MOST IMPORTANT QUESTIONS FOR ACCOUNTS INTERNALS

- The G’s University

Q. According to Convention of Conservatism
A. Provision is made for Bad and doubtful debts

Q. A businessman purchased goods for Rs.25,00,000 and sold 70% of such goods during the accounting year ending March 31, 2022. The market value of
remaining goods was Rs.5,00,000. He valued the closing stock at Rs.5,00,000 and not at Rs.7,50,000 due to :
A. Conservation

Q. From the following information, calculate Interest Coverage Ratio: Net Profit after Interest & Tax Rs.1,00,000 Current Assets Rs.4,00,000 Current
Liabilities Rs.2,00,000 Fixed Assets Rs. 6,00,000 10% Long Term Debt Rs. 4,00,000 Tax Rate @ 40%
A. 0.2063

Q. Using “lower of cost and net realisable value” for the purpose of inventory valuation is the implementation of which of the following concepts?
A. The prudence concept

Q. Wages paid to a worker making additions to machinery amounting to Rs. 5,000 were debited to the Wages account. Identify the type of error
A. Error of Principle

Q. From the following information, calculate Return on Investment (ROI): Net Profit After Interest and Tax Rs.8,10,000; 9% Debentures Rs.30,00,000;
Capital Employed Rs.60,00,000; Tax @ 40%
A. 0.27

Q. The accountant of a firm desires that adjustments for outstanding expenses and prepaid expenses should not be made while preparing financial
statements. Which accounting concept will be violated?
A. Accrual Concept and Matching Concept

Q. Assuming that Debt to Equity Ratio is 2:1,on sale of fixed asset (Book Value Rs.40,000) for Rs.50,000, the ratio will be:
A. 0.1

Q. Use of a common unit of measurement and common format of reporting promotes _____.
A. Comparability

Q. Accounting policies should not be changed from one period to another is based on the principle of
A. Consistency

Q. When Debt-Equity Ratio is 2, under which transaction the ratio will decline:
A. All of the above

Q. Issue of fully paid Bonus Shares

A. No cash flow

Q. The accountant of a firm desires that adjustments for outstanding expenses and prepaid expenses should not be made while preparing financial
statements. Which accounting concept will be violated?
A. Accrual Concept and Matching Concept

Q. Rent paid on 1st October, 2018 for one year upto 30th September, 2019 was Rs.2,400. Rent paid on 1st October for the yea upto 30th September, 2020
was Rs.3,200. Rent shown in the P&L A/c for the year ended on 31st December, 2019 would be:
A. Rs.2,600

Q. Adopting of Accounting Standards is mandatory for

A. Companies

Q. From the following information, calculate Interest Coverage Ratio: Net Profit after Tax Rs.7,00,000 6% Debentures Rs.20,00,000 Tax Rate @ 30%
A. 9.33 Times

Q. Under inflationary conditions, LIFO will lead to:

A. Lower Profit

Q. Which of the following is the error of principle?

A. Wages paid for installation of machinery debited to Wages A/c

Q. On 1st July 2017, a machine is purchased for Rs.1,75,000 and Rs.25,000 are spent on its installation. Depreciation is charged 10% on dimnishing balance
method. Books are closed on 31st March each year. On 31st March, 2020 depreciation charged will be:
A. Rs.16,650

Q. Considering the following transactions, the total of accounting equation will be: a. Commenced business with cash Rs.4,00,000 b. Purchased goods on
credit Rs.75,000 c. Goods costing Rs.1,00,000 sold at a profit of 20% for cash d. Rent paid Rs.5,000
A. Rs.4,90,000

Q. A commenced business on 1st April, 2017 with a capital of Rs.5,00,000. On 31st March, 2018, his assets were worth Rs.7,80,000 and liabilities Rs.70,000.
Find out his profits earned during the year?
A. Rs.2,10,000

Q. Net Profit of a company before charging manager's commission is Rs.21,000. If the manager is entitled to 5% commission after charging such commission,
how much manager will get as commission?
A. Rs.1000

Q. From the following information relating to year ended March 31, 2020, calculate Net Profit Before Tax and Extraordinary Items: Opening Balance in
Statement of P&L (Surplus) Rs.2,00,000 Closing Balance in Statement of P&L (Surplus) Rs.6,72,000 Transfer to Debentures Redemption Reserve
Rs.2,00,000 Proposed Dividend for the previous year ended March 31, 2019 Rs.1,80,000 Interim Dividend paid during the year Rs.1,44,000 Provision for
Tax made during the Current Year Rs. 2,00,000 Income Tax Paid Rs.2,16,000
A. Rs.11,96,000
Q. Creation of reserves
A. decreases the divisible profits

Q. Ms/ Future Ltd. has invested Rs.10,000 in the shares of Relicam Industries Ltd. Current Value of these shares is Rs.10,500. Accountant of Future Ltd.
wants to show Rs.10,500 as value of investment in the books of accounts, Which accounting convention restricts him from doing so:
A. Conservatism

Q. Which of the following transaction will result into flow of cash?

A. Received Rs.19,000 from debtors

Q. A trial balance contains Debtors Rs.15,000, Bad Debts Rs.400 and Provision for Doubtful Debts Rs.600. Further Bad Debts given in adjustments are Rs.400
If a provision @ 5% is made on Debtors, P&L A/c will be debited with:
A. Rs.930

Q. Accounting Standards are formulated by

A. Institute of Chartered Accountants of India

Q. A sum of Rs.32,000 has been spent on a mchine as follows: (i) Rs.20,000 for addition to double the output, (ii) Rs.5,000 for repairs necessitated by
negligence and (iii) Rs.7,000 for replacement of worn-out parts.
A. Rs.20,000 as capital expenditure and Rs.12,000 as revenue expenditure

Q. Closing Trade Receivables Rs.4,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables
Rs.2,00,000; Net Sales Rs.15,00,000. Calculate Trade Receivables Turnover Ratio
A. 4 Times

Q. Sundry Debtors given in the Trial Balance are Rs.20,000. Further, bad debts amounted to Rs.1,000 and it is desired to create a provision of 5% on debtors
for doubtful detbts and 2% for discount. Sundry Debtors will appear in the Balance Sheet at a figure of:
A. Rs. 17,689

Q. The book value of an asset after three years of depreciation on reducing balance method @ 15% p.a. is Rs.49,130. What was its original vale?
A. Rs.80,000

Q. Total Debts Rs.12,00,000; Shareholders Funds Rs.2,00,000; Reserves & Surplus Rs.50,000; Working Capital Rs.1,00,000 and Current Assets Rs.5,00,000.
Calculate Debt to Total Assets Ratio
A. 0.57:1

Q. Dividend received by a manufacturing company is classified as:

A. Investing activitiy

Q. Total Assets Rs.2,60,000; Total Debts Rs.1,80,000; Current Liabilities Rs.20,000. Calculate Debt to Equity Ratio
A. 2:1

Q. Creation of reserves
A. decreases the divisible profits

Q. A company is following weighted average cost method for valuing its inventory. The details of its purchase and issue of raw materials during the week are
as follows: Dec. 1 opening stock 50 units value RS. 2,200; Dec. 2 purchased 100 units @ Rs. 47; Dec. 4 issued 100 units; Dec. 5 purchased 200 units
@ Rs. 48. The value of inventory at the end of the week will be Inventory Valuation.
A. Rs.11,900

Q. According to Objectivity concept:

A. There should be proper vouchers for checking every transaction

Q. Accrual concept is based on:

A. Matching Concept

Q. According to Convention of Conservatism

A. Provision is made for Bad and doubtful debts

Q. Net Profit of a company before charging manager's commission is Rs.21,000. If the manager is entitled to 5% commission after charging such commission,
how much manager will get as commission?
A. Rs.1000

Q. A transfer price is:

A. the price charged by one segment of the company for goods or services provided to another segment

Q. Bought goods for cash for Rs.1,00,000 at 20% trade discount and 2% cash discount. Entry will be:
A. Dr.Purchases by Rs.80,000 and Cr. Cash by Rs.78,400 and Discount by Rs.1,600

Q. A trial balance contains Debtors Rs.15,000, Bad Debts Rs.400 and Provision for Doubtful Debts Rs.600. Further Bad Debts given in adjustments are
Rs.400. If a provision @ 5% is made on Debtors, P&L A/c will be debited with:
A. Rs.930

Q. Using “lower of cost and net realisable value” for the purpose of inventory valuation is the implementation of which of the following concepts?
A. The prudence concept

Q. Considering the following transactions, the total of accounting equation will be: a. Commenced business with cash Rs.4,00,000 b. Purchased goods on
credit Rs.75,000 c. Goods costing Rs.1,00,000 sold at a profit of 20% for cash d. Rent paid Rs.5,000
A. Rs.4,90,000

Q. Which of the following is a correct difference between a provison and reserve?

A. A provision is created out of a legal necessity whereas a reserve is created as a matter of prudence

Q. Buyback of shares is an extra-ordinary item for

A. Financing Activity

Q. Provision __________ of the year in which it is created

A. Decreases the profit
Q. Issue of fully paid Bonus Shares
A. No cash flow

Q. The accountant of a firm desires that adjustments for outstanding expenses and prepaid expenses should not be made while preparing financial statements.
Which accounting concept will be violated?
A. Accrual Concept and Matching Concept

Q. XYZ Radiology Centre acquired a new imported X-ray machine for Rs. 10,50,000. Octroi paid on the machine was Rs. 5,000. Expenses of setting up and
starting the machine was Rs. 2,000. The Centre spent Rs. 2,500 on distribution of flyers, advertising the new facility, and Rs. 50,000 on an inaugural
ceremony by the District Collector. The amount that can be classified as capital expenditure would be
A. Rs. 10,57,000

Q. The revised AS-2 (Valuation of inventories) permits which of the following method for computation of cost of inventory?
A. FIFO

Q. Sundry Debtors given in the Trial Balance are Rs.20,000. Further, bad debts amounted to Rs.1,000 and it is desired to create a provision of 5% on debtors
for doubtful detbts and 2% for discount. Sundry Debtors will appear in the Balance Sheet at a figure of:
A. Rs. 17,689

Q. Provision is made:
A. To provide for known losses

Q. The book value of an asset after three years of depreciation on reducing balance method @ 15% p.a. is Rs.49,130. What was its original vale?
A. Rs.80,000

Q. A firm purchased on 1st April 2018 a second-hand machinery for RS.50,000 and spent Rs.10,000 on its installation. On 1st July in the same year additional
machinery was purchased for Rs.20,000. Depreciation is provided each year on 31st December @ 5% p.a. on written down value method. The amount of
depreciation in the first year will be:
A. Rs.2,750

Q. From the following information relating to year ended March 31, 2020, calculate Net Profit Before Tax and Extraordinary Items: Opening Balance in
Statement of P&L (Surplus) Rs.2,00,000 Closing Balance in Statement of P&L (Surplus) Rs.6,72,000 Transfer to Debentures Redemption Reserve
Rs.2,00,000 Proposed Dividend for the previous year ended March 31, 2019 Rs.1,80,000 Interim Dividend paid during the year Rs.1,44,000 Provision for
Tax made during the Current Year Rs. 2,00,000 Income Tax Paid Rs.2,16,000
A. Rs.11,96,000

Q. A transaction involving increase in Debt-Equity Ratio and no change in Current Ratio is:
A. Issue of debentures against the purchase of fixed asset

Q. What will be the percentage of depreciation under SLM considering the given information: Original Cost of Machine Rs.1,50,000 Salvage Value after 9
years Rs. 15,000 Repair charges in 2nd year Rs.10,000
A. 0.1

Q. The books of Raj Ratan Limited revealed the following information: Opening Inventory Rs. 6,00,000; Purchases during the year 2021-2022 Rs.34,00,000;
Sales during the year 2021-2022 Rs.48,00,000. On March 31,2022, the value of inventory as per physical inventory-taking was Rs.3,25,000. The
company's gross profit on sales has remained constant at 25%. The management of the company suspects that some inventory might have been pilfered
by a new employee. What is the estimated cost of missing inventory?
A. Rs.75,000

Q. Accounting Standards are needed

A. All of the above

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