Professional Documents
Culture Documents
6. A person started business with a cash of Rs. 22,000 and stock of Rs. 3,000 on 1st January,
1996.,Durihg the year , he made a profit of Rs. 6,000. His creditors were paid Rs. 4,500 for the
office furniture supplied. He took goods worth Rs. 3,500 for his daughter's wedding on 30th
June, 1996. The 9ross assets of his business on 31st December, 1996 was
(a) Rs. 27,500
(b) Rs. 26,500
(c) Rs. 23,500
(d) Rs. 20,500
7. Match List I with List II and select the correct answer:
List I List II
(Item) (Type of asset)
A. Brand equity 1. Tangible
B. Plant and Machinery 2. Current
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 1
C. Advances to suppliers 3. Intangible
D. Deferred revenue expenditure 4. Fictitious
ABCDABCD
(a) 3 1 4 2 (b) 3 1 2 4
(c) 1 3 2 4 (d) 1 3 4 2
8. In stock valuation, application of the principle 'at cost price or market price whichever is
lower' will result in the valuation of stock sometimes at cost price and at other times at market
price. This is an application of the principle of
(a) Consistency (b) Materiality (c) Conservatism (d) Disclosure
9. Match List I with List II and select the correct answer:
List I List II
A. Heavy amount of 1. Capital expenditure
premium on redemption of
preference shares .
B. Excess of sale proceeds 2. Deferred revenue expenditure
fixed assets over their
original cost
C. Cost of installation 3. Capital gain of an old machine
D. Freight paid on purchase 4. Revenue of raw material expenditure
ABCDABCD
(a) 2 3 4 1 (b) 3 2 4 1
(c) 2 3 1 4 (d) 3 2 1 4
10. Amount spent on an advertisement campaign, the benefit of which is likely to last for three
years is a
(a) capital expenditure
(b) revenue expenditure
(c) deferred revenue expenditure
(d) contingent expenditure
11. Match List I with List II and select the correct answer :
List I List II
A. Preliminary expenses 1. Capital expenditure
B. Traveling expenses of 2. Revenue expenditure r the salesman
C. Profit on sale of a part 3. Capital gain of the business building
D. Nazarene paid on the 4. Deferred revenue purchase of Land for expenditure business
ABCDABCD
(a) 4 2 3 1 (b) 4 2 1 3
(c) 2 4 3 1 (d) 2 4 1 3
12. Revenue is generally recognized as being earned at that point of time when
(a) sale is effected (b) cash is received
(c) production is completed (d) debts are collected
13. Which one of the following will be treated as revenue expenditure ?
(a) Cost incurred for a new exit as required under the local bodies' bye laws
(b) Interest paid on loan during the construction of works
(c) Cost of pulling down an old building as also the payment made to the architect for the plan
of a
new building
(d) A dealer in sewing machines purchases sewing machines and spends some money on the
repair of ten machines damaged while in transit.
16. Which one of the following depreciation methods is most suitable for a coal mine ?
(a) Diminishing balance method
(b) Depletion method
(c) Fixed installment method
(d) Sum of years' digits method
17. In the case of a sole proprietorship, Assets in Balance Sheet items are conveniently shown
in (a) order of fixity (b) order of liquidity
(c) alphabetical order. (d) order of dates of acquisition
18. Match List I (Names of accounts) with List II (Matters with which the accounts are
concerned) and select the correct answer :
List-I List-II
A. Partners current 1. Dissolution of partnership
accounts
B. Goodwill account 2. Revaluation of assets on the admission of a partner
C. Partners drawings 3. Fixed capitals of partners
accounts
D. Profit and Loss
adjustment account 4. Goods taken by partners for private consumption
ABCDABCD
(a) 1 3 2 4 (b) 1 3 4 2
(c) 3 1 4 2 (d) 3 1 2 4
19. A business concern provides the following details :
Cost of goods sold 1,50,000
Sales 2,00,000
Opening stock 60,000
Closing stock 40,000
Debtors 45,000
Creditors 50,000
The concerns' purchases would amount to (in Rs.)
(a) 1,30,000 (b) 2,20,000
(c) 2,60,000 (d) 2,90,000
20. Match List I (transaction) with List II (Entry to be made) and select the correct :
List I List II
A. Loss on realisation 1. Debits partner's capital A/c
B. Profit on realization 2. Credit realization A/c
C. Assets sold 3. Credit partner's capital A/c
D. Creditors paid 4. Debit realisation A/c
ABCDABCD
(a) 1 3 2 4 (b) 3 1 2 4
(c) 3 1 4 2 (d) 1 3 4 2
21. Which of the following statements are appropriate in respect of partnership accounts ?
1. In the absence of any provision in the partnership agreement to the contrary, partners can
charge interest at 6% per annum on loans given by them to the partnership firm.
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2. An ordinary partnership firm can have not more than 50 partners.
3. A banking partnership firm can have not more than 10 partnership.
4. In the absence of any provision in the partnership agreement to the contrary, profits and
losses are shared by the partners in the ratio of their capitals.
Select the correct answer from the codes given below :
(a) 1 and 2 (b) 1 and 3
(c) 2, 3 and 4 (d) 1, 3 and 4
22. A and B are equal partners in a firm. They submitted C as one-sixth partner who brought in
Rs. 6O,000 as godown. The new profit sharing ratio is 3 : 2 : 1.lf goodwill of Rs. 60,000 is to be
paid to the old partners as per profit sacrificing ratio, B will receive
(a) Rs. 30,000 (b) Rs. 60,000
(c) Rs. 45,000 (d) Nil
23. R, admitted as a new partner for one-fourth share of future profits, fails to bring in cash of
Rs. 5,000 to wards goodwill but the existing (old) partners S and T, sharing profits in the ratio
of 3 : 2, raise the goodwill account at its full value. Therefore the partners will be credited for
goodwill as S (Rs) T (Rs) R (Rs)
(a) 3,000 2,000 Nil
(b) 9 000 6000 5 000
(c) 12,000 8,000 Nil
(d) 2,250 1,500 1,250
24. The following figures {all in Rs.) relate to a non trading concern :
1st January, 1995 stock of medicines 5,000 1st January, 1995 outstanding creditors for
medicines 3,000 Amount paid for medicines during the years 15,000 Value of medicines
spoiled during the year 400 Stock of medicines on 31st December, 1995 3,500 The amount to
be debited to Income and Expenditure account would be
(a) Rs. 15,000 (b) Rs. 18,500
(c) Rs. 18,000 (d) Rs. 13,500
25. Which one of the following statements is correct ?
(a) Depreciation is not the process of valuation of asset it is a process of allocation of cost of
asset to the period of its economic life
(b) If the cost of machinery is more than the book value, then depreciation need not be provided
(c) When the plant and machinery are maintained in good condition, through repairs and
renewals, depreciation need not be provided
(d) In the absence of any legal provisions, if the auditor finds that provision made for
depredation is inadequate, then he is not required to refer to it in his report
26. What is the correct sequence of the following actions required for the preparation of Final
Accounts ?
(a) Preparation of Trial Balance
(b) Balancing of Accounts
(c) Preparation of Annual Financial Statements
(d) Making Adjusting Entries
Select the correct answer from the codes given below:
(a) 4, 2, 1, 3 (b) 2, 4,3, 1
(c) 2, 1, 4, 3 (d) 4, 2, 3, 1
96. Which one of the following is the latest and most form of communication ?
(a) Speed post (b) Telex
(c) Fax (d) E-mail
97. Which one of the following pairs is correctly matched?
(a) Manual of office procedures------ In its absence the workload cannot be distributed equitably
and full-day's work cannot be assigned to different employees
99. A meeting of the Board of Directors must be held at least once every
(a) two months
(b) two months and at least three such meeting must be held every year
(c) three month and at least four such meeting must be held every year
(d) six months
Directions: The following fourteen items consist of two statements one labeled the Assertion At
and the other labeled 'Reason R' You are to examine these two statements carefully and decide
if the Assertion A and the Reason R are individually are and if so, whether the Reason is a
correct explanation of the Assertion. select your answers to these items using the codes given
below and mark your answer sheet accordingly.
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is not a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
107. Assertion (A) : A construction company which by .Memorandum and Articles had powers
to borrow and lend carries on a banking business. This is considered to be ultra vires the
memorandum
Reason (R) : The borrowing and lending should be received to the main (construction) activity
only.
108. Assertion (A) : A minor can be admitted to the benefits of partnership with the consent of
all the partners.
Reason (R) : His liability is confined only the extent of his share in the profits and property of
the firm.
109. Assertion (A) : The auditor should examine the “Objects clause" of the Memorandum of
Association.
Reason (R) : This would ensure that the company is carrying on business as specified in the
Memorandum of Association.
110. Assertion (A) : The auditor of a proprietary firm need not be bound by professional
propriety.
Reason (R) : Proprietary auditor is responsible only to the person (s) who appoints (s) him.
111. Assertion (A) : The main purpose of auditing is to verify that the accounts have been
prepared according to the principles of accounting and to see whether the financial statements
so prepared reflect a true and fair view of the state of affairs of a business.
Reason (R) : Auditing starts after the completion of recording of transactions in the books of
account.
112. Assertion (A) : The auditor should visit the particular concern at intervals and check the
book of accounts.
Reason (R) : Some precaution is required to be taken by the auditor to avoid weaknesses of
continuous audit.
113. Assertion (A) : Return on Investment is the ultimate relationship between earnings and
investment.
Reason (R) : Sales play the pivotal role in such a relationship as sales govern the earnings and
investments in turn government sales.
114. Assertion (A) : In accounting, a distinction is made between the business and the owner .
Reason (R) : Accounting concepts are based on objectivity and not on subjectivity.
115.Assertion (A) : Materiality concept refers to the state of ignoring relatively small items and
values from accounts.
Reason (R) : The effort involved in allocating the cost of a small item over a long period should
be justified m terms of the benefit derived from this operation. Therefore. cost of such items
may be treated as expenses for the period In which they are acquired.
Commerce 98
1. A second hand machinery was purchased for Rs. 1,00,000 five years ago and was overhauled
by carrying out some current repairs at a cost of Rs.10,000. It has also accumulated depreciation
of Rs. 50,000. It has been disposed of in the beginning of the sixth year for Rs. 60,000.
Profit/loss on such disposal shall be
(a) Profit of Rs. 10,000
(b) Loss of Rs. 50,000
(c) Loss of Rs. 40,000
(d) No profit, no loss
2. Match List I with List II and select the correct answer :
List I List II
A. Income measurement 1. Accrues to owner's equity
B. Expense recognition 2. Revenue recognition
C. Basis for realisation in 3. Matching revenue and expenses
accounting
D. Recognized revenue 4. Accounting period
ABCDABCD
(a) 3 4 2 1 (b) 3 4 1 2
(c) 2 3 4 1 (d) 2 3 1 4
3. It is given that the cost of the stock is Rs. 100. However, its current market price is Rs .95
(buying) and Rs. 90 selling). If the market price is interpreted in the sense of replacement cost,
the stock should be valued at
(a) Rs.95 (b) Rs. 100 (c) Rs.90 (d) Rs.93
4. In the last-in-first-out (LIFO) method, the closing stock is valued at
(a) a price which is paid for the last consignment
(b) a price which is paid for the earlier consignment
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 15
(c) an average price of all the consignments
(d) none of the above
21. ' A' and 'B' are partners in a business sharing profits in the ratio of 5 : 3. They admit 'C' as a
partner with 1/4 share in the profits which he acquires 3/4 from 'A' and 1/4 from 'B'. He pays
Rs. 4,000 as his share of goodwill. 'A' and 'B' will be credited by
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 17
(a) Rs. 2,500 and Rs. 1,500 respectively
(b) Rs. 2,000 each
(c) Rs. 1,000 and Rs. 3,000 respectively
(d) Rs. 3,000 and Rs. 1,000 respectively
22. ‘A' and ‘B', who are partners, share profits in the ratio of 7: 3. 'C' is admitted as a new
partner. ' A' surrenders 1/7 of his share and 'B' surrenders 1/3 of his share in favor of ‘C'. The
new profit sharing ratio will be
(a) 6 : 2 : 2 (b) 4 : 1 : 1
(c) 3 : 2 : 2 (d) none of the above
23. ' A' and 'B' are two partners of a firm having capitals of Rs. 15000 and Rs. 5000
respectively, snaring profit and loss in the ratio of 2 : 1. On dissolution of the firm the assets
realised is : 1st installment Rs. 3000 ; 2ndinstalment Rs.5000 Under Proportionate Capital
Method, the loss to 'B' will be
(a) Rs.1000 (b) Rs.2100 (c) Rs.3000 (d) Rs.4000
24. A, B, C, D are partners sharing profit and losses in the ratio 3 : 3 : 2 : 1. The partnership is
dissolved and D becomes insolvent. C brings only his share of loss and shows inability to
contribute any thing towards D's deficiency. According to Garner Vs Murray ruling. D's
deficiency in the total will be shared by
(a) A and B in their capital ratio
(b) A, B and C in their profit sharing ratio
(c) A, B and C in their capital ratio
(d) A, B and C equally
25. According to Companies Act, "reserve capital" is created
(a) for a specific purpose at any time during its working life
(b) for issue to the existing shareholder as rights issue of shares
(c) as the uncalled portion of share capital of a limited company to be called only in the event of
winding up
(d) for conversion of FCDS into equity shares
26. If a company adopts Table' A', the compare is required to pay interest on calls in advance at
the rate of
(a) 8% (b) 7% (c) 6% (d) 5%
27. Match List I with List II and select the correct answer :
List I List II
(Items of balance sheet (Heading of balance sheet)
of a company)
A. Profit prior to Incorporation 1. Provisions
B. Proposed dividend 2. Miscellaneous expenditure
C. Interest paid out of Capital 3. Current liabilities
D. Unclaimed dividend 4. Reserves and Surplus
ABCDABCD
(a) 4 1 3 2 (b) 4 1 2 3
(c) 1 4 2 3 (d) 1 4 3 2
28. Amount set apart to meet probable losses on account of bad debts is a
(a) liability (b) reserve
(c) provision (d) contingent liability
29. Which one of the following is NOT a current Liability ?
(a) Acceptances
(b) Local installment payable in the current year
(c) Temporary bank overdraft
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(d) Arrears of preference dividend
30. Consider the following statements : Redeemable preference shares can be redeemed out of
1. sale proceeds of the new issue of shares.
2. Sale proceeds of the new issue of debentures.
3. profits available for dividends.
4. Sales proceeds of the assets of the company.
Of these statements :
(a) 1 and 3 are correct (b) 1 alone is correct
(c) 2, 3 and 4 are correct (d) 1, 2, 3 and 4 are correct
31. Match List I with List II and select the correct answer:
List I List II
A. Balance of Debenture 1. Realisation account
Redemption Fund
B. Balance of Sinking Fund account 2. Funds-Flow statement
for the replacement of an asset
C. On dissolution of a firm, the 3. General Reserve
provisions made for doubtful debts
appearing in Balance sheet
D. Financial consequences of 4. Asset account
business operations
ABCDABCD
(a) 1 2 3 4 (b) 3 4 1 2
(c) 1 2 4 3 (d) 3 4 2 1
32. A company .issue 10,000 shares of Rs. 10 each at a discount of 10% payable as follows : On
application Rs. 2.50 On allotment Rs. 3.00 On first & final call Rs. 3.5 A holder of 100 shares
did not pay the final call and his shares were forfeited. Share Capital a/c will be debited by
(a) Rs.650 (b) Rs.850
(c) Rs, 1000 (d) Rs.900
33. Whenever debentures are cancelled, any profit on cancellation is transferred to
(a) profit and loss account
(b) sinking fund account
(c) capital redemption reserve account
(d) capital reserve account
34. Given that :- Closing Stock Rs. 30,000 Opening Stock Rs, 20,000 Sales Rs. 1,00,000
Administrative and selling expenses Rs. 20,000 Purchases Rs. 70,000 the operating ratio is
(a) 50% (b) 65% (c) 75% (d) 80%
35. Match List I with List II and select the correct answer :
List I List II
A. EAIT No. of equity shares 1. Liquidity outstanding
B. Debt / equity 2. Solvency
C. FA+ long term funds 3. Capital structure
D. CA + CL 4. Overall performance
ABCDABCD
(a) 4 3 2 1 (b) 4 3 1 2
(c) 2 3 1 4 (d) 2 3 4 1
36. If the Stock turnover ratio is 4 times and the collection period is 30.days, the operating cycle
would be
(a) 30 days (b) 60 days (c) 90 days (d) 120 days
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 19
37. Given:
Fixed assets Rs. 10,00,000
Current assets Rs. 6,00,000
Total net profit Rs. 2,60,000
Current liabilities Rs.3,00,000
Which one of the following will be the correct ROI ?
(a) 26% (b) 25% (c) 20% (d) 16.5%
38. Consider the following income statement :
Which one of the following will be the correct 'Fund from operation ?
(a) Rs.73,000 (b) Rs.75,000
(c) Rs.83,000 (d) Rs.92,000
39. Minimum Alternative Tax (MAT) is applicable to the
(a) joint stock company
(b) co-operative society
(c) partnership firm
(d) sole proprietor concern
40. Non-registration of a partnership does NOT affect
(a) the right of a partner to sue the firm
(b) the right of the firm to sue, third parties
(c) the right of a third party to proceed against the firm or its partners
(d) any of the above
41. If a minor chooses to continue as a partner on attaining the age of majority, he \\ill be liable
to the debts of the firm from the date of his
(a) attaining majority
(b) admission to profits of the firm
(c) choosing to become a partner at a subsequent date
(d) guardian giving the options
42. The liability of the Karla in a joint Hindu family is
(a) limited to his interest in the joint family
(b) unlimited
(c) limited to the entire property of the family
(d) limited to the private properties of all the members
43. Which one of the following is NOT an advantage of the incorporation of company ?
(a) Perpetual succession
(b) Limited liability of Members
(c) Capital contributions fofll1ing part of the joint stock of the company
(d) Freedom to do any business
44. Match List I with List II and select the correct answer:
List I List II
(Organisation) (Associated with)
A. Joint stock company 1. Memorandum of Association (M/A)
B. Co-operative society 2. Special Act
C. Statutory corporation 3. Mutual contract
D. Partnership 4. Bye-laws
5. Shareholding
ABCDABCD
(a) 1 4 3 2 (b) 5 2 4 3
(c) 1 4 2 3 (d) 5 2 3 4
70. Match List I with List II and select the correct answer :
List I List II
A. Span of control 1. Tile superior helps, through continuous guidance the subordinate
to reach his goals
B. M. B. O. 2. Numerical limit of subordinates to be supervised by an executive C. M. B. E. 3.
Subordinate remains accountable to his superior and the superior
has authority to demand accountability from his subordinate.
D. Delegation 4. The management will concern itself and of confirms its activities
of authority to those areas and operations where the actual performance is
short of the target.
ABCDABCD
(a) 1 2 3 4 (b) 1 2 4 3
(c) 2 1 3 4 (d) 2 1 4 3
71. Consider the following statements :
1. MBO is a control technique in which managers devote time only on the areas of deviation.
2. MBO integrates the individual with the organization and the organization with the
environment.
3. In MBO the control over people is shifted to control over operations
4. The MHO principle must be accompanied in practice by the principle of critical-point control
Of these statements:
(a) 1 and 2 are correct (b) 2 and 3 are correct
(c) 3 and 4 are correct (d) 1 and 4 are correct
72. Match List I with List II and select the correct answer :
List I (Name) List II (Model)
A. Kurt Levin 1. Action Research process model
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 24
B. H.J. Leavitt 2. Sequential process model
C. Larry Greener 3. System model
D. Floyd C. Mann 4. Three-step model
ABCDABCD
(a) 1 2 3 4 (b) 1 4 3 2
(c) 3 2 1 4 (d) 4 3 2 1
73. In the process of controlling office management, certain steps are normally taken. These
include
1. Analyzing the actual performance.
2. Finding out the reasons for discrepancies.
3. Evaluating the performance.
4. Establishing the standards of work performance.
The correct sequence in which these steps are usually taken is
(a) 4, 1, 2, 3 (b) 1, 4, 2, 3
(c) 1, 4, 3, 2 (d) 4, 1, 3, 2
91. Match List I with List II and select the correct answer :
List I List II
A. Compensating 1. Not recording a business transaction
errors
B. Errors of omission 2. Charging a Revenue item to capital
C. Errors of principle 3. Writing a debit item on the credit side and a credit item on the debit
side of equal amount
D. Errors of 4. Posting a correct amount to a wrong Account
commission
ABCDABCD
(a) 3 1 4 2 (b) 2 1 4 3
(c) 3 1 2 4 (d) 2 1 3 4
92. Audit report along with accounts is given by
(a) Statutory Auditor (b) Internal Auditor
(c) Government Auditor (d) Secretariat Auditor
93. Consider the following statements :
Management audit may
1. cover performance audit.
2. protect the interest of the share holders
3.cover proprietor audit
4. refer to audit of work done by the management accountant.
Of these statements
(a) 1 and 2 arc correct (b) 3 and 4 arc correct
(c) 1 and 3 are correct (d) 2 and 4 are correct
94. Management audit is ordered by the
(a) Workers of a company
(b) Government
(c) Board of Directors
(d) Securities Exchange Board of India
95. When an auditor detects material weaknesses in 1he internal checks and control system of
the company under audit, he should report his findings as per
(a) ICAI orders (b) SEBI orders
(c) MAOC AR orders (d) ICW AI orders
96. Which of1he following statements are true ?
1. Dividend can be paid out of capital profits if only Articles of Association of the company
permits.
2. Goodwill taken over may be written off out of profit prior to Incorporation
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 27
3. Dividend can be paid out of current profits in spite of un-provided depreciation for past
years. 4. Capital redemption reserve can be used for issuing fully paid bonus shares to the
shareholders according to Company's Act.
(a) l and 2 (b) 1, 2 and 3
(c) 2 and 4 (d) 3 and 4
97. The remuneration of an auditor of a partnership firm is fixed by
(a) the Partnership Act
(b) The Companies Act
(c) the Government
(d) none of the above
98. If the shareholders fail to appoint or reappoint auditors of limited company in au Annual
General Meeting. the vacancy will be filled by the
(a) Securities Exchange Board of India (b) Comptroller and Auditor General of India
(c) Central Government (d) Registrar of companies
99. Match list I List II and select the correct answer :
List I List II
(Appointment of auditor) (Appointing authority)
A. First auditor of a non-Govt. 1. Shareholder of the company
limited company
B. Reappointment of a retiring 2. Board of directors limited of the company
auditor of non-Govt limited
C. Auditor of a Government 3. Central Government on the advice of
Company Comptroller the and Auditor General of India
D. Auditor of a non-Govt. 4. Central Government
limited company, when
shareholders fail to
reappoint or reappoint an auditor
ABCDABCD
(a) 1 2 4 3 (b) 2 1 3 4
(c) 1 2 3 4 (d) 2 1 4 3
100. In so far as a company is concerned, which one of the following pairs is NOT correctly
matched ?
(a) Internal audit Obligatory
(b) Statutory audit Mandatory
(c) Continuous audit Optional
(d) Management audit Voluntary
101. A file which contains rules governing the organisation Under audit is known as
(a) current file (b) permanent file
(c) routine file (d) precedence file
102. Where the auditor places a high degree of reliance on an internal control procedure. the
acceptable risk of over reliance would be
(a) low (b) high
(c) moderate (d) nil
103. Under the Companies Act. which one of the following powers can be exercised by the
Board of Directors ?
(a) Power to sell any of the company's undertakings
(b) Power to make call
(b) Power to borrow money in excess of the paid up capital
(d) Power to reappoint an auditor
104.The statutory meeting of the company must be held within six months
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 28
(a) from filing of statement in lieu of prospectus
(b) of obtaining the certificate of commencement of business
(c) of obtaining the certificate of incorporation
(d) from the date when the first Board of Directors meeting was held
105. A public limited company can offer pre-emptive rights only to the
(a) directors of the company
(b) existing equity shareholders
(c) debenture holders
(d) short-term creditors of the company
106. Under the law, the inspector who does the inspection of the company's accounts has to
submit his report to the
(a) company's Board of Directors
(b) Secretary to the company
(c) Central Government
(d) shareholders of the company
107. Account books for how many preceding years should be preserved in good condition ?
(a) 5 (b) 8
(c) 10 (d) 13
108. A qualified company Secretary is needed to be appointed as Secretary to a company only
on the basis of the
(a) business of the company
(b) paid up capital of the company
(c) location of the company
(d) listing of the company on any stock exchange
109. Match List I with List II and select the correct answer :
List I List II
A. Statutory functions of a Secretary 1. Non-statutory function
B. Advice to the Managing Body 2. Executive function
C. Filing tax returns 3. Functions imposed by law
D. Image of organisation 4. Public Relations Officer
ABCDABCD
(a) 1 2 3 4 (b) 3 2 1 4
(c) 4 3 2 1 (d) 3 4 1 2
Directions:- The following 11 (eleven) items consist of two statements, one labeled as '
Assertion A' and the other labeled .as 'Reason R'. You are to examine these no statements
carefully and decide if the Assertion A and the Reason R: are individually true and if so,
whether the Reason is a correct explanation of the Assertion. Select your answers to these items
using the codes given below and mark your answer sheet accordingly.
(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is NOT the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
110. Assertion (A) : Amount realised on the disposal (sale) of discarded machine of the factory
should be treated as revenue receipt.
Reason (R): Sale proceeds are usually of revenue in nature.
111. Assertion (A) : Financial leverage is beneficial only when the rate of earning is higher than
the cost of debt.
Commerce 99
71. Match List I with List II and select the correct answer:
List I List II
A. acid tests ratio 1. Liquidity ratio
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 38
B. Gearing ratio 2. Profitability ratio
C. Working capital turnover 3. Leverage ratio
ratio
D.Return on capital employed4. Long-term solvency ratio
5. Activity ratio
ABCDABCD
(a) 1 3 5 2 (b) 2 5 1 3
(c) 1 5 4 2 (d) 5 3 4 1
72. Which of the following transaction (s) will 1tnprove the Current Ratio ?
1. Bills receivable dishonored.
2. Cash collected from customers.
3. Issue of new shares,
4. Payment of preliminary expenses by way of equity shares.
Select the correct answer using the codes given below :
(a) 1, 2 and 3 (b) 4 alone
(c) 3 alone (d) 2 and 4
73. Credit sales of a company during the year are Rs. 1,20,000; Debtors, Rs. 20,000 and Bills
receivable Rs. 10,000. The average collection period is
(a) 3 months (b) 4 months (c) 5 months (d) 6 Months
74. Collection 0! sundry debtors would
(a) increase current ratio
(b) decrease current ratio
(c) have no effect on current ratio
(d) increase debtors' turnover
75. Which one of the following statements is NOT correct?
A high gross profit margin ratio is the result of
(a) Higher sales prices, cost of goods sold remaining constant
(b) Lower cost of good sold, sales price remaining constant
(c) an increase in the proportionate volume of higher margin items
(d) Increase in the sales return, cost of goods sold remaining the same
76. A company with a paid up capital of 5000 equity shares of Rs. 10 each has a turnover of
four
times with a margin of 8% on sales. The ROI of the company will be
(a) 28% (b) 32% (c) 35% (d) 42%
77. The best definition of 'Capital employed' in calculating the rate of return on investment is
(a) current assets + gross fixed assets
(b) current assets + net fixed assets
(c) working capital + gross fixed assets
(d) working capital + net fixed assets
78. While calculating the net present value under discounted cash flow method of return on
investment analysis, the calculations involved are:
1. Cash outflow
2. Discounted net cash flow
3. Cash inflow
4. Net present value the correct sequence of these calculations is
(a) 4,1, 3, 2 (b) 1, 3, 2, 4
(c) 1, 2, 3, 4 (d) 3, 1, 4, 2
79. Patents and copyrights fall under the category of
(a) current assets (b) liquid assets
(c) Intangible assets (d) nominal assets
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80. Match List I (Balance sheet items) with List II (Classification) and select the correct
answer: List I List II
A Discount on debenture 1. Current liability
B. Forfeited shares account 2. Non-current asset
C. Income taxes payable 3. Current asset
D. Debtors' acceptance 4. Non-current liability
ABCDABCD
(a) 2 4 1 3 (b) 4 2 3 1
(c) 2 4 3 1 (d) 4 2 1 3
81. Ajoy Ltd. makes a profit of Rs. l,00,000, after providing for depreciation on assets
amounting to Rs. 2.0,000 and writing off preliminary expenses amounting to Rs. 10,000 and
gain of Rs. 5,000 on sale of a piece of machinery. Funds from operation of Ajoy Ltd. would be
(a) Rs. 1,00,000 (b) Rs. 1,20,000
(c) Rs. 1,25,000 (d) Rs. 1,35,000
82. Which one of the following statements is correct ?
(a) A decrease in current liabilities causes an increase in the working capital
(b) An increase in current liabilities causes a decrease in the working capital
(c) A decrease in the current assets causes an increase in the working capital
(d) An increase in the current assets causes a decrease in the working capital,
83. Match List I with List II and select the correct answer.
List I List II
A. Net loss from operations 1. Source of funds
B. Changes in working 2. Drain on working capital
C. Depreciation 3. Flow of Funds
D. Issue of fully paid bonus shares 4. Neither source nor application of funds
ABCDABCD
(a) 3 2 1 4 (b) 2 3 4 1
(c) 2 3 1 4 (d) 3 2 4 1
84. Vouching may be termed as
(a) Identification of the documentary evidence supporting the transaction
(b) Verification of the document supporting the transaction
(c) authentication of document supporting the transaction
(d) Verification of the accuracy and authenticity of the transaction
85. Interim audit refers to an audit conducted
(a) in two different accounting years
(b) In-between two statutory annual audits within the same accounting period.
(c) In-between one statutory audit and an internal audit in the same accounting period
(d) In-between one statutory audit, one management audit and one internal audit
86. Audit Techniques are concerned with the
(a) examination of those evidences which have. been traced by audit procedures
(b) Application of generally accepted accounting principles to particular phases of a financial
statement
(c) accuracy and validity of management authorization to the account section employees
(d) Method of conducting a business affair and reporting in annual report
87.What is the correct sequence of the following aspects in auditing?
1. Special audit 2. Internal audit
3. Internal check 4. Annual audit
(a) 1., 3, 2, 4 (b) 3, 4, 1, 2
(c) 3, 2, 4, 1 (d) 1, 2, 3, 4
88. The main purpose of an independent audit is to
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(a) check and correct frauds and errors
(b) help in detecting frauds and errors
(c) Determine if the financial statements fairly represent the actual financial position. and the
working results of the organization
(d) help in formulating future plans
89. Match List I (types of audit) with List II (purposes) and select the correct answer using the
codes given below:
List I List II
A. Continuous 1. To ensure efficient conduct of the business and prevent wastage
audit
B. Periodical 2. Detailed examination of the books of accounts at regular intervals
audit
C. Interim 3. Audit taken up at the close of the financial period
audit
D. Internal 4. Audit conducted between the end of two financial periods
audit
ABCDABCD
(a) 1 3 4 2 (b) 2 3 4 1
(c) 3 2 1 4 (d) 3 1 2 4
90. Management audit refers to
(a) examination of books and audit of accounts done by the management
(b) the periodic assessment of company's activities by the statutory auditor
(c) Periodic assessment of company's managerial is planning. Organizing. Actuating and
controlling compared to norm of successful operation
(d) auditor's assessment of the financial statement of the entity
91. An arrangement in which the accounting work of each individual is checked by other
members is known as
(a) Internal audit (b) external audit
(c) internal check (d) test checking
Commerce 2000
3. Consider the following Balance Sheet of ABC Company Limited as on March 31, 1999 :
Liabilities Rs Assets Rs
Equity share capital 20,00,000 Fixed assets 60,00,000
Preference share capital 10,00,000 Less depreciation 20,00,000
General reserve 5,00,000 40,00,000
10% debentures 11,00,000 Debtors 10,00,000
Creditors 7,00,000 Stock 6,00,000
Outstanding expenses 3,00,000 Cash 1,00,000
Profit & Loss A/c 1,05,000 Formation expenses 5,000
57,05,000 57,05,000
The current ratio of ABC Company Limited is
(a) 2.00 (b) 1.90 (c) 1.85 (d)1.70
13. A company's reported current profit is Rs 70,000 after incorporating the following :
Loss on sale of investments Rs 10,000; Premium on redemption of debentures Rs 1,500;
Depreciation on machinery and plant Rs 20,000; Goodwill and preliminary expenses written off
Rs 30,000; Gain from sale of non-current assets Rs 40,000
The net inflow of funds from the operation would be
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 47
(a) Rs 91,500 (b) Rs 80,000
(c) Rs 70,000 (d) Rs 59,500
14. For the purpose of analysing changes in financial position, enterprises prepare
(a) Balance Sheet and Profit & Loss A/c
(b) Cash flow statements and Funds flow statement
(c) Statement of cash from operations and Balance Sheet
(d) Statement of changes in working capital and Statement of cash from operations
16. It is necessary that an auditor should prepare an 'Audit Programme'; maintain an 'Audit Note
Book'; use an Internal Control Questionnaire' and a 'Flow Chart of Accounting System adopt
'Special Ticks' for each class of transaction checked and divide work as well as responsibility
among the members of his staff for an efficient conduct of audit work. All these refer to
(a) general principles of internal auditing
(b) general principles of internal checking
(c) basic principles of auditing
(d) general techniques of auditing
17. Materiality in accounting is decided
(a) by the size of an item
(b) by the knowledge as to whether an individual item is having a significant influence on
financial statement
(c) solely by the discretion of the accountant
(d) by the physical volume of the transaction
18. Match List I (Event) with List II (Result) and select the correct answer using the codes
given below :
List I List II
A. Collusion between two 1. Payments of dividends
or more persons otherwise not possible
B. Falsification of accounts 2. Error of principle committed
to increase apparent profits
C. Operation of an effective 3. Trial balance may agree
system of internal check
D. Purchase of raw 4. Frauds per-petrated and concealed
materials is debited to
loose tools account 5. Possibility of errors and frauds
is considerably reduced
ABCDABCD
(a) 3 4 5 2 (b) 4 1 5 2
(c) 4 1 2 5 (d) 2 4 1 3
24. A had started business with Rs 20,000 in the beginning of the year. During the year he
borrowed Rs 10,000 from B. He further introduced Rs 20,000 in the business. He also gave Rs
5,000 as loan to his son. Goods given away as charity by him was Rs 2,000. Profits earned by
him was Rs 25,000. He also withdrew Rs 3,000 from the business. His capital at the end of the
year would be
(a) Rs 50,000 (b) Rs 40,000
(c) Rs 62,000 (d) Rs 48,000
25. When it is not registered, a partnership firm is
(a) deemed to be an illegal association and is disallowed to carry on business
(b) allowed to carry on business subject to payment of penalty
(c) allowed to carry on business subject to certain disabilities
(d) allowed to carry on business only with the special permission of the Registrar of Firms
26. Match List I (Organisation) with List II and select the correct answer using the codes given
below
List I List II
A. Cooperative society 1. Collective business
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B. Joint Hindu family 2. Purchase/Transfer of share
C. Joint Stock company 3. By virtue of birth
D. Partnership firm 4. Common mutual interest
5. Mutual contract
ABCDABCD
(a) 1 3 2 5 (b) 5 4 1 3
(c) 4 3 2 5 (d) 4 1 2 3
27. Match List I with List II and select the correct answer
List I List II
A. Ashbury Rail Carriage & Iron 1. Corporate entity
Co. Ltd. vs. Riche
B. Peek vs. Gurney 2. Objects clause
C. Saolmon vs. Salomon & Co. 3. Misstatement in
prospectus
D. Royal British Bank vs. Turquand 4. Indoor management
ABCDABCD
(a) 2 1 3 4 (b) 3 4 1 2
(c) 2 3 1 4 (d) 2 3 4 1
28. A special resolution passed for the purpose of reduction of capital of a company must be
confirmed by the
(a) Registrar of Companies (b) Company Law Board
(c) SEBI (d) Appropriate Law Court
29. Equity shares issued by a company to its-employees or directors at a discount or for
consideration other than cash for providing know-how or making available rights in the nature
of intellectual property rights or value additions are known as
(a) Employees'/ Directors' stock option
(b) Promoters' quota
(c) Sweat equity
(d) Right shares
31. The criterion for deeming a private company as a public company on the basis of average
annual turnover is
(a) Rs 25 crores (b) Rs 20 crores
(c) Rs 10 crores (d) Rs 5 crores
32. Match List I with List II and select the correct answer
List I List II
A. Registrar of Companies 1. Specified Securities
B. Memorandum of Association 2. Rules and Regulations of the Company
C. Buy back of shares 3. Certificate of Incorporation
D. Articles of Association 4. Objects of the Company
5. Minimum Subscription
ABCDABCD
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(a) 3 4 5 1 (b) 4 3 1 2
(c) 3 4 1 2 (d) 1 2 5 4
33. All those who are dealing with the company are expected to know the contents of the
Memorandum and Articles of Association. This is called
(a) Doctrine of indoor management
(b) Doctrine of ultra virus
(c) Constructive notice
(d) Doctrine of merger
34. An act of a director which is intra vires the Memorandum and ultra vires the Articles of
Association
(a) cannot be ratified by the company
(b) must necessarily be ratified by the company
(c) may be ratified by the company
(d) is void ab initio
35. Match List I with List II and select the correct answer
List I List II
A. Doctrine of ultra vires 1. Articles of Association
B. Doctrine of indoor management 2. Prospectus
C. Doctrine of golden rule 3. Memorandum of Association
ABCABC
(a) 1 3 2 (b) 3 1 2
(c) 2 1 3 (d) 3 2 1
36. Which one of the following statements correctly explain the term 'Doctrine of Indoor
Management' ?
(a) The doctrine seeks to protect the outsiders against the company
(b) Every person dealing with the company is presumed to have read and understood the
contents of company's Memorandum and Articles of Association
(c) If a person enters into a contract with the company which is contrary to the provisions of
Memorandum and Articles of Association, he will not get any right under such contract
(d) It protects the company against the outsiders.
37. Match List I with List II and select the correct answer
List I List II
A. A long-term debt instrument on which 1. Mutual Fund
interest is accumulated and paid on maturity
B. A debt instrument on which rebate is 2. Deep Discount Bond
available under the Income Tax Act
C. Pooling together the money of different 3. Infrastructure Bond
investors and investing it in diversified securities
D. Buying the right but not the obligation 4. Put option
to sell a security for a specific price
ABCDABCD
(a) 4 1 2 3 (b) 2 3 1 4
(c) 3 1 2 4 (d) 3 1 4 2
38. The comprehensive meaning of an efficient stock market is that it is a market which
(a) allocates resources efficiently
(b) reflects the effective use of information in the price of the shares traded therein
(c) signals the changes in the listed company's performance
(d) safeguards the investors' money
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39. Global depository receipts (GDRs) are issued by successful corporations with a view to
attracting
(a) overseas loan funds
(b) remittances from NRIs
(c) foreign equity capital
(d) foreign direct investment
40. Stock Holding Corporation of India Ltd. is expected to achieve, in the long run, the
objective of
(a) sale of all kinds of securities in all stock exchanges
(b) purchasing all shares issued in the country
(c) paperless trading in respect of all stock market transactions
(d) holding shares of all new companies and selling them later
41. Which one of the following documents attests the fact that goods of specified quantity,
value and description are entering the bounds of the country ?
(a) Bill of lading (b) Consular invoice
(c) Documentary bill (d) Bill of entry
42. Match List I (Name of the Authority) with List II (Function/Activity) and select the correct
answer
List I List II
A. Port Authority 1. Claim for damage
B. Insurance Company 2. Demurrage for goods unloaded
C. ECGC 3. Export finance guarantee
D. Advising Bank 4. Bank in the ekporters country
5. Bank issuing L/C on the request of controller
ABCDABCD
(a) 2 1 4 3 (b) 1 4 3 5
(c) 2 1 3 4 (d) 4 1 3 5
43. Which one of the following is an example of a trading block (regional integration in trade) ?
(a) North American Free Trade Agreement
(b) Madras Export Trade Processing Zone
(c) Free Trade Zone at Kandla
(d) Indo-American Chamber of Commerce
44. To guard against the dangers of excess payment arising out of double insurance or over-
insurance made by the insured, insurance companies provide in their agreement
(a) Average clause (b) Subrogation clause
(c) Risk clause (d) Indemnity clause
45. A person insured his property worth Rs 10,000 against fire for Rs 8,000. His actual loss by
fire is Rs 5,000 and there is an average clause in the policy. His claim will be
(a) Rs 10,000 (b) Rs 8,000
(c) Rs 5,000 (d) Rs 4,000
52. Match List I with List II and select the correct answer
List I List II
A. Principles of Management 1. Douglas McGregor
B. Management by objectives 2. Chester Barnard
C. Human Resources 3. Henry Fayol
Approach School
D. Human Relations School 4.George Elton Mayo
5. Peter Drucker
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ABCDABCD
(a) 1 2 3 4 (b) 4 5 1 2
(c) 2 1 3 4 (d) 4 5 2 1
59. The approach that considers an organisation to be in a dynamic relationship with its
environment, is called
(a) Contingency approach
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(b) Scientific approach
(c) Societal approach
(d) Systems approach
60. Under which one of the following types of organizational structure does a person become
accountable to two or more bosses at the same time ?
(a) Matrix structure (b) Centralized structure
(c) Decentralized structure (d) Vertical structure
63. The delegation of authority from higher to lower levels of an organisation is called
(a) Diminution of authority (b) Division of labour
(c) Departmentalisation (d) Decentralisation
70. The provisions relating to inter-corporate loans are interalia laid down in
(a) Section 370 of the Companies Act, 1956
(b) Section 372 of the Companies Act, 1956
(c) Section 372 A of the, Companies Act,. 1956
(d) Section 371 of the Companies Act, 1956
71. The books of account of a company should be preserved for a period of not less than
(a) 2 years (b) 5 years
(c) 8 years (d) 10 years
72. In the Balance Sheet, under the subheading 'current liabilities and provisions', disclosure of
the name(s) of small-scale industries/undertakings is required if the company owes a sum
(a) exceeding Rs 1 lakh as outstanding for more than 6 months
(b) not exceeding Rs 1 lakh as outstanding for more than 6 months
(c) exceeding Rs 1 lakh as outstanding for more than 30 days
(d) exceeding Rs 50,000 as outstanding for more than 2 months
73. Investor Education and Protection Fund is required to be established by
(a) the Central Government
(b) the SEBI
(c) over the Counter Exchange
(d) the National Stock Exchange
74. If an auditor, after his appointment, becomes disqualified as specified in Section 226 (3) and
(4) of the Companies Act, 1956
(a) the appointing authority will ask him to vacate his office
(b) the Company Law Board will ask him to tender his resignation
(c) he will be deemed to have vacated his office
(d) the Institute of Chartered Accountants of India will terminate him from office
75. According to Companies Act, when the dividend proposal is exceeding 20 per cent of the
paid-up capital, the amount to be transferred to reserve shall not be less than
(a) 7.5 per cent of the current profit
(b) 10 per cent of the current profit
(c) 12.5 per cent of the current profit
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 56
(d) 15 per cent of the current profit
Directions :- The following 13 (thirteen) items consist of two statements, one labelled as
'Assertion A' and the other labelled as 'Reason R'. You are to examine these two statements
carefully and decide if the Assertion A and the Reason R are individually true and if so,
whether the Reason is a correct explanation of the Assertion. Select your answers to these items
using the codes given below and mark your answer sheet accordingly.
(a) Both A and Rare true and R is the correct explanation of A
(b) Both A and R are true but R is NOT the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
81. Assertion (A) : Management accounting provided management with information for
decision making.
Reason (R) : Management accounting is a branch of cost accounting
82. Assertion (A) : Under diminishing balance method of depreciation, the charge for
depreciation keeps on diminishing year after year in all subsequent years.
Reason (R) : Under diminishing balance method, the rate per cent of which depreciation is
written off goes on diminishing from year to year.
84. Assertion (A) : Now-a-days many companies prepare their Balance Sheet in a vertical form
rather than in the traditional horizontal form.
Reason (R) : Part IV of Schedule VI to the Companies Act, 1956 permits both the forms.
85. Assertion (A) : When pro-rate allotment of shares is made, the surplus application money is
transferred to Share Allotment A/c.
Reason (R) : The company is not required to pay any interest on such surplus application
money.
86. Assertion (A) : One single primary ratio, that measures the financial outcome of all recorded
business activities, is RO'
Reason (R) : In practice, however, variations are also found in the ratio because capital and
return are subject to different interpretations by firms.
91. Assertion (A) : External alignment of wage rates is possible only when internal alignment is
achieved.
Reason (R) : Internal alignment of wage rates is dependent on increase in profits.
92. Assertion (A) : Job evaluation facilitates framing a suitable incentive system for workers.
Reason (R) : Incentives can be rationally based on timesaving by workers on a particular job,
which can rightly be known from job evaluation.
93. Assertion (A) : For a company, every debt is not a loan, but every loan is a debt.
Reason (R) : In the case of deposit of money with the company, it is the depositor who is the
prime mover, whereas in the case of loan it is the company who is the prime mover.
94. Consider the following activities connected with the accounting information system
1. Preparation of the table of accounting
2. Communication of accounting information
3. Preparation of accounting information report
4. Collection of accounting data
The correct sequence of these activities is
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 58
(a) 4, 1, 3, 2 (b) 1, 4, 3, 2
(c) 4, 3, 1, 2 (d) 1, 2, 4, 3
95. A cooperative store having a turnover of Rs 10 lakhs and profit of Rs 50,000 purchase locks
costing Rs 300 for use in the shop. The accountant charged it in the P & L A/c of current year,
but the auditor raised an objection saying that it should be capitalised. On which one of the
following conventions could the accountant be defended ?
(a) Disclosure (b) Materiality
(c) Conservation (d) Consistency
96. Consider the following statements
Notes forming part of accounts of companies invariably display significant Accounting Policies
1. as per the requirement of SEBI guidelines for disclosure and investor protection
2. because it is a mandatory requirement under the Companies Act, 1956
3. as required by AS-1-disclosure of accounting policies, which is mandatory
4. as it is required under the listing agreement with the stock exchanges
Which of the above statements are correct ?
(a) 1, 2 and 3 (b) 2 and 3
(c) 2, 3 and 4 (d) 1 and 4
97. Match List I with List II and select the correct answer
List I List II
A. Showing joint life policy at 1. Concept of consistency
surrender value
B. Team spirit and dedication of 2. Concept of cost
employees are not recorded
in the books of accounts
C. Methods of depreciation and 3. Concept of conservatism
inventory valuation should
not be changed frequently
D. Fixed assets are recorded 4. Concept of money measurement
at 'cost less depreciation'
ABCDABCD
(a) 3 4 1 2 (b) 3 4 2 1
(c) 4 3 1 2 (d) 4 3 2 1
98. If depreciation is calculated on the basis of formula, n (n + 1) then which one of the
following methods is adopted? 2
(a) Diminishing value method
(b) Annuity method
(c) Sum of years digits method
(d) Sinking fund method
99. Consider the following methods of inventory valuation
1. Simple average
2. First in first out
3. Last in first out
4. Weighted average.
Which of these methods DO NOT match current cost with current revenues ?
(a) 1 and 3 (b) 1, 2 and 3
(c) 1. 2 and 4 (d) 2, 3 and 4
102. The ending balance of owner's equity is Rs 21,000. During the year, the owner contributed
Rs 6,000 and withdrew Rs 4,000. If the firm had Rs 8,000 net income for the year, what was the
owners equity at the beginning ?
(a) Rs 23,000 (b) Rs 21,000
(c) Rs 19,000 (d) Rs 11,000
103. The ending balance of the accounts receivable account was Rs 12,000. Services billed to
customers for the period were Rs 21,500 and collection on account from customers was Rs
23,600. The beginning balance of account receivable was
(a) Rs 33,500 (b) Rs 14,100
(c) Rs 9,800 (d) Rs 33,300
105. A company issues 14% debentures of Rs 10,00,000 at a discount of 10%. The discount
allowed will be treated in the account books as
(a) Capital expenditure
(b) Revenue expenditure
(c) Deferred revenue expenditure
(d) Capital loss
106. A building standing in the books at Rs 30,000, was sold for Rs 45,000. The gain on the
sale of building was transferred to profit and loss account thus taking the net profit to Rs
1,70,000. The fund from operation will be
(a) Rs 2,15,000
(b) Rs 1,70,000
(c) Rs 1,55,000
(d) Rs 2,00,000
107. Match List I with List II and select the correct answer
List I List II
A. Leasehold property 1. Depreciation fund method
B. Mines, quarries, etc. 2. Annuity method
C. The interest lost on the 3. Fixed instalment method
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 60
acquisition of an asset
D. To provide for replacement 4. Depletion method
of asset at the end of its useful life
ABCDABCD
(a) 2 1 4 3 (b) 3 4 1 2
(c) 3 4 2 1 (d) 4 3 1 2
108. Following are the extracts from the Trial Balance of a firm :
Particulars Dr. (Rs) Cr. (Rs)
Sunday debtors 50,000 -
Provision for doubtful debts - 5,000
Bad debts 3,000 -
Additional information
(i) Additional bad debts Rs 3,000
(ii) Keep the provision for bad debts @ 10% on debtors
The net amount of bad debts that will appear in the Profit and Loss Account will be
(a) Rs 8,000 (b) Rs 7,500
(c) Rs 5,700 (d) Rs 4,500
109. A and B sharing profits in the ratio of 3 : 2 and having capitals of Rs 30,000 and Rs 15,000
respectively decided to dissolve the firm. After paying off all liabilities, cash realised from
various assets is Rs 15,000. This amount will be distributed between A and B as
(a) Rs 9,000 and Rs 6,000 respectively
(b) Rs 10,000 and Rs 5,000 respectively
(c) Rs 7,500 and Rs 7,500 respectively.
(d) Rs 12,000 and Rs 3,000 respectively
110. A, B and Care partners sharing profits in the ratio of 6 :3 : 1. They decided to dissolve the
firm when their capitals were Rs 8,000, Rs 3,000 and Rs (-) 1,000 respectively. Other liabilities
and assets were-Bank overdraft Rs 3,500. A's advance to the firm Rs 500; sundry creditors Rs
2,500; plant and machinery Rs 7,500; stock in trade Rs 2,500; sundry debtors Rs 6,000 and cash
Rs 500. Plant and machinery realised at.20% less, stock in trade at 25% less and sundry debtors
at 30% less than their respective book value. Expenses of dissolution amounted to Rs 250. C
became insolvent and his private estate yielded Rs 100 only. What is the loss on realisation?
(a) Rs 4,125 (b) Rs 4,150
(c) Rs 4,175 (d) Rs 4,225
111. A, Band Care the partners in a business firm sharing their profits in the ratio of 4 : 3 : 2. A
new partners D enters the firm. The new profit sharing of A, B, C and D is 5 : 4 : 2 : 1. D
contributes a goodwill of Rs 36,000. This goodwill is to be allocated among A, B and C. Which
one of the following will be the correct allocation ?
A
Rs B
Rs C
Rs
(a) 16,000 12,000 8,000
(b) 12,000 8,000 16,000
(c) 12,000 Nil 24,000
(d) 24,000 Nil 12,000
112. A, Band Care equal partners in a firm with capital of Rs 16,800, Rs, 12,600 and Rs 6,000
respectively. With bills payable Rs 3,300; creditors Rs 6,000; cash Rs 600; debtors Rs 10,800;
stocks Ps. 11,400; furniture Rs 2,400 and building Rs 19,500. E is admitted to the firm and
brings Rs 9,000 as goodwill and Rs 15,000 as capital. Half the goodwill is withdrawn by old
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 61
partners, and stock and furniture is depreciated by 10%. A provision of 5% on debtors is created
and value of building is taken at Rs 27,000.
The profit on revaluation will be
(a) Rs 5,500 (b) Rs 5,580
(c) Rs 5,400 (d) Rs 5,680
113. A and Bare partners in a firm sharing profits in the ratio of 3 : 2. They admit C as a new
partner for 1/3 share in the profits of the firm. The new profit sharing ratio of A, B and C is
(a) 3 : 2 : 1 (b) 3 : 2 : 2
(c) 3 : 2 : 3 (d) 6 : 4 : 5
114. Some companies give cash flow statements in their annual reports as prescribed by
(a) Part IV of Schedule VI to the Companies Act, 1956
(b) the listing agreement with the stock exchanges
(c) the SEBI regulations
(d) the Accounting Standard-3 on cash flow statements
115. Under the net worth method, the basis of ascertaining profit is the
(a) difference between the liabilities on two dates
(b) difference between the gross assets on two dates
(c) difference between the capital on two dates
(d) increase in net worth before adjusting for drawings and additions to capital
116. A non-performing asset with a financial institution denotes an asset on which
(a) regular dividend is not being received
(b) interest is on default for two quarters or more
(c) repayment of capital appears difficult
(d) there is no earning of profit
117. Consider the following statements :
Redeemable preference shares of a company can be redeemed out of
1. profits of the company which would otherwise be available for dividend
2. company's share premium account
3. fresh issue of shares made for the purpose of redemption
Which of the above statements are correct
(a) 1 and 2 (b) 1 and 3
(c) 2 and 3 (d) 1, 2 and 3
118. A company forfeited 100 shares of Rs 10 each owing to the default in the payment of share
call money of Rs 5 each. These shares were issued at Rs 9 each, payable at Rs 2 on application,
Rs 2 on allotment and the balance of Rs 5 on call. The shares were then reissued to another
shareholder at a price of Rs 6 per share.
The amount to be debited to forfeited shares account on account of discount on reissue of shares
would be
(a) Rs 100 (b) Rs 300
(c) Rs 400 (d) Rs 500
119. The issue of bonus shares must be in accordance with the guidelines issued by the
(a) Company Law Board
(b) Controller of capital issues
(c) Securities and Exchange Board of India
(d) Registrar of Companies
120. Consider the following statements :
A low inventory turnover may be the result of
1. obsolescence of some of the stock
2. slow-moving inventory
3. frequent stock-outs
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 62
4. fast-moving inventory
Which of the above statement(s) is/are correct ?
(a) 1 and 2 (b) 4 alone
(c) 2 alone (d) 2 and 3
Commerce 2006
Questions
1)."Each individual in an organization must know in advance what one is expected to achieve."
It is related to which of the following steps of MBO?
(a) Setting of organizational purpose and objectives
(b) Key result areas.
(c) Setting subordinates' objectives
(d) Appraisal
2).Which one of the following statements about MBO (Management by Objectives) is not
correct?
(a) The greater the participation of the manager and his Employees in setting goals, the more
likely that the goals would be achieved
(b) Autonomy in implementation of the plans is a pre Requisite for the success of MBO
(c) Individual goal setting is not necessary for the success Of MBO
(d) Top level goal setting is a pre-requisite for the success Of MBO.
3). Match List- I with List-II and select the correct answer using the code given below the lists:
List-I (Description) List-II (Functional Feature
A. Decentralization in Organization 1. Machine-oriented and not man-oriented
B. Chain of communication 2. Line authority
C. Task of top management 3. Setting goals of Organization
D. Movement of task Management 4. Empowerment of sub ordinates
ABCD ABCD
(a) 3 1 4 2 (b) 4 2 3 1
(c) 3 2 4 1 (d) 4 1 3 2
4).What is the job evaluation method in which a number d compensable factors are identified
and then the degree to which each of these factors is present on the job is determined, called?
(a) Job classification (b) Point rating
(c) Factor comparison (d) Job ranking
5). Consider the following steps with regard to job 'ranking' method:
1. Obtain job information
2. Rank jobs
3. Select jobs
4. Select compensable factors
5. Combine ratings what is the
correct sequence of the steps given above?
a) 1 - 3 - 2 - 5 -4 (b) 2 - 1 - 3 - 5 - 4
(c) 2 - 3 - 1 - 4 - 5 (d) 1 - 3 - 4 - 2 - 5
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 63
6). Match List- I with List-II and select the correct answer using the code given below the lists:
List - I (Concept) List - II (Explanation)
A.Theory of Specialisation 1. Number of subordinates to be supervised
B.Departmentation 2. Plan of reporting in an Organization
C.Span of Management 3. Pattern of grouping Activities
D.Chain of command 4. Breakdown of a complex task
ABCD ABCD
(a) 2 1 3 4 (b) 4 3 1 2
(c) 2 3 1 4 (d) 4 1 3 2
7). What is the method used in a standard costing system which analyses the factors that
resulted in the deviation between standard costs and actual costs, called?
a) Bill of Materials (b) Progress Report
(c) Variance Analysis (d) Cost Statement
8). Consider the following statements regarding coordination
1. Coordination cannot be voluntarily produced by a number of cooperating persons
2. Most part of it is the result of voluntary attitudes on the part of people in an organization.
3. Coordination is a far more inclusive term embracing the idea of cooperation.
4. Charismatic leaders do not give weightage to coordination
Which of the statements given above are correct?
(a) 1 and 2 only (b) 1 and 3 only
(c) 2 and 4 only (d) 1 and 4 only
9). Which one of the following describes best the organization's values, aspirations and reasons
for being?
(a) Vision
(b) Mission
(c) Objectives
(d) Goals
10).In. the Blake and Mouton's Managerial Grid Theory, what is the point (1.9) known as?
(a) Improverished management
(b) Country club management
(c) Middle of the road management
(d) Team management
11. Ann effective direction tries to get work. accomplished by subordinates without affecting
their need satisfaction adversely. What. Is this principle of directing known as?
(a) Principle of maximum individual contribution
(b) Principle of harmony of objectives
(c) Principle of efficiency of direction
(d) Principle of authoritative direction
12). In Vroom's theory of motivation, what is valence related to?
List I (Types of Cloud)
(a) The strength of an individual's preference to a total outcome.
(b) The strength of a group's preference to a total outcome.
(c) The strength of a group's preference to a. particular outcome
(d) The strength of an individual's preference to a particular outcome
13. Match List-I (Basic Components of Expectancy Theory) with List-II (Definition) and select
the correct answer using i I the code given below the Lists :
List-I List-II
A. Expectancy 1. Force directing specific behavioural alternatives
B. Instrumentality 2. Preference of an 'individual for a particular outcome
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 64
C. Motivation 3. Probability that effort will lead to good performance
D. Valence 4. Probability that successful performance will lead to certain outcomes
ABCD ABCD
(a) 1 4 2 3 (b) 2 3 1 4
(c) 1 3 2 4 (d) 2 4 1 3
14). 14. The following information is given:
Sales 70,000
Purchases 40,000
Expenses 8,000
Creditors at the end 15,000
Creditors at the beginning 12,000
What is the value of cash from operations?
(a) Rs 22,000 (b) Rs 19,000
(c) Rs 30,000 (d) Rs 25,000
15. Which one of the following statements is correct?
(a) If the value of current assets (in the current year) increases (compared with last year), the
working capital decreases
(b) If the value of current liabilities (in the current year) decreases (compared with last year),
'the working capital increases
(c) If the value of current liabilities (in the current year) increases (compared with last year), the
working capital increases
(d),If the value of current assets (in the current year) decreases (compared with last year), the
working capital increases
16).A machinery whose book value was Rs 1,20,000 was sold for Rs 1,68,000. The gain on sale
of machinery was taken to Profit and Loss Account which ultimately showed net profit for the
year as Rs 1,50,000. What is the value of funds from operations?
(a) Rs 1,02,000 (b) Rs 1,98,000
(c) Rs 48,000 (d) Rs 1,68,000
17. Which one of the following is the correct statement? Business draws benefit from the
society; it has an obligation to communicate its contribution to society. For this purpose
accounting must
(a) deal with measurement and reporting of the performance to its stakeholders
(b) confine to going concern stipulation
(c) show its concern for revenue recognition and distribution
(d) be secluded from commercial consideration
18. Which one of the following is the correct statement? The most important factor influencing
evolution and growth of auditing is
(a) Industrial Revolution
(b) divorce of ownership from management
(c) establishment of the Institute of Chartered Accountants of India
(d) adoption of mechanised accounting
19. Match List-I with List-II and select the correct answer using the code given below the
Lists :
List-I List-II
(Basis of Classification) (Types of Audit)
A. Time 1. Complete Audit
B. Subject matter 2. Public Audit
C. Extent or coverage 3. Periodical Audit
D. Organization structure 4. Government Audit
5. Cost Audit
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 65
ABCD ABCD
(a) 3 4 1 5 (b) 1 5 2 3
(c) 3 5 1 4 (d) 1 4 2 5
20)What does the total auding situation comprise?
(a) Inherent risk, process risk and control risk
(b) Appropriate evidence and oral evidence
(c) Detailed evidence and appropriate evidence
(d) Sufficient evidence and appropriate evidence
21. Which of the following should be obtained as a basis of 10 conclusions by the auditor?
(a) Sufficient evidence and detailed evidence
(b) Terrigenous deposits
(c) Pelagic deposits
(d) Coral reefs
22. Which one of the following is the correct statement? An independent financial audit is
conducted because
(a) the top management may have indulged in fraud and the auditor would detect the same and
report to the shareholders
(b) the audit may result in suggesting improvement in the internal control system
(c) the audit enhances credibility to financial statement
(d) the audit guaran~ees that no material misstatement intentional or unintentional-remains in
the financial statements
23. What is an in-depth examination to detect a suspected fraud in an enterprise termed as ?
(a) Internal audit (b) Independent financial audit
(c) Operations audit (d) Investigation
24. Match List- I (Audit Test) with List-II (Situation) and select the correct answer using the
code given below:
list-I list-II
(A) Depth testing 1. Examination in depth by the auditor of the accounting function or
department at an interval planned by auditor
(B)Vouching audit 2. Used in situations where evidence of a single error gives hint to the
auditor of a serious lapse which may require
(C)Discover Sampling 3. Applied in situations where auditor has absent or unreliable adn as a
result, it would be necessary to check all the documentary evidences.
(d)Rotational test 4. Involves tracing through the entire system all the aspects of a transaction
which the auditor wishes to check.
ABCD ABCD
(a)1 3 4 2 (b)4 2 3 1
(c)1 4 3 2 (d)4 3 2 1
25. Which one of the following is the best way for an auditor to satisfy himself that the amount
of cash-in-hand shown in the balance sheet is correct ?
(a) To obtain a certificate from the cashier to this effect
(b) To visit the location where cash is kept at the close of business hours on the last working
day of the financial year and count the cash-in-hand
(c) To visit the location where cash is kept at the close of business hours on the first working
day of the financial year and count the cash-in-hand
(d) To compare the amount of cash-in-hand at the balance sheet date with the corresponding
amount in the previous year's balance sheet
26. Match List- I (Method of Auditing) with List-II (Pr.ocedure) and select the correct answer
using the code given below the Lists :
list-I list-II
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 66
A. Vouching 1. To select and examine a representative sample from large number of similar
items.
B. Audit programme 2.Testion and checking done by quality control department of an
organization .
C. Internal Audit 3. Audit conducted by regular employees of a business concern.
D. Test Checking 4. The inspection of documentary evidence supporting and substantiating a
transaction.
5. A detailed plan of the auditing work to be performed.
ABCD ABCD
(a)3 1 2 5 (b)4 5 3 1
(c)3 5 2 1 (d)4 1 3 5
27. Match list- I with List-II and select the correct answer using the code given below the Lists :
list-I list-II
A. Minutes Book 1. Recording entires of creditors payment
B.Log Book 2.Recording entries of raw matrial receipts
C.Subsidiary Ledger 3.Recording entries of resolution passed
D.Stores Ledger 4.Recording entries of production
5. Recording entries of cash withdrawn from bank
ABCD ABCD
(a)2 4 1 3 (b)3 1 5 2
(c)2 1 5 3 (d)3 4 1 2
28) Which of the following are examined to verify the legal charges?
1. Examine the payment made to the lawyer by reference to the bill and money receipt from the
lawyer as well as any amount paid in advice.
2. Examine the basis of allocation of expenditure under capital and revenue head
C.Subsidiary Ledger 3.Recording entries of resolution passed
Inspect the register of law suits, if maintained by the company.
(a) 1 and 3 only (b)1,2 and only
(c)2 and 4 only (d)1,2,3 and 4
29)Which one of the following is the correct statement? Book Debts should be verified with the
help of
(a) book debts from the balance sheet
(b) amount received from debtors
(c) debtors' schedule
(d) certificate of book debts from the management
30. Which one of the following is the correct statement? Negative confirmation procedure in
relation to debtors is applied where
(a) the number of debtors is small & each owes a large sum
(b) the number of debtors is large & each owes a small sum
(c) the number of debtors is small & each owes a small sum
(d) the number of debtors is large & each owes a large sum
31. Under which of the following circumstances an auditor may refuse to accept the vouchers?
1. The amount written in words does not match with the amount written in figures
2. The date of voucher does not match with the date of entry in the books of accounts
3. The amount mentioned in the voucher does not correspond to the entry in the cash book
4. The voucher has not been endorsed by a competent authority
Select the correct answer using the code given below:
(a) 1 'and 2 only (b) 2 and 3 only
(c) 1, 3 and 4 only (d) 1, 2, 3 and 4
65. Consider the following statements : Share premium account may be used by the company
1. in paying up un-issued share~ of the company to be issued to members of the company as
fully paid bonus shares
2. in providing for premium payable on redemption of preference shares or debentures
3. in buying back of securities
4. in writing off the expenses or commission paid or discount allowed on issue of securities
Which of the statements given above is/are correct ?
(a) 1, 2, 3 and 4 (b) 1, 2 and 4 only
(c) 2 and 4 only (d) 3 only
66. Which doctrine emanated from the famous case of Royal British Bank v. Turquand (1856)
119 ER 886 ?
(a) Doctrine of ultra vires(b) Doctrine of subjugation
(c) Doctrine of indoor management (d) Doctrine of proportional representation
67. In the event of not accepting the recommendations of the Audit Committee, what is the
responsibility of the Board of Directors ?
(a) That it will simply pass a resolution by recording the reasons' for not accepting the report.
(b) That it will record the reasons and communicate such reasons to the shareholders
(c) That it will record the reasons and communicate to the Central Government
(d) That it will record the reasons and communicate to the Registrar of Companies
68. The public documents of a company should not only be read but to be understood as they
are and therefore
deemed to have been read by those who deal with the company. What is this rule known as ?
(a) The rule of equality (b) The rule of constructive notice
(c) The rule of increasing liability (d) The rule of abrogation
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 72
69. What is the penalty for making any statement, promise or forecast which is false, deceptive
or misleading, or by any other dishonest concealment of material fact to enter into any
agreement for acquiring shares or debentures through the pr'Jspectus ?
(a) With imprisonment extending to five years or with a fine of rupees one lakh or with both
(b) With imprisonment extending to three years or with a fine of rupees one lakh or with both
(c) With imprisonment extending to five years only
(d) With a fine of rupees one lakh only
70. Which one of the following statements in the context of the famous case of Solomon v.
Solomon & Co. Ltd. (1897), AC 22, is correct ?
(a) A company is entirely distinct from and independent of its members even if a member owns
virtually the whole of its shares
(b) A company is distinct from and independent of its members; but in case a member owns
virtually the whole of its shares, they are actually the same
(c) A company and its members are not distinct and independent from each other
(d) A person having issued at least 51% of company's share would only be treated distinctly
71. Match List-I (Office Equipment) with List-II (Function and Utility) and select the correct
answer using the code given below the Lists :
List-I List-II
A. Pen Drive 1. Fixed data storage device
B. Hard Disc 2. Conversion of Hard copy of text/picture into soft copy D. Scanner
C. Administrative Manual 3. Mobile data storage device
D. Handbook 4. Weather forecasting.
ABCD ABCD
(a) 3 1 4 2 (b) 2 4 1 3
(c) 3 4 1 2 (d) 2 1 4 3
72)Match List-I (Manual/Handbook) with List-II (Activity) and select the correct answer using
the code given below:
List -IList - II
A. Policy Manual 1. Filing, correspondence and communication
B. Organization Manual 2. Selected aspects in combined form
C. Administrative Manual 3. Decisions and pronouncements of management
D. Handbook 4. Responsibility and authority of different positions
ABCD ABCD
(a) 3 2 1 4 (b) 1 4 3 2
(c) 3 4 1 2 (d) 1 2 3 4
73).Which one of the following is the correct statement? The most appropriate purpose of
accounting standards is
(a) to facilitate auditing task of diverse nature
(b) reduction of alternatives and bringing uniformity
(c) to make adequate volume of information available to its end-users
(d) to ensure better tax compliance including VAT
74). Which one of the following is the correct statement? The first Accounting Standard (AS-1)
relates to
(a) information to be disclosed in financial statements
(b) consolidated financial statements
(c) disclosure of accounting policies
(d) reporting of financial information by segments
76. Which one of the following is the correct statement? According to the convention of
conservatism, the stock in trade is valued at
(a) the market price (b) the cost price
(c) the market price or cost price whichever is more B (d) the market price or cost price
whichever is less
77. On which one of the following concepts is determination of expenses for an accounting
period based ?
(a) Accounting period concept (b) Matching concept
(c) Cost concept (d) Money measurement concept
78). Match Ust-I (Accounting Concept) with List-II (Assumption Involved) and select the
correct answer using the code given below the Lists :
List -IList - II
A. Accrual concept 1. Entity shall remain in operation long enough to carry out its
existing commitments
B. Entity concept 2. Existence of business separate from its owners, creditors,employees and
customers, etc.
C. Going concern concept 3. Method of identifying revenue and expenses with specific
period of time
D. Consistency concept 4. Accounting principles and procedures should be followed
uniformly from one period to another
5. All material information should be disclosed in the financial statements
ABCD ABCD
(a) 4 2 1 5 (b) 3 1 2 4
(c) 4 1 2 5 (d) 3 2 1 4
79). Which one of the following is the correct statement? The revenue is generally considered
as realized at the time of
(a) receipt of order (b) Agreement to sell
(c) receipt of cash (d) sale
80). In XY partnership firm, X is to get 10% commission on net profit before charging any
commission, and Y is to get 10% commission after commissions of both X and Yare charged.
Net profit is Rs 40,000. What is the value (approximate) of commission of Y?
(a) Rs 3,272 (b) Rs 4,508
(c) Rs 4,896 (d) Rs 5,255
82). If land and property are recorded in the books of accounts at market price and profit on
disposal of an item of the same is credited to Profit and Loss Account, which accounting
principle is violated ?
(a) Cost principle (b) Realization principle
(c) Matching principle (d) Principle of Quality
83). Which one of the following is prescribed by the generally accepted accounting principles ?
(a) Uniformity in accounting practices in all enterprises within a country (b) Uniform
accounting practices in all enterprises all over the world
(c) Different accounting practices in different industries (d) Different accounting practices in
different regions
84). Given:
Rs
Opening Capital 10,000
Closing Capital 12,000
New Capital introduced 1,000
What is the profit for the year?
(a) Rs 4,000 (b) Rs 3,000
(c) Rs 2,000 (d) Rs 1~000
86).Match List-I (Accounting Concept) with List-II (Example) and select the correct answer
using the code given below the Lists
List -IList - II
A. Business entity 1. Capital in the liability side of Balance Sheet
B. Dual aspect 2. Balance Sheet as on 31st December, 2004
C. Accounting period 3. Wages paid Rs 5,000
D. Money measurement 4. Goodwill in Balance Sheet for Rs 10,000
ABCD ABCD
(a) 1 4 2 3 (b) 2 3 1 4
(c) 1 3 2 4 (d) 2 4 1 3
87). Which one of the following contains two frequently discussed cross-sectional techniques of
accounting information and their analysis? (a) Abridged profit and loss account and balance
sheet
(b) Cash flow statement and statement of changes in financial position
(c) Common size statements and financial ratio analysis
88).Which one of the following is the correct statement? When an auditor finds significant
unexplained fluctuations in various financial ratios while performing analytical review
procedures, he should normally
(a) qualify the audit report
91).Match List-I (Explanation) with List-II (Types of Audit) and select the correct answer using
the code given below
List –I List - II
A. Audit work is carried on almost simultaneously with recording transaction 1. Balance
Sheet Audit
B. Auditor starts his work after the final accounts have been prepared 2. Continuous Audit
C. Audit conducted in between two annual audits 3. Interim Audit
D. Some of the books & records of the whole period or specific period are audited 4. Partial
Audit
ABCD ABCD
(a) 2 4 3 1 (b) 3 1 2 4
(c) 2 1 3 4 (d) 3 4 2 1
92). What is/are the purpose(s) of using working papers prepared by an auditor?
1. Planning' and conduct of the audit efficiently
2. Supervision and review of audit work performed by the juniors .
3. Producing the working papers as evidence of the audit work performed by him
Select the correct answer using the code given below.:
(a) 1, 2 and 3 (b) 2 only
(c) 2 and 3 only (d) 1 and 3 only
93). Match List-I (Method of Collecting Audit Evidence) with List-II (Example) and select the
correct answer using the code given below the Lists
List -IList - II
A. Observation 1. Auditor finds that although there is no increase in salaries and wages,
contribution to Provident Fund has increased
B. Correlation with related information 2. On a thorough Scrutiny of payroll auditor comes
across 13 entries instead of 12 entries, one extra entry being for the succeeding month of next
year
C. Enquiry 3. Auditor, on a visit of company's godowns, finds that there is a huge pile of
damaged and obsolete stock. On investigation he is told that the same are not shown as such in
the inventory sheets
94). Match List-I (Specific Item) with List-II Relevant internal Control Query) and select the
correct answer using the code given below the Lists :
List -IList - II
A. Fixed assets 1. Are bank reconciliation statements prepared from time to time?
B. Purchase 2. Are invoices checked and verified in regard to description of materials, terms of
payments, etc?
C. Sales 3. Are all invoices duly approved for payment?
D. Disbursement 4. Who authorises for the sale of scraps?
5. Who prepares payroll ?
ABCD ABCD
(a) 2 3 4 1 (b) 4 1 2 5
(c) 2 1 4 5 (d) 4 3 2 1
97). Match Ust-I (Accounting Standard) with List-II (Subject and select the correct answer
using the code given below,
List -IList - II
A. AS-13 1. Consolidated Financial Statements
B. AS-2 2. Accounting for Investments
C. AS- 3 3. Cash Flow Statements
D. AS-12 4. Valuation of Inventories
5. Accounting for Government
ABCD ABCD
(a) 3 4 2 5 (b) 2 1 3 4
(c) 3 1 2 4 (d) 2 4 3 5
98). A company purchased a machine for Rs 30 lakhs on 1st April, 2002. The estimated life of
the machine is 9 years and scrap value is Rs 3 lakhs. The company follows straigh~ line method
for charging depreciation.' If the method of depreciation is changed from straight line method
99). 99. Which one of the following reasons provides the best theoretical support for
accelerated depreciation?
(a) Assets are more efficient in early years and initialiy generate more revenue
(b) Expenses should be allocated in a manner so as to smoothen earnings
(c) Repairs and maintenance costs will increase in later years so depreciation should decline
(d) Accelerated depreciation provides earlier replacement because of time value of money
100). Which one of the following is the correct statement? Drawings by proprietor in
anticipation of future profit, made during the year would
(a) reduce owner's equity and increase assets
(b) reduce owner's equity and increase liabilities
(c) reduce both owner's equity and assets
(d) increase liabilities and assets and reduce owner's equity
101). In which account are the revenue as well as expenses shown on cash basis?
(a) Income and Expenditure account (b) Profit and Loss account
(c) Profit and Loss Appropriation account (d) Receipts and Payments account
102). X and Yare partners in a firm sharing profits and losses in the ratio 5:3. They admitted Z
into the firm. The new. profit and loss sharing ratio is 3 : 2 : 1. What are the values of
sacrificing ratios of X and Y?
X Y
(a) 1/8 1/24
(b) 1/3 1/6
(c) 3/8 1/24
(d) 1/12 1/12 (Le., equal)
103).Match List.I (Transaction) with List-II (Entry to be Made) and select the correct answer
using the code given below the Lists :
List -IList - II
A. Loss on realization 1. Debit partner's capital account
B. Profit on realization 2. Credit realization account
C. Assets sold 3. Credit partner's capital account
D. Creditors paid 4. Debit drawings account
5. Debit realization account
ABCD ABCD
(a) 1 3 2 5 (b) 2 5 4 3
(c) 1 5 2 3 (d) 2 3 4 5
104. Which one of the following is the correct statement? As per the provisions in the
Companies Act & the relevant Accounting Standard AS-5, depreciation provision is :
(a) a process of allocation of the depreciable amount of an asset over its estimated useful life
(b) a process of valuation of the depreciable amount of an asset over its remaining useful life
(c) a process of writing off the unrealized portion of an asset at the end of its useful life
(d) simply a statutory provision optional for a business entity
105. Which one of the following is the correct statement? By maintaining the provision for
depreciation account, the asset account
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 78
(a) is shown after deducting the annual provision made for depreciation
(b) is maintained at its original cost throughout its lifetime
(c) is reduced annually by the depreciation amount
(d) is reproduced at net realizable value
106. Subscriptions received by a non-profit organization during the year 2004 amounted to Rs
10,000. The subscriptions outstanding on 31-12-2003 and 31-12-2004 were Rs 2,000 and Rs
4,000 respectively, while the subscriptions received in advance on those dates were Rs 3,000
and Rs 2,000 respectively. What was the income from subscriptions of the organization for the
year 2004 ?
(a) Rs 16,000 (b) Rs 15,000
(c) Rs 13,000 (d) Rs 9,000
107. Which one of the following is the correct statement? In the case of non-profit organization,
ifafter the adjustment of incomes and expenses related to specific fund the fund balance is
negative, it is transferred to
(a) the assets side of the Balance Sheet
(b) the liabilities side of the Balance Sheet
(c) the credit side of Income and Expenditure Account
(d) the debit side of Income and Expenditure Account
108. If proprietary ratio (Shareholders funds/Net assets) is 0.75; and the debentures, current
liabilities and current assets are Rs 45,000, .Rs 40,000 and Rs 85,000 respectively, what is the
amount of Net Block (Fixed assets)?
(a) Rs 1,35,000 (b) Rs 1,40,000
(c) Rs 1,80,000 (d) Rs 1,00,000
109. Match List-I (Computation of goodwill) with List-II (Method) and select the correct
answer using the code given below
List -IList - II
A. Goodwill is determined on the basis of the excess of actual profits over the normal profits
expected in future 1. Super Profit Method
B. Goodwill is determined on the basis of the total value of the firm
ABCD
a. 3 1 2 4
b. 2 4 3 1
c. 3 4 2 1
d. 2 1 3 4
16. The tool used by auditor to monitor and
control the progress of audit work is
a. Engagement diary
b. Audit programme
c. Audit working papers
d. Audit notes
17. Which one of the following is the most
appropriate management control technique
for timely completion of a project?
a. Organization chart
b. Management by Objectives
c. PERT
d. Span of control
18. Which of the following pairs are correctly
matched?
1. Frederick Herzberg: Scientific
management
2. Henry Fayol: Modern management
3. Max Weber: Bureaucracy
4. Philip Kotler: Marketing
Select the correct answer using the codes
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 225
given below
a. 1 and 2
b. 2 and 3
c. 1 and 3
d. 2, 3 and 4
19. Hawthorne studies have underlined the
significance of which of the following?
a. System approach to management
b. Contingency approach to management
c. Modern approach to management
d. Human relations approach to
management
20. Which of the following is called
‘Backbone of auditing?
a. Routine checking
b. Vouching
c. Internal checks
d. Internal control
21. Match List I with List II and select the
correct answer using the codes given
below:
List I
A. Receipts and payments account
B. Income and expenditure account
C. Dividend equalization reserve.
D. Subscription received in advance
account
List II
1. Revenue
2. Cash
3. Liability
4. General reserve
ABCD
a. 2 1 4 3
b. 3 4 1 2
c. 2 4 1 3
d. 3 1 4 2
22. Burns and Stalker, model for categorizing
organization by structural design uses the
terms
a. Functional and geographic
b. Functional and organic
c. Geographic and mechanistic
d. Mechanistic and organic /
23. In management principles, grid refers to
a. Diverse managerial styles
b. Coordination
c. Communication
d. Motivation
24. Who among the following is a bear
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 226
operator?
a. A stock broker who sells shares now
and buys the same shares later
b. An investor who expects the price of a
security or that of the whole securities
market to rise
c. An investor who sells securities in
anticipation’ of being able to
repurchase them later at a lower price
d. A broker who indulges in rigging of
share prices
25. Consider the following statements
regarding’ Information ‘Memorandum
1. A company inviting subscription by an
information memorandum shall be
bound to file a prospectus prior to the
opening of the subscription lists and
the offer as a red-herring prospectus, at
least 10 days before the opening of the
offer.
2. The information memorandum and
red-herring prospectus shall carry same
obligations as are applicable in the
case of a prospectus.
3. 3. Any variation between the
information memorandum and the red4
of 15
herring prospectus shall be highlighted
as variations by the issuing company.
Which of the statements given above is/are
correct?
a. 1 only
b. 1, 2 and 3
c. 2 and 3
d. 3 only
26. Match List I with List II and select the
correct answer:
List I
A. Financial leverage
B. Quick ratio
C. Stock turnover
D. Margin on sales
List II
1. Efficiency
2. Profitability
3. Liquidity
4. Risk
Codes;
ABCD
a. 4 3 1 2
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 227
b. 1 2 4 3
c. 4 2 1 3
d. 1 3 4 2
27. In a partnership business if there is no
specific agreement among partners, profit
is distributed in the
a. Ratio of capital contributions
b. Ratio of time spent in the business
c. Ratio to be decided by the Court
d. Equal ratio
28. Rules concerning meetings and reports of
a joint stock company are contained in its
a. Prospectus
b. Memorandum of Association
c. Articles of Association
d. Bye -laws
29. Consider the following statements about
management of change:
1. Job enlargement and job enrichment
are examples of techno-structural
approaches to change
2. Organizational development is short -
range effort supported by top
management to increase an
organization’s problem solving and
renewal processes
Which of the statements given above is/are
correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
30. Consider the following statements about
organizational structure
1. Functional organization is used by
large, multi - product companies
2. Product or market organization is used
by smaller firms that offer a limited
line of products
3. Matrix organizational structure is a
hybrid
Which of the statements given above is/are
correct?
a. 1 and 2
b. 3 only
c. 2 and 3
d. 1, 2 and 3
IAS Prelims Commerce 2004
31. Consider the following statements about
office auto-motion:
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 228
1. The growth of EDP (electronic data
processing) departments and
emergence of MIS (management
information system) are two
independent entities
2. DSS (decision support system) is
accessible only to the computer
specialists
3. Which of the statements given above
is/are correct?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
32. A company purchased 8% bonds at a cost
of Rs. 12,00,000 (Face value Rs.
10,00,000) on January 1,2003. Half yearly
interest is payable on this investment on
June 30 and December 31 each year. The
Company closes its accounts on 31.3.2003.
The amount of accured interest shown in
profit and loss account for the year ended
is
a. Rs. 40,000
b. Rs. 60,000
c. Rs. 20,000
d. Rs. 80,000
33. Goods worth Rs. 24,000 were returned by
X. The accountant, however, credited the
sales returns account by Rs. 42,000. In
5 of 15
order to rectify this error, what should be
done?
a. Debit the sales return account by Rs.
42,000
b. Credit the sates return account by Rs.
24,000
c. Debit the sales return account by Rs.
66,000
d. Debit the sales return account by Rs.
18,000
34. A machine with a written down value of
Rs. 10,000 has been sold for Rs. 13,000.
The amount realized is a
a. Capital receipt and profit involved
should be transferred to Capital.
Reserve
b. Revenue receipt
c. Capital receipt and profit involved
should be transferred to General
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 229
Reserve
d. Capital receipt and profit involved
should be transferred to Profit and
Loss A/c
35. In case of winding up of a company, in
what order does the official liquidator
distribute the amounts realized among the
following different creditors?
1. Legal expenses and the cost of
liquidation
2. Debenture holders
3. Unsecured creditors
Select the correct answer using the codes
given below
a. 1-2-3
b. 3-2-1
c. 3-1-2
d. 1-3-2
36. Rs. 10,000 spent on the replacement of
worn - out parts of an electronic machinery
is treated as
a. Capital expenditure
b. Revenue expenditure
c. Deferred revenue expenditure
d. Capital loss
37. Preliminary expenses are an example of
a. Revenue expenditure
b. Capital expenditure
c. Deferred revenue expenditure
d. All of the above
38. Which of the following is/are capitalized
along with the purchase of a fixed asset?
1. Import duty
2. Delivery and handling cost
3. Cash discount
4. Cost of installation
Select the correct ‘answer using the codes
given below
a. 3 only
b. 2 and 3
c. 1, 2 and 4
d. 1, 2, 3 and 4
39. Match List I (Items) with List II
(Standards) and select the correct answer
using the codes given below:
List I
A. Accounting for fixed assets
B. Revenue recognition
C. Depreciation accounting
D. Cash flow statement
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 230
List II
1. AS – 9
2. AS - 10
3. AS - 3
4. AS - 6
Codes;
ABCD
a. 2 3 4 1
b. 4 1 2 3
c. 2 1 4 3
d. 4 3 2 1
40. Accounting Standard AS - 2 provides that
inventories should be valued at
a. Lower of historical cost and net
realizable value
b. Lower of historical cost and market
value
c. Only estimated selling price
d. All of the above three
41. ABC Company purchased cassettes during
three months as follows
The Company sold 1600 cassettes @ Rs.
100 each. What will be the value of
closing stock if the cost flow assumption
of weighted average method is followed?
a. Rs. 23,500
b. Rs. 35,200
c. Rs. 37,500
d. Rs. 36,200
42. While making an adjustment entry in
respect of interest on capital, credit is
made to
a. Capital account
b. Interest on capital account
c. Profit & Loss account
d. Interest account
43. Given the following data extracted from
the book of
Abdul Traders: (Rs)
Opening stock: 30,000
Closing stock: 40,000
Purchases: 1,25,000
Carriage inwards: 2,000
Carriage outwards: 3,000
Return outwards: 5,000
Sales: 1,50,000
The cost of goods sold will be
a. Rs. 1,30,000
b. Rs. 1,12,000
c. Rs. 1,20,000
KAVITHA TUTORIALS, TIRUVURU[Type text] Page 231
d. Rs. 1,15,000
44. Consider the following statements:
A credit purchase during the accounting
year which was not recorded in the books
of account but included in the closing
stock is to be
1. added to the credit purchases account
2. added to the creditors account
3. subtracted from the closing stock
4. added to the opening stock
Which of the statements given above is/are
correct?
a. 3 only
b. 1 and 2
c. 2 and 3
d. 2, 3 and 4
45. In which of the following ways Secretary
of a company can be removed from his
office?
a. By a resolution passed in the meeting
of the Board of Directors
b. By an order of the Registrar of the
company
c. By a resolution passed in the Annual
General Meeting
d. None of the above three