

Advance received for 2022-2023 40,000

Ticket of airline purchase in March 2021 for travel in October 6,500

2022

A. 10,000
B. 9,000
C. 8,500
D. 7,700
E. None of the above

Answer – Option D

Explanation –
• Cash basis refers to a major accounting method that recognizes revenues and expenses at the time cash
is received or paid out. It doesn’t include any sale or purchase done on a credit basis.
• Therefore, In the above Question, Sales credit of 90,000 will not be considered while calculating the Net
Profit.
• So, Net profit = Advance received less Cash Paid in salary less Ticket Purchase
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 =40000 – 25000 – 6500
= 8500
Hence, Option D is the correct answer. All other options are incorrect.

Explanation
PFRDA Grade A questions

Question 1 – Payment of interest and dividend by a company engaged in providing financial services will be
classified as which activity in the cash flow statement? PFRDA Grade A – Phase 1 - 2021

A. Cash Flow from Operating Activity

B. Cash Flow from Investing Activity
C. Cash Flow from Financing Activity
D. Both B and C
E. None of the above

Answer – Option C

Explanation –
• Payment of interest and dividend by a company engaged in providing financial services will be classified as
Cash flow from financing activity in the cash flow statement.
• In the case of other enterprises, cash flows arising from dividends received should be classified as cash
flows from investing activities.
• In case of a financial enterprise (whose main business is lending and borrowing), interest paid, interest
received and dividend received are classified as operating activities while dividend paid is a financing
activity.
• In case of a non-financial enterprise, as per AS-3, it is considered more appropriate that payment of
interest and dividends are classified as financing activities whereas receipt of interest and dividends are
classified as investing activities.

Hence, Option C is the correct answer. All other options are incorrect.

Additional Information:

• Operating activities are the activities that constitute the primary or main activities of an enterprise.

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 o For example, for a company manufacturing garments, operating activities are procurement of raw
material, incurrence of manufacturing expenses, sale of garments, etc.
o These are the principal revenue generating activities (or the main activities) of the enterprise and these
activities are not investing or financing activities
o Cash flows from operating activities are primarily derived from the main activities of the enterprise.
o They generally result from the transactions and other events that enter into the determination of net
profit or loss.
o Cash advances and loans made by financial enterprises are usually classified as operating activities since
they relate to main activity of that enterprise.
• Investing activities relate to purchase and sale of long-term assets or fixed assets such as machinery,
furniture, land and building, etc. Transactions related to long-term investment are also investing activities.
• Financing Activities relate to long-term funds or capital of an enterprise, e.g., cash proceeds from issue of
equity shares, debentures, raising long-term bank loans, repayment of bank loan, etc.

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 SEBI Grade A questions

Question Number Answer

Question 1 Option D

PFRDA Grade A questions

Question Number Answer
Question 1 Option B

Section C

Explanation
SEBI Grade A questions

Question 1 – Profit on Forfeiture shares after reissue is transferred to _____________ SEBI Grade A – Phase 2
- 2020

A. General Reserve
B. Debenture Redemption Reserve
C. Securities Premium Reserve
D. Capital Reserve
E. None of the above

Answer – Option D

Explanation –
• If the discount allowed on reissue of shares is less than the forfeited amount, there will be some balance
left in the Forfeited Account, which should be transferred to capital reserve, because it is a profit of
capital nature.
Hence, Option D is the correct answer. All other options are incorrect.

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 Explanation
PFRDA Grade A questions

Question 1 – A company has outstanding preference shares of ₹15,00,000 of which ₹9,00,000 will be redeemed
by using divisible profits and the rest of the equity shares will be issued having a face value of ₹8. Calculate the
number of equity shares to be issued by the company. PFRDA Grade A – Phase 1 - 2021

A. 1,87,500
B. 75,000
C. 1,12,500
D. 1,50,000
E. 2,25,000

Answer – Option B

Explanation –
No. of equity shares to be issued = ₹ (15,00,000 – 9,00,000) / ₹8
= 75,000 shares
Hence, Option B is the correct answer. All other options are incorrect.

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 Section C

Explanation
SEBI Grade A questions

Question 1 – The rights are sold to somebody else at a price by the shareholder. What is this called? SEBI Grade
A – Phase 1 - 2022

A. Repurchase of Rights
B. Restitution of Rights
C. Renunciation of Rights
D. Reversion of Rights
E. Resale of Rights

Answer – Option C

Explanation –
• The rights issue renunciation is the transfer of the rights entitlements by a shareholder not willing to
accept the rights offer and wants to renounce the shares in favor of another person.
• This process of transfer or sale to another person is known as the renunciation of rights.
• The person selling the rights entitlement is known as the renouncer and the person buying the rights
entitlements is known as the renouncee.
Hence, Option C is the correct answer. All other options are irrelevant.

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 Section C

Explanation
PFRDA Grade A questions

Question 1 – The ESOP is offered at ₹75 when market value of the share is ₹90. Market price on the date of
exercise of option is ₹84. What is the fair value of option recorded in the books of accounts? PFRDA Grade A –
Phase 1 - 2021

A. Rs 75
B. Rs 9
C. Rs 15
D. Rs 6
E. Rs 84

Answer – Option C

Explanation –
• As per Accounting Standard on Share-Based Payments, Fair value is the amount for which stock option
granted or a share offered for purchase could be exchanged between knowledgeable, willing parties in
an arm’s length transaction.
• An enterprise should measure the fair value of shares or stock options granted at the grant date, based
on market prices, if available, taking into account the terms and conditions upon which those shares or
stock options were granted.
Therefore, fair value of the ESOP = ₹90 - ₹75 = ₹15
Hence, Option C is the correct answer. All other options are incorrect.

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 Section C

Explanation
SEBI Grade A questions

Question 1 – Which of the following is correct about buy back rules? SEBI Grade A – Phase 1 - 2022

A. No need to file declaration of solvency

B. No board approval required even if buy back up to10% of the total paid-up equity capital and free reserves
of the company.
C. Can be done by issuing same kind of shares.
D. No authorization in articles
E. The ratio of the aggregate of secured and unsecured debts owed by the company after buy-back shall not
be more than twice the paid-up capital and its free reserves

Answer – Option E

Explanation –
• A buyback of shares is buying back of own shares by a company that was issued earlier.
• It is a corporate action event wherein a company makes a public announcement for the buyback offer
to acquire the shares from existing shareholders within a given timeframe.
• The company announces an offer price for the buyback that is generally higher than the current market
price.
• As per Section 68 of the Companies Act, 2013, The ratio of the aggregate of secured and unsecured debts
owed by the company after buy-back shall not be more than twice the paid-up capital and its free
reserves. This ratio is also regarded as Debt-Equity Ratio.
Hence, Option E is the correct answer. All other options are incorrect.
Additional Information:
• Form SH-9 Declaration of Solvency is filed. Hence, Option A is incorrect.
• Buyback Procedure: Convene a meeting of the board of directors and pass a resolution for the proposal
of buyback if the % of the buyback is less than 10% Or If the % of the buyback is up to 25% pass the
resolution for convening an Extraordinary general meeting and pass a special resolution in the meeting.
Hence, Option B is incorrect.
• The Buyback may be done by Company’s

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 o Free reserves
o Securities Premium account
o Proceeds of issue of any shares or other specified securities.
o (Provided that no buy-back of any kind of shares or other specified securities shall be made out
of the proceeds of an earlier issue of the same kind of shares or same kind of other specified
securities) Hence, Option C is incorrect.
• Articles of Association shall authorize Buyback. Hence, Option D is incorrect.

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 SEBI Grade A questions

Question Number Answer

Question 1 Option B

PFRDA Grade A questions

Question Number Answer

Question 1 Option B

Section C

Explanation
SEBI Grade A questions

Question 1 – A company purchased inventory 1000 units@1200 per unit from outside vendors. Vendor allowed
a trade discount of 5%. Vendors offered a cash discount of 3% if payment is made in 45 days. Company decided
to avail that. Custom duty is 50 per unit and delivery charges is 6000 as a whole. Find the value of inventory as
per AS 2. SEBI Grade A – Phase 2 - 2022

A. 12,00,000
B. 11,96,000
C. 10,90,000
D. 12,25,000
E. None of the above

Answer – Option B

Explanation:

Purchase cost = 12,00,000/- (1000@1200 per unit)

Trade Discount = 5% of Purchase cost = 5% of 12,00,000 = 60,000/-

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Also, as per Accounting Standard 2, Cash discount will not be considered.

Therefore Discount = 60,000/-

Custom Duty = 50x1000 = 50,000/-

Delivery Charges = 6000

Cost of Inventory = Purchase cost – Discount + Other Costs

= 1200000 -60000 + 50000 +6000

= 11,96,000/-
Hence, Option B is the correct answer. All other options are incorrect.

Explanation
PFRDA Grade A questions

Question 1– A company purchased 50,000 units at ₹2 per unit. Market price of the units as on 31.03.2021 is
₹0.90 per unit. Calculate the value of closing stock to be recorded in the books of accounts of the company.
PFRDA Grade A – Phase 1 - 2021

A. Rs 1,00,000
B. Rs 45,000
C. Rs 1,45,000
D. Rs 55,000
E. Rs 72,500
Answer – Option B

Explanation –

• As per the Prudence concept of accounting, the value of closing stock to be recorded in the books of
accounts will be the lower of the actual cost or the net realizable value.
• Since, the net realizable value is lower than the actual cost, therefore the value of closing stock will be
₹0.90 per unit.
• Hence, the total value of closing stock would be 50000 units x ₹0.90 per unit = ₹45,000.

Therefore, Option B is the correct answer. All other options are incorrect.

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 Section C

Explanation
SEBI Grade A questions

Question 1 – Ind-AS 18 related to revenue recognition is dealing with ___________. SEBI Grade A – Phase 1 -
2022

A. Hire Purchase
B. Revenue arising from Leases
C. Contract
D. Revenue arising from Interest, Royalty, Dividend
E. None of the above
Answer – Option D

Explanation:

• IND AS 18 Revenue Recognition sets the guidelines as to when to recognize the revenue arising from
certain types of transactions and the accounting treatment of the same. Revenue is recognized when it
is probable that future economic benefits will flow to the entity and these benefits can be measured
reliably.
• Applicability of IND AS 18: This Standard should be applied in accounting for revenue arising from the
following transactions:
o Revenue arising from Sale of goods
o Revenue arising from Rendering of Services
o Revenue arising from Interest, Royalties or Dividends
Hence, Option D is the correct answer. All other options are incorrect.
Additional Information:
• Ind AS 17 deals with hire purchase or revenue arising from Leases. Hence, Option A and Option B are
incorrect.
• Ind AS 115 deals with revenue from contracts. Hence, Option C is incorrect.

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 Section B

Answer Key

SEBI Grade A questions

Question Number Answer

Question 1 Option C
Question 2 Option B

Section C

Explanation
SEBI Grade A questions

Question 1 – Calculate exchange profit & Loss for 2011-12 and 2012-13 as per AS11? SEBI Grade A – Phase 2 -
2020

Goods worth Rs 1 Lakh purchased on 23/03/2012 at Rs 46.60 per dollar rate

Dollar rate on 31st March 2012 = Rs 47 per dollar

In May 2012 when payment was made, exchange price was Rs 47.5 per dollar

A. Rs 40,000
B. Rs 50,000
C. Rs 90,000
D. Rs 10,000
E. None of the above
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Answer – Option C

Explanation:

Profit/Loss for the year 2011-12 = Rs 47.00 – Rs 46.60 = Rs 0.4 per dollar loss,

Total = Rs 0.4 * 1 lakh = Rs 40,000

Profit/loss for the year 2012-13 = Rs 47.50 – Rs 47.00 = Rs 0.5 per dollar loss,

Total = Rs 0.5 * 1 lakh = Rs 50,000

Total loss for the years 2011-12 and 2012-13 = Rs 90,000

Hence, Option C is the correct answer. All other options are incorrect.

Question 2 – Company ABC limited took a loan of $10 million dollar for 3 months on 1st January 2021.

Exchange rate at the time of contract (on 1.01.2021) was $1 = Rs 70.

Exchange rate at the time of repayment (on 31st March 2021) was $1 = Rs 72.5

Find the amount of P&L for the year ended 2020-21 for the company ABC. SEBI Grade A – Phase 2 - 2022

A. Profit of Rs 2.5 Crores

B. Loss of Rs 2.5 Crores
C. Loss of Rs 5 Crores
D. Profit of Rs 3 Crores
E. None of the above

Answer – Option B

Explanation:

Amount of Loan taken in Rs = 10,000,000 x 70 = 70 crores

Amount of Loan Repaid = 10,000,000 x 72.5 = 72.5 Crores

Exchange Loss = Rs 2.5 Crores

Hence, Option B is the correct answer. All other options are incorrect.

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 SEBI Grade A questions

Question 1 – Calculate the total machine cost from the following SEBI Grade A – Phase 2 - 2020

Machine Cost = Rs 15 lakh

Cartage = Rs 2000

Freight = Rs 25000

Installation = Rs 40000

Testing = Rs 18000

A. Rs 15.67 lakh
B. Rs 15.27 lakh
C. Rs 15.85 lakh
D. Rs 15.45 lakh
E. None of the above
Answer – Option C

Explanation:

All the given costs form a component of the total cost of machine and would be included in the total cost
incurred. Adding all the given costs, the total cost of a machine
= 15,00,000+2,000+25,000+40,000+18,000
= Rs 15.85 lakh
Hence, Option C is the correct answer. All other options are incorrect.

Question 2 – Value of Machine is Rs 12,00,000 for 10 years and its residual value is nil. After 5 years, the
remaining machine life is increased by 3 years and the value increased by Rs 1,20,000. Find the Depreciation for
the 6th year on SLM basis. SEBI Grade A – Phase 2 - 2022

A. 90,000
B. 1,00,000
C. 1,20,000
D. 50,000
E. None of the above

Answer – Option A
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Explanation:

Cost of Asset = 12,00,000

Salvage Value = Nil (As given in Question)
Useful Life of Asset = 10 years
Therefore, as per the above formula
Depreciation charged per year on original value = 1200000/10 = 1,20,000
Value at the end of 5th year = 1200000- (5 x 120000) = 6,00,000
Revalued Machine value = 600000+120000=7,20,000

Remaining Life after extension of 3 years = 5 + 3 = 8

Depreciation charged in 6th year = 720000/8 = 90,000

Hence, Option A is the correct answer. All other options are incorrect.

Explanation
PFRDA Grade A questions

Question 1 – The depreciable amount of a depreciable asset should be allocated on a _________ basis to each
accounting period during the useful life of the asset. PFRDA Grade A – Phase 2 - 2021

A. Straight-line basis
B. Written Down Value
C. Systematic Basis
D. Zero Basis
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E. None of the above

Answer – Option C

Explanation:

• As per AS-10 on PPE, the depreciable amount of an asset should be allocated on a systematic basis over
its useful life.
• Option A and Option B are the methods of depreciation.
• Option D is irrelevant.

Hence, Option C is the correct answer. All other options are incorrect.

Additional Information:

Basis for Straight Line Value Method Written Down Value Method
Comparison

Meaning A method of depreciation in which A method of depreciation in which

the cost of the asset is spread a fixed rate of depreciation is
uniformly over the life years by charged on the book value of the
writing off a fixed amount every asset, over its useful life.
year.

Calculation of On the original cost On the written down value of the

depreciation asset.

Annual Remains fixed during the useful life. Reduces every year
depreciation
charge

Value of asset Completely written off Not completely written off

Amount of Initially lower Initially higher

depreciation

Impact of repairs Increasing trend Remains constant

and depreciation
on P&L A/c

Appropriate for Assets with negligible repairs and Assets whose repairs increase, as
maintenance like leases, copyright. they get older like machinery,
vehicles etc.

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 Section C

Explanation
PFRDA Grade A questions

Question 1 – If an investment is realizable within 1 year, then this type of investment is known as ____________.
PFRDA Grade A – Phase 2 – 2021

A. Non-Marketable Securities
B. Current Investments
C. Liquid Investments
D. Long-term Investments
E. None of the above
Answer – Option B

Explanation:

• If an investment is realizable within 1 year, then this type of investment is known as Current Investment.
• As per AS-13, Accounting for Investments, a current investment is an investment that is by its nature readily
realizable and is intended to be held for not more than one year from the date on which such investment is
made.

Hence, Option B is the correct answer. All other options are incorrect.

Additional Information:

• Non-Marketable Securities: A non-marketable security is an asset that is difficult to buy or sell due to
the fact that they are not traded on any major secondary market exchanges. Hence, Option A is
incorrect.
• Liquid Investment: A liquid investment is any investment that can be easily converted into cash without
having a significant impact on its value. Hence, Option C is incorrect.
• Long-term Investments: A long-term investment is an account on the asset side of a company's balance
sheet that represents the company's investments, including stocks, bonds, real estate, and cash. Long-
term investments are assets that a company intends to hold for more than a year. Hence, Option D is
incorrect.

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 SEBI Grade A questions

Question Number Answer

Question 1 Option D
Question 2 Option D
Question 3 Option E
Question 4 Option A
Question 5 Option E
Question 6 Option B
Question 7 Option D
Question 8 Option C
Question 9 Option B

PFRDA Grade A questions

Question Number Answer

Question 1 Option A

Section C

Explanation
SEBI Grade A questions

Question 1 – Provision of tax is under which sub-head in balance sheet __________. SEBI Grade A – Phase 1 -
2020

A. Long-term Provisions
B. Short-term assets
C. Long-term liabilities
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D. Short-term liabilities
E. None of the above
Answer – Option D

Explanation:

• Provision of tax is under Short-term liabilities in the balance sheet.

• The provision for taxes on is the amount of taxes a company estimates it will pay in a given year.In the
Balance sheet it shown under the head Short Term Liabilities.
Hence, Option D is the correct answer. All other options are incorrect.

Question 2 – Long term borrowings maturing in the current year are shown in the balance sheet under which
head? SEBI Grade A – Phase 2 - 2020

A. Current Assets
B. Fixed Assets
C. Long-term liabilities
D. Current Liabilities
E. None of the above
Answer – Option D

Explanation:

• The current maturity of a company’s long-term debt refers to the portion of liabilities that are due within
the next 12 months.
• As this portion of outstanding debt comes due for payment within the year, it is removed from the long-
term liabilities account and recognized as a current liability on a company’s balance sheet.
• Any amount to be repaid after 12 months is kept as a long-term liability.

Hence, Option D is the correct answer. All other options are incorrect.

Additional Information:

• Current Assets: A current asset is an item on an entity's balance sheet that is either cash, a cash
equivalent, or which can be converted into cash within one year. Hence, Option A is incorrect.
• Fixed Assets: Fixed assets refer to long-term tangible assets that are used in the operations of a business.
They provide long-term financial benefits, have a useful life of more than one year, and are classified as
property, plant, and equipment (PP&E) on the balance sheet. Hence, Option B is incorrect.
• Long-Term Liabilities: Long-term liabilities, also called long-term debts, are debts a company owes third-
party creditors that are payable beyond 12 months. Hence, Option C is incorrect.

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Question 3 – Which of the following is an example of Commitment Item in the Balance Sheet? SEBI Grade A –
Phase 1 - 2022

A. Arrears of dividend share

B. Guarantee
C. Undisclosed charges on Company
D. Dividend declared after BSD and before AGM
E. Uncalled liability on shares and other investments partly paid
Answer – Option E

Explanation:

• Commitment refers to the contractual obligations which are certain and independent in nature.
• If the commitments relate to the reporting period, they need to be disclosed in the balance sheet as
liabilities and if commitments does not belong to the reporting period they needs to disclosed in notes
to accounts.
• Uncalled liability on shares and other investment partly paid. The uncalled amount on these shares is a
commitment as it will have to be paid when called.

Hence, Option E is the correct answer. All other options are incorrect.

Question 4 – Which of the following is a Capital Expenditure? SEBI Grade A – Phase 1 - 2022

A. Overhauling cost of Second-hand Machinery

B. Inauguration cost of new unit

C. Repainting of Van

D. Replacement cost of spare parts

E. Revenue from Insurance Business

Answer – Option A

Explanation:

• Capital expenditure or capital expense is the money an organization or corporate entity spends to buy,
maintain, or improve its fixed assets.
• If overhaul cost is incurred, it increases the useful life of the asset, so it is useful for many years. Hence,
it is a capital expenditure.

Hence, Option A is the correct answer. All other options are incorrect.

Additional Information:

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 BASIS FOR CAPITAL EXPENDITURE REVENUE EXPENDITURE
COMPARISON

Meaning Capital Expenditure refers to the outlay Revenue Expenditure is an expenditure

of funds for acquiring or increasing the whose whole benefit is utilized during
value of the fixed assets. the current accounting period.

Nature Non-recurring outlay Recurring Outlay

Tends to Increase earning capacity Maintains earning capacity

Benefits Produces benefits over several years. Produces benefits for an accounting year.

Appears in Balance Sheet Profit and Loss Account

Nature Real Account Nominal Account

Debited to Asset Account Expense Account

Adds value to an Yes No

existing asset

Capitalization of Yes No
Expenses

Purpose For acquiring or erecting fixed assets to For carrying out day-to-day activities of
be used in business. the business.

Question 5 – Which of the following is not an exceptional item in P&L Account? SEBI Grade A – Phase 1 - 2022

A. Profit or loss arises on disposal of fixed assets

B. Abnormal losses on long term contracts
C. Amount received in settlement of insurance claim
D. Write off of expenses capitalised on intangible assets other than amortization
E. Sales of an investment in subsidiary and associated companies
Answer – Option E

Explanation –

Exceptional items are costly events that have an impact on a company's bottom line but must not be misread
as gains or losses in routine business operations. Exceptional items and extraordinary items are often confused,
but they are recorded differently.

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Para 14 of AS 5 gives certain examples of such exceptional items:

1. The write-down of inventories to NRV

2. Disposal of items of fixed assets

3. Disposal of long-term investments

4. Legislative changes having retrospective application (e.g., increase in D.A. with retrospective effect
after revision by Sixth Pay Central Commission)

5. Litigation Settlement.

From the above, the following features of exceptional items can be deduced:
A. Profit or loss arises on the disposal of a fixed asset.

B. Abnormal losses on long-term contracts.

C. Amount received in settlement of insurance claims

D. Write off of expenditure capitalized on intangible assets other than amortization.

Hence, Sales of an investment in subsidiary and associated companies will not be considered as an Exceptional
Item. As for this purpose separate financial statements are made. Hence, Option E is the correct answer.

Question 6 – Which of the following is an intangible asset? SEBI Grade A – Phase 1 - 2022

A. Railway Siding
B. Mining Rights
C. Leasehold Land
D. Cash
E. None of the above

Answer – Option B

Explanation:

• Tangible assets are physical; they include cash, inventory, vehicles, equipment, buildings and
investments.
• Intangible assets do not exist in physical form and include things like accounts receivable, pre-paid
expenses, and patents and goodwill.
• Hence, Mining Rights is an intangible asset as they do not exist in physical form.
• All other options are tangible assets, as they are physical.

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Hence, Option B is the correct answer. All other options are incorrect.

Question 7 – Which of the following statement is incorrect regarding provisions?? SEBI Grade A – Phase 2 -
2022

A. They appear on the company's balance sheet under the current liabilities.
B. A provision should be recognized as an expense
C. Provisions represent funds put aside by a company to cover anticipated losses in the future.
D. Provisions are contingent upon happing or non-happening of an event in the future
E. None of the above
Answer – Option D

Explanation:

Hence, Option D is the correct answer. All other options are incorrect.
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Question 8 – Which of the following statement is incorrect w.r.t Cash and Cash equivalents? SEBI Grade A –
Phase 2 – 2022

A. Cash equivalents include bank accounts and marketable securities, which are debt securities with
maturities of less than 90 days.
B. Any items falling within this category are classified within the current assets category in the balance
sheet.
C. Cash and Cash equivalents include bank deposits with more than twelve months of maturity shall not be
disclosed separately.
D. Cash and cash equivalents shall be classified as Balances with banks; Cheques, drafts on hand; Cash on
hand; etc.
E. None of the above
Answer – Option C

Explanation:

As per schedule III of the Companies Act and also Cash flow statements: Bank deposits with more than 12
months of maturity shall be disclosed separately.

Hence, Option C is the correct answer. All other options are incorrect.

Question 9 – Calculate the Gross profit Ratio from the given information. SEBI Grade A – Phase 2 - 2022

Particulars Amount

Sales Rs 1,00,000

Purchase Rs 75,000

Carriage Inward Rs 2000

Wages Rs 5000

Salary Rs 15,000

Decrease in Inventory Rs 10,000

Purchase Return Rs 2000

F. 5%
G. 10%
H. 15%
I. 20%
J. None of the above
Answer – Option B
Explanation –
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 ---------------(1)

Total Revenue = Sales = Rs 1,00,000/-

----------- (2)
Cost of goods sold (COGS) refers to the direct costs of producing the goods sold by a company. This amount
includes the cost of the materials and labor directly used to create the good.
COGS is based only on the costs that are directly utilized in producing that revenue, such as the company’s
inventory or labor costs that can be attributed to specific sales. By contrast, fixed costs such as managerial
salaries, rent, and utilities are not included in COGS.
A wage is payment made by an employer to an employee for work done in a specific period of time.
➢ Therefore, wages will be considered and during the calculation of COGS and Salaries will not be.
Cost of Direct Labor = Wages = Rs 5000 ------------ (3)
Overhead Manufacturing Cost: Manufacturing overhead (MOH) cost is the sum of all the indirect costs which
are incurred while manufacturing a product

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• Carriage inwards is the shipping and handling costs incurred by a company that is receiving goods from
suppliers. Raw materials and the cost of labour used during the manufacture of the product are good
examples of direct expenses that are easily traced back to the product. Therefore, Carriage inward cost will
be added to the manufacturing Overheads and Wages will not be considered being a direct expense.
=> Overhead Manufacturing Cost = Carriage inwards cost = Rs 2000 -------------- (4)
Purchase = Purchase during the period – Purchase return = Rs 75000 – 2000 = Rs 73,000

Also, Decrease in Inventory is of Rs 10,000

Therefore (Beginning Inventory – Ending Inventory) = Rs 10,000/- -------------(5)

Putting all the values calculated in equation (3), (4) and (5) in Equation (2), We have
=> COGS = 10000+73000 + 2000+5000 = 90,000

Now Using Equation (1)

GPR = (Total Revenue – COGS) x100 / Total Revenue
GPR = (100000-90000) x 100/ 100000 = 10%
Hence, Option B is the correct answer. All other options are incorrect.

Explanation
PFRDA Grade A questions

Question 1 – Which of the following is not a current liability? PFRDA Grade A – Phase 2 – 2021

A. Deferred Tax Liability

B. Bank Overdraft
C. Accounts Payable
D. All of the above
E. None of the above

Answer- Option A
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Explanation:
• As per Schedule III, Deferred Tax Liability is a non-current liability. Hence, Option A is the correct answer.
• Bank Overdrafts and Accounts Payable are examples of current liability.
Additional Information:

• Current liabilities are an enterprise’s obligations or debts that are due within a year or within the normal
functioning cycle.
o Moreover, current liabilities are settled by the use of a current asset, either by creating a new
current liability or cash.
o Current liabilities appear on an enterprise’s Balance Sheet and incorporate accounts payable,
accrued liabilities, short-term debt and other similar debts.
• Non-current liabilities are referred to as the long-term debts or financial obligations that are listed on
the balance sheet of a company.
o These are also known as long-term liabilities.
o These obligations are not due within twelve months or accounting period as opposed to current
liabilities, which are short-term debts and are due within twelve months or the accounting
period.
o Example: Long Term Loans, Debentures, etc.

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 Section C

Explanation
SEBI Grade A questions

Question 1 – Tally Software is used for ___________. SEBI Grade A – Phase 1 - 2020

A. Price Determination
B. Accounting
C. Customer Acquisition
D. Understanding Market Penetration
E. None of the above
Answer – Option B

Explanation:

• Tally is an ERP accounting software package that is used to record day to day business data of a company.
The latest version of Tally is Tally ERP 9.
• Tally ERP 9 Software is one of the most financial accounting systems used in India. For small and medium
enterprises, it is complete enterprise software.

Hence, Option B is the correct answer. All other options are incorrect.

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