Which of the following branches of accounting primarily deals with processing and presenting of accounting data for internal use?

(a) Tax accounting

(b) Management accounting    (Answer)

(c) Financial accounting 

(d) Inflation accounting

Accounting records transactions in terms of:

(a) Commodity units

(b) Production units

(c) Monetary units    (Answer)

(d) Distribution units

Long-term liabilities are:

(a) Current assets + Current liabilities

(b) Total liabilities – Current liabilities    (Answer)

(c) Current liabilities + Owner’s equity

(d) None of these

A business entity has assets of Rs. 20,000 and liabilities of Rs. 5,000
Owner’s equity is:

(a) 15,000    (Answer)

(6) 25,000

(c) 30,000

(d) 20,000

A business entity has owner’s equity of Rs. 40,000 and liabilities of Rs. 25,000. Its assets are:

(a) 65,000    (Answer)

(b) 15,000

(c) 25,000

(d) 40,000


Amount spent on unsuccessful patents right is a:

(a) Capital expenditure    (Answer)

(b) Deferred revenueexpenditure

(C) Revenue expenditure

(d) None of these

Renewal fee for patents is a:

(a) Development expenditure    

(b) Capital expenditure

(c) Revenue expenditure    (Answer)

(d) Deferred revenue expense

Which of the following is capital expenditure?

(a) Purchase of delivery    (Answer)

(b) Cost of advertisement

(c) Purchase of machine    

(d) Purchase of spare parts

Which one of the following is revenue expenditure?

(a) Purchase of land    

(b) Purchase of machinery

(c) Purchase of raw    (Answer)

(d) Purchase of office material

All of the following are revenue expenditure except:

(a) Purchase of spare parts

(b) Cost of advertisement

(c) Purchase of machine    

(d) Extension of building    (Answer)


The asset account appears at its original cost throughout its life under:

(a) Depreciation finding method    (Answer)

(b) Machine hour rate method

(c) Annuity method

(d) Sum of years digits method   

Leasehold property is generally depreciated by:

(a)Reducing balance    

(b) Annuity method

(c) Fixed installment    (Answer)

(d) Insurance policy

Interest on the cost of the asset is taken into account while calculating depreciation in which of the following method:

(a) Insurance policy

(b) Annuity method    (Answer)

(c) Reducing balance    

(d) Fixed installment

As compared to annuity method, the amount of depreciation provided in the sinking find method is:

(a) Equal

(b) Higher    

(c) Lower    (Answer)

(d) Zero

Under diminishing balance method, the depreciation is calculated on:

(a) The written down value of the asset    (Answer)

(b) The inarket value of the asset

(c) The original cost of the asset    

(d) The fair market value of the asset


Salaries paid to an employce is debited to:

(a) Employee’s account    

(b) Salaries account    (Answer)

(c) Cash account

(d) Capital account

Bank reconciliation statement is prepared by:

(a) Bank

(b) Customer of the bank    (Answer)

(c) Tax authorities

(d) Proprietor of business

Which of the following is recorded in the general journal?

(a) Purchased furniture on cash base

(b) Purchased machinery on cash base

(c) Depreciation provided on plant & machinery    (Answer)

(d) Paid bills payable by cheque

Which of the lollowing error is disclosed by trial balance?

(a) Error of principle

(b) Error of omission

(c) Wrong amount posted in ledger account    (Answer)

(d) None of these

The debts written off as bad, if subsequently recovered are credited to:

(a) Debtors account

(b) Bad debts account    (Answer)

(c) Profit and loss account

(d) Sales account


Which of the following accounts would not have zero balance after closing entries have been posted?

(a) Rent paid

(b) Office furniture

(c) Interest payable

(d) All of the above    (Answer)

Insurance premium paid on the life policy of a partner is:

(a) Debited to capital account of the partner    (Answer)

(b) Credited to profit and loss account

(c) Credited to partner’s capital account

(d) None of these

Balance sheet shows the financial position of business:

(al As on a particular date

(b) For unpredictable period

(c) For a given period    (Answer)

(d) None of these

An example of an intangible asset is:

(a) Debit balance of profit

(b) Goodwill and loss account    (Answer)

(c) Preliminary expenses

(d) Deferred revenue expenditure


Sale-Purchase-Operating expenses is equal to:

(a) Gross profit

(b) Net operating profit    (Answer)

(c) Net profit

(d) Gross operating profit

Tournament expenses should be:

(a) Recorded as Capital

(b) Posted as expenditure asset

(c) Deducted from    (Answer)

(d) Recorded as revenue

Amount received form sale of scraps by a charitable hospital is treated as:

(a) Expense

(b) Asset

(c) Liability

(d) Income    (Answer)

Subscription outstanding at the beginning of the year was Rs. 2,000 and received during the year is Rs. 2,000. What amount will be shown in the Income and expenditure account of the hotel?

(a) 20,000

(b) 18,000    (Answer)

(c) 2,000

(d) 22,000

On which side of the balance sheet, the interest receivable an investments of a charitable organisation should be shown?

(a) Asset side    (Answer)

(b) Liability side

(c) Both (a) and (b)

(d) None of these


Profit on the sale of furniture io non-profit organisations is to be shown on the:

(a) Receipt side of receipts and payments A/C

(b) Payment side of receipts and payments A/C

(c) Credit side of the profit and loss A/C

(d): Credit side of the income and expenditure A/C    (Answer)

When two firms amalgamate, general reserve is transferred to:

(a) Partner’s account    (Answer)

(b) New firms account

(c) Révaluation account

(d) Firms account

Goodwill raised at the time of admission of a new partner, should be
written off in:

(a) Old profit sharing ratio

(6) Gaining ratio

(c) New profit sharing    (Answer)

(d) Sacrificing ratio ratio

Realisation account is a:

(a) Nominal account    (Answer)

(b) Personal account

(c) Real account

(d) Fictitious account

The balance in joint life policy reserve account should be transferred to:

(a). Main partners’ account

(b) All the partners’ account    (Answer)

(c) Remaining partners’ account

(d) Deceased partner’s account


On joint life policy of partners, the amount received from the insurance company in excess of its surrender value should be credited to partners account:

(a) In the profit sharing ratio    (Answer)

(b) In the ratio of capitals Equally

(d) In the ratio of their practice

Whenever debentures are cancelled, any profit on cancellation is transferred to:

(a) Capital redemption reserve account

(b) Capital reserve account

(c) Profit and loss accąunt    (Answer)

(d) Sinking fund account

Right shares are the shares:
(a) Issued by a newly-formed company

(b) First offered to the existing sharcholders    (Answer)

(c) First offered to debenture holders

(d) Issued to the directors of the company

When all the debentures are redeemed, the balance left in the dcbentures sinking fund account is transferable to:

(a) Sinking íund investment account

(b) General reserves    (Answer)

(c) Debenture account

(d) Capital redemption reserve

After the re-issue of all forfeited shares, the balance in share forfeiture account, should be:

(a) Transferred to capital reserve account    (Answer)

(b) Added to paid-up capital

(c) Transferred to goodwill account

(d) None of these


The balance of debenture sinking ſund is transferred to which account after the redemption of debentures:

(a) Capital reserve

(b) Debenture account

(c) General reserve    (Answer)

(d) Capital reserve

Balance sheet of a limited company is prepared in the:

(a) Vertical form

(b) Horizontal form

(c) Neither (a) nor (b)

(d) Both (a) and (b)    (Answer)

In the balance sheet of the company, fixed deposit are shown under the head:

(a) Unsecured loan    (Answer)

(b) Contingent liability

(c) Secured loan

(d) Current liability

Interest paid on debenture is shown in:

(a) Profit and loss appropriation account

(b) Income statement    (Answer)

(c) Current liability side of balance sheet

(d) All of the above


Final accounts of the company are prepared and comprises of the following:

(a) Balance sheet

(b) Income statement

(c) Both (a) and (b)    (Answer)

(d) None of these

Unclaimed dividend is shown on the liability side of the balance sheet under the head:

(a) Miscellancous items

(b) Current liabilities    (Answer)

(c) Reserve and surplus   

(d) Provisions

For judging the long-term solvency of a firm, which of the following ratios is most important?

(a) Stock turnover ratio

(b) Return on investments

(c) Debt equity ratio    (Answer)

(d) Fixed assets turnover ratio

In a common size balance sheet, each item is expressed as a percentage of:

(a) Debt capital

(b) Total assets    (Answer)

(c) Equity capital

(d) Fixed assets

In common size balance sheet, each item is expressed as a percentage of:

(a) Capital

(6) Liabilities

(c) Fixed assets

(d) Both (a) and (b)    (Answer)

Comparative financial statements are prepared at the end of:

(a) Every quarter

(6) Every size months

(c) At the will of management    (Answer)

(d) Each financial year


Which of the following is the most popular and commonly used tool of financial statement analysis?

(a) Cash flow statement

(b) Ratio analysis statement    (Answer)

(c) Comparative statement

(d) Common size

The term “funds” as used in “funds flow statement” means:

(a) Current assets

(6) Cash

(c) Current liabilities

(d) Current assets minus current liabilities    (Answer)

Which of the following financial statements explain changes in the assets and liabilities that may have taken place between two dates?

(a) Funds statement    (Answer)

(b) Income statement

(c) Position statement

(d) None of these

The term current liabilities is used to describe such obligations which are paid within one year and:

(a) Out of current assets

(b) Out of fixed assets

(c) By creating current liabilities

(d) Both (a) and (b)    (Answer)

All of the following are current assets except:

(a) Stock

(b) Debtor

(c) Cash

(d) Building   (Answer)


Which of the following is a non-current liability?

(a) Long-term loan    (Answer)

(b) Bank overdraft

(c) Sundry creditors

(d) Bills payable

A cash inflow:

(a) Increase total cash

(b) Increase total assets

(c) Increase cash

(d) Both (a) and (c)    (Answer)

Preparation of cash flow statement is:

(a) Recommendatory    (Answer)

(b) Mandatory

(c) Required under

(d) None of the them

Income Tax Act

The item resulting in cash flows is:

(a) Transfer to general

(b) Issue of sharesreserves    (Answer)

(c) Goodwill written off

(d) Salaries outstanding

Cash payment to employees is a cash flow from:

(a) Investing activities

(b) Financing activities

(c) Operating activities    (Answer)

(d) None of these


When there is a net profit, which of the items are deducted from the net profit to arrive at cash from operations:?

(a) Decrease in current assets

(b) Decrease in current liabilitics

(C) Increase in current assets    (Answer)

(d) Increase in current liabilities


When an auditor detects material weakness in the internal checks and control system of the company under audit, he should report his findings as per:

(a) SEBI orders

(b) ICAI orders    (Answer)

(c) ICWAI orders

(d) MAOCAR orders

When an auditor places a high degree of reliance on an internal control procedures, the acceptable risk of over-reliance would be:

(a) Zero

(b) Moderate

(c) Low

(d) High    (Answer)

A file which contains rules governing the organisation under audit is known as:

(a) Permanent file    (Answer)

(b) Current file

(c) Routine file

(d) Precedence file


The remuneration of an auditor of a partnership firm is fixed by:

(a) The Partnership Act

(b) The Government

(c) The Companies Act

(d) None of these    (Answer)

Audit report along with annual account is given by:

(a) Government auditor

(6) Secretarial auditor

(c) Statutory auditor    (Answer)

(d) Internal auditor

Business means:

(a) Industry and clmmerce    (Answer)

(6) commerce

(c) Selling and buying of goods

(d) Track and Commerce


Industry includes:

(a) Transport

(b) Banking Industry

(c) Insurance business

(d) All of the above    (Answer)

Fishing should be classified as:

(a) Genetic industry

(b) Extracting industry    (Answer)

(c) Construction industry

(d) Manufacturing industry

Fish culture should be classified as:

(a) Construction industry.

(b) Extractive industry

(c) General industry    (Answer)

(d) Manufacturing industry

Which of the following is an extractive industry?

(a) Hunting    (Answer)

(b) Flour mills    

(c) Cattle breeding

(d) Forest culture


The partnership entity is:

(a) Legal entity

(b) Accountable entity

(c) Both (a) and (b)

(d) None of these    (Answer)

The “Return of allotment” has to be filed with the registrar in the case of:

(a) Allotment of debentures

(b) Issue of shares by a private company    (Answer)

(c) Re-issue of forfeited shares

None of these

The charter of a company is its:

(a) Articles o association

(b) Prospectus

(c) Statement is lieu of prospectus

(d) Memorandum of association    (Answer)

Which of the following is not a distinctive feature of the co-operative form of business organisation:

(a) One share one vote    (Answer)

(b) Corporate status system

(c) Democratic

(d) Service before self management

A joint stock company’s letterhead must, by law, have the address of the :

(a) Factory

(b) Registered office    (Answer)

(c) Managing director

(d) Head office


In which of the following, investment is most risky:

(a) Preference shares

(b) Equity shares    (Answer)

(c) Debentures

(d) Fixed deposits

Which of the following sureties proves a burden an the finances of the company, when company is not earning profits?

(a) Equity shares

(b) Debentures    (Answer)

(c) Preference shares

(d) None of these

A project, which may not add to the existing profits, should be financed by:

(a) Equity capital    (Answer)

(b) Debentures

(c) Public deposits

(d) Preference shares

Which of the following is not an ownership security?

(a) Debentures    (Answer)

(b) Equity shares

(c) Preference shares

(d) Public deposits

In which of the following, rate of interest/dividends is not fixed?

(a) Debentures

(b) Preference capital

(c) Equity capital    (Answer)

(d) Public deposits

When a right to sell a security is acquired, it is known as:

(a) Put option    (Answer)

(b) Call option

(c) Double option

(d) Single option


Stock exchange deals with the :

(a) Issue of equity shares

(b) Issue of preference shares

(c) Issue of debentures

(d) Second hand securities    (Answer)

Purchase and sale of shares before or after official trading hours of stock exchange is known as:

(a) Margin trading

(b) Kerb trading    (Answer)

(c) Hammering    

(d) Short selling

Continuous forward selling to depress prices in the stock exchange is called:

(a) Bear hammering

(b) Short selling

(c) Bear square    (Answer)

(d) None of these

Mutual funds are to be operated by:

(a) Public sector banks

(b) Private sector banks

(c) Financial institutions

(d) Asset management companies    (Answer)

In which of the following forms of combinations a common sales agency or syndicate is attached?

(a) Trust

(b) Cartels    (Answer)

(c) Trade association

(d) Informal agreements


When a company, which is a holding company controlling its subsidiaries but is itself a subsidiary controlled by another holding company, it is known as:

(a)Pure holding company

(b) Primary holding company

(c) Mixed holding company

(d) Intermediate holding company    (Answer)

Complete consolidation of business can be achieved through:

(a) Combination trust

(b) Acquisition

(c) Amalgamation    (Answer)

(d) Interlocking

Pool is a business combination in the sphere of:

(a) Output

(b) Income & profit

(c) Sales

(d) All of the above    (Answer)

Technological updating would invariably require:

(a) Change in capital

(b) Induction of fresh management    (Answer)

(c) Privatization of public enterprizes

(d) Retrenchment of workers

Primage is a payment made of:

(a) Insurance-in-transit

(b) Loading the goods    (Answer)

(c) Packing of goods

(d) None of these

A letter of credit is opened on behalf of:

(a) An exporter

(b) A buying agent

(c) An importer    (Answer)

(d) A bank

Mate’s receipt is issued by:

(a) The exporter

(b) The importer

(C) The captain of the ship    (Answer)

(d) The bank or his assistant


A foul bill of lading is issued when:

(a) Goods are damaged    (Answer)

(b) Goods are a stolen property

(c) Goods are not properly trade

(d) None of these

Port Trust duties are payable by:

(a) Importer    (Answer)

(b) The forwarding agent

(c) Shipping company

(d) Exporter


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