1. Match the following items from column A with column B.
a) 1-b, 2-c, 3-d, 4-a
b) 1-a, 2-c, 3-d, 4-b
c) 1-b, 2-a, 3-d, 4-c
d) 1-b, 2-d, 3-a, 4-c

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2. Financial statements do not consider
a) Assets expressed in monetary terms.
b) Liabilities expressed in monetary terms.
c) Only assets expressed in non-monetary terms.
d) Assets and liabilities expressed in non-monetary terms

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1. Money measurement concept
a) Money measurement concept
b) Going concern concept
c) Realisation concept
d) Accrual concept

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2. Guru Ltd. Purchased a machinery for Rs. 10 lakhs. Installation charges= Rs. 20,000. Market value Rs. 12 lakhs. Company valued the machine at market price at the end of the year at Rs. 12 lakhs which concept is violated?
a) Cost Concept
b) Realization concept
c) Matching concept
d) Accrual concept

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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 present value 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. 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

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1. Selection of an inappropriate accounting policy decision may
a) Overstate the performance and financial position a business entity.
b) Understate/overstate the performance and financial position a business entity.
c) Overstate the performance a business entity.
d) Understate financial position a business entity.

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2. Which of the following is not an example of change in accounting policy?
a) Change in method of providing depreciation on fixed assets.
b) Change in the method of providing inventory valuation.
c) Adopting double Entry system of accounting in place of Single Entry.
d) Change in method of valuation of Investments.

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1. It is essential to standardize the accounting principles and policies in order to ensure
a) Transparency.
b) Consistency.
c) Comparability.
d) All of the above.

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2. Accounting Standards in India are issued by
a) Central Govt.
b) State Govt.
c) Institute of Chartered Accountants of India.
d) Reserve Bank of India.

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1. Capital of business is Rs. 75,000 and liability is Rs. 25,000 then total assets of business would be:
a) Rs. 1,00,000
b) Rs. 15,000
c) Rs. 75,000
d) Rs. 50,000

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2. Outstanding Salary is a :
a) Real account
b) Personal account
c) Representative personal
d) Nominal account

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1. The process of transferring the transaction relating to changes in a particular item at one place in the form of an account is called __________:
a) Balancing
b) Casting
c) Journalizing
d) Posting

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2. Which of the following is a real account?
a) Building A/c
b) Capital A/c
c) Rent A/c
d) All these.

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1. Which of the following in Trial Balance is contradictory to each other? __________.
a) Inventory and Drawings
b) Sales and Purchase Return
c) Carriage Inward and Outward
d) Trade Receivable and Liability

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2. Methods of preparation of Trial Balance are :
a) Balance Method
b) Total Method
c) Total and Balance Method
d) All of these

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1. Purchases of Fixed assets on credit basis is recorded in :
a) Purchase Book
b) Cash Book
c) Journal Proper
d) Journal

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2. 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

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1. Rs. 2,500 spent on the overhaul of machines purchased second-hand is
a) Capital expenditure
b) Revenue expenditure
c) Deferred revenue expenditure
d) None of the above

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2. What is the difference between deferred revenue expenditure and prepaid expenses?
a) Accounting treatment
b) Estimation of amount
c) Benefit for more than one accounting period
d) Nature of expenditure

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1. In three column Cash Book, when does contra entry occurs?
a) Withdrawal of cash from bank
b) Payment to creditors
c) Withdrawal of cash from bank for personal use
d) All of the above

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2. Double entry in Cash Book is completed when :
a) Salaries are paid by cheque
b) Withdrawal of money from bank for personal use
c) Deposited cash into bank
d) None of these

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1. Contingent liability if becomes probable then it is ________
a) Provided for in the books of A/c
b) Provided in Director’s report
c) Shown in notes to accounts
d) None of these

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2. Contingent assets usually arise from unplanned or other unexpected events:
a) True
b) False
c) Partly True
d) None

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1. Umesh sends goods on approval basis as follows:
 

Date January, 2011	Customer's Name	Sale price of  Goods sent Rs.	Goods accepted Rs.	Good Returned Rs.
8	Anna	3500	3000	500
10	Babu	2800	2800	---
15	Chandra	3680	---	3680
22	Desai	1260	1000	260

The Inventories of goods sent on approval basis on 31st January will be
a) Rs. 500.
b) Nil.
c) Rs. 260
d) None of the above.

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2. A sent some goods costing Rs. 3,500 at a profit of 25% on sale to B on sale or return basis. B returned goods costing Rs. 800. At the end of the accounting period i.e. on 31st December, 2011, the remaining goods were neither returned nor were approved by him. The Inventories on approval will be shown in the balance sheet at Rs.
a) 2,000.
b) 2,700.
c) 2,700 less 25% of 2,700.
d) 3,500.

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1. Goods purchased of Rs. 100 from N was not recorded at all. What will be its effect on the trial Balance?
a) Will tally
b) Will not tally
c) Will have no affect
d) None of these.

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2. Which type of error occurs when credit sales is wrongly posted to Purchase Day Book:
a) Error of omission
b) Error of commission
c) Compensatory error
d) Error of principle

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1. An amount of Rs. 5,000 debited twice in pass book to prepare Bank Reconciliation Statement, when overdraft as per the cash book in the starting point:
a) Rs. 5,000 will be deducted
b) Rs. 5,000 will be added
c) Rs. 10,000 will be deducted
d) Rs. 10,000 will be added

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2. When favourable balance as per cash book is the starting point, wrong debit by the bank to the firm will be:
a) Added
b) Subtracted
c) Both
d) None

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1. Net realizable value is:
a) Estimated selling price
b) Estimated cost price plus marketing cost
c) Estimated selling price less cost incurred in order to make the sale
d) Estimate selling price plus cost incurred in order to make the sale

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2. Bharat Indian Oil is a bulk distributor of petrol. A periodic inventory of petrol on hand is taken when the books are closed at the end of each month. The following summary of information is available for the month:
Sales Rs. 9,45,000
General administration cost Rs. 25,000
General administration cost Rs. 25,000
Purchases (including freight inward):
June 1 2,00,000. Liters @ Rs. 2.85 per liter
June 30 1,00,000 liters @ Rs. 3.03 per liter
June 30 Closing stock 1,30,000 liters.

Using the value of inventory on June 30 using weighted average method of inventory costing.
a) Rs. 8,15,000
b) Rs. 7,52,000
c) Rs. 7,83,000
d) Rs. 6,79,000

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1. On April 01, 2004 the debit balance of the machinery account of A Ltd. was Rs. 5,67,000. The machine was purchased on April 01,2002. The company charged depreciation at the rate of 10% per annum under diminishing balance method. On October 01,2004, the company acquired a new machine at a cost of Rs. 60,000 and incurred Rs. 6,000 for installation of the new machine. The company decided to change the system of providing depreciation from the diminishing balance method to the straight line method with retrospective effect from April 01, 2002. The rate of depreciation will remain the same. The company decided to made necessary adjustment in respect of depreciation due to the change in the method in the yea 2004-2005.
Cost of machinery on 01.04.2002 = __________.
a) Rs. 5,67,000
b) Rs. 6,30,000
c) Rs. 7,00,000
d) Rs. 7,77,778

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2. Annuity method is designed for which of the following :
a) Leases
b) Intangibles
c) Fixed Assets
d) Any of above

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1. If Purchases Account is not credited in case of goods lost in transit then which account can be credited?
a) Goods Lost in Transit Account
b) Purchase Return Account
c) Trading Account
d) Sales Account

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2. On 31st March, 2011, the books of Ajit showed a net profit of Rs. 84,000. Later it was discovered that the closing stock was overvalued, by Rs. 4,000 and the discount received or Rs. 1,500 was treated as an expense. What was the correct net profit of Ajit?
a) Rs. 81,500
b) Rs. 83,000
c) Rs. 89,500
d) Rs. 91,000

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1. Robin consigned good for the value of Rs. 8,250 to Raj of Kanpur paid freight etc. of Rs. 650 and insurance Rs. 400. Drew a bill on Raj at 3 months after date for Rs. 3,000 as an advance against consignment, and discounted the bill for Rs. 2960. Received Account Sales from raj showing that part of the goods had realized gross Rs. 8,350 and that his expenses and commission amounted to Rs. 870. The stock unsold was valued at Rs. 2750. Consignee wants to remit a draft for the amount due. The amount of draft will be:
a) Rs. 2,130
b) Rs. 4480
c) Rs. 5,130
d) Rs. 5090

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2. Rahim of Kolkata sends out goods of the invoice value Rs. 2,00,000 to Ram of Delhi at cost + 25%. The amount of loading will be:
a) Rs. 50,000
b) Rs. 40,000
c) Rs. 30,000
d) Rs. 60,000

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1. Which of the following methods of valuation of closing stock is followed in joint venture accounting?
a) Net realizable value
b) Cost price
c) Least of cost or Net realizable
d) None of these

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2. A and B were partners in a joint venture sharing profits and losses in the proportion of 4/5^th and 1/5^th respectively. A supplies goods to the value of 50,000 and incurs expenses amounting to Rs. 5400. B supplies goods to the value of Rs. 14,000 and his expense amount to Rs. 800. B sells goods on behalf of the joint venture and realizes Rs. 92,000. B is entitled to a commission of 5 per cent on sales. B settles his account by bank draft. What will be the final remittance?
a) B will remit Rs. 69,160 to A
b) A will remit Rs. 69,160 to B
c) A will remit Rs. 69,000 to B
d) B will remit Rs. 69,000 to A

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1. Indian Currency is a
a) Bill of Exchange
b) Cheque
c) Promissory Note
d) Bank Draft

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2. On 1^st January Shilpa owes Rs. 10,000 and accepts a 3 months bill for the amount. On the date of maturity Shilpa was not able to meet the bill. She pays Rs. 4000 and asks to draw another bill for three months for the balance amount with interest will @ 15% p.a. The amount of interest will be:
a) Rs. 200
b) Rs. 225
c) Rs. 500
d) Rs. 900

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1. Aryan and Gauri were partner in a firm sharing profits and losses in the ratio of 2:1. Their capital was R.s. 90,000 and Rs. 60,000 respectively. They were entitled for interest on capital @ 12% p.a. The firm earned a profit of Rs. 84,000 after allowing interest on capitals. Profits will be distributed among them will be:
a) Rs. 44,000; Rs. 22,000
b) Rs. 56,000; Rs. 28,000
c) Rs. 50,400; Rs. 33,600
d) Rs. 39,600; Rs. 26,400

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2. Interest on drawings is treated as:
a) Revenue
b) Expense
c) Liability
d) None of these.

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1. If old ratio between A & B is 1:1 & new ratio between A, B & C is 4:3:2 Recorded Good will of Rs. 90,000 appears in B/S. Which accounts will be affected if they decide to write off goodwill immediately?
a) A A/c and B A/c
b) A A/c and C A/c.
c) B A/c and C A/c.
d) None

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2. A and B share profits and losses in the ratio 2:1.
C is admitted with 1/4th share in profits
C acquired 3/4th of his share from B. New profit and loss sharing ratio will be:
a) 2: 1 : 1
b) 23 : 13 : 12
c) 3 : 1: 1
d) 1: 1: 1

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1. A, B, C are partners sharing profits in the ratio of 4:3:2. D is admitted for 2/9th share of profits and brings Rs. 30,000 as capital and 10,000 for his share of goodwill. The new profit sharing ratio between partners will be 3:2:2:2. Goodwill amount will be credited in the capital accounts of :
a) A only
b) A, B and C (equally)
c) A, and B (equally)
d) A, and C (equally)

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2. A and B are partners C is admitted with a guarantee profit of Rs. 10,000 from A with a new profit sharing ratio of 3:2:1. Profit for the year 2009-10 is Rs. 1,20,000. How much profit C will get?
a) Rs. 10,000
b) Rs. 20,000
c) Rs. 30,000
d) None of these.

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1. A, B, and C are partners with capitals of Rs. 1,00,000, Rs. 75,000 and Rs. 50,000. On C’s retirement his share is acquired by A and B in the ration of 6:4. Gaining ratio will be:
a) 3:2
b) 2:2
c) 2:3
d) None

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2. 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 premium is fully charged to revenue as and when paid?
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

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1. 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

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2. Revaluation account is prepared at the time of
a) Admission of a partner
b) Retirement of a partner
c) Death of a partner
d) All of the above

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1. When shares are forfeited, share capital account is debited by:
a) Nominal values of shares
b) Paid-up amount of shares
c) Called – up amount of shares
d) Forfeited amount

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2. X Ltd. Allotted 10,000 shares to the applicants of 14,000 shares on prorate basis. O applied for 840 shares. What is the number of shares allotted to him. If application money is @ Rs. 2 then what will be is amount transferred to further calls. _______.
a) 600 shares, Rs. 480
b) 840 shares, Nil
c) 600 shares, Nil
d) 840 shares, Rs. 12000

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1. The underwriting commission in case of issue of debentures can’t exceed:
a) 2.5%
b) 3%
c) 3%
d) 5%

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2. Debenture holders are called __________ of the Company
a) Creditors
b) Debtors
c) Owners
d) Bankers

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1. X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:
a) 4000 shares
b) 5000 shares
c) 4480 shares
d) 5600 shares

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2. In case of redemption option of preference shares is out of the fresh issue of equity shares, which of the following account will be credited?
a) Capital reserve account
b) Equity share capital account
c) Current liabilities and provisions account
d) Capital redemption reserve account

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