CPT-ACCOUNTS-SAMPLE-TEST

CPT-ACCOUNTS-SAMPLE TEST PAPER

Q.1 Which of the following practices is not in consonance with the convention of conservatism?
1. Creating provision for bad debts
2. Creating provision for discount on creditors
3. Creating provision for discount on debtors
4. Creating provision for tax
Correct Answer: 2

Q.2 Omission of paise and showing the round figures in financial statements is based on
1. Conservatism concept
2. Consistency concept
3. Materiality concept
4. Realisation concept
Correct Answer: 3

Q.3 Accounting does not record non-financial transactions because of:
1. Accrual concept
2. Cost concept
3. Continuity concept
4. Money measurement concept
Correct Answer: 4

Q.4 Which of these are is not a fundamental accounting assumption?
1. Going concern
2. Consistency
3. Conservatism
4. Accrual
Correct Answer: 3

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Q.5 Fixed assets and current assets are categorized as per concept of:
1. Separate entity
2. Going concern
3. Consistency
4. Time period
Correct Answer: 2

Q.6 AS 2 is on:
1. Disclosure of Accounting Policies
2. Valuation of Inventories
3. Revenue Recognition
4. Depreciation Accounting
Correct Answer: 2

Q.7 Selection of an inappropriate accounting policy may lead to:
1. Understatement of Performance
2. Overstatement of Performance
3. Understatement or overstatement of financial position
4. None of the above
Correct Answer: 3

Q.8 Proprietor (owner) is treated as creditor of business due to :
1. Periodicity concept
2. Materiality Principle
3. Entity Concept
4. Consistency concept
Correct Answer: 3

Q.9 What is the Journal Entry for Depreciation when Provision for Depreciation exits ?
1. Dr. Depreciation a/c & Cr. Asset a/c
2. Dr. P & L a/c & Cr. Depreciation a/c
3. Dr. Depreciation a/c & Cr. Provision for depreciation a/c
4. Dr. P & L a/c & Cr. Provision for Depreciation a/c
Correct Answer: 3



Q.10 What is the Rectification Entry when Sale of Machinery recorded in the Sales Book is rectified after Final Account ?
1. Dr. Sales a/c & Cr. Machinery a/c
2. Dr. Machinery a/c & Cr. Sales a/c
3. Dr. Bank a/c & Cr. Machinery a/c
4. Dr. P & L Adjustment A/c & Cr. Machinery A/c
Correct Answer: 4

Q.11 Workmen Compensation Under Dispute' is an example of:
1. Contingent Liability
2. Contingent Asset
3. Current Liability
4. Current Asset
Correct Answer: 1

Q.12 When the total of trial balance is not reconciled, the account opened at this juncture is:
1. Trading Account
2. Suspense Account
3. Profit & Loss Account
4. None of these
Correct Answer: 2

Q.13 Which type of error occurs when credit sales is wrongly recorded in Purchase Day Book:
1. Error of Omission
2. Error of Commission
3. Compensatory Error
4. Error of Principle
Correct Answer: 2

Q.14 Purchases book records:
1. All cash purchase
2. All credit purchases
3. Credit purchases of goods in trade
Correct Answer: 3



Q.15 Present liability of uncertain amount, which can be measured reliably by using a substantial degree of estimation, is termed as ________
1. Provision
2. Liability
3. Contingent liability
Correct Answer: 1

Q.16 The debts written off as bad, if recovered subsequently are
1. Credited to Bad Debts Recovered Account
2. Credited to Debtors Account
3. Debited to Profit and Loss Account
Correct Answer: 1

Q.17 Amount realized from the sale of securities (Investments) purchased earlier is an example of
1. Revenue Expenditure
2. Capital Receipt
3. Deferred Revenue Expenditure
4. Capital Expenditure
Correct Answer: 2

Q.18 Ram is aware that his books for the year ended 31'' March contained some errors. However, he took the difference to the
Suspense Account and prepared the annual Financial Statements. Later, he identified the errors as - Goods bought on credit from
Lal for Rs.3,500 was entered in the Sales Book as Rs. 3,050 . Lal was credited with Rs. 3,050 in the Ledger .
What is the entry for rectifying the above error?
1. Dr. Sales A/c 3,500 and Cr. Lal A/c 450 and Suspense A/c 3,050
2. Dr. Sales A/c 3,500, Purchase A/c 3,050 and Cr. Suspense A/c 6,550
3. Dr. Lal A/c 6,550 and Cr. Suspense A/c 450; P & L Adj. A/c 6,100
4. Dr. P & L Adjustment A/c 6,550 and Cr. Lal A/c 450; Suspense A/c 6,100
Correct Answer: 4



Q.19 Journal Proper is called -
1. Principal Book
2. Subsidiary Book
3. Day Book
4. Proper Book
Correct Answer: 2

Q.20 Ledger is also called -
1. Principal Book
2. Subsidiary Book
3. Day Book
4. Proper Book
Correct Answer: 1

Q.21 Which financial statement represents the accounting equation
ASSETS = LIABILITIES + OWNER'S EQUITY
1. Income Statement
2. Cash Flow Statement
3. Balance Sheet
4. Fund Flow Statement
Correct Answer: 3

Q.22 The beginning stock of the current year is overstated by Rs. 500 and closing stock is overstated by Rs. 1,200.
The Profit of the current Year will be :
1. Rs. 1,700 (overstated)
2. Rs. 1,200 (understated)
3. Rs. 1,700 (understated)
4. Rs. 700 (overstated)
Correct Answer: 4



Q.23 In arriving at adjusted cash balance which of the following is not taken into account:
1. Amount deposited by our customer directly in our account
2. Errors in the Cash Book
3. Errors in the Pass Book
4. All of these
Correct Answer: 3

Q.24 The following information is available from the books of Hari
(a) Balance as per Pass Book on 30th November overdrawn Rs.10,000
(b) Interest on Investment collected by Bankers on 30th Nov. Rs.955, entered in Cash Book on 4th Dec.
(c) Cheque deposited for collection on 30th Nov. but returned dishonoured on 6th Dec. of Rs.945
(d) Bankers have made mistake in balancing by showing overdrawn balance in excess by Rs.1,000 on 30th Nov.,
Which was rectified in Bank Pass Book on 7th Dec. when notified.
In the above case, the balance in the Cash Book on 30th Nov is
1. Rs.11,080 (Debit)
2. Rs.11,080 (Credit)
3. Rs.9,100 (Debit)
4. Rs.9,010 (Credit)
Correct Answer: 4

Q.25 On 23rd March, 2006, i.e., a week before the end of the accounting year 2005-06, a company undertook physical stock
verification . The value of Stock as per Physical stock verification was found to be Rs.35,000.
The following details pertaining to the period 23/03/2006 to 31/03/2006 are given :
I. Goods costing Rs.5,000 were sold during the week.
II. Goods received from consignor amounting to Rs.4,000 included in the value of stock
III Goods earlier purchased but returned during the period amounted to Rs.1.000.
IV. Goods earlier purchased and accounted but not received Rs.6.000.
After considering the above, the value of stock held as on March 31, 2006 was
1. Rs.27,000
2. Rs.19,000
3. Rs.43,000
4. None
Correct Answer: 1



Q.26 Cost of physical stock on 15.4.06 was Rs.3,00,000. Sales amounting Rs.1,00,000 and purchases worth Rs.50,000 were held
between 31.3.06 and 15.4.06 . Goods are sold at a profit of 20% on sales. Value of inventory as on 31.3.06 is
1. Rs.3,50,000
2. Rs.2,70,000
3. Rs.3,30,000
4. Rs.3,00,000
Correct Answer: 3

Q.26 15.01.2006 Opening Stock 50 units @ Rs.30 per unit
01.02.2006 Purchases 200 units @ Rs.40 per unit
15.02.2006 Issued 100 units
The value of closing stock on 15.02.2006 on Weighted Average Cost basis is
1. Rs.5,700
2. Rs.3,000
3. Rs.4,000
4. None
Correct Answer: 1

Q.27 A company has given following data for the month of March 2004.
Opening Stock 100 units @ Rs.100 each. Purchases :
March 4, 200 units @ Rs.120 each
On March 31, 2006, there were 300 units on hand.
The value of closing stock under FIFO is -
1. Rs.42,000
2. Rs.33,000
3. Rs.39,500
4. None
Correct Answer: 3



Q.28 Cost of a machine = Rs. 1,12,500
Salvage value = Rs. 10,500
Useful life = 5 Years
Depreciation for the last years using the sum of digits method will be:
1. Rs. 6,800
2. Rs. 20,400
3. Rs. 34,000
4. Rs. 27,200
Correct Answer: 1

Q.29 Depreciation starts on a machine from the date:
1. It is purchased
2. It is put to use
3. It is installed
4. Any of above
Correct Answer: 2

Q.30 Original Cost = Rs.1,00,000, Life = 5 years, Expected salvage value = Rs.2,000. Rate of depreciation p.a. = ?
1. 19.6%
2. 20%
3. 19.8%
4. 20.8%
Correct Answer: 1

Q.31 Which of the following is Depleted?
1. Land
2. Goodwill
3. Machinery
4. Coal mines
Correct Answer: 4



Q.32 A purchased a mine for Rs.2,50,000 minerals in the mine were expected to be 5,00,000 tonnes. In the first year, 50,000 tonnes
of minerals were used . What is the depreciation for the first year ?
1. Rs.20,000
2. Rs.25,000
3. Rs.30,000
4. Rs.35,000
Correct Answer: 2

Q.33 Scrap value of an asset means the amount that it can fetch on sale at the _______ of its useful life:
1. Beginning
2. End
3. Middle
4. None
Correct Answer: 2

Q.34 Purchase Price of Machine Rs. 80,000 . Installation Charges Rs. 20,000 . Residual Value Rs. 40,960. Uesful life
4 Years . The rate of depreciation under WDV Method is :
1. 25 %
2. 20 %
3. 14.76 %
4. None
Correct Answer: 2

Q.35 Mr. Prakash sells goods at 25% above cost. His sales were Rs.10,20,000 during the year. However, he sold damaged goods for
Rs. 20,000 costing Rs. 30,000 . This sale is included in Rs.10,20,000. The amount of gross profit is :
1. Rs.1,90,000
2. Rs.2,50,000
3. Rs.2,40,000
4. Rs.2,00,000
Correct Answer: 1



Q.36 The total cost of goods available for sale with a company during the current year is Rs.12,00,000 and the total sales during
the period are Rs. 13,00,000 . If the gross profit margin of the company is 33 1/3% on cost, the closing inventory during the
current Year is
1. Rs.4,00,000
2. Rs.3,00,000
3. Rs.2,25,000
4. Rs.2,60,000
Correct Answer: 3

Q.37 The adjustments to be made for prepaid expenses is:
1. Add prepaid expenses to respective expenses and show it as an asset
2. Deduct prepaid expenses from respective expenses and show it as an asset
3. Add prepaid expenses to respective expenses and show it as a liability
4. Deduct prepaid expenses from respective expenses and show it as a liability
Correct Answer: 2

Q.38 If average stock is Rs. 20,000. Closing stock is Rs. 4,000 more than value of opening stock. Closing stock will be:
1. Rs. 16,000
2. Rs. 18,000
3. Rs. 20,000
4. Rs. 22,000
Correct Answer: 4

Q.39 What is the amount of purchase when opening stock = Rs.3,500 Closing Stock = Rs.1,500, Cost of goods sold = Rs.22,000.
1. Rs.20,000
2. Rs.24,000
3. Rs.27,000
4. Rs.17,000
Correct Answer: 1



Q.40 Which account is to be credited when an endorsed cheque is dishonoured ?
1. Debtor
2. Bill Receivable
3. Endorsee
4. Payee
Correct Answer: 3

Q.41 When closing inventory will be overstated it will result in:
1. Net income for the period to be overstated
2. Cost of goods sold to be understated
3. Both (1) and (2)
4. None of these
Correct Answer: 3

Q.42 Cost of goods sold is equal to:
1. Opening stock plus total purchases
2. Opening stock plus total purchases minus Closing Stock + Direct Costs
3. Closing stock plus total purchases
4. Opening stock minus total purchases plus closing stock
Correct Answer: 2

Q.43 In books of manufacturing concern, Opening Stock consists of:
1. Raw Materials
2. Work in Progress
3. Finished Goods
4. All of the above
Correct Answer: 4

Q.44 In which Financial Statements is Bad Debt shown if it appears in the Trial Balance?
1. Trading & Profit & Loss Account
2. Profit & Loss Account & Balance Sheet
3. Only Balance Sheet
4. Only Profit & Loss account
Correct Answer: 4



Q.45 Renewal of Bill means
1. Extending the tenure of the old bill
2. Extending the due date of the old bill
3. Issuance of new bill in place of old cancelled bill
4. Modification in the days of grace
Correct Answer: 3

Q.46 Q. 11 How is Abnormal Loss treated in the Consignment account ?
1. Total value is shown on the credit side
2. Value not recovered from the Insurance Co. is shown on the credit side
3. Value re recovered from the Insurance Co. is shown on the credit side
4. No Entry
Correct Answer: 2

Q.47 What should be the treatment, when the due date is a public holiday ?
1. The next following day is the due date
2. The preceding business day is the due date
3. Ignore 3 days of grace
4. There is no change in the due date, so payment is to be made on the day
Correct Answer: 2

Q.48 What should be the treatment, when the due date falls on a Sudden holiday ?
1. The next following day is the due date
2. The preceding business day is the due date
3. Ignore 3 days of grace
4. There is no change in the due date, so payment is to be made on the day
Correct Answer: 1

Q.49 In case of del-credere commission provided by consignor to consignee, bad debts is a loss of __________________
1. Consignee
2. Consignor
3. Both consignor and consignee
4. Neither of the two
Correct Answer: 1



Q.50 In a Joint venture between A &B, A spent Rs.2,000 on freight Rs.1,000 as godown rent, & also raised a loan from bank
of Rs.50,000 at 18 % p.a . Repayable after 1 month. B spent Rs.5,000 as selling expenses & he also raised a loan from bank
of Rs.1,50,000 at 18% repayable after 2 months. The total expenses of Joint Venture will be
will be
1. Rs.8,000
2. Rs.8,250
3. Rs.5,250
4. Rs.13,250
Correct Answer: 4

Q.51 A consignee sold goods costing Rs.50,000 at a profit of Rs.10,000. Out of total sales 30% was credit sale. As per the agreement
the consignee will get 5% ordinary commission, 2% del-credere commission on credit sales & 3% over-riding commission on
amount in excess of cost price. The amount of commission will be.
1. Rs. 3,660
2. Rs.3,840
3. Rs.4,500
4. Rs.3,100
Correct Answer: 1

Q.52 Goods costing Rs.1,20,000 were sent on consignment basis. These goods are invoiced to give a gross margin of 20% on
invoice price . The amount of loading is :
1. Rs.24,000
2. Rs.30,000
3. Rs.20,000
Correct Answer: 2

Q.53 X of Kolkata sends out goods costing Rs.1,00,000 to Y of Delhi. 3/5th of the goods were sold by consignee for Rs.70,000.
Commission 2% on sales plus 10% of gross sales less all commission exceeds cost price. The amount of Commission will be:
1. Rs.2833
2. Rs.2900
3. Rs.3000
4. Rs.2181
Correct Answer: 4



Hint : Total Commission
Total Cost 1,00,000
Cost of Goods sold(3/5 of 1,00,000) C.P 60,000
Sales Value S.P 70,000
Profit =(S.P-C.P) (70,000-60,000) 10,000
Let the Total Commission be " x "
Fixed Commission = 2 % of 70,000 1,400
Variable Commission = 10 % of (Profit - Total Commission)
10%(10,000- x ) = 1000 - . 10 x Equation -I
Variable Commission = Total Commission - Fixed Commission.
x-1,400 Equation -I I
Hence from equation I & I I, we get
x - 1,400 = 1,000 - .10x
1.10 x = 2400
Therefore x = 2400/ 1.10 = 2,181 .
Total Commission = 2,181 . Option (4)

Q.54 Commission provided by the consignor to the consignee to promote higher sale is known as:
1. Ordinary commission
2. Del credere commission
3. Over - riding commission
4. Special commission
Correct Answer: 3

Q.55 On 1st January Shilpa owes Rs. 10,000 and accepts a 3 months bill for the amount. On the date of maturity Shilpa was
not able to meet the bill. She pays Rs. 4,000 and asks to draw another bill for three months for the balance amount with
interest @ 15% p.a. The amount of interest will be:
1. Rs. 200
2. Rs. 225
3. Rs. 500
4. Rs. 900
Correct Answer: 2



Q.56 The purpose of accommodation bill is:
1. To finance actual purchase or sale of goods
2. To facilitate trade transmission
3. When both parties are in need of funds
Correct Answer: 3

Q.57 A & B are Partners sharing profits & losses in the ration 5 : 3 On admission C brings Rs.70,000 cash & Rs.48,000 against
Goodwill. New Profit Sharing Ratio between A, B & C is 7: 5 : 4. Find the sacrificing ration between A&B
1. 3 : 1
2. 4 : 7
3. 2 : 1
4. 5 : 4
Correct Answer: 1

Q.58 Revaluation Account is prepared at the time of
1. Admission, Retirement, Death, Dissolution of Firm
2. Admission, Retirement, Death, Dissolution of Partnership Agreement
3. Admission, Retirement, Dissolution of Firm, Dissolution of Partnership Agreement
Correct Answer: 2

Q.59 The Capital of a firm is Rs.70,000/-. The reasonable return in the industry is 8%. If the profit earned by the firm during past -
five years was Rs.7,000/- Rs.9,000/- Rs.8,000/- Rs.9,000/- & Rs.10,000/-; then the super profit of the firm will be
1. Rs.8,500
2 Rs.5600
3. Rs,5,000
4. Rs.3,000
Correct Answer: 4



Q.60 In the absence of Partnership Deed, a Partner is entitled to interest on money advanced to the firm at
1. 4% p.a.
2. 8% p.a.
3. 6% p.a.
4. 10% p.a.
Correct Answer: 3

Q.61 When a new Partner is admitted to the Partnership Firm
1. Old Partnership is dissolved
2. Old Partnership Firm is dissolved
3. Both old Partnership and Firm are dissolved
4. Neither old Partnership nor the Firm is dissolved
Correct Answer: 1

Q.62 When a Partner is given Guarantee by the other Partners, loss on such guarantee will be borne by
1. Partnership Firm
2. All the other Partners
3. Partners who gave the guarantee
4. Partner will highest profit sharing ratio.
Correct Answer: 3

Q.63 Fluctuating Capital Account is credited with:
1. Interest on Capital
2. Profit of the year
3. Remuneration to the partners
4. All of these
Correct Answer: 4



Q.64 JLP of the partner is a / an ___________ account:
1. Nominal
2. Personal
3. Representative Personal
4. Asset
Correct Answer: 4

Q.65 The amount due to deceased partner is paid to his:
1. Father
2. Friends
3. Wife
4. Executors
Correct Answer: 4

Q.66 Brokerage on the issue of shares and debentures is a _____________ expenditure:
1. Revenue
2. Capital
3. Deferred Revenue
4. Partly capital partly revenue
Correct Answer: 3

Q.67 Security premium is shown under which head in the Balance Sheet.
1. Current Liabilities
2. Miscellaneous Expenditure
3. Reserves and Surplus
4. None of these
Correct Answer: 3

Q.68 The minimum subscription as prescribed by SEBI against the entire issue is:
1. 95%
2. 90%
3. 5%
4. None
Correct Answer: 2



Q.69 Dividends are usually paid upon:
1. Paid up capital
2. Called up capital
3. Issued capital
4. Reserve capital
Correct Answer: 1

Q.70 Redeemable preference shares must be redeemed within:
1. 5 years
2. 10 years
3. 15 years
4. 20 years
Correct Answer: 4

Q.71 When debentures are issued as collateral security, interest is paid on:
1. Nominal value of debentures
2. Face value of debentures
3. Discounted value of debentures
4. No interest is paid
Correct Answer: 4

Q.72 Discount on issue of debentures is a ___________
1. Revenue loss to be charged in the year of issue
2. Capital loss to be written off from capital reserve
3. Capital loss to be written off over the tenure of the debentures
4. Capital loss to be shown as goodwill
Correct Answer: 3



Q.73 The following information pertains to X Ltd.
Equity share capital called up Rs.5,00,000
Calls in arrear Rs. 40,000
Calls in advance Rs. 25,000
Proposed dividend 12%
The amount of dividend payable will be
1. Rs.50,000
2. Rs.55,200
3. Rs.46,000
4. 43,500
Correct Answer: 2

Q.74 G Ltd. acquired assets worth Rs.8,10,000 from H Ltd. by issue of shares of Rs.100 at a discount of 10%. The number of
shares to be issued by G Ltd. to settle the purchase consideration will be
1. 6,000 shares
2. 7,500 shares
3. 9,000 shares
4. 5,625 shares
Correct Answer: 3

Q.75 That portion of Share Capital which can be called up only on the winding up of the Company is
1. Authorised Capital
2. Issued Capital
3. Subscribed Capital
4. Reserve Capital
Correct Answer: 4

Q.76 When shares are forfeited, the Called Up Amount on shares is debited to -
1. Shares Forfeited Account
2. Capital Reserve Account
3. General Reserve Account
4. Capital Account
Correct Answer: 4



Q.77 "Proposed dividends" is shown in the Balance Sheet of a company under the head:
1. Provisions
2. Reserves and Surplus
3. Current Liabilities
4. Other Liabilities
Correct Answer: 1

Q.78 Share Allotment Account is a:
1. Real Account
2. Nominal Account
3. Personal Account
4. Company Account
Correct Answer: 3

Q.79 When debentures are issued as Collateral Security, which entry has to be passed:
1. Debenture Suspense A/c Dr. To Debenture A/c
2. No Entry has to be made
3. Either (1) or (2)
4. None
Correct Answer: 3

Q.80 Premium on redemption of debentures account is ---------------
1. A real account
2. A nominal account-Income
3. A personal account
4. A nominal account-expenditure.
Correct Answer: 3

Q.81 Capital Redemption Reserve is utilised to
1.To redeem Preference Shares.
2.To redeem Debentures.
3. For issue of Bonus Shares
4. None of these
Correct Answer: 3



Q.82 Debenture premium cannot be used to -------
1.Write off discount on issue of Shares or Debentures
2.Write off premium on redemption of Shares or Debentures
3. Pay Dividends
4. Write off capital loss
Correct Answer: 3

Q.83 As per Companies Act, "Interest accured and due on debentures" should be shown
1.Under Debentures
2.As Current Liabilities
3. As Provision
4. As a reduction of Bank balance
Correct Answer: 1

Q.84 Which of the following is False with respect to debentures ?
1.They can be issued for Cash
2.They can be issued for consideration other than Cash
3.They can be issued as Collateral security
4.They can be issued in lieu of dividends
Correct Answer: 4

Q.85 which of the following cannot be used for the purpose of creation of Capital Redemption Reserve Account ?
1.Profit & Loss account (Credit balance)
2.General Reserve account
3.Dividends equalization reserve account
4.Unclaimed dividends account
Correct Answer: 4

Q.86 As per Schedule VI of the Companies Act, 1956, Forfeited shares account will be
1.Added to the Paid-Up Capital
2.Deducted from the Paid-Up Capital
3.Shown as a Capital Reserve
4.Shown as a Revenue Reserve
Correct Answer: 1



Q.87 The document inviting offers from Public to subscribe for Shares or Debentures or Deposits of a body Corporate is a
1.Share Certificate
2.Stock invest
3.Fixed deposit receipt
4.Prospectus
Correct Answer: 4

Q.88 Declared dividend should be classified in the Balance as a
1. Provision
2. Current Liability
3. Reserve
4. Current Asset
Correct Answer: 2

Q.89 On the issue of Shares, the application money should not be less than
1) 2.5% of the nominal value of shares
2) 2.5% of the issue price of the shares
3) 5% of the nominal value of shares
4) 5% of the issue price of the shares
Correct Answer: 3

Q.90 When shares are issued to promoters for the services offered by them, the account that will be debited with the
nominal value of shares is
1. Preliminary expenses
2. Goodwill
3. Asset account
4. Share Capital
Correct Answer: 2



Q.91 Maximum Interest rate applicable for calls in arrears
1) 5%
2) 6%
3) 7%
4) 8%
Correct Answer: 1

Q.92 Maximum Interest rate applicable for calls in advance
1) 5%
2) 6%
3) 7%
4) 8%
Correct Answer: 2

Q.93 The minimum paid-up capital for Public limited Company
1) Rs. 1 lakh
2) Rs. 2 lakh
3) Rs. 5 lakh
4) Rs. 10 lakh
Correct Answer: 3

Q.94 The minimum paid-up capital for Private limited Company
1) Rs. 1 lakh
2) Rs. 2 lakh
3) Rs. 5 lakh
4) Rs. 10 lakh
Correct Answer: 1

Q.95 Which of these items are shown in the Profit & Loss appropriation account
1. Provision for Bad debts
2. Provision for depreciation
3. Provision for bonus
4. Provision for dividend
Correct Answer: 4



Q.96 Schedule VI Part II of the Companies Act, deals with
1. Format of Balance Sheet
2. Format of Profit & Loss Account
3. Format of Cash Flow Statement
4. Format of trading account
Correct Answer: 2

Q.97 Schedule VI Part I of the Companies Act, deals with
1. Format of Balance Sheet
2. Format of Profit & Loss Account
3. Format of Cash Flow Statement
4. Format of trading account
Correct Answer: 1

Q.98 In the event of liquidation of the company, the debenture holders have prior right over
1. Principal amount
2. Interest
3. Both "a" & "b"
4. Either "a" & "b"
Correct Answer: 3

Q.99 Preference Shareholders get
1. Fixed dividend
2. Fixed bonus
3. Fixed Interest
4. Fixed discount every year
Correct Answer: 1

Q.100 Which of the following accounts have only credit balances ?
1. Reserve Fund Account
2. Capital Account
3. Accounts Payable
4. All of these
Correct Answer: 4



Q.101 A Company intending to issue shares at discount must issue the shares within------from the date of approval of
Company Law Board
1. 30 days
2. 2 months
3. 6 months
4. 1 year
Correct Answer: 2

Q.102 In case a Public limited Company is required to refund the application money due to non subscription to the minimum limit,
the application money is to be refunded within ------days of Closure of issue
1. 45 days
2. 60 days
3. 42 days
4. 21 days
Correct Answer: 2

Q.103 Maximum rate od discount shall not be more than
1) 5 %
2) 10%
3) 12%
4) 15%
Correct Answer: 2

Q.104 The act of voluntary return of shares by shareholders for cancellation is called
1. Cancellation of shares
2. Return of shares
3. Surrender of shares
4. Refusal of shares
Correct Answer: 3



Q.105 Rights issue of shares is for whom
1. General public
2. Promoters only
3. Employees only
4. Existing shareholders only
Correct Answer: 4

Q.106 Balance Sheet of a company is prepared in the format prescribed in/by
1. Income Tax Act
2. Schedule VI of the Companies Act,1956
3. By CAG
4. By ICAI
Correct Answer: 2

Q.107 Calls in arrear is
1. Reduced from Called-Up Capital
2. Reduced from Subscribed Capital
3. Reduced fron Authorised Capital
4. Shown in the assets side
Correct Answer: 3

Q.108 Equity Shareholders are entitled to
1. Fixed dividend
2. Fixed Interest
3. Dividend as declared by B.O.D and approved by Shareholders in AGM
4. No dividend at all.
Correct Answer: 3

Q.109 Profit from the date of purchase of business to the date of incorporation of the company is called
1. Profit prior to incorporation
2. Pre-acquisition a/c
3. Prior period profits
4. Pre-launch profits
Correct Answer: 1



Q.110 Users of accounting information include :
1. Creditors
2. Lenders
3. Customers
4. All of the above .
Correct Answer: 4

Q.111 Accounting Standards
1. Harmonise accounting policies
2. Eliminate the non-comparability of Financial Statements .
3. Improve the reliability of Financial Statements.
Correct Answer: 4

Q.112 All of the following are limitations of Accounting Standards except
1. The choice between different alternative accounting treatment is difficult
2. There may be trend towards rigidity
3. Accounting Standards cannot Override the Statute
Correct Answer: 4

Q.113 A change in accounting policy is justified
1. To comply with accounting standards
2. To ensure more appropriate presentation of the Financial Statement of the enterprise
3. To comply with Law
Correct Answer: 4



Q.114 Opening Capital Rs. 30,000 , Closing Capital Rs. 15,000 , Loss during the Year Rs. 8,000 , Drawings Rs.7,000.
Additional Capital introduced will be :
1. Nil
2. 8,000
3. 16,000
4. 23,000 .
Correct Answer: 1

Q.115 Cash Embezzlement Account is :
1. Personal A/C.
2. Real A/C.
3. Nominal A/C
4. None of these .
Correct Answer: 3

Q.116 Which account is the odd one out ?
1. Goodwill A/C.
2. Patents A/C.
3.Technical Know-how A/C
4. Work-in-progress .
Correct Answer: 4

Q.117 Which account is the odd one out ?
1. Bad Debts A/C.
2. Bad Debts Recovered A/C.
3.Goods destroyed by Fire A/C
4. Embezzlement A/C. .
Correct Answer: 2



Q.118 Opening & Closing entries are recorded in :
1. Cash Book
2. Ledger
3.Journal Proper
4. Balance Sheet
Correct Answer: 3

Q.119 Expenses incurred on Trial Run is :
4. Prepaid Expenses
Correct Answer: 1

Q.120 Interest on a term loan for the purchase of machinery where the Commercial production has not begun till the last
day of the accounting Year is :
4. Prepaid Expenses
Correct Answer: 1

Q.121 Interest on a term loan for the purchase of machinery where the Commercial production has already begun
4. Prepaid Expenses
Correct Answer: 2



Q.122 Expenses to obtain a license for starting a Factory is :
4. Prepaid Expenses
Correct Answer: 1

Q.123 Profit & Loss Adjustment Account is used
1. to rectify all the errors in the Year of occurrence of errors.
2. to rectify all the errors involving real accounts in the subsequent Year
3. to rectify all the errors involving nominal accounts in the subsequent Year so as not to affect the profit or loss of that period
4. None of these
Correct Answer: 3

Q.124 As per AS-2 , the historical cost of inventories should normally be determined by using -----
1. FIFO and LIFO Method
2. LIFO and Weighted Average Cost Method
3. FIFO and Weighted Average Cost Method
4. FIFO and Simple Average Cost Method
Correct Answer: 3

Q.125 Which of the following item is not credited to Consignment Account ?
1. Cash Sales made by the Consignee
2. Credit Sales made by the Consignee
3. Consignment Stock
4. Stock Reserve on Closing Stock
Correct Answer: 4

Q.126 Stock lost due to inherent characteristics of the commodities is-----
1. Normal Loss
2. Abnormal Loss
3. Normal Gain
4. Abnormal Gain
Correct Answer: 1



Q.126 The Manufacturing account is prepared :
1. to ascertain thr profit or loss on the goods produced
2. to ascertain the cost of the goods manufactured
3. to show the sale proceeds from the goods produced during the year
4. both ( b ) and ( c )
Correct Answer: 2

Q.127 Which Reserve has debit balance ?
1. General Reserve
2. Contingency Reserve
3. Reserve for Discount on Debtors
4. Reserve for Discount on Creditors
Correct Answer: 4

Q.128 Provision is :
1. an appropriation out of profits
2. a charge against the profits
3. a reserve
4. None of these
Correct Answer: 2

Q.129 Under Permanence approach ----
1. the most liquid assets are presented at the top of the Balance Sheet
2. the least urgent payments are presented at the bottom of the Balance sheet
3. the most urgent payments are presented at the top of the Balance sheet
4. the least liquid assets are presented at the top of the Balance Sheet
Correct Answer: 4

Q.130 Under the Liquidity approach ----
1. the most liquid assets are presented at the bottom of the Balance Sheet
2. the least urgent payments are presented at the top of the Balance sheet
3. the most urgent payments are presented at the bottom of the Balance sheet
4. the least liquid assets are presented at the bottom of the Balance Sheet
Correct Answer: 4



Q.131 Obsolescene of a depreciable asset may be caused by
a Technology Changes
b Improvement in production method
c Change in market demand for the product or service output
d Legal or other restrictions
1. Only ( a ) above
2. Both ( a ) and ( b ) above
3. All a , b , c & d
4. Only ( d ) above
Correct Answer: 3

Q.132 When depreciation is recorded by charging to Provision for Depreciation Account , the asset apears ---
1. at Original Cost
2. at Original Cost less depreciation
3. at market value
4. at realizable value
Correct Answer: 1

Q.133 Depreciation is ------
1. a Cash Expenditure like other normal expenses
2. a Cash Operating Expense
3. a Non-Cash Operating Expense
4. a Non-Cash Non-Operating Expense
Correct Answer: 3

Q.134 Depreciation ------
1. Can be provided only in case of profit
2. Cannot be provided in case of loss
3. Is to be provided irrespective of the fact whether there are profits or losses
4. need not be provided if the market value of the asset exceeds the cost of the asset
Correct Answer: 3



Q.135 Under inflationary conditions , which of the methods will show highest value of Closing Stock ?
1. FIFO
2. LIFO
3. Weighted Average
Correct Answer: 1

Q.136 Memorandum Joint Venture Account is prepared
1. to find out profit on venture
2. to find out amount due from Co-Venturers
3. When separate sets of books is maintained
4. When a Co-Venturers records all the Joint Venture transaction in his books
Correct Answer: 1

Q.137 In Memorandum Joint Venture Account Method , each Co-Venturers records -----
1. all the Joint Venture Transactions
2. Common Joint Venture transactions
3. only those which are effected by him only
4. None of these
Correct Answer: 3

Q.138 Acceptance is necessary in case of --------
1. Promissory Note
2. a Cheque
3. a Bill ( other than Cheque ) payable on demand
4. None of these
Correct Answer: 3

Q.139 When the bill is honoured at the maturity date, the drawee debits ------
1. Drawer's Account
2. Bills Payable Account
3. Cash / Bank Account
4. Holder of Bill Account ( Banker / Endorsee )
Correct Answer: 2



Q.140 Which of the following is correct for presenting bill to notary public
1. To pay fees to notary public
2. for " bill for collection "
3. If the acceptor can prove that the bill was not presented to him for payment, he can escape the liability , hence for
dishonour it is produced
4. For drawing a fresh bill
Correct Answer: 3

Q.141 Partner by holding out is also known as -------
1. Active Partner
2. Dormant Partner
3. Partner by estoppel
4. Partner by stoppage
Correct Answer: 3

Q.142 Which is not to be disclosed in the Balance Sheet of a Company
1. Authorised Capital
2. Issued Capital
3. Subscribed Capital
4. Reserve Capital
Correct Answer: 4


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