SCHOOL OF DISTANCE EDUCATION BBA SEMESTER II CORE...

School of Distance Education

Financial Accounting – II Sem. BBA

UNIVERSITY OF CALICUT

SCHOOL OF DISTANCE EDUCATION

BBA SEMESTER II

(2019 Admn. Onwards)

CORE COURSE – BBA2B02 – FINANCIAL ACCOUNTING

QUESTION BANK

Introduction to Accounting

1. All the transactions measurable in the terms of money are recorded in accounts is according

to

A. Business entity concept

B. Going concern concept

C. Money measurement concept

D. Accounting period concept

2. Dividing the expenditure into capital and revenue is according to

A. business entity concept

B. going concern concept

C. money measurement concept

D. accounting period concept

3. While putting the value or price of an entity in financial records the lowest price is recorded

not the current price or current market value. This is known as

A. Business Entity Concept

B. Conservatism

C. Cost Concept

D. Money Measurement Concept

4. Co-operative societies is an example of

A. personal account

B. real account

C. nominal account

D. representative personal account

5. Outstanding salary account is a

A. natural personal account

B. artificial personal account



C. representative personal account

D. real account

6. Interest earned is a

A. personal account

B. real account

C. nominal account


7. Commission paid is a

A. personal account

B. real account

C. nominal account


8. Trading account is a

A. personal account

B. real account

C. nominal account


9. Profit and loss account is a

A. personal account

B. real account

C. nominal account


10. All revenue incomes are credited to

A. manufacturing account

B. trading account

C. profit and loss account

D. balance sheet

11. In profit and loss account, if credit is more than the debit, the difference is

A. net profit

B. net loss

C. gross profit

D. gross loss

12. Which accounting concept satisfy the valuation criteria



A. Going concern, Realisation, Cost

B. Going concern, Cost, Dual aspect

C. Cost, Dual aspect, Conservatism

D. Realisation, Conservatism, Going concern.

13. The process of recording financial data upto trial balance is

A. Book keeping

B. Classifying

C. Summarising

D. Analyzing

14. In income measurement & recognisation of assets & liabilities which of the following

concepts goes together?

A. Periodicity, Accural, Matching

B. Cost, Accural, matching

C. Going concern, cost, Realization

D. Going concern, Periodicity, Reliability

15. Interpretation means

A. Explanation of meaning and significance of the data in Financial Statements.

B. Concerned with preparation and presentation of classified data

C. Systematic analysis of recorded data

D. Methodical classification of data given in Financial Statements.

16. Which of the following is wrong?

A. All real and personal accounts are transferred to balance sheet

B. Nominal accounts are transferred to P & L account

C. Each account is opened separately in ledger

D. Rent is a personal account, outstanding rent is nominal account

17. _______ is root cause for financial accounting

A. Stewardship accounting

B. Social accounting

C. Management accounting

D. Human resource accounting

18. If nothing is given in the financial statements about the three accounting assumptions then

it is to be treated as it



A. Is assumed that it is not followed

B. Is assumed to be followed

C. Is assumed to be followed to some extent

D. None of the above

19. The proprietor of the business is treated as creditor for the capital introduced by him due

to_____ concept.

A. Money measurement

B. Cost

C. Entity

D. Dual aspect

20. Fixed assets are held by business for _____

A. Converting into cash

B. Generating revenue

C. Resale


21. Which accounting concept specifies the practice of crediting closing stock to the trading

account?

A. Cost

B. Realisation

C. Going concern

D. Matching

22. Amount spent to increasing the earning capacity is a ______ expenditure

A. Capital

B. Revenue

C. Deferred revenue

D. Capital Loss

23. Human resources will not appear in the balance sheet according to ______ concept.

A. Accrual

B. Going concern


D. None

24. Provision for discount on debtors is calculated on the amount of debtors.



A. Before deducting provision for doubtful debts.

B. After deducting provision for doubtful debts.

C. Before deducting actual debts and provision for doubtful debts.

D. After adding actual bad and doubtful debts.

25. Which of the following is not a Real Account?

A. Cash A/c

B. Investments A/c

C. Outstanding rent A/c

D. Purchases A/c

26. Value of goods withdrawn by the proprietor for his personal use should be credited to ____

A. Capital A/c

B. Sales A/c

C. Drawings A/c

D. Purchases A/c

27. Which of the following is incorrect?

A. Good will – Intangible asset

B. Sundry debtors – Current asset

C. Loose tools - Tangible fixed asset

D. Outstanding expenses – Current asset

28. M/s Stationery Mart will debit the purchase of stationery to _______

A. Purchases A/c

B. General Expenses A/c

C. Stationery A/c

D. None

29. Small items like, pencils, pens, files, etc. are written off within a year according to ___

concept.

A. Materiality

B. Consistency

C. Conservatism

D. Realisation

30. Business enterprise is separate from its owner according to _____ concept.

A. Money measurement concept



B. Matching concept

C. Entity concept

D. Dual aspect concept

31. The policy of anticipate no profit and provide for all possible losses arise due to the concept

of _____

A. Consistency

B. Disclosure

C. Conservatism

D. Matching

32. According to which concept, the proprietor pays interest on drawings

A. Accrual concept

B. Conservatism concept

C. Entity concept

D. Dual Aspect concept

33. Cost concept basically recognises ____

A. Fair Market value

B. Historical cost

C. Realisable value

D. Replacement cost

34. If the Market value of closing Inventory is less than its cost price, inventory will he shown

at ____

A. Marketable value

B. Fair Market value

C. Both

D. none

35. The Market price of good declined than the cost price. Then the concept that plays a key

role is ____

A. Materiality

B. Going concern concept

C. Realization

D. Consistency



36. Fixed assets are double the current assets and half the capital. The current assets are

Rs.3,00,000 and investments are Rs.4,00,000. Then the current liabilities recorded in balance

sheet will be

A. 2,00,000

B. 1,00,000

C. 3,00,000

D. 4,00,000

37. Which of the following provide frame work and accounting policies so that the financial

statements of different enterprises become comparable.

A. Business Standards

B. Accounting Standards

C. Market Standards

D. None

38. Which of the following factor is not considered while selecting accounting policies?

A. Prudence

B. Substance over form

C. Accountancy

D. Materiality

39. Debit the receiver & credit the giver is _____ account

A. Personal

B. Real

C. Nominal

D. All the above

40. Cash a/c is a ______

A. Real a/c

B. Nominal

C. Personal

D. None

41. As per accrual concept, which of the followings is not true

A. revenue – expenditure = profit

B. revenue – profit = expenditure

C. sales + gross profit = revenue

D. revenue = profit + expenditure



42. Mr. X sold goods to Mr. Y ask Mr. X to keep the goods with him for some time

A. symbolic delivery

B. actual delivery

C. constructive delivery

D. none of these

43. If nothing is written about the accounting assumption to be followed it is presumed that

A. They have been followed

B. They have not been followed

C. They are followed to some extent

D. none of these

44. Capital A/c is a _______ A/c.

A. Personal

B. Real

C. Nominal

D. None

45. Cash A/c is a ________ A/c.

A. Personal

B. Real

C. Nominal

D. None

46. The principle “Debit the receiver and credit the giver” is related to_____

A. Personal a/c

B. Real a/c

C. Nominal a/c

D. None

47. Which of the following is a Real A/c?

A. Building A/c

B. Capital A/c

C. Shyam A/c

D. Rent A/c

48. Valuation of stock in accounting follows the principle of cost price or ____ whichever is

lower.



A. Market Price

B. Average Price

C. Net realizable Value

D. None of these.

49. Which of the following is not a nominal Account?

A. Outstanding salaries Account

B. Salaries account

C. Interest paid

D. Commission received

50. For every debit there will be an equal credit according to

A. Matching concept

B. cost concept


D. Dual aspect concept

51. Historical cost concept requires the valuation of an asset at

A. Original cost

B. Replacement value

C. Net realizable value

D. Market value

52. The comparison of financial statement of one year with that of another is possible only

when _______ concept is followed

A. Going concern

B. Accrual

C. Consistency

D. Materiality

53. Profit and loss is calculated at the stage of

A. Recording

B. Posting

C. Classifying

D. Summarising

54. Which of the following is not the main objective of accounting?

A. Systematic recording of transactions



B. Ascertaining profit or loss

C. Ascertainment of financial position

D. Solving tax disputes with tax authorities

55. The rule debit all expenses and losses and credit all income and gains relates to

A. Personal account

B. Real account

C. Nominal accounts

D. All

56. Matching concept means

A. Assets = capital + liabilities

B. Transactions recorded at accrual concept

C. Anticipate no profit but recognize all losses

D. Expenses should be matched with the revenue of the period.

Branch Accounts

57. When Branch pays expenses for H.O. the following account is debited in the books of the

branch _______

A. Expenses is debited

B. H.O. a/c is debited

C. Branch is debited

D. None

58. Under the stock and debtor system, Branch A/c is treated as ______

A. Joint a/c

B. Nominal a/c

C. Personal a/c

D. Real a/c

59. When Branch assets a/c is kept in the books of H.O., the H.O. will debit following a/c for

its depreciation _____

A. Branch P & L a/c

B. Depreciation a/c

C. Branch a/c

D None



60. Goods are sent to branch at cost plus 20%. If closing stock of the branch is Rs 60,000 at

invoice price, Rs ______ will be credited to stock reserve a/c.

A. Rs 10000

B. Rs 12000

C. Rs 6000

D. Rs 12600

61. HO sends goods to branch at 20% profit on invoice price, therefore the percentage of profit

on cost comes to ______

A. 15%

B. 25%

C. 33.33%

D. 20%

62. HO sends goods to branch at invoice price after adding 25% on cost price, so profit would

be ___ % of invoice price

A. 33.33%

B. 40%

C. 20%

D. 25%

63. For finding the amount of sundry expenses paid by the branch, the following a/c should be

prepared.

A. Computer a/c

B. Creditors

C. Petty cash a/c

D. Debtors

64. If the opening balance of petty cash is Rs 1000, closing balance is Rs 500 and the petty

cash received from HO is Rs 700, then what will be the amount of sundry expenses _____

A. Rs 1200

B. Rs 800

C. Rs 700

D. Rs 500

65. H.O. sent Rs 5000 as petty cash to branch during the year. Opening and closing balances

of petty cash was Rs 1400 and Rs 400 respectively. Then petty expenses of the branch during

the year will be ______



A. Rs 5000

B. Rs 6400

C. Rs 4600

D. Rs 6000

66. Which of the following branches, taking into consideration the scope of authority and

responsibility, prepares its own independent final accounts?

A. Independent Branch

B. Foreign Branch

C. Dependent branch

D. Independent and Foreign branch both

67. Opening balance of debtors a/c is Rs 1,40,000. Credit sales is Rs 10,74,000 and closing

balance of Debtors a/c is Rs 1,90,000. What is the amount of cash collection from the debtors?

A. Rs 10,24,000

B. Rs 8,84,000

C. Rs 11, 52,000

D. Rs 8,42,000

68. Goods in transit are shown in the balance sheet at ______

A. Head office

B. Branch

C. Both

D. None of above

69. H.O. has sent goods on invoice price worth Rs 2,40,000 which are 25% above cost price.

What is the loading element?

A. Rs 60000

B. Rs 240000

C. Rs 48000

D. Rs 160000

70. If the opening and closing balance of debtors a/c is Rs 50,000 and Rs 40,000 respectively,

cash received from debtors Rs 1,10,000 and bad debts are Rs 4,000 then what will be the

amount of credit sales?

A. Rs 110000

B. Rs 100000

C. Rs 102000



D Rs 104000

71. The adjusting entry for difference between the invoice price and cost price of goods are

shown in ________

A. Balance sheet

B. P & L a/c

C. Branch adjustment a/c

D. None of above

72. Stock and debtors system is generally used when goods are sent to the branch at _____

A. Cost price

B. Invoice price

C. Both

D. None

73. H.O. sent goods to branch at invoice price 50% plus on original price. How many

percentage of profit will be on Invoice price?

A. 20%

B. 25%

C. 33.33%

D. 16.67%

74. Goods sent by HO but not received by branch before the end of the year, by debiting it to

goods in transit, which account should be credited?

A. Cash a/c

B. H.O. a/c

C. Trading a/c

D. Branch a/c

75. If the opening balance of debtors is Rs 16,000 and closing balance is Rs 80,000, cash

received from debtors is Rs 35,000 and bad debts is Rs 1,000, then what will be the amount of

credit sales?

A. Rs 95000

B. Rs 105000

C. Rs 100000

D. Rs 110000



76. The system of keeping accounts generally adopted by small size branches are:

A. Debtors system

B. Stock & Debtors system

C. Wholesale branch system

D. Final account system

77. Goods are supplied by the head office to dependent branches are at:

A. Cost price

B. Invoice price

C. Market price

D. Cost or invoice price

78. Under debtors system which account is prepared by head office to calculate profit or loss

of each branch:

A. capital account

B. debtors account

C. branch account

D. branch adjustment account

79. Under debtors system depreciation on fixed asset is ________

A. credited to branch A/c

B. debited to branch A/c

C. not shown in branch A/c

D. shown in debtors A/c

80. Branch Trading &Profit & Loss A/c is only a _________ account not forming part of the

full accounting system.

A. Single

B. Memorandum

C. Capital

D. Double

81. In final account system, Branch Trading and Profit & Loss A/c is prepared at ________

A. invoice price

B. cost price

C. cost & invoice price

D. market price



82. Under Final A/c system, the profit or loss made by the branch is determined by preparing

A. Branch stock A/c

B. Branch Debtors A/c

C. Branch Adjustment A/c

D. Branch Trading & Profit &Loss A/c

83. The Branch Account prepared under Final Account System is the nature of:

A. Nominal Account

B. Real Account

C. Personal Account

D. General Account

84. Dependent branch makes:

A. Cash sales only

B. Credit sales only

C. Cash & Credit sales

D. Instalment sales

85. All branch expenses such as rent, salary are paid by H.O in case of:

A. independent branch

B. local branch

C. dependent branch

D. foreign branch

86. Branch Trading & Profit & Loss A/c is prepared to incorporate all _____

A. Revenue items

B. Capital items

C. Asset items

D. Past items

87. The difference between goods sent by H.O. and received by branch is known as _______

A. Goods in transit

B. Goods in warehouse

C. Goods in production

D. Goods in godown

88. The stock reserve for unrealised profit will be ________ to the H.O profit & Loss A/C

A. Debited



B. Credited

C. First credited then debited

D. Not shown

89. ____________ account is prepared to adjust the loads included in the value of opening

stock and closing stock.

A. Branch stock

B. Branch adjustment

C. Stock reserve

D. Branch P&L

90. ____________ account shows the shortage or surplus of stock.

A. Branch adjustment

B. Branch stock

C. Goods sent to branch

D. Branch P&L

91. The profit included in surplus or shortage of stock is transferred to ______ account

A. Branch stock

B. Branch expenses

C. Branch adjustment

D. Branch P&L

92. The balance of branch adjustment account is transferred to _________ account

A. Branch stock

B. Branch P&L

C. Branch Debtors

D. Branch expenses

Accounting for Proprietary Concerns

93. An ordinary partnership business can have:

A. Not more than 50 partners

B. Not more than 20 partners.

C. Any number of partners.

D Any number than 2 partners.



94. In the absence of an agreement profit and loss are divided by partners in the ratio of:

A. Capital

B. Equally

C. Time devoted by each partners

D. None of these.

95. In the absence of an agreement, Interest on loan advanced by the partner to the firm is

allowed at the rate of:

A. 6%

B. 5%

C. 12%

D. 9%

96. Current accounts of the partners should be opened when the capitals are:

A. Fluctuating

B. Fixed

C. Either fixed or fluctuating

D. None of these

97. Investment in partnership is made by introducing:

A. Cash

B. None – cash assets

C. Cash or non – cash assets

D. None of these.

98. Partnership is formed by the partners by:

A. Written agreement

B. Oral agreement

C. Written or oral

D. None of these

99. Any partner who investments in the business but does not take active part in the business

is:

A. Secret partner

B. Sleeping partner

C. Active partner

D. Nominal partner



100. The written agreement of partnership is called:

A. Partnership deed

B. Articles of association

C. Memorandum of association

D. Certificate of incorporation

101. Under fixed capital methods, profit will be credited to:

A. Capital Account

B. Drawings

C. Current A/c

D. Profit & Loss

102. The members of partnership firm are individually called as:

A. Director

B. Investor

C. Partner

D. Manager

103. Liability of partners in a partnership business is:

A. Limited

B. Un-limited

C. Limited & unlimited

D. None of these

104. Capital of the partners are maintained by:

A. Fixed capital method

B. Fluctuating capital methods

C. By any two above methods

D. None of them.

105. Drawings of the partners are:

A. Debited to profit & loss A/c

B. Credited to profit & loss A/c

C. Credited to capital A/c

D. Debited to capital A/c

106. A partners has to pay interest on drawings what is the entry in the personal A/c of the

partner?



A. Credit partners capital A/c

B. Credit partners current A/c

C. Debit the partners current A/c

D. Debit partners current A/c

107. Salary paid to partner should be:

A. Debited to his current A/c

B. Credited to his current A/c

C. Credited to profit & loss appropriation A/c

D. None of above

108. Interest on capital Account:

A. Debited to profit & loss A/c

B. Credit to profit & loss A/c

C. Debit to profit & loss and credited to partners capital A/c

D. Only credited to partners capital A/c

109. At the time of admission of a new partner the firm is:

A. Dissolved

B. Continued

C. Not effected

D. Re-organized

110. At the time of admission an incoming partner contributes as goodwill:

A. In cash

B. Does not pay cash

C. May or may not pay cash for goodwill

D. None of these.

111. Goodwill is valued as two years purchase of the average profits of three previous years

are Rs. 15000, the value of goodwill be:

A. Rs. 15000

B. Rs. 30000

C. Rs. 20000

D. Rs. 50000

112. Value of goodwill agreed upon Rs. 30000 on C, S admission and allowing him ¼ share

of total profit Goodwill is brought in cash, the amount of goodwill be as:



A. Rs. 30000

B. Rs. 7500

C. Rs. 150000

D. Rs. 120000

113. Goodwill of the firm is valued Rs. 30000. C an incoming partner purchase ¼ share of total

profit Goodwill be raised in the books.

A. Rs. 30000

B. Rs. 7500

C. Rs. 120000

D. Rs. 7000

114. An incoming partner pays his share of goodwill in cash, and profit sharing ration of old

partner is changed, Goodwill be distributed among old partners:

A. As their old profit ratio

B. According to new ration

C. According to sacrifice ratio

D. None of these

115. At the time of admission of a new partner, general reserve is:

A. Debited to capital of old partners

B. Credited to capital of old partners

C. Allowed to remain is balance sheet

D. Debited to current account

116. A new partner may be admitted to a partnership:

A. With the consent of all partners

B. With the consent of two third of old partners

C. With the consent of any one of the partners

D. Without consent of old partners

117. At the time of a new partner Goodwill:

A. Belongs to all partners, new and old

B. Belongs only to the new partners who is going to be admitted

C. Belongs only to the old partner who have credited it

D. None of the above.

118. In the revaluation account a decrease in the value of plant and machinery:



A. Appears on the debit side

B. Appears on the credit side

C. Appears on the debit side of good will account

D. Does not appear at all

119. In the revaluation account an increase in the value of land and building:

A. Appears on the debit side

B. Appears on the credit side

C. Appears on the credit side of good will account

D. Does not appear at all

120. The partnership may come to an end due to the:

A. Death of a partner

B. Insolvency of partner

C. By giving notice

D. All of the above

121. In case of retirement of a partner full good will is credited to the accounts of:

A. All partners

B. Only retiring partner

C. Only remaining partner


122. Revaluation account is operated to find out gain or loss at the time of:

A. Admission of a partner

B. Retirement of a partner

C. Death of a partner

D. All of above

123. Partners equity is effected due to:

A. Retirement of a partner

B. Admission of a partner

C. Death of a partner

D. All of above

124. The accounting procedure at the retirement of partner is valued:

A. Revaluation of assets and liabilities

B. Ascertaining his share of goodwill



C. Finding the amount due to him

D. All of above

125. If the remaining partner want to continue the business, after the retirement of a partner, a

new partnership agreement:

A. Necessary

B. Not necessary

C. Optioned

D. None of above

126. An account operated to ascertain the loss or gain at the death of a partner is called:

A. Realization account

B. Revaluation account

C. Execution account

D. Deceased partner A/c

127. Amount due to outgoing partner is shown in the balance sheet as his:

A. Liability

B. Asset

C. Capital

D. Loan

128. The loss or gain an account of revaluation at the time of retirement of a partner is shared

by:

A. Remaining partners

B. Retiring partner

C. All partners

D. None of above

129. On the retirement of a partner any reserve being should be transferred to the capital

account of:

A. All partners in the old profit sharing ratio

B. Remaining partners in the new profit sharing ratio

C. Neither the retiring partner, nor the remaining partner

D. None of above

130. Retirement or death of a partner.

A. Is dissolution of partnership agreement

B. Is dissolution of a firm



C. May or may not be a dissolution of partnership agreement

D. None of above

131. If all the partners, but one are insolvent it is:

A. Dissolution of an agreement

B. Dissolution of firm

C. May or may not cause dissolution

D. None of above

132. If all the partners, but one, are solvent it is:

A. Dissolution of partnership agreement

B. Dissolution of firm

C. May or may not cause dissolution

D. None of above

133. At the time of dissolution:

A. All the assets are transferred to realization A/c

B. Only current assets are transferred to realization A/c

C. Non cash assets are transferred to realization A/c

D. Only liquid and current asset are transferred to realization A/c

134. At the time of dissolution non – cash assets are credited with:

A. Market value

B. Book value

C. As the agreed amount among the partners

D. Cost or market whichever is low

135. If a partner takes over an asset of the firm, his capital account:

A. Will be debited with the amount as agreed

B. Will be credited with the market value of the asset

C. Will be debited with book value of the asset

D. None of above

136. Loss on realization is distributed among partners:

A. According to profit and loss ratio

B. According to capital ratio

C. As decided among them

D. None of above



137. Loss on realization is:

A. Debited to partners capital A/c

B. Credited to partners capital A/c

C. Debited to realization A/c

D. Credited to realization A/c

138. When all partners are insolvent creditors will be:

A. Paid fully

B. Paid rate ably

C. Taken over by the partners

D. Paid by government

139. The persons who have entered into a partnership business are individually called:

A. Realization A/c

B. Partners capital A/c

C. Sundry debtors

D. Provision for bad debts A/c

140. The persons who have entered into a partnership business are individually called:

A. Vender

B. Agents

C. Partners

D. A firm

141. If no provision is made in agreement regarding the duration of the partnership:

A. Limited partnership

B. Partnership at will

C. None

D. Particular partnership

142. A person who declares by word of mouth as partner of the firm is called:

A. Active partner

B. Estople partner

C. Dormant partner

D. Nominal partner

143. A person who receives a share of profits from one of the regular partner is called:

A. Secret partner



B. Quasi

C. Partner in profit only

D. Sub – partner

144. The agreement among partners which set out the terms on which they had agreed to form

a partnership is called:

A. Partnership deed

B. Partnership at will

C. None of these

D. Arbitration clause

145. Every partner has a right to be consulted in all matters affecting the business of:

A. Sole-tradership

B. Partnership

C. JSC

D. Both (a) and (b)

146. For the firm interest on drawing is:

A. Expense

B. Income

C. Liability

D. None

147. A credit balance on a partner’s current A/c is.

A. Fixed capital

B. Part of capital

C. A current asset

D. Long – term liability

148. Upon the sale of an established business its good will:

A. Marketable value

B. Not marketable value

C. (b) and (c)

149. Old profit sharing ratio minus new profit sharing ration is equal to:

A. Sacrificing ratio

B. Ratio of gain

C. Capital ratio



D. None

150. A is drawing Rs. 500 regularly on the 16th of every month, he will have to pay interest in

a year on Rs. 6000 for the total period of @ given rate of interest):

A. 5 months

B. 6 months

C. 7 months

D. 12 months

151. For any decrease in the value of liability, revolution A/c is to be:

A. Debited

B. Credited

C. Both (Cr.) & (Dr.)

D. Neither (Dr.) & (Cr.)

152. Revolution A/c is a:

A. Real A/c

B. Personal A/c

C. Cash A/c

D. Nominal A/c

153. When good will is brought in cash by new partner, method is known as:

A. Premium method

B. Revolution method

C. Memorandum revolution method

D. None

154. Section 37 of partnership act provided interest on the amount left by retiring or decreased

partner at:

A. 5%

B. 10%

C. 6%

D. bank rate

155. When a partner dies, firm will receive the:

A. 1/2 amount of policy

B. 1/4 amount of policy

C. 3/4 amount of policy



D. Full amount of policy

156. At the time of dissolution all the assets of firm are transferred to the realization A/c:

A. Market value

B. Book value

C. Cost value

D. Bale value

157. Balance of realization A/c is transferred to the capital A/c of the partners in:

A. Capital ratio

B. Profit sharing ratio

C. Interest ratio

D. Equally

158. The decision is Garner Vs Murray was given in:

A. 1904

B. 1905

C. 1933

D. 1804

Hire Purchase and Instalment System

159. When an asset is acquired on 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

D. None of these

160. If the firm stops making repayments and the goods or assets are taken away from them as

a result, this is known as:

A. Cancellation

B. Forfeiture

C. Repossession

D. Annulment

161. On the balance sheet of a company, the value of the asset bought through hire purchase

will appear as:



A. Cost less depreciation to date less amount owing on hire purchase less interest owing

B. Cost less amounts owing on hire purchase

C. Cost less depreciation to date less amount owing on hire purchase

D. Cost less depreciation to date

162. The depreciation on an asset purchased through hire purchase should be:

A. Should be straight line only

B. Based on the cost price of the asset only

C. Based on the total cost including interest

D. No depreciation should be provide until the final payment is made

163. The interest charged on the hire purchase should appear in the profit and loss account in

what manner?

A. The total interest levied should be divided equally over the total period the for

purchase agreement

B. The interest charged in that period only should be included

C. Interest should instead be capitalised on the balance sheet

D. Interest should be apportioned in proportion to the repayment totals

164. Ownership of goods under hire purchase agreement is transferred at the time of:

A. Payment of down payment

B. Payment of first instalment

C. Payment of last instalment


165. Which of the following does not give a difference between a hire purchase and a normal

purchase?

A. Timing of payment for asset

B. Legal ownership of asset

C. Quality of asset purchased

D. Total cost of asset.

166. The act of buying an asset without having to make full payment in the immediate future

is known as:

A. Hire purchase

B. Finance lease

C. Operating lease

D. Sale and leaseback



167. The amount of interest is credited by the buyer to ________

A. Hire purchase Account

B. Hire Vendor Account

C. Interest Account

D. Cash Account

168. The depreciation in the books of buyer is charged on _________

A. Hire Purchase Price

B. Market price

C. Total Instalment amount

D. Cash Price

169. Hirer charges depreciation on:

A. Hire purchase price

B. Cash price

C. Lower of the two

D. None of these

170. What is transferred to Hirer under hire purchase system:

A. Ownership of assets

B. Possession of asset

C. Ownership and possession of asset

D. None of these

171. Hire Purchase Act is passed in the year

A. 1932

B. 1956

C. 1972

D. 1872

172. The Sale of Goods Act is applicable in:

A. Credit Purchases

B. Cash Purchases

C. Cash Sales

D. None of these

173. Under which system, ownership is transferred on payment of final installment

A. Installment system



B. Credit system

C. Hire purchase system

D. Cash system

174. Under hire purchase system the buyer is called _________

A. Buyer

B. Hirer

C. Hire vendor

D. Debtor.

175. Under hire purchase system who has the right of sell __________

A. Buyer

B. Hirer

C. Hire Vendor

D. Debtor

176. Under hire purchase system, the agreement can be _________

A. Renewed

B. Registered

C. Terminated

D. Endorsed.

177. Installment system is governed by _______

A. Hire Purchase Act

B. Sale of Goods Act

C. Installment Act

D. Properties Registration Act

178. Under hire purchase system, the retail price of the articles is called ________

A. MRP

B. Wholesale Price

C. Retail Price

D. Cash Price

179. Cash price plus interest is _________

A. Installment Price

B. Hire Purchase Price

C. Maximum Retail Price



D. Retail Price

180. The advance amount under hire purchase system is called __________

A. Cash Price

B. Retail Price

C. Interest

D. Down Payment

181. Under hire purchase system, interest is calculated on _______

A. Cash Price

B. Hire Purchase Price

C. MRP

D. Outstanding Balance.

182. If the hire purchaser fails to make payment of any installment, it is called _______

A. Default

B. Repossession

C. Sale

D. Purchase

183. If the hire vendor may take away all the goods on which there is default of installment it

is called____________

A. Repossession

B. Partial Repossession

C. Complete Repossession

D. Purchase.

184. The hire vendor takes away only a portion of the goods on which there is default of

Installments it is called _________

A. Repossession

B. Partial Repossession

C. Complete Repossession

D. Purchase

185. In the books of hirer, for payment of installment hire vendor account will be ________

A. Debited

B. Credited

C. Rectified



D. Reversed

186. In the books of hirer, for interest due at the end of the year hire vendor account will be

_______

A. Debited

B. Credited

C. Rectified

D. Reversed

187. In the books of Hirer, the interest and depreciation account will be transferred to ______.

A. Trading account

B. P & L account

C. P & L appropriation account

D. Balance sheet

188. Nature of hire purchase agreement is __________.

A. Agreement of sale

B. Option to transfer

C. Option to buy

D. Option to sell

189. 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

190. Under ______ system the buyer does not get ownership of goods immediately

A. Installment

B. HP

C. Installment and HP

D. None of these

191. ________ means the price at which the goods can be purchased by the hirer for ready

cash.

A. HP price

B. Installment price

C. Cash price



D. Down payment

192. ________ is the initial payment made at the time of signing the hire purchase agreement

A. HP price

B. Installment price

C. Cash price

D. Down payment

193. The difference between hire purchase price and the cash price is called ______

A. Hire charges

B. Cost of the asset

C. Installment price

D. Cash price

194. In order to deal with the re possession the hire vendor operates an account called _______

A. Asset account

B. Goods account

C. Goods repossessed account

D. None of these

195. Hire Purchase price =

A. Cash price + Down payment

B. Cash price + Total interest

C. Cash price

D. Sum of total instalments

196. Cash Price =

A. Hire purchase price – total interest

B. Down payment in cash

C. Down payment + Interest


Issue of Shares and Debentures

197. The amount of capital with which the company intends to get registered is known as

A. issued capital

B. subscribed capital

C. authorized capital



D. called-up capital

198. Which of the following statement is false:

A. A company is a legal entity quite distinct from its members

B. A company can buy its own share

C. A shareholder is the agent of the company

D. Same person can agent and creditor of the company

199. Which of the following are the characteristics of a company

A. Liability of the members is limited up to the face value of shares held by them

B. It is a voluntary association of persons

C. A company is a separate body can sue and be sued in its own name

D. Perpetual succession

200. Share application and allotment account is a:

A. Personal account

B. Real account

C. Nominal account


201. Securities premium account is shown on the liabilities side of the balance sheet under the

head:

A. Share capital

B. Reserves and surplus

C. Current liabilities

D. Non-Current liabilities

202. As per section 78 of the companies act, amount collected as premium on securities cannot

be utilized for:

A. Issuing fully paid bonus shares to the members

B. Purchase of fixed assets

C. Writing off preliminary expenses

D. Buy back of it’s own shares

203. The portion of the authorised capital which can be called-up only on the liquidation of the

company is called

A. Authorised capital

B. Reserve capital

C. Issued capital



D. Called up capital


A. Buy back must be authorised by articles of company

B. A special resolution must be passed for buy back

C. Shares can be partly paid up

D. The ratio of debt owed by the company is not more than twice the capital and its

free reserves after such buy back

205. If shares are bought back out of free reserves then a sum equal to nominal value of the

shares so bought back is transferred to:

A. Capital reserve account

B. Capital redemption reserve account (CRR)

C. General reserve account

D. Statutory reserve account

206. Maximum buy back limit in any year is ______ of total paid up equity capital and free

reserves.

A. 25%

B. 10%

C. 20%

D. No limit

207. Which of the following statement in false:

A. Bonus issue is made out of free reserves or securities premium collected in cash only

B. Bonus shares can be issued out revaluation profit

C. No bonus issue shall be made within 12 months of any public or right issue

D. Company can issue bonus shares in any ratio.

208. Right share are not offered to the existing equity shareholders if:

A. The company in general meeting has so decided by a special resolution

B. Decided by an ordinary resolution and same has been approved by the central

government

C. Right shares are offered to existing shareholders only

D. Both a and b.

209. Which of the following reserves which can be utilised to make partly paid shares into fully

paid up:

A. Securities premium



B. Capital redemption reserve

C. Surplus arising from a change in the method of charging depreciation

D. Capital reserve from sale of fixed assets in cash


A. Bonus issue is made in lieu of dividend

B. Bonus issue is not made unless the partly paid shares are made fully paid up

C. Bonus issue must be implemented within six months from the date of approval

D. Bonus is simply capitalisation of free reserve

211. Redeemable Preference shares can be redeemed out of __________

A. The sale proceeds of Investments

B. The proceeds of a fresh issue of shares

C. Share premium

D. The proceeds of issue of debentures

212. When Redeemable Preference shares are due for redemption, the entry passed is

A. Debit redeemable Preference Share capital a/c; Credit cash a/c

B. Debit Redeemable Preference share capital a/c; credit Preference shareholders a/c

C. Debit preference shareholders a/c; credit cash a/c

D. Debit preference shareholders a/c; credit capital reduction a/c

213. Which of the following can be utilized for the redemption of preference shares of a

company out of profit:

A. Shares forfeited account

B. Development rebate reserve account

C. Capital redemption reserve account

D. Dividend equalization reserve

214. Which of the following cannot be utilized for the redemption of preference shares of a

company

A. Securities premium on fresh issue of shares

B. General Reserve

C. Profit and Loss Account

D. Dividend equalization reserve

215. A company cannot issue redeemable preference shares for a period exceeding

_____________.

A. 6 years



B. 7 years

C. 8 years

D. 20 years

216. Which of the following cannot be used for the purpose of creation of capital redemption

reserve account?

A. Profit and loss account (credit balance)

B. General reserve account

C. Dividend equalization reserve account

D. Unclaimed dividends account

217. The Capital Redemption reserve is created for the following reasons:

A. To Maintain the capital intact

B. To safeguard the interest company’s creditors

C. Both of the above


218. Which of the following accounts can be transferred to capital redemption reserve account?

A. General reserve account

B. Forfeited shares account

C. Profit prior to incorporation

D. Securities premium account

219. According to sec. 100(1)(c) of the companies act, a company can pay back share capital

which is in excess of need if:

A. Authorized by articles

B. Confirmation of the court

C. Special resolution is passed to that effect

D. All of the above

220. Which of the following is not a statistical book of a company?

A. Share application and allotment book

B. Register of share warrants

C. Register of shares and debentures transferred

D. Register of debenture holders

221. Share capital suspense account is opened when:

A. Balance sheet is not tallied



B. When dividend is declared but not paid

C. When shares are forfeited

D. When application money is received but balance sheet is prepared before allotment

of shares.

222. A company can issue share at a discount if

A. One year have been elapsed since the date at which the company was allowed to

commence business

B. Shares issued at a discount must belong to a class of shares already issued

C. Issue must take place within two must after the date of sanction by the court or within

extended time.

D. All of the above

223. When bonus share are received the average cost of the existing shares are ______

A. Reduced

B. Increased

C. equal

D. none of these

224. Bonus shares are issued by ________ free reserves

A. Generalizing

B. Capitalizing

C. Equalizing

D. None of these

225. Bonus shares are issued out of _________

A. capital reserve

B. free reserve

C. share premium

D. none of these

226. Right shares are issued to _________ shareholders

A. previous

B. existing

C. future

D. None of these

227. Sale of right is a _________ receipt in case of right issue

A. Revenue



B. capital

C. deferred revenue

D. none of these

228. Forfeiture of shares results in compulsory termination of ______ due to non-payment of

allotment/call money

A. allotment

B. membership

C. subscription

D. issue

229. Securities premium account can be used for

A. Paying tax liability

B. paying dividend on shares

C. allowing discount in reissue of forfeited shares

D. to write off preliminary expenses

230. After the issue of forfeited shares, balance of forfeited shares account Is transferred to

A. capital reserves A/c

B. share capital

C. general reserves

D. profit & loss A/c

231. Preference shares have priority over equity shares for

A. payment of dividend and repayment of capital

B. voting in annual general meeting

C. subscribe for new issue of shares and debentures

D. interest on money invested in company

232. Shareholders get:

A. interest

B. dividend

C. bonus

D. commission

233. Debenture holders have right to receive _______ even if there is no profit

A. interest

B. commission



C. dividend

D. bonus

234. Debenture holders are the _____ of the company

A. owners

B. customers

C. creditors

D. partners

235. Dividends are usually paid as a percentage of

A. authorized capital

B. net profit

C. paid up capital

D. called up capital

236. Debentures can be issued only

A. at par

B. at discount

C. premium

D. any of the above

237. If the minimum subscription is not received by the company, then the refund of application

money should be made within ______ days.

A. 7

B. 9

C. 10

D. 22

238. Cancelation of shares mean

A. Reissue of shares

B. Valuation of shares

C. Forfeiture of shares

D. Allotment of shares

239. To issue shares on premium mean

A. Issue on face value of shares

B. Issue on more than face value of shares

C. Issue on less than face value of shares



D. Initial public offer

240. To issue shares on Par mean





241. To issue shares on Discount mean





242. Forfeited shares to become ________

A. property of the government

B. property of the company

C. property of the shareholders

D. property of all the shareholders

243. Debentures represent the _________

A. manager's share in a business

B. investment by shareholders in a business

C. long term borrowing of a business

D. none of the above

244. Discount on issue of debentures is shown under the heading in a company's Balance Sheet

_______

A. Fixed assets

B. Loans and advances

C. Investment

D. Miscellaneous expenditure

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

A. Calls-in-advance account

B. Share capital account

C. Securities premium account

D. Discount on issue of shares account



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

A. Writing off any loss on sale of fixed asset

B. Writing off any loss of revenue nature

C. Writing off the expenses/discount on the issue of debentures

D. None of these

247. When shares are forfeited, the share capital account is debited with ________ and the

share forfeiture account is credited with __________.

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

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

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

D. None of these

248. As per the SEBI guidelines, on issue of shares, the application money should not be less

than

A. 2.5% of the nominal value of shares

B. 2.5% of the issue price of shares

C. 25% of the issue price of shares

D. 25% of the nominal value of shares



ANSWER KEY

1 C 39 A 77 D 115 B 153 A 191 C 229 D

2 D 40 A 78 C 116 A 154 C 192 D 230 A

3 B 41 C 79 C 117 C 155 D 193 A 231 A

4 A 42 A 80 B 118 A 156 B 194 C 232 B

5 C 43 B 81 C 119 B 157 B 195 B 233 A

6 C 44 A 82 D 120 D 158 A 196 A 234 C

7 C 45 B 83 A 121 A 159 B 197 C 235 C

8 C 46 A 84 C 122 D 160 C 198 C 236 D

9 C 47 A 85 C 123 D 161 D 199 C 237 C

10 C 48 C 86 A 124 D 162 B 200 A 238 C

11 A 49 A 87 A 125 A 163 B 201 B 239 B

12 A 50 D 88 D 126 B 164 C 202 B 240 A

13 A 51 A 89 B 127 D 165 C 203 B 241 C

14 A 52 C 90 B 128 C 166 A 204 C 242 B

15 A 53 D 91 C 129 A 167 B 205 B 243 C

16 D 54 D 92 B 130 A 168 D 206 A 244 D

17 A 55 C 93 B 131 B 169 B 207 B 245 C

18 B 56 D 94 B 132 B 170 B 208 D 246 C

19 C 57 B 95 A 133 C 171 C 209 D 247 C

20 B 58 D 96 B 134 B 172 A 210 A 248 C

21 D 59 C 97 C 135 A 173 A 211 B

22 A 60 A 98 C 136 A 174 C 212 B

23 C 61 B 99 B 137 A 175 C 213 D

24 B 62 C 100 A 138 B 176 C 214 A

25 C 63 C 101 C 139 A 177 B 215 D

26 D 64 A 102 C 140 C 178 C 216 D

27 D 65 D 103 B 141 B 179 B 217 C

28 A 66 A 104 C 142 B 180 D 218 A

29 A 67 A 105 D 143 D 181 D 219 D

30 C 68 A 106 D 144 A 182 A 220 D

31 C 69 C 107 D 145 B 183 C 221 D

32 C 70 D 108 C 146 B 184 B 222 D

33 B 71 C 109 A 147 B 185 A 223 A

34 A 72 B 110 C 148 A 186 B 224 B

35 C 73 C 111 B 149 A 187 B 225 B

36 B 74 D 112 B 150 B 188 C 226 B

37 B 75 C 113 A 151 B 189 C 227 B

38 C 76 A 114 C 152 D 190 B 228 B

SCHOOL OF DISTANCE EDUCATION BBA SEMESTER II CORE...

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