Paper - 5: Financial Accounting Bit Questions

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PAPER - 5
FINANCIAL ACCOUNTING
BIT QUESTIONS
DIRECTORATE OF STUDIES
THE INSTITUTE OF
COST ACCOUNTANTS OF INDIA
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The Institute of Cost Accountants of India

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PAPER - 5
FINANCIAL ACCOUNTING
BIT QUESTIONS
DIRECTORATE OF STUDIES
THE INSTITUTE OF
COST ACCOUNTANTS OF INDIA

P-5: Financial Accounting - Bit Questions
PAPER - 5
Financial Accounting
Bit Questions
The Institute of Cost Accountants of India 1

(I) Choose the most appropriate one from given four alternatives.
1. If an employee of the business files a legal suit on business, it is considered in the

books as
(a) Legal Expense
(b) Liability
(c) Contingent Asset
(d) Contingent Liability
2. At the end of the accounting year the capital expenditures are shown in the
(a) assets side of the Balance Sheet.
(b) liabilities side of the Balance Sheet.
(c) debit side of the Profit and Loss A/c.
(d) credit side of the Profit and Loss A/c.
3. Which of the following is not a method of charging depreciation?

(a) Sinking Fund Method
(b) Sum of years Digit Method
(c) Working hours Method
(d) Asset's Life-cycle Method
4. If average inventory is `1,25,000 and closing inventory is `10,000 less than opening
inventory then the value of closing inventory will be
(a) ` 1,35,000
(b) ` 1,15,000
(c) ` 1,30,000
(d) ` 1,20,000
5. The Accommodation bill is drawn

(a) to finance actual purchase or sale of goods.
(b) to facilitate trade transmission.
(c) when both parties are in need of funds.
(d) None of the above
6. Balance of X's account in creditors ledger is transferred to X's account in debtors

ledger, in this case
(a) X's account in debtors ledger will be debited.
(b) X's account in creditors ledger will be debited.
(c) Suspense account will be debited.
7. Ground rent or surface rent means

(a) Minimum rent
(b) Maximum royalty payable
(c) Minimum royalty payable
(d) Fixed rent payable in addition to minimum rent
8. Accounting standard in India are issued by

(a) Government of India
(b) Reserve Bank of India
(c) The Institute of Chartered Accountants of India
(d) The Institute of Accounting Standard of India
9. As on 31st March, 2017 debtors and additional bad debts are ` 8,00,000 and ` 10,000
respectively. If the provision for bad debts is made at 5% on debtors then amount of
such provision will be

(a) `40,000
(b) `50,000
(c) `39,500
(d) `40,500
10. Income and Expenditure Account is a

(a) Nominal Account
(b) Real Account
(c) Personal Account
(d) Artificial Personal Account
11. Creditors ledger adjustment account is opened in

(a) General Ledger
(b) Debtors Ledger
(c) Creditors Ledger
(d) Either (b) or (c)
12. Receipts and Payments account is a

(a) Nominal Account
(b) Real Account
(c) Personal Account
(d) Artificial Personal Account
13. A resource owned by the business with purpose of using it for generating future profit, is
known as
(a) Capital
(b) Asset
(c) Liability
(d) Surplus
14. Outward Invoice issued is a source document of

(a) Purchase Book
(b) Sales Book
(c) Return Inward Book
(d) Return Outward Book
15. Which of the following is of capital nature?

(a) Commission on purchases
(b) Cost of repairs
(c) Rent of factory
(d) Wages paid for installation of machinery
16. If any stock is taken by a co-venturer, it will be treated as

(a) an income of the joint venture.
(b) an expense of the joint venture.
(c) to be ignored from joint venture.
(d) it will be treated in the personal books of the co-venturer.
17. Contingent liability would appear

(a) on the liability side of the Balance Sheet.
(b) on the assets side of the Balance Sheet.
(c) do not shown in the books of accounts.
(d) as a note in Balance Sheet.

18. Income statement of a Charitable Institution is known as

(a) Statement of profit and loss
(b) Receipts and Payments Account
(c) Income and Expenditure Account
(d) Profit and Loss Account
19. Which of the following account is mainly prepared at the time of dissolution of the
firm
(a) Revaluation A/c
(b) Goodwill A/c
(c) Realization A/c
(d) Memorandum Revaluation A/c
20. Advertisement expenses are apportioned among departments in the proportion of

(a) sales of each department
(b) purchases of each department
(c) no. of units sold by each department
(d) cost of sales of each department
21. In Hire Purchase system cash price plus interest is known as

(a) Capital value of asset
(b) Book value of asset
(c) Hire purchase price of asset
(d) Hire purchase charges
22. Which one is/ are the method/s of Accounting for Branches
(a) Final Accounts Method;
(b) Debtors Method and
(c) Stock and Debtors Method.
(d) All of the above
23. __________ is similar to the Profit and loss A/c

(a) Income and Expenditure A/c
(b) Receipts and Payments A/c
(c) Balance Sheet
(d) None of the Above
24. Kuntal draws a bill on shyam for ` 7,000.Kuntal endorsed it to Ram. Ram endorsed it
to Rahim. The payee of the bill will be:
(a) Kuntal
(b) Ram
(c) Shyam
(d) Rahim
25. Bad debts are apportioned among departments in the proportion of

(a) Sales of each department
(b) Number of units sold by each department
(c) Cost of sales of each department
26. Which of the following is not a Fundamental Accounting Assumption?

(a) Going Concern
(b) Consistency
(c) Accrual
(d) Materiality

27. ________ is equal to estimated selling price less the estimated costs of completion
and the estimated costs necessary to make the sale.
(a) Net Realizable value
(b) Cost of Conversion
(c) Cost of Purchase
28. _______ are investments which are held beyond the current period as to sale or
disposal.
(a) Non-current Investments
(b) Current Investments
(c) Current Liabilities
29. An obligation which may or may not materialize is a/an _______________.

(a) Loss
(b) Asset
(c) Contingent Liability
30. ________________ voucher denotes payment of cash.

(a) Cash Payment
(b) Cash Receipt
(c) Bank Payment
31. Which of the following is an example of Capital Expenditure?

(a) Inventory of raw materials, work-in-progress and finished goods;
(b) Insurance premium;
(c) Taxes and legal expenses;
(d) None of the above.
32. Which of the following errors is not disclosed by a Trial Balance?

(a) Errors of Omission
(b) Errors of Commission
(c) Compensating Errors
33. ___________ is specially suited to mines, oil wells, quarries, sandpits and similar assets
of a wasting character.
(a) Depletion
(b) Depreciation
(c) Amortisation
(d) Dilapidation
34. The following account has a credit balance

(a) Plant and Equipment A/c
(b) Loans A/c
(c) Purchase A/c
35. From the following details estimate the capital as on 31.03.2017. Capital as on
01.04.2016 - `4,10,000. Drawings `40,000, Profit during the year ` 50,000
(a) `4,10,000
(b) `4,50,000
(c) `4,20,000
(d) `4,00,000

36. A and B purchased a piece of land for ` 30,000 and sold it for `60,000 in 2016.
Originally A had contributed `12,000 and B `8,000. The profit on venture will be
(a) `30,000
(b) `20,000
(c) `60,000
(d) Nil
37. AB Ltd. has signed at 31st December, 2017 the Balance Sheet date, a contract where
the Total Revenue is estimated at ` 15 Crores and Total Cost is estimated at ` 20
Crores. No work began on the contract. Is the Contractor required to give any
accounting effect for the year ended 31st December, 2017?
(a) Recognize expected loss of `5 Crores
(b) Recognize `15 Crores as Profit
(c) No entry
38. Which of the following item does not match with receipts and payments account?
(a) It is a summarized cash book
(b) Transactions are recorded in it on cash basis
(c) It records revenue transactions only
(d) It serves the purpose of a real account
39. Which of the following is/ are the basic features of a Joint Venture
(a) The profit or loss on joint venture is shared between the co-venturers in the agreed
ratio
(b) The co-venturers may or may not contribute initial capital
(c) The JV is dissolved once the purpose of the business is over
40. Excess of hire purchase price over cash price is known as

(a) Installment
(b) Cash down payment
(c) Interest
(d) Capital value of asset
41. Which of the following is/are revenue expenditure?

(a) Consumable Stores
(b) Taxes and legal expenses
(c) Rent of factory building
(d) All of Above
42. AS-9 is related to

(a) Revenue Recognition
(b) Cash Flow Statement
(c) Accounting for Fixed Assets
(d) Disclosure of Accounting policies
43. The person to whom bill is endorsed is known as __________.

(a) Endorsee
(b) Drawee
(c) Drawer
44. Which of the following is/are feature/features of Income and Expenditure Account?
(a) It follows Nominal Account
(b) All Capital incomes and expenditures are excluded

(c) Profit on sale of asset is credited

45. The debts which are not bad is known as

(a) Good debt
(b) Bad Debt
(c) Doubtful Debt
46. A transaction without immediate cash settlement is known as

(a) Cash Transaction;
(b) Credit Transaction;
(c) Deferred Transaction;
47. _________ liabilities represent proprietor’s equity, i.e. all thoseamount which are
entitled to the proprietor
(a) External;
(b) Debenture;
(c) Internal;
48. Goods are transferred from Department X to Department Y at a price so as to

include a profit of 33.33% on cost. If the value of closing stock of Department Y is `
48,000, then the amount of stock reserve on closing stock will be
(a) `12,000
(b) `9,000
(c) `18,000
49. Bad debts Recovered `1,000. It will be

(a) Credited to Bad debts A/c
(b) Credited to debtor’s personal A/c
(c) Debited to creditor’s personal A/c
(d) Credited to bad debts recovered A/c
50. Which of the following purpose is served from the preparation of Trial Balance?
(a) To check the arithmetical accuracy of the recorded transactions;
(b) To ascertain the balance of any ledger account;
(c) To facilitate the preparation of final accounts promptly;
(d) All of the above.
51. _________ contains the transactions relating to goods that are returned by us to our
creditors
(a) Return Inward;
(b) Return Outward;
(c) Sales Daybook;
52. The basic principles of ____ concept is that business is assumed to exist for an
indefinite period
(a) Going Concern;
(b) Business Entity;
(c) Money Measurement;

53. Capital Profit arises from which of the following?

(a) Profit prior to incorporation;
(b) Premium received on issue of shares;
(c) Profit made on re-issue of forfeited shares;
54. Which of the following cannot be detected by Trial Balance?

(a) Errors of Omission;
(b) Errors of Principal;
(c) Errors of Misposting;
55. The concept that business is assumed to exist for an indefinite period and is not
established with the objective of closing down is referred to as
(a) Money Measurement concept
(b) Going Concern concept
(c) Full Disclosure concept
(d) Dual Aspect concept
56. In the hire purchase system interest charged by vendor is calculated on the basis of
(a) Outstanding cash Price
(b) Hire purchase Price
(c) Installment amount
57. Goods are transferred from Department A to Department B at a price so as to

include a profit of 33.33% on cost. If the value of closing stock of Department Y is
`36,000, then the amount of stock reserve on closing stock will be
(a) `12,000
(b) `9,000
(c) `18,000
58. Bad debts Recovered `750. It will be

(a) Credited to Bad debts A/c
(b) Credited to debtor‘s personal A/c
(c) Debited to creditor‘s personal A/c
(d) Credited to bad debts recovered A/c
59. Which of the following is a function of journal:

(a) Analytical Function
(b) Recording Function
(c) Historical Function
60. The out flow of funds to acquire an asset that will benefit the business for more than
one accounting period is referred to as —
(a) Miscellaneous Expenditure
(b) Revenue Expenditure
(c) Capital expenditure
(d) Deferred Revenue Expenditure
61. The cost of a Fixed Assets of a business has to be written off over its
(a) Natural Life
(b) Accounting Life
(c) Physical Life
(d) Estimated Economic Life

62. Receipts and Payments Account records

(a) Only revenue nature receipts
(b) Only capital nature receipts and payment
(c) Only revenue nature receipts and payments
(d) Both the revenue and capital nature receipts and payments
63. Excess of minimum rent over royalty is known as

(a) Maximum rent
(b) Excess workings
(c) Short workings
(d) Deficiency of actual royalty
64. If any transaction is not recorded in the primary books the same is recorded in
_______
(a) Journal Proper
(b) Sales Day Book
(c) Cash Book
65. Which of the following is not a feature of Trial Balance

(a) It is a list of debit and credit balances which are extracted from various ledger
accounts;
(b) It does not prove arithmetical accuracy which can be determined by audit;
(c) It is not an account. It is only a statement of account;
(d) All the transactions are primarily recorded in this book, hence it is the primary
book of entry.
66. The person in whose favour the bill is endorsed is known as __________.
(a) Endorsee
(b) Drawee
(c) Drawer
67. Which of the following is/ are the basic features of a Joint Venture
(a) The profit or loss on joint venture is shared between the co-venturers in the agreed
ratio;
(b) The co-venturers may or may not contribute initial capital;
(c) The JV is dissolved once the purpose of the business is over;
68. The following account has a credit balance

(a) Plant and Equipment A/c
(b) Purchase Returns A/c
(c) Purchase A/c
69. When Sales = `3,60,000, Purchase = ` 3,20,000, Opening Stock = `68,000 and rate of
the Gross Profit is 20% on cost, the Closing Stock would be
(a) `1,00,000
(b) `44,000
(c) `46,000
70. As per AS – 1, which of the following is not a Fundamental Accounting Assumptions?

(a) Conservatism
(b) Going Concern

(c) Consistency
(d) Accrual
71. Name the book in which, entries are recorded on the basis of debit notes issued.
(a) Sales book
(b) Purchase Book
(c) Sales Return Book
(d) Purchase Return Book
72. Name the principle involved in the classification of Assets as Fixed and Current
(a) Cost Principle
(b) Going Concern Principle
(c) Matching Principle
(d) Prudence Principle
73. If a fixed amount is withdrawn on the first day of every month of calendar year by a
partner in partnership firm, then for what period the interest on the total amount of
drawings will be calculated?
(a) 4.5 months
(b) 5.5 months
(c) 6.5 months
(d) 7.5 months
74. Del credere commission is allowed to consignee

(a) for making cash sales
(b) for making credit sales
(c) for making extra sales
(d) for undertaking risk of bad debts
75. Which of the following is a function of journal:

(a) Analytical Function
(b) Recording Function
(c) Historical Function
76. Any change in the accounting policy relating to inventories which has a material
effect in the current or later periods should be disclosed. This is in accordance with
the accounting principle of:
(a) Going Concern
(b) Conservatism
(c) Consistency
(d) Disclosure
77. Depreciation is a process of

(a) Apportionment
(b) Valuation
(c) Allocation
78. AS-9 is related to

(a) Revenue Recognition
(b) Cash Flow Statement
(c) Accounting for Fixed Assets
(d) Disclosure of Accounting policies

79. An amount spent in connection with obtaining a License for starting the factory is
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Pre-paid Expenditure
80. According to AS-15 (Revised) superannuation scheme which has relevance only to
the final salary and number of years of service is
(a) Defined Benefit Scheme
(b) Defined Contribution Scheme
(c) Non-Contributory Scheme
(d) Both (a) and (b)
81. Expenditures in respect of certain types of assets whose usefulness does not expires
in the year of their occurrence but generally expires in the near future are called
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Deferred Revenue Expenditure
82. The main objective of average clause contained in a fire insurance policy is to
(a) Encourage full Insurance
(b) Discourage full Insurance
(c) Encourage under Insurance
(d) Encourage full Insurance and Discourage under Insurance
83. Short working can be recouped out of

(a) Minimum Rent
(b) Excess of Actual Royalty over Minimum Rent
(c) Excess of Minimum Rent over Actual Royalty
(d) Profit and Loss Account
84. AS-6 (revised) is applicable to which one of the following assets?

(a) Goodwill
(b) Live stock
(c) Plantation
(d) Plant and Machinery
85. According to AS-3 (Revised) interest and dividends received in the case of a
manufacturing enterprise should be classified as cash flow from
(a) Operating Activities
(b) Financing Activities
(c) Investing Activities
(d) Both (b) and (c)
86. Provision for bad and doubtful debts is created in anticipation of actual bad debts on
the basis of:
(a) Business Entity Concept;
(b) Conservatism Concept;
(c) Accrual Concept;
(d) Full Disclosure Concept.
87. The out flow of funds to acquire an asset that will benefit the business for more than
one accounting period is referred to as:
(a) Miscellaneous Expenditure;
(b) Revenue Expenditure;

(c) Capital Expenditure;

(d) Deferred Revenue Expenditure.
88. Goods are sent to the Branch at cost plus 25%. The loading on invoice price is:
(a) 20%;
(b) 25%;
(c) 30%;
89. Actuarial valuation relates to:

(a) Banking company;
(b) Electric Supply Company;
(c) Insurance Company;
90. Survey expenses for marine insurance claim must be

(a) Added to claim;
(b) Added to legal charges;
(c) Added to administrative charges;
91. A profit on sale of furniture of a club will be taken to

(a) Cash Account;
(b) Receipts and Payment Account;
(c) Income and Expenditure Account;
(d) Profit and Loss Account.
92. Realisation Account is a:

(a) Representative Personal Account;
(b) Artificial Personal Account;
(c) Real Account;
(d) Nominal Account.
93. Bank shows the provision for income tax under the head
(a) Contingency Accounts;
(b) Other liabilities and provisions;
(c) Contingent liabilities;
(d) Borrowings.
94. Bank Reconciliation Statement is:

(a) Ledger Account
(b) Part of cash book
(c) A separate statement
(d) A subsidiary of Journal
95. Income & Expenditure A/c shows subscriptions `10,000; Subscriptions accrued in the
beginning of the year and at the end of the year were `1,000 and `1,500
respectively. The figure of subscription received appear in receipts and payments
account will be:
(a) `9,500
(b) `10,000
(c) `10,500
(d) `12,000
96. A non-performing asset is:

(a) Money at call and short notice.

(b) Cash balance with bank

(c) An asset that ceases to generate income
97. Which of the following is not a Qualitative characteristicof Financial Statement?

(a) Cost Principle
(b) Understandability
(c) Relevance
(d) Reliability
98. Name the book in which, entries are recorded on the basis of credit notes issued.
(a) Sales Book
(b) Purchase Book
(c) Sales Return Book
(d) Purchase Return Book
99. Exception to consistency principle is

(a) Cost Principle
(b) Going Concern Principle
(c) Matching Principle
100. The balance in consignment account shows

(a) Amount receivable from consignee
(b) Amount payable to consignee
(c) Profit/ loss on consignment
(d) Closing stock with consignee
101. Provision for bad debts is

(a) Real Account
(b) Nominal account
(c) Personal account
102. The business is treated as distinct and separate from its owners on the basis of the
(a) Going concern concept
(b) Conservatism concept
(c) Matching concept
(d) Business entity concept
103. Due to retrospective effect on revision of salary of employees, the arrears of salary
relating to past years, payable in current year is
(a) Prior - period item
(b) Extra - ordinary item
(c) Ordinary item requiring separate disclosure
(d) Contingent item
104. Discount given in the Sales - Invoice itself is

(a) Cash discount
(b) Trade discount
(c) Rebate
(d) Allowance
105. Canteen expenses are apportioned among departments in the proportion of

(a) Departmental floor space
(b) Departmental direct wages

(c) Departmental sales

(d) Departmental No. of employees
106. Both cash and credit transactions are recorded, on the basis of
(a) Accounting Period Concept
(b) Going Concern Concept
(c) Business Entity Concept
(d) Accrual Concept
107. Which of the following book is both a journal and a ledger?

(a) Cash Book
(b) Sales Day Book
(c) Bills Receivable Book
(d) Journal Proper
108. Interest received in advance account is a

(a) Nominal Account
(b) Real Account
(c) Artificial Personal Account
(d) Representative Personal Account
109. Shiva draws a bill on Sanat on 25th October, 2018 for 90 days, the maturity date of the
bill will be
(a) 27th January, 2019
(b) 26th January, 2019
(c) 25th January, 2019
(d) 28th January, 2019
110. Peeru and Simu entered in the business of buy and sale of food grain for a period of
one year and sharing the profit in the ratio of 3:2, this agreement is a
(a) Partnership
(b) Consignment
(c) Joint-venture
(d) Lease
111. At the end of the year 2017-18, Prepaid Insurance Premium `7,500 appeared in the
Trial Balance, it will be shown
(a) only in Profit & Loss Account.
(b) only in Balance Sheet.
(c) both in Profit & Loss Account and in Balance Sheet.
(d) not in Both in Profit & Loss Account and in Balance Sheet.
112. Contingent Liability would appear

(a) on the liabilities side of the Balance Sheet.
(b) on the assets side of the Balance Sheet.
(c) as a note in the Balance Sheet.
113. Debtors Ledger Adjustment Account is opened in the

(a) Debtors Ledger
(b) Creditors Ledger
(c) General Ledger
(d) Both Creditors Ledger and General Ledger
114. Generally sacrifice ratio is concerned with the situation of

(a) Admission of a new partner

(b) Retirement of a partner

(c) Dissolution of firm
(d) Conversion of firm into company
115. KCS purchased a machine from JPS on hire purchase system, whose cash price was
`8,64,000. ` 2,16,000 being paid on delivery and balance in three annual instalments
of `2,88,000 each. The amount of interest included in first installment would be
(a) ` 72,000
(b) `57,600
(c) `1,08,000
(d) `36,000
116. Which of the following is a resource owned by the business with the purpose of using it
for generating future profits?
(a) Loan from Bank
(b) Owner's Capital
(c) Trade Mark
117. Chandu & Co.'s Account is a

(a) Real Account
(b) Nominal Account
(c) Representative Personal Account
(d) Artificial Personal Accounts
118. Purchase of a laptop for office use wrongly debited to Purchase Account. It is an error
of
(a) Omission
(b) Commission
(c) Principle
(d) Misposting
119. Which of the following term is most suitable for writing off Patent?
(a) Depletion
(b) Amortization
(c) Depreciation
120. Memorandum Joint Venture Account is prepared when

(a) the separate set of books is maintained for Joint Venture.
(b) each Co-venturer keeps records of all transactions.
(c) each Co-venturer keeps records of their own transactions only.
(d) All of the above cases
121. Which of the following commission is allowed by the consignor to the consignee to
encourage the consignee for putting-up hard work in introducing new product in the
market?
(a) Del-credere Commission
(b) Over-riding Commission
(c) Hard work Commission
(d) Ordinary Commission
122. If Ram's acceptance which was endorsed by us in favour of Saleem is dishonoured,

then the amount will be debited in our books to
(a) Saleem
(b) Ram

(c) Bills Receivable Account

123. In case of a Club, the excess of expenditure over income is called as

(a) Surplus
(b) Deficit
(c) Capital Fund
(d) Investment in Fixed Assets
124. A Charitable Institution has 250 members with a annual subscription of `5,000 each.
The subscription received during 2018-19 were `11,25,000, which include ` 65,000 and
`25,000 for the years of 2017-18 and 2019-20 respectively. Amount of outstanding
subscription for the 2018-19 will be
(a) `90,000
(b) `1,25,000
(c) `2,15,000
(d) ` 1,90,000
125. The following are details of closing stock items in Aarvi Limited:
Items Historical Cost (` in Lakh) Net Realizable Value (` in Lakh)
A 30 27
B 15 18
C 35 35
D 40 45
The value of Closing Stock will be
(a) `120 Lakh
(b) `125 Lakh
(c) `117 Lakh
(d) `128 Lakh
126. When stock is valued at cost in one accounting period and at lower of cost and Net
realizable value in another accounting period
(a) Prudence Principle conflicts with Consistency Principle.
(b) Matching Principle conflicts with Consistency principle.
(c) Consistency Principle conflicts with Accounting Period Assumption.
127. Materiality Principle is an exception to the

(a) Consistency principle
(b) Full disclosure Principle
(c) Accounting Period Assumption
128. In a Cash Book Debit balance of `112 brought forward as credit balance of ` 121,
while preparing a Bank Reconciliation Statement taking the balance as per Cash Book
as the starting point:
(a) `112 to be added
(b) `121 to be added
(c) ` 233 to be added
(d) `112 to be subtracted
129. ______________ represents a potential obligation that could be created depending on

the outcome of an event.
(a) Internal Liability
(b) Current Liability
(c) Contingent Liability
(d) Non-current Liability

130. Opening Debtors, Collection from Debtors and Discount Allowed were `3,15,000;
`18,30,000 and `35,000 respectively. If the closing debtors were 20% of credit sales of
the period then closing debtors and credit sales would be
(a) ` 3,51,667 and`17,58,333
(b) `3,63,333 and `18,16,667
(c) `3,87,500 and `19,37,500
(d) `3,10,000 and `15,50,000
131. Following information is given
`
Opening Stock 2,13,000
Purchase 16,55,000
Sales 21,32,000
Carriage Inwards 32,500
Carriage Outwards 38,600
Return Inwards 38,000
If the rate of gross profit is 25% on cost then value of closing stock will be
(a) `2,57,800
(b) `1,94,900
(c) `2,25,300
(d) ` 3,30,000
132. Provision for Doubtful Debt on 1st April, 2018 was `21,500. During the year 2018 – 19
the Bad-debt and Recovery of Bad-debt were ` 10,500 and ` 2,100 respectively. The
Sundry Debtors on 31st March, 2019 were `2,25,000. Provision is to be made @ 5% on
Debtors. If on 31st March, 2019, there was additional Bad-debt of ` 2,500 then Provision
for doubtful-debt will be
(a) debited to Profit & Loss Account by `11,250.
(b) debited to Profit & Loss Account by `2,625.
(c) debited to Profit & Loss Account by `3,000.
(d) debited to Profit & Loss Account by `900.
133. A and B enter into a joint venture sharing profit and losses in the ratio of 3:2. A
purchased goods costing `2,00,000. B sold 95% goods for ` 2,50,000. A is entitled to get
1% commission on purchase and B is entitled to get 5% commission on sales. A drew a
bill on B for an amount equivalent to 80% of original cost of goods. A got it discounted
at `1,50,000. What is A's share of profit?
(a) `15,300
(b) ` 21,300
(c) `18,900
134. Subscription of ` 6,25,000 had been shown in the Income and Expenditure Account
prepared for the year ending 31st March, 2019. Additional information is as below:
135.
On 31st March, 2018 (`) On 31st March, 2019 (`)
Subscription Outstanding 55,000 72,000
Subscription Received in Advance 31,000 37,000
The amount of subscription received during the year 2018-19 would be

(a) `6,36,000
(b) `6,02,000
(c) `6,14,000
(d) `6,48,000

136. X and Y are partners with the capital of `50,000 and ` 30,000 respectively. Interest
Payable on Capital is 10% p.a. If the profits earned by the firm is ` 4,800, what will be
the Interest on Capital for X and Y?
(a) `5,000 and `3,000
(b) `3,000 and `1,800
(c) No interest will be paid to the partners
Answer Key:
(1) (d) Contingent Liability

(2) (a) assets side of the Balance Sheet.
(3) (d) Asset's Life-cycle Method
(4) (d) ` 1,20,000
(5) (c) when both parties are in need of funds.
(6) (b) X's account in creditors ledger will be debited.
(7) (d) Fixed rent payable in addition to minimum rent
(8) (c) The Institute of Chartered Accountants of India
(9) (c) ` 39,500
(10) (a) Nominal Account
(11) (a) General Ledger
(12) (b) Real Account
(13) (b) Asset
(14) (b) Sales Book
(15) (d) Wages paid for installation of machinery
(16) (a) an income of the joint venture
(17) (d) as a note in Balance Sheet
(18) (c) Income and Expenditure Account
(19) (c) Realization A/c
(20) (a)sales of each department
(21) (c) Hire purchase price of asset
(22) (d) All of the above
(23) (a) Income and Expenditure A/c
(24) (d) Rahim
(25) (b) Number of units sold by each department
(26) (d) Materiality
(27) (a) Net Realizable value
(28) (a) Non-current Investments
(29) (c) Contingent Liability
(30) (a) Cash Payment
(31) (d) None of the above
(33) (a) Depletion
(34) (b) Loans A/c
(35) (c) ` 4,20,000
(36) (a) ` 30,000
(37) (a) Recognize expected loss of ` 5 Crores
(38) (c) It records revenue transactions only
(40) (c) Interest
(41) (d) All of Above
(42) (a) Revenue Recognition
(43) (a) Endorsee
(45) (a) Good debt
(46) (b) Credit Transaction

(47) (c) Internal

(48) (a) ` 12,000
(49) (d) Credited to bad debts recovered A/c
(51) (b) Return Outward
(52) (a) Going Concern
(55) (b) Going Concern concept
(56) (a) Outstanding cash Price
(57) (b) ` 9,000
(58) (d) Credited to bad debts recovered A/c
(60) (c) Capital expenditure
(61) (d) Estimated Economic Life
(62) (d) Both the revenue and capital nature receipts and payments
(63) (c) Short workings
(64) (a) Journal Proper
(65) (d) All the transactions are primarily recorded in this book, hence it is the primary
book of entry
(66) (a) Endorsee
(68) (b) Purchase Returns A/c
(69) (d) None of the above
(70) (a) Conservatism
(71) (d) Purchase Return Book
(72) (b) Going Concern Principle
(73) (c) 6.5 months
(74) (d) for undertaking risk of bad debts
(76) (c) Consistency
(77) (c) Allocation
(78) (a) Revenue Recognition
(79) (b) Capital Expenditure
(80) (a) Defined Benefit Scheme
(81) (c) Deferred Revenue Expenditure
(82) (d) Encourage full Insurance and Discourage under Insurance
(83) (b) Excess of Actual Royalty over Minimum Rent
(84) (d) Plant and Machinery
(85) (c) Investing Activities
(86) (b) Conservatism Concept
(87) (c) Capital Expenditure
(88) (a) 20%
(89) (c) Insurance Company
(90) (a) Added to claim
(91) (c) Income and Expenditure Account
(92) (d) Nominal Account
(93) (b) Other liabilities and provisions
(94) (c) A separate statement
(95) (a) ` 9,500
(96) (c) An asset that ceases to generate income
(97) (a) Cost Principle
(98) (c) Sales Return Book
(99) (d) Prudence Principle
(100) (c) Profit/ loss on consignment
(101) (c) Personal account

(102) (d) Business entity concept

(103) (c) Ordinary item requiring separate disclosure
(104) (b) Trade discount
(105) (d) Departmental No. of employees
(106) (d) Accrual Concept
(107) (a) Cash Book
(108) (d) Representative Personal Account
(109) (c) 25th January, 2019
(110) (c) Joint-venture
(111) (b) only in Balance Sheet
(112) (c) as a note in the Balance Sheet
(113) (c) General Ledger
(114) (a) Admission of a new partner
(115) (c) ` 1,08,000
(116) (c) Trade Mark
(117) (d) Artificial Personal Accounts
(118) (c) Principle
(119) (b) Amortization
(120) (c) each Co-venturer keeps records of their own transactions only
(121) (b) Over-riding Commission
(122) (b) Ram
(123) (b) Deficit
(124) (c) ` 2,15,000
(125) (c) ` 117 Lakh
(126) (a) Prudence Principle conflicts with Consistency Principle
(127) (b) Full disclosure Principle
(128) (c) ` 233 to be added
(129) (c) Contingent Liability
(130) (c) ` 3,87,500 and ` 19,37,500
(131) (c) ` 2,25,300
(132) (b) debited to Profit & Loss Account by ` 2,625
(133) (b) ` 21,300
(134) (c) ` 6,14,000
(135) (b) ` 3,000 and ` 1,800

(II) Match the following in Column I with the appropriate in Column II
1. Match the following:
Column I Column II
i. Noting charges A Branch Accounts
ii. Stock and Debtors Method B Piecemeal Distribution
iii. Work certified C Not-for Profit Organisation
iv. Average Clause D Royalty Accounts
v. Maximum Loss Method E Bill of Exchange
F Construction Contract
G Insurance Claims
Column I Column II
i. Garner Vs. Murray Case A AS – 10
ii. Repossession of Goods B Computerized Accounting System
iii. Provision for unrealized profit C Insolvency of a Partner
iv. Property, Plant and Equipment D Royalty Accounts
v. Automatic Financial Statements E Hire Vendor
F Inter-departmental transfer at invoice
price
G Retirement of a Partner
Column I Column II
i. GAAP A Encourages prompt payment by debtor
ii. Cash receipt voucher B Amount owed by business to others
iii. Capital Receipt C Generally Accepted Accounting Principles
iv. Liabilities D Denotes receipt of cash
v. Cash Discount E It is non-recurring in nature
Column I Column II
i. Chronologically recording of transactions A Machinery Account
ii. Generally Accepted Accounting Principles B Recurring in nature
iii. Tangible Real a/c C Journal
iv. Revenue Receipts D GAAP
v. Helps check the arithmetical accuracy E Drawee
vi. Acceptance of Bills of Exchange F Trial Balance
vii. Dissolution of Firm G AS – 10
viii. Property, Plant and Equipment H Realisation Account
ix. Amount of actual royalty over minimum I Tournament Expenses
rent
x. Not for profit organizations J Excess working
Column I Column II
i. Double Column A Property, Plant and Equipment
ii. Under Valuation of Assets B Cash Book
iii. AS – 10 C Secret Reserves

iv. Indemnity Period D Dead Rent

v. Minimum Rent E Insurance Claims
Column I Column II
i. Both a journal and a ledger A Valuation of Inventories
ii. Under valuation of Assets B Cash Book
iii. AS – 2 C Secret Reserves
iv. Indemnity Period D Royalties
v. Minimum Rent E Insurance Claim
Column I Column II
i. Maximum Loss A Hire Purchase
ii. Partial repossession B Bills of Exchange
iii. Purchases day book C Credit Balance
iv. Noting charges D Partnership Dissolution
v. Provision for bad and doubtful debts E Subsidiary Book
Column I Column II
i. Events occurring after the Balance A AS – 6
Sheet Date
ii. Prior Period Items B AS – 9
iii. Depreciation Accounting C AS – 16
iv. Timing of recognition of sales of D AS – 5
goods
v. Capitalization of Borrowing Cost E AS - 4
Column I Column II
i. AS 16 A Revenue Recognition
ii. Remittance in transit B Receipts and Payments account
iii. Entrance Fee C Borrowing costs
iv. AS 9 D Dissolution of Partnership firm
v. Garner V Murray Rule E Branch Adjustment
Column I Column II
i. Non -Performing Assets A Branch Accounts
ii. AS – 15 (Revised) B Consignment Accounting
iii. AS – 28 C Banking Company
iv. Stock and Debtors Method D Employee Benefits
v. Account Sales E Impairment of Assets
F Borrowing Cost
Column I Column II
i. Assets are equal to liabilities plus A AS – 9

capital
ii. Intangible Fixed Assets B AS – 2
iii. Depreciation Accounting C Dual Aspect Concept
iv. Revenue Recognition D AS – 6
v. Valuation of Inventories E Goodwill
F Borrowing Cost
Column I Column II
i. Non-Performing Assets A Single Entry System
ii. Intangible Assets B Trial Balance
iii. Statement of Affairs C AS – 26
iv. Depreciation Accounting D Banking Companies
v. Check Arithmetic Accuracy E AS - 10
Column I Column II
i. Cash Flow Statement A AS – 13
ii. Unexpired Risk Revenue B Consignment
iii. Accounting for Investment C AS – 7
iv. Del-credere Commission D Insurance Companies
v. Construction Contracts E AS – 3
Column I Column II
i. AS – 3 A Insurance Claims
ii. Maximum Loss Method B Accounting for fixed assets
iii. AS – 10 C Hire Purchase system
iv. Average Clause D Piece meal distribution
v. Repossess the goods E Cash flow statement
Column I Column II
i. Receipt & Payment a/c A AS – 10
ii. Revaluation model of Asset B Consignment
iii. Proforma Invoice C Not for Profit Organization
iv. Stage of Completion Method D Hire Purchase
v. Partial Repossession E AS – 7
F AS – 6
Column I Column II
i. Dead Rent A Bills Receivable
ii. Marshalling B Consignment
iii. Protesting C Liquidity Order
iv. Account Sales D Accounting Policies
v. Substance over form E Royalty

Column I Column II
i. Highest Relative Capital Method A Departmental Accounts
ii. Basis of Apportionment of Expenses B Insurance Claim
iii. Partial Repossession C AS – 9
iv. Indemnity Period D Piecemeal Distribution
v. Revenue Recognition E Hire Purchase
Column I Column II
i. Endorsement A AS – 7
ii. Amortisation B AS – 10
iii. Average Clause C Depreciation
iv. Percentage of Completion D Bills Receivable
v. Recoverable Amount E Insurance Claim
Answer Key:
Ans:1
(i) E
(ii) A
(iii) F
(iv) G
(v) B
Ans:2
(i) C
(ii) E :
(iii) F
(iv) A
(v) B
Ans:3
(i) C
(ii) D
(iii) E
(iv) B
(v) A
Ans:4.
(i) C
(ii) D
(iii) A
(iv) B
(v) F
(vi) E
(vii) H
(viii) G
(ix) J
(x) I

Ans:5
(i) B
(ii) C
(iii) A
(iv) E
(v) D
Ans:6
(i) B
(ii) C
(iii) A
(iv) E
(v) D
Ans:7
(i) D
(ii) A
(iii) E
(iv) B
(v) C
Ans: 8
(i) E
(ii) D
(iii) A
(iv) B
(v) C
Ans:9
(i) C
(ii) E
(iii) B
(iv) A
(v) D
Ans:10
(i) C
(ii) D
(iii) E
(iv) A
(v) B
Ans:11
(i) C
(ii) E
(iii) D
(iv) A
(v) B

Ans:12
(i) D
(ii) C
(iii) A
(iv) E
(v) B
Ans:13
(i) E
(ii) D
(iii) A
(iv) B
(v) C
Ans:14
(i) E
(ii) D
(iii) B
(iv) A
(v) C
Ans:15
(i) C
(ii) A
(iii) B
(iv) E
(v) D
Ans:16
(i) E
(ii) C
(iii) A
(iv) B
(v) D
Ans:17
(i) D
(ii) A
(iii) E
(iv) B
(v) C
Ans:18
(i) D
(ii) C
(iii) E
(iv) A
(v) B

(III) State whether the following are 'True' or 'False':
1. Memorandum joint venture account is prepared to find out amount due from co-
venture.
2. Receipts and Payments Account is prepared by adopting cash principle of
accounting.
3. As per AS-9 revenue from interest should be recognized on the time proportion basis.
4. Bad debts recovered is credited to debtor's personal account.
5. New-partner pays premium for goodwill, which will be shared by old partners in their
new profit-sharing ratio.
6. One of the objectives achieved by providing depreciation is saving cash resources
for future replacement of assets.
7. Royalty account is a real account in nature.
8. As per AS-7 expenses recognized in the period in which the work to which expenses
relate is performed.
9. Expenses incurred by branch out of petty cash balance are debited to branch
account by the head office.
10. In absence of partnership deed the profit or loss should be distributed among partners
in their capital ratio.
11. The excess of expense over income is called Profit.
12. Current Liability represents a potential obligation that could be created depending on
the outcome of an event.
13. The primary stage of accounting function is called Book-keeping.
14. In Dual Aspect Concept the assets represent economic resources of the business.
15. According to AS-2 Inventories are held for sale in normal course of business.
16. Premium received on issue of shares is a revenue profit.
17. Depreciation is an actual loss.
18. Dishonour of a Bill means that the acceptor refuses to honour his commitment on due
date and payment of the bill on presentation does not take place.
19. Consignee is the person who sends goods to agents.
20. Average Clause is a clause contained in a fire insurance policy.
21. In case of Hire Purchase ownership passes at the time of sale.
22. Minimum rent is also called dead rent or fixed rent.
23. Revenue expenditure is the outflow of funds to acquire an asset that will benefit the
business for not more than one accounting period.
24. Independent Branches maintain independent accounting records.
25. Depreciation is a charge against profit.
26. Compensation paid to employees who are retrenched is Capital expenditure.
27. In the hire purchase system interest charged by vendor is calculated on the basis of
the outstanding cash price.
28. When complete sequence of accounting procedure is done, which happens
frequently and repeatedly in same directions then it is called an accounting cycle.
29. Liabilities are resources owned by the business with the purpose of using it for
generating future profits.
30. Excess of hire purchase price over cash price is known as Interest.
31. Bad debts are apportioned among departments in the proportion of sales of each
department.
32. Joint Venture is a Temporary form of business organization.
33. As per concept of conservatism, the Accountant should provide for all possible losses
but should not anticipate profit.
34. Hybrid Basis of Accounting is the combination of both Cash as well as Accrual basis.
35. Honour of a Bill means that the acceptor refuses to honour his commitment on due
date and for this, payment of the bill on presentation does not take place.
36. As per full disclosure principle, the financial statements should disclose all irrelevant
information.
37. Realisation account is a real account.

38. Trade discount is recorded in the books of original entry.

39. Abnormal wastages should be included in the cost of inventories as per AS – 2.
40. In absence of partnership deed, partners are entitled to interest on capital @ 6% p.a.
41. Realisation account is opened at the time of dissolution of the partnership firm.
42. Amount spent for white washing the factory building is treated as Revenue
Expenditure.
43. In the case of consignment sales, revenue is to be recognised on sale of goods to a
third party.
44. The amount by which the minimum rent exceeds the actual Royalty is known as
Excess Workings.
45. Bank Reconciliation Statement is not a part of the process of Accounts.
46. As per AS-2 Inventory is valued at the lower of net realizable value and current
replacement cost.
47. Retiring a bill under rebate means payment of the bill before due date.
48. Income and Expenditure Account is prepared by adopting accrual principle of
Accounting.
49. As per concept of conservatism, the Accountant should provide for all possible losses
but should not anticipate profit.
50. The cost of developing software for a company engaged in software business is
revenue expenditure.
51. Goodwill is a fictitious asset.
52. Wages incurred by departmental workers of a factory in installing a new machinery is
a revenue expenditure.
53. Royalty account is a nominal account in nature.
54. Trial Balance would not disclose error of omission.
55. Original cost minus scrap value is the depreciated value of an asset.
56. The average clause is applicable when the actual loss is less than the sum assured.
57. Life membership fee may be capitalized and shown in balance sheet in liabilities
side.
58. Bad debts are apportioned among departments in the proportion of value of sales of
each department.
59. Joint Venture is temporary partnership.
60. As per AS-2, inventory should normally be valued at historical cost or market value
whichever is lower.
61. When the goods are returned by branch goods sent to branch account will be
credited in the books of head office.
62. The contract of insurance is a contract of guarantee.
63. Receipt & Payment Account only records the revenue nature of receipts and
expenses.
64. Sales Book records both cash and credit sales.
65. Normal loss of goods sent on consignment is shown in Consignment Account.
66. In case of trading concern, cost of goods sold and cost of sales are same.
67. In Proprietorship business, Income-tax payable is shown as a liability in Balance
Sheet.
68. Bank reconciliation statement is prepared to arrive at the bank balance.
69. Deferred revenue expenditure is current year's revenue expenditure to be paid in the
later years.
70. Reducing balance method for depreciation is followed to have a uniform charge for
depreciation and repairs and maintenance together.
71. Reserve for Discount on Creditors has a credit balance.
72. A promissory note can be made payable to the bearer.
73. All these items of revenue nature which received during the period of accounts, are
only shown in the Income and Expenditure Account.
74. When the capitalization of profits method is used then the value of goodwill on the
basis of future maintainable profits is more than that of on the basis of super profits.

75. In case of transfer from Creditors Ledger to Debtors Ledger, the Debtors Ledger
Adjustment Account should be debited.
76. Unrecoupable short-workings should be charged to Profit and Loss Account.
77. In the Stock and Debtors Method of accounting, balance of Branch Stock Account
shows either Gross Profit or Gross Loss.
78. Prudence is a concept to recognise all losses and not profits.
79. Revenues are matched with expenses in accordance with the matching principle.
80. Depreciation is non-cash and non-operating expense which is to be provided for if
there are profits.
81. Net Profit is reflected in higher cash balances and net loss is reflected in lower net
worth.
82. If Partnership Deed is silent, Rate of Interest on loan by firm to a Partner shall be 6%
p.a.
Answer Key:
1. False
2. True
3. True
4. False
5. False
6. True
7. False
8. True
9. False
10. False
11. False
12. False
13. True
14. True
15. True
16. False
17. False
18. True
19. False
20. True
21. False
22. True
23. True
24. True
25. True
26. False
27. True
28. True
29. False
30. True
31. True
32. True
33. True
34. True
35. False
36. False
37. False
38. False
39. False
40. False

41. True
42. True
43. True
44. False
45. True
46. False
47. True
48. True
49. True
50. False
51. False
52. False
53. True
54. True
55. True
56. False
57. True
58. True
59. True
60. True
61. False
62. False
63. False
64. False
65. False
66. False
67. False
68. False
69. False
70. True
71. False
72. False
73. False
74. False
75. False
76. True
77. True
78. False
79. False
80. False
81. False
82. False

(IV) Fill in the blanks:
1. The ______ discount is not recorded in the books of accounts.

2. Profit or Loss on revaluation is shared among the partners in ___________________Ratio.
3. At the time of goods sent to consignee, the proforma invoice is prepared by ________.
4. Memorandum revaluation account is prepared when the _____________ of assets and
liabilities are not altered.
5. Realisation account is opened at the time of ______________of the firm.
6. A bill of exchange drawn on 12th April, 2017 for four months, the date of maturity will
be ________________.
7. The parties of joint venture is called ______________.
8. Outstanding subscription is shown in the _________ side of Balance Sheet.
9. According to AS-2 inventories should be valued at lower of cost and ________________
value.
10. Revenue expenditure is incurred to earn revenue of the ___________ period.
11. The debts which may or may not be realized are called ____________ debts.
12. The _______________ shows financial position of the business as on a particular date.
13. ______________ is the combination of both the basis i.e. Cash as well as Accrual basis.
14. A transaction forgotten to be entered in books of accounts is an error of ___________.
15. In a Computerised Environment the processing of information will be by one or more
______________.
16. _____________ represents an amount of cash, goods or any other assets which the
owner withdraws from business for his or her personal use.
17. Assets like brand value, copy rights, goodwill are known as _______________.
18. Rebate is given in case of ______________of a bill.
19. Goods costing ` 4,00,000 sent out to consignee at cost + 25%. Invoice value of the
goods will be _____________.
20. The amount invested by owners into business is called___________.
21. As per ________________ concept business is assumed to exist for an indefinite period.
22. _______________ Cash Book has one amount column on each side.
23. In case of departmental accounting each department is considered to be an
___________Centre.
24. _____________ accounting package can suitably match with the organisational
structure of the company.
25. Debtor is a person who ______ to others.
26. The average clause is applicable when the actual loss is_______ than the sum
assured.
27. Vehicles represent __________ expenditure while repairs to vehicle would mean
__________ expenditure.
28. Amount spent on the travelling expenses of a partner to a foreign trip for purchase of
an asset to be used for the business is __________ expenditure.
29. The withdrawal of money by the owner of business is called __________.
30. An allowance by a creditor to debtor for prompt payment is ______________.
31. Income & Expenditure Account is similar to __________________ A/c.
32. Profit means excess of _________ over ________________.
33. The Bank A/c is a _________Account.
34. Assets are classified as non-current asset and current assets as per ______________
Principle.
35. ______________________amount is the higher of asset's net selling price and its value in
use.
36. The __________ Loss is included in the valuation of inventories.
37. _________________ is the amount by which minimum rent exceeds the actual royalty.
38. While posting an opening entry in the ledger, in case of an Account having debit
balance, in ‘Particulars’ column the words ________________ are written on debit side.
39. Depreciation Accounting is the process of __________and not __________.

40. Finished goods are normally valued at cost or ________________whichever is lower.

41. The relation between Consignee and Consignor is that of ________________.
42. The relationship between Co- venturer’s is that of ____________.
43. Net Worth is excess of _____________ over ______________.
44. The Sales `180 Lakh, Purchases `129 Lakh and Opening Stock ` 33 Lakh. If the rate of
Gross Profit is 50% on cost, then the value of closing stock will be _______.
45. In case of Loss of Profit Policy, Gross Profit is the sum of Net Profit plus _________
Standing Charges.
46. Interest to be allowed @ 0.75 per cent per month on Partners Capital of ` 60 Lakh;
Manager's Commission @ 5 per cent of Net Profit before charging such commission. If
the Net Profit before charging interest on capital and manager's commission
amounted to `14.85 Lakh, then manager's commission will be _______.
47. A machinery was purchased on Hire Purchase System. Its cash price was ` 5,20,000
which was payable in annual instalments of `1,80,000 each including interest @ 15 per
cent per annum. The amount of interest included in 2nd instalment would be ______.
48. _________________ method for depreciation is followed to have a uniform charge for
depreciation and repairs and maintenance together.
49. Reserve for Discount on Creditors has a____ balance.
50. __________________ can be made payable to the bearer.
51. The gain from sale of capital assets need not be added to revenue to ascertain the
_________________of a business.
52. __________ property may be the subject matter of consignment.
Answer Key:
1. trade
2. Old Profit sharing
3. Consignor
4. Book Value
5. Dissolution
6. 14th August, 2017
7. co-venturer’s
8. Assets
9. Net Realizable
10. current
11. doubtful
12. Balance Sheet
13. Hybrid/Mixed
14. Omission
15. Computers
16. Drawings
17. Intangible Assets
18. Retirement
19. ` 5,00,000.
20. Capital.
21. Going Concern
22. Single Column
23. Activity
24. Customized
25. Owes
26. More
27. capital,revenue
28. capital
29. drawings
30. Cash discount
31. Profit and Loss
32. income, expenditure

33. Personal
34. Going Concern
35. Recoverable / Fair Value
36. Normal
37. Short – Workings
38. To balance b/f
39. allocation,valuation
40. Net Realizable Value
41. Agent and Principal
42. Co-owners
43. total assets, total liabilities
44. ` 42 Lakh
45. Insured
46. ` 47,250
47. 62,700
48. Reducing Balance
49. debit
50. Bills Receivable
51. Operating Profit or Loss
52. Movable

Notes
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THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
www.icmai.in
Headquarters
CMA Bhawan, 12 Sudder Street, Kolkata - 700016
Å +91-33-2252 1031/34/35/1602/1492
Delhi Office
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Behind every successful business decision, there is always a CMA

Behind every successful business decision, there is always a CMA

Behind every successful business decision, there is always a CMA

The Institute of Cost Accountants of India 1

1. If an employee of the business files a legal suit on business, it is considered in the

3. Which of the following is not a method of charging depreciation?

5. The Accommodation bill is drawn

6. Balance of X's account in creditors ledger is transferred to X's account in debtors

7. Ground rent or surface rent means

8. Accounting standard in India are issued by

The Institute of Cost Accountants of India 2

10. Income and Expenditure Account is a

11. Creditors ledger adjustment account is opened in

12. Receipts and Payments account is a

14. Outward Invoice issued is a source document of

15. Which of the following is of capital nature?

16. If any stock is taken by a co-venturer, it will be treated as

17. Contingent liability would appear

The Institute of Cost Accountants of India 3

18. Income statement of a Charitable Institution is known as

20. Advertisement expenses are apportioned among departments in the proportion of

21. In Hire Purchase system cash price plus interest is known as

23. __________ is similar to the Profit and loss A/c

25. Bad debts are apportioned among departments in the proportion of

26. Which of the following is not a Fundamental Accounting Assumption?

The Institute of Cost Accountants of India 4

29. An obligation which may or may not materialize is a/an _______________.

30. ________________ voucher denotes payment of cash.

31. Which of the following is an example of Capital Expenditure?

32. Which of the following errors is not disclosed by a Trial Balance?

34. The following account has a credit balance

The Institute of Cost Accountants of India 5

40. Excess of hire purchase price over cash price is known as

41. Which of the following is/are revenue expenditure?

42. AS-9 is related to

43. The person to whom bill is endorsed is known as __________.

The Institute of Cost Accountants of India 6

(c) Profit on sale of asset is credited

45. The debts which are not bad is known as

46. A transaction without immediate cash settlement is known as

48. Goods are transferred from Department X to Department Y at a price so as to

49. Bad debts Recovered `1,000. It will be

The Institute of Cost Accountants of India 7

53. Capital Profit arises from which of the following?

54. Which of the following cannot be detected by Trial Balance?

57. Goods are transferred from Department A to Department B at a price so as to

58. Bad debts Recovered `750. It will be

59. Which of the following is a function of journal:

The Institute of Cost Accountants of India 8

62. Receipts and Payments Account records

63. Excess of minimum rent over royalty is known as

65. Which of the following is not a feature of Trial Balance

68. The following account has a credit balance

70. As per AS – 1, which of the following is not a Fundamental Accounting Assumptions?

The Institute of Cost Accountants of India 9

74. Del credere commission is allowed to consignee

75. Which of the following is a function of journal: