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If an employee of the business files a legal suit on business, it is considered in the books as | d | A legal suit represents a potential obligation that depends on the outcome of a future event (the court's decision). Because the obligation is not yet confirmed, it is recorded as a contingent liability in the notes to accounts, rather than a confirmed liability or expense. | Legal Expense | Liability | Contingent Asset | Contingent Liability | null | null |
At the end of the accounting year the capital expenditures are shown in the | a | Capital expenditures (CapEx) are funds used to acquire, upgrade, or maintain physical assets (like property, buildings, or equipment). Since these provide benefits over a long period (more than one year), they are capitalized and listed as non-current assets on the Balance Sheet. | assets side of the Balance Sheet. | liabilities side of the Balance Sheet. | debit side of the Profit and Loss A/c. | credit side of the Profit and Loss A/c. | null | null |
Which of the following is not a method of charging depreciation? | d | Sinking Fund, Sum of Years' Digits, and Working Hours are all standard accounting methods for calculating depreciation. "Asset's Life-cycle" usually refers to Life Cycle Costing (a management accounting concept regarding total cost of ownership), not a specific method for charging periodic depreciation in financial boo... | Sinking Fund Method | Sum of years Digit Method | Working hours Method | Asset's Life-cycle Method | null | null |
If average inventory is `1,25,000 and closing inventory is `10,000 less than opening inventory then the value of closing inventory will be | d | Formula: Average Inventory = (Opening Inventory + Closing Inventory) / 2. Let Opening Inventory = X. Then Closing Inventory = X - 10,000
Calculation: 1,25,000 = (X + X - 10,000) / 2. 2,50,000 = 2X - 10,000. 2,60,000 = 2X. X (Opening) = 1,30,000. Closing = 1,30,000 - 10,000 = 1,20,000 | ` 1,35,000 | ` 1,15,000 | ` 1,30,000 | ` 1,20,000 | null | null |
The Accommodation bill is drawn | c | Unlike a trade bill, which is backed by the sale of goods, an accommodation bill is drawn specifically to help one or both parties raise money temporarily by discounting the bill with a bank. It is done for mutual financial accommodation without an underlying trade transaction. | to finance actual purchase or sale of goods. | to facilitate trade transmission. | when both parties are in need of funds. | None of the above | null | null |
Balance of X's account in creditors ledger is transferred to X's account in debtors ledger, in this case | b | A creditor account normally has a Credit balance. To transfer (remove) this balance, you must perform the opposite action, which is a Debit. The Journal entry for a set-off is: Debit Creditor (Creditors Ledger) and Credit Debtor (Debtors Ledger). | X's account in debtors ledger will be debited. | X's account in creditors ledger will be debited. | Suspense account will be debited. | None of the above | null | null |
Ground rent or surface rent means | d | In royalty accounts, surface rent (or ground rent) is the payment made for using the surface of the land (e.g., for stacking materials or building sheds). This is a fixed amount payable to the landlord irrespective of production and is usually paid in addition to the minimum rent or royalty. | Minimum rent | Maximum royalty payable | Minimum royalty payable | Fixed rent payable in addition to minimum rent | null | null |
Accounting standard in India are issued by | c | In India, the Accounting Standards Board (ASB), constituted by the Institute of Chartered Accountants of India (ICAI), formulates and issues Accounting Standards. | Government of India | Reserve Bank of India | The Institute of Chartered Accountants of India | The Institute of Accounting Standard of India | null | null |
As on 31st March, 2017 debtors and additional bad debts are ` 8,00,000 and ` 10,000 respectively. If the provision for bad debts is made at 5% on debtors then amount of such provision will be The Institute of Cost Accountants of India 2 P-5: Financial Accounting - Bit Questions | c | Adjust Debtors: Start with the Debtors balance and subtract the additional bad debts (which haven't been recorded yet).8,00,000 - 10,000 = 7,90,000. Calculate Provision: Calculate the percentage on the adjusted amount.5% of 7,90,000 = 39,500 | `40,000 | `50,000 | `39,500 | `40,500 | null | null |
Income and Expenditure Account is a | a | The Income and Expenditure Account is prepared by Non-Profit Organizations to determine a Surplus or Deficit. It records expenses and incomes (losses and gains) for the current period, which classifies it strictly as a Nominal Account (similar to a Profit & Loss A/c). | Nominal Account | Real Account | Personal Account | Artificial Personal Account | null | null |
Creditors ledger adjustment account is opened in | a | In the Self-Balancing Ledger system, the "Adjustment Account" represents the controlling account. The Creditors Ledger Adjustment Account (also called Total Creditors Account) is kept in the General Ledger to verify the total balance of the subsidiary Creditors Ledger. | General Ledger | Debtors Ledger | Creditors Ledger | Either (b) or (c) | null | null |
Receipts and Payments account is a | b | The Receipts and Payments Account is essentially a summary of the Cash Book. Since Cash is an asset, this account is classified as a Real Account (Debit what comes in, Credit what goes out). | Nominal Account | Real Account | Personal Account | Artificial Personal Account | null | null |
A resource owned by the business with purpose of using it for generating future profit, is known as | b | An asset is defined as a resource controlled by an entity as a result of past events and from which future economic benefits (profits/cash flows) are expected to flow to the entity. | Capital | Asset | Liability | Surplus | null | null |
Outward Invoice issued is a source document of | b | An "Outward Invoice" is a bill sent by the seller to the buyer. This document serves as the primary evidence for a credit sale, which is recorded in the Sales Book. (Conversely, an Inward Invoice is for the Purchase Book). | Purchase Book | Sales Book | Return Inward Book | Return Outward Book | null | null |
Which of the following is of capital nature? | d | Any expense incurred to bring a fixed asset (like machinery) into working condition is capitalized (added to the cost of the asset) rather than treated as a revenue expense. | Commission on purchases | Cost of repairs | Rent of factory | Wages paid for installation of machinery | null | null |
If any stock is taken by a co-venturer, it will be treated as | a | When a co-venturer takes stock, it is treated essentially as a sale to that person. The Joint Venture account is credited (Income/Gain) and the Co-venturer’s account is debited. | an income of the joint venture. | an expense of the joint venture. | to be ignored from joint venture. | it will be treated in the personal books of the co-venturer. | null | null |
Contingent liability would appear | d | Contingent liabilities (like a pending lawsuit) are not actual liabilities yet, so they are not included in the main total of the Balance Sheet but are disclosed in the footnotes (Notes to Accounts) for transparency. | on the liability side of the Balance Sheet. | on the assets side of the Balance Sheet. | do not shown in the books of accounts. | as a note in Balance Sheet. The Institute of Cost Accountants of India 3 P-5: Financial Accounting - Bit Questions | null | null |
Income statement of a Charitable Institution is known as | c | Charitable institutions do not operate for "Profit," so they prepare an "Income and Expenditure Account" to determine "Surplus" or "Deficit." | Statement of profit and loss | Receipts and Payments Account | Income and Expenditure Account | Profit and Loss Account | null | null |
Which of the following account is mainly prepared at the time of dissolution of the firm | c | Upon dissolution, assets are sold and liabilities paid off. These transactions are recorded in a Realization Account to find the final profit or loss on the closing of the firm. | Revaluation A/c | Goodwill A/c | Realization A/c | Memorandum Revaluation A/c | null | null |
Advertisement expenses are apportioned among departments in the proportion of | a | Advertisement expenses are incurred to generate sales. Therefore, logically, this cost is distributed among departments based on their respective sales figures. | sales of each department | purchases of each department | no. of units sold by each department | cost of sales of each department | null | null |
In Hire Purchase system cash price plus interest is known as | c | The total amount payable in a Hire Purchase system includes the Cash Price (actual cost) + Interest (financing charge). This total is called the Hire Purchase Price. | Capital value of asset | Book value of asset | Hire purchase price of asset | Hire purchase charges | null | null |
Which one is/ are the method/s of Accounting for Branches | d | Dependent branches can be accounted for using the Debtors System, Stock and Debtors System, or Final Accounts System depending on the complexity and data available. | Final Accounts Method; | Debtors Method and | Stock and Debtors Method. | All of the above | null | null |
__________ is similar to the Profit and loss A/c | a | Both are nominal accounts prepared on an accrual basis. They both match revenue against expenses for a specific period. | Income and Expenditure A/c | Receipts and Payments A/c | Balance Sheet | None of the Above | null | null |
Kuntal draws a bill on shyam for ` 7,000.Kuntal endorsed it to Ram. Ram endorsed it to Rahim. The payee of the bill will be: | d | The "Payee" is the person holding the right to receive the payment. Since the bill was last endorsed to Rahim, he is the current payee. | Kuntal | Ram | Shyam | Rahim | null | null |
Bad debts are apportioned among departments in the proportion of | a | Bad debts occur when customers fail to pay for credit sales. Therefore, the expense is allocated based on the volume of sales. | Sales of each department | Number of units sold by each department | Cost of sales of each department | None of the above | null | null |
Which of the following is not a Fundamental Accounting Assumption? | d | According to AS-1, the three Fundamental Accounting Assumptions are Going Concern, Consistency, and Accrual. Materiality is a convention/concept, not a fundamental assumption. | Going Concern | Consistency | Accrual | Materiality The Institute of Cost Accountants of India 4 P-5: Financial Accounting - Bit Questions | null | null |
________ is equal to estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale. | a | This is the standard definition of NRV used for valuing inventory (Inventory is valued at Cost or NRV, whichever is lower). | Net Realizable value | Cost of Conversion | Cost of Purchase | None of the above | null | null |
_______ are investments which are held beyond the current period as to sale or disposal. | a | Investments intended to be held for more than 12 months (beyond the current period) are classified as Non-current. | Non-current Investments | Current Investments | Current Liabilities | None of the above | null | null |
An obligation which may or may not materialize is a/an _______________. | c | An obligation that depends on a future uncertain event (like winning or losing a court case) is a Contingent Liability. | Loss | Asset | Contingent Liability | None of the above | null | null |
________________ voucher denotes payment of cash. | a | In vouching, a specific "Cash Payment Voucher" is used to authorize and record the outflow of physical cash. | Cash Payment | Cash Receipt | Bank Payment | All of the above | null | null |
Which of the following is an example of Capital Expenditure? | d | Inventory (Asset/Expense), Insurance (Revenue Exp), and Taxes (Revenue Exp) are not Capital Expenditures. Capital Expenditure refers to buying fixed assets like land, buildings, or machinery. | Inventory of raw materials, work-in-progress and finished goods; | Insurance premium; | Taxes and legal expenses; | None of the above. | null | null |
Which of the following errors is not disclosed by a Trial Balance? | d | explanation: A Trial Balance only checks if Total Debits = Total Credits. It cannot detect:. Omission: Entry completely missing (Debit 0, Credit 0).. Commission: Wrong account but correct side (e.g., Debiting Mr. A instead of Mr. B).Compensating: One error cancels out another. | Errors of Omission | Errors of Commission | Compensating Errors | All of the above | null | null |
___________ is specially suited to mines, oil wells, quarries, sandpits and similar assets of a wasting character. | a | Depletion is the term used for the reduction in the value of natural resources (mines, oil wells) as the resource is extracted (wasted away). | Depletion | Depreciation | Amortisation | Dilapidation | null | null |
The following account has a credit balance | b | Plant (Asset) = Debit.Purchase (Expense) = Debit.Loan (Liability) = Credit | Plant and Equipment A/c | Loans A/c | Purchase A/c | None of the above | null | null |
From the following details estimate the capital as on 31.03. Capital as on 01.04.2016 - `4,10, Drawings `40,000, Profit during the year ` 50,000 | c | Closing Capital = Opening Capital + Profit - Drawings. 4,10,000 + 50,000 - 40,000 = 4,20,000 | `4,10,000 | `4,50,000 | `4,20,000 | `4,00,000 The Institute of Cost Accountants of India 5 P-5: Financial Accounting - Bit Questions | null | null |
A and B purchased a piece of land for ` 30,000 and sold it for `60,000 in Originally A had contributed `12,000 and B `8,.The profit on venture will be | a | Profit = Sale Price - Cost Price. 60,000 - 30,000 = 30,000 | `30,000 | `20,000 | `60,000 | Nil | null | null |
AB Ltd. has signed at 31st December, 2017 the Balance Sheet date, a contract where the Total Revenue is estimated at ` 15 Crores and Total Cost is estimated at ` 20 Crores. No work began on the contract. Is the Contractor required to give any accounting effect for the year ended 31st December, 2017? | a | Under AS-7 (Construction Contracts) and the Prudence concept, if Total Cost ( 20 Cr) exceeds Total Revenue ( 15 Cr), the entire anticipated loss (` 5 Cr) must be recognized immediately, even if work hasn't started. | Recognize expected loss of `5 Crores | Recognize `15 Crores as Profit | No entry | None of the above | null | null |
Which of the following item does not match with receipts and payments account? | c | This statement is False. The Receipts and Payments account records all cash transactions, whether they are Capital (e.g., sale of building) or Revenue (e.g., rent paid) in nature. | It is a summarized cash book | Transactions are recorded in it on cash basis | It records revenue transactions only | It serves the purpose of a real account | null | null |
Which of the following is/ are the basic features of a Joint Venture | d | JVs are temporary, profit-sharing partnerships where capital contribution is flexible, and the entity dissolves after the goal is achieved. | The profit or loss on joint venture is shared between the co-venturers in the agreed ratio | The co-venturers may or may not contribute initial capital | The JV is dissolved once the purpose of the business is over | All of the above | null | null |
Excess of hire purchase price over cash price is known as | c | The difference between the higher Hire Purchase price and the lower Cash Price is the Interest charged for the delayed payment. | Installment | Cash down payment | Interest | Capital value of asset | null | null |
Which of the following is/are revenue expenditure? | d | Consumables, legal fees, and rent are all recurring expenses incurred to maintain daily business operations, making them Revenue Expenditures. | Consumable Stores | Taxes and legal expenses | Rent of factory building | All of Above | null | null |
AS-9 is related to | a | AS-9 is the standard titled "Revenue Recognition." (AS-3 is Cash Flow, AS-10 is Property, Plant & Equipment). | Revenue Recognition | Cash Flow Statement | Accounting for Fixed Assets | Disclosure of Accounting policies | null | null |
The person to whom bill is endorsed is known as __________. | a | Endorser: The person transferring the bill. Endorsee: The person receiving the bill. | Endorsee | Drawee | Drawer | None of the above | null | null |
Which of the following is/are feature/features of Income and Expenditure Account? | d | It is a Nominal account, it ignores capital items (Balance Sheet items), and it records gains like profit on the sale of assets. | It follows Nominal Account | All Capital incomes and expenditures are excluded The Institute of Cost Accountants of India 6 P-5: Financial Accounting - Bit Questions | Profit on sale of asset is credited | All of the above | null | null |
The debts which are not bad is known as | a | Debts that are fully recoverable and not suspected to default are technically referred to as Good Debts. | Good debt | Bad Debt | Doubtful Debt | None of the above | null | null |
A transaction without immediate cash settlement is known as | b | A transaction where goods are exchanged but cash is paid at a later date is a Credit Transaction. | Cash Transaction; | Credit Transaction; | Deferred Transaction; | None of the above. | null | null |
_________ liabilities represent proprietor’s equity, i.e. all thoseamount which are entitled to the proprietor | c | According to the Business Entity Concept, the business is separate from the owner. Capital is the amount the business "owes" back to the owner, making it an Internal Liability. | External; | Debenture; | Internal; | None of the above. | null | null |
Goods are transferred from Department X to Department Y at a price so as to include a profit of 33.33% on cost. If the value of closing stock of Department Y is ` 48,000, then the amount of stock reserve on closing stock will be | a | Profit is 33.33% on Cost => 1/3 on Cost. 1/3 on Cost is equal to 1/4 on Selling Price (Invoice Price).Closing Stock (at Invoice Price) = 48,000$.Stock Reserve = $48,000 X(1/4 )= 12,000$. | `12,000 | `9,000 | `18,000 | None of the above | null | null |
What is a Sole Proprietorship? | C | null | Business owned by president | Business owned by several companies | Business owned by one person | Business owned by a company | null | null |
Which of the following is owned by a single person | D | null | Private Company | Public Company | Joint Hindu Family | Sole Proprietorship | null | null |
Sole proprietorship business can be started by | B | null | at least seven persons | any one person | at least two persons | at least three persons | null | null |
A sole proprietor has a limit in which of the following ability | A | null | Managerial | Owner | Worker | None of these | null | null |
Sole Proprietorship is most suitable for | C | null | Medium scale concerns | Large scale concerns | Small scale concerns | None of the above | null | null |
The life of sole proprietorship business is | C | null | Stable | Very short life | Unstable | Long life | null | null |
In which form of business, there is no need to share profits. | B | null | Company | Sole proprietorship | Partnership | Joint Hindu family business | null | null |
A Sole proprietor concern is free from regulation by. | B | null | Indian Contract Act | Government | Private Indian | Indian Law | null | null |
The reason for the end of the sole proprietorship can be | D | null | Insolvency | Insanity | Death | All the above | null | null |
Sole proprietorship business owner has | C | null | Restricted Liability | No Liability | Unlimited Liability | Limited Liability | null | null |
A company is formed by | C | null | Government | Directors | Promoters | Owners | null | null |
The word limited should appear after the name of | B | null | Partnership | Registered company | Statutory company | Chartered company | null | null |
Deferred shares are generally issued to: | A | null | Promoters | Government | General Public | Managing agents | null | null |
The minimum members in public limited company are: | D | null | 4 | 2 | 8 | 7 | null | null |
Share premium is shown in the balance sheet as an: | B | null | Deducted from the asset side. | Liability | Deduction in paid up capital | Asset | null | null |
Share premium money can be used for: | A | null | Issue of fully paid bonus shares | Payment of debentures | Payment of dividend | Writing of good will | null | null |
Debenture can be issued at: | D | null | At discount | At premium | At par | All of the above | null | null |
How many members have to sign a memorandum of association in case of a private company? | C | null | Five | Seven | Two | Ten | null | null |
The official signature of a company is called: | D | null | Prospectus | Debentures | Shares | Common seal | null | null |
The company is managed by the group of persons known as: | A | null | Board of directors | Group of member | Team of shareholders | None of the above | null | null |
Trade between two countries can be useful if cost ratios of goods are: | D | null | Undetermined | Decreasing | Equal | Different | null | null |
The term Euro Currency market refers to | B | null | The international foreign exchange market | The market where the borrowing and lending of currencies take place outside the country of issue | The countries which have adopted Euro as their currency | The market in which Euro is exchanged for other currencies | null | null |
Which of the following theories suggests that firms seek to penetrate new markets over time? | B | null | Imperfect Market Theory | Product cycle theory | Theory of Comparative Advantage | None of the above | null | null |
Dumping refers to: | B | null | Reducing tariffs | Sale of goods abroad at low a price, below their cost and price in home market | Buying goods at low prices abroad and selling at higher prices locally | Expensive goods selling for low prices | null | null |
International trade and domestic trade differ because of: | D | null | Different government policies | Immobility of factors | Trade restrictions | All of the above | null | null |
The margin for a currency future should be maintained with the clearing house by | D | null | The seller | The buyer | Either the buyer or the seller as per the agreement between them | Both the buyer and the seller | null | null |
The following statement with respect to currency option is wrong | D | null | Foreign currency- Rupee option is available in India | An American option can be executed on any day during its currency | Put option gives the buyer the right to sell the foreign currency | Call option will be used by exporters | null | null |
Govt. policy about exports and imports is called: | A | null | Commercial policy | Fiscal policy | Monetary policy | Finance policy | null | null |
Which of the following is international trade: | A | null | Trade between countries | Trade between regions | Trade between provinces | Both (b) and (c) | null | null |
Market in which currencies buy and sell and their prices settle on is called the | C | null | International bond market | International capital market | Foreign exchange market | Eurocurrency market | null | null |
Moving along an indifference curve the: | D | null | Consumers prefer some of the consumption points to others. | Marginal rate of substitution for a good increase as more of the good is consumed. | Marginal rate of substitution is constant. | Consumers do not prefer one consumption point to another. | null | null |
The slope of the indifference curve is equal to which of the following? | C | null | One | Marginal utility | Marginal rate of substitution | None of these | null | null |
Why is the indifference curve convex to origin? | A | null | Due to continuous decline of marginal rate of substitution | Due to law of diminishing marginal utility | Due to monotonic preferences | Both a and b | null | null |
Which of the following is not the property of indifference curves? | C | null | Higher the indifference curves, higher is the level of satisfaction. | Indifference curve is downward sloping. | Indifference curve is concave to origin. | Two indifference curves cannot intersect each other. | null | null |
Hicks and Allen believed that utility: | B | null | Can be measured in cardinal numbers | Can be measured in ordinal numbers | Cannot be measured | Cannot be expressed | null | null |
As we move down the indifference curve from left to right, the slope of the indifference curve tends to which of the following? | C | null | Unity | Zero | Decline | Rise | null | null |
In the indifference map, a higher IC indicates which of the following? | B | null | Lower level of satisfaction | Higher level of satisfaction | Same level of satisfaction | Either higher or same level of satisfaction | null | null |
Two indifference curves cannot cut each other because of which of the following? | C | null | They represent those combinations of two goods that give the same satisfaction. | The slope is downwards. | Each indifference curve represents a different level of satisfaction. | They are convex to origin. | null | null |
An indifference curve is related to which of the following? | A | null | Choices and preferences of consumer | Prices of goods X and Y | Consumer’s income | Total utility from goods X and Y | null | null |
An Indifference curve slope down towards right since more of one commodity and less of another result in which of the following? | D | null | Decreasing expenditure | Maximum satisfaction | Greater satisfaction | Same satisfaction | null | null |
Liberalization means | B | null | Free determination of interest rates | Liberating the industry, trade and economy from unwanted restrictions | Opening up of economy to the world by attaining international competitiveness | Reducing number of reserved industries from 17 to 8 | null | null |
When a company taken over another one and clearly becomes the new owner, the action is called | A | null | Acquisition | Merger | Strategic Alliance | None of the above | null | null |
By which act does the government check restrictive trade? | A | null | MRTP Act | FEMA act | Industrial Policy Act 1991 | None of these | null | null |
Which among the following is not opened for private sector participation | A | null | Railways | Telecommunication sector | Education sector | Power sector | null | null |
Which among these can be the condition for the success of privatisation? | C | null | Measurability of performance | Alternative institutional arrangements | Barriers to enter the market | All of the above | null | null |
Which among these is monopolistic trade practice? | A | null | Manufacturing only one product | Selling only one product | Limiting technical Development | Unreasonably limiting competition | null | null |
The Industrial policy resolution was passed first in | B | null | 1947 | 1956 | 1931 | 1999 | null | null |
Globalisation is the term used to describe process of removal of restriction on | C | null | Investment | Foreign Trade | Both (A) and (B) | None of the above | null | null |
Laissez Faire policy is adopted in | B | null | Socialist Economic system | Capitalist Economic system | Communist Economic System | Mixed Economic System | null | null |
Which one is not the main objective of Fiscal Policy in India? | D | null | To promote employment opportunities | To minimize the inequalities of income and wealth | To promote price stability | To increase liquidity in economy | null | null |
Purchasing goods from a foreign country is called | A | null | Import | Entrepot | Export | Re-Export | null | null |
Goods imported for the purpose of export is known as | C | null | Home trade | Foreign trade | Entrepot | Trade | null | null |
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