Deck 40: Accounting and Financial Management : Part A

Question 1

Find the closing stock from the following details. Opening Stock ` 80,000, Purchases ` 1,40,000, Wages ` 60,000, Sales ` 3,20,000, GP on sales 25%

A)60,000 .
B)40,000 .
C)45,000 .
D)30,000

Answer 1

40,000 .

Question 2

Sinking Fund is created for which of these purposes

A)To repay or redeem a long term fixed liability .
B)To replace a wasting asset .
C)To replace a depreciable asset .
D)All the three

Answer 2

All the three

Question 3

Tick the correct statement

A)Petty cash is an expense .
B)Balance Sheet is also known as a positional statement .
C)Revaluation A/c is Real A/c .
D)Depreciation is a process of valuation

Answer 3

Balance Sheet is also known as a positional statement .

Question 4

A B C are three partners sharing profit and loss in the ration of 2:2:1, B recently obtained MBA degree from Oxford University, accordingly the partner decided to give him a guaranteed profit of ` 60,000. Find the share of profit of B if the firm made a net profit of ` 1,25,000 during 2012-13

A)60,000 .
B)50,000 .
C)25,000 .
D)40,000

Question 5

A firm has a policy of changing depreciation on Plant and Machinery @ 10% under WDV Method. If the book value of Plant and Machinery was ` 81,000 on 31.03.2013. Find the original cost of the plant if the same was purchased on 01.04.2011

A)80,000 .
B)1,00,000 .
C)81,000 .
D)1,20,000

Question 6

Closing Stock lying unsold with the consignee is valued at-

A)Cost Price .
B)Market Price .
C)Realizable Price .
D)Least of cost or net realizable value

Question 7

Goods lying with the consignee are shown as-

A)Closing Stock .
B)Work in Progress .
C)Stock in Transit .
D)Suspense A/c

Question 8

Credit balance in Cash Book means-

A)Bank overdraft .
B)Bank deposit .
C)FD with Bank .
D)Cash embezzlement

Question 9

AB are two partners in a firm, as per the terms of agreement partners drawing will carry interest @ 10%. If A has drawn funds from business as per the details given below. Find the interest for the year ended 31.12.2012 01.04.2012 ` 20,000 01.06.2012 ` 10,000 01.09.2012 ` 20,000

A)2,500
B)2,750
C)1,417
D)2,000

Question 10

` 5,000 paid as local cartage on material purchased. However this amount was booked under Miscellaneous Expenses A/c instead of on Carriage Inward. Due to this error net profit and loss will-

A)Increase by ` 5,000 .
B)Decrease by ` 5,000 .
C)Increase by ` 10,000 .
D)not be affected at all

Question 11

If outside liabilities and owners' equity are added we get………

A)Total Liabilities .
B)Net worth .
C)Shareholders Fund .
D)Gross Block

Question 12

Business expenses excludes…

A)Fire insurance premium of office building .
B)LIC premium on the life of proprietor .
C)Interest on capital .
D)Repair of office furniture

Question 13

Goods received from other co-venturer is debited to ……

A)Joint Venture A/c .
B)Joint Bank A/c .
C)Memorandum Joint Venture A/c .
D)Other Co- venture A/c

Question 14

Which of these is not a function of Financial Accounting

A)To provide financial information to the users of the financial statements
B)To portray gloomy picture of the business in order to evade tax liabilities
C)To keep a systematic record of business transactions
D)To depict a true and fair view of the financial position of the business

Question 15

Drawee is the person…..

A)Who draw a bill of exchange .
B)Who presents the bill of exchange for payment .
C)Who accepts the bill of exchange .
D)Who holds the bill of exchange till maturity

Question 16

Accounting is a/ an -

A)Science .
B)Art .
C)Subject matter of sociology .
D)Subject matter of philosophy

Question 17

Trial Balance is prepared to….

A)Check true and fair view of Balance Sheet .
B)To check arithmetic accuracy of A/cs .
C)To ensure legal compliance .
D)To ensure compliance to IFRS

Question 18

The term PBIT stands for:-

A)Profit before Income Tax .
B)Profit before Interest and Tax .
C)Profit before Internal Transfers .
D)Profit by Income Tax

Question 19

…… is a secret reserve usually created to provide for the loss by way of fluctuation in the value of investment

A)Investment Fluctuation Reserve .
B)Foreign Exchange Fluctuation Fund .
C)General Reserve .
D)Capital Reserve

Question 20

As per the Companies Act, 1956 which of these are allowed to create secret reserves in their books of account

A)Banking Companies .
B)Insurance Companies .
C)Electricity Companies .
D)All the three

Question 21

An increase in one liability may lead to

A)Increase in another asset .
B)Decrease in liability .
C)Both (a) and (b) .
D)Either (a) or (b)

Question 22

X draws a 3 months bill of exchange for ` 25,000 upon Y on 23-10-12. Find the due date of the bill.

A)24-01-13 .
B)25-01-13 .
C)26-01-13 .
D)23-01-13

Question 23

A is entitled to 10% partner's commission before charging such commission. Find the commission payable to A if the net profit before charging such commission amounted to ` 60,000

A)5,900 .
B)6,000 .
C)5,000 .
D)5,050

Question 24

Over statement of sales may lead to-

A)Over statement of profit of current year.
B)Over statements of profit of next year.
C)Under statement of profit of current year .
D)All the three

Question 25

When Bills Receivable is returned dishonoured by the drawee, which of these A/c is debited by the drawee

A)Drawer A/c .
B)Bank A/c .
C)BP A/c .
D)BR A/c

Question 26

A second hand truck was purchased for `75,000, `10,000 was spent on its repair, `2,000 to get the truck registered in the name of the firm and `1,000 as dealers commission. The capitalized value of truck will be-

A)88,000 .
B)87,000 .
C)85,000 .
D)75,000

Question 27

Narrations are usually given at the end of

A)Each journal entry .
B)Each page .
C)Each column .
D)Each account

Question 28

Under which method of depreciation annual depreciation goes on decreasing

A)Reducing balance method .
B)Straight line method .
C)Annuity method .
D)None

Question 29

Choose the true statement-

A)Income and gain A/cs shows increase on credit side
B)Expenses and losses A/cs shows reduction in balance on debit side
C)Assets A/c can have credit balance also .
D)Debtors are the owing of the business

Question 30

Which of these is an example of accelerate method of depreciation

A)Written down value method .
B)Straight line method .
C)Sinking fund method .
D)Annuity method

Question 31

Which of these items will not be capitalized along with the Asset

A)Installation charges .
B)Annual repair and maintenance .
C)Statutory levies .
D)Freight and insurance

Question 32

On the debit side of a Sales A/c entry can be for which of these reasons

A)Sales returns .
B)Discount allowed .
C)Both .
D)Additional sales

Question 33

The term Imprest system is related to………

A)Petty cash .
B)Inventory valuation .
C)Classification of assets .
D)None

Question 34

An office equipment is purchased on 1.1.12 for `1,10,000 having working life of 4 years at the end of which it is expected to have a scrap value of `10,000. Find the difference in depreciation as per Sum of years digit methods and reducing balance method (25% WDV) for the year ending on 31st December 12

A)25,000 .
B)40,000 .
C)15,000 .
D)10,000

Question 35

M draw a 3 months bill of exchange of ` 20,000 on T on 1st April 07. On due date T paid ` 4,000 and requested M to draw another bill of exchange for 2 months. On the due date of second bill of exchange T is declared insolvement and a dividend of 25 paisa in a rupee is expedited to be realized from his assets. Find the amount receivable from T in respect of the outstanding bill of exchange

A)5,000 .
B)4,000 .
C)16,000 .
D)20,000

Question 36

A sends goods costing ` 1,00,000 on consignment to yield a profit of 20% on cost. What is the invoice price

A)1,37,500 .
B)1,25,000 .
C)1,20,000 .
D)None

Question 37

Under which method of depreciation annual depreciation fluctuate with the volume of production

A)Sum of Years' Digit Method .
B)Production Method .
C)Written Down Value Method .
D)None

Question 38

Who bears noting charges in case of dishonor of a bill of exchange.

A)Drawer .
B)Drawee .
C)Both .
D)Bank

Question 39

When the goods are returned by the customers within the specified time, they are recorded

A)Initially in the Sale or Return Ledger. Thereafter, in the Sale or Return Day Book
B)Initially in the Sale or Return Day Book. Thereafter, in the Sale or Return Ledger
C)Only in the Sale or Return Day Book
D)Only in the Sale or Return Ledger

Question 40

Long term assets being `3,00,000, current Assets `80,000, outside liabilities `1,20,000. Find owners equity-

A)3,50,000 .
B)2,60,000 .
C)2,00,000 .
D)None

Question 41

A merchant sends out his goods casually to his dealers on approval basis. All such transactions are, however, recorded as actual sales and are passed through the sales book. On 31st March, it was found that 100 articles at a sale price of ` 200 each sent on approval basis were recorded as actual sales at that price. The sale price was made at cost plus 25%. The amount of stock on approval will be amounting

A)16,000.
B)20,000.
C)15,000.
D)None of the above.

Question 42

In the Sale or Return Ledger

A)All the customers are individually debited and the sale or return account is credited with the periodical total of the Sale or Return Day Book,
B)All the customers are debited in total and the sale or return account is credited with the periodical total of the Sale or Return Day Book.
C)All the customers are individually debited and the sale or return account is also credited with the individual total of the Sale or Return Day Book.
D)None of the above.

Question 43

All revenue receipts and expenditure are shown in -

A)Balance Sheet .
B)Trading and Profit and Loss A/c .
C)Cash Flow Statement .
D)Statement of Affairs

Question 44

On 1st January 2013 X paid `120,000 being rent upto 31.12.2013. If the accounts are closed on 31.03.12. `90,000 will be shown as -

A)Accrued rent .
B)Prepaid rent / Expenses .
C)Accrued expenses .
D)Accrued income

Question 45

Choose the true statement-

A)Accrued income represent income unearned but realized in cash
B)Accrued income represent income earned but not realized in cash
C)Accrued income A/c is shown on the liability side .
D)No tax is payable on accrued income

Question 46

Which of these will cause change in working capital

A)Payment of Creditors in cash
B)Realization of amount due from the Debtors
C)Sale of office equipment for cash
D)Providing depreciation on Plant and Machinery

Question 47

Consider the following data pertaining to a firm: Credit balance as per bank column of cash book `13,000. Bank interest on overdraft appeared only in the pass book `2,600. Cheques deposited but not collected by the bank ` 5,000. The balance as per pass book is

A)20,600 (Dr. balance) .
B)18,500 (Dr. balance) .
C)18,500 (Cr. balance) .
D)15,600 (Dr. balance)

Question 48

Consider the following data pertaining to a company for the year 2011-2012 : Opening balance of sundry debtors ` 40,000. Credit sales `4,30,000. Cash sales ` 20,000. Cash collected from debtors `4,00,000. Closing balance of sundry debtors ` 50,000 The bad debts of the company during the year are

A)40,000 .
B)35,000 .
C)30,000 .
D)20,000

Question 49

The opening stock of a company is `60,000 and the closing stock is `70,000. If the purchases during the year are `2,00,000 the cost of goods sold will be

A)2,10,000 .
B)2,00,000 .
C)1,90,000 .
D) `1,80,000

Question 50

The balance as per bank statement of a company is `12,000 (Dr.). The company deposited two cheques worth `9,500, out of which one cheque for `2,300 was dishonoured which was not entered in the cash book. The credit balance as per cash book is

A)21,000 .
B)15,300 .
C)23,800 .
D)9,700

Question 51

Which of the following is not a main column of sales or return journal?

A)Goods sent on approval column .
B)Goods returned column
C)Goods approved column .
D)Purchase column

Question 52

Which of the following accounting treatments is/are true in respect of accrued commission appearing on the debit side of a Trial Balance?

A)It is shown on the debit side of the Profit and Loss Account
B)It is shown on the credit side of the Profit and Loss Account
C)It is shown on the liabilities side of the Balance Sheet
D)It is shown on the assets side of the Balance Sheet

Question 53

If a bill is endorsed to a third party, the accounting entry in the books of the endorser, at the time of endorsement involves

A)Credit Endorsee's Account
B)Debit Endorsee's Account
C)Debit Bills Receivable Account
D)Credit Bills Payable Account

Question 54

----- is the date on which a bill falls due for payment

A)Settlement Date .
B)Maturity Date .
C)Payment Date .
D)Due Date

Question 55

Joint Venture is a partnership -

A)With no firm name .
B)For indefinite period .
C)Formed for 5 years .
D)All the three

Question 56

Depreciation amount of a fixed asset represents -

A)Historical cost less residual value .
B)Historical cost .
C)Historical cost less cost of disposal.
D)Book Value less scrap value

Question 57

When benefit of a revenue expense extend beyond an accounting year, it is called

A)Revenue Expenditure .
B)Capital expenditure .
C)Deferred Revenue Expenditure.
D)Recurring profit

Question 58

The convention that states that the accounting practice should be followed consistently over the years

A)Consistency .
B)Conservation .
C)Materiality .
D)Disclosure

Question 59

Which of the following is a non-monetary asset?

A)Account Receivable .
B)Account Payable .
C)Demand Bank Deposits .
D)Patents and Trademarks

Question 60

Accounting for Fixed Assets is related to

A)AS 7 .
B)AS 14 .
C)AS 10 .
D)AS 21

Question 61

The maximum amount beyond which a company is not allowed to raise funds, by issue of share is

A)Issued Capital .
B)Reserve Capital .
C)Subscribed Capital .
D)Authorised Capital

Question 62

Accounts dealing with transaction relating to persons or an organization is called

A)Personal Account .
B)Nominal Account .
C)Real Account .
D)Representative Personal Account

Question 63

The document listing the latest balances of all Real and Personal A/c in the ledger on a given date is known as -

A)Trial Balance .
B)Positional Statement .
C)Income Statement .
D)Charter of Accounts

Question 64

A sent some goods to B to be sold on consignment basis. 1/10 of the goods valued ` 25,000 were lost in transit. Find the value of goods sent of consignment basis -

A)2,50,000 .
B)25,000 .
C)2,500 .
D)None

Question 65

A company sends its cars to dealers on 'sale or return' basis. All such transactions ire however treated like actual sales and are passed through the sales day book. Just before the end of the financial year, two cars which had cost ` 55,000 each have been sent on sale or return and have been debited to customers at ` 75,000 each, cost of goods lying with the customers will be

A)1,10,000.
B)35,000.
C)75,000.
D)None of the above.

Question 66

From the following details estimate the capital as on 31.03.2013, Capital as on 01.04.2012 ` 2,05,000. Drawing ` 20,000, Profit during the year ` 25,000

A)2,05,000 .
B)2,25,000 .
C)2,10,000 .
D)2,00,000

Question 67

Goods worth ` 10,000 were purchased by B on which the traders allowed ` 500 trade discount and offer to give 5% cash discount if immediate payment is made. The Purchase A/c will be debited by -

A)10,000 .
B)9,800 .
C)9,000 .
D)9,500

Question 68

S issued cheque worth ` 35,000 in March 2013 out of which cheques worth ` 15,000 were presented for payment after by 31st march, 2013. What amount should be added to balance as per pass book

A)15,000 .
B)10,000 .
C)25,000 .
D)None of the above

Question 69

Owing of the business are called -

A)Liabilities .
B)Capital .
C)Net Worth .
D)Assets

Question 70

` 8,000 is spent of travelling expenses of the partner to a foreign trip for purchased of an asset to be used for the business is a/an -

A)Capital Expenditure .
B)Revenue Expenditure .
C)Revenue Loss .
D)Capital Loss

Question 71

The Capital of X Ltd. was ` 55,000 as on 01.04.2012 which fell to ` 25,000 by the end of 31.03.2013. Find the value of goods sent of consignment basis -

A)Drawings .
B)Business losses during the period .
C)Both .
D)Introduction of new capital

Question 72

A trader has credited certain items of sales on approval aggregating ` 60,000 to Sales Account. Of these, goods of the value of `16,000 have been returned and taken into stock at cost ` 8,000 though the record of return was omitted in the accounts. In respect of another parcel of ` 12,000 (cost being `6,000) the period of approval did not expire on the closing date. Cost of goods lying with customers should be

A)12,000.
B)54,000.
C)6,000.
D)None of the above.

Question 73

Cash sales will be recorded in -

A)Sales Day Book .
B)Cash Book .
C)Purchase Book .
D)Return in Ward Book

Question 74

Cost of goods sold excludes -

A)Opening Stock .
B)Closing Stock .
C)Wages and Salary .
D)Salesmen Commission

Question 75

From the following details find out the amount to be debited to Profit and Loss A/c as fresh provision for doubtful debts during 2012-13 Debtors ` 30,000 as on 31.03.2013. Bad debt during the year ` 1,500. Provision for bad debts as on 01.04.2012 ` 2,000. Provision for doubtful debts to be kept at 5% of total debtors

A)1,500 .
B)1,000 .
C)3,000 .
D)2,000

Question 76

A of Assam sent goods costing ` 45,000 to K of Kolkata at cost plus 331/3%. 1/5 of the goods were lost in transit and the remaining was sold at profit of 20% on invoice price. Find the value of sales -

A)54,500 .
B)60,000 .
C)57,600 .
D)55,000

Question 77

Two primary qualitative characteristics of Financial Statements are -

A)Understandability and Materiality .
B)Relevance and Reliability .
C)Relevance and Understandability .
D)Materiality and Reliability

Question 78

Profit and loss on Depreciation Investment Fund A/c is transferred to -

A)Profit and Loss A/c .
B)General Reserve A/c .
C)Trading A/c .
D)Capital Reserve A/c

Question 79

Which of these expenses does not result in cash outflow

A)Depreciation .
B)Interest on Loan .
C)Payment on Dividend .
D)Donation

Question 80

Which of these term is not found in a Joint Venture business

A)Del Credere Commission .
B)Co-venturer .
C)Joint Bank A/c .
D)Memorandum Joint Venture A/c