TIME -2 HRS
COMMON PROFICIENCY TEST
JUNE-2013
PAPER 1
MAXIMUM MARKS: 100
THE TEST IS DIVIDED INTO TWO SECTIONS
QUESTIONS 1 TO 100 HAVE ONLY ONE CORRECT ANSWER & CARRY +1 MARK FOR EACH
CORRECT ANSWER & -0.25 MARK FOR EACH WRONG ANSWER.
PART A- ACCOUNTANCY (60 MARKS)
Q.1 While determining net profit, all costs which are applicable to revenue of the period are charged against revenue. Which
QUESTIONS 1 TO 100 HAVE ONLY ONE CORRECT ANSWER & CARRY +1 MARK FOR EACH CORRECT
concept is being followed?
ANSWER & -0.25 MARK FOR EACH WRONG ANSWER.
(a) Business entity concept
(b)
Matching concept
(c) Money measurement concept
(d) Dual aspect concept
Q.2 The underlying accounting principle necessitating amortization of Intangible Assets is/are:
(a) Cost concept
(b) Realization concept (c) Matching concept (d) Both ‘b’ and ‘c’
Q.3 Window dressing of Accounts means :
(a) Presenting accounts in beautiful manner
(b) Showing more losses to avoid Income tax
(c) Showing more profit to attract Investment (d) All of the above
Q.4 Omission of paise and showing the round figures in financial statements is based on :(a) Conservatism concept
(b) Consistency concept
(c) Materiality concept
(d) Realization concept
Q.5 Which is not an example of an accounting policy:
(a) Going concern
(b) Valuation of Fixed assets
(c) Treatment of retirement benefits
(d) Valuation of inventories
Q.6 Selection of an inappropriate accounting policy may lead to :
(a) Understatement of performance
(b) Overstatement of performance
(c) Understatement or overstatement of financial position
(d) none of the above
Q.7 The bad debts written off, if subsequently recovered are credited to –
(a) Debtor’s account
(b) Sales account
(c) trading account
(d) Profit & Loss account
Q.8 What is the credit sale if cash sales is Rs 10,000, collections from debtors is Rs 4,00,000 , bad debts Rs 25000 and
opening and closing balance debtors is Rs 25000 and Rs 75000 respectively?
(a) Rs 3,00,000 (b) Rs 4,00,000 (c) Rs 4,75,000 (d) Rs 4,85,000
Q.9 Accrual system of accounting is also known as(a) Cash system
(b) Mercantile system (c) Receipt system
(d) Government system
Q.10 Which of the following is a basic evidence of a transaction ?
(a) Journal entry
(b) Cash book
(c) Voucher
(d) Cash receipt
Q.11 Bank overdraft account is a :
(a) Personal account (b) Real account (c) Nominal account (d) representative personal account
Q.12 If two or more transactions of the same nature are journalized together it is known as:
(a) compound journal entry
(b) separate journal entry
(c) Posting
(d) none of the above
Q.13 General Reserve Account and Dividend Equalisation Fund Account are –
(a) Personal account (b) Real account (c) Nominal account
(d) none
Q.14 A note sent by buyer on return of goods is :
(a) Debit note
(b) Credit note (c) Return note (d) none
Q.15 Imprest amount –Rs 500. What will be the amount of reimbursement if following expenses were incurred by the petty
cashier during the month-Telephone = Rs 150, Tiffin = Rs 50, small repairs = Rs 30 general expenses = Rs 100.
(a) 300
(b) 170 (c) 330
(d) 270
Q.16 Interest received of Rs 100 was recorded as interest paid. What will be the effect on cash balance?
(a) Cash will reduce by 100
(b) Cash will increase by 200
(c) Cash will reduce by 200
(d) No effect on cash balance
Q.17 On 1st April, 2002, Anoop sold goods for Rs 30,000 to Deepak who gave an acceptance for Rs 25000 and a cheque for
Rs 5000. Anoop immediately discounted @ 12% this bill from the bank for Rs 24000. Hence the period of the bill is :
(a) 4 months (b) 2 months (c) 3 months (d) 5 months
Q.18 Goods amounting to Rs 12000 were returned by a customer and were taken into stock, but no entry in respect thereof
was passed in the books. It should be classified as –
(a) A clerical error
(b) An error of commission
(c) An error of omission
(d) An error of principle
Q.19 Which of the following error will not effect the agreement of Trial Balance:
(a) Purchase returns books was undercast by Rs 100
(b) Goods taken by the proprietor Rs 1500 for gift to his daughter were not recorded at all
(c) Goods amounting to Rs 860 sold to Raman were correctly entered in the sales book but were posted as Rs 866 to the
buyer’s account
(d) Rs 50,000 received from A was posted to the debit of his account
Q.20 Cash sales of Rs 3550 was entered as Rs 3505 The rectifying entry will be .
(a) Cash a/c Dr 45
To Sales a/c
45
(b) Suspense a/c Dr
45
To Sales a/c
45
(c) Cash a/c Dr 45
To Suspense a/c
45
(d) none of the above
Q.21 The beginning stock of the current year is over stated by Rs 500 and closing stock is overstated by Rs 1200 effect on
profit will be :
(a) Rs 1700 (overstated)
(b) Rs 1200 (understated)
(c) Rs 1700 (understated)
(d) Rs 700 (overstated)
Q.22 Rectification in next financial year is done through :
(a) Profit & Loss A/c
(b) Profit & Loss Appropriation A/c
(c) Profit & Loss Adjustment A/c
(d) none of these
Q.23 Sale of old furniture is wrongly transferred to Sales account. Which type of error is this?
(a) Error of Principle
(b) Compensating Error
(c) Error of Omission
(d) Error of commission
Q.24 Receict side of cash book is overcast by Rs. 250. Bank passbook shows overdraft of Rs. 13450 cash book will show.
(a) overdraft of Rs. 13450
(b) overdraft of Rs. 13700
(c) overdraft of Rs. 13200
(d) none of the above
Q. 25 Debit balance as per cash book
Rs. 2000
Cheques deposited but not realized Rs. 100
Cheques issued but not presented Rs. 150
Bank allowed interest
Rs. 50
Bank collected dividend
Rs. 50
Balance as per passbook will be :
(a) Rs. 2100
(b) Rs. 1950
(c) Rs. 2350
(d) Rs. 2150
Q. 26 The cash book showed an overdraft of Rs. 1500 but the pass book made up to same date showed that cheques of Rs.
100 Rs. 50 and Rs. 125 had not been presented for payment and a cheque of Rs. 400 had not been cleared the balance as per
the pass book will be :
(a) Rs. 1100
(b) Rs. 1625
(c) Rs. 2175
(d) Rs. 1375
Q.27 Credit balance as per cash book Rs. 10000
Bank charged interest Rs. 150
Cheques issued but not present for payment Rs. 2500
Balance as per pass book will be :
(a) Rs. 7650
(b) Rs. 12350
(c) Rs. 12650 (d) none of these
Q.28 The payment side of cash book is undercast by Rs. 250 If the starting point of BRS is the overdraft balance as per pass
book , then what would be the treatment to reach to overdraft balance of cash book ?
(a) add 250
(b) less 250 (c) add 500
(d) less 500
Q.29 An account sale furnished by the consignee to the consignor , contains which of the following :
(a) the quantity received , sold , price chard balance in stock , lost etc.
(b) expenses incurred on behalf of the consignor and commission due to him .
(c) the net amount due from him and remittance made if any .
(d) A debtor to a creditor .
Q.30 Ram sold part of the consignment for Rs. 1,60,000. The cost excluding commission and bonus is Rs.1,04,000. The
terms of consignment agreement provided a commission of 5% on sales and bonus of 20% of the net profit after charging
such bonus and commission. The amount of commission & bonus will be:
(a)Rs.19,200 (b)Rs.17,600 (c)Rs.8,000
(d)Rs.16,000
1
Q.31 P sent out goods costing Rs.45,000 to Y at cost + 333 %. 1/10th of goods were lost in transit. 2/3rd of balance of the
goods were sold at 20% above IP. The amount of sale value will be:
(a)Rs.54,000 (b)Rs.43,200 (c)Rs.60,000 (d)Rs.36,000
Q.32 Goods sent on consignment a/c is a :
(a)personal a/c (b)real a/c
(c)nominal a/c (d)sales a/c
Q.33 In case of joint venture business, Memorandum Joint Venture a/c is prepared when:
(a)separate books of a/c is prepared
(b)co-venturer maintains complete record of joint business in their own books of
accounts.
(c)co-venture maintains record of their own transactions for joint business in their own books of accounts
(d)in all the above cases
Q. 34 A&B are co-venturer having joint bank account. A pays B Rs.50,000 for joint business what will be the entry in A,s
books when Memorandum Joint venture method is followed.
(a)B a/c Dr.
50000
To joint bank 50000 (b)B a/c Dr. 50000
To bank a/c 50000
(c)Joint bank Dr.
50000
To A
50000
(d)J.V. with B Dr.
50000
To bank
50000
Q.35 A & B entered into a joint venture to underwrite the shares of K Ltd.make a public issue of 1,00,000 equity shares of
Rs.10 each. 80% of issue are subscribed by the public. The profit sharing ratio between A & B is 3:2. The balance
unsubscribed shares are purchased by A&B in profit sharing ratio. How many shres are purchased by A?
(a)80,000 shares
(b)72,000 shares
(c)12,000 shares
(d)8,000 shares
Q.36 According to Accounting Standard-2 inventory is to be valued at
(a)Actual cost or sales value, which ever is less (b)historical cost
(c)net realizable value (d)historical cost or net realizable value, which ever is less
Q.37 As on 31st march, 2006 Aditya Ltd.has five type of inventory items and below are given the historical cost and net
realisable value of the five items:
ITEMS
NRV
HISTORICAL COST
A
26,000
22,000
B
42,000
45,000
C
15,000
12,000
D
32,000
28,000
E
26,000
27,000
You are required to ascertain the value of stock for final account purposes.
(a)Rs.1,41,000 (b)Rs.1,34,000 (c)Rs.1,30,000 (d)Rs.1,45,000
Q.38 Physical inventory system is also known as:
(a)perpetual inventory system (b)periodic inventory system
(c)inventory record system
(d)none
Q.39 Which method of stock valuation matches current cost with current revenue?
(a)FIFO
(b)LIFO
(c)wighted average method
(d)specific identification method
Q.40 What is the objective behind selling goods on approval basis:
(a)for introducing a new products in the market (b)for pushing up sales (c)to capture a larger share in the market (d)all of
these
Q.41 X and Y sharing profits in the ratio of 7:3 admit Z on 3/7 share in the new firm which he takes 2/7 from X and 1/7 from
Y. The new ratio of X, Y and Z will be
(a)7:3:3 (b)5:2:3 (c)14:6:15
(d)29:11:30
Q.42 A, B and C are partners in business sharing profits in the ratio of 2:5:1. C dies on 1/1/2006. The profits for the financial
year 2005-06 (april-march) is Rs.64,000. The share of the deceased patner in the profits for the year will be rupees
(a)6,000
(b)9,600
(c)8,000
(d)3,200
Q.43 As per section 37 the Indian Partnership Act,1932, the executors would be entitled at their choice to the interest
calculated from the date of death till the date of payment on the final amount due to the deceased partner at ………… % p.a.
(a)7
(b)4
(c)6
(d)12
Q.44 A and B are partners having Capital of Rs.50,000 and 60,000 respectively. Interest on capital is given @ 5% p.a. profits
for the year before appropriation is Rs.4,600 provide interest on capital out of profits. Interest allocated to partners is:
(a)Rs.3,000 & Rs.2,500 (b)Rs.2,091 & Rs.2,509
(c)Rs.2,500 & Rs.2,091 (d)Rs.600 & Rs.300
Q.45 A, B and C share profits and losses in the ratio of 3:2:1. D is admitted with 1/6 share which he gets entirely from A.
New ratio will be:
1 1 1 1
(a)3 : 3 : 6 : 6 (b)3:1:1:1 (c)2:2:2:1
(d)none
Q46. Share allotment account is a :
(a) Real account
(b) Nominal account
(c) Personal account
(d) Company account
Q47. If the issue size is upto Rs. 500 Crores, the issued shares should be made fully paid up within ____ of the date of
allotment :
(a) 6 months
(b) 10 months
(c) 12 months
(d) 18 months
Q48.
Securities premium is shown under which head in the Balance Sheet.
(a) Current liabilities
(b) Miscellaneous expenditure
(c) Reserves and surplus
(d) None of these
Q49. Mr. X, a holder of 10,000 shares for Rs. 10 each has paid Rs. 3 on application and Rs. 3 on allotment. He did not pay
Rs. 2 on first call. His shares are forfeited subsequently after first call. Share capital will be debited by
_____________
(a) Rs. 85,000
(b) Rs. 1,00,000 (c) Rs. 80,000
(d) Rs. 60,000
Q50. Share premium is utilized for this purpose:
(a)
For raising goodwill
(b)
For premium payable on redemption of preference share
(c)
For writing of capital losses,
(d)
For paying dividend
Q51. At the time of forfeiture, Share Capital Account is debited with:
(a)
Face Value
(b)
Nominal Value
(c)
Paid-up Value
(d)
Called-up Value
Q52. 10,000 equity shares of Rs.10 each were issued to public at premium of Rs.2 per share. Applications were received
for 20,000 shares. Amount of securities premium account will be:
(a)Rs.20,000
(b)Rs.24,000
(c)Rs.4,000
(d)Rs.1,600
Q53. When shares are issued to promoters which account is debited ?
(a)
Goodwill
(b)
Premium
(c)
Promoters
(d)
Share Capital
Q.54 to56:
X Ltd. decides to redeem 13,000, 15% Pref. Shares of Rs. 100 each at 10% premium. It has a General Reserve of Rs.
9,10,000 and Securities Premium of Rs. 20,000. The minimum number of Equity Shares of Rs. 10 each to be issued
for the purpose of redemption.
Q54. If the new equity shares are to be issued at 20% discount;
(a) 40,000
(b) 62,500
(c) 60,000
(d) None of these
Q55. If the new equity shares are to be issued at par;
(a) 50.000
(b) 60,000
(c) 40.000
(d) None of these
Q56. If the new equity shares are to be issued at 30% premium.
(a) 50,000
(b) 62.500
(c) 35.000
(d) 39,000
Q57.Preference share can be redeemed.
(a) Only if they are fully paid up
(b) Even they are partly paid up
(c) After getting the permission from the court only
(d)All of the above
Q58. A company forfeited 100 equity shares of Rs.100 each issued at premium of 50%(to be paid at the time of allotment) on
which the first call money of Rs.30 per share was not received, final call of Rs.20 is yet to be made. These shares were
subsequently reissued @ Rs.70 pers share at Rs.80 paid up. The amount credited to capital reserve is:
(a)4,000
(b)2,000
(c)3,000
(d)none
Q59. X purchased the running business of A for Rs.60,000. In place of cash he discharged the purchase consideration by
issue of equity shares of Rs.10 each at 20% premium. Find the number of shares to be issued?
(a)6,000
(b)7,500
(c)5,000
(d)8,000
Q60. Selling and distribution expenses does not comprise of :
(a) Godown Rent
(b) Bad Debts
(c) Insurance for stock of finished goods
(d) Carriage Inward
PART B – LAW (40 MARKS)
Q.61 A void agreement –
(a) is illegal
(b) is not void ab-initio (c) may or may not be illegal
(d) none of the above
Q.62 Do the following constitute valid contracts(a) A agrees to marry B
(b) A coolie carries luggage of passenger
(c) A buys 2 kg of tomato from a vegetable vendor
(d) All the above
Q.63 Cross offer do not constitute a contract because(a) there is no acceptance
(b) there is implied acceptance
(c) crossing implies cancellation
(d) it amounts to counter offer
Q.64 When the proposal or acceptance is made otherwise than words, the promise is said to be –
(a) Expressed
(b) Implied
(c) Accepted (d) Rejected
Q.65 When the contract is perfectly valid in its substance but which cannot be enforced because of certain technical defects,
This is called a –
(a) Unilateral contract (b) Bilateral contract (c) Unenforceable contract
(d) Void contract
Q.66 When goods are displayed in a show window bearing price-tags, it indicates –
(a) Offer to sell goods at prices mentioned on the price tags
(b) an invitation to make an offer
(c) an advertisement
(d) an announcement
Q.67 Which are of the following statements is false(a) Promisee or any other person may supply consideration
(b) Past consideration is good consideration
(c) Consideration need not be adequate
(d) Consideration should be adequate
Q.68 An agreement without consideration is void except in case of compensation for –
(a) Voluntary services rendered
(b) Voluntary services rendered at the request of the other party to the agreement
(c) Voluntary services rendered at the request of third person
(d) Reimbursement of expenses incurred
Q.69 A supplied to B, a minor, products, such as wheat flour, dals and other foodstuffs. He claims their price out of his
assets. B fails to pay the price of these. In this case which one of the following statements is correct?
(a) Since minor’s agreement is void, A cannot recover their price
(b) There was agreement between A and B for the supply of goods, hence A can recover the price
(c) Since the articles and the good supplied constitute necessaries, A can get them reimbursed out of the assets of the minor.
(d) A is not entitled to reimbursement from the property of the minor as he supplied them voluntarily
Q.70 An agreement in restraint of marriage is :
(a) Voidable
(b) Void
(c) Valid
(d) Illegal
Q.71 If an agreement suffers from any uncertainty, it is –
(a) Voidable
(b) void
(c) Unenforceable
(d) None of these
Q.72. A and B agree that A shall pay Rs 1000 for which B shall afterwards deliver to an either rice or smuggled opium. In
this case(a) The first agreement is void and the second voidable
(b) The first is voidable and the second is void
(c) The first is valid and the second is void
(d) The first is void and the second is valid
Q.73 Where under a contract of sale the property in goods is to be transferred at a future time, the contract is called:
A an agreement to sell
B a sale
C neither a nor b
D both a & b
Q.74 A warranty is stipulation
A essential to the main purpose of the contract
B collateral to the main purpose of the contract
C very important to seller
D very important to buyer
Q.75 If the condition as to the title of goods is not fulfilled , the buyer
A may reject the goods
B has no alternative but to buy the goods
C may reject the goods and claim damages
D all of the above
Q.76 In case of unascertained goods the property in the goods passes:
A when the goods are ascertained
B when the goods are appropriated
C both a & b
D either a & b
Q.77 When the goods are sent on sale or return basis , the property in the goods passes to the buyer :
(a) When the buyer signifies his approval or acceptance to the seller (b) When the buyer pledges the goods
(c) When the buyer resells the goods (d) All the above
Q.78 In respect of …………….. Goods, the property in the goods is transferred to the buyer at such time as the parties
intend it to be transferred to the buyer at such time as the parties intend it to be transferred .
(a) Future
(b) Unascertained
(c) contingent (d) specific or Ascertained
Q. 79 If no time is fixed , the seller must sent them within
(a) six months (b) two months (c) reasonable time
(d) one month
Q 80. The Unpaid seller’s right of lien is to ------(a) re-organize possession of goods (b) re-sell the goods (c) regain possession of goods (d) retain possession of goods
Q.81. In an auction sale of goods , the seller makes use of pretended bidding to raise the price , the sales is --(a) valid
(b) void
(c) voidable at the instance of the buyer (d) unenforceable
Q.82 At an auction sale, the bidder can withdraw his bid(a) before fall of hammer
(b) at any time during auction
(c) before payment of price
(d) cannot withdraw bid
Q.83 In an auction sale, the property shall be sold to be –
(a) Lowest bidder
(b) Highest bidder
(c) Any bidder (d) all bidders
Q.84 For a contingent contract the event must be :
(a)certain
(b)uncertain
(c)independent (d)uncertain & collateral
Q. 85 A contract implied by law is known as:
(a)contingent contract
(b)quasi contract
(c)expressed contract
(d)implied contract
Q. 86 A invited his friend B for dinner at his house on a specified date. He subsequently forgot about it and went for a movie. When
B arrived at A’s house, A was not there and no dinner was ready . The transaction between A and B is :
(a)a valid contract
(b)a quasi contract
(c)a social invitation with no intention of creation a legal obligation
(d)an invalid contract
Q 87 A borrowed Rs.1000 from B. A dies before paying back the loan. Can B recover the amount from A’s legal representative?
(a)no, B cannot recover (b)yes, subject to any estate left by him
(c)B can recover even if no estate is left (d)none of above
Q88 If loss or damage arose naturally and directly in usual course of things from a breach of contract, the aggrieved party would be
eligible for:
(a)special damages
(b)nominal damages
(c)ordinary damages
(d)exemplary damages
Q89 In the case of wrongful dishonor of a cheque by a banker the damages awarded will be:
(a)nominal
(b)special
(c)exemplary
(d)ordinary
Q.90 A party who suffers loss as a result of breach of contract, can , in the usual course, claim:
(a)ordinary damages
(b)special damages
(c)exemplary damages (d)penal damages
Q.91 A joint Hindu Family is created :
(a) By a contract
(b) By operation of law or status
Q.92 The essential elements of partnership does not include :
(a) Partnership should be registered
(b) There must be an agreement to share profits of a business
(c) There must be mutual agency among partners
(c) By registration
(d) By all the above mode
(d) There must be an association of two or more persons
Q93 The partnership relation does not exist when :
(a) A creditor taking a share of profits in lieu of interest and part payment of principal
(b) A person receives a share of profit as a part of his remuneration
(c) Share of profits given to workers as bonus
(d) None of the above
Q.94 According to the Partnership Act, ‘Business’ includes –
(a) Trade
(b) Occupation (c) Profession
(d) All the above
Q.95 Property of firm does not include:
(a) All property which the partners have originally brought into the common stock of the business
(b) Goodwill of the business
(c) Personal properties belonging to the partner
(d) Property acquired by the funds of the firm
Q.96 A firm may be registered :
(a) In the beginning when it is being formed
(b) At a later date, after its formation
(c) When the court orders the firm to be registered
(d) When the Income tax Department insists on its registration
Q.97 A partner has an implied authority to bind a firm by his act if he :
(a) Acquires immovable property on behalf of the firm
(b) Opens a banking account on behalf of the firm in his own name
(c) Withdraws a suit or proceeding filed on behalf of the firm (d) None of the above
Q.98 For admitting a minor into the benefits of the partnership, which of the following is required ?
(a) Consent of the minor’s guardian
(b) Consent of the Registrar of firms
(c) Consent of all the partners of the firm
(d) All of the above
Q.99 Unless there is a contract to the contrary, a firm is automatically dissolved on :(a) The expiry of fixed term
(b) Death of a partner
(c) Insolvency of a partner
(d) All of the above
Q.100 A partnership may be dissolved by any partner by giving a notice to other partners in case of :(a) Partnership at will
(b) Partnership for a fixed duration
(c) Particular partnership
(d) Limited liability partnership