CORPORATE ACCOUNTING
1) Cancelation of shares mean
A. Reissue of shares
B. Valuation of shares
C. Forfeiture of shares
D. Allotment of shares
Option: C
2) To issue shares on premium mean
A. Issue on face value of shares
B. Issue on more than face value of shares
C. Issue on less than face value of shares
D. Initial public offer
Option: B
3) To issue shares on Par mean
A. Issue on face value of shares
B. Issue on more than face value of shares
C. Issue on less than face value of shares
D. Initial public offer
Option: A
4) To issue shares on Discount mean
A. Issue on face value of shares
B. Issue on more than face value of shares
C. Issue on less than face value of shares
D. Initial public offer
Option: C
5) Goodwill mean
A. Good Will
B. Credit
C. Debit
D. Good Wishes
Option: B
6) Which of following is not the method of valuation of Goodwill?
A. Average profit Method
B. Super profit Method
C. Capitalization Method
D. Straight line Method
Option: D
7) Super profit mean
A. Average Profit – Net profit
B. Average Profit – Normal rate of return
C. Weighted Average Profit
D. Net profit – Average Profit
Option: A
8) Which of following is not Method of calculation of Purchas Consideration?
A. Lump sum Method
B. Net Asset Method
C. Net Payment Method
D. Annuity Method
Option: D
9) Merger of two or more companies or business undertaking to form new company mean
A. Reconstruction
B. Amalgamation
C. Absorption
D. Commandment of Company
Option: B
10) Which of following is not Method of winding of company?
A. Compulsory winding up
B. Voluntary winding up
C. Winding up under the supervision of the court
D. Knowingly winding up
Option: D
11) Which of following is not Current Asset?
A. Patent
B. Bills receivable
C. Cashable security
D. Prepaid Expenses
Option: A
12) Which of following is not Current Liability?
A. Bank overdraft
B. Bills Payable
C. Account Payable
D. Retain earning
Option:D
13) Working capital will increase
A. If Current Asset Decrease
B. If Current Liability Decrease
C. If Current LiabilityIncrease
D. If new shares are issued
Option:B
14) Following is the application of fund
A. Decrease in balance of Fixed Asset
B. Decrease in working capital
C. Decrease in net profit
D. Decrease in preliminary expenses
Option:C
15) Following is the Source of fund
A. Decrease in balance of Debenture
B. Decrease in Long term Liability
C. Increase in Long term loan
D. Redemption of Shares
Option:C
16) Provision for Income Tax is _____
A. Debited to P & L Appropriation A/c
B. Debited to Profit and Loss A/c
C. Debited to Treading A/c
D. Credited to P & L Appropriation a/c
Option:B
17) Corporate dividend tax is _______
A. Computed on Net profit
B. Computed on Share Capital
C. Computed on Goss Profit
D. Computed on Dividend paid
Option: D
18) Dividend is paid on _______
A. On Issued Share Capital
B. On Subscribed Share Capital
C. On Called up Share Capital
D. On Paid up Share Capital
Option: D
19) Dividend policy of a company mainly concern with
(i) dividend payout and
(ii) Stability of dividend
A. Only (i) is correct
B. Only (ii) is correct
C. Both (i) and (ii) are correct.
D. Both (i) and (ii) are incorrect.
Option: C
20) Discounted cash flow criteria for investment appraisal does not include
A. Not present value
B. Benefit cost ratio
C. Accounting rate of return
D. Internal rate of return
Option: B
21) As per SEBI Guideline minimum Application money shall not be less than
A. 25% of Issue price
B. 10% of Issue price
C. 20% of Issue price
D. 6% of Issue price
Option: A
22) The maximum allowable discount on Equity shares is
A. 8% of Issue price
B. 10% of Issue price
C. 12% of Issue price
D. 6% of Issue price
Option: B
23) Share application Account is _______________
A. Real A/c
B. Personal A/c
C. Nominal A/c
D. Fictitious A/c
Option: B
24) Share Allotment Account is _______________
A. Real A/c
B. Personal A/c
C. Nominal A/c
D. Fictitious A/c
Option: B
25) Share Call Account is _______________
A. Real A/c
B. Personal A/c
C. Nominal A/c
D. Fictitious A/c
Option: B
26) Debenture holder are____________
A. Creditor Of Company
B. Debtor of Company
C. Owner of Company
D. Members of Company
Option: A
27) Share holder are____________
A. Creditor Of Company
B. Debtor of Company
C. Owner of Company
D. Members of Company
Option: C
28) After declaration dividends are paid to the shareholders as per the provision of
A. Indian Companies Act
B. RBI Act
C. SEBI Act
D. Indian Contract Act
Option: C
29) The first item in order of payment to be made by liquidator is
A. Liquidation expenses
B. Secured creditor
C. Preferential creditor
D. Preference shareholder
Option: A
30) Dividend Policy must be
A. Flexible
B. Flexible and Fixed both
C. Fixed
D. All of the above
Option: A
31) Assertion (A) :The liability of share holders in a private limited company is limited to the
amount.
Reason (R) :The number of share holders of a private limited company is limited to fifty.
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
Option: D
32) Match the following
List-I (Type of Value) List-II (Features of Value)
(a) Market Value 1. Price which is present in market
(b) Intrinsic Value 2. Net Assets
(c) Liquidation Value 3. Value at wind up
(d) Salvage Value 4. Scrap Value
5. Cost Price
A.
(a) (b) (c) (d)
1 4 3 2
B.
(a) (b) (c) (d)
1 2 3 4
C.
(a) (b) (c) (d)
1 3 2 4
D.
(a) (b) (c) (d)
1 4 3 5
Option: B
33) Liquidator‘s statement of receipt and payment is known as
A. Cash flow statement
B. Deficiency a/c
C. Statement of affairs
D. Liquidator‘s final statement of A/c
Option: D
34) Suppliers and creditors of a firm are interested in
A. Profitability position
B. Liquidity position
C. Market share position
D. Debt position
Option: B
35) Which is the form of dividend?
A. Cash dividend
B. Bond dividend
C. Stock dividend
D. All of these
Option: D
36) Which is the type of dividend?
A. Cash Dividend
B. Interest
C. Profit cum-reserve
D. Flexible Capital
Option: A
37) Which is not the form of dividend?
A. Regular
B. Stock
C. Property
D. Zero Dividend
Option: D
38) The dividend on equity shares is only paid when dividend on ------- has already been paid.
A. Debenture
B. Preference Shares
C. Bond
D. Equity Shares
Option: B
39) A company pays dividend at the
A. End of the week
B. End of the financial year
C. End of the month
D. All of the above
Option: B
40) Which one is the principle of capital structure?
A. Cost principle
B. Risk principle
C. Control principle
D. All of these
Option: D
41) In the calculation of return on shareholders investments the referred investment deals with
A. All reserves
B. Preference and equity capital only
C. All appropriations
D. All of the above
Option: D
42) The assets of a business can be classified as
A. Only fixed assets
B. Only current assets
C. Fixed and current assets
D. None of the above
Option: C
43) The return on investment (ROI) may be calculated as
A. Net profit before interest, tax and dividend / Capital employed
B. Net profit after interest, tax and dividend / Shareholder's fund
C. ( Net profit - preference dividend )/ No. of equity shares
D. Return on Investment / Net profit ratio
Option: A
44) ROI stands for?
A. Return on Investment
B. Ratio of Investment
C. Return of Income
D. None of these
Option: A
45) In case of a limited company, the term financial statements includes
A. Profit and loss and balance sheet
B. Profit and loss account, profit and loss appropriation account and balance sheet
C. Balance sheet
D. None of the above
Option: B
46) The profit on the reissue of forfeited share are transferred to
A. Capital A/ c
B. Capital Reserve
C. Profit & Loss A/c
D. General Issues
Option: B
47) The direct advantages of accounting do not include
A. Preparation of financial statements
B. Comparison of results
C. Competitive advantage
D. Information to interested groups
Option: C
48) Which of the following statements is not correct?
A. For the purpose of Funds Flow Statement, the term 'fund ' generally refers to net
working capital
B. Funds flow is a wider concept than the Cash flow
C. The flow of funds must arise due to external and not internal transactions of the
business
D. The capitalisation of reserves by the issue of bonus shares also involves flow of funds
Option: D
49) Match List I with List II and select correct answer using the codes given below:
List I List II
a. ABC Analysis I. Capital Structure
b. Fund Flow Analysis II. Inventory Control
c. ROI Ill. Working Capital Management
d. M M Theory IV. Overall Profitability
A.
a b c d
II III IV I
B.
a b c d
I II IV III
C.
a b c d
IV III I II
D.
a b c d
I III II IV
Option: A
50) Which one of the following is an example of sources of funds?
A. Decrease in share capital
B. Increase in long-term liabilities
C. Decrease in long-term liabilities
D. Increase in fixed assets
Option: B
51) Which of the following statement is correct?
A. Fixed assets must always be shown at market value
B. Book-keeping and accounting are different terms
C. Owner's Equity = Assets + Liabilities
D. Patents is an example of current asset
Option: A
52) Bonus shares can be issued by a company
A. Out of the Reserves created by revaluation of fixed assets
B. Out of share premium not collected in cash
C. Without any provision for it in the Articles of Association of the company
D. Out of free reserves built out of genuine profit
Option: D
53) Current assets include
A. Stores & Spare parts
B. Stock in trade
C. Sundry Debtors
D. All of the above
Option: D
54) Which of the following accounting equation is correct?
A. Capital + Liabilities= Assets
B. Capital = Assets + Liabilities
C. Capital- Liabilities = Assets
D. Capital + Assets = Liabilities
Option: A
55) Goods withdrawn by the proprietor for his personal use are
A. Shown as a deduction from the purchases
B. Shown as a deduction from the sales
C. Treated as sales at cost price
D. Added to the purchases
Option: A
56) Unpaid calls are shown in the balance sheet of a company
A. By adding it to the share capital
B. By deducting it from the called-up share capital
C. Under the head 'current assets'
D. Under the head 'current liabilities'
Option: B
57) Stock is
A. Included in the category of fixed assets
B. Part of current assets
C. Intangible
D. Tangible
Option: B
58) Which of the following is not included in the category of 'Intangible Assets' ?
A. Patents rights
B. Copy rights
C. Competitive benefit and privileges
D. Machinery
Option: D
59) AS -10 (Accounting Standard on Fixed Assets) does not deal with accounting for the
following items to which special considerations apply
A. Forests, plantations and similar regenerative natural resources
B. Wasting assets including material rights, expenditure on the exploration for and
extraction of minerals, oil, natural gas and similar non-regenerative resources
C. Expenditure on real estate development and livestock
D. None of the above
Option: D
60) Which of the following assets are dealt with by AS - 10 (Accounting Standard on Fixed
Assets)?
A. Land, building, plant and machinery, vehicles, furniture and fittings
B. Goodwill and patents
C. Trademarks and designs
D. All of the above
Option: D
61) Cost of inventories includes
A. Direct Material + Direct Expenses
B. Direct Labour + Direct Expenses
C. All costs of purchase, cost of conversion and other costs incurred in bringing the
inventories to their present location and condition
D. Direct material only
Option: C
62) Closing stock is valued at
A. Cost
B. Market value
C. Cost or market price whichever is lower
D. None of the above
Option: C
63) Salary due to clerk is preferential for a period not exceeding
A. 2 Month
B. 3 Month
C. 4 Month
D. 5 Month
Option: C
64) The fundamental accounting equation' Assets = Liabilities + Capital' is the formal expression
of
A. Dual aspect concept
B. Matching concept
C. Going concern concept
D. Money measurement concept
Option: A
65) Maximum __________ can be treated as preferential salary and wages
A. 20,000
B. 25,000
C. 30,000
D. 10,000
Option: A
66) Which of the following statements is true in relation to liabilities?
A. Claims against the resources.
B. Currently existing obligations which the firm intends to meet at some time in the
future.
C. It must be capable of being expressed in money terms.
D. All of the above
Option: D
67) All capital expenditures and receipts are taken to
A. Trading and Profit and Loss Account
B. Balance sheet
C. Trial balance
D. None of the above
Option: B
68) Which one of the following branches of accounting primarily deals with processing and
presenting of accounting data for internal use?
A. Financial accounting
B. Tax accounting
C. Management accounting
D. Inflation accounting
Option: C
69) 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. None of the above
Option: C
70) As per AS – 14 purchase consideration is what is payable to
A. Shareholders
B. Creditors
C. Debentureholders
D. Shareholders and Debentureholders
Option: A
71) Amalgamation is said to be in the nature of merger if:
A. All assets and liabilities of transferor company are taken over by the transferee
company.
B. Business of transferor company is intended to be carried on by the transferee
company.
C. Purchase consideration must be paid in equity shares by the transferee company
except for fraction shares.
D. All of the above
Option: D
72) Amalgamate adjustment account is opened in the books of transferee company to
incorporate:
A. The assets of the transferor company
B. The liabilities of the transferor company
C. The statutory reserves of the transferor company
D. The non – statutory reserves of the transferor company
Option:C
73) Goodwill arising on amalgamation is to be
A. Retained in the books of the transferee company
B. Amortised to income on a systematic basis normally five years
C. Adjusted against reserves or profit and loss account balance
D. All of the above
Option:B
74) Under pooling of interest method the difference between the purchase consideration and
share capital of the transferee company should be adjusted to:
A. General reserve
B. Amalgamation adjustment account
C. Goodwill or capital reserve
D. None of the above
Option:A
75) Under purchase method the difference between the purchase consideration and share capital
of the transferee company should be adjusted to:
A. General reserve
B. Amalgamation adjustment account
C. Goodwill or capital reserve
D. None of the above
Option:C
76) Which of the following is not deferred revenue expenditure?
A. Heavy advertisement expenditure.
B. Expenses incurred in removing the business to more convenient premises.
C. Preliminary expenses.
D. Depreciation on fixed assets.
Option: D
77) For amalgamation in the nature of merger, the shareholders holding at least ______ or more
of the equity shares of the transferor company becomes the equity shareholders of the transferee
company.
A. 51%
B. 90%
C. 99%
D. 100%
Option: B
78) AS – 14 is not applicable if when Transferee Company acquires Transferor Company and
Transferor Company
A. Ceases to exist
B. Separate entity is Continue to exist
C. Applied in all cases
D. None of the above
Option: B
79)A Ltd. and B Ltd. go into liquidation and a new company X Ltd. is formed. It is a case of
A. Absorption
B. External reconstruction
C. Amalgamation.
D. commencement
Option:C
80) X Ltd. goes into liquidation and a new company Z Ltd. is formed to take over the business of
X Ltd. It is a case of:
A. Absorption
B. External reconstruction
C. Amalgamation.
D. commencement.
Option:B
81) Which of the following cannot be treated as revenue expenditure?
A. Cost of goods purchased for resale.
B. Wages paid for the erection of plant and machinery.
C. Obsolescence cost.
D. Expenses incurred by way of repairs of existing assets which do not in any way add to
their earning capacity.
Option: B
82) Which of the following has the highest cost of capital?
A. Loans
B. Equity shares
C. Bonds
D. Preference shares
Option: B
83) Risk in capital budgeting implies that the decision maker knows _ of the cash flows.
A. Variability
B. Certainty
C. Probability
D. None of these
Option: C
84) Cost of capital is helpful in corporative analysis of various
A. Source of Finance
B. Source of Services
C. Source of material
D. Product
Option: A
85) Which method does not consider the time value of money
A. Net present value
B. Internal Rate of Return
C. Average rate of return
D. Profitability Index
Option: C
86) Which of the following has the highest cost of capital?
A. Loans
B. Equity shares
C. Bonds
D. Preference shares
Option: B
87) When the expenses of liquidation are to be borne by the purchasing company, then the
purchasing company debits:
A. Vendor company's account
B. Bank account
C. Goodwill account.
D. Realisation A/c
Option:C
88) When the purchasing company makes payment of the purchase consideration, it debits:
A. Business purchase account
B. Assets account
C. Vendor company's account.
D. Realisation A/c
Option:C
89) The share capital, to the extent already held by the purchasing company, is closed by the
vendor company by crediting it to:
A. Share capital account
B. Purchasing company's account
C. Realisation account.
D. Business purchase account
Option: C.
90) Which of the following is not included in the assumption on which Myron Gorden proposed
a model on Stock valuation
A. Retained earning the only source of financing
B. Finite Life of the firm
C. Taxes do not exist
D. Constant rate of return on firms investment.
Option: B
91) X Ltd. goes into liquidation and an existing company Z Ltd. purchases the business of X
Ltd. It is a case of:
A. Absorption
B. External reconstruction
C. Amalgamation.
D. Liquidation
Option: A
92) Liabilities (not accumulated profits) of a company include—
A. General reserve
B. Pension fund
C. Dividend equalisation fund.
D. Retain earning
Option: B
93) When the expenses of liquidation are to be borne by the vendor company, then the vendor
company debits:
A. Realisation account
B. Bank account
C. Goodwill account.
D. Purchasing company account
Option: A
94) Accumulated profits include:
A. Provision for doubtful debts
B. Superannuation fund
C. Workmen's compensation fund.
D. Provision for Tax
Option: C
95) For paying liabilities not taken over by the purchasing company, the vendor company
credits:
A. Realisation account
B. Bank account
C. Liabilities account.
D. purchasing company account
Option: B
96) Which one is more appropriate for cost of retained earning?
A. Weighted Average cost of capital
B. Opportunity cost to the firm
C. Expected rate of return by the investor
D. None of the above
Option: B
97) Debt financing is a cheaper source of finance because of
A. Time value of Money
B. Rate of Interest
C. Tax deductibility of Interest
D. Dividends not payable to lenders.
Option: C
98) The vendor company transfers preliminary expenses (at the time of absorption) to:
A. Purchasing Company account
B. Realisation account
C. Purchasing company's account.
D. Equity shareholders' account
Option: D
99) A newly established company cannot be successful in obtaining finance by way of
A. issue of equity capital
B. issue of preference share
C. issue of debenture
D. None of the above
Option: C
100) Money spent to acquire or upgrade physical assets is known as:
A. Revenue Expense
B. Capital Expense
C. Administrative Expense
D. Operating Expense
Option: B
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