CAT – Level – I Sample Question Paper

Paper – 1
Time Allowed: 2 Hrs Max Marks: 100

Que No. 1. All fixed assets have a limited useful life except:

(A) Intangible Assets

(B) Land
(C) Furniture
(D) Plant & Machinery

Que No. 2. Transaction means exchange of money or money’s worth for __________.

(A) Capital
(B) Value
(C) Drawings
(D) Credit

Que No. 3. Can a Minor be a party of Joint venture:

(A) Minor can be admitted into joint venture but can’t participate actively in the business.
(B) Minor can be admitted only for the benefits of joint venture profits.
(C) No, A Minor cannot act as “Co-Venture” in the joint venture.
(D) Yes, A Minor can act as a “Co-Venture” in the Joint venture.

Que No. 4. Del Credere Commission is given to:

(A) Increase the volume of Sales

(B) Cover the risk of Bad Debts
(C) Reduce the Tax Liability
(D) None of the Above

Que No. 5. According to Section 9 of the Negotiable Instruments Act, the ____________ is a particular
kind of holder.

(A) Holder in Due Course

(B) Issuer of the Instrument
(C) Minor
(D) All of the above

Que No. 6. Which of the following is not correct:

(A) Errors of omission arise when any transaction is left to be recorded.

(B) Errors of carry forward from one year to another year affect both Personal and Real A/C.
(C) Errors which affect one account can be errors of posting.
(D) Errors of commission arise when any transaction is recorded in a fundamentally incorrect
manner.
Que No. 7. Which of the following is not included in Historical Cost of a Fixed Asset:

(A) Import duties and taxes which are refundable in nature

(B) Purchase Price
(C) Any cost which is directly attributable to bring the asset to the working condition for its intend
to use.
(D) None of the Above

Que No. 8. Sales - Cost of Goods Sold = ?

(A) Gross Working Capital

(B) Net Profit
(C) Gross Profit
(D) Operating Profit

Que No. 9. If a Bank Reconciliation Statement is prepared from the balance of Pass Book:

(A) Add those items which have resulted in the increase of bank balance as per Cash Book
(B) Deduct those items which have resulted in the decrease of bank balance as per Pass Book
(C) Add those items which have resulted in the decrease of bank balance as per Pass Book
(D) Add those items which have resulted in the increase of bank balance as per Pass Book

Que No. 10. GAAP Stands for:

(A) Generally Adopted Accounting Practices

(B) Generally Adopted Accounting Principles
(C) Generally Accepted Accounting Practices
(D) Generally Accepted Accounting Principles

Que No. 11. XYZ issued cheques worth Rs. 6,00,000 in favour of its creditors, on 26th March 2018 out
of which cheques worth Rs. 4,20,000 were presented to bank within 31st March 2018. The balance in
both the books was Rs. 8,00,000 before this transaction. What would be the difference in cash and
pass books as on 31.3.2018:

(A) Rs. 1,80,000

(B) Rs. 80,000
(C) Rs. 4,20,000
(D) Rs. 6,00,000
Que No. 12. Cash Paid to Mr. X for Rs. 1,000 was posted to his account Rs. 100. Pass the rectification
entry if error was deducted after preparation of Final Accounts:

(A)

(B)

(C)

(D)

Que No. 13. Under which depreciation method the amount of depreciation expenses remain same
throughout the useful life of a fixed asset:

(A) Reducing Balance Method

(B) Straight Line Method
(C) Machiner Hour Method
(D) None of the Above

Que No. 14. The following is not a type of liability:

(A) Short Term

(B) Current
(C) Fixed
(D) Contingent
Que No. 15. XYZ Company paid salary to Mr. Ram for Rs. 5,000/- what will be the journal entry in the
books of XYZ Company:

(A)

(B)

(C)

(D)

Que No. 16. M/s Kothari Lal & Sons bought goods from M/s Bhandari Bros. for Rs. 3,000 on 10%
Trade Discount, Journalise the transaction:

(A)

(B)

(C)

(D)

Que No. 17. Machinery A/c is type of _______ Account:

(A) Cash Account

(B) Nominal Account
(C) Personal Account
(D) Real Account
Que No. 18. Memorandum Joint venture a/c will be opened when:

(A) Can be opened only if all co-ventures are agreed.

(B) Separate set of Books are not maintained and each co-venture keeps records of own
transaction.
(C) Separate set of Books are maintained.
(D) Separate set of Books are not maintained and each co-venture keeps records of all
transactions.

Que No. 19. M/s Vinay Kumar returned goods worth Rs. 1,000. What will be the Journal Entry in
Books:

(A)

(B)

(C)

(D)

Que No. 20. __________ will be classified as Cash flow from Financing Activities:

(A) Purchase of Machinery in Cash

(B) Received of Commission
(C) Dividend Paid
(D) None of the Above

Que No. 21. Rs. 15,101 received from Krishan but credited to Sohan A/c. This is an error of:

(A) Commission
(B) Ommission
(C) Compensating
(D) Principle

Que No. 22. Which of the following statement is not true in the context of “Depreciable Assets”:

(A) Have an unlimited useful life

(B) Held by enterprise not for ordinary sale in the ordinary course of business
(C) Used in the production or supply of goods
(D) Expected to be used during more than one accounting period
Que No. 23. Promissory note is drawn by the_______:

(A) Payee
(B) Acceptor
(C) Purchaser
(D) Seller

Que No. 24. Joint Venture business are governed by:

(A) Indian Partnership Act 1932

(B) Indian Contract Act 1872
(C) Law of agency
(D) None of the above

Que No. 25. Which one of the following is true about Income & Expenditure Account of a non-
proft/non-trading concerns:

(A) It starts with opening balance

(B) All Payments - Capital or revenue are recored here
(C) It is similar to Profit & Loss Account
(D) It does not consider whether the payment/expenses relate to the current year or not

Que No. 26. How many days are allowed as Days of Grace:

(A) 6 Days
(B) 3 Days
(C) 4 Days
(D) 5 Days

Que No. 27. Goods sent on consignment at Cost + 25%. The percentage of loading on invoice price will
be _____ :

(A) 33%
(B) 20%
(C) 50%
(D) 25%

Que No. 28. The first step in the accounting cycle is:

(A) Analyze transactions by examining source documents

(B) Prepare financial statements
(C) Post journal entries to the accounts in the ledger
(D) Journalize transactions in the journal

Que No. 29. Expenses on Repair of building were debited to building account, it is __________

(A) Compensating Error

(B) Error of Commission
(C) Error of Omission
(D) Error of Principle
Que No. 30. Stock is a type of:

(A) Intangible Assets

(B) Fixed Assets
(C) Current Asset
(D) None of the Above

Que No. 31. Contra Entries are those entries which are related to:

(A) Cash and Bank

(B) Cash only
(C) Bank Only
(D) None of the above

Que No. 32. Business Entity Concept is not applicable to …………………:

(A) Public Company

(B) Sole Proprietorship
(C) Partnership
(D) Private Limited Company

Que No. 33. In case of Trading Concern Opening Stock means __________:

(A) Raw Material

(B) Work In Progress
(C) Finished Goods
(D) Any of the above

Que No. 34.

(A) Rs. 6,200

(B) Rs. 3,000
(C) Rs. 3,600
(D) Rs. 6,000

Que No. 35. Encashing the bill before the date of its maturity is called:

(A) Retirement of Bill

(B) Endorsement of Bill
(C) Discounting of Bill
(D) Dishonour of Bill
Que No. 36. Shyam issued cheques worth Rs. 50000 in favour of his parties in 26th December 2018
out of which cheques worth Rs 42000 were presented to bank within 31st December 2018. The
balance in both the books were Rs. 60000 before this transaction. What would be the difference in
cash and pass books as on 31.12.2018:

(A) Rs. 18,000

(B) Rs. 8,000
(C) Rs. 12,000
(D) Rs. 10,000

Que No. 37. ______________Expenditure represent certain types of assets whose usefulness does
not expire in the year of their occurance but generally expires in the near future.

(A) Deferred Revenue Expenditure

(B) Revenue Expenditure
(C) Capital Expenditure
(D) Operating Expenditure

Que No. 38. Which of the following will Increase working capital:

(A) Paying cash to creditors

(B) Sale of old machine for cash
(C) Payment to creditors by cheque
(D) Writing of Goodwill

Que No. 39. From the following information, calculate the net profit earned by Mr. Y during the year
ended on 31st March 2018:

Cost of Goods Sold = Rs.75,000

Gross profit ratio = 25% on Sales.
Net profit ratio = 10% on Sales.
Interest received = Rs. 1,200,
Interest paid= Rs. 700

(A) Rs. 9,000

(B) Rs. 9,500
(C) Rs. 10,000
(D) Rs. 8,500

Que No. 40. Which of the following term is not an internal liability:

(A) Reserves
(B) Capital
(C) Debentures
(D) Undistributed Profits

Que No. 41. Depreciation on factory equipment would be reported in the statement of cash flows
prepared by the indirect method in:

(A) The cash flows from operating activities section

(B) A separate schedule
(C) The cash flows from financing activities section
(D) The cash flows from investing activities section
Que No. 42. Mr. Dinkar Choubey has to pay his loan installment and he had to pay Rs.1,500 per month.
Two payments were made via bank account but no entry was found in cash book. Identify the correct
adjustment in the cash book.

(A) Rs.1,500 will be deducted from cash book balance

(B) Rs.1,500 will be added to cash book balance
(C) Rs.3,000 will be deducted from cash book balance
(D) Rs.3,000 will be added to cash book balance

Que No. 43. __________ is a type of capital expenditure:

(A) Purchase of Stationery

(B) Purchase of Goodwill
(C) Payment of Salary
(D) Payment of Overtime

Que No. 44. Net worth is excess of ___________ over _____________

(A) Total Assets, Total Liabilities

(B) Current Assets, Current Liabilities
(C) Total Liabilities, Total Assets
(D) Current Liabilities, Current Assets

Que No. 45. Anil sold goods to Sunil for Rs. 50,000 and draw a bill upon Sunil for the same amount,
which is payable after 4 months. Anil retain the bill for 4 months. Who is the drawee.

(A) Anil
(B) Both
(C) Sunil
(D) None of the Above

Que No. 46. Conversion of debentures in to equity shares will affect __________:

(A) Cash from Investing Activities

(B) Cash from Operating Activities
(C) Cash from Financing Activities
(D) None of the Above
Que No. 47. A truck was purchased on 01-July-2018 for Rs. 20,000. The estimated salvage value is Rs.
2,000. The estimated useful life is 3 years. Using straight-line method of depreciation, the amount of
depreciation in the adjusting entry at fiscal year-end on 31-December-2018 will be:

(A)

(B)

(C)

(D)

Que No. 48. Which of the following is not an abnormal loss:

(A) Scrap generated in the manufacturing process

(B) Stock destroyed in fire
(C) Goods lost in transit
(D) All of the above

Que No. 49. On the statement of cash flows, the cash flows from operating activities section would
include:

(A) Payments for the acquisition of investments

(B) Receipts from the issuance of capital stock
(C) Received from royalties, commission, fees etc.
(D) Payments for cash dividends

Que No. 50. In Non profit organisations annual subscriptions are credited to _______________
Account on accrual basis:

(A) Profit & Loss Account

(B) Trading Account
(C) Income & Expenditure Account
(D) Receipt & Payment Account

Que No. 51. This periodic write off is known as ____________and that is quite similar to
depreciation of tangible assets?

(A) Abnormal loss

(B) Bad bebts
(C) Doubtful debts
(D) Amortization
Que No. 52. Consider following statements:

1) Depreciation is an amortized expenditure;

2) Pre-operative expenses are revenue expenses.

(A) Only statement (1) is correct

(B) Both the statements are correct
(C) Both the statements are incorrect
(D) Only statement (1) is incorrect

Que No. 53. Travelling in Railways is an example of ?

(A) Running contract

(B) One sided Contract
(C) Unenforceable contract
(D) Implied Contract

Que No. 54. AS 28 deals with:

(A) Impairment of assets

(B) Investment property
(C) Intangible assets
(D) Income taxes

Que No. 55. Conversion of debentures in to equity shares will affect __________:

(A) Cash from Investing Activities

(B) Cash from Operating Activities
(C) Cash from Financing Activities
(D) None of the Above

Que No. 56. Entries in Receipts & Payments account of a Non-profit concern is made on:

(A) Both Cash and Accrual Basis

(B) Accrual Basis
(C) Cash Basis
(D) None of the above

Que No. 57. Mr. Adhikary of Kolkata sends out 2,000 boxes to Mr. Mehta of Delhi costing Rs 150 each.
Consignor’s expenses Rs. 7,500. 1/10th of the boxes were lost in consignee’s godown and treated as
normal loss. 1,200 boxes were sold by consignee. The value of consignment stock will be:

(A) Rs. 90000

(B) Rs. 102500
(C) Rs. 90375
(D) Rs. 92250
Que No. 58. Which of the following is an example of liability:

(A) Land
(B) Cash
(C) Creditors
(D) Building

Que No. 59. Net worth is excess of ___________ over _____________

(A) Total Assets, Total Liabilities

(B) Current Assets, Current Liabilities
(C) Total Liabilities, Total Assets
(D) Current Liabilities, Current Assets

Que No. 60. Cash flow statement (based on AS – 3) indicates the change in ____________

(A) Bank
(B) Cash
(C) Cash and cash equivalents
(D) None of the Above

Que No. 61. "Employment Injury" under ESI Act 1948 means:

(A) Injury created by employer

(B) Injury created by employee
(C) Personal Injury
(D) All of the Above

Que No. 62. ESI Act 1948 came into application on:

(A) 19th April 1948

(B) 29th April 1948
(C) 11th April 1949
(D) 27th April 1948

Que No. 63. The ESI Act 1948 provides certain benefits to the employees in case of:

(A) Employment Injury

(B) Maternity
(C) Sickness
(D) All of the Above

Que No. 64. In which of the following situations member of the Employees Provident Fund Scheme
can withdraw full amount accumulated with interest:

(A) Permanent Disability

(B) Superannuation
(C) Both of the Above
(D) None of the Above
Que No. 65. An agreement to pay money or money’s worth on the happening or non – happening of
a specified uncertain event, is a:

(A) Wagering agreement

(B) Contingent contract
(C) Quasi contract
(D) Uncertain agreement

Que No. 66. For lawful offer and acceptance; there must be at least_______:

(A) Three parties

(B) Two parties
(C) Seven parties
(D) One party

Que No. 67. Under ESI Act 1948, the contributions payable in respect of each wage period shall
ordinarily fall due on ______ day of the wage period:

(A) Last
(B) Eighteenth
(C) Seventh
(D) First

Que No. 68. Fiduciary relationship exists between:

(A) Creditor and debtor

(B) Husband and wife
(C) Landlord and tenant
(D) Solicitor and client

Que No. 69. X agrees to sell to Y " a hundred tons of oil". There is nothing whatever to show what kind
of oil, This is:

(A) Void Agreement

(B) Illegal Agreement
(C) Quasi contract
(D) Voidable Contract

Que No. 70. Which of the following is not a type of asseptance:

(A) Specific Acceptance

(B) General Acceptance
(C) Qualified Acceptance
(D) None of the Above

Que No. 71. Under PF Act, Employer means:

(A) Owner of Factory

(B) Occupier of Factory
(C) Either (a) or (b)
(D) Neither (a) nor (b)
Que No. 72. Which of these is not an essential of a valid contract:

(A) Cross offer

(B) Free consent
(C) Lawful offer & acceptance
(D) Lawful consideration

Que No. 73. A partner who contributes the capital and shares the profits but does not take any active
part in the conduct of business is called:

(A) Non Executive Partner

(B) Dormant Partner
(C) Partner for Profits
(D) None of the Above

Que No. 74. Quasi contracts are based on the principles of :

(A) Equity
(B) Justice
(C) Both equity & justice
(D) Unjust enrichment

Que No. 75. Substitution of existing contract by a new contract is called:

(A) Novation
(B) Remission
(C) Rescission
(D) Waiver

Que No. 76. Under PF Act, basic wages includes:

(A) HRA
(B) Overtime Allowance
(C) Both of the Above
(D) None of the Above

Que No. 77. The provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952 are
applicable to employees who are drawing pay not exceeding :

(A) Rs. 12,000

(B) Rs. 15,000
(C) Rs. 6,500
(D) Rs. 10,000

Que No. 78. Limited liability partnership is governed by LLP Act ______and LLP Rules ______:

(A) 1998, 1999

(B) 2009, 2010
(C) 2011, 2011
(D) 2008, 2009
Que No. 79. The Partnership Act, 1932 is _____________ to Limited Liability Partnership:

(A) Not Applicable

(B) Applicable
(C) Mandatory
(D) Applicable without any exception

Que No. 80. LLP is created by

(A) Law
(B) Agreement
(C) Mutual Agency
(D) All of the Above

Que No. 81. A proposal may be revoked at any time:

(A) Before the rejection of its communication

(B) Before the communication of its acceptance
(C) Both (a) & (b)
(D) None of the Above

Que No. 82. The Payment of Gratuity Act come into force on:

(A) 23rd Sept., 1972

(B) 23rd Oct., 1971
(C) 16th Sept., 1971
(D) 16th Sept., 1972

Que No. 83. Who administer fund under PF Act:

(A) Central Board

(B) Provident Fund Commissioner
(C) Labour Commissioner
(D) State Government

Que No. 84. Employees employed under Indian Red Cross Society will cover under Payment of Bonus
Act 1956:

(A) Yes
(B) No
(C) Yes, With Concent of Central Government
(D) Yes, With concent of State Government

Que No. 85. _______ bonus is payable even if establishment is running in loss.

(A) No
(B) Maximum
(C) Minimum
(D) Statutory
Que No. 86. Who will appoint the Chief Inspector under Factories Act:

(A) State Government

(B) Central Government
(C) Either (a) or (b)
(D) None of the Above

Que No. 87. Who is employee under the Payment of Gratuity Act, 1972:

(A) Pujari Working in Temple

(B) Bus Driver
(C) Both of the Above
(D) None of the Above

Que No. 88. An employee who is eligible for payment of gratuity shall apply within _____ from the
date of gratuity become payable:

(A) 45 days
(B) 30 days
(C) 20 days
(D) 15 days

Que No. 89. Under the Sale of Goods Act, 1930, “Property in Goods” means:

(A) The general property or ownership in goods

(B) The specific property or ownership in goods
(C) Either (a) or (b)
(D) Neither (a) nor (b)

Que No. 90. Welfare officers are to be appointed if organisation is engaging ______ or more
employees:

(A) 200
(B) 400
(C) 500
(D) 600

Que No. 91. The Appropriate Government may fix minimum wages ________:

(A) By the Hour

(B) By the day
(C) By the month
(D) Any of the above

Que No. 92. An employee may be disqualified from receiving bonus if he is dismissed from on the
ground of ________:

(A) Fraud
(B) Theft, misappropriation or sabotage of any property of establishment
(C) Riotous or violent behaviour on the premises of establishment
(D) All of the above
Que No. 93. Minimum wages payable under the Payment of Wages Act 1948 shall be paid:

(A) In Cash
(B) In Kind
(C) Either cash or in kind
(D) Partly in cash and Partly in kind

Que No. 94. According to the Payment of wages Act 1936, no fine shall be imposed on any employed
person who is under the age of:

(A) Eighteen Years

(B) Fifteen Years
(C) Twenty One Years
(D) Twelve Years

Que No. 95. Mr. Ajay was terminated by his employer of the factory with a reason of non-satisfaction
of the performance of Mr. Ajay's work. When is the wages earned by Mr. Ajay till the date of
termination need to be paid by the employer:

(A) Within a week's time

(B) Within a monht's time
(C) Before the expiry of the second working day from termination
(D) On the 9th day from the termination date

Que No. 96. The maxim “Nemo dat quid non habet” means that:

(A) No one can give what he himself does not have

(B) One can give what he himself does have
(C) Non owner can also have valid transfer
(D) All of the above

Que No. 97. Employer’s contribution to Employees’ Deposit Linked Insurance is __________

(A) 8.33%
(B) 1.1%
(C) 3.67%
(D) 0.5%

Que No. 98. The Factories employing more than 1000 workers are required to submit their plan for
approval to:

(A) Chief Inspector of Factories

(B) Joint Chief Inspector of Factories
(C) Deputy Chief Inspectors of Factories
(D) Additional Chief Inspector of Factories
Que No. 99. Which of the Following Statement is Correct:

(A) No adult worker shall be required or allowed to work in any factory on any day on which he
has already been working in the same factory.
(B) No adult worker shall be required or allowed to work in any factory on any day on which he
has already been working in any other factory.
(C) No adult worker shall be required or allowed to work in any factory on any day on which he
has not been working in any other factory
(D) No adult worker shall be required or allowed to work in any factory on any day on which he
has not been working in the same factory

Que No. 100. Leave with wages is allowed for employees if they work for ________ days in a month:

(A) 30
(B) 25
(C) 15
(D) 20
 Answer Key
Que No. Answer Que No. Answer Que No. Answer Que No. Answer Que No. Answer

1 B 21 B 41 A 61 C 81 B

2 B 22 A 42 C 62 A 82 D

3 C 23 C 43 B 63 D 83 A

4 B 24 A 44 A 64 C 84 B

5 A 25 C 45 C 65 A 85 C

6 D 26 B 46 D 66 B 86 A

7 A 27 B 47 A 67 A 87 D

8 C 28 A 48 A 68 D 88 B

9 A 29 D 49 C 69 A 89 A

10 D 30 C 50 C 70 A 90 C

11 A 31 A 51 D 71 C 91 D

12 A 32 B 52 A 72 A 92 D

13 B 33 C 53 D 73 B 93 A

14 C 34 D 54 A 74 C 94 B

15 A 35 C 55 D 75 A 95 C

16 A 36 B 56 C 76 D 96 A

17 D 37 A 57 B 77 B 97 D

18 B 38 B 58 C 78 D 98 A

19 A 39 C 59 A 79 A 99 B

20 C 40 C 60 C 80 A 100 D