1. On January 1, Sohan paid rent Rs. 5,000. This can be classified as
a) An event
b) A transaction.
c) A transaction as well as an event.
d) Neither a transaction nor an event.

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2. Double Accounting System owes its origin to :
a) Lucas Pacioli
b) Adam Smith
c) Kohler
d) Karl Marx

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1. To achieve comparability of the financial statements of an enterprise, the same accounting policies should be followed from one period to another period due to ________ concept.
a) Materiality
b) Consistency
c) Conservatism
d) Going concern

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2. According to which concept the owner of an enterprise pays the “interest on drawings”?
a) Accrual concept
b) Conservative concept
c) Entity concept
d) Dual Aspect 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 current cost of the 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. 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.

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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.

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2. The area wherein different accounting policies can be adopted are:
a) Valuation of inventories
b) Retirement benefits
c) Treatment of goodwill
d) All of the above.

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1. 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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2. All of the following are limitations of Accounting Standards except
a) The choice between different alternative accounting treatments is difficult.
b) There may be trend towards rigidity.
c) Accounting Standards cannot override the statute.
d) All of the above.

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1. Recovery of bad debts written off previously will be ?
a) Credited to debtors A/c
b) Adjusted against provision for doubtful debts
c) Debited to debtors A/c
d) Credited to Profit and Loss A/c

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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. What will be the Journal Entry when goods purchased are returned?
a) Creditors A/c Dr.
To Purchase Returns A/c
b) Purchase Return A/c Dr.
To Creditors A/c
c) Creditors A/c Dr.
To Sales A/c
d) None of these.

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2. At the end of the accounting year all the nominal accounts of the ledger book are
a) Balanced but not transferred to profit and loss account
b) Not balanced and also the balance is not transferred to the profit and loss account
c) Balanced and the balance is transferred to the balance sheet
d) Not balanced and their balance is transferred to the profit and loss account.

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1. Closing stock in the trial balance implies that.
a) It is already adjusted in the opening stock.
b) It is adjusted in sales a/c
c) It is adjusted in the purchase a/c
d) None of these.

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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. In Purchases Book the record is in respect of
a) Cash purchase of goods,
b) Credit purchase of goods dealt in,
c) All purchases of goods.
d) None of the above

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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. Heavy advertisement expenditure should be treated as :
a) Deferred Revenue Expenditure
b) Revenue expenditure
c) Capital Expenditure
d) None of these.

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2. Which of the following statement is false?
a) Expenses in connection with obtaining a licence for running the Cinema is Capital expenditure
b) Heavy advertisement expenses to introduce a new product is deferred revenue expenditure
c) Cost of construction of building including cost of temporary huts for storing building materials is capital expenditure
d) The cost of Rings and Pistons of an engine changed to increase its fuel efficiency is revenue expenditure

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1. Imprest amount – Rs. 500. What will be the amount of re-imbursement if following expenses were incurred by the petty cashier during the month-Telephone =Rs. 150, Tiffin = Rs. 50, small Repairs = Rs. 30 general expenses = Rs. 100.
a) 300
b) 170
c) 330
d) 270

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2. Small payments are recorded in a book called:
a) Cash Book
b) Small payments book
c) Purchase book
d) Petty cash book

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1. 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.

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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. Under sales on return or approval basis, when transactions are few and the seller at the end of the accounting year reverse the sale entry, then what will be the accounting treatment for the goods returned by the customers on a subsequent date?
a) No entry will be passed for such return of goods
b) Entry for return of goods is passed by the seller
c) Only the stock account will be adjusted
d) None of the above

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2. Sale or return day book is a :
a) Primary Book
b) Principal Book
c) Memorandum Book
d) None of these

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1. Error relating to fundamental aspect of accounting is known as.
a) Error of Principle
b) Error of Omission
c) Error of Commission
d) Compensating Error

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2. 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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1. When the balance as per Pass Book is the starting point, uncollected cheques are:
a) Added in the bank reconciliation statement
b) Subtracted in the bank reconciliation statement
c) Not required to be adjusted in the bank reconciliation statement.
d) Neither of the above.

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2. The credit balance as per pass book of Mr. X was Rs. 65,600. Cheques issued but not presented for payment Rs. 75,800. Cheques deposited by one of the customers of the bank but wrongly credited in Mr. X account Rs. 20,600. The balance as per cash book will be:-
a) Rs. 30,800 Debit
b) Rs. 30,800 overdraft
c) Rs. 1,20,800 Debit
d) Rs. 10,400 overdraft.

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1. 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 information given in problem, compute the amount of cost of goods sold for June using FIFO basis.
a) Rs. 7,84,500
b) Rs. 6,85,500
c) Rs. 3,88,000
d) Rs. 7,58,000

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2. 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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1. B Ltd. has been charging depreciation on the straight line method. It charges a full year depreciation even if the machinery is utilized only for part of the year. An equipment which was purchased for Rs. 3,50,000 now stands at Rs. 2,97,500 after depreciating at the rate of 5% on a straight line basis. Now the company decides to change the method of depreciation with retrospective effect. The applicable reducing balance rate for this machinery would be 8% p.a. Assuming that before the effect of this change could be accounted, depreciation for the current year is already charged based on straight line method and is reflected in depreciated value of Rs. 2,97,500.

If 8% depreciation was charged by the reducing balance method, WDV at the end of 3rd year is
a) Rs. 2,72,541
b) Rs.2,96,240
c) Rs. 3,22,000
d) Rs. 3,60,000

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2. A purchased a computer on 1.4.06 for Rs.60,000. He purchased another computer on 1.10.07 for Rs.40,000. He charges depreciation @ 20% p.a. on straight line method. What will be closing balance of computers as on 31.3.09?
a) Rs.40,000
b) Rs.64,000
c) Rs.52,000
d) Rs.48,000

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1. Opening Stock = Rs. 50,000
Purchases = Rs. 1,00,000
Purchase Return = Rs. 29,000
Sales = Rs. 2,00,000
Find the Gross Profit
a) Rs. 1,21,000
b) Rs. 79,000
c) Rs. 21,000
d) None of the above

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2. A Company wishes to earn a 20% profit margin on selling price. Which of the following is the profit mark up on cost, which will achieve the required profit margin?
a) 33%
b) 25%
c) 20%
d) None of the above

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1. Out of the following at which point the treatment of “Sales” and “Consignment” is same:
a) Ownership transfer
b) Money receive
c) Stock outflow
d) Risk

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2. Ram of Kolkata sends out 1,000 boxes to Y of Delhi, costing Rs. 200 each. 1/10^th of the boxes were lost in transit. 2/3^rd of the boxes received by consignee is sold at cost +25%. The amount of sale value will be:
a) Rs. 1,00,000
b) Rs. 1,50,000
c) Rs. 1,20,000
d) Rs. 1,40,000

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1. State which of the statement is true?
a) Memorandum Joint Venture Account is prepared to find out profit on venture
b) Memorandum Joint Venture Account is prepared to find out amount due from Co-venturer
c) Memorandum Joint Venture Account is prepared when separate sets of books is maintained
d) In Memorandum Joint Venture Account only one venturer’s transaction is recorded

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2. A bought goods of the value of Rs. 10,000 and consigned them to B to be sold by them on joint venture, profits being divided equally. A draws a bill on B for an amount equivalent to 80% of cost on consignment. The amount of bill will be:
a) Rs. 10,000
b) Rs. 8,000
c) Rs. 6,000
d) Rs. 9,000

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1. From the following information, find out who can draws the bill if Mr. A sold goods to B:
a) A will draw a bill on B
b) B will draw a bill on A
c) None
d) Third party will draw a bill on A

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2. The Noting changes levied on dishonour of an endorsed bill by the Notary Public are to be born by:
a) Drawer of the bill
b) Holder of the bill
c) Endorser of the bill
d) Person responsible for dishonour

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1. The relationship between persons who have agreed to share the profit of a business carried on by all or any of them acting for all is known as …………..
a) Partnership
b) Joint Venture
c) Association of Persons
d) Body of Individuals

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2. When a partner is given Guarantee by the other partner, loss on such guarantee will be borne by
a) Partnership firm
b) All the other partners
c) Partner who gave the guarantee
d) Partner with highest profit sharing ratio

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1. Profits of last three years were Rs. 6,000, Rs. 13,000 and Rs. 8,000. Calculate goodwill for two years of purchase
a) Rs. 81,000
b) Rs. 27,000
c) Rs. 9,000
d) Rs. 18,000

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2. Goodwill is to be calculated at one and half years purchase of average profit of last 5 years. The firm earned profits during first 3 years as, Rs. 20,000, Rs. 18,000 and Rs. 9,000 and suffered losses of Rs. 2,000 and 5,000 in last 2 years. Goodwill amount will be:
a) Rs. 12,000
b) Rs. 10,000
c) Rs. 15,000
d) None

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1. X and Y share profits and losses in the ratio of 4:3. They admit Z in the firm with 3/7 share which he gets 2/7 from X and 1/7 form Y. The new profit sharing ratio will be:
a) 7:3:3
b) 2:2:3
c) 5:2:3
d) 2:3:3

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2. A and B are partners sharing the profit in the ratio of 3:2. They take C as the new partner, who is supposed to bring Rs. 25,000 against capital and Rs. 10,000 against goodwill. New profit sharing ratio is 1:1:1. C is able to bring Rs. 30,000 only. How this will be treated in the books of the firm.
a) A and B will share goodwill brought by C as Rs. 4,000: Rs.1,000
b) Goodwill not brought, will be adjusted to the extent of Rs.5,000 in sacrificing ratio.
c) Both
d) None

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1. Retiring or outgoing partner:
a) To be liable for firm’s liabilities
b) Not liable for any liabilities of the firm
c) Is liable for obligation incurred before his retirement
d) Is liable for obligations incurred with his consent only

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2. 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 value for the retiring partner and surrender value for the rest
b) Surrender value
c) Policy amount
d) None of these

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1. A, B and C are the partners sharing profits and losses in the ratio of 5:3:2, took a joint life policy of Rs. 30,000. On the death of B what amount will be payable to each partner
a) A-Rs. 22,000 and B-Rs. 8,000
b) A-Rs. 14,000 and B-Rs. 16,000
c) A-Rs. 15,000, B-Rs. 9,000 and C-Rs. 6,000
d) A-Rs. 10,000, B –Rs. 8,000 and C-Rs. 10,000

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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

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1. As per The Companies Act, only preference shares, which are redeemable within _______ can be issued
a) 24 years
b) 22 years
c) 30 years
d) 20 years

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2. The following statements apply to equity/preference shareholders. Which one of them applies only to Preference Shareholders?
a) Shareholders risk the loss of investment
b) Shareholders dear the risk of no dividends in the event of losses
c) Shareholders usually have the right to vote
d) Dividends are usually a fixed amount in every financial year

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1. Interest Payable on debentures is
a) An appropriation of profit of the company.
b) A charge against profits of the company.
c) Transferred to Sinking Fund A/c
d) Treated as Miscellaneous Expenditure to be shown in Balance Sheet.

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2. Which of the following statements is true?
a) A debenture holder is an owner of the company
b) A debenture holder can get his money back only on the liquidation of the company
c) A debenture issued at a discount can be redeemed at a premium
d) A debenture holder receives interest only in the event of profits

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1. Which of the following accounts can be transferred to capital redemption reserve account?
a) General reserve account
b) Forfeited shares account
c) Profit prior to incorporation
d) Share premium account

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2. According to section 78 of the Companies Act, the amount in the Securities Premium A/c cannot be used for the purpose of
a) Issue of fully paid bonus shares
b) Writing off losses of the company
c) Writing off preliminary expenses
d) Writing off commission of discount on issue of shares

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