Q 1. "When production exceeds sales in a given period, the profit according to the accrual basis of accounting surpasses the profit based on the cash basis of accounting."
"A liability is categorized as 'Current' when it meets the requirement of being anticipated to be settled within the organization's regular Operating Cycle."
Q 2. If the level of production exceeds sales within a specific period, the profit calculated based on the accrual basis of accounting will be greater than the profit determined using the cash basis of accounting.
A liability is categorized as "Current" when it meets the requirement of being anticipated to be settled within the normal operating cycle of the organization.
Q 3. Which of the following are the differences that arise due to errors committed in recording transactions while preparing Bank Reconciliation Statement?
I. Direct Payment made by the bank on behalf of customers.
II. Errors committed in recording transactions by the firm.
III. Errors committed in recording transactions by the bank.
IV. Interest charged by the bank on overdraft
Q 4. Which of the following statements regarding the creation of secret reserves are correct?
I. Secret reserves may be created by charging capital expenditure to the profit and loss account.
II. Creating excessive provisions for doubtful debts or depreciation can contribute to the creation of secret reserves.
III. Representing actual assets as contingency assets is a method of creating secret reserves.
Therefore, statements I, II, and III are all correct regarding secret reserve creation.
Q 5. Which of the following rules listed below does not assist in determining capital expenditure?
Q 6. Among the given options, the one that is not an example of a medium-term source of finance is:
Q 7. The term used to describe the voucher that is prepared by the loan department bank staff when the interest is due is known as ___
Q 8. In what ways can profits be distributed?
Q 9. Which of the following options serves as an example of a secret reserve?
Q 10. In a Balance Sheet prepared in order of liquidity, the following item would appear first on the liabilities side:
Q 11. When an income is accruing outside India during the previous financial year, it is included in the total income of a Resident and Not Ordinary Resident.
Q 12. Which of the following statement(s) is/are correct regarding 'Non-Performing Assets'?
Statement I: 'Non-Performing Assets' refers to those assets that fail to generate expected returns to the bank due to borrowers' default in making repayment.
Statement II: The bank should recognize income on 'Non-Performing Assets' (NPA) on an accrual basis.
Q 13. Consider the following scenario for two IT-based companies, Company D in the US and Company P in the UK. Company D adheres to the Generally Accepted Accounting Principles (GAAP) system, while Company P follows the International Financial Reporting Standards (IFRS) system. Based on this context, please answer the following questions regarding the classification of interest paid and interest received by Company D.
How will Company D classify interest paid and interest received in its activities?
Q 14. Directions [Set of 2 Questions]: There are two IT-based companies, Company D and Company P, with Company D located in the US and Company P located in the UK. Company D adheres to the Generally Accepted Accounting Principles (GAAP) system, while Company P follows the International Financial Reporting Standards (IFRS) system. Answer the following questions based on this information.
In which activity will Company P classify dividends?
Q 15. Directions [Set of 2 Questions]: On 1st April 2015, the balance sheet of X Ltd Company displays a closing balance of 27,000 for the plant. The plant was sold for 48,000 on 1st April 2016, and it experienced depreciation of 3,000 over the course of one year. Based on the provided information, determine the condition of X Ltd after the sale of the plant.
Q 16. Directions [Set of 2 Questions]: On 1st April, 2015, the balance sheet of X Ltd Company shows a closing balance of plant worth 27,000. The plant was sold for 48,000 as of 1st April 2016. The depreciation on the plant for one year is 3,000. Using the provided information, calculate the value of the situation experienced by the plant."
Q 17. If the borrower pays the arrears of interest and principal in the case of loan accounts classified as NPAs, the account may be classified as a "standard" account.
Q 18. What is the amount of marginal relief available to Raju if his total net income earned in a financial year is Rs. 52 Lakhs?
Q 19. In the Base framework, Pillar 3 seeks to enhance market discipline by imposing regulatory disclosure requirements. The following principles should be adhered to when it comes to Pillar 3 disclosures:
I. Consistency over time: Disclosures should maintain consistency throughout different periods.
II. Comparability across banks: Disclosures should allow for meaningful comparisons between different banks.
III. Objectivity: Disclosures should be objective in nature, providing unbiased and factual information.
Q 20. The Rule 'Debit all expenses and losses and Credit all incomes and gains' pertains to which account?
Q 21. Based on the provisions of the Income Tax Act 1961, determine the appropriate treatment for the following scenario:
When a non-resident Indian borrows money and utilizes the interest paid on that loan for a purpose in India that is not related to any business or profession.
Q 22. The following is a revised format of the types of trial balances arranged in chronological order:
I. The unadjusted trial balance
II. The adjusted trial balance
III. The post-closing trial balance
Q 23. Revised statement:
The correct statement regarding the Imprest system of Petty Cash is as follows:
I. Under this system, a fixed amount of cash is maintained to cover small expenses.
II. The journal entry for the Imprest system is a debit to the Petty Cash account and a credit to the Cash account.
Q 24. On which accounting concept and convention is the classification of assets into fixed and current assets based?
Q 25. Which of the following is not a characteristic of the written down value method of depreciation?
I. The book value of the asset reaches zero at some point in time.
II. Depreciation is calculated based on the book value of assets rather than the cost.
III. The depreciation amount assigned to a particular asset decreases each year.
IV. There is no requirement to estimate the residual value and estimated useful life when determining the depreciation amount.
Q 26. Which of the following statements accurately describes the concept of gang variance in standard costing?
Q 27. In which of the following cases will income from the previous year be assessed in the previous year itself?
I. Shipping business of the non-resident.
II. Artificial Judicial person formed for a particular purpose.
III. Discontinued Business.
Please note that the income assessment rules may vary based on the tax laws of the specific jurisdiction.
Q 28. Under which situations is a person considered a resident in India?
Q 29. Features of Direct tax include:
I. The burden of direct tax cannot be shifted to another person.
II. It is levied and collected from the same person.
III. Examples of Direct tax include income tax and tax on undisclosed foreign assets.
Q 30. XYZ Ltd recorded a profit of 500,000 for the fiscal year ending on March 31, 2020. However, this profit calculation included certain entries that need to be adjusted. The adjustments are as follows:
(i) On March 28, 2020, a car was purchased for business use at a cost of 150,000. However, this amount was mistakenly categorized as vehicle expenses.
(ii) Unpaid electricity bills for February and March 2020, amounting to Rs. 20,000 per month, were not recorded.
To determine the accurate profit for the year ended on March 31, 2020, the adjustments mentioned above need to be considered.
Q 31. In the context of the Government scheme for software development and training, when a resident makes lumpsum royalty payments to a non-resident manufacturer for the transfer of all rights associated with computer software, the following condition regarding royalty shall apply: ___
Q 32. Which of the following options does not qualify as a Fictitious Asset?
Q 33. The RBI prescribes certain additional disclosures in the bank balance sheet under schedule 18 Notes to disclosure. These include:
I. Movement of Non-Performing Assets (NPAs)
II. Overseas assets, NPAs, and revenue
III. Off-balance sheet Special Purpose Vehicles (SPVs) sponsored by banks
IV. Concentration of deposits
Q 34. When calculating depreciation, the method employed should consider the following factors:
I. Accounting requirements
II. Type of asset
III. Lifespan of the asset
IV. Number of units produced
Q 35. When a company receives government grants, it is necessary to record them in the books of accounts in accordance with which Indian accounting standard?
Q 36. Match the following different types of financial decisions:
(I) Investment decision: B. This decision is concerned with how the firm's funds are to be invested in different assets.
(II) Financing decision: C. This decision is concerned with how much finance to be raised and identifying the various available sources for it.
(III) Dividend decision: A. This decision means how much of the profit earned by the company is to be distributed to the shareholders as dividends and how much of it should be retained in the business.
Q 37. Which of the following costs are not capitalized in capital budgeting?
Q 38. The term used to describe an agreement in which one party purchases an asset and grants the other party the right to use it in exchange for periodic payments over a defined duration is called _______________?
Q 39. The analysis method described as _________ is an effective tool for making decisions, employing a structured non-parametric approach to problem-solving.
Q 40. Yield Curve Notes, utilized by companies to raise funds, possess the following features:
(I) Yield Curve Notes function similarly to inverse floaters and are employed as a hedge against interest rates.
(II) The yield of Yield Curve Notes rises in tandem with an increase in the prevailing interest rate.
(III) Yield Curve Notes are categorized as structured debt securities.
Q 41. The assets listed below are arranged in order of liquidity, from the most liquid to the least liquid:
I. Cash in hand
II. Short-term investments
III. Bills Receivable
IV. Prepaid Insurance
V. Goodwill
Q 42. Choose the odd one out:
Q 43. Which of the following statements is correct?
I. The provision for bad and doubtful debt is a reflection of the conservatism concept.
II. The recording of fixed assets at cost is attributed to the accrual concept.
III. Accounting equations are founded on the dual aspect concept.
Q 44. What is the definition of a small unit of a company's capital that carries a fixed rate of dividend and entitles the holder to receive dividends when the company earns profit?
Q 45. Which statement(s) regarding 'Reserves' is/are correct?
Statement I: Reserves represent an appropriation of profits rather than a charge on the profits.
Statement II: Reserves are established to cater for known liabilities.
Q 46. What kind of cost is depreciation
Q 47. What is the value of current assets if the owner's capital is $80,000, liability is $40,000, and fixed assets are $60,000?
Q 48. The bank reconciliation statement can be prepared using the balances from the following sources:
I. Cash Book
II. Pass Book
III. Subsidiary Books
Q 49. The amount of Securities Premium cannot be utilized for which of the following purposes?
Q 50. It is not necessary to provide depreciation on plant and machinery when its ________ is higher than its _________.
Q 51. According to Section 69D, what is the relevant tax rate for the borrowed or repaid amount on Hundi transactions?
Q 52. Salary received by non-resident seafarers, for services rendered outside India on a foreign-going ship, and deposited in an NRE bank account maintained with an Indian bank shall be included in the total income for the purpose of tax calculation in India.
Q 53. What is the correct distinction between a Revenue Reserve and a Capital Reserve?
Q 54. In the Balance Sheet of Banking Companies, there are a total of 12 schedules. What information is portrayed in Schedule 1 to 5 of the Balance Sheet?
Q 55. During the P.Y. 2022-23, an HUF named XYZ conducts its business operations from Canada and makes its policy decisions there. Mr. Z, an Indian citizen and the Karta of the HUF, visits India after a gap of 11 years. He arrives in India on May 1, 2022, and departs for Australia on February 1, 2023. Considering this scenario, we need to determine the residential status of both XYZ HUF and Mr. Z for the F.Y. 2022-23.
Q 56. What is the term for the process of pooling illiquid assets into marketable securities and offering them to investors to raise finance?
Q 57. Chetan, a non-resident Indian who has been residing in Malaysia since 2000, returned to India for permanent residence on 1.12.2020. What would be Chetan's residential status for the financial year 2022-23?
Q 58. What technique is utilized to compute the future value of cash flows?
Q 59. calculate the depreciation value for a machinery purchased by ABC company for $30,000. The machinery has a salvage value of $500, a useful life of 10 years, and an estimated total unit usage of 50,000 units. Determine the depreciation value specifically for the actual usage of 5,000 units.
Q 60. Depreciation Calculation using the Sum-of-the-Years' Digits Method
ABC Company recently acquired machinery for a total cost of $30,000. The machinery has a salvage value of $500 and is expected to remain in use for a useful life of 10 years. The estimated number of units the machinery will produce throughout its entire lifespan is 50,000. calculate the depreciation value of the machinery specifically for the first year using the Sum-of-the-Years' Digits Method. Please provide the calculated depreciation value.
Q 61. What is the purpose of the provision included in the following scenarios?
Q 62. The amount of discount charged on a bill of exchange is not influenced by which of the following factors?
Q 63. What types of income are considered to accrue or arise in India? Please select from the options below:
I. Dividend declared by a foreign company outside India.
II. Hire charges paid for the use of machinery in India, but paid outside India.
III. Interest received from deposits with an Indian company, but received outside India.
Q 64. Would the amount charged, Rs 15,00,000, by the lawyer who is a resident of London and hired by Ms. Paksha to represent her case in the Supreme Court of India, be subject to taxation in ___?
Q 65. What is the correct method for determining Owner's Equity from the options provided below?
Q 66. What charges need to be paid in the situation described above, where A sells goods to B, draws a three-month bill on B, B accepts it, returns it to A, and A discounts it, but the acceptance is dishonored on the due date and noting charges were paid?
Q 67. In the given scenario where A sells goods to B, draws a three-month bill on B on the same day, which B accepts and returns to A for discounting, and later the acceptance is dishonored on the due date resulting in the payment of noting charges, who bears the responsibility for covering these specific charges?
Q 68. Rewritten statement:
In which costing method does the cost per unit decrease as production increases?
Q 69. Which of the following does not qualify as a feature of a financial lease?
Q 70. In accordance with the Income-tax Act of 1961, the total income of a taxpayer is determined by categorizing their various income sources into five distinct heads. Please identify which of the following options does not fall under any of these heads of income.
Q 71. To which account is the amount debited when cash is withdrawn for personal expenses?
Q 72. As per Accounting Standard 3, the Cash flow statement is categorized into the following:
I. Operating Activities
II. Investing Activities
III. Financing Activities
IV. Expense and Income Activities
Q 73. To determine the cash flow from operating activities, the company must subtract which of the following items?
Q 74. When the bill discounted from the bank is dishonored, who will be responsible for the noting charges?
Q 75. Please find below the reformatted and rewritten version of the statements:
1. Statement I: The liabilities side of the Balance Sheet always indicates credit balances.
2. Statement II: The Balance Sheet is prepared for a specific period.
Q 76. The expenditure transaction encompasses the following aspects:
I. Cash outflow is involved in this type of transaction.
II. It entails the acquisition of capital or long-lived assets.
III. It covers the procurement of goods intended for sale or the acquisition of services.
Q 77. What is the cost of goods sold given the following information: Opening Stock of Rs. 18,500, Direct Wages of Rs. 14,800, Purchases of Rs. 40,700, Interest on Loan of Rs. 3,800, and Closing Stock of Rs. 24,000?
Q 78. In terms of functions, NBFCs and banks share similarities, but what sets them apart? Choose the option below that emphasizes the differences between banks and NBFCs.
Q 79. In which voucher would XYZ Co. record the purchase of furniture on credit?
Q 80. Which type of expenditure is beneficial only for the current period?
Q 81. What is the amount of tax payable by an individual who is 65 years old with a total income of Rs 450,000?
Q 82. Which of the following statements accurately describe ratio analysis?
I. Ratio analysis involves establishing a mathematical relationship between two figures extracted from financial statements.
II. Ratio analysis enables the comparison of current performance with past performance, as well as the measurement of organizational effectiveness and efficiency.
III. Ratios play a crucial role in assessing and analyzing the performance of an organization.
Q 83. What would be Mr. Mohit's tax liability in India as a Non-resident Indian receiving a USD 2500 payment from Sejal, a managing consultant in China, for consulting services related to an India-China collaborative project used in India?
Q 84. Section 87A provides a rebate from the tax payable by an assessee, being an individual resident in India, whose total income does not exceed what amount?
Q 85. I. How does profit maximization occur within a firm, involving the determination of input levels, output levels, and prices to achieve the highest profit?
II. How does wealth maximization contribute to a firm's efforts to enhance the value of its business, leading to an increase in the market value of its shares and ultimately raising its market capitalization?
Q 86. Among the provided statements, which statement specifically applies exclusively to preference shareholders?
Q 87. What is the margin of safety under marginal costing if a company earns a profit of Rs 50,000 during the year, with a marginal cost of Rs 10 per unit and a selling price of Rs 12 per unit?
Q 88. Which of the following statements accurately describes the difference between IFRS and GAAP?
I. IFRS is based on the fair value concept, while GAAP is based on the historical cost concept.
II. GAAP is principle-based, whereas IFRS is rule-based.
Q 89. In which of the following situations should controllable variances be adjusted?
Q 90. What type of financing involves a wealthy individual offering capital to startups in exchange for equity in the company?
Q 91. Which of the statements below is incorrect regarding the residential status of an individual?
Q 92. Which of the following items will NOT be found on the debit side of the Profit & Loss Account?
Q 93. What would be the preceding financial year for the assessment year 2023-24 if a businessman initiates his business on July 1, 2022?
Q 94. In which of the following statements/accounts will the "Salaries & Wages" from the Trial Balance be presented?
Q 95. To record the adjustment entry for the unexpired discount earned by banks in bill discounting, the following revised format can be used:
I. Unexpired Discount A/c Dr.
To Discount Earned A/c
II. Discount Earned A/c Dr.
To Unexpired Discount A/c
III. Unexpired Discount A/c Dr.
To Discounted Bill A/c
IV. Discounted Bill A/c Dr.
To Unexpired Discount A/c
Q 96. In order to close the discounted Bill Account at the beginning of the next financial year, the banks should transfer the amount to ____.
Q 97. Which of the following statements about provisions is not accurate?
Q 98. Which of the following contra account(s) do banks utilize to manage transactions that have no direct impact on the bank's position?
I. Letters of credit opened.
II. Bills received or sent for collection.
Q 99. What is the correct statement regarding the inclusion of income in the total income of a Resident and Ordinary Resident when income is accruing outside India during the previous financial year?
Q 100. Which ratio is a key metric used by prospective business lenders to evaluate an organization's ability to meet long-term obligations?
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