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Que.1: Yash Ltd. wants to prepare its cash flow statement. It sold equipment of book value of Rs. 60,000 at a gain of Rs. 8,000. The amount to be reported in its cash flow statement under operating activities is:

A.) Nil

B.) (8,000)

C.) 8,000

D.) 60,000

Que.2: As per AS 13, when current investments are reclassified as long‐term investment, transfer should be made at:

A.) Cost

B.) Carrying amount on the date of transfer

C.) Lower of cost and carrying amount on the date of transfer

D.) Lower of cost and fair value at the date of transfer

Que.3: As per AS 16, income from temporary investment of borrowings that are eligible for capitalization is to be treated as:

A.) Credited to profit and loss account

B.) Added to general reserve

C.) Deduction from the borrowing cost incurred

D.) Added to capital reserve

Que.4: Which costs are not included in the carrying amount of an item of PPE?

A.) Costs of site preparation

B.) Costs of relocating the operations

C.) Installation and assembly costs

D.) Initial delivery and handling costs

Que.5: Out of the given Accounting Standards, which AS is not applicable to Level-II and Level-III non‐corporate entities in their entirety?

A.) AS 17 “Segment Reporting”

B.) AS 28 “Impairment of Assets”

C.) AS 19 “Leases”

D.) AS 29, “Provisions, Contingent Liabilities and Contingent Assets”

Que.6: If one large asset has a number of individual components with different useful lives, it should be depreciated by:

A.) Treating as one asset, without disclosing in the notes to the financial statements

B.) Breaking down into different components

C.) Expensing it all

D.) Treating as one asset, but disclosing in the notes to the financial statements

Que.7: AB Company Ltd. had 1,00,000 shares of common stock outstanding on January 1. Additional 50,000 shares were issued on July 1, and 25,000 shares were re‐acquired on September 1. The weighted average number of shares outstanding during the year on Dec. 31 is:

A.) 1,40,000 shares

B.) 1,25,000 shares

C.) 1,16,667 shares

D.) 1,75,000 shares

Que.8: A Ltd. sold machinery having WDV of Rs. 40 lakhs to B Ltd. for Rs. 50 lakhs (Fair value Rs. 50 lakhs) and same machinery was leased back by B Ltd. to A Ltd. The lease back is in nature of operating lease. The treatment will be:

A.) A Ltd. should amortise the profit of Rs 10 lakhs over lease term

B.) A Ltd. should recognise the profit of Rs 10 lakhs immediately

C.) A Ltd. should defer the profit of Rs 10 lakhs

D.) No profit should be recognized by A Ltd.

Que.9: Which item will form part of “Share capital” as per Schedule III to the Companies Act, 2013?

A.) Share options outstanding account

B.) Forfeited Shares

C.) Share application money pending allotment

D.) Capital work‐in‐progress

Que.10: If the turnover of the company is Rs. 100 crores, then the figures appearing in the financial statements may be rounded off to:

A.) Nearest hundreds

B.) Nearest thousands

C.) Nearest lakhs

D.) Not rounded off at all

Que.11: As per Section 462 of the Companies Act 2013, the Financial Statements of a Start-up Private company may not include:

A.) Balance sheet at the end of the financial year

B.) Profit and Loss account for the financial year

C.) Cash flow statement for the financial year

D.) Statement of change in equity (if applicable)

Que.12: When an impairment loss occurs, the carrying amount of the asset shall be reduced to its:

A.) Market value

B.) Recoverable amount

C.) Net present value

D.) Value in use

Que.13: Segment revenue does not include:

A.) Gains on sales of investments unless the operations of the segment are primarily of a financial nature

B.) Portion of enterprise revenue that is directly attributable to a segment

C.) Revenue from transactions with other segments of the enterprise

D.) Relevant portion of enterprise revenue that can be allocated on a reasonable basis to a segment

Que.14: In an operating lease, the lessee should recognize the benefit of incentives as:

A.) A reduction of rental expense over the lease term, on a straight-line basis

B.) Recognized immediately as income

C.) Deducted from the value of the lease payments in the current year

D.) It is ignored

Que.15: An entity should present:

A.) the statement of cash flows more prominently than the other statements

B.) the balance sheet and statement of profit and loss more prominently than the other statements

C.) notes to other accounts more prominently than the other statements

D.) each financial statement with equal prominence

Que.16: The cost of an internally generated intangible asset does not include:

A.) expenditure on training the staff to operate the asset

B.) salaries of personnel directly engaged in generating the asset

C.) materials consumed in generating the intangible asset

D.) fees to register a legal right

Que.17: A non-cancellable lease cannot be cancelled:

A.) upon the occurrence of any contingency

B.) with the permission of the lessor

C.) on the request of the lessee upon payment an additional amount

D.) if the lessee enters into a new lease for different asset with the same lessor

Que.18: As per AS-10 ‘Property, Plant and Equipment’, an enterprise holding investment properties should value investment property:

A.) as per fair value

B.) as per revaluation model

C.) under discounted cash flow mode

D.) under cost model

Que.19: As per AS 17, reportable segments are those whose total revenue from external sales and inter-segment sales is:

A.) 10% or more of the total revenue of all segments

B.) 15% or more of the total revenue of all segments

C.) 20% or more of the total revenue of all segments

D.) 25% or more of the total revenue of all segments

Que.20: As per AS 20, information regarding basic and diluted EPS is to be disclosed on the face of:

A.) Statement of profit and loss

B.) Notes to the account

C.) Balance sheet

D.) Cash flow statement

Que.21: Which item of inventory is under the scope of AS 2 (Revised)?

A.) WIP arising under construction contracts

B.) Raw materials

C.) Shares, Debentures held as stock in trade

D.) Inventory of livestock, agricultural and forest products

Que.22: Which account cannot be used for issue of bonus shares as per the Companies Act?

A.) Securities premium account

B.) Revaluation reserve

C.) Capital redemption reserve

D.) General reserve

Que.23: An asset bought for Rs.12,00,000 have a carrying value of Rs. 10,00,000. It can be sold in the market for Rs. 9,50,000. Similar asset  with newer technology can be  purchased from the market at Rs. 15,00,000. The fair value of the asset will be:

A.) Rs. 15,00,000

B.) Rs. 12,00,000

C.) Rs. 10,00,000

D.) Rs. 9,50,000

Que.24: As per AS 3, cash flow should be reported on net basis in the case of:

A.) Entities engaged in trading activities

B.) Funds held for customers by an investment enterprise

C.) Entities engaged in stock broking business

D.) Company which is a subsidiary of another company

Que.25: When the current ratio is 4:1 and the amount of current liabilities is Rs. 15,000 what would be the amount of current assets?

A.) Rs. 75,000

B.) Rs. 3,750

C.) Rs. 12,000

D.) Rs. 60,000

Que.26: A company is being sued but no court judgment or legal settlement has been reached. At present, the company has no obligation to pay but in future 20% cash outflow of the sued amount may occur. The company will account for it as a:

A.) Provision

B.) Contingent liability

C.) Contingent asset

D.) Disclosure only

Que.27: The debit or credit balance of “Foreign Currency Monetary Item Translation Difference Account”

A.) Is shown as “Miscellaneous Expenditure” in the Balance Sheet

B.) Is shown under “Reserves and Surplus” as a separate line item

C.) Is shown as “Other Non-current/Current Assets” in the Balance Sheet

D.) Is not shown in the books as it is a notional difference not realised in cash

Que.28: As per Schedule III to the Companies Act, 2013, money received against share warrant should be classified in Balance Sheet under:

A.) Reserves and Surplus

B.) Current Liabilities

C.) Share Capital

D.) Shareholders’ funds

Que.29: If the equipment account has a balance of Rs. 22,50,000 and the accumulated depreciation account has a balance of Rs. 14,00,000, the book value of the equipment is:

A.) Rs. 36,50,000

B.) Rs. 8,50,000

C.) Rs. 14,00,000

D.) Rs. 12,00,000

Que.30: Goods purchased Rs. 1,00,000. Sales Rs. 90,000. Margin 20% on cost. Closing Inventory will be:

A.) Rs. 20,000

B.) Rs. 10,000

C.) Rs. 25,000

D.) Rs. 30,000

Que.31: Transactions of Aruna Ltd. for the period 1.4.2017 to 31.3.2018 are as below:

Indirect expenses Rs. 80,000; Sales Rs. 7,50,000; Purchases Rs. 4,50,000; Stock as on 31.3.2018 Rs. 3,60,000. Rate of gross profit on sales is 12%. The value of stock as on 1.4.2017 was:

A.) Rs. 5,70,000

B.) Rs. 4,90,000

C.) Rs. 5,30,000

D.) None of the above

Que.32: At the time of stock taking, accountant noted that, goods costing Rs. 1,000 (estimated future cost of Rs. 1,600) are lying in godown, waiting for dispatch. These goods were billed on March 15, 2018 for Rs. 1,200. While calculating the value of physical inventory, the following adjustment will be made in the value of inventory shown by the books of account for the year ended on 31.3.2018:

A.) Exclude the goods from calculating inventory

B.) Include the sale price Rs. 1,200 in the value of inventory

C.) Include the cost price Rs. 1,000 in the value of inventory

D.) Include the goods at estimated future cost of Rs. 1,600 in the value of inventory

Que.33: If a purchase return of Rs. 1,000 has been wrongly posted to the debit of the sales returns account, but has been correctly entered in the suppliers’ account, the total of the:

A.) Trial balance would show the debit side to be Rs. 1,000 more than the credit

B.) Trial balance would show the credit side to be Rs. 1,000 more than the debit

C.) The debit side of the trial balance will be Rs. 2,000 more than the credit side

D.) The credit side of the trial balance will be Rs. 2,000 more than the debit side

Que.34: Debit balance as per Cash Book of ABC Enterprises as on 31.3.2018 is Rs. 1,500. Cheques deposited but not cleared amounts to Rs. 100 and Cheques issued but not presented of Rs. 150. The bank allowed interest amounting Rs. 50 and collected dividend Rs. 50 on behalf of ABC Enterprises. Balance as per pass book should be:

A.) Rs. 1,600

B.) Rs. 1,450

C.) Rs. 1,850

D.) Rs. 1,650

Que.35: The cash book showed an overdraft of Rs.    1,500, but the pass book made up to the same date showed   that cheques of Rs 100, Rs. 50 and Rs. 125 respectively had not been presented for payments; and the cheque of Rs. 400 paid into account had not been cleared. The balance as per the pass book will be:

A.) Rs. 1,100

B.) Rs. 2,175

C.) Rs. 1,625

D.) Rs. 1,375

Que.36: Amit Ltd. purchased a machine on 01.01.2018 for Rs. 1,20,000. Installation expenses were Rs. 10,000. Residual value after 5 years Rs. 5,000. On 01.07.2018, expenses for repairs were incurred to the extent of Rs. 2,000. Depreciation is provided under straight line method. Annual Depreciation will be:

A.) Rs. 13,000

B.) Rs. 17,000

C.) Rs. 21,000

D.) Rs.  25,000

Que.37: Consider the following data pertaining to E Ltd. who constructed a cinema house:

Cost of second hand furniture Rs. 90,000; Cost of repainting the furniture Rs. 10,000; Wages paid for fixing the furniture Rs. 2,000; Fire insurance premium Rs. 1,000. The amount debited to furniture account is:

A.) Rs. 90,000

B.) Rs.  91,000

C.) Rs. 1,00,000

D.) Rs 1,02,000

Que.38: On 1st April, 2017, M/s Zero Bros. had a provision for doubtful debts of Rs. 13,000. During 2017-18 Rs. 8,400 proved irrecoverable and it was desired to maintain the provision for bad debts @ 4% on debtors which stood at Rs. 3,90,000 before writing off bad debts. Amount of net provision debited to profit and loss account will be:

A.) Rs. 15,600

B.) Rs. 15,000

C.) Rs. 10,664

D.) Rs. 10,000

Que.39: Mayur Textiles Private limited was incorporated on 23rd October, 2017. As per the compliance requirement, Company shall hold its annual general meeting(AGM) within 9 months from the date of closure of financial year and file financial statements with MCA within due date. What is the due date for holding a Board meeting for approval of financial statements?

A.) 30th September, 2018

B.) 30th December, 2018

C.) 31st December, 2018

D.) 31st March, 2019

Que.40: Event Management Company is in need of additional funds. They have already exhausted their limit of authorized capital. In this case you suggested them to increase authorized capital first and then raise additional funds. As you are looking at the compliance requirements, which MCA form you will file for intimating increase in authorized capital?

A.) SH-4

B.) SH-5

C.) SH-6

D.) SH-7

Que.41: Ms. Noori and Mr. Vikas are two promoters who want to incorporate a Company limited by guarantee. Both will be subscribing 50-50 Equity Capital of the Company. Name has been approved by the Ministry. Which table they have to adopt as a form of Memorandum of Association?

A.) Table A

B.) Table B

C.) Table C

D.) Table D

Que.42: You are a consultant of Nova Private Limited, a Company under incorporation. You are drafting Memorandum of Association (MOA) and Articles of Association (AOA) of the Company. In schedule I, forms have been specified for MOA & AOA. In MOA, amount of share capital with which the company is to be registered has to be mentioned. As per table A, which clause number is a capital clause?

A.) 4th Clause

B.) 5th Clause

C.) 6th Clause

D.) 7th Clause

Que.43: Naman Ltd has taken a loan of USD 20,000 on 1.04.2017 for a specific project at an interest rate of 2.5%p.a. payable annually. On 1.04.2017, the exchange rate between the currencies was Rs. 55 per USD. The exchange rate as on 31.3.2018 was Rs. 49 per USD. The corresponding amount was borrowed by the company in local currency at an interest rate of 5% as on 1.04.2017. What will be the increase/decrease in the liability towards the principal amount?

A.) Increase by Rs. 24,500

B.) Decrease by Rs. 24,500

C.) Decrease by Rs. 1,20,000

D.) Increase by Rs. 1,20,000

Que.44: Nihal Constructions undertook a construction contract of a dam for Rs. 200 crores on 22.12.2017. On 22.2.2018, the company found that it had already spent Rs. 175 crores on the construction. A prudent estimate of additional cost for completion was Rs. 37 lakhs. When should the company recognize the provision of expected loss?

A.) The company will recognize the expected loss at the time of conclusion of contract

B.) The company will recognize the expected loss for the year ended on 31.3.2018

C.) The company will not recognize the expected loss

D.) The company will proportionately recognize the expected loss when the loss becomes probable and balance shall be recognized at the time of conclusion of contract

Answers:

(Also read: Direct Tax MCQs with Answers for Practical Training Assessment Level-1)