fundamentals of accounts - amazon web...

Fundamentals of Accounts

CA. Chiranjeev Jain

1 Cheques received from Sailendra not deposited same day Journalise.

a) Sailendra Account Dr. To Bank Account b) Cheque in Hand Account Dr. To Saildendra Account c) Cash Account Dr. To Saildendra Account d) Bank Account Dr. To Saildendra Account

2 Which of these is not a distinction between joint venture & partnership? a) Perpetuality b) Act governing them c) Revenue earning motive d) Liquidation process

3 What is excluded from cost of the asset? a) Installation charges b) Repair and maintenance c) Commissioning d) Trial run

4 Which is the two basic method of depreciation? a) Straight line and Sinking fund b) Reducing balance and Sinking fund c) Annuity fund method and Sinking fund d) Straight line and Reducing balance

5 What is straight line method? a) Reducing amount written off every year b) Equal amount written off every year c) Taking interest into consideration while writing off the asset d) Amount written off on the basis of machine-hour worked

6 What is reducing balance method? a) Reducing amount written off every year b) Equal amount written off every year c) Taking interest into consideration while writing off the asset d) Amount written off on the basis of machine-hour worked

7 What is annuity method? a) Reducing amount written off every year b) Equal amount written off every year c) Taking interest into consideration while writing off the asset d) Amount written off on the basis of machine-hour worked

8 What is machine-hour method method? a) Reducing amount written off every year b) Equal amount written off every year


CA. Chiranjeev Jain

c) Taking interest into consideration while writing off the asset d) Amount written off on the basis of machine-hour worked

9 Depreciation of fixed assets is an example of _____________ expenditure. a) Revenue b) Deferred revenue c) Capital d) None of the three

10 In______________ method, depreciation is charged by allocating depreciable cost in proposition of the annual output to the probable life-time output

a) Working hours method b) Replacement method c) Revaluation method d) Production units method

11 Out of the goods sent on approval basis amounting to Rs.8900, goods worth Rs.3700 were returned by the customer as on the due date. What would be the entry in the supplier’s books of accounts?

a) Dr. Customer a/c Rs.8900 & Cr. Sales a/c Rs.8900 Dr. Sales Return a/c Rs.3700 & Cr. Customer a/c Rs.3700

b) Dr. Customer a/c Rs.8900 & Cr. Sales on approval basis a/c Rs.8900 Dr. Sales Return a/c Rs.3700 & Cr. Customer a/c Rs.3700

c) Dr. Customer a/c Rs.8900 & Cr. Sales on approval basis a/c Rs.8900 Dr. Sales on approval basis a/c Rs.3700 & Cr. Customer a/c Rs.3700

d) Dr. Customer a/c Rs.8900 & Cr. Sales a/c Rs.8900 Dr. Sales on approval basis a/c Rs.3700 & Cr. Customer a/c Rs.3700

12 Mr. A started a business on 1st January 2005 with Rs. 5,00,000. During the year he bought goods worth Rs. 1,00,000 on credit and sold 80% of the same goods at profit of 20% on cost. At the end of the year 2005, the amount of opening stock to be shown in the trial balance of Mr. A will be

a) Rs. 20,000 b) Rs. 24,000 c) Rs. 1,00,000 d) Nil

13 Which of these is not a distinction between joint venture & consignment? a) Governing law b) Profit sharing ratio c) Ownership d) Revenue earning motive

14 When the invoice/bill is made payable at a stated number of days after date then the due date is a) That specific date b) Date on which the term of the bill expires c) The date which comes after adding stated number of days to the date of bill d) The due date of the last bill


CA. Chiranjeev Jain

15 Balance of A’s Capital is Rs. 93,500; B’s Capital is Rs. 52,500 and C’s Capital is Rs. 25,000 and partners decides that the capitals of partners in the new firm are to be in the profit sharing ratio – the capital of C being taken as the base capital. New profit sharing ratio is 3 : 1 : 1.

a) Transfer to Current Account: A – Rs. 18,500 and B Rs. 27,500. b) Cash bought in by A – Rs. 18,500 and B – Rs. 27,500. c) Transfer to Current Account: A – Rs. 18,500, B Rs. 27,500 & C – Rs. 6,000. d) Cash bought in by A – Rs. 18,500, B – Rs. 27,500 & C – Rs. 6,000.

16 How is abnormal loss treated in the Balance Sheet? a) Total value is shown on the Asset side b) Value recovered from the Insurance Co. is shown on the asset side c) Amount due from the Insurance Co. is shown on the asset side d) No entry

17 What is sinking fund method? a) Amount placed to a special fund at the same time an equal amount deposited in

government securities b) Amount written off on the basis of machine-hour worked c) Taking interest into consideration while writing off the asset d) Reducing amount written off every year

18 What is the journal entry for charging of depreciation? a) Dr.Dep a/c and Cr.P/L a/c b) Dr.Dep a/c and Cr.Asset a/c c) Dr.P/L a/c and Cr. Dep a/c d) Dr..Asset a/c and Cr.Dep a/c

19 What is the journal entry for transfer of depreciation? a) Dr.Dep a/c and Cr.P/L a/c b) Dr.Dep a/c and Cr.Asset a/c c) Dr.P/L a/c and Cr.Dep a/c d) Dr.Asset a/c and Cr.Dep a/c

20 What is the journal entry for depreciation when provision for depreciation exists? a) Dr.Dep a/c and Cr.Asset a/c b) Dr.P/L a/c and Cr..Dep a/c c) Dr.Dep a/c and Cr.Provision a/c d) Dr.P/L a/c and Cr..Provision a/c

21 What is the journal entry for transfer of depreciation to the sinking fund? a) Dr.Dep a/c and Cr.Asset a/c b) Dr.Dep a/c and Cr.P/L a/c c) Dr.Sinking fund a/c and Cr.Dep a/c d) Dr.Dep a/c and Cr.Sinking fund a/c

22 What is the journal entry for investment of amount of depreciation? a) Dr.Dep. a/c and Cr.Bank a/c b) Dr.Sinking fund a/c and Cr.Bank a/c c) Dr.Sinking fund investment a/c and Cr.Bank a/c d) Dr..Bank a/c and Cr.Sinking fund investment a/c

23 What is the journal entry for transfer of amount to the extent of book value of the asset? Dr.Sinking fund a/c and Cr.Bank a/c

a) Dr.Sinking fund a/c and Cr.Asset a/c b) Dr.Sinking fund a/c and Cr.Dep a/c


CA. Chiranjeev Jain

c) Dr.Dep a/c and Cr.Sinking fund a/c 24 If the due date is a public holiday then the due date will be

a) Succeeding business day b) Preceeding business day c) Due date will not change d) It will be one month later

25 What is production unit method? a) Amount written off on the basis of number of units produced b) Amount written off on the basis of machine-hour worked c) Taking interest into consideration while writing off the asset d) Amount placed to a special fund at the same time an equal amount deposited in

government securities 26 What is the rate of depreciation, under straight line method when cost of machine is Rs

105000,residual value Rs 5000 & useful life is 10 yrs? a) 26% b) 26.5% c) 9.5% d) 10%

27 The capital of all the partners should always be in the ______ ratio. a) Profit sharing. b) Time devoted. c) Equal d) None.

28 A company is association of _________ a) parties b) persons c) debtors d) partner

29 In which Financial Statements is bad debt shown if it appears in the adjustment? a) Trading & Profit & Loss account b) Profit & Loss account & Balance Sheet c) Only Balance Sheet d) Only Profit & Loss account

30 Out of the goods sent on approval basis amounting to Rs.9500, goods worth Rs.4200 were retained by the customer as on the due date. What would be the entry in the supplier’s books of accounts?

a) Dr. Customer a/c Rs.9500 and Cr. Sales a/c Rs.9500 Dr. Sales a/c Rs.5300 & Cr. Customer a/c Rs.5300

b) Dr. Customer a/c Rs.9500 and Cr. Sales on approval basis a/c Rs.9500 Dr. Sales on approval basis a/c Rs.4200 & Cr. Sales a/c Rs.4200

c) Dr. Customer a/c Rs.9500 and Cr. Sales on approval basis a/c Rs.9500 Dr. Sales on approval basis a/c Rs.4200 & Cr. Customer a/c Rs.4200

d) Dr. Customer a/c Rs.9500 and Cr. Sales on approval basis a/c Rs.9500 Dr. Sales on approval basis a/c Rs.5300 & Cr. Sales a/c Rs.5300 31 What are contingencies as per AS-4?

a) It is an event which would result in gain. b) It is an event which would result in loss c) It is an event, outcome of which is dependent on uncertain future events. d) All of thethree


CA. Chiranjeev Jain

32 A company is guided by? a) companies act 1931 b) companies act 1934 c) companies act 1932 d) companies act 1956

33 The minimum number,of member in public company is ______ a) 7 b) 8 c) 4 d) 2

34 The profits of a company are disposed of in the form of _______ a) dividend or bonus share. b) dividend or prefrence share. c) dividend or equity share. d) dividend or debenture

35 How many methods are there to record joint venture transaction? a) 1 b) 2 c) 3 d) 4

36 According to section 617 a government company is a company in which not less than _______ of the paid up share capital held by central govt..

a) 41% b) 50% c) 100% d) 51%

37 Companies profit divided among shareholders is _________ a) interest b) reserve c) dividend d) surplus

38 Who is the owner of company ________ a) share holders b) promoter c) director d) partner

39 When the due date is an emergency/unforseen holiday a) Succeeding business day b) Preceeding business day c) Due date will not change d) It will be one month later

40 what is the full form of SEBI. a) Share exchange board of India. b) security exchange board of India. c) security encashment board of India. d) share earned board of India.


CA. Chiranjeev Jain

41 The capital,which is offered to the public for subscription……. a) authorised b) issued c) paid up d) called up

42 In which Financial Statements is bad debt shown if it appears in the Trial Balance? a) Trading and Profit and Loss account b) Profit and Loss account and Balance Sheet c) Only Balance Sheet d) Only Profit and Loss account

43 Any company incorporated outside India but has set up a business place in India? a) government company b) subsidiary company c) foreign company d) private company

44 Which share capital refers to the part of the called capital, which has been paid by the shareholders?

a) authorised b) issued c) paid up d) called up

45 Out of the goods sent on approval basis amounting to Rs.12500, the customer retained goods worth Rs.4500 and they returned goods worth Rs.5000 on the due date. What would be the entry in the supplier’s books of accounts?

a) Dr. Customer a/c Rs.12500 & Cr. Sales on approval basis a/c Rs.12500 Dr. Sales on approval basis a/c Rs.4500 & Cr. Sales a/c Rs.4500

Dr. Sales on approval basis a/c Rs.5000 & Cr. Customer a/c Rs.5000 b) Dr. Customer a/c Rs.12500 & Cr. Sales a/c Rs.12500

Dr. Sales Return a/c Rs.5000 & Cr. Customer a/c Rs.5000 Dr. Sales a/c Rs.3000 & Cr. Customer a/c Rs.3000

c) Dr. Customer a/c Rs.12500 & Cr. Sales a/c Rs.12500 Dr. Sales Return a/c Rs.5000 & Cr. Customer a/c Rs.5000 Dr. Sales a/c Rs.4500 & Cr. Customer a/c Rs.4500

d) Dr. Customer a/c Rs.12500 & Cr. Sales on approval basis a/c Rs.12500 Dr. Sales Return a/c Rs.5000 & Cr. Customer a/c Rs.5000 Dr. Sales on approval basis a/c Rs.4500 & Cr. Customer a/c Rs.4500 46 Which of these is not a method of joint venture?

a) Joint bank method b) Memorandum method c) Columunar method d) None of the three

47 A purchase of Rs. 1,870 by cheques has been wrongly posted in the cashbook as Rs. 1,780. This has the effect of

a) Increasing the bank balance by Rs. 90 b) Decreasing the bank balance by Rs. 90 c) Increasing the bank balance by Rs. 180 d) Decreasing the bank balance by Rs. 180


CA. Chiranjeev Jain

48 Jadu Ltd. re-issued 2,000 shares, which were forfeited by debiting Share forefeiture account by Rs. 3,000. These shares were re-issued at Rs. 9 per share. The amount to be transferred to Capital Reserve account will be

a) Rs. 3,000 b) Rs. 2,000 c) Rs. 1,000 d) Nil

49 Proforma invoice is a statement of information in the form of invoice prepared by _________to appraise the ________about certain essential particulars of the goods.

a) Consignee, Consignor b) Buyer, Seller c) Consignor, consignee d) None of the three

50 If the company fails to raise minimum subscription within 120 days from the date of first issue of prospectus , it is required to return the amount it has received from the application within next _____ days

a) 5 b) 7 c) 6 d) 10

51 A and B are partners in a firm sharing profits in the ratio of 3:2. They admit C as the new partner for 1/6th share in the profits. The firm goodwill was valued at Rs. 1,50,000/-. For adjustment of goodwill. C’s account will be debited by

a) Rs. 20,000 b) Rs. 15,000 c) Rs. 25,000 d) None of the three

52 Who is liable to compensate the company or the allottee for any loss, damage, or costs suffered through irregular allotment

a) share holders b) promoter c) director d) partner

53 Goods sent on approval has been Recorded as actual sales, which two accounts needs to be adjusted?

a) Sales and Closing Stock b) Sales and Opening Stock c) Purchases and Closing Stock d) No Adjustment

54 Redeemable preference share are those preference share whose amount can be returned by the company to their holders within the ____ of company according to companies act 1956

a) 20yrs b) 40yrs c) 60yrs d) lifetime

55 Called up share—calls in arrears = a) authorised b) issued


CA. Chiranjeev Jain

c) paid up d) called up

56 the term ________ means distribution of an expense fund divided or any item on some equitable basis.

a) forfeiture b) issue c) pro rata d) allotment

57 Which interest is treated as negative interest? a) Red ink interest b) Blue Ink interest c) Negative interest d) Accrued interest

58 Closing stock is valued at _____ a) Cost price b) Market price c) Cost price or Market price,whichever is high d) Cost price or Market price,whichever is less

59 _______ Expenditure, are those expenditure for which payment has been made or a liability incurred but which is carried forward on the presumption that it will be of benefit over a subsequent periods.

a) Deferred Expenditure b) Deferred Revenue Expenditure c) Capital Expenditure d) Revenue Expenditure

60 Books of primary entry is better known as _____ a) Ledger b) Journal c) Profit & Loss a/c d) Balance Sheet

61 How many methods are there to account for ‘sale on approval basis’? a) one b) two c) three d) four

62 What does cost price mean? a) Cost of goods+carriage b) Cost of goods+cost of conversion c) Cost of goods+cost of conversion+other cost to bring inventory in its present position d) Cost of goods+cost of conversion+carriage

63 Which of the following asset is compulsory to revalue at the time of admission of a new partner: a) Stock b) Fixed Assets. c) Investment. d) Goodwill.

64 Which of the following is not the purpose of stock valuation? a) Income determination b) Capital detemination


CA. Chiranjeev Jain

c) Liquidity d) Legal obligation

65 If average stock = 12,000 closing stock is Rs. 3,000 more than opening stock then the value of closing stock will be Rs.

a) Rs. 12,000 b) Rs. 24,000 c) Rs. 10,500 d) Rs. 13,500

66 Which of the following is a method to determine Inventory quantities? a) LIFO and FIFO b) LIFO and Periodic c) FIFO and Perpetual d) Perpetual and Periodic

67 What is the feature of periodic method? a) Based on book records b) Done on a periodic basis c) Expensive d) All of the three

68 Which of these is not an accounting method of joint venture? a) Separate set of books b) Split set of books c) Same set of books d) None of the three

69 What is the feature of perpetual method? a) Based on physical verification b) Less expensive c) Provides continuous information d) Inventory control not possible

70 Which of the following is a method to determine Inventory pricing? a) LIFO and FIFO b) LIFO and Periodic c) FIFO and Perpetual

(1) Perpetual and Periodic 71 What is FIFO method?

a) Issued made out of latest receipt b) Issued made out of first receipt c) Issued made out of highest value receipt d) Issued made out of lowest value receipt

72 What is LIFO method? a) Issued made out of latest receipt b) Issued made out of first receipt c) Issued made out of highest value receipt d) Issued made out of lowest value receipt

73 Which of the following is not a method to determine Inventory pricing? a) Weighted average method b) Base stock method c) Gross Purchase price method d) Adjusted selling price method


CA. Chiranjeev Jain

74 Which of the following is not a difference between LIFO & FIFO? a) Recommendation by AS-2 b) Valuation of closing stock c) Effect on the quantity of stock left d) Difference in profit

75 Joint Life Policy is not surrendered at the time of _______ a) Admission. b) Retirement c) Death. d) Dissolution.

76 Which among the following is not a method to account for ‘sale on approval basis’? a) Ordinary sale method b) Multicolumn Journal Method c) Separate Day books method d) Columnar Sale day book method

77 What are accounting estimates? a) These are estimates for determining income and expenditure b) These are estimates for valuation of assets and liabilities c) These are estimates for business valuation d) These are estimates for uncertain future business events

78 Arrears of depreciation will be debited to a) Trading a/c b) Profit & Loss a/c c) Profit & Loss adjustment a/c d) Profit & Loss appropriation a/c

79 Which of the following a/c is not required to be open in case of separate set of books? a) Memorandum a/c b) Joint bank a/c c) Joint venture a/c d) Co-venturer accounts

80 On 1st January Shilpa owes Rs. 10,000 and accepts a 3 months bill for the amount. On the date of maturity Shilpa, not being able to meet the bill and by paying Rs. 4,000 in cash she asked to draw another bill for three months for the balance amount with interest @ 15% per annum. The amount of interest should be

a) Rs. 200 b) Rs. 225 c) Rs. 500 d) Rs. 900

81 Dheeraj and Gopal are partners in a firm with capitals of Rs. 5,00,000 each. They admit Deepak as a partner with 1/4th share in the profits of the firm. Deepak brought Rs. 8,00,000 as his share of capital. The total capital of the firm after Deepak’s admission will be Rs. 20,00,000. The amount of hidden goodwill brought by Deepak will be

a) Rs. 5,00,000 b) Rs. 8,00,000 c) Rs. 3,00,000 d) None of the three

82 Which of the following do not constitute inventories? a) Stock for sale in ordinary business


CA. Chiranjeev Jain

b) Stock for production c) Stock for services d) Stock for share trading

83 What are cost formulas? a) Formula used for quantifying goods b) Formula used for pricing goods c) Formula used for work in process d) Formula used for the extent consumable stock

84 What is the treatment of stock with customers on approval basis? a) Add selling price of goods with the closing stock b) Subtract selling price of goods with the closing stock c) Add cost price of goods with the closing stock d) Subtract cost price of goods with the closing stock

85 What is the treatment of stock with the consignee ? a) Subtract selling price of goods with the closing stock b) Add selling price of goods with the closing stock c) Subtract cost price of goods with the closing stock d) Add cost price of goods with the closing stock

86 What is the treatment of remaining stock in joint venture? a) Subtract selling price of goods with the closing stock b) Add selling price of goods with the closing stock c) Subtract cost price of goods with the closing stock d) Add cost price of goods with the closing stock

87 What would be the treatment when, Rs.5000 is incurred on up gradation of computer by installation of 128 MB RAM?

a) Capital expenditure of Rs.5000 b) Deferred revenue expenditure of Rs.5000 c) Deferred capital expenditure of Rs.5000 d) Revenue expenditure of Rs.5000

88 Who authorises whom to forfeit shares on non-payment ? a) Article of association authorises Directors b) Article of association authorises Shareholders c) Memorandum of association authorises Directors d) Memorandum of association authorises Shareholders

89 To which account is profit on reissue posted to. a) Reserve capital b) Security premium c) Capital reserve d) General reserve

90 Which of the following a/c is not required to be open in case of same set of books? a) Memorandum a/c b) Joint bank a/c c) Joint venture a/c with co-venturer a/c d) All of the three

91 Under which head in the Schedule -VI is stock disclosed. a) Current asset b) Loans & Advances c) Investment


CA. Chiranjeev Jain

d) Miscellaneous expenses 92 Income Tax is shown on

a) Debit side of Profit & loss a/c b) Debit side of Capital a/c c) Debit side of Trading a/c d) No entry

93 Which method is used when the transactions are few in nature? a) Ordinary sale method b) Multicolumn Journal Method c) Separate Day books method d) Columnar Sale day book method

94 On what requirement should ‘change in accounting policy’ be made? a) Required by the statute b) Compliance with an accounting standard c) True and fair presentation of financial statement d) All of the three

95 What is pro-rata allotment? a) Allotment of debentures on high-end basis b) Allotment of shares on low-end basis c) Allotment of shares on equitable basis d) None of the three

96 Under which section of the companies act 1956 is redemption of preference shares provided for. a) Sect 78 b) Sect 80 c) Sect 82 d) Sect 84

97 What authorises redemption of preference shares? a) Memorandum of association b) Board of directors c) Articles of association d) Shareholders

98 No shares can be redemmed unless ____ a) Its partly paid b) Its fully paid c) Its fully called up d) Its partly called up

99 Preference Shares can be redeemed out of ______ a) Reserve capital b) Capital Reserve c) Security premium d) Profits of the company

100 Premium on redemption of preference Shares can be paid out of _____ a) Security premium b) Capital Reserve c) Revaluation reserve d) Reserve capital

101 Which of the following a/c discloses profit/loss in joint venture? a) Joint bank a/c


CA. Chiranjeev Jain

b) Joint venture a/c c) Co-venturer a/c d) None of the three

102 The reserve for redemption of preference shares is known as _____ a) Capital Redemption a/c b) Redemption a/c c) Capital Redemption Reserve a/c d) Redemption Reserve a/c

103 Under which section of the companies act is buyback of shares covered? a) 77E b) 87A c) 77A d) 87E

104 The balance of Profit & Loss a/c is transferred to a) Trading a/c b) Won’t be transferred c) Profit & Loss adjustment a/c d) Profit & Loss appropriation a/c

105 What is the full form of ESOP? a) Employees Stock option Plan b) Employer Stock option Plan c) Employees Share option Plan d) Employer Share option Plan

106 Preference shares Rs. 50000 to be redeemed at 5% premium. What is the journal entry, assuming that proper balances are there in relevant account?

a) Dr. Redeemable preference shares a/c 50000,Securities premium a/c 2500 & Cr. Bank a/c 52500

b) Dr. Redeemable preference shares a/c 50000,Reserve a/c 2500 & Cr. Bank a/c 52500 c) Dr. Redeemable preference shares a/c 50000,Securities premium a/c 2500 & Cr. Preference

shareholders a/c 52500 d) Dr. Redeemable preference shares a/c 50000,Reserve a/c 2500 & Cr. Preference

shareholders a/c 52500 107 Which method is used when the transactions are more in nature?

a) Ordinary sale method b) Multicolumn Journal Method c) Separate Day books method d) Columnar Sale day book method

108 What is the amount posted to Capital redemption reserve? a) Nominal Value of Redemable Preference shares less Securities premium on it b) Nominal Value of Redemable Preference shares less Nominal value of shares issued c) Nominal Value of Redemable Preference shares less Market value of shares issued d) None of the three

109 From which a/c is the amount transferred to the capital redemption reserve on priority basis. a) Security premium b) Capital Reserve c) General Reserve d) Reserve capital


CA. Chiranjeev Jain

110 Indigo Ltd had 9000 10% redeemable preference shares of Rs. 10 each, fully paid up. The company decided to redeem these preference shares at par by the issue of sufficient number of equity shares of Rs. 10 each fully paid up at a discount of 10%. The number of equity shares issued should be:

a) 9,000 b) 11,000 c) 10,000 d) None of the three

111 If the securities premium a/c is insufficient for the premiun payable on redemption of preference shares, then which a/c will be debited?

a) Capital Reserve b) Profit & loss A/c c) Reserve capital d) Revaluation reserve

112 There are 1000 sewing machines costing Rs. 250/-,sent on consignment. Freight paid by consignor & consignee Rs 1500 & 2500 resp. Godown rent paid Rs500/month and godown used for 7 months.20 machines destroyed beyond repair at consignees end. What is the value of abnormal loss of the consignment.

a) 5050 b) 5030 c) 5080 d) 5150

113 Which of the following a/c discloses venturers balance in joint venture? a) Joint bank a/c b) Joint venture a/c c) Co-venturer a/c d) Memorandum a/c

114 The word ‘security premium’ in place of ‘share premium’ has been substituded by Companies (Amendment) Act of ______

a) 1977 b) 1991 c) 1999 d) 2001

115 Debentures may be either ______ a) Simple or Complicated b) Closed or Naked c) Simple or Naked d) Closed or Complicated

116 Debenture Carrying charge on all the asset is known as ______ a) Fixed b) Mortgage c) Naked d) Floating

117 The sale of By-Products would be credited to a) Trading account b) Profit & Loss a/c c) Manufacturing account d) Profit & Loss adjustment a/c

118 Debenture Carrying charge on particular asset of the company is known as ______


CA. Chiranjeev Jain

a) Fixed b) Mortgage c) Naked d) Floating

119 Which of the following is not a feature of debenture? a) It is a bond issued to the company b) It acknowledges a debt c) Interest need to be paid on it d) None of the three

120 What is a mandatory requirement for creation of charge on the asset by debenture? a) Registering with the SEBI b) Registering with the Registrar c) Registering with the Company Law Board d) Registering with the RBI

121 It is customary to create a __________in favour of one or more person in case of mortgage debentures

a) Fund b) Charge c) Interest d) Trusteeship

122 Bills of exchange is covered under_________ a) Contracts Act 1872 b) Sale of Goods Act 1930 c) Negotiable Instruments Act 1881 d) Companies Act 1956

123 A, B and C are three partners sharing profits in the ratio 4:3:3. C died on 30th September with the capital balance of Rs. 48,000. Partners claimed for Joint Life Policy of Rs. 1,00,000 which was received on 30th November. Total Capital of C to be paid to his executor will be

a) Rs. 78,000 b) Rs. 48,000 c) Rs. 30,000 d) Rs. 1,00,000

124 In whose books is Memorandum a/c prepared? a) Co-venturer b) Co-venturer a/c with Joint venture a/c c) ‘a’ and ‘b’ d) None of the three

125 “Assets should be valued at the price paid to acquire them” is based on a) Accrual concept b) Cost concept c) Money measurement concept d) Realisation concept

126 Debentures may be issued as an additional security against________ a) Advance made by the company b) Loan made by the company c) Loan made to the company d) Overdraft balance

127 Premium on the issue of debenture is credited to the ________


CA. Chiranjeev Jain

a) Revalution reserve b) Security Premium a/c c) Reserve Capital a/c d) General reserve a/c

128 What is to be written off over the various years in the ratio of the amount utilised each year out of the proceeds of debentures?

a) Discount on issue of debenture b) Discount on redemption of debenture c) Discount on coversion of debenture d) All of the three

129 Which of the following is not a difference between shares and debentures? a) Return on investment b) Redemability c) Source of finance d) Charge on the asset

130 An increase in one liability will lead to: a) Increase in asset. b) Increase in other liability also. c) Increase in capital. d) None of the three

131 Unrealised profit will be debited to a) Profit & Loss a/c b) Provision account c) Profit & Loss adjustment a/c d) Profit & Loss appropriation a/c

132 A minimum quantity of stock always held as precaution against out ot stock situation is called a) Zero stock b) Risk stock c) Base stock d) None of the three

133 A company issued 1,00,000 euqity shares of Rs. 10 each at a premium of Rs. 2 and 5,000 10% Debentures of Rs. 100 each at 10% discount. All the shares and debentures were subscribed and allotted by crediting 10% Debentures account with

a) Rs. 10,00,000 b) Rs. 12,00,000 c) Rs. 5,00,000 d) Rs. 4,50,000

134 Kena Ltd, issued 10,000 12% Debentures of Rs.100 each at a discount of 10% payable in full on application by 31st March, 2006. Applications were received for 12,000 debentures. Debentures were allotted on 9th june, 2006. The amount of excess money refunded on the same date will be

a) Rs. 1,80,000 b) Rs. 1,00,000 c) Rs. 1,20,000 d) Rs. 1,50,000

135 What entry would the customer pass when it purchases goods on approval basis? a) Dr. Purchase a/c & Cr. Supplier a/c b) Dr. Purchase on approval basis a/c & Cr. Supplier a/c c) Dr. Suspense a/c & Cr. Supplier a/c


CA. Chiranjeev Jain

d) No entry 136 To provide funds to pay to the retiring partner or to the representatives of a deceased partner,

generally partner opt for: a) Create a Sinking Fund. b) Create Joint Life Policy c) Create Reserve Fund. d) Create a separate Bank Account.

137 What is ‘cum-interest’ debenture? a) Debenture purchased after the interest period including interest b) Debenture purchased after the interest period excluding interest c) Debenture purchased before the interest period excluding interest d) Debenture purchased within the interest period including interest

138 Xeta Ltd was formed as a Public Limited Company with an authorized capital of Rs. 20,00,000 divided into shares of Rs. 10 each. Xeta Ltd. issued fully paid up shares of Rs. 10/- each in consideration of acquiring assets worth Rs. 3,80,000 from M/s Rahim Bros. The shares are issued at a premium of 25%. To record this transaction, share capital need to be credited by

a) Rs. 3,80,000 b) Rs. 76,000 c) Rs. 2,00,000 d) Rs. 3,04,000

139 Mr. Prakash sells goods at 20% above cost. His sales were Rs. 10,20,000 during the year. However, he sold damaged goods for Rs. 20,000 costing Rs. 30,000. This sale is included in Rs. 10,20,000. The amount of gross profit is :

a) Rs. 1,90,000 b) Rs. 2,50,000 c) Rs. 2,40,000 d) Rs. 2,00,000

140 Who signs the bills of exchange? a) Drawer b) Drawee c) Payee d) Maker

141 ‘Penalties for unlawful environmental damage’ is classified as _______ a) Revenue expenditures b) Contingent liabilities c) Contingent asset d) Reserve

142 Capital introduced by Mr. A. on 1.4.2006 Rs. 3,00,000; further capital introduced during the year was Rs. 50,000 in the mid of the year. Mr. A withdrew Rs. 2,000 per month and the profit earned during the year was Rs. 20,000. Capital as on 31.3.2006 was

a) Rs. 3,94,000 b) Rs. 3,46,000 c) Rs. 2,94,000 d) None of the three

143 Under which section of the companies act is debenbtures defined. a) 2(10) b) 2(14) c) 2(12)


CA. Chiranjeev Jain

d) 4(12) 144 In double entry system of book-keeping every business transaction affects

a) Two accounts b) Two sides of the same account c) The same account on the different dates d) All of the three

145 Which of the following is not a feature of a ‘Bearer Debenture’? a) Name and address of the bearer not recorded in Company details b) Debenture transferable by mere delivery c) Need to be registered with the Company Law Board d) Coupons are attached to it

146 Balance sheet prepared after the new partnership agreement, assets and liabilities are recorded at: a) Original Value. b) Revalued Figure c) At realisable value. d) At current cost.

147 Tista Ltd. has issued 14% Debentures of Rs. 10,00,000 at a discount of 10% on April 01,2004 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2006 the amount shown as “Interest accrued but not paid” in the Balance Sheet will be

a) Rs. 35,000 shown along with Debentures b) Rs. 70,000 under current liabilities c) Rs. 1,40,000 shown along with Debentures d) Rs. 10,000 under current liabilities

148 What is the number of days added to the due date, in case of time or tenure bills? a) Two days b) Three days c) Five days d) A week

149 What is the order in which the accounting transactions and events are recorded in the books? a) Journal, Subsidiary Books, Ledger, Balance Sheet, Profit & Loss Account b) Ledger, Journal, Balance Sheet, Profit & Loss Account c) Journal, Ledger, Profit & Loss Account, Balance Sheet d) Profit & Loss Account, Ledger, Balance Sheet, Journal

150 Which principle is an exception of full disclosure principle? a) Materiality b) Conservatism c) Disclosure d) None of the three

151 Who developed the double entry system? a) Kohler b) Chambers c) Pacioli d) Adam Smith

152 Mr. X took loan from bank as on 01.01.1998 Rs. 5,00,000 @ 18% p.a. payable annually. As on 31.12.2005 the bank announces a discount of 10% on the outstanding amount, if loan is repaid within 15 days. What is its current cost?

a) 590000 b) 500000


CA. Chiranjeev Jain

c) 450000 d) 531000

153 To whom the amount would be payable in case of bills of exchange? a) Drawer b) Drawee c) Acceptor d) Bearer of the instrument

154 An expected gain on the disposal of an asset is recognized as _______ a) Profit from sale of asset b) Revaluation Reserve c) Contingent asset d) Not to be recognised in the books.

155 How will Discount received be treated if it appears in the Trial Balance and no Reserve for Discount on creditors account appears?

a) Shown on the credit side of the Profit & Loss a/c b) Shown on the debit side of the Reserve for discount on Creditors a/c c) Shown on the debit side of the trading account d) No entry

156 A purchased a car for Rs. 5,00,000, making a down payment of Rs. 1,00,000 and signing a Rs. 4,00,000 bill payable due in 60 days. As a result of this transaction:

a) Total assets increased by Rs. 5,00,000. b) Total liabilities increased by Rs. 4,00,000 c) Total assets increased by Rs. 4,00,000. d) Total assets increased by Rs. 4,00,000 with corresponding increase in liabilities by Rs.

4,00,000. 157 Why do we need AS?

a) To detect fraud and error b) To estimate the financial strength of the entity c) To provide a set of accounting policy, norms and disclosure requirements d) To give framework for audit purpose

158 The parties to a bills of exchange are_____ a) Drawer, Drawee & Maker b) Payee, Drawee & Maker c) Drawer, Drawee & Payee d) Drawer. Maker & Payee

159 All of the following is an example of accounting policies, except? a) Method of charging Depreciation b) Expenditure during construction c) Valuation of investment d) Sinking Fund created for replacement of assets.

160 Outgoing partner is compensated for parting with firm’s future profits in favour of remaining partners. In what does remaining contribute to such compensation amount?

a) Gaining Ratio. b) Capital Ratio. c) Sacrificing Ratio. d) Profit Sharing Ratio.

161 In bills of exchange, drawer is _____ a) The person who accepts the bill


CA. Chiranjeev Jain

b) The person who draws the bill c) The person to whom the amount is paid d) The person in whose favour the bill is drawn

162 Provision for contingencies are not made in respect of ________, since they do not relate to situation existing at the balance sheet date.

a) Specified business risk b) Unspecified business risk c) Uncertain Business risk d) Certain Business risk

163 What is a promissory note? a) It is an instrument in writing or oral, containing an unconditional undertaking signed by the

maker to pay certain sum of money to the bearer b) It is an instrument in writing containing an conditional undertaking signed by the maker to

pay certain sum of money to the bearer c) It is an instrument in writing containing an unconditional undertaking signed by the maker

to pay certain sum of money to the bearer d) It is an instrument in writing containing an unconditional order signed by the maker to pay

certain sum of money to the bearer 164 The profits of last three years are Rs. 42,000; Rs. 39,000 and Rs. 45,000. Capital employed is Rs.

4,00,000 and normal rate of return is 10%. The amount of goodwill calculated on the basis of super profit method for three years of purchase will be

a) Rs. 2,000 b) Rs. 4,000 c) Rs. 6,000 d) Rs. 8,000

165 How is the unexpired portion of deferred revenue expenditure shown in the financial statements? a) On the asset side under Current asset, loans and advances b) On the liability side under Unsecured loan c) On the liability side under Current liability and provision d) On the asset side under Miscellaneous Expenditure

166 Which of the following is the main objective of accounting? a) Ascertainment of the results for recorded transactions b) Ascertainment of the financial position of the business c) Communicating the interpreted results to the users of accounts d) All of the three

167 Goodwill is a) a current asset b) a tangible asset c) an intangible asset d) Liability

168 In case of complete records, what is the journal entry in co-venturers (A) book,when commission is payable to the other co-venturer(B)?

a) Dr.Joint Venture a/c & Cr. A a/c b) Dr.Joint Venture a/c & Cr. B a/c c) Dr. A a/c & Cr.Joint Venture a/c d) Dr. B a/c & Cr.Joint Venture a/c

169 What is a bill of exchange?


CA. Chiranjeev Jain

a) It is an instrument in written or oral, containing an unconditional undertaking signed by the maker to pay certain sum of money to the bearer

b) It is an instrument in writing containing an conditional undertaking signed by the maker to pay certain sum of money to the bearer

c) It is an instrument in writing containing an unconditional undertaking signed by the maker to pay certain sum of money to the bearer

d) It is an instrument in writing containing an unconditional order signed by the drawee to pay certain sum of money to the bearer

170 Fundamental Accounting Assumptions followed should be disclosed in the financial statement in the following case.

a) Should be disclosed always. b) Disclosed only when not followed. c) Disclosed only when followed. d) Disclosure depends on the nature of the enterprise.

171 Which of these is the distinction between promissory note & bills of exchange? a) Promissory note is conditional whereas bills of exchange is undonditional b) Promissory note is oral whereas bills of exchange is written c) Promissory note is signed by the payee whereas bills of exchange is signed by the maker d) Promissory note is a promise to pay whereas bills of exchange is an order to pay

172 Endorsement of bill means ______ a) Transfer of right on the bill from the Creditor to the Drawer b) Transfer of right on the bill from the Drawer to the Creditor c) Transfer of right on the bill from Creditor to the Drawee d) Transfer of right on the bill from the Drawee to the Creditor

173 What do you mean by ‘term of bill’? a) Date of making the bill b) Date of maturity c) Duration of the bill d) The date on which the bill will lapse

174 Usually the term of the bill does not exceed ________ a) 30 days b) 90 days c) 180 days d) 365 days

175 What is meant by ‘after sight’? a) Term of the bill beginning with the date of drawing it b) Term of the bill beginning with the date of signature of the drawer c) Term of the bill beginning with the date of signature of the payee d) Term of the bill beginning with the date of signature of the drawee

176 How many days of grace is allowed for negotiable instrument? a) 1 b) 2 c) 3 d) 4

177 Date of maturity of bill is ______ a) Duration of the bill b) The date on which the bill will expire c) Due date+Days of grace


CA. Chiranjeev Jain

d) Due date 178 What should be the treatment, when the due date is a public holiday?

a) The next following day is the due date b) The preceding business day is the due date c) Ignore 3 days of grace d) There is no change in the due date, so payment is to be made on that day

179 What is the journal entry in co-venturers(A) book,when commission is payable to the same(A)? a) Dr.Joint Venture a/c & Cr. A a/c b) Dr. A a/c & Cr.Joint Venture a/c c) Dr.Joint Venture a/c & Cr. Commission a/c d) Dr. Commission a/c & Cr.Joint Venture a/c

180 A bill is drawn on 27.06.1999, accepted on 28.06.1999 is payable 3 months after date. What is its due date?

a) 30.09.1999 b) 29.09.1999 c) 01.10.1999 d) 28.09.1999

181 How is the expired portion of capital expenditure shown in the financial statements? a) As an income b) As an expense c) As an asset d) As a liability

182 What do you mean by ‘financial statements, in India? a) Profit & Loss Account, Balance Sheet, Cash Flow Statement, Schedules and Notes forming

part of Accounts. b) Profit & Loss Account, Balance Sheet c) Trial Balance, Profit & Loss Account, Balance Sheet d) Trial Balance, Profit & Loss Account, Balance Sheet

183 On death of a partner, his executor is paid the share of profits of the dying partner for the relevant period. This payment is recorded in Profit & Loss ______ Account.

a) Adjustment b) Appropriation. c) Suspense d) Reserve

184 What is the accounting entry passed, in the drawer’s books, when the bill is discounted with the bank?

a) Dr. Bank a/c, Dr. Discouting charges a/c & Cr. Bill Receivable a/c b) Dr. Bank a/c, Cr. Discouting charges a/c & Cr. Bill Receivable a/c c) Dr. Bank a/c, Dr. Discouting charges a/c & Cr. Drawee a/c d) Dr. Bank a/c & Cr. Bill Receivable a/c

185 What is the accounting entry passed, in the drawee’s books, when the bill is discounted with the bank?

a) No entry b) Dr. Drawers a/c & Cr. Bills Payable a/c c) Dr. Bills Payable a/c & Cr. Drawers a/c d) Dr. Bills Payable a/c & Cr. Bank a/c

186 What is the accounting entry passed, in the drawer’s books, when the discounted bill is dishonoured?


CA. Chiranjeev Jain

a) No entry b) Dr. Drawee a/c & Cr. Bank a/c c) Dr. Drawee a/c & Cr. Bill Receivable a/c d) Dr. Drawee a/c & Cr. Endorsee a/c

187 What is the accounting entry passed, in the endorsee’s books, when the endorsed bill is dishonoured?

a) No entry b) Dr. Drawer a/c & Cr. Bill Receivable a/c c) Dr. Drawer a/c & Cr. Endorser a/c d) Dr. Endorser a/c & Cr. Bill Receivable a/c

188 What is ‘noting charges’? a) Fees for noting the fact of the dishonoured bill b) Fees paid for endorsing the bill c) Charges for discounting the bill with the bank d) None of the three

189 What is the accounting entry passed for noting charges, in the drawee’s books, when the bill sent for collection is dishonoured?

a) No entry b) Dr. Noting charges a/c & Cr. Drawer a/c c) Dr. Cash a/c & Cr. Drawer a/c d) Dr. Drawer a/c & Cr. Bill Payable a/c

190 Closing stock will not be shown in the trading account a) If It appears in the trial balance b) It does not appear in the trial balance c) It appears in the balance sheet d) It appears in the Profit & Loss account

191 Renewal of bill means _____ a) Extending the tenure of the old bill

Extending the due date of the old bil b) Issuance of new bill in place of old cancelled bill c) Modification in the days of grace

192 Retiring of a bill means ______ a) Payment made before the date of maturity b) Payment made after the date of maturity c) Payment made on the date of maturity d) None of the three

193 What do you mean by accommodation bills? a) Bills drawn to meet financial needs b) Bills drawn without any consideration c) Bills drawn although not to facilitate trade transmission d) All of the three

194 A bill is drawn on 10.05.1999, accepted on 12.05.1999 is payable after 2 months. What is its due date?

a) 10.07.1999 b) 11.07.1999 c) 15.07.1999 d) 13.07.1999


CA. Chiranjeev Jain

195 Anju Ltd. forfeited 300 equity shares of Rs. 10 each fully called-up, held by Manju for non-payment of final call @ Rs. 4 each. However, she paid appliction money @Rs. 2 per share and allotment money @ Rs. 4 per share. These shares were originally issued at par. The amount to be credited to Share forefeiture account will be

a) Rs. 1,200 b) Rs. 3,000 c) Rs. 4,200 d) Rs. 1,800

196 Where are Capital expenditures recorded? a) Balance sheet b) Profit & Loss account c) Trading account d) Manufacturing account

197 What is the accounting equation? a) Equity + liabilities = Assets b) Equity = Fixed Assets + Working Capital – Long Term Liabilities c) Both d) None

198 Profits leads to an increase in a) Asset b) Liability c) Income d) Capital

199 If R. starts a business with a capital of Rs.10,000 which two accounts will be affected a) Liability and capital b) Cash and R’s capital c) Cash and asset d) Cash and liability

200 Journal Proper is called a) Principal book b) Subsidiary book c) Day book d) Proper book

201 What is the journal entry in case of separate set of book when co-venturer(A) takes a part of stock? a) Dr. A a/c & Cr. Joint Venture a/c b) Dr. Joint Venture a/c & Cr. A a/c c) Dr. A a/c & Cr. Stock a/c d) Dr. Stock a/c & Cr. A a/c

202 Ledger is also called a) Principal book b) Subsidiary book c) Day book d) Proper book

203 ___________ indicates the amount which the proprietor has invested in the firm a) Asset b) Liability c) Income d) Capital


CA. Chiranjeev Jain

204 Real account relates to assets of the firm, but not a) Debt b) Stock c) Prepaid accounts d) None of the three

205 The net effect of all the nominal account is transferred to a) Profit & loss account b) Trading account c) Capital d) Balance sheet

206 The papers supporting transaction & establishing its veracity is known as a) Documents b) Vouchers c) Bills d) Memos

207 A company offers to the public 10,000 shares for subscription. The company receives application for 12,000 shares. If the shares are allotted on prorata basis, then applicants for 12,000 shares are to be allotted as

a) 4 shares for every 5 shares applied. b) 2 shares for every 3 shares applied. c) 5 shares for every 6 shares applied. d) 3 shares for every 4 shares applied.

208 The journal entry for goods purchased for Rs.1000 credit from Ram Narayan Bros. a) Purchases account dr. To, cash account b) Purchases account dr. To, creditors account c) Purchases account dr. To, Ram Narayan Bros. Account d) Goods account dr. To, Ram Narayan Bros. Account

209 What is the rule for debit and credit for real accounts? a) Debit the receiver, credit the giver b) Credit the receiver, debit the giver c) Debit what comes in, credit what goes out d) Debit what goes out, credit what comes in

210 What is the difference between deferred revenue expenditure and prepaid expenditure? a) Benefit for more than one accounting period b) Nature of expenditure c) Estimation of amount d) None of the three

211 Different organizations from same industry should select accounting policies a) As per the provisions of the Companies Act b) As per the Auditing and Assurance Standards c) On a uniform basis from one concern to another and from one accounting period to another d) On non-uniform basis from one concern to another and from one accounting period to

another 212 What is the journal entry in case of separate set of book when loss is the result of the venture?

a) Dr. Loss a/c & Cr. Joint Venture a/c b) Dr. Joint Venture a/c & Cr. Loss a/c c) Dr. Co-Ventureres a/c & Cr. Joint Venture a/c d) Dr. Joint Venture a/c & Cr. Co-venturers a/c


CA. Chiranjeev Jain

213 Which of the following is not a compound entry? a) Debiting one account and crediting two or more accounts b) Debiting two or more accounts and crediting one account c) Debiting several accounts and crediting several account d) Debiting one account and crediting one account

214 A withdrawal of cash from business by the proprietor should be credited to a) Proprietor Account b) Capital Account c) Drawings Account d) Cash Account

215 Goods taken by the proprietor for personal use should be credited to a) Sales account b) Proprietors personal account c) Purchases account d) Expenses account

216 The trial balance checks a) Arithmetical accuracy of books b) The honesty of the book keeper c) The valuation of closing stock d) All of the three

217 Trial Balance is prepared a) Annually b) Yearly c) Quartly d) Depends on the policy of the management

218 The first entry in the next financial year in the journal of the running business is to record a) Purchase b) Sale c) Opening stock d) Closing balances of the assets and liabilities of the previous year

219 How would loss by fire in the godown amounting to Rs.100000 be treated in the books of accounts? a) Capital expenditure b) Revenue expenditure c) Deferred capital expenditure d) Deferred revenue expenditure

220 Purchase book records a) Credit purchases of goods dealt in business b) Purchase of all goods c) Cash purchases d) None of the three

221 Where are transactions recorded, which are not recorded in regular subsidiary books? a) Journal Proper b) Bills journal c) Goods journal d) None of the three

222 In the books of original entry, balancing is not done, except a) Cash book b) Journal


CA. Chiranjeev Jain

c) Bills journal d) Goods journal

223 Rich Ltd. had 3,000, 12% Redeemable preference shares of Rs. 100 each, fully paid-up. The company issued 25,000 equity shares of Rs. 10 each at par and 1,000 14% debentures of Rs. 100 each. All amounts were received in full. The payment was made in full. The amount to be transferred to Capital Redemption Reserve Account is

a) Nil. b) Rs. 2,00,000. c) Rs. 3,00,000. d) Rs. 50,000

224 What is the journal entry in case of separate set of books of co-venturers when purchase of goods is made?

a) Dr. Purchase a/c & Cr. Joint Bank a/c b) Dr. Joint Bank a/c & Cr. Purchase a/c c) Dr. Joint bank a/c & Cr. Joint venture a/c d) Dr. Joint venture a/c & Cr. Joint bank a/c

225 The balance in the petty cash book is a) Expense b) Profit c) Asset d) Loss

226 What would be the treatment of a huge loss arising from an accident in the books of accounts? a) Treated as deferred revenue expenditure b) Treated as extraordinary item according to AS-5 c) Treated as Capital expenditure d) Treated as Revenue expenditure

227 What is the measurement basis for the valuation of Assets & Liabilities? a) Historical cost b) Realisable value c) Present value d) Current cost

228 Partnership Act commences in: a) 01st October 1932. b) 01st July 1932. c) 01st November 1932. d) 02nd October 1932.

229 Win Ltd. issued 20,000, 8% debentures of Rs.10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year will be

a) Rs.40,000. b) Rs.10,000. c) Rs.20,000. d) Rs.8,000.

230 The liability of all the partners is: a) Limited to their share in profits. b) Limited to capital introduced by them. c) Jointly and severely unlimited. d) None of the three.


CA. Chiranjeev Jain

231 In the absence of any agreement, partners are liable to receive interest on their Loans @: a) 12% b) 10% c) 6% d) 8%

232 As per Partnership Act 1932, a firm needs to serve a public notice on _______ of a partner. a) Admission b) Retirement c) Death d) Dissolution

233 Seeta and Geeta are partners sharing profits and losses in the ratio 4:1. Meeta was manager who received the salary of Rs. 4,000 p.m. in addition to a commission of 5% on net profits after charging such commission. Profits for the year is Rs. 6,78,000. Total remuneration of Meeta will be

a) 78000 b) 88000 c) 76000 d) 87000

234 The profits of last three years are Rs. 42,000; Rs. 39,000 and Rs. 45,000. Find out the goodwill of two years purchase.

a) 42000 b) 84000 c) 126000 d) 36000

235 What is the journal entry in case of separate set of books of joint venture when sale of goods is made?

a) Dr.Sale a/c & Cr. Joint Bank a/c b) Dr.Joint Bank a/c & Cr. sale a/c c) Dr. Joint bank a/c & Cr. Joint venture a/c d) Dr. Joint venture a/c & Cr. Joint bank a/c

236 Features of a partnership firm are: a) Two or more persons carrying common business under an agreement. b) Sharing profits and losses in the fixed ratio. c) Business carried by all or any of them acting for all. d) All of the three.

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

238 What would be the treatment when, an asset is purchased for Rs.100000 and installation charges incurred Rs.10000 for the asset?

a) Capital expenditure of Rs.110000 b) Capital expenditure of Rs.100000 & Revenue expenditure of Rs.10000 c) Deferred revenue expenditure of Rs.110000 d) Deferred revenue expenditure of Rs.100000 & Revenue expenditure of Rs.10000

239 Which two concepts are regarded as the basic concepts? a) Entity Concept and Money Measurement Concept b) Entity Concept and Going Concern Concept


CA. Chiranjeev Jain

c) Accrual Concept and Going Concern Concept d) Going Concern Concept and Consistency Concept

240 Goodwill is the intangible assets of the concern which helps to earn: a) Revenue. b) Extra Revenue. c) Profits d) Super Profits

241 What is the other name of partnership deed: a) Articles of partnership. b) Partnership agreement. c) Partnership report. d) Partnership data.

242 What time would be taken into consideration if equal monthly amount is drawn as drawing at the beginning of each month:

a) 7 b) 6 c) 5 d) 6.5

243 Realisation expenses is also known as ______ a) Revaluation Expenses. b) Winding up Expenses. c) Expenses to repay liabilities. d) Expenses on realisation of assets.

244 How would you close the Partner’s Drawing Account: a) By transfer to Capital or Current Account debit side b) By transfer to Capital Account credit side. c) By transfer to Current Account credit side d) Either ‘b’ or ‘c’.

245 Following are the methods of calculating goodwill except: a) Super Profit Method. b) Average Profit Method. c) Weighted Average Profit Method. d) Capital Profit Method.

246 What is the journal entry in case of separate set of book when each party’s account is settled? a) Dr. Joint bank a/c & Cr. Co-venturer a/c b) Dr. Co-venturer a/c & Cr. Joint bank a/c c) Dr. Co-venturer a/c & Cr. Joint venture a/c d) Dr. Joint venture a/c & Cr. Co-venturer a/c

247 Bank Overdraft can be classified as ______ accounts. a) Personal b) Representative Personal c) Nominal d) Real

248 Following are the differences between Capital Account and Current Account except: a) Capital Account is prepared under fixed capital method whereas current account is prepared

under fluctuating capital method. b) In capital account only capital introduced and withdrawn is recorded, all other transactions

between the firm and partner is recorded in the current account.


CA. Chiranjeev Jain

c) Interest is sometimes paid on capital account balance but no such interest is payable on current account balances.

d) ‘b’ and ‘c’ both 249 “Substance of any transaction should be considered while recording them and not only the legal

form” is the statement which holds true for a) Substance over form. b) Disclosure of accounting policies. c) Both (a) and (b). d) None of the three.

250 An amount of Rs.300,entered in the sales return book, has been posted to the debit of Mr.Sundar, who returned the goods.The rectifying journal entry is

a) Suspense A/c Dr Rs.300 To Mr.Sundar A/c(In Sales Ledger) Rs.300 b) Mr. Sundar A/c(In Sales Ledger) Rs.300 Dr To Suspense A/c Rs.300 c) Suspense A/c Dr Rs.600 To Mr. Sundar A/c(In Sales Ledger) Rs.600 d) Mr. Sundar A/c(In Sales Ledger) Rs.600 Dr To Suspense A/c Rs.600

251 The total of discount allowed coloumn in the cash book for the month of jan amounting to Rs.1000 was not posted.The rectifying journal entry is

a) Debtors A/c Dr.1000 To Suspense A/c(In Sales Ledger) Rs.1000 b) Suspense A/c(In Sales Ledger) Dr. Rs.1000 To Discount A/c Rs.1000 c) Discount A/c Dr.1000 To Suspense A/c(In Sales Ledger) Rs.1000 d) Suspense A/c(In Sales Ledger) Dr. Rs.2000 To Discount A/c Rs.2000

252 The assumption underlying the fixed installment method of depreciation is that of ________ of the asset over different years of its useful life.

a) Usage. b) Equal usage. c) Charge. d) None of the three.

253 Following are the differences between Partnership and Joint Venture except: a) Joint venture is essentially planned for short term mainly for one transaction. However,

partnerships are normally undertaken as going concerns and are expected to last for a very long period.

b) The persons involved in a joint venture are called co-venturers whereas persons involved in a partnership are called partners.

c) Any specific statute of the Government does not govern joint ventures but the Indian Partnership Act, 1932, governs partnerships.

d) Memorandum of Understanding is mandatory to be drafted to spell the relationship between the co-venturers whereas the basic relationship between the partners is defined by the partnership deed.

254 A and B purchased a piece of land for Rs 30,000 and sold it for Rs 60,000 in 2005. Originally A had contributed Rs 12000 and B Rs 8000. The profit on venture will be

a) Rs. 30,000 b) Rs. 20,000 c) Rs. 60,000 d) Nil

255 Section 211 of the Companies Act provides that the balance sheet of a Company shall be in the prescribed form given in

a) Part I of schedule VI b) Part II of Schedule VI


CA. Chiranjeev Jain

c) Part III of Schedule VI d) All of the three.

256 What is the journal entry in case of separate set of book when expenses are incurred? a) Dr. Expenses a/c & Cr. Joint Bank a/c b) Dr. Joint Bank a/c & Cr. Expenses a/c c) Dr. Joint venture a/c & Cr. Joint bank a/c d) Dr. Joint bank a/c & Cr. Joint venture a/c

257 The Companies Act provides that the Profit and loss Account of a Company shall be in the prescribed form given in

a) Part I of schedule VI b) Part II of Schedule VI c) Part III of Schedule VI d) No such form has been prescribed

258 Schedule VI provides that a) A Balance Sheet should be shown first and a Profit and loss Account shall be annexed to it. b) Profit and loss Account should be shown first and Balance Sheet shall be annexed to it. c) Balance Sheet and Profit and Loss Account can be shown in any order. d) Nothing as such has been provided.

259 Profit & loss appropriation account is prepared to determine a) Net Profit b) Divisible Profit c) Distributed profit d) Disposal of divisible profit

260 A and D are equal partners. They wanted to admit C as 1/6th partner who brought Rs.60,000 as goodwill. The new profit sharing ratio is 3:2:1. Profit sacrificing ratio will be:

a) 0:1/6 b) 2:1 c) 3:1 d) None of the three.

261 This item is not shown in Profit & loss appropriation account. a) Equity Dividend b) Preferece Dividend c) Interim Dividend d) None

262 This item is not shown in Profit & loss appropriation account. a) Transfer to General Reserve b) Transfer to Development rebate reserve c) Transfer to Depreciation Reserve d) Transfer to Debenture redemption reserve

263 Capital Work in Progress is shown in Balance sheet under a) Share Capital b) Fixed assets c) Current assets d) Current Liabilities

264 Premium on redemption of debentures is shown in Balance sheet under a) Reserve and Surplus b) Current Liabilities & Provisions c) Current assets


CA. Chiranjeev Jain

d) Miscellaneous Expenditure 265 Proposed Bonus is shown on the

a) Debit of Profit and loss Account b) Credit of Profit and loss Account c) Debit of Profit & loss appropriation account d) Credit of Profit & loss appropriation account

266 A minor partner is not party to: a) Profits of the firm. b) Revenue of the firm. c) Assets of the firm. d) Debt of the firm.

267 What would be the treatment when, Rs.5000 is incurred on maintenance of plant & machinery for a particular year?

a) Capital expenditure of Rs.5000 b) Deferred revenue expenditure of Rs.5000 c) Deferred capital expenditure of Rs.5000 d) Revenue expenditure of Rs.5000

268 Preliminary Expenses written off is shown in a) Profit & loss account. b) Profit & loss appropriation account c) Miscellaneous Expenditure in Balance sheet d) Current Assets in Balance Sheet

269 This item is shown in Profit & loss appropriation account. a) Transfer to Sinking Fund b) Transfer to Investment Fluctuation Fund c) Both d) None

270 Live Stock is shown under a) Fixed Assets b) Current Assets c) Current Liabilities & Provisions d) Contingent Liability

271 Contingent Liabilities must be shown under a) Current Liabilities & Provisions b) Miscellaneous Expenditure c) By way of foot note only d) Not Shown

272 When the invoice/bill is made payable on a specific date then the due date is a) That specific date b) Date on which the term of the bill expires c) The date which comes after adding stated number of days d) The due date of the last bill

273 ‘Calls in advance’ is shown under a) Share Capital b) Reserve & Surplus c) Current Liabilities d) Loans and advances

274 ‘Bills Receivable’ is shown under


CA. Chiranjeev Jain

a) Fixed Assets b) Current Assets c) Loans and Advances d) None

275 ‘Unclaimed Dividend’ is shown under a) Reserve & Surplus b) Unsecured Loans c) Current Liabilities d) Provisions

276 ‘Interest accrued and due on Debentures’ is shown under a) Secured Loans b) Unsecured Loans c) Current Liabilities d) Provisions

277 Firm has earned exceptionally high profits from a contract which will not be renewed. In such a case the profit from this contract will not be included in ________

a) Profit share of the partners. b) Calculation of the goodwill c) Both. d) None

278 What is BRS? a) Statement to verify the negative balance of bank book b) Statement to reconcile the difference between the cash book and pass book c) Statement to reconcile the difference between the cash coloumn and cash book d) None of the above

279 ‘Short Term Loans’ is shown under a) Secured Loans b) Unsecured Loans c) Current Liabilities d) Current Assets

280 This is not a contingent liability a) Uncalled Liability on partly paid shares b) Arrears of Dividend on Cumulative Preference Shares c) Guarantee for loan d) Unclaimed Dividend

281 1000 Kg. of Mangoes were consigned to a wholesaler, the cost being Rs.3 per kg. plus Rs.400 freight. Loss of 15% of Mangoes is unavoidable. 750 kgs. were sold by the consignee. The remaining stock of 100 kg. will be valued at

a) Rs.300. b) Rs.500. c) Rs.400. d) None of the three.

282 Patents and trademark are shown under a) Fixed Assets b) Current Assets c) Current Liabilities & Provisions d) Miscellaneous Expenditure

283 ‘Loose Tools’ is shown under


CA. Chiranjeev Jain

a) Fixed Assets b) Investment c) Current Assets d) Miscellaneous Expenditure

284 When the invoice/bill of 3.1.2006 is made payable at 3 months after date then the due date is a) 3.4.2006 b) 6.4.2006 c) 5.4.2006 d) 4.4.2006

285 ‘Bills Discounted not matured’ is shown under a) Current assets b) Loans & Advances c) Miscellaneous Expenditure d) None

286 Schedule VI prescribes form for a) Balance Sheet b) Profit and Loss account c) Cash Flow statement d) All of three

287 Balance of Profit & loss appropriation account is shown in a) Reserve & Surplus in Balance Sheet b) Asset Side of Balance sheet c) Provisions in Balance sheet d) Not shown in Balance sheet

288 A, B and C are partners sharing profits in the ratio 2:2:1. On retirement of B, goodwill was valued as Rs. 30,000. Find the contribution of A and C to compensate B.

a) Rs. 20,000 and Rs. 10,000. b) Rs. 8,000 and Rs. 4,000. c) They will not contribute any thing. d) Information is insufficient for any comment.

289 Mohan runs a restaurant. He renovates some of the old cabins to increase some space. The amount of Rs. 15,000 was incurred on renovation. The amount to be charged to profit and loss account is

a) Nil. b) Rs. 15,000. c) Rs. 10,000. d) None of the three

290 Capital Expenditure is defined as ______ a) Expenditure which contribute to the revenue earning capacity for a particular accounting

period b) Expenditure which contribute to the revenue earning capacity for two accounting periods c) Expenditure which contribute to the revenue earning capacity for more than one accounting

period d) Expenditure which contribute to the revenue earning capacity for indefinite accounting

periods 291 Capital introduced in the beginning by Shyam Rs.. 3,00,000; further capital introduced during the

year Rs. 2,00,000; Drawing Rs. 1,500 per month and closing capital is Rs. 4,50,000. The amount of profit or loss for the year is

a) Loss of Rs. 32,000.


CA. Chiranjeev Jain

b) Loss of Rs. 50,000. c) Profit of Rs. 32,000. d) Information is insufficient for any comment.

292 A, B and C are partners sharing profits and losses in the ratio of 3:2:1. C retires on a decided date and Goodwill of the firm is to be valued at Rs. 60,000. Find the amount payable to retiring partner on account of goodwill.

a) 30000 b) 20000 c) 10000 d) 60000

293 What would be the treatment when, machinery worth Rs.50000 purchased on installment basis, where there are 4 equal installment of Rs.15000 to be paid?

a) Capital expenditure of Rs.60000 b) Capital expenditure of Rs.50000 & deferred revenue expenditure of Rs.10000 c) Capital expenditure of Rs.50000 & revenue expenditure of Rs.10000 d) Deferred revenue expenditure of Rs.60000

294 On March 31, 2006 Amit purchased a typewriter from Arvind for Rs. 8,000. This is a) An event.

A transaction. b) A transaction as well as an event. c) Neither a transaction nor an event.

295 Which of the following errors is an error of omission? a) Sale of Rs. 5,000 was written in the purchases journal. b) Wages paid to Shyam has been debited to his account. c) The total of the sales journal has not been posted to the sales account. d) None of the three

296 Goodwill brought in by incoming partner in cash for joining in a partnership firm is taken away by the old partners in their ________ ratio.

a) Capital b) New profit sharing c) Old profit sharing d) Sacrificing

297 Payment of Rent, Salary, Purchase of goods, sale of goods etc. can be termed as a) Transactions b) Events c) Activities d) Results

298 Sale of scrap of raw materials appearing in the trial balance are shown on the credit side of ______ a) Trading account. b) Manufacturing account. c) Profit and loss account. d) None of the three.

299 Overhauling expense of second-hand machinery purchased is a _______ expenditure a) Revenue b) Capital c) Deferred revenue d) Deferred capital

300 What entry would the supplier pass when it sells goods on approval basis?


CA. Chiranjeev Jain

a) Dr. Customer a/c & Cr. Sales a/c b) Dr. Customer a/c & Cr. Sale on approval basis a/c c) Dr. Customer a/c & Cr. Suspense a/c d) No entry

301 Abnormal loss on consignment is credited to ________ a) Profit and loss account. b) Consignee’s account. c) Consignment account. d) None of the three.

302 ________ days of grace are allowed in case of time bills for calculating date of maturity. a) 2 b) 4 c) 3 d) 5

303 Errors of commission do not permit: a) Correct totaling of the trial balance. b) Correct totaling of the Balance sheet. c) Trial balance to agree. d) None of the three.

304 Expenses incurred on the repairs and whitewashing for the first time on purchase of a old building are… expenditure.

a) Revenue b) Capital c) Deferred revenue d) Deferred capital

305 The main difference between the definition of accounts given by AICPA and AAA is: a) Recognising Monetary items/economic items b) Communication of results to the users of accounts. c) To invite comments from the users of accounts. d) Help in decision making.

306 A & B are partners sharing profits and losses in the ratio 5:3. On admission C brings Rs. 70,000 cash and Rs. 48,000 against goodwill. New profit sharing ratio between A, B and C are 7:5:4. Find the scarifying ratio as A:B

a) 3:1 b) 4:7 c) 2:1 d) 5:4

307 The ratio in which the continuing partners acquire the outgoing (retired or deceased) partner’s share is called ________

a) Sacrificing ratio. b) Gaining ratio. c) New profit sharing ratio. d) Old profit sharing ratio.

308 The amount of calls in arrear is deducted from_____________ to arrive at________. a) Issued capital, called up capital. b) Called up capital, issued capital. c) Paid up capital, called up capital. d) Called up capital, paid up capital


CA. Chiranjeev Jain

309 “Assets should be valued at the price paid to acquire them” is based on a) Accrual concept. b) Cost concept. c) Money measurement concept. d) Realisation concept.

310 Difference of totals of both debit and credit side of the trial balance is transferred to a) Difference account. b) Trading account. c) Miscellaneous account. d) Suspense account.

311 Which body is responsible for the framework of AS? a) Accounting Standards Boards of C&AG b) ICAI c) Accounting Standards Boards of ICAI d) Ministry of Finance

312 The cost of a small calculator is accounted as an expense and not shown as an asset in a financial statement of a business entity due to __________

a) Materiality concept. b) Matching concept. c) Periodicity concept. d) Conservatism concept.

313 If the incoming partner brings any additional amount in cash other than his capital contributions then it is termed as________

a) Capital. b) Reserves. c) Profits. d) Premium for goodwill

314 In case of del-credere commission provided by consignor to consignee, bad debts is a loss of _________

a) Consignee. b) Consignor. c) Both consignor and consignee. d) Neither of the two.

315 What would be the treatment, when a fixed asset is sold for Rs.70000, whose cost was Rs.90000 & WDV Rs.60000?

a) Capital profit of Rs.70000 b) Capital profit of Rs.10000 c) Revenue profit of Rs.10000 d) Revenue expenditure of Rs.20000

316 Discounting of bill by the drawer is done with________ a) Creditor b) Drawee. c) Bank. d) Notary public.

317 Fluctuating capital account is credited with __________ a) Interest on capital. b) Profits of the year. c) Salaries or remuneration of the partners.


CA. Chiranjeev Jain

d) All of the three. 318 A and B are partners sharing profits in the ratio 5:3, they admitted C giving him 3/10th share of

profit. If C acquires 1/5th share from A and 1/10th from B, new profit sharing ratio will be: a) 5:6:3. b) 2:4:6 c) 18:24:38. d) 17:11:12

319 If the date of maturity of a bill is a holiday, then the bill will mature on a) Next working day. b) Preceding working day. c) Holiday itself. d) Other agreed day.

320 Following are the essential elements of a partnership firm except: a) Atleast two persons. b) There is an agreement between all partners. c) Equal share of profits and losses. d) None of the three.

321 A and B are partners sharing profits in the ratio of 3:2. They admit C as a new partner for 3/10th share, which he acquires 2/10 from A and 1/10 from B. The new profit sharing ratio of A, B and C is

a) 3:4:3. b) 4:3:3. c) 3:3:4. d) None of the three.

322 What do you mean by adjusted purchases? a) Net Purchases-Returns Outward b) Net Purchases+Opening Stock-Closing Stock c) Net Purchases-Closing Stock d) Net Purchases+Opening Stock

323 In the bank reconciliation statement, when balance as per the cashbook is taken as the starting point, then direct deposits from the customer of Rs. 2,500 in the bank will be

a) Added b) Subtracted c) Ignored d) None of the three.

324 Weighted average method of calculating should be followed when: a) Profits are uneven. b) Profits has increasing trend. c) Profits has decreasing trend. d) Either ‘b’ or ‘c’.

325 Change in profit sharing ratio means: a) Purchase of share of profits by one partner from another. b) Mode of reconstituting the firm. c) Both. d) None

326 Which of the following is not a difference between capital and revenue receipt? a) Revenue receipt arises from recurring business activities whereas capital receipt arises from

non-recurring activities


CA. Chiranjeev Jain

b) Revenue receipt are recorded in Trading & Profit/Loss account whereas capital receipt are recorded in the balance sheet

c) Benefits accruing from revenue receipt are for a particular year whereas benefits accruing from capital receipt are for more than a particular year

d) Revenue receipts are recognized on accrual basis whereas capital receipts are recognized on cash basis

327 An Indian businessman buys goods from UK worth 20,000 Euro and the payment was made in US Dollars. This transaction will be recorded by him in ________

a) Indian Rupees b) US Dollar c) Pound d) Euro

328 Following is the sequence to journalise the transactions. a) Ascertain accounts, Ascertain debit and credit, fill the particular column, fill the amount

column. b) Ascertain debit and credit, Ascertain accounts, fill the date column, fill the amount column. c) Ascertain debit and credit, fill the particular column, Ascertain accounts, fill the amount

column. d) Ascertain accounts, Ascertain debit and credit, fill the particular column, fill the amount

column, put the LF. 329 What is Red Ink Interest?

a) Interest from the date of closing to the due date b) Interest calculated 3 days after due date c) Interest calculated from 31st Oct to the due date d) Interest calculated from year ending to the due date

330 A and B are partners sharing profits and losses in the ratio of 3:2 (A’s Capital is Rs. 30,000 and B’s Capital is Rs. 15,000). They admitted C and agreed to give 1/5th share of profits to him. How much C should bring in towards his capital?

a) 9000 b) 12000 c) 14500 d) 11250

331 How many parties are there in consignment? a) 1 b) 2 c) 3 d) None of the three.

332 Which of these is not a feature of consignment? a) There is pricncipal and agent relationship between the consignor and consignee b) Consignor presents proforma invoice to the consignee c) The property in thr goods passes on to the consignee after transfer of the goods d) Consignor reimburses all the expenses to the consignee

333 How would the closing stock be valued when expected selling price is lower than the cost? a) Valued at cost b) Valued at net selling price c) Valued at selling price d) None of the three.

334 When is a BRS prepared?


CA. Chiranjeev Jain

a) Monthly b) Yearly c) Quartly d) On a particular date

335 What is Del-Credere commission? a) Commission for goods sold at higher rate that instructed b) Commission to cover up insured risk of the business c) Commission to cover up uninsured risk of the business d) Commission to cover up risk arising out of credit sales

336 Which of these is not a difference between consignment and sale transaction? a) The number of parties involved b) The property in the goods is with the buyer after the sales is made,but it is with the

consignor in case of goods consigned c) The motive to earn revenue d) The seller directly sells goods to the buyer but the consignor sells goods indirectly through

the consignee 337 How is closing stock valued in consignment?

a) Cost of goods consigned+expense incurred by consignor-abnormal loss-goods in transit+non recurring exp of consignee

b) Cost of goods consigned+expense incurred by consignor-abnormal loss-goods in transit+ recurring exp of consignee

c) Cost of goods consigned+expense incurred by consignor-abnormal loss-goods in transit+recurring & non recurring exp of consignee

d) Cost of goods consigned+expense incurred by consignor-abnormal loss-goods in transit+non recurring exp of consignee+normal loss

338 How is abnormal loss to its proportion valued while in transit? a) Cost of goods consigned+consignee expenses b) Cost of goods consigned+consignor expenses c) Cost of goods consigned+consignee non-recurring expenses d) Cost of goods consigned+consignee recurring expenses

339 How is abnormal loss to its proportion valued at consignees end? a) Cost of goods consigned+consignee expenses b) Cost of goods consigned+consignor expenses c) Cost of goods consigned+consignee non-recurring expenses d) Cost of goods consigned+consignee recurring expenses

340 What is loading in consignment? a) Consignment send at a deflated rate b) Consignment send at a inflated rate c) Consignment send at cost+expenses incurred by the consignor d) None of the three

341 Who is a consignor? a) The party receiving goods b) The party sending goods c) The party buying goods d) None of the three

342 Who is a consignee? a) The party receiving goods b) The party sending goods


CA. Chiranjeev Jain

c) The party buying goods d) None of the three.

343 The revalued figure of the following assets and liabilities are recorded in the revaluation account: a) Fixed Assets. b) Current Assets c) Current Liabilities. d) All of the three.

344 In case the due date of a bill falls after the date of closing the account then a) No Interest b) Interest calculated 3 days after due date c) Interest calculated from 31st Oct to the due date d) Interest calculated from year ending to the due date

345 What is crossing of cheque? a) Signing on the back side b) Drawing two parallel lines c) Mentioning account number in a crossed format d) None of the three

346 Amount spent for replacement of worn out part of machine is…expenditure a) Revenue b) Capital c) Deferred revenue d) Deferred capital

347 According to Periodicity concept the duration of each accounting period should be a) 1st April of the year to 31st March of the following year. b) 1st January to 31st December. c) One calendar year. d) None of the three.

348 What is the amount of del-credere commission when credit sale is Rs200000 & cash sale is Rs. 150000, the amount of commission being 10%?

a) 20000 b) 15000 c) 35000 d) None of the three.

349 Goods costing Rs.100000 are consigned at 20% on invoice price. What is its load? a) 125000 b) 25000 c) 75000 d) 20000

350 Goods invoice Rs.100000 are consigned at 20% on cost. What is its load? a) 16666.67 b) 116666.67 c) 83333.33 d) 20000

351 There are 1000 sewing machines costing Rs. 250/-,sent on consignment. Freight paid by consignor & consignee Rs 1500 & 2500 resp.20 machines destroyed beyond repair during transit. What is the valuation of abnormal loss?

a) 5080 b) 5050


CA. Chiranjeev Jain

c) 5030 d) 5000

352 There are 1000kg apples sent on consignment, cost being Rs3/kg. Freight paid by consignor & consignee Rs 400 & 2500 resp. 15% loss is unavoidable. What is the per kg value?

a) 6.94 b) 4.5 c) 4.75 d) 4.25

353 There are 1000 sewing machines costing Rs. 250/-,sent on consignment. Freight paid by consignor & consignee Rs 1500 & 2500 resp.20 machines destroyed beyond repair at consignees end. What is the valuation of abnormal loss?

a) 5080 b) 5050 c) 5030 d) 5000

354 Calculate the special commission in the following case.400 units sold at Rs200/unit,price mentioned at proforma invoice Rs. 110/unit. Special commission @25%over Rs150/unit.

a) 11000 b) 15000 c) 5000 d) 20000

355 Which of the following cases would not lead a difference in the cash & bank book? a) Cheque issued but not presented b) Cheque deposited not cleared c) Dishonour of bills discounted d) Discounting charges on bills of exchange

356 Which of the folowing is not an advantage of BRS? a) Early detection of errors b) Completion of cash book c) Correct calculation of profit d) Reducing the chances of embezzlement

357 1,000 shares of Rs.100 each were issued to a promoter of the company for their legal services, rendered in the formation of the company. For this, company credited Share Capital Account and debited

a) Goodwill account by Rs. 1,00,000. b) Legal services account by Rs.1,00,000. c) Promoter’s account by Rs.1,00,000. d) Formation expenses account by Rs.1,00,000.

358 Which of these service is not rendered by the bank? a) Discounting bills b) Collection of dividend c) Payment on customers behalf d) Purchase & sale of debentures

359 What is amended cash book w.r.t BRS? a) Rectified Cash book having two coloumns b) Rectification of cash book before BRS c) Rectification of cash book after BRS d) Rectified Cash book having three coloumns


CA. Chiranjeev Jain

360 What is pass book? a) Statement of transactions in the customers book b) Statement of transactions in the bank book c) Reconciled Statement of transactions in the customers book d) Reconciled Statement of transactions in the bank book

361 What is the treatment if the starting point is a favourable pass book balance, when cheque is deposited but not cleared?

a) Add to the pass book b) Subtract from the cash book c) Add to cash book d) Subtract from the pass book

362 What is the treatment if the starting point is a favourable cash book balance, when cheque is issued but not presented?


363 What is joint venture? a) Export-import business b) Short duration business c) Long duration business d) Permanent business establishment

364 How do we find ‘Cost of Goods Sold’? a) Opening Stock + Purchases + Direct Expenses-Closing Stock b) Opening Stock + Purchases + Direct Expenses c) Opening Stock + Purchases-Closing Stock d) Opening Stock + Purchases + Direct Expenses-Closing Stock e) Opening Stock + Direct Expenses-Closing Stock

365 What entry would the customer pass when it accepts the goods purchased on approval basis? a) Dr. Purchase a/c & Cr. Supplier a/c b) Dr. Purchase a/c & Cr. Purchase on approval basis a/c c) Dr. Purchase a/c & Cr. Suspense a/c d) No entry

366 Which AS has been withdrawn by ICAI? a) AS 28 b) AS26 c) AS8 d) AS6

367 What is the treatment if the starting point is a favourable cash book balance,when cheque directly deposited in bank?


368 What is the treatment if the starting point is a favourable pass book balance,when income directly received by bank?

a) Add to the pass book b) Subtract from the cash book


CA. Chiranjeev Jain

c) Add to cash book d) Subtract from the pass book

369 A and B are partners sharing profits in the ratio 5:3. They admitted C giving him 3/10th share of profit. It C acquired 1/5th share from A and 1/10th from B, new profit sharing ratio will be

a) 5:6:3. b) 2:4:6. c) 18:24:38. d) 17:11:12.

370 What is the treatment if the starting point is a favourable pass book balance,when expenses paid directly by bank?


371 What is the treatment if the starting point is a favourable cash book balance,when bank charges are levied?


372 What is the treatment if the starting point is a unfavourable cash book balance,when wrong debit is made in the cash book?


373 What is the treatment if the starting point is a favourable pass book balance,when wrong credit is made in the pass book?


374 Revenue Expenditure is defined as ______ a) Expenditure which contribute to the revenue earning capacity for a particular accounting

period b) Expenditure which contribute to the revenue earning capacity for two accounting periods c) Expenditure which contribute to the revenue earning capacity for more than one accounting

period d) Expenditure which contribute to the revenue earning capacity for indefinite accounting

periods 375 What is the treatment if the starting point is a unfavourable pass book balance, when there is

overcasting of Dr. side of bank account in the cashbook? a) Add to the pass book b) Subtract from the cash book c) Add to cash book d) Subtract from the pass book

376 What is the treatment if the starting point is a unfavourable cash book balance,when there is undercasting of Cr. Side of bank account in the cash book?


CA. Chiranjeev Jain


377 Trade Marks are a) Fixed Asset b) Tangible Fixed Asset c) Intangible Fixed Asset d) Current Asset

378 What is an error? a) Intentional mistakes b) Unintentional mistake c) Mistake under influence d) None of the three.

379 What is a fraud? a) Intentional mistakes b) Unintentional mistake c) Mistake under influence d) None of the three.

380 What entry would the supplier pass when the customer accepts goods? a) Dr. Customer a/c & Cr. Sales a/c b) Dr. Suspense a/c & Cr. Sales a/c c) Dr. Sale on approval basis a/c & Cr. Sales a/c d) No entry

381 Revaluation Account is prepared at the time of: a) Admission, Retirement, Death, Dissolution of firm. b) Admission, Retirement, Death, Dissolution of Agreement. c) Admission, Retirement, Dissolution of firm, Dissolution of Agreement. d) None of the three.

382 ‘General Purpose Financial Statements’ does not include? a) Cash Flow Statement b) Internal audit review c) Balance Sheet d) Explanatory Notes

383 Which of these are the basic type of errors? a) Error of principle and Compensating error b) Error of principle and Error of commission c) Error of principle and Error of omission d) Clerical errors

384 What is error of principle? a) When a transaction is partially or completely omitted b) When the amount is written on the wrong side or posted in wrong account or casting errors

are there, etc. c) When the transaction recorded is in contravention with the general accounting policies d) When the effect of errors committed are cancel out

385 As per Money Measurement Concept, in what currency transactions and events should be recorded in the books of accounts?

a) Ruling currency of the country in which the transaction takes place


CA. Chiranjeev Jain

b) Ruling currency of the country in which the books of accounts are prepared c) Currency set by the Ministry of Finance d) Currency set by the Government

386 What is error of omission? a) When a transaction is partially or completely omitted b) When the amount is written on the wrong side or posted in wrong account or casting errors

are there,etc. c) When the transaction recorded is in contravention with the general accounting policies. d) When the effect of errors committed are cancel out

387 What is error of commisssion? a) When a transaction is partially or completely omitted b) When the amount is written on the wrong side or posted in wrong account or casting errors

are there,etc. c) When the transaction recorded is in contravention with the general accounting policies d) When the effect of errors committed are cancel out

388 What is compensating error? a) When a transaction is partially or completely omitted b) When the amount is written on the wrong side or posted in wrong account or casting errors

are there,etc. c) When the transaction recorded is in contravention with the general accounting policies. d) When the effect of errors committed are cancel out

389 For what type of error P/L adjustment a/c needs to be corrected. a) Errors before preparartion of ledger b) Errors before preparation of trial balance c) Errors after trial balance but before final account d) Errors after final account

390 Salaries and wages will appear on a) Debit side of the trading account b) Debit side of the Profit & Loss account c) Asset side of the Balance Sheet d) Credit side of the Trading account

391 Which of these errors do not affect the trial balance? a) Making an entry in the wrong subsidiary book b) Wrong casting of subsidiary book c) Wrong posting d) Omitting to post the total of subsidiary book

392 In which of the following type, suspense a/c is opened? a) Errors before preparation of trial balance b) Errors after trial balance but before final account c) Errors after final account d) None of the three.

393 Loss on issue of debentures is a) Intangible asset b) Current asset c) Current liability d) Miscellaneous expenditure

394 What is the rectified entry when the purchase of machinery is entered in the purchase a/c? a) Dr. Purchase a/c & Cr. Machinery a/c


CA. Chiranjeev Jain

b) Dr. Machinery a/c & Cr. Purchase a/c c) Dr. Purchase a/c & Cr. Bank a/c d) Dr. Machinery a/c & Cr. Bank a/c

395 What is the rectified entry when the cash received from A has been creditd to B a/c? a) Dr. B a/c & Cr. A a/c b) Dr. A a/c & Cr.B a/c c) Dr.Bank a/c & Cr. A a/c d) Dr.Bank a/c & Cr. B a/c

396 What would be the treatment, when a fixed asset is sold for Rs.120000, whose cost was Rs.100000 & WDV Rs.60000?

a) Revenue profit of Rs.60000 b) Capital profit of Rs.60000 c) Capital profit of Rs.20000 & Revenue profit of Rs.40000 d) Capital profit of Rs.40000 & Revenue profit of Rs.20000

397 What entry would the customer pass when it rejects the goods purchased on approval basis? a) Dr. Supplier a/c & Cr. Purchase a/c b) Dr. Supplier a/c & Cr. Purchase on approval basis a/c c) Dr. Supplier a/c & Cr. Suspense a/c d) No entry

398 What is the rectified entry when the sale of machinery is entered in the sale a/c? a) Dr. Sale a/c & Cr. Machinery a/c b) Dr. Machinery a/c & Cr. Sale a/c c) Dr. Bank a/c & Cr. Machinery a/c d) Dr. Bank a/c & Cr. Sale a/c

399 What is the rectified entry when repairs made is debited to building account? a) Dr. Repairs a/c & Cr. Building a/c b) Dr. Building a/c & Cr Repairs a/c c) Dr. Repairs a/c & Cr.Bank a/c d) Dr.. Building a/c & Cr Bank a/c

400 What is the rectified entry when drawings made by proprietor is debited to expense a/c? a) Dr. Expense a/c & Cr. Drawings b) Dr. Drawings a/c & Cr. Expense a/c c) Dr. Expense a/c & Cr. Bank d) Dr. Drawings a/c & Cr. Bank a/c

401 What is the rectified entry when a cheque received from A is dishonoured and posted to sales return a/c ?

a) Dr. A a/c & Cr. Sales a/c b) Dr. Sales a/c & Cr. A a/c c) Dr. Sale a/c & Cr. Sales return a/c d) Dr. A a/c & Cr. Sales return a/c

402 Which of the following is not a capital expenditure? a) Acquiring an asset b) Extending a Fixed asset c) Replacement of an existing asset d) None

403 What is the rectified entry when sales book is cast short? a) Dr. Bank a/c & Cr. Sales a/c b) Dr. Sales a/c & Cr. Bank a/c


CA. Chiranjeev Jain

c) Dr. Suspense a/c & Cr. Sales a/c d) Dr. Sales a/c & Cr. Suspense a/c

404 What is the rectified entry when discount rceived from A not entered in discount coloumn? a) Dr. A a/c & Cr. Discount a/c b) Dr. Discount a/c & Cr. A a/c c) Dr. Cash a/c & Cr. Discount a/c d) Dr. Cash a/c & Cr. A a/c

405 Following the correct sequence to prepare various accounts, while a new partner is admitted into a partnership firm.

a) Revaluation A/c., Partner’s Capital A/c., Cash A/c., Balance Sheet. b) Revaluation A/c., Partner’s Capital A/c., Partner’s Current A/c., Cash A/c. c) Revaluation A/c., Partner’s Capital A/c., Bank A/c., Balance Sheet. d) Revaluation A/c., Partner’s Current A/c., Cash A/c., Balance Sheet.

406 What is the rectified entry when wages paid for installation of machine included in wages a/c? a) Dr. Wages a/c & Cr. Bank b) Dr. Machinery a/c & Cr. Bank c) Dr. Wages a/c & Cr. Machinery a/c d) Dr. Machinery a/c & Cr. Wages a/c

407 Which of the following do not have universal application? a) Accounting concepts b) Accounting principals c) Accounting conventions d) All of the three.

408 What is the rectified entry when sale made to A is was wrongly credited to it’s a/c? a) Dr. Bank a/c & Cr. A a/c b) Dr. Suspense a/c & Cr. A a/c c) Dr. A a/c & Cr. Suspense a/c d) Dr. Bank a/c & Cr. Suspense a/c

409 ‘Treating a revenue expenditure as capital expenditure’ is an example of a) Compensating error. b) Error of principle c) Error of ommission d) Error of commission

410 What is depreciation? a) Damage of asset over time period b) Enhancement of value of asset c) Diminution in the value of asset due to wear and tear d) All of the three.

411 What entry would the supplier pass when the customer rejects goods? a) Dr. sales a/c & Cr. Customers a/c b) Dr. Sale on approval a/c & Cr. Customers a/c c) Dr. Suspense a/c & Cr. Customers a/c d) No entry

412 Major guidelines for selection of Accounting Policies: a) Prudence, Substance over form, Materiality

Going concern, Accrual, Consistency b) Matching, Dual aspect, Conservatism c) Dual aspect, Conservatism, Materiality


CA. Chiranjeev Jain

413 Which of these is not an objective of depreciation? a) Correct income measurement b) True position of statement c) Correct estimate of income and expenses d) Funds for replacement

414 For what accounting estimate is required for depreciation. a) Cost of asset b) Installation charges c) Useful life d) None of the three.

415 What does ‘LF’ column of journal means? a) It means Ledger Folio. b) It represents page number of ledger book where the entry is posted. c) It represents the page of the account to which entry is posted. d) All of the three.

416 How is abnormal loss treated in the Trading account? a) Total value is shown on the credit side b) Value not recovered from the Insurance Co. is shown on the credit side c) Value recovered from the Insurance Co. is shown on the credit side d) No Entry

417 Interest on capital will be paid to the partners if provided for in the agreement but only from a) Profits. b) Reserves. c) Accumulated profits. d) Goodwill.

ANSWERS 1. B 2. C 3. B 4. D 5. B 6. A 7. C 8. D 9. A 10. D 11. C 12. D 13. D 14. C 15. A 16. C 17. A 18. B 19. C 20. C


CA. Chiranjeev Jain

21. D 22. C 23. B 24. B 25. A 26. C 27. D 28. B 29. B 30. B 31. C 32. D 33. A 34. A 35. B 36. D 37. C 38. A 39. A 40. B 41. B 42. D 43. C 44. C 45. A 46. C 47. A 48. C 49. C 50. D 51. C 52. C 53. A 54. A 55. C 56. C 57. A 58. D 59. B 60. B 61. C 62. C 63. D 64. B 65. D 66. D 67. B 68. B


CA. Chiranjeev Jain

69. C 70. A 71. B 72. A 73. C 74. C 75. C 76. D 77. D 78. C 79. A 80. B 81. C 82. D 83. B 84. C 85. D 86. D 87. A 88. A 89. C 90. B 91. A 92. B 93. A 94. D 95. C 96. B 97. C 98. B 99. D 100. A 101. B 102. C 103. C 104. D 105. A 106. C 107. C 108. B 109. C 110. C 111. B 112. C 113. C 114. C 115. C 116. D


CA. Chiranjeev Jain

117. C 118. B 119. A 120. B 121. D 122. C 123. A 124. D 125. B 126. C 127. B 128. A 129. C 130. A 131. A 132. C 133. C 134. A 135. D 136. B 137. D 138. D 139. C 140. B 141. A 142. B 143. C 144. A 145. C 146. B 147. A 148. B 149. C 150. A 151. C 152. C 153. D 154. D 155. A 156. D 157. C 158. C 159. D 160. A 161. B 162. B 163. C 164. C


CA. Chiranjeev Jain

165. D 166. D 167. C 168. B 169. D 170. B 171. D 172. B 173. C 174. B 175. D 176. C 177. C 178. B 179. C 180. A 181. B 182. A 183. C 184. A 185. A 186. B 187. D 188. A 189. B 190. A 191. C 192. A 193. D 194. D 195. D 196. A 197. C 198. D 199. B 200. B 201. A 202. A 203. D 204. A 205. C 206. B 207. C 208. C 209. C 210. C 211. C 212. C


CA. Chiranjeev Jain

213. D 214. D 215. C 216. A 217. D 218. D 219. B 220. A 221. A 222. A 223. D 224. D 225. C 226. B 227. A 228. A 229. D 230. C 231. C 232. B 233. A 234. B 235. C 236. D 237. C 238. A 239. A 240. D 241. A 242. D 243. B 244. A 245. D 246. B 247. B 248. A 249. A 250. C 251. C 252. B 253. D 254. A 255. A 256. C 257. D 258. A 259. D 260. A


CA. Chiranjeev Jain

261. D 262. C 263. B 264. B 265. C 266. D 267. D 268. A 269. C 270. A 271. C 272. A 273. A 274. C 275. C 276. A 277. B 278. B 279. B 280. D 281. C 282. A 283. C 284. B 285. D 286. A 287. A 288. B 289. A 290. C 291. A 292. C 293. C 294. B 295. C 296. D 297. A 298. B 299. B 300. B 301. C 302. C 303. C 304. B 305. B 306. A 307. B 308. D


CA. Chiranjeev Jain

309. B 310. D 311. C 312. A 313. D 314. A 315. C 316. C 317. D 318. D 319. B 320. C 321. B 322. A 323. A 324. D 325. C 326. D 327. A 328. A 329. A 330. D 331. B 332. C 333. B 334. D 335. D 336. C 337. A 338. B 339. C 340. B 341. B 342. A 343. D 344. A 345. B 346. A 347. D 348. C 349. B 350. A 351. C 352. A 353. A 354. C 355. D 356. C


CA. Chiranjeev Jain

357. A 358. D 359. B 360. B 361. A 362. C 363. B 364. A 365. A 366. C 367. C 368. D 369. D 370. A 371. B 372. C 373. D 374. A 375. A 376. C 377. C 378. B 379. A 380. C 381. B 382. B 383. D 384. C 385. B 386. A 387. B 388. D 389. D 390. B 391. A 392. A 393. D 394. B 395. A 396. C 397. D 398. A 399. A 400. B 401. D 402. D 403. C 404. A


CA. Chiranjeev Jain

405. B 406. D 407. C 408. C 409. B 410. C 411. B 412. A 413. C 414. C 415. D 416. A 417. A