1. Net Profit or Loss will be derived at _______ stage of accounting
a) Classifying
b) Interpretation
c) Recording
d) Summarising

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2. The main objectives of Book- Keeping are :
a) Complete Recording of Transactions
b) Ascertainment of Financial Effect on the Business
c) Analysis and interpretation of data
d) (a) and (b) both

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1. Rosa pays Rs. 1200 on 01.06.2009 towards yearly subscription (July’ 01 2009 to June’ 30 2010) of a newspaper. It means she has to make adjustment of _____ for finalization of accounts for the year ended 31.3.10.
a) Rs. 300 as prepaid
b) Rs. 300 as outstanding
c) Rs. 200 as prepaid
d) Rs. 200 as outstanding

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2. Match the following items from column A with column B

Column A	Column B
1. Entity concept assumptions	(a). Are the fundamental accounting
2. Accrual concept	(b). Gives the valuation criteria
3. Going concern, Consistency and accrual	(c). Is the basic accounting concept
4. Going concern, cost and realization concept	(d). Is the procedural accounting concept

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

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1. 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 historical cost of machinery is:
a) Rs. 10,00,000
b) Rs. 20,00,000
c) Rs. 15,00,000
d) Rs. 12,00,000

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2. There are ________generally accepted measurement bases or valuation principles :
a) Two
b) Three
c) Four
d) Five

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1. Selection of an inappropriate accounting policy may lead to :
a) Understatement of Performance
b) Overstatement of Performance
c) Understatement or Overstatement of Financial Position
d) None of the above

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2. A change in Accounting Policy is justified to :
a) Comply with accounting standard
b) Comply with Law
c) Ensure more appropriate presentation of Financial Statements
d) All of the above

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1. IASB stands for:
a) Indian Accounting Standards Board
b) Indian accounting Standards Bulletin
c) International Accounting Standards Bulletin
d) International Accounting standards Boards

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2. AS 2 is on :
a) Disclosure of Accounting Policies
b) Valuation of Inventories
c) Revenue Recognition
d) Depreciation Accounting

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1. Discount is allowed by Arun to Varun. Which of the following should be the course of action in the books of Arun?
a) Credit Varun A/c and debit Discount Allowed A/c
b) Debit Varun A/c and credit Discount Received A/c
c) Credit Arun A/c and debit discount Allowed A/c
d) Debit Arun A/c and credit discount Received A/c

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2. In Double Entry System of Book-keeping every business transaction affects:
a) Two accounts
b) Two sides of the same accounts
c) The same account on two different dates
d) All of the above

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1. Goods costing Rs. 5,000 given to a worker towards wages Rs. 5,000. Market price of goods is Rs. 6,000. Journal entry will be
a) Wages A/c Dr. Rs. 6,000
To Sales A/c Rs. 6,000
b) Wages A/c Dr. Rs. 5,000
To Purchases A/c Rs. 5,000
c) Wages A/c Dr. Rs. 5,000
To Cash A/c Rs. 5,000
d) None of the above

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2. After recording the transactions and events in journal and subsidiary books, they will be transferred to
a) Profit and Loss Account
b) Balance Sheet
c) Ledger
d) Memorandum Books

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1.

S. No.	Account heads	Debit (Rs.)	Credit (Rs.)
1	Sales		15,000
2	Purchases	10,000
3	Miscellaneous Expenses	2,500
4	Salaries		2,500
	Total	12,500	17,500

The difference in trial balance is due to:
a) Wrong placing of sales account
b) Wrong placing of salaries account
c) Wrong placing of miscellaneous expenses account
d) Wrong placing of all accounts

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2. Bhandari’s trial balance was showing difference of Rs. 5,000 (debit side exceeds). While checking of total sales register, he found that the total is overcast by Rs. 2,000. After correction in sales register what would be the difference in his trial balance.
a) Debit side exceeds by Rs. 7,000
b) Debit side exceeds by Rs. 5,000
c) Debit side exceeds by Rs. 3,000
d) Credit side exceeds by Rs. 3,000

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1. Debit note issued are used to prepare _______
a) Sales Return Book
b) Purchase Return Book
c) Journal Proper
d) Purchase Book

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2. A second hand motor car was purchased on credit from B Brothers for Rs. 10,000.
a) Journal Proper (General Journal)
b) Sales Book
c) Cash book
d) Purchase Book

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1. XYZ Limited has a house for 3 years. It used it as guest house. Now it incurred an expenditure for Rs. 2,50,000 for repairing the roof of this house. Expenses incurred on such repairs are:-
a) Capital Expenditure
b) Revenue Expenditure
c) Deferred Revenue Expenditure
d) None of the above.

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2. A truck was purchased and after sometime, the name of the company was painted on it for advertisement purpose for Rs. 1,000/- this is:
a) Capital Expenditure
b) Deferred Revenue Expenditure
c) Revenue Expenditure
d) None

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1. Cash book is a type of _______ but treated as a ________ of accounts.
a) Subsidiary book, principal book
b) Principal book, subsidiary book
c) Subsidiary book, Subsidiary book
d) Principal book, Principal book

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2. Petty cash may be used to pay
a) The expenses relating to postage and conveyance.
b) Salary to administrative staff
c) For the purchase of furniture and fixtures
d) For the purchase of raw material.

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1. Which of the following is not a difference between a provision and contingent liability?
a) A provision meets the recognition criteria whereas a contingent liability fails to meet the same.
b) Provision is a present liability of uncertain amount whereas contingent liability is a possible obligation which arises from past event.
c) Provision can’t be measured whereas contingent liability can be accurately measured.
d) None of the above.

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2. Which of the following is not a contingent liability?
a) Claims against the firm not acknowledged as debts.
b) Guarantees given in respect of third parties.
c) Amount due to trade creditors which is not disputed.
d) Bills discounted form bank.

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1. Which method is used for “Sale on Approval” basis when the transactions are few in nature?
a) Multi Column Journal Method
b) Columnar Sale Day Book Method
c) Ordinary Sale Method
d) Separate Day Book Method

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2. Total sales of Star Limited for the year ended 31^st March 2008 was Rs. 5,00,000, which includes goods sold to R for Rs. 5,500 at a profit of 10% on cost. Such goods are still lying in the Godown of Star Limited at the buyer’s risk. In the books of Star Limited sales would be shown as :-
a) Rs. 5,00,000
b) Rs. 5,05,000
c) Rs. 4,94,500
d) Rs. 4,95,000

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1. Classify the errors :
Sales to Heena Rs. 143 was posted to Meena as Rs. 143.
a) Errors of commission
b) Errors of omission
c) Errors of principle
d) Compensating errors

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2. The beginning stock of the current year is overstated by Rs. 500 and closing stock is overstated by Rs. 1200. Effect on profit:
a) Rs. 1700 (overstated)
b) Rs. 1200 (understated)
c) Rs. 1700 (understated)
d) Rs. 700 (overstated)

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1. On 31.3.09 the balance of the cash book is Rs. 7,074 (credit) and Balance as per Bank statement is Rs. 3,159 (debit). On scrutiny it was found that the difference was due to cheques issued but yet not presented for payment. The Bank Balance as on 31.3.09 to be shown in Balance Sheet as :-
a) As Bank Overdraft Rs. 3,159
b) As Cash at Bank Rs. 7,074
c) As Bank Overdraft Rs. 7,074
d) As Cash at Bank Rs. 3,159

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2. The overdraft as per cash book of Mr. X is Rs. 20,500. One of the customer of Mr. X residing in Mumbai directly remitted Rs. 50,000 into Mr. X’s account, about which Mr. X was not aware. One of the cheques deposited into bank for Rs. 25,000 was returned unpaid and the advice in this regard is yet to be received by Mr. X. The balance as per Pass book was:
a) Rs. 4,500 credit
b) Rs. 4,500 overdraft
c) Rs. 45,500 credit
d) None of the above

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1. The following are the details supplied by Agni Ltd. in respect of its raw materials for the Month od December, 2011: 

Date	Receipts (Units)	Price per unit (RS.)	Issues (Units)
01.12.2011	2,000 (Opening)	5.00
07.12.2011	1,000	6.00
10.12.2011	-	-	2,500
15.12.2011	2,000	6.50
31.12.2011	-	-	2,200

On 31.12.2011, a shortage of 100 units was found.
Using the data given in problem, the value of closing inventory using principle.
a) Rs,1,600
b) Rs.1,500
c) Rs.1,950
d) Rs.2,000

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2. From the following information, answer the questions.
X who was closing his books on 31.03.2011 failed to take the actual inventory which he did on 9th April, when it was ascertained by him to be worth Rs.25,000.
It was found that sales are entered in the Sales Day Book on the same day of despatch and the returns inward in the returns book as and when the goods are received back. Purchases are entered in the Purchases Day Book once the invoices are received. Observations-
i. Sales between 31st March and 9th April as per Sales Book are Rs.1,720. Rate of gross profit is 33 1/3% on cost.
ii. Purchases during the same period as per Purchases Book are Rs.120.
iii. Out of above purchases, goods amounting to Rs.50 were not received until after the inventory was taken. 
iv. Goods invoiced during the month of March, but goods received only on 4th April, amounted to Rs.100.
You want to find the value of physical inventory on 31st March. You start with the value of inventory on 9th April.

How would you adjust the observation # 3?
a) 70 (Less)
b) 50 (Less)
c) 120
d) 50 (Add)

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1. Original Cost   = Rs. 1,26,000
Salvage Value = Rs. 6,000
Useful Life      = 6 year
What will be the book value of the asset as at the beginning of fourth year: (Under Sum of Year’s digits method)
a) Rs. 1,03,143
b) Rs. 40,286
c) Rs. 45,987
d) Rs. 99,256

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2. Which of the following is not true with regard to fixed assets?

a) They are acquired for using them in the conduct of business operations
b) They are not meant for resale to earn profit
c) They can easily be converted into cash
d) Depreciation at specified rates is to be charged on most of the fixed assets

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1. Under-statement of closing work in progress in the period will
a) Understate cost of goods manufactured in that period.
b) Overstate current assets.
c) Overstate gross profit from sales in that period.
d) Understate net income in that period.

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2. Goods worth Rs. 5,000 were supplied to Mr. X at an invoice price of 20% above Cost and allowed trade discount at 10% on invoice price. At what price were the goods sold to X?
a) Rs. 5,400
b) Rs. 5,500
c) Rs. 5,625
d) Rs. 6,600

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1. Ram of Kolkata sends out goods costing 1,00,000 to Y of Mumbai at 20% profit on invoice price. 1/10^th of the goods were lost in transit. 1/2 of the balance goods were sold. The amount of Inventories reserve on consignment Inventories will be:
a) Rs. 4,500
b) Rs. 9,000
c) Rs. 11,250
d) None

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2. X of Kolkata sent out 2000 boxes costing 100 each with the instruction that sales are to be made at cost + 45%. X draws a bill on Y for an amount equivalent to 60% of sales value. The amount of bill will be:
a) Rs. 1,74,000
b) Rs. 2,00,000
c) Rs. 2,90,000
d) Rs. 1,20,000

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1. 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

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2. X and Y entered into a joint venture to sell 1,000 bags of wheat costing Rs. 200 each. X paid Rs. 2,000 for freight and Rs. 3,000 for insurance. 4/5th of the bags were sold by Y at Rs. 250 each bag. Remaining stock was taken over by Y at cost. The amount of the stock taken over by Y will be—
a) Rs. 40,000
b) Rs. 45,000
c) Rs. 41,000
d) Rs. 50,000

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1. X draws a bill on Y on 1.1.05 for 30 days. What will be the maturity date of the bill:
a) 2.2.05
b) 3.2.05
c) 1.2.05
d) 31.1.05

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2. On 1^st January 2006, Vimal sold goods worth Rs. 20,000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with, bank on 4^th February 2006 @ 15% p.a. The discounting charges will be:
a) Rs.3,000
b) Rs. 750
c) Rs. 500
d) None

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1. In the absence of an agreement, interest to be allowed on partner’s capital is _______?
a) 8%
b) 9%
c) 6%
d) None of these.

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2. If a firm prefers Partners Capital Accounts to be shown at the amount introduced by the partners as capital in firm then, the entries for salary, drawings, interest on capital or drawings and profits are made in
a) Trading Account
b) Profit and Loss Account
c) Balance Sheet 
d) Partners’ Current Account

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1. A firm has an average profit of Rs. 60,000. Rate of return on Capital employed is 12.5% p.a. Total capital employed in the firm was Rs. 4,00,000. Goodwill on the basis of two years purchase of super profits is :
a) Rs. 20,000
b) Rs. 15,000
c) Rs. 15,000
d) None

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2. An asset which is not fictitious but intangible in nature, having realizable value ______
a) Machinery
b) Building
c) Furniture
d) Goodwill

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1. A and B are partners sharing profits and losses in ratio of 3:2.
A’s Capital is Rs. 30,000
B’s Capital is Rs. 15,000
They admit C and agreed to give 1/5th share of profits to him
How much C should being in towards his Capital ?
a) Rs. 9,000
b) Rs. 12,000
c) Rs. 14,500
d) Rs. 11,250

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2. A, B, and C share profits and Losses in the ratio, of 3:2:1. D is admitted with 1/6 share which he gets entirely from A. New ratio will be:
a)
b) 3:1:1:1
c) 2:2:2:1
d) None

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1. At the time of retirement of a partner, firm gets ……….from the insurance company against the Joint Life Policy taken jointly for all the partners
a) Policy Amount
b) Surrender Value
c) Policy Value for the retiring partner and Surrender Value for the rest.
d) Surrender Value for all the partners

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2. X, Y, Z were partners sharing profits in ratio 5:3:2. Goodwill does not appear in books, but it is agreed to be worth Rs. 1,00,000. X retires from the firm and Y and Z decide to share future profits equally. X’s share of goodwill will be debited to Y’s and Z’s capital A/cs in ratio:
a) 1/2:1/2
b) 2:3
c) 3:2
d) None

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1. As per Section 37 of the Indian Partnership Act, 1932, the executors would be entitled at their choice to the interest calculated from the date of death till the date of payment on the final amount due to the dead partner at ……. Percentage per annum
a) 7
b) 4
c) 6
d) 12

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2. R, J and D are the partners sharing profits in the ratio 7:5:4. D died on 30th June 2006. It was decided to value the goodwill on the basis of three year’s purchase of last five years average profits. If the profits are Rs. 29,600; Rs. 28,700; Rs. 28,900; Rs. 24,000 and Rs. 26,800. What will be D’s share of goodwill?
a) Rs. 20,700
b) Rs. 27,600
c) Rs. 82,800
d) Rs. 27,000

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1. D Ltd. issued 2,00,000 shares of Rs. 100 each at a premium of Rs. 20 per share payable as follows:
On application               Rs. 20
On allotment                 Rs. 50 (including premium)
On first call                   Rs. 30
On second and final call Rs. 20
Application were received for 3,00,000 share and pro rata allotment was made to applicants of 2,40,000 shares. Money excess received on application of 2,40,000 shares was employed on account of sum due on allotment as part of share capital. E, to whom 4,000 shares were allotted, failed to pay the allotment money and on his subsequent failure to pay the first call, his shares were forfeited and F, the holder of 6,000 shares failed to pay the two calls and his shares were forfeited after the second call. Of the forfeited shares, 8,000 shares were reissued to G at a discount of 10%, the whole of E’s forfeited shares being reissued.
Net balance in Capital Reserve Account =___________.
a) Rs. 2,96,000
b) Rs. 80,000
c) Rs. 2,10,000
d) Rs. 2,16,000

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2. Securities Premium can be used by the company.
a) To adjust Loss on Revaluation of Assets
b) To issue fully paid Bonus shares
c) To pay dividend
d) To Adjust Trading Loss

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1. Loss on issue of debenture is generally written off in ___________
a) 5 years
b) 15 years
c) 10 years
d) Over the period of redemption

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2. P Ltd. issued 5,000, 12% debentures of Rs. 100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year =?
a) Rs. 80,000
b) Rs. 40,000
c) Rs. 10,000
d) Rs. 8,000

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1. The Balance sheet of A Ltd. as on March 31,2006 is as under:
 

Liabilities	Rs.	Assets	Rs.
Share Capital: Equity shares of Rs.100 each  12% Preference shares of Rs. 10 each Reserves and surplus: General reserve Profit and Loss Account 18% Debentures Sundry creditors Bank overdraft	5,00,000 3,00,000 1,50,000 2,50,000 2,00,000 50,000 25,000 1475000	Land and building Plant and machinery Furniture and Fixtures Investments Sundry debtors Inventories Cash	4,00,000  3,00,000 2,50,000 2,25,000 1,00,000 1,50,000 50,000 1475000

The 12% preference shares are redeemable at a premium of 10%. The company wishes to maintain the cash balance at Rs. 25,000. For the purpose of redemption of preference shares, it proposed to sell the investments for Rs. 2,00,000. The company proposes to issue sufficient number of equity shares of Rs. 100 each at a premium of 5% to raise required cash resources.
 Total Cash required to effect the above decisions is __________.
a) Rs. 3,30,000
b) Rs. 3,55,000
c) Rs. 25,000
d) Rs. 1,05,000

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2. Ajay Ltd. decides to redeem 10,000 Preference Shares of Rs. 10 each at 10% premium. Balance in Profit and Loss A/c is Rs. 65,000 and in Securities Premium A/c is Rs. 5,000. You are required to calculate the minimum number of equity shares of Rs. 10 each to be issued for the purpose of redemption, if the new share is to be issued at a discount of 20%.
a) 13, 125 shares
b) 5,625 shares
c) 13,750 shares
d) 5,000 shares

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