Question Bank | Fundamentals of Accounting

1. Meaning and Scope of Accounting - Quiz

1. At the end of the financial year, Mr. X earns a profit of Rs.57,000 in his business. This is
a) A transaction
b) An event
c) A transaction as well as an event
d) Neither a transaction nor an event

2. ________ of American Institute of Certified Public Accountants enumerated the functions of Accounting:
a) Accounting Principles Board
b) Accounting Standards Board
c) Accounting Concepts Board
d) None of these

2. Accounting Concepts, Principles and Conventions - Quiz

1. As per basic accounting Equation Assets = Capital + Liabilities which of the following equation will be true if Ram starts a business with Rs. 5,50,000 & then buy goods worth Rs. 1,50,000 from Madan on credit?
a) Rs. 7, 00,000 = Rs. 5, 50,000 + Rs. 1, 50,000
b) Rs. 7, 00,000 = Rs. 6, 50,000 – Rs. 50,000
c) Rs. 5, 50,000 = Rs. 5, 00,000 + Rs. 50,000
d) Rs. 5, 50,000 = Rs. 7, 00,000 – Rs. 1, 50,000

2. The comparison of the financial statement of one accounting period with that of another accounting period is possible only when _______ concept is followed.
a) Cost
b) Consistency
c) Going concern
d) Materiality

3. Accounting as a Measurment Discipline - Quiz

1. Measurement discipline deals with:
a) Identification of objects and events.
b) Selection of scale.
c) Evaluation of dimension of measurement scale.
d) All of the above.

2. Mohan purchased a machinery amounting Rs. 10,00,000 on 1^st April, 2001. On 31^st March, 2011, similar machinery could be purchased for Rs. 20,00,000 but the realizable value of the machinery (purchased on 1.4.2001) was estimated at Rs. 15,00,000. The present discounted value of the future net cash inflows that the machinery was expected to generate in the normal course of business, was calculated as Rs. 12,00,000.

The realizable value of machinery is:
a) Rs. 10,00,000
b) Rs. 20,00,000
c) Rs. 15,00,000
d) Rs. 12,00,000

4. Accounting Policies - Quiz

1. Accounting policies refer to specific accounting
a) Principles.
b) Methods of applying those principles.
c) Both (a) and (b).
d) None of the above.

2. Accounting principles and policies are to be standardised to achieve:
a) Transparency
b) Consistency
c) Comparability
d) All of theses

5. Accounting Standards - Quiz

1. Accounting Standards ________ the statue:
a) Can over-ride
b) Cannot over-ride
c) May over-ride
d) None

2. Accounting Standards refers to specific accounting :
a) Principles
b) Methods of applying those principles
c) Both (a) and (b)
d) None

6. Journal Entries - Quiz

1. Debit the expenses or losses, credit all incomes and gains, is the rule for:
a) Real Account
b) Personal Account
c) Nominal Account
d) All of the above

2. Accounts receivable is :
a) Revenue
b) Expense
c) Asset
d) Liability

7. Ledgers - Quiz

1. From the following information ascertain the closing balance of debtors:
Opening balance of debtors Rs. 32,600; total sales Rs. 1,03,000; cash collected from debtors Rs. 70,000 sales return Rs.1,500; discount on purchases Rs. 1,200; cash sales Rs. 43,000; bad debts Rs. 700:
a) Rs. 19,200
b) Rs. 20,400
c) Rs. 63,400
d) Rs. 21,900

2. Furniture of book value of Rs. 20,000 was sold for Rs. 6,000 and new furniture of Rs. 20,000 was purchased. Amount debited towards purchase of new furniture will be:-
a) Rs. 14,000
b) Rs. 29,000
c) Rs. 5,000
d) Rs. 20,000

8. Trial Balance - Quiz

1. After the preparation of ledgers, the next step is the preparation of
a) Trading accounts
b) Trial balance
c) Profit and loss account
d) None of the above

2. Salaries paid Rs. 4,500 is shown in credit side of trial balance. In the total of trial balance the debit side will be short by _____
a) Short by Rs. 4,500
b) Excess by Rs. 4,500
c) Short by Rs. 9,000
d) Excess by Rs. 9,000

9. Subsidiary Books - Quiz

1. The total of the Purchase Day Book is posted periodically to the :
a) Debit of purchases A/c
b) Credit of purchase A/c
c) Cash Book
d) None of these

2. Total of the Purchase Return Book is posted to the ______ side of Purchase Return Account in the ledger:
a) Debit
b) Credit
c) No where
d) None of these.

10. Capital and Revenue Expenditures and Receipts - Quiz

1. Revenue Expenditure wrongly recorded as Capital Expenditure will result in:
a) Overstatement of net profit and understatement of assets
b) Overstatement of net profit and overstatement of assets
c) Understatement of net profit and overstatement of assets
d) Understatement of net profit and understatement of assets

2. Amount spent on increasing the seating capacity in a cinema hall is:
a) Capital expenditure
b) Revenue expenditure
c) Deferred Revenue expenditure
d) None

11. Cash Book - Quiz

1. Rent due for the month of March will appear __________ in the Cash book.
a) On the receipt side
b) On the payment side
c) As a contra entry
d) No where

2. The Balance of Petty Cash is :
a) An expense
b) Revenue
c) An asset
d) Liability

12. Contingent Assets and Contingent Liabilities - Quiz

1. Contingent asset usually arises from unplanned or unexpected events that give rise to
a) The possibility of an inflow of economic benefits to the business entity.
b) The possibility of an outflow of economic benefits to the business entity.
c) Either (a) or (b)
d) None of the above.

2. Present liability of uncertain amount, which can be measured reliably by using a substantial degree of estimation, is termed as :
a) Provision
b) Liability
c) Contingent Liability
d) None of the above

13. Sale of Goods on Approval or Return Basis - Quiz

1. A trader has credited certain items of sales on approval aggregating Rs. 60,000 to Sales Account. Of these, goods of the value of Rs. 16,000 have been returned and taken into Inventories at cost Rs. 8,000 though the record of return was omitted in the accounts. In respect of another parcel of Rs. 12,000 (cost being Rs. 6,000) the period of approval did not expire on the closing date. Cost of goods lying with customers should be
a) Rs. 12,000.
b) Rs. 54,000
c) Rs. 6,000
d) None of the above.

2. A trader sends out goods is customer on approval and credits them to sales amount. On 31st March, 2011, sundry debtors includes an amount of Rs. 5,000 for goods sent on approval basis for which no confirmation was received till year end. These goods were sent out at a cost +25%. Physical stock taken on 31st March, 2011 amounted to Rs. 50,000. The amount of stock appearing is Balance Sheet would be:
a) Rs. 45,000
b) Rs. 50,000
c) Rs. 53,750
d) Rs. 54,000

14. Rectification of Errors - Quiz

1. If a purchase return of Rs. 1,000 has been wrongly posted to the debit of the sales returns account, but has been correctly entered in the suppliers’ account, the total of the
a) Trial balance would show the debit side to be Rs. 1,000 more than the credit
b) Trial balance would show the credit side to be Rs. 1,000 more than the debit.
c) The debit side of the trial balance will be Rs. 2,000 more than the credit side
d) The credit side of the trial balance will be Rs. 2,000 more than the debit side.

2. If One of the cars purchased by a car dealer is used for business purpose and has been debited to goods for resale A/c, then the rectification entry will be
a) Debit Drawings A/c and Credit Purchases A/c
b) Debit office Expenses A/c and Credit Motor Car A/c
c) Debit Motor Car A/c and Credit Purchases A/c
d) Debit Motor Car A/c and Credit Sales A/c

15. Bank Recouncilation Statement - Quiz

1. Overdraft as per Cash book means:
a) Credit balance in the cash book
b) Credit balance in the bank column of the cash book
c) Decrease in Liability
d) None

2. The balance as per Cash Book (overdraft ) is 1,500. Cheques for Rs. 400 were deposited but were not collected. The cheques issued but not presented were Rs. 100, Rs. 125, Rs. 50. Balance as per Pass Book is :
a) Rs. 1,100
b) Rs. 1,625
c) Rs. 12,000
d) Rs. 1,375

16. Inventories - Quiz

1. Inventories are assets :
a) Held for sales in the ordinary course of business
b) In the production process for such sale
c) In the form of materials or supplies to be consumed in the production process or in the rendering of service
d) All of the above

2. The opening stock is overstated by Rs. 10,000 and closing stock is understated by Rs. 15,000. The impact of these on net profit for the current year is :
a) Rs. 5,000 overstated
b) Rs. 25,000 overstated
c) Rs. 25,000 understated
d) Rs. 5,000 understated

17. Depreciation Accounting - Quiz

1. The balance in the accumulated provision for depreciation account of a company as at the beginning of the year 2010-11 was Rs. 2,00,000 when the original cost of the assets amounted to Rs. 10,00,000. The company charges 10% depreciation on a straight line basis for all the assets including those which have been either purchased or sold during the year. One such asset costing Rs. 5,00,000 with accumulated depreciation as at the beginning of the year of Rs.1,00,000 was disposed off during the year.

Depreciation for the year is
a) Rs.40,000
b) Rs. 50,000
c) Rs. 60,000
d) Rs.1,00,000

2. Amortization refers to writing off:
a) Depleting assets
b) Wasting assets
c) Intangible assets
d) Fictitious assets

18. Final Accounts - Quiz

1. The manager of a firm is entitled to a commission of 10% on net profit after his commission. If the net profit of the firm before charging commission is Rs. 4,40.000, the amount of manager’s commission will be :
a) Rs. 44,000
b) Rs. 40,000
c) Rs. 37,000
d) Rs. 33,000

2. The manufacturing account is prepared:
a) To ascertain the profit or loss on the goods produced
b) To ascertain the cost of the manufactured goods
c) To show the sale proceeds from the goods produced during the year
d) Both (b) and (c).

19. Consignment - Quiz

1. Consignment Account is a :
a) Real Account
b) Nominal account
c) Trading account
d) Personal Account

2.

Column A	Column B
1. The relationship between consignor and consignee is	(a). Consignor
2. Entire profit on consignment business belongs to	(b). Is allowed to consignee by consignor for protecting consignor from bad debt
3. Account Sales	(c). Principal and agent
4. Del-credere Commision	(d). Is rendered by Consignee to Consignor

a) 1-a, 2-c, 3-d, 4-b
b) 1-c, 2-a, 3-d, 4-b
c) 1-c, 2-d, 3-a, 4-b
d) 1-d, 2-c, 3-b, 4-a

20. Joint Ventures - Quiz

1. For material supplied from own Inventories by any of the venturer, the correct journal entry will be: (In cash of separate sets of books)
a) Joint Venture A/c will be debited and Venturers Capital A/c will be credited
b) Joint Venture A/c will be debited and Joint Bank A/c will be credited
c) Joint Venture A/c will be debited and Material A/c will be credited
d) Joint Bank A/c will be debited and Joint Venture A/c will be credited

2. In a Joint venture A contributes Rs. 5,000 and B contributes Rs. 10,000. Goods are purchased for Rs. 11,200. Expenses amount Rs. 8,000. Sales amount to Rs. 14,000the remaining goods were taken by B at an agree price of Rs. 400. A and B share profit and losses in the ratio of 1:2 respectively. As a final settlement, how much A will receive?
a) Rs.5,800
b) Rs.6,000
c) Rs.5,000
d) Rs.10,800

21. Bills of Exchange and Promissory Notes - Quiz

1. A drew a bill on B for Rs. 50,000 for 3 months. Proceeds are to be shared equally. A got the bill discounted at 12% p.a. and remits required proceeds to B. The amount of such remittance will be:
a) Rs.24,250
b) Rs.25,000
c) Rs.16,167
d) Rs.32,333

2. A draws a bill on B for Rs. 1,00,000. A endorsed the bill to C. the bill return dishonoured. Noting charges Rs. 1,000. B request A to accept the amount at 2% discount by a single cheque. The cheque amount will be:
a) Rs.98,000
b) Rs.98,980
c) Rs.99,000
d) Rs.99,980

22. Introduction to Partnership Accounts - Quiz

1. X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before interest on partner’s capital was Rs.6,000 and Y determined interest @ 24% p.a. on his loan of Rs. 80,000. There was no agreement on this point. Calculate the amount payable to X, Y and Z respectively.
a) Rs. 2,000 to each partner
b) Loss of Rs. 4,400 for X and Z & Y will take home Rs. 14,800
c) Rs. 400 for X, Rs. 5,200 for Y and Rs. 400 for Z
d) Rs. 2,400 to each partner

2. Subject to contract between the partners, interest on capital is to be provided out of profits only. In case of insufficient profits (i.e. net profit less than the amount of interest on capital), the amount of profit is distributed:
a) In equal ratio
b) In profit sharing ratio
c) In capital ratio
d) Restricted to 6% of partner’s capital

23. Treatment of Goodwill in Partnership Accounts - Quiz

1. Under super profit basis goodwill is calculated by:
a) No. of years purchased multiplied with average profits
b) No. of years Purchased multiplied with super profits
c) Summation of the discounted value of expected future benefits
d) Super profit divided with expected rate of return

2. X and Y are partners in a firm with capital of Rs. 18,000 and Rs. 20,000. Z was admitted for 1/3^rd share in profits and brings Rs. 24,000 as capital, calculate the amount goodwill:
a) Rs. 24,000
b) Rs. 20,000
c) Rs. 15,000
d) Rs. 10,000

24. Admission of New Partner - Quiz

1. Which of the following asset is compulsory to revalue at the time of admission of a new partner:
a) Stock
b) Fixed Assets
c) Investment
d) Goodwill

2. A and B are partners sharing profits in the ratio of 7:3. C is admitted as a new partner. ‘A’ surrenders 1/7 of his share and ‘B’ surrenders 1/3rd of his share in favour of C. The new profit sharing ratio will be:
a) 6:2:2
b) 4:1:1
c) 3:2:2
d) None

25. Retirement of a Partner - Quiz

1. A, B and C takes a Joint Life Policy, after five years B retires from the firm. Old profit sharing ratio is 2:2:1. After retirement A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partner’s capital account on receiving the JLP amount if joint life policy is maintained at surrender along with the reserve?
a) Rs. 50,000 credited to all the partners in old ratio
b) Rs. 2,50,000 credited to all the partners in old ratio
c) Rs. 2,00,000 credited to all the partners in old ratio
d) Distribute JLP Reserve Account in old profit sharing ratio.

2. Joint Life Policy is taken by the firm on the life(s) of …………………..
a) All the partners jointly
b) All the partners severely
c) On the life of all the partners and employees of the firm
d) ‘a’ and ‘b’

26. Death of a Partner - Quiz

1. A, B and C takes a Joint Life Policy their profit sharing ratio is 2:2:1. On death of B, A and C decides to share profits equally. They had taken a Joint Life Policy of Rs. 2,50,000 with the surrender value Rs. 50,000. What will be the treatment in the partner’s capital account on receiving the JLP amount if joint life policy is maintained at the surrender value?
a) Rs. 50,000 credited to all the partners in old ratio
b) Rs. 2,50,000 credited to all the partners in old ratio
c) Rs 2,00,000 credited to all the partners in old ratio
d) No treatment is required

2. B, C, D are partners sharing profits in the ratio 7:5:4. D died on 30th June 2006 and profits for the year 2005-2006 were Rs. 12,000. How much share in profits for the period 1st April 2006 to 30th June 2006 will be credited to D’s Account?
a) Rs. 3,000
b) Rs. 750
c) Nil
d) Rs. 1,000

27. Issue, Forfeiture and Reissue of shares - Quiz

1. T Ltd. proposed to issue 6,000 equity shares of Rs. 100 each at a premium of 40%. The minimum amount of application money to be collected per share as per the Companies Act, 1956* =?
a) Rs. 5.00
b) Rs. 6.00
c) Rs. 7.00
d) Rs. 8.40

2. Which of the following statements is true?
a) Par value must be separately reported in the balance sheet because it represents the market value of the shares when it was first issued
b) Selling common shares for more than par value results in gain that is reported in the income statement
c) Common shareholders assume a higher investment risk than long-term creditors
d) Non-convertible debentures cannot be issued by companies

28. Issue of Debentures - Quiz

1. When debentures are issued as collateral security against any loan then holder of such debentures is entitles to
a) Interest only on the amount of loan
b) Interest only on the face value of debentures
c) Interest both on the amount of the loan and on the debentures
d) None of the above.

2. When Debentures are issued as Collateral Security, which entry has to be passed :
a) Debenture Suspense A/c Dr.
To Debentures A/c
b) No entry has to be made
c) Either (a) or (b)
d) None

29. Redemption of Preference Shares - Quiz

1. Redemption of Preference Shares
a) 3, 00,000
b) 2, 50,000
c) 2, 00,000
d) 5, 00,000

2. During the year 2000-2001, T Ltd. issued 20,000, 12% Preference Shares of Rs. 10 each at a premium of 5%, which are redeemable after 4 years at par. During the year 2005-2006, as the company did not have sufficient cash resources to redeem the preference shares, it issued 10,000,14% debentures of Rs. 10 each at a premium of 10%. At the time of redemption of 12% preference shares, the amount to be transferred to capital redemption reserve =?
a) Rs. 90,000
b) Rs. 1,00,000
c) Rs. 2,00,000
d) Rs. 1,10,000

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Fundamentals of Accounting [CA - CPC]

Class/Course - CA - CPC

Subject - Fundamentals of Accounting

Total Number of Question/s - 4416