Question Bank | Fundamentals of Accounting

1. Meaning and Scope of Accounting - Quiz

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

2. Financial position of the business is ascertained on the basis of
a) Records prepared under book-keeping process.
b) Trial balance.
c) Accounting reports.
d) None of the above.

2. Accounting Concepts, Principles and Conventions - Quiz

1. The Rule of “Lower of Cost or Market Value” is based on which concept ?
a) Dual Aspect
b) Conservatism
c) Disclosure
d) Prudence

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

3. Accounting as a Measurment Discipline - Quiz

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

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. Which of the following is one of the major considerations governing the selection and application of accounting policy:
a) Prudence
b) Materiality
c) Substance over form
d) All of the above

2. The areas wherein different accounting policies can be adopted are
a) Providing depreciation.
b) Valuation of inventories.
c) Valuation of investments.
d) All of the above.

5. Accounting Standards - Quiz

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.

2. 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.

6. Journal Entries - Quiz

1. In case of a debt becoming bad, the amount should be created to :
a) Trade receivables account.
b) Bad Debts Account
c) Cash Account
d) Sales Account

2. M/S Stationary Mart will debit purchase of stationary to _______
a) Stationary Account
b) General Expenses Account
c) General Expenses Account
d) Stock Account

7. Ledgers - Quiz

1. The technique of finding the net balance of an account after considering the totals of both debits and credits appearing in the account is known as
a) Posting
b) Purchase
c) Balancing of an account
d) Arithmetically accuracy test

2. Journal and ledger records transactions in
a) A chronological order and analytical order respectively.
b) An analytical order and chronological order respectively.
c) A chronological order only
d) An analytical order only.

8. Trial Balance - Quiz

1. Which of the following is not a process in the preparation of a Trial Balance ?
a) Recording
b) Summarizing
c) Classifying
d) Interpretation

2. 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.

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. A bills receivable of Rs. 1,000, which was received from a debtor in full settlement for a claim of Rs. 1,100 is dishonoured.
a) Purchases Return Book
b) Bills Receivable Book
c) Purchases Book
d) Journal Proper (General journal)

10. Capital and Revenue Expenditures and Receipts - Quiz

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.

2. Recovery of Bad debt is a :
a) Revenue Receipt
b) Capital Receipt
c) Capital Expenditure
d) Revenue Expenditure

11. Cash Book - Quiz

1. Cash book is a form of :
a) Trial Balance
b) Ledger
c) Journal
d) All of the above

2. What rate of commission is charged by the bank issuing the credit card :
a) 1% to 3%
b) 3% to 6%
c) 2% to 5%
d) 1% to 4%

12. Contingent Assets and Contingent Liabilities - Quiz

1. Contingent asset is not recognized in the financial statements on the basis of ______ accounting concept:
a) Prudence
b) Materiality
c) Substance over form
d) Going concern

2. Income tax demand, disputed by a company is________
a) Contingent Liability
b) Current Liability
c) Long term Liability
d) None of these

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

1. Memorandum records of sale on approval is a part of :
a) Management Accounts
b) Financial Accounts
c) Cost Accounts
d) None of the above

2. X sent some goods costing Rs. 3,500 at a profit 20% on sales or approval basis. Y returned goods costing Rs. 800. At the end of the year 2013 the remaining goods were neither returned nor approved. The closing stock to be shown in Balance Sheet will be:
a) Rs. 2,700
b) Rs. 2,000
c) Rs. 2,700 less 25% of 2,700
d) Rs. 3,500

14. Rectification of Errors - Quiz

1. Goods worth Rs. 100 taken by proprietor for domestic use should be credited to
a) Sales account
b) Proprietor’s personal expenses
c) Purchases account
d) Expenses account

2. Which type of error can occur while posting the journal entries in the ledger:
(a) Error of Principle
(b) Error of Commission
(c) Error of Partial Omission
(d) Error of Complete Omission
a) (A), (B), (C) and (D)
b) (B), (C) and (D)
c) (A), (C) and (D)
d) (A), (B) and (D)

15. Bank Recouncilation Statement - Quiz

1. The Cash book showed an overdraft of Rs.1,500 but the pass book made up to same date should that cheques of Rs. 100, Rs. 50 and Rs. 125 had not been presented for payment and a cheque of Rs. 400 had not been cleared. The balance as per the Cash Book will be:
a) Rs. 1,100
b) Rs. 1,625
c) Rs. 2,175
d) Rs. 1,375

2. The payment side of Cash Book is under cast by Rs. 250. If the starting point of BRS is the Overdraft Balance as per Pass Book, then what would be the treatment to reach to Overdraft Balance of Cash Book ?
a) Add 250
b) Less 250
c) Add 500
d) Less 500

16. Inventories - Quiz

1. From the following information, answer the questions.
Physical verification of inventory was done in 23rd June. The value of inventory was Rs.4,80,000.
Following transactions took place between 23rd June and 30th June:
1. Out of goods sent on consignment, goods costing Rs.24,000 were unsold.
2. Purchases of Rs.40,000 were made, out of which goods worth Rs.16,000 were delivered on 5th July.
3. Sales were Rs. 1,36,000, which include goods worth Rs.32,000 sent on approval. Half of these goods were returned before 30th June, but no intimation is available regarding the remaining goods. Goods are sold at cost plus 25%. However, goods costing Rs.24,000 had been sold for Rs.12,000.
You want to determine the value of inventory on 30th June. You start with physical inventory on 23rd June.

Cost of Normal Sales = ______________.
a) 73,600
b) 80,000
c) 1,08,800
d) 99,200

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 issues in the month of December 2011 using simple average method.
a) Rs.15,385
b) Rs.21,675
c) Rs.19,750
d) Rs.27,417

17. Depreciation Accounting - Quiz

1. Glass, Cutlery etc.: Balance on 01.01.2004 is Rs. 28,000. Glass, Cutlery, etc. purchased during the year Rs. 16,000. Depreciation is to be charged on the above assets as follows- 1/5th of their values is to be written off in the year of purchase and 2/5th in each of the next 2 years. Of the stock of Glass, Cutlery, etc. as on 01.01.2004,
a) Rs. 7,000
b) Rs. 17,500
c) Rs. 20,200
d) Rs. 24,200

2. Scrap value of an asset means the amount it can fetch on sale at the ______of its useful life :
a) Beginning
b) End
c) Middle
d) None

18. Final Accounts - Quiz

1. Bad debts Rs. 3,000
Provision for bad debts Rs. 3,500
It is desired to make a provision of Rs. 4,000 at the end of the year. The amount debited to P & L A/c is :
a) Rs. 4,000
b) Rs. 5,000
c) Rs. 6,500
d) Rs. 3,500

2. Bills Receivable discounted but not due till date of final accounts is shown as :
a) Liabilities
b) Assets
c) P & L A/c
d) Foot notes (contingent liabilities )

19. Consignment - Quiz

1. The risk of stock on consignment lies with
a) Consignor
b) Consignee
c) Buyer
d) Seller

2. A consigned 1000 litres of coconut oil @ Rs. 50 per it. To B. The normal loss is estimated at 5%. The profit was fixed at 14% on the total cost. What is the sale price per liter?
a) Rs. 57
b) Rs. 60
c) Rs. 70
d) Rs. 55

20. Joint Ventures - Quiz

1. Joint Venture Accounting follows which concept:
a) Accrual Concept
b) Going Concern Concept
c) Cost Concept
d) Cash Basis

2. 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

21. Bills of Exchange and Promissory Notes - Quiz

1. On 15.8.05 X draws a bill on Y for 3 months for Rs. 20,000. 18^th Nov was a sudden holiday, maturity date of the bill will be:
a) 17^th July
b) 18^th July
c) 19^th Nov
d) 15^th Nov

2. Who is the acceptor of “Bill of exchange”?
a) Debtor
b) Creditor
c) Seller
d) None of the above

22. Introduction to Partnership Accounts - Quiz

1. In the absence of any deed of partnership---
a) Only working partners are entitled to Salary.
b) Partners are entitled for commission @ 6% of the net profits of the firm.
c) Partners contributing highest capital is entitled for interest on capital @ 6% p.a.
d) Interest at the rate of 6% is to be allowed on a partner’s loan to the firm.

2. A, B and C had capitals of Rs. 50,000; Rs. 40,000 and Rs. 30,000 respectively for carrying on business in partnership. The firm’s reported profit for the year was Rs. 80,000. As per provisions of the Indian Partnership Act, 1932, find out the share of each partner in the above amount after taking into account that no interest has been provided on an advance by A of Rs. 20,000, in addition to his capital contribution.
a) Rs. 26,267 for Partner B and C & Rs. 27,466 for partner A
b) Rs. 26,667 each partner
c) Rs. 33,333 for A, Rs. 26,667 and Rs. 20,000 for C
d) Rs. 30,000 each partner

23. Treatment of Goodwill in Partnership Accounts - Quiz

1. Capital employed by M/s PQR is Rs. 5, 00,000. Rate of normal profit is 20%. Past four year’s profits were as follows:

Year	Profit (Rs.)
1	1,20,000
2	1,80,000
3	1,50,000
4	2,00,00

Calculate value of goodwill at 2 years purchase using super profit method:
a) Rs. 3,25,000
b) Rs. 1,62,500
c) Rs. 3,12,500
d) Rs. 1,25,000

2. The capital of A and B sharing profits and losses equally are Rs. 90,000 and Rs. 30,000 respectively. They value the goodwill of the firm at Rs. 84,000, which was not recorded in the books. If goodwill is be raised now, by what amount each partner’s capital account will be debited:
a) Rs. 21,000 and Rs. 63,000
b) Rs. 42,000 and Rs. 42,000
c) Rs. 63,000 and Rs. 21,000
d) None of the above

24. Admission of New Partner - Quiz

1. 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

2. X and Y are partners sharing profits in the ratio of 3:1. They admit Z as a partner who pays Rs. 4,000 as Goodwill the new profit sharing ratio being 2:1:1 among X, Y and Z respectively. The amount of goodwill will be credited to:
a) X and Y as Rs. 3,000 and Rs. 1,000 respectively
b) X only
c) Y only
d) None of the above

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 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

2. Balances of A, B and C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 2,00,000; B Rs. 3,00,000 and C Rs. 2,00,000. A desired to retire form the firm, B and C share the future profits equally, goodwill of the entire firm be valued at Rs. 1,40,000 and no Goodwill account being raised.
a) Credit Partner’s Capital Account with old profit sharing ratio for Rs. 1,40,000
b) Credit Partner’s Capital Account with new profit sharing ratio for Rs. 1,40,000
c) Credit A’s Account with Rs. 40,000 and debit B’s Capital Account with Rs. 10,000 and C’s Capital Account with Rs. 30,000
d) Credit Partner’s Capital Account with gaining ratio for Rs. 1,40,000

26. Death of a Partner - Quiz

1. If three partners A, B & C are sharing profits as 5:3:2, then on the death of a partner A, how much B & C will pay to A’s executer on account of goodwill. Goodwill is to be calculative on the basis of 2 years purchase of last 3 years average profits. Profits for last three years are: Rs. 3,29,000; Rs. 3,46,000 and Rs. 4,05,000.
a) Rs. 2,16,000 & Rs. 1,42,000
b) Rs. 2,44,000 & Rs. 2,16,000
c) Rs. 3,60,000 & Rs. 3,60,000
d) Rs. 2,16,000 & Rs. 1,44,000

2. JLP of the partners is a/ an ___________account:
a) Nominal
b) Personal
c) Representative Personal
d) Assets

27. Issue, Forfeiture and Reissue of shares - Quiz

1. When shares are issued to promoters which account is debited?
a) Goodwill
b) Premium
c) Promoters
d) Share Capital.

2. A Ltd. acquired, assets worth Rs. 15,00,000 form H Ltd. by issued of shares of Rs. 100 @ premium of 25%. The number of shares issued to settle the purchase consideration will be:
a) 12,000 shares
b) 15,000 shares
c) 18750 shares
d) 11,250 shares

28. Issue of Debentures - Quiz

1. 6000 debentures were discharged by issuing Equity Shares of Rs. 10 each at 20% Premium. Find the number of shares issued.
a) 50000
b) 60000
c) 5000
d) 6000

2. 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.

29. Redemption of Preference Shares - Quiz

1. 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

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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Fundamentals of Accounting [CA - CPC]

Class/Course - CA - CPC

Subject - Fundamentals of Accounting

Total Number of Question/s - 4416