Financial Accounting

INTRODUCTION TO ACCOUNTING
1) The following account has a credit balance

A. Plant and Equipment A/c
B. Purchase Returns A/c
C. Purchase A/c
D. None of the above
2) The following account has a credit balance
A. Plant and Equipment A/c
B. Loans A/c
C. Purchase A/c
3) Amount invested by the proprietor in the business should be credited to-
A. Proprietor
B. Capital
C. Drawings
D. Cash
4) An obligation which may or may not materialize is a/an .
A. Loss
B. Asset
C. Contingent Liability
5) Under which of the following heads is claims against a Company not acknowledged as
debts shown?
A. Unsecured Loan
B. Current Liability
C. Current Assets
D. Contingent Liability
6) Contingent Liability would appear
A. On the liability side
B. On the asset side
C. As a note in Balance Sheet
7) If an employee of the business files a legal suit on business, it is considered in the books
as
A. Legal Expense
B. Liability
C. Contingent Asset
D. Contingent Liability
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8) A resource owned by the business with purpose of using it for generating future profit,
is known as
A. Capital
B. Asset
C. Liability
D. Surplus
9) Outward Invoice issued is a source document of
A. Purchase Book
B. Sales Book
C. Return Inward Book
D. Return Outward Book
10) voucher denotes payment of cash.
A. Cash Payment
B. Cash Receipt
C. Bank Payment
D. All of the above
11) A transaction without immediate cash settlement is known as
A. Cash Transaction;
B. Credit Transaction;
C. Deferred Transaction;
D. None of the above.
12) liabilities represent proprietor’s equity, i.e. all those amounts which are entitled
to the proprietor
A. External;
B. Debenture;
C. Internal;
13) Internal Liability represents.
A. Proprietor’s Equity
B. Loans from Banks
C. Debtors
14) All credit sale of goods are recorded in
A. Cash Book
B. Purchase Book
C. Sales Day Book
D. Bills Receivable Book
15) If any transaction is not recorded in the primary books the same is recorded in
A. Journal Proper
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B. Sales Day Book
C. Cash Book
16) Which of the following is not a Qualitative characteristic of Financial Statement?
A. Cost Principle
B. Understandability
C. Relevance
D. Reliability
17) Discount given in the Sales - Invoice itself is
A. Cash discount
B. Trade discount
C. Rebate
D. Allowance
18) Which of the following book is both a journal and a ledger?
A. Cash Book
B. Sales Day Book
C. Bills Receivable Book
D. Journal Proper
19) Interest received in advance account is a
A. Nominal Account
B. Real Account
C. Artificial Personal Account
D. Representative Personal Account
20) Which of the following is a resource owned by the business with the purpose of using it
for generating future profits?
A. Loan from Bank
B. Owner's Capital
C. Trade Mark
D. All of the above
21) Which of the following is a function of journal:
A. Analytical Function
B. Recording Function
C. Historical Function
D. All of the above
22) Chandu & Co.'s Account is a
A. Real Account
B. Nominal Account
C. Representative Personal Account
D. Artificial Personal Accounts
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23) Accounts receivable normally has balance.
A. Debit.
B. Credit.
C. Unfavorable.
24) Expense Account will always have
A. Debit balance
B. Credit balance
C. Nil
25) All of the following are functions of Accounting except
A. Decision making
B. Measurement
C. Forecasting
D. Ledger posting
26) Which of the following purpose is served from the preparation of Trial Balance?
A. To check the arithmetical accuracy of the recorded transactions
B. To ascertain the balance of any ledger account
C. To facilitate the preparation of final accounts promptly
D. All of the above.
27) Which of the following is not a feature of Trial Balance
A. It is a list of debit and credit balances which are extracted from various
ledger accounts;
B. It does not prove arithmetical accuracy which can be determined by audit;
C. It is not an account. It is only a statement of account;
D. All the transactions are primarily recorded in this book; hence it is the primary
book of entry.
28) The accountant of the firm M/s ABC is unable to tally the following trial balance.
S. No. Account heads Debit (₹) Credit (₹)
1. Sales 15,000
2. Purchases 10,000
3. Miscellaneous expenses 2,500
4. Salaries 2,500
Total 12,500 17,500
The above difference in trial balance is due to
A. Wrong placing of sales account
B. Wrong placing of salaries account
C. Wrong placing of miscellaneous expenses account
D. Wrong placing of all accounts
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29) A suspense account facilitates the preparation of even when the has not
tallied.
A. Ledgers; Trial balance
B. Financial statements; Trial Balance
C. Trial balance; Financial statements
D. Journal; Trial balance
30) All of the following have debit balance except
A. Wages account
B. Debtors accounts
C. Bills payable account
D. Goodwill
31) Outstanding salary account is
A. Real account
B. Nominal account
C. Personal account
32) Purchase of a fixed asset on credit basis is recorded in
A. Cash book
B. Purchases book
C. Journal proper
33) Name the book in which, entries are recorded on the basis of debit notes issued.
A. Sales book
B. Purchase Book
C. Sales Return Book
D. Purchase Return Book
34) Name the book in which, entries are recorded on the basis of credit notes issued.
A. Sales Book
B. Purchase Book
C. Sales Return Book
D. Purchase Return Book
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ACCOUNTING PRINCIPLES, CONCEPTS AND
CONVENTIONS
1. The Full form of GAAP is

A. Generally Accepted Accounting Principles
B. Generally Accepted Accountancy Principles
C. Globally Accepted Accounting Principles
D. Global Accounting Accepted Principles
2. Fundamental accounting assumption is
A. Materiality
B. Business entity
C. Going concern
D. Dual aspect
3. Which of the following is not a Fundamental Accounting Assumption?
A. Going Concern
B. Consistency
C. Accrual
D. Materiality
4. The business is treated as distinct and separate from its owners on the basis of the
A. Going concern concept
B. Conservatism concept
C. Matching concept
D. Business entity concept
5. Transactions between owner and business are recorded as per
A. Periodicity concept
B. Going concern concept
C. Prudence concept
D. Business Entity concept
6. Capital is shown on the liability side because of:
A. Business Entity Concept.
B. Conservatism Concept.
C. Accrual Concept.
D. Duality Concept.
7. Dual aspect concept in accounting results in the following equation:
A. Capital + Liability = Assets
B. Revenue = Expenses
C. Capital + Profit = Assets
D. Total Assets = Total Liability
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8. At the year end, an amount outstanding for electricity consumed during that year
will be dealt in the Accounts for the year by following the accounting concept of-
A. Realisation
B. Accrual
C. Conservatism
9. Both cash and credit transactions are recorded, on the basis of
A. Accounting Period Concept
B. Going Concern Concept
C. Business Entity Concept
D. Accrual Concept
10. The concept that business is assumed to exist for an indefinite period and is
not established with the objective of closing down is referred to as
A. Money Measurement concept
B. Going Concern concept
C. Full Disclosure concept
D. Dual Aspect concept
11. Payment of ₹ 1,00,000 towards salaries and wages results in:
A. Increase in equity by ₹ 1,00,000.
B. Decrease in equity by ₹ 1,00,000.
C. Decrease in equity by ₹ 1,00,000, if it does not include any advance payment of salaries
and wages.
12. Both total assets and owners’ capital are increased by….
A. Credit Purchase
B. Retained Earning
C. Bank Loan
D. Drawings
13. X Ltd., purchased goods for ₹ 5 lakh and sold 9/10th of the value of goods for ₹ 6
lakh. Net expenses during the year were ₹ 25,000. The company reported its net
profit as ₹ 75,000. Which of the following concept is violated by the company?
A. Realization
B. Conservation
C. Matching
D. Accrual
14. A businessman purchased goods for ₹ 25,00,000 and sold 80% of such goods during the
accounting year ended 31st March, 2020. The market value of the remaining goods was
₹ 4,00,000. He valued the closing stock at cost. He violated the concept of
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A. Money measurement
B. Conservatism
C. Cost
D. Periodicity
15. Payment received from Debtor
A. Decreases the Total Assets
B. Increases the Total Assets
C. Results in no change in the Total Assets
D. Increases the Total Liabilities
16. contains the transactions relating to goods that are returned by us to
our creditors
A. Return Inward;
B. Return Outward;
C. Sales Daybook;
17. The basic principles of concept is that business is assumed to exist for an
indefinite period
A. Going Concern;
B. Business Entity;
C. Money Measurement;
18. The concept that business is assumed to exist for an indefinite period and is
not established with the objective of closing down is referred to as
A. Money Measurement concept
B. Going Concern concept
C. Full Disclosure concept
D. Dual Aspect concept
19. Name the principle involved in the classification of Assets as Fixed and Current-
A. Cost Principle
B. Going Concern Principle
C. Matching Principle
D. Prudence Principle
20. If a concern proposes to discontinue its business from March 2023 and decides to
dispose off all its assets within a period of 4 months, the Balance Sheet as on March
31, 2023 should indicate the assets at their
A. Historical cost
B. Net realizable value
C. Cost less depreciation
D. Cost price or market value, whichever is lower
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21. RPC Ltd. follows the written down value method of depreciating machinery year
after year by applying the principle of
A. Comparability
B. Convenience
C. Consistency
22. Exception to consistency principle is
A. Cost Principle
B. Going Concern Principle
C. Matching Principle
23. When stock is valued at cost in one accounting period and at lower of cost and
Net realizable value in another accounting period
A. Prudence Principle conflicts with Consistency Principle.
B. Matching Principle conflicts with Consistency principle.
C. Consistency Principle conflicts with Accounting Period Assumption.
24. A change in accounting policy is justified
A. To comply with accounting standards
B. To ensure more appropriate presentation of the financial statement of the
enterprise.
C. To comply with the law.
25. Purchases book records:
A. All cash purchases
B. All credit purchases
C. Credit purchases of goods in trade
26. Materiality Principle is an exception to the
A. Consistency principle
B. Full disclosure Principle
C. Accounting Period Assumption
27. The determination of expenses for an accounting period is based on the principle of
A. Objectivity
B. Materiality
C. Matching
D. Entity
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28. Which of the following is not a sub-field of accounting?
A. Management accounting
B. Cost accounting
C. Financial accounting
D. Book-keeping
29. It is essential to standardize the accounting principles and policies in order to ensure
A. Transparency
B. Consistency
C. Comparability
D. All of the above
30. State the case where the going concern concept is applied?
A. When an enterprise was set up for a particular purpose, which has been achieved,
or to be achieved shortly
B. When a receiver or liquidator has been appointed in case of as a company which
is to be liquidated
C. Fixed assets are acquired for use in the business for earning revenues and are
not meant for resale
D. When San enterprise is declared sick
31. A purchased a car for ₹ 5,00,000, making a down payment of ₹ 1,00,000 and signing a
₹ 4,00,000 bill payable due in 60 days. As a result of this transaction
A. Total assets increased by ₹ 5,00,000.
B. Total liabilities increased by ₹ 4,00,000.
C. Total assets increased by ₹ 4,00,000.
D. Total assets increased by ₹ 4,00,000 with corresponding increase in liabilities by
₹ 4,00,000
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CAPITAL AND REVENUE TRANSACTIONS
1. The basic consideration(s) in the distinction between capital and revenue

expenditure is/ are
A. Nature of business
B. Effect on revenue generating capacity
C. Purpose of expenses
D. All of the above
2. The outflow of funds to acquire an asset that will benefit the business for more
than one accounting period is referred to as
A. Miscellaneous Expenditure
B. Revenue Expenditure
C. Capital Expenditure
D. Deferred Revenue Expenditure
3. An amount spent for replacement of worn-out part of machine is
A. Capital Expenditure
B. Revenue Expenditure
C. Deferred Revenue
D. Capital Loss
4. Which of the following is a Revenue Expenditure?
A. Construction of Factory shed.
B. Sales Tax paid in connection with purchase of Office Equipment.
C. Legal Expenses in connection with defending a title to firm’s property.
D. License fees.
5. Wages is classified as
B. Revenue expenditure
C. Both (a) and (b)
6. Wages paid on installation of Machinery is classified as
B. Revenue expenditure
C. Both (a) and (b)
7. A firm of builders spent ₹ 4,00,000 for purchasing a plot of land and erected its
own office over 1/4th of the site. The remaining area was developed for sale to
public. The expenditure incurred for development is:
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A. Capital
B. Revenue
C. Deferred Revenue
8. At the end of the accounting year the capital expenditures are shown in the
A. assets side of the Balance Sheet.
B. liabilities side of the Balance Sheet.
C. debit side of the Profit and Loss A/c.
D. credit side of the Profit and Loss A/c.
9. Which of the following is of capital nature?
A. Commission on purchases
B. Cost of repairs
C. Rent of factory
D. Wages paid for installation of machinery
10. Which of the following is an example of Capital Expenditure?
A. Inventory of raw materials, work-in-progress and finished goods;
B. Insurance premium;
C. Taxes and legal expenses;
11. Which of the following is/are revenue expenditure?
A. Consumable Stores
B. Taxes and legal expenses
C. Rent of factory building
D. All of Above
12. An amount spent in connection with obtaining a License for starting the factory is
A. Revenue Expenditure
B. Capital Expenditure
C. Pre-paid Expenditure
13. Amount spent on increasing the seating capacity in the cinema hall is a
A. Capital expenditure
B. Deferred revenue expenditure
C. Revenue expenditure
14. ₹ 2,500 spent on the overhaul of a machine purchased second-hand is
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15. Depreciation of fixed assets is an example of expenditure.
A. Revenue
B. Deferred revenue
C. Capital
16. A bad debt recovered during the year is a
A. Capital expenditures
B. Revenue expenditures
C. Capital receipt
D. Revenue receipt
17. ₹ 5,000 was spent by Saroj for addition to machinery in order to increase the
production capacity. The amount is-
A. Revenue in nature
B. Deferred revenue in nature
C. Capital in nature
D. Liability in nature
18. Amount spent by a publisher for acquiring copyrights is a
19. Mohan runs a restaurant. He renovates some of the old cabins to increase some
space. The amount of ₹ 15,000 was incurred on renovation. The amount to be charged
to profit and loss account is
A. Nil.
B. ₹ 15,000.
C. ₹ 10,000.
20.Amount received on sale of fixed asset is a
A. Revenue receipt
B. Capital receipt
C. Both (a) and (b)
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BANK RECONCILIATION STATEMENT
1. Bank Reconciliation Statement is prepared by

A. The bank
B. The auditor
C. The Accountholder
D. All of the above
2. Bank Reconciliation Statement is-
A. Ledger Account
B. Part of Cash Book
C. A separate statement
D. A sub-division of Journal
3. Bank Reconciliation Statement is prepared to:
A. rectify the mistakes in pass book.
B. to rectify the mistakes in cash book.
C. to arrive at balance as per bank statement.
D. to find the reasons of differences in balance as per Cash Book and Bank Statement.
4. Bank statements are prepared by
A. Banks
B. Customers
C. Auditors
D. Any of the above
5. Favourable balance in bank statement is-
A. Credit Balance
B. Debit Balance
C. Bank Overdraft
D. Adjusted cash book balance
6. Overdraft balance in bank statement is-
A. Credit Balance
B. Debit Balance
C. Bank Overdraft
D. Adjusted cash book balance
7. Credit balance in the cash book means
A. Overdraft as per passbook
B. Favorable balance as per passbook
C. Both (a) and (b).
8. A Cash deposit made by business appears on the bank statement in Column
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A. Debit
B. Credit
C. Expenses
D. Liability
9. In a Cash Book Debit balance of ₹ 112 brought forward as credit balance of ₹ 121,
while preparing a Bank Reconciliation Statement taking the balance as per Cash Book
as the starting point:
A. ₹ 112 to be added
B. ₹ 121 to be added
C. ₹ 233 to be added
D. ₹ 112 to be subtracted
10. The cash book showed an overdraft of ₹ 1,500, but the pass book made up to the
same date showed that cheques of ₹ 100, ₹ 50 and ₹ 125 respectively had not been
presented for payments; and the cheque of ₹ 400 paid into account had not been
cleared. The balance as per the pass book will be
A. ₹ 1,100
B. ₹ 2,175
C. ₹ 1,625
D. ₹ 1,375
11. The Bank Account of Mukesh was balanced on 31st March, 2024. It showed an
overdraft of ₹ 91,000. It was observed that one cheque amounting ₹ 20,000
deposited but not collected by bank till 31st March. Bank charges of ₹ 500 were
also charged by the bank during March but accounted in the book of Mukesh on April
4, 2024. The bank statement of Mukesh shows balance of-
A. ₹ 70,500
B. ₹ 69,500
C. ₹ 70,000
D. ₹ 50,000
12. Debit balance as per Cash Book of ABC Enterprises as on 31.3.2023 is ₹ 1,500.
Cheques deposited but not cleared amounts to ₹100 and Cheques issued but not
presented of ₹ 150. The bank allowed interest amounting ₹50 and collected dividend
₹ 50 on behalf of ABC Enterprises. Balance as per pass book should be
A. ₹ 1,600
B. ₹ 1,450
C. ₹ 1,850
D. ₹ 1,650
13. When preparing a Bank Reconciliation Statement, if you start with a debit balance
as per the Cash Book, then cheques issued but not presented within the period are
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A. Added
B. Deducted
C. Not required to be adjusted
14. Under bank reconciliation statement, while adjusting the cash book
A. All the errors and omissions in the cashbook are taken into consideration
B. All the errors and omissions in the passbook are taken into consideration
C. Delays in recording in the passbook due to difference in timing are taken
into consideration
D. All of the above
15. A purchase of ₹ 1,870 by cheques has been wrongly posted in the cashbook as ₹ 1,780.
This has the effect of
A. Increasing the bank balance by ₹90
B. Decreasing the bank balance by ₹90
C. Increasing the bank balance by ₹180
D. Decreasing the bank balance by ₹180
16. In the bank reconciliation statement, when balance as per the cashbook is taken as the
starting point, then direct deposits from the customer of ₹ 2,500 in the bank will be-
A. Added
B. Subtracted
C. Ignored
17. Debit balance as per Cash Book of Topsy Enterprise as on 31.3.2024 is ₹ 1,500.
Cheques deposited but not cleared amounts to ₹ 100 and Cheques issued but not
presented of ₹ 150. The bank allowed interest amounting ₹ 50 and collected dividend
₹ 50 on behalf of Topsy Enterprise. After reconciliation, balance as per pass book
should be
A. ₹ 1,600
B. ₹ 1,450
C. ₹ 1,650
D. ₹ 1,850
18. There was difference in the bank column of cash book and passbook by ₹ 2,500. On
scrutiny it was found that interest of ₹ 500 charged directly by the bank was not
entered in the cash book. The same was adjusted in the cashbook before
reconciliation statement. Now, in the bank reconciliation statement, this interest of
₹ 500 is to be-
A. Added to the cash book balance.
B. Subtracted from the cash book balance.
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C. Ignored while preparing bank reconciliation statement.
19. When balance as per cash book (debit balance) as on 31st March is the starting
point, what will be the effect while preparing bank reconciliation statement when
out of the cheques amounting to ₹ 5,000 deposited, cheques aggregating ₹ 1,500
were credited in March and cheques aggregating ₹ 2,000 credited in April and the
rest have not been collected?
A. Subtract ₹ 2,000.
B. Add ₹ 2,000.
C. Subtract ₹ 3,500.
D. Add ₹ 3,500.
20. A cheque returned by bank marked ‘NSF’ means
A. Bank can’t verify your identity
B. Check has been forged
C. Check can’t be cashed being out of date
D. There is not sufficient fund in your account
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BILLS OF EXCHANGE
1. The Accommodation bill is drawn
A. to finance actual purchase or sale of goods.
B. to facilitate trade transmission.
C. when both parties are in need of funds.
2. The person to whom bill is endorsed is known as.
A. Endorsee
B. Drawee
C. Drawer
3. If the date of maturity of a bill is a holiday, then the bill will mature on:
A. Next working day
B. Preceding working day.
C. Holiday itself.
D. Other agreed day.
4. The date of maturity of bill is 10th October, 2009. The Government of India
suddenly declared 10th October, 2009 as the holiday under the Negotiable
Instruments Act, then the bill will mature on –
A. 9th October, 2009
B. 10th October, 2009.
C. 12th October, 2009.
D. 11th October, 2009.
5. Shiva draws a bill on Sanat on 25th October, 2018 for 90 days, the maturity date
of the bill will be
A. 27th January, 2019
B. 26th January, 2019
C. 25th January, 2019
D. 28th January, 2019
6. On 1st January, 2024, Vimal sold goods worth ₹20,000 to Renu and drew a bill on
Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted
the bill with bank on 4th February, 2024 @ 15% per annum. The discounting
charges will be:
A. ₹ 3,000
B. ₹ 750
C. ₹ 500
D. None of the three.
7. Kuntal draws a bill on shyam for ₹ 7,000. Kuntal endorsed it to Ram. Ram endorsed it
to Rahim. The payee of the bill will be:
A. Kuntal
B. Ram
C. Shyam
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D. Rahim
8. If Ram's acceptance which was endorsed by us in favour of Saleem is dishonoured,
then the amount will be debited in our books to
A. Saleem
B. Ram
C. Bills Receivable Account
9. Making payment before due date of the bill is called-
A. Endorsement of bill
B. Renewal of bill
C. Retirement of bill
D. Rediscounting of bill
10. X draws a bill on Y for ₹ 20,000 for 3 months on 01.01.2024. The bill is discounted
with banker at a charge of ₹ 100. At maturity the bill return dishonoured. In the
books of X, for dishonour, the bank account will be credited by
A. ₹ 19,900
B. ₹ 20,000
C. ₹ 20,100
D. ₹ 19,800
11. A draws a bill on B for Rs 30,000. A wants to endorse it to C in settlement of Rs
35,000 at 2% discount with the help of B’s acceptance and balance in cash. How
much cash A will pay to B?
A. ₹ 4,300
B. ₹ 4,000
C. ₹ 4,100
D. ₹ 5,000
12. Bobby sold goods worth ₹ 25,000 to Bonny. Bonny immediately accepted a bill on
1.11.09, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.09.
On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent
and 50 paise is recovered from Bonny’s estate. How much amount of bad debt will
be recorded in the books of Bobby?
A. ₹ 12,500
B. ₹ 9,437
C. ₹ 11,687
D. ₹ 13,650
13. Ram’s acceptance to Dinesh for Rs 8,000 renewed for 3 months on the condition
that Rs 4,000 be paid in cash immediately and the remaining amount will carry
interest @ 12% p.a. The amount of interest will be
A. ₹ 120
B. ₹ 80
C. ₹ 90
D. ₹ 160
14. A drew a bill on B for ₹ 50,000 for 3 months. Proceeds are to be shared equally.
A got the bill discounted at 12% p.a. and remits required proceeds to B. The
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amount of such remittance will be
A. ₹ 24,250
B. ₹ 25,000
C. ₹ 16,167
D. ₹ 32,333
15. Noting charges are paid at the time of of a bill.
A. Retirement
B. Renewal
C. Dishonor
16. A bill of ₹ 12,000 was discounted by A with the banker for ₹ 11,880. At maturity,
the bill returned dishonoured, noting charges ₹ 20. How much amount will the bank
deduct from A’s bank balance at the time of such dishonour?
A. ₹ 12,000
B. ₹ 11,880
C. ₹ 12,020
D. ₹ 11,900
17. Our acceptance to Mr. A for ₹8,000 renewed for 3 months on the condition that
₹2,000 is paid in cash immediately and the bill for remaining balance to carry out
interest at 18% p.a. The amount of the renewed bill of exchange will be
A. ₹ 6,270
B. ₹ 8,270
C. ₹ 8,000
D. None of the three
18. Mohit, the acceptor of the bill has to honour a bill on 31st March 2010. Due to
financial crisis, he is unable to pay the amount of bill of ₹ 20,000. Therefore, he
approaches Rohit on 20th March 2010 for extension of bill for further 3 months.
Rohit agrees to extend the credit period by drawing a new bill for ₹ 21,000
together with interest of ₹ 1,000 in cash. In this case, old bill of ₹ 20,000 will be
considered as
A. Discounted
B. Dishonoured
C. Cancelled
D. Retired
19. A draws a bill on B for ₹ 30,000 for mutual accommodation. A discounted that bill
for ₹ 28,000 from bank and remitted ₹ 14,000 to B. On due date A will send to B-
A. ₹ 14,000
B. ₹ 14,500
C. ₹ 15,000
D. ₹ 15,500
20. On 1st January 2024 Nisha draws a bill for ₹ 5,000 on Disha for 3 months for
mutual accommodation. On the same day, Disha draws a bill for ₹ 6,000 on Nisha
for 4 months. Both the bills were discounted with the bank for ₹ 4,850 and ₹ 5,700
respectively. 50% of the receipt was sent to the other party. First bill was met
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on its due date. On the maturity date of Nisha’s acceptance, Disha will send-
A. ₹ 3,000
B. ₹ 2,850
C. ₹ 2,425
D. ₹ 2,500
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ACCOUNTING FOR CONSIGNMENT
1. A proforma invoice is sent by
A. Consignee to Consignor
B. Consignor to Consignee
C. Debtors to Consignee
D. Debtors to Consignor
2. Del credere commission is allowed to consignee
A. for making cash sales
B. for making credit sales
C. for making extra sales
D. for undertaking risk of bad debts
3. The balance in consignment account shows
A. Amount receivable from consignee
B. Amount payable to consignee
C. Profit/ loss on consignment
D. Closing stock with consignee
4. Which of the following statement is not true:
A. If del-credere commission is allowed, bad debt will not be recorded in the books
of consignor
B. If del-credere commission is allowed, bad debt will be debited in consignment
account
C. Del-credere commission is allowed by consignor to consignee
D. Del-credere commission is generally given to promote credit sales
5. Which of the following commission is allowed by the consignor to the consignee to
encourage the consignee for putting-up hard work in introducing new product in
the market?
A. Del-credere Commission
B. Over-riding Commission
C. Hard work Commission
D. Ordinary Commission
6. The additional commission payable to the consignee for taking over additional
responsibility of collecting money from customers is known as
A. Del-Credere Commission
B. Ordinary Commission
C. Over – riding commission
7. The owner of the consignment stock is
A. Consignor
B. Consignee
C. Debtors
D. None
8. The unsold stock on consignment is valued at–
22
A. Original cost of the goods
B. Original cost + All expenses incurred by both Consigner and Consignee
C. Original cost + Non recurring expenses incurred by Consigner
D. Original cost + Non recurring expenses incurred by both Consigner and Consignee
9. Consignment stock is recorded at
A. Cost Price
B. Net Realisable value
C. Selling Price
D. Lower of (a) and (b)
10. In the books of consigner, the profit of consignment will be transferred to-
A. General Trading A/c
B. General P/L A/c
C. Drawings A/c
11. Goods costing ₹ 4,80,000 were sent on consignment basis. Goods are invoiced at 125%
of the cost price. The invoice price and the loading will be:
A. ₹ 6,00,000 and ₹ 1,00,000.
B. ₹ 5,00,000 and ₹ 1,00,000.
C. ₹ 6,00,000 and ₹ 1,20,000.
D. ₹ 5,00,000 and ₹ 1,20,000.
12. X sent out certain goods to Y of Delhi. 1/10 of the goods were lost in transit.
Invoice value of goods lost ₹ 12,500. Invoice value of goods sent out on consignment
will be:
A. ₹ 120,000
B. ₹ 125,000
C. ₹ 140,000
D. ₹ 1,00,000
13. X of Kolkata sends out goods costing ₹ 3,00,000 to Y of Mumbai at cost + 25%.
Consignor’s expenses ₹ 5,000. 1/10th of the goods were lost in transit. Insurance
claim received ₹ 3,000. The net loss on account of abnormal loss is
A. ₹ 27,500
B. ₹ 25,500
C. ₹ 30,500
D. ₹ 27,000
14. P of Faridabad sent out goods costing ₹ 45,000 to Y of Delhi at cost + 33-1/3 %.
1/10th of goods were lost in transit. 2/3rd of the goods received are sold at 20%
above invoice price. The amount of sale value will be:
A. ₹ 54,000
B. ₹ 43,200
C. ₹ 60,000
D. ₹ 36,000
15. X of Kolkata sends out goods costing ₹ 1,00,000 to consignee Y of Delhi. 3/5th of the
goods were sold by consignee for ₹ 70,000. Commission 2% on sales plus 20% of gross
sales less all commission exceeds cost price. The amount of Commission will be:
23
A. ₹ 2,833
B. ₹ 2,900
C. ₹ 3,000
D. ₹ 2,800
16. Rahim of Kolkata sends out 1,000 boxes to Ram of Delhi costing ₹ 100 each at an
Invoice Price of ₹ 120 each. Goods send out on consignment to be credited in general
trading account will be:
A. ₹ 1,00,000
B. ₹ 1,20,000
C. ₹ 20,000
17. Deepak consigned 100 sets of TVs to Sudeep @ ₹10,000 each. 5 TVs were damaged
in transit due to unavoidable reason whose price was adjusted in the remaining TVs.
The new price of each TV will be
A. ₹ 10,000
B. ₹ 10,200
C. ₹ 15,000
D. ₹ 10,526
18. Abnormal loss on consignment is credited to
A. Profit and Loss account.
B. Consignee’s account.
C. Consignment account.
19. C Ltd. recorded the following information as on March 31, 2010:
Stock as on April 01, 2009 80,000
Purchases 1,60,000
Sales 2,00,000
It is noticed that goods worth ₹ 30,000 were destroyed due to fire. Against this,
the insurance company accepted a claim of ₹ 20,000.
The company sells goods at cost plus 33-1/3 %. The value of closing inventory,
after taking into account the above transactions is,
A. ₹ 10,000
B. ₹ 30,000
C. ₹ 1,00,000
D. ₹ 60,000
20. is unavoidable and should be spread over the entire consignment while valuing
consignment stock.
A. Abnormal loss
B. Normal loss
C. Extra-ordinary loss
21. Sujal consigned goods costing ₹ 2,50,000 to Mridul on 1st January 2010 by incurring
₹ 20,000 on freight. Some goods were lost in transit. For remaining goods Mridul
24
spend ₹ 15,000 to take the delivery including storage charges. During the quarter,
Mridul sold 3/4 of the goods received by him for ₹ 3,00,000 and charged commission
@10% on it to Sujal. At the end of the quarter, Sujal asked the details of goods lost,
sold, expenses commission and balance due to him alongwith the consignment stock
from Mridul. As desired, Mridul sent the periodical detail statement commonly known
as
A. Account statement
B. Account sales
C. Statement of affairs
D. Summary statement
22. X of Kolkata sent out 2,000 boxes costing 100 each with the instruction that sales are
to be made at cost + 45%. X draws a bill on Y for an amount equivalent to 60% of sales
value. The amount of bill will be-
A. ₹ 1,74,000
B. ₹ 2,00,000
C. ₹ 2,90,000
D. ₹ 1,20,000
23. A consignee sold goods costing ₹ 50,000 at a profit of ₹ 10,000. Out of total sales,
30% was credit sale. As per the agreement the consignee will get 5% ordinary
commission, 2% del-credere commission on credit sale and 3% over-riding commission
on amount in excess of cost price. The amount of commission will be
A. ₹ 3,360
B. ₹ 3,660
C. ₹ 4,500
D. ₹ 3,000
24. Expenses incurred by the consignor on sending the goods to the consignee is ₹1,000
for insurance, ₹ 1,500 on freight and ₹500 on packing the goods. While expenses
incurred by the consignee on behalf of the consignment are ₹ 800 on octroi, ₹ 600 as
godown charges and ₹ 1,200 as selling expenses. The amount to be excluded while
calculating consignment stock will be:
A. ₹ 2,600
B. ₹ 600
C. ₹ 1,200
D. ₹ 1,800
25. 1,000 Kg. of Mangoes were consigned to a wholesaler, the cost being ₹ 3 per kg. plus
₹ 400 freight. Loss of 15% of Mangoes is unavoidable. 750 kgs. were sold by the
consignee. The remaining stock of 100 kg. will be valued at-
A. ₹ 300.
B. ₹ 500.
C. ₹ 400.
25
ACCOUNTING FOR JOINT VENTURE
1. The parties to joint venture is called
A. Co-venturers
B. Partners
C. Principal & Agent
D. Friends
2. If any stock is taken by a co-venturer, it will be treated as
A. an income of the joint venture.
B. an expense of the joint venture.
C. to be ignored from joint venture.
D. it will be treated in the personal books of the co-venturer.
3. Capital Accounts of the co-venturers are of the nature of
A. Personal Account
B. Nominal Account
C. Real Account
4. Which of the following is/ are the basic features of a Joint Venture
A. The profit or loss on joint venture is shared between the co-venturers in the
agreed ratio
B. The co-venturers may or may not contribute initial capital
C. The JV is dissolved once the purpose of the business is over
D. All of the above
5. Joint venture account is a
A. Personal account.
B. Real account.
C. Nominal account.
6. Peeru and Simu entered in the business of buy and sale of food grain for a period of
one year and sharing the profit in the ratio of 3:2, this agreement is a
A. Partnership
B. Consignment
C. Joint-venture
D. Lease
7. Memorandum Joint Venture Account is prepared when
A. the separate set of books is maintained for Joint Venture.
B. each Co-venturer keeps records of all transactions.
C. each Co-venturer keeps records of their own transactions only.
D. All of the above cases
8. Memorandum Joint Venture Account is prepared .
A. for determining the amount due to co-venturer
B. for determining the amount due from co-venturer
C. for ascertaining the profit/ loss on venture
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9. If a venturer draws a bill on his co-venturer and if the drawer discounts the
bill with same sets of books maintained, the discounting charges will be borne by
A. The drawer of the bill
B. The drawee of the bill
C. The discounting charges will be recorded in memorandum account
D. The discounting charges will be borne by bank
10. A and B enter into a joint venture sharing profit and losses in the ratio of 3:2. A
purchased goods costing ₹ 2,00,000. B sold 95% goods for ₹ 2,50,000. A is entitled
to get 1% commission on purchase and B is entitled to get 5% commission on sales.
A drew a bill on B for an amount equivalent to 80% of original cost of goods. A got
it discounted at ₹ 1,50,000. What is A's share of profit?
A. ₹ 15,300
B. ₹ 21,300
C. ₹ 18,900
11. A and V enter into a joint venture to sell a consignment of biscuits sharing profits
and losses equally. A provided biscuits from stock ₹ 10,000. He paid expenses
amounting to ₹ 1,000. V incurred further expenses on carriage ₹ 1,000. He receive
cash for sales ₹ 15,000. He also took over goods to the value of ₹ 2,000. The profit
on joint venture will be-
A. ₹ 3,000
B. ₹ 5,000
C. ₹ 6,000
D. ₹ 3,500
12. Ram and Shyam enter into a joint venture. Both of them deposited ₹65,000 and
₹32,500 respectively into a joint venture. Goods were purchased for ₹75,000 and
expenses amounting ₹10,950 were incurred. Goods sold for ₹90,000 and goods
unsold were taken over by Ram at an agreed value of ₹2,700. The profit on joint
venture is:
A. ₹ 17,700
B. ₹ 4,500
C. ₹ 4,050
D. ₹ 6,750
13. A and B enter into a joint venture for purchase and sale of Type-writer. A
purchased Typewriter costing ₹ 1,00,000. Repairing expenses ₹ 10,000, printing
expenses ₹ 10,000. B sold it at 20% margin on selling price. The sales value will be:
A. ₹ 1,25,000
B. ₹ 1,50,000
C. ₹ 1,00,000
D. ₹ 1,40,000
14. A and B enter into a joint venture to underwrite the shares of K Ltd. @ 5%
underwritting commission. K Ltd. make an equity issue of 1,00,000 equity shares of
₹ 10 each. 80% of the issue are subscribed by the party. The profit sharing ratio
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between A and B is 3:2. The balance shares not subscribed by the public, purchased
by A and B in profit sharing ratio. How many shares to be purchased by A?
A. 80,000 shares
B. 72,000 shares
C. 12,000 shares
D. 8,000 shares
15. A and B entered into a Joint Venture. A purchased goods costing ₹ 2,00,000, B sold
4/5th of the same for ₹ 2,50,000. Balance goods were taken over by B at cost less
20%. If same set of books is maintained, find out profit on venture
A. ₹ 82,000
B. ₹ 90,000
C. ₹ 50,000
D. Nil.
16. If unsold goods costing ₹ 20,000 is taken over by Venturer at ₹ 15,000, the Joint
Venture A/c will be credited by:
A. ₹ 20,000
B. ₹ 15,000
C. ₹ 5,000
D. Nil
17. In a joint venture between A and B, A purchased goods costing ₹ 42,500. B sold goods
costing ₹ 40,000 at ₹ 50,000. Balance goods were taken over by A at same gross
profit percentage as in case of sale. The amount of goods taken over by A will be:
A. ₹ 3,125
B. ₹ 2,500
C. ₹ 3,000
18. Memorandum Joint venture account is a
A. Personal account
B. Real account
C. Nominal account
19. Generally, when the size of the venture is , the co-venturers keep separate set
of books of account for the joint venture.
A. Small
B. Medium
C. Large
D. All of the above
20. In a Joint venture between A and B, A, on purchase of goods, spend ₹2,000 on
freight, ₹1,000 as godown rent, and also raised a loan from bank of ₹50,000 at 18%
p.a. repayable after 1 month. B spend ₹ 5,000 as selling expenses and he also raised
a loan from bank of ₹1,50,000 at 18% repayable after 2 months. The total expenses
of Joint venture other than purchases will be
A. ₹ 8,000
B. ₹ 8,250
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C. ₹ 5,250
D. ₹ 13,250
21. Ram in a joint venture with Shyam purchased goods costing ₹ 20,000 and sends to
Shyam for sale incurring ₹1,000 on freight. Shyam took the delivery and paid ₹ 500
as carriage. He sold the goods costing ₹ 18,000 for ₹ 25,000 and kept the remaining
goods at cost price. Sharing equal profits of the venture, amount to be paid by Shyam
to Ram will be:
A. ₹ 25,000
B. ₹ 22,250
C. ₹ 23,750
D. ₹ 24,500
30
ACCOUNTING FOR DEPRECIATION
1. Depreciation is a process of:

A. apportionment
B. valuation
C. allocation
D. appropriation
2. Which of the following asset generally assumed not to depreciate
A. Machinery
B. Land
C. Building
D. Both (b) and (c)
3. Depreciation charges are
A. Cash Expenses
B. Financial Expenses
C. Non-cash Expense
D. Non-operating Expense
4. Under straight line method, depreciation is calculated on
A. Written down value.
B. Scrap value.
C. Original cost.
5. is especially suited to mines, oil wells, quarries, sandpits and similar assets of
a wasting character.
A. Depletion
B. Depreciation
C. Amortization
D. Dilapidation
6. The cost of a Fixed Assets of a business has to be written off over its-
A. Natural Life
B. Accounting Life
C. Physical Life
D. Estimated Economic Life
7. The estimated value of depreciable asset after its useful life is called
A. Actual Value
B. Book Value
C. Disposal/ Residual Value
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D. Current Value
8. Carriage charges paid for a new plant purchased if debited to carriage account
would affect
A. Plant account.
B. Carriage account.
C. Plant and carriage accounts.
9. The expired portion of capital expenditure is shown in the financial statements as
A. As an income.
B. As an expense.
C. As an asset.
D. As a liability.
10. Depreciation starts on a machine from the date:
A. It is purchased
B. It is put to use
C. It is installed
D. Any of the above
11. Sukku Limited purchased a machine on 1st July, 2023 for ₹ 8,90,000 and freight and
transit insurance premium paid ₹ 25,000 and ₹ 15,000 respectively. Installation
expenses were ₹ 40,000 and salvage value after 5 years will be ₹ 50,000. Under
straight line method for the year ended 31st March, 2024 the amount of depreciation
will be
A. ₹ 1,35,750
B. ₹ 1,81,000
C. ₹ 1,84,000
D. ₹ 1,38,000
12. A second-hand car is purchased for ₹10,000, the amount of ₹ 1,000 is spent on its
repairs, ₹ 500 is incurred to get the car registered in owner’s name and ₹ 1,200 is
paid as dealer’s commission. The amount debited to car account will be
A. ₹ 10,000
B. ₹ 10,500
C. ₹ 11,500
D. ₹ 12,700
13. Which of the following is / are the characteristic/s of depreciation
A. It is a charge against profit.
B. It indicates diminution in service potential.
C. It is an estimated loss of the value of an asset. It is not an actual loss.
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14. Provision for depreciation Account is created by debiting to
A. Machinery Account
B. Profit & Loss Account
C. Profit & Loss Appropriation Account
D. None of these
15. Which of the following is not a method of charging depreciation?
A. Sinking Fund Method
B. Sum of years Digit Method
C. Working hours Method
D. Asset's Life-cycle Method
16. Which of the following term is most suitable for writing off Patent?
A. Depletion
B. Amortization
C. Depreciation
D. All of the above
17. Purchase Cost of machinery ₹ 7,20,000; Carriage inwards ₹ 15,000; Transit insurance
₹ 8,000; Installation Charges ₹ 25,000; Workshop Rent ₹25,000; Salvage value ₹
50,000 and estimated working life 8 years. On the basis of straight-line method, the
amount of depreciation for third year will be
A. ₹ 96,000
B. ₹ 89,750
C. ₹ 88,750
D. ₹ 91,875
18. Mr. A purchased a machinery costing ₹ 1,00,000 on 1st October, 2023. Transportation
and installation charges were incurred amounting ₹ 10,000 and ₹ 4,000 respectively.
Market value of the machine was estimated at 1,20,000 on 31st March 2024. While
finalising the annual accounts, A values the machinery at ₹ 1,20,000 in his books. Which
of the following concepts was violated by A?
A. Cost concept
B. Matching concept
C. Realisation concept
D. Periodicity concept.
19. In the books of D Ltd. the machinery account shows a debit balance of ₹ 60,000 as
on April 1, 2023. The machinery was sold on September 30, 2024 for ₹ 30,000. The
company charges depreciation @ 20% p.a. on diminishing balance method. Profit / Loss
on sale of the Machinery will be
A. ₹ 13,200 profit
B. ₹ 13,200 loss
33
C. ₹ 6,800 profit
D. ₹ 6,800 loss
20. An old furniture was purchased for ₹ 10,000; it was repaired for ₹ 100. The
repairs account should be debited by
A. ₹ 10,000
B. ₹ 10,100
C. ₹ 100
D. Nil
34
BAD DEBT AND PROVISIONS
1. Suresh’s Trial balance provides you the following information:

Bad debts ₹10,000
Provision for doubtful debts ₹15,000
Suresh wants to make a provision of ₹ 20,000 at the end of the year. The amount
debited to the Profit & Loss Account is
A. ₹ 45,000
B. ₹ 5,000
C. ₹ 15,000
2. Opening and Closing balance of debtors are ₹ 30,000 & ₹40,000 respectively, Cash
collected from debtors ₹ 2,40,000. Discount allowed is ₹15,000 for prompt payment.
Bad Debts ₹ 10,000. The total goods sold on credit are .
A. ₹ 2,55,000
B. ₹ 2,45,000
C. ₹ 2,95,000
D. ₹ 2,75,000
3. As on 31st March, 2017 debtors and additional bad debts are ₹ 8,00,000 and ₹ 10,000
respectively. If the provision for bad debts is made at 5% on debtors then amount
of such provision will be
A. ₹40,000
B. ₹50,000
C. ₹39,500
D. ₹40,500
4. The debts which are not bad is known as
A. Good debt
B. Bad Debt
C. Doubtful Debt
5. Bad debts Recovered ₹1,000. It will be
A. Credited to Bad debts A/c
B. Credited to debtor’s personal A/c
C. Debited to creditor’s personal A/c
D. Credited to bad debts recovered A/c
6. Provision for bad and doubtful debts is created in anticipation of actual bad debts
on the basis of:
A. Business Entity Concept;
35
B. Conservatism Concept;
C. Accrual Concept;
D. Full Disclosure Concept.
7. Provision for bad debts is
A. Real Account
B. Nominal account
C. Personal account
8. Bad debts Recovered ₹750. It will be
A. Credited to Bad debts A/c
B. Credited to debtor’s personal A/c
C. Debited to creditor’s personal A/c
D. Credited to bad debts recovered A/c
9. Gauri paid ₹ 1,000 towards a debt of ₹ 1,050, which was written off as bad debt in
the previous year. Gauri’s account should be credited with
A. ₹ 1,000
B. ₹ 1,050
C. ₹ 50
10. Sundry debtors of M/s Santosh amounts to ₹ 25,000 and bad debts ₹3,000. M/s
Santosh provides for Doubtful debts @ 2% and for discount @ 1%. The amount of net
debtors to be shown in the Balance Sheet will be
A. ₹ 21,560
B. ₹ 22,000
C. ₹ 21,780
D. ₹ 21,344
11. The determination of the amount of provision for doubtful debts is an accounting-
A. Policy.
B. Estimate.
C. Parameter.
36
RECTIFICATION OF ERRORS
1. Errors are mistakes
A. Intentional.
B. Unintentional.
C. Undetected.
2. It is easy to detect than to .
A. Frauds, Errors
B. Mistakes, Errors
C. Errors, Frauds.
D. Errors, Mistakes.
3. Which of the following errors is not disclosed by a Trial Balance?
A. Errors of Omission
B. Errors of Commission
C. Compensating Errors
D. All of the above
4. Which of the following cannot be detected by Trial Balance?
A. Errors of Omission;
B. Errors of Principal;
C. Errors of Mis posting;
5. Which of the following errors are not revealed by the Trial Balance:
A. Compensating errors
B. Errors of commission
C. Wrong balancing of an account
D. Wrong totalling of an account
6. Rectification of Errors are first entered in –
A. Journal Proper
B. Subsidiary Books
C. Trial Balance
D. Ledger
7. Purchase of a laptop for office use wrongly debited to Purchase Account. It is an
error of
A. Omission
B. Commission
C. Principle
D. Mis-posting
8. A goods of the value ₹ 1,000 was returned by Debtor was taken into stock but no
entry was made in the books. It is -
A. Error of commission
B. Error of omission
C. Error of Principle
37
D. Not an error
9. Salaries paid ₹ 4,500 is shown on credit side of Trial Balance. The debit side of
Trial Balance will be –
A. Short by ₹ 4,500
B. Excess by ₹ 4,500
C. Short by ₹ 9,000
D. Excess by ₹ 9,000
10. If a purchase return of ₹84 has been wrongly posted to the debit of the sales return
account, but had been correctly entered in the suppliers account, the total of the
trial balance would show
A. the credit side to be ₹ 84 more than debit side
B. the debit side to be ₹ 84 more than credit side
C. the credit side to be ₹ 168 more than debit side
D. the debit side to be ₹ 168 more than credit side
11. If a sales return of ₹ 1,500 has been wrongly posted to the credit of the purchase
returns account, but has been correctly entered in the debtors’ account, the total of
the
A. trial balance would show the debit side to be ₹3,000 more than the credit
B. trial balance would show the credit side to be ₹ 3,000 more than the debit
C. the debit side of the trial balance will be ₹1,500 more than the credit side
D. the credit side of the trial balance will be ₹1,500 more than the debit side
12. Which of the following errors will affect the trial balance?
A. Repairs to building wrongly debited to Building A/c
B. Total of Purchase Journal cast short by ₹ 1,000.
C. Freight paid on new machinery debited to Freight A/c
13. Following errors have been rectified at the end of the year:
i. The return inward book was undercast by ₹ 150.
ii. The return outward book was overcast by ₹ 1,000.
iii. A payment of ₹1,500 on account of salaries has been posted twice in the salaries
account although entered correctly in the cashbook.
The above errors if rectified, will give correct trial balance. Before
rectification, balance of suspense account was
A. ₹ 150 (Dr.)
B. ₹ 1,150 (Dr.)
C. ₹ 350 (Cr.)
D. ₹ 1,500 (Cr.)
14. ₹ 1,000 paid as rent to Krishna, the landlord, was debited to Krishna’s personal account.
This error will-
A. Affect the trial balance
B. Not affect the trial balance
C. Affect the suspense account
15. Which of the following error is an error of omission?
38
A. Sale of ₹ 5,000 was written in the purchases journal.
B. Wages paid to Shyam has been debited to his account.
C. The total of the sales journal has not been posted to the sales account.
16. An amount of ₹ 6,000 due from Anshul, which had been written off as a bad debt in
a previous year, was unexpectedly recovered, and had been posted to the personal
account of Anshul. The rectification entry will be
A. Anshul’s A/c Dr. ₹ 6,000, To Suspense A/c ₹6,000.
B. Suspense A/c Dr. ₹ 6,000, To Bad debts recovered A/c ₹ 6,000.
C. Anshul’s A/c Dr. ₹ 6,000, To Bad debts recovered A/c ₹ 6,000.
D. No rectification entry required.
17. After preparing the trial balance the accountant finds that the total of the debit
side is short by ₹ 1,000. This difference will be-
A. Credited to suspense account.
B. Debited to suspense account.
C. Adjusted to any of the debit balance account.
D. Adjusted to any of the credit balance account.
18. A sale of ₹ 100 to A recorded in the Purchase Book would affect:
A. Sales Account
B. Purchases Returns Account
C. Sales Account, Purchases Account & A Account.
19. Goods purchased pass through sales book. Effect of this rectification will be-
A. Increase the gross profit
B. Decrease the gross profit
C. Have no effect on Gross Profit
D. Increase the net profit
20. Bad debt recovered credited to Debtors Account. Effect of this rectification will be-
A. Increase the gross profit
B. Have no effect on Gross Profit
C. Increase the net profit
D. Both (b) and (c)
39
FINAL ACCOUNT OF SOLE TRADES
1. Arrangement of balance sheet in a proper way is known as

A. Marshalling of Balance Sheet
B. Formatting of Balance Sheet
C. Finalization of Balance Sheet
D. Grouping of Balance Sheet
2. When Sales = ₹ 1,80,000, Purchase = ₹ 1,60,000, Opening Stock = ₹ 34,000 and rate
of the Gross Profit is 20% on cost, the Closing Stock would be
A. ₹ 50,000
B. ₹ 44,000
C. ₹ 46,000
3. At the end of the year 2023-24, Prepaid Insurance Premium ₹7,500 appeared in the
Trial Balance, it will be shown
A. only in Profit & Loss Account.
B. only in Balance Sheet.
C. both in Profit & Loss Account and in Balance Sheet.
D. not in Both in Profit & Loss Account and in Balance Sheet.
4. Pre-paid insurance premium should be classified as a:
A. Current asset.
B. Fictitious asset.
C. Non-current asset.
5. Drawings is shown in the Balance Sheet as-
A. As an addition to the Capital Account
B. A deduction from the Capital Account
C. Part of Current Liabilities
D. Part of Current Assets
6. Which of the following relationships is/are false?
A. Net Profit = Gross Profit – Administration and Other expenses
B. Net Profit = Gross Profit + Administration expenses and Other expenses
C. Opening Stock + Purchases – Closing Stock = Cost of Sales
D. Both (b) and (c) above
7. Which of the following is not part of financial statements?
A. Trading and Profit & Loss Account
B. Balance Sheet
C. Fund Flow Statement
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D. Notes to Accounts
8. Which of the following is not part of financial statements?
A. Trading and Profit & Loss Account
B. Balance Sheet
C. Trial balance
D. Cash Flow Statement
9. While finalizing the current year’s profit, the company realized that there was an
error in the valuation of closing stock of the previous year. In the previous year,
closing stock was valued more by ₹ 50,000. As a result
A. Previous year’s profit is overstated and current year’s profit is also overstated
B. Previous year’s profit is understated and current year’s profit is overstated
C. Previous year’s profit is understated and current year’s profit is also understated
D. Previous year’s profit is overstated and current year’s profit is understated
10. What would be the cost of Purchase from the following details– Opening Stock
₹ 4,000
Sales ₹ 45,000
Direct Expenses ₹ 5,000
Indirect Expenses ₹ 6,000
Closing Stock ₹ 2,000
Gross Profit ₹ 5,000
A. ₹ 28,000
B. ₹ 33,000
C. ₹ 32,000
D. ₹ 27,000
11. Following information is given
Amount (₹)
Opening Stock 2,13,000
Purchase 16,55,000
Sales 21,32,000
Carriage Inwards 32,500
Carriage Outwards 38,600
Return Inwards 38,000
If the rate of gross profit is 25% on cost then value of closing stock will be
A. ₹ 2,57,800
B. ₹ 1,94,900
C. ₹ 2,25,300
D. ₹ 3,30,000
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12.
Sales : ₹ 45,000
Opening Stock : ₹ 18,000
Purchases : ₹ 30,000
Cost of Goods Sold : ₹ 27,000
Trading Expenses : ₹ 12,000
Net Profit is-
A. ₹ 6,000
B. ₹ 18,000
C. ₹ 12,000
13. When Sales = ₹ 3,60,000, Purchase = ₹ 3,20,000, Opening Stock = ₹ 68,000 and
rate of the Gross Profit is 20% on cost, the Closing Stock would be
A. ₹ 1,00,000
B. ₹ 44,000
C. ₹ 46,000
14. The beginnings inventory of the current year is overstated by ₹ 5,000 and closing
inventory is overstated by ₹ 12,000. These errors will cause the net income for the
current year by
A. ₹ 17,000 (overstated)
B. ₹ 12,000 (understated)
C. ₹ 7,000 (overstated)
D. ₹ 7,000 (understated)
15. Net realizable value is –
A. Estimated selling price
B. Estimated Cost Price plus Marketing cost
C. Estimated Selling price less cost incurred in order to make sale.
D. Estimated Selling price plus cost incurred in order to make sale.
16. is equal to estimated selling price less the estimated costs of completion and
the estimated costs necessary to make the sale.
A. Net Realizable value
B. Cost of Conversion
C. Cost of Purchase
17. The General Manager is entitled to a commission of 10% on net profit after charging
the commission of Works Manager. The Works Manager is entitled to a commission of
5% on the net profits after charging the commission of General Manager. The profit
42
before charging any commission is ₹ 7,500. The commission of the Work Manager to
the nearest rupee will be:
A. ₹ 321
B. ₹ 333
C. ₹ 337
D. ₹ 326
18. If average inventory is ₹ 1,25,000 and closing inventory is ₹10,000 less than opening
inventory then the value of closing inventory will be
A. ₹ 1,35,000
B. ₹ 1,15,000
C. ₹ 1,30,000
D. ₹ 1,20,000
19. are investments which are held beyond the current period as to sale or
disposal.
A. Non-current Investments
B. Current Investments
C. Current Liabilities
20. Repairs and Maintenance of Delivery Vans is
A. Selling and Distribution Expenses
B. Indirect Expenses
C. Administration Expenses
D. Both (a) & (b)
21. Rent paid on 1st October, 2022 for the year to 30th September, 2023 was ₹ 1,200
and rent paid on 1st October, 2023 for the year to 30th September, 2024 was ₹
1,600. Rent payable, as shown in the profit and loss account for the year ended 31st
December 2023, would be:
A. ₹ 1,200
B. ₹ 1,600
C. ₹ 1,300
D. ₹ 1,500
22. Mohan purchased goods for ₹ 15,00,000 and sold 4/5th of the goods amounting ₹
18,00,000 and paid expenses amounting ₹ 2,70,000 during the year, 2023. He paid ₹
5,000 for an electricity bill of Dec. 2022 and advance salaries amounting ₹ 15,000
was paid for the month of Jan. 2024. He counted net profit as ₹ 3,50,000. The net
profit calculated by him is correct according to
A. Entity concept
B. Periodicity concept
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C. Matching concept
D. Conservatism concept
23. When adjusted purchase is shown on the debit column of the trial balance then
A. Both opening stock and closing stock do not appear in the trial balance
B. Closing stock is shown in the trial balance and not the opening stock
C. Opening stock is shown in the trial balance and not the closing stock
D. Both opening and closing stock appear in the trial balance
24. Income tax paid by the sole-proprietor from business bank account is debited to
A. Income tax account
B. Bank account
C. Capital account
D. Not to be shown in the business books
25. When opening stock is overstated, net income for the accounting period will be
A. Overstated
B. Not be affected
C. Understated
26. The total cost of goods available for sale with a company during the current year
is ₹12,00,000 and the total sales during the period are ₹13,00,000. If the gross
profit margin of the company is 33-1/3% on cost, the closing inventory during the
current year is
A. ₹ 4,00,000
B. ₹ 3,00,000
C. ₹ 2,25,000
D. ₹ 2,60,000
27. On 31st March 2009, Suraj has to pay to M/s Chandra ₹7,000 on account of credit
purchase from the later. He paid ₹1,800 on 30th June 2009 after availing a cash
discount of 10%. On 30th September 2009, he paid ₹ 2,850 after availing 5% cash
discount. On account of final settlement, the amount to be paid by Suraj without any
discount will be
A. ₹ 2,350
B. ₹ 2,000
C. ₹ 2,200
D. ₹ 2,150
28. Mr. A, the owner of M/s Apex Ltd. withdrew some goods from the business for his
personal use. The accountant of the firm recorded this transaction on the basis of
selling price of goods. He justifies his contention on the basis that business and the
proprietor are two different entities as per business entity concept and therefore
44
drawings should be charged at the same price on which the goods are sold to the
outside customers.
However, Mr. A emphasizes that he should be charged with only the cost price of
the goods withdrawn by him. At which price, the drawings should be recorded?
A. Fair value.
B. Selling price.
C. Cost price.
29. Bank overdraft as per trial balance is ₹ 1,60,000. Bank has allowed the customer to
overdrew 80% of the hypothecated value of the stock. Hypothecation of stock has
been done by the bank at 80% of the original closing stock value. The amount of closing
stock is:
A. ₹ 2,00,000.
B. ₹ 2,50,000.
C. ₹ 1,02,400.
D. ₹ 1,28,000.
30. Salary has been paid for 11 months from April 2023 to February, 2024 amounting
₹22,000. The amount of outstanding salary shown in the balance sheet will be-
A. ₹ 1833
B. ₹ 2,000
C. ₹ 1,000
31. Capital introduced by Mr. A on 01.04.2023 ₹ 3,00,000; further capital introduced
during the year was ₹ 50,000 in the mid of the year. Mr. A withdrew ₹ 2,000 per month
and the profit earned during the year was ₹ 20,000. Capital as on 31.03.2024 will be-
A. ₹ 3,94,000
B. ₹ 3,46,000
C. ₹ 2,94,000
32. Atul purchased goods costing ₹ 50,000 at an invoice price, which is 50% above cost.
On invoice price he enjoyed 15% trade discount and ₹ 3,750 cash discount on cash
payment of goods in lump sum at the time of purchase. The purchase price to be
recorded in the books before cash discount will be
A. ₹ 75,000.
B. ₹ 60,000.
C. ₹ 63,750.
D. ₹ 50,000.
33. Mr. Mohan started a cloth business by investing ₹ 50,000, bought merchandise worth
45
₹ 50,000. He sold merchandise for ₹ 60,000. Customers paid him ₹ 50,000 cash and
assured him to pay ₹ 10,000 shortly. The amount of revenue earned by him is
A. ₹ 50,000.
B. ₹ 60,000.
C. ₹ 1,00,000.
D. ₹ 70,000.
34. Ganesh takes a salary ₹ 10,000 per month. He withdrew goods worth ₹ 2,500 for
personal use and got salary ₹ 9,500 in cash. The excess payment of ₹ 2,000 will be
debited to-
A. Sales account.
B. Goods account.
C. Salary account.
D. Salary in advance account.
46
INCOMPLETE RECORDS
1. Accounts generally held under single entry system by-
A. Company
B. Sole Trader
C. Society
D. Government
2. When closing capital is more than opening capital, it denotes-
A. Profit
B. Loss
C. No Profit no loss
D. Profit, if there is no introduction of fresh capital
3. From the following details estimate the capital as on 31.03.2017. Capital as on
01.04.2016 - ₹4,10,000. Drawings ₹40,000, Profit during the year ₹ 50,000
A. ₹ 4,10,000
B. ₹ 4,50,000
C. ₹ 4,20,000
D. ₹ 4,00,000
4. A and B purchased a piece of land for ₹ 30,000 and sold it for ₹60,000 in 2023.
Originally A had contributed ₹ 12,000 and B ₹ 8,000. The profit on venture will be-
A. ₹ 30,000
B. ₹ 20,000
C. ₹ 60,000
D. Nil
5. Opening Debtors, Collection from Debtors and Discount Allowed were ₹ 3,15,000; ₹
18,30,000 and ₹ 35,000 respectively. If the closing debtors were 20% of credit sales
of the period, then closing debtors and credit sales would be
A. ₹ 3,51,667 and ₹ 17,58,333
B. ₹ 3,63,333 and ₹ 18,16,667
C. ₹ 3,87,500 and ₹ 19,37,500
D. ₹ 3,10,000 and ₹ 15,50,000
6. Nidhi started her business with capital of ₹45,000 on 1st January, 2023. Interest on
drawings ₹5,000 and interest on capital ₹2,000 were appearing in the Profit and Loss
A/c for the year ended 31st December, 2023. Nidhi withdrew ₹14,000 during the
year and profit earned during the year amounted to ₹15,000. Her capital on 31st
December, 2023 is-
A. ₹ 67,000
B. ₹ 47,000
C. ₹ 45,000
D. ₹ 43,000
7. Capital introduced in the beginning by Shyam ₹ 3,00,000; further capital introduced
during the year ₹ 2,00,000; Drawing ₹ 1,500 per month and closing capital is ₹
4,50,000. The amount of profit or loss for the year is:
47
A. Loss of ₹ 32,000.
B. Loss of ₹ 50,000.
C. Profit of ₹ 32,000.
D. Information is insufficient for any comment.
8. Opening capital is ascertained by preparing
A. Total Debtors Account
B. Total Creditors Account
C. Cash Account
D. Opening Statement of Affairs
9. Credit purchase can be ascertained by preparing-
A. Debtors Account
B. Creditors Account
C. Any of above
10. Credit Sale can be ascertained by preparing-
A. Debtors Account
B. Creditors Account
C. Any of above
48
NON-PROFIT ORGANISATION
1. The Receipts and Payments Account generally begins with

A. Credit Balance
B. Debit Balance
C. Both Debit and Credit Balance
2. Income and Expenditure Account is a
A. Nominal Account
B. Real Account
C. Personal Account
D. Artificial Personal Account
3. Receipts and Payments account is a
A. Nominal Account
B. Real Account
C. Personal Account
D. Artificial Personal Account
4. Which of the following is/are feature/features of Income and Expenditure
Account?
A. It follows Nominal Account
B. All Capital incomes and expenditures are excluded
C. Profit on sale of asset is credited
D. All of the above
5. Income statement of a Charitable Institution is known as
A. Statement of profit and loss
B. Receipts and Payments Account
C. Income and Expenditure Account
D. Profit and Loss Account
6. is similar to the Profit and loss A/c
A. Income and Expenditure A/c
B. Receipts and Payments A/c
C. Balance Sheet
D. None of the Above
7. Which of the following items is shown in the Income and Expenditure Account?
A. Only items of capital nature
B. Only items of revenue nature which are received during the year
C. Only items of revenue nature pertaining to the period of accounts
D. Both the items of capital and revenue nature
49
8. In case of a Club, the excess of expenditure over income is called as
A. Surplus
B. Deficit
C. Capital Fund
D. Investment in Fixed Assets
9. Scholarship granted to students out of specific funds provided by Government will
be debited to-
A. Income and Expenditure Account
B. Receipts and payments Account
C. Funds granted for Scholarship account
10. Salary debited to Income and Expenditure Account for the year was ₹ 48,000.
Outstanding salary paid in the beginning of the year and the outstanding salary at the
end of the year were ₹ 6,000 and ₹ 7,500 respectively. The amount of Salary to be
shown in Receipts and Payments Account will be:
A. ₹ 48,000
B. ₹ 40,500
C. ₹ 54,000
D. ₹ 46,500
11. Income & Expenditure A/c shows subscriptions ₹10,000; Subscriptions accrued in the
beginning of the year and at the end of the year were ₹1,000 and ₹1,500 respectively.
The figure of subscription received appear in receipts and payments account will be:
A. ₹9,500
B. ₹10,000
C. ₹10,500
D. ₹12,000
12. A Charitable Institution has 250 members with a annual subscription of ₹5,000
each. The subscription received during 2018-19 were ₹11,25,000, which include ₹
65,000 and ₹25,000 for the years of 2017-18 and 2019-20 respectively. Amount
of outstanding subscription for the 2018-19 will be
A. ₹ 90,000
B. ₹ 1,25,000
C. ₹ 2,15,000
D. ₹ 1,90,000
13. During the year ₹ 96,000 was Debited as salary in the Income Expenditure Account.
There was outstanding on Salary Account at the beginning and at the end of the year
were ₹ 12,000 and ₹ 15,000 respectively. The amount of salary paid shown in Receipt
and Payments Account would be-
50
A. ₹ 84,000
B. ₹ 81,000
C. ₹ 93,000
14. In the case of non-profit organization donations received by the organization are
reflected in
A. Income and Expenditure Account
B. Capital Account
C. Receipts and Payments Account
15. Which of the following item does not match with receipts and payments account?
A. It is a summarized cash book
B. Transactions are recorded in it on cash basis
C. It records revenue transactions only
D. It serves the purpose of a real account
16. Receipts and Payments Account records
A. Only revenue nature receipts
B. Only capital nature receipts and payment
C. Only revenue nature receipts and payments
D. Both the revenue and capital nature receipts and payments
17. A profit on the sale of furniture of a club will be taken to:
A. Cash account
B. Receipts and payments account
C. Income and expenditure account
18. The Income and expenditure Account and the Receipts and Payments Account of a
Local Club at the end of a particular year show the following amounts:
As per Income As per Receipts and
Expenditure A/c (₹) Payments A/c (₹)
Printing Charges 7,500 6,900
Rent Paid 12,000 11,000
When there were no outstanding of Rent and Printing charges at the beginning of
that year, the difference of ₹ 1,600 will be shown in the Balance Sheet at the end of
the year as:
A. Asset
B. Liabilities
C. Ignored
D. Capital Fund
51
19. Subscription of ₹ 6,25,000 had been shown in the Income and Expenditure Account
prepared for the year ending 31st March, 2019. Additional information is as below:
On 31st March, 2018 On 31st March, 2019
(₹) (₹)
Subscription Outstanding 55,000 72,000
Subscription Received in Advance 31,000 37,000
The amount of subscription received during the year 2018-19 would be
A. ₹ 6,36,000
B. ₹ 6,02,000
C. ₹ 6,14,000
D. ₹ 6,48,000
20. What will be the effect of Depreciation on Machinery in Receipt and Payment Account?
A. Shown in Debit Side of Receipt and Payment Account
B. Shown in Credit Side of Receipt and Payment Account
C. No effect on Receipt and Payment Account
52
INSURANCE CLAIM
1. A business takes a............. insurance policy to cover the claims for loss of stocks and
loss of profit.
A. Life insurance
B. Car insurance
C. Fire
D. health insurance
2. clause is applicable in case of under insurance
A. Normal
B. Average
C. Actual
D. Standard
3. The stock which is rescued from fire is-
A. Scrap
B. Salvage
C. Defective
D. Short goods
4. The main objective of average clause contained in a fire insurance policy is to
A. Encourage full Insurance
B. Discourage full Insurance
C. Encourage under Insurance
D. Encourage full Insurance and Discourage under Insurance
5. Gross profit can be calculated as
A. Net profit + Insured standing charges.
B. Net profit - Insured standing charges.
C. Net profit + standing charges.
D. Net Profit - Standing Charges
6. The value of stock on the date of fire can be ascertained by preparation of a……………
Account
A. Trading
B. Profit and Loss
C. Memorandum Trading
D. Memorandum Profit and Loss
7. The Memorandum trading account is prepared for the period from-
A. 1st January to 31st December
B. 1st April to 31st March
C. Opening date of accounting year to the date of fire
D. Opening date of accounting year to closing date of accounting year
8. The difference between standard turnover and actual turnover during indemnity
period is called-
A. Actual sales
B. Short Sales
53
C. Total Sales
9. Stock of goods destroyed by fire is ₹ 4,00,000 and stock salvaged ₹ 30,000, value
of policy is ₹ 3,00,000. The amount of claim if there is an average clause will be-
A. ₹ 3,00,000
B. ₹ 3,70,000
C. ₹ 2,77,500
D. ₹ 4,00,000
10. Prakash sells goods at 25% on sales. His sales were ₹10,20,000 during the year.
However, he sold damaged goods for ₹20,000 costing ₹30,000. This sale is included in
₹10,20,000. The amount of gross profit is-
A. ₹ 1,90,000
B. ₹ 2,50,000
C. ₹ 2,40,000
D. ₹ 2,00,000
54
HIRE PURCHASE AND INSTALMENT SALE
TRANSATION
1. In the hire purchase system interest charged by vendor is calculated on the basis of
A. Outstanding Cash Price
B. Hire Purchase Price
C. Instalment amount
2. In Hire Purchase system cash price plus interest is known as
A. Capital value of asset
B. Book value of asset
C. Hire purchase price of asset
D. Hire purchase charges
3. Excess of hire purchase price over cash price is known as
A. Installment
B. Cash down payment
C. Interest
D. Capital value of asset
4. In case of Hire-Purchase the total sum payable by the hire-purchaser as per terms
in order to complete the transactions is
A. Net Cash Price
B. Net Hire-Purchase Charges
C. Hire-Purchase Price
D. Cash Price Instalment.
5. When an asset is acquired on the hire purchase system, the asset account is debited
with of the assets in the books of the hire purchaser.
A. Hire purchase price
B. Cash Price
C. Instalment Price
6. Shiva purchased a laptop on hire-purchase system. As per terms, he is required to pay
₹ 7,500 down, ₹ 10,000 at the end of first year, ₹ 7,500 at the end of second year,
and ₹12,500 at the end of third year. Interest is charged at 12% per annum. The
interest payable with the installment at the end of second year will be
A. ₹ 900
B. ₹ 1,999
C. ₹ 804
D. ₹ 1,760
7. KCS purchased a machine from JPS on hire purchase system, whose cash price
was ₹8,64,000. ₹ 2,16,000 being paid on delivery and balance in three annual
instalments of ₹2,88,000 each. The amount of interest included in first installment
would be
A. ₹ 72,000
55
B. ₹ 57,600
C. ₹ 1,08,000
D. ₹ 36,000
8. Arti Ltd. purchased a machine on hire purchase system for a cash price ₹ 5,00,000 to
be paid as ₹ 78,700 cash down and the balance by three equal annual installments of
₹ 2,00,000 each. If interest is charged @ 20% per annum then amount of interest
payable in second installment will be
A. ₹ 1,00,000
B. ₹ 61,112
C. ₹ 33,328
D. ₹ 84,260
9. Which of the following is not a step under Partial Repossession?
A. Calculate Book value of Goods Repossessed
B. Calculate Agreed Value of Goods Repossessed
C. Loss on default = Book Value + Agreed Value
10. The substance of the transactions gets preference over legal position. The
transactions and events recorded in the books of account and presented in the
financial statements, should be governed by the substance of such transactions and
not merely by their legal form as per the concept of-
A. Faithful representation.
B. Substance over form.
C. Neutrality.
D. Fair disclosure.
56
BRANCH ACCOUNTING
1. Independent Branch meant when separate account are maintained by:

A. Head Office.
B. Branch
C. Both
D. None of these
2. Branches no keeping full system of accounting is called
A. Dependent Branch
B. Independent Branch
C. Simple Branches
3. The account for the dependent branches is maintained only in the books of
A. Branch
B. Head office
C. Both
4. Goods are sent to the Branch at cost plus 25%. The loading on invoice price is
A. 20%
B. 25%
C. 30%
5. For Sales Return at Branch, in case of dependent branches, entry to be passed in
HO books,
A. Debit Branch Debtors A/c, Credit Branch Stock A/c.
B. Debit Branch Stock A/c, Credit Branch Debtors A/c.
C. Debit Sales A/c, Credit Branch Debtors A/c.
D. Debit Sales A/c, Credit Branch Stock A/c.
6. Which one is/ are the method/s of Accounting for Branches
A. Final Accounts Method;
B. Debtors Method and
C. Stock and Debtors Method.
D. All of the above
7. Which account is used for transactions concerned with head office supplying
resources to the branch?
A. Capital account
B. Current account
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C. Branch account
D. Joint venture account
8. The system in which profit and loss made by the branch is determined by preparing
branch trading and profit and loss account at cost price-
A. Stock and debtors Method
B. Final Account Method
C. Debtors Method
D. All of the above
9. Cost of goods returned by branch will have the following effect
A. Goods Sent to Branch account will be debited
B. Branch Stock Account will be credited
C. Both a and b
D. Either a or b
10. Under Branch accounting Debtors System, closing balance of liabilities are recorded
in-
A. Credit Side
B. Debit Side
C. Any of the above
58
DEPARTMENTAL ACCOUNTING
1. Bad debts are apportioned among departments in the proportion of
A. Sales of each department
B. Number of units sold by each department
C. Cost of sales of each department
2. Canteen expenses are apportioned among departments in the proportion of
A. Departmental floor space
B. Departmental direct wages
C. Departmental sales
D. Departmental No. of employees
3. Goods are transferred from Department X to Department Y at a price so as to include
a profit of 33.33% on cost. If the value of closing stock of Department Y is ₹ 18,000,
then the amount of stock reserve on closing stock will be
A. ₹ 6,000
B. ₹ 4,500
C. ₹ 9,000
4. The goods are transferred from Department X to Department Y at selling price which
includes a profit of 25% on cost. Stock valued at ₹65,000 in Department Y, then
amount of unrealized profit will be
A. ₹ 16,250
B. ₹ 13,000
C. ₹ 21,667
5. Provision for Doubtful Debt on 1st April, 2018 was ₹ 21,500. During the year 2018 –
19 the Bad-debt and Recovery of Bad-debt were ₹ 10,500 and ₹ 2,100 respectively.
The Sundry Debtors on 31st March, 2019 were ₹ 2,25,000. Provision is to be made @
5% on Debtors. If on 31st March, 2019, there was additional Bad-debt of ₹ 2,500 then
Provision for doubtful-debt will be
A. debited to Profit & Loss Account by ₹ 11,250.
B. debited to Profit & Loss Account by ₹ 2,625.
C. debited to Profit & Loss Account by ₹ 3,000.
D. debited to Profit & Loss Account by ₹ 900.
6. If Department A transfers goods to Department B at a price of 50% above cost, what
will be the amount of stock reserve on unsold stock worth ₹9,000 of Department B?
A. 3,000.
B. 4,500.
C. 1,500.
D. 6,000
7. Which of the following expenses may not be proportioned amongst the departments
using any suitable basis:
59
A. Carriage Inward
B. Profit on Sale of Investments
C. Labor welfare expenses
D. Sales Promotion
8. Depreciation on assets is apportioned among various departments on basis of
A. Value of assets of each department.
B. Number of Assets of each Department
C. Purchases of each department.
D. Sales of each department.
60
ACCOUNTING FOR PARTNERSHIP
UNIT 1: BASICS OF PARTNERSHIP
1. Total asset of a firm is ₹ 1,20,000, outside liability amounted to ₹ 60,000, total
capital contributed by the partners would be
A. ₹ 60,000
B. ₹ 40,000
C. ₹ 1,00,00
D. ₹ 20,000
2. In a written agreement amongst the partners, interest @ 5% p.a. is to be provided
on loan. The interest given by a partner to the firm will be at an interest at the rate
of
A. 5%
B. 6%
C. 8%
D. 10%
3. If a fixed amount is withdrawn on the first day of every month of calendar year by a
partner in partnership firm, then for what period the interest on the total amount of
drawings will be calculated?
A. 4.5 months
B. 5.5 months
C. 6.5 months
D. 7.5 months
4. Mr. X is a partner in a firm. He withdraws ₹200 at the end of each month. If rate
of interest on drawings is @ 5% p.a., the interest on drawings is
A. ₹ 65
B. ₹ 55
C. ₹ 60
D. ₹ 50
5. In the absence of any provision in the partnership agreement, profits and losses
are shared
A. In the ratio of capitals
B. Equally
C. In the ratio of loans given by them to the partnership firm
6. X and Y are partners with the capital of ₹50,000 and ₹ 30,000 respectively. Interest
Payable on Capital is 10% p.a. If the profits earned by the firm is ₹ 4,800, what will
be the Interest on Capital for X and Y?
A. ₹ 5,000 and ₹ 3,000
B. ₹ 3,000 and ₹ 1,800
C. No interest will be paid to the partners
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7. Interest on capital will be paid to the partners if provided for in the agreement but
only from
A. Profits of the year
B. Reserves
C. Accumulated Profits
D. Goodwill
8. X, Y and Z are partners in a firm. At the time of division of profit for the year there
was dispute between the partners. Profits before interest on partner’s loan was ₹
6,000 and Y determined interest @ 24% p.a. on his loan of ₹ 80,000. There was no
agreement on this point. Calculate the amount payable to X, Y and Z respectively.
A. ₹ 2,000 to each partner
B. Loss of ₹ 4,400 for X and Z & Y will take home ₹ 14,800
C. ₹ 400 for X, ₹ 5,200 for Y and ₹ 400 for Z
D. ₹ 2,400 to each partner
9. Fluctuating capital account is credited with-
A. Interest on capital.
B. Profits of the year.
C. Salaries or remuneration of the partners
10. The profits of last three years are ₹ 42,000; ₹ 39,000 and ₹ 45,000. Capital
employed is ₹ 4,00,000 and normal rate of return is 10%. The amount of goodwill
calculated on the basis of super profit method for three years of purchase will be:
A. ₹ 2,000.
B. ₹ 4,000.
C. ₹ 6,000.
D. ₹ 8,000.
11. A firm employs ₹ 2,00,000 as Capital and the normal rate of return is 10%. If the
firm makes an average profit of ₹ 30,000 per year, the value of Goodwill by
considering it as the purchase of 3 years super profit will be:
A. ₹ 25,000
B. ₹ 20,000
C. ₹ 30,000
12. R, J and D are the partners sharing profits in the ratio 7:5:4. D died on 30th June
2024. It was decided to value the goodwill on the basis of three year’s purchase of
last five years average profits. If the profits are ₹ 29,600; ₹ 28,700; ₹ 28,900; ₹
24,000 and ₹ 26,800. D’s share of goodwill will be-
A. ₹ 20,700
B. ₹ 27,600
C. ₹ 82,800
D. ₹ 27,000
13. A and B are partners with the capital ₹ 50,000 and ₹ 40,000 respectively. They share
profits and losses equally. C is admitted on bringing ₹ 50,000 as capital only and nothing
was brought against goodwill. Goodwill valued as ₹ 35,000 which was adjusted through
62
the Capital accounts of the partners What will be value of goodwill in the books after
the admission of C?
A. ₹ 55,000
B. NIL
C. ₹ 20,000
D. ₹ 15,000
14. A and B are partners with capitals of ₹ 10,000 and ₹ 20,000 respectively and sharing
profits equally. They admitted C as their third partner with one-fourth profits of the
firm on the payment of ₹ 12,000. The amount of hidden goodwill is-
A. ₹ 6,000
B. ₹ 10,000
C. ₹ 8,000
15. Find the goodwill of the firm using capitalization method from the following
information: Total Capital Employed in the firm ₹ 8,00,000. Reasonable Rate of Return
15%. Profits for the year ₹ 12,00,000
A. ₹ 82,00,000
B. ₹ 12,00,000
C. ₹ 72,00,000
D. ₹ 42,00,000
16. Sushila’s business disclosed the following profits for the last two years:
2008: ₹ 40,000 (including an abnormal gain of ₹5,000)
2009: ₹ 50,000 (After charging an abnormal loss of ₹10,000)
The value of goodwill on the basis of one year purchase of the average profit of last
two years is-
A. ₹45,000
B. ₹37,500
C. ₹47,500
17. A firm earns profit of ₹1,10,000. The normal rate of return in a similar type of
business is 10%. The value of total assets (excluding goodwill) and total outside
liabilities are ₹11,00,000 and ₹1,00,000 respectively. The value of goodwill by
Capitalization method is-
A. ₹ 1,00,000
B. ₹ 10,00,000
C. Nil
18. A, B & C are equal partners. They wanted to change the profit-sharing ratio into
4:3:2. The goodwill was valued as ₹ 90,000. The effected accounts will be
A. C’s capital account debit and A’s capital account credit with ₹ 10,000.
B. B’s capital account debit and A’s capital account credit with ₹ 10,000.
C. C’s capital account debit and B’s capital account credit with ₹ 10,000.
D. A’s capital account debit and C’s capital account credit with ₹ 10,000.
19. X and Y share profits and losses in the ratio of 2:1. They take Z as a partner and the
63
new profit-sharing ratio becomes 3:2:1. Z brings ₹4,500 as premium for goodwill. The
full value of goodwill will be:
A. ₹ 4,500.
B. ₹ 18,000.
C. ₹ 27,000.
D. ₹ 24,000.
20. Premium for goodwill is always distributed among the old partners in
A. Gaining ratio
B. Old ratio
C. Sacrificing ratio
D. New ratio
64
ADMISSION OF PARTNER
1. X and Y were partners sharing profit/losses as 3:2. They admit Z as a new partner,
giving him 1/5th share of future profits. What should be the new profit-sharing ratio?
A. 12:8:5
B. 3:2:1
C. 8:12:5
D. 5:8:12
2. A and B are partners sharing profit/loss in the ratio of 3:2. They admit C into
partnership for 1/6 share in the profit which he acquired equally from old partners.
The new profit- sharing ratio will be
A. 3:2:1
B. 1:1:1
C. 31:19:10
D. 14:6:4
3. X, Y and Z are partners in the ratio of 3:2:1. W is admitted with 1/6th share in future
profits. Z would retain his original shares. What is the new profit-sharing ratios of
the partners?
A. 12:8:5:5
B. 12:8:2:1
C. 12:8:1:1
D. 12:8:2:6
4. Generally, sacrifice ratio is concerned with the situation of
A. Admission of a new partner
B. Retirement of a partner
C. Dissolution of firm
D. Conversion of firm into company
5. 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
6. State the ratio in which the partners share all the accumulated profits, reserves,
losses and fictitious assets in case of change in profit sharing ratio.
A. Old profit-sharing ratio
B. New profit-sharing ratio
C. Equally
66
7. When a new partner is admitted, unless otherwise agreed, the profit sharing
ratio between the existing partners will
A. Reduce
B. Increase
C. Remain same
8. A and B are partners sharing profits in the ratio 5:3, they admitted C giving him
3/10th share of profit. If C acquires 1/5th share from A and 1/10th from B, new
profit-sharing ratio will be
A. 5:6:3
B. 2:4:6
C. 18:24:38
D. 17:11:12
9. A & B are partners sharing profits and losses in the ratio 5:3. On admission, C brings
₹ 70,000 cash and ₹ 48,000 against goodwill. New profit-sharing ratio between A, B
and C are 7:5:4. The sacrificing ratio among A:B will be
A. 3:1
B. 4:7
C. 5:4
D. 2:1
10. A, B and C are partners in the ratio of 3:2:1. D is admitted in the firm for 1/6th share
in profits. C would retain his original share. The new profit-sharing ratio between A,
B, C and D will be-
A. 12:8:5:5
B. 8:12:5:5
C. 5:5:12:8
D. 5:5:8:12
11. In partnership when a new Partner brings his share of Goodwill in cash, then the amount
of such Goodwill will be credited to Partners’ capitals as per the following ratio:
A. Old Profit-sharing ratio
B. Sacrificing ratio
C. Gain ratio
12. Which of the following accounting adjustments are required at the time of admission
of a partner?
A. Computation of New Profit-Sharing Ratio
B. Revaluation of Assets and Liabilities
67
C. Distribution of Reserves, Accumulated Profits and Losses
D. All of the above
13. Profit or loss on revaluation is shared among the partners in ratio.
A. Old Profit Sharing
B. New Profit Sharing
C. Capital
D. Equal
14. Rohan & Sohan are partners in a firm sharing profits & losses in the ratio 3:1. A
partner Mohan is admitted and he brought ₹40,000 as goodwill. New profit-sharing
ratio of all the partners is equal. The amount of goodwill to be shared by old partners
is:
A. Equally ₹ 20,000 each
B. Rohan ₹ 30,000 & Sohan ₹10,000
C. Rohan ₹ 40,000
D. received ₹ 50,000 & Sohan paid ₹ 10,000
15. A and B are partners sharing profits and losses in the ratio of 3:2 (A’s Capital is
₹30,000 and B’s Capital is ₹15,000). They admitted C and agreed to give 1/5th share
of profits to him. How much C should bring in towards his capital?
A. ₹ 9,000
B. ₹ 12,000
C. ₹ 14,500
D. ₹ 11,250
16. A and B, who share profits and losses in the ratio of 3:2 has the following balances:
Capital of A ₹ 50,000; Capital of B ₹ 30,000; Reserve Fund ₹ 15,000. They admit C as
a partner, who contributes to the firm ₹ 25,000 for 1/6th share in the partnership.
If C is to purchase 1/6th share in the partnership from the existing partners A and
B in the ratio of 3:2 for ₹ 25,000, find closing capital of C-
A. ₹ 25,000
B. ₹ 19,000
C. ₹ 20,000
D. ₹ 18,000
17. General reserve at the time of admission of a new partner is transferred to
A. Profit and Loss adjustment Account
B. Old partners’ capital accounts
C. Revaluation account
D. Memorandum revaluation account
18. At the time of admission of a new partner, if the value of goodwill is shown in the books,
it is written back by
68
A. Old partners in old profit/loss sharing ratio
B. All the partners including the new partner in new profit/loss sharing ratio
C. Old partners in sacrificing ratio
D. New partner in gaining ratio
19. It is decided to form a partnership with a total capital of ₹ 6,00,000. Three partners
Ajay, Vijay and Sanjay who will share profits and losses in the ratio of 5:3:2, agreed
to contribute proportionate capital. Their capital contribution will be:
A. ₹ 3,00,000: ₹ 1,80,000: ₹ 1,20,000
B. ₹ 2,00,000: ₹ 2,00,000: ₹ 2,00,000
C. ₹ 3,00,000: ₹ 2,00,000: ₹ 1,00,000
D. ₹ 1,00,000: ₹ 2,00,000: ₹ 3,00,000
20. If goodwill account is raised by the partners at the time of admission of a new
partner, it will be written off in
A. Old Profit-sharing ratio
C. Sacrificing ratio
D. Capital ratio
69
RETIREMENT OF PARTNER
1. Outgoing partner is compensated for parting with firm’s future profits in favour of
remaining partners The remaining partners contribute to such compensation amount in
A. Gaining Ratio
B. Capital Ratio
C. Sacrificing Ratio
D. Profit Sharing Ratio
2. The retiring partner becomes entitled to get back which of the following?
A. Balance of his capital and current account at the time of retirement.
B. Share of goodwill, undistributed profit or loss, reserves and profit or loss on
revaluation of assets and liabilities
C. Salary, commission, interest on capital, if any and all other dues till the date
of retirement
D. All of the above
3. A, B and C are partners sharing profits in the ratio 2:2:1. On retirement of B, goodwill
was valued as ₹ 30,000. Contribution of A and C to compensate B will be-
A. ₹ 20,000 and ₹ 10,000 respectively
B. ₹ 8,000 and ₹ 4,000 respectively
C. They will not contribute any thing
D. Information is insufficient for any comment
4. As per Section 37 of the Indian Partnership Act, 1932, the executors would be entitled
at their choice to the interest calculated from the date of death till the date of payment
on the final amount due to the dead partner at percent per annum.
A. 7
B. 4
C. 6
D. 12
5. A, B and C are Partners sharing profits in the ratio of 2:3:1. A retires and his share
is taken by B and C equally, what will be the gaining ratio?
A. 2:3
B. 1:1
C. 2:1
D. 1:2
6. A, B and C are partners, their profit-sharing ratio being 5:4:3. C retires and is credited
with ₹ 9,000 for goodwill. How much will be debited to A’s Capital account in respect of
goodwill-
A. 5,000
70
B. 16,000
C. 20,000
D. 4,000
7. Om, Jai and Jagdish are partners sharing profits and losses in the ratio of 5:3:2. Om
retires and goodwill is valued at ₹ 50,000. New profit-sharing ratio of Jai and Jagdish
will be equal. For the adjustment of goodwill, Jai and Jagdish’s capital accounts will be
debited by:
A. ₹ 15,000 and ₹ 10,000 respectively
B. ₹ 10,000 and ₹ 15,000 respectively
C. ₹ 20,000 and ₹ 5,000 respectively
D. ₹ 5,000 and ₹ 20,000 respectively
8. Amit, Rohit and Sumit are partners sharing profits and losses in the ratio of 5:4:3. Sumit
retires and if Amit and Rohit shares profits of Sumit in 4:3, then new profit-sharing
ratio will be:
A. 4:3.
B. 47:37.
C. 5:4.
D. 5:3.
71
DEATH OF PARTNERS
1. If a partner dies which of the following amount becomes payable?

A. His share of undistributed profit/loss;
B. His share of goodwill;
C. His share of Joint Life Policy, if any;
D. All of the above
2. On what basis deceased partner’s share of profit till his death is computed?
A. Time basis
B. Turnover
C. (a) or (b) above
D. None
3. At the time of death of a partner, firm gets from the insurance company against the
Joint Life Policy taken jointly for all the partners
A. Policy Amount
B. Surrender Value
C. Policy amount or surrender value whichever is higher
D. Policy amount or surrender value whichever is lower
4. Raj, Jai and Hari are the partners sharing profits in the ratio 7:5:4. Hari died on 30th
June, 2023 and profits for the accounting year 2022-2023 were ₹ 24,000. How much
share in profits for the period 1st April, 2023 to 30th June, 2023 will be credited to
Hari’s Account.
A. ₹ 6,000.
B. ₹ 1,500.
C. ₹ 2,000
D. Nil.
5. A, B and C are partners sharing profits and losses in the ratio 9:4:3. The firm took
separate life policy of ₹ 25,000 for A, ₹ 20,000 for B and ₹ 51,000 for C. What is the
share of C in the policy amount?
A. ₹ 18,000
B. ₹ 25,000
C. ₹ 51,000
D. ₹ 20,000
6. A, B and C shares profit and loss in the ratio of 4:4:2. They have a joint life insurance
policy of ₹1,00,000, whose premium is paid by the firm. Surrender value of the policy
at the beginning of the year 2022 is ₹ 80,000. On the death of A on 2nd January
2022, the amount to be credited in C’s account will be-
A. ₹ 40,000
72
B. ₹ 20,000
C. ₹ 16,000
D. Nil
7. A, B and C are partners in the firm sharing profits and losses in 5:3:2 ratio. The firm’s
Balance Sheet as on 31.3.2022 shows the Reserve balance of ₹ 25,000, Profit of the
last year ₹ 50,000, Joint Life policy of ₹ 10,00,000, fixed assets of ₹ 12,00,000. On
1st June C died and on the same date assets were revalued. The executor of the
deceased partner will get along with the capital of C
A. Share in the Reserves account of the firm.
B. Proportionate share of profit upto the date of death.
C. Share in Joint life policy.
8. After death of partner the goodwill account is written off to the capital accounts of
the remaining partners in the-
A. Old profit-sharing ratio
C. Gaining ratio
D. None of these
73
DISSOLUTION OF FIRM
1. Realization account is opened at the time of

A. Admission of a new partner
B. Retirement of a partner
C. Dissolution of the Firm
D. In all the above situations
2. Which of the following account is mainly prepared at the time of dissolution of the
firm
A. Revaluation A/c
B. Goodwill A/c
C. Realization A/c
D. Memorandum Revaluation A/c
3. A/c is used for the reassessment of the assets and liabilities.

A. General Reserve
B. Profit & Loss
C. Revaluation
D. Both (b) & (c)
4. Realization account is a
A. Representative personal account
B. Artificial personal account
C. Real account
D. Nominal account
5. The solvent partners must share the deficiency of an insolvent partner:

A. In the profit-sharing ratio
B. In the capital ratio
C. In the gaining ratio
74
ACCOUNTING STRANDARDS
AS-1
1. As per AS – 1, which of the following is not a Fundamental Accounting Assumptions?

A. Conservatism
B. Going Concern
C. Consistency
D. Accrual
2. Any change in the accounting policy relating to inventories which has a material effect
in the current or later periods should be disclosed. This is in accordance with the
accounting principle of:
A. Going Concern
B. Conservatism
C. Consistency
D. Disclosure
3. Which one is the correct Fundamental accounting assumptions as per AS 1?
A. Going Concern, Matching and Consistency
B. Money Measurement, Going Concern and Prudence
C. Accounting Period, Going Concern and Entity Concept
D. Going Concern, Consistency and Accruals
4. Which of the following is not a major consideration in selection and application of
accounting policies?
A. Prudence
B. Comparability
C. Materiality
D. Substance over form
5. Adoption of different accounting policies by different companies operating in the same
industry affects which of the qualitative characteristics the most?
A. Comparability
B. Relevance
C. Faithful representation
D. Reliability
AS – 80
6. A Company purchased a Machine costing ₹ 15 Lakh for its production process. It paid
Freight ₹ 25,000, Cartage ₹ 2,000 and installation charges ₹ 18,000. The Company spent
an additional amount of ₹ 40,000 for testing and preparing the Machine for use. As per
AS-10, the amount that should be recorded as the cost of Machine would be:
A. ₹ 15,45,000
B. ₹ 15,25,000
C. ₹ 15,85,000
75
D. ₹ 15,65,000
7. MGS Co. purchased a machine costing ₹ 1,25,000 for its manufacturing operations and
paid shipping costs of ₹ 30,000. MGS spent an additional ₹ 12,000 testing and preparing
the machine for use. What amount should MGS record as the cost of machine?
A. ₹ 1,25,000
B. ₹ 1,55,000
C. ₹ 1,67,000
D. ₹ 42,000
8. Which of the following is/are example/s of costs that are not related to an item
of property, plant and equipment?
A. costs of opening a new facility or business
B. costs of conducting business in a new location or with a new class of customer
C. administration and other general overhead costs
D. All of the above
9. Bearer plant is a plant that
A. is used in the production or supply of agricultural produce
B. a living animal
C. are held for use in the production or supply of goods or services
10. AS-10 is not applicable on
A. Biological assets related to agricultural activity
B. Produce on bearer plants
C. Wasting assets
D. All of the above
11. In the case of downward revaluation of an asset, which is for the first time revalued,
account is debited.
A. Fixed Asset
B. Revaluation Reserve
C. Profit & Loss account
D. General Reserve
AS-11
12. The Accounting Standard on ‘the Effect of Changes in foreign exchange rates’ is
A. AS -11
B. AS -15
C. AS -18
D. None of these
13. The Foreign Currency receivables as per books of accounts 10,000$ USD= ₹80,
₹8,00,000 accounted on 09-Feb-2023.On 31-Mar-2023, The USD= INR 82 then what is
the amount of Foreign Currency Receivables to be reported on 31-Mar-2023 balance
sheet as Assets-
A. ₹ 2,000
B. (₹ 2,000)
76
C. ₹ 8,20,000
D. ₹ 80,000
14. Which of the following items should be converted to closing rate for the purposes of
financial reporting?
A. Items of Property, Plant and Equipment
B. Inventory
C. Trade Payables, Trade Receivables and Foreign Currency Borrowings
D. All of the above
15. If asset of an integral foreign operation is carried at cost, cost and depreciation
of tangible fixed asset is translated at
A. Average exchange rate
B. Closing exchange rate
C. Exchange rate at the date of purchase of asset
D. Opening exchange rate
AS-12
16. When we can recognize government grant in books of account

A. Conditions for receipt of grant should be fulfilled
B. Grants are certain to be received
C. Any of above
D. Both (a) and (b)
17. Grant received in respect of depreciable assets can be
A. Reduced from cost of the asset
B. Credited to deferred grant account
C. Any of above
D. Both (a) and (b)
18. X Ltd. has received a grant of ₹ 20 crore for purchase of a qualified machine costing ₹
80 crore. X Ltd has a policy to recognise the grant as a deduction from the cost of the
asset. The expected remaining useful life of the machine is 10 years. Assume that there
is no salvage value and the depreciation method is straight-line. The amount of annual
depreciation to be charged as an expense in Profit and Loss Statement will be:
A. ₹ 10 crore
B. ₹ 6 crore
C. ₹ 2 crore
D. ₹ 8 crore
19. Land received as grant should-
A. not be recorded in books of account
B. recorded at Actual purchase price of land
C. nominal value
D. any of the above
77
AS-16
20. AS -16 Deals with

A. Accounting of Inventory Cost
B. Accounting for transactions in Foreign Currencies
C. Accounting for Depreciation
D. Accounting for Borrowing Costs
21. As per AS 16, all the following are qualifying assets except
A. Manufacturing plants and Power generation facilities
B. Inventories that require substantial period of time
C. Assets those are ready for sale.
22. X Ltd is commencing a new construction project, which is to be financed by borrowing.
The key dates are as follows:
• 15th May, 2021: Loan interest relating to the project starts to be incurred
• 2nd June, 2021: Technical site planning commences
• 19th June, 2021: Expenditure on the project started to be incurred
• 18th July, 2021: Construction work commences
Identify the commencement date for Capitalisation under AS 16.
A. 15th May, 2021.
B. 19th June, 2021.
C. 18th July, 2021.
D. 2nd June, 2021.
23. Borrowing cost incurred during abnormal period should be
A. Transferred to Profit and Loss A/c
B. Capitalized
C. Any of the above
AS-19
24. Accounting Standard for lease is

A. AS 17
B. AS 9
C. AS 19
D. AS 15
25. The person who undertakes an agreement, conveys to another person the right to use
in return for rent, an asset for an agreed period of time-
A. Lessor
B. Lessee
C. Both
26. The estimated value of the asset at the end of the lease term is known as
A. Residual value
78
B. Invoice value
C. Dual value
D. Market value
27. Which lease transfer substantially all the risk and rewards incident to ownership of an
asset?
A. Operating Lease
B. Finance Lease
C. Both of the above
28. Operating lease is a .
A. Revocable contract
B. Non revocable contract
C. Operating contract
29. In which types of lease expenses like maintenance, repair, and taxes are born by the
lessor?
A. Operating lease
B. Financial lease
C. Both
30. Short-term lease which is often cancellable is known as
A. Finance Lease
B. Net Lease
C. Operating Lease
D. Leverage Lease
31. A lease which is generally not cancellable and covers full economic life of the asset is
known as:
A. Sale and leaseback
B. Operating Lease
C. Finance Lease
D. Economic Lease
32. One difference between Operating and Financial lease is:
A. There is often an option to buy in operating lease
B. There is often a call option in financial lease.
C. An operating lease is generally cancelable by lessee
D. A financial lease in generally cancelable by lease.
AS-22
33. The effect of timing difference is called as

A. Current Tax
B. Deferred Tax
C. Minimum Tax
79
34. Accounting Standard 22 is related to-
A. Accounting for Taxes on Income
B. Borrowing Costs
C. Accounting for Government Grants
D. Property, Plant and Equipment
35. As per AS 22 on ‘Accounting for Taxes on Income’, tax expense is:
A. Current tax + deferred tax charged to profit and loss account
B. Current tax-deferred tax credited to profit and loss account
C. Either (a) or (b)
D. Deferred tax charged to profit and loss account
36. For the year ended 31.03.2024 accounting income of DNP Ltd. is ₹ 30 lakhs. However,
its Taxable income was ₹ 20 lakhs only due to timing difference. Tax rate is 30%. The
Deferred tax liability will be
A. ₹ 10 Lakhs
B. ₹ 3 Lakhs
C. ₹ 9 Lakhs
D. ₹ 6 Lakhs
80

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INTRODUCTION TO ACCOUNTING

1) The following account has a credit balance

1. The Full form of GAAP is

1. The basic consideration(s) in the distinction between capital and revenue

1. Bank Reconciliation Statement is prepared by

1. Depreciation is a process of:

1. Suresh’s Trial balance provides you the following information:

1. Arrangement of balance sheet in a proper way is known as

1. The Receipts and Payments Account generally begins with

1. Independent Branch meant when separate account are maintained by:

1. If a partner dies which of the following amount becomes payable?

1. Realization account is opened at the time of

3. A/c is used for the reassessment of the assets and liabilities.

5. The solvent partners must share the deficiency of an insolvent partner:

1. As per AS – 1, which of the following is not a Fundamental Accounting Assumptions?

16. When we can recognize government grant in books of account

20. AS -16 Deals with

24. Accounting Standard for lease is

33. The effect of timing difference is called as

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