Paper - 1 Fundamentals of Accounting

Paper - 1 Fundamentals of Accounting Chapter 1 : Accounting : An Introduction Unit 2 : Accounting Concepts, Principles and Conventions [1] What is the objective of conservatism? (a) Take all incomes and losses (b) Anticipate losses but not profits (c) Take all losses [2] Contingent liabilities are shown in footnote of Balance Sheet as per which concept? (a) Materiality (b) Disclosure (c) Realization (d) Dual Aspect [3] Which of the following does not follow Dual Aspect? (a) Increase in one asset, decrease in other. (b) Increase in both asset and liability (c) Decrease in one asset, decrease in other (d) Increase in one asset & capital [4] The Rule of Lower of Cost or Market Value is based on which concept? (a) Dual Aspect (b) Conservatism (c) Disclosure (d) Prudence Chapter 2 : Accounting Process Unit 1 : Basic Accounting Procedures Journal Entries [5] In case of bad debts, which account is credited? (a) Bad debts Account (b) Creditors Account (c) Debtors Account [6] Proprietor s Account is Account. (a) Real (b) Nominal (c) Personal [7] Purchase of second-hand computer on credit by a cloth merchant will be recorded in : (a) Journal (b) Cash Book (c) Purchase Book Unit 2 : Ledgers [8] Which of the following is known as Principal Books of Accounts? (a) Ledger (b) Journal (c) Trial Balance (d) Balance Sheet Unit 4 : Subsidiary Books [9] The Balance of Sales Day Book is Rs. 25,000. Rs. 5000 were recovered from debtors. Then balance of Day Book will be transferred by which amount? (a) Rs. 25,000 (b) Rs. 5,000 (c) Rs. 20,000 (d) Rs. 10,000 Unit 5 : Cash Books [10] In three column Cash Book, when does contra entry occurs? (a) Withdrawal of cash from bank (b) Payment to creditors (c) Withdrawal of cash from bank for personal use (d) All of the above [11] What will be journal entry when cash is withdrawn from bank for personal use? (a) Drawings A/C debit, Bank A/C credit (b) Cash A/C debit, Bank A/C credit (c) Bank A/C debit, Drawings A/C credit (d) Bank A/C debit, Capital A/C credit Unit 6 : Capital and Revenue expenditures and Receipts [12] An old machinery is purchased for Rs. 10,000. Installation charges of Rs. 1,000 were incurred. Repairs to the old machinery = Rs. 7,000 Repairs Account will be debited by : (a) Rs. 7,000 (b) Rs. 8,000 (c) Nil

2 CPT Abridged Scanner : (Paper 1) Fundamentals of Accounting Unit 8 : Rectification of Errors [13] 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 [14] Sales for Rs. 5,000 was entered as purchase. The effect of this error will be : (a) G.P. will increase by Rs. 5,000 (b) G.P. will decrease by Rs. 5,000 (c) G.P. will decrease by Rs. 10,000 (d) G.P. will increase by Rs. 10,000 Chapter 3 : Bank Reconciliation Statement [15] The balance as per Cash Book is Rs. 10,000 Cheques for Rs. 2,000 were issued but not presented for payment. What would be the balance as per Pass Book? (a) Rs. 10,000 (b) Rs. 2,000 (c) Rs. 12,000 [16] The balance as per Cash Book (overdraft) is Rs. 1,500. Cheques for Rs. 400 were deposited but were not collected. The cheques issued but not presented were Rs. 100, Rs. 125, Rs. 50. Balance as per Pass Book is: (a) Rs. 1,100 (b) Rs. 1,625 (c) Rs. 2,175 (d) Rs. 1,375 [17] If the balance as per Pass Book is the starting point, so the treatment of undercasting of receipt side of Cash Book will be : (a) Added (b) Deducted (c) No treatment [18] 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 Chapter 4 : Inventories [19] Calculate Closing Stock using FIFO Method : Particulars Units Rate Opening Stock 100 Rs. 50 Purchases 50 Rs. 40 Issue 125 (a) Rs. 5,000 (b) Rs. 1,000 (c) Rs. 1,250 (d) Rs. 6,250 [20] Cost of Goods Sold = (a) Opening Stock + Purchases - Closing Stock (b) Opening Stock - Sales + Closing Stock (c) Opening Stock - Purchases + Closing stock [21] Opening Stock = Rs. 6,000 Closing Stock = Rs. 8,000 Cost of Goods Sold = Rs. 87,000 Calculate the value of Purchases? (a) Rs. 1,01,000 (b) Rs. 89,000 (c) Rs. 73,000 (d) Rs. 85,000 Chapter 5 : Depreciation Accounting [22] A machinery is purchased for Rs. 10,000. On 1 st April, 2005. Depreciation @ 10% p.a. is provided. Calculate the amount of difference in depreciation as per SLM and WDV basis in the year 2006-07. (a) Rs. 1,000 (b) Rs. 100 (c) NIL (d) Rs. 200 [23] A mine was taken on lease for Rs. 2,00,00,000. Its total production capacity is 4,00,000 mt. What will be the depreciation in 2007 if it produced 30,000 m.t. in 2007? (a) Rs. 10 lacs (b) Rs. 15 lacs (c) Rs. 50 lacs [24] A machine is purchased for Rs. 1,00,000. Installation charges of Rs. 10,000 were incurred. Depreciation @ 10% was provided on Straight Line Basis. The machine was sold for Rs. 60,000 after 5 years. Calculate the profit or loss on sale of machine. (a) Rs. 5,000 Loss (b) Rs. 5,000 Profit (c) Rs.60,000 Profit (d) Rs. 40,000 Loss

CPT Abridged Scanner : (Paper 1) Fundamentals of Accounting 3 Chapter 6 : Preparation of Final Accounts of sole Proprietors [25] Selling and distribution expenses does not comprise of : (a) Godown Rent (b) Bad Debts (c) Insurance for Stock of Finished Goods (d) Carriage Inward [26] There was a stock of Rs. 5,500, out of which stock of Rs. 500 was burnt due to fire and was disposed off for Rs. 200. Remaining goods were sold at 25% above cost price. Find net profit. (a) Rs. 6,250 (b) Rs. 7,200 (c) Rs. 6,575 (d) Rs. 5,950 [27] If profit is 25% on cost price then the profit on sale price will be : (a) 20% (b) 30% (c) 33 1 / 3% (d) 40% [28] If Purchases Account is not credited in case of goods lost in transit then which account can be credited? (a) Goods Lost in Transit Account (b) Purchase Return Account (c) Trading Account (d) Sales Account [29] Opening Stock = Rs. 50,000 Purchases = Rs. 1,00,000 Purchase Return = Rs. 29,000 Sales = Rs. 2,00,000 Find the Gross Profit (a) Rs. 1,21,000 (b) Rs. 79,000 (c) Rs. 21,000 [30] Postal Expenses Account is shown in : (a) P & L A/C (b) Trading A/C (c) Balance Sheet (d) Manufacturing A/C [31] Prepaid Expense of Financial Year relate with : (a) Previous Financial Year (b) Following Financial Year (c) Current Financial Year [32] Opening Capital = Rs. 5,00,000 Profits during the year = Rs. 1,00,000 Calculate the Average Capital of the year. (a) Rs. 55,000 (b) Rs. 3,00,000 (c) Rs. 9,167 (d) Rs. 50,000 [33] Goods in Transit but not taken in Closing Stock will be credited to: (a) Purchase A/C or Trading A/C (b) Supplier A/C (c) Goods in Transit A/C (d) Cash A/C Chapter 7 : Accounting for special Transactions Unit 1 : Consignment 34] X sends goods to Y on consignment, but 15% of the goods were lost in transit. Such loss will be borne by : (a) Consignee (b) Consignor (c) Both (a) and (b) (d) Insurance company [35] Who is owner of the unsold stock left with the consignee? (a) Consignee (b) Consignor (c) Co-venturer (d) Both (a) and (b) [36] The Consignor sends along with the consigned goods to the consignee. (a) Account Sales (b) Proforma Invoice (c) Both Unit 2 : Joint Ventures [37] Which of the following is incorrect? (a) Joint Venture is not based on going concern. (b) Joint Venture can be formed with minor. (c) A bill of exchange is a negotiable instrument. (d) Nothing charges are the expenses of drawee. [38] Joint venture is a Account. (a) Personal (b) Real (c) Nominal (d) Capital [39] A and B entered into a Joint Venture. A bought goods for Rs. 6,00,000. He sold 80% of the goods for Rs. 5,60,000 and took the remaining goods at cost less 20%. Find the amount of profit. (a) Rs. 56,000 (b) Rs. 60,000 (c) Rs. 70,000 [40] When Memorandum Joint Venture Method is followed,. in Books of X, Joint Venture with Y A/C will be credited with, for amount received by X.

4 CPT Abridged Scanner : (Paper 1) Fundamentals of Accounting (a) Y (b) Sales (c) Debtor (d) Cash Unit 3 : Bills of Exchange and Promissory Notes [41] When a bill is renewed, then entry will be : (a) No entry will be passed (b) Entries for cancellation of old bill and renewal of bill (c) Entry for renewal of bill [42] If a machine is purchased for Rs. 5,00,000 on 1 st April, 2002 on hire-purchase basis, What is the average due date, if amount is repaid in 5 yearly annual instalments starting from 1 st April, 2003. (a) 1.4.05 (b) 1.4.04 (c) 1.4.03 (d) 1.4.07 [43] A draws a bill for Rs. 10,000 on B for 2 months. He gets it discounted from bank @ 12%. They agreed to share the proceeds equally. How much amount is received by A? (a) Rs. 5,000 (b) Rs. 4,900 (c) Rs. 4,000 [44] In case of sudden holiday, maturity date falls on : (a) Next following day (b) Previous day (c) On the same day [45] A bill not paid by drawee on due date is called. (a) Noting of bill (b) Dishonour of bill (c) Renewal of bill (d) Discounting of bill Unit 4 : Sale of Goods on Approval or Return Basis [46] Sales = Rs. 1,06,000 Sales Return = Rs. 6,000 Out of Rs. 1,06,000, goods costing Rs. 10,000 were sent on approval for Rs. 12,000 which have not been approved yet. Calculate Net Sales. (a) Rs. 1,00,000 (b) Rs. 88,000 (c) Rs. 1,12,000 (d) Rs. 18,000 Chapter 8 : Partnership Unit 1 : Introduction to Partnership Account [47] Interest on Drawings is : (a) Debited to P/L A/C (b) Credited to P/L A/C (c) Debited to Capital A/C Unit 3 : Admission of New Partner [48] A and B share profits in the ratio of 3:4. C was admitted for 1/5th share. Calculate the new profit sharing ratio. (a) 3:4:1 (b) 12:16:7 (c) 16:12:7 [49] A and B carry on business and share profits and losses in the ratio of 3:2. Their respective capitals are Rs. 1,20,000 and Rs. 54,000. C is admitted for 1/3 rd share in profit and brings Rs. 75,000 as his share of capital. Capitals of A and B to be adjusted according to C s share. Calculate the amount refunded to A. (a) Rs. 30,000 (b) Rs. 32,000 (c) Rs. 15,000 (d) Rs. 28,000 [50] On account of admission, the assets are revalued and liabilities are reassessed in Account. (a) Partner s Capital A/C (b) Revaluation A/C (c) Realisation A/C (d) Balance Sheet [51] The opening balance of Partner s Capital Account is credited with : (a) Interest on Capital (b) Interest on Drawings (c) Drawings (d) Share in Loss Unit 5 : Death of a Partner [52] A, B and C are partners sharing profits in the ratio of 3:2:1. They had a Joint Life Policy of Rs. 3,00,000. Surrender value of JLP in Balance Sheet is Rs. 90,000. C dies. What is share of each partner in JLP? (a) Rs. 1,05,000; Rs. 70,000; Rs. 35,000 (b) Rs. 45,000; Rs. 30,000; Rs. 15,000 (c) Rs. 1,50,000; Rs. 1,00,000; Rs. 50,000 (d) Rs. 1,95,000; Rs. 1,30,000; Rs. 65,000

CPT Abridged Scanner : (Paper 1) Fundamentals of Accounting 5 Chapter 9 : Company Accounts Unit 1 : Introduction to Company Account [53] Equity shareholders have a right to : (a) Vote (b) 20% dividend (c) Have preference on redemption (d) All of the above [54] Equity shareholders are of a company. (a) Bankers (b) Creditors (c) Debtors (d) Owners Unit 2 : Issue, forfeiture and Re-Issue of Shares [55] The difference between Subscribed Capital and Called-up Capital is called: (a) Calls-in-arrear (b) Calls-in-advance (c) Uncalled capital [56] A company issued 5,000 shares of Rs. 10 each at 20% premium payable as follows : Application - Rs. 2, Allotment-Rs. 5 (including premium) and First and Final Call-Rs.5. A holder of 200 shares failed to pay the First and Final Call. His shares were forfeited. Calculate the amount to be credited to Share Forfeiture Account. (a) Rs. 1,000 (b) Rs. 1,400 (c) Rs. 400 [57] 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 [58] Which statement is issued before the issue of shares? (a) Prospectus (b) Memorandum of Association (c) Articles of Association (d) All of these Unit 3 : Redemption of Preference Shares [59] Preference Shares can be issued for a maximum period of : (a) 20 years (b) 24 years (c) 25 years Unit 4 : Issue of Debentures [60] A company issued 1,00,000 12% debentures of Rs. 100 each. Calculate the amount of interest on debentures. (a) Rs. 12,000 (b) Rs. 1,20,000 (c) Rs. 12,00,000 Answer 1. (b) 2. (b) 3. (c) 4. (b) 5. (c) 6. (c) 7. (a) 8. (a) 9. (a) 10. (a) 11. (a) 12. (c) 13. (a) 14. (c) 15. (c) 16. (b) 17. (b) 18. (a) 19. (b) 20. (a) 21. (b) 22. (b) 23. (b) 24. (b) 25. (d) 26. (d) 27. (a) 28. (c) 29. (b) 30. (a) 31. (b) 32. (a) 33. (a) 34. (b) 35. (b) 36. (b) 37. (b) 38. (c) 39. (a) 40. (d) 41. (b) 42. (a) 43. (b) 44. (a) 45. (b) 46. (b) 47. (c) 48. (b) 49. (a) 50. (b) 51. (a) 52. (a) 53. (a) 54. (d) 55. (c) 56. (a) 57. (d) 58. (a) 59. (a) 60. (c)