Questions and Answers on Accountancy

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Questions and Answers on Accountancy

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Accountancy Questions and Answers for Preparation

1. When shares issued at premium which of the following account is credited?
A. Securities premium Reserve
B. Share first call account
C. Share allotment account
D. Share forfeited account

2. The amount of capital mentioned in MOA is __________
A. Authorized capital
B. issued capital
C. Reserve capital
D. Subscribed capital

3. Closing stock appearing in trial balance will be taken to ________
A. Trading account only
B. Balance sheet only
C. Trading account and balance sheet
D. Profit and loss account only

4. Rights share are those shares which are _____________?
A. issued by a newly formed company
B. offered to the existing shareholders
C. Issued to the directors of the company
D. Issued to holders of convertible debentures

5. Owner’s equity stands tor-
A. Fixed assets minus Fixed Liabilities
B. Fixed Assets minus Current Liabilities
C. Current Liabilities minus Fixed Liabilities
D. Total assets minus Fixed Liabilities

6. A business entity has an opening balance of 4,000 as provision for bad and doubtful debts. Total sales amounts to 6,00,000 and out of which Rs.1,00,000 worth of sales is for cash. A provision of 1% is to be made on outstanding debtors. The amount to be debited to profit and loss account for current year’s provision on debtors will be
A. 5,000
B. 6,000
C. 1,000
D. None oi these

7. Advance payment of tax is in the nature of ___________
A. Capital expenses
B. Revenue Expense
C. Prepaid expenses
D. General expenses

8. Profit on cancellation of own debentures are transferred to ____________
A. P&L a/c
B. Capital reserve
C. General reserve
D. Development Rebate Reserve

9. Which one of the following statement is false?
A. The process of issue of bonus shares‘ is also known as capitalization of reserves
B. Fully paid bonus shares are issued only out of capital reserves
C. Only revenue reserves should be used when bonus is declared in order to make partly paid shares into fully paid shares.
D. Bonus shares are shares issued without payment

10. In what order the following items are shown on the liability side of the balance
I. Share capital
II. Debentures
III. Sundry creditors
IV. Proposed dividends

11. Generally Auditor is an-
A. Employee of the company
B. Agent of the company
C. Agent of the shareholders
D. None of these

12. Auditing is
A. An examination of books and vouchers of a company with the objective of enabling the auditor to state whether or not the financial statements reflect a true and fair view.
B. Verification of accounting data with a view of reporting on the reliability of the accounting statements.
C. Independent examination of financial information of any entity when such an examination is conduct with a view to expressing an opinion thereon.
D. Systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an enterprise with a view to expressing.

13. Which of the following statement lo correct?
A. In all auditing situation, the only evidence available is books and vouchers.
B. An auditor seeks conclusive evidence in support of the proposition under examinations.
C. An auditor should collect evidence which assures a reasonable and competent man that the data, statements etc. under report fairly represent the reality as far as it can be determined. Accordingly, he seeks evidence. which is persuasive rather than conclusive in nature.
D. All of these

14. Capital profits imply profits earned-
A. Through business transactions
B. From capital
C. From sales of fixed assets
D. From sale of current assets

15. Internal check Involves-
A. Reduction of work of cashier
B. Division of responsibilities of members of staff
C. Verification of inventory
D. Collusion among the members of staff

16. Which of the following statement best describes the nature of the relationship between statutory auditors and the internal auditors?
A. Statutory auditors should consider the work of the internal auditors in determining the nature, timing and extent of their audit procedures.
B. Statutory auditors may rely on the internal auditor’s judgment regarding the materiality of transaction
C. Internal auditors any assist the statutory auditors in performing compliance report
D. Internal auditors may assist the statutory auditors in performing substantive procedures.

17. The difference between internal audit and statutory audit is that-
A. Internal auditor should be a qualified chartered accountant whereas statutory auditor need not hold such a qualification
B. Internal auditor has to submit his report to the shareholders while a statutory auditor has lo submit his report to the management
C. Appointment of Internal auditor is optional while the appointment of statutory auditor ls obligatory
D. None of these

18. The essence of audit is-
A. Billing
B. Purchasing
C. Vouching
D. Trading

19. The board of directors shall appoint first auditor of a company ______
A. Within one month of completion of capital subscription state of the company
B. Within one month of the promotion of the company
C. Within one month of the commencement of the business of the company
D. Within one month of incorporation of the company

20. Financial management is not required to-
A. Determine the financial needs
B. Effect arrange the funds
C. Manage the efficiency of the employees
D. St the financial arrangement

Selected Questions Previous Question
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21. Net worth is –
A. CA + FA – CL
B. Capital-Fictitious Assets
C. CA – CL Debenture Fund
D. Capital – CL

22. A second-hand machinery purchased for Rs. 1,00,000 five years ago was overhauled by carrying out same current repairs at a cost of Rs.10,000. It has also an accumulated depreciation of Rs 50,000. it has been disposed of in the beginning of the sixth year for Rs. 60,000. Profit/loss on such disposal shall be-
A. Profit of Rs.10,000
B. Loss of Rs. 50,000
C. Loss of Rs. 40,000
D. No Profit, no loss

23. Depreciation is provided on-
A. Current assets
B. Liquid assets
C. Fictitious assets
D. Fixed assets

24. Factor which determines the capital gearing is-
A. Trading on equity
B. Elasticity oi capital structure
C. Cost of financing
D. Divided policy

25. Difference of current assets and current liabilities is equal to-
A. Net profit
B. Borrowed capital
C. Accrued income
D. Working capital

26. Overhead refers to:
A. Direct Prime Cost
B. Ali Indirect costs
C. Only Factory indirect Costs
D. Only indirect expenses

27. Prime cost =
A. Cost of direct labour + cost of direct material + direct expense
B. Cost of indirect labour + cost of indirect material + direct Exp.
C. Cost of direct labour + cost of direct material + indirect Exp.
D. Cost of indirect labour + cost oi direct material + indirect Exp.

28. In ‘make or buy’ decision, it is profitable to buy from outside supplier’s price is below the firm’s own ___________
A. Fixed Cost
B. Variable Cost
C. Total Cost
D. Prime Cost

29. Statutory cost audit are applicable only to:
A. Firm
B. Company
C. Individual
D. Society

30. Cost Unit is defined as:
A. Unit of quantity of product, service or time in relation to which costs may be ascertained or expressed
B. A location, person or an item of equipment or a group of these tor which costs are ascertained and used for cost control.
C. Centers concerned with earning an adequate return on investment
D. Fixed cost is a cost

31. Sunk cost are:
A. Relevant for decision making
B. Not relevant for decision making
C. Cost to be incurred in future
D. Future costs

32. Calculate value of closing stock from the following Opening stock of finished goods (500 units): Rs. 2,000 Cost of production (10000 unite) He 50 000 Closing stock (1000 units):
A. Rs 4,000
B. Rs. 4,500
C. Rs. 5,000
D. Rs. 6,000

33. Which one out of the following is not an inventory valuation method?
C. Weighted Average

34. incomes which accrue or arise outside Indie but ere received directly into Indie ere taxable in case of
A. Resident only
B. Both ordinarily resident and NOR
C. Non-resident
D. All the assesses

35. In which method depreciation le charged in Income Tax Act
A. Straight Line Method
B. Written Down Method
C. Sinking Fund Method
D. Other Method

36. R Ltd., is an Indian company whose entire control and management of its affairs is situated outside India. R Ltd., Shall be:
A. Resident in India
B. Non-resident in India
C. Not ordinarily resident in India
D. None of these

37. Unabsorbed depreciation which could not be set off in the same assessment year, can be carried forward for:
A. 8 Years
B. Indefinitely
C. 4 Years
D. None of the above

38. A is entitled to children education allowance @ Rs. 80 p.m. per child for 3 Children. The amount exempted will be ___________.
A. Rs. 200 p.m.
B. Rs. 160 p.m.
C. Rs. 240 p.m.
D. None of these

39. Exemption u/s 54B available for:
A. Gain on Transfer oi agricultural land
B. Gain on sale of Securities
C. Gain on transfer of house property
D. None of the above

40. Deduction under section 40(b) shall be allowed on account of salary/remuneration paid to:
A. Any partner
B. Major partner only
C. Working partner only
D. None of these

41. The maximum exemption of gratuity amount is notified by Central Government shall be:
A. 10,00,000
B. 13,00,000
C. 12,00,000
D. 14,00,000

42. Deduction under section 80C shall be allowed for:
A. Any education fee
B. Tuition fee exclusive of any payment towards any development
C. tee or donation or payment similar nature
D. Tuition fee and annual charge

43. Employer‘s contribution to unrecognized provident fund shall be:
A. Fully taxable
B. Fully exempt
C. Exempt up to 12% of salary
D. Taxable at the time oi retirement

44. Share of partner in the income of partnership firm shall be.
A. Taxable
B. Fully exempted
C. Exempted
D. Partially exempted

45. The country with highest GST Rate in the world is-
B. India
C. China
D. Greece

46. What kind if Tax is GST?
A. Direct Tax
B. Indirect Tax
C. Depends on the type oi goods and services
D. None of the above

47. Qualities of branch banking not is
A. Division of Risk
B. Banking Facilities
C. Equal Interest Rate
D. Loss in Branches

48. When was RBI Nationalized?
A. In1935
B. In 1939
C. In1948
D. In1969

49. Central Bank creates Credit by:
A. Paper Money
B. Deposit
C. Derivative deposit
D. All of Above