CMA MCQ SERIES PAST PAPER NOTES-Executive-Revision

AMIT TALDA CLASSES
PAST PAPERS MCQ SERIES

CORPORATE &
MANAGEMENT
ACCOUNTING
CS EXECUTIVE
BY
CA. AMIT TALDA
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Contents
CHAPTER 1 ............................................................................................ 3
CHAPTER 2 ............................................................................................ 6
CHAPTER 3 & 5 ..................................................................................... 9
CHAPTER 4 .......................................................................................... 22
CHAPTER 6 .......................................................................................... 28
CHAPTER 7 .......................................................................................... 31
CHAPTER 8 .......................................................................................... 36
CHAPTER 9 .......................................................................................... 40
CHAPTER 10 & 11 & 12 ....................................................................... 45
CHAPTER 13 ........................................................................................ 53
CHAPTER 14 ........................................................................................ 55
CHAPTER 15 ........................................................................................ 57
CHAPTER 16 ........................................................................................ 64
CHAPTER 17 ........................................................................................ 72
CHAPTER 18 ........................................................................................ 73
CHAPTER 19 & 20 & 22 ....................................................................... 82
CHAPTER 21 ........................................................................................ 92

CHAPTER 1
1. Mines as asset is an example of: (DEC 2019)
(a) Current Asset
(b) Wasting Asset
(c) Fictitious Asset
(d) Intangible Asset
2. The following is not an advantage of Double entry system: (DEC 2019)

(a) It prevents and minimizes frauds.
(b) Helps in decision making
(c) The trial balance doesn’t disclose certain types of errors
(d) It becomes easy for the Government to calculate the tax.
3. Financial statements are used by: (DEC 2020)

(a) Investors
(b) Creditors
(c) Regulators
(d) All of the above
4. A person who owes money to the business is a …………………… (DEC 2020)

(a) Debtor
(b) Creditor
(c) Investor
(d) Promoter
5. Preliminary expense is a ………… asset. (DEC 2020)

(a) Current
(b) Fixed
(c) Tangible
(d) Fictitious
6. The words ‘To Balance b/f’ or ‘By Balance b/f’ are recorded in the ‘Particulars Column’ at the
time of posting of: (DEC 2020)
(a) all compound entries
(b) an opening entry
(c) a closing entry
(d) an adjusting entry
7. Computers taken on hire by a business for a period of twelve months should be classified as:
(AUG 2021)
(A) Current assets
(B) Intangible assets
(C) Deferred revenue expenditure
(D) Not an asset
8. The arrangement of assets and liabilities in accordance with a particular order is known as
_________________ of balance sheet. (AUG 2021)
(A) Tallying
(B) Marking
(C) Ruling
(D) Marshalling
9. Provisions are _____________________ (AUG 2021)

(A) Nominal accounts
(B) Personal accounts
(C) Real accounts
(D) Representative personal accounts
10. ______________shall mean any amount written off or retained by way of providing for
depreciation, renewals or diminution in value of assets, or retained by way of providing for any
known liability of which the amount cannot be determined with substantial accuracy. (AUG
2021)
(A) Provision
(B) Reserves
(C) Appropriation
(D) Transfer
11. The original cost at which an asset or liability is acquired is known as ________ (AUG 2021)
(A) Carrying cost
(B) Replacement cost
(C) Amortization
(D) Historical cost
12. When complete sequence of accounting procedure is done, which happens frequently, and
repeated in same directions during an accounting period, it is called an ……………. . (DEC 2021)
(A) Accounting Cycle
(B) Accounting Period
(C) Accounting Process
(D) Accounting Tools
13. While preparing a trial balance, in which method are totals of both the sides of the accounts
written in the separate columns? (DEC 2021)
(A) Total Method
(B) Balance Method
(C) Compound Method
(D) Pure Method
14. If the owner’s equity is ` 5,00,000 and outsiders’ equity is ` 3,00,000, calculate total equity.
(DEC 2021)
(A) ` 5,00,000
(B) ` 2,00,000
(C) ` 8,00,000
(D) ` 3,00,000
15. Statement I : It may be prepared on a loose sheet of paper.

Statement II : The ledger accounts are balanced at first. They will have either “debit- balance”
or “credit-balance” or “nil-balance”.
Statement III : The accounts containing debit-balance are written on the debit column, and
those with credit-balance are written on the credit column.
All the above three statements are relevant for: (DEC 2021)
(A) Ledger
(B) Cash Book
(C) Trial Balance
(D) Financial Statement
16. Purchase goods of the list price of ` 25,000 from Mohan less 20% trade discount and 2%
cash discount. The amount of cash discount is ………………….. . (DEC 2021)
(A) ` 160
(B) ` 240
(C) ` 400
(D) ` 500

17. The amount set aside out of profits is called ………………… . (DEC 2021)
(A) Provision
(B) Reserve
(C) Surplus
(D) Income
ANSWER
1 2 3 4 5 6 7 8 9 10
B C D A D B D D A A
11 12 13 14 15 16 17
D A A C C C B
WORKING NOTES:
16.
𝐶𝑎𝑠ℎ 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = (25,000 − 20%) × 2% = 400

CHAPTER 2
1. At the time of preparation of Balance Sheet, Capital Work-in-progress is shown in the head of:
(DEC 2019)
(a) Share Capital
(b) Non-current Liabilities
(c) Current Assets
(d) Non-current Assets.
2. As per ICAI Guidance Note, at the end of the year, balance of Share Options Outstanding
Account should be shown under the: (DEC 2019)
(a) Current Liabilities
(b) Reserve and Surplus
(c) Current Assets
(d) No-current Liabilities
3. As per Companies Act, 2013, the prescribed form of Balance Sheet of a Company is given in:
(DEC 2019)
(a) Part II of Schedule III
(b) Part I of Schedule III
(c) Part I of Schedule II
(d) Part I of Schedule V
4. Current Assets are those assets: (DEC 2020)

(a) Which can be converted into cash within 12 months
(b) Which can be converted into cash within a period normally not exceeding 12 months
(c) Which can be converted into cash within an operating cycle which normally does not exceed
12 months.
(d) Which are held for their conversion into cash within an operating cycle or a period of 12
months
5. The figures appearing in the Financial Statements may be rounded off to the nearest crore,
only if Turnover is …………….. (DEC 2020)
(a) less than ` 100 crore
(b) ` 100 crore or more
(c) more than ` 100 crore
(d) more than ` 500 crore
6. A Company shall disclose by way of notes, additional information regarding aggregate

expenditure and income on any item of income or expenditure which exceeds: (DEC 2020)
(a) 1% of the revenue from operations or ` 1,00,000, whichever is higher
(b) 1% of the revenue from operations or ` 1,00,000, whichever is lower
(c) 1% of the revenue from operations or ` 10,00,000, whichever is higher
(d) 1% of the revenue from operations or ` 10,00,000, whichever is lower
7. A balance sheet has two parts to it, i. e.

I. Equity and Liabilities and
II. ………………………………. (DEC 2020)
(a) Shareholder’s fund
(b) Trade receivables
(c) Inventories
(d) Assets
8. Share Options Outstanding Account will be shown in the Balance Sheet of a company under
the heading (DEC 2020)
(a) Share Capital
(b) Reserves & Surplus
(c) Non-current Liabilities
(d) Current Liabilities
9. Loans from banks repayable on demand will be classified in the Balance Sheet of a company
as: (DEC 2020)
(a) Short-term borrowings
(b) Long-term borrowings
(c) Other Current Liabilities
(d) Other Long-term Liabilities
10. In the Balance Sheet of a company which item shall be sub-classified as: (i) Secured,
considered good; (ii) Unsecured, considered good; (iii) Doubtful. (DEC 2020)
(a) Long-term and Short-term Trade Receivables
(b) Long-term loans and advances
(c) Short-term loans and advances
11. Financial statements include: (DEC 2021)

(A) Income Statement, Balance Sheet, Statement of Stockholders Equity, Statement of Cash Flow
(B) Income Statement, Balance Sheet, Statement of Fund Flow, Statement of Cash Flow
(C) Income Statement, Balance Sheet, Statement of Cash Flow, Statement of Trend Analysis
(D) Income Statement, Balance Sheet, Statement of Stockholders Equity, Statement of Trend
Analysis
12. A corporate balance sheet is also known as: (AUG 2021)

(A) Statement of changes in assets and liabilities
(B) Statement of sources and application of funds
(C) Statement of financial condition
(D) Statement of object and reason
13. A copy of the financial statements and Board’s report duly adopted at the AGM shall be filed
with the Registrar within _____________of the date of AGM. (AUG 2021)
(A) 60 days
(B) 30 days
(C) 90 days
(D) 21 days
14. As per the provisions of the Companies Act, 2013, companies must maintain their accounts
under ____________________ (AUG 2021)
(A) Double account system
(B) Single entry system
(C) Double entry system
(D) Duplicate account system
15. One Person Company (OPC) shall file a copy of the financial statements duly adopted by its
member, along with all the documents which are required to be attached to such financial
statements, within _________________ from the closure of the financial year. (AUG 2021)
(A) 30 days
(B) 60 days
(C) 120 days
(D) 180 days
16. If the Company’s Issued Capita is more than the Authorized Capital, and approval of
increase in Authorized Capital is pending, the amount of Share Application Money received over
and above the Authorized Capital should be shown under the head : (DEC 2021)
(A) Other Current Liabilities
(B) Other Long-Term Liabilities
(C) Reserve and Surplus
(D) Short-Term Provision
17. The term “Continuing Default” is used with respect to : (DEC 2021)
(A) Short-term borrowing
(B) Medium- term borrowing
(C) Long-term borrowing
(D) None of the above
18. According to the rules for the purposes of Sub-section (1) of Section 129, the class of
companies as may be notified by the Central Government from time to time, shall mandatorily
file their financial statements in: (DEC 2021)
(A) Extensible Business Reporting Language (XBRL) format
(B) Extensible Business Reporting (XBR) format
(C) Extensible Business Presentation Language (XBPL) format
(D) Extensible Business Presentation (XBP) format
ANSWER
1 2 3 4 5 6 7 8 9 10
D B B D B A D B A D
11 12 13 14 15 16 17 18
A C B C D A C A

CHAPTER 3 & 5
1. Shiva Ltd. forfeited 4,500 equity shares of ` 10 each (which are issued on 40% pro-rata (basis)
for non-payment of allotment @ ` 6 (including premium of ` 2.50) and first and final call ` 3 per
share. If the excess money received on application is used for receiving the amount due as
securities premium, what amount should be credited to ‘Share Forfeited Account? (DEC 2019)
(a) ` 15,750
(b) ` 28,125
(c) ` 39,375
(d) ` 13,500
2. P Ltd. forfeited 5,000 equity shares of ` 10 each for non-payment of first and final call of `
2.50 per share which were issued at a premium of ` 3 per share receivable at allotment. Out of
these, 3,200 shares are re-issued at ` 8 per share as fully paid up. The amount transferred to
Capital Reserve will be: (DEC 2019)
(a) ` 37,500
(b) ` 31,100
(c) ` 24,000
(d) ` 17,600
3. C Ltd. invited applications for the issue of 20 Lakh equity shares of ` 10 each payable ` 3 on
application and ` 7 on allotment. Applications were received for 35 Lakh equity shares.
Applications for 7 Lakh shares were rejected and pro-rata allotment was made to remaining
applicants. Excess application money was adjusted on the sums due on allotment. Ravi could
not pay allotment money on his 2500 allotted shares. The amount received on allotment will be:
(DEC 2019)
(a) ` 1,39,92,500
(b) ` 1,15,92,500
(c) ` 1,04,86,880
(d) ` 1,15,85,500
4. Rule 17 of the Companies (Share Capital and Debenture) Rule, 2014, is related to: (DEC 2019)
(a) Issue of right shares
(b) Buy-back of shares or other securities
(c) Issue of sweat equity shares
(d) Employee stock option plan
5. For the companies whose financial statements comply with the accounting standards as
prescribed in Section 133 of the Companies Act, 2013, the premium payable on redemption of
preference shares shall be provided out of: (DEC 2019)
(a) The profits of the company only
(b) The securities premium only
(c) Any of either profits of the company or securities premium
(d) None of the above
6. The Capital Redemption Reserve Account may be used by the company: (DEC 2019)
(a) In the issue of fully paid-up bonus shares
(b) In conversion of partly paid-up shares into fully paid-up
(c) In writing off the preliminary expenses of the company
(d) In distribution of dividend among shareholders
7. A company offered 2,50,000 equity shares to public for subscription. 70% of public issue was
underwritten by G. Her firm underwritten was for 40,000 shares. Public subscribed for 1,30,000
shares. What is the net liabilities of G if as per underwriting agreement no credit is given to
underwriter G for her firm underwritten shares? (DEC 2019)
(a) 4,000 Shares
(b) 85,000 Shares
(c) 96,000 Shares
(d) 56,000 Shares
8. Written down value of a machine as on 31st March 2019 is ` 6,65,558. Rate of depreciation
on the basis of written down value method is 15%. What will be the cost of this machine
purchased on 1st April, 2014? (DEC 2019)
(a) ` 15,00,000
(b) ` 12,00,000
(c) ` 10,00,000
(d) ` 8,00,000
9. The term ‘Calls in Arrears’ is shown in the company’s balance sheet: (DEC 2019)
(a) Under current liabilities
(b) Under current assets, loans and advances
(c) As deducted from called up capital
(d) Non-current liabilities
10. At the time of forfeiture of shares the share capital account will be: (DEC 2019)
(a) Debited with paid up value of share forfeited
(b) Debited with called up value of shares forfeited
(c) Debited with face value of shares forfeited
(d) Debited with issue price of shares forfeited
11. The loss/discount on re-issue of forfeited shares may be: (DEC 2019)
(a) Equal or exceed the forfeited amount
(b) Not exceed the forfeited amount
(c) Equal to amount of premium which were received at the time of original issue
(d) Not exceed the called up value of shares
12. When the forfeited shares were originally issued at premium, the maximum permissible
discount on re-issue shall be: (DEC 2019)
(a) The amount of premium at time of original issue
(b) The amount credited to forfeited shares account
(c) The face value of forfeited shares
(d) The called up value of forfeited shares
13. Z Ltd. issued 5,000 equity shares of ` 10 each at 10% premium which is payable on
allotment. The company received application money @ ` 3 per share and allotment money
received on only 4,500 shares @ ` 4 per share. The company forfeited 500 shares for non-
payment of allotment money. At the time of forfeiture, the Equity Shares Capital a/c will be:
(DEC 2019)
(a) Debited with ` 5,000
(b) Debited with ` 3,500
(c) Debited with ` 3,000
(d) Credited with ` 3,500
14. Which of the following is correct? (DEC 2020)

(a) The company shall not issue sweat equity shares for more than 15% of the existing paid up
equity share capital in a year or shares of the issue value of rupees five crore, whichever is
higher.
(b) The company shall not issue sweat equity shares for more than 15% of the existing paid up
equity share capital in a year or shares of the issue value of rupees 5 crore, whichever is lower.
(c) The company shall not issue sweat equity shares for more than 25% of the existing paid up
equity share capital in a year or shares of the issue value of rupees 5 crore, whichever is higher.
(d) The company shall not issue sweat equity shares for more than 25% of the existing paid up
equity share capital in a year or shares of the issue value of rupees 5 crore, whichever is lower.
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15. If the Articles of Association are silent regarding interest on calls-in-arrears, the minimum
rate of interest which can be charged on calls-in-arrears is: (DEC 2020)
(a) 12% p. m.
(b) 10% p. a.
(c) 12% p. a.
16. The maximum amount of capital a company can issue is called …………….. (DEC 2020)
(a) Issued Capital
(b) Paid up Capital
(c) Authorized Capital
(d) Called up Capital
17. Forfeited shares can be re-issued at ……………. (DEC 2020)

(a) Par
(b) Premium
(c) Discount
(d) Any of the above
18. No issue of bonus shares shall be made by a company out of: (DEC 2020)
(a) Its free reserves
(b) The securities premium account
(c) Capitalizing reserves created by revaluation of assets
(d) The capital redemption reserve account
19. In case of buy-back of shares, passing of the special resolution is not required if: (DEC 2019)
(a) The buy-back is 10% or less of the total paid-up equity capital of the company
(b) The buy-back is 25% or less of the total paid-up equity capital of the company
(c) The buy-back is 10% or less of the total paid-up equity capital and free reserves of the
company
(d) The buy-back is 25% or less of the total paid-up equity capital and free reserves of the
company
20. Every buy-back shall be completed within a period of ……….. from the date of the resolution
or special resolution, as the case may be, passed by the Board. (DEC 2019)
(a) One month
(b) Three months
(c) Six months
(d) One year
21. In G Ltd., there is one whole-time director and three part-time directors. The maximum rate
of remuneration payable to all directors will be: (DEC 2019)
(a) 11%
(b) 8%
(c) 6%
(d) 10%
22. When the effective capital of a company is ` 100 crore and above but less than ` 250 crore,
the maximum remuneration payable as per Part-II of Schedule V of the Companies Act, 2013, by
the company to its managerial personnel when the company has no profits or inadequate profits,
will be: (DEC 2019)
(a) ` 42 Lakh
(b) ` 84 Lakh
(c) ` 120 Lakh
(d) ` 120 Lakh plus 0.01% of the effective capital in excess of ` 150 Lakh

23. The Escrow account under Regulation 9(xi) of SEBI (Buy back of securities) Regulations,
2018 does not include: (DEC 2020)
(a) Cash deposited with a scheduled commercial bank
(b) Bank guarantee in favour of the merchant banker
(c) Deposit of acceptable securities with appropriate margin, with the merchant banker
(d) Deposits of acceptable securities with appropriate margin, with the company
24. Which of the following is capital reserve? (AUG 2021)

(A) Profit prior to incorporation
(B) Profit on sale of fixed assets
(C) Profit on reissue of forfeited shares
(D) All of the above
25. Unmarked application has to be distributed to underwriters in the ratio

of___________________ (AUG 2021)
(A) Gross Liability Ratio
(B) Last Agreed Ratio
(C) Net Liability Ratio
(D) Equal Ratio
26. Applications bearing the stamp of the respective underwriter are called as_______ (AUG 2021)
(A) Firm applications
(B) Stamped applications
(C) Underwritten application
(D) Marked application
27. Underwriting is a contract of: (AUG 2021)

(A) Indemnity
(B) Bailment
(C) Guarantee
(D) Pledge
28. There shall be a minimum vesting period of ___________in case of Employee Stock Option
scheme (ESOS). (AUG 2021)
(A) 3 months
(B) 1 year
(C) 6 months
(D) 3 years
29. Where the right to obtain Shares or Stock options expires unexercised. The balance standing
to the credit of Employee Stock Option Outstanding A/c should be transferred to : (AUG 2021)
(A) Profit & Loss A/c
(B) General Reserve A/c
(C) Share Based Payment Reserve A/c
(D) Securities Premium A/c
30. Under the ____________ employees are given an option to purchase shares on the spot at a
discount price. (AUG 2021)
(A) Employees Stock Purchase Scheme
(B) Employee Stock Option Scheme
(C) Stock Appreciation Rights Scheme
(D) Preferential Allotment Scheme
31. As per Section 68 of the Companies Act, 2013, post buyback, debt equity ratio should not
exceed _____________________ (AUG 2021)
(A) 1
(B) 1.5
(C) 2
(D) 3
32. Where a company buys back own shares or other specified securities, it shall extinguish and
physically destroy the shares or securities so brought back within _____________of the last date of
completion of buy-back ? (AUG 2021)
(A) 3 days
(B) 8 days
(C) 7 days
(D) 9 days
33. Declaration of solvency in relation to buy back of shares has to be filed in______ (AUG 2021)
(A) Form SH-6
(B) Form SH-9
(C) Form SH-4
(D) Form SH-8
34. Paid-up equity shares capital of Novel Ltd. is ` 50,00,000 having face value of ` 10 each fully
paid-up. Other details :
General Reserve = ` 15,00,000
Capital Redemption Reserve = 4,00,000
Profit & Loss Account = ` 1,00,000
Statutory Reserve = ` 6,40,000
Securities Premium = ` 1,00,000
The board of directors passed resolution in board meeting to buy back maximum number of
shares as allowed by law. What is the maximum no. of shares that can be bought back ? (AUG
2021)
(A) 55,000 shares
(B) 67,000 shares
(C) 1,25,000 shares
(D) 78,000 shares
35. Negi Ltd. had 90,000 equity shares of ` 100 each. Fully paid up. The company decided to
buy back 10% shares at par by the issue of sufficient number of preference shares. Company do
not have any reserves. How much preference shares are required to be issued, it new preference
shares are to be issued at ` 10 each ? (AUG 2021)
(A) 9,00,000 shares
(B) 90,000 shares
(C) 1,00,000 shares
(D) 1,20,000 shares
36. Which of the following cannot be used for the purpose of creation of capital redemption
reserve account? (AUG 2021)
(A) Profit and Loss A/c (credit balance)
(B) General Reserve A/c
(C) Dividend Equalization Reserve A/c
(D) Unclaimed Dividends A/c
37. According to section 52 of the Companies Act, 2013, the amount in the Securities Premium
A/c cannot be used for the purpose of : (AUG 2021
(A) Issue of fully paid bonus shares
(B) Writing off losses of the company
(C) For purchase of own securities
(D) Writing off commission or discount on issue of shares
38. Which of the following statements is correct? (AUG 2021)

(A) Preference shares and debentures have priority right for a reward over ordinary shares
(B) Debentures will not receive interest in a year when the company makes an operating loss
(C) Preference shares will get dividend only when ordinary shares too receive them
(D) Ordinary shares could be paid dividend even when a company has negative retained earnings
39. Capital Redemption Reserve Account may be applied to issue _________ (AUG 2021)
(A) Right shares
(B) Bonus debentures
(C) Bonus to employees of the company
(D) Bonus shares
40. Preference shares amounting to ` 2,00,000 are redeemed at a premium of 5% by issue of

equity shares amounting to ` 1,00,000 at a premium of 10%. What is the amount to be
transferred to capital redemption reserve? (AUG 2021)
(A) `1,05,000
(B) ` 1,00,000
(C) ` 2,00,000
(D) ` 1,11,000
41. J Ltd. had 3,000, 12% Redeemable Preference Shares of ` 100 each, fully paid up. The
company issued 25,000 equity shares of ` 10 each at par and 1,000 14% Debentures of ` 100
each. The amount to be transferred to Capital Redemption A/c will be ___________________ (AUG
2021)
(A) Nil
(B) ` 50,000
(C) ` 2,00,000
(D) ` 3,00,000
42. The notice relating to offer for right issue shall be dispatched through registered post or
speed post or through electronic mode to all the existing shareholders at least ___________before
the opening of the issue. (AUG 2021)
(A) 3 days
(B) 5 days
(C) 7 days
(D) 10 days
43. If company makes bonus issue at 2:3, then it means: (AUG 2021)
(A) For every two shares three bonus shares will be allotted
(B) For every three shares two bonus shares will be allotted
(C) For every five shares three bonus shares will be allotted
(D) For every five shares two bonus shares will be allotted
44. __________ are shares issued by a company free of cost to its existing shareholders. (AUG
2021)
(A) Right shares
(B) Bonus shares
(C) Stock options
(D) Warrants
45. _________________ Refers to that part of the authorized capital which has actually been
offered to the public for subscription. (AUG 2021)
(A) Called up capital
(B) Subscribed capital
(C) Issued capital
(D) Nominal or authorized capital
46. Premium on issue of shares must be treated as _______________ (AUG 2021)

(A) Revenue Receipt
(B) Deferred Revenue Receipt
(C) Capital Receipt
(D) Capital Loss
47. Premium on issue of shares must be credited to a separate account called

___________________ (AUG 2021)
(A) Share Premium Account
(B) Securities Premium Account
(C) Discount on Issue of Shares
(D) Securities Profit Account
48. Amount received as calls-in-advance is a _____________ of the company. (AUG 2021)

(A) right
(B) asset
(C) debt
(D) revenue
49. Amount due on calls made but not paid is known as _________________ (AUG 2021)
(A) Calls-in-Advance
(B) Calls-in-Arrears
(C) Unpaid amounts
(D) Defaulting amounts
50. __________________may be said to be the compulsory termination of membership by way of

penalty for non-payment of allotment and/or any call money. (AUG 2021)
(A) Surrender of shares
(B) Forfeiture of shares
(C) Transfer of shares
(D) Transmission of shares
51. A company has a subscribed capital of 2,00,000 equity shares of ` 25 each, ` 20 per share
called up. The directors forfeited 200 equity held by a shareholder who failed to pay the first call
made @ ` 10 per share. Later, the directors reissued these shares as ` 20 per share paid up at `
15 per share. On reissue, amount to be transferred to capital reserve account is
___________________ (AUG 2021)
(A) ` 1,000
(B) ` 1,400
(C) ` 1,500
(D) ` 1,100
52. Declared dividend must be paid within ________________ of declaration. (AUG 2021)
(A) 5 days
(B) 10 days
(C) 30 days
(D) 60 days
53. In case of buy back of own shares, a company shall make a public announcement within
two working days from the date of special resolution/Board of directors resolution in: (DEC
2021)
(A) at least one English National Daily, one Hindi National Daily and two Regional
language daily
(B) at least one English National Daily, one Hindi National Daily and one Regional language
daily
(C) at least one English National Daily, two Hindi National Daily and one Regional language
daily
(D) at least two English National Daily, one Hindi National Daily and one Regional
language daily
54. ABC Ltd. issued 1,00,000 equity shares of ` 100 each. payable as under:
On application ` 30; On allotment ` 30. On final call ` 40
1,45,000 applications were received as under:
Applicants applied for 25,000 shares, allotted full.
Applicants applied for 1,00,000 shares, allotted 75,000 shares on pro-rata basis. Remaining
applications were rejected.
Amount received at the time of application is ……………… . (DEC 2021)
(A) ` 50,00,000
(B) ` 43,50,000
(C) ` 37,50,000
(D) ` 25,00,000
55. In the question number of 31, how much excess money received on application:
(DEC 2021)
(A) ` 13,50,000
(B) ` 30,00,000
(C) ` 27,50,000
(D) ` 15,00,000
56. In the question number of 31, amount to be refunded …………………. . (DEC 2021)
(A) ` 3,50,000
(B) ` 4,50,000
(C) ` 5,00,000
(D) ` 6,00,000
57. In the question number of 31, amount of excess application money available for
adjustment against allotment money ………………. . (DEC 2021)
(A) ` 7,50,000
(B) ` 13,50,000
(C) ` 15,50,000
(D) ` 17,50,000
58. A company after the completion of the buy-back under this sections, shall file with the
Registrar a return in ……………….. . (DEC 2021)
(A) Form No. SH. 9
(B) Form No. SH. 10
(C) Form No. SH. 11
(D) Form No. SH. 12
59. Section 68 (4); Every buy-back shall be completed within a period of ........................ from
the date of passing of the special resolution, or as the case may be, the resolution passed by
the Board. (DEC 2021)
(A) 6 months
(B) One year
(C) Two years
(D) 5 years
60. According to section 68 (1) of the Companies Act, 2013, a company cannot purchase its
own shares or other specified securities (referred to as buy-back) out of: (DEC 2021)
(A) Free reserves
(B) Securities premium account
(C) The proceeds of the issue of any shares or other specified securities
(D) The proceeds of an earlier issue of the same kind of shares or same kind of other specified
securities

61. XYZ Ltd. Issued 60,000, 12% debentures of ` 100 each. 70% of the issue was underwritten
by ABC Ltd. Applications for 56,000 debentures were received by the XYZ Ltd. The liability of
ABC Ltd. is: (DEC 2021)
(A) 2,800 debentures
(B) 3,800 debentures
(C) 4,000 debentures
(D) 4,200 debentures
62. LMN Ltd. allotted 20,000 shares to the applicants of 28,000 shares on pro-rata basis. The
amount payable on application is ` 25 per share. Kanika applied for 700 shares, the number
of shares allotted to Kanika will be: (DEC 2021)
(A) 500 shares
(B) 700 shares
(C) 800 shares
(D) 900 shares
63. At the time of forfeiture of shares the share capital account is debited with: (DEC 2021)
(A) Face value
(B) Called up value
(C) Paid up value
(D) Issued value
64. A Ltd. forfeited 1,000 shares of ` 10 each fully called up for non-payment of first & final
call of ` 3 per share. 600 of these shares were reissued at ` 9 per share, fully paid up. What is
the amount to be transferred to Capital Reserve Account? (DEC 2021)
(A) ` 7,000
(B) ` 4,200
(C) ` 6,400
(D) ` 3,600
65. Pro-rate allotment of shares is made when there is: (DEC 2021)
(A) Under subscription
(B) Over subscription
(C) Equal subscription
(D) As and when desired by directors
66. ABC Ltd. issued 10,000 equity shares of ` 100 each at par payable as under: On
application ` 30; on allotment ` 20; on first and on final call ` 50 per share.
Applications were received for 30,000 shares. Applications for 5,000 shares were rejected and
pro-rata allotment was made to the applicants for 25,000 shares. Excess application money is
adjusted towards amount due on allotment and calls.
How much amount will be received in cash on first call? (DEC 2021)
(A) ` 1,00,000
(B) ` 1,50,000
(C) ` 2,00,000
(D) ` 2,50,000
67. The company shall not issue sweat equity shares for more than ................................... of
the existing paid up equity share capital in a year or shares of the issue value of
rupees…………………… , whichever is higher. (DEC 2021)
(A) 5%, 1 Crore
(B) 10%, 2 Crore
(C) 15%, 5 Crore
(D) 20%, 10 Crore
68. The escrow amount shall be payable in the following manner: (DEC 2021)
(i) if the consideration payable does not exceed ` 100 crores; 25 per cent of the consideration
payable
(ii) if the consideration payable exceeds ` 100 crores; 25 per cent up to ` 100 crores and 10 per
cent thereafter
(iii) if the consideration payable does not exceed ` 10 crores; 25 per cent of the consideration
payable
(iv) if the consideration payable exceeds ` 100 crores; 5 per cent up to ` 100 crores and2.5 per
cent thereafter
(A) (i)
(B) (i) and (ii)
(C) (i), (ii) and (iii)
(D) (i), (ii), (iii) and (iv)

ANSWER
1 2 3 4 5 6 7 8 9 10
B D D B C A D A C B
11 12 13 14 15 16 17 18 19 20
B B B A B C D C C D
21 22 23 24 25 26 27 28 29 30
C C D D A D C B B A
31 32 33 34 35 36 37 38 39 40
C C B C A D B A D B
41 42 43 44 45 46 47 48 49 50
B A A B C C B C B B
51 52 53 54 55 56 57 58 59 60
A C B B A D A C B D
61 62 63 64 65 66 67 68
A A B D B D C B
WORKING NOTES:
1.
4500
𝑆ℎ𝑎𝑟𝑒 𝑎𝑝𝑝𝑙𝑖𝑒𝑑 = = 11250 𝑠ℎ𝑎𝑟𝑒𝑠
40%
𝐴𝑚𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑒𝑑 𝑜𝑛 𝐴𝑝𝑝𝑙𝑖𝑐𝑎𝑡𝑖𝑜𝑛 = 11250 × [10 − (6 − 2.5) − 3]
= 11250 × 3.5
= 39375
𝐴𝑚𝑜𝑢𝑛𝑡 𝑡𝑟𝑎𝑛𝑠𝑓𝑒𝑟 𝑡𝑜 𝑓𝑜𝑟𝑓𝑒𝑖𝑡𝑒𝑑 𝑠ℎ𝑎𝑟𝑒𝑠 = 𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑐𝑒𝑖𝑝𝑡 − 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠 𝑃𝑟𝑒𝑚𝑖𝑢𝑚
= 39375 − (4500 × 2.5)
= 28125
2.
𝑎𝑚𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑒𝑑 𝑜𝑛 3200 𝑠ℎ𝑎𝑟𝑒𝑠 = 3200 × (10 − 2.5)
= 24000
𝐿𝑜𝑠𝑠 𝑜𝑛 𝑅𝑒 − 𝑖𝑠𝑠𝑢𝑒 = 3200 × (10 − 8)
= 6400
𝐴𝑚𝑜𝑢𝑛𝑡 𝑡𝑟𝑎𝑛𝑠𝑓𝑒𝑟𝑟𝑒𝑑 𝑡𝑜 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑅𝑒𝑠𝑒𝑟𝑣𝑒 = 34000 − 6400
= 17600/−
3.
𝐸𝑥𝑐𝑒𝑠𝑠 𝐴𝑚𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑒𝑑 𝑜𝑛 𝐴𝑝𝑝𝑙𝑖𝑐𝑎𝑡𝑖𝑜𝑛 = [(35 − 7) × 3] − [20 × 3]
= 84 − 60
= 24
𝐶𝑎𝑙𝑙 𝑖𝑛 𝐴𝑟𝑟𝑒𝑎𝑟𝑠 = 𝐴𝑚𝑜𝑢𝑛𝑡 𝑑𝑢𝑒 𝑜𝑛 𝐴𝑙𝑙𝑜𝑡𝑚𝑒𝑛𝑡 − 𝐴𝑚𝑜𝑢𝑛𝑡 𝐴𝑑𝑣𝑎𝑛𝑐𝑒
2500
= (2500 × 7) − {[( × 28) × 3] − (2500 × 3)}
20
= 14500/− 𝑖. 𝑒. 0.145 𝑙𝑎𝑘ℎ𝑠
𝐴𝑚𝑜𝑢𝑛𝑡 𝑅𝑒𝑐𝑒𝑖𝑣𝑒𝑑 𝑜𝑛 𝐴𝑙𝑙𝑜𝑡𝑚𝑒𝑛𝑡 = 𝐴𝑚𝑜𝑢𝑛𝑡 𝑑𝑢𝑒 − 𝐴𝑑𝑣𝑎𝑛𝑐𝑒 𝑜𝑛 𝐴𝑝𝑝𝑙𝑖𝑐𝑎𝑡𝑖𝑜𝑛 − 𝐶𝑎𝑙𝑙 𝑖𝑛 𝐴𝑟𝑟𝑒𝑎𝑟𝑠
= (20 × 7) − 24 − 0.145
= 115.855 𝑙𝑎𝑘ℎ𝑠
7.
Underwriting Liability
Gross Liability (250000 × 70%) 175000
(-) Application Received (130000 × 70%) (91000)

(-) Firm Underwriting (28000)
(as benefit is not to be given it will be distributed in gross liability)
(40000 × 70%)
56000
8.
𝑅𝑒𝑣𝑒𝑟𝑠𝑒 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑖𝑠 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 ℎ𝑒𝑟𝑒.
𝑂𝑓𝑓𝑒𝑟 𝑑𝑒𝑝𝑛 𝑡ℎ𝑒 𝑣𝑎𝑙𝑢𝑒 𝑖𝑛𝑐𝑜𝑚𝑒 85%
6,65,558
31.3.2018 = = 783009
85%
793009
31.3.2017 = = 921187
85%
921187
31.3.2016 = = 1083750
85%
1083750
31.3.2015 = = 1275000
85%
1275000
1.4.2014 = = 15,00,000
85%
13.
𝐴𝑡 𝑡ℎ𝑒 𝑡𝑖𝑚𝑒 𝑜𝑓 𝑓𝑜𝑟𝑓𝑒𝑖𝑡𝑢𝑟𝑒, 𝐸𝑆𝐶 𝑖𝑠 𝑑𝑒𝑏𝑖𝑡𝑒𝑑 𝑏𝑦 𝐶𝑎𝑙𝑙𝑒𝑑 𝑢𝑝 𝑣𝑎𝑙𝑢𝑒.
𝐻𝑒𝑟𝑒, 𝐶𝑎𝑙𝑙𝑒𝑑 𝑢𝑝 𝐴𝑚𝑜𝑢𝑛𝑡 𝑖𝑠 3 + 4 = 7
∴ 𝐸𝑆𝐶 𝑤𝑖𝑙𝑙 𝑏𝑒 𝑑𝑒𝑏𝑖𝑡𝑒𝑑 𝑏𝑦 500 × 7 = 3500
34. Maximum Buy Back = 5,00,000 × 25% = 1,25,000 Equity Shares

Buy Back price is not given in the question.
35. No. of Preference Shares = (90,000 × 100) ÷ 10 = 9,00,000 Preference Shares
40. CRR = Nominal Value Redeemed – Capital Increase by Issue of Equity

CRR = 2,00,000 – 1,00,000
CRR = 1,00,000
41. CRR = Nominal Value Redeemed – Capital Increase by Issue of Equity

CRR = 3,00,000 – 2,50,000
CRR = 50,000
51. Amount Received = Called up – Amount Not received = 20 – 10 = 10

Loss on Reissue = 20 – 15 = 5
Capital Reserve = Amount Received – Loss on reissue
Capital Reserve = (200 × 10) – (200 × 5)
Capital Reserve = 1,000
54. Amount received on Application = Number of Application * Application money per Application
= 1,45,000 * 30 = 43,50,000
55. Excess Money on Application = Total Application Money Received – Amount of Share
Capital Allotted = (1,45,000 * 30) – (1,00,000 * 30) = 13,50,000
56. Amount to be refunded = Rejected Application * Application money per share = (1,45,000
– 25,000 – 1,00,000) * 30 = 6,00,000
57. Excess Amount for Adjustment in Allotment Money = Amount Received on Pro-rate
Applications – Amount of Share Capital Allotted = (1,00,000 * 30) - (75,000 * 30) = 7,50,000
61.
Gross liability (60,000 × 70%) 42,000
(-) Unmarked Application (56,000 × 70%) (39,200)
Net Liability 2,800
62.
700
𝑆ℎ𝑎𝑟𝑒𝑠 𝐴𝑙𝑙𝑜𝑡𝑡𝑒𝑑 = × 20,000 = 500 𝑠ℎ𝑎𝑟𝑒𝑠
28,000
64.
Amt. Received on 600 shares (600 × 7) 4200
(-) Loss on Re-issue of 600 shares (600 × 1) (600)
Capital Reserve 3600
66.
Amt. Received (25,000 × 30) 7,50,000
(-) Application (10,000 × 30) (3,00,000)
(-) Allotment (10,000 × 20) (2,00,000)
Excess 2,50,000
F & F Call Received = (10,000 × 50) – 2,50,000 = 2,50,000

CHAPTER 4
1. The entry____ “Debentures Suspense A/c Dr.,
To Debentures A/c” can be passed/done: (DEC 2019)
(a) On the issue of debentures for the consideration other than cash.
(b) On the issue of debentures as collateral security.
(c) For rectification of the error relating to balance of debentures account.
(d) On the issue of debentures at discount but redeemable at premium.
2. C Limited issued 8% Debentures of ` 65,00,000 at 5% discount which are redeemable at a

premium of 10%. On recording the transaction “Loss on Issue of Debentures Account” will be:
(DEC 2019)
(a) Debited by ` 3,25,000
(b) Debited by ` 6,50,000
(c) Debited by ` 9,75,000
(d) Credited by ` 3,25,000
3. M Ltd. issued 8% Debentures of ` 60 Lakh on 1st January, 2019 at a discount of 10%. The
debentures are redeemable in three equal instalments of ` 20 Lakh each payable on 31st
December every year. The amount of discount to be written at the end of the year on 31st March,
2021, will be: (DEC 2019)
(a) ` 2,00,000
(b) ` 1,00,000
(c) ` 1,50,000
(d) ` 1,75,000
4. S Ltd. had issued 80,000, 8% Debentures of ` 100 each redeemable on 31st December, 2019
at a premium of 20%. The company offered three options to debenture holders, out of which one
is to convert their holdings into equity shares of ` 10 each at a premium of ` 3.50 per share. This
offer was accepted by the holders of 49,275 debentures. For this, number of equity shares issued
will be: (DEC 2019)
(a) 4,38,000
(b) 5,91,300
(c) 3,65,000
(d) 7,98,255
5. G Ltd. has 8,00,000, 12% Debentures of ` 100 each. During the year 2018-2019 the company
purchased its own debentures from the open market for immediate cancellation are as follows:
(i) Aug. 1, 2018: 15000 Debentures @ ` 95.50 (ex-interest)
(ii) Jan. 1, 2019: 25000 Debentures @ ` 101.50 (cum-interest)
If debenture interest is payable on 30th September and 31st March every year, then the amount
of profit or loss on cancellation of debentures will be: (DEC 2019)
(a) ` 30,000 (Profit)
(b) ` 70,000 (Profit)
(c) ` 67,500 (Profit)
(d) ` 1,05,000 (Profit)
6. The profit on cancellation of debentures should be transferred to: (DEC 2019)

(a) Securities Premium A/c
(b) Statement of profit and Loss
(c) General Reserve A/c
(d) Capital Reserve A/c
7. Which of the following is not a method of redemption of debentures? (DEC 2020)

(a) By payment of lumpsum
(b) By payment in Instalments
(c) By purchase in open market
(d) By conversion into short term loans
8. Every company required to create/maintain Debenture Redemption Reserve shall before the
30th day of April of each year, deposit or invest (as the case may be) at least ……………. % of the
amount of its debentures maturing during the year ending on the 31st day of March next year in
the prescribed mode. (DEC 2020)
(a) 5
(b) 10
(c) 15
(d) 25
9. Neel Ltd. purchased a building worth ` 99,00,000 and issued 12% Debentures of ` 100 each
at a premium of 10%. What will be the amount of premium? (DEC 2020)
(a) ` 8,00,000
(b) ` 9,90,000
(c) ` 9,00,000
(d) ` 10,00,000
10. Saket Ltd. purchased a machinery worth ` 1,20,000 and building worth ` 2,00,000 from
Rashmi Ltd. for an agreed purchase consideration of ` 3,00,000 to be satisfied by the issue of
3,000, 10% debentures of ` 100 each. Calculate the amount to be transferred to capital reserve
A/c: (DEC 2020)
(a) ` 10,000
(b) ` 20,000
(c) ` 30,000
(d) ` 40,000
11. Five years ago X Ltd. had issued 12% Debentures of ` 30 lakh (redeemable in six equal
annual Installments). These Debentures will be shown in the Balance Sheet of a company under
the heading: (DEC 2020)
(a) Non-current Assets
(b) Non-current Liabilities
(c) Current Assets
(d) Current Liabilities
12. “Interest accrued & due on debentures” is shown _______________ (AUG 2021)
(A) Under debentures
(B) As other current liabilities
(C) As provisions
(D) As a reduction of bank balance
13. Discount on issue of debentures is a : (AUG 2021)

(A) Revenue loss to be charged in the year of issue
(B) Capital loss to be written off from capital reserve
(C) Capital loss to be written off over the tenure of the debentures
(D) Capital loss to be shown as goodwill
14. Tax deducted at source on interest on debenture is shown as ______________ (AUG 2021)
(A) Expense
(B) Asset
(C) Liability
(d) Income
15. T Ltd. purchased machinery from N Company for a book value of ` 4,00,000. The
consideration was paid by issue of 10% debentures of ` 100 each at a premium of 25%. The
debenture account was credited with ___________________ (AUG 2021)
(A) ` 4,00,000
(B) ` 5,00,000
(C) ` 3,20,000
(D) ` 4,80,000
16. K Ltd. issued 5,000, 12% debentures of ` 100 each at a premium of 10%, which are
redeemable after 10 years at a premium of 20%. The amount of loss on redemption of
debentures to be written off every year is _____________ : (AUG 2021)
(A) ` 80,000
(B) ` 40,000
(C) ` 10,000
(D) ` 8,000
17. P Ltd. issues 10,000 7% debentures of ` 100 each at a discount of 5% redeemable at the end
of 7 years at a premium of 6%. Loss on issue of debenture account will be debited by: (DEC
2021)
(A) ` 50,000
(B) ` 60,000
(C) ` 90,000
(D) ` 1,10,000
18. As per guidelines issued by SEBI, what percentage of the amount of debentures must be
transferred to “Debenture Redemption Reserve” before the commencement of redemption of
debenture, in case of convertible debentures: (DEC 2021)
(A) 0%
(B) 25%
(C) 50%
(D) 100%
19. When debenture is issued as collateral security, the final entry for recovered the collateral
debenture in books is: (DEC 2021)
(A) Dr. Cash a/c, Cr Debenture a/c
(B) Dr. Debenture Suspense a/c, Cr Cash a/c
(C) Dr. Debenture Suspense a/c, Cr Debenture a/c
(D) Dr. Cash a/c, Cr Debenture Suspense a/c
20. Wind Ltd. issued 30,000 12% debentures of ` 10 each at par which are redeemable
after 5 years at a premium of 10%. The amount of loss on redemption to be written off every
year will be: (DEC 2021)
(A) ` 15,000
(B) ` 7,500
(C) ` 6,000
(D) ` 4,500
21. If the purchase price for the debentures includes interest for the expired period, the
quotation is said to be ………………….. . (DEC 2021)
(A) Ex-interest
(B) Cum-interest
(C) Net-interest
(D) Gross-interest
22. If the sinking fund is non-cumulative, the interest received on Sinking Fund Investment is
not invested and not credited to Sinking Fund A/c. The amount of interest is : (DEC 2021)
(A) debited to Profit & Loss statement
(B) credited to Profit & Loss statement
(C) added in reserve in balance sheet
(D) added in assets in balance sheet
23. Which of the following is false: (DEC 2021)

(A) Rate of interest on debenture is fixed
(B) Equity shareholders are owners and debentureholders are lenders
(C) At the time of liquidation debentureholders get their payment before equity shareholders
(D) Interest on debentures is an appropriation of profit
24. Which of the following is true with regard to, 12% debentures issued at a discount at 10%?
(DEC 2021)
(A) The carrying amount of debentures will reduce each year at a rate of 10%
(B) Issue price and carrying amount of debenture are equal
(C) The face value and carrying amount of debentures are equal
(D) At the time of redemption, the debenture holder will be paid the issue price
25. P Ltd. issued 12% 10,000 debentures of ` 100 each at a discount of 10% on 1st April
2016. The company pays interest half yearly on 30th June and 31st December every year. On
31st March 2020 the amount shown as ‘Interest accrued but not due’ in the balance sheet will
be: (DEC 2021)
(A) ` 30,000
(B) ` 60,000
(C) ` 1,20,000
(D) ` 1,50,000
26. Debenture can be issued: (DEC 2021)

(i) For Cash
(ii) For Consideration other than Cash
(iii) As Collateral Security
(A) (i)
(B) (i), (ii)
(C) (i), (iii)
(D) (i), (ii) and (iii)

ANSWER
1 2 3 4 5 6 7 8 9 10
B C D A D D D C C B
11 12 13 14 15 16 17 18 19 20
D B C C C C D A * C
21 22 23 24 25 26
B B D C A D
WORKING NOTES:
2.
𝑇𝑜𝑡𝑎𝑙 𝐿𝑜𝑠𝑠 = 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡𝑒𝑑 𝑜𝑛 𝐼𝑠𝑠𝑢𝑒 + 𝑃𝑟𝑒𝑚𝑖𝑢𝑚 𝑜𝑛 𝑅𝑒𝑑𝑒𝑚𝑝𝑡𝑖𝑜𝑛
= (65,00,000 × 5%) + (65,00,000 × 10%)
= 975000/−
3.
𝑇𝑜𝑡𝑎𝑙 𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 = 60 × 10% = 6 𝑙𝑎𝑘ℎ𝑠.
1.1.2019 Weights Ratio Discount
60 3 3
6× =3
6
31.12.2019 40 2 2
6× =2
6
31.12.2020 20 1 1
6× =1
6
31.12.2021 6
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑓𝑜𝑟 𝐹𝑌 2020 − 21 𝑤𝑖𝑙𝑙 𝑏𝑒.

9 3
= (2,00,000 × ) + (1,00,000 × )
12 12
= 150000 + 25000
= 175000/−
4.
49275 × (100 + 20%)
𝑁𝑜. 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒𝑠 =
(10 + 3.5)
59,13,000
=
13.5
= 438000 𝑠ℎ𝑎𝑟𝑒𝑠
5.
𝑃𝑟𝑜𝑓𝑖𝑡 𝑜𝑟 𝐿𝑜𝑠𝑠 𝑜𝑛 𝐶𝑎𝑛𝑐𝑒𝑙𝑙𝑎𝑡𝑖𝑜𝑛 1𝑠𝑡 𝐴𝑢𝑔𝑢𝑠𝑡 = 𝐹𝑉 − 𝐶𝑜𝑠𝑡
= (15000 × 100) − (15000 × 95.5)
𝑃𝑟𝑜𝑓𝑖𝑡 𝑜𝑛 𝑙𝑜𝑠𝑠 𝑜𝑛 𝐶𝑎𝑛𝑐𝑒𝑙𝑙𝑎𝑡𝑖𝑜𝑛 1𝑠𝑡 𝐽𝑎𝑛.
3
= (25000 × 100) − [(25000 × 101.5) − (25000 × 100 × × 12%)]
12
= 2500000 − (2537500 − 75000)
= 37500 𝑃𝑟𝑜𝑓𝑖𝑡
𝑇𝑜𝑡𝑎𝑙 = 67500 + 37500
= 105000 𝑃𝑟𝑜𝑓𝑖𝑡
9.
99,00,000
𝑁𝑜. 𝑜𝑓 𝐷𝑒𝑏𝑒𝑛𝑡𝑢𝑟𝑒𝑠 𝑡𝑜 𝑏𝑒 𝑖𝑠𝑠𝑢𝑒𝑑 =
100 + 10
= 90,000 𝑑𝑒𝑏.
𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑃𝑟𝑒𝑚𝑖𝑢𝑚 = 90,000 × 10
= 9,00,000
10.
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑒𝑑 = 1,20,000 + 2,00,000
= 3,20,000
𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑛𝑠𝑖𝑑𝑒𝑟𝑎𝑡𝑖𝑜𝑛 𝑃𝑎𝑖𝑑 = 3,000 × 100
= 3,00,000
∴ 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑅𝑒𝑠𝑒𝑟𝑣𝑒 = 3,20,000 − 3,00,000
= 20,000
Journal Entry
Building 2,00,000
Machinery 1,20,000
To 10% Debenture 3,00,000
To Capital Reserve 20,000
15. No. of Debentures = Purchase Consideration ÷ Issue Price

No. of Debentures = 4,00,000 ÷ 125
No. of Debentures = 3,200
Debentures Account will be credited by 3,200 × 100 = 3,20,000
16. Total Loss = redemption at premium = 5,000 × 100 × 20% = 1,00,000

Loss to be written off Every Year = Total Loss ÷ Life = 1,00,000 ÷ 10 = 10,000
17. 𝑇𝑜𝑡𝑎𝑙 𝐿𝑜𝑠𝑠 = (10,000 ∗ 100 ∗ 5%) + (10,000 ∗ 100 ∗ 6%) = 1,10,000
19. My Explanations on Wrong Questions

WQ 19: Final Entry for recovered Collaterals is Debenture Dr to Debenture
Suspense which is not given in the options.
20.
𝑊 (30,000 × 10 × 10%)
𝐿𝑜𝑠𝑠 𝑒𝑣𝑒𝑟𝑦 𝑦𝑒𝑎𝑟 = = 6,000
0 5
25. Accrued but not due period is from 1st January to 31st March (3 months)
3
(10,000 × 100) × 12% × = 30,000
12

CHAPTER 6
1. Every company having turnover of ` ………… during the immediately preceding financial year
shall constitute a Corporate Social Responsibility Committee. (DEC 2019)
(a) 500 crore and more
(b) 1,000 crore and more
(c) 250 crore and more
(d) 100 crore and more
2. Which of the following is not a type of segment as per AS – 17? (DEC 2019)
(a) Geographical segment
(b) Business segment
(c) Industrial segment
(d) Reportable segment
3. As per Section 149 (1) of the Companies Act, 2013, the paid-up share capital requirement for
non-listed company, having at least one woman director is: (DEC 2019)
(a) ` 10 crore or more
(b) ` 100 crore or more
(c) ` 1,000 crore or more
(d) ` 500 crore or more
4. The Corporate Social Responsibility Committee shall consist of ………… directors, out of which
at least ……….. director(s) shall be independent director(s). (DEC 2019)
(a) Two or more; one
(b) Four or more; two
(c) Three or more; two
(d) Three or more; one
5. Every Company having Net Worth of ` ………… shall constitute a corporate social
responsibility committee of the Board. (DEC 2020)
(a) 100 crore or more
(b) 200 crore or more
(c) 500 crore or more
(d) 1000 crore or more
6. CSR and corporate governance represent a ___________ between business and society. (AUG
2021)
(A) Social climate
(B) Special contract
(C) Special climate
(D) Social contract
7. Manager of Malabar Ltd. is entitled to a commission @ 3% on net profit after charging such
commission. Calculate the commission payable to the manager. Net profit before tax and
managerial remuneration is ` 8,80,000, Depreciation as provided in books of account is `
1,10,000 and Depreciation as per the Companies Act, 2013 is ` 1,32,000. (AUG 2021)
(A) ` 25,740
(B) ` 24,990
(C) ` 42,900
(D) ` 23,330
8. Provisions of Corporate Social Responsibility (CSR) are applicable to the company having net
profit of __________________ (AUG 2021)
(A) ` 100 crore or more
(B) ` 75 crore or more
(C) ` 50 crore or more
(D) ` 5 crore or more
9. As per section 138 of the Companies Act 2013, Internal Audit is compulsory if in the
preceding financial year turnover: (DEC 2021)
(A) ` 50 crore or more
(B) ` 100 crore or more
(C) ` 200 crore or more
(D) ` 500 crore or more
10. The managerial remuneration shall be payable to a person appointed within the meaning of
………………… . (DEC 2021)
(A) Section 196 of the Companies Act, 2013
(B) Section 129 of the Companies Act, 2013
(C) Section 131 of the Companies Act, 2013
(D) Section 136 of the Companies Act, 2013
11. Corporate Social Responsibility Committee of the Board consisting of …………….. . (DEC
2021)
(A) Five or more directors, out of which at least one director shall be an independent director
(B) Three or more directors, out of which at least one director shall be an independent director
(C) Five or more directors, out of which at least two directors shall be an independent director
(D) Three or more directors, out of which at least two directors shall be an independent director
12. If any director contravenes the provision of this section 197 (i.e. Recovery of Remuneration
received by director in contravention of section 197 of the Companies Act, 2013), shall be
punishable with: (DEC 2021)
(A) fine which shall not be less than ten thousand rupees but which may extend to one lakh
rupees.
(B) fine which shall not be less than ten thousand rupees but which may extend to two lakh
rupees.
(C) fine which shall not be less than one lakh rupees but which may extend to two lakh
rupees.
(D) fine which shall not be less than one lakh rupees but which may extend to five lakh
rupees.
13. As per section 149 (1) of the Companies Act, 2013, at least one-woman director is to be
appointed by: (DEC 2021)
(A) Non-listed public companies having paid up share capital of ` 100 crore or more, or
having turnover of ` 100 crore or more
(B) Non-listing public companies having paid up share capital of ` 100 or more, or having
turnover of ` 200 crore or more
(C) Non-listed public companies having paid up share capital of ` 100 crore or more, or
having turnover of ` 300 crore or more
(D) Non-listed public companies having paid up share capital of ` 100 crore or more, or having
turnover of ` 500 crore or more

ANSWER
1 2 3 4 5 6 7 8 9 10
B C B D C D B D C A
11 12 13
B D C
WORKING NOTES:
7.
Net Profit 8,80,000
(+) Depreciation Charged 1,10,000
(-) Depreciation as per Companies Act (1,32,000)
Net Profit before Commission 8,58,000
Commission = 3% × (8,58,000÷103%) = 24,990

CHAPTER 7
1. Equity holder of a company who does not have the voting control of the company by virtue of
his or her below fifty percent ownership of the company’s equity capital, terms as: (DEC 2019)
(a) Small shareholder
(b) Minority shareholder
(c) (a) or (b) Both
(d) None of these options
2. H Ltd. is a holding company of S Ltd. During the year 2018-19, Bills Receivable amounted to `
4,00,000, out of total bills receivable of ` 5,00,000 received from S Ltd., were discounted by H
Ltd. and S Ltd. had endorsed to its creditors all the bills received from H Ltd. amounting to `
3,00,000. At the end of the year the amount of mutual debtors will be: (DEC 2019)
(a) ` 8,00,000
(b) ` 3,00,000
(c) ` 2,00,000
(d) ` 1,00,000
3. On 1st April, 2019, H Ltd. purchased 16,00,000 equity shares out of 20,00,000 equity shares
of S Ltd. Following information is provided as on 31st March, 2019, by S Ltd.:
`
Equity Share Capital 2,00,00,000
General Reserve 45,00,000
Statement of Profit & Loss 32,00,000
On 1st April, 2019, a machine of S Ltd. revalued by H Ltd. 25% above its book value of `
12,50,000. The amount of minority interest will be: (DEC 2019)
(a) ` 40 Lakh
(b) ` 55 Lakh
(c) ` 54.775 Lakh
(d) ` 56.025 Lakh
4. Holding of H Ltd. was 75% in S Ltd. Other information obtained from the books of S Ltd. were
as under:
31st March, 2019 (` in Lakh)
Share Capital 150
General Reserve 25
Surplus: Statement of Profit and Loss 35
Capital Reserve 10
If the cost of investment in shares of S Ltd., for H Ltd. was ` 162 Lakh, the amount of cost of
control would be: (DEC 2019)
(a) ` 12 Lakh (Goodwill)
(b) ` 3 Lakh (Goodwill)
(c) ` 3 Lakh (Capital Reserve)
(d) ` 4.50 Lakh (Goodwill)
5. The main purpose of the preparation of consolidate statements is: (DEC 2019)
(a) The compliance of AS – 21
(b) The satisfy the legal provision of the Companies Act, 2013
(c) To reflect a true and fair view of the position and the profit or loss of the holding company
‘group’
(d) All the above
6. On 30th June, 2018, two-third of the shares of S Ltd. (with total capital of ` 48,00,000) was
acquired by H Ltd. The balance sheet of S Ltd. showed a debit balance ` 24,00,000 on 1st
January, 2018 and a credit balance of ` 14,40,000 on 31st December, 2018. The investment by
H Ltd. in shares of S Ltd. is ` 36,00,000. Calculate the “cost of control” in this acquisition: (DEC
2020)

(a) ` 7,20,000
(b) ` 6,20,000
(c) ` 3,60,000
(d) ` 1,80,000
7. The total capital of subsidiary company is ` 3,00,000 and out of this, ` 2,40,000 is owned by
holding company. What is the amount of minority interest, if % of outside shareholder is 20%?
(DEC 2020)
(a) ` 2,40,000
(b) ` 60,000
(c) ` 48,000
8. What is the amount of the unrealized profit to be eliminated, if the parent’s year-end inventory
includes at ` 5,40,000 goods invoiced to it by its 60% owned subsidiary at cost plus 25%? (AUG
2021)
(A) ` 35,000
(B) ` 1,08,000
(C) ` 64,800
(D) ` 81,000
9. Pre-acquisition profit in subsidiary company is considered as : (AUG 2021)

(A) Revenue Profit
(B) Capital Profit
(C) Goodwill
(D) Cost of control
10. If cost of acquisition of shares in the subsidiary company is more than intrinsic value of the
shares of subsidiary company on the date of acquisition, then resultant figure will be : (AUG
2021)
(A) Minority Interest
(B) Capital Reserve
(C) Goodwill
(D) Significant cost
11. Unrealized profit on goods sold and included in stock is deducted from: (AUG 2021)
(A) Capital Profit
(B) Revenue Profit
(C) Fixed Assets
(D) Minority interest
12. A Ltd. paid ` 9,00,000 for 70% of equity in B Ltd. on 1st April, 2019. On this date B Ltd. had
share capital of ` 10,00,000 and retained earnings of ` 5,00,000. All of the assets and liabilities
of B Ltd. were recorded at fair value. A Ltd. interest in the B Ltd. would be: (DEC 2021)
(A) ` 6,30,000
(B) ` 7,00,000
(C) ` 10,50,000
(D) ` 15,00,000
13. When the holding company purchases the shares at a price above the nominal value, the
excess price paid represents: (DEC 2021)
(A) Cost of control or Goodwill
(B) Capital Reserve
(C) Reserve and Surplus
(D) Business Assets

14. Profit on revaluation of assets to be shown as …………….. in the consolidated Balance Sheet.
(DEC 2020)
(a) General Reserve
(b) Capital Reserve
(c) Goodwill

ANSWER
1 2 3 4 5 6 7 8 9 10
B D D C D A B B B C
11 12 13 14
B C A B
WORKING NOTES:
2.
H Ltd. S Ltd.
Total B/R 500000 300000
(-) Discounted/Transferred (400000) (300000)
1,00,000 -
3.
20,00,000 − 16,00,000
𝑀𝑖𝑛𝑜𝑟𝑖𝑡𝑦 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 = × 100 = 20%
20,00,000
Share in Share Capital & Reserves
ESC (2,00,00,000 × 20%) 40,00,000
GR (45,00,000 × 20%) 9,00,000
P & L (32,00,000 × 20%) 6,40,000
Profit on Revaluation 62500
[(1250000 × 25%) × 20%]
56,02,500
4.
Cost of Control Lakhs
Cost of Investment 162
(-) Share in Net Assets
SC/GR/P & L/CR
[(150 + 25 + 35 + 10) × 75%] (165)
Capital Reserve (3)
6.
Cost of Control
Cost of Investment 36,00,000
(-) Share in Net Assets of S Ltd.
2
Share Capital (48,00,000 × 3) 32,00,000
Pre-Acquisition Reserves & Surplus:
2
Opening Loss (24,00,000 × 3) (16,00,000)
Current Year Profit upto date of acquisition:
Balance of P & L went from debit to credit. That
means opening was loss and closing is profit. So total
profit during year = 24,00,000 + 14,40,000 =
38,40,000 & Pre- Acquisition profit will be (38,40,000 ×
6
12
) = 19,20,000
2
Holding share = (19,20,000 × 3)
12,80,000 28,80,000
Goodwill 7,20,000
7. Minority = Total Capital – Holding Share

= 3,00,000 – 2,40,000
= 60,000/-
8. Unrealized Profit = [5,40,000 ÷ (100% + 25%)] × 25% = 1,08,000
12. Interest = 70% (Share Capital & Pre-Acqn. Reserves)

= 70% (10,00,000 + 5,00,000)
= 10,50,000

CHAPTER 8
1. Company Auditor’s Report Order, 2016, was issued by the: (DEC 2019)
(a) Institute of Chartered Accountants of India
(b) Ministry of Corporate Affairs of Government of India
(c) Comptroller and Auditor General of India
(d) Ministry of Finance of Government of India
2. Company Auditor’s Report Order (CARO), 2016 is not applicable to: (DEC 2019)
(a) Insurance Company
(b) Company registered for charitable purpose
(c) One person company
3. As per the concept of value added statement, “Gross value Added” is: (DEC 2019)
(a) Distributed to employees in the form of salaries and wages, to government in the form of
taxes and duties, to financer in the form of interest.
(b) Distributed to government in the form of taxes and duties, to financer in the form of interest,
to shareholders in the form of dividend.
(c) Distributed to employees in the form of salaries and wages, to government in the form of taxes
and duties, to financer in the form of interest.
(d) Distributed to employees in the form of salaries and wages, to government in the form of
taxes and duties, to financer in the form of interest, to shareholders in the form of dividend and
the remaining balance in the form of retained earnings.
4. The capital structure of KC Ltd. is:

Equity Share Capital ` 250 lakh
Long-term Debt ` 110 lakh
Bank Overdraft ` 40 lakh
The average rate of return on similar types of companies is 20%, while risk-free return is 10%.
Rate of interest charged by bank is 18%. Weighted Average Cost of Capital (WACC) will be: (DEC
2019)
(a) 16%
(b) 13.55%
(c) 16.25%
(d) 17.05%
5. The differences between the Company’s total market value and Capital invested is a: (DEC
2019)
(a) Economic Value Added (EVA)
(b) Shareholder Value Added
(c) Market Value Added
(d) Gross Value Added
6. A simplified financial statement that shows how much wealth has been created by a company
is called ……………. (DEC 2019)
(a) Income statement
(b) Statement of profit and loss
(c) Value added statement
(d) Economic value added
7. CARO 2016 is applicable to: (DEC 2020)

(a) Banking Companies and Insurance Companies
(b) One Person Company and Small Companies
(c) Companies registered for Charitable Purposes
(d) Foreign Companies
8. Every non-listed public company must have at least one woman director, if it has: (DEC 2020)
(a) paid up share capital of at least ` 100 crore
(b) turnover of at least ` 100 crore
(c) in aggregate, outstanding loans/ borrowings/debentures/deposits of at least ` 50 crore
9. The areas of corporate governance included in Companies Act, 2013 are: (DEC 2020)
(a) Independent directors and woman director and Corporate Social Responsibility Committee
(b) Audit Committee, Internal Audit and Serious Fraud Investigation office
(c) Nomination and Remuneration Committee and Stakeholder relationship Committee
10. Market Value Added is: (DEC 2020)

(a) = Market Value of equity – Book value of equity
(b) = Present value of all future EVA
(c) = Shareholder Value Added (SVA)
(d) = Both (a) and (b)
11. What is the full form of CARO? (DEC 2020)

(a) Company Account’s Repository Order
(b) Company Account’s Reports Order
(c) Company Auditor’s Report Order
(d) Company Assets Revaluation Order
12. Shareholder Value Added (SVA) is: (DEC 2020)

(a) = Economic profits of a business – minimum return required by all providers of capital
(b) = Economic profits of a business – minimum return required by all Shareholders only
(c) = Economic profits of a business – minimum return required by Equity Shareholders only
(d) = Book value of equity – Cost equity
13. The Board of Directors of the Company, who has to form a Corporate Social Responsibility
Committee, shall make sure that the company spends in every financial year, minimum
……………… % of the average net profits made during the 3 immediately preceding financial
years as per the CSR policy. (DEC 2020)
(a) 1
(b) 2
(c) 5
(d) 10
14. If we add ‘Cost of Capital’ to ‘Economic Value Added’ we get_____________ (AUG 2021)
(A) Profit After Tax
(B) Net Operating Profit After Tax
(C) Gross Value Added
(D) Earnings before Interest and tax
15. CARO, 2016 applies to a private limited company being a subsidiary or holding company of a
public company, having a paid up capital and reserves and surplus not more than
_________________ as on the balance sheet date. (AUG 2021)
(A) ` 5 Crore
(B) `1 Crore
(C) `2 Crore
(D) `10 Crore
16. CARO. 2016 applies to a private limited company which has a total revenue as disclosed in
Schedule III to the Companies Act. 2013 including revenue from discontinuing operations
exceeding ____________during the financial year as per the financial statements. (AUG 2021)
(A) ` 15 Crore
(B) ` 100 Crore
(C) ` 10 Crore
(D) ` 25 Crore
17. As per Rule 8 of the Companies (Accounts) Rules, 2014, the Report of the Board shall
contain the particulars of contracts or arrangements with related parties under Section 188 (1)
in the ___________________ (AUG 2021)
(A) Form AOC-1A
(B) Form AOC-2
(C) Form AOC-3
(D) Form AOC-4A
18. Which type of director should be the head of the Stakeholders Grievance Committee? (AUG
2021)
(A) Executive director
(B) Non-executive director
(C) Senior most directors
(D) Chairman appointed for shareholder’s meetings
19. Rishabh Ltd. earns a profit after tax ` 3,96,000. Corporate tax is 0.4. Its capital structure
consists of equity shares ` 9,60,000; 15% Term Loan ` 4,80,000; Cost of equity is 0.12. Its
economic value added is ______________ (AUG 2021)
(A) ` 2,66,400
(B) ` 2,80,800
(C) ` 2,08,800
(D) ` 2,80,008
20. CARO 2016 is applicable on small companies, if: (DEC 2021)

(A) Paid up capital less than or equal to ` 50 lakh and last reported turnover less than or equal
to ` 200 lakh
(B) Paid up capital less than or equal to ` 25 lakh and last reported turnover less than or equal
to ` 200 lakh
(C) Paid up capital less than or equal to ` 50 lakh and last reported turnover less than or equal
to ` 500 lakh
(D) Paid up capital less than or equal to ` 100 lakh and last reported turnover less than or equal
to ` 500 lakh

ANSWER
1 2 3 4 5 6 7 8 9 10
B D D * C C D A D D
11 12 13 14 15 16 17 18 19 20
C A B B B C B B B *
WORKING NOTES:
19. EVA = PAT – (Equity × Ke) = 3,96,000 – (9,60,000 × 12%) = 2,80,800

WQ 20: As per me, Question should be “CARO 2016 is not applicable to Small
Companies, if” but Actual Question is asked on Applicability and you might be knowing
CARO 2016 is not applicable on Small Companies. Also all the options have the wording
“Less than or Equal to”.

CHAPTER 9
1. Pooja Ltd. had the investment of ` 68 lakh as on 31st March, 2018 and that of ` 81 lakh as on
31st March, 2019. During the year the company had sold 30% of its original investment at a
profit of ` 9,60,000. The cash inflow and outflow from investment will be: (DEC 2019)
(a) ` 20.40 lakh and ` 33.40 lakh
(b) ` 33.40 lakh and ` 30 lakh
(c) ` 30 lakh and ` 43 lakh
(d) ` 30 lakh and ` 33.40 lakh
2. During the year 2018-19, a company redeemed its 10% debenture of ` 8,00,000 at 10%
premium and after some time a fresh issue was made of new 10% debenture of ` 7,50,000 at a
premium of 25%. The net cash flow from debenture would be: (DEC 2019)
(a) Net cash outflow of ` 50,000
(b) Net cash inflow of ` 50,000
(c) Net cash inflow of ` 57,500
(d) Net cash outflow ` 57,500
3. In the case of financial enterprises, cash flows arises from interest paid should be classified as
cash flow from: (DEC 2019)
(a) Operating Activities
(b) Investing Activities
(c) Financing Activities
(d) Either (b) or (c)
4. Balance of Provision for Taxation as on 1-4-2018 and 31-3-2019 were ` 13,72,000 and `
14,55,000 respectively. During the year ` 12,05,000 were paid towards income tax. The amount
of provision made for taxation will be: (DEC 2019)
(a) ` 12,05,000
(b) ` 12,88,000
(c) ` 11,22,000
(d) ` 2,50,000
5. Plant Original Costing ` 1,35,500 (accumulated depreciation ` 72,800) was sold at a profit of `
15,900 during the year 2018-19. The amount of cash flow from the transaction would be: (DEC
2019)
(a) ` 1,51,400
(b) ` 62,700
(c) ` 2,24,200
(d) ` 78,600
6. Mithu Ltd. had the investment as on 31-3-2018 and 31-3-19 were ` 10,95,000 and `
10,82,000 respectively. During the year interest on investment received ` 77,000 which was
used in writing down the book value of investments. If there were some purchases of investment,
then the cash flow from investment and from interest would be: (DEC 2019)
(a) Cash inflow ` 1,300 only
(b) Cash inflow ` 9,000 only
(c) Cash inflow ` 77,000 and Cash outflow ` 64,000
(d) Cash inflow ` 9,000 and Cash outflow ` 77,000
7. Following information were provided by a trading company to you:

`
Net profit after tax for the year 2018-19 18,35,000
During the year 2018-19
 Depreciation written off 1,08,000
 Goodwill written off 50,000
 Provision made for taxation 5,50,000

 Income tax paid 4,80,000
 Interest on Investment credited to Profit and Loss Account 25,000
 Interim dividend paid 2,10,000
Cash flow from Operating Activities would be: (DEC 2019)
(a) ` 22,73,000
(b) ` 20,38,000
(c) `17,23,000
(d) ` 20,63,000
8. On 31st March, 2019, X Ltd. Has 8% fixed Deposit (Date of FD 1st March, 2019, maturing on
31st May, 2019) of ` 3,00,000. Interest is received on monthly basis. While preparing Cash Flow
Statement as per AS-3: (DEC 2020)
(a) ` 2,000 (interest) will be added to net profit while calculating net cash inflow after tax from
operating activities
(b) ` 3,00,000 will be treated as cash outflow in investing activities
(c) Both (a) and (b)
9. Which of the following is not a cash flow for a company? (DEC 2020)
(a) Dividends
(b) Proceeds from issuance of share capital
(c) Amortization of preliminary expenses
(d) Interest payments
10. Cash payments to and on behalf of employees is an example of …………….. (DEC 2020)
(a) Cash flow from operating activities
(b) Cash flow from investing activities
(c) Cash flow from financing activities
11. In case of a financial enterprise, Interest received on Debentures held as Investment is

…………………….. (DEC 2020)
(a) Operating activity
(b) Investing activity
(c) Financing activity
12. For the purpose of Cash Flow statement, ‘Cash Equivalents’ include : (AUG 2021)
(A) bank fixed deposit for 30 days
(B) money market instruments
(C) treasury bills
(D) All of the above
13. A Company has a Net Cash Sale of ` 6,00,000, Cash Expenses ` 2,80,000 and Depreciation `
50,000. Cash from Operating Activity should be : (AUG 2021)
(A) ` 1,60,000
(B) ` 1,20,000
(C) ` 2,40,000
(D) ` 3,20,000
14. Cash Inflow before working capital changes is ` 4,80,000, decrease in inventory is ` 60,000,
increase in receivables position is ` 80,000 and increase in payables position is ` 70,000, then
cash flow from operating activity is : (AUG 2021)
(A) ` 5,50,000
(B) ` 4,30,000
(C) ` 5,70,000
(D) ` 5,30,000
15. Debentures interest paid is ` 80,000, Proposed dividend on equity shares is ` 1,50,000,
Preference dividend paid is ` 1,20,000, Provision for tax is ` 90,000, then cash outflow from
financing activity is : (AUG 2021)
(A) ` 3,50,000
(B) ` 4,40,000
(C) ` 2,00,000
(D) ` 2,80,000
16. Cash flows arising from the purchase and sale of dealing or trading securities are classified
as: (AUG 2021)
(A) Operating Activities
(B) Investing Activities
(C) Financing Activities
(D) Extraordinary Activities
17. MN Ltd. reported income tax expenses of ` 6,10,000 on its income statement for the year
ended on 31st March 2020. The comparative balance sheet of the company showed that income
tax payable on 31st March 2019 and 31st March 2020 was ` 80,000 and ` 1,30,000 respectively.
Based on the above information, cash payment for the income tax during the year ended on 31st
March 2020 was: (DEC 2021)
(A) ` 6,60,000
(B) ` 6,10,000
(C) ` 5,60,000
(D) ` 4,80,000
18. The land account was debited by ` 60,00,000 and credited by ` 25,00,000 during the current
year. The income statement reported a profit on sale of land in the amount of ` 2,00,000. All
transactions related to land account were cash transactions. These transactions would be shown
in the statement of cash flow as: (DEC 2021)
(A) ` 60,00,00 cash provided by investing activities, and ` 25,00,000 cash disbursed for investing
activities.
(B) ` 27,00,000 cash provided by investing activities, and ` 60,00,000 cash disbursed for
investing activities.
(C) ` 25,00,000 cash provided by investing activities, and ` 60,00,000 cash disbursed for
(D) ` 23,00,000 cash provided by investing activities, and ` 60,00,000 cash disbursed for
19. The net profit after tax for the year was ` 30,00,000. Working capital increased during the
year by ` 5,00,000. Depreciation for the year was ` 5,00,000 and tax expenses was ` 7,50,000.
Amount paid towards income tax based on self-assessment and demand from tax department for
earlier year was ` 10,00,000. Cash flow from operating activities is: (DEC 2021)
(A) ` 47,50,000
(B) ` 40,00,000
(C) ` 37,50,000
(D) ` 30,00000
20. Interest Payment by non-financial enterprises is classified as: (DEC 2021)

(A) Operating activity
(B) Investing activity
(C) Financial activity
(D) Operating as well as Financing activity
21. Which of the following is not an investing cash flow? (DEC 2021)
(A) Purchase of marketable securities for ` 5,00,000 by cheque
(B) Sale of land for ` 30,00,000
(C) Sale of 10,000 equity shares @ ` 100 each
(D) Purchase of Property Plant and Equipment for ` 10,00,000 for cash
ANSWER
1 2 3 4 5 6 7 8 9 10
D C A B D C B C C A
11 12 13 14 15 16 17 18 19 20
C D D D C A C B C C
21
A
WORKING NOTES:
1.
Investment A/c
Opening 68 Sale (Cost) (68 × 30%) 20.4
Purchase 33.4 Closing 81
Cash Outflow = Purchase = 33.4

Cash Inflow = Sale Value =
Cost + Profit = 20.4 + 9.6 =
= 30
2. Inflow = Issue = 750000 + 25%

= 937500/-
Outflow = Redemption = 8,00,000 + 10%
= 880000/-
Net Inflow = 937500 – 880000
= 57500/- Inflow
4.
Provision for Tax
Cash 12,05,000 Opening 13,72,000
Closing 14,55,000 P & L (Balancing Figure) 12,88,000
Total 26,60,000 Total 26,60,000
5. Cash Inflow = Sale Value = Cost + Profit

Cost = WDV = Original Cost – Acc. Depreciatio,n
= 1,35,500 – 72,800
= 62,700
Sale Value = Cost + Profit
= 62,700 + 15,900
= 78,600/-
6. Interest Received = Cash Inflow = 77,000
Cash Outflow = Purchases
Revised Closing Balance = 10,82,000 + 77000
= 11,59,000
As they have wrongly credited Interest to Investment A/c.
Purchase = Closing Balance – Opening Balance
= 11,59,000 – 10,95,000
= 64,000
7.
𝑪𝑭 𝒇𝒓𝒐𝒎 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑨𝒄𝒕𝒊𝒗𝒊𝒕𝒊𝒆𝒔.

NP 18,35,000
+ Provision for tax 5,50,000
+ Depreciation 1,08,000
+ Goodwill w/o 50,000
- Interest (25,000)
PBT 25,18,000
(-) Tax Paid (4,80,000)
Cash Flow 20,38,000
𝑷𝒍𝒔 𝑵𝒐𝒕𝒆: −𝐼𝑛𝑡𝑒𝑟𝑖𝑚 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑖𝑠 𝑛𝑜𝑡 𝑑𝑒𝑏𝑖𝑡𝑒𝑑 𝑡𝑜 𝑃 & 𝐿 ℎ𝑒𝑛𝑐𝑒 𝑛𝑜𝑡 𝑎𝑑𝑑𝑒𝑑 𝑏𝑎𝑐𝑘.
13.
Net Cash Sale 6,00,000
(-) Cash Expenses 2,80,000
Net Cash Flow 3,20,000
14.
Cash inflow before WCC 4,80,000
+ Decrease in Inventory 60,000
- Increase in receivable (80,000)
+ Increase in Payables 70,000
Cash Flow from Operating Activity 5,30,000
15.
Cash Flow From Financing Activity:
Debenture Interest paid (80,000)
Preference Dividend Paid (1,20,000)
Cash Outflow (2,00,000)
17.
Tax Payable
Particulars Amount Particulars Amount
C/B (Bal. Fig) 5,60,000 Op. Bal. 80,000
Cl. Bal. 1,30,000 P&L 6,10,000
Total 6,90,000 Total 6,90,000
19. CF from operating activities

NP after tax 30,00,000
(-) WC increased (5,00,000)
(+) Depreciation 5,00,000
(+) Tax provision 7,50,000
37,50,000

CHAPTER 10 & 11 & 12
1. The Accounting Standards Board was constituted by the Institute of Chartered Accountants of
India in the year: (DEC 2019)
(a) 1975
(b) 1977
(c) 1976
(d) 1978
2. Which of the following Section of Companies Act, 2013, is required that the auditor has to
report whether in his option the financial statements comply with the Accounting Standards
referred in Section 133 of the Companies Act, 2013: (DEC 2019)
(a) Section 141 (3) (e)
(b) Section 145 (3) (b)
(c) Section 143 (3) (e)
(d) Section 144 (3) (e)
3. Which of the following is not included in the conditions satisfied by the small and medium
companies (SMCS) with reference to applicability of Accounting Standards? (DEC 2019)
(a) Company is not a holding company or subsidiary of a non-SMC.
(b) Company is not a bank or financial institution or insurance
(c) Company’s turnover does not exceed ` 10 crores in the immediately preceding accounting
year.
(d) Equity and debt securities of the company are not listed or are not in the process of listing in
any stock exchange, whether in India or outside India.
4. Which of the following is a Small and Medium Sized Company (SMC) as per the Companies
(Accounting standards) Rules, 2006: (DEC 2020)
(a) X Ltd. has appointed Merchant bankers to prepare a Red-herring prospectus for the purpose
of filing the same with SEBI
(b) Y Pvt. Ltd. engaged only in insurance broking business has a turnover of ` 55 crore (including
other income of ` 5 crore), GST collected of ` 1 crore and shown as Unsecured Loan and Secured
Loan from bank of ` 9 crore and public deposits of ` 1 crore.
(c) Z Pvt. Ltd., acquired 51% equity in a listed company. It has a turnover of ` 50 crore and
borrowings of ` 10 crore.
(d) W Pvt. Ltd. has a turnover of ` 55 crore (including other income of ` 5 crore) and took
Secured Loan from bank of ` 10 crore and public deposits of ` 1 crore which were fully paid
before the end of the financial year.
5. AS 3 and AS 17 are not applicable in their entirely to: (DEC 2020)

(a) Level II Entities
(b) Level III Entities
(c) SMCs
6. Provision is: (DEC 2020)

(a) an unknown liability but is amount and due date are determine
(b) an unknown liability and its amount and due date are indeterminate
(c) a known liability and its amount and due date are determinate
(d) a known liability but its amount and due date are indeterminate
7. A Chief Accountant of TT Ltd. gives the following data regarding its six segments:
` in crore
Particulars M N O P Q R Total
Segment Assets 9 9 55 9 9 9 100
Segment Results - 19 - 162 18 10 - 19 10 - 162
Segment Revenue 161 29 29 28 27 26 300

The Reportable Segments as per AS 17 are: (DEC 2020)
(a) M, N
(b) M, N, O
(c) M, N, O, P
(d) M, N, O, P, R
8. AS 18 and AS 24 are not applicable in their entirely to: (DEC 2020)

(a) Level II Entities
(b) Level III Entities
(c) SMCs
9. AS – 7 issued by ICAI deals with ……………… (DEC 2020)

(a) Disclosures of accounting policies
(b) Revenue Recognition
(c) Construction contracts
(d) Government grants
10. ……………… are set of accounting standards notified by the Ministry of Corporate Affairs
which are converged with International Financial Reporting Standards. (DEC 2020)
(a) International Accounting Standards
(b) Indian Accounting Standard
(c) Indian Auditing Standard
(d) International Auditing Standards
11. X Ltd. has 5,000 AC in stock on 31st March, 2019. The cost of each AC amount to ` 10,000.
There is firm commitment of sale of 1,000 AC by the company in April, 2019 @ ` 15,000 per AC.
However, the general price of this AC at year end amounts to ` 9,500 per AC. Calculate the Value
of Closing Stock as per AS-2. (DEC 2020)
(a) ` 480 lakh
(b) ` 475 lakh
(c) ` 530 lakh
12. Which of the following institute formerly was established as a registered company under the
Companies Act? (DEC 2019)
(a) The Institute of Chartered Accountants of India (ICAI)
(b) The Institute of Company Secretaries of India (ICSI)
(c) The Institute of Cost and Works Accountants of India (ICWAI) {now it, The Institute of Cost
Accountants of India}
13. The Institute of Chartered Accounts of India is the ……. Professional body of Chartered
Accountants in the world. (DEC 2019)
(a) Largest
(b) Second Largest
(c) Third Largest
(d) Fifth Largest
14. “The Association of International Certified Professional Accountants” launched by the: (DEC
2019)
(a) American Association of Public Accountants (AAPA)
(b) American Association of Chartered Public Accountants (AICPA)
(c) Chartered Institute of Management Accountants (CIMA)
(d) Both AICPA and CIMA
15. Financial Reporting Council is an organization of which country? (DEC 2019)

(a) United States of America (USA)
(b) Canada
(c) UK
(d) Japan
16. “Satyam Vada, Dharam Chara” is: (DEC 2020)

(a) Motto of the ICSI
(b) Vision Statement of the ICSI
(c) Mission Statement of the ICSI
(d) Objective of the ICSI
17. IASB stands for: (DEC 2020)

(a) Indian Accounting Standard Board
(b) International Auditing Standard Board
(c) International Accounting Standard Board
(d) International Assurance Service Board
18. The structure of IFRS Foundation consists of: (DEC 2020)

(a) International Accounting Standards Board (IASB), IFRS Foundation Trustees and IFRS
Foundation Monitoring Board
(b) IFRS Foundation Trustees, IFRS Foundation Monitoring Board and IFRS Advisory Council
(c) IFRS Foundation Monitoring Board, IFRS Advisory Council, International Accounting
Standards Board (IASB)
(d) International Accounting Standards Board (IASB), IFRS Foundation Trustees and IFRS
Advisory Council
19. The Advisory Council is the formal advisory body to the: (DEC 2020)
(a) International Accounting Standards Board
(b) Trustees of the IFRS Foundation.
(c) IFRS Foundation Monitoring Board
(d) Both (a) and (b)
20. GAAP stands for: (DEC 2020)

(a) Generally accepted accounting principles
(b) Generally accumulated adherence policy
(c) Generally accounting adherence policy
(d) Generally assisted accounting principles
21. Public Interest Committee (PIC) established by IPSASB consists of individuals from the: (DEC
2020)
(a) International Monetary Fund
(b) International Organization of Supreme Audit Institutions
(c) Organization for Economic Co-operation and Development and the World Bank Group
22. The Institute of Chartered Accountants in Australia and the New Zealand Institute of
Chartered Accountants amalgamated to become one body: (DEC 2020)
(a) CA ANZ
(b) ICA ANZ
(c) ANZ CA
(d) ANZ ICA
23. External Reporting Board (XRB) belongs to: (DEC 2020)

(a) New Zealand
(b) Australia
(c) USA
(d) UK
24. Which of the following International Accounting Standard (IAS) is related to Earning per
share’? (DEC 2019)
(a) IAS – 20
(b) IAS – 24
(c) IAS – 33
(d) IAS – 38
25. Mandatory applicability of Ind AS to all Banks, NBFCS (Non-Banking Finance Companies),
and Insurance Companies is from: (DEC 2019)
(a) 1st April, 2015
(b) 1st April, 2016
(c) 1st April, 2017
(d) 1st April, 2018
26. Which of the following Ind AS is related to Consolidated Financial Statements? (DEC 2019)
(a) Ind AS – 108
(b) Ind AS – 110
(c) Ind AS – 115
(d) Ind AS – 7
27. Under Ind AS 1, presentation of any items of income or expense as extraordinary item is:
(DEC 2020)
(a) Separately disclosed
(b) Shown as a part of statement of profit and loss
(c) Prohibited
28. Ind AS 20 requires government grants of the nature of promoter’s contribution: (DEC 2020)
(a) to be credited directly to capital reserve and treated as a part of shareholders’ funds
(b) to be recognized as income over the periods
(c) Not to be recognized
(d) Either (a) or (b)
29. Ind AS 11 requires contract revenue to be measures at ………………… (DEC 2020)

(a) Net realizable value
(b) Fair value of consideration received/receivable
(c) Consideration received/receivable
30. Ind AS 34 requires the following in the contents of an interim financial report in addition to
what was required under previous standard AS 25: (DEC 2020)
(a) A condensed balance sheet
(b) A condensed statement of profit and loss
(c) A condensed cash flow statement
(d) A condensed statement of changes in equity
31. The Association of International Certified Professional Accountants launched in 2017,

bringing together the expertise and capabilities of the: (DEC 2020)
(a) AICPA and CIMA
(b) AICPA and FASB
(c) IFRS Foundation and FASB
(d) CIMA and FASB
32. Ind AS 113 deals with: (DEC 2020)

(a) Fair value measurement
(b) Joint arrangements
(c) Financial instruments
(d) Insurance contract
33 …………… prescribes the basis for presentation of general purpose financial statement to
ensure comparability both with the entity’s financial statements of previous periods and with the
financial statements of other entities. (DEC 2020)
(a) Ind AS 1
(b) Ind AS 2
(c) Ind AS 3
(d) Ind AS 4
34. Financial Reporting Council (UK) is a : (AUG 2021)

(A) Company limited by guarantee
(B) Unlimited Company
(C) Subsidiary company of IFRS
(D)Associate company of the Institute of Chartered Accountants of England
35. AS-11 issued by ICAI deals with ______________ (AUG 2021)

(A) Accounting for Government grants
(B) Accounting for foreign exchange transaction
(C) Cash Flow Statement
(D) Fund Flow Statement
36. Ravi Ltd. purchased goods at the cost of ` 40 lakh in October, 2019. Till March 2020, 75% of
the stocks were sold. The Company wants to disclose closing stock at ` 10 Lakh. The expected
sale value is ` 11 Lakh and a commission at 10% on sale is payable to the agent. What is the
correct closing stock to be disclosed as at 31.3.2020 as per AS-2 ? (AUG 2021)
(A) 10 Lakh
(B) 9.9 Lakh
(C) 11 Lakh
(D) 12 Lakh
37. Ind AS-2 provides for reversal of the write-down of inventories to : (AUG 2021)
(A) Cost
(B) Replacement Cost
(C) Net realizable value
(D) Net realizable value limited to the amount of original write-down
38. The IFRS foundation has a _______________Governance structure. (AUG 2021)

(A) Three-tier
(B) Two-tier
(C) Four-tier
(D) Five-tier
39. In case of rising prices (Inflation), FIFO method will ___________________ (AUG 2021)
(A) Provide lowest value of closing stock and profit
(B) Provide highest value of closing stock and profit
(C) Provide highest value of closing stock but lowest value of profit
(D) Provide highest value of profit but lowest value of closing stock
40. A ………………… is a business segment or a geographical segment identified on the basis of

foregoing definitions for which segment information is required to be disclosed by this Standard?
(DEC 2021)
(A) Business segment
(B) Geographical segment
(C) Reportable segment
(D) Area segment

41. Match the List I with items in List II: (DEC 2021)
List I List II
(a) AS 06 (i) Employee Benefits
(b) AS 09 (ii) Revenue Recognition
(c) AS 12 (iii) Depreciation Accounts
(d) AS 14 (iv) Accounting for Government Grants
(a) (b) (c) (d)

(A) (ii) (iv) (i) (iii)
(B) (i) (iv) (ii) (iii)
(C) (ii) (iii) (i) (iv)
(D) (iii) (ii) (iv (i)
)
42. The standard-setting procedure of Accounting Standards Board cannot be outlined as: (DEC
2021)
(A) Identification of broad areas by ASB for formulation of AS
(B) Constitution of study groups by ASB to consider specific projects and to prepare preliminary
drafts of the proposed Accounting Standards. The draft normally includes objective and scope of
the standard, definitions of the terms used in the standard, recognition and measurement
principles, wherever applicable, and presentation and disclosure requirements.
(C) Consideration of the preliminary draft prepared by the study group of ASB and revision, if
any, of the draft on the basis of deliberations.
(D) Presentation of transactions and events in the financial statements in a manner that is
meaningful and understandable to the reader.
43. As per IFRS disclosure to be made in only consolidated financial of the parent company
for: (DEC 2021)
(A) Intangible Assets
(B) Earnings Per Share
(C) Market Price Per Share
(D) Dividends
44. In case there is any conflict between provisions of any applicable Act and Accounting
Standards, the ..................... shall prevail. (DEC 2021)
(A) Accounting Standard
(B) Provisions of the Act
(C) Above (A) & (B), both
(D) None of the above
45. Trustees of IFRS Foundation have been appointed for a: (DEC 2021)
(A) Renewable period of 5 years
(B) Non-renewable period of 5 years
(C) Renewable period of 3 years
(D) Non-renewable period of 3 years
46. Members of the IFRS Advisory Council are appointed by the: (DEC 2021)
(A) Board of Directors
(B) Trustees
(C) Board of Directors and Trustees jointly
(D) Chairperson of the Foundation
47. Ind AS shall be adopted by specified classes of companies based on their: (DEC 2021)
(A) Net worth
(B) Listing Status
(C) Net worth or Listing Status
(D) Net worth and Listing Status
48. From 1st April 2019 if Net worth is more than or equal to ` 250 crore but less than 500
crore it becomes mandatory to apply Ind AS for …………... . (DEC 2021)
(A) NBFC
(B) All Banks
(C) Insurance Companies
(D) Listed Companies
49. Ind AS 104 on Insurance Contract will not be applicable to: (DEC 2021)
(A) Insurance Contracts
(B) Reinsurance Contracts
(C) Financial Instruments that it issues with a discretionary participation features
(D) Product warranties issued directly
50. Following is the comparative information of PQ Ltd. for 2 consecutive years:

31st March 2020 31st March 2021
` `
Inventory 10,00,000 6,00,000
Accounts Payable 24,00,000 30,00,000
Cost of Goods
Sold - 1,00,00,000
Based on the above information, the net cash paid to supplier of inventory during the year
ended on 31st March 2021 is: (DEC 2021)
(A) ` 90,00,000
(B) ` 98,00,000
(C) ` 1,02,00,000
(D) ` 1,10,00,000

ANSWER
1 2 3 4 5 6 7 8 9 10
B C C B D D B B C B
11 12 13 14 15 16 17 18 19 20
A C B D C A C A D A
21 22 23 24 25 26 27 28 29 30
D A A C D B C D B D
31 32 33 34 35 36 37 38 39 40
A A A A B B D A B C
41 42 43 44 45 46 47 48 49 50
D D B A C B D A D A
WORKING NOTES:
7. A business segment or geographical segment is identified as a reportable segment if:
 revenue from sales to external customers and from transactions with other segments is 10%
or more of the total revenue of all segments
 Segment result is 10% or more of the following whichever is greater in absolute amount:
 combined result of all segments in profit
 combined result of all segments in loss
 Segment assets are 10% or more of total assets of a segment
(a) Segment Assets:- O

(b) Segment Results:- N
(c) Segment Revenue:- M
So, Reportable Segments are M, N, O.
11. 1,000 AC :- Cost 10,000 NRV 15,000 w.i.L = 10,000
4,000 AC :- Cost 10,000 NRV 9,500 WIL = 9,500
𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘 = (1,000 × 10,000) + (4,000 × 9,500)
= 480 𝑙𝑎𝑘ℎ𝑠
36. As per AS -2, Valuation of Inventory , Inventory should be valued at lower of cost or NRV.
Cost = 40,00,000 × 25% = 10,00,000

NRV = 11,00,000 – 10% = 9,90,000
Valuation = 9,90,000
50. Op. Stock + Purchase – Cl. Stock = COGS

Purchase = (COGS + Cl. Stock) – Op.
= (1,00,00,000 + 6,00,000) – 10,00,000
= 96,00,000
A/c Payable
Particulars Amount Particulars Amount
C/B 90,00,000 Op. 24,00,000
Cl. 30,00,000 Pur. 96,00,000

CHAPTER 13
1. Which of the following is/are purpose(s) of “Time Recording”? (DEC 2019)
(a) Payroll
(b) Time-keeping
(c) Time-booking
(d) Time-keeping and Time-booking
2. Match the following – I with II:

I
(a) Direct Cost
(b) Indirect Cost
II
(i) Raw material
(ii) Showroom expenses
(iii) Drawing Office Expenses
(iv) Carriage inwards
(v) Carriage outwards
(vi) Preliminary packing
(vii) Productive wages
(viii) Oil and grease
Select the correct answer from the options given below: (DEC 2019)
(a) (a) – (i)(iv)(vi)(vii); (b) (ii)(iii)(v)(viii)
(b) (a) – (i)(v)(vii); (b) – (ii)(iii)(iv)(v)(viii)
(c) (a) – (i)(iii)(iv)(vi); (b) – (ii)(v)(vii)(viii)
(d) (a) – (i)(iii)(v)(vii); (b) – (ii)(iv)(vi)(viii)
3. According to Behavioural Analysis, the overheads may be classified as: (DEC 2019)
(a) Factory overhead, administration overhead, selling and distribution overhead
(b) Fixed overhead, variable overhead, semi-variable overhead
(c) Indirect material, indirect labour and indirect expenses
(d) Normal overhead & Abnormal overhead
4. …………….. is regarded as a specialized branch of accounting which involves classification,

accumulation, assignment and control of costs. (DEC 2020)
(a) Costing
(b) Cost Accounting
(c) Cost Accountancy
(d) Cost
5. Primary packaging material is an example of: (DEC 2020)

(a) Direct material
(b) Indirect material
(c) Direct expenses
(d) Indirect expenses
6. The focus of Management accounting is on : (AUG 2021)

(A) Tax Preparation
(B) External Reporting
(C) Internal Reporting
(D) Auditing
7. Cost of Goods _________________________ (AUG 2021)

(A) Opening Stock + Purchases – Direct Expenses + Closing Stock
(B) Opening Stock + Purchases + Direct Expenses – Closing Stock
(C) Sales – Opening Stock + Purchases – Direct Expenses – Closing Stock
(D) Opening Stock + Purchases – Direct Expenses – Closing Stock

8. Recording of workers’ time spent different jobs or processes for determining labour cost of
job/processes is called : (DEC 2021)
(A) Time Booking
(B) Time Keeping
(C) Time Charing
(D) Time Management
9. According to CIMA, prime cost is ………. . (DEC 2021)

(A) Direct material, direct labour and direct expenses
(B) Direct and indirect material and direct and indirect labour
(C) Direct material and direct labour
(D) Only direct material
10. Rent of own factory premises is an example of : (DEC 2021)

(A) Indirect expenses
(B) Direct expenses
(C) Revenue expenses
(D) National expenses
11. The aspect of material control are ……. . (DEC 2021)

(A) Accounting aspect and Operational aspect
(B) Accounting aspect and Production aspect
(C) Costing aspect and Operational aspect
(D) Costing aspect and Production aspect
ANSWER
1 2 3 4 5 6 7 8 9 10
D A B B A C B A C D
11
A

CHAPTER 14
1. Companies (Cost Records and Audit) Rules, 2014, came into force on: (DEC 2019)
(a) 1-04-2014
(b) 30-04-2014
(c) 30-06-2014
(d) 30-09-2014
2. Which of the following Form is used for filing Cost Audit Report with the Central Government?
(DEC 2019)
(a) CRA – 1
(b) CRA – 2
(c) CRA – 3
(d) CRA – 4
3. Which of the following is the social purpose of Cost Audit? (DEC 2020)
(a) Detection and correction of abnormal losses
(b) Detection of errors and frauds
(c) Determination of inventory valuation
(d) Pinpointing areas of inefficiency and mismanagement for the benefit of shareholders and
consumers
4. Which section of the Companies Act, 2013 deals with audit of cost accounting records? (DEC
2020)
(a) Section 158
(b) Section 139
(c) Section 168
(d) Section 148
5. Cost Audit Report is required to be prepared in: (DEC 2020)

(a) Form CRA – 1
(b) Form CRA – 2
(c) Form CRA – 3
(d) Form CRA – 4
6. What is the General information attached in the Annexure to Cost Audit Report? (DEC 2020)
(a) Distribution of Earnings
(b) Cost Accounting Policy
(c) Details of Industry Specific Operating Expenses
(d) Reconciliation of Indirect Taxes
7. The base of cost audit report is _________________________ (AUG 2021)

(A) Efficiency and propriety
(B) Profitability and liquidity
(C) True & Fair view
(D) Reliability and propriety
8. Every specified company including all units and branches thereof shall maintain cost records
in ____________________ in respect of each financial year. (AUG 2021)
(A) Form CRA-5
(B) Form CRA-1
(C) Form CRA-4
(D) Form CRA-2
9. Cost Auditor is appointed by the ___________ (AUG 2021)

(A) Central Government
(B) Audit Committee
(C) Board of Director
(D) Shareholders
10. Rule 6 of Companies (Cost Records and Audit) Rules. 2014 requires the companies
prescribed under the said rules to appoint an auditor within of the commencement of every
financial year. (DEC 2021)
(A) 90 days
(B) 45 days
(C) 180 days
(D) 60 days
11. The cost auditor shall submit the cost audit report along with his or its reservations or
qualifications or observation or suggestions, if any, in Form ………. . (DEC 2021)
(A) CRA-3
(B) CRA-2
(C) CRA-4
(D) CRA-1
12. As per CCRA- Rule 2014 every regulated industry (Category-A) is required to maintain
cost record if overall turnover exceeds or equal to : (DEC 2021)
(A) ` 25 crore
(B) ` 35 crore
(C) ` 50 crore
(D) ` 100 crore
13. The requirement for cost audit rules shall not apply to a company which is covered in rule
3; and
(i) whose revenue from exports, in foreign exchange, exceeds seventy-five percent of its total
revenue; or
(ii) which is operation from a special economic zone;
(iii) which is engaged in generation of electricity for captive consumption through Captive
Generating Plant.
(A) (i)
(B (ii)
(C) (i) and (ii)
(D) (i), (ii) and (iii)
ANSWER
1 2 3 4 5 6 7 8 9 10
C D D D C B A B C C
11 12 13
A C D

CHAPTER 15
1. Which of the following steps are required for Budgetary Control? (DEC 2019)
(a) Organization for Budgeting; Budget Manual; Responsibility for Budgeting; and Budget
Standard
(b) Organization for Budgeting; Budget Manual; Responsibility for Budgeting; and Budget
Procedure
(c) Objective for Budgeting; Budget Manual; Responsibility for Budgeting; and Budget Standard
(d) Organization for Budgeting; Budget Objective; Responsibility for Budgeting; and Budget
Standard
2. A factor which will limit the activities of an undertaking and which is taken into account in
preparing budgets, is terms as: (DEC 2019)
(a) Limiting factor
(b) Governing factor
(c) Key factor
(d) All the above
3. If the Capacity Ratio and Efficiency Ratio of a factory are 95% and 125% respectively, then
Activity Ratio will be: (DEC 2019)
(a) 131.58%
(b) 76%
(c) 118.75%
(d) 152%
4. Following information estimated for the year 2020-21:

 Normal loss in production will be 5% of input.
 Sales (in units) as per Sales Budget 38,350 units.
 Closing stock will be 6600 units which has been estimated 10% more than previous
year’s quantity.
The input for required production will be: (DEC 2019)
(a) 39,737 units
(b) 41,000 units
(c) 40,898 units
(d) 39,638 units
5. Puvi Ltd. provides the following information for the quarter ending 31st March, 2020:
Expected Sales:
January, 2020 ` 25 lakh
February, 2020 ` 28 lakh
March, 2020 ` 30 lakh
Roughly 40% of the sales are for cash, 80% of credit sales are collected in the month following
the month of sales and the balance of credit sales one month after that. The amount collected
from debtors in the month of March, 2020, will be: (DEC 2019)
(a) ` 10.96 Lakh
(b) ` 28.44 Lakh
(c) ` 22.96 Lakh
(d) ` 16.44 Lakh
6. ………. is a method of budgeting whereby all activities are re-evaluated each time a budget is
set. Discrete levels of each activity are valued and a combination is chosen to match funds
available. (DEC 2019)
(a) Master budget
(b) Zero-Based Budgeting
(c) Performance Budgeting
(d) Flexible Budget

7. Cost of Sales – Selling and Distribution Overhead + Closing Stock of Finished Goods –
Opening Stock of Finished Goods = …………….. (DEC 2019)
(a) Cost of Goods Sold
(b) Works Cost
(c) Cost of Production
(d) Conversion Cost
8. XYZ Ltd. manufactures three products X, Y and Z. The Sales Value Mix Ratio of these
products are 20%, 30% and 50% respectively. The corresponding Variable Cost to Sales Ratio is
50%, 30% and 20%. The total fixed costs are ` 35,500. Calculate Overall Break Even Point (in
Value): (DEC 2020)
(a) ` 50,000
(b) ` 60,000
(c) ` 71,000
9. Sales (in units): Jan. 1,000, Feb. 2,000, Mar. 3,000, Apr. 4,000. 20% of the Sales are on cash
basis and the balance on credit basis. Uniform Selling Price – ` 20 per unit. 50% of credit sales
are collected in the month following the sales, 50% of the remaining in the second month and
the balance in the third month. Calculate the total amount of Cash Sales and Collection from
Debtors during the month of April: (DEC 2020)
(a) ` 52,000
(b) ` 36,000
(c) ` 50,000
10. Sales (in units): Jan. 1,000, Feb. 2,000, Mar. 3,000, Apr. 4,000, May 5,000. 25% of the
Purchases are on cash basis and the balance on credit basis. Uniform Selling Price – ` 20 per
unit. This price was fixed after adding 25% to cost. No stock remains at the end of a month.
Purchases are made one month in advance and 50% of Credit purchases are paid within one
month and the balance in two months. Calculate the total amount of Cash Purchases and
Payment to Creditors during the month of April: (DEC 2020)
(a) ` 62,000
(b) ` 46,000
(c) ` 50,000
11. Which of the following is true? (DEC 2020)

(a) The main stress of Zero base budgeting is on why a unit needs to spend.
(b) Zero base budgeting facilitates the introduction and implementation of the system of MBO.
(c) Performance Budgeting requires Establishment of Responsibility Centres,
12. A …………… is a booklet specifying the objectives of an organization in relation to its

spending strategy. (DEC 2020)
(a) Budgetary control
(b) Budget manual
(c) Key factor
(d) Budget controller
13. From the following calculate production for the 4th quarter:
Units
Sold
𝑄1 12,000
𝑄2 15,000
𝑄3 16,500
𝑄4 18,000
Opening units 10,000 at the beginning of 𝑄1 and closing units 12,500 at the end of 𝑄4 .
2 1
Production is 3 rd of current quarter requirement and 3 rd of next quarter requirement: (DEC
2020)
(a) 12,000 units
(b) 20,500 units
(c) 18,500 units
(d) 18,000 units
14. A Budget that gives a summary of all the functional budget and projected Profit & Loss
Account is known as _____________________ (AUG 2021)
(A) Capital Budget
(B) Flexible Budget
(C) Master Budget
(D) Discretionary Budget
15. The difference between fixed cost and variable cost has significance in preparation of
________________ (AUG 2021)
(A) Flexible Budget
(B) Maser Budget
(C) Cash Budget
(D) Capital Expenditure Budget
16. Which of the following would be found in a Cash budget? (AUG 2021)
(A) Capital Expenditure
(B) Provision for doubtful debts
(C) Deprecation
(D) Accrued expenditure
17. Reliable Ltd. has given the following data : (AUG 2021)
Budget Production = 800 Units
Standard hours per unit = 25
Actual production = 576 units
Actual Working = 12,000 hours
What is the Efficiency Ratio?
(A) 110%
(B) 120%
(C) 100%
(D) 125%
18. The Budget sales for the next 4 quarter are – ` 1,92,000, ` 2,88,000, ` 2,88,000 and `
3,36,000 respectively. It is estimated that sales will be paid for us follows : 75% of the sales will
be paid in the quarter in which sales were made. Of the balance, 50% will be paid in the quarter
after the sales was made. The remaining 50% will be paid in the quarter after this. The amount
of cash received in quarter 3rd will be ___________________ (AUG 2021)
(A) ` 2,76,000
(B) ` 1,44,000
(C) ` 3,24,000
(D) ` 2,40,000
19. A management consultancy recovers overheads on chargeable consulting hours. Budget

overheads were ` 6,15,000 and actual consulting hours were 32,150. Overhead were under
recovered by ` 35,000. If actual overhead were ` 6,94,075, what was the budgeted overhead
absorption rate per hour. (AUG 2021)
(A) ` 19.13
(B) ` 20.50

(C) ` 21.59
(D) ` 22.68
20. PQR factory produces two units of a commodity in one standard hours. Actual production
during a particular year is 34,000 units and budgeted production for the year is 40,000 units.
Actual hours are 16,000. Activity ration is …………. . (DEC 2021)
(A) 40%
(B) 80%
(C) 85%
(D) 106.25%
21. Using the information from Q. No.20, Capacity ratio is ………… (DEC 2021)
(A) 40%
(B) 80%
(C) 85%
(D) 106.25%
22. Using the information from Q. No. 20. Efficiency ratio is………………… (DEC 2021)
(A) 40%
(B) 80%
(C) 85%
(D) 106.25%
23. Which is not the method of preparation of cash budget ? (DEC 2021)
(A) Receipts and payments method
(B) Adjusted profit and loss account method
(C) Balance sheet method
(D) Cash flow method

ANSWER
1 2 3 4 5 6 7 8 9 10
B D C B B B C A A A
11 12 13 14 15 16 17 18 19 20
A B C C A A B A B C
21 22 23
B D D
WORKING NOTES:
4.
𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘 = 10% 𝑚𝑜𝑟𝑒 𝑡ℎ𝑎𝑛 𝑃. 𝑌. (𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘)
∴ 𝑆𝑜 𝑏𝑎𝑠𝑒 𝑜𝑓 𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘 = 100% + 10% = 110%
𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘 = 110% × 𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘
𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘
∴ 𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘 =
110%
6,600
=
110%
= 6,000 𝑈𝑛𝑖𝑡𝑠.
𝑂𝑝. +𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 − 𝐶𝐿 = 𝑆𝑎𝑙𝑒𝑠
∴ 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 = 𝑆𝑎𝑙𝑒 + 𝐶𝐿 − 𝑂𝑝.
= 38,350 + 6,600 − 6,000
= 38,950 𝑈𝑛𝑖𝑡𝑠.
96 𝐼𝑛𝑝𝑢𝑡 𝑖𝑠 100 𝑡ℎ𝑒𝑛 𝑂𝑢𝑡𝑝𝑢𝑡 𝑖𝑠 95
38,950
∴ 𝐼𝑛𝑝𝑢𝑡 = × 100
95
= 41,000 𝑈𝑛𝑖𝑡𝑠.
5. March 2020
(i) 40% Cash Sales = 30 × 40% = 12 Lakhs
(ii) 80% of Credit Sale of Feb. 2020 = (28 × 60% × 80%) = 13.44 Lakhs
(iii) 20% of Credit Sale of Jan. 2020 = (25 × 60% × 20%) = 3 Lakhs
Total Collection =28.44 Lakhs
8.
X Y Z
(a) Variable Cost % 50% 30% 20%
(b) P/V% (100% – VC % 50% 70% 80%
(c) Sale Value Mix (given) 20% 30% 50%
(d) Combined P/V % (b * c) 10% 21% 40%
71%
𝑇𝑜𝑡𝑎𝑙 𝐹𝐶
𝑂𝑣𝑒𝑟𝑎𝑙𝑙 𝐵𝐸𝑃 =
𝑃/𝑉 %
35,500
=
71 %
= 50,000
9. Collection Pattern:-
Following Month :- 50% of Credit Sales
Second Month Following :- 50% of remaining i. e. 50% of 50% i. e. 25% of Credit Sale
Third Month Following: - Balance (100% – 50% - 25%) i. e. 25%.
Total Collection (April) :-

Cash Sale (4,000 × 20) × 20% = 16,000
Credit Sale
March [(3,000 × 20) × 80%] × 50% = 24,000
Feb [(2,000 × 20) × 80%] × 25% = 8,000
Jan [(1,000 × 20) × 80%] × 25% = 4,000
52,000
10.
20
𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 𝑃𝑟𝑖𝑐𝑒 = × 100 = 16/𝑈𝑛𝑖𝑡
100 + 25
𝑇𝑜𝑡𝑎𝑙 𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝐶𝑃 & 𝑃𝑎𝑦𝑚𝑒𝑛𝑡𝑠 𝑖𝑛 𝑀𝑜𝑛𝑡ℎ 𝑜𝑓 𝐴𝑝𝑟𝑖𝑙
(i) Cash Purchase (One month in Advance) = (5,000 × 16) × 25% = 20,000
(ii) Payment of Creditor
March(One month in Advance) [(4,000 × 16) × 75%] × 50% = 24,000
Feb [(3,000 × 16) × 75%) × 50% = 18,000
62,000
13. Total Sales = (12,000 + 15,000 + 16,500 + 18,000)

= 61,500
Total Production = (Sales + Cl. Stock) – Op. Stock
= 61,500 + 12,500 – 10,000
= 64,000
2 1
𝑄1 = (12,000 × ) + (15,000 × ) = 13,000
3 3
2 1
𝑄2 = (15,000 × ) + (16,500 × ) = 15,500
3 3
2 1
𝑄3 = (16,500 × ) + (18,000 × ) = 17,000
3 3
Q = 64,000 – 13,000 – 15,500 – 17,000
= 18,500 Units
17. Efficiency Ratio = Actual Output ÷ Standard Output = 576 ÷ (12,000÷25) = 120%
18. Amount received in Quarter 3:

From Quarter 3: (2,88,000 × 75%) = 2,16,000
From Quarter 2: (2,88,000 × 12.5%) = 36,000
From Quarter 1: (1,92,000 × 12.5%) = 24,000
Total = 2,76,000
19. Absorbed OH = Actual OH – Under recovery of OH = 6,94,075 – 35,000 = 6,59,075
Absorbed OH = Budgeted OH Absorption Rate × Actual Consulting Hours

6,59,075 = Budgeted OH Absorption Rate × 32,150
Budgeted OH Absorption Rate = 6,59,075 ÷ 32,150 = 20.5
20.
𝑆𝐻 𝑓𝑜𝑟 𝐴𝑂
𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = × 100
𝐵𝐻
0.5 × 34,000
= × 100
0.5 × 40,000
= 85%
Please Note:- 2 units are produced in 1 hour, so 1 unit is prepared in 0.5 hour.
21.

𝐴𝐻 𝑤𝑜𝑟𝑘𝑒𝑑
𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑅𝑎𝑡𝑖𝑜 = × 100
𝐵𝐻
16,000
=
0.5 × 40,000
= 80%
22.
𝑆𝐻 𝑓𝑜𝑟 𝐴𝑂
𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 𝑅𝑎𝑡𝑖𝑜 = × 100
𝐴𝐻
34,000 × 0.5
= × 100
16,000
= 106.25%

CHAPTER 16
1. N Ltd. has Net working capital of ` 119 Lakh, Total Liabilities ` 225 Lakh and Non-current
liabilities are ` 140 Lakh. The Current Ratio will be: (DEC 2019)
(a) 2.4:1
(b) 1.85:1
(c) 2.46:1
(d) 1.15:1
2. A company’s purchases are ` 385 Lakh, Sales ` 510 Lakh and closing stock ` 58 Lakh. If the
rate of gross profit is 25% on cost, then Stock Turnover Ratio will be: (DEC 2019)
(a) 5.32 times
(b) 7.34 times
(c) 5.54 times
(d) 5.87 times
3. Mahi Ltd. has closing stock ` 648 Lakh and prepaid expenses ` 32 Lakh. Total liquid assets
were ` 1,830 Lakh. If the liquid ratio is 1.5:1, then working capital will be: (DEC 2019)
(a) ` 836.67 Lakh
(b) ` 1,290 Lakh
(c) ` 1,258 Lakh
(d) ` 1,150 Lakh
4. Which of the following is not included in the activity ratios? (DEC 2019)
(a) Sales to Capital Employed
(b) Debtors Turnover Ratio
(c) Proprietary Ratio
(d) Working Capital Turnover Ratio
5. The ideal norm preferred by Banks for current ratio is: (DEC 2019)
(a) 2:1
(b) 2.2:1
(c) 1.5:1
(d) 1.33:1
6. Following are the details of Beta Limited:

` in Lakh
Equity Share Capital 1500
(Shares of 10)
8% Preference Share Capital 400
12% Debentures 250
Profit before interest and tax 590
Dividend Payout
Ratio = 70%
Price – Earning (P/E)
Ratio = 25
Corporate tax rate = 30%
Earnings per Share (EPS) will be: (DEC 2019)
(a) ` 3.52
(b) ` 2.464
(c) ` 2.06
(d) ` 2.40
7. Sale Management is more concerned with: (DEC 2020)

(a) Ageing Schedule of Debtors
(b) Product Cost Variance Analysis
(c) Capital Expenditure and Forward Commitments

8. Top Management is more concerned with: (DEC 2020)

(a) Ageing Schedule of Debtors
(b) Product Cost Variance Analysis
(c) Capital Expenditure and Forward Commitments
9. Which of the following is also known as working capital ratio? (DEC 2020)
(a) Current ratio
(b) Liquid ratio
(c) Debtor turnover ratio
(d) Cash reserve ratio
10. From the following information, calculate net profit ratio: (DEC 2020)
1
Gross Profit is 4 th of cost and sales is ` 2,00,000. Indirect expenses is ` 12,000:
(a) 19%
(b) 20%
(c) 14%
(d) 25%
11. Current ratio is 2.5: 1 and Liquid ratio is 1:1. Stock is ` 60,000. Calculate current liability:
(DEC 2020)
(a) ` 40,000
(b) ` 60,000
(c) ` 1,00,000
(d) Cannot be determined
12. Earnings Per Share (EPS) is equal to : (AUG 2021)

(A) Profit before tax/No. of shares in authorized capital
(B) Profit after tax/No. of shares in issued capital
(C) Profit after tax/Net Worth
(D) Profit before tax/Net Worth
13. Interest coverage ratio = 6, indicates : (AUG 2021)

(A) Sales are 6 times of interest
(B) Profit after tax is 6 times of interest
(C) EBIT is 6 times of interest
(D) Interest is 6 times after tax
14. Debtors turnover ratio reflects : (AUG 2021)

(A) Collection period
(B) Number of times debtors against credit sales
(C) Aging of the debtors
(D) Number of times debtors against total sales
15. XYZ Ltd. books of accounts show profit from operation (EBDIT) at ` 500 Lakh. It paid 12% on
a debt of ` 1,000 Lakh. Depreciation is ` 100 Lakh and Tax is 35%, PAT will be : (AUG 2021)
(A) ` 184 Lakh
(B) ` 182 Lakh
(C) ` 178 Lakh
(D) ` 180 Lakh
16. The following information is pertaining to A Ltd.

Current ratio :4
Acid Test ratio : 2.8

Current liabilities : ` 31.00 Lakh
Find out the value of Inventory: (AUG 2021)
(A) ` 62 Lakh
(B) ` 43 Lakh
(C) ` 37.2 Lakh
(D) ` 105.4 Lakh
17. P Ltd. furnished the following information :

Cost of Goods Sold : ` 6 Lakh
Net Profit : ` 3 Lakh
Sales Return : ` 1 Lakh
If the net profit margin of P Ltd. was 25%, then the gross profit margin was: (AUG 2021)
(A) 55%
(B) 60%
(C) 40%
(D) 50%
18. Which of the following is classified as liquidity ratio? (AUG 2021)

(A) Return on equity
(B) Return on Investment
(C) Acid Test ratio
(D) Debt Equity ratio
19. A Liquid ratio lower than 1:1 shows: (AUG 2021)

(A) Under Trading
(B) Under Investment
(C) Over Trading
(D) Over Investment
20. If a concern has a very high stock turnover ratio, which of the following statement is False?
(AUG 2021)
(A) Stock Velocity Ratio is Low
(B) Stock has many fast moving items
(C) There is under trading
(D) Funds blocked in working capital are less
21. ________________ examine the policy of the company regarding of dividend and retain earning.
(AUG 2021)
(A) Earnings Per Share (EPS)
(B) Price Earnings Ratio
(C) Dividend Payout Ratio
(D) Return on Investment
22. The relevant details of the company are: Equity share capital : ` 25,00,000; Face value of
shares : ` 100; Profit for equity shareholders: ` 5,15,00; Dividend payout ratio : 40%; P/E ratio
: 30. Calculate Earnings Per Share (EPS). (DEC 2021)
(A) ` 20.60
(B) ` 2.06
(C) ` 30.6
(D) `13.60
23. Equity share capital : ` 25,00,000; Face value of shares: ` 100; Profit for equity
shareholders : 5,15,000; Dividend pay-out ratio : 40%; P/E ratio : 30.
The dividend per share is …….. (DEC 2021)
(A) ` 4.59
(B) ` 8.24
(C) ` 26.60
(D) ` 30.24
24. From the following information. Calculate debtor’s turnover ratio :

Closing debtors ` 2,00,000 Cash sales 25% of credit sales;
Excess of closing debtors over opening debtors ` 80,000, Total sales ` 12,00,000 (DEC 2021)
(A) 3 times
(B) 4 times
(C) 6 times
(D) 5 times
25. Using the information in Q. No. 24, calculate average collection period. (DEC 2021)
(A) 3 times
(B) 2 times
(C) 1 times
(D) 4 times
26. Proprietary Funds is ………….. (DEC 2021)

(A) Equity share capital + Preference share capital + Reserves
(B) Equity share capital + Preference share capital
(C) Equity share capital + Preference share capital + Reserves – Fictitious Assets
(D) Equity share capital + Preference share capital + Reserves + Fictitious Assets
27. Match the List – I with items in List – II :

List – I
(a) All items on the statement are expressed as a percentage of the base item
(b) Index number of the movements of the various financial items in the financial statements for
a number of periods
(c) A statement of “Source and Application of Funds”
(d) A study of different items of financial statements
List – II
(i) Fund Flow Analysis
(ii) Common Size Statement
(iii)Trend Analysis
(iv) Comparative Statement
(a) (b) (c) (d)
(A) (ii) (iv) (i) (iii)
(B) (i) (iv) (ii) (iii)
(C) (ii) (iii) (i) (iv)
(D) (i) (ii) (iv) (iii)

ANSWER
1 2 3 4 5 6 7 8 9 10
A D A C D D A B A C
11 12 13 14 15 16 17 18 19 20
A B C B B C D C C C
21 22 23 24 25 26 27
C A B C B C C
WORKING NOTES:
1.
𝐶𝐿 = 𝑇𝐿 − 𝑁𝐶𝐿
= 225 − 140
= 85
𝑁𝑊𝐶 = 𝐶𝐴 − 𝐶𝐿
119 = 𝐶𝐴 − 85
𝐶𝐴 = 204
𝐶𝐴
∴ 𝐶𝑅 =
𝐶𝐿
204
=
85
= 2.4: 1
2.
25% 𝑜𝑛 𝐶𝑜𝑠𝑡: −𝐿𝑒𝑡 𝐶𝑜𝑠𝑡 𝑏𝑒 100
𝑆𝑜, 𝑃𝑟𝑜𝑓𝑖𝑡 = 25
∴ 𝑆𝑃 = 100 + 25 = 125
25
∴ 𝑃𝑟𝑜𝑓𝑖𝑡 𝑜𝑛 𝑆𝑎𝑙𝑒 = × 100
125
= 20% 𝑜𝑛 𝑆𝑎𝑙𝑒
∴ 𝑃𝑟𝑜𝑓𝑖𝑡 = 510 × 20%
= 102 𝐿𝑎𝑘ℎ𝑠
𝐶𝑂𝐺𝑆 = 510 − 102 = 408 𝐿𝑎𝑘ℎ𝑠
𝐶𝑂𝐺𝑆 = 𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘 + 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 − 𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘
𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘 = 𝐶𝑂𝐺𝑆 − 𝑃𝑢𝑟𝑐ℎ𝑎𝑠𝑒 + 𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘
= 408 − 385 + 58
𝐶𝑂𝐺𝑆
∴ 𝑆𝑡𝑜𝑐𝑘 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 =
𝐴𝑣. 𝐼𝑛𝑣.
408
=
58 + 81
( 2 )
408
=
69.5
= 5.87 𝑡𝑖𝑚𝑒𝑠
3.
(𝐶𝐴 − 𝑆𝑡𝑜𝑐𝑘 − 𝑃/𝐸)
𝐿𝑖𝑞𝑢𝑖𝑑 𝑅𝑎𝑡𝑖𝑜 =
𝐶𝐿
1830
1.5 =
𝐶𝐿
𝐶𝐿 = 1220
𝐶𝐴 = 𝐿𝐴 + 𝑆𝑡𝑜𝑐𝑘 + 𝑃/𝐸
= 1830 + 648 + 32
= 2510

∴ 𝑊𝐶 = 𝐶𝐴 − 𝐶𝐿
= 2510 − 1220
6.
EBIT 590
(-) Interest (250 × 12%) (30)
EBT 560
(-) Tax @ 30% (168)
EAT 392
(-) Pref. Dividend (400 × 8%) (32)
Earnings for Equity 360
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑓𝑜𝑟 𝐸𝑞𝑢𝑖𝑡𝑦
𝐸𝑃𝑆 =
𝑁𝑜. 𝑜𝑓 𝐸𝑆.
360
=
150
= 2.4/𝑆ℎ𝑎𝑟𝑒
10.
1
𝐺𝑃 = 𝑜𝑓 𝐶𝑜𝑠𝑡 = 25% 𝑜𝑓 𝐶𝑜𝑠𝑡
4
i.e. 20% on Sales
𝑁𝑃
𝑁𝑃 % = × 100
𝑆𝑎𝑙𝑒𝑠
𝐺𝑃 − 𝐼𝑛𝑑𝑖𝑟𝑒𝑐𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
= × 100
𝑆𝑎𝑙𝑒𝑠
(2,00,000 × 20%) − 12,000
= × 100
2,00,000
28,000
= × 100
2,00,000
= 14%
11.
𝐶𝐴
𝐶𝑅 =
𝐶𝐿
𝐶𝐴
2.5 =
𝐶𝐿
𝐶𝐴 = 2.5 𝐶𝐿 ____________(1)
𝐶𝐴 − 𝑆𝑡𝑜𝑐𝑘
𝐿𝑅 = _________(2)
𝐶𝐿
𝑆𝑢𝑏𝑠𝑡𝑖𝑡𝑢𝑡𝑒 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 (1)𝑖𝑛 (2)
2.5 𝐶𝐿 − 60,000
1=
𝐶𝐿
60,000
𝐶𝐿 =
1.5
𝐶𝐿 = 40,000
15.
EBDIT 500
- Depreciation (100)
- Interest (1,000 × 12%) (120)
PBT 280
- Tax @ 35% (98)
PAT 182
16. Current Ratio = CA ÷ CL

CA = Current Ratio × CL
CA = 4 × 31
CA = 124
Acid Test Ratio = (CA – Stock) ÷ CL

Stock = CA – (Acid Test Ratio × CL)
Stock = 124 – (2.8 × 31)
Stock = 37.2
17. NP % = NP ÷ Net Sales

Net Sales = NP ÷ NP% = 3 ÷ 25% = 12
GP % = GP ÷ Net sales = (12 – 6) ÷12 = 50%
22.
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑓𝑜𝑟 𝐸𝑞𝑢𝑖𝑡𝑦 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠
𝐸𝑃𝑆 =
𝑁𝑜. 𝑜𝑓 𝐸𝑞𝑢𝑖𝑡𝑦 𝑆ℎ𝑎𝑟𝑒𝑠
5,15,000
=
25,00,000 ÷ 100
5,15,000
=
25,000
= 20.6
23. 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒 = 𝐸𝑃𝑆 × 𝑃𝑎𝑦𝑜𝑢𝑡 𝑅𝑎𝑡𝑖𝑜

= 20.6 40%
= 8.24
24. Credit Sale be x.

x + (x 25%) = 12,00,000
1.25x = 12,00,000
x = 9,60,000
Opening Debtor = 2,00,000 – 80,000 = 1,20,000
2,00,000 + 1,20,000
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐷𝑒𝑏𝑡𝑜𝑟 = = 1,60,000
2
𝐶𝑟𝑒𝑑𝑖𝑡 𝑆𝑎𝑙𝑒
∴ 𝐷𝑒𝑏𝑡𝑜𝑟 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑅𝑎𝑡𝑖𝑜 =
𝐴𝑣𝑔. 𝐷𝑒𝑏𝑡𝑜𝑟
9,60,000
=
1,60,000
= 6 times
25.
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑫𝒆𝒃𝒕𝒐𝒓
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑪𝒐𝒍𝒍𝒆𝒄𝒕𝒊𝒐𝒏 𝑷𝒆𝒓𝒊𝒐𝒅 =
𝑴𝒐𝒏𝒕𝒉𝒍𝒚 𝑪𝒓𝒆𝒅𝒊𝒕 𝑺𝒂𝒍𝒆
1,60,000
=
9,60,000/12

1,60,000
=
80,000
= 2 months

CHAPTER 17
1. Which of the following set of report is classified according to their contents? (DEC 2019)
(a) Descriptive reporting; tabular reports and Graphic reports
(b) Routine reports and Special reports
(c) Production reports; Sales reports; Cost reports and Finance reports
(d) Graphic presentation; Routine reports and Finance reports
2. Which of the following is not a step taken towards implementing an effective management
reporting programme? (DEC 2019)
(a) Discovery
(b) Access point
(c) Finance
(d) Feedback
3. Following is not an advantage of effective Management reporting system: (DEC 2020)

(a) Improves decision making
(b) Improves responsiveness to issue
(c) Improves efficiency of resources
4. Which is not a form of reporting ? (DEC 2021)

(A) Descriptive reporting
(B) Subjective reporting
(C) Tabular reporting
(D) Graphic presentation
ANSWER
1 2 3 4
C C D B

CHAPTER 18
1. A low margin of safety usually indicates: (DEC 2019)
(a) High profit
(b) High fixed overheads
(c) Low fixed overheads
(d) Operation on high level of activity
2. Which of the following is not a method of transfer pricing considered in normal course? (DEC
2019)
(a) Full cost transfer pricing
(b) Negotiated transfer pricing
(c) Opportunity cost transfer pricing
(d) Standard cost transfer pricing
3. Following data provided by M Ltd.:

First Six Months (`) Last Six Months (`)
Profit 10,00,000 14,00,000
Cost of Sales 70,00,000 76,00,000
Fixed cost for the year will be: (DEC 2019)
(a) ` 22 Lakh
(b) ` 34.40 Lakh
(c) ` 73.33 Lakh
(d) ` 44 Lakh
4. Which of the following are examples of key factors?

(1) Sales value/quantity
(2) Raw material quantity
(3) Raw material quality
(4) Labour hour’s availability
(5) Plant capacity
(6) No. of plants used in manufacturing process
(7) Cost of production
(a) 1, 3, 5 and 6
(b) 1, 2, 4 and 5
(c) 2, 3, 5 and 7
(d) 1, 2, 4 and 6
5. Match the following List-I with List-II:

List – I
(P) Profit earned
(Q) Classification of costs into fixed and variable costs
(R) Both fixed and variable costs are charged to product
(S) Sum of fixed cost and profit
List – II
(1) Contribution
(2) Margin of Safety x P/V Ratio
(3) Marginal Costing
(4) Absorption Costing
(a) (P) – (2), (Q) – (4), (R) – (1), (S) – (3)
(b) (P) – (2), (Q) – (3), (R) – (4), (S) – (1)
(c) (P) – (1), (Q) – (4), (R) – (3), (S) – (2)
(d) (P) – (1), (Q) – (3), (R) – (4), (S) – (2)
6. Information provided by S Ltd. are given below:

Fixed Cost ` 24 lakh
Profit ` 12 lakh
Break-even point ` 60 lakh
When sales are ` 120 Lakh, then calculate the profit: (DEC 2019)
(a) ` 66 Lakh
(b) ` 30 Lakh
(c) ` 24 Lakh
(d) ` 21 Lakh
7. In an Activity Based Costing System, the allocation basis that are used for applying costs to
services or procedures are called: (DEC 2019)
(a) Profit centres
(b) Cost centres
(c) Cost units
(d) Cost drivers
8. Inspection of products is an example of: (DEC 2019)

(a) Unit level activities
(b) Batch level activities
(c) Product level activities
(d) Facility level activities
9. A company has Profit/Volume (P/V) Ratio 40 percent. By what percentage must variable cost
be decreased to offset 25% reduction in selling price, so as to maintain the same P/V Ratio?
(DEC 2020)
(a) 15%
(b) 25%
(c) 33.33%
(d) 41.67%
10. Production 11,000 units @ ` 11.50 per unit, Closing Stock of finished Goods 3,000 units.
Opening Stock 2,000 units @ ` 14 per unit, Selling and Distribution Expenses 20% of Cost of
Sales, Profit @ 25% on Sales. Calculate Profit per unit: (DEC 2020)
(a) ` 15 per unit
(b) ` 10 per unit
(c) ` 5 per unit
11. Which of the following is not a method of Transfer Pricing? (DEC 2020)
(a) Market based transfer pricing
(b) Cost based transfer pricing
(c) Negotiated transfer pricing
12. A company sells two products, J and K. The sales mix is 4 units of J and 3 units of K. The
contribution margin per unit are ` 40 for J and ` 20 for K. Fixed costs are ` 3,08,000 per month.
Compute the individual break-even point of product J and product K: (DEC 2020)
(a) 800 units and 600 units
(b) 600 units and 800 units
(c) 5600 units and 4200 units
(d) 4200 units and 5600 units
13. Which of the following is not an objective of Activity Based Costing? (DEC 2020)
(a) Activity Based Costing is a two-stage product costing method
(b) The cost pools in the two-stage approach now accumulate product related cost
(c) It is based on the concept that products consume activities and activities consume resources
14. Selling price of a product is ` 32/unit. Variable cost ratio is 50%. Fixed cost is ` 96,000.
Units sold are 10,000. Calculate Margin of Safety in percentage: (DEC 2020)
(a) 40%
(b) 60%
(c) 50%
(d) Cannot be determined
15. Margin of Safety may be improved by: (DEC 2020)

(a) Lowering Fixed Cost
(b) Increasing Volume of Sales
(c) Increasing Selling Price
16. If sales in an organization is ` 1,00,000, fixed cost is ` 12,000 and profit is ` 8,000,
Profit/Volume ratio is …………….. (DEC 2020)
(a) 80%
(b) 8%
(c) 20%
(d) 12%
17. Monsoon is an example of key factor in which of the following industries? (DEC 2020)
(a) Motor car
(b) Aluminum
(c) Electro-optics
(d) Hydropower generation
18. Activity Based Costing assigns costs to products by tracing expenses to ………… (DEC 2020)
(a) Products
(b) Sales
(c) Activities
(d) Profits
19. Activity based cost system would probably provide the greatest benefits for organization that
use _______________ (AUG 2021)
(A) Job Order Costing
(B) Process Costing
(C) Standard Costing
(D) Historical Costing
20. In marginal costing, stock is valued at ________________ (AUG 2021)

(A) Fixed Cost
(B) Semi-variable Cost
(C) Variable Cost
(D) Market Price
21. An increase in selling price ________________________ (AUG 2021)

(A) Increase the break-even point
(B) Decrease the break-even point
(C) Does not effect the break-even point
(D) Optimizes the break-even point
22. Fixed Cost = ` 2,00,000, Sales = ` 8,00,000, P/V Ratio = 30%; the amount of profit is
_________________ (AUG 2021)
(A) ` 50,000
(B) ` 40,000
(C) ` 35,000
(D) ` 45,000
23. S Ltd. has fixed cost of ` 60,000 P. A. It manufactures a single product which it sells for ` 20
per unit. Its P/V ratio is 40%. S. Ltd. Break-even Point in Units is: (AUG 2021)
(A) 1,800
(B) 3,000
(C) 5,000
(D) 7,500
24. Gas oil and company has two divisions: Transportation and Refining. Transportation
sales crude oil to Refining division. The cost of one barrel of crude is ` 50, direct labour is `
15, variable overheads ` 3 and fixed overhead ` 35. Transportation division sets its profit
margin 20% of the variable cost. If Transporting division operating at full capacity, the
transfer price will be : (DEC 2021)
(A) ` 65
(B) ` 116.6
(C) ` 123. 6
(D) ` 158.6
25. Achieve goal congruence, Realistic performance evaluation and Maintain autonomy of
the divisions are the objectives meet by which method of transfer pricing? (DEC 2021)
(A) Cost based transfer pricing
(B) Negotiated transfer pricing
(C) Market based transfer pricing
(D) Opportunity cost transfer pricing
26. If profit is ` 20,000, BEP is ` 2,00,000 and P/V Ratio is 40%. What will be margin of
safety? (DEC 2021)
(A) ` 50,000
(B) ` 80,000
(C) ` 8,000
(D) ` 12,000
27. From the following data :

Volume of
production (units) 1,20,000 1,50,000
Maintenance
expenses (`) 84,000 1,02,000
The variable cost per unit is : (DEC 2021)
(A) 0.60 per unit
(B) 0.68 per unit
(C) 0.70 per unit
(D) 0.78 per unit
28. Using the information from Q. No. 27, the total fixed cost is…………… (DEC 2021)
(A) 6,000
(B) 12,000
(C) 18,000
(D) 24,000
29. Using the information Q. No. 27, what is the total variable overheads at the level of
output 1,40,000 units ? (DEC 2021)
(A) 84,000
(B) 95,200
(C) 98,000
(D) 1,09,200

30. The following figures are available from the records of ABC Enterprises as at 31st
March :
Year 2020 2021
(` Lakh) (` Lakh)
Sales 150 200
Profit 30 50
The P/V ratio is……………. (DEC 2021)

(A) 20%
(B) 25%
(C) 40%
(D) 50%
31. Using the information from Q. No. 30, the total fixed expenses is…………. (DEC 2021)
(A) ` 20 lakh
(B) ` 30 lakh
(C) ` 40 lakh
(D) ` 50 lakh
32. Using the information from Q. No. 30, the break – even sales is………….. (DEC 2021)
(A) ` 50 lakh
(B) ` 75 lakh
(C) ` 100 lakh
(D) ` 125 lakh
33. Using the information from Q. No. 30, Sales required to earn a profit of Ru 90 lakh
is………. (DEC 2021)
(A) ` 275 lakh
(B)` 300 lakh
(C) ` 325 lakh
(D) ` 50 lakh
34. Using the information from Q. No. 30, Profit or loss that would arise if the sales were ` 280
lakh is…………….(DEC 2021)
(A) ` 52 lakh
(B) ` 62 lakh
(C) ` 72 lakh
(D) ` 82 lakh
35. Match the List – I (Activity ) with items in List – II (Cost Pool.
List - I
(a) Facility – level
(b) Product – level
(c) Batch – level
(d) Unit – level
List – II
(i) Purchasing
(ii) Quality Control
(iii) Human Resources
(iv) Parts Management
(a) (b) (c) (d)
(A) (ii) (iv) (i) (iii)
(B) (i) (iv) (ii) (iii)
(C) (i) (iv) (ii) (iii)

(D) (iii) (iv) (i) (ii)
ANSWER
1 2 3 4 5 6 7 8 9 10
B D A B B C D B D C
11 12 13 14 15 16 17 18 19 20
D C B A D C D C A C
21 22 23 24 25 26 27 28 29 30
B B D B C A A B A C
31 32 33 34 35
B B B D D
WORKING NOTES:
3.
1st 6 m 2nd 6 m
Profit 10,00,000 14,00,000
COS 70,00,000 76,00,000
Sale (Profit + COS) 80,00,000 90,00,000
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑟𝑜𝑓𝑖𝑡
𝑃/𝑉% = × 100
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑆𝑎𝑙𝑒
4,00,000
= × 100
10,00,000
= 40%
𝐹𝐶 = 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 − 𝑃𝑟𝑜𝑓𝑖𝑡𝑠
= (80,00,000 × 40%) − 10,00,000
= 22,00,000/−
6.
𝐹𝐶
𝑃/𝑉% = × 100
𝐵𝐸𝑃
24
= × 100
60
= 40%
𝑃𝑟𝑜𝑓𝑖𝑡 = 𝐶 − 𝐹𝐶
= (120 × 40%) − 24
= 48 − 24
9. It can be Solved by Example. (Assumed)

Original Reduction of 25%
SP 100 75
VC (60%) 60 35
P/V (40%) 40 40
60 − 35
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑉𝐶% = =× 100
60
= 41.67%
10.
`
Op. Stock (2,000 × 14) 28,000
(+) Production (11,000 × 11.5) 1,26,500
(-) Cl. Stock (3,000 × 11.5) (34,500)
COGS. (Units sold = 10,000) 1,20,000
(+) Selling & Distribution
1,20,000 30,000
( × 20)
(100 − 20)
LOS 1,50,000
(+) Profit (25% on Sales)
1,50,000 5,00,000
( × 20)
(100 − 25)
Sales 2,00,000
50,000
𝑃𝑟𝑜𝑓𝑖𝑡 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡 =
10,000
= 5/𝑈𝑛𝑖𝑡
12.
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑠𝑎𝑙𝑒𝑠 𝑀𝑖𝑥 = (4 × 40) + (3 × 20)
= 160 + 60
= 220
3,08,000
∴ 𝐵𝐸𝑃(𝑁𝑜. 𝑜𝑓 𝑆𝑎𝑙𝑒𝑠 𝑀𝑖𝑥) =
220
= 1,400
𝑈𝑛𝑖𝑡𝑠 𝑜𝑓 𝐽 = 1,400 × 4
= 5,600 𝑈𝑛𝑖𝑡𝑠
𝑈𝑛𝑖𝑡𝑠 𝑜𝑓 𝐾 = 1,400 × 3
= 4,200 𝑈𝑛𝑖𝑡𝑠
14. P/V % = 100% – VC %
=100% – 50%
= 50%
𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝐵𝐸𝑃 (𝑈𝑛𝑖𝑡𝑠) =
𝑐/𝑢
96,000
=
32 × 50%
= 6,000
MOS (Units) = 10,000 – 6,000
= 4,000
4,000
𝑀𝑂𝑆 % = × 100
10,000
= 40%
16.
𝐶
𝑃/𝑉 % = × 100
𝑆
(𝐹𝐶 + 𝑃)
= × 100
𝑆
12,000 + 8,000
= × 100
1,00,000
= 20%
22. Profit = Contribution – Fixed Cost

Profit = (8,00,000 × 30%) – 2,00,000
Profit = 40,000
23. BEP = Fixed Cost ÷ Contribution per unit = 60,000 ÷ (20×40%) = 7,500 Units
24. As transportation division is working at full capacity we will have to take full cost including
fixed overheads.
Transfer Price = VC + Profit + FC
= (50 + 15 + 3) + (68 × 20%) + 35
= 68 + 13.6 + 35
= 116.6
Please Note:- Profit is to be taken on Variable cost only as given in the question.
26.
𝑃𝑟𝑜𝑓𝑖𝑡 20,000
𝑀𝑂𝑆 = = = 50,000
𝑃/𝑉% 40%
27.
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝐶𝑜𝑠𝑡
𝑉𝐶/𝑢 =
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑜𝑢𝑡𝑝𝑢𝑡
(1,02,000 − 84,000)
=
(1,50,000 − 1,20,000)
18,000
=
30,000
= 0.6/u
28. Total Fixed Cost = Total Cost – Variable Cost

= 84,000 – (1,20,000 × 0.6)
= 12,000
29. TVC at 14000 units = 0.6 × 140000

= 84000
30.
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑟𝑜𝑓𝑖𝑡
𝑃𝑉% = × 100
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑆𝑎𝑙𝑒
50 − 30
= × 100
200 − 150
20
= × 100
50
= 40%
31. TFC = Sales – Profit – VC

P/V % = 40% So; VC % = 60% 150
– 30 –(150 × 60%)
150 – 30 – 90
= 30
32.
𝐹𝐶 30
𝐵𝐸𝑃 = = = 75 𝐿𝑎𝑘ℎ𝑠
𝑃/𝑉% 40%
33.
𝐹𝐶 + 𝐷𝑃
𝐷𝑒𝑠𝑖𝑟𝑒𝑑 𝑆𝑎𝑙𝑒𝑠 =
𝑃/𝑉%
30 + 90
=
40%

= 300 Lakhs
34.
Particulars Amount
` Lakhs
Sales 280
(-) VC (60%) (168)
Contribution 112
(-) FC (30)
Profit 82

CHAPTER 19 & 20 & 22
1. Which of the following is not a valuation approach? (DEC 2019)
(a) Assets Approach
(b) Income Approach
(c) Expenditure Approach
(d) Market Approach
2. Which of the following Ind AS deals with “Financial Instruments : Presentation”? (DEC 2019)
(a) Ind AS – 32
(b) Ind AS – 33
(c) Ind AS – 114
(d) Ind AS – 109
3. Ind AS 33 deals with ……………… (DEC 2020)

(a) Earning per share
(b) Financial Instrument Presentation
(c) Fair Value Measurement
4. A deposit to be made on 1st January, 2020, into bank that will earn an interest of 7%
compound annually. It is desired to withdraw ` 60,000 on 31st December, 2023 and ` 1,00,000,
on 31st December 2025. The amount to be deposited 1st January, 2020, will be ……….
(𝑃𝑉𝐹7% 𝑓𝑜𝑟 4 𝑦𝑒𝑎𝑟𝑠 = 0.7629; 𝑃𝑉𝐹7% 𝑓𝑜𝑟 6 𝑦𝑒𝑎𝑟𝑠 = 0.6663): (DEC 2019)
(a) ` 1,30,608
(b) ` 1,12,404
(c) ` 1,22,063
(d) ` 1,09,582
5. Following information provided by B Ltd.:

 Last Earning Per Share (EPS) of the company = ` 75 per share
 Company’s dividend pay-out ratio = 40%
 Required rate of return from equity investment = 18%
By using capitalization earning method, the value of equity will be (if dividend are expected to
grow at a constant rate of 10% per annum): (DEC 2019)
(a) ` 412.50
(b) ` 183.33
(c) ` 166.67
(d) ` 375
6. Following information is provided by A Ltd.:

` in lakh
2,00,000, 8% Preference Shares of ` 100 each fully paid-up 200
60,00,000 Equity Shares of ` 10 each fully paid-up 600
Reserves and Surplus 270
External Liabilities 480
Average profit after tax, earned every year by the company 169
The normal return earned on the market value of fully paid-up equity shares of the same type of
the company is 15%. Assume that 2% of total assets are worthless. The intrinsic value per equity
share will be: (DEC 2019)
(a) ` 14.50
(b) ` 13.98
(c) ` 17.32
(d) ` 17.83
7. Which of the following method of valuation of shares is/are suitable for ascertaining the
market value of shares which are quoted on a recognized stock exchange? (DEC 2019)
(a) Based on rate of dividend method
(b) Based on rate of earnings method
(c) Based on price earnings ratio method
(d) All the above
8. Average profit, Super profit and Capital employed of a firm are ` 15,60,000; ` 4,80,000; and `
90,00,000 respectively. Normal rate of return is 12%. The value of goodwill on the basis of
capitalization of ‘Average Profit’ and of ‘Super profit’ will be: (DEC 2019)
(a) ` 130 Lakh and ` 40 Lakh
(b) ` 1,87,200 and ` 57,600
(c) ` 130 Lakh and ` 11,37,600
(d) ` 40 Lakh and ` 40 Lakh
9. As per Section 247 of the Companies Act, 2013, the Registered Valuer shall be appointed by
the: (DEC 2019)
(a) Company’s Board of Directors
(b) Central Government
(c) Registrar of Companies
(d) Company’s Audit Committee
10. MOON Ltd. is developing a new production process. During the financial year ended 31st
March, 2018, the total expenditure incurred on the process was ` 60 lakh. The production
process met the criteria for recognition as an intangible asset on 1st December, 2017.
Expenditure incurred till this date was ` 32 lakh. Further expenditure incurred on the process
for the financial year ending 31st March, 2019 was ` 90 lakh. As on 31st March, 2019, the
recoverable amount of know-how embodied in the process is estimated to be ` 82 lakh. This
includes estimates of future cash outflows and inflows. The expenditure to be charged to Profit
and Loss Account for the year ended 31st March, 2019 is ………………………….. lakh. (Ignore
depreciation). (DEC 2020)
(a) ` 118
(b) ` 82
(c) ` 36
11. Under section 247 of The Companies Act, 2013, a Registered Valuer shall be appointed by
the Company’s: (DEC 2020)
(a) Board of Directors only
(b) Company Secretary only
(c) Director Finance and Accounts only
12. P purchased business from Q on 30th June, 2019. Profit earned by Q for the preceding years
ending on 31st December every year were:
2016 – ` 41,000, 2017 – ` 40,000 and 2018 – ` 42,000. It was ascertained that profits of 2017
included a non-recurring item of ` 1,500 and profit of 2018 was reduced by ` 2,000 due to an
extraordinary loss on account of theft. The annual premium was ` 200 per annum. P at the time
of purchasing the business, was employed with Sufitel Associates and was getting ` 500 p. m. He
intends to replace the manager who at the present is getting ` 350 p. m. The goodwill is
calculated at 2 years purchase of the average profits. Calculate the goodwill of the business:
(DEC 2020)
(a) ` 84,000
(b) ` 78,334
(c) ` 75,455
(d) ` 85,445
13. Average profit of a firm is ` 48,000. The rate of capitalization is 12%. Assets and liabilities of
the firm are ` 4,00,000 and ` 1,70,000 respectively. Find value of Goodwill: (DEC 2020)
(a) ` 2,30,000
(b) ` 4,00,000
(c) ` 1,70,000
(d) ` 1,90,000
14. Value of share based on earning basis method is calculated as: (DEC 2020)
(a) (Possible rate of dividend/Normal rate of dividend) * Paid up value per share
(b) (Normal rate of dividend/possible rate of dividend) * Paid up value per share
(c) (Normal rate of dividend/dividend per share) * Paid up value per share
15. When the required rate of return is equal to the coupon rate, then the market value of a
bond is __________________ (AUG 2021)
(A) Above Face Value
(B) Face Value
(C) Below Face Value
(D) Book Value
16. The 𝛽 (Beta) of a risk free stock is: (AUG 2021)

(A) 10
(B) – 1
(C) 1
(D) 0
17. Which of the following investment decision is required to be taken for a stock, if its intrinsic
value is greater than its market value? (AUG 2021)
(A) Sell
(B) Hold
(C) Buy
(D) Indifferent
18. P Ltd. issue ` 50,000 8% Debenture at a discount of 5%. The tax rate is 50%. The cost of
debt capital is ________________ (AUG 2021)
(A) 5.42%
(B) 5.1%
(C) 4.42%
(D) 4.21%
19. Find out the goodwill of the company from the following information:
Total Capital Employed = ` 8,00,000
Reasonable Rate of return = 15%
Profits for the year = ` 12,00,000
Use capitalization method : (AUG 2021)
(A) ` 82,00,000
(B) ` 12,00,000
(C) ` 72,00,000
(D) ` 42,00,000
20. Which of the following is not a method of business valuation? (AUG 2021)
(A) Asset Based
(B) Earning based
(C) Market based
(D) Equity based
21. Which of the following is not the method of valuation of Goodwill? (AUG 2021)
(A) Average profit method
(B) Super profit method
(C) Capitalization method
(D) Straight line method
22. “When a business is non-operating or has been generating losses, and the company’s focus
is holding investment or real estate.” Which method of valuation is best used in this case? (DEC
2021)
(A) Discounted cash flow model
(B) Asset approach
(C) Earning based model
(D) Capital asset pricing model
23. ABC Ltd. has ` 50,00,000 in long term debts, ` 10,00,000 in preferred stock and ` 40,00,000
in common equity. All the values are on market value. The before tax cost of debts 10%. Cost of
common equity is 15%. Assume a tax rate of 40%. The overall cost of capital is ………… (DEC
2021)
(A) 10.90%
(B) 10.46%
(C) 11%
(D) 12.90%
24. A firm has a total capital investment of ` 2,25,000. The firm earned net profit during the
last four years ` 35,000, ` 40,000, ` 60,000, ` 50,000. The fair return on the net capital
employed is 15%. The Super profit is ……….. (DEC 2021)
(A) ` 45,000
(B) ` 37,500
(C) ` 12,500
(D) ` 7,500
25. Which is not the approach for valuing of intangible assets? (DEC 2021)
(A) Cost approach
(B) Super–Value approach
(C) Market-Value approach
(D) Economic-Value approach
26. A Lid. Invested ` 500 lakh in assets. There are 50,00,000 shares outstanding. The par
value of share is ` 10. It earns a rate of 15% on its investment and has a policy of retaining
60% of the earning. Growth rate is…………… (DEC 2021)
(A) 6%
(B) 7.5%
(C) 9%
(D) 10%
27. D. Ltd. has the following details Return on equity: 10%

Expected earnings per share: ` 10
Pay – out ratio: 30%
Required rate of return: 5% per annum Price of share of D Lid. Is ……….. (DEC 2021)
(A) ` 37.5
(B) ` 87.5
(C) ` 125
(D) ` 140
28. An increase in earning s per share or a reduction in loss per share resulting from the
assumption that convertible instruments are converted, that options or warrants are exercised
or that ordinary shares are issued upon the satisfaction of specified conditions is……………….
(DEC 2021)
(A) Diluted earnings per share
(B) Anti – diluted earnings per share
(C) Weighted earning per share
(D) Basic earnings per share
29. Following are the objectives of : (DEC 2021)

(1) To determine Fair Value.
(2) To set out a single Ind AS framework for measuring fair value.
(3) To require disclosures with respect to fair value measurements.
(A) Financial instrument presentation
(B) Market based approach
(C) Principal market measurement
(D) Fair value measurement
30. P Ltd. has 12% Debentures of ` 40 Lakh and 13% Debentures of ` 60 Lakh. If the corporate
tax rate is 30%, then combined cost of debt after tax will be: (DEC 2019)
(a) 12.60%
(b) 8.75%
(c) 8.82%
(d) 12.50%
31. Which of the following is not a method used for valuation of shares? (DEC 2019)
(a) Net assets method
(b) Based on rate of dividend method
(c) Based on rate of earnings method
(d) Net realizable value method
32. The risk free rate is 8%, return on a broad market index is 15%. The actual return provided
by the security is 18%. What must be its beta, by using CAPM if the security is correctly priced
in the market? (DEC 2019)
(a) 1.43
(b) 0.70
(c) 2.00
(d) 1.2
33. The relationship between risk and return established by the security market line is called:
(DEC 2019)
(a) Earning Based Model
(b) Capital Assets Pricing Model
(c) Discounted Cash Flow Model
(d) Arbitrage Pricing Theory
34. Risk-Free Rate of Interest on Govt. Treasury Bonds 5.5%, Average Return on Market Portfolio
18%. Beta is 1.8. Security is said to be overpriced, if actual return is: (DEC 2020)
(a) 29%
(b) 28%
(c) 27%
35. Risk-Free Rate of Interest on Govt. Treasury Bonds 5%, Average Return on Market Portfolio
17.5%. What must be the beta, if the security is correctly priced with actual return of 25%?
(DEC 2020)
(a) 1.2
(b) 1.3
(c) 1.5
(d) 1.6
36. The relationship between the risk and return established by the ‘security market line is
called ………………… (DEC 2020)
(a) Earning based model
(b) Arbitrage pricing theory
(c) Economic value added
(d) Capital asset pricing model
37. Beta of Market portfolio is always ……………. (DEC 2020)

(a) 0
(b) 1
(c) Less than 1
(d) More than

ANSWER
1 2 3 4 5 6 7 8 9 10
C A A B D B C D D C
11 12 13 14 15 16 17 18 19 20
A B C A B D C D C D
21 22 23 24 25 26 27 28 29 30
D B * C B C * B D C
31 32 33 34 35 36 37
D A B C D D B
WORKING NOTES:
4.
𝐷𝑒𝑝𝑜𝑠𝑖𝑡 = 𝑃𝑉 𝑜𝑓 60,000𝑓𝑜𝑟 4 𝑦𝑟𝑠 + 𝑃𝑉 𝑜𝑓 1,00,000 𝑓𝑜𝑟 6 𝑦𝑟𝑠
= (60,000 × 0.7629) + (1,00,000 × 0.6663)
= 45,774 + 66,630
= 1,12,404.
5.
𝐷1
𝑃0 =
𝑘𝑒 − 𝑔
(75 × 40%)
=
18% − 10%
= 375/−
6.
Net Asset Method
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑎𝑟𝑒 𝑛𝑜𝑡 𝑔𝑖𝑣𝑒𝑛.
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 = 𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦
𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 = 200 + 600 + 270 + 480
= 1550
∴ 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡 = 1550.
𝑁𝑒𝑡 𝐴𝑠𝑠𝑒𝑡 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝐸𝑞𝑢𝑖𝑡𝑦
𝑁𝑒𝑡 𝐴𝑠𝑠𝑒𝑡 𝑉𝑎𝑙𝑢𝑒 =
𝑁𝑜. 𝑜𝑓 𝐸𝑞𝑢𝑖𝑡𝑦 𝑆ℎ𝑎𝑟𝑒𝑠
1550 − 2% − 480 − 200
=
60
839
=
60
= 13.98/𝑆ℎ𝑎𝑟𝑒
8.
𝐺𝑜𝑜𝑑𝑤𝑖𝑙𝑙 𝑜𝑛 𝐶𝑎𝑝𝑖𝑡𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝐴𝑣. 𝑃𝑟𝑜𝑓𝑖𝑡
𝐴𝑣. 𝑃𝑟𝑜𝑓𝑖𝑡
= − 𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝐸
𝑁𝑅𝑅
15,60,000
= − 90,00,000
12%
= 40,00,000.
𝐺𝑜𝑜𝑑𝑤𝑖𝑙𝑙 𝑜𝑛 𝐶𝑎𝑝𝑖𝑡𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑆𝑢𝑝𝑒𝑟 𝑃𝑟𝑜𝑓𝑖𝑡
𝑆𝑢𝑝𝑒𝑟 𝑃𝑟𝑜𝑓𝑖𝑡
=
𝑁𝑅𝑅
480000
=
12%
= 40,00,000/-

10.
Cost of Intangible Asset = (60 – 32) + 90
= 118 lakhs
Recoverable Amount = 82 lakhs
∴ 𝐼𝑚𝑝𝑎𝑖𝑟𝑚𝑒𝑛𝑡 𝐿𝑜𝑠𝑠 = 118 − 82
= 36 𝑙𝑎𝑘ℎ𝑠
12.
2016 2017 2018
Profits 41,000 40,000 42,000
(+) Non Recurring item - (1,500) -
(+) Extraordinary Loss - - 2,000
41,000 38,500 44,000
41,000 + 38,500 + 44,000
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 =
3
= 41,167
Future Maintainable Profit
Average Profits 41,167
(-) Annual Premium (200)
(+) Manager Remuneration (350 × 12) 4,200
(-) His Remuneration (500 × 12) (6,000)
39,167
𝐺𝑜𝑜𝑑𝑤𝑖𝑙𝑙 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑟𝑜𝑓𝑖𝑡 × 𝑁𝑜. 𝑜𝑓 𝑌𝑟𝑠.

= 39,167 × 2 = 78,334/−
13.
Value of Goodwill by Capitalization Method
𝐴𝑣. 𝑃𝑟𝑜𝑓𝑖𝑡
(𝑎)𝑁𝑜𝑟𝑚𝑎𝑙 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑 =
𝑁𝑅𝑅
48,000
=
12%
= 4,00,000
(b) Goodwill = Normal Capital Employed – Actual C.E.
= 4,00,000 – (Assets – Liability)
= 4,00,000 – (4,00,000 – 1,70,000)
= 4,00,000 – 2,30,000
= 1,70,000
18. Kd = I(1-t)/NP = 8(1-0.5)/95 = 4.21%
19. Normal Capital Employed = Profits ÷ Capitalization Rate = 12,00,000 ÷ 15% = 80,00,000
Goodwill = Normal Capital Employed – Actual Capital Employed = 80,00,000 – 8,00,000 =
72,00,000

Source Amt. Weight Cost W×C
Equity 40,00,000 0.4 5% 6%
Preference Shares 10,00,000 0.1 11% 1.1%
Debt 50,00,000 0.5 6% [10% (1-0.4) 3%
1,00,00,000 10.1%
As per me, Answer should be 10.1% which is not given in the question.
24.
35,000 + 40,000 + 60,000 + 50,000
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑟𝑜𝑓𝑖𝑡 = = 46,250
4

Super Profit = Average Profit – Normal Profit
= 46250 – (2,25,000 × 15%)
= 46,250 – 33750
= 12,500
26. Growth Rate = b × r

= 60% × 15%
= 9%
27.
My Explanations on Wrong Questions
WQ 13: Retention Ratio = (1 – Payout) = 1 – 0.3 = 0.7
g = b × r = 0.7 × 10% = 7%
𝐷1
𝑃0 =
𝐾𝑒 − 𝑔
10 × 30%
=
5% − 7%
Question is wrong as < 𝑔
Required Rate should be 15%

If we take Required Rate as 15% then we can find the answer as under:
10 × 30%
=
15% − 7%
= 37.5
30.
40 60
𝐶𝑜𝑚𝑏𝑖𝑛𝑒𝑑 𝑘𝑑 = [12%(1 − 0.3) × ] + [13% × (1 − 0.3) × ]
100 100
= 3.36% + 5.46%
= 8.82%
32.
𝐶𝐴𝑃𝑀 = 𝑅𝑓 + 𝛽(𝑅𝑚 − 𝑅𝑓 )
18% = 8% + 𝛽(15% − 8%)
18% − 8%
𝛽=
7%
= 1.43 𝑡𝑖𝑚𝑒𝑠𝑠
34.
𝐶𝐴𝑃𝑀 = 𝑅𝑓 + 𝛽(𝑅𝑚 − 𝑅𝑓 )
= 5.5% + 1.08(18% − 5.5%)
= 5.5% + 22.5%
= 28%
𝐴𝑡 28%, 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑦 𝑤𝑖𝑙𝑙 𝑏𝑒 𝑐𝑜𝑟𝑟𝑒𝑐𝑡𝑙𝑦 𝑝𝑟𝑖𝑐𝑒𝑑.
𝑊ℎ𝑒𝑛 𝐴𝑐𝑡𝑢𝑎𝑙 𝑅𝑒𝑡𝑢𝑟𝑛 𝑖𝑠 𝑙𝑒𝑠𝑠 𝑡ℎ𝑎𝑛 𝐶𝐴𝑃𝑀, 𝑡ℎ𝑒𝑛 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑦 𝑖𝑠 𝑂𝑣𝑒𝑟 𝑃𝑟𝑖𝑐𝑒𝑑.
𝐻𝑒𝑛𝑐𝑒, 𝑤ℎ𝑒𝑛 𝐴𝑐𝑡𝑢𝑎𝑙 𝑟𝑒𝑡𝑢𝑟𝑛 𝑖𝑠 27%, 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑦 𝑤𝑖𝑙𝑙𝑏𝑒 𝑂𝑣𝑒𝑟 𝑃𝑟𝑖𝑐𝑒𝑑.
35.
𝐶𝐴𝑃𝑀(𝐸𝑅 ) = 𝑅𝑓 + 𝛽(𝑅𝑚 − 𝑅𝑓 )
25% = 5% + 𝛽(17.5% − 5%)
25% − 5%
𝛽=
12.5%
= 1.6 𝑡𝑖𝑚𝑒𝑠
CHAPTER 21
1. SEBI (Share Based Employee Benefits) Regulations, 2014 apply to the: (DEC 2020)
(a) Employee stock option schemes and employee stock purchase schemes only
(b) stock appreciation rights schemes only
(c) general employee benefits schemes and retirement benefit schemes only
2. With reference to Ind AS 102, what does SBP stand for? (DEC 2020)
(a) Share based payment
(b) Share based proportion
(c) Sum based payment
(d) Shareholder based pricing
3. The date on which the company and employees agree to the terms of an employee share-based
payment plan is: (DEC 2021)
(A) Vesting date
(B) Exercise date
(C) Grand date
(D) Next date
ANSWER
1 2 3
D A C

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RATE---MANAGEMENT-ACCOUNTING-NEW-SYLLABUS-POCKET-REVISION-BOOK
FMSM POCKET REVISION BOOK LINK :

https://www.amittaldaclasses.com/index.php/coaching/book_details?id=56&title=FINANC
IAL---STRATEGIC-MANAGEMENT-NEW-SYLLABUS-POCKET-REVISION-BOOK
COMBO POCKET REVISION BOOK LINK :

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-POCKET-REVISION-BOOK
BUY REGULAR VIDEO LECTURES OF AMIT TALDA SIR:

CMA:
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PORATE-&-MANAGEMENT-ACCOUNTING-NEW-SYLLABUS-VIDEO-LECTURES
FMSM:
https://www.amittaldaclasses.com/index.php/coaching/product_detail?id=209&title=FINA
NCIAL-&-STRATEGIC-MANAGEMENT-NEW-SYLLABUS-VIDEO-LECTURES
CMA & FMSM COMBO

https://www.amittaldaclasses.com/index.php/coaching/combo

CMA MCQ SERIES PAST PAPER NOTES-Executive-Revision

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CMA MCQ SERIES PAST PAPER NOTES-Executive-Revision

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AMIT TALDA CLASSES

PAST PAPERS MCQ SERIES

1|Page VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

2|Page VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

2. The following is not an advantage of Double entry system: (DEC 2019)

3. Financial statements are used by: (DEC 2020)

4. A person who owes money to the business is a …………………… (DEC 2020)

5. Preliminary expense is a ………… asset. (DEC 2020)

9. Provisions are _____________________ (AUG 2021)

15. Statement I : It may be prepared on a loose sheet of paper.

4|Page VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

5|Page VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

4. Current Assets are those assets: (DEC 2020)

6. A Company shall disclose by way of notes, additional information regarding aggregate

7. A balance sheet has two parts to it, i. e.

11. Financial statements include: (DEC 2021)

12. A corporate balance sheet is also known as: (AUG 2021)

8|Page VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

14. Which of the following is correct? (DEC 2020)

10 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

17. Forfeited shares can be re-issued at ……………. (DEC 2020)

11 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

24. Which of the following is capital reserve? (AUG 2021)

25. Unmarked application has to be distributed to underwriters in the ratio

27. Underwriting is a contract of: (AUG 2021)

38. Which of the following statements is correct? (AUG 2021)

40. Preference shares amounting to ` 2,00,000 are redeemed at a premium of 5% by issue of

46. Premium on issue of shares must be treated as _______________ (AUG 2021)

47. Premium on issue of shares must be credited to a separate account called

48. Amount received as calls-in-advance is a _____________ of the company. (AUG 2021)

50. __________________may be said to be the compulsory termination of membership by way of

16 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

(A) Face value

(B) Called up value

(C) Paid up value

(D) Issued value

18 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

19 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

34. Maximum Buy Back = 5,00,000 × 25% = 1,25,000 Equity Shares

35. No. of Preference Shares = (90,000 × 100) ÷ 10 = 9,00,000 Preference Shares

40. CRR = Nominal Value Redeemed – Capital Increase by Issue of Equity

41. CRR = Nominal Value Redeemed – Capital Increase by Issue of Equity

51. Amount Received = Called up – Amount Not received = 20 – 10 = 10

F & F Call Received = (10,000 × 50) – 2,50,000 = 2,50,000

21 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

2. C Limited issued 8% Debentures of ` 65,00,000 at 5% discount which are redeemable at a

6. The profit on cancellation of debentures should be transferred to: (DEC 2019)

7. Which of the following is not a method of redemption of debentures? (DEC 2020)

13. Discount on issue of debentures is a : (AUG 2021)

23. Which of the following is false: (DEC 2021)

26. Debenture can be issued: (DEC 2021)

25 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑓𝑜𝑟 𝐹𝑌 2020 − 21 𝑤𝑖𝑙𝑙 𝑏𝑒.

15. No. of Debentures = Purchase Consideration ÷ Issue Price

Debentures Account will be credited by 3,200 × 100 = 3,20,000

16. Total Loss = redemption at premium = 5,000 × 100 × 20% = 1,00,000

19. My Explanations on Wrong Questions

27 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

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30 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

31 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

9. Pre-acquisition profit in subsidiary company is considered as : (AUG 2021)

32 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322

33 | P a g e VIDEO LECTURES OF CMA & FMSM AVILABLE, CALL 7249869322