262. Computers
taken on hire by a business for a period of twelve months should be classified
as
(a)
Current
assets
(b) Intangible assets
(c) Deferred revenue expenditure
(d) Not an asset
[Hints: (d) Computers taken on hire by a business for a period of twelve months is
not
an asset because it is not owned by the business to be classified as asset. Thus, the correct answer is (d). Since it is not an asset it cannot be classified as any asset and other alternatives are not the correct answers.]
263. Which
of the following is
not
an intangible asset?
(a)
Trade mark
(b) Franchise
(c) Accounts
Receivable
(d)
Secret Profit [Hints: (c) An accounts receivable is not an
intangible asset. It is the
amount that the business has to receive from its debtors. The other assets mentioned
in alternatives a, b, and d- trademark, franchises and secret
processes are intangible assets.
Hence, the correct
answer is (c).]
264. Which
of the following is a current
liability?
(a) Prepaid expenses
(b)
Trademark
(c) Discount on issue of shares
(d)
Outstanding Salaries
[Hints: (d) Outstanding salaries are short term
obligations expected to be paid off during the short period of time. So, it is a current liability. Prepaid expenses, trademark and discount on issue of shares are assets. Hence, (d)
is correct answer.]
265. Based on which of the following
concepts,
is Share Capital Account shown on the liabilities
side of a
Balance Sheet?
(a) Business
entity concept
(b)
Money measurement concept
(c) Going concern concept
(d)
Matching
concept
[Hints: (a) Share capital is the contribution made by the owner(s) and is regarded as
a liability to the business in the nature of owner's equity. The
underlying feature for this
treatment is the distinction between the owner(s) and that of the
business owned by them. According to business
entry concept whenever an owner brings capital into the business, the business in turn is deemed to owe
the capital to the owner. As such the share capital account is treated as a liability to the business and shown under liabilities.
The other concepts are not correct because,
(b) Money measurement concept explains that in financial accountancy, a record is
made
only
of information that
can
be expressed in monetary terms and ignores other events,
however
significant they may be. It is silent
about the treatment
of share capital account.
(c) Going concern concept explains that the resources of the concern would continue
to be used for the purposes
for which they are meant to be used. The
very categorization of assets into fixed
and
current presupposes the going concern concept.
It does not deal about
the treatment
of share capital
account.
(d)
Conservatism concept:
The theme behind this principle is
that recognition of
revenue requires better evidence than recognition of expenses. It deals with revenues
and expenses
and
not the share capital account.]
266. Which
of the following is
not
a contingent liability?
(a) Debts included in Sundry Debtors
which
are doubtful
in
nature
(b) Uncalled liability on partly
paid shares
(c) Claims
against the company
not
acknowledged as
debts
(d)
Arrears of fixed cumulative
dividend
[Hints: (a) A contingent liability is the loss which will be known or determined only
on the occurrence or non- occurrence of one or more future uncertain events. Debts
of debtors is not an uncertain event but only the realization of a part of the debt in
doubtful
for
which provision must be provided and hence it is not a contingent
liability. Items in other alternatives uncalled liability on partly paid
shares (b) may be
called up in
the event of necessity,
claims against
the company not acknowledged as
debts (c
) they may or may not turn out to be debts in future. Arrears of cumulative fixed
dividend (d)
are
contingent liabilities.]
267. Which
of the following are current assets
of a business?
i. Income received in advance
ii. Stock
iii. Debtors
iv. Pre-paid expenses
v. Accrued income
(a) Both (i)
and (iv)
above
(b) Both (ii) and (iii)
above
(c) (i),(ii)
and (iii) above
(d) (ii),(iii),(iv)
and (v) above
268. Which
of the following statements
is true?
(a) Bad Debts
Recovered Account
is transferred to Sundry
Debtors Account
(b) Bill
of
exchange is
drawn
by the purchaser
(c) Trial Balance establishes
the arithmetical accuracy
of the accounting
records
(d)
A well maintained asset need not be depreciated
[Hints: (c)
Bad debts
recovery amount
will be transferred to Profit & Loss Account and not to Sundry Debtors Account. Hence (a) is not correct. Bill of exchange is drawn by the
drawer
i.e., the seller and not the
purchaser. According to Companies Act,
all assets must be depreciated.
Hence (a),
(b)
and (d) are not true. By tallying Trial Balance always proves the arithmetical
accuracy
of the accounting records.
Hence (c) is correct.]
269. Closing
entries are generally passed —
(a)
At the time of opening new books
of account
(b)
At the time of closing the accounts
(c) During
the course of accounting
period any
time
(d)
After certification of accounts
270. Closing
stock appearing in the Trial Balance is shown
in
-
(a)
Trading A/c and Balance Sheet
(b) Profit and Loss A/c
(c) Balance Sheet only
(d)
Trading A/c only
271. Depreciation Account
appearing
in the Trial Balance is
shown in —
(a) Profit and Loss A/c
(b)
Trading A/c
(c) Deducted from the concerned assets
A/c
(d)
Shown on the liability side
272. Profit on sale
of old plant is shown -
(a) In Trading A/c
(b) In Profit and Loss
Appropriation A/c
(c) Profit and Loss A/c
(d) Being a non operating
item
ignored
273. Carriage
on goods purchased is shown in —
(a) Profit and Loss A/c
(b)
Capitalized with work in progress
(c) Trading A/c
(d)
Shown in Balance Sheet
274. Which
of these is not an operating
income
(a) Income from sale of trading
goods
(b) Bad debts
recovered
(c) Interest
on FDs
(d) None
275. ABC holds
an average inventory
of ' 36,000(CP) with an inventory
turnover of 5 times.
If the firm makes a
gross profit of 25% on sales, find the total sales
of the company
(a)
' 2,40,000 (b)
' 2,10,000 (c)
' 2,00,000
(d)
' 1,80,000
276. From the following details what will be the partners'
commission?
Net profit before charging partners' commission '65,000. Partners' commission @
11% after charging
such commission
(a)
6441
(b)
5431
(c) 7654
(d)
9876
277. From the following details what will be the partners'
commission?
Net profit
before
charging
partners' commission
'65,000.
Partners' commission
11% before charging such commission
(a)
6441
(b)
5431
(c)
7150
(d)
5876
278. Arrangement
of Balance Sheet in a logical order is known
as —
(a) Dressing Balance Sheet
(b)
Marshalling Balance Sheet
(c) Formatting Balance Sheet
(d)
Make up of Balance Sheet
279. Improper valuation of inventory effects—
(a) Profitability
(b) Financial position
(c) Both
(d)
Cash inflows
280. Find the cost of
goods sold if goods are sold for ' 2,000 at 25% profit on cost
(a)
' 1,600 (b)
' 1,500 (c)
' 1,000
(d)
' 1,800
281. Find the value of opening stock from the following data.
Purchases ' 1,50,000, Closing stock ' 30,000 , Sales '2,20,000, Gross
profit ' 40,000.
(a)
' 50,000
(b)
' 55,000
(c) ' 60,000
(d)
' 65,000
282. A Bill
of Exchange is
drawn on 1st April, 2012 payable
after 3 months.
The
due date of
the bill is
(a) 30th June,2012
(b)
1st July,2012
(c) 4th July,2012
(d) 4th August,2012
[Hints: (d) Bill drawn on 1st April, 2012 payable after 3 months. The due date is 1st
April,
2012 + 3 months + 3 days of grace = 4th July, 2012.]
283. Which
of the following statements
is/are true?
(a) Noting charges are paid by
the holder of the bill on the date of default
(b)
A bill can be
endorsed only
thrice
(c) On renewal
of bill the old bill is
canceled
(d) Both (a) and (c)
above
[Hints: (d) Noting charges are paid by the holder of the bill to get the bill noted for dishonour on the date of its dishonour. Statement (a) is true.
A bill can be endorsed any number of times, there is no limit to the number of endorsements.
Statement (b) is false.
Renewal of bill takes place when the acceptor requests the drawer to cancel the old
bill
and
draw a new bill.
Hence statement
(c
) is true.
Hence option (d)
stating that statement
(a)
and (c) are the right choice.]
284. When bill discounted with
the bank is dishonoured?
(a)
Acceptor's
Account is debited in the books
of
drawer
(b) Bills
Receivable Account is credited in the books of drawer
(c) Bank Account is debited in the books
of
drawer
(d) Bills
Payable
Account is debited in the books
of
drawer
[Hints: (a) When a bill discounted with bank has been dishonoured, the drawer debits the Acceptors Account (restores the acceptor status a debtor for the amount due) and credits
the Bank Account or Cash
Account (the
amount he pays to bank). The acceptor debits the Bills Payable Account, the noting charges and credits the Drawer's
Account (Restores
the status quo of the creditor to whom he is due to pay).
Hence option (a) is correct. All other options are incorrect.]
285. Which
of the following statements
is/are false?
(a)
Accommodation bills are drawn for the benefit of drawer only
(b) Bills
sent for collection is
an asset
(c) Bills
of
exchange cannot
be drawn on a banker
(d) Both (a) and (c)
above
[Hints: (d) Accommodation bills are drawn for the benefit of both the parties to the
bill.
Hence statement
(a)
is false.
Bills sent for collection in the books of the drawer is an asset replacing the Bills
Receivable (asset).
A cheque is a bill of exchange which is drawn on a banker, payable at sight. Hence option
(c ) is false.
Hence option
(d) the statements (a) and (c ) are false, is the right choice.]
286. In the books of the drawer,
the accounting treatment involved on receipt
of a bill of exchange duly accepted by the drawee is
i. Debit Bills Receivable Account
ii. Debit Drawee‟s Account
iii. Credit Drawee‟s Account
iv. Credit Sales Account
(a)
Only (i) above
(b) Both (ii) and (iv) above
(c) Both (i)
and (iii) above
(d) Both (i)
and (iv)
above
[Hints: (c) In the books of the drawer, the accounting treatment involved on receipt of a bill of exchange
duly
accepted by the
drawee is debit Bills Receivable Account and credit Drawee's
Account
.i.e., the combination of statements
in (i) and (iii) alternative (c) is the
correct
answer. The other alternatives are
incorrect because the combination of one correct
answer with the statement of incorrect answer. Drawee's Account is debited (ii)
as soon as a sale is made or any advances is made
and
Drawee's Account
is not debited
when the
bill of exchange is accepted and sales is credited (iv) when the sale is made
and
not at the time of acceptance
of bill of exchange. Thus, the alternatives (a), statement (i) (b), combination of (ii)
and
(iv) (d) combination of (i)
and
(iv) are incorrect.]
287. The noting charges levied on dishonour of an endorsed bill by the Notary Public are to be
borne by
(a)
The drawer of the bill
(b)
The person responsible for dishonour
(c) The holder of the bill
(d)
The endorser of the bill
[Hints: (b) The
noting charges are
the charges paid to
Notary Public for
presenting a bill for payment and to note the fact of dishonour. The charges are to be borne by the person responsible for dishonour who is none other than the
drawee.
Thus, the correct answer is
(b).
The drawer of the bill (a) is incorrect answer because the drawer may pay the charges initially
but ultimately they are to be borne by the drawee. The holder of the
(c)
is entitled to receive the payment of the bill and to bear
the noting charges on the
bill. The endorser (d) may be the drawer of the bill in which case he will recover the
noting charges from the drawee of the bill. Thus
(b) is the correct answer.]
288. The drawer of a trade bill passes relevant
entries with regard to the transaction
involved in it. But, in case of an accommodation bill, he
passes an entry in addition to
the usual entries. The additional entry
so passed is with respect to
(a) Discounting of
the bill with the bank
(b) Payment of the bill on due date
(c) Remitting or receiving the amount
(d)
Sending the
bill to bank for collection
[Hints: (c ) In case of accommodation bills, the additional entry that is to be passed
other than the
usual entries passed with regard to trade bills in the
books of the
drawer
is
in
respect of (c
) remitting or receiving
the
amount at the time of discounting the bill and honouring the bill at maturity. The entries passed are the same in case of discounting the bill with the bank (a) and no additional entry is
passed except for sending the share of proceeds to the drawee. On
payment of the bill
on due date (b) no additional entry is passed in the
books of the drawer. If the
bill is sent to the bank for collection, (d) the purpose behind the accommodation bill is
defeated. However, no additional entry is required to be passed at the time
of sending
the bill to the bank for collection
(d)
. Thus, (c)
is the correct answer.]
289. Under which of the following situations, is journal entry not passed in the books of
the drawer?
(a)
When a discounted bill is
honoured by the drawee on the due date
(b)
When a bill is
sent to
the bank for collection
(c) When a bill is
renewed at the request of the drawee
(d)
When a debtor accepts a
bill
drawn by
the drawer
[Hints: (a) When a discounted bill is honoured by the drawee on the due date, (a) no journal entry is passed in
the books of the drawer. The entry is passed at the time of discounting of the
bill itself and no entry is required if the
discounted bill is honoured on due date. Hence, (a)
is the correct answer. The other alternatives are incorrect
because,
when a
bill is sent to
the bank for collection
(b)
a journal entry debiting bills sent to bank for collection and crediting Bills Receivable is passed.
When a
bill
is renewed at the
request of the drawee (c) a journal
entry is passed canceling the old bill
and
raising a new bill
with interest. When a
debtor accepts a bill drawn by the drawer (d) when a debtor
is converted to bills receivable and debtors balance is reduced and Bills Receivable account is increased
to extent of the amount passing a journal entry to that effect. Thus, (a) is the correct
answer.]
290. Which
of the following is
not
a feature of a
promissory note?
(a) It must
be in writing
(b) It contains an unconditional
promise to
pay
(c) It is payable to
the bearer
(d) It must
be signed by the maker
[Hints: (c)
According to the Negotiable
Instrument Act,
promissory note
is not
payable to the bearer. It must contain an order to pay. So this is not
the characteristic of promissory note. Other options are
the characteristics of promissory
note.]
291. How many
parties are generally found in a Bill of Exchange
(a)
4 (b)
2 (c)
3
(d)
5
292. X draws
a Bill
of Exchange on Y for ' 10,000 on 1-1 -2013
for
3 months. The due date of the bill will be —
(a) 4-4-2013 (b)
3-4-2013
(c) 1-4-2013 (d)
31-3-2013
293. When a
B/R is endorsed by the Drawer what entry is passed
by the Drawee—
(a) B/R A/c
Dr. to Drawer A/c Cr.
(b)
B/P A/c Dr. to
Drawer A/c Cr.
(c) 3rd Party's A/c Dr. to
B/P
A/c Cr.
(d) No entry
at all
294. When a
B/R is discounted, what entry
is passed by the Drawee—
(a) Bank A/c Dr. to
B/R Cr.
(b) Drawer A/c Dr. to B/R A/c Cr.
(c) B/R A/c
Dr. to B/P A/c Cr.
(d) No entry
295. Noting charges are ultimately borne by—
(a)
Drawee (b)
Drawer (c) Payee
(d) None
296. Negotiable
Instrument Act
was enacted in—
(a)
1981
(b)
1881
(c)
1871
(d)
2001
297. Which
of these is not an essential
feature of a bill of exchange
(a)
Unconditional
(b)
Certainty of amount
(c) In writing
(d)
Amount
to be paid in foreign currency
298. A foreign bill of exchange is
generally drawn up in —
(a)
Triplicate (b)
Duplicate
(c)
Single
(d)
Quadruplicate
299. Which
of these are not required in a promissory
note
(a)
Acceptance
(b) Unconditional promise to
pay
(c) Properly stamped
(d) Payment to
be
made legal currency
