Mock Test 4 For DECEMBER 2016 The Institute of Chartered Accountants of India ABHIMANYYU AGARRWAL

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1 Mock Test 4 For DECEMBER 2016 The Institute of Chartered Accountants of India ABHIMANYYU AGARRWAL CA - CPT Marks 60 Time 1 hrs. Every correct answer carries +1 mark each and 0.25 mark will be deducted for each wrong answer. Section A : Fundamentals of Accounting (60 marks) 1. A Trial Balance contains the balances of (a) (b) (c) (d) Only real A/c Real A/c & Nominal A/c Personal A/c Both (b) & (c) 2. After preparing the trial balance the accountant finds that the total of debit side is short by Rs. 1,500. This difference will be (a) (b) (c) (d) Credited to suspense account Debited to suspense account Adjusted to any of the debit balance account Adjusted to any of the credit balance account 3. Which of the following in Trial Balance is contradictory to each other? (a) (b) (c) (d) Inventory and Drawings Sales and Purchase Return Carriage Inward and Outward Trade Receivable and Liability 4. While preparing Trial Balance, the head not included in the Trial balance is : (a) Suspense Account (b) Capital Account (c) Closing Stock Account (d) Opening Stock Account 5. From the debit side of Cash Book posting is made to the side of the ledger accounts (a) Debit (b) Credit (c) Either debit or Credit (d) None 6. A sum of Rs. 50,000 was spent on painting the new plant. It is a (a) Revenue expenditure (b) Capital expenditure (c) Deferred revenue expenditure (d) none of these 7. Contingent asset usually arises from unplanned or unexpected events that give rise to (a) (b) (c) The possibility of an inflow of economic benefits to the business entity. The possibility of an outflow of economic benefits to the business entity. Either (a) or (b) Page 1

2 8. Rectification of which types of errors requires opening of suspense A/c (a) Errors of principle (b) Complete omission (c) Partial omission (d) Errors of commission 9. The credit balance of Rs. 2,000 in the bank column of the cash book was carried forwarded as its debit balance. When overdraft as per pass book is starting point : (a) Rs. 2,000 will be deducted (b) Rs. 2,000 will be added (c) Rs. 4,000 will be deducted (d) Rs. 4,000 will be added 10. The cost of goods sold is equal to (a) Opening stock plus total purchases (b) Opening stock plus total purchases minus closing stock + Direct costs (c) Opening stock plus total purchases plus closing stock + Direct costs (d) Closing stock plus total purchase 11. Which of the following systems of inventory valuation computes cost of goods sold as residual amount? (a) Weighted Average (b) Last-in First-out (c) Perpetual Inventory System (d) Periodic Inventory System 12. Expenses incurred to retain the title of a building is a (a) Revenue expenditure (b) Capital expenditure (c) Deferred revenue expenditure 13. Valuation of inventory is dealt within (a) AS-2 (b) AS-3 (c) AS-4 (d) AS Original cost = Rs. 1,00,000 Life = 5 years, Expected salvage value = Rs Rate of depreciation p.a. =? (a) 19.6% (b) 20% (c) 19.8% (d) 20.8% 15. Non-charging of depreciation will lead to (a) Under-valuation of closing stock (b) Over statement of profit (c) Over statement of working capital (d) Evasion of tax Page 2

3 16. Cheque which can be credited only to the bank account of the payee (a) Self (b) Bearer (c) Order (d) Crossed 17. When a firm maintains a simple Cashbook, it need not maintain (a) Sales Journal (b) Purchase Journal (c) Journal Proper (d) Cash Account 18. Separate day book method is used when there are (a) Only one transaction (b) Only two transaction (c) Large number of transactions (d) None of the above 19. Bank column of the Cashbook may show (a) Only a debit balance (b) Only a credit balance (c) Either debit balance or a credit balance 20. In a three Column Cash book (a) Only Cash Column and Discount Columns are balanced (b) Only bank column and Discount columns are balanced (c) Only cash column and bank columns are balanced (d) Cash column, bank column and discount columnsare balanced 21. By separate daybooks method how many books are prepared? (a) One (b) Two (c) Three (d) Four 22. Contra entries are passed only when (a) Double column cash book is prepared (b) Three-column cash book is prepared (c) Simple cash book is prepared 23. The balance in the petty cash book is (a) An expenses (b) A profit (c) An asset (d) A liability 24. A trial balance will not balance if (a) Correct Journal entry is posted twice (b) The purchase on credit basis is debited to purchases and credited to cash (c) Rs. 500 cash payment to creditors is debited to creditors for Rs. 50 and credited to cash as Rs Page 3

4 (d) None of these Page 4

5 25. Rectify the error of a credit purchase of goods worth Rs. 10,000 recorded as credit sale to Mr.Lele, discovered two months later, this rectification will be recorded in- (a) Purchase Book (b) Rectification entry book (c) Sales Book (d) Journal proper 26. Bed Debt Written off (a) Journal Voucher, Sales Book (b) Journal Voucher and Journal Proper (c) Debit Note, Journal Proper (d) Credit Note, Journal Proper 27. Invoice is sent by (a) Seller (b) Buyer (c) LENDER (d) None of the above 28. Bills Receivable Book is the part of (a) Ledger (b) Journal (c) Balance Sheet 29. Purchase for office furniture on account is recorded in (a) Purchases Book (b) General Journal (c) Cash Book (d) Ledger 30. A customer cheque return dishonoured is recorded (a) Purchase Return Book (b) Sales Return Book (c)cash Book (d) Journal 31. Which of the following books should be used to record purchase of a typewriter on account? (a) Cash Book (b) Purchase book (c) Sale Book (d) Journal Proper 32. Which of the following Books should be used to record in adjusting entry for depreciation? (a) Cash Book (b) purchase Book (c) Sale Book (d) Journal Proper 33. An account having which balance is not show in the Trial Balance? (a) Negative (b) Debit (c) Nil (d) High amount 34. Salaries fall under which category. (a) Revenue (R) (b) Expense (E) (c) Asset (A) (d) Liability (L) 35. Receipt of a loan is (a) Capital (b) Income (c) Liability (d) None of the above Page 5

6 36. Unpaid salary for Rs. 340 is to be provided for in the accounts (a) Bills receivable books (b) Purchases book (c) Journal proper (General Journal) (d) Purchases return 37. Purchases day book records : (a) All cash purchases (b) All credit purchases (c) Credit Purchases of goods in trade 38. The total of the sales book is posted to (a) The credit of the sales account (b) Credit of the purchases account (c) Credit of the capital account 39. General reserve is created with the objective (a) To make available additional working capital (b) To meet any unknown liability (c) To equalize the rate of dividend (d) All of these 40. Transfer to capital redemption reserve account is allowed from (a) Share forfeiture account (b) Share premium account (c) General reserves (d) Capital reserve 41. Which of the following errors will affect the Trial Balance? (a) Repairs to buildings have been debited to buildings (b) The total of purchase journal is Rs. 2,000 short (c) Freight paid on new machinery has been de debited to the Freight Account 42. Cheque received from Bina by Rs. 4,000 was recorded in the cash column of the Cash Book, though on the correct side. The rectification will be done by (a) Passing a rectification entry in cash book (b) Creating a suspense A/c (c) Passing a rectification entry in the Journal Proper (d) None of the above 43. If a nominal account is credited in a rectifying entry (a) Profit will be decreased or loss will be increased (b) Profit will be increased or loss will be decreased (c) No effect on profit or loss (d) None Page 6

7 44. The purchase book was under cast by Rs. 71. What is the effect on profit? (a) No effect (b) Profit will be increased by Rs. 71 (c) Profit will be decreased by Rs. 71 (d) None 45. The another name of Depletion Method is (a) Revaluation method (b) Productive output method (c) Written Down Value method (d) Straight line method 46. For charging depreciation, on which of the following assets, the depletion method is adopted? (a) Plant & Machinery (b) Land & Building (c) Goodwill (d) Wasting assets like Mines & Quarries 47. Depreciation is charged only on the (a) Current asset (b) Intangible asset (c) Fixed asset (d) Immovable asset 48. What is the term used for Patent, Trademark Goodwill, Franchise, Copyright and Written off? (a) Amortisation (b) Depreciation (c) Depletion 49. Accumulated depreciation is an example of (a) An expense (b) An unrecorded revenue (c) A liability (d) A contra asset account 50. The number of production or similar units expected to be obtained from the use of an asset by an enterprise is called as (a) Unit life (b) Useful life (c) Production life (d) Expected life 51. Revaluation method is followed in case of (a) Fixed assets (b) Current assets (c) Assets which are longer in quantity but have smaller value (d) Assets having smaller values 52. The estimated value of depreciable asset after its useful life is called (a) Actual value (b) Replacement value (c) Disposal value (d) Current value Page 7

8 53. Assets appearing in the book but having no value are known as (a) Wasting assets (b) Intangible assets (c) Current assets (d) fictitious assets 54. Purchase of office equipment s result in (a) Increase in Capital (b) Decrease in Liabilities (c) Increase in Assets (d) Decrease in capital 55. In the absence of specific provision in the partnership deed at what rate interest on drawing of the partners would be allowed? 8% 10% 6% (d) Nil 56. Which of these statements is true? (a) Partners current Account can show debit or credit balance (b) Partners current Account shows only credit balance (c) Partners current Account shows only debit balance 57. Current account of the partners are opened when (a) Capital is fluctuating (b) Capital is fixed (c) Capital is fixed as well fluctuating (d) When fresh capital is added 58. Memorandum records of sale on approval is a part of (a) Management Accounts (b) Financial accounts (c) Cost Accounts 59. The number of members of a private company cannot exceed (a) 200 (b) 100 (c) 50 (d) Calls in advances attracts (a) 5% (b) 12% (c) 8% (d) 9% Page 8