ABBSOFT COMPUTERS

FINANCIAL ACCOUNTING

PART (A)- 1 MARK
  1. The success of business depends on the factor.
  2. Land
  3. Labor and capital
  4. Management
  5. All of the above

Ans. (d)

  1. ______States that “anticipate no profits but provide for all possible losses”.
  2. The Realization concept
  3. Concept of prudence
  4. Both a & b
  5. The Accrual concept

Ans. (b)

  1. Luca Fra Pacioli, ______mathematician.
  2. An Italian
  3. An Indian
  4. An American
  5. None of the above

Ans. (c)

  1. Voucher can be of
  2. Two types
  3. Three types
  4. Four types
  5. Six types

Ans. (b)

  1. There are ______elements of profit and loss Account.
  2. Two
  3. Three
  4. Four
  5. Five

Ans.(a)

  1. The term Credit is derived from
  2. French word
  3. Greek word
  4. Latin word
  5. None of the above

Ans. (c)

  1. ______is the residual interest of owners in assets over liabilities.
  2. Expenses
  3. Income
  4. Equity
  5. None of the above

Ans.(d)

  1. ______records goods returned to the supplier (s).
  2. Salas day book
  3. Purchase day book
  4. Returns Inward book
  5. Return outward book

Ans.(d)

  1. ______records credit sale of traded goods.
  2. Purchase day book
  3. Sales day book
  4. Cash book
  5. None of the above

Ans.(b)

  1. ______of the cash book is not balanced
  2. Discount column
  3. Bank
  4. Cash
  5. All of the above

Ans.(a)

  1. There are ______types of primary books.
  2. Two
  3. Four
  4. Six
  5. Eight

Ans.(a)

  1. The suffix “c/d” denotes
  2. Carried down
  3. Count down
  4. Credit or debit
  5. None of the above

Ans.(a)

  1. Which of the following is a book of secondary entries/
  2. Posting
  3. Ledger
  4. Account
  5. None of the above

Ans.(b)

  1. The account maintained by the bank for it customer is a
  2. Pay-in-slip
  3. Pass book
  4. Mirror – version
  5. None of the above

Ans.(b)

  1. The bank reconciliation statement is
  2. Not a part of books of accounts
  3. A part of books of accounts
  4. A part and parcel of books of accounts
  5. Both b & c

Ans.(a)

  1. ______gives the details of transactions between bank and the customer.
  2. Reconciliation statement
  3. Bank statement
  4. Pass book
  5. Cash book

Ans.(a)

  1. ______is not a part of books of account.
  2. Trial balance
  3. P & L A/c
  4. Trading A/c
  5. Balance sheet

Ans.(a)

  1. Trading account shows
  2. Gross profit
  3. Net profit
  4. Notional profit
  5. Both a & b

Ans.(a)

  1. Omission of recording a transaction in the primary book is called
  2. Error of principle
  3. Error of omission
  4. Both a & b
  5. Error of commission

Ans.(b)

  1. ______shows the position of Assets and Liabilities of a business entity as on a particular date.
  2. P & L A/c
  3. P & L appropriation A/c
  4. Balance sheet
  5. Suspense Account

Ans.(c)

  1. In India Corporate entities registered as per
  2. Companies Act 1948
  3. Companies Act 1956
  4. Banking Regulation Act 1947
  5. None of the above

Ans.(b)

  1. Reserve is the part of
  2. Profit
  3. Dividend
  4. Bonus
  5. All of the above

Ans.(a)

  1. Minute books are maintained as per
  2. Sec 143
  3. Sec 157
  4. Sec 193
  5. Sec 307

Ans.(c)

  1. The abridged statements shall be audited and approved by the
  2. Board of Directors
  3. Accountant
  4. Finance Manager
  5. All of the above

Ans.(a)

  1. Historical cost of inventories may be determined by using
  2. FIFO
  3. LIFO
  4. Both a & b
  5. Variable Costing Method

Ans.(c)

  1. Variable costing is also called
  2. Direct costing
  3. Absorption costing
  4. Both a & b
  5. None of the above

Ans.(b)

  1. ______have a residual interest in corporate profits.
  2. Debenture Capital
  3. Preference Share Capital
  4. Equity Share Capital
  5. Both a & b

Ans.(c)

  1. Statutory books are required to be maintained by a Companies Act.
  2. 1932
  3. 1948
  4. 1949
  5. None of the above

Ans.(d)

  1. Intangible assets
  2. Have physical existence
  3. Have no physical existence
  4. Which can be seen
  5. None of the above

Ans.(b)

  1. The term ‘depreciable assets’ refers to:
  2. Tangible assets
  3. Tangible fixed assets
  4. Intangible assets
  5. None of the above

Ans.(b)

  1. Prevision for taxation is shown under the head ______in the Balance Sheet.
  2. P & L
  3. Reserves
  4. Provision
  5. All of the above

Ans.(a)

  1. All dividends must be paid within ______days of its declaration.
  2. 37
  3. 42
  4. 48
  5. 52

Ans.(a)

  1. MODVAT was introduced by incorporating Rules 57A to 57J in the Central Excise Rules. _____
  2. 1932
  3. 1944
  4. 1952
  5. None of the above

Ans.(d)

  1. MODVAT was introduced in the year
  2. 1980
  3. 1989
  4. 1992
  5. None of the above

Ans.(d)

  1. Which of the following is distribution of profits to shareholders?
  2. Amortization
  3. Effective Capital
  4. Dividend
  5. Provisions

Ans.(c)

  1. Capital required to maintain routine operations is called
  2. Fixed Capital
  3. Working Capital
  4. Fixed assets
  5. All of the above

Ans.(b)

  1. Short term obligations which have to be a met within the next twelve months is called
  2. Current Assets
  3. Working capital
  4. Secured loans
  5. Current liabilities

Ans.(d)

  1. ______denotes the loss in value on an asset due to wear and tear.
  2. Provision of taxation
  3. Dividend
  4. Depreciation
  5. None of the above

Ans.(c)

  1. Managerial remuneration is payable to managerial personnel within the overall ceiling prescribed in section of the Companies Act, _____.
  2. 1956
  3. 1959
  4. 1947
  5. 1955

ans.(a)

  1. The Income Tax Act ______
  2. 1958
  3. 1968
  4. 1972
  5. 1961

Ans.(d)

  1. Expand MAT
  2. Modified Annual Tax
  3. Minimum Alternative Tax
  4. Maximum Annual Tax
  5. Maximum Alternative Tax

Ans.(a)

  1. An Annual Report comprises
  2. Director’s Report
  3. Auditor’s Report
  4. Annual Account
  5. All of the above

Ans.(d)

  1. Loans obtained against hypothecation of an asset is called
  2. Unsecured Loan
  3. Capital
  4. Secured Loan
  5. All of the above

Ans.(c)

  1. ICAI has issued Accounting Standard- 6 (AS-6) on:
  2. Material charges
  3. Dividend
  4. Depreciation Accounting
  5. All of the above

Ans.(c)

  1. It is a part of total equity of a company. The holders of these shares enjoy certain privilege is called
  2. Equity Share capital
  3. Preference Share capital
  4. Capital Structure
  5. Leverage

Ans.(a)

  1. ‘It’ is an artificial account which appear in the Trial Balance to account for undetected errors. Here ‘It’ stands for:
  2. Fixed A/c
  3. Reserve A/c
  4. Suspense A/c
  5. None of the above

Ans.(c)

  1. Which of the following is arrived at by deducting the direct cost of goods sold from sales proceeds?
  2. Net profit
  3. Gross profit
  4. Balance Sheet profit
  5. All of the above

Ans.(b)

  1. Which of the following is a document supporting cheques deposited into the bank?
  2. Bank statement
  3. Pass book
  4. Cash book
  5. Pay-in-slip

Ans.(d)

  1. Folio means the page of
  2. A Journal
  3. A Ledger
  4. Both a & b
  5. None of the above

Ans.(b)

  1. Furniture Account is
  2. Real A/c
  3. Nominal A/c
  4. Personal A/c
  5. Representative Personal A/c

Ans.(a)

PART (B)- 2 MARKS
  1. A credit sale of Rs.500 to Gopal has been wrongly passed through the purchase book. The rectification entry will be

a. Gopal’s A/c Dr. 1,000

To purchase A/c500

To sales A/c500

b. Purchase A/c Dr. 500

To sales A/c500

c. Gopal’s A/c Dr. 1,000

To purchase A/c 1,000

  1. None of the above

Ans.(b)

.

  1. ‘It’ is a control account maintained in the general ledger which records transactions of individual customers accounts in a summarized manner. Here ‘It’ stands for
  2. General Reserve A/c
  3. Sundry Creditors A/c
  4. Sundry Debtors A/c
  5. Both b & c

Ans.(c)

  1. Subsidiary Ledger is classified into
  2. Main Ledger and Secondary Books
  3. General Ledger: Debtors Ledger, Creditors Ledger
  4. Both a & b
  5. None of the above

Ans.(b)

  1. Pass the Journal Entry for: sold goods on credit Rs.1,10,000

a. Sales A/cDr. 1,10,000

To Debtors A/c 1,10,000

b. Debtors A/cDr. 1,10,000

To Sales A/c1,10,000

c. Goods A/cDr. 1,10,000

To Sales A/c1,10,000

d. None of the above

Ans.(b)

  1. Purchased goods worth Rs.1,00,000 paying Rs.15,000 cash and balance payable after three months. The elements included are:
  2. Cash and Creditor
  3. Purchase and Creditor
  4. Purchase, cash and Creditor
  5. Goods and cash

Ans.(c)

6. A ______Increase in liability, while ______increase in liability.

  1. Debit, Debit
  2. Credit, Credit
  3. Debit, Credit
  4. Credit, Debit

Ans. (b)

7. Return inward = ______, return outward = ______.

  1. Sales return, purchase return
  2. Purchase return, sales return
  3. Purchase return, purchase book
  4. None of above.

Ans. (a)

8. The term petty is derived from ______word “______” which means small.

  1. French, petti
  2. German, petty
  3. Ital, petit
  4. French, petit

Ans. (d)

9. 1. The compensating errors are most difficult to find out.

2. trail balance help in locating errors.

  1. 1-true, 2-false
  2. 1-true, 2- true
  3. 1-false, 2-false
  4. 1-false, 2- false.

Ans. (b)

10. ______is the person who draws the bills of exchange & ______is the person to whom the payment is to be made.

  1. drawer, drawee
  2. drawee, payee
  3. payee, drawee
  4. drawer, payee.

Ans. (d)

11. 1. Expenses and Losses = Debit

2. Decrease in assets and increase in Liabilities (also equity) = Credit

  1. 1-True; 2-True
  2. 1-False; 2-False
  3. 1-True; 2-False
  4. 1-False; 2-True

Ans .(a)

12. 1. The schedules to the Balance Sheet and Profit & Loss A/c contain as much details as

Possible.

2. Finance charges include lease rentals, bank commission, and bank charges. Etc.

  1. 1-True; 2-False
  2. 1-False; 2-False
  3. 1-True; 2-True
  4. 1-False; 2-True

Ans.(c)

13. 1. Double entry accounting is not followed while recording transactions.

2. The books of accounts are maintained on accrual basis.

a. 1-True; 2-True

b. 1-False; 2-False

c. 1-True; 2-False

d. 1-False; 2-True

Ans. (d)

  1. Salary of Rs.200 paid to the Cashier, gopal has been debited to his personal A/c. The rectification entry will be:

a. Salary A/cDr.200

To Gopal’s A/c200

b. Gopal’s A/cDr.200

To Salary A/c200

c. Cash A/cDr.200

To Salary A/c200

d. None of the above

Ans. (a)

  1. Journal is used as the book of ______entry which cannot be recorded in ______.
  2. secondary, jounal
  3. primary, cash book
  4. entries, sales book
  5. primary, cash book

Ans. (d)

  1. (I) Stock refers to the unsold goods lying in the business on a certain date.

(II) Opening & closing stock accounts have to be regarded as assets account

Which of the above statement are not correct.

  1. Only I
  2. Only II
  3. Neither I & II
  4. Both I & II
  1. In ______transaction personal account may or may not be involved while in ______

Transaction personal account is definitely involved.

a. General, journal

  1. Cash, sales
  2. Credit, purchase
  3. Cash, credit

Ans.(d)

18.The ______of an enterprise consists of all promissory motes given by customer while ______consist of all promissory notes accepted by the business in restpect of amounts owing to its suppliers.

  1. B/E, B/R
  2. B/R,B/P
  3. A/R,B/E
  4. B/P,B/R

Ans. (b)

19.Match the following

A.

1.It is the process of transferring debits & credits from the journal & other books of original entry to their accounts in the ledger

2. it is process of ascertaining that a particular account has received more benefits than it has received on particular date.

B.

1.Balancing

2. Posting

  1. 1-2,2-1
  2. 1-1,2-2
  3. neither of above
  4. only 1-2.

Ans.(b)

20______method of depreciation is the most simple method of depreciation. To compute depreciation by ______method initial cost & estimated life need to considered.

  1. Straight line , reducing balancing
  2. Straight line, written down value
  3. Reducing balancing, Straight line
  4. Straight line, Straight line

Ans. (d)

PART (C)- 4 MARKS

ABC Ltd., maintains a Current Account with the S.B.I. Bank 31st March 2004, the bank column of its cash allowed a debit balance of Rs.1, 54,300. However, the Bank statement showed a different balance as on that date.

Reasons:

Cheques deposited but not yet the bank Rs.75, 450

Cheques issued but not yet presented Rs.80,760 Bank charges not yet recorded in the cash book Rs.1,135

Cheque received by the bank directly Rs.1,35,200 Insurance premium paid by the bank as per standing instructions not yet intimated Rs.15,400

By preparing reconciliation statement answer Q.No. 61-65.

  1. What is the total amount to be deducted from Bank balances as per the Cash book?
  2. Rs.1, 35,200
  3. Rs.2, 15,960
  4. Rs.91,985
  5. None of the above

Ans.(c)

  1. What is the total amount to be added to Bank Balance as per the Cash book?
  2. Rs.1, 80,760
  3. Rs.1, 90,850
  4. Rs.2, 15,960
  5. None of the above

Ans.(c)

  1. What is the balance as per the Bank Statement?
  2. Rs.1, 54,300
  3. Rs.1, 35,200
  4. Rs.3, 70,000
  5. None of the above

Ans.(d)

4.What is the total balance after adding the amount to be added to the Bank balance as per the Cashbook but before deduction?

  1. Rs.2, 15,960
  2. Rs.3, 70,260
  3. Rs.4, 15,150
  4. None of the above

Ans.

Q.no: 70-75

TRIAL BALANCE

as on 31st December 2002

Particulars / Dr. Rs. / Cr. Rs.
R. Rajan’s Capital
R. Rajan’s Drawings
Purchase and Sales
Sales and Purchase Return
Stock (1-1-2002)
Wages
Building
Freight and Carriage
Trade Expenses
Advertisement
Interest
Taxes and Insurance
Debtors and Creditors
Bills Receivable and Bills Payable
Cash at Bank
Cash in hand
Salaries / 7,600
89,000
89,00
12,000
8,000
2,20,000
20,000
2,000
2,400
1,300
65,000
15,000
12,000
1,900
8,000

4,67,000 / 2,90,000
1,50,000
4,500
3,500
12,000
7,000
4,67,000

Adjustments:

  1. Stock on 31st December, 2002 was valued at Rs.15,000.
  2. Insurance was prepaid to the extent of Rs.400
  3. Outstanding liabilities were: Salaries Rs.2,000, Taxes Rs.1,300.
  4. Depreciate Building at 2% p.a.

5. The gross profit is

  1. 35,000
  2. 36,700
  3. 37,700
  4. 38,700

Ans. (c)

Q 6. The net profit is

  1. 20,000
  2. 20,200
  3. 21,000
  4. 21,200

Ans.(b)

Q 7. The balance for tax and insurance posted in P&L account is

  1. 2,000
  2. 2,200
  3. 2,500
  4. 3,000

Ans.(b)

Q 8. The total amount in balance sheet of assets side is

  1. 3,50,900
  2. 3,34,900
  3. 3,54,900
  4. 3,24,900

Ans.(d)

Q 9. The capital amount to be posted in liability side is

  1. 3,02,600
  2. 3,06,200
  3. 3,03,000
  4. 3,10,200

Ans.(a)

10.Match the following:

A

  1. Non-cash resources & obligations change in time periods other than those in which money is received or paid.
  2. It is based on the concept that to find out the profitability, the expenses incurred to generate the revenue are to be matched against that revenue.
  3. Assets are always recorded at acquisition cost and that cost becomes the basis for all future accounting for the asset.
  4. This concept tells that to recognize revenue it has to be ‘realized’.

B.

  1. Realization concept
  2. Accrual concept
  3. Matching concept
  4. Cost concept
  1. 1-2, 2-4, 3-3, 4-1
  2. 1-2, 2-3, 3-4, 4-1.
  3. 1-3, 2-4, 3-3, 4-2
  4. 1-1, 2-3, 3-2, 4-4

Ans. (b)

11.Match the following:

A.1. Manipal academy of higher education.

2. Building account

3. Goodwill account

4. Salary account

B1. Nominal account

2. Tangible assets account

3. Intangible assets account

4. Personal account

  1. 1-2, 2-4, 3-3, 4-1
  2. 1-1, 2-3, 3-4, 4-2.
  3. 1-4, 2-2, 3-3, 4-1
  4. 1-2, 2-4, 3-1, 4-4.

Ans. (c)

12.Match the following:

A

  1. These assets are mere debit balances, i.e. expenses or loses carried forwarding one year to another.
  2. These assets are either in the form of cash or quickly converted into cash.
  3. These fixed assets are exhausted or lost through the use.
  4. These are non-physical assets.

B

  1. wasting assets
  2. intangible assets
  3. liquid assets
  4. fictitious assets.
  1. 1-1,2-3,3-4,4-1
  2. 1-3,3-4,3-2,4-1
  3. 1-4,2-3,3-1,4-2.
  4. 1-4,2-3,3-2,4-1

Ans. (c)

13.Which of the following statement is correct:

  1. accounting machines are used only for journalizing & posting.
  2. www provides internet technology to navigate the vast resources available in the market.
  3. AS-9 of ICAI deals with fixed assets.
  4. AS-10 of ICAI deals with depreciation accounting

a.1,2,3

b. 2,3

c. only 2

d. 3,4

Ans.(c)

  1. On 1st March , 2008, Ram drew a 3 months’ bill on Rahim for Rs. 500, which was duly accepted. Ram discounted the bill with his banker at 8% per annum. The bill was duly honored on the due date. Which of the following entries will be made in the books of Rahim:

1. Ram account Dr.500

To B/P account500

2.B/R account Dr.500

To Rahim Account500

3.B/P account Dr.500

To Cash A/c500

4.cash account Dr.490

To B/R account490

  1. 1,3
  2. 2,3
  3. 1,4
  4. 2,4

Ans. (a)

15.what will be the total of assets side according to the accounting equation on the basis of the following transactions.

  1. Ramesh started Business with Rs. 2,00,000.
  2. purchased goods on credit from Ashok Rs. 40.000
  3. sold goods for cash Rs. 26000, costing Rs. 22000.
  1. Rs.226000
  2. Rs.240000
  3. Rs.224000
  4. Rs.204000

Ans.(c)

ANSWERS

1. d2. b3. c4. b5. a6. c7. d

8. d9. b 10. a11. a 12. a13.b14. b

15. a16. a17. a 18. a19. b20. c21. b

22. a23. c 24. a25. c26. b27. c28. d

29. b30. b31. a32. a33. d34. d35. c

36. b37. d38. c39. 40. d41. a 42. d

43.c44. c 45. c46. 47. a48. d49. c

50. b51. d52. b53. a54. b55. a56. c

57. b58. b59. c 60. a 61. c 62. c63. d

64. 65. 66. 67. 68. 69. 70. c

71. b72. b73. d74. a

1