kasc-commerce pa
TRANSCRIPT
KONGUNADU ARTS AND SCIENCE COLLEGE
(AUTONOMOUS)
[Re-accredited by NAAC with ‘A’ Grade 3.64 CGPA-(3rd Cycle)]
Coimbatore – 641 029
DEPARTMENT OF COMMERCE (PG) & B.COM PA
QUESTION BANKS
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SUBJECTS
S.No Name of the Subject
1. C.P.1 – Principles of Accountancy
2. C.P.2 – Business Economics
3. C.P.3 - Mercantile Law
4. C.P.4 - Banking Theory, Law & Practice
5. C.P.5 – Financial Accounting
6. C.P.6. Cyber Law
7. C.P.7 – Business Communication
8. C.P.8 – Accounting Standards
9. Allied 3- Introduction to Information Technology
10. Skill Based Subject 1- Strategic Management
11. C.P.9 - Partnership Accounting
12. C.P.10 - Cost Accounting
13. C.P.11 - Company Law
14. C.P.12 - Principles of Management
15. Allied 4- Industrial Law
16. Skill Based subject 2- Customer Relationship Management
17. C.P.13 - Corporate Accounting
18. C.P.14 - Financial Management
19. C.P.15 - Direct Tax
20. C.P.16 – Principles of Marketing
21. Major Elective 1 – Human Resource Management
22. Skill Based subject 3- Entrepreneurship Development
23. C.P.17– Management Accounting
24. C.P.18 – Principles of Auditing
25. C.P.19 – Indirect Tax
26. Major Elective 2 – Financial Services
27. Skill Based subject 4- Investment Management
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I B.COM PA
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KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
DEPARTMENT OF COMMERCE PG & PA
Class: I B.COM PA Semester – I
Sub. Name: Principles of Accountancy Sub. Code: 18UPA101
Prepared By: Mr.Ilanchezhiyan
1. The rent paid to landlord is credited to
a. Landlord’s a/c
b. Rent a/c
c. Cash a/c
d. None of the above
2. In case of a debt becoming bad, the amount should be credited to
a. Debtors a/c
b. Bad debts a/c
c. Cash a/c
d. Sales a/c
3. Which financial statement represents the accounting equation,
assets=liabilities+owner’s equity:
a. Income statement
b. Statement of cashflows
c. Balance sheet
d. Non of the above
e.
4. The debts written off as bad, if recovered subsequently are
a. Credited to bad debts recovered a/c
b. Credited to debtors a/c
c. Debited to P&L a/c
d. None of the above
5. Prepaid salary a/c
a.Real
b.Personal
c.Nominal
d.None of the above
6. Accounts payable
a.Revenue
b. Expenses
c. Assets
d. Liability
7. 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 two different dates.
d. All of the above.
8. A withdrawal of cash from business by the proprietor should be credited to:
a.Drawing account
b. Capital account
c. Cash account
d. Purchase account
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9. The process of transferring the debit and credit items from a journal to their respective
accounts in the ledger is termed as
a. Posting
b. Purchase
c. Balancing of an account
d. Arithmetically accuracy test
10. The technique of finding the net balance of an account after considering the totals of
both debits and credits appearing in the account is known as
a. Posting
b. Purchase
c. Balancing of an account
d. Arithmetically accuracy test
11. Journal and ledger records transactions in
a. A chronological order and analytical order respectively.
b. An analytical order and chronological order respectively.
c. A chronological order only
d. An analytical order only
12. Ledger book is popularly known as
a. Secondary book of accounts
b. Principal book of accounts
c. Subsidiary book of accounts
d. None of the above
13. An allowance of Rs.50 was offered for an early payment of cash of Rs.1050
a. Sales book
b. Cash book
c. Journal proper (General Journal)
d. Purchase book
14. A second hand motor car was purchased on credit from B brothers for Rs.10000.
a. Journal proper (General Journal)
b. Sales Book
c. Cash Book
d. Purchase Book
15. Goods were sold on credit basis to A brothers for Rs.1000
a. Cash book
b. Journal Proper (General Journal)
c. Sales book
d. Bills receivable book
16. Credit purchase of stationery worth Rs.5000 by a stationery dealer.
a. Purchase book
b. Sales book
c. Cash book
d. Journal proper (General Journal)
17. Purchased goods from E worth Rs.5000 on credit basis
a. Bills receivable book
b. Purchases book
c. Journal proper (General Journal)
d. Purchases Return
18. Unpaid salary for Rs.340 is to be provided for in the accounts.
a. Bills receivable
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b. Purchase book
c. Journal proper (General Journal)
d. Purchases Return
19.A debit note for Rs.2000 issued to Mr.F for goods returned by us is to be accounted for
e. Bills receivable
f. Purchase book
g. Journal proper (General Journal)
h. Purchases Return
20. Goods outward journal is meant for recording all returns of goods
i. Sold on credit
j. Purchased on credit
k. Purchased on cash
l. None of the above
SECTION –B
21. Journalise the following transactions in the books of Sri T.N. of Coimbatore:
1987:
Oct 1 Commenced business with Rs. 50,000
3 Purchased goods for cash Rs. 10,000 at 5% trade discount.
4 Paid carriage Rs. 50
8 Purchased machinery for Rs. 20,000
10 Sold goods to Madan on account for Rs. 15,000
22. Journalise the following transactions in Balan’s books:
1985
Jan 1 Balan started business by investing cash Rs. 50,000.
He bought goods of Rs. 4,000 and furniture of Rs. 500.
2 Purchased building for Rs. 10,000
3 Purchased goods for cash Rs. 3,000
4 Purchased goods on credit Rs. 2,500
5 Paid cartage Rs. 20.
23. Journalise the following transactions, post them in the ledger and balance the accounts on
31st Jan. 1999. Rs.
Jan.
1
2
5
7
10
15
20
25
30
Lakshmi started business with a capital of
She purchased goods from Mala on credit
She paid cash to Mala
She sold goods to Shanthi
She received cash from Shanthi
She further purchased goods from Mala
She paid cash to Mala
She further sold goods to Shanthi
She received cash from Shanthi
50,000
10,000
5,000
10,000
8,000
12,000
4,000
13,000
3,000
24. Enter the following transactions in the journal and ledger of Hans Raj of Chennai.
1999: Rs.
Mar.
1
3
4
Hans Raj commenced business with cash
Purchased goods for cash
Deposited into bank
Withdrew from bank for office use
30,000
1,500
21,000
1,500
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5
6
10
19
20
27
28
Sold goods to Ramu
Purchased goods on credit from Kannan
Received from Ramu Rs. 1,470 and allowed him
discount
Cash Sales
Paid to Kannan in full settlement
Paid rent
Paid Salary
1,500
680
30
2,400
650
150
300
Accounts are closed on 31st
25. Prepare ledger account of Ravi from the following transactions:
2000
April 1
2
5
7
12
16
21
Bought goods from Ravi for Rs. 60,000 on credit.
Paid him by cheque Rs. 36,000
Sold him goods worth Rs. 12,000 on credit.
Received from him Rs. 4,000
He returned defective goods costing Rs. 1,000
Purchased from him two sets of articles work (a) Rs. 5,000 and
(b) Rs. 4,000. Paid cash immediately for the first set only and
agreed to pay the value of the second after a month.
Paid to Ravi Rs. 6,000.
26. Enter the following transactions of Sekar, a dealer in electrical goods, in the purchases
book for the month of April 2000.
2000
April
3
Purchased from General Supplies Co. Ltd., :
24 Transistor Radio sets at Rs. 200 each
20 Electric Toasters at Rs. 100 each
6 Electric clocks at Rs. 200 each
Less: Trade discount 20% on all items.
April
6
Purchased from Topaz Ltd., :
12 Electric Razors at Rs. 120 each
48 Battery touches at Rs. 20 each
April
7
Purchased from Radio House :
10 Colour T.V. at Rs. 6,000 each
4 Portable B/W Televisions at Rs. 1,500 each
April
19
Purchased 400 light bulbs at Rs. 5 each
Less: Trade discount at 20%.
(Ans: Total of Purchases Book Rs. 76,400)
27. The Rough Book of M/s. Nathan & Co. contains the following:
2000
Mar.
1
Purchased from Seeman & Co., on Credit:
10 gross pencisl @ Rs. 10 per gross
2 gross registers @ Rs. 24 per dozen
Less : Trade discount @ 10%
2 Purchased for cash from the Stationery Mart:
30 gross exercise books @ Rs. 3 per dozen
3 Purchased typewriter for office use from M/s. Modern Goods
Co.
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on Credit for Rs. 2,000
4 Purchased on Credit from the paper Co.
10 reams of white paper @ Rs. 10 per ream
20 reams of colour paper @ Rs. 15 per ream
Less : Trade discount @ 10%
6 Purchased two dozens ink. pots @ Rs. 1.50 each from
M/s. Krishna Bros. on Credit
Make out the purchases Book of M/s. Nathan Co.
(Ans: Total of Purchases book Rs. 76,400)
28. Enter the following transactions in the sales day book. At the end of the month, total the
day book and indicate the amount to be posted to General Ledger. The firm carries on
furniture business.
2000
May 1 Sold office furniture to Sukumar, list price Rs. 9,600 allowing
him 20% trade discount. Invoice No. 9152.
May 8 Sold 8 filing cabinets to Mohan at list price of Rs. 1,000 each.
May
18
Sold 12 typewriters to Ambal Commerce College at Rs. 1,800
each.
May
28
Sold office furniture to Sandhya Industries Ltd., list price Rs.
12,000, Trade discount of 20% was allowed. Invoice No. 9276.
(Ans: Total of Sales Day Book Rs. 43,640)
29. The following are some of the transactions of M/s. Karthik & Sons as per waste Book.
Prepare sales book for the period.
2000
Jan. 1 Sold to M/s Ram & Gupta on credit.
60 Shirts @ Rs. 8 each
40 Trousers @ Rs. 10 each
Less : Trade discount @ 10%
Jan. 5 Sold old furniture to M/s. Settu & Co. on credit Rs. 160
Jan. 8 Sold 100 Shirts to M/s. Jagan & Sons @ Rs. 8 per shirt.
Jan. 10 Sold 20 Shirts to Shanthi stores @ Rs. 7.50 each for cash.
Jan.15 Sold on credit to M/s Mani & Khan
200 Shirts @ Rs. 7.50 each
20 Overcoats @ Rs. 50 each
Less : Trade discount @ 10%
(Ans: Total of Sales Book Rs. 3842)
30. Prepare a Day Book and an Invoice Book from the following particulars:
2000
June
1
8
14
20
22
30
31
Purchase 40 carpets from M/s. Perumal & Co. at Rs. 35 each.
Sold 10 carpets to Rahim at Rs. 42 each.
Purchases of Palani trading Co., 24 carpets at Rs. 60 each.
Purchased 14 carpets from Delhi Trading Co. at Rs. 23 each.
Sold for cash 25 carpets at Rs. 46 each.
Purchased for cash 8 carpets at Rs. 10 each.
Sold to M/s. Roy & Co., 14 carpets at Rs. 52 each.
(Ans.: Total of Day (Sales) Book Rs. 1,148; Total of Invoice (purchases) Book Rs. 3162)
31. Enter the following transactions in the purchases Book and Sales Book of Mr. Pandian.
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2000 Rs.
Jan. 1
2
4
12
19
21
30
Purchased goods from Balu
Sold goods to Swamy
Bought goods from Gowri
Sold goods to Thenali
Sold goods to Jayaraman
Bought goods from Rajesh
Sold goods to Shanthi
30,000
15,000
13,500
10,500
750
9,000
900
(Ans: Total of Purchases Book Rs. 52,500; Total of Sales Book Rs. 27,150)
32. List out the objectives of accounting
33. Explain the functions of accounting.
34. What is double entry system? What are the advantages of double entry system?
SECTION -C
35. Journalise the following transactions in the Books of Balan:
1999
Rs.
Dec.
1
3
4
5
6
7
8
9
10
11
12
13
15
16
18
19
20
25
31
Balan commenced business with a
capital of
Bought goods for cash
Sold goods for cash
Deposited in IOB
Bought goods from Ravi
Bought furniture for cash
Sold goods to Nathan
Paid Cash to Seenu
Nathan returned goods worth
Paid advertisement charges
Returned goods to Ravi
Withdrew cash from bank
Bought a bicycle for office use
Received commission
Drew cash for personal use
Electricity charges paid
Paid insurance premium
Interest received
Paid Rent
Paid Salaries
Interest accrued
Salary due
Prepaid insurance
Commission received in advance
1,00,000
60,000
50,000
40,000
30,000
4,000
40,000
10,000
2,000
4,000
3,000
10,000
3,000
1,000
6,000
600
1,500
300
1,200
9,600
600
1,000
500
100
36.. The following are the transactions of Sankar & Co., for the month of July. Journalise
the transactions:
1999 Rs.
July
1
Capital paid into bank
Bought stationery for cash
10,000
60
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3
5
6
11
12
14
16
20
23
24
26
27
31
Bought postage stamps
Bought postage stamps
Sold goods for cash
Bought office furniture from Babu Bros.
Sold goods to Mohan
Received cheque from Mohan
Paid Babu Bros. by cheque
Sold goods to Raj & Co.
Bought goods from Swamy & Bros.
Bought goods for cash from Nathan & Co.
Sold goods to Palani
Raj & Co., paid on account
Paid Swamy & Bros. by cheque in full settlement
Paid Salaries
Rent is due to Satyan but not yet paid
4,200
20
1,500
1,000
2,000
2,000
1,000
1,000
1,400
450
700
500
1,370
500
200
37. Journalise the following transactions of Mr. Rahim.
2000 Rs.
Mar.1 Rahim commenced business with cash
Goods worth Rs. 80,000 and furniture
Opened Current A/c with Indian Bank
Bought goods of Santhanam
Sales to Radha
Sold to Jagan
Swamy sold goods to us
Kannan bought goods from us
Typewriter purchased
Received goods returned by Radha
Returned goods to Santhanam
Received cheque from Radha
Paid Radha’s cheque into Bank
Sold goods to Sankar and cash received
Paid into Bank
Purchased a Motor cycle of personal use
Stationery purchased and paid by cheque
Bought a steel cash box through cheque
Drew cheque for personal use
Withdrew from Bank
Paid Salaries
1,60,000
30,000
40,000
20,000
16,000
80,000
10,000
6,000
12,000
1,400
1,000
14,000
2,000
2,000
60,000
500
4,000
3,000
6,000
5,000
38. Journalise the following transactions of M/s. Kamalesh & Co. for the month of Dec.
1999.
Balance on Dec. 1. 1999:
Cash Rs. 7,000
Rs. 40,000
Rs. 30,000
Rs. 10,000
Rs. 80,000
Debtors: X : Rs. 6,000
Y : Rs. 10,000
Bank loan Rs. 14,000
Creditors P : Rs. 14,000
Q : Rs. 16,000
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Dec
2
5
7
10
14
17
19
24
30
31
Received Rs. 5,600 cash from Mr. X in full and final settlement.
Purchased goods of the list price of Rs. 20,000 at 10% discount
on credit from Mr.R.
Sold goods to ‘S’ on credit Rs. 16,000.
‘S’ Pays Rs. 14,400 after getting 10% discount for prompt
payment.
Salaries paid in cash Rs. 4,000.
Interest on Bank loan Rs. 1,400 debited to the current account of
the business enterprise.
Goods costing Rs. 2,000. distributed as free samples.
Cash withdrawn by Kamalesh for personal use Rs. 4,000.
Paid Rs. 12,000 to ‘P’ in full and final settlement of his account.
Cash Sales at list price Rs. 10,000. Trade discount allowed Rs.
1,00.
39. Journalise the following transactions of X from his following report:
Rs.
(i) Kamal became insolvent. A first and final payment of 60
paise in a rupee was received from his official receiver. He
owed me a debt of
500
(ii) Received cash for a bad debt written off last year 250
(iii) Rent due to landlord 400
(iv) Depreciation on office furniture 50
(v) Salaries due to clerks 2,000
40.. Journalise the following transactions:
1999 Rs.
Rs.
Jan 1
3
4
10
16
22
25
26
28
30
Ramesh had with him from last year Rs. 10,000 worth
of goods and cash
Wages due to labourers
Insurance premium due but not paid
Paid for charity
Received rent from sub-tenant
Received a V.P.P. Rs. 1,360. Sent a peon to take delivery
of it and he paid Rs. 10 for cartage
Paid Baskar on account through Bank
Received interest on loan from the debtor
Rahul returned goods
Goods returned to sethu
Karthik who owed Rs. 1,700 became insolvent,
Received from the official receiver a settlement of 75
paise in the rupee
Purchased a motor cycle for his son
20,000
360
400
10
100
1,400
25
200
280
8,000
41. From the following transactions of Mr. Velmurugan, You are required to write up his
Journal, post the entries in the ledger accounts and balance the accounts at the end of the
month.
1999. Rs.
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Mar.
1
2
4
5
7
8
11
13
15
17
18
19
21
23
25
27
30
31
Velmurugan commenced business with
furniture
stock Rs. 12,000 and cash
Purchase from Satya
Sold goods for cash
Returned goods to Satya
Purchased goods for cash
Sold goods to Anand
Anand returned goods
Paid cash to Satya Rs. 4,120 and he allowed us
discount
Sold goods to Balaji
Received cash from Anand Rs. 2,160 and
allowed him discount
Purchased stationery
Received cash from Balaji
Sold old furniture for cash
Paid commission
Velmurugan withdrew cash
Postage stamps purchased
Received cash from Balaji
Paid Salary Rs. 1,800 and office rent
2,000
6,000
12,000
6,000
1,400
6,000
8,000
1,200
80
5,200
50
600
3,200
200
2,000
200
100
2,000
600
42. On 1st May 1999, the following were the ledger balances of M/s. Kishan Lal & Co.:
Cash in hand Rs. 600; Cash at Bank Rs. 14,000;
Bills payable Rs. 2,000; Jamal (Dr) Rs. 1,600;
Stock Rs. 8,000; Guru (Cr) Rs. 4,000;
Sankar (Dr) Rs. 3,000; Rahim (Cr) Rs. 1,800;
Capital Rs. 19,400.
Transactions during the month were :
May 2
3
5
8
15
18
19
20
25
31
Bought goods of Guru
Sold to Sankar
Bought of Rahim
Sold to Jamal
Paid to Guru by Cheque
Received from Sankar by Cheque
Allowed him discount
Sold goods to Sankar
Paid rent by cheque
Sold to Jamal
Paid Salaries
1,800
2,000
2,400
1,000
1,500
4,000
100
1,600
300
2,000
600
Journalist the above transactions and post the entries in the ledger accounts.
43. . James commenced a business on 1st Jan. 2000. The following were his transactions
for the first month:
Jan.
1
3
Commenced business with
Paid into bank
Purchased furniture & Paid by Cheque
Bought goods from Larry Games & Co.
Sold goods to Johnson
50,000
47,000
4,000
10,800
9,600
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8
10
11
12
13
15
17
18
20
23
24
26
28
30
31
Installed Telephone under OYT Scheme,
paid by cheque
Bought goods from Larry Gomes & Co.
Paid for office stationery in cash
Sold goods to Abdul & Co.
Received cheque from Johnson
(discount allowed Rs. 240)
Paid Larry Gomes & Co. by Cheque
(discount received Rs. 540)
Paid 3 month’s rent to 31st March, in cash
Bought goods from K. Kesari
Paid wages in cash
Paid Office expenses in cash
Bought goods of Sahu Ahmed & Co.
Sold goods to Harris
Sold goods to Albert
Sold goods to Abdulla & co.
Received cheque from Harris
Paid wages in cash
Paid office expenses in cash
Paid Sahul Ahmed & Co. by cheque in full
settlement
Harris’s cheque returned, dishonoured
Received cheque from Abdul & Co., in full
settlement
Abdullah & Co. returned goods, not upto
sample
Paid for newspapers & Periodicals
Sold old Newspapers
Received cheque from Albert
Drawings out of bank for personal use
4,000
12,900
160
10,700
9,360
10,260
800
14,800
160
140
12,500
6,400
3,200
5,000
2,000
160
100
12,260
10,400
400
60
20
3,200
1,500
You are required to pass journal entries and post them into ledger.
44. Enter the following transactions in proper subsidiary books of Mr. Raja and post them to
ledger:
2000
Mar. 1 Purchased 500 bags of wheat from Pal at Rs. 900 per bag,
less trade discount 10%
2 Bought 300 bags of rice from Kamal at Rs. 1,000 per bag,
less trade discount 5%
7 Sold to Lalitha 120 bags of rice Rs. 1,100 per bag, less
trade discount 5%.
12 Returned to Pal 15 bags of wheat which were purchased
on 01.03.2000.
13 Sold to Harris 200 bags of wheat Rs. 1,250 per bag, less
trade discount 10%.
18 Harris returned wheat worth Rs. 4,500
24 Returned 40 bags of rice to Kamal
30 Bought of Sankar 300 bags of rice at Rs. 900 per Kg.
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31 Purchased from Dayalan 200 bags of wheat at Rs. 700 per
bag.
(Ans: Total of PurchasesBook Rs. 11,00,000;Total of Sales Book Rs.
3,50,400;Total of Purchase returns Book Rs. 50,150;Total of sales returns Book
Rs. 4,500)
45. . Anand starts business with Rs. 10,000 on 01.07.1986. Of this, he pays Rs. 9,000 into
his bank account. His cash transactions during the first week were:
Rs.
July 1
2
3
4
5
6
Purchased Stationery, paid cash
Purchased goods for cash
Purchased office table and chair
Cash sales
Received from Gopal, as
advance for a consignment of
goods
Paid Sethi & Co., cash
Paid for sign board
Cash Sales
Purchased old typewriter
40
650
200
150
200
140
130
160
300
Prepare Cash book for the period.
(Ans: Closing Cash Balance Rs. 50)
UNIT-II
1. Goods purchased from A for Rs.10000 passed through the sales book, the error will
result in
a. Increasing gross profit
b. Decrease in gross profit
c. No effect on gross profit
d. Either a (or) b
2. If the amount is posted in the wrong a/c or it is written on the wrong side of the account,
it is called
a. Error of Ommission
b. Error of Commission
c. Error of Principle
d. Compensating error
3. Rs.200 paid as wages for erecting a machine should be debited to
a. Repairs a/c
b. Machine a/c
c. Capital a/c
d. Furniture a/c
4. On purchase of old furniture the amount of Rs. 1000 spent on its repairs should be
debited to
a. Repair a/c
b. Furniture a/c
c. Cash a/c
d. Bank a/c
5. Goods worth Rs. 50 given as charity should b credited to
a. Charity a/c
b. Sales a/c
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c. Purchase a/c
d. Cash a/c
6. Goods worth Rs. 100 taken by proprietor for domestic use should be credited to
a. Sales a/c
b. Proprietor’s personal expenses a/c
c. Purchases a/c
d. Expenses a/c
7. Errors of commission do not permit
a. Correct totaling of the balance sheet
b. Correct totaling of the trial balance
c. The trial balance to agree
d. None of the above
8. Preparation of trial balance is for
a. Locating errors of commission
b. Locating errors of Principle
c. Locaing clerical errors
d. All of the Above
9. Rs.200 received from Mr. Smith whose a/c, was written off as a bad debt should be
credited to
a. Bad debts recovered a/c
b. Smith’s a/c
c. Cash a/c
d. Bad debt’s a/c
10. Purchase of office furniture Rs.1200 has been debited to general expenses a/c. It is:
a. A clerical error
b. An error of principle
c. An error of omission
d. Compensating error
11. Sale of office furniture should be credited to
a. Sales a/c
b. Furniture a/c
c. Purchase a/c
d. Cash a/c
12. Balance of the petty cash is
a. An expenses
b. An income
c. An asset
d. A liability
13. Fixed assets are
a. Kept in the business for use over a long time for earning income
b. Meant for resale
c. Meant for conversion into cash as quickly as possible
d. All of the above
14. Goodwill is
a. A current asset
b. An intangible fixed assets
c. A tangible fixed asset
d. An investment
15. Stock is
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a. Included in the category of Fixed Assets
b. Investment
c. A part of current asset
d. An intangible fixed asset
16. Manufacturing a/c is prepared
a. To ascertain a profit/loss on the goods produced
b. To ascertain a cost of manufactured goods
c. To show sale proceeds from the goods produced during the year
d. Both b and c
17. A prepayment of insurance premium will appear in the balance sheet and in the
insurance a/c respectively as:
a. A liability and a debit balance
b. An asset and a debit balance
c. An asset and a credit balance
d. None of the above
18. Under statement of closing work in progress in a period will
a. Understate cost of goods manufactured in that period
b. Overstate current assets
c. Overstate gross profit from sales in that period
d. Understate net income in that period
19. If sales revenue are Rs.400000 cost of goods sold is Rs.310000 and operating
expenses are Rs.60000 the Gross Profit is Rs.
a. 30000
b. 90000
c. 340000
d. 60000
20. Sales is =
a. cost of goods sold-gross profit
b. cost of goods sold+gross profit
c. gross profit - cost of goods sold
d. cost of goods sold + Net Profit
SECTION-B
21. What is the purpose of preparation of a Financial statement?
22. Pass necessary adjusting entries in Mr.X’s journal on 31st Dec 1988:
a. Rs.20000 wages were outstanding.
b. Write off Depreciation on Machinery Rs.50000
c. Rs.15000 were received in advance as interest.
23. Show the necessary entries to adjust the following;
d. Outstanding salaries Rs.200; Rent Rs.300
e. Prepaid insurance premium Rs.450
f. Income outstanding: Interest on Investments Rs.400
g. Dividend Rs.350
h. Discount received in advance Rs.150
i. Bad debts written on Rs.200
j. Interest on securities received in advance Rs.500
24. Prepare trading and profit and loss a/c from the information given below:
particulars Rs particulars Rs
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Opening stock 3600 Carriage on sales 400
purchases 18260 Rent factory 400
wages 3620 Rent office 500
Closing stock 4420 Sales returns 700
sales 32000 Purchase returns 900
Carriage on
purchase
500 General expenses 900
Discount to
customers
360 Interest on bank 200
(Ans : GP Rs 10240, NP Rs 8280)
25. From the following Trial balance, prepare Trading, P&L a/c for the year ended
31.12.1981 and the balance sheet as on the date
Trial balance
particulars Rs particulars Rs
purchases 11870 Capital 8000
Sundry debtors 7580 Bad debts recovered 250
Return inwards 450 creditors 1250
Bank deposite 2750 Return o/w 350
rent 360 Bank overdraft 1570
salaries 850 sales 14690
Travelling expenses 300 Bills payable 1350
Cash 210
Discount allowed 40
Stock 2450
Drawings 600
27460 27460
ADJUSTMENTS :
1. Closing stock as on 31.12.81 was Rs 4200.
2. Writeoff Rs. 80 as bad debts and create a reserve for bad debts @ 5% on sundrydebtors.
3. Three months rent is outstanding.
(Ans : GP :4470, NP : 2595,
Balance Sheet total Rs.14285)
26. What are errors of omission? Give two examples?
27. Rectify the following errors:
Purchases books is overcast by Rs.300 (for the month of march)
Sales book has been under cast by Rs.200
Purchase returns book has been overcast by Rs.75
Sales returns book has been under cast by Rs.50
28. Correct the following errors found in the books of Mr.Dhandapani. the trial balance was
out by Rs.986, excess credit. The diference has been posted to a suspense a/c.
a. A Sale of Rs.400 to S & co., was wrongly credited to their a/c.
b. A Purchase of Rs.134 had been posted to a creditors a/c as Rs.120.
c. The total of return inward book for December had been cast Rs.200 short.
d. The cheque for Rs.400 received from Sandhiya had been dishonoured and was
posted to the debit of “Allowance a/c”
29. Difference in trial balance (excess debit) of Rs.2000 was placed to a suspense a/c. Rectify
the following errors discovered subsequently but before finalising the accounts.
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e. Sale book was overcast be Rs.300
f. Purchase of goods from Govind Rs.2000 is posted to his a/c as Rs.200.
g. Salary paid Rs.500 was posted twice to the salaries a/c.
30. From the following errors, you are required to ascertain the net effect on the net profit:
h. Rs.750 written off as depreciation on machinery a/c has not been debited to
depreciation a/c
i. The total of sales returns book has been undercast by Rs.100
(Ans:Reduce in Profit Rs.850)
31. Calculate the adjusted average profit after adjusting the effect of the following errors, if
the profit before discovering the errors was Rs.2000:
j. Payment of rent Rs.250 debited to landlord’s personal a/c
k. A cash purchase of Rs.210 not posted in the ledger.
(Ans: Adjusted net profit : Rs. 1540)
SECTION-C
32. Prepare Trading and P&L a/c and Balance Sheet for the year ended 31.03.1999
particulars Rs
capital 80000
drawings 6000
Opening stock (1.4.98) 45000
purchases 250000
sales 310000
furniture 10000
debtors 40000
Freight and octroi 4800
Trade expenses 500
salary 5500
Rent 2400
Advertisement 5000
Insurance premium 400
Commission earned 1300
Discount allowed 200
Bad debs 1800
Provision for bad debts 900
creditors 20000
Cash 5200
Bank 5800
Goodwill (at cost ) 20000
ADJUSTMENTS :
1. Closing stock Rs.53000
2. Salaries have been paid for 11 months only
3. Prepaid insurance premium Rs 100.
4. Commission earned bt not received Rs 122.
5. Create 3% provision for bad debts in debtors.
6. Depreciation on furniture @10% is to be charged
7. ¼ of advertisement is to be writtenoff.
(Ans : GP :Rs 63200,. NP : 50872 B/S total : Rs 145372)
33. Preparation of final accounts is the culmination of the accouting process ,explain?
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34. Distinguish between Trading P&L a/c and Trial balance and Balance sheet?
35. What do you mean by liquidity order and permenancy order?
36. Describe the procedure for preparation of the final accounts of a sole trader step by step
?
37. Rectify the following errors without using a suspense a/c.
1.Purchase of furniture Rs. 2500 passed through purchase day book.
2. Goods worth Rs.1000 used by the proprietor not recorded in the books.
3. Credit sales to Ramu Rs.1500 wrongly credited to his a/c.
4. Payment to Gopal Rs.450 posted to his a/c as Rs.540.
48. Rectify the following errors:
a. The return outward book was undercast by Rs.55.
b. A purchase Raj for Rs.555 was entered in the invoice book as Rs.55.55.
c. Interest received from Gopalan Rs.25 for loan given to him is credited to
Gopalan’s a/c instead of interest on loan a/c.
d. A sale of old furniture amounting to Rs.75 has been credited to sales a/c.
38. What is Suspense a/c? Why is it opened & how is it finally closed?
39. What are the errors which are not disclosed by trial balance?
40.Draw a Performa of trading, profit and loss account and balance sheet
UNIT- III
1. X draws a bill on Y for Rs.3000 X endorsed to Z .Y will pay the amount of bill to
a. X
b. Z
c. To him self
d. None
2. Fees paid in cash to notary public is charged by
a. Drawer
b. Drawee
c. Holder of the bill of exchange
d. None
3. The promissory note should be signed by
a. Drawer
b. Drawee
c. Payee
d. Promiser
4. K draws a bill on S for Rs.3000 . K endorsed it to R. R endorsed it to Z . the payee of
the bill will be
a. K
b. R
c. S
d. Z
5. Balance of the petty cash is
a. An expenses
b. An income
c. An asset
d. A liability
6. Fixed assets are
a. Kept in the business for use over a long time for earning income
b. Meant for resale
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c. Meant for conversion into cash as quickly as possible
d. All of the above
7. Goodwill is
a. A current asset
b. An intangible fixed assets
c. A tangible fixed asset
d. An investment
8. Stock is
a. Included in the category of Fixed Assets
b. Investment
c. A part of current asset
d. An intangible fixed asset
9. Manufacturing a/c is prepared
a. To ascertain a profit/loss on the goods produced
b. To ascertain a cost of manufactured goods
c. To show sale proceeds from the goods produced during the year
d. Both b and c
10. A prepayment of insurance premium will appear in the balance sheet and in the
insurance a/c respectively as:
a. A liability and a debit balance
b. An asset and a debit balance
c. An asset and a credit balance
d. None of the above
11. Under statement of closing work in progress in a period will
a. Understate cost of goods manufactured in that period
b. Overstate current assets
c. Overstate gross profit from sales in that period
d. Understate net income in that period
12. If sales revenue are Rs.400000 cost of goods sold is Rs.310000 and operating expenses
are Rs.60000 the Gross Profit is Rs.
a. 30000
b. 90000
c. 340000
d. 60000
13. Sales is =
a. cost of goods sold-gross profit
b. cost of goods sold+gross profit
c. gross profit - cost of goods sold
d. cost of goods sold + Net Profit
14. On 1.1.05 X draws a bill on Y for 20000 for 3 months the maturity date of the bill
will be
a. 01.04.05
b. 03.04.05
c. 04.04.05
d. 04.05.05
15. On 15.08.05 X draws a bill on Y for 3 months for Rs.20000 18th November was a
sudden holiday, maturity date of bill will be
a. 17thnov
b. 18thnov
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c. 19thnov
d. 15thnov
16. On 16.06.05 X draws a bill on Y for 25000 for 30 days. 19thjuly is a public holiday
maturity date of bill will be
a. 19thjuly
b. 18thjuly
c. 17thjuly
d. 16thjuly
17. A company wishes to earn a 20% profit margin on selling price. Which of the following
is the profit markup on cost, which will achieve the required profit margin?
a. 33%
b. 25%
c. 20%
d. None of the above
SECTION-B
21. Define A/c current? What is its purpose?
22. Compute interest under product method, from the following information:
e. Rate of interest 10%
f. Total of products(Dr.): 3592200
g. Total of products(Cr.): 2053500
(Ans: Interest Rs.421.56)
23. Compute net interest to be credited under daily balance method from the following data:
h. Interest on debit balance : 15%
i. Interest on credit balance : 12%
j. Total of Products (Dr.) : 108000
k. Total of Products (Cr.) : 3146000
(Ans: Interest Rs.987.21)
24. Explain the meaning of ‘Red link interest’ ?
25. What do you understand by ‘Daily Balance Method’ of Account current?
26. Differentiate between ‘Forward method’ and Backword Method’ ?
27. Amrit sells goods worth Rs.1500 to Anand on 15th April, 1988. On the same date
Anand accepts a bill for 2 months for the amount. Amrit discounts the bill immediately with
bank @ 16% p.a. The bill is met on maturity.
Give Entries in the books of Amrit and also show the bills receivable a/c.
(Ans: Discount Rs.400)
28. What do you understand by ‘Honouring’ and ‘Dishonouring’ the bills of exchange.
29. X receives a bills receivable for Rs.5000 from Y. X endorses it to Z. Make journal
entries in the books of X.
30. J’s acceptance for Rs.350 for 3 months. J gave Rs.25 for Interest. Our acceptance to
K Rs.400b renewed for 3 months with interest @ 5%. Pass Journal Entries.
(Ans: Interest on acceptance to K Rs. 5)
31. Calculate the due dates of bills in the following cases
k. When the maturity date of the bill falls on 15th Aug. 2002
l. When the maturity date of bill falls on 26th Jan. 2003
m. When the maturity date of the bill falls on 16th Mar. 2003 (Sunday)
(Ans: Due Dates (a) 14-Aug-2002; (b) 25-Jan-2003; (c)15-
Mar-2003)
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32. Mr. A has withdrawn Rs.1000 every month from his partnership firm during the year
2002. Interest on drawings is at 5% p.a. Compute the Interest payable on A, with the help
of Average Due Date on the assumption that amounts are withdrawn in the beginning of
every month.
(Ans: Interest :
Rs. 325)
33. Raj lent Rs. 24000 to Kumar on 1-1-92 which is repayable in 6 equal annual
installments commencing from 1st Jan 93.
Calculate Average due date. Interest at 15%p.a and amount of each installments.
(Ans: A.D.D. 1-7-95; Interest Rs.12600;
Each Installments Rs. 6100)
34. Rs.60000 lent by Ram to Rahim on 1-1-92 is repayable in 5 half yearly installments
commencing from 1st Jan 93. Calculate Average due date. Interest at 10% and amount of
each installment.
(Ans: A.D.D. 1-1-94; Interest Rs. 12000
Amount of each installment Rs.14400)
SECTION-C
49. On 1st jan 1998, the amount due to from Gopal to Krishnan was Rs.1000. during the 6
months ended June, the transactions were as follows:
1998 Particulars Rs.
Feb 10 Sold goods to Gopal 2000
Mar 15 Purchased goods from gopal 600
Apr 20 Cash received from Gopal 800
May 15 Cash paid to Gopal 600
Prepare an account current to be rendered by Krishnan to Gopal on 30th June 1998.
Calculating Interest @ 12% p.a.
(Ans: Gopal’s a/c Rs.2320; Interest Rs.120)
50. From the following prepare an account current as set by X to Y on 30-06-93, charging
interest on debits at the rate of 6% and on credits at 4% per annum.
1993 Particulars Rs.
Jan 1 Balance due from Y 1800
Jan 10 Sold goods to Y 1560
Jan 17 Y returned goods 375
Feb 10 Y paid by cheque 1200
Feb 14 Y accepted X’s draft for one month 900
Apr 29 Goods sold to Y 1845
May 15 Received cash from Y 2100
June 5 Y accepted X’s bill for 3 months 1500
51. What do you understand by varying rates of interest? How do you prepare account current
when varying rates of interest are to be used?
52. What are the points to be noted while counting days for each transaction while preparing
Account Current?
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1. A 3 months bill for Rs.3000 was returned duly accepted by Ram on 10th march 2000
to the drawer Mohan who endorsed the bill in favour of Senthil. Senthil discounts the
bill with his bank for Rs.1920, 2 days later. Ram did not meet the bill on the due date.
Pass Journal Entries in the books of Ram, Mohan and Senthil.
2. A owes B Rs.21000. On 1.1.1990, he accepts a bill for 3 months for Rs.20000 in full
settlement. On the same date, B discounts the bill with his bankers @ 6%p.a. before
the due date, A becomes Bankrupt and B receives 1st and final dividend of 20 paise in
the Rupee. Pass Journal entries and prepare necessary accounts in the books of B.
(Ans: Discount : Rs.300; Bad Debts Rs.16800)
3. Explain the meaning of the terms:
a. Drawer
b. Drawee
c. Payee
d. Endorsee in the context of Bill of Exchange.
4. On 1.1.96 X and Y drew on each other bills payable after months for Rs.20000 each
for mutual accommodation. The bills were discounted by each of them @ 8%p.a. on
maturity each party honoured his own acceptance.
Give Journal entries in the books of X & Y for the above arrangements.
(Ans: Discount on each bill Rs.400)
5. What are the consequences of insolvency of drawee of a bill?
6. A drew on B a bill for Rs.15000 on 1st Jan 1998. Payable after 3 months. The bills,
after acceptance, was discounted by A @ 6%. A remitted 1/3rd of the proceeds to B.
On due date, he send the necessary amount to B who met the bill. Record these
transactions in the books of A.
(Ans: Discount Rs.225; Cash Sent to B Rs.4925)
2. Mr.X has purchased goods, the due dates of which are as follows:-
Rs. 1000 due on 5th July 1990
Rs. 1700 due on 10th August 1990
Rs. 700 due on 25th September 1990
Rs. 1300 due on 10th November 1990
He wants to make the complete payment on Oct 15th 1990. Calculate the Interest
@6%p.a. with the help of average due date method.
(Ans: A.D.D : 4-9-90; Interest: Rs.31.68)
3. Mr.A has the bills due to ‘Y’ on different dates. They agree to settle the entire account
by a cheque decide upon the date of the cheque.
a. Rs. 6000 due on 17-7-96
b. Rs. 4000 due on 15-8-96 (Independence Day)
c. Rs. 14000 due on 18-9-96 (Sunday)
d. Rs. 6000 due on 3-10-96
(Ans: Date of Cheque: 3-9-96)
4. The following amounts are due to Raj by Vasanth. Vasanth wants to pay off on 16-
08-97.
Due Dates Amount (Rs.)
1-8-97 600
15-8-97(Independence Day) 1000
22-9-97 500
5-10-97(Sunday) 800
Determine the amount to be paid on 16-08-97
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(Ans: A.D.D. 1-9-97; Amount to be paid on 16-8-97 Rs.2892.37;
Interest to be reduced – Rs.7.63)
5. Meena drew upon Mohini several bills of exchange due for payment on diffrerent
dates as under:
Date of the bill Amount (Rs.) Tenure of the bill
2-10-90 600 3 months
20-10-90 800 2 months
10-11-90 1000 3 months
27-11-90 750 3 months
8-12-90 900 1 month
16-12-90 1200 2 months
Find out the Average due date
(Ans: A.D.D. 30-1-91)
6. Sharma having accepted the following bills drawn by his creditor Gambir Singh due
on different dates apporched his creditor to cancel them all and allow him to accept a
single bill for the payment of his entire liability on the average due date you are
required to ascertain the total amount of the bill and its due date.
Bill
No.
Date of
drawing
Date of
acceptance
Amount
(Rs.)
Tenure
1 16-2-96 20-2-96 16000 90 days after
sight
2 6-3-96 7.3.96 12000 2 months after
date
3 24-5-96 31-5-96 4000 4 months after
sight
4 1-6-96 4-6-96 18000 1 month
(Ans: Total Amount of Bill Rs.50000;
A.D.D. for New Bill 14-6-96)
7. A partner has withdrawn the following sums of money during the half year ending 13-
June-1995
January 15 500
February 10 400
March 12 700
April 5 800
May 20 1000
June 18 900
Interest is to be charged @ 10%p.a. Find out the average due date and calculate the
interest on drawings.
(Ans: 13-4-95; Interest Rs.91.89)
UNIT –IV
1. P of Delhi sends out 100 boxes of toothpaste costing Rs.200 each. Each box consist of
12 packets. 60 boxes were sold by consignee at Rs.20 per packet. Amount of sale
value will be: Rs.
a. 14400
b. 12000
c. 13200
d. 14200
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2. Goods costing Rs.200000 sent out to consignee at cost+25%. Invoice value of the goods
will be: Rs.
a. 250000
b. 240000
c. 300000
d. None
3. Goods costing Rs.180000 sent out to consignee to show profit of 20% on Invoice Price.
Invoice Price of the goods will be: Rs.
a. 216000
b. 225000
c. 210000
d. None
4. Goods of the Invoice value Rs.240000 sent out to consignee at 20% profit on cost. The
loading amount will be: Rs.
a. 40000
b. 48000
c. 50000
d. None
5. X sent out certain goods to Y of Delhi. 1/10 of the goods were lost in transit. Invoice
value of goods lost Rs.12500. Invoice value of goods sent out on consignment will be
:Rs.
a. 120000
b. 125000
c. 140000
d. 100000
6. Commission will be shared by :
a. Consignor & Consignee
b. Only Consignee
c. Only Consignor
d. Third Party
7. In the books of consignor, the profit of consignment will be transferred to :
a. General Trading a/c
b. General P&L a/c
c. Drawings a/c
d. None of these
8. If del-credere commission is allowed for bad debt, consignee will debit the bad debt
amount to:
a. Commission earned a/c
b. Consignor’s a/c
c. Debtors a/c
d. General rading a/c
9. A proforma invoice is sent by;
a. Consignee to Consignor
b. Consignor to Consignee
c. Debtors to Consignee
d. Debtors to Consignor
10. Which of the following expenses of consignee will be considered as non-selling
expenses:
a. Advertisement
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b. Selling expenses
c. Insurance
d. None of the above
11. When the balance as per cash book is the starting point, direct deposits by customers
are
a. Added
b. Subtracted
c. Not required to be adjusted
d. None of these
12. A BRS is a
a. Part of the cash book
b. Part of the bank a/c
c. Part of the Financial Statement
d. None of the above
13. When balance as per pass book is the starting point, interest allowed by a bank is
a. Added
b. Subtracted
c. Not required to be adjusted
d. None of these
14. A BRS is prepared with a help of
a. Bank statement and bank column of the cash book
b. Bank statement and cash column of the cash book
c. Bank column of the cash book and cash column of the cash book
d. None of the Above
15. Debit balance as per cash book of ABC Enterprises as on 31-03-2009 is Rs. 1500.
Cheques deposited but not cleared amounts to Rs.100 & cheques issued but not
presented of Rs.150. The bank allowed interest amounting to Rs.50 and collected
dividend Rs.50 on behalf of ABC Enterprises. Balance as per pass book should beRs.
a. 1600
b. 1450
c. 1850
d. 1650
16. When drawing of a bank reconciliation statement, if you start with a debit balance as
per bank statement, the un presented cheques should be
a. Added
b. Subtracted
c. Not required to be adjusted
d. None of these
17. A debit balance in the depositor’s cash book will be shown as
a. A debit balance in the bank statement
b. A credit balance in the bank statement
c. Over drawn balance in the bank statement
d. None of the above
18. When preparing a BRS, If you start with a debit balance as per cash book, cheques
issued but not presented within the period should be
a. Added
b. Subtracted
c. Not required to be adjusted
d. None of these
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19. When the balance as per pass book in the starting point, direct payment by bank are,
a. Added in the BRS
b. Subtracted in the BRS
c. Not required to be adjusted
d. None of these
SECTION –B
21. Mr. Shiva consigned 1000 kg vegetables costing Rs.4500. Expenses incurred were
Rs.600. If loss due to natural deterioration in quality is of 10 kg. If 810 kg. were sold,
calculate the cost of stock at the end.
(Ans: Clg Stock 180kg; Rs.927.27)
22. Goods consigned 1000 kg a@ 20/kg. Freight and carriage paid by the consignor
Rs.8000. Consignee sold 600kg. @ Rs. 35/kg. And incurred Rs.2000 as unloading
expenses, Rs.4000 as godown rent and Rs.2000 as selling expenses, normal loss due to
leakage 100kg. Ascretain the value of unsold stock.
(Ans: Value of unsold stock Rs.10000
23. Mr. Vijay of Chennai 200 cycles which costs Rs.900 each to Kamal of Hydrabad on
consignment basis.
Vijay paid freight of Rs.2400, Cartage Rs.600 and Insurance Rs. 800. In Hydrabad, Kamal
has spent Rs. 200 as Cartage; loading and unloading Rs. 100. The cycles have been kept
in a godown at a monthly rent of Rs. 200p.m. at the end of Accounting period, 40 cycles
remined unsold. The selling price of the cycles is Rs. 1000 at hydrabad. What should be
the value of Stock unsold?
(Ans: Value of unsold stock Rs.36820)
24. A & B completed a joint venture and earned Rs. 60000. The profits are to be shared
in the ratio of 2:1.
Pass the necessary Journal entries in the books of A & B.
(Ans: Profit A 40000 B 20000)
25. R&S completed a joint venture and earned Rs.45000. The profits are to be shared in
the ratio of 3:1.
Pass the necessary Journal entries in the books of R&S, assuming they maintain full
records in their own books.
(Ans: Profit R 33750 S 11250)
26. B,a co-venture of A took away goods worth Rs.9000, at the end of a venture. What
entries will you make when
a. There is a separate set of books for the venture.
b. Records are kept by B for his transaction only
c. Records are kept by A for his transaction only
27. X & Y contribute Rs.50000 each into a joint banking a/c. They spent Rs.90000 to
acquire and sell wheat. X collects Rs.70000 and Y Rs.80000 from sales. The Venture is
closed. Show Joint Venture a/c in the separate books of the venture.
(Ans: Profit Rs.60000)
28. P & M are partners in the joint venture sharing p&l in the ratio 3:2. P Supplied goods
for Rs.6000 and incurred Rs.200 as expenses. M supplied goods worth Rs.5000 and spent
Rs.300 as expenses. M sold all the goods for Rs.18000. M is entitled to commission of
4% on sales. He settled his a/c by sending a bank draft to P. Preapre the joint venture a/c
in the books of P.
(Ans: Profit
Rs.5780)
29. Distinguish between Joint Venture, Partnership and Consignment?
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30. Prepare BRS from the following data as on 31.12.1995
d. Balance as per cash book 12500
e. Cheque issued but not presented for payment 900
f. Cheque deposited in bank but not collected 1200
g. Bank paid insurance premium 500
h. Direct deposite by a customer 800
i. Interest on investment collected by bank 200
j. Bank charges 100
(Ans : Balance as per Pass book 12600)
31. From the following particulars ascertain the balance as per cash bookof Swami as at
31.03.1993
k. Credit balance as per pass book as on 31.03.93 Rs 2500
l. Bank charges of Rs.60 had not been entered in the cash book
m. Out of the cheques of Rs. 3500 paid into the bank, a cheque of Rs. 3800 only
were presented for payment
n. A dividend of Rs. 400 was collected by the banker directly but not entered in
the cash book
o. A cheque of Rs. 600 had been dishonoured prior to 31.03.93,but no entry was
made in the cash book
(ans Balance as Cash book 3060)
32. What is adjusted cash book ?
33. From the information given below prepare BRS
p. Credit balance (O/D) as per cash book as on 31.1.96 7100
q. Cheque drawn but not presented for payment 2300
r. Interest on overdraft not recorded in the cash book 150
(Ans : O/D as per pass book 4950 )
34. Prepare BRS :
Balance as per pass book (cr) 31.12.91. 9000
Cheque issued but not presented 15000
Cheque deposited but not credited 1500
Bank has given credit for interest 150
(Ans : O/D as per Cash book : Rs 4650 )
SECTION-C
35. A company sends 300 bales of cotton to its consignee costing Rs.600 per bale. The
following expenses were incurred in connection with the consignement.
s. Rs.900 paid by the consignor for dispatching the goods.
t. Rs. 2000 paid by the consignee by way of freight, duty and clearing charges.
u. Rs 1000 paid by the consignee by way of godown rent and salaries of sales
man.
You are required to calculate the value of stock at end, if the consignee sells away
2/3rd of the consignment at Rs.700 per bale. The consignee is to receive the
commission of 11% on sales.
(Ans: Value of Unsold Stock Rs.60967)
36. Goods sent on consignment 2000 kg @ 10/kg. Expenses paid by consignor:
Freight Rs. 1000, Insurance Rs. 600. 400 kg were destroyed in transit due to an accident
. Claim admitted by the insurance company was Rs.3000. The consignee sold1400 kg @
Rs. 20/kg. And incurred the following expenses:Unloading Rs.400, Godown Rent Rs.
1000 and Selling Expenses Rs.600
You are required to calculate the value of loss in transit and unsold stock.
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(Ans: Value of Loss in Transit Rs. 4320;
Value of unsold stock Rs.2210)
37. Madurai Somu & co., consigned 50 cases of goods of Rs200 each to Chennai Nathan
& co., Madurai Somu paid Rs.200 as insurance and Rs.300 as freight. Nathan sold the
goods for Rs.24000 and paid Rs.520 for carriage & Rs. 130 for godown rent. Nathan is
eligible for 4% commission on gross sales. Nathan & co., sends cheque for the balance
due. Show the Journal entries and Nathan & co., account in the books of M/s Madurai
somu & Co.,
(Ans: Amount due from Nathan & Co., Rs. 22390;
Profit on consignment Rs.11890)
38. On 1st april 96.Arun of Nellore consigned to balu of Chennai 200 radio set at rs 1300
each. Arun paid Rs.500 for insurance and Rs. 1000 for freight. On 13th april, Balu received
consignement and had to pay Rs.300 as unloading charges and dock charges. On 14th oct
1996. Balu sent on account of sales to Arun informing that till 30th sept., 1996, 180 sets
were sold at Rs. 1400 each and 20 sets @ Rs.1350 each. Balu sent the balance by a demand
draft after deducting his commission at 10% on sales.
Show the necessary journal entries in the books of Arun.
(Ans: Loss on Consignment : Rs. 10850;
Amount received from Balu : Rs.250650)
39. X from Velur consigns 50 bales of Cotton at Rs.400/bale to his agent Y in Madras. Y
is entitled for a commission of 5% on sales plus expenses.
Y sells the consignment for Rs.28000 incurring freight charges Rs.100 and insurance
Rs.500 and remils the sales proceeds. Pass the journal entries in the books of both the
parties.
(Ans: Profit on consignment Rs,6000;
Amount due from y Rs. 26000)
40. Satish of Trivandrum sent on consignement to Magesh of Cochin goods costin
Rs.44250, and paid railway freight Rs. 1140, Cartage Rs.350 and insurance Rs.1050. Half
of the goods were sold by Magesh for Rs.26250. He incurred storage Rs.300 and selling
expenses Rs.525. He is entitled to a commission of Rs.1310 and remitted the balance by
Bank draft. Prepare necessary ledger accounts in the books of Satish.
(Ans.Profit Rs.720; Stock 23395;
Amount due from Magesh Rs.24115)
41. Mr.Thangam consigmend 100 toys costing Rs. 1500 each to Mr.Raja. he incurred an
expenses of Rs. 200 for sending the consignment. During transit 5 toys were damaged
and claim of Rs. 7000 was received from the insuranc company. Mr. Raja took possession
of the remaining toys and out of them sold 80 toys at Rs.2000 each, he incurred a direct
expenditure of Rs.3800 and an indirect expenditure of Rs.1500on the consignment. He is
allowed a commission of 5% on gross sales.
Prepare consignment account and consignees a/c in the books of consignor.
(Ans: Abnormal Loss Rs.7600; Consignment Stock
15 toysValued @ Rs.23400; Profit Rs. 25700)
42. K&L entered into a joint venture with a profit sharing ratio of 4:1. K supplied goods
worth Rs.10000 and incurred expenses Rs.800. L supplied goods worth Rs.8000 and spent
Rs.600 for expenses. L sold all the goods for 24000 for which he is entitled for a
commission at 5% on sales. L settled the account by cheque.
Prepare joint venture a/c and L’s a/c in the books of K.
(Ans: Profit Rs.3400; Amount due form L : Rs.13520)
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43. What is memorandum joint venture account? Why it is prepared and Format of Joint
Venture a/c?
44. S and H entered into a joint venture of repairs for housing quarters at an agreed price
of Rs.10000. H supplied mateials for Rs.6000 and S supplied equipments for Rs.1000. S
has also taken back the equipment at the end at an agreed value of Rs. 500.
Prepare Joint Venturea/c in the books of H.
(Ans: Profit Rs.3500)
8. Write short notes on
a. Co-venturers
b. Joint Venture with…..A/c
c. Unsold stock at the end of a joint venture.
45. Prepare BRS as on 31.12.1993 from the following details
Balance as per cash book Rs.7225
Cheque deposited in bank bot not collected 675
Cheque issued but not presented for payment 879
Bank charged debited in the pass book 20
Interested credited in pass book 15
(Ans : Bank balance as per Pass book : 7424)
46. From the following particulars prepare BRS as on 31.12.2000,
d. Bank balance as per cash book as on 31.12.2000 Rs 5400
e. Cheques issued but not presented for payment 515
f. Cheque deposited into bank but not credited in the pass book Rs 240
g. Bank charges debited in the pass book Rs. 30
h. Interest on current account credited by the bank but not recorded in the cash
book Rs.25
(Ans : Balance as per pass book 5617 )
47. From the following particulars prepare BRS as at 31st December
Balance as per pass book Rs 62460
i. Cheque issued but not presented
Rajini Rs 4590
kamakshi Rs 5960
Bhavani Rs 9580
j. Cheque deposited but not cleared until after close of the year
john Rs 5060
balu Rs 9130
k. The bankers had wrongly debited the account Rs 2250 the error was rectified
by them on 4th jan of the following year
(Ans : Cash book balance Rs 58770)
48. what is Bank Reconcilation Statement ?why should it be prepared periodically ?
50. Explain the method of preparing BRS ?
UNIT V
1. Sale of old newspapers is—
a). Capital Receipt
b) Revenue Receipt
c) Asset
d) Profit
2. Income and expenses related to the prize fund is shown in—
a) Income and Expenditure Account
b) Assets side of the Balance Sheet
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c) Liabilities side of the Balance Sheet
d) Cash Account
3. Life membership fees of non-trading concerns is—
a) Capital Receipts
b) Revenue Receipts
c) Both
d) None of these
4. Legacies should be treated as—
a) Liability
b) A Revenue Receipt
c) A Capital Receipt
d) None of these
5. Payment of Honorarium to secretary is treated as— (B.S.E.B., 2012, 13)
a) Capital Expenditure
b)Revenue Expenditure
c ) Cash Expenses
d) none of these
6. Income and Expenditure Account generally indicates—
a) Surplus/Deficit
b) Cash Balance
c) Capital Fund
d) Net Profit/Loss
7. Donation received for specific objective will be shown—
a) In Income and Expenditure A/c
b) On Liabilities side of B/S
c) On Assets side of B/S
d) In none of these
8. The excess of assets over liabilities in non-trading concerns is treated as— (B.S.E.B.,
2010)
a) Capital Fund
b) Capital
c) Profit
d) Net Profit
9. In non-trading concerns, excess of income over expenditure is called—
a) Profit
b) Surplus
c) Loss
d ) Deficit
10. In not-for-profit organisations, excess of expenditure over income is called—
a) Loss
b) Profit
c) Deficit
d) Surplus ese
11. ___________ to prescribe accepted accounting principles and procedures.
a) Single entry system
b) Double entry system
c) Posting
d) Accounting standards
12. Accounting standards provides a frame work for the preparation of _____
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a) Journal
b) Ledger
c) Trial balance
d) Financial statements
13. Main objectives of accounting standard is __________ in financial reporting
a) Uniformity
b) Duplication
c) Accuracy
d) Convenient
14. International Accounting Standards issued by _____
a) ASB
b) IASC
c) SEBI
d) Banks
15. Disclosure of accounting policies is dealt in _______
a) AS 1
b) AS 2
c) AS 3
d) AS 4
16. Accounting for Inventories dealt in _____
a) AS 1
b) AS 2
c) AS 3
d) AS 4
17. Inventories should be valued at ______
a) Cost price
b) Net realisable value
c) Cost or net realisable value whichever is lower
d) Cost or net realisable value whichever is higher
18. Cash flow statements are discussed under ______
a) AS 1
b) AS 2
c) AS 3
d) AS 4
19. Accounting Standard 4 is concerned with _____
a) Events occurring after posting
b) Events occurring before investing
c) Events occurring after balance sheet date
d) Events occurring after recording.
20 . _______ referring to the specific accounting principles.
a) Accounting policies
b) Rules
c) Recording
d) Balancing
SECTION-B
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21. From the following particulars related to Arman Point, prepare a Receipt and Payment
account for the year ending 31st March 2018
Particulars Amount Particulars Amount
Opening cash
balance 500
Sale of old sports
materials 600
Opening bank
balance 3600 Donation received 2300
Subscriptions
collected for Rent paid 1500
2016-
17 ₹ 250 Sports materials
purchased 2400
2017-
18 ₹ 3800 Purchase of
refreshments 300
2018-
19 ₹ 450 4500
Expenses for
maintenance 1000
Sale of refreshments 500 Salary paid 1250
Entrance fees 500 Tournament
expenses 1200
Furniture purchased 750
Office expenses 600
Closing cash in
hand 200
22. From the following particulars of JMD Educational Society, prepare a Receipts and
Payments Account and an Income and Expenditure Account for the year ending 31st March,
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2007:
The following information is supplied to you:
Received interest on Investment Rs 500; Subscriptions received during the year Rs 5,00,000;
Sale of newspapers Rs 200; Donations received Rs 65,000; Sale of Computer Rs
10,000;(Book value Rs 8,000); Rent paid Rs 8,000; Postage paid Rs 300, Purchase of Govt.
Bonds Rs 3,000, Payment to creditors Rs 1,000, Advertising Expenses Rs 500; Outstanding
Rent Rs 300, Outstanding Postage and courier Rs 100, Outstanding Subscriptions Rs 3,000
(including Rs 200 of 2005-06). Donations were to be capitalised.
23. What is subscription? How is it calculated?
24. From the following particulars taken from the Cash Book of a health club, prepare a
Receipts and Payments Account.
Particulars Rs
Opening balance:
Cash in Hand 5,000
Cash at Bank 25,000
Subscriptions 1,65,000
Donations 35,000
Investment Purchased 80,000
Rent Paid 20,000
General Expenses 21,500
Postage and stationery 2,000
Courier charges 1,000
Sundry Expenses 2,500
Closing Cash in Hand 12,000
25. The Receipt and Payment Account of Harimohan charitable institution is given:
Receipt and Payment Account for the year ending March 31, 2015
Receipts Amount
Rs Payments
Amount
Rs
Balance b/d: Furniture 3,000
Cash at Bank 22,000 Investments 55,000
Cash in Hand 8,800 Advance for building 20,000
Donations 32,000 Charities 60,000
Subscriptions 50,200 Salaries 10,400
Endowment Fund 60,000 Rent and Taxes 4,000
Legacies 24,000 Printing 1,000
Interest on Investment 3,800 Postage 300
Interest on Deposits 800 Advertisements 1,100
Sale of old newspapers 500 Insurance 4,800
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Balance c/d:
Cash at Bank 32,000
Cash in Hand 10,500
2,02,100 2,02,100
26. Prepare the Income and Expenditure Account for the Year ended on March 31, 2015 after
considering the following:
(i) It was decided to treat Fifty per cent of the amount received on account of Legacies and
Donations as income.
(ii) Liabilities to be provided for are:
Rent Rs 800; Salaries Rs 1,200; advertisement Rs 200.
(iii) Rs 2,000 due for interest on investment was not actually received.
27. Following is the information given in respect of certain items of a Sports Club. Show
these items in the Income and Expenditure Account and the Balance Sheet of the Club:
Particulars Rs
Sports Fund as on 1.4.2015 35,000
Sports Fund Investments 35,000
Interest on Sports Fund 4,000
Donations for Sports Fund 15,000
Sports Prizes awarded 10,000
Expenses on Sports Events 4,000
General Fund 80,000
General Fund Investments 80,000
Interest on General Fund Investments 8,000
28. Define Accounting Standards.
29. What are the objectives of accounting standards?
30. List out advantages of accounting standards?
31. How are accounting standards formulated?
32. Enumerate the reasons for which accounting standards are needed.
SECTION – C
33. From the following trial balance and other information pertaining to the year ended 31st
March, 2012 for the Delhi School, prepare the Income and Expenditure Account for the year
and the Balance Sheet at its end:
Fees still receivable are Rs 6,000 and Salaries still payable are Rs 14,000. New furniture
costing Rs 20,000 was purchased on 1st October, 2011 but no entry has been passed for it
yet. Furniture sold was of the book value of Rs 10,000 on 1st April, 2011.
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Depreciation is to be charged as under:
34. . From the following, prepare an Income and Expenditure Account for the vear
ended 31st March, 2011:
Subscriptions include Rs 1,200 for 2009-10. Also rent includes Rs 500 paid for March, 2010.
Subscriptions amounting to Rs 1,500 have still to be collected for the year 2010-2011. Rent
for March, 2011 is still to be paid and Rs 250 is outstanding against a stationery bill. The
book value of the scooter was Rs 8,200.
35 . The following is the statement of receipts and payments of the Charity Eye Hospital for
the year ending March 31, 2012:
You are asked to prepare the Income and Expenditure Account for the year and the Balance
Sheet as on 31st March, 2012. The other assets on 1st April 2011 were—Furniture, Rs 2,000;
Land, Rs 50,000; Buildings Rs 1,50,000; Instruments, Rs 3,500. Write off depreciation at 2
1/2% on Buildings, 6% on Furniture, and 20% on Instruments (including new).
36. From the following Receipts and Payments Account and the additional information
pertaining to Janakpuri Football Club, prepare Income and Expenditure Account for the year
ended 31st March, 2012 and Balance Sheet as at that date:
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Additional Information:
i. Subscription received include Rs. 9000 outstanding subscription for the year 2010-11.
Subscription for the year 2011-12 amounting to Ra. 16,000 is still outstanding. Some
members have paid subscription for the year 2012-13 amounting to Rs. 8000 which is
included in the subscriptions received.
ii. face value of 12% investment on 31st March 2011 was Rs. 15,000 (cost price Rs 12000)
iii. Book value of furniture sold on April 2011 was Rs. 12000, depreciation being 20% p.a.
provide depreciation on new furniture at the same rate.
iv. Telephone bill for one quarter is outstanding the amount outstanding being Rs. 300. The
charge for each quarter is the same both for 2010-11 and 2011-12.
(v) Unpresented cheques for periodicals being Rs. 4000 for 2010-11 and Rs. 12000 for 2011-
12.
(vi) Stock of balls with the club on 31st March 2012 amounted to Rs. 6000
37. What is need for Accounting Standards? Discuss the reasons.
38. List out the international Accounting Standards.
39. Explain the significance and advantages of accounting standards.
40. Briefly explain the provisions of AS – 1 “Disclosure of Accounting policies”
41. What is the procedure for ‘Formulation’ and ‘Issuin’g accounting standards?
42. What steps are taken to prepare Income and Expenditure Account from a Receipt
and Payment Account?
43. Distinguish between Receipts and Payments Account and Income and
Expenditure Account.
KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS)
COIMBATORE
DEPARTMENT OF COMMERCE (PG)
QUESTION BANK – 2018-2019
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SUBJECT: BUSINESS ECONOMICS SUBJECT CODE:
Staff-in-charge: Dr.Sheeba.E and Mrs P.Geetha Class: I B.Com (PA)
………………….....................................................................................................................
UNIT - I
Part-A 1 mark
1. “Economics is the Science which studies human behavior as a relationship between
ends and scarce means which have alternative uses” – These lines are attributed by
A. Samuelson
B. Lionel Robbins
C. Robertson
D. Marshall
2. The branch of economics studies about unemployment, illiteracy and national Income
A. Micro Economics
B. Wealth Economics
C. Macro Economics
D. Fiscal Economics
3. Micro Economics deals with
A. Individual firm, individual consumer
B. General economy as a whole
C. Total demand, total supply
D. National income
4. Marginal utility is
A. Total utility / number of units
B. Additional to total utility
C. Total utility – Average utility
D. Total utility + Average utility
5. Business Economics is in nature
A. Macro
B. Micro
C. Flexible
D. Rigid
6. The firm’s profitability depends on the
A. Cost of sales
B. Cost of production
C. Income
D. Investment
7. The goods which are used for final consumption by the consumer is called
A. Durable goods
B. Consumer goods
C. Marketable goods
D. Capital goods
8. Father of economics is
A. Alfred Marshall
B. Adam Smith
C. A.C. Pigou
D. Robbins
9. Which branch of economics studies about unemployment, illiteracy, National income
tax?
A. Micro economics
B. Wealth economics
C. Macro economics
D. Fiscal economics
10. Micro economics is also known as
A. price theory
B. process theory
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C. product theory
D. projection theory.
11. The business economic theory is concerned with the management technique to achieve.
A. Maximization of total revenue from sales
B. minimization of cost of production
C. maximizes profit from the business unit.
D. all the above
12. Which is not included in the welfare goal to the society by the firm?
A. building of roads
B. charitable hospitals
C. living wages
D. maintaining parks
13. ---------------------- deals with the behavior of individual decision makings units such
as consumers, resource owners and so on.
A. Macro economics
B. Micro economics
C. mini economics
D. None of these
14. Business economics is a science which deals with the application of -----------------
in business practices.
A. Economic theory
B. Commerce theory
C. Macro theory
D. None of these
15. The guiding principle of business economics is not -----------------but avoiding loss.
A. Profit maximization
B. Loss maximization
C. Profit minimization
D. Loss minimization
16. The marginal utility curve is:
A. Downward sloping
B. Upward sloping
C. Vertical
D. Horizontal
17. The law of Equi-marginal utility is otherwise called as:
A. Law of substitution
B. Law of diminishing MU
C. Law of negative returns
D. None of these
18. When Marginal utility diminishes, total utility:
A. Diminishes
B. Increases
C. Remains constant
D. Increases at a diminishing rate
19. Continues consumption of homogeneous product is a assumption for:
A. Law of Demand.
B. Law of Supply.
C. Law of Diminishing Marginal Utility
D. Law of returns to scale
20. An input should be so allocated that the value added by the last unit is the same in all
cases.
A. Opportunity Cost
Principle
B. Equi-Marginal Principle
C. Incremental Principle
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D. Discounting Principle
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Part –B 5 Marks
1. Define the concepts of business economics and state its features.
2. Define Micro and Macro economics and bring out their distinction.
3. Outline the concepts of utility in business economics.
4. Classify the various forms of utility.
5. What do you mean by economic analysis and state its features?
6. State the law of diminishing utility with suitable utility schedule.
7. Explain the difference between cardinal utility and ordinal utility. Give example.
8. Write any two definitions of economics.
9. What are the assumptions of law of Equi-marginal utility?
10. Define the objectives of business economics
………………………………………………………………………………………………..
Part –C 8 marks
1. Discuss the significance of business economics
2. Explain the nature and scope of business economics
3. Illustrate the law of diminishing marginal utility with suitable examples
4. Explain the applications of law of Equi-marginal utility.
5. Explain the various method of economic analysis
6. State the assumptions and limitations of law of diminishing marginal utility.
7. Explain the types of utility with example.
8. State the relationship between total utility and marginal utility.
9. Define utility analysis and state the features and factors determining utility analysis.
10. What is economics? Define the branches and need for economics?
………………………………………………………………………………………………..
Answer for part A
UNIT - II
Part- A 1mark
1. The law of demand, establishes the relationship between
A. Income and demand
B. Price and demand
C. Price of a good and demand for its substitute
D. Price of a good and demand for its complementary
2. All of the following are determinants of demand except
A. Tastes & preferences
B. Quantity supplied
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B C A B B A B B C A D B B A A A A C B B
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C. Income
D. Price of related goods
3. The normal demand curve has a
A. Positive slope
B. Vertical slope
C. Horizontal slope
D. Negative slope
4. Demand for a commodity is desire for that commodity backed by
A. A wish for the lowest possible price
B. Ability and willingness to pay
C. Cash in one’s pocket
D. A promise to make payment
5. Market demand is
A. The sum of all individual demands
B. Demand at prevailing average prices
C. Ability to pay the price asked
D. Demand in a perfectly free market
6. If elasticity of demand is infinity, it is called
A. perfectly elastic
B. perfectly inelastic
C. elastic
D. inelastic
7. When two goods are completely interchangeable, they are
A. Perfect substitutes
B. Perfect complements
C. Giffen goods
D. Veblen goods
8. Consumer is said to be in equilibrium when
A. Marginal utility > price
B. Marginal utility = price
C. Marginal utility < price
D. Marginal utility is maximum
9. The cardinal utility approach was developed by
A. Robbins
B. Adam smith
C. Alfred Marshall
D. Pigou
10. The total utility is maximum when
A. Marginal utility is zero
B. Marginal utility is negative
C. Marginal utility is equal to average utility
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D. Marginal utility is the highest
11. If a shift in the demand curve that raises the price of oranges from Rs7 to Rs9 a
bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels,
the
A. supply of oranges is elastic
B. supply of oranges is inelastic
C. demand for oranges is inelastic
D. demand for oranges is elastic
12. The kinked demand curve explains
A. Price rigidity
B. Price flexibility
C. Demand rigidity
D. Demand flexibility
13. The demand for food is most elastic in countries
A. with low income levels
B. that are highly urbanized
C. with intermediate income levels
D. with high income levels
14. The amount of demand with the rise in price
A. Increases
B. Diminishes
C. Equal
D. None
15. The amount demanded to change the price of a commodity is called
A. Demand schedule
B. Market schedule
C. Schedule curve
D. Economies to scale
16. Elasticity of demand measures the responsiveness of demand to
A. Increase in price
B. Decrease in price
C. Change in price
D. Stock in price
17. A is a prediction of estimation of future
A. Demand
B. Forecast
C. Decision making
D. Planning
18. Demand curve is related to
A. MU curve
B. Marginal revenue
C. Both (a) and (b)
D. None of these
19. The upper portion of the kinked demand curve is relatively
A. More inelastic
B. More elastic
C. Less elastic
D. Inelastic
20. If the demand curve confronting an individual firm is perfectly elastic, then firm is
A. Price taker
B. Adjust output
C. Adjust price
D. All of these
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Part – B 5marks
1. Define demand and its features.
2. How would you classify demand?
3. Give the various steps involved in forecasting.
4. Explain demand schedule with suitable example.
5. Give the exception to the law of demand.
6. Discuss the forecasting demand for a new product
7. Mention the criteria for a good forecasting.
8. What are the purposes of short term forecasting?
9. Define demand curve and its features.
10What are the types of elasticity of demand?
…………………………………………………………………………………………………
Part – C 8marks
1. Can you elaborate the reason, why does the demand curve slopes downwards?
2. Explain law of demand with appropriate example.
3. Identify the factors determining elasticity of demand
4. List out the steps involved in forecasting and its methods.
5.Explain the concept of Price elasticity of demand and types of it briefly.
6.Explain income elasticity and its types.
7.write down the importance of elasticity of demand.
8.Explain the types of demand briefly.
9.Explain the factors influencing market demand.
10. Elucidate the determinants of demand for the following products:
a. Books
b. Laptops
c. Cosmetics
d. Home Appliances
…………………………………………………………………………………………………..
Answer for part A
1 2 3 4 5 6 7 8 9 10 1 12 13 14 15 16 17 18 19 20
B B D B A A A B C A A A A B A C B C B A
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UNIT - III
Part-A 1mark
1. Transformation of inputs into output is called as
A. Consumption
B. intermediate good
C. production
D. capital formation
2. The growth of an organization that leads to inefficient management is
A. diseconomies of scale
B. financial economies of scale
C. external economies
D. internal economies
3. In Economics the term ‘production’ implies
A. Manufacture of a product
B. Creation of utility
C. Growing a crop
D. Providing a service
4. The cost of production includes
A. Money
B. Real
C. Opportunity
D. Nominal
5. Production takes place only with the combination of of production
A. Factors
B. Criteria
C. Determinants
D. Features
6. Capital means
A. Cash
B. Investment
C. Wealth
D. all the above
7. is what the seller is willing to offer for sale.
A. Supply
B. Demand
C. Production
D. None
8. The direct relationship between the price of a commodity and the quality of the commodity
supplies is called as
A. Law of demand
B. Law of supply
C. Law of utility
D. Perfect competition
9. The law which studies the direct relationship between price and quantity supplied of a
commodity is
A. Law of demand
B. Law of variable proportion
C. Law of supply
D. None of the above
10. When price rises, quantity supplied
A. expands
B. falls
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C. increases
D. unchanged.
11. In case of perfectly inelastic supply the supply curve will be
A. rising
B. vertical
C. horizontal
D. falling.
12. When a percentage in price results in equal change in quantity supplied, it is called,
A. elastic supply
B. perfectly inelastic
C. elasticity of supply
D. unitary elastic supply
13. When supply of a commodity decreases on a fall in its price, its is called
A. Expansion of supply
B. Increase in supply
C. Contraction of supply
D. Decrease in supply.
14. Which utility approach suggests that utility can be measured and quantified?
A. ordinal
B. Cardinal
C. both a &b
D. diminishing marginal utility.
15. ----------------------- of a commodity is the additional utility derived by a consumer, by
consuming one more unit of that commodity.
A. Marginal utility
B. Total utility
C. Average utility
D. maximum utility
16. The point at which the total utility starts diminishing is when
A. marginal utility is positive
B. it remains constant
C. marginal utility is increasing
D. marginal utility is negative.
17. Which shows various combinations of two products that give same amount of
satisfaction?
A. Iso-cost curve.
B. Marginal utility curve.
C. Iso-quant.
D. Indifference curve.
18. Which of the following is considered production in economics?
A. Driving for pleasure
B. Teaching for a fee
C. Boating for recreation
D. Donating blood
19. The supply of a good refers to
A. Stock available for sale
B. Total stock in the warehouse
C. Actual production of the good
D. Quantity of the good offered for sale at a particular price per unit of time
20. Economies of scale exist when
A. the long-run cost of producing a unit of output falls as the output increases
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B. the firm is too small and too specialised
C. the cost of finding a trading partner is low
D. the firm is too large and too diversified
……………………………………………………………………………………………
Part –B
5marks
1. What are the factors of production?
2. What do you think about returns to scale?
3. Define the term ‘Supply’ and brief out the various determinants of supply.
4. Graph out and write note on the supply curve.
5. Define Production function. Distinguish between short run and long run
production functions
6. List out the assumptions of law of variable proportions.
7. State the elasticity of supply and its types.
8. What are the factors influencing elasticity of supply.
9. What do you mean by economies of scale.
10.What do you mean by diseconomies of scale.
………………………………………………………………………………………………
…
Part –C 8marks
1. Outline the economies of scale of production.
2. Describe law of returns to scale and law of variable proportion
3. Discuss the concept elasticity of supply and its kinds.
4. Illustrate law of supply.
5. Discuss about the internal and external diseconomies of scale
6. State the difference between law of variable proportions and law of return to scale.
7. What do you mean by production function and its measures of productivity.
8. What is production? And write the concept of production.
9. Discuss about the internal and external economies of scale.
10. Explain about producer’s equilibrium.
………………………………………………………………………………………………
Answer for part A
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
C A B A A D A B A B B D C B A A D B D A
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UNIT - IV
Part-A 1mark
1. Efficient utilisation of resources is achieved to greatest extent under
A. Duopoly
B. Perfect competition
C. Monopolistic competition
D. Oligopoly
2. In a perfectly competitive market, the firm is
A. Price taker
B. Price maker
C. Output adjuster
D. Price adjuster
3. Manufactures of commodities constitute
A. Primary market
B. Secondary market
C. Terminal market
D. Future market
4. An individual firm is a price – taker in
A. Regulated market
B. Monopolistic competitive market
C. International market
D. Perfect competitive market
5. A perfectly competitive industry adjusts toward long run equilibrium of zero economic
profits through
A. Cost & revenue
B. Surpluses and shortages
C. Demand and supply
D. Entry and exit
6. For a monopoly to be absolute, production must be in the hands of a single producer and
A. Market price must be at an absolute minimum
B. Cost must be at an absolute minimum
C. There must be no substitute for the commodity
D. There must be a variety of substitutes on the market
7. There is large entry of new firms in the industry during the firms are earning
A. Abnormal profit
B. Supernormal profit
C. Normal profit
D. Break even profit
8. A situation with only one buyer is called
A. Monopoly
B. Oligopoly
C. Monopsony
D. Perfect competition
9. Price discrimination will always lead to
A. increases in output
B. decreases in output
C. no change in output
D. fluctuation in output
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10. In case of oligopoly, numbers of firms are
A. large
B. infinite
C. two
D. few
11. The Kinked demand curve explains
A. price rigidity
B. price flexibility
C. Demand rigidity
D. Demand flexibility
12. The product under monopolistic competition
A. Dove shampoo
B. Railways
C. Vegetables
D. Branded mobile phones
13. An example of monopsony may be seen in the relationship of
A. Pencil manufacturer and Artists
B. Book publishers and Printers
C. Lorry manufactures and Lockage firms
D. Rail and Railway locomotive
14. A place where people buy and sell commodities is called
A. Market
B. Trade Center
C. Departmental Store
D. Both A&B
15. A market structure where large numbers of buyers and sellers freely operate is called
A. Monopoly
B. Monopolistic
C. Perfect Competition
D. No competition
16. Monopoly is a market structure where there is seller and many buyers.
A. Single
B. Two
C. Three
D. More than three
17. When average revenue is more than the average cost it is called as
A. Abnormal profit
B. Abnormal Loss
C. Super normal profit
D. Marginal revenue
18. When a product is sold at different prices to different customers it is called
A. Market Structure
B. Price Discrimination
C. Marginal Revenue
D. Average Revenue
19. The price discrimination of the first degree is also called as
A. Pricing
B. Perfect discrimination
C. Market structure
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D. Market condition
20. Monopoly power is high when
A. There are few close substitutes
B. There are many rivals
C. There are few sellers of the products
D. There are no close substitutes
………………………………………………………………………………………………….
.
Part –B 5marks
1. In economic perspective what is a market? Bring out its characteristics.
2. Write a note on the factors affecting market structure.
3. Identify the market competition and bring out its features – where large number of buyers
and sellers freely operate and sell homogenous commodity at uniform price.
4. Explain long run equilibrium in perfect competition.
5. Describe the monopoly type of market structure and explain its features.
6. Write note on the types of price discrimination for various market structures.
7. Explain the price discrimination under monopoly
8. Explain the features of monopolistic competition
9. Analyse the salient features of perfect competition market structure.
10. Briefly discuss the types of monopoly market.
……………………………………………………………………………………………
… Part –C
8marks
1. Explain in detail the classification of markets.
2. What are the various forms of market structure – Discuss?
3. Elaborate and discuss about short run equilibrium under perfect competition.
4. Discuss the degrees of price discrimination and bring out its condition.
5. Write a note on Duopoly and Oligopoly.
6. What is Monopolistic competition? How to determine the equilibrium price under
monopolistic competition.
7. Distinguish between perfect competition and monopoly market structure.
8. Explain kinked demand curve of oligopoly.
9. Write the price and output determination under perfect competition.
10. Write the price and output determination under monopoly.
…………………………………………………………………………………………………
.. Answer for part A
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B A A D D C B C C D A A D A C A C B D D
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UNIT - V
Part-A 1mark
1. The net value of GDP after deducting depreciation from GDP is
A. Net national product
B. Net domestic product
C. Gross national product
D. Disposable income
2. The value of national income adjusted for inflation is called
A. Per capita income
B. Disposable income
C. Inflation rate
D. Real national income
3. The average income of the country is
A. Per capita income
B. Disposable income
C. Inflation rate
D. Real national income
4. Which of the following is added to national income while calculating personal income?
A. Transfer payments to individuals’
B. Social security contributions
C. Corporate taxes
D. Undistributed profits
5. The national income estimation is the responsibility of
A. NSSO
B. CSO
C. Finance Ministry
D. National Income Committee
6. As per the CSO classification, which of the following does not fall under the industrial
sector?
A. Construction
B. Manufacturing
C. Fisheries
D. Mining
7. the most appropriate measure of a country's economic growth is
A. GDP
B. NDP
C. Per capita real income
D. GNP
8. Value Added Method to measure National Income is also known as
A. Product Method
B. Expenditure Method
C. Income Method
D. Revenue Method
9. Net Domestic Product (NDP) = ……………………..
A. GDP - Subsidies
B. GDP - Indirect Taxes
C. GDP - Indirect Taxes - Subsidies
D. GDP - Depreciation
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10. The sum of all incomes received by the individual during a given year is called
A. Personal Disposable Income
B. Personal wealth
C. Personal income
D. Personal earnings
11. Personal Income after deduction of personal taxes is called
A. Personal Revenue
B. Personal Wealth
C. Personal Earnings
D. Personal Disposable Income
12. Real national income increases when
A. Prices of goods are rising
B. National savings increase
C. Quantity of goods and services increases
D. National savings decrease
13. To avoid double counting when GDP is estimated, economist
A. Use GDP deflator
B. Calculate value added at each stage of production
C. Use retail prices
D. Use price only intermediate goods
14. A TV set purchased from a retail store is an example of
A. Intermediate good
B. Capital goods
C. Surplus goods
D. Final goods
15. Gross National Product is
A. Total sales in the economy
B. Total monetary transactions in an economy
C. The market value of all goods and series produced in an economy
D. Total spending in an economy
16. Which of the following is not included in personal income?
A. Social security benefits
B. Dividend payments
C. Undistributed corporate profits
D. Interest received from saving certificates
17. GDP refers to
A. Gross domestic product
B. Gross domestic price
C. Gross demand product
D. None
18. Financial stability is essential for growth
A. Economic
B. Industrial
C. Entrepreneurial
D. Both A & B
19. Sum of balance of current account and balance of capital account is known as
A. Balance of payment
B. balance of trade
C. balance of debt
D. balance of accounts
20. The financial year in India is
A. April 1 to March 31
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B. January 1 to December 31
C. March 1 to April 30
D. March 16 to March 15
………………………………………………………………………………………………….. Part –
B 5marks
1. What do you understand by the term economic growth and its fluctuation?
2. Explain the terms personal income and disposable income.
3. Explain GDP and NDP.
4. Explain Net National Product in detail.
5. Write the difference between GNP and NNP.
6. What are the problems in measuring national income? Discuss.
7. Write down the concepts associated with National Income.
8. Explain the usefulness of national income estimates.
9. What are the difficulties in estimating national income.
10.What do mean by economic welfare?
………………………………………………………………………………………………… Part –
C 8marks
1. Discuss the methods of measuring national income.
2. Explain the difficulties in estimating national income.
3. State and discuss the various concepts of national income.
4. Discuss the income method to measure national income.
5. Explain briefly about real income.
6. Discuss the value added method to measure national income.
7. State briefly about GDP and NDP.
8. Briefly explain about personal income.
9. Explain about disposal income.
10. What is national income and briefly state their concepts.
…………………………………………………………………………………………………..
Answer for part A
1 2 3 4 5 6 7 8 9 1
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Mercantile Law 18UPA203
Prepared by: Dr. M. Revathi Bala
Unit I
Part – A (20x1 = 10)
1. An agreement enforceable by law is a ____
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a. Enforceable acceptance b. Accepted offer c. Approved promise d. Contract
2. Which is correct?
a. Proposal + acceptance = Promise b. Promise + consideration = Agreement
c. Agreement + Enforceability at law = Contract d. All of these
3. In the Indian Contract act, the term contract is defined in section ____
a. 2 (e) b. 2 (h) c. 2 (d) d. 3 (a)
4. An agreement not enforceable by law is said to be___
a. Void b. Valid c. Voidable d. Breach
5. A contract voidable at the option of one party to the contract is ____
a. Void contract b. Voidable contract c. Illegal contract d. Unenforceable contract
6. A proposal when accepted becomes ___
a. Promise b. Agreement c. Contract d. Consideration
7. Which of these is a valid acceptance?
a. Be absolute b. Be conditional c. Be Unusual mode d. Be Unreasonable time
8. General offer can be accepted by ____
a. Person to whom it is addressed
b. General public at large
c. Any body fulfilling the conditions attached to offer
d. Only senior citizen having PAN number
9. Goods displayed in a shop with a price tag is an ____
a. offer b. Invitation to offer c. Counter offer d. Acceptance
10. An offer may lapse by ____
a. Revocation b. Counter offer c. Rejection of offer by offeree d. All of these
11. In the case of Indian Contract Act, the term consideration is defined in section ____
a. Sec. 2(b) b. Sec. 2(c) c. Sec. 2(d) d. Sec. 2(e)
12. Consideration must move at the desire of ____
a. Promisor b. Promisee c. Any other person d. Third person
13. Which of the following statement is true?
a. There can be a stranger to a contract
b. There can be a stranger to consideration
c. There can be a stranger to a contract and consideration
d. The contract can be possible without consideration
14. Consideration may be ___
a. Past b. Present c. Future d. All of these
15. The maxim ‘Quid- pro-quo’ refers to ___
a. Anything in return b. Something in return c. Everything in return d. Nothing in return.
16. Which of the following statement is true?
a. Consideration must result in a benefit to both parties.
b. Past consideration is no consideration in India.
c. Consideration must be adequate.
d. Consideration must be something, which a promisor is not already bound to do.
17. Which of the following statement is false? Consideration:
a. Must move at the desire of the promisor
b. May move from any person
c. Must be illusory
d. Must be of some value.
18. Which of the following statement is true?
a. There can be stranger to a contract
b. There can be stranger to a consideration
c. There can be a stranger to a contract and consideration
d. None of the above.
19. Consideration in simple term means
a. Anything in return b. Something in return c. Everything in return d. Nothing in return
20. Which of the following is not an exemption to the rule – ‘No consideration; No contract’
a. Compensation for involuntary services
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b. Love and affection
c. Contract of agency
d. Gift
Answers: 1 – d 2 – c 3 – b 4 – a 5 – b 6- a 7 – a 8 – b 9 – b 10 – d 11 – c 12 – a 13 – b
14 – d 15 – b 16 – d 17 – c 18- b 19 – b 20 – a
Part – B (10 x 5 = 50)
1. Define law. State the need for law.
2. Write a short note on the maxim ‘Ignorantia juris non excusat’.
3. Specify the need for the presence of ‘consesnsus-ad-idem’ for entering into the contract.
4. What are the sources of mercantile law?
5. Write a note on: i. Agreement ii. Legal enforceability iii. Consensus-ad-idem and iv. Obligation
6. ‘All contracts are agreements but all agreements are not contract’ – Justify.
7. Write a note on communication of offer and acceptance
8. What do you mean by communication of Revocation?
9. Explain the revocation of offer and acceptance.
10. Write a note on ‘Doctrine of privity of contract’
Part – C (10 x 5 = 50)
1. State the nature and scope of mercantile law.
2. What are the essentials of valid contract?
3. What are the various types of contract.
4. What are the legal rules to offer?
5. State the various types of offer.
6. What are the essentials to acceptance?
7. When does an offer come to an end?
8. What are the legal rules to consideration?
9. What are the exceptions that a stranger to a contract can not sue?
10. What are the exceptions to the rule ‘No consideration; No contract’?
Unit II
Part – A (20x1 = 10)
1. Which of the following persons are not competent to contract?
a. Minors b. Persons of unsound mind c. Persons disqualified by law d. All of these
2. For the purpose of entering into a contract, a minor is a person who has not completed the age of
___
a. 16 years b. 18 years c. 20 years d. 21 years
3. A contract with minor, which is beneficial for him, is ___
a. Void-ab-initio b. Voidable c. Valid d. Illegal
4. Who do not fall under the category of persons of unsound mind?
a. Idiot b. Lunatics c. Drunken persons d. Alien
5. Where the consent of a party is obtained by misrepresentation, the contract is ___
a. Valid b. Void c. Voidable d. Illegal
6. Consent is not said to be free when it is caused by ____
a. Coercion b. Undue influence c. Fraud d. All of these
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7. When the consent of a party is obtained by fraud, the contract is _____
a. Void b. Voidable c. Valid d. Illegal
8. The threat to commit suicide amounts to ____
a. Coercion b. Undue influence c. Misrepresentation d. Fraud
9. Moral pressure is involved in the case of ____
a. Coercion b. Undue influence c. Misrepresentation d. Fraud
10. A wrong representation when made without any intention to deceive the other party amounts to
____
a. Coercion b. Undue influence c. Misrepresentation d. Fraud
11. An agreement which prevents a person from carrying a lawful business is
a. Void b. Valid c. Voidable d. Contingent
12. An agreement in restraint of marriage i.e., which prevents a person from marrying, is
a. Void b. Valid c. Voidable d. Contingent
13. An agreement in restraint of legal proceedings is void. It does not cover an agreement which
a. Restricts absolutely the parties from enforcing their legal rights
b. Cut short the period of limitation
c. Discharges a party from liability
d. Provides for a reference to arbitration instead of court of law.
14. An agreement to do an illegal act i.e, to share the earnings of a smuggling business is
a. Void b. Valid c. Voidable d. Contingent
15. When an agreement consists of two parts once legal and the other illegal, and the legal part is
separable from the illegal one, such legal part is
a. Void b. Valid c. Contingent d. Illegal
16. Wagering agreement consists of _____
a. Promise b. Reciprocal promise c. Certain promises d. None of these
17. In contract act, wagering agreements are dealt in ___
a. Sec.10 b. Sec. 20 c. Sec. 30 d. Sec. 40
18. In contingent contract, future is a ____
a. Determinant b. Collateral c. Certain d. Secondary
19. A contingent contract depends on the non – happening of a future uncertain event and becomes
void when such event
a. Happens b. Does not become impossible c. Does not happen d. Both (a) and (b)
20. The nature of wagering agreement is ____
a. Game of chance b. Not a game of chance c. Certain event d. Urgent event
Answers: 1 – d 2 – b 3 – a 4 - d 6 – d 27– b 8 – a 9 – b 10- c 11 – a 12 – a 13 – d 14 –a 15- b 16
– b 17 – c 18 – b 19 – d 20-a
Part - B (10 x 5 = 50)
1. Who are all competent to enter into a contract?
2. Who are not capable to enter into a contract?
3. What is meant by coercion and undue influence? Give examples.
3. Briefly explain the mistake of law.
4. What are the various cases which fall under bilateral mistake?
5. What are all void agreements?
6. Differentiate between Wagering Agreement and Contingent Contract
7. Enumerate the types of quasi contract.
8. Contracts which need not be performed?
9. By whom must contracts be performed?
10. What are the kinds of damages?
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Part - C (10 x 5 = 50)
1. Explain the position of minor.
2. What are the liabilities of minor with regard to necessaries?
3. List out the parties of unsound mind.
4. Mention the tests of soundness of mind.
5. What are the agreements opposed to public policy?
6. State the provisions of the contract act relating to the devolution of joint rights and liabilities.
7. ‘Time is the essence of performance of contract’ – Substantiate this statement.
8. Explain the various modes of discharge of contract.
9. Elucidate the rules to perform the reciprocal promises.
10. What are the remedies for the breach of contract?
Unit III
Part – A (20x1 = 10)
1. The person who promises to make good the loss is called as
a. Indemnifier b. Indemnified c. Promisee d. Offeror
2. The person who gives the guarantee is called
a. Principal debtor b. Agent c. Surety d. Creditor
3. _______ means substitution of one person for another.
a. Indemnity b. Guarantee c. Subrogation d. None of these
4. If the guarantee is obtained by means of keeping silence as to material circumstances is ____
a. Valid b. invalid c. Legitimate d. Acceptable
5. A contract of indemnity is for
a. Reimbursement of loss b. No reimbursement of loss c. Security of debt d. Giving guarantee
6. The person who delivers a thing under a contract for return at a specified time or under specified
conditions is ____
a. Bailor b. Bailee c. Pawnor d. Pawnee
7. Delivery of goods as security for a loan or fulfillment of and obligation is ____
a. Indemnity b. Guarantee c. Bailment d. Pledge
8. It is one in which neither the bailor not the bailee is entitled to any remuneration.
a. Gratuitous bailment b. Non gratuitous bailment c. Lien d. Charge
9. A method of creating a charge over the movable assets is called as
a. Mortgage b. Lien c. Custody d. Hypothecation
10. _____ relates to immovable property.
a. Pledge b. Charge c. Hypothecation d. Mortgage
11. An agent is employed to bring the principal into
a. Business b. Social relationship c. Legal relationship d. Contract
12. When a person, by his conduct or by statement, leads willfully another person to believe that a
certain person is his agent, he is
a. Active agent b. Estoppel c. Broker d. Commission agent
13. An agent may act on behalf of another without his knowledge or consent is
a. Principal b. Servant c. Agency by ratification d. Agency by operation of law
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14. An agent who guarantees the solvency of those whom he introduces to his principal is
a. Mercantile agent b. Broker c. Factor d. Del credere agent
15. The principal is liable for all acts of the agent done within the scope of his _____
a. Business b. Authority c. Assets d. Liabilities
16. Agency by holding out is a branch of
a. Agency by necessity b. Agency by estoppel c. Sub agent d. Substituted agent
17. Sec. 221 confers an agent the right of
a. Subrogation b. Compensation c. Lien d Stoppage in transit
18. Particular lien may be
a. Express b. Implied c. Express or implied d. None of these
19. Factor is a type of
a. Mercantile agent b. Non mercantile agent c. Estate agent d. None of these
20. The best example for non mercantile agent is
a. Broker b. Factor c. Commission agent d. Wife
Answers: 1 – a 2 – c 3 – c 4 – b 5 - a 6 – a 7 – d 8 – a 9 – d 10 - d
11 – c 12 – b 13 – c 14 –d 15 - b 16 – b 17 – c 18 – c 19 – a 20 – d
Part - B (10 x 5 = 50)
1. What are the rights of indemnifier? When does his liability commence?
2. What are the kinds of guarantee?
3. ‘The liability of the surety is secondary and co-extensive with that of the principal debtor’ – Comment.
4. Define “bailment” and explain its essential features (or) requisites.
5. What are the kinds of bailment?
6. . Explain the various kinds of agents.
7. List out the rights and duties of an agent.
8. Explain the various rights of principal.
9. Explain the implied authorities of the agent.
10. Discuss the liabilities of agent to third parties.
Part - C (10 x 5 = 50)
1. Define guarantee. What are the essential features (or) legal rules of guarantee?
2. Differentiate between contract of Indemnity and Guarantee
3. Discuss the rights of surety against i. The creditor ii. The principal debtor and iii. Co-sureties.
4. How can a surety discharge himself from liability?
5. Explain the duties and rights of bailor and bailee.
6. Explain the terms ‘particular lien’ and ‘general lien’ . Briefly explain the persons who can employ
the right of general lien.
7. Differentiate between bailment and pledge.
8. Define agent and Principal. What are the essentials of Relationship of agency?
9. Briefly explain the rules regarding the creation of agency.
10. How can an agency be terminated and explain the effect of the termination of the agency.
Unit IV
Part – A (20x1 = 10)
1. The term ‘goods’ under Sale of Goods Act, 1930 does not include ___
a. Goodwill b. Actionable claims c. Stocks and shares d. Harvested crops
2. A contract for the sale of ‘future goods’ is ____
a. Sale b. Agreement to sell c. Void d. Hire purchase contract
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3. A stipulation in a contract of sale of goods whose violation by seller gives a right of rescission to
buyer is called as ____
a. Guarantee b. Warranty c. Condition d. Term
4. Doctrine of caveat emptor means
a. Let the seller beware b. Let the buyer beware
c. Let the creditor beware d. None of these
5. When the unpaid seller has parted with the goods to a carrier and the buyer has become insolvent,
he can exercise
a. Right of lien b. Right of stoppage in transit
c. Right of resale d. Right of withholding delivery
6. A contract for the sale of goods where the property would pass to the buyer on payment of total
price would be
a. Sale b. Agreement to sell c. Hire purchase contract d. Sale on approval
7. The unpaid seller has the right of stoppage of goods in transit only where the buyer
a. Becomes insolvent b. Refuses to pay price c. Acts fraudulently d. All of these
8. Sale of goods act 1930 deals with the
a. Movable goods only b. Immovable goods only
c. Both movable and immovable d. All goods except ornaments
9. The condition and warranties may be in the form of
a. Express b. Implied c. Either a or b d. None of these
10. Which of the following is not a form of delivery?
a. Constructive b. Structured c. Actual d. Symbolic
11. Mercantile agent is having an authority to
a. Sell or consign goods b. Raise money on the security of goods
c. Sell or buy goods d. Any of the above
12. Contract of sale is
a. Executory contract b. Executed contract c. Both of the above d. None of the above
13. In which form of the contract, the property in goods passes to buyer immediately.
a. Agreement to sell b. Hire purchase c. Sale d. Installment to sell
14. An unpaid seller has the right against
a. Good only b. The buyer only c. Both goods and buyer d. None of these
15. The essence of a right of lien is to
a. Deliver the goods b. Retain the possession c. Regain the possession d. None of these
16. An auction sale is complete on the
a. Delivery of the goods b. Payment of price c. Fall of hammer d. None of these
17. If a agrees to deliver 100 kgs of sugar to B in exchange of 15 meters of cloth, then it is
a. Contract of sale b. Agreement to sell c. Sale on approval d. Barter
18. Seller has the right of resale where
a. Goods are perishable b. Seller has reserved with such right
c. Seller gives notice d. All of these
19. Sale of goods act came into force on
a. 15th March 1930 b. 1st July 1930 c. 30th July 1930 d. 30th June 1930
20. The person who buys or agrees to buy goods is known as
a. Consumer b. Buyer c. Both a and b d. None of the above
Answers: 1 – b 2 –b 3 –c 4 – b 5 - b 6 – b 7 – d 8 – a 9 – c 10 – b 11 – d 12 - b 13 – c
14 – c 15 – b 16 – c 17 – d 18 –d 19 - b 20 – b
Part - B (10 x 5 = 50) 1. What is meant by contract of sale? What are the essentials of a contract of sale?
2. What do you mean by sale and agreement to sell? Differentiate between sale and agreement to sell.
3. Explain the classification of goods.
4. Give a short note on the effect of destruction of goods.
5. State the document of title to goods.
6. Discuss the payment of price in the contract of sale.
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7. What do you mean by earnest?
8. Write the differences between condition and warranty.
9. Describe the implied conditions and warranties.
10. Briefly explain the doctrine of caveat of emptor.
Part - C (10 x 5 = 50) 1. Explain the document of title to goods.
2. What are the stages in the performance of contract of sale of goods by a seller?
3. When does the property in goods sold pass from the seller to buyer in the contract of sale of goods?
4. Explain the rules for ascertaining when the property in goods passed to the buyer.
5. State the exceptions to the rule ‘No one can pass a better title what he himself has’.
6. What are the rules available regarding the delivery of goods?
7. What are the rights and duties of buyer?
8. Who is unpaid seller? What are the rights of unpaid seller?
9. What do you mean by Auction Sale? Explain the rules regarding the auction sale.
10. Discuss the exceptions to the rule of ‘caveat emptor’.
Unit V
Part – A (20x1 = 10)
1. The most important element in partnership is
a. Business b. Sharing of profits
c. Agreement d. Business to be carried on by all or any one of them acting for all.
2. The maximum number of partners is mentioned in
a. The Partnership Act b. General Clauses act c. Companies Act d. Societies Act
3. A firm is the name of
a. The partners b. Minors in the firm c. Business under which the firm carries on business
d. Collective name under which it carries on business
4. In the absence of agreement to the contrary, all partners are
a. Not entitled to share profits b . Entitled to share in capital gain
c. Entitled to share in proportion to their ages d. Equally
5. A minor is
a. A partner of a firm b. Representative of the firm c. Entitled to carry on the business
d. Entitled to the benefits of the firm
6. Partnership at will is one:
a. Which does not have any deed b. Which does not have any partner
c. Which does not provide for how long the business will continue
d. Which can not be dissolved.
7. Active partner is one who
a. Takes part in the business of the firm b. Actively participate in cocurricular activities
c. Actively shares the profits d. Makes a show of authority
8. Every partner has the right to
a. Take part in the business of the firm b. To share exclusive profit
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c. Use the property of the firm for personal purpose d. Pay taxes
9. Partners are
a. Principal’s at will of agents b. Agent of the firm
c. Representatives of the firm d. Co-partners of the firm
10. A partner can retire on
a. Reaching the age of superannuation
b. On the balance in the capital account reaching certain amount
c. In accordance with partnership deed
d. On the conditions of his nominee becoming a partner
11. A partner can be expelled if
a. Such expulsion is in good faith b. Majority of the partner agrees such expulsion
c. The expelled partner is given an opportunity to start a business
d. Compensation is paid
12. Death of a partner has the effect of
a. Dissolving the firm b. Result in continuance of the business of the firm
c. His heirs joining in the firm d. Computation of profit upto the death of a partner
13. Registration of the firm is
a. Compulsory b. Optional c. Occasional d. None of these
14. An unregistered firm can not claim
a. Set on b. Set off c. Set on and set off d. None of the above
15. On dissolution, the partners remain liable to till
a. Accounts are settled b. Partners dues are paid off
c. Public notice is given d. Registrar strikes of the name.
16. Which of the following is not disability of an unregistered firm?
a. It can file suit against third parties b. Its partners can not file suit against firm
c. It can not claim a set off exceeding Rs. 100
d. It can not be sued by third parties
17. Which of the following acts are not included in the implied authority of a partner?
a. To buy or sell on account of partners b. To borrow money for the purpose of firm
c. To enter into partnership on behalf of firm
d. To engage a lawyer to defend actions against firm
18 . Reconstitution of firm takes place in case of
a. Admission of partners b. Retirement of partner c. Expulsion / Death of partner
d. All of these
19. A new partner can be admitted in the firm with the consent of
a. All the partners b. Simple majority of all partners c. Expulsion / Death of partner
d. New partners only
20. A partner may be retired from an existing firm
a. With consent of all partners b. As per express agreement
c. By written notice in partnership at will d. All of these
Answers:
1 –d 2 – c 3 –d 4 – d 5 –d 6 – c 7 –a 8 – a 9 –a 10 – c 11 –a 12 –a 13 – b 14 – b 15- c
16 – d 17- c 18 – d 19 – a 20 - d
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Part - B (10 x 5 = 50)
1. What are the essential elements of partnership?
2. Distinguish between partnership and club.
3. Distinguish between partnership and Hindu Undivided Family.
4. Differentiate between partnership and association.
5. Give a short not co-ownership.
6. What are the various types of partnership?
7. State the consequences of non registration of partnership.
8. Specify the nature of partnerhip.
9. When does the court dissolve the partnership firm.
10. When can be the partnership firm be dissolved without the order of the court.
Part - C (10 x 5 = 50)
1. Differentiate between partnership and company
2. Who are the various types of partners?
3. State the minor’s position in partnership.
4. Discuss the rights of partners.
5. Enumerate the duties of partners.
6. Describe the procedures for the registrations of partnership.
7. Discuss the various modes of dissolution of partnership firm.
8. List out the liabilities of partners.
9. ‘The acts done by the partners are the acts done by the partnership firm’ – Justify.
10. Elucidate the ‘Principal - Agent’ relationship among the partners.
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KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS)
COIMBATORE
DEPARTMENT OF COMMERCE WITH PROFESSIONAL ACCOUNTING (UG)
QUESTION BANK – 2018-2019
SUBJECT:Banking theory law and practice SUBJECT CODE: 18UPA204/ 16UPA619
Staff-in-charge: Dr.R.Maharajothi Priya
Class: I B.Com PA / (III B.Com PA)
Unit - I
SECTION A
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1.We should keep our savings with banks because
a) It is safe b) Earns interest c) Can be withdrawn anytime d) All of above
2. Minimum age required to open SB account in the bank
a) 8 years b) 10 years c) 12 years d) None of above
3. Bank having maximum number of branches in India
a) Reserve Bank of India b) State Bank of India c) Punjab National Bank d) Bank of Baroda
4. India has different categories of commercial banks. Which of the following is not a commercial
bank ?
A)Foreign Bank B)Commodity Banks C)Nationalized Banks D)Co)-operative Banks
5. -----------is an institution which deals in money and credit.
a. bank b. Industry c. Government d. institution
6.--------- is a bank of a nation
a. foreign bank b. Domestic bank c. Central bank d. mortgage bank
7. Unit banking is originated and developed in -----------
a. U.S.A b. Britain c. Germany d. Russia
8. banks in india require license from -----------
a. Branch bank b. SBI c. IDBI d. RBI
9.under mixed banking the commercial banks perform ---------------
a. group function b. Dual function c. Single function d. investment function
10. corporate banking refers to dealing with limited --------------
a. small customers b. Rural customers c. Urban customers d. large-sized customers.
11. ---------- are the main stay of economic progress of a country
a. transaction b. individual c. Banks d. government
12. banks regulate flow of national savings into various ------------
a. productive channels b. Private channels c. Public channels d. group channels
13. lead bank scheme was introduced in the year -----------
a.1966 b.1969 c.1970 d. 1952
14. service area approach is an important development in the ------------
a. urban lending b. Rural lending c. Semi urban lending d. all the abov
15.the self employment scheme was formulated by -------------
a. government of india b. Government of andra c Government of kerala
d. Government of UP
16.The formers’ service societies have been organised for ------------
a. industry b. Organisation c.Selfhelp group d. agriculture
17.the concept of priority sector was evolved with the introduction of social control over -----
a. banks b.individuals c. Workers d. marginal farmers
18. After nationalisation the names of the banks were ----------
a. changed b. Renamed c. Retained d. removed
19.the nationalisation of commercial banks increased the role of ----------
a. private bank b. Cooperative bank c. Public sector bank d. commercial bank
20. central banks are established by the government for overall ------------
a. monetary control b. Credit control c. Loan control d. deposits control
SECTION - B
1. What is banking ?
2. Write the features of banking.
3. Write short notes on commercial banks.
4. What is exchange bank?
5. How international bank play a role in business?
6. Define unit banking. Write its advantages.
7. Write short notes on branch banking
8. Draw an organisational structure of branch banking.
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9. State the importance of banking in economic progress.
10. Why the banking system needed for the economy?
SECTION - C
1. Explain in detail about central bank and industrial development bank.
2. Describe the role of cooperative banks in India.
3. Briefly explain the importance of savings bank and land mortgage banks.
4. Compare in detail the indigenous and supranational bank.
5. Write in detail about advantages and disadvantages of group banking.
6. On the basis of lending operations, how the banks are classified?
7. Explain functions of relationship banking, narrow banking and regional banking.
8. Illustrate banks and economic development with examples.
9. Clarify in detail the importance of innovative schemes in the banking industry.
10. Write in detail about the role of commercial bank in economic development.
Answer keys
1.D 2.B 3.B 4.D 5.A 6.C 7.A 8.D 9.B 10.D 11.C 12.A 13.B 14.B 15.A 16.D 17.A 18.C
19.D 20.A
UNIT – II
SECTION-A
1. Commercial banks in India are organised as joint stock companies and known as ------a.
Banking companies b. Nationalised companies c. Scheduled companies d. organised
companies.
2. The nationalised banks include fourteen banks nationalised on ---------------
a.5thapril 1980 b. 15thapril 1980 c. 6th may 1987 d. 20thjune 1990
3. in recurring deposit the customer can deposit money at -----------
a. every month b. Everyday c. Every year d. every week
4. current account are maintained by the people who need to have a ----------------
a. profit balance b. Regular balance c. Irregular balance d. liquid balance
5. ---------- facility is given to holders of cuurent account only.
a. loan b. Credit c. Overdraft d. discounts
6. the volume of credit creation is more during --------------
a. prosperity b. Recession c. Stagnation d. all the above
7. The capacity to expand credit is restricted when there is --------------
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a. decrease in money circulation b. Increase in money circulation c. No money circulation d.
more inflation
8. the reserve bank of india started functioning from ---------------
a. 4th march 1999 b, 16thjune 1945 c. 23rd November 1930 d. 1stapril 1935
9. --------- banks are required to maintain a minimum cash balance with RBI.
a. scheduled commercial bank b. Exchange bank c. Rural bank d. cooperative bank
10. ----------- refers to providing startup capital to a new and risky business
a. share capital b. Return back loan c. Venture capital d. special capital
11. ------------ was the first to start factoring services
a. RBI b.IDBI c. IDI d. SBI
12. one cannot draw cash or deposit cash through -------------
a. ATM machine b. Phone banking c. Online banking d. direct banking
13. ----------- is a small plastic card issued by bank to purchase goods without account balance.
a. credit card b. Debit card c. Visa card d. all the above.
14. ------------- is used for withdrawing cash or purchasing goods.
a. otp number b. Password c. Account number d. pin number
15. to close an account the customer should give bank a -------------
a. notice in writing b. Oral information c. Submit document d. pay dues
16. e- banking provides services to the customers for -----------
a. limited hours b. 12 hours c. 8 hours d. 24 hours
17. electronic banking takes place through --------------
a. EFT b. EES c. TTF d. RRFG
18. ------------ facilitates payment for purchases with a debit /credit card
a. ATM b. Point of sale transfer c. Online transfer d. payment transfer.
19. the mobile users who become online internet users do -------------
a. commerce b. Traditional commerce c. M-commerce d. instant trade
20. SMS stands for -----------
a. short messaging service b. Simple message service c. Single message service
d. short mobile service
SECTION - B
1. Write short notes on nationalised and non scheduled banks.
2. Classify various forms of loans and advances by commercial banks
3. What are the primary functions of commercial banks?
4. How would you differentiate primary and derivative deposits?
5. Loans make deposits – discuss.
6. Do banks create credit? What are the limitations to create credit?
7. Write short notes on RBI
8. What is banknet?
9. Define ATM. List out its advantages.
10. What does the NEFT mean?
SECTION - C
1. How do commercial banks in india employ their funds?
2. Analyse the assets and functions of modern commercial banks.
3. Explain the process of multiple expansion of bank deposits.
4. Banks are not merely purveyors of money but also an important sense manufacturars of money.
Discuss.
5. Write in detail abount management and functions of RBI.
6. Explain credit control measures by RBI.
7. Describe the role of venture capital.
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8. Briefly explain the advantages and disadvantages of e-banking.
9. Explain RTGS concepts in detail.
10. How would you differentiate debit card and credit card? Explain with an example.
Answer keys
1.A 2.B 3.A 4.D 5.C 6.A 7.A 8.D 9.A 10.C 11.D 12.B 13.A 14.D 15.A 16.D 17.A 18.B
19.C 20.A
UNIT – III
SECTION-A
1. When a person opens an account with a banker, there arises a -----------
a. Personal relationship b. Obligatory relationship c. Contractual relationship d.
equivalent relationship
2. When a banker receives gold ornaments and important documents, he becomes a ------------
---
a. Bailee b. Bailor c. Debtor d. creditor
3. The agent principal relationship exist between a banker and his --------------
a. Employee b. Customer c. Administrator d. depositer
4. A banker’s obligation to pay a cheque is subject to the amount available in ---------
a. OD account b. Drawer’s account c. Merger account d. deposit account
5. The cheque will be honoured only when it is drawn as per requirements of ---------
a. Law b. Customer c. Central bank c. Banker
6. the right to retain goods as security is known as -----------
a. possession b. Freedom c. Lien d. entrust
7. a banker is a ----------- debtor
a. privileged b. Serviced c. Rendered d. obliged
8. a banker’s lien is always a --------------
a. specific b. General c. Positive d. negative
9. accepting a bill and making it payable at the bank is called ------------
a. domiciliation b. Collection c. Clearance d. insolvency
10. -------------- is necessary to exercise a lien
a. Agreement b. Contract c. Acceptance d. no agreement
11. the word customer signifies a relationship in which ------------ is of no essence.
a. Mutual acceptance b. Duration c. Deposit d. withdrawal
12. A negative lien does not give any right of possession to the --------------
a. Creditor b. Supplier c. Sender d. receiver
13. A banker can exercise his particular lien on the safe ------------
a. Regular articles b. Irregular articles c.personalised articles d. custody articles
14. When funds are deposited for a specific purpose, banker becomes a -----------
a. Trustee b. Agent c. Statutory d. beneficiary
15. Negative lien are also known as ---------
a. Possessory lien b. Non-possessory lien c. Collateral lien d. compelled lien
16. RBI is empowered to collect customers credit information from banks under-------
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a. Sec.45B b. Sec.46A c. Sec.88C d.Sec. 29B
17. The right to set-off is nothing but a right to combine ---------------
a. Two debts b. Two or more credits c. Two or more accounts d. cheques
18. As soon as a banker receives a garnishee order absolute, he should -------------
a. Close the a/c of customer b. Stop the a/c operation c. Either close or stop a/c
operation depending upon wording d. all the above
19. In general, while appropriating payments the first option is given to -------------
a. Creditor b. a/c holder c. Debtor d. partner
20. The rule in Clayton’s case applies only to a -------------
a. Running account b. Closed account c. Transferred account d. combined a/c
SECTION - B
1. Write short notes on general relationship.
2. What is special relationship?
3. A banker is liable to pay damages for wrongful dishonour of cheques. Discuss.
4. Clarify banker’s lien towards its customers.
5. How the state of customer’s account is disclosed by the banker as per law?
6. Discuss disclosure of state of customer’s account in the interest of bank.
7. What is right to set-off?
8. A banker can exercise his right to set-off without prior notice – discuss.
9. What is the rule laid down in Clayton’s case?
10. Discuss the banker’s right to close the account of a customer.
SECTION - C
1. Explain statutory obligation of banker to honour cheques.
2. Describe the basic relationship between a banker and a customer.
3. What are the circumstances for exercising lien? Explain.
4. A banker has duty to maintain secrecy of customer’s accounts. Justify
5. List out the general precautions in disclosing state of the account to a customer.
6. Discuss about the right to claim incidental charges.
7. Distinguish between closing of an account and stopping operation of an account.
8. What are the major rights of a banker? Explain.
9. Differentiate privileged debtor and privileged creditor.
10. Explain the right to charge compound interest and exemption from law of limitation act.
Answer keys
1.C 2.A 3.B 4.D 5.A 6.C 7.A 8.B 9.A 10.D 11.B 12.A 13.D 14.A 15.B 16.A 17.C 18.C
19.C 20.A
UNIT – IV
SECTION-A
1. A customer is first asked to sign an application form to -------------
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a. Open an account b. To transfer account c. To stop operation d. to cancel account
2. The application form contain --------------
a. Fee amount b. Deposit amount c. Rules and regulations d. kind of deposit
3. Every new customer is expected to give three or more -------------
a. Specimen signature b. E- signature c. Digital signature d. verification sign
4. Failure to get a letter of introduction may land a customer in ----------
a. Delay b. Complex procedure c. Trouble d. cancellation
5. A letter of introduction to open an account serves as a precaution against ------------
a. Fraud b. Transaction c. Change account d. deposit
6. at the time of opening new accounts, it is always advisable to have an -----------
a. interaction b. Interview c. Advise d. preparation
7. bankers allow a new party to open an account only in -----------
a. card b. Cash c. Cheque d. online .
8. current account is an account which is generally opened by ------------
a. old people b. All customers c. Children d. business people
9. a fixed deposit is one which is ---------------
a. repayable b. Transferable c. Extendable d. all the above
10. at the time of opening deposit account, the banker issues a ------------
a. bill b. Currency c. Cheque d. receipt
11. ------------ deposit is intended primarily for small scale savers.
a. Savings b. Current c. Joint d. fixed
12. a ----------- is a person who has not attained the age of 18.
a. Adult b. Children c.minor d. insolvent
13. a guarantee given by a minor is ------------
a. valid b. Liable c. Agreed d. not valid
14. a lunatic is a person of ---------------
a. unsound mind b. Sound mind c. Physically challenged d. none of the above
15. ----------- firm is an association of two or more persons
a. Joint stock b. Partnership c. Strategic d. international
16. No partner has an implied power to sell property of his firm under --------------
a. Sec.19 of partnership act b. Sec.8 of companies act c. Sec.3 of sales act d. sec.33 of
contract act
17. a joint stock company is an artificial person created by -------------
a. members b. Organisation c. Law d. partners
18. a joint account is opened by two or more ----------------
a. bankers b. Directors c. Individuals d. women
19. a joint account can be opened in the name of a ------------
a. husband and wife b. Friends c. Neighbours d. shareholders
20. partnership is the relationship between persons who have agreed to share ------------
a. capital b. Infrastructure c. Labour d. profit
SECTION - B
1. Write short notes on importance of deposits.
2. State the basic procedure of submitting an application form to open account.
3. What does the letter of introduction mean in opening bank account?
4. What are all the documents associated with opening an account?
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5. What is bank passbook? Write its importance.
6. Write short notes on current deposit account.
7. What is savings deposit account?
8. Who is minor? How does banker treats him in opening bank account?
9. List out the privileges of a minor guaranteed by law.
10. Write the nature of partnership firm.
SECTION - C
1. Explain general precautions for opening bank account.
2. Distinguish between current deposit account and savings deposit account.
3. How would you open fixed deposit account? Explain its procedure.
4. Describe insurance linked savings bank deposit and recurring deposit.
5. Explain briefly on infant. Write the banker’s duty towards infant.
6. Who is lunatic? Write the banker’s duty towards lunatic.
7. Explain in detail about partnership firm
8. Explain in detail about Joint Stock Company.
9. What are procedures for opening joint account? Explain all the elements.
10. Compare special features of joint stock and partnership firm
Answer Keys
1.A 2.C 3.A 4.C 5.A 6.B 7.B 8.D 9.A 10.D 11.A 12.C 13.D 14.A 15.B 16.A 17.C 18.C
19.A 20.D
UNIT –V
SECTION-A
1. Negotiability implies easy transferability from one person to another in return for -----------
-
a. Consideration b. Transaction c. Sales d. purchase
2. Negotiable instruments are governed by the negotiable instruments act of ---------
a. 1991 b. 1771 c. 1881 d. 1661
3. There is no formality to be complied with transfer of --------------
a. Non negotiable b. Negotiable c. Admissible c. Conditional
4. In India, how many instruments does the law recognises?
a. One b. Seven c. Six d. three
5. A promissory note must be in -------------
a. Writing b. Oral c. law d. crossing
6. ----------------- contains an order from creditor to the debtor to pay money.
a. Time bill b. Purchase order c. Exchange bill d. bill of exchange
7. The order stated in the bill and the promissory note must be ---------------
a. Conditional b. Unconditional c. Payable d. receivable.
8. Cheque was originally spelt as -----------
a. Check b. Cek c. Seck d. shek
9. In these days of economic civilisation, the cheque act as -------------
a. privilage b. Currency notes c. Dollars d. yen
10. A cheque is always dramn on a ---------------
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a. order b. Conditions c. Printed form d. executive form.
11. Banker’s cheques are issued on behalf of ----------
a. Customers b. Seller c. Distributer d. working group
12. ------------ cheque is always meant for local payment only.
a.customer b. Banker c. Stakeholder d. seller.
13. a cheque without crossing is called an ------------
a.closed cheque d. drawn cheque c. Open cheque d. short cheque
14. ---------- are of paramount importance in crossing.
a. sign b. Name c. Space d. two lines
15. Not negotiable crossing is a warning to the -------------
a. paying banker b. Collecting banker c. Holder d. both a and b
16. The safest form of crossing is -----------
a. general crossing b. Special crossing c. Double crossing d. a/c payee crossing
` 17. An endorsement consists of -------------
a.one contract b. Two contracts c. Three contracts d. four contracts
18. ------------- means the transfer of legal title to a property.
a. settlement b. Amendment c. Order d. assignment
19. If the cheque is torn into pieces, then the banker should ------------
a. not honour b. Honour c. Transfer d. forward
20. A paying banker is under a legal obligation to honour customer’s -----------
a. request b. Guideline c. Mandate c. Suggestion
SECTION - B
1. What is negotiable instrument?
2. Write short notes on negotiable instruments act.
3. List out the features of negotiable instrument.
4. Draw a specimen of a promissory note and write its essentials.
5. What is cheque?
` 6. Differentiate between cheque and bill of exchange.
7. Clarify the payee column in cheque.
8. What is crossing of a cheque?
9. Define general crossing. What are its essentials?
10. Write the significance of endorsement.
SECTION-C
1. Explain in detail about types of negotiable instruments
2. What are the salient features of a cheque?
3. The drawing of a cheque requires special attention. Discuss.
4. Explain i) the ‘amount column’ and ‘signature column’ of a cheque.
5. Discuss in detail the provisions given under Sec.138 of the NI act.
6. Distinguish between a cheque and a draft and bring out clearly the risks of honouring a
post-dated cheque.
7. Explain the different kinds of crossing with examples and write their significance.
8. Bring out clearly the significance of not negotiable crossing and a/c payee crossing.
9. Describe kinds of endorsement with examples.
10. Clarify in detail about the regularity of endorsement.
Answer Keys
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1.A 2.C 3.B 4.D 5.A 6.D 7.B 8.A 9.B 10.C 11.A 12.B 13.C 14.D 15.C 16.D 17.B 18.D
19.A 20.A
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II B.COM PA
KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
Class: II B.COM (PA) Semester –III
Sub. Name: FINANCIAL ACCOUNTING Sub. Code: 18UPA305
Prepared By: S. Arumugaraj
UNIT - I
Section - A
1. Depreciation is a process of ____________.
a) valuation. b) allocation. c) reduction. d) appreciation.
2. The main objective of providing depreciation is __________.
a) to calculate true profit. b) to calculate financial position.
c) to reduce tax burden. d) to reduce profit.
3. Depreciation arises because of ____________.
a) fall in the market value of an asset. b) physical wear and tear.
c) fall in the value of money. d) rise in the value of money.
4. Depreciation applies to ____________.
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a) current assets. b) liquid assets. c) intangible assets. d) fixed assets.
5. Straight line method is also called as______.
a) written down value method. b) annuity method.
c) depreciation fund method. d) fixed installment method.
6. Under Straight line method the amount of depreciation is:
a) Increasing every year b) Decreasing every year
c) Fixed for all the years d) Fluctuating every year
7. Under this method of depreciation, the balance in the asset account will not be reduced to
zero.
a) Straight line method. b) Written down value method.
c) Annuity method. d) Depreciation fund method.
8. Estimated sale value of the asset at the end of its economic life is known as
a) Purchase value b) Market value c) Written down value d) Residual value
9. The permanent, continuing and gradual shrinkage in the book value of a fixed asset is called
a) depreciation b) appreciation c) reduction d) compensation
10. Under depreciation fund method, the amount of depreciation is calculated from
a) log tables b) sinking fund tables c) annuity tables d) present value tables
11. Under depreciation fund method depreciation is charged to ______.
a) P&L account b) Trading account c) Balance sheet d) P&L appropriation account
12. The asset account appears in the books at original cost when a _________.
a) P & L account is maintained b) provision for depreciation a/c is maintained
c) balance sheet is maintained d) provision for depreciation a/c is not maintained
13. Income tax authorities recognized method is
a) Straight Line Method b) Written Down Value Method
c) Annuity Method d) Depreciation Fund Method.
14. Loss on sale of Depreciation fund investment is transferred to ________.
a) Lease A/c b) Depreciation Fund A/c
c) Profit & Loss A/c d) Interest on depreciation fund investment A/c
15. Profit on sale of Depreciation fund investment is transferred to ________.
a) Lease A/c b) Profit & Loss A/c
c) Depreciation Fund A/c d) Interest on depreciation fund investment A/c
16. Depreciation is charged on the ____________.
a) market value b) book value c) purchase value d) sale value
17. Under machine hour rate method, the depreciation charged on the basis of
a) Number of employees b) Hours utilized c) Rate fixed by Govt d) Rate fixed by Firm
18. Under insurance policy method the premium is paid in the ______.
a) beginning of each year. b) middle of every week
c) middle of each year. d) maturity date.
19. If the asset is sold, the provision for depreciation relating to the asset sold is transferred to
a) Asset account. b) Liability account. c) P & L account d) Trading account.
20. Provision for depreciation account appears on the ______.
a) Assets side of the Balance sheet b) Liability side of the Balance sheet.
c) P & L account debit side d) P & L account credit side
Answer Key
1 2 3 4 5 6 7 8 9 10
b a b d d c b d a b
11 12 13 14 15 16 17 18 19 20
a b b b c b b a a b
Section - B
1. Distinguish between Straight line method and Written down value method of depreciation.
2. A company purchased a plant for Rs.50,000. The useful life of the plant is 10 years and the
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residual value is Rs.10,000. Find out the rate of depreciation under the straight-line method.
3. A machine purchased on 01-07-2013 at a cost of Rs.14,000 and Rs.1,000 was spent on its
installation .The depreciation is written off at 10% on the original cost every year.
The books are closed on 31st December each year. The machine was sold for Rs.9,50 on
31stMarch 2016. Show the Machinery account for all the years.
4. On 1st Jan 2009 machinery was purchased by ‘X’ for Rs 50,000. On 1st July 2010 additions
were made to the extent of Rs 10,000. On 1st April 2011, further additions were made to the
extent of Rs 6,400. On 30th June 2012, machinery the original value which was Rs 8,000 on
1s Jan2009, was sold for Rs.6,000. X closes his books on 31st December each Year.
Show the Machinery account for the years from 2009 to 2012 in the books of ‘X’ if
depreciation is charged 10% p.a. by the Straight line method.
5. Ram & co Purchased a machinery for Rs.90,000 on 1st April 2001.They spent Rs.10,000 for
installation charges. But the machinery was brought into use from 1st October 2001.It further
purchased a machinery costing Rs.20,000 on 1st January 2004.Accounts are closed 31st March
every year. Depreciation is to be provided at the rate of 10 % per annum on Written Down value
Method. Prepare Machinery account and Depreciation account for three years.
6. A Lease is purchased on 1st January 2010 for the term of 5 years on payment of Rs.40,000. It
is proposed to depreciate the Lease by the Annuity method charging 5 percent interest. If the
annuity of Re.1 for 5 years at 5% is Re.0.230975. Show the Lease A/c for the full period.
7. Compare depreciation fund method with insurance policy method.
8. Explain the causes for depreciation.
9. Kumaran brother organisation purchased one machinery on 1st Jan, 2000 valued Rs.5,00,000.
That machinery sold for Rs.4,00,000 on 1st Jan, 2002. That organisation depreciated 15% on
straight line method every year. Accounts are closed on 31st Machinery year.
Prepare Machinery account and Depreciation account.
10. A Machine was acquired on 1st April 2002 at a cost of Rs 2,70,000 , the cost of installation
being Rs 30,000. It is expected that its total life will be 60,000 hours. During 2002, it worked
for 15,000 hours and during 2003 for 24,000 hours. Write up the Machinery account for the
years 2002 and 2003.
Section – C
1. Discuss the various methods for providing depreciation.
2. On 1st Jan 2009 machinery was purchased by ‘X’ for Rs 50,000. On 1st July 2010 additions
were made to the extent of Rs 10,000. On 1st April 2011, further additions were made to the
extent of Rs 6,400. On 30th June 2012, machinery the original value which was Rs 8,000 on
1s Jan2009, was sold for Rs.6,000. X closes his books on 31st December each year.
Show the Machinery account for the years from 2009 to 2012 in the books of ‘X’ if
depreciation is charged 10% p.a. by the Diminishing balance method.
3. Messers. Sarojini Balu & Co purchased a machine for Rs.22,000 on 1st Jan 2002. The
estimated life of the machinery is 10 years , after its break-up value will be Rs.2,000.
Depreciation has to be charged at 21% on Diminishing balance. There was an addition to the
original plant on 1st Jan.2004 to the value of Rs.4,000.You are required to prepare machinery
account for the first three years and also prepare depreciation a/c.
4. Distinguish between Reserves and Provisions.
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5. A company purchased a 3 years` Lease on 1-1-2010 for Rs.25,000. It is decided to provide for
the replacement of lease at the end of 3 years by setting up a Depreciation fund. It is expected
that the investment will fetch interest at 5%. Sinking fund tables show that to provide requisite
sum at 5% at the end of 3 years an investment at Rs.7,932 is required every year. Investments
are made to the nearest rupee.
On 31st December 2012, the investments were sold for Rs. 15,250. On 1-1-2013, the
same lease was renewed for a further period of 3 years by payment of Rs.30,000. Show the
journal entries and give the Lease A/c, Depreciation fund A/c ,Depreciation fund investment
A/c ,Interest on Depreciation Fund Investment A/c and New Lease A/c.
6. Machinery was purchased on 1.1.2012 for Rs.40,000.On 30th June 2012 ,another second hand
machine was purchased for Rs.15,000 and Rs.5,000 was spent for repairs. On 30th June 2013
the second machine was sold for Rs.15,000. Prepare machinery account after allowing
depreciation of 10% p.a on the written down value.
7. A company, whose accounting year is calendar year, purchased on 1.1.2003 a machine for
Rs.40,000. It purchased further machinery on 1st October 2003 for Rs. 20,000 and on 1st July
2004 for Rs.10,000. On 1.7.2005, 1/4th of the machinery installed on 1.1.2003 became
obsolete and was sold for Rs. 6,800. Show how the machinery account would appear in the
books of the company for all the 3 years under diminishing Balance Method. Depreciation is
to be provided at 10% p.a.
8. On 1st January 2002, a merchant purchased a four years’ lease of premises costing Rs 50,000
It has been decided to provide for its replacement by means of an Insurance Policy, the annual
premium on which amounts to Rs 12,000. Show the necessary accounts recording the
depreciation and replacement of the lease.
9. A company purchased a lease for three years for Rs.1,20,000 on 1st January 1998 and
decided to provide for its replacement by means of an insurance policy for Rs.1,20,000. The
annual premium is Rs.38, 000. On 1st January 2001, the lease is renewed for a further period
of three years for Rs.1,20,000. Journalize the above transactions and prepare ledger accounts.
10. A Machine was purchased on 1st January 2004 at a cost, of Rs 50.000 and the cost of
installation Rs 8,000 his expected that its total working life will be 1,00,000 hours. The scrap
value may be Rs 3,000. During the year 2004, the machine worked for 1,200 hours and in
2005 for 1,350 hours.
Calculate the deprecation for 2004 and 2005 and prepare ledger accounts.
UNIT - II
Section – A
1. Single entry system of accounting is usually adopted by ________.
a) Small firms b) Joint stock companies
c) Co-operative societies d) Banking Companies
2. Statement of affairs is just like a _______
a) Profit&Loss a/c b) Trading a/c c) Cash book d) Balance sheet
3. Sales Rs.1,50,000 and Gross profit is 20% on Sales. What will be the cost of goods sold?
a) Rs.1,80,000 b) Rs.1,20,000 c) Rs.30,000 d) 1,33,667
4. Interest on capital is calculated on which capital-
a) Opening Capital b) Closing Capital c) Closing Stock d) Opening Stock
5. Opening stock of Rs. 20,000, Purchases Rs.1,20,000, Closing Stock Rs.60,000, Gross Profit
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on sales is 20%. Then the amount of sales is ______.
a) Rs. 80,000 b) Rs. 1,40,000 c) Rs. 1,80,000 d) Rs. 1,00,000
6. Which account is prepared to know cash purchase or cash sales?
a) Trading Account b) Debtor’s Account c) Creditor’s Account d) Cash A/c
7. Single Entry System is ________.
a) Complete and scientific system b) Incomplete and unscientific
c) Incomplete and scientific d) Complete and unscientific
8. Which of the following one is prepared to find out the Capital?
a) Statement of Affairs b) Memorandum Trading a/c
c) Profit & Loss a/c d) Total Creditors a/c
9. Cash paid to Creditors can be calculated from the________ .
a) Total Debtors a/c b) Total Creditors a/c c) Profit & Loss a/c d) Balance Sheet
10. Cost of goods sold Rs.54000 and Gross Profit is 25% on Sales. What will be the Sales?
a) Rs.67,500 b) Rs.72,000 c) Rs.64,800 d) Rs.78,000
11. Investment account is in the nature of _________ .
a) Personal A/c b) Nominal A/c c) Capital A/c d) Real A/c
12. Difference between net worth at the beginning of the year and at the end of the year represents
a) capital balance b) cash balance c) pass book balance d) profit or loss
13. Opening capital can be found by preparing ________.
a) cash book b) bank account c) statement of affairs d) trading account
14. Investment in Land is a ________ .
a) Short Term Investment b) Long Term Investment
c) Liability d) Income
15. In case of cum-interest transaction, the price paid by the buyer is:
a) More than the real price of the securities b) Less than the real price of the securities
c) Equal to the real price of the securities d) Actual price of the securities
16. If the purchase price for the debentures includes interest for the expired period, the
quotation is said to be ______.
a) Ex-interest b) Cum-interest c) Compound interest d) Fair value
17. If the purchase price for the debentures excludes interest for the expired period, the
quotation is said to be ______.
a) Ex-interest b) Cum-interest c) Compound interest d) Fair value
18. Under single entry system in net worth method, additional capital is deducted with _______.
a) opening capital b) closing capital c) additional capital d)drawings
19. Bills payable dishonoured will be posted in _____side of bills payable account.
a) debit b) credit c) either debit or credit d) Both
20. In single entry system, net worth method is also called ________.
a) asset method b) mercantile method c) statement of affairs method d) accrual method.
Answer Key
1 2 3 4 5 6 7 8 9 10
a d b a d d b a b b
11 12 13 14 15 16 17 18 19 20
d d c b a b a c a c
Section – B
1. Distinguish between single entry system and double entry system of accounting.
2. Explain the features of single entry system.
3. Mr.Ravi maintains his book on single entry system. He gives you the following information.
Capital as on 01-01-2010 Rs.32,000;
Capital as on 31-12-2010 Rs.36,000;
Drawings during the year 2010 Rs.10,000;
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Capital introduced on August, 2010 Rs.6,000.
You are required to calculate the profit made during the year 2010.
4. From the following data ,ascertain sales made during the year by preparing memorandum
trading account. Rs.
Stock on 1-1-2010 60,000
Stock on 31-12-2010 40,000
Purchases during 2010 4,00,000
Wages paid 10,000
Rate of gross profit on sale: 20%.
5. Mohan, a retail merchant commenced business with a capital of Rs.12,000 on1.1.2014
subsequently on 1.5.2014 he invested further capital of Rs.5,000. During the year he
has withdrawn Rs.2,000 for his personal use. On 31.12.2014, his assets and liabilities
were as follows:-
Rs. Rs.
Cash at bank 3,000 Furniture 2,000
Creditors 5,000 Stock 6,000
Debtors 4,000
Calculate the profit or loss made during the year 2014.
6. Find out the profits of the business for the year 2012
Capital on 1.1.2012 Rs.20,000
Capital on 31.12.2012 Rs.30,000
Capital introduced during the year Rs. 8,000
Drawings Rs.7,000
7. From the following details calculate total sales made during the year 2005.
Debtors on 01-01-2005 Rs.17,425; Debtors on 31-12-2005 Rs.15,300;
Cash received from debtors Rs.49,200; Sales Returns Rs.3,700;
Bad debts Rs.2,500; Discounts Rs.1,800;
Bills Receivable Rs.5,000; Cash sales Rs.12,000.
8. From the following particulars you are required to calculate total purchases for the year 2008.
Bills payable on 01-01-2008 Rs.5,000; Bills Payable on 31-12-2008 Rs.7000
Creditors on 01-01-2008 Rs.6000; Creditors on 31-12-2008 Rs.4000
Cash paid to creditors during the year 2008 Rs.30,200; Return outwards Rs.1,200;
Bills payable discharged during the year 2008 Rs.8,900; Cash purchases Rs.25,800.
9. On 31.01.2013, X’ purchased for cash from Y’ four 6% Rs.100 debentures of the Mehta Ltd
at Rs.110.50 cum-interest; interest being payable on 1st June and 1st December each year.
How will you record the transaction in the books of X and Y if each party had to pay bank
commission of 25 paise per 100 on face value?
10. Ram sold to Raja 4,000 ,10 % Loan Bond of Rs.100 each at Rs.92 ex-interest on 1st February
2004. Interest is payable by the company on 31st October and 30th April each year.
Pass journal entries in the books of both the parties.
Section – C
1. Mr. Ram keeps his books by the single entry method. His position on 31st December 2007
and 31st December 2008 was as follows:
Ledger balances 31-12-2007
Rs.
31-12-2008
Rs.
Cash in hand 200 300
Cash at bank 3,000 2,000
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Stock-in-trade 20,000 19,000
Sundry debtor 8,500 14,000
Furniture 1,800 1,500
Sundry creditors 22,000 29,000
Plant and Machinery 15,000 27,000
During the year 2008, Mr. Ram introduced Rs.5,000 as further capital in his business, and
withdrew Rs.750 per month.
From the above particulars, prepare a statement showing the profit or loss made by him for the
year ended 31st Dec.2008.
2. From the following details find out the credit purchases and total purchases : -
Particulars Rs Particulars Rs
Cash purchases 29,000 Bills payable paid during the year 10,500
Bills payable (opening) 7,500 Purchase returns 1,500
Bills payable (closing) 2,500 Allowances from creditors 800
Creditors (opening) 20,000 Bills payable dishonored 300
Creditors (closing) 18,000
Cash paid to creditors 25,000
3. From the following details , prepare Trading and Profit and Loss account for the period ended
31.3.2007 and a Balance sheet on that date.
As on 1.4.2006 As on 31.3.2007
Stock 50,000 25,000
Sundry debtors 1,25,000 1,75,000
Cash 12,500 20,000
Furniture 5,000 5,000
Sundry Creditors 75,000 87,500
Other details :- Rs.
Drawings 20,000
Discount received 7,500
Discount allowed 5,000
Sundry expenses 17,500
Cash Paid to creditors 2,25,000
Cash Received from debtors 2,67,500
Sales Return 7,500
Purchase return 2,500
Cash Sales 2,500
4. Find out total Purchases and total sales from the following details.
Rs.
Opening balance of sundry debtors 50,000
Opening balance of sundry creditors 30,000
Cash collected from sundry debtors 3,00,000
Discount received 1,500
Cash paid to sundry creditors 20,000
Discount allowed 5,000
Return inwards 6,000
Return outwards 8,000
Closing balance of sundry debtors 35,000
Closing balance of sundry creditors 25,000
Cash Purchases 12,000
Cash Sales 24,000
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5. Distinguish between Balance sheet and Statement of affairs.
6. Rathinam keeps his books under single entry system. From the following information prepare
trading and P&L A/c and Balance Sheet as on 31.12.2001.
Cash balance as on 1.1.2001 4,250
Assets and Liabilities as follows:
31.12.2000 31.12.2001
Debtors 16,300 21,250
Stock 8,330 11,220
Furniture 850 850
Creditors 5,100 3,780
Other transactions :
Cash received from debtors 52,680;Cash sales 1,275; Cash paid to creditors 37,400; Cash
purchases 4,250;Salaries 10,200; Discount received 595;Rent and taxes 1,275; Discount allowed
255;Other expenses 1,530; Return inwards 850;Drawings 2,550; Return outwards 680; Additional
capital 1,700; Bad debts 170
Adjustments : Write off depreciation of 5% on furniture. Create a reserve of 1 % on
debtors for doubtful debts.
7. Mr. Mathew keeping his books under single entry system has placed the following facts
before you.
01-01-1996 31-12-1996
Rs. Rs.
Sundry debtors 18,100 19,300
Stock 15,000 14,000 Machinery
25,000 - Furniture
4,000 - Sundry creditors
11,000 12,500
Summary of cash transactions for 1996
Receipts Rs. Payments Rs.
Opening balance
Cash sales
Received from debtors
Miscellaneous receipts
Loan from David(@9%
0n 1st July)
500
6,100
75,300
200
10,000
Payment to creditors
Wages
Salaries
Expenses
Drawings
Machinery Purchased(1st
July)
Closing balance
35,000
16,000
15,000
11,000
4,000
9,500
1,600
92,100 92,100
Discount allowed were Rs.700 and Discount received were Rs.400.Bad debts written off were
Rs.800.Depreciation is to be written off: Furniture at 5% and Machinery at 10% p.a. Expenses
include insurance for Rs.500 p.a. paid upto 31st March 1997. Wages Rs.2,000 still due.
Prepare trading and profit & loss a/c and balance sheet relating to 1996.
8. Mr. X keeps his accounts on single entry system. From the following information prepare
trading and profit and loss account for the year ended 31.03.2011, together with balance sheet
as on that date: Cash book analysis shows the following
Rs. Rs.
Interest charges 100 Balance at bank as on 31-3-2011 425
Staff salaries 8,500 Cash in hand as on 31-3-2011 75
Payment to creditors 15,000 Received from debtors 25,000
Cash sales 15,000 Other business expenses 7,500
Personal withdrawals 2,000
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Further details available are:
31.03.2010 31.03.2011
Stock 9,000 10,220
Creditors 8,000 5,500
Debtors 22,000 30,000
Furniture 1,000 1,000
Office Premises 15,000 15,000
Provide 5% to interest on X’s capital balance as on 1-4-2010. Provide Rs.1,500 for doubtful
debts and 5% depreciation on all fixed assets. 5% Group Incentive Commission
to staff has to be provided for on net profit after meeting all expenses and the commission.
9. Mr. Investor held on 01.01.2012 Rs.2,00,000 of 3.5% Government loan at Rs.1,90,000.
Three months interest had accrued.On31.05.2012 he purchased a further Rs.80,000 of the loan
@ Rs,96 (net)cum-interest, On 31.07.2012, Rs.60,000 of the loan was sold at Rs.94 ((net) ex-
interest. On 30.11.2012 Rs.40,000 of the loan was sold at Rs.96 (net) cum-interest. Interest on
the loan was paid each year on 31st March and 30th September and was collected on 4th April
and 5th October. The price of the loan on 31.12.2012 was Rs.96. Draw up the Loan account.
Ignore income tax and paise.
10. Mr. Investor furnishes the following details relating to his holding in 6% Government Bonds:
Opening balance Face Value Rs. 60,000 — Cost Rs. 59,000.
1.3.1996 — 100 units purchased ex-interest at Rs. 98.
1.7.1996 — Sold 200 ex-interest out of the original holding at Rs. 100.
1.10.1996 — Purchased 50 units at Rs. 98 cum-interest.
1.11.1996 — Sold 200 units ex-interest at Rs. 99 out of the original holding.
Interest dates are 30th September and 31st March. Mr. Investor closes his books every 31st
December. Show the Investment Account as it would appear in his books.
11. Gamma Investment Company hold 1,000, 15% debentures of ` 100 each in Beta Industries
Ltd. as on April 1, 2009 at a cost of ` 1,05,000. Interest is payable on June, 30 and December,
31 each year. On May 1, 2009. 500 debentures are purchased cum-interest at ` 53,500. On
November 1, 2009 600 debentures are sold ex-interest at ` 57,300. On November 30, 2009,
400 debentures are purchased ex-interest at ` 38,400. On December 31 2009, 400 debentures
are sold ex-interest for ` 55,000.
Prepare the investment account showing value of holdings on March 31, 2010 at cost using
FIFO method.
UNIT - III
Section – A
1. Branch which does not maintain its own set of books is ________.
a) Dependent branch b) Independent branch c) Foreign branch d) Local branch
2. Branch account under stock and debtors system is a
a) Real account b) Nominal account c) Personal account d) Capital account
3. A branch which maintains its own set of books that branch is called ––––––––.
a) Independent branch b) Dependent branch c) Foreign branch d) All the above
4. Stock and debtors system is generally used when goods are sent to the branch at –
a) Cost price b) Invoice price c) Both ) None
5. Opening stock + Purchases – Sales = -----------
a) Gross profit b) Net profit c) Cash account d) Closing stock
6. Goods are sent to branch at cost plus 20% .If closing stock of the branch is Rs 60,000 at
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invoice price. The amount will be credited to stock reserve a/c is _________.
a) Rs.10,000 b) Rs.12,000 c) Rs.6,000 d) Rs.12,600
7. The business policies and the administration of a branch are wholly controlled by the head
office that type of branch is called ________.
a) independent branch b) dependent branch c) local branch d) foreign branch.
8. All branch expenses such as rent, salary, are paid by the head office in case of ________.
a) independent branch b) local branch c) local branch d) dependent branch
9. Branch accounts under debtors system, credit sales are ________.
a) shown in debit side b) shown in credit side
c) shown both the side d) not shown both the side.
10. Branch which does not keep its full system of accounting is called as _______.
a) independent branch b) dependent branch c) local branch d) foreign branch
11. Repairs to buildings is apportioned to departments on the basis of
a) Floor area occupied b) Number of workers c) Value of asset d) Sales ratio
12. ESI, PF payable by employer should be divided among the different departments on the basis
of _______.
a) number of worker in each department b) number of machines in each department
c) wages of each department d) floor area occupied by each department
13. Workmen’s amenities and welfare expenses should be divided among the different
departments on the basis of ________.
a) number of worker in each department b) number of machines in each department
c) wages of each department d) floor area occupied by each department
14. Carriage inward expenses should be divided among the different departments on the basis of
a) light points b) purchase value c) sales ratio d) floor area.
15. Expenses which cannot be identified with a particular department are called _____.
a) direct expenses b) indirect expenses c) office expenses d) petty expenses
16. Expenses which cannot be apportioned to department must be shown in the _______.
a) Balance sheet b) Trading account c) P & L account d) Suspense account
17. When goods are transferred from one department to other, the transferring department
should be _________.
a) debited b) credited c) added d) subtracted
18. When goods are transferred from one department to other, the receiving department
should be _________.
a) debited b) credited c) omitted d) subtracted
19.Salary and wages are apportioned to different departments on the basis of ______ .
a) Number of workers b) Value of asset c) Sales of each department d) Floor area occupied
20. The departmental accounting enables a business firm to maximize ________.
a) profits b) loans c) overhead cost d) works cost
Answer Key
1 2 3 4 5 6 7 8 9 10
a a a b d a b d d b
11 12 13 14 15 16 17 18 19 20
a c a b b c b a a a
Section – B
1. State the objects of maintaining Branch accounts.
2. The following details relating to Madurai Branch.
Opening stock 11,200 Goods sent to Branch 51,000
Opening debtors 6,300 Cash expenses 5,000
Cash from debtors 41,200 Stock at end 13,600
Cash sales 25,000 Credit sales 39,000
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Prepare Branch Account.
3. Pass journal entries in the books of Head office under debtors system for the following
transactions.
(i) Goods sent to branch at cost Rs.50,000
(ii) Remittance received from branch Rs.61,000.
(iii) Profit earned by the branch Rs.8,000.
4. A head office in Mumbai sends goods to its branch at Kolkatta. Prepare branch account and
to calculate profit.
Rs.
Debtors on 1.7.2013 12,000
Stock on 1.7. 2013 10,000
Goods sent to branch 32,000
Cash sales 16,000
Cash received from debtors 29,000
Stock on 31.3.2014 12,000
Debtors on 31.3.2014 23,000
5. Loyal shoe company opened a branch at Madurai on 1-1-2009. From the following particulars,
the Madurai Branch account for the year 2009 and 2010.
2009 2010
Rs. Rs.
Goods sent to Madurai Branch 15,000 45,000
Cash sent to Branch for : Rent 1,800 1,800
Salaries 3,000 5,000
Other expenses 1,200 1,600
Cash received from the branch 24,000 60,000
Stock on 31st December 2,300 5,800
Petty cash in hand on 31st December 40 30
6. Chakraborty, Calcutta has a branch at Bombay. Goods are supplied to the branch at cost. The
expenses of the branch are paid from Calcutta and the branch keep a sales journal and debtor
ledger only. From the following information supplied by the branch, Prepare Branch Account
in the books of head office.
Opening stock 1.4.2008 Rs. 24,000 ;
Closing stock 31.3.2009 Rs. 18,000;
Credit sales Rs. 41,000 ;
Cash sales Rs. 17,500 ;
Receipt from debtors Rs. 37,500 ;
Sundry debtors on 31.3.2008 Rs. 9,160;
Goods received from Head Office Rs. 30,000
Goods received at H.O on 31.3.2009 Rs. 3,600
Expenses paid by H.O for the branchRs. 10,400.
7. A company had two departments 'A' and 'B'. 'A' department supplies the goods to 'B'
department at its usual selling price. From the following figures, prepare departmental
trading and profit and loss a/c for the year 2002.
Departments
A B
Opening stock 1.1.2002 30,000 –
Purchases 2,10,000 –
Transfer to 'B' 50,000 50,000
Sales 2,00,000 60,000
Closing stock (31.12.2002) 40,000 10,000
8. From the following particulars, prepare departmental Trading and profit and loss a/c for the
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year ending 31.12.2007.
Dept X Dept Y
Rs Rs
Stock (1.1.2007) 9,000 8,400
Sales 42,000 36,000
Purchases 27,000 21,600
Direct Expenses 5,490 8,520
Postage 360 360
Stock (31.12.2007) 10,800 4,800
Indirect expenses for the entire business was Rs.3,900 which are to be divided in the
proportion of sales of the two departments.
9. Good Luck Ltd opened a branch on 1-1-2015 at Coimbatore. The following
information is supplied to you. Prepare Branch Account.
Goods sent to branch 50,000
Sales: Cash Rs.20,000; Credit Rs.36,000 56,000
Cash received from Debtors 32,000
Discount allowed to them 600
Cash sent to branch for expenses 7,000
Stock on 31-12-2015 8,000
Debtors on 31-12-2015 3,400
10. List out the advantages of departmental accounting.
Section – C
1. From the following particulars relating to Hyderabad branch for the year ended 31-12-1990,
Prepare Branch A/c in the Head Office books. Rs.
Stock at the branch on 1-1-1990 15,000
Debtors at the Branch on 1-1-1990 30,000
Petty cash at the Branch on 1-1-1990 300
Goods sent to Branch during 1990 2,52,000
Cash Sales 1990 60,000
Received from Debtors 2,10,000
Credit Sales during 1990 2,28,000
Cheques sent to branch during 1990:
For Salaries 9,000
For Rent& Rates 1,500
For Petty Cash 1,100 11,600
Stock at the Branch on 31-12-1990 25,000
Petty Cash 31-12-1990 200
Goods returned by the branch 2,000
Debtors on 31-12-1990 48,000
2. A Chennai head office has a branch at Salem to which goods are invoiced at cost plus 20%
from the following particulars. Prepare Brach a/c in the head office books:
Goods sent to branch 2,11,872
Total sales 2,06,400
Cash sales 1,10,400
Cash received from branch debtors 88,000
Branch debtors on 1.1.2012 24,000
Brach stock on 1.1.2012 7,680
Branch stock on 31.12.2012 13,440
3. From the following particulars prepare a branch account showing the profit or loss at the
branch Rs.
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Opening stock at the branch 15,000
Goods sent to branch 45,000
Sales 60,000
Salaries 5,000
Other expenses 2,000
Closing stock could not be ascertained but it is known that the branch usually sells at cost
plus 20%. The branch manager is entitled to a commission of 5% of the profit of the branch
before charging such commission.
4. Prepare branch accounts for the year 1994. From the following particulars the Madurai
branch account for the year 1994
Stock on 1.1.94 11,200
Debtors on 1.1.94 6,300
Goods sent to branch 51,000
Cash sent to branch for :
Rent 1,500
Salaries 3,000
Petty cash 500 5,000
Sales at branch
Cash 25,000
Credit 39,000 64,000
Cash received from debtors 41,200
Stock on 31.12.94 13,600
5. Explain the differences between branch account and departmental account.
6. The following information is given by Balan, a merchant for the year ended 31.12.2012.
Sales: Purchases: Opening stock:
Dept I 70,000 Dept I 43,000 Dept I 3,400
Dept II 30,000 Dept II 25,000 Dept II 1,100
Debtors 23,000 Bank charges 120
Salary 5,400 Commission 2,200
Office furniture 1,080 Stationary 2,700
Advertisement 5,800 Rent 1,800 Wages 10,000 Insurance 2,400
Provide depreciation at 10% on furniture. Bad debts 300. Create 10% provision for discount
on debtors. Stock position for the year ended 31.12.2012 Dept I - 4,000; Dept II - 1,680.
From the above information, prepare Departmental trading and profit and loss a/c. Expenses are
allocated on the basis of sales.
7. The following trial balance for the year ended 31-03-2001 was extracted from the books of
Shri.Bikram Singh:
Particulars Debit Rs. Credit Rs.
Capital on 1-4-2001 50,000
Drawings Account 10,000
Stock on 1-4-2001:Radios 45,000
:Watches 21,000
Sales: Radios 2,94,000
Watches 1,46,000
Purchases: Radios 2,25,000
Watches 1,15,000
Salaries 12,600
Publicity Expenses 8,900
Rent, Rates and Taxes 3,200
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Prepare the Departmental Trading and Profit and Loss Account for the year ended 31st March,2002
after taking into account the following: i.
The stock as on 31st March,2002 was: Radios Rs.30,000; Watches Rs.24,000.
ii. An amount of Rs.1,200 out of Sundry Debtors has to be written off as bad and the
provision for doubtful debts has to be increased thereafter to 10% of the debts
outstanding.
iii. The following expenses are outstanding as on 31st March 2002: Publicity Rs.1,300 ;
Salaries Rs.1,200; Commission Rs.1,700.
iv. Provide 10% depreciation on Furniture and Fixtures.
v. Revenue items to be allocated in the ratio of 2:1 as between Radios and Watches.
Ignore fractions.
8. The following purchases were made by a business house having three departments:
Dept. A - 1,000 units
Dept. B - 2,000 units at a total cost of Rs.1,00,000
Dept. C - 2,400 units
Stock on 1st January were: Dept. A - 120 units
Dept. B - 80 units
Dept. C - 152 units
The Sales were: Dept. A - 1,020 units at Rs.20 each
Dept. B - 1,920 units at Rs.22.50 each
Dept. C - 2,496 units at Rs. 25 each
The rate of gross profit is the same in each case.
Prepare the Departmental Trading accounts.
9. From the following information , prepare departmental trading and profit & loss account
in a columnar form of the three departments of Sharma Dry Cleaners Ltd.
Particulars Dry cleaning Darning Dyeing
Stock on 01-01-2006 4,00,000 3,40,000 9,40,000
Commission 10,600
Miscellaneous Expenses 5,000
Furniture and Fixtures 12,400
Sundry Debtors 16,800
4% Govt. of India Loan 10,000
Sundry Creditors 8,800
Interest 400
Provision for Bad and Doubtful Debts 800
Cash Balance 4,500
5,00,000 5,00,000
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Stock on 31-12-2006 3,30,000 4,38,000 8,17,000
Purchases 19,59,000 6,97,000 13,73,000
Sales 40,00,000 20,00,000 40,00,000
Wages 7,28,000 3,00,000 2,46,000
Goods were transferred from one department to another at cost price as follows:
i) Darning to Dry cleaning Rs.2,400 and to Dyeing Rs.40,200
ii) Dyeing to Dry cleaning Rs.25,800 and to Darning Rs.18,000
iii) Dry cleaning to Darning Rs.3,000 and to Dyeing Rs.24,000
The following expenses were apportioned equally:
Stationery Rs. 5,418
Postage Rs. 4,050
General expenses Rs.2,37,618
Insurance Rs. 10,080
Depreciation Rs. 32,598
Rent and taxes Rs.1,80,000 is to be split in proportion to space occupied i.e.,
Dry cleaning 4; Darning 2; Dyeing 2 and other space 2.
10. A firm had two departments ,cloth and readymade garments. The garments were made by
the firm itself out of cloth supplied by the cloth department at its usual selling price. From the
following and profit and loss account for the year ended 31-3-2007.
Particulars Cloth Dept Readymade Dept
Rs Rs
Opening Stock on 1.4.2006 3,00,000 50,000
Purchases 20,00,000 15,000
Sales 22,00,000 4,50,000
Transfer to readymade garments dept 3,00,000 -------
Expenses:
Manufacturing ------------ 60,000
Selling 20,000 6,000
Stock 31-3-2007 2,00,000 60,000
The stock in the readymade garments department may be considered as consisting of 75%
cloth and 25% other expenses. The cloth department earned gross Profit @ 15 % in 2005-06.
General expenses of the business as a whole came to Rs.1,10,000.
UNIT - IV
Section – A 1. The difference between the hire purchase price and cash price is ________.
a) Down Payment b) First instalment c) Interest d) Last instalment
2. Under hire purchase system the buyer becomes the owner of goods _______.
a) Immediately after the payment of last instalment
b) Immediately after the delivery of goods
c) Immediately after the down payment paid
d) Immediately after the first instalment paid
3. Hire purchase system is governed by ________.
a) Hire Purchase Act 1972 b) Hire Purchase Act 1973
c) Hire Purchase Act 1974 d) Hire Purchase Act 1975
4. Under hire purchase system the relationship between hirer and hire vendor is that of
a) buyer and seller b) bailor and bailee c) pawner and pawnee d) debtor and creditor
5. Under hire purchase system, the risk of loss is borne by the________.
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a) Buyer b) Hirer c) Hire Vendor d) Debtor
6. Under hire purchase system, if installment is not paid the hire vendor has a right to ____.
a) sell the goods b) repossession of goods c) repair the goods d) purchase the goods
7. The advance amount under hire purchase system is called as ________.
a) cash price b) retail price c) interest d) down payment
8. Under which system ownership is transferred on signing of the agreement?
a) installment system b) credit system c) hire purchase system. d) cash system.
9. Under installment system the relationship between the buyer and seller is that of a ________.
a) buyer and seller b) bailor and bailee c) pawner and pawnee d) debtor and creditor
10. In the books of hirer, when the asset is repossessed hire vendor account will be ________.
a) debited b) credited c) rectified d) reversed
11. If the hire purchaser fails to make payment of any installment, it is called ________.
a) purchase b) repossession c) sale d) default
12. In fire insurance claims, the undamaged stocks are known as _________.
a) Closing stock b) Opening stock c) Stock salvaged d) Average stock
13. Closing stock on the date of fire is Rs. 30,000 ,value of Policy Rs.25,000 and the stock
salvaged is Rs. 7,500. The claim will be _____.
a) 25,000 b) 22,500 c) 18,750 d) 32,500
14. The difference between standard turnover and affected period turnover is ______.
a) Accounting turnover b) Annual turnover c) Saved turnover d) Short sales
15. The period for which insurance policy is taken against the risk of fire is __________.
a) Accounting period b) Calendar period c) Indemnity period d) Standard period
16. This is the sales during the twelve months exactly before fire.
a) Standard turnover b) Annual turnover c) Saved turnover d) Accounting year turnover
17. The average clause in a loss of profit policy protects the _______.
a) Insured b) Creditors c) Insurer d) Underwriters
18. Consequential loss policy indemnifies ____ losses.
a) Revenue b) Abnormal c) Capital d) Normal
19. A fire insurance policy is taken out to indemnity:
a) Capital losses and revenue losses of tangible assets b) Normal and abnormal losses
c) Capital losses of intangible assets d) Revenue losses of tangible assets
20. If the indemnity period is six months, standard turnover is 20,000, Annual turnover is 50,000,
turnover during indemnity period is 8,000, then short sales amount will be:
a) 30,000 b) 12,000 c) 42,000 d) 22,000
Answer Key
1 2 3 4 5 6 7 8 9 10
c a a b c b d a d a
11 12 13 14 15 16 17 18 19 20
d c c d c b c a a b
Section – B
1. Raman purchases a motor car from Bharathan whose cash price is Rs.56,000 on 1-1-2013.
Rs.15,000 is paid on signing the contract and the balance is to be paid in three equal annual
instalments of Rs.15,000 each. The rate of interest is 5%. Calculate the amount of interest
included in each instalment and also prepare Motor Car A/c.
2. On 1-1-2006, Mr. Sharma purchased a machinery on hire purchase system. The payment is to
be made Rs.4,000 down (on signing of the contract) and Rs.4,000 annually for three years.
The cash price of the machinery is Rs.14,900 and the rate of interest is 5%.
Calculate the interest for each year’s instalment.
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3. Mr. X Purchases a machine on hire purchase basis. The cash price of the machine was
Rs.1,80,000. As per the terms, the buyer had to pay Rs.40,000 on signing the agreement and
the balance in four installments of Rs.40,000 each, payable at the end of each year.
Calculate the interest chargeable at the end of each year.
4. Mr.Anbu Purchased a TV on hire purchase system for Rs.10,000 to be paid as follows
On signing the agreement Rs.1,200
At the end of Ist year Rs.1,700
At the end of 2nd Year Rs.1,600
At the end of the 3rd year Rs.5, 500
Calculate cash price of the TV if the vendor charged interest at 10% per annum.
5. A fire occurred in the premises of X Ltd., on 10-10-2011. All stocks were destroyed except
to the extent of Rs.6,200. From the following figures, ascertain the loss of stock suffered by
the company:- Rs.
Stock on 01-01-2010 40,000
Purchases during 2010 1,45,000
Sales during 2010 2,00,000
Stock on 31-12-2010 25,000
Purchases during 2011 upto the date of fire 1,52,200
Sales during 2011 upto the date of fire 1,89,000
6. A fire occurred at the premises of a trader on 31.05.2014 destroying a great part of his goods.
His stock at 1.1.2014 was Rs.60,000. The value of stock salvaged was Rs.13,500. The gross
profit on sales was 30% and sales amounted to Rs.1,53,000 from January to the date of fire ,
while for the same period the purchases amounted to Rs.1,03,500.
Prepare a statement of claim.
7. Write short note on: a) Average clause. b) Indemnity period
8. A fire occurred in the business premises of Raghavan on 19-07-2009. From the following
particulars ascertain the loss of stock and prepare a claim for insurance.
Stock on 01-01-2008 36,720
Stock on 31-12-2008 32,400
Sales for 2008 2,16,000
Purchases for 2008 1,46,400
Purchases from 01-01-2009 to 19-07-2009 1,76,400
Sales from 01-01-2009 to 19-07-2009 1,80,000
The stocks were always valued at 90 % of cost. The stock saved from fire was worth Rs.21,600.
The amount of the policy was Rs.75,600. There was an average clause in the policy.
9. Rakesh purchased a motor car on hire purchase system. The total cash price of the car is
Rs.15,980 payable Rs.4,000 down and three installments of Rs. 6,000, Rs.5,000 and Rs.2000
payable at the end of first, second and third years respectively. Interest is charged at 5% p.a.
You are required to prepare ledger accounts in the books of both the parties.
10. A fire occurred in the premises of X on 15th August 1995. A large part of the stock was
destroyed and the value of stock salvaged was Rs.7,500. For the period from 01-01-1995 to
15-08-1995, the following information is available.
i) Purchases amounted to Rs.42,500.
ii) Sales amounted to Rs.45,000.
iii) Stock on hand on 01-01-1995 was Rs.20,000 at cost price
iv) Goods costing Rs.2,500 were taken by X for his personal use.
The previous accounts reveal that the rate of Gross profit was 33⅓ % on sale. The insurance
policy was for Rs. 25,000 and included an average clause. Prepare statement of claim.
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Section – C
1. Distinguish between Hire Purchase System and Instalment purchase System.
2. Mr.X Purchased four UPS for Rs14,000 each on 01-01-1992 under the Hire Purchase
system. The Hire purchase price for all the four UPS was Rs.60,000 to be paid as Rs.15,000
down payment and 3 equal installments of Rs.15,000 each at the end of year.
Interest is charged at 5% per annum. The buyer depreciates the UPS at 10% per annum
on straight line method. From the above particulars, give journal entries in the books of Mr.X.
3. Sundar sells goods on H.P system at cost plus 60%.From the following prepare
Hire Purchase Trading Account.
Jan.1 Goods out on H.P system at H.P price Rs.32,000.
Dec 31 Instalments not due and unpaid Rs. 72,000.
Dec 31 Instalments due and unpaid Rs. 4,000.
The following transactions took place during the year.
i. Goods sold on H.P price Rs.1,60,000.
ii. Cash received from customers at H.P price Rs.1,12,000.
iii. Goods received back on default valued at Rs.800 (Instalment due Rs. 4,000).
4. On 1st Jan1994 Latha Transport Ltd purchased from Delhi Motors 3 trucks costing Rs.50,000
each on the hire purchase system. Payment was to be made Rs.30,000 down and the remainder
in Three equal annual instalment together with interest at 9 %. p.a. Latha Transport Ltd
writes off depreciation @ 20% p.a. on the diminishing balance method. It paid the instalment
due at the end of first year but could not pay the next. Delhi Motors agreed to leave one truck
with the purchaser, adjusting the value of the other 2 trucks against the amount due. The trucks
were valued on the basis of 30% depreciation annually.
Prepare necessary ledger accounts in the books of both the parties.
5. Knight purchased a truck for Rs.1,60,000 from S.Waugh on 1.1.93 payment to be made
Rs. 40,000 down and Rs.46,000 at the end of the 1st year, Rs.44,000 at the end of the 2nd year
and Rs.42,000 at the end of the 3rd year. Interest was charged at 5% p.a. Knight depreciates
the truck at 10% per annum on written down value method. Knight after having paid down
payment and first installment at the end of the first year, could not pay the 2nd installment.
The seller took possession of the truck, and after spending Rs. 4,000 on repairs of the asset,
sold it away for Rs.91,500.
Give journal entries and ledger accounts in the books of both the parties
6. The premises of a trading firm caught fire on 22.10.85 and the stock was damaged the firm
had made up accounts to 31st December.
Stock on 31.12.1984 Rs.13,272
Stock on 31.12.1983 Rs.9,614
Purchases during 1984 Rs.45,258
Purchases from 1.1.85 to the date of fire Rs.34,827
Sales during 1984 Rs.52,000
Sales from 1.1.1985 to the date of fire Rs.49,170 Additional
information:-
i. In April 1985 goods which cost Rs.1,000 were given away for
advertising purpose, no entries being made in the books.
ii. During 1985, a clerk had misappropriated unrecorded cash sales. It is
estimated that the defalcation amounted to Rs.400.
iii. The rate of gross profit is constant.
From the above information, make an estimate of the stock on the date of fire.
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7. Explain the procedure for fire claims under Loss of Profit Method.
8. From the following information you are required to workout claims under the loss of profits
insurance policy. a) Cover gross profit Rs.2,00,000, b) indemnity period 6 Months,
c) damage due to a fire accident on 28th December accounting year ends on 31st December.
d) Net profit plus all standing charges in the prior accounting year Rs.3,00,000.
e) Standing charge uninsured Rs.50,000.
f) Turnover of the last accounting year was Rs.10,00,000, the rate of gross profit being 25%.
g) The annual turnover, namely the turnover for 12 months immediately preceding the fire
Rs.10,40,000.
h) As a consequence of fire, there was a reduction in certain insured standing charges at the
rate of Rs.50,000 per annum.
i) The standard turnover Rs.5,20,000.
j) Increased cost of working during the period of indemnity was Rs.40,000.
k) Turnover during the period of indemnity was Rs.2,00,000 and out of this turnover of
Rs. 1,60,000 was maintained due to increased cost of working.
9. Krishna sells products on Hire purchase terms, the price being cost plus 33⅓ %. From the
following particulars for the year ended 31-12-2005, prepare the necessary accounts on stock
and debtors to reveal the profit earned. Rs.
01-01-2005 Stock out on hire at HP price 16,00,000
Stock in hand at shop 2,00,000
Instalments due (customers still paying) 1,20,000
31-12-2005 Stock out on hire at HP price 18,40,000
Stock in hand at the shop 2,80,000
Instalments due (customers still paying) 2,00,000
Cash received during the year 32,00,000
10. From the following information, find the claim under a loss of profits policy.
Rs.
Sales in 1991 2,00,000
Sales in 1992 2,40,000
Sales in 1993 2,88,000
Sales in 1994 3,45,600
Net profit in 1994 20,000
Standing charges (all insured)in 1994 14,560
Date of dislocation by fire 1-1-1995 period of dislocation 3 months
Sales from 1-1-1994 to 31-3-1994 86,400
Sales from 1-1-1995 to 31-3-1995 23,680
Indemnity period 9 months
Policy value 1,00,000
There was no reduction in standing charges during the dislocation period nor there any
additional costs.
UNIT – V
Section – A
1. Royalty account is in the nature of _______.
a) Personal a/c b) Real a/c c) Nominal a/c d) Representative of personal a/c
2. Excess of minimum rent over actual royalty paid to the landlord is known as _______.
a) Dead rent b) Short workings c) Recoupment of short workings d) Short workings lapsed
3. Royalty Receivable account is in the nature of ________ .
a) Nominal a/c b) Personal a/c c) Real a/c d) Both Nominal and Real a/c
4. In the books of Lessee, shortworkings irrecoverable are credited to_________ .
a) Profit&loss a/c b) Shortworkings a/c c) Landlord a/c d) Bank a/c
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5. The amount paid to the Landlord is Royalty or minimum rent whichever is ____.
a) less b) more c) both d) none
6. Royalty is Rs 64,000, Minimum rent Rs 80,000. Strike is for 3 months with no work done,
Minimum rent to be reduced in proportion of time, find the amount paid to Landlord.
a) Rs 60,000 b) Rs 64,000 c) Rs 80,000 d) None of these
7. When Royalty amount is more than Minimum rent, amount paid to landlord is;
a) Royalty amount b) Minimum amount c) Difference of both d) None
8. The balance of royalty payable account is transferred to _____ .
a) Profit and loss a/c b) Royalties suspense a/c c) Production a/c d) Bank a/c
9. Royalty earned by the lessee is credited to—
a) Sub-lessee a/c b) Profit and loss a/c c) Royalty receivable a/c d) minimum rent a/c
10. Royalty are connected with the following type of business
a) Manufacturing industry b) Mining industry c) Construction business d) Trading business
11. When royalty is paid, in the books of lessee, it is debited to ______ .
a) Royalty account b) P&L account c) Landlord account d) Lessee account
12. When the lessor receives payment, the credits—
a) Lessee a/c b) Royalty a/c c) shortworkings a/c d) P&L a/c
13. Landlord is called as ____.
a) Lessee b) Lessor c) Bailor d) Bailee
14. Royalty payer or tenant is called as _______ .
a) Lessee b) Lessor c) Pawnor d) Pawnee
15. Redeemable Dead Rent is also called as _____ .
a) Minimum rent b) Royalty c) Shortworkings d) Shortworkings Lapsed
16. Minimum rent is also known as ________ .
a) Dead rent b) Royalty c) Outstanding rent d) Prepaid rent
17. Rock rent is the other name of ______ .
a) Minimum rent b) Royalty c) Shortworkings d) Shortworkings Lapsed
18. When shortworkings are to be recovered, ______ account to be debited.
a) Lessor a/c b) Royalty a/c c) Shortworkings a/c d) P&L a/c
19. In the books of Lessor, short working is called;
a) Royalty payable b) Royalty suspense account
c) Royalty payable suspense account d) Royalty receivable suspense account
20. In the case of sub-lease , the royalty receivable must be transferred to ________.
a) Landlord a/c b) Royalty payable a/c c) Profit and Loss a/c d) Minimum rent a/c
Answer Key
1 2 3 4 5 6 7 8 9 10
c b a a b b a c c b
11 12 13 14 15 16 17 18 19 20
c a b a c a a a d b
Section – B
1. Ramu took a Lease of mines for a period of 20 years. Royalty payable is Re.1 per tonne
subject to a minimum rent of Rs.12,000 p.a. Shortworkings are recoupable during the first
three years of the lease. The output was
1990—nil;1991—4000 tonnes;1992—20,000 tonnes and 1993—40,000 tonnes.
Give the necessary ledger accounts in the books of Ramu.
2. Write short Notes on: (i) Royalty (ii) Minimum rent
3. From the following information of ‘ X’ Ltd ,you are required to prepare the Analytical
table showing the Royalty, Minimum rent, Short workings, Short workings recouped,
Shortworkings not recovered transferred to P&L A/c and Royalty payable to the
Landlord . ‘X’ Ltd company leased a colliery on 1st January 2002 at the Minimum Rent of
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Rs.20,000 per year, merging in to a royalty of Rs.1.50 per ton, with a power to recoup
shortworkings over the first four years of the lease. The output of the colliery for the first
four years were :2002 - 9,000 tonnes ; 2003 - 12,000 tonnes; 2004 - 16,000 tonnes ;
2005 - 20,000 tonnes . Give
journal entries for four years in the books of Landlord (Lessor)
4. Calculate the amount payable to the landlord from the following details:
Royalty : Re.1 per ton of coal raised.
Minimum rent: 1999 – Rs.10,000 ; 2000 – Rs.15,000 ; 2001 – Rs.20,000 ; 2002 – Rs.25,000
Output in tons : 1999 – 5,000 ; 2000 – 8,000 ; 2001 – 30,000 ; 2002 – 30,000
Shortworkings are recoverable only out of excess royalties in the next year but not later.
5. Calculate the amount payable to the landlord from the following details:
Minimum rent : Rs. 10,000 p.a.
Actual Royalties : 1991 – nil ; 1992 – Rs.12,000 ; 1993 – Rs.8,000 (strike) ; 1994 – Rs.9,000
Shortworkings are recoverable out of the royalties of the next year only. In case of strike, the
actual royalties earned can be taken as minimum rent.
6. Compute shortworkings recovered from the following particulars assuming shortworkings are
recoupable in the following two years:
Royalty : Rs. 5 per ton of coal raised.
Dead rent : Rs. 35,000 p.a.
Output: 1999 – 5,000 tonnes ; 2000 – 8,000 tonnes ; 2001 – 10,000 tonnes
7. What do you understand by sub-lease? List out the ledger accounts prepared in the books of
Landlord,Tenant and Sub-Tenant.
8. Distinguish between Royalty and Rent.
9. SKC Ltd., took a lease from GD Ltd. a coal-field for a period of 30 years from 1.1.2008 on
a royalty of 25 paise per tonne of coal got with a dead rent of Rs.2,200 a year and power to
recoup short workings during the first 5 years of the lease. The annual output were as follows:
Year 2008 2009 2010 2011 2012
Tonnes 2000 3600 9000 15000 25000
Give journal entries in SKC Ltd. for five years.
10. On 1.1.2009, a company leased a piece of land for a minimum rent of Rs.1,000 in the first
year, Rs.2,000 in the second year and there after Rs.3,000 per annum, margins into a royalty of
25 paise per tonne; with power to recoup short workings over the first three years only. The
annual output for the four years ending with 31.12.2012 were 1,000; 6,000; 16,000 and
24,000 tonns respectively. Write up the short working account.
Section – C
1. On 01-01-2002 Rama Collieries Ltd., leased a piece of land agreeing to pay a minimum rent of
Rs.2,000 in the first year,Rs.4,000 in the second year and Rs.6,000 for third year onwards
merging into a royalty of 40 paise per tone,with power to recoup shortworkings over the first
three years only. The figures of annual output for the four years to 31-12-2005 were 1,000 ;
10,000 ; 18,000 and 20,000 tonnes respectively.
Prepare ledger accounts in the books of the company.
2. X company acquired lease of a mine at a minimum rent of Rs.10,000 p.a. The royalty was
fixed at Re.0.50 per tonne. Shortworkings could be recouped within three years following the
year in which the shortworkings occur. If there is stoppage of production due to strike in any
year, the minimum rent would be proportionately reduced in regard to the length of the
stoppage. The output (in tonnes) of the mine was as follows:
Year 1998 1999 2000 2001 2002(strike) 2003
Output (in tonnes) 8,000 12,500 21,500 26,000 17,000 30,000
During 2002, there was a strike for three months. Show the necessary ledger accounts for
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each of the year in the books of X company.
3. Mr.N wrote a book of Management and got it published with M/s. Nachiar Publications on the
terms that royalties will be paid @ 5 per copy sold subject to a minimum amount of 15000
with a right of recoupment of short workings over the first three years of the lease. From the
following prepare
a) Royalties A/c b) Short workings A/c c) Mr.N's A/c.
The other details are :
Year No. Copies Printed Closing Stock
2001 2,000 100
2002 3,000 200
2003 4,000 400
2004 5,000 500
4. A limited took a colliery from B limited, on 1.1.2012 at a dead rent of Rs. 60,000
merging into royalty of Rs. 3 per kg with power to recoup short workings during the first
three years of the lease. The output of the colliery for the five years of the lease 9,000,
15,000,27,000,17,000 and 28,000 kg respectively. Prepare royalty receivable account in the
books of B limited and pass journal entries in the books of A limited.
5. Explain the accounting treatment when royalties are more than ,less than or equal to Minimum
Rent .
6. Mining Co.Ltd. obtained on 01-01-2000 from landlord a lease of coal mine , the terms being
royalty of Re 0.50 per tonne of coal raised subject to a minimum rent of Rs. 4,000 per annum
with a right of recoupment of shortworkings over the first four years of the lease Mining Co.
Ltd. granted a sub-lease of part of the land to mining lessee on a royalty of Re 0.75 per tonne
merging into a minimum rent of Rs 2,000 per annum with a right of recoupment of
shortworkings during the two years following the shortworkings.
The output for the five years is as follows:
Year Mining Co
tonnes
Mining Lessee
tonnes
2000 4,400 1,600
2001 4,640 2,160
2002 5,200 2,800
2003 5,600 3,600
2004 7,200 4,800
Give necessary ledger accounts in the books of Mining Co Ltd.
7. A company leased a colliery from the GD Coal Limited on 1stJanuary 2009 at a minimum
rent of Rs.40,000 merging into a royalty of Re.1 per ton with power to recoup hortworkings
over the first three years of the lease. The output of the colliery for the first four years was
18000 tons, 32000 tons, 48000 tons and 38000 tons respectively.
Pass the necessary journal entries for each of the four years in the books of GD Coal Limited.
8. From the following details prepare journal entries relating to royalty in the books of Dinakar.
Land lord : Galaxy coal mines
Lease period : 25 years
Lease amount : 2 per tonnes
Minimum rent : 10,000 per annum
Short working recovery: 2 following years
Production:
Year: 2009 2010 2011 2012
Tonns: 4000 4500 5400 6500
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9. On 01-01-2000,Balu obtained a mining lease and on 01-01-2001 he sub-leased a part of the
mine to Charu. Show the ledger accounts in the books of Balu based on the following
10. Explain the accounting procedure in the Tenant’s books in relation to sub-lease .
**************************************************************************
KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS)
COIMBATORE
DEPARTMENT OF COMMERCE WITH PROFESSIONAL ACCOUNTING (UG)
QUESTION BANK – 2018-2019
SUBJECT: CYBER LAW SUBJECT CODE: 18UPA306
Staff-in-charge: Dr.R.Maharajothi Priya Class: II B.Com PA
&
Mrs.N.Sruthi
Unit - I
SECTION A
1. Cyber law means ---------
a. Crime b. Activity c. Internet law d. Computer law
2. The cyber world has no -----------
a. Physical boundaries b. Loopholes c. Enforcement d. grey areas
3. Cyber law in India can be found in the form of ----------
a. authority b. Organisation c. IT act 2000 d. Cyber crime act 1999.
4. Ideal cyber law in India requires a considerable amount of ------------
a. time b. Money c. Resources d. all the above
Year Lease
tonnes
Sub-lease
tonnes
2000 12,000 nil
2001 56,000 10,000
2002 66,000 14,000
2003 58,000 18,000
Royalty
Per tonne
Re. 1
Rs. 1.50
Minimum rent Rs.51,000 Rs.22,000
Shortworkings
recoverable
3 Years 2Years
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5. Cyber space must adopt ----------
a. technology b. Self regulation c. Control d. abilities
6. A traditional crimes have been replaced by --------------
a. cyber crimes b. Cyber tech c. Cyber act d. cyber law
7. The concept of cyber crime is different from -----------
a. ordinary crime b. Conventional crime c. Special crime d. regular crime
8. Cyber crimes is defines as crime against individual or organisations by means of -------- a.
computer b. Direct information c. E-mail d. physical hurt.
9. Any person who commits an illegal act with a guilty intention is called ----------
a. adults b. Children c. Individual d. offender
10. -----------is a very common problem in cyber crime
a. access b. Location c. Loss of evidence d. systems
11------------ has unique characteristic of storing data in a very small space.
a. Computer b. File c. Folder d. disk
12. Hackers generally hack the -------------
a. file b. Passwords c. Transactions d. all the above
13. Spoofing is a blacking through ------------
a. email b. Privacy c. Card d. spam
14. The programs that can copy itself are called --------------
a. worms b. Victims c. Network d. transaction
15. Cyber squatting is where two people claim for the same ------------
a. crime b. Digital money c. Electronic cash c. Domain name
16. Hardware sabotage means to damage the are---------------
a. software b. Information c. Hardware d. computer hardware
` 17. Internet users should avoid -------------
a. Sending photographs b. Ethics c. morality d. chatting
18. It is not at all possible to eliminate cybercrime from ------------
a. network b. Data c. Cyber space d. cyber address.
19. Internet is the medium for huge information and -----------
a. communications b. Education c. Corporate network d. prevention.
20. ------------ should watch traffic and check irregularity on the site.
a. corporate owners b. Police cobs c. Website owners d. servers
SECTION B
1. What is cyber law?
2. Which of the legal issues does the cyber law govern?
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3. State the nature of the cyber law.
4. Define cyber space and its scope.
5. What are the pre-requisites of cyber law?
6. How a sound judicial system be implemented for a successful cyber law?
7. Why is the cyber law needed?
8. How internet is advantageous to the criminals?
9. What is Interpol?
10. How to create cyber law literacy?
SECTION C
1. Write in detail about role of cyber law in preventing cyber crime?
2. Explain the application of cyber law.
3. Describe the scope of cyber law.
4. Illustrate model legal regime for cyber crime prevention.
5. Write in detail about cybercriminals and computer crime.
6. Cyber crime rate is increasing year after year. Justify with reasons.
7. Briefly explain classifications of cyber crime.
8. Explain the role of Interpol in cyber crime prevention.
9. Clarify in detail about CERT and its functions.
10.What are the major challenges to cyber law?
Answer keys
1.C 2.A 3.C 4.D 5.B 6.A 7.B 8.A 9.D 10.C 11.A 12.D 13.D 14.A 15.C 16.C 17.A 18.C
19.A 20.C
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UNIT – II
SECTION-A
1. ---------- is defined as the intentional use of computers, networks, and public internet to cause
destruction.
a. Cyber terrorism b. Cyber act c. Cyber threaten d. cyber danger
2. Cyber terrorism can weaken -------------
a. Organisation b. Individual c. Economy d. all the above
3. The term cyber terrorism was coined by -------------
a.Harculus b. Barry.C.Collin d. Jaswanth sinha d. Merry de porter.
4. The terrorist groups are using internet to spread their ------------
a. act b. Technology c. Message d. attack
5. In recent days, cyber terrorist prefer using ---------------
a. cyber attack methods b. Traditional methods c. Identification methods d. open platform
methods.
6. Terrorism can also come in the form of --------------
a. information b. Dis location c. Dishonest d. disinformation
7. Minor attacks come in the form of --------------
a. offline b. Data diddling c. Network c. E-mail.
8. ---------- means buying and selling of goods across internet.
a. commerce b. Business c. Exchange d. e-commerce
9. e- business is the creation of new and redesigning of existing -----------
a. virtual items b. Supply chain c. Service d. value chain.
10. Electronic commerce is said to comprise ------------------
a. commercial transaction b. Selling transaction c. Buying transaction d. information
11. Manufacturers selling goods to distributors and wholesalers is an example of -----------
a. C2C b. C2B c. B2B d. G2G
12. Electronic commerce is a subset of ------------
a. e-business b. E- governance c. E-transaction d. e-banking
13. ---------- is the application of electronic commerce
a. e-mail b. Online shopping c. E-tickets d. all the above
14. Privacy of information is a major threat in -----------
a. direct marketing b. Personal marketing c. Online marketing d. consumer marketing.
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15. ------------ refers to use of internet as a platform for providing services to citizens
a. e-portal b. E-service c. E-business d. e-governance
16. The concept of e-governance was chosen by the council of ---------
a. Europe b. Britain c. India d. America
17. The government of India has launched ------------
a. Nepp b. DIT c. NeGP D. Eept
18. e-governance in India is in its -------------
a. maturity stage b. Infancy stage c. Decline stage d. none of the above
19. ------------play a very important role in e-governance in india
a. ICT b. RTC c.RTO d.CTS
20. The national e-governance plan of India seeks for ----------
a. short term growth b. Long term growth c. Temporary growth d. average growth
SECTION -B
1. What is cyber terrorism?
2. Write short notes on impact of cyber terrorism on economy.
3. List out the reasons for growth of cyber terrorism.
4. What are the challenges in prevention of cyber terrorism?
5. What are the major tools of cyber terrorism?
6. Write any two major cyber terrorism incidents in India.
7. What is e-commerce?
8. What are the functions of e-commerce?
9. E-commerce is witnessing excellent growth in India. Justify with examples.
10. What is e-governance?
SECTION -C
1. Explain in detail about dangers of cyber terrorism.
2. Describe the role of IT act 2000 in preventing cyber terrorism in India.
3. Write in detail about the role of government and individual in cyber terrorism prevention.
4. Briefly explain the evolution of e-commerce.
5. Illustrate the types of e-commerce with examples.
6. E-commerce has both advantages and disadvantages. Justify.
7. Define e-governance. Explain its growth and development in India.
8. Explain national e-governance plan.
9. Describe the challenges in implementing complete e-governance in India.
10. Explain various e-governance services with examples
Answer keys
1.A 2.D 3.B 4.C 5.A 6.D 7.B 8.D 9.D 10.A 11.C 12.A 13.D 14.C 15.D 16.A 17.C 18.B
19.A 20.B
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UNIT – III
SECTION – A
1. ---------- authenticates a writing by the signer with the signed document.
a. Signature b. Name c. Act d. message
2. Electronic signature means authentication of electronic record by -----------
a. Receiver b. Subscriber c. Writer d. publisher
3. ----------- are used to create digital signature
a. Password b. Data c. Information d. keys
4. ------------ is the portion of the key that is available to other people
a. Private key b. Public key c. Signature key d. data key
5. ----------- is a way to ensure an electronic document is authentic.
a. Password b. Signature c. Digital signature d. sender name
6. A digital signature provides a greater degree of -------------
a. Access b. Safety c. Legitimacy d. message
7. ------------- is the science of creating code systems to scramble readable message.
a. Cryptography b. Protocol c. Source code d. raw data
8. A power to investigate offences is covered under ---------------
a. Section 45 b. Section 23 c. Section 9 d. section 78
9. A digital signature certificate is normally valid for ------------
a. 1or2 years b. 3or4 years c. 5or8 years d. 10or 15 years
10. A digital certificate includes --------------
a. Public key b. Serial number c. Owner’s name d. all the above
11. ---------- is a person who has been granted license to issue digital signature
certificate.
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a) Controller b) Certifying Authority c) Deputy Controller d) Assistant Controller
12. The controller of the Certifying authorities is appointed by the _______.
a) Central government b) State government c) Governor d) High court
13. ________ is empowered to appoint deputy controllers and assistant controllers.
a) Controller b) Certifying authority c) Cyber cell official d) Executor
14. __________ supervises and controls the activities of the Certifying authorities.
a) Executor b) Central government c) State government d) Controller
15. ___________ authenticates electronic document.
a) Digital signature b) Password c) OTP d) Secret code
16. The license of the Certifying authority is valid for _______.
a) One year b) Two years c) Three years d) Four years
17. The license of Certifying authority can be renewed not later than _______ months.
a) 2 b) 3 c) 4 d) 5
18. The prescribed fee for obtaining Certifying authority license as per IT Act is ________.
a) Rs.25,000 b) Rs.20,000 c) Rs.15,000 d) Rs.10,000
19. ________ certificate binds only the name of the public key holder.
a) Authorizing b) Transactional c) Identification d) Ordinary
20. ________ certificate attest some facts about an electronic transaction.
a) Transactional b) Authorizing c) Identification d) Ordinary
SECTION - B
1. Write short notes on digital signature.
2. What is cryptography?
3. Why is the digital signature required?
4. What is asymmetric cryptography?
5. Write the functions of electronic signature.
6. Write a note on Certifying authority.
7. Why is it important to have Certifying authority? Explain.
8. Explain briefly about Certifying authority license.
9. How to acquire license to issue electronic signature certificate? Explain.
10. Write a note on Authorizing certificate of digital signature.
SECTION-C
1. Explain the importance of digital signature.
2. Describe the role of electronic signature.
3. Write in detail the essential steps of the digital signature process.
4. Differentiate symmetric and asymmetric cryptography.
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5. Today’s business is in need of electronic digital signature. Justify.
6. Elaborate and explain about the types of digital signature certificates.
7. Differentiate between transactional certificate and identification certificate.
8. What do you mean by electronic signature certificate? Explain in detail.
9. Differentiate between digital signature certificate and electronic signature certificate.
10. Explain the role of Controller in governing the Certifying authorities.
Answer keys
1.A 2.B 3.A 4.A 5.C 6.B 7.A 8.D 9.A 10.D 11.B 12.A 13.A 14.D 15.A 16.A 17.B 18.A 19.C
20.A
UNIT IV
SECTION- A
1) ___________ is the practice of making bank transactions through the internet.
a) Banking b) Online banking c) Traditional banking d) Transactional banking
2) Online banking was first offered in _______.
a) 1995 b) 1996 c) 1997 d) 1998
3) Personal finance, banking on priority basis etc. relate to ________ banking.
a) Personal b) Transaction c) Online d) Relationship
4) Dematerialized account openings relate to __________ services of banks.
a) Depository b) Transactional c) Personal d) Relationship
5) Credit related facilities, services related to trade etc. relate to _______ banking.
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a) Personal b) Transactional c) Online d) Relationship
6) _______ represents a secured website.
a) http b) https c) org d) net
7) _________ represents OTP.
a) One Time Password b) Over Time Password
c) One Term Password d) Over Term Password
8) ________ chapter of IT act deals with authentication of electronic records.
a) Second b) Third c) Fourth d) Fifth
9) ________ of IT act deals with authentication of electronic records.
a) Sec 3 b) Sec 4 c) Sec 5 d) Sec 6
10) ________ means an algorithm mapping of one sequence of bit into another set of values.
a) Hash function b) Algorithm
c) Mathematical function d) Cryptographic function
11) No two messages can have same _______.
a) Algorithm b) Mathematical function
c) Hash function d) Cryptographic function
12) Section _______ of IT act defines digital signature.
a) 2(p) b) 2(a) c) 2(c) d) 2(f)
13) Section ________ of IT act defines electronic signature.
a) 3A b) 3B c) 3C d) 3D
14) Legal recognition of electronic records is stated in __________ of IT act .
a) Sec 4 b) Sec 5 c) Sec 6 d) Sec 7
15) Delivery of services by service provider is stated in _______ of IT act.
a) Sec 6A b) Sec 6B c) Sec 6C d) Sec 6D
16) Audit of documents in electronic form is dealt in _______ of IT act.
a) Sec 7A b) Sec 7B c) Sec 7C d) Sec 7D
17) Retention of electronic records in dealt in _________ of IT act.
a) Sec 6 b) Sec 7 c) Sec 8 d) Sec 9
18) Clause containing publication of rules and regulations in electronic gazette is stated in
________ of IT act.
a) Sec 5 b) Sec 6 c) Sec 7 d) Sec 8
19) Clause containing power to make rules by Central government in respect of electronic
signature is stated in ________ of IT act.
a) Sec 7 b) Sec 8 c) Sec 9 d) Sec 10
20) The validity of contracts formed through electronic means is being stated in _______ of
IT act.
a) Sec 10A b) Sec 10B c) Sec 10C d) Sec 10D
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SECTION- B
1) What is online banking? State your views on online banking.
2) List out the services provided by banks through online.
3) Write a note on authentication of electronic records.
4) Write a description about hash function.
5) What do you mean by legal recognition of electronic records? Explain.
6) Write a note on use of electronic records and digital signatures in government and its
agencies.
7) Explain about audit of documents in electronic form.
8) Write about the publication of rules and regulations in electronic gazette as stated in IT act.
9) Write a note on the validity of contracts formed through electronic means.
10) State the clause of IT act related to legal recognition of electronic signature.
SECTION- C
1) Bring out the need for online banking in the current scenario.
2) Enumerate the advantages and disadvantages of online banking.
3) Discuss about online banking in India.
4) State the security measures to be followed to carryout safe online banking.
5) Discuss on delivery of services by service provider as stated in IT act 2000.
6) State your views about retention of electronic records.
7) Elaborate and explain about the power of Central government to make rules in respect of
electronic signature.
8) Bring out the importance of electronic records and electronic transactions in the current
scenario.
9) What are the steps to be followed to secure your electronic records?
10) How does authentication of electronic records help in carrying out electronic
transactions? Explain.
Answer Keys
1.B 2.A 3.A 4.A 5.B 6.B 7.A 8.A 9.A 10.A 11.C 12.A 13.A 14.A 15.A 16.A 17.B 18.D
19.D 20.A
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UNIT V
SECTION- A
1) ___________ is the expansion of Cr.P.C.
a) Code of Criminal Procedure b) Crime of Code Procedure
c) Code of Criminal Programme d) Crime of Code Programme
2) _______ are offences for which court grants bail to the accused.
a) Bailable offence b) Non-bailable offence
c) Cognizable offence d) Non-cognizable offence
3) ________ offences are mentioned in Sec 436 of Cr.P.C.
a) Bailable b) Non-bailable c) Cognizable d) Non-cognizable
4) __________ are offences for which bail is granted as per the discretion of court.
a) Bailable offence b) Non-bailable offence
c) Cognizable offence d) Non-cognizable offence
5) _______ offences are mentioned in Sec 437 of Cr.P.C.
a) Bailable b) Non-bailable c) Cognizable d) Non-cognizable
6) An offence, where a police officer can arrest the accused without a warrant is known as
_________ offence.
a) Bailable b) Non-bailable c) Cognizable d) Non-cognizable
7) An offence, where a police officer can arrest the accused only with a warrant is known as
_________ offence.
a) Bailable b) Non-bailable c) Cognizable d) Non-cognizable
8) An offence, which can be compensated in terms of money is known as ________.
a) compoundable offence b) Non-compoundable offence
c) Cognizable offence d) Non-cognizable offence
9) An offence, which cannot be compensated in terms of money is known as ________.
a) compoundable offence b) Non-compoundable offence
c) Cognizable offence d) Non-cognizable offence
10) ________ provision has been inserted in Sec 77A of IT (Amendment) act, 2008.
a) compoundable offence b) Non-compoundable offence
c) Cognizable offence d) Non-cognizable offence
11) Court shall not compound offences that have been committed against _______.
a) Men b) Women c) Transgenders d) Foreigners
12) The procedure to compound offence has been provided under_______.
a) Sec 323 b) Sec 324 c) Sec 325 d) Sec 326
13) The person accused can file an application for compounding in the court in which the
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offence is ________.
a) Pending for trial b) During trial c) After trial d) Before trial
14) The offences punishable with imprisonment less than 3 years are __________ offences.
a) Cognizable b) Non-cognizable c) Compoundable d) Non-compoundable
15) The offences punishable with imprisonment of more than 3 years are _______ offences.
a) Cognizable b) Non-cognizable c) Compoundable d) Non-compoundable
16) Punishment of cyber terrorism is stated in _______ of IT act.
a) Sec 66F b) Sec 66D c) Sec 66C d) Sec 66A
17) Tampering of computer documents is punishable under _________ of IT act.
a) Sec 64 b) Sec 65 c) Sec 66 d) Sec 67
18) Sending threatening messages through e-mail is punishable under________ of IPC.
a) Sec 504 b) Sec 505 c) Sec 506 d) Sec 507
19) ________ is the expansion of IPC.
a) Indian Penal Code b) Indian Procedural Code
c) Indian Protective Code d) Indian Penalty Code
20) Denial of service attack is punishable under _______ of IT act.
a) Sec 41 b) Sec 42 c) Sec 43 d) Sec 44
SECTION- B
1) Write a note on the precautions to be taken by internet users to prevent cyber crimes.
2) How to protect your e-mail account? Explain.
3) Explain about the jurisdictional problem prevailing in handling cyber crimes.
4) Write a note on bailable and non-bailable offences.
5) Briefly explain about cognizable and non-cognizable offences.
6) What are compoundable and non-compoundable offences? Explain.
7) Write a note on investigation of cyber crimes.
8) Briefly explain about power of arrest with regard to cyber crimes.
9) What is meant by power of confiscation? Explain.
10) Briefly explain about compounding of offences.
SECTION- C
1) Elaborate and explain the ways to prevent cyber crimes.
2) What are the preventive measures to be taken by the organizations to safeguard their
e-resources.
3) State the necessary measures to be taken by the state to avoid cyber crimes.
4) Classify offences on the basis of Code of Criminal Procedure.
5) List out the cyber crime offences and related provisions as stated in IT act.
6) What is tampering of computer documents? How could it be prevented?
7) Write in detail about the punishments for cyber crimes as stated in IT act.
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8) Elaborate and explain about identity theft.
9) Write in detail about cyber crimes and other statutes.
10) Explain in detail about regular cyber crimes and applicable provisions.
Answer Keys
1.A 2.A 3.A 4.B 5.B 6.C 7.D 8.A 9.B 10.A 11.B 12.B 13.A 14.B 15.A 16.A 17.B 18.C
19.A 20.C
KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
DEPARTMENT OF COMMERCE PG & PA
Class: II B.COM (PA) Semester – III
Sub. Name: Business Communication Sub. Code: 18UPA307
Prepared By: Mrs.C.Goldbell Rachel (Units I , II & III)
Dr. Sheeba.E (Units III , IV & V)
Unit I
Section A
1. Transmission of information from one person to another is called _______
a. Trade b. Business c. Emotions d. Communication
2. The study of body language is called as ____________
a. Connotation b. kinesics c. Chronemics d. Proxemics.
3. The communication which flows from the superior to subordinate____________
a. Downward Communication b.Upward Communication c.Slanting d. Formal
4.The ____________ should not be affected at the cost of correctness and completeness
a. Courtesy b. Clarity c. Brevity d. Communication
5. Exchanging facts, ideas and opinions between two or more persons is called ________
a. Clarity b. Communication c. Courtesy d.Brevity
6. An essential component of communication is _______
a. Feedback b. Communication c. Ideas d. Suggestions
7. The main purpose of communication is to achieve organisational _________
a. Effectiveness b. Goals c. Culture d. Mission
8. Effective internal communication implies _________
a. Increased sales b. Conducive work atmosphere
c. Better public image d. Good team work
9. Effective external communication implies_________
a. Increased sales b. Conducive work atmosphere
c. Better coordination d. Effective leadership
10. Employees should be encouraged to give ________
a. Order b. Suggestions c. Persuasion d. Feedback
11. The aim of _______ should be the organisation’s betterment.
a. Advice b. Warning c. Education d. Suggestion
12. _______ stands for mental health.
a. Morale b. Advice c. Education d. Warning
13. A communication that can be informal and good for interpersonal relationships is called
________ communication
a. Oral b. Written c. Upward d. Downward
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14. Communication that flows from a subordinate to the superior is called ________ communication
a. Downward b. Upward c. Horizontal d. Slanting
15. The communication that flows between people at the same level is called _______
communication
a. Horizontal b. Upward c. Downward d. Diagonal
16.A communication that is important for promoting understanding & coordinating among
various department is called ____ communication
a. Upward b. Downward c. Horizontal d. Slanting
17. A communication that has the advantages of instantaneous feedback and clarification is referred as
____
a. Diagonal b. Horizontal c. Upward d. Written
18. A communication between two individuals at different levels in different departments is called
______ communication
a. Diagonal b. Horizontal c. Upward d. Downward
19. Which is an informal channel of communication?
a. Grapevine b. Motivation c. Leadership d. Oral
20. Primarily a channel of _________ communication that can flow even vertically and diagonally.
a. Upward b. Horizontal c. Diagonal d. Downward
………………………………………………………………………………………………………
Section B
1. Give the meaning and importance of business communication.
2. Elaborate the communication cycle.
3. Classify business communication.
4. What are the principles of communication?
5. Write the significance of communication.
6. Define communication and list out the objectives of communication.
7. Explain upward and downward communication and its advantages.
8. Explain vertical communication and its advantages.
9. What is Grapevine communication? Write its types.
10. Describe horizontal communication and its advantages.
……………………………………………………………………………………………………..
Section C
1. Illustrate the modern methods of communication
2. Discuss the objectives of communication.
3. Explain the barriers in communication?
4. Write a note on Non- verbal communication.
5. Explain in detail about the types of communication.
6. Describe in detail about the communication media.
7. Elucidate the methods of communication in detail.
8. Describe in detail about the channel of communication.
9. Explain the 6 C’s in principles of communication.
10. Why does an organisation need multiple channels of communication?
Answers:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
D B A C B C A B A B B A A B A C A A A B
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Unit II
Section A
1. An enquiry made in response to the seller’s advertisement is called __________
a. Unsolicited enquiry b. Solicited enquiry c. Routine enquiry d. Status enquiry
2. Non availability of product ordered can be managed by giving a ___________
a. Trade discount b. Concession c. Counter offer d. Sample
3. Caveat emptor denotes _____
a. Seller beware b. Supplier beware b. Carrier beware d. Buyer beware
4. An order with incomplete information is called ____________
a. Defective Order b. Time-out order c. Partial order d. Suspense Order.
5. If a letter of credit is addressed to more than one bank, it is called ___________ letter of
credit
a. Routine b. Multiple c. Collective d. Circular
6. _______ enquiry made at the buyer’s own initiative.
a. Solicited b. Unsolicited c. Routine d. Status enquiry
7. Enquiry made by an old buyer in the usual course of business is ______ enquiry.
a. Solicited b. Unsolicited c. Routine d. Collective
8. ________ usually contain prices, quotations and other terms of sale, such as discount, credit,
delivery, etc.
a. Replies b. Routine enquiry c. Quotations d. Tender
9. A ________ is general and voluntary.
a. Offer b. Quotation c. Tender d. Order
10. A _________ is a specific offer for sale.
a. Offer b. Quotation c. Tender d. Enquiries
11. A _____ is an offer in which the seller undertakes to accept an order, at the price named and on the
conditions stated only within a specified time.
a. Firm offer b. Quotation c. Tender d. Order
12. A written offer to supply goods or do a job for an agreed price is called _______
a. Offer b. Quotation c. Tender d. Order
13. ________ establishes a legal relation between the seller and the buyer.
a. Offer b. Order c. Tender d. Quotation
14. A form that includes all relevant instructions about time allowed for execution of the order and
about terms of payment is called __________
a. Order form b. Tender c. Offer d. Enquiries
15. Sometimes sellers receive orders with incomplete information is called________
a. Defective order b. Flawless order c. Sound order
16. When goods can be bought and sold without cash payment is called _________
a. Credit b. Debit c. Status d. Profit
17. The names of the business firms that can submit a report on a customer’s creditworthiness is
referred as _____
a. Trade reference b. Bank reference c. Status enquiries d. Solicited enquiries
18. Letters that are usually written in a series, each successive letter stronger in tone than its
predecessor is called _______
a. Collection b. Sales c. Circular d. Status enquiries
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19. Letters that have been observed to be good- humoured, friendly and sometimes even stunt letters
make debtors pay more easily than they are stiff and strongly worded is ___
a. Sales b. Circular c. Humorous d. collection
20. A ________ can be commercial or non- commercial.
a. letter of credit b. sales letter c. circular letter d. Collection letter
…………………………………………………………………………………………………
Section B
1. Discuss the functions of business letters.
2. Explain the essentials of an effective business letters.
3. Discuss the various replies for the status enquiry.
4. Draft a circular letter announcing the change in address.
5. Give short notes about inside address.
6. Give short notes about body of the letter.
7. What do you mean by complimentary close? Give examples.
8. What do you mean by offer and quotations?
9. Place an order for certain goods. State that they are to be sent by parcel post.
10. Explain about the trade and bank reference.
…………………………………………………………………………………………………
Section C
1. Discuss the various kinds of business letters?
2. Give the layout of a business letter..
3. Draft a letter to a supplier requesting for the price list of umbrellas and raincoats.
4. Draft a sales letter about a new energy drink.
5. Explain in detail about the hints in Enquiries and replies letter.
6. Describe in detail about the parts of a letter.
7. Draft a letter to confirm a quotation sent earlier by mail.
8. You have received a large first order from a customer. Write a letter thanking him and asking
him to furnish you the bank details.
9. Draft a letter announcing a gift scheme on the occasion of the Diwali to increase the sale of the
latest design of suiting.
10. Write a sales letter to promote the sale of multipurpose cell phone for business executives.
…………………………………………………………………………………………………
Answers:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B C D A B B C A A B A C B A A A A A A B
Unit III
Section A
1. A person who acts on behalf of the principal to sell the goods in the market is ________
a. Supplier b. Agent c. Promoter d. None
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2. __________ is issued along with the letter of credit , in which the signature of the holder is attested
a. .Letter of attachment b. Letter of indication c. Consent letter d. Letter of specification
3. There are _________ types of insurance
a. 2 b. 3 c. 4 d. 5
4. Agents are paid __________ on the goods handled by them
a. Salary b. Wages c. Commission d. Brokerage
5. Agency contracts are given for a ________ period and can be renewed periodically.
a. Fixed b. Routine c. General d. Flexible
6. Expand FOR _________
a. Free on Road b. Foreign or Rural c. Free on Reign d. Fair on Road
7. The insurance that deals with fire accidents are called as _______ insurance
a. Life b. Marine c. Fire b. Burglary
8. The insurance that deals with life policies are called as _______ insurance
a. Life b. Marine c. Fire b. Burglary
9. If agreed value for goods is mentioned then it is a _______
a. Average policy b. Specific policy c. Floating Policy d. Valued policy
10. A facility that is availed only by the current account holders is called ____ facility
a. Loan b. Cash withdrawals c. Overdraft d. Fixed deposit
11. We should keep our savings with banks because
a) It is safe b) Earns interest c) Can be withdrawn anytime d) All of above
12. Bank does not give loan against
a) Gold Ornaments b) LIC policy c) Lottery ticket d) NSC
13. Nomination can be done in
a) Savings Bank account b) Recurring Deposit account c) Fixed Deposit account d) All of above
14. Minimum age required to open SB account in the bank
a) 8 years b) 10 years c) 12 years d) None of above
15. Bank does not provide loans for
a) Crop loans b) Education loans c) Home loans d) Drinking & Gambling
16. KYC means
a) Know your customer b) Know your character c) Both of above d) None of above
17. Life insurance means
a) Insurance of human b) Insurance of life of human and Cattle c) Insurance of Life of Machines d)
All of above
18. PAN means
a) A kind of utensil b) Primary Account Number c) Permanent Account Number d) None of above
19. Business Correspondent means
a) An agent who provides banking services b) An agent of business house c) A type of money
lender d) None of above
20. While making nomination, signature of nominee is required on
a) Account Opening Form b) Nomination form c) Affidavit d) None of above
………………………………………………………………………………………………………
Section B
1. Enlist the situations in which we have correspondence with bank
2. What are the kinds of life policies?
3. What is insurance? Explain its types?
4. Discuss on the correspondence between principal and an agent.
5. Who is an agent?
6. What do you mean by agency correspondence?
7. Draft a letter to a customer whose account has been overdrawn informing him such practice is
not allowed by the bank.
8. Write a letter to the bank for opening a current account.
9. Differentiate between a principal and an agent.
10. Write a letter to the bank requesting for an educational loan.
…………………………………………………………………………………………………..
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Section C
1. Explain the stages in agency correspondence.
2. Write a letter enquiring about the surrender value of the policy.
3. Draft an application for an agency
4. Draft a letter announcing the cancellation of agency.
5. Write a letter to the bank requesting for an overdraft facility.
6. Draft a letter to the bank for opening a current account.
7. Write a letter to the bank for stopping the payment of a cheque.
8. Draft a letter to the head office seeking their approval to raise overdraft limit.
9. Discuss about the application for an agency.
10. Draft a letter to the manufacturer for obtaining an agency.
………………………………………………………………………………………………………
Answers:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B A B C A A C A B C A B C D D A A C B B
Unit IV
Section A
1. A formal written record of the meeting is called ___________
a. Minutes b. Agenda c. Reports d. Notice.
2.. An advance information sent to everyone entitled to attend the meeting in written form is ----
a. Agenda b. Notice c. Minutes d. None .
3. The important tool for making the meeting effective is _________
a. Minutes b. Agenda c. Reports d. Notice.
4. A notice for a meeting should be sent -------------- days before the meeting.
a.21 b. 24 c. 25 d. 28
5. A/An ______ Report can be denied at any time.
a. An oral report b. A written report c. A functional report d. Financial report
6. A/An _____ is a permanent record.
a. Oral report b. Written report c. Functional report d. financial report
7. A Report that is usually in the form of a person- to- person communication is ___ report
a. Informal b. Formal c. Special d. Routine
8. A report that can be statutory or non- statutory is ___ report
a. Informal b. Formal c. Special d. Routine
9. The report that can be prepared and presented according to the form and procedure laid down by
law is called _________ report
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a. Non- statutory b. Formal c. Statutory d. Informal
10. A report that is prepared and presented at regular, prescribed intervals in the usual routine of
business .is called _______ report
a. Periodic b. Formal c. Special d. Statutory
11. The reports that are related to a single occasion or situation is called ____ report
a. Special b. Formal c. Periodic d. Informal
12. On the basis of _________the report can be informative or interpretative.
a. Function b. Nature c. Number of persons d. Decisions
13. On the basis of _______ of the subject dealt with, we have a problem- determining report or fact-
finding report.
a. Function b. Nature c. Number of persons d. Both a & b
14. A good report is always ________
a. Reader-oriented b. Scientific-oriented c. Periodic-oriented d. Writer -oriented
15. A document that can be recorded in tabular form or continuous paragraphs is called a. a. a.
Agenda b. Notice c. Minutes d. Reports
16. Entries are made in the minutes book within _____ days of the conclusion of the meeting.
a.25 b. 30 c. 21 d. 32
17. Each page of the minutes book is dated and signed by the ______
a. Chairperson b. Directors c. Manager d. CEO
18. A statement that helps the members to come prepared for the meeting is called
___
a. Minutes b. Agenda c. Reports d. Notice.
19. An advance _______ is sent to all the members entitled to attend the meeting.
a. Agenda b. Notice c. Minutes d. Report
20. In minutes of resolution only _______ are recorded
a. Resolutions b. brief account of discussion c. Functions d. Both a& b
……………………………………………………………………………………………………………
…
Section B
1. Write the layout of agenda.
2. List the characters of good report.
3. Write the importance and type of minutes
4. Enlist the duties of a secretary
5. How to prepare a report?
6. List out the duties of a secretary.
7. Why is it important to circulate agenda among the members in advance?
8. How does agenda help in regulating the proceedings of a meeting?
9. In how many ways a report can be organised?
10. State the main points to be considered while drafting a report.
………………………………………………………………………………………………………
Section C
1. Explain the structure of report.
2. Draft a report to managing director from human resource manager about the revised salary
Structure of employees.
3. Draft a minutes for an annual general meeting of the board of directors in a company.
4. Prepare a notice along with a agenda inviting the members for the quarterly board meeting.
5. Write a letter to the manufacturer asking him for a sole agency at North India for his product.
6. Briefly explain the steps involved preparing minutes.
7. Explain the classification of secretarial correspondence.
8. Write a letter to the shareholder who has complained about your decision not to pay dividends
in spite of good profits.
9. Draft a report as a secretary to the board of directors about the need for an immediate advertising
campaign.
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10. What do you mean by minutes? Discuss its contents.
Answers:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A B B A A B A C B C C C B A C B A B B A
Unit V
Section A
1. A-------------- is a personal marketing document that communicates your career objective .
a. Resume b. Public speech c. Business reports d Letters.
2. A ----------- reports are longer and may involve in research analysis and interpretation of data.
a. Informal b. Formal c. Legal d. Routine
3. An -------------- is a mutual exchange of information between the employer and the candidate for a
demand in the organization position .
a. Public speech b. Interview c. Report presentation d. All the above.
4. The routine and important part of modern business communication is ___________
a. Reports b. E-mails c. Circulars d Letters.
5. The process of communicating information to a large audience is called ________
a. Interview b. Public speech c. Reports d. None
6. An application letter written in response to an advertisement is called _____ letter
a. Formal b. Informal c. Solicited d. Unsolicited
7. An application letter written in writer’s initiative is called _____ letter
a. Formal b. Informal c. Solicited d. Unsolicited
8. An interview conducted to assist the performance is called ______ interview
a. Selection b. Appraisal c. Grievance d. Exit
9. An interview conducted to hear about the complaints is called ______ interview
a. Selection b. Appraisal c. Grievance d. Exit
10. An interview conducted to know the reason for leaving the organization is called ______
interview
a. Selection b. Appraisal c. Grievance d. Exit
11. An interview conducted to select a person for a job is called ______ interview
a. Selection b. Appraisal c. Grievance d. Exit
12. A speech can be divided into ______ parts.
a. 3 b. 4 c. 5 d. 2
13. A/An _______ is conducted to select the right person for the right job.
a. Appraisal b. Selection c. Interview d. Public speech
14. An interview is conducted to avoid time consuming _______ process
a. Selection b. Screening test c. Appraisal d. Both a & b
15. Mixed pattern of structured and unstructured interview is called ____ interview
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a. Stress b. Semi structured c. Group d. Depth
16. To redress the complaints about the constrains ________ interview is conducted
a. Selection b. Appraisal c. Grievance d. Exit
17. A/An _______ meeting is the first meeting conducted after the establishment of the company.
a. Statutory b. Annual General c. Class d. Extra-ordinary annual general
18. Public speech is like a ________ talk
a. Informal b. Formal c. Friendly d. Casual
19. A document that contains only personal information about a person is called _____
a. Resume b. Curriculum vitae c. Bio-data d. Both b & c
20. An interview conducted to investigate on disciplinary grounds is called ____ interview
a. Exit b. Appraisal c. Reprimand d. Grievance
……………………………………………………………………………………………………..
Section B
1. Explain the interviewee’s preparation for the interview.
2. What are the types of resume and type of minutes?
3. Write short note on public speech.
4. Write the characters of the business report presentation.
5. Mention any five characteristics of a good speech.
6. Why is it important to keep the speech brief?
7. Give the format of an application letter.
8. Write down the different types of interview.
9. Enlist the points to be kept in mind while writing an application letter.
10. What is the need for conducting an interview?
…………………………………………………………………………………………………
Section C
1. What do you mean by interview? Explain the interview techniques.
2. Write in detail about the various heads that are included under resume.
3. Write the guidelines in preparing application letter.
4. Discuss the format of a resume.
5. Elucidate the characteristics of a good speech. Enlist the points to be kept in mind while
preparing a speech.
6. Draft a vote of thanks to mark the end of a state level seminar.
7. Write down the interviewer’s conduct during the time of interview.
8. Discuss the need for an interview and explain the types of interview.
9. Explain the various heads under a resume.
10. Draft a bio-data of yourself with all the necessary information.
…………………………………………………………………………………………………..
Answers:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A B B B B C D B C D A A C A B C A A C C
KONGUNADU ARTS AND SCIENCE COLLEGE(AUTONOMOUS)
COIMBATORE- 641 029
Class: II B.COM (PA) Semester –III
Sub. Name: Accounting Standards Sub. Code: 17UPA307 / 18UPA308
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Prepared By: Dr.R.Murugesan
QUESTION BANK
Unit I
SECTION –A 1 Mark
1. What do you mean by ASB?
a. Accounting Security Board b. Accounting Standard Board
c. Accounting Standardization Boardd. None of these
2. IASB was established in the year….
a. 1999 b. 1977 c. 1972 d. 2001
3. FASB is based in…………….
a. London b. Chennai c. New York d. Norwalk
4. ………………..is the process of determining the monetary amounts at which the elements
of financial statements are recognized and carried in the financial statements.
a. Recognition b. Addition c. Measurement d. Carrying
5. …………….is the residual interest in the asset of an entity after deducting all liabilities
a. Capital b. Net Asset c. Depreciation d. Equity
6. ASB was set up in India on………………
a. 21 April 1977 b. 1 April 1977 c. 1 January 1976 d. 31 March 1978
7. Indian Accounting Standard 3 (AS3) deals with….
a. Amalgamation b. Lease
c. Cash flow Statement d. Depreciation Accounting
8. What is the expansion of IASC?
a. Indian Accounting Standard Committee
b. International Accounting Standard Committee
c. International Accounting Standard Control
d. None of these
9. How many members are there in IASB?
a. 10 b. 12 c. 20 d. 14
10. Accounting profession of India is governed by………………….
a. ICAIb. Ministry of Corporate Affairs c. Govt. Of India d. ASB
11. IASC head quartered at….
a. Delhi b. London c. New York d. Tokyo
12. What is conceptual framework for accounting?
a. A set of rules and regulations
b. A set of financial statements
c. Components of financial statements
d. A set of principles underpinning financial reporting
13. Harmonise accounting policies and practices in India_______ was constituted.
a. ASB b. ICAI
c. RBI d. SEBI
14. Who issues Accounting Standards in India?
a. ASB b.ICAI c. IMF d. RBI
15. ICAI Stands for______
a. Institute of charted accountants of India b. Institute of cost accountants of India
c. International charted accountants of India d. International cost accountants of India
16. Who determines and formulate the accounting standards in India?
a. SEBI b.ICAI c. ASB d. RBI
17. Who is the father of modern accountancy?
a. Luca Pacioli b. King Chandra Gupta c. C.P. Gupta d. Kautilya
18. Accounting is universally accepted as _______
a. Principles b. Rules c. Language of business d. Policies
19. Which one is not include in the financial statement?
a. Profit & loss account b. Balance sheet
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c. Cash flow statement d. Trial balance
20. IASC was established in_______
a. June1973 b. April 1977 c. January 1976 d. March 1978
Answer for part A ( Unit I)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B B D C D A C B D A B D A B A C A C D A
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SECTION -B 5 Marks
1. Define accounting standards and explain their meaning
2. Who issues accounting standards in India?
3. What do you understand by small and medium sized companies?
4. What are the objectives of accounting standards?
5. Enumerate the reasons for which accounting standards are needed.
6. List out the advantages of accounting standards.
7. What is Accounting Standards Board?
8. How are accounting standards formulated?
9. What are the functions of Accounting Standards Board?
10. Give importance of accounting standards.
SECTION –C 8 Marks
1. Discuss the applicability of accounting standards.
2. What are accounting standards? Explain their objectives.
3. What are the needs for accounting standards? Discuss the reasons.
4. Explain the significance and advantages of accounting standards.
5. What is Accounting Standards Board? How is it formed? How does it formulate standards?
6. Explain the scope and functions of accounting standards board.
7. Discuss the scope of accounting standards.
8. Explain the procedures for formulation and issuing accounting standards.
9. Explain the meaning and features of level I, level II and level III enterprises in relation to
accounting standards.
10. Explain briefly any five Indian accounting standards.
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Unit II
SECTION-A 1 Mark
1. Net profit or loss for the period dealt with __________
a. AS:3 b. AS:4 c. AS:5 d. AS:7
2. Accounting for fixed assets dealt with ________
a. AS:5 b.AS:6 c. AS:10 d. AS:11
3. Extraordinary items are dealt in under which accounting standard?__________
a. AS:7 b.AS:5 c. AS:3 d. AS:2
4. Accounting for construction contract deals with______
a. AS:10 b.AS:7 c. AS:13 d. AS:12
5. Accounting for revenue recognition deals with_______
a. AS:9 b.AS:5 c. AS:20 d. AS:21
6. Depreciation accounting deals with ______
a. AS:7 b.AS:6 c. AS:3 d. AS:2
7. AS-6 depreciation accounting not applicable to ______
a. Goodwill b.Machinery c. Furniture d.Building
8. Mines, quarries etc. are_________
a. Fixed asset b. Fictitious asset c. Current asset d. Wasting asset
9. Depreciation is calculated on ______
a. Fixed assets b. Current assets c. Land d. Fictitious asset
10. Which one of the following event may be extraordinary items?
a. Earthquakes b. Rain c. Accident d. Loss by fire
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11. The activity that arise in the normal course of business is known as_____
a. Ordinary activities b. Extraordinary activities
c. Special activities d. Special events
12. The activities which are not expected to occur as part of business is known as_____
a. Ordinary activities b. Extraordinary items
c. Special activities d. Special events
13. Land is not a depreciable assets because it has______
a. Limited life b. Unlimited life c. More value d. More earnings
14. A contract for construction of bridge, dam, building is known as _____
a. Construction contract b. Contract
c. Construction agreement d. Construction dealings
15. The contractor receives contract price plus percentage of amount, that contract is ____
a. Fixed price contract b. Cost plus contract
c. Wagering Contract d. Contingent contract
16. Cost that are directly related to specific contract is called as _______
a. Allocable cost b. Specific cost c. Fixed cost d. Variable cost
17. The following cost is not directly related to specific contract_______
a. Insurance premium paid for all the contracts
b. Cost of material used in construction
c. Depreciation of plant used on specific contract
d. Cost of hiring plant for specific contract
18. Revenue arising from sale of goods in the ordinary course of business deals with
a. AS:9 b.AS:5 c. AS:20 d. AS:21
19. Royalty, interest, dividend income received is deal with _________
a. AS:10 b.AS:5 c. AS:20 d. AS:9
20. Which one of the following is not a fixed assets?
a. Machinery b. Building c. Cash d. Furniture
Answer for part A (Unit II)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
C C B B A B A D A A A B B A B B A A D C
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SECTION -B 5 Marks
1. What are the Extra-ordinary items under AS -5?
2. Briefly explain the meaning of prior period items under AS-5.
3. What is a depreciable asset as per AS-6?
4. Explain meaning of the cost of assetas per AS-6.
5. How is estimated useful life of a depreciable asset ascertained?
6. What is a construction contract as par AS -7?
7. What do you mean by contract cost and contract revenue in the context of AS-7?
8. What is revenue as per AS-9?
9. What are fixed assets under AS-10?
10. How do you determine cost of fixed assets under AS-10?
SECTION -C 8 Marks
1. How do you deal with extraordinary items, prior period items and changes in accounting policies as
per AS-5?
2. Explain the provision of AS-6 depreciation accounting in detail.
3. What are the disclosures necessary under AS-6 in the financial statements?
4. Distinguish between fixed price contract and cost plus contract under AS-7.
5. Explain the methods of revenue recognition as provided in AS-9.
6. On what basis revenue from interest, royalty, dividend from investments in shares recognized
as per AS-9?
7. What are the disclosure requirements relating to fixed assets under AS-10?
8. What is the accounting treatment for revaluation of fixed assets under AS-10?
9. How are revenues from sale of goods and services performed recognized? Explain.
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10. Discuss the accounting treatment for revaluation of fixed assets under AS-10.
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Unit III
SECTION-A 1 Mark
1. Type of contract which involves future exchange of assets at a specified price
is classified as
a. Future contracts b. Present contract c. Spot contract d. Forward contract
2. Foreign Exchange rates in India are determined by:
a. Finance Ministry b. RBI c. FEDAI d. Market forces of demand/supply
3. Who regulates the foreign trade in India?
a. RBI b. DGFT c. FEDAI d. SEBI
4. A contract which affords adequate protection to an exporter or an importer against
exchange risk is :
a. Hedging b. Guarantee c. Letter of Credit d. Forward Contract
5. A group of European countries have formed a union and created a common
Currency known as __________.
a. The Euro b. The European Unionc. The EMUd. The EU currency
6. Borrowing cost are,
a. Interest and other cost that an entity incurs in connection with borrowing of funds
b. Dividend payments
c. Fine on delayed payments
d. None of the above
7. Borrowing cost do not include,
a. Interest on debentures
b. Incremental administrative fees for raising loans
c. Dividend declared to equity shareholders
d. All of the above
8. An entity shall cease capitalizing borrowing cost when
a. Expenditure on the asset is being incurred
b. Borrowing cost are being incurred
c. The asset is materially ready for its intended use
d. All of the above
9. Assets held by an entity for earning income by way of rent dividend is _________
a. Investments b. Assets c. Liabilities d. Income
10. Investments property is an investment made in_________
a. Machinery b.Land &building c.Furniture d.Current assets
11. Investment without physical form is ________
a. Building b. Machinery c.Shares d. Furniture
12. Government grant received for immediate financial support to only one entity in the industry
presented as extraordinary item as per
a. AS.5 b. AS.6 c. AS.12 d. AS.13
13. Government grant is also known as _______
a. Income b. Capital c. Subsidy d. Bonus
14. Government grant may be in the form______
a. Cash b. Kind c. Cash or kind d. None of these
15. Accounting for government grant deals with _____
a. AS.12 b. AS.7 c. AS.5 d. AS.29
16. Refund of government grant is treated as an extraordinary items as per ______
a. AS.11 b. AS.9 c. AS.5 d. AS.26
17. The effects of changes in foreign exchange rates deals with_____
a. AS.12 b. AS.11 c. AS.9 d. AS.29
18. Accounting for investment deals with________
a. AS.13 b. AS.7 c. AS.11 d. AS.12
19. Interest and other costs incurred in connection with the borrowing of funds are____
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a. Fixed cost b. Variable cost c. Borrowing cost d. Marginal cost
20. Accounting treatment for borrowing cost deals with______
a. AS.12 b. AS.16 c. AS.17 d. AS.20
Answer for part A (Unit III)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
D D D D A A C C A B C A C C A C B A C B
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SECTION -B 5 Marks
1. What do you understand by reporting currency and exchange rate in the context of AS-11?
2. What are monetary and non-monetary items under AS-11?
3. What is Government grant under AS-12? When should the government grants be recognized
as revenue?
4. Briefly explain capital approach and income approach in relation to AS-12 accounting for
government grants.
5. What are long term investments and current investments under AS-13?
6. At What price current investment be carried in accounts as per AS-13?
7. What is the price at which long term investments to be shown in accounts as per AS-13?
8. What are borrowing costs under AS-16?
9. What do you understand by capitalization of borrowing costs?
10. Write a note on qualifying assets in the context of AS-16.
SECTION -C 8 Marks
1. Explain the procedure for accounting for the effect of changes in foreign exchange rates under
AS- 11.
2. Distinguish between integral foreign operation and non-integral foreign operation.
3. How should the government grants be accounted in a company as per AS-12?
4. Explain the government grants related to specific fixed assets.
5. What are the accounting treatments for refund of government grants?
6. Describe the accounting treatment for long term investment under AS-13.
7. Explain the treatment of current investments as per AS-13.
8. Explain the various forms of investment.
9. Discuss the provisions relating to capitalization of borrowing cost under AS-16.
10. What are all included under borrowing costs as per AS- 16?
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Unit IV
SECTION –A 1 Mark
1. A distinguishable component of an enterprise that is engaged in providing an individual
product or service that is different from business segment is known as
a. Business segment b. Geographical segment
c. Reportable segment d. Marketing segment
2. A distinguishable component of an enterprise that is engaged in providing products or services
within a particular economic environment is known as____
a. Business segment b. Geographical segment
c. Reportable segment d. Marketing segment
3. The segment information is required to be disclosed by this statement____
a. Business segment b. Geographical segment
c. Reportable segment d. Marketing segment
4. Revenue from sales to external customers as reported in the profit and loss account is ____
a. Enterprise revenue b. Revenue c. Segment revenue d. Business revenue
5. The aggregate portion of enterprise revenue that is directly attributable to a segment is ____
a. Enterprise revenue b. Revenue c. Segment revenue d. Business revenue
6. Segment revenue - segment expense = _______
a. Segment result b. Net profit c. Net income d. Net result
7. Earnings per share comes under the accounting standard_______
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a. AS:20 b. AS:26 c. AS:17 d. AS:29
8. Provision, contingent liabilities and contingent assets comes under the _______
a. AS: 13 b. AS: 12 c. AS:16 d.AS:29
9. AS: 26 deals with the __________
a. Fixed assets b. Current assets c.Intangible assets d. Tangible assets
10. Which one of the following is intangible assets?
a. Goodwill b. Furniture c. Machinery d. Building
11. An intangible asset (other than goodwill) is,
a. An identifiable asset without physical substance
b. A non-monetary asset without physical substance
c. An identifiable non-monetary asset without physical substance
d. All of the above
12. An intangible asset is identified when,
a. It is separable
b. It arises from contractual or other legal rights, regardless whether those rights are
transferable or separable from the entity
c. Either (a) or (b)
d. None of these
13. The cost of intangible asset at initial recognition is measured at its fair value when,
a. It is internally generated
b. It is acquired as a part of business combination
c. It is acquired by way of a Government grant
d. Both (b) and (c)
14. The useful life of an intangible asset may be,
a. Finite b. Infinite c. Either (a) or (b) d. None of these
15. Which of the following securities do not influence diluted EPS?
a. Equity shares not entitled to dividend, but which may in the future
b. Ordinary preference share
c. Convertible loan stock
d. Share option
16. Which of the following is not an example of a potential ordinary share?
a. Standard preference share b. Convertible preference share
c. Stock warrant d. Convertible debt
17. Theoretical ex-rights price (‘TERP’) is calculated when there is a:
a. Bonus issue b. Right issue c. Stock split d. All of these
18.Cash payments to acquire the entity’s own shares (ie, treasury shares) are:
a. Cash outflows from operating activities
b. Cash outflows from investing activities
c. Cash outflows from financing activities
d. None of the above
19. A…………. is an operating segment or results from the aggregation of two or more
operating segments that meets quantitative thresholds.
a. Joint Venture b. Associates c. Reportable segment d. None of the above
20. Segment reporting deals with_____
a. AS:20 b. AS:26 c. AS:17 d. AS:29
Answer for part A (Unit IV)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A B C A C A A D C A C C D C B A B B C C
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SECTION -B 5 Marks
1. What is business segment in the context of AS-17 segment reporting?
2. What is geographical segment in the context of AS-17 segment reporting?
3. What do you understand by Earning per share?
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4. Distinguish between basic EPS and diluted EPS.
5. What is intangible asset as per AS-26?
6. How are intangible assets amortized as per AS-26?
7. Briefly explain the meaning of contingent liability in the context of AS-29.
8. What is a contingent asset in the context of AS-29?
9. List out the disclosures in the financial statement relating to provision as per AS-29.
10. How are provisions recognized as per AS-29?
SECTION -C 8 Marks
1. Discuss in detail segment reporting under AS-17.
2. Discuss the main features of segment reporting as per AS-17.
3. Explain the meaning and disclosure in the financial statements of basic EPS under AS-20.
4. Describe the meaning and disclosure in the financial statements of diluted EPS under AS-20.
5. How do you recognize expenses on intangible assets and amortize them as per As-26?
6. What is intangible asset? How do you deal with such assets as per AS-26?
7. Describe provisions, contingent liabilities and contingent assets under AS-29.
8. Discuss the accounting treatment of provisions, contingent liabilities and contingent assets in the
financial statement as per AS-29.
9. Explain the recognition of contingent liabilities and contingent assets as per As-29.
10. Discuss the recognition of provision for restructuring as per As-29.
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Unit V
SECTION- A 1 Mark
1. AS-30,31,32 applicable to all commercial, industrial and business entities other than _____
a. Small sized entities b. Medium sized entities
c. Small and Medium sized entities d. Large entities
2. Financial instruments recognition and measurement deals with _______
a. AS:20 b. AS:26 c. AS:19 d.AS:30
3. Financial instruments presentation deals with_______
a. AS:31 b. AS:26 c. AS:17 d. AS:29
4. Financial instruments disclosure deals with_________
a. AS:31 b. AS:32 c. AS:19 d.AS:30
5. IASB stands for________
a. International Accounting Standards Board
b. Indian Accounting Standards Board
c. International Auditing Standards Board
d. International Accounting Statement Board
6. Which of the following is /are example of primary or direct financial instrument
a. Fixed deposit receipt b. Insurance policies c. Mutual fund Unit d. Debentures
7. Which of the following is /are example of Secondary or indirect financial instrument
a. Equity shares b. Preference shares c. Post office saving deposit d. Bonds
8. Which of the following is not a negotiable instrument?
a. ADR b. GDR c. FDR d. IDR
9. The financial service which is pooling risks of people_________
a. Mutual fund b. Venture capital c. Insurance d. All of these
10. According to IFRS, the term financial asset includes
a. Cash or Cash equivalent b. Equity shares
c. Contractual right to receive cash d. All the above
11. --------------is also known as “G.Secs”
a. Gold Traded Fund (GTF) b. General Securities
c. Govt. Securities d. Growth oriented fund
12. .................. are negotiable instrument issued by an overseas depository
a. ADR b. GDR c. IDR d. All of these
13. Financial assets are___ .
a. Directly contribute to the country's productive capacity
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b. Indirectly contribute to the country's productive capacity
c. Contribute to the country's productive capacity both directly and indirectly.
d. Do not contribute to the country's productive capacity either directly or indirectly.
14. IFRS stands for_________________
a) International Financial Reporting Standards
b) Indian Financial Reporting Standards
c) Industrial Financial Reporting Standards
d) Institutional Financial Reporting Standards
15. As per IFRS15, an agreement between two or more parties that creates enforceable right
and obligation is called….
a. Agreement b. Contract c. Performance obligation d. Liability
16. Which of the following is not an exception for application of IFRS 15
a. Lease contract b. Insurance contract
c. None monetary exchanges d. All the above
17. A……………………..is the liability of uncertain timing and uncertain amount.
a. Provision b. Reserve c. Current liability d. None of the above
18. Specific principles, bases, conventions, rules and practices applied in presenting financial
statements, are called,
a. Accounting estimates b. Accounting policies
c. Prospective application d. Accounting estimates
19. Indian accounting standards converged with IFRS is known as……….
a. IASs b. Ass c. IFRSIC d. Ind Ass
20. ….. is a financial reporting period shorter than a full financial year
a. Short period b. A quarter c. Interim period d. None of these
Answer for part A (Unit V)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
C D A B A D C C C A C D B A B D A B D C
SECTION -B 5 Marks
1. What are the objectives of AS-30?
2. What do you mean by financial assets in the context of AS-30?
3. List out the financial assets in the context of AS-30.
4. What is financial liability in the context of AS-30?
5. What are the objectives and scopes of AS-31?
6. What are the applicability of AS-32?
7. What is derivative instrument?
8. What do you mean by IFRS?
9. What are the objectives of IFRS?
10. State the applicability of IFRS.
SECTION -C 8 Marks
1. Explain the classifications of financial instrument as per AS-30.
2. Discuss the accounting and measurement of financial assets as per AS-30.
3. Explain the measurement of financial liability as per AS-30.
4. Explain the various types of financial assets.
5. Explain the various types of financial liability.
6. Discuss the de-recognition of financial assets as perAS-30.
7. Describe the financial instrument presentation as per AS-31.
8. Discuss the objectives and scope of AS-32.
9. Explain the financial instrument disclosure as per AS-32.
10. Explain the benefits of International Financial Reporting Standards.
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KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS)
COIMBATORE
DEPARTMENT OF COMMERCE PA & PG
Class: II B.Com Semester –III
Sub. Name: Introduction to Information
Technology
Sub. Code: 17UPA3A3 /
18UPA3A3
Prepared By: Dr. M. USHARANI
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UNIT-I
SECTION-A
CHOOSE THE CORRECT ANSWER
1. The basic operations performed by a computer are_______________
(a) Arithmetic operation (b) Logical operation (c) Storage and relative (d) All the above
2. The brain of any computer system is____________
(a) ALU (b) Memory (c) CPU (d) Control unit
3. Computer is free from tiresome and boardroom. We call it__________
(a) Accuracy (b) Reliability (C) Diligence (d) Versatility
4. Software in computer_______________
(a) Enhances the capabilities of the hardware machine (b) Increase the speed of central processing
unit (c) Both of above (d) None of above
5. The arranging of data in a logical sequence is called______________
(a) Sorting (b) Classifying (c) Reproducing (d) Summarizing
6. Instructions and memory address are represented by_______________
(a) Character code (b) Binary codes (c) Binary word (d) Parity bit
7. A set of information that defines the status of resources allocated to a process is________
(a) Process control (b) ALU (c) Register Unit (d) Process description
8. BCD is______________
(a) Binary Coded Decimal (b) Bit Coded Decimal (c) Binary Coded Digit (d) Bit Coded
Digit
9. Properly arranged data is called_____________
(a) Field (b) Words (c) Information (d) File
10. A computer consist of________________
(a) A central processing unit (b) A memory(c) Input and output unit(d) All of the above
11. What are the three decisions making operations performed by the ALU of a computer?__
(a) Grater than (b) Less than (c) Equal to (d) All of the above
12. The word processing task associated with changing the appearance of a document is____
(a) Editing (b) Writing (c) Formatting (d) All of above
13. Once you load the suitable program and provide required data, computer does not need human
intervention. This feature is known as_______________
(a) Accuracy (b) Reliability (c) Versatility (d) Automatic
14. A byte consists of_______
(a) One bit (b) Four bits (c) Eight bits (d) Sixteen bits
15.Modern Computers are very reliable but they are not_____________
(a) Fast (b) Powerful (c) Infallible (d) Cheap
16. The central processing unit (CPU) consists of_______________
(a) Input, output and processing (b) Control unit, primary storage, and secondary storage (c)
Control unit, arithmetic-logic unit and primary storage (d) Control unit, processing, and primary
storage
17. The notable features like keyboards, monitors, GUI were developed in_______generation
(a) First (b) Second (c) Third (d) Fourth
18. Which is the highest form?_______________
(a) Data (b) Information (c) Knowledge (d) All of above
19.What produces useful information out of data?________________
(a) Computer (b) Processing (c) Programming (d) none of above
20.The act of retrieving existing data from memory is called_________________
(a) Read-out (b) Read from (c) Read (d) All of above
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
d c c a a b d a c d d c d c c c c c b d
SECTION-B
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ANSWER THE FOLLOWING
1. Write short notes on history of computers.
2. Explain the various characteristics of a computer.
3. List out the different types of computers.
4. Describe the basic components of a computer system.
5. List out and explain the difference between data and information.
6. State any five computer related jobs in business.
7. List out the things that the computers can’t do.
8. Write a note on automation and diligence with respect to a computer.
9. Briefly explain the different types of computer software.
10. Bring out the need of computers in finance department.
SECTION-C
ANSWER THE FOLLOWING
1. Discuss the importance of computers in business with examples.
2. Define the data processing concept and state its objectives.
3. Write a short note on :(i) data storage and (ii)data retrieval capabilities.
4. Explain the computer applications in various areas of business.
5. Elucidate the different parts of the computers with suitable diagrams.
6. What is the use of computer in Government, the Military and Politics?
7. Explain the levels of information and categories of information.
8. Describe how 21st Century technology assists the use of the knowledge, information and data. 9. What are the six elements of computer system? Discussin brief.
10. Discuss the type of Computer Applications used in Sickness and in Health?
UNIT-II
SECTION-A
CHOOSE THE CORRECT ANSWER
1.Which of the following devices used stones for performing calculations?_______
(a) Sand table (b) Abacus (c) Napier bones (d) Pascaline
2. Microprocessors as switching devices are for which generation computers________
(a) First Generation(b) Second Generation (c) Third Generation(d) Fourth Generation
3. Integrated Circuits (ICs) are related to which generation of computers?________
(a) First generation(b) Second generation (c) Third generation (d) Fourth generation
4. A hybrid computer______________
(a) Resembles digital computer (b) Resembles analogue computer (c) Resembles both a digital and
analogue computer (d) None of the above
5. Which type of computers uses the 8-bit code called EBCDIC?_____________
(a) Minicomputers (b) Microcomputers (c) Mainframe computers (d) Super computer
6. Chief component of first generation computer was______________
(a) Transistors(b)Vacuum Tubes and Valves(c) Integrated Circuits(d) None of above
7. Which of the following IC was used in third generation of computers?______________
(a) SSI (b) MSI (c) LSI (d) Both a and b
8. The main electronic component used in first generation computers was______________
(a) Transistors (b) Vacuum Tubes and Valves (c) Integrated Circuits (d) None of above
9. A technique used by codes to convert an analog signal into a digital bit stream is known as______
(a) Pulse code modulation(b) Pulse stretcher(c) Query processing(d) Queue management
10.When was vacuum tube invented?_________
(a) 1900 (b) 1906 (c) 1910 (d) 1880
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11.The digital computer was developed primarily in______________
(a) USSR (b) Japan (c) USA (d) UK
12.Abacus was the first _______________
(a) electronic computer (b) mechanical computer(c) electronic calculator (d) mechanical calculator
13. Which was the most popular first generation computer?______________
(a) IBM 650 (b) IBM 360 (c) IBM 1130 (d) IBM 2700
14.The first firm to mass-market a microcomputer as a personal computer was____________
(a) IBM (b) Super UNIVAC (c) Radio Shaks(d) Data General Corporation
15. Why are vacuum tubes also called valves?____________
(a) Because they can amplify the weak signals and make them strong (b) Because they can stop or
allow the flow of current (c) Both of above (d) None of above
16. Multi user systems provided cost savings for small business because they use a single processing
unit to link several_______________
(a) Personal computers (b) Workstations (c) Dumb terminals (d) Mainframes
17. Which of the following is the first computer to use Stored Program Concept?__________
(a) UNIVAC (b) ENIAC (c) EDSAC (d) None of above
18. One computer that is not considered a portable is_____________
(a) Minicomputer (b) Laptop computer (c) Notebook computer (d) All of above
19. Which is the largest computer?__________________
(a) Mainframe Computer (b) Mini Computers (c) Micro Computers (d) Super Computers
20.WAN is a most used abbreviation in Networking, what is its full form?_____________
(a) WAP Area Network (b) Wide Area Network (c) Wide Array of Network (d) Wireless
Access Network
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
a D c c c b d b a b c d a c b c c a a b
SECTION-B
ANSWER THE FOLLOWING
1. Explain briefly the following classes of computers:
(i)Analog computer (ii) Digital computer (iii) Hybrid computer
2. Discuss the advantages and disadvantages of third generation computers.
3. Write short note on Laptop or note book computers.
4. Distinguish between Digital and Analog signal .
5. What are the features of third generation computers?
6. How is a PC different from workstation?
7. List out the different types of portable computers.
8. Write short note on computer networking and its characteristics. 9. How computers can be used for data transmission and real time data processing?
10. Point out the Characteristics of minicomputers andMicrocomputers?
SECTION-C
ANSWER THE FOLLOWING
1. Give details about the computer classification based on size and speed.
2. Explain in detail about the different generations of computers.
3. Describe any three methods of data processing with suitable diagrams.
4. Explain with suitable examples: (a)Multiprogramming (b) Multiprocessing.
5. Discuss about the important LAN structures in detail.
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6. Differentiate between analogand digital computers.
7. Difference between LAN and WAN
8. Explain different types of networks and show how communication helps in decision making.
9. Write a detailed note on WAN
10. Discuss Different Types of Networking Topology?
UNIT-III
SECTION-A
CHOOSE THE CORRECT ANSWER
1. Storage capacity of magnetic disk depends on________________
(a) tracks per inch of surface (b) bits per inch of tracks (c) disk pack in disk surface (d) All of
above
2. The two kinds of main memory are___________
(a) Primary and secondary (b) Random and sequential (c) ROM and RAM (d) All of above
3. A storage area used to store data to a compensate for the difference in speed at which the different
units can handle data is___________
(a) Memory (b) Buffer (c) Accumulator (d) Address
4. CD-ROM is a_____________
(a) Semiconductor memory (b) Memory register (c) Magnetic memory (d) None of above
5. The ALU of a computer responds to the commands coming from______________
(a) Primary memory(b) Control section (c) External memory (d) Cache memory
6. ___________produces high quality graphics (hardcopy) in colour.
(a) RGB monitor (b) Plotter (c) Ink-jet printer (d) Laser printer
7. One millisecond is______________
(a) 1 second(b) 10th of a seconds(c) 1000th of a seconds(d) 10000th of a seconds
8.The output quality of a printer is measured by_____________
(a) Dot per sq. inch(b) Dot per inch(c) Dots printed per unit time(d) All of the above
9.Which of the following storage devices can store maximum amount of data?__________
(a) Floppy Disk (b) Hard Disk (c) Compact Disk (d) Magneto Optic Disk
10. A high quality CAD system uses __________ for printing drawing and graphs
(a) Dot matrix printer (b) Digital plotter(c) Line printer (d) All of the above
11. Which of the following is not an input device?__________
(a) OCR(b) Optical scanners(c) Voice recognition device (d) COM (Computer Output to Microfilm)
12. Magnetic disks are the most popular medium for___________
(a) Direct access (b) Sequential access (c) Both of above (d) None of above
13. Which of the following produces the best quality graphics reproduction?_________
(a) Laser printer (b) Ink jet printer (c) Plotter (d) Dot matrix printer
14. Mnemonic a memory trick is used in which of the following language?____________
(a) Machine language (b) Assembly language (c) High level language (d) None of
above
15. Instruction in computer languages consist of_________
(a) OPCODE (b) OPERAND (c) Both of above (d) None of above
16. Which is considered a direct entry input device?_____________
(a) Optical scanner (b) Mouse and digitizer (c) Light pen (d) All of the above
17. Which of the following is used as a primary storage device?_____________
(a) Magnetic drum (b) Hard Disks (c) Floppy (d) All of above
18. Algorithm and Flow chart help us to____________
(a) Know the memory capacity (b) Identify the base of a number system (c) Direct the output to a
printer (d) Specify the problem completely and clearly
19.The difference between memory and storage is that memory is and storage is _________
(a) Temporary, permanent (b) Permanent, temporary (c) Slow, fast (d) All of above
20.Machine language is __________
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(a) Machine dependent (b) Difficult to program (c) Error prone (d) All of above
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
d C b d b b c b b b d d c b c d a d a d
SECTION-B
ANSWER THE FOLLOWING
1. Explain the functions of an input unit and an output unit.
2. Write a short note on different types of computer software.
3. Define flow chart and briefly explain its advantages and disadvantages.
4. Draw a flow chart to: (i) find the average of 20 numbers
(ii) find out the total of 3 subjects
5. List out and explain any two storage media.
6. Write down the features of magnetic tape.
7. Explain the features of good programming language
8. Enumerate the main purpose of a translator program.
9. Write a note on the following input devices :
(i)Track ball.(ii)Joystick.
10. Explain the structure, usage of magnetic tape. Explain the Barcodes.
SECTION-C
ANSWER THE FOLLOWING
1. Enumerate the steps involved in software development.
2. Give an elaborate note on various programming languages.
3. List out any ten program flow chart symbols and explain its functions.
4. Discuss the steps involved in developing a computer program.
5. Differentiate between complier, assembler and interpreter.
6. List the different types of printers and explain laser printer mechanism.
7. Explain the structure of Magnetic tape and Optical Disk with a suitable diagram .
8. Write in detail about output device.
9. Explain in detail the Software Types.
10. Clearly discuss any five input devices.
UNIT-IV
SECTION-A
CHOOSE THE CORRECT ANSWER
1.From which generation operating systems were developed?_______________
(a) First (b) Second (c) Third (d) Fourth
2. Operating system, editors, and debuggers comes under?_____________
(a) System Software (b) Application Software (c) Utilities (d) None of the above
3. When was the X window system born?______________
(a) 1984 (b) 1989 (c) 1988 (d) 1990
4. Which of the following is not an XT microprocessor?______________
(a) 8006 (b) 8086 (c) 8088 (d) None of above
5. HTTP is an acronym for_____________
(a)Hyper Text Transfer Protocol (b) Hyper Text Transport Protocol (c)
Hyper Target Transfer Protocol (d) High Text Transfer Protocol
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6. Linux is________________
(a) single user, single tasking (b) single user, multitasking (c) multi user, single tasking
(d) multi user, multitasking
7. Network operating system runs on__________
(a) server (b) every system in the network (c) both server and every system in the network
(d) none of the mentioned
8. Internet provides _______ for remote login.
(a) telnet (b) http (c) ftp (d) RPC
9. A Microsoft window is an ______________
(a) Operating system (b) graphic program (c) database program (d) word processing
10.Which is not application software?________
(a) Windows NT (b) Pagemaker (c) Winword XP (d) Photoshop
11. Which of the following operating system does not implement themulti tasking truly?___
(a) Windows NT (b) Windows 98 (c) Windows XP (d) MS DOS
12. Which of the following windows version support 64 bit processor?____________
(a) Windows 98 (b) Windows 95 (c) Windows XP (d) Windows 2000
13. Which of the following operating system do you choose to implement a client server
network?____
(a)Ms DOS (b)Windows 2000 (c) Windows 98 (d) Windows
14. Which operating system use write through
catches?_____________ (a) UNIX (b) XENIX (c) ULTRIX (d) DOS
15.Which of the following describes e-commerce?___________
(a) doing business electronically (b) doing business (c) sale of the goods (d)all of the above
16. The best products to sell in B2C e-commerce is____________
(a) small products (b) digital products (c) speciality products (d) fresh products
17. E-mail stands for______________
(a) Electronic mail (b) Educational mail (c) Express mail (d)Excess mail
18. Which is a communication service?_____________
(a) E-mail (b)Voice mail (c)Fat services (d) All of the above
19. What is full name of EDI? ___________
(a)Electronic Document Interchange (b)Electronic Data Interchange(c)Educational Data Interchange
(d)Express Data Interchange
20.GUI means________
(a)Graphical user interface (b)Graphical user interaction (c)Graphics uniform interaction (d)
None
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
c a a d a d a a a a d c b d a b a d b a
SECTION-B
ANSWER THE FOLLOWING
1. Write a short note on DOS.
2. Explain the features of Windows NT.
3. Define e-commerce and state the reasons for the growth of e-commerce.
4. List out some of the differences between internet and intranet.
5. Write a note on Electronic mail system.
6. Write a short note on Electronic commerce
7. Bring out the functions of an operating system
8. What is Hyper Text MarkupLanguage ?
9. Briefly explain Domain Name System and List any 3 Domain Extensions.
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10. Define Search Engine? Mention any Two Search Engine name
SECTION-C
ANSWER THE FOLLOWING
1. Explain in detail the evolution of windows.
2. E-commerce an inevitable part of business- Discuss.
3. Describe e-mail and discuss its uses.
4. What is an internet – Explain the various applicationsof internet.
5. Explain about the anatomy of E-commerceApplications.
6. Discuss about the world wide web as architecture
7. Discuss about CDMA and GSM
8. Write the main components of an e-mail system.
9. Mention the Parts of Internet Address and expand FTP, TCP/IP, SMTP and HTTP
10. Describe mobile computers and its workings.
UNIT-UNIT-V
SECTION-A
CHOOSE THE CORRECT ANSWER
1. What is the first stage in software development?__________________
(a) Specification and design (b) Testing (c) System Analysis (d) Maintenance
2. Personnel who design, program, operates and maintains computer equipment refers to____(a)
Console-operator (b) Programmer (c) Peopleware (d) System Analyst
3. A system is________________
(a) an integration of different units so as to achieve an objective (b) input unit (c) input and output
unit (d) input, output and storage units
4.To locate a data item for storage is_______________
(a) Field (b) Feed (c) Database (d) Fetch
5. MIS is designed to provide information needed for effective decision making by?_______
(a) Consumers (b) Workers (c) Foremen (d) Managers
6. In which language is source program written?________________
(a) English (b) Symbolic (c) High level (d) Temporary
7. CAD stands for__________
(a) Computer aided design (b) Computer algorithm for design (c) Computer application
in design (d) All of the above
8.Which of the following is not the classification of computers based on application?______
(a) Electronic Computers (b) Analog Computers (c) Digital Computers(d) Hybrid Computers
9. In order to produce a computer-based information system, we must together________
(a) 5 parts (b)3 parts (c) 2 parts (d) 4 parts
10. An_________ is a set of processes and procedures that transform data into information and
knowledge.
(a) information system (b) Knowledge system (c) Database system (d)computer system
11. In a typical ________network, application processing is shared between clients and one more
servers.
(a)cloud computing (b) client server computing (c)mobile computing (d)data computing
12. Which of the following is a computer based system that stores and manipulates data that are
viewed from a geographical point or reference?_________
(a)Geographical Information System (b)Database System (c)Geographic System (d)Software
System
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13._________ is the process of defining the current problem, determining why a new system is
needed, identifying the objectives of the proposed system.
(a)Feasibility analysis (b)System Analysis (c)System definition (d)System requirements
14. Which of the following are the main software components of DSS?_________
(a)Database management system (b)model management system (c)support tools
(d) All of the above
15.ICT (Information and Communication Technology) includes_________
(a)E-mail (b)Internet (c)Educational TV (d)All the above
16.ICT Stands for_________
(a)International Communication Technology (b)Intera Common Terminology (c) information and
Communication Technology (d)Inter Connected Terminals
17. Which are the tools not used for System Analysis___________
(a)Flowcharts (b) Decision table (c) System-test data (d) data Flow diagram
18. Documentation is prepared____________
(a)at every stage (b)at system design (c)at system analysis (d)at system development
19. An example of a hierarchical data structure is___________
(a)tree (b) array (c)link list (d) all of the above
20. Which of the following appropriately explains the desirable characteristic of good system
design?____________
(a)conversion (b)long discussions (c) modular approach (d) proper documentation
Answers
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C c a d d c a a a a B a c d d c C a a c
SECTION-B
ANSWER THE FOLLOWING
1. Briefly explain the characteristics of transaction processing system.
2. Discuss the functions of management process.
3. Explain the Group decision support system.
4. Write a short note on components of expert system
5. What is the role of EDI in International Trade ?
6. Write down the benefits of EDI.
7. Point outthe phases in the Decision-makingprocess?
8. Explain about the approaches to development ofDecision support systems.
9. List the function of system analyst.
10. Define Computer based Information systems?
SECTION-C
ANSWER THE FOLLOWING
1. Give an elaborate note on System Life Cycle.
2. Discuss the need for computer based information system
3. Enumerate the steps involved in construction and development of expert system.
4. Illustrate the benefits of DSS with suitable examples
5. Explain information system security in detail.
6. What is DBMS – Discuss about various types of DBMS.
7. Describe the major disadvantages of file processing systems.
8. Discuss the six phases of system analysis and design.
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9. What is structured analysis and structured design? Discuss the components of structured analysis.
10. State the characteristics and components of MIS.
KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
DEPARTMENT OF COMMERCE PG & PA
Class: II B.COM (PA) Semester – III
Sub. Name: Strategic Management Sub. Code: 18UPA3S1
Prepared By: Mrs.C.Goldbell Rachel
UNIT 1
Section A
1. The word strategy is derived from the ________ word strategos.
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a. Latin b. French c. Greek d. Arabic
2. The _______ environment includes all the factors outside the organization.
a. Internal b. External c. Flexible d. Rigid
3. Demographic, Socio-cultural factors and economic conditions together form the ____ environment.
a. Micro b. Macro c. Internal d. External
4. A well designed _____ can boost the profit of an organization.
a. Strategic Management b. Business Management
c. Organizational Management d. Office Management
5. Strategic Management makes the whole approach _____
a. Formal b. Informal c. Rigid d. Flexible
6. Business policy is the decisions regarding ________
a. Business b. Past c. Present d. Future
7. There are _____ levels of strategy.
a. 2 b. 3 c. 4 d. 5
8. A study of nature and process of choice about the future of an enterprise is called _____
a. Business policy c. Strategic Management
b. Personnel Management d. Functional Policy
9. Long term strategy is for the period of _______
a. < than one year b. 1-3 years c. 3-5 years d. More than 5 years
10. A statement that distinguishes one organization from the other is called ______
a. Vision b. Mission c. Objectives d. Strategic Goals
11. The objectives that includes the achievements, targets and goals are called as ___
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a. Tangible b. Intangible c. Mission d. Vision
12. The objectives that includes brand and company name is called _____
a. Tangible b. Intangible c. Mission d. Vision
13. The economic environment refers to:
a. the nature and direction of the economy in which a firm competes or may compete.
b. the economic outlook of the world provided by the World Bank.
c. an analysis of how the environmental movement and world economy interact.
d. an analysis of how new environmental regulations will affect our economy.
14. Strategic management is __________.
a. a set of managerial decisions and actions
b. oriented to short-run performance of an organization
c. a process that is done best if it is done quickly
d. all of the above (a; moderate
15. Competitive rivalry has the most effect on the firm's ____ strategies than the firm's other strategies.
a. business-level b.corporate-level c. acquisition d. international
16. Considering strategic planning, 'Organizations purpose' statement is known as
a.Vision statement b. Mission statement c. Value proposition d.Both a and b
17. The goal of the organization's ____ is to capture the hearts and minds of employees, challenge
them, and evoke their emotions and dreams.
a. vision b. mission c. culture d. strategy
18. A firm's mission
a. is a statement of a firm's business in which it intends to compete and the customers which it intends
to serve.
b. is an internally-focused affirmation of the organization's financial, social, and ethical goals.
c. is mainly intended to emotionally inspire employees and other stakeholders.
d. is developed by a firm before the firm develops its vision.
19. Which one of the following includes questions like, what is our business? And what are the values
and preferences of an organization?
a. Priority Statement c. Motivation Statement
b. Mission Statement d. Problem Statement
20. Business-level strategies are concerned specifically with:
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a. creating differences between the firm's position and its rivals.
b. selecting the industries in which the firm will compete.
c. how functional areas will be organized within the firm.
d. how a business with multiple physical locations will operate one of those locations.
Section B
1. Give the meaning and definition of strategy.
2. List out the criteria for effective strategy.
3. Distinguish between strategy and policy.
4. Define strategic management and give its meaning.
5. Outline the need for strategic management
6. List out any five benefits of strategic management.
7. What are the limitations of strategic management?
8. What do you mean by vision statement?
9. Bring out the meaning of mission statement.
10. What are the strategies to minimize political risk?
Section C
1. Define the term strategy and explain its kinds.
2. Discuss the benefits and limitations of strategic management.
3. Illustrate the concept strategic management and explain its process.
4. Explain the concept of business policy.
5. Elucidate the concept levels of strategy.
6. Bring out the meaning of vision and mission statement and explain its characteristics.
7. Explain the term business environment with suitable examples.
8. Why do companies globalize?
9. Discuss about business environment with suitable examples
10. What is the impact of international business on domestic enterprise.
Answers:
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C B B A C D B A C B A B A A A B A A B A
UNIT 2
Section A
1.Exploration of new markets abroad is an example of
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a. Strengths b. Weaknesses c. Opportunities d. Threats
2.Loss in sales because of poor quality raw materials have been used in production is concluded in
company?
a. Strengths b. Weaknesses c. Opportunities d. Threats
3. Unfavorable external factors or trends that may pose a challenge to company are called
a. Strengths b. Weaknesses c. Opportunities d. Threats
4.In external environment, favorable factors and trends are classified as
a. Strengths b. Weaknesses c. Opportunities d. Threats
5.Competitive edge of your company can be best classified as
a. Strengths b. Weaknesses c. Opportunities d. Threats
6.According to SWOT analysis, analysis of Opportunities & Threats is part of
a. Internal environment c. Both a and b
b. External environment d. Physical Environment
7.Company’s strengths and weakness are evaluated in
a. PEST analysis
b. SWOT analysis
c. Both a and b
d. TOWS Matrix
8.Strategic planning is strategic fit between organizations changing marketing opportunities and its
a. Strengths & Weaknesses
b. Goals & Capabilities
c. Opportunities & threats
d. Both a and b
9.In BCG growth share matrix, horizontal axis represents
a. Market growth rate
b. Relative market share
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c. Portfolio analysis
d. Both b & c
10.In growth-share matrix, vertical axis represents
a. Business portfolio
b. Relative market share
c. Market growth rate
d. Both a and b
11.A set of techniques used in strategic formulation that are related to individual products is called _____
a. Portfolio Analysis b. TOWS Matrix c.BCG Matrix d. SWOT Analysis
12. Portfolio analysis is a ____ approach
a. Intellectual b. Analytical c. Situational d. Business
13. TOWS Matrix deals with four types of strategies they are _________
a. SO,WO,ST,WT b. SO,WO,SW,WT
c. SO,WS,ST,WT d. SW,WS,ST,WT
14. An important aspect of strategic analysis is to consider the possible implications of ______ decisions.
a. Complicated b. Routine c. Formal d. Informal
15. An inherent limitation of the organization which creates strategic disadvantage is called as _
a. Strengths b. Weaknesses c. Opportunities d. Threats
16. TOWS Matrix is an _____ tool
a.Action b.Planning c. Forecasting d.Systematic
17. SWOT Analysis is a __________ tool
a. Systematic b.Action c. Planning d. Forecasting
18. The process of analyzing and understanding what the future holds and how a company can sustain
and grow is called ________
a. Strategic analysis b. Portfolio analysis
c. SWOT Analysis d. BCG Matrix
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19. The collection of methods used by the managers to analyze the internal and external environment is
called __________
a. Strategic analysis b. Situational Analysis
c. SWOT Analysis d. BCG Matrix
20. Expand BCG
a. Boston consulting group b. Best consulting group
c. Boston Creative group d. Breeze consulting group
Section B
1. Write a note on situational analysis.
2. Discuss the concept of TOWS Matrix
3. What do you mean by portfolio analysis
4. Bring out the strengths of BCG Matrix.
5. What do you mean by strategic planning?
6. Explain the levels of strategic planning
7. What do you mean by strategy formation?
8. List out the benefits of strategic planning.
9. Who are termed as dogs in BCG Matrix?
10. List out the usefulness of SWOT Analysis.
Section C
1. Explain the significance of SWOT analysis.
2. Discuss on the concept TOWS matrix and portfolio analysis.
3. Elucidate the concept of BCG Matrix.
4. Bring out the strengths and shortcomings of BCG matrix.
5. Explain the term strategic planning and bring out its benefits.
6. Illustrate the concept of strategic formation and explain its modes
7. Explain the stages in corporate strategy formation.
8. Discuss about corporate strategy and explin its features.
9. What are the elements to be considered while conducting situational analysis?
10. Write a note on various strategic plans.
Answers:
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
C C D C A B B B B C A B A B B A C A B A
UNIT 3
Section A
1. Strategy formulation
a. is managing forces during the action.
b. focuses on effectiveness.
c. is primarily an operational process.
d. requires coordination among many people.
2. Situation in which company is making more sales with its existing product is classified as
a. Market development b. Market penetration c. Product development d. Diversification
3. Functional strategy acts as the basis for controlling the activities in different ______ areas of the
business.
a. Divisional b. Financial c. Functional d. Administrational
4. According to marketing four Ps, credit terms can be classified as
a. Place b. Product c. Price d. Promotion
5. Marketing strategy along with the ______ strategies form the primary strategy.
a. Production b. Price c. Place d. Promotion
6. According to four Ps of marketing, inventory and logistics services are classified as
a. Place b. Product c. Price d. Promotion
7. Marketing strategy starts with
a. Targeting b. Market segmentation c. Positioning d. Differentiation
8. Public relations' can be classified as
a. Place b. Product c. Price d. Promotion
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9. In marketing strategy, advertising and personal selling can be referred as
a. Place b. Product c. Price d. Promotion
10. Target customers stands at the ________ of the marketing process.
a. End b. Beginning c. Centre d. Side
11. The activities that communicate the merits of the product and persuade the target customers to buy
it is called _______
a. Product b. Price c. Place d. Promotion
12. Personal selling is one of the _________ forms of promotion.
a. Oldest b. New c. Fastest d. Slow
13. The strategy that is central to the strategy implementation is _____ strategy.
a. Market b. Financial c. Human resource d. Logistics
14. Management of ______ is the process which integrates the flow of supplies into, through and out
of an organization.
a. Logistics b. Funds c. Resources d. Time
15. In the growing organizations __________ are viewed as a source of competitive advantage.
a. Finance b. Human resource c. Logistics d. Both a&b
16. Human resource strategy links the human resource management and _____
a. Vision b. Mission c. Strategic goals d. Both b & c
17. When a company depends on another company for human resource it is called as ______
a. In sourcing b. Out sourcing c. Recruitment d. Selection
18. The strategy used for evaluating the most cost effective methodology for distributing goods to the
market is called _____ strategy.
a. Marketing b. Production c. Logistics d. Human resource
19. Management of cash deals with ________ and returns.
a. Risk b. Funds c. Reserves d. Debts
20. Place strategy is also called as ________ strategy.
a. Channel b. Promotion c. Market d. Distribution
Section B
1. What do you mean by marketing strategy?
2. Explain the 4 P’s in marketing mix.
3. Write a note on product strategy.
4. Give the meaning of financial strategy.
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5. Explain the strategy relating to working capital.
6. Discuss the concept process strategy.
7. List out the kinds of pricing.
8. Write a note on human resource strategy
9. Bring out the need for logistics strategy.
10. What do you mean by product design strategy?
Section C
1. Explain the various marketing strategies.
2. Discuss about the price strategy with suitable examples.
3. Explain the concept financial strategy.
4. Elucidate on decision making in production strategy.
5. Write a note on working capital strategy.
6. What are the various issues in finance where strategy formulation is required?
7. Discuss the issues and advantages about logistics strategy.
8. Discuss about process strategy.
9. Illustrate on the topic human resource strategy.
10. Explain the various promotional activities involved in promotional strategy
Answers:
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B B C C A A B D D C D A B A B C B C A D
UNIT 4
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Section A
1. Which of these is true about strategy implementation?
a. It is positioning forces before the action.
b. It focuses on effectiveness.
c. It is primarily an operational process.
d. It is primarily an intellectual process.
2.On what does strategy implementation focus?
a. Effectiveness b. Intellectual skills c. Efficiency d. Coordination
3.Strategy implementation is primarily a(n) __________ process.
a. intellectual b. operational c. analytical d. top-management
4. Strategy implementation focuses on _______
a. Efficiency b. Effectiveness c. Competition d. Control
5.Strategy implementation requires special motivation and _________ skills
a. Communication b. Leadership c. Emotional d. Intellectual
6.What type of organizational structure does the small businesses follows?
a. Divisional Structure b. Functional Structure c. Matrix Structure
d. Process type Structure
7. Medium sized firms tend to use _____ structure
a. Matrix structure b. Process type structure c. Divisional Structure
d. Functional Structure
8. A_________ structure is the most simple and inexpensive
a. Departmental b. Divisional c. Matrix d. Functional
9. Accountability is the clearest in ________ organizational structure
a. Divisional b. Functional c. Matrix d. Process type
10. Matrix organizational structure is most _____ structure.
a. Complex b. Simple c. Flexible d. Rigid
11. Which of the following skills is most important for successful strategy implementation?
a. Conceptual b. Motivating c. Integrative d. Analytical
12. Strategic business unit with low market share and high market growth is considered as
a.Cash Cows b.Stars c. Dogs d. Question marks
13. SBU's considered as 'Cash Cows' requires
a. Heavy investment b. less investments1 c. More marketing
d.Both a and c
14. SBU's in 'Stars' category requires
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a. Heavy investment b. less investments c. More marketing
d. Both a and c
15. Company’s key businesses are known as
a. Portfolio analysis b. Strategic Business Units (SBU's)
c. Both a and b d. None of above
16. SBU's of a company with low market share and growth rate are considered in
a. Stars b. Dogs c. Cash Cows d. Question marks
17. In growth-share matrix, high growth and high share SBU's are considered as
a. Stars b. Cash Cows c. Question marks d. Dogs
18. A____ generates revenue in excess of its expenses
a. Profit Centre b. Profit calculation c. Loss calculation d. Both A & B
19. In _________ leadership style there is no direction and control of a leader.
a. Autocratic b. Laissez faire c. Participative d. Democratic
20. In _______ leadership style the opinions and ideas are taken from the subordinates.
a. Participative b. Laissez faire c. Participative d. Free rein
Section B
1. What do you mean by strategic implementation?
2. Explain the issues involved in strategic implementation.
3. Outline the term strategic control.
4. What do you mean by organizational structure?
5. Explain the concept of profit centers.
6. List out the various leadership styles.
7. Outline the advantages of SBU.
8. “Exerting strategic leadership”. Discuss.
9. Write a note on the establishment of profit centers by business.
10. Explain the situational analysis given by Harsy and Balchand on various leade4rship styles.
Section C
1. Explain the term strategic implementation and bring out the various issues.
2. Give a note on strategic control and explain its process.
3. How to match organizational structure to strategy?
4. Explain the different forms of organizational structure.
5. Discuss about the various establishments of profit centers.
6. Write a note on leadership and behavioral challenges.
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7. Discuss in detail about SBU.
8. Describe the characteristics of SBU and discuss its advantages.
9. Bring out the role of leadership in strategy implementation.
10. Differentiate between strategy formulation and strategy implementation
Answers:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
D C B A B B C D A A B D B A B B A A B A
UNIT 5
Section A
1.Expand BPR.
a. Business Process re-structure
b. Business process re-engineering
c. Business process resource
d. Business process re-thinking
2. The concept of BPR was pioneered in the early _______
a. 1990’s b. 1970’s c.1980’s d.1890’s
3. Market development is result of introducing
a. New product in existing market
b. Existing product in new market
c. Existing product in existing market
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d. New products in new markets
4. Strategy of introducing new product in existing market is classified as
a. Market development
b. Market penetration
c. Product development
d. Diversification
5.A firm uses information technology to break down functional barriers and create a work system
based on business processes, products, or outputs rather than on functions or inputs in
a. restructuring.
b. benchmarking.
c. reengineering.
d. decentralization.
6.TQM stands for
a. Total quality management
b. Total quantity manager
c. Total quality manager
d. Total quantity management
7.Total quality management is a _______ process
a. Short b. Long c. Continuous d. Complex
8. TQM is a ______ focused management system.
a. Share holders b. People c. Management d. Organization
9. An approach of setting goals and measuring productivity based on best industry practice is called as
_________
a. Benchmarking b. Re-engineering c. Centralization d. Decentralization
10. The concept of bench marking was developed by ________ Corporation
a.Henry Fayol b.Marshall c. Xerox d. Adam Smith
11.The concept of benchmarking was developed during_____
a.1980’s b.1890’s c.1990’s d. 1960’s
12. Benchmarking helps the organization to get ahead of _____ competition
a.Physical b. Cut-throat c. Competitors d. Both B & C
13. Six sigma means maintenance of the desired _________
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a.Price b. Demand c. Quantity D. Quality
14. Six sigma helps in developing and ______ near-perfect products
a. Delivering b. Maintaining c. Producing d. Enhancing
15. For implementing six sigma there are ________ separate key methodologies
a. 4 b. 2 c.5 d.8
16. The methodologies used for implementing six sigma are __________
a. DMAIC, DMADV c. DMMIC, DMADV
b.DMANC, DMADV d. DMAIC, DMAOV
17.DMAIC is directed towards improvement of _______ products.
a.New b.Finished c.Semi-finished d.Existing
18. DMADV is a strategy used for designing ______ products
a. New b. Finished c. Semi-finished d. Existing
19. The critical elements of six sigma is put into ____ themes
a. 4 b. 5 c. 6 d. 7
20. Entry barriers into the _______ world are relatively low.
a. Economic b. Global c. Competitive d. E-Commerce
Section B
1. Outline the need for business process re-engineering.
2. Explain the business process re-engineering cycle.
3. What is TQM? List out its elements.
4. Write down the underlying principles in TQM.
5. Give the meaning and definition of bench marking.
6. Discuss the bench marking process.
7. Explain the benchmarking process.
8. What do you mean by six sigma?
9. List out the six themes of six sigma.
10. Write a note on internet technology.
Section C
1. State the problems involved in the implementation of BPR.
2. Discuss the concept of BPR and explain its framework.
3. How is total quality management useful in an organization?
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4. Explain the concept of TQM.
5. Explain the stages involved in benchmarking process.
6. Discuss the need for benchmarking in an organization.
7. Describe the term six-sigma and bring out its benefits.
8. Explain the six-sigma methodology.
9. Discuss the themes of six-sigma.
10. What is e-commerce? Explain its characteristics.
Answers:
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B A B C C A C B A C A B D A B A D A C D
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KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
Class: II B.COM (PA) Semester –IV
Sub. Name: PARTNERSHIP ACCOUNTING Sub. Code: 18UPA409
Prepared By: S. Arumugaraj
UNIT I
Section – A
1. Current account of the partners should be opened when their capitals are __________.
a) Fixed b) Fluctuating c) Pledged d) Borrowed
2. In the absence of partnership Deed ,profits and losses are shared by the partners in ____.
a) Capital ratio b) Equal ratio c) Age ratio. d) Standard ratio of 1:2.
3. The document containing the agreement between the partners is called ---------------.
a) Firm document b) Memorandum c) Partnership deed d) Articles
4. Interest on capital is calculated on _____.
a) Opening capital b) Closing capital c) Average capital d) Additional capital
5. Interest on capital is debited to _____.
a) Capital a/c b) Current a/c c) P&L a/c d) P&L Appropriation a/c
6. Partner’s salary will be debited to _____ .
a) P&L Appropriation a/c b) Current a/c c) P&L a/c d) Capital a/c
7. When partner’s capitals are fixed, the interest on capital is to be credited to _____.
a) Capital a/c b) Current a/c c) P&L a/c d) P&L Appropriation a/c
8. Interest on drawings is credited to _____.
a) Capital a/c b) Current a/c c) P&L a/c d) P&L Appropriation a/c
9. When partner’s capitals are fluctuate, the interest on capital is to be credited to _____.
a) Capital a/c b) Current a/c c) P&L a/c d) P&L Appropriation a/c
10. An ordinary partnership business can have
a) Not more than 50 partners b) Not more than 20 partners
c) Any one partner d) Any two partners
11. In the absence of an agreement profits or losses are divided by the partners in the ratio of
a) Capital contribution b) Equal share c) Time devoted by each partner d) Salary drawn.
12. Where a partner is entitled to interest on capital such interest will be payable --------.
a) Only out of profits b) Only out of capital c) Out of Reserves d) Out of Loss
13. A partnership can be formed only for a ________ business.
a) legal b) unlawful c) illegal d) none of
14. If no provision is made in agreement regarding the duration of the partnership:
a) Limited partnership b) Partnership at – will c) Particular partnership d) None
15. A person who declares by word of mouth as partner of the firm is called:
a) Active partner b) Estople partner c) Dormant partner d) Nominal partner
16. The agreement among partners which set out the terms on which they had agreed to form a
partnership is called:
a) Partnership deed b) Partnership at – will c) None of these d) Arbitration clause
17. A credit balance on a partner’s current A/c is:
a) Fixed capital b) Part of capital c) A current asset d) Long – term liability
18. A banking partnership business can have:
a) Not more than 10 partners b) Not more than 20 partners
c) Not more than 50 partners d) More than 50 partners
19. In the absence of an agreement, Interest on loan advanced by the partner to the firm is
allowed at the rate of:
a) 6% b) 5% c) 12% d) 9%
20. Drawings of the partners are:
a) Debited to profit & loss A/c b) Credited to profit & loss A/c
c) Credited to capital A/c d) Debited to capital A/c
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Answer Key
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a a c a d a b d a b
11 12 13 14 15 16 17 18 19 20
b a a b b a b a a d
Section – B
1. Define Partnership under Indian Partnership Act 1932.
2. On 1st January 1998 the capitals of Paramu and Sivam were Rs. 30,000 and Rs. 50,000.Paramu
introduced on July 1, Rs.10,000 and on November 1, Rs. 5,000; Sivam Rs. 5,000 on August 1
and Rs.20,000 on April 1, as additional capital. 5% interest is to be considered on capitals and
drawings. Paramu withdraws Rs. 200 in the beginning of every month and Sivam Rs. 200 at
the end of every month during the year. Calculate the interest payable and chargeable.
3. Bring out the essential features of partnership.
4. A and B are partners sharing profits and losses equally. A drew regularly Rs.2,000 at the end
of every month during the year. B draws Rs.4,000 regularly at the beginning of every month
during the year. Calculate interest on drawings at 10%p.a.
5. Ramesh and Suresh are partners. Ramesh draws Rs.900 regularly in the middle of each month
during the year. Suresh draws Rs.2,500 at the end of each month during the year. Calculate
interest on drawings at 5% p.a.
6. Anu and Banu are partrners sharing profits in the ratio of 3:2. They admit Cheenu into
partnership giving him 1/5thshare of profits with a guarantee of Rs. 24,000 as minimum. Anu
and Banu as between themselves continued to share profits as before. Profit of the firm were
Rs.96,000. Determine the profits of Anu , Banu and Cheenu.
7. X and Y were partners in a firm sharing profits in the ratio of 3:2. They admit Z as a new
partner for 1/5 th share of his future profits with the guarantee of profits Rs.12,000 as
minimum. X and Y as between themselves continued to share profits as before. Profits of the
firm for 2001were Rs.48,000. Determine the profits of X,Y and Z. (Ans:
X - 21,600 ; Y- 14,400 ; Z - 12,000)
8. A and B are partners sharing profits in the ratio of 3:2 with capitals of Rs. 8,00,000 and Rs.
6,00,000 respectively. Interest on capital is agreed @ 5% p.a. B is to be allowed an annual
salary of Rs. 60,000 which has not been withdrawn. During 2013-14, the profits of the year
prior to calculation of interest on capital but after charging B‘s salary amounted to Rs.
2,40,000. A provision of 5% of the profits is to be made in respect of Manager‘s commission.
Prepare an account showing the appropriation of profit. (
Ans: Profit tr. To P&L App.A/c Rs.2,85,000 ; Profit tr. to A - 93,000, B – 62,000)
9. A, B and C are Partners in a firm sharing Profit and Losses in the ratio 2:3:5. Their fixed
capitals were 3,00,000; 6,00,000; and 1,20,000 respectively for the year 2014 interest on
capital was credited to them @ 12% instead of 10%. Pass the necessary adjustment entry.
10. In a partnership , partners are charged interest on drawings at 12% p.a. During the year ended
31-12-2011, a partner drew as follows:
Month/Date Rs.
Feb 1 1,500
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May 1 5,500
June 30 1,500
October 31 6,500
December 31 2,000
What is the interest chargeable to the partner ? (Ans : 825)
11. Why is Profit and Loss Adjustment Account prepared? Explain.
12. List the items which may be debited or credited in capital accounts of the partners when:
(i) Capitals are fixed.
(ii) Capital are fluctuating.
Section – C
1. From the following Balance sheet of A and B, calculate interest on capital at 5% p.a. for the
year ending 31-12-1996. Balance sheet as on 31-12-1996
Liabilities Rs. Assets Rs.
A’s Capital
B’s Capital
P&L Appropriation A/c-1996
20,000
16,000
8,000
Sundry Assets
A’s Drawings
42,000
2,000
44,000 44,000
During the year 1996, A’s drawings were Rs.2,000 and B’s drawings Rs. 6,000. Profits during
the year 1996 were Rs. 12,000.
2. From the following Balance sheet of Mohan and Madan on 31st Dec.2010,after adjustment of
profit for 2010 and drawings:
During the year 2010: (i) Profits were Rs.40,000;
(ii) Drawings of Mohan were Rs.12,000; (iii) Interest to be charged at 5% p.a. on opening
capitals. Calculate the interest on capitals of Mohan and Madan.
3. Ramu and Somu are partners with a capitals of Rs.30,000 and Rs.20,000 respectively. Ramu
is entitled for a salary of Rs.400 per month. Interest at 5% is allowed on capitals. There is no
interest on drawings. During the year Ramu withdrew Rs.3,000 and Somu Rs.2,000. The
profit for the year before making any adjustments is Rs.12,000. The divisible profits of Ramu
is 60% and somu 40% on the first Rs.2,000. Over that amount, profit is shared equally.
Prepare Profit and loss appropriation account and partners capital account.
4. Write up the capital and current accounts of the partners A and B from the following:
Particulars A B
Capital on 1-1-94 40,000 35,000
Current account on 1-1-94 200 100
Drawings 8,000 7,000
Interest on drawings 200 100
Share of profits 4,200 3,300
Liabilities Rs. Assets Rs.
Capitals: Mohan 40,000
Madan 48,000
Creditors
P&L Appropriation A/c
88,000
32,000
24,000
Land
Buildings
Other Assets
Madan’s drawings
16,000
72,000
48,000
8,000
1,44,000 1,44,000
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Interest on capital 6% 6%
Salary 3,600 Nil
5. Anand and Balan started business with capital of Rs.45,000 each on 1st January 2001. Anand
is to have a salary of Rs.450 per month. Interest is to be allowed on capital at 6%. Profits are
to be distributed in 3:2 ratio after the above adjustments. During the year Anand withdraw
Rs.18,000 in twelve equal installments each at the beginning of every month whereas Balan
withdrew Rs.18,000 in twelve equal installments each at end of every month. The profit for
the year before allowing for the adjustments Rs.39,765. Prepare profit and loss appropriation
a/c, capital a/c and current a/c.
6. List out the contents in partnership deed.
7. A, and C are partners with fixed capitals of Rs. 2,00,000, Rs. 1,50,000 and Rs. 1,00,000
respectively. The balance of current accounts on 1st January, 2004 were A Rs. 10,000 (Cr.);
B Rs. 4,000 (Cr.) and C Rs. 3,000 (Dr.).
A gave a loan to the firm of Rs. 25,000 on 1st July, 2004. The Partnership deed provided for
the following:-
(i) Interest on Capital at 6%.
(ii) Interest on drawings at 9%. Each partner drew Rs. 12,000 on 1st July, 2004.
(iii) Rs. 25,000 is to be transferred in a Reserve Account.
(iv) Profit sharing ratio is 5: 3: 2 up to Rs. 80,000 and above Rs. 80,000 equally. Net Profit of
the firm before above adjustments was Rs. 1,98,360.
From the above information prepare Profit and Loss Appropriation Account, Capital and
Current Accounts of the partners.
8. A , B and C are partners sharing profits and losses in proportion to their capital at the
beginning of the year. They are entitled annually to draw Rs.6,000, Rs.5,000 and Rs.4,000
respectively. Out of their anticipated shares of profits. Any drawing in excess of these
amounts are to be regarded as advances taken from the firm and are to be subjected to
interest at an average rate of 6% p.a. The capitals at the beginning of the year are to be
allowed interest at an average rate of 5% p.a. The capital of the partners as at the beginning
of the year were Rs.80,000 B Rs.60,000, C Rs.40,000.
The credit balances of their current accounts were A Rs.2,304, B Rs.3,728 and C Rs.1,152.
Their drawings during the year were Rs.10,000 for A Rs.12,000 for B Rs.5,000 for C. The
profits for the year were Rs. 30,096, before making any adjustment for interest.
Draw up the current a/c
9. Anju and Manju are partners in a firm having capital of Rs.50,000 each. Anju and Manju are
entitled to receive a salary of Rs.1,500p.m and Rs.3,000 respectively. Further, Anju is
entitled to receive 10% commission on net profit before charging any commission and Manju
is entitled to receive 8% commission on net profits after all commissions. Net profit before
charging any commission during the year was Rs.45,000. Show the distribution of profit
among partners if their profit sharing ratio is 3:2.
10. X, Y and Z are in partnership sharing profits and losses in the ratio of 3:2:1. Z’s share is,
however, guaranteed by X and Y at a fixed minimum of Rs.8,000. The net profit for the year
ended 31st December 2006 was Rs.36,000. Show the profit and loss appropriation a/c
indicating the amount due finally to each partner.
11. What is partnership? What are its chief characteristics? Explain.
12. Discuss the main provisions of the Indian Partnership Act 1932 that are relevant to
partnership accounts if there is no partnership deed.
UNIT II
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Section – A
1. At the time of Admission of a New Partner in a Firm, the Profit or loss on revaluation must be
transferred to the old partners in their _____.
a) Sacrificing ratio b) Capital ratio c) Gaining ratio d) Old profit sharing ratio
2. Excess of actual profit over the normal profit is known as________.
a) Net profit b) Gross profit c) Super profit d) Average profit
3. Revaluation account is a __________ .
a) Nominal Account b) Personal account c) Real account d) Current account
4. At the time of admission of a new partner, general reserve is:
a) Debited to old partner’s capital a/c b) Credited to old partner’s capital a/c.
c) Allowed to remain in balance sheet d) Debited to P&L Appropriation a/c
5. A new partner may be admitted into a partnership:
a) With the consent of all the partners b) With the consent of two third of old partners
c) With the consent of any one of the partners d) Without consent of all the partners
6. In a partnership firm assets are Rs.5,00,000 and liabilities are Rs. 2,00,000. The normal
profit rate is 15%. State the amount of normal profits.
a) Rs.75,000 b) Rs. 30,000 c) Rs.45,000 d) Rs. 1,05,000
7. Which of the following is not a methods for valuation of goodwill in a partnership firm?
a) Average Profit Method b) Super Profit Method
c) Capitalisation Method d) Yield method
8. The amount of general reserve is transferred to partner’s capital account in _____.
a) New ratio b) Old ratio c) Sacrificing ratio d) Capital ratio
9. When goodwill is brought in cash by the new partner, the method is known as _____ .
a) Revaluation Method b) Premium Method
c) Memorandum Revaluation Method d) Net Assets Method
10. Old profit sharing ratio minus New profit sharing ratio is ____ .
a) Capital ratio b) Equal ratio c) Sacrificing ratio d) Gaining ratio
11. In order to maintain fair dealings, at the time of admission, it is necessary to revalue assets
and liabilities of the firm to their ______.
a) cost price b) cost price less depreciation c) true value d) none
12. ‘All assets and liabilities shall not be altered other than cash and capital’ _________ account
should be prepared.
a) Revaluation a/c b) Memorandum Revaluation a/c c) Both (a) and (b) d) Suspense a/c
13. Goodwill is ______ .
a) a Tangible asset b) an Intangible asset c) a Wasting asset d) a Fictitious asset
14. Revaluation profit should be transferred to _______ capital account .
a) All the partners b) New partner c) Existing partners d) New partner’s friend
15. A and B are partners sharing profits in the ratio 1:2. C is admitted and the new profit sharing
ratio is 1:2:3. Sacrificing ratio is ___.
a) 1:3 b) 2:1 c) 3:1 d) 1:2
16. Which one of the following adjustment is not necessary at the time of new partner
admission?
a) Adjustment in profit sharing ratio
b) Adjustment of Goodwill
c) Adjustment for revaluation of assets and reassessment of liabilities
d) Preparation of deficiency account
17. Deepak and Vivek are partners sharing profit in the ratio of 3 : 2. They admit Ashu as a new
partner for 1/5 share in profit. The new profit sharing ratio will be ______.
a) 12:8:5 b) 3:2:1 c) 12:8:1 d) 12:5:8
18. Profit and Loss account in assets side is transferred to _______ capital accounts.
a) All the partners b) New partner c) Existing partners d) New partner wife,s
19.If the investments are sold out, the investment fluctuation fund should be transferred to ___.
a) Revaluation a/c b) Capital a/c c) Both (a) and (b) d) Goodwill a/c
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20.Excess of Capital and liabilities over the total assets is called as ______ .
a) Hidden Goodwill b) Prepaid Expenses c) Contingent liabilities d) Stock
Answer Key
1 2 3 4 5 6 7 8 9 10
d c a b a c d b b c
11 12 13 14 15 16 17 18 19 20
c b b c d d a c a a
Section – B
1. Anbu and Balu are partners in a firm sharing profits in the ratio of 3:2. They admit Chandru
into partnership. Chandru pays a premium of goodwill Rs.1,000 for his 1/4th share of profit.
No goodwill account appears in the books. Anbu and Balu withdrew the entire amount of
goodwill. Calculate the New ratio, Sacrificing ratio and also pass necessary journal entries.
2. From the following information, calculate the value of goodwill at 3 years purchase of super
profit.
i) Average capital employed in the business Rs 6,00,000.
ii) Net trading profit of the firm for the past three years were Rs.1,07,600;Rs. 90,700 and
Rs.1,12,500.
iii) Rate of interest expected from capital having regard to the risk involved is 12%.
iv) Fair remuneration to the partners for their services Rs.12,000.p.a.
(Ans: Goodwill Rs.58,800)
3. Raman and Laxman were partners sharing profits and losses in the ratio of 4:3. They
admit Velan as a new partner and decided to revalue the assets and liabilities as indicated
below:
(i) Increase the value of building by Rs.60,000.
(ii) Provision for doubtful debts to be decreased by Rs.800.
(iii) To decrease machinery byRs.16,000; Furniture by Rs.4,000 and stock by
Rs.12,000.
(iv) A provision for outstanding liabilities to be created by Rs.800.
Pass journal entries and prepare revaluation a/c.
4. A and B are partners sharing profits and losses in the ratio of 5:3. They admit C as a new
partner and decided to revalue the assets and liabilities as indicated below:
(i) Increase the value of machinery by Rs.32,000.
(ii) To bring into record at Rs.14,000, investment which have not so for been brought into
account.
(iii) To decrease stock byRs.12,000; Furniture by Rs.11,000.
(iv) To write off creditors by Rs.11,000. Pass journal entries and prepare revaluation a/c.
5. A firm earned net profits during the last three years are Rs.30,000, Rs.43,000 and Rs.47,000.
The capital investment of the firm is Rs.1,20,000. A normal rate of return is 10%.
Calculate the value of goodwill on the basis of three years purchase of super profits.
6. Goodwill is valued on the basis of two years purchase of average profits of the preceding
three years. The profits of the previous years were:2001 - Rs.40,000; 2002 – Rs.58,000;
2003 – Rs.70,000. Calculate the value of goodwill.
7. A and B share profits in the ratio of 5:3. They admits in the firm for 3/8th share of profits and
bring Rs.3,000 for goodwill. Calculate the new ratio and sacrificing ratio.
8. A, B and C were partners in a firm sharing profits in 3:2:1. They admitted D for 10% profits.
Calculate the new profit sharing ratio and sacrificing ratio. ( Ans: 9:6:3:2).
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9. Radha and Rukmani are partners in a firm sharing profits in 3:2 ratio. They admitted Gopi as
a new partner. Radha surrendered 1/3rd of her share in favour of Gopi and Rukmani
surrendered 1/4th of her share in favour of Gopi. Calculate new profit sharing ratio.
(Ans. 4:3:3)
10. The firm earned net profits during the last three years as follows:
Year Rs.
2011 36,000
2012 40,000
2013 44,000
The capital investment of the firm is Rs.1,20,000. A fair return on the capital having regard
to the risk involved is 10%. Calculate the value of goodwill on the basis of three years
purchase of super profits.
11. A ,B and C are partners sharing profits equally. They admit D into partnership for 1/4th share
in the future profit. D is to bring in Rs.9,000 for goodwill. No goodwill account appears in
the books. They withdrew half of the goodwill. Give necessary journal entries as per AS-10.
Section – C
1. Explain the different methods of accounting treatment of goodwill at the time of admission of a new
partner.
2. X and Yare partners in a firm sharing profits in the ratio of 3:2 Their balance sheet as on
31.12.2012 was stood as under.
Liabilities Rs Assets Rs
Creditors 10,000 Cash 1,500
Capitals: Debtors 6,500
X 40,000 Stock 18,000
Y 30,000 Building 34,000
______
Furniture 20,000
______
80,000 80,000
They admit Z in to partnership on 01.10.2013 with a capital of Rs.25,000 and their new profit
sharing ratio is 5:3:2 . The following revaluations were made as under.
i) Stock to be depreciated at 10%.
ii) Provision for bad debts is to be Rs.500.
iii) Furniture to be depreciated at 5 %.
iv) Buildings is to be valued at Rs.40,000.
Pass journal entries and prepare Revaluation a/c and Balance sheet after admission of Z.
3. Arul and Asha are partners in a firm sharing profit and loss in the ratio of 1:1 . The position of
their Balance sheet as on 31st dec.2013 was as under.
.
Liabilities Rs. Assets Rs.
Arul’s capital 60,000 Land and buildings 60,000
Asha’s Capital 40,000 Furniture 10,000
General reserve 10,000 Stock 15,000
Sundry creditors 30,000 Debtors less provision
(10,000 – 500)
9,500
Bank overdraft 5,000 Cash in hand 50,500
1,45,000 1,45,000
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On 1.4.2014 Arjun was admitted as a partner with 1/5th share in future profit. Following are
the terms for his admission :
i Land and buildings be valued at Rs.80,000.
ii Value of the furniture and stock be reduced by 10% .
iii Goodwill Rs.10,000 brought in cash by Arjun .
iv Arjun brought Rs. 20,000 as his capital .
v Provision for bad debts be increased to Rs.1,000.
Prepare necessary ledger accounts and balance sheet of the newly constituted firm.
4. A and B were partners sharing profits and losses in the ratio of 2:1. Their Balance sheet as on
31.12.2016 was as follows:
Liabilities Rs. Assets Rs.
Creditors 65,900 Cash 1,200
Capital Debtors 9,700
A 30,000 Stock 20,000
B 20,000 Machinery 35,000
Building 50,000
1,15,900 1,15,900
They decided to admit C as a partner for 1/3rd share in the profits of the firm, subject to the
following conditions:
(i) C should bring capital Rs.15,000.
(ii) The value of stock and machinery depreciated by 10%.
(iii) Provision of 5 % on debtors to be made for doubtful debts.
(iv) The value of building be appreciate by Rs.9,500.
Pass journal entries and also prepare necessary ledger accounts and Balance sheet after C’s
admission.
5. P and Q were partners sharing profits and losses in the ratio of 5:3. Their Balance
sheet as on 31.12.2014 was as follows:
Liabilities Rs. Assets Rs.
Creditors 20,000 Bank 28,500
Bill payable 8,000 Stock 22,500
General reserve 28,000 Bills receivable 15,000
Capital a/c: Debtors 15,000
P 80,000 Building 34,000
Q 40,000 Furniture 4,000
Plant 27,000
Goodwill 30,000
1,76,000 1,76,000
On 1-1-2015 they decided to admit R into partnership giving him 1/5th share. He brings in
Rs.50,000 as his share of capital but nothing for goodwill. The partners decided to revalue
the assets as follows:
Goodwill Rs.50,000; Plant Rs.25,000; Debtors Rs.31,000; Stock Rs.32,500; Building
Rs.40,000; Furniture Rs.2,000;Bills receivable Rs.12,500.
You are required to prepare revaluation account, capital account of partners and new
Balance sheet.
6. Ram, Laxman and kannan who were equal partners in a firm and their Balance sheet on
01-03-2013 was as under.
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They agreed to take Krishnan into partnership and gave him 1/4th share in the future profits
on the following terms:
i. That Krishnan should bring in Rs.18,000 for goodwill and Rs.30,000 as capital.
ii. That one half of the goodwill shall be withdrawn by the old partners.
iii. That stock and furniture be depreciated by 10%.
iv. That provision of 5% on debtors created for doubtful debts.
v. That a liability for Rs. 2,160 be created against bills discounted.
vi. That the value of the building having appreciated, and should be valued at
Rs.54,000.
vii. That the value of liabilities and assets other than cash are not be altered.
Give journal entries and Prepare Memorandum Revaluation A/c, Partners’ capital A/c and the
Balance sheet of the new firm.
7. A, B and C are partners in a firm of Accountants who maintain accounts on the cash basis
sharing profits and losses in the ratio of 2:3:1. Their balance sheet as on 31st March 2002
on which date D is admitted as a partner is as follows:
Liabilities Rs. Assets Rs.
B’s Capital 35,000 Furniture 10,000
C’s Capital 22,000 Motor Car 20,000
Cash at bank 18,000
A’s Capital 9,000
57,000 57,000
D is given 1/4th share in the profits and losses in the firm and the profits and losses sharing ratio
as between the other partners remains as before. The following adjustments are to be made prior
to D’s Admission:
i The motor car is taken by B at a value of Rs.25,000.
ii The furniture is revalued at Rs.18,000.
iii The value Goodwill is Rs.50,000. It is agreed among A , B and C that C interested in
Goodwill only upon a value of Rs.30,000.
iv Fees billed but not realized Rs.11,000 are brought into account
v Expenses incurred but not paid Rs.3,000 are provider for.
D’ brings Rs.20,000 in cash as his capital contribution. He is also to be credited with
Rs.22,000 for having agreed to amalgamate his separate practice as Chartered Accountant
with this firm. Prepare Revaluation Account, Capital Accounts and balance sheet of the
firm after D’s admission.
8. L and K were partners in a firm sharing profits and losses in the ratio of 7:5 and their Balance
sheet on 31-12-2012 was as under.
Liabilities Rs. Assets Rs.
Bills payable 6,600 Cash 1,200
Creditors 12,000 Debtors 21,600
Capital A/cs - Ram 33,600 Stock 22,800
Laxman 25,200 Furniture 4,800
Kannan 12,000 Buildings 39,000
89,400 89,400
Liabilities Rs. Assets Rs.
Bills payable 30,000 Cash 14,000
Creditors 26,000 Debtors 40,000
Bank overdraft 50,000 Stock 20,000
General reserve 24,000 Bills Receivable 15,000
Capital A/cs - L 50,000 Furniture 25,000
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They decided to admit G into partnership on 01-01-2013 and gave him 1/3rd share in the
future profits on the following terms:
i. That G should bring in Rs.50,000 as a capital.
ii. That the goodwill is valued 2 years purchase of average profits of last four years
of Rs.40,000 ; 32,000 ; 15,000 and 13,000 respectively.
iii. That the furniture be depreciated by Rs.1,000.
iv. That the provision of 2.5% on debtors created for doubtful debts.
v. That a sundry creditors for Rs.3,000 be decreased no longer as a liability.
vi. That the investment of Rs.5,000 brought into account.
Give journal entries and Prepare Revaluation A/c, Partners’ capital A/c and the Balance sheet of
the new firm. (Ans. B/S total Rs.2,47,000)
9. A and B sharing profits in the ratio of 3:1. Their balance sheet as on 31.12.2004 is as under:
Balance sheet as at 31.12.2004
Liabilities Rs. Assets
Rs.
Creditors 37,500 Cash at bank 22,500
General reserve 4,000 Bills receivable 3,000
Capitals :
A – 30,000
B – 16,000
46,000
Stock 20,000
Debtors 16,000
Furniture 1,000
Building 25,000
87,500 87,500
On 1.1.2005 they admit C as a new partner on the following arrangement:
a. C to bring Rs.10,000 as capital for 1/5 share of profits .
b. The new firm to have goodwill Rs.10,000
c. Stock and furniture to be reduced by 10%, a reserve of 5% on debtors for doubtful
debts to be created.
d. Building to be appreciated at 20%.
Give necessary ledger accounts and balance sheet.
10. Explain the different methods of accounting treatment of goodwill at the time of admission of a new
partner.
UNIT III
Section – A
1. New profit sharing ratio minus old profit sharing ratio is called as ---------.
a) Gaining ratio b) Sacrificing ratio c) Capital ratio d) Equal ratio
2. As per AS-10 the share of good will of a retiring partner should be written off to the
- K 40,000 Plant 80,000
Goodwill 26,000
2,20,000 2,20,000
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remaining partners capital account in their ________
a) Sacrificing ratio b) Capital ratio c) Gaining ratio d) Old profit sharing ratio
3. When the amount due to retiring partner is not paid immediately, then it is transferred to __ .
a) Capital A/c b) Loan A/c c) Cash A/c d) Suspense A/c
4. Amount due to out going partner is shown in the balance sheet as his _____ .
a) Liability b) Asset c) Capital d) Loan
5. The loss or gain an account of revaluation at the time of retirement of a partner is shared by:
a) Remaining partners b) Retiring partner c) All partners d) Any one partner
6. On retirement of a partner, any reserve being should be transferred to the capital account of:
a) All partners in the old profit sharing ratio b) Remaining partners in the new ratio
c) Neither the retiring partner, nor the remaining partner d) None of the above
7. Section 37 of partnership act provided interest on the amount left by retiring or deceased
partner at:
a) 5% b) 10% c) 6% d) 12%
8. When a partner dies, firm will receive the claim:
a) 50% of policy b) 25% of policy c) 75% of policy d) 100%of policy
9. In case of retirement of a partner good will in the balance sheet is credited to the accounts of:
a) All partners b) Only retiring partner c) Only remaining partner d) None of the above
10. As per AS-10, the share of retiring partner’s goodwill is transferred to remaining partners
capital accounts in their ______ .
a) Sacrificing ratio b) Gaining ratio c) Old ratio d) New ratio
11. Joint life policy A/c is _____ .
a) a nominal a/c b) a personal a/c c) a capital a/c d) an asset a/c
12. The Executor is entitled to get all the right of a __________ .
a) Continuing Partner b) Deceased partner c) Dormant Partner d) Minor Partner
13. Share of goodwill of the deceased partner is ________ to his capital account.
a) Credited b) Debited c) No effect d) Kept in suspense
14. The balance in the capital account of the deceased partner is transferred to his ______ .
a) Continuing Partner’s a/c b) Brother’s a/c c) Executor’s a/c d) Friend’s a/c
15. An account operated to ascertain the loss or gain at the death of a partner is called:
a) Realisation Account b) Revaluation Account
c) Executors Account d) Decreased partner's A/c.
16. The accounting procedure at the retirement of a partner involves:
a) Revaluation of assets and liabilities b) Ascertaining his share of goodwill
c) Finding the amount due to him d) All the above
17. Partner’s equity is affected due to:
a) Retirement of a partner b) Admission of a partner
c) Death of a partner d) All of above
18. If a partner was died on 31-03-2012 and his share was 1/3 . Last year (31-12-2011) profit was
Rs.4,20,000. At the time of death of a partner, the deceased partner’s share of profit will be:
a) 35,000 b) 1,05,000 c) 1,40,000 d) 46,667
19. Salary due to the deceased partner is transferred to ______ .
a) Goodwill A/c b) Revaluation A/c
c) Remaining Partner’s capital A/c d) Decreased partner's capital A/c.
20. Joint life policy reserve is in the nature of ______.
a) Accumulated Profits b) Asset c) Capital d) Loan
Answer Key
1 2 3 4 5 6 7 8 9 10
a c b d c a c d a b
11 12 13 14 15 16 17 18 19 20
d b a c b d d a d a
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Section – B
1. Anil, Kapil & Sunil are equal partners, Anil retires from the business and Kapil & Sunil
continue in the firm the profit sharing ratio is 2:1. For the purpose of Anil retirement
goodwill of the firm is valued at Rs. 45,000. Pass necessary journal entries.
If (i) Goodwill a/c is not received
(ii) Goodwill a/c is received.
2. P, Q and R were partners in a firm sharing profits and losses in the ratio of 5/10, 3/10, 2/10
respectively. On 31.12.2009 Q decided to retire from the firm. The new profit sharing ratio of
P & R were 3/5 & 2/5 respectively. Calculate gaining ratio of P & R.
3. P, Q, R and S are partners in a firm sharing profits in the ratio of 2:1:2:1 on the retirement of
R, the firm’s goodwill was valued at Rs. 45,000. P, Q and S decided to share the future profits
equally. Calculate gaining ratio and pass journal entry for goodwill.
4. Distinguish between Sacrificing Ratio and Gaining Ratio.
5. Aparna, Manisha and Sonia are partners sharing profits in the ratio of 3:2:1. Manisha retires
and goodwill of the firm is valued at Rs. 1,80,000. Aparna and Sonia decided to share future
in the ratio of 3:2. Pass necessary Journal entries.
6. Mohan, Nalan and Obrai are partners sharing profit in the ratio 3 : 2 : 1. Mohan retires from
the partnership. In order to settle his claim, the following revaluation of assets and liabilities
was agreed upon:
The value of Machinery is increased by Rs.25,000.
The value of Investment is increased by Rs 2,000.
A provision for outstanding bill standing in the books at Rs. 1,000 is now not required.
The value of Land and Building is decreased by Rs.12,000.
Give journal entries and prepare Revaluation account (Ans: Profits Rs.16,000)
7. Find the total amount due to Manish, who is retiring as a partner:
Credit balance in Manish capital account Rs.20,000.
Manish‘s share of goodwill Rs.7,000
General reserve balance shown in Balance sheet Rs.10,000
Profit on Revaluation of Assets /liabilities Rs.3,000
Interest on drawings Rs.5,00.
Manish share in the profit of the firm 1/2 .
8. Journalise the following transactions in case of retirement of a partner.
a) Undistributed profit and General reserve are in the Balance sheet.
b) Unrecorded liability brought into account.
c) Lump sum payment to retiring partner.
9. P,Q,R and S are partners in a firm sharing profits in the ratio of 2:1:2:1. On the retirement of
R ,the firm’s goodwill was valued at Rs.45,000. P,Q and S decided to share the future profits
equally. Pass journal entry for goodwill.
10. A,B and C are in partnership sharing profits and losses equaly. They take out a joint life
policy for Rs.30,000 on 1.1.2005 and pay an annual premium of Rs. 3,000. The books of
account are closed on 31st December every year. C died on 1.1.2007. The firm realised the
policy amount the next day. Pass the necessary journal entries.
11. A,P and R were partners in a firm. R’ died on 28-02-2011. His share of profits from the
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closure of the last accounting year till the date of death was to be calculated on the
basis of the average profits of three completed years before death. Profits for 2008,
2009 and 2010 were Rs.55,000 , Rs.66,000 and Rs.77,000 respectively.
Calculate R’s share of profits till his death and pass necessary journal entry for the
same.
Section – C
1. Sunil,Devan and Ravi were equal partners in a firm and their balance sheet as on 31.12.2010 was
given below.
Liabilities Rs. Assets Rs.
Capital A/c:
Sunil
Devan
Ravi
General reserve
Creditors
15,000
12,000
18,000
4,500
40,500
Machinery
Furniture
Debtors
Stock
43,500
1,500
30,000
15,000
90,000 90,000
Ravi retired on 31.12.2010 and assets were revalued as under:
Machinery Rs.50,000 ; Furniture Rs.1,200 ; Debtors Rs.28,500 ; Stock Rs.14,700
Goodwill of the firm is valued at Rs.9,000 and Ravi’s share of goodwill is to be adjusted to
continuing partners capital accounts. Give journal entries, prepare necessary ledger accounts
and new balance sheet.
2. The Balance sheet of Rangan, Hari and Suri who are sharing profits & losses in the
proportions of 1/2, 1/3 and 1/6 respectively was as follows on 30-06-2010.
Liabilities Rs Assets Rs.
Bills payable 6,400 Cash in hand 150
Sundry creditors 12,500 Cash at bank 25,500
Capitals: Bills receivable 5,400
Rangan 40,000 Book debts 17,800
Hari 25,000 Stock 22,300
Suri 20,000 85,000 Furniture 3,500
Profit & Loss A/c 4,500 Plant & Machinery 9,750
Building 24,000
_______ _______
1,08,400 1,08,400
Rangan retires from the business on 01-07-2010 and his share in the firm is to be ascertained
on a revaluation of the assets as follows:
(i) Stock Rs. 20,000 ; Furniture Rs.3,000 ; Plant & Machinery Rs.9,000 ; Building
Rs.20,000 and Rs 850 is to be provided for doubtful debts.
(ii) The goodwill of the firm is agreed to be valued at Rs.6,000.
(iii) Rangan is to be paid Rs.11,050 in cash on retirement and the balance in 3 equal yearly
instalments with 5% interest p.a..
Show the necessary ledger accounts, Balance sheet of the continuing partners and the loan
account of Rangan till it is finally closed.
3. A, B and C are partners in a firm sharing profits and losses in the ratio of 1/3:1/2:1/6
respectively. Their balance sheet as on 31-03-2013 was as follows:
Liabilities Rs. Assets Rs.
Reserve fund 16,000 Building 50,000
Capital: Machinery 40,000
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A 30,000 Furniture 10,000
B 40,000 Stock 25,000
C 25,000 Debtors 18,000
Loan payable 15,000 Less: Provision 500 17,500
Creditors 25,000 Cash 8,500
1,51,000
1,51,000
‘C’retires on 31- 03 - 2013 subject to the following conditions:
(i) Goodwill of the firm is valued at Rs.24,000.
(ii) Machinery to be depreciated by 10%.
(iii) Furniture to be depreciated by 5%.
(iv) Stock to be appreciated by 15% and building to be appreciated by 10%
(v) Reserve for doubtful debts to be raised to Rs.2,000.
Prepare necessary ledger accounts and show the Balance sheet of the new firm.
4. Following is the Balance Sheet of X,Y and Z as at 31.12.2010.
Liabilities Rs. Assets Rs.
Creditors 4,000 Cash in hand 400
Capital A/cs Cash at Bank 10,000
X 20,000 Debtors 12,000
Y 10,000 Stock 8,000
Z 10,000 Plant & Machinery 12,000
Reserve 6,400 Goodwill 8,000
50,400 50,400
Z died on 14.3.2011. Under the terms of partnership deed the executor of a deceased partner
was entitled to:
i. Amount standing to the credit of partner’s Capital A/c.
ii. Interest on Capital balance at 5% per annum.
iii. Share of goodwill on the basis of twice the average of the past three years’s profits and
iv. Share of profit from the closing of the last financial year to the date of death on the
basis of the average of the three completed years’ profit before the death.
Profit for 2008, 2009, and 2010 were respectively Rs. 12,000, Rs. 14,000 and Rs. 16,000.
Profit were shared in the ratio of capitals. Prepare Z’s Capital A/c to be rendered to his
Executors.
5. Anand, Babu and Chandhar are sharing profits in the ratio of 3:2:1 respectively . on
31stDecember 2010, balance sheet of the firm stood as follows:
Liabilities Rs Assets Rs.
Creditors 13,590 Cash 5,900
Capital accounts
Anand – 15,000
Babu – 10,000
Chandhar – 10,000
35,000
Debtors 8,000
Stock 11,690
Building 23,000
48,590 48,590
Babu retired on the above mentioned date:
i.Building be appreciated by Rs.7,000
ii.Provision for bad debts be made at 5% on debtors
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iii.Goodwill account Rs.9,000 of the firm created
iv.Rs.5,000 be paid to Babu immediately and the balance may be treated as loan.
Give necessary journal entries and also prepare ledger accounts and balance sheet.
(Ans: Babu’s Loan a/c Rs.10,200 ; B/S Total Rs.50,190)
6. Prince,Queen and Raja share profits in the ratio of 3:2:1 on 30th April 2005 Raja died. Their
Balance sheet on 31.12.2004 was
Liabilities Rs. Assets Rs.
Capital a/c : Goodwill 18,900
Prince 30,000 Cash and Bank 5,000
Queen 20,000 Stock 10,000
Raja 20,000 80,000 Investments 5,000
Reserve for Doubtful debts 800 Property 40,000
General Reserve 5,200 Debtors 10,000
Creditors 12,900
88,900 88,900
On the date of death it was found that:
a) Property be valued at Rs. 58,000: Investments at Rs.4,700: Stock Rs 9,400.
b) Goodwill be valued at one year ‘s purchases of the average profits of the past five years.
c) Raja ‘s Profits to the date of death be calculated on the basis of the average profits of the
preceding three years. The profits of the last five years were: 2000 - 11,500 ; 2001 - 14,000;
2002 – 9,000 : 2003 – 8,000 : 2004 – 10,000. Prepare Raja’s account ,Revaluation account
and Balance sheet.
7. Explain the accounting procedure to be followed with regard to death of a partner.
8. X, Y and Z were partners in a firm sharing profits and losses equally. Z died on 31-03-2011
Their balance sheet as on 31-12-2010 was as follows:
Liabilities Rs. Assets Rs.
Reserve fund 18,000 Goodwill 40,500
Capital: Buildings 90,000
X 90,000 Investment at cost 24,000
Y 75,000 Stock 84,000
Z 63,000
Investment
Fluctuation Fund 6,300
Debtors 54,000
Less: Provision 5,400 48,600
Creditors 46,800 Cash 12,000
2,99,100
2,99,100
On the date of death it was found that: (i) Debtors were all good .
(ii) Investments were valued at Rs.22,500 and were taken over by X at that value.
(iii) Buildings was valued at Rs.1,71,000 .
(iv) Stock were valued at Rs.75,000.
(v) A liability for workmen compensation for Rs.9,000 was to be provided.
(vi) Goodwill was to be valued at one year purchase of average profits of last five years.
(vii) Z’s share of profit upto the date of death was to be calculated on the basis of last
year’s profits.
The profits of the last five years were as under : 2006 – Rs.34,500 ; 2007 – Rs.37,500 ;
2008 – Rs. 24,000 ; 2009 – Rs. 30,000 ; 2010 – Rs.36,000.
Prepare necessary ledger accounts and show the Balance sheet of the remaining partners.
9. You are given the Balance Sheet of Mohit, Sohan and Rahul who are partners sharing profits
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in the ratio of 2 : 2 : 1, as on March 31, 2007.
Balance Sheet as on March 31, 2007.
Liabilities Rs. Assets Rs.
Creditors 40,000 Goodwill 30,000
Reserve Fund 25,000 Fixed assets 60,000
Capitals: Mohit 30,000 Stock 10,000
Sohan 25,000 Sundry Debtors 20,000
Rahul 15,000 70,000 Cash at bank 15,000
1,35,000 1,35,000
Sohan died on June 15, 2007. According to the Deed, his legal representatives are entitled to:
(i) Balance in Capital Account;
(ii) Share of goodwill valued on the basis of thrice the average of the past 4 years’ profits.
(iii) Share in profits up to the date of death on the basis of average profits for the past
4 years.
(iv) Interest on capital account @ 12% p.a.
Profits for the years ending on March 31 of 2004, 2005, 2006, 2007 respectively
were Rs. 15,000, Rs. 17,000, Rs. 19,000 and Rs. 13,000.
The firm had taken a Joint Life Policy of Rs. 1,25,000, the annual premium being charged
to profit & loss account every year. Sohan’s legal representatives were to be paid the
amount due. Mohit and Rahul continued as partner by taking over Sohan’s share equally.
Work out the amount payable to Sohan’s legal representatives. (Ans: S Executor 94,158)
10. Explain the modes of payment to a retiring partner.
UNIT IV
Section – A
1. Realization account is a __________ .
a) Nominal Account b) Personal account c) Real account d) Current account
2. Garner Vs Murray rule , the deficiency of the insolvent partner must be borne by _________.
a) the solvent partners in their sacrificing ratio b) the solvent partners in their new ratio.
c) all the partners in their capital ratio d) the solvent partners in their adjusted capital ratio
3. The rule in Garner Vs Murray applicable to ______.
a) Admission of a partner b) Insolvency of a partner
c) Death of a partner d) Retirement of a partner
4. A firm has unable to pay its debts when _____ .
a) a partner is insolvent b) a partner has debit balance
c) the firm is insolvent d) a partner is minor
5. The decision of Garner Vs Murray was given in the year:
a) 1904 b) 1905 c) 1933 d) 1804
6. The Capital deficiency of the Insolvent partner will be borne in _____.
a) Profit Sharing Ratio b) Loss Sharing Ratio c) Capital Ratio d) None
7. Which one is the correct for realization losses will be distributed to partners?
a) Profit Sharing Ratio b) Drawings Ratio c) Capital Ratio d) None of these
8. When dissolution expenses are incurred-
a) Cash account is debited b) Cash account is credited
c) Realization A/c is debited d) Both b & c
9. The assets and liabilities not taken over by the new firm are transferred to Partner's Capital
Accounts in their ______ .
a) Profit sharing ratio b) Capital ratio c) Equal ratio d) None of above
10. In the event of amalgamation, the goodwill of each firm is credited to the partners capitals of
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the respective firm in their _____ .
a) Old profit sharing ratio b) New profit sharing ratio c) Capital ratio d) None of above
11. Increase in the value of asset and decrease in the value of Liability shows _____ .
a) Revaluation Profit b) Revaluation Loss c) No Profit, No Loss d) None of above
12. Decrease in the value of asset and increase in the value of liability shows_______.
a) Revaluation Profit b) Revaluation Loss
c) No Profit, No Loss d) None of above
13. When Unrecorded assets are realized-
a) Cash account is debited b) Cash account is credited
c) Realization A/c is debited d) Capital account is debited
14. Garner Vs Murray rule is not applicable to :
a) One partner insolvent b) Two or more partners insolvent but not all the partners
c) All the partners insolvent d) None of above
15. If partner’s capital account has a deficit balance and cannot contribute any amount to meet
his/her deficiency, that partner is known as:
a) Solvent b) Debtor c) Insolvent d) Creditor
16. As per Garner Vs. Murray, Solvent partners bring in cash to the extent of _____ .
a) Revaluation Profit b) Revaluation Loss
c) Realisation Loss d) Realisation Profit
17. As per Garner Vs. Murray, the closing balance of solvent Partner’s Capital account is
transferred to ______ .
a) Realization A/c b) Insolvent Partner’s A/c c) Cash Account d) Drawings A/c
18. If the partner is insolvent, the accumulated profits & reserves are transferred to _____ .
a) Realization A/c b) Cash A/ c) Partner’s loan A/c d) Partner’s Capital A/c
19. When Unrecorded liability is paid:
a) Cash account is debited b) Cash account is credited
c) Realization A/c is debited d) Both b & c
20. When insolvent partner’s private estate realised :
a) Cash account is debited b) Cash account is credited
c) insolvent partner’s capital a/c is credited d) Both a & c
21. Two firms are combined together to form a new firm is called ____.
a) Amalgamation b) Sale of firms c) Dissolution d) Reconstruction
22. The amount payable by the purchasing company to the vendor firm is called ___ .
a) Goodwill b) Purchase consideration c) Donation d) Commission
Answer Key
1 2 3 4 5 6 7 8 9 10
a d b c a c a d b a
11 12 13 14 15 16 17 18 19 20
a b a c c c c d d d
21 22
a b
Section – B
1. From the following information , prepare Realisation account assuming all the partners are
insolvent. Current assets Rs.40,000. Furniture Rs.50,000. Fixed assets Rs. 4,55,000.
Provision for depreciation on furniture Rs.20,000. Sundry Creditors Rs.4,20,000.
Bills payable Rs.20.000. Amount realised on selling the assets Rs.2,55,000.
Partners A,B and C share profits & losses in the ratio of 2:2:1 .
2. Distinguish between Realisation account and Revaluation account.
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3. Explain the Garner Vs Murray Rule.
4. X,Yand Z are partners sharing profits and losses in the ratio of 2:2:1. Y is insolvent and his
estate is unable to contribute anything. You are required to pass journal entries as per Garner
Vs Murray rule from the following:
Realisation loss Rs.1,20,000 ; Deficiency in Y’s capital a/c Rs.22,000
Capital ratio of X and Z : 73:25
5. A B and C are partners in 4:3:3. Their capitals are respectively Rs.5,000(Dr.), Rs.30,000 (Cr)
and Rs.60,000 (Cr.) ‘A’ becomes insolvent. The realization losses are Rs. 27,000. Apply
Garner Vs Murray rule and pass journal entries.
6. X, Y and Z are equal partners with capitals Rs.10000, Rs.20000 and Rs. 6000 (Dr.). ’Z’
becomes insolvent. The Realization losses of the firm are Rs. 27, 000. As per Garner Vs
Murray rule find out the capital deficiency of the insolvent partner and pass necessary
journal entries.
7. What is amalgamation of firms? State its advantages.
8. Pradeep limited has taken over business of ABC firm and agreed to pay the purchase price is
given below:
i) 2,800 shares of Rs.50 each fully paid at Rs.60 per share
ii) 25,000, 8% preference shares of Rs.100 each issued at a premium of 25% and
iii) Rs.20,000 in cash.
You are required to compute the amount of purchase consideration payable to ABC firm.
(Ans: Purchase consideration Rs. 2,13,000)
9. M and N partners of a firm amalgamating with XY & Co, have capitals of 1,00,000 and
Rs.2,00,000 respectively and they share profits equally. Their goodwill is valued
atRs.80,000. It is decided that investment of the value of Rs.30,000 and Bank loan of Rs.
45,000 will not be taken over by the new firm. Revaluation profit on other assets and
liabilities is ascertained to be Rs.20,000.
You are asked to arrive at the adjusted capital balance of M & N for the purpose of
amalgamation
10. X Ltd agreed to purchase the business of Rahim and Karim as on 31-03-2003. Their assets on
that date were Rs.4,40,000 and liabilities to outsiders Rs.1,60,000. For the purpose of sale, it
is agreed that 90% of the assets alone will be taken over at 10% discount. Liabilities are to be
taken subject to rebate of 5%. Goodwill is deemed worth Rs.40,000. Ascertain
Purchase consideration. ( Ans: Purchase consideration Rs. 2,44,400)
11. What is purchase consideration ? Briefly state the methods of computing purchase
consideration.
12. A, B and C are partners sharing profits and losses equally. They agreed to dissolve
their firm on 1-1-2003. On that date, their balance sheet was as follows:
Liabilities Rs. Assets Rs.
Capital: Sundry assets 21,000
A 12,000 Profit & Loss a/c 3,000
B 8,000 C's Capital a/c 1,000
Sundry creditors 5,000
25,000 25,000
The assets realized Rs.15,500 and the expenses of realization Rs. 500. C became insolvent and his
estate paid Rs.400. Prepare realization account.
Section – C
1. A, B and C are partners, in a business dividing profits equally. Their Balance Sheet at 31st
March, 2002 is as follows:
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Liabilities Amount Assets Amount
Sundry Creditors 10,000 Furniture 2,100
Bills Payable 2,000 Stock 15,400
Capital Account Sundry Debtors 18000
A 12,000 Less: Provision for
Doubtful Debts 900 17,100
B 900
C 1,000 22,000 C’s Current A/c. 5,000
Current Account Cash at Bank 1,400
A 2,000
B 2,000 4,000
Reserve Fund 3,000
Total 41,000 41,000
C is insolvent and his estate pays Rs.1,800 to the firm. The partnership is consequently dissolved
and Sundry Debtors, Stock and Furniture realize Rs.23,600. Sundry creditors were settled at
Rs.8,000. You are required to prepare the necessary ledger account to close the books of the firm in
accordance with the decision in Garner Vs Murray.
2. The Balance Sheet of L, M and N who are equal partners showed as follows on 31-12-2001 .
Liabilities Amount Assets Amount
Creditors 10,600 Cash at Bank 900
Capital Account Stock 17,000
L 16,700 Debtors 13,000
M 10,700 27,400 Investments 4,000
Reserve Fund 2,400 Furniture 1,000
Profit & Loss A/c 1,500 Machinery 3,000
N’s Capital A/c 3,000
Total 41,900 41,900
The firm was dissolved on the date. The assets realized in follows:
Debtors 12,500 Stock 17,200
Investments 3,800 Furniture 800 Machinery 2,500
The creditors were paid off Rs.10,540 in full settlement of their claims. The expenses of dissolution
amounted to Rs.60. Assuming N is insolvent and he is not able to bring in anything. Prepare the
ledger accounts in accordance with the decision in Garner Vs. Murray.
3. The following is the Balance Sheet of X,Y and Z on 31.3.94.
Liabilities Rs. Assets Rs.
Capital A/Cs Furniture 40,000
X 50,000 Plant &
Machinery
20,000
Y 30,000 Stock 40,000
General Reserve 30,000 Sundry Debtors 20,000
Sundry Creditors 40,000 Cash at Bank 12,000
Z’s Capital 18,000
1,50,000 1,50,000
`Z ‘is insolvent but his estate paid Rs. 4,000. It is decided to dissolve the partnership.
The assets realised as follows: Sundry Debtors : Rs. 15,000; Furniture Rs. 28,000;
Stock Rs. 32,000; Plant & Machinery Rs. 14,000; The dissolution expenses Rs.5,000.
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Give necessary Ledger Accounts to close the books of the firm if the capitals are
fluctuating and apply the Garner Vs. Murray rule.
4. A,B and C are partners sharing profits and losses in the ratio of 3:2:1 respectively. The firm
was dissolved on 31.12.95 on which date its Balance Sheet was as follows:
Liabilities Rs Assets Rs
Capital Accounts : A 45,000 Plant & machinery 28,500
B 5,000 Stock 25,000
C 5,000 Sundry Debtors 25,000
A’s Current A/C 750 Cash at Bank 1,500
Sundry Creditors 20,000 B’s Current A/C 1,000
Bills Payable 3,500 C’s Current A/C 2,500
Bank loan 5,000 Profit & Loss A/C 750
84,250 84,250
Plant and Machinery realized for Rs.20,000; Stock realized Rs.15,000; Debtors realized
Rs.21,000; Goodwill was sold for Rs.300. The dissolution expenses amounted to Rs.600. C is
insolvent and a dividend of 50 paise in the rupee is received from his private estate.
Pass journal entries and prepare ledger accounts to close the books of the firm applying the
rule in Garner Vs. Murray rule.
5. X,Y and Z are equal partners. The following is the Balance Sheet of X,Y and Z on 31.12.92.
Liabilities Rs. Assets Rs.
Capital A/Cs Buildings 4,000
X 1,600 Plant
Furniture
4,000
1,600
Z 1,000 Stock 1,600
Loan 2,000 Sundry Debtors 2,000
Sundry Creditors 10,000 Cash at Bank 100
Y’s Capital 1,300
14,600 14,600
Due to lack of liquidity and weak financial position of the partners, the firm is dissolved.
X and Z are not able to contribute anything and a sum of Rs.400 received from Y. All of
them are declared insolvent.
The assets realised as follows: Sundry Debtors : Rs. 1,100; Furniture Rs.400;
Stock Rs. 1,000; Plant Rs. 2,000; Buildings Rs.1,600. The dissolution expenses Rs.100.
Give necessary Ledger Accounts to close the books of the firm.
(Ans: Deficiency a/c total Rs.4,700 ; X 1,200 Creditors 3,500; Y – 3,300; Z- 1,400)
6. The following is the balance sheet of Arun, Babu, Cheran and David on 31.12.94. they
shared profits and losses in the ratio of 4:3:2:1.
Liabilities Rs. Assets Rs.
Capitals: Arun
Babu
Cheran
Sundry creditors
15,000
10,000
1,500
5,000
Fixed Assets
Current assets
Goodwill
David’s Capital
20,000
6,000
5,000
500
31,500 31,500
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David has no separate assets and liabilities. The partners decided to dissolve the
business. Fixed assets realized Rs.15,000 and current assets realized Rs.5,000. The goodwill
is valueless. Realization expenses amount to Rs.1,500. Cheran can contribute only Rs.250
from his separate resources. Prepare accounts according to Garner Vs. Murray assuming that
both Cheran and David have become insolvent.
7. The following is the Balance Sheet of A,B and C on 31.3.2014.
Liabilities Rs. Assets Rs.
Capital A/Cs Furniture 1,60,000
A 2,00,000 Plant &
Machinery
80,000
B 1,20,000 Stock 1,60,000
General Reserve 1,20,000 Sundry Debtors 80,000
Sundry Creditors 1,60,000 Cash at Bank 48,000
C’s Capital 72,000
6,00,000 6,00,000
`C ‘is insolvent but his estate paid Rs. 16,000. It is decided to dissolve the partnership.
The assets were realised as follows: Sundry Debtors : Rs. 60,000; Furniture Rs. 1,12,000;
Stock Rs. 1,28,000; Plant & Machinery Rs. 56,000; The dissolution expenses Rs.20,000.
Give necessary Ledger Accounts to close the books of the firm if the capitals are
fluctuating and apply the Garner Vs. Murray rule.
(Ans: Realisation loss Rs.1,44,000)
8. A,B,C and D were partners sharing profits in the ratio of 3:2:3:2 The following was the
Balance Sheet on 31.12.92.
Liabilities Rs. Assets Rs.
Capital A/Cs Assets 34,000
A 20,000 C’s Capital 12,720
B 10,000 D’s Capital 3,280
Reserve fund 8,000
Sundry Creditors 12,000
50,000 50,000
On the above date C became insolvent and was able to contribute only 50 paise in the
rupee. The assets realised Rs. 25,000. The dissolution expenses Rs.800.
Give necessary Ledger Accounts to close the books of the firm.
9. Explain the accounting steps to be followed when a partner becomes insolvent.
10. Explain the accounting treatment in case of all the partners become insolvent.
11. Explain the main purpose of converting a partnership firm into limited companies.
UNIT V
Section – A
1. Which of the following is the correct order of payment for the amount realised under
Piecemeal distribution?
a) Realisation expenses, Outside Liabilities, Partners Loan ,Partners Capital.
b) Partners Capital,Outside Liabilities, Partners Loan, Realisation Expenses.
c) Partners Capital ,Partners Loan ,Outside Liabilities, Realisation Expenses.
d) Partners Loan, Realisation expenses, Outside Liabilities, Partners Capital.
2. In piecemeal distribution, the Proportionate Capital method is also called as ______.
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a) Maximum Loss Method b) Memorandum Revaluation Method
c) Highest Relative Capital Method. d) Pooling of interest Method
3. At the time of dissolution all the assets of firm are transferred to the realization A/c:
a) Market value b) Book value c) Cost value d) Sale value
4. Realisation account is prepared only at the time of _________.
a) Dissolution of a Firm b) Admission of a Partner
c) Retiring a Partner d) Death of a Partner
5. Balance of realization A/c is transferred to the capital A/c of the partners in:
a) Capital ratio b) Profit sharing ratio c) Interest ratio d) Equally
6. On dissolution of the firm, partner’s capital accounts are closed through:
a) Realisation Account b) Drawings Account
c) Bank Account d) Loan Account.
7. Unrecorded liabilities when paid are shown in:
a) Debit of Realisation Account b) Debit of Bank Account
c) Credit of Realisation Account d) Credit of Bank Account.
8. In liquidation, the final cash is distributed among the partners:
a) Equally b) In agreed ratio c) final capital ratio d) opening capital ratio
9. When partnership is dissolved, the final task is:
a) Payment of liabilities b) Payment to partners
c) Payment of expenses d) Payment to employees
10. If assets are sold more than book value, realization account will be:
a) Credited b) Debited c) Not recorded d) None of these
11. In case of liquidation of a firm, assets are:
a) Donated b) Distributed c) Sold d) Revalued
12. If partner’s capital account has a deficit balance and can contribute any amount to meet
his/her deficiency, that partner is known as:
a) Solvent b) Debtor c) Insolvent d) Creditor
13. The account used for liquidation process is:
a) Revaluation a/c b) Income summary a/c c) Realisation a/c d) Closing account
14. Loss on realization is:
a) Debited to partners’ capital account b) Credited to partners’ capital account
c) Credited to realization account d) None of the above
15. Balance of realization account is transferred to the capital account of partners in:
a) Capital ratio b) Profit sharing ratio c) Interest ratio d) Equally
16. The balance left in the capital accounts in case of dissolution is settled by:
a) Revaluation account b) Bank account
c) Realization account d) Profit & loss appropriation account
17. Realization account, operated by partnership business, is called:
a) Asset b) Temporary account c) Contra asset d) None of these
18. If all partners, but one, are insolvent it is:
a) Dissolution of an agreement b) Dissolution of firm
c) May or may not cause dissolution d) None of above
19. If a partner takes over an asset of the firm, his capital account:
a) Will be debited with the amount as agreed
b) Will be credited with the market value of the asset
c) Will be debited with book value of the asset
d) None of above
20. When a partner takes away an asset on dissolution-
a) Cash account is debited b) Cash account is credited
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c) Realization A/c is debited d) Partner’s Capital account is debited
Answer Key
1 2 3 4 5 6 7 8 9 10
a c b a b c a b b a
11 12 13 14 15 16 17 18 19 20
c a c a b b b b a d
Section – B
1. A partnership firms was dissolved on 30th June, 1989. its Balance sheet on the date of
dissolution was as follows:
Liabilities Rs. Assets Rs.
Capital: Cash 5,400
Ram 38,000 Sundry Assets 94,600
Shyam 24,000
Mohan 18,000
Loan A/c – Shyam 5,000
Sundry Creditors 15,000
1,00,000 1,00,000
Calculate the Absolute surplus capital.
2. Distinguish between Dissolution of Partnership and Dissolution of Partnership firm.
3. What journal entries would you pass for the following assuming all assets and liabilities are
already transfer to realization account :
i) Unrecorded assets realized Rs.5,000.
ii) Unrecorded liability paid Rs.3,000
iii) A liability taken over by partner ‘X’ Rs.8,000.
4. On dissolution, the following are the information provided to you, compute the net amount
realized.
Month Debtor Stock Expenses
April 30,000 14,000 1,000
May 17,000 10,000 2,000
June 22,000 Nil 500
5. How will you deal with the realization expenses of the firm of X and Y in the following
cases:
i) Realisation expenses amount to Rs. 2,000
ii) Realisation expenses of Rs.600 paid by X
iii) Realisation expenses are to be borne by X for which he will be paidRs.1,400. The actual
expenses incurred by X were Rs 2,400.
6. From the following, distribute cash under Proportionate capital method:
Capital accounts of the partners: A - Rs.20,000 B - Rs.10,000
Profit sharing ratio: 3:2
I Instalment Rs. 5,000
II Instalment Rs. 2,000
III Instalment Rs. 1,000
7. Calculate Absolute surplus capital under piecemeal distribution from the following. A firm
has three partners A,B and C with their capitals of Rs.40,000 , Rs.20,000 and Rs.20,000
respectively. Their profit sharing ratio is 3:2:1
8. From the following information , realisation a/c assuming all the partners are insolvent:
Current assets Rs. 40,000 ; Furniture Rs.50,000 ; Fixed assets Rs.4,55,000 ; Provision for
depreciation on furniture Rs. 20,000 ; Sundry creditors Rs.4,20,000 ; Bills payable Rs.20,000
All the Assets realised Rs.2,55,000. Partners A,B and C share profits in the ratio of 2:2:1.
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9. How deficiency of Creditors is paid off?
10. Reproduce the format of Realisation Account.
Section – C
1. Red, White and Blue are in partnership. The following is their balance sheet as at31-12-2013
on which date they dissolved partnership. They share profits is in the ratio of 5:3:2.
Liabilities Rs. Assets Rs.
Capitals:
Red
White
Blue
Creditors
Red’s loan
50,000
15,000
45,000
40,000
10,000
Premises
Plant
Stock
Debtors
40,000
30,000
30,000
60,000
1,60,000 1,60,000
It was agreed to repay the amounts due to the partners as and when the assets were
realized ,viz: 01.02.2014 Rs.30,000 ; 01.04.2014 Rs.73,000 ; 01.06.2014 Rs.47,000.
Prepare statement showing how the distribution of cash to the partners should be made
under Proportionate Capital Method.
2. The following is the balance sheet of M/s.A,B and C who share profits and losses in the ratio
of 2:2:1
Liabilities Rs. Assets Rs.
Sundry creditors 30,000 Cash 4,000
Capitals:
A
B
C
30,000
24,000
8,000
Sundry debtors 44,000
Stock 44,000
92,000 92,000
The firm was dissolved and that assets were realized gradually Rs. 20,000 was received first
Rs.30,000 was received next and Rs.18,000 finally .
Show how the distribution of cash is made.
3. P,Q and R were partners sharing profits and losses in the ratio of 2 : 2 : 1. The partnership
was dissolved on December 31,1997, and their balance sheet on that date was as follows:
Liabilities Rs. Assets Rs.
Sundry Creditors 6,000 Cash in hand 2,000
Capital Accounts : Other Assets 38,000
P 16,000
Q 10,000
R 3,000
Profit and Loss A/c 5,000
40,000 40,000
The assets were realized gradually : Rs. 10,000 was received in first time, Rs. 10,000 the second
time and Rs.13,000 finally. Show how the cash was distributed under proportionate capital
method.
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4. Orange, Apple and Banana were in partnership sharing profits and losses in the ratio3:2:1 They
decide to dissolve the partnership and to distribute the sale proceeds as when realized. The
partners’ capital were Orange Rs.10,000, Apple Rs.9,000 and Banana Rs,5,000. Apple’s loan(Cr)
amounted to Rs.3,000. Sundry creditors amounted to Rs.6,000. The assets were realized as under:
Months Stock Furniture Debtors Expenses
July
August
September
October
3,000
2,000
2,500
3,000
300
100
-
-
2,000
1,500
2,000
1,500
500
200
300
200
You are required to draw up a statement showing the distribution of cash and journal entry for
closing finally the capital accounts of the partners by following the proportionate capital
method.
5. A and B were partners sharing profits and losses in the ratio of 3:2. On 01.07.2011 their
Balance sheet was as under:
Liabilities Rs. Assets Rs.
Capital A/c
A
B
Sundry Creditors
50,000
30,000
2,00,000
Stock
Debtors
Furniture
Cash
1,20,000
1,50,000
6,000
4,000
2,80,000 2,80,000
The firm was dissolved on the above date. The assets realized only Rs.1,60,000.
Expenses came to Rs.5,000. A’s private estate could pay only Rs.10,000.
B had no surplus. Close the books of the firm by showing the relevant ledger accounts.
6. P,Q and R were partners sharing profits and losses in the ratio of 1/2 :1/ 4 : 1/4. The
partnership was dissolved on December 31,2009, and their balance sheet was as follows:
Liabilities Rs. Assets Rs.
Sundry Creditors 14,000 Other Assets 40,000
Capital Accounts :
P 10,000
Q 10,000
R 6,000
40,000 40,000
The assets were realized Rs. 35,500. Creditors were paid in full. Realisation expenses
amounted to Rs.1,500. Close the books of the firm.
7. The following is the Balance sheet of X,Y and Z as at 30-12-1994.
Liabilities Rs. Assets Rs.
Sundry Creditors 62,000 Plant & Machinery 50,000
Capital Accounts : Land & Buildings 1,00,000
X 75,000 Stock 20,000
Y 22,500 Debtors 70,000
Z 67,500
Y’s Loan 13,000
2,40,000 2,40,000
On the above date, they decided to dissolve the firm and to repay the amounts due to
partners as and when the assets were realized viz.
1st realization Rs. 45,000
2nd realization Rs.1,09,500
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3rd realization Rs. 70,500
Prepare the statement showing how the distribution should be made under
maximum loss method.
8. Gobi,Murali and Guna were partners sharing profits and losses in the ratio of 2:2:1. The
partnership was dissolved on 31-12-2005, and their balance sheet was as follows:
Liabilities Rs. Assets Rs.
Sundry Creditors 11,200 Debtors 12,500
Bills payable 2,000 Goodwill 1,500
Bank Loan 12,000 Bills Receivable 1,250
Capital Accounts : Plant 21,250
Gobi 6,000 Furniture 1,200
Murali 4,000 Cash in hand 500
Guna 3,000
38,200 38,200
The assets were realized as follows: Goodwill Rs.7,500. 10% of Debtors proved bad. Bills
receivable Rs.1,200 ; Plant Rs. 17,750. Gopi took furniture at book value. Bills payable were
paid before due date, earning a discount of Rs.100. Creditors were settled for Rs.10,700.
Bank loan was paid off including interest of Rs.200 . Prepare the necessary ledger accounts.
9. What do you understand by piecemeal distribution? Explain the methods for piecemeal
distribution.
10. Describe the different ways in which the partnership firm may be dissolved.
***************************************************************************
KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS)
COIMBATORE – 641 029
QUESTION BANK
Class: II Bcom PA (Main & addl) Semester: IV
Subject: Cost accounting Subject code: 18UPA410
Prepared By: N.SRUTHI
UNIT I
SECTION- A (1 marks)
Choose the right answer
1) _______ is the verification of correctness of cost accounts.
a) Costing b) Cost audit c) Cost control d) Budgetary control
2) _______ aims at guiding the actual performance towards the line of target.
a) Costing b) Cost audit c) Cost control d) Budgetary control
3) ________ begins with recording of expenditure and ends with the preparation of
statistical data.
a) Costing b) Cost accounting c) Cost audit d) Cost control
4) _________ deals with collection and analysis of expenses.
a) Cost ascertainment b) Cost audit c) Cost control d) Budgetary control
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5) _______ involves the fixation of budgets and comparison of actual cost with the budget
fixed.
a) Cost ascertainment b) Cost audit c) Cost control d) Budgetary control
6) ______ is the amount of resources given up in exchange for some goods or services.
a) Expense b) Cost c) Loss d) Cost centre
7) _________ are cost applied against certain revenue.
a) Expense b) Loss c) Cost centre d) Profit centre
8) ________ is the diminution in ownership equity.
a) Expense b) Loss c) Cost centre d) Profit centre
9) ________ is the smallest segment of activity responsible for cost accumulation.
a) Expense b) Loss c) Cost centre d) Profit centre
10) ________ discloses the profit of a particular segment of activity.
a) Expense b) Loss c) Cost centre d) Profit centre
11) Production, administration, selling and distribution costs are _______ based
classification of cost.
a) Function b) Nature c) Normality d) Controllability
12) Cost due to the change in level of activity is known as _______.
a) Differential cost b) Sunk cost c) Implicit cost d) Explicit cost
13) Zero value of an asset which is irrecoverable is known as ________.
a) Differential cost b) Sunk cost c) Implicit cost d) Explicit cost
14) Imputed cost is also known as _________.
a) Notional cost b) Differential cost c) Replacement cost d) Opportunity cost
15) _________ cost involves immediate payment of cash to outsiders.
a) Explicit b) Implicit c) Opportunity d) Differential
16) _______ cost does not involve immediate payment of cash.
a) Explicit b) Implicit c) Opportunity d) Differential
17) _________ is the profit lost when one alternative is selected over another.
a) Explicit cost b) Implicit cost c) Opportunity cost d) Differential cost
18) ________ is the comparison made of the actual cost with standard cost.
a) Marginal costing b) Uniform costing c) Standard costing d) Absorption costing
19) ________ costing ascertains the cost of work done in the past.
a) Standard b) Historical c) Direct d) Absorption
20) _______ costing is used to ascertain the effect of changes in volume.
a) Standard b) Marginal c) Direct d) Absorption
SECTION- B (5 marks)
Answer the following
1) Define cost accounting. Write a note on cost concepts.
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2) Briefly write about the scope of cost accountancy.
3) Differentiate between implicit cost and explicit cost.
4) Illustrate opportunity cost with suitable examples.
5) What is differential cost? Explain.
6) Write a note on techniques of costing.
7) Briefly explain about methods of costing.
8) Describe the importance of cost accounting in controlling the costs of the company.
9) Describe about the treatment of stock in cost sheet.
10) What are the different overhead costs? Explain.
SECTION- C (8 marks)
Answer the following
1) Discuss on costing as an aid to management.
2) Elaborate and explain about the classification of cost.
3) Explain in detail about elements of cost.
4) Draft the specimen of cost sheet.
5) Calculate prime cost, factory cost, cost of production, cost of sales and profit from the following:
Particulars Rs. Particulars Rs.
Direct material 1,00,000 Depreciation: Factory plant 500
Direct wages 30,000 Depreciation: Office 1,250
Wages for foreman 25,000 Consumable stores 2,500
Electric power 500 Manager’s salary 5,000
Lighting: Factory 1,500 Director’s fees 1,250
Lighting: Office 500 Office stationery 500
Storekeeper’s wages 1,000 Telephone charges 125
Oil and water 500 Postage and telegrams 250
Rent: Factory 5,000 Salesmen’s salaries 1,250
Rent: Office 2,500 Travelling expenses 500
Repairs & renewals: Factory plant 3,500 Advertising 1,250
Repairs & renewals: Office 500 Warehouse charges 500
Sales 1,89,500 Carriage outwards 375
6) From the following particulars, prepare a statement showing the components of the total sales and
profit for the year ended 31st December.
Particulars Rs. Particulars Rs.
Stock of finished goods (1st Jan) 6,000 Wages 1,75,000
Stock of raw materials (1st Jan) 40,000 Work manager’s salary 30,000
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Work-in progress (1st Jan) 15,000 Factory employee’s salary 60,000
Purchase of raw materials 4,75,000 Power expenses 9,500
Carriage inwards 12,500 General expenses 32,500
Factory rent and taxes 7,250 Sales for the year 8,60,000
Other production expenses 43,000 Stock of raw materials (31st Dec) 50,000
Stock of finished goods (31st Dec) 15,000 Work-in progress (31st Dec) 10,000
7) The following data relate to the manufacture of a product during the month of January.
Raw materials consumed Rs.80,000 Office overhead is 10% of works cost
Direct wages Rs.48,000 Selling overhead Rs.1.50 per unit
Machine hours worked 8,000 hrs Unit produced 4,000
Machine hour rate Rs.4 Units sold 3,600 @ Rs.50 each
Prepare a cost sheet and show a) Cost per unit b) Profit for the period
8) Calculate prime cost, factory cost, cost of production, cost of sales and profit from the following
details:
Particulars Rs. Particulars Rs.
Direct material 10,000 Administrative expenses 1,000
Direct labour 4,000 Selling expenses 300
Direct expenses 500 Sales 20,000
Factory expenses 1,500
9) The directors of a manufacturing business require a statement showing the production results of the
business for the month of March. The accounts reveal the following information:
Particulars Rs. Particulars Rs.
Stock in hand 1st March: Work-in-progress 1st March 8,220
Raw materials 25,000 Work-in-progress 31st March 9,100
Finished goods 17,360 Sale of finished goods 72,310
Stock in hand 31st March: Direct wages 17,150
Raw materials 26,250 Non-productive wages 830
Finished goods 15,750 Works expenses 8,340
Purchase of raw materials 21,900 Office & administrative expenses 3,160
Selling & distributive expenses 4,210
You are required to construct a statement so as to show:
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a) The value of materials consumed; b) The total cost of production; c) The cost of goods sold; d) The
net profit for the month.
10) The accounts of Pleasant Company Ltd show for 2017:
Materials Rs.3,50,000; Labour Rs.2,70,000; Factory OH Rs.81,000 and Administrative OH Rs.56,080.
What price should the company quote for the refrigerator? It is estimated that Rs.1,000 in material and
Rs.700 in labour will be required for one refrigerator. Absorb factory OH on the basis of labour and
administrative OH on the basis of works cost. A profit of 12 ½% on selling price is required.
Answers:
SECTION- A (1 marks)
Choose the right answer
1) Cost audit (b)
2) Cost control (c)
3) Cost accounting (b)
4) Cost ascertainment (a)
5) Budgetary control (d)
6) Cost (b)
7) Expense (a)
8) Loss (b)
9) Cost centre (c)
10) Profit centre (d)
11) Function (a)
12) Differential cost (a)
13) Sunk cost (b)
14) Notional cost (a)
15) Explicit (a)
16) Implicit (b)
17) Opportunity cost (c)
18) Standard costing (c)
19) Historical (b)
20) Marginal (b)
SECTION- C (8 marks)
Answer the following
5) Prime cost – Rs.1,30,000; Factory cost – Rs.1,47,500; Cost of production – Rs.1,59,375; Cost of
sales – Rs.1,63,250 and Profit – Rs.26,250
6) Prime cost – Rs.6,52,500; Factory cost – Rs.8,07,250; Cost of production – Rs.8,39,750; Cost of
goods sold – Rs.8,30,750 and Profit – Rs.29,250
7) a) Cost per unit – Rs.44 b) Profit for the period – Rs.16,200
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8) Prime cost – Rs.14,500; Factory cost – Rs.16,000; Cost of production – Rs.17,000; Cost of sales –
Rs.17,300 and Profit – Rs.2,700
9) Value of materials consumed – Rs.20,650; b) Total cost of production – Rs.49,250; c) Cost of goods
sold – Rs.50,860; d) Net profit for the month – Rs.17,240
10) Rs.2,357.49
UNIT II
SECTION- A (1 marks)
Choose the right answer
1) EOQ stands for _______.
a) Effective Ordering Quantity b) Economic Ordering Quantity
c) Effective Order Quality d) Economic Order Quality
2) The quantity of material to be ordered at one time is known as _______.
a) EOQ b) JIT c) EPQ d) JOT
3) ________ is the expansion of ABC analysis.
a) Always Better Control b) Always Best Control
c) Actual Better Control d) Actual Best Control
4) Proportional parts value analysis method is also known as __________.
a) ABC analysis b) EOQ c) Perpetual inventory system d) JIT
5) In ABC analysis, the lower percentage of items handled at higher percentage of
investment is denoted by _______.
a) A b) B c) C d) None of these
6) In ABC analysis, the higher percentage of items handled at lower percentage of
investment is denoted by ________.
a) A b) B c) C d) None of these
7) _________ is the record of receipt and issue of materials.
a) Stores ledger b) Bin card c) Stock taking d) Invoice
8) ________ is a record of receipts, issues and balances of stock shown with money value.
a) Stores ledger b) Bin card c) Stock taking d) Invoice
9) ________ is a physical perpetual inventory.
a) Stores ledger b) Bin card c) Stock taking d) Invoice
10) __________ is a form used as a formal request to the purchasing department to purchase
materials.
a) Purchase requisition b) Invoice c) Bin card d) Cash bill
11) The purchase requisition is generally prepared in ______ copies.
a) 1 b) 2 c) 3 d) 4
12) Regular purchase requisition is prepared by _______.
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a) Store keeper b) Works manager c) Purchase manager d) Supply manager
13) Inviting quotations from many parties by giving advertisement in press is known as
________.
a) Open tender b) Limited tender c) Single tender d) Closed tender
14) Inviting quotations from proven suppliers from past is known as _________.
a) Open tender b) Limited tender c) Single tender d) Closed tender
15) Inviting quotation from a regular sole supplier is known as _______.
a) Open tender b) Limited tender c) Single tender d) Closed tender
16) _______ prepares a purchase order for the supply of stores.
a) Purchase department b) Store keeper c) Supply manager d) Works manager
17) _________ carries out receipt and inspection of materials ordered in small concerns.
a) Store keeper b) Supply manager c) Purchase manager d) Works manager
18) Store keeper enters the details of the goods received on purchase in ________.
a) Stores ledger b) Bin card c) Goods received note d) Requisition slip
19) ________ is the expansion of FIFO.
a) First In First Out b) Final In Final Out c) First In Final Out d) Final In First Out
20) ________ is the expansion of LIFO.
a) Last In First Out b) Latest In Final Out c) Last In Final Out d) Latest In First Out
SECTION- B (5 marks)
Answer the following
1) Write a note on the need for material control.
2) Briefly explain about levels of material control.
3) Briefly explain about the types of stores.
4) Write a note on the criteria for choosing the supplier.
5) What do you understand by ABC analysis? Explain.
6) State the importance of having a centralised purchase department.
7) In a company weekly minimum and maximum consumption of material A are 25 and 75 units. The
re-order quantity as fixed by the company is 300 units. The material is received within 4 to 6 weeks
from issue of supply order. Calculate minimum level and maximum level of material A.
8) If the minimum stock level and average stock level of raw material A are 20,000 and 40,000 units.
Find its reorder quantity.
9) Find out the EOQ from the following: Annual usage – 6000 units; Cost of material per unit – Rs.20;
Cost of placing and receiving one order – Rs.60; Annual carrying cost of one unit – 10% of inventory
value.
10) Calculate EOQ from the following: Consumption during the year – 600 units; Ordering cost Rs.12
peer order; Carrying cost 20%; Price per unit Rs.20.
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SECTION- C (8 marks)
Answer the following
1) Elaborate and explain about perpetual inventory system.
2) Explain in detail about the functions of purchase department.
3) State the differences between Bin card and Stores ledger.
4) About 50 items are required everyday for a machine. A fixed cost of Rs.50 per order is incurred for
placing an order. The inventory carrying cost per item amounts to Rs.0.02 per day. The lead period is
32 days. Compute i) EOQ ii) Re-order level.
5) Following information relating to a type of material is available.
Annual demand – 2,400 units; Unit price – Rs.2.40; Ordering cost per order Rs.4.00; Storage cost
2% per annum; Interest rate 10% per annum; Lead time – Half month. Calculate EOQ and Total annual
inventory cost in respect of the particular raw material.
6) A wholesaler supplies 30 stuffed dolls each week day to various shops. Dolls are purchased from the
manufacturer in lots of 120 each of Rs.1,200 per lot. Every order incurs a handling charge of Rs.60 plus
a freight charge of Rs.250 per order. Multiple and fractional lots also can be ordered and all orders are
filled the next day. The incremental cost is Rs.0.60 per year to store a doll in inventory. The wholesaler
finances inventory investment by paying its holding company 2% monthly for borrowed funds.
i) How many dolls should be ordered at a time to minimise the total annual inventory cost? Assume that
there are 250 week days in a year.
ii) How frequently should he order?
7) When tenders were invited for a store, quotations were received as under:
Supplier A: rate Rs.2 each; Trade discount – 10%; Cash discount – 5% if bills are paid within a fortnight
after receipt; Transport charges Rs.1 per 100 units.
Supplier B: Rate Rs.1.80 each (upto 1000 units) Rs.1.60 each (for orders above 1,000 units); 6% interest
per annum will be added if bills are not paid within a fortnight after receipt of the materials.
Transport charges Rs.3 per 100 units. Assume about 5,000 units are required every month and that
quality and other conditions of supply are the same, offer your comments as to whom purchase order
can be issued. The factory pays 50% of its total monthly bills every fortnight.
8) The stock in hand of a material as on 1st September 2016 was 500 units at Rs.1 per unit. Following
purchases and issues were subsequently made. Prepare the stores ledger account showing how the value
of issues would be recorded under FIFO method.
Purchased: Sep 6 - 100 units at Rs.1.10; Sep 20 – 700 units at Rs.1.20; Sep 27 – 400 units at Rs. 1.30;
Oct 13 – 1,000 units at Rs.1.40; Oct 20 – 500 units at Rs.1.50; Nov 17 – 400 units at Rs.1.60.
Issued: Sep 9 – 500 units; Sep 22 – 500 units; Sep 30 – 500 units; Oct 15 – 500 units; Oct 22 – 500
units; Nov 11 – 500 units.
9) Following transaction took place in respect of an item of material.
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Date Receipts quantity Rate Issue quantity
2/9/16 200 2.00 ---
10/9/16 300 2.40 ---
15/9/16 --- --- 250
18/9/16 250 2.60 ---
20/9/16 --- --- 200
Record the above transaction in the stores ledger, pricing the issues at: a) Simple average method; b)
Weighted average method
10) Following transactions occur in the purchase and issue of a material.
Jan 2 purchased 4,000 units @ Rs.4.00 per unit; Jan 20 purchased 500 units @ Rs.5.00 per unit; Feb 5
issued 2,000 units; Feb 10 purchased 6,000 units @ Rs.6.00 per unit; Feb 12 issued 4,000 units; March
2 issued 1,000 units; March 5 issued 2,000 units; March 15 purchased 4,500 units @ Rs.5.50 per unit;
March 20 issued 3,000 units. Prepare stores ledger account as per LIFO method.
Answers:
SECTION- A (1 marks)
Choose the right answer
1) Economic Ordering Quantity (b)
2) EOQ (a)
3) Always Better Control (a)
4) ABC analysis (a)
5) A (a)
6) C (c)
7) Bin card (b)
8) Stores ledger (a)
9) Stock taking (c)
10) Purchase requisition (a)
11) 3 (c)
12) Store keeper (a)
13) Open tender (a)
14) Limited tender (b)
15) Single tender (c)
16) Purchase department (a)
17) Store keeper (a)
18) Goods received note (c)
19) First In First Out (a)
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20) Last In First Out (a)
SECTION- B (5 marks)
Answer the following
7) Minimum level-200 units; Maximum level-650 units
8) 40,000 units
9) 600 units
10) 60 units
SECTION- C (8 marks)
Answer the following
4) i) 500 items; ii) 1600 items
5) EOQ – 258 units; Total annual inventory cost – Rs.5,837.15
6) i) EOQ – 1,245 dolls; ii) Frequency of orders – 2 months
7) Total cost of material: Supplier A – Rs.8,823.75; Supplier B – 8,160.19. The purchase order should
be issued to Supplier B
8) Value of stock – Rs.940
9) a) Rs.720; b) Rs.726
10) Value of stock – Rs.14,250
UNIT III
SECTION- A (1 marks)
Choose the right answer
1) Labours who are not directly engaged in production are known as _______.
a) Productive labours b) Direct labours c) Indirect labours d) Operational labours
2) _______ is the percentage change in the labour force of an organisation.
a) Labour turnover b) Direct labour c) Indirect labour d) Labour replacement
3) Time for which the employer pays but from which he obtains no production is known as
________.
a) Idle time b) Entry time c) Leisure time d) Break time
4) _______ represents the wastage of time which cannot be avoided.
a) Normal idle time b) Abnormal idle time c) Leisure time d) Entry time
5) ________ represents the wastage of time which can be avoided if proper precautions are
taken.
a) Normal idle time b) Abnormal idle time c) Leisure time d) Entry time
6) ________ is the unused capacity of a department that cannot be utilised profitabily.
a) Idle capacity b) Firm capacity c) Production capacity d) Sales capacity
7) The worker is paid at an hourly, daily, weekly or monthly rate under _________ system.
a) Time wage b) Piece rate c) Measured day rate d) Differential time rate
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8) If wages are provided at time rate similar to other firms, then this system of wage
payment is known as _________.
a) Flat time rate b) High day rate c) Measured day rate d) Graduated time rate
9) If wages are provide at time rate higher than other firms, then this system of wage
payment is known as _________.
a) Flat time rate b) High day rate c) Measured day rate d) Graduated time rate
10) When the system of wage payment is fixed based on the level of performance specified
by the employer, it is known as ________.
a) Flat time rate b) High day rate c) Measured day rate d) Graduated time rate
11) In ________ system of wage payment, wage rates are linked up with the cost of
living index.
a) Flat time rate b) High day rate c) Measured day rate d) Graduated time rate
12) The payment of different wage rates to different workers based on their personal skills
and abilities is known as _______.
a) Differential time rate b) Flat time rate c) High day rate d) Measured day rate
13) ________ system of wage payment is known as the payment by result.
a) Time wage system b) Piece rate system c) High day rate d) Flat time rate
14) The system of wage payment in which payment is based on the quantity of work done is
known as _________.
a) Time wage system b) Piece rate system c) High day rate d) Flat time rate
15) Payment is made on the number of units produced at a fixed rate per unit under
_______.
a) Straight piece rate system b) Differential piece rate system
c) Multiple piece rate system d) Task and bonus plan
16) Low piece rate for low production and high piece rate for high production is provided
under _______.
a) Straight piece rate system b) Differential piece rate system
c) Multiple piece rate system d) Task and bonus plan
17) Rent of building is an example of _________.
a) Fixed overhead b) Variable overhead
c) Semi-variable overhead d) Administrative overhead
18) The indirect portion of the total cost is known as ________.
a) Overhead b) Indirect labour c) Direct labour d) Induced cost
19) Commission to sales man is an example of ________.
a) Fixed overhead b) Variable overhead
c) Semi-variable overhead d) Administrative overhead
20) Telephone expense that includes a fixed portion of annual charges plus variable charge
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according to calls is an example of ________.
a) Fixed overhead b) Variable overhead
c) Semi-variable overhead d) Administrative overhead
SECTION- B (5 marks)
Answer the following
1) What is labour turnover? Explain its methods for computation.
2) How are overheads classified? Explain.
3) Calculate the earnings of workers A and B under straight piece-rate system and Taylor’s differential
piece rate system.
Normal rate per hour – Rs.1.80; Standard time per unit – 20 seconds.
Differentials to be applied: 80% of piece rate below standard; 120% of piece rate at or above standard.
Worker A produces 1,300 units per day and Worker B produces 1,500 units per day.
4) On the basis of the following information, calculate the earnings of X and Y under the straight piece
rate system and Taylor’s differential piece rate system.
Standard production 10 units per hour; Normal time rate – Rs.5 per hour.
Differential piece rate to be applied: 80% of piece rate for below standard performance. 120% of piece
rate for performance at or above the standard.
Actual performance: X produced 80 units in a day of 10 hours; Y produced 110 units in a day of 10
hours.
5) Calculate the earnings of workers A, B and C under straight piece rate system and Merrick’s
multiple piece rate system from the following:
Normal rate per hour – Rs.180; Standard timer per unit – 1 minute; Output per day: Worker A – 384
units; Worker B – Rs.450 units; Worker C – Rs.552 units.
Working hours per day is 8 hours.
6) Calculate earnings under Merrick’s multiple piece rate system. Standard production per hour – 12
units. Normal rate per unit – Rs.0.60. In a 8 hour day, Worker A produced 64 units; Worker B produced
96 units; Worker C produced 84 units and Worker D produced 100 units.
7) From the following data, calculate total monthly remuneration of 3 workers A, B and C under Gant’s
task and bonus scheme. Standard production per month per worker is 1,000 units; Actual production
during the month: Worker A – 850 units; Worker B – 1000 units; Worker C – 1100 units. Piece work
rate – Rs.0.50 per unit.
8) Time rate – Rs.5 per hour; High task – 40 units per week; Price rate above high task – Rs.6.50 per
unit. In a 40 hour week each worker produced the following: Worker A – 35 units; Worker B – 40 units;
Worker C – 41 units and Worker D – 52 units. Calculate wages for workers under Gant’s task and bonus
scheme.
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9) Rate per hour – Rs.15; Time allowed for job – 20 hours; Time taken – 15 hours. Calculate the total
earnings of the worker under i) Halsey premium plan ii) Halsey weir plan. Also find out effective rate
of earnings.
10) A worker completes a job in a certain number of hours. The standard time allowed for the job is 20
hours and the hourly rate of wages is Rs.20. The worker earns at the 50% rate a bonus of Rs.40 under
Halsey plan. Ascertain his total wages under the Rowan premium plan.
SECTION- C (8 marks)
Answer the following
1) What is idle time? Explain the measures to control idle time.
2) Elaborate and explain about system of wage payment.
3) From the following particulars supplied by the personnel department, calculate labour turnover: Total
number of employees in the beginning of the month – 2,010; Number of employees recruited during the
month – 30; Number of employees left during the month – 50; Total number of employees at the end of
the month – 1,990.
4) From the following data provided to you, find the labour turnover rate, a) Flux method b)
Replacement method c) Separation method.
No of workers on the pay roll: at the beginning of the month – 500; at the end – 600. During the month,
5 workers left, 20 persons were discharged and 75 workers were recruited. Of these, 10 workers were
recruited in the vacancies of those leaving, while the rest were engaged for an expansion scheme.
5) The cost accountant of Y Ltd has computed labour turnover rates for the quarter ended 31st March,
2016 as 10%, 5% and 3% respectively under Flux method, Replacement method and Separation
method. If the number of workers replaced during the quarter is 30, find out the number of workers
recruited and joined, workers left and discharged.
6) The standard time allowed for the job is 30 hours. The hourly rate of guaranteed wages is Rs.15.
Because of saving in time, a worker X gets an hourly wage of Rs.18 under Rowan premium bonus
system. For the same saving in time, calculate the hourly rate of wages a Worker Y will get under Halsey
Premium bonus system.
7) Standard output per day of 8 hours is 16 units. Actual output of a worker for 8 hours is 20 units. Rate
per hour is Rs.2.50. Calculate the wages payable to the worker under Emerson’s efficiency plan.
8) In a manufacturing concern the daily wages guaranteed for worker is Rs.40. The standard output for
the month is 1,000 articles representing 100% efficiency. The rate of wages is paid without bonus to
those workers who show upto 66 2/3% efficiency. Beyond this, bonus is payable in a graded scale.
Efficiency Bonus
90% 10%
100% 20%
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Further increase of 1% of bonus for every 1% further rise in efficiency. Calculate the total earnings of
A, B, C and D who have worked 26 days in a month and their output was A - 500; B – 900; C – 1,000;
D – 1,200.
9) In a factory, there are 2 service departments S1 and S2 and 3 production departments P1, P2 and P3.
In April, the departmental expenses were: P1 – 7,810; P2 – 12,543; P3 – 4,547; S1 – 4,000; S2 – 2,600.
The eservice department expenses are apportioned as under:
P1 P2 P3 S1 S2
S1 30% 40% 20% --- 10%
S2 10% 20% 50% 20% ---
Prepare a statement showing the distribution of Service department expenses to production departments
under repeated distribution method, simultaneous equation method, trial and error method.
10) Compute the machine hour rate from the following data:
Total machine cost to be depreciated Rs.2,30,000; Life: 10 years; Depreciation on straight line;
Departmental overheads (annual): Rent - Rs.50,000; Heat and light – Rs.20,000; Supervision –
Rs.1,30,000. Departmental area 70,000 sq feet. Machine area 2,500 sq feet. 26 machines in the
department. Annual cost of reserve equipment for machine Rs.1,500. Hours run on production – 1,800.
Hours for setting and adjusting – 200. Power cost Rs.0.50 per hour of running time. Labour: a) When
setting and adjusting, full time attention. b) When machine is producing, one man can look after three
machines. Labour rate - Rs 6 per hour.
Answers:
SECTION- A (1 marks)
Choose the right answer
1) Indirect labours (c)
2) Labour turnover (a)
3) Idle time (a)
4) Normal idle time (a)
5) Abnormal idle time (b)
6) Idle capacity (a)
7) Time wage (a)
8) Flat time rate (a)
9) High day rate (b)
10) Measured day rate (c)
11) Graduated time rate (d)
12) Differential time rate (a)
13) Piece rate system (b)
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14) Piece rate system (b)
15) Straight piece rate system (a)
16) Differential piece rate system (b)
17) Fixed overhead (a)
18) Overhead (a)
19) Variable overhead (b)
20) Semi-variable overhead (c)
SECTION- B (5 marks)
Answer the following
3) Earnings under straight piece rate: Worker A – Rs.13; Worker B – Rs.15. Earnings under Taylor’s
differential piece rate: Worker A – Rs.10.40; Worker B – Rs.18.00
4) Straight piece rate system: Worker X – Rs.40; Worker Y – Rs.55 and Taylor’s differential piece rate
system: Worker X – Rs.32; Worker Y – Rs.66.
5) Earnings under straight piece rate system: Worker A – Rs.1152; Worker B – Rs.1350; Worker C –
Rs.1650 and Earnings under Merrick’s multiple piece rate system: Worker A – Rs.1152; Worker B –
Rs. 1485; Worker C – Rs.1987.2
6) Earnings under Merrick’s multiple piece rate system: Worker A – Rs.38.40; Worker B – Rs.63.36;
Worker C – Rs.55.44; Worker D – Rs.72
7) Earnings under Gant’s task and bonus scheme: Worker A – Rs.500; Worker B – Rs.600; Worker C –
Rs.660
8) Earnings under Gant’s task and bonus scheme: Worker A – Rs.200; Worker B – Rs.240; Worker C –
Rs.266.5; Worker D – Rs.338
9) i) Halsey premium plan – Rs.262.50; Effective rate of earnings – Rs.17.50 ii) Halsey weir plan –
Rs.247.5; Effective rate of earnings – Rs.16.50
10) Rs.384
SECTION- C (8 marks)
Answer the following
3) Labour turnover: Separation method – 2.5%; Replacement method – 1.5%; Flux method – 4%
4) Labour turnover: a) Flux method – 18.2%; b) Replacement method – 1.8%; c) Separation method –
4.5%
5) Number of workers recruited and joined - 42, Workers left and discharged - 18
6) Earnings of Worker Y under Halsey plan – Rs.405; Effective rate per hour – Rs.16.9
7) Wages payable under Emerson’s efficiency plan – Rs.29
8) Total earnings of worker A – Rs.1040; worker B – Rs. 1144; worker C – Rs.1,248; worker D –
Rs.1,456
9) P1 – 9,500; P2 – 15,000; P3 – Rs.7,000
10) Rs.20.15
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UNIT IV
SECTION- A (1 marks)
Choose the right answer
1) _________ is used to ascertain the cost of the product at each stage of manufacture.
a) Process costing b) Production costing c) Operating costing d) Contract costing
2) _______ is the loss that is unavoidable in the process of production.
a) Normal process loss b) wastage c) Scrap d) Abnormal process loss
3) Any loss caused by unexpected conditions is known as ________.
a) Normal process loss b) wastage c) Scrap d) Abnormal process loss
4) When actual loss in a process is smaller than what was expected, it results in _______.
a) Normal loss b) Abnormal loss c) Normal gain d) Abnormal gain
5) The value of by-product and scrap are ________ to the process account.
a) Debited b) Credited c) Excluded d) Carried forward
6) Materials, labour and direct expenses are ________ to the process account.
a) Debited b) Credited c) Excluded d) Carried forward
7) In _________ costing, a separate account is kept for each process.
a) Process b) Production c) Operating d) Contract
8) In process costing, the abnormal loss is treated as _________ cost and written off to
P & L A/c.
a) Unit b) Period c) Future d) Process
9) Process costing is not used in one of the following:
a) Chemical b) Textile c) Cement d) Oil refining
10) An input of 5,000 kg of material introduced into the process and the expected loss is 8%,
if the actual output from the process is 4,300, the abnormal loss is ________ Kgs.
a) 300 b) 400 c) 500 d) 600
11) When raw material is to pass certain stages before it is converted into finished goods,
the method of costing used is ________.
a) Process costing b) Production costing c) Operating costing d) Contract costing
12) The cost of _______ process loss is absorbed in the cost of production of actual units.
a) Normal b) Abnormal c) Single d) Multiple
13) ________ process loss should be transferred to costing profit and loss A/c.
a) Normal b) Abnormal c) Single d) Multiple
14) The method of costing applied in paper mills is _________.
a) Process costing b) Job costing c) Operating costing d) Contract costing
15) The method of costing applied in steel industry is _______.
a) Process costing b) Job costing c) Operating costing d) Contract costing
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16) When 1,000 units are 60% complete in a process, it is equivalent to _______ completed
units.
a) 500 b) 600 c) 700 d) 800
17) _________ costing is used to determine the cost of each job separately.
a) Process costing b) Job costing c) Operating costing d) Contract costing
18) Abnormal loss = ________.
a) Actual loss – Normal loss b) Normal loss – Actual loss
c) Normal loss – Abnormal gain d) Abnormal gain – Normal loss
19) Abnormal gain is also known as ________.
a) Overall gain b) Effectives c) Effortives d) Unexpected gain
20) The normal process loss is recorded only in items of ________.
a) Quality b) Quantity c) Production d) Scrap
SECTION- B (5 marks)
Answer the following
1) What is process costing? Explain its features.
2) Write a note on abnormal gain.
3) What is normal loss? How it is treated in process costing?
4) How does abnormal loss and abnormal gain arise? Explain?
5) Distinguish between normal process loss and abnormal process loss.
6) Write a note on the application of process costing in industries.
7) The cost of production of 40 units consisting of materials Rs.1,500; Labour Rs.1,300 and overheads
Rs.164. The normal waste is 5% of input. Show the process A/c.
8) The following expenditure is incurred for producing articles.
Materials (200 units) – Rs.400; Labour – Rs.3,000; Indirect expenses – Rs.2,000; Normal wastage is 5%
of the input. One unit of wastage is sold at Rs.16.50 each. Prepare process A/c.
9) In X Ltd 1,000 units of raw materials were introduced in process I. The actual output and normal loss
of the respective process are:
Output (units) Normal loss on input (units)
Process I 900 10%
Process II 680 20%
Process III 540 25%
Find out the abnormal effective in process III.
10) A product passes through three processes. During March 2016, 1,000 finished units were produced
with the following expenditure:
Process A Process B Process C
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Direct material 1,500 2,600 2,000
Direct labour 5,000 4,000 3,000
Overhead expenses amounted in all to Rs.6,000. They are to be apportioned on the basis of direct wages.
Main raw materials issued to Process A were worth Rs.6,000. Prepare process accounts.
SECTION- C (8 marks)
Answer the following
1) Elaborate and explain about the usage of process costing in industries.
2) What is a process account? How it is computed when wastage, scrap and process losses occur?
Illustrate with examples.
3) Distinguish between process costing and job costing.
4) A product passes through 3 distinct processes to completion. These processes are numbered I, II and
III respectively. During the week ended 15th Jan 2017, 500 units are produced. Following information
is obtained.
Process I Process II Process III
Direct materials 3,500 1,600 1,500
Direct labour 2,500 2,000 2,500
The overhead expenses for the period were Rs.1,400 apportioned to the process on the basis of wages.
Prepare process accounts.
5) In a chemical industry one product has to pass through two processes. The finished product of the
first process becomes the raw material of the last process. Find out the unit cost of the finished product
of the last process per kg on the basis of the following:
First process Last process
Raw materials 1,000 kg @ Rs.1.50 per kg ---
Direct labour 200 men @ Rs.2.50 per man 300 men @ Rs.1.50 per man
Work overhead 50% of direct labour 50% of direct labour
Finished products 600 kg 500 kg
Sales value of by-product 400 kg @ Rs.1 per kg ---
Sale value of scrap --- 100 kg @ Rs.0.25 per kg
6) Bengal chemicals produced 3 chemicals during the month of July, 2017 by three consecutive
processes. In each process 2% of the total weight put in is lost and 10% is scrap which form processes
1 and 2 realises Rs.100 a ton and from process 3 Rs.20 a ton. The products of three processes are dealt
with as follows:
Process 1 Process 2 Process 3
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Passed on to the next process 75% 50% ---
Sent to warehouse for sale 25% 50% 100%
Process 1 Process 2 Process 3
Rs. Tons Rs. Tons Rs. Tons
Raw materials 1,20,000 1,000 28,000 140 1,07,840 1,348
Manufacturing wages 20,500 --- 18,520 --- 15,000 ---
General expenses 10,300 --- 7,240 --- 3,100 ---
Prepare process cost accounts showing the cost per ton of each process.
7) In process A 100 units of raw materials were introduced at a cost of Rs.1,000. The other expenditure
incurred by the process was Rs.602. Of the units introduced 10% are normally lost in the course of
manufacture and they possess a scrap value of Rs.3 each. The output of process A was only 75 units.
Prepare Process A A/c and abnormal loss A/c.
8) In process B, 75 units of a commodity were transferred from Process A at a cost of Rs.1,310. The
additional expenses incurred by the process were Rs.190. 20% of the units entered are normally lost and
sold @ Rs.4 per unit. The output of the process was 70 units. Prepare process B A/c and abnormal gain
A/c.
9) From the following information given to you, prepare process B A/c and other accounts. 2,000 units
are transferred to Process B @ Rs.4 per unit. Other details relating to the process are: Material – 4,000;
Labour – 1,000; Overhead – 700. The normal loss has been estimated @ 10% of the process input. Units
representing normal loss can be sold @ Rs.1.00 per unit. Actual production in the process is 1,900 units.
Output of process B transferred to finished stock A/c.
10) A product passes through 2 distinct processes A and B and then to the finished stock. The normal
wastage of each process is as follows:
Process A- 3% of the units entering the process; Process B- 5% of the units entering the process.
Wastage of process A was sold at ₹0.50 per unit and that of process B at ₹1 per unit. 10,000 units of
materials were issued to process A at a cost of ₹ 2 per unit.
The other expenses were as follows;
Process A Process B
Sundry materials ₹ 2,000 ₹ 3,000
Wages ₹ 10,000 ₹ 16,000
Overhead expenses ₹ 2,100 ₹ 2,375
Actual output 9,500 units 9,100 units
Prepare process accounts and other accounts.
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Answers:
SECTION- A (1 marks)
Choose the right answer
1) Process costing (a)
2) Normal process loss (a)
3) Abnormal process loss (d)
4) Abnormal gain (d)
5) Credited (b)
6) Debited (a)
7) Process (a)
8) Period (b)
9) Cement (c)
10) 300 (a)
11) Process costing (a)
12) Normal (a)
13) Abnormal (b)
14) Process costing (a)
15) Process costing (a)
16) 600 (b)
17) Job costing (b)
18) Actual loss – Normal loss (a)
19) Effectives (b)
20) Quantity (b)
SECTION- B (5 marks)
Answer the following
7) Transfer to next process: Units – 38; Amount – Rs.2964
8) Transfer to next process: Units – 190; Amount – Rs.8835
9) 30 units
10) Cost per unit: Process A – Rs.15; Process B – Rs.23.60; Process C – Rs.30.10
SECTION- C (8 marks)
Answer the following
4) Transfer to Process II: Units – 13; Total cost – Rs.6,500. Transfer to Process III: Units – 21; Total
cost – Rs.10,500
5) The unit cost of the finished product of the last process per kg – Rs.5
6) Cost per ton: Process 1 – Rs.160; Process 2 – Rs.215; Process 3 – Rs.132.50
7) Transfer to next process: units – 75; Amount - Rs.1310. Abnormal loss transferred to costing P & L
A/c – Rs.217
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8) Transfer to next process: units – 70; Amount - Rs.1680. Abnormal gain transferred to costing P & L
A/c – Rs.200
9) Transfer to Finished stock A/c: units – 1900; Amount - Rs.14,250. Abnormal gain transferred to
costing P & L A/c – Rs.650
10) Transfer to Process B A/c: units – 9500; Amount- Rs.33,250; Transfer to finished stock A/c: units
– 9100; Amount- Rs.54,600; Abnormal gain transferred to costing P & L A/c – Rs.375; Abnormal loss
transferred to costing P & L A/c – Rs.600
UNIT V
SECTION- A (1 marks)
Choose the right answer
1) Service costing is also known as _________.
a) Operating costing b) Contract costing c) Process costing d) Job costing
2) _______ is the cost of producing and maintaining a service.
a) Operating costing b) Contract costing c) Process costing d) Job costing
3) In transport costing, garage rent relates to ________.
a) Fixed charge b) Variable charge c) Semi-variable charge d) Additional charge
4) In transport costing, petrol and depreciation relates to _______.
a) Fixed charges b) Variable charges c) Semi-variable charges d) Additional charges
5) ________ is a specific order costing of work undertaken generally of long duration.
a) Operating costing b) Contract costing c) Process costing d) Job costing
6) The construction of dams, buildings etc. make use of ________ costing.
a) Operating b) Contract c) Process d) Job
7) Work certified will appear on the _________ side of the contract A/c.
a) Debit b) Credit c) Expense d) Income
8) In contract A/c, work certified and uncertified appears under the head _________.
a) Work-in-progress b) Finished work c) Work certified d) Work uncertified
9) __________ represents the difference between the value of work certified and cost of
work certified.
a) Notional profit b) Gross profit c) Net profit d) Gross loss
10) In contract costing, no profit should be taken when the work completed is up to _____.
a) 1/4th b) 2/4th c) 3/4th d) 1/3rd
11) ________ is the process of ensuring that two sets of records are in agreement with each
other.
a) Reconciliation b) Adjustment c) Comparison d) Computation
12) Contract costing is not used in one of the following industries:
a) Ship building b) Civil construction c) Automobiles d) Construction of bridges
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13) In contract costing, payment of cash to the contractor is made on the basis of ________.
a) Certified work b) Uncertified work c) Finished work d) Unfinished work
14) Contract costing is specialised system of job costing that applies to ________ contracts.
a) Short-term b) Long-term c) Medium-term d) Continuous
15) The sum of value of work certified and uncertified appearing in the contract a/c is called
_______.
a) Work-in-progress b) Work-in-process c) Work completed d) Work done
16) No profit should be taken to P & L A/c, if the amount of work certified is less than
_______ of the contract price.
a) 20% b) 25% c) 30% d) 35%
17) Service costing is not used in one of the following:
a) Electricity b) Hospitals c) Transport d) Electronics
18) In service costing, fixed charges are also known as ________.
a) Standing charges b) Variable charges
c) Semi-fixed charges d) Maintenance charges
19) ________ of depreciation in cost accounts is deducted from costing profits while
reconciling with financial profits.
a) Over charge b) Under charge c) Absolute charge d) Partial charge
20) Capital losses shown in financial accounts are ________ while reconciling costing
profits with financial profits.
a) Added b) Deducted c) Exempted d) Included
SECTION- B (5 marks)
Answer the following
1) What is operating costing? How is it useful?
2) Classify the costs related to transport costing.
3) From the following information, calculate total kilometres and total passenger kilometres.
Number of buses-4; Days operated in a month-30; Trip made by each bus-4; Distance of route- 30
kilometres (one way); Capacity of bus-60 passengers; Normal passengers travelling is 80% of the
capacity.
4) A truck starts with a load of 10 tonnes of goods from station P. It unloads 4 tonnes at station Q and
rest of the goods at station R. It reaches back directly to station P after getting reloaded with 8 tonnes of
goods at station R. The distance between P to Q, Q to R and then from R to P are 40kms, 60kms and
80kms. Compute absolute tonne-km and commercial tonne-km.
5) Following was the expenditure on a contract for Rs.6,00,000 commenced in Jan 2010:
Materials - Rs.1,20,000; Wages - Rs.1,64,400; Plant Rs.20,000; Business charges - Rs.8,600
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Cash received on account to 31st December 2010 amounted to Rs.2,40,000 being 80% of work certified;
the value of materials in hand on 31/12/10 was Rs.10,000. Prepare the contract A/c for 2010 showing
the profit to be credited to the year’s P & L A/c. Plant is to be depreciated at 10%.
6) The following was the expenditure on a contract for Rs.12,00,000 commenced in Jan.
Rs. Rs.
Materials 2,40,000 Plant 40,000
wages 3,28,000 Overheads 17,200
Cash received on account of the contract upto 31st December was Rs.4,80,000 being 80% of the work
certified. The value of materials in hand was Rs.20,000. The plant had under gone 20% depreciation.
Prepare contract A/c.
7) The profit shown in the financial accounts was Rs.1,12,870 and for the same period the cost
accounts showed a profit of Rs.27,040.
The examination of the accounts showed the following differences:
Cost accounts(Rs.) Financial accounts (Rs.)
Depreciation 98,260 1,05,200
Opening stock 2,75,100 2,55,000
Closing stock 1,82,180 1,87,500
Profit on sale of asset - 8,500
Dividend received - 26,350
Imputed rent charge 32,500 -
Reconcile the profit figures.
8) From the following data prepare a reconciliation statement:
Rs.
Profit as per cost accounts 1,45,500
Works overheads under- recovered 9,500
Administrative overheads under-recovered 22,750
Selling overheads over-recovered 19,500
Over-valuation of opening stock in cost accounts 15,000
Over-valuation of closing stock in cost accounts 7,500
Interest earned during the year 3,750
Rent received during the year 27,000
Bad debts written off during the year 9,000
Preliminary expenses written off during the year 18,000
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9) Red Ltd made a profit of Rs.20,000 during the year 2012 as per their costing system, whereas their
financial accounts disclose a profit of Rs.15,000. From the following P & L A/c for the year ended 31st
Dec,2012 as per financial books, you are required to prepare a reconciliation statement:
P & L A/c
Particulars Rs. Particulars Rs.
To opening stock of finished goods 1,00,000 By sales 1,75,000
To purchases 80,000 By closing stock of finished goods 80,000
To direct wages 20,000
To factory expenses 15,000
To gross profit c/d 40,000
2,55,000 2,55,000
To administrative expenses 10,000 By gross profit b/d 40,000
To selling expenses 15,000
To net profit 15,000
40,000 40,000
Costing records show the following:
a) Stock ledger costing balance Rs.89,000
b) Direct labour Rs.23,000
c) Factory overheads Rs.13,000
d) Administrative overheads and selling expenses each are calculated at 8% of sales separately.
10) A company undertook a contract for construction of a large building complex. The construction
work commenced on 1st April 2016 and the following data are available for the year ended 31st March
2017.
Rs. ‘000 Rs. ‘000
Contract price 35,000 Materials returned from site 250
Work certified 20,000 Plant hire charges 1,750
Progress payments received 15,000 Wages related costs 500
Materials issued to site 7,500 Site office costs 678
Planning and estimating costs 1,000 Head office expenses
apportioned
375
Direct wages paid 4,000 Site expenses incurred 902
Work not certified 149
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The contractors own a plant which originally cost Rs.20,00,000 has been continuously in use in this
contract throughout the year. The residual value of the plant after 5 years of life is expected to be
Rs.5,00,000. Straight line method of depreciation is in use.
As on 31st March,2017 the direct wages due and payable amounted to Rs.2,70,000 and the materials at
site were estimated at Rs.2,00,000. Prepare contract a/c for the year ended 31st march ,2017.
SECTION- C (8 marks)
Answer the following
1) Elaborate and explain about contract costing.
2) What is meant by reconciliation? Explain about reconciliation of cost and financial
accounts.
3) A transport company is running two buses between two places 100 kms apart. The seating capacity
of each bus is 50 passengers. The following particulars are taken from their books for a month.
Wages of drivers, conductors, cleaners – Rs.3,000
Salary of supervisory and office staff - Rs.1,500
Diesel, oil etc. - Rs. 6,000
Repairs and maintenance - Rs. 1,500
Taxation and insurance - Rs.2,000
Depreciation - Rs.3,000
Interest and other charges - Rs.2,500
The actual passengers carried were 80% of the capacity. The buses ran all the days. Each bus made a
to and fro trip. Find out the cost per passenger kilometre.
4) Calculate cost per passenger km for the year 2016-17 for a fleet of passenger buses run by a transport
company from the following:
5 passenger buses costing Rs.50,000; Rs.1,20,000; Rs.45,000; Rs.55,000 and Rs.80,000 respectively.
Yearly depreciation of vehicles – 20% of the cost. Annual repairs, maintenance and spare parts – 80%
of depreciation. Wages of 10 drivers @ Rs.100 each per month; wages of 20 cleaners @ Rs.50 each per
month. Yearly rate of interest @ 4% on capital. Rent of six garages @ Rs.50 each per month. Director’s
fees @ Rs.400 per month, office establishment @ Rs.1,000 per month, license and taxes @ Rs.1,000
every six months, realisation by sale of old tyres and tubes @ Rs. 3,200 every 6 months, 900 passengers
were carried over 1,600 kms during the year.
5) A transport company has been given a 40 kilometre long route to run 5 buses. The cost of each bus is
Rs.6,50,000. The buses will make 3 round trips per day carrying an average 80% passengers of their
seating capacity. The seating capacity of each bus is 40 passengers. The buses will run on an average 25
days in a month. The other information for the year 2016-17 are given below:
Garage rent Rs.4,000 per month
Annual repairs and maintenance Rs. 22,500 each bus
Salaries of 5 drivers Rs. 3,000 each per month
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Wages of 5 conductors Rs.1,200 each per month
Manager’s salary Rs.7,500 per month
Road tax, permit fee etc.. Rs.5,000 for a quarter
Office expenses Rs.2,000 per month
Cost of diesel per litre Rs.33
Kilometre run per litre for each bus- 6 kilometres
Annual depreciation- 15% of cost
Annual insurance- 3% of cost
You are required to calculate the bus fare to be charged from each passenger per kilometre, if the
company wants to earn profits of 33⅓ % on taking (total receipts from passengers).
6) G transport ltd charges Rs.90 per ton for its 6 tons truck lorry load from city A to city B. The charges
for the return journey are Rs.84 per ton. No concession or reduction in these rates is made for any
delivery of goods at intermediate station C. In Jan 2010, the truck made 12 outward journeys for city B
with full load out of which 2 tons were unloaded twice in the way at city C. The truck carried a load of
8 tons in its return journey for 5 times but once caught by police and Rs.1,200 was paid as fine. For the
remaining trips the truck carried full load out of which all the goods on load were unloaded once at city
C.
The distance from city A to city C and city B are 140 kms, 300 kms. Annual fixed and maintenance
charges are Rs.60,000 and Rs.12,000. Running charges spent during Jan 2010 are Rs.2,944.
You are required to find out the cost per absolute ton kilometre and the profit for Jan 2010.
7) Surya construction ltd with a paid up share capital of Rs.50,00,000 under took a contract to construct
MIG apartments. The work commenced on the contract on 1st April 2016. The contract price was
Rs.60,00,000. Cash received on account of the contract upto 31st March 2017 was Rs.18,00,000 (being
90% of the work certified). Work completed but not certified was estimated at Rs.1,00,000. As on 31st
March 2017 material and site was estimated at Rs.30,000 , machinery at site costing Rs.2,00,000 was
returned to stores and wages outstanding were Rs.5,000. Plant and machinery at site is to be depreciated
at 5%.
Following were balances as per trial balance as on 31st March,2017:
Rs.
Rs.
Land and building 23,00,000 Site expenses 5,000
Plant and machinery (60% at site) 25,00,000 Office expenses 12,000
Furniture 60,000 Rates and taxes 15,000
Materials 14,00,000 Cash at bank 1,33,000
Fuel and power 1,25,000 Wages 2,50,000
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Prepare contract A/c.
8) A company maintained separate cost and financial accounts and the costing profit for the year 2010
differed to that revealed in financial accounts, which was shown as Rs.50,000.
i) Cost accounts Financial accounts
Opening stock of raw materials 5,000 5,500
Closing stock of raw materials 4,000 5,300
Opening stock of finished goods 12,000 15,000
Closing stock of finished goods 14,000 16,000
ii) Dividends of Rs.1,000 were received by the company
iii) A machine with net book value of Rs.10,000 was sold during the year for Rs.8,000
iv) The company charged 10% interest on its opening capital employed of Rs.80,000 to its process costs
You are required to determine the profit figure which was shown in the cost accounts.
9) The net profit of A Co Ltd appeared at Rs.60,652 as per financial records for the year ending 31st
March,2017. The cost books , however showed a net profit of Rs.86,200 for the same period. A scrutiny
of the figures from both the sets of accounts revealed the following facts:
Rs.
Work overhead under-recovered in costs 1,560
Administrative overheads over-recovered in costs 850
Depreciation charged in financial accounts 5,600
Depreciation recovered in costs 6,250
Interest on investments not included in costs 4,000
Loss due to obsolescence charged in financial accounts 2,850
Income tax provided in financial accounts 20,150
Bank interest and transfer fee credited in financial books 375
Stores adjustment (credit) in financial books 237
Value of opening stock in cost accounts 24,800
Value of opening stock in financial accounts 26,300
Value of closing stock in cost accounts 25,000
Value of closing stock in financial accounts 23,000
Interest charged in cost accounts 2,000
Goodwill written off 5,000
Loss on the sale of furniture 600
Prepare Reconciliation statement.
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10) From the following data pertaining to the year 2016 prepare an operating cost sheet showing the
cost of electricity generated per kwh. By thermal power station:
Total units generated 10,00,000 kwh
Operating labour Rs.65,000
Repairs and maintenance Rs.55,000
Lubricants, spares and stores Rs.50,000
Plant supervision Rs.40,000
Administration overheads Rs.25,000
Coal consumed per kwh. For the year is 2.5 kg of Rs.0.05 per kg. Charge depreciation @ 10% on
capital cost of Rs.2,00,000.
Answers:
SECTION- A (1 marks)
Choose the right answer
1) Operating costing (a)
2) Operating costing (a)
3) Fixed charge (a)
4) Variable charges (b)
5) Contract costing (b)
6) Contract (b)
7) Credit (b)
8) Work-in-progress (a)
9) Notional profit (a)
10) 1/4th (a)
11) Reconciliation (a)
12) Automobiles (c)
13) Certified work (a)
14) Long term (b)
15)Work-in-progress (a)
16) 25% (b)
17) Electronics (d)
18) Standing charges (a)
19) Over charge (a)
20) Deducted (b)
SECTION- B (5 marks)
Answer the following
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3) Total kilometres – 28,800 kms; Total passenger kilometres – 13,82,400 passenger kms
4) Absolute tonne-km – 1,400; Commercial tonne-km – 1,440
5) Profit to be credited to the P & L A/c – Rs.8,000
6) Profit to be credited to P & L A/c – Rs.14,293; Notional profit – Rs.26,800
7) Profit as per financial accounts – Rs.1,12,870
8) Profit as per financial accounts – Rs.1,44,000
9) Profit as per financial accounts – Rs.15,000
10) Profit to be credited to P & L A/c – Rs.1,662; Notional profit – Rs.3,324
SECTION- C (8 marks)
Answer the following
3) Cost per passenger kilometre Rs.0.04
4) Cost per passenger Km – Rs.0.125
5) Bus fare to be charged from each passenger per kilometre – Rs.0.405
6) Cost per absolute ton kilometre – Rs.0.205; Profit – 3,224
7) Profit to be credited to P & L A/c – Rs.72,900; Notional profit – Rs.2,43,000
8) Profit as per cost accounts – Rs.43,200
9) Profit as per financial accounts – Rs.60,652
10) Cost per kwh – Rs.0.38
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KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS)
COIMBATORE
DEPARTMENT OF COMMERCE (PG)
QUESTION BANK – 2018-2019
SUBJECT: COMPANY LAW SUBJECT CODE: 18UPA411
Staff-in-charge: Dr.Sheeba.E Class: II B.Com (PA)
…………………………………………………………………………………………………..
UNIT I
Part-A 1mark
1. The maximum number of members in private company is
A. 50
B. 100
C. 150
D. 200
2. On 14th July, the Registrar of Companies issued a certified of incorporation, but it was dated 10th July
instead of 14th July. From which date the company will legally come into existence?
A. 10th July
B. 14th July
C. 31st July
D. 1st July
3. RBI is an example of
A. Statutory Company
B. Public Company
C. Private Company
D. Holding Company
4. The following person is neither an agent nor a trustee of a company under incorporation.
A. Promoter
B. Director
C. Underwriters
D. Shareholder
5. The contracts entered after incorporation but before getting the certificate to commence business are
called
A. Preliminary contracts
B. Provisional contracts
C. Pre-incorporation contracts
D. Initial contracts
6. When a private company holds at least 25% of paid up share capital of a public company, it becomes
a
A. Deemed Public co.,
B. Private co.,
C. Independent Private co.,
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D. Defunct company
7. Select the case where the corporate veil of the company is not lifted
A. Protection of revenue
B. Avoidance of welfare legislation
C. A company is a sham
D. When the company is unable to pay its debts
8. The separate legal entity concept is well established in the following case law.
A. Solomon vs. Solomon and company
B. Gramophone typewriter vs. Stanley
C. Asbury rail vs. riche
D. Royal British Bank Vs. Turquand
9. In case of company limited by guarantee, the liability of the members can be enforced only by
A. the time when the company so decides.
B. the time of winding up of the company.
C. an order of court.
D. an order of Registrar of Companies.
10. Payment of dividend out of capital is
A. legal
B. rectifiable
C. allowed if Articles of Association authorizes
D. ultra-virus
11. A company limited by shares has
A. Unlimited liability
B. Applicable only for private company
C. Perpetual succession
D. Comes to an end on the death of members
12. The term company is defined under the sec of the Act
A. Section 2 (4)
B. Section 4 (2)
C. Section 3 (1)
D. Section 1 (3)
13. The company shares can be freely transferable is
A. Private Company
B. Public Company
C. Both (a) & (b)
D. None of the above
14. Converting a public company into a private company requires a special resolution.
A. Passed by the members and with sanction of the central Government.
B. Passed by the members and approved by the Registrar of companies.
C. Passed by the members and approved by the company Law Tribunal.
D. Passed by the members and approved by the auditors.
15. Legal position of a promoter of a company is.
A. That of an agent.
B. That of a trustee.
C. That of a solicitor.
D. In a fiduciary capacity.
16. A company is said to have been registered when?
A. It files Memorandum of association and Articles of Association.
B. It gets incorporation certificate with the Registrar of Companies.
C. It gets certificate for commencement of business.
D. It actually starts its business.
17. Certificate of commencement of business is not required by.
A. A public company.
B. A private company.
C. Both public and private companies.
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D. Private company subsidiary to a public company.
18. East India Company is an example of.
A. Statutory Company.
B. Registered company.
C. Chartered company.
D. None of these.
19. Liability of a member in case of a private company is
A. Limited
B. Unlimited
C. Both (a) or (b)
D. None of the above
20. Central Government permission is required in case of _______ conversion __________
A. Private to public
B. Public to private
C. Both (a) or (b)
D. None of the above
…………………………………………………………………………………………………..
Part –B 5 Marks
1. Distinction between a public company & a private company?
2. Bring out the classification of registered companies.
3. Define company. Explain the features of a company.
4. Explain the privileges enjoyed by private company in India.
5. What are the objectives of Companies Act, 2013?
6. Define ‘One-person Company’ and ‘Small Company’.
7. Discuss the exemptions available to a Government company.
8. What is corporate veil? When is this said to be lifted?
9. Distinguish between holding and subsidiary company.
10. Write short note on section 8 companies.
…………………………………………………………………………………………………..
Part –C 8marks
1. Briefly explain the types of company.
2. Enumerate the procedure to be followed at the time of conversion of private company into public
company.
3. Define company. Discuss its features.
4. Discuss about the various types of company.
5. Distinguish between private company and public company.
6. What are the special privileges enjoyed by a private company.
7. “The fundamental attribute of corporate personality is that company is a legal entity distinct from
the members”. Elucidate the statement.
8. “A joint stock company is a legal person with perpetual succession and common seal”. Examine this
statement.
9. Write short note on Producer Company. Who can be the member of Producer Company?
10. “A government company is governed by the same legal provisions as any other company
registered under the companies act”. Comment on this statement.
…………………………………………………………………………………………………..
Answer for Part A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
D A A A B A D A C D C C A A D B B C C B
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UNIT II
Part-A 1 Mark
1. According to which sec. name of the company should end with “Ltd” or “Pvt Ltd”
A. 10
B. 11
C. 12
D. 13
2. The companies which are formed under special charter granted by the king or queen of England are
called
A. Statutory companies
B. Registered companies
C. Chartered companies
D. None of these
3. The companies which are formed under special Act. Those companies are called as
A. Chartered companies
B. Statutory companies
C. Registered companies
D. None of these
4. The companies which are formed under companies Act. 1956. They will be called as
A. Chartered companies
B. Statutory companies
C. Registered companies
D. None of these
5. If a company which is formed with unlimited liability wants to convert to limited liability then it
should pass
A. Ordinary resolution
B. Special resolution
C. No need
D. Normal resolution
6. The conclusive evidence in case of company that statutory requirements have complied with is
A. Certificate of Incorporation
B. Certificate of commencement of Business
C. Both
D. None of the above
7. Private company can start its business immediately after the issue of
A. Certificate of commencement of Business
B. Certificate of Incorporation
C. Both
D. None of the above
8. Public company should start business only after getting certificate of
A. Incorporation
B. Commencement of business
C. Post -incorporation
D. Pre-incorporation
9. Private company can start business only after getting certificate of
A. Incorporation
B. Commencement of business
C. None of these
D. Incorporation of company
10. The two types of business structure created via a process of incorporation are
A. Companies and sole proprietorships.
B. Partnerships and limited liability partnerships.
C. Companies and limited liability partnerships.
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D. Companies and partnerships.
11. Minimum paid up capital for a public company
A. 500000
B. 400000
C. 300000
D. 200000
12. The minimum number of persons required to form a private company is
A. 7
B. 2
C. 3
D. 4
13. Pre-incorporation contract is also known as
A. Provisional
B. Preliminary
C. illegal
D. legal
14. Prospectus was issued in order to test the market before finalizing issue size/ price.
A. Deemed
B. Shelf
C. Red herring
D. None of the above
15. Section 3(1) states that a company may be formed
A. For any lawful purpose
B. For illegal purpose
C. Just for sake
D. For status and profit making
16. Section 7(1) of the Act provides for the detailed procedure for
A. Incorporation of company.
B. formation of company
C. winding up of company
D. amalgamation of company
17. What is the maximum allowable period for the adoption of the name by the promoters when the
registrar informs the promoters of the company that the name is available for use?
A. 30 days from the date the name is allowed
B. 60 days from the date the name is allowed
C. 90 days from the date the name is allowed
D. 180 days from the date the name is allowed
18. Rule 8 of Companies (Incorporation) Rules, 2014 states that in determining whether
A. a proposed name is identical with another
B. the company is operating properly
C. the MOU signed
D. the promoters are registered
19. the number of many months a company can continue its business u/s 45 is
A. 1
B. 2
C. 5
D. 6
20. M.M. Obtained, the incorporation on Jan 1, 2018 and C.C.B on June 1, 2018. The earliest date on
which it can hold the statutory meeting is
A. Feb 1, 2018
B. March 1, 2018
C. July 1, 2018
D. August 1, 2018
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Part –B 5marks
1. List the duties of the promoters.
2. What is a criminal liability for misstatements in prospectus?
3. Define prospectus. What are its contents?
4. What are the disadvantages of incorporation of a company?
5. Discuss the managerial remuneration of the promoters.
6. Write a note on ‘pre-incorporation contract’.
7. Discuss about ‘provisional contract’.
8. Write a note on the role of promoter in the incorporation of a company.
9. Explain the legal formalities that are to be compiled with under the companies act 2013 regarding
formation of a company.
10. What do you mean by certificate of incorporation?
………………………………………………………………………………………………..
Part –C 8 marks
1. Write the effects of certificate of incorporation.
2. Explain the advantages of incorporation.
3. Discuss about the stages in the formation of a company.
4. Discuss about the advantages of incorporation of a company.
5. Discuss the rights, duties and legal position of a promoter.
6. Discuss the functions of a promoter.
7.” Promoter stand in a fiduciary relationship with the company they promote”. Discuss.
8. “The companies act is not against the profit made by the promoter but its non disclosure”. Examine
this statement with regard to the duties and obligations of the promoter of the company.
9. “A certificate of incorporation is conclusive evidence that all the requirements of the companies act
have been compiled with”. Comment.
10. Describe the various stages in incorporation of a public limited company. What documents are
required for filing for incorporation?
…………………………………………………………………………………………………..
Answer for Part A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
D C B C B A B B A C A B B C A A B A D D
UNIT III
Part-A 1 mark
1. The Articles of a company may be altered by
A. The directors
B. Any official of the company
C. Shareholders by passing an ordinary resolution
D. Shareholders by passing a special resolution
2. The Memorandum of a company
A. Is inferior to its Articles
B. Is the fundamental document of a company
C. Invites people to invest in its shares
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D. Deals with the internal management of the company
3. The Article of Association must be signed by the
A. Directors
B. Promoters
C. Subscribers
D. Registrar
4. Alteration of Articles of association should not conflict with the
A. Memorandum
B. Memorandum and the Companies Act
C. Companies act
D. Prospectus
5. One of the limitations of Doctrine of constructive notice is
A. Doctrine of ultra virus
B. Doctrine of indoor management
C. Memorandum of association
D. Articles of Association
6. The statement in lieu of prospectus is required to be issued by
A. All companies which issue shares and debentures
B. Private companies
C. Public companies when shares are issued among friends and relatives
D. Government company
7. A prospectus which does not have complete particulars about the price and quantum of securities
offered is
A. Red-herring prospectus
B. Shelf prospectus
C. Statement in lieu of prospectus
D. Deemed prospectus
8. The rate of commission payable to underwriters cannot exceed
A. 2%
B. 3%
C. 5 %
D. 7%
9. The prospectus should be signed by the
A. Directors
B. Secretary
C. Members
D. Managers
10. The doctrine of indoor management is an ______to the doctrine of constructive notice
A. Exception
B. Extension
C. Alternative
D. None of the above
11. The doctrine of _________ does not apply to acts void ab initio.
A. Ultra vires
B. Intra vires
C. constructive notice
D. Indoor management
12. A company can change its name at its own discretion by passing _________
A. Ordinary resolution
B. Special resolution
C. Boards resolution
D. None of the above
13. Any change in the address of the registered office must be communicated to the registrar within:
A. 15 days
B. 30 days
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C. 1 Month
D. 12 months
14. MOA should be in form ____________ in case of company limited by shares
A. Table A
B. Table B
C. Table C
D. Table D
15. In the MOA we can alter all clauses expect one clause
A. Objects clause
B. Name clause
C. Association clause
D. None of these
16. Ultra vires means
A. Beyond the power
B. within the power
C. Both
D. None of the above
17. Change in objects clauses can be effected
A. For any reason
B. For special reason only
C. to comply with C.G order
D. None of the above
18. The capital clause of a company can be changed with the permission of
A. Company law board
B. Registrar
C. Court
D. None of the above
19. The lending of funds ultra vires, the company has no rights
A. under the company’s Act
B. contract Act
C. under equity
D. None of the above
20. Companies are now allotted a _______ in addition to their name
A. PAN
B. SIN
C. PIN
D. CIN
………………………………………………………………………………………………......
Part –B 5 marks
1. What are the documents required for registration?
2. Give the meaning of memorandum of association.
3. How to alter the registered office clause?
4. Discuss the alteration of object clause.
5. Give the meaning of doctrine of ultra virus.
6. What do you mean by articles of association?
7. List the companies that should have articles of association.
8. What is the effect of articles of association?
9. What are the contents of memorandum of association?
10. Explain the procedures to be followed to alter the article of association.
………………………………………………………………………………………………......
Part –C 8 Marks
1. What do you mean by alteration of memorandum of association under companies law?
2. What are the exceptions for doctrine of indoor management?
3. What are the constituents of memorandum of association?
4. How can the memorandum of association be altered?
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5. Give the meaning of articles of association and list out its contents
6. Distinguish between memorandum of association and articles of association.
7. What are the objects of memorandum of Association?
8. Define holding and subsidiary company.
9. What are the effects of a ultra vires transactions?
10.”The memorandum of a company is its charter of existence”. Discuss
…………………………………………………………………………………………………
Answer for Part A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
D B C B B C A C A B D B C B C A B C A D
UNIT IV:
Part-A 1Mark
1. First directors are usually named in
A. Articles of the company
B. Memorandum of the company
C. Prospectus of the company
D. Annual report of the company
2. The position of a Director is that of a
A. Trustee
B. Quasi trustee
C. Employee
D. Fiduciary
3. If there are 9 directors in a company the number of permanent directors is
A. 3
B. 5
C. 6
D. 2
4. Director identification number has to be obtained from
A. Company law board
B. Registrar
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C. Ministry of commerce
D. Central Government
5. Alternate director can only be appointed in case a director leaves India for a period of not less than
A. 2 months
B. 3 months
C. one year
D. Two years
6. A person can be appointed as a Director in a maximum of
A. 10 companies
B. 15 companies
C. 20 companies
D. 25 companies
7. A director who is not duly appointed but acts as a director is known as a
A. Rotational Director
B. Acting Director
C. De-facto director
D. Voluntary director
8. Directors to retire by rotation shall retire in
A. Ordinary meeting
B. Board meeting
C. Annual general meeting
D. Extra ordinary
9. The provision for director identification number was introduced in
A. Company’s act 1956
B. Company’s (amendment) act 2000
C. Company’s (amendment) act 2002
D. Company’s (amendment) act 2006
10. Directors are not liable to a company for
A. Absence
B. Misfeasance
C. Negligence
D. Ultra vires acts
11. An additional director will hold office till
A. Retirement
B. Conduct of next annual general meeting
C. He voluntarily retires
D. The board removes him
12. Directors incur personal liability for
A. Failure to repay application money
B. Failure to deposit application money
C. Failure to send notice of meeting
D. Failure to pay dividend when there is insufficient profit
13. The office of a director shall be statutorily vacated if he absents himself for
A. Any meeting
B. 3 consecutive meetings of the board
C. Statutory meeting
D. All meetings held for a period of 12 months
14. The board of directors cannot delegate power to
A. Issue debentures
B. Borrow money otherwise than on debentures
C. Invest funds
D. Make loans
15. The following vacancy is not a casual vacancy
A. Retirement
B. Death
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C. Resignation
D. Disqualification
16. The term of office of s managing director cannot exceed
A. 2 years at a time
B. 3 years at a time
C. 5 years at a time
D. 7 years at a time
17. A company cannot appoint simultaneously a managing director and
A. Manager
B. Secretary
C. General Manager
D. Chairman
18. In the following circumstance the majority shareholders can exercise power in a general meeting of
the company
A. Appointment of managing director
B. Making investments
C. Deadlock in management
D. Issuing debentures
19. The overall managerial remuneration payable in a company shall not exceed
A. 5% of net profits
B. 10% of net profits
C. 11% of net profits
D. 3% of net profits
20. The minimum number of directors for a private company is
A. 1
B. 3
C. 2
D. 4
…………………………………………………………………………………………………..
Part –B 5Mark
1. List any five duties of a director.
2. Who can appoint a director? Give the restrictions on number of directorships.
3. “Directors are the trustees of the company”. Comment
4. What are the disqualifications of a director?
5. Explain the powers of company sectary.
6. Write a note on a) small share holders’ director b) interested director
7. Write a note on the maximum number of directorship which a person can hold at any point of time.
8. Distinguish between a managing director and a manager of a company.
9. State the circumstances in which a director is compelled to vacate his office.
10. Explain managerial remuneration.
…………………………………………………………………………………………………..
Part –C 8Marks
1. Discuss the information to be shown on share certificate.
2. What are the Liabilities of the Directors of a company towards the company?
3. To what extent can the director of a company be considered as trustees, agents or managing partners
of the company.
4. Explain the procedure for the appointment of board of directors.
5. Enumerate the qualification of directors.
6. Discuss the rights of a member of a company to remove a director before the expiry of his tenure.
What safeguard are available to a director who is faced with such an action.
7. Explain appointment of directors, their rights, duties and liabilities.
8. Explain the provisions of the companies act 2013 relating to restrictions imposed on the powers of
Board of Directors.
9. Is it mandatory to have a women director on Board of all companies? Comment.
10. State the provision of the companies act 2013 in regard to removal of directors by the shareholders.
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…………………………………………………………………………………………………..
Answer for Part A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
A D A D B C C C D A B A D A A C A C C C
UNIT V:
Part-A 1 Mark
1. The first meeting of shareholders of a public company is
A. Statutory meeting
B. Board meeting
C. Annual General meeting
D. Committee meeting
2. The meeting that is convened to transact some urgent or special business is called as
A. Annual general meeting
B. Extra ordinary general meeting
C. Class meeting
D. board meeting
3. The report which is sent to all members before the company’s first meeting is called
A. Business report
B. Annual report
C. Statutory report
D. yearly report
4. The following meeting can be held on the requisition of members with not less than 1/10th of paid-
up share capital
A. Statutory meeting
B. Annual general meeting
C. Extra ordinary meeting
D. Class meeting
5. The ruling in the case of Sharp VS Dawes was that
A. Director can be disqualified if he is adjudicated as insolvent
B. Statutory meeting can be postponed
C. A creditor can be nominated to the board
D. One person cannot constitute a meeting
6. The statutory meeting is required to be held by
A. All companies
B. Only by private companies
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C. Only public companies
D. Deemed public company
7. In case of a annual general meeting the following business is considered as special business
A. Declaration of a dividend
B. Removal of a director
C. Appointment of auditors
D. Appointment of directors
8. If the Board of Directors fails to convene an extraordinary General Meeting on the requisition of
members
A. The requisition themselves may convene the meeting
B. The tribunal may call the meeting
C. The court may call the meeting
D. The creditors may call the meeting
9. Shareholders get an opportunity to review the working of the company in
A. statutory meeting
B. Annual general meeting
C. Class meeting
D. Board meeting
10. If the Annual General Meeting cannot be held for want of quorum, it shall automatically stands
adjourned to
A. Next week
B. Same day in the next month
C. Same day in the next week
D. Next day
11. The total number of members in Jai Ltd. is 850, therefore the quorum for a meeting is
A. 5
B. 10
C. 15
D. 20
12. The proper authority for convening a general meeting of a company is the
A. Board of directors
B. Managing director
C. Chairman of Board of directors
D. Shareholders
13. The notice for the general meeting of a company must be given at least
A. 7 days before the meeting
B. 14 days before the meeting
C. 21 days before the meeting
D. 30 days before the meeting
14. The record of proceedings of a meeting is
A. Proxy
B. Minutes
C. Agenda
D. Notice
15. A proxy can
A. Speak at the meeting
B. Vote by show of hands.
C. Demand a poll
D. Sign the minutes
16. If a meeting is conducted in a company without issuing notice the proceedings of the meeting will
be
A. Valid
B. Voidable
C. Void
D. Rectifiable
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17. The person who represent a member of the company in a general meeting.
A. Chairman
B. Shareholder
C. Proxy
D. Creditor
18. A poll can be demanded by
A. Proxy only
B. Members personally present only
C. Both by proxy and members personally present
D. Neither by proxy nor by members personally present
19. Which of the following requires passing of a special resolution?
A. Adoption of annual accounts
B. Appointment of directors
C. Payment of interest out of capital
D. To declare dividend
20. A special resolution must be filed with the registrar for registration within
A. 14 days of its passing
B. 21 days of its passing
C. 30 days of its passing
D. 45 days of its passing
…………………………………………………………………………………………………..
Part –B 5 Marks
1. Write a short note on Annual general meeting.
2. Explain about Extra-ordinary general meeting.
3. State the objectives of the meeting?
4. What is an agenda?
5. Discuss about Proxy?
6. Write about the duties of a company secretary?
7. Write short note on a) Voting by poll b) Resolutions
8. Define quorum. What is a quorum for a general meeting?
9. What is the quorum required for a general meeting in the case of a private limited company?
10. Point out the difference between adjournment, postponement and dissolution of meeting
…………………………………………………………………………………………………
Part –C 8 Marks
1. Explain different types of company meeting.
2. Write general rules to conduct AGM.
3. Describe the requisites of a valid meeting.
4. Give the specimen for the minutes of meeting.
5. Explain in detail the various types of meeting.
6. Explain the provisions of the companies act 2013 with regard to proxies at general meeting.
7. Write short note on a) ordinary resolution b) special resolution c) resolution required special notice.
8. “Every meeting, in order to be valid must be duly convened, properly constituted and conducted.”
Elucidate
9. Explain the legal provisions with regard to ‘quorum’. What is the quorum required for a general
meeting in the case of a public limited company?
10. At an extraordinary general meeting, no director is willing to act as chairman. State the legal position
in the circumstances.
…………………………………………………………………………………………………
Answer for Part A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
A B C C D C B A B C A A C B C C C C C C
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KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
DEPARTMENT OF COMMERCE PG & PA
Class: II B.COM (PA) Semester – IV
Sub. Name: Principles of Management Sub. Code: 18UPA412
Prepared By: Mrs.C.Goldbell Rachel (Units I , II & III)
Mrs. P.Geetha (Units III , IV & V)
UNIT 1
SECTION A
1. Management is both an art and a _____.
A) Management
B) Science
C) Economic
D) History
2. Father of scientific management is _____.
A) Henry Fayol
B) Elmonpateres
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C) F.W. T aylor
D) Louisallen
3. Father of modern management is _____.
A) Henry Fayol
B) ElmonPateres
C) Louisallen
D) F.W. Taylor
4. Management is the _____ of function.
A) Low Level
B) Intermediate
C) Middle Level
D) High Level
5. _____ lays down broad policies and principle for guidance.
A) Management
B) Administrative
C) Planning
D) Controlling
6. Who developed functional fourmanship theory _____.
A) Henry Fayol
B) Louisallen
C) ElmonPeteres
D) Taylor
7. Administrative management thory consist of _____ categories.
A) Two
B) Three
C) Four
D) Five
8. Accounting comes under the category of _____.
A) Management
B) Scientific Management
C) Industrial Activities
D) Administrative
9. “Esprit de corps” means _____.
A) Unity is strength
B) Unity of command
C) Remuneration of personnel
D) Unity of direction
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10. “Management is what manager does” said by _____.
A) EG Plowman
B) Mary Cushing Niles
C) Louis Allon
D) Koontz
11. Which one is not a function of management?
A) Planning
B) Administrating
C) Organising
D) Staffing
12. _____ creates harmonious relationship among all works.
A) Planning
B) Directing
C) Controlling
D) Organising
13. _____ means application of skills in finding the desire result.
A) Art
B) Science
C) Economic
D) Both A and B
14. _____ is based on co-operation between management to the workers.
A) Administrative
B) Co-ordinate
C) Scientific Management
D) Management
15. Management does not deals with _____
A) Statistics
B) Commerce
C) Economic
D) Sociology
16. _____ is the father of modern theory of general and industrial management.
A) F.W. Taylor
B) Louisallem
C) ElomonPateres
D) Henry Fayol
17. Administrative management of Industrial activities _____ categories.
A) Five
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B) Six
C) Seven
D) Ten
18. Administrative management in _____ principles.
A) Ten
B) Twelve
C) Fourteen
D) Fifteen
19. _____ is a science as well as an art.
A) Management
B) Administrative
C) Scientific Management
D) Organisation
20. _____ is multidisciplinary in nature.
A) Administrative
B) Organisation
C) Management
D) Scientific Management
SECTION B
1. Give the meaning and definition of management.
2. “Management is an art or science” Discuss.
3. Explain the scope of Management.
4. Differentiate between Management and administration.
5. Enlist the functional areas of management.
6. What are the functions of management?
7. Discuss about the essentials of management.
8. “Management is an interdisciplinary approach”. Explain.
9. Enlist the elements of scientific management.
10. What are the benefits of scientific management?
SECTION C
1. Explain the functions of management.
2. Discuss the nature of management.
3. Explain the elements of scientific management of FW.Taylor .
4. Discuss the Henry Fayol’s Administrative Management theory.
5. Discuss the scope of management.
6. Elucidate about F.W.Taylor’s scientific management.
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7. Explain the 14 principles of administrative management theory.
8. Explain the elements and benefits of scientific management.
9.” Management is both art and science. “Explain.
10. Explain the importance of management.
Answers:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B C A D B D A C A C B D A C A D B C A C
UNIT II
SECTION A
1. Planning is the most basis of all _____ function.
A) Administrative
B) Management
C) Finance
D) Organisation
2. _____ is getting ready to do something tomorrow.
A) Organising
B) Controlling
C) Directing
D) Planning
3. _____ is a dynamic process.
A) Planning
B) Organising
C) Directing
D) Controlling
4. Planning process in first step _____.
A) Establishment of objective
B) Developing planning process
C) Identification of opportunities
D) Identification of alternative
5. _____ plan are usually, made once and refain their value over a period of time.
A) Standing plan
B) Tactical plan
C) Strategic plan
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D) Single use plan
6. _____ plan is concerned with what the lower level units within each division must do.
A) Standing plan
B) Single use plan
C) Strategic plan
D) Tactical plan
7. _____ plan is an outline od step designed with the goals of the entire organisation as a whole.
A) Standing plan
B) Tactical plan
C) Strategic plan
D) Contigency plan
8. _____ plan is a plan deviced for a specific situation when things go wrong.
A) Single use plan
B) Contigency plan
C) Standing plan
D) Tactical plan
9. “Planning premises are the anticipated environment in which plans are expected to operate”,
said by _____
A) Haimann
B) Mary Cushing Niles
C) F.W. Taylor
D) Koontz and Weihrich
10. _____ is the human process.
A) Decision making
B) Controlling
C) Staffing
D) Co-ordinating
11. “Decision making is defined as selection of a course of action from among alternative”, said
by_____.
A) F.W. Taylor
B) Haimann
C) Knootz and Weihrich
D) Mary Cushing Niles
12. “Decision making is a selection based on some criteria from two or more possible alternative”,
said by _____.
A) Mary Cushing Niles
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B) George R. Terry
C) F.W. Taylor
D) Haimann
13. Planning in types _____.
A) Three
B) Six
C) Four
D) Five
14. Decision making process in last step _____.
A) Implementation and follow up
B) Evaluation of alternative
C) Search for alternative
D) Evaluation of problem
15. BPR means _____.
A) Building Process Re-engineering
B) Business Production Re-engineering
C) Business ProductionRevised
D) Business Process Re-engineering
16. “ Business process is a set of logically related task performed to achive a define business
outcome”, said by _____.
A) Pater F. Drucker
B) Davenport
C) Henry Fayol
D) Taylor
17. Business process re-engineering is a business in _____ strategy.
A) Administrative
B) Organisation
C) Management
D) Scientific Management
18. Management by object was conceptualized by _____.
A) Peter F Drucker
B) Taylor
C) George R Terry
D) Knootz
19. Decision making is a _____ process.
A) Testing
B) Selection
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C) Evaluation
D) Analysis
20. Operational plan in types _____.
A) Five
B) Fore
C) Three
D) Two
SECTION B
1. Bring out the importance of planning.
2. Discuss the meaning and definition of planning.
3. What do you mean by MBO and discuss its features. (OR)
4. Write a note on BPR.
5. Give the meaning of planning and discuss its nature. (OR)
6. Illustrate the planning process.
7. What are the different types of plan?
8. Bring out the features of decision making.
9. What are the advantages and disadvantages of MBO?
10. How to make premises effective?
SECTION C
1. Give the meaning of planning and discuss its nature.
2. Illustrate the planning process.
3. Discuss the MBO process.
4. Explain the decision making process.
5. What are the advantages and disadvantages of planning?
6. Discuss about planning premises.
7. Explain the various types of plans.
8. Define decision making and explain the features of decision making.
9. Classify the planning premises in detail.
10. What do you mean by MBO? Discuss the pros and cons.
ANSWERS:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B D A C A D C B D A C B C A D B C A B D
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UNIT III
SECTION A
1. “Organisation is the firm of every human association for the attainment of a common purpose”,
said by _____.
A) MC Farland
B) Jones D Mooney
C) Chester Bernard
D) Haney
2. _____ structure is the formal pattern of interactions designed by management.
A) Administrative
B) Business
C) Management
D) Organisation
3. Organisation structure in types _____.
A) Two
B) Three
C) Fore
D) Five
4. _____ structure is highly efficient.
A) Adaptive
B) Functional
C) Mechanistic
D) Divisional
5. _____ structure is opposite in nature of mechanistic structure.
A) Mechanistic
B) Adaptive
C) Functional
D) Matrix
6. _____ structure is an hybrid organisational firm.
A) Team
B) Network
C) Matrix
D) Functional
7. _____ means most of the decisions are taken by the top level management.
A) Internal
B) External
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C) Decentralisation
D) Centralisation
8. _____ means extension and delegation through all level of management.
A) Decentralisation
B) Centralisation
C) Internal
D) External
9. Delegation in types _____.
A) Three
B) Fore
C) Two
D) Five
10. _____ steps in involved in process of delegation.
A) Three
B) Fore
C) Five
D) Six
11. Line and Staff Authority to _____ approaches to use.
A) Two
B) Three
C) Five
D) Six
12. _____ is help in attaining the organisational objectives.
A) Line authority
B) Staff authority
C) Staff approach
D) Line approach
13. _____ helps the line function in attaining the objectives.
A) Line approach
B) Staff approach
C) Line authority
D) Staff authority
14. _____ is always downwards from the superior to the subordinate.
A) Line approach
B) Staff approach
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C) Staff authority
D) Line authority
15. _____ involved giving advice to the line manager and authority flows in any directors.
A) Line approach
B) Staff approach
C) Staff authority
D) Line authority
16. _____ is the process of grouping of similar activities are department or decisions.
A) Departmentation
B) Oraganisation
C) Administration
D) Management
17. Departmentation by _____ strategies.
A) Four
B) Five
C) Six
D) Seven
18. _____ structure is less formal and more flexible.
A) Adaptive
B) Functional
C) Team
D) Network
19. _____ is a structure helps the active to be performed effectively.
A) Administration
B) Organisation
C) Management
D) Planning
20. _____structure makes employees comfortable and simplified training.
A) Adaptive
B) Team
C) Functional
D) Divisional
SECTION B
1. Discuss the nature of organizing.
2. Explain the importance of organizing.
3. Discuss the categories of Span of Control.(OR)
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4. Elucidate the process of delegation
5. State the merits of line organization.(OR)
6. Highlight the importance of Departmentation
7. Write a note on features and types of delegation.
8. Enlist any eight principles of organisation.
9. Discuss the process of organizing.
10. Define organizational chart and bring out its advantages.
SECTION C
1. Explain the contents and types of organisation
2. Give the meaning and explain the types of organisation structure.
3. Explain about the organization chart.
4. Discuss about span of control and its types.
5. Explain the strategies of Departmentation.
6. How to make delegation effective?
7. Write a note on centralization and decentralization.
8. Explain the principles of organisation.
9. Discuss the pros and cons of organizational chart.
10. Classify the organization structure in detail.
ANSWER:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B D A C B C D A C B A D B D C A D A B C
Unit IV
SECTION A
1. _____ is the art of getting things done by other.
A) Administrations
B) Motivation
C) Management
D) Scientific Management
2. Ability X Motivation = _____.
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A) Willingness
B) Performance
C) Encouragement
D) Couragement
3. Who developed the two theories of x and y ?
A) Douglas mc Gregor
B) Maslow
C) Fredeick
D) Taylor
4. X theory is _____ theory.
A) New
B) Old
C) Morden
D) Traditional
5. In _____ theory workers dislikes to work by themselves.
A) X theory
B) Y theory
C) Z theory
D) Maslow’s
6. _____ theory is modern theory.
A) Maslow’s
B) X theory
C) Y theory
D) Z theory
7. Workers in ____ theory are unambitions.
A) Maslow’s
B) Z theory
C) Y theory
D) X theory
8. The workers in ____ theory feels that work in natural as play.
A) X theory
B) Y theory
C) Z theory
D) Maslow’s
9. Democratic leadership is followed in _____.
A) Maslow’s theory
B) X theory
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C) Z theory
D) Y theory
10. Autocratic leadership is followed in _____.
A) Y theory
B) X theory
C) Z theory
D) Maslow’s theory
11. _____ is one who guides and direct other people
A) Staff
B) Leader
C) Subordinate
D) Worker
12. _____ leader is one who wants to run the organisation all by himself.
A) Democratic
B) Laisse fair
C) Auloratic
D) Liberal
13. A leader acts according to the wisher of his followers is _____.
A) Democratic
B) Liberal
C) Intellectual
D) Autocratic
14. The _____ style has full power or authority to take decision.
A) Democratic
B) Liberal
C) Intellectual
D) Autocratic
15. In _____ style the leader motivates his followers to work hard by offering than rewards.
A) Negative
B) Autocratic
C) Positive
D) Democratic
16. _____ is a willingness to expand energy to achive a goal or a reward.
A) Controlling
B) Motivation
C) Management
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D) Administrative
17. Motivation has _____ types.
A) Two
B) Three
C) Four
D) Fine
18. _____ a process of inducing people inner drives and actions.
A) Motivation
B) Administrative
C) Controlling
D) Staffing
19. _____ is the process of influencing behaviour of others.
A) Controlling
B) Staffing
C) Administrative
D) Motivation
20. Leadership styles has _____ types.
A) Two
B) Three
C) Four
D) Five
SECTION B
1. Give the meaning and definition of motivation.
2. Write about the nature of motivation?
3. Explain the motivation process.
4. What is the need for motivation in an organisation?
5. Write a note on X theory of motivation.
6. What are the criticisms of Maslow’s theory?
7. Give the meaning and definition of leadership.
8. Explain any five leadership qualities.
9. Explain the autocratic leadership styles.
10. Discuss about free rein leadership style.
SECTION C
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1. Illustrate Maslow’s need hierarchy theory of motivation.
2. Elucidate the effective leadership qualities.
3. Discuss the nature and importance of motivation.
4. What is motivation? Explain the types of motivation.
5. Discuss Mc-Gregor’s X and Y theory of motivation.
6. What are the qualities of a good leader?
7. Why is leadership important in an organisation?
8. Explain the various leadership styles.
9. Give a comparison between X and Y theory.
10. explain the nature and characteristics of leadership.
ANSWER:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
C B A D A C D B D A B C A D C B C A D B
Unit V
SECTION A
1. “ Communication is a process which involves the transmission and accurate replication of
ideas ensured by feedback for the propose of eliciting action which will accomplish
organisation words”, said by ___.
A) Taylor
B) William Scolt
C) J. Lundy
D) Newman
2. _____ from the idea means communication of facts and emotions.
A) Staffing
B) Controlling
C) Co-ordinating
D) Communication
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3. The purpose of _____ to elicit action.
A) Communication
B) Co-ordination
C) Controlling
D) Directing
4. Communication has _____ types.
A) Five
B) Four
C) Two
D) Three
5. Flow of management from superior to subordinate _____.
A) Upward communication
B) Downward communication
C) Horizontal communication
D) Diagonal communication
6. Flow of management from subordinate to superior _____.
A) Horizontal communication
B) Diagonal communication
C) Upward communication
D) Downward communication
7. Nothing but rumours and gossips _____ .
A) Horizontal communication
B) Diagonal communication
C) Upward communication
D) Grapevine communication
8. There are _____ principles of effective communication.
A) Five
B) Six
C) Five
D) Fore
9. _____ if should include only relevant fact.
A) Consideration
B) Courtesy
C) Completeness
D) Conciseness
10. ______ adopts “You” attitude.
A) Consideration
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B) Courtesy
C) Conciseness
D) Clarity
11. _____ is the process which ensure smooth function of a management.
A) Communication
B) Consideration
C) Co-ordination
D) Controlling
12. “ Co-Ordination is the part of all phase of administration and that otos not a separate and
distinct activity”, said by _____
A) J.Lundy
B) Newman
C) Taylor
D) James. D. Mooney
13. Co-ordination has _____ types.
A) Five
B) Four
C) Two
D) Three
14. Which co-ordination superior co-ordination his work to sub-ordinate?
A) Horizontal co-ordination
B) Internal co-ordination
C) External co-ordination
D) Vertical co-ordination
15. _____ is defines to the establishment of relationship between the person of same states.
A) Internal co-ordination
B) External co-ordination
C) Horizontal co-ordination
D) Vertical co-ordination
16. _____ is the last function of management.
A) Controlling
B) Co-ordination
C) Staffing
D) Directing
17. “Control is the function of the system which provides direction in performance to the plans”,
said by ____.
A) Billy. E. Goetz
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B) Dalton. E. Mcfarland
C) Newman
D) J. K. Rosen
18. Which one is not a step of controlling process?
A) Search for alternatives
B) Establishment of standards
C) Measuring performance
D) Taking collective action
19. Clarity has _____ types.
A) Three
B) Two
C) Five
D) Four
20. “ Co-ordination involved the development of unit of purpose and harmonious implementation
of plans for thr achievement of desired ends”, said by _____.
A) J. Lundy
B) Newman
C) Alan. C. Reily and James. D. Mooney
D) J. K. Rosen
SECTION B
1. Discuss the types of communication.
2. State the advantages of control
3. What are the characteristics of control?
4. Discuss the types of control.
5. Bring out the importance of controlling.
6. Enlist the rules for effective communication.
7. What is the need for communication?
8. Write a note on line and staff authority.
9. How to make delegation effective?
10. Bring out the need for control in an organisation.
SECTION C
1. Explain the communication process.
2. Explain the importance of coordination in management.
3. Discuss the importance and process of control..
4. Explain the importance of coordination in management.
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5. Explain the modern techniques of control.
6. What are the requirements of effective control?
7. Discuss the barriers to effective communication.
8. Explain the types of communication.
9. Give the importance of delegation. Discuss the process of delegation.
10. Discuss about line and staff authority.
.
ANSWER
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B D A C B C D B D A C B C D C A D A B C
KONGUNADU ARTS AND SCIENCE COLLEGE(AUTONOMOUS)
COIMBATORE- 641 029
Class: II B.COM (PA) Semester – IV
Sub. Name: Industrial Law Sub. Code: 17UPA4A4 /
18UPA4A4
Prepared By: Dr.R.Murugesan
QUESTION BANK
Unit I
SECTION – A 1 Mark
1. As per the Factories Act "Adult" means a person who has completed ___year of age.
a) Fifteenth b) Sixteenth c) Seventeenth d) Eighteenth
2. As per Factories Act, "Child" means a person who has not completed his _____Year of age.
[Sec 2(c)]
a) Fourteenth b) Fifteenth c) Sixteenth d) Eighteenth
3. As per Factories Act, _______ of a factory means the person who has ultimate control over
the affairs of the factory. [Sec 2(n)]
a) Manager b) Owner c) Director d) Occupier
4. The Factories Act imposes the following obligations upon the employer in regard to his
workers. [Sec 7 A]
a) Health b) Safety c) Welfare d) All the above.
5. Section 2 (a) of the act defines the term .
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a) Adult b) Adolescent c) Child d) Calendar year
6. According to the definition of "Week" under the Act, it is a period of 7 days beginning
at midnight on .
a) Sunday b) Monday c) Saturday d) Friday
7. Crèche is to be provided if ____or more women employees are engaged.
a) 25 b) 32 c) 30 d) 40
8. Section 2 (n) under the act defines
a) Publisher b) Manager c) Owner d) Occupier
9. As per the act, the floor of ever work room should be cleaned once every
a) Day b) month c) week d) hour
10. The power of inspectors is discussed under ________of the Factories Act, 1948.
a) Section 9 b) Section 10 c) Section 11 d) Section 12
11. The primary purpose of employee safety programme is to preserve the employees'
a) Mental health b) Physical health
c) Emotional health d) All of the above
12. Ensuring the safety, health and welfare of the employees is the primary purpose of the
a) Factories Act, 1948 b) Payment of Wages Act, 1936
c) Equal Remuneration Act, 1976 d) Industrial Disputes Act, 1947
13. The first Factories Act was enacted in
a) 1881 b) 1895 c) 1897 d) 1885
14. The space for every worker employed in the Factory after the commencement of Factories
Act, 1948 should be _____Cubic Meters.
a) 9.9 b) 10.2 c) 14.2 d) 13.2
15. The provision for cooling water during hot weather should be made by the organization if it
Employees _____or more employees.
a) 200 b) 250 c) 300 d) 150
16. Who is an Adolescent as per Factories Act, 1948?
a) Who has completed 17 years of age b) Who is less than 18 years
c) Who has completed 15 years but less than 18 years d) None of these
17. Which one of the following is not a welfare provision under Factories Act, 1948?
a) Canteen b) Crèches c) First Aid d) Drinking water
18. Safety Officers are to be appointed if Organization is engaging _____or more employees.
a) 1000 b) 2000 c) 500 d) 750
19. Canteen is to be provided if engaging employees more than _____persons.
a) 250 b) 230 c) 300 d) 275
20. Leave with wages is allowed for employees if they work for _______days in a month.
a) 15 b) 25 c) 20 d) 28
Answer for part A (Unit I)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
D B D D A C C D C A D A A C B C D A A C
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SECTION - B 5 Marks
1. Define the term adult, adolescent, Young person.
2. What are the provision have been made in the factories Act 1948 for protection
against fire?
3. What are the provision have been made in the factories Act 1948 for protection
against machinery of factory?
5. What are the provision have been made in the factories Act 1948 for protection
against building of factory?
6. State the restrictions imposed by the factories Act 1948 on employment of women in the
factory.
7. Write a note on provisions relating to hazardous processes as introduced by factories Act.
8. What are the provisions have been made relating to lighting of factory?
9. State the provisions of the factories act regarding extra wages for overtime and weekly
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holidays.
10. What are the weekly and daily hours for which an adult worker may be allowed to work in a
factory?
SECTION – C 8 Marks
1.Discuss the General duties of occupier under factories Act, 1948.
2. Describe the procedure of appointment of inspector under the factories Act 1948. What are
their powers?
3. Discuss the rules regarding approval, licensing and registration of factories with special reference to
notice by occupier as required by the factories Act 1948 before starting a factory and occupying the
same.
4. Discuss the provisions of the factories Act1948 with regard to health.
5. Describe the provisions of the factories Act1948 with regard to safety.
6. Discuss the provisions of the factories Act1948 with regard to welfare.
7. Enumerate the provisions regarding to employment of young person.
8. Discuss the provisions of the factories act regarding to employment of women.
9. Explain the provisions relating to working hours of adult in the factory.
10.Discuss the rules relating to annual leave with wages.
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Unit II
SECTION – A 1 Mark
1. Disablement which reduces temporarily the earning capacity of a workman in any
employment in which he was engaged at the time of accident resulting in disablement is called
a) Temporary disablement b) Permanent disablement
c) Total disablement d) Partial disablement
2. Disablement which permanently reduces the earning capacity of a workman in every
employment which he was capable of undertaking at the time of accident resulting in
disablement is called ___________.
a) Temporary disablement b) Permanent disablement
c) Total disablement d) Partial disablement
3. Disablement not only reduces earning capacity of workman but incapacitates him from all
work which he was capable of performing at the time of accident is called ______
a) Temporary disablement b) Permanent disablement
c) Total disablement d) Partial disablement
4. Amount of compensation payable for death resulting from the injury is equal to ____ % of
monthly wages multiplied by the relevant factor or an amount of Rs.___ whichever is more.
a) 40% Rs. 80000 b) 50% Rs. 90000
c) 30% Rs. 70000 d) 60% Rs. 90000
5. The amount of compensation payable for permanent total disablement resulting from the
injury is equal to ___ % of monthly wages multiplied by the relevant factor or an amount of
Rs. ____ whichever is more.
a) 40% Rs. 80000 b) 50% Rs. 90000
c) 30% Rs. 70000 d) 60% Rs. 90000
6. Half monthly payments under workmen Compensation Act shall be payable on ______ day
from the date of disablement, if it lasts for a period of 28 days or more.
a) 15th b) 16th c) 30th d) 60th
7. Employer is liable to pay compensation to workman, if a personal injury is caused to the
workman by accident arising _________ his employment.
a) Out of and in the course of b) Out of
c) In the course of d) None of these
8. Payment of compensation shall be made through _____________ in respect of a workman
whose injury has resulted in death.
a) Dependants b) Commissioner c) Occupier d)Inspector
9. Loss of both hands deemed to result in ________
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a) Temporary disablement b) Permanent disablement
c) Permanent total disablement d) Partial disablement
10. Layoff compensation is to be paid @ ______of average wages.
a)15 days b) 50% c) 60% d) 75 %
11. ________absolves the employer's liability under the Maternity Benefit Act and
Workmen's Compensation Act
a) Employees Provident fund Act b) Industrial Employment (Standing Order) Act
c) Employees State Insurance Act d) Industrial Disputes Act
12. The employee welfare facilities available outside the organization are called
a) Intra-mural facilities b) Extra-mural facilities
c) Extravagance d) None of the above
13. The employee welfare facilities available inside the organization are called
a) Intra-mural facilities b) Extra-mural facilities
c) Extravagance d) None of the above
14. Who among the following has the responsibility for employee welfare?
a) Employers b) Central government
c) State government d) All of the above
15. In the absence of statutory requirements, the employers may not provide even the basic
facilities to the employees. This is the basic assumption of the .
a) Religious theory b) Policing theory
c) Appeasement theory d) Benevolence theory
16. Which of the following benefits is covered under social security schemes?
a) Retirement benefit b) Compensation facilities
c) Medical facilities d) All of the above
17. The particulars or the accident should be entered in separate registers kept as- Accident
Book- Form No of ESIoffice: a) Form No.12 b) Form No.14 c) Form No.15 d) Form No.18
18. The primary purpose of employee safety programme is to preserve the employees' ____
a) Mental health b) Physical health c) Emotional health d) All of the above
19. The visual presentation of the ranking of work sites in a factory based on the number
of accidents reported from each site is called
a) Accident Frequency Method b) Spot Map Method
c) Incidence Rate d) Severity Rate
20. Which of the following involves redesigning material for the safe performance of the jobs?
a) Safety engineering b) Safety campaigns
c) Safety committee of equipment, machinery and d) Safety training
Answer for part A (Unit II)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A B C A B B A A C B C B A D B D C D B A
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SECTION- B 5 Marks
1. Who is Workman under Workmen’s compensation Act, 1923?
2. What are the scope and coverage ofworkmen’s compensation Act, 1923?
3. Define the term Commissioner, dependent, employer.
4. How has concept of partial and total disablement been tackled by workmen’s
compensation Act, 1923.
5. List out the injuries deemed to result in permanent total disablement.
6. List out the injuries deemed to result in permanent partial disablement.
7. How an employer can wriggle out of his liability to pay compensation?
8. What is scope of arising out of and in the course of employment?
9.Write a note on workmen and Wages.
10. State the methods of calculating monthly wages under the workmen’s compensation
Act, 1923.
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SECTION- C 8 Marks
1. Discuss the rules regarding workmen’s compensation.
2. Explain the list of occupational diseases.
3. Discuss the rules regarding the notice of accident and its proper manner.
4. Describe the provisions of workmen’s compensation Act 1923 relating to (a) review
(b) Distribution of compensation.
5. Discuss the defences available to an employer to an employer against a claim for
compensation made by a workmen under the workmen’s compensation Act1923.
6. Discuss the rules regarding to the distribution of compensation.
7. Discuss the compensation for death, partial and permanent disablement.
8. Explain the employers liability for compensation to a workmen injured by an accident arising
out of and in the course of his employment.
9. Describe the employer liability for compensation under section 3 of the workmen’s compensation
Act1923.
10. Under what circumstances is the order of the commissioner under the workmen’s compensation
Act 1923 appealable?
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Unit III
SECTION – A 1 Mark
1. On which date was the bonus act implemented by the government?
a. 2nd September, 1980 b. 2nd September, 1965
c. 1st September, 1965 d. 3rd September, 1965
2. Which section in the act deals with the computation of available surplus?
a. Section 3 b. Section 3A c. Section 5 d. Section 1
3. Complete the formula used for calculating bonus for basic salary which is more than 3500.
Bonus = _______ * (Bonus Months)* 20%
a. Basic salary b. Ex-gratia c. 3500 d. 8400
4. As per the act what is the minimum number of days an employee must have worked in an
establishment to be eligible for bonus?
a. 240 working days b. 30 working days
c. 120 working days d. 365 working days
5. What is the minimum amount of bonus paid to an employee?
a. 8.33% b. 8.5% c. 8% d. 8.3%
6. The maximum amount of bonus to be paid in an accounting year as per section 10 of this act is
a. 8.33% b. 10% c. 20% d. 15%
7. Which section deals with the computation of number of working days?
a. Section 10 b. Section 11 c. Section 13 d. Section 14
8. What is the mode of paying bonus to the employees as specified in the act?
a. Cash b. Cheque c. Account transfer d. In kind
9. The payment of bonus shall be made within ______ from the date on which the award becomes
enforceable or the settlement comes into operation where there is dispute regarding payment of bonus.
a. 15 days b. On the day of settlement c. 1 month d. None of the above
10. The payment of bonus should be made within a period of _____ months from the close of the
accounting year.
a. 2 months b. 6 months c. 8 months d. None of the above
11. The ceiling on wage for calculation of Bonus under the Payment of Bonus Act 1965 is
(a) Rs. 2,500 (b) Rs. 3,500 (c) Rs. 4,500 (d) Rs. 6,500
12. Under the payment of Bonus Act, 1965, the gross profits derived by an employer from an
establishment in respect of any accounting year shall be computed
(a) In case of Banking Company according to schedule II and in any other case schedule I.
(b) In case of Banking Company according to schedule I and in any other case schedule II
(c) In case of Banking Company and in any other case schedule I.
(d) In case of Banking Company and in any other case schedule II.
13. The Payment of Bonus Act, 1965 is applicable to an employee who draws wage or salary of
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(a) Rs. 3500 in case of apprentice
(b) Rs. 5000 in case of apprentice and employee
(c) Rs. 7500 in case of employee only
(d) Rs. 10,000 in case of employee only
14. Payment of Bonus Act 1965 is applicable to every factory and to every other establishment where
_____workmen are employed on any day during an accounting year
(a) 20 or more (b) 10 or more (c) 50 or more (d) 30 or more
15. Every employee receiving salary or wages upto RS. 3,500 p.m. and engaged in any kind of work
whether skilled, unskilled, managerial, supervisory etc. is entitled to bonus for every accounting year
if he has worked for at least ---------- days in that year.
(a) 15 working days (b) 30 working days
(c) 60 working days (d) 90 working days
16. The minimum bonus which an employer is required to pay even if he suffers losses during the
accounting year or there is no allocable surplus is --------- % of the salary or wages during the
accounting year
(a) 10% (b) 20% (c) 8.33 % (d) 6.33%
17. If in an accounting year, the allocable surplus calculated after taking into account the amount ‘set
on’ or the amount ‘set of’ exceeds the minimum bonus, the employer should pay bonus in proportion
to the salary or wages earned by the employee in that accounting year subject to a maximum of -------
% of such salary or wages.
(a) 25% (b) 30% (c) 10% (d) 20%
18. The bonus should be paid in cash within _____months from the close of the accounting year
(a) 8 months (b) 6 months (c) 12 months (d) 3 months
19. The employer has to submit an annul return of bonus paid to employees during the year, in Form
D, to the Inspector, within _____of the expiry of the time limit specified for payment of bonus.
(a) 10 days (b) 20 days (c) 30 days (d) 60 days
20. The contravention of the provisions of the Act or rules may attracts the punishment of
(a) imprisonment upto 3 months, or fine up to Rs.500, or both
(b) imprisonment upto 2 months, or fine up to Rs.1000, or both
(c) imprisonment upto 6 months, or fine up to Rs.10000, or both
(d) imprisonment upto 6 months, or fine up to Rs.1000, or both
Answer for part A (Unit III)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B C A B A C D A C C B B D A B C D A C D
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SECTION- B 5 Marks
1.Define the term (a) Allocable surplus (b) Available surplus.
2. What are the conditions for the eligibility of bonus?
3. When an employee is disqualified from receiving bonus?
4. Write a detailed note on the bonus formula given in the payment of bonus Act 1965.
5. How gross profit is calculated in case of company for the purpose of bonus?
6. How is available surplus determined under the payment of bonus Act?
7. Define the term bonus. What is the quantum of maximum bonus?
8. How can bonus be recovered by the employee?
9. Write a note on salary, employer and employee.
10. What are the applications of the payment of bonus Act.
SECTION- C 8 Marks
1. Explain the objectives of payment of bonus Act.
2. Discuss the rules for determination and distribution of bonus?
3. Discuss the special provisions of the payment of bonus Act 1965 in respect of new
establishment.
4.Illustrate the rule of set on and set off of allocable surplus.
5. Discuss the payment of bonus act not apply to certain categories of employee.
6. Discuss the computation of gross profit in case of banking company.
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7. Discuss the computation of gross profit in case of non- banking establishments.
8. Explain the eligibility and disqualification for receiving bonus and determination of bonus.
9. Discuss the powers of inspectors under the payment of bonus act.
10. Describe the penalties and offences under the payment of bonus act.
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Unit – IV
SECTION – A 1 Mark
1. Employees Provident Fund and Miscellaneous Provisions Act. 1952 is applied to
establishments employing not less than
a) 10 employees b) 20 employees c) 50 employees d) 100 employees
2. An employee whose salary at the time of joining does not exceed ______shall become a
member of the provident fund under the Act.
a) Rs 10,000 b) Rs 7500 c) Rs 6500 d) Rs 5000
3. Employee share of provident fund contribution is
a) 12 % b) 8.33% c) 1.75% d) 4.75%
4. Employer's share of contribution to the provident fund is
a) 8.33% b) 12% c) 3.67% d) 4.75%
5. Employer's contribution to Employees' Deposit linked Insurance is
a) 3.67 % b) 1.1 % c) 0.5 % d) 0.05
6. Layoff compensation is to be paid @ ______of average wages.
a) 15 days b) 50% c) 60% d) 75 %
7. Employees Provident Fund and Miscellaneous Provisions Act, 1952 is applied to
establishments employing not less than ____
a) 10 employees b) 20 employees c) 50 employees d) 100 employees
8. Under the PF Act, 1952 "Insurance Fund" means .
a) Unit Linked Insurance Plan b) Deposit Linked Insurance Fund
c) Employees' Group Accident Insurance d) Medical Insurance Fund
9. The scheme defined under section 2(i-b) of the PF Act, 1952 is______
a) Pension Scheme b) Provident Fund Scheme
c) Family Pension Scheme d) Insurance Scheme
10. The section 2(i-a) of PF Act, 1952 defines .
a) Member b) Insurance c) Insurance Fund d) None of these
11. The Insurance Scheme is framed under sub-section (1) of the Section __of the PF Act, 1952.
a) 8-A b) 7-B c) 6-C d) 5-D
12. The term "Member" is defined in the section ______of the PF Act, 1952.
a) 2(j) b) 2(u) c) 2(m) d) 2(p)
13. Section 2(k-A) of the PF Act, 1952 defines .
a) Occupier of the factory b) Pension Fund
c) Establishment d) Pension Scheme
14. The Employees' Pension Fund is established under sub-section (2) of the section .
a) 8-A b) 7-A c) 6-A d) 5-A
15. Section 2(kb) of the PF Act, 1952 defines .
a) Recovery Amount b) Recovery Office
c) Recover Officer d) Repayment Amount
16. Section 2(11) of the PF Act, 1952 defines .
a) Superannuation b) Annual Salary c) Scheme Policies d) Recovery
17. The Employees' Provident Funds Appellate Tribunal which is constituted under sec 7-D is defined
under which section?
a) 2(j) b) 2(k) c) 2(1) d) 2(m)
18. In which year was the Employees' State Insurance Act enacted?
a) 1948 b) 1976 c) 1923 d) 1961
19. The employer's share of contribution under the ESI Act is
a) 12%s b) 8.33% c) 1.75% d) 4.75 %
20. The employee's share of contribution under the ESI Act is
a) 12% b) 8.33% c) 1.75 % d) 4.75%
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Answer for part A (Unit IV)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B C A C C B B B D C C A B C C A D A D C
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SECTION- B 5 Marks
1. What are the application of the employees’ provident funds and miscellaneous provisions
Act 1952?
2. Define the terms in the employees’ provident funds and miscellaneous provisions
Act 1952: (a) Employer (b) Employee (c) Basic wages
3. Write a short note on establishment of provident fund.
4. What are the statutory rate of contribution both employer and employee for provident funds
scheme?
5. State the meaning of employees’ pension fund scheme.
6. What are the purposes of establishment of employees’ pension fund scheme?
7. What do you mean by employees’ deposit linked insurance scheme 1976?
8. What are the functions of the central board?
9. Who are members of the executive committee of central board?
10. What are penalties provided for various offences committed under the employees’ provident
funds and miscellaneous provisions Act 1952?
SECTION- C 8 Marks
1. Discuss the provisions of the employees’ provident funds and miscellaneous provisions Act
1952.
2. Explain the provisions of the employees’ pension fund scheme and it’s establishment.
3. Describe the provisions of the employees’ deposit linked insurance scheme and it’s
establishment.
4. Discuss the provisions of the administrations of the schemes.
5. List out the powers of inspectors under the employees’ provident funds, employees’ pension
fund scheme and employees’ deposit linked insurance scheme.
6. Explain the procedure for determining and recovery of moneys due from employers under the
employees’ provident funds and miscellaneous provisions Act 1952.
7. Discuss the penalties provided for various offences committed under the employees’ provident
funds and miscellaneous provisions Act 1952.
8. Describe the power of exemption from the operation of provision of any scheme under the
employees’ provident funds and miscellaneous provisions Act 1952.
9. Explain the priority of payment of contributions over other debts.
10. Discuss the special provisions relating to existing provident funds.
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Unit V
SECTION – A 1 Mark
1. Under the Payment of Gratuity Act, 1972 the maximum gratuity payable is
(a) Rs. 10 lakhs (b) Rs. 8 lakhs (c) Rs. 5 lakhs (d) Rs. 3.5 lakhs
2. What is the qualifying service to claim gratuity?
(a) 15 years (b) 10 years (c) 5 years (d) No such prescription
3. The eligibility condition for obtaining gratuity under the Payment of Gratuity Act, 1972 is
(a) Completion of 2 years of Service (b) Completion of 3 years of Service
(c) Completion of 4 years of Service (d) Completion of 5 years of Service
4. The maximum amount of gratuity has now been enhanced to Rs. 10 lakhs from
(a) 2.5 lakhs (b) 3.5 lakhs (c) 5 lakhs (d) 7.5 lakhs
5. Payment of Gratuity Act, 1972 is applicable to every shop or establishment within the meaning of
any law for the time being in force in relation to shops and establishment in a State, in which ---------
persons are or were employed on any day in the preceding 12 months.
(a) 10 or more persons (b) 10 (c) 10 or more persons (d) 20
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6.For every completed year of service or part thereof in excess of six months, the employer shall pay
gratuity to an employee at the rate of -------- days’ wages based on the rate of wages last drawn by the
employee concerned.
(a) 25 days (b) 15 days (c) 30 days (d) 7 days
7. In the case of a monthly rated employee, the fifteen days’ wages shall be calculated by dividing the
monthly rate of wages last drawn by him by ----------- and multiplying the quotient by fifteen.
(a) 30 (b) 15 (c) 26 (d) 25
8.In the case of an employee who is employed in a seasonal establishment and who is not so employed
throughout the year, the employer shall pay the gratuity at the rate of --------days’ wages for each
season.
(a) 14 days (b) 15 days (c) 10 days (d) 7 days
9. The employer shall arrange to pay the amount of gratuity within --------- days from the date it
becomes payable.
(a) 30 days (b) 15 days (c) 60 days (d) 75 days
10. Appeal on the decision of controlling authority should be preferred within _____days from the
date of the order
(a) 30 days (b) 60 days (c) 15 days (d) 75 days
11. The formula for calculating gratuity is
(a) Gratuity = (Monthly Salary/25) X 15 X No. of years of service
(b) Gratuity = (Monthly Salary/30) X 15 X No. of years of service
(c) Gratuity = (Monthly Salary/26) X 15 X No. of years of service
(d) Gratuity = (Monthly Salary/15) X 15 X No. of years of service
12.For avoiding any payment knowingly makes any false statement or representation shall be
punishable with
(a) imprisonment upto 3 months or fine upto Rs. 10,000/- or both
(b) imprisonment upto 6 months or fine upto Rs. 10,000/- or both
(c) imprisonment upto 3 months or fine upto Rs. 20,000/- or both
(d) imprisonment upto 6 months or fine upto Rs. 20,000/- or both
13. Failure to comply with any provision of the Act or Rules shall be punishable with
(a) imprisonment upto 1 year or with fine extend upto Rs. 10,000/- or with both
(b) imprisonment upto 1 year or with fine extend upto Rs. 20,000/- or with both
(c) imprisonment upto 2 year or with fine extend upto Rs. 20,000/- or with both
(d) imprisonment upto 2 year or with fine extend upto Rs. 50,000/- or with both
14. Which section deals with the determination of the amount of gratuity
(a) Section 10 (b) Section 8 (c) Section 7 (d) Section 9
15. As per Payment of Gratuity Act 1972 how much time it takes for an employee who wants
to acquire a family nomination who has no family at the time of making nomination?
(a) 15 days (b) 30 days (c) 60 days (d) 90 days
16. What, as per Payment of Gratuity Act, 1972 is the maximum imprisonment term for the
purpose of avoiding any payment?.
(a) 1 year (b) 2 years (c) 3 years (d) 5 years
17. __________ it takes for gratuity became payable to an employee who had applied as per
Payment of Gratuity Act 1972
(a) 15 days (b) days (c) 60days (d) 90 days
18. Payment of Gratuity Act was introduced in the year _______________.
(a) 1923 (b) 1961 (c) 1972 (d) 1976
19. What is the duration within which the receipt of nomination in Form ‘F’ under sub-rule (1),
the employer shall get the service particulars of the employee, as mentioned in the form of
nomination, verified with reference to the records of the establishment and return to the
employee, as per the Payment of Gratuity Act, 1972 ?
(a) 7 days (b) 10 days (c) 15 days (d) 30 days
20.Service needed to qualify for Employee Pension Scheme is
(a) 10 years (b) 8 years (c) 7 years (d) 5 years
Answer for part A (Unit V)
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A C D B A B C D A B C A B C D B B C D A
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SECTION- B 5 Marks
1. Define the following terms as used in the payment of gratuity Act 1972:
(a) Appropriate government (b) Continuous service (c) Superannuation
2. Define the following terms as used in the payment of gratuity Act 1972:
(a) Employee (b) Employer (c) Family (d) Wages
3. What are the rules relating to nomination by an employee under the payment of gratuity Act
1972?
4. What is the rate of gratuity payable to an employee under the payment of gratuity
Act 1972?
5. When does an employee forfeit his right to gratuity?
6. Write a note on “compulsory insurance of employer for payment of gratuity”.
7. What are the rules as to determination of gratuity under the payment of gratuity
Act 1972?
8. What are rules relating to application of gratuity?
9. Who is controlling authority under the payment of gratuity Act 1972?
10. What are the powers of controlling authority under the payment of gratuity
Act 1972?
SECTION- C 8 Marks
1. Discuss the scope of coverage of the payment of gratuity Act 1972.
2. Explain the provisions of payment of gratuity Act 1972.
3. Discuss the circumstances in which gratuity becomes payable to an employee under the
payment of gratuity Act 1972.
4. Describe the compulsory insurance and protection of gratuity.
5. Discuss the rules relating to nomination by an employee under the payment of gratuity
Act 1972.
6. Explain the rules as to determination and recovery of the amount of gratuity under the
payment of gratuity Act 1972.
7. List out the powers of inspectors under the payment of gratuity Act 1972.
8. Discuss the penalties provided for various offences committed under the payment of gratuity
Act 1972.
9. Explain the payment and forfeiture of gratuity and exemption of gratuity.
10. Describe the provisions of compulsory insurance and protection of gratuity.
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KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
Class: II B.COM PA Semester –IV
Sub. Name: CUSTOMER RELATIONSHIP
MANAGEMENT
Sub. Code: 18UPA4S2
Prepared By: Mrs.P.Geetha
UNIT-1
SECTION - A
1. CRM stands for
a) Consumer Relating Market b) Customer Relation Market c) Consumer Related Market
d) Customer Relationship Management.
2. In CRM, an enterprise built a customer
a) Relation b) Information c) Database d) All the above
3. CRM aims at providing better customer service and the customer
a) Help b) Retain c) avoid d) find
4. Barter system means
a) Exchange of money b) Exchange of commodities c) None of the above d) Both a) and b)
5. CRM was first coined in the year
a) 1980 b) 1990 c)1970 d) 1965
6. CRM concept has been introduced to serve the customer by using
a) Discount b) low price c) Promotion d) latest technology
7. Find the corner stone of CRM
a) Marketing b) Sales c) Service d) All the above
8. A good CRM strategy needs to balance effectiveness and
a) Customer b) Efficiency c) Profit d) None of the above
9. While efficiency helps us to stay in the game, game refers to
a) Production b) Marketing c) Business d) Technology
10. Who need to know about current service, back orders, unpaid bills?
a) Customer b) Owner c) Sales representatives d) Supplier
11. Which automation helps an organization to automate the sales?
a) Sales automation b) service automation c) Marketing automation d) All the above
12. Which enables the business to decide the effective channels?
a) Sales automation b) service automation c) Marketing automation d) None of the above
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13. Which enables the business to retain the customer by providing best quality of service?
a) Sales automation b) service automation c) Marketing automation d) All the above
14. Which type of CRM helps top management?
a) Operational CRM b) Analytical CRM c) Collaborative CRM d) All the above
15. Gather the customer information coming from different channels is the feature of
a) Operational CRM b) Analytical CRM c) Collaborative CRM d) All the above
16. Which enables the organization to share the customer information among business units like
sales team, marketing team, technical and support team
a) Operational CRM b) Analytical CRM c) Collaborative CRM d) All the above
17. Collecting feedback from the customer is an example of
a) Operational CRM b) Analytical CRM c) Collaborative CRM d) All the above
18. Which combine the elements of operational & analytical CRM
a) Sales intelligence b) Campaign management c) None of the above d) Both a) and b)
19. The first step in customer life cycle is
a) Attracting new customer b) servicing the customer c) Retain the customer d) All the above
20. Final step in customer life cycle is
a) Attracting new customer b) servicing the customer c) Retain the customer d) All the above
Key answers:
1. a 2. d 3. b 4. d 5. b 6. d 7. d 8. b 9. c 10. c
11. a 12. b 13. b 14. b 15. b 16. c 17. c 18. b 19. b 20. c
SECTION - B
1. Define CRM.
2. Why CRM is implemented in business strategy?
3. List out the benefits of CRM.
4. Write a short note on balancing front line efficiency and effectiveness.
5. What are all the corner stone of CRM?
6. Write about sales automation.
7. What are all the features of analytical CRM?
8. Write a short note on campaign management
9. What are all the steps in customer lifecycle?
10. Write a short note on collaborative CRM.
SECTION - C
1.State the importance of CRM in business.
2.Explain the growth of CRM.
3.State the various types of CRM.
4.Describe the objectives and benefits of CRM.
5.Explain the concept of analytical CRM.
6.Explain the concept of managing customer experience across touch points.
7.Highlight the concept of operational CRM.
8.Explain CRM strategy.
9.Describe the strategic frame work of CRM.
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10. Explain the concept of sales intelligence CRM.
UNIT-2
SECTION - A
1. The electronic CRM encompasses all the CRM function with the use of ___
a. Intranet b. Internet c. Extranet d. All the above
2. The CRM which includes the minimum necessary services such as website effectiveness and
responsiveness as were as order fulfillment is known as__
a. Foundational services b. Value added services c. Customer centered services d. Supporting
and technological services
3. The company should follow __ steps to implement a mobile CRM system
a. Two b. Four c. Three d. Six
4. E-CRM stands for__
a. Electronic customer relationship management
b. Electronic company relationship management
c. Electronic customer relief management
d. Easy customer relationship management
5. __ adopted by business firms in recent years includes the formulation of methodologies and
tools that help business to manage customer relationship in an organized way.
a. M-CRM b. e-CRM c. ROI d.CRM strategy
6. __ relates all forms of managing customer relationship with the use of information technology.
a. CRM b. e-CRM c. Sales coverage d. pricing optimization
7. The CRM system is something that allows us to ___ manage and use customer relationship
data to improve business.
a. Develop b. Control c. Acquire d. Store
8. Levels of e-CRM are of ___ types
a. Four b. Three c. Two d. Five
9. ___ is the subset of electronic CRM
a. CRM b. Internet c. M-CRM d. Extranet
10. The extra services such as online auction and outline training and education is known as
a. Foundational services b. Value added services c. customer centered services d. None of the
above
11. In CRM contact with customer through___
a. Department store b. Retail store c. Both(a)and(b) d. None of these
12. To ensure that the use and stake holders are approved of new system in__
a. Roll out phase b. Need analysis phase c. Mobile design phase d. Mobile application testing
phase
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13. The mobile channel creates a __ connection with the customers
a. Indirect b. Direct c. Both(A)and(B) d. None of the above
14. Mobile CRM supports loyalty between__ and__
a. Wholesalers & company b. Customer & company c. Retailers & company d. Manufacturer
& company
15. In M-CRM, there is difficulty in measuring and meaning and valuing__ benefits
a. Tangible b. Specific c. Intangible d. Automated
16. System overhead is also known as __
a. Client computers b. Computers c. None of above d. Medium computers
17. The services like order tracing product configuration and customization as well as security is
known as___
a. Customer centered services b. Foundational services c. Value added services d. None of
these
18. In need analysis phase mobile CRM system must be able to grow and change with the__
a. Business b. Company c. Society d. Both(a)and(b)
19. This is the next critical phase that will show all the technical concerned that need to be
addressed__
a. Need analysis phase b. Mobile design phase c. Roll out phase d. Mobile application testing
phase
20. There is a lack of active senior management sponsorship in __
a. CRM b. e-CRM c. M-CRM d. ROI
Answer Keys
1 2 3 4 5 6 7 8 9 10
D A B A A B D B C B
11 12 13 14 15 16 17 18 19 20
B D B B C A A A B C
SECTION – B
1. Write short notes on e-CRM
2. What are the different levels of e-CRM
3. Write sort notes on M-CRM
4. Give a short notes on need to adopt e-CRM
5. What are the advantages of M-CRM
6. What are the failures of M-CRM
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7. State any five difference between e-CRM and CRM
8. What do you mean by need analysis phase
9. Write a short notes on foundational services
10. Give the definition of M-CRM and with any two steps in implementing it
SECTION-C
1. Define e-CRM and write define the difference between CRM and e-CRM
2. Elaborate the advantage of mobile CRM
3. Define mobile CRM and explain the steps to implement a mobile CRM system
4. Describe the e-CRM tools
5. What are the factors to be considered for successful implementation of e-CRM
6. Elaborate the disadvantages of mobile CRM
7. Define e-CRM and Elaborate different levels of e-CRM
8. M-CRM plays an important role in current situation. Justify the statement
9. Define e-CRM and write down the CRM functions with the use of net environment
10. Elaborate about e-CRM and M-CRM and also state the difference between e-CRM and
M-CRM.
UNIT-3
SECTION - A
1. __ is important from success point of view of a business
a. Planning b. Controlling c. Organizing d. Staffing
2. Number of steps in CRM planning __
a. 8 b.5 c.6 d.4
3. The first step in implementing a successful CRM project is to conduct an __
a. Internal analysis b. external analysis c. moderate analysis d. step analysis
4. Successful solutions begins with __
a. Analysis b. control c. maintenance d. directing
5. __ analysis will result in clear direction for the project and the foundation for measuring the
project success
a. Project goals b. current state analysis c. desired analysis d. product deliverables
6. Examples of desired state analysis__
a. Higher margin per sale b. Increased customer satisfaction c. Stronger relationship with
partner d. all the above
7. __ reduce the time to spread the information to the sales team.
a. Desired goals b. project goals c. maintenance goal d. product deliverables
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8. Elimination of duplicate data entry can be reduced by __
a. Maintenance b. control c. project goals d. directing
9. Which method helps to track customer reference__
a. Project goals b. project deliverables c. project selection d. project intermediate
10. __ automatically notify other team members regarding plan and events
a. Maintenance b. specification c. product deliverables d. staffing
11. Maintenance of online encyclopedia of all marketing and sales material is a step of__
a. Product deliverables b. project goals c. staffing d. selection
12. Number of steps in selection process of CRM solution__
a. 13 b. 19 c. 20 d. 12
13. There are over __ number of front office automation solutions on the market
a. 300 b.500 c.400 d. 700
14. The success depend on selecting the best __and __
a. Partner and solution b. solution and weakness c. strength and weakness d. partner and
strength
15. Result of __ phase of the analysis , the areas where the revenue gap can be narrowed will be
obvious
a. Project b. project deliverables c. Desired d. stated
16. __ will become your projects critical success factors
a. Solution b. staffing c. project objectives d. maintenance
17. ROI stands for
a. Rate Of Investment B. Rate Of Indication c. Rate Of Implementation
d. Return on Investment
18. Increased revenue and decreased costs are the obvious __ indicators
a. ROL b. ROI c. RBI d. RSI
19. __ can be implemented in less time than it takes to develop and implement a proprietary or
homegrown system
a. customized solutions b. derived solutions c. simultaneous solution d. basic solution
20. The best way to assure that your implementation experience will be positive and professional is
to check __
a. Client data b. sales c. demand d. client references
Answer Keys
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A D A A C D B B B C A D C A C C D B A d
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SECTION - B
1. Write short notes on current state analysis
2. What is desired state analysis
3. List out the project goals
4. Write short notes on product deliverables
5. Define ROI. Write its features
6. Categorize the steps involved in selection process.
7. Define proprietary system. Why it is needed?
8. Write short notes on steps in planning CRM project
9. What is documentation?
10. Write short notes on CRM experience
SECTION - C
1. Explain the general business goals & objectives
2. Describe the selection process of CRM solution
3. Explain the estimation of ROI
4. Write short notes on a. current state analysis b. desired state analysis
5. Write short notes on a. project goals b. product deliverables
6. Describe any five process of selection process of CRM solution
7. Explain in detail on a. proprietary systems b. packaged solutions
8. Write short notes on a. client reference b. training
9. Illustrate the importance of specialized resources and need for proper training.
10. Elucidate CRM experience and documented methodology
UNIT-4
1. There are _____ steps involved in CRM implementation.
a) 8
b) 5
c) 7
d) 9
2. Which one is the first step involved in CRM implementation?
a) Beta test and Data import
b) Development of customisation
c) Commencement of meeting
d) Rollout and system hand off
3. Gathering the requirement of CRM implementation should take about days_____.
a) 3 to 4 days
b) 5 to 6 days
c) 8 days
d) 10 to 11 days
4. The first phase CRM project is _____.
a) Marketing module customisation
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b) Sales module customisation
c) Service and support module customisation
d) Report integration
5. The term length of customisation takes _____ weeks.
a) 6 to 10 weeks
b) 10 to 15 weeks
c) 1 to 5 weeks
d) 3 to 4 weeks
6. Training has _____ types.
a) 5
b) 6
c) 7
d) 8
7. In _____ development intiative exploits the existing under structivecreate benefits quickly.
a) Short term
b) Long term
c) Quick
d) Slow
8. _____ helps to create a smooth customer experience and customer interaction channels.
a) Customer strategy
b) Customisation
c) Integration
d) Motivation
9. A useful framework will composes with _____.
a) Creating synchronous customer
b) Customer interaction management
c) Channel integration
d) Customer strategy
10. Formulation of term includes vendor side team and _____.
a) Seller side team
b) Customer side team
c) Management team
d) Administration team
11. _____ focuses on achieving specific customer goals.
a) Customer insight
b) Customer plan
c) CRM implementation
d) Customer strategy
12. Critical elements are tried out in the filed prior to the commitment in _____ approach.
a) Piloting approach
b) Performance approach
c) Motivational approach
d) Customer approach
13.______ is not asset of software or hardware implementation coupled with touch feels change
management.
A) CRM B) E-CRM C) S-CRM D) M-CRM
14.______ is the easy interaction between customers and company , enhancing quick response to
customers request and suggestions.
A) CRM solution B) CRM implementation C) customer strategy D) customer framework.
15.______ is the activities that roll out existing best practices a cross the business.
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A) Quick wins B) short term development C) Long term Development D) Piloting Approach.
16.______ Development should be evolutionary and multi-tiered.
A) CRM B) e-CRM C) M-CRM D) Short term development.
17._______ Supply of customer information which have been accumulated and integrated from
different channels.
A) Abundant B) interactions C) Implementation D) strategy
18.Each CRM project should Focus on _____ at least one defined requirements.
A) Implementation B) selection C) Framework D) Solution
19.____ point solutions that delivers finite functionally one well run project might be enough.
A) CRM B) e-CRM C) s-CRM D) M-CRM
20.______initiatives that can exploit the existing infrastructure to create benefits quickly.
A) Piloting Approach B) secure leadership C) customer insight D) short term development
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A C A B A C A C A B D A A B A A A A A D
5 MARKS:
1) What are the key drivers for implement of CRM?
2) Specify the warnings to implement CRM.
3) What are the benefits of CRM solutions?
4) What is the CRM implementation?
5) What is the framework of successful CRM?
6) What are the five phases of CRM project?
7) Write a short note on typical elements of strategy?
8) What is the improve your measurement of the customers?
9) Write a short note on Prepare a sound, verifiable business case?
10) What is the customer interaction management and channel integration of CRM?
8 MARKS:
1) Discuss the requisites for implementing CRM?
2) What types of customer support problems you face and how quickly they can be resolved?
3) Explain the way to choose Right CRM solutions?
4) Write the functions of CRM Implementation steps?
5) List out the principles that help to guide the company through the network?
6) Explain the framework of successful CRM and its important principles?
7) How can improve CRM management?
8) What are the modules can be included in CRM?
9) How long does it take to implementation CRM solutions?
10) How do you make sure you get a healthy return on your investment in CRM?
UNIT-5
1. _____ is all about building long term business relationship with customers.
a) Customer relationship management
b) Customer relational marketing
c) Customer relational management
d) Customer relational marketing
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2. _____ is one of the key consideration to ensure the scientific change in the implementation of
CRM.
a) Adopt customer antric
b) Customer in sight
c) Develop a short term strategic vision
d) Customer strategy
3. CRM vendor should be _____ stable.
a) Financially
b) Physically
c) Mentally
d) Conceptually
4. Developing long term strategic vision is one of the process in ___.
a) CRM Product
b) CRM Challenges
c) CRM Implementation
d) CRM Project
5. CRM challenges provides _____ analysis.
a) Random
b) Convenient
c) Continuous
d) Condition
6. Customer relationship management is about building collaborative relationship with _____.
a) customer
b) Vendor
c) Wholesaler
d) Seller
7. Any CRM project that take more than _____ days to implement, runs the risk of failure.
a) 80 days
b) 70 days
c) 60 days
d) 90 days
8. Total cost of ownership over _____ years must include the whole CRM strategy.
a) 4
b) 3
c) 2
d) 5
9. Acquiring better knowledge of customer and their buying habits is the process in _____.
a) CRM
b) CRP
c) ROI
d) CRS
10. The ultimate goal of _____ is to meet and exceed customer expectation.
a) ROI
b) Customer relational management
c) Customer relationship management
d) Customer relationship marketing
11. The proliferation of TV and internet have _____.
a) Increased
b) Decreased
c) Constant
d) Fluctuate
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12. Customer _____ and profitability rise and time to market would come down.
a) Honesty
b) Loyalty
c) Trustworthy
d) Faithfulness
13. The ‘Brand’ concept is _____ powerful.
a) More
b) Less
c) Above
d) Between
14. Major challenge is the slow adoption ______ in developing CRM capability.
a) Planning
b) progress
c) Process
d) Performance
15. CRM is a well-defined series of _____.
a) Function
b) Profit
c) Service
d) Marketing
16. Develop a _____ strategic vision.
a) Short team
b) Intermediate
c) Long team
d) Operational
17. Create _____ for gathering customer data
a) Programmes
b) Plan
c) Principles
d) Policies
18. CRM vendor only provides _____ % of the total CRM solution.
a) 40%
b) 20%
c) 50%
d) 100%
19. CRM project takes more than _____ days to implement run the risk of farther.
a) 30 days
b) 60 days
c) 90 days
d) 120 days
20. CRM needs are inherently fluid and will change as organisation ____.
a) Enlarge
b) Evolve
c) Efficient
d) effective
1 2 3 4 5 6 7 8 9 10
A A A B C A D D A C
11 12 13 14 15 16 17 18 19 20
A B B C A C D B C B
5 MARKS:
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1. How long does it takes to implement CRM solution?
2. What are the advantages of using CRM on mobile devices?
3. Can CRM be integrated with social media services?
4. Explain the opportunities and challenges in CRM?
5. What are all the pitfalls of CRM?
6. Explain the opportunities, challenges, and pitfalls of the CRM?
7.Write short notes on CRM opportunities?
8.State the limitations of CRM.
9.What you mean by Technology focus?
10.Write a notes on
• Quick win
• Short term development
• Long term development
8 MARKS:
1) Explain the key challenges in CRM Implementation?
2) Discuss the focus of technology in CRM?
3) Describe the challenges of CRM?
4) Elaborate the ways to avoid CRM pitfalls.
5) What are the biggest opportunities & challenges in Digital marketing?
6) What are the challenges to implement CRM for business?
7) What are the Challenges that company might face when trying to Implement CRM?
8) Write short notes on challenges?
9)What are the biggest challenges with your CRM?
10)What are the biggest opportunities in marketing analytics?
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III B.COM PA
KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
Class: III BCOM PA Semester- V
Sub. Name: Corporate Accounting Sub. Code: 18UPA513
Prepared By: Dr.S.RAJAM
UNIT=I
SRECTION-A
1. ……………… is an artificial person created by law
a. Firm b. Sole trader c. Company d . None of these
2. The liability of shareholders of a company is ………………..
a. Limited b. Unlimited c. Uncertain d. None of these
3. A company is managed by its…………….
a. Partners b . Auditor c. Board of Directors d. Debenture holder
4. Authorised capital is called as……………
a. Reserve capital b. Nominal Capital c. Capital Reserve d. Subscribed capital
5. …………..is that portion of capital which is called up only on winding up of the company.
a. Authorised Capital b. Issued capital c. Subscribed capital d. Reserve capital
6. As per the companies Act, the interest on calls in advance is …………..
a. 10% b. 6% c. 5% d. 7%
7. The rate of interest on Calls in arrears as per Companies Act is …………
a. 10% b. 6% c. 5% d. 7%
8. The shares of a company can be issued at …………..
a. Par b. Premium c. Discount d. All of these
9. Share application account is a ………..
a. Real Account b. Nominal Account c. Impersonal Account. d. Personal Account
10. The rate of discount on shares cannot exceed ……….
a. 10% b. 5% c. 6% d. 7%
11. Underwriting commission is classified as …………..
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a. Capital Loss b. Capital Expenditure c. Revenue expenditure d. Deferred revenue
expenditure
12. The profit on reissue of forfeited shares is transferred to ………
a. General reserve b. Capital Redemption reserve c. Capital reserve d. Investment
Allowance reserve
13. The shares firstly offered to the existing shareholders are called as ………….
a. Right shares b. Bonus shares c. Ordinary shares d. None of these
14. . The security premium account is shown in the balance sheet under the head……….
a. Share capital b. Reserves & Surplus c. Secured loans d. Current liabilities
15. When shares are issued at a price higher than their face value, it is called issue at…………..
a. Par b. Premium c. Discount d. None of these
16. The forfeited shares can be reissued at …………
a. Par b. Premium c. Discount d. All of these
17. Preference shareholders are…………
a. Debtors of the company b. Creditors of the company c. Owners of the company
d. None of these
18. Preference shares cannot be redeemed at ………..
a. Par b. Premium c. Discount d. All of these
19. Preference shares can be redeemed by………….
a. Fresh issue of shares b. Profit c. partly out of fresh issue and partly out of profit.
d. All of these
20 …………… preference shares can be redeemed
a. Fully paid b. Partly paid c. Both A and B d. None of these
SECTION. B
21. S T L Global Ltd. was formed with a nominal Share Capital of Rs.40,00,000 divided into 4,00,000
shares of 10 each. The Company offers 1,30,000 shares to the public payable Rs. 3 per share on
Application, Rs. 3 per share on Allotment and the balance on First and Final Call. Applications were
received for 1,20,000 shares. All money payable on allotment was duly received, except on 200 shares
held by Y.Pass Journal entries
22. Vaibhav Ltd. issued 1,00,000 shares of L 10 each at per. The whole amount was payable with
application. Pass the necessary journal entries in the books of company.
23. X Ltd. invited application for 10,000 shares of the value of Rs. 10 each. The amount is payable as
Rs. 2 on application and Rs. 5 on allotment and balance on First and Final Call. The whole of the
above issue was applied and cash duly received. Give Journal entries for the above transaction.
24. Ram holding 10 shares of Rs.10 each of which Rs.2 on application Rs.3 on allotment but could not
pay Rs.3 on first call. His shares were forfeited by the Directors. The Final call is not made as yet.
Give Journal entries in the book of company.
25. A Ltd. Forfeited 200 shares of L 10 each fully called up held by X for non payment of allotment
money of Rs. 3 per share and First & Final call of Rs. 4 per share. He paid the application money of
Rs. 3 per share. These shares were reissued to Y for Rs. 8 per shares pass necessary journal entries.
26. A Ltd. Forfeited 100 shares of Rs. 100 each issued at a premium of 50% to be paid at time
allotment on which first call of Rs. 30 per equity share was not received, final call of Rs. 20 is yet to
be made. These shares were reissued at Rs. 70 per share at Rs. 80 paid up. pass necessary journal
entries.
27. X Co. Ltd. had issued 2, 00,000 6% redeemable preference shares of Rs. 100 each. Under the
terms of the issue of shares, redemption was to take place on April 1, 2012. A general reserve of Rs. 1,
25, 00,000 had already been built up out of past profits. For the purpose of the redemption, 75,000 new
5% preference shares of Rs. 100 each were offered to the public at a premium of Rs. 50, payable in
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full on application. The new issue was fully subscribed and paid for. Thereupon 6% redeemable
preference shares were redeemed. Make journal entries to record the above transactions.
28. The balance sheet of Besto Ltd. as on March 31, 2012, disclosed the following information:
Authorised share capital: 5% redeemable preference shares of Rs. 10 each
1, 50,000 : Ordinary shares of Rs. 10 each 5, 00,000
Paid up capital:
5% Redeemable preference shares of Rs. 10 each fully paid 1, 10,000: Ordinary shares of Rs. 10 each
fully paid 3, 00,000: Profit and loss account 2, 00,000. On April 6, 2012 the preference shares were
redeemed at a premium of Rs. 4 per share. The company could not yet trace holders of 1,200
preference shares. On April 8, 2012 a bonus issue of one fully paid ordinary share for every five shares
was made.
Show the journal entries to record these transactions (including cash) and show these accounts as they
would appear in the balance sheet on April 8, 2012.
29. K Ltd issued 1,20,000 preference shares of Rs.10 each. The whole issue was underwritten by
Malan for maximum commission permitted by law. Applications for 1,00,000 shares were received in
all. Determine the net liability of Malan and commission payable to him.
30 B. Ltd issued 1,50, 000 equity shares. The whole of the issue was underwritten as follows.
X – 50% ; Y – 25% ; and Z – 25 %
Application for the 1,20,000 shares were received in all, out of which applications for 30,000
shares had the stamp of X, those for 15,000 shares that of Y and those for 30,000 shares that of Z.
The remaining applications for 45,000 shares did not bear any stamp. Determine the liability of the
underwriters.
SECTION- C
31. AB Ltd. invited applications for issuing 75,000 equity of L100 each a premium of L30 per share.
The amount was payable as follows:
On Application & Allotment – L 85 per share (including premium); On First and Final call the balance
Amount Applications for 1,27,500 shares were received. Applications for 27,500 shares were rejected
and shares were allotted on pro-rata basis to the remaining applicants Excess money received on
application and allotment was adjusted towards sums due on first and final call. The calls were made. A
shareholder, who applied for 1,000 shares, failed to pay the first and final call money. His shares were
forfeited. All the forfeited shares were reissued at L150 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of AB Ltd..
32. Pass necessary journal entries for the following transactions in the Books of Rajan Ltd.
(a) Rajan Ltd. purchased machinery of L 7,20,000 from Kundan Ltd. The payment was made to Kundan
Ltd. by issue of equity shares of L100 each at 20% Premium.
(b) Rajan Ltd. purchased a running business from Vikas Ltd. for a sum of Rs. 2,50,000 payable as
Rs.2,20,000 in fully paid equity shares of L10 each and balance by a bank draft. The assets and liabilities
consisted of the following:
Plant & Machinery Rs. 90,000; Buildings Rs. 90,000; Sundry Debtors Rs. 30,000; Stock Rs 50,000;
Cash Rs.20,000; Sundry Creditors Rs. 20,000
33. Poonam Co. Ltd. offered to public for subscription 1,00,000 14% preference shares of Rs 100 each
at a premium of Rs 10 per share. Payment was to be made as follows.
On application Rs 30; On allotment Rs 40 (including premium); On first and final call Rs 40
Applications were received for all the shares offered and allotment was duly made. All moneys were
duly received except the money on call on 100 shares which were forfeited after the requisite notices
had been served. Later, all the forfeited shares were reissued as fully paid up @ Rs 95 per share.
Journalise all the above mentioned transactions including cash transactions.
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34. A Ltd. invited applications for 1,00,000 shares of Rs 100 each at a discount of 6% payable as follows:
On Application Rs 25;On Allotment Rs 34;On First and Final Call Rs 35.
The applications received were for 99,000 shares and all of these were accepted. All moneys due were
received except the first and final call on 100 shares which were forfeited. 50 shares were re-issued @
Rs 90 as fully paid.
Assuming that all requirements of the law were complied with, pass entries in the Cash Book and Journal
of the company. Also show how these transactions will be reflected in the company’s balance sheet.
35. Zed Ltd. issued 5,00,000 equity shares of Rs 10 each at a discount of 10% payable as to Rs 2.50 per
share along with application, Rs 2.50 per share on allotment and the balance on the first and the final
call to be made six months after allotment. The issue was fully subscribed for. Call on 300 shares was
not received. These shares were forfeited. Half of these shares were reissued as fully paid up @ Rs 8 per
share. Two months later, the remaining forfeited shares were reissued as fully paid up @ Rs 11 per
share. Pass journal entries for the above mentioned transactions.
36. Kitkat Co. Ltd. Issued 50,000 Equity shares of Rs.10 each and 3000, 10% Preference shares of
Rs.100 each, all shares being fully paid. On 31.3.08, Profit and Loss Account showed an undistributed
profit of rs.50,000 and General Reserve Account stood at Rs.1,20,000. On 2.4.08, the directors decided
to issue 1500, 6% Preference shares of Rs.100 each for cash and to redeem the existing preference shares
at Rs.105 utilizing as much as would be required for the purpose. Show the journal entries to record the
transactions.
37. The King Kong Ltd.’s Balance sheet shows the following balance s on 31-3-08. 30,000 equity shares
of Rs.10 each fully paid; 18,000 10% Redeemable Preference shares of Rs.10 each fully paid; 4000,
15% Redeemable Preference shares of Rs.10 each, Rs.8 paid up. General Reserve Rs.12,000; Securities
Premium Rs.15,000; Profit Loss Account Rs.80,000 and capital Reserve Rs.20,000.
Preference shares are redeemed on 1-4.08 at a premium of Rs.2 per share. For redemption, 4000 equity
shares of Rs.10 each are issued at 10% premium. A bonus issue of equity share was made at par, two
shares being issued for every five held on that date. Show the journal entries to record the above
transactions.
38. R. Ltd made a public issue of 80,000 equity shares of Rs.10 each. The entire issue was underwritten
by five underwriters as follows.
A—25% ; B – 15% ; C – 10% : D – 30% and E – 20% Applications bearing the rubber stamp of an underwriter are to be applied in relief of his liability. As a result of the issue, the following applications were received: Bearing rubber stamp of A for 11,000 shares Bearing rubber stamp of B for 8,200 shares Bearing rubber stamp of C for 7,400 shares Bearing rubber stamp of D for 6,600 shares Bearing rubber stamp of E for 6,800 shares Not bearing any stamp 24,000 64, 000 You are required to find out the liability of individual underwriters.
39. C Ltd issued 60,000 6% debentures of Rs. 100 each. 80% of the issue was underwritten by Balu brothers. Applications for 45,000 shares received in all out of which applications for 30,000 were marked. Determine the liability of Balu brothers.
40. TT.Ltd issued 50,000 equity shares of Rs. 10 each at par. The entire issue was underwritten as
follows:
A – 30,000 shares (firm underwriting 4,000);
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B -- 15,000 shares (firm underwriting5000) C – 5,000 shares (firm underwriting 1,000) The total applications including firm underwriting were for 40,000 shares. The marked applications were as follows: A—10,000 shares; B – 7,000 shares; and C --3,000 shares. The underwriting contact provides that credit for unmarked applications be given to the underwriters in proportion to the shares underwritten. Determine the liability of each underwriters and amount of commission payable to them assuming the rate to be 2% on issue price.
Answer:
1.c Company 2.a Limited 3. c Board of Directors 4. b Nominal Capital 5. d Reserve capital 6. b 6%
7.c 5% 8. d. All of these 9.d Personal Account 10. a 10% 11. d. Deferred revenue expenditure 12. c.
Capital reserve 13. a. Right shares 14. b. Reserves & Surplus 15. b. Premium 16 d. All of these .
17.c Owners of the company 18.c Discount 19. d. All of these 20. a Fully paid
UNIT-II SECTION- A
1. Debenture represents ………. Of a company
a. Borrowed capital b. Owned capital c. Hybrid capital d. None of these
2. Debenture holders will get ……..
a. Dividend b. Interest c. Profit d. All of these
3. Debenture holders are the ……….of a company
a. Debtors b. Owners c. Creditors d. Borrowers
4.When debentures are issued as a consideration of purchase of assets …………. Is debited.
a. Debenture Account b. Cash Account c. Assets Account d. Creditor Account
5. Discount or loss on issue of debenture is a ………….
a. Capital Profit b. Revenue Receipt c. Capital Loss d. Revenue Expense
6. Debentures can be redeemed out of ……….
a. Fresh issue b. Capital c. Profit d. All of these
7. Debentures are shown in the balance sheet under the head ………..
a. Secured loans b. Unsecured loans c. Provisions d. Current liabilities
8. . After realizing all the investments, the balance in the sinking fund account is transferred
to…………
a. Profit and Loss A/c b. Debenture Account c.. Sinking fund A/c d. Capital reserve
9.The profit of post incorporation period is called-------------
a. Revenue profit b. capital profit c. Both a & b d. none of the above
1 0.Salesmen’s commission is divided in profit prior to incorporation according to-------
a. Turnover Ratio b. Time Ratio c. Post incorporation d. Pre incorporation
11. Director’s remuneration is calculated on the basis of -----------
a. Turnover Ratio b. Time Ratio c. Post incorporation period. D. Pre incorporation
period
12. If there is a loss prior to incorporation, it will be debited to-----------
a. General Reserve A/c b. Profit and Loss A/c c. Capital Reserve Account d. Goodwill A/C
13. Audit fees in general is to be treated as -----------
A.post incorporation expenses. b. Pre incorporation expenses c. Time ratio d. Sales ratio
14. A private company can start business on the receipt of the --------
a. Certificate of Incorporation. b. goodwill account c. Purchase consideration d. Sales receipt
15. Capital loss should be debited to ---------
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a. Profit & Loss account b. Goodwill Account. c. Reserve account d. Revenue account
16. Which of the following expenses is not distributed based on time.
(a)Rent (b) Salary (c) Stationery expenses (d) None of the above.
17. Interest on purchase price is divided in ---------.
a. Sales ratio b. Turnover ratio c. Time ratio d. Capital ratio
18. Gross profit is to be distributed in ------------
a. Sales ratio b. Turnover ratio c. Time ratio d. Capital ratio
19. Preliminary expenses are written on----------.
a. post incorporation period b.pre incorporation period c. Goodwill d. Reserve account
20. Sales man’s salary is to be divided into
a. Turnover ratio. b. Sales ratio c. Time ratio d. Capital ratio
SECTION- B
21. T Ltd issued 1000 8% debentures of Rs. 100 each. Give appropriate journal entries in the books of
the company, if the debentures were issued as follows:
i) Issued at par, redeemable at par
ii) Issued at a discount of 5%, repayable at par
iii) Issued at a premium of 10%, repayable at par
iv) Issued at par, redeemable at a premium of 10%
v) Issued at a discount of 5%, repayable at a premium of 10%
You are also required to show how the items concerned appear in the balance sheet in each of
the above case.
22. Raj Ltd. Issued 2,000 12% Debentures of L100 each at par payable Rs.25 Application, Rs.50 on
Allotment and the balance on first and final call. In all 3,000 application were received. Allotment was
made to 2,000 applicant other were rejected. Give Journal entries.
23. Zee Ltd. Took over the following assets and liabilities of business ofUsha Ltd.
Assets : Machinery-Rs.1,00,000, Furniture Rs.1,80,000 Stock Rs.20,000
Liabilities-Creditors Rs. 80,000
The purchases price was agreed at Rs.1,08,000. This is to settle by issue of 12%
Debentures at premium of 20% pass necessary Journal entries.
24. Pass the necessary journal entries for the issue and redemption of
Debentures in the following cases:
(i) 10,000, 10% debentures of L120 each issued at 5% premium, repayable at par.
(ii) 20,000, 9% Debentures of L200 each issued at 20% premium, repayable at
30% premium.
25. Ganga Ltd. issued 2,000 12% debentures of L100 each at a premium of 10% payable L25 on
application; L40 (including premium) payable on allotment and balance on First and Final Call. In all
3,500 application were received 500application were rejected and allotment was made to applicants to
3,000 debentures on Pro-rata basis. The excess money was adjusted on allotment. Give journal entries.
26. a. Rajan a small scale industrialist decided to convert his firm into limited company with effect from
1st April 1996. But he obtained the certificate of incorporation on 1st August 1996 and the certificate to
commence business on 1st October 1996. His accounts were closed on 31st December 1996.
Find out the time ratio for the purpose of ascertaining per incorporation profit
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b). A company was incorporated on 1.2.98 to purchase the business of Abdul kalam & sons as from 1st
November 1997.
There was 10 employees before incorporation but 5 more were appointed on 1.2.1998. you are required
to ascertain the weighted time ratio for dividing salaries between the pre and post incorporation periods,
assuming that the accounts are finalised on 31st October.
27. Explain the methods of calculating sales ratio and time ratio?
28. A company is incorporated on 1st May, 1998. The total amount of wages paid is Rs.
90,000. Number of workers employed in pre-incorporation period , post incorporation
period 24
Ans:Simple time ratio = 4 month : 8 months or 1 : 2
Weighted time ratio = (1 x 6): (2 x 24) = 6 : 48 or 1 : 8
29. From the following details. Calculate profit before and after incorporation time
ratio 3:4 sales ratio 2:3 gross profit Rs 5,00,000
Expenses Rs; Salaries 96,000; Discount 40,000; Rent 15,000; General expenses 12,000
Ans: Net Profit 3,37,000
30. Ganesh Ltd was incorporated on 1st May 1996 to purchase the running business of
Vinayak and Co., with effect from 1st January 1996. The company obtained
certificate of commencement of business on 24th August 1996. Calculate the time
ratio, if the accounts were finalized on 31st December 1996. Computation of time Ratio:
Ans:Time Ratio = 4:8= 1:2
SECTION-C
31. Excel Ltd made the following issues of debentures on 1.4.97
i) 200 10% debentures of Rs. 100 each to settle a creditor who supplied a machine
on credit some time ago at a price of Rs.18,000
ii) 300 10% debentures of Rs.100 each for cash at a discount of 5%
iii) 1000 10% debentures of Rs 100 each to the bankers as collateral security for a
loan of Rs. 80000
All the above issues are redeemable at par.
Pass journal entries to record the above in the books of the company and show
how these items are to be shown when the company’s balance sheet is prepared.
32. Moon rays Ltd issued 50000 8% debentures of Rs. 10 each to the public at par, to be paid Rs.4
on application and the balance on allotment. Applications were received for 48000 debentures.
Allotment was made to all the applicant and the amount due were received promptly. Give journal
entries to record the transactions and show how they appear in the balance sheet of the
company
33.Earth movers Ltd issued 15000 14% debentures of Rs. 100 each for public subscription, at a
premium of 10% payable as to Rs. 30 on applicaaation,Rs.50 (including premium)on allotment and
the balance in one call
25000 applications were received,4000 applications were rejected and debentures were
allotted to the remaining applicants pro rata. Allotment amount was received from all the
allottees one of whom paid the call amount due on his 1000 debentures along with allotment
money. The call amount was also collected on the due date. You are required to pass journal
entries in the company’s book.
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34. On 1.1.98 Y Ltd issues 4000 debentures of Rs. 100 each repayable at the end of four years at a
premium of 5%. It has been decided to institute a Sinking fund for the purpose, the investment being
expected to realise 4% net. Sinking fund tables show that 0.235490 amounts to Rs. 1 @ 4% in
four years. Investments were made in multiples of hundred only. On 31.-12-2001, the balance at bank
was Rs.118000 and the investment realised Rs.313600. the debentures were paid off. Give journal
entries and show ledger accounts (except for debenture interest)
35.Samy Ltd issued 6% debentures for Rs.1200000 on 1.1.94. it was provided in the debenture
trust deed that the debentures are repayable at the end of 1996 with a premium of 10%. A sinking
fund was set up to provide cash for the redemption on the due date. The amounts set aside annually
are to be invested in 5% government bonds. Sinking fund tabled show that 0.31720856 at 5%
compound interest in 3 years will become Re.1. You are required to write the ledger for all the 3
years in the company’s book. Calculations may be made to the nearest rupee.
36. Ganesh Ltd was registered on 1.7.97 to acquire the running business of Suneel & co, with
effect from 1.1.97. The following was the profit and Loss account of the company on
31.12.97.
Particulars Amount Particulars Amount
To Office expenses 54000 225000
To formation expenses (written off ) 10000
To stationary & postage 5000
To selling expenses 60000
To director’s Fees 20000
To Net profit 76000
225000 225000
You are required to prepare a statement showing profit earned by the company in the pre
and post incorporation periods. The total sales for the year took place in the ratio of 1:2 before and
after incorporation respectively.
37. .Pankajam Mills Ltd was incorporated on 31st July 1977 to purchase the business of Hemalatha&
co as on 1st April 1977. The books of accounts disclosed the following on 31st march 1978
i). Sales for the year Rs.3210400 (1st April to 31st July 77 Rs.802600;1st July 77 to 31st
March 1978 Rs.2407800). ii). Gross profit for the year Rs 412800; Managing directors’
salary Rs.12000; preliminary expenses written off Rs.18000. Company secretary’s salary Rs.58000
iii) Bad debts written off Rs. 14890 (prior to 31st July Rs4020,after 31at July Rs 10870)
iv). Depreciation on machinery Rs.25200; general expenses Rs.51000; Advertising Rs 7400
; interest on debentures Rs.20000.
You are required the prepare a statement apportioning properly the net profit of the
company as between
a). Profit available for distribution b). Profit prior to incorporation.
38. A co Ltd was incorporated on May 1, 2008 to take over the business of X & co as a going
concern from January 1, 2008. The profit and loss account for the year ending December 31, 2008
was as follows.
Particulars Rs Particulars Rs
To Rent & taxes
To insurance
To electricity charges
To salaries
To directors Fees
To auditor’s fees
To commission
To advertisements
To discount
To office expenses
To carriage
12000
3000
2400
36000
3000
1600
6000
4000
3500
7500
3000
By trading account
(gross Profit)
155000
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To bank charges
To preliminary expenses
To bad debts
To interest on loan
To net profit
1500
6500
2000
3000
60000
155000 155000
The total turnover for the year ending December 31,2008wasRs.500000 divided into Rs.150000
for the period up to may 1,2008 and Rs 3,50000 for the remaining period.
39.The company was incorporated on 1st may 194 to take over a business from the preceding 1st
January. The accounts were made up to 31st December, 1994 as usual and the trading and profit
and loss account gave the following result;
Particulars Rs Particulars Rs
To opening stock
To purchase
To gross profit
To rent, rates& insurance
To director’s fees
To salaries
To office expenses
To travellers commission
To discounts
To bad debts
To audit fee
To depreciation
To debenture interest
To Net profit
1,40,000
9,10,000
3,00,000
13,50,000
18,000
20,000
51,000
48,000
12,000
15,000
3,000
8,500
6,000
4,500
1,14,000
3,00,000
By sales
By closing stock
By gross profit
12,00,000
1,50,000
13,50,000
3,00,000
3,00,000
It is ascertained that the sales for November and December are one and half times the average
of hose for the year, whilst those for February and April are only half the average, all the
remaining months having average sales.
Apportion the year’s profit between the pre and post incorporation periods.
40. What are the steps of ascertaining “profit prior to Incorporation”?
ANS:
1 a. Borrowed capital 2 b. Interest 3 c. Creditors 4. C. Assets Account 5 .c. Capital Loss. 6 d. All of
these 7 a . Secured loans 8. D Capital reserve 9. a. Revenue profit 10. a. Turnover Ratio 11. c. Post
incorporation period. 12. d. Goodwill A/C 13. a.post incorporation expenses 14. a. Certificate
of Incorporation 15. b. Goodwill Account 16. d) None of the above 17. c. Time ratio 18. b. Turnover
ratio 19. a. post incorporation period 20 a. Turnover ratio.
UNIT-III SECTION-A
1. Which financial statement is used to show what the firm owns?
a.income statement.b.balance sheet c.statement of retained earnings d.cash flow statement
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2.Balance sheet is a statement which discloses an organization’s------
a.assets b.liabilities c.owner’s equity d.all of these
3.Current liabilities need to be paid
a.within one accounting cycle b.beyond one accounting cycle c.within 3 years d. within 6 months
4.Which of the following is not a current assets?
a.Accounts receivable b.Inventory of finished products c.Inventory of raw materials d. Land
5.Which of the following is a financial asset?
a. Inventories b.Equipment c.Loan to an associate d.Accounts receivable 6.Amount realised from sale of goods os regarded in the statement of profit and loss as--- a. other income b. Revenue from operations c. Any of the above d. None of the above 7. Divident received by a financial company is shown on the statement of profit & Loss as--- a. other income b. Revenue from operation c. Finance cost d. None of the above
8. As per ………..it is the statutory obligation of companies to prepare their final accounts.
a. Sec 210 b. Sec 211 c. Sec 212 d. Sec 214 72.
9. The Balance sheet of Companies are prepare in the form ……….
a. Part I of Schedule V b. Part I of Schedule VI c. Part II of Schedule V d. Part II of
Schedule VI
10. The Profit and Loss Account of companies is prepared in the form ………….
a. Part I of Schedule V b. Part I of Schedule VI c. Part II of Schedule V d Part II of Schedule
VI
11. The dividend declared between two annual general meeting is called ……….
a. Proposed Dividend b. Final Dividend c. Interim Dividend d. None of these.
12.The net profit available for dividend distribution is called …………
a. Net Profit b. Surplus c. Divisible Profit d. Capital Profit
13. Dividend in the form of shares is called ………..
a. Interim Dividend b. Scrip Dividend c Final Dividend d. None of these
14.. ………is the dividend declared in the annual general meeting of shareholders.
a. Proposed Dividend b. Final Dividend c. Interim Dividend d. None of these
15. The dividend recommended by the Board of Directors is called………
a. Proposed Dividend b. Final Dividend c. Interim Dividend d. None of these
16. Unclaimed dividend is shown in the balance sheet under the head ……..
a. Reserves and Surplus b. Current Liabilities c. Loans and Advances d.
Current Assets
17. ……..is a charge against profit of the company
a. Provision b. Reserves c. Surplus d. All of these
18. CDT stands for….
a. Company Direct Tax b. Corporate Dividend Tax c. Combined Direct Tax
d. None of these
19. An item which may or may not be the liability of the company due to happening of certain event
is…………
a. Current Liability b. Fixed Liability c. Contingent Liabilityd. None of these
20. Advance tax paid is shown in the balance sheet under the head……….
a. Current Liabilities b. Loans and Advances c. Fixed Assets d. None of these
SECTION- B
21.. From the following is the trial balance of Vishal Ltd., prepare the Balance Sheet of the company
as on 31st March 2015 as per Schedule III of the Companies Act.
Trial Balance as on 31st March 2015
Debit Rs Credit Rs.
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Advances to
employees
3,00,000 Equity Share Capital 52,00,000
Cash at Bank 3,14,320 Capital Reserve 60,000
Furniture & Fixture 7,50,000 Loan from SBI 8,00,000
Premises 41,09,940 Provision for
Employees Welfare
Fund
6, 00,000
Patents 10,00,000 Proposed Dividend 1,64,000
Discount on issue of
shares(unwritten off)
25,000 Short term loan from
bank
4,90,200
Trade Receivables 3,66,240 Unpaid dividend 64,800
Advance Tax 50,000 Profit & Loss A/c 42,980
8% Govt. Bonds 3,36,000 Bills Payable 85,100
Stock in trade 3,55,600 Sundry Creditors 1,00,020
76,07,100 76,07,100
22. From the following Ledger balances of Varun LTD., prepare the Balance Sheet of the companyas
on 31st March 2014 as per Schedule III of the Companies Act.
Particulars Rs. Particulars Rs.
Plant & machinery 6,00,000 Immovable property 10,00,000
8% Debenture 8,00,000 Public deposit 5,00,000
Employee’s provident Fund 1,30,000 Provision for taxation 1,80,000
Securities premium 80,000 Drafts on hand 5,00,000
Cash at bank 34,000 Bills Receivab 2,40,000
24000 fully paid Equity shares
of Rs.100 each Rs. 50 12,00,000 Brokerage on issue of shares 1,10,000
called up
Sundry Creditors 1,16,000 Bank overdraft 1,50,000
Loan to Manager 70,000 Security Deposit 1,24,000
Deposits with ICICI 1,98,000 Trademarks 1,80,000
Bank(5 years)
Prepaid insurance 1,00,000
23. Prepare a statement of profit or loss of Star Ltd as per Revised schedule VI from the
following particulars:
Revenue from operations Rs.3,25,000 ;Other income Rs.3,150; Cost of goods sold
Rs.58,500; Employee benefit expenses Rs.99,000; Depreciation and amortization
Rs.28,785; Other expenses Rs.33,590; Tax expense Rs.8,000
24. Prepare a Balance sheet of X Ltd from the following information.
Share capital Rs.2,45,000; Reserves and surplus Rs.1,14,296; Long-term borrowings
Rs.15,700; Tax payable Rs.35,200; Other current liabilities Rs.35,199; Tangible assets
Rs.1,68,815; Bank Rs.73,400; Closing stock Rs.1,91,500; Other current assets Rs.1,680
25 From the following profit and loss account of the S Ltd for the year ended 31.12.92 and
additional data given, calculate commission due to Managing director at 5% of net profit.
Salary of Managing director is to be treated as part payment of the commission.
Profit and Loss account for the year ended 31.12.90
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Particulars Rs Particulars Rs
To opening stock
To bonus ( including Rs.500 for
1991)
To director’s fees
To Managing directors: Salary
Commission
To development rebate reserve
To provision for tax
To establishment expenses
TO loss on sale of investment
To net profit c/d
11,000
5,000
3,000
2,000
1,000
800
3,000
40,000
200
1,22,000
By sales
By closing stock
By other incomes :
Discount
Profit on sale
of fixed assets
1,70,000
15,000
2,000
1,000
1,88,000 1,88,000
The book value of the fixed assets sold was Rs. 2,000 and their original cost was Rs.2,600
26. From the following particulars, determine the maximum remuneration available to a full time
director of a manufacturing company. The profit and loss account of the company showed a net profit
of Rs. 20,00,000. After taking into account the following items.
a). Depreciation( including special depreciation of Rs. 20,000) Rs. 50,000
b). Provision for income tax Rs.1,00,000
c). Donation to political parties Rs.25,000
d). Ex-gratia payment to a worker Rs.5,000
e).Capital profit on sale of assets Rs.75,000
27. Determine the maximum remuneration payable to the part-time director and manager of B Ltd., ( a
manufacturing company) under section 309 and 387 of the companied act, from the following
particulars
Before charging any such remuneration, the profit & Loss account showed a credit balance of
Rs. 46,20,000 for the year ended 31st March 2016 after taking into account the following information.
Particulars Amount
Capital expenditure 10,50,000
Subsidiary received from Government 4,20,000
Special depreciation 1,40,000
Multiple shift allowance 1,05,000
Bonus tp foreign technicians 3,15,000
Provision for taxation 56,00,000
Ex-gratia to an employee 70,000
Loss on sale of fixed assets 70,000
Profit on sale of investment 4,20,000
28. The following Trial Balance has been extracted from the books of Agro India Ltd. on 31.03.2015
Trial Balance as on 31st March 2015
Prepare the Balance sheet of the company as per schedule III of the Companies Act
2013.
Debit Rs. Credit Rs
Plant & Machinery 9,00,000 Sinking Fund 1,00,000
Stock of raw material 1,75,000 Sundry Creditors 1,00,000
Live stock 4,30,000 Equity Share capital 15,00,000
Loan to director 1,35,000 15% Debentures
25,000
IFCI Bonds 2,00,000 Outstanding salary 10,000
Profit & Loss A/c 10,000 Proposed dividend 2,00,000
Patents 3,74,000 Revaluation Reserve 1,65,000
Discount on issue of
shares
25,000 Mortgage Loan 2,54,000
Interest Accrued 1,05,000
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23,54,000 23,54,000
29.Prepare Balance sheet of Samarth Ltd. In a prescribed pro forma as on 31-03-
2015 from the following trial balance.
Trial balance as on 31st March 2015
30. From the
following
information of
Rashmi
prepare Profit
& Loss
Account for
the year ending
31st
March,
2006.
Particulars Amount Particulars Amount
Gross Profit 64800 Discount Received 600
Bad debts 1500 Commission Received 2100
Depreciation 2500 Freight outward 1600
Office rent 4800 Prepaid Insurance 600
Insurance 3200 Salary 6400
Telephone charges 1700 Stationery 700
Interest on loan 2400 Furniture 6000
Building 50000
Closing stock as on 31st March, 2006 Rs 20000
SECTION - C
31. B Ltd was registered with an authorized capital of Rs.12,00,000 in equity shares of Rs,10
each. The following is its trial balance on 31st March 2016.
Particulars Debit Particulars Credit
Goodwill 50,000 Share capital 8,00,000
Cash 1,500 12% debentures 6,00,000
Bank 79,800 Profit& loss A/c 52,500
Purchases 3,70,000 Sales 8,30,000
Preliminary expenses 10,000 Bills payable 74,000
Calls- in arrears 15,000 Sundry creditors 80,000
Premises 6,00,000 General reserves 50,000
Plant and machinery 6,60,000 Provision for bad debts 7,000
Interim dividend 78,500
Stock(01.04.2016) 1,50,000
Furniture & fixtures 14,400
Sundry debtors 1,74,000
Wages 1,69,730
General expenses 13,670
Freight & carriage 26,230
Salaries 29,000
Debit Rs. Credit Rs
Lease hold premises 13,00,000 Debenture redemption
reserve
3,75,000
Plant & Equipment 9,45,000 Provision for warranties 1,35,000
Book debts 3,44,000 Short Term loan 2,65,000
Bank balance 1,45,000 Profit & loss A/c 2,69,000
Advance Income tax 85,000 12% Debentures 4,55,000
Licenses & Franchise 2,25,000 Commission payable 44,000
Redeemable pref. shares
inSonata Ltd.
6,30,000 32000 equity shares of Rs.
100each, Rs.50 called up
16,00,000
Cheques on hand 95000 P r o v i s i o n f o r tax 46,000
Rent paid in advance 36000 Interest accrued 54,000
Mortgage loan from
IDBI
5,62,000
38,05,000
38,05,000
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Director’s fees 11,450
Bad debts 4,220
Debenture interest paid 36,000
Prepare a statement of profit and loss and balance sheet in revised format, as per Schedule,
after marking the following adjustments:
a). Depreciate plant and machinery by 15%
b). Write off preliminary expenses
c). Provide for six months interest on debentures:
d).leave bad and doubtful debts’ provision at 5% on sundry debtors
e) Provision for income tax at 50%
f). Stock on 31st March 2016 was 1,90,000
g). Provide for corporate tax dividend tax @17%
32. Moon and Star Ltd is a company with an authorized capital of Rs.5,00,000 divided into 5000
equity share of Rs.100 each on 31.12.2003 of which 2,500 shares were fully called up. The
following are the balances extracted from the ledger as on 31.12.2003
Trial balance of Moon & Star Co Ltd
Debit Rs Credit Rs
Opening stock
Purchased
Wages
Discount allowed
Insurance (up to
31.3.04)
Salaries
Rent
General Expenses
Printing
Advertisements
Bonus
Debtors
Plant
Furniture
Bank
Bad debts
Calls in arrears
50,000
2,00,000
70,000
4,200
6,720
18,500
6,000
8,950
2,400
3,800
10,500
38,700
1,08,500
17,100
34,700
3,200
5,000
Sales
Discount received
Profit& loss account
Creditors
Reserves
Loans from managing
director
Share capital
3,25,000
3,150
6,220
35,200
25,000
15,700
2,50,000
You are required to prepare Profit & loss A/C for the year ended 31.12.2003 and a balance
sheet as on that date. The following further information is given.
a). Closing stock was valued at Rs.1,91,500
b).Depreciation on plant at 15% and on furniture at 10% should be provided.
c). A tax provision of Rs.8,000 is considered necessary
d). the directors declared an interim divided on 15.8.03 for 6 months ending June 30, 2003
@ 6%
33. Kasyap Ltd. Is a company with an authorised capital of Rs.10,00,000, divided into 10,000 equity
shares of Rs.100each on 31st march 2016; of which 5000 shares were fully called up. The following
are the balances extracted from the ledger, as on 31st March 2016.
Trial balance of Kashyap Ltd.
Particulars Debit Particulars Credit
Opening stock 1,00,000 Sales 6,50,000
Purchases 4,00,000 Discount received 6,300
Wages 1,40,000 Profit & loss A/c 12,440
Discount allowed 8,400 Creditors 70,400
Insurance(up to 30.6.2016) 13,440 Reserves 50,000
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Salaries 37,000 Loan from M.D 31,400
Rent 12,000 Share capital 5,00,000
General expenses 17,900
Printing and stationary 4,800
Advertisements 7,600
Bonus 21,000
Debtors 77,400
Plant 3,61,000
Furniture 34,200
Bank 69,400
Bad debts 6,400
Calls in arrears 10,000
13,20,540 10,20,540
You are required to prepare statement of Profit and loss for the year ended 31st March 2016 and the
balance sheet as on that date after considering the following information
a). Closing stock was valued at Rs. 3,83,000
b). Depreciation on plant at 15% and on furniture at 10% should be provided.
c). A tax provision of Rs.16000 is considered necessary.
d). The directors declared an interim dividend for six months ending 30.09.2016 at 6%.
e). Provide for corporate dividend tax t 17%.
34. B Ltd was registered with an authorised capital of Rs.12,00,000 in equity shares of Rs,10
each. The following is its trial balance on 31st March 2016.
Particulars Debit Particulars Credit
Goodwill 50,000 Share capital 8,00,000
Cash 1,500 12% debentures 6,00,000
Bank 79,800 Profit& loss A/c 52,500
Purchases 3,70,000 Sales 8,30,000
Preliminary expenses 10,000 Bills payable 74,000
Calls- in arrears 15,000 Sundry creditors 80,000
Premises 6,00,000 General reserves 50,000
Plant and machinery 6,60,000 Provision for bad debts 7,000
Interim dividend 78,500
Stock(01.04.2016) 1,50,000
Furniture & fixtures 14,400
Sundry debtors 1,74,000
Wages 1,69,730
General expenses 13,670
Freight & carriage 26,230
Salaries 29,000
Director’s fees 11,450
Bad debts 4,220
Debenture interest paid 36,000
24,93,500 24,93,500
Prepare a statement of profit and loss and balance sheet in revised format, as per Schedule, after
marking the following adjustments:
a). Depreciate plant and machinery by 15%
b). Write off preliminary expenses
c). Provide for six months interest on debentures:
d).leave bad and doubtful debts’ provision at 5% on sundry debtors
e) Provision for income tax at 50%
f). Stock on 31st March 2016 was 1,90,000
g). Provide for corporate tax dividend tax @17%
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35. Varun Ltd was registered with an authorised capital of Rs.60,00,000 in equity shares of
Rs.10 each. The following is the list of balances extracted from its books on 31st December 2016.
Particulars Amount Particulars Amount
Purchases 18,50,000 Sundry debtors 8,72,000
Wages 8,48,650 General expenses 1,68,350
Manufacturing expenses 1,31,150 Stock(on 01.01.2016) 7,50,000
Salaries 1,40,000 Cash in hand 2,00,000
Bad debts 21,100 Goodwill 57,500
Director’s fees 62,250 Cash at bank 3,99,000
Debenture interest paid 90,000 Subscribed and fully called up
capital
40,00,000
Preliminary expenses 50,000 Profit& loss account 1,45,000
calls in arrear 75,000 6% debentures 30,00,000
Plant and machinery 30,00,000 Sundry creditors 5,80,000
Premises 33,00,000 Bills payable 3,35,000
Interim dividend paid 3,75,000 Sales 41,50,000
Furniture and fittings 70,000 General expenses 2,50,000
You are required to prepare a statement of profit and loss for the year ended 31st December 2016
and the balance sheet on that date, after making the following adjustments.
i). Depreciate plant and machinery by 10%
2) provide half year’s interest on debentures outstanding
3). Also write oil preliminary expenses
4). Make provision for bad and doubtful debts of Rs.28,500 on sundry debtors
5). Stock on 31st December 2016 Rs.9,10,000
6). Provide for corporate tax dividend tax @17%
36. The following is the trial balances of Krishna Ltd .as on 31st December2016. The authorised
capital is 1,00,000 equity share of Rs.10 each. Prepare a stamen of Profit and loss account and
balance sheet as on that date.
Adjustment:
Particulars Debit Particulars Credit
Calls- in arrears 12,800 Subscriber capital : 20000
shares of Rs.10 each
2,00,000
Land 20,000 Bad debts reserve(on
01.01.2016)
2,800
Buildings 50,000 Sales 1,60,000
Machinery 30,000 Purchase return 6,800
Furniture 6,400 Sundry creditors 26,400
Carriage inwards 4,600 Securities premium 12,000
Wages 42,800 General reserves 48,000
Salary 9,200
sales return 3,400
bank charges 200
Coal 1,400
Rates and taxes 1,600
Purchases 1,00,000
Bills receivable 2,400
General expenses 3,800
Sundry debtors 85,600
Stock(on 01.01.2016) 50,000
Fire insurence 800
Cash at bank 26,000
Cash in hand 5,000
Total 4,56,000 Total 4,56,000
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i). Charge depreciation on building at 2 1/2 %, on machinery at 10% and on furniture at 10%.
ii). Make a reserve 5% on debtors for bad debts iii). Carry forward the following unexpired amount fire insurance of Rs.240 iv) provide for liabilities : wages Rs.6400; salaries Rs.1000 and rates Rs.400 v). The value of stock on 31st December 2016 was Rs.60,000 37. Following is the trial balance of Johana Ltd as on 31st march 2016.
The
following additional information is available. ➢ Stock on 31st March 2016 is 16,400 ➢ Depreciate machinery at 10%Provide 5% discount on debtors ➢ Provide 2.5% discount on creditors ➢ 6 Months insurance was unexpired at Rs.75 p.a ➢ 1 month rent @ Rs.1080 p.a was due on 31st March 2016. ➢ Provide managing director’s commission, 15% on the net profit before deducting his commission.
You are required to prepare statement of profit & loss a/c for the year ended 31st March 2016 and the balance sheet on the date. 38. Rajesh Ltd. Is a company with an authorised capital of Rs.10,00,000 divided into 10,000 equity shares of Rs.100 each. On 31st December 2016, 5000 shares were fully called up. The following balances were extracted from the ledger of the company as on 31st December 2016.
Particulars Amount Particulars Amount Stock 1,00,000 Advertisements 7,600 Sales 8,50,000 Bonus 21,000 Purchases 6,00,000 Debtors 77,400 Productive wages 1,40,000 Creditors 70,400 Discount allowed 8,400 Plant& machinery 1,61,000
Discount received 6,300 Furniture 34,200 Insurance(up to 31.3.2016) 13,440 Cash and bank balances 2,69,400
salaries 37,000 Reserves 50,000 Rent 12,000 Loan from managing
directors 31,400
general expenses 17,900 Bad debts 6,400 P/L account 12,440 Calls in arrears 10,000 Printing & stationeries 4,800
You are required to prepare statement of Profit & loss account for the year ended 31st December 2016 and the balance sheet on that date. Additional information: Closing stock Rs.1,83,000 Provide for depreciation at 15% on plant and machinery and 20% on furniture Outstanding liabilities: wages Rs.10,400; salary Rs.2440 and rent Rs.1200; Provide 5% dividend of paid up share capital provide for corporate dividend tax @17%
39..The following is the trial balance of Nalli Ltd as at 30th Dec., 1998 is given to you;
Debit Rs Credit Rs
Particulars Debit credit Stock on 31.03.2015 15,000 Purchases and sales 49,000 70,000 Wages 10,000 Discounts 1,400 1,000 Salaries 1,500 Rent 990 Insurance 3,410 Profit & loss A/C (01.04.2016) 3,006 Dividend paid 1,800 Share capital 20,000 Debtors and creditors 7,500 3,500 Machinery 5,800 Cash in hand 3,240 Reserves 3,100 Bad debts 966 1,00,606 1,00,606
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Stock (1.1.19980)
Bank
Patents
Calls in arrears
Returns inwards
Purchases
Wages
Insurance prepaid
Bills receivable
Sundry debtors
Discount on issue of
debentures
Plant & machinery
Land & building
Insurance
General expenses
Establishment
expenses
80,000
17,600
60,000
20,000
30,000
7,72,000
1,08,000
400
30,000
80,000
10,000
4,00,000
3,00,000
4,000
40,000
60,000
8000 equity shares of
Rs.100 each,Rs.75 paid
6% debentures
Sundry creditors
General reserves
Sales
Returns outward
P&L A/C (Cr)
6,00,000
2,00,000
1,00,000
80,000
10,00,000
20,000
12,000
Additional information; 1. The value of stock on 31st Dec. was Rs.74,000 2. Outstanding wages totaled rs.10,000 3. A provision 5% is to be created in sundry debtors for doubtful debts 4. Depreciate patents @10% and plant & machinery @ 7½ % and on land & building @ 4%
You are required to prepare Trading and profit & loss account for the year ended 31.12.1998
and balance sheet as on that date.
40. Draw a new format of profit and loss account and balance sheet ANS: .1. b.balance sheet 2. d.all of these 3. a.within one accounting cycle 4. d. Land
5. d.Accounts receivable 6. b. Revenue from operations 7. b. Revenue from operation 8. A. Part I
of Schedule V 9. b Part I of Schedule VI 10 d. Part II of Schedule VI 11 c. Interim Dividend 12 c.
Divisible Profit 13 b. Scrip Dividend 14. b Final Dividend. 15 a. Proposed Dividend 16. b Current
Liabilities 17 a. Provision 18. b Corporate Dividend Tax 19 c. Contingent Liability 20. b. Loans and
Advances
UNIT – IV
SECTION – A
1. The process of two or more companies combining to form a new company is called _______
a) Absorption b) Amalgamation c) reconstruction d)general reserves
2. In the case of amalgamation there are two or more liquidation and one _________
A) Absorption b) formation c) reconstruction d) creditors
3. Goodwill or capital reserve arises only when the amalgamation is in the nature of _______
a) sales b) purchase c) profit d) loss
4. When there is no formation and no liquidation is known as _______
a) amalgamation b) absorption c) external reconstruction d) internal reconstruction
5. Under the pooling of interest method the transferee company incorporate the assets and
Liabilities of the transferor company at ________
a) book value b) fair values c) market values d) resale value
6. Under the purchase methods the transferee company incorporate the assets and liabilities
Of the transferor company at ________
a) book value b) fair values c) market values d) resale value
7. As per AS- 14 purchase consideration is what is payable to _________
a) share holders b) debenture holders c) creditors d) purchasers
8. When amalgamation is in the nature of merger the accounting methods to be followed to is ____
a)equity method b) purchase method c) pooling of interest method d) consolidated method
9. Under net payment method purchase consideration is calculated by adding the various
payment made by the __________ company
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a) sales b) purchase c) profit d) loss
10. Accumulated losses in the vendor company should be transferred to _____________A/C
a) preference share holders b) equity shareholders c) creditors d) debtors
11. Internal reconstruction is generally resorted to write off the past accumulated __________
A) losses b) profits c) share capital d) reserves
12. In a scheme of capital reduction any new liability to be provided for such an arrears
of preference Dividend must be met out of ___________ account
a) paid-up capital b) shareholders c) capital reduction d) assets a/c
13. Any balance is the capital reduction account after writing off lost capital is transferred to _____
a) capital reserve a/c b) share surrender a/c c) reorganization a/c d) contingency reserve
14. In a scheme of reorganization amount of shares surrendered by shareholders is transferred to ___
a) capital reduction a/c b) share surrender a/c c) reorganization a/c d) capital reserve a/c
15. for a company to carry out capital reduction, permission is required from ________
a) The competent court b) controller of capital issue c) company law board d) central govt
16. Capital reduction account is used in the case of _____________
a) Internal reconstruction b) external reconstruction c) amalgamation d) absorption
17. For calculating the value of an equity share by intrinsic value method, it is essential to know—
a. Normal rate of return b. Expected rate of return c. Net equity. D. Capital employed
18. For calculating the value of an equity share by yield method, it is essential to know—
a. Expected rate of return b. Called-up equity share capital c. Capital employed. D. Net equity
19. For calculating price-earnings ratio, it is essential to know—
a. Market value per share b. Nominal value per share c Paid-up value per share d. normal rate of
return
20. For calculating the value of an equity share by earning capacity method, it is essential to know —
a. Nominal value per share b. Rate of earning c. Dividend per share. D. Capital employed
SECTION -B
21. Write short note on Purchase consideration and external reconstruction?
The assets of X Ltd are purchased by Y Ltd. The purchase consideration was as Follows:
a) cash payment of Rs.90 for every share of X Ltd
b) A cash payment of Rs.550 for every debenture in X Ltd in full discharge
c) An exchange of four shares of Y Ltd. Of Rs.75 each (quoted in the market at
14 each)for every share of X Ltd.
d) the expenses of liquidation amounting to Rs.10000 were met by Y Ltd.
Additional information of X ltd on the date of absorption
Rs
Share capital 6000 equity shares of Rs.500 each 3,00,000
1300 debentures of Rs.550 each 6,50,000
Sundry creditors 2,50,000
Workman saving bank 2,00,000
Calculate purchase considerations ( cash as well as shares)
22. A ltd is absorbed by B ltd, the consideration being the takeover of liabilities the payment of cost
of absorption as part of purchase consideration not exceeding Rs. 10,000. The payment of the
debenture of Rs 15 per share in cash and allotment of one 10 % Preference share of Rs 10 each
and five equity share of rs 10 each fully paid for every four share in A ltd. The no of shares of
A ltd are 2 lakhs of Rs.10 each fully paid
23.A ltd agrees to take over the business of B ltd on the following terms
1. the share holders of B ltd are to be paid of Rs.25 in cash and the offer of four
Shares of Rs.10 each in A ltd for every share of B ltd. B ltd had 50,000 equity shares
Outstanding
2. the debenture holders holding 5000 debentures of Rs.100 each are to be
Redeemed at a premium of 10%
3. Cost of liquidation amounting to Rs.25000 are to be borne by A ltd
Compute purchase consideration
24 Ratan Ltd., having a share capital of Rs.3,00,000 divided into 3,000 shares of Rs.100 each,
resolves to sub- divide the share into 30,000 shares of Rs.10 each. Pass necessary journal entry.
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25. Marshall Ltd has share capital of Rs.5,00,000 divided into 5,000 share of Rs.100 each,fully paid.
Show the entries under each of the following conditions.
i). when Marshall Ltd., resolves to sub-divide the shares into 50,000 shares of Rs.10
each fullypaid.
ii). When Marshall Ltd., resolves to convert its 5,000 shares of Rs.100 each into
Rs.5,00,000 worth of stock.
26. Ram Company Ltd passed resolution and got Court permission for the reduction of its share
capital by Rs.5, 00,000 for the purposes mentioned as under i) To write off the debit balance of P&L A/C of Rs 2,10,000 ii) To reduce the value of investment by Rs.80,000 iii) To reduce the value of plant & machinery by Rs.90,000 and goodwill by Rs.40,000
The reduction was made by converting 50,000 preference shares of Rs.20 each fully
paid to the same number of preference shares of Rs.15 each fully paid and by
converting 50,000 equity shares of Rs.20 each on which Rs.15 is paid up into 50,000
equity shares of Rs.10 each fully paid up. Pass journal entries to record the share
capital reduction.
27.The paid up capital of Science Traders Ltd. Amounted to Rs. 5,00,000 consisting of 2,000 5%
cumulative preference shares of Rs. 100 each and 30,000 equity shares of Rs.10 each. The
preference dividends were in arrears for Rs. 30,000.After a succession of losses incurred by the
company, the directors recommended to the share holders the proposal to reduce the capital to provide
a sum sufficient following purpose.
a). To write down the book value of patents by Rs. 70,000; Plant and machinery by Rs. 17,000; and
tools and implements by Rs. 2,000
b). To write off debit balance on Profit & Loss account of Rs. 1,98,000.
c). Any balance made available by the reduction of capital to be used to write off “Experiment and
research expenses”
The scheme, duly approved and authorized, provided as follows.
i). For every five 5% preference shares, three 4% cumulative preference shares, of Rs. 100 each and
twenty equity shares of Rs. 2 each.
ii). For every Rs. 10 of accumulated arrears of preference dividend, one equity share of Rs.2 each
iii). For every five old equity shares, one new equity share of Rs.2 each.You are required to show
the necessary journal entries and prepare capital reduction account to record the above in the books
of the company.
28. From the following information calculate the value per equity share:
Particulars Amount
5,000 8% preference shares of Rs 100 each
75,000 equity shares of 10 each, Rs. 8 per share paid up
Expected profits per year before tax
Rate of Tax
Transfer to general reserve every year
Normal rate of earning
5,00,000
6,00,000
2,80,000
50%
20% of the profit
10%
29. Two companies, A Ltd. and B. Ltd., are found to be exactly similar as to their assets, reserves
and liabilities except that their share capital structures are different:
The share capital of A. Ltd. is Rs. 11,00,000, divided into 1,000, 6% Preference Shares of Rs. 100
each and 1,00,000 Equity Shares of Rs. 10 each.The share capital of B. Ltd. is also Rs. 11,00,000,
divided into 1,000, 6% Preference Shares of Rs. 100 each and 1,00,000 Equity Shares of Rs. 10 each.
.The fair yield in respect of the Equity Shares of this type of companies is ascertained at 8%.The
profits of the two companies for 2009 are found to be Rs. 1, 10,000 and Rs. 1, 50,000,
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respectively.Calculate the value of the Equity Shares of each of these two companies on 31.12.2009 on
the basis of this information only. Ignore taxation.
30.How do you determine fair value of shares?
SECTION- C
31 M Ltd and N Ltd agreed to amalgamate on the basis of the following balance sheet
as on 31.1.2006
Liabilities M
Rs
N
Rs
Assets M
Rs
N
Rs
Share Capital
Rs.25each
75,000
50,000
Goodwill 30,000 -
P&L A/c 7,500 2,500 Fixed assets 31,500 38,800
Creditors 3,500 3,500 Stock 15,000 12,000
Depreciation
Fund
- 2,500 Debtors 8,000 5,200
Bank 1,500 2,500
Total 86,000 58,500 Total 86,000 58,500
The assets and liabilities are to be taken over by a new company formed called P Ltd at book
values. P Ltd capital is Rs.2, 00,000 divided into 10,000 equity shares of Rs.10 each and
10,000 9 % preference shares of Rs.10 each. P Ltd issued the equity shares equally to the
vendor companies and preference shares were issued for any balance of purchase price. Pass
journal entries in the books of P Ltd and prepare its balance sheet if the amalgamation is in the
nature of purchase.
32.Following is the balance sheet of K L td as on 31.12.2004
Liabilities Rs Assets Rs
2,000 shares of
Rs.10 each fully
paid
20,000
Goodwill 4,000
Profit & Loss A/c 7,000 Fixed asssets 16,500
Debentures 10,000 Current assets 19,500
Creditors 3,000
Total 40,000 Total 40,000
33.R Ltd agreed to take over the assets of K Ltd (exclusive of one fixed asset of
Rs.4, 000 and cash Rs.1,000 included in current assets) at 10 % more than the book values. It
agreed to take over creditors also. The purchase price was to be discharged by the issue of
2,000 shares of Rs.10 each at the market value of Rs.15 each and the balance in cash.
Liquidation expenses came to Rs.400 K L td sold the fixed asset of Rs.4, 000 and realised the
book value. It paid off its debentures and liquidation expenses. You are required to give journal
entries in the books of K Ltd and R Ltd.
34.. K Ltd balance sheet showed the following position on 31st March 2006
Liabilities Rs Assets Rs
10,000 equity shares
of Rs.100 each
10,00,000
Fixed assets 8,00,000
Capital Reserve 2,00,000 Current assets 4,00,000
Bank loan 2,00,000 Cash at bank 2,00,000
Trade creditors 3,00,000 P&L A/c 3,00,000
Total 17,00,000 Total 17,00,000
M Ltd was incorporated to take the fixed assets and 60% of the current assets at an agreed
value or Rs.9,00,000 to be paid as to Rs.7,40,000 in equity shares of Rs.10 each and the
balance in (5 debentures. The debentures were accepted by bank in settlement of loan.
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Remaining current assets realised Rs.90,000. After meeting Rs.20,000 expenses of liquidation
all the remaining cash was paid to the creditors in full settlement. Give journal entries in the
books of both the companies and prepare the initial balnacesheet of M Ltd if the amalgamation
is in the nature of purchase.
35. . On 31st march 2008 Thin Ltd was absorbed by thick Ltd the later taking over all the assets and
liabilities of the former at book values. The consideration for the business was fixed at Rs.
4,00,000 to be discharged by the transferee company in the form of its fully paid equity shares
of Rs. 10 each to be distributed amounting the share holders of the transferor company each
share holders getting two shares for every shares held in the transferor company. The balance
sheets of the two companies as on 31st march 2008 stood as under
Liabilities Thick Ltd Thin
Ltd
Assets Thick
Ltd
Thin Ltd
Share capital ;
Authorized
Issued and subscribed
capital
Equity share of Rs.10
each fully paid
General reserve
Profit and loss a/c
Workman compensation
fund
Sundry creditors
Staff provident fund
Provision for taxation
15,00,000
9,00,000
1,80,000
20,502
12,000
58,567
10,200
12,300
5,00,000
2,00,000
50,000
12900
9,000
30,456
4,000
5,000
Goodwill
Plant &
machinery
Furniture
Stock in trade
Sundry debtors
Prepaid insurance
Income tax refund
Claim
Cash in hand
Cash at bank
2,00,000
4,12,000
80,000
2,65,000
2,21,200
-
-
869
14,000
60,000
1,00,000
30,000
60,000
46,000
700
6,000
356
8,300
Amalgamation expenses amounting to Rs. 1,000 were paid by Thick Ltd., you are required to
1). Prepare realization account and equity shareholders account in the books of Thin Ltd.
2). Pass the necessary journal entries in the books of Thick Ltd., and
3). Prepare the balance sheet of Thick Ltd., after the amalgamation
36. Kala Ltd’s balance sheet showed the following position on 31st March 1995
Liabilities Rs Assets Rs
10,000 equity shares of
Rs.100 each
Capital reserve
Bank Loan
Trade creditors
10,00,000
2,00,000
2,00,000
3,00,000
Fixed assets
Current assets
Cash at bank
Profit & Loss a/c
8,00,000
4,00,000
2,00,000
3,00,000
17,00,000 17,00,000
Mala Ltd. Was incorporated to take the fixed assets and 60% of the current assets at an agreed value
of Rs.9,00,000 to be paid as to Rs.7,40,000 in equity shares of Rs.10 each and the balance in
9% debentures. The debentures were accepted by bank in settlement of loan. Remaining current
assets realizes Rs.90,000. After meeting Rs.20,000 expenses of liquidation, all the remaining
cash was paid to the creditors in full settlement.
Give journal entries in the books of both the companies and prepare the initial balance sheet of
Mala Ltd.
37. The following is the balance sheet of United Industries Ltd in 31st Dec.98
Liabilities Rs Assets Rs
Share capital;6000 6% preference
shares of Rs.100 each
6,00,000 Goodwill
45,000
12000 equity shares of Rs.100 each 12,00,000 Land & building 6,00,000
8% debentures 3,00,000 Plant& machinery 9,00,000
Bank overdrafts 3,00,000 Stock 1,30,000
Sundry creditors 1,50,000 Debtors 1,40,000
Cash 15,000
Profit & loss a/c 7,00,000
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Preliminary expenses 20,000
TOTAL 25,50,000 TOTAL 25,50,000
On the above date the company adopted the following scheme of reconstruction 1. The equity shares are to be reduced to shares of rs.40 each fully paid and preference shares to be
reduces to fully paid shares of Rs.75 each 2. The debenture holders took over stock and debtors in full satisfaction of their claims 3. The land and building to be appreciated by 30% and plant & machinery to be depreciated by 30% 4. The fictitious and intangible assets are to be eliminated 5. Expenses of reconstruction amounted to Rs.5,000
Give journal entries incorporating the above scheme of reconstruction and prepare the
reconstructed balance sheet
38. Discuss different methods of valuing “Equity shares”?
39. X Co Ltd.,has the following shares as a part of its share capital
10,000 8% preference shares of Rs.100 each fully paid.
50,000 equity shares of Rs.5 each fully paid.
20,000 equity shares of Rs. 10 each, Rs. 8 called up and paid up.
The company has decided to alter the share capital as follow:
i). To subdivide the preference shares into shares of Rs. 10 each
ii). To consolidate the equity shares of Rs. 5 each into shares of Rs. 10 each
iii). To convert the party paid up equity shares into fully paid up shares of Rs.8 each
With necessary legal sanctions.
40. Following a series of losses, XYZ Co. Ltd., resolved to reduce its capital to 50,000 fully
paid Rs.5 shares and to eliminate share premium account. The company’s balance sheet
prior to implementation of the scheme was
Liabilities Rs Assets Rs
Share Capital;
50,000 fully paid shares of Rs. 10 each
Securities premium A/C
Creditors
Bank Overdrafts
5,00,000
50,000
62,000
73,000
Goodwill
Land & building
Plant& machinery
Stock
Debtors
Profit& Loss
1,00,000
1,62,000
2,07,000
92,000
74,000
50,000
6,85,000 6,85,000
It was resolved to apply the sum available under the scheme: i). To write off the goodwill account
ii). To write off the debit balance of the Profit& loss account iii). To reduce the book value of the
assets by the following amounts.
Rs
Land and Building
Plant & machinery
Stock
42,000
67,000
33,600
iv). To provide a bad debts reserve of 10% of the book value of debtors.
Show the journal entries to give effects to the scheme and prepare the revised balance sheet
after its implementation.
41. The following is the balance sheet of United Industries Ltd in 31st Dec.98
Liabilities Rs Assets Rs
Share capital;6000 6% preference
shares of Rs.100 each
6,00,000 Goodwill
45,000
12000 equity shares of Rs.100
each
12,00,000 Land & building 6,00,000
8% debentures 3,00,000 Plant& machinery 9,00,000
Bank overdrafts 3,00,000 Stock 1,30,000
Sundry creditors 1,50,000 Debtors 1,40,000
Cash 15,000
Profit & loss a/c 7,00,000
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Preliminary expenses 20,000
TOTAL 25,50,000 TOTAL 25,50,000
On the above date the company adopted the following scheme of reconstruction 1. The equity shares are to be reduced to shares of rs.40 each fully paid and preference shares to be
reduces to fully paid shares of Rs.75 each 2. The debenture holders took over stock and debtors in full satisfaction of their claims 3. The land and building to be appreciated by 30% and plant & machinery to be depreciated by 30% 4. The fictitious and intangible assets are to be eliminated 5. Expenses of reconstruction amounted to Rs.5,000
Give journal entries incorporating the above scheme of reconstruction and prepare the
reconstructed balance sheet
ANSWERS
1.b)Amalgamation. 2 b.formation. 3. B. purchase 4c. external reconstruction 5a. book value 6 b.
fair values 7 a . share holders 8 c. pooling of interest method 9. b) purchase 10. b) equity
shareholders 11 a. losses 12 c. capital reduction 13 c. capital reserve a/c 14 b. share surrender a/c 15.
a) The competent court 16.a Internal reconstruction 17 c. Net equity.18. a. Expected rate of
return 19. a Market value per share 20. b Rate of earning
UNIT-V
SECTION –A 1..A company in which more than 50% of share are held by another company is termed as a) Holding company b) subsidiary company c) GOVT company d) public company 2. Profits earned by a subsidiary company up to the date of acquisition of share by the holding company are called a) revenue profits b) capital profits c) Revaluation profits d) realization profits 3. Profit made aa subsidiary company after the date of purchase of share by the holding company are known as ---------- a) revenue profits b) capital profits c) Revaluation profits d) realization profits 4. The excess price paid by a holding company to acquire controlling interest in the subsidiary company is transferred to a) capital reserve b) goodwill c) Revenue reserve d) none of the above 5. To excess of share inequity or net assets of the subsidiary company and above the price paid for the investment is shown as a) Capital reserve b) Cost of control c) Revenue reserve d) none of the above 6. A company should purchase more than -------- share of another company in order to become holding company a) 50% b) 20% c) 25% d) 100% 7. The profits included in the closing stock on the date of consolidated balance sheets a) realized profits b) profit control c) unrealized profits d) revenues 8. Monitory interest is shown on the-------- side of consolidated balance sheets a) assets b) liabilities c) profits d) loss 9. Dividend paid out of capital must be credited to ----------- a/c by the holding company a) P& L A/C b) General reserve c) Investment d) machinery 10.Goods in transit and cash in transit should be entered on the ------------- side of the CBS a) liability side b) assets side c) debit side d) credit side 11.Post acquisition profits are also known as ----------- a) realized profits b) profit control c) unrealized profits d) revenues profits 12.Pre acquisition profits is are also known as a) capital profits b) realized profits c ) unrealized profits d) revenues profits 13.dividend paid out of revenue profits should be credited to---------- A/C a) reserve a/c b) net profit a/c c) profit and loss account d) none of the above 14.A contributory is a --------- a) Unsecured creditor b) Preferential Creditors c) Shareholders d) Debenture holder 15. List A in statement of affairs gives the list of ---------
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a) Assets specifically pledged b) Assets not specifically pledged c) Preferential Creditors d) Unsecured creditors 16.. List E in statement of affairs gives the list of ------- a) Preferential Creditors b) Debenture holders c) Unsecured Crediotrs d) Secured creditors 17. Secured creditors are shown in the statement of affairs under---- a) list A b) List B c) List c d) List D 18.. Preferential creditors are shown in the statement of affairs under----- a) list D b) List B c) List C d) List A
19.Any sum due to an employee out of provident fund is an example of------- a) Unsecured Creditor b) Preferential creditor c) Secured creditor d) Partly secured creditor 20. List 'H' shows--------- A/c a) Statement of affairs b) Preparation liquidator's final statement c) Deficiency or Surplus A/c d) Liquidator's remuneration
SECTION -B 21.Calculate minority interest from the Balance sheet of Mumbai Ltd.
Balance sheet of Mumbai Ltd as on 31.12.1999
Liabilities Rs Assets Rs
Share capital
700000 shares of Rs 2 each
General reserve as on 1.1.99
Creditors
P/L A/c as on 31.12.99
1400000
600000
300000
200000
Sundry assets
Plant & machinery
Other assets
Investment(80% of
shares)
1000000
700000
150000
650000
Madras Ltd acquire 80% of the shares at Rs.650000
22. On 31.12.03 X Ltd acquire 80% equity share of Y Ltd. The P& L a/c and general
reserve balance as per balance sheet of Y Ltd prepared on 31.12.03 amounting to
Rs. 6, 80,000 and Rs. 1, 44,000 respectively. On the date of acquisition of share the
assets of Y ltd. were revalued and gain of Rs.120000 was found. Calculate capital profits and Revenue profits. Ans C.P:9,44,000 ; R.P : Nil
23. X Ltd purchased 60% shares of Y Ltd on 1.1.02 when the balance on their P&L A/C and general
reserve were Rs. 150000 and Rs.160000 respectively.On 31.12.02 the balance sheet of Y ltd
showed P& L a/c balance of Rs.400000 and general reserve Rs. 30000. Calculate capital profits and
revenue profits
Ans C.p: 310000 R.P:390000
24. P ltd acquired 65% shares of Q Ltd on 1.10.02. P& L account in the book of Q Ltd showed a debit
balance of Rs. 40000 on 1.4.02 . on 31.3.03 the balance sheet Q Ltd showed the p7l account balance of
Rs.1,20,000. Calculate capital profit and revenue profit
Ans C.P: 40000 R.P 80000 25.. Aliquidator is entitled to receive remuneration @ 2% of the assets realised and 3% on te amount distributed among the unsecured creditors.The assets realised Rs.70, 00,000 against which payment was made as follows: Liquidation expenses Rs.50, 000,Preferential creditors Rs.1, 50,000 and Secured creditors Rs.40, 00,000 and unsecured creditors Rs.30, 00,000. Calculate the total remuneration payable to the liquidator. ANS: Liquidator's remuneration: Rs. 2, 21,845 26. The following particulars relate to a limited compnay, which went into volunatary liquidation: Preferential crediotrs Rs.25, 000 Unsecured Creditors Rs.58, 000 6%debentures Rs.30, 000 The assets realised Rs.80, 000. The expenses of liquidation amounted to Rs.1,500 and the liquidator's remuneration was agreed at 2 1/2 % on the amount realised and 2% on the amount paid to unsecured creditors including preferential creditors. Show the liquidator's final statement of account ANS: Unsecured Creditors: Rs. 20,588 27.. From the following details ascertian unsecured creditors to be shown in statement of affairs: Creditors for goods Rs.80, 000 Bills Payable Rs. 8,000 Loan from bank (unsecured) Rs. 20,000 Bank overdraft Rs. 6,000 Loan on security of machinery Rs. 40,000
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Estimated realisable value of machinery Rs.32, 000 Bills discounted Rs. 31,000(20% expected to rank) Contingent liabilities Rs. 2,500 (10% expected to rank) ANS: Unsecured Creditors: Rs. 1, 30,700 28.. From the following particulars, related to a liquidated company, calculate the amount of unsecured creditors and preferential creditors: Trade creditors Rs. 1, 42,200 Provident fund of workers Rs. 11,000 Gas board for gas supplied Rs.420 Dues to City Corporation for local taxes Rs.10, 000 Salary of clerk for six months Rs. 30,000 Salary of peon for four months Rs. 6,000 Directors fees for four months Rs .8, 000 Income tax due Rs. 10,000 Compensation under workmen's compensation act Rs.9, 000 ANS: Unsecured Creditors: Rs. 1, 60,620 29.The ultra Optimist Ltd went in to liquidation. Its assets realised Rs.3, 50,000 excluding amount realised by sale of securities held by the secured creditors. The following was the position: Share capita: 1,000 shares of Rs.100 each 1, 00,000 Secured creditors (securities realised Rs.40, 000) 35,000 Preferential creditors 6,000 Unsecured creditors 1, 40,000 Debentures having a floating charge on the assets of the company 2, 50,000 Liquidation expenses 5,000 Liquidator's remuneration 7,500 Prepare the liquidator’s final statement of account ANS: Amount paid to unsecured creditors-Rs.86, 500 30 .. Who are preferential creditors?
SECTION-C 31. The balance sheet of C ltd and D ltd as at 31st December 1986 are as follows
Liabilities Cltd Dltd Assets Cltd Dltd
Share Capital (in share of Sundry assets 1,32,500 1,38,200
Rs 10 each) 2,00,000 1,00,000 Goodwill -` 20,000
General reserves 18,000 20,000 Shares in Dltd at cost 1,40,000 _
Profit &loss a/c 24,500 23,000
Creditors 30,000 15,200
_______________ ______________
2,72,500 158 200 2,72,500 1,58,200
In the case of D Ltd profit for the year ended 31st December 1986 is Rs 12,000 and transfer to
reserve is Rs 5000. The holding of C ltd in D ltd is 90% acquired on 30th June 1986.
Draft a consolidated Balance sheet of C ltd and its subsidiary.
32. On 31st march 1996 the balance sheets of H Ltd and its subsidiary S ltd stood as follows:
Liabilities H Ltd S ltd assets H Ltd S ltd
Equity share capital 800000 200000 Fixed assets 550000 100000
General reserve 150000 70000 75% shares in
Profit &Losses/c 90000 55000 S ltd(at cost) 280000 ---
Creditors 120000 80000 Stock 105000 177000
Other current
Assets 225000 128000
___________________ ______________________
1160000 405000 1160000 405000
___________________ _____________________
Draw a consolidated B/S as at 31st march 1996 after taking into consideration the following
information:
(i) H ltd acquired the shares on 31st July 1995
(ii) S ltd earned profit of Rs.45000 for the year ended 31st march 1996
(iii) In January 1996 S ltd sold to H ltd goods costing Rs. 15000 for Rs 20000.
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On 31st march 1996 half of these goods were lying as unsold in the go down of H ltd.
Give your working notes
33. From the following balance sheets relating to H ltd and S ltd prepare a consolidated balance sheets
Balance sheet as on 31.12.1992
Liabilities H Ltd SLtd Assets H Ltd SLtd
Share capital (share of Rs. Sundry fixed assets 8,00,000 1,20,000
10 each) 10,00,000 2,00,000 Stock 6,10,000 2,40,000
P&l a/c 4,00,000 1,20,000 Debtors 1,30,000 1,70,000
Reserves 1,00,000 60,000 Bills receivable 10,000 -
Creditors 2,00,000 1,20,000 Shares in S ltd at
Bills payable -- 30,000 cost(15,000 shares) 1,50,000__________
17,00,000 5,30,000 17,00,000 5,30,000
All profits of S ltd have been earned after the shares were acquired by h ltd . But there was already
reserve of Rs. 60,000 on that date.
(a) All the bills payable of S ltd were accepted in favors of H ltd.
(b) The stock of H ltd includes Rs 50,000 purchased from S ltd . The profits added was 25% on cost.
34.The following are the B/S of H ltd and its subsidiary Sltd as on 31.3.1995
Liabilities H ltd Sltd Assets Hltd Sltd
Share capital : Machinery 3,00,000 10,000
Rs 10 each fully paid 6,00,000 2,00,000 Furniture 70,000 45,000
General reserve 1,50,000 70,000 70% share in
P/L a/c 70,000 50,000 SLTD at cost 2,60,000 -
Creditors 90,000 60,000 Stock 1,75,000 1,89,000
Debtors 55,000 30,000
Cash at bank 50,000 10,000
Preliminary expenses - 6,000
___________________ __________________
9,10,000 3,80,000 9,10,000 3,80,000
H ltd acquired the shares of S ltd on 30th June 1994, S ltd ‘s general reserves and P/L a/c
stood at Rs 60,000 and 20,000 respectably. No part of the preliminary expenses was written off in the
year ended 31.3.95
Prepare consolidated Balance sheet of h ltd and Its subsidiary S ltd as on 31.3 95 giving all
your working notes separately. 35. The following information was extracted from the books of a limited company on 31st December 1993 on which datre a winding up order was made:
Particulars Rs Equity share capital: 2,000 shares f Rs.10 each 20,000 6%preference share capital:3,000 shares of Rs.10 each 30,000 Calls in arrear(estimated to produce Rs.200) 400 5% first mortgage debentures secured by a floating charge on te whole of the assets of the company (interset paid to date)
20,000
Crediotrs fully secured(value of securities Rs.4,000) 3,500 Crediotrs partly secured (value of securities Rs.2,000) 4,000 Preferential crediotrs for wages,rates,and taxes etc 750 Unsecured creditirs 27,000 Bank overdraft,secured by a second charge on the whole of the assets of the company
2,000
Cash in hand 120 Book debts: Good Doubtful debts(Estimated to produce Rs.300) Bad
3,800 800 450
Stock in trade(estimated to produce Rs.6,000) 7,200 Freehold land & building(estimated to produce Rs.18,500) 21,000 Plant & machinery (estimated to produce Rs.6,300) 6,000 Fixtures & fittings( Estimated to produce Rs.800) 1,200
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Prepare a statement of affairs of the company ANS: Estimated deficiency as regards creditors-Rs.15, 230 and Estiamted deficiency as regards members-Rs.65, 030 36. . M.Co Ltd went into voluntary liquidation on 1.3.1997. The following balances are extracted from its books on that date:
Liabilities Rs Assets Rs Capital: 50,000 equity shares of Rs.10 each
5,00,000 Buildings 1,50,000
Debentures(secured by floating charge)
2,00,000 Plant & machinery 2,10,000
Bank overdraft 30,000 Stock in trade 95,000 creditors 40,000 Book debts 75,000
Less: Provision 10,000 65,000
Calls in arrears 1,00,000 Cash on hand 10,000 P&L A/c 1,40,000 Total 7,70,000 Total 7,70,000
Plant & machinery, and buildings are valued at Rs.1, 50,000 and Rs. 1, 20,000- respectively. On realisation, losses of Rs.15, 000 are expected on stock. Book debts will realise Rs. 70,000. Calls in arrears are expected to realise 90%. Bank overdraft is secured against buildings. Preferential creditors for taxes and wages are Rs.6, 000 and miscellaneous expenses outstanding Rs.2, 000. Prepare a statement of affairs to be submitted at the meeting of creditors. ANS: Estimated surplus as regards creditors Rs.2, 48,000 37. Shri Chopra is appointed liquidator of Moon Co Lts in vouluntary liquidation on 1 st July 1993.Following baalnces are extracted from the books on that date:
Liabilities Rs Assets Rs Share capital: 24,000 shares of Rs.5 each
1,20,000 Machinery 45,000
Reserves for bad debts 15,000 Leashold properties 60,000 Debentures 75,000 Stock-in trade 1,500 Bank overdraft 27,000 Book debts 90,000 Liabilities for purchases 30,000 Investments 9,000 Calls in arrear 7,500 Cash in hand 1,500 P&L A/c 52,500 Total 2,67,000 Total 2,67,000
Prepare a statement of affairs to be submitted to the meeting of the creditors. The following assets were realised are valued as under: Machinery-Rs.90,000; Leasehold properties-Rs.1,09,000; investmetns-Rs.6,000; Stoc- in trade-Rs.3,000; Bad debts are-Rs.3,000 and the doubtful debts are-Rs.6,000 which are estimated to realise-Rs.3,000.The bank overdraft is secured by deposit of title deeds of leasehold properties.Preferential crediotrs are-Rs.1,500. Telephone rent outstanding is Rs.120 ANS: Estimated surplus as regards creditors Rs.1, 67,380 38. . The following balances are extracted from 'A' Ltd balance sheet as on 31.3.92
Particulars Rs Equity share capital 1,00,000 6% prefernce share capital 2,00,000 6% debentures 1,50,000 Fully secured creditors(security value-rs.35,000) 30,000 Partly secured creditors(security value-Rs.10,000) 20,000 Preferential creditors 6,000 Bills payable 1,00,000 Unsecured creditors 70,000 Bank overdraft 10,000 Bills receivable 15,000 Bills discounted(one bill for Rs.10,000 is bad) 40,000 Book Debts: Good Doubtful-(estimated to realise 50%) Bad
10,000 7,000 6,000
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Land & Buildings(estimated at Rs.1,00,000) 1,50,000 Stock (Estimated at Rs.40,000) 50,000 Machinery 5,000 Cash in hand 100
Prepare statement of affairs as on 31.3.92 ANS: Deficiency as regards creditors-Rs.1, 77,400 and Defiicency as regards contributories Rs.4, 77,400 39. On Jan 31, 1990 an ompulsory order for winding up was made against X Co Ltd the following particulars being disclosed:
Particulars Book value Estimated to produce
Cash in hand 100 100 Dentores 4,000 3,600 Buildings 60,000 48,000 Furniture 20,000 20,000 Unsecured creditors 20,000 Debentures: Secured on buildings Secured on floating charges
42,000 10,000
Preferential creditors 6,000 Share capoital:32,000 shares of 10 each
3,20,000
Estimated liability for bills discounted was Rs.6, 000 estimated to rank Rs.6, 000. Other contingent liabilities were Rs.12, 000 estimated to rank at Rs.12, 000. The company was ofrmed on the 1st day of January 1985 and has made losses of Rs.3, 13,900. Prepare statemetn of affairs ANS: Deficiency as regards creditors-Rs.24, 300 and Deficiency as regards contributories-Rs.3, 44,300 40. X Ltd went into liquidation on 31.3.1989 when the following balance sheet was prepared:
Liabilities Rs Assets Rs Share Capital: 19,500 equity shares of Rs.10 each
1,95,000 Goodwill 50,000
Sundry crediotrs: Partly secured creditors(secured o building)
55,310 Building 48,000
Unsecured creditors 99,790 Machinery 65,500 Preferntial crediotrs 24,200 Stock 56,800 Bank overdraft(unsecured) 12,000 Sundry debtors 64,280 Cash 2,500 P&L A/c 98,680 Total 3,86,300 Total 3,86,300
Assets realised as follows: Building-Rs.35,000; machinery-Rs.51,000; Stock-Rs.39,000; Sundry debtors- Rs.58,500; Cash-Rs.2,500.The expenses on liquidation amounted to Rs.1,000.The liquidator's remuneration was agreed at 2.5% on the amount realised (including cash) and 2% on the amount paid to the unsecured creditors.you are required to prepre the liquidators final statemetn of accuont. ANS: Amount paid to unsecured creditrs-Rs.1, 18,300 and Liquidator's remuneration Rs.7, 500
ANSWERS 1. b) subsidiary company 2. b) capital profits 3. a) revenue profits 4. b) goodwill 5. a) Capital reserve 6. a) 50% 7. c) unrealized profits 8. b) liabilities 9. c) Investment 10. b) assets side 11. d) revenues profits 12. a) capital profits 13. c) profit and loss account 14. C.Shareholder 15. b.Assets not specifically pledged`16. C. Unsecured Creditors 17. b.List B18. c. List C 19. b) Preferential creditor 20 .c. Deficiency or Surplus
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KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS),
COIMBATORE – 29.
DEPARTMENT OF COMMERCE WITH PROFESSIONAL ACCOUNTING
SEMESTER V
18UPA514 – FINANCIAL MANAGEMENT
PREPARED BY
Dr.B.DIVYA PRIYA
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18UPA514 - FINANCIAL MANAGEMENT
1. Financial management is mainly concerned with ________
a) Arrangement of funds b) Efficient management of every business
c) All aspects of acquiring and utilizing financial resources for firm’s
activities
d) Profit maximization
2. When the firm has adequate cash to pay for its bills, it is known as:
a) Profitability b) Liquidity c) Risk d) Deficit
3. The basic objective of financial management is:
a) Profit Maximization b) Wealth Maximization
c) Making Financial decisions d) Trade off Risk-Return
4. The requirement of receipts and disbursements of government institutions is
done by
a) Public finance b) Private finance
c) Business finance d) All of these
5. Planning and controlling of firms financial resources is called
a) Business management b) Financial management
c) Principles of management d) Management
6. The modern approach of finance function deals with
a) Only procurement of funds b) Procurement and utilization of funds
c) Only utilization of funds d) Investment of funds
7. The job of finance manager is confirmed to
a) Raising of funds b) Management of cash
c) Raising of funds and their effective utilization
d) Allocation of funds
8. Financial decision involve
a) Investment, financing and dividend decision
b) Investment, financing and sales decision
c) Financing, dividend and cash decision
d) Investment decision
9. What is ignored in profit maximization?
a) Time value of money b)Risk c) Net value d) Book value
10. Which of the following is not an function of finance manager?
a) Acquisition of funds b) Investment of funds
c) Assisting management in dividend policy
d) Raising of funds
11. Which one of the following is not a long –term source of finance?
a) Shares b) Debentures c) Public deposits d) Long term loans
12. Which one of the following is not a short –term source of finance?
a) Shares b) Public deposits c) Trade creditors
d) Advances from commercial banks
13. Internal source of finance is
a) Retained earnings b) Shares c) Debentures d) Loans
14. External source of finance is
a) Depreciation funds b) Retained earnings c) Shares d) Surpluses
15. The shares issued by a company to employees or directors at a discount for
consideration other than cash is called
a) Sweat shares b) Equity shares
c) Preference shares d) Cumulative Pref. shares
16. Owner of the company is
a) Debenture holders b) Shareholders c) Creditors d) Debtors
17. Debenture holders are
a) Owner b) Creditors c) Debtors d)Customers
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18. Fixed rate of dividend is payable to
a) Equity shares b) Preference shares c) Debentures d) Bonds
19. Fixed rate of interest is payable to
a) Equity shares b) Preference shares c) Debentures d) Retained earnings
20. Short-term loan is loan taken for a period up to
a) 5 years b) 1 year c) 3 years d)10 years
SECTION B
1. Define financial management.
2. What are the classifications of finance?
3. What are the objectives of financial management?
4. What do you mean by debentures?
5. What do you mean by preference share?
6. What are the classifications of share?
7. Write a note on ploughing back of profits.
8. What are functions of finance manager?
9. Write a note on profit maximization and wealth maximization.
10. List out the role of finance manager.
SECTION C
1. Explain the functions of financial management.
2 Discuss the various sources of long -term finance.
3. Describe the various types of debentures.
4. Explain the features of equity shares.
5. Discuss the advantages of equity shares.
6. Explain the classifications of preference shares.
7. Explain the features of preference shares.
8. What are the advantages and disadvantages of preference share.
9. Explain the features of debentures.
10. Discuss the advantages and disadvantages of debentures.
Answer Scheme – SECTION A
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
c b b a b b c a a c c a a c a b b b c b
UNIT II
SECTION A
1. The length of time needed to regain the original investment is called _______
a) PBP b) NPV c) ARR D) EBIT
2. A project costs 1,00,000 and yields an annual cash flow of 20,000 for 8 years.
Calculate its pay-back period.
a) 5 years b) 4.5 years c) 8 years d) 10 years
3.The net present value method is the classic economic method of evaluating the
a) Investment proposals b) Investment project
c) Investment Planning d) All of these
4. Internal Rate of Return is
a) Historical cost b) Specific Cost c) Explicit Cost d) Implicit Cost
5. The cost that equates the present value of cash inflows with the present value of
cash outflows is
a) Historical cost b) Specific Cost c) Explicit Cost d) Implicit Cost
6. The rate at which the present value of cash inflows equals to initial investment
a) Internal Rate of Return b) Interest Rate
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c) Nominal rate d) Inflation rate
7. Internal source of finance is ________
a) Equity shares b) Preference shares
c) Debenture d) Retained earnings
8. Capital budgeting is related to ____________
a) Fixed assets b) Current Assets
c) Long term assets d) Liabilities
9. Which one of the following is not a capital budgeting technique?
a) PBP b) ARR c) NVP d) Financial leverage
10.Capital Budgeting is a part of
a)Investment Decision b) Working Capital Management
c) Marketing Management d) Capital Structure
11.Capital Budgeting deals with
a) Long-term Decisions b) Short-term Decisions
c) Both (a) and (b) d) Neither (a) nor (b)
12.Capital Budgeting Decisions are
a) Reversible b) Irreversible c) Unimportant d)All of the above
13. Which of the following is not incorporated in Capital Budgeting?
a) Tax-Effect b) Time Value of Money
c) Required Rate of Return d) Rate of Cash Discount
14. Which of the following is not a capital budgeting decision?
a) Expansion Programme b) Merger
c) Replacement of an Asset d) Inventory Level
15.A sound Capital Budgeting technique is based on
a) Cash Flows b) Accounting Profit
c) Interest Rate on Borrowings d) Last Dividend Paid
16. Which of the following is not a relevant cost in Capital Budgeting?
a) Sunk Cost b) Opportunity Cost
c) Allocated Overheads d) Both (a) and (c) above.
17. Capital Budgeting Decisions are based on:
a) Incremental Profit b) Incremental Cash Flows
c) Incremental Assets d) Incremental Capital
18. Which of the following does not affect cash flow proposal?
a) Salvage Value b) Depreciation Amount
c) Tax Rate Change d) Method of Project Financing
19. Cash Inflows from a project include
a) Tax Shield of Depreciation b) After-tax Operating Profits
c) Raising of Funds d) Both (a) and (b)
20. Which of the following is not followed in capital budgeting?
a) Cash flows Principle b) Interest Exclusion Principle
c) Accrual Principle d) Post-tax Principle
SECTION B
1. What do you mean by capital budgeting?
2. What are the features of capital budgeting?
3. State the importance of capital budgeting.
4. What do you mean by pay-back period?
5.State the concept of NPV?
6. A project requires an investment of 5,00,000 and has a scrap value of 20,000
after five years. It is expected to yield profits after depreciation and taxes during
the five years amounting to 40,000, 60,000, 70,000, 50,000 and 20,000.
Calculate the average rate of return on the investment.
7.Initial outlay 50,000, life of assets 5 years, estimated cash inflow 12,500.
Calculate internal rate of return.
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8.Determine the pay-back period for a project which requires a cash outlay of
10,000, and generates cash inflows of 2,000, 4,000, 3,000 and 2,000 in the
first, second, third and fourth year respectively.
9. A project cost 5,00,000 and yields annually a profit of 80,000 after
depreciation @ 12% p.a. but before tax of 50%. Calculate the pay-back period.
10. Initial investment 60,000
Life of asset 4 years
Estimated net annual cash flows:
1styear 15,000
2ndyear 20,000
3rd year 30,000
4th year 20,000
Calculate internal rate of return.
SECTION C
1. Discuss the process of capital budgeting.
2. Explain the various kinds of capital budgeting techniques.
3. Discuss the various methods of capital budgeting.
4. A limited company is considering the purchase of a new machine which will carry out some operations
performed by labour. X and Y are alternative models. From the following information, you are required
to prepare a profitability statement showing rate of return on investment and work out the pay-back
period for each method.
Model X Model Y
Estimated Life 5 years 6 years
Cost of Machine 1,50,000 2,50,000
Cost of Indirect materials 6,000 8,000
Estimated Savings in scrap 10,000 15,000
Additional cost of maintenance 19,000 27,000
Estimated savings in scrap:
Employees not required
Wage per employee
150
600
200
600
5. Calculate (i) Net Present Value @ 10% and 12%and (ii) Internal Rate of
Return for the Project X. The details of the project are as under:
Initial Cost of Investment 21,000
Year 1 2 3 4
Annual Cash Inflows ( ) 4,000 6,000 8,000 10,000
Present Value factor @ 10% 0.909 0.826 0.751 0.683
Present Value factor @ 12% 0.893 0.797 0.712 0.636
A company is considering the purchase of two machines with the following details:
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Machine I Machine II
Life (Estimated)
3 years 3 years
Capital Cost
10,000 10,000
Net Earnings after tax:
First Year 8,000 2,000
Second Year 6,000 7,000
Third Year 4,000 10,000
You are required to suggest which machine should be preferred, using:
1. Pay-back Period Method and 2. Net Present Value @ 10% and its values
forfirst year, second year and third year are 0.909, 0.826 and 0.751
respectively.
7. For each of the following projects compute (i) pay –back period (ii) post pay-
back profitability (iii) post back profitability index:
(a) Initial outlay 50,000
Annual cash inflow (after tax but before depreciation) 10,000
Estimated life 8 years
(b) Initial outlay 50,000
Annual cash inflow (after tax but before depreciation):
First three years 15,000
Next five years 5,000
Estimated life 8 years
Salvage 8,000
8. From the following information compute the net present value of the two
projects and suggest which of the two project should be accepted at a discount
rateof 10%.
The projects cash inflows are as follows:
Year
Project A (
)
Project B
( )
1 5000 20000
2 10000 10000
3 10000 5000
4 3000 3000
5 2000 2000
The following are the present value factors at 10% p.a
Year 1 2 3 4 5
Factor (10%)
NPV 0.909 0.826 0.751 0.683 0.621
9. Calculate the average rate of return of project A and B from the following information.
Particulars Project A Project B
Initial
investment 20000 30000
Estimated life 5 years 5 years
Scrap value 1000 2000 KASC-C
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If the rate of return is 12% which project should be undertaken?
10. Raja Ltd wants to replace its existing plant. It has received three mutually
exclusive proposals I, II, and III. The plants under the three proposals are
accepted to cost Rs.2,50,000 each and have estimated life of 5 years, 4 years,
and 3 years respectively. The companies required rate of return is 10%. The
anticipated net cash inflows after the taxes for the three plants are as follows.
Which of the above proposal would you recommend for the management
for acceptance? You may use NPV technique for evaluation.
Year 1 2 3 4 5
Factor (10%)
NPV 0.909 0.826 0.751 0.683 0.621
Answer Scheme – SECTION A
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
a a a c c a d c d a a b d d a d b d d c
SECTION B
6.ARR 10%
7. IRR 8%
8. PBP 3 years 6 months
9. 5 years
10. IRR 14.45%
SECTION C
4. PBP X-4 years, Y- 5 years. Rate of return X- 5%, Y- 3.3%, Model X is
recommended.
5. IRR-10.843%
6. PBP Machine1= 1.33 years, Machine2 = 2.1 years.
NPV Machine1 = 5232, Machine2 = 5110
Particulars Project A Project B
Investment 20,000 30,000
Expected life 4 years 5 years
Project Net income (after
interest and tax):
Year
1 2000 3000
2 1500 3000
3 1500 2000
4 1000 1000
5 - 1000
Total 6000 10000
Year
Plant I
Plant II
Plant III
1 80000 110000 130000
2 60000 90000 110000
3 60000 85000 20000
4 60000 35000 -
5 180000 - -
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Machine1 should be preferred.
7. (a) (i) 5 years, (ii) 30,000, (iii) 60%
(b) (i) 4 years (ii) 20,000 (iii) 40%.
8. NPV X- 4227, Y- 4728, Project Y should be suggested.
9. ARR= A-15%, B- 13.33%, A is suggested.
10. NPV Plant I 70,100, Plant II - 12,070, Plant III - 25,950.
Plant I should be recommended.
UNIT III
1. Cost of capital may refer to:
a) minimum rate of return b) Cut-off rate c) Minimum acceptable risk d) All of the above
2. Minimum acceptable rate of return on new investment made by the firm.
a) Cost of capital b) Capital budgeting c) leverage d) dividend
3. Rate of return payable on debt is termed as:
a) Cost of Debt b) Cost of Preference Capital c) Coat of Retained Earnings d) Cost of
equity
4. Overall cost of capital is denoted as:
a) Ko b) Kd c) Kp d) Kr
5. The cost of retained earnings is approximately equal to:
a) Cost of Debt b) Cost of Preference Capital c) Cost of Equity d) Cost of bonds
6. Rate of return payable on preference shares is termed as:
a) Cost of Debt b) Cost of Preference Capital c) Coat of Retained Earnings d) Cost of
equity
7. The profits which are not distributed as dividends to the investors is known as
a) Retained earnings b) Salaries c) Wages d) Incentives
8. Implicit cost is associated with
a) Opportunity cost b) Explicit cost c) Historical cost d) Specific cost
9. Internal source of fund:
a) Retained earnings b) equity shares c) Preference shares d) Debentures
10. Weighted average cost is otherwise called as
a) Specific cost b) composite cost c) Explicit cost d) Implicit cost
11. The cost of capital comprises of:
a) Return at Zero Risk level b) Premium for operating risk c) Premium for financial risk d)
All the above
12. Cost of capital is used as a discount rate while evaluating capital investment proposals under:
a) Payback period b) Net Present Value Method c) ARR method d) None of the above
13. The rate of return payable to procure different sources of financing is denoted as:
a) Cost of capital b) Implicit cost of capital c) Historical d) Explicit cost of capital
14. The cost which has already been incurred for financing a particular project is known as
a) Future cost b) Historical cost c) Specific cost d) Composite cost
15. The risks which can be eliminated or minimized through diversification is termed as:
a) Financial risk b) Operating risk c) Diversifiable risk d) non-diversifiable risk
16. The weights which are assigned to each source of funds, in proportion of financing inputs the firm
intends to employ or raise is known as
a) Historical weights b) Book value weights c) Market value weights d) Marginal weights
17. Overall cost of capital can be denoted as
a) Weighted Average cost of capital b) composite cost of capital c) both (a) and (b) d) None
of the above
18. Diversifiable risk is also known as
a) Systematic risk b) Non-diversifiable risk c) Unsystematic risk d) None of the above
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19. The cost of capital is slightly lower than
a) Cost of Debt b) Cost of Preference Capital c) Cost of Retained Earnings d) Cost of
equity
20. Present value of cash inflows is equal to present value of cash outflows:
a) Specific cost b) composite cost c) Explicit cost d) Implicit cost
SECTION B
1. Define cost of capital.
2. What are the components of cost of capital?
3. What are the two approaches available for cost of capital?
4. List out the ways in which debt can be issued.
5. X Ltd. issues Rs.1,00,000 9% debentures at par. The tax rate applicable to the company is 50%.
Compute cost of debt.
6. Y Ltd. issues Rs.1,00,000 9% debentures at a premium of 10%. The tax rate applicable to the
company is 50%. Compute cost of debt.
7. ABC Co. issues 14% preference capital of Rs.100 each at a premium of 20% for Rs.10,00,000. It
incurred Rs.50,000 while issuing preference capital. Find out the cost of preference capital.
8. A company issues 10,000, 12% debentures of Rs.100 each at Rs.94. these debentures are redeemable
after 5 years. Assuming tax rate of 40%, find out the cost of debt.
9. A company issues Rs.1,00,00,000 12% redeemable debentures at a discount of 6%. The floatation
costs amounted to Rs.4,00,000. These debentures are redeemable after a period of 6 years. Calculate
cost of debt before and after tax. The tax rate is 50%.
10. A firm’s Ke (return available to equity shareholders) is 15%, the average tax rate of shareholders is
40% and it is expected that 2% is brokerage cost that shareholders will have to pay while investing
their dividends in alternative securities. What is the cost of retained earnings?
SECTION C
1. Explain in detail significance of cost.
2. Explain different types of cost.
3. What is cost of capital? What are the approaches available for the cost of capital? Explain.
4. Discuss the problems in computation of cost.
5. a ) Z Ltd. issues Rs.1,00,000 9% debentures at a discount of 5%. The tax rate is 40%. Calculate
cost of debt. (Ans: Kdb: 9.47% and Kda: 5.68%)
b) A Ltd. issues Rs.2,00,000 9% debentures at a premium of 10%. The cost of floatation is 2% of
the face value. The tax rate is 60%. Calculate cost of debt.
6. Amar company issues 10% preference shares of Rs.100 each. Cost of issue is Rs.3 per share.
Calculate cost of preference capital if these shares are issued at a) par, b) at a premium of 10%, c) at a
discount of 6%.
7. A company is considering raising of funds of about 100 lakh by one of two alternative methods,
viz., 14% Institutional term loan and 13% non-convertible debentures. The term loan option would
attract no incidental cost. The debentures would have to be issued at a discount of 2.5% and would
involve cost of issue of 1 lakh.
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Advise the company as to the better option based on the effective cost of capital in each case. Assume a
tax rate of 50%.
8. A firm is considering an expenditure of 60 lakhs for expanding its operations. The relevant
information is as follows:
Rs.
Number of existing equity shares 10 lakhs
Market value of existing shares 60
Net earnings 90 lakhs
Compute the cost of existing equity share capital and of new equity capital assuming that new-shares
will be issued at a price of 52 per share and the costs of new issue will be 2 per share.
9. Calculate the weighted average cost of capital (before tax and after tax) from the following
information. Assume that the tax rate is 55%.
Type of Capital Proportion in the New Capital
Structure
Before-tax Cost of
Capital
Equity Capital 25% 24.44%
Preference Capital 10% 27.29%
Debt Capital 50% 7.99%
Retained Earnings 15% 18.33%
10. (i) If the company’s cost of equity capital is 8% and the anticipated growth rate is 5% p.a.,
Calculate the indicated market price if the dividend of 1 per share is to be maintained.
(ii) Your company’s share is quoted in the market at 20 currently. The company pays a dividend of
1 per share and the investor’s market expects a growth rate of 5% per year. Calculate the company’s
cost of equity capital.
ANSWER KEY – UNIT III - SECTION A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
d a a a c b a a b b d b d b c d c c d c
SECTION B
5. a) Kdb: 9% and Kda: 4.5%
6. Kdb: 8.18% and Kda: 4.09%
7. Cost of preference capital: 12.17%
8. Cost of debt – before tax - 13.61% and after tax - 8.16%
9. Cost of debt – before tax - 14.39% and after – tax - 7.19%
10. Cost of retained earnings - 8.82%
SECTION C
5. a ) Cost of debt : Kdb: 9.47% and Kda: 5.68%
b) Cost of debt Kdb: 8.33% and Kda: 3.33%
6. Cost of preference capital: at a) par - 10.31%, b) at a premium of 10% - 9.35% and c) at a discount
of 6% - 10.99%
7. Effective cost of capital - 7% and 6.74%
8. Cost of existing capital - 15% and cost of new issue - 18%
9. Weighted Average cost of capital – 15.58%
10. (i) Market price per share Rs.33.33
(ii) Cost of equity capital - 10%)
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UNIT IV
1. It is the permanent financing of the company represented by long-term debt and shareholders’
funds.
a) Capitalisation b) Capital Structure c) Financial Structure d) None of the above
2. An optimum capital structure may be:
a) combination of equity and preference shares b) Equity shares and Debentures c) Equity
shares, debentures and Debt d) combination of equity, preference shares and debt
3. The operational justification for the proposition i.e. the capital structure is irrelevant to the value of
the firm, is given in
a) Net Income Approach b) Net Operating Income Approach c) MM Approach d) None of the
above
4. The use of debt by the investor for arbitrage is called the
a) financial leverage b) operating leverage c) home-made leverage d) combined leverage
5. When a company is able to raise debt at lower rate than cost of equity, it is said to be:
a) financial leverage b) operating leverage c) home-made leverage d) combined leverage
6. The structure which includes both long-term as well as short-term sources of funds
a) optimum capital structure b) capital structure c) financial structure d) none of the above
7. The following factor determine capital structure:
a) Trading on equity b) Nature of enterprise c) government policy d) All of the above
8. According to M.M. Theory, the firms can be classified into ________ risk class. a)homogenous
b) heterogenous c) financial d) operating
9. An appropriate capital structure should have the following features:
a) Profitability b) Solvency c) Flexibility d) All of the above
10. It is very difficult to find out
a) capital structure b) optimum capital structure c) financial structure d) None of the above
11. This leverage is associated with investment activities.
a) Financial leverage b) operating leverage c) combined leverage d) None of the above
12. The expenses which vary with the production and incurred only when there is a production are
known as
a) variable expenses b) fixed expenses c) semi-variable expenses d) fixed operating
expenses
13. The operating leverage exists when
a) DOL is equal to one b) DOL is less than one c) DOL is greater than one d) None of the
above
14. Depreciation is a:
a) Variable Cost b) Fixed Cost c) Semi-Variable Cost d) None of the above
15. A company with a highly predictable EBIT is regarded as having
a) High business risk b) High financial risk c) Combined risk d) Systematic risk
16. When the firm is able to earn more than the fixed financial charges payable it is known as
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a) Operating leverage b) Unfavourable financial leverage c) Negative financial leverage d)
favourable financial leverage
17. This leverage expresses the relationship between the changes in sales over changes in EPS.
a) Operating leverage b) Financial leverage c) Composite leverage d) None of the above
18. Every company should have a:
a) High degree of operating leverage b) High degree of financial leverage c) high degree of
operating leverage with high degree high degree of financial leverage d) balanced degree of
operating and financial leverage
19. When a firm has high operating leverage then it is a:
a) very risky situation b) no risky situation c) less risky situation d) None of the above
20. Operating leverage is determined by the firm’s
a) cost structure b) financial structure c) capital structure d) Capitalization
SECTION B
1. Define capital structure.
2. Differentiate between financial structure and capital structure.
3. What is optimal capital structure?
4. Define leverage.
5. It is proposed to start a business requiring a capital of Rs.10 lakhs and an assumed return of 15% on
investment. Calculate EPS if the entire capital is raised by issuing equity shares of Rs.100 each. Tax
rate 50%.
6. It is proposed to start a business requiring a capital of Rs.100 lakhs and an assumed return of 20%
on investment. Calculate EPS (i) if the entire capital is raised by issuing equity shares of Rs.100
each. (ii) If 50% is raised from equity shares and 50% capital is raised by means of 10% debentures.
Assume tax rate 50%.
7. From the following information, you are required to compute of XYZ Ltd, you are required to
calculate capitalisation.
Liabilities: Equity Share Capital 10,00,000
Preference Share Capital 5,00,000
Long-term Loans and Debentures 2,00,000
Retained Earnings 6,00,000
Capital Surplus 50,000
Current Liabilities 1,50,000
25,00,000
8. X Ltd. is expecting an annual EBIT of 80,000. The company has 2 lakhs, 8% debentures. The
cost of equity capital or equity capitalization rate is 10%. You are required to calculate the total
value of the firm according to the Net Income Approach.
9. A Company expects a net income of Rs. 1,00,000. It has Rs. 2,50,000, 8% debentures. The equity
capitalization rate of the company is 10%. Calculate the value of the firm and overall capitalization
rate according to the net income approach (ignoring income tax).
10. Calculate the operating, financial and composite leverage from the following particulars:
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Interest 5,000
Sales 50,000
Variable Cost 25,000
Fixed Costs 15,000
SECTION C
1. Explain the factors determining capital structure.
2. Explain MM Approach theory of capital structure.
3. Explain the types of leverage in detail.
4. Explain Net Income and Net Operating Income Approach theory of capital structure.
5. The following figures relate to two companies:
P Ltd. ( ) Q Ltd. ( )
Sales
(-) Variable costs
500
200
1,000
300
Contribution
(-) Fixed Costs
300
150
700
400
EBIT
(-) Interest
150
50
300
100
Profit before tax 100 200
You are required to calculate the operating, financial and composite leverage and comment on the
relative risk position of them.
6. ABC Company has currently an all equity capital structure consisting of 15,000 equity shares of
100 each. The management is planning to raise another 25 lakhs to finance a major programme of
expansion and is considering three alternative method of financing:
(i) To issue 25,000 equity shares of 100 each
(ii) To issue 25,000, 8% debentures of 100 each
(iii) To issue 25,000, 8% Preference shares of 100 each
The company’s expected earnings before interest and taxes will be 8 lakhs. Assume a corporate tax
rate of 50%, determine the earnings per share (EPS) in each alternative and comment which alternative
is best and why?
7.Compute the market value of the firm, value of shares and the average cost of capital from the
following information.
Net operating income Rs. 1,00,000
Total investment Rs. 5,00,000
Equity capitalization Rate:
(a) If the firm uses no debt 10%
(b) If the firm uses Rs. 25,000 debentures 11%
(c) If the firm uses Rs. 4,00,000 debentures 13%
Assume that Rs. 5,00,000 debentures can be raised at 6% rate of interest whereas Rs. 4,00,000
debentures can be raised at 7% rate of interest.
8. A Company expects a net income of Rs. 1,00,000. It has Rs. 2,50,000, 8% debentures. The equity
capitalization rate of the company is 10%. Calculate the value of the firm and overall capitalization rate
according to the net income approach (ignoring income tax).
(b) If the debenture debts are increased to Rs. 4,00,000. What shall be the value of the firm and the
overall capitalization rate? (Ans: (i) 9.52%, (ii) 9.6%)
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9.XYZ expects a net operating income of Rs. 2,00,000. It has 8,00,000, 6% debentures. The overall
capitalization rate is 10%. Calculate the value of the firm and the equity capitalization rate (Cost of
Equity) according to the net operating income approach.
If the debentures debt is increased to Rs. 10,00,000. What will be the effect on volume of the firm and
the equity capitalization rate? (Ans: 12.67% & 14%)
10. There are two firms ‘A’ and ‘B’ which are exactly identical except that A does not use any debt in
its financing, while B has Rs. 2,50,000 , 6% Debentures in its financing. Both the firms have earnings
before interest and tax of Rs. 75,000 and the equity capitalization rate is 10%. Assuming the corporation
tax is 50%, calculate the value of the firm. (Rs.8,75,000)
ANSWER KEY – UNIT IV
SECTION A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
b d c c a c d a d b b a c b a d c d a a
SECTION B
5. EPS: Rs.7.5
6. EPS: (i) Rs.10 (ii) Rs.15
7. Capitalisation Rs.17,00,000
8. Value of the firm according to the Net Income Approach - Rs.8,40,000
9. Overall capitalization rate according to the net income approach - 9.52
10. O.L. 2.5; F.L. 2, C.L.:5
SECTION C
5. Answer:
P Ltd. Q Ltd.
O.L 2 2.333
F.L 1.5 1.5
C.L 3 3.5
6. EPS: Plan I: Rs.10, Plan II: Rs.20 and Plan III: Rs.13.33, Plan II is the best
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7. Value of the firm: a) 10%, b) 9.78% and c) 10.48%
8. (i) Value of the firm : 9.52%, and (ii) Overall Capitalisation rate: 9.6%
9. Capitalisation rate: i) 12.67% & ii) 14%
10.Value of the firm - Rs.8,75,000
UNIT V
1. Portion of profit distributed amongst its shareholders is referred as:
a) Dividend b) Earnings c) Salaries d) Bonus
2. That portion of profit which is declared as dividend is known as:
a) Dividend pay-out ratio b) Earnings per share c) Salary retention ratio c) Bonus pay-out
ratio
3. When the dividend is paid in the form of cash, it is known as:
a) Stock Dividend b) Cash Dividend c) Scrip Dividend d) Property Dividend
4. By paying stock dividend, a company may conserve it’s:
a) safety b) liquidity c) stability d) profitability
5. When a company pays a fixed amount per share as dividend every year, it refers to:
a) constant dividend per share b) dividend pay-out ratio c) dividend retention ratio d) constant
pay-out ratio
6. The consistency in the payment of dividend is known as:
a) safety b) liquidity c) stability d) profitability
7. It determines the amount of profit to be paid as dividend and the amount of profit to be retained.
a) Dividend policy b) profit c) liquidity d) capital
8. Regular payment of dividend, it means:
a) safety b) liquidity c) stability d) profitability
9. Stability of dividend may be in the following form:
a) constant dividend per share b) constant percentage c) stable rupee dividend plus extra
dividend d) All of the above
10. The capitalization of profit is termed as:
a) cash dividend b) bond dividend c) stock dividend d) property dividend
11. When the dividend is paid in the form of bonus shares, it is known as:
a) Stock Dividend b) Cash Dividend c) Scrip Dividend d) Property Dividend
12. Bond dividend is otherwise known as:
a) Stock Dividend b) Cash Dividend c) Scrip Dividend d) Property Dividend
13. When the dividend is paid by property, it is known as:
a) Stock Dividend b) Cash Dividend c) Scrip Dividend d) Property Dividend
14. When the dividend is paid in the form of cash, it is known as:
a) Stock Dividend b) Cash Dividend c) Scrip Dividend d) Property Dividend
15. If the company promises to pay the shareholder at a future specific date, this type of dividend is
referred as:
a) Stock Dividend b) Cash Dividend c) Scrip Dividend d) Property Dividend
16. Irrelevance theory of Dividend is propounded by:
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a) Modigliani & Miller b) Gordon c) Walter d) Steve Jobs
17. Relevance theory of dividend is propounded by:
a) Modigliani & Miller b) Durand c) Walter d) Steve Jobs
18. When the entire profit is given to the shareholders as dividend, dividend payout ratio is:
a) 100% b) 60% c) 20% d) 200%
19. When the entire profit is retained by the company, dividend payout ratio is:
a) 100% b) 60% c) 20% d) 0%
20. Out of total profit of the firm, 20% were retained, in this case dividend pay-out ratio will be: a)
100% b) 60% c) 20% d) 80%
SECTION B
1. What is dividend? Explain the types of dividend.
2. State the criticism of MM approach.
3. What are the assumptions of Walter’s model?
4. What are the assumptions and criticisms of Gordon’s model?
5. Sahu & Co. earns 6 per share having capitalisation rate of 10 per cent and has a return on investment at
the rate of 20 per cent. According to Walter’s model, what should be the price per share at 30 per cent
dividend payout ratio?
6. The following figures are collected from the annual report of XYZ Ltd.:
Net Profit Rs.30 lakhs; Outstanding 12% preference shares Rs.100 lakhs
No. of equity shares Rs.3 lakhs Return on Investment 20%.
What should be the approximate dividend pay-out ratio so as to keep the share price at 42 by using
Walter model?
7. Subhash & Co. earns Rs.8 per share having capitalisation rate of 10 per cent and has a return on
investment at the rate of 20 per cent. According to Walter's model, what should be the price per share at
25 per cent dividend payout ratio? Is this the optimum payout ratio as per Walter’s Model?
8. The earnings per share of a company is Rs.10 and the rate of capitalisation applicable to it is 10 per cent.
The company has three options of paying dividend i.e.(i) 50%,(ii)75% and (iii)100%. Calculate the
market price of the share as per Walter’s model if it can earn a return of 15% on its retained earnings.
9. The earnings per share of a company is Rs.10 and the rate of capitalisation applicable to it is 10 per cent.
The company has three options of paying dividend i.e.(i) 50%,(ii)75% and (iii)100%. Calculate the
market price of the share as per Walter’s model if it can earn a return of 5 per cent on its retained
earnings.
10. The earnings per share of a company is Rs.10 and the rate of capitalisation applicable to it is 10 per
cent. The company has three options of paying dividend i.e.(i) 50%,(ii)75% and (iii)100%. Calculate
the market price of the share as per Walter’s model if it can earn a return of 10% on its retained
earnings.
SECTION C
1. What are the determinants of dividend policy of a firm?
2. Briefly explain Walter’s approach to Dividend policy.
3. Explain the concept of MM theory of dividend.
4. Explain the different forms of dividend.
5. X Company Ltd., has 100000 shares outstanding the current market price of the shares Rs. 15
each. The company expects the net profit of Rs. 2,00,000 during the year and it belongs to a rich
class for which the appropriate capitalisation rate has been estimated to be 20%. The company is
considering dividend of Rs. 2.50 per share for the current year. What will be the price of the share
at the end of the year (i) if the dividend is paid and (ii) if the dividend is not paid.
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6. From the following information supplied to you, ascertain whether the firm is following an
optional dividend policy as per Walter’s Model?
Total Earnings Rs. 2,00,000
No. of equity shares (of Rs. 100 each 20,000)
Dividend paid Rs. 1,00,000
P/E Ratio: 10
Return on Investment: 15%
The firm is expected to maintain its rate on return on fresh investments. Also find out what should be
the E/P ratio at which the dividend policy will have no effect on the value of the share? Will your
decision change if the P/E ratio is 7.25 and interest of 10%?
7. The earnings per share of a company are Rs. 80 and the rate of capitalization applicable to the
company is 12%. The company has before it an option of adopting a payment ratio of 25%. Using
Walter’s formula of dividend payout, compute the market value of the company’s share of the
productivity of retained earnings for 12%.
8. From the following data, calculate the MP of a share of ABC Ltd., under (i) Walter’s formula; and
(ii) Dividend growth model.
EPS = Rs. 10 DPS = Rs. 6
Ke = 18% r = 25%
9. The following data are available for R Ltd.
— Earnings per share Rs. 8
— Rate of return on investment 16%
— Rate of return to shareholders 12%
If Gordon’s basic valuation formula is applied what will be the price per share when the
dividend pay out ratio is 25%, 50%, 60% and 100%.
10. The earnings per share of a company is Rs.10 and the rate of capitalisation applicable to it is 10 per
cent. The company has three options of paying dividend i.e.(i) 50%,(ii)75% and (iii)100%.
Calculate the market price of the share as per Walter’s model if it can earn a return of 15%, 10%
and 5% on its retained earnings.
ANSWER KEY – UNIT V - SECTION A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
a a b b a c a c d c a c d b c a c a d d
SECTION B
5. Market price per share P=Rs.102
6. Dividend pay-out ratio : 52%
7. Market price per share : P = Rs.140
8. Market price per share (P): 50% - Rs.125, 75% - Rs.112.5 and 100% - Rs.100
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9. Market price per share (P): 50% - Rs.75, 75% - Rs.87.5 and 100% - Rs.100
10. Market price per share (P): – 50% - Rs.100, 75% - Rs.100 and 100% - Rs.100
SECTION C
5. (i) If the dividend is paid: Rs.15.50 and (ii) if the dividend is not paid: Rs.18
6. Value of the firm: Rs.200 and 75.62.
7. Market price per share: Rs.62.5
8. MP of a share of ABC Ltd., under (i) Walter’s formula – Rs.64.22 and (ii) Dividend growth model –
Rs.81.48
9. Gordon’s basic valuation formula: Price per share - 25% - Rs.0, 50% - Rs.100, 60% - Rs.85.71 and
100% - Rs.66.67.
10. Market price of the share: a) At 15%: Rs.125, Rs.112.5 and Rs.100;
b) At 10%: Rs.75, 87.5 and 100 and
c) At 5%: Rs. 100, Rs.100 and Rs.100)
KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
Class: III B.COM PA Semester –VI
Sub. Name: DIRECT TAX Sub. Code: 18UPA515
Prepared By: Dr.B.DIVYA PRIYA, M.Com. (CA)., M.Phil., M.B.A., SET., Ph.D.
&Mrs.P.Geetha M.COM.,MBA.,PGDCA
UNIT I
SECTION A
1. Who introduced income tax?
a) Sir James Wilson b) Ambedkar c) P.Chidambaram d) Arun Jaitley
2. Income Tax Act was first introduced in India on
a) 1st April 1961 b) 1st June 1961 c) 1st September, 1961 d) 1st January, 1961
3. Income tax Act, 1961 came into force on:
a) 1st April 1962 b) 1st June 1962 c) 1st September, 1962 d) 1st January, 1962
4. The term ‘person’ was defined under
a) Section 2(3) of Income Tax Act, 1961
b) Section 2(4) of Income Tax Act, 1961
c) Section 2(5) of Income Tax Act, 1961
d) Section 2(8) of Income Tax Act, 1961
5. The manager of H.U.F. is referred as:
a) Partners b) Co-parceners c) Karta d) spouse
6. For computation of residential status, taxable entities are classified into:
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a) 2 categories b) 3 categories c) 4 categories d) 5 categories
7. Income, on which tax was not charged are called:
a) Exceptional income b) Omitted income c) Privileged income d) Exempted
income
8. Exempted income are defined under Income Tax Act, 1961, section:
a) 10 b) 20 c) 30 d) 50
9. An Indian Companies residential status is always:
a) non-resident b) resident c) not ordinary resident d) None of the above
10. Income tax is a
a) direct tax b) business tax c) professional tax d) Indirect tax
11. Who is assessee in case of H.U.F.?
a) Karta b) Father c) Spouse d) Deemed Karta
12. In which year Income Tax was levied in India for the first time?
a) 1860 b) 1960 c) 2000 d) 2010
13. Previous year started from
a) April b) March c) January d) September
14. A person is said to be a non-resident when he is
a) not fulfilling any one of the basic conditions b) fulfilling only basic conditions
c) fulfilling only additional conditions d) fulfilling both basic and additional conditions
15. Residential status is determined for:
a) Assessment year b) Previous year c) Accounting year d) Financial year
16. Under the income-tax act, the incidence of taxation depends on
a) the citizenship of tax payer b) the residential status of the tax payer
c) the age of the tax payer d) the gender of the tax payer
17. Who among the following may be “not ordinarily resident”?
a) Partnership firm b) Company c) Association of persons d) Hindu Undivided Family
18. Residential status of taxable entities is:
a) fixed in nature b) Fixed once in 5 years c) can change from year to year d) none of these
19. An individual who wants to be resident of India must stay in India for at least
a) 730 days in 10 previous years b) 365 days in the previous year
c) 182 days in the previous year d) 150 days in the previous year
20. Past untaxed income brought to India is taxable in the hands of:
a) resident and not ordinarily resident b) resident and ordinarily resident
c) non-resident d) none of these
SECTION B
1. Define Previous year and assessment year.
2. Define ‘person’ as per Income Tax Ac, 1961.
3. Mr. P, an Indian Citizen, is living in Delhi since 1960, he left for Japan on July 1, 2013 and comes
back on August 7, 2017. Determine his residential status for the previous year 2017-18.
4. Dr. Z, an Indian Citizen and a Professor in IIM, Lucknow, left India on September 15, 2017 for
USA to take up Professor’s job in MIT, USA. Determine his residential status for the assessment
year 2018 - 19.
5. Mohan is a citizen of India. He left for Iran on 18th April, 2017 and could not return to India till
the end of the financial year 2017- 18. Determine his residential status for the assessment year
2018 – 19.
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6. Ramavtar left for U.S.A. on 10th March, 2015 after having lived in India for 20 years. He returned
to India on 10th September 2017. Determine his residential status for the assessment year 2018 –
19.
7. What is the residential status of an individual for the assessment year 2018-19 who came to India
for the first time in 2015-16 and was in India as follows:
Previous Year Presence in India
2017 – 18 185 days
2016 – 17 15 days
2015 - 16 26 days
8. Mr.Vikas is Karta of a H.U.F whose property is situated in Bangladesh. During his previous year
2017 – 18 he came to India with his family for 15 days and went back leaving his family in India.
Determine the residential status of India.
9. The following are the details of income of Shri Ram Lal:
1. Share of income from a joint venture in India 10,000
2. Dividend 1,000
3. Income from Agriculture in Pakistan 20,000
4. Salary received in India 9,800 (computed) but the services for the same were
rendered in Iran.
5. Income from business (controlled from India) in Pakistan 10,000 and his income
remitted to India.
6. Income earned and received in Pakistan from bank deposits 5,000
7. Income accrued in India but received in Iran 10,000
Compute Mr.Ram Lal’s taxable income if he is (i) Resident, (ii) Not Ordinary Resident and (iii) Non-
Resident.
10. Following are the incomes of Mr.Amarnath for the financial year 2018-19:
(i) Interest on savings Bank deposit in Chennai 1,200
(ii) Income from Agriculture in Africa invested in Nepal 10,000
(iii) Dividend received in U.K. from an American
Company, a part of which 2,000 remitted to India
10,000
(iv) Pension received in Belgium for services rendered in
India with a Limited Company
20,000
Compute Mr.Amarnath’s taxable income if he is (i) Resident, (ii) Not Ordinary Resident and
(iii) Non-Resident.
SECTION C
1. Explain about the conditions laid down in residential status.
2. Define: a) Assessee b) Income c) Incidence of tax.
3. Mr.Ram, an Indian citizen leaves India for the first time on 31st May, 2013 an comes back on 15th
May, 2016. He again leaves India on 10th June 2017 to come back on 14th January, 2018. He is living
in India since then. Determine his status for the previous year 2017 – 18.
4. Mr. B is a foreign citizen. His father was born in Delhi in 1960 and mother was born in England in
1965. Hisgrandfather was born in Delhi in 1935. Mr. A is coming to India to see Taj Mahal and visit
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other historical places in India. He comes to India on 1st November, 2017 for 200 days. He has never
come to India before. Determine his residential status for PY 2017-18.
5. A person after about 26 years of stay in India, retired to England in April 2016 and returned to India
on 15th February 2018 to take up a salaried appointment. What is his residential status for the
previous year 2017-18?
6. Mr.B, a married citizen of India left for Germany for the first time on 15-9-2016 on a business trip.
He returned to India on 5-6-2017. During his absence from India he maintained a dwelling house for
himself in Calcutta. What will be his residential status for the assessment year 2018 – 19?
7. a) Mr.Ram, an Indian Citizen leaves India for the first time on 31st May, 2013 and comes back on
15th May, 2016. He again leaves India on 10th June 2017 to come back on 14th January 2018. He is
living in India since then. Determine his status for the previous year 2017 – 18.
b) Mr.Vikas is Karta of a H.U.F whose property is situated in Bangladesh. During his previous
year 2017 – 18 he came to India with his family for 15 days and went back leaving his family in
India. Determine the residential status of India.
8. Which of the following incomes are taxable when the residential status of Mr.Mukesh is: (i)
Resident, (ii) Not Ordinary Resident and (iii) Non-Resident.
1. Income accrued in Canada received in India Rs.2,000
2. Rs.5,000 were earned in Africa and received there brought to India
3. Rs.5,000 earned in India but received in Canada
4. Rs.10,000 earned and received in Sri Lanka from a business controlled from India
5. House property income (computed) from Srilanka Rs.2,000
6. Rs.4,000 was past untaxed foreign income which was brought to India during the
previous year.
7. Profit earned from a business in Kanpur Rs.10,000.
9. The following are the incomes of Shri Kiran for the previous year 2017 – 18.
Rs.
i) Profit from business in Dharwad 7,000
ii) Income accrued in India but received in Italy 6,000
iii) Profit from business in England received in India 5,000
iv) Income from house property in Africa but received in India 4,000
v) Profit from business established in Iran and deposited in a
bank there, the business being controlled from India
3,000
vi) Income from house property in Pakistan and deposited on
bank there
2,000
vii) Past untaxed foreign income brought in to India during this
previous year
1,000
Compute the total income of Shri Kiran for the assessment year 2018 – 19 if he is (i) Ordinary
Resident, (ii) Not Ordinary Resident and (iii) Non – resident.
10. The following are the incomes of Shri Raman for the previous year 2017 – 18.
Rs.
i) Profit on sale of machinery in Bangladesh but received in
Australia
30,000
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ii) Profit from business established in Iran and deposited in
bank there, the business being controlled from India (1/3rd
received in India)
42,000
iii) Income from house property in Africa 20,000
iv) Agricultural Income in England and was received there but
later brought in to India
8,000
v) Past untaxed foreign income brought in to India during this
previous year
6,000
Compute the total income of Shri Kiran for the assessment year 2018 – 19 if he is (i) Ordinary
Resident, (ii) Not Ordinary Resident and (iii) Non – resident.
UNIT I – Answer Scheme
Section A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
a c c a c b d a b a a a a a b b d b b d
SECTION B
3. Resident & Ordinary resident (Satisfied both basic and additional conditions)
4. Non-resident (have not satisfied basic conditions)
5. Non-resident (have not satisfied basic conditions)
6. Ordinary Resident(Satisfied both basic and additional conditions)
7. Ordinary Resident (Satisfied both basic and additional conditions)
8. Non-resident (have not satisfied basic conditions)
9. OR Rs.64,800, NOR Rs. 39,800 and NR Rs.29,800
10. Resident Rs.41,200, NOR Rs.2,200 and NR Rs.21,200
SECTION C
3. Ordinary resident – Satisfied both basic and additional conditions
4. Non-resident – have not satisfied basic conditions
5. Non-resident – have not satisfied basic conditions
6. Ordinary Resident (Satisfied both basic and additional conditions)
7. a) Ordinary Resident (Satisfied both basic and additional conditions)
b) Non-resident – have not satisfied basic conditions
8. OR: Rs.34,000, NOR: Rs.27,000 and NR: Rs.17,000
9. OR: Rs.27,000, NOR: Rs.25,000 and NR: Rs.22,000
10. OR: Rs.1,00,000, NOR: Rs.72,000 and NR: Rs.44,000
UNIT II
SECTION A
1. Which section of the Income Tax Act, 1961 defined ‘Income from House Property’?
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a) Section 6 b) Section 22 c) Section 38 d) Section 61
2. The basis of charge for tax on income from house property is:
a) Annual value b) Rental value c) Municipal value d) Market Value
3. ERV of let-out house if standard rent is not applicable is:
a) Least of MRV or FRV b) Higher of MRV or FRV c) Lower of FRV or MRV
d) None of these
4. GAV of self occupied house is:
a) Always nil b) Always fully taxable c) Higher of MRV/FRV d) None of these
5. Standard Deduction u/s 24 is:
a) ¼ of NAV b) 1/5 of NAV c) 30% of NAV d) 10,000
6. Preconstruction interest is deductible in:
a) 4 instalments b) 5 instalments c) 6 instalments d) 3 instalments
7. Arrears of rent recovered are subject to standard deduction u/s 24 up to:
a) 1/5th of arrears b) 1/4th of arrears c) 1/6th of arrears d) 30% of arrears
8. In case of self-occupied house, standard deduction is a) Nil b) 20% of NAV c) 30% of NAV
d) 10,000
9. The rent fixed as per municipal valuation is called a) Municipal value b) F.R.V. c) Standard
Rent d) Actual Rent
10. Interest on loan is allowed as deduction up to a maximum of a) Rs.30,000 b) Rs.50,000 c)
Rs.60,000 d) Rs.1,00,000
11. Exemption limit of HRA in case of assessee living in metropolitan cities is:
a) 50% of salary b) 40% of salary c) 15% of salary d) 20% of salary
12. Exemption limit of HRA in case of assessee living in non metropolitan cities is:
a) 40% of salary b) 50% of salary c) 15% of salary d) 20% of salary
13. Education allowance is exempted upto a maximum of:
a) One child b) Two children c) Three children d) Four children
14. Children education allowance is exempted upto:
a) 200 p.m. per child b) 300 p.m. per child c) 100 p.m. per child d) 400 p.m. per child
15. Hostel expenditure allowance is exempted up to:
a) 300 p.m. per child b) 200 p.m. per child c) 150 p.m. per child d) 250 p.m. per child
16. Interest on RPF balance is exempted up to:
a) 9.75% b) 9.5% c) 10% d) 12%
17. Employer’s contribution to RPF is exempted upto:
a) 10% of salary b) 13% of salary c) 12% of salary d) 11% of salary
18. Gratuity in case of government employee is:
a) Fully taxable b) Partly taxable c) Fully exempted d) Government pays the tax
19. Pension is taxable under _________ head.
a) salary b) House property c) Capital gains d) Other sources
20. Rent free accommodation is an example for
a) Allowance b) Compensation c) Perquisite d) Profit in lieu of salary
SECTION B
1. Mr. Ashikh retired in September, 2012 after having put in 42 years of service in a company. His
average salary for 10 months preceding Sept. 2012 was Rs:2500 p.m. He received a gratuity of Rs.
60,000. Compute his taxable gratuity.
2. Mr. Athul, covered under the Payment of Gratuity Act, 1972, retires on 10th January, 2013 after
serving the company for 16 years. At the time of retirement his basic salary was Rs: 4,400 p.m. and
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DA Rs: 800 p.m. On retirement he receives Rs: 1,00,000 as gratuity. Compute the amount of gratuity
exempt U/s 10(10).
3. Mr.Suhil is a government employee. He draws a monthly salary of Rs.20,000 and Rs. 500 p.m. as
entertainment allowance. Find out the amount of deduction for the entertainment allowance.
4. Mr. Aswin is entitled to a basic salary of Rs 5,000 p.m. and dearness allowance of Rs 1,000 p.m.,40%
of which forms part of retirement benefits. He is also entitled to HRA of Rs 2,000 p.m. He actually
pays Rs 2,000 p.m. as rent for a house in Delhi. Compute the taxable HRA.
5. Compute Gross annual value:
Actual rent Rs. 24,000 p.a.,
Fair rent Rs.28,000 p.a.
Standard rent Rs. 20,000 p.a.
6. Calculate annual rental value from the following particulars for the assessment year 2018-19.
Actual rent Rs. 14,000 p.m.;
MRV Rs. 1,20,000 p.a.;
FRV Rs.1,32,000 p.a.
Standard rent Rs. 1,38,000.
During the previous year, the assessee is not able to realise two month rent.
7. Rinju is the owner of 2 houses. From the following, find out annual value of the houses:
House-1 House-2
Municipal value 30,000 35,000
Actual rent 40,000 32,000
FRV 36,000 30,000
SRV 30,000 36,000
Municipal tax paid 4,000 3,500
8. Compute Annual Rental Value from particulars given below:
Rs.
Municipal Rental Value 60,000 p.a.
Fair Rental Value 66,000 p.a.
Standard Rent 63,000 p.a.
Real Rent 6,000 p.m.
Date of completion: 31- 05-2017 Date of letting : 1-08-2017.
9. Define the term ‘salary’ as per Income Tax Act, 1961.
10. Explain: i) Arrears in rent ii) pre-construction interest.
SECTION C
1. Justin Kuriakose retired on 31-10-2012 after serving 20 years. He received Rs;96,000 as leave
encashment for 12 months. His average salary at the time of retirement amounted to Rs:7,400. He
had 2 months leave at his credit. Find out the taxable amount of Leave encashment.
2. Compute gross salary from information given below for each situation separately:
(i) Salary @ Rs.30,000 p.m.
(ii) D.A. @ Rs. 6,000 p.m.
(iii) C.C.A. @ Rs.1,000 p.m.
(iv) House Rent Allowance @ Rs.8,000 p.m.
(v) Commission on turnover achieved by him is Rs. 40,000
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Situation a) living in own house, ii) living in rented house at Delhi and D.A. enters
into pay for retirement benefits and rent paid is Rs.7,000 p.m. c) Living in rented
house at Chandigarh and D.A. does not enter into pay for retirement benefits and
rent paid is Rs.10,000 p.m.
3. Mr.A is employed at Hyderabad at a basic salary of Rs.25,000 p.m and he is also getting following
allowances :
Rs.
1. Dearness Allowances
2. Lunch allowance
3. Servant allowance (he is paying Rs.1,200 p.m. to a servant)
4. Transport allowance
5. Education allowance allowed per child for three children
6. Hostel allowance to one child
7. Conveyance allowance
8. Overtime allowance
9. Officiating allowance
10. Cash allowance
11. Entertainment allowance
12. Medical allowance
13. City Compensatory allowance
14. House Rent allowance
2,000 p.m.
1,000 p.m.
1,000 p.m.
2,000 p.m.
200 p.m.
500 p.m.
800 p.m.
2,000 p.m.
2,000 p.m.
1,200 p.m.
2,000 p.m.
800 p.m.
600 p.m.
5,000 p.m
He is having a family house at the place of his posing but he is living in a rented house and is
paying a rent of Rs.7,000 p.m. Find out his Gross salary.
4. Mr.Jai, a manager with a company was transferred to Bangalore where he stayed in a hotel free of
rent. His salary particulars are:
Salary Rs.25,000
D.A. (p.m.) Rs.5,000
Conveyance allowance (p.m.) Rs. 1,000
Actual expenditure incurred for employment (p.m.) Rs.600
City Compensatory allowance (p.m.) Rs.1,000
Calculate the value of rent free accommodation if he stayed in a hotel:
a) 14 days and actual bill is Rs.6,600
b) 38 days and actual bill is Rs.30,950.
5. Mr.D owns a house at Vijay nagar and submits the following particulars:
Rs.
Rent received 1,75000
Standard rent 1,60,000
Municipal Valuation 1,70,000
Fair Rental Value 1,72,000
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Municipal taxes 12% of MRV + 2% of Municipal taxes as
Sanitation charges
Compute the net annual value.
6. From the following particulars given below for two self-occupied houses. Advise the owner as to
which house he should choose as self-occupied for the assessment year 2018 – 19:
House A
(Rs.)
House B
(Rs.)
Municipal Rental Value 24,000 p.a. 30,000 p.a.
Municipal Taxes (50% paid) 2,000 p.a. 3,000 p.a.
Ground rent 500 p.a. 1,000 p.a.
Fire Insurance Premium paid 1,000 p.a. 2,000 p.a.
Interest on loan taken to construct the house 15,000 p.a. 18,000 p.a.
Other Income 2,00,000
p.a.
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7. Mr.X has three house properties which he uses for is residential purposes.
I
Rs.
II
Rs.
III
Rs.
Municipal value 40,000 60,000 80,000
F.R.V. 50,000 70,000 65,000
Standard Rent 60,000 84,000 72,000
Municipal taxes 4,000 6,000 9,000
Expenses on repair 2,000 4,000 3,000
Insurance premium 1,000 2,500 3,000
Year of loan 1998 2002 2007
Interest on loan paid in the p.y. 2017 -18 35,000 40,000 25,000
Find out income from house property.
8. Compute income from house property from the particulars given below for the assessment year
2018 -19:
Municipal Rental value Rs.24,000 p.a.
Actual rent received Rs.30,000 p.a.
Municipal taxes Rs.2,400 p.a.
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Date of completion 31.03.2014
Date of letting 1.04.2014
Fire insurance premium due 400 p.a.
Ground rent due 600 p.a.
Interest on loan taken to construct the house: 2011-12 to 2016-17 @ Rs.15,000 p.a.
2017 – 18 Rs.10,000 and Interest on delayed payment of interest Rs.1,000.
9. Explain the types of allowances in detail.
10. Write a note on taxable perquisite.
UNIT II – ANSWER SCHEME
SECTION A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
a a b a c d d a a a a a b a a a c c a c
SECTION B
1. Taxable gratuity: Rs.7,500
2. Amount of gratuity exempt U/s 10(10). : Rs.48,000
3. Amount of deduction for the entertainment allowance: Rs.5,000
4. Taxable HRA : Rs.6,480
5. Gross Annual Value : Rs. 24,000
6. Annual rental value: Rs.1,40,000
7. ARV: House 1 : Rs.36,000; House 2: Rs.31,500
8. Annual Rental Value: Rs.48,000
SECTION C
1. Taxable amount of Leave encashment: Rs.14,800
2. Gross Salary: Situation a) living in own house – Rs.5,80,000,
b) living in rented house at Delhi - Rs.5,43,200
c) Living in rented house at Chandigarh – Rs.5,00,000
3. Gross salary: Rs.4,78,800
4. Value of rent free accommodation if he stayed in a hotel:
a) 14 days and actual bill is Rs.6,600 - Taxable value - Nil
b) 38 days and actual bill is Rs.30,950 – Taxable value – Rs.4,791
5. Net Annual Value:Rs.1,54,192
6. Option I : a) House A : Self-occupied – Loss: Rs.15,000; House B deemed to be let out; Option
II : b) House B : Self-occupied – Loss: Rs.18,000; House A deemed to be let out; Income:
Rs.1,100; Hence option II is better.
7. House I : Loss - Rs.2,800; Income from House II: Rs.4,800 and House III: Rs.19,100
8. Income from house property: Rs.3,320
UNIT III
SECTION A
1. Profits earned from an illegal business are:
a) Taxable b) Tax free c) Ignored by Tax Authorities d) Treated as ‘other income’.
2. Contribution made to an approved scientific research association is eligible for deduction upto:
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a) 50% b) 80% c) 100% d) 175%
3. Unabsorbed capital expenditure on scientific research can be carried forward for:
a) 15 Years b) 14 Years c) 8 Years d) Indefinite period
4. Excise duty and sales tax are allowed as deduction if paid before:
a) Late date of filing of return b) Previous year end c) before 31st December of the previous
year d) None of these
5. Technical know-how acquired after 1-4-98 is eligible for depreciation at:
a) 10% p .a. b) 20% p.a. c) 25% p.a. d) 40% p.a.
6. Which one of the following is not an admissible expense? a) Income tax b) Excise duty c) Bad
debt d) sales tax
7. Preliminary expenses shall be allowed as deduction in a) 10 instalments b) 8 instalments c) 5
instalments d) 3 instalments
8. Bad debts allowed earlier and recovered latter on is a) business income b) non-business income
c) exempted income d) other sources
9. Gifts from clients are a) Professional income b) Business income c) Other sources d) exempted
income
10. Repair incurred before installation of an assets is a) capital expenditure b) capital receipt c)
Revenue expenditure d) revenue receipt
11. To be a short-term capital asset, non financial capital asset” must be held for
a) less than 36 months b) less than 24 months c) less than 12 months d) less than 6 months
12. What is the time limit for holding of a financial asset, to be called ‘Short Term Capital Asset”?
a) Not more than 6 months b) Not more than 12 months c) Not more than 24 months d)
Not more than 36 months
13. To be a long term capital asset, a non financial asset should be held more than
a) 12 months b) 24 months c) 36 months d) 60 months
14. If shares were held for less than 12 months, it is then called as:
a) Short term capital asset b) Long term capital asset c) Exempted Capital asset d) None of
these
15. Indexing is applicable to:
a) Long term capital asset b) Short term capital asset c) Exempted capital asset d) Financial
asset
16. Land held for 56 months
a) Long term capital asset b) Short term capital asset c) Exempted capital asset d) None of
these
17. Short term capital gain on sale of unlisted shares are a) taxable b) exempted c) partially exempted
d) partially taxable
18. Long term capital gain on sale of unlisted shares are a) taxable b) exempted c) partially exempted
d) partially taxable
19. Exemption u/s 54 is allowed when a residential house is sold and the investment is made on a)
another residential house b) shares c) land d) Jewellery
20. Cost of long term debentures are a) eligible for indexing b) not eligible for indexing c) both (a)
and (b) d) none of these
SECTION B
1. Mr.R declared a bonus of Rs.1,00,000 for employees but due to paucity of funds he could pay
Rs.40,000 on 31-03-2018. He paid Rs.3,000 on 14-07-2018 and Rs.3,000 on 1-10-2018. He filed his
return on 31-7-2018.
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2. To what extent following are allowed as deductions in computing the income of business carried on
by Mr.A:
(i) Entertainment expenditure incurred during the previous year ending 31-3-2017 is 50,000
(ii) Daily allowance given to Mr.Mohan, employees is at the rate of 2,000 per day. He was on
tour for 5 days and was given 10,000 as daily allowance during previous year 2017-18.
(iii)Ten items were presented during previous year 2017-18 on advertisement each costing
2,000
(iv) Income-tax deposited in advance during the previous year 2017-18 amounted to 2,000
3. A payment of 42,000 by cheque as employer’s contribution to provident fund, made on 30-11-
2017, due date being 15-12-2017. The cheque was realized on 31-12-2017. Calculate the
admissibility income under the head profits and gains.
4. From the following information given below find out how much amount can be deducted during
the previous year 2017 -18. These expenses relate to previous year 2017 – 18.
S.No. Expenses Amount and Date of
Payment
Due Date
1. Interest to Financial Corporation Rs.1,00,000 on 1-06-2018;
Rs.1,00,000 on 31-03-2019
31.07.2018
2. Employee’s contribution to P.F. Rs.20,600 on 13-04-2018 by
cheque which was encashed
on 26-04-2018
15.04.2018
3. Advance Income Tax Rs.62,000 on 29-07-2018 31.07.2018
4. Excise Duty Rs.1,40,000 paid on 1-1-
2019
31.07.2018
5. Cost of acquisition in 2002-03 is 1,20,000. Find out the Indexed Cost if sold in 2017-18. [CII for
2002-033 is 105 and for 2017-18 is 272].
6. Find out the indexed cost and capital gain: W.D.V of Office Furniture which as on 1-4-2017
18,000 (which was purchased on 15-9-2008 for 20000 & sold on 1-9-2017(CII = 272) for 26,000.
7. Find out the indexed cost and capital gain: Bonds purchased on 1-11-2006 (CII = 122) for
2,60,000 were sold on 1-1-2018 (CII = 272) for 4,00,000.
8. Mr.X purchased a house on 1-11-2001 for 2,00,000 which was improvised in 2010-11 at the cost
of 1,00,000. What will be its indexed cost during 2017-18 if C.I.I. for 2001-02 is 100, in 2010-11 is
167 and for 2017-18 is 272).
9. Define the term ‘capital gain’.
10. Distinguish between Cost of acquisition and Cost of Improvement.
SECTION C
1. From the following statement, compute income from profession of Dr.S.K.Kapoor if accounts
are maintained on mercantile system:
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Notes:
1. Electricity and water charges includes domestic bill of 2,500
2. Half of motor car expenses are for professional use.
3. Telephone expenses include 40% for personal use
4. Opening stock of medicine was 6,000 and closing stock was 4,000.
2. Calculate taxable profit of the assessee for the assessment year 2018-19 from the particulars
given below:
Profit for the previous year 2017-18 (Before charging the following
amounts)
2,60,000
(i) Amount given to Punjab University for Research in the field
of social sciences
20,000
(ii) Cost of land acquired for constructing research laboratory 1,00,000
(iii) Cost of Building and P & M required for research 3,50,000
(iv) Amount given as salary to staff engaged in research (relating
to a field not related to assessee’s own business) during
2017-18 (Business started on 1-4-2017)
30,000
(v) Salary given to staff engaged in research within premises
during 2017-18
60,000
3. Following is the profit and loss account of Kesari Mlya for the previous year 2017 – 18.
PROFIT AND LOSS ACCOUNT
Rs. Rs.
To salaries 25,650 By Gross profit 80,000
To rent 1,000 By bank interest 450
To commission on sales 100 By Bad Debts recovered (last
year allowed)
2,000
To Income – tax 2,600 By rent from house property 4,800
To Entertainment expenses 600 By interest on commercial
securities
2,000
Rs. Rs.
To Dispensary Rent 36,000 By Visiting fees 45,000
To Electricity & water charges 6,000 By Consultation fees 1,25,000
To Telephone Expenses 6,000 By sales of medicines 72,000
To Salary to nurse & compounder 36,000 By Dividends 5,000
To Depreciation on Surgical Equipment 6,000
To purchase of medicines 36,000
To Depreciation on X-ray Machine 4,000
To Income Tax 5,500
To Donation to RamaKrishna Mission 4,000
To Motor Car expenses 9,600
To Depreciation on car 4,800
To Net Income 93,100
2,47,000 2,47,000
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To Commission paid to collect
Interest on Securities
25
To Embezzlement by cashier 1,000
To Municipal tax of H.P. 600
To Bad Debts (allowed) 450
To repairs to house 1,625
To Office expenses 9,180
To depreciation 5,000
To L.I.C premium 1,320
To net Profit 40,100
Total 89,250 Total 89,250
Depreciation on the assets is Rs.4,500
Compute the taxable business income for the assessment year 2018 – 19.
4. Mr.H submits the following particulars about sale of assets during the year 2014-15:
Jewelery
Plot
Gold
Sale price 5,00,000 20,24,000 2,40,000
Expenses on sale Nil 24,000 Nil
Cost of acquisition 1,50,000 7,00,000 80,000
Year of acquisition 2007-08 2004-05 2009-10
C.I.I. 129 113 148
He has purchased a house for 12,00,000 on 1-3-2018. Calculate the amount of taxable capital
gain if C.I.I. for 2017-18 is 272.
5. Mr.Raman Raju inherited a house from his father Mr.D.Raju on 1-1-2006. [C.I.I. = 117]. The house
was acquired by Mr.D.Raju in 1989-90 for 60,000 and its F.M.V. as on 1-4-2001 was 5,20,000
and it was sold in 2017-18 [C.I.I. = 272] for 13,50,000.
6. From the following information of Mrs.Juhi, compute taxable capital gains for the Assessment year
2018-19:
(i) Cost of acquisition of residential house 5,50,000
(ii) Sale proceeds on 2-8-2017 21,00,000
(iii) Cost of construction of new residential house.
(The house was constructed during 2017-18.
The house is used by Juhi’s sister for her
residence)
4,00,000
The Cost inflation index in 2001-02 was 100 and 2017-18 is 272.
7. From the following information of Mrs.Karishma, compute taxable capital gains for the Assessment
year 2014-15:
i. Purchased Agricultural Land (Agra city) in 2002-03
(self cultivated)
1,60,000
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ii. Sold the land on 10-8-2017 for 7,00,000
iii. Invested in purchase of a house on 10-9-2017 2,00,000
iv. Purchased another piece of agricultural land on 10-
10-2017
1,50,000
The cost inflation index for 2002-03: 105, for 2017-18 was 272. She does not own any other house.
8. Mr.Sundar purchases a house property for RS.92,000 on 16-6-90. He dies on 12-9-1998. The
property transferred to Mrs.Sundar by his will. Mrs.Sundar spends to Rs.1,40,000 during 2004-05 for
re-construction of the property. Mrs.Sundar sells the house property for Rs.16,75,000 on 20th March,
2018. Brokerage paid by Mrs.Sundar is Rs.16,750. The fair market value of the house on 1st April
2001 is Rs.3,00,000. Compute the capital gain. (Cost inflation index for 2004-05 is 113, and for 2001-
02 is 100 and for 2017-18 is 272).
9. Explain income exempted from capital gain.
10. Write a note on capital gain.
UNIT III - Answer Scheme
Section A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
a a c a c a d a a a b a c a c a a a a b
SECTION B
1. Rs. 70,000 allowed during assessment year 2018 – 19 and Rs.30,000 during 2019 – 20
2. (i) Fully Allowed; (ii) Fully Allowed (iii) Fully Allowed and (iv) Disallowed
3. Payment of 42,000 will not be allowed in any of the previous years as cheque was not
realized within 15 days
4. (1) Rs.1,00,000 paid on 1-6-2018; (2) Rs.20,600; (3) Not Allowed and (4) Nil
5. Indexed Cost: Rs.3,10,857
6. Short term Capital Gain: Rs.8,000
7. LTCG Rs.1,40,000; No indexing
8. Indexed Cost Rs.7,06,874
SECTION C
1. Professional Receipts: Rs.2,42,000; Professional Payments Rs.1,34,300 and Professional Gain
Rs.1,07,700
2. (i) 100% i.e. Rs.25,000 to be allowed; (ii) and (iv) not allowed (v) allowed (iii) Capital
expenditure adjusted up to Rs.1,75,000 and the balance to be c/f Rs.1,75,000; Taxable Profit :
Nil.
3. Business Profit Rs.39,520
4. Taxable LTCG: a) Jewellery : Nil; b) Plot Rs.2,42,584 and Gold Nil
5. LTCG Rs.1,41,111
6. LTCG: Rs.6,04,000; Exempted u/s 54 Rs.4,00,000 and Taxable LTCG Rs.2,04,000
7. LTCG Rs.2,85,524, exemption u/s 54B Rs.1,50,000, exemption u/s 54F Rs.81,578; Taxable LTCG
Rs.53,946
8. Taxable L.T.C.Gain: Rs.5,05,259
UNIT IV
SECTION A
1. Dividends from co-operative society are
a) Exempted b) Taxable c) Partly Taxable d) None of these
2. ‘Interest on securities’ accrues
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a) Day by day b) Quarterly c) After a fixed period mentioned on the face of the security d)
None of these
3. ‘Grossing up’ of interest on securities is required when
a) Interest is received after T.D.S. b) They are central govt. securities c) Interest on bank
deposits is less than 10,000 d) None of these
4. Tax is reduced from casual incomes at
a) 10% + surcharge and cesses b) 20%+surcharge and cesses c) 30% d) none of these
5. Interest on bank term deposits is subject to tax deduction at source if the interest amount during the
relevant previous year exceeds
a) 2,000 b) 5,000 c) 10,000 d) 30,000
6. Which of the following gifts is taxable?
a) Gifts in kind from relatives b) Gifts from wife c) Gifts from son d) Gifts from office
colleague
7. Loss from long term capital asset can be set-off against
a) STCG b) Business Income c) LTCG d) Salary Income
8. Loss on accounting of maintenance of race horses can be carried forward for
a) 8 years b) 9 years c) 10 years d) 4 years
9. Loss under the head house property can be carried forward for
a) 4 years b) 8 years c) 9 years d) 10 years
10. Business loss can be carried forward for
a) 4 years b) 10 years c) 9 years d) 8 years
11. Unabsorbed depreciation can be carried forward for
a) 4 years b) 8 years c) 9 years d) unlimited period
12. Loss under the head capital gain can be carried forward for
a) 4 years b) 8 years c) 9 years d) 10 years
13. Which one of the following is not an income from other sources?
a) Interest on fixed deposit in bank b) Winnings from cross word puzzles
c) Gift in excess of Rs.50,000 from an unrelated person d) Profit on sale of building
14.Which of the following income from other sources is not taxable?
a) Dividend from co-operative society b) Dividend from foreign company c) Dividend from
domestic company d) Winnings from lottery
15. Income from other sources is a.................
a) Residuary head of income b) Major head of income c) Income from a single source d) Constant
and regular income
16. In case of compacy, surcharge on MAT for Assessment year 2018 -19 for book profit exceeding
Rs.10 crore was
a) 10% on tax b) 12% of tax c) 15% of tax d) 20% of tax
17. Rate of income tax in the case of every firm:
a) 20% b) 30% c) 15% d) 25%
18. Rate of income tax in the case of an individual whose income is below Rs.2,50,000:
a) Nil b) 5% c) 15% d) 25%
19. Education cess for the assessment year is:
a) 3% b) 5% c) 7% d) 10%
20. STCG on the transfer of capital asset is
a) 15% b) 20% c) 30% d) 50%
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SECTION B
1. Explain the deductions U/S 80 DD and 80 DDB.
2. Explain the methods of taxation in computation of tax liability.
3. Explain the deduction U/S 80 U.
4. Mr. D is karta of an H.U.F . The H.U.F has a child( son of D’s brother) who is mentally
disorder. Mr. D’s mother is also physically disabled. The H.U.F has spent Rs.24000 on their
treatment. Can H.U.F claim deduction U/S 80 DD and if yes , how much? (Ans: yes,75,000)
5. Mr. X is government employee and he his father and his son are suffering from notified
illness. He has incurred the following expenses :
Rs.
On his own treatment 50,000
Amount reimbursed by employer 20,000
On treatment of his son 40,000
Insurance claim received 18,000
On treatment of his father 20,000
Insurance claim received 6000
calculate deduction U/S 80 DDB . No deduction of any expenditure incurred on treatment of
his father who is not dependent on him. (Ans: Rs.2000)
6. If a professional man has his gross taxable income of Rs. 3,60,000 and pays rent of Rs. 5000
p.m at varanasi. Calculate the amount of deduction U/S 80 GG.
(Ans: Rs.24,000)
7. Compute the tax liability of Mr. A for the assessment year 2018-19 if his total income is:
A. Rs. 2,31,670 (Ans: a. Nil
B. Rs.2,64,371 b. Rs,719)
8. Compute the tax liability of an individual assessee whose income is Rs. 2,94,800 for the year
2018-19 along with rebate U/S 87A. (Ans: Rs.2307)
9. Mr. Raman, a Chartered Accountant, is living at kanpur and is carrying on his profession
there, For the year 2017-18 he has supplied the following particulars. Compute his total
income for the assessment year 2018-19:
Rs.
Professional Gain 5,00,000
Rent received from house at Delhi 18,000 p.a
Municipal taxes 1,500 p.a
Long term capital gain 10,000
Part time salary as lecturer in taxation laws 1,24,000
Rent paid at Kanpur 6000 p.m
Interest on Govt. Securities 19,000
He also deposited Rs.15,000 in PPF (Ans :Rs.6,41,510)
10. Compute the tax liability of Mr. Z if his total income is Rs. 7,84,096 for the year 2018-19 as
in case : A. Citizen
B. Senior citizen (Ans: a. Rs.71,400 b.
Rs.58,525)
8 MARKS
1. Explain the deductions U/S 80E, 80EE, 80G, 80GG, 80GGB, 80TTA.
2. Explain the income tax rates for:
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i. Individual
ii. Co-operative society
iii. Firm
iv. Local authority
v. Company
3. From the following particulars of Mr. X . Compute the amount of deduction U/S 80 C
for the previous year 2017-18.
Life insurance premium paid:
On own policy -30,000
On the life of his wife -10,000
On the life of father - 10,000
On the life of married daughter and her
husband ( joined policy) - 10,000
All life policy were taken in 2010.
Contribution of recognised PF - 2000 p.m
Deposit in PPF in march 2018 - 45000
Group insurance premium - 3000
Investment made during 2017-18 in NSC VIII issue - 10,000
Repayment of loan taken from LIC for the construction
of residental house Rs.4000p.m[ including 1000p.m as interest] 48000 Accured
interest on NSC VIII issue - 4000
Insurance premium on the life of minor son paid on 2.4.2018 - 8000
(Ans: Rs.1,50,000)
4. Mr. Sony whose gross total income is Rs. 40,00,000 makes the following donation during the
previous year 31.03.2018
Rs.
To PM national relief fund 1,00,000
To national defence fund 2,00,000
To temple of public worship for its repair 2,00,000
To a local collage for construction of commerce block 1,00,000
To poor student as guide 10,000
To municipal committee 1,00,000
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To CM earthquake relief fund Maharashtra 20,000
The gross total income includes 10,00,000 as profit on sale of long term capital assets. Compute
his total income for the assessment year 2018-19.
(Ans: Rs.35,05,000)
5. The following are particulars of income of Mr. Behl for the Assessment year 2018-19:
Rs.
1. Income from House property 61,200
2. Business Income 1,80,000
3. Dividends from co-operative society 15,500
4. Long Term Capital Gain:
a. from Land 60,000
b. from Jewellary 35,000
5. He paid Rs. 28,000 as Life Insurance Premium on his own policy of
Rs. 2,00,000 ( policy issued on May 1,2013). He also paid Rs. 6000 on a life policy of
Rs. 50,000 which he acquired in 2010.
6. He gave Rs. 30,000 as donation to a charitable institution approved under section 80
G.
7. During the year he deposited Rs. 18,000 in an equity linked saving scheme notified
U/S 80 C
8. He deposited Rs. 12,500 in National Saving Scheme 1992.
9. Interest accrued on N.S.C. VIII issue purchased in November 2016 for Rs. 30,000
is Rs. 2,260.
10. Interest accrued on a fixed deposit in a Bank Rs. 6000.
Compute his Total Income. (Ans:2,83,290)
6. Compute the amount of tax payable for the assessment year 2018-19 in the following
cases:
(a) Total income of Mr. X is Rs. 5,20,064
(b) Income of Mr. Y [ a resident senior citizen] is Rs. 5,20,064
(c) Income of Mr. Z [a resident super senior citizen] is
Rs.5,20,064.
(Ans: a. Rs.17,007
b. Rs.14,432
c. Rs.4132 )
7. Mr. A got medical insurance of all family members and paid premium in the previous
year 2017-18 as under:
Rs.
1. Medical insurance of self paid by cheque 10,000
2. Medi-claim premium of wife paid in cash 5,000
3. Medical insurance premium of 16 years old son
paid by cheque to a private insurance company
by Insurance Regulatory and Development Authority 3,000
4. Medi-claim premium paid on the medical insurance of
father and mother 22,000
5. Medi-claim premium on the policy of dependent younger
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brother 4,000
6. Preventive medical check-up of wife 4,000
And also find the deduction amount if the insurance taken for his parents
U/S 80D.
(Ans: own policy:Rs.17,000
parents :Rs.39,000)
8. From the particulars given below compute the total income of Mr. S.K. Giri a, physically
handicapped person, for the assessment year 2018-19:
Rs.
1. Salary received from employer 2,10,000
2. Annual rental value of let out house 15,000
3. Interest on loan taken to purchase another house
which is self-occupied 20,000
4. He had sold another residental house on 1-4-2017 for Rs. 23,48,000. Its fair market
value on 1-4-2001 was Rs. 6,50,000. Out of capital gain of the house he invested Rs.
5,00,000 in bonds of National Highway Authority of India notified u/s 54EC [ CII for
2017-18 is 272]
5. He won Rs. 40,000 in race course betting and Rs. 2000 in lottery.
6. He paid Rs. 6000 by cheque as premium to secure health insurance policy of GIC for
his family.
7. His mother who is dependent on him is suffering from cancer and he spent Rs. 46,500
on her treatment.
8. His minor son is mentally retarded on whose special education he spent Rs. 15,000
during the year.
9. He donated Rs. 10,000 to Karnataka State Chief Minister’s Relief Fund. 10.He gave
Rs. 2000 for repair of a notified temple and Rs. 1,500 to Family
Planning Association of India. (Ans: Rs.1,22,000)
9. Mrs. Kamala has attain the age of 65 years on 3-10-2017. She had the following incomes for
the previous year 31-3-2018:
Rs.
i. Short-term capital gain on sale of plot 1,56,000
ii. Long-term capital gain on sale of jewellary 2,05,000
iii. She has deposited Rs. 35,000 in PPF.
You are requested to compute the tax liability of Mrs. Kamala for the assessment year 2018-19.
(Ans: Rs.2,780)
10. An assessee, who is an individual received the following incomes during the financial
year 2017-18:
Rs.
i. Insurance commission received from L.I.C 10,656
ii. Cloth Business Profits 2,75,000
iii. He made the following payments during the year:
a. Deposit of Rs. 10,000 in National Saving Scheme 1992
b. Payment of Rs. 500 p.m to Jeevan Dhara Policy
c. Investment of Rs. 10,000 in units of mutual funds
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notified u/s 80C as equity linked saving scheme
d. Donation given to:
Rs.
National Children Welfare Fund 5,000
P.M. National Relief Fund 5,000
Gujarat Relief Fund 2,000
P.M. Folks Arts Fund 1,000
P.M. Students Aid Fund 2,000
Maharastra C.M’S Earthquake Relief Fund 2,000
Local authority to promote Family Planning 2,000
Public Charitable Trust 10,000
National Fund for control of drug abuse 4,000
iv. He paid Rs. 6000 by cheque to General Insurance Company under Medi claim.
Compute his total income.
(Ans: Rs. 2,26,104)
UNIT IV - Answer Scheme
Section A
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
b a a c c a c d b d d b d a a b b a a a
UNIT V
SECTION A
1. Deductions from G.T.I. are available when
a) G.T.I. is a positive figure only b) Even when G.T.I. is negative c) When G.T.I. is ‘Nil’ d)
In all the above cases
2. Maximum amount deductible under section 80C, 80CCC and 80CCD cannot exceed
a) 1,00,000 b) 50,000 c) 80,000 d) 1,50,000
3. Which of the following is not to be included to compute gross qualifying amount for Section
80C?
a) Contribution to PPF b) Subscription to NSS c) Payment of Life Insurance Premium
d) Payment of school fees of a poor neighbour’s children
4. Deduction u/s 80CCC in respect of
a) Mediclaim insurance b) Pension fund premium c) LIC Premium d) NSS
5. If assessee is senior citizen, maximum permissible deduction for premium paid for medical
insurance u/s 80D is
a) 5,000 b) 10,000 c) 20,000 d) 30,000
6. Deduction u/s 80DD in respect of:
a) medically handicapped dependant b) Treatment of a specified disease
c) Contribution to PPF d) LIC premium paid
7. Maximum deduction u/s 80DD shall be
a) 10,000 p.a. b) 20,000 p.a. c) 30,000 p.a. d) 75,000 p.a.
8. Deduction in respect of interest on loan taken for higher education of self or spouse or children
is fully deductible under
a) Section 88 b) Section 92 c) Section 80E d) Section 16B
9. Donation to NDF is allowed as deduction at the rate of
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a) 100% b) 50% c) 10% d) Nil
10. Donation to Rajiv Gandhi Foundation allowed as deduction at the rate of
a) 10% b) 50% c) 100% d) 25%
11. Maximum deduction in respect of Royalty income of authors of literary, Artistic or scientific
nature is
a) 3,00,000 b) 2,00,000 c) 1,00,000 d) 40,000
12. Deduction u/s 80U is allowed to
a) All assessees b) Handicapped assessee c) Member of HUF d) None of these
13. Determining the tax liability is called
a) Assessment b) Scrutiny c) Enquiry d) Evaluation
14. The number allotted by income tax authorities to assessees for identification and which should
be quoted in all documents and correspondence is
a) I.D.No. b) Register No. c) PAN d) Licence No.
15. Deduction of tax at source made for incomes which can be calculated in advance is called
a) T.D.S b) PAS c) FAS d) MAS
16. Due date of first instalment of advance tax by assessees other than companies is:
a) 15th June b) 15th September c) 30th June d) 30th November
17. Due date of filing of return by a non business assessee is
a) 30th June b) 31st August c) 31st July d) 30th November
18. In case of a salaried employee, due date of filing of return is
a) 30th June b) 31st August c) 31st July d) 30th November
19. Last date for filing of return by a company assessee is
a) 30th June b) 31st August c) 31st July d) 30th September
20. Maximum marginal rate of tax:
a) 30% b) 50% c) 60% d) 75%
SECTION B
1. Define filing of return and due dates for filing of return.
2. What is tax evasion and tax avoidance ?
3. Explain about TDS and write any four provisions of the TDS act.
4. The total income of an individual (45 years old) computed under the normal provisions of the
Income Tax Act is Rs. 10,00,000. However the ‘ adjusted total income’ of the individual
[computed as per sec 115JC(2)] amounted to
Rs. 30,00,000. Calculate the Final Tax Liability of the individual for the Assessment Year 2018-
19.
(Ans: Rs.5,71,650)
5. The total income of H.U.F computed under the normal provisions of Income Tax Act is Rs.
2,77,930. However the ‘adjusted total income’ of the H.U.F [computed as per sec 115JC(2)]
amounted to Rs. 25,00,000. Calculate the Final Tax Liability of the H.U.F for Assessment Year
2018-19 along with Rebate U/S 87A.
(Ans: Rs.4,76,375)
6. Mr. S runs a firm with his partners M and V . The book loss of the firm is Rs. 30,000
and he provides Rs. 1,80,000 as Remuneration to his working
partners. Compute his Total Income of the firm for the Assessment Year 2018-19.
(Ans: Rs.(-) 1,80,000)
7. The total income of XYZ Ltd, a domestic company, computed under the normal provisions of
Income Tax is Rs. 2,50,000. However, the Book profits of the company (calculated as per sec
115JB) amount to Rs. 8,15,000. Calculate the tax liability of company for Assessment Year
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2018-19, on assumption that the total turnover of the company for the previous year 2015-16
did not exceed
Rs. 50 crores.
(Ans: Rs.1,55,300)
8. The estimated tax liability (after deducting TDS) of Mr. Sanjeev for the previous year 2017-
18 is Rs. 1,00,000. Calculate advance tax payable by him in various instalments during the
previous year 2017-18.
(Ans: IV installment Rs.25,000)
9. Compute the tax payable by a company for the Assessment year 2018-19 if its total income
is Rs. 4,00,000 and Book profit is Rs. 15,00,000.
(Ans: Rs. 3,58,900)
10. The estimated tax liability of Anand Ltd for the previous year 2015-16 is Rs.
5,00,000. Calculate advance tax payable by the company in various
instalments during the previous year 2015-16 (Ans:IV installment Rs.1,25,000)
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SECTION C
1. Explain briefly about Advance Payment of Tax.
2. What is PAN ? What is the procedure for obtaining the PAN ?
3. Write down the format for computation of total income of the assessment of firm.
4. The following are the particulars of the income of the GND University teacher during the
year ending 31st
March 2018:
a) Salary Rs. 37,400 p.m plus Rs. 9000 p.m as grade pay from which 10 per cent is
deducted for statutory provident fund to which the University contributes 12 per
cent.
b) Rent-free bungalow of the annual letting value of Rs. 18,000
c) Wardenship allowance Rs. 2000 p.m
d) 12 % interest on Government Loan of Rs. 65,000
e) Income from house property (computed) Rs. 29,560
f) He received Rs. 3,500 for writing articles in a journal.
g) He paid Rs. 2000 by cheque to G.I.C under mediclaim.
h) Interest on postal saving bank deposit Rs. 6500
i) Interest (gross) Rs. 2,500
j) Examinership remuneration Rs. 3,500
k) During the year, he sold shares of Relience Industries Ltd and earned a long
term capital gains Rs. 60,000
During the year he paid Rs. 24,000 as life insurance premium on his own policies and spent
Rs. 600 on books purchased for his own use.
Find out his Total Income , tax and exempted income. Population of Amritsar is 12 lakhs.
(Ans:Rs. 34,310)
5. The following details of income have been supplied by Karta of H.U.F. You are required to
compute the total income and tax of H.U.F. It has deposited
Rs. 10,000 in PPF.
Rs
a) Profit from business 2,62,000
b) Salary received by a member of H.U.F 8,000
c) Director’s fee received by Karta 6,000
d) Rental value of house property let 12,000
e) Municipal Taxes 600
f) Interest on a fixed deposit of Axis Bank 450
g) Long-term Capital gains from the transfer of building 9,500
h) Long-term Capital gains from the transfer of investments 10,000
i) Donation to a collage which is an approved institution 4,000
j) Profit from an AOP (1/4th share) 10,000
(Ans: Rs. 4,450)
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6. The Profit and Loss a/c of the firm in which XYZ shares P&L in the ratio of 5:4:1
respectively. Discloses profit of Rs. 80,525 for accounting year ending
31st
March 2018.
DEBIT Rs Rs CREDIT Rs Rs
Donation to
National Defence
Fund
11,000 Capital gain on
sale of scarp
Machinery
5,000
Salary to partners
X
Y
Z
15,000
19,000
22,000
56,000
Interest on
debentures after
deduction of tax
at source 2500
22,500
Commission to X 6,000 Interest on
securities
(gross)
3,500
Office Rent (paid
to Y)
12,000
Compute the Total Income of the firm for the Assessment year 2018-19. The firm has
submitted the certificate copy of instrument partnership along with return and it
provides for payment of salary, commission to working partners X,Y and Z as per
above. (Ans: Rs.25,660)
7. Compute the tax payable by a company for the Assessment year 2018-19 if:
a) its total income is Rs. 5,00,000 and book profit is Rs. 20,00,000.
b) its total income is Rs. 6,20,000 and book profit is Rs. 10,00,000.
8. Krishnamoorthy born on 5th
January 1975 has furnished the following information
Particulars Rs
Salary income 1,00,000
Rent from house 58,000
Municipal taxes paid 6,000
STCG on sale of shares 5,000
Winning from lottery 50,000
Interest on Bank deposits 6000
Interest on Govt. securities 2,000
Interest on debentures 14,000
Deposit in PPF account 90,000
LIC on own life policy premium 20,000
Crossword puzzle winnings 80,000
Compute the net tax payable by Krishnamoorthy for the Assessment year 2018-19
9. HUF with more than one co-parcenr entitled to claim partition, owns a property
which is let out at Rs. 600 p.m per unit. The property consists of 10 identical r
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residential units. The municipal rental value of the property is Rs. 60,000 p.a
Following deductions are claimed as expenses: Rs.
Municipal taxes 4,200
Lift maintenance 2,000
Water pump expenses 800
Actual expenses on repairs 8,000
Cost of renovation of the property 50,000
Education cess levied by the State Govt 2,000
Rent Collector’s monthly salary 200
Interest on loan taken by mortgaging the property and loan was
used for the family business 5,000
Income from the family business for the Assessment year 2018-19 was Rs.
2,10,000 after charging interest on loan.
A lottery ticket worth Rs. 100 was purchased out of family funds on the name HUF. It
won a prize of Rs. 1,00,000.
The karta had acquired a shop out of his own savings which he gifted to his wife.
Shop has an annual income(computed under the head HP) is Rs. 24,000.
Compute total income of HUF and tax payable for the assessment year 2017-18.
(Ans: Tax payable Rs.31,180)
10. From the particulars given below calculate the total income of firm assessed u/s
184 and income of the partners P,Q and R for the assessment year 2018-19.
The firm has submitted its deed and the payment of remuneration and interest is in
accordance with such deed. Profit-sharing ratio is 4:3:2.
Rs. Rs.
Profit as per P&L Account after deducting the
following amounts (-
)3,40,000 Remuneration to working partners
P 1,20,000
Q 90,000
R 60,000
Interest paid on capital capital
P 2,00,000 28,000
Q 3,00,000 42,000
R 1,00,000 14,000
(Ans: Book loss Rs. 58,000
Partners income P Rs.90,667
Q Rs.86,000
R Rs.45,333)
UNIT V – Answer Scheme
Section A
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a d a b d a d c a b a b a c a b b c c a
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KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS)
COIMBATORE
DEPARTMENT OF COMMERCE PA & PG
Class: III B.Com Semester –VI / V
Sub. Name: Principles of Marketing
Sub. Code: 16UPA515 / 18UPA516
Prepared by: Dr. M. USHARANI
UNIT-I
SECTION-A
CHOOSE THE CORRECT ANSWER
1. The word market is derived from the Latin word__________
(a) Marcatus (b) markas (c) market (d) market
2. Which of the following is central to any definition of marketing?
(a) Making a profit (b) Making a sale (c) Transactions (d) Customer relationships
3. Modern marketing aims to attract_____________
(a) Suppliers (b) investors (c) customers (d) employees
4. _______________ refers to marketing activities carried on in more than one nation.
(a) Domestic marketing (b) international marketing (c) deemed marketing
(d) green marketing
5. _________ may be defined as principles that define acceptable conduct in marketing.
(a) Consumer ethics (b) promotional ethics (c)product ethics (d) marketing ethics
6. Which of the following is not a type of marketing concept?
(a) Production concept (b) selling concept (c) societal marketing concept
(d) supplier concept
7. ____________is the father of modern marketing.
(a) Peter Drucker (b) Philip Kotler (c) Lester (d) Maslow
8. Inside sale is known as _____________
(a) Direct marketing (b) Social marketing c) Tele-marketing (d) Viral marketing
9. Marketing refers to the_______________
(a) Sale of product (b)goods and services are exchanged to each other
(c)goods distribution (d) All of these
10. Marketers often use the term ________ to cover various groupings of customers.
(a) people (b) buying power (c) demographic segment (d) market
11.Adding new features to a product is advocated by which of the approaches?_________
(a) Product Approach (b) Production Approach (c) Marketing Approach (d) Selling
Approach
12. Which is not a form of Internet Marketing?_____________
(a) On-line marketing (b) Internet advertising (c) e-Marketing (d) Product Mix and
Branding
13.The Market environment consists______________
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(a) Socio-economic (b) Technology (c) Competition (d) All of these
14. Modern Marketing includes___________
(a) Digital Marketing (b) Social Marketing (c) Green Marketing (d) All of the
above
15.False and mishandling claims vulgarity in advertisement do not match with__________
(a) Aggressive advertising (b) Ethics in advertising (c) Mass level of advertising (d)
Sales promotion
16. Marketing is_______________
(a) Essential an operational and purposive pursuit (b) A cost of service (c) cost of
product (d) An expense
17. Which one of the following is controllable variable of marketing management?________
(a) Packaging (b) Legal Environment (c)Advertisement (d) political environment
18. Internet Marketing does not deal_____________
(a) Advertising (b) Interactive Marketing (c) E-mail Marketing and Web advertising (d)
Display Advertising
19.The accurate meaning of "International Marketing" is ___________
(a) Marketing goods to developed countries (b) Marketing products worldwide (c) Selling
global products in domestic market (d) Marketing using WW
20. Which one of the following facilitates E-Commerce?
(a) Public relations (b) Direct marketing(c) Personal selling (d) Product quality
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
a d c b d d b c D d a d d d b a c d b b
SECTION-B
ANSWER THE FOLLOWING
1. What is market?
2. What are the marketing activities?
3. List out the objectives of marketing.
4. Differentiate between micro and macro marketing.
5. Write the importance of marketing to the society
6. In what way the marketing is beneficial to the individual firms?
7. What is consumer approach marketing?
8. What is e-marketing?
9. Define international marketing. List its benefits.
10. Highlight the recent career opportunities in marketing.
SECTION-C
ANSWER THE FOLLOWING
1. Write the evolution of marketing.
2. Explain the factors influencing marketing concept.
3. Describe the market classification.
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4. Explain the modern marketing concept.
5. What are the approaches to the study of marketing? Explain.
6. Write in detail about features of the marketing concept.
7. Explain various activities involved in international marketing.
8. What are the advantages and disadvantages of e-marketing?
9. Ethical behaviour is necessary in marketing. Justify.
10. Explain the advantages and disadvantages of telemarketing.
UNIT-II
SECTION-A
CHOOSE THE CORRECT ANSWER
1._____________ has classified marketing functions into concentration and dispersion
(a) Clark and Clark (b) Huegy (c) Pyle (d) Mitchell
2. The buying behaviour of consumers is influenced by ___________
(a) Cultural (b) Social (c) Personal (d) All of the above
3._____________is the heart of marketing task
(a)Production (b) demand (c) place (d) selling
4. _____ means the physical movement of persons and goods from one place to another.
(a) export (b) promotion (c) transportation (d) exchange
5.The most structured marketing problems are likely to be those dealing with___________
(a) Product (b) Promotion (c) Place (d) Price
6. In the social-cultural arena, marketers may not understand_____________
(a) People’s views(b) Organisation’s views(c) Society’s views(d) Government’s views
7. One-level channel consists of_______________
(a) Producer-consumer(b) Producer-dealer-consumer(c) Producer-dealer-retailerconsumer(d)
Producer-dealer-wholesaler retailer- consumer
8. In the buying decision process, what is the term used for a person who first suggests
buying the product or service?
(a) Influencer (b) Initiator(c) Decider(d) Buyer
9. The _______________ is the set of consumers who are buying the company’s products.
(a) Potential market (b) Target market (c) Available market (d) Penetrated market
10._________combination of quality, service & price
(a) Marketing Triad (b) Customer Value Triad (c) Customer Satisfaction Triad
(d) Service Quality Trial
11. __________is the acquisition of goods and services by the seller or industrial user for
the purpose of resale.
(a) Selling (b) Assembling (c) Buying (d)Transportation
12.__________is establishment of certain standards or specifications for products
(a) Standardization (b) Gradation (c) Product Control (d) Product Development
13. Testing before launching a product is known as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐. (a)Acid test (b) Concept testing (c) Market test (d) Test marketing
14. _____is the act of obtaining a desired object from someone by offering something in
return.
(a) A value proposition (b) Exchange (c) Bribery (d) Value creation
15. The art and science of choosing target markets and building profitable relationships with
them is called ________.
(a) marketing management (b) positioning (c) segmentation(d) selling
16. Which of the following is an activity of physical distribution?___________
(a) Order processing(b) Warehousing(c) Advertising(d) Transportation 17.Marketing
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channels means?_______________
(a) Delivery objects (b) Sales targets (c) Delivery outlets (d) Delivery boys
18.A distribution channel has several ______ Points
(a)Exchange (b)Distribution (c)Selling (d)Buying
19.Intermediaries play an important role in matching _______
(a) dealer with customer (b) supply and demand (c) product to region
(d) manufacturer to product
20. Producers today sell their goods to___________
(a) final users (b) final users and marketing members (c) intermediaries
(d) the government at various level
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
C d d c c d b b D b b a d b a c c a b c
SECTION-B
ANSWER THE FOLLOWING
1. What are the basic functions involved in marketing functions?
2. Listout the functions involved in physical supply.
3. Define market management. Listout its activities.
4. What is buying?
5. What are the problems in buying?
6. What is selling?
7. Write short notes on importance of transportation in marketing.
8. Write the role of finance in successful marketing.
9. How to bear the risk in marketing.
10. What is market information?
SECTION-C
ANSWER THE FOLLOWING
1. Explain the broad classifications of marketing function by Clark and Clark.
2. Explain kinds of buyers with an example.
3. Describe various purchasing methods in marketing.
4. What is assembling? Highlight the advantages of assembling.
5. Explain the elements of selling.
6. Illustrate the functions of transport in marketing.
7. Write in detail about the basic modes of transport.
8. Elucidate advantages and essentials of good storage.
9. Explain the types of standards and grading.
10. Explain the types of marketing risks with examples.
UNIT-III
SECTION-A
CHOOSE THE CORRECT ANSWER
1. Who is the king of any business?____________
(a) Consumers (b) Shareholders (c)Institutions (d) Management
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2. _____________ include factors unique to a particular person.
(a) Personal factors (b) group factors (c) product factors (d) price factors
3. The process of dividing market into smaller homogeneous markets is called
market___________
(a)planning (b)segmentation (c) positioning (d)targeting
4. The expansion of CRM is______________
(a)Consumer Related Marketing (b) Consumer Relation Marketing (c) Customer
Relation Marketing (d) Customer Related Marketing
5. What is the last stage of the consumer decision process? ______________
(a) problem recognition (b) post purchase behaviour (c) alternative evaluation (d) purchase
6. Which of the following point is responsibility for effective market segmentation?
(a) Measurability (b) Easy & accessibility (c) Substantiality (d) All of the above
7. Example for a personal factor that influences consumer behaviour is________
(a) Religion (b) Reference group c) Sub-culture (d)Occupation
8.Following is a Macro environmental force except _____________
(a)Monetary policies (b)Organisational culture (c)Inflation (d)Demographics
9.Which of the variables is not used by marketers for demographic segmentation?______
(a) Age (b) Income(c) Gender (d) Poverty
10.Highest percentage of ideas for new products originates with/from which of the
following sources? ____________
(a) Competitors (b)Customers (c) Employee (d) Top management
11. The term Marketing Myopia was written by___________
(a) Philip Kotler (b) Royal Dutch Shell (c)Theodore Levitt (d) Henry Ford
12. The buying process starts from which one of the following stage in which the buyer
recognizes a problem or need?
(a) Need recognition (b)Information search (c) Evaluation of alternative(d) Purchase
decision
13. When customers don't know what they want or don't even know what's possible, the most
effective strategy is ________ marketing.
(a) customer-driven (b) customer-driving (c) societal (d) production
14. Of the following, which is the most important concept of modern marketing?____
(a) customer relationship management (b) societal marketing (c) consumer-generated
marketing (d) properly trained salespeople
15. Customer-perceived value is determined by a customer's ________ of the benefits and
costs of a market offering relative to those of competing offers.
(a) personal assessment (b) rational expectations (c) accurate assessment (d) objective
evaluation
16.Which of the following is the term for customers who make repeat purchases and tell
others about their positive experiences with a product or service?
(a) satisfied customers (b) customer evangelists (c) butterflies (d) full partners
17. The final step in the marketing process is ________.
(a) capturing value from customers (b) creating customer loyalty (c) creating customer
lifetime value (d) understanding the marketplace
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18. A consumer buying behaviour is influenced by__________
(a) Cultural and social factors (b) Personal factors(c) Both a and b(d) None of the above
19._________ focuses on customer and stakeholder needs, characteristics and behaviour to
form beneficial partnerships
(a) Customer relation marketing (b) Frequency marketing (c) Aftermarketing
(d) Relationship marketing
20._________ is the study of how individuals, groups and organizations select, buy, use and
dispose off goods, services, ideas or experiences to satisfy their needs and wants.
(a) Consumer behaviour(b) Product cycle(c) Purchase behaviour (d) None of the above
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
a a b c b d d b D b c a b a a b a c a a
SECTION-B
ANSWER THE FOLLOWING
1. What is consumer behaviour?
2. Write the impact of consumer behaviour in marketing.
3. How to understand consumer perception in marketing?
4. Define market segmentation. List out the objectives.
5. Why is the market segmentation needed for extended marketing?
6. Write the process of market segmentation.
7. What are the levels of segmentation?
8. What are customer relations marketing?
9. What are the objectives of CRM?
10. How to delight the customers in marketing?
SECTION-C
ANSWER THE FOLLOWING
1. What is the need for understanding consumer behaviour?
2. Explain the factors influencing consumer buying behaviour.
3. Illustrate consumer buying decision process.
4. Write the requirements of effective market segmentation.
5. What are the methods of market segmentation? Explain.
6. What is meant by Market Segmentations? What are the criteria of successful
market segmentation?
7. How should a policy be purposefully adopted in segmenting the markets? Explain.
8. Explain the steps involved in relationship marketing.
9. Describe customer response model in delighting the customers.
10. Compare transactional marketing and relationship marketing.
UNIT-IV
SECTION-A
CHOOSE THE CORRECT ANSWER
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1. The concept of marketing mix was developed by____________
(a) N.H. Borden (b) Philip Kotler (c) Stanton (d) Anderson
2. __________mean classification of standardised product into certain well defined classes
or groups
(a) Gradation (b) Segmentation (c) Standardisation (d) Specification
3. Testing before launching a product is known as ___________
(a) Acid test (b) Concept testing (c) Market test (d) Test marketing
4. NPD stands for ________________
(a) National Production development (b) New Product Department (c) New
Product Design (d) New Product Development
5. Which is the feature of Direct marketing?____________
(a)One to one communication (b) Open dialogue (c) Personal relationship (d) All of
the above
6. A consumer contest is an example of ___________
(a) Advertising (b) Indirect selling (c) personal selling (d) Sales promotion
7. Advertising appropriations are largest in __________type of products
(a) Convenience goods (b) High priced products (c) Speciality goods (d) Industrial
products
8. Which of the following is not an element of marketing mix?_____________
(a) Distribution (b) Promotion (c) Production (d) Pricing
9. __________________ is the 5th P of marketing as stated by Philip Kotler
(a)Persistent (b) Purpose (c) People (d) Process
10. ____________is the combination of the product, distribution, price and promotional
activities.
(a)Marketing mix (b) product mix (c)price mix (d) place mix
11. Which of the following goods are purchased by the consumers only after a careful
comparison?___________
(a) Convenience (b) shopping (c) speciality (d) none of the above
12. __________refers to the total number of items in product mix.
(a)Length (b) depth (c) width (d) consistency
13. ____________involves a high introductory price in the initial stage to skim the cream of
demand.
(a)Psychological pricing (b) customary pricing (c) skimming pricing (d)penetration
pricing
14.The promotion “P” of marketing is also known as ________.
(a)Product Differentiation (b)Distribution (c)Cost (d)Marketing Communication
15. Sales promotion includes all promotional activities other than advertising, personal selling
and __________________
(a) Publicity (b) Advertisement (c) Production (d) Coupon
16. Brand concept not includes______________
(a) Digital marketing (b) Brand name (c) Brand identity and value (d) Brand
personality
17. In marketing mix, which four P's are covered?______________
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(a) Product, Price, Place, Promotion (b) Product, Price, Penetration, Promotion (c)
Product, Price, power, public (d) Product, Price, Positioning, Promotion
18. A Product line is a group of Products that are closely related to______________
(a) Product (b) Promotion (c) Production style and Brand (d) Power
19. Who plays their significant role in distribution of goods when they do not sell to ultimate
users or consumers?____________
(a) Retailer (b) Wholesaler (c) Mediator (d) Commission agent
20. Pricing is one of the essential components of _____________
(a) Promotion mix (b) Marketing mix (c) Product mix (d) STP strategy
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
a a d d d d a c B a b a c d a a a a b b
SECTION-B
ANSWER THE FOLLOWING
1. Define marketing mix. What are the major decisions involved.
2. Write short notes on concept of marketing mix.
3. What are the factors determining marketing mix?
4. Define branding. List out its elements.
5. What are the functions of branding?
6. Write the advantages of labelling.
7. Write the significance of price in marketing.
8. Write the importance of personal selling.
9. What is retailing?
10. Write short notes on sales promotion.
SECTION-C
ANSWER THE FOLLOWING
1. Explain the components of marketing mix.
2. What are the advantages and arguments against branding?
3. Enumerate the stages of Product Life Cycle.
4. Illustrate the major branding decisions.
5. Explain pricing objectives in marketing.
6. Describe the factors affecting price of a product.
7. Differentiate personal selling and sales promotion.
8. Write the importance of channels of distribution.
9. Explain in detail about functions of middlemen.
10. Elucidate importance of retailing in today’s context.
UNIT-V
SECTION-A
CHOOSE THE CORRECT ANSWER
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1.BIS came into effect on _________________
(a)30th Dec 1986 (b)25th Oct 1990 (c)23rd Dec 1986 (d)27th Nov 1998
2. Green marketing is the marketing of ____________friendly products and services.
(a) environment (b) producer (c) seller (d) consumer
3. A _________is a contract between two parties to undertake an exchange of the underlying
asset at a specific future date at a pre-determined price.
(a) Future (b) swap (c) option (d) forward
4. AGMARK is a certification mark employed on _______ products in India.
(a) Sea products (b) animal products (c) agricultural products (d) hosiery products
5.ISI mark is mentioned on the products related to_______
(a) Industrial products(b) Processed food(c) Non polluting vehicles(d) Agricultural
product.
6. Which certificate is required to jewellers in the market? ____________
(a) FPO mark(b) AGMARK(c) BIS hallmark(d) None of these
7. AGMARK is a guarantee of standard_________________
(a) size (b)weight (c)quantity (d) quality
8. Consumer protection act is applicable to______________
(a)movable goods (b)immovable goods (c)specific goods and services (d) all goods and
services
9. Who issues ISI mark in India?____________________
(a) Food Safety and Standard Authority of India(b) National Standard Oganisation of India(c)
Bureau of Indian Standard(d) b and c both
10. COPRA is related to_____________
(a) Environment friendly products(b) Child Rights(c) Protection of consumer rights(d) Organic
products
11. Coffee is adulterated with________________
(a) Saw dust(b) Chicory (c) Ghee (d) All of these
12. Agmark act 1937 comes under _______________
(a)Dept. of consumer affairs, Govt. of India(b) Dept. of Agriculture and Cooperation
(c)Dept. of Marketing and inspection (d) Dept. of Legal Meterology
13. According to the American Marketing Association, which of the following is marketing
of products that are presumed to be environmentally safe?______________
(a) Gray Marketing (b) Green Marketing (c) Global Marketing (d) Social
Marketing
14.A consumer is not satisfied with district forum. In how many days he can challenge the
same and approach the State Commission?_____________
(a) 20 days (b) 30 days (c) 50 days (d) 100 days
15. To charge fair prices from the customers is an example of_____________
(a) Good habit (b) Bad habit (c) Good ethics (d) Bad ethics
16. _______provides separate definitions of consumer for the purpose of goods and service.
(a) Consumer Protection Act, 1988 (b) Consumer Protection Act,1989 (c)
Consumer Protection Act,1986 (d) Consumer Protection Act,2000
17. _______________can sue in negligence for injury caused by a defective product.
(a) Good customer (b) Bad customer (c) Regular customer (d)
Diseased customer
18. The redressal of consumer grievances, the consumer protection Act is a ______________
(a) One tier enforcement (b) Two-tier enforcement (c) Three-tier
enforcement (d) Four-tier enforcement
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19. ____________provides a safeguard for consumers against goods and services which are
hazardous to health.
(a) Right to safety (b) Right to be informed (c) Right to choose (d) Right to be heard
20. A futures contract ______________
(a)is a direct contract between two parties created to meet the specific needs of the
parties(b)has more counterparty risk than a forward contract (c) are standardized because
they are offered by and traded on an exchange (d)are used more frequently than swaps
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
c a d c a c d d D c b a b b c c d c a c
SECTION-B
ANSWER THE FOLLOWING
1. Define Marketing and discuss its significance in the Modern World.
2. Write the role of government in marketing.
3. Explain the unique aspects of how government buyers make their buying decisions.
4. Write the procedure to buy the government projects.
5. Why is the standardisation needed for a product?
6. Write the role of standardisation in agricultural marketing
7. What is consumerism?
8. Write the evolution of consumerism.
9. Write the role of government in consumer awareness on their rights.
10. What is green marketing?
SECTION-C
ANSWER THE FOLLOWING
1. Explain the role of Bureau of Indian Standard.
2. Write in detail about AGMARK.
3. Briefly explain the need for consumer protection.
4. Comment on measures for consumer protection.
5. Clarify the approaches to consumerism.
6. Summarise the laws to protect interests of consumers.
7. Discuss the role of three tier machinery for redressal of consumers’ grievances
8. Explain benefits of green marketing concept.
9. Explain forward trading in commodities.
10. “Indian consumers have or do not have awareness on consumer rights”. Justify.
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KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS),
COIMBATORE – 29.
DEPARTMENT OF COMMERCE WITH PROFESSIONAL ACCOUNTING
SEMESTER V
18UPA5E1 – HUMAN RESOURCE MANAGEMENT
PREPARED BY
Dr.M.Revathibala
UNIT- I
SECTION A
1) The process of efficiently achieving the objectives of the organisation with and through
people______
a) Management b) Administration c) Decision Making d) Controlling
2) HRM is a ________ subsystem of an organization.
a) Government b) Central c) Both (A) and (b) d) None of these
3) HRM involves both___________ and operative functions.
a) Managerial b) Financial c) Planning d) None of these
4) HRM is a process of ____________ competent human resources in the organization
a) Procuring b) developing c) Controlling d) all of these above
5) Human Resource Management function does not involve
a) Recruitment b) Selection c) Cost control d) Training
6) Which one of the following does not includes under the functions of HRM
a) Planning b) Organizing c) Recruitment d) Profitability
7) The main objective of Human resource management is
a) To increase the welfare of human resource b) To maximize profit
c) To maximize loss d) none of these
8) The focus of Human Resource Management revolves around
a) Machine b) Motivation c) Money d) Men
9) The difference between human resource management and personnel m an ag em en t i s
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a ) Ins ig n i f i c an t b ) M ar g i n a l c ) N a r r o w d) Wide
10) The modern term for personnel management
a) HRD b) HRP c) HRM d) HSM
11) To achieve goals organizations require employees
a) Control b) Direction c) Commitment d) Cooperation
12) The amount of quality output for amount of input means
a) Productivity b) Production c) Sales increase d) Increase in profits
13. Psychology oriented factor of production is ____________.
a) Land b) Finance c) Machine d) labour
14. Human Resource Planning is also known as ______________
a) Strategic Planning b) Human Resource Development
c) Budget Planning d) Manpower Planning
15) Operating functions of HRM are also known as
a) Managerial function b) Organizing functions
c) Staffing functions d) none of these
16) Role of HR mangers is
a) Advisory role b) Mediator role
c) Representative role d) All the above
17) _________is process of determining manpower requirements in order to carry out
integrated of organization.
a) Human Resource Planning b) Human Resource Control
c) Human Resource Development d) Human Resource Management
18) Management function arises as a result of
a) Consumer preferences b) Abundance of capital
c) Expansion of industry d) Shortage of labour
19) Quality goals require alignment with
a) Production b) Human Resources c) Finance d) Purchase
20) Deployment of which resource is difficult to master
a) Human b) Land c) Capital d) Natural
ANSWERS:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A B A D C D A D D C C A D D C D A D B A
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SECTION – B
1. Define human resources management. Explain the features of HRM.
2. What are the objectives of human resources management?
3. Explain the scope of human resources management?
4. Write a short note on HR acquisition functions.
5. Explain the significance of HRM.
6. Write a short note on managerial functions.
7. Difference between HRM and personnel management.
8. What are the objectives of human resource planning?
9. What are the problems faced by human resources planning?
10. What are the characteristics of human resource planning?
SECTION – C
1. Explain in detailed about functions of human resource management.
2. What are the features of human resource management?
3. What are the characteristics of human resource management?
4. Explain about the need and importance of human resource planning.
5. Write in detail about process of human resource planning.
6. What are the limitations and guidelines of human resource planning?
7. What are the importance of human resource planning?
8. Explain the techniques for forecasting human resource needs?
9. Write in detailed about barriers of human resource planning?
10. Explain in detailed about functions of personnel management?
UNIT –II
SECTION – A
1. The process of searching prospective workers and stimulation them to apply for jobs
in the Organization
a) Recruitment b) Selection c) Placement d) None of the above
2. Son of the soil recruitment” means
a) Performance to local population b) Performance to areas other than
local
c) Performance to foreigners d) None of these
3. _______is the process of screening job applications to ensure that the most
appropriate candidates are hired.
a) Selection b) Recruitment c) Hiring d) Placement
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4. A ________ test is a standardized measure of behaviour.
a) Proficiency b) Psychological c) Ability d) Aptitude
5. _________ involves assigning a specific job to each one of the selected candidates.
a) Induction b) Placement c) Interview d) All the above
6. Interview in which a panel of experts interviews each candidate is____
a) Group interview b) Panel interview c) Preliminary interview d) None of these
7. The test designed to measure the potential and ability of an individual test is known as
a) Proficiency test b) Psychological test c) Ability test d) Aptitude test
8. Which of the following is the area from which applicants can be recruited?
(a) Employment Lines (b) Employees' Association (c) Labour Market (d) Labour
Schemes
9.Selection of the candidates is done out of
(a) target population (b) internal sources
(c) external sources (d) internal as well as external sources
10. One of the external sources of recruitment is __
(a) retired managers and employees (b) dependents of deceased employees
(c) gate hiring (d) none of the above
11 Selection is______
(a) Subjective (b) Objective (c) Normative (d) Positive
12 Recruitment
(a) follows selection (b) precedes selection
(c) matches selection (d) none of the above
13. E-recruiting methods include
(a) internet job boards (b) career websites
(c) employer websites (d) all of the above
14. A test interprets problems or situations for employees is____
(a) Projective tests. (b)Interest tests (c) Preference tests (d) Simulation tests
15. ________ indicates type of people required.
(a) Training plan (b) Recruitment plan (c) Retention plan (d) Deployment plan
16. The test which measures individual potential to learn is______
(a) Aptitude tests (b) Attitude tests (c) Personality tests (d) Intelligence tests
17. Oral examination of candidates for employment is ________
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(a) Placement (b)Screening (c) Interview (d) Selection
18. Recruitment is one of the HR __________ function.
(a) Acquisition (b) Development (c) Maintenance (d) Compensation
19. Which test is conducted to measure the likes, dislikes & habits ?
(a) Vocational test (b) Temperament test (c) Skills test (d) Interest test.
20. Sources of recruitment & methods, procedures, techniques for____
(a) Selection. (b) Promotion. (c) Transfer (d) Training.
ANSWERS:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A A A B B B D C A C A B D A B A A A C A
SECTION B
1. Explain purpose of recruitment
2. State the importance of selection.
3. Write a short note on recruitment process.
4. Explain about sources of recruitment.
5. Difference between recruitment and selection.
6. What are the processes of selection?
7. Explain the advantage and disadvantage of selection tests.
8. What are objectives of selection interview?
9. What are the qualities of an effective interviewer?
10. Write a short note about recruitment policy.
SECTION C
1. What are the factors affecting recruitment policy and programme?
2. Explain the various sources of recruitment.
3. Write in detailed about techniques used for recruitments.
4. What are the steps to be followed for selection process?
5. Explain different types of tests.
6. What are the steps to be followed for interview process?
7. What are the different types of interview?
8. What are the precautions to be used for selection tests?
9. What are the limitations of interview? Explain the guidelines for effective
interviewing.
10. What are recruitment methods and its evaluation?
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UNIT – III
SECTION – A
1. A kind of future oriented training_____________
(a)Employee training (b) Employee development (c) Employability (d) Employee
potential
2. _____refer to training methods that require the trainee to be actively involved in
learning.
(a) Hands on learning (b) Jobless learning (c) Self Learning (d) Visual learning
3. _________ involves assigning a specific job to each one of the selected candidates.
(a) Induction (b) Placement (c) Interview (d) All the above
4. The systems model of training contains three phases __________, training and
development, and evaluation.
(a)Preparation B. Assessment. C. Introduction D. Organizing
5. Training helps to improve and give higher __________.
(a) Productivity B. Mobility C. Viability D. Vitality
6. Many colleges and universities have arranged for students to work part-time in a special
training program as part of their education. This training is called _____
(a) College trainee experience (b) Educational credits program
(c)Coordinated education (d) An internship
7. __________ training seeks to adjust newly appointed employees to the work environment
(a) Production (b) Induction (c) Safety (d)Refresher
8. Which of the following term reflects the process of preparing organizational people
according to the future needs?
(a) Learning (b) Training (c) Development (d) Need analysis
9. Career counselling' is part of which of the following functions of HRM?
(a) Compensation & benefits ( b) Planning & selection
(c) Training & development (d) Maintenance of HRIS
10. Job posting is:
a) Internal advertisement by an organization to attract candidates from the existing
employees, against a vacancy.
( b) The system of transferring existing employees to comparable new jobs available in the
organization.
(c) An arrangement of in house training of employees for career advancement.
(d) Grouping together of a family of similar jobs, under a single title to establish
uniformity of standards in controls and compensations.
11. _____refer to training methods that require the trainee to be actively involved in
learning.
(a) Hands on learning (b) Jobless learning (c) Self learning (d) Visual learning
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12. _________is self-instruction without the presence of a instructor using audio, video
materials, interactive video sessions and computer materials
(a) Open learning (b) Visual learning (c) Classroom teaching ( d) Technical learning
13. _____________is to train the employees who are geographically separated from each
other or from trainer and they are connected television hook-ups.
( a) Telemarketing (b) Tele net working (c) Telecommunicating (d)
Teleconferencing
14. Sensitivity training is otherwise known as
(a) Simulation training (b) Laboratory training (c) Project training (d) Behavioural
Training
15. An interactive, instructor-led approach where the instructor and employee meet in a
classroom for a specific duration of time in a common location.
(a) Face to face training (b) Group process (c) Updating training (d) Ulterior training.
16. The process of examination a training program is called________
(a) Training evaluation. (b) Training needs analysis.
(c) Training method identification. (d) Training module designing.
17. _____________is a reactive process
(a) Training and Development (b) Training
(c) Development (d) Learning
18. It refers to the process used to determine if training is necessary
(a) Task assessment. (b) Need assessment.
(c) Training assessment. (d) Development orientation
19. __________ is the simplest unit of work and involves very elementary movement
(a) Position (b) Task ( c) Job (d) Micro motion
20. Training to the raters of performance appraisal is an important responsibility of:
(a) Top management (b) HR department (c) Line managers (d) Production department
ANSWERS:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B C B B A D B B C A C B B C C C B B B B
SECTION – B
1. Explain the process of training.
2. What are the problems faced at the time of placement situation?
3. Explain the role of training and development.
4. Explain the assumptions of training?
5. Write a note on sensitivity training.
6. What are the factors effectiveness of training and development?
7. Write a note on transactional analysis.
8. Explain the needs and importance of training
9. What are the different types of training
10. Explain the concept of placement.
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SECTION – C
1. Explain in detailed about the methods of training.
2. What is sensitivity training? Explain about positive and negative consequences.
3. What are characteristics of trainees and trainers?
4. Explain the benefits and importance of training.
5. Explain about the methods and techniques of training.
6. Write in detailed about transactional analysis
7. State the advantages and disadvantages of training and placement.
8. Discuss about designing a training programme.
9. Discuss in detailed about concept of training effectiveness.
10. Write in detailed about retraining.
UNIT- IV
SECTION – A
1. _________ provides an objective basis for taking personnel decision
(a) Manpower planning (b) Performance Appraisal (c) Documentation (d) Industrial
Relations
2. Willingness, capacity & opportunity to perform are said to be;
(a) Performance outcomes (b) Determinants of performance
(c) Performance appraisals (d) Types of performance standards
3. What is another term for 360-degree feedback?
(a) Feedback loop (b) Multi-source assessment (c) Upward feedback (d) Circle feedback
4. Which of the following measurement methods rates employee performance? relative to
Other employees?
(a) Graphic rating scale (c) Comparative method
(b) Essay method (d) Critical incident method
5. ______ is defined as the record of outcomes produced on a specific job function or
activity during a specific time period.
(a) Performance (b) Work function (c) Evaluation ( d) None of the above
6 ______ is the personnel activity by means of which the enterprise determines the
extent to which the employee is performing the job effectively.
(a) Job evaluation (b) Work evaluation (c) Performance evaluation (d) None of the above
7.In which evaluation method, the evaluator is asked to describe the strong and weak
aspects of the employee’s behaviour.
(a) Graphic rating scale (b) Forced choice
(c) Essay evaluation (d) Management by Objective
8. In this technique, personnel specialists and operating managers prepare lists of
statements of very effective and very ineffective behaviour for an employee.
(a) Critical incident technique (b) Forced choice
(c) Essay evaluation (d) Management by Objective
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9. The following technique(s) is based on the critical incident approach.
(a) Behaviorally anchored rating scales (BARS) (b) Critical incident technique
(c) Both (A) and (B) (d) None of the above
10. Paired comparison method can be used by
(A) Superiors (B) Peers (C) Subordinates (D) All of the above
11. The multiple-input approach to performance feedback is sometimes called ____
degree assessment.
(a) 90 (b) 180 (c) 270 (d) 360
12. An ______ is a vertical move in rank and responsibility.
(a) Increment (b) Appraisal (c) Promotion (d) None of the above
13. The following technique is used to evaluate an employee individually.
(a) Graphic scale rating (b) Ranking (c) Paired comparison (d) Forced distribution
14. The technique that have been used to evaluate an employee in comparison with
other employees
(a) Ranking (b) Forced choice (c) Essay evaluation (d) Critical incident technique
15. The Recognition may be shown in the form of
(a) A pat on the back of employee (b) Promotion
(c) Assignment of more interesting tasks (d) All of the above
16. Which is the biggest challenge faced while conducting performance appraisal?
(a) Evaluating performance of self – managed teams
(b) Presence of a formal appeal process
(c) Appraisals based on traits are to be avoided
(d) None of the above
17. Which of these options are the activities that constitute the core of performance
management?
(a) Performance interview (b) Archiving performance data
(c) Use of appraisal data (d) All of the above
18. Which company first developed the 360 degree system of appraisal?
(a) Wipro in 1990 (b) Godrej Soaps in 1991
(c) General Electric, US in 1992 (d) None of the above
19. Which is the simplest and most popular technique for appraising employee performance?
(a) Rating Scales (b) Critical Incident (c) Cost accounting (d) BARS
20. First step in 'appraising process' is
(a) defining the job (b) training session (c) feedback session (d) interview sessions
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ANSWERS:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B B B C A C A A C D D C A A D A D C A A
SECTION – B
1. Discuss the characteristics of performance appraisal.
2. What are the objectives of performance appraisal?
3. Explain about performance appraisal of managers.
4. What are the limitations of performance appraisal?
5. Write a short note about graphic rating scale.
6. Explain the steps involved in performance appraisal through management by
objectives?
7. Define performance appraisal. Explain its concepts.
8. Discuss about 360-degree appraisal.
9. Describe about assessment centres and its objectives.
10. Write a short on self-appraisal.
SECTION-C
1. Discuss the steps involved in performance appraisal process.
2. Describe about methods of performance appraisal.
3. What do you mean by 360- degree appraisal? Discuss merits and demerits of 360-
degree appraisal.
4. Explain the essentials of effective performance appraisal systems.
5. What do you mean by performance appraisal interview? Explain its types.
6. Explain the goal setting approach to performance appraisal. What are are its
advantage and limitations?
7. Distinguish between performance appraisal and potential appraisal.
8. Discuss about barriers and overcoming barriers of performance appraisal.
9. What is behaviourally anchored rating scale? Discuss about process and problems of
the scale.
10. What are the elements and uses of performance appraisal?
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UNIT-V
SECTION- A
1. In an organization, base pay is classified as being part of
(a) direct compensation (b) primacy compensation
(c) indirect compensation (d) recency compensation
2. It takes when an employee moves to a position higher than the one formerly occupied
(a) Promotion (b) Demotion (c) Transfer (d) Motivation
3. Direct compensation towards the contribution of labour is---------.
(a)Money (b) pay (c) reward (d) Wagers
4. The objective of salary administration is to offer----------.
(a) More wages (b) Lesser wages (c) Poor wages (d) Fair wages
5. Non-financial motivator is---------
(a) Bonus (b) Job security (c) Medical reimbursement (d) Leave with pay
6. The promotion criteria is always based on___________
(a)Merit (b) Merit and seniority (c) Seniority (d) Recommendations
7. _______ is the ideal or target to achieve through higher productivity
(a) Fair wages (b) Minimum wages (c) Living wages (d) Normal wages
8. Movement of an employee from a low level to the higher level is _____
(a) Transfer (b) Promotion (c) Rotation (d)Shifting
9. Apart from pay what is the second most common reason for an employee to join a trade
union?
(a)group solidarity (b) friendship groups
(c) political reasons (d) wide range of personal benefits.
10. Amount of remuneration received during a period is __________
(a) Wages (b) Earnings (c) Minimum wage (d) Wage structure
11. Motivational devices used to encourage special workers________
(a) Compensation (b) Wages (c) Salaries (d) Incentives
12. The downward movement of employee in organizational hierarchy with lower pay status
responsibilities means___________.
(a) Demotion (b) Job change (c) Promotion (d)Transfer
13. A------ takes place when an employee moves to a position higher than the one
formerly occupied.
(a) transfer (b) demotion (c) punishment (d) promotion
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14. Authority being conferred based on technical knowledge or skill of ____.
(a) Technical Power (c) Competence authority.
(b) Machiavellianism (d) Power Distribution.
15. Which of the following is an example of payment that is consistent from period to
period despite the number of hours worked
(a) Wage (b) Salary (c) Reward (d) Incentive
16. Variable pay is also know as:
(a) Incentive (b) group pay (c) performance pay (d) B and C
17. Which of the following is a legally mandated benefit?
(a) social security (b) unemployment compensation
(c) workers’ compensation (d) all of the above
18. Direct compensation includes which of the following:
(a) Flexible benefits (c) Long-term incentive pay
(b) Workers’ Compensation (d)Unpaid leave
19. Indirect compensation is represented by which of the following:
(a) Social Security benefits (c) Differential pay
(b) Short-term incentive pay (d) Merit pay
20. Adding 'incentives' to job is included in
(a) intrinsic motivation (c) extrinsic motivation
(b) outsourced motivation (d) in-house motivation
ANSWERS:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A A A D A D D B D B D A D C D A D C B C
SECTION – B
1. What do you mean by incentives? Discuss about its concept.
2. Write a short note on financial incentives.
3. Explain the formulation of good incentive schemes.
4. Describe about fringe benefits.
5. What are the advantages and disadvantages of remuneration?
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6. Explain about purpose and advantages of promotion.
7. Define demotion. What are needs of demotion?
8. What are the objectives of human resource audit?
9. Discuss the benefits of human resource audit.
10. Discuss about non-financial incentives.
SECTION- C
1. What are the different types of financial incentives?
2. What do you mean by incentives? How do financial incentives differ from non-
financial incentives in motivating employees?
3. Explain the different types of benefits.
4. Give a detailed concept of promotion and demotion policy.
5. Explain about criteria bases for promotion.
6. What are the objectives and scope of human resource audit?
7. What are the different processes of human resource audit?
8. Explain the scope of human resource audit.
9. Discuss the merits and demerits of promotion.
10. What are the elements of promotion policy?
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KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS),
COIMBATORE – 29.
DEPARTMENT OF COMMERCE WITH PROFESSIONAL ACCOUNTING
SEMESTER V
18UPA5S3 – ENTREPRENEURSHIP DEVELOPMENT
PREPARED BY
1. Mrs.GOLD BELL RACHELL, Assistant Professor (Unit I, II & III)
2. Dr.B.DIVYA PRIYA, Associate Professor (Unit III, IV & V)
18UPA5S3 - ENTREPRENEURSHIP DEVELOPMENT
UNIT I - Section A
1. Entrepreneurship involves innovation” who said?
a. Frank Carney b. Mill c. Schumpeter d. Knight
2. In EDP, “P” STANDS FOR _______
a. Plan b. Programme c. Process d. Promotion
3. An individual who bears the risk of operating a business in the face of uncertainty
about the future condition is called ________
a. Entrepreneur b. Partner c. Agent d. Principal
4. _________entrepreneurs neither introduce new changes nor adopt new methods
innovated by others.
a. Technical b. Fabian c. Induced d. Business
5. The term intrapreneur was coined by …………………………. .
a. Robert Owen b. Joseph Schumpeter
c. Richard Cantillon d. Gifford Pinchot
6. According to Schumpeter, Is the most important function of a modern entrepreneur.
a. Innovation, b. invention, c. skill, d. creativity
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7. Social attitude is one of the important problems of a __________Entrepreneur.
a. Drone. b. Business c. Women d. Adoptive.
8. The capacity to develop new ideas, concepts and processes is known as :
a. Innovation, b. Invention c. Skill d. Creativity.
9. Which of the following risks is borne by the entrepreneur:
a. Financial risks, b. Personal risks, c. Psychological risks, d. all of
these.
10. Which of the following is a psychological factor affecting entrepreneurial growth:
a. Legitimacy of entrepreneurship, b. social status,
c. need for achievement d. none of these.
11. The entrepreneur who does not change the method of production already introduced
is:
a. Drone entrepreneur b. Fabian entrepreneur,
c. classical entrepreneur d. none of these.
12. Person who works within an organization, having entrepreneurial capabilities is:
a. Entrepreneur b. Intrapreneurs, c) manager d. Chief
executive.
13. Who introduced the term intrapreneur:
a. Schumpeter b. Peter Drucker,
c. David McClelland d. Gifford Pinchot 111.
14. A micro enterprise is one in which the investment in plant and machinery does not
exceed Rs.____________
a. 25 lakhs b. 50 lakhs c. 1 crore d. 10 lakhs
15. A small enterprise is one in which the investment in plant and machinery is more
than Rs_____ But does not exceed Rs____________
a. 10 lakhs / 2 crores b. 25 lakhs /5crores
c. 5 crores/ 10 crores d. 2 crores/5 crores
16. A medium enterprise is one in which the investment in plant and machinery is
more than Rs ……………………. But does not exceed Rs ………………….. .
a. 10 lakhs / 2 crores b. 25 lakhs /5crores
c. 5 crores/ 10 crores d. 2 crores/5 crores
17. A micro enterprise is one in which the investment in plant and machinery does
not exceed Rs…………………….. .
a. 25 lakhs b. 50 lakhs c. 1 crore d. 10 lakhs
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18. A women who initiates, organize and run a business enterprise is defined as
____________
a. Women entrepreneur b. Women Sole trader c. Women partner d. Women leader
19. Women entrepreneurship has been recognized as an important source of ______ growth.
a. Financial b. Economic c. Motivational d. Functional
20. Business entrepreneurs are individual and they are also called __________
a. Solo operators b. Sole traders c. Partners d. Agents
Section B
1. Give the meaning and definition of entrepreneurship.
2. Who is an entrepreneur?
3. List out the characteristics of an entrepreneur.
4. State any five qualities of an entrepreneur.
5. What are the stages in entrepreneurial process
6. Distinguish between entrepreneurship and intrapreneurship.
7. Who are intrapreneurs? List out their characteristics.
8. State the phases of entrepreneurship
9. What are the psycho-social barriers faced by women entrepreneurs
10. List out the qualities of women entrepreneurs.
Section C
1. Qualities of a successful entrepreneur
2. Explain the types of entrepreneurs.
3. What are the functions of an entrepreneur?
4. Explain the pros and cons of being an entrepreneur.
5. Explain the role of entrepreneurship in economic development.
6. Distinguish between entrepreneur and manager.
7. What are the problems inhabiting entrepreneur?
8. Discuss the economic factors affecting entrepreneurial growth.
9. Discuss the measures undertaken for the development of women entrepreneurs.
10. Outline the problems faced by the women entrepreneurs.
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Answers:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
c b a b d a c d d c a b d a b c d a b a
Unit II
Section A
1. Any investment opportunity which is to be exploited for profit is called _________
a. Product b. Project c. Share d. Bond
2. the process of collection, compilation and analysis of economic data for the purpose of
finding out possible opportunities for investment is called_________
a. Project screening b. Project appraisal
c. Project identification d. Project implementation
3. The process of evaluating the project ideas with a view to select the best and promising
idea after eliminating the unprofitable ideas is called _________
a. Screening b. appraisal c. Identification d. Formulation
4. After screening the ideas, they are translated into project ____________
a. portfolio b. profiles c. proposal d. Promotion
5. SWOT stands for strength, weakness, opportunity, and __________
a. Treat b. Threat c. Tort d. Theme
6. Project formulation means ___________ Study.
a. Profitability b. Liquidity c. Feasibility d. Viability
7. Analysis that is primarily concerned with the identification, quantification and evaluation
of project resources is called __________
a. Network b. Financial c. Techno-economic d. Input
8. Analysis that is done to ascertain financial viability of a project is called as _______
a. Network b. Financial c. Techno-economic d. Input
9. Project __________ is done after the project is implemented.
a. Management b. Appraisal c. Evaluation d. Formulation
10. The process of measuring the progress and performance of a project is called:
a. Project appraisal b. Project evaluation. c. Project control. d. Project audit.
11. __________ is the master report
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a. feasibility report b. interim report c. project report d. progress report
12. __________ is the final report
a. feasibility report b. interim report c. project report d. progress report
13. ___________ skill helps an entrepreneur to establish an enterprise.
a. communication b. decision-making c. project development d. management
14. Projects for industrial development is an…………….project.
a. Quantifiable b. Non-quantifiable c. Sectoral d. Crash
15. An idea or a plan that is intended to be carried out is called _____
a. Opportunity b. Idea c. Project d. Promotion
16. _________ issues guidelines for preparing industrial projects.
a. Commercial bank b. planning commission c. Chartered accountant d. Auditor
17.The analysis of cost and revenue is the nature of ________ feasibility.
a. Economic b. Technical c. Social d. Financial
18.After screening , the ideas are translated into __________
a. Project description b. Project profile c. Project design d. Feasibility report
19. The main purpose of ______ is to provide information required for project appraisal.
a. Project description b. Project profile c. Project design d. Feasibility report
20._________ is the heart of the project.
a. Project description b. Project profile c. Project design d. Feasibility report
Section B
1. Give the meaning and definition of a project.
2. List out the elements in a project profile.
3. What is project selection?
4. Write a note on project identification
5. How is a product selected?
6. What is project feasibility?
7. Explain the utility of feasibility analysis.
8. State the objectives of feasibility analysis.
9. Discuss the importance of feasibility analysis.
10. Enlist the elements of market feasibility.
Section C
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1. Explain the criteria used for project selection
2. Discuss about the classification of project.
3. Explain the constrains in project identification.
4. Explain the phases of project life cycle.
5. Discuss in detail about the importance of project report.
6. What the reasons for conducting feasibility analysis
7. Explain project selection.
8. Discuss the various types of feasibility analysis.
9. Illustrate the methods of assessment of project feasibility.
10. Give the format of a project report.
Answers:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
b c a b b c d b c b c c c a c a a b d c
UNIT III - SECTION A
1. District industrial center was started in the year _______
a. 1879 b. 1967 c. 1978 d. 1987
2. Which is an apex bank in the industrial setup?
a. ICICI b. IDBI c. IFCI d. SIDBI
3. The ______ provides consultancy and training to small entrepreneurs.
a. IDBI b. SISI c. DIC d. SSIB
4. There are ______ SSI’s
a. 28 b.30 c. 25 d.42
5. SISI was established in _________
a. 1956 b. 1955 c. 1967 d. 1998
6. NSIC was set up in _______
a. 1956 b. 1955 c. 1967 d. 1998
7. __________ is an apex policy making agency .
a. DIC b. SIDBI c. SIDO d. SISI
8. NSIC’s head office is at _________
a. Kolkata b. New Delhi c. Chennai d. Bombay
9. SIDO has a network of __________ small industries service institutes
a. 28 b. 25 c. 24 d. 30
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10. The main function of ____________ is coordination of industrial development.
a. DIC b. SIDBI c. SIDO d. SISI
11. SSIC was set up in the year:
a) 1956 b) 1958 c) 1960 d) 1962
12. An autonomous non-profit service organization to promote entrepreneurship:
a) ICICI b) NABARD c) Co-operative Banks d) Indian Investment Centre
13. Which of the following is a state-level institution to promote entrepreneurship in the
state?
a) SSIC b) RBI c) NABARD d) SBI
14. KVIC was established in the year:
a) 1953 b) 1958 c) 1960 d) 1962
15. Gandhian philosophy and thought were the backbone of:
a) KVIC b) ITCOT c) SSIC d) SIDO
16. ITCOT was started in the year:
a) 1979 b) 1980 c) 1984 d) 1990
17. Head of SIDO:
a) The Governor of RBI b) Development Commissioner c) Ministry of Industries d)
Chief Minister of Tamil Nadu
18. Which of the following was the sub-ordinate officer of the department of SSI?
a) SIDO b) SSIC c) ICICI d) IDBI
19. Indirect loans to entrepreneurs are given by SIDBI through SFC and
a) SIDO b) RBI c) NABARD d) ITCOT
20. KVIC supports tiny sector entrepreneurs with investment in plant and machinery upto
a) Rs.10 lakhs b) Rs.5 lakhs c) Rs.15 lakhs d) Rs.25 lakhs
SECTION B
1. Enlist the activities of DIC
2. Bring out the objectives of DIC
3. State the functions of SISI
4. Write a note on NSIC
5. What are the facilities offered by NSIC
6. What are the objectives of SSIC?
7. Explain the functions of Indian Investment Centre (IIC).
8. Explain the objectives of KVIC.
9. Write a note on ITCOT.
10. Explain the working of SIDO.
SECTION C
1. Discuss the functions of DIC.
2. Explain the role and functions of NSIC.
3. Assess the role of SIDO.
4. Discuss about SISI in detail.
5. Explain about DIC in detail.
6. Explain the functions of ITCOT.
7. Explain the objectives and functions of SIDO.
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8. Explain the working of IIC.
9. Discuss the role of KVIC in promoting tiny industries.
10. Explain the objectives and functions of SSIC.
ANSWER KEY – UNIT III
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UNIT IV - SECTION A
1. IFCI was established in the year:
a) 1948 b) 1949 c) 1950 d) 1960
2. The first term financial institution was:
a) IFCI b) IDBI c) SIDBI d) ICICI
3. Expand IFCI.
a) Institutional Finance Corporation of India b) Industrial Finance Corporation of
India c) Information for Finance Credit in India d) India Finance Credit Institution
4. Wholly-owned subsidiary of RBI:
a) IFCI b) IDBI c) SIDBI d) ICICI
5. IDBI was set up in the year:
a) 1964 b) 1965 c) 1956 d) 1945
6. Which of the following is the subsidiary of IDBI?
a) SIDBI b) NSIC c) SIDC d) SFC
7. Soft loan scheme was introduced by
a) IFCI b) IDBI c) SIDBI d) ICICI
8. Soft loan scheme was introduced in the year
a) 1976 b) 1975 c) 1986 d) 1980
9. Technical Development Fund Scheme was introduced in
a) March 1979 b) March 1980 c) March 1982 d) March 1984
10. IDBI has introduced a scheme for rediscounting of bills against the sale of
a) goods b) machinery c) land d) services
11. An apex institution in the field of industrial finance:
a) IDBI b) IFCI c) SIDBI d) ICICI
12. IDBI was taken over by Government of India in the year:
a) 1976 b) 1965 c) 1956 d) 1945
13. SIDBI was set up in :
a) October 1989 b) November 1989 c) December 1989 d) September 1989
14. State Financial Corporation was set up under the Act:
a) State Financial Corporation Act, 1951 b) State Financial Corporation Act, 1952
c) State Financial Corporation Act, 1953 d) State Financial Corporation Act, 1954
15. Type of private equity:
a) Venture Capital b) Seed capital c) Merchant capital d) Business capital
16. Venture capital financing investment occurs after:
a) Seed capital funding b) Business capital c) obtaining loans and advances from a
lending institution d) a period of 1 year from start-ups of business
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17. A catalyst institution for the development of small, medium and large scale industries
in Tamil Nadu.
a) Tamil Nadu Industrial Investment Corporation Limited b) Tamil Nadu Investment
Industrial Corporation Limited c) Tamil Nadu Institute for Industrial Corporation d)
Tamil Nadu Investment credit Institute
18. TIIC was established in the year:
a) 1949 b) 1950 c) 1962 d) 1980
19. The authorised share capital of TIIC was
a) Rs.300 crores b) Rs.200 crores c) Rs.425 crores d) Rs.500 crores
20. Which of the following institution was acting as a catalyst in the development of
Medium and Large Scale Industries in Tamil Nadu?
a) SIPCOT b) SSIB c) SIDO d) TIIC
SECTION B
1. What are the objectives of IFCI?
2. Write a note on SFC.
3. Explain the functions of IDBI.
4. Explain about UTI.
5. Write a note on TIIC.
6. What are the benefits of venture capital?
7. Explain SIDBI role in promoting entrepreneurs.
8. What are features of venture capital?
9. What are the roles of IFCI in promoting entrepreneur?
10. Explain the functions of SIDO.
SECTION C
1. Discuss the role of IFCI in promoting entrepreneurs.
2. Explain the assistance provided by IFCI to entrepreneurs.
3. Explain the functions of SIDBI.
4. Write a note on soft loan scheme provided by IDBI.
5. Explain the stages of process to obtain venture capital finance.
6. Explain the features and benefits of venture capital.
7. Explain the functions of UTI.
8. Discuss about the schemes provided by IDBI.
9. Explain the functions of TIIC in promoting entrepreneurs.
10. Explain the functions of SIPCOT in detail.
ANSWER KEY – UNIT IV
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UNIT V
SECTION A
1. A single lump sum which is given by a govt. to an entrepreneur to cover the cost is known
as
a) Subsidy b) Concession c) Bounties d) None of these
2. A bonus or financial aid which is given by a govt. to an industry to help it compete with other
units in home market or in a foreign market is known as……
a) subsidy b) Concession c) Bounties d) None of these
3. Bounty signifies:
a) bonus b) Grants c) Concessions d) Subsidies
4. The financial and promotional assistance provided by the Govt. to the industries for
boosting up industrial development in all regions particularly in backward areas.
a) Seed capital b) incentive c) subsidy d) none of these
5. The place where the required facilities and factory accommodation are provided by the
government to the entrepreneurs to establish their industries there.
a)industry b) industrial estate c) company d) none of these
6. The initial capital that is required to obtain loans from the financial institutions
is called
a) Seed capital b) incentive c) subsidy d) none of these
7. In case of micro enterprises, range of investment in plant and machinery:
a) Upto Rs.25 lakhs b) Rs.25 lakhs – Rs.5 crores c) Rs.5 crores – 10 crores d)
above Rs.10 crores
8. In case of small enterprises, range of investment in plant and machinery:
a) Upto Rs.25 lakhs b) Rs.25 lakhs – Rs.5 crores c) Rs.5 crores – 10 crores d)
above Rs.10 crores
9. In case of medium enterprises, range of investment in plant and machinery:
a) Upto Rs.25 lakhs b) Rs.25 lakhs – Rs.5 crores c) Rs.5 crores – 10 crores d)
above Rs.10 crores
10. In case of micro enterprises, range of investment in equipment:
a) Upto Rs.10 lakhs b) Rs.10 lakhs – Rs.2 crores c) Rs.2 crores – 5 crores d)
above Rs.5 crores
11. In case of small enterprises, range of investment in equipment:
a) Upto Rs.10 lakhs b) Rs.10 lakhs – Rs.2 crores c) Rs.2 crores – 5 crores d)
above Rs.5 crores
12. In case of medium enterprises, range of investment in equipment:
a) Upto Rs.10 lakhs b) Rs.10 lakhs – Rs.2 crores c) Rs.2 crores – 5 crores d)
above Rs.5 crores
13. A Government incentive program that offers a tax reduction or elimination to businesses.
a) Tax holiday b) Subsidy c) Sales tax d) Excise duty
14. Newly started SSI units in backward areas are completely exempted from the payment of
electricity duty up to a period of:
a) 7 years b) 6 Years c) 3 years d) two years
15. Newly started SSI units in backward areas can claim exemption up to 7 years for
a) Electricity duty b) Property tax c) sales tax d) Excise duty
16. Newly started SSI units in backward areas can claim exemption up to 5 years for
a) Electricity duty b) Property tax c) sales tax d) Excise duty
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17. Newly started SSI units in backward areas are completely exempted from the payment of
property tax up to a period of:
a) 5 years b) 6 Years c) 3 years d) two years
18. Seed capital was introduced by
a) IDBI b IFCI c) NABARD d) ICICI
19. Seed capital was introduced in the year:
a) 1976 b) 1978 c) 1956 d) 1945
20. First women oriented self employment scheme:
a) Mohila Coir Yojana Board b) Rashtriya Mahila Kosh c) Swayamsidha
scheme d) Swadhar
SECTION B
1. Define incentive.
2. What are the different types of incentives?
3. Define subsidies.
4. Define bounty.
5. Differentiate between incentives, concession and subsidy.
6. Explain tax holiday.
7. What do you mean by seed capital?
8. List out the taxation benefits available to SSI.
9. Distinguish between incentives, subsidies and bounty.
10. List out government sponsored subsidy schemes.
SECTION C
1. Define incentives. Explain its types.
2. Differentiate between : (i) Incentives and Subsidies, (ii) Incentives and bounties and
(iii) Subsidies and bounties
3. Explain incentives, subsidies, bounties, concession and grants in detail.
4. Explain about seed capital assistance in detail.
5. Discuss the benefits of seed capital.
6. Explain in detail about subsidies in marketing of SSI products.
7. Explain in detail about transport subsidy available for SSI units.
8. Write a note on tax holiday.
9. Discuss in detail taxation benefits available to SSI units.
10. Discuss the role of entrepreneurs in export promotion and import substitution.
ANSWER KEY – UNIT V
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KONGUNADU ARTS AND SCIENCE COLLEGE, COIMBATORE
Question bank
Class: B.Com PA Semester - VI
Sub. Name: Management accounting Sub. Code: 18UPA617
Prepared By: Dr.S.RAJAM
UNIT –I
SECTION- A
1.The term ‘Management Accountancy’ was first used in-------
a) 1910 b) 1939 c) 1950 d). 1958
2 . …………… accounting is concerned with providing information to management for taking
managerial decisions.
a)management b)Financial c)Cost d)Final
3. The use of management accounting
a) Compulsory b) Optional c) Obligatory d). Regular
4.Management accounting assists the management------
a)Only in control b)Only in direction c)Only in planning d) In planning,
direction and control
5.Management accountancy is a structure for
a) Costing b) Accounting c) Decision making d) Management
6.Who coined the concept of management accounting?
a) R.N Anthony b) James H. Bliss c) J. Batty d) American Accounting
Association
7. Which among the following do not belong to the category of Accounting ?
a)management Accounting b)Financial accounting c)Cost accounting d)None of
these
8. Trend percentages and trend ratios are used in
a) Static Analysis b) Dynamic Analysis c) Horizontal Analysis d) Vertical
Analysis
9. The basic function of Management Accounting is to ……………………….
a)record all business transactions b)interpret the financial data c)assist the
management in performing its functions effectively d) collect data
10. Management accounting provides invaluable services to Management in
performing…………..
a)All management functions b)Co-ordination functions c)Controlling functions
d)collecting function
11. Accounting designed to serve parties external to the operating responsibility of the firm is
termed as…………….
a) Management Accounting b)Financial Accounting c)Cost accounting d)final
accounting
12.Cost Accounting and Management Accounting are ……………….. in nature.
a)complementary b)contradictory c)Different d)Similar
13. Management accounting has a ……….. scope than cost accounting.
a) Wider b)Narrow c) shortly d) lengthy
14. ……………explains what has happened to a business unit as a result of
operations between two balance sheet dates.
a) Income statement b)Profit and Loss Account c)Both of these d) balance
sheet
15. ……………….are the statements, in which figures reported are converted into
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percentages to some common base.
a) Comparative statements b) common size statements c) profit and loss account
d)balance sheet
16. Income statement matches the …………… incurred in the accounting year
a) Revenue and costs b) Incomes and expenses c) Both of these d) final account
17. …………..are statements of financial position at different periods
a) comparative statements b) common size statements c) profit & loss account
d)Final account
18. Management accounting provides-------
a) Qualitative information b) Quantitative information c) Both Qualitative and
qualitative d) non monetary item
19. In Trend percentage, the base year would be
a) the first year b) the last year c)any year d) Middle year
20. Management Accounting is also known as
a) Cost Accounting b) Financial Accounting c) Decision Accounting d) Corporate
Accounting
SECTION – B
21. What are called financial statements?
22. What is the scope of management accounting?
23. State any two objectives of management accounting.
24. What is trend analysis
25. From the following Profit and Loss Account of Ram Ltd. for the yearending 31st
December 1998, and 1999 prepare common size IncomeStatement and give your
interpretation.
Profit & Loss Ale of Ram Ltd. for the year ending 31st December
Particular 1998 (Rs.) 1999 (Rs.)
Net Sales
Less Cost of Goods sold
Gross Margin
Less Operating Expenses
Income before interest & tax
Less Interest
Net Income before Tax
Less Tax @ 50%
Net Income After Tax
22,30,000
15,35,000
6,95,000
4,02,000
2,93,000
18,000
2,75,000
1,37,500
1,37,500
31,85,000
22,70,000
9,15,000
6,02,000
3,13,000
30,000
2,83,000
1,41,500
1,41,500
( ANS: Net income tax 1998- 6.15 ; 1999 -4.45)
26. Convert the following statement of profit and loss into the comparative statement of profit
and loss of BCR Co. Ltd
Particulars 2013- 2014 2014-2015
i) Revenue from operations
ii) Other incomes
(iii) Expenses
(iv) Income tax
60,00,000
1,50,000
44,00,000
35%
75,00,000
1,20,000
50,60,000
40%
27. From the following statement of profit and loss of Madhu Co. Ltd., prepare comparative
statement of profit and loss for the year ended March 31, 2014 and 2015:
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Particulars 2013-14 2014-15
Revenue from operations
Employee benefit expenses
Other expenses
Tax rate 40 %
16,00,000
8,00,000
2,00,000
20,00,000
10,00,000
1,00,000
28. From the following profit and loss account and balancesheet of Jayaprakash industries Ltd.
Prepare a comparative income statement (Rs. in lakhs)
1999 2000 1999 2000
To cost of goods sold
To Operating expenses:
Administrative expenses
Selling expenses
To Net profit
500
20
30
150
700
640
20
40
200
900
By sales 700
700
900
900
29. Interpret the results of operations of a manufacturing concern usingtrend ratios, on the
following information:
(Amount in ’000Rupees) For the year ended 31st March
Items 1996 1997 1998 1999
Sales (net)
Cost of goods sold
Gross Profit
Selling Expenses
Net Operating Profit
13,000
7,280
5,720
1,200
4,520
12,000
6,960
5,040
1,100
3,940
9,500
5,890
3,610
970
2,640
10,000
6,000
4,000
1,000
3,000
30. The following are the Balance Sheets of J. Ltd. as at March 31, 2014 and 2015. Prepare a
Comparative balance sheet.
Particulars March 2014 March 2015
I. Equity and Liabilities
1. Shareholders’ Funds
a) Share capital
b) Reserve and surplus
2. Non-current Liabilities
Long-term borrowings
3. Current liabilities
Trade payables
Total
II. Assets
1. Non-current assets
a) Fixed assets
- Tangible assets
- Intangible assets
2. Current assets
- Inventories
- Cash and cash equivalents
20,00,000
3,00,000
9,00,000
3,00,000
35,00,000
20,0000
9,00,000
3,00,000
3,00,000
15,00,000
4,00,000
6,00,000
2,00,000
27,00,000
15,00,000
6,00,000
4,00,000
2,00,000
SECTION –C
31. Bring out the importance of Management Accounting.
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32. Explain the major tools of financial analysis
33. Distinguish management accounting from financial accounting
34. Distinguish between Management accounting and Cost accounting
35. The following are the Balance sheets of a concern for the years 2010 and
2011. Prepare a comparative Balance sheet and study the financial position of
The concern
36. From the following profit and loss account and balance sheet of Jayaprakash industries
Ltd. Prepare a comparative income statement and a comparative balance sheet.
(Rs. in lakhs)
Particulars 1999 2000 Particulars 1999 2000
To cost of goods sold
To Operating expenses:
Administrative expenses
Selling expenses
To Net profit
500
20
30
150
700
640
20
40
200
900
By sales 700
700
900
_____
900
37. From the following information you should prepare the Common size balance sheet
Liabilities 2010 2011 Assets 2010 2011
Equity share capital 3000 4000 Land and Building 4000 4000
General reserve 3000 3000 Plant and Machinery 6500 8000
Profit & Loss A/c 1400 2660 Furniture 600 800
12% Debentures 5000 4000 Stock 1500 1200
Sundry Creditors 630 720 Debtors 300 400
Bills Payable 80 150 Cash at Bank 150 50
Cash in Hand 60 80
13110 14530 13110 14530
Balance sheets of company ABC and DEF as on 31st March 2015 ABC DEF
Cash 2500 1500
Accounts receivable 4000 1000
Inventory 5000 1100
Current assets 11500 3600
Plant and equipment 35000 11000
Goodwill 1700 500
Total assets 48200 15100
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Total liabilities & equity 48200 1510
38. The following details are provided by C ltd. For the year ended 31st March, 2015 and
2016 prepare Comparative Statement:
39. What are the advantages of Management Accounting?
40. Enumerate the limitations of management accounting.
Ans: 1. c) 1950 2. a)management 3. b) Optional 4. d) In planning, direction and control
5. c) Decision making 6. b) James H. Bliss 7. d)None ofthese 8. a) Static Analysis 9.
c)assist the management in performing its functions effectively 10. a)All management
functions 11. b)Financial Accounting 12. a)complementary 13. a) Wider 14. c)Both of
these 15. b) common size statements 16. c) Both of these 17. a) comparative statements
18. c) Both Qualitative and qualitative 19. a) the first year 20. c) Decision Accounting
UNIT –II
SECTION-A
1. Current ratio is a_____________
a. short-term solvency ratio b. long-term solvency ratio c. profitability ratio.
d. turnover ratio.
2. Proprietary ratio is a ___________.
a. short-term solvency ratio. b. long-term solvency ratio. c. profitability ratio.
d. turnover ratio.
3. Fixed assets ratio is a __________
a. short-term solvency ratio. b. long-term solvency ratio. c. profitability ratio. d.
turnover ratio.
Current liabilities 10000 1000
Long term debt 27000 5000
Total liabilities 37000 6000
Equity 11200 9100
Particulars 31/03/15 31/03/16
Share capital 24,00,000 26,10,000
General Reserves 2,40,000 2,90,000
Profit and Loss A/c 4,20,000 6,00,000
11% Debentures 10,00,000 6,00,000
Goodwill 2,00,000 1,60,000
Land &Building 14,00,000 13,00,000
Plant and Machinery 12,00,000 13,20,000
investment (Non trading) 4,80,000 4,40,000
Creditors 3,70,000 4,30,000
Provision for Tax 1,60,000 2,10,000
Proposed Dividend 2,72,000 2,88,000
Stock 8,00,000 7,70,000
Debtors 5,76,000 8,30,000
Cash at Bank 1,76,000 1,86,000
Prepaid Expenses 30,000 22,000
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4. The ratios which reflect managerial efficiency in handling the assets is.
a turnover ratios b. profitability ratios. c. short term solvency ratio. d. long term
solvency ratio.
5. The ratios which reveal the final result of the managerial policies and performance
is_____.
a. turnover ratios. b. profitability ratios. c. short term solvency ratio. d. long
term solvency ratio.
6. Return on investment is a_________.
a. turnover ratios. b. short term solvency ratio. c. profitability ratios. d. long
term solvency ratio.
7. Net profit ratio is a ___________.
a. turnover ratio. b. long term solvency ratio. c. short term solvency ratio
d. profitability ratio.
8. Stock turnover ratio is a___________.
a. turnover ratio. b. profitability ratio. c. short term solvency ratio. d. long term
solvency ratio.
9. Fixed assets turnover ratio is a _______
a. short-term solvency ratio. b. long-term solvency ratio. b. profitability ratio.
d. turnover ratio.
10. The overall net increase or decrease in working capital is found out by
preparing…………………
a)Fund flow statement b)Cash flow statement c)statement showing changes in.
working capital d) none of these
11 ……………is only internal source of funds
a. Fund from operations b. Net profit C. both of these d. none of these
12. Return on equity is also called______
a . return on investment. b. gross profit ratio. c. return on shareholders’ funds.
d. return on net worth.
13. Fund flow refers to changes in ------------- capital
a. Fixed b. working c. both of these d. none of these
14 . Turnover ratio is also known as ______________.
a. activity ratios. b. solvency ratios. c. liquidity ratios. c. profitability ratios.
15.Inventory or stock turnover ratio is also called_______________.
a. stock velocity ratio. b. debtors velocity ratio. c. creditor’s velocity ratio.
d. working capital turnover ratio.
16. Sales – Gross Profit = _______________________.
a. net profit. b. administrative expenses. c. cost of production. d. cost of goods
sold.
17. Opening stock + purchases + direct expenses – closing stock = ____________
a. net profit. b. cost of production c. administrative expenses. d. cost of goods
sold.
18 . Which ratio measures the number of times the receivables are rotated in a year in terms
of sales?
a. stock turnover ratio. b. debtors turnover ratio. c. creditors velocity ratio. d.
working capital turnover ratio.
19. Debtors turnover ratio is also called___________________.
a. stock turnover ratio. b.
debtor’s velocity ratio. c. creditors velocity ratio.
d. working capital turnover ratio
20. Creditors turnover ratio is also called ________________.
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a. stock turnover ratio. b. debtors velocity ratio. c . accounts payables ratio.
d. working capital turnover ratio.
SECTION - A
21. M/s M Ltd. Has submitted the following balance sheet as on 30th June 2000.
Particulars Rs Particulars Rs
Equity capital 150000 Fixed Assets 162000
Revenue reserves 30000 Current Assets
8% Debentures 20000 Stock 32000
Current liabilities
Sundry creditors
49000
Debtors 41000
Bills receivable 2000
Bank 12000
249000 249000
Find the current ratio and quick ratio and comment on the financial condition of the
company. 22. Calculate Gross profit ratio, Operating profit ratio, Operating ratio, Net profit ratio 23.
Compute the Payout ratio and retained earnings ratio from the following data
Rs Rs
Net profit 10000 Provision for tax 5000
No. of equity shares 3000 Preference dividend 2000
Dividend per equity share 40 paise
24. Cash 10,000
Bills Receivables 5,000
Sundry Debtors 25,000
Stock 20,000
Sundry Creditors 30,000
Cost of sales 1,50,000
Calculate working capital turnover ratio Ans: 5 times
25. Total sales = 520,000; Sales returns = 20,000; Cost of goods sold 400,000
Required: Calculate gross profit ratio.
26. Explain the Nature of Ratio analysis
27. Calculate funds from operations from the information given below as on 31stMarch 2008
1. Net profit for the year ended 31st march 2008 650000
2. Gain on sale of building Rs 35500
3. Good will appears in the books at Rs 180000.out of that 10% has been written off
during the year
4. Old machinery worth Rs. 8000 has been sold for 6500 during the year
5. Rs. 125000 has been transferred to the general reserve fund
6. Depreciation has been provided during the year on machinery and furniture at 20%
whose total cost is 650000
28. From the following balance sheet of A Ltd . Prepare a cash flow statement.
Particulars Rs Particulars Rs Sales 21000 Income from investment 200 Sales return 1000 Administration expenses 1300
Cost of sales 16400 Selling expenses 700
Interest expenses(Non
operating)
100 Depreciation 200
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Liabilities 30.6.98
`
30.6.99
`
Assets 30.6.98
`
30.6.99
`
Share capital
Retained earning
Creditors
Mortgage loan
8000
1450
900
--
8500
2450
500
500
Land
Plant
Debtors
Stock
cash
5000
2400
1650
900
400
5000
3400
1950
700
900
29. From the following prepare a statement showing changes in working capital during 1999
Balance sheet of Sree Ganesh Ltd as on 31st December
Liabilities 1998 ` 1999 ` Assets 1998 ` 1999 `
Share capital
Reserve
P/L Account
Debentures
Creditors for
goods
Provision for
Income tax
6,00,000
50,000
40,000
3,00,000
1,70,000
60,000
6,00,000
1,80,000
65,000
2,50,000
1,60,000
80,000
Fixed assets
Less: Depreciation
Stock
Book debts
Cash in hand and
at Bank
Preliminary
expenses
10,00,000
3,70,000
6,30,000
2,40,000
2,50,000
80,000
20,000
11,20,000
4,60,000
6,60,000
3,70,000
2,30,000
60,000
15,000
12,20,000 13,35,000 12,20,000 13,35,000
30. From the following summarized balance sheet of Sri Krishna Ltd., Prepare a schedule of
changes in working capital
Liabilities 1998 ` 1999 ` Assets 1998 ` 1999 `
Share capital
Creditors
P/L Account
4,00,000
1,06,000
14,000
5,75,000
70,000
31,000
Plant
Stock
Debtors
Cash
75,000
1,21,000
1,81,000
1,43,000
1,00,000
1,36,000
1,70,000
2,70,000
5,20,000 6,76,000 5,20,000 6,76,000
SECTION -C
31. From the following information you are asked to prepare a Balance sheet
1. Current liabilities 100000
2. Reserves and surplus 50000
3. Bills payable 40000
4. Debtors 35000
5. Current ratio 1.75
6. Acid test ratio 1.15
7. Fixed assets to proprietors fund 0.75
8. Ratio of fixed assets to current assets 3
32. Prepare a balance sheet from the following data
a. Current ratio1.4
b. Liquid ratio
c. Stock turnover ratio 8 [ based on closing stock]
d. Gross profit ratio 20%
e. Debt collection period 1.5 months
f. Reserves and surplus to capital 0.6
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g. Fixed assets turnover ratio 1.6
h. Capital gearing ratio 0.5
i. Fixed assets to net worth 1.25
j. Sales for the year Rs.1000000
33. The comparative balance sheet of M/s Ram brothers for the two years were as follows
Liabilities 31.12.2007
`
31.12.20
08`
Assets 31.12.200
7`
31.12.200
8`
Capital
Loan from bank
Creditors
Bills payable
Loan from SBI
150000
160000
90000
50000
----
450000
175000
100000
100000
40000
25000
440000
Land&building
Machinery
Stock
Debtors
Cash
110000
200000
50000
70000
20000
450000
150000
140000
45000
80000
25000
440000
Additional Information: i) Net profit for the year 2008 amounted to ` 60000 ii) During the year a machine costing `25000( accumulated depreciation `10000)
was sold for `13000
The provision for depreciation against machinery as on 31.12.2007 was 50000 and
on 31.12.2008 `85000.
You are required to prepare a cash flow statement
34. Calculate 1. Gross profit ratio 2. Operating ratio 3. Operating profit ratio 4. Net profit
ratio
Particulars Amount Particulars Amount
Sales
Sales returns
Cost of sales
Interest expenses
(non operating)
21,000
1,000
16,400
100
Income from investments
Administrative expenses
Selling expenses
Depreciation
200
1,300
700
200
35. From the following information prepare a balance sheet. Show the workings `
Working capital
Reserves and surplus
Bank overdraft
Current ratio
Liquid ratio
Fixed asset to proprietor’s fund
Long term liabilities
75,000
1,00,000
60,000
1.75
1.15
0.75
nil
36. Write the following ratios and further information given below; prepare a Trading
Account, Profit and Loss account and a Balance sheet of Shree Ganesh &co
i). Gross profit ratio 25%
ii). Net profit / sales 20%
iii). Stock turnover ratio 10
iv). Net profit/ capital 1/5
v). Capital to total liabilities ½
vi). Fixed assets / capital 5/4
vii). Fixed assets/total current assets 5/7
viii). Fixed assets Rs.10, 00,000
ix). Closing stock Rs. 1, 00,000
37. From the following information of a textile company complete Performa balance sheet
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If its sales are Rs.23, 00,000
Sales to net worth 2.3 times
Current debt to net worth 42%
Total debt to net worth 75%
Current ratio 2.9 times
Net sales to Inventory 4.6 times
Average collection period 90 days
Fixed assets to net worth 53.2%
No of working days in a year 360
Performa balance sheet
Liabilities Amount Assets Amount
Net worth ? Fixed assets ?
Long term debt ? Cash ?
Current debt ? Sundry debtors ?
38. From the following balance sheets of Apple Ltd. On 31st December,1998 and 1999 you are
required to prepare funds flow statement
Balance sheets
Liabilities 1998 Rs 1999 Rs Assets 1998 Rs 1999 Rs
Share capital 1,00,000 1,00,000 Goodwill 12,000 12,000
General reserve 14,000 18,000 Building 40,000 36,000
Profit& Loss a/c 16,000 13,000 Plant 37,000 36,000
Sundry creditors 8,000 5,400 Investment 10,000 11,000
Bills payable 1,200 800 Stock 30,000 23,400
Provision for
taxation
16,000 18,000 Bills receivable 2,000 3,200
Provision for
doubtful debts
400 600 Debtors 18,000 19,000
Cash
6,600 15,200
The following additional information has also been given;
a). Depreciation charged on plant was Rs. 4,000 and on building Rs.4,000
b). Provision for taxation of Rs. 19,000 was made during 1999
c). Interim dividend of Rs. 8,000 was paid during 1999
39. The comparative balance sheet of M/S. Ram brothers for the two years were as follows
Liabilities 20007 Rs 2008Rs Assets 2007Rs 2008 Rs
Share capital 1,50,000 1,75,000 Land&Building 1,10,000 1,50,000
Loan from bank 1,60,000 1,00,000 Plant 2,00,000 1,40,000
Sundry creditors 90,000 1,00,000 Stock 50,000 45,000
Bills payable 50,000 40,000 Debtors 70,000 80,000
Loan from SBI --- 25,000 Cash 20,000 25,000
4,50,000 4,40,000 4,50,000 4,40,000
Additional information:
a). Net profit for the year 2008 amounted to Rs. 60,000
b). During the year a machine costing Rs.25000 (accumulated depreciation Rs.
10,000) was sold for Rs 13,000
the provision for depreciation against machinery as on 31.12.2007 was Rs. 50,000 and on
31.12.2008 Rs. 85,000.
You are required to prepare a cash flow statement.
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40. With the following ratios and further information given below, prepare a trading account,
profit and loss account and balance sheet of Shree Ganesh & Co
Gross profit ratio- 25%
Net profit/ sales 20%
Stock turnover ratio -10%
Net profit / capital -1/5
Capital to total liabilities – ½
Fixed assets /capital – 5/4
Fixed assets / Total current assets- 5/7
Fixed assets – Rs. 10,00,000
Closing stock 1,00,000
Ans: 1. a. short-term solvency ratio 2. b. long-term solvency ratio 3. b. long-term solvency
ratio 4. a turnover ratios 5. b. profitability ratios 6. c. profitability ratios 7. d. profitability
ratio 8. a. turnover ratio 9. d. turnover ratio 10. a)Fund flow statement 11. a.Fund from
operations 12. d. return on net worth 13. b. working 14. a. activity ratios 15. a. stock
velocity ratio 16. d. cost of goods sold. 17. d. cost of goods sold. 18. b. debtors
turnover ratio 19. b. debtors velocity ratio 20. c . accounts payables ratio
UNIT-III
SECTION –A
1. Increase in Accounts payable when compared to previous year results in
…………….of working capital
a. Increase b. Decrease. C. No change d. None of these
2. Decrease in Working capital constitutes …………………
a. Source of fund b. application of funds c. Neither source nor application
d. Current account
3. ……………….refers to firms investment in current assets.
a. Working capital b. Gross working capital. C. Net working capital d. Nil working
capital
4……………..means excess of current assets over current liabilities.
a. Working capital .b. Gross working capital c. Net working capital d. Current
working capital
5. Which among the following results in decrease of working capital?
a. Increase in current liabilities b. Increase in current assets c. decrease in current
liabilities d. Decrease current assets
6. Net working capital is the excess of current assets and ----------
a. current assets b. Current liabilities c. Fixed assets d. Fixed liabilities
7. Working capital is also known as -------- capital
a. revolving circulate b. Current capital c. Fixed capital d. Quick capital
8. The gross working capital is a ------- concern concept
a. monetary b. Cash c. Going d. Regulatory
9. Larger the process period of manufacture, -------- is the amount of working capital required.
a. larger b. Shorted c. Big d. Small
10. There is a time gap between cash inflows and ----------
a. cash outflows b. Cash receivable c. cash movement d. Cash withdrawn
11. ---------------- refers to the time taken b bank in collecting cheque
a, bank cheques b. bank pass book c. bank float d. Banker
12. -------------is a form of finance receivable
a. cash receivable b. Cash payable c. Collecting cheques d. Factoring
13. ------------management is essential because investments in stocks are high
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a. investment b. Material c. Stock d. Receivable
14. The time required to process and execute an order is called ----------
A. idle time b. Lead time c. Process d. working time
15. --------------are the costs of purchasing materials
a. ordering cost b. Return material c. Process cost d. Collecting cost
16. ------------ management is a trade off between the cost of carrying cash and the need of
maintaining liquidity
a. time b. Material c. Cost d. Cash
17. Trade off between -----------and cost of maintaining receivables is important for effective
receivable management
a. purchasing b. Profitability c. Collectively d. Processing
18. Cash planning is a technique to plan and control the use of -------
a. cheque b. Cash c. Deposits d. Banker
19. Receivable represents amounts owed to the firm as a result of sale or goods or services in
the ordinary course of -----------
a. job b. Work c. Business d. Goods
20. --------- provide loans for working capital
a. financial institutions b. commercial banks c. Non commercial bank d. City bank
SECTION-B
21. What is the concept of working capital?
22. Name the various kinds of working capital
23. What ate the principles of working capital management?
24. What is a letter of credit?
25. What are cash inflows?
26. Distinguish between a deposit float and bank float
27. Enumerated the various cost of receivables
28. Give the objectives of holding inventories
29. What are the risks and costs of holding inventories?
30. Write short notes on codifications of inventories?
SECTION-C
31. Explain various factors of influencing working capital?
32. Discuss the importance of working capital for a manufacturing concern
33. What are the advantages of adequate working capital?
34 .What do you understand by receivable management?
35. What is receivable management? How it is useful for business concern/
36. Discuss the various aspects or dimensions of receivable management?
37. Define the inventory control?
38. What are the inventory control systems?
39. What is selective control of inventory? Why it is needed?
40. Define safety stock how it affects the computation of reorder level
ANS: 1.b. Decrease 2. a. Source of fund 3.b. Gross working capital 4.c. Net working capital 5.
a. Increase in current liabilities 6.b. Current liabilities 7.a. revolving circulate 8.c. Going 9.a.
larger 10.a. cash outflows 11.c. bank float 12.d. Factoring13. a. investment 14. Lead time
15.a. ordering cost 16. Cash 17.b. Profitability 18.b. Cash 19.c. Business 20.b. commercial
banks
. UNIT- IV
SECTION- A
1. Budget is a ______________.
a. a post-mortem analysis b. a substitute of management c. an aid to
management d. calculation .
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2. One of the most important tools of cost planning is _________.
a. budget. b. direct cost. c. unit cost. d. cost sheet.
3. Sales budget is a _________.
a. Functional budget. b. Expenditure budget. c. Master budget . d. Flexible
budget.
4. The budget which usually takes the form of budgeted profit and loss account and balance
sheet is known as ___________
a. Flexible budget. b. Master budget. c. Cash budget. d. Purchase budget.
5. The fixed-variable cost classification has `a special significance in the preparation
of________.
a. Capital budget. b. Cash budget. c. Master budget . d. Flexible budget .
6. The budget, which is prepared first of all is.________
a. Master budget. b. Cash budget. c. Budget for key factor. d. Flexible budget.
7. What type of budget is designed to take into account forecast change in costs, prices, etc?
a. Master budget. b. Rolling budget. c. Flexible budget. d. Functional budget.
8. Operation budgets normally cover a period of _____.
a. one to ten years. b. one to two years. c. one to five years. d. one year or less.
9. Budgetary control starts with ________________.
a. Planning. b. Organizing. c. Budgeting. d. Controlling.
10. Budgetary control ends with ____________.
a. Planning. b. Organizing c. Budgeting d. Control.
11. Budget designed to remain constant irrespective of the level of activity attained is
called______________.
a. Fixed budget. b. Flexible budget. c. Sales budget. d. Production budget
12. Long-term budgets are prepared for _______________.
a. 1 year. b. 1-3 years. c 1-5 years. d. 5-10 years.
13. The budget which shows the budgeted quantity of output to be produced during a specific
period is.
a. Fixed budget. b. Flexible budget. c. Sales budget. d. Production budget
14. Material consumption budget is prepared on the basis of ______________.
a. Production budget. b. Sales budget. c Fixed budget. d. Flexible budget.
15. Labour budget is a part of ____________.
a. Fixed budget. b. Sales budget. c. Production budget. d. Flexible budget.
16. Labour budget is prepared by ________________.
a. Personnel department b. Sales department. c. Purchase department.
d. Accounts department.
17. The budget prepared to estimate the expenditure to be incurred for planning, organizing,
direction and control function of the management is___________.
a. Production overhead budget. b. Administration overhead budget. c. Selling and
distribution overhead budget. d. Master budget.
18. The budget prepared to estimate expenditure to be incurred to sell the product and its
distribution is ____________.
a. Production overhead budget. b. Administration overhead budget. c. Selling and
distribution overhead budget. d. Master budget
19. Fixed budget is prepared for only _________.
a. One level of activity. b. Range of activity. c. Two level of activity. d. Three
level of activity.
20. The budget starts without any base is _______________.
a. Master budget. b. Flexible budget. c. Zero base budgeting. d. Fixed budget.
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SECTION –B
21. Distinguish between Budget and Forecasting.
22. Ashish Engineering Co. Ltd. manufacturer’s two articles X and Y. Its sales department has
three divisions: West, South and East. Preliminary sales budgets for the year ending 31st
December 2003, based on the assessments of the divisional executives:
Product X: West 40,000 units: South 1,00,000 units and East 20,000 units
Product Y: West 60,000 units: South 8,00,000 units and East Nil
Sales price X Rs. 2 and Y Rs. 3 in all areas.
Arrangements are made for the extensive advertising of product X and Y and it is estimated
that West division sales will increase by 20,000 units. Arrangements are also made to advertise
and distribute product Y in the Eastern area in the second half of 2003 when sales are expected
to be 1,00,000 units.
Since the estimated sales of the South division represented an unsatisfactory target, it is agreed
to increase both the estimates by 10%. Prepare a sales budget for the year to 31stDecember
2003.
23. From the following particular, you are required to prepare production budget of Mittal Ltd.
a manufacturing organization that has three products X, Y and Z.
Product Estimated stock at the
beginning of the budget
period
Estimated stock at
The end of the budget
period
Estimated sales as Per sales
budget
X
Y
Z
5,000 units
4,000 units
6,000 units
6,400 units
3,850 units
7,800 units
21,600 units
19,200 units
23,100 units
24. Production cost of a factory for a year is as follows:
Direct wages Rs. 40,000
Direct materials Rs. 60,000
Production overhead fixed Rs. 20,000
Production overhead variable Rs. 30,000
During the forthcoming year, it is expected that
(a) The average rate for direct labour remuneration will be far from Rs. 3 per
hour to Rs. 2 per hour
(b) Production efficiency will remain unchanged
(c) Direct labour hours will increase by 331/3%
The purchase price per unit of direct materials and of the other materials and services which
comprise overheads will remain unchanged. Draw up a budget and a factory overhead rate, the
overhead being absorbed on direct wage basis.
Ans: cost of production - 1,45,556
25. Draw up a material purchase budget from the following information: Estimated sales of a
product are 30,000 units. Two kinds of raw materials A and B are required for manufacturing
the product. Each unit of the product requires 3units of A and 4 units of B. The estimated
opening balance in the beginning of the next year: finished goods 5,000 units; A, 6,000 units:
B, 10,000 units. The desirable closing balance at the end of the next year: finished product,
8,000units; A, 10,000 units, B 12,000 units. Material purchase budget for the year
Ans: Quantity of material purchased A 1,03,000; B 1,34,000
26. With the following data for a 60% activity prepare a budget for production at80%
and 100% capacity
Production at 60% capacity 300 units
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Materials Rs. 100 per unit
Labour Rs. 40 per unit
Expenses Rs. 10 per unit
Factory expenses Rs. 40,000 (40% fixed)
Administrative expenses Rs. 30,000 (60% fixed)
27. Larsen Ltd plans to sell 1,10,000 units of a certain product line in the first fiscal quarter ,
1,20,000 units in the second quarter ,1,30,000 units in the third quarter and 1,50,000 units
in the fourth quarter and 1,40,000 units in the first quarter pf the following year. At the
beginning of the first quarter of the current year, there are 14,000 units of product in
stock. At the end of each quarter the company plans to have an inventory equal to one-
fifth of the sales for the next fiscal quarter.
Prepare production budget
28. The standard cost data for R Ltd., shows that 2 hours of direct labour are required to produce
one unit of finished product. The standard rate per hour is Rs.5. but it has to be raised to Rs.6
from the third month of the first quarter of 2008. The budgeted productions for the first quarter
ending 31.3.08 are as follows
January 5,000 units; February 8,000 units; & March 10,000 units. Prepare labour cost budget
for the first quarter.
29. The income and expenditure forecasts for month of march to August 2005 are given as
follows
month Sales(cr) Purchase
(cr)
wages Man.
expenses
Off.
expenses
Sell.
expenses
March
April
May
June
July
August
60000
62000
64000
58000
56000
60000
36000
38000
33000
35000
39000
34000
9000
8000
10000
8500
9500
8000
3500
3750
4000
3750
5000
5200
2000
1500
2500
2000
1000
1500
4000
5000
4500
3500
3500
4500
You are given the following information
i) Plant costing Rs. 16000 is due for delivery in July payable 10 % on delivery and
the balance after 3 months
ii) Advance tax of Rs. 8000 is payable in March and June each
iii) Creditors allow 2 months credit and debtors are paying 1 month late opening
balance of cash Rs. 8000 lag of one month in expenses
Prepare Cash budget for the month of May to July
30. Prepare Production Budget for three months from January to March from the following
Months Opening stock Estimated sales Desired closing
stock
Jan
Feb
Mar
April
2000
3000
4000
5000
10000
12000
14000
13000
5000
4000
3000
2000
SECTION - C
31. Prasad and Co. wishes to prepare cash budget from January. Prepare a cash budget for the
first six months from the following estimated revenue and expenses:
Month Total sales
(Rs.)
Materials Wages (Rs.) Production
overheads(Rs.)
Selling and
distribution
overheads (Rs.)
January 10,000 10,000 2,00 1,600 400
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February
Mar
April
May
June
11,000
14,000
18,000
15000
20000
7,000
7,000
11,000
10000
12500
2,200
2,300
2,300
2000
2500
1,650
1,700
1,750
1600
1800
450
450
500
450
600
Additional information
1. Cash balance on 1st January was Rs. 5,000. New machinery is to be installed
at Rs.10,000 on credit, to be repaid by two equal instalments in March and April.
2. Sales commission @ 5% on total sales is to be paid within a month of
following actual sales.
3. Rs. 5,000 being the amount of 2nd call may be received in March. Share
Premium amounting to Rs. 1,000 is also obtainable with the 2nd call.
4. Period of credit allowed by suppliers- 2 months.
5. Period of credit allowed to customers- 1 month.
6. Delay in payment of overheads- 1 month.
7. Delay in payment of wages- ½ month.
8. Assume cash sales to be 50% of total sales.
32. Prepare a flexible budget for overheads on the basis of the following data.
Ascertain the overhead rates at 50%, 60% and 70% capacity.
At 50% capacity (Rs.)
Variable overheads:
Indirect material 3000
Indirect labour 9 9000
Semi-variable overheads:
Electricity (40% fixed 60% variable) 15,000
Repairs (80% fixed 20% variable) 1500
Fixed overheads:
Depreciation 8,250
Insurance 2,250
Salaries 7,500
Total overheads 46,500
Estimated direct labour hours 93,000
33. The expenses budget for production of 1000 units in a factory furnished below
Particulars Per unit
(Rs)
Materials
Labour
Variable overheads
Fixed expenses (Rs100000)
Variable expenses(Direct)
Selling expenses(10% fixed)
Distribution expenses(20% fixed)
Administrative expenses
Total Cost
70
25
20
10
5
13
7
5
155
Prepare budget for production of
i) 8000 units’ ii) 6000 units iii) indicate cost per unit at both levels
34. A glass manufacturing company request you to calculate and present the budget
for the next year from the following information
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Sales:
Glass 300000
Bent glass 500000
Direct material cost 6% of sales
Direct wages-20 workers @ Rs 150 per month
Factory overhead:
Indirect labour:
Works manager Rs. 500 per month
Foreman Rs. 400 per month
Stores and spares 2½% in sales
Administrative, selling &distribution expenses-Rs 14,000 per year
Depreciation on machinery Rs 12,600
Light and power Rs 5,000
Other sundries 10 % on direct wages
Repairs and maintenance Rs 8,000
35. The following information at 50% capacity is given. Prepare a flexible budget and forecast
the P/L account at 60%, 70%and 90% capacity.
Expenses of 50% capacity (RS)
Fixed expenses
Salaries 50,000
Rent and taxes 40,000
Depreciation 60,000
Administrative expenses 70,000
Variable expenses
Material 2,00,000
Labour 2,50,000
Others 40,000
Semi variable expenses
Repairs 1,00,000
Indirect labour 1,50,000
Others 90,000
It is estimate that fixed expenses will remain constant at all capacities. Semi
variable expenses will not change between 45% and 60% capacity will rise by 10%
and between 60% and 75% capacity crosses 75%. Estimate sales at various level of capacity
are
Capacity Sales(Rs)
60% 11,00,000
70% 13,00,000
90% 15,00,000
36. Draw up a Flexible budget for overhead expenses on the basis of the following data and
determine the overhead rates at 70%,80%and 90% capacity.
Particulars At 80%
capacity
Variable overhead:
Indirect labour
Stores including spares
Semi variable overheads:
Power(30% fixed,70% variable)
12,000
4,000
20,000
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Repairs and maintenance
(60% Fixed and 40% variable)
Fixed overheads:
Depreciation
Insurance
Salaries
Total overheads
Estimated direct labour hours
2,000
11,000
3,000
10,000
62,000
1,24,000
37. What do you mean by budgetary control? What are the advantages of budgetary control?
38. What are the different classifications of budget?
39. The expenses for budgeted production of 10,000 units in a factory are furnished below:
Per unit
Material
Labour
Variable overheads
Fixed overheads(Rs. 1,00,000)
Variable expenses(Direct)
Selling expenses (10% on Fixed)
Distribution expenses (20% fixed)
Administration expenses
Total cost per unit
70
25
20
10
05
13
07
05_________
155
Prepare a budget for production of :
a).8,000 units b). 6,000 units c). Indicate cost per unit at both the levels
Assume that administration expenses are fixed for all levels of production.
40. ITC Ltd has prepared the budget for the production of 1 lakh units of the only commodity
manufactured nut it fit a costing period as under:
Rs. in lakhs
Raw material
Direct labour
Direct expenses
Works overhead (60% Fixed)
Administrative overhead (80 % Fixed)
Selling overhead (50% Fixed)
2.52
0.75
0.10
2.25
0.40
0.20
The actual production during the period was only 60,000 units. Calculate the
revised budgeted cost per unit.
ANS:1. c. an aid to management 2. a. budget 3. a. Functional budget 4. 5. d. Flexible budget
6. c. Budget for key factor 7. b. Rolling budget 8. d. one year or less 9. a. Planning 10. d.
Control 11 a. Fixed budget 12. d. 5-10 years 13. d. Production budget 14. a. Production
budget 15. c. Production budget 16. a. Personnel department 17. b. Administration overhead
budget 18. c. Selling and distribution overhead budget. 19. a. One level of activity 20 c.
Zero base budgeting
UNIT- V
SECTION -A
1. Profit Volume ratio is the ratio of ……………. To sales
a. Contribution b. Profit c. Sales d. none of these
2. Contribution margin is also known as __________.
a. marginal income .b gross profit. c. net profit. d. net loss.
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3. Period costs are__________.
a. overhead costs . b. prime cost. c. variable cost. d. fixed costs. 4. Contribution
margin is equal to___________.
a. fixed cost - loss . b. profit + variable cost. c. sales — fixed cost- profit . d. sales –
profit.
5. P/V Ratio is an indicator of _______________.
a. the rate at which goods are sold . b. the volume of sales c. the volume of profit. d.
the rate of profit.
6. Margin of Safety is the difference between___________.
a. planned sales and planned profit . b. actual sales and break-even sales. c. planned
sales and actual sales d. planned sales and planned expenses. 7. An increase in
variable costs______________.
a. increases p/v ratio . b. increases the profit. c. reduces contribution . d. increase
margin of safety.
8. An increase in selling price____________.
a. increases the break-even point. b. decreases the break-even point. c. does not affect
the break-even point. d. optimize the breakeven point.
9. A large Margin of Safety indicates____________.
a. over production. b. over capitalization . c. the soundness of the business. d. under
capitalization. 10. if` fixed costs decrease while variable cost per unit remains
constant, the new B.E.P in relation to the old B.E.P will be___________.
a. lower b. higher. C. unchanged . d. indeterminate.
11. Marginal costing is a …………… of costing
a. system b. Method c. Technique d. all of these 12. Under marginal costing,---------- Costs are regarded as costs of the products. a. variable costs b. Fixed costs c. Both of these. d. none of these
13. Under marginal costing, stocks of finished goods and work in process are valued at ------
cost only
a. variable costs b. fixed costs c. marginal cost d. none of these
14 ………………..is the excess of sales over marginal cost of sales
a. profit b. margin c. loss d. contribution
15. The Profit/Volume ratio or marginal ratio expresses the relation of …………
to sales.
a. Profit b. marginal cost c. contribution d. none of these
16. .Profit Volume ratio is the ratio of ……………. To sales
a. Contribution b. .Profit c. Sales d. none of these
17.The ratio of contribution to ……………. Is called P/V ratio
a. volume b. sales c. profit d. none of these
18 …………..is the angle caused by intersection of total cost line and total
sales line
a. angle of contribution b.angle of incidence c. all of these .d. none of these
19. At Breakeven point contribution will be equal to …………….
a..variable cost b.fixed cost c. profit d.none of these
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20..Marginal cost is the aggregate of prime cost and ……………….
a. fixed overheads b. variable overheads c. contribution d. none of these
SECTION-B
21. What do you understand by contribution? How does it help management in solving
various problems?
22. Determine the amount of fixed expenses and prepare marginal cost statement from the
following particulars:
Sales
Direct material
Direct labour
Variable overheads
profit
Rs
2,50,000
80,000
50,000
20,000
60,000
23. . From the following information relating to Quick standards Ltd., You are required to
find out (a)P.V ratio (b) Breakeven point (c)Profit (d)Margin of safety
Rs
Total Fixed cost 4, 500
Total variable cost 7,500
Total sales 15,000
(e)Also calculate the volume of sales to earn profit of Rs.6, 000.
24. a).A company has the capacity to produce 16000 units per month. At present it is producing
10000 units and selling at RS15.Cost per unit is as follows
Material Rs. 5
Labour Rs. 3
Variable expenses Rs. 1
Fixed expenses Rs. 2.50
Rs 11.50
Should the company accept the order for addition 4000 units to sell at Rs 10
25. Prepare marginal cost statement from the following particulars
Variable cost: Direct material 4,500; direct wages 2,500; factory overheads 1,500
Fixed cost: Administrative expenses 1,250
Total cost 9,750 ; Profit 5,250
26. .fill in the blanks for each of the following independent situations
Case No., of
units sold
Selling
price p.u
Variable cost
% of sales
Contributio
n margin
Fixed cost profit
I
II
III
15,000
2,000
?
?
160
15
90
?
75
?
80,000
?
30,000
?
25,000
0
(2,000)
50,000
27. Calculate breakeven point
Sales
Fixed expenses
Variable cost
Direct material
Direct labour
Other variable expenses
Rs
6,00,000
1,50,000
2,00,000
1,20,000
80,000
28. The following information is given for two companies.
X Ltd Y Ltd
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Units produced & sold
Revenues
Fixed costs
Operating income
Variable cost
17000
1,70,000
85,000
51,000
34,000
17,000
1,70,000
34,000
51,000
85,000
Find out the breakeven point of each company both in units as well as in volume
29. Given: fixed cost Rs.8,000; Break even sales(in Units) 4000:sales 7000 units;selling price
per unit Rs.10. Calculate variable cost and profit.
30. Pepsi Company produces a single article. Following cost data is given about its product:‐ Selling price per unit Rs.40
Marginal cost per unit Rs.24
Fixed cost per annum Rs. 16000
Calculate:
(a)P/V ratio (b) break even sales (c) sales to earn a profit of Rs. 2,000 (d) Profit at sales of Rs.
60,000 (e) New break even sales, if price is reduced by 10%.
SECTION-C
31. Raj Corporation Ltd., has prepared the following budget estimates for the year
1999-2000 Sales (units) 15,000
Fixed expenses Rs.34,000
Sales Rs.1,50,000
Variable cost Rs. 6 per unit
You are required to;
(i)Find the P.V ratio, breakeven point and margin of safety.
(ii) Calculate the revised P.V ratio, breakeven point and margin of safety in each
of the following cases:
a). Decrease of 10% in selling price
b). Increase of 10% in variable cost
c). Increase of sales volume by 2,000 units
d). Increase of Rs.6, 000 in fixed costs.
32. Assuming that the cost structure and selling price remain the same in period I and II
Find out i) Profit volume ratio ii) Fixed cost iii) Profit when sales are Rs 100000
iv) Sales required to earn a profit of Rs 20000 v) Margin of safety for II period
Period Sales Profit
I 120000 9000
II 140000 13000
33. Product X can be produced either by machine A or machine B. machine A can produce
100 units of X per hour and machine B 150 units per hour. Total machine hours
available during the year are 2,500. Taking into account the following data determine
the profitable methods of manufacture:
Per unit of X
Machine A
Rs
Machine B
Rs
Marginal cost
Selling price
Fixed cost
5
9
2
6
9
2
(OR)
34. The cost per unit of the three products A,B,& C of a company are given below:
Products
A Rs B Rs C Rs
Direct materials 20 16 18
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Direct labour
Variable overhead
Fixed expenses
Profits
Selling price
No of units produced
12
8
6
46
18
64
10,000
14
10
6
46
14
60
5,000
12
6
4
40
12
52
8,000
Production arrangements are such that if one product is given up
the production of the others can be raised by 50%. The directors propose that C
should be given up because the contribution from that products is the lowest.
Do you agree?
35. .from the following data, calculate breakeven point expressed in terms of units and also
the new B.E.P if selling price is reduced by 10%
Fixed expenses: Depreciation Rs.1,00,000; salaries Rs.1,00,000
Variable expenses: Materials Rs.3 per unit; labour Rs.2 per unit: selling price Rs.10
per unit
36. from the following information relating to Quick standards LTD you are required to find
out P.V ratio, Breakeven point, Profit and margin of safety.
Total fixed cost Rs.4500; total variable cost Rs.7500; total sales 15000
Also calculate the volume of sales to earn profit of Rs.6000.
37. From the following data calculate i) P.v ratio ii). Profit when sales are Rs.20,000 iii)New
breakeven point if selling price is reduced by 20%; fixed expenses Rs.4000; Breakeven sales
Rs.10000.
38. A company produces and markets industrial container and packing cases. Due to
competition the company proposes to reduce the selling price. If the present level of profit is
to be maintained indicate the number of units to be sold if the proposed reduction in selling
price is i). 5% ii). 10% iii) 15%
The following additional information is available.
Present sales (30,000 units) 3,00,000
Variable cost (30,000 units) 1,80,000
Contribution 1,20,000
Less; fixed cost 70,000
Profit 50,000
39. following information has been made available from the cost records of united automobiles
Ltd manufacturing spare parts.
Direct material Per unit
X Rs.8
Y Rs.6
Direct wages
X 24 hours at 25 paise per hour
Y 16 hours at 25 paise per hour
Variable overheads 150% of wages
Fixed overheads Rs750
Selling Price
X Rs.25
Y Rs.20
40. The directors want to be acquainted with the desirability of adopting any one of the
following alternative sales mixes in the budget for the next period. a) 250 units of X and 250 units of Y
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b) 400 units of y only c) 400 units of X and 100 units of Y d) 150 units of X and 350 units of Y
State which of the alternative sales mixes you would recommended to the management?
Ans:1.a.Contribution 2.a. marginal income 3.d. fixed costs 4.a. fixed cost - loss 5.d. the
rate of profit 6.b. actual sales and break-even sales7. a. increases p/v ratio 8.b. decreases the
break-even point 9.c. the soundness of the business 10b. Higher 11. c. technique 12.a.
variable costs 13.c. marginal cost 14.c. loss 15.c. contribution 16.a. Contribution 17.b.
sales 18.b.angle of incidence 19.b.fixed cost 20.b. variable overheads
KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS)
COIMBATORE
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DEPARTMENT OF COMMERCE PA & PG
Class: III B.Com Semester –VI
Sub. Name: Principles of Auditing Sub. Code: 18UPA618
Prepared by: Dr. E. Sheeba, Dr. R. Murugesan, Miss. N. Sruthi and Dr. M.
Usharani
UNIT – I
SECTION-A
CHOOSE THE CORRECT ANSWER
1. The work ‘Audit’ is derived from the Latin word_____________
(a)Audire (b) Audeir (c) Audit (d) Audem
2. Compensating error is otherwise called a _________________
(a) Equal error (b) Compensated error (c)Tallied error (d) Off. Setting error
3. Which one of the following is a detailed plan of auditing work______________
(a)Audit note book (b) Audit working papers (c) Audit schedule note (d) Audit
programme
4. Audit note book is maintained by______________
(a)Auditors (b) Clerks (c) Shareholders (d) Company
5. Main object of auditing is___________
(a)Detection of errors (b) To find out whether P & L and Balance sheet show true
and fair state of affairs (c) Detection of frauds (d) Detection and prevention of
errors and frauds.
6. A purchase invoice for Rs. 3,280 was entered in the purchase book as Rs. 3,820. This
is an ____________________
(a)Error of Omission (b) Error of Principle (c) Error of Commission (d) Error of
Duplication
7. Off- setting error is also called as_____________
(a) Compensatory error (b) Error of commission (c) Error of omission (d)
Principle error
8. Before the work of audit is commenced, the auditor plans out the whole of audit work
and it is called as______________
(a)Audit plan (b) Audit note (c) Audit programme (d) Audit paper
9. The principal objection of audit is _____________
(a)to exhibit a true and fare view of the state of affairs of the undertaking (b)
detection of errors (c) detection of frauds (d) detection and prevention of errors and
frauds
10. The auditor has to _____________
(a)prepare the final accounts of the concern (b) prepare the final accounts and verify
it (c) verify the accounts already prepared by the accountant (d) prepare the trial
balance
11. Scope of audit in case of statutory audit is fixed by______________
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(a)Client (b) Auditor (c) Government (d) Law concerned
12. Written material prepared or collected by Auditor in the course of particular audit
engagement is called______________
(a)Audit file (b) Audit note book (c)Working papers (d) Audit Engagement
letter
13. Auditing is defined in _______________
(a)AAS 1 (b) AAS 2 (c) AAS 4 (d) AAS 6
14. An auditor program is a_____________
(a)internal check (b) detailed plan (c) internal audit (d) statutory report
15. “Auditor is not valuer” was stated in_______________
(a)Kingston cotton Mills case (b) London & General bank case (c) Lee V.
Neuchatel co ltd case (d) London Oil storage co case
16. An auditor is verifying valuation of building which has been self-constructed by the
client. Which of the following documents is least relevant to the auditor for verification
purposes?_____________
(a)Bills of contractor (b) Minutes of meeting of board of directors (c) Certificates
of engineer and architect (d) Loan agreement with the bank which financed the
construction
17. Auditor should be dutiful like a _____________
(a)Watch dog (b) A blood hound (c) A detective (d) An insurer
18. Teeming and lading is a method of ______________
(a)Error (b) Vouching (c) Entry (d) Fraud
19. Typically, an audit planning memorandum would contain the following
sections except________
(a)Assessment of business risk (b) Audit approach (c) Objectives of the audit
(d) Background information
20. Which of the following is one of the procedures in the planning phase___________
(a)Determine materiality (b) Prepare client proposal (c) Select staff to perform the
audit (d) Determine need for other professionals
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
a d d b b b b c a c d c a b c b a d a a
SECTION-B
ANSWER THE FOLLOWING
1. Distinguish between auditing and accountancy.
2. What do you mean by Audit programme? List the types of audit program.
3. State the primary and secondary objectives of Auditing.
4. Enlist the various types of errors.
5. Explain the duties and responsibilities of an auditor with respect to frauds
6. Write short note on the term ‘Audit planning’
7. What is Audit evidence paper? Explain the classification of working paper.
8. Explain the distinct types of frauds found in accounting.
9. Give note on window dressing as a manner of manipulation of account.
10. Brief out the important aspects that have to be taken care by the auditor before
commencing a new audit
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SECTION-C
ANSWER THE FOLLOWING
1. Define auditing. Discuss the objectives of auditing.
2. What are the various qualities of an auditor for auditing an account?
3. Discuss the basic principles of auditing.
4. Explain the main advantages of auditing for different stakeholders and the limitations
of auditing.
5. Elucidate standard on auditing 300 (SA 300)
6. State the benefits and drawbacks of Audit programme.
7. Discuss the Audit program for purchase/purchase return
8. What do you mean by Audit working paper and discuss the purpose of it.
9. As an auditor what are all the common techniques he would follow for auditing?
10. Elucidate the various types of errors in accounting.
UNIT – II
SECTION-A
CHOOSE THE CORRECT ANSWER
1) Audit at the end of the year is known as_____________
(a) periodic audit (b) standard audit (c) efficiency audit (d) operational audit
2) An audit conducted at irregular interval is called as_____________
(a) Cost audit (b) Special audit (c) Occasional audit (d) Government audit
3) This kind of audit is conducted generally between two annual audits__________
(a) internal audit (b) interim audit (c) final audit (d) continuous audit
4) Internal audit is an evaluation and analysis of the business operation conducted by
the________
(a) Accounting staff (b) Management (c) Internal audit staff (d) External audit
staff
5) The purpose of internal Audit is to keep proper control over____________
(a) accounting activities (b) audit activities (c) management activities (d) business
activities
6) The external auditor can rely on internal auditor and there is no need
of_______________
(a) Statutory audit (b) Cost audit (c) Management audit (d) Cent percent checking
7) The two main functions in auditing process, based on evidence are______________
(a) collection of evidences and evaluation of evidences (b) relevance and adequacy
(c )validity (d) None of these
8) Ministry of Corporate Affairs has issued mandatory, on Companies engaged in Bulk
drugs, fertilisation, sugar, telecommunications, industrial alcohol and electricity
&petroleum______
(a) Secretarial audit records (b) Financial audit records (c) Statutory audit records
(d) Cost audit records
9) Cost audit is useful for the purpose of ______ and proper utilization of scarce resources
(a)Increasing profit (b) Reducing cost (c) Cost control and cost reduction
(d) Optimum utilization
10) Balance sheet audit does not include_____________
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(a)Vouching of income, expense, accounts related to assets and liabilities
(b)Examination of adjusting and closing entries (c) Verification of assets and liabilities
(d) Routine checks.
11) One among the following is not the evidence-gathering techniques employed by an
auditor________
(a)Risk assessment (b) Inspection (c) Re-performance (d) Analytical procedures
12) The most reliable form of audit evidence is____________
(a) Written documents (b) Visual observation of a transaction or event by the auditor
(c )Analytical procedures (d) Oral representation of the third parties
13) Auditing standards differ from auditing procedures in that procedures relate to
________.
(a) Measure of performance b) Audit principles (c) Acts to be performed
(d) Audit judgments.
14) The type of audit assesses and checks the reliability of security system, information
security structure, and integrity of system is_____________
(a) IT Audit (b) Financial audit (c) Forensic audit (d) Company audit
15) Type of audit that checks against internal policies and procedure or external law and
regulation is_________________
(a)Compliance Audit (b) Internal audit (c) External audit (d) Integrated audit
16) The processes and technique that auditors perform to obtain audit evidences which
enable them to make conclusion on the set audit objective and express their opinion
is___________
(a) Audit procedures (b) Audit planning (c) Audit evidence (d) Audit programme
17) Audit procedure normally design by auditors is based on the characteristic
of____________
(a)Target transaction or event (b) Evidence (c) Programme (d) Benefits
18) The evidence obtained by auditors during a financial audit and recorded in the audit
working papers is___________
(a)Audit evidence (b) Audit planning (c) Audit report (d) Audit letter
19) Auditing relies upon a set of principles to help make an audit an effective and reliable
tool in support of management policies and controls this is according to___________
(a)ISO 19011:2011 (b) ISO 20000:2011 (c) ISO 12055:2011 (d) ISO 12900:2011
20) One among the following is an audit principal________________
(a)Confidentiality (b) Clarity (c) Clearance (d) Capacity
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
a c B c d d a d c d a b c a a a a a a a
SECTION-B
ANSWER THE FOLLOWING
1. Define audit evidence. What are its objectives?
2. State the sufficiency of audit evidence.
3. Highlight the significance of audit evidence.
4. What is relevance of evidence?
5. Bring out the procedures to collect Audit evidence.
6. Write a note on analytical evidence.
7. How would you classify the evidence?
8. State the importance of audit evidence.
9. What is materiality of evidence?
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10. What are the principles of audit evidence?
SECTION-C
ANSWER THE FOLLOWING
1. Explain the characteristics of satisfactory evidence.
2. What are the guidelines for evaluating competency of audit evidence?
3. What do you mean by Audit evidence? Explain the steps involved in the process of
opinion formation.
4. Discuss the different types of evidence used in Auditing by the auditors.
5. Discuss the factors to be considered in evaluation of audit evidence.
6. Describe the methods of collecting audit evidence.
7. Explain the process of gathering audit evidence.
8. Elucidate the precautions that an auditor has to observe while collecting audit
evidence.
9. Discuss the factors determining the adequacy of audit evidence.
10. Explain the factors influencing collection of audit evidence.
UNIT-III
SECTION-A
CHOOSE THE CORRECT ANSWER
1) The systematic examination of the books and records of a business is_____________
(a)Auditing (b) Vouching (c) Verification (d) Checking
2) Balance sheet audits is an audit in which_____________
(a)Balance sheet of a number of years are audited (b) Audit is done at the end of
financial years (c) Verification of assets and liability is done (d) Income and
expenses are verified
3) _______ is considered as a backbone of auditing
(a)Voucher (b) Vouching (c) Internal control (d) Internal audit
4) Voucher which support a transaction in case of absent of original voucher is
called________
(a)Primary voucher (b) Subsidiary voucher (c) Cash receipt (d) Cash payment
5) In order to vouch which of the expenses, the auditor will examine bill of
entry?___________
(a)Customs duties (b) Excise duties (c) Sales tax (d)Income tax
6) In case of sale return, the auditor should examine____________
(a)Credit notes and inward return note (b) Debit notes and inward return note
(c )Purchases invoices and inward return note (d) Sales invoices and inward return
note
7) Serial number of vouching should be_______________
(a) Colored (b)Continuous (c) Odd number (d)Even number
8) The very essence of auditing______________
(a)Vouching (b)Verification (c)Valuation (d) Evaluation
9) An auditing process in which auditor satisfy himself with the actual existence of assets
and liabilities appearing in the Statement of Financial position______________
(a)Verification (b)Programming (c) Evaluating (d) Vouching
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10) Copies of supporting documents which are not available in original are __________
(a)Collateral voucher (b) Primary voucher (c) Secondary voucher (d) Collection
voucher
11) Internal control is____________
(a)part of internal check (b) a part of internal audit (c) whole system of
control employed by management (d) examination of reliability of transaction
12) PERT and CPM comes under_______________
(a) administrative control (b) accounting control (c) both types of control
(d) not a control device at all
13) Responsibility accounting is___________
(a) accounting control (b) not a control device (c)partly accounting and partly
administrative control (d) administrative control
14) Which of the following is not accounting control? ____________
(a) time booking (b) responsibility accounting (c) neither (d) both
15) Which of the following is used for evaluation of internal control? ____________
(a) internal questionnaire approach (b) all (c) flow chart approach (d) narrative
approach
16) Representation of the entire control system in diagram under evaluation system is
_______
(a) flow chart method (b) narrative approach (c)internal questionnaire approach
(d) all of these
17) Arrangement in which work of one individual is verified by another member is
called_________
(a) internal audit (b) internal control (c) internal check (d) management
information system
18) The logic behind the internal check is ______________
(a) encouraging division of work (b) minimising fraud (c) facilitating quick
submission (d) none of the above
19) Internal auditor is appointed by ______________
(a) Central government (b) State government (c) management (d) shareholders
20) Operational audit is conducted to examine______________
(a) performance of functional units in general (b) financial data (c) various control
mechanism (d) quality standards set for products
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
b c a b a a b a a a c b d c b a a a c a
SECTION-B
ANSWER THE FOLLOWING
1. Vouching’ is the essence of an audit. Bring out its importance.
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2. What is meant by voucher?
3. State the objectives of verification.
4. What procedure should an auditor adopt in the course of vouching?
5. State the procedure for vouching payment side of cash book.
6. State the objectives of internal control.
7. Mention the principles of internal control system.
8. Highlight the features of internal check system
9. What is the role of auditor in internal check system?
10. How do you evaluate internal audit function?
SECTION-C
ANSWER THE FOLLOWING
1. Explain about the objectives of vouching.
2. Discuss the features of vouching.
3. Explain about the vouching of the debit side of the cash book.
4. Explain about the verification of different types of assets.
5. Distinguish between vouching and verification
6. Discuss the merits and demerits of internal control system.
7. Discuss the objectives of internal check system.
8. Discuss the merits and demerits of internal check system.
9. Elaborate on the objectives of internal audit.
10. Examine the co-ordination between internal audit and external audit.
UNIT-IV
SECTION-A
CHOOSE THE CORRECT ANSWER
1) Auditing in computerized information system faces ___________ risks.
(a) Control (b) Handling (c) Capacity (d) Requirement
2) _______ has increased the capacity of accounting facet of administration.
(a) CIS (b) Auditing (c) Planning (d) Analysing
3) In CIS, ________ are done by computer according to the parameters already set in the
programme.
(a) Arithmetic manipulations (b) Character control
c) Access control d) Material process
4) The computer environment does not allow __________ stages of data output.
(a) Initial (b) Intermediary (c) Final (d) Manipulated
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5) _______ trial is not elaborately available in computerized information system.
(a) Audit (b) Accounting (c) Data (d) Administrative
6) In CIS, the restriction of _______ to computer is a serious concern of the
management.
(a) Access (b) Usage (c) Control (d) Handling
7) The computer input, processing and output are subject to _________.
(a) Easy manipulation (b) Easy process (c) Accession (d) Control restriction
8) In CIS, ________ are subjected to the risk of virus infection.
(a) Data stored (b) Controls (c) Manipulation (d) Evidence
9) The computerized accounting makes extensive use of ________ in accounting.
(a) Data (b) Codes (c) Values (d) Characters
10) ________ is a programme that affects the working of target area of the computer.
(a) Computer virus (b) Code (c) Characters (d) Software
11) ______ helps to minimise the occurrence of committing frauds in computerised
auditing.
(a) Accountability (b) Internal check (c) Coding (d) Authorisation
12) Use of _______ software can pose threat to reliability of data.
(a) System (b) Antivirus (c) Sub-standard (d) Application
13) The application software developed in accordance with pre-determined standards
must be documented in the form of a ________.
(a) Manual (b) Code (c) Programme (d) Content
14) The _________ of work assignments among operators should be properly planned in
computerized information system .
(a) Operation (b) Allocation (c) Appropriation (d) Execution
15) _______ should be arranged in order to carry out computerised auditing without any
time delay.
(a) Sequencing of work (b) Allocation of work
(c) Execution of work (d) Segregation of work
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16) Use of passwords for accepting a transaction in the system is an example of
implementing _______ into the computer programme.
(a) Authorisation (b) Accountability (c) Code (d) Internal check
17) Any _________ in the output should be incorporated only under the express
authorisation of the concerned authority.
(a) Error (b) Correction (c) Updation (d) Failure
18) ________ involves performance of the process twice to compare the results of the two
performance to find out discrepancies if any.
(a) Duplicate processing (b) Parity character (c) Echo check (d) Validity check
19) ________ consists of reading and comparing the data generated by the system.
(a) Echo check (b) Validity check (c) Equipment check (d) parity check
20) Under _______ a bit is added whenever a data is entered to ensure the data credibility.
(a) Echo check (b) Validity check (c) Equipment check (d) parity check
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
a a a b a a a a b a b c a b a a b a a d
SECTION- B
Answer the following
1. Briefly explain the need for computerized auditing.
2. Write a note on auditing in computerized information system.
3. How does computerized audit make arithmetic manipulation simple? Explain.
4. What is EDP? How is it useful in auditing?
5. How to manage supporting vouchers while carrying out auditing in computerized
6. information system.
7. State your views to avoid coding problem in computerized audit.
8. How to avoid computer viruses to ensure reliable audit of data?
9. How to enable control over development and maintenance of auditing software?
10. Who is an operator? Mention his role in computer audit.
11. Write a note on division of responsibility in computerized audit.
SECTION- C
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Answer the following
1. Elaborate and explain the benefits of auditing in computerized information system.
2. Differentiate between conventional auditing and computerized auditing.
3. State your views on problems that occur due to auditing in computerized information
system.
4. Explain in detail about computer aided audit techniques.
5. What are the internal controls in CIS? Explain.
6. Why is it important to have control over functioning of equipment in computerized
audit? Explain.
7. What are the application controls that are to be ensured during data input?
8. What is control over processing? Explain its importance.
9. Explain in detail about test data.
10. What do you understand by controlled processing? Explain.
UNIT-V
SECTION-A
CHOOSE THE CORRECT ANSWER
1) Special audit is necessary for _________concern.
(a) Inefficient (b) processing (c) trading (d) manufacturing concern
2) A company auditor can be removed by _________________.
(a) board of directors (b)managing director (c)any director (d)general meeting.
3) A vacancy caused by resignation of an auditor is filled by _________
(a) board of directors (b)managing director (c)general meeting (d)central
government
4) Audit of company account is _____________
(a) compulsory (b)unnecessary (c)avoidable (d)depends upon directors.
5) Special audit of the accounts of a company is directed by ______________.
(a)shareholders of the company (b)comptroller and auditor general of India
(c)company law board (d)central government
6) Except in special cases the retiring auditor is automatically _________.
(a)Re-appointed (b) dismissed (c) disqualified (d) suspended
7) Who is responsible for the appointment of statutory auditor of a limited
company?_____
(a) Directors of the company (b) Members of the company (c) The Central
Government (d) All of the above
8) Which of the following sections deal with qualifications of the auditor ?__________
(a) Section 226 (1) and section 226(2) (b) Section 224 (1) and section 224 (2)
(c) Section 226 (3) and section 226(4) (d) Section 224(3) & Sec.224
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9) If a casual vacancy in the office of auditor arises by his resignation it should only be
filled by the company in a __________
(a) Board meeting (b) extraordinary general meeting (c) General
meeting (d) annual general meeting
10) Which audit out of the following would not be regarded as one audit for the purposes
of section 224(IB)?______________
(a) Audit of one branch each of two different companies (b) Joint audit (c) Audit
head office & branches (d) Audit of one or more branches of a company
11) The authority to remove the first auditor before the expiry of term is with
(a) the shareholders in a general meeting (b) the shareholders in the first annual
General meeting (c) the board of directors (d) the Central Government
12) The retiring auditor does not have a right to__________
(a) make written representations (b) get his representations circulated (c) be
heard at the meeting (d) speak as a member of the company
13) Right to visit branches has been given to the auditor under which
section?____________
(a) Section 222(3) (b) Section 228(2) (c) Section 228(4) (d) Section
228(3)
14) The branch auditor is appointed by __________
(a) Shareholders in an annual general meeting (b) Shareholders in general
meeting (c) Board of directors in board meeting (d) Any of the above
15) Who among the following can be appointed as special auditor by the Central
Government?
(a) The statutory auditor (b) chartered accountant in practice (c) Any chartered
accounted who is not in practice (d)Both(a) and (b)
16) Auditor to attend meeting____________
(a) has right (b) has no right (c) has right some times (d)never has right
17) Certifying annual reports is __________
(a) moral responsibility (b) professional ethics (c) statutory duty (d) duty under
common law
18) Where an auditor deliberately falsifies accounts or destroys evidence, his liability
comes under___________
(a) civil (b) partly civil (c) criminal (d) partly criminal
19) The tenure of appointment for an auditor for a company is_________
(a) one year (b) two years (c) three years (d) four years
20) An auditor can audit a maximum of _________ companies
(a)10 (b) 15 (c) 20 (d) 25
Answers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
a D c a d d b a c a a d c b b a c d a c
SECTION-B
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ANSWER THE FOLLOWING
1. Write short note on Branch audit and Joint audit.
2. Briefly discuss about the special audit.
3. What are the eligibility criteria for appointment as a cost auditor?
4. State the classification of capital.
5. Enumerate the conditions for redemption of preference shares.
6. Mention the procedure for removal of an auditor.
7. State the provisions of the companies act regarding the remuneration of auditors.
8. Mention the statutory duties of an auditor.
9. Enumerate auditor’s duty under professional ethics.
10. Point out the criminal liability of an auditor.
SECTION- C
ANSWER THE FOLLOWING
1. Explain in detail the procedure for appointment of cost auditor under companies Act,
2013.
2. Explain the audit procedure in connection with share transfer.
3. Bring out the role of auditor in alteration of capital.
4. How would you examine the following items while auditing the account of a
company limited by shares?
(i) Share application (ii) Share allotment (iii) Share call
5. Describe the steps involved in Bank audit.
6. State the provisions of Companies Act with reference to appointment of an auditor.
7. Discuss the provisions of companies act with regard to qualification, disqualification
and removal.
8. Elaborate on the rights of an auditor.
9. Discuss the civil and criminal liabilities of an auditor.
10. Examine the status of an auditor in a company.
KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS),
COIMBATORE – 29.
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DEPARTMENT OF COMMERCE WITH PROFESSIONAL ACCOUNTING
SEMESTER VI
18UPA619 – Indirect Tax
PREPARED BY
Dr.B.DIVYA PRIYA, M.Com. (CA)., M.Phil., M.B.A., SET., Ph.D.
Associate Professor of Commerce
2018
INDIRECT TAX
UNIT I
SECTION A
1. Government imposes taxes to a) check the accumulation of wealth among the rich b)
run the machinery of state c) uplift weaker sections d) none of these
2. Sales tax is a) Direct tax b) Indirect taxes c) wealth tax d) none of these
3. Indirect taxes are taxes on a) Consumption b) Distribution c) Proportion d)
Progression
4. Progressive tax is also called as a) average tax b) sales tax c) single tax d) Graduated
tax
5. Indirect taxes are a) income based incomes b) supply based taxes c) commodity based
taxes d) production based taxes
6. Indirect taxes are a) regressive in nature b) progressive in nature c) legal in nature d)
none of these
7. Which of the following are the indirect taxes? a) Customs Duty b) Excise duty c)
Sales tax and service tax d) All the above
8. Who bear the ultimate burden of indirect taxes? a) Sellers b) Manufacturers c)
Consumers d) None of the above
9. Customs duty is a form of: a) Income tax b) direct tax c) indirect tax d) wealth tax
10. Indirect taxes are ____ in nature. a) inflationary b) deflationary c) exceptional d)
legal
11. Indirect taxes are: a) elastic b) deflation tax c) exceptional tax d) wealth
12. Indirect taxes have in built safeguards against a) tax avoidance b) tax evasion c) tax
payers d) revenue officers
13. In case of indirect taxes, final tax-payers are: a) manufacturers b) agents c) company
d) consumers
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14. Indirect taxes are imposed on a) production, sale and movement of goods and services
b) on goods only c) on services only d) on income of an individual
15. Which of the following was the form of indirect taxes? a) wealth tax b) income
tax c) property tax d) customs duty
16. Which of the following was not the form of indirect taxes? a) goods and services tax
b) income tax c) excise duty d) customs duty
17. Which of the following tax provide huge revenues to the government? a) Indirect tax
b) Entertainment tax c) wealth tax d) income tax
18. Indirect and regressive tax: a) Income tax b) wealth tax c) Goods and service tax d)
Gift tax
19. Rate of duties are not differ from person to person: a) Income tax b) Gifts tax c)
Property tax d) Indirect tax
20. Central Board of Excise and Customs was renamed as a) Central Board of Indirect taxes
and Customs b) Central Board of customs c) Central Board of direct taxes d) Central
Board of estate duty
SECTION B
1. What is meant by indirect taxes?
2. What are the objectives of indirect taxes?
3. Classify taxes based in their nature.
4. Explain tax evasion.
5. Explain tax avoidance.
6. What are the characteristics of tax avoidance?
7. What are the activities relating to tax evasion?
8. ‘Indirect taxes are elastic in nature’ – Justify.
9. ‘Indirect taxes are regressive in nature’ – Justify.
10. Explain the penalty relating to tax avoidance.
SECTION C
1. Explain the features of indirect taxes.
2. Explain the benefits of indirect taxes.
3. What are the disadvantages of indirect taxes?
4. Distinguish between direct and indirect taxes.
5. Distinguish between tax avoidance and tax evasion.
6. Explain in detail the activities relating to tax evasion.
7. Explain the characteristics of tax avoidance.
8. Sketch on the constitutional amendment relating to indirect tax.
9. Discuss the role Central Board of Indirect taxes and customs.
10. Explain about the consequences of tax avoidance.
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UNIT I – Section A – Answer Key
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UNIT II
SECTION A
1. Customs duty is an instrument of
a) Monetary policy b) Fiscal policy c) Industrial policy d) Foreign Trade policy
2. An area beyond 200 nautical miles from the base line is called
a) high seas b) forest area c) mountain d) desert
3. One nautical miles is equal to
a) 1.515 miles b) 1 miles c) 0.75 miles d) 0.25 miles
4. C.I.F. stands for
a) Cost, Insurance and Freight b) cost, Incentive and Freight c) Cost, Insurance and
Fringe Benefit d) Cost, Incentive and Fringe Benefit
5. Exclusive Economic zone extends to 200 nautical miles from the
a) baseline b) Free on Board c) high seas area d) Union Territorial region
6. F.O.B. stands for
a) Free on Board b) First on Board c) Flight on Boarding d) Focus on Board
7. F.O.B. is the sum total of:
a) Cost, Insurance and Freight b) cost, Incentive and Freight c) Cost, Insurance and
Fringe Benefit d) Cost, Incentive and Fringe Benefit
8. Duty imposed on imports of a particular country is called as
a) Anti-dumping duty b) counterveiling duty c) Goods and Service Tax d) VAT
9. Duty drawback allowed for Import duty is paid on
a) Exported goods b) Imported goods c) luxury goods d) convenience goods
10. Basic customs duty is levied under section ____ of the customs act.
a) 15 b) 13 c) 12 d) 10
11. Indian customs waters extend upto _____ nautical miles beyond territorial waters.
a) 24 b) 15 c) 16 d) 20
12. Percentage of assessable value of the item.
a) Custom Duty b) Income Tax c) VAT d) Wealth tax
13. Margin of dumping is the difference between normal value and the
a) export price of the goods under complaint b) inflation rate c) Flat rate d) slab
rate
14. Bill of entry can be submitted within __________ days prior to expected date of arrival of
vessel.
a) 25 b) 30 c) 45 d) 60
15. Customs duty rate specified with eight digit code is referred as
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a) PAN b) HSC c) Inflation rate d) Indian Tariff Code
16. Under which provision of the Customs Act, 1962, the duty of customs is leviable on
imported goods?
a) Sec.17 b) Sec. 14 c) Sec.12 d) Sec.15
17. Which of the following has not been issued under Customs Act, 1962?
a) IPR (Imported Goods Enforcement Rules, 2007)
b) The Foreign Trade Policy 2015 – 2020
c) The Baggage Rules, 2016
d) The Customs Valuation Rules, 2007
18. Under which of the following, Export Promotion Scheme, Capital Goods are allowed to
be imported duty free?
a) Export Promotion Capital Goods Scheme b) Export Oriented Unit
Scheme c) Special Economic Zone (SEZ) d) All of the
above
19. If ‘Tata Company’ imports a product from abroad, then which tax will be levied on it?
a) VAT b) Customs Duty c) Income tax d) Corporation tax
20. High seas an area beyond _______ nautical miles from the base line.
a) 100 b) 150 c) 185 d) 200
SECTION B
1. Give the constitution provisions on Customs Act.
2. Define the term: i) Conveyance ii) Coastal Goods.
3. Explain Custom Station.
4. Differentiate between imported goods and smuggled goods.
5. Define: i) person-in-charge ii) Transit of Goods and iii) Transhipment of Goods.
6. Write a note on Exclusive Economic Zone.
7. What are the Duty rates for payment of customs duty?
8. Explain domestic tariff area.
9. Explain about the penalty levied under Customs Duty.
10. Write a note on Import report.
SECTION C
1. Explain about the taxable event for imported goods.
2. Explain about the taxable event for exported goods.
3. Sketch on the taxable event for warehoused goods.
4. Explain about duty liability in special circumstances under customs.
5. Explain the type of import duties.
6. Discuss about the type of export duty.
7. Discuss about the goods exempted from customs.
8. Explain about deemed exports and duty drawback.
9. Explain the role of customs duty officer.
10. Explain about the refund of customs duty.
UNIT II – Section A – Answer Key
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UNIT III
SECTION A
1. Which of the following is a form of indirect tax?
a) Goods and Service Tax b) Income Tax c) Corporate Tax d) Capital Gains Tax
2. When was the Goods and services Tax (GST) Council constituted?
a) 12th September 2016 b) 12th September, 2017 c) 12th September 2018 d) 13th
September 2016
3. Who is the head of the GST Council of India?
a) Arun Jaitley b) P.Chidhambaram c) O.Panneerselvam d) Narendra Modi
4. The first country to introduce GST was
a) Pakistan b) Bhutan c) India d) France
5. France introduced GST in the year:
a) 1954 b) 1956 c) 1964 d) 1984
6. When does GST Bill was introduced in Lok Sabha?
a) 19th December 2014 b) 19th December 2015 c) 19th December 2016 d) 19th
December 2017
7. The Indian government has implemented the new indirect tax regime – GST from:
a) 1.01.2017 b) 1.03.2017 c) 1.07.2017 d) 1.09.2017
8. Around how many countries have implemented GST?
a) 157 b) 160 c) 170 d) 180
9. What does G stands for in GST? a) General b) Global c) Goods d) Great
10. What kind of Taxes will GST replace?
a) Central Excise Tax b) Service Tax
c) Entertainment Tax d) All the types of taxes
11. GSTN stands for:
a) Goods and Services Tax Network b) Global services Tax Network
c) Global Secondary Tax Network d) Goods and Services Specialised Nation
12. Integrated Goods and Service Tax GST is charged by:
a) Central Government of India b) State Government of India c) District of the State
d) None of these
13. Which of the following taxes leviable on an intra-State transaction?
a) CGST b) SGST c) IGST d) both (a) and (b)
14. Which of the following taxes leviable on an inter-State transaction?
a) CGST b) SGST c) IGST d) both (a) and (b)
15. “One nation and one tax” –
a) GST b) VAT c) Entertainment tax d) luxury tax
16. The state Jammu and Kashmir implemented GST with effect from:
a) 8th July, 2018 b) 10th July, 2018 c) 15th July, 2018 d) 20th July, 2018
17. A supply of goods and services or both which is leviable to GST is called as:
a) taxable supply b) principal supply c) non-taxable supply d) None of
these
18. VAT was replaced by
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a) Income tax b) Luxury ax c) Entertainment tax d) Goods and Service
Tax
19. What is the threshold limit to register for GST?
a) Rs.20 lakhs b) Rs.25 lakhs c) Rs.30 lakhs d) Rs.50 lakhs
20. GST rate for sweets:
a) 5% b) 10% c) 15% d) 28%
SECTION B
1. What is Goods and Service tax?
2. Define Consideration under CGST Law.
3. Define Goods and Services.
4. Define the term ‘business’ under CGST Law.
5. What is GSTN?
6. What do you mean HSC and SAC?
7. What are the goods not covered under GST?
8. What is the threshold limit for registering under GST?
9. What is CGST, SGST, IGST and UTGST?
10. Define ‘Person’ under CGST Law.
SECTION C
4. Explain the history and evaluation of GST in India.
5. “One nation, one tax’ – Justify.
6. Explain the benefits of GST.
7. Discuss about the features and need for GST in India.
8. Explain the taxes subsumed under GSST.
9. What are the constitutional provisions relevant for GST?
10. Explain taxable person, goods, services, and supply under CGST Law.
11. Discuss about the benefits of HSC and SAC.
12. What are the services of GSTN?
13. Explain composition scheme under GST.
UNIT III – Section A – Answer Key
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UNIT IV
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SECTION A
1. Aggregate turnover includes: a) Central tax b) State tax c) Union Territory tax d)
export of goods or services
2. Aggregate turnover excludes: a) Central tax b) export of goods or services c) exempt
supplies d) taxable supplies
3. Output tax in relation to a taxable person under the CGST Act, 2017, includes: a) Tax
chargeable on taxable supplies made by him b) Tax chargeable on taxable supplies made
by agent c) both (a) and (b) d) Tax payable by him under reverse mortgage
4. Distribution of electricity by a distribution utility is a: a) Non-taxable supply b) Exempt
supply c) Nil rated supply d) Neither supply of goods nor supply of services
5. What are the different types of supplies covered under the scope of supply? a) Supplies
made with consideration b) supplies made without consideration c) both (a) and (b) d)
None of the above
6. What are the factors differentiating composite supply and mixed supply? a) Nature of
bundling i.e., artificial and neutral b) Existence of principal supply c) both (a) and (b)
d) None of the above
7. In case of composite supply, tax rate applicable to composite supply is a) Tax rate as
applicable as principal supply b) Tax rate as applicable as ancillary supply c) Tax rate as
applicable as respective supply d) None of the above
8. In case of composite supply, tax rate applicable to mixed supply is a) tax rate as
applicable on supply attracting the lowest rate of tax b) tax rate as applicable on supply
attracting the highest rate of tax c) tax at 28% d) None of the above
9. _____ of the constitution provides that no tax shall be levied or collected except by
authority of law. a) Article 254 b) Article 260 c) Article 265 d) Article 245
10. What are the taxes levied on an intra-state supply? a) CGST b) SGST c) CGST and
SGST d) IGST
11. What is the maximum rate prescribed under CGST Act? a) 12% b) 28% c) 20% d)
18%
12. Who will notify the rate of tax to be levied under CGST Act? a) Central Government
Suo Moto b) State Government Suo Moto c) GST Council Suo Moto d) Central
Government as per the recommendations of the GST Council
13. Which of the following taxes levied on imports? a) CGST b) SGST c) IGST d)
CGST and SGST
14. What is the maximum rate prescribed under UTGST? Act? a) 14% b) 28% c) 20%
d) 30%
15. Which of the following will be excluded from the computation of ‘aggregate turnover’?
a) value of taxable supplies b) value of exempt supplies c) Non-taxable supplies d)
value of inward supplies in which tax is paid on reverse charge basis
16. What is the date of receipt of payment? a) Date of entry in the books b) Date of
payment credited into bank account c) Earlier of (a) or (b) d) Date of filing of return
17. Tax invoice must be issued by a) Every supplier b) Every taxable person c) Registered
persons not paying tax under composition scheme d) All of the above
18. An invoice must be issued a) at the time of removal of goods b) on transfer of risks and
rewards of the goods to the recipient c) on receipt of payment for the supply d)
earliest of the above dates
19. The tax invoice should be issued _____ the date of supply of service. a) within 30 days
from b) within 15 days from c) within 20 days from d) on
20. A credit note is issued by a) supplier b) recipient c) Central Board of Direct Taxes
d) Finance minister
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SECTION B
1. Who is liable to pay GST?
2. Who is a taxable person?
3. What do you mean by tax invoice?
4. What do you mean by debit note?
5. What is credit note?
6. Define ‘Aggregate turnover’.
7. What are the goods exempted from GST?
8. Give composition of rate of GST.
9. What are the effective dates for composition of levy under GST?
10. Who can avail composition scheme?
SECTION C
1. Discuss the functions and benefits of CGST.
2. Write a note on Integrated Goods and Service tax.
3. Explain the functions of State GST.
4. Explain the scope of supply.
5. What are the obligations of registered person under GST?
6. Explain the contents of GST Invoice.
7. Write short notes on debit note and credit note.
8. Discuss about the goods and services that are exempted under GST.
9. What is Rate Structure? What are the rate for different category of goods and services?
10. Explain the functions and benefits of IGST.
UNIT IV – Section A – Answer Key
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UNIT V
SECTION A
1. The details of outward supplies of goods or services shall be submitted by
a) 10th of the succeeding month b) 18th of the succeeding month
c) 15th of the succeeding month d) 20th of the succeeding month
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2. Details of Outward supplies shall include
a) Invoice b) Credit and Debit notes c) Revised invoice issued in relation to outward
supplies d) All the above
3. The details submitted by the outward supplier in Form GSTR 1 shall be furnished to the
recipient regular dealer in form
a) GSTR 4A b) GSTR 5A c) GSTR 2A d) GSTR 6A
4. The details submitted by the outward supplier in Form GSTR 1 shall be furnished to the
recipient compounding dealer in form
a) GSTR 4A b) GSTR 5A c) GSTR 2A d) GSTR 6A
5. The details submitted by the outward supplier in Form GSTR 1 shall be furnished to the
input service distributor in form
a) GSTR 4A b) GSTR 5A c) GSTR 2A d) GSTR 6A
6. The details submitted by the supplier in Form GSTR 1 are communicated to the registered
taxable person in
a) Form GSTR 1A on 17th of the succeeding month
b) Form GSTR 2A after the data entry in Form GSTR 1
c) Form GSTR 2A after the due date of filing Form GSTR 1
d) Form GSTR 1A on 15th of the succeeding month
7. The details of inward supplies of goods or services in Form GSTR 2 shall be submitted by
a) 10th of the succeeding month b) 18th of the succeeding month
c) 15th of the succeeding month d) 20th of the succeeding month
8. Details of Inward supplies shall include
a) Inward supplies of goods and services communicated in Form GSTR 2A
b) Inward supplies in respect of which tax is payable under reverse charge
mechanism
c) Inward supplies of goods and services not declared by suppliers
d) All the above
9. Any modification / deletion done by the recipient to the details contained in Form GSTR 2
shall be communicated to the supplier in:
a) Form GSTR 1A b) Form GSTR 3A c) Form GSTR 6A d) Form GSTR 2A
10. The supplier on receiving the communication in Form GSTR 1A shall accept, reject or
modify the details by:
a) 18th of the succeeding month b) 20th of the month succeeding the quarter
c) 17th of the succeeding month d) 10th of the succeeding month
11. The certificate of details of tax deducted by the deductor shall be furnished to the
deductee in Form
a) GSTR 7 b) GSTR 7A c) GSTR 2A d) GSTR 1A
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12. The e-commerce operator collecting tax under section 52 shall file its monthly return in
a) Form GSTR 8 by 18th of the succeeding month
b) Form GSTR 7 20th of the month succeeding the quarter
c) Form GSTR 8 17th of the succeeding month
d) Form GSTR 8 10th of the succeeding month
13. Every registered taxable person who is required to get his accounts audited under section
35(5) shall furnish electronically
a) Annual return b) Audited copy of annual accounts
c) Reconciliation statement reconciling the value of supplies declared in the return and the
financial statement
d) All of the above
14. The annual return shall be filed by the registered taxable person (other than dealers
paying tax under section 10) in form
a) GSTR 7 b) GSTR 9 c) GSTR 9A d) GSTR 10
15. Notice to non-filers of return shall be sent in Form
a) GSTR 5 b) GSTR 3 c) GSTR 3A d) GSTR 10
16. The final return shall be filed by the registered taxable person within
a) 3 months of the date of cancellation b) Date of order of cancellation
c) Later of the (a) or (b) d) Earlier of the (a) or (b)
17. Which of these registers/ledgers are maintained online?
a) Tax liability register b) Credit ledger c) Cash ledger d) All of them
18. Payment made through challan will be credited to which registers/ledgers?
a) Electronic Tax liability register b) Electronic Credit ledger
c) Electronic Cash ledger d) All of them
19. What is the validity of challan in FORM GST PMT-06?
a) 1 day b) 5 days c) 15 days d) Perpetual validity
20. For payment of IGST input tax credit can be utilised in the following manner only :
a) IGST, CGST. SGST/UTGST b) IGST, SGST/UTGST, CGST
c) CGST, SGST/UTGST, IGST d) Any of the above manner
SECTION B
1. What do you mean by first return?
2. What is meant by revision of returns?
3. What is the penalty for delay in filing GSTR?
4. What do you mean by outward supply?
5. What is meant by inward supply?
6. Define Annual return.
7. Define final return.
8. What is the due date for filing various monthly returns?
9. What is advance registration?
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10. Who is Input Credit Distributor?
SECTION C
1. Explain the various methods to file a return.
2. Write a note on various forms of return.
3. Discuss the nature of GST returns.
4. What is final return? Who are all required to final return and when?
5. What is advance registration? Who are all liable for advance registration?
6. Can cancellation of a registration revoked? What is the procedure?
7. Explain the various methods of input credit methods?
8. Explain about furnishing of GSTR in detail.
9. Explain Outward Supply and Inward Supply.
10. Write a note on first return, annual return and final return.
ANSWER KEY – UNIT V – SECTION A
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KONGUNADU ARTS AND SCIENCE COLLEGE(AUTONOMOUS)
COIMBATORE- 641 029
Class: III B.COM (PA) Semester – V
Sub. Name: Financial Services Sub. Code: 16UPA6E2 /
18UPA6E2
Prepared By: Dr.R.Murugesan
QUESTION BANK
Unit I
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SECTION A 1
Mark
1.————— includes all activities involved in the transformation of savings into
investment.
a. Financial system b. Financial service c. Economic system d. Saving system
2. According to IFRS, the term financial asset includes
a. Cash or Cash equivalent b. Equity shares
c. Contractual right to receive cash d. All the above
3. Which of the following is /are example of primary or direct financial instrument?
a. Fixed deposit receipt b. Insurance policies c. Mutual fund Unit d.
Debentures
4. Which of the following is /are example of Secondary or indirect financial instrument?
a. Equity shares b. Preference shares c. Post office saving deposit d. Bonds
5. A non-banking Financial Institution
a. Can accept demand deposit b. Can issue cheques to customers
c. Cannot accept fixed deposit d. Cannot accept demand deposit and can`t issue
cheques
6. Kerala State Financial Enterprises ltd (KSFE) is an example of
a. Banking institution b. Investment institution
c. NBFI d. State level development banks
7. UTI, LIC etc are examples of
a. Banking institution b. Investment institution c. NBFI d. Development banks
8. SFC is an example of
a. Banking institution b. Investment institution c. NBFI d. Development
Institution
9. --------are examples of financial intermediaries
a. Commercial banks b. Insurance companies
c. Investment companies d. All of the above.
10. Which of the following is not a negotiable instrument?
a. ADR b. GDR c. FDR d. IDR
11. The financial service which is pooling risks of people_________
a. Mutual fund b. Venture capital c. Insurance d. All of these
12. In India Insurance business are regulated by
a. IRBI b. RBI c. IRDA d. IRDP
13. Financial intermediaries exist because small investors cannot efficiently.
a. Diversify their portfolios b. Gather all relevant information
c. Assess credit risk of borrowers d. All of the above
14. General insurance business nationalised in the year----------
a. 1956 b. 1972 c. 1969 d. 1982
15. ............ is a product whose value is derived from the value of underlying asset
a. Repo b. T-bills c. Govt. securities d. Derivatives
16. --------------is also known as “G.Secs”
a. Gold Traded Fund (GTF) b. General Securities
c. Govt. Securities d. Growth oriented fund
17. .................. are negotiable instrument issued by an overseas depository
a. ADR b. GDR c. IDR d. All of these
18. Perpetual bond is also known as
a. Deep discount bond b. Irredeemable bond c. Bearer bond d. Registered bond
19. Zero Coupon Bond is also known as
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a. Deep discount bond b. Irredeemable bond c. Bearer bond d. Zero Interest
bond
20. Non-banking financial institutions (NBFIs) are registered under
a. RBI Act b. Banking Regulation Act c. Companies Act d. SEBI Act
Answer for part A (Unit I)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B A D C D C B D A C C C D B D C D B A C
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SECTION -B 5 Marks
1. What do you mean by financial service?
2. List out any four fund based activities of a financial service company.
3. State the causes for financial innovation in the financial service sector.
4. Distinguish between loan syndication and venture capital.
5. What is factoring? Is it similar to forfeiting?
6. Discuss any three new products available in the forex market.
7. What is convertible bond? Give an example.
8. As between medium term debenture and variable rate debenture, which one do you prefer
and
why?
9. What are the special features of a cumulative, convertible preference share?
10. What do you understand by the term financial engineering?
SECTION –C 8 Marks
1. Discuss the feature of financial services.
2. Explain the importance of financial services.
3. Describe the various types of financial services provided by financial service companies.
4. Discuss the scope of financial services.
5. Explain the classifications of financial service industries.
6. Explain the various modern services provided by financial intermediaries.
7. Discuss the role of financial player in financial service sector.
8. Discuss about financial service and economic environment.
9. Discuss the innovative financial instruments introduced in recent times in the financial
service
sectors.
10. Explain the challenges facing the financial service sectors.
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Unit II
SECTION A 1 Mark
1. Merchant bankers perform the following roles .
a. Market new stock and bond issues for firms.
b. Provide advice to the firms as to market conditions, price, etc.
c. Provide consultancy services for expansion etc
d. All of the above
2. Underwriting of shares by a financial intermediary is a kind of ————— activity.
a. Fee based b. Fund based c. Both of these d. None of these
3. ————— services are mainly provided to foreign investors.
a. Custodial services b. Financial services c. Factoring services d. None of these
4. Term lending institutions are ————— market intermediaries.
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a. Money market b. Bill market c. Capital market d. None of these
5. The minimum net worth for the first category of merchant banker is Rs. —————
a. 2 Crore b. 5 Crore c. 1 Crore d. 10 Crore
6. A merchant banker can claim a charge —————% as the commission for the whole
issue.
a. 5 b. 10 c. 2.5 d. 0.5
7. The first Indian Bank to set up Merchant Banking division in India is -----------
a. UCO Bank b. State Bank of India c. ICICI. d. Punjab National Bank
8. The first foreign bank which started Merchant Banking services in India is
a. City Bankb. Bank of America c. The Federal Bank d.The National Grindlays
Bank
9. Investment banks facilitate the sale of securities in the .
a. Primary market. b. Secondary market c. Retail market. d. Wholesale market.
10. Arbitrage is ------- .
a. Buying and selling in two markets simultaneously b. A rate of interest
c. A Fee. d. A dispute.
11. Exchange risk in case of foreign currency Non Resident (Banks) scheme (FCNR) Is borne
by
a. RBI. b. Depositor. c. Govt. Of India d. Concerned Bank.
12. Direct sale of securities to investors is called..........
a. Public offer b. Private placement c. FPO d. IPO
13. “Native Stock and Share Brokers Association” is the old name of............
a. SEBI b. NSE c. BSE d. NASDAQ
14. Firms that specialize in helping companies raise capital by selling securities are called---
a. Commercial banks b. Merchant banks c. Savings banks d. Credit unions
15. Financial assets .
a. Directly contribute to the country's productive capacity
b. Indirectly contribute to the country's productive capacity
c. Contribute to the country's productive capacity both directly and indirectly.
d. Do not contribute to the country's productive capacity either directly or indirectly.
16. The sale of a mortgage portfolio by setting up mortgage pass-through securities is an
example of
a. Credit enhancement b. Securitization. c. Unbundling d. Derivatives.
17. BOLT stands for
a. Borrowing or Lending Trade b. Bombay Online Trading
c. Bond or Loan Transaction d. None of these
18. The means by which individuals hold their claims on real assets in a well-developed
economy are
a. Investment assets b. Depository assets c. Derivative assets d. Financial assets
19. Which of the following is /are not regulatory institutions
a. RBI b. SEBI c. IRDA d. IFCI
20. The concept of securitisation is associated with .
a. Capital market b. Money market c. Debt market d. Foreign exchange
market.
Answer for part A (Unit II)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
B B A C C D B D A A D B C D B B B D C C
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SECTION –B 5 Marks
1. Define merchant banker.
2. What is portfolio management?
3. State the qualities require for a merchant banker.
4. What are the problems faced by merchant banker in India?
5. Write a note on project counseling.
6. What do you mean by listing of securities?
7. What do you mean by stock exchange?
8. State the feature of stock exchange.
9. Write a note on SEBI.
10. What is underwriting? State its advantages.
SECTION-C 8 Marks
1. Distinguish between commercial bank and merchant bank.
2. The scope for merchant banking is great in India. Discuss.
3. Explain the various services provided by merchant banker.
4. Explain in detail the pre- issue management.
5. Discuss the guidelines for merchant bankers issued by SEBI.
6. Explain the function the functions of new issue market.
7. Examine the recent trend in primary markets in India.
8. Explain the various new instruments introduced in the new issue market.
9. Distinguish between new issue market and stock exchange.
10. Explain the functions of SEBI.
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Unit III
SECTION A 1 Mark
1. ------- is referred as both fund based and fee based financial service.
a. Hire purchase b. Leasing c. Factoring d. Underwriting
2. In hire purchase, who can be enjoying salvage value of asset?
a. Hirer b. Vendor c. Financiers d. All of these
3. Hire Purchase Act passed in the year
a. 1969 b. 1982 c. 1972 d. 1976
4. ............... supplies machinery to small scale industries under hire purchase system.
a. IDBI b. SIDMI c. NSIC d. DIC
5. In India, Banks are permitted to carry on Hire purchase business
a. Directly b. Through its Departments c.Through subsidiary d. Any of the
above
6. In hire purchase, till the payment of last installment, amount paid by hirer is treated as
a. Rent b. Interest c. Cash price d. All of these
7. With -------- we rent and with .......... we buy the goods.
a. Hire purchase, leasing b. Leasing, hire purchase
c. Hire purchase, installment d. Hire purchase, Credit sale
8. In.............., lessor fulfills financing function
a. Operating lease b. Swap lease c. Financial lease d. Balloon lease
9. In................., Lessor fulfills servicing function
a. Operating lease b. Swap lease c. Financial lease d. Balloon lease
10. In India, banks cannot do hire purchase business without the permission of
a. SEBI b. Central Govt. c. State govt. d. RBI
11. Which of the following is tripartite system?
a. Financial lease b. Operating lease c. Leverage lease d. Swap lease
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12. Equipment lease transaction is treated as contract of............
a. Bailment b. Pledge c. Guarantee d. Agency
13. ............. lease is for a limited period
a. Financial lease b. Operating lease c. Leverage lease d. Swap lease
14. The entire lease rental is treated as........ in the books of lessor
a. Expense b. Income c. Receivable d. Capital
15. Leased asset is shown in the balance sheet of..................
a. Lessee b. Lessor c. Lender d. Both lessor and lessee in 50:50 ratio
16. Who can claim investment allowance in relation to leased asset?
a. Lessee b. Lessor c. Lender d. Both lessor and lessee in 50:50 ratio
17. An average lease agreement involves.............
a. Two parties b. Three parties c. Four parties d. None of these
18. ................. Leasing companies are formed to promote the sale of its parent company
a. Leverage b. Financial c. Vendor d. Swap
19. In ----------leasing, maintenance expenses and taxes are born by the lessee
a. Financial lease b. Operating lease c. Both the above d. None the above
20. ----------- is suitable lease arrangement for retail shop, mall etc.
a. Financial lease b. Operating lease c. Leverage leased. Sale and lease back
Answer for part A (Unit III)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
D A C C C A B C A D D C A B B B B C A D
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SECTION –B 5 Marks
1. What do you mean by leasing?
2. Write a note on sale and lease back.
3. What is vendor leasing?
4. What is leverage lease?
5. List out the contents of a lease agreement.
6. What are the income tax provisions relating to leasing?
7. What do you mean by hire purchase agreement?
8. Write note on installment sale.
9. What is financial lease?
10. What do you mean by operating lease?
SECTION-C 8Marks
1. Discuss the advantages of leasing.
2. Explain the disadvantages of leasing.
3. Describe the different kinds of leasing.
4. Explain the structures of leasing industry in India.
5. Discuss the various problems faced by leasing companies in India.
6. Distinguish between financial lease and operating lease.
7. Explain the features of hire purchase agreement.
8. Distinguish between hire purchase and leasing.
9. Distinguish between hire purchase and installment sale.
10. What are the accounting treatments of lease? Explain.
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Unit IV
SECTION A 1 Mark
1. A mutual fund in which shares are issued only when the fund is organized is called a fund.
a. Closed-end. b. Load. c. No-load d. Open-end
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2. .......... fund generates regular income to the investors on periodical basis.
a. Balanced fund b. Income fund c. Growth fund d. All of these
3. Income-cum- growth fund is also known as.................
a. Balanced fund b. Nest eggs c. Open ended fund d. Long haul
4. ............... fund concentrate mainly on capital appreciation.
a. Balanced fund b. Income fund c. Growth fund d. All of these
5. Pure growth fund is also known as
a. Nest eggs b. Balanced fund c. Leverage fund d. Stop gap arrangement
6. Investors generally use............... as a ‘parking place’ or ‘stop gap arrangement”
a. Balanced fund b. Income fund c. Growth fund d. MMMF
7. .................mutual fund otherwise known as “intrinsic value”
a. Income b. Capital c. Portfolio d. Net asset value
8. Best suited fund for a business people is...............
a. Balanced fund b. Income fund c. Growth fund d. Taxation fund
9. The facility offered to the investors to shift from one scheme to another under same fund is
known as
a. Roll over facility b. Re- purchase facility
c. Re-issue facility d. Lateral shifting facility
10. --------- variety of mutual fund offers tax benefits to the investors
a. Balanced Fund b. Fund of fund c. Money Market Mutual fund d. Taxation fund
11. Generally mutual funds are of
a. High risk b. Risk free c. Low risk d. Any of the above
12. Which of the following fund is entirely opposite to bond fund?
a. Balanced b. Close ended c. Income fund d. Aggressive growth fund
13. The market performance of mutual fund can be judged on the basis of
a. Net asset value or intrinsic value b. Capital appreciation
c. Regular / stable income d. Any of these
14. ----------- is the regulator of mutual funds in India
a. RBI b. IRDA c. SEBI d. Both SEBI and GOI
15. In mutual fund, ELSS stands for
a. Entry to Limited Subscribers Scheme b. Equity Linked Saving Scheme
c. Entry Load for Saving Scheme d. None of these
16. .................fund is also known as sectoral fund.
a. Theme fund b. Contra fund c. Fund of fund d. Bond fund
17. ------------ fund is invested in those companies whose share prices are far below their real
worth
a. Theme fund b. Contra fund c. Fund of fund d. Bond fund
18. ...........fund are used to purchase units of other Mutual funds.
a. Theme fund b. Contra fund c. Fund of fund d. Bond fund
19. In Mutual fund arena, SIP stands for
a. Structural investment plan b. Systematic investment plan
c. Stable Income plan d. None of these
20. Which is pooling the small savings?
a. Mutual fund b. Insurance c. Credit rating d. Guarantee
Answer for part A (Unit IV)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
D B A C A D C C D D C D A D B A B C B A
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SECTTION-B 5 Marks
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1. What is mutual fund? Give an example.
2. Briefly discuss any two schemes that can be offered by a mutual fund.
3. Distinguish between a share and a mutual fund unit.
4. What are the special features of an open-ended fund?
5. Distinguish between income fund and growth fund.
6. What is specialized fund? Give an example.
7. What are the risks associated with mutual funds.
8. Briefly discuss the structure of the mutual fund operations in India.
9. What do you mean by rollover facility? When is it available to an investor?
10. What is net asset value? How is it computed?
SECTION-C 8 Marks
1. Define mutual fund and describe the various types of mutual funds.
2. Explain the important features of mutual funds.
3. Discuss the functions of mutual funds.
4. Explain the risks associated with mutual funds.
5. Discuss the rights of mutual fund investors.
6. Explain the advantages of mutual funds.
7. ‘Mutual funds provide stability to share prices, safety to investors and resources to
prospective
entrepreneurs’. Discuss.
8. Explain the rights and facilities are available to an investor of a mutual fund.
9. Explain the factors should be considered before selecting a mutual fund.
10. Discuss the present state of the mutual funds in India and outline the causes for their slow
growth.
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Unit V
SECTION A 1 Mark
1. Full service factoring is often
a. Recourse factoring b. Non-recourse factoring
c. Agency factoring d. None of these
2. Disclosed factoring is also known as
a. Recourse factoring b. Non-recourse factoring
c. Agency factoring d. Notified factoring
3. Maturity factoring is also known as
a. Maturity factoring b. Disclosed factoring c. Agency factoring d. Notified
factoring
4. “Confidential invoice discounting” is another name of
a. Maturity factoring b. Disclosed factoring
c. Undisclosed factoring d. Notified factoring
5. Re-Factoring fee is applicable in case of
a. With recourse factoring b. Disclosed factoring
c. Agency factoring d. Notified factoring
6. ..............Is an “invoice based export finance” technique.
a. International factoring b. Disclosed factoring
c. Agency factoring d. Notified factoring
7. “EDI” in EDIFACTORING stands for
a. Economic Deposit insurance b. Electronic Data interchange
c. Export Division insurance d. None of these
8. Which of the following is a type of international factoring?
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a. Two factor system b. Single factor system
c. Direct export factor system d. All of these
9. ................ literally means “relinquish rights to something”.
a. Securitisation b. Factoring c. Forfaiting d. Credit rating
10. Investment Information and Credit Rating Agency of India (IICRA) is a
a. Private company b. Public company c. Govt. Company d. Statutory
company
11. ------ is the venture capital assistance at the stage of development of business idea
a. Start up capital b. Mezzanine capital c. Bridge capital d. Seed capital
12. Fourth-Round of venture capital financing is also called…………...
a. Seed capital b. Mezzanine finance c. Bridge finance d. None of these
13. Which of the following is / are the methods of venture financing?
a. Equity b. Conditional loan c. Income note d. All of these
14. The minimum size of venture capital fund is .
a. Rs. 10 crores b. Rs. 20 crores c. Rs. 25 crores d. Rs. 50 crores.
15. CIBIL stands for............
a. Credit Information Bureau of India ltdb. Central Investment Board of India Ltd
c. Credit and Investment Bureau of India ltd d. None of these
16. Which of these is not a credit rating agency?
a. Moody. b. Standard &Poors c. Price water house d. CRISIL
17. Consumer loans are granted for---------- period.
a. Medium b. Short c. Long d. Both long and medium
18.The financial service which pooling risks of people is_____
a. Mutual fund b. Venture capital c. Insurance d. All of these
19. The venture capital assistance at the stage where the project started to fetch profit but not
reached in its full efficiency is called
a. Start up capital b. Mezzanine capital c. Bridge capital d. Seed capital
20. Which of the following is/are types of consumer credit?
a. Revolving credit b. Unsecured credit c. Secured credit d. All the above
Answer for part A (Unit V)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A D A C A A B D C B D C D A A C B C B D
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SECTION-B 5 Marks
1. What is factoring? Briefly discuss its modus of operandi.
2. What are refactoring charges?
3. Briefly explain any two types of export factoring.
4. What is Edi factoring? State its importance.
5. Write a note on consumer finance.
6. What is venture capital?
7. State the features of venture capital.
8. What is meant by credit rating?
9. State the objectives of credit rating.
10. What are the objectives of CRISIL?
SECTION –C 8 Marks
1. Explain the different types of factoring and their importance.
2. Discuss in detail the various services rendered by factoring intermediaries.
3. Describe the various functions of factoring.
4. Explain the benefits of factoring that offered to their clients.
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5. Discuss the importance of venture capital.
6. Explain the various stages of venture capital financing.
7. Explain the guidelines for venture capital in India.
8. Discuss the benefits of credit rating.
9. Explain the working of various credit rating agencies in India.
10. Discuss the functions of credit ratings.
KONGUNADU ARTS AND SCIENCE COLLEGE (AUTONOMOUS),
COIMBATORE – 29.
DEPARTMENT OF COMMERCE WITH PROFESSIONAL ACCOUNTING
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SEMESTER VI
18UPA6S4 - INVESTMENT MANAGEMENT
PREPARED BY
Dr.B.DIVYA PRIYA, M.Com. (CA)., M.Phil., M.B.A., SET., Ph.D.
Associate Professor of Commerce
2018
18UPA6S4 - INVESTMENT MANAGEMENT
UNIT I
1. Investment is the
a) Net additions made to the nation’s capital stocks b) Person’s commitment to buy
a flat or a house c) Employment of funds on assets to earn returns d) Employment
of funds on goods and services that are used in production process
2. Speculator is a person:
a) who evaluates the performance of the company b) who uses his own funds only
c) who is willing to take high risk for high return d) who considers here says and
market behaviour
3. To frame the investment policy the investor should have:
a) knowledge about the company and brokers b) Investible funds c) knowledge
about the investment alternative alternatives d) knowledge about the markets with
funds
4. Financial intermediaries
a) do not invest in new long-term securities b) include insurance companies and
pension funds c) include the national and regional stock exchanges d) are usually
underwriting syndicates
5. The investors by investing in the mutual fund get:
a) Professional management b) Return potential c) Diversification d) All of the
above
6. Investment made on a house property is a
a) financial investment b) Economic investment c) Non negotiable financial
investment d) Non-financial investment
7. Investment means
a) Investing of money b) lending of loans c) borrowing funds d) None of the
above
8. It relates to the reaction of specific stocks (or portfolios) to changes in the general
market. a) Systematic risk b) Unsystematic risk c) Returns d) All the above
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9. Which of the following is not a financial investment?
a) Purchase of shares b) Purchase of bonds c) purchase of car d) purchase of
debentures
10. Which of the following is a tax saving investment?
a) Fixed deposit b) Shares c) NSC d) PPF
11. Investment are concerned with risk and
a) Profit b) Salary c) returns d) Interest
12. This type of risk is avoidable through proper diversification
a) Portfolio risk b) Systematic risk c) Unsystematic risk d) Total risk
13. Interest rate risk is a type of :
a) Credit risk b) Market risk c) Operational risk d) All of the above
14. Financial risk is defined as:
a) Uncertainties resulting in adverse variation of profitability or outright losses b)
Uncertainties that result in outright losses c) Uncertainties in cash flow d)
Variations in net cash flows
15. A bank suffers loss due to adverse market movement of a security. The security was
however held beyond the defeasance period. What is the type of risk that the bank has
suffered?
a) Market risk b) operational risk c) market liquidation risk d) Credit risk
16. Which of the following is not a type of credit risk?
a) Default risk b) Credit spread risk c) Intrinsic risk d) Basis risk
17. The risk that arises due to change in the purchasing power is called
a) Financial risk b) Interest rate risk c) Market risk d) Inflation risk
18. The unsystematic risk is explained by
a) Variance of the index b) Unexplained variance of the index c) Explained
variance of the index d) None of these
19. Systematic risk factor(s) involved in investing in bonds
a) Purchase-power risk b)Yield risk c) both (a) and (b) above d) Interest rate risk
20. OTCEI was incorporated in the year :
a) 1990 b) 1995 c) 1999 d) 2000
SECTION B
1. Define investment management.
2. Explain the concept of investment.
3. What are the features of investment?
4. Distinguish between investment and gambling.
5. Differentiate between investment and speculation.
6. What are characteristics of investment?
7. What are different alternative forms of investment?
8. Define risk. What are its types?
9. Explain the concept of risk.
10. Explain the concept of returns.
SECTION C
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1. Explain the concept of investment and the factors to be considered in investment
decision.
2. Explain the importance of investment.
3. Discuss the features of investment.
4. Differentiate between (i) Investment and speculation and (ii) Investment and
gambling.
5. Explain the objectives of investment.
6. Explain the various forms of investment.
7. Discuss about the alternative forms of investment.
8. Explain the types of risk.
9. Explain the concept of risk with its causes.
10. Explain the concept of returns with its kinds.
UNIT I – Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9. 10 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
c d d b d d a a c d c C b a b b d b c a
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UNIT II
SECTION A
1. Which of the following is associated with long-term funds?
a) Money Market b) Capital Market c) Stock Market d) Chamber of commerce
2. Which of the following markets is associated with short-term funds?
a) Money Market b) Capital Market c) Stock Market d) Chamber of commerce
3. Primary and secondary markets
a) compete with each other b) Complement each other c) function independently d)
control each other
4. Which of the following are examples of a primary market transaction?
a) A company issues new common stock b) A company issues new bonds c) An
investor asks his broker to purchase 1,000 shares of Microsoft common stock d)
statements (a) and (b) are correct
5. In secondary market, the delivery and payment of hand delivery contract is completed
a) On the same day of the date of contract b) on the next day of the date of contract c)
Within four days from the day of contract d) Within 14 days from the day of contract
6. The major difference between the primary and secondary stock market is that a)
Outstanding securities of a company are traded in the primary rather that in the secondary
market b) Creation of securities take place in the primary market rather than in the
secondary market c) the primary market is regulated by SEBI whereas the secondary
market is regulated by stock market d) the primary market is one that imparts liquidity
and marketability to long-term securities and not the secondary market
7. If the company offers additional shares to the existing shares, it is called a) bonus shares
b) Rights issue c) both of these d) None of these
8. Debentures are a) non-transferable b) Transferable c) assets of the company d) None
of the these
9. Stock exchange a) helps in the fixation of stock price b) Ensures safe and fair dealing c)
induces good performance by the company d) All the above
10. In BSE, shares are divided into a) two categories b) three categories c) four categories
d) five categories
11. The primary capital market a) imparts liquidity and marketability to long-term financial
instruments b) helps companies to raise funds to finance their projects c) provides an
auction market for long-term securities d) operates through the medium of stock
exchanges
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12. The major categories of investors in primary market of government securities include a)
Reserve Bank of India b) Financial institutions c) Foreign financial institutions d) All
the above
13. SEBI stands for:
a) Securities and Exchange Bank of India b) Securities and Exchange Board for Investment
c) Securities and Exchange Board of India d) None of These
14. SEBI was established in the year: a) 1992 b) 1988 c) 1991 d) 2000
15. SEBI has to be responsive to the needs of which of the following:
a) The Investors b) The Issuers of Securities c) The Market Intermediaries d) All of the
Above
16. Which of the following functions rolled into one body by SEBI?
a) Quasi Legislative b) Quasi Judicial c) Quasi Executive d) All of the Above
17. Headquarter of the SEBI:
a) Delhi b) Bengaluru c) Chennai d) Mumbai
18. Stock market is a place where:
a) Stock buyers and sellers meet b) Investors and companies meet c) traders and investors
meet d) employers and employees meet
19. The India Stock Market is regulated by:
a) Reserve Bank of India b) Government of India c) Securities and Exchange Board of
India d) Investors
20. The term bullish indicates:
a) Positive price action b) Negative Price Action c) Neutral price action d) none of the
above
SECTION B
1. What is primary market?
2. What are the differences between primary and secondary market?
3. What is NIM?
4. What do you mean by secondary market?
5. What are the features of NIM?
6. What are the limitations of NIM?
7. What are features of secondary market?
8. Write a note on listing of securities.
9. List out the types of brokers.
10. Briefly explain the operations of stock market.
SECTION C
1. Define new issue market. Explain its features.
2. Discuss the functions of NIM.
3. Discuss about major intermediaries in NIM.
4. Explain the limitations of NIM.
5. Explain the methods of floating NIM.
6. Explain the functions of secondary market.
7. Explain about the kinds of brokers.
8. Discuss the limitations of secondary market.
9. Differentiate between primary and secondary market.
10. Discuss about the regulations of stock exchanges.
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UNIT II – Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9. 10 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
b a b d d a b b d b b d a b d d d a c a
UNIT III
SECTION A
1. Gross domestic product is a logical factor to analyse the economy in picking up a
stock because it indicates a) Inflation or deflation b) the market value of assets c)
the status of the economy d) the condition of the stock market
2. The fall in the interest rate is conducive to the stock market because a) money may
flow from the bond market to stock market b) corporate can borrow at easy terms
c) brokers can do businesses at borrowed funds d) both (a) and (b)
3. One of the following factors leads the activity of stock market a) money supply b)
per capita income c) unemployment rate d) manufacturing and trade
4. The rise of dividend tax from 10% to 20% in a broader sense affects a) the investor
b) the corporate c) the stock market d) the financial institution
5. A growth industry is defined as a) an industry with 15% rate of growth per annum
b) an industry where demand for its product is growing c) an industry with high
capital investment d) an industry with the average growth higher than the growth of
economy
6. Mr.A is a daring portfolio manager. He wants to increase the return of his portfolio.
He should choose stock from a) defensive industry b) Industry at a growth stage c)
Industry in the maturity period d) industry at more export potential
7. The market value of the scrip is determined by a) the dividend declared by the
company b) the present status of the stock market c) the number of floating shares
d) the interaction of demand and supply
8. In the stock market, psychology a) investors forget the past b) history repeats itself
c) more faith in future prediction d) both (a) and (b)
9. Dow theory was developed to explain a) New York stock market movement b) the
Dow Jones Industrial average c) Security market price movement d) the buy and
sell strategy
10. The share prices a) move either in declining or increasing trend b) may remain flat
for a period of time c) the movement of the share prices form a straight line d) the
increasing or decreasing move may be Zigzag
11. Technical indicators help a) to find out the present state of the stock market b) to
estimate the growth of the stock market c) to indicate the economic activity d) to
allow the direction of the overall market
12. In a bull market, a bearish signal is given when a) advances decline line slopes down
b) BSE, SENSEX is falling c) Fall in the trade volumes d) A/D line slopes
downward while BSE, SENSEX is rising
13. Oscillators show the share price movement a) over a reference period b) below a
reference point c) through a reference point d) both (b) and (c)
14. The Chartist believes that charts a) spot the current trend for buying and selling b)
indicates the future action to be taken c) shows the past historic movement d) all of
the above
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15. The goal of fundamental analysis is to find securities a) whose intrinsic values
exceeds market price b) with a positive present value of growth opportunities c)
with high market capitalization rates d) all of the above
16. Fundamental analysis is good for a) long-term investment c) short-term investment
c) systematic investment d) unsystematic investment
17. Dow theory is originated by a) Charles Dow b) Harry Markowitz b) William
Sharpe d) Benjamin Graham
18. Relative strength analysis is proposed by a) Robert A Levy b) Harry Markowitz b)
William Sharpe d) Benjamin Graham
19. To forecast future prices, the fundamental analyst uses data of: a) micro-environment
b) macro-environment c) political environment d) natural environment
20. The process of looking at a business at the basic or fundamental financial level.
a) Technical analysis b) fundamental analysis c) Political analysis d)
economic analysis
SECTION B
1. Explain the concept of fundamental analysis.
2. What do you mean by economic forecasting?
3. What are the objectives of security analysis?
4. What are the types of security analysis?
5. What are the objectives of fundamental analysis?
6. Explain the strengths of fundamental analysis.
7. Explain the types of economic forecasting.
8. What are the major components of company analysis?
9. What are the problems of industry analysis?
10. What are the influencing factors of industry analysis?
SECTION C
1. Explain the concept of fundamental analysis with its strength and weaknesses.
2. What is company analysis? What are the company forecasting methods?
3. Discuss the framework of fundamental analysis.
4. Explain industry analysis.
5. Explain the role of SWOT analysis.
6. Discuss the factors influencing industry analysis.
7. Discuss the factors affecting economic forecasting.
8. Explain the characteristics of Industry analysis.
9. Discuss the problems of industry analysis.
10. Explain the need for industry analysis.
UNIT III – Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9. 10 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
c d a c d b d b b d d d c d a a a a a b
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UNIT IV
SECTION A
1. Grandfather of technical analysis
a) Harry Markowitz b) William Sharpe c) Charles Dow d) Benjamin Graham
2. The Elliot Wave Theory
a) is a recent variation of the Dow theory b) suggests that stock prices can be described
by a set of wave patterns c) is similar to the Kondratieff Wave theory d) All of the
above
3. The efficient market hypothesis:
a) implies that security prices properly reflect information available to investors b) has
little empirical validity c) implies that active traders will find it difficult to put perform
a buy-and-hold strategy d) both (a) and (c) above
4. Tests of market efficiency have focuses on: a) the mean-variance efficiency of the
selected market proxy b) strategies that would have provided superior risk-adjusted
return c) Results of actual investment of professional managers d) both (a) and (b)
5. Which form of market efficiency states that current prices fully reflect the historical
sequence of prices? a) Weak b) Semi-strong c) Strong d) None of these
6. Which form of market efficiency states that current prices fully reflect the publicly
available information? a) Weak b) Semi-strong c) Strong d) None of these
7. Which form of market efficiency states that current prices fully reflect all information,
both private and public? a) weak b) semi-strong c) strong d) none of these
8. Markets would be inefficient if rational investors’
a) existed b) did exist c) like to take more d) did not like to take risk more
9. Markets would be inefficient if rational investors’ existed and actions if arbitragers were
a) limited b) unlimited c) risk more d) no risk
10. The semi-strong form of the Efficient Market Hypothesis requires that:
a) current stock prices reflect all security market information b) stock prices reflect all
information from public and private sources c) stock prices reflect all public
information, as well as security market information d) stock market reflect all price and
volume histories and other phenomena observable from the activities of the market on
which the security trades
11. Which of the following most relevant to random walk theory?
a) Stock price changes are random but predictable b) stock prices respond slowly to
both new and old information c) Future price changes are uncorrelated with past price
changes d) past information is useful in predicting future prices
12. Random walk theory occurs when:
a) Stock price changes are random but predictable b) stock prices respond slowly to
both new and old information c) Future price changes are uncorrelated with past price
changes d) past information is useful in predicting future prices
13. Random walk model is also known as
a) Weak form EMH b) Semi-strong form EMH c) Strong form EMH d) None of these
14. Weak form EMH is also known as
a) Random Walk model b) Sharpe model c) Markowitz theory modem d) MM Model
15. Which of the following statement defines the efficient market?
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a) Information is fully reflected on the stock prices b) the stock exchange is fully
automated c) the market is monitored by the regulation authorities d) free entry and
exit of the investors
16. Efficient market was defined:
a) Information is fully reflected on the stock prices b) the stock exchange is fully
automated c) the market is monitored by the regulation authorities d) free entry and
exit of the investors
17. The term ‘efficient market’ was first defined by: a) Fama b) Sharpe c) Dow Jones d)
Markowitz
18. The term ‘efficient market’ was first defined in the year: a) 1965 b) 1975 c) 1985 d)
1995
19. Which of the following defines the efficient market?
a) Free entry and exit of the investors b) the market that is closely watched by the
regulatory agencies c) stock prices fully reflecting all the market information d) when
you find more risk-taker
20. The Dow Theory was developed by W.P.Hamilton and Robert Rhea from the editorial
written by Dow during:
a) 1900 – 1902 b) 1905 – 1907 c) 1910 – 1912 d) 1915 – 1917
SECTION B
1. Write a note on technical analysis.
2. What are the factors to be considered in technical analysis?
3. What are the assumptions of technical analysis?
4. Discuss about the criticisms of technical analysis.
5. What are the views of analyst in relation to technical analysis?
6. Explain efficient market theory.
7. What are the assumptions of efficient market hypothesis?
8. Write a note on Random Walk theory.
9. What are the reasons according to Random Walk theory about price fluctuation in
stock market?
10. What are the limitations of Random Walk theory?
SECTION C
1. Discuss the factors and assumptions of technical analysis.
2. How technical analysis is different from fundamental analysis in investment
management.
3. Explain the assumptions of efficient market.
4. Discuss the implications of Random Walk theory.
5. Explain the forms of Efficient Market Hypothesis.
6. Discuss the reasons for price fluctuations and limitations of Random Walk theory.
7. Explain weak form of efficient market.
8. Explain semi-strong form of efficient market.
9. Explain strong form of efficient market.
10. Distinguish between Random Walk, Technical and Fundamental analysis.
UNIT IV – Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9. 10 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
c d d d a b c a a c C c a a a a a a C a
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UNIT V
SECTION A
1. The concept of beta is most closely associated with
a) Variance analysis b) Unsystematic risk c) correlation coefficient d) Capital Asset
Pricing Model
2. Which of the following would reduce the applicability of Capital Asset Pricing Model?
a) Investors having different time horizons for investments b) the presence of high
transaction costs in the market c) the different expectations of the investors regarding the
risk and return associated with various securities d) All of the above
3. Diversification reduces
a) Interest rate risk b) market risk c) unique risk d) Inflation risk
4. Simple diversification means
a) purchase of more than 15 stocks b) purchase of treasury bills c) purchase of less
than 15 stocks at random d) purchase of large varieties of assets
5. Markowitz approach has its roots in
a) good portfolio management b) proper entry and exit in the market c) Estimation of
stock return d) analyzing the risk and return related to stocks
6. Risk lover’s utility curves have
a) positive slope b) negative slope c) convex to the origin d) negative slope and
convex to the origin
7. A single-index model
a) greatly reduces the number of required calculations, relative to those required by the
Markowitz model b) enhances the understanding of systematic and unsystematic risk c)
greatly increases the number of required calculations, relative to those required by the
Markowitz model d) both (a) and (b)
8. A single-index model uses ___ as a proxy for the systematic risk factor.
a) A market index, such as the S&P 500 b) the current account deficit c) the growth
rate in GNP d) the unemployment rate
9. One “cost” of the single-index model is that it:
a) is virtually impossible to apply b) prohibits specialization of efforts within the
security analysis and industry c) requires forecasts of the money supply d) allows for
only two kinds of risk – macro risk and micro risk
10. Markowitz theory is called __________ Model.
a) Full co-variance b) correlation c) cause and effect d) index
11. Negative correlation between two securities helps in finding-out
a) reducing risk b) increasing risk c) zero risk d) no risk
12. Sharpe’s model is known as
a) Index model b) Beta model c) MM model d) Cause and effect model
13. The corner portfolio provides an analysis of
a) risk b) return c) stock market d) risk and return
14. The corner portfolio provides an analysis of _________ and return.
a) risk b) return c) stock market d) risk and return
15. The corner portfolio provides an analysis of risk and return.
a) risk b) return c) stock market d) risk and return
16. This theory relates to diversification of investment.
a) Markowitz theory b) Bea theory c) Dow theory d) Efficient market theory
17. Diversification will not help reduce a portfolio’s
a) systematic risk b) specific risk c) political risk d) overall risk
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18. The object of portfolio is to reduce ____ by diversification.
a) Risk b) returns c) uncertainty d) percentage
19. The risks which can be eliminated or minimized through diversification is termed as:
a) Financial risk b) Operating risk c) Diversifiable risk d) non-diversifiable risk
20. Beta is a measure of
a) non-diversifiable risk b) diversifiable risk c) political risk d) natural risk
SECTION B
1. What is portfolio analysis?
2. Explain portfolio risk and return.
3. Explain expected return on portfolio.
4. What are the types of portfolio theory?
5. What are the assumptions of Markowitz Model?
6. What about the assumptions of Sharpe Model?
7. Write a note on Beta concept on risk.
8. What is Risk-free return and Market Risk Premium?
9. Explain in brief about beta and market portfolio.
10. Explain the use of Single Index Model.
SECTION C
1. Explain the concept of Portfolio risk and return.
2. Explain the various types of portfolio theory.
3. Explain Markowitz Portfolio theory.
4. Discuss Markowitz theory of portfolio in detail.
5. Explain Sharpe Index portfolio theory in detail.
6. Explain limitations of Capital Assets Pricing Model.
7. Explain the assumptions of Capital assets of pricing model.
8. Explain the terminologies of CAPM.
9. Explain Efficient Frontier theory.
10. Explain any five assumptions and limitations of CAPM.
UNIT V – Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9. 10 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
d d c d c d a d a a a a d a b a a a c a
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