Module I : Introduction to Accounting /

 

The art of recording transactions in a set of books is referred to as __________.

Select one:

1. Book Keeping
2. Accounting
3. Auditing
4. Writing

 

Which of the following is a basic assumption?

Select one:

1. Conservatism concept
2. Matching concept
3. Historical cost concept
4. None of the above

 

Which of the following is/are function(s) of Accounting?

Select one:

1. Measurement
2. Forecasting
3. Decision-making
4. All of the above

 

Accounting is considered as a/an ___________ of the business.

Select one:

1. Language
2. Face
3. Art
4. None of the above

 

__________ an art of recoding, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character, and interpreting the results thereof

Select one:

1. Management Accounting
2. Financial Accounting
3. Cost Accounting
4. None of the above

 

Who issues International Financial Reporting Standards?

Select one:

1. The IFRS Advisory Committee
2. The stock exchange
3. The International Accounting Standards Board
4. The government

 

Which of the following is/are objective(s) of Accounting?

Select one:

1. Providing Information to the Users for Rational Decision-making
2. Systematic Recording of Transactions
3. Ascertainment of Results of above Transactions
4. All of the above

 “The process of identifying, measuring and communicating economic information to permit informed judgments anddecisions by the users of accounting”. This definition was given by ____________________.

Select one:

1. American Accounting Association
2. British Accounting Association
3. Indian Accounting Association
4. None of the above

 

Business is an economic activity undertaken ___________________.

Select one:

1. with the motive of earning profits
2. to maximize the wealth for the owners.
3. with the motive of earning profits and to maximize the wealth for the owners.
4. None of the above

 

What is the role of the IASB?

Select one:

1. Oversee the standard setting and regulatory process
2. Formulate international financial reporting standards
3. Review defective accounts
4. Control the accountancy profession

 

According to the IASB Conceptual framework which of the following is not an objective of financial statements?

Select one:

1. Providing information regarding the financial position of a business
2. Providing information regarding the performance of a business
3. Enabling users to assess the performance of management to aid decision making
4. Helping to assess the going concern status of a business

 

The insistence of the concept of ________ would result in avoidance of window dressing the results by choosing the accounting method by convenience and thereby either inflating or understating net income.

Select one:

1. Dual aspect
2. Consistency
3. Revenue Realisation
4. Matching

 

The IASB Conceptual framework identifies user groups. Which of the following is not an information need for the 'Investor' group?

Select one:

1. Assessment of repayment ability of an entity
2. Measuring performance, risk and return
3. Taking decisions regarding holding investments
4. Taking buy/sell decisions

 

Which of the following is not an accounting convention?

Select one:

1. Prudence
2. Consistency
3. Depreciation
4. Accruals

If, at the end of the financial year, a company makes a charge against the profits for stationery consumed but not yet invoiced, this adjustment is in accordance with the convention of:

Select one:

1. materiality
2. accruals.
3. consistency
4. objectivity

 

Which of the following correctly defines ‘equity’ according to the IASB's Conceptual Framework for Financial Reporting?

Select one:

1. Equity is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefit.
2. Equity is a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.
3. Equity is the residual interest in the assets of the entity after deducting all its liabilities.
4. Equity is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities.

 

In times of rising prices, the historical cost convention:

Select one:

1. understates asset values and profits.
2. understates asset values and overstates profits.
3. overstates asset values and profits.
4. overstates asset values and understates profits.

 

 

 

Module II : Recording of Transactions

 

The following account has a credit balance

Select one:

1. None of the above
2. Sundry Creditors A/c
3. Purchase A/c
4. Plant and Equipment A/c

 

A trial balance shows -

Select one:

1. None of these
2. Accuracy of account
3. Only arithmetical accuracy of accounts
4. Honesty of accountants

 

The purchase of supplies on account should result in:

Select one:

1. a debit to Supplies and a credit to Accounts Receivable.
2. a debit to Supplies Expense and a credit to Cash.
3. a debit to Supplies and a credit to Accounts Payable
4. a debit to Supplies Expense and a credit to Supplies

 

Imprest system is used in-

Select one:

1. Ledger
2. Cash book
3. Journal
4. Petty cash book

 

Accounts related to assets or properties or possessions.

Select one:

1. Nominal Account
2. Personal Account
3. Real Account
4. Artificial Personal Account

 

A ledger:

Select one:

1. is a book of original entry.
2. contains only asset and liability accounts.
3. is a collection of the entire group of accounts maintained

by a company

1. should show accounts in alphabetical order

 

A revenue account:

Select one:

1. is increased by credits
2. has a normal balance of a debit
3. is decreased by credits
4. is increased by debits

 

Posting:

Select one:

1. normally occurs before journalizing.
2. transfers ledger transaction data to the journal
3. is an optional step in the recording process
4. transfers journal entries to ledger accounts

 

Debits:

Select one:

1. increase assets and decrease liabilities
2. increase both assets and liabilities
3. decrease assets and increase liabilities
4. decrease both assets and liabilities

 

Which of the following is a type of Voucher

elect one:

1. All of the above
2. Receipt Voucher
3. Payment Voucher
4. Non-Cash or Transfer Voucher

 

Which of the following statements about a journal is false?

Select one:

1. It helps to locate errors because the debit and credit

 amounts for each entry can be readily compared.

1. It is not a book of original entry.
2. It provides a chronological record of transactions
3. It discloses in one place the complete effect of a

transaction.

 

Ram purchased a car INR. 10,000 paid INR. 3000 as cash andbalance amount will be paid in three equal installments due tothis __________________.

Select one:

1. Both (b) and (c)
2. Total liabilities increase by 3000
3. Total assets increase by 10,000
4. Assets will increase by 7000 with corresponding increase

in liability by 7000

 

In which book of prime entry will a business record debit notes in respect of goods which have been sent back to suppliers?

Select one:

1. The purchase day book
2. The cash book
3. The sales returns day book
4. The purchase returns day book

 

From the following details estimate the capital as on 31.03.2017,Capital as on 01.04.2016 INR. 4,10,000. Drawings INR. 40,000, Profitduring the year INR. 50,000

Select one:

1. 4,20,000
2. 4,50,000
3. 4,00,000
4. 4,10,000

 

At 30 November 20X5 Jenny had a bank loan of $8,500 and abalance of $678 in hand in her bank account. How should theseamounts be recorded on Jenny's opening trial balance at 1December 20X5?

Select one:

1. Debit $8,500 and Credit $678
2. Credit $7,822
3. Debit $7,822
4. Credit $8,500 and Debit $678

 

Before posting a payment of €5,000, the Accounts Payable ofSenator Company had a normal balance of €16,000. Thebalance after posting this transaction was:

Select one:

1. € 11,000
2. € 21,000
3. Cannot be determined
4. € 5,000

 

The trial balance of Clooney Corporation had accounts with the following normal balances: Cash $5,000, Service Revenue$85,000, Salaries and Wages Payable $4,000, Salaries and Wages Expense $40,000, Rent Expense $10,000, Share Capital—Ordinary $42,000, Dividends $15,000, and Equipment $61,000. Inpreparing a trial balance, the total in the debit column is: ...........

Select one:

1. $216,000
2. $91,000
3. $131,000
4. $116,000

 

3rd Module Assessment

 

 

A trial balance will have no balance, if ____

Select one:

1. correct entry is posted twice
2. The purchase on credit basis is debited to purchases and credited to cash
3. 500 cash payment to creditors is debited to creditors for 50 and credited to cash as 500
4. None of the above

 

________ Account charges the COGS and other direct expenses and losses against the sales revenue to determine the

gross operating result of the concern during a particular accounting period.

Select one:

1. Trading
2. Profit & Loss
3. Income & Expenditure
4. Receipts & Payments

 

The financial statement that reflects information about the financial performance of an entity is referred to as the___________.

Select one:

1. Cash Flow Statement
2. Income Statement
3. Balance Sheet
4. None of the above

 

Gross profit is the difference between

Select one:

1. Sales and cost of goods sold
2. Sales and operating expenses
3. Sales and non-operating expenses
4. None of the above

The financial statements of an organisation are drafted using the ___________.

Select one:

1. Transactions
2. Events
3. Ledger balances
4. None of the above.

 

Payment to a creditor

Select one:

1. Increase an asset, reduce a liability
2. Reduce an asset, reduce a liability
3. Only reduce a liability
4. Only reduce an asset.

 

Which of the following is a position statement?

Select one:

1. Profit and loss account
2. Balance sheet
3. funds flow statement
4. Trial balance

 

Assets are listed on the balance sheet in the order of their

Select one:

1. purchase date.
2. adjustments
3. liquidity.
4. balance.

Among the financial statements, ___________ is/ are referred to as ‘period statement’.

Select one:

1. Trading Account.
2. Profit & Loss Account
3. Both (a) and (b)
4. Balance Sheet

 

Balance sheet is prepared

Select one:

1. At a particular date
2. At the close of a day
3. For the close of a period
4. For showing performance of an organisation

 

What does carriage inwards effect

Select one:

1. Sales
2. Purchases
3. Drawing
4. Capital

 

Where is carriage inwards disclosed?

Select one:

1. Profit and loss account
2. Balance sheet
3. Trading account.

d Trial balance

Which of the following is the correct formula for cost of sales?

Select one:

1. Opening inventory – purchases + closing inventory
2. Purchases – closing inventory + sales
3. Opening inventory – closing inventory + purchases
4. Opening inventory + closing inventory – purchases

 

Carriage outwards is disclosed in

Select one:

1. Balance sheet
2. Profit and loss account
3. Trading account
4. Trial balance

 

If a company wants to earn a 25% profit on sales, what will be the profit mark up on the cost.

Select one:

1. 20%
2. 33. 33%
3. 30%
4. 25%

 

Prisha has not kept accurate accounting records during the financial year. She had opening inventory of $6,700 andpurchased goods costing $84,000 during the year. At the year end she had $5,400 left in inventory. All sales are made ata mark up on cost of 20%. What is Prisha’s gross profit for the year?

Select one:

1. $13,750
2. $17,060
3. $16,540
4. $20,675

 

Given that values of opening inventory, purchases and Cost of Goods Sold for a particular accounting period are INR.1,00,000, INR. 9,30,000 and INR. 7,50,000, the closing inventory will be:

Select one:

1. 2,80,000
2. 2,40,000
3. 8,20,000
4. 4,80,000

 

Module IV : Financial Statement Analysis

 

A measure useful in evaluating the effi ciency in managing inventories is:

Select one:

1. inventory turnover
2. average days to sell inventory.
3. Both (a) and (b).
4. return on shareholders’ equity.

 

Comparisons of data within a company are an example of the following comparative basis:

Select one:

1. Industry averages.
2. Intra company.
3. Intercompany.
4. Both in tracomp any and intercompany.

 

 

The process of comparing various financial factors of a company over a period of time is known as …

Select one:

1. Inter?firm comparison
2. Ratio Analysis
3. Intra?firm comparison
4. Inter?industry comparison

 

Which technique used for figures of two or more periods are placed side by side to facilitate easy and meaningful comparisons?

Select one:

1. Comparative statement
2. Common?size statement
3. Trend Analysis
4. None

 

Which of the following is technique of financial statement analysis?

Select one:

1. Common?size statement
2. Comparative statement
3. Trend analysis
4. All

 

What is followed while preparing the financial statements?

Select one:

1. Accounting conventions
2. Accounting principles
3. Accounting concepts
4. All

Which of the following is the main objective of a financial statement?

Select one:

1. to know the solvency
2. to know the debt capacity
3. to know the earning capacity
4. All

 

In horizontal analysis, each item is expressed as a percentage of the:

Select one:

1. net income amount
2. equity amount
3. total assets amount
4. base year amount

 

dication of a company’s ability to:

Select one:

1. generate net income.
2. generate cash to pay dividends
3. generate cash to invest in new capital expenditures.
4. Both (b) and (c).

 

Which is an example of a cash fl ow from a financing activity?

Select one:

1. Receipt of cash from sale of land.
2. Issuance of debt for cash
3. Purchase of equipment for cash.
4. None of the above

 

The statement of cash flows classifies cash receipts and cash payments by these activities:

Select one:

1. operating and non-operating.
2. investing, financing, and operating.
3. financing, operating, and non-operating.
4. investing, financing, and non-operating.

 

Which is an example of a cash flow from an operating activity?

Select one:

1. Payment of cash to lenders for interest
2. Receipt of cash from the sale of ordinary shares
3. Payment of cash to reacquire shares.
4. None of the above.

 

Which of the following is incorrect about the statement of cash flows?

Select one:

1. The direct method may be used to report cash provided by operations.
2. The statement shows the cash provided (used) for three categories of activity.
3. The operating section is the last section of the statement.
4. The indirect method may be used to report cash provided by operations.

 

Horizon Company has the following current account information for a recent balance sheet: Cash $ 25,000;Temporaryinvestments 25,000; Accounts receivable 125,000; Merchandise inventory 100,000; Accounts payable 75,000; Accruedexpenses 25,000 What are the current and quick ratios?

Select one:

1. 1.75, 2.50
2. 2.75, 0.50
3. 2.50, 1.50
4. 2.75, 1.75

 

Sammy Company reported net sales of £300,000, £330,000, and £360,000 in the years, 2012, 2013, and 2014, respectively.If 2012 is the base year, what is the trend percentage for 2014?

Select one:

1. 77%.
2. 120%.
3. 108%.
4. 130%

 

Tiger Equipment Sales Co. had accounts receivable at the beginning and end of the year of $200,000 and $300,000,respectively. The net sales were $1,000,000. Determine the accounts receivable turnover and number of days’ sales inaccounts receivable.

Select one:

3. 3.3, 109
4. 3.3, 91
5. 4.0, 109
6. 4.0, 91.25

 

 

 

 

Module V : Amalgamation, Absorption and Reconstruction of Companies & Company Accounts

 

 

Amalgamation adjustment reserve is opened in the books of the amalgamating company to incorporate

Select one:

1. None of the above
2. Non- Statutory reserves of the amalgamating company
3. Assets of the amalgamating company
4. Statutory reserves of the amalgamating company

 

Which of the following statement is true in case of a Foreign Company?

Select one:

1. A Company incorporated outside India and has a place

of business in India

1. None of the above
2. A Company incorporated in India and has a place of

business in India.

1. A Company incorporated in India and has place of

 

  business outside India

When the object of reconstruction is usually to re-organise capital or to compound with creditors or to effect economies then such type of reconstruction is called

Select one:

1. None of the above
2. Internal reconstruction with liquidation
3. External reconstruction
4. Internal reconstruction without liquidation of the company

 

Which of the following statement is not a feature of a Company?

Select one:

1. None of the above
2. Perpetual Existence
3. Separate legal entity
4. Members have unlimited liability

 

Which of the following statements is not a feature of a private company?

Select one:

1. None of the above
2. Does not restrict on the number of its members to any

    limit.

1. Restricts the rights of members to transfer its shares.
2. Does not involve participation of public in general.

 

The excess price received over the par value of shares, should be credited to __________.

Select one:

1. Share capital account
2. Securities premium account
3. Calls-in-advance account
4. None of the above

 

The accumulated losses under scheme of internal re construction are written off against

Select one:

1. Capital Reduction account
2. None of the above
3. Share Capital account
4. Shareholders’ account

 

In case of amalgamation, the entry for elimination of unrealized profit or loss on stock is made

Select one:

1. By the vendor company
2. By the purchasing company
3. By the third party
4. None of the above

 

The Securities Premium amount may be utilized by a company for __________.

Select one:

1. Writing off any loss on sale of fi xed asset
2. Writing off the expenses/discount on the issue of

debentures

1. None of the above
2. Writing off any loss of revenue nature

 

If expenses of liquidation of the vendor company are paid bythe purchasing company then, in purchasing company’s book, the account debited is

Select one:

1. None of the above
2. Vendor company account
3. Goodwill account
4. Liquidation expense account.

 

At the time of amalgamation, purchase consideration does notinclude

Select one:

1. The sum which the transferee company will directly pay

 to the creditors of the transferor company

1. Payments made in the form of assets by the transferee

 company to the shareholders of the transferor company

1. Preference shares issued by the transferee company to

 the preference shareholders of the transferor company

1. None of the above

 

When shares are forfeited, the share capital account is debited with ________ and the share forfeiture account is credited with __________.

Select one:

1. Paid-up capital of shares forfeited; Called up capital of

shares forfeited

1. Called up capital of shares forfeited; Amount received on

shares forfeited

1. Called up capital of shares forfeited; Calls in arrear of

 shares forfeited

1. None of the above

 

A process of reconstruction, which is carried out without tliquidating the company and forming a new one is called

Select one:

1. External reconstruction
2. Amalgamation
3. None of the above
4. Internal reconstruction.

 

Reconstruction is a process by which affairs of a company arereorganized by

Select one:

1. Both (a) and (b)
2. Revaluation of assets and Reassessment of liabilities.
3. None of the above
4. Writing off the losses already suffered by reducing the

      paid up value of shares and/or varying the rights attached

     to different classes of shares.

 

F Ltd. purchased Machinery from G Company for a book value of INR. 4,00,000. The consideration was paid by issue of 10%debentures of INR. 100 each at a premium of 25%. The debenture account was credited with ______.

Select one:

1. 5,00,000
2. 4,00,000
3. 3,20,000
4. 4,20,000

 

T Ltd. proposed to issue 6,000 equity shares of INR. 100 each at a premium  of 40%. The minimum amount of application money to be collected per share as per the Companies Act, 2013

Select one:

10. INR. 10.00
11. INR. 5.00
12. INR. 6.00
13. INR. 7.00

 

G Ltd. acquired assets worth INR. 7,50,000 from H Ltd. by issue ofshares of INR. 100 at a premium of 25%. The number of shares to be issued by G Ltd. to settle the purchase consideration = ?

Select one:

1. 6,000 shares
2. 7,500 shares
3. 9,375 shares
4. 8,550 shares

 

 

Assignment 2

 

 

Compute the times interest earned for 2014.

Select one:

13. 13.0 times
14. 11.2 times.
15. 65.3 times
16. 14.0 times.

 

 

Compute the days in inventory for 2014.

Select one:

1. 24 days.
2. 60.8 days.
3. 64.4 days
4. 6 days.

 

Compute the current ratio for 2014.

Select one:

1. 1.26:1.
2. 3.0:1.
3. .80:1.
4. 3.75:1.

 

Compute the profit  margin for 2014.

Select one:

5. 5.90%
6. 17.1%.
7. 18.10%
8. 37.9%.

 

Compute the return on ordinary shareholders’ equity for 2014.

Select one:

51. 51.7%.
52. 61.2%.
53. 47.9%.
54. 59.40%

 

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