oo & ' Management Accounting CGV Fully Solved Questions of Previous Exams Topic-wise arrangement of past examination questions Hints are given for practical MEQs Chapter-wise Marks Distribution of Past Exams Updated as per applicable provisions of the Companies Act 2013 vvvvyv at Solved ate) CSN.S. Zad Paper For Dec. 2023 Exam (Old Syllabus) ‘Riso Avaliabla?)Self Learning Study Material 8th EditionChapter-wise Marks Distribution Introduction to Financial Accounting [Introduction to Corporate Accounting [Issue of Shares [Issue of Right & Bonus Shares [Redemption of Preference Shares {Issue & Redemption of Debentures [Underwriting of Shares é& Debentures 2 3 4 5 6 |Buy Back of Shares 7 8 9 [Accounting for Share Based Payments 10 [Financial Statements Interpretation 11 [Consolidation of Accounts 12 |Corporate Financial Reporting 13 |Cash Flow Statement 14 | Overview of Accounting Standards 15 |National & International Accounting Authorities 16 |Adoption, Convergence & Interpretation of IFRS /& Accounting Standards int India 17 | Overview of Cost 18 |Cost Accounting Records & Cost Audit under the |Companies Act, 2013 19 | Budgetary Control 20 | Ratio AnalysisFund Flow Statement Fz [Management Reporting 2 fal 1a Fi [Macsinal Costing & Transfer Pricing 3 | = Tee] Fa [netivity Based Costing & Transfer Pricing 3 piven 35 [Valuation of Goodwill & Shares 4 a1 tas 26 | Valuation, Principles & Framework 4 at Tal 27 | Methods of Valuation 6 = ann bees a00 100 | 100 Note : J- June; D - December.Contents PAGE Chapter-wise Marks Distribution 15 Chapter-wise Comparison with Study Material z 17 PARTA CORPORATE ACCOUNTING © Chapter 2 : , ___® INTRODUCTION TO FINANCIAL ACCOUNTING _ = 13 Chapter 2 21 @ ACCOUNTING FOR ISSUE Chapter 4 |_@ ISSUE OF RIGHT & BONUS SHARES 4l | Chapter 5 |_| REDEMPTION OF PREFERENCE SHARES : : 7 51 * Chapter 6 4 BUY BACK OF SHARES ae oe | Chapter? i REDE DEBENTURES L9CONTENTS 1-10 japter Se TING OF SHARES & DEBENTURES 81 Chapter 9 : @ ACCOUNTING FOR SHARE BASED PAYMENTS (ESOS & ESOP) 2 - Pe Chapter 10 @ FINANCIAL STATEMENTS INTERPRETATION ik Id Chapter 11 @ CONSOLIDATION OF ACCOUNTS 4 Chapter 12 @ CORPORATE FINANCIAL REPORTING. 21 Chapter 13 ’ @ CASH FLOW ‘STATEMENT 131 - Chapter 14 ‘© OVERVIEW OF ACCOUNTING STANDARDS iar Chapter 15 o NATIONAL & INTERNATIONAL ACCOUNTING 3 AUTHORITIES . 151 ” Chapter 16 ms | ! ADOPTION, CONVERGENCE & INTERPRETATION OF IFRS & ACCOUNTING __ STANDARDS IN INDIA 161 PARTB _ MANAGEMENT ACCOUNTING Chapter 17 # OVERVIEW OF cos zag Chapter 18 ° pe ACCOUNTING RECORDS & COST AUDIT UNDER THE COMPANIES 41 chan 19 194 © BUDGETARY CONTROL, ‘CONTENTS Vit PAGE, Chapter 21 + FUND FLOW STATEMENT 211 Chapter 22 @ MANAGEMENT REPORTING 221 Chapter 23 @ MARGINAL COSTING 231 Chapter 24 24d Chapter 25 , °e VALUATION OF GOODWILL & SHARES 25.1 Chapter 26 @ VALUATION, PRINCIPLES & FRAMEWORK: ‘i * 26.1 Chapter 27 _@ METHODS OF VALUATION 271 Solved Paper : June 2023 (Suggested Answers) PLPART A CORPORATE ACCOUNTINGINTRODUCTION TO FINANCIAL ACCOUNTING MCQs.ON' THEORY 1, Accounting policies followed by organizations - (A), Can be changed every year. (B) Should be consistently followed from year to year (C) Can be changed after 5 years (D) None of the above 2. When a change 'in accounting policy is justified? (A) To comply with accounting stan- dard (B) To ensure more appropriate pre- sentation of the financial state- ment of the enterprise (©) ‘To comply with law (D) All of the above 3. It is essential to standardize the accounting principles and policies in order to ensure - (A) Transparency (B) Profitability (C) Reputation (D)_All of the above 4. A specific accounting policy refers to- (A) Principles (B) Methods of applying those prin- ciples 13 (C) Both (A) & (B) (D) None of the above 5. The determination of the amount of bad debts is an accounting - (A) Policy (B) Estimate (C) Parameter (D) None of the above 6. Generally, which of the following measurement bases are usually accepted in accounting parlance? (A) Historical Cost (B) Current Cost (C) Realizable Value (D) Any of the:above 7. Book valie & Market value of machinery 0n31.3.2015 was %1,00,000 & 7 1,10,000 respectively. As on 31.3.2019, if the company values the machinery at & 1,10,000, which of the * following valuation principle is being followed - (A) Historical Cost (B) Present Value (C) Realisable Value (D) Current Cost On the basis of following informa- tion answer next 4 questions.PART A : CORPORATE: ACCOUNTING 1 14 urchased a machinery ee ¥ 10,000 on 1.4.2010. on 31.3.2019, similar machinery val be purchased for € 20,000 but the realizable value of the machinery (purchased on 1.4.2010) was estimated at ¥ 15,000. The present discounted value of the future net cash inflows that the machinery was expected to generate in the normal course of business, was calculated as % 12,000, 8. The current cost of the machinery is - (A) = 10,000 (B) % 20,000 (C) % 15,000 (D) % 12,000 9. The present value of machinery is - (A) % 10,000 : (B) % 20,000 (©) % 15,000 (D) 212,000 10. The historical cost ofmachineryis- (A) % 10,000 (B) % 20,000 (©) % 15,000 ) 212,000 11. The realizable value of machinery is- (AY % 10,000 “ (B) % 20,000 (C) % 15,000 (D) 212,000 12, Property, plant and €quipment are convent 2 Shits: ‘onally presented in the balance (A) Replace Ment cost Jess 2 lated depreciation See (B) Historical Cost less Salvage value (C) Historical cost less Portion thereof (D) Original cost adjusted for Price-level changes 13. All accounts are classifi (A) Personal (B) Real (©) Nominal accounts (D) Any of the above 14, Accounts recording transactj with a person or group of perso, ms known as - 7 (A) Personal accounts (B) Real accounts (C) Nominal accounts (D), Impersonal accounts 15. Personal accounts are of the following types: (A). Natural; Real, Representative (B) Artificial, Legal, Nominal (C) Natural, Artificial, Representative (D) Any of the above Seprectation Behera led into. . 16. An account recording transactions with an individual human being is termed as a'- (A) Artificial orlegal persons account (B) Naturalpersons’personal account — (C) Representative personalaccounts — (D) Any of the above 17, Accounts relating to properties Of assets are known as - (A) Real Accounts (B) Personal Accounts (C) Nominal Accounts (D) None of above 18. An account recording fine! transactions with an artificial PCH. 1 : INTRODUCTION TO FINANCIAL ACCOUNTING created by law or otherwise are termed as- (A) Artificial orlegal persons account (B) Natural persons’ personal account (C) Representative personal accounts (D) Any of the above 19. Real accounts can be further classified into - (A) Tangible (B) Intangible (C) (A) or (B) (D) None of above 20. Accounts whichrepresenta certain person or group of persons are termed as- (A) Artificial orlegal persons account (B) Naturalpersonspersonalatcount _ (©) Representative personal accounts (D) Any of the above 21. The process of balancing of an account involves equalization of both sides of thé account. If the debit side of an account exceeds the credit side, the difference is put on the credit side. The said.balance is - @_ A debit balance (i) A credit balance (iii) An expenditure or an asset (iv) An income or a liability Sélect the correct answer from, the * options given below - (A) Only (i) above (C) Both (i) and : (D) Both (ii) and (iii) above 22. Which of the following types of accounts represent assets and 15 properties which can be seen, touched, felt, measured, purchased and sold? (A) Tangible real accounts (B) Intangible real accounts (C) Representative personal accounts (D) Artificial orlegal persons account 23. Accounts relating to income, revenue, gain expenses and losses are termed as: (A) Real Accounts (B) Personal Accounts - (C) Nominal Accounts (D) None of above 24, + accounts represent assets and properties which cannot be seen, touched or felt -but they can be measured in terms of money. (A) Tangible real accounts (B) Intangible real accounts (C) Representative personalaccounts (D) -Artificial orlegal personsaccount 25. The rule for nominal accounts is - (A) Debit thereceiver, Credit the giver (B) Debit what comes in, Credit what goes out (C) Debit all expenses and losses, Credit all incomes and gains (D) All of the above 26. Current Assets - Current liabilities =? . (A) Working capital (B) Capital (C) Debtors (D) Owners equity 27. On 1.1,2019, CS rent of = 25,000 for Academy. This can BPART A: CORPORAT 16 (a) Anevent cp) A transact e A transaction as well as an event fo) Neitheratransactionnoranevent 28. Mt. Bhandari purchased a car for 250,000, making a down payment of £ 10,000 and signing a © 40,000 bal payable due in 60 days. As a result of this transaction: (A) Totalassetsincreased by 50,000 () Total liabilities increased by 740,000 (C) Total assets increased by % 40,000 (D) Total assets increased by 40,000 with corresponding increase in liabilities by ¥ 40,000 29. Accounting policy forinventories of XLtd.states that inventories are valued at the lower of cost or net realizable value. Which accounting principle in followed in adopting the above policy? (A) Materiality (B) Prudence (C) Substance over form (D) All of the above 30. On 31.3.2019 after sale of goods £2,000, Neelam is left with the closing inventory of @ 10,000. This is - (A) An event (B) A transaction tion. (C) A transaction as well as an event (D) Neitheratransactionnoranevent 31. Provisions for doubtful debts’ and ‘provision for disco rs’ ar unt on, ty debtors’ are (A) Prudence (B) Substance over from (C) Materiality (D) All of the above 'E ACCOUNTING 32. Purposes of an accounting syste, include all the following except - (A) Interpret and record the effects of business transaction Classify the effects of transaction, ie to facilitate the preparation reports i (B) Summarize and communicate information to,decision makers Dictate the specific types of busi- ness enterprise transactions that the enterprises may engage in, 33. Accounting cycle or accounting process includes - (X) Journalizing (Summarizing) (¥)’ Posting to ledger (Recording) (Z) Final account (Classifying) Find the correct match. (A) (X) ®) @~) (C) All (X), (Y) & (Z) (D) None of the above (C) @) - 34, includes identifying, record- ing, classifying and summarizing the transactions. (A) Accounting posting (B) Accounting cycle (©) ‘Tally of accounts (D) All of the above 35. In which order the accounting transactions and events are recorded in the books? (A) Journal, Subsidiary books, Ledger and Trial Balance Ledger, Journal, Ledger and Tia! - Balance. Subsidiary books, Ledger a4 ‘Trial Balance and Journal. Profit and loss account, Ledge Balance Sheet, Journal. B (C) (D)CH, 1: INTRODUCTION TO FINANCIAL ACCOUNTING 1.7 36. Journal is the book of in 41, Ledger is the of account which every transaction is recorded where similar transactions relating before being posted into the ledger. (A) Primary entry (B) Secondary entry (©) Third entry (D) None of above 37. is a book in which all the business transactions are originally recorded in chronological order and fromwhich they are posted to theledger accounts at any convenient time. (A) Ledger (B) Journal (C) Purchases returns books (D) Sales book 38. Journal has ____ columns. () 4 (@) 5 (©) 3 () 6 39. Transactions which are inter- connected and have taken ‘place simultaneously are recorded by means ofa- (A) Adjustment entry (B) Combined journal entry (C) Either (A) or (B) (D) Closing entry 40. is the principal book of accounts where similar transactions relating to a particular person or property or revenue or expense are recorded, (A) Ledger (B) Journal (C) Purchases returns books (D) Sales book to a particular person or property or revenue or expense are recorded. (A) Principal book (B) Primary entry book (C) Third entry book (D) None of above 42, ____ is a book of account; in which all types of accounts relating to assets, liabilities, capital, expenses and revenues are maintained. (A) Ledger (B) ‘Journal (C) Primary entry book (D) None of above 43. The process of recording transac- tion in journal is termed as - (A) Balancing (B) Posting (C) Journalizing (D) None of above 44, Process of recording transaction in Jedger is known as - (A) Balancing (B) Posting (©) Journalizing (D) None of above 45. Journal is book of - (A) Analytical record (B) Chronological record (C) Alphabetical record (D) None of above 46. Ledger is book for - (A) Analytical record (B) Chronological recordPART A: CORPORATE ACCOUNTING 18 (©) Aiphabetical record bove D) None of al 7 : ‘phe process of equalizing the two oi fof an account by putting the oa the side where amount difference on is short is known as (A) Balancing (B) Posting (C) Journalizing (D) None of above 48. Journal and ledger records transactions in - (A) Achronological orderandanalyt- ical order respectively, (B) An analytical order and chrono- logical order respectively. (C) Achronological order only (D) An analytical order only. 49. Ledgerbookis popularly knownas- (A) Secondary book of accounts (B) Principal book of accounts (C)_ Subsidiary book of accounts (D) None of the above 50. At the end of the accounting year all the nominal accounts of the ledger book are - (A) Balanced but not transferred to Profit and loss account (B) Not balanced andalso the balance ‘snottransferred to the Profitand loss account (C) Balancedand the balanceis trans- ferred to the balance sheet (D) Not balanced an transferred to { account, d their balance is he profit and loss 81. An allowance of 8 50 was ‘off foran early payment of cash of 1 95 It will be recorded in - , (A) Sales Book , (B) Purchase Book _ (©) Journal Proper (General Journa)y (D) Cash Book 52. A second hand motor car ‘was purchased on credit from B & Co, for % 10,000. If will be recorded in- (A) Journal Proper (General Journal) (B) Cash Book (C) Purchase Book (D) Sales Book 53. Goods were sold on credit basis to Mr. Ram for & 10,000. It will be recorded in - (A) Journal Proper (General Journal) (B) Cash Book (C) Purchase Book (D): Sales Book 54. Accounting forrecovery from Mr.C ofan amount of € 2,000 earlier written off as bad debt will be recorded in - (A) Sales book (B) Purchase book (C) Journal Proper (General Journal) (D) Cash book 55. Credit purchase ofstationery worth % 5,000 by a stationery dealer will be recorded in - (A) Journal Proper (General Journal) (B) Cash book (C) Purchase book (D) Sales book 56. A bill receivable of € 10,000, which was received from a debtor inCH. 1 : INTRODUCTION TO FINANCIAL ACCOUNTING full settlement for a claim of % 11,0( cishonoured willbe recanledia on (A) Bills receivable book (B) Journal proper (General Journal) (©) Purchases return Book (D) Purchase book 57. Outstanding salary % 34,000 to be provided in the accounts will be recorded in - (A) Bills receivable book (B) Journal proper (General Journal) (C) Purchases Return Book: (D) Parchase book 58. A debit note for ¥ 20,000 issued to Mr. Z for goods returned by us is to be accounted for in - (A) Bills receivable book (B) General journal (C) Purchases return book (D) Purchase book 59. Investment was sold in cash for % 1,00,000 at par will be recorded in - (A) Cash book (B) General journal (C) Purchases return book (D) Purchase book 60. Investment was sold on credit for % 1,00,000 at par will be recorded in - (A) Cash book (B) General journal (C) Purchases return book (D) Purchase book 61. Salary paid in cash - % 50,000 will be recorded in - (A) General journal (B) Cash book 19 (C) Purchases return book (D) Purchase book” 62. NSZ Ltd. makes payments to its sundry creditors through cheques and the cash discount received on these payments is recorded in the. triple- coluninar cash book. In the event of — dishonour of any such cheques, the — discount so received should be written _ back through: () A debit to discount column of the cash book. (i) Acreditto discount column. ofthe cash book. (iii) A credit to bank column of the cash book. (iv) A ‘debit to discount account through journal proper. (v) A credit to creditor's account through journal proper. Select the correct answer from the options given below - (A) Only @ above (B) ‘Only (é) above (© Both (i) & (éi) above (D) Both (iv) & (v) above 63. Which of the following statements > is correct? (A) The trial balance is prepared af- ter preparing the profit and loss account. The trial balance shows only bal- ances of assets and liabilities @) (©) The trial balance shows only nominal account balances. (D) Thetrial balance has no statutory importance from the pointof view of law. :pART A: CORPO! 1.10 sie ‘ is that expedite et OF . ———~_cquisiti an results in acquisition, Feast in the which results ™ ra business. | earning capacity of a @ Capital expenditure (B) Revenue expenditure . (©) Deferred revenue expenditure (D) None of the above fit expires 65. Expenses whose benefit within the year of expenditure and which are incurred to maintain the earning capacity of existing assets are termed as - (A) Capital expenditure (B) Revenue expenditure (©) Deferred revenue expenditure (D) None of the above 66. There are certain expenses which may be in the nature of revenue but their benefit may not be consumed-in the year in which such expenditure has been incurred; rather the benefit may extend over a number of years are termed as - (A) Capital expenditure (B) Revenue expenditure (©) Deferred revenue expenditure (D) None of the above 67. Which of the following is/are example of capital expenditure? (A) Purchases of land & buildings by the property dealer (B) Purchases of mat chinery dealer (©) Expenses incurred for Patents (D) All of the above 68. Which of the example of capital e: chinery by ma- getting following is/are ‘xpenditure? RATE, ACCOUNTING aid to lawyer for drawi Feearehase deedofland © Overhauling expenses of secong hand machinery c) Cartagepaid forbringingmachin, ‘ ” ery to the factory from supplier, premises ig (D) All of the above 69. Amounts paid for wages, salary carriage of goods, repairs, rent ang interest etc., are items of - (A) Capital expenditure (B) Revenue expenditure (©) Deferred revenue expenditure (D) None of the above 70. Costs incurred to acquire an asset are but costs incurred to keep them in working condition orto defend their ownership.are __ (A) Capital expenditure, Revenue expenditure (B) Revenue expenditure, Revenue expenditure (a) (@) (C) Deferred revenue expenditure, Revenue expenditure (D) Revenue expenditure, Capital expenditure 71. Which of the following is/are not example of capital expenditure (A) Money spent to reduce work ing expenses like conversion 0 hand-driven machinery to pow’ er-driven machinery : (B) Money paid for goodwill (like th tight to use the established na™ ofan outgoing firm) (C) Expenditure which doesnotrest! Mm an increase in capacity * : reduction of day-to-day expe™™ () All of the aboveCH. 1: INTRODUCTION TO FI 72. Depréciation on fixed assets is - (A) Capital expenditure (B) Revenue expenditure (C) Deferred.revenue expenditure (D) None of the above 73. All sums spent up to the point an asset is ready for use should also be treated as - (A) Capital expenditure (B) Revenue expenditure (C) Deferred revenue expenditure (D) None of the above 74. Amounts paid for wages, salary, carriage of goods, repairs, rent and interest etc. are items of - "INANCIAL ACCOUNTING 1.11 (A) Capital expenditure (B) Revenue expenditure (C) Deferred revenue expenditure (D) None of the above 715. Fee paid to a lawyer for checking whether all the papers are in order: © beforeland is purchased is ___! -Butif later asuitis filed against the purchaseh the legal costs will be (A) Capital expenditure, Revenue " expenditure (B) Revenue expenditure, Revenue expenditure (C) Deferred revenue expenditure, Revenue expenditure (D) Revenue expenditure, Capital expenditure PAST EXAMINATION MCQs 76. Dec. 2019: Mines as asset is an example of: (A) Current Asset (B) Wasting Asset (C) Fictitious Asset (D) Intangible Asset 77. Dec. 2019: At the time of prepara- tion of Balance Sheet, Capital Work-in- progress is shown in the head of: (A) Share Capital (B) Non-current Liabilities (C) Current Assets (D) Non-current Assets 78. Dec. 2019: 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 Ist April, 2014? (A) @15,00,000 (B) = 12,00,000 (C) @10,00,000 (D) %8,00,000 79. Dec. 2019: Following is not an advantage of Double Entry System: (A) Itprevents 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 Govern- ment to calculate the tax. 80. Dec. 2020: Financial statements are used by: (A) Investors (B) Creditors (C) Regulators (D) All of the abovePART (a) pebtor @) Creditor oO Investor Promoter : a ie 2020: The words ‘To Balance yf’ are recordet itor By Br olan atthe te of posting oft : (a) all compound entries (B) an opening entry (©) aclosing entty (D) an adjusting entry 83. June 2021: Original cost at which an asset or liability is acquired is known as — (A) Carrying cost (B) Replacement cost (C) Amortization (D) Historical cost 84, June 2021: Computers taken on hire bya business fora period of twelve months should be classified as: (A) Current assets (B) Intangible assets (©) Deferred revenue expenditure (D) Not an asset 85. June 2021: The arran; 3 igement of assets and liabilities in accordance with a particular order is known as os of balance sheet. (A) Tallying (8) Marking © Ruling ©) Marshalling A: CORPORATE ACCOUNTING 86. June 2021: Provisions arg “a Nominal accounts (B) Personal accounts (C) Real accounts (D) Representative personal accounts 87. June 2021: As per the provisions ofthe Companies ‘Act, 2013, companies must maintain their accounts under (A) Double account system =” (B) ‘Single entry system (C) Double entry system (D) Duplicate account system 88. Dec. 2021: When complete sequence of accounting procedure is done, which happens frequently, and repeated in same directions during an accounting period, it is called an (A) Accounting Cycle (B) Accounting Period (C) Accounting Process (D) Accounting Tools 89. Dec. 2021: While preparing a trial balance, in which method are totals of both the sides of the accounts written in the separate colurnns? (A) Total Method (B) Balance Method (C) Compound Method (D) Pure Method 90. Dec. 2021: If the owner's equity ~ is 7 5,00,000 and outsiders’ equity is 3,00,000, calculate total equity. (A) &5,00,000 (B) %2,00,000 (C) %8,00,000 () %3,00,000CH, 1: INTRODUCTION TO FINANCIAL ACCOUNTING 91. Dec. 2021: Statement I: It may be prepared ona 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 I: The accounts contain- ing debit-balance are written on the debit column, and those with credit-bal- ance are written on the credit column. All the above three statements are relevant for: (A) Ledger (B) Cash Book (C) Trial Balance (D) Financial Statement 92, Dec. 2021: Purchiase goods of the list price of = 25,000 from Mohan less 20% trade discount and 2% cash dis- count. The amount of cash discount is (A) = 160 (B) 240 (C) = 400 (D) 500 93. June 2022: Who originated the accounting concept based on double entry system? (A) Luco Fernandis (B) Luca Pacioli (C) Eric Kohler (D) Eric Pacioli 94, June 2022: Which of the following 1.13 (A) Provision for taxation (B) Provision for depreciation (C) Cash discount to customers (D) Discount on issue of shares 95. June 2022: What is the nature of a Cash Book? : (A) a Journal (B) a Ledger (C) both a Journal and a Ledger (D) neither a Journal nor a Ledger 96. Dec. 2022: Accounting -.. of a business entity. (A) Measures past performance (B) Depicts current financial position (C) Helps in forecasting future per- formance (D) All of the above 97. Dec. 2022: Which of the following statements is correct in relation to Trade Discount? (A) Recorded in the books of account (B) Calculated on invoice price (©) Encourage prompt payment (D) All of the above 98. Dec. 2022: Journal Proper contains vues. that cannot be entered in any other subsidiary book. (A) Cash transactions (B) Cash and Credit transactions (C) Contra transactions (D) Rectification entries is an example of fictitious asset?, ANSWERS rlel2 ols [alts [ols | @) 6 ML LO 3. 1) 19 | @) | 10. | @) | (©) | 12. (© | 43. | m) [ 14. [@)0. | (C) ‘A) | 18. | (A) | 19. | (©) | 2 15. | (© | 16. © ae es 25. | (©) | 26. | (A) zi « 21 (a an 7 31, | (A) | 32. | (D)_| 33. 2) “ 2 sel - (B) | 38. | oa) | 39. | (B) | 40. | (A) ‘ a) = a 1 (B) | 45. |B) | 46. |) | 47. | @ | 48. 54. | (D) | 55. | (©) ~ | @) | 52. | (a) | 53. | @) : Sete Let seta es Le La lea ®) = a 65. | (B) | 66. | © | 67. | (©) | 68. ww). a 7. ©} 72. | @y} 7. | ay | 74. | ®) | 78. (aL [76 oy 78. (A) | 79. | © | 80. | (Dd) | 81. om a * $8. S 85. | D) | 86. | © | 87.| (© | 88. : bere 93. | (B) | 94. | @) | 95. | © | 96. | () | 97. | @) 1 | Cost on 1.4.2014 x | ©) Depreciation for 2014-2015 (0.15x) | 0.85% | ©) Depreciation for 2015-2016 (0.1275x) | ; 0.7225 | (2 Depreciation for 2016-2017 (0:108375x) | 0.614125x | ©) Depreciation for 2017-2018 (0.09211875x) | 0.52200625x | (-) Depreciation for 2018-2019 (0.0783009375x) L 6,65,558 0.52200625x — 0.0783009375x = 6,65,558 0.4437053125x = 6,65,558 665,558 ne fe eR 0.4437053125 00,000 90. Net Equity = 5,00,000 ~ 3,00,000 = 2,00,000 92. List Price () Trade discount @ 20% Cash Discount =INTRODUCTION TO CORPORATE ACCOUNTING = MCQs ON THEORY 1. Anasset shall be classified as current: (A) Ifitis held primarily for the pur- pose of being traded. B If it is not possible to classify such asset as non-current asset. (C) If for the asset normal operating cycle cannot be identified. @ If such asset expected to be real- ized after twelve months after the reporting date. 2. A copy of the financial statements, including consolidated financial state- ment, along with all the documents attached to financial statements, duly adopted at the AGM, shall be filed with the Registrar within __of the date of AGM in prescribed manner along with prescribed fees. (A) 10 days (B) 30 days (C) 60 days (D) 90 days 3. Asper Schedule III ofthe Companies Act, 2013, where the normal operating cyclecannot beidentified, itisassumed to have duration of - (A) 3 months (B) 6 months (C) 9 months (D) 12 months 4. As per Rule 12 of the Companies (Accounts) Rules, 2014, a financial staternent shall be filed in___ which should be pre-certified by Practicing CA. (A) Form AOC-3 (B) Form AOC-4 (©) Form AOC-5 (D) Form AOC-6 5. A liability shall be classified as current when it satisfies any of the following criteria: < : (A) It is expected to be settled in the company’s normal operating cy- cle. (B) Itisduetobesettled within twelve months after the reporting date (C) The company does not have an unconditional right to defer set- tlement of the liability for at least twelve months afterthe reporting date. ~ (D) All of the above 6. 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 finan- 212.2 ; ithi 1c cial statements, within from the Closure of the financial year. (A) 30 days (B) 60 days (C) 120 days (D) 180 days 7, Which of the following is required to be disclosed in notes to accounts in respect of ‘Share Capital’? (A) A reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period : (B) Aggregate number and class ‘of shares bought back (C) Shares in the company held by each shareholder holding more than 5%, (D) All of the above 8, As per Rule 3 of the Companies (Filing of Documents and Forms in Ex- tensible Business Reporting Language) Rules, 2015, all companies having has to file. their Balance Sheet, Profit & Loss A/c and other documents with the Registrar using the Extensible Business Reporting Language(XBRL). (A) Issued capital of 5 Croreorabove (B) Authorized ca: %10 Crore (Cc) Paid-up capital of %5 Crore or above (D) Subscribed ca or above 9. Which of the fol] the heading ‘Rese: balance sheet? (A) Share Options Outstanding Ac- count (B) Share Applic: Allotment pital of more than pital of 25 Crore lowing appears under rves & Surplus’ in the ation Money Pending PART A: CORPORATE ACCOUNTING (C) Long Term Provisions (D) Secrete Reserves 10. As per Schedule III of the Compa. nies Act, 2013,a Company shall disclose byway ofnotes additional information _ (A) 0.5% of the revenue from opera. tions (B) % 10,000 (C) 1%ofthe revenue from operations % 1,00,000, whichever is higher (D) 0.5% of the revenue from opera- tions & 10,000, whichever is less, 11. As per Rule 3 of the Companies (Filing of Documents and Forms in Extensible Business Reporting Lan- guage) Rules, 2015, all companies having turnover of has to file their Balance Sheet, Profit & Loss Alc and other documents with the Registrar using the Extensible Business Report- ing Language (XBRL) (A) %50 Crore or above (B) % 100 Crore or above (C) % 250 Crore or above (D) %500 Crore or above 12. As per Section 128 of the Compa- nies Act, 2013, every company shall Prepare and keep at its books of account and other relevant books and Papersand financial statement forevery financial year (A) Corporate Office (B) Registered Office (C) Corporate Office or Registered Ffice (D) Head Office 13. Which of the following will be shown in the balance sheet under the heading ‘cash and cash equivalents”?CH. 2: 2 -INTRODUCTION TO CORPORATE ACCOUNTING (A) Earmarked balances with banks (B) Bank deposits with more than twelve months maturity (C) Cheques, drafts on hand (D) All of the above 14, Which of the following type ofcom- pany is required to file their accounts in Extensible Business Reporting Lan- guage (XBRL) format? (A) Banking companies (B) Insurance companies (C) Non-Banking Financial compa- nies (D) None of the above 15. Declared dividend must be paid within of declaration. (A) 5 days (B) 10 days (C) 30 days (D) 60 days 16. Retained earnings are - (A) An indication of a company’s liquidity. | ~ : (B) The same as'cash in the bank. (C) Notimportant when determining dividends. 7 (D) The cumulative earnings of the company after dividends. 17.Which of the following type of com- pany is required to file their accounts in Extensible Business Reporting Lan- guage (XBRL) format? (1) Subsidiary of Indian Listed Com- pany (1) Companies to prepare th ments in accordanc! which are required eir financial state- e with the oes 2.3 Companies (Indian Accounting Standards) Rules, 2015 (111) Private company having turnover of 99 Crore. (IV) Publiccompanies. havingpaid-up » capital of 3 Crore. , Select the correct answer from tions given below - * @) M&d@ © (B) dD & dv) (C) QD) & a) (D) ©, i) & GM) 2 18. The primary goal of a public- ly-owned firm interested in serving its stockholders should be to - (A) Maximize expected total corpo- rate profit (B) Maximize expected EPS (C) Maximize thestockprice pershare (D)’ Maximize expected net income. 19..In the real world, we find that dividends - ~ (A) Usually exhibit greater stability than earnings. (B) Fluctuate more widely than earn- ings (C) Tend to be a lower percentage of earnings for mature firms (D) Are usually set asa fixed percent- age of earnings 20. Which of the following statement is correct? (A) Acompany may, if so authorized by its articles, pay dividends in proportiontothe amount paid-up on each share. (B) Dividend cannot be paid on calls- in-advance.26. Trial Balance of Complex Ltd., as at 31.3.2019 shows the following item: Particulars {De® | Cn @. Advancé income tax] 55,000] - Provision for tax for year ended 31,3.2018 - | 30,000 (1) Advance payment of income tax includes % 35,000 for 2017-2018. (2) Actual tax liability for 2017-2018 amounts to % 38,000 and no effect for the same has so far be given in accounts. (3) Provision forincome tax has tobe made for 2018-2019 for = 40,000. You are required to calculate: (a) Li- ability for taxation for last year ie. 2017-2018; (b) Extra provision to be made in current year for last year. (A) % 8,000; = 3,000 (B) %5,000; = 12,000 (C) %3,000; = 8,000 (D) = 12,000; = 5,000 27. A company had made provision for tax = 70,000 for last year. Actual tax liability for the last financial year settled at f 68,000. It had paid advance tax for last year & 65,000. Which of the following statement is correct in relation tax treatment in accounts of the company? (A) Liability for taxation for the last year is = 3,000 (B) Provision towrite back for the last year % 2,000 (C) Adjustment entry isrequired tobe passed in current year by debiting Provision for Tax A/cand crediting Advance Income Tax A/c® 65,000, (D) All of the above are correct, 28, Yash Ltd. has only one type of ital, viz. 40,000 equity shares of 100 each, It also has got reserves totalling % 20,00,000. The company closes its books on 31st March each year It a paid dividends @ 15% up to 2015-201 and 20% thereafter: In 2018-2019, company suffered a loss of & 2,50,009; therefore, it wishes to draw rea amount out of the reserves to pay v= idend at 12%. As the Companies (Dec- laration of Dividend Out of Reserves. Rules, 2014 how much man percentage of dividend can be pat the company out of reserves. (A) 12% (B) 10% (C) 8.75% (D) 6.55% ity of profits, MUSKAT 29. Due to paucity of p: poses 10 LTD. an Indian company P! declare dividends out of its general reserves. z 10% pref, shares (@ 100 each) 10,00,000 Equity shares (~ 100 each) _ 30,00,000 General reserve 8,00,000 Securities premium 2,00,000 Credit balance of P & L A/c 20,000 Net profit for the year (after _1,80,000 tax) Average dividend for last 3 15% years As per the Companies (Declaration of Dividend Out of Reserves) Rules, 2014 how much-maximum percentage of dividend can be paid by the company out of reserves, (A) 10% (B) 8% (C) 12% (D) 15% 30. i Sane pene Capital of Apsara Ltd of 5,00,000 equity shares of 50,000, 8% pret erenceparr A: CORPO! if sh, The statement O se on ie tthe company i ee profit and 9°, 21gshowed net Pe yearended?2"70,00,000. Net Pron. before ta fom previous Yon a sheet ‘amounted to © 6,01 nee balance pakes.a provision of 4076 9° one Following appropriation’ incom proposed by'the company: ivi 0 per final dividend @ € 1.5 yo equity shareholders. RATE AccoUNTING aio tra nsfer 5% of net profit to | reserve. general 2 orporate dividend tax yay, s ce se closing balance of Profit & Log. Alc will be - (A) %3,94,500 (B) % 2,94,500 (Cz 4,94,500 (D) %1,94,500 ) PAST EXAMINATION MCQS 31, Dec 2019: As per Companies Act, 2013, the prescribed form of Balance Sheet of a Company is given in: (A) Part IL of Schedule IT (B) Part I of Schedule HT (©) Part I of Schedule I (D) Part I of Schedule V 32. Dec 2020: Current Assets are those assets: 7 (A) Which can be converted into cash within 12 months (B) Which can be: converted into cash within a period normally n “ ot ex- ceeding 12 months Which can be conve cash within an oper (C) erted into rating cycle (D, w 4 (i mt are held for their conver: ete “sh withinan operatin ae °F period of 12 months - Dec 2029; i i oe * 2029, he figures a aS Inancial Stateme, Founded off tg the n i Turnover is PPearing MS may be “t Crore, only (C) more’than % 100 Crore (D) more than % 500 Crore 34. Dec 2020:A Company shall disclose by way of notes, additional informa. tion regarding aggregate expenditure and income on any item of income or expenditure which exceeds: (A) 1%oftherevenue from operations or 1,00,000, whichever is higher (B) 1%oftherevenue from operations or 1,00,000, whichever is lower (C) 1%0ftherevenue from operations ©r® 10,00,000, whicheveris higher (D) 1%oftherevenue from operations 9r¥ 10,00,000, whicheveris lower 35. Dec 2020: Loans from banks re- payable on demand will be classified n the Balance Sheet of a company as! (A) Short-term borrowings (B) Long-term borrowings = Other Current Liabilities e eae Long-term Liabilities comme 2020: In the Balance Sheetof? Sr aRY Which item shall be sub-cla* it) 42°: © Secured, considered 2004! Gi) U; f Doubreecured, considered good: (iCH. 2: INTRODUCTION TO CORPORATE ACCOUNTING (A) Long-term and Short-term Trade Receivables (B) Long-term loans and advances (C) Short-term loans and advances (D) All of the above 37. June 2021: A corporate balance sheet is also known a (A) Statement of changes in assets and liabilities (B) Statement of sources and appli- cation of funds (C) Statement of financial condition (@) Statement of object and reason 38, June 2021: 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. . (A) 60 days (B) 30 days (C) 90 days (D) 21 days 39. June 2021: As per Rule 8 of the Companies (Accounts) Rules, 2014, the Report of the Board shall contain the particulars of contracts or arrange- ments with related parties under Sec- tion 188(1) in the (A) Form AOC-1A. (B) Form AOC-2 (C) Form AOC-3 (D) Form AOC-4A 40. June 2021: 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 . es from the closure of the financial year. 2.7 (A) 30 days (B) 60 days (C) 120 days 1D) 180 days a June 2021: Declared dividend must be paid within of decla- ration. (A) 5 days (B) 10 days (C) 30 days (D) 60 days 42. Dec 2021: If the Company's Issued Capital is more than the Authorized Capital, and approval of increase in Au- thorized Capital is pending, the amount of Share Application Money received over and above the Authorized Capital should be shown under the head: (A). Other Current Liabilities (B) Other Long-Term Liabilities (C) Reserve and Surplus (D) Short-Term Provision 43. Dec 2021: The term “Continuing Default” is used with respect to: (A) Short-term borrowing (B) Medium-term borrowing (C) Long-term borrowing (D) None of the above" 44. Dec 2021: 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: (A) Extensible Business Reporting Language (XBRL) format (B) Extensible Bu: (XBR) format (C) Extensible Business Presentation Language (XBPL) format (D) Extensible Business P; i XBP) hee ‘ess Presentation siness Reporting2.8 45. June 2022: In the context of filing of financial statements by a company, the term “XBRL” means i“ (A) Xavier Business Rules and Law (B) Extensible Business Reporting Language Xavier Business Reporting Lan- guage ; Extensible Business Rules and Law 46, June 2022: According to Section 128(1) of the Companies “Act, 2013 every company shall prepare and keep its books of account and otherrelevant books and papers and financial state- ments for every financial year which give a true and fair view of the state of the affairs of the company, at its © (D) (A) Corporate office (B) Registered office (©) Every Regional office (D) Every Branch office 47. Sune 2022: As per Companies Act, 2013, the prescribed form for Statem, of Profit and Loss is given in: nt ANSWERS 1. | (A) 8. [© 15. | (©) 22. | (B) 29. | (a) 36. | (D) 43. | © PART A; CORPORATE ACCOUNTING (A) Part I of Schedule IT (B) Part I of Schedule Ir (C) Part II of Schedule II (D) Part lof Schedulev 48. Dec. 2022: The acronym stands for: (A) Expandable Business Re Search, Language (B) Expandable Business Reporting Language (C) Extensible Busiriess Review Lan, guage | (D) Extensible Business Reporting Language 49. Dec. 2022; For disclosure require- ment, list of shareholders holding ~. of shares as on the balance sheet date should be given, (A) 5% and above (B) More than 5% (C) 10% and above (D) More than 10% (D) | 7. | o (D) | 14. | @) () | 21. | @) (®) | 28. | (©) (A) | 35. | @) (C) | 42.'[ (a) (D) | 49, (B) |cH. : INTRODUCTION TO CORPORATE ACCOUNTING 2.9 HINTS FOR IMPORTANT PRACTICAL MCQs 25. : Dr.__ Profit and Loss Appropriation A/c for the year ended 31.3.2018 Ce To General Reserve A/c 1,45,000 | By Balance b/d 95,000 To Preference Dividend 1,37,500 | By Net Profit (current year) (12,50,000 x 11%) To Proposed Dividend 9,00,000 (37,50,000 x 24%) To Corporate Dividend Tax 1,76,375 14,50,000 (1,37,500 + 9,00,000) x 17% To Balance c/d 1,86,125 15,45,000 15,45,000 26. | [Adjustment for advance tax Assessment finalized for last year 38,000 Advance tax paid for last year 35,000 | | Tax to be paid 3,000 Adjustment for pt ion for ne |_| Assessment finalized for last year 38,000 Provision for tax made for last year 30,000 Extra provision to be made-for last year 8,000 27. Adjustment for advance tax i = z Assessment finalized for last year 68,000 Advance tax paid for last year 65,000 Tax to be paid 3,000 Adjustment for provision for tax = ‘Assessment finalized for last year 68,000 Provision for tax made for last year 70,000 | Provision to write back for the last year 2,000 28. Dividends can be declared out of past years profits transferred to reserves. In this case, the company has to comply with the Companies (Declaration of Dividend Out of Reserves) Rules, 2014. It lay down the following conditions subject to which a dividend may. be declared by a company in the event of inadequacy or absence of profits in any year out of the profits earned by it in previous years and transferred to reserves.PART At CORPORATE ACCOUNTING 2.10 he average of the rate. 11 not exceed. the i ai Jared shal in the 3 years immediately Preceg, 3 (1) The rate of dividend dec! which dividend was declared by it that year. ae ~ Dividend Ra 15% 9 2016-2017 20 ie 2017-2018 20%. 55% Average rate of dividend = 55/3 = 18.33% So, 18.33% dividend can be paid at first instance. j Amount required for dividend at 18.33% = 40,00,000 x 1 8.33% = %7,33,200, 3 (2) The total amount to be drawn from such accumulated profits shall not exceed 1/10th of the sum of its paid-up share capital and free reserves as appearing in the latest audited financial statement. 1/10th of (Paid up capital + Free Reserve) = (40,00,000 + 20,00,000) x 4 1/10 = 6,00,000. ; : Thus, above amount in condition (1) will be restricted to % 6,00,000. | (3) The amount so drawn shall first be-utilized to set off the losses incurred in the financial year in which dividend is declared before any dividend in _ respect of equity shares is declared. ; i Total amount to be drawn from such accumulated profits 6,00,000] ©) Losses incurred i % ),000) ( Preference dividend Cy | Amount that can be drawn from accumulated profits 3,50,000] ie = rate of dividend = 3,50,000/40,00,000 x 100 = 8.75% | (4) The balance of reserves afte) i cit ‘A | : S T such withdr; The balance of reser withdrawal shall not Stok ie ea are capital as Appearing in the latest audited Ree ite 1 Reserves 20,00,000) (3,50,000)} 16,50,000| lated profits