Raj LTD

KONGUNADU ARTS AND SCIENCE COLLEGE
(AUTONOMOUS)
[Re-accredited by NAAC with ‘A’ Grade 3.64 CGPA-(3rd Cycle)]
Coimbatore – 641 029
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DEPARTMENT OF Commerce (UG)

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QUESTION BANKS
SUBJECTS
S.No Name of the Subject

1. Fundamentals Of Financial Accounting
2. Auditing
3. Business Research Methods
4. Business Organisation
5. Business Communication
6. Business Economics
7. Commercial Law
8. Company Law
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9. Corporate Accounting
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10. Cost Accounting
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11. Direct Tax
12. Entrepreneurial Development
13. Financial Accounting
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14. Principiles Of Management
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15. Financial Services

16. Higher Corporate Accounting
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17. Higher Financial Accounting

18. International Trade
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19. Indirect Tax

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20. Management Accounting

21. Marketing
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22. Banking Theory Law And Practice

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23. Business Accounting

(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
SUBJECT CODE: 16UCM101
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TITLE OF THE PAPER: FUNDAMENTALS OF FINANCIAL ACCOUNTING

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DEPARTMENT OF COMMERCE (UG)

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NOVEMBER 2019
Kongunadu Arts & Science College (Autonomous)
Department of Commerce (UG)
Question Bank
FUNDAMENTALS OF FINANCIAL ACCOUNTING
CONTENTS
S.NO CONTENT PAGE NO.
1 Section A 1
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2 Section B 8
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3 Section C 17
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4 Key for Section A 28
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Prepared by
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S.K.ARUNKUMAR
Assistant Professor,
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Department of Commerce (UG),

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Kongunadu Arts & Science College,
Coimbatore-29.
FUNDAMNETALS OF FINANCIAL ACCOUNTING
SECTION A
UNIT I
1. When a person starts a business, he is called _________.
a) Proprietor b) Receiver c) Manager d) Investor
2. The book which says that “modern accounting” has often been called “the language of
business” is __________ accounting.
a) Financial b) Cost c) Elementary d) Modern
3. The junior level employees of the accounts department who are known as ________
keepers.
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a) Book b) Journal c) Ledger d) Finance
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4. ________ is a policy of “caution” or “Playing safe”.
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a) Material b) Consistency c) Disclosure d) Conservatism
5. Sales book is also known as ______ book. ce
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a) Sales day b) Day c) Sold d) All of these
6. The amount which needed during a specific period for small payments is estimated as
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_______ amount.
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a) Total b) Interest c) Imprest d) Small

7. Balance of each account of ledger is recorded in _________
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a) Journal b) Ledger c) Day book d) Trial balance

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8. ________ is the second important stage in the accounting cycle or process.

a) Ledger b) Journal c) Day book d) Trial balance
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9. An account is usually in the _______ format and contains two sides.

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a) L b) T c) I d) V
10. Journal is a book of primary or _________ entry.
a) Original b) Secondary c) Dual d) Two
11. Transactions are recorded in the journal in ________ order.
a) Ascending b) Descending c) Chronological d) Numerical
12. Every journal entry is accomplished by a __________.
a) Debit b) Credit c) Ledger d) Narration
13. Bought furniture with cash, entry is debited to _________ account.
a) Cash b) Furniture c) Purchased d) Sales
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14. Sales with name of buyer given should be assumed as _________ sales.
a) Credit b) Cash c) Bank d) Buyer
15. ________ errors are usually committed in maintaining accounts.
a) Rectify b) Mistakes c) Classify d) Numerous
16. Errors which neutralise each other are called _______ errors.
a) Numerous b) Principle c) Compensating d) Commission
17. ________ account is used for rectification whenever applicable.
a) Suspense b) Ledger c) Journal d) Final
18. If profit decreases because of rectification of errors, the profit and loss account must be
________.
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a) Credited b) Debited c) Balanced d) Forwarded
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19. _______ means doing something which should not have been done.
a) Errors b) Principle c) Omission d) Commission
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20. When a transaction is not at all recorded in any books is called _____ omission.
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a) Complete b) Partly c) Compensating d) Wrong
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UNIT II
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21. The balance found in the bank column is termed as _______ balance as per cash book.
a) Cash b) Bank c) Both a & b d) None of these
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22. In the pass book transactions which increases the customer’s balance are recorded on
______ side.
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a) Credit b) Left c) Debit d) Right

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23. __________statement is a list which shows difference between cash & bank balance.
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a) Financial b) Cost c) Managing d) Bank reconciliation

24. Cheques discounted previously are dishonoured or debited in _______ book.
a) Cash b) Ledger c) Pass d) Journal
25. The balance shown by the cash or pass book can be taken as ________ balance.
a) Opening b) Closing c) Fixed d) Flexible
26. When accounts are finalised at the end of an accounting year, cash at bank must be shown
in the _________.
a) Trading b) P & L a/c c) Balance sheet d) Final
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27. Unfavourable balance indicates the excess of withdrawals over deposits and is called
_____
Overdraft.
a) Bank b) Pass c) Cash d) Account
28. All mistakes in the cash book relating to entering casting must be __________.
a) Balanced b) Tally c) Rectified d) Recorded
29. Favourable balance indicates the balanced of _________ at the bank.
a) Withdraw b) Deposits c) Account d) Books
30. BRS means for bank _________ statement.
a) Reconciliation b) Revocation c) Reduction d) Restruction
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31. Preparation of ______ accounts is the last step in the accounting cycle.
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a) Trading b) Final c) Balance d) Trial
32. All nominal accounts concerning goods by passing entries known as _______
a) Opening b) Balancing c) Closing
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d) Trading
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33. The cost of raw materials consumed during the year is to be ____ in the account.
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a) Debited b) Credited c) Balanced d) Traded

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34. ________is the incidental residue from certain types of manufacture.

a) Factory b) Cost c) Scrap d) Stock
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35. ________ account is prepared to know the trading results of the business.
a) Balance b) Cost c) Management d) Trading
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36. _______ is a ledger account.

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37. The expenses which are incurred for making the goods saleable.
a) Indirect b) Direct c) Sale d) Fixed
38. The goods that unsold lying in the godown at the end of the accounting year.
a) Opening b) Closing c) Scrap d) Stock
39. ________ is prepared to measure the correct financial position of the business.
40. ________ is the original fund with which he entered a business.
a) Proprietor’s capital b) Networth c) Both a & b d) None of these
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UNIT III
41. ________ of exchange is an instrument signed by the maker and bound to pay the
amount.
a) Bill b) Cheque c) Document d) Goods
42. The person who writes out the bill of exchange is known as _________.
a) Drawee b) Creditor c) Debtor d) Drawer
43. The person upon whom the bill of exchange is drawn is called _________.
a) Drawee b) Payee c) Debtor d) Drawer
44. The person to whom the amount has to be paid is known as the _________.
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45. ________ bills enables businessmen to get funds from the market to meet their temporary
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financial requirements.
a) Documents b) Goods c) Accommodation d) Legal
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46. The document in which the purchaser himself makes a written promise to pay the amount
to the seller is known as _________.
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a) Promissory note b) Bill c) Accommodation d) Cheque
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47. _________ is an Indian version of bill of exchange.

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a) Holder b) Hundi c) Stamp d) Notary

48. The term ______ means the transfer of a bill of exchange.
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a) Endorsement b) Promissory note c) Stamp d) Documents

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49. When the acceptor of the bill wants to pay the amount of the bill before the due date, it is
known as _______ of bill.
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a) Closing b) Trading c) Retiring d) Balancing

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50. __________ of acceptor means unable to pay the amount owed by him.
a) Insolvency b) Retiring c) Balancing d) Bill
51. A bill of exchange has two aspects namely bill receivable and bill _______.
a) Saleable b) Honourable c) Discountable d) Payable
52. The mathematical process involved in the computation of average due date is known as
“equation of _______”.
a) Payable b) Saleable c) Balancing d) Payments
53. When a single amount is borrowed which is repayable in several __________.
a) Instalments b) Payments c) Credits d) Debits
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54. Average due date is an equated or _______ date.
a) Opening b) Mean c) Median d) Closing
55. Actual payment of the total amount may be made on ________.
a) Average b) Account c) Closing d) Opening
56. An _________ current is a running statement of transactions between two parties for a
given period of time.
57. Under _______ method, the days are counted from the date or due date of transaction.
a) Backward b) Forward c) Epoque d) Daily balance
58. Under _______ method, the days are counted from the due date of one transaction to the
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due date of another.
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59. Under _______ method, the days are counted from the due date of transaction to the
opening date of the account current. ce
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60. _______ interest is written in red ink in the books.
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a) Epoque b) Forward c) Red-Ink d) Daily balance

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UNIT IV
61. _______ of goods is a transfer of possession of goods.
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a) Consignor b) Consignee c) Agent d) Consignment

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62. The person sending or forwarding goods for sale is known as ________.
a) Payee b) Consignor c) Consignee d) Agent
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63. The person to whom the goods are sent is known as ________ or agent.
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64. When goods are sent on consignment, they are usually accompanied by statement known
as ________.
a) Document b) Bills c) Cheque d) Proforma invoice
65. _________ is the remuneration to the consignor for selling consigned goods.
a) Commission b) Omission c) Del Credere d) Account
66. The extra commission over and above the usual commission is known as
____commission.
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67. Both consignor and consignee have to incur expenses for despatching and _____ goods.
a) Selling b) Purchasing c) Closing d) Opening
68. Accidental loss or loss due to negligence is termed as ________ loss.
a) Normal b) Abnormal c) Damaged d) Avoidable
69. Consignment account is a ______ account.
a) Personal b) Nominal c) Real d) Trading
70. Goods sent on consignment is a _________ account.
71. When the persons coming together for their specific job is termed as _____ venture.
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a) Sole b) Partner c) Joint d) Co-Venture
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72. Joint venture account is a _______ account in nature.
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a) Personal b) Real c) Nominal d) Ordinal
73. Co-venture’s account is a ________ account. ce
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74. The persons who carry on a joint venture are called ________.
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a) Partnership b) Co-venturer c) Sole d) Firm

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75. Joint venture business follows the account on ______ basis.

a) Accrual b) Cash c) Credit d) Debit
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76. Under ________ method, each venture records in his own books only.
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a) Partial record b) Memorandum Joint Venture c) Both a & b d) None of these

77. Memorandum joint venture account is a part of the ________ system.
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a) Single entry b) Double entry c) Triple entry d) Debit

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78. _______ venture may record joint record joint venture transactions in his own books of
accounts.
a) Co-Venturer b) Joint c) Sole d) Partner
79. No ______ is sent by one Co-venturers to another in case of joint venture.
a) Account sale b) Proforma c) Invoice d) Credit sale
80. The doctrine of implied authority is not applicable to the _______ venturers.
a) Joint b) Co-Venturers c) Sole d) Trading
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UNIT V
81. It is to serve their members and not profit making concerns are also called _____
organisations.
a) Profit b) Non-Profit c) Sole d) Partnership
82. All the receipts of cash or cheque are recorded on the _______ side.
a) Debit b) Credit c) Left d) Reverse
83. All ________ and revenue receipts are entered on the debit side.
a) Capital b) Debit c) Credit d) Payment
84. Income and expenditure account is prepared in lieu of ______account.
a) Trading b) Profit & Loss a/c c) Credit d) Debit
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85. Receipts and payments account is a type of ________ account.
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a) Personal b) Real c) Nominal d) Balance
86. Receipts and payments is prepared in lieu of _______ book.
a) Bank b) Cash c) Day d) Sales
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87. Accrued incomes are recorded in the ______ side of balance sheet.
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a) Assets b) Liabilities c) Debit d) Credit

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88. Fees paid by new members at the time of joining the organisation is called ____ fees.
a) Entrance b) Legal c) Life d) Membership
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89. _______ fees is also received as many times in a year as persons become members.
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90. _________ is a primary source of income of a non-profit organisation.

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a) Subscriptions b) Entry fees c) Membership d) Donation

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91. A donation not received for a specific purpose is treated as a _____ donations.
a) Entrance b) General c) Specific d) Legal
92. Amount received by non-profit organisations as per will of a deceased person is called
________.
a) Legacy b) Sale c) Donations d) Specific
93. Excess of assets over liabilities is called _______ fund.
a) Capital b) General c) Specific d) Special
94. Any amount realised from sale of sports materials treated as __________.
a) Loss b) Profit c) Income d) Special
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95. ________ refers to the amount paid to a person to reimburse the actual expense.
a) Honorarium b) Donations c) Income d) Special
96. Purchase of books is treated as ________ expenditure.
97. The credit total exceeds debit total, the difference is known as _______.
a) Surplus b) Deficit c) Profit d) Loss
98. The debit total exceeds credit total, the difference is a excess of expenditure over
_______.
a) Surplus b) Deficit c) Income d) Loss
99. Spent in the year of receipt and are treated as _______ receipt.
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a) Capital b) Revenue c) Legal d) Credit
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100. The surplus or deficit ascertained in Income and Expenditure account is transferred to
the _______fund.
a) Capital b) Revenue c) Deficit ce d) Credit
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Section B
UNIT I
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1 .Journalise the following transaction in the books of Sri T.N of Coimbatore:

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1987
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Oct 1 Commenced business with Rs.50, 000

3 Purchased goods for cash Rs.10, 000 at 5% trade discount.
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4 Paid carriage Rs.50

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8 Purchased machinery for Rs.20, 000

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10 Sold goods to Raja on account for Rs.15, 000

2. Journalise the following transactions, post them in the ledger and balance the accounts on
31th jan.1999
Jan 1 Lakshmi started business with a capital of Rs.50, 000
2 She purchased goods from Mala on credit Rs.10, 000
5 She paid cash to Mala Rs.5, 000
7 She sold goods to Rani Rs.10, 000
10 She received cash from Rani Rs.8, 000
15 She further purchased goods from Mala Rs.12, 000
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25 She further sold goods to Rani Rs.13, 000
3.Enter the following transactions in the Purchase Book and Sales Book of Mr .PANDIAN.
2000
JAN 1 Purchased goods from Balu Rs.30, 000
2 Sold goods to Swamy Rs.15, 000
4 Bought goods from Gowri Rs.13, 500
12 Sold goods to Thenali Rs.10, 500
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19 Sold goods to Jayarama Rs.750
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21 Bought goods from Rajesh Rs. 9, 000
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30 Sold goods to shanthi Rs.900
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4.Prepare Return outwards book and open ledger accounts from the following transaction :
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Oct 10 Returned to Ramchand& co .
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25 copies of corporate Accounting @ Rs.150 per copy

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10 copies of Financial Accounting @ Rs.130 per copy

Oct 20 Returned to Raman Publications
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8 copies of Business Statistics @ Rs.100 per copy

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10 copies of principles of Economics @ Rs.75 per copy

5.Enter the following transactions in cash book with Discount and Cash columns
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2000
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Nov 1 Cash in hand Rs.390

5 Sold goods for cash Rs.6, 420
6 Credit purchase from Varun Rs.4, 350
10 Received from Mohan Rs.4, 240 Discount allowed to him Rs.40
14 Paid for Electricity charges Rs.250
16 Bought stationary Rs.250
19 Drew from Bank for office use Rs.2, 800
24 Paid cash to Varun Rs.4, 300 in full settlement
29 Received cash from Velavan Rs.770 Discount allowed to him Rs.30
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30 Paid salaries Rs.2, 000
6.State the rules of making entries under double entry system.
7 .Enter the following transactions of a trader in a triple column cash book:
1987
Nov 1 Nizam started business with Rs.1, 00, 000
2 Deposited into bank of Bodi Rs.95, 000
5 Purchased a building for Rs.70, 000 and paid by cheque
10 Purchased merchandise Rs.20, 000 and paid by cheque
25 Paid freight Rs.50
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29 Withdrawn from bank for personal use Rs.500
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30 Cleared electricity bill Rs.90
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8.Prepare Trail balance from the following ledger balance for the year ending 31.12.99
Capital 50,000 Plant &Machinery 80,000
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Sales 1, 77,000 Purchases 60,000
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Return outward 750 Return inward 1,000

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Stock (1.1.99) 30,000 Discount (dr.) 350

Discount (cr.) 800 Bank charges 75
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Debtors 45,000 Creditors 25,000

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Salaries 6,800 Carriage inwards 750

Wages 10,000 Carriage outwards 1200
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Bad debts provision 525 Rent and Taxes 10,000

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Advertisement 2,000 Cash in hand 900

Cash at Bank 6,000
9.Rectify the following error which are discovered in the books of Srinivasagalu&Co
(a) The return outward book is over cast by Rs.150.
(b) Received Rs.200 from Shyam debited to his account.
(c) The purchase book was under cast by Rs.1, 000.
(d) A payment of Rs.500 for salaries toRaju has been posted twice to salaries account.
(e) Rs.150 received from Maden was entered on the debit side of the cash book. No
posting was done to Maden’s A/C
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10.What do you understand by the types of errors usually made in maintaining accounts?
UNIT II
11. What is an `Adjusted cash book’?
12. Distinguish between `Trial balance’ and `Balance sheet’.
13. Prepare Trading Account of for the year ending 31-12-96 from the following
information:
Particulars Rs.
Opening stock 80,000

Purchases 8,60,000
Freight inward 52,000
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Wages 24,000
Sales 14,40,000
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Purchase returns 10,000
Sales returns 3,16,000
Closing stock
Import duty
1,00,000
30,000
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14. From the following balance extracted at the close of the year ended 31st Dec 1996,
prepare Profit and loss account of Mr.raj as at that date:
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Particulars Rs Particulars Rs
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Gross profit 55,000 Repairs 500

Carriage on sales 500 Telephone expenses 520
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Office rent 500 Interest(Dr.) 480

General expenses 900 Fire insurance premium 900
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Discount to customers 360 Bad debts 2,100

Interest from bank 200 Apprentice premium(Cr.) 1,500
Travelling expenses 700 Printing& stationery 2,500
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Salaries 900 Trade expenses 300

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Commission 300
15. The sundry debtors on 31 st Dec 1995 are Rs. 40,000. On analysis, it is found that
debtors for Rs .36,000 are good. The debtors for Rs.3,000 are doubtful and are estimated to
realize 2/3 rds of the amount and the debtors for Rs.1,000 are bad. Make a provision for
doubtful debts.Show the journal, profit &loss a/c and balance sheet.
16. From the following, calculate the amount of provision for doubtful debts to be debited to
p&l a/c:
Opening provision for doubtful debts Rs.2,400

Closing sundry debtors Rs 42,000
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Bad debts yet to be written off Rs.2,000
Provide for doubtful debts at 10% on debtors.
17. The bank overdraft of Ranjini on 31-12-93 as per cash book is Rs. 9,000. From the
following particulars, prepare bank reconciliation statement:
Rs.
(i) Unpresented cheque 3,000

(ii) Uncleared cheque 1,700
(iii) Bank interest debited in the pass book only 500
(iv) Bill collected and credited in the pass book only 800
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(v) Cheque of Renu dishonoured 500
(vi) Cheques issued to sekar entered in the
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Cash column of cash book 300
18. Prepare a bank reconciliation statement from the following data as on 31-12-1995.
(a) Balance as per cash book

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12,500
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(b) Cheques issued but not presented for payment 900
(c)Cheques deposited in bank but not collected 1,200
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(d)Bank paid insurance premium 500

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(e) Direct deposit by a customer 800

(f)Interest on investment collected by bank 200
(g)Bank charges 100
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19. From the following particulars, Prepare a bank reconciliation statement as on 31-12-2003
(i) Balance as per cash book Rs.2,28,800.
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(ii)Three cheques for Rs.22,500, Rs.3,740 and Rs.2,700 issued in Dec. were presented for
payment in Jan 2004
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(iii)Two cheques of Rs.23,000 and Rs.3,700 were sent for collection but no collection was
made during the year.
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20. Prepare Bank Reconciliation statement: Rs.

Balance as per pass book (Cr.)(31-12-91) 9,000
Cheques issued but not presented 15,000
Cheques deposited but not credited 1,500
Bank has given credit for interest 150
UNIT III
21. Enumerate the practical uses of Average due date.
22. What do you understand by ’Daily Balance Method’ of Account current?
23. What are the differences between a Bill of exchange and Promissory note?
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24. Explain the meanings of the terms. a) Drawer b) Drawee c) Payee and d) Endorsee in the
context of bills of exchange.
25. Kannan purchased goods from Raman, the due date for payment in cash being as follows:
Rs
Mar 15 1000 Due 18th April
Apr 21 1500 Due 24th May
Apr 27 500 Due 30th June
May 15 600 Due 18th July
Raman agreed to draw a bill for the total amount due on the average due date.
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Ascertain the date.
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26. Find out the Average due date of the following bills accepted by a trader wishes to settle
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them with one single payment.
Date of Bill Amount of Bill

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1-4-90 800 6-6-90
30-4-90 1000 3-8-90
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3-6-90 400 6-7-90

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15-6-90 600 18-9-90

27. The following transactions took plce between Ram and Krishna from 1-1-09 to 30-6-09
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2009 Rs
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Jan 1 Sold goods to Ram 2240

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Jan 10 Received Ram’s 1000

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acceptance at 2 months
Feb 15 Received cash from 1200
Ram
Mar 2 Bought goods from 5500
Ram
Mar 3 Accepted Ram’s bill at 2000
1 month
Apr 11 Paid cash to Ram 2000
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Apr 30 Sold goods to Ram 2400
payable up to 31st may
May 11 Bought goods from 1500
Ram
May 31 Sold goods to Ram 2200
payable up to 10th June
June 15 Bought goods from 3000
Ram
Prepare the account current to be sent by Krishna on 30th June 2009 .the rate of
interest is 5%.
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28. Prepare Account current for Nagesh in respect of the following transactions with Basha:-
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1994 Rs
Sep 16 Goods sold to Basha ce

400(due 1st Oct)
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Oct 1 Cash received from Basha 180
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Oct 21 Goods purchased from Basha 1000(due 1st Dec)

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Nov 1 Paid to Basha 660

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Dec 1 Paid to Basha 660

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Dec 5 Goods purchased from Basha 1000(due 1st Jan)

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1995
Jan 1 Paid to Basha 1200
Jan 9 Goods sold to Basha 40(due 1st Feb)
The Account is to be prepared up to 1st Feb. Calculate interest @6%p.a.
29. From the following information, pass journal entries in the books of Drawer:
(1)’A’ draws a bill of exchange for Rs. 10,000 and ‘B’ accepted the same.
(2)’A’ discounts the bill at 10% with the bank.
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(3)’B’ pays the amount on maturity date.
30. For their mutual accommodation, Pal draws a bill on Gani for Rs 8,000for 3 months on 1-
1-2001 Gani accepted the bill and returned it to Pal. Pal discounts the bill with the bank for
Rs 7,900 and remits half the proceeds to Gani. Before maturity Pal remits the amount due to
Gani and Gani honours the bill.Show the entries in the books of Pal and Gani.
UNIT IV
31. What are the difference between ‘Sale’ and ‘Consignment’?
32. How would you make a note on Joint ventures and Co-ventures?
33. ‘C’ of Calcutta consigns goods to ’B’ of Bombay for sale at invoice price or over. ‘B’ is
entitled to a Commission of 10% on invoice price and 30% on any surplus price realized. ‘B’
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accepted a bill of exchange drawn by ‘C’ amounting to 80% of the invoice price.During the
year 1999, goods consigned by ‘C’ were invoiced at Rs.90,000 , such goods cost ‘C’
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Rs.60,000. Sales made by ‘B’ were Rs.81,000 and goods in his hands on 31.12.1999,
remaining unsold represented an invoice value of Rs.21,000 ‘B’ remitted a sight draft for the
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amount due after deducting his commission and proportionate advance applicable to goods
sold.You are required to show the necessary accounts in the books of the consignor.
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34.Prem consigned 200 boxes of medicines@ Rs.100 per box to Ram. He incurred the
following expenses:
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Insurance Rs.1,000; Loading charges Rs.1,600 and Freight Rs.1,400

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An account sales was received from Ram which showed that 160 boxes were sold@
Rs.200 per box. Ram incurred the following expenses:
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Clearing charges Rs.1,000; Godown rent Rs.400; Advertisement Rs.600

and Other selling expenses Rs.1,000
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Ascertain the value of stock on consignment and show also the relevant entry.
35. Madurai Somu& Co consigned 50 cases of goods @ Rs.200 each to Chennai Nathan &
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Co. Madurai Somu& Co paid Rs. 200 as insurance and Rs.300 as freight. Nathan & Co sold
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the goods for Rs.24,000 and paid Rs.520 for carriage and Rs.130 for godown rent. Nathan &
Co is eligible for 4% Commission on gross sales. Nathan & Co sends cheque for the balance
due. Show the journal entries and Nathan & CO account in the books of M|S. Madurai
Somu&Co.
36. Sathish of Trivandrum sent on consignment to Mahesh of Cochin goods costing
Rs.44,250 and paid railway freight Rs.1,140, Cartage Rs.350 and Insurance Rs.1,050. Half of
the goods were sold by Mahesh for Rs. 26,250. He incurred storage expenses Rs.300 and
selling expenses Rs.525. He is entitled to a commission of Rs. 1,310 and remitted the balance
by bank draft. Prepare necessary ledger account in the books of Sathish.
37. B, V & S entered into a Joint venture of a contract Rs.1,00,000 is the contract price.
Rs.40,000 , Rs.20,000 & Rs.20,000 were invested by B, V & S respectively and a Joint bank
account was opened. They purchased materials for Rs.60,000; architect fees of Rs.1,000 was
paid by B, V paid for sundry expenses Rs.2,000 and S paid Rs.4,000 for cement.The contract
15
was duly carried out. All the transactions were done through Joint bank account. Give
necessary ledger accounts.
38. R, S completed a joint venture and earned Rs.45000. The profit is to be shared in the ratio
of 3:1. Pass necessary journal entries in the books of R& S assuming they maintain full
records in their own respective books.
39. X and Y contribute Rs.50000 each into a joint banking a/c. They spend Rs.90000 to
acquire and sell wheat. X collects Rs.70000 and Y Rs.80000 from sales. The venture is
closed. Show joint venture a/c in the separate books of the venture.
40. S and H entered into a joint venture of repairs for housing quarters at an agreed price of
Rs.10000.’H’ supplied materials for Rs.6000 and S supplied equipments for Rs.1000.S has
also taken back the equipment at the end at an agreed value of Rs.500.Prepare joint venture
acoount in the books of H.
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UNIT V
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41. Explain the meaning of ‘Non- trading organisation’.
42. What is a ‘Receipts and Payment Accounts’? ce
43. What is an ‘Income and Expenditure Account’?
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44. Write a short note on:(a)Subscriptions;(b)Life membership fees.
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45. From the following details ’ascertain the amount of subscription to be credited to income
and expenditure account for the year 1999.Subscription received in 1999-Rs 48,000 which
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includes Rs 4,000 for 1998 and Rs 8,000 for 2,000. Subscription due but not received at the
end of the year 1999 were Rs20,000 . Subscriptions received in 1998 in advance for 1999
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were Rs 12,000.
46. Compute the expenditure to be shown in income and expenditure account from the
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following :
(A) Sports materials purchased for cash 20,000
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Opening stock of sports materials 5,000

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Closing stock of sports material 8,000

Opening creditors of sports materials 7,000
Cash paid to creditors for sports materials 22,000
Closing creditors for sports materials 6,000
(B) Stationery purchased during the year 40,000
Opening stock of stationery 8,000
Closing stock of stationery 9,000
47. Find out the amount of salaries to be debited to income and expenditure account for 1999
from the details given below :
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Payment made for salaries during 1999 Rs 48,000
Outstanding salaries as on 31-12-1998 Rs 2,000
Prepaid salaries as on 31-12-1998 Rs 1,200
48. Write a short notes on: (a) Legacy (b) Government grants (c) Capital funds.
49. Give a list of ‘Non- Trading concerns ‘ which are generally Nom profit seeking.
50. How do you incorporate the following in the Tanjore turf club Balance sheet for the year
31-3-99?
Medal distribution fund Rs 98,400
Interest on the fund investment Rs 28900
Medals distributed Rs 28,700
Medals distribution fund investment Rs98,000.
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SECTION C
UNIT I
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1.Enter the following transactions in the Journal and ledger of Hariprasad of Hyderabad.
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2000
July 1 Commenced business with cash Rs.1, 80,000
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3 Deposited into bank Rs.55, 000

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4 Purchases goods for Cash Rs.22, 000

5 Bought goods of swaminathan Rs.72, 000
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8 Cash sales Rs.16, 200

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11 Cash deposited into Bank Rs.23, 000

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14 Purchased furniture for cash Rs.4, 000

16 Sold goods to vivek Rs.12, 700
17 Received cash from vivek Rs.12, 446 and allowed him discount Rs.254
18 Paid Swaminathan cash Rs.12, 000 and discount allowed by him Rs.240
20 Paid Wages Rs.1, 800
21 Sold goods to Jagadeesan Rs.35, 000
22 Paid cash for trade expenses Rs.150
24 Sold goods to Rajan Rs.23, 280
25 Received from Jagadeesan Rs.21, 000 and allowed him discount Rs.525
17
26 Paid swaminathan cash on account Rs.24, 000
29 Paid Cash for stationary Rs.180
30 Paid cash for miscellaneous expenses Rs.150
31 Bought goods from Sridhar Rs.17, 870
31 Withdrew cash for private expenses Rs.1, 480
2.Record the following transactions for the month of January 1999 in the purchases book of
M/s Narain Electronics:
Jan.4 Purchased from M/s Brown Electronics:
20 Black & White T.Vs@Rs.5,200 per piece.
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10 Colour T.Vs @ Rs.12, 000 per piece.
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Trade discount on all items @12%
Jan.10 Purchased from M/s Mani Electronics:
12 video tapes @Rs.600 per piece
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8 Philips tape recorders @Rs.2, 500 per piece.
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Jan.19 Purchased from M/s sehgal Electronics:

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10 LG Stores @ Rs.3, 500 per piece.

8 LG Colour T.Vs @ Rs.25, 000 per piece.
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Trade discount @15%

Jan 24 Purchased from M/s Gupta Electronics:
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200 Audio Cassettes @ Rs.25 per piece.

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30 Equity toasters @ Rs.500 per piece.

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Also show posting of the above transactions into ledger accounts from purchases book.
3.Record the following transactions completed during the month of march 1999 in the
Journal.
Mar .1 Paid rent for the month Rs.600
2 Paid cash for the office stationery Rs.60
8 Purchased office equipment on account Rs.10, 000
13 Paid advertising expenses Rs.600
15 Received cash from Kumar on account Rs.8, 000
18 Paid Maran on account Rs.4, 000
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25 withdrew cash for personal use Rs.2, 000
29 Paid telephone bill Rs.600
30 Fees earned and billed to customer Rs.20, 000
31 Paid for repairs to typewriters Rs.300
31 Paid electricity bill for the month Rs.400
4.M/s Prasad Furniture Mart purchased the following items during the month of Dec.2000
2000
Dec.5 Purchased from M/s Goodwill furniture
200 chairs @ Rs.100 per chair
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25 Tables @ Rs.200 per table
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Less: 10%discount.
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11 Purchased from M/s. Nithiya Motors
One Maruti car for Rs.1, 40, 000 ce
One Scooter for Rs.14, 000
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16 Cash purchases from Dilip Furniture:
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4 Sofa sets @ Rs.5, 000 per set

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24 Dining chairs @ Rs.200 per chair

4 Dining tables @ Rs.2, 000 per table.
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Less: 15%trade discount.

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Prepare purchases book and show ledger posting of purchase book.

5.Discuss the merits and limitations of accounting?
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6.Nivetha maintains a two columnar cash book which she balances every week.
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2000
Mar.25 Her Cash Book showed balance of Rs.6, 900
26 Paid Cash to Kailash Rs.1, 428 and discount received Rs.72
31 Received as compensation from Railway authority Rs.4, 380
Received cash from Shanthi Lai Rs.3, 975 and allowed him discount Rs.75
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7. Enter the following Transactions in the B/R Book and B/P Book and post them into the
ledger:
1999
Sep 1 Received from the Gandhi his Promissory Note for Rs.600
8 Accepted a bill 3M/d for Rs.1, 500 drawn by Kalki& Co.
15 Sent our acceptance to savithri& Sons for Rs.750
20 Kamal& co drew upon us for four months and acceptance given for Rs.690
27 Sent our draft to Ganesh who returned it to us duly accepted for Rs.300
30 Did not accept a bill drawn by Mr .Karthik for Rs.400 after 3 months.
8. Journalise the following transactions. Post them in the ledger balance the ledger accounts
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and prepare trail balance:
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1990
Jan 1 Murugan commenced business with a capital of Rs.80, 000
2 Purchased goods for Rs.24, 000 ce
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3 Bought furniture for Rs.18, 000
5 Sold goods for Rs.18, 000
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7 Sold goods to Kumar on credit for Rs.15, 000

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8 Purchased goods from David on credit for Rs.6, 000

15 Cash received from Kumar Rs.14, 950, allowed him discount Rs.50.
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18 Paid cash to David Rs.2, 000

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22 Drawn for personal use Rs.3, 000

25 Opened a bank account by depositing Rs.11, 000
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31 Rent paid Rs.2, 000: Salary paid: Rs.3, 500

9.On 31st March 1995, just before preparing the final accounts, Mr Robin prepared a trail
balance which did not agree. He put the difference in a newly opened suspense account. The
following errors were located. Pass journal entries to rectify the error and prepare suspense
account
(a) A sale of Rs.2, 000 has been passed through the purchase day book of customer’s
account has however, been correctly debited.

(b) Rs.30, 000 paid for the purchase of a motor cycle for Mr Inzazmam (a partner
20
had been charged to miscellaneous expenses a/c )
(c) A sale of Rs.4, 000 to saeet& co. Was credited to their account
(d) While carrying forward the total of sale book from one page to the next the amount
was written as Rs.3, 53, 316 instead of Rs.3, 35, 136.
(e) The returns inward book book for March 1995, had been cast Rs.2, 000 short.
(f) A purchase of Rs.1, 324 had been posted to the debit of the creditor’s account
Rs.1, 234
10 .What are accounting concepts and conventions? How are they evolved?
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UNIT II
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11. How do you treat outstanding and prepaid expenses when they are given in(a) Trial
balance and (b)in adjustments
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12. List out the causes for the difference between the balances shown by cash book and pass
book.
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13. The provision for bad and doubtful debts account shows a balance of Rs.2,000 on
1stjan1994. The bad debts during the year 1994 amount to Rs.1,600. The sundry debtors on
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31st December 1994 are Rs 32,000. Create a new provision for bad debts @5%.Show the
journal, ledger, Profit& loss A/C and balance sheet.
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14. The following particulars are extracted from the book of kalyani. 1996
Rs.
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Jan 1 Provision for bad& doubtful debts 12,000

Provision for discount on debtors 5,600
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Dec.31 Discounts allowed during the year 9,300

Bad debts written off during the year 4,700
Bad debts recovered during the year 250
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Debtors 1,00,600
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Written off further Rs.2,400 (definitely bad). Provision for discount allowed @ 2%and for
doubtful debts @ 10% are to be maintained.Show how the relevant items would appear in
ledger, P & L A/c and balance sheet as on Dec. 31, 1996.
15. Balance as per cash book of govind is Rs.10,500 on 31.03.03. Ascertain the balance to be
shown by him as bank balance in his balance sheet from the following:
Rs.
(a) Over casting in pass book on credit side 800
(b)Under casting in cash book on debit side 640
(c)Cheques deposited but not credited 6,000
(d)Wrong credit in pass book 16,000
(e)Interest credited in pass book alone 370
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16. On 31-03-1982 the pass book showed credit balance of Rs.10,500. The following details
were noticed;
(a) Cheques amounting to Rs.3,500 were issued but cheque for Rs.1,200 had not
been presented for payment in the bank upto 31st March.
(b) Cheques amounting to Rs. 2,750 were deposited in the bank but cheques of
Rs.750 had not been cleared upto 31st march.
(c)Bank had given debit of Rs.35 for sundry charges and
(d)Bank had received directly from customers Rs.800 and dividend of Rs.130 upto
st
31 march.
Prepare a bank reconciliation statement as on 31-03-1982.
17. From the following particulars prepare a bank reconciliation statement as at 31st
December:
Balance as per pass book –Rs.62,460
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(i) Cheques issued but not presented
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Rajini -Rs.4,590
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Kamakshi-Rs.5,960
Bhavani -Rs.9,580
(ii) Cheques deposited but not cleared until after close of the year
John-Rs.5,060
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Balu-Rs.9,130
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(iii) The bankers had wrongly debited the account Rs.2,250 the error was rectified by them
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on 4thjan of the following year.

18. From the following particulars prepare a bank reconciliation statement as on 31st march
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1990
(a)Bank balance as on 31st march 1990 as per pass book Rs.15200.
(b) Bank charges debited Rs.130
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(c)Cheques issued but not presented to bank for payment Rs.2000

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(d)Cheques deposited into bank not credited in the pass book Rs7000
(e)A cheques entered as deposit in the cash book instead of as a payment Rs.220.
(f) Rs.364 paid into bank had been entered twice in the cash book.
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(g)The receipt column of the cash book has been overcast by Rs. 1,000
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(h)A cheque drawn for Rs. 9 had been incorrectly entered in the cash book as Rs.99
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19. From the following Trail balance extracted from the books of kamalnath prepare trading
and profit & loss A/c and balance sheet for the year ended 31-03-1981.
Particular Rs. Particular Rs.
Purchases 11,870 Capital 8,000

Debtors 7,580 Bad debts recovered 250
Return inwards 450 Creditors 1,250
Bank deposit 2,750 Return outwards 350
Rent 360 Bank overdraft 1,570
Salaries 850 Sales 14690
Travelling expenses 300 Bills payable 1,350
Cash 210
Stock 2,450
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Discount allowed 40
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Drawings 600
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1,76,580 1,76,580
Adjustments:
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(i) Stock on 31-3-1995 was Rs.6800
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(ii) Salary outstanding Rs.1500
(iii) Insurance prepaid Rs.150.
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(iv) Depreciate machinery @ 10% and patents @20%

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(v) Create a provision of 2% on debtors for bad debts.

20. From the following balance as at 31st Dec 1994of a trader, prepare a trading and profit &
loss A/C for the year 1994 and a balance sheet as on that date.
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Particulars Rs. Particulars Rs.

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Salaries 5,500 Creditors 9,500

Rent 1,300 Sales 32,000
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Cash 1,000 Capital 30,000

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Debtors 40,000 Loans 10,000

Trade 600
expenses 25,000
Purchase 2,500
Advances 5,600
Bank
balance 81,500 81,500
Adjusted:-
(i) Stock on31-3-1995 was Rs.6800
(iii) Insurance prepaid Rs.150
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(iv)Depreciate machinery @10% and patents @ 20%
UNIT III
21. What is average due date? Why it is computed?
22. What are the points to be noted while counting days for each transactions while preparing
Account Current?
23. What are the consequences of insolvency of drawee of bill?
24. What do you understand by ‘Honoring’ and ‘Dishonoring’ a Bill of exchange?
25. On 1-5-99 Mohan gave his acceptance for three months bill of Rs.6,000 drawn by of
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Murali. Murali sent the bill to bank for collecting the amount on maturity. After maturity
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Muralireceived intimation from the bank that the bill has duly honored by Mohan and Bank
charged Rs . 20 for collection.Show the entries in the books of Murali and Mohan.
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26. Abdul gave his acceptance for Amir’s four month bill of Rs . 2,400 on Jan 1st1999 . One
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month before the due date Abdul paid the amount of the bill at 5% p.arebate . Pass the
necessary journal entries in the books of both the parties
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27. R owes the following sum of money due from him on the dates stated:
Rs. 300 due on March 9. 1993;Rs. 1000 due on April 2. 1993

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Rs. 4000 due on April 30. 1993 and Rs. 100 due on June 1. 1993
He wants to make the complete payment on 30-6-93. Calculate interest at 5%p.a ith the help
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of Average Due Date.

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28. The following amounts are due to Ezil by Sataya. Sataya wants to pay off
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(1) On 18-3-97 or (2) On 14-7-97. Interest rate of 8% p.a is taken into consideration.
Due dates Rs
10-1-97 1,000
26-1-97 (Republic day) 2,000
23-3-97 6,000
18-8-97 (Sunday) 8,000
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29. The following are a series of transactions between Anbu and Balu for the three months
ending on 31-3-89 . Calculate the amount of interest to be paid by one party to another at
10% p.a. using époque method.
Books of Anbu Rs
1-1-89 Balu’s opening balance(Dr) 10,000
10-1-89 Sold goods to Balu 20,000
15-1-89 Cash received from Balu 20,000
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30. On 2-9-92 Gopal opened an account with Canara Bank depositing Rs. 5,000. His future
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depositing were;20th Jan Rs 2,500;20th March Rs 3,000;20th May Rs.3,500.His withdrawals
were: Rs 6,000 On 20th Feb Rs 5,000; On 20th April and Rs 2,500; On 20thJune.Prepare the
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account current to be rendered by the bank for the period 30th June 1992 charging interest at
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5% p.a on customer’s debit balance and 2% p.a on customers credit balance.
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UNIT IV
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31. Explain the method of maintaining accounts in the books of Consignor and Consignee.
32. Describe the different methods of recording transactions relating to joint venture.
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33. Jain of Delhi consigned 300 tins of coconut oil to Narang of Chandigarh, invoiced at
Rs.200 per tin Jain paid Rs.2000 as carriage and other expenses. The consignor drew a bill of
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exchange for Rs.16000 which was later discounted at Rs.15700.The consignee rendered an
account sales showing the following details:
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280tins sold at Rs.250 per tin

20 tins sold at Rs.260 per tin
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Storage and selling expenses Rs.5000

Clearing and cartage Rs.1600
Commission at 6% on sales
The consignee sent a sight draft for the balance.
Show the entries and important ledger accounts in the books of both the parties.
34. Ramesh consigned 2000mt. of chemicals at a cost of Rs.800 per mt. to Jain. Ramesh paid
freight and insurance charges of Rs.20000 of the above500 mt of chemicals were destroyed
by fire during transist. John cleared the balance of 1500 mt. of chemicals and sold 1000 mt. at
an average price of Rs.1000 per mt. John incurred the following expenses:
Godown rent Rs.5000, insurance Rs.3000, Clearing charges Rs.4500. Insurance claim
received against fire Rs.400000 after admitting the solvage value of stock destroyed by fire at
Rs.10000. John was entitled to a commission of 10% on sale proceeds. John sents the balance
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to Ramesh after adjusting his commission and expenses out of the sale proceeds. Prepare a
consignment account and Johns account in the books of Ramesh.
35. David of Coonor consigns 2000 case of goods costing Rs.100 each to Sundar of Chennai.
David pays the following expenses:
Freight Rs:6000
Carriage Rs.2000
Landing charges Rs.2000
Sundar sells 1400 cases at Rs.140 per case and incurs the following expenses.
Clearing charges Rs.1700
Warehousing and storage Rs.3400
Packing and selling expenses Rs.1200.
It is found that 100 cases have been lost in transit and 200 cases are still in transit. Sundar is
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entitled to a commission of 10% on gross sales. Prepare consignment account, Sundar
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account in the books of David.
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36.Sankar sends 20000 units at Rs.50 to Sunil on 1.1.99 to be sold at a commission of 7.5% .
5% goods were lost in transit and it is considered normal. The consignor spent the following
expenses:
Packing expenses at Rs. 2 per case(cash)
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Freight Rs.10000(due)
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Insurance Rs.6000(bank)
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The consignee received at the balance consignment and a cheque of Rs.200000 as

advance. He incurred Rs.8000 as unloading charges and Rs.36000 as selling and
distribution expenses. He submitted an account sales on 31.3.99 disclosing that 14000
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units were sold at Rs.80 per unit. Assuming the consignee send draft for balance. You are
required to pepare, the necessary ledger accounts in the books of both the parties.
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37.Sundar and Rajan were independent contracters. They undertook a joint venture to
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construct a building for a company. They opened a joint bank account and deposited
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Rs.50,000 by Sundar and Rs.30,000 by Rajan. The contract price was Rs.3,00,000 which was
to be discharged Rs.2,50,000 in cash and Rs.50,000 in shares. Sundar paid architect fees
Rs.10,000. Rajan paid wages Rs.20000. Sundar supplied a truck for Rs.20000 into the
venture. Rajan was entitled to a commission of Rs.10000. Materials purchased totaled
Rs.100000 and other expenses totaled Rs.75000. Materials costing Rs.5000 was lost in an
accident.
The venture was completed and the contract price was duly discharged. Sundar took shares at
a value of Rs.55000 and took back the truck at Rs.16000.
Prepare necessary ledger accounts assuming that separate books are maintained for the
venture.
38. S& P entered into a joint venture and agreed to divide the profit as to S 60% and P 40%.
S & P contributed Rs.180000 and Rs.120000 respectively for carrying on transactions
relating to the venture. They opened a joint bank account with the above contributions. They
26
purchased 3 old state buses for Rs.240000. S and P personally paid Rs.45000 and Rs.30000
respectively for repairs and renewals. They purchased a few tires and tubes costing Rs.54000.
2 buses were sold for Rs.270000 and the 3rd one was taken by P at cost price. Pass necessary
journal entries and prepare joint venture account, joint bank a/c and close the a/c of the
venture.
39.Karthik and Sundar both contractors undertook a joint venture for construction of a
building. A joined bank a/c was opened in which Karthik deposited Rs.50000 and Sundar
deposited Rs.30000. The contract price was Rs.200000 payable as to Rs 160000 in cash and
Rs.40000. in shares. The contract was completed. They are to share the profits and loses in
2/3 and 1/3 respectively. From the following details prepare the ledger accounts.
Materials supplied by Karthik Rs.10000
Materials supplied by Sundar Rs.8000
Wages paid Rs.60000
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Materials purchased Rs.140000
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Architects fees paid by Karthik Rs.2000
The stock of material at the end valued at Rs.6000 were taken by Sundar. The shares
were taken by Karthikfor Rs.32000. ce
40.Senthil and Saravanan entered into a Joint venture, the former contributing Rs.80000
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and the later Rs.50000. They opened a joint bank a/c and agreed to share profits 1/3 and
2/3 respectively. They purchased goods for cash Rs.80000 and Saravanan supplied goods
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to the value of Rs.40000. The entire goods were sold for Rs.170000 paying Rs.4100
towards the expenses. Senthil was entitled to a commission of 3% on sales.Show joint
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venture a/c and joint bank a/c.

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UNIT V
41. Distinguish between ‘Receipts and Payment Account’ and ‘Income and Expenditure
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Account’.
42. How do you prepare the balance sheet of a Non Trading concern?
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43. What is income and expenditure account ? Explain the steps required in its preparation?
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44. What are special funds? How do you show the transactions relating to such funds in non
profit organisation?
45. Begum fine arts club had furniture of the book value of Rs 56,000 as on 1-1-1999. On2-1-
1999 it sold furniture of the book value of Rs 24,000 for Rs 25,000. Furniture was to be
deprecated @10%per annum. How will these items appear in the final accounts of the club on
31-12-99?
46. The Chellammal charity Hospital has paid Rs 64,000 during 1999 under the head salaries.
The salary paid includes Rs 2,000 for the year 1998 and Rs 400 for the year 2000. Salaries
still payable for the year 1999 Rs 4,000. Show how the items will appear in the income and
expenditure account of the hospital for the year 1999.
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47. Draw the formation for income and expenditure and receipt and payment account and
balance sheet for non -profit organisation.
48. A charity hospital had paid Rs 23,000 during 1995 under the head ‘Salaries’. The salaries
paid includes Rs500 for 1994 and Rs500 for 1996 but Rs1,500 was payable for 1995. Show
how these items will appear in income and expenditure a\c for the year 1995 , and opening
and closing balance sheet of the hospital.
49. How do you prepare receipt and payment accounts from income and expenditure account
and balance sheet?
50. Write short notes on : (a) subscriptions (b) legacy (c) life membership fees (d) capital
funds (e) government grants. And explain the meaning of Non – trading organisation.
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ANSWERS
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1.a) Proprietor
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2.c) Elementary
3.a) Book ce
4.d) Conservatism
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5.d) All of these
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6.c) Imprest
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7.d) Trial balance

8.a) Ledger
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9.b) T
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10.a) Original
11.c) Chronological
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12.d) Narration
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13.b) Furniture
14.a) Credit
15.d) Numerous
16.c) Compensating
17.a) Suspense
18.b) Debited
19.d) Commission
20.a) Complete
21.b) Bank
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22.a) Credit
23.d) Bank reconciliation
24.c) Pass
25.a) Opening
26. c) Balance sheet
27.a) Bank
28. c) Rectified
29.b) Deposits
30.a) Reconciliation
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31.b) Final
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32. c) Closing
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33.a) Debited
34.c) Scrap ce
35.d) Trading
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36.a) Trading
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37.b) Direct
38.b) Closing
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40. c) Both a & b

41.a) Bill
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42.d) Drawer
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43.a) Drawee
44.b) Payee
45.c) Accommodation
46.a) Promissory note
47.b) Hundi
48.a) Endorsement
49.c) Retiring
50.a) Insolvency
51.d) Payable
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52.d) Payments
53.a) Instalments
54.b) Mean
55.a) Average
56. b) Account
57.b) Forward
58.d) Daily balance
59.a) Backward
60.c) Red-Ink
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61.d) Consignment
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62.b) Consignor
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63.c) Consignee
64.d) Proforma invoice ce
65.a) Commission
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66.c) Del Credere
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67.a) Selling
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68.b) Abnormal
69.b) Nominal
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70.c) Real
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71.c) Joint
72.c) Nominal
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73.a) Personal
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74.b) Co-venturer
75.b) Cash
76.c) Both a & b
77.b) Double entry
78.b) Joint
79.a) Account sale
80.b) Co-Venturers
81.b) Non-Profit
82.b) Credit
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83.a) Capital
84.b) Profit & Loss a/c
85.b) Real
86.b) Cash
87.a) Assets
88.a) Entrance
89.a) Entrance
90.a) Subscriptions
91.b) General
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92.a) Legacy
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93.a) Capital
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94.c) Income
95.a) Honorarium ce
96.a) Capital
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97. a) Surplus
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98.c) Income
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99.b) Revenue
100.b) Revenue
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(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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TITLE OF THE PAPER: AUDITING

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APRIL 2019
1
Question Bank
AUDITING
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CONTENTS
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1 Section A 3
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2 Section B 8
3 Section C 9
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A
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Prepared by
S.KALPANA DEVI
Coimbatore-29.
2
SECTION A
UNIT I
1. The word auditor means -----------.
a. Hearer b. Speaker c. Writer d. Orator
2. Auditing is mandatory under the companies act --------.
a. 2011 b. 2010 c. 2013 d. 2012
3. --------- refers to unintentional mistakes in financial information.
a. Error b. Fraud c. Omission d. Commission
4. Compensating errors are also known as ----------- errors.
a. Clerical b. Offsetting c. Duplicating d. On setting
5. ------------- of cash is otherwise called as misappropriation of cash.
a. Manipulation b. Inflation c. Deflation d. Embezzlement
6. ---------- Company can appoint an internal auditor.
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a. Listed b. Unlisted c. Private d. Public
7. When a transaction is recorded twice, it is called as error of -----------.
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a. Principle b. Omission c. Duplication d. Commission
8. Fraudulent manipulation of accounts are committed by---------- level management.
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a. Top b. Middle c. Low d. All the above
9. Prior to -------, no qualification for auditors were prescribed.
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a. 1918 b. 1920 c. 1813 d. 1913
10. The word audit is derived from the --------- word.
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a. French b. Greek c. Latin d. Spanish
11. ---------- is a synonym to control, check, inspect and revise.
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a. Account b. Audit c. Balance sheet d. None of these

12. Professional qualification to be in an auditor is to pass------------.
a. Commerce b. Chartered accountant c. Arts d. Science
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13. Under audit, period covered is generally --------- financial year.

a. One b. Two c. Three d. Four
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14. The nature of investigation is --------.

a. Mandatory b. Compulsory c. Voluntary d. None of these
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15. Audit helps government in ----------.

a. Taxation b. Detection of frauds c. Settling disputes d. Finding profit
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16. The two categories of members of ICAI are --------- and fellows.
a. Assistants b. Accountants c. Charters d. Associates
17. An auditor should have a good-----------.
a. Courage b. Communication c. Common sense d. All the above
18. Wrong allocation of expenditure is error of ----------.
a. Duplication b. Competition c. Commission d. Principle
19. The primary objective of auditing is as per section --------- of companies act 2013.
a. 141 b. 143 c. 144 d. 153
20. Manipulation and alteration of records are known as ---------.
a. Mistakes b. Errors c. Omission d. Frauds
UNIT II
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21. To avoid payment of income tax, a company --------- it’s profit.
a. Inflation b. Deflation c. Balance d. Increase
22. The personal qualities of an auditor is also termed as ---------- qualities.
a. Professional b. Standard c. Statutory d. General
23. There was auditing activity in ancient China, Greece and --------.
a. Egypt b. Rome c. Germany d. Portugal
24. Auditing is done by an ---------- qualified person.
a. Independent b. Dependent c. Individual d. None of these
25. Auditing helps in identifying true and fair ---------- position of a company.
a. Financial b. Accounting c. Income d. Profit
26. Statutory audit is often called as --------- audit.
a. Internal b. Financial c. External d. Secretarial
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27. The institute of ----------- accountants of India defines cost audit.
a. Cost and work b. Cost c. Work d. Cost and management
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28. The banking regulation act, -------- contains the provisions relating to bank audit.
a. 1947 b. 1948 c. 1949 d. 1950
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29. ---------- audit is an examination of records and books of insurance company.
a. Bank b. Bank and insurance c. Company d. Insurance
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30. -------- audit is not legally required.
a. Sole proprietary b. Government c. Tax d. Statutory
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31. -------- is one of the objectives of internal audit.
a. Proper control b. Internal check c. No errors d. No frauds
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32. ----------- is a written plan containing exact details of an audit.

a. Audit plan b. Audit strategy c. Audit evidence d. Audit programme
33. --------- Programme is prepared for some specific functional areas.
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a. General audit b. Special audit c. Professional audit d. Functional audit

34. Audit note book is also called as a ----------- book.
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a. Mandatory b. Circular c. Remembrance d. Bound

35. The auditors have to retain the working papers for a period of --------- years.
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a. 5 b. 7 c. 8 d. 10
36. -------- is a valuable part of internal control.
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a. External check b. Internal check c. Internal audit d. External audit

37. -------- is useful for drawing the audit programme.
a. Audit notebook b. Audit evidence c. Audit papers d. Audit check
38. --------- is the foundation of all components of internal control system.
a. Control environment b. Risk assessment c. Monitoring d. Information
system
39. Internal check is a automatic and --------- process.
a. Continuous b. Stable c. Flexible d. Standard
40. The form and content of working paper is based on -------- of an entity.
a. Profit b. Turnover c. Size d. Flexibility
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UNIT III
41. Internal audit report is submitted to the ------------.

a. Government b. Tax authorities c. Management d. Shareholders
42. Internal auditors are the --------- of the organisation.
a. Employees b. Agents c. Appointees d. Owners
43. External audit is ----------.
a. Discretionary b. Temporary c. Permanent d. Compulsory
44. Accounting records of a company should be prepared as per ----------.
a. GAAP b. GAPP c. AACP d. GPAA
45. Usually external audit is conducted by ---------.
a. Employees b. Management c. Government d. Third party
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46. ------------ Audit is undergone to study the relationship inside the company.
a. Compliance b. Tax c. Construction d. Operational
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47. A private company with turnover of -------- can go for internal audit.
a. Rs.250 crores b. Rs.150 crores c. Rs.200 crores d. Rs.400 crores
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48. ------ is one of the important features of a good system of internal check.
a. Responsibility b. Protection c. Distribution of work d. Unreliability
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49. --------- is a complete record of doubts and their clarification.
a. Audit notebook b. Audit programme c. Audit papers d. Audit evidence
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50. --------- is one of the main objectives of audit programme.
a. No omission b. Inspection c. Observation d. Confirmation
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51. -------- means testing the truth of items appearing in the books of original entry.
a. Vouching b. Examining c. Testing d. Accounting
52. --------- Voucher refers to the written evidence in original.
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a. Primary b. Collateral c. Secondary d. Sales

53. The auditor should see whether the voucher is on a -------- form.
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a. Written b. Verbal c. Oral d. Printed

54. After inspecting the vouchers, the auditor should --------- it by a stamp.
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a. Print b. Cancel c. Write d. None of these

55. The auditor should see whether the voucher is made in the name of the --------.
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a. Accountant b. Employer c. Manager d. Banker

56. The auditor should not accept the -------- vouchers.
a. Simulated b. Tripled c. Doubled d. Mutilated
57. While vouching of trading transactions it is necessary to look into-------- principles.
a. Business b. Auditing c. Accounting d. Financial
58. --------- Accounts are an integral part of the financial accounts.
a. Purchase b. Sales c. Cash d. Inventory
59. ---------- is prepared in the receiving department.
a. Good received note b. Bin stock card c. Delivery note d. Purchase order
60. The requisition slip should be prepared in ------------ copies.
a. Double b. Triplicate c. Quadruplicate d. None of these
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UNIT IV
61. --------- is done by the auditor at the end of the year.

a. Vouching b. Examining c. Verification d. Classifying
62. The term ----------- means amount retained by way of providing depreciation etc.
a. Bills payable b. Provision c. Outstanding d. Prepaid
63. --------- is defined as a gradual deterioration in value due to use.
a. Appreciation b. Land c. Machinery d. Depreciation
64. Under -------- method an equal amount is written off every year over an asset.
a. Straight line b. Diminishing balance c. Sinking fund d. Depletion
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65. Undervaluation of opening stock is one of the factors which increase the ----------.
a. Gross profit b. Net profit c. Income d. Revenue
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66. Shortages in cash have been also covered up by ---------.
a. Over casting b. Under casting c. Under totalling d. Over totalling
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67. -------- is an important accounting control.
a. Final accounts b. Bank reconciliation c. Trial balance d. All the above
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68. ------- is an example of internal documentary evidence.
a. Bank statement b. Wages books c. Court decree d. Invoice
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69. --------- has prescribed the overall limit to managerial remuneration.
a. Section197(1) b. Section197(2) c. Section 197(4) d. Section 197(5)
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70. Particulars of the journey 1should be mentioned in the voucher of ----------- expenses.
a. Accommodation b. Preliminary c. Travelling d. Salaries
71. Newspapers, slides, hoarding, television etc are examples of -------- expenses.
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a. Advertisement b. Distribution c. Purchase d. Transportation

72. An unauthorized loan cannot be treated as a -------- of the concern.
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a. Revenue b. Expenditure c. Liability d. Asset

73. ---------- profit is a profit arising from sale of asset, reissue of forfeited shares etc.
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a. Tangible b. Capital c. Reserve d. None of these

74. The audit of -------- is an important step in verification of final accounts.
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a. Journal b. Trial balance c. Ledger d. Vouchers

75. Before purchase, there should be a system of inviting quotations from -------.
a. Customers b. Traders c. Bankers d. Suppliers
76. Bin card is also called as -------- card.
a. Stock b. Purchase c. Sales d. Goods
77. -------- Transactions include purchases, sales, purchase returns, sales returns etc.
a. Cash b. Trading c. Ledger d. None of these
78. Under casting the receipt side of the cash book is an example of --------.
a. Error b. Mistake c. Fraud d. Manipulation
79. Under the Indian stamp act, -------, instruments whereby payment is acknowledged
should bear a revenue stamp.
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a. 1899 b. 1988 c. 1998 d. 1898
80. --------- is an appropriation of divisible profit.
a. Surplus b. Revenue c. Assets d. Reserve
UNIT V
81. The auditor’s ------- is the end product of each audit.

a. Plan b. Strategy c. Report d. Programme
82. Unqualified opinion is otherwise known as --------- opinion.
a. Unclean b. Adverse c. Clean d. Disclaimer
83. The first auditor of any company should be appointed within ------days of registration.
a. 15 b. 75 c. 30 d. 60
84. Remuneration of the auditor shall be fixed in --------- meeting.
a. Statutory b. Directors c. Board d. General
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85. Under section ---------- the auditor has the right to receive his remuneration for auditing.
a. 142 b. 141 c. 144 d. 152
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86. Under section 140(1) , in case of ---------, the auditor has the right to be heard at the
meeting.
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a. Appointment b. Duties c. Power d. Removal
87. Section 143 of the companies act, 2013 specifies the ------- duties of an auditor.
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a. Statutory b. Ordinary c. Secretarial d. External
88. Expand NFRA.
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a. National financial reserve authority
b. National financial reporting authority
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c. National financial reporting association

d. National financial reserve association
89. Every company under section 85 is required to keep a --------- of charges.
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a. Auditor b. Register c. Accountant d. Shareholders

90. The -------- is a watchdog and not a bloodhound.
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a. Government b. Auditor c. Owner d. Tax authority

91. The auditor must check the -------- of accounts.
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a. Accuracy b. Standard c. Quantity d. None of these

92. The auditor should safeguard the interest of the --------.
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a. Government b. Shareholders c. Employees d. Customers

93. The central government may prescribe the auditing standards with --------.
a. ICAI b. ICCI c. ACAI d. CCAI
94. Penalty for failure to disclose fraud for an auditor may extend to ----------.
a. Rs.25,00,000 b. Rs.20,00,000 c. Rs.15,00,000 d. Rs.10,00,000
95. The auditor should himself verify the ------ of the company.
a. Revenue b. Income c. Profit d. Assets
96. The process of recording transaction is changed due to --------- auditing.
a. Electronic b. Manual c. Traditional d. Effective
97. Using of ------- codes is one of the impact created by e-auditing .
a. Auditing b. Numeric c. Alpha d. Alpha-numeric
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98. --------- Approach means auditing around the computer.
a. Red box b. Brown box c. White box d. Black box
99. ------- is one of the scopes of audit in a computerised environment.
a. High speed b. High clerical error c. Low speed d. None of these
100. ------- Approach means auditing through the computer.
a. White box b. Yellow box c. Black box d. Blue box
SECTION B
UNIT I
1. Write a note on auditing in India.
2. What is the role of auditing in developing an economy?
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3. What are the features of auditing?
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4. Define the term auditing.
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5. Brief the term auditing in relation to investigation.
6. What is the basic qualification of an auditor?
7. How auditing is useful for the management of a company?
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8. Write down about the institute of chartered accountants of India.
9. What are the primary objectives of audit?
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10. Write a note on the detection and prevention of fraud.
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UNIT II
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11. What are the benefits of internal audit?

12. What are the factors to be considered before planning an audit?
13. How will you classify the various types of audit programme?
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14. Write about audit note book.

15. What are the objectives of audit working papers?
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16. Distinguish between internal check and internal control.

17. What are the features of vouching?
18. Write a note on vouchers.
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19. Mention in brief about the characteristics of the internal control.

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20. What is the role of cost audit in a company?
UNIT III
21. What are the principal matters to be considered while vouching trading transactions?
22. How will you vouch the credit purchase transactions?
23. How will you vouch the sales returns of a company?
24. What are the steps involved in the verification of the system of internal control?
25. How payments made under petty cash should be verified by an Auditor?
26. Write about travelling expenses under vouching of cash transactions.
27. What are the steps involved in the audit of ledgers?
28. Write a note on the verification of bought ledgers?
29. What do you mean by self-balancing and sectional balancing ledgers?
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30. What will be considered under the heading general ledger?
UNIT IV
31. Distinguish between verification and vouching.
32. What is the meaning and definition of verification?
33. Write a note on capital expenditure.
34. Define the various types of assets.
35. What are the purposes of providing depreciation?
36. Define the several causes of depreciation.
37. What are the needs for depreciation?
38. How to determine the amount of depreciation?
39. Write a short note on the methods of depreciation.
40. Define the term Reserve.
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UNIT V
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41. What are the characteristics of reserve?
42. Distinguish between capital reserve and general reserve.
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43. Distinguish between general reserve and specific reserve.
44. Write a note on provisions.
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45. Write a note on auditing around the computer.
46. What do you mean by E-Auditing?
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47. What are the effects of computers on auditing?
48. Write a note on auditing through the computer.
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49. What do you mean by black box approach?

50. Write about the recent changes E-auditing.
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SECTION C
UNIT I
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1. Explain about the scope of audit.

2. Describe the various functions of auditing.
3. Distinguish between auditing and investigation.
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4. Discuss about the advantages of auditing.

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5. Write in detail about the disadvantages of auditing.

6. Describe the different qualities of an auditor.
7. Explain about the disqualification of an auditor.
8. Discuss about the primary objectives of an audit.
9. Describe the secondary objectives of auditing.
10. Classify in detail about the kinds of audit.
UNIT II
11. Explain about the objectives of audit programme.
12. Briefly describe about audit note book.
13. Discuss about the importance audit working paper.
14. Describe the various contents involved in audit working papers.
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15. Draft the specimen of an audit programme.
16. Explain about the objectives of internal control.
17. Describe how internal check is distinguished from internal control.
18. Explain the several characteristics of the internal control.
19. Discuss about the objectives of internal audit.
20. Write a note on i) cost audit ii) management audit
UNIT III
21. Explain the points to be noted while vouching.
22. Explain about internal control in respect of trading transactions.
23. Explain how to vouch the details of purchases.
24. Describe the special precautions in verification of purchase invoices.
25. Explain the factors that increases and decreases the gross profit.
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26. Explain how to verify the bank balance of a company.
27. Describe about the vouching of the receipt side of the cash book.
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28. Discuss about vouching of the payment side of the cash book.
29. Explain some of the frauds which may be committed by a ledger keeper.
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30. Discuss in detail about the sales ledger. er
UNIT IV
31. Explain about the vouching of purchase ledger over sales ledger.
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32. Describe the importance of vouching ledger accounts of a company.
33. Discuss in detail about purchase ledger.
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34. Explain the various aspects under General ledger.

35. Explain about the kinds of reserves.
36. Describe how an auditor should verify the provisions ascertained in a company.
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37. Discuss in detail about contingent assets and liabilities of a firm.

38. Describe the steps involved in verifying the fixed assets of a company.
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39. Explain the methods used to ascertain depreciation.

40. Describe the role of an auditor in the verification assets and liabilities.
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UNIT V
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41. Discuss about the qualification of an auditor.

42. Explain the various duties of an auditor.
43. Describe why and how an auditor will b disqualified.
44. Discuss in your own words about E-Auditing.
45. Describe the various approaches in auditing in computerised environment.
46. Explain about the liabilities of an auditor.
47. Explain in detail about the recent changes in E-Auditing.
48. Describe the role of auditors in auditing a company's share capital.
49. Explain about audit of share transfer.
50. Discuss about how far an auditor’s role help in shaping a country's economy.
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Key answer for one word
1.a. Hearer 2.c.2013 3.a.Error 4.b.Offsetting 5.d.embezzlement 6.a.Listed
7.c.Duplication 8.a.Top 9.d.1913 10.c.Latin 11.b.Audit 12.b.Chartered accountant
13.a.One 14.d.None of these 15.d.Finding profit 16.a.Assistants 17.a.Courage
18.d.Principle 19.b.143 20.d.Frauds 21.b.Deflation 22.d.General 23.b.Rome
24.a.Independent 25.a.Financial 26.b.Financial 27.a.Cost and Work 28.a.1947
29.a.Bank 30.a.Sole proprietary 31.b.Internal audit 32.a.Audit Plan 33.d.Functional
audit 34.c.Remembrance 35.b.7 36.b.Internal check 37.a.Audit notebook
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38.c.Monitoring 39.a.Continuous 40.c.Size 41.c.Management 42.a.Employee
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43.d.Compulsory 44.a.GAAP 45.d.Third party 46.a.Compliance 47.c.Rs 250
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crores48.c.Distribution of work 49.c.Audit paper 50.c.Observation 51.a.Vouching
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52.a.Primary 53.d.Printed 54.b.Cancel 55.b.Employer 56.d.Multilated
57.c.Accounting 58.c.Cash 59.a.Good received note 60.b.Triplicate 61.c.Verification
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62.b.Provision 63.d.Depreciation 64.a.Straight line 65.a.Gross Profit 66.a.Over
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casting 67.b.Bank reconciliation 68.b.Wages books 69.a.Section 197(1)
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70.a.Travelling 71.a.Advertisement 72.c.Liability 73.b.Capital profit 74.b.Trial

balance 75.d.Suppliers 76.a.Stock card 77.b.Trading transactions 78.c.Fraud
79.a.1899 80.a.Surplus81.c.Report 82.c.Clean 83.c.30 days 84.c.Board 85.a.142
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86.d.Removal 87.a.Statutory 88.b.National financial reporting authority

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89.b.Register 90.b.Auditor 91.a.Accuracy 92.b.Shareholders 93.a.ICAI

94.a.RS.25,00,000 95.d.Assets 96.a.Electronic 97.d.Alpha-numeric 98.d.Black box
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99.a.High speed 100.a.White box

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COIMBATORE-641029
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QUESTION BANK
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SUBJECT CODE: 15UCM5E1
TITLE OF THE PAPER: BUSINESS RESEARCH METHODS
NOVEMBER 2019
Question Bank
BUSINESS RESEARCH METHODS
CONTENTS
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1 Section A 1
2 Section B 10
3 Section C
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Prepared by
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S.KALPANA DEVI
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Coimbatore-29.
BUSINESS RESEARCH METHODS
SECTION A
UNIT I
1. _________ is the lifeline of human civilization and development.
a) Research b) Personnel management c) Innovations d) Inventions
2. Business research can reduce the degree of ________.
a) Competitiveness b) Uncertainty c) Problems d) Risk
3. In common research means ________.
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a) Search for more knowledge b) Criteria c) Outcome d) Specification
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4. The objectives of research mostly depend on _________ factors.
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a) Social b) Economical c) Situational d) Technological
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5. _______ characteristics of research means there is no place for superstitious belief.
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a) Rational b) Systematic c) Scientific d) Objective
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6. There is order or methodology or logical sequence in conducting research in _____.

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a) Rational research b) Scientific research c) Systematic research d) Objective
7. In ______ research there must be empirical evidence.

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a) Scientific b) Systematic c) Rational d) Universal

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8. ______ is the backbone of research.
a) Objectivity b) Honesty c) Systematic d) Verifiable

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9. _______ are the techniques the researcher employs in conducting research.
a) Research method b) Research methodology c) Business research d) Comparison
10. _______ is the way a research problem is systematically solved employing the relevant
research methods.
a) Research methodology b) Research methods c) Hypothesis d) Literature
11. No attempt is made to solve the problem in ________ research.
a) Exploratory b) Formal c) Descriptive d) Analytical
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12. ______ research is a full-fledged research with substantial structure of well-defined
parameters.
a) Formal b) Descriptive c) Conceptual d) Empirical
13. ______ is a scientific and systematic search for pertinent information on a specific topic.
a) Sample b) Procedure c) Formulation d) Research
14. ________ research includes surveys and fact-finding enquiries of different kinds.
a) Analytical b) Descriptive c) Applied d) Fundamental
15. ______ research is based on the measurement of quantity or amount.
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a) Quantitative b) Qualitative c) Conceptual d) Empirical
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16. The first step in research process is _______.
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a) Development of working hypothesis b) Extensive literature survey
c) Formulating the research problem

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d) Preparing the research design
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17. ______ research is data based quantitative research amenable for verification.
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a) Conceptual b) Empirical c) Field d) Analytical

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18. The blue print of research process is _______.
a) Hypothesis b) Research design c) Literature d) Data collection

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19. The data collected from entire population is called _____.

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a) Census b) Observation c) Pilot d) Schedule
20. ______ are the final findings of the investigations.

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a) Inferences b) Results c) Solutions d) Abstracts
UNIT II
21. The most important source to identify a problem is ________
a) Literature b) Experience c) Inference d) Suitability
22. A proper _______ of the research problem enables the researcher to be on the right
track.
a) Identification b) Selection c) Defining d) Sourcing
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23. ________ is the process of fencing around a research problem.
a) Delimitation b) Justifying c) Complimenting d) Solving
24. The review is presented _________.
a) In chronological order b) Broadly c) Without any correlation
d) Without any evidence
25. ________ is a logical and systematic plan to conduct a research study.
a) Research design b) Hypotheses c) Literature d) Abstract
26. ______ is the blueprint of the research study.
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a) Summary b) Abstract c) Design d) Process
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27. _______ component of research design deals with how a sample is selected.
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a) Report design b) Statistical design c) Data collection design
d) Sampling design
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28. The techniques generally employed are detailed in the chapter _______.
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a) Sampling techniques b) Collection and processing of data

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c) Data analysis d) Interpretation
29. ______design seeks only general information to test the possibility of conducting a
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detailed research.
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a) Exploratory b) Formal c) Descriptive d) Diagnostic
30. _______ design does not aim at testing hypotheses.

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a) Exploratory b) Formal c) Descriptive d) Diagnostic
31. _______ is particularly useful when researcher lack a clear idea of the problem.
a) Descriptive b) Diagnostic c) Analytical d) Exploratory
32. _______ design is structural which clearly states hypotheses or investigative questions.
a) Formal b) Diagnostic c) Descriptive d) Analytical
33. _____ design is used in fact-finding investigation to gather detailed information.
a) Descriptive b) Analytical c) Fundamental d) Exploratory
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34. _______ design aims at identifying the causes of a problem to enable the researcher
Search for a solution.
a) Experimental b) Analytical c) Diagnostic d) Descriptive
35. Research problems related to finance are brought under ______ design.
a) Diagnostic b) Analytical c) Experimental d) Formal
36. CRD means ________.
a) Completely randomized design b) Clearly randomized design
c) Customised randomized design d) Controlled randomized design
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37. RCBD means _______.
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a) Randomized complete block design b) Randomized complete block description
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c) Randomized clear blocked design d) Randomized complete block diagnosis
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38. A biography or an autobiography is a typical ________.
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a) Literature b) Data c) Case study d) Pilot study
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39. When researcher studies different panels of consumers at one point of time it is ____
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study.
a) Longitudinal b) Cross-section c) Factorial d) Pilot

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40. The overall design is rigid in _______ design.

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a) Exploratory b) Formulate c) Descriptive d) Longitudinal
UNIT III
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41. _____ is known as complete enumeration survey method.
a) Census b) Sample c) Element d) Parameter
42. ______ is the part of total population about which the study is concentrated.
a) Finite population b) Infinite population c) Population d) Target population
43. A ______ is the portion of the population which is supposed to truly represent the
population.
a) Census b) Element c) Sample d) Unit
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44. _____ is a list containing all sampling units from which the sample is to be drawn.
a) Sampling b) Sampling technique c) Sampling frame d) Sampling design
45. A _______ is a characteristic of a population.
a) Parameter b) Element c) Census d) Sample
46. A _______ is a characteristic of a sample.
a) Population b) Unit c) Census d) Statistic
47. _______ reduces the time and cost of research.
a) Sampling b) Survey c) Design d) Parameter
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48. ______ provides quick results.
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a) Census b) Sampling c) Units d) Surveys
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49. In _______ sample, each unit of the population has an equal chance to get into the
sample
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a) Probability b) Non-probability c) Parameter d) Statistics
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50. _______ method of sample is popular when the population is of manageable size.
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a) Lottery b) Table of random numbers c) Computer d) None
51. _______ sampling technique is suitable when the units/items in a population are almost
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uniform.
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a) Simple random b) Systematic c) Stratified d) Cluster
52. _______ sampling method is used in those cases where a complete list of the population
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is available.
53. _______ sampling procedure will be effective when the population is heterogeneous.
54. When the units/elements of a population are scattered over a larger area _______
Sampling is more appropriate.
a) Systematic b) Stratified c) Cluster d) Multi-stage
55. _______ sampling is also known as incidental sampling.
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a) Convenience b) Judgement c) Quota d) Snowball
56. In ______ sampling the researcher can take the opinion of experts in the field.
a) Convenience b) Judgement c) Cluster d) Quota
57. _______ is considered as the principal instrument in research.
a) Hypotheses b) Designing c) Sampling d) Collection
58. A hypotheses is always in a _______ form.
a) Declarative b) Judgemental c) Exploratory d) Analytical
59. When there is no difference between variables it is known as ______ hypotheses.
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a) Null b) Alternative c) Relational d) Correlation
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60. When there is difference between variables it is known as _______ hypotheses.
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a) Null b) Alternative c) Complex d) Rational
UNIT IV
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61. _______ constitutes the foundation of any scientific analysis and interpretation.
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a) Data b) Scaling c) Sampling d) Research

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62. When an investigator uses the data which have already been collected by others, it is
called as _________.
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a) Primary data b) Secondary data c) Internal data d) Fundamental data

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63. _______ are collected directly by the researcher from the original sources.
a) Primary data b) Secondary data c) Internal data d) Fundamental data

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64. _______ data collection is costly and time-consuming.
a) Primary b) Secondary c) Internal d) Analytical
65. ________ method of primary data collection is not only seeing and hearing, it includes
perceiving as well.
a) Observation b) Experimentation c) Simulation d) Interviewing
66. In ______ observation method the investigator observes the phenomenon personally
when it takes place.
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a) Participant b) Direct c) Indirect d) Controlled
67. _______ is a research process used to study the casual relationship between variables.
68. _______ is a process of conducting experiments on a symbolic model representing a
phenomenon.
a) Experimentation b) Simulation c) Interviewing d) Observation
69. ______ simulation is a game played by people in a laboratory setting to simulate people
in real life.
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a) Man b) Computer c) Man-computer d) Statistical
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70. _______ is an operational model programmed to generate a sequence of interactions.
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a) Man b) Computer c) Man-computer d) Statistical
71. _____ is a prominent method of data collection.

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72. ______ type of interview is used for large-scale formalized survey.

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a) Structured b) Unstructured c) Focused d) Depth
73. ______ type of interview is more useful in case studies rather than in surveys.
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a) Structured b) Unstructured c) Focused d) Depth

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74. In ______ interview the situation is analysed prior to the interview and an interview
Guide related to the research hypotheses is used.

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a) Structured b) Focused c) Clinical d) Depth
75. ______ interview is concerned with broad underlying feelings, motivation or life
experiences.
a) Clinical b) Depth c) Telephonic d) Focused
76. _______ interview requires real probing questions.
a) Structured b) Focused c) Clinical d) Depth
77. The interview which can cover extensive geographical area is ______.
a) Telephonic b) Mail survey c) Depth d) Focused
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78. _______ is essentially a list that the respondent is asked to mark or check in a particular
Way regarding personal qualities.
a) Opinionaire b) Inventory c) Interview schedule d) Mailed questionnaire
79. _____ are structured ones with two or more alternative responses for the respondent to
Choose.
a) Open-ended b) Closed-ended c) Dichotomous d) Declarative
80. A _______ question can be answered either as “yes” or “no”.
a) Closed-ended b) Dichotomous c) Multiple choice d) Declarative
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UNIT V
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81. _____ is a search for broader meaning of research findings.
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a) Interpretation b) Data c) Analysis d) Statistics
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82. It is through _______ that the researcher can understand the abstract principle that
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works beneath the findings.
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a) Interpretation b) Analysis c) Sampling d) Procedures

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83. A research is said to be incomplete unless it is presented in a _______.
a) Statement b) Abstract c) Summary d) Report format

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84. A _____ is a formal statement of the details of the research process and its results.
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a) Hypotheses b) Research report c) Interpretation d) Analysis
85. ______ report follows a specified format.

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a) Technical b) Interim c) Summary d) Popular
86. To convince the authority concerned that the research is alive and is in progress, _____
Reports are presented.
a) Technical b) Interim c) Summary d) Popular
87. _______ report is meant for general public.
a) Technical b) Interim c) Summary d) Thesis
88. Acknowledgement of researcher comes under ______ head of a report.
a) Prefatory items b) Body of the report c) Terminal items d) Does not exist
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89. Statement of problem is included in ________ chapter.
a) First b) Second c) Third d) Fourth
90. Terminal items include _____.
a) References b) Bibliography c) Appendices d) All the above
91. ______ is the first page in a research report.
a) Title page b) Declaration c) Certificate d) Acknowledgement
92. _______ is the overall opinion of the researcher on the topic.
a) Findings b) Summary c) Suggestions d) Conclusion
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93. The ______ of the project will indicate the primary objective.
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a) Title b) Dimensions c) Literature d) Sources
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94. The ______ of the project form the secondary objectives.
a) Dimensions b) Title c) Review d) Data

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95. ________ is the first step in report writing.
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a) Logical analysis of subject-matter b) Preparation of final outline

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c) Preparation of rough draft d) Rewriting and polishing
96. The _______ provides the complete outline of the research report along with
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all details.
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a) Preliminary pages b) Main text c) Introduction d) Findings
97. ______ are the works/reports specific to the study and referred to in the body of the report
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a) References b) Bibliography c) Appendices d) Annexure
98. ______ do not find a place in the body of the report.
a) References b) Bibliography c) Appendices d) Annexure
99. ________ is not page-numbered.
a) Prefatory b) Body c) Terminal d) Introduction
100. Ho is denoted for ______.
a) Hypotheses b) Null hypotheses c) Alternate hypotheses d) none
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SECTION B
UNIT I
1. What is research? Explain with example.
2. What are the objectives of research?
3. What are the motives for doing research?
4. Discuss the characteristics of a good research.
5. Analyse the term “objectivity” in research.
6. Why do we study research in business?
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7. Discuss the limitations of scientific research in business.
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8. Discuss the significance of research.
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9. What are the criteria of good research?
10. What is the essence of a research process?

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UNIT II
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11. How is a research problem identified and selected?

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12. How can you justify problem selection?
13. How is a problem defined?

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14. What is problem statement?

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15. What is research design?
16. What is case study?

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17. Explain descriptive design with examples.
18. What are the basic principles in experimental design?
19. What is a research plan?
20. What are the sources of research plan?
UNIT III
21. What is the need for sampling?
22. Analyse the limitations of sampling.
23. What is a sample design?
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24. What are the characteristics of a good sampling design?
25. How is sample size fixed?
26. What are the advantages and disadvantages of census method?
27. Discuss the advantages and disadvantages of systematic sampling.
28. What are the limitations of convenience sampling methods?
29. Define hypotheses.
30. What are the sources of hypotheses?
UNIT IV
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31. Analyse the characteristics of a good questionnaire.
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32. How is a questionnaire pretested?
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33. What is data processing?
34. What is data collection?

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35. What are the features of secondary data?
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36. What are the advantages and disadvantages of secondary data?

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37. What is internal data? Discuss on the availability of internal data.
38. What is observation method? Discuss its characteristics, advantages and limitations.
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39. What is simulation? Discuss its types.

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40. Discuss on the advantages and limitations of interviews.
UNIT V
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41. What is interpretation?
42. What is the need for interpretation?
43. What is report writing?
44. What are the functions of research report?
45. What is the purpose of a research report?
46. Discuss the characteristics of a good report.
47. What is chapter scheme? How is it written?
48. Explain references with example.
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49. What is the basic difference between reference and bibliography?
50. What are the salient points in executing a research project?
SECTION C
UNIT I
1. Write a brief note on the overview of research.
2. Distinguish between research methods and research methodology.
3. What are the various types of research?
4. Discuss the various steps in the research process.
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5. Discuss the relevance of ethics in research.
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6. What is applied research and fundamental research? Explain on which research is more
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relevant.
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7. What is review of literature? Explain the sources and need for review of literature.
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8. Explain the term descriptive research and its purpose.
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9. “All businesses operate in the world of uncertainty”. Explain on how research helps to
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overcome uncertainty.
10. What are the factors affecting objectivity in research?

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UNIT II
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11. What are the various sources of identifying problems?
12. Analyse the criteria of problem selection.

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13. Discuss the steps in defining a problem.
14. What are the components of a research design?
15. What is the need for research design?
16. Discuss the different types of research design.
17. Differentiate longitudinal study from cross-sectional study.
18. What are the concepts relating to research design?
19. What is experimental design? How are they classified?
20. What is exploratory design? Explain the sources of exploratory design.
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UNIT III
21. Distinguish between census and sampling.
22. Discuss the principles of sampling.
23. Differentiate sampling error from non-sampling error.
24. Discuss the various probability and non-probability sampling techniques.
25. Discuss on simple random sampling and its methods.
26. Differentiate cluster sampling and stratified sampling.
27. Discuss the characteristics of good hypotheses.
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28. What is the role of hypotheses?
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29. Discuss the various types of hypotheses.
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30. Discuss the various steps in hypotheses testing.
UNIT IV
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31. Distinguish between primary and secondary data.
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32. Discuss the various methods of primary data collection.

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33. How is a questionnaire constructed?
34. What are the methods of data collection?

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35. What are the types of observation method?

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36. Discuss on the types of interviews.
37. What are the tools for data collection?

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38. What are the steps in data processing?
39. What is a pilot study? Discuss on the need for a pilot study.
40. “Primary data collection is more expensive than secondary data collection”. Discuss.
UNIT V
41. What are the techniques of interpretation?
42. What are the precautions observed in interpretation?
43. What are the various types of research?
44. Discuss the layout or format of a research report.
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45. What does the table of contents in a research report contain?
46. Discuss on the different types of report.
47. Discuss on how to frame review of literature.
48. Explain research methodology and its contents.
49. Discuss the points in presenting of research report.
50. What is statement of problem? Discuss the importance in writing the statement of
problem.
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ANSWER KEY: SECTION A
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UNIT I
1. a) Research 2.b) Uncertainty 3.a) Search for more knowledge 4.c) Situational
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5.a) Rational 6.c) Systematic research 7.a) Scientific 8.b) Honesty 9.a) Research method
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10.a) Research methodology 11.a) Exploratory 12.a) Formal 13.d) Research
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14.b) Descriptive 15.a) Quantitative 16.c) Formulating the research problem

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17.b) Empirical 18.b) Research design 19.a) Census 20.a) Inferences
UNIT II
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21.a) Literature 22.c) Defining 23.a) Delimitation 24.a) In chronological order

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25.a) Research design 26.c) Design 27.d) Sampling design 28.c) Data analysis
29.a) Exploratory 30.a) Exploratory 31.d) Exploratory 32.a) Formal 33.a) Descriptive
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34.c) Diagnostic 35.b) Analytical 36.a) Completely randomized design

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37.a) Randomized complete block design 38.c) Case study 39.b) Cross-section
40.c) Descriptive
UNIT III
41.a) Census 42.d) Target population 43.c) Sample 44.c) Sampling frame
45.a) Parameter 46.d) Statistic 47.a) Sampling 48.b) Sampling 49.a) Probability
50.a) Lottery 51.a) Simple random 52.b) Systematic 53.c) Stratified 54.c) Cluster
55.a) Convenience 56.b) Judgement 57.a) Hypotheses 58.a) Declarative 59.a) Null
60.b) Alternative
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UNIT IV
61.a) Data 62.b) Secondary data 63.a) Primary data 64.a) Primary 65.a) Observation
66.b) Direct 67.b) Experimentation 68.b) Simulation 69.a) Man 70.b) Computer
71.d) Interviewing 72.a) Structured 73.b) Unstructured 74.b) Focused 75.a) Clinical
76.d) Depth 77.b) Mail survey 78.b) Inventory 79.b) Closed-ended 80.b) Dichotomous
UNIT V
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81.a) Interpretation 82.a) Interpretation 83.d) Report format 84.b) Research report
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85.a) Technical 86.b) Interim 87.c) Summary 88.a) Prefatory items 89.a) First
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90.d) All the above 91.a) Title page 92. d) Conclusion 93.a) Title 94.a) Dimensions
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95.a) Logical analysis of subject-matter 96.b) Main text 97.a) References
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98.b) Bibliography 99.a) Prefatory 100.b) Null hypotheses
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*************************************************************************
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15
(AUTONOMOUS)
COIMBATORE-641029
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A
QUESTION BANK
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TITLE OF THE PAPER: BUSINESS ORGANISATION
NOVEMBER 2019

Question Bank
BUSINESS ORGANISATION
CONTENTS
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1 Section A 1
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2 Section B 8
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3 Section C 11

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Prepared by
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S.Saranya
Coimbatore-29.
BUSINESS ORGANISATION
SECTION – A
Choose the correct answer
UNIT I
1. The word business means _____
a. A state of being busy b. A state of being sincere c. A state of being energetic
d. A state of being regular
2. Profession involves _____
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a. Rendering of personal services b. Undertaking a business c. Undertaking Contract
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d. Economic activities
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3. _____ means production of goods and services
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a. Business b. Profession c. Commerce d. Employment
4. Advertising removes the hindrance of _____
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a. Time b. Place c. Person d. Distance
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5. Sole trading business can be started by ______________
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a. At least two persons b. At least seven person c. At least one person

d. no limit
6. The liability of a sole trader is _____
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a. Unlimited b. Joint c. Several d. Limited

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7. The minimum number of partners permitted in banking business is _____

a. 7 b. 10 c. 15 d. 12
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8. The partnership deed should be _____

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a. In writing b. Orally agreed c. May be in Oral d. May be in writing

9. Sole proprietorship is suitable for
a. Large scale concerns b. Medium scale concerns c. Small scale concerns d. All concerns
10. A partnership firm may be registered under
a. 1949 act b. 1956 act c. 1932 act d. 1957 act
11. The minimum number of members required to start a partnership firm is _____
a. 2 b. 5 c. 7 d. 4
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12. An enterprise managed and controlled by the government is termed as _____
a. Private enterprises b. Public enterprises c. Joint sector d. Joint stock company
13. A company is _____
a. A natural person b. An artificial person c. Both a and b d. Business
14. The _____ is the substitute for a company’s signature
a. Directors signature b. Manager’s signature c. Managing Directors signature
d. Common seal
15. _____ guarantee the sales of shares of a company
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a. Registrars b. Underwriters c. Advisors d. Lead managers
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16. Co- operatives are voluntary associations of persons with _____ motive
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a. Profit b. Monetary c. Economic d. Service
17. The management of Co- operatives is _____ in nature
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a. Oligarchic b. Autocratic c. Democratic
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18. The oldest form of Co- operatives is _____ Co- operatives
a. Consumer b. Housing c. Marketing d. Industrial
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19. The _____ are governed by the provision of the companies act 1956.
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a. Government company b. Departmental undertakings c. Public limited company

d. Public corporation
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20. The primary objective of public utilities is _____

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a. Lower the risk b. Public welfare c. Large investment d. Strict regulations

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UNIT - II
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21. The Theory of plant location propounded by Sergent Florence is

a. Predictive theory b. Inductive theory c. Deductive theory d. Location theory
22. Cost minimization and _____ maximization are the objectives of plant location
a. Profit b. product c. sales d. Quality
23. The first economist who attempted an analytical approach to the problem of industrial
location for the first time is _____
a. Adam Smith b. Alfred Marshall c. Lionel Robbins d. Alfred Weber
24. Sargent Florence’s Theory of location is called
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a) Deductive Approach b. Inductive Approach c) Inclusive Theory d) Exclusive Theory
25. Agglomerative refers to _____ of production
a. Concentration b. Business c. Profit d. Plant layout
26. The _____ cost and labour cost are the primary costs according to Weber’s deductive theory
a. Raw material b. Transport c. Administration d. Selling
27. Deglomerative refers to _____ of production
a. Large scale b. Small scale c. Dispersal d. Concentration
28. The _____ refers to the movement of materials from stage to stage between the work centre.
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a. Transportation b. Storage c. Process chart d. Packing
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29. The _____ refers to the checking of the quality of the work.
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a. Operation b. Inspection c. Storage d. Delay
30. If the location is in _____ it enjoys some of the advantages of both the city location and the
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village location er
a. Rural b. Urban c. City d. Suburbs
31. Co-efficient of Localization indicates the tendency of _____ industries.
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a.Concentration b.Dispersal c.Profitability d.Cost minimisation

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32. The decision regarding location of a plant is not a _____ decision.

a.Changing b.Flexible c.Static d.Important
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33. According to Weber _____ cost depend on the weight to be transported and the distance to be
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covered.
a.Product b.Raw material c.Transport d.Pure material
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34. Materials which lose weight in the production process are called as _____.
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a.Gross raw material b.Pure material c.Raw material d.Finished products

35. The example for pure material is _____.
a.Coal b.Sugar cane c.Iron ore d.Cotton
36. Weber classified raw materials into _____ types.
a.1 b.3 c.2 d.4
37. The _____ raw materials are those common material which are available everywhere.
a.Localized b.Ubiquitous c.Pure d.Aritifical
38. Stationary layout is suitable for manufacturing_____.
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a.Small products b.Light products c.Bulky products d.Technical items
39. The _____ layout is better suited for low volume of production.
a.Functional b.Stationary c.Line d.Combined.
40. The _____ layout is not flexible.
a.Product b.Functional c.Stationary d.Combined
UNIT - III
41. In _____ layout similsr machines and eqipments of the same functional type are arranged in
)
one department.
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a.Process b.Product c.Functional d.Stationary
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42. As production increases in the long run, the minimum average cost_____.
a.Remains stable b.Remains constant c.Increases d.Declines
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43. The _____ economies refer to economies enjoyed by a particular firm because of increase in
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its output.
a.External b.Scale c.Cost d.Internal
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44. Division of labour can be adopted by _____ firms.

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a.New b.Old c.Large scale d.Small scale

45. Small scale firms are _____ flexible in their functioning.
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a.More b.Not c.Less d.None of the above

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46. When product customization is required _____ scale production is suitable.

a.Large b.Small c.Medium d.Local
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47. Diseconomies of scale lead to increase in_____.

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a.Average cost of production b.Sales c.Production d.Profits

48. Units engaged in small scale production find it difficult to survive during conditions of_____.
a.Recovery b.Boom c.Inflation d.Depression
49. Organisations undertaking large scale production enjoys _____ economies and _____
economies.
a.Large and small b.Internal and external c.Average and non average d.None
50. Large scale units which are charaterized by mechanization adopt division of_____.
a.Labour b.Material c.Transportation d.Wages
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51. A capital intensive enterprise requires_____.
a.More employees b.Less employees c.Male employees d.Female employees
52. In the case of an optimum firm, any expansion beyond the existing size would result in
_____.
a.Diseconomies of scale b.Economies of scale c.More profit d.More sales
53. In the case of an equilibrium firm, marginal revenue is equal to_____.
a.Total cost b.Total revenue c.Marginal cost d.Sales
54. The _____ firm enjoys lowest average cost of production.
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a.Representative b.Optimum c.Small scale d.Equilibrium
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55. A firm which outsources work requires_____.
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a.More employees b. Skilled employees c. Less employees d.Semi-skilled employees
56. The _____ refers to the aggregation of firms which use the same raw material.
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a.Plant b.Firm c.Organisation
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57. Total assets refers to the _____.
a. Total of current assets b.Total of liquid assets c.Total of fixed assets
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d. Total of current assets and fixed assets

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58. _____ is an average firm and is generally used as a standard of reference.

a. Optimum firm b.Representative firm c.Equilibrium firm d.Profitability
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59. The _____ developed the concept of euilibrium firm.

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a.A.C.Pigou b.Alfred Marshal c.Adam Smith d.Prof.Haney

60. The _____ factors influence the optimum firm.
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a.Techinical b.Managerial c.Marketing d.All the above

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UNIT - IV
61. Trade associations are _____ organisations of independent business units in similar lines of
business.
a. Voluntary b.Non-profit c.Profitable d.Regional
62. There are_____ types of associations.
a.5 b.4 c.3 d.9
63. In trade association members continue to retain their_____.
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a.Name b.Objective c.Motive d.Identity
64. Ttrade unions act_____.
a.1923 b.1926 c.1928 d.1932
65. The _____ associations relate to a particular trade.
a.Trade associations b.Chamber of commerce c.Trade unions d.Informal agreements
66. The _____ comprises of those who are engaged in the same trade.
a.Name b. Region c. Membership d.Trade
67. In _____ the members are from a particular region and may be engaged in different trades.
a. Trade association’s b.Chamber of commerce
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c.Trade unions d.Informal agreements
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68. The _____ was set up in 1927 on the advice of Mahatma Gandhi.
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a.SEDF b.AIOE c.ICA d.FICCI
69. The CC provides feedback to the _____ with regard to members opinions of government
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policies. er
a. Firm b.Business c. Government d.Organisation
70. The _____ are the functions of chamber of commerce.
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a.Communication b.Making representation c.Necessary informations d.All the above

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71. The _____ are the set of rules and standards that guide behaviour.
a. Character b.Code of conduct c.Ethics d. Principles
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72. The word ethics is derived from the _____ word.

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a.Ethi b.Ethical c.Etial d.Ethos

73. According to Peter Drucker,the objective of any business is to_____.
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a.Stock holders b.Create goodwill c.Create privacy d.Create customs

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74. The _____ specify the actions in the workplace.

a.Code of conduct b.Code of practice c.Code of ethics d.Code of legal activity
75. Business and society enjoy a _____ relationship.
a.Corporate b.Symbiotic c.Profitable d.Departmental
76. The word ethics emerged from_____ word.
a.Latin b.French c.English d.Spanish
77. The concept of B.E came into focus in 1970`s in_____.
a.Australia b.Africa c.India d.USA
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78.The _____ play an important role in influencing business ethics.
a.Coporate b.Individual c.Leadership d.Society
79. The chamber of commerce has made representations to the government regarding the _____.
a. FBT b. FCT c. FRE d. FTR
80. The _____ are the reasons for businesses to follow business principles.
a. Reputation b. Brand image c. Employee trust d. All the above
UNIT - V
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81. The _____ is a market for buying and selling of existing securities of different companies.
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a. Money market b. Capital market c. Issue market d. Stock exchange
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82. The _____ stock exchange is considered as the oldest stock exchange in the world.
a. Amsterdam b. American c. Britian d. Indian
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83. The first stock exchange in India was established in the year _____.
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a. 1873 b. 1874 c. 1875 d. 1876
84. The _____ are issued by the companies in stock exchange.
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a. Shares b. Debentures c. Bonds d. All the above

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85. When the outlook for new investment is not attractive _____ light is used.
a. Orange b. Red c. Yellow d. Blue
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86. The Madras stock exchange was started in the year _____.
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a. 1934 b. 1935 c. 1937 d. 1938

87. The oldest stock exchange in India was _____.
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a. NSE b. BSE c. CSE d. DSE

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88. The BSE introduces a new group called the ____ in the year 1999.
a. A b. W c. X d.Z
89. The NSE was establisheb in the year _____.
a. 1992 b. 1986 c.1998 d. 1985
90. NSE commenced operation in the wholesale debt market in the month of _____.
a. January b. March c. June d. July
91. The _____ brokers execute orders of their customers by buyins and selling of securities on
the exchange.
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a. Floor b. Jobbers c. Odd lot dealers d. Commision
92. A speculators who anticipates fall in the price of securities is known as _____.
a. Bull b.Bear c. Stag d. Lame duck
93. There are _____ types of transactions takes place in stock exchange.
a. 2 b.4 c. 3 d. 7
94. A _____ order is one which is active for a week.
a. Market b.Week c. Limit d. Day
95. The ______ act as a link between the depositories and investors
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a. Depository participants b. Depository link c. Depository price d. Deposit
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commission
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96. Capital market meet the _____ finacial requirements of businesses.
a. Short b. Medium c. All d. Long
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97. The process of converting physical securities into electronic form is known as _____.
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a. Demat b. Remat c. DP d. NSDL
98. The _____ will forward the request for remat received from the investor after verification
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a. AD b. RD c. DP d. SD
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99. The _____ hold securities of investors in electronic form.

a. Rights b. Contracts c. Custodian d. Depositories
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100. B group securities arealso known as _____.

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a. Cleaned b. Not cleaned c. Specified d. Listing

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SECTION – B
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Answer the following
UNIT – I
1. What can you infer from the term nature of business?

2. How would you clarify the meaning Trade and Commerce?
3. What would you like to demonstrate from the objectives of business?
4. How would you show your understanding towards the meaning of sole proprietorship
concern?
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5. What can you say about the characteristics of partnership firm?
6. Can you elaborate the reasons behind the demerits of a company?
7. How will you compare Business and Profession?
8. How would you apply what you have learned to develop the qualities of a successful
businessmen?
9. What is the main idea of co-operative society?
10. What inference can you make towards the concept of public enterprises?
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UNIT – II
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11. What other ways would you plan for the location of business unit?
12. What could happen if localisation of industries increases?
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13. How would you clarify the meaning localisation of industries?
14. How would you categorize the process of business unit?
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15. What can you say about the localisation and de localisation of industries?
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16. What are Agglomerative and deglomerative factors?

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17. What statement supports the advantages of process layout?

18. How would you explain the merits of Delocalisation?
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19. What are the circumstances under which the problem of plant location may arise?
20. How would you relate the Location and Site?
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UNIT – III
A
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21. How would you choose the size of business unit?

22. How would you clarify the objectives of business unit?
23. What could happen if large scale operations increase?
24. What inference can you make from the term representative firm?
25. What are the features of optimum firm?
26. What can you say about the motives of large scale production?
27. What could be the result if large scale production increases?
28. How would you determine the measures of business unit?
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29. How would you develop the internal economies of scale?
30. What are the functions of large scale production?
UNIT – IV
31. What is trade asociations? How it is useful to its members?

32. How would you state the features of trade asociations?
33. How can you make use of the Trade asociations?
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34. How can you use the benefits of chamber of commerce?
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35. Can you predict the outcome if trade asociations in India increases?
36. Can you illustrate the role of chamber of commerce in India?
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37. What can you say about business ethics?
38. What factors would you select to show the importance of business ethics?
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39. What are the motives of business ethics?
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40. Can you elaborate on the reasons for the need of business ethics?
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UNIT – V
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41. What is stock exchange? How it is useful fot the investors?

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42. How would you show your understanding towards stock exchange?
43. What ideas justify the importance of stock exchange?
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44. How would you rephrase the weakness of stock exchange?

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45. What can you say about the role of stock exchange?
46. Explain in detail about the formation and trading in BSE?
47. Can you make a relationship between BSE and NSE?
48. Who were the main speculators? Can you explan them?
49. What ideas justify that Demat a/c is important?
50. Can you elaborate the concept of Remat a/c?
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SECTION-C
UNIT – I
1. Define business. Explain the scope of business.
2. How would you apply what you have learned to develop the sole proprietorship concern?
3. How would you classify the types of trade?
4. What changes could you make to solve the aids to trade?
5. Can you predict the outcome of successful business?
)
6. How can you describe the features of sole trading concerns?
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7. How would you clasify the types of partners?
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8. What ideas justify about the merits of public entreprises?
9. How would you demonstrate the characteristics of a company?
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10. How would you explain the limitations of co-operative society?
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UNIT – II
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11. Elaborate on the term factors inflencing location.

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12. How would you prioritizethe Weber’s theory?

13. Can you propose an alternate to the Sargent florence theory?
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14. How would you show the functions of process layout?

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15. What would be the result if localisation of industries increases?

16. What motive is there in delocalisation of industries?
A
17. How would you apply the characteristics of plant layout in industries?
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18. How will you illustrate the factors favourable for delocalisation?
19. How would you summarize the features of localisation of industries?
20. What changes would you make to solve the critism against the Weber’s theory?
UNIT - III
21. Can you elaborate the reasons for measuring the size of business unit?
22. How would you the factors determining the size of business firm
23. What are the pros and cons of large scale business unit?
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24. Can you elaborate the reasons for the survival of small scale undertakings?
25. What would you say about the equilibrium firm?
26. How would you improve the implications for optimum firm?
27. How would you classify the types of firm?
28. What is the theme of external economies?
29. How would you demonstrate the scope of large scale production?
30. What changes could you make to improve the large scale of production?
)
UNIT - IV
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31. What is the theme of Trade Associations?
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32. Will you interpret the advantages of trade associations in your own words?
33. What are the functions of Chamber of Commerce?
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34. Can you make a distinction between Trade Associations and Chamber of Commerce?
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35. What is Trade Associations? Can you list the types of Trade Associations?
36. How would yoy summarize the types of Chamber of Commerce?
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37. How would you show your understanding towards the importance of Chamber of
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Commerce?
38. How would you simplify the features of Business ethics?
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39. Can you predict the outcome if business ethics is followed in business?
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40. How would you inspect the factors influencing the business ethics?
A
UNIT - V
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41. Explain the history and evolution of Stock exchange.

42. What is the main motive of Stock exchange?
43. How would you determine the features of SEBI?
44. How can you explain the chracteristics of BSE?
45. What is the main idea of NSE? State its functions.
46. How would you shoe the recent developments in primary market?
47. What are the methods can be used for trading in Stock exchange?
48. How would you apply what you learned in the purchase and sale of Demat account?
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49. What other ways would you plan to use Demat account?
50. How would you critize the Remat account?
ANSWERS FOR SECTION A:
1. a 21. b 41. a 61. a 81. d

2. c 22. a 42. d 62. c 82. a
3. a 23. d 43. d 63. d 83. c
4. c 24. b 44. c 64. b 84. d
5. c 25. a 45. a 65. a 85. b
)
6. a 26. b 46. b 66. c 86. c
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7. b 27. c 47. a 67. b 87. b
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8. d 28. a 48. d 68. d 88. d
9. c 29. b 49. b 69. c 89. a
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10. c 30. d 50. a 70. d 90. c
11. a 31. a 51. b 71. c 91. d
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12. b 32. b 52. a 72. d 92. b
13. b 33. c 53. c 73. d 93. c
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14. d 34. a 54. b 74. a 94. b

15. b 35. d 55. c 75. b 95. a
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16. d 36. c 56. d 76. a 96. d

17. c 37. b 57. d 77. d 97. a
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18. a 38. c 58. b 78. c 98. c

19. a 39. a 59. a 79. a 99. d
SC
20. b 40. a 60. d 80. d 100. c

A
K
13
(AUTONOMOUS)
COIMBATORE-641029
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ce
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QUESTION BANK
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TITLE OF THE PAPER: BUSINESS COMMUNICATION
A
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APRIL 2019
1
Question Bank
BUSINESS COMMUNICATION
CONTENTS
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1 Section A 3
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2 Section B 10
3 Section C 12
4 ce
Key for Section A 14
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A
Prepared by
K
G.Vanithamani
Assistant Professor, Department
of Commerce (UG),
Coimbatore-29.
2
SECTION A
CHOOSE THE CORRECT ANSWER
UNIT – I
1). Communication is …….. of facts, ideas, opinions by two or more persons.
a). Exchange. b). Foreign exchange. c). Control. d). None of the above.
2)…………… channel of communication called the grapevine.
a). Formal. b). Informal. c). Horizontal. d). None of the above.
3). The main objective of communication is ………
a). Information and persuasion. b). Skill and personality development c). Control and
management. d). None of the above.
)
4). The downward communication flow from …….
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a). A subordinate to a superior. b). A subordinate to a subordinate. c). A superior to a
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superior. d). A superior to a subordinate.
5). Examples of oral communication …………
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a). Letter b). E-mail c). Telephone d). None of the above.
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6). How to make audio-visual communication effective?
a). The pictures are colourfulb). Clearly written. c). Speak politely d). None of
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the above.
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7). Advantage of written communication …………

a). Save time b). Save money c). Permanent record. d). None of the above.
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8). Written communication includes ……………..

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a). Reports & forms b). Interviews c). Film d). None.
9). Communication saves time ……..
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a). Internal communication b). Interview c). Oral communication d). Schedule.
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10). The most important part of the letter is ………

a). The heading b). Date c). Body of the letter d).Post script.
11). Advantage of oral communication ……
a). Permanent record b). Legal document c). Save time d). None.
12). Normal salutation in chairman’s speech will be …………..
a). Ladies and Gentlemen b). Dear Sir c). Respected Sir d). Madame.
13). Internal communication is a communication between ………
a). Banker and customer b). Superiors and subordinate c). Salesman and buyer
d). Insurance company and its customer
14). Telephonic conversation is a …………
3
a). Verbal communication b). Non-Verbal communication c). Visual
communication d). None.
15). Envelopes containing transparent papers to show the address are called …….
a). Window envelops b). Easy envelop c). Address envelop d). Front envelop
16). In the communication cycle, the process of retranslation of signals into ideas is
called ……….
a). Encoding b). Decoding c). Response d). Feedback.
17). If each line in the inside address is started after leaving a small gap, it is known as
…………
a). Block form b). Correct form c). Indented form d). Address form.
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18). The inside address should be written ………
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a). Below the Salutation. b).Above the heading c). Above the Salutation. d). Above the
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date.
19). Reports from the subordinates to the superiors take the form of ………
a). Upward communication.
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b). Downward communication. c). Face-to-face
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communication. d). Visual communication.
20). Pictures, slides, films fall under ………
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a). Body languages. b). Audio-visual communication. c). Reporting. d)Visual

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communication.
UNIT – II
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21). Communication in an organization should ideally flow…………

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a). From top to bottom b). From bottom to top c). Both ways. d) None
of these
A
22). The official record of the proceeding of a meeting is known as ….

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a). Agenda b). Minutes c). Prospectus. d) Association

23). The participants of a board meeting are ……….
a). Member b). Directors c). Member and directors. d)
Managers
24)………. are the official records of the proceeding of a meeting.
a). Agenda b). Minutes c). Noticed). None of the above.
25). Minutes of resolutions is only resolutions ………
a). Recorded b). Development c). Decision-making d). None of the above.
26). A report is a basic management tool used in ……….
a). Personality development. b). Decision–makingc). Individual development.d). None
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27). Press reports refers to ………
a). Reports in newspapers b). Reports through letters
c). Oral communication d). None of the above.
28). An informal report is usually in the form of a ………. Communication.
a). Person to person. b). Prescribed form.
c). Regular intervals. d). None of the above.
29). A concise and accurate record of the proceedings at a meeting is called as …
a). Resolution b). Minutes c). Invoice. d) Agenda
30). List of items of business to be considered at a meeting is called as …….
a). Agenda b). Dividend c). Prospectus. d) Minutes
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31). An Agenda prepared in connection with ………..
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a). Meeting b). Business tours c). Exhibition d). None of these.
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32). Minutes of a meeting are usually prepared by ……….
a). Secretary b). Chairman c). Shareholder d). None of these
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33)…… is a communication which contains the decision of the higher authority of the
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organization.
a).Amendment b). Resolution c). Debate d). None of the above.
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34)………. reports are related to a single occasion or situation.

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a). Special b). Periodic c). Informal d). None.

35).A collection letter is associate with ………
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a). Debtors b). Creditors c). Excellent. d) Bank

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36). A report prepared in a prescribed form and presented according to an established

procedure is ….. report.
A
a). Formal b). Informal c). Statutory. d) None of

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these
37). A report given by a secretary to the Marketing Director may be called as ….
a). Formal b). Informal c). Oral d). Personal.
38)….. is done by drawing a list of the items of business to be transacted at the meeting.
a). Minutes b). Resolution c). Invitation d). Agenda.
39). The minute books are the ….. book of the company.
a). Subsidiary b). Statutory c). Obligatory d). Secondary.
40). The value mail, E-mail, Video conferencing etc., some of the ……… based media
of communication.
a). Computer b). Traditional c). Science d). Rules.
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UNIT – III
41). A circular is a form of …………
a). Oral communication b). Face-to-face communication
c). Group communication d). None of these
42). C.I.F. means ………..
a). Cost, Indent and Freight. b). Cost, Insurance and fare.
c). Cost, Insurance and Freight. d). None of the above.
43). Letter of credit is issued …….
a). By Bank. b). By supplier. c). By customer. d). None of the above.
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44). A substantial amount of trading involves ………
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a). Credit b). Cash c). Direct selling d). E-mail.
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45). For a buyer, making enquiries is the ………
a). First stage b). Second stage c). Third stage d). None of the above.
46). Circular letter is mental for ………
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a). Mass communication b). Personal communication
c). Secret communication d). None of the above.
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47). One of the following directly relates to provision of credit …………..

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a). Current Account b). Savings Account

c). Recurring deposit d). Discounting Bills.
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48). Marine insurance is effected FPA. FPA denotes ………

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a). Free of particular Average. b). Free of particular Assignment.

c). Free of partial Average. d). None of the above.
A
49). The exit communication takes place when an employee ……….. the organization.
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a). Enter into b). Learning from c). Both. d) Leaves

50). Clearance sales refer to ………..
a). Sale of pure chemicals b). Sale of detergents c). Sale of food products. d). None
of the above.
51). Testimonial refers to …….
a). Conduct Certificate b). Test marks. c). Course Certificate d). None
52). The enquiry letters sentences should be ……….
a). Simple and short .b). Very long. c). long. d). None of the above.
53). The reply to the complaints and claims of a customer is called ………
a). Adjustment b). Collection. c). Correction d). Circular.
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54). In the names by the private limited companies are …………
a). Private limited b). Private company c). Limitedd).Public company.
55). The greatest problem of every business house is the ……..
a). Payment of salary b). Receiving Money.
c). Collection of debts. d). None of the above.
56). Letters written to those customers who fail to make payment of the amount due
within the stipulated time is ………..
a). Circular letters. b). Regret letters. c). Collection letters. d) Application letter.
57). A part of application letter which gives details about the education, experience and
other details is called as ……….
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a). Bio-data b). Order c). Interview. d). Letter part
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58). “Introducing a new model car” – The letter of this type is called as …..
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a). Collection letter b). Sales letter c). Remainder. d).
Application letter.
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59). The single largest medium of business communication is ……….
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a). Pager b). Fax c). Business letter d). E-mail
60). The purpose of collection letter is …………..
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a). To motivate the buyer to buy b). To motivate the buyer to pay.
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c). To ask the customer to collect the goods d). Announcing the rebate, discount
UNIT – IV
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61). Marine Insurance relate to ……

SC
a). Sea risk b). Fire risk c). Life risk d). None of the above
62). Re-insurance is insurance for ………….
A
a). Brokers b). Traders c). Insurers. d) Depositors

K
63). A letter which is containing an issue in the newspapers is called as …….

a). Editor’s letter b). Letter to the Editor. c). Friendly letter d). General letter.
64). Bio-data means ……..
a). Personal history b). Birth Certificate c). Mark sheet d). Conduct Certificate.
65). FAS means ……….
a). Free Alongside ship b). Free After Sales Services
c). Free Air Service d). None of the above.
66). Bill of Lading is issued by ……….
a). Exporter b). Importance c) The ship’s master transporting goods d). None
67). Credit card ………
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a). Is a Deposit account b). Is used for jewel ban.
c). Is used to buy goods on credit d). None of the above.
68). Marine Insurance is related to ………
a). Cargo b). Goods transported through lorry c). Godowns d). None of the above.
69)… is a device by which losses suffered by a few are shared by many.
a). Insurance b). Agency c). Both d). None.
70). Theinsurance company scrutinizes the proposal, assess the risk and fixes a …. to be
paid.
a). Premium b). Discount c). Interest d). None.
71). Insurance cannot ………… the risk.
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a). Percent or Control b). Accept c). Liable d). None of the above
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72). Abbreviate FAA …..
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a). Free of All Average b). Freight of All Average
c). Free of Assurance Average d). None of the above
73). Life Insurance is often described as ………
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a). Life Assurance b). Life Saving
c). Saves Time d). None of the above
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74). For Consideration ….

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a). Adopt the you-attitude in your message b). Avoid gender bias. c). Emphasize
positive, Pleasant facts d). All the above.
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75). Correctness implies ….

SC
a). Giving correct facts b). At an appropriate time c). In a suitable d). All the above.
76)…. Are welcome, for it is not obligatory to accept them.
A
a). Suggestion b). Order c). Courtesy d). None.

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77)…. Communication is unsuitable for lengthy message.

a). Oral b). Written c). Vertical d). None.
78). Communication is something so simple and difficult that we can never put it in
simple words says ….
a). T.S.Matthews b). Peter.F.Drucker c). Newman d). None.
79)… may be less important for small business.
a). Letter-writing b). Telephone c). E-mail d). None.
80)… Communication is the most popular means of transmitting message.
a). Written b). Oral c). Visual d). Face-to-face.
UNIT – V
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81). An offer to sell goods at a price and conditions specified is called as ….
a). Pledge b). Prospectus c). Anotation. d) Minutes
82)Sometimes a letter carries along with it some other papers is called as ….
a). Copy right b). Enclosure c). Audit. d) Agenda.
83). A document giving full details of goods being sent is called as ………..
a). Agreement b). Adjustment c). Invoice. d) Enclosure
84). Sales Promotion Letter must possess “AIDA” qualities; ‘I’ stands for …….
a). Indifference b).Improvement
c). Interest d). None of the above.
)
85). An agent …….
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a). Acts as a buyer. b). Acts on behalf of another person or business.
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c). Acts as an owner of the business. d). None of the above.
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86). Chamber of commerce is a ……….
a). Voluntary organizations b). A group of Traders
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c). Profit organizations d). Non-Profit organizations.

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87). Agent generally handles goods of a number of manufacturers and their …. expenses
are spread over all the products.
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a). Overhead b). Miscellaneous c). Revenue d). None.

SC
88)… is a column in newspapers where readers can express their views on various
matters.
A
a). Letter to the editor b). Letter to collector c). Letter to C.M d). None.
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89) A letter which is containing an issue in the newspapers is called as …….

a). Editor’s letter b). Letter to the Editor. c). Friendly letter d). General letter.
90). Audio-Visual communication is most suitable for mass…. and mass ….
a). Publicity & Education b). Policies & Political c). Save & Store d). None.
91). Employees should encourage giving ….
a). Information b). Guidelines c). Suggestion d). Order.
92). Standard Sheets measuring …… are preferred these days.
a). 11”x 8 ½” b). 10”x 9 ½” c). 12”x 12 ½” d). None
93). The letter of acknowledgement …..
a). Provides a record b). Shows courtesy.
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c). Avoids misunderstanding d). Serves all the above purposes.
94). The letter should be based on …..
a). I attitude b). You attitude c) We attitude d). None of the above.
95). The reimbursement of expenses is generally made by the …..
a) Principal b). Agent c). Subordinate d). None of the above
96). Interpretation of data is followed by ……
a). Recommendation b). Suggestion c). Conclusions d). None of the above.
97). Communication network in any organization is …………
a). Internal & External b). Verbal & Written c). Oral & Non-Verbal d). Feedback.
98).Ability to communicate effectively ………
)
a). Is inborn b). Can be developed c). Can’t be developed d). Is not necessary.
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99). Empathy leads to …..
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a). Greater receptivity b). More involvement c). Greater focus d). None of the above.
100). In telephonic talk the message should be ……..
a). Brief b). Convoluted c). Evasive
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d). All the above.
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SECTION – B
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UNIT – I
1). What is meant by communication? How would you make communication effective?
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2). Write an explanatory note on the communication cycle.

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3). What are the various forms of written communication?

4).What is the merits of oral communication?
A
5). What do you mean by Lateral communication and its name?

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6). What are the limitations of downward communication?

7). Briefly discuss the importance of Listening in communication.
8). Discuss the importance of appraisal interviews.
9). Illustrate blocked and indented form of inside address.
10). What are the different forms of oral communication? How can oral communication
be made effective?
Unit – II
11).What are the requisites of a good press report?
12). Briefly discuss the various kinds of committees.
13). What are the different types of reports?
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14). Explain the steps in preparing a report.
15). Compare and contrast written communication with oral communication.
16).What is the sources of Information?
17). How to make effective advice?
18).What is order? Explain its types.
19).What is the characteristics of effective order?
20). How would you distinguish between advice and counseling?
Unit – III
21). Mention the physical aspect of a business letter.
22). Explain the stages in collection letter.
)
23). What are the occasions in which we write circular letter?
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24). Explain the features of collection letter.
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25). Explain the advantage of sales letter.
26). Prepare circular letter announcing the introduction of a new partner.
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27). State the occasion that warrant the writing of compliant letters.
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28). What are the parts of a business letter?
29). Mention any four factors that can give rise to complaints.
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30). Mention the situation that need circular letter.

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Unit – IV
31). What are the functions of Business correspondence?
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32). Give a model Bio-data.

SC
33). What do you mean by agency correspondence?

34). Draft a letter to a Book Publisher complaining about the defective books received by
A
you.
K
35). Write a letter to a Bank for opening an SB account for you.

36). Draft a circular in connection with reduction sale of Textiles.
37). Write a letter informing LIC of your remitting Premium.
38). Draft a letter seeking Agency for Detergent cakes of popular brand.
39).Prepare a Report of a Sales Manager to General Manager of an organization
regarding increasing competition and strategy to overcome it.
40). Draft a letter cancelling your order placed some days earlier. Give reasons for your
cancellation.
Unit – V
41). Write a short not on the art of persuasion.
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42). What is meant by morale? How can the morale of the workers be kept high?
43). What is mailing notation?
44). A good letter never says ‘no’. Do you agree? How can the writer of a business letter
avoid the use of ‘no’?
45). How the grapevine operates?
46). Write a note on importance of effective communication.
47). What are the objectives of communication?
48). Explain the various methods of upward communication.
49). Explain ‘Oral communication’.
50). Explain the essential features of layout of a letter.
)
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SECTION – C
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UNIT – I
1). Write a note on the need and importance of business communication.
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2). What do you mean by communication? Explain the process of communication.
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3). Discuss the relative merits and limitation of written communication.
4). Compare and contrast written communication with oral communication.
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5). Explain the various methods of upward communication.

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6). Explain the socio-psychological barriers in communication.

7). What are the barriers to communication?
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8). Explain the different types of communication in detail.

SC
9). What are the main objectives of downward communication and limitation?
10). What are the essentials of oral communication?
A
K
UNIT – II
11). What are the types of reports? Explain in detail.
12). Discuss the characteristics of a good business repost.
13). Explain the important principles to the followed in the preparation of business
reports.
14). Explain the importance of effective communication in business.
15). Describe the various forms of verbal and non-verbal communication.
16). What do you mean by listening? What are its advantages? Suggest measures for
becoming a good listener.
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17). What is meant by “media of communication”? Explain the classification of media of
communication.
18). What do you understand by “communication”? Discuss the importance of business
communication.
19). Briefly discuss the importance of audio-visual communication. How can it be made
effective?
20). What are the determinants of effective communication system?
UNIT – III
21). What are the stages of collection letters?
22). Discuss the form and contents of an application letter.
)
23). What are the hints for writing collection letters?
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24). What is D.O. letter? Mention any two situations in which it desirable to write a D.O.
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letter.
25). What are form paragraphs? What are the advantages and disadvantages of writing
form paragraphs?
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26). Write briefly notes on the following:
a) Form letter
m
b) Memos
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c) Business letter as a means of spreading goodwill.

27). Draft a model adjustment letter.
28). Write the hints of drafting a “Reply”.
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29). How to draft an order?

SC
30). Discuss the role of communication in Business.

A
UNIT – IV
K
31). Write a tactful letter to a customer who is in the habit of deducting discount even
though his payments are made too late.
32). Draft a model letter of advice of shipment to a commission agent.
33). Draft a letter from Branch Manager to General Manager of a Bank on feasibility of
opening a new branch in the nearby area.
34). Write a letter to a fire Insurance company requesting to settle the claim for damages
due to fire.
35). Draft a circular announcing the admission of a partner.
36). Draft an application for the post of Sales Manager in a Pharmaceutical Organization.
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37). Draft a typical Director’s Annual Report.
38). Draft a speech delivered on the Occasion of Golden Jubilee celebrations of India’s
independence in a college on a topic: “Current trends in Education”.
39). Draft a report by committee of directors of Selvi & Co., Ltd., Erode to enquire into
the possibilities of opening a new branch at Coimbatore.
40). A shareholder writes to the Secretary, Premier Mills Ltd., Coimbatore, enquiring
whether the company would declare the same dividend this year as it did in the previous
year. Draft the secretary’s reply.
UNIT – V
41). Explain the golden rules for writing a good precis.
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42). What is a form letter? Give any four examples of a form letter.
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43). Describe important element of a quotation.
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44). What kind of communication networks would you recommend for an organization
suffering from poor communication?
45). What are the golden rules of precis writing?
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46). How to write a precis?
47).Why does an organization need multiple channel of communication?
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48). What is meant by rubber-stamp opening paragraph? Give two examples of such an
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opening.
49). What details are usually in the heading of a business letter?
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50). In what case can the use of postscript be justified?

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ANNEXURE
UNIT I
1. a) Exchange 11. c) Save time
2. b) Informal 12. a) Ladies and gentlemen
3. a) Information & Persuasion 13. b) Superiors and subordinates
4. d) A superior to a superior 14. b) Non-verbal communication
5. c) Telephone 15. c) Address envelop
6. a) The pictures are colourful 16. b) Decoding
14
7. c) Permanent record 17. c) Indented form
8. a) Reports & forms 18. c) Above the salutation
9. c) Oral communication 19. a) Upward communication
10. c) Body of the letter 20. b) Audio-visual communication
UNIT II
21. d) None of these 31. c) Exhibition
22. b) Minutes 32. b) Chairman
23. a) Member 33. b) Resolution
24. a) Agenda 34. a) Special
25. a) Recorded 35. d) Bank
26. a) Personality development 36. b) Informal
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27. b) Reports through letters 37. a) Formal
28. b) Prescribed form 38. a) Minutes
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29. b) Minutes 39. a) Subsidiary
30. b) Dividend 40. d) Rules
UNIT III
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41. c) Group communication 51. b) Testmarks
42. c) Cost, Insurance & Freight 52. a) Simple & short
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43. a) By bank 53. a) Adjustment

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44. a) Credit 54. b) Private company

45. a) First stage 55. c) Collection of debts
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46. a) Mass communication 56. c) Collection leeters

47. a) Current account 57. a) Bio-data
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48 a) Free of particular average 58. b) Sales leeters

49. c) Both 59. d) E-Mail
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50. d) None of these 60. b) To motivate the buyer to pay

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UNIT IV
61. a) Sea risk 71. a) Percent (or) Control
62. c) Insurers 72. a) Free of all average
63. a) Editor’s letter 73. a) Life assurance
64. a) Personal history 74. d) All the above
65. a) Free alongside ship 75. d) All the above
66. c) The ship’s master transporting goods 76. a) Suggestion
67. c) Is used to buy goods on credit 77. a) Oral
68. a) Cargo 78. a) T.S.Mathews
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69. c) Both 79. a) Letter-writing
70. c) Interest 80. b) Oral
UNIT V
81. b) Prospectus 91. c) Suggestion
82. a) Copyright 92. a) “11*8 ½”
83. c) Invoice 93. d)Serves all the above purposes
84. c) Interest 94. b) You attitude
85. b) Acts on behalf of another person or 95. c) Subordinate
business
86. a) Voluntary association 96. b) Suggestion
87. a) Overhead 97. a) Internal & External
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88. a) Letter to the editor 98. b) Can be developed
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89. a) Editor’s letter 99. c) Greater focus
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90. a) Publicity & education 100. d) All the above
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16
(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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SUBJECT CODE: 18-*UCM1A1

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TITLE OF THE PAPER: BUSINESS ECONOMICS

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NOVEMBER 2019
Question Bank
BUSINESS ECONOMICS
CONTENTS
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1 Section A 1
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2 Section B 8
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3 Section C 9
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4 Key for Section A
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Prepared by
S. KALPANADEVI
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Coimbatore-29.
BUSINESS ECONOMICS
SECTION A
UNIT I
1. The English word economics is derived from the ancient Greek word --------------
a. Oikonomia b. Oikonomie c. Aikonomia d. Eikonomia
2. Adam smith is the great ------------ economist.
a. Swedish b. Norwegian c. American d. Scottish
3. Welfare definition for economics was introduced by-------------
a. Adam Smith b. Alfred Marshall c. Aristotle d. Lionel Robbins
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4. The most accepted definition of economics was given by Lord Robbins in -----------
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a. 1934 b. 1935 c. 1932 d. 1945
5. Economics is the science of making -------------
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a. Opinions b. Ends c. Wants d. Choices
6. ------------ definition for economics was introduced by Prof.Paul Samuelson
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a. Wealth b. Scarcity c. Welfare d. Growth
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7. Economics is both positive and ---------------- science

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a. Normative b. Negative c. Inductive d. Deductive

8. ------------ method of economics descend from the general to particular
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a. Traditional b. Modern c. Inductive d. Deductive

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9. Economics is both science and -----------

a. Art b. Commerce c. Statistics d. Research
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10. ----------- method of economics mounts up from particular to general

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a. Positive b. Negative c. Inductive d. Deductive

11. ----------would mean creation of utility or producingthings for satisfying human wants.
a. Production b. Public Finance c. Exchange d. Distribution
12. ----------economics is also called as price theory.
a. Macro b. Micro c. Positive d. Normative
13. The science of economics centers on want –effort - -------------
a. Need b. Consumption c. Satisfaction d. Scarcity
14. Macro economics is otherwise known as ----------- theory
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a. Expenditure b. Cost c. Sales d. Income
15. Wants – satisfying capacity of a good is called ------------
a. Demand b. Satisfaction c. Services d. Utility
16. The ut ilit y derived from the first unit of commodit y is called --------- utilit y.
a. Init ial b. Marginal c. Average d. Total
17. Law of-------------- Utility is the foundation stone of utility analysis.
a. Diminishing marginal b. Equi-Marginal c. Marginal d. Diminishing
18. Utilit y can be measured in t he number system.
a. Ordinal b. Cardinal c. Roman d. Arithmet ic
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19. l a w o f E q u i M a r g i n a l U t i l it y w a s p r o p o u nd e d i n t h e - - - - - - - - - -
c e nt u r y
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a. 1 8 t h b. 1 9 t h c. 20th d. 17th
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20. Utility is -----------
a. Subjective b. Objective c. Irrelative d. None of these
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UNIT II
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21. Thehigher the price of the commodity, the --------- the quantity demanded.
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a.Decreasing b. Lower c. Upper d. Standard

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22. Without ---------, no business would ever bother producing anything.

a.Saless b. Demand c. Profit d. Consumer
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23. Law of demand governs the relationship between quantity demanded and ----------
a. Cost b. Price c. Income d. Revenue
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24. --------- means everything remains the same other than price.
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a. Seteris Paribas b. Ceteris paribus c. Veteris d. Deteris peri

25. Demand --------- is a tabular column depicts different prices for a given commodity.
a. Line b. Curve c. Schedule d. Statement
26. -------- extends or contracts for a change in price.
a. Income b. Sales c. Demand d.Profit
27. ---------- means responsiveness of demand to the change in price
a. Elasticity b. Inelasticity c. Rigidity d. Flexibility
2
28. Small change in price, big change in demand = ---------- elasticity of demand
a. Perfect b. Unit c. Zero d. Negative
29. Unit elasticity of demand = ----------
a. E=1 b. E=0 c. E*1 d. E*2
30. ---------- devised a geometrical method for measuring elasticity at a point.
a.Prof.Marshall b. Adam Smith c. Augustin cournot d. Robbins
31. ---------method = Price *Quantity demanded
a. Arc b. Point c. Price d. Total outlay
32. --------- demand is defined as a quantity demanded by a single consumer
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a. Autonomous b. Individual c. Market d. Industry
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33. Demand of non-durable goods are also known as demand of --------- goods
a. Perishable b. Non perishable c. Fast moving d. Consumer
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34. Demand based on the price of the substitute is called -------- demand.
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a. Income b. Cross c. Price d. None of these
35. When the income of the consumer increases the demand --------
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a. Decreases b. Constant c. Increases d. Nil

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36. Giffen Goods are the ---------- goods

a. Cheaper b. Costlier c. Superior d. Inferior
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37. -------- demand represents the demand of complementary goods

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a. Derived b. Market c. Joint d. Organization

38. The difference between what we pay and what we have to pay is called -------- surplus
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a.Consumer b. Producer c. Seller d. Distributor

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39. The concept of consumer's surplus is criticised as an --------- concept

a. Applicability b. Imaginary c. Statistical d. All the above
40. Demand curve always slopes ---------
a. Upwards b. Vertically c. Horizontally d. Downwards
UNIT III
41. Production is the result of co-operation of land, Labour, capital and ---------
a. Rentb. Profit c. Organisation d. Producer
42. --------- refers to the functional relationship between the input and output
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a. Consumer surplus b. Production function c. Consumption d. Production
43. The relationship between the price and quantity supplied is ---------
a. Negative b. Indirect c. Direct d. Inverse
44. --------- is what the seller is able and willing to offer for sale.
a.Production b. Supply c. Stock d. Sales volumes
45. -------- is the most important factor that influences supply of a commodity.
a. Income b. Technology c. Climate d. Price
46. Supply changes a little or negligibly, it is -------- elastic
a. Less b. More c. Low d. High
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47. ---------- is the determinant of supply
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a. Goods b. Services c. Stock d. All the above
48. Resource owners earn -------- in return for land
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a. Wages b. Revenue c. Profit d. Rent
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49. ---------- includes machinery, tools and buildings
a. Capital b. Enterprise c. Business d. Labour
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50. --------- is just the facilitator of trade and not a factor

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a. Money b. Need c. Resources d. Technology

51. The law of -------- examines the production function with one factor variable
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a. Negative returns b. Returns to scale c. Variable proportion d. Positive returns

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52. The law of returns to scale describes the relationship --------- inputs and output
a. Standard b. Stable c. Fixed d. Variable
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53. If output of a firm increases equally to the increases in input then it is called --------
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returns
a. Constant b. Increasing c. Negative d. Diminishing
54. Under producer’s equilibrium all units of Labour and capital are---------
a. Heterogeneous b. Unique c. Homogeneous d. Fixed
55. The term scale of production refers to the ------- of a firm
a. Size b. Flexibility c. Profit d. Sales
56. -------- is one of the most important sources of internal economies.
a. Land b. Labour c. Technology d. Resources
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57. A large firm can utilize its ----------
a. By products b. Waste materials c. Materials d. Machinery
58. -------- made a distinction between internal and external economies of scale
a. Sweezy b. Robbins c. Samuelson d. Marshall
59. -------- capital tends to change over a period of time
a. Fixed b. Standard c. Fluctuating d. Short term
60. Production and consumption are -----------
a. Interdependent b. Independent c. Supplement d. Compliment
UNIT IV
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61. The term market is derived from ------- word
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a. Greek b. Latin c. Spanish d. French
62. The movement of goods throughout the world is called -------- market
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a. Domestic b. Regional c. National erd. International
63. Highly perishable goods come under--------- market
a. Spot b. Short period c. Future d. Long period
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64. Large number of buyers and sellers come under -------- competition
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a. Monopoly b. Oligopoly c. Perfect d. Duopoly

65. -------- has only one or single seller
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a. Perfect b. Monopoly c. Oligopoly d. Duopoly

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66. ---------- means a place where buyer and seller meets together
a. Stores b. Market c. Region d. Port
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67. Monopolistic competition consist of ---------- goods.

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a. Differentiated b. Unique c. Durable d. Inferior

68. Duopoly was constructed by -----------
a. David Ricardo b. Amartya Sen c. Augustin Cournot d. Gary Becker
69. The word kinked means ---------
a. Twist b. Line c. Dot d. None of these
70. --------is one of the important features of oligopoly market
a. Many sellers b. Dependence c. Free entry d. Advertising
71. ---------- competition incurs heavy selling cost
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a. Perfect b. Imperfect c. Monopolist d. Pure
72. In perfect competition, there is absence of ---------- cost
a. Manufacturing b. Transport c. Selling d. Maintenance
73. Under monopoly firm is itself an --------
a. Industry b. Corporation c. Business d. State
74. -------- refers to price discrimination when different prices charged for different places
a. Personal b. Geographical c. Usage d. None of these
75. Price discrimination helps the firm to earn --------
a. Goodwill b. Revenue c. Subsidies d. Incentives
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76. First degree price discrimination is practiced by -----------
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a. Railways b. Airlines c. Museums d. Doctors
77. Monopolist is always a ---------
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a. Price taker b. Price maker c. Price giver
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78. --------- price is the price where the goods supplied is equal to goods demanded
a. Equilibrium b. Equal c. Standard d. Fixed
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79. --------- is a market structure with a small number of firms

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a. Duopoly b. Monopoly c. Oligopoly d. Triopoly

80. -------- is one of the example of pure monopoly
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a. Public utilities b. Private firm c. Lawyers d. Cinemas

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UNIT V
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81. --------- = consumption+investment

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a. National income b. Real income c. Personal income d. Disposable income

82. ------- is the total value of goods and services produced in a country during a year
a. GNP b. GDP c. NDP d. NNP
83. NDP is the value of net ------- of the economy during a year
a. Input b. Income c. Revenue d. Output
84. GNP includes ------ types of final goods and services
a. Three b. Two c. Four d. Five
85. --------- investment means the difference between exports and imports
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a. Net foreign b. Net domestic c. Gross domestic d. Foreign
86. Income earned within the country from its own resources is called ---------- income
a. National b. Domestic c. Personal d. Real
87. -------- income = personal income – direct taxes
a. Disposable b. Private c. Real d. Per capita
88. Per capita income = national income ÷ ------------
a. Citizens b. Companies c. National expenses d. Population
89. Services of housewives are considered as ---------- under national income
a. Paid services b. Unpaid services c. Services d. Expenditure
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90. ---------- is a legal activity in England and included in national income
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a. Smuggling b. Gambling c. Horse racing d. All the above
91. --------- is deducted from GNP in order to arrive at NNP
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a. Direct tax b. Depreciation c. Indirect tax
er d. Personal expenses
92. Government spending on police, military etcare called -------- expenditure
a. Government b. Public c. State d. Domestic
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93. National income data helps in framing national policies like --------
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a. Investment b. Sales c. Industrial d. Employment

94. National income calculation is useful for ----------
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a. Economist b. Scientist c. Industrialist d. Politician

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95. Value added method is also known as --------- method

a. Production b. Consumption c. Expenditure d. Income
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96. -------- method approaches national income from distribution side

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a. Value added b. Production c. Output d. Income

97. The expenditure made on ------- should not be included while estimating GDP
a. Purchase of old share b. Second hand goods c. Fertilisers d. All the above
98. -------- income is income of a nation after adjusting for inflation
a. Real b. Personal c. National d. Gross
99. ---------- is the largest purchasing power country in the world
a. India b. China c. Japan d. England
100. National income helps in the growth of a country's ----------
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a. International trade b. Economy c. Employment d. None of these
SECTION B
UNIT I
1. Define the wealth definition of Economics.
2. What is your opinion towards the welfare definition of Economics?
3. Write a note on nature of Economics.
4. Distinguish the difference between deductive and inductive method of economic analysis.
5. Write about Utility.
6. How would you classify the various forms of Utility?
7. What facts show about the law equi marginal utility?
8. How would you evaluate the modern definition of Economics?
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9. Can you propose an alternative for scarcity definition?
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10. Can you identify the different features of Utility?
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UNIT II
11. What can you say about Demand curve?
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12. How would you classify the types of demand?
13. Illustrate the term demand schedule.
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14. Summarize elasticity of demand.
15. Will you interpret in your own words about income elasticity of demand?
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16. What can you say about cross demand?

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17. Can you explain what demand function is?

18. How would you summarize price elasticity of demand?
19. How would you rephrase the meaning of demand?
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20. What are the main features of demand?

UNIT III
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21. Simplify production function

22. Can you list the various factors of production?
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23. What conclusion can you draw from the law of variable proportion?
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24. What are the internal economies of scale of production?

25. What are the external economies of scale of production?
26. Illustrate law of negative returns to scale.
27. How would you categorize the factors influencing supply?
28. What can you say about the term supply?
29. Write a note on law of increasing returns to scale.
30. Can you classify the term capital?
UNIT IV
31. What is a market?
32. Classify the market under competition.
33. How will you summarize the term perfect competition?
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34. Write a note on equilibrium price.
35. What is your opinion about monopolistic competition?
36. How will you categorize the kinds of discriminating monopoly?
37. What is your opinion towards oligopoly?
38. What are the degrees of price discrimination?
39. Illustrate why monopolist is a price maker.
40. What are the main characteristics of perfect competition?
UNIT V
41. What is your idea about national income?
42. Can you list out the methods involved in calculating national income?
43. Write a note on personal income.
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44. Which statement extends the importance of gross domestic product?
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45. What is your opinion towards real income?
46. Why do you think calculation of national income is important for a country?
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47. How will you summarize disposable income?
48. Will you define net national product?
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49. Write about net domestic product?
50. Can you list out few factors that affect the calculation of national income?
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SECTION C
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UNIT I
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1. Disprove the term ‘Economics is a Science’

2. Can you assess the value or importance of Economics?
3. How would you prioritize the definitions of Economics?
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4. Identify the various methods used in economic analysis.

5. Explain the law of diminishing marginal utility.
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6. Compare the welfare and scarcity definition of Economics.

7. Explain the functions of Economics in shaping up of a country's economy?
8. Explain the relationship between the nature and scope of Economics.
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9. Justify law of equi marginalutility is an upgrade of law of diminishing marginal utility.

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10. Explain the term economic analysis.

UNIT II
11. Explain the term law of demand.
12. Identify the various kinds of price elasticity of demand.
13. Measure the elasticity of demand.
14. Evaluate consumer surplus
15. Can you assess the importance of demand?
16. Explain the different types of elasticity of demand
17. Describe the individual and market demand schedule.
18. Prove why demand curve slopes downwards.
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19. Outline the advantages and disadvantages of demand.
20. Illustrate the several aspects that do not support law of demand.
UNIT III
21. Distinguish between law of returns to scale and law of variable proportion.
22. Explain the production function table.
23. Illustrate the contribution of factors of production in effective production.
24. Explain the term producer’s equilibrium.
25. Demonstrate the various stages in law of variable proportion.
26. Relate the different phases in law of returns to scale.
27. Summarize in detail about economies of scale of production.
28. Outline law of supply
29. Rephrase in detail the term ‘production’.
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30. Explain the types of elasticity of supply.
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UNIT IV
31. Compare the classifications of market under different conditions.
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32. Demonstrate the price and output determination under perfect competition.
33. Explain in detail about price discriminating monopoly.
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34. Describe the Augustin Cournot model of duopoly.
35. Outline the merits and demerits of perfect competition.
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36. Illustrate why selling cost exist in monopolistic competition.

37. Explain the sweezy's kinked demand curve of oligopoly.
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38. Distinguish between oligopoly and duopoly.

39. Summarize the price and output determination under monopoly.
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40. Discuss about the domestic and international market.

UNIT V
SC
41. Explain in detail about national income.

42. Summarize the difficulties in calculating the national income.
A
43. Describe the factors to be considered while collecting data for national income
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calculation.
44. Demonstrate about gross domestic product in detail.
45. Compare the methods used in calculating national income.
46. Explain about value added method.
47. Illustrate why product method is one of the popular method in calculating national
income.
48. Explain about the problems faced in calculating national income.
49. Outline the role of national net product in enhancing the growth of a country.
50. Discuss about income method and expenditure method.
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Annexure
1.a 26.c 51.c 76.d
2.d 27.a 52.d 77.b
3.b 28.a 53.a 78.a
4.c 29.a 54.c 79.c
5.d 30.a 55.a 80.a
6.d 31.d 56.c 81.a
7.a 32.b 57.a 82.b
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8.d 33.a 58.d 83.d
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9.a 34.b 59.c 84.c
10.c 35.c 60.a 85.a
11.a 36.d 61.b 86.b
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12.b 37.c 62.d 87.a
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13.c 38.a 63.b 88.d
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14.d 39.b 64.c 89.b

15.d 40.d 65.b 90.c
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16.a 41.c 66.b 91.b

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17.a 42.b 67.a 92.b

18.b 43.c 68.c 93.d
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19.b 44.b 69.a 94.a

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20.a 45.d 70.d 95.a

21.b 46.a 71.c 96.d
22.b 47.c 72.b 97.d
23.b 48.d 73.a 98.a
24.b 49.a 74.b 99.a
25.c 50.a 75.b 100.a
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(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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A
TITLE OF THE PAPER: COMMERCIAL LAW

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NOVEMBER 2019
1
Question Bank
COMMERCIAL LAW
CONTENTS
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1 Section A 3
2 Section B
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3 Section C 14
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Prepared by
S.POORNI
Coimbatore-29.
2
SECTION A
UNIT -1
1. The law of contract deals with rights in ____________________.
(a) Personam (b) Rem (c) Dealings (d) Business
2. The Indian Contract Act was established in the year _____________.
(a).1872 (b) 1880 (c) 1870 (d) 1875
3. The Contract which is governed by separate act is _____________.
(a)Partnership act (b) Sale of goods act (c) Negotiable Instruments Act
(d) All of the above
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4. The general principles of the Law of Indian Contract Act is dealt in Section __________.
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(a)76 to 86 (b) 1 to 75 (c) 87 to 100 (d) 124 to 238
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5. The law relating to special contracts is dealt in section ___________.
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(a)1 to 75 (b) 124 to 238 (c) 1 to 50 (d) 60 to 100
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6. ____________ refers to every promise and every set of promises, forming consideration
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for each other.
(a)Agreement (b) Indemnity (c) Surety (d) Guarantee

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7. A proposal when accepted becomes a __________.

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(a)Agency (b)Surety (c) Promise (d) Guarantee
8.___________ is the person who is incompetent to contract.

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(a)Agent (b) Indemnifier (c) Minor (d) Guarantor

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9.______________means something in return.
(a)Consideration (b) Offer (c) Acceptance (d) Certainty
10. An agreement which is enforceable of law is said to be a ____________ contract.
(a)Valid (b) Void (c) Voidable (d) Illegal
11. A ______________ Contract is one which is enforceable at the option of one of the
3
parties to contract.
(a)Valid (b) Void (c) Voidable (d) Illegal
12. In a ____________ contract rights and obligations arise not by an agreement but by
operations by law.
(a) Express (b) Implied (c) Quasi (d) Wagering
13. In a ___________ contract, there must be mutuality in the sense the gain of one party
should be the loss to the other.
(a) Express (b) Implied (c) Quasi (d) Wagering
14. ___________________ is the foundation of every contract.
(a)Offer (b) acceptance (c) consideration (d) consent
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15.A person, whose mental powers are disordered is called a ____________.
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(a)Idiot (b) Lunatic (c) Intoxicated (d) Alien
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16. The term ___________ means forcibly compelling a person to enter into a contract.
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(a)Void ab initio (b) Quasi (c) Undue influence (d) Coercion
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17. ________________ means an intentional misstatement of facts, which are the material for
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the formation of a contract.
(a)Fraud (b) Misrepresentation (c) Coercion (d) Undue Influence

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18. _____________ means an incorrect belief which leads one party to misunderstand the
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Other.
(a)Fraud (b) Mistake (c) Misrepresentation (d) Coercion

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19. An agreement made without consideration is ___________.

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(a) Valid (b) Illegal (c) Voidable (d) Wagering
20. A promise to subscribe to the charity is a ____________.
(a)Valid contract (b) Voidable contract (c) Void agreement (d) Void contract
UNIT II
21. When the obligations created by a contract come to an end, the contract is ___________.
(a) Void (b) Voidable (c) Discharged (d) Breached
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22. The Normal and natural mode of discharging a contract is by _______.
(a).Performance (b) Mutual agreement (c) Impossibility (d) Operation of law
23. ______________ means substitution of a new contract in the place of the old one.
(a) Novation (b) Alteration (c) Remission (d) Waiver
24._______________ of contract means change in one or more of the terms of a contract.
(a) Novation (b) Alteration (c) Remission (d) Waiver
25. ______________ means the acceptance of less than what was contracted for.
(a)Remission (b) Rescission (c) Waiver (d) Merger
26. _____________ means cancellation of all or some of the terms of a contract.
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27.______________ means abandoning the rights.
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28. ________________ denotes coinciding and meeting of an inferior and superior right in
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one and the same person.
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(a) Merger (b) Performance (c) Mutual agreement (d) Novation

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29. The _____________ is neither allowed to deal with his property nor to pay any of his
Creditors.
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(a) Death (b) Merger (c) Alteration (d) Insolvency

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30.The ____________ of the contract means the failure of a party to perform his obligations.
(a)Discharge (b) Breach (c) Novation (d) Merger

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31. Where one of the parties to a contract commits breach, the other party may treat the
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contract as _____________.
(a) Rescission (b) Damages (c) Quantum meruit (d) Injunction
32. The term ____________ means monetary compensation payable by defaulting party to
aggreived party.
(a) Rescission (b) Damages (c) Quantum meruit (d) Injunction
33. Damages that arise in the ordinary course of events from the breach of contract are called
__________ damages.
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(a)Ordinary (b) Special (c) Exemplary (d) Nominal
34. _____________ damages are payable for the loss arising on account of some special or
unusual circumstances.
(a)Ordinary (b) Special (c) Exemplary (d) Nominal
35. Damages awarded in case of action on lost or breach of promise is called _________
Damages.
(a) Vindictive (b) Nominal (c) Special (d) Ordinary
36. ____________ damages are awarded to the aggrieved party when there is only technical
violation of the legal rights.
(a)Nominal (b) Exemplary (c) Special (d) Ordinary
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37.______________ is the amount of compensation fixed by an agreement between the
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parties.
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(a) Penalty (b) Liquidated damages (c) Interest (d) Injunction
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38.The amount specified in the contract at the time of contract is disproportionate to the
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damages likely to accrue in the event of breach, it is known as __________.

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(a)Penalty (b) Damages (c) Quantum merit (d) Injunction
39. _____________ means payment in proportion to the work done.

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(a)Quantum merit (b) Injunction (c)Penalty (d) Damages

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40. The term_____________ may be defined as an order of the court instructing a person to
refrain from doing some act that has been the subject matter of the contract.
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(a) Injunction (b) Quantum merit (c) Recession (d) Novation

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UNIT -III
41. ______ is a contract by which one party promises to save the other from loss.
(a) Indemnity (b) Guarantee (c) Bailment (d) Warranty
42. The person who promises or makes good the loss is called _______.
(a) Indemnity holder (b) Indemnifier (c) Bailer (d) Bailee
43. The person whose loss is to be made good is called ______.
(a) Indemnity holder (b) Indemnifier (c) Bailer (d) Bailee
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44. _______ section of the act deals with the contract of guarantee.
(a) 126 (b) 124 (c) 125 (d) 121
45. ______ is a contract to perform the promise or discharge the liability of a third person in
case of his defaults.
(a) Guarantee (b) Surety (c) Indemnity (d) Bailment
46. ______ is the person who gives the guarantee.
(a) Principal debtor (b) Creditor (c) Surety (d) Indemnifier
47. ______ is the person in respect of whose default the guarantee is given.
(a) Surety (b) Principal debtor (c) Creditor (d) Indemnity holder
48. ______ is the person to whom the guarantee id given.
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(a) Creditor (b) Indemnifier (c) Pledgee (d) Surety
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49. In case of guarantee, the number of parties involved are_______.
(a) 2 (b) 3 (c) 4 (d) 1 ce

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50. The number of contracts in a contract of indemnity is _______.
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(a) 2 (b) 3 (c) 4 (d) 1

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51. ______ guarantee is for good behaviour and honesty.
(a) Fidelity (b) Debt (c) Claim (d) Equities

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52. When two or more persons give a guarantee for the same debt, they are called as ______.
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(a) Sureties (b) Co-sureties (c) Principal (d) Agents
53. A surety is said to be discharged when his liability_______.

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(a) Comes to an end (b) Becomes void (c) Unlawful (d) Is voidable
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54. _____ is the delivery of goods by one person to another for some purpose.
(a) Pledge (b) Warranty (c) Guarantee (d) Bailment
55. The person who is delivering the goods is called _____.
(a) Bailer (b) Bailee (c) Pledger (d) Pledgee
56. The person to whom the goods are delivered is called the ______.
(a) Bailer (b) Bailee (c) Pledger (d) Pledgee
57. The bailment of goods as security for payment of a debt or performance of a promise is
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called _______.
(a) Pledge (b) Indemnity (c) Surety (d) Warranty
58. When a person finds an article and takes it into his custody he is called ______.
(a) Pledger (b) Bailer (c) Finder of goods (d) Agent
59. The position of a finder of lost goods is that of _______.
(a) Bailer (b) Bailee (c) Surety (d) Principal debtor
60. _____ guarantee relates to a series of transactions where the surety remains liable for a
Fixed sum till the continuance of guarantee.
(a) Specific (b) Continuing (c) Implied (d) Executed
UNIT IV
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61. The law relating to agency is contained in section _____.
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(a) 182 to 238 (b) 180 (c) 181 (d) 240
62. ______ is a person employed to do any act for another. ce

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(a) Indemnifier (b) Surety (c) Guarantor (d) Agent
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63. An agreement is said to be ______ when it is given by words spoken or written.
(c) Ratification (d) Estoppels’

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(a) Express (b) Implied

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64. ______ agency arises from the conduct situation or relationship of parties.
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(a) Express (b) Implied (c) Ratification (d) Operation of law
65. _____ is an act done by one person on behalf of another but without his knowledge or
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authority.
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(a) Ratification (b) Estoppels’ (c) Holding out (d) Dissertation
66. ______ agent has customary course of business.
(a) Universal (b) General (c) Mercantile (d) Non-mercantile
67. A _____ is a mercantile agent entrusted with the possession of goods.
(a) Factor (b) Broker (c) Auctioneer (d) Commission
68. A _____ is an agent who is employed to buy or sell goods on behalf of another.
(a) Factor (b) Broker (c) Auctioneer (d) Commission
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69. An ______ is an agent appointed by a seller to sell his goods by public auction.
(a) Auctioneer (b) Commission (c) Del credere (d) Banker
70. _____ is an agent and a surety at the same time.
(a) Auctioneer (b) Commission (c) Del credere (d) Banker
71. _____ is the agent of his customer.
(a) Banker (b) Auctioneer (c) Insurance (d) Advocates
72. Agents who do not deal in buying and selling of goods are called ______ agents.
(a) Mercantile (b) Non-mercantile (c) Special (d) General
73. _____ is engaged to conduct legal proceedings on behalf of the principals.
(a) Insurance agents (b) Advocates (c) Special agents (d) General agents
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74. A _____ agent is one who enjoys unlimited authority to do all such acts as could be
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delegated.
(a) Special (b) General (c) Universal (d) Insurance ce

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75. A _____ is a person employed by and acting under the control of the original agent in the
business of the agency.

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(a) Sub-agent (b) Substituted agent (c) Special agent (d) Actual agent
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76. _____ agent act under the direct control of the principal appointed by original agent.
(a) Sub (b) Substituted (c) Real (d) Implied

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77. ______ authority of the agent is one which has been conferred upon the agent by his
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principal.
(a) Actual (b) Implied (c) Apparent (d) Express
78. When an agent is appointed to carry on business to do every lawful thing necessary he is
under ______ authority.
(a) Actual (b) Express (c) Implied (d) Apparent
79. The agency is ______ when the agent or principal dies or becomes insane.
(a) Terminated (b) Void (c) Discharged (d) Breached
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80. If an agent has incurred a personal liability, the agency is ____.
(a) Revocable (b) Irrevocable (c) Destroyed (d) Substituted
UNIT V
81. The sale of goods act was passed in ______.
(a) 1930 (b) 1932 (c) 1935 (d) 1929
82. ______ act deals with sale of only movable goods.
(a) Sale of goods (b) Partnership (c) Negotiable instrument (d) Contract
83. _____ act does not deal with the sale of immovable property.
(a) Sale of goods (b) Partnership (c) Negotiable instrument (d) Contract
84. If the property in the goods is transferred immediately from the seller to the buyer, the
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Contract of sale is called _______.
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(a) Sale (b) Agreement to sale (c) Business (d) Dealing
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85. When the ownership of the goods is transferred at a future date it is called _______.
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(a) Sale (b) Agreement to sale (c) Business (d) Dealing

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86. Sale is a _____ contract.
(a) Executory (b) Executed (c) Implied (d) Actual

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87. Agreement to sell is a _____ contract.

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(a) Executory (b) Executed (c) Implied (d) Actual
88. If a certain term is considered as essential, it is a ______.

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(a) Warranty (b) Condition (c) Guarantee (d) Indemnity

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89. If the parties treat a certain term as non-essential, it is a _______.
(a) Warranty (b) Condition (c) Guarantee (d) Indemnity
90. ______ is a stipulation that is vital to the main purpose of the contract.
(a) Sale of goods act (b) Condition (c) Warranty (d) Indemnity
91. ______ is a stipulation that is only collateral to the main purpose of the contract.
(a) Guarantee (b) Warranty (c) Condition (d) Indemnity
92. _____ condition is expressly agreed upon by both the parties at the time of the contract
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of sale.
(a) Express (b) Implied (c) Actual (d) Real
93. When the conditions are not written in the contract but are attached to the contract by
the operation of law are called ______ condition.
(a) Express (b) Implied (c) Actual (d) Real
94. ______ means let the buyer beware.
(a) Sales act (b) Partnership (c) Instrument (d) Caveat emptor
95. When the whole of the price has not been paid it is called ______.
(a) Unpaid seller (b) Fraud (c) Illegal (d) Rejection
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96. _______ is the right to retain possession of goods until payment in respect of them is
made. ce
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(a) Lien (b) Stoppage in transit (c) Resale (d) Repudiate
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97. An ______ is a method of selling property by bids.

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(a) Auction (b) Pricing (c)Damping (d) None
98. _____ is an unlawful act by which an intending purchaser is prevented from bidding
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the price at an auction sale.

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(a) Auction (b) Damping (c) Repudiating (d) Disclosure
99. All auction sales are subject to ______ warranties.

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(a) Actual (b) Implied (c) General (d) Special

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100.At an auction, the sale is complete when the auctioneer announces its completion by the
Fall of the hammer ______ times.
(a) 3 (b) 2 (c) 1 (d) 4
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SECTION B
UNIT I
1. Define the term contract. What are the elements of contract?
2. Distinguish between void, voidable and illegal contracts.
3. What are wagering contracts?
4. What are contingent contracts?
5. What is an offer? When is it complete?
6. What is meant by acceptance? Who can accept an offer?
7. Define consideration. What are the legal rules regarding it?
8. Discuss the provisions of law relating to minor’s agreements.
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9. Discuss the meaning of free consent.
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10. What are unlawful agreements?
UNIT II ce
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11. What do you understand by novation?
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12. What is meant by anticipatory breach of contract?

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13. What do you understand by the doctrine of quantum meruit?
14. What is meant by quantum meruit? When and how does it come into operation?
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15. What do you mean by quasi-contract?

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16. What do you mean by breach of contract?
17. What do you mean by discharge by impossibility?

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18. What is the difference between ordinary damages and special damages?
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19. What are the rules regarding the payment of interest stipulated in a contract?
20. What are the cases for claim on quantum meruit?
UNIT III
21. Define a contract of indemnity.
22. State the rights of indemnifier.
23. Define a contract of guarantee.
24. What is continuing guarantee?
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25. How can a continuing guarantee be revoked?
26. Distinguish between contracts of indemnity and guarantee.
27. What is the consideration of a guarantee?
28. State the nature and extent of surety.
29. What is meant by finder of goods?
30. What are the rights of a pawnee and pawnor?
UNIT IV
31. Define agent and principal.
32. List out the essentials as to agency.
33. State the rules of agency.
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34. What are the various ways in which the agency is created?
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35. Discuss agency by estoppels.
36. Define substituted agent. ce

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37. What do you mean by ostensible authority?
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38. Who is a pretended agent?

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39. When is an agent personally liable for the contracts entered into by him on behalf of the
principal?
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40. When is an agency irrevocable?

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UNIT V
41. Define sale and agreement to sell.

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42. Define goods. What are the different classes of goods?

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43. What are the essentials of a valid sale?
44. Distinguish between sale and agreement to sell.
45. Define the term condition.
46. Define the term warranty.
47. What is implied warranty?
48. What is caveat emptor?
49. Who is an unpaid seller?
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50. Distinguish between the right of lien and stoppage of goods.
SECTION C
UNIT I
1. List out the various essentials of a valid contract.
2. What are the various kinds of contract? Describe them briefly.
3. “All agreements are not contracts but all contracts are agreements”. Discuss the statement.
4. “Contract is an agreement enforceable by law”. Discuss.
5. List out the various rules of a valid offer.
6. Discuss briefly the law relating to communication of offer, acceptance and revocation.
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7. Discuss the various kinds of consideration.
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8. What do you mean by capacity to contract? Name the persons who are not competent
to contract. ce
9. “The essence of every agreement is that there ought to be free consent on both sides”.
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Discuss.
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10. In what cases the consideration and object of an agreement are said to be unlawful?
Explain with examples.

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UNIT II
SC
11. What do you mean by discharge of contract? State the various modes of discharging
a contract.
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12. Explain breach of contract as a mode of discharge of contract.

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13. What is the difference between penalty and liquidated damages?
14. Under what circumstances is a party entitled to a specific performance?
15. State the different remedies available to the aggrieved party for a breach of contract.
16. State the principles on which damages are awarded on a breach of contract.
17. Explain the different kinds of damages.
18. Enumerate the various kinds of quasi-contracts.
19. What are the different ways for mutual discharge?
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20. What are the ways under discharge by operation of law?
UNIT III
21. Discuss the essentials and legal rules for a valid contract of indemnity.
22. State the rights of the indemnity-holder when sued. When does the liability of indemnifier
Commence?
23. List out the circumstances under which a surety is discharged.
24. Distinguish between bailment and pledge.
25. Distinguish between a general lien and a particular lien.
26. Define bailment. What are the requisites of a valid bailment?
27. What are the rights and obligations of a finder of goods?
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28. When is a pledge created by non-owners valid?
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29. What is the law relating to lien?
30. How is a bailment classified? ce

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UNIT IV
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31. What are the different kinds of agents? How are they classified?
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32. State briefly the duties of an agent.
33. State the rights of an agent.

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34. What is the degree of skill required for an agent?

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35. Discuss the extent to which an agent can delegate his authority. What are the
consequences of such delegation?

A
36. Define the term sub-agent. When he can be appointed?

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37. State the position of sub-agent in relation to the original agent, principal and third party.
38. Distinguish between sub-agent and substituted agent.
39. Discuss the liability of a principal when the agent exceeds his authority.
40. What is an agency coupled with interest? When can it be revoked?
UNIT V
41. Explain the nature of contract of sale of goods.
42. Explain the different kinds of goods with example.
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43. Discuss the effects of destruction of goods.
44. How is a contract of sale made? State the necessary formalities of such a contract.
45. Explain and illustrate the implied conditions in a contract of sale as provided in the sale
of goods act.
46. Distinguish between condition and warranty.
47. Explain the rule of caveat emptor. Discuss the case in which the rule does not apply.
48. State the doctrine of caveat emptor and exceptions to it.
49. State the various rights of an unpaid seller.
50. “The right of stoppage in transit is an extension of the right of lien”. Comment.
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Answer key: Section A
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UNIT I
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1. (a) Personam 2. (a).1872 3. (d) All of the above 4. (b) 1 to 75 5. (b) 124 to 238
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6. (a) Agreement 7.(c) Promise 8. (c) Minor 9. (a) Consideration 10. (a) Valid
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11. (c) Voidable 12.(c) Quasi 13. (d) Wagering 14. (c) Consideration 15. (b) Lunatic
16. (d) Coercion 17. (a) Fraud 18. (b) Mistake 19. (d) Wagering 20. (c) Void agreement
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UNIT II
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21. (c) Discharged 22. (a).Performance 23.(a) Novation 24.(b) Alteration 25.(a) Remission
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26. (b) Rescission 27.(c) Waiver 28.(a) Merger 29.(d) Insolvency 30.(b) Breach
31.(a) Rescission 32.(b) Damages 33.(a) Ordinary 34.(b) Special 35.(a) Vindictive
SC
36.(a) Nominal 37.(b) Liquidated damages 38.(a) Penalty 39.(a) Quantum merit
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40.a) Injunction
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UNIT -III
41.(a) Indemnity 42.(b) Indemnifier 43.(a) Indemnity holder 44.(a) 126 45.(a) Guarantee
46.(c) Surety 47.(b) Principal debtor 48.(a) Creditor 49.(b) 3 50.(d) 1 51.(a) Fidelity
52.(b) Co-sureties 53.(a) Comes to an end 54.(d) Bailment 55.(a) Bailer 56.(b) Bailee
57.(a) Pledge 58.(c) Finder of goods 59.(b) Bailee 60.(b) Continuing
UNIT IV
61.(a) 182 to 238 62.(d) Agent 63.(a) Express 64.(b) Implied 65.(a) Ratification
66.(c) Mercantile 67.(a) Factor 68.(b) Broker 69.(a) Auctioneer 70.(c) Del credere
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71.(a) Banker 72.(b) Non-mercantile 73.(b) Advocates 74.(c) Universal 75.(a) Sub-agent
76.(b) Substituted 77.(a) Actual 78.(d) Apparent 79.(a) Terminated 80.(b) Irrevocable
UNIT V
81.(a) 1930 82.(a) Sale of goods 83.(a) Sale of goods 84.(a) Sale 85.(b) Agreement to sale
86.(b) Executed 87.(a) Executory 88.(b) Condition 89.(a) Warranty 90.(b) Condition
91.(b) Warranty 92.(a) Express 93.(b) Implied 94.(d) Caveat emptor 95.(a) Unpaid seller
96.(a) Lien 97.(a) Auction 98.(b) Damping 99.(b) Implied 100.(a) 3
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(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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TITLE OF THE PAPER: COMPANY LAW

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APRIL 2019
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Question Bank
COMPANY LAW
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CONTENTS
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S.NO CONTENT ce PAGE NO.
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1 Section A 3
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2 Section B 10
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3 Section C 12

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SC
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Prepared by
S.Saranya
Coimbatore-29.
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UNIT I
SECTION – A
1. A public limited company should have a minimum _____ of members.
a. 5 b. 6 c. 7 d. 8
2. The recent Indian companies act was passed in the year _____
a. 1936 b. 1956 c.2006 d. 2013
3. The reserve bank of India is a ______ company.
a. Registered b. Statutory c. Private d. Foreign
4. A company is an _____ person created by law.
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a. Artificial b. Independent c. Dependent d. Legal
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5. Company can be said as _____ association of persons.
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a. Compulsory b. Voluntary c. Registered d. Unregistered
6. Capital of the company is divided into parts called _____.
a. Shares b.Bonds c. Securities
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d. Debentures
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7. A company is formed preliminary by certain persons called _____.
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a. Underwriters b. Directors c. Promoters d. Shareholders

8. The _____ person associated for any lawful purpose may form a public company.
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a. 2 or more b. 7 or more c. 5 or more d. 6 or more

9. Company incorporated outside India but having the place of business in India is called as
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_____.
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a. Government company b. Chartered company c. Statutory company d. Foreign company

10. The minimum number of members required to form a private company is _____.
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a.4 b. 7 c. 2 d. 9
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11. The maximum number of members required to form a private company is _____.
a. Cannot exceed 200 b.Unlimited c. 200 or more d. 250 or more
12. The maximum number of members required to form a public company is _____.
a. 500 or below b. Unlimited c. 550 or more d. 600 or more
13. A public company must have at least _____ directors
a. 3 b. 5 c. 2 d. 1
14. If a company controls majority of board of directors in another company, it is termed as
_____.
a. Subsidiary company b. Holding company c. Unlimited company d. Statutory company
3
15. The _____ companies are established by the royal charters.
a. Statutory b. Chartered c. Public d. Private
16. The _____ companies are created by special act of legislature
a. Statutory b. chartered c public d private
17. The registrar certifies the company as incorporated by issuing_____
a. Certificate of commencement b. Certificate of association c. Certificate of incorporation
d. General certificate
18. When liabilities of members of a company is limited to the amount unpaid on shares it is
called as _____
a. Company limited by shares b. Company limited by guarantee c. Unlimited companies
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d. Chartered company
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19. In public company managerial remuneration should not exceed _____ of net profit.
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a. 12% b.14% c. 11% d. 10%
20. A company is managed by_____
a. Shareholders
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b. Board of directors c. Promoters d. General manager
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UNIT- II
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21. The _____ is the main document of a company which defines its objects.
a. Memorandum of association b. Articles of Association c. Prospectus d. None
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22. Memorandum of association is a _____ document.

a. Existing principal b. Directors c. Share holders d. Public
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23. The copy of memorandum must be sent within _____ days to the company members.
a. 5 b. 6 c. 7 d. 8
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24. In case of public company the memorandum must be signed by atleast _____ persons
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a. 2 b. 7 c. 4 d. 8
25. A company being a legal person must have a _____ to establish its corporate existence
a. Principles b. Objects c. Name d. Capital
26. The _____ clause states the nature of liability that members incur
a. Situation b. Identical c. Association d. Liability
27. The term ultra means _____
a. Authority b. Beyond c. Absence d. Variation
28. The _____ means powers
a. Contract b. Interest c. Vires d. Property
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29. The _____ of the company is personally liable to make good funds in ultravires
a. Director b. Members c. Promoter d. Creditor
30. The ______ document contains the internal rules and regulations regarding internal
management of a company
a. Memorandum of association b. Articles of Association c. Prospectus d. Detailed
31. Articles of Association is briefly called as _____
a. Association b. Articles c. Company d. Management
32. AOA must have been adopted as per _____ of the Indian companies Act.
a. Table A Schedule I b. Table A Schedule II c. Table A Schedule III d. Table A Schedule IV
33.The special resolution passed in the meeting must be filed with the registrar within _____
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a. 40 days b. 35 days c. 90 days d. 30 days
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34. Articles of Association is a _____ document
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a. Primary b. Secondary c. Principle d. Compulsory
35. The AOA of a private company must have _____ restrictions
a. 2 b. 5 c. 3 d. 4
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36. Doctrine of indoor management is basically an exemption to the doctrine of_____ notice
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a. Aware b. Constructive c. Acts d. Document

37. A _____ means any invitation issued to the public inviting it to deposit money with the
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company or to take shares of the company

a. MOA b. AOA c. Certificate of incorporation d. Prospectus
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38. The prospectus must be issued to the public within _____ days of its registration
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a. 30 b.50 c. 90 d.60
39. In ______ prospectus complete particulars of quantum is not included
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a. Red herring b. Shelf c. Deemed d. Abridged

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40. The prospectus may be in the form of _____.

a. Document b. Circular c. Advertisement d. All the above
UNIT – III
41. The _____ refers to the cash or goods used to generate income either by investing in a
business.
a. Capital b. Share c. Supply d. Stock
42. Capital is not a _____ factor.
a. Secondary b. Artificial c. Primary d. Industrial
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43. Capital formation independs upon savings and _____.
a. Supply b. Demand c. Long term process d. Investment
44. The term capital in relation to a company can be broadly divided into _____ kinds.
a. 3 b. 4 c. 5 d. 6
45. The _____ capital denotes the capital raised by the issue of equity shares.
a. Equity b. Preference c. Debentures d. Public deposit
46. The _____ capital is the part of the issued capital which has been called upon the shares.
a. Paid up b. Unpaid c. Called d. Reserve
47. The remainder of issued capital which has not been called is known as _____.
a. Authorised b. Uncalled c. Issued d. Subscribed
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48. Share capital is the owned _____ of the company.
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a. Share b. Nature c. Capital d. Wealth
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49. Share holder has the right to share the_____ of the company.
a. Loss b. Profit c. Asset d. Income
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50. The ______ share has the preferential rights on all shares
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a. Preference b. Equity c. Deffered d. No par
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51. The unpaid dividend is treated as arrears in _____ preference share.

a. Non cumulative b. Participating c. Non Participating d. Cumulative
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52. The holder of _____ kind of share has a right to convert their shares into equity share
within a specified period.
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a. Non convertible b. Convertible c. Redeemable d. Guaranteed

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53. The advantage of preference share is _____

a. Retention of controlb. Economic c. Convinienced. All the above
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54. The _____ are the real owner of the company.

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a. Preference b. Equity c. Deffered d. No par

55. The company mat also issue _____ shares to their employees or directors.
a. Bonus b. Right c. Deffered d. Sweat equity
56. In equity share the capital is _____ term resource.
a. Long b. Medium c. Short d. Fixed
57. The company issue its share at original value is called issue of shares at _____.
a. Premium b. Par c. Discount d. None
58. The amount stated in prospectus as minimum subscription must have been subscribed
within _____ days.
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a. 30 b. 40 c. 50 d. 60
59. In _____ the bearer is entitled to the specified number of shares or stock.
a. Share certificate b. Transfer of shares c. Share warrant d. Transmission of shares
60. Return of share by the share holder to the company for cancellation termed as ____
shares.
a. Surrender of shares b. Lien of shares c. Transfer of shares d. Blank
UNIT - IV
61. Person who are in charge of the management of the affairs of the company are termed as
_____.
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a. Share holder b. Director c. Member d. Promoter
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62. Director is the persons appointed to direct and supervise the affairs of a _____.
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a. Company b. Member c. Finance d. Management
63. The _____ can be appointed as director.
a. Body corporate b. Association c. Firm
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d. Individual
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64. The nominal value of directors share should not exceed _____.
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a. 3000 b. 4000 c. 5000 d. 5500

65. The _____ director are not liable to retire by rotation.
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a. Shadow b. De facto c. Permanent d. First

66. An alternate director is appointed to act in place of a director who is absent for a period of
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more than _____ months.

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a. 3 b. 4 c. 5 d. 6
67. The public company having paid up capital of Rs. 100crore or more can appoint _____
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director.
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a. Nominee b. Women c. Executive d. Independent

68. Director are described as _____
a. Trustee b. Managing partner c. Employees d. All the above
69. Company shall have a maximum _____ number of director.
a. 11 b. 13 c. 15 d. 17
70. The third party appointment of director means the _____ who have advanced loan to the
company.
a. Financial corporation b. Member c. Tribunal d. Company
71. The term MD stands for _____.
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a. Manager displacement b. Managing director c. Manager director d. Manager
discretion
72. A MD occupies a dual capacity namely that of director as well as _____ of the company.
a. Share holder b. Member c. Employer d. Agent
73. The MD of a public company can be appointed only for a maximum period of _____
years
a. 3 b. 5 c. 7 d.9
74. The whole time director is the _____ of the company.
a. Employee b. Executive c. Manager d. Casual
75. The manager _____ be a company
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a. May be b. May not be c. May or May not be d. None of the above
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76. The term ______ means a confidential officer
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a. Secretary b. Manager c. Managing Director d. Board of Director
77. The _____ secretary is the person who is employed for performing some personal works
of his employer
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a. Association b. Private c. Embassy d. Administration
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78. Those who are working as secretaries before _____ are eligible to continue as secreteries
irrespective of their educational qualifications.
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a. 31/10/1975 b. 31/10/1976 c. 31/10/1980 d. 31/10/1978

79. The first secretary of a company is appointed by the _____ at pre- incorporation period
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a. Board of Director b. Secretary c. Public d. Promoter

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80. The secretary is liable in _____ liability if he makes secret profit

a. Statutory b. Negotiable c. Default d. Contractual
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UNIT – V
81. In common word meeting means an act of coming _____ in company.
a. Interact b. Assembly c. Face to face d. Together
82. To constitute a valid meeting there must be _____ or more persons.
a. 2 b. 3 c. 5 d. 6
83. The _____ is the condition precedent for a valid meeting.
a. Accidental b. Invalid c. Omission d. Previous
84. If _____ is not present the meeting is invalid and proceedings of such meeting is invalid.
a. Quorum b. Chairman c. Authority d. Transaction
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85. The statutory meeting must be held within _____ months from the date at which company
is entitled to start its business.
a. 5 b.6 c. 6 d.8
86. Annual general meeting is held _____ in a year.
a. Once b. Twice c. Quarterly d. None
87. The time gap between two annual general meeting should not exceed _____ months.
a. 11 b. 12 c. 13 d. 15
88. The term Agenda means _____ at a meeting.
a. Items b. Trade c. Things to be done d. Business
89. The term _____ can be defined as a written record of the business done at a meeting.
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a. Quorum b. Minutes c. Agenda d. Proxy
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90. The company cannot prohibit any member from exercising his _____ on any ground.
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a. Duties b. Transaction c. Investment d. Voting rights
91. In _____ resolution the explanatory statement is not required to be sent along the notice
of meeting.
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a. Ordinary b. Special c. Required d. Circumstances
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92. Ordinary resolutions are not required to be registered with the _____,
a. AOA b. MOA c. Registrar d. Board of Director
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93. The _____ is the process of putting an end to the life of the company.
a. Winding up b. Adjournment c. Administer d. Resolution
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94. The winding up is also called as _____.

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a. Liability b. Debt c. Liquidation d. Surplus

95. The process of winding up begins after the _____ passes the order of winding up
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a. Member b. People c. Agent d. Court

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96. In a _____ winding up the liquidator is known as voluntary liquidator.

a. Voluntary b. Compulsory c. Administrator d. Debtor
97. In the _____cases the compulsory winding up takes place.
a. Did not hold statutory meeting b. Inability to pay debts c. Failure to commence
business d. All the above
98. After winding up the name of the company in the register of companies shall be struck of
by the registrar of _____.
a. Joint stock company b. Partnership c. Co operative d. Sole trading
99. The _____ liquidator is appointed by the court.
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a. Voluntary b. Company c. Official d. Non voluntary
100. In case of winding up the name of the past members is present in _____
a. List A b. List B c. List C d. List D
SECTION – B
Answer all the questions
UNIT – I
1. Define the term “company” and discuss its characteristics.

2. What are the privileges of private company?
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3. State the duties of promoter.
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4. What are the various functions involved in Incorporation?
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5. Explain about company limited by shares.
6. What is certificate of in corporatation?
7. What is government company?
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8. When does the newly formed company can commence its business?
9. What is perpetual succession and common seal?.
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10. Distinguish between company and partnership?

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UNIT – II
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11. Briefly explain about the memorandum of association.

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12. Discuss about the various importance of memorandum of association.

13. Write short note on i. Object clause and ii Liability clause.
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14. Explain the various types of ultra vires.

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15. State the various difference between the memorandum of association and articles of
association.
16. Discuss about the effects of memorandum of association and articles of association.
17. Doctrine of Constructive notice – explain
18. Give a brife note on prospectus.
19. What are the various requirements needed to consider a document as prospectus.
20. Explain about the newspaper advertisement of prospectus.
UNIT – III
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21. Write short note on shares and share capital.
22. Discuss about the different types of share capital.
23. Briefly explain the features of shares
24. Explain the various advantages of prefence shares.
25. Give a short note on i. Equity share and ii. Prefence shares.
26. How can be the shares surrendered?
27. Differentiate between Equity share and Prefence shares.
28. What is share certificate?
29. What is meant by call on shares?
30. Define about the forfeiture of shares.
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UNIT – IV
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31. Who is eligible to become a director?
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32. Briefly discuss about the member of directorship and director.
33. Write about the procedure for removal of the director.
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34. What is liability? Write a short note on unlimited liability for director.
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35. Give a short note on remuneration to director.

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36. List out the disqualification of Managing Director.

37. Who can be a manager? Explain
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38. Explain the legal provision regarding manager.

39. Discuss about the various liability of a secretary.
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40. Write a short note on corporate social responsibility.

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UNIT – V
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41. What are the essential contents to be present in the statutory meeting?
42. Write a note on extraordinary general meeting.
43. Briefly explain about the quorum.
44. Write the ways in which the voting takes placein the meeting.
45. Write a note on i. Proxy and ii. Agenda.
46. Differentiate between the ordinary and Special resolution.
47. What is meant by winding up of a company?
48. Explain the procedure for compulsory winding up of a company?
49. Differentiate between the Compulsory and voluntary winding up.
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50. Who is a liquidator? Explain its types.
SECTION – C
Answer all the questions
UNIT – I
1. Explain the different kinds of companies?
2. Discuss about the various advantages of the company.
3.What is a private company? How does the public company can be converted into a Private
company?
4. Discuss the various stages in the formation a company.
)
5. Under what circumstances does a private company become a deemed public company?.
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6. Explain about functions and remuneration of promoters.
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7. Explain about the registration process of the companies.
8. What is public company? Distinguish it from a private company?
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9. Discuss about the important changes that taken place between the companies act 1956 and
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2013.
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10. State the various disadvantages faced by a private company.

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UNIT – II
11. Explain about the various clauses of memorandum of association.
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12. State the ways in which the memorandum of association can be altered.
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13. What is doctrine of ultra vires? Explain its effects.

14. How was the article of association important to the companies?
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15. Discuss about the various contents in the articles of association.

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16. What is doctrine of indoor management and how it is useful?

17. Discuss the various rules related to the issue of prospectus.
18. Explain the contents in the prospectus.
19. How is prospectus helpful to the company and explain the types of prospectus.
20. What will be the liability for misstatement of facts in the prospectus?
UNIT – III
21. What are the main charecteristics of capital explain?
22. Explain the various classifications of share capital.
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23. Discuss about the procedure for issue of shares.
24. State the various types of prefence shares.
25. List out the advantages and disadvantages of equity shares.
26. What are the terms used in issue of shares?
27. Briefly explain about the allotment of shares.
28. State the difference between share certificate and share warrant.
29. Explain about the various kinds of shares.
30. What is meant by shares? Differentiate share and stock.
UNIT – IV
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31. Define director and explain its types.
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32. Discuss the procedure for appoinment of director in the company.
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33. Write about the various powers of the board of directors.
34. List out the various duties of the director.
35. Discuss in detail about the liability of a director.
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36. Explain the procedure for appoinment of the director.
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37. Differentiate between the manager and managing director.

38. Explain the various types of a secretary in a company.
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39. List out the qualifications of a secretary in a company.

40. What are the various powers and duties of secretary in a company.
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UNIT – V
41. What are the pre requisite to constitute a meeting?
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42. Explain about the different types of company meeting.

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43. Define minutes and state the hints to be drafted in minutes.

44. Write a note on resolution and explain itskinds.
45. List out the circumstances in which a special resolution is necessary.
46. Explain the process of winding up of a company
47. Discuss in detail about the different types of winding up of a company.
48. Explain the different types of voluntary winding up.
49. List out the duties and liabilities of a liquidator.
50. Explain the consequence of winding up.
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Answers for Section A
1. c. 7 18. a. Company limited by 33. d. 30 days
2. d. 2013 shares 34. b. Secondary
3. b. Statutory 19. c. 11% 35. c. 3
4. a. Artificial 20. b. Board of directors 36. b. Constructive
5. b. Voluntary 21. a. Memorandum of 37. d. Prospectus
6. a. Shares association 38. c. 90
7. c. Promoters 22. d. Public 39. a. Red herring
8. b. 7 or more 23. c. 7 40. d. All the above
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9. d. Foreign company 24. b. 7 41. a. Capital
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10. c. 2 25. c. Name 42. b. Productive
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11. a. Cannot exceed 200 26. d. Liability 43. d. Investment
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12. b. Unlimited 27. b. Beyond 44. b. 4
13. a. 3 28. c. Vires 45. a. Equity
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14. b. Holding company 29. a. Director 46. c. Called
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15. b. Chartered 30. b. Articles of 47. b. Uncalled
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16. a. Statutory Association 48. c. Capital

17.c.Certificateof 31. b. Articles 49. b. Profit
incorporation 32. a. Table A Schedule I 50. a. Preference
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51. d. Cumulative 63. d. Individual 74. a. Employee

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52. b. Convertible 64. c. 5000 75. c. May or May not be

53. d. All the above 65. c. Permanent 76. a. Secretary
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54. b. Equity 66. a. 3 77. b. Private

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55. d. Sweat equity 67. b. Women 78. c. 31/10/1980

56. a. Long 68. d. All the above 79. d. Promoter
57. 69. c. 15 80. d. Contractual
58. a. 30 70. a. Financial 81. c. Face to face
59. c. Share warrant corporation 82. a. 2
60. a. Surrender of shares 71. b. Managing director 83. d. Previous
61. b. Director 72. c. Employer 84. a. Quorum
62. a. Company 73. b. 5 85. b. 6
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86. a. Once 91. a. Ordinary 96. a. Voluntary
87. d. 15 92. c. Registrar 97. d. All the above
88. c. Things to be done 93. a. Winding up 98. a. Joint stock company
89. b. Minutes 94. c. Liquidation 99. c. Official
90. d. Voting rights 95. d. Court 100. b. List B
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(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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A
TITLE OF THE PAPER: CORPORATE ACCOUNTING

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APRIL 2019
1
Question Bank
CORPORATE ACCOUNTING
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CONTENTS
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1 Section A
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2 Section B 9
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3 Section C 19
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SC
A
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Prepared by
S.Amutha
Associate Professor,
Coimbatore-29.
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SECTION – A
UNIT I
1 .Share allotment and share application are -------
a) Personal a/c b) real a/c c) Impersonal a/c d) nominal a/c
2. The minimum share application money is ---------
a) 5% of the face value of shares b) 10% of the issue price of shares
c) Re. 1 per share d) 15% of the face value of shares
3. Premium received on issue of shares a/c is shown on --------
a) Assets side of B/s b) liabilities side of B/s
c) Credit side of P&L A/C d) debit side of P&L A/c
4.Premium on issue of shares can be used for --------------
a) Distribution of dividend b) writing off capital losses
c) Transferring to general reserve d) paying fees to directors
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5. The rate of discount on shares cannot exceed ---------------
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a) 3% b) 6% c) 5% d) 10%
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6. Discount on issue of shares a/c is shown on -----------
a) Assets side of B/s b) liabilities of B/s
c) Debit side of P&L A/c d) credit side of P&L A/c
7 .Discount on issue of shares is a ------------
a) Revenue loss
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b) capital loss
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b) Deferred revenue expenditure d) neither of the above
8. Interest on calls paid in advance has to be paid @ -----------
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a) 4% b)6% c) 7% d) 9%
9. Interest @ --------- is charged on calls –in-arrears according to table ‘A’ of the
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companies act. a ) 5% b) 9% c) 3% d) 12%

10. Discount on reissue of forfeited shares should not exceed :
a) 5% subscribed capital b) 10% reissued capital
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c) The amount received so far on forfeited shares d) neither of the above

11 .Rights shares are those shares which are :
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a) Issued by a newly formed company

b) First offered to the existing shareholders
c) Issued to the directors of the company
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d) Issued to holders of convertible debentures

12. The underwriter is entitled to claim remuneration on:
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a) The issue price of shares underwriters

b) the face value of shares actually purchased
c) the face value of shares not purchased by him
d) None of the above
13. According to section 76 of the companies Act 1956, the commission payable underwriter
for underwriting shares should not exceed.
a) 5% b) 10%
c) 2.5% d) 1.5%
14. Commission for underwriting shares as per the guidelines issued by the stock Exchange
division of the Dept. of Economic Affairs, Ministry of finance and also as per SEBI guidelines
should not exceed
a) 5% b) 2.5% c) 10% d) 1.5%
3
15. The underwriting commission in case of preference shares / Debentures beyond Rs.5
lakhs as per SEBI guidelines, should not exceed -------
a) 2% b) 2.5% c) 5% d) 1.5%
16. Redeemable preference shares can be redeemed out of:
a) Amount realized on sale of investment
b) Divisible profits otherwise available for dividend
c) proceeds of fresh issue of shares d) Both( b)&(c).
17. When preference shares are redeemed out of profits otherwise available for dividend, the
sum equal to the nominal amount of shares must be transferred to:
a) Capital redemption reserve b) Reserve Fund c) P&L A/C d) Insurance Fund
18. Transfer to capital Redemption Reserve can be made from:
a) Capital Reserve A/C b) Forfeited shares A/C
c) General Reserve A/ C d) Securities premium A/C
19. Transfer to Capital Redemption Reserve a/c is not allowed from:
a) P&L A/C b)Debenture redemption fund
c) Workmen’s Accident fund d) Profit prior to incorporation
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20. The premium on redemption of preference shares can be provided out of:
a) Securities Premium b) Insurance fund
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c) Forfeited shares A/c d) Depreciation Reserve
UNIT II
21. Debentures represent the --------
a) Manager’s share in a business
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b)Investment by shareholders in a business
c)Long term borrowings of a business d)None of the above.
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22. Debenture holders are the -----------
a) Customers of the company b) Creditors of the company
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c) Owners of the company d) None of the above

23. Debentures are shown under the following heading in a company’s Balance sheet---------
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a)Secured loan b)Unsecured loan c)Share Capital d)Current Liabilities

24. According to companies (Amendment) Act 1999, the premium on issue of debentures
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should be credited to--------- a) Share premium A/c b)Debenture premium A/c

c)Securities premium A/c d)None of the above.
25. Discount on issue of debentures is shown under the following heading in a company’s
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Balance sheet-------- a)Fixed Assets b)Loans & Advances

c)Investments d)Miscellaneous Expenditure
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26.Interest on debentures is normally payable-------

a)Half yearly b)Quarterly c)Annually d)Monthly
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27.A fixed percentage of interest on debentures is calculated on---------

a) The issue price of debentures b) The normal value of debentures
c)The face value of debentures plus premium d) None of the above
28. Profit on cancellation of own debentures is transferred to--------
a) Profit and loss A/c b) Dividend equalisation A/c
c) Capital Reserve d) None of these
29. Own debentures A/c ( at a time of purchase of own debentures) is always to be debited
with----------- a)fair value b) the cum-interest price
c) the ex-interest price d) None of the above
30. The balance of sinking fund investments A/c after the realisation of investment is
transferred to-------- a)Profit & loss A/c b) Debenture A/c
c) Sinking Fund A/c d)None of the above
31. After redemption of debentures, the balance in the sinking fund a/c is transferred to -------
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a) Secret reserve b) General reserve c) Capital reserve d)P&L A/C
32.Profit prior to incorporation belongs to ---------
a) the company b) the vendor c) both d)None
33.Profit prior to incorporation should be credited to--------- a) Goodwill a/c
b) Revenue Reserve a/c c) Capital Reserve a/c d) Preliminary expenses a/c
34.Loss prior of incorporation should be debited to --------------- a) Revenue Reserve
b) Goodwill a/c c)Capital Reserve a/c d)Preliminary expenses a/c
35.Gross profit is to be appointed between pre and post incorporation periods in------------
a)Time ratio b)Adjusted time ratio c)Sale ratio d)None of the above
36.Audit fees should be divided between pro and post incorporation periods in----------
a) Time ratio b) Time ratio or posted only incorporation period
c) Sale ratio d) Adjusted time ratio
37. Bad debts recovered which was written off before purchase of businesss should be ---------
a) Dividend in time ratio b) Dividend in sale ratio
c) Posted in pre incorporation period d) all of these
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38. The salary paid to Manager, for a period before acquisition of business should be ---------
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a) Dividend in time ratio b) Dividend in sale ratio
c) Posted in pre incorporation period d) None of the above
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39. Interest-paid to Vendor should be divided between pre and post incorporation periods in---
a) Adjusted time ratio b) time ratio c)sales ratio d) None of the above
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40. Discount received from creditors and a carriage inwards should be dividend between pre
and post incorporation periods in--------
a) Sales ratio b) Purchase ratio c) Adjusted time ratio d) None of these
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UNIT III
41. Amount realised from sale of goods is shown in the statement of profit and loss as ---------
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a) Other income b) Revenue from operations

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c) Any of the above d) None of the above

42. Gain on sale of fixed assets is shown in the statement of profit and loss as --------------
a) Other income b) Revenue from operations
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43. Dividend received by a financial company is shown in the statement of profit and loss
-------- a) Other income b) Revenue from operations
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44. Raw materials purchased is shown in the statement of profit and loss as ---------------
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a) Cost of materials consumed b) Purchase of stock in trade

c) Changes in inventories d) None of the above
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45. Goods purchased for reselling is shown in the statement of profit and loss as--------------
a) Cost of materials consumed b) Purchase of stock in trade
c) Changes in inventories d) None of the above
46. Payment of wages and salaries is shown in the statement of profit and loss under ----------
a) Employees benefit expenses b) Other expenses
c) Finance costs d) None of these
47. Payment of interest on debentures and bank overdraft is shown in the statement of profit
and loss under --------- a) Employees benefit expenses b) Other expenses
c) Finance costs d) None of these
48. Preliminary expenses written off is shown in the statement of profit and loss under --------
c) Finance costs d) Depreciation and amortisation expenses
49. Carriage outwards is shown in the statement of profit and loss under--------
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c) Finance costs d) Depreciation and amortisation expenses
50. Debentures redeemable after 10 years of issue and shown as -------
a) Long term borrowings b) Shown term borrowings
c) Other current liabilities d) None of these
51. Bank overdraft is shown in the balance sheet of a company as -----------------
a) Long term borrowings b) Shown term borrowings
c) Other current liabilities d) None of these
52. Dividend is paid on -------- a) Authorised capital b) Issued capital
c) Called up d) Paid up capital
53. Securities premium is shown in the balance sheet of a company under --------
a) Share capital b) Reserve and surplus
c) Long term borrowings d)None of these
54. Expenses incurred on the employees are called ----------
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c) Finance costs d)None of the above
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55. Expenses incurred by the company on the borrowings are termed as --------------
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c) Finance costs d)None of the above
56. ---------- is allocation of cost of fixed cost over its useful life.
57.
a) Machinery b) Depreciation
------------ is writing off of intangible assets.
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c) cash d) None of the above
a) Long term borrowings
b) Shown term provision c) Other current liabilities d) Amortisation
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58. Statement of profit and loss shows ----------- performance.
a) Cost b) Finance c) Capital d) All of these
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59. Assets which have physical existence are called-------

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a) Tangible b) Intangible c) Both d) None

60. Assets that are to be converted into cash within 12 months are known as----------
a) fixed asset b) Current asset c) Non-current asset d)All of these
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UNIT IV
61. When an existing company takes over the business of one or more existing companies it
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is called -------- a) purchase consideration b) External reconstruction

c) Internal reconstruction d) absorption
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62. The amount which is paid by the purchasing company for the purchase of the business of
the vendor company ------------ a) purchase consideration b) External reconstruction
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c) Internal reconstruction d) absorption

63. Cost of liquidation expensed agreed to be paid by the purchasing company is debited to
------------- in the books of the latter company. a) Realisation account
b) P&L account c) Revaluation account d) Reserves
64. Accumulated losses in the vendor company should be transferred to ---------------.
a) Realisation account b) P&L account
c) Revaluation account d) Reserves
65. When two or more companies go into liquidation and a new company is formed to take
over the business, it is called------ a) External reconstruction b) Reserves
c) Amalgamation d) Fractional
66. Under Net Assets Method the purchase consideration is arrived at ------------------.
a) Assets b) liabilities c) Assets – Liabilities d)None
67. Under Net Payment Method, the purchase consideration is calculated by -----------.
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a) the total of payment made to shareholders and debenture holders
b) the total of payment made to shareholders
c) the total of payment made to debenture holders
d) the total of payment to members
68. Accident Compensation Fund is a liability and should be closed by transferring it to -------
a) Realisation account b) P&L account c) Revaluation account d) Reserves
69. After giving sanction of capital reduction the court may order the use of words ------ after
the name of the company for a specified period.
a) Increases b) nil c) Reduced d) equal
70. Under Section 95 of the companies act 1956, the company shall give notice of the
alteration of capital to the registrar within ----------- days.
a) 15 b) 90 c) 45 d) 30
71. Internal Reconstruction is generally resorted to write off the -------------.
a) accumulated losses b) Accumulated Profits c) P&L A/c d) Reserves
72. Reduction of capital is unlawful except when ----------------.
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a) without the consent of creditors b) with contest of creditors
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c) debtors d) Capital
73. Accounting standard for Amalagamation is -----------------
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a) AS-8 b) AS-20 c)AS-14 d)AS-3
74. Pooling of interest method is used to account for amalagamation in the nature of ----------
a) Purchase (b) Sale (c) Merger ce (d) None of the above
75. The accounting standards committee of the ICAI has developed AS-------to bring
uniformly in accounting for Amalgamations in India.
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a) 8 b) 20 c) 10 d) 14
76. Any excess of purchase consideration paid over and above the share capital of the
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transferor company should be adjusted in --------- transferee company’s books

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a) Reserves b) profit and loss c) balance sheet d) Purchase

77. After giving sanction of capital reduction the court may order the use of words ------ after
the name of the company for a specified period.
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a) Increases b) nil c) Reduced d) equal

78. Alteration share capital is effected by a company if it authorised by the --------
a) Memorandum of Association b) Articles of Association
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c) Shareholders d) Board of Directors

79. The capital reduction scheme can be implemented only after getting permission from -----
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a) Central Government b) Controller of capital issues

c) Shareholders d) The competent court
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80. When company converts its equity shares into the capital stock, then the account to be
credited is -------------- a) preference share capital a/c b) equity share capital a/c
c) equity capital stock a/c d) no entry is required
UNIT V
81. A contributory is a---------- a) Unsecured creditor b) preferential creditor
c) shareholder d) Debentureholder
82. List ‘A’ in statement of affairs gives the list of --------
a) Assets specifically pledged b) Assets not specifically pledged
c ) preferential creditors d) Unsecured creditors.
83. List ‘E’ in statement of affairs gives the list of--------------
a) Preferential creditors b) Debentureholders
c) Unsecured creditors d) secured creditors
84. Secured creditors are shown in the statement of affairs under -----------
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a) List A b) List B c) List C d) List C
85. Preferential creditors are shown in the statement of affairs under---------
a) List D b) List B c) List C d) List A
86. The proceeds of assets not specifically pledged and the surplus of the assets specifically
pledged is first available for --------------------
a) preferential creditors b) Unsecured creditors c) preference Shareholders
d) Legal charges,Liquidator’s remuneration and Liquidation expenses
87. Any sum due to employee out of provident fund is an example of ----------------
a) Unsecured creditor b) preferential creditor
c) Secured creditor d) partly secured creditor
88. The Liquidator’s final statement of A/c is prepared --------
a) Only in case of creditors voluntary winding up
b) Only in case of members voluntary winding up
c) Only in case of compulsory winding up by the court
d) Whatever may be the mode of winding up
)
89. Bills were discounted to the extent of Rs.10,000 of which bill of Rs. 4,000 are likely to be
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dishonoured. Hence, the liability to rank in respect of these bills will be -------------
a) Rs.10,000 b) Rs.4,000 c) Rs. 6,000 d) Rs.14,000
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90. when the sale proceeds of pledged security is not sufficient to pay off secured creditors
fully, the balance due to them should be added to ---------------
a) Unsecured creditors
c) Equity share capital
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b) preferential creditors
d) preference share capital
91. when the liquidated company has adequate cash to pay off all liabilities, the interest on
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liabilities should be paid ------------
a) upto date of commencement of insolvency proceedings
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b) upto the date of actual payment of liabilities

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c) upto the date of payment to shareholders d)None

92. At the time of liquidation of a company, the liquidators have to file a statement of
receipts and payments known as ---------- a) Liquidators final statement of A/c
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b) Statement of affairs c) Surplus/Deficiency A/c d) None of these

93. As per the provisions of Sec 205A unclaimed dividend should be included in---------
a) List A b) List B c) List D d) List E
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94. The deficiency shown by deficiency a/c will be equal to the deficiency revealed by the----
a) Statement of Affairs b)Liquidators final Statement c) Both d) None
A
95. Debenture holders secured by first floating charge are paid after the payment to----
a) Preferential creditors b) Unsecured creditor
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c) Secured creditor d) Deficiency or surplus

96. Under Net Asset Method, the value of share depends on the amount that would be
available to---------------- a) Preference Share holders b) Equity share holders
c) Creditors d) Debenture holders
97. List H shows---------- a) Preferential creditors b) Unsecured creditor
c) Secured creditor d) Deficiency or surplus
98. Goodwill is asset. a) ficitous asset b) net asset
c) gross d) none
99. The job of realizing assets and paying various liabilities during liquidation of a company
is performed by a person is called
a) clerk b) auditor c) liquidator d) Promoter
100. A share holder is ------- a) contributory b) creditor c) banker d) none
8
SECTION B
UNIT I
1) Batiboi co Ltd issued 50,000 equity shares of rs.10 each to the public on condition that full
Amount of share will be paid in a lump-sum. All these shares were taken up and paid by
The Public. Pass the journal entries in the books of company. When
(A) Shares are issued at par
(B) Shares are issued at a premium of 10% and
(C) Shares are issued at a discount of 10%.
2) Ram Ltd invited applications for 1, 40,000 shares pf RS.10 each payable RS.2 on
Application Rs.2 on allotment and RS.6 on first and final call. The company received
Application for 2,00,000 shares and pro-rata allotment was made. Pass journal entries and
Prepare cash book, assuming all the instalment were duly received.
)
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3) Kandhan Ltd issued 40,000 shares of RS.10 each payable in full on application as per a
Private placement agreement .The Company received application 40,000 shares.
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Applications were accepted in full. Show journal entries in the books of Kandhan ltd.
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4) Mr. Senthil is the shareholder in kiran ltd holding 2,000 shares of RS.10 each he had paid
Rs.2 and RS.3 per share on application and allotment respectively, but failed to pay RS.3
and Rs.2 per share for 1 st and 2nd call respectively. Directors forfeitures his shares given
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on journal entries.
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5) Mohan Ltd invited applications for 2,000 shares of RS.100 each at a discount of 10%
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Payable as follows:
On application Rs. 25
On allotment Rs.30
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On first call and final call RS.35.

Whole of the issue was subscribed and paid for except the final call on 300 shares
which were forfeited by the company after giving due notice. Pass the forfeiture entry.
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6) P, Q, R Ltd issued 25,000 shares of RS.100 each. The whole issue was under-written by
A
David. In addition, there is a firm under writing of 3,000 shares by David. Application for
17,000 shares were received by the company in all. Calculate the liability of David.
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7) Sky Lega issued 30,000 equity shares of RS.100 each.75% of the issue was under-written
by Prakash. Application for 21,000 shares were received in all by the company. Determine
The liability of Prakash.
8) Sterling Ltd have part of their share capital in 25,000 6% redeemable preference shares of
Rs.100 each. The company decided to redeem the preference shares premium of 10%.The
General reserve of the company shoe a credit balance RS.3,00,000. The directors decide to
Utilise 60% of the reserve in redeeming preference shares and the balance is to be met
from the proceeds of fresh issue sufficient number of shares RS.10 each. The premium is
to be met from year’s profits &loss appropriation account. Give journal entries to record
the above transactions.
9
9) Symcox L td issued 75,000 equity shares of RS.10 each and 5,000 redeemable preference
shares of RS.100 each all shares being fully called and paid-up on 31.03.1992 profit &
loss Account showed undistributed profits of Rs.3,00,000 and general reserve stood at
Rs.2,50,000 on 01.04.1992,the directors decided to redeem the existing preference shares
at Rs.105. Utilising as much profits as would be required for the purpose. You are
required to pass journal entries in the books of the company.
10) Briefly explain the Capital redemption reserve.

UNIT II
11. Excel Ltd. Made3 the following issues of debentures on 1.4.97
a) 200n 10% debentures of Rs.100 each to settle a creditors who supplied a machine on
credit some time ago at a price of Rs.18,000.
b) 300 10% debentures of Rs.100 each for cash at a discount of 5%
c) 1,000 10% debentures of Rs.100 each to the bankers as co9llateral security for loan of
Rs.80,000.
)
All the above issues are redeemable at par.
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Pass journal entries t6o record the above in the books of the company and show how
these items are to be shown when the company’s Balance Sheet is prepared.
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12. Hamid Pasha Ltd. Obtained an overdraft of Rs.5,00,000 from bank for which the
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company issued 7,000 12% debentures of Rs.100 each as collateral security. Show how
the items appear in Balance Sheet, if (a)The issue of debentures need not be recorded in
the books (b) the issue of debentures must be recorded in the books.
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13. Moon Rays Ltd. Issued 50,000 8% debentures of Rs.10 each to the public at par, to be
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paid Rs.4 on application and the balance on allotment.

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Applications were received for 48,000 debentures. Allotment was made to all the
applicants and the amount due was received promptly. Give journal entries to record the
transactions and show how they appear in the Balance Sheet of the company.
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14. A company purchased Building of the book value of Rs.1,98,000 from another firm. It
was agreed that the purchase considerati9on be paid by issued 10% debentures of Rs.100
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each. Give journal entries if the debentures hsve been issued:

1) at par
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2) at discount of 10% and

3)at a premium of 10%.
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15. Rashid Ltd. Has Rs.10,00,000 8% Debebtures outstanding on 1.1.96. The company has
been redeeming every year on January 1 st Rs.1,00,000 debentures by drawings by lot, at
par. Give necessary journal entries:
(a) If the redemption is out of profits.
(b) If the redemption is out of capital.
16. Rajan as small scale industrialist decided to convert his firm into a limited company with
effect from 1st April 1996 . But he obtained the of incorporation on 1 st August 1996 and
the certifcate to commence business on 1 st October 1996. His accounts were closed on
31st December 1996.
`Find out the time ratio for the purpose of ascertaining pre incorporation profit.
10
17. AXE Co. Ltd., issued Rs.4,00,000, 10% debentures of Rs.100 each at a discount of 5%
which are repayable after 10 years at a premium of 15%. Pass journal entry for the issue.
18. Krishna Ltd which had Rs.50,00,000 10% debentures outstanding, made the following
purchase in the open market for immediate cancellation:
1.4.1997 1,000 debentures of Rs.100 each at Rs.9
1.9.1997 2,000 debentures of Rs.100 Each at Rs.97.
You are required to give the journal entries for purchase and cancellation of the
debentures.
a) If the above purchase rates are ‘Ex-interest’
19. Earth Movers Ltd. Issued 15,000 14% debentures of Rs.100 each for the public
subscription, at a premium of 10% payable as to Rs.30 on application, Rs.50(including
premium)on allotment and the balance in one call.
25,000 applications were received. 4,000 applications were rejected and debentures were
)
allotted to the remaining applications pro-rata.Allotment amount was received from all
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the allotees one of who paid the call amount due on his1,000 debentures along with
allotment money. The call amount was also collected on the due date.
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You are required to pass necessary journal entries in the company’s books.
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20 .Chand Ltd. Issued 1,000 12% Debentures of Rs. 100 each on 1-1-2011 at a discount of
10%, redeemable at premium of 10%. Give journal entries relating to issue of debentures
interest for the period ending 31.12.2011assuming that the interest was payable half
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yearly on 30th june and 31st December and tax deducted at source rate is 10%. Chand Ltd.
follows calander year as its accounting year.
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UNIT III
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21. Following balances have been extracted from the books of Rama Ltd., on 31 st
March,2014:
Equity share capital (1,00,000 shares of Rs.10 each) Rs.10,00,000; Securities premium
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Rs.2,00,000; 12% Debentures Rs.5,00,000; Creditors Rs.2,00,000; Proposed Dividend

Rs.50,000; Surplus, that is Balance in statement of profit and loss (debit) Rs.50,000;
Land and Building Rs.9,00,000; Government Bonds Rs.5,00,000; Capital Work-in
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Progress (Building) Rs.3,50,000 and Discount on issue of 12% Debentures

Rs.1,00,000; Cash at Bank Rs.50,000; Furniture Rs.60,000; Debtors Rs.20,000.
Debenture were issued on 1st April, 2013 redeemable after 5, years that is on 31 st March,
A
2017.
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Surplus that is Balance in statement of profit and loss is before writing off Discount on
issue of debentures.
Prepare the balance sheet of the company as per revised Part of the Companies Act,
1956.
22 The following ledger balances were extracted from the books of Varun Ltd. as on
31.03.2013:
Land and building Rs.2,00,000; 12% debentures Rs.2,00,000; share capital
Rs.10,00,000 (equity shares of Rs.10 each fully paid up); plant and machinery
Rs.8,00,000; goodwill Rs.2,00,000; investment in shares of Raja Ltd. Rs.2,00,000;
general reserve Rs.1,95,000; stock in trade Rs.1,00,000; bills receivable Rs.50,000;
debtors Rs.1,50,000; creditors Rs.1,00,000; bank loan(unsecured) Rs.1,00,000;
provision of tax Rs.50,000; proposed dividend Rs.55,000.
11
Prepare the balance sheet of the company as per revised schedule , part of the
Companies Act 1956.
23. The following balances have been extracted from the books of Rama Ltd. as on 31st March
2013:
Share capital Rs.10,00,000 securities premium Rs.1,00,000
12% debentures Rs.5,00,000 trade payables(creditors) Rs.2,00,000
Proposed dividend Rs.50,000 government bonds Rs.4,00,000
Machinery Rs.9,00,000 cash and cash equivalents Rs.1,00,000
Work in progress Rs.4,00,000
Surplus i.e., balance in statement
of profit and loss (Dr) Rs.50,000
Prepare the balance sheet of the company ass per Revised Schedule ,part of the
companies Act 1956.
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24. From the following balances, prepare the balance sheet of a company in the prescribed
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format. Goodwill Rs.1,50,000; investments Rs.2,00,000; share capital Rs.5,00,000; reserves
Rs.1,10,000; securities premium Rs.15,000; preliminary expenses Rs.10,000; profit and loss
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A\c(cr) Rs.25,000; debentures Rs.2,50,000. Other fixed assets Rs.4,70,000; stock Rs.80,000;
debtors Rs.60,000; bank balance Rs.30,000; unsecured loan Rs.65,000; sundry creditors
Rs.35,000. ce
25. Prepare a balance sheet as at 31 st March 2000 from the following information of ABC Ltd
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as required under Companies Act 1956:
Rs Rs
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Term loan 10,00,000 loss for the year 3,58,000

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Creditors 11,45,000 sundry debtors 12,25,000

Advances 3,72,000 loans from directors 2,00,000
Cash & bank balances 2,75,000 provisions for doubtful debts 20,200
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Staff advances 55,000 stock 4,00,000

Provision for tax 1,70,000 fixed assets (W.D.V) 51,50,000
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Securities premium 4,75,000 finished goods 7,50,000

Loose tools 50,000 General reserve 20,50,000
Investments 2,25,000 Capital work in progress 2,00,000
A
Additional Information:
(a) Share capital consist of:
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(1) 30,000 equity shares of Rs.100 each fully paid up

(2) 10,000- 10% pref.shares of Rs.100 each fully paid up
(b) Term loan is secured
(c) Depreciation on assets ; Rs.5,00,000
26. Following balances have been extracted from the books of jenins company ltd., as on 31 st
march 2014:
Particulars Dr.r Cr.rs

s.
Machinery 1,60,000
Land & building 6,74,000
Dep.on machinery 16,000
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Purchases(adjusted) 4,00,000
Closing stock 1,50,000
Wages 1,20,000
Sales 10,00,000
Salaries 80,000
Bank overdraft 2,00,000
10% debentures (issued on 1 st April 2013) 1,00,000
Equity share capital-shares of Rs.100 each (fully paid) 2,00,000
Preference share capital- 1,000 6% shares of Rs.100 each fully 1,00,000
paid
The board of directors of jenins company ltd., had decided to make the following
appropriations:
(a). To declare an equity dividend @10% on paid up capital
(b). To pay dividend on the preference share capital in full
(c). To transfer Rs.2,00,000 to general reserve
)
Prepare statement of profit and loss for the year ended 31st March 2014 and the balance sheet
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as that date. Ignore the income tax.
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27. The following trail balance of Nallis ltd., as at 30th December 1988 is given to you:
Debits Rs Credits Rs
Stock (1.1.98) ce
80,000 8,000 equity shares of Rs.100
each,Rs75
6,00,000
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Bank 17,000 6% debentures 2,00,000
Patents 60,000 P&L A/c (Cr) 12,000
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Calls in arrears 20,000 sundry creditors 1,00,000

Returns inwards 30,000 general reserve 80,000
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Purchases 7,72,000 sales 10,00,000

Wages 1,08,000 returns outward 20,000
Insurance prepaid 400
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Bills receivable 30,000

Sundry debtors 80,000
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Discount on issue of 10,000

debentures
Plant & machinery 4,00,000
A
Land & buildings 3,00,000

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Insurance 4,000
General expenses 40,000
Additional information:
(a). The value of stock on 31 st December 1988 was Rs. 74,000
(b). Outstanding wages totalled Rs. 10,000
(c). A provision 5% is to be created on sundry debtors for doubtful debts
(d). Depreciate patents@ 10% and Plant & Machinery @ 7.5 % and so on Land @ Buildings
@ 4%.
You are required to prepare statement of profit and loss for the year ended 31.12.1988 and
balance sheet as on that date.
13
28. From the following balances 31 st December 1988 of a limited company, prepare statement
of profit and loss for the year ended and balance sheet as on that date:
Stock 1.1.88 33,380 subscribed & paid 50,000
Discounts 6,788 up capital
Land 22,000 Sales 1,46,268
Plant & Machinery 10,700 sundry receipts 200
Purchases 91,888 Creditors 39,532
Furniture 2,750 provision for bad debts 5,300
Debtors 63,600 discounts (Cr) 5,904
P & L A/c (Dr) 4,960 bank overdraft 13,823
Carriage 3,780 customer’s deposit 400
Wages 9,016
)
Bad debts 1,820
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Office expenses 10,275
Cash in hand 470
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The following adjustments have to be made:
(a). Stock on 31.12.1988 Rs.35,460 ce
(b). Depreciation on Plant &Machinery at 10% and furniture at 6%
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(c). Provide 10% for bad and doubtful debts
(d). Customer’s deposit has been forfeited
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(e). Proposed dividend at 10%

(f). Provision for taxation Rs.7,500
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(g). The managing director is entitled to 10% commission on net profits before charging such
commission
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29. What is the maximum rate of managerial remuneration in case of public ltd company
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30. Give some examples for intangible assets

UNIT IV
31. Raman Ltd., agrees to purchase the business of Krishnan Ltd on the following terms:
A
a) For each of the 10,000 shares of Rs. 10 each in Krishnan Ltd. 2 Shares is Raman Ltd.
of Rs. 10 each will be issued an agreed value of Rs. 12 per share. In additional, Rs. 4
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per shares cash also will be paid.

b) 8% Debentures worth Rs. 80,000 will be issued to settle the Rs. 60,000 9% debentures
in Krishnan Ltd.
c) Rs. 10,000 will be paid towards expense of winding up.
Calculate the purchase consideration.
32. Following is the balance sheet of Samy Ltd. as on 31-3-2004
Liabilities Rs. Assets Rs.

Share Capital: 8% Preference Fixed Assets 16, 25,000
Shares of Rs. 100 each 3, 75,000
Equity shares of Rs. 10 each 7, 50,000 Investments 3, 00,000
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General Reserve 4, 50,000 Current Assets 2, 50,000
7% Debentures 3, 50,000
Current Liabilities 2, 50,000
21,75,000 21, 75,000
Romy Ltd. agreed to takeover the business of Samy Ltd.

A. Calculate Purchases consideration under Net assets method on the basis of the
following:
i. Romy Ltd. agreed to discharge 7% debentures at a premium of 10% by
issuing 9% debentures of Romy Ltd.
ii. Fixed assets are to be valued at 10% above book value, the investment at
par, current assets at 10% discount and current liabilities at book value.
B. Calculate purchase consideration under Net payments method on the basis of the
)
following:
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i. Romy Ltd. agrees to discharge the 7% debentures at a premium of 10%
by issuing 9% debentures of Romy Ltd.
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ii. Preference Shares are discharged at a premium of 10% by issuing 10%
preference shares of Rs. 100 each in Romy Ltd.
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For every 2 Equity shares in Samy Ltd. 3 Equity shares of Rs. 10 each in
Romy Ltd. Will be issued in addition to Cash payment of Rs. 3 per
Equity share in Samy Ltd.
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33. Spring Field Ltd ,is absorbed by sports Field Ltd .,the consideration being:
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(1)The taking over of the trade liabilities of Rs.40,000;

(2) The payment 1of cost of absorption of Rs.15,000;
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(3) The repayment of ‘B’ debentures of spring field ltd .of Rs.2,00,000 at par;
(4)The discharge of ‘A’ debentures of Rs.3,00,000 in the vendor co.at a
premium of 10% by the Issue of 8% dentures in sports field ltd at par;
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(5)A payment of Rs.20 per share in cash and the exchange of 4 fully paid Rs.10
shares in sports field Ltd.at a market price of Rs.15 per shares for every
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Rs.50 share for every Rs.50 share in spring field Ltd. Which were 40,000 in
number.
You are required to find out the purchase consideration.
A
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34. Raj Ltd and Gobi ltd. agreed upon an amalgamation. The balance sheets of both the
companies were as follows:
Liabilities Raj ltd Gobi ltd Assets Raj ltd Gobi ltd
Issued capital 30,000 24,000 Furniture 9,000 6,300

(Rs.10 each)
Reserve 1,500 Debtors 14,400 18,000
P&L A/C 3,600 Bank 18,360 12,240
Sundry creditors 12,900 7,440 P&L A/C 1,140
42,900 36,540 42,900 36,540
15
The assets of Raj ltd are to be taken over at book values except furniture which is to be
written down by Rs.3,060. Gobi Ltd’s assets are to be taken over at book values except
debtors which are to be considered worth Rs.9,900. The share capital of the combined
company is to be 2,400 preference shares of Rs.10 each fully paid and ordinary shares of Rs.5
each fully paid. The allocation of the shares is equal except that the surplus capital of Raj Ltd
is to be satisfy by preference shares.
Show the balance sheet of the new company.
35) The following are the summarised balance sheet of Amar Ltd and Samar Ltd as on 31 st
March 1994.
Liabilities Amar Ltd Samar Ltd Assets Amar Ltd Samar Ltd
Rs Rs Rs Rs
Issued share capital: 8,00,000 6,00,000 Goodwill 1,20,000

Shares of Rs.10 each
)
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P&L A/C 1,40,000 Fixed assets 6,00,000 2,40,000
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Creditors 80,000 2,40,000 Current assets 4,20,000 2,80,000
P&L A/C 2,00,000
10,20,000 8,40,000 ce 10,20,000 8,40,000

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Amar Ltd agreed to take over the business of Samar Ltd as on the date of the balance sheets.
After due negotiations, it was determined that the shares of Amar Ltd are worth Rs.12 each
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and the shares of Samar Ltd are worth Rs.5 each.

You are required to make the necessary entries in the books of Amar Ltd and draw up its
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balance sheet immediately after the takeover.
36) The balance sheet as on 31 December 1983 of the Gamma Ltd was as follows:
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Share capital Land 65,000
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1,000 shares of Rs.100 each Machinery 22,000

Fully paid up 1,00,000 Furniture 3,000
8% debentures 40,000 Stock 25,000
A
Creditors 6,000 Debtors 15,000

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Cash 4,000
P&L A/C 12,000
1,46,000 1,46,000
Beta company Ltd was formed to take over the business of Gamma Ltd, with a nominal
capital of Rs.1,00,000 dividend into 500 9% preference shares of Rs.100 each and 500 equity
shares of Rs.100 each on the following basis:
(a) The debenture holders in Gamma Ltd are to accept 350 preference
Shares
(b) The shareholders in Gamma Ltd are to receive one equity share in Beta
Ltd for every two shares held by them.
(c) Cost of liquidation met by Beta Ltd Rs.600.
(d) The balance of pref. shares have been issued and taken up by the public.
16
Give important ledger accounts to close the books of Gamma Ltd and journal entries in the
books of Beta Ltd.
37) Divya Ltd., agreed to take over Pranav Ltd., was to pay the debentures and liabilities of
Pranav Ltd., and take over the assets, the consideration being the issue by Divya Ltd., of
4,00,000 fully paid shares of Rs.10 each and the payment of Rs.3,00,000 in cash to Pranav
Ltd.in addition to paying its liquidation expenses of Rs.1,40,000.
The balance sheets of the costs of the Co were as under:
Divya Ltd Pranav Ltd Divya Ltd Pranav Ltd
Liabilities (Rs) (Rs) Assets (Rs) (Rs)
Share capital 50,00,000 Goodwill 30,00,000 5,00,000

(Rs.10 each) 1,50,00,000 10,00,000 Fixed assets 1,03,33,000 35,68,200
)
10% debentures 50,00,000 4,36,200 Machinery 38,76,800 16,43,900
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Creditors 8,34,200 2,69,500 Debtors 7,24,000 3,98,400
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P&L A/C 9,88,500 2,00,000 Stock 17,92,600 7,85,200
Bank O.D. - Bills Receivable 3,62,100 -
Bank Balance 1`6,84,200 -
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Calls in arrears 50,000 10,000
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2,18,22,700 69,05,700 2,18,22,700 69,05,700

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38. What is pooling of interests method?

39. How purchase consideration is determined?
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40. Explain capital reduction.

UNIT V
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41. From the following details ascertain unsecured creditors to be shown in statement
of affairs:
A
Rs.
K
Creditors for goods 80,000

Bills payable 8,000
Loan from bank ( unsecured) 20,000
Bank over draft 6,000
Loan on security of machinery 40,000
Estimated realisable value of machinery 32,000
Bills discounted 31,000 (20% expected to rank)
Contingent liabilities 5,000 ( 10% expected to rank)
42. From the following particulars, related to a liquidated company, calculate the
amount of unsecured creditors and preferential creditors :
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The creditors other than secured creditors of a liquidated company were :
Rs .
Trade creditors 1,42,200
Provident fund of workers 11,000
Gas board for gas supplied 420
Dues to city corporation for local taxes 10,000
Salary of clerk for six months 30,000
Salary of peon for four mo 6,000
Directors fees for four months 8,000
Income tax due 10,000
Compensation under workmen’s compensation act 9,000
)
43. On the date of liquidation of a company, the salaries of four clerks for four
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months at the rate of Rs.7,000 p.m. and salaries of four peons for three months at the
rate of Rs. 1,500 p.m. are outstanding. You are required to calculate the amount to be
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included in preferential creditors, and unsecured creditors.
44. Calculate liquidator’s remuneration from the following particulars:

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Assets realised: Rs. 6,30,000 including cash balance : Rs. 30,000 liquidator’s
remuneration
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2% on the assets realised.
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45. Compute liquidator’s remuneration from the information given below:

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Secured creditors : Rs. 60,000 ( securities realised : Rs. 80,000)

Other assets realised : Rs. 75,000
Liquidator’s remuneration : 2 ½ % on the amounts realised ( including
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securities with creditors

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46. Ascertain the remuneration payable to liquidator from the data given below:
A
Secured creditor : Rs. 50,000 ( securities realised by secured creditors : Rs.

60,000)
K
Assets realised : Rs. 80,000

Liquidator’s remuneration : 3% on the amounts realised
From the following particulars, calculate the remuneration payable to liquidator:
(a) Amount available for distribution to unsecured creditors before paying to

Liquidators remuneration : 2,80,800
(b) Liquidator’s remuneration : 2% on the amount paid to unsecured

creditors
47. Find out the remuneration payable to liquidator with the help of the following
information.
18
Preferential creditors : Rs. 1,400
Unsecured creditors : Rs. 81,000
Amount available for unsecured
Creditors after paying preferential
Creditors, before paying liquidator’s
Remuneration : Rs. 74.154
Liquidator’s remuneration : 2% on the amount distributed to
unsecured Creditors
48. The liquidators of a company is entitled to a remuneration of 2% on assets

realised and 3% on the amount distributed to unsecured creditors. The assets realised
Rs. 1,00,000 including cash balance of Rs. 5,000 . amount available for distribution to
unsecured creditors before paying liquidators remuneration was Rs. 43,100 . calculate
liquidator’s remuneration.
)
49. The liquidator of SR & Co Ltd. Is entitled to get a remuneration of 3% on the
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amount realised from the assets and 2% on the amount distributed to the unsecured
creditors. From the following particular calculate the remuneration payable.
(U
(a) Cash realised from assets 3,00,000
(b) Preferential creditors 10,000
(c) Amount due to unsecured creditors ce 4,00,000
50. Give a Proforma of Liquidators Final Statement of Account.

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SECTION C
UNIT I
m
1) In January 1998 Green Ltd issued 2000 shares of Rs.100 each at a discount of 5% the issue
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was fully subscribed by paying Rs.20 per share on application. The balance was
payable as to Rs.25 on allotment (with adjustment of discount) Rs.20 on first call and
Rs.30 on final call.
-C
All the calls were made and received with an exception of final call on 200 shares
held by one Mr. Zahir. Pass Journal entries to record the above and show the
resultant balance sheet.
SC
2) Udhayam Ltd issued shares to the public @ Rs.100 each, payable as to Rs.12.50 on
A
application Rs.12.50 on allotment Rs.25 three months after allotment and the balance to
be called up as and when required. All Moneys upto allotment were duly received, but as
K
regards the call of RS.25,a shareholders holding 200 shares did not pay the amount
due. Another shareholder who was allotted 300 shares paid them up in full. Show the
necessary journal entries to record the above transactions and show how the capital
should appear on the balance sheet.
3) Daniel Co. Ltd issued 30,000 equity shares of RS.100 each at a premium of RS.20 per
Share payable as follows:
(I) On application RS.20 (on 15-01-1998)
(II) On allotment RS.40 (on 01-02-1998) (including premium)
(iii) On first call RS.30 (on 01-05-1998)
(iv) On final call RS.30 (On 01-09-1998)
The company’s articles provide for 5% p.a. Interest on calls-in –arrear and 6%p.a.Interst
on calls-in-advance. All the shares were duly applied and all moneys were received on
19
the due date except the following. (i) A holder of 300 shares paid the amount due
along with allotment and (ii) a holder of 300 shares paid the entire amount due on 1 st
Call with the amount due on 2 nd call. Cash in respect of interest on calls-in-arrear or
Calls-in-advance was neither received nor paid. You are required to pass journal entries
to record the above transactions.
4) Ambassador Ltd. Issued 2,000 shares of RS.100 each at a premium of 10% payable as
follows:
(i) Rs.25 on application
(ii) Rs.35 on allotment (including premium)
(iii)Rs.20 on first call
(iv)Rs.30 on final call
1,800 shares were applied for and allotted all the money was received with the
Expansions of 1st and final call on 2,000 shares held by Raghu. These share were
Forfeiture. Give journal entries and balance sheet.
)
G
5) A company issued 10,000 equity shares of RS.10 each at a premium of RS.3 per share
payable RS.5 0n application.RS.5 (including premium)on allotment and the balance on
(U
call. All the shares offered were applied for and allotted. All the moneys due on allotment
were received expect on 200 shares call was made. All the amount due thereon was
ce
received except on 300 shares. Directors forfeited 200 shares on which both allotment
and call money was not received.
Pass the necessary journal entries to record the above and also show how this will
er
appear in the balance sheet of the company.
m
6) A company issued 1,00,000 shares of RS.10 each payable as RS.1 0n application, RS. 2 0n
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allotment,RS.3 on first call and RS.4 on final call. All the amount received with the
following exceptions.’P’ holding 1,000 shares has not paid the money due on allotment
and calls. ’A’ who holds 500 shares has not paid the money due on first and final calls.
’K’ who holds 300 shares has not paid the money due on final call.
-C
The shares of P, A and K were, therefore forfeited. These shares were subsequently
reissued at a premium of 5%.Pass the journal entries recording the above issue of
SC
shares.
A
7) Gopu industries ltd issued 50,000 Shares of RS.20 each at per. The following details of the
amounts payable.
K
DATE CALL Rs. per share

1997 June 30 Application 4
1997 SEPT 30 Allotment 5
1997 DEC 31 First call 3
Except Rajan a shareholder holding 1,000 shares who failed to pay the allotment amount
and the 1st call, all the other amounts were received. on march 15,1998 the shares of Rajan
were forfeited. Pass the journal entries in the books of the company for the above
transactions.
8) Bhooma Ltd issued 50,000 shares of RS.10 each payable as follows:

(i)RS.20 on application
(ii)RS.30 on allotment
(iii)RS.25 on first call and
20
(iv)RS.25 on final call
The company received applications for 40,000 shares and these applications were accepted.
All sums due on allotment, first and final calls were received expect the final call on 400
shares. These 400 shares were subsequently forfeited by the company and reissued at RS.80
per share. Give journal entries in the books of the company.
9) Fast forward made on issue of 60,000 shares which were underwritten as follows,
X-30,000 Shares ; Y-18,000 shares and Z-12,000.In addition, there was firm underwriting
as follows;
X-3,000 shares ;Y-1,500 shares and Z-4,500 shares. The total subscription including firm
underwritten was 45,600 shares. The following marked firm were included in the
subscription.
X-9,000 shares;Y-13,500 shares;Z-5,100 shares show the allocative of liability of each
underwriter.
)
(i) If the benefit of firm underwriting application is given to application by treating them like
G
marked firms.
(ii) If the benefit of the firm underwriting application is not given to individual to
(U
Underwriters by treating them like unmarked firms.
ce
10) Excellent ltd issued 4,000 equity shares of 100 each and 4,000, 8% of RS.100 each. The
debentures were issued at a discount of 6%.The whole of the issue was underwritten by
Mrs.Thomsan&Co for a commission of 2.5% on the issue price and 2.5% issue price of
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Debentures. The public applied for 3,600 shares and 3,200 shares. These were
Immediately paid for the underwriters fulfilled their obligation. Pass journal entries and
m
Prepare balance sheet

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UNIT II
11. Timex Ltd., Issued 1,000 8% debentures of Rs.100 each. Give appropriate journal
entries in the books of the company, if the debenture were issued as follows;
-C
Issued at par, redeemable at par.

Issued at a discount of 5%, repayable at par.
Issued at a premium not 10%, repayable at par.
SC
Issued at par ,redeemable at a premium of 10%

Issued at a discount of 5%, repayable at a premium of 10%
A
You bare also requires to show how the items concerned appear in the Balance Sheet in each
of the above cases.
K
12. On 1.4.1997, Rama ltd. Issued 2,500 8% debentures of Rs.100 each at 5% DISCOUNT.
Holders of the debentures have option to convert their holdings into equity shares of Rs.25
per at any time within 3 years.
On 31.3.98, holders of 500 debentures notified their intention to exercise the
option.
Show the necessary journal entries in the company’s books relating issue and
conversion of the debentures. Also show how items affected would appear in the
company’s Balance Sheet
13. Goutham Ltd., 15,000 8% DEBENTURES OF rs.100 each at a discount of 5% payable

after 5 years at a premium of 5%. You are required to show: i)Journal entries at the time of
21
issue and redemption of debentures; ii) Show the “Loss on Issue of Debentures A/C” over
the period.
14.S Ltd., issued Rs.5,00,000 10% debentures of Rs.100 each at a discount of 10% The
debentures holders have an option to convert them into equity shares of Rs. 10 each at par is
at the end of the 10th year.
You are required to find out No. of shares a debentures holder gets and also give the
the necessary journal entries.
a) If he converts his 200 debentures at the end of the second year from the date of
issue;
b) If he converts his 200 debentures at the end of Tenth yesr, on the ageed date of
the redemption.
15.G Ltd., issued 2,000 12% Debentures of Rs,100 each 1.1.98 at a discount of 10%
)
redeemable at premium of 15% in equal annual drawings in 4 years out of profits. Give
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journal entries both the time of issue and redemption of debentures.(Ignore the treatment of
loss issue of debentures and interest)
(U
16. Show by means of journal entries the following at the time of issue on 1.1.1`995 and
redemption after 6 years on 31.12.1995 ce
A) Q Ltd. Issued 20,000 12% Debentures of Rs, 100 each at a discount of 5% to be
redeemed at a premium of 5% at the end of sixth year.
er
B) R.Ltd issues 30,000 13% debentures of Rs.100 each at par, to be redeemed at a
premium of 4% at the end of sixth year.
m
C) S Ltd issues 24,000 14% debentures of Rsw.100 each at a premium of 5% to be

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redeemed at par at the end of sixth year.

17. On 1-1-98, Y Ltd, issues 4,000 12% Debentures of Rs. 100 each repayable at the end of
four years at a premium of 5% . It has been decided to institute a Sinking Fund for the
-C
purpose, the investments being expected to realise 4% net. Sinking Fund tables show that
0.235490 amounts to RS.1 @4% in 4 years. Investment’s were made in multiples of
hundred only.
SC
On 31.12.2001, the Balance at bank was Rs.1,18,000 and the investments realised
Rs. 3,13,600. The debentures were paid off . Give journal entries and so ledger
A
accounts (Expect for debentures interest).

K
18. Samy Ltd, issued 60% debenture for Rs.12,00,000 on 1.1.94. It was provided in the
debenture trust deed that the debentures are repayable at the end of 1996 with a premium of
10%. A sinking fund was set up to provide case for the redemption on the due date. The
amounts set a side annually are to be invested in 5% government bonds sinking fund tables
so that 0.31720856 @ 5% compound invest in 3 years will become Re 1.
You are required to write the ledger accounts for all the 3 years in the company’s
books. Calculation may be made to the nearest rupee.
19. Ganesh Ltd, was registered on 1-7-97 to acquire the running business of Suneel &
Co., with effect from 1-1-97. The following was the profit and Loss account of the
company on 31-12-97.
Particular Rs. Particulars Rs.
To Office expenses 54,000 By Gross Profit B/d 2,25,000
22
To Formation expenses 10,000
(written off)
To Stationery& Postage 5,000
To Selling Expenses 60,000
To Directors Fees 20,000
To Net Profit 76,000
2,25,000 2,25,000
You are required to prepare a statement showing profit earned by the company in
the pre and post incorporation periods. The total sales for the year took place in the
ratio of 1:2 before and after incorporation respectively.
20. Mohith Ltd., which has Rs. 10,00,000 8% debentures of Rs. 100 each outstanding on
1.1.96. on which interest is payable on 30th june and on 31st December each year is
permitted to purchase its own debentures in the open market and cancel them or retain
)
them or resell them at its option.
G
The company made the following purchase in the open market on 1.4.96. 500
(U
Debentures at Rs.97 ex-interest.
Give appropriate journal entries, if
a) The debentures were cancelled on the same day;
ce
b) The debentures were retained till 1.7.96 on which date they were cancelled.
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UNIT III
m
21. Moon and star co.ltd is a company with an authorised capital of Rs.5,00,000 divided into
5,000 equity shares of Rs.100 each on 31.12.1985 of which 2,500 shares were fully called up.
om
The following are the balances extracted from the ledger as on 31.12.1985
Trail balances of Moon & Star co.ltd
-C
Opening stock 50,000 Sales 3,25,000

Purchases 2,00,000 Discount received 3,150
SC
Wages 70,000 Profit & Loss A/c 6,220

Discount allowed 4,200 Creditors 35,200
Insurance upto 31. 6,720 Reserves 25,000
A
Salaries 18,500 Loan from managing 15,700

K
directors
Rent 6,000
General expenses 8,950 Share capital 2,50,000
Printing 2,400
Advertisements 3,800
Bonus 10,500
Debtors 38,700
Plant 1,80,500
Furniture 17,100
Bank 34,700
Bad debts 3,200
Calls-in-arrears 5,000
6,60,270 6,60,270
23
You are required to prepare statement of profit and loss for the year ended 31.12.1985 and a
balance sheet as on that date. The following further information is given:
(a). Closing stock was valued at Rs.1,91,500
(b). Depreciation on plant at 15% and on furniture at 10% should be provided
(c). A tax provision of Rs.8,000 is considered necessary
(d). The directors declared an interim dividend on 15.8.85 for 6 months ending June 30, 1985
@6%
(e). Provide for corporate dividend tax 17%
22. A ltd., was registered with an authorised capital of Rs.6,00,000 in equity shares of Rs.10
each. The following is its trail balance on 31st March 1998
Trial balance of ‘A’Ltd.
Debit Rs Credit Rs
Goodwill 25,000
)
Cash 750
G
Bank 39,900
(U
Purchases 1,85,000
Preliminary expenses 5,000
Share capital 4,00,000
12% debentures
P&L A/c (Cr)
ce 3,00,000
26,250
er
Calls-in-arrears 7,500
Premises 3,00,000
m
Plant & Machinery 3,30,000

Interim dividend 39,250
om
Sales 4,15,000
Stock (1.4.97) 75,000
Furniture & fixtures 7,200
-C

Wages 84,865
SC

Freight and carriage 13,115
Salaries 14,500
A
Directors’ fees 5,725

K
Bad debts 2,110

Debenture interest paid 18,000
Bills payable 37,000
Sundry creditors 40,000
General reserve 25,000
Provision for bad debts 3,500
12,46,750 12,46,750
Prepare statement of profit and loss and balance sheet in proper from after making the
following adjustments:
a) Depreciate plant and machinery by 15%
b) Write off preliminary expenses
c) Provide for 6 months interest on debentures
24
d) Leave bad and doubtful debts provision at 5% on sundry debtors
e) Provide for income tax at 50%
f) Stock on 31.03.1998 was Rs.95,000
g) Provide for corporate dividend tax@ 17%
23. The Mafatlal manufacturing company Ltd. Chennai, was registered with a nominal capital
Rs. 12,00,000 in equity shares of Rs.10 each. The following is the list of balances extracted
from its books on 31 st March 1998.
Rs. Rs.
Premises 6,00,000 Sales 8,30,000
Stock(1.4.97) 1,50,000 6% debenture 6,00,000
Furniture 14,400 profit @loss A\c 29,000
Calls in arrears 15,000 bills payable 76,000
Plant & machinery 6,60,000 sundry creditors 1,00,000
Interim dividend paid 75,000 general reserve 50,000
)
Sundry debtors 1,74,000 provision for Doubtful 7,000
G
debts(1.4.97)
(U
Goodwill 68,000 subscribed, called up & 8,00,000
paid up capital
Cash 63,300
Purchase
Preliminary expenses
3,70,000
10,000
ce
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Wages 1,69,730
m
Advertising 20,000
Freight 26,230
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Salaries 29,000
Directors ‘ fees 11,450
Bad debts 4,220
-C
Debenture interest Paid 18,000

24,92,000 24,92,000
SC
The following adjustments have to be made:

(a) Stock on 31st March 1998 was valued at Rs.1,90,000
A
(b) Write off preliminary expenses

(c) Provide for half year’s debenture interest
K
(d) The provision for doubtful debts on 31 st March 1998 should be equal to 1% on
sales
(e) Directors’ fees are outstanding to the extent of Rs.550 and salaries Rs.1,000
(f) Depreciate plant & machinery by 5%; premises by 2% and write off Rs.2,400
on furniture
(g) Goods to the value of Rs.3,000 were distributed as free samples during the
year. But no entry in this respect had been made.
You are required to prepare the statement of profit and loss for the year ended
31st March 1998 and the balance sheet as on the same date.
24. The Auto parts manufacturing Co Ltd., was registered with an authorised capital of Rs.
7,50,000 divided into 3,000 6% cumulative preference shares of Rs.100 each and 4,500
equity shares of Rs.100 each. The following are the balances taken as on 31.12.98
25
Rs Rs
Stock on 1.1.98 2,41,500 share capital 3,000
6% cumulative preference 3,00,000
shares of Rs.100 each
3,000 equity shares (Rs. 75 2,25,000
called up)
Delivery expenses 1,02,000 P&L A\c (Cr) 58,500
General expenses 21,000 5% debentures 2,10,000
Bills receivable 6,000 trade creditors 1,25,520
Investments: 60,000 provision for taxation 8,800
6,000 shares of General reserve 82,725
Rs.10 Each in
sunrise co.ltd
)
9,000 sales 9,18,600
G
Preference dividend
half year 30.06.1998
(U
Bank balances 97,500
Goodwill 1,00,000
Trade debtors
Freehold premises
1,67,500
3,90,000
ce
er
at cost
Salaries 1,03,500
m
Rent & rates 38,250

Furniture at cost 75,000
om
Purchases 4,76,500
Freight & carriage 3,750
Inward
-C
Debenture interest 5,250

Half year
SC
Final dividend for 20,250

1997
Cash in hand 12,145
A
19,29,145 19,29,145
K
Prepare statement of profit and loss for the year ended 31.12.1998 and balance sheet at the
date after taking the following into account:
a) Closing stock Rs.2,15,000
b) Depreciation: 2 1\2% on freehold property and 6% furniture
c ) Bills receivable for Rs.2,500 maturing after 31.12.1998 has been discounted
with bank
d) Directors proposed to pay second half year’s dividend on preference shares
e) 10% dividend on equity shares is proposed
f) Provide 5% towards reserve for doubtful debts on trade debtors
g) Provide for corporate dividend tax
25. Big Bull Ltd. has a nominal capital of Rs.6,00,000 divided into shares of Rs.10 each. The
following trail balance is extracted from the books of the company as on 31.12.1987
26
Rs Rs
Calls in arrears 7,500 6% debentures 3,00,000
Premises(Rs.60,000 added on 3,60,000 Profit loss a/c(1.1.87)
1.7.1987) 14,500
Machinery 3,00,000 creditors
50,000
Interim dividend paid 7500 general reserve
25,000
Purchases 1,85,000 share capital (called
up) 4,60,000
Preliminary expense 5,000 bills payable
38,000
Freight 13,100 sales
4,15,000
Directors’ fees 5,740 provision for bad debts 3500
)
Bad debts 2,110
G
4% government securities 60,000
(U
Stock(1.1.87) 75,000
Furniture 7,200
Goodwill
Cash
25,000
750
ce
er
Bank 39,900
Wages 84,800
m

Salaries 14,500
om
Debenture interest 9,000

13,06,000 13,06,000
Prepare final accounts of the company for the year ending 31.12.87 in the prescribed form
-C
after taking into account the following adjustments:

a) Depreciate machinery by 10% and furniture by 5%
SC
b) Write off preliminary expenses

c) Wages include Rs.10,000 paid for the construction of a compound wall to the
premises and no adjustment was made
A
d) Provide 5% for bad debt on sundry debtors

K
e) Transfer Rs.10,000 to general reserve

f) Provide for income tax Rs.25,000
g) Stock on 31.12.87 was Rs.1,01,000
26. The silver ore co.ltd. was formed on 1.4.1997 with an authorised capital of Rs.6,00,000 in
shares of Rs.10 each of these 52,000 shares had been issued and subscribed but there were
calls in arrears on 100 shares. From the following trail balance as on March 31,1998, prepare
statement of profit & loss and the balance sheet.
Rs Rs
Cash at bank 1,05,500 share capital
5,19,750
27
Plant 40,000 sale of sliver 1,79,500
Mines 2,20,000 interest on F.D.upto dec.31
3,900
Promotion expenses 6,000 dividend on investment
3,200
Advertising 5,000
Cartage on plant 1,800
Furniture & 20,900
buildings
Administrative 28,000
Repairs to plant 900
Coal and oil 6,500
Royalties paid 10,000
Railway track& 17,000
wagon
)
Wages of miners 74,220
G
Cash 530
(U
Investment shares 80,0000
of tin miners
6% F.D in syndicate
bank 89,000
7,06,350
ce 7,06,350
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m
Adjustments:
om
(a) Depreciate plant and railway by 10%; furniture& building by 5%

(b) Write off a third of the promotion expenses
(c) Value of silver ore on March 31,1998 Rs.15,000
-C
(d) The directors forfeited on Dec.20,1997,100 shares on which only Rs.7.50 had been
paid.
SC
27. A limited company was registered with an authorised capital of Rs.30,00,000 in equity
shares of Rs. 10 each. The following is the list of balances extracted from its books on
A
31.12.94
K
Rs
Purchases 9,25,000
Wages 4,24,325
Manufacturing expenses 65,575
Salaries 70,000
Bad debt 10,550
Directors ‘ fees 31,125
Debenture interest paid 45,000
Preliminary expenses 25,000
Calls in arrears 37,500
Plant & machinery 15,00,000
Premises 16,50,000
Interim dividend paid 1,87,500
28
Furniture and fittings 35,000
Sundry debtors 4,36,000
Stock on 1.1.94 3,75,000
Cash in hand 1,00,000
Goodwill 28,750
Cash at bank 1,99,500
Subscribed and fully called up capital 20,00,000
Profit & loss A\c (Cr) 72,500
6% debentures 15,00,000
Sundry creditors 2,90,000
Bills payable 1,67,500
Sales 20,75,000
General reserve 1,25,000
)
You are required to prepare statement of profit and loss for the year ended 31.12.94 and the
G
balance sheet as on that date, after making, the following adjustments.
(U
Depreciate plant& machinery by 10%. Provide half years interest on debentures. Also write
off preliminary expenses and make provision for bad and doubtful debts of Rs.4,250 on
sundry debtors. Stock on 31 st December 1994 was Rs.4,55,000. Provide for corporate
dividend tax @ 17% ce
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28. The following is the trail balance of ABC company Ltd. as on 31.12.1994. prepare
statement of profit and loss account and balance sheet.
m
Dr. ( Rs) Cr. ( Rs)

om
Authorised 5,00,000
capital:50,000 shares
of Rs.10 each
-C
Subscribed 1,00,000
capital:10,000 shares
SC
of Rs. 10 each
Calls in arrears 6,400
Land 10,000
A
Building 25,000
Machinery 15,000
K
Furniture 3,200
Carriage inwards 2,300
Wages 21,400
Salary 4,600
Bad debts reserve 1,400
(1.1.94)
Sales 80,000
Sales return 1,700
Bank charges 100
Coal 700
Rates and taxes 800
Purchases 50,000
Purchase return 3,400
29
Stock on 1.1.94 25,000
Fire insurance 400
Cash at bank 13,000
Cash in hand 2,500
Securities premium 6,000
General reserve 24,000
2,28,000 2,28,000
Charge depreciation on building at 2 1\2% on machinery at 10% and on furniture at 10%.

Make a reserve of 5% on debtors for bad debts.
)
Carry forward the following unexpired amount:
G
Fire insurance Rs.120
(U
Provide for liabilities:
Wages Rs.3,200. Salaries Rs.500 and rates Rs.200
The value of stock on 31.1294 was Rs.30,000.
ce
29. Give the format of balance sheet as per revised schedule 6.
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30. Give the format of statement of profit and loss as per revised schedule 6.
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UNIT IV
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31. Raman Ltd. and Sivan Ltd. have agreed to amalgamate. A new company Sivaram Ltd. has
been formed to take over the running concern as on 31.12.1995.The following Balance sheet
-C
show the position of the companies’ amalgamating.

SC
Liabilities Sivan Ltd Sivan Ltd Assets Sivan Ltd Sivan Ltd
Share 20,000 50000 Goodwill - 6,000
Capital
A
Rs.10 each
K
General 16,000 - Plant 14,000 20,000

Reserve
Capital - 4,000 Furniture 8,000 12,000
Reserve
P&LA/c 4,000 Sundry 10,000 17,000
Debtors
Loan from 10,000 16,000 Cash at 12,000 7,000
Bnak Bank
Creditors 10,000 6,000 P & L A/ - 6,000
Stock 16,000 8,000

60,000 76,000 60,000 76,000
30
Sivaram Ltd. took over all the assets and liabilities of both the transfer companies at book
except cash at bank, creditors and the goodwill of Sivan Ltd. which was considered
worthless.
The purchases considered was good was agreed at Rs. 60,000 for Raman Ltd. and Rs.
40,000 for Sivan Ltd. fully paid equity shares of Rs. 10 each were issued to settle the
purchase price for both the companies.
Cash at Bank of both the companies was exactly sufficient to settle their creditors at 10%
discount and pay the liquidation expenses.
You are required to give important ledger accounts to close the book of the transferor
companies and the Journal and Balance Sheet in the books of the transfer company, assuming
that the amalgamation is in the nature of purchase.
32. M Ltd and N Ltd agreed to amalgamate on the basis of the following Balance Sheet as
on 31.3.97
)
G
liabilities M N Assets M N
Share capital 75,000 50,000 Goodwill 30,000 -
(U
Rs.25 each
P&L A/c
Creditors
7,500
3,500 3,500 Stock
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2,500 Fixed Assets 31,500
15,000
38,800
12,000
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Depreciation - 2,500 Debtors 8,000 5,200
fund
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Bank 1,500 2,500

86,000 86,000 86,000 86,000
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The assets and liabilities are to be taken over by a new company formed called P Ltd., at
book values. P Ltd.’s capital is Rs. 2, 00,000 divided into 10,000 equity shares of Rs. 10 each
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and 10,000 9% preference shares of Rs. 10 each.

P Ltd. issued the equity shares equally to the vendor companies and preference shares
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were issued for any balance of purchase price.

Pass journal entries in the books of P Ltd. and prepare its Balance Sheet, if the
amalgamation is in the nature of Purchase.
A
33. The following is the Balance Sheet of X Ltd. as on 31.3.1996

K

Share Cpital 2, 20,00,000 Land and Buildings 10, 00,000
00,000 shares of
Rs10 each.
General reserve 2, 50,000 Plants & Machinery 15, 00,000
Dividend 2, 00,000 Furniture 25,000

equalization
Reserve
51,000 Stock 6, 00,000
Profit and Loss A/c
12% Debentures 10, 00,000 Work-in-progress 3, 00,000
Sundry creditors 3, 00,000 Sundry debtors 2, 50,000
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Cash at Bank 1,26,000
38,01,000 38,01,000
The company was absorbed by A Ltd. on the above date. The consideration for the
absorption is the discharge of the debentures at a premium of 5% taking over the liability in
respect of sundry creditors and a payment of Rs. 7 in cash and one share of Rs. 5 in A Ltd. at
the market value of Rs. 8 per share for every share in X Ltd. The cost of liquidation of Rs.
15,000 is to be met by the purchasing company.
Close the book of X Ltd., and pass journal entries in the books of A Ltd.
)
34. Following is the Balance sheet of K Ltd. as on 31.12.1980
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2,000 Shares of 20,000 Goodwill 4,000
Rs.10 each fully
paid
P&LA/c
Debentures
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7,000 Fixed Assets
10,000 Current Assets
16,500
19,500
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Creditors 3,000
40,000 40,000
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R Limited agreed to take over the assets of K Ltd. (exclusive of one fixed assets of
Rs. 4,000 and cash Rs. 1,000 included in current assets) at 10% more than the book values. It
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agrees to take over creditors also. The purchase price was to be discharged by the issue of
2,000 shares of Rs. 10 each at the market value of Rs. 15 each and the balance in cash.
Liquidation expenses came to Rs. 400.
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K Ltd. sold the fixed assets of Rs. 4,000 and realized the book value. It paid off as
debentures and liquidation expenses.
SC
You are required to give journal entries in the books of K Ltd. and R. Ltd.
A
35. Kala Ltd’s Balance Sheet showed the following position on 31 st March 1995.
K
10,000 equity shares of 10, 00,000 Fixed Assets 8, 00,000

Rs. 100 each Current assets 4, 00,000
Capital reserve 2, 00,000 Cash at Bank 2, 00,000
Bank loan 2, 00,000 Profit & Loss A/c 3, 00,000
Trade creditors 3, 00,000
17, 00,000 17, 00,000
Mala Ltd. was incorporated to take the fixed assets and 60% of the current assets at
an agreed value of Rs. 9, 00,000 to be paid as to Rs. 7, 40,000 in equity shares of Rs. 10 each
and the balance in 9% debentures. The debentures were accepted by bank in settlement of
loan. Remaining current assets realized Rs. 90,000. After meeting Rs. 20,000 expenses of
liquidation, all the remaining cash was paid to the creditors in full settlement.
32
Give journal entries in the books of both the companies and prepare the initial
Balance sheet of Mala Ltd., if the amalgamation is in the nature of purchase.
36. Ram Ltd, and Shyam Ltd., have agreed to amalgamate. A new company Rajesh Ltd., has
been formed to take over the combined concern as on 31 st December 1998.After negotiations,
the assets of the two companies have been agreed upon as shown below:
Balance Sheet as on 31-12-98
Liabilities Ram Ltd Shyam Ltd Assets Ram Ltd Shyam Ltd
(Rs) (Rs) (Rs) (Rs)
Share capital: Land& Buildings 5,00,000 3,00,000

Shares of Rs.10 Plant& Machinery 2,00,000 2,50,000
each 10,00,000 5,00,000 Goodwill - 50,000
)
Reserve Fund - 50,000 Furniture 1,10,000 -
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P&L A/C 50,000 50,000 Stock 1,50,000 20,000
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Creditors 80,000 50,000 Debtors 1,20,000 20,000
Bank 50,000 10,000
11,30,000 6,50,000
ce 11,30,000 6,50,000
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Prepare the balance sheet of Rajesh Ltd., assuming
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(a)The entire purchase price is paid off in the form of equity shares of Rs.100 each in Rajesh
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Ltd.(b)The amalgamation is in the nature of merger.

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A
K
37. Sumeru Ltd agrees to absorb the business of Vindhya Ltd as on the basis of the following
balance sheet as on 31 st march 1998.
Liabilities Rs Assets Rs
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Share capital: Land & Buildings 5,00,000
Authorised:50,000 shares Machinery 1,00,000
of Rs.50 each 25,00,000 Stock 6,00,000
Issued and subscribed: Investments 20,000
40,000 shares of Rs.50 Sundry debtors
each 20,00,000 4,60,000
Called up and paid up Less: Provision
capital: 40,000 shares of for bad debts 20,000 4,40,000
Rs.50 each - Rs.30 called Cash at bank 60,000
and paid 12,00,000
Reserves 2,50,000
Profit&Loss A/C 1,20,000
Creditors 1,50,000
17,20,000 17,20,000
)
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Sumeru Ltd took over all assets and liabilities of Vindhya Ltd, subject to the retention of
Rs.30,000 cash to provide for costs of liquidation, and to satisfy any dissenting shareholders.
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The consideration for the sale is the allotment of one shares of Rs.100(Rs.50 paid up)in
sumeru Ltd.For every two shares in Vindhya Ltd. The market value of the Rs.50 paid up
share of Sumeru Ltd. on that date was Rs.700 per share.ce
The liquidation of Vindhya Ltd has paid, out of Rs.30,000 retained, the costs of liquidation
of Rs.20,000 and dissenting shareholders of 200 shares at Rs.32.5 per share ,totalling
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Rs.6,500
Prepare ledger accounts in the books of Vindhya Ltd and give journal entries in the books of
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Sumeru Ltd.
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38. ’X’ Ltd and ‘Y’ Ltd agree to amalgamate as from 31 st December 1993 on which date their
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respective Balance Sheets as follows:

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X Y Assets X Y
Liabilities
A
Share Capital: Cash-in-hand 100 50

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Shares of Re.1 80,000 25,000 Cash at bank 3,400 450

each Sundry Debtors 22,500 6,000
Sundry Creditors 3,000 1,000 Plant 12,000 4,500
Reserves 7,500 4,000 Stock 15,000 7,000
Profit & Loss A/c 2,500 1,000 Premises 30,000 10,000
Patents 10,000 3,000
93,000 31,000 93,000 31,000
Draw up the Balance Sheet of the new company “XY” Ltd which was incorporated to take
over the amalgamated concerns and state the number of shares in the new company which
will be allotted to the shareholders of the old companies. (Assume the same face value)
34
39. Lala Co Ltd decided to reconstruct and went into liquidation with the following assets
and liabilities
Pref. share capital of Fixed assets 44,99,200

Rs.10 each 2,00,000 Stock 73,500
Equity share capital Debtors 1,31,000
of Rs. 10 each 8,00,000 Cash 400
General reserve 12,100 P&L A/C 4,12,700
Bank loan 18,600
Creditors 86,100
11,16,800 11,16,800
)
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A new company called Bala co Ltd. was formed to acquire the fixed assets and stock of Lala
co Ltd at Rs.3,40,000 and Rs.60,000 respectively. The purchase price is to be paid by issue of
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10% preference shares and equity shares of Rs.10 each for equal amounts.
Debtors realised Rs.1,22,750 and the creditors were paid Rs.81,340
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In full satisfaction. Bank loan was paid in full. The expenses of liquidation came to
Rs.10,710.
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Close the books of Lala co Ltd and give the balance sheet of Bala co Ltd.
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40. Kala Ltd ‘s balance sheet showed the following position on 31 st march 1995.
10,000 equity shares of Fixed assets 8,00,000
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Rs.100 each 10,00,000 Current assets 4,00,000

Capital reserve 2,00,000 Cash at bank 2,00,000
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Bank loan 2,00,000 P&L A/C 3,00,000

Trade creditors 3,00,000
A
17,00,000 17,00,000
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Mala Ltd was incorporated to take the fixed and 60% of the current assets at an agreed value
of Rs.9,00,000 to be paid as to Rs.7,40,000 in equity shares of Rs.10 each and balance in 9%
debentures. The debentures were accepted by bank in settlement of loan .Remaining current
assets realised Rs.90,000.After meeting Rs.20,000 expenses of liquidation, all the remaining
cash was paid to the creditors in full settlement.
Give journal entries in the books of both the companies and prepare the initial balance sheet
of Mala Ltd., if the amalgamation is in the nature of purchase.
UNIT V
41. The following information is extracted from the books of a drum company on june 30,on
which date a winding up order was made:
35
Equity share capital ,80,000 shares of Rs.10 each 8,00,000
10%preference share capital 12,000 shares of Rs.100 each 12,00,000
Calls in arrears on equity shares 9estimated to produce Rs.8,000) 16,000
9%first mortgage debentures, secured by a floating charge on the
Whole of the assets of the company 8,00,000
Creditors fully secured (value of shares in x ltd Rs.1,60,000) 1,40,000
Creditors fully secured (value of the shares in y ltd 80,000) 1,60,000
Preferential creditors 30,000
Bank overdraft secured by a charge second charge on the whole
Of the asset of the company 80,000
Unsecured creditors 10,40,000
Estimated liability on bill discounting 40,000
Cash in hand 8,100
Book debts - good 1,50,000
-Doubtful (estimated to produce 40%) 30,000
)
-bad debts 18,000
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Stock in trade (estimated to produce Rs.2,38,700) 2,88,000
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Freehold land & buildings 9estimated to produce Rs.7,82,000) 6,60,000
Plant & machinery (estimated to produce Rs.2,12,000) 3,00,000
Fixture & fittings (estimated to produce Rs. 30,000) 50,000
Prepare a statement of affairs
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a) as regards creditors and b) as regards contributories
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42. The insoi ltd is to be liquidated. Their summarized balance sheet as at 30 th sep 2003
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appears as under:
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2,50,00 shares of Rs.10 each 25,00 000 Land and buildings 5,00,000
Secured debentures (on land
and buildings) 10,00,000 Other fixed assets 20,00,000
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Unsecured loans 20,00,000 Current assets 45,00,000

Trade creditors 35,00,000 Profit &loss A/c 20,00,000
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90,00,000 90,00,000
Contingent liabilities are

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For bills discounting 1,00,000

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For excise duty demands 1,50,000

On investigation it is found that the contingent liabilities are certain to devolve and the assets
are likely to be realized as follows:
Rs
Land & buildings 11,00,000
Other fixed assets 18,00,000
Current assets 35,00,000
Talking the above into accounts prepare the statement of affairs.
43. The following balance were extracted from the books of sudden death ltd on 31.12.2006
on which date of winding up order was made:
Share capital: Rs.
Equity share-20,000 shares of 10.each,Rs 8 per share called up 1,60,000
36
Preferential shares-2000 shares of Rs 100 each fully paid 2,00,000
Calls-in-arrears on equity shares- estimated to realize Rs.600 1,000
15% debentures secured by the first floating charge on the assets 2,00,000
Bank overdraft secured by a second floating charge on the asset 1,00,000
Fully secured creditors (secured against plant& machinery) 60,000
Investments (estimated to realize Rs.60,000) 80,000
Plant & machinery –secured to creditors
Estimated to realize Rs.80,000 1,20,000
Land & building- estimated to realise Rs.80,000 40,000
Rent & taxes 4,000
Wages & salary 3,000
Bills payable 24,000
bills receivable – estimated to realize Rs.2,000 6,000
debtors-estimated to realize 60% 1,40,000
)
bills discounted –Rs.30,000 likely to rank 8,000
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contingent liability likely to materialize 6,000
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stock-in-trade-estimated to produce Rs.38,000 60,000
cash in hand and at bank 3,200
Enter the accured salary of Rs.4,000 and rent of Rs. 2,000 has still to be made in the
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books.
Prepare a statement of affairs and a deficiency A/c/
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44. Shri B .Rose is appointed liquidator of a company in voluntary liquidation on 1.7.2006

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and the following balances are extracted from the books on the date:
Share capital: Machinery 60,000
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32,000 shares oh Rs.5 each 1,60,000 Leasehold properties 80,000

Provision for bad debts Stock-in-trade 2000
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Debentures 20,000 Book debts 1,20,000

Bank overdraft 1,00,000 Investments 12,000
Liabilities for purchases 36,000 Calls in arrears 10,000
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40,000 Cash in hand 2,000

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Profit loss A/c 70,000

3,56,000 3,56,000
The assets are revalued as under:
Investments at Rs.8,000
Stock in trade at Rs.4,000
Machinery at Rs.1,20,000
Leasehold properties at Rs.1,46,000
Bad debts are Rs.4,000 ;doubtful debts are Rs.8,000, Estimated to realize Rs.4,000
The bank overdraft is secured by deposit of title deeds of leasehold properties.
Preferential creditors for tax and wages Rs.2,000
Telephone rent owing is Rs.160
37
You are required to prepare (i) statement of affairs as regards creditors and contributories
and (ii) deficiency or surplus A/c.
45. A liquidator is entitled to receive remuneration @ 2% of the assets realized and 3% on
the amount distributed among the unsecured creditors. The assets realized Rs. 70,00,000
against which payment was made as follows:
Liquidation expenses Rs.50,000
Preferential creditors Rs.1,50,000 and
Secured creditors Rs.40,00,000; unsecured creditors: Rs. 30,00,000
Calculate the total remuneration payable to the liquidators.
46..The following particulars relate to a limited company which went into voluntary
liquidation:
Unsecured creditors 58,000
6% debentures 30,000
)
The assets realized Rs.80,000 .The expenses of liquidation amounted to Rs.1500 and the
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liquidators remuneration was agreed at 2 ½% on the amount realized and 2% on the amount
paid to unsecured creditors including preferential creditors
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Show the liquidator’s final statement of accounts.
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47. The following particulars relate to a limited company which has gone into voluntary
liquidation. You are required to prepare the liquidators final account following for his
remuneration @ 3% on the amount realised and 2 ½ % on the amount to the unsecured
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creditors.
Share capital issued
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5000 preference shares of Rs.100 each (fully paid)

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30,000 equity shares of Rs.10 each fully paid

12,000 equity shares of Rs creditors.10 each,Rs.8 paid up
Assets realised Rs.9,24,000 excluding amount realised by sale of securities held by the
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secured creditors.
Rs.
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Unsecured creditors 8,51,094

Secured creditors (security realised Rs.1,62,000) 1,38,000
A
Debentures having a floating charge on the assets 3,00,000

K
Expenses of liquidation amounted to Rs.9,000

A call of Rs.2 per share on the partly paid equity shares was duly paid except in case of one
share holders owing 1,200 shares
48. Sun co ltd went into liquidation on 31.12,1997 its capital is divided into 20,000 shares of
Rs.50 each .its assets and liabilities on this date were as follows:
Cash in hand RS.1500; Realised from stock Rs.59,200; from book debts Rs.98,400;
from furniture Rs.2,100;investment with bank for overdraft Rs.9,800;unsecured creditors
Rs.1,07,550; preferential creditors Rs. 10,590; bank overdraft Rs.8,000 6% debentures having
a floating charge Rs.88,000.
Bank overdraft its amount from investments of Rs.9,800 gave the surplus to the
liquidator. Debenture were paid on 30.6.1998 with interest.
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Remuneration of liquidators 3% on net amount realised (excluding the amount give to
secured creditors but including cash in bank); 2% on the amount paid to unsecured creditors
(excluding preferential creditors).Cost of liquidation is Rs.2,030 .prepare liquidator’s final
statement of account.
49. A company went into voluntary liquidation on 31.3.1998. when the following balance
sheet was prepared:
Liabilities Rs Asset Rs
Authorized capital: 40,000 Goodwill 6,960
4,000 shares of Rs.10 each Freehold properties 5,000
Issued capital Machinery 7,480
3,000 shares of Rs.10 each 30,000 Stock 11,710
Unsecured creditors 15,432 Debtors 9,244
Partly secured 5,836 Cash 100
Preferential creditors 810 Profit & loss A/c 11,816
)
Bank overdraft(unsecured) 232
G
52,310 52,310
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The liquidator realised the assts as follows:
Freehold properties which was used in the first instance to pay the partly secured
creditors pro-rata Rs 3600; machinery Rs.5000 ;stock Rs.6,200 debtors Rs.8,700 ; cash
Rs.100. ce
The expenses of liquidation amounted to Rs.100 and the liquidator’s remuneration was
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agreed at 2.5% on the amount realised including cash and 2% on the amount paid to
unsecured creditors.
Prepare the liquidator’s final statement of account.
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50. The capital of Henry ford company ltd. Which went into liquidation was as follows:
(i) 4,000 equity shares of Rs.100 each, fully paid.
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(ii) 3,000 equity shares of Rs.100 each, Rs.80 per share paid up .
(iii) 1,000 preference shares of Rs.100 each fully paid(these have preference in the
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repayment of capital)
(iv) 1,000 deferred shares of Rs.100,Rs.80 per share paid up (these to be repaid only after
satisfying the claims of equity shareholder).
The various creditors amounted in all to Rs.1,00,000 including the liquidator’s
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remuneration of Rs.2,500.the liquidator made a call of the remaining Rs.20 per

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share on the deferred shares which was paid in full.

He also realised all the assets amounting to Rs.1,91,000.
A call of Rs. 15 per share was made on the equity shares which were partly paid up. this was
paid in full with the exception of that on 100 shares which shares forfeit the right of refund of
capital
Prepare the liquidator’s account showing the return to the shareholders
SECTION A - Key
1. a) Personal a/c 51.b) shown term borrowings

2. a) 5% of the face value of shares 52. d) paid up capital
3. b) liabilities side of B/s 53.b) reserves and surplus
4. b) writing off capital losses 54.a) employees benefit expenses
39
5.a) 3% 55.c) finance cost
6.a) assets side of b/s 56.b) depreciation
7. b) capital loss 57. d) amortisation
8.b) 6% 58.b) finance
9.a) 5% 59.a) tangible
10. b) the amount received so far on 60.b) current asset
forfeited shares
11. b) first offered to the existing 61.d) absorption
shareholders
12.a) the issue price of share underwriters 62.a)purchase consideration
13.a) 5% 63.a) realisation a/c
14.b) 2.5% 64.a) realisation a/c
15.a) 2% 65.c) amalgamation
16.d) both (b)&(c) 66.c) assets - liabilities
17.a) capital redemption reserve 67.b) the total of payment pay to
)
shareholders
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18.c) general reserve a/c 68.a) realisation a/c
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19.d) profit prior to incorporation 69.c) reduced
20.a) securities premium 70.d) 30
21.c) long term borrowings of a business 71. a) accumulated loss
22.b)creditors of the company
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72.a) without the consent of creditors
23.a)secured loan 73.c) AS-14
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24.c)securities premium a/c 74.c) merger
25.d) miscellaneous expenditure 75.d)14
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26.a) half yearly 76.a) reserves

27.b)the normal value of debentures 77. c) reduced
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28.c) capital reserve 78.a) memorandum of association

29.c) the ex-interest price 79. d) the competent court
30.c) sinking fund a/c 80.c) equity capital stock a/c
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31.b) general reserve 81. c) shareholder

32.a) the company 82.b) assets not specifically pledged
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33.c) capital reserve a/c 83.c) unsecured creditors

34.b) goodwill 84.b) list B
A
35.c) sale ratio 85. c) list C

36.b) time ratio or posted only 86. c) legal charges liquidators
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incorporation period remuneration and liquidation expenses

37.c)posted in pre incorporation period 87.b) preferential creditors
38.b) dividend in sale ratio 88. d) whatever may be the mode of
winding up
39.a) adjusted time ratio 89. b) Rs.4000
40.b) purchase ratio 90. a) unsecured creditors
41.b) revenue from operation 91.b) upto the date of actual payment of
liabilities
42.a) other income 92. a) Liquidators final statement of A/c
43.b) revenue from operation 93.d) list E
44.a) cost of material consumed 94.a) statement of affairs
45.b) purchase of stock in trade 95.a) preferential creditors
46.a) employees benefit expenses 96.b) equity shareholders
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47.c) finance cost 97.d) deficiency or surplus
48.d) depreciation amortisation expenses 98.a) fictious asset
49.b) other expenses 99.c) liquidator
50.a) long term borrowings 100.a) contributory
)
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(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
A
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TITLE OF THE PAPER: COST ACCOUNTING
NOVEMBER 2019
1
Question Bank
COST ACCOUNTING
CONTENTS
)
1 Section A 3
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2 Section B 18
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3 Section C 26
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Prepared by
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S.RAMAKRISHNAN
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Coimbatore-29.
2
COST ACCOUNTING
SECTION – A
Unit-I
1.Cost Accounting is_________
a) An instrument of management control
b) Not needed if prices are beyond the control of the firm
c)Nothing more than a detailed analysis of expenditure
d) Useful only in such organizations which have profit as the aim
)
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2. The main purpose of cost accounting is to
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a)Maximise profits
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b)Provide information to management for decision making
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c)Help in inventory valuation
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d)Aid in the fixation of selling price

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3.Increase in total variable cost is due to _________
a)Increase in fixed cost b) Increase in sales

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c) Increase in production d) None

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4. Costs which are ascertained after they have been incurred are known as ______
A
a)Imputed costs b)Sunk costs

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c)Opportunity costs d) Historical costs
5. The term ‘cost’ refers to
a)The value of the sacrifice made to acquire goods or services
b)The present value of future benefits
c)An asset that has given benefit and is now expired
d)The price of products sold or service rendered
3
6. Cost accounting differs from financial accounting in respect of
a)Reporying of cost b)Control of cost
c)Ascertaining cost d)Recording cost
7. Conversion cost is equal to the total of
a)Material cost and direct wages b)Material cost and indirect wages
c)Direct wages and factory overheads d)Material cost and factory overheads
8.The principal factor to be considered in designing a costing system includes
a)Company organization structure b)Nature of business
)
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c)Manufacturing process d)All of the above
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9. Research and development cost is an example of
a)Pre – production ce
b)Sunk cost
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c)Imputed cost d)Opportunity cost
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10. The technique and process of ascertaining cost is known as

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a)Cost b)Costing
c)Accounting d) None
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11. Prime cost may be correctly defined as

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a)The sum of the large cost items in a product cost

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b)The total cost incurred in producing a finished unit

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c)The sum of direct materials and direct labour cost with all other costs excluded
d)The total of all cost items which can be directly charged to product
12. Prime cost plus variable overheads is known as
a)Cost of sales b)Production cost
c)Total cost d) Marginal cost
4
13. A cost sheet should have
a)As many columns as may be required b)Two columns
c)Three columns d) One column
14. Welfare expenses will be shown in the cost sheet under
a)Administrative overheads b)Factory overheads
c)Selling overheads d) Distribution overheads
15. Factory cost is also known as
a)Prime cost b)Cost of production
)
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c)works cost or production cost d) None
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16. A statement that sets out the divisional classification of cost is known as
a) Sheet ce b) cost
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c)Schedule d) cost sheet
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17. The aggregate of indirect materials, indirect labour and indirect expenses is known as
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a) overheads b) Material
c)Labour d) None
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18. Total cost is made up of materials, labour and

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a)Sales b)expenses
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c)Profit d) Loss
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19. An understatement of closing work in progress inventory will
a)Overstate net profit b)Neutral net profit
c) Understate net profit d) None
20. Factory cost and factory expenses are
a)The same b)Total cost
c)Sales d) not the same
5
Unit-II
21.Direct material is a
a)Selling cost b)Distribution cost
c)Administration cost d) Manufacturing cost
22. A written request to a supplier for specified goods at an agreed upon price is called a
a)Material requisition form b)Receiving report
c)Purchase order d) Purchase requisition
)
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23.A purchase requisition is prepared by
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a)Foreman b)Store keeper
c)Supplier ce
d) Purchase manager
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24.Purchase requisition is generally prepared in
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a)Quadruplicate b)Single
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c)Triplicate d) Duplicate
25. Under perpetual inventory system, the purchase of materials is recorded in an account
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entitled
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a)Work in process inventory b) Cost of goods sold
c) Purchase of raw materials d) Material inventory

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26.The store keeper should initiate a purchase requisition when stock reaches
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a)Average stock level b) Minimum stock level
c)Re- order level d) Maximum stock level
27. Economic order quantity is computed so that
a)The cost materials are least
b)The ordering and carrying cost are least
c)The ordering and stock-out costs are least
6
d) The ordering and back ordering costs are least
28.Under ABC technique ‘A’ stands for
a)High value items b) Low value items
c)Medium value items d) All the above
29. Re-oredring quantity may be measured in
a)FIFO b)HIFO
)
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c)Standard cost d)LIFO
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30.A method of stock valuation seldom used by companies
a)FIFO ce
b)HIFO
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c)LIFO d) None
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31. Material analysis sheet is also known as

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a)Bill of materials b)Material abstract
c)Purchase requisition note d) Material requisition note

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32. Bin card is also known as bin

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a)tag or store card b)Identity card

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c)Ration card d) None

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33. When prices fluctuate widely, the method of pricing that smooths out the effect of
fluctuation is
a)FIFO b)LIFO
c)Simple average d) weighted average
34. Allotting symbols or code number or both to the different items of stores is called
a)Computer coding b)Production coding
7
c)Stores coding d) All the above
35. Material Return Note is sent by returning department to the
a)Buyer b)Store keeper
c)Seller d) None
36. Units that do not meet production standards and are sold for their salvage value are
termed as
a)Spoiled units b) Waste material
)
G
c)Scrap material d) Defective units
(U
37. Selection of suppliers is made by
a)Supervisor ce b)Accountant
er
c)Worker d) Management
m
38.The adoption of FIFO method results in a profit inflation during the period of
om
a)Decreasing prices b)Costant
c)Rising prices d)All the above

-C
39.A ____________ card contains the quantity and value of materials received, issued and in
SC
Balance.
A
a)Identity b)Stores ledger

K
c)Jounal d) None
40. In base stock method of pricing the material issues, the term ‘ base stock ‘represents the
a)Minimum stock b)Stock in balance
c)Maximum stock d) Quantity of stock being issued
8
Unit-III
41.Direct labour means
a)Labour which can be conveniently associated with a particular cost unit
b) Labour which completes the work manually
c)Permanent labour in the production department
d)Labour which is recruited directly and not through contractors
42.Labour turnover is measured by
a)No.of workers joining/No. of workers in the beginning of the period
)
G
b)No.of workers replaced / Average no. of workers
(U
c)No. of workers left/ No. of workers in the beginning plus at the end
d) All of these ce
er
43. Time and motion study conducted by
m
a) Payroll department b)Personnel department

om
c)Engineering department d) Time keeping department
44. Wage sheet is prepared by

-C
a)Cost accounting department b) Personnel department

SC
c) Time keeping department d)Payroll department

A
45. The time wage system

K
a) Benefits the less efficient workers b)Satisfies trade unions
c)Increases cost of production d)None
46. The straight piece rate system
a)Is opposed by trade unions b)Recognises individual efficiency
c)Benefits the employer d) None
47. Differential piece rate systems
9
a) Are complicated b) Are discriminatory
c)Pay workers in proportion to their efficiency d) None
48.Time not spent on productive workis known as
a) Repair b) Lunch time
c) Breakfast d) Idle time
49.Idle time arises only when workers are paid on
a)Time basis b)Piece basis
c) Contract basis d) All the above
)
G
50. The difference between the time clocked and time booked is termed as
(U
a) Good time b)Idle time
c) Bad time d) None ce

er
51.The Halsey plan
m
a) Is intended to improve the quality of work

om
b) Pays higher bonus at higher levels of efficiency
c)Divides the benefit of time saved equally between the employer and employee
-C
d) All the above

SC
52.The Rowan plan

A
a) Is the best for efficient workers

K
b) Pays increased bonus at an increasing rate as the efficiency
c) Is the best for idle workers
d) Pays lower bonus than that of Halsey beyond 50% saving in time
53.Under Emersons efficiency plan, the worker gets normal wages at
a)33 1/3 % efficiency b) 80% efficiency
c)100% efficiency d) 66 1/3% efficiency
10
54.Under Gantt task and bonus plan, no bonus is available to a worker if his efficiency is
Below
a)50% b)100%
c)75% d) 30%
55.Fringe benefits
a) Are contract labour costs b) Are related to labour productivity
c)are indirect forms of employee compensation d) None
)
56.Under the high wage plan, worker is paid
G
(U
a) Normal wages plus bonus b) At a double rate for overtime
c)According to his efficiency d)at the time rate higher than the usual rate
ce
57. The benefit of time saved by a worker against the standard should
er
a)Be shared by the two if it is not standardized b)Go wholly to the employer
m
c) Go wholly to the employee d) Go wholly to Management

om
58.When overtime is worked due to seasonal pressure of work, the overtime premium should
-C
be treated as
SC
a) Profit b)overhead
c) Loss d) All the above

A
59. In Halsey bonus plan, a worker gets a bonus equal to

K
a) 30% of time saved b) 75% time saved
c) 50% of time saved d) 100% time saved
60. In Taylor’s differential piece rate system, ______ types of piece rates are set for each job.
a) Three b)Four
11
c) One d) Two
Unit-IV
61.The allocation of whole items of cost to cost centres or cost unitsis termed as
a)Cost apportionment b) Overhead absorption
c)Cost reapportionment d) cost allocation
62.Wages paid to maintenance department workers who do repair work principally for
production departments but also on the vehicles in the distribution department should be
charged as
)
G
a) General cost b)Production cost
(U
c)Service cost d) Distribution cost
ce
63.Number of workers employed is used as a basis for the apportionment of
er
a)Personnel department expenses b)canteen expenses
m
c) Time office costs d) Any of these

om
64.Absorption means
a)charging of overheads to cost units b) Charing of overheads to cost centres

-C
c)Charging of overheads to stores d) None

SC
65. Factory overheads should be absorbed on the basis of

A
a) Machine hours b) Direct labour hours

K
c) Direct labour cost d)Relationship to cost incurred
66. Administration overheads are recovered as a percentage of
a)Prime cost b) Direct materials
c)Works cost d) Direct wages
67.Information regarding depreciation is obtained from
12
a)Invoice b)plant register
c)Cash book d) Stores requisition
68.Factory worker fringe benefit costs are usually charged to
a)Manufacturing overhead b) office and administration overhead
c) Direct labour d) Work in progress inventory
69.The only method of allocating service department costs to producing departments that
considers reciprocal services is called the
a) Step method b)Out of step method
)
G
c)Direct method d) Algebraic method
(U
70. When the amount of overhead absorbed is less than the amount of overhead incurred, it is
known as : ce
b)Proper – absorption of overhead
er
a) Over- absorption of overhead
m
c)Under- absorption of overhead d) None

om
71. The process of grouping costs according to their common characteristics is called
a) Cost allocation b)cost classification

-C
c) Cost apportionment d) cost ascertainment

SC
72.____________ is the allotment of proportions of items of cost to cost centres or cost units.
A
a)Apportionment b) Allocation
K
c) Ascertaiment d) Classification
73.Relative area of departments is used as basis for the apportionment for items such as
a)Time keeping b) Supervision
c)Welfare expenses d) Rent , lighting and heating
74.Standard cost is a _________________ cost.
a) Post-determined b) Determined
13
c)Pre-determined d) None
75.Standard costing _______ are revealed through different accounts
a) Materials b)Variances
c) Labour d) Overheads
76.When the actual cost incurred is less than the standard cost, the deviation is known as
a)Unfavourable variance b)Favourable variance
c)Material variance d) None
77.When the profit is less than the standard profit , it is known as
)
G
a) Favourable variance b) overhead variance
(U
c)Material variance d) unfavourable variance
78.Overhead is an aggregate of ce
er
a)Direct labour and direct expenses b) Direct material and direct wages
m
c)indirect materials ,indirect labour , indirect expenses d) None

om
79.Departments that helps producing departments indirectly are known as
a) personnel departments b)service departments

-C
c)marketing departments d) sales departments

SC
80. ___________ is separately computed for each machine.

A
a)Machine hour rate b)Labour hour rate

K
c) Factory cost d) None
Unit-V
81.In process costing, cost follows
a)Product flow b)Finished goods
c) price rise d) price decline
82.Materials may not be put into process
14
a) continuously b)in the shipping department
c)at the end of the operation d) at the beginning of an operation
83.When materials are added in a process after the first process and the volume of production
is increased, the unit cost of the preceding process is:
a) increased b) unchanged
c)decreased d) not applicable
84.The type of process loss that should not affect the cost of inventories is
a)Seasonal loss b) Standard loss
)
G
c)Normal loss d) Abnormal loss
(U
85.When FIFO method is used in process costing, the opening stock cost is
a)Kept separate from the cost of the new period ce

er
b)Averaged with other costs to arrive at total cost
m
c) Subtracted from the new cost

om
d) Added to the new cost
86.When average method is used in process costing, the opening inventory cost is
-C
a) Subtracted from the new cost b) Added to the new cost

SC
c) Averaged with other costs to arrive at total cost

A
d) Kept separate from the cost of the new period

K
87.The main object of apportioning joint cost of a processing centre to various products
produced is to
a) Establish inventory cost assigned to unsold units
b) Report more correct standard product cost for comparative analysis
c)Record accurate cost of sales by product lines
d) Develop accurate processing cost variance product-wise
15
88.A method of apportionment of joint cost to various joint products on the basis of their
respective capacities to bear joint cost is
a) Survey method b)Average cost method
c) Physical unit method d) Sales value method
89.A bakery producing cakes, biscuits and breads should be treated as
a)Joint product b) Main product
c) Co-product d) By-product
90.Individual product, each of a significant value, produced simultaneously from the same
)
G
raw material is known as
(U
a) Main product b)Joint product
c)By-product d) Co-product ce
er
91.The method of accounting for joint product cost that will produce the same gross profit for
m
all the product is

om
a) reverse cost method b) opportunity cost method
c)Sales value method d) other income method

-C
92.Credit is given to the Process A/c at a predetermined value of the by-product under
SC
a) Points value method b) Sales value method

A
c) Opportunity cost method d) Standard cost method

K
93.Classification and accumulation of costs by fixed and variable cost is of special
importance in
a) Operating costing b) process costing
c) Batch costing d) output costing
94.The Tamilnadu transport corporation must use
a)Job costing b) Operating costing
16
c)Contract costing d) Process costing
95. In hospitals, the cost unit is
a)Monthly rent b) Weekly rent
c)Bed-day d) None
96.Electricity generating company should employ
a)Contract costing b) Batch costing
c) Job costing d) Operating costing
97.Cinema houses must adopt
)
G
a)Operating costing b) Contract costing
(U
c) Batch costing d) Process costing
98.The cost unit used in a canteen is ce

er
a) Bed-day b)Plate- meals
m
c)Time spent d) None

om
99.Abnormal losses should be transferred to
a)Trading account b)Balance sheet

-C
c)Costing profit and loss account d)All the above

SC
100.The basic purpose of accounting of joint products and by – products is to

A
a)Valuation of work in process b) Determine sales value

K
c)Increase production d) Determine profit or loss on each product line
17
SECTION – B
Unit-I
1.What is cost accounting? What are its objectives?
2. Discuss the limitations of cost accounting
3.What are the types or techniques of costing
4. What is cost sheet? Give a Specimen of cost sheet.
5. Find the amount of raw materials consumed from the following:
Opening stock of raw materials Rs. 10000
)
G
Purchase of raw materials Rs.90000
(U
Carriage inwards Rs.5000
Closing stock of raw materials Rs. 25000 ce

er
6.Calculate prime cost from the following data
m
Direct materials Rs.10000

om
Direct labour Rs.4000
Direct expenses Rs.500

-C
7. ascertain cost of production from the following:

SC
Materials Rs.10000
A
Wages Rs.5000
K
Factory overhead: 125% of wages
Office overhead: 20% on works cost
18
8. Find out the selling price
Prime cost per unit Rs.720
Works overhead : 20% on works cost
Office overhead : 10% on cost of production
Profit : 20 % on sales
9. Prepare a cost sheet with the following details
Direct materials Rs.50000
Direct wages Rs.15000
)
G
Factory expenses Rs.5000
(U
Office expenses Rs.1000
Selling expenses Rs.500 ce

10. In a factory 20000 units of a product ‘A’ were manufactured in the month of july 2013.
er
m
Prepare a cost sheet showing cost per unit from the data given.
om
Opening stock of materials Rs.5000
Purchases Rs.55000
-C
Closing stock Rs.10000

SC

A
Factory overheads Rs.40000

K
Administration overheads Rs.20000
Unit-II
11.Briefly explain the objectives of material controls
12.State the merits and demerits of centralized purchase
13.What do you mean by ABC analysis? What are its advantages?
19
14. Calculate the economic order quantity from the following particulars
Annual usage 20000 units
Buying cost per order Rs.10
Cost per unit Rs.100
Cost of carrying inventory 10% of cost
15.Calculate the economic order quantity from the following particulars
Annual usage 6000 units
)
G
Cost of materials per unit Rs.20
(U
Cost of placing and receiving one order Rs.60
Annual carrying cost ce

Rs.2 per unit
er
16. From the following data for the last twelve months , compute re order level, minimum
m
level and average stock level of a stock item:

om
Maximum usage in a month 300 kg
Minimum usage in a month 200 kg

-C
Average usage in a month 225 kg

SC
Time lag in the procurement of materials:

A
Maximum – 6 months: Minimum- 2 months

K
Re-ordering quantity -750 kg.
17.Prepare stores ledger account under FIFO method:
1.1.2016 Opening stock 200 units @ Rs.3
2.1.2016 Received 300 units @ Rs.4
4.1.2016 Issued 250 units
6.1.2016 Received 100 units @ Rs.2
20
!0.1.2016 Issued 200 units
18. From the following particulars, prepare stores ledger adjustment account under FIFO
Method
Nov 1 Opening stock 500 units at Rs 3 each.
9 Purchases 300 units at Rs 2 each.
15 Issued 400 units.
20 Purchases 500 units at Rs 3 each.
)
G
19.From the following particulars, prepare the stores ledger under the LIFO Method
(U
2013 Jan. 1 Purchased 300 units @ Rs.3 per unit
4 ce
Purchased 600 units @ Rs.4 per unit
er
6 Issued 500 units
m
10 Purchased 700 units @ Rs.5 per unit

om
15 Issued 800 units
20. From the following particulars, prepare stores ledger adjustment a/c under LIFO method
-C
Dec 1 Opening stock 1000 units at Rs 2 each.

SC
6 Purchases 800 units at Rs 2.10 each.

A

K
12 Purchases 1600 units at Rs 2.10 each.
Unit-III
21.Briefly explain the causes of Labour turnover
22.What is idle time ? What are the causes for idle time?
23.What is the difference between Halsey plan and Rowan plan
24. What are the essential features of good wage system?
21
25. Calculate the earnings of worker under halsey premium plan
Time allowed = 48 hours
Time taken = 40 hours
Rate per hour= Rs.10
26. The output of worker A is 120 units in a 80 hour week. Guaranteed time rate is Rs 10 per
hour. Ordinary piece rate is Rs 4 per units.
Show the earnings of worker A under time rate and piece rate.
27. Rate per hour :Rs.15
)
G
Time allowed : 20 hours
(U
Time taken : 15 hours
ce
Calculate total earnings of the worker under Halsey Plan.
er
28. The following particulars apply to a job :
m
Standard time 8 hours

om
Time taken 5 hours
Time rate Rs 10 per hour

-C
Calculate earnings under Rowan plan.

SC
29. From the following particulars, calculate the earnings of A under Rowan plan
A

K
Time rate Re.1 per hour
Time taken 9 hours
Also determine the effective rate of earnings per hour.
22
30. From the information given below, calculate the earnings of three workers X,Y and Z
under Gantts task bonus plan:
Time rate Rs.15 per hour
High task per day of 8 hours =80 units
High piece rate Rs.2 per unit
Days output = X: 70 units; Y:80 units; Z:90 units
Unit-IV
)
G
31.What do you understand by production department and servicedepartment?
(U
32.Briefly explain the function wise classification of overheads
ce
33.What do you understand by departmentalization of overheads?
er
34.What is meant by machine hour rate? How to compute it?
m
35.The standard cost of material for manufacturing a unit of a particular product is estimated
om
as follows:
16 kg. of raw materials @ Re.1 per kg.

-C
On completion of the unit, it was found that 20 kg. of raw material costing Rs.1.50 per
SC
kg. has been consumed.

A
Compute material variances.

K
36. Compute the overheads allocable to production departments X and Y from the following:
There are two service departments S1and S2.S1 renders service to X and Y in the ratio
of 5:3 and S2 renders service to X and Y in the ratio of 3:1. Overheads as per primary
overhead distribution are:
X:Rs.58800; Y : Rs.39400; S1:Rs.32800; S2: Rs.12400
23
37. From the following particulars, you are required to calculate the prime cost percentage
Rateof works overheads :
Works overheads of a department: Rs.750000
Direct wages : Rs. 750000
Direct material cost : Rs. 2250000
38. During Feb 2008, works overhead incurred in a factory was Rs.40,000. The machine
Hoursworked during the month were 8,000 hours. Determine the machine hour rate to be
Chargedto the output to recover the works overhead.
)
G
39. A factory has several deoartments. The following details are relating to dept. ‘Y’ for the
(U
month of April 2017:
Direct wages for April 2017: Rs.50000 ce

er
Factory overheads allocated and apportioned to the department: Rs.20000
m
Calculate the overhead absorption rate based on direct wages for the month.
om
40.Calculate direct labour hour rate from the following:
Total no. of workers 250

-C
Working days in a year 300

SC
No.of hours per day worked 8

A
Short and idle time 5%

K
Factory overheads Rs.45600
Gift to workers Rs.2000
Unit-V
41.What are the features of process costing?
42.What do you understand by normal loss? How is it treated in process cost accounts?
43. What do you understand by abnormal loss? How is it treated in process cost accounts?
24
44. What do you understand by abnormal gain? How is it treated in process cost accounts?
45. What are the characteristics of operating costing?
46. From the following information, calculate kilometers and total passenger kilometers.
Number of buses: 4
Days operated in a month:30
Trip made by each bus: 4
Distance of route : 30 kilometres long (one way)
Capacity of bus: 60 passengers
)
G
Normal passengers travelling: 80% of the capacity.
(U
47. Sri ram produces a product through two processes X and Y. Prepare the process accounts
from the following details relating to March 2007. ce

er
Process X Process Y
m
Material 45,000 15,000

om
Labour 60,000 25,000
Chargeable expenses 5,000 10,000

-C
The overhead accounting to Rs.17,000 are to be apportioned on the basis of labour.

SC
48. In process A 100 units of raw materials were introduced @ a cost of rs.1000. The other
A
expenditure incurred by the process was Rs.600. Of the units introduced 10% are
K
normally lost in the course of manufacture and they process a scrap value of Rs.7 per unit..
The output of process A was only 75 units. Prepare process account and abnormal loss
account.
49.The following expenditure is incurred for producing articles, called mini motors
Rs.
Materials(200 Units) 4000
25
Labour 3000
Indirect expenses 2000
Normal wastage is 5% of the input. One unit of wastage is sold at Rs.16.50 each.
Prepare process account.
50.Prepare process account from the following:
Materials issued 1000 kg. @ Rs.125
Wages Rs.28000
Overheads Rs.8000
)
G
Normal loss 5% of inputOutput 900 kgs.
(U
SECTION – C
Unit-I ce
er
1.Explain briefly the functions of cost accounting
m
2.State the difference between financial accounts and cost accounts

om
3. What are the differences between management accounting and cost accounting?
4.Briefly explain the different methods of costing

-C
5.What do you mean by elements of cost ? Explain different elements of total cost.
SC
6. Prepare cost sheet:

A
Raw materials used is Rs.60000

K
Wages Rs.15000
Works expenses : 100% of wages
Office expenses : 25% on works cost
Selling overhead : 10% of cost of production.
7.Prepare a cost sheet from the following
Raw materials Rs.10000
26
Labour Rs.5000
Selling overheads Rs.6000
Factory on cost Rs.10000
Office expenses Rs.8000
Profit : 20% on sales
8.Draw a statement of cost from the following particulars
Opening stock : Rs.
)
G
Materials 200000
(U
Work in progress 60000
Finished goods ce 5000

er
Closing stock:
m
Materials 180000
om
Work in progress 50000
Finished goods 15000

-C
Materials purchased 500000

SC
Direct wages 150000

A
Manufacturing expenses 100000

K
Sales 800000
Selling and distribution expenses 20000
9. The following data relate to the manufacture of a product during the month of January
Rs.
Raw materials consumed 80000
Direct wages 48000
27
Machine hours worked 8000
Machine hour rate 4
Office overhead 10% of works cost
Selling overhead Rs.1.50 per unit
Units produced 4000
Units sold 3600 at Rs.50 each
Prepare a cost sheet and show (a) cost per unit and (b) profit for the period
10. From the following particulars prepare a statement showing
)
G
i. Raw materials consumed ii. Prime cost iii. Works cost iv. Cost of production
(U
v. Profit
1.1.2017 ce 31.1.2017
er
Rs Rs
m
Raw materials 30,000 48,000

om
Work-in-progress 39,750 21,000
Purchase of raw materials 1,35,000

-C

SC
Direct wages 60,000

A
Chargeable expenses 22,500

K
Works overheads 33,750
Administrative overheads 15,000
Selling & Distribution overheads 21,000
Sales 3,30,000
Unit-II
28
11.Explain the functions of the purchasing department
12.Describe the different stages involved in purchase procedure
13.State the various methods of pricing the issue of materials
14.Two components A and B are used as follows:
Normal usage 50 units per week each
Minimum usage 25 units per week each
Maximum usage 75 units per week each
)
G
Reorder quantity A-300 units ; B – 500 units;
(U
Reorder Period : A - 4 to 6 weeks; B- 2 to 4 weeks
Calculate for each components ce

er
(a) Reorder level
(b) Minimum level
m
(c) Maximum level

(d) Average stock level
om
15.From the following information, calculate:

-C
(a) Maximum stock level

SC
(b) Minimum stock level
(c) Re-order level

A
(d) Average stock level

K
Minimum consumption 240 units per day
Maximum consumption 420 units per day
Normal consumption 300 units per day
Re-order quantity 3600 units
Re- order period 10-15 days
Normal re-order period 12 days
29
16. From the following transaction calculate stores ledger account under FIFO method:
Jan 1 Purchased 4,000 units at Rs 4 per unit
20 Purchased 500 units at Rs 5 per unit
Feb 5 Issue 2,000 units
10 Purchased 6,000 units at Rs 6 per unit
12 Issue 4,000 units
Mar 2 Issue 1,000 units
5 Issue 2,000 units
)
G
15 Purchased 4,500 units at Rs 5.50 per unit
(U
20 Issue 3,000 units
ce
17. The Receipts side of the Stores Ledger Account shows the following:
er
Jan 1 Opening balance 500 units @ Rs.4 per unit
m
Jan 5 Received 200 units @ Rs.4.25 per unit

om

-C

SC
Issues of the material were as follows:

A
Jan 4-200 units; Jan 10 – 400 units; Jan 15- 100 units; Jan 19 –100 units
K
Jan 26-200 units; Jan 30-250 units.
Write out Stores Ledger Account Pricing the issues LIFO.
18. The following is an extract of the record of receipts and issues of sulphur in a chemical
factory during June 2017
2017
June 1 Opening balance 100 tons @ Rs.200
30
8 Issued 50 tons
14 Received from supplier 40 tons @ Rs.190
17 Issued 36 tons
24 Issued 60 tons
25 Returned to suppliers 10tons out of goods received on 21st june
29 Issued 40 tons
)
G
30 Returned from department 6 tons @ Rs.190
(U
The stock verifier of the factory had found a shortage of 2 tons on 23 rd June and left
ce
a note accordingly. You are required to prepare stores ledger account under FIFO and
er
LIFO method.
m
19. Prepare a stores ledger account and enter the following transactions adopting the simple
om
average method of pricing the issues.
2018
-C
Feb 1 Opening balance 50 units at Rs.3 per unit

SC
5 Issued 20 units
A
7 Purchased 40 units at Rs.4 per unit

K
9 Issued 25 units
19 Purchased 75 units at Rs.5 per unit
20 Issued 15 units
21 Received back 10 units out of feb.9 issue
26 Issued 60 units.
20. With the help of following transaction prepare weighted average method of pricing issue.
31
April 1 Balance 300 units at Rs 2 each
2 Purchased 200 units at Rs 2.20 each
4 Issued 150 units
11 Issued 150 units
19 Issued 200 units
27 Issued 150 units
)
G
Unit-III
(U
21.What is labour turnover? What are the methods of measuring it?
ce
22.Briefly describe the various methods of labour remuneration
er
23. From the following particulars given by the personal department, calculate the labour
m
turnover rate by applying:

om
a) Separation Method b) Replacement method c) Flux method
No. of workers on the payroll:

-C
At the beginning of the month 900

SC
At the end of the month 1,100

A
During the month 10 workers left; 40 workers were discharged and 150 workers were
recruited. Of these, 25 workers are recruited in the vacancies of those leaving while
K
the rest were engaged for an expansion scheme.
24. The following information is extracted from the records of a company for the month of
October 2011:
Number of employees at the beginning of the month 950
Number of employees at the end of the month 1050
Number of employees resigned 10
32
Number of employees discharged 30
Number of employees replaced in the vacancies 20
Number of employees appointed due to expansion scheme 120
Calculate the monthly labour turnover rate and the equivalent annual rates under
three methods of labour turnover measurement
25.During a week, a worker produced 300 units working for 48 hours. The hourly rate is
Rs.4.The estimated time to produce a unit is 10 minutes. Under incentive scheme, 20%
additional time is allowed. Calculate his gross earnings under Halsey and Rowan plans.
)
G
26. From the following data, calculate the total wages of a worker under:
(U
a) Halsey premium plan
Hourly rate Rs.2 ce

er
m
Time taken 12 hours

om
b) Under Halsey – weir premium plan
Time allowed 48 hours

-C
Time taken 40 hours

SC
Rate per hour Rs.3

A
27. From the following particulars, calculate the earnings of different workers under Taylors
K
differential piece rate system.
Standard time per unit : 6 minutes
Normal Rate : Rs.5 per hour
Differential piece rates :
80% of piece rate below the standard
120% of piece rate at or above the standard
33
In a day of 8 hours, the production by different workers is as under:
Amar : 70 units ; Badekhan : 80 units ;Chaplin : 90 units ; Dharmsingh : 100 units
28. With the help of following information ascertain the wages paid to workers Raja and
Kumar under Taylor’s differential piece rate system.
Standard time allowed 60 units per hour
Normal time rate Rs 6 per hour
Differential to be applied:
80% of piece rate when below standard
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120% of piece rate when at or above standard
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In a day of 8 hours, the workers have produced as follows Raja 400 units, Kumar 520 units
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29.Calculate earnings of 3 workers A,B,C under merricks plan of piece rate system given the
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following :
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Standard production = 120 units

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Production of A = 90 units
Production of B =100 units

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Production of C =130 units

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Ordinary piece rate = Re.0.10

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30. Standard time allowed for a job is 50 hours. The hourly rate of wage is Rs.10 per hour
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plus a dearness allowance of Rs.5 per hour worked.
The actual time taken by the worker was 40 hours. Calculate total wages on :
1) Time basis 2) Piece basis 3) Halsey plan and 4) Rowan’s Plan.
Unit-IV
31.Define ‘overhead’.State the different methods of classification of overheads.
34
32.What is meant by absorption overheads? Explain briefly the different methods of
absorption of overheads.
33.Distinguish between standard costing and budgetary control
34.What are the advantages and limitations of standard costing?
35. Krishna producing concern is divided into four departments A, B and C are production
departments and D is a service department. The actual expenses for a period as follows:
Rs.,
Rent 1000
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Repairs to plant 600
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Depreciation on plant 450
Light 120
Supervisory expenses
ce 1000
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Fire insurance in respect of stock 500
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Power 900
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Employers liability for insurance 150

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The following information is available in respect of the four departments

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Departments
A B C D
Area (Sq. metres) 1,500 1,100 900 500
A
H.P. of plant 24 18 12 6
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No. of employees 20 15 10 5
Total wages (Rs) 6000 4000 3000 2000
Value of plant (Rs) 2,40,000 1,80,000 1,20,000 60,000
Value of Stock Rs.) 1,50,000 90,000 60,000 -
Apportion the costs to the various departments on the most equitable method.
36. A company has three production departments and two service departments. For the period
ended 31st Dec.2017, the departmental distribution summary has the following totals:
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Production departments Rs.
P1 3200
P2 2800
P3 2000
Service departments
S1 800
S2 1200
The service departments costs are proposed to be charged on percentage basis as
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given below:
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P1 P2 P3 S1 S2
S1 20% 40% ce
30% - 10%
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S2 40% 20% 20% 20% -
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You are required to show the apportionment of service departments overheads by

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simultaneous equation method.
37. A company has three production departments and two service departments. Overhead
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distribution summary is as follows:

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Production departments Rs.

A
A 13600
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B 14700
C 12800
Service departments
X 9000
Y 3000
The expenses of service departments are charged on percentage basis as given below:
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A B C X Y
Dept. X 40% 30% 20% - 10%
Dept. Y 30% 30% 20% 20% -
Apportion the cost of service departments by using the repeated distribution method.
38. From the following details relating to the production department of a factory, you are
required to calculate overhead absorption rates under different possible methods.
Material consumed Rs.120000
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Machine hours 25000
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Labour hours worked 12500
Factory overheads relating to the dept. ce Rs.80000

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39. From the data given below, compute machine hour rate:
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Cost of the machine Rs.90000

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Installation charges Rs.10000
Estimated Scrap value Nil

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Estimated repair charges per year Rs.1000

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Estimated working life of the machine 10000 hours

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Standing charges allocated to the machine per year Rs.6000

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Estimated working hours per year 2000 hours
Power consumption of the machine is 20 units per hour and the rate of power per 100
units is Rs.10.
40. The following expenses have been incurred in respect of a shop having four identical
Machines:
Rs.
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Rent and rates 6000 p.a.
Power consumed by the shop @10 paise per unit 4800 p.a.
Repairs 1000 p.a.
Lighting for the shop 800 p.a.
Shop supervisor’s salary 600 per month
Lubricants etc. 100 per month
Depreciation per month 600 p.a.
Hire purchase instalment ( including interest of Rs.300) Rs.800
)
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There are two attendants in the shop each getting Rs.60 per month. Each machine
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consumes 10 units of power per hour. Calculate the machine hour rate.
Unit-V ce
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41.Bring out the distinction between job costing and process costing
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42. What are the advantages and limitations of process costing?

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43.Discuss the methods of joint products and by products
44.What are the procedures adopted while determining operating costing in transport?
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45.A transport company is running two buses between two places 100 kilometres apart. The
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seating capacity of each bus is 50 passengers. The following particulars are taken from
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theirbooks for a month:

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Rs.
Wages of drivers, conductors and cleaners 3000
Salary of supervisory and office staff 1500
Diesel oil etc. 6000
Repairs and maintenance 1500
Taxation and insurance 2000
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Depreciation 3000
Interest and other charges 2500
The actual passengers carried were 80% of the capacity. The buses ran on all the days.
Each bus made a to and fro trip. Find out the cost per passenger- Kilometre.
46. A Product passes through two distinct processes, A and B , and thereafter to finished
stock.From the following information, you are required to prepare process cost accounts.
Process A Process B
Materials consumed Rs.12000 Rs.6000
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Direct Labour Rs.14000 Rs.8000
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Manufacturing expenses Rs.4000 Rs.4000
Input in Process A (units) ce 10000 -

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Input in Process A (Value) Rs.10000 -
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Output (units) 9400 8300

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Normal wastage 5% 10%
Value of normal wastage (per100 units) Rs.8 Rs.10

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47. Product Z requires three distinct processes and after the third process, the product is
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transferred to finished stock. You are required to prepare various process accounts from
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the following information.

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Total Process I Process II Process III
Rs. Rs. Rs. Rs.
Materials 12000 9600 1440 960
Labour 9600 3600 3840 2160
Direct expenses 1920 1200 720 -
Production Overheads 14400
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Production overheads are to be allocated to different processes on the basis of labour.
Production during the period was 480 units but there is no opening and closing stocks.
Prepare process accounts for all the three processes.
48.From the following information given to you, prepare process B account:
2000 units are transferred to process B @ Rs.4 per unit. Other details relating to the
process are:
Rs.
Materials 4000
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Labour 1000
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Overhead 700
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The normal loss has been estimated @ 10% of the process input. Units representing
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normal loss can be sold @ Re.1.00 per unit. Actual production in the process is 1900
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units. Output of process B transferred to finished stock account.

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49.From the following information find out the cost of X and Y, the latter being the by
product on whose sale a profit of 20% on selling price is obtained:

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Joint expenditure Separate expenditure

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X Y
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Rs. Rs. Rs.

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Materials 9000 2000 1000
Labour 4000 800 300
Expenses 2000 1000 400
Total amount realized by sale of Y was Rs.3500.
50. A particular brand of phenyle passed through three important processes. During the week
ended 15th January, 600 gross bottles were produced. The cost book shows the following
40
information:
Process A Process B Process C
Rs. Rs. Rs.
Materials 4000 2000 1500
Labour 3000 2500 2300
Direct expenses 600 200 500
Cost of bottles Nil 2030 Nil
Cost of corks Nil Nil 325
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The indirect expenses for the period were Rs.1600
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The by- products were sold for Rs.240 (Process B).
The residue was sold for Rs.125.50(process C) ce

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Prepare the account in respect of each of the process, showing its cost and cost of
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production of the finished product per gross bottles.

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Annexure
Unit I Q 1 2 3 4 5 6 7 8 9 10
A a b c d a b c d a b
Q 11 12 13 14 15 16 17 18 19 20
A c d a b c d a b c d
UnitII Q 21 22 23 24 25 26 27 28 29 30
A d c b a d c b a d c
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Q 31 32 33 34 35 36 37 38 39 40
A b a d c b a d c b a
Unit III Q 41 42 43 44 45 46 47 48 49 50
Q 51 52 53 54 55 56 57 58 59 60
Unit IV Q 61 62 63 64 65 66 67 68 69 70
A d c d a d c b a d c
Q 71 72 73 74 75 76 77 78 79 80
A b a d c b b d c b a
Unit V Q 81 82 83 84 85 86 87 88 89 90
Q 91 92 93 94 95 96 97 98 99 100
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(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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TITLE OF THE PAPER: DIRECT TAX

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NOVEMBER 2019
1
Question Bank
DIRECT TAX
CONTENTS
1 Section A 3
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2 Section B 15
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3 Section C 19

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Prepared by
S.K. Arunkumar
Coimbatore-29.
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DIRECT TAX
SECTION – A
UNIT -1
1. Income tax act year is ________
a. 1961
b. 1971
c. 1962
d. 1972
2. Additional surcharge (education cess ) of 2 per cent is payable on
a. Income tax c. Surcharge
b. Income tax plus surcharge d. None
3. Family pension received by a widow of a member of the armed forces where the death of the
member has occurred in the course of the operational duties, is
)
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a. Exempt up to Rs.3,00,000 c. Totally exempt under section 10(19)
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b. Exempt up to Rs. 3,50,000 d. Totally chargeable to tax
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4. In respect of shares held as investment, while computing the capital gains, securities transaction
tax paid in respect of sale of listed shares sold in a recognized stock exchange,
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a. Is deductible up to Rs.1,00,000 c. Is deductible if C.G.’s is < 5,00,000
b. Is deductible up to Rs.2,00,000 d. Is not deductible at all
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5. Gift of Rs 5,00,000 received on 10 July, 2009 through account payee cheque from a non-relative
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regularly assessed to income-tax, is

a. A capital receipt not chargeable to tax d. Exempt up to Rs.25,000 and balance
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b. Chargeable as other sources chargeable to tax as income from other

c. Chargeable to tax as business income sources
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6. The maximum rebate allowable under section 88E to an individual deriving income of Rs.2,00,000
from taxable securities transactions, who has paid securities transactions tax of Rs.14,600 and
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whose average rate of income-tax is 8 per cent , is

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a. Rs.16,000 b. Rs.20,600
c. Rs.14,600 d. None of the above
7. For an employee in receipt of hostel expenditure allowance for his three children, the maximum
annual allowance exempt under section 10(14) is
a. Rs.10, 800 c. Rs.9,600
b. Rs.7,200 d. Rs.3,600
8. For an industrial undertaking fulfilling the conditions, additional depreciation in respect of a

machinery costing Rs.10 lakh acquired and installed on October 3, 2009 is
a. Rs.75,000 c. Rs.1,00,000
b. Rs.1,50,000 d. None of the above
3
9. Assessee is always a _______but a person may or may not be an assessee.
a. Person b. Foreigner
c. Kind d. None
10. A person may not have assessable income but may still be______.
a. assessee c. Ordinary person
b. Foreigner d. Not ordinary person
11. In some cases assessment year and previous year can be same____________.
a. financial year c. previous year
b. assessment year d. None
12. A.O.P should consist of :

a. Individual only c. Both the above
b. Persons other than individual only.
d. none
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13. Body of individual should consist of :
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a. Individual only c. Both the above
b. Persons other than individual only. d. none
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14. A new business was set up on15-11-2009 and it commenced its business from 1-12-2009.The first
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previous year in this case shall be:
a. 15-11-2009 to 31-3-2010
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b. 1-12-2008 to 31-3-2009
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c. 2009-2010
d. none
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15. A person leaves India permanently on 15-11-2009.The assessment year for income earned till 15-
11-2005 in this case shall be:
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a. 2008-09
b. 2009-10 d. none
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c. 2010-11
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16. Surcharge in case of an individual or HUF for assessment year 2009-10 is payable at the rate of :
a. 12% of the income-tax payable provided the total income exceed Rs.60,000.
b. 10% of the income-tax payable provided the total income exceeds Rs.10,00,000
c. 5% of the income-tax payable if the total income exceeds Rs.8,50,000
d. none
17. Surcharge in case of a firm for assessment year 2009-10 is payable at the rate:
a. 2.5% of income-tax payable c. 10% of income-tax payable
b. 5% of income-tax payable d. None
18. The maximum amount on which income-tax is not chargeable in case of firm is:
a. Rs.1,00,000 c. Nil
b. Rs. 90,000 d.Rs.80,000
4
19. The maximum amount on which income-tax is not chargeable in case a co-operative society is:
a. Rs.50,000 c. Nil
b. Rs.30,000
20. A local authority is taxable at flat rate of income-tax.

a) 2 b)4 c) 6 d) None
UNIT II
21. Income which accrue outside India from a business controlled from India is taxable in case of:
a. Resident only c. Both ordinarily resident and NOR
b. Not ordinarily resident only d. Non-resident
22. Income which accrue or arise outside India and also received outside India taxable in case of:
)
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a. resident only c. both ordinarily resident and NOR
b. not ordinarily resident d. none of the above
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23. TI of a person is determined on the basis of his:
a. residential status in India
b. citizenship in India
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c. none of the above
d. both of the above
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24. Once a person is a resident in a P.Yr. he shall be deemed to be _________for subsequent P. Yr.
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a. resident c. Ordinary resident

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b. Non resident d. None
25. Once a person is ________for a source of income in a particular P. Y r. he shall be deemed to be

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resident for all other sources of income in the same P. Yr :

a. resident c. Ordinary resident
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b. Non resident d. None

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26. R Ltd., is an Indian company whose entire control and management of its affairs is situated outside
India. R Ltd., shall be :
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a. Resident in India c. Not ordinarily resident in India

b. Non-resident in India d. none
27. R Ltd., is registered in U.K. The control and management of its affairs is situated in India .R Ltd
shall be :
a. Resident in India
b. Non-resident d. None
c. Not ordinarily resident in India
28. R, a foreign national visited India during previous year 2008-09 for 180 days. Earlier to this he
never visited India. R in this case shall be:
a. Resident in India c. Not ordinarily resident in India
b. Non-resident d. none
5
29. An Indian company is always _______in India
a. Resident in India c.Not ordinarily resident in India
b.Non-resident d.none
30. Dividend paid by an Indian company is:

a. Taxable in India in the hands of the recipient
b. Exempt in the hands of recipient
c. Taxable in the hands of the company and exempt in the hands of the recipient
d. None
31. Agricultural income is exempt provided the:
a. Land is situated in India
b. Land is situated in any rural area India
c. Land is situated whether in India or outside India.
d. none
)
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32. If the assessee is engaged in the business of growing and manufacturing tea in India ,the
agricultural income in that case shall be:
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a. 40% of the income from such business
b. 60% of the income from such business
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c. market value of the agricultural produce minus expenses on cultivation of such produce
d. None
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33. Agricultural income is :
a. Fully exempt b. Partially exempt c. Fully taxable
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d. none
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34. The partial integration of agricultural income, is done to compute tax on:
a. agricultural income
b. non agricultural income
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c. both agricultural and non agricultural income

d. None
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35. There will be no partial integration of agricultural income with non agricultural income, if the non
agricultural income does not exceed:
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a. Rs.1,00,000 c. Rs. 50,000

b. Rs.60,000 d. None
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36. There will be no partial integration, if the agricultural income does not exceed:
a. Rs.40,000 c. Rs.5,000 d. Rs.4000
b. Rs.50,000
37. A local authority has earned income from the supply of commodities outside its own jurisdictional
area. It is :
a. Exempt
b. Taxable
38. R, a chartered accountant is employed with R Ltd., as an internal auditor and requests the
employer to call the remuneration as internal audit fee. R shall be chargeable to tax for such fee
under the head.
6
a. Income from salaries c. Income from other sources.
b. Profit and gains from Business and
Profession d. domestic
39. R, who is entitled to a salary of Rs.10,000 p.m. took an advance of Rs.20,000 against the salary in
the month of March 2005.The gross salary of R for assessment year 2005-06 shall be:
a. Rs.1,40,000 b. Rs.1,20,000 c. None of these two
d. None
40. A is entitled to children education allowance @ Rs. 80 p.m. per child for 3 children amounting Rs.
240 p.m. It will be exempt to the extent of :
a. Rs.200 p.m.
b. Rs.160 p.m.
c. Rs. 240 p.m.
d. None
)
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UNIT III
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41. A car is imported after 1- 4- 2009 by R Ltd. from London to be used by its employee. R Ltd. shall
be allowed depreciation on such car at:
a. 15% b. 40% ce c. Nil d.30%
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42. Unabsorbed depreciation which could not be set off in the same assessment year, can be carried
forward for:
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a. 8 Years b. Indefinitely c. 4Years d.none

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43. Certain revenue and capital expenditure on scientific research are allowed as deduction in the
previous year of commencement of business even if these are incurred:
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a. Five years immediately before the commencement of business

b. 3 years immediately before the commencement of the business
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c. Any time prior to the commencement of the business.

d.none
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44. If any amount is donate for research, such research should be in nature of:
a. Scientific research only d. none
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b. Social or statistical research only

c. Scientific or social or statistical
research
45. Preliminary expenses incurred are allowed deduction in:

a. 10 equal installments c. full
b. 5 equal instalments d. None
46. In case the assessee follows mercantile system of accounting, bonus or commission to the
employee are allowed as deduction on:
a. Due basis c. Due basis but subject to section 43B.
b. Payment basis d. None
7
47. Interest on money borrowed for the purpose of acquiring a capital asset pertaining to the period
after the asset is put to use is to be:
a. Capitalized b. Treated as revenue expenditure
c. Normal loss d. None
48. Expenditure incurred on purchase of animals to be used by the assessee for the purpose of carrying
on his business& profession is subject to
a. Depreciation
b. Deduction in the previous year in which animal dies or become permanently useless
c. Nil deduction
d. None
49. Expenditure incurred on family planning amongst the employees is allowed to
a. Any assessee
b. A company assessee
c. An assessee which is a company or cooperative society
d. None
)
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50. Interest on capital of or loan from partner of a firm is allowed as deduction to the firm to the extent
of:
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a. 18% p.a.
b. 12% p.a. even if it is not mentioned in partnership deed
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c. 12% p.a. or at the rate mentioned in partnership deed whichever is less.
d. None
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51. Deduction under section 40(b) shall be allowed on account of salary /remuneration paid to :
a. Any partner b. Major partner only c. Working partner only
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d. None
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52. Remuneration paid to working partner shall be allowed as deduction to a firm:

a. In full
b. Subject to limits specified in section 40(b)
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c. None of these two

d. None
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53. A firm business income is nil /negative. It shall still be allowed as deduction on account of
remuneration to working partner to the maximum extent of:
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a. Actual remuneration paid as specified in partnership deed

b. Rs.50,000
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c. Nil
d. None
54. For person carrying on profession, tax audit is compulsory, if the gross receipts of the previous
year exceeds:
a. Rs.50 lakhs b. Rs.40 lakhs c. Rs.10 lakhs
d. None
55. Tax audit is compulsory in case a person is carrying on business whose gross
turnover/sales/receipts, as the case may be, exceeds:
a. Rs. 10 lakhs b. Rs. 40 lakhs c. 1 crore
d. None
56. In case an assessee in engaged in the business of civil construction, presumptive income scheme is
applicable if the gross receipts paid or payable to him in the previous year does not exceed:
a. Rs.10 lakhs b. Rs. 40 lakhs c. Rs. 50 lakhs
8
d. None
57. In the aforesaid case ,the income shall be presumed to be :
a. 5% of gross receipts b. 8% of gross receipts c. 10% of gross receipts
d. None
58. In case an assessee is engaged in the business of plying hiring or leasing goods carriage,
presumption income scheme under section 44AE is applicable if the assessee is the owner of
maximum of :
a. 8 goods carriages b. 10 goods carriages c. 12 goods carriages
d. None
59. In case an assessee is engaged in the business of retail trade, presumptive income scheme is
applicable if the total turnover of such retail trade of goods does not exceed:
a. Rs.10 lakhs c. Rs.40 lakhs
b. Rs.30 lakhs d. Rs.50 lakhs
60. In the above case the income to be presumed under section 44AF shall be :
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a. 8% of total turnover b. 5% of total turnover c. 10% of total turnover
d. None
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UNIT IV
61. The exemption under section 54 ,shall be available:

a. To the extent of capital gain invested in the HP
b. Proportionate to the net consideration price invested
c. To the extent of amount actually invested
d. None
62. The exemption u/s 54B, is allowed to :
a. Any assessee c. Individual or HUF
b. Individual only
d. None
63. For claiming exemption under section 54B the assessee should acquire:
a. Urban agricultural land c. Any agricultural land
b. Rural agricultural land
d. None
)
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64. New assets acquired for claiming exemption u/s 54, 54B or 54D,if transferred within 3 years, will
result in:
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a. Short-term capital gain c. ST or LTCG depending upon original
b. long-term capital gain transfer
d. None ce
65. Loss from a speculation business of a particular A. Yr. can be set off in the same A. Yr. from:
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a. Profit and gains from any business
b. Profit and gains from any business other then speculation business
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c. Income of speculation business

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d. d. None
66. Loss under the head capital gain in a particular assessment year can:
a. Be set off from other head of income in the same assessment year.
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b. Be carried forward
c. Neither be set off nor carried forward
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d. None
67. The loss is allowed to be carried forward only when as assessee has furnished:
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a. Return of loss
b. Return of loss before the due date mentioned u/s 139(1)
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c. Or not furnished the return of loss

d. None
68. Loss under the head income from house property can be carried forward:
a. Only if the return is furnished before the due date mentioned u/s 139(1)
b. Even if the return is not furnished
c. Even if the return in furnished after the due date
d. None
69. Deduction u/s 80C in respect of LIP, Contribution to provident fund, etc. is allowed to :
a. Any assessee
b. An individual
c. An individual or HUF
d. An individual or HUF who is resident in India
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70. Deduction under section 80C is allowed from:
a. Gross total income
b. Total income
c. Tax on total income
d. None
71. An assessee has paid life insurance premium of Rs.25,000 during the previous year for a policy of
Rs.1,00,000.He shall:
a. Not be allowed deduction u/s 80C

b. Be allowed Deduction u/s 80C to the extent of 20% of the capital sum assured i.e.Rs.20,000
c. Be allowed Deduction for the entire premium as per the provisions of section 80C
d. None
72. For claiming Deduction u/s 80C, the payment or deposit should be made:
a. Out of any income
b. Out of any income chargeable to income tax
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c. During the current year out of any source
d. None
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73. Deduction under section 80C shall be allowed for :
a. Any education fee
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b. Tution fee exclusive of any payment towards any development fee or donation or payment of
similar nature
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c. Tution fee and annual charges
d. None
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74. Deduction under section 80CCC is allowed to the extent of :

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a. Rs. 20,000 c. Rs. 40,000

b. Rs. 10,000
d. None
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75. Deduction under section 80D in respect of medical insurance premium is allowed to:
a. Any assessee
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b. An individual or HUF
c. Individual or HUF who is resident in India
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d. Individual only
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76. Deduction u/s 80D is allowed if the premium is paid to :

a. Life insurance Corporation
b. General insurance Corporation or any other insurer
c. Life insurance or General insurance corporation
d. None
77. The payment for Insurance premium under section 80D should be paid:
a. In cash c. Cash/by d.cheque
b. By cheque
78. The quantum of deduction allowed under section 80D shall be limited to:
a. Rs.6,000 c. Rs. 40,000
b. Rs.10,000
d. None
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79. Deduction U/s 80G on account of donation is allowed to:
a. A business assessee only c. Individual or HUF only
b. Any assessee
d. None
80. The maximum deduction u/s 80GG shall be limited to:
a. Rs. 1,000 p.m.

b. Rs. 2,000 p.m.
c. Rs. 3,000 p.m.
d. None
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181UCM515
UNIT V
81. The last date of filing the return of income u/s 139(1) for assessment year 2009-10 in case
of a non corporate business assessee whose accounts are not liable to be audited shall be:
a. 31st July of the assessment year

b. 30th June of assessment year
c. 31st October of the assessment year
d. d. None
82. For the P.Y. 2008-09 the business income of the assessee before providing C.Yr.
depreciation of Rs. 3,50,000 is Rs. 1,50,000. His due date of return was 31-10-2009 but
he submitted the return on 16-12-2009, the assessee in this case:
)
a. Be allowed to carry forward unabsorbed depreciation of Rs. 2,00,000
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b. Not allowed to carry forward unabsorbed depreciation of Rs.2,00,000
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c. Normal loss
d. d. None
83. K finds some mistake in the return of income submitted by him on 05-06-2009 for
ce
assessment year 2009-10, he wishes to revised such return. No assessment has been done
in this case. K can revise such return till:
er
a. 31-03-2009
m
b. 31-03-2011
c. 31-03-2010
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d. None
84. The notice under section 143(2) must be served within:
a. 12 months from the date of filing of return
-C
b. 12 months from the due date of filing the return u/s 139(1) or from the date of filing
of return of income.
SC
c. 12 months from the end of the month in which the return was furnished.
d. None
A
85. Time limit for completion of asst. u/s 143/144 shall be:
K
a. Four years from the end of the relevant assessment year in which income was first
assessable.
b. Two years from the end of the relevant assessment year in which income was first
assessable.
c. Two years from the end of the month in which the return was so furnished.
d. None
86. The time limit for completion of assessment/reassessment u/s 147 shall be:
a. One year from the end of financial year in which notice u/s 148 was served on the
assessee
b. Two years from the end of the financial year in which notice u/s 148 was served on
the assessee
c. Four years from the end of the financial year in which notice u/s 148 was served on
the assessee
13
181UCM515
d. None
87. The amendment of an order u/s 154 can be made:
a. Within 4 years from the date when the order sought to be amended was passed
b. Within 4 years from the date of receipt of such order by the assessee
c. Within 4 years from the end of the F.Y, in which the order sought to be amended was
passed.
d. None
88. The first appeal against the order the assessing officer lies with:
a. Deputy commissioner (Appeals)
b. Commissioner appeals
c. Appellate Tribunal
d. None
89. The first appeal can be filed by:
)
a. The assessee only
G
b. Assessing officer only
(U
c. Either the assessee or the assessing officer
d. None
90. If the assessee is not satisfied with any order passed by the assessing officer, he can:
a. File appeal to commissioner (Appeal)
ce
b. Apply for revision to the CIT u/s 264
er
c. Either file appeal or apply for revision u/s 264
m
d. File appeal as well as apply for revision.

91. Revision u/s 263 is to be done by the commissioner
om
a. On his own motion

b. On the request of the assessee
c. On the request of the assessing officer
-C
d. On his own motion or on the request of the assessee or the assessing officer
SC
92. The time limit for passing an order of revision under section 263 by the commissioner of
Income-tax, where the same is to give effect to a direction by the High Court is:
A
a. Two years from the date of direction

K
b. Three years from the date of direction

c. Two years from the end of the financial year in the direction is given
d. There is no time limit.
93. Income from rent of agricultural lands is:

a) Agricultural Income
b) Business Income
c) Casual Income
d. None
94. Income form tea cultivation and manufacturing of tea business has to be divided in two
parts:
a) 40% is Agricultural Income
14
181UCM515
b) 50% is Agricultural Income

c) 60% is Agricultural Income
d). None
95. Integration of Agricultural Income and Non-Agricultural Income is not done in case of
a) Individuals
b) Partnership firm assessed u/s 184
c) Companies
d. None
96. Income of the previous year (1-6-2008 to 31-3-2009) is taxable in the assessment year.
a) 2007 – 08
b) 2008 – 09
c) 2009 – 10
d. None
)
97. Income from sale of household furniture is
G
a) Taxable Income
(U
b) Exempted Income
c) Casual Income
d. None
ce
98. Share of income received by a member of H.U.F out of H.U.F. income is
a) Taxable income u/s 66
er
b) Exempted income u/s 10(2)
m
c) Rebateable income u/s 86

d. None
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99. No integration of agricultural income with non – agricultural income if agricultural

income is below:
a) Rs.1,00,000 b) Rs.5,000 c) Rs.18,000d. None
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100. Share of income received an A.O.P (whose income is liable to tax at rates applicable to
an individual is entitled to rebate at
SC
a) 27½ % b) Nil c) Average rate d)None

A
SECTION – B
K
UNIT-I
1. State the objective of taxation?
2. Define the term of ‘Assessee’?
3. Who is an ‘assessee in default’?
4. Discuss the previous year?
5. What is the assessment year?
6. Mr.A left India for the first time on 31st Dec.2006 Determine his residential status for
the previous year 2006 – 07.
7. Mr. A come to indi for the first time on November 6,2005 and left India on 13 th May
2006. he again come to indai on 13th October 2006 and left on 4th April 2007.
Determine his status for the previous year 2006 – 07.
15
181UCM515
8. Mr.X is selected for a job in Nigeria and his agreement has been approved by the
Government of India. He left India on 1st October 2003 and came back on 30th
September 2006. now, he is in India. Determing his status for the previous year 2006
– 07.
9. Mr.Ram yadav is Karta of HUF having property in India and Mauritus. He stayed in
India only for 61days to visit various temples during 2006 – 07. Determine the status
of HUF.
10. Define Agricultural Income.
UNIT II
)
G
11. Limits for exemption of gratuity for government and semi government employee.
(U
12. Limits for exemption of gratuity to an employee not covered under payment of
Gratuity Act.
Limits for exemption of commuted value of pension
ce
13. Write a Provision for HRA, EA, Pension and Deduction 80C for Govt and Non-Govt
employees.
er
14. Write a elaborate format for income from salaries.
m
15. From the particulars given below compute Income From House Property which
om
consist of 2
independent units having 1/3rd and 2/3 rd area:
Date of Completion 1/11/2003
-C
Municipal rental Value Rs.96,000

Fair rental value Rs.84,000
SC
Self-Occupied 2/3 portion

Let-out 1/3 portion from
A
1/4/08 to 31/8/08
K
@Rs.7200 p.m
and self occupied from 1/9/08 onwards.
Municipal Taxes Rs.6,000 p.a
Fire Insurance Premium Rs.2,000 p.a
Ground Rent Rs.4,000 p.a
Interest on Loan Rs.7,500 p.a
16. Mr.Hari getting a pension of Rs.2000pm from a company during the previous year.
He got his 2/3 of pension commuted and received Rs.123000. Compute the taxable
pension amount for both the cases of gratuity.
17. Give a format for income from salaries
18. Write a format for income from house property
19. Explain about the graduity
16
181UCM515
20. Explain about the pension
UNIT III
21. Explain about the capital gain and its types.
22. Differentiate LTCG and STCG.
23. Calculate taxable capital gain from the following.

An asset as purchased in 2014-15 for Rs.150000. the asset was sold for Rs.250000 in
the previous year. Calculate capital gain.
24. Calculate taxable capital gain. An asset was purchased in the year 2007-08 for
)
Rs.426000. During the previous year it was sold for Rs.800000. Expenses in
G
connection with the transfer of sale is Rs.10000. [CII 2007-08 : 551; 2016-17 : 1125]
(U
25. Mr. Ashok redeemed 6000 units of a debt oriented mutual fund on 22.08.2015 @
Rs.45.the units were acquired by him in 2002-03 @ Rs.11. calculate capital gain.
[CII: 2002-03: 447; 2016-17:1125]
ce
er
m
26. From the following details calculate capital gain.

om
a. Sale consideration of residential house Rs.2500000 on 26-10-2016 [CII-

1125]
b. Cost of acquisition of the house on 1-8-2005 is Rs.702000[CII – 497]
-C
c. New residential house acquired on 2nd February 2017 is Rs.750000

SC
27. From the following details calculate capital gain.

a. Sale consideration of residential house for Rs.3000000 on 26-08-2016 [CII: 1125]
A
b. Cost of acquisition of the house on 1-7-2005 is Rs.1002000[CII – 497]

K
c. New residential house acquired on 2nd March 2017 is Rs.600000

d. Cost of stamp and registration fees is Rs.100000
28. Write a format for income from business

29. Give a short note on profession
30. Explain about the business income
UNIT IV
31. Mr. Ganesh previous year’s Gross Total Income is Rs.500000. he has made the
following donations. Calculate the net income.
1. National Foundation for Communal Harmony Rs.10000
2. National Children’s Fund Rs.20000
17
181UCM515
3. National Defence Fund Rs.25000\
32. Mr. Shaji previous year’s Gross Total Income is Rs.450000. He has made the
following donations. Calculate his net income.
1. Jawaharlal Nehru memorial Fund Rs.12000
2. Rajiv Gandhi Foundations Rs.8000
3. Africa Fund Rs.15000
4. Indira Gandhi Memorial Fund Rs.14000
33. Calculate the Total Taxable income from the following cases
CASE 1
Long term capital gain [+] 200000
Short term capital loss[-] 60000
)
Business loss [-] 90000
G
CASE 2
(U
Long term capital loss [-] 450000
Short term capital gain [+]135000
34. Explain about the IFOS
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35. Explain about the losses
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36. How can losses can be forward to calculate
m
37. Income from transaction part of which takes place in India and part outside
38. Casual income - only exempted limits.
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39. Exemption of leave travel concession u/s 10(5)

40. What are the limits for exemption in IFOS
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UNIT V
41. Compute tax liability of Mr.X for the assessment year 2007 – 08 if his non agri.
SC
Income is Rs.1,20,000 and agri. Income is Rs.40,000

42. Explain about the deductions u/s 80s
A
43. Mr. Sathish previous year’s Gross Total Income is Rs.450000. He has made the
K
following donations. Calculate his net income.

1. Jawaharlal Nehru memorial Fund Rs.12000
2. Rajiv Gandhi Foundations Rs.8000
3. Africa Fund Rs.15000
4. Indira Gandhi Memorial Fund Rs.14000
44. Calculate the Total Taxable income from the following
Long term capital gain [+] 200000

Short term capital loss[-] 60000
Long term capital loss [-] 450000
18
181UCM515
Short term capital gain [+]135000

45. Explain about PAN

46. Write a format for deductions 80s
47. Explain about a Tax liability
48. What is Statutory Provident Fund deductions in 80s?
49. What is Recognized Provident Fund deductions in 80s?
50. What is Public Provident Fund deductions in 80s?
SECTION-C
Unit I
)
1. Explain the tax system prevalent in India.
G
2. Write a note on historical background of Income tax Act?
(U
3. Explain the term Assessee. State the different classes of Assesses.
4. State the procedure followed in computing the total income if an assessee.
5. What is the residential status of Mr.Karthi? For the assessment year 2018-2019,
who was in India as follows
ce
er
Year Days present in India Determine the residential status.
2017-2018 182 days
m
2016-2017 55 days
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2015-2016 28 days
6. Mr.Ram an Indian Citizen leaves India for the first time on 31 st may 2013 and
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comes back on 15th may 2016. He again leaves India on 10th june 2017.To come
back on 14th January 2018. He is living in India since then. Determine his
SC
residential status for the previous year 2017-2018

A
7. Ms. Indu is a foreigner came to India from Poland for the first time on 1 st April
K
2011. She stayed here continuously for 3years and went to France on 1 st April
2014, Again she returned to India on 1st July 2014 and went to Poland on 1st
December 2015. Again she came back to India on 25th January 2018 on service
in India. Determine the Residential status for 2018-2019.
8. Mr.Santhosh a foreigner came to India for the first time on June 15 th 2012 .
During the financial year 2012-2013,2013-2014,2014-15,2015-16,2016-
17,2017-18. He stays in India for 120 days, 115 days, 15days,191days, 124days
and 80days respectively. Determine the residential status for the assessment year
2018-2019.
9. Mr.Raja an assessee of the following two cases, Find out his Residential status
for Assessment year 2018-2019.
19
181UCM515
a) CASE 1: Raja is an citizen of India. He left to Iran on 18 th 2017and could not

return to India till the end of the financial year of 2017-2018.
b) CASE 2: Mr.Raja left for USA on 10th March 2015 after having lived in India for
20 years. He returned India on 10th September 2017.
10. Define (a) Assessment Year (b) Person (c) Previous year (d) Income
Explain the various kinds of Agricultural Income
Unit II
11. MR. Kishore lives in Coimbatore he is a private sector employee he earns

RS.5000 as basic pay and DA RS.2000 EA RS.600 per month. Calculate the
)
entertainment allowances of Mr. Kishore?
G
(U
12. MS. Akshara is a government employee she earns basic pay as RS. 17750 DA
RS.6250 per month (50% enter into service benefit) she earned RS.5200 as
HRA and paid the rate of RS.4500 and received the EA RS.750 per month.
ce
13. MR. Sekar works in government of Tamil Nadu (Chennai) he gets salary as
er
follows:
m
Salary as RS.5000 per month, DA RS.1000 per month in forming part. DA RS.750 per
month does not forming part.
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HRA- RS.600 per month.

EA- RS.250 per month and he claims that he pays a rent of RS.200 per month. calculate
exempted HRA and EA?
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SC
14. MR.X is an employee in XY private ltd company he used his private vehicle for
his official work, also for both private and official use he earns rs.800 for his
expenses .
A
His vehicle cubic capacity is 1000 calculate the motor perquisite amount for both the cars.
K
15. MR. Y is as employee of ABC ltd and he utilize the company’s motor car his
personal use and also official work. The actual expense for that is RS. 5000. The
cubic capacity is 25000CC . calculate the taxable perquisite for the employer
16. MR. Sundar an employee of government of Tamil Nadu received RS.68900 as

gratuity at the time of retirement on October 14-2016 .calculate the taxable
gratuity for MR. Sundar?
17. MR. Abdul an employee of M&N company ltd received by RS.68000 as

gratuity .he is covered by the payment of gratuity act 1972. He retired on July
15-2016. After rendering service of 36 years 9 months at the time of retirement
20
181UCM515
his monthly basic salary was RS.32000 and DA (forming part) RS.1000.
calculate the exempted gratuity.
18. MR. Mohan earns RS.125000 as gratuity as on 15 th December 2016 .he was
working in ford company (private)ltd. coming under payment of gratuity act
1972 at the time of payment getting RS.5000 per month salary and RS.3000 per
month as DA[75% as forming part] calculate exempted gratuity in the
following cases.
19. From the particulars given below compute Income From House Property which
consist of 2
independent units having 1/3rd and 2/3 rd area:
Date of Completion 1/11/2003
Municipal rental Value Rs.96,000
)
Fair rental value Rs.84,000
G
Self-Occupied 2/3 portion
(U
Let-out 1/3 portion from
1/4/08 to 31/8/08@Rs.7200
p.m and self
occupied from 1/9/08 onwards.
ce
Municipal Taxes Rs.6,000 p.a
er
Fire Insurance Premium Rs.2,000 p.a
m
Ground Rent Rs.4,000 p.a

Interest on Loan Rs.7,500 p.a
om
20. Write formate for income from house property

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UNIT III
SC
21. Mr. Anand owns a residential house in Mumbai, which he acquired in the month
A
of June 1995 for Rs.350000. he sells the house for Rs.2500000 on 18 th August
K
2016. He purchased another house at Chennai on 10th December 2016 for

Rs.600000. on 25th December 2016 he deposits Rs.450000 in SBI under capital
gain deposit account scheme. Calculate the taxable amount of capital gains.
[CII:1995-96:281; 2016-17:1125]
22. From the following calculate taxable capital gain of Miss. Rithiga
a. Sale consideration of residential house on 31st December 2016 Rs.1500000
b. Purchase of another residential house in March 2017 Rs.200000
c. Investment in bonds on 15th January 2017 which qualifies for u/s 54 EC Rs.50000
d. House, which was purchased in the year 1997-98 for Rs.300000, was sold on 31st
December 2016.[CII: 1997-98:331 ;2016-17:1125]
(OR)
21
181UCM515
23. Ms. Gayathri sells jewellery on 25th august 2016 for Rs.1500000. cost of the
jewellery on 25th June 1993 was Rs.300000. brokerage and commission paid for
transfer was Rs.10000. from the earned capital gain Mr. Valli purchased a
residential house on 12th January 2017 for Rs.325000. calculate taxable capital
gain.[CII:1993-94:244 ; 2016-17:1125]
24. From the following details given by Mr. Ram who has shifted his industrial
undertaking from urban area to a non-urban area, calculate the taxable capital
gain. The following were extracted during the shifting.
a. He sold a one plant & machinery costing Rs.200000 purchased on 31 st December
2013 on 14th April 2017 for Rs.345000. he invested the gain amount in another
plant and machinery in the non-urban area.
b. He sold furniture’s costing Rs.75000 for Rs.142000 in the course of shifting and
)
purchased new furniture in the non-urban area.
G
(OR)
(U
25. Calculate the capital gain from the following particulars given by Mr. Suman for
the previous year, if CII for 2016-17 is 1125 and 1981-82 is 100.
Cost of residential house Rs.325000 [FMV as on 1-4-1981]
Date of purchase 1.10.1979
ce
Date of issue 1.10.2016
er
Sale value Rs.4000000
m
Cost of improvement Rs.50000

Date of improvement 1.10.2002[CII:447]
om
Stamp duty and legal charges Rs.50000

The assesse has purchased another residential house within one year for Rs.150000 before the
date of sale.
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26. From the following calculate capital gains of Ms. Uma for the current assessment year, if
CII for 1993-94 is 244, 1997-98 is 331, 2005-06 is 497 and 2016-17 is 1125 respectively.
SC
A).Asset – Jewellery
Year of purchase 1993-94
A
Year of sale 2016-17

K
Cost of acquisition Rs.150000

Cost of improvement in 1997-98 Rs.46000
Consideration received on sale Rs.950000
27.Differences between LTCG and STCG
28. Asset – debentures

Year of purchase 2005-06
Year of sale 2016-17
Cost of acquisitionRs.180000
Selling expenses Rs.5000
Consideration received on sale Rs.300000
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181UCM515
29. Find out GAV:

Particulars House House House House House House
House
1 2 3 4 5 6 7
1.MRV75000 65000 65000 82000 82000 145000 145000
2.FRV 64000 67000 65500 76500 78500 125000 155000
3.SR 60000 60500 71000 81000 71000 130000 130000
4.Annual rent 144000 96000 84000 84000 108000 nil nil
5.Period of vacancies 1 ½ month 2 month 2 month 1 month 3 month nil nil
6.Unrealised rent _ _ _ _ _ _ _
30. From the following Calculate NAV(Net Annual Value)

FRV-34,000
)
MRV-28,000
G
SR-35,000
(U
AR-3,000 per month
Municipal tax made by the year 1,500.
ce
UNIT IV
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31. MS. Ayanda furnishes the following particulars of income for the previous year. calculate
m
income from other sources.

She received rs.250000 as stake money. she spent rs.50000 for maintenance of horse races.
om
32. Ms. Catherine furnishes the following details of his income. Calculate income from other
sources for the previous year.
a. Rs.25,000 received as interest from government securities rs.2000 spent towards collection
-C
charges.
b. Dividend from an Indian company rs.40,000
SC
c. Dividend from an foreign company rs.15,000

d. Family pension rs.12000
A
33. Calculate income from other sources of Mr. Kelemwork from the following assuming all
K
commercial securities are unlisted securities.

a. Rs. 2,50,000 invested in 12% less-tax government securities.
b. rs. 2,50,000 invested in 125 less-tax commercial securities.
c. rs. 2,50,000 invested in 12% less-tax commercial securities.
d. rs. 8,000 received as interest from less-tax commercial securities.
34. Mr. Ganesh previous year’s gross total income is rs. 5,00,000.He has made the following
donations. Calculate the net income.
1. National foundation for commercial harmony rs.10,000
2. National children’s fund rs.20,000
3. National defence fund rs. 25,000
35.Mr. Shaji previous year’s gross total income is rs. 4,50,000.He has made the following
donations. Calculate his net income.
1. Jawaharlal Nehru memorial fund rs. 12,000
23
181UCM515
2. Rajiv Gandhi foundation rs. 8,000

3. Africa fund rs. 15,000
4. Indira Gandhi memorial fund rs. 14,000.
36. What are the incomes from the other sources, explain it
37. Explain about the IFOS exempted amount.
38. Explain about losses carry forward to the how many years-discuss it
39. Briefly explain about the set of losses and carry forward
40. format for IFOS
UNIT V
41. Mr. Ganesh previous year’s gross total income is rs. 5,00,000.He has made the following
)
donations. Calculate the net income.
G
National foundation for commercial harmony rs.10,000
(U
National children’s fund rs.20,000
National defence fund rs. 25,000
42. Mr. Shaji previous year’s gross total income is rs. 4,50,000.He has made the following
donations. Calculate his net income.
ce
1.Jawaharlal Nehru memorial fund rs. 12,000
er
2. Rajiv Gandhi foundation rs. 8,000
m
3. Africa fund rs. 15,000

4. Indira Gandhi memorial fund rs. 14,000.
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43. Mr. Robert submits the following information for the previous year. How will you adjust
the losses shown by him.
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RS
Income from Salary (+)50,000
SC
Income from House property (-)7,500

Business income (-)15,000
A
Bank interest (+)30,000

K
Note: Salary income of rs.50,000 should not be utilised to set-off business income (loss).
44. What are deduction u/s 80s

45. Explain about any four deduction 80s
46. Explain about the tax liability
47. format for calculations for total income
48. Explain about the filings and returns
49. Explain PAN and its importance
50. How to calculate the tax liability for an assessee.
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181UCM515
Annexure
SECTION – A
ANSWERS
Q ANS Q. ANS Q. ANS Q. ANS Q. ANS
. N N N N
N O O O O
O
1 a)1961 21 c)Both 41 c)Nil 61 a) To the 81 a) 31st July
ordinarily extent of
resident and capital gain
NOR
invested in the
HP
2 b)Income tax 22 a) resident only 42 b) Indefinitely 62 b)Indvidual 82 a) Be

plus surcharge only allowed to
carry
)
G
forward
3 c)Totally 23 a) residential 43 b) 3 years 63 c) Any 83 a. b)
(U
exempt under status in India immediately agricultural 31-03-
section 10(19) before the 2011
land
commenceme
4 d)Totally 24 a)None 44
nt ce
c) Scientific or 64 a) Short-term 84 c) 12
er
chargeable to social or capital gain months
tax statistical from the
m
end of the
month
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5 b) Chargeable 25 a)None 45 a) 10 equal 65 c) Income of 85 b) Two

years
as other installments speculation from the
sources business end of
the
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relevant
assessme
nt
SC
6 c) Rs.14,600 26 a) Resident in 46 c) basis but 66 b) Be carried 86 a) One

India subject to forward year from
section 43B the end of
A
financial
K
year in
which
notice u/s
148
7 d) Rs.3,600 27 b) Non-resident 47 b) Treated as 67 b) due date 87 c) Within 4
revenue mentioned u/s years from
expenditure 139(1) the end of
the F.Y, in
which the
8 c)Rs.1,00,000 28 b) Non-resident 48 b) Deduction 68 c) Even if the 88 b)
in the return in Comm
previous year i furnished after issione
the due date r
appeal
s
25
181UCM515
9 a)assessee. 29 a)Resident 49 b) A company 69 c) An 89 a. a)

assessee individual or The
HUF assess
ee
only
10 a)assessee. 30 c)Taxable in the 50 c) 12% p.a. or 70 a) Gross total 90 a. c)

hands of the at the rate Either
income file
company and mentioned in appeal or
exempt partnership apply for
revision
u/s 264
11 a)financial 31 a) Land is 51 c) Working 71 b) Be allowed 91 a. a)

year. situated in India partner only Deduction u/s On his
80C to the own
)
motio
G
extent of 20%
n
(U
12 c) Both the 32 b)60% of the 52 b) Subject to 72 b) Out of any 92 d)There is
above income from limits income no time
such specified ce chargeable to
income tax
limit
er
13 a) Individual 33 a) Fully exempt 53 c)nil 73 b) Tution fee 93 a)
m
only exclusive of Agricultur

any payment al Income
om
towards
14 a)15-11-2009 34 b)non 54 b) Rs.40 lakhs 74 b) 10000 94 c) 60% is
to 31-3-2010 agricultural Agricultur
income
-C
al Income
15 b) 2009-10 35 a) Rs.1,00,000 55 b) Rs.40 lakhs 75 a. b) An 95 c)
SC
individual Companie
or HUF s
A
16 b)10% and 36 c) Rs.5,000 56 b) Rs.40 lakhs 76 b) General 96 c) 2009 –

Rs.1000000 insurance 10
K
Corporation
17 c) 10% of 37 b) Taxable 57 b) 8% of gross 77 b)by cheque 97 b)
income-tax receipts Exempted
payable Income
18 C) Nil 38 a)Income from 58 b) 10 goods 78 b) 10,000 98 b)
salaries carriages Exempted
income
u/s 10(2)
19 c) Nil 39 b) Rs.1,20,000 59 c) Rs.40 lakhs 79 b) assessee 99 b)
Rs.5,000
20 100
d)None 40 b)Rs.160 p.m 60 b) 5% of total 80 b) 2,000 p.m c) Average
turnover rate
26
(AUTONOMOUS)
COIMBATORE-641029
)
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(U
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QUESTION BANK
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TITLE OF THE PAPER: ENTREPRENEURIAL DEVELOPMENT

A
K
APRIL 2019
1
Question Bank
ENTREPRENEURIAL DEVELOPMENT
)
G
CONTENTS
(U
S.NO CONTENT ce PAGE NO.
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1 Section A 3
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2 Section B 11
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3 Section C 12

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SC
A
K
Prepared by
S.Saranya
Coimbatore-29.
2
UNIT I
SECTION – A
1. Entrepreneurship development in a country largely depends on ______.
a. Rate of growth of population b. Educational standards c. Conducive govt.
policies
d. Availability of credit
2. Adoptive entrepreneurs are also called as _______ entrepreneurs.
a. Imitative b. Fabian c. Drone d. Technocrat
3. Discovery of new ideas, articles and methods is referred as ______.
)
a. Innovation b. Invention c. Research d. Experimentation
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4. A rural entrepreneur faces the problem of _____.
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a. Technical risks b. Economic risks c. Environmental risks d. All the above
5. The word “Entrepreneur” is derived from the _____ word.
c. Environmental risks b. English c. American
ce d. Latin
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6. The characters of Entrepreneurs are _____.
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a. Innovation b. Optimistic c. Creative d. All the above

7. The functions of entrepreneurs are_____.
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a. Innovation b. Risk taking c. Control d. All the above

8. An entrepreneur is _____.
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a. An innovator b. Only a risk taker c. Both innovator & risk taker d.None
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9. EDP is expanded as _____.

a. Enterprise development programme b. Entrepreneurial development programmes
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c. Entrepreneurial dual programmes d. Enter dual programmes

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10. Which category of entrepreneurs represents the skilled persons in rural society?
a. Tribal entrepreneur b. Merchant & trader entrepreneur c. Artisan entrepreneur d.
Drone entrepreneur
11. The French term “entrepreneurship” refers to _______.
a. To undertake b. To understand c. To do d. Understand
12. Who is a stereo type entrepreneur?
a. Technical entrepreneur b. Classical entrepreneur c. Professional entrepreneur
d. Fabian entrepreneur
13. WDCs stand for _______.
3
a. Women developing committee b. Women developing corporations c. World
developing committee d. Works delegating council
14. Features of rural entrepreneurs is ______.
a. Very low investment b. Low gestation period c. Use of traditional skills
d. All the above
15. The entrepreneur who acts as middlemen is _____ entrepreneur.
a. Farm b. Artisan c. Merchants & traders d. Tribal
16. Traditional industries are _____.
a. Khadi b. Power looms c. Iron & steel d. Automobiles
17. Problems of women entrepreneurs is _____.
)
a. Financial problems b. Family conflicts c. Marketing problems d. All the above
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18. An entrepreneur is the one who plans, develops and manages a corporate body is ______
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a. Business entrepreneur b. Corporate entrepreneur c. Trading entrepreneur d. Industrial
entrepreneur
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19. An entrepreneur who is carrying out trading activity but not manufacturing is ______
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entrepreneur.
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a. Business b. Corporate c. Trading d. Industrial

20. Entrepreneurship is a _________________
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a. An intangible factor b. Tangible factor c. Dependent factor d. Valuble face

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UNIT – II
SC
21. The _____ is not a commercial bank.

a. SBI b. Indus Ind Bank c. Development Cooperative Bank d. EXIM Bank
A
22. SIDBI is an off short of _____.

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a. IDBI b. RBI c. NABARD d. IRBI

23. The _____ is not a financing agency.
a. SIDBI b. IDBI c. IRBI d. TCO
24. SISI provide _____.
a. Finance assistance to SSI b. Underwriting facilities c. Re-finance facilities and advisory
service d. Technical consultancy
25. ITCOT is sponsored by _____.
a. IDBI b. SIDBI c. RBI d. ICICI
26. IRCI is now renamed as _____.
a. IIBI b. IRBI c. IDBI d. IFCI
4
27. TIIC is the SFC of _____.
a. Tripura b. Tamilnadu c. All southern states d. All union Territories
28. A person engaged in processing cereals and pulses needs marketing support __approach.
a. EGB b. SIET c. NAYE d. KVIC
29. TIIC stands for _____.
a. Tamilnadu invest industrial corporation b. Tamilnadu industrial investment corporation
c. Tamilnadu industrial information corporation d. Tamilnadu Internet Investment
Corporation
30. TCO’s are promoted by the _____.
a. Development banks b. Central govt. c. State govt. d. RBI
)
31. DIC’s function at _____ level.
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a. State b. District c. National d. International
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32. SISIs established in ______.
a. 1957 b. 1956 c. 1958 d. 1959
33. SIDO is established for _____ development.
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a. Modern industrialists b. Market researchers c. Small scale entrepreneurs d. Large
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scale industries
34. One of the main functions of NSIC is _____.
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a. Conducting research b. To prepare project reports c. To develop small- scale units

d. To provide training programmes
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35. The assistance rendered by SISIs is _____.

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a. Technical service b. Training facilities c. Testing facilities d. All the above

36. Khadi and village industries commission was set up in _____ year.
A
a. 1956 b. 1954 c. 1953 d. 1959

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37. National institute of small industries extension training institute was set up in 1956 at
_____.
a. Chennai b. Bangalore c. Hyderabad d. Cochin
38. IFCI stands for _____.
a. Investment finance corporation institute b. Industrial facility council of India
c. Institutional finance corporation of India d. Industrial finance corporation of India
39. One of the main objectives of ICICI is to promote ______.
a. To assist small scale industries b. To assist in modernisation of industrial enterprise
Private sector c. To protect industries against loss d. none
40. The main aim of the NIDC is _____.
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a. To assist small scale industries only b. To assist large scale industries only
c. To encourage medium & large scale industries d. To develop rural entrepreneurs
UNIT – III
41. Sickness refers to _____.
a. Poor labour relations in SSI unit b. Ill health of the employees of a SSI unit
c. Loss of market share of a SSI unit d. Accumulated cash losses of a SSI unit.
42. The _____ are the features of small scale business.
a. Flexibility b. Dispersal of units c. Resources d. Sickness
43. Small business is regarded as a ______ for entrepreneurship.
)
a. Cotton bed b. Seedbed c. Green bed d. Thorn bed
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44. Small scale units help in the development of ______.
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a. Backward areas of the country b. Urban areas of the country c. Modern industries
d. Young generation
45. The _____ are the Merits of small scale business.
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a. Employment generation b. Self employment c. Use of local resources d. All the above
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46. Problems of small scale business_____.

a. Lack of finance b. Inadequate of raw material c. Poor infrastructure d. All the above
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47. Some items _____ not reserved for SSI sector.

a. Ice cream b. Lighting c. Biscuits d. Rice-milling
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48. The _____ is not a Traditional industries.

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a. Hand looms b. Coir industries c. Sericulture d. Mobile

49. According to sick industrial companies act 1985, an industrial _____company is defined
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as sick company.
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a. It was registered for at least 7 years b. It was registered for at least 5 years
c. It was registered for at least 8 years d. It was registered for at least 3 years
50. According to IDBI, a unit may be considered sick if it has defaulted the payment of
_____.
a. Three installments b. Six installments c. Two installments d. Five installments
51. Sickness can be classified into _______ types.
a. 2 b. 3 c. 4 d. 5
52. The _____ sickness is beyond the control of the persons who float the unit.
a. Genuine b. Incipient c. Development d. Trade
53. The _____ sickness also be termed as man- made sickness.
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a. Genuine b. Comparability c. Induced d. Industry
54. Symptoms of sickness is _____.
a. Default in payment of interest of debentures b. Operating below break – even point
c. High cost of capita d. All the above
55. Causes of sickness can be divided into _____ categories.
a. 3 b. 2 c. 4 d. 5
56. External causes of industrial sickness ______.
a. Low quality b. Poor marketing efforts c. Faulty capital structure d. None of the above
57. Internal causes of industrial sickness is _____.
a. Power cuts b. Low quality c. Unfair exploitation d. All the above
)
58. If the small scale units want to manufacture of drugs and cosmetics, then they have to
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obtain license from _____.
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a. Chief inspector of factories b. Commissioner c. State drug controller d. CLB
59. If the SSI wants to be a corporate body then they have to register with ______.
a. Company law board b. Chief inspector of factories
ce c. Commissioner d. Inspector-
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general of registration
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60. The licensing authority for units covered under explosives & fire arms act _____.
a. Assistant commission b. Pollution control board c. Deputy Chief controller of
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explosives d. Commercial tax officer

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UNIT – IV
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61. Incentives is a general tem which includes ______.

a. Bonus & DA b. Concessions c. Concession & bounties d. Subsidies & bounties
A
62. Subsidies means______.

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a. Concession given to poor family b. Extra allowances c. A single lump sum given by
government to an entrepreneur to cover the cost d. Overtime wages
63. Incentives and subsidies increase the ability of the entrepreneur ______.
a. To face the recession b. To face competition c. To overcome the loss d. To cover
loss
64. Need for incentives is ______.
a. To remove regional disparities in development b. To promote entrepreneurship
c. To generate more employment d. All the above
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65. Under the scheme of promoting ISO 9000 certification, SSI units are given financial
support by way of reimbursing _______ of their expenditure to obtain ISO 9000
certification.
a. 90% b. 75% c. 25% d. 50%
66. The NSIC extends some of the incentives to SSI units, which get register under the
______.
a. State financial incentive scheme b. Single point registration scheme
c. Double point registration scheme d. Central financial incentive scheme
67. Overseas corporate bodies (OCBs. are those companies in which NRIs hold at least
______ of the equity.
)
a. 50% b. 60% c. 45% d. 25%
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68. SEZ stands for _____.
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a. Special entry zone b. Secured entry zone c. Safety engine zone d. Special economic zone
69. EOU’s stands for _____.
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a. Export oriented units b. Export on units c. Export oriented unions d. Export on unions
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70. EHTP stands for
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a. Electronic hardware transfer system b. Electronic hardware technology park

c. Extra hindrance on trade procedures d. Electronic hard technology park
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71. SIDO administers ______ small industries service units

a. 50 b. 34 c. 43 d. 26
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72. The transport subsidy of ______ for different regions is provided for both incoming raw
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material and out going finished products.

a. 45% to 90% b. 50% to 90% c. 50% to 80% d. 35% to 90%
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73. For some SSI units in backward areas, tax holiday is declared for ______ for both sales
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tax and income tax.

a. 10 years b. 2 years c. 5 years d. 15 years
74. Capital investment subsidy scheme is offered by ______
a. State government b. Central governmentt c. Ministry of commerce d. Both state &
central governmentt.
75. Under capital investment subsidy scheme, the maximum limit which can be availed by a
backward industrial unit is _______.
a. Rs. 50lakhs b. Rs.15lakhs c. Rs.25lakhs d. Rs. 10lakhs
76. MDF stands for ______.
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a. Management of development fund b. Marketing division faculty c. Management of
district fund d. Marketing development fund
77. Income tax deduction is allowed in respect of expenditure on scientific research is
______.
a. Expenditure on scientific research related to the business b. Expenditure on new product
development c. Expenditure on customer survey d. Expenditure incurred on dealer survey
78. Seed capital is also known as ______.
a. Equity capital b. Preference capital c. Working capital d. Initial capital
79. In our state, the ______ procures the key raw materials from the main producers and
supplies them to the needy entrepreneurs.
)
a. SISI b. SIDCO c. TIIC d. ICICI
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80. The ______ offers subsidy to physically handicapped entrepreneurs to prepare project
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report, pre-investment study and market surveys.
a. IDBI b. IFCI c. NABARD d. ADB
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UNIT – V
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81. Project formulation is _____ process.

a. A technical b. An economic c. An investigating process d. None of the
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above
82. A project has ______.
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a. Input characteristics b. Output characteristics c. Social cost-benefit d. All the

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above
83. Network design is _____.
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a. A work plan for project implementation b. Useful in social cost benefit analysis
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c. A source of finance d. Fund for industry development

84. Payback period method is _____ useful.
a. A method of technical analysis b. Used in network analysis c. Method of project
appraisal d. A method of generating business ideas
85. A project means for health care is an example for _____ project.
a. Quantifiable b. Sectoral c. Non quantifiable d. Technical
86. A project means for transport and communication sector is an example for _____ project.
a. Quantifiable b. Sectoral c. Non quantifiable d. Technical
87. Project life cycle consists of _____________ main stages.
a. 2 b. 3 c. 4 d. 5
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88. The _____ is the process of evaluating future of a project idea within the limitations of
the project implementing body and the constraints imposed on the project situation by
environment.
a. Feasibility analysis b. Techno-economic analysis c. Input analysis d. Financial analysis
89. CPM stands for ______.
a. Critical path method b. Consumer product machine c. Common programme method
d. Critical pair method
90. PERT stands for _____.
a. Programme evaluation result technique b. Price effective revenue technique
c. Programme evaluation and review technique d. Programme executing review team
)
91. The ______ comprises a set of symbols connected with each other in a sequential
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relationship with each step making the completion of an event.
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a. A network b. An activity c. A critical path d. An event
92. A Bank is automating its branches. It is an example for ______ project.
a. New b. Expansion c. Modernization
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d. Diversification
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93. The _____ does not consume time or resources in a network.
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a. An Activity b. A Node c. A Burst d. An Event

94. The ______ superior to CPM and PERT and recently used technique.
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a. GERT b. LOB c. WASP d. None

95. GERT stands for _____.
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a. Game evaluation review technique b. Graphical Evaluation and Review Technique

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c. Graphical extension ruling technique d. Gaming extension ruling technique

96. The ______ is the length of time required to recover the initial cash outlay on project.
A
a. ARR b. Payback period c. NPV d. IRR

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97. One of the drawbacks of payback period method ______.

a. Ignores the cost of the project b. Does not consider time value of money
c. It is difficult to operate d. Yield inconsistent result
98. IRR stands for _____.
a. Initial rate of return b. Investment rate of return c. Internal rate of return d. Internal
review rate
99. The_____ is written document that summarises a business opportunity and defines how
the identified opportunity is to be seized and exploited.
a. Project report b. Project appraisal c. Synopsis d. Project review record
100. EST stands for _____.
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a. Even standard time b. Earliest start time c. Estimated save time d. Earliest saved time
SECTION – B
UNIT – I
1. State the importance of entrepreneurship development in a developing country.
2. What are the functions of an Entrepreneur?
3. Define the term “entrepreneurship”.
4. “A study of business environment is advantageous to entrepreneur” explain.
5. Explain any two types of entrepreneurs?
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6. What are the qualities of a successful entrepreneur?
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7. Write short notes on rural entrepreneurship.
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8. What is the role of Entrepreneur in modern business?
9. What are the qualities of women Entrepreneur?
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10. What are the objectives of entrepreneurial training?
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UNIT – II
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11. What are the functions of SISI?

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12. What are the functions of ITCOT?

13. Write short note on SIDO.
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14. Explain about the functions National small industries corporation limited (NSIC).
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15. What are the various facilities provided by SIDCO to small scale units?
16. Write short note on Khadi and village industries (KVIC).
A
17. Write short notes on BIS.

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18. Write short notes on TCO.

19. What are the functions of ITCOT?
20. What are forms of assistance given be ICICI?
UNIT – III
21. Explain the various Classification of SSI units.
22. Give 3 internal causes of sickness of SSI units.
23. Give 3 remedial measures to stop industrial sickness of SSI unit.
24. Explain the objectives of SSI.
25. Explain the advantages of small industries.
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26. Explain the external causes of industrial sickness.
27. Explain the features of small scale industries.
28. Explain the importance of small scale industries.
29. What is the need of small scale business?
30. Explain the various remedial measures to attend industrial sickness.
UNIT – IV
31. List down the incentive and concessions available to SSI units?
32. Emphasize the importance in incentives and subsidies?
33. What is meant by seed capital assistance?
)
34. State the merits of incentives and subsidies?
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35. Any four selected categories of industries that can get special subsidy?
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36. What is the need for providing incentives to SSI?
37. Explain the general feature of capital investment Subsidy scheme?
38. Explain the drawbacks of incentives and subsidies?
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39. Write short note on facilities for the EPZ.
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40. What is the need of foreign direct investment in SSI SECTOR?

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UNIT – V
41. What is the process of project identification?
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42. State the features of pay back period method?

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43. Write note on techno – economic projects.

44. What are the advantages of CPM?
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45. Emphasize the need for project formulation?

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46. What are all the internal constraints in project identification?

47. What are the contents of a project report?
48. State the features of CPM.
49. Explain the essential requirements of project objectives.
50. Explain the external constraints in project identification.
SECTION – C
UNIT – I
1. Explain the types of entrepreneurs?
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2. Explain the contents of Entrepreneurial training program?
3. Explain factors determining the growth of entrepreneurs?
4. Elaborate problems faced by entrepreneurs?
5. Define rural entrepreneurship. What are the typical characteristic features of a rural
industry?
6. What are the problems faced by women entrepreneurs? Suggest measures to overcome the
Problems.
7. Explain the importance of training and development of entrepreneurs?
8. Explain the phases of EDP
9. State the important function of an entrepreneur?
)
10. Explain the characteristics features of entrepreneur?
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UNIT – II
11. Explain the role of SISI in developing SSI?
12. Explain role and objectives of SIPCOT?
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er
13. Explain the role played by DIC in promoting Entrepreneurship.
m
14. Explain the various promotional activities of commercial banks in entrepreneurial

development.
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15. Explain the various financial norms of the TIIC for financial assistance?
16. What are all the assistance provided by IFCI?
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17. What are all the various financial institution involved in extending financial assistance to
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entrepreneurs?
18. Explain the objectives and functions of ICICI.
A
19. Explain the functions of IRBI.

K
20. Explain about the “appraisal of term loans”.
UNIT – III
21. Elaborate the causes of sickness?
22 What are the steps involved in the rehabilitation of sick units?
23. Explain the procedures for registration of small scale industrial undertakings.
24. Write about merits and demerits of SSI.
25. Discuss the magnitude of sickness of small scale sector in India.
26. Explain the steps involved in promoting a SSI.
27. What financial assistance is granted by institutional agencies to SSI?
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28. Give suggestive measures for industrial sickness.
29. What are all the remedial measures taken by RBI to prevent from sickness?
30. Compare SSI unit and large industrial unit.
UNIT – IV
31. Elaborately discuss the central government incentive scheme
32. What is the difference between incentive and subsidy? What are the tax benefits available
to SSIs in India?
33. Explain about incentives and facilities to exporters?
34. State the salient features of state capital incentive subsidy scheme
)
35. Explain the various tax benefits available to small scale industries in India
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36. List down the incentives provide to the women entrepreneurs
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37. Explain the main classes of incentives and subsidies given by state government?
38. What are the functions of EXIM bank of India?
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39. Write in detail about incentives offered to develop the industries in backward areas
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40. Explain about transport subsidy?
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UNIT – V
41. Explain in brief the elements of project formulation

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42. How will you classify the projects? Give a rational and acceptable criterion for
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classifying projects.
43. What are the various types of network techniques?
A
44. Explain the basic concepts in network analysis

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45. What is feasibility analysis? Describe its main phases.

46. What is meant by CPM? What are the advantages and limitations of CPM?
47. Explain about payback period method and average rate of return method.
48. What are all the merits and demerits of NPV?
49. What are the various modern quantitative techniques that may be employed at the
appraisal stage?
50. State the various project appraisal methods.
14
ANSWERS FOR SECTION A
1. b. Educational standards 25. d. ICICI 45. d. All the above
2. a. Imitative 26. b. IRBI 46. d. All the above
3. b. Invention 27. b. Tamilnadu 47. b. Lighting
4. c. Environmental risks 28. d. KVIC 48. d. Mobile
5. c. Environmental risks 29. b. Tamilnadu industrial 49. a. It was registered for
6. d. All the above investment corporation at least 7 years
7. d. All the above 30. a. Development banks 50. a. Three installments
8. c. Both innovator & risk 31. b. District 51. b. 3
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taker 32. b. 1956 52. a. Genuine
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9. b. Entrepreneurial 33. c. Small scale 53. c. Induced
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development programmes entrepreneurs 54. d. All the above
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10. c. Artisan entrepreneur 34. c. To develop small- 55. b. 2
11. a. To undertake scale units 56. d. None of the above
er
12. b. Classical 35. d. all the above 57. b. Low quality
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entrepreneur 36. c. 1953 58. c. State drug controller
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13. b. Women developing 37. c. Hyderabad 59. a. Company law board

corporations 38. d. Industrial finance 60. c. Deputy Chief
14. d. All the above corporation of India controller of explosives
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15. c. Merchants & traders 39. b. to assist in 61. b. Concessions

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16. a. Khadi modernisation of industrial 62. c. A single lump sum

17. d. All the above enterprise Private sector given by government to an
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18. b. Corporate 40. c. To encourage entrepreneur to cover the

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entrepreneur medium & large scale cost

19. c. Trading industries 63. b. To face competition
20. a. An intangible factor 41. d. Accumulated cash 64. d. All the above
21. d. EXIM Bank losses of a SSI unit 65. b. 75%
22. a. IDBI 42. a. Flexibility 66. b. Single point
23. c. IRBI 43. b. Seedbed registration scheme
24. a. Finance assistance to 44. a. Backward areas of 67. b. 60%
SSI the country
15
68. d. Special economic 90. c. Programme
zone evaluation and review
69. a. Export oriented units technique
70. b. Electronic hardware 91. a. A network
technology park 92. c. Modernization
71. c. 43 93. d. An Event
72. b. 50% to 90% 94. a. GERT
73. c. 5 years 95. b. Graphical
74. b. Central government Evaluation and Review
)
75. c. Rs.25lakhs Technique
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76. d. Marketing 96. b. Payback period
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development fund 97. b. Does not consider
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77. a. Expenditure on time value of money
scientific research related 98. c. Internal rate of
er
to the business return
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78. d. Initial capital 99. a. Project report
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79. b. SIDCO 100. b. Earliest start time

80. b. IFCI
81. c. An investigating
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process
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82. d. All the above

83. a. A work plan for
A
project implementation
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84. c. Method of project

85. c. Non quantifiable
86. b. Sectoral
87. b. 3
88. a. Feasibility analysis
89. a. Critical path method
16
(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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A
TITLE OF THE PAPER: FINANCIAL ACCOUNTING

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APRIL 2019
1
Question Bank
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FINANCIAL ACCOUNTING
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CONTENTS
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1 Section A 3
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2 Section B 7
3 Section C 13
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A
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Prepared by
S.K. Arunkumar
Coimbatore-29.
2
SECTION A
UNIT I
1. The book which says that “modern accounting” has often been called “the language of
business” is accounting.
a) Financial b) Cost c) Elementary d) Modern
2. When a person starts a business, he is called .
a) Proprietor b) Receiver c) Manager d) Investor
3. The junior level employees of the accounts department who are known as
keepers.
a) Book b) Journal c) Ledger d) Finance
4. is a policy of “caution” or “Playing safe”.
a) Material b) Consistency c) Disclosure d) Conservatism
5. Sales book is also known as book.
a) Sales day b) Day c) Sold d) All of these
6. The amount which needed during a specific period for small payments is estimated as
)
amount.
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a) Total b) Interest c) Imprest d) Small
7. Balance of each account of ledger is recorded in
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a) Journal b) Ledger c) Day book d) Trial balance
8. is the second important stage in the accounting cycle or process.
a) Ledger b) Journal
9. An account is usually in the
ce
c) Day book d) Trial balance
format and contains two sides.
a) L b) T c) I d) V
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10. Journal is a book of primary or entry.
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a) Original b) Secondary c) Dual d) Two

11. Transactions are recorded in the journal in order.
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a) Ascending b) Descending c) Chronological d) Numerical

12. Every journal entry is accomplished by a .
a) Debit b) Credit c) Ledger d) Narration
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13. Bought furniture with cash, entry is debited to account.

a) Cash b) Furniture c) Purchased d) Sales
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14. Sales with name of buyer given should be assumed as sales.

a) Credit b) Cash c) Bank d) Buyer
15. errors are usually committed in maintaining accounts.
A
a) Rectify b) Mistakes c) Classify d) Numerous

16. Errors which neutralise each other are called _ errors.
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a) Numerous b) Principle c) Compensating d) Commission

17. account is used for rectification whenever applicable.
a) Suspense b) Ledger c) Journal d) Final
18. If profit decreases because of rectification of errors, the profit and loss account must be
.
a) Credited b) Debited c) Balanced d) Forwarded
19. means doing something which should not have been done.
a) Errors b) Principle c) Omission d) Commission
20. When a transaction is not at all recorded in any books is called omission.
a) Complete b) Partly c) Compensating d) Wrong
UNIT II
21. The balance found in the bank column is termed as balance as per cash book.
a) Cash b) Bank c) Both a & b d) None of these
22. In the pass book transactions which increases the customer’s balance are recorded on
3
side.
a) Credit b) Left c) Debit d) Right
23. statement is a list which shows difference between cash & bank balance.
a) Financial b) Cost c) Managing d) Bank reconciliation
24. Cheques discounted previously are dishonoured or debited in book.
a) Cash b) Ledger c) Pass d) Journal
25. The balance shown by the cash or pass book can be taken as balance.
a) Opening b) Closing c) Fixed d) Flexible
26. When accounts are finalised at the end of an accounting year, cash at bank must be shown
in the .
27. Unfavourable balance indicates the excess of withdrawals over deposits and is called
Overdraft.
a) Bank b) Pass c) Cash d) Account
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28. All mistakes in the cash book relating to entering casting must be .
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a) Balanced b) Tally c) Rectified d) Recorded
29. Favourable balance indicates the balanced of at the bank.
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a) Withdraw b) Deposits c) Account d) Books
30. BRS means for bank statement.
a) Reconciliation
31. Preparation of
b) Revocation ce
c) Reduction d) Restruction
_ accounts is the last step in the accounting cycle.
er
32. All nominal accounts concerning goods by passing entries known as
a) Opening b) Balancing c) Closing d) Trading
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33. The cost of raw materials consumed during the year is to be in the account.
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a) Debited b) Credited c) Balanced d) Traded

34. is the incidental residue from certain types of manufacture.
a) Factory b) Cost c) Scrap d) Stock
35. account is prepared to know the trading results of the business.
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a) Balance b) Cost c) Management d) Trading

36. is a ledger account.
SC

37. The expenses which are incurred for making the goods saleable.
a) Indirect b) Direct c) Sale d) Fixed
A
38. The goods that unsold lying in the godown at the end of the accounting year.
K
a) Opening b) Closing c) Scrap d) Stock

39. is prepared to measure the correct financial position of the business.
40. is the original fund with which he entered a business.
a) Proprietor’s capital b) Networth c) Both a & b d) None of these
UNIT III
41. of exchange is an instrument signed by the maker and bound to pay the
amount.
a) Bill b) Cheque c) Document d) Goods
42. The person who writes out the bill of exchange is known as .
a) Drawee b) Creditor c) Debtor d) Drawer
43. The person upon whom the bill of exchange is drawn is called .
4
44. The person to whom the amount has to be paid is known as the .
45. bills enables businessmen to get funds from the market to meet their temporary
financial requirements.
a) Documents b) Goods c) Accommodation d) Legal
46. The document in which the purchaser himself makes a written promise to pay the amount
to the seller is known as .
a) Promissory note b) Bill c) Accommodation d) Cheque
47. is an Indian version of bill of exchange.
a) Holder b) Hundi c) Stamp d) Notary
48. The term means the transfer of a bill of exchange.
a) Endorsement b) Promissory note c) Stamp d) Documents
49. When the acceptor of the bill wants to pay the amount of the bill before the due date, it is
known as of bill.
a) Closing b) Trading c) Retiring d) Balancing
)
50. of acceptor means unable to pay the amount owed by him.
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a) Insolvency b) Retiring c) Balancing d) Bill
51. A bill of exchange has two aspects namely bill receivable and bill .
(U
a) Saleable b) Honourable c) Discountable d) Payable
52. The mathematical process involved in the computation of average due date is known as
“equation of ”. ce
a) Payable b) Saleable c) Balancing d) Payments
53. When a single amount is borrowed which is repayable in several .
er
a) Instalments b) Payments c) Credits d) Debits
54. Average due date is an equated or date.
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a) Opening b) Mean c) Median d) Closing

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55. Actual payment of the total amount may be made on .

56. An current is a running statement of transactions between two parties for a
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given period of time.

57. Under method, the days are counted from the date or due date of transaction.
SC

58. Under method, the days are counted from the due date of one transaction to the
A
due date of another.

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59. Under method, the days are counted from the due date of transaction to the
opening date of the account current.
60. interest is written in red ink in the books.
a) Epoque b) Forward c) Red-Ink d) Daily balance
UNIT IV
61. of goods is a transfer of possession of goods.
a) Consignor b) Consignee c) Agent d) Consignment
62. The person sending or forwarding goods for sale is known as .
63. The person to whom the goods are sent is known as or agent.
64. When goods are sent on consignment, they are usually accompanied by statement known
as .
5
a) Document b) Bills c) Cheque d) Proforma invoice
65. is the remuneration to the consignor for selling consigned goods.
66. The extra commission over and above the usual commission is known as
commission.
67. Both consignor and consignee have to incur expenses for despatching and goods.
a) Selling b) Purchasing c) Closing d) Opening
68. Accidental loss or loss due to negligence is termed as loss.
a) Normal b) Abnormal c) Damaged d) Avoidable
69. Consignment account is a account.
70. Goods sent on consignment is a account.
71. When the persons coming together for their specific job is termed as venture.
)
a) Sole b) Partner c) Joint d) Co-Venture
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72. Joint venture account is a account in nature.
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73. Co-venture’s account is a account.
74. The persons who carry on a joint venture are called
a) Partnership b) Co-venturer c) Sole
ce .
d) Firm
75. Joint venture business follows the account on basis.
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a) Accrual b) Cash c) Credit d) Debit
76. Under method, each venture records in his own books only.
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a) Partial record b) Memorandum Joint Venture c) Both a & b d) None of these

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77. Memorandum joint venture account is a part of the system.

a) Single entry b) Double entry c) Triple entry d) Debit
78. venture may record joint record joint venture transactions in his own books of
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accounts.
a) Co-Venturer b) Joint c) Sole d) Partner
79. No is sent by one Co-venturers to another in case of joint venture.
SC
a) Account sale b) Proforma c) Invoice d) Credit sale

80. The doctrine of implied authority is not applicable to the venturers.
A
a) Joint b) Co-Venturers c) Sole d) Trading

K
UNIT V
81. It is to serve their members and not profit making concerns are also called
organisations.
a) Profit b) Non-Profit c) Sole d) Partnership
82. All the receipts of cash or cheque are recorded on the side.
a) Debit b) Credit c) Left d) Reverse
83. All and revenue receipts are entered on the debit side.
a) Capital b) Debit c) Credit d) Payment
84. Income and expenditure account is prepared in lieu of account.
a) Trading b) Profit & Loss a/c c) Credit d) Debit
85. Receipts and payments account is a type of account.
a) Personal b) Real c) Nominal d) Balance
86. Receipts and payments is prepared in lieu of _ book.
6
a) Bank b) Cash c) Day d) Sales
87. Accrued incomes are recorded in the side of balance sheet.
a) Assets b) Liabilities c) Debit d) Credit
88. Fees paid by new members at the time of joining the organisation is called fees.
89. fees is also received as many times in a year as persons become members.
90. is a primary source of income of a non-profit organisation.
a) Subscriptions b) Entry fees c) Membership d) Donation
91. A donation not received for a specific purpose is treated as a donations.
a) Entrance b) General c) Specific d) Legal
92. Amount received by non-profit organisations as per will of a deceased person is called
.
a) Legacy b) Sale c) Donations d) Specific
93. Excess of assets over liabilities is called fund.
)
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94. Any amount realised from sale of sports materials treated as _.
a) Loss b) Profit c) Income d) Special
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95. refers to the amount paid to a person to reimburse the actual expense.
a) Honorarium b) Donations c) Income d) Special
96. Purchase of books is treated as
a) Capital b) General
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expenditure.
c) Specific d) Special
97. The credit total exceeds debit total, the difference is known as .
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a) Surplus b) Deficit c) Profit d) Loss
98. The debit total exceeds credit total, the difference is a excess of expenditure over
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.
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a) Surplus b) Deficit c) Income d) Loss

99. Spent in the year of receipt and are treated as receipt.
a) Capital b) Revenue c) Legal d) Credit
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100. The surplus or deficit ascertained in Income and Expenditure account is transferred to
the fund.
a) Capital b) Revenue c) Deficit d) Credit
SC
Section B
UNIT I
A
1 .Journalise the following transaction in the books of Sri T.N of Coimbatore:

1987
K
Oct 1 Commenced business with Rs.50, 000

3 Purchased goods for cash Rs.10, 000 at 5% trade discount.
4 Paid carriage Rs.50
8 Purchased machinery for Rs.20, 000
10 Sold goods to Raja on account for Rs.15, 000
2. Journalise the following transactions, post them in the ledger and balance the accounts on
31th jan.1999
Jan 1 Lakshmi started business with a capital of Rs.50, 000
2 She purchased goods from Mala on credit Rs.10, 000
7 She sold goods to Rani Rs.10, 000
15 She further purchased goods from Mala Rs.12, 000
7
25 She further sold goods to Rani Rs.13, 000
3.Enter the following transactions in the Purchase Book and Sales Book of Mr .PANDIAN.
2000
JAN 1 Purchased goods from Balu Rs.30, 000
2 Sold goods to Swamy Rs.15, 000
4 Bought goods from Gowri Rs.13, 500
12 Sold goods to Thenali Rs.10, 500
19 Sold goods to Jayarama Rs.750
21 Bought goods from Rajesh Rs. 9, 000
30 Sold goods to shanthi Rs.900
4.Prepare Return outwards book and open ledger accounts from the following transaction :
2000
Oct 10 Returned to Ramchand& co .
25 copies of corporate Accounting @ Rs.150 per copy
)
10 copies of Financial Accounting @ Rs.130 per copy
G
Oct 20 Returned to Raman Publications
8 copies of Business Statistics @ Rs.100 per copy
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10 copies of principles of Economics @ Rs.75 per copy
5.Enter the following transactions in cash book with Discount and Cash columns
2000
Nov 1 Cash in hand Rs.390
ce
er
6 Credit purchase from Varun Rs.4, 350
10 Received from Mohan Rs.4, 240 Discount allowed to him Rs.40
m
14 Paid for Electricity charges Rs.250

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16 Bought stationary Rs.250

19 Drew from Bank for office use Rs.2, 800
24 Paid cash to Varun Rs.4, 300 in full settlement
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29 Received cash from Velavan Rs.770 Discount allowed to him Rs.30

6.State the rules of making entries under double entry system.
SC
7 .Enter the following transactions of a trader in a triple column cash book:

1987
A
Nov 1 Nizam started business with Rs.1, 00, 000

2 Deposited into bank of Bodi Rs.95, 000
K
5 Purchased a building for Rs.70, 000 and paid by cheque

10 Purchased merchandise Rs.20, 000 and paid by cheque
25 Paid freight Rs.50
29 Withdrawn from bank for personal use Rs.500
30 Cleared electricity bill Rs.90
8. Prepare Trail balance from the following ledger balance for the year ending 31.12.99
Capital 50,000 Plant &Machinery 80,000
Sales 1, 77,000 Purchases 60,000
Return outward 750 Return inward 1,000
Stock (1.1.99) 30,000 Discount (dr.) 350
Discount (cr.) 800 Bank charges 75
Salaries 6,800 Carriage inwards 750
8
Wages 10,000 Carriage outwards 1200
Bad debts provision 525 Rent and Taxes 10,000
Advertisement 2,000 Cash in hand 900
Cash at Bank 6,000
9. Rectify the following error which are discovered in the books of Srinivasagalu&Co
(a) The return outward book is over cast by Rs.150.
(b) Received Rs.200 from Shyam debited to his account.
(c) The purchase book was under cast by Rs.1, 000.
(d) A payment of Rs.500 for salaries toRaju has been posted twice to salaries account.
(e) Rs.150 received from Maden was entered on the debit side of the cash book. No
posting was done to Maden’s A/C
10. What do you understand by the types of errors usually made in maintaining accounts?
UNIT II
11. What is an `Adjusted cash book’?
12. Distinguish between `Trial balance’ and `Balance sheet’.
)
13. Prepare Trading Account of for the year ending 31-12-96 from the following
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information:
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Particulars Rs.
Purchases 8,60,000
Freight inward
Wages
52,000
24,000
ce
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Sales 14,40,000
Purchase returns 10,000
m
Sales returns 3,16,000

Closing stock 1,00,000
om
Import duty 30,000

14. From the following balance extracted at the close of the year ended 31st Dec 1996,
prepare Profit and loss account of Mr.raj as at that date:
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Gross profit 55,000 Repairs 500
SC
Carriage on sales 500 Telephone expenses 520

Office rent 500 Interest(Dr.) 480
General expenses 900 Fire insurance premium 900
A
Discount to customers 360 Bad debts 2,100

Interest from bank 200 Apprentice premium(Cr.) 1,500
K
Travelling expenses 700 Printing& stationery 2,500

Salaries 900 Trade expenses 300
Commission 300
15. The sundry debtors on 31 st Dec 1995 are Rs. 40,000. On analysis, it is found that
debtors for Rs .36,000 are good. The debtors for Rs.3,000 are doubtful and are estimated to
realize 2/3 rds of the amount and the debtors for Rs.1,000 are bad. Make a provision for
doubtful debts.Show the journal, profit &loss a/c and balance sheet.
16. From the following, calculate the amount of provision for doubtful debts to be debited to
p&l a/c:
Opening provision for doubtful debts Rs.2,400
Closing sundry debtors Rs 42,000
Bad debts yet to be written off Rs.2,000
9
Provide for doubtful debts at 10% on debtors.
17. The bank overdraft of Ranjini on 31-12-93 as per cash book is Rs. 9,000. From the
following particulars, prepare bank reconciliation statement:
Rs.
(i) Unpresented cheque 3,000
(ii) Uncleared cheque 1,700
(iii) Bank interest debited in the pass book only 500
(iv) Bill collected and credited in the pass book only 800
(v) Cheque of Renu dishonoured 500
(vi) Cheques issued to sekar entered in the
Cash column of cash book 300
18. Prepare a bank reconciliation statement from the following data as on 31-12-1995.
Rs.
)
(a) Balance as per cash book 12,500
G
(b) Cheques issued but not presented for payment 900
(c)Cheques deposited in bank but not collected 1,200
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(d)Bank paid insurance premium 500
(e) Direct deposit by a customer 800
(f)Interest on investment collected by bank
(g)Bank charges
ce 200
100
19. From the following particulars, Prepare a bank reconciliation statement as on 31-12-2003
er
(i) Balance as per cash book Rs.2,28,800.
(ii)Three cheques for Rs.22,500, Rs.3,740 and Rs.2,700 issued in Dec. were presented for
m
payment in Jan 2004

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(iii) Two cheques of Rs.23,000 and Rs.3,700 were sent for collection but no collection was
made during the year.
20. Prepare Bank Reconciliation statement: Rs.
Balance as per pass book (Cr.)(31-12-91) 9,000
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Cheques issued but not presented 15,000

Cheques deposited but not credited 1,500
SC
Bank has given credit for interest 150
UNIT III
A
21. Enumerate the practical uses of Average due date.

K
22. What do you understand by ’Daily Balance Method’ of Account current?

23. What are the differences between a Bill of exchange and Promissory note?
24. Explain the meanings of the terms. a) Drawer b) Drawee c) Payee and d) Endorsee in the
context of bills of exchange.
25. Kannan purchased goods from Raman, the due date for payment in cash being as follows:
Rs
Mar 15 1000 Due 18th April
Apr 21 1500 Due 24th May
Apr 27 500 Due 30th June
May 15 600 Due 18th July
Raman agreed to draw a bill for the total amount due on the average due date.
Ascertain the date.
26. Find out the Average due date of the following bills accepted by a trader wishes to settle
them with one single payment.
10
Date of Bill Amount of Bill Due date
1-4-90 800 6-6-90
30-4-90 1000 3-8-90
3-6-90 400 6-7-90
15-6-90 600 18-9-90
27. The following transactions took plce between Ram and Krishna from 1-1-09 to 30-6-09
2009 Rs
Jan 1 Sold goods to Ram 2240
Jan 10 Received Ram’s 1000

acceptance at 2 months
Feb 15 Received cash from 1200

Ram
Mar 2 Bought goods from 5500
)
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Ram
Mar 3 Accepted Ram’s bill at 2000
(U
1 month
Apr 11 Paid cash to Ram 2000

ce
Apr 30 Sold goods to Ram 2400
er
payable up to 31st may
m
May 11 Bought goods from 1500

Ram
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May 31 Sold goods to Ram 2200

payable up to 10th June
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June 15 Bought goods from 3000

Ram
SC
Prepare the account current to be sent by Krishna on 30th June 2009 .the rate of
interest is 5%.
28. Prepare Account current for Nagesh in respect of the following transactions with Basha:-
A
1994 Rs
K
Sep 16 Goods sold to Basha 400(due 1st Oct)

Oct 1 Cash received from Basha 180
Oct 21 Goods purchased from Basha 1000(due 1st Dec)
Nov 1 Paid to Basha 660
Dec 1 Paid to Basha 660
1995
Jan 1 Paid to Basha 1200
Jan 9 Goods sold to Basha 40(due 1st Feb)
The Account is to be prepared up to 1st Feb. Calculate interest @6%p.a.
29. From the following information, pass journal entries in the books of Drawer:
(1)’A’ draws a bill of exchange for Rs. 10,000 and ‘B’ accepted the same.
11
(2)’A’ discounts the bill at 10% with the bank.
(3)’B’ pays the amount on maturity date.
30. For their mutual accommodation, Pal draws a bill on Gani for Rs 8,000for 3 months on 1-
1-2001 Gani accepted the bill and returned it to Pal. Pal discounts the bill with the bank for
Rs 7,900 and remits half the proceeds to Gani. Before maturity Pal remits the amount due to
Gani and Gani honours the bill.Show the entries in the books of Pal and Gani.
UNIT IV
31. What are the difference between ‘Sale’ and ‘Consignment’?
32. How would you make a note on Joint ventures and Co-ventures?
33. ‘C’ of Calcutta consigns goods to ’B’ of Bombay for sale at invoice price or over. ‘B’ is
entitled to a Commission of 10% on invoice price and 30% on any surplus price realized. ‘B’
accepted a bill of exchange drawn by ‘C’ amounting to 80% of the invoice price.During the
year 1999, goods consigned by ‘C’ were invoiced at Rs.90,000 , such goods cost ‘C’
Rs.60,000. Sales made by ‘B’ were Rs.81,000 and goods in his hands on 31.12.1999,
remaining unsold represented an invoice value of Rs.21,000 ‘B’ remitted a sight draft for the
)
amount due after deducting his commission and proportionate advance applicable to goods
G
sold.You are required to show the necessary accounts in the books of the consignor.
34. Prem consigned 200 boxes of medicines@ Rs.100 per box to Ram. He incurred the
(U
following expenses:
Insurance Rs.1,000; Loading charges Rs.1,600 and Freight Rs.1,400
ce
An account sales was received from Ram which showed that 160 boxes were sold@
Rs.200 per box. Ram incurred the following expenses:
Clearing charges Rs.1,000; Godown rent Rs.400; Advertisement Rs.600
er
and Other selling expenses Rs.1,000
Ascertain the value of stock on consignment and show also the relevant entry.
m
35. Madurai Somu& Co consigned 50 cases of goods @ Rs.200 each to Chennai Nathan &
om
Co. Madurai Somu& Co paid Rs. 200 as insurance and Rs.300 as freight. Nathan & Co sold
the goods for Rs.24,000 and paid Rs.520 for carriage and Rs.130 for godown rent. Nathan &
Co is eligible for 4% Commission on gross sales. Nathan & Co sends cheque for the balance
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due. Show the journal entries and Nathan & CO account in the books of M|S. Madurai
Somu&Co.
36. Sathish of Trivandrum sent on consignment to Mahesh of Cochin goods costing
SC
Rs.44,250 and paid railway freight Rs.1,140, Cartage Rs.350 and Insurance Rs.1,050. Half of
the goods were sold by Mahesh for Rs. 26,250. He incurred storage expenses Rs.300 and
A
selling expenses Rs.525. He is entitled to a commission of Rs. 1,310 and remitted the balance
by bank draft. Prepare necessary ledger account in the books of Sathish.
K
37. B, V & S entered into a Joint venture of a contract Rs.1,00,000 is the contract price.
Rs.40,000 , Rs.20,000 & Rs.20,000 were invested by B, V & S respectively and a Joint bank
account was opened. They purchased materials for Rs.60,000; architect fees of Rs.1,000 was
paid by B, V paid for sundry expenses Rs.2,000 and S paid Rs.4,000 for cement.The contract
was duly carried out. All the transactions were done through Joint bank account. Give
necessary ledger accounts.
38. R, S completed a joint venture and earned Rs.45000. The profit is to be shared in the ratio
of 3:1. Pass necessary journal entries in the books of R& S assuming they maintain full
records in their own respective books.
39. X and Y contribute Rs.50000 each into a joint banking a/c. They spend Rs.90000 to
acquire and sell wheat. X collects Rs.70000 and Y Rs.80000 from sales. The venture is
closed. Show joint venture a/c in the separate books of the venture.
40. S and H entered into a joint venture of repairs for housing quarters at an agreed price of
Rs.10000.’H’ supplied materials for Rs.6000 and S supplied equipments for Rs.1000.S has
12
also taken back the equipment at the end at an agreed value of Rs.500.Prepare joint venture
acoount in the books of H.
UNIT V
41. Explain the meaning of ‘Non- trading organisation’.
42. What is a ‘Receipts and Payment Accounts’?
43. What is an ‘Income and Expenditure Account’?
44. Write a short note on:(a)Subscriptions;(b)Life membership fees.
45. From the following details ’ascertain the amount of subscription to be credited to income
and expenditure account for the year 1999.Subscription received in 1999-Rs 48,000 which
includes Rs 4,000 for 1998 and Rs 8,000 for 2,000. Subscription due but not received at the
end of the year 1999 were Rs20,000 . Subscriptions received in 1998 in advance for 1999
were Rs 12,000.
46. Compute the expenditure to be shown in income and expenditure account from the
following :
)
(A) Sports materials purchased for cash 20,000
G
Opening stock of sports materials 5,000
Closing stock of sports material 8,000
(U
Opening creditors of sports materials 7,000
Cash paid to creditors for sports materials 22,000
Closing creditors for sports materials 6,000
(B) Stationery purchased during the year 40,000
ce
Opening stock of stationery 8,000
er
Closing stock of stationery 9,000
m
om
47. Find out the amount of salaries to be debited to income and expenditure account for 1999
from the details given below :
-C
Payment made for salaries during 1999 Rs 48,000

SC

A
48. Write a short notes on: (a) Legacy (b) Government grants (c) Capital funds.
49. Give a list of ‘Non- Trading concerns ‘ which are generally Nom profit seeking.
K
50. How do you incorporate the following in the Tanjore turf club Balance sheet for the year
31-3-99?
Medal distribution fund Rs 98,400
Interest on the fund investment Rs 28900
Medals distributed Rs 28,700
Medals distribution fund investment Rs98,000.
SECTION C
UNIT I
1. Enter the following transactions in the Journal and ledger of Hariprasad of Hyderabad.
2000
July 1 Commenced business with cash Rs.1, 80,000
3 Deposited into bank Rs.55, 000
13
4 Purchases goods for Cash Rs.22, 000
5 Bought goods of swaminathan Rs.72, 000
11 Cash deposited into Bank Rs.23, 000
14 Purchased furniture for cash Rs.4, 000
16 Sold goods to vivek Rs.12, 700
17 Received cash from vivek Rs.12, 446 and allowed him discount Rs.254
18 Paid Swaminathan cash Rs.12, 000 and discount allowed by him Rs.240
20 Paid Wages Rs.1, 800
21 Sold goods to Jagadeesan Rs.35, 000
22 Paid cash for trade expenses Rs.150
24 Sold goods to Rajan Rs.23, 280
25 Received from Jagadeesan Rs.21, 000 and allowed him discount Rs.525
26 Paid swaminathan cash on account Rs.24, 000
)
29 Paid Cash for stationary Rs.180
G
30 Paid cash for miscellaneous expenses Rs.150
31 Bought goods from Sridhar Rs.17, 870
(U
2. Record the following transactions for the month of January 1999 in the purchases book of
M/s Narain Electronics:
Jan.4 Purchased from M/s Brown Electronics:
ce
20 Black & White T.Vs@Rs.5,200 per piece.
er
10 Colour T.Vs @ Rs.12, 000 per piece.
Trade discount on all items @12%
m
Jan.10 Purchased from M/s Mani Electronics:

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12 video tapes @Rs.600 per piece

8 Philips tape recorders @Rs.2, 500 per piece.
Jan.19 Purchased from M/s sehgal Electronics:
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10 LG Stores @ Rs.3, 500 per piece.

8 LG Colour T.Vs @ Rs.25, 000 per piece.
Trade discount @15%
SC
Jan 24 Purchased from M/s Gupta Electronics:

200 Audio Cassettes @ Rs.25 per piece.
A
30 Equity toasters @ Rs.500 per piece.

Also show posting of the above transactions into ledger accounts from purchases book.
K
3.Record the following transactions completed during the month of march 1999 in the
Journal.
Mar .1 Paid rent for the month Rs.600
2 Paid cash for the office stationery Rs.60
8 Purchased office equipment on account Rs.10, 000
13 Paid advertising expenses Rs.600
15 Received cash from Kumar on account Rs.8, 000
18 Paid Maran on account Rs.4, 000
25 withdrew cash for personal use Rs.2, 000
29 Paid telephone bill Rs.600
30 Fees earned and billed to customer Rs.20, 000
31 Paid for repairs to typewriters Rs.300
31 Paid electricity bill for the month Rs.400
4.M/s Prasad Furniture Mart purchased the following items during the month of Dec.2000
14
2000
Dec.5 Purchased from M/s Goodwill furniture
200 chairs @ Rs.100 per chair
25 Tables @ Rs.200 per table
Less: 10%discount.
11 Purchased from M/s. Nithiya Motors
One Maruti car for Rs.1, 40, 000
One Scooter for Rs.14, 000
16 Cash purchases from Dilip Furniture:
4 Sofa sets @ Rs.5, 000 per set
24 Dining chairs @ Rs.200 per chair
4 Dining tables @ Rs.2, 000 per table.
Less: 15%trade discount.
Prepare purchases book and show ledger posting of purchase book.
5.Discuss the merits and limitations of accounting?
)
6. Nivetha maintains a two columnar cash book which she balances every week.
G
2000
Mar.25 Her Cash Book showed balance of Rs.6, 900
(U
26 Paid Cash to Kailash Rs.1, 428 and discount received Rs.72
30
30
Cash sales Rs.11, 370 ce
Withdrew cash for private expenses Rs.1, 020
31 Received as compensation from Railway authority Rs.4, 380
er
Received cash from Shanthi Lai Rs.3, 975 and allowed him discount Rs.75
7. Enter the following Transactions in the B/R Book and B/P Book and post them into the
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ledger:
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1999
Sep 1 Received from the Gandhi his Promissory Note for Rs.600
8 Accepted a bill 3M/d for Rs.1, 500 drawn by Kalki& Co.
-C
15 Sent our acceptance to savithri& Sons for Rs.750

20 Kamal& co drew upon us for four months and acceptance given for Rs.690
27 Sent our draft to Ganesh who returned it to us duly accepted for Rs.300
SC
30 Did not accept a bill drawn by Mr .Karthik for Rs.400 after 3 months.
8. Journalise the following transactions. Post them in the ledger balance the ledger accounts
A
and prepare trail balance:

1990
K
Jan 1 Murugan commenced business with a capital of Rs.80, 000

2 Purchased goods for Rs.24, 000
3 Bought furniture for Rs.18, 000
5 Sold goods for Rs.18, 000
7 Sold goods to Kumar on credit for Rs.15, 000
8 Purchased goods from David on credit for Rs.6, 000
15 Cash received from Kumar Rs.14, 950, allowed him discount Rs.50.
18 Paid cash to David Rs.2, 000
22 Drawn for personal use Rs.3, 000
25 Opened a bank account by depositing Rs.11, 000
31 Rent paid Rs.2, 000: Salary paid: Rs.3, 500
9. On 31st March 1995, just before preparing the final accounts, Mr Robin prepared a trail
balance which did not agree. He put the difference in a newly opened suspense account. The
15
following errors were located. Pass journal entries to rectify the error and prepare suspense
account
(a) A sale of Rs.2, 000 has been passed through the purchase day book of customer’s
account has however, been correctly debited.
(b) Rs.30, 000 paid for the purchase of a motor cycle for Mr Inzazmam (a partner
had been charged to miscellaneous expenses a/c )
(c) A sale of Rs.4, 000 to saeet& co. Was credited to their account
(d) While carrying forward the total of sale book from one page to the next the amount
was written as Rs.3, 53, 316 instead of Rs.3, 35, 136.
(e) The returns inward book book for March 1995, had been cast Rs.2, 000 short.
(f) A purchase of Rs.1, 324 had been posted to the debit of the creditor’s account
Rs.1, 234
10 .What are accounting concepts and conventions? How are they evolved?
UNIT II
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11. How do you treat outstanding and prepaid expenses when they are given in(a) Trial
balance and (b)in adjustments
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12. List out the causes for the difference between the balances shown by cash book and pass
book.
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13. The provision for bad and doubtful debts account shows a balance of Rs.2,000 on
1stjan1994. The bad debts during the year 1994 amount to Rs.1,600. The sundry debtors on
31st December 1994 are Rs 32,000. Create a new provision for bad debts @5%.Show the
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journal, ledger, Profit& loss A/C and balance sheet.
14. The following particulars are extracted from the book of kalyani. 1996
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Rs.
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Jan 1 Provision for bad& doubtful debts 12,000

Provision for discount on debtors 5,600
Dec.31 Discounts allowed during the year 9,300
Bad debts written off during the year 4,700
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Bad debts recovered during the year 250

Debtors 1,00,600
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Written off further Rs.2,400 (definitely bad). Provision for discount allowed @ 2%and for
doubtful debts @ 10% are to be maintained.Show how the relevant items would appear in
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ledger, P & L A/c and balance sheet as on Dec. 31, 1996.

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15. Balance as per cash book of govind is Rs.10,500 on 31.03.03. Ascertain the balance to be
shown by him as bank balance in his balance sheet from the following:
Rs.
(a) Over casting in pass book on credit side 800
(b)Under casting in cash book on debit side 640
(c)Cheques deposited but not credited 6,000
(d)Wrong credit in pass book 16,000
(e)Interest credited in pass book alone 370
16. On 31-03-1982 the pass book showed credit balance of Rs.10,500. The following details
were noticed;
(a) Cheques amounting to Rs.3,500 were issued but cheque for Rs.1,200 had not
been presented for payment in the bank upto 31st March.
(b) Cheques amounting to Rs. 2,750 were deposited in the bank but cheques of
Rs.750 had not been cleared upto 31st march.
16
(c) Bank had given debit of Rs.35 for sundry charges and
(d) Bank had received directly from customers Rs.800 and dividend of Rs.130 upto
31st march.
Prepare a bank reconciliation statement as on 31-03-1982.
17. From the following particulars prepare a bank reconciliation statement as at 31st
December:
Balance as per pass book –Rs.62,460
(i) Cheques issued but not presented
Rajini -Rs.4,590
Kamakshi-Rs.5,960
Bhavani -Rs.9,580
(ii) Cheques deposited but not cleared until after close of the year
John-Rs.5,060
Balu-Rs.9,130
(iii) The bankers had wrongly debited the account Rs.2,250 the error was rectified by them
)
on 4thjan of the following year.
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18. From the following particulars prepare a bank reconciliation statement as on 31st march
1990
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(a) Bank balance as on 31st march 1990 as per pass book Rs.15200.
(b) Bank charges debited Rs.130
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(c) Cheques issued but not presented to bank for payment Rs.2000
(d)Cheques deposited into bank not credited in the pass book Rs7000
(e)A cheques entered as deposit in the cash book instead of as a payment Rs.220.
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(f) Rs.364 paid into bank had been entered twice in the cash book.
(g)The receipt column of the cash book has been overcast by Rs. 1,000
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(h)A cheque drawn for Rs. 9 had been incorrectly entered in the cash book as Rs.99
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19. From the following Trail balance extracted from the books of kamalnath prepare trading
and profit & loss A/c and balance sheet for the year ended 31-03-1981.
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Particular Rs. Particular Rs.

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Purchases 11,870 Capital 8,000

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Debtors 7,580 Bad debts recovered 250

Return inwards 450 Creditors 1,250
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Bank deposit 2,750 Return outwards 350

Rent 360 Bank overdraft 1,570
Salaries 850 Sales 14690
Travelling expenses 300 Bills payable 1,350
Cash 210
Stock 2,450
Discount allowed 40
Drawings 600
1,76,580 1,76,580
Adjustments:
(i) Stock on 31-3-1995 was Rs.6800
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(iii) Insurance prepaid Rs.150.
(iv) Depreciate machinery @ 10% and patents @20%
(v) Create a provision of 2% on debtors for bad debts.
20. From the following balance as at 31st Dec 1994of a trader, prepare a trading and profit &
loss A/C for the year 1994 and a balance sheet as on that date.
Particulars Rs. Particulars Rs.
Salaries 5,500 Creditors 9,500

Rent 1,300 Sales 32,000
Cash 1,000 Capital 30,000
Debtors 40,000 Loans 10,000
Trade 600
expenses 25,000
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Purchase 2,500
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Advances 5,600
Bank
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balance 81,500 81,500
(i) Stock on31-3-1995 was Rs.6800

ce Adjusted:-

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(iii) Insurance prepaid Rs.150
(iv) Depreciate machinery @10% and patents @ 20%
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UNIT III
21. What is average due date? Why it is computed?
22. What are the points to be noted while counting days for each transactions while preparing
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Account Current?
23. What are the consequences of insolvency of drawee of bill?
24. What do you understand by ‘Honoring’ and ‘Dishonoring’ a Bill of exchange?
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25. On 1-5-99 Mohan gave his acceptance for three months bill of Rs.6,000 drawn by of
Murali. Murali sent the bill to bank for collecting the amount on maturity. After maturity
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Muralireceived intimation from the bank that the bill has duly honored by Mohan and Bank
charged Rs . 20 for collection.Show the entries in the books of Murali and Mohan.
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26. Abdul gave his acceptance for Amir’s four month bill of Rs . 2,400 on Jan 1st1999 . One
month before the due date Abdul paid the amount of the bill at 5% p.arebate . Pass the
necessary journal entries in the books of both the parties
27. R owes the following sum of money due from him on the dates stated:
Rs. 300 due on March 9. 1993;Rs. 1000 due on April 2. 1993
Rs. 4000 due on April 30. 1993 and Rs. 100 due on June 1. 1993
He wants to make the complete payment on 30-6-93. Calculate interest at 5%p.a ith the help
of Average Due Date.
28. The following amounts are due to Ezil by Sataya. Sataya wants to pay off
(1) On 18-3-97 or (2) On 14-7-97. Interest rate of 8% p.a is taken into consideration.
Due dates Rs
10-1-97 1,000
26-1-97 (Republic day) 2,000
23-3-97 6,000
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18-8-97 (Sunday) 8,000
29. The following are a series of transactions between Anbu and Balu for the three months
ending on 31-3-89 . Calculate the amount of interest to be paid by one party to another at
10% p.a. using époque method.
Books of Anbu Rs
1-1-89 Balu’s opening balance(Dr) 10,000
30. On 2-9-92 Gopal opened an account with Canara Bank depositing Rs. 5,000. His future
depositing were;20th Jan Rs 2,500;20th March Rs 3,000;20th May Rs.3,500.His withdrawals
were: Rs 6,000 On 20th Feb Rs 5,000; On 20th April and Rs 2,500; On 20th June.Prepare the
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account current to be rendered by the bank for the period 30th June 1992 charging interest at
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5% p.a on customer’s debit balance and 2% p.a on customers credit balance.
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UNIT IV
31. Explain the method of maintaining accounts in the books of Consignor and Consignee.
32. Describe the different methods of recording transactions relating to joint venture.
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33. Jain of Delhi consigned 300 tins of coconut oil to Narang of Chandigarh, invoiced at
Rs.200 per tin Jain paid Rs.2000 as carriage and other expenses. The consignor drew a bill of
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exchange for Rs.16000 which was later discounted at Rs.15700.The consignee rendered an
account sales showing the following details:
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280tins sold at Rs.250 per tin

20 tins sold at Rs.260 per tin
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Storage and selling expenses Rs.5000

Clearing and cartage Rs.1600
Commission at 6% on sales
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The consignee sent a sight draft for the balance.

Show the entries and important ledger accounts in the books of both the parties.
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34. Ramesh consigned 2000mt. of chemicals at a cost of Rs.800 per mt. to Jain. Ramesh paid
freight and insurance charges of Rs.20000 of the above500 mt of chemicals were destroyed
by fire during transist. John cleared the balance of 1500 mt. of chemicals and sold 1000 mt. at
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an average price of Rs.1000 per mt. John incurred the following expenses:
Godown rent Rs.5000, insurance Rs.3000, Clearing charges Rs.4500. Insurance claim
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received against fire Rs.400000 after admitting the solvage value of stock destroyed by fire at
Rs.10000. John was entitled to a commission of 10% on sale proceeds. John sents the balance
to Ramesh after adjusting his commission and expenses out of the sale proceeds. Prepare a
consignment account and Johns account in the books of Ramesh.
35. David of Coonor consigns 2000 case of goods costing Rs.100 each to Sundar of Chennai.
David pays the following expenses:
Freight Rs:6000
Carriage Rs.2000
Landing charges Rs.2000
Sundar sells 1400 cases at Rs.140 per case and incurs the following expenses.
Clearing charges Rs.1700
Warehousing and storage Rs.3400
Packing and selling expenses Rs.1200.
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It is found that 100 cases have been lost in transit and 200 cases are still in transit. Sundar is
entitled to a commission of 10% on gross sales. Prepare consignment account, Sundar
account in the books of David.
36. Sankar sends 20000 units at Rs.50 to Sunil on 1.1.99 to be sold at a commission of 7.5% .
5% goods were lost in transit and it is considered normal. The consignor spent the following
expenses:
Packing expenses at Rs. 2 per case(cash)
Freight Rs.10000(due)
Insurance Rs.6000(bank)
The consignee received at the balance consignment and a cheque of Rs.200000 as
advance. He incurred Rs.8000 as unloading charges and Rs.36000 as selling and
distribution expenses. He submitted an account sales on 31.3.99 disclosing that 14000
units were sold at Rs.80 per unit. Assuming the consignee send draft for balance. You are
required to pepare, the necessary ledger accounts in the books of both the parties.
)
37. Sundar and Rajan were independent contracters. They undertook a joint venture to
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construct a building for a company. They opened a joint bank account and deposited
Rs.50,000 by Sundar and Rs.30,000 by Rajan. The contract price was Rs.3,00,000 which was
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to be discharged Rs.2,50,000 in cash and Rs.50,000 in shares. Sundar paid architect fees
Rs.10,000. Rajan paid wages Rs.20000. Sundar supplied a truck for Rs.20000 into the
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venture. Rajan was entitled to a commission of Rs.10000. Materials purchased totaled
Rs.100000 and other expenses totaled Rs.75000. Materials costing Rs.5000 was lost in an
accident.
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The venture was completed and the contract price was duly discharged. Sundar took shares at
a value of Rs.55000 and took back the truck at Rs.16000.
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Prepare necessary ledger accounts assuming that separate books are maintained for the
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venture.
38. S& P entered into a joint venture and agreed to divide the profit as to S 60% and P 40%.
S & P contributed Rs.180000 and Rs.120000 respectively for carrying on transactions
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relating to the venture. They opened a joint bank account with the above contributions. They
purchased 3 old state buses for Rs.240000. S and P personally paid Rs.45000 and Rs.30000
respectively for repairs and renewals. They purchased a few tires and tubes costing Rs.54000.
SC
2 buses were sold for Rs.270000 and the 3rd one was taken by P at cost price. Pass necessary
journal entries and prepare joint venture account, joint bank a/c and close the a/c of the
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venture.
39. Karthik and Sundar both contractors undertook a joint venture for construction of a
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building. A joined bank a/c was opened in which Karthik deposited Rs.50000 and Sundar
deposited Rs.30000. The contract price was Rs.200000 payable as to Rs 160000 in cash and
Rs.40000. in shares. The contract was completed. They are to share the profits and loses in
2/3 and 1/3 respectively. From the following details prepare the ledger accounts.
Materials supplied by Karthik Rs.10000
Materials supplied by Sundar Rs.8000
Wages paid Rs.60000
Materials purchased Rs.140000
Architects fees paid by Karthik Rs.2000
The stock of material at the end valued at Rs.6000 were taken by Sundar. The shares
were taken by Karthikfor Rs.32000.
40. Senthil and Saravanan entered into a Joint venture, the former contributing Rs.80000
and the later Rs.50000. They opened a joint bank a/c and agreed to share profits 1/3 and
2/3 respectively. They purchased goods for cash Rs.80000 and Saravanan supplied goods
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to the value of Rs.40000. The entire goods were sold for Rs.170000 paying Rs.4100
towards the expenses. Senthil was entitled to a commission of 3% on sales.Show joint
venture a/c and joint bank a/c.
UNIT V
41. Distinguish between ‘Receipts and Payment Account’ and ‘Income and Expenditure
Account’.
42. How do you prepare the balance sheet of a Non Trading concern?
43. What is income and expenditure account ? Explain the steps required in its preparation?
44. What are special funds? How do you show the transactions relating to such funds in non
profit organisation?
45. Begum fine arts club had furniture of the book value of Rs 56,000 as on 1-1-1999. On2-1-
1999 it sold furniture of the book value of Rs 24,000 for Rs 25,000. Furniture was to be
deprecated @10%per annum. How will these items appear in the final accounts of the club on
31-12-99?
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46. The Chellammal charity Hospital has paid Rs 64,000 during 1999 under the head salaries.
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The salary paid includes Rs 2,000 for the year 1998 and Rs 400 for the year 2000. Salaries
still payable for the year 1999 Rs 4,000. Show how the items will appear in the income and
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expenditure account of the hospital for the year 1999.
47. Draw the formation for income and expenditure and receipt and payment account and
balance sheet for non -profit organisation. ce
48. A charity hospital had paid Rs 23,000 during 1995 under the head ‘Salaries’. The salaries
paid includes Rs500 for 1994 and Rs500 for 1996 but Rs1,500 was payable for 1995. Show
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how these items will appear in income and expenditure a\c for the year 1995 , and opening
and closing balance sheet of the hospital.
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49. How do you prepare receipt and payment accounts from income and expenditure account
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and balance sheet?

50. Write short notes on : (a) subscriptions (b) legacy (c) life membership fees (d) capital
funds (e) government grants. And explain the meaning of Non – trading organisation.
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ANSWERS
SECTION A
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1. c) Elementar
2. a) Proprietor
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3. a) Book
4. d) Conservatism
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5. d) All of these
6. c) Imprest
7. d) Trial balance
8. a) Ledger
9. b) T
10. a) Original
11. c) Chronological
12. d) Narration
13. b) Furniture
14. a) Credit
15. d) Numerous
16. c) Compensating
17. a) Suspense
18. b) Debited
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19. d) Commission
20. a) Complete
21. b) Bank
22. a) Credit
23. d) Bank reconciliation
24. c) Pass
25. a) Opening
27. a) Bank
28. c) Rectified
29. b) Deposits
30. a) Reconciliation
31. b) Final
32. c) Closing
33. a) Debited
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34. c) Scrap
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35. d) Trading
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36. a) Trading
37. b) Direct
38. b) Closing
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40. c) Both a & b
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41. a) Bill
42. d) Drawer
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43. a) Drawee
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44. b) Payee
45. c) Accommodation
46. a) Promissory note
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47. b) Hundi
48. a) Endorsement
49. c) Retiring
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50. a) Insolvency
51. d) Payable
A
52. d) Payments
53. a) Instalments
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54. b) Mean
55. a) Average
56. b) Account
57. b) Forward
58. d) Daily balance
59. a) Backward
60. c) Red-Ink
61. d) Consignment
62. b) Consignor
63. c) Consignee
64. d) Proforma invoice
65. a) Commission
66. c) Del Credere
67. a) Selling
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68. b) Abnormal
69. b) Nominal
70. c) Real
71. c) Joint
72. c) Nominal
73. a) Personal
74. b) Co-venturer
75. b) Cash
76. c) Both a & b
77. b) Double entry
78. b) Joint
79. a) Account sale
80. b) Co-Venturers
81. b) Non-Profit
82. b) Credit
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83. a) Capital
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84. b) Profit & Loss a/c
85. b) Real
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86. b) Cash
87. a) Assets
88. a) Entrance
89. a) Entrance
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90. a) Subscriptions
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91. b) General
92. a) Legacy
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93. a) Capital
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94. c) Income
95. a) Honorarium
96. a) Capital
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97. a) Surplus
98. c) Income
99. b) Revenue
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100. b) Revenue
A
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(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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TITLE OF THE PAPER: PRINCIPILES OF MANAGEMENT

SC
NOVEMBER 2019
A
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1
Question Bank
PRINCIPILES OF MANAGEMENT
CONTENTS

1 Section A 3
2 Section B 9
3 Section C 11
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Prepared by
Dr. S. UMA
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Associate Professor & Head,

SC

Coimbatore-29.
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2
PRINCIPLES OF MANAGEMENT
SECTION – A
UNIT I
1. The father of scientific management is----------
( a)Henry Fayol (b) Peter Drucker c)Fredrick Taylor (d) Leon Festinger
2. Management refers to-----------
a) Group of people (b) A process (c) Subject Matter (d) All the above
3. Unity of command refers to------------
a) Insubordination (b) Dual subordination(c) Single subordination (d) None
4. Hawthorne experiment were done by -----------
)
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(a)Elton Mayo (b) Renisislikert (c) Abrahan Maslow d)Douglas Mcgregor
5. Management and Administration are-------------
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(a)Same (b) Different (c) Dependent on each other (d) Mutually exclusive
6. One of the principle of scientific management is-----------
(a)Job analysis (b) Mental revolution (c) Development of worker (d) Economy
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7. Important feature of management is that it applies to ------------ of anOrganization
(a)Top Level (b) Bottom Level (c) Middle Level (d) All Level
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8. ----------- contribution are generally termed as operational management or
administrative management.
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(a)Luther Gulude (b) F.W.Taylor (c) Henry Fayol (d) Herbert scmon
9. ---------- is considered to be a pioneer contribution to the management thought in
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the human relation period

(a) F.W.Taylor (b) Henry Fayol (c) Mary parker foliet (d) Chester I.Benard
10.The fourteen principles of management was received by
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(a)Fwtaylor (b) henry fayol (c) Follet (d)Gilberth

11. Management is
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(a)art (b)science (c) both (d)None

12. The important contribution of Peter F Drucker is
(a)scientific Management (b) Principle of management
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(c) Management by objectives (d)none of the above

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13. Management is a
a)Short term process (b) Continuous process (c) static process (d) none of the above
14. Top management consists of
a.board of the directors (b) Chief executive (c) Works manager (d) none of the above
15. Henry Fayol was a -----
(a) Social Scientist (b) Mining Engineer (c) Accountant (d) Production engineer
16.. Which of the following statement best describes the principle of ‘Division of Work?’
(a) Work should be divided into small tasks (b) Labour should be divided
(c) Resources should be divided among jobs (d) It leads to specialisation
17. Which of the following statements is FALSE about Taylor and Fayol?
(a) Fayol was a mining engineer whereas Taylor was a mechanical engineer
3
(b) Fayol’s principles are applicable in specialised situations whereas Taylor’s principles
have universal application
(c) Fayol’s principles were formed through personal experience whereas Taylor’s
principles were formed through experimentation
(d) Fayol’s principles are applicable at the top level of management whereas Taylor’s
principles are applicable at the shop floor.
18. .Inter personal role of a manager
(a)Leader (b)Monitor (c) Negotiator (d)none
19. Management is emerging as a
(a)Profession (b)Medicine (c) Policy (d) none of the above
20. One of the levels of scientific management is
(a)chief executives (b) Middle level management
(c) Supervisory management (d) Board of directors
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UNIT II
21.The first step in planning is -----------
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a)Finding alternative courses of action (b) Evaluating and Selecting a course
of action c) Measuring and controlling the progress (d) None of the above
22. In the SWOT analysis for strategic planning the O stands for---------
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a) Organization (b) Opportunities (c) Opposition (d) Order
23.One of the limitation of planning is-----------
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a) Efficiency (b) Morale (c) Effective Results (d) Cost
24.Importance for planning is provided by-----------
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a) Forecasting (b) Co- ordination c) Budget (d) None of the above

25.MBO Means------------
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a)Management by Operation (b) Management by objective

(c)Management by Organization (d) None of the above
26.------------- is an action plan based on the reaction pattern of others
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a)Schedule (b) Budget (c) Strategy (d) Programme

27.All plans flow from--------------
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a)Objectives (b) Procedures (c) Rules (d) Strategy

28.----------- is a management system is which each member of the organization
effectively participate and involves him.
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a)MBO (b) MBE (c) TQM (d)TPM

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29.Planning is------------
(a)Mobilizing resources (b) Receiving results
c)Deciding in advance (d) Analyzing the past
30.A plan is for -----------
a)Past (b) Present (c) Future (d) None
31. Management by objectives also described as_
(a) Management by exception (b) Management by results
(c) control by exception (d) Management by evaluation
32.. A good plan should be
a)flexible (b) Less cost (c) less time (d) all the above
33. TopManagement should focus on complex and strategic issues is the concept of
4
(a) Management by exception (b) Management by results
(c) control by exception (d) Management by objectives
34. Planning means
a)looking back (b) forecasting (c) departmentation (d) Govt.policy
35.Decision making is------------
(a)choice among alternatives (b)organizational rules
(c)processes and procedures (d)None
36.Strategic decisions are taken by-------------
(a)top management (b)middle management (c)lower level management (d)None
37.Selecting from among several alternatives is called----------
(a)Forecasting (b)Decision making (c)planning (d)Policy
38.The time frame of strategic decisions is -------- term
(a)Long (b)Short (c)Medium term (d)None of the above
)
39.-----------is the act of recreating a core business process with the goal of improving
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product output,quality or reducing costs.
(a)Business process reengineering (b)business process (c)reengineering (d)none of
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the above
40. The founder of Business process reengineering concept is-------
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(a)Michael Hammer (b)Fayol (c)Maslow (d)Mayo
UNIT III
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41. Authority refers to-----------
a)Rights conferred to a person (b) Influencing ability to a person
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c)Responsibility assigned to a person (d) None of the above

42.Scalar principle is also known as----------
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a)Management by objectives (b) Chain of command

(c) Management by exception (d) None of the above
43. The lowest level of authority of a staff person is-------------
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a)Concurring authority (b) Compulsory consultation

c) Voluntary authority (d) Functional authority
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44. Informal organization arises from----------

a)The planned structure of jobs & position b)The personal and social relations of
people work in the organization c)The government d)None
A
45. Importance of organization --------------

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a)Basic for success (b) Specialization

c) Responsibility fixation (d) Development
46. Factors determining the Span of control----------------
a) ability of the supervisor (b) fixation of responsibility (c)specilalization (d) Morale
47.Military type of Organization means-----------
a) Functional Organization (b) Line Organization
c) Line and staff Organisazation (d) Committee Organization
48.--------- organization refers to the structure of relationship deliberately built up by the
top management to realize the objective.
a)Informal (b) New (c) Old (d) Formal
49.Multiple command system relates to ----------
a)Matrix Organization (b) Project Organization c)Functional Organization (d) None
5
50. Responsibility means----------
a)Power to make decisions (b) Legitimacy
(c) Obligation to perform (d) Exercise of authority
51.Line organization is suitable for ---------

a)Large enterprises (b) Public Sector enterprises c)Small enterprises (d) Banks
52.The task of management in this type of organization is divided according to
specialization------------
a) Functional (b) Line and Staff (c) Line organization (d) None of the above
53.Unity of command means---------------
a)answerable to only one superior (b) answerable to two superior
c) answerable to three superior (d) None of the above
54.Delegation involves--------------
)
a) Delegator and delegates (b)Sanction of authority
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c) Willingness to accept authority (d) Un willingness to accept authority
55.It is the right to give orders and the power to exact obedience--------------
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a) Responsibility (b) Authority (c) Delegation (d) None of the above
56. It refers to the capacity of one person to influence the behavior of another------------
a) Authority (b) Responsibility (c) power (d) None of the above.
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57. The principle centralization refers to ---------
a)Every thing should be centralized b)Nothing should be centralized
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c)Optimum degree for the particular concern d)None
58. Basis of departmentation-------------
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(a) By number (b) By fraction (c) By product (d) All the above
59. The process of grouping activities into units and sub units for purpose of
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administration--------
a)Centralisation (b) Decentralisation (c) Departmentation (d) Separation
60. A hand book which contains organization details is known as---------
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a)Organization chart b) Organization manual

c)Organization chart & Organization manual d) None of the above
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UNIT IV
61.-------- implies the synchronization of all the activities of the business so as to
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achieve the predetermined goals

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a)Motivation (b) Communication (c) Controlling (d) Co- Ordination

62.Staffing function deals with ----------
a)Machine’s (b) Materials (c) Men (d) None
63.Employment exchange is a -----------
a)Source of recruitment (b)Decision making c) plant location
64. Theory X and Theory Y was advocated by
a) McGregor b) Maslow c) Herzberg d) None of these
65. Motivation process is a phased process.
a) Two b) four c) six d) five
66. Motivation is associated with------------
a)Financial incentives only b)both Financial incentives and non Financial incentives
c)non Financial incentives only d)none
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67. Maslow theory of motivation----------
a)physiological needs b)social needs c)safety needs d)all the above
68. The needs that an individual seeks to satisfy first is-------------
a)esteem needs b)safety needs c)physiological needs d) social needs
69. theory z was developed by----------------
a)prof willams g. ouchi b)philips c)Douglas mc gregor d)Ellsworth
70. The important qualities of leader-----------
a)Health and physical fitness b)Mentalvigour and energy
cManagement ability embarrassing foresight and art of handling men d)All the above
71. Performance is equal to ------------
a)Ability + motivation b) Ability – motivation c) Ability x motivation d)none
72. Inducing the worker to work is----------------
a)Promotion b) Motivation c) Job analysis d) co-ordination
)
73.Motivation originates from----------
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(a)Need and wants (b)fear (c)Happiness (d)fines and penalties
74.According to ------------employees are inherently lazy and dislike work
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(a)theory x (b)theory y (c)theory z (d)maslow theory
75.Command and control type of leaders-------------
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(a)Laissez faire (b)Bureaucratic (c)Autocratic (d)Democratic
76.A leader should be a good--------
(a)Listener (b)motivator (c)thinker (d)all the above
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77.-------------leadership style gives more importance to procedure and policies
(a)Laissez faire (b)Bureaucratic (c)Autocratic (d)Democratic
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78.--------leaders have personal magnetism and are an inspiration to their followers

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(a)charismatic (b)Bureaucratic (c)Autocratic (d)Democratic

79.-----------is the art of getting things done willingly from others.
(a)Control (b)coordination (c)staffing (d)motivation
80.Herzberg theory is termed as the -------theory
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(a)Three factor (b)one factor (c)two factor (d)None of the above

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UNIT V
81. Control refers to----------
a) Physical Control (b) Monetary Control
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(c)Adherence to values (d) Adherence to standards

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82. Correction of deviations-----------

a) a step in directing (b) a step in planningc) a step in controlling (d) Co-ordination
83. Critical path method is----------
a)additional control techniques (b) an auditing
(c) a direct supervision (d) a modern control technique
84. Control must always be preceded by------------
a) Co- Ordination (b) Budgeting c)Planning (d) Decision making
85.Breakeven point is the point when sales is equal to -----------
a) Total cost (b) Profit (c) Production (d) Contribution
86.PERT and CPM are controlling techniques
a) modern b)old c)both d)none
87. The last function of management is
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a) planning b)controlling c)staffing d) directing
88.One of the external barriers of communication----------
(a)wrongful translation b) carelessness c) lack of memory d) delay in information
89.Orders to produce is in the form of --------

(a)downward communication b) upward communication c) horizontal communication d)
circular communication
90. Modern techniques of control-----------
a)statistical information b) critical path method c) auditing d) supervision
91. The essence of the control is---------
a) Action b) planning c) delegation d) information
92. Co-ordination establishes relationship between--------
a)departments b) employees c) management and employees d) all the above
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93. Controlling is required for ------------
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a)Planning b) organizing c) directing d) All the above.
94. Final step in communication process ------------
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a)Idea b) Action. c) Sending message d) None of the above
95. In the process of communication the word decoding is mainly used with
………………..of the communication
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a)The sender b) The receiver c) Both d) None.
96. The grape wine communication is --------
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a)Oral b) Written c) Formal d) Informal
97. Types of coordination------------
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a)External and internal coordination b) Efficiency and effectiveness c) Unit of direction

98. What is the most appropriate goal of the firm?
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a) Shareholder’s Wealth Maximisation b) Profit Maximisation c) Stakeholder’s

Maximisation d) EPSMaximisation
99. Any short coming of co –ordination by means of rules and procedures may be made
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good by ---------
a) Planning (b) liaison rotes (c) Hierarchy (d) Task forces.
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100.Forward planning stands for--------

a) Selection of people (b) Establishing plant for future c)Budgetary Control (d) None
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SECTION –B
UNIT I
1. What is management? &explain its features.

2. What are the functions of a manager?
3. Describe the nature of management?
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4. Explain the functions of management?
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5. Describe the contributions of F.W.Taylor?
6. Is management an art or science-Explain.
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7. Explain the principles of management.
8. Is management is profession. Explain.
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9. Explain the Management Thought of peter F.Drucker.
10. Explain about criticism of scientific management
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UNIT II
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11. State the steps in planning?

12. What are the different methods of planning?
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13.Discuss the nature of planning.

14.State the features of good policy.
15.What are the limitations of planning?
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16.Planning is the essence of Management?Explain

17.Explain the importance of forecasting?
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18.Discuss the steps involved in planning premises?

19.What are the features of decision making?
20. Explain about the BPR?
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UNIT III
21.What is span of control ? explain .

22.What is a committee organization ?.Explain.
23.Explain the merits of line organization?
24.Write down the steps in process of organization.
25.Define organization. State the importance of organization.
26.What are the characteristics of formal organization?
27. Discuss functional organization?
28. Compare line, line and staff and functional organization structure?
29.What is delegation and explain its benefits?
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30. What are the factors determining degree of decentralization?
UNIT IV
31. List out the importance of motivation
32.State the importance of staffing
33.What are the positive reinforcement
34.What are the various factors in Z theory
35.Distinguish X theory and Y Theory
36.What are the functions of a Leader
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37.state Features of maslows theory?
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38.What are the qualities of a leader?Explain
39.List out the features of motivation?
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40. Explain the benefits of motivation?
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UNIT V
41. Explain about types of control?

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42.Explain the importance of control.
43 What are the elements of communication
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44.Whatsteps are involved in the process of control?

45. What is co-ordination?explain the needof co-ordination.
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46. What are the various good qualities of efficient controlling system?
47.What are the objectives of control?
48What are the different problems of co-ordination?
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49.What is the effective co-ordination?Explain

50.What is informal communication?Explain
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SECTION –C
UNIT I
1. What do you understand by scientific management?. Explain its findings and
criticisms.
2. Distinguish management from administration?
3. Define scientific management. Explain its Benefits.
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4. Broadly discuss the nature and Characteristics of Management?
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5. Explain the contributions given by Henry Fayol to principles management.
6. What are the levels of management?Explain
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7. Explain the roles of manager
8. Illuminate the objectives of management
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9. Explain the functional areas of management.
10. Elucidate the importance of management
UNIT II
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11. What are the purposes of planning?
12. Elaborate the need for different types of policies.
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13. Elaborate the steps in planning in modern organization.

14. What is MBO? Explain the advantages and limitations of MBO?
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15. Explain about objectives of planning?

16. Explain the importance of planning
17. What are the types of planning
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18. Explain the steps in decision making

19. Explain the importance of decision making
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20.Explain about importance of BPR?
UNIT III
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20. Examine the various types of organization in detail.

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21. What are the principles of organization?Explain

22. Narrate the reasons for the frequent conflicts between line and staff systems?
23. Illuminate about the organization chart
24. Analyze the types of span of control.
25. Explain the various factors determining the Span of supervision?
26. What is delegation? Explain the process of delegation?
27. What are the disadvantages of centralization?
28. State the advantages and disadvantages of decentralization.
29. state the merits and demerits of centralization?
30. Explain the basis of departmentation?
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UNIT IV
31. Explain Maslow Theory of Motivation

32. Explain two factor theory
33. Explain about critism against Z theory
34. Explain the various types of reinforcement in motivation
35. Elucidate the approaches of leadership
36. Explain the types of Leaders
37. Discuss about different types of Leaders styles?
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38. What are the factors affecting staffing?explain
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39. State the features of leadership?Explain
40. Explain the objectives of leadership?
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UNIT V
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41. Discuss barriers of communication
42. Explain the methods of communication
43. Explain the merits and demerits of written communication
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44.Explain the characteristics of communication
45.Define control. Explain the techniques of control in detail.
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46.Coordination is the essence of management?Explain

47.Explain the steps involved in control
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48. Explain the characteristics of control

49. Define coordination. distinguish between co ordination and cooperation.
50.Explain about coordination techniques?
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-------------ALL THE BEST-----------

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Annexure
1 c.Fredrick 11 C. both 21 d. None 31 D. 41 A. Rights

Taylor Management conferred to
by evaluation a person
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2 a. Group of 12 C. 22 B. 32 D. all the 42 B. Chain of
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people Management Opportunities above command
by objectives
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3 c. Single 13 B. 23 D. Cost 33 D. 43 D.
subordination Continuous Management Functional
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process by objectives authority
4 A. Elton 14 A. board of 24 B. Co- 34 A. looking 44 B.
Mayo the directors ordination back
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5 B. Different 15 B. Mining 25 B. 35 A. choice 45 A. Basic for
Engineer Management among success
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by Objective alternatives
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6 B. Mental 16 D. It leads to 26 C. Strategy 36 A. top 46 A. ability of

revolution specialisation management the
supervisor
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7 D. All Level 17 D. 27 A. Objectives 37 B. Decision 47 B. Line

making Organization
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8 C. Henry 18 A. Leader 28 A. MBO 38 A.Long 48 A. Informal

Fayol
9 A.F.W.Taylor 19 A. Profession 29 C. Deciding 39 A. Business 49 A. Matrix
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in advance process Organization

reengineering
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10 B. henry 20 b. Middle 30 C. Future 40 A. Michael 50 C.

fayol level Hammer Obligation
management to perform.
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51 A. Large 61 D. Co- 71 C. Ability x 81 D. Adherence 91 A.
enterprises Ordination motivation to standards Action
52 D. None 62 D. None 72 B. 82 C. a step in 92 C.
Motivation controlling manage
ment
and
employ
ees
53 A. answerable 63 A. Source of 73 A. Need 83 D. a modern 93 D. All
)
to only one recruitment and wants control the
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superior technique above
54 B. Sanction of 64 A. McGregor 74 A. theory x 84 C. Planning 94 B.
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authority Action
55 C. Delegation 65 D. five 75 C. 85 A. Total cost 95 B. The
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Autocratic receive
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56 C. power 66 B. both 76 D. all the 86 A. modern 96 D.
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Financial above Inform
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&non al
Financial
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incentives
57 A.Every thing 67 D. all the 77 B. 87 B. controlling 97 A.
should be above Bureaucratic Externa
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centralized l and
internal
coordin
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ation
58 D. All the 68 C. 78 A. 88 D. delay in 98 B.
A
above physiological charismatic information Profit

needs Maximi
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sation
59 B.Decentralisati 69 A. prof 79 D. 89 A. downward 99 A.
on willams motivation communication Plannin
g
60 b. Organization 70 d. All the 80 C. two 90 b. critical path 100 C.
manual above factor method Budget
ary
Control
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(AUTONOMOUS)
COIMBATORE-641029
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ce
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QUESTION BANK
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SUBJECT CODE: 15UCM5E1
TITLE OF THE PAPER: FINANCIAL SERVICES
NOVEMBER 2019
1
Question Bank
FINANCIAL SERVICES
CONTENTS
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1 Section A 3
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2 Section B 13
3 Section C
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Prepared by
S. Ramakrishnan
Coimbatore-29.
2
Major Elective 1- FINANCIAL SERVICES
SECTION - A
UNIT- I
1. In finance we refer to the market for short-term government and corporate debt securities
as the __________ market.
a) money b) capital c) primary d) secondary
2. Which of the following would generally have unlimited liability?
a) A limited partner in a partnership b) A limited partner in a partnership.
c) The owner of a sole proprietorship d) A member in a limited liability company
3. In finance we refer to the market where existing securities are bought and sold as the
)
__________ market.
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a) money b) capital c) primary d) secondary
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4. The following one is a kind of fee based activity of a financial intermediary __________
a) Hire purchase financing b) Leasing c) Capital issue management
d) Underwriting of shares
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5. Find the odd man out ___________ a) Commercial paper b) Share Certificate
c) Certificate of deposit d) Treasury bill
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6. The process of managing the sales ledger of a client by a financial service company is
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Called ___________ a) Forfeiting b) Factoring c) Leasing

d) Securitization of debt
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7. The inflation free instrument is ___________ a) Option bond b) Index-linked

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guilt bond c) Variable rate debenture d) Deep discount bond

8. Non-banking companies should compulsorily get credit rating for their ___________
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a) Capital market instruments b) Money market instruments

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c) Debt market instruments d) All of the above

9. The important goal of the financial service industry is to mobilize and allocate
____________ a) Savings b) Barrowings c) Lending d) Depositing
10. Underwriting of shares by a financial intermediary is a kind of __________ activity.
a) Loan b) Fund based c) Lending d) Depositing
11. To regulate the securities market and to protect the investors interest.
a) money b) capital c) primary d) SEBI
12. N.B F C stands for .
(a)Non banking finance companies (b) Non banking financial corporation
3
(c) Non bulk finance companies (d) None of these.
13. The term ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ refers financial investment in a highly risky and growth oriented
venture with the objective of earning a high rate of return.
(a)Venture capital (b) Merchant banking (c) Leasing (d) none of these.
14. Term lending institutions are ___________ market intermediaries.
a) Capital b) Asset c) Liabilities d) None of the above
15. Financial service companies exclude ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) Commercial banks (b) Insurance companies (c) Sole proprietorship
(d) Crepitating agencies.
16. Specialized financial institution, are also known as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
)
(a)Leasing companies (b) U T I (c) N B F C s (d) Development bank.
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17. Financial services offered financing risk project e.g. Risk capital scheme of I F C I
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venture capital fund of I D F I etc. to provide ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) Seed capital (b) Venture capital ce
(c) Primary fund
18. Functions of financial services exclude ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(d) secondary fund.
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(a) Mobilization of savings (b) Allocation of fund (c) Specialized services
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(d) Collection of tax.

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19. N.B F C stands for .

(a)Non banking finance companies (b) Non banking financial corporation
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(c) Non bulk finance companies (d) None of these.

20.The term ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ refers financial investment in a highly risky and growth oriented
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venture with the objective of earning a high rate of return.

(a)Venture capital (b) Merchant banking (c) Leasing (d) none of these.
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UNIT – II
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21. The first bank to set up a separate merchant banking division in India.
(a) Punjab national bank (b) Standard charted bank
(c) National & Grin days bank (d) National city bank.
22. The first Indian commercial bank to set up a merchant banking division in 1972.
(a) S B I (b) S B T (c) Bank of India (d) SIBI
23. Which of the following is not a fee‐based financial service?
(a) Corporate counseling (b) Lease financing (c) Profit management
(d) Issue management.
4
24. Which of the following is not a fund based financial services.
(a) Credit rating agencies (b) Venture capital (c) Consumer credit (d) Factoring.
25. All merchant bankers must have minimum net worth of ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) 5crore (b) 1crore (c) 10crore (d) 20crore.
26. Find out odd one‐ Authorization criteria of merchant bankers.
(a) All business performed (b) professional competence
(c) Capital adequacy (d) Past experience.
27. Financial intermediaries provide services on the basis of non‐fund activities, also called
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) Participating activity (b) Fee based activity
)
(c) Commission based activity (d) Salary based activity.
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28. All type of activities which are of a financial nature are called ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
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(a) Financial market (b) Primary market (c) Capital market (d) financial services.
29. Identify odd one.
(a) C R I S I L (b) I C R A
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(c) C A R E (d) I C I C I.
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30. Fee based activity includes ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
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(a) Credit rating (b) Stock broking (c) Portfolio management services
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(d) lease finance

31. Hedging of risks by using ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
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(a) Swaps and derivatives (b) Swaps only (c) Derivatives (d) None of these.
32. Asset based service also called ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
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(a) Fee based (b) Interest based (c) Capital based (d) fund based
33. Non fund based activities also called ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
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(a) Fund capital based (b) Interest based (c) fee based (d) managing the capital issue.
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34. Modern activities exclude.

(a) Personal advisory services (b) Managing the capital issue
(c) Assisting mergers and acquisitions (d) Capital restructuring.
35. The number of lead merchant bankers may not exceeds in case any issue of , issue size
less than Rs.50crore,number of MBs ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐. (a) 1 (b) 3 (c) 2 (d) 4
36. The minimum under writing obligation of a load merchant banker is ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ of the
total underwriting commitment.
(a) 15% (b)5% (c)50% (d) 10%.
5
37. The maximum number of lead merchant bankers that can be appointed in the case the
issue exceeds Rs.100crore less than Rs.200crore is ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) 2 (b) 3 (c) 4 (d) 5.
38. Category 1 merchant bankers can act as .
(a) Only as advisor (b) Underwriter (c) Consultant
(d) All issue management functions
39. Merchant bankers are .
(a) Merchants (b) Banks (c) Neither merchants nor banks (d) None of these.
40. Merchant banker shall not associate with any business other than that of the securities
market.
)
(a) False (b) True (c) None of these (d) All of these.
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UNIT- III
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41. In hire purchase system, each installment is treated as ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ till the last installment
is paid. ce
(a) Interest (b) Hire charge (c) payment (d) Credit .
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42. The features of hire purchase:
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(a)The possession of goods is given to the buyer immediately.

(b) The ownership in the goods remains with the vendor till the last installment is
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paid.
(c) The seller can repossess the goods in case of default in payment .
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(d) All of these.

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43. Discounting of bills of exchange is an attractive ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ based financial

service provided by the finance companies.
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(a) Fee (b) Fund (c) Opinion (d) Capital.

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44. A direct lease, a sale and leaseback, and a leveraged lease are all examples of
a) operating leases b) financial leases c) full-service leases
d)"off-balance sheet" methods of financing.
45. ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ is a method of renting assets.
(a) Hire purchase (b) Lease (c) hedge finance (d) Credit rating.
46. ‐‐‐‐‐‐ is the opinion of the rating agency on the relative ability and willingness of the
issuer of deby instrument to meet the debt service obligations as and when they arise.
(a) Credit rating (b) rating by merchant banker (c) merit rating
(d) operating feed back.
6
47. Which of the following leases would least likely be classified as an operating lease by the
lessee?
(a) The lease term is 5 years and the economic life of the leased asset is 8 years.
(b) Ownership of the leased asset reverts to the lessor at the end of the lease term.
(c) The agreement permits the lessee to buy the leased asset for one dollar at the end of
the lease term.
(d) The fair value of the leased asset is $20 million and the present value of the lease
payments is $13 million.
48. Which of the following is not a sufficient criterion for a lessee to classify a lease as a
capital lease?
)
a) The lease transfers ownership of the leased asset to the lessee at the end of the lease
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term.
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b) The lessee has the option of acquiring the asset during or at the end of the lease
term at a bargain price.
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c) The lease term is greater than two-thirds of the economic life of the asset.
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d) The present value of the minimum lease payments is at least 90% of the fair value
of the leased asset.
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49. For a lessor to consider a leasing arrangement to be a non-operating lease, collectability

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of the lease payments must be reasonably assured and:

(a) There must be no bargain purchase option.
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(b) The lessee must be responsible for all executory costs over the term of the lease.
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(c) The lease term must be 75% or more of the economic life of the asset.
(d) Any costs to the lessor yet to be incurred must be reasonably predictable.
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50. In an operating lease in which the asset's economic life and lease term are different:
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a) The lessee depreciates the leased asset over the term of the lease.
b) The lessor depreciates the leased asset over its economic life.
c) The lessee should record a leased asset and a related obligation at the present value
of the lease payments.
d) The lessee depreciates the asset over its economic life.
51. If a capital lease contains a bargain purchase option, the lessee should depreciate the
leased asset:
a) Over the term of the lease.
b) Without reference to the economic life of the asset.
7
c) Over the economic life of the asset.
d) Without reference to the term of the lease.
52. A necessary condition for a sales-type lease is:
a) Legal title to the asset transfers to the lessee.
b) The present value of minimum lease payments exceeds the lessor's cost.
c) The lessor earns interest revenue instead of dealer's profit.
d) The lessor earns dealer's profit instead of interest revenue.
53. One difference between a financial lease and operating lease is that ___________
a) there is a often a call option in a financial lease.
b) there is often an option to buy in an operating lease.
)
c) an operating lease is often cancellable by the lessee.
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d) a financial lease is often cancellable by the lessee.
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54. The principal reason for the existence of leasing is that
a) intermediate-term loans are difficult to obtain.
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b) this is a type of financing unaffected by changes in tax law.
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c) companies, financial institutions, and individuals derive different benefits
from owning assets.
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d) leasing is a renewable source of intermediate-term funds.

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55. A way to analyze whether debt or lease financing would be preferable is to

a) compare the net present values under each alternative, using the cost of capital as
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the discount rate

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b) compare the net present values under each alternative, using the after-tax cost
of borrowings as the discount rate
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c) compare the payback periods for each alternative.

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d) compare the effective interest costs involved for each alternative.

56. A conventional revolving credit agreement allows a firm
a) to borrow a fixed amount for the entire commitment period.
b) to borrow for a short-period with a right to renew the loan during the
commitment period.
c) to possibly include a provision to convert the credit agreement into a term
loan contract at maturity.
(d) to do all of the above.
57. The type of lease that includes a third party, a lender, is called a(n):
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a) sale and leaseback b) direct leasing arrangement.
c) leveraged lease d) operating lease
58. One advantage of a financial lease is that
a) it has a shorter maturity than term loans.
b) it never appears as a liability on the balance sheet.
c) it eliminate the needs to make periodic payments.
d) it provides a way to indirectly depreciate land.
59. Medium-term notes (MTNs) have maturities that range up to
a) one year b) two years c) ten years d) thirty years
60. A direct lease, a sale and leaseback, and a leveraged lease are all examples of
)
a) operating leases b) financial leases c) full-service leases
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d)"off-balance sheet" methods of financing.
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UNIT – IV
61. Factoring is method of raising ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ finance through account receivable
credit offered by commercial banks and factors.
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(a) Long term (b) Medium term (c) short term (d) all of these.
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62. Functions of a factor exclude.

(a) Credit rating (b) Credit recording (c) Credit administration (d) Credit financing.
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63. The factor assumes credit risks associated with the -------------.
(a) Collection of accounts (b) collection of securities
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(b) Collect the fund (d) collect the goods .

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64. Venture capital organized in ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.

(a) 1995 (b) 1954 (c) 1952 (d) 1950.
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65. Who is the chairman of high powered committee constituted by the R B I under factoring
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services.
(b) U.K. Singha (b) Pranab Mugharjee (c) C.S. kalyana sundaram
(d) Mr. Gerhard Prenner
66. Financing sick unit to make them profitable is called ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) Turn around (b) Buyout (c) Bridge (d) None of these.
67. V C Fs of specialized financial institution promoted by ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) Central government (b) RBI (c) state government (d) None of these.
68. I D B I , I F C I , I C I C I etc. are promoted by ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) V C F s of specialized financial institution (b) V C F s of commercial bank
9
(c) Private V C Fs (d) None of these.
69. Write the example of V C Fs of state financial institution.
(a) K S I D C (b) T D I C I (c) C V C F (d) None of these.
70. Which of the following is a V C F promoted by specialized financial institution.
(a)Indus venture capital fund (b) I L & FS Venture corporation ltd.
(c) I D B I venture capital fund (d)None of these.
71. Off shore VCFs are promoted by ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ & financial institution.
(a) Foreign banks (b)Private banks (c) State banks (d) None of these.
72. High risk is an outstanding feature of ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) Mutual fund (b) venture capital (c) Debenture finance (d) govt. bonds.
)
73. The purpose of valuation is to assess the ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ & viability of the venture & to
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devide of the percentage of the VCF ownership in the new venture. (a) Profitability
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(b) Feasibility (c) Availability (d) None of these.
74. The purpose of valuation is to assess the profitability & ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ of the venture.
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(a) Accessibility (b) Marketability (c) Viability (d) None of these.
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75. In ‐‐‐‐‐‐‐‐‐‐‐‐‐‐ method the starting time & exit time of the venture investment is only
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considered. (a) Conventional valuation method (b) First chieago method

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(c) revenue multiplier method (d) None of these.

76. In the ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ method the entire earnings stream of the venture investment is
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considered.
(a) Conventional valuation method (b) First chieago method
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(d) revenue multiplier method (d) None of these.

77. The additional finance provided by VCFs to overcome fledging stage is called
A
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐. (a) Second round financing (b) first round financing (c) seed capital
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(d) None of these.

78. The ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ is used to estimate the annual revenue of the new company.
(a) Revenue multiplier factor (b) Expense multiplier factor
(e) Conventional multiplier factor (d) None of these.
79. The venture capital process involves post investment Services is also called
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐. (a) Investment nurturing (b) Turn around financing (c) Seed money (d)
None of these.
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80. SIDBI venture capital scheme started operation in ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a) 1992 (b)1993 (c)1994 (d)1995.
UNIT – V
81. In cases where a Life Insurance Agent collects the premium from the policyholder
and remits it to the insurer’s office, he is acting as an agent of __________:
a. IRDA b. the Insurance Company
c. the Policyholder d. the broker
82. A policy where the policyholder makes a one-time payment of premium, is known as
a ______________ a. Money-back policy b. Single premium policy
c. Salary Savings Scheme policy d. Half-yearly policy
)
83. State which of the statements given below is correct
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a. An organisation can exist only with employees
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b. An organisation can exist only with different sections
c. An organisation can exist only with its own office building
d. An organisation can exist without a purpose
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84. State which of the statements given below is correct
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a. People generally feel that life related risks are imminent

b. Religious beliefs interfere with the purchase of life insurance
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c. People are always keen to buy insurance

d. Life insurance cannot be denied to anyone at any time
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85. Which of the following is/ are important activities of an organisation’s Accounts
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Department? a. Keeping control on cash b. Investments of funds

c. Processing bills d. All of the above
A
86. Which of the following is an important reason for insurers to sell life insurance policies
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through agents?
a. People can decide which policy is best for them
b. Agents have to earn their commissions
c. Agents have to meet their marketing targets
d. Many people require personalised guidance for selecting the right policy
87. Compared to the premium for a Whole Life plan, the premium for an Endowment plan
will be ____________ for the same age
a. more b. less c. the same d. double
88. A nomination can be made only in favour of ________________
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a.any individual b. spouse and children with guardian
c. spouse and minor children d. parents, spouse and children
89. Select the expanded form of SA as commonly used in life insurance
a. Sum Assured b. Surrender of Assurance
c. Supplementary Assurance d. Stamp Act
90. Select the expanded form of OR as commonly used in life insurance
a. Oral Rehydration b. Once Renewed
c. Ordinary Rates d. Ordinary Renewal
91. Select the expanded form of SV as commonly used in life insurance
a. Summary Valuation b. Selected Value
)
c. Surrender Value d. Stamp Value
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92. Which of the following terms matches closest with ‘Foreclosure’?
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a. Surrender Value b. Nominee
c. Death Claim d. Maturity Claims
93. Find out which of the given statements is incorrect
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a. An organisation must have a purpose
b. An organisation is identified by its actions
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c. An organisation is identified by the building it occupies

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d. A organisation can sue and be sued

94. Find out which of the given statements is incorrect
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a. Accounts department has to monitor cash flow from subordinate offices

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b. Marketing department has to monitor business inflow

c. Marketing department has to monitor performance of agents
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d. Actuarial department is responsible for settling death claims

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95. Which of the following terms is dissimilar to the other four in the context of insurable
interest in life insurance?
a. Employer b. Creditor c. Employee d. Debtor
96. Which of the following terms is dissimilar to the other four in the context of death
claims in life insurance?
a. Early claims b. Non-early claims
c. Foreclosure d. Claimant’s statement
97. Insurance is a ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.
(a)Instrument (b) Contract (c) Agreement (d) Rating.
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98. Insurance works on the principle of ---------------
a. Trust b. Sharing c. Randomness d. All of the above
99. Insurance is legitimate ---------------
a) when an adverse happening is likely b) When an adverse happening is unlikely
c) When an adverse happening is certain d) In all the above three situations
100. Insurance benefits replace---------------
a) All physical losses, in full b) All physical losses, partly
c) All monetary losses, in full d) The monetary losses, but only to some extent
SECTION - B
UNIT I
)
1. Explain the term financial services.
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2. Who are suppliers of financial services?
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3. List out the fund base financial services.
4. What are the various elements of financial service sector?
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5. Discuss any four innovative financial instruments of recent times.
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6. Explain in details scope of financial services industry.
7. What are different financial services? Which agencies provide financial services?
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8. Write a short note on need of Financial Innovation in services.

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9. Write Short Notes on Future of Indian financial services industry.

10. Write Short Notes on Global Slowdown of Financial Services.
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UNIT – II
SC
11. What is Capital Market?

12. What is gilt edged market?
A
13. Write a short note on "Market Makers".

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14. Write Short Notes on Merchant banking in India

15. What are the Problems of Merchant Bankers in India?
16. what is meant by underwriting?
17. What are the SEBI guidelines for merchant banking in India?
18. Explain the provisions relating to market intermediaries aimed at investor protection.
19. Define the services of merchant bankers in India.
20. Write about Commercial Banks.
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UNIT- III
21. What is leasing?
22. Who are the credit rating agencies in India?
23. Under what circumstances leasing is preferred?
24. Define Lease. Write short note on : (a) Lessor and (b) Lessee.
25. Write short notes on Export-Bills Credit Scheme.
26. Write Short Notes on Legal Aspects of leasing.
27. Write Short Notes on Indian leasing and here purchasing industry.
28. Write Short Notes on Sale and lease back.
29. What do you understand by Leasing finance?
)
30. What do you understand by Hire-Purchase Finance?
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UNIT – IV
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31. Write short notes on Factoring. Why is factoring needed?
32. Define the term mutual fund. What are its advantages?
33.
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Distinguish between factoring and bills discounting.
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34. Who are the credit rating agencies in India?
35. Write Short Notes on Challenges to VC Industry in India.
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36. What are the features of Venture Capital Financing

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37. State the progress made by mutual funds in mobilising the savings of the people.
38. Write Short Notes on Credit rating agencies.
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39. Write Shorts notes on UTI

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40. What role commercial bank plays in mutual fund?

UNIT V
A
41. What is meant by insurance?

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42. Define Insurance.

43. Write a short note on Life Insurance.
44. What are the characteristics of a fire insurance contract?
45. What is a standard policy?
46. What do you mean by fire and loss by fire?
47. Why do insurers rarely exercise the reinstatement option?
48. What is meant by ‘perils of the sea’? and list the special perils.
49. What is General Average Loss? Explain with an example.
50. List out some of the ratios to evaluate the performance of the insurance operations.
14
SECTION – C
UNIT I
1. Explain the various financial services available in the market.
2. Explain the importance of financial services.
3. Explain the types of financial services.
4. Discuss the Economic Environment.
5. Discuss about players in financial service sector.
6. What are financial intermediaries? Mention their functions.
7. Explain the provisions relating to market intermediaries aimed at investor
protection.
)
8. Why do you think financial markets are required? What are views on proper
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regulation of these markets?
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9. Discuss the evolution of financial services in India. What are problems faces
by financial services industry in India?
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10. “The services provided by Financial Institutions have some typical
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characteristics that make these products quite distinct from the products of
Industrial Enterprises.” Discuss this statement by bringing out these typical
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characteristics and significance of these services.

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UNIT – II
11. Explain the SEBI guidelines for merchant banking in India.
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12. What are the recent developments in capital market in India? Explain.
SC
13. Enumerate the various functions of a merchant banker.

14. Explain the SEBI guidelines for bonus shares.
A
15. Explain the provisions relating to market intermediaries aimed at investor

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protection.
16. Define merchant bank. Discuss services of merchant bankers in India, in
detail.
17. Compare Merchant Banks and Commercial Banks.
18. The scope for merchant banking in India is great. Discuss.
19. Explain underwriting and its types.
20. What are the problems of commercial banks in financing leasing
companies?
UNIT- III
15
21. Explain about Indian leasing and hire purchasing industry.
22. Discuss contents of lease agreement.
23. Discuss advantages and disadvantages of leasing.
24. Explain the concept of leasing and Hire purchase.
25. What are the types of lease? What are special types of lease agreements?
26. Compare and contract ’Leasing’ and ‘Hire Purchasing”. Why do companies
go for leasing of assets?
27. Discuss advantages and disadvantages of Hire purchase.
28. Explain the Features of Leasing.
29. Explain the types of lease Accounts.
)
30. Discuss the difference between Leasing and Hire purchasing.
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UNIT – IV
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31. What is the modus operandi of credit rating by the agent?
32. Discuss the merits and demerits of factoring.
33.
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What is credit rating? To what extent it helps investors? Do you see some
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limitations of credit rating?
34. Explain various stages of ventures capital financing.
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35. Discuss important provisions of SEBI Regulations for Venture Capital.

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36. Discuss the steps in seeking Venture Capital funding.

37. Discuss benefits and limitations of credit rating
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38. Elaborate importance of Mutual funds to economy to the investors and to the
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sponsors
39. What are mutual funds? What factors to be considered before investing in a
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mutual fund?
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40. Discuss the various functions of factoring.

UNIT V
41. Explain different types of insurance.
42. Discuss the Insurance Laws and Regulations.
43. Explain the principles of insurance.
44. Discuss the historical evolution of the general insurance business in India.
45. Discuss the subrogation rights of an insurer.
46. Discuss the dual role of IRDA in the present insurance market in India.
16
47. Discuss the important provisions of the Motor Vehicles Act with regards to the
third party liability.
48. Explain the benefits available under the provisions of the ESI schemes.
49. How is an insurance consumer protected under the provisions of the Consumer
protection Act, 1986
50. Discuss how the needs for passing the ‘Marine’ Insurance Act, 1963 arise.
Annexure
SECTION A - KEY
1. a) money 51. (c) Over the economic life of the asset
2. c) The owner of a sole proprietorship 52. (b) The present value of minimum lease
)
payments exceeds the lessor's cost
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3. d) secondary 53. (c) an operating lease is often
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cancellable by the lessee
4. c) Capital issue management ce
54. (c) companies, financial institutions,
and individuals derive different benefits
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from owning assets
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5. b) Share Certificate 55. (b) compare the net present values

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under each alternative, using the after-tax

cost of borrowings as the discount rate
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6. b) Factoring 56. (d) to do all of the above

7. b) Index-linked guilt bond 57. (c) leveraged lease
SC
8. c) Debt market instruments 58. (d) it provides a way to indirectly

depreciate land
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9. a) Savings 59. (d) thirty years

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10. b) Fund based 60. (c) full-service leases

11. d) SEBI 61. (c) short term
12. (a)Non banking finance companies 62. (a) Credit rating
13. (a)Venture capital 63. (a) Collection of accounts
14. a) Capital 64. (d) 1950
15. (c) Sole proprietorship 65. (d) Mr. Gerhard Prenner
16. (d) Development bank. 66. (a) Turn around
17. (b) Venture capital 67. (a) Central government
17
18. (d) Collection of tax 68. (a) V C F s of specialized financial
institution
19. (a)Non banking finance companies 69. (a) K S I D C
20. (a)Venture capital 70. (c ) I D B I venture capital fund
21. (c) National & Grin days bank 71. (a) Foreign banks
22. (a) S B I 72. (b) venture capital
23. (b) Lease financing 73. (a) Profitability
24. (a) Credit rating agencies 74. (c) Viability
25. (a) 5crore 75. (a) Conventional valuation method
26. (a) All business performed 76. (b) First chieago method
)
27. (b) Fee based activity 77. (a) Second round financing
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28. (d) financial services. 78. (a) Revenue multiplier factor
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29. (d) I C I C I 79. (a) Investment nurturing
30. (d) lease finance ce
80. (b)1993
31. (a) Swaps and derivatives 81.( b) the Insurance Company
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32. (d) fund based 82. (b) Single premium policy
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33. (c) fee based 83. (a) An organisation can exist only with
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employees
34. (b) Managing the capital issue 84. (b) Religious beliefs interfere with the
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purchase of life insurance

35. (c) 2 85. (d) All of the above
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36. (a) 15% 86. (d) Many people require personalised

guidance for selecting the right policy
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37. (c) 4 87. (a) more

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38. (d) All issue management functions 88. (a) any individual
39. (c) Neither merchants nor banks 89. (a) Sum Assured
40. (b) True 90. (c) Ordinary Rates
41. (b) Hire charge 91. (c) Surrender Value
42. (d) All of these 92. (a) Surrender Value
43. (b) Fund 93.( c) An organisation is identified by the
building it occupies
44. (c) full-service leases 94. (d) Actuarial department is responsible
18
for settling death claims
45. (b) Lease 95. (d) Debtor
46. (a) Credit rating 96. (c) Foreclosure
47. ( c ) The agreement permits the lessee 97. (c) Agreement
to buy the leased asset for one dollar at the
end of the lease term.
48.( c) The lease term is greater than two- 98. (d) All of the above
thirds of the economic life of the asset
49. (d) Any costs to the lessor yet to be 99. (a) when an adverse happening is likely
incurred must be reasonably predictable
)
50. ( b) The lessor depreciates the leased 100. (d) The monetary losses, but only to
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asset over its economic life some extent
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19
(AUTONOMOUS)
COIMBATORE-641029
)
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QUESTION BANK
A

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TITLE OF THE PAPER: HIGHER CORPORATE ACCOUNTING

NOVEMBER 2019
1
Question Bank
HIGHER CORPORATE ACCOUNTING
CONTENTS
)
1 Section A 3
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2 Section B 11
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3 Section C 30
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4 Key for Section A
er 89
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SC
A
Prepared by
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Dr. P.K.Uma Maheswari
Coimbatore-29.
2
SECTION A
UNIT I
I. Choose the correct Answer:

1. Every banking company is required to close its accounts on:
a) 31st December b) 31st March c) 30th June d) 30th September
2. The percentage of profit to be transferred to statutory reserved by the banking is:
a) 2% b) 15% c) 20% d) 10%
)
3. An asset which does not generate income to the banker is termed as:
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a) performing assets b) fixed asset c) non – performing asset d) current
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4. Rebate on bills discounted is:
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a) an accurate income b) an item of income c) a liability d) discount received but not
earned
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5. A non –banking assets is:
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a) an investment b) an item of office appliances c) any asset acquired from the debtors in
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Satisfaction of claim d) money at call and short notice

6. Provision for Income – tax is shown in the Bank accounts under the head:
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a) borrowings b) other liabilities c) operating expenses d) contingent liabilities

SC
7. The heading other assets does not include:

a) stationary and stamps b) interest accrued c) gold d) silver
A
8. Demand drafts and telegraphic transfers are shown in the bank accounts under the head
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a) contingent liabilities b) bills payable c) loans and advances d) borrowings in India

9. Letter of credit and endorsements are shown in the bank account under the head:
a) bills payable b) contingent liabilities c) bills for collection d) other assets
10. Building acquired in satisfaction of a claim and interest accrued but not due on investments
are shown in the bank's balance sheet under the head:
a) fixed assets b) investments c) advances d) other assets
11. ------ is considered as the central bank of India.
a) RBI b) SBI c) ICICI d)bank of baroda
3
12. ------- banks were nationalized in the year 1969.
a) 14 b) 16 c) 20 d) 13
13. ------- banks were nationalized in the year 1980
a) 6 b) 9 c) 10 d) 23
14. RBI was established in the year ------.
a) 1935 b) 1986 c) 2000 d) 1990
15. The RBI Act, 1934 came into force on -------.
a) April 1, 1935 b) April 1, 1938 c) April 1, 1936 d) April 1, 1937
16. ---- acts as banker to the Government.
a) RBI b) SBI c) ICICI d) IDBI
17. Banking Regulation Act was passed in the year -----
a) 1949 b) 1986 c) 2000 d) 1990
18. Balance Sheet of Banking companies comprise of ----- schedule
)
a) 12 b) 19 c) 16 d) 15
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19. Banks prepares the accounts for
a) Calendar year b) Financial year c) Co-operative year d) Assessment year
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20. Every Indian co. is required to transfer at least ---- of its profit to statutory reserve.
a) 20% b) 30% c) 25% d)) 15%
UNIT II
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21. Insurance business in India is now regulated by the provision of:
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a) insurance act 1938 b) IRDA act 1999 c) banking regulations act 1949 d) Indian
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companies act 1949

22. Number of schedules to be prepared by the insurance companies for their financial statement
is:
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a) 26 b) 10 c) 12 d) 15
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23. In life insurance, the policy amount is payable:

a) after the death of the assured b) after the expiry of the policy period
A
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c) on death of the insured or on expiry of policy period w-e-r is earlier

d) only when insured has incurred loss
24. In general insurance, the policy amount is payable:

a) after the death of the insured b) after the expiry of the policy period
c) only when loss occurs or the liability arises d) only when the insured has attained a certain
age.
25. Claims paid by life insurance companies is shown in:

a) schedule 1 b) schedule 2 c) schedule 3 d) schedule 4
4
26. The commission received from the re –insurer is called:
a) commission on reinsurance accepted b) commission on reinsurance ceded
c) commission on direct business d) none of the above
27. The bonus which is to be paid on maturity of the policy along with the policy amount is
known as:
a) Reversionary bonus b) annual bonus c) interim bonus c) eventual bonus
28. The balance found in the revenue account of life insurance companies is considered as:
a) net profit/ net loss be) surplus/ deficiency c) life assurance fund d) gross profit / gross
loss
)
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29. The balance found in the revenue account of general insurance companies is considered as:
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a) Provision for unexpired risk b) net profit / net loss c) operating profit / operating loss
d) gross profit / gross loss
30. The commission paid by the re – insurer is known as:

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a) Commission on direct business b) commission on reinsurance ceded
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c) Commission on direct business b) none of the above
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31. A Valuation Balance Sheet is prepared by:

a) Joint Stock Company b) Banking Company
c) Life Insurance Company d) General Insurance Company
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32. Preliminary expenses incurred by life insurance companies is treated as

a) Misc. expenditure b) a deduction from paid up share capital
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c) Fixed asset d) an operating expense

33. Agents Balances (Dr.) is shown in the balance sheet of life insurance companies as:
a) Current Liabilities b) Other Assets c) fixed assets d) Borrowings
A
34. Appropriations, like interim dividend, proposed final dividend in general insurance business
are shown in:
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a) Profit & Loss appropriations A/c b) Revenue A/c c) Profit &Loss A/c d)
Trading A/c
35. The Percentage of Profit of Life business to be distributed to policy holders is:
a) 95% b) 100% c) 50% d) 40%
36. Leasehold Ground Rents are shown in
a) Revenue A/c b) P&L A/c c) Schedule 8 – Investments d) Schedule 9 – Loans
37. Fire insurance provides for s
a) Tangible Assets b) Intangible Assets
c) Fictitious Assets d) Both tangible and intangible Assets
38. The average clause in a loss of profits policy protects the
a) Insured b) Insurer c) Workers d0 Tax Authorities
39. A Fire Insurance Policy is taken to indemnify
5
a) Capital losses to tangible property b) revenue losses to tangible property
c) Capital losses to intangible property b) revenue losses to intangible property
40. A contract of fire and marine insurance is a contract of-----.
a) Indemnity b) Law c) an Act d) Event
UNIT III
41. Under “Double Account System” interest on debentures and loans are shown in the
a) Revenue Account
b) Net Revenue Account
c) Capital Account (Receipts and Expenditure on Capital Account)

42. Under “Double Account System” profits is disclosed in the
)
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a) Revenue Account b) Net Revenue Account
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c) Capital Account (Receipts and Expenditure on Capital Account)
d) Income and expenditure A/C
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43. Cost of replacement of an asset not involving any increase in capacity is
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a) Capitalized b) Charged to Net Revenue Account
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c) Charges to Revenue Account d) Bank A/C

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44. Tariffs and Dividend Control Reserve is created out of

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a) Clear profit b)Total surplus (clear profit less reasonable return

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c)Disposable surplus d) Deficit

45. Which of the following is not taken into consideration for calculating “Reasonable Return”
A
a) An amount equal to ½% on loans advanced by the State Electricity Board

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b) An amount equal to ½% on the amount raised through issue of debentures

c) An amount equal to ½% on the balance of General
46. Under double account system, preliminary expenses is shown on:
a) Debit side of Revenue A/c b) Debit side of Net Revenue A/c

c) Debit side of Capital A/cd) Assets side in the General Balance Sheet
47. Cost of licence appears in:
6
a) General Balance Sheet b) Capital A/c c)Revenue A/c d)Net Revenue A/c
48. When as asset is replaced, any amount realised on sale of old material will be credited to:
a) Net Revenue A/c b) Revenue A/c c)Assets A/c d) Replacement A/c
49. Original cost of an asset RS 2,50,000. Present cost of replacement RS 3,25,000. Amount
spent on replacement RS 3,80,000. The amount chargeable to Revenue will be:
a) RS. 1,30,000 b) RS. 3,80,000 c) RS. 2,50,000 d) RS. 3,25,000
50. Original cost of an asset is RS 50,000. Present cost of the replacement is RS 65,000. The
amount spent in its replacement is RS 76,000. The amount to be capitalised will be:
a)RS. 65,000 b) RS. 76,000 c) RS. 11,000 d) RS. 50,000
)
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51. What is the name of the account showing profit and loss under double account system
a)Income and expenditure b) income statement
c) Revenue account d) net revenue account

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52. What is the name of the account which shows profit or loss appropriate under double account
system?
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a) Net revenue account b) revenue account

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c) Income statementd) income and expenditure

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53. Under double accounting system, interest on debentures is shown in

a) Revenue account b) net revenue account
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c) capital account d)general balance sheet

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54. Under double account system, shares forfeited account is shown in

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a)credit side of revenue A/c b) credit side of net revenue A/c
c) credit side of capital A/c d) liabilities side of the general balance sheet
55. Under double account system, depreciation is
a) Debited to revenue A/c b) debited to net revenue A/c
c) Credited to the assets A/c d) credited to depreciation fund A/c
56. Under double account system the income statement is sub-divided into
a) Revenue a/c and net revenue a/c b) asset and replacement a/c
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c) Asset and revenue a/c d) net revenue and replacement a/c
57. Receipt and expenditure on capital account is known as
a) revenue a/c b) capital a/c c) p & l a/c d) net revenue a/c
58. Contribution to general reserve should be made until it reaches ____ percent of the original
cost of the asset
a) 2% b)5% c)8% d)10%
59. Contingencies reserve is created until it equal ____percent of the original cost of fixed asset
a) 2% b) 5% c) 8% d) 10%
)
60. The balance of capital account represent excess/ shortage of investment in fixed asset out of
G
____ source
(U
a)short term b) medium term c) long term d) both a & c
UNIT IV
61. A holding company is one which holds more than:
ce
er
a) 2/3rd share capital of subsidiary b) 50% of share capital of subsidiary company
m
b) 75% of share capital of Govt. Company d) none of the above
om
62. A company in which more than 50% of shares are held by another company is termed as:
a) Holding company b) subsidiary company c) govt. Company d) public company
-C
63. Profits earned by a Subsidiary company up to the date of acquisition of shares

SC
a) Revenue: b) Capital Profits c) Revaluation Profits d) Realization Profits

64. Profits made by a Subsidiary company up to the date of Purchase of shares by the holding
A
company are called:

K
a) Revaluation Profits b) Capital Profits c) Revenue Profits d) Realization Profits
65. The term ‘Minority Interest’ represents:

a) the shareholders holding 50% of shares in Subsidiary Co b) The interest of the outsiders in
the Subsidiary Co c) The company which holds more than 51% in Subsidiary Co d) None of
the above
66. The excess price paid by a holding company to acquire ‘controlling interest’ in the subsidiary
company is transferred to:
a) Capital Reserve b) Goodwill a/c c) Revenue Reserve d) none of the above
8
67. The excess of the share in equity or net assets of the subsidiary over and above the price paid
for the investment is shown as:
a) Capital Reserve b) Cost of Control c) Revenue Reserve d) none of the above

68. Unrealized profit included in stock is:
a) Deducted from consolidated profit and loss a/c of holding company
b) Deducted from P&L a/c balance in combined Balance Sheet Liabilities side
c) Deducted from stock and P&L a/c balance in combined Balance Sheet
d) Shown separately in assets side of CBS
)
69. Any loss or Profit on revaluation of assets and outside liabilities is:
G
a) Treated as Revenue profit/loss b) Ignored in CBS
(U
c) Net profit/Loss d) Gross profit/Loss
ce
c) Treated as Capital Profit/Loss and adjusted in the respective assets /liabilities in combined
Balance Sheet
er
d) Shown separately in liabilities side of CBS
m
70. Bonus shares issued out of Post acquisition profit s will:
om
a) Have no effect on CBS b) Decrease the Revenue Profits

c) Decrease the total of assets side of CBS d) increase the goodwill in the extent of the holding
company’s share of the bonus
-C
71. When one company has control over another company is called as
SC
a) Holding Co. b) Subsidiary Co. c) Foreign Co. d) Govt. Co.

72. A Co. is controlled by another co. that co. is called as
a) Holding Co. b) Subsidiary Co. c) Foreign Co. d) Govt. Co.
A
73. Dividends paid out of pre-acquisition profits should be credited to ----- account by the
K
holding company.
a) General Reserve b) Revenue Reserve c) Capital Reserve d) Investment
74. Minority Interest is a ----- to the holding company.
a) Liability b) Asset c) Income d) Expense
75. Consolidated Balance Sheet is prepared by ----
a) Holding co. b) Subsidiary Co. c) Foreign Co. d) Govt. Co.
76. ----- represents the outside share holders proportion on the net assets of the subsidiary.
a) Minority Interest b) Capital Reserve c) Cost of Control d) Reserve Fund
77. The contingent liability is shown by way of footnote in the
a) Profit & Loss a/c b) Consolidated Balance Sheet c) Appropriation A/c d) Revenue A/c
78. Minority Interest is shown in the
a) Debit side of P&L a/c b) Credit side of P&L a/c c) Liability side d) Assets side
79. Profit earned after the acquisition of a company is
9
a) Revenue profit b)) Capital Profit c) Super Profit d) None of the above
80. ----- Investment is normally not held for more than one year.
a) Current b) long-term c) Short-term d) Medium
UNIT V
81. Goodwill is
a) Tangible assets b) Fictitious assets c) Intangible assets d) None of the above
82. Under what heading Goodwill is down on the asset side
a) Fixed assets b) Investments c) Current assets d) Miscellaneous Expenditure
83. According to the simple profit method the value of good will is
a) The product of current year’s profit and number of years
b) The product of average profit of the given years and number of years
)
c) The product of last year’s profit and number of years
G
84. The goodwill of a business is to be valued at 3 years purchase of the average profits of the
(U
last 3 years. The profits of the last 3 years are Rs. 5,000, Rs. 6,000 and Rs. 7,000 respectively.
Hence the goodwill will be valued at
ce
a) Rs. 18,000 (b) Rs. 12,000 c) Rs. 15,000 d) Rs. 14,000
85. Super profit is the difference between
a) Capital employed and Average capital employed b) Average profit and Normal profit
er
c) Current profit and Last year profit d) none of the above
m
86. Average capital employed can be ascertained
a) By adding ½ of current year profit to closing capital employed
om
b) By deducting half of current year profit from opening capital employed

c) By deducting half of current year profit from closing capital employed
-C
87. A business has a capital of Rs. 40,000. In the end it had earned profit of Rs. 5,000
During the year. Hence the average capital of the business will be
a) Rs. 42,500 b) Rs. 35,000 c) Rs. 45,000 d) Rs. 37,500
SC
8. Goodwill is an example of
a)A current asset b) A fictitious asset c) an Intangible Asset d) a fixed asset
A
89. If the super profit of a business are Rs. 6,000 and normal rate of profit is 10 per cent
Then the amount of goodwill as per the capitalization method will be
K
a) Rs. 60,000 b) Rs. 600 c) Rs. 12,000 d) Rs. 6,000

90. For calculating the value of equity share by intrinsic value method, it is estimated to know
a) Normal rate of return b) expected rate of return c) Net assets d) none of the above
91. It is essential to know for calculating the value of an equity share by yield method
a) Expected rate of return b) capital employed c) Called up equity share capital
d) Valuation of share
92. Price Earnings ratio can be calculated with the help of
a) Market value per share b) nominal value per share c) Paid up value per share d) None
93. Under net assets method, the value of share depends on the amount that would be
Available to
a) Debenture holders b) creditors for goods c) Equity share holders d) Preference share holders
94. Amortisation of an intangible asset means
10
a) Purchasing asset b) selling asset c) recording the asset in book d) writing off over
estimated
95. If the value of purchase consideration is lower than the value of net asset acquired the
difference is shown in
a) Goodwill b) capital reserve c) revenue reserve d) none of these
96. The difference between subscribed capital and called up capital is called ----.
a) Paid up capital b) uncalled capital c) Calls-in advance d) Call-in-arrears
97. The excess of average profit over the normal profit is known as
a) Super Profit b) Normal Profit c) Average Profit d) Adjusted Average profit
98. Assets used for own use and not for lease or resale is known
a) Fixed asset b) wasting asset c) current asset d) fictitious asset
99. Asset backing method is known as
a) Intrinsic value b) Dual Method c) Earnings method d) Net Assets Method
)
100. Valuation of Goodwill is done by
G
a) Companies b) Partnership c) Sole Proprietorship d) All the above
(U
SECTION B
UNIT I
ce
1.On 31st March 1998, Bharat Commercial Bank Ltd, finds its advances classified as follows:
er
Particulars (RS.)
m
Standard assets 14,91,300

om
Sub – standard assets 92,800

Doubtful assets (secured)
-C
: Doubtful for one year 25,660

: Doubtful for one year to 3 years 15,640
SC
: Doubtful for more than 3 years 6,580

A
Loss assets 10,350

K
Calculate the amount of provision to be made by the bank against the above mentioned
advances.
2. The Trial Balance of the Nedungadi Bank Ltd., As on 30 th June 1984 shows the following
balances.
Particulars (RS.)
Interest and discount 45,40,600
11
Rebate on bills discounted (1.7.83) 4,750
Bills discounted and purchased 3,37,400
The unexpired discount as on 30.6.84 is estimated to be RS 5,560. Draftsman necessary
adjusting entries and calculate the amount of interest and discount to be credited to Profit and
Loss Account.
3. Calculate the net profit earned by Sandhya bank Ltd. From the data given below for the year
ended 31.3.2003:
Particular (RS.)
)
Interest earned 5,00,000
G
Other incomes 37,000
(U
Interest expenses 3,40,000
ce
Operating expenses 1,05,000
Rebate on bills discounted
er
(1.4.2002) 48,000
m
(31.3.2003) 52,000
om
4. On 1.1.90, the rebate on bills discounted account of a bank showed a credit balance of RS
-C
1,00,000. On 31.12.90, the discount account showed a credit balance of RS 15,00,000 before
SC
adjusting unexpired discount. The bills discounted outstanding on 31.12.90 were RS ² crores
with average maturity date of January 31,1991 and they were all discounted at 12% p.a.
A
Write adjustment entries and relevant ledger accounts to record these items and also show
K
how these items will appear in the final accounts of the bank.
5. From the following particulars, prepare the Profit and Loss Account of Chennai Bank Ltd.,
For the year ending 31 st March 1992.
Particulars (RS. In '000)

Interest on deposits 3,200
Commission (Cr.) 100
Interest on loans 2,490
12
Sundry charges (Dr.) 100
Rent and taxes 200
Establishment 500
Discount on bills discounted 1,490
Interest on overdrafts 1,600
Interest in cash credits 2,320
Auditors' fees 35
Directors' fee 16
Bad debts to be written off 300
)
G
(U
6. On 31.12.1996 Popular Bank Ltd. Has the following bills in its port folio. All the bills are
discounted at 5%.
Amount in RS.
ce
Due date
er
50,000 31.1.1997
m
40,000 30.4.1997
om
30,000 03.3.1997
-C
Calculate rebate on bills discount, assuming accounts are closed on 31 st December.

SC
7. PRR Bank Ltd. Discounted a bill of the face value of RS 4,00,000 for RS 3,90,000 on Jan 23,
2001. Of the discount, RS 1,600 was for the year 2001 – 02. Pass journal entries at the time of
A
discounting the bill, closing of accounts on 31.3.01 and opening entry for the next year 2001 –
K
02.
8. From the following information, find out the amount of provision to be shown in the Profit
and Loss Account of a commercial Bank:
Particulars RS. In lakhs

Assets:
13
Standard 8,000
Substandard 6,000
Doubtful:
For one year 1,000
For three years 1,600
For more than 3 years 400
Loss Assets 1,200
Hint : (1). As per recent RBI guidelines, 0.25% Provision on standard assets is also to be made.
)
G
(2). It is assumed that doubtful assets are fully secured.
(U
9. From the following information prepare the Profit and Loss Account of ABC Bank Ltd. For
ce
the year ended on 31st March 1992 in the prescribed form.
er
Particulars (RS.)
m
Interest on loan 2,59,000
om
Interest on fixed deposits 2,75,000

Rebate on bills discounted required 49,000
Commission 8,200
-C
Establishment 54,000
SC
Discount on bills discounted 1,95,000

Interest in cash credit 2,23,000
A
Interest in current account 42,000

K
Rent and taxes 18,000

Interest on overdraft 1,54,000
Directors' fees 3,000
Auditors' fees 1,200
Interest on savings bank deposits 68,000
Postage and telegrams 1,400
Printing and stationery 2,900
Sundry charges 1,700
14
Bad debts be written off amounted to RS 40,000. Provision for taxation may be made @
55%.
Balance of profit from last year was RS 1,20,000. The directors have recommended a
dividend of RS 20,000 for the shareholders.
10. Write about the guidelines of RBI for Balance Sheet?
UNIT II
)
11. A life Assurance Company prepared it’s Revenue A/c for the year ended 31.03.2006 and
G
ascertained it’s Life Assurance fund to be RS 28,35,000. It was found late that the following had
(U
been omitted from the accounts:
ce
(A). Interest accrued on investments RS 39,000; er
Income tax liable to be deducted thereon is estimated to be RS 10,500.
m
(B). Outstanding premiums RS 32,800.

om
(C). Bonus utilised for reduction of premium RS 6,750.

-C
(D). Claims intimated but not admitted RS 17,400.

SC
(E). Claims covered under reinsurance RS 6,500.
What is the Life Assurance Fund?

A
K
12. The Life fund of a Life Insurance Company on 31.3.2006 showed a balance of RS 54,00,000.
However, the following items were not taken into account while preparing the Revenue A/c for
2005 – 06:
Particulars RS
(a). Interest and dividends accrued on investments 20,000
(b). Income tax deducted at source on the above 6,000
15
(c). Reinsurance claims recoverable 7,000
(d). Commission due on reinsurance premium paid 10,000
(e). Bonus in reduction of premiums 3,000
13. A Life Insurance Company gets its valuation made once in every two years. It’s Life
Assurance fund on 31.3.2006 amounted to RS 63,84,000 before providing RS 64,000 for the
share holders' dividend for the year 2005 – 06. It’s actuarial calculation due on 31.3.2006
disclosed a net liability of RS 60,80,000 under assurance annuity contracts. An interim bonus of
RS 80,000 was paid to the policy holders during the two years ending 31.3.2006.
)
G
Prepare a statement showing the amount now available as bonus to policy holders.
(U
14. From the following figures appearing in the books of Fire Insurance division of a General
ce
company, show the amount of claim as it would appear in revenue account, by preparing
schedule 2, claims incurred.
er
m
Particulars Direct Business Re – insurance
RS ('000) RS ('000)
om
Claims paid during 2005 – 06 4,670 700

Claims payable – 1.4.2005 763 87
-C
31.3.2006 813 53
SC
Claims received - 230

Claims receivable – 1.4.2005 - 65
A
31.3.2006 - 113
K
Expenses of Management 230

(Includes RS 35 thousand surveyor's fees and RS
45 thousand legal expenses for settlement of
claims)
15. Compute commission expenses to be derived in schedule 2 of a Life insurance company:
Particulars RS
Commission on direct business 93,000
16
Commission on reinsurance accepted 40,000
Commission on reinsurance cedes 50,000
16. Calculate the net claim to be debited to Revenue a/c of an Insurance Company:
Particulars RS
Claims paid for the year ended 31.03.2006 5,75,000
Claims outstanding on 01.04.2005 55,000
Claims covered under reinsurance 28,000
17. The Revenue account of a Life Insurance Company shows the Life Insurance Fund on
)
G
31.03.2006 at RS 48,78,000 before taking into account the following items.
(U
Particulars RS
ce
(a). Claims intimated but not admitted 65,500
(b). Bonus utilised in reduction of premiums 6,500
er
(c). Interest accrued on securities 19,500
m
(d). Outstanding premiums 18,000
om
(e). Claims recovered under reinsurance 27,000

Pass the entries giving effect to the above adjustments and show the Life fund at the end of
the year 2005 – 06 after making the above adjustments.
-C
SC
18. From the following particulars, prepare the fire revenue account for 2005 – 06:

A
Claims paid 235

K
Legal expenses regarding claims 5

Premiums received 600
Reinsurance premium 60
Commission 100
Expenses of management 150
Provision against unexpired risk on 1.4.2005 260
Claims unpaid on 1.4.2005 20
17
19. Form the following balance as at 31.3.06 in the books of General Insurance Co. Ltd., Prepare
a Revenue account in respect of fire insurance carried on by them.

Claims paid 480
Claims outstanding on 1.4.05 40
Claims intimated and accepted but not paid on 31.3.06 70
Premium received 1,200
Reinsurance premium paid 120
Commission 200
)
G
Commission on reinsurance ceded 8
(U
Commission on reinsurance accepted 4
ce
Provision for unexpired risk on 1.4.05 er 400
Additional provision for unexpired risk on 1.4.05 20
Bonus utilised in reduction of premium 12
m
Reinsurance recovered of claim medical expenses regarding claims 8

om
Medical expenses regarding claims 5

Loss on sale of Motor car 3.5
-C
Bad debts 2.5

SC
Refund of double taxation 4.5

Interest and Dividend 8
A
Income tax deducted thereon 1.5

K

Profit on sale of investments 3.5
Rent of staff quarters deducted from salaries 2.4
Depreciation for furniture 4.6
Provide for additional reserve for unexpired risk at 1% of the net premium in addition to
opening balance of additional reserve.
20. Discuss about the Duties, Power and Function of IRDA?.
UNIT III
18
21. Ratnakar Electricity Supply Company Co Ltd. (which adopts the Double Account Systems)
re-built and re-equipped a power station and the connecting lines during the year 2007. For this
purpose they purchase materials worth Rs.10,85,000 and used stores worth Rs.4,90,000 from
their existing stocks.
The cost of labour came to Rs.5,22,000. The estimated supervisory overheads attributed to
this projects were Rs. 13,000. The station was erected in 1990 at a cost of Rs.5,00,000 and the
index of costs in this line stood in 2007 @ 385, taking 1990 as the base yaer.
Discarded materials from the old station fetched Rs.12,000.
)
G
Calculate the amount to be capitalized and the amount to be charged on Revenue Account.
(U
22. The Gurgaon Electricity Company Ltd. Decides to replace one of its old plants with a
modern one with a larger capacity. The plant when installed in 1940 cost the company Rs 24
ce
lakhs, the components of materials, labour and overheads being in the ratio of 5 : 3 :2. It is
er
ascertained that the costs of materials and labour have gone up by 40% and 80% respectively.
m
The proportion of overheads to total costs is expected to remain the same as before.
om
The cost of the new plant as per improved design is Rs 60 lakhs and in addition, material
recovered from the old plant of a value of Rs 2,40,000 has been used in the construction of new
-C
plant. The old plant was scrapped and sold for Rs 7,50,000.
SC
The accounts of the company are maintained under the Double Account System. Indicate
how much would be capitalized and the amount that would be charged to revenue. Show the
A
Ledger Accounts.
K
23. The CESC Limited decided to replace one of its old plants by an improved plant. This plant
was built in 1964 for Rs 67,50,000. To built a new plant of the same size and capacity it would
now cost Rs.1,00,00,00. The cost of the new plant with larger capacity was Rs.2,12,50,000 and
in addition, materials of the old plants valued at Rs.6,87,500 were used in the construction of the
new plant. The balance of the old plant was sold for Rs.3,75,000.
You are required to calculate the amount to be charged to Revenue Account and the amount
to be capitalized. Also show the plant Account and the Replacement Account.
19
24. The Jaipur Electric Supply Company Ltd. (which adopts the Double Accounts System) re-
built and re-equipped a power station and the connecting lines during the year 2007. For this
purpose they purchased materials of Rs.10,85,000 and used stores worth Rs.4,90,000 from their
existing stocks. The cost of labour came to Rs.5,22,000. The estimated supervisor over-heads
attributed to this project were Rs.13,000. The station was erected in 1975 at a cost of Rs.5,00,000
and the index of costs in this line stood in 2007 at 385, taking 1975 as the base year. Discarded
materials from the old station fetched Rs.12,000.
Show Journal Entries to record the above transactions and give working notes showing how
you arrived at the figures.
)
G
25. CESC Ltd. Decides to replace its old plants with a modern one with a larger capacity. The
(U
plant was installed in 1940 at a cost of Rs.40 lakhs. The components of materials labour and
overhead are in the ratio of 5 : 3 : 2. It is ascertained that the cost of materials and labour have
ce
gone up by 50% and 100% respectively. The proportion of overheads to total costs is expected to
er
remain the same as before.
m
The cost of the new plant as per the improved design is Rs.90 lakhs and in addition, materials
om
recovered from the old plant having value of Rs.2,00,000 is used in the construction of the new
plant. The old plant is scrapped and sold for Rs.7,50,000.
-C
The accounts of the company are maintained under Double Account System. Show the
SC
Journal Entries in the books of the CESC Ltd.

A
K
26. From the following information and details to the year ended 31 st march, 2008 an bearing in
mind
the provisions of the Electricity (Supply) Act,1948, indicate the disposal fo profits of X
Electricity
Corporation Limited:
Praticulars Rs Praticulars Rs
20
Net profit before charging Security deposited of Customer 4,84,000
debenture interest 35,00,000 Customer Contribution to main 3,20,000
Fixed assets 4,20,00,000 lines 1,40,000
Depreciation written-off on fixed Preliminary expenses
assets 98,00,000
Loan from Electricity Board 1,20,00,000 Average fo current assets 23,70,000
6% Investments of Reserve fund excluding customers
(F.V. Rs. 90,00,000) 90,00,000 balances of Rs.6,20,000 4,40,000
6% Investments of the
)
Contingencies Reserve 76,00,000 Development Reserve 7,50,000
G
Tariffs and Dividends Control 10% Debenture interest pain in the
(U
Reserve 8,40,000 year
ce
The Reserve Bank of India rate of the relevant date was 8%.
er
m
om
-C
SC
A
K
27. The following balances relate to an electricity company and pertain to this accounts for the
year ended 31st december,2007:
21
Share Capital 1,00,00,000 Depreciation Reserve on Fixed 80,00,000
Reserve Fund (invested in 5% assets 75,00,000
Govt. Securities at per) 60,00,000 Consumers’ Deposits
Contingencies Reserve – Amounts contributed by consumer 2,00,000
invested in 6% State Govt. 20,00,000 towards fixed assets 5,00,000
Loans 30,00,000 Intangible assets 6,00,000
Loan from State Electricity 8,00,000 Tariffs and Dividend Control 20,00,000
Board 10,00,000 Reserve
11% Debentures 2,00,00,000 Current Assets – Monthly average
)
Development Reserve
G
Fixed Assets
(U
The company earned a post tax profit of Rs.9 lakhs. Show how the company will be dealt with
ce
under the provisions of the Electricity Act, assuming that the Bank rate during the year was 8%.
er
28. The following balance have been extracted, at the end of 2007, from the books of an
Electricity company:
m
om
Particulars Rs Partuculars Rs
Share capital 1,00,00,000 Consumers Deposited 40,00,000
-C
Reserve Fund (invested in 8% Amounts contribution by

Govt. securities at par) 60,00,000 consumers towards cost of fixed 2,00,000
SC
Contingencies Reserve invested assets 8,00,000

in 7% State Loan 12,00,000 Intangible assets 10,00,000
A
Loan from State Electricity 25,00,000 Tariffs and Dividends Control 15,00,000
K

12% Debentures 8,00,000 Current Assets (monthly average)
Development Reserve 2,50,00,000
Fixed Assets
Depreciation Reserve on fixed 30,00,000
assets
22
The company earned a profits of Rs.28,00,000 (after tax) in 2007. Show how the profits have to
be dealt with by the company, assuming that the Bank rate was 10%. All working should form
part of your answer:
29.The Saharanpur Electricity Company Ltd. Earned a profit of Rs.17,40,000 during the year
ended March 31,2008 after charging interest on debentures amounting to Rs.45,000 @ 7.5%.
You are required to show the disposal of profits assuming bank rate at 6% with the help of the
following data:
)
Fixed assets at cost 2,50,00,000 Contingency reserve investment 10,00,000
G
Preliminary expenses 5.00,000 Loan for electricity board 50,00,000
(U
Monthly average of current Tariff and dividend control reserve 2,00,000
ce
assets, including amount due Security deposit received from
from customers Rs.6,00,000 36,00,000 customers 5,00,000
er
Reserve fund (represented by Development reserve 5,00,000
m
6% Govt. securities 40,00,000
Total depreciation written - off 77,00,000
om
30. Describe the Distinguish characteristics of the final accounts of electricity company under
electricity (supply) Act, 1948.
-C
SC
UNIT IV
31.The balance sheet of C LTD and D LTD as at 31st December 1986 are as follows
A
K
Liabilities C LTD D LTD Assets C LTD D LTD

Share capital 2,00,000 1,00,000 Sundry assets 1,32,500 1,38,200
( in share of
RS 10 each
General 18,000 20,000 Goodwill - 20,000
reserve
Profit and 24,500 23,000 Share in D 1,40,000 -
loss a/c LTD at cost
23
Creditors 30,000 15,200
272500 158200 272500 158200
In the case of D LTD profit for the year ended 31 st December 1986 is RS 12000 and
transfer to reserve is RS 5000. The holding off C LTD in D LTD is 90% acquired on 30 th
June 1986
Draft a consolidated balance sheet of C LTD and it’s subsidiary.
32. The following are the balance sheet of H LTD and it’s subsidiary S LTD as on
31.3.1995
)
G
Liabilities H LTD S LTD Assets H ltd S LTD
Share capital 6,00,000 2,00,000 Machinery 3,00,000 1,00,000
(U
RS 10 each
ce
fully paid
General 1,50,000 70,000 Furniture 70,000 45,000
er
reserve
m
Profit & loss 70,000 50,000 70% share in 2,60,000 -

om
a/c S LTD at cost

Creditors 90,000 60,000 Stock 1,75,000 1,89,000
-C
Debtors 55,000 30,000

Cash at bank 50,000 10,000
SC
Preliminary - 6,000
expenses
A
9,10,000 3,80,000 9,10,000 3,80,000

K
H LTD acquired the share of S ltd on 30 June 1994. On 1st April 94, S ltd's general
reserve vand profit and loss account stood at RS 60,000 and 20,000 respectively. No part
of the preliminary expenses was written off in the year ended 31.3.95.
Prepare consolidated balance sheet of H LTD and it’s subsidiary S LTD as on
31.3.95,giving all your Working note separately.
33. X LTD purchased 60% shares of Y LTD on 1-1-02 when the balance on their P&L
A/C and General reserve were RS 1,50,000 and RS 1,60,000 respectively. On 31-12-
24
02, the balance sheet of Y LTD showed P&L A/c balance of RS 4,00,000 and General
reserve RS 3,00,000. Calculate capital profit and revenue profit.
34. Calculate minority interest from the balance sheet of Mumbai LTD
Balance sheet of Mumbai LTD as on 31-12-1997
Share capital 14,00,000 Sundry assets 10,00,000
7,00,000 share
)
of RS 2 each
G
General 6,00,000 Plant and 7,00,000
(U
reserve as on machinery
1-1-97
Creditors 3,00,000
ce
Other assets 1,50,000
er
P & L A/c as 2,00,000 Investment ( 6,50,000
m
on 31-12-97 80% of shares)
om
25,00,000 25,00,000
Madras LTD acquired 80% of the shares at RS 6,50,000.
-C
35. S LTD has capital of RS 15,00,000 in share of RS 100 each. Out of this, 'H' LTD
SC
purchased 75% shares at RS 17,50,000. The profit of S LTD at the time of purchase
of shares by H LTD we’re RS 7,50,000. S LTD decided to make a bonus issue out
A
calculate the cost of control after the issue of bonus shares.

K
36. Stock of RS 3,20,000 held by H LTD consists of RS 1,20,000 goods purchased from
S LTD who has charged profit on sale of 20%. H LTD, acquired 80% of shares of S
LTD. Calculate the amount of unrealized profit included in stock.
37. A subsidiary Co sold goods to it’s holding company on the basis of cost plus 25%. At
the end of the year. Stock-in-trade of the holding company included such goods
25
amounted to RS 80,000. 25% of the shares of the subsidiary Co are held by outsiders.
What is the amount of stock reserve required?
38. Prepare a consolidated balance sheet from the following balance sheet
Liabilities H LTD S LTD Assets H LTD S LTD

Capital Rs 1400 1000 Sundry 885 1510
1 share assets
Creditors 350 190 Shares in 1,125 -
)
S LTD
G
900
(U
shares at
ce
cost
P & L A/c 260 320
er
m
2,010 1,510 2,010 1,510

om
On the date of acquisition of shares by H LTD in S LTD, the credit balance on latter’s P
-C
&L A/c was RS 220. No dividends have been declared since that date.
SC
39. Balance sheet as on 31.12.2000

A
Share 10,000 5,000 Sundry 16,000 10,000

K
capital RS assets
1 each
Reserve 5,000 - 5000 6,000
shares in
S LTD
P & L A/c 4,000 1,800 -
Creditors 3,000 3,200
26
22,000 10,000 22,000 10,000
Shares of S LTD we’re purchased by H LTD on 30th June 2000. On 1st Jan 2000 the
balance sheet of S LTD showed a loss of RS 3000.
40. Give brief explanation about holding company?
UNIT V
41. Calculate goodwill on the basis of three years purchase of the last five years average profits.
The profits for the last five years are: I year–Rs 4,800; II year – 7,200; III year - Rd 10.000; IV
)
year – RS 3,000 and V year Rs.5,000.
G
(U
42.G Ltd. Proposed to purchase the business carried on by ThiruDass. Goodwill for this purpose
is agreed to be valued at three years purchase of the profit of the post four years. The appropriate
ce
weights to be use are: 2013 – 1; 2014 – 2; 2015 – 3; 2016 – 4; Profits for these years were: 2013
–Rs 10,000; 2014 –RS 11,000; 2015 – RS 12,000 and 2016 –RS 15,000.
er
m
Compute the values of the goodwill of the firm.
om
43.The net profit for the 5 years is
Year 2011 2012 2013 2014 2015

-C
Profit 10,000 15,000 15,000 20,000 30,000

SC
A
The capital employed in the business is RS 1,50,000. Normal rate of return is 10%.
K
Calculate the goodwill on the basis of 4 years purchase of average profits and capitalisation of
Average profits method.
44. K & Co. Decided to purchase a business for RS 2,40,000. It’s profits of the last four years
were 2013 RS 60,000; 2014 – RS 75,000; 2015 –RS 72,000 and 2016 –RS 69,000. The owner of
the business was personally managing it. A manager to replace him was has to be paid RS 9,000
p.a. Calculate the value of goodwill if it is valued on the basis of the average net profit for the
last four years.
27
45. From the following information calculate the value of goodwill according to super profit
basis at 5 years purchase:
i) Average capital employed in the business RS 7,00,000
ii) Net trading profit of the firm for the past three years RS 1,07,000; RS 90,700 and RS
1,15,500
Respectively
iii). Rate of interest expected from capital 12%
)
G
IV). Remuneration to partners for their service RS 12,000 per annum
(U
v). Sundry assets of the firm RS 7,54,762; Sundry liabilities RS 31,329.
ce
46. The net profit for the five years is: er
Year 2012 2013 2014 2015 2016
m
Profit 10,000 15,000 15,000 20,000 30,000
om
The capital employed in the business is RS 1,50,000 and normal rate of return is 10%.
-C
Calculate the value of goodwill on the basis of 4 years purchase of super profit.
SC
47. The net profits of a company after providing for taxation for the past five years are RS
A
K
78,000, RS 82,000, RS 88,000, RS 93,000, and RS 99,000. The capital employed in the business
is RS 8,00,000 on which a reasonable rate of return of 10% is expected. It is expected that the
company will be able to maintain its super profits for the next five years. Calculate the value of
the goodwill of the business on the basis of an annuity of upper profits, taking the present value
of an annuity of one rupee for the five years at 10% interest as RS 3.78.
48. Mr. K has invested a sum of RS 3,00,000 in his own business which is a very profitable one.
The annual profit earned from his business is RS 60,000 which include a sum of RS 10,000
received as compensation for acquisition of a part of his business premises. The income could
28
have been invested in deposit for a period of five years and earn 10% interest and be himself
could earn RS 7,200 per annum in alternative employment. Considering 2% as four
compensation for the risk involved in the business calculate the value of goodwill of his business
on capitalization of super profits at the normal rate of return.
49. The following is a balance sheet of a company as on 31 st Dec 2016:
Liabilities Amount Assets Amount

Equity share capital of RS 100 12,00,000 Fixed assets 14,60,000
each
)
Reserves and surpluses 2,50,000 Investments (5% securities) 1,20,000
G
Creditors 5,60,000 Current assets 5,40,000
(U
Provision for taxation 1,43,000 Preliminary expenses 33,000
ce
21,53,000 21,53,000
er
The provision for taxation for the current year is 55% of net profit. Return on capital
m
employed in this industry is 10%. Ascertain the yield value of share.

om
50. Discuss about the needs for valuation of goodwill?

-C
SC
A
K
29
SECTION C
UNIT I
1.From the following particulars, prepare a Profit and Loss A/c of New Bank Ltd, for the year
ended 31.12.1996.
Particulars RS. (In Particulars RS. (In

'000) '000)
Interest on loans 260 Interest in cash credits 225
Interest on fixed deposits 280 Rent and taxes 20
)
G
Rebate on bills discounted 50 Interest on overdrafts 56
(U
Commission charged to 9 Directors' and Auditors' fees 4
customers 56 Interest on savings bank 70
ce
Establishment expenses 200 accounts 2
Discount on bills discounted 45 Postage and telegrams 2
er
Interest in current accounts 3 Sundry charges
m
Printing and advertisements

om
2. From the following information relating to Lakshmi Bank Ltd., Prepare the Profit & Loss for
-C
the year ended 31st December, 1987.

SC
RS. RS.
A
Rent received 72,000 Salaries and allowances 2,18,800

K
Exchange and commission 32,800 Postage 5,600

Interest on fixed deposited 11,00,000 Sundry charges 4,000
Interest in saving bank A/c 2,72,000 Director's & Auditor's fees 16,800
Interest on overdrafts 2,16,000 Printing 8,000
Discount on bills discounted 7,80,000 Law charges 3,600
Interest in current accounts 1,68,000 Locker rent 1,400
Interest in cash credits 8,92,000 Transfer fees 2,800
Depreciation on bank property 20,000 Interest on loans 10,36,000
30
3. The following is the Trial Balance extracted from the books of Town Bank Ltd.
Particulars RS. RS.

Balances with banks 46,350 Share capital 3,00,000
Investments in Govt. Bonds 1,94,370 Securities deposit of employees 15,000
Other investments 1,55,630 SB accounts 7,420
Gold bullion 15,130 Current accounts 97,000
Interest accrued on investments 24,620 Fixed deposits 1,13,050
Silver 2,000 Reserve fund 1,40,000
Constitution's liability for Borrowing from banks 77,230
)
G
Acceptances, etc. 56,500 Profit and Loss A/c 6,500
(U
Building 65,000 Bills for collection 43,500
Furniture 5,000 Acceptances and endorsements 56,500
ce
Money at call 26,000 Interest er 72,000
Loans 2,00,000 Commission 25,300
Bills discounted 12,500 Discounts 42,000
m
Interest 7,950 Rent 600

om
Bills for collection 43,500 Profit on Bullion 1,200

Audit fees 5,000 Miscellaneous income 2,700
-C
Loss on sale of furniture 1,000 Accumulated depreciation on

SC
Directors' fees 1,200 Building 20,000

Salaries 21,200
A
Postage 50
K
Managing director's remuneration 13,000

Loss on sale of investments 30,000
Cash in hand 25,000
Cash with RBI 50,000
Branch adjustment A/c 20,000
------------- -------------
10,20,000 10,20,000
31
You are required to prepare the Profit and Loss Account and Balance Sheet after taking into
consideration the following
(I) Baddebts RS 500.

(II) Rebate on bills RS 1,000.
(III) Current year's depreciation on building RS 2,000.
(IV) Some current. Accounts are over drawn to the extent of RS 25,000 and total of credit
Balances is RS 1,22,000.
4. From the following figures taken from the books of Money Bank Ltd., Prepare Profit and Loss
)
Account and Balance Sheet as on 31.12.1987.
G
(U
10,000 shares of RS 100 each RS 50 paid up 500
ce
Reserve fund investments er 350
Fixed deposits 950
Saving bank deposits 3,000
m
Current deposits 8,000

om
Money at call and short notice 450

Investments 2,500
-C
Interest accrued and paid 200

SC
Rent 20
Salaries ( including GM's salary RS 24,000) 69
A
Directors fees 6
K
Provident fund contribution 5

General expenses 10
Profit and Loss Account – 1.1.87 200
Bank draftsman 310
Unclaimed dividends 20
Premises ( after depreciation up to 31.12.1986 RS 1,00,000) 1,200
Cash 150
Stock of stationery 10
32
Cash with RBI 1,400
Traveller's cheques 500
Balance with other banks 1,600
Letters of credit 300
Borrowed from banks 800
Owing by foreign correspondents 100
Interest and discounts 700
Commission 50
Bills discounted 600
)
Loans 3,000
G
Cash credits and overdrafts 4,000
(U
Bills for collection 140
ce
Acceptances on behalf of customers 200
Dividend for 1986 50
er
Branch adjustments (Cr) 10
m
om
Rebate on bills discounts for unexpired term is RS 5,000. A provision for doubtful details
amounting to RS 30,000 is required. Create provision for taxation to the extent of RS 1,00,000.
-C
Charge 5% depreciation on premises on original cost. Traveller's cheques pain amounted to

SC
RS.20,000.
5. From the following ledger balances of People Bank Ltd., Prepare Profit and Loss Account.
A
K
Particulars RS.
Interest paid on deposits 1,60,520
Commission exchange and brokerage 44,240
Interest received 5,32,260
Salary and Provident fund 40,000
Profit on sale of fixed assets 30,000
Printing and Stationery 10,000
33
Postage and Telephones 20,000
Note : Provide for taxation RS 20,000 and rebate on bills discounted was RS 14,380.
6. From the following balances of Reliable Bank Ltd., As at 31 st March 1991, prepare a Profit
and Loss Account and a Balance Sheet for the relevant year.
Balance Sheet as at 31st March 1991
(RS. In (RS. In
)
'000) '000)
G
Share capital (equity shares of Borrowing from banks 2,100
(U
RS. 3,300 Cash with other banks 1,800
ce
10 each, fully paid) 640 Cash with Reserve Bank 3,000
Reserve fund 10,000 Cash in hand 250
er
Current accounts 5,000 Interest & discount received 10,080
m
Savings banks accounts 2,500 Bills payable 4,200
om
Fixed deposit accounts 800 Bills discounted & purchased 3,000

Profit and Loss account 600 Term loans 4,500
Money at call and short notice Cash credits 11,670
-C
Salaries ( including RS 3,200 Sundry creditors 500

SC
1,20,000 to 50 Bills for collection 980

General manager) 7,500 Acceptance on behalf of
A
Directors' fees 70 Customers 2,500

K
Investments (at cost) 40 Interest accrued and paid 1,200

Audit fees
Building ( net of depreciation)
Up to 31.3.90 – RS 5,60,000
Depreciation has to be provided at 5% on the original cost of building. A provision of RS.

2,50,000 for bad debts and RS 30,00,000 for taxation needs to made.
34
7. The following are the balance of the Indra Bank Ltd., As at 31.3.1993.
Trial balance as on 31.3.1993
Particulars Debit Particulars Credit

Cash in hand 3,14,644 Share capital:
Cash with RBI 6,21,858 2,50,000 shares of RS 20 each
Money at call and short notice 2,79,416 RS 3 7,50,000
Bills discounted 8,33,483 Paid
Advances to customers 13,42,120 1,37,500 shares of RS 10 each 1,37,500
)
Liability of customers for RS 1 5,00,000
G
Endorsements 1,61,599 Paid 25,81,343
(U
Bank premises 2,60,000 Reserve 6,85,135
ce
Shares in subsidiary Current accounts 1,61,599
companies 2,48,000 Deposit accounts 1,78,617
er
At cost Endorsements for customers 56,005
m
Shares in Affiliated companies 1,68,000 Acceptance for customers 1,28,139
At cost 2,24,220 Dividend equalisation fund 1,41,010
om
Balance with other banks 6,18,358 P & L A/c on 1.4.92 38,461

Investments at cost 42,048 Interest received 1,54,859
-C
Interest paid 1,91,363 Discount charges 86,251

SC
General expense 32,188 Commission charges

Dividend : Interim 56,005 Dividends received less tax
A
Final
K
Liability of customers for 1,78,617

Acceptances ----------------- ---------------
55,98,919 55,98,919
Adjustments:
(I) Rebate on bills discounted Rate 3,271.

(II) RS 20,000 to be allocated to reserve.
You are required to prepare Profit and Loss Account and Balance Sheet.
35
8. From the following information, prepare Profit and Loss Account of Swadesh Bank Ltd,., For
the year ended 31st December 1987.
Particulars RS. ('000)

Interest on fixed deposits 430
Interest on loans 650
Discount on bills discounted 415
Interest on over drafts 210
Interest in cash credits 410
Interest on savings bank deposits 125
)
G
Salaries and allowances 140
(U
Rent, taxes, insurance and lighting 40
Locker rent 5
ce
Repairs to bank property er 2
Commission, exchange and brokerage 24
Directors' fees and allowances 25
m
Transfer fees 2
om

Local committee fees and allowances 10
-C
Audit fees 12
SC
Printing and Stationery 4

Loss on sale of Govt. Securities 5
A
Loss on sale of furniture 2

K
Postage and telegrams 2

Depreciation 10
Advertisement 4
Legal charges 2
(I) Rebate on bills discounted on 31st December, 1986 RS 19,000.
36
(II) Rebate on bills discounted on 31st December, 1987 RS 26,000.
(III) Bad debts to be written off RS 40,000.
(IV) Provide for taxation RS 50,000.
9. The following Ledger balances of Bank of Purasawalkam Ltd., As on 31.12.1994 are

furnished to you. Prepare Profit and Loss Account and Balance Sheet as per requirement of law.
Particulars (RS. In
Thousands)
Reserve fund 1,200
)
Bad debts written off 128
G
General expenses 182
(U
Current accounts 20,245
Interest paid 160
Deposit accounts
ce 6,920
er
Profit and Loss Account B/FD 229
m
Bills receivable for customers 1,500
Discounts 244
om
Endorsements and guarantees 575

Commission 45
-C
cash 225
SC
interest earned 550

Balance with RBI 2,030
A
Endorsements and guarantees (constituent liabilities) 575

K
Balance Ruth foreign correspondents 1,206

Bills for collection 1,500
Borrowings from banks 6,482
Cash credit and overdrafts 15,457
Investments 9,882
Bills discounted 6,228
Premises 2,217
Share capital 2,000
37
The following information is furnished:
(A) Rebate on bills discounted to be provided RS 64,000.

(B) The bank has paid an interim dividend of RS 2,00,000 during the year.
10. Give the format of Balance Sheet?.
UNIT II
11. A life Assurance Company prepared it’s Revenue A/c for the year ended 31.03.2006 and
ascertained it’s Life Assurance fund to be RS 28,35,000. It was found late that the following had
)
been omitted from the accounts:
G
(U
(A). Interest accrued on investments RS 39,000;
Income tax liable to be deducted thereon is estimated to be RS 10,500.
(B). Outstanding premiums RS 32,800.

ce
er
(C). Bonus utilised for reduction of premium RS 6,750.
m
om
(D). Claims intimated but not admitted RS 17,400.
(E). Claims covered under reinsurance RS 6,500.

-C
What is the Life Assurance Fund?

SC
12. The Life fund of a Life Insurance Company on 31.3.2006 showed a balance of RS 54,00,000.
A
However, the following items were not taken into account while preparing the Revenue A/c for
K
2005 – 06:
Particulars RS
(a). Interest and dividends accrued on investments 20,000
(b). Income tax deducted at source on the above 6,000
(c). Reinsurance claims recoverable 7,000
(d). Commission due on reinsurance premium paid 10,000
(e). Bonus in reduction of premiums 3,000
38
13. A Life Insurance Company gets its valuation made once in every two years. It’s Life
Assurance fund on 31.3.2006 amounted to RS 63,84,000 before providing RS 64,000 for the
share holders' dividend for the year 2005 – 06. It’s actuarial calculation due on 31.3.2006
disclosed a net liability of RS 60,80,000 under assurance annuity contracts. An interim bonus of
RS 80,000 was paid to the policy holders during the two years ending 31.3.2006.
Prepare a statement showing the amount now available as bonus to policy holders.
14. From the following figures appearing in the books of Fire Insurance division of a General
company, show the amount of claim as it would appear in revenue account, by preparing
)
schedule 2, claims incurred.
G
(U
Particulars Direct Business Re – insurance
RS ('000) RS ('000)
ce
Claims paid during 2005 – 06 4,670 700
Claims payable – 1.4.2005 763 87
er
31.3.2006 813 53
m
Claims received - 230

om
Claims receivable – 1.4.2005 - 65

31.3.2006 - 113
-C
Expenses of Management 230

(Includes RS 35 thousand surveyor's fees and RS
SC
45 thousand legal expenses for settlement of

A
claims)
K
15. Compute commission expenses to be derived in schedule 2 of a Life insurance company:
Particulars RS
Commission on direct business 93,000
Commission on reinsurance accepted 40,000
Commission on reinsurance cedes 50,000
39
16. Calculate the net claim to be debited to Revenue a/c of an Insurance Company:
Particulars RS
Claims paid for the year ended 31.03.2006 5,75,000
Claims covered under reinsurance 28,000
17. The Revenue account of a Life Insurance Company shows the Life Insurance Fund on
31.03.2006 at RS 48,78,000 before taking into account the following items.
)
Particulars RS
G
(a). Claims intimated but not admitted 65,500
(U
(b). Bonus utilised in reduction of premiums 6,500
ce
(c). Interest accrued on securities 19,500
(d). Outstanding premiums 18,000
er
(e). Claims recovered under reinsurance 27,000
m
Pass the entries giving effect to the above adjustments and show the Life fund at the end of
the year 2005 – 06 after making the above adjustments.
om
18. From the following particulars, prepare the fire revenue account for 2005 – 06:
-C

SC
Claims paid 235

A
Premiums received 600

K
Reinsurance premium 60
Commission 100
Provision against unexpired risk on 1.4.2005 260
40
19. Form the following balance as at 31.3.06 in the books of General Insurance Co. Ltd., Prepare
a Revenue account in respect of fire insurance carried on by them.

Claims paid 480
Claims outstanding on 1.4.05 40
Claims intimated and accepted but not paid on 31.3.06 70
Premium received 1,200
Reinsurance premium paid 120
Commission 200
)
G
Commission on reinsurance ceded 8
(U
Commission on reinsurance accepted 4
ce
Provision for unexpired risk on 1.4.05 er 400
Additional provision for unexpired risk on 1.4.05 20
Bonus utilised in reduction of premium 12
m
Reinsurance recovered of claim medical expenses regarding claims 8

om
Medical expenses regarding claims 5

Loss on sale of Motor car 3.5
-C
Bad debts 2.5

SC
Refund of double taxation 4.5

Interest and Dividend 8
A
Income tax deducted thereon 1.5

K

Profit on sale of investments 3.5
Rent of staff quarters deducted from salaries 2.4
Depreciation for furniture 4.6
Provide for additional reserve for unexpired risk at 1% of the net premium in addition to
opening balance of additional reserve.
20. Discuss about the Duties, Power and Function of IRDA?.
41
UNIT III
21. Ratnakar Electricity Supply Company Co Ltd. (which adopts the Double Account Systems)
re-built and re-equipped a power station and the connecting lines during the year 2007. For this
purpose they purchase materials worth Rs.10,85,000 and used stores worth Rs.4,90,000 from
their existing stocks.
The cost of labour came to Rs.5,22,000. The estimated supervisory overheads attributed to
this projects were Rs. 13,000. The station was erected in 1990 at a cost of Rs.5,00,000 and the
index of costs in this line stood in 2007 @ 385, taking 1990 as the base yaer.
)
G
Discarded materials from the old station fetched Rs.12,000.
(U
Calculate the amount to be capitalized and the amount to be charged on Revenue Account.
ce
22. The Gurgaon Electricity Company Ltd. Decides to replace one of its old plants with a
modern one with a larger capacity. The plant when installed in 1940 cost the company Rs 24
er
lakhs, the components of materials, labour and overheads being in the ratio of 5 : 3 :2. It is
m
ascertained that the costs of materials and labour have gone up by 40% and 80% respectively.
om
The proportion of overheads to total costs is expected to remain the same as before.
The cost of the new plant as per improved design is Rs 60 lakhs and in addition, material
-C
recovered from the old plant of a value of Rs 2,40,000 has been used in the construction of new
SC
plant. The old plant was scrapped and sold for Rs 7,50,000.
The accounts of the company are maintained under the Double Account System. Indicate
A
how much would be capitalized and the amount that would be charged to revenue. Show the
K
Ledger Accounts.
23. The CESC Limited decided to replace one of its old plants by an improved plant. This plant
was built in 1964 for Rs 67,50,000. To built a new plant of the same size and capacity it would
now cost Rs.1,00,00,00. The cost of the new plant with larger capacity was Rs.2,12,50,000 and
in addition, materials of the old plants valued at Rs.6,87,500 were used in the construction of the
new plant. The balance of the old plant was sold for Rs.3,75,000.
42
You are required to calculate the amount to be charged to Revenue Account and the amount
to be capitalized. Also show the plant Account and the Replacement Account.
24. The Jaipur Electric Supply Company Ltd. (which adopts the Double Accounts System) re-
built and re-equipped a power station and the connecting lines during the year 2007. For this
purpose they purchased materials of Rs.10,85,000 and used stores worth Rs.4,90,000 from their
existing stocks. The cost of labour came to Rs.5,22,000. The estimated supervisor over-heads
attributed to this project were Rs.13,000. The station was erected in 1975 at a cost of Rs.5,00,000
and the index of costs in this line stood in 2007 at 385, taking 1975 as the base year. Discarded
materials from the old station fetched Rs.12,000.
)
G
Show Journal Entries to record the above transactions and give working notes showing how
(U
you arrived at the figures.
ce
25. CESC Ltd. Decides to replace its old plants with a modern one with a larger capacity. The
plant was installed in 1940 at a cost of Rs.40 lakhs. The components of materials labour and
er
overhead are in the ratio of 5 : 3 : 2. It is ascertained that the cost of materials and labour have
m
gone up by 50% and 100% respectively. The proportion of overheads to total costs is expected to
om
remain the same as before.
The cost of the new plant as per the improved design is Rs.90 lakhs and in addition, materials
-C
recovered from the old plant having value of Rs.2,00,000 is used in the construction of the new
SC
plant. The old plant is scrapped and sold for Rs.7,50,000.

A
The accounts of the company are maintained under Double Account System. Show the
K
Journal Entries in the books of the CESC Ltd.
26. From the following information and details to the year ended 31 st march, 2008 an bearing in
mind
the provisions of the Electricity (Supply) Act,1948, indicate the disposal fo profits of X
Electricity
Corporation Limited:
43
Net profit before charging Security deposited of Customer 4,84,000
debenture interest 35,00,000 Customer Contribution to main 3,20,000
Fixed assets 4,20,00,000 lines 1,40,000
Depreciation written-off on fixed Preliminary expenses
assets 98,00,000
Loan from Electricity Board 1,20,00,000 Average fo current assets 23,70,000
6% Investments of Reserve fund excluding customers
(F.V. Rs. 90,00,000) 90,00,000 balances of Rs.6,20,000 4,40,000
)
6% Investments of the
G
Contingencies Reserve 76,00,000 Development Reserve 7,50,000
(U
Tariffs and Dividends Control 10% Debenture interest pain in the
ce
Reserve 8,40,000 year
er
The Reserve Bank of India rate of the relevant date was 8%.
m
27. The following balances relate to an electricity company and pertain to this accounts for the
om
year ended 31st december,2007:

-C
Share Capital 1,00,00,000 Depreciation Reserve on Fixed 80,00,000
SC
Reserve Fund (invested in 5% assets 75,00,000

Govt. Securities at per) 60,00,000 Consumers’ Deposits
A
Contingencies Reserve – Amounts contributed by consumer 2,00,000

K
invested in 6% State Govt. 20,00,000 towards fixed assets 5,00,000

Loans 30,00,000 Intangible assets 6,00,000
Loan from State Electricity 8,00,000 Tariffs and Dividend Control 20,00,000
11% Debentures 2,00,00,000 Current Assets – Monthly average
Development Reserve
Fixed Assets
44
The company earned a post tax profit of Rs.9 lakhs. Show how the company will be dealt with
under the provisions of the Electricity Act, assuming that the Bank rate during the year was 8%.
28. The following balance have been extracted, at the end of 2007, from the books of an
Electricity company:
Particulars Rs Partuculars Rs
Share capital 1,00,00,000 Consumers Deposited 40,00,000
Reserve Fund (invested in 8% Amounts contribution by
Govt. securities at par) 60,00,000 consumers towards cost of fixed 2,00,000
)
Contingencies Reserve invested assets 8,00,000
G
in 7% State Loan 12,00,000 Intangible assets 10,00,000
(U
Loan from State Electricity 25,00,000 Tariffs and Dividends Control 15,00,000
ce
12% Debentures 8,00,000 Current Assets (monthly average)
er
Development Reserve 2,50,00,000
m
Fixed Assets
Depreciation Reserve on fixed 30,00,000
om
assets
The company earned a profits of Rs.28,00,000 (after tax) in 2007. Show how the profits have to
-C
be dealt with by the company, assuming that the Bank rate was 10%. All working should form
SC
part of your answer:

A
29.The Saharanpur Electricity Company Ltd. Earned a profit of Rs.17,40,000 during the year
K
ended March 31,2008 after charging interest on debentures amounting to Rs.45,000 @ 7.5%.
You are required to show the disposal of profits assuming bank rate at 6% with the help of the
following data:
45
Fixed assets at cost 2,50,00,000 Contingency reserve investment 10,00,000
Preliminary expenses 5.00,000 Loan for electricity board 50,00,000
Monthly average of current Tariff and dividend control reserve 2,00,000
assets, including amount due Security deposit received from
from customers Rs.6,00,000 36,00,000 customers 5,00,000
Reserve fund (represented by Development reserve 5,00,000
6% Govt. securities 40,00,000
Total depreciation written - off 77,00,000
)
30. Describe the Distinguish characteristics of the final accounts of electricity company under
G
electricity (supply) Act, 1948.
(U
UNIT IV
ce
31. The balance sheet of C LTD and D LTD as at 31st December 1986 are as follows
er
Liabilities C LTD D LTD Assets C LTD D LTD
m
Share capital 2,00,000 1,00,000 Sundry assets 1,32,500 1,38,200

om
( in share of
RS 10 each
-C
General 18,000 20,000 Goodwill - 20,000

SC
reserve
Profit and 24,500 23,000 Share in D 1,40,000 -
A
loss a/c LTD at cost

K
Creditors 30,000 15,200

272500 158200 272500 158200
In the case of D LTD profit for the year ended 31 st December 1986 is RS 12000 and
transfer to reserve is RS 5000. The holding off C LTD in D LTD is 90% acquired on 30 th
June 1986
Draft a consolidated balance sheet of C LTD and it’s subsidiary.
46
32. The following are the balance sheet of H LTD and it’s subsidiary S LTD as on 31.3.1995
Liabilities H LTD S LTD Assets H ltd S LTD
Share capital 6,00,000 2,00,000 Machinery 3,00,000 1,00,000
RS 10 each
fully paid
General 1,50,000 70,000 Furniture 70,000 45,000
reserve
Profit & loss 70,000 50,000 70% share in 2,60,000 -
a/c S LTD at cost
)
G
Creditors 90,000 60,000 Stock 1,75,000 1,89,000
Debtors 55,000 30,000
(U
Cash at bank 50,000 10,000
ce
Preliminary - 6,000
expenses
er
9,10,000 3,80,000 9,10,000 3,80,000
m
H LTD acquired the share of S ltd on 30 June 1994. On 1st April 94, S ltd's general
om
reserve vand profit and loss account stood at RS 60,000 and 20,000 respectively. No part
of the preliminary expenses was written off in the year ended 31.3.95.
-C
Prepare consolidated balance sheet of H LTD and it’s subsidiary S LTD as on

31.3.95,giving all your Working note separately.
SC
33.X LTD purchased 60% shares of Y LTD on 1-1-02 when the balance on their P&L A/C and
A
General reserve were RS 1,50,000 and RS 1,60,000 respectively. On 31-12-02, the balance sheet
K
of Y LTD showed P&L A/c balance of RS 4,00,000 and General reserve RS 3,00,000. Calculate
capital profit and revenue profit.
34.Calculate minority interest from the balance sheet of Mumbai LTD
Balance sheet of Mumbai LTD as on 31-12-1997
Share capital 14,00,000 Sundry assets 10,00,000
7,00,000 share
47
of RS 2 each
General 6,00,000 Plant and 7,00,000
reserve as on machinery
1-1-97
Creditors 3,00,000 Other assets 1,50,000
P & L A/c as 2,00,000 Investment ( 6,50,000
on 31-12-97 80% of shares)
25,00,000 25,00,000
Madras LTD acquired 80% of the shares at RS 6,50,000.
)
G
35.S LTD has capital of RS 15,00,000 in share of RS 100 each. Out of this, 'H' LTD purchased
(U
75% shares at RS 17,50,000. The profit of S LTD at the time of purchase of shares by H LTD
we’re RS 7,50,000. S LTD decided to make a bonus issue out calculate the cost of control after
ce
the issue of bonus shares. er
1. Stock of RS 3,20,000 held by H LTD consists of RS 1,20,000 goods purchased from S
m
LTD who has charged profit on sale of 20%. H LTD, acquired 80% of shares of S LTD.
om
Calculate the amount of unrealized profit included in stock.

2. A subsidiary Co sold goods to it’s holding company on the basis of cost plus 25%. At the
-C
end of the year. Stock-in-trade of the holding company included such goods amounted to
RS 80,000. 25% of the shares of the subsidiary Co are held by outsiders. What is the
SC
amount of stock reserve required?

3. Prepare a consolidated balance sheet from the following balance sheet
A
K

Capital Rs 1400 1000 Sundry 885 1510
1 share assets
Creditors 350 190 Shares in 1,125 -
S LTD
900
shares at
cost
48
P & L A/c 260 320
2,010 1,510 2,010 1,510
On the date of acquisition of shares by H LTD in S LTD, the credit balance on latter’s P
&L A/c was RS 220. No dividends have been declared since that date.
4. Balance sheet as on 31.12.2000
Share 10,000 5,000 Sundry 16,000 10,000
)
G
capital RS assets
1 each
(U
Reserve 5,000 - 5000 6,000
ce
shares in
S LTD
er
P & L A/c 4,000 1,800 -
m
Creditors 3,000 3,200

om
22,000 10,000 22,000 10,000

Shares of S LTD we’re purchased by H LTD on 30th June 2000. On 1st Jan 2000 the
-C
balance sheet of S LTD showed a loss of RS 3000.

5. Give brief explanation about holding company?
SC
UNIT V
A
1.Calculate goodwill on the basis of three years purchase of the last five years average profits.
K
The profits for the last five years are: I year–Rs 4,800; II year – 7,200; III year - Rd 10.000; IV
year – RS 3,000 and V year Rs.5,000.
2.2G Ltd. Proposed to purchase the business carried on by ThiruDass. Goodwill for this purpose
is agreed to be valued at three years purchase of the profit of the post four years. The appropriate
weights to be use are: 2013 – 1; 2014 – 2; 2015 – 3; 2016 – 4; Profits for these years were: 2013
–Rs 10,000; 2014 –RS 11,000; 2015 – RS 12,000 and 2016 –RS 15,000.
Compute the values of the goodwill of the firm.
49
3.The net profit for the 5 years is
Year 2011 2012 2013 2014 2015

Profit 10,000 15,000 15,000 20,000 30,000
The capital employed in the business is RS 1,50,000. Normal rate of return is 10%.
Calculate the goodwill on the basis of 4 years purchase of average profits and capitalisation of
Average profits method.
)
G
4. K & Co. Decided to purchase a business for RS 2,40,000. It’s profits of the last four years
(U
were 2013 RS 60,000; 2014 – RS 75,000; 2015 –RS 72,000 and 2016 –RS 69,000. The owner of
the business was personally managing it. A manager to replace him was has to be paid RS 9,000
ce
p.a. Calculate the value of goodwill if it is valued on the basis of the average net profit for the
last four years.
er
m
5. From the following information calculate the value of goodwill according to super profit basis
at 5 years purchase:
om
i) Average capital employed in the business RS 7,00,000

-C
ii) Net trading profit of the firm for the past three years RS 1,07,000; RS 90,700 and RS
SC
1,15,500
A
Respectively
K
iii). Rate of interest expected from capital 12%
IV). Remuneration to partners for their service RS 12,000 per annum
v). Sundry assets of the firm RS 7,54,762; Sundry liabilities RS 31,329.
6. The net profit for the five years is:
Year 2012 2013 2014 2015 2016

Profit 10,000 15,000 15,000 20,000 30,000
50
The capital employed in the business is RS 1,50,000 and normal rate of return is 10%.
Calculate the value of goodwill on the basis of 4 years purchase of super profit.
7. The net profits of a company after providing for taxation for the past five years are RS 78,000,
RS 82,000, RS 88,000, RS 93,000, and RS 99,000. The capital employed in the business is RS
8,00,000 on which a reasonable rate of return of 10% is expected. It is expected that the company
will be able to maintain its super profits for the next five years. Calculate the value of the
goodwill of the business on the basis of an annuity of upper profits, taking the present value of
)
an annuity of one rupee for the five years at 10% interest as RS 3.78.
G
(U
8. Mr. K has invested a sum of RS 3,00,000 in his own business which is a very profitable one.
The annual profit earned from his business is RS 60,000 which include a sum of RS 10,000
ce
received as compensation for acquisition of a part of his business premises. The income could
have been invested in deposit for a period of five years and earn 10% interest and be himself
er
could earn RS 7,200 per annum in alternative employment. Considering 2% as four
m
compensation for the risk involved in the business calculate the value of goodwill of his business
om
on capitalization of super profits at the normal rate of return.
9. The following is a balance sheet of a company as on 31 st Dec 2016:

-C

SC
Equity share capital of RS 100 12,00,000 Fixed assets 14,60,000

A
each
K
Reserves and surpluses 2,50,000 Investments (5% securities) 1,20,000

Creditors 5,60,000 Current assets 5,40,000
Provision for taxation 1,43,000 Preliminary expenses 33,000
21,53,000 21,53,000
The provision for taxation for the current year is 55% of net profit. Return on capital
employed in this industry is 10%. Ascertain the yield value of share.
10. Discuss about the needs for valuation of goodwill?
51
SECTION C
UNIT I
1.From the following particulars, prepare a Profit and Loss A/c of New Bank Ltd, for the year
ended 31.12.1996.
Particulars RS. (In Particulars RS. (In

'000) '000)
)
Interest on loans 260 Interest in cash credits 225
G
Interest on fixed deposits 280 Rent and taxes 20
(U
Rebate on bills discounted 50 Interest on overdrafts 56
Commission charged to 9 Directors' and Auditors' fees 4
customers
ce
56 Interest on savings bank 70
er
Establishment expenses 200 accounts 2
m
Discount on bills discounted 45 Postage and telegrams 2
Interest in current accounts 3 Sundry charges
om
Printing and advertisements

-C
2. From the following information relating to Lakshmi Bank Ltd., Prepare the Profit & Loss for
SC
the year ended 31st December, 1987.

A
RS. RS.
K
Rent received 72,000 Salaries and allowances 2,18,800

Exchange and commission 32,800 Postage 5,600
Interest on fixed deposited 11,00,000 Sundry charges 4,000
Interest in saving bank A/c 2,72,000 Director's & Auditor's fees 16,800
Interest on overdrafts 2,16,000 Printing 8,000
Discount on bills discounted 7,80,000 Law charges 3,600
Interest in current accounts 1,68,000 Locker rent 1,400
Interest in cash credits 8,92,000 Transfer fees 2,800
52
Depreciation on bank property 20,000 Interest on loans 10,36,000
3. The following is the Trial Balance extracted from the books of Town Bank Ltd.
Particulars RS. RS.

Balances with banks 46,350 Share capital 3,00,000
Investments in Govt. Bonds 1,94,370 Securities deposit of employees 15,000
Other investments 1,55,630 SB accounts 7,420
)
G
Gold bullion 15,130 Current accounts 97,000
(U
Interest accrued on investments 24,620 Fixed deposits 1,13,050
Silver 2,000 Reserve fund 1,40,000
ce
Constitution's liability for Borrowing from banks
er 77,230
Acceptances, etc. 56,500 Profit and Loss A/c 6,500
Building 65,000 Bills for collection 43,500
m
Furniture 5,000 Acceptances and endorsements 56,500

om
Money at call 26,000 Interest 72,000

Loans 2,00,000 Commission 25,300
-C
Bills discounted 12,500 Discounts 42,000

SC
Interest 7,950 Rent 600

Bills for collection 43,500 Profit on Bullion 1,200
A
Audit fees 5,000 Miscellaneous income 2,700

K
Loss on sale of furniture 1,000 Accumulated depreciation on

Directors' fees 1,200 Building 20,000
Salaries 21,200
Postage 50
Managing director's remuneration 13,000
Loss on sale of investments 30,000
Cash in hand 25,000
Cash with RBI 50,000
53
Branch adjustment A/c 20,000
------------- -------------
10,20,000 10,20,000
You are required to prepare the Profit and Loss Account and Balance Sheet after taking into
consideration the following
(V) Baddebts RS 500.
)
G
(VI) Rebate on bills RS 1,000.
(U
(VII) Current year's depreciation on building RS 2,000.
(VIII) Some current. Accounts are over drawn to the extent of RS 25,000 and total of credit
ce
Balances is RS 1,22,000. er
m
4. From the following figures taken from the books of Money Bank Ltd., Prepare Profit and Loss
om
Account and Balance Sheet as on 31.12.1987.

-C
10,000 shares of RS 100 each RS 50 paid up 500

SC
Reserve fund investments 350

Fixed deposits 950
A
Saving bank deposits 3,000

K
Current deposits 8,000

Money at call and short notice 450
Investments 2,500
Interest accrued and paid 200
Rent 20
Salaries ( including GM's salary RS 24,000) 69
Directors fees 6
54
General expenses 10
Profit and Loss Account – 1.1.87 200
Bank draftsman 310
Unclaimed dividends 20
Premises ( after depreciation up to 31.12.1986 RS 1,00,000) 1,200
Cash 150
Stock of stationery 10
Cash with RBI 1,400
Traveller's cheques 500
)
Balance with other banks 1,600
G
Letters of credit 300
(U
Borrowed from banks 800
ce
Owing by foreign correspondents 100
Interest and discounts 700
er
Commission 50
m
Bills discounted 600
om
Loans 3,000
Cash credits and overdrafts 4,000
Bills for collection 140
-C
Acceptances on behalf of customers 200

SC
Dividend for 1986 50

Branch adjustments (Cr) 10
A
K
Rebate on bills discounts for unexpired term is RS 5,000. A provision for doubtful details
amounting to RS 30,000 is required. Create provision for taxation to the extent of RS 1,00,000.
Charge 5% depreciation on premises on original cost. Traveller's cheques pain amounted to
RS.20,000.
55
5. From the following ledger balances of People Bank Ltd., Prepare Profit and Loss Account.
Particulars RS.
Interest paid on deposits 1,60,520
Commission exchange and brokerage 44,240
Interest received 5,32,260
Salary and Provident fund 40,000
Profit on sale of fixed assets 30,000
)
G
Postage and Telephones 20,000
(U
Note : Provide for taxation RS 20,000 and rebate on bills discounted was RS 14,380.
6. From the following balances of Reliable Bank Ltd., As at 31 st March 1991, prepare a Profit
ce
and Loss Account and a Balance Sheet for the relevant year.
er
Balance Sheet as at 31st March 1991
m
om
(RS. In (RS. In
'000) '000)
Share capital (equity shares of Borrowing from banks 2,100
-C
RS. 3,300 Cash with other banks 1,800

SC
10 each, fully paid) 640 Cash with Reserve Bank 3,000

Reserve fund 10,000 Cash in hand 250
A
Current accounts 5,000 Interest & discount received 10,080

K
Savings banks accounts 2,500 Bills payable 4,200

Fixed deposit accounts 800 Bills discounted & purchased 3,000
Profit and Loss account 600 Term loans 4,500
Money at call and short notice Cash credits 11,670
Salaries ( including RS 3,200 Sundry creditors 500
1,20,000 to 50 Bills for collection 980
General manager) 7,500 Acceptance on behalf of
Directors' fees 70 Customers 2,500
56
Investments (at cost) 40 Interest accrued and paid 1,200
Audit fees
Building ( net of depreciation)
Up to 31.3.90 – RS 5,60,000
Depreciation has to be provided at 5% on the original cost of building. A provision of RS.

2,50,000 for bad debts and RS 30,00,000 for taxation needs to made.
)
7. The following are the balance of the Indra Bank Ltd., As at 31.3.1993.
G
(U
Trial balance as on 31.3.1993
ce
Particulars Debit Particulars Credit
Cash in hand 3,14,644 Share capital:
er
Cash with RBI 6,21,858 2,50,000 shares of RS 20 each
m
Money at call and short notice 2,79,416 RS 3 7,50,000
om
Bills discounted 8,33,483 Paid

Advances to customers 13,42,120 1,37,500 shares of RS 10 each 1,37,500
Liability of customers for RS 1 5,00,000
-C
Endorsements 1,61,599 Paid 25,81,343

SC
Bank premises 2,60,000 Reserve 6,85,135

Shares in subsidiary Current accounts 1,61,599
A
companies 2,48,000 Deposit accounts 1,78,617

K
At cost Endorsements for customers 56,005

Shares in Affiliated companies 1,68,000 Acceptance for customers 1,28,139
At cost 2,24,220 Dividend equalisation fund 1,41,010
Balance with other banks 6,18,358 P & L A/c on 1.4.92 38,461
Investments at cost 42,048 Interest received 1,54,859
Interest paid 1,91,363 Discount charges 86,251
General expense 32,188 Commission charges
Dividend : Interim 56,005 Dividends received less tax
57
Final
Liability of customers for 1,78,617
Acceptances ----------------- ---------------
55,98,919 55,98,919
Adjustments:
(III) Rebate on bills discounted Rate 3,271.

(IV) RS 20,000 to be allocated to reserve.
)
G
You are required to prepare Profit and Loss Account and Balance Sheet.
(U
8. From the following information, prepare Profit and Loss Account of Swadesh Bank Ltd,., For
the year ended 31st December 1987.
Particulars
ce RS. ('000)
er
Interest on fixed deposits 430
m
Interest on loans 650

om
Discount on bills discounted 415

Interest on over drafts 210
-C
Interest in cash credits 410

Interest on savings bank deposits 125
SC
Salaries and allowances 140

A
Rent, taxes, insurance and lighting 40

K
Locker rent 5
Repairs to bank property 2
Commission, exchange and brokerage 24
Directors' fees and allowances 25
Transfer fees 2
Local committee fees and allowances 10
Audit fees 12
58
Printing and Stationery 4
Loss on sale of Govt. Securities 5
Loss on sale of furniture 2
Postage and telegrams 2
Depreciation 10
Advertisement 4
Legal charges 2
)
G
(V) Rebate on bills discounted on 31st December, 1986 RS 19,000.
(U
(VI) Rebate on bills discounted on 31st December, 1987 RS 26,000.
(VII) Bad debts to be written off RS 40,000.
ce
(VIII) Provide for taxation RS 50,000. er
9. The following Ledger balances of Bank of Purasawalkam Ltd., As on 31.12.1994 are
m
furnished to you. Prepare Profit and Loss Account and Balance Sheet as per requirement of law.
om
Particulars (RS. In
Thousands)
-C
Reserve fund 1,200

Bad debts written off 128
SC
General expenses 182

A
Current accounts 20,245

K
Interest paid 160

Deposit accounts 6,920
Profit and Loss Account B/FD 229
Bills receivable for customers 1,500
Discounts 244
Endorsements and guarantees 575
Commission 45
cash 225
59
interest earned 550
Balance with RBI 2,030
Endorsements and guarantees (constituent liabilities) 575
Balance Ruth foreign correspondents 1,206
Bills for collection 1,500
Borrowings from banks 6,482
Cash credit and overdrafts 15,457
Investments 9,882
Bills discounted 6,228
)
Premises 2,217
G
Share capital 2,000
(U
ce
The following information is furnished: er
(C) Rebate on bills discounted to be provided RS 64,000.
m
(D) The bank has paid an interim dividend of RS 2,00,000 during the year.
om
10. Give the format of Balance Sheet?.
UNIT II
-C
11. A Life Insurance Co. disclosed a fund of RS 20,00,000 and the Balance Sheet total RS
SC
45,00,000 on 31.3.2006 before taking into consideration:

A
(A). A claim of RS 10,000 intimated and admitted but not paid during the year.
K
(B). A claim of RS 6,000 outstanding in the books for 8 years and written back.
(C). Interest on securities accrued RS 800 but not received during the year.
(D). Premium of RS 600 is payable under reinsurance.
(E). Reinsurance recoveries RS 26,000.
(F). Bonus utilised in reduction of premium RS 10,000.
60
(G). Agent's commission to be paid RS 8,000.
Pass the necessary journal entries for the above omissions, re- compute the fund and show
the balance sheet total after making the above adjustments.
12. The following balances are abstracted from the books of New Bharat Life Insurance Co. Ltd.,
as on 31.3.2006:
Debit Balances RS ('000) Credit Balances RS ('000)

Life Assurance Fund (1.4.2005) 15,00,000 Claims paid during the year 64,900
Premiums 4,96,000 Annuities 2,050
)
G
Consideration for annuities 15,000 Bonus in reduction of 1,600
(U
granted 1,00,000 premiums 2,400
Interest & Dividends 750 Medical fees 4,000
ce
Fines for revival of policies 20,750 Surrenders 18,650
Reinsurance premium 4,500 Commission 22,000
er
Claims outstanding (1.4.2005) Management expenses 8,500
m
Income tax on Dividends

om
Prepare Revenue A/c after making the following adjustments:

-C
SC
Particulars RS. ('000)

(I).Outstanding balances:
A
Claims 14,000
K
Premiums 4,600
(II). Future bonus for premium 2,400
(III). Claim under reinsurance 8,000
61
13. From the following Trial Balance, Prepare the Revenue A/C and the Balance Sheet of the
Great Life Assurance Co. Ltd.
Trial Balance as on 31.3.2006
Debit Balances RS. Credit Balances RS.

('000) ('000)
Loans online policies 4,200 Premiums 3,65,900
Expenses of management 18,200 Profit on sale of investments 10,800
Deposit with RBI – Claims admitted but not paid 58,400
)
Govt. Of India Securities 2,00,000 Sundry trade creditors 7,700
G
Commission 9,800 Life Assurance fund (1.4.05) 28,00,000
(U
Freehold Ground rents 1,68,000 Consideration for annuities 12,200
ce
Bonus in cash 4,200 granted 1,20,500
Surrenders 21,100 Interest, dividends & rents - gross
er
Claims by maturity 1,04,700
m
Claims by death 1,72,600
House property 59,800
om
Annuities paid 7,600

Outstanding premiums 21,600
-C
Income tax on interest receipts 7,100

SC
Agents' balances 6,800

Port Trust debentures, Interest
A
and principal guaranteed by 5,28,200

K
Govt. 12,700
Cash at Bank, Current A/c 1,750
Cash in hand 1,42,500
Foreign Govt. Securities 1,500
Office furniture
Fully paid up share capital in
Limited liability companies 1,21,600
Registered in India 150
62
Stock of policy stamps in hand 6,61,400
Mortgage in India 2,06,400
Mortgage out of India 7,19,000
Loans on Govt. Securities 1,74,600
Loans on company policies
33,75,500 33,75,500
14.Indian Insurance Co. Ltd furnishes you the following information:
(I). On 31-3-2005 it had reserve for unexpected risks to the tune of RS 40 crores. It comprises
of RS 15
)
G
Crores in respect of Marine insurance business, RS 20 crores in respect of Fire Insurance
(U
business
ce
And RS 5 crores in respect of miscellaneous insurance business.
(II). It is the practice of the company to create reserves at 100% of net premium income in
er
respect
m
Of Marine insurance policies and at 50% net premium income in respect of Fire and
om
Miscellaneous insurance policies.

(III). During 2005 – 06, the following business was conducted.
-C
Particulars Figures RS. Figures RS. In

In Crores
SC
Crores
Marine Fire Miscellaneous
A
Permia collected from:

K
(a) Insureds in respect of policies issued 18 43 12

(b) Other insurance companies in respect
of 7 5 4
Risks undertaken.
Permia paid / payable to other insurance 6.7 4.3 7
companies on business ceded.
Indian Insurance company asks you to:

63
(a) Pass journal entries relating to “ unexpired risks reserve”.
(b) Show in columnar form “ unexpired risks reserve A/c “ for 2005 – 06.
15. From the following particulars relating to 'Z' Insurance Co. Ltd., prepare Fire Revenue A/c
for the year ending 31.3.2005:
Debit Balances (RS. In Credit Balances (RS. In '000)

'000)
Claim paid 4,80,000 Premium received 12,00,000
Claims outstanding on 1.4.04 40,000 Reinsurance premium paid 1,20,000
)
Claims intimated but not Commission 2,00,000
G
Accepted & paid on 31.3.05 10,000 Commission on reinsurance
(U
Claims intimated and accepted Ceded 10,000
But not paid on 31.3.05 60,000 Provision for unexpired risk
Commission on reinsurance on
ce 4,00,000
er
Accepted 5,000 1.4.04
m
Expenses of management 3,05,000 Additional provision for 20,000
Bonus in reduction of premium 12,000 Unexpired risk on 1.4.04
om
-C
You are required to provide for additional reserve for unexpired risk at 1 % of the net
premium in addition to the opening balance.
SC
16. From the following balances, prepare the fire insurance revenue account for the year ended
A
31.3.2006 of ABC fire insurance Co. Ltd.

K
Debit Balances RS. ('000) Credit Balances RS. ('000)

Commission on reinsurance Audit fees 2,500
Accepted 1,86,458 Professional taxes 2,875
Commission on direct business 1,95,172 Bad debts written off 2,206
Depreciation on furniture 650 Claims under policies less
Depreciation on Library 148 Reinsurance paid during the
Depreciation on Motor car 6,240 Year 1,52,930
64
General Manager's salary 12,074 Reserve for unexpired risk as
Telephone 24,000 at 3,66,954
Postage & telegrams 5,100 31.3.05
Rent 62,500 Additional reserve for 45,824
Travelling expenses 45,600 unexpired
Motor car expenses 45,500 Risk as at 31.3.05 9,89,980
Establishment 24,000 Premiums received less
Bonus 24,000 Reinsurance 3,41,208
Stationary 35,550 Commission on reinsurance 6,264
)
Newspapers & Periodicals 14,062 Ceded 1,198
G
Legal expenses 23,400 Unpaid claims on 31.3.06 250
(U
Electricity charges 16,100 Unpaid claims on 31.3.06
ce
Provident fund contribution 11,875 Miscellaneous expenses
You are required to make 40% of the net premium received as provision for unexpired risk
er
as at 31.3.06 and 10% of the net premium as additional reserve for the same.
m
17. Zaldi pay Insurance Co. Ltd has furnished the following information for preparation of
om
revenue account for the insurance business for the year ended 31.3.2006 and it’s Profit and Loss
A/c for the year.
-C
Debit Balances (RS. In Credit Balances (RS. In

SC
'000) '000)
Claims admitted but not paid 42,376 Bad debts 2,500
A
Commission paid 50,000 Claims paid 15,000

K
Commission on reinsurance P & L appn. A/c 10,000

Received 12,000 Premium received less
Share transfer fees 5,000 Reinsurance 5,52,000
Expenses of management 78,000 Claims outstanding as on 27,000
Reserve for unexpired risk as 1.4.05 18,500
on 2,30,000 Dividend on share capital
1.4.05 40,000
Additional reserve on 1.4.05
65
The following further information has also to be considered:
(i) Premium outstanding at the end of the year RS 40,000 thousands.

(ii) Additional reserve at 10% of net premium to be maintained
(iii) It is the policy of the company to maintain 50% premium towards reserves for
unexpired risks.
18. From the following balance of united general Insurance Co. Ltd. As on 31.3.2006 prepare:
)
(I). Fire revenue A/c. (II). Marine revenue A/c and (III). Profit & Loss A/c
G
(U
Debit Balances (RS. '000) Credit Balances (RS.
'000)
ce
Provision for unexpired risk on Interest, dividends, etc. 28
1.4.05: Fire 500 Difference in exchange (Cr) 0.6
er
Marine 1,640 Miscellaneous receipts 10
Additional reserve on 1.4.05: Profit on sale of land 120
m
Fire 100 Premium received:
Bad debts: Fire 1,200
om
Fire 10 Marine 2,160

Marine 24 Expenses of management:
Auditors fees 2.4 Fire 290
-C
Directors fees 10 Marine 800

Share transfer fees 1.6 Commission earned on
SC
Bad debts recovered 2.4 Reinsurance ceded:

Claims paid & outstanding: Fire 60
Fire 380 Marine 120
A
Marine 760
Commission paid:
K
Fire 180
Marine 216
Depreciation 70
Provision for unexpired risk is to be kept at 50% of the premiums for fire and at 100%
marine departments. The additional reserve in case of fire insurance is to be increased by 5% of
the net premium.
66
19. From the following Trial balance as on 31.3.2006 drawn from the books of Calcutta General
Insurance Co. Ltd and with the help of the future information, draw up the separate revenue
accounts, Profits & Loss account for 2005 – 06 and a Balance Sheet as on 31.3.2006.
Debit Balances (RS. '000) Credit Balances (RS. '000)

Claims paid less reinsurance: Share transfer fee 200
Fire 2,00,000 Compensation from L.I.C
Marine 75,000 (Transferred to P & L A/ c) 2,00,000
Miscellaneous 1,50,000 General reserve 50,000
Commission paid: Share capital (equity shares of
)
G
Fire 45,000 RS 10 each) 3,00,000
(U
Marine 30,000 Balance of funds as on 1.4.05:
Miscellaneous 37,000 Fire 2,50,000
ce
Expenses of management: er Marine 50,000
Marine 24,000 Miscellaneous 1,00,000
Fire 30,000 Unclaimed dividend 5,000
m
Miscellaneous 22,000 Amount due to other insurers 1,75,000

om
Interest accrued but not due 5,000 Sundry creditors 25,000

Amount due from other insurers 85,000 P & L A/c (1.4.05) 30,000
-C
Furniture (cost 8,000) 7,000 Interest & dividends (net) ( not

SC
Building (cost 1,50,000) 1,40,000 Relating to any fund) 20,000

Cash in hand 8,200 Investments reserve 50,000
A
Cash at Bank in current A/c 2,50,000 Outstanding claims as on 1.4.05:

K
Investments (at cost): Marine 10,000

Deposit with R.B.I ( Central Fire 30,000
Govt. 1,00,000 Miscellaneous 20,000
Securities) 6,50,000 Commission on reinsurance
Central Govt. Securities 2,00,000 ceded: 15,000
State Govt. Securities Fire 18,000
Fully paid shares of Joint stock 50,000 Marine 10,000
Companies Miscellaneous
67
Premium less reinsurance:
Marine. 2,00,000
Fire. 3,00,000 7,50,000
Miscellaneous. 2,50,000
21,08,200 21,08,200
(i) Outstanding claims as on 31.3.06 ( less reinsurance)

Fire. -. RS 40,000 thousands
Marine. -. RS 20,000 thousands
)
G
Miscellaneous. -. RS 25,000 thousands
(U
(ii) Market value of investments in 31.3.06 – RS 8,90,000 thousands.
(iii) Deprecation on furniture @ 10% and on Buildings @ 2% to be charges to Profit &
ce
Loss A/c er
(iv) Transfer to general reserve RS 2,00,000 thousands.
(v) Reserve for unexpired risks to be provided @ 50% of the premium income for the
m
year.
om
(vi) Ignore taxation.
20. Discuss about the accounting principles for preparation of Financial Statement?
-C
UNIT III
SC
21. The following balances were extracted from the books of the Atomic Electricity Supply
A
Company Ltd. Prepare a Revenue Account, Capital Account and Balance sheet.
K
A call of Rs.10 per share was payable on March 31, 2008 and arrears are subject to interest at
5% p.a. Depreciation to be provided for: Buildings 2.5%; Machinery 7.5%;Transformers, etc.
10%; Meters and electrical instruments 15%; Depreciation on additions to be charged for six
months. Transfer to contingency reserve @ ½% of the cost of fixed assets.
The Atomic Electricity Supply Company Ltd.
Trail balance as on March 31, 2008
68
Figures
of March Particulars DR. Cr.
31, Rs Rs
2007
Rs
Authorised Capital : 1,00,000 shares of Rs 100 each
20,00,000 Subscribed : 50,000 shares of Rs 50 each 25,00,000
15,00,000 6% Debentures 15,00,000
1,00,000 Depreciation Fund 1,00,000
)
- Calls - in – arrears 1,00,000
G
9,30,000 Freehold land 9,30,000
(U
4,00,000 Buildings 5,00,000
ce
6,00,000 Machinery at station 10,00,000
5,00,000 Mains 8,00,000
er
1,00,000 Transformers, Motor, etc. 2,00,000
m
50,000 Meters 1,50,000
om
30,000 Electrical instruments 40,000

1,60,000 Cables, Mains, etc 2,35,000
25,000 Furniture and Fixtures 25,000
-C
Coal and Fuel 1,90,000

SC
Oil, Waste, engine – room stores 75,000

Coal, oil, waste, etc., in stock 10,000
A
Wages at station 3,00,000

K
Repairs and replacements 50,000

Rates and taxes 30,000
Salaries(including that of Secretary and Manager) 1,50,000
Directors’ fees and remuneration 1,00,000
Law and incidental expenses 30,000
Sale by meter 8,75,000
Sale by contract 5,00,000
69
Meter rent 30,000
Sundry Creditors 1,00,000
Sundry Debtors 3,00,000
Cash in hand and at bank 3,30,000
56,05,000 56,05,000
22. The following balances are extracted from the books of M/s. Flashlight Electric Company
Ltd:
)
G
(i) Fixed assets : Expenditure uo to 1.1.2007:
(U
(a) Land and Buildings Rs.10,00,000: (b) Machinery Rs.15,00,000
(ii) Additions during the year – Machinery Rs.3,50,000
(iii)
ce
Depreciation Fund : (a) Machinery Rs.3,00,000: (b) Buildings Rs. 1,00,000
er
(iv) Authorised Capital Rs.50,00,000 divided into equity shares of Rs 100 each
Issued and fully paid – up 20,000 equity shares of Rs 100 each (including 2,500 equity
m
(v)
shares
om
Issued during the year)

(vi) 7.5% Debentures Rs.10,00,000 secured by a charge on Fixed Assets
-C
(vii) Sundry Creditors Rs.2,50,000; Reserve Fund Rs.5,00,000;Reserve Fund Investments at

SC
cost
Rs.5,00,000; ( Market value Rs.5,25,000)
A
(viii) Stock Rs.3,02,500; Sundry debtors Rs.4,50,000; Cash at Bank Rs.2,00,000; Cash in
K
Hand
Rs.50,000
(ix) Profit and Loss Account (Cr.) Rs.2,02,500
You are instructed to prepare:
(i) The Balance Sheet as on December 31,2007 according to Schedule VI to the Companies
Act, 1956
Under the Single Account System (Previous figures year’s not required)
(ii) (a) Capital Account
70
(b) General Balance Sheet as on the same date under the Double Account System.
23. X Electricity Company Limited decides to replace one of its old plants with a modern one in
April, 2006. The plant when installed in the year 2000. costed the company Rs 26 lakhs, the
components of materials and labour being in the ratio 7 : 3. It is ascertained that the cost of
labour and materials have risen by 30% and 25% respectively. The cost of new plant is Rs 66
lakhs and in addition old materials worth Rs.92,000 are reused. Old materials worth Rs.1,68,000
are sold. Under Double Accounting System compute the following:
(i) The amount to be written off to Revenue Account

(ii) The amount to be Capitalised
)
G
(iii) Draw up the necessary journal entries
(U
(iv) Draw up the Replacement Accounts.
24. From the following particulars available in respect of Powerful Electric Supply Company
ce
Limited as on 31st March 2008, wok out the (i) capital base, (ii) reasonable return; and (iii)
surplus and give the calculations for disposal of surplus, if any.
er
m
Fixed Assets 60,00,00,000 Debentures 10,00,00,000

om
Accumulated Depreciation 20,00,00,000 Tariff and Dividends Control

Cost of Licence 1,00,00,000 Reserve 3,00,00,000
-C
Depreciation Reserve Fund Security Deposit received from

SC
Investment 20,00,00,000 Consumers 3,00,00,000

Loans advanced by the State Monthly average of the month
A
Electricity Board 5,00,00,000 – end balances of stores,

K
Contingency Reserve 2,00,000 materials, supplies, cash and 3,00,00,000

bank 6,10,00,000
Clear Profit for the year
Other information:
(i) All statutory investments stand at the current figures since April 1, 2007 and earn a
return of 10% p.a.
(ii) The applicable Reserve Bank of India rate is 9%.
71
25. From the following details of electricity supply company, maintaining accounts under the
Double Account System, calculate the following : (a) clear profit; (b) capital base; (c)
reasonable return; and (d) amounts available for dividends, and contribution to tariff and
dividend control reserve and consumer’s rebate reserve.
Sale of energy 12,40,000 Management expenses 90,000
Meter rents 90,000 Depreciation 60,000
Transfer fees 1,000 Interest on loan from Electricity 9,000
Cost of generation 6,05,000 Board
)
G
Distribution and selling expenses 65,000 Contingency Reserve Investment 5,000
(U
Rent, rates and taxes 18,000 Income 1,000
Audit fees 5,000 Interest on Security Deposit 600
ce
Intangibles written – off 3,000 Interest on Bank Deposit
er 32,000
Contribution to Provident Fund
Original cost of fixed assets is Rs.27,00,000: contributions by consumers for acquisition of
m
such fixed assets Rs.2,00,000;cost of intangibles Rs.50,000; contingency reserve investments

om
Rs.50,000; stores opening and closing Rs.40,000; and, Rs.60,000 respectively; Cash and Bank
balances – opening Rs. 30,000 and closing Rs.50,000.
-C
Depreciation up to the beginning of the year : Rs.5,00,000. Intangibles written – off up to the
SC
beginning of the year Rs 40,000. Security deposit of customers held in cash Rs. 20,000. Tariff
and Dividend Control Reserve – opening balance Rs.80,000. Developments Reserve – opening
A
balance Rs.1,20,000.
K
Amount carried forward for distribution to consumers Rs.15,000. Loan from State Electricity
Board Rs.90,000. No new Plant and machinery was added in the year. Transfer in the year to
contingency reserve was Rs.8,000. Reserve Bank rate is to be adopted at 8%.
72
26. The follow9ng are the balance on 31.12.2007 in the books of Dhoopguri Power Supply Co.
Ltd:
Particulars Dr. (Rs) Cr. (Rs) Particulars Dr. (Rs) Cr. (Rs)
Land on 31.12.2006 3,00,000 Cash 12,000
Quality and Land Cost of generation 70,000
during 2007 10,000 electricity
Machinery on 12,00,000 Cost of distributing 10,000
31.12.2006 electricity 10,000
Quality on Machinery 10,000 Rent, rates and taxes 24,000
)
G
during 2007 Management expenses 40,000
(U
Mains incl. cost of 4,00,000 Depreciation 2,60,000
laying on 31.12.2006 Sale of current 10,000
ce
Quality on Mains 1,00,000 Rent and Meters
er 20,000
during 2007 10,98,000 Interest on Debentures 40,000
Equity share capital 4,00,000 Interim Dividend
m
Debentures 2,000 Balance of Net 57,000

om
Sundry Creditors 5,00,000 Revenue A/c on

Depreciation Reserve 31.12.2006
-C
Sundry Debtors for 80,000

SC
current supplied 1,000 23,27,000 23,27,000

Other Debtors TOTAL
A
From the above Trial Balance, prepare : (i) Capital Account; (ii) General Balance Sheet; (iii)
K
Revenue Account; and, (iv) Net Revenue Account.
27. The following is the Trial Balance of The Social Electric Co. Ltd. For the year ended
December 31,2007:
Figures of Dec. 31,

2006 Particulars Dr. Cr.
Rs Rs Rs
Nominal capital 10,000 shares of Rs 50 each
73
1,00,000 Subscribed – 5,000 shares, Rs 25 paid 1,25,000
75,000 Debentures, 6% interest 75,000
5,600 Depreciation fund 5,000
-- Calls – in- arrears 5,000
46,500 Freehold land 46,500
20,000 Buildings 25,000
30,000 Machinery at station 50,000
25,000 Mains 40,000
5,000 Transformers, motors, etc 10,000
)
2,500 Meters 7,500
G
1,500 Electric instruments 2,000
(U
8,000 General stores (cable, mains, etc) in stock 11,750
ce
2,250 Office furniture 1,250
Coal and fuel 9,500
er
Oil, waste and engine room stores 3,750
m
Coal, oil waste, etc, in stock 500
om
Repairs and replacements 2,500

Rates and taxes 1,500
Salaries of secretary, manager, etc. 7,500
-C
Wages at station 15,000

SC
A
K
Directors’ fees 5,000

Stationery, printing and advertising 3,000
Incidental expenses 500
Law charges 1,000
Sales of meters 43,750
Sale by contracts 25,000
Meter rents 1,500
74
Cash in hand and bank 16,500
2,80,250 2,80,250
(1) Provide depreciation on : Building 2.5%; Machinery 7.5%; Mains 5%; Transformers, etc.
10%; Meters 15%.
(2) A call of Rs 5 per share was payable on 31th June, 2007 and arrears are subject to interest at
5% p.a. Prepare Revenue Account and Capital Account for the year ended December 31, 2007
and Balance Sheet as on that date.
)
28. The following balance relate to The Bijlee Electric Co. Ltd. And pertain to the accounts for
G
the year ended on 31st December, 2007:
(U
ce
Share Capital 2,00,00,000 10% Debentures
er 16,00,000
Fixed Assets 4,00,00,000 Depreciation reserve on fixed 1,60,00,000
Average of Current Assets 40,00,000 assets 1,50,00,000
m
Reserve fund (invested in 6% Security deposits of customers

om
Govt. Securities F.V.Rs 120 1,20,00,000 Customers contribution to main 4,00,000

lakhs) lines 10,00,000
-C
6% investments of the 40,00,000 Preliminary expenses 12,00,000

SC
contingency reserve 60,00,000 Tariffs and dividend control

Loan from electricity board 20,00,000 reserve
A
Development reserve
K
The company earned a profit of Rs 22 lakhs before charging debenture interest, Indicate the
disposal of profit, bearing in mind the provisions of the Electricity (Supply) Act, 1948, assuming
the Reserve Bank of India rate on the relevant date was 8%.
29. The following balances have been extracted from the books Deepjyot Electricity Company
Limited as at 31st March, 2008.
Particulars Dr. (Rs) Cr. Particulars Dr. (Rs) Cr. (Rs)

(Rs)
75
Land 2,40,000 Work in progress 18,00,000
Buildings (add. During Loans and advance 20,00,000
the year Rs1,50,000) 13,50,000 Depreciation 20,00,000
Plant and Machinery 45,40,000 Cash and Bank
Mains (incl. Rs balances 18,00,000
15,00,000 expended Share capital:
during the year) 1,50,00,000 80,000 Equity
House service Shares of Rs 100
connections(including each. Fully paid
)
Rs (including 20,000
G
6,90,000 expended 98,00,000 shares issued 80,00,000
(U
during the year) 1,05,00,000 during the year)
Transformer sub –
ce
24,00,000 Reserve for rebate 2,00,000
station 10,000 to consumers 2,20,000
er
Other Fixed assets Development 3,00,000
m
License reserve
om
Investment of 6,00,000 Contingency 5,00,000

contingency reserve (in 75,70,000 reserve
Govt. Securities) 13,40,000 Tariff and dividend 2,70,00,000
-C
Purchase of energy 7,00,000 control reserve

SC
Salaries and wages 40,00,000 Accumulated 60,00,000

Repairs and depreciation
A
maintenance 36,000 Loans from

K
Establishment 3,75,000 approved financial 30,500

expenses institution 27,90,500
Directors’ fees and 1,40,000 Balance of Net
allowances 65,00,000 Revenue Accounts 60,00,000
Interest on fixed loans b/f from previous 2,14,50,000
Int. on consumers year 1,50,000
security deposit Sundry creditors 60,000
Current Assets Consumers 7,27,01,000 7,27,01,000
76
security deposits
Sale of energy
Rentals of meters
Interest received
TOTAL
Prepare the Capital Account, Revenue Account, Net Revenue Account and General Balance
Sheet of Deepjyoti Electricity Supply Company Limited after making the following the
following adjustments:
(1) Provide RS 30,00,000 for taxation:
)
G
(2) Transfer RS 3,00,000 to Contingency Reserve:
(U
(3) Transfer RS 1,40,000 to Development Reserve; and,
(4)
ce
Assuming that the amount of Reasonable Return is RS 17,59,000 transfer the appropriate
er
amounts to reserve after rebate to consumer and to Tariff and Dividend Control Reserve.
m
30. Discuss the chief feature and relative advantage and disadvantage of the Double Account
om
System as compared with the Single Account System.
UNIT IV
-C
31.X LTD purchased 750 shares in Y LTD on 1.7.94. The following we’re their balance sheet on
SC
31.12.94
A
Liabilities X LTD Y LTD Assets X LTD Y LTD

K
Share capital: 3,00,000 1,00,000 Building 2,05,000 1,25,000

shares of RS
100 each
General reserve 1,00,000 70,000 Stock 1,00,000 80,000
on 1.1.94
P & L A/c 1,00,000 60,000 Debtors 1,00,000 40,000
Creditors 80,000 40,000 Investment 1,00,000 -
in Y LTD
77
Bills payable 50,000 20,000 Bills 40,000 45,000
receivable
Current - 20,000 Cash At 60,000 20,000
account: Bank
X LTD
Current 25,000 -
account:
Y LTD
6,30,000 3,10,000 6,30,000 3,10,000
)
G
Additional information
(U
Bills receivable of X LTD include RS 10,000 accepted by Y LTD
ce
Debtors of X LTD include RS 20,000 payable by Y LTD.
A cheque of RS 5000 send by Y LTD on 28th December was not yet received by X LTD on 31st
er
December 1994.
m
om
Profit and loss A/c of Y LTD showed a balance of RS 20,000 on 1.1.94
You are required to prepare a consolidated balance sheet of X LTD and Y LTD as on
-C
31.12.1994.
SC
32.The following balance sheet are presented to you

A
Balance sheet as at 31.12.89

K
Liabilities A LTD B LTD Assets A LTD B LTD

Share 2,50,000 1,00,000 Fixed 1,75,000 75,000
capital: assets
share of
RS 50
each
General 50,000 - Stock-in- 45,000 20,000
reserve trade
P&L A/c 40,000 - Debtors 30,000 15,000
6% - 50,000 6% 30,000 -
debenture debenture
in B LTD
78
acquired
at par
Trade 37,500 22,500 Shares in 60,000 -

creditors B LTD
1500 at
RS 40
Cash at 37,500 12,500
bank
P&L A/c
- 50,000
3,77,500 1,72,500 3,77,500 1,72,500
A LTD acquired the share on 1.4.89. The profit and loss account of B LTD showed a debit
balance of RS 75,000 on 1.1.89. Trade creditors of B LTD include RS 10,000 for goods supplied
)
G
by A LTD on which A LTD made a profit of RS 1000. Half of the goods were still in stock on
(U
31.12.89.
Prepare the consolidated balance sheet.
ce
33.L. G LTD acquired 90% of the equity shares in D. R LTD on June 30 1985 at a cost of RS
er
6,00,000. No balance sheet was prepared at the date of acquisition. The balance sheets of D. R
m
LTD as at December 31,1984 and 1985 were as follows

om
Liabilities 1984 1985 Assets 1984 1985

Rs Rs Rs Rs
-C
Share capital: 2,00,000 2,00,000 Sundry assets 6,00,000 7,56,000

SC
20,000 equity shares

of RS 10 each
Revenue reserve 4,00,000 4,40,000 Goodwill 1,00,000 1,00,000
A
P & L A/c 1,00,000 1,74,000

Proposed dividend - 42,000
K
7,00,000 8,56,000 7,00,000 8,56,000

L. G LTD balance sheet on 31.12.85 was as under
2,00,000 equity shares of 20,00,000 Net assets 30,00,000
RS 10 each
Capital reserve 2,00,000 Investment 6,00,000
18,000 equity
shares of RS
10each in D. R
LTD
79
General reserve 10,00,000
P & L A/c 4,00,000
36,00,000 36,00,000
L. G LTD has not passed entries for the dividend proposed by D. R LTD.
Prepare consolidated balance sheet of L. G LTD and it’s subsidiary D. R LTD as on 31 st

December 1985.
34.The balance sheet of H LTD and S LTD on 31st December 1990 were as follows
)
G
Share - 1,00,000 Land and 3,10,000 1,60,000
(U
capital: building
10% pref
shares of
ce
RS 100
each
er
Equity 10,00,000 4,00,000 Machinery 2,70,000 1,35,000
share of less 10%
m
RS 100 depreciation
each
om
General 1,00,000 50,000 3000 share 4,50,000 -

reserve in S LTD
P & L A/c 40,000 30,000 Stock at 2,20,000 1,50,000
-C
balance on cost
1.1.90
SC
Profit for 2,00,000 80,000 Debtors 1,55,000 90,000

1990
Creditors 1,50,000 70,000 Cash and 85,000 1,95,000
A
bank
balance
K
14,90,000 7,30,000 14,90,000 7,30,000

H LTD acquired 3000 equity share in S LTD on 1stJuly 1990. As on the date of acquisition, H
LTD found that the value of land and building and machinery of S LTD, should be RS 1,50,000
and RS 1,92,500 respectively.
Prepare the consolidated balance sheet of H LTD and it’s subsidiary S LTD showing the assets at
their proper values.
35.On 31st March, 1996 the balance sheet of H LTD and S LTD stood as follows
80
Share 5,00,000 2,00,000 Sundry 5,17,600 3,04,000
capital: assets
RS 10
each, fully
paid
Reserve 1,00,000 50,000 60% Share 1,62,400 -
in S LTD
acquired on
31st March
1996(cost)
Creditors 80,000 60,000 Preliminary - 6,000
expenses
)
G
6,80,000 3,10,000 6,80,000 3,10,000
st
(U
Prepare the consolidated balance sheet as at 31 March, 1996
36.From the balance sheet given below prepare a consolidated balance sheet of A LTD and it’s
ce
subsidiary company B LTD. er
Balance sheet as at 30th June 1994
m
Liabilities A LTD B LTD Assets A LTD B LTD

om
Share 25,00,000 6,00,000 Land and 6,40,000 2,00,000

capital: building
Rs 10
-C
each
General 3,60,000 1,20,000 Machinery 12,60,000 3,40,000
SC
reserve
Profit and 2,40,000 1,80,000 Furniture 1,40,000 60,000
loss
A
account
K
Trade 3,50,000 1,00,000 40,000 5,00,000 -

creditors shares in
B LTD
Stock 4,10,000 2,50,000
Debtors 3,80,000 1,00,000
Bank 1,20,000 50,000
balance
34,50,000 10,00,000 34,50,000 10,00,000
At the date of acquisition by A LTD of it’s holding off 40,000 shares in B LTD the latter
company had undistributed profit and reserve amounting to RS 1,00,000 none of which had been
distributed since then.
81
37.Given below are the balance sheet of H LTD and S LTD

Share 5,00,000 2,00,000 Sundry 6,00,000 3,00,000
capital: assets
shares of
RS 100
each
Reserve 1,40,000 50,000 1,500 2,40,000 -
shares in
S LTD
Profit and 1,00,000 30,000
loss
)
account
G
Creditors 1,00,000 20,000
(U
8,40,000 3,00,000 8,40,000 3,00,000
S LTD had a credit balance of RS 10,000 in the reserve when H LTD acquired shares in it. S
LTD made a bonus issue of one share for every five share held, all out of the post acquisition
ce
profit, on the date of the above balance sheet. The issue is not yet recorded in the books.
er
Calculate the cost of control before and after the bonus issue.
m
38.Star LTD acquired the whole of the share in Sun LTD as at 1st January 1995. The balance
om
sheet of both the companies on 31st December 1995 were as under.

-C
Liabilities Star LTD Sun LTD Assets Star Sun LTD

LTD
SC
Share Building 6,00,000 2,00,000

capital:
20,000 10,00,000 -
A
shares of
K
RS 50
each
80,000 - 4,00,000
shares of
RS 5 each
General 3,00,000 40,000 Machinery 3,00,000 1,00,000
reserve
Profit and 2,00,000 1,60,000 Stock 1,00,000 1,50,000
loss
account
Creditors 1,00,000 60,000 Debtors 50,000 90,000
Investment 5,00,000 -
in shares
82
of sun
LTD
Cash at 50,000 1,20,000
bank
16,00,000 6,60,000 16,00,000 6,60,000
The balance of profit and loss account of Sun LTD on 1.1.95 was RS 80,000. Sun LTD paid a
dividend of 10% in March 1995 for the year 1994 which was credited by Star LTD to it’s profit
and loss account.
Stock of Star LTD include RS 20,000 goods which were purchased from Sun LTD at a profit of
20% on sale value.
)
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Show consolidated balance sheet as on 31st December 1995.
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39.The summarized balance sheet of Honey LTD and Moon LTD as on December 31.1996 we’re
as follows
Liabilities Honey Moon Assets

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Honey Moon LTD
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LTD LTD LTD
Capital Plant 1,20,000 54,700
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2,500 2,50,000 -
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equity
shares of
RS 100
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each
1000
equity - 1,00,000
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shares of
RS 100
A
each
Capital - 60,000 Premises 75,000 90,000
K
reserve
General 1,20,000 - Investment 1,70,000 -
reserve in Moon
LTD at cost
Profit and 28,600 18,000 Stock 70,000 18,000
loss
account
Bank loan 50,000 - Debtors 21,000 20,000
Bills - 4,200 Amount 1,000 -
payable owned by
including Moon LTD
RS 1500 to
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Honey
LTD
Creditors 23,550 - Bank 7,250 4,000
Creditors: Bills 7,900 -
Honey - 500 receivable (
LTD including RS
Others - 4,000 1,500 from
Moon LTD)
4,72,150 1,86,700 4,72,150 1,86,700
Honey LTD acquired 800 equity shares of RS 100 each in Moon LTD. On 1 st April 1996.
Prepare a consolidated balance sheet as on December 31.1996 showing your working.
Sundry creditors of Honey LTD include RS 6000 due to Moon LTD
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The directors are advised that the premises of Moon LTD are under valued by RS 10,000 and it’s
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plant over valued by RS 5000.
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A cheque for RS 500 sent to Honey LTD by Moon LTD on December 30.1996 was not received
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by the former until January 3,1997.
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Profit and loss account of Moon LTD represent profit earned during the year ended 31.12.96
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40.Describe the steps involved in preparation of consolidated balance sheet.
UNIT V
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41.The balance sheet of R. Ltd as on 31-03-2016 is as follow:

SC

A
Share capital of RS 10 each 1,00,000 Goodwill 10,000

K
8% Preference shares of 10% 50,000 Fixed assets 1,80,000

each
Reserve ( including provision Investments ( 5% Govt. Loan ) 20,000
for taxation RS 10,000) 1,00,000
8% debentures 50,000 Current assets 1,00,000
Creditors 25,000 Preliminary expenses 10,000
Discount on debentures 5,000
3,25,0000 3,25,000
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The average profits of the company (after deducting interest on debentures and taxes) is RS
31,000. The market value of the machinery included in the fixed assets is RS 5,000 more.
Expected rate of return is 10%. Evaluate the goodwill of the company five times of the super
profits.
42. From the following, compute the value of goodwill under all methods. Average capital
employed is RS 10,00,000. Normal rate of profit is 10%. Profit for 2014 – RS 1,40,000, 2015 –
RS 1,22,000 and 2016 – RS 1,70,000. Profit for 2015 has been arrived at after writing off
abnormal loss of RS 10,000 and profit of 2016 ii nuclide non – recurring income of RS 22,000.
Goodwill is to be calculated on the basis of 3 years purchase of super profit. The present value of
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annuity is RS 2.4868.
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43. Given below is the balance sheet of Modern Ltd. As on 31 st March 2013.
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Share capital of RS 10 each 6,00,000 Land 2,70,000
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Creditors 80,000 Plant 1,00,000
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P & L a/c 40,000 Stock 3,60,000

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Bank overdraft 10,000 Debtors 1,60,000

Provision for taxation 1,00,000
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Proposed dividend 60,000

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8,90,000 8,90,000
The net profits of the company, after deducting usual working expenses but before providing
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for taxation, were as under: 2012 – 13 RS 2,00,000; 2011 – 12 RS 2,20,000; 2010 – 11 RS

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1,80,000; 2009 – 10 RS 2,20,000; 2008 – 09 RS 1,70,000.
On 31st March 2013, land were valued at RS 2,80,000 and plant at RS 1,20,000. Sundry debtors
on the same date included RS 4,000 as irrecoverable. Having regard to the nature of business, a
10% return on net tangible capital invested is considered reasonable.
You are required to value the company's shares ex- dividend, your own valuation of goodwill
may be based on five years purchase of annual super profits.( Tax rate is to be assumed at 50% ).
44. On 31st Dec.2016, the balance sheet of a company showed the following positions:
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Shares capital of RS 10 each 40,00,000 Fixed assets 5,00,000
Reserve 90,000 Current assets 2,00,000
P & L a/c 20,000 Goodwill 40,000
5% Debenture 1,00,000
Current liabilities 1,30,000
7,40,000 7,40,0000
On 31-12-2016, the fixed assets were independently valued at RS 3,50,000 and the goodwill at
RS 50,000. The net profits for the three years were 2014 – RS 51,600; 2015 – RS 52,000 and
)
2016 – RS 51,650. From the profit 20% was placed to reserves. The fair rate of return on
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investment may be taken at 10%.
Compute the value of the shares by (I) Net assets method and (ii) Yield method.
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45. From the following balance sheet you are required to value the equity shares under net assets
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method:
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Shares capital of RS 10 each 3,00,000 Assets at book value 6,00,000

6% Preference shares of RS
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100 each 2,00,000

SC
Liabilities 1,00,000
6,00,000 6,00,000
A
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The market value of ½ of the assets is considered at 10 % more than the book value and that of
remaining ½ at 5 % less than the book value. There was a liability of RS 5,000 which remains
unrecorded. Assume preference shares have no priority over repayment of capital or dividend.
46. Healy Ltd. And Moly Ltd. Propose to amalgamate:
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Balance Sheets of Healy Ltd. & Moly Ltd. As on 31.12.1998
Liabilities Healy Moly Assets Healy Moly

Ltd Ltd Ltd Ltd
RS RS RS RS
Share capital: Fixed assets less
Equity shares of Depreciation 5,00,000 1,50,000
RS 4,00,000 2,00,000 Investments ( face
RS 10 each 3,00,000 20,000 value RS 2,00,000
General reserve 1,00,000 30,000 6% GP. Notes) 2,00,000
P & L A/c 2,00,000 50,000 Current assets 3,00,000 1,50,000
Current liabilities
10,00,000 3,00,000 10,00,000 3,00,000
Net profit:
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Year Healy Ltd Moly Ltd
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RS RS
1996 1,50,000 46,000
1997 1,44,000 45,000
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1998 1,50,000 56,000
Goodwill for the purpose of amalgamation may be taken as 3 years' purchase of average super
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profits of trading on the basis of 10% normal profit on closed capital invested. The current assets
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of Healy Ltd. Are to be taken as RS 4, 30,000 and that of Moly Ltd. As RS 1,75,000. Ascertain
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the value of goodwill.
47. Wasting died on 20thDecember 1998. The balance sheet of his business on 31st December
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1998 was as under:

SC
Liabilities RS Assets RS
Capital 1,50,000 Buildings 1,00,000
A
Trade creditors 75,000 Furniture 1,000

K
Income tax payable 20,000 Motor vehicle 9,500

Stock –in – trade 35,000
Cash 30,00
2,45,000 2,45,000
The net profits of the business for the five year ended 31 stDecember 1998 were RS 77,500; RS
93,340; RS 1,12,240; RS 92,960 and RS 1,04,249. Wasting was actively engaged in the business
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but did not draw salary. The debts due to the business are all good and on a revaluation the
values of the fixed assets are as follows:
Buildings – RS 1,50,000; Furniture – RS 1,500 and Motor vehicle – RS 20,000. Assuming the
management remuneration for the services of the proprietor to be RS 1,000 per month and 12%
is the fair return on investment, calculate the amount of goodwill by capitalising super profits.
48. From the following information, compute the value of goodwill as per annuity method.
Average capital employed Ra 10,00,000
Normal rate of profit 10%
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Profits: For 1991 – RS 1,40,000 For 1992 – RS 1,22,000 For 1993 – RS 1,70,000
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Profits for 1992 have been arrived at after writing off abnormal loss of RS 10,000 and profits
of 1993 include a non-profit recurring income of RS 22,000. Goodwill is to be calculated on the
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basis of annuity of 3 years purchase of super profits. The present value of annuity of Re 1 for 3
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years at 10% is RS 2.4868.
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49. From the following information calculate the value per equity share:
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particulars RS
5,000 8% preference shares of RS 100 each 5,00,000
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75,000 equity shares of RS 10 each, RS 8 per share paid up 6,00,000

SC
Expected profits per year before tax 2,80,000

Rate of tax 50%
A
Transfer to general reserve every year 20% of the profit

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Normal rate of earnings 10%
50. What are the methods used to calculate Goodwill?
88
Annexure
1. B
2. C
3. C
4. D
5. C
6. D
7. B
8. C
9. A
10. A
)
11. D
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12. A
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13. A
14. A
15. A
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16. A
17. A
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18. A
19. B
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20. C
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21. B
22. A
23. C
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24. C
25. A
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26. A
27. B
A
28. B
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29. C
30. B
31. D
32. D
33. B
34. A
35. C
36. D
37. A
38. A
39. D
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40. A
41. B
42. A
43. A
44. B
45. A
46. C
47. B
48. D
49. D
50. C
51. C
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52. A
53. B
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54. C
55. D
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56. A
57. B
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58. C
59. B
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60. C
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61. B
62. B
63. B
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64. B
65. A
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66. B
67. B
A
68. A
69. C
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70. D
71. A
72. B
73. A
74. B
75. B
76. C
77. B
78. C
79. C
90
80. C
81. C
82. A
83. B
84. A
85. B
86. A
87. C
88. C
89. B
90. A
91. D
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92. A
93. A
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94. D
95. B
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96. A
97. A
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98. A
99. A
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100.D
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A
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91
(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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TITLE OF THE PAPER: HIGHER FINANCIAL ACCOUNTING
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NOVEMBER 2019
SC
A
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1
Question Bank
HIGHER FINANCIAL ACCOUNTING
CONTENTS

1 Section A 3
2 Section B 10
3 Section C 16
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Prepared by
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S.Amudha
SC

Coimbatore-29.
A
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2
HIGHER FINANCIAL ACCOUNTING
SECTION A
UNIT 1
1.When there is no written agreement, the profits and losses of partnership are to be …………….
a) in the ratio of capital b) in the ratio of current account
c) equally among the partners d) none
2. Goodwill is ………..
b) a fixed asset b) a current asset
c) a tangible asset d) an intangible asset
3. old profit sharing ratio-new profit sharing ratio=?
a) equal ratio b) sacrificing ratio
c) gaining ratio d) capital ratio
4 .When there is no written agreement, the profits and losses of partnership are to be …………….
a) in the ratio of capital b) in the ratio of current account
c) equally among the partners d) none
)
5.when goodwill is brought in cash by new partner the method is known as………..
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a) revaluation method b) premium method
c) memorandum revaluation a/c d) none
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6.old ratio minus new ratio is equal to……..
a) sacrificing ratio b) gaining ratio c) new ratio d) old ratio
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7.A and B are the partners share profit & losses in the ratio of2:1. C is admitted as a new partner for 1/4 th
share. Then sacrificing ratio will be ……..
a) 1:1 b)1:1:2 c) 2:1 d) 3:1
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8.The admission of a partner if the goodwill is raised at full value, it should be debited to……
a) cash account b) old partners capital account
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c) goodwill account. d) New partners capital account

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9. Assets and liabilities are adjusted at the time of admission of a partner and profit is
resulted, it should be credited to the capital accounts of……
a) all partners in their new profit sharing ratio;
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b) the old partners in their new profit sharing ratio;

c) the old partners in their old profit sharing ratio.
d) the old partners in the sacrificing ratio
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10.A and B are partners sharing profits in the ratio of 3:2.C is admitted paying a premium of
Rs.2,000 for ¼ th share of profitill get……
A
a)Rs.800 (b) Rs.500 (c) Rs.1, 200 (d) Rs. 1,000

11. Amount to be written off after the admission of a partner is transferred to the capital
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accounts of all partners in……

a) their capital ratio b) new profit sharing ratio
c) old profit sharing ratio d) Sacrificing ratio
12.Current accounts of the partners should be opened when the capitals are……..
a) fluctuating b) fixed c) partly fixed d) partly fluctuating
13. In the absence of a partnership deed, profits and losses are divided by partners…
a) ratio b) equally c) 6% d) 12%
14. In the absence of an agreement, interest on partner’s loan shall be paid @..........
a) 6% b) 7% c) 3% d) 12%
15. In the absence of an agreement, partners shall……..salaries.
a) paid b) not to paid c) partly paid d) none of the above
16.A, B and C share profits and losses in the ratio of 1/2, 1/3, 1/6 respectively. D, a new
partner, is given 1/8 share. Then the new profit sharing ratio will be……..
(a) 2:3:4:5 (b) 1: 2: 3 : 4 (c) 7/16:7/24:7/48:1/8 (d)7/8:7/16:7/24:7/48
3
17. A partner admitted into the partnership firm acquires two rights. i.e.(i)the right to share in
the assets of the partnership and (ii)the right to share……..
(a) in the profits of the business (b) assets of the business
(c) liabilities of the business (d) expenses of the business
18.Interest on capital should be treated as ----
(a) Expense (b) Income (c) Asset (d) Liabilities
19.Profit on revalution is to be credited to old partners in their ----
(a) profit sharing ratio (b) capital ratio
(c) current ratio (d) none of the above
20. The sum of the shares sacrificed by the old partners is equal to the share given to ------
(a) new partner(b) old partner (c) all partner (d) none of the above
UNIT II
21.Profit on revaluation at the time of retirement must be transferred to the partners in ……..
a}capital ratio b}new ratio c}old ratio d}none
22.Revaluation a/c is a………. a/c
)
a} personal a/c b} real a/c c} nominal a/c d} none
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23. In case of retirement of a partner, goodwill at its full value is credited to the
account/accounts of……
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a) Only retiring partner b) all partners
c) only remaining partners d) new partner
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24.In case of retirement of a partner, profit on revaluation is credited to the capital accounts
of the partners……
(a)equally (b)in the profit sharing ratio
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(c) in proportion to their capitals (d) New ratio
25.When any partner retires or dies and the remaining partners carry on the business with the
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firm’s property without any final settlement of accounts, the outgoing partner or executors of
the deceased partner are entitled to……
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(a) interest at 6%p.a.of the amount due to the retiring partners or executors of the
deceased partner
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(b) such share of the profits as may be attributable to the use of the amount due;
(c ) either of the above two at the option of the outgoing partner or executors of the deceased partner
(d) Both of the above two at the option of the outgoing partner or executors of the deceased partner
SC
26.Premium paid by the new partner must be shared by the old partners in their -----
(a) old ratio (b) new ratio (c) sacrificing ratio (d) gaining ratio
A
27.Old partners ratio minus the new profit sharing ratio is equal to ----
(a) Gaining ratio(b) sacrificing ratio (c) capital ratio (d) profit sharing ratio
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28. Provision for doubtful debts appearing at the time of dissolution of firm is transferred to ………..
a} debtors a/c b} realization a/c c} cash a/c d} creditors a/c
29.Partners salaries to be debited to……….
a} trading account b} p&l a/c c} p&l appropriation a/c d} none
30.For the firm , interest on Drawings is …………
a} an income b} expense c} both d} none
31.Joint life policy account is a …….
a} nominal a/c b} personal a/c c} real a/c d} none
32. In the case of dissolution of firm all assets excluding cash must be transferred to ………..
a} revaluation a/c b} realization a/cc} memorandum revaluation a/c d} none
33. Upon dissolution a liability taken over by a partner is to be debited to ……….
a}p&l a/c b}capital a/c c}revaluation a/c d}realization a/c
34.The balance in the realization a/c is to be transferred to the partner’s capital a/c in the
a} profit sharing ratio b} capital ratio c} both d} none
4
35.When the firm sells the the business, cash balance is transferred to ………. Account
a} capital a/c b}revaluation a/c c}realization a/c d) P&L a/c
36. An un recorded asset realised at the time of dissolution is credited to ……….
a} realisation a/c b} revaluation a/c c} capital a/c d} none
37. In dissolution accounting cash account shows ………. Balance
a} nil b} debit c} credit d} none
38.Unrecorded liability paid at the time of dissolution is to be debited to…….account.
(a) realisation a/c b} revaluation a/c c} capital a/c d} none
39. When an unrecorded asset is realized at the time of dissolution of the firm, cash account
is debited and……account is credited.
(a) revaluation (b) realization (c) capital (d) none of the above
40.Goodwill account appearing in the books on the dissolution date is closed by transferring
it to the debit side of the ……account.
(a) realization (b) revaluation (c) cash a/c (d) capital a/c
UNIT III
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41.when two or more firms joined together to form a new firm is called ……..
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a} absorption b} amalgamation c} internal reconstruction d} external reconstruction
42. Liabilities not taken over the new firm (at the time of amalgamation) will be transferred to ……..
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a} capital account b} realization account c} revaluation account d} none
43.At the time of amalgamation any profit or loss on revaluation is transferred to ……….. Accounts
a} capital b} realization c} both ce d} none
44. In the case of sale to a company, the purchases consideration must be paid on the basis of ……..
a} a lump sum b} net asset c} payment basis d} any of the above
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45.Realization a/c is a ……..
a} personal a/c b} real a/c c} nominal a/c d} none
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46. Garner vs. Murray is being applied while ………..

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a} admission of a partner b} retirement of a partner

c} insolvency of a partner d} all the above
47.When the credit side of a realization a/c exceeds debit side of realisations a/c then the result is known as
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a} revaluation a/c b} realisation a/c c} revaluation loss d} realisation profit

48.Realisation profit or loss is transferred to partners capital a/c in the ratio of ……..
a} profit sharing b} equal c} capital d} sacrifice
SC
49.Excess of assets over liabilities is known as ………..

a} net assets b} current liabilities c} capital d} working capital
50. Firm is unable to pay its debts when ……..
A
a} partner is insolvent b} partner has his debit balance

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c} the firm is insolvent d} none

51. Before Garner Vs. Murray decision, no distinction was made between
a) Trading loss and capital loss b) Trading income and capital income.
c) Capital expenditure and revenue expenditure d) none of the above
52.The practice before Garner vs. Murray decision was to share the deficiency of the
insolvent partner by the solvent partners in their ……ratio.
(a) realization (b)Capital ratio (c) profit and loss a/c (d) none of the above
53.According to the decision in Garner vs. Murray, in the absence of any agreement to the
contrary, the deficiency of the insolvent partner must be borne by other solvent partners in
proportion to……
(a) capital (b) profit (c) loss (d) revalue
54.Before Garner vs. Murray decision, no distinction was made between trading and ------
loss.(a) Current(b) Capital (c) profit sharing ratio (d) none of the above
5
55.If some solvent partner is having a --------balance in his capital account on the dissolution
date, he will not have to bear the loss on account of the deficiency the insolvent partners.
(a) credit (b) debit (c) surplus (d) deficiency
56. When there is gradual realisation of ----- on the dissolution of a firm, the various
realisation of asset should be distributed in such a way that even if the remaining assets do
not realize anything, no partner should receive more than the amount to which he is
ultimately entitled after having debited with the share of total loss on realisation.
(a) assets (b) liabilities (c) income (d) expenditure
57.At the time of dissolution all the assets of firm are transferred to the realization
A/c ---- a) Market value b) Book value c) Cost value d) Bale value
58. The decision is Garner Vs Murray was given in ----
a) 1904 b) 1905 c) 1804 d) 1805
59.Upon the sale of an established business its goodwill----
a) Marketable value b) Not marketable value
c) Both (a) & (b) d) Either (a) & (b)
)
60.For any decrease in the value of liability, revolution a/c is to be ----
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a) Debited b) Credited c) c) Both (a) & (b) d) Neither (Dr.) & (Cr.)
UNIT IV
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61.The loss of profit policy covers loss of profit due to
(a) Loss of sales
(b)
(c)
Non-recovery of standing charges ce
Loss of sales as well as loss of insured standing charges.
(d) None of the above
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62. The objective of inserting average clause in loss of stock policy is to
(a) Encourage under-insurance
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(b) Discourage full insurance of stock

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(c) Encourage full insurance of stock

63. A building worth Rs. 10,00,000 is insured for Rs.6,00,000.It is completely destroyed by
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fire. The loss to be admitted by the insurance company will be

(a) Rs.10,00,000
(b) Rs. 6,00,000
SC
(c) Rs.5,00,000
A
64.Fire insurance provides cover for

(a) tangible assets
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(b) intangible assets

(c) both
(d) none of the above
65.The average clause in a loss of stock policy discourages -----
(a) under insurance of stock
66.The difference between standard turnover and actual turnover during the indemnity
period is -----
(a) long sales
(b) sales
(c) purchases
(d) short sales
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67. The average clause in case of a loss of stock policy is applied when the value of stock
on the date of fire is more than the -----.
(a) amount of the policy taken
68.Rate of gross profit in case of a loss of profit insurance is determined by applying the
formula ---
(a) Net profit + Insured standing charges
(b) Net profit - Insured standing charges
(c) (Net profit + Insured standing charges)/Sales of the financial year preceding
the year of fire
(d) none of the above
69. Loss of profit insurance is also known as -----.
)
(a) Discourage full insurance of stock
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(b) Encourage full insurance of stock
(c) consequential loss insurance
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70.Book debts are shown under
(a)
(b)
List A
List E
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(c) List F
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(d) List G
71.Preferential creditors are shown under
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(a) List A
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(b) List D
(c) List E
(d) List B
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72. Under the Presidency Towns Insolvency Act,, rent due to landlord is preferential for a
period of
(a) one month
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(b) two month

(c) three month
A
(d) Four month

73. Amount due to Government or local authority is a
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(a) secured claim

(b) unsecured claim
(c) preferential claim
(d) Partly secured claim
74. Under Presidency Town’s Insolvency Act, how many months rent is treated as preferential creditors.
(a) one month
(b) two months
(c) three months
(d) four months.
75. Under the Provincial Insolvency Act, rent due to the landlord is preferential for a period
of ----- (a) one month (b) three month
(c) Rent is not preferential ( d ) None of the above
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76.The objective of inserting average clause in loss of stock policy is to
(a) Encourage under insurance
(b) Discourage under insurance
(c) Discourage full insurance
77. Amount of deficiency is calculated by preparing
(a) Insolvency a/c
(b) Deficiency a/c
(c) Statement of Affairs
78. The amount of deficiency is given under
(a) Fully secured creditors
(b) Partly secured creditors
(c) Unsecured creditors
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79. Preferential creditors are a category of
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(a) Fully secured creditors
(b) Partly secured creditors
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(c) Unsecured creditors
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80 . Loss on bills discounted and likely to be dishonoured is included in List F and shown
on the ---- side of the Deficiency Account.
(a) debit
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(b) credit
(c) right
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(d) left
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UNIT V
81.Which one of the following combination of accounting assumptions are fundamental as per AS – 1?
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(a) Going concern, consistency, and accrual

(b) Going concern, conservatism, and historic cost
(c) Historic cost, consistency and conservatism
SC
(d) Conservatism, consistency and accrual

82. Any change in the accounting policy relating to inventories which has a material effect in the current or
A
later periods should be disclosed. This is in accordance with the accounting principle of:
(a) Going concern
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(b) Conservatism
(c) Consistency
(d) Disclosure
83. Which one of the following formulae is not based on historic cost?
(a) FIFO
(b) LIFO
(c) Lastest purchase price
(d) Lastest sale
84.Depreciation is ----------- decline in the value of an asset
a) Permanent b) Temporary c) Unwanted d) a and b
85. Accounting standards board was setup in India in the yea…….

a)1964 b)1975 c)1977 d)1990
8
86.For transfer of balance of sinking fund account to asset account at the end of the
year__________ account is debit.
a) Asset b) Sinking fund c) Cash d) Liability
87. Costing is a technique of ___________.
a) decreasing cost
b ) Ascertaining cost
c ) increasing
d ) none of the above
88. Cost accounting has been developed because of ______ of financial accounting.
a) advantages
b) necessities
c) limitation
d) none of the above
89.There is difference between ----------- costing and process costing.
a) job
)
b) batch
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c) service
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90.Cost accountancy is the science, art and __________ of a cost accountant.
a) practice
b) law
c) rules
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91.The ordinary trading account is locked storehouse of most valuable information
to which cost system is the_________.
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a) advantageous aspect
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b) disadvantageous aspect
c )key
d )none of the above
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92. Accounting principles are ---------

a) as definite as principles of physics and chemistry.
b ) unlike principles of physical science
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c ) verifiable through observations and record

d) none
A
93.Accounting concepts are based on

a) certain assumptions.
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b) certain facts and figures

c) certain accounting records.
d) Above all
94. Financial accounts provide a summary of
a) assets
b) liabilities
c) accounts
d) none
95. Financial statements are:
a) estimates of facts
b) anticipated facts
c) recorded facts
d)none
9
96. Cash from operation is equal to --------
a)Net Profit plus increase in stock
b) Net Profit plus increase in debtors
c) Net Profit plus increase in outstanding expenses
d) Net Profit plus increase in prepaid expenses
97. Operating profits are calculated by
a)Adding back amortization of development cost
b)Deducting amortization of development cost
c)Neither of the two
d) Either of the two
98. Fund flow statement is prepared to
a)know the real profit for the year
b)ind out the sources and applications of funds
c)help the creditors to know the availability of funds for disposal
d)satisfy the debtors
)
99. In cash flow statement, income tax refunded is a
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a) sources of cash
b) application of cash
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c) outflow of cash
d)find out the sources and applications of funds
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100.The capital which is needed even during the off season is
a)Permanent Working Capital
b)Variable Working Capital
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c)Cash Working Capital
d)help the creditors to know the availability of funds for disposal
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om
.
SECTION – B
UNIT I
1. Following is the Balance Sheet of Mohan and Madan on 31 st Dec, 1990.after adjustment of
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Profit for 1990 and drawings:

Rs. Rs.
SC
Capital: Mohan 40000 Land 16,000

A
Madan 48000 88,000 Buildings 72,000

Creditors 32,000 Other Assets 48,000
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P&L Appropriation A/C 24,000 Madan’s Drawings 8,000

1,44,000 1,44,000
During the year 1990 : (i)Profits were Rs.40,000;

(ii) Drawings of Mohan were Rs.12,000;
(iii) Interest id to charged at 5% p.a. on opening capitals.
Calculate interest on capitals of Mohan and Madan.
2. A partner makes drawings of RS.2,000 p.a. under the partnership deed.Interset is to be
charged at 12%p.a.What is the interest that should be charged to the partner if the amount
was drawn. (i) in the beginning of the month
(ii) in the middle of the month and
(iii) at the end of the month.
3 .From the following balance sheet of A and B, calculate interest on capital at 5% p.a.for the
year ending 31st December 1996.
10
Balance sheet as on 31-12-1996
Rs. Rs.
A’s Capital 20,000 Sundry Assets 42,000

B’s Capital 16,000 Drawings ‘A’ 2,000
Profit & loss
Appropriation A/C-1996 8,000
44,000 44,000
During the year 1996, A’s drawings were RS.2,000 and B’s drawings RS.6,000.profits
during the year 1996 were RS.12,000
4. X and Y are Partners Sharing Profits in the ratio of 3:2. From 1st January 1991, they admit
X into Partnership giving him 1/5th share of profits with the guarantee of Rs.12,000/-
Minimum. X and Y as between themselves continued to share profits as before. Profits of
)
The Firm for 1991 were Rs.48,000/-. Determine the profits of X, Y and Z.
G
5. A, B and C are partners with capitals of Rs.12,000, Rs.10000 & Rs.4,000 respectively.
After providing interest on capital at 6% p.a. the profits are divisible as follows:
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A - 1/2, B - 1/3 and C - 1/6. But A and B have guaranteed that C’s Share shall not
Amount to less than Rs.1,000/- in any one year.
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During the year 1992, A and B have each withdrawn Rs.2,000 and C Rs.1,000. The net
Profit for the year before providing interest on partner’s capitals was Rs.4,800. You are
required to show the Current accounts of the partners.
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6. A and B are partners in a business sharing profits in the ratio of 5:3. They decide the admit
C into the firm giving him 1/6th share. Calculate the New Profit sharing ratio and
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sacrificing ratio of the partners.

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7. A and B are partners sharing profits and losses in the ratio of 5:3. They admit C as a
partner. C acquires his share 4/20 from A and 2/20 from B. Find out the new profit sharing
ratio and sacrificing ratio.
-C
8. A and B are partners sharing profits in 3:2 Ratio. C is admitted for 1/5 share which he
acquires equally from both A and B. Find out the new ratio of partners.
9. Calculate the amount of Goodwill at three years purchase of last five years average profits.
SC
The profits were:

I year - Rs.9,600/- II year - Rs.14,400/- III year-Rs.20,000/-
A
IV year- Rs.6,000/- V year- Rs.10,000/-

K
10. Prem and Chandra share profits in the ratio of 7:3 .Ram was admitted as a partner. Prem
surrendered 1/7 th share and Chandra 1/3 of his share in favour of Ram . Calculate new ratio.
UNIT II
11. A,B and C were partners in a firm, sharing profits and losses in the ratio of 3:2:5. ‘C’
retires and on that date the firm’s goodwill is valued at Rs.80,000. Pass necessary
journal entry to adjust goodwill at the time of retirement.
12. P,Q,R and S are partners in a firm sharing profits in the ratio of 2:1:2:1. On the
retirement of R, the firm’s goodwill was valued at Rs.45,000. P,Q and S decided to
share the future profits equally. Pass journal entry for goodwill.
13. Bim, Gim and Nim are partners sharing profits in the ratio of 2:3:5. Goodwill appears in
their books at a value of Rs.60,000. Bim retires and on the day of Bim’s retirement
goodwill is valued at Rs.30,000. Gim and Nim decided to share the future profits equally.
Pass the necessary journal entries for goodwill.
11
14. M,N and O were partners in a firm sharing profits in the ratio of 3:2:1. O retired and the
new profit sharing ratio between M and N was 1:2. On O’s retirement the goodwill of
the firm was valued at Rs.18,000. Pass journal entry goodwill.
15. Bil, Chil, Dhil and Gil are partners sharing profits in the ratio of 3:2:3:2. On the
retirement of Dhil, goodwill was valued at Rs.48,000. Dhil’s share of goodwill will be
given to her by adjusting it into the capital accounts of Bil, Chil and Gil. Give journal
entry for goodwill when the new profit sharing ratio is 3:1:6.
16. X, Y and Z are partners sharing profit in the ratio of 1:2:3. Z retires and his capital, after
making adjustments for reserves and profits on revaluation, stands at Rs. 44,000. X and
Y agreed to pay him Rs. 55,000 in full settlement of his claim. Give journal entry for
goodwill if the new profit ratio is decided at 1:3.
17. R, M and J were partners in a firm. J died on 29th Feb 2008. His share of profit from the
closure of the last accounting year till date of death was to be calculated on the basis of the
average of profit of three completed years before death. Profits for 2005, 2006 and 2007
were Rs. 7000, Rs. 8000 and Rs. 9000 respectively. Calculate J’s share of profit till his
)
death and pass the necessary journal entry for the same.
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18.Write down the different methods of treatment of joint life policy.
19. What are the circumstances under which dissolution of firm takes place?
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20. What are difference between sacrificing ratio and gaining ratio
UNIT III
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21. M and N partners of a firm amalgamating with ‘X Y & Co.,’ have capitals of
Rs.1,00,000 and Rs.2,00,000 respectively and they share profits equally. Their goodwill is
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valued at Rs.80,000. It is decided that investments of the value of Rs.30,000 and bank loan of
Rs.45,000 will not be taken over by the new firm. Revaluation profits on other assets and
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liabilities is ascertained to be Rs.20,000.

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You are asked to arrive at the adjusted capital balances of M & N for the purpose of
amalgamation.
22. Prepare revaluation account from the following in the books of X and Y.
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a) Machinery worth Rs.1,00,000 to be depreciated by10%

b) Buildings worth Rs.2,50,000 to be appreciated by 10%
c) Outstanding salary Rs 10,000
SC
d) Stock of Rs.10,000 was destroyed by fire and 25% was received from insurance
company.
A
e) Write off bad debts Rs 3,800

23. ABCD is the new firm which acquired the running business of A and B and C and D
K
whose adjustedcapitals are rupees 90000, rupees 86000 rupees 70,000 and rupees 60000
respectively. They share profits and losses equally. Among the assets and liabilities taken
over Goodwill of A and B Rs 30,000 and that of c and d Rs. 50000. It is decided to write it
off. The new forms capital should be Rs.240000 which must be in profit sharing ratio.
Calculate the amount to be transferred to current accounts of the partner.
24. Pradeep limited has taken over the business of Mr Sandeep and agreed to pay the
purchase price As given below:
a) 2800 shares of Rs 50 is fully paid at rupees 60 Per share.
b) Rupees 25000 in a 8% preference shares of Rs 100 is issued at premium of
25% and
c) Rs.20,000 in cash
You are required to compute the amount of purchase consideration payable to Mr Sandeep.
25. X Limited agree to purchase the business of Rahim and Karim as on 31.3.2003. Their
assets on that date were Rs. 4,40,000 and liabilities to outsiders rupees 1,60,000. For the
12
purpose of sale it is agreed that 90% of assets alone will be taken over at 10 % discount.
Liabilities are to be taken subject to rebate of 5% . Goodwill is deemed worth Rs. 40,000.
Ascertain purchase consideration.
26. Write short notes on Garner vs. Murray Decision
27. What do you mean by amalgamation of firms?
28. write down the accounting treatment for sale of firm to a company.
29. How to calculate the net payment method of Purchase consideration?
30. What is a Realisation Account? How does it differ from Revaluation Account?
UNIT IV
31. A Fire Occurred at the premises of a trader on 31.5.94 destroying a great part of his
goods. His stock at 1.1.94 at Rs.60, 000. The value of stock salvaged was Rs.13, 500. The
gross profit on sales was on 30% and sales amounted to Rs. 1, 53,000 from January to date of
fire, while for the same period the purchases amounted to Rs.1, 03,500. Prepare a statement
of claim.
32. Calculate insurance claim from the following facts assuming that the insurers met their
)
liability under the policy on ‘average basis’
G
A trader’s stock valued at Rs. 40,000 was totally destroyed. The stock in the
godown was insured for Rs.30,000 subject to average clause. The balance of stock,
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left after fire, appeared in the books at Rs.24, 500.
33. A fire occurred in the premises of Mr. Dheenadayalam on 15 th August 1995. A large part
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of the stock was destroyed that Rs. 7,500 was realized for the salvage. For the period from 1 st
January 1995 to 15th August 1995, the following information available:
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i. Pursachases amounted to Rs.42, 500.
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ii. Sales amounted to Rs. 45,500.

iii. Stock on hand on 1st January 1995 was Rs. 20,000 at cost price.
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iv. Goods costing Rs. 2,500 were taken by Dhenadayalan for his personal use.
The previous account reveals the rate of gross profit was 33 1/1% on Sale.
-C
The insurance policy was for Rs. 25,000 and included an average clause.
Prepare the statement of claim to be made on the insurance company.
SC
34. A trader asks for your help in preparing an insurance claim in respect of stock-in –trade
destroyed by fire in his warehouse on June, 1, 1996.
A
His books of accounts give the following information concerning trading account
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transactions for the period, January 1 to June 1, 1996.

Balance of stock, January 1, 1996 at cost Rs. 26,000.
35. A fire occurred in the premises of XLtd. On 10.10.91. All stock were destroyed concept
to the extent of Rs. 6,200. From the figures, ascertain the loss of stock suffered by the
company.
Rs.
Stock on 1.1.90 40,000
Purchases during 1990 1, 45,000
Sales during 1990 2, 00,000
Stock on 31.12.90 25,000
Purchases during 1991 1, 52,000
Up to the date of fire
Sales during 1991 up to 1, 89,000
13
date on fire
36. The premises of a trading from caught fire on 22.10.85 and the stock was damaged. The
firm had made up accounts on 31st December.
Rs
Stock on 31.12.1984 13,272
Stock on 31.12.1983 9,614
Purchase during 1984 45,258
Purchase from 1.1.85 34,827
to the date of fire
Sales during 1984 52,000
Sales from 1.1.85 to the 49,170
date of fire
Additional Information:-
)
a) In April 1985 goods which cot Rs. 1,000 were given away for advertising
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purpose, no entries being made in the books.
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b) During 1985, a clerk had misappropriated unrecorded cash sales. It is
estimated that the defalcation amounted to Rs. 400.
c) The rate of gross profit is constant. ce
From the above information, make an estimate of the stock on the date of fire
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37. Fire occurred in the premises of paswan on 1oth May 1996. In order to make a claim on
their fire policies in respect of the stock, they ask your advice and you are able to obtain the
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following information.
1993 1994 1995 1996
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Rs. Rs. Rs. Rs.
Opening Stock 16,000 15,000 16,000 18,000

-C
Purchases 41,000 47,200 56,000 78,000

Sales 60,000 66,000 78,000 99,000
SC
Closing stock 15,000 16,000 18,000 ?

The stock salvaged was Rs. 3,800. Compute amount of claim.
38. A fire occurred in the business premises of Raghavan on 19.7.89. From the following
A
particular ascertain the loss of stock and prepare a claim for insurance.
K
Rs.
Stock on 1.1.88 36,720
Stock on 31.12.88 32,400
Sales for 1988 2, 16,000
Purchases for 1988 1, 46,400
Purchases for 1.1.89 to 19.7.89 1, 76,400
Sales from 1.1.89 to 19.7.89 1, 80,000
The stocks were always valued at 90% of cost. The stock saved from fire was worth
Rs. 21,600. The amount of the policy was Rs. 75,600. There was an average clause in the
policy.
14
39. On 1.7.1988 a fire took place in the Godown of Ram Kumar which destroyed all stocks.
Rs. Rs.
Sales in 1986 2, 00,000 Sales in 1987 3, 00,000

Gross Profit in 1986 60,000 Gross Profit in 1987 60,000
Stock on 1.1.88 2, 70,000 Purchases from 1.1.88
Sales from 1.1.88 to to 30.6.88 4, 00,000
30-6-88 7, 20,000
Additional Information:
a) Stock as on 31.12.1987 had been undervalued by 10%
b) A stock taking conducted in March 1988 had revealed that stock costing Rs.80,000
were lying in a damaged condition. 50% of that stock had been sold in May 1988 at 50%
of the cost and the balance were expected to be sold at 40% of the cost.
)
40. A fire occurred in the premises of Ganesh Flour Ltd., on 1.5.1988.The company
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had a loss of profit policy for Rs.2, 40,000. Sales from 1.5.1988 to 31.04.1988 were Rs.20,
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00,000, the sales from 1.5.1988 to 31.8.1988 being Rs.6, 00,000. During the indemnity
period, which lasted four months, sales amounted to only Rs. 80,000. The company made up
its accounts to 31st December. The profit and loss account for 1988 is given below.
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Profit & Loss Account
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Particulars Amount (Rs.) Particulars Amount (Rs.)
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To Opening Stock 2,00,000 By Sales 19,00,000

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To Purchases 12,00,000 By Closing Stock 1,00,000
To Manufacturing expenses 1,34,000

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To Variable selling expenses 1,81,000

SC
To Fixed expenses 1,45,000
To Net Profit 1,40,000

A
20,00,000 20,00,000
K
UNIT V
41. Mention any six areas in which different accounting policies may be adopted by different enterprises.
42. Can inventories be valued at cost.
43. What is the purpose of the cash-flow statement? What information is disclosed in such a statement?
44.Distinguish between operating, investing and finance activities.
45.What are the uses of cash-flow statements?
46. When do you recognize revenue in the following cases?
(a) Advertising commission
(b) Cash on delivery basis
(c) Installation fees
(d) Consignment sales
47. What components of cost are to e included in the cost of fixed assets?
15
48. How are self-constructed assets valued?
49. How an asset acquired in exchange in exchange of another is valued?
50. How are expenditure on assets subsequent to acquisition dealt with?
SECTION C
UNIT I
1 On 1st January 1991, kavitha and sumathy entered into partnership and contributed Rs
80000 and Rs. 60,000 respectively. They share profits and losses in the ratio 3:2 .
Sumathy is to be allowed a salary of Rs 16,000 per year. Interest on capitals is to be
allowed at 5% per annum. 5% Interest is Interest being Kavitha Rs 280 and Sumathy Rs
200. Profit in 1991 before they above noted adjustments was Rs42,320. Show the
distribution of profits between the partners and prepare capital accounts
a. When they are fluctuating and
b. When they are fixed
2 Meena and Srilekha are partners with capitals of Rs. 60,000 and 20,000 respectively on
)
1st January 1989. The Trading profit ( before taking into account in the provisions of the
G
deed ) for the year ended 31 st December 1989 was Rs 24,000. Interest on capital is to
be allowed at 6% per annum. Srilekha is entitled to a salary of Rs 6,000 per annum.
(U
The drawing of the partners were Rs 6,000 and Rs 4000, in the interest for Meena being
Rs 200 and Srilekha Rs 100. Prepare the profit and losses appropriation A/C and partners
3
capital account. ce
A Firms earns Rs 1,20,000 as its annual profits, the rate of normal profit being 10%. The
assets of the firm amount to Rs 14,40,000 and liabilities to Rs 4,80,000. Find out the
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value of goodwill by Capitalisation Method.
4 Afirm earned net profits during the last three years as follows:
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1st year -36,000

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2nd year-40,000
3rd year-44,000
The capital investment of the firm is Rs 1,20,000. A fair returns on the
-C
capital having regard to the risk involved is 10%. Calculate the value of goodwill on
the basic three years purchase of super profits.
5 Neenu and Beenu were partners sharing profits equally. Their balance sheet as on 31 st
SC
March 2011 was as under:

LIABILITIES RS ASSET RS
A
Creditors 1,00,000 Cash in hand 24,000

Bills payable 30,000 Cash at bank 30,000
K
Outstanding expenses 6,000 Debtors 40,000

Capital A/C : Less: PBDD 1000 39,000
Neenu 1,20,000 Stock 40,000
Beenu 80,000 2,00,000 Furniture 20,000
Machinery 36,000
Land and Bulding 1,47,000
3,36,000 3,36,000
On that date, they agreed to admit Seenu as a partner on the following terms:
A. Seenu will get 1/5 the shares in profits and will bring in Rs 40,000 as his
capital and Rs 10,000 as his share of goodwill.
B. Goodwill brought in by Seenu will be withdrawn by Neenu and Beenu .
C. The provision for doubtful debts should be brought upto 5% debtors.
D. Machinary be depreciated by Rs 4,000 and furniture by 12%
E. Stock be valued at Rs 46,000
F. Land and Bulding be appreciated by 20%
16
G. Investments of Rs 4,000 which did not appear in the books, should be
duly recorded.
Prepare revalution A/C , Capital A/C, Balance sheet of new firm.
6 A and B were partners sharing profits and losses in the ratio of 2:1. Their balance sheet
as on 31.12.2003 was as follows:
LIABILITIES RS ASSETS RS
Creditors 65,900 Cash 1,200
Capital Debtors 9,700
A 30,000 Stock 20,000
B 20,000 50,000 Machinery 35,000
Bulding 50,000
1,15,900 1,15,900
They decided to admit ‘C’ as a partner for 1/3 rd share in the profits of the firm, subject
to the following conditions:
a) That he should bring in Rs 15,000 as his capital
)
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b) That the value of stock and machinery be depreciated by 10%
c) That the provision of 5% on sundry debtors be made for doubtful debts.
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d) That the value of buldings be appreciated by Rs 9,500
Prepare necessary ledger accounts and balance sheet after C’s admission.
7 Ramu and Gopu are partners sharing profits in the ratio of 2:1 .Following is the balance
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sheet of firm as on 31.3.2011.
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Wages due 5,000 Cash in hand 22,000
Sundry Creditors 48,000 Cash at bank 2,000
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CapitalA/C Debtors 30,000

Ramu 60,000 Less: Provision 2000 28,000
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Gopu 35,000 Bills Receivable 12,000

Stock 18,000
Investments 12,000
-C
Furniture 4,000
Bulding 50,000
SC
1,48,000 1,48,000
On 1.4.2011 Somu was as a partner. Somu brings in Rs 25,000 as a capitalfor ¼ th
share4 in profits
A
a) Provision for doubtful debts increased to Rs 3,500

b) Furniture be reduced to Rs 3,500
K
c) Buldings be increased by Rs 10,000

d) An investment of Rs 1,500 not recorded in the books, now brought into
account.
e) A contigent liability of Rs 800 has become a certain liability. It has been agree
among partners that assets and liabilities are to be shown at old values.
8 The following were the profits earned by Bertha and Lam for the past four years
2007 RS 60,000
2008 Rs 80,000
2009 Rs 1,00,000
2010 Rs 1,40,000
You are required to value the good will on the basis of 3years purchase of weighted
average profits, assigning weights of 1,2,3 and 4 respectively for the four years.
9 Aand B are partners sharing profits in the ratio of 3:1. Their Balance sheet stood as
under on 31.3.2004
17
Salary due 5,000 Stock 10,000
Creditors 40,000 Prepaid insurance 1,000
Capital Debtors 8,000
A 30,000 Less: 500 7,500
B 20,000 50,000 Cash 18,500
Machinery 22,000
Buldings 30,000
Furniture 6,0000
95,000 95,000
C is admitted as a new partner introducing a capital of Rs 20,000 , for his ¼ th share in
future profits.
Following revaluation are made:
a) Stock be depreciated by 5%
b) Furniture be appreciated by 10%
c) Bulding be revalued at Rs 45,000
)
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d) The provision for doubtful debts should be increased to Rs.1,000. Prepare
Revaluation A/C and Balance sheet afteradmission.
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st
10On 31 December 1993, after the close of the accounts, the capital accounts of A,B,Cstood
in the books of the firm at Rs.80,000 Rs.60,000 and Rs.40,000 respectively. It was
subsequently discovered that interestat 5%on the partners capital as at the beginning of the
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year and the interest on drawings of partners were left out of consideration. The interest on
drawing of partners amounted to A Rs 500, BRs. 360 and CRs.200. the profit for the year in
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arriving the above figures of the capital amounted to Rs.1,20,000 and partner’s drawings had
been ARs 20,000, B Rs15,000 and C Rs9,000 . The partners shared profits and losses in the
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ratio of A 1/2: B 1/3: C 1/6. Give the necessary adjusting entry.

UNIT II
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11. A and B are partners sharing profit and losses in the ratio of 3:2. Their Balance Sheet is as
under:
-C
SC
Capital A\cs Plant & Machinery 30,000

A 30,000 Stocks 24,500
A
B 22,500 Debtors 22,500

K
Reserve A\c 22,500 Bank 9,000

Sundry creditors 11,250 Cash in hand 750
86,250 86,250
B retires and the following revaluations were made:

(1) The goodwill of the firm is valued at Rs.37,500
(2) Depreciate Plant& Machinery by 7 1\2 % and Stock by 15%
(3) A bad debts provision is raised against debtors at 5% and discount reserve against
creditors at 2%. Prepare profit and loss adjustments A\c, partner’s Capital
accounts and new balance sheet as on 1st January 1997.
18
12. Malathi and Revathi are partners in a business sharing profits and losses in the ratio of
3:2. Their balance sheet as on 1st January 1996 was as given below:
Capital Accounts Machinery 20,000
Malathi 20,000 Stock 16,000
Revathi 15,000 Debtors 15,000
Reserve fund 15,000 Cash at bank 6,000
Creditors 7,500 Cash in hand 500
57,500 57,500
)
G
Revathi retires from the business on 1.1.96 owing and Malathi takes it over.
(U
The following revaluations were made:
(a) The goodwill of the firm was valued at Rs. 25,000
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(b) Depreciate Machinery by 7 1\2% and Stock by 15%
(c) Create a provision for bad debts at 5% on debtors
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(d) Create a provision for discount on creditors at 2%
Give journal entries, partner’s capital accounts, Revaluation account, and
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Balance Sheet of Malathi.

13. Anjali, Bindu and Carole were partners carrying on business. They shared profits and
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losses in the ratio of 2:1:1 respectively. Their Balance Sheet as on 31.12.2010 stood as
follows:
-C
SC
Sundry creditors 24,000 Cash in hand 20,000

Bills payable 28,000 Sundry debtors 37,000
A
General reserve 20,000 Bills payable 25,000

K
Capitals : Stock 40,000

Anjali 50,000 Plant & Machinery 50,000
Bindu 25,000
Carole 25,000
1,72,000 1,72,000
Anjali retires from 1 st April 2011 as per the following terms:

(1) Her share of goodwill shall be determined on the basis of two years’ purchase of
the average profits of last four years which were:
2007- Rs. 8,000; 2008- Rs. 4,000; 2009- Rs. 5,600(loss); 2010-Rs. 9,600.
(2) Her share of profit to the date of retirement shall be ascertained on the basis of
profit for the year 2010.
19
(3) Assets were to be revalued as under:
Stock Rs. 60,000; debtors (on account of bad debts) Rs. 35,000; plant &
machinery Rs. 40,000; Anjali is paid Rs. 10,000 in cash and Balance to be paid in
future.
Show necessary accounts and prepare Balance Sheet of continuning partners.
14. King, Queen and Prince are partners sharing profits in the ratio of 3:2:1. Their Balance
Sheet on 31.3.95 was as follows:
General reserve 6,000 Building 20,000
Capital A\c : Furniture 3,000
King 15,000 Stock 12,000
Queen 10,000 Debtors 15,000
)
Prince 10,000 Cash 1,000
G
Creditors 10,000
(U
Bills payable 5,000
51,000 51,000
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Queen retires from the firm as on the following terms:
(1) Building is to be valued at Rs. 32,000; furniture written down by Rs. 600; stock to
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be reduced by Rs. 1,800; a provision of 5% be created on debtors.
(2) Goodwill is to be valued at 2 years purchase of 3 years profit. The retiring
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partner’s share is to be adjusted in the capital of the continuing partners.

(3) The amount due to the retired partner is to be paid in three annual instalments with
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12% interest
(4) The profits for the past three years were: Rs. 5,000; Rs. 6,000 and Rs. 7,000
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respectively. Give the Revaluation A\c, Capital A\c and the Balance Sheet of the
new firm.
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15. Kin, Min and Tin are partners sharing profits and losses equally. Their Balance sheet as
on 31.3.2011 is:
A

K
Creditors 47000 Cash 36000

General reserve 30000 Debtors 84000
Capital a/c Less: PBDD 6000
78000
Kin: 82000 Stock 19000
Min: 82000 Fixture 42000
Tin: 90000 254000 Furniture 56000
Machinery 100000
331000 331000
Tin died on 1st April 2011 and the following agreement was to be put into effect:
(1) Goodwill was valued at Rs.60000 and Tin was to be credited with his share.
20
(2) Assets were revalued: Machinery to Rs.117000; Furniture to Rs.46000; Stock to
Rs.15000.
(3) Rs.21000 was to be paid away to the Tin’s executors on 1st April 2011.
Pass journal entries and prepare revaluation a/c capital a/c s and Balance sheet of new firm.
16. A, B and C are partners sharing profits and losses in the ratio of 2: 2: 1. On 1 st January
2008, they took out a joint life policy of Rs. 200000. Annual premium of Rs .10000 was
payable on 1st Jan each year .Last premium was paid on 1st January 2011. B died on 1st March
2011, and policy money was received on 31st March 2011. The surrender value of policy as
on 31st December each year were as follows:
2008- Nil; 2009- Rs.2000; 2010- Rs. 5000. Show necessary accounts as on
31st December each year assuming that:
(1) The premium is charged to profit & loss account every year.
(2) The premium is debited to joint life policy account and the balance of the joint
life policy account is adjusted every year to its surrender value.
(3) The premium is debited to joint life policy account and a sum equal to premium is
)
debited to profit & loss appropriation account and credited to joint life policy
G
reserve.
17. P, Q and R share profits in proportion of ½, ¼ and ¼. On the date of dissolution their
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Balance sheet was as follows:
Creditors
P’s Capital
14000
10000
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Sundry assets 40000
Q’s capital 10000

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R’s capital 6000
40000 40000
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The assets realized Rs. 35500. Creditors were paid in full. Realization expenses
amounted to Rs. 1500. Close the books of the firm.
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18. Explain the garner Vs.Murray Rule.

19. Describe the piecemeal Distribution in Dissolution of partnership.
20. Enumerate the modes of dissolution.
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UNIT III
21. D,E,F and G are partners sharing 4:3:2:1. Their position statement are as follows:
SC
Liabilities Assets
Capital accounts Cash at bank 4,500

A
D: 90,000 Machinery 1,32,000

K
E: 60,000 Stock 60,000

Sundry creditors 1,20,000 Debtors 1,20,000
Bank loan 60,000 Capital accounts:
F 10,500
G 3,000
3,30,000 3,30,000
The firm is dissolved. All assets realised Rs.2,46,000. The sundry creditors and bank
loan were paid Rs.1,77,000 in full satisfaction. The expenses of dissolution are Rs.1,800. G
became insolvent and F paid only Rs.9,000.
Prepare ledger accounts to close the books of the firm.
21
22. A, B and C are partners sharing profits and losses in the ratio of 3:2:1 respectively.
The firm was dissolved on 31.12.95 on whichdate its balance sheet was as follows:
Liabilities Assets
Capital accounts: A 45,000 Plant & Machinery 28,500
B 5,000 Stock 25,000
C 5,000 Sundry debtors 25,000
A’s current account 750 Cash at bank 1,500
Sundry creditors 20,000 B’s current a/c 1,000
Bills payable 3,500 C’s current a/c 2,500
A’s loan 5,000 Profit & Loss a/c 750
84,250 84,250
Plant and Machinery realised for Rs.20,000; stock realised Rs.15,000; Debtors realised
Rs.21,000; Goodwill was sold for Rs.300; The dissolution expenses amounted to Rs.600; C is
)
G
insolvent and a dividend of 50 paise in the rupee is received from his private estate.
Pass journal entry and prepare ledger accounts to close the books of the firm applying the rule
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in Garner vs Murray.
23. P, Q and R are partners in a firm. They share profits and losses equally. Their
balance sheet as on 31.12.92 is given as under.
Liabilities
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Rs. Assets Rs.
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Capital P 16,000 Machinery 40,000
R 12,000 Furniture 16,000
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Reserve fund 18,000 Debtors 40,000

Creditors 64,000 Cash at bank 8,000
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Q’s capital 6,000

1,10,000 1,10,000
The partnership is dissolved due to insolvency of Q who is unable to contribute
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anything in the payment of his debt of the firm. Machinery realised Rs.30,000 and furniture
SC
Rs.6,400. Only Rs.24,000 was recovered from debtors. Creditors are paid at discount of 5%.
Prepare the necessary accounts in the books of the firm when the capitals are
A
fluctuating. Applying Garner vs. Murray rule.

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24. The balance sheet of ‘A’ & ‘B’ as on 31.3.2002 were as follows:
Liabilities
Liabilities AA BB Assets
Assets AA BB
Rs. Rs. Rs. Rs.
Capitals 15,000 20,000 Machinery 7,500 9,000
Creditors 10,000 5,000 Furniture - 3,500
Bank loan 5,000 - Stock 10,000 5,000
Bills payable - 2,500 debtors 5,000 10,000
Buildings 7,500 -
30,000 27,500 30,000 27,500
They decided to amalgamate their business. The following revaluations were agreed:
a) Machinery to be reduced by 10%
b) Furniture of B to be appreciated by 5%
22
c) Stock to be depreciated by 10%
d) Buildings to be appreciated by 20%
Pass the journal entries in the books of ‘A’ and ‘B’ and also prepare the amalgamated
balance sheet.
25. The following is the balance sheet of Arun, Babu, Cheran and David on 31.12.94.
they shared profits and losses in the ratio of 4:3:2:1.
Capitals Fixed Assets 20,000
Arun 15,000 Current Assets 6,000
Babu 10,000 Goodwill 5,000
Cheran
David 1,500 David’s
has no separate assets and liabilities. capitaldecided to dissolve the
The parners 500
31,500 31,500
)
David has no separate assets and liabilities. The partners decided to dissolve the business.
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Fixed assets realised Rs.15,000 and current assets realised Rs.5,000. The goodwill is
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valueless. Realisation expenses amount to Rs.1,500. Cheran can contribute only Rs.250 from
his separate resources. Prepare necessary accounts according to Garner vs. Murray assuming
that both Cheran and David have become insolvent.
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26. X, Y and Z are equal partners, whose balance sheet on 31.12.1992 is as follows:
Liabilities Rs Assets Rs.
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Capital A/c’s
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Plant & Machinery 4,000

X: 1,600 Land & Buildings 4,000
Z: 1,000 Furniture 1,600
X’s loan
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2,000 Debtors 2,000

Sundry creditors 10,000 Stock
Stock 1,600
1,600
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Cash
Cashininhand
hand 100
100
Sundry creditors 10,000 Y’s
Y’scapital(overdrawn)
capital(overdrawn) 1,300
1,300
A
14,600 14,600
K
14,600 14,600
Due to lack of liquidity and weak financial position of the partner, the firm is
dissolved. X and Z are not able to contribute anything and a sum of Rs.400 received from Y.
All of them are declared insolvent.
The assets are realised: Stock Rs.1,000; Plant & Machinery Rs.2,000; Furniture
Rs.400; Land & Buildings Rs.1,600; and Debtors Rs.1,100 only. Realisation expenses
amounted to Rs.100. you are required to close the books of the firm.
23
27. Geetha and Sheetal partners were partners sharing profit and losses in the ratio of 3:2. On
1.7.99, there balance sheet was under:

Creditors 20,000 Plant 50,000
Reserves 15,000 Stock 20,000
Capitals : Debtors: 18,000
Geetha 40,000 (-) RBD: 900
Sheetal 30,000 17,100
Cash at bank 17,900
1,05,000 1,05,000
It was found that the liabilities contained Rs.1,600 which are not payable.
)
The firm was taken over by a company and the Purchase consideration consisted of 8,250 of
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Rs.10 each fully paid and balance in cash.
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Pass journal entries to close the books of the firm. Assume that the shares are distributed in
the profit sharing ratio.
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28. The following was the balance sheet of M/s A and B as on 31.3.2000.
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Current liabilities 30,000 Fixed assets 1,00,000

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General reserve 36,000 Stock 60,000

Capitals: A 1,00,000 Debtors 25,000
B 64,000 (-) RBD 1,000
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24,000
B/R 20,000
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Bank 26,000
'P' ltd acquired this business on the above date and the terms were:
2,30,000 2,30,000
A
a) Fixed assets to be valued at 20% more than the book value.

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b) Stock to be valued at 90% of book value.

c) RBD to be 10% on debtors.
d) The Purchase consideration was to be settled by the issue of 20,000 equity shares of
Rs.10 each valued at Rs.12each. Pass journal entries in the books of P Ltd.
24
29. A and S were partners sharing profits in the ratio of 2/3 and 1/3 respectively. Their
balance sheet as on 31.12.1992 on which date they converted their business into a company
was as follows:
Creditors 30,000 Cash 7,000

Mortgage on freehold premises 10,000 Debtors 26,000
Capitals : A 20,000 Machinery 5,000
S 10,000 Freehold premises 16,000
70,000 70,000
The company took over all the Assets and liabilities except mortgage on freehold
)
premises for a purchase price of Rs.60,000 payable as to Rs.12,000 in debenturers
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and the balance in the equity shares of Rs.10 each. Close the books of the firm after the above
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transactions have been carried out. mortgage has been paid. The partners agree to share
debentures and shares in proportion to their capitals. prepare the ledger accounts in the books
of the firm.
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30. Ram &Co Ltd. was formed to take over the running business of M/S Ram and Shyam
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who shared the profit in the ratio of 3 : 2.Their balance sheet as on 31.12.2000was as follows:
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Creditors 20,000 Goodwill 15,000

Bills payable 10,000 Buildings 42,000
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Mrs. Ram’s loan 4,000 Machinery 20,000

Ram’s capital 60,000 Stock 22,000
Shyam’s capital 40,000 Debtors 28,000
A
Investments 5,000
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Bank 2,000
1,34,000 1,34,000
The company agreed to take over the assets as under:
Machinery Rs.15000, buildings Rs.60,000, stock Rs.20,000, Rs.25,000, Goodwill Rs.20000.
The company also agreed to take over the creditors and bills payable at book values.
The firm retained investments and sold them for RS 6,000 and paid Mrs. Ram's loan.
The Purchase consideration was settled by the issue of 10,000 equity shares of Rs.10 each
and balance in cash, shares being distributed in profit sharing ratio. Pass the journal entries to
close the books of the firm.
UNIT IV
25
31. There was a serious fire in the premises of M/s Careless on 1 st Sep. 1990. Their business
activities were interrupted until 31.12.1990, when normal trading conditions were re-
established. M/s Careless are insured under the loss of profit policy for Rs.4, 20,000 the
period of indemnity being six months.
You are able to ascertain the following information:-

a) The net profit for the year ended 31.12.1988 was Rs.2, 00,000.
b) The annual insurable standing charges amounted to Rs.3,00,000 of which Rs.
20,000 were not included in the definition of insured charges under the policy.
c) The additional cost of working in order to mitigate the damage caused by the
fire amounted to Rs. 6,000 and but for this expenditure, the business would have
had to shut down.
d) The saving in insured standing charges in consequence of the fire amounted to
Rs. 15,000.
)
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e) The turnover for the period of four months ended April 30, August 31 and
December 31 in each of the year 1989, and 1990 was as under.
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Rs. Rs. Rs.
1980 6, 50,000 8, 00,000

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9,50,000
1990 7, 00,000 8, 00,000 1, 50,000
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You are required to compute the relevant claim under the terms of the loss of profit
policy
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32. From the following information you are required to workout claim under the loss of profit
insurance policy.
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a) Cover Gross Profit - Rs.2,00,000

b) Indemnity Period - six months
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th
c) Damage due to a fire accident on 28 December accounting year ends on
31st December.
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d) Net profit plus all standing charges in the prior accounting year Rs.
3,00,000.
A
e) Standing Charges uninsured Rs, 50,000.

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f) Turnover of the last accounting year was Rs. 10,00,000, the rate of gross
profit being 25%
g) The annual turnover, namely, the turnover for 12 months immediately
preceding the fire Rs. 10, 40,000.
h) As a consequence of fire, there was a reduction in certain insured standing
charges at the rate of Rs. 50,000 per annum.
33. What are preferential creditors in the following liabilities of insolvent Bhupesh according
to presidency Towns Insolvency Act and Provincial Insolvency Act?
Rs.
3 Month’s salary for 10 clerks 3,600
One month wages of 12 laborers 1,600
Sales Tax 400
26
3Months rent of landlord 600
Income tax 1,000
Wages of four servants 1,400
Salaries 1,000
Municipal tax 400
Wages 6,000
st
34. Mr. Deepak filed his petition for insolvency on 31 December 1994. The details of
outstanding expenses are as follows:
i. Salaries of 8 clerks @ Rs.150 per month for each clerk for 3 months.
ii. Wages of a labourer for the month of August 1944 Rs. 120.
iii. Wages of 8 labourer for the month of September 1944 @ Rs.110 per labourer.
iv. Rent of landlord for the month of November and December 1944 Rs. 800.
v. Amount due to the municipality for Rs. 1,000 to the income tax department Rs.
2,000 and to the sales tax department Rs. 2,000.
)
vi. Salaries of two clerks for the month of July 1933 Rs. 500 each.
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You are required to find out the amount of preferential and non-preferential creditors
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according to presidency Towns Insolvency Act.
35. Mr.Umesh of Madurai consults you for preparing a statement of affairs. How will the
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following items appear in the various lists?
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i. Private liabilities Rs. 20,000
ii. Unsecured loans Rs. 4,00,000
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iii. Loans from Guru Rs. 1, 20,000 secured by plant & machinery. The estimated
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value of plant & machinery is Rs. 1,10,000 (Book value Rs. 1,16,000.
iv. Bills discounted Rs. 16,000 out of which bills of Rs. 10,000 are excepted to be
dishonored.
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v. Loans from pawar secured by first mortgage on life insurance policy Rs.
80,000. Surrender value of life insurance policy Rs. 1, 00,000.
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vi. Land lord Rent for 4 months @ Rs. 150 per months due.
vii. Loans from Ram Rs. 70,000 secured by second charge on life insurance policy
A
mentioned above.
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viii. Rates and taxes Rs. 800.

ix. Banks overdraft Rs. 60,000 secured by personal guarantee of a friend the
insolvent
x. Loan from wife Rs. 30,000 out of which she received Rs. 16,000 from her
father.
xi. Wages @ Rs. 30 per month per servant for 6 months for 3 servants.
xii. Salaries @ Rs. 200 per month per clerk for 7 months for 4 clerks.
xiii. Bills Payable Rs. 8,000.
27
36. How will you treat the following in the statement of affairs and deficiency A/C?
i. Rs. 40,000 loans from wife have been included in unsecured creditors of Rs. 1,
00,000. Wife has paid this loan out of her Stridhan.
ii. 16 months before declaration of insolvency a private house of Rs. 60,000 was
transferred to his wife without consideration.
iii. Private assets of s. 50,000 of the insolvent include Rs. 6,000 Stridhan of his wife
and private liabilities are Rs. 30,000.
iv. The insolvency has transferred his private cottage of Rs. 36,000 to his daughter
in consideration of her marriage.
37. Mr. Chandran of Calcutta finds himself insolvent on 31.12.93. His position was as
follows:
)
Leasehold property Rs. 10,000(estimated to realize Rs. 9,000)
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Plant & Machinery Rs. 4,000(estimated to realize Rs. 3,000)
Stock in trade Rs. 2,000(estimated to realize Rs. 1,400)
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Book Debts -Good Rs. 6,000
-Doubtful Debts Rs. 500(estimated to realize 50%)
-Bad Debts Rs. 1,400
Bills in hand -Rs. 375.
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Life policy for Rs. 2,500 whose surrender value is Rs. 500 is held by insurance
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company against a loan of Rs. 290.
Bills discounted Rs. 600(Rs. 200 likely to be dishonored).
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Loan on Mortgage of Leasehold Rs. 5,000.

Cash in hand Rs. 10.
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Bank overdraft secured by personal guarantee of Chandran’s brother and second

mortgage on leasehold Rs. 5,000.
Unsecured creditors Rs. 15,000.
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Loans from Nathan Rs. 250 secured by second charge on life policy.
Ground Rent on leasehold for three months accrued Rs. 25.
SC
He could not pay his office clerk’s (two in number).

Salaries for six months, Rs. 150 and also rates and taxes amounting to Rs. 150.
Prepare a Statement of Affairs
A
38. From the following particulars, prepare the statement of affairs and deficiency account of
K
Mohan who is an insolvency debtor:
Unsecured Creditors Rs. 30,100; Creditors partly secured Rs.38,160(Holding security of

the value of Rs. 36,200 which is estimated to realize only Rs. 12,000. Preferential
creditors Rs. 1,000; Bill Received discounted Rs. 4,120 (upon which it is estimated that
there will be liability of Rs. 560); Stock in trade Rs. 20,020.(estimated to realize Rs.
16,000); Book debts: Good Rs. 15,720;doubtful and had Rs. 1,300(estimated to realize
Rs. 356) Land and Buildings Rs. 16,000(estimated to realize Rs. 10,000), Plants and
Machinery Rs.25,000 (estimated to realize Rs. 11,000), Cash in hand Rs. 4.
He started business five years ago with a capital of Rs. 50,000; The trading, after
charging interest on capital at Rs. 2,000 per year resulted in a profit of Rs. 1,204 for the
first year and losses of Rs. 740, Rs. 900, Rs. 1,000 and Rs. 1,400 for the subsequent
years. His drawings were at the rate of Rs. 1,800 a year and there was a speculation loss
of Rs. 3,180 during the whole period of five years.
28
39. Mr.Kannan filed his petition on 31.12.91 and his statement of affairs was made of the
following particulars:
Rs.
Creditors – fully secured by lien on stock 2,000
Creditors – Partly secured by lien on shares 8, 00,000
Creditors – unsecured 15, 00,000
Mortgage on buildings 2, 00,000
Creditor’s payable in full 60,000
Buildings – of the value of 2, 20,000
Machinery (estimated to produce Rs. 2, 40,000) 3, 00,000
40.Sankar is insolvent. He supplies to you the following information as on 31.12.93.
)
Rs.
G
Cash in hand 200
Salary due to clerks 800
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Taxes owing to government 2,400
Creditors for goods 60,000
the book value of Rs. 40,000

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Bank Loan secured by lien on stock of
20,000
Furniture (expected to realize Rs. 4,000) 8,000
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Stock (expected to realize Rs. 60%) 60,000
Book debts – Good 8,000
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Doubtful (expected to realize 40%) 20,000

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Bills Receivable (Rs. 6,000 bad) 10,000

Bills Discounted (Rs. 4,000 bad) 12,000
Loan from Mrs.Sankar (from her own funds) 20,000
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Sankar started business six years ago with a Capital of Rs. 1, 10,000. He drew Rs. 20,000
each year for private purposes but did not maintain proper books of accounts. Mrs.Sankar
gave up jewellery valued at Rs. 8,000 to the Receiver. Prepare the Statement of Affairs and
SC
Deficiency A/c.
UNIT V
41. Indicate three areas in respect of which different accounting policies may be adopted by different
A
enterprises. Also indicate the requirements with regard to disclosure of accounting policies.
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42. Explain the logic of valuing inventories below historical cost when NRV is below Historical cost.
43. What are the recommendations of AS – 2 for allocating common costs to joint and by products.
44. Describe the direct approach of determining cash-flow operations? How is indirect approach
different from the direct approach?
45. Discuss the main contents of AS – 9 relating to revenue recognition on sale of goods.
46. What procedure is to be followed when there is uncertainty on revenue recognition?
47.Explain in detail about AS – 1
50. Explain in detail about various methods of Goodwill.
29
Annexure
SECTION A - KEY
1. c) equally among the partners 51. a) Trading loss and capital loss
2. d) an intangible asset 52. (b)Capital ratio
3. b) sacrificing ratio 53. (a) capital
4. c) equally among the partners 54. (b) Capital
5. a) revaluation method 55. (a) credit
6. a) sacrificing ratio 56. (a) assets
7. c) 2:1 57. b) Book value
8. c) goodwill account 58. a) 1904
9. c) the old partners in their old profit 59. (a) Marketable value
sharing ratio
10. a) Rs.800 60. (b) Credited
11. c) old profit sharing ratio 61. (a) Loss of sales as well as loss of
)
insured standing charges.
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12. b) fixed 62. (c) Encourage full insurance of stock
13. b) equally 63. (b) Rs. 6,00,000
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14. a) 6% 64. (a) tangible assets
15. b) not to paid 65. (d) None of the above
16. (b) 1: 2: 3 : 4 ce
66. (d) short sales
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17. (a) in the profits of the business 67. (a) amount of the policy taken
18. (a) Expense 68. (c) (Net profit + Insured standing
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charges)/Sales of the financial year

preceding the year of fire
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19. (a) profit sharing ratio 69. (c) consequential loss insurance
20. (a) new partner 70. (c ) List F
21. c) old ratio 71. (b) List D
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22. c) nominal account 72. (a) one month

23. b) all partners 73. (a) preferential claim
SC
24. (b) in the profit sharing ratio 74. (a) one month
25. (a) interest at 6% p.a.of the amount due 75. ( c ) Rent is not preferential
to the retiring partners or executors of the
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deceased partner
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26. a) Old ratio 76. (a) Encourage under insurance

27. b) Sacrificing ratio 77. (b) Deficiency a/c
28. b) realization a/c 78. (d) None of the above
29.c ) P&L appropriation a/c 79. (d) None of the above
30. a) an income 80. (b) credit
31. c) real account 81. (a) Going concern, consistency,
and accrual
32. b) realization a/c 82. (d) Disclosure
33. d) realization a/c 83. (a) FIFO
34. a) profit sharing ratio 84. b) Temporary
35. a) capital a/c 85. b)1975
36. a) realisation a/c 86. b) Sinking fund
37. a) nil 87. b) Ascertaining cost
38. a) realisation a/c 88. b) necessities
30
39. b) realisation a/c 89. a) job
40. a) realisation a/c 90. a) practice
41. b) amalgamation 91. a) advantageous aspect
42. a) capital account 92. c) verifiable through observations and
record
43. a) capital 93. c) certain accounting records
44. d) any of the above 94. c) accounts
45. c) nominal a/c 95. c) recorded facts
46. c) insolvency of a partner 96. a) Net Profit plus increase in stock
47. d) realisation profit 97. a)Adding back amortization of
development cost
48. a) profit sharing 98. b)find out the sources and applications
of funds
49. c) capital 99. b) application of cash
50. c) the firm is insolvent 100. b) Variable Working Capital
)
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31
(AUTONOMOUS)
COIMBATORE-641029
)
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QUESTION BANK
SC
A
SUBJECT CODE: 16UCM2A2

TITLE OF THE PAPER: INTERNATIONAL TRADE
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NOVEMBER 2019
1
Question Bank
FUNDAMENTALS OF FINANCIAL ACCOUNTING
CONTENTS
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1 Section A 3
2 ce
Section B 10
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3 Section C 12
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A
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Prepared by
S.SARANYA
Coimbatore-29.
2
SUBJECT CODE: 16UCM2A2
(AUTONOMOUS)
COIMBATORE – 641 029
INTERNATIONAL TRADE
UNIT I
SECTION – A
)
1. The _____ trade is the trade goes beyond the boarder of the nation.
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a. Local b. Regional c. National d. International
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2. Selling of goods or services to another country is known as _____.
a. Income b. Trade c. Export ce
d. Investment
3. Buying of goods or services from another country is known as _____.
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a. Poverty b. Import c. Growth d. Output
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4. The example of International trade in India is _____.

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a. Japanese watch b. American drink c. German cars d. All the above

5. The International trade is also known as _____ trade.
a. Foreign b. Home c. State d. Welfare
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6. The foreign trade enables the nation to improve the _____ welfare.
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a. Export b. Import c. Economic d. Production

7. The International trade helps in _____ the price of goods throughout the world.
A
a. Stability b. Increase c. Decrease d. Very low

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8. The _____ enables the country to obtain goods which cannot produce by themselves.
a. Gains b. International trade c. Demand d. Supply
9. The _____ is the one of the measurement of the gains from international trade to a
particular country.
a. Self sufficient b. Efficient c. Terms of trade d. Index ratio
10. The net barter terms of trade is also called as _____ terms of trade.
a. Exact b. Classical c. Desire d. Commodity
11. The _____ introduces the concept of Gross barter terms of trade.
a. Taussig b. Adam c. Jacob d. Viner
3
12. G.S Dorrance has modified the _____ terms of trade and presented income terms of trade.
a. Gross b. Single c. Net barter d. Factoral
13. The _____ terms of trade indicate a nations capacity to import.
a. Double b. Income c. Real cost d. Utility
14. Jacob Viner has introduced the concept of _____ and Double factoral terms of trade.
a. Single b. Net c. Gross d. Income
15. Changes in _____ may also cause changes in terms of trade.
a. Utility b. Desire c. Resource d. Taste and preferences
16. The _____ trade involves buying goods in large quantity from producer.
a. Retail b. Wholesale c. Export d. Home
)
17. The home trade is also known as _____ trade.
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a. Internal b. External c. Foreign d. Import
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18. Goods are imported from one country and re- exported after processing is called _____
trade.
a. Export b. Import c. Entrepot
ce d. Foreign
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19. The balance of international payment usually referred as _____ of payments.
a. Income b. Changes c. Balance d. Transfer
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20. The _____ includes all transactions which give rise tonor use up of national income.
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a. Capital account b. Current account c. Unilateral account d. Official statement

account
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SC
UNIT – II
21. A tariff is a _____ imposed by government for international trade.
A
a. Duty or tax b. Services c. System d. Utility

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22. The _____ is levied upon both imports and exports.

a. Monetary measures b. Incentives c. Tariff d. Quota
23. The trade barriers classified into _____ types
a. 3 b. 5 c. 7 d. 2
24. The _____ duty is imposed upon good originating from foreign scheduled to third country
crossing home country.
a. Import b. Export c. Transit d. Specific
25. The _____ is a flat sum per physical unit of the commodity imported or exported down.
a. Specific duty b. Compound duty c. Transit duty d. Single column
4
26. The _____ duties are levied as a fixed percentage of the value of the commodity
imported or exported up.
a. Countervailing b. Ad – volerm c. Protective d. Revenue
27. The single column is also known as _____ tariff system.
a. Sub system b. Conventional c. Minimum d. Uni- linear
28. In the double column tariff system there are _____ rates of duty on some or on all
commodities.
a. 2 b. 3 c.4 d. 5
29. The _____ duties are generally penalty duties and an addition to the regular rates.
a. Anti dumping b. General c. Maximum d. Revenue
)
30. The non tariff barrier means _____.
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a. Non- tax barrier b. Number tax barrier c. Non – tariff base d. Non – tariff Barrier
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31.The _____ are an important means of restricting import and export.
a. Tariff b. Non – tariff c. Administered d. Quotas
ce
32. A ______ combines the features of the tariff as well as the quota.
er
a. Unilateral quota b. Tariff Quota c. Licensing Quota d. Industrial quota
33. In mixing quota the producer is obliged to utilize _____upto a certain portion in finished
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product.
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a. Domestic raw material b. Imported material c. General material d. Aggregate

material
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34. The impact of quota is _____.

SC
a. Price effect b. Protective effect c. Revenue effect d. All the above

35. The quotas may affect the _____ of the country by imposing them.
A
a. Revenue b. Terms of trade c. Redistrictive d. Consumption

K
36. In international trade _____ means exchange of goods rather than by currency purchase.
a. Policy b. Restricting supply c. Counter trade d. None of the above
37. The _____ refers to direct exchange of goods of equal value with no money.
a. Buy back b. Barter c. Compensation real d. Counter purchase
38. In _____ the seller receives a part of payment in cash and rest in products.
a. Barter b. Buy back c. Compensation real d. Transfer of goods
39. The trade which is common between communist countries is known as _____.
a. Policy b. Restricting supply c. Counter trade d. None of the above
40. Tariff is applicable to _____ importers.
a. Some b. All c. Government d. Private
5
UNIT – III
41. The international trade is generally very _____ and sensitive.
a. Competitive b. Normal c. Advance d. Cleared
42. The credit facilities made available to the buyers are one of the important determinants of
_____ business.
a. Export b. Import c. Entrepot d. Cashless
43. The extent to which _____ must be extended to the importer depends on the sale terms.
)
a. Transport b. Goods c. Debit d. Credit
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44. If the _____ gets cash in advance, there will not be any problem in respect of finance.
(U
a. Customer b. Importer c. Exporter d. Consumer
45. Sometimes the institutional credit is extended to the _____ buyers instead of the exporter.
a. Home b. Foreign c. Official
ce d. Regular
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46. A _____ contract should clearly specify when, where and how the payment will be made.
a. Sale b. Purchase c. Shipment d. Financial
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47. The most advantageous payment term for the seller is _____.
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a. Cash after sale b. Cash on sale c. Cash on demand d. Cash in advance

48. If the seller enjoys a _____ position it is easy to obtain advance payment.
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a. Oligopoly b. Duopoly c. Monopoly d. None of the above

SC
49. The documentary against payment is also known as _____

a. Cash against document b. Cash notice c. Cash transaction d. Cash deposit
A
50. In _____ the documents are handed over to the buyer when have accepts the bill of
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exchange by signing it.

a. Cash in advance b. Open account c. Consignment sale d. Document on
acceptance
51. The _____ letter of credit covers the major part of the export business of the world.
a. Document against payment b. Individual c. Documentary d. Commercial
52. The _____ is also known as packing credit.
a. Post-shipment b. Pre-shipment finance c. Letter of credit d. Private concern
53. The financial institutions provides ______ credit to the buyers and sellers.
a. Buyers b. Line of credit c. Supplier d. All the above
54. The EXIM bank was set up in the year _____.
6
a. 1982 b. 1962 c. 1986 d. 1983
55. The EXIM stands for _____.
a. Export Institute Management b. Export Import Bank of India c. Entrepot Import
Bank of India d. Export Import Management
56. The EXIM bank was fully owned by _____.
a. Beneficiary b. Third party c. Government of India d. Financial
institution
57. In letter of credit the opener is the _____.
a. Issuer b. Importer c. Exporter d. Middleman
58. The clean letter of credit may be negotiated against the _____.
)
a. Acceptance b. Cash credit c. Clean draft d. Revocable
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59. The _____ was transformed into ECGC.
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a. ERIC b. WTO c. BSIC d. EXIM
60. The ECGC was renamed as Export Credit Guarantee Corporation of India united in
_____.
ce
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a. 1921 b. 1964 c. 1982 d. 1983
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UNIT – IV
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61. The _____ is a system or process of converting one national currency into another.
a. Currency b. Foreign exchange c. Regulation d. Interpretation
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62. The foreign exchange regulation act ______.

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a. 1927 b. 1983 c. 1973 d. 1987

63. FERA means _____.
A
a. Foreign Experiment Regulation Act b. Foreign Exchange Regulation Act

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c. Foreign Experiment Regulate Act d. Foreign Experiment Regulate Act

64. The Foreign Exchange regulates _____.
a. Deposits b. Credits c. Balance payable d. All the above
65. The foreign exchange market is a market in which _____ transactions takes place.
a. Foreign exchange b. Home trade c. Middle man exchange d. Whole sale
exchange
66. In the transaction between bank and non bank customer _____ customer constitute main
source of foreign exchange business.
a. Primary b. Secondary c. Bank d. Financial
7
67. The _____ and brokers authorized to deal in foreign exchange in the same country
constitute the national foreign exchange market.
a. Businessmen b. Professional c. Banks d. Proprietor
68. Foreign exchange deals between two currencies, follows _____ national centers involve
in it.
a. One b. Three c. Two d. Four
69. The primary function of the foreign exchange market is the _____ from one country to
another.
a. Hedging facility b. Credit facility c. purchasing facility d. Transfer of
purchasing power
)
70. The main function of the foreign exchange is to provide _____.
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a. Provision b. Hedging facility c. Payment facility d. Transport
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facility
71. In _____ the amount is transferred from one country bank to other in the form of cash or
telex.
ce
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a. Telegraphic transfer b. Mail c. Currency d. Bills of
exchange
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72. The documentary credit is also known as _____.

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a. Foreign exchange b. Cheque c. Draft d. Re- imbursement

73. The _____ refers to the class of foreign exchange on the spot.
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a. Spot b. Specified c. Documentary d. Regular

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74. The equivalent rate at time of making contract in spot market and foreign exchange rate is
known as _____
A
a. Premium b. Par c. Discount d. Deviation

K
75. The _____ is one of the important means of achieving certain national objectives.
a. Maintenance of value b. Stable exchange c. Exchange control d. Outflow of
capital
76. The objectives of exchange control is _____.
a. Strengthen the government b. Conserve foreign exchange c. Check capital
flight d. All the above
77. The exchange control is one of the measures available for improving the _____ position.
a. Consumption b. Balance of payment c. Re – export d. Essential import
78. The maintenance of _____ rate stability is the major objectives of exchange control.
a. Exchange b. Domestic c. Decline d. Increased
8
79. The unilateral measures methods may be adopted by a country _____ without any
reference to other country
a. Speculation b. Multilateral c. Bilateral d. Unilaterally
80. The _____ refers to the policy of government for fixing exchange rate below or above the
normal rate.
a. Rationing trade b. Regulation trade c. Exchange pegging d. Exchange equalization
UNIT – V
81. International financial reporting standards usually called as _____
a. INRS b. IRFS c. IFRS d. IFRT
)
82. IFRS are progressively replacing the many different national _____ standards
G
a. Accounting b. Restatement c. Basic d. Progressive
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83. The international monetary fund is an organization of countries that seeks to promote
international _____ co – operation.
a. Current transaction b. Long term c. Trade
ce d. Monetary
er
84. The membership in IMF is _____ to every country.
a. Strict b. Open c. Balanced d. Economic
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85. In _____ aspect IMF provides International co operation, technical assistance to its
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members.
a. Regulatory b. Financial c. Consultive d. Active
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86. The credit tranche policy is the _____ basic policy on the use of its general resources.
SC
a. IMF b. ITO c. GATT d. IBRD

87. The international bank for reconstruction and development today more popularly known
A
as _____.
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a. World Twins b. Guarantees c. Financial resources d. World bank

88. The IOA means _____.
a. Inter Development Act b. International Development Association
c. Inter department Associations d. International Development Asset
89. The IDA was set up in the year _____.
a. 1984 b. 1963 c. 1983 d.1992
90. The IDA was a subsidiary of the world bank to provide _____ to the member countries.
a. Soft loan b. Rural development c. Repayment loans d. Productive loans
91. Te IFC was established in the month of _____.
a. April b. May c. July d. August
9
92. The IFC was an affiliate of the world bank with _____ member countries.
a. 30 b. 25 c. 31 d. 28
93. The _____ set up as a regional finance institution.
a. ADB b. GATT c. WTO d. IFRS
94. The ADB Bank headquarters located at _____.
a. US b. China c. Philippines d. Australia
95. The ADB is empowered to provide _____ assistance in the form of guarantee and loans.
a. Educational b. Health facilities c. Project d. Financial
96. The ADB provides _____ assistance to constitute an integral function of the bank.
a. Technical b. Housing c. Medical d. Urban development
)
97. The WTO headquarters located at _____.
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a. Switzerland b. Japan c. India d. Argentina
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98. The WTO administer the _____.
a. Trade review mechanism b. Dispute settlement body c. Goods council
d. All the above
ce
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99. Brazil, Russia, India and China is termed as _____.
a. BRIK b. BRIC c. BRIS d. BIRC
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100. The main objective of BRIC is to co-operate between the member nation by providing
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___.
a. Financial assistance b. Support various project c. Infrastructure
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d. All the above

SC
SECTION – B
A

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UNIT – I
1. What do you infer from the term International trade? Explain.
2. What would be the result if international trade increases?
3. What ideas justify that Comparative cost theory is useful?
4. How would you explain about the Hecksher Ohlin Theory?
5. What did you observe from the Gains of international trade?
6. What is balance of payment? Explain.
7. What is the main theme of Unilateral payment account and official statement account?
8. What can you say about the problems in measurement of terms of trade?
9. What is the main function of import and enterpot trade?
10
10. How would you show your understanding towards availability approach?
UNIT – II
11. How would you show your understanding towards? Explain its impact
12. What are the other ways you can plan for Non tariff barriers?
13. What is the main idea of quotas?
14. How would you summarize the Forms of counter trade?
15. What can you say about the double column and triple column tariff rate?
16. How would you explain the types of types of tariff duty?
)
17. Can you elaborate the reasons behind the import licensing?
G
18. What would be the result if counter trade keep on increasing?
(U
19. What statement supports the need for tariff?
20. What are the circumstances under which counter trade arises?
ce
er
UNIT – III
21. What did you observe from the term Export financing?
m
22. How would you choose the institutional finance for export?
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23. What are the functions of various parties of letter of credit?

24. Can you elaborate on the reasons for the need of export credit guarantee corporations?
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25. How would you develop the insurance covers of export credit guarantee corporations?
SC
26. How would you clarify the objectives of standard policy of export credit guarantee
corporations?
A
27. What inference can you make from the Letter of credit?
K
28. What are the various features of EXIM bank?

29. Can you predict the primary goal of export credit guarantee corporations?
30. What can you say about the modus of operandi of Letter of credit?
UNIT – IV
31. What is foreign exchange market and how it is useful?
32. What factors would you select to show the determination of exchange control?
33. What is the main idea of exchange control?
34. How would you develop the balance of payment theory?
11
35. How would you make use of recent EXIM policy?
36. What can you say about the bilateral method?
37. What do you infer from the term FEMA Act?
38. How would you explain the evaluation of balance of payment?
39. What can you say about the criticism of exchange rate?
40. What inference can you make from the term swap operations?
UNIT – V
41. Elaborate on the international monetary fund?
42. How would you explain the financial policies and facilities of IMF?
)
43. Explain the evolving role of IFC?
G
44. How can you show the various functions of ADB?
(U
45. How will you interpret the advantages of IMF?
46. What is the main purpose of the World bank?
47. How would you determine features of WTO?
ce
er
48. Can you elaborate on the concept of IDA?
49. How can you describe the objectives of BRICS?
m
50. How can you explain the WTO and its characteristics?
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SECTION – C
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Answer The Following

SC
UNIT – I
1. What is international trade and explain its objectives?
A
2. What ideas justify that international trade is important?

K
3. Can you elaborate on the reasons for the basis of international trade?
4. How would you make use of the terms of trade?
5. How would you improve the balance of trade and balance of payment?
6. How would you show your understanding towards the influences of terms of trade?
7. Can you invent a additional balance of payment of items?
8. How would you classify the various forms of trade?
9. When did BOP used? Can you recall the components of balance of payments?
10. How would you categorize the Foreign trade?
UNIT – II
12
11. How would you classify the types of tariff?
12. Elaborate on the impact of tariff.
13. Can you elaborate on the important administrative protection measures?
14. How would you classify the types of quota?
15. What can you say about the impact of quotas?
16. Can you make a distinction between Tariff and Quota?
17. Can you explain about the advantages of counter trade?
18. What could be the result of the growth of counter trade?
19. How would you prioritize the advantages of Quotas?
20. How would you illustrate the features of counter trade?
)
G
UNIT – III
(U
21. How would you describe about the preshipment credit
22. What is the main idea of post shipment finance?
23. What are the various functions of EXIM bank?
ce
er
24. How would you categorize the various kinds of letter of credit?
25. What are the functions of export credit Guarantee Corporation?
m
26. What is the theme of standard policy and the risk covered under the standard policy?
om
27. How would you simplify the features or documentation?

28. How would you show your understanding towards the leading programs of EXIM Bank?
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29. What is export finance? Can you explain the payment terms in export finance?
SC
30. How would you demonstrate the risk not covered under standard policy?
A
UNIT – IV
K
31. What are the functions of foreign exchange market?

32. How would you determine the methods of effecting international payment?
33. How would t=you inspect the transactions in the foreign exchange market?
34. Can you illustrate the objectives of exchange control?
35. How would you classify the methods of exchange control?
36. What is exchange rate? Can you list the classifications of exchange rate?
37. What are the functions of FEMA Act?
38. What ideas justify the main objectives of FEMA Act?
39. How can you show your understanding towards recent exim policy?
40. Can you elaborate the functions of exchange control?
13
UNIT – V
41. What is the main objectives of IMF?
42. What are the functions of IMF?
43. Can you illustrate the formations and functions of World bank?
44. What ideas justify that ID credit is important?
45. How would you summarize the features of IFC?
46. What are the various scope of ADB?
)
47. How can you explain the characteristics of WTO?
G
48. Define BRICS. Explain its formations and functions?
(U
49. How would you inspect the functions IFC and ADB?
50. Explain the history and evolution of World bank?
ce
er
ANSWERS FOR SECTION - A
1. d. International 18. c. Entrepot 35. b. Terms of trade
m
2. c. Export 19. c. Balance 36. c. Counter trade

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3. b. Import 20. b. Current account 37. b. Barter

4. d. All the above 21. a. Duty or tax 38. c. Compensation real
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5. a. Foreign 22. c. Tariff 39. c. Counter trade

SC
6. c. Economic 23. d. 2 40. b. All

7. a. Stability 24. c. Transit 41. a. Competitive
A
8. b. International trade 25. a. Specific duty 42. a. Export

K
9. c. Terms of trade 26. b. Ad - volerm 43. d. Credit

10. d. Commodity 27. d.Uni- linear 44. c. Exporter
11. a. Taussig 28. a. 2 45. b. Foreign
12. c. Net barter 29. a. Anti dumping 46. a. Sale
13. b. Income 30. d. Non – tariff Barrier 47. d. Cash in advance
14. a. Single 31. d. Quotas 48. c. Monopoly
15. d. Taste and 32. b. Tariff Quota 49. a. Cash against
preferences 33. a. Domestic raw document
16. b. Wholesale material 50. d. Document on
17. a. Internal 34. d. All the above acceptance
14
51. c. Documentary 66. a. Primary 84. b. Open
52. b. Pre-shipment 67. c. Banks 85. c. Consultive
finance 68. c. Two 86. a. IMF
53. d. All the above 69. d. Transfer of 87. d. World bank
54. d. 1983 purchasing power 88. b. International
55. b. Export Import 70. b. Hedging facility Development Association
Bank of India 71. a. Telegraphic transfer 89. d. 1960
56. c. Government of 72. d. Re- imbursement 90. a. Soft loan
India 73. a. Spot 91. c. July
57. b. Importer 74. b. Par 92. c. 31
)
58. c. Clean draft 75. c. Exchange control 93. a. ADB
G
59. a. ERIC 76. d. All the above 94. c. Philippines
(U
60. d. 1983 77. b. Balance of payment 95. d. Financial
61. b. Foreign exchange 78. a. Exchange 96. a. Technical
62. c. 1973 79. d. Unilaterally
ce 97. a. Switzerland
er
63. b. Foreign Exchange 80. c. Exchange pegging 98. d. All the above
Regulation Act 81. c. IFRS 99. b. BRIC
m
64. d. All the above 82. a. Accounting 100. d. All the above
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65. a. Foreign exchange 83. d. Monetary

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SC
A
K
15
(AUTONOMOUS)
COIMBATORE-641029
)
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ce
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QUESTION BANK
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SC
A

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TITLE OF THE PAPER: INDIRECT TAX
APRIL 2019
1
Question Bank
INDIRECT TAX
)
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CONTENTS ce
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m

1 Section A 3
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2 Section B 18
3 Section C 21
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SC
A
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Prepared by
Mr.S.Ramakrishnan
Coimbatore-29.
2
INDIRECT TAX
(Question Bank)
ONE Mark
(SECTION – A)
Unit-I
1. Indirect taxes are taxes on_______
)
G
a) Consumption b)Distribution
(U
c) Proportion d) Progression
ce
2. A_________ is a compulsory charge imposed by the Government without any expectation
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of direct return in benefit.
m
a)Goods b) Services
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c)Tax d) None
3. A Duty which is levied on Units of measure of a commodity is __________

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a) Specific Duty b) Tariff Duty

SC
c) Advalorem Duty d) Compounded Duty

A
4. Adam smith in his book, “Wealth of Nations” explained the____basic canons of Taxation.
K
a)Two b) Four c) Three d) Five
5. Impact and Incidence fall on different person is called
a)Direct tax b) Income tax
c) Indirect tax d) All the above
6. . If the producer shifts the the tax burden to the consumer__________
a) Backward shifting b) Forward shifting
3
c) Positive shifting d) Negative shifting
7. A Duty which is levied on Units of measure of a commodity is __________
a) Specific Duty b) Tariff Duty
c) Advalorem Duty d) Compounded Duty
8. Progressive tax is also called as ______
a) Average tax b) Sales tax
)
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c) Single tax d) Graduated tax
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9. The Union list contains
a)97 entries ce
b) 66 entries
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c) 47 entries d) 56 entries
m
10. State list consists of _____ entries

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a) 36 b) 46 c) 56 d) 66
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11. ------------ is a tax levied for the special purpose

SC
a) Surcharge b) CESS
c) Toll tax d) OCTROI

A
12. ------------ is a tax on using a bridge or a road.

K
a) Toll tax b) Toll gate duty
c) Toll fee d) Toll duty
13. If the producer shifts the tax burden to the factors of production it is _________
a) Backward shifting b) Forward shifting
c) Positive shifting d) Negative shifting
14. Concurrent list consists of ______ entries
4
a) 27 b) 37 c) 47 d) 57
15. _______ is normally payable in the form of money
a) Tax b) Goods c) Services d) None
16. Impact and incidence fall on the same person is called _________
a) Indirect tax b)Direct tax c) Customs tax d) None
17. According to ________ principle, there should be diversity in the tax system of the
country.
)
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a) Canon of co-ordination b) Canon of Expediency
(U
c) Canon of simplicity d) Canon of diversity
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18. __________ principle states that the tax system should be simple, easy and
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understandable to the common man.
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a) Canon of co-ordination b) Canon of Expediency

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c) Canon of simplicity d) Canon of diversity
19. The following are the limitations of indirect taxes

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a) Regressive b) Uncertainty
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c) Inflationery d) All the above

A
20. The constitution Amendment Bill was passed by the Lok Sabha in
K
a) May, 2016 b) May, 2015
c) May, 2017 d) May, 2018
Unit-II
21. GST Stands for
a)Goods and supply Tax b) Government sales Tax
5
c)Goods and services tax d) General sales tax
22. In india GST become effective from
a) 1st April , 2017 b) 1st January, 2017
c) 1st March , 2017 d) 1st July , 2017
23. In India GST came effective from July 1st,2017 India has choosen __________ model of
dual GST
a) USA b) Canadian
)
c) UK d) China
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(U
24. GST is a ___________ based tax on consumption of goods and services.
a) Destination b) Duration
c) Dividend
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d) Development
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25. Indian GST model has ___________ rate structure
m
a) 3 b) 4 c) 5 d) 6
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26. What does “I” stands for in IGST?

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a)Integrated b) International
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c) Internal d) Intra
27. How many types of taxes will be in Indian GST?

A
a) 2 b) 4 c) 3 d) 5
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28. First announcement to introduce GST by 2010, is made in year
a)2000 b) 2006 c)2004 d) 2008
29. Which of the following tax is not subsumed in GST
a)Stamp Duty b)VAT
c)Entry tax d)Entertainment tax
30. When can a registered person avail credit on inputs?
6
a)On receipt of goods b)On receipt of documents
c) both d) None of the above
31.Input tax credit on capital goods and inputs can be availed in
a)In thirty six installments b) In twelve installments
c) In six installments d) In one installment
32. What is the rate of interest on delayed payment of GST ?
a)18% per annum b) 18% per month
)
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c) 24% per annum d) None of the above
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33. What is the rate of TCS under GST ?
a) 1% CGST + 1% IGST ce
b) 1% IGST + 1% SGST
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c) 1% CGST + 1% SGST d) None of the above
m
34. Which date shall be considered as date of deposit of GST to the account of Government ?
om
a) Date of credit into account of Government
b) Date of debit to the account of the taxable person

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c) Date of creation of challan for payment

SC

A
35. Sumit is an agriculturist and he has sold cashew nuts which are not peeled to Mr. Anuj,
K
who is registered under GST. Who is liable to pay GST ?
a) Sumit b) Anuj
c) Either A or B d) None of the above
36. There are _________ types of registration under GST
a)Two b) Four c) Three d) Five
37. Zero rated supply shall have the meaning assigned to it in
7
a)Section 18 b) Section 19 c)Section 16 d)Section 17
38. All GST returns have to be filed
a) Offline b)In Office c) Online d) None
39. .--------------- means bringing goods into india from outside.
a) Export b) Import
c) Inter state sale d) Intra state sale
40. ___________ supply is a taxable supply which is subject to a rate of zero percent.
)
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a) Standard – rated supply b) Zero-rated supply
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c) Peak-Rated supply d) Special- rated supply
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Unit-III
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41. What is the maximum rate prescribed under GST?
a) 12% b) 28%
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c) 18% d) 20%
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42. Can a person apply for registration without PAN?

A
a) NO b) YES
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43.Is there any ceiling limit prescribed on the rate under IGST?
a)40% b) 12%
c)18% d) 28%
44. What is the threshold limit of turnover in the preceding financial year opting to pay tax
under composition scheme?
a)Rs.20 lacs b) Rs.75 lacs
8
c)Rs.50 lacs d) None of the above
45. What is the rate applicable under CGST to a registered person being a rotelier opting to
pay taxes under composition scheme?
a)1% b) 0.5% c)2.5% d) None of the given options.
46. Who are mandatorily required to obtain registration?
a) Every person
b) Not required for an agriculturist or person exclusively engage in supplying exempt
goods or services
)
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c) For an agriculturist or exclusively engaged in supplying exempt goods or services
(U
is not required and for others if specified threshold limit exceeds in a financial year.
ce
d) No,only if specified threshold exceeds in a financial year then only need to obtain
er
47. Which form is to be used for registration?
m
a) Form GSTR – 1A b) Form GSTR – 2

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c) Form GST REG-01. d) Form GST REG.
48. PAN issued under Income Tax Act is mandatory for grant of registration
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a) It is one of the document listed

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b) Yes but non-resident taxable person may be granted registration on the basis of any
A
other document
K
c)No, for persons who are required to deduct tax at source U/S 51 shall have TAN in
liew of PAN
d) Both (b) and (c)
49. For an E- Commerce operator registration threshold limit is?
a)Rs.20 lacs b) Rs.50 lacs
c) Rs.75 lacs d) None of the above
9
50. Which of the following required amendment in the registration certificate?
a) Change of name of the registered person
b) Change in constitution of the registered person
c) Switching over from composition schemeto normal scheme or vice versa
d) All of the above
51.Can a registered person opt for composition scheme only for one out of his 5 business
different units having same Permanent Account Number?
a) Yes b) No
)
c) Yes with prior approval of the central government
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d) Yes, subject to prior approval of the GST council
52. Can a registered person under composition scheme claim input tax credit?
a)Yes b) No
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c) ITC on inward supply of goods only can be claimed
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d) ITC on inward supply of services only can be claimed

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53. Banking company or financial institution have an option of claiming ITC

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a) Actual credit on 50% credit b) Only 50% credit

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c)Only actual credit d) Actual credit and 50% credit
54. Provisional input tax credit can be utilized against

A
a) Any tax liability b) Interest and penalty

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c) Fine d) Self assessed output tax liability
55. Input tax credit as credited in electronic credit ledger can be utilized for
a) Payment of interest b) Payment of penalty
c)Payment of taxes d) Payment of fine
56. Tax invoice must be issued by__________
a)Every supplier b) Every taxable person
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c)Registered persons not paying tax under composition scheme
d) All the above
57. The registered recipient must issue an invoice in the following cases
a) The supplier is unregistered
b) The supplier fails to issue an invoice
c) The goods or services received notified for tax on reverse charge basis
d) All of the above
)
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58. CS & Associates imported services amounting Rs. 3,00,000 from related person for the
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purpose of business during the FY 2018-19. Such transaction shall be considered as
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___________
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a) Taxable supply b. Exempt supply
c) Zero-rated supply d) Not a supply

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59. Rate of GST applicable in case of mixed supply, shall be of particular supply which
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attracts the ___________ rate of tax.

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a) Average b) Principal supply’s
c) Highest d) Lower
60. Chawla is engaged in the business of supplying alcoholic liquor for human consumption.
He also supplies peanuts alongwith alcohol. Such supply shall be considered as
__________
a) Composite supply b) Mixed supply
11
c) Non-taxable supply d) Exempt supply
Unit-IV
61.What are the taxes levied on an Intra-state Supply?
a) CGST b) SGST
c) IGST d) CGST and SGST
62.Which of the following taxes will be levied on imports of goods and services?
)
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a) IGST b)CGST
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c) SGS d) Exempt.
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63. Maximum rate prescribed under UTGST/SGST?
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a)14% b)28%
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c)20% d) 30%
64. Which of the following is an intra state supply?

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a)Supplier of goods located in Goa and place of supply of goods in GOA

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b) Supplier of goods located in Nagpur place of supply of goods SEZ located in

A
Mumbai
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c)Supplier of goods located in Kolkata and place of supply of goods in Bangalore.
d) All the above
65. Place of supply in case of installation of elevator is
a) Where the movement of elevator commences from the suppliers place
b) Where the installation of elevator is made
c) Where the delivery of elevator is taken

12
d) Where address of the recipient is mentioned in the invoice.
66. What is location of supply in case of importation of goods?
a) Customs port where the goods are cleared
b) Place where the goods are delivered after clearance from customs port
c)Location of the importer d) Owner of the goods
67. Which one of the following is true?
a)A person can collect tax only he is registered
b) Registered person not liable to collect tax till his aggregate turnover exceeds
)
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threshold limit
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c)A person can collect the tax during the period of his provisional registration
d) None of the above ce

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68. What is the validity of the registration certificate?

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a)Five years b) Ten years
c)No Validity d) Valid till it is cancelled

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69. When does liability to pay GST arise in case of supply of goods?
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a) On raising of invoice b) At the time of supply of goods

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c) On receipt of payment d) Earliest of any of above

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70. What is the date of receipt of payment?
a) Date of entry in the books b) Date of payment credited into bank account
c) Date of filing of returns d) Earlier of (a) and (b)
71. The time limit to pay the value of supply with taxes
a)180 days b) 90 days
c) 365 days d) 6 months
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72. A bill of supply can be issued in case of interstate and intra- state
a) Exempted suppliers b) Supplies by composition suppliers
c) Supplie by unregistered person d) None of the above
73. An invoice must be issued
a) At the time of removal of goods
b) On transfer of risks and rewards of the goods to the recipient
c) On receipt of payment for the supply
d) Earliest of the above dates
)
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74. B Ltd. of Delhi, transfers a title of Furniture to C Ltd. of Haryana for consideration of Rs.
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96,000. Such transfer of title of Furniture shall be considered as ___________
a) Supply of goods ce
b) Supply of services
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c) Both (a) and (b) d) Neither (a) nor (b)
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75. Which of the following shall be treated as inter-state supply of goods under GST ?
a) Sale of Goods by supplier located in Delhi to a person located in Haryana

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b) Sale of Goods by supplier located in Delhi to a person located in Delhi

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c. Both A and B
A
d. None of the above

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76. Jain booked hotel Taj for two days in Delhi, one day in Mumbai and two days in Goa.
Hotel Taj charged a consolidated amount of Rs. 1,25,000. What shall be the place of
supply ?
a) Delhi b) Mumbai
c) Goa d) Location of each of the above mentioned states
77. Bet Airways has issued a ticket pass to Arun, who is a registered person in Haryana, for
14
travel anywhere in India. The pass will be used by Arun in future and hence the departure
place is not known at the time of issue of pass. What shall be the place of supply in such
a case ?
a) Location of supplier b) Location of recipient
c) Location of departure place of conveyance d) None of the above
78. Anil Logistics Pvt. Ltd. of Canada gave 10 buses on lease to a registered entity, Tanya
Logistics Pvt. Ltd. of New Delhi for rent of Rs. 80 lakhs for 2 months. What shall be the
place of supply in such a case ?
)
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a) Canada b) New Delhi
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c) Mumbai d) None of the above
79. . ___________ is liable to pay tax under RCM ce

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a)Supplier b) Seller
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c)Vendor d) Recipient
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80. ._______________ and governments need to know whether the supply is interstate or
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intra state supply

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a)Accountant b) Tax Payer

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c)Auditor d) Customer
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Unit-V
81. How will the goods and services be classified under GST regime?
a)HSN code b) SAC code
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c)SAC/HSN code d) GST code
82. HSN code stands for
a) Home shopping Network b) Harmonised system Number
c) Home State Number d) Harmonised system of Nomenclature
83. SAC code stands for
a) Software Accounting Code b) System Accounting Code
c) Service Application Code d) Services Accounting Code
84. The value of supply of goods and services shall be the
)
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a) Transaction value. b) MRP
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c) Market value d) None of the given options.
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85.What deductions are allowed from the transaction value
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a) Packing charges mention in invoice
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b) Discounts mention in invoice

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c) Any amount paid by customer on behalf of the supplier
d) Freight charges mention on invoice

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86. Whether credit on capital goods can be taken immediately on receipt of the goods?
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a)Yes b) After usage of such capital goods

A
c)After capitalizing in books of Accounts d) None of the above

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87. In India ______________ is a type of indirect tax levied on goods imported into india as
well as on goods exported from india.
a)Excise duty b)Sales tax c) Direct tax d) Customs duty
88. The Customs Act
a)1962 b)1963 c)1964 d) 1965
89. ___________ means waiver on cancellation of customs duty payable.
16
a)Excise duty b) Remission of duty
c)Abatement of duty d)None
90. Indian government encourages export of quality goods from india and supports
_________ policy
a)Make in India b)Make in china
c)Make in Europe d) Make in Japan
91. The customs Tariff Act
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a)1973 b) 1974 c)1975 d)1976
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92. There are _____________ types of customs duties in India.
a) Two b) Three ce
c) Four d) Five
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93. General basic customs rate is
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a) 15% b) 10% c) 20% d) 25%

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94. Duty at the “________”is charged where there is no provision for preferential treatment.
a) Lower rate b) High rate c) Standard rate d) Preferential rate

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95. Compensation cess is levied under ___________ of the Goods and Services tax act 2017
A
a) Section 5 b) Section 6 c) Section 7 d) Section 8

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96. _____________ of the act empowers the central Govt. to impose safeguard duty
a) Section 8A b) Section 8B c) Section 8C d) Section 8D
97. Under Indian customs Valuation ( Determination of value of Imported Goods) Rules ,
2017,_______methods are specified to determine the value of goods imported in to India.
a) Six b) Five c) Four d) Three
98. ____________ is also called as Fall back or Flexible method
17
a) Computed method b) Deductive method
c) Residual method d) All the above
99. The ______________ Government has the power to grant exemption by passing
exemption notification in the official gazette.
a) State b) Central
c) Union territory d) None
100. ___________ is the refund reduction or waiver in whole or in part of customs duties
assessed or collected upon importation of an article or materials which are subsequently
)
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exported.
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a) Import b) Export c) Drawback d) None
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5 Marks (SECTION – B)
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Unit-I
1.What are the specific objective of taxation?
2.What is Impact of Tax?
3.What is Incidence of Tax?
4.What are the principles of taxation advocated by others?
5. What are the limitations of direct tax?
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6.What are the differences between impact and incidence.
7.What is advalorem duty?.
8. What is specific duty?
9. Differences between advalorem duty and specific duty
10. Describe the demerits of indirect taxes.
Unit-II
11.What is CGST,SGST,UTGST and IGST?
12.GST is destination based tax system. Explain the concept of destination based taxation
)
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13.What are the goods not covered under GST?
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14. How the concept of supply is important under GST?
15. What is dual GST?

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16. What is GSTN?
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17.What is threshold limit specified for registering under GST?

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18.Who can avail composition scheme?
19.What is the mode of payment of taxes?

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20.Describe about zero rate.

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Unit-III
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21.What are the benefits available to registered suppliers under GST?
22.What is the due date for filing various monthly returns?
23.What are the documents required for registration?
24. Briefly describe types of registration.
25. What are the eligibility conditions availing input tax credit?
26. Explain the difference between TDS and TCS.
19
27.What is the responsibility of persons opting for composition scheme?
28. What are the benefits under composition scheme?
29.What is composite and mixed supplies?
30. What are the limitations of GST composition scheme?
Unit-IV
31.What is IGST?
32.What are the products exempted from IGST?
)
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33.Explain the concept of import.
(U
34. What is supply in territorial waters?
35. Why is continuous travel?

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36. What is place of supply when movement of goods involved?
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37. What is place of supply when no movement of goods involved?

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38. What the place of supply when assembling and installation is happened at a place?
39. What is OIDAR service, what is place of supply of such service?

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40.Who is not taxable online recipient?

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Unit-V
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41.What is taxable event under customs act?
42.What is safeguard Duty? Why it is levied?
43. What is the object of customs law?
44. What are the basic acts for charging customs duty?
45. What is the structure of HS code?
46. What is transaction value?
20
47. What is deductive value and computed value?
48. What is pilfered goods?
49.What is rate of abatement?
50.What is special exemption? What are its elements?
8 Marks (SECTION – C)
Unit-I
1.What are the general characteristics of tax?
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2.Explain the main features of Indirect Taxes.
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3.Distiguish between Indirect tax and direct tax
4.State and explain the principles of taxation advocated by Adam Smith.
5.Explain the constitutional basis of taxation in India.

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6. What is Union list, State List and Concurrent List? Provide a few items relating to taxation
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in each list.
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7.Write a note on the key features of constitution (101st Amendment ) Act, 2016
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8. What are the advantages and disadvantages of indirect taxes?

SC
9.Explain merits of direct taxes.
10. Discuss classification of taxes.

A
Unit-II
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11.Explain the history and evaluation of GST in India.
12.What are the constitutional provisions relevant for GST?
13.What is HSN & SAC ? Explain the importance of HSN & SAC.
14.Discuss the various benefits of GST.
15. What is rate structure? How many rates are specified in GST?
16. What are the services of GSTN?

21
17. Explain the taxes subsumed in GST.
18. Describe the ease of doing business in India.
19. Discuss the Input tax credit.
20. Write a short note on
a) Anti-profiteering b) Self Assessment
c)Electronic filing d) Poverty eradication
Unit-III
)
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21.Briefly explain the features of composition levy
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22.Explain the concept of supply and its main ingredients.
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23. Explain different kind of supply with reference to tax rate?
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24. What are the conditions specified for availing composition scheme?
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25. Distinguish between composition GST levy and normal GST levy
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26. What are notified services for RCM ? Explain such services.
27. Explain the methods to collection of tax under GST.

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28. What is the basic rule to determine time of supply of goods or services?
SC
29. Discuss procedure of registration.

A
30. Explain filing of returns.

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Unit-IV
31. Explain about Inter-state supply of goods and services.
32.Describe the Intra- state supply of goods and services.
33.Explain the scope of IGST.
34.Briefly explain the levy and collection of IGST.
22
35.Discuss the power to grant exemption from tax.
36.Is place of supply being important in GST? IF yes how it is?
37.Briefly explain the various methods of determining place of supply.
38. What is supply of goods to third person? What is the place of supply for such transaction?
39. Explain the location of supplier or the recipient of services is outside india.
40. Explain the place of supply of goods.
Unit-V
)
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41.Briefly explain the scope of customs act.
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42. Discuss the types of duties charged under customs act.
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43. What is prohibition under customs law? What are the reasons for prohibiting export or
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Import?
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44. What is classification of goods? How it is important under customs act?

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45. Discuss customs valuation.
46.Describe the general rule of classification under customs act.

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47. Explain the methods of valuation under customs act.

SC
48.Describe abatement of duty damaged or deteriorated goods.

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49.Explain remission of duty on goods lost , destroyed or abandoned.

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50. What is customs duty drawback? Explain.
Unit I Q 1 2 3 4 5 6 7 8 9 10
A a c a b c b a d a d
Q 11 12 13 14 15 16 17 18 19 20
A b a a c a b d c d b
Unit II Q 21 22 23 24 25 26 27 28 29 30
A c d b a b a c b a c
23
Q 31 32 33 34 35 36 37 38 39 40
A d a c a b a c c b b
Unit III Q 41 42 43 44 45 46 47 48 49 50
A d a a b c c c d d d
Q 51 52 53 54 55 56 57 58 59 60
A b b a d c c a a c b
Unit IV Q 61 62 63 64 65 66 67 68 69 70
A d a c a b c a d d d
Q 71 72 73 74 75 76 77 78 79 80
A a a a a a d b b d b
Unit V Q 81 82 83 84 85 86 87 88 89 90
A c d d a b a d a b a
Q 91 92 93 94 95 96 97 98 99 100
A c a b c d b a c b c
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24
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25
(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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TITLE OF THE PAPER: MANAGEMENT ACCOUNTING
APRIL 2019
1
Question Bank
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MANAGEMENT ACCOUNTING
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CONTENTS ce
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1 Section A 3
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2 Section B 8
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3 Section C 11
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4 Key for Section A

A
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Prepared by
Dr. P.K.Uma Maheswari
Coimbatore-29.
2
UNIT I
Section A
1. Financial accounting deals with:
a. Determination of costs b. Determination of profit
c. Determination of prices d. none
2. Financial accounts record only
a. Actual figures b. Budgeted figures c. Standard figures. d. none
3The term ‘Management Accountancy’ was first used in:
a. 1910 b. 1939 c. 1950 d. none
)
4. Management Accounting relates to :
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a. Recording of accounting data b. Recording of costing data
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c. Presentation of accounting data d. none
5. The use of management accounting is :
a. Compulsory b. Optional
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c. Obligatory d. none
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6. Accounting principles are:
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a. as definite as principles of physics and chemistry

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b. unlike principles of physical science

c. verifiable through observations and record
d. none
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7. Accounting concepts are based on:

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a. certain assumptions. b. certain facts and figures

c. certain accounting records d. none
A
8. Business entity concept distinguishes between:

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a. individual and business b. business and business

c. owners d. none
9 The cost concept records the figures at
a. market values b. actual amount paid c. actual amount or market value whichever is less
d. none
10. Going concern concept assumes
a. business as a going concern b. business as a dissolve c. business on realising
values d. None
11. Financial accounts provide a summary of
3
a. assets b. liabilities c. accounts d. none
12. Financial statements are: a. estimates of facts b. anticipated facts
c. recorded facts d. none
13. Retained earnings statement depicts:
a. appropriation of profits b. estimate of profits c. estimates of costs
d. none
14. Accounting principles are
a. as definite as principles of physics and chemistry.
b. unlike principles of physical science
c. verifiable through observations and record
)
d. none
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15.The term management accounting was first used in
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a. 1914 b.1936 c.1950 d. None
16.Interpretation of financial statements requires
a. analysis and comparison
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b. simplification and standardization
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c. specification and calculation d. none
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17. Analysis of financial statements proceeds

a. Compilation of data b. Comparison of data c. Interpretation
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d. None
18. Decision making is the primary function of
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a. Management accountant b. Middle management c. Top management d. none

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19.Financial accounting deals with

a. Determination of costs b. Determination of profits
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c. Determination of prices d. none

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20.The function of management accounting is:

a. Modification of data b. Planning c. Financial analysis
d. All the above
UNITII
Section A
21. Ratio of ‘Net Sales’ to ‘Net Working Capital’ is a ----------------.
4
a. working capital turnover ratio b. profitability ratio c.Liquidity ratio
22. Observing changes in the financial variables across the years is --------------.
a. vertical analysis b. horizontal analysis c. inter-firm comparison
23. Ratio of Net Profit before interest and tax to sales is --------------.
a. operating profit ratio b. capital gearing c. solvency ratio.
24. The statistical yardstick that provides a measure of the relationship between two
accounting figures is -------------------.
a. current ratio b. the accounting ratio c. input output ratio.
25. Debt Equity Ratio is a -----------------.
a. liquidity ratio b. solvency ratio c. profitability ratio.
)
26. The turnover ratio helps management in -------------------.
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a. managing resources b. managing a debt c. evaluating performance.
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27. Long term solvency is indicated by ----------------.
a. current ratio b. debt/equity ratio c. net profit ratio.
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28. Identify the satisfactory acid test ratio among the following:
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a. 2:1 b.1:2 c.1:1 d. None of these
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29. Identify the formula that is used to calculate the net profit ratio
a.(Net Profit/Sales)*100 b. (Net Profit/(Total Sales-Sales Returns))*100
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c. (Net Profit/Capital Employed)*100 d. (Net Profit/Share Capital)*100

30. The ratio which expresses the relationship between contribution and sales is
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a. Current ratio b. Sales ratio c. Profit volume ratio d. None of these

SC
31. Opening Stock + Purchases – Closing Stock = ?

a. Production b. Cost of Goods Sold c. Gross profit d. Sales
A
32. Profit volume ratio can be improved by

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a. increasing the selling price b. increasing the fixed cost

c. increasing the variable cost
33. Balance Sheet ratio is
a. Creditors turnover ratio b. Current ratio c. Fixed Assets turnover ratio
34.Solvency Ratio is
a.Gross profit ratio b.Current ratio c.Capital Gearing ratio
35. Profit and loss account ratio is
a.Net profit ratio b.Proprietary ratio c.Debtors turnover ratio
36. The current assets to the current liability ratios is said to be satisfactory if it is
a.1:2 b.2:1 c.1:1
5
37. The return on net worth ratio is obtained by dividing the net profits by
a.Equity Share Capital b.Proprietor’s fund c.Only accumulated profits
38. The liabilities of business can be classified as
a.Current and Fixed liabilities b.Only Current liabilities
c.Only Fixed liabilities
39. If the cost of goods sold is Rs. 2, 00, 000, the value of opening stock is Rs. 40,000 and the
value of closing stock is Rs.60, 000, the stock turnover ratio will be
a.5 times b.4 times c.3.3 times
40. The change in the cost of goods sold can be due to
a.Increase or decrease in the quantity of goods sold
)
b.Increase or decrease in sale price
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c.Combination of the two
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d.none
UNIT III
Section A:
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Choose the correct answer:
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41. Working capital is employed for

a.short term operations b.long term operations
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c.both short term and long term operations d. none of these

42. Working Capital required to meet contingencies is
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a.Regular Working Capital

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b.Permanent Working Capital

c.Reserve Working Capital
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d.Temporary Working Capital

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43. Short tem working capital is provided by

a. Financial Institutions b.Commercial Banks c.Sale of shares and debentures d.none
44. Non-fund item refers to
a. Dividend received b.Depreciation c.Refund of tax d.none
45. Cash from operation is equal to

a.Net Profit plus increase in stock
b.Net Profit plus increase in debtors
c.Net Profit plus increase in outstanding expenses
6
46. Working capital is mainly needed
a. to maintain inventories b. to avail cash discount
c. to increase the earning capacity of the firm
47. Depreciation of building is
a.Source of funds b.Application of fund c.No flow of funds
48. The excess of current assets over current liabilities is termed as
a.Fixed Capital b.Working Capital c.Fixed/ Working Capital
49.Tax paid is
a.Application of fund b.Source of fund c.No flow of fund
50.Cash from operation is equal to
)
a.Net Profit minus increase in creditors b.Net Profit minus decrease in B/P
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c.Net Profit minus decrease in debtors
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51.Operating profits are calculated by
a.Adding back amortization of development cost
b.Deducting amortization of development cost
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c.Neitherof the two
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52.Fund flow statement is prepared to

a.know the real profit for the year
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b.find out the sources and applications of funds

c.help the creditors to know the availability of funds for disposal
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d.satisfy the debtors

SC
53.In cash flow statement, income tax refunded is a

a.sources of cash b.application of cash c.outflow of cash
A
54.The capital which is needed even during the off season is

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a.Permanent Working Capital

b.Variable Working Capital
c.Cash Working Capital
55.__________ explains what has happened to a business between two balance sheet
statements
a.Income Statement b.Funds Flow Statement c.Ratio Analysis
d.Cash Flow Statement
56.A firm’s investment in current assets refers to
a.Working Capital b.Gross Working Capital
c.Net Working Capital d.none
7
57.Net Working Capital represents the excess current assets over _________ liabilities.
a.Contingent b.Total c.Current
d. Future
58.Depreciation of Machinery is
a. Application of fund b.Sources of fund
c. Non-flow of fund d.None of the above
59.Cash Flow Statements are of
a. Long term duration b.Short term duration
c. Medium term duration d.None of the above
60.Gross working capital refers to the capital invested in the -----------of an enterprise. a.
)
current assets b. current liabilities c. debtors d. creditors
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UNIT IV
Section A:
Choose the best answer:
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61. The sales minus sales at break even point is known as
a. Margin of Safety b.Additional Sales c.Average Sales
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d.None of these
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62. A BEP is
a.Sales minus variable cost b.Sales minus margin of safety
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c.Fixedcost plus profit

SC
63. The operation cycle means

a.The accounting period of the business
A
b.The period for which business expenses have been incurred

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c.The time gap between the sales and their actual realisation in cash
64. Margin of Safety means
a.Current sales is excess of BEP sales
b.Current sales is not excess of BEP sales
c.Current sales is equal to BEP sales
65. Contribution is equal to

a.Selling Price + Variable Cost b.Selling Price - Variable Cost
c.Selling Price * Variable Cost d.Fixed Cost + Variable Cost
8
66. When fixed cost is Rs. 10,000 and P/V ratio is 50%, the break even point will be
a.Rs.20,000 b.Rs.10,000 c.Rs.40,000 d.None of these
67. Additional cost of producing one additional unit is called
a.Fixed cost b.Marginal cost c.Additional cost
68.__________ Costs are known as direct costs.
a.Variable b.Fixed c.Semi-variable d.None
69. Marginal cost refers to increase or decrease in the amount of cost, on account of increase
or decrease in
a.Cost of Production b.Sales Volume c.Production by a single unit d. None
70. Which must be deducted from contribution to find out profit?
)
a.Fixed Cost b.Variable Cost c.Sales d.Other Items
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71. At Break Even Point which must be equivalent to fixed cost
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a.Sales b.Contribution c.Variable Cost d.Profit
72. Marginal Cost is the
a.Terminal expenses b.Fixed cost
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c.Additional cost d.Variable cost
m
73. A large margin of safety indicates

a.Over Production b.Over Capitalization
om
c.The soundness of the business d. Loss to the business

74. Contribution margin is also known as ----
-C
a. Marginal Income b. Gross profit c. Net Income d. none of the above

SC
75. Period cost means ---- cost a. Variable b. fixed c.prime d. none of the
above
A
76. The costing method in which fixed factory overheads are added to inventory is --- costing
K
a. Direct b. marginal c. Absorption d. none of the above

77. When fixed cost is Rs.10,000 and p/v ratio is 50% the BEP will be -----
a. 20,000 b. 40,000 c. 5,0000 d. none of the above
78. When profit volume ratio is 40% and sales value Rs.10,000 the variable cost will be -----
a. 4,000 b.6,000 c.10,000 d.20,000
79. When margin of safety is 20% and p/v ratio is 60% the profit will be----
a. 30 % b. 33 1.3% c. 12% d. 10 %
80. When sales are Rs.2,00,000 , fixed cost Rs.30,000,p/v ratio 40% the amount of profit will
be -----a. 50,000 b. 80,000 c. 12,000 d. 24,000
9
UNIT V
Section A
81. The basic difference between a fixed and flexible budget is that a fixed budget.
a.Is considered with fixed expenses where flexible budget deal with variable
expenses.
b.Cannot be changed whereas flexible budgets can be easily changed.
c.Is a budget for single measure of activity whereas flexible budget is on different
activity levels.
d. none
82. A flexible budget requires careful study and classification of expenses into:
)
G
a.Past and current expenses
b.Fixed, semi-variable and variable expenses
(U
c.Administrative, selling and factory expenses
83. Budget is prepared for ce
a.a definite future period b.a definite present period
er
c.a definite past period d.none of these
m
84. Zero base budgeting is quite popular in

om
a.India b.U.S.A c.England

85. The first step in preparing the budget is
-C
a.Cash budget b.Production forecast c.Sales forecast

86. The budget can be classified according to
SC
a.Time b.Function c.Both

87. Budgetary control helps a company to meet market competition efficiently by keeping the
A
cost
K
a. at maximum level b.at minimum level c.at equal level

88. A budget which consolidates an organizations overall plan is called
a.Master Budget b.Overall Budget
c.Consolidated Budget d. None of these
89. The difference between fixed and variable cost has a special significance in the
preparation of
a.Flexible Budget b.Master Budget c.Cash Budget
90. Key factor of budgeting may also be known as
a. Limiting factor b. Un limiting factor c. Main budget factor
10
91. A budget is generally evolved from
a. Forecasting b. Plan c. Policies and Procedures d.None
92 .Who is the “Father of Zero base budgeting”?
a. Mr. Jimmy Carter b. Robert N. Antony c. Malcomn d.A.Phyrr
93. Which of the following is functional budget?
a.Sales budget b.Current budget c.Flexible budget
d.Fixed budget
94. Flexible budget is suitable for
a.Seasonal industries b.Fashionable industries
c.Iron industries d.Textile industries
)
95. Cash Budget is a part of
G
a.Production Budget b.Financial Budget
(U
c.Sales Budget d.Non-financial Budget
96. Capital expenditure budget is prepared for a period of
a.6 to 12 months b.3 to 5 years
ce
c.1 year d.5 to 10 years
er
97. Sales Budget is a
m
a.Functional Budget b.Master Budget c.Expenditure Budget

98. In the case of plant the principal budget factor may be
om
a.Insufficient Capacity b. Shortage of experienced salesmen

c. General shortage of power d. all of these
-C
99. The difference between fixed and variable cost has a special significance in the
SC
preparation of
a. Flexible Budget b.Master Budget c.Cash Budget d.none
A
100. The budget that is prepared first of all is

K
a. Cash Budget b.Master Budget c.Budget for the key factor

UNIT - I
Section B:
1.What’s is financial accounting?
2.Mention any two limitations of financial accounting?
3.What are the objects of financial statement interpretation?
4.Mention the main tools of financial statement analysis?
5.Describe briefly the various steps involved in the installation of management accounting?
6.State any two difference between cost accounting and management accounting?
11
7.From the following data, prepare statement of profit in comparative form:
Particulars Year I Year II
Sales 6,00,000 7,00,000
Gross profit 36% 30%
Office and administrative 1,40,000 1,45,000
expenses
Income tax rate 50% 50%
8.From the following information relating to Swadesh Politex ltd for the year ended 31st
December 1987 and 1988 you are requested to prepare the assets side of the common size
)
balance sheet of the company as on 31st December 1987 and 1988
G
Asset 1987(RS in lakhs) 1988(RS in lakhs)
(U
Cash 100 140
Debtors
Stock
200
200
ce 300
300
er
Land 100 100
m
Building 300 270

om
Plant 300 270

Furniture 100 140
-C
1300 1520
SC
9.What is comparative income statement?

10.What do you mean by trend percentage?
A
K
UNIT - II
Section B:
11.Ascertain the gross profit ratio from the following particulars:
12
Gross profit = RS. 27,000
Cost of sales = RS.33,000
Opening stock = RS. 12,000
Closing stock = RS. 16,000
12. You are required to calculate return on capital employed from the following:
RS.
Net profit after tax = 3,00,000
Rate of income tax 5,000 8% convertible= 50%
Debentures of RS 100 each, fully paid – up = 5,00,000
Current assets= 5,50,000
)
Current liabilities= 2,50,000
G
Fixed assets (at cost) = 10,25,000
(U
Depreciation upto date= 1,25,000
13. Calculate the earnings per share from the following data:
ceRS.
er
Net profit after tax = 76,000
m
12% Preference shares capital (RS. 10 each) = 3,00,000

Equity share capital (RS. 10 each) = 2,00,000
om
14. A company declared dividend at 20% on its equity shares each having a paid – up value
of RS. 10 and a market price of RS. 25. Calculate the dividend yield ration:
-C
15. Opening stock = RS. 29,000

SC
Closing stoc = RS. 31,000

Sales = RS. 3,00,000
A
Gross profit = 25% on cost

K
Calculate stock turnover ratio:

16. Calculate the debtors turnover ratio from the following particulars:
Cash sales = RS. 6,00,000
Total sales = RS. 12,00,000
Bills receivable on 1.1.99= RS. 45,000
Bills receivable on 31.12.99 = RS. 55,000
Debtors on 1.1.99 = RS. 80,000
Debtors on 31.12.99 = RS. 1,20,000
13
17.From the following information, calculate creditors turnover and average age of accounts
payable or average payment period:
Credit purchase = RS. 9,60,000
Creditors = RS. 96,000
Bills payable = RS. 64,000
18. From the following figures, calculate the creditors turnover ratio:
Total purchases = RS. 6,00,000
Cash purchases = RS. 2,50,000
Bills payable on 1.1.99 = RS. 25,000
Bills payable on 31.12.99 = RS. 75,000
)
Sundry creditors on 1.1.99 = RS. 1,50,000
G
Sundry creditors on 31.12.99 = RS. 1,00,000
(U
19. Give the following figures:
RS.
Sales = 15,00,000
ce
er
Gross profit = 20% on sale
m
Current assets = 4,00,000

Current liabilities = 2,00,000
om
Fixed assets (Gross) = 5,00,000

Less: Depreciation = 1,00,000
-C
-----------------
SC
Calculate : (I) Capital turnover ratio (ii) Fixed turnover ratio (iii) Working capital
turnover ratio
A
20. What's are the limitations of ratio analysis?

K
UNIT - III
Section B:
14
II Answer the following:
21.PA& Co. is desirous to purchase a business and has consulted you and one point on which
you are asked to advise them is the average amount of working capital which will be required
in the first year's working.
You given the following estimates and are instructed to add 10% to your computed figure
to allow for contingencies:
Particulars Figure for the year
RS.
(I)Average amount locked up for stocks:
Stock of finished goods 5,000
)
Stock of stores, materials etc. 8,000
G
(ii) Average credit given:
(U
Inland sales – 6 weeks credit 3,12,000
Export sales – 1 ½ weeks credit 78,000
(iii) Lag in payment of wages and other outgoings:
ce
er
Wages – 1 ½ weeks 2,60,000
m
Stores, materials etc., - 1 ½ months 48,000

Rent, royalties etc., - 6 months 10,000
om
Clerical staff –½ month 62,400

Manager – 1/2 month 4,800
-C
Miscellaneous expenses –1 ½ months 48,000

SC
(iv) Payment in advance:

Sundry expenses (paid quarterly in advance) 8,000
A
(v) Undrawn profits on the average throughout the year 11,000

K
Set up your calculation for the average amount of working capital required.
22. From the following estimates, you are required to calculate the average amount of
working capital required:
(I)Average amount locked up in stocks: RS.
15
Stock of stores, materials etc. 20,000
Stock of finished goods and work – in –progress 25,000
Local sales –3 weeks credit 2,08,000
Export sales – 6 weeks credit 6,24,000
(iii) Time lag in payment for:
Purchase – 3 weeks 1,56,000
Wages – 2 weeks 4,55,000
Add 10% to allow for contingencies.
)
23.M/s.Senthil industries Ltd., are engaged in large customer retailing. From the following
G
information, you are required to forecast their working capital requirements:
(U
Projected annual sales = RS. 65 lakhs
Percentage of net profit on cost of sales = 25%
Average credit allowed to debtors
ce
= 10 weeks
er
Average credit allowed by creditors = 4 weeks
m
Average stock carrying (in terms of sales requirement = 8 weeks

Add 10% to computed figures to allow for contingencies:
om
24. From the following information, prepare a statement showing the average working capital
requirements:
-C
Budgeted sales : = RS. 7,80,000

SC
Analysis of cost of each unit: RS.

Raw materials 4.50
A
Labour 2.50
K
Overheads 2.00
Profits 1.00
_______
Sale price 10.00
________
It is estimated that:
(I)pending use, raw materials are carried in stock for three weeks and finishes products for
two weeks.
(ii) Factory processing will take 3 weeks.
(iii) Suppliers will give 4 weeks credit and customers require 6 weeks credit.
16
(IV) Cash on hand is estimated to be RS. 25,000.
25. The management of fast Ltd., desires to know the working capital required with effect
from 1stJanuary 1986 to finance the production programme. Percentage of various elements
of cost of selling price are:
Raw materials = 50%
Labour = 20%
Overheads = 10%
You are informed that:(I)Raw materials remain in the stores on an average for the one month
before issue to production.
(ii) Finished goods remain in the godown for the two months before sales.
)
(iii) Each unit of production will be in process for one month.
G
(iv) Credit allowed by credits is one month and allowed to debtors is two months.
(U
(v) selling price is RS. 9 per unit.
Production in 1986 is expected to be 1,00,000 units.
ce
26. A project costs RS. 2,50,000 and yields an annual cash inflows of RS. 50,000 for 7 year.
er
Calculate it’s pay –back period.
m
27.One of the two machines A and B is to be purchased. From the following information,
find out which of the two will be more profitable.The average rate of tax may be taken at
om
50%.
Particulars Machine A Machine B
-C
Cost of each machine RS. 50,000 Ram 80,000

SC
Working life 4 years 6 years

Earnings before tax RS. RS.
A
Year 1 10,000 8,000

K
2 15,000 14,000
3 20,000 25,000
4 15,000 30,000
5 - 18,000
6 - 13,000
28. A project costing RS.110 lakhs has a Life of 10 years at the end of which it’s scrap value
is likely to be RS.10 lakhs. The firm's cut – off rate is 12%. The project is expected to yield
an annual profit after tax of RS.10 lakhs, depreciation being reckoned on straight line basis.
At 12% p.a., the present value of the rupee received annually for 10 years is RS.5.650 and the
17
value of one rupee received at the end of the 10th year is Re.0.322. Ascertain the net present
value of the project.
29. Initial investment - RS. 2,40,000
Life of the asset - 4 years
Estimated net annual cash flows:
Year
I - RS.60,000
II - RS.80,000
III - RS.1,20,000
IV - RS.80,000
)
You are required to calculate IRR.
G
(U
30.Mention two advantage of adequate working capital?
UNIT-IV ce
Section B:
er
II Answer the following:
m
31.Prepare marginal cost statement from the following particulars:

om
Particulars RS.
Variable Cost:
-C
Direct materials 4,500

Direct wages 2,500
SC
Factory OH 1,500
8,500
A
Fixed cost:
K
Administrative exp. 1,250

Total cost 9,750
Profit 5,250
Sales 15,000
32.Prepare marginal cost statement:

Particulars RS.
Variable cost 8,500
Fixed cost 1,250
18
Sales 15,000
33.Prepare a marginal cost statement from the following:

Particulars RS.
Fixed cost 5,00,000
Variable cost RS. 10 per unit
Selling price RS. 15 per unit
34.Calculate BEP:
P/V ratio : 40%
Total cost : RS. 1,00,000
)
Variable cost : RS. 60,000
G
35.Calculate Break even volume from the following data:
(U
Profit RS. 5,000 ( 20% of sales), P/V ratio : 50%.
36.Calculate BEP in units and in sales value from the following:
ce
Output : 3,000 units
er
Selling price per unit : RS. 30
m
Variable cost per unit. : RS. 20

Fixed cost : RS. 20,000
om
37.A company budgets it’s marginal contribution as RS. 45,000. The sales and fixed cost are
budgeted as RS.2,25,000 and RS. 60,000. Calculate Break – even sales.
-C
38.The fixed cost for the year is RS. 40,000. Variable cost per unit for the single product
SC
being made is. RS. 6. Estimated sales for the period are valued at RS. 1,60,000. The number
of units involved coincides With the executed volume of output. Each sells at RS. 10 each.
A
Calculate the BEP.

K
39.The position of a company is given below:

Sales. : RS. 2,00,000
Variable expenses : RS. 1,50,000
Fixed expenses. :. RS. 15,000 Calculate P/V ratio BEP.
40.explain marginal costing?
UNIT - V
Section B:
41.A manufacturing company submit the following figure of product 'x' for the first quarter of
2003:
19
Sales(in units)
Jan : 50,000; Feb : 40,000; Mar : 60,000
Selling price per unit RS 100
Target of first quarter 2004
Sales unit increased by 20%
Selling price increase by 10%
Prepare the sales budget
42.Prepare production budget from the following
Product Opening stock Closing stock Estimate sales
X 5000 6000 244000
)
Y 10000 22500 187500
G
Z 25000 12500 300000
(U
43.From the following particulars from Jan to june, prepare production budget
Month Jan Feb Mar Apr May ce June July
Sales 10,000 12,000 16,000 20,000 24,000 24,000 20,000
er
(Unit)
m
Finished goods equal to half the sales of next month will be in stock at the end of each
month. Assume it is the company first year of business.
om
44.From the following information, prepare a cash budget for the period from Jan to April
Expected sales Expected purchase
-C
January 60,000 48,000

SC
February 40,000 45,000

March 45,000 31,000
A
April 40,000 40,000

K
Wages to be paid to workers will be RS 5,000 pm. Cash balance of 1st Jan may be assumed to
be RS 8000.
45.With the following data for 60% activity, prepare a budget for 80% activity
Materials :RS 10 per unit
Wages :RS 6 per unit
Factory overhead :RS 6000 (20% fixed)
Administration overhead :RS 2400 ( 10% variable)
Assume that production at 60% activity is 240 units.
20
46.A company incurs the following expenses to produce 1000 units of an article
Particulars Rs
Direct material 60,000
Direct labour 30,000
Power(20% fixed) 20,000
Repair & 16,000
maintenance ( 15%
fixed)
Depreciation ( 40% 12,000
variable)
)
Administrative 24,000
G
expenses( 100%
(U
fixed)
ce
Prepare a flexible budget showing the individual expenses of production level at 1500
unit and 2000 units.
er
47.Malley LTD sells two products A and B which are produced in it’s special product
m
division. Sales for the year 2009 were planned as follows

om
Quarter I Quarter II Quarter III Quarter IV

Product A 10,000 12,000 13,000 15,000
-C
Product B 5,000 4,500 4,000 3,800

The selling price were RS 20 per unit and RS 50 per unit respectively for A and B.
SC
Average sales return are 5% of sales and the discount and bad debts amount to 4% of the total
sales. Prepare sales budget for the year 2009.
A
48.From the following, prepare production budget

K
Product Opening stock Estimate sales Closing stock

A 2000 10000 5000
B 3000 15000 4000
C 4000 13000 3000
D 5000 13000 2000
49.Prepare a production budget for the half year ended 30.6.2003 from the following
Product Estimate sales Estimate Estimate
op.stock clo.stock
A 20000 4000 5000
21
B 50000 6000 10000
C 30000 5000 4000
50.Discuss about the importance of budgeting?

UNIT – I
Section C:
1.Explain the characteristics feature of management accounting?
2.Discuss about the scope and objectives of management accounting?
3.Give the difference between management accounting and financial accounting?
4.Bring out the limitations of management accounting?
)
G
5.Explain the main duties and function of management accounting?
(U
6.What is meant by comparative financial statements?
7.From the following profit and loss account of Gori LTD for the year ended 31st December
ce
1988 and 1989, you are required to prepare a comparative income statement for the year 1988
and 1989
er
Particulars 1988 1989 Particulars 1988 1989
m
To cost of 600 750

om
goods sold
To 20 20 By net sales 800 1000
-C
administrative
expenses
SC
To selling 30 40
expenses
A
To net profit 150 190

K
800 1000 800 1000

8.Calculate the trend percentage from the following data taking 1984 as the base
Particulars 1984(rs in lakhs) 1989(RS in lakhs)
Working capital 100 140
Plant and equipment 1000 1500
Long term debt 1456 2800
Net tangible assets 5616 9975
22
9.What is common sized balance sheet and income statement? Explain the technique of
preparing common sized balance sheet?
10.Explain and illustrate the trend analysis method of financial statement?
UNIT – II
Section C
11.Raj sells goods on cash and credit. The following information relates to his business for
the year 1979:
RS.
Total gross sales 1,00,000
Cash sales ( included in above) 20,000
)
G
Sales returns 7,000
Total debtors for sales as on 31.12.79 9,000
(U
Bills receivable on 31.12.79 2,000
Provision for doubtful bests on 31.12.79 1,000 ce
Total creditors on 31.12.79 10,000
er
Calculate the average collection period.
m
12. Calculate Debt – equity ratio from the following data:

om
RS.
Equity share capital = 10,00,000
-C
10% Preference share capital = 5,00,000

Reserves = 5,00,000
SC
Loan from IDBI = 10,00,000

Current liabilities = 4,00,000
A
6% Debentures = 15,00,000
K
13. From the following particulars, calculate the fixed assets ratio:
RS.
Share capital = 4,00,000 General reserve= 1,00,000
6% Debentures = 4,00,00 Trade creditors= 1,50,000
Plant and machinery = 4,00,000 Land and buildings = 4,00,000
Furniture= 1,00,000 Trade debtors = 1,20,000
Cash in hand= 80,000 Bills payable = 48,000
Stock = 1,60,000
23
14. Given:
Receivable turnover = 4
Payable turnover = 6
Inventory turnover = 8
Capital turnover ratio = 2 times
Fixed assets turnover ratio = 8 times
Gross profit ratio = 25%
Gross profit during the year amounted to RS. 80,000. There is no long – term loan or
overdraft. Reserves and surplus amount to RS. 28,000. Ending inventory of the year is RS.
2,000 above the beginning inventory. Notes receivable amount to RS. 5,000 and notes
)
payable are RS. 2,000. Prepare a balance sheet on the basis of the information given above.
G
15. Prepare the balance sheet from the following ratios:
(U
Current ratio = 2.5
Total assets / Net worth = 3.5
Sales / Fixed assets = 6
ce
er
Sales / Current assets = 8
m
Sales / inventory = 15
Sales / Debtors = 18
om
Annual sales = RS. 25,00,000

16. From the following particulars, prepare the balance sheet of Shri. Mohan Ram:
-C
Current ratio = 2
SC
Working capital = RS. 4,00,000

Capital block to current assets = 3:2
A
Fixed assets to turnover = 1:3

K
Sales cash / credit = 1:2

Stock velocity = 2 months
Creditors velocity = 2 months
Debtors velocity = 3 months
Capital block Net profit = 10% of turnover
Reserve = 2.5% of turnover
Debentures / Share capital = 1:2
Gross profit ratio = 25% ( to sales)
17. The following date represents the ratios pertaining to Empson Co. Ltd., For the year
ending 31st March, 1999.
24
Annual sales = RS. 40,00,000
Sales to Net worth = 4 times
Current liabilities to Net worth = 50%
Total debts to Net worth = 80%
Current ratio = 2.2 times
Sales to inventory = 8 times
Average collection period = 40 days
Fixed assets to Net worth = 70%
From the above particulars, prepare the balance sheet of Empson Co. Ltd., As on 31st
March, 1999. Assume that all sales are made on credit.
)
18.From the following information, you are required to prepare a balance sheet:
G
(I) Current ratio = 1.75
(U
(ii) Liquid ratio = 1.25
(iii) Stock turnover ratio ( cost of sales / closing stock) = 9
(IV) Gross profit ratio = 25%
ce
er
(v) Debt collection period = 1 ½ months
m
(vi) Reserves and Surplus to capital = 0.2

(vii) Turnover to fixed assets ( based on cost of sales) = 1.2
om
(viii) Capital gearing ratio = 0.6

(ix) Fixed assets to Net worth = 1.25
-C
(x) Sales for the year = RS. 12,00,000

SC
19. Following is the balance sheet of Y Ltd:

Liabilities RS. Assets RS.
A
Equity share capital 1,00,000 Cash in hand 2,000

K
6% Preference share capital 1,00,000 Cash at bank 10,000

7% Debentures 40,000 Bills receivable 30,000
8% Public debt 20,000 Investments 20,000
Bank overdraft 40,000 Debtors 70,000
Creditors 60,000 Stock 40,000
Outstanding creditors 7,000 Furniture 30,000
Proposed dividend 10,000 Machinery 1,00,000
Reserves 1,50,000 Land and buildings 2,20,000
Provision for taxation 20,000 Goodwill 35,000
25
Profit & loss A/c 20,000 Preliminary expenses 10,000
5,67,000 5,67,000
During the year, provision for taxation was RS. 20,000. Dividend was proposed at RS.
10,000. Profit carried from the last year was RS. 15,000. You are required to
calculate:(I)Current ratio; (ii) Liquidity ratio; (iii) Dept – equity ratio; (IV) Fixed assets ratio;
and (v) Fixed charges cover ratio.
20. Examine the relationship between solvency, liquidity and profitability?
UNIT – III
Section C
21.From the following estimates, you are required to calculate the average amount of
)
G
working capital required:
(U
Particulars RS.
(I)Average amount locked up in stocks:
Stock of stores, materials etc. ce 20,000
Stock of finished goods and work – in – progress 25,000
er
m
Local sales – 3 weeks credit 2,08,000

om
Export sales – 6 weeks credit 6,24,000

(iii) Time lag in payment for:
-C
Purchase – 3 weeks 1,56,000

Wages – 2 weeks 4,55,000
SC
Add 10% to allow for contingencies.

22. The following information has been supplied by a borrower:
A
(I) Expected level of production - 3,00,000 units

K
(ii) Raw materials to remain in stock on an average - 2 months

(iii) Processing period for each unit of product - 1 month
(IV) Finished goods remain in stock on an average - 3 months
(v) Credit allowed to the customers from the date of despatch - 3 months
(vi) Expectedratios of cost to selling price:
• Raw materials - 60%

• Direct wages - 10%
• Overheads - 20%
26
(vii) Selling price per unit - RS.10
(viii) Expected margin on sale - 10%
You are required to estate the working capital requirements of the borrower.
23. From the following information, prepare a statement showing the average working capital
requirements:
(I) Output per annum = 39,000 units
(ii) 25% of the output is sold against cash.
(iii) Analysis of cost of each unit: RS.
Raw materials 5
Direct labour 4
)
Overheads 3
G
---------
(U
Total cost 12
Profit 3
---------
ce
er
Selling price 15
m
---------
(IV) Raw materials are in stock on a average for four weeks and finished products for three
om
weeks.
(v) Factory processing will take on a average two weeks.
-C
(vi) Credit allowed to debtors - 4 weeks

SC
(vii) Credit allowed by suppliers - 3 weeks

(viii) Lag in payment of labour - 2 weeks
A
(ix) Lag in payment of overheads - 4 weeks

K
(x) Cash on hand is expected to be RS.10,000

Assume that production is carried on evenly throughout the year. Wages and overheads
accrue similarly.
24. X Ltd. Sells goods in the home market at a gross profit of 20% on sales ( Depreciation not
to be taken into consideration as a part of the cost of goods sold).
It’s annual figures are as follows: RS.

Sales - Home market at one month's credit 22,50,000
Foreign markets at two months' credit 10,80,000
( Sale price 10% below home price)
27
Materials used - suppliers extend two months credit 9,72,000
Manufacturing expenses (cash) paid in one month arrears 12,60,000
Wages paid - ½ month in arrears ?
Administrative expenses paid - One month in arrears 2,40,000
Sales promotion expenses payable quarterly in advance 1,60,000
Cash in hand (estimated) 40,000
The company keeps one month's stock of each of raw materials and finished goods.
Set up your calculation of the average amount of working capital required. Provide 10%
margin for contingencies.
25. From the following information, prepare a statement showing working capital required by
)
the company:
G
Level of production per month - 20,000 units
(U
Selling price per unit - RS.20
Margin on sales - 10%
Expected ratios of cost to selling price:
ce
er
• Raw – materials - 55%
•
m
Direct labour - 20%

• Overheads. - 15%
om
Raw materials required in stock - 2 months

Processing period - 1 month
-C
Finished goods in stock on an average - 2 months

SC
Recovery from customers after - 1 month

26. From the following details, prepare an estimate of the requirements of working capital:
A
Production - 60,000 units

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Selling price per unit - RS.5

Raw materials - 60% of selling price
Direct wages - 10% of selling price
Overheads - 20% of selling price
Materials in hand - 2 months requirements
Production time - 1 month
Finished goods in stores - 3 months
Credit for material - 2 months
Credit allowed to customers - 3 months
Average cash balance - RS. 20,000
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Wages and overheads are paid at the bringing of the month following. In production all the
required materials are charged in the initial stages and wages and overheads accident evenly.
27. From the following information, prepare a statement in columnar form showing the
estimated working capital requirements:
(I) in total hand
(ii) as regards each constituent part of working capital. Budgeted sales RS. 2,60,000/- per
annum.
Analysis of cost of each unit.
Raw materials - RS. 3/-
Labour - RS. 4/-
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Overheads - RS. 2/-
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Profit - RS. 1/-
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It is estimated that:
(a) Pending use, raw materials are carried in stock for three weeks and finished goods for two
Weeks.
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(b)Factory processing will take three weeks
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(c) Suppliers will give five weeks credit and customers will require eight weeks credit.
It may be assumed that production and overheads accrue evenly throughout the year.
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28. From the following information, you are required to prepare for the board of Directors of
X Ltd. a forecast profit and loss account for the year ended 30thJune 1972, and balance sheet
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as at 30th June 1973.

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Particulars RS.
Paid – up share capital 10,00,000
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8% debentures (secured on assets) 2,50,000

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Fixed assets on 1st July 1972 6,25,000

Bank overdraft on 1stJuly 1972 1,81,250
Production during the previous year was 60,000 units. It is expected that this level of
activity would be maintained during the current year.
The expected ratios of cost to selling prices are: Raw materials 60 percent, Direct wages 10
percent, Overheads ( including debenture interest) 20 percent, Raw materials are in stock on
average two months. Materials are in process valued at cost of raw materials plus 50 percent
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of direct wages and overheads by creditors is two months and credit given to debtors is three
months, selling price is RS. 25 per unit.
You are informed that there is a regular production and sales cycle. Ignore tax.
29. From the information given below, you are required to prepare a projected profit and loss
A/c, balance sheet and estimate of working capital requirements:
(I) Issued share capital RS. 2,00,000
Fixes assets at cost RS. 2,00,000
8% bonds RS. 75,000
(ii) The expected ratios of cost to selling price:-
Raw materials 40%
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Labour 30%
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Overheads 20%
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Profit 10%
(iii) Raw material are kept in store for average of 2 months.
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Finished goods remain in stock for an average period of one month
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• Work – in – progress (100% complete in regards to materials and 50% for labour
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and overheads) will approximately be to half a months production.

• Credit allowed to customers is two months and given by suppliers is one month.
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• Production during the previous year was 40,000 units and it is planner to maintain
the same in the current year also
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• Selling price RS.9 per unit.

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• Calculation of debtors may be made at selling price.

30. What do you understand by working capital and how is it classified?
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UNIT – IV
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Section C:
31.Indian plastics make plastic buckets. An analysis of their accounting reveals:
Variable cost per bucket RS. 20
Fixed cost RS. 50,000 for the year
Capacity 2,000 buckets per year
Selling price per bucket RS. 70
Required:
• Find the Break – even Point.
• Find the number of buckets to be sold to get a profit of RS. 30,00
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• If the company can manufacture 600 buckets more per year with an additional
fixed cost of RS. 2,000, what should be the selling price to maintain the profit per
bucket as at above?
32. Reprographics Ltd., Manufactures a documents reproducing machine which has a
variable cost structure as follows:
RS.
Material 40
Labour 10
Overhead 4
Selling price 90
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Sales during the current year are expected to be RS. 13,50,000 and fixed overhead RS.
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1,40,000
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Under a wage agreement, an increase of 10% is payable to all direct workers from the
beginning of the forthcoming year, while material costs are expected to increase by 7.5%,
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variable overhead costs by 6% and fixed overhead costs 3%, you are required to
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calculate:
•
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The new selling price if the current P/V Ratio is to be maintained, and
• The quantity to be sold during the forthcoming year to yield the same amount of
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profit as the current assuming the selling price to remain at RS. 90.
33. Cookwell Ltd. Manufactures pressure cookers, the selling price of which is RS. 300
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per unit. Currently the capacity utilisation is 60% with a sales turnover of RS. 18,00,000.
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The company proposes to reduce the selling price by 20% but desires to maintain the
same profit position by increasing the output. Assuming that the increases output could be
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made and sold, determine the level at which the company should operate to achieve the
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desired objective.
The following future data are available:
• Variable cost per unit RS. 60.
• Semivariable cost (including a variable element of RS.10 per unit) RS. 1,80,000
• Fixed cost RS.3,00,000 will remain constant up to 80% level. Beyond this, an
additional amount of RS. 60,000 will be incurred.
34. From the following figures, find the Break – even Volume:
Selling price per tonne
Variable cost per tonne
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Fixed expenses
If this volume represents 40% capacity, what is the additional profit for a added
production of 40% capacity, the selling price of which is 10% lower for 20% capacity
production and 15% lower than the existing price for the other 20% capacity.
35. A toy manufactures earns an average net profit RS. 3 per piece in a selling price of
RS. 15 by producing and selling 60,000 pieces at 60% of the potential capacity.
Composition of his cost of sales is:
Direct materials RS. 4.00
Direct wages RS. 1.00
Works overheads RS. 6.00 ( 50% fixed)
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Selling overheads RS. 100 ( 25% fixed
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During the current year, he intends to produce the same number but anticipates that:
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• His fixed changes will go up by 10%
• Rates of direct wages will increase by 20%
• Rates of direct material will increase by 5%
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• Selling price cannot be increased under these circumstances he obtains, an order
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for a future 20% of his capacity. What minimum price will you remind for
accepting the order to ensure the manufacturer an overall profit of RS. 1,80,500.
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36. A factory produces 24,000 units. The cost sheet gives the following information:
RS.
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Direct materials 2,40,000

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Direct wages 1,68,000

Variable overheads 96,000
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Semivariable overheads 56,000

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Fixed overheads 1,60,000

Total cost 7,20,000
The production is sold at RS.40 per unit. The management proposes to increase the
production by 3,000 units for sale in the foreign market. It is estimated that the semivariable
overheads will increase by RS. 2,000. But the product will be sold at RS. 28 per unit in the
foreign market. However, no additional capital expenditure will be incurred. The
management seeks your advice as a cost accountant.
37. Due to industrial depression, a plant is running at present at 50% of its capacity. The
following details are available:
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Cost of production per unit.
RS.
Direct materials 2 Production per month 20,000 units
Direct labour 1 Total cost of production RS.1,60,000
Variable overheads 3
Fixed overheads 2 Price 1,40,000
8 Loss 20,000
An exporter offers to buy 5,000 units per month at the rate of RS.6.50 per unit and the
company hesitates to accept the offer fearing increase of future operating losses.
Advise, whether the company should accept or decline this offer.
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38. The following information in respect of product X and product Y of a firm is given:
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Product X product Y
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Selling price per unit RS. 100 RS. 90
Direct materials RS. 45 RS. 45
Direct labour hours 20 hours
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(@ 0.50 per hour)
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Variable overhead:-
100% direct wages
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Fixed overhead RS. 5,000

Present the above information to show the profitability products during labour shortage.
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39. From the following data, Calculate the Break – even Point:
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RS.
Selling price per unit 20
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Direct material cost per unit 8

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Direct labour per unit 2

Direct expenses per unit 2
Variable overheads per unit 3
Fixed overheads (Total) 20,000
If sales are 20% above Break – even Point, determine the net profit.
40. give significant and limitations of marginal costing?
UNIT – V
Section C:
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41.Prepare a production budget for 3 month ending 31.3 08 for a factory producing 5
products on the basis of the following information
Product Opening stock Estimate sales Desired
closing stock
A 5000 20000 4000
B 6000 25000 6000
C 10000 50000 11000
D 1000 10000 1000
E 2000 5000 5000
42.Prepare production budget for the first six month
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Month of sale Product A(unit) Product B(unit)
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Jan 28 10
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Feb 28 12
Mar
Apr
24
20
ce 16
20
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May 16 24
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June 16 24
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July 18 20
It is assumed that there is no work in progress and sales equal to half of the following
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month will be kept in stock for current month.

43.Mallar LTD plans to sell for the next year 50,000 units of a particular product. Two kinds
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of raw material A and B are required for manufacturing the product. Each unit of the product
requires 2 units of A and 3 units of B. The estimate opening balance at the beginning of next
A
year are
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Finished product: 8000 units,Raw material A:12000 B:15000

The desired closing balance at the end of the next year are:
Finished product :6000 unit
Raw material A:13000 B:16000 , Draw up a raw material purchase budget for
next year.
44.The cost details collected from the following records of safai LTD for the production of
500 units are given below
Particulars Per unit
Materials 40
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Labour 30
Variable o/h 12
Selling & distribution o/h (20%fixed) 10
Administrative overhead(40% variable) 15
Fixed overhead (RS 7500) 15
Selling price per unit 122
Prepare a budget for production of
• 700 units
• 900 units
45.Prepare a flexible budget for the production and sales of 1200 units, 1600 units and 2000
)
units. The following expenses for the production of 1000 units
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Particulars Per unit
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Direct material 20
Direct wages
Administrative
30
20
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OH(fixed)
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Selling expenses 10
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(50% fixed)
Distribution 20
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expenses (25% fixed)

100
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46.Following information relate to X LTD when it’s production is at 50% capacity

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Particulars Rs
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Fixed expenses:
1)salary 210000
2)rent& tax 140000
3)dep& others 397500
Semi-variable expenses at 50% capacity:
1)plant maintenance 62500
2) indirect labour 247500
3) salesman salary 72500
4) sundry expenses 65000
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Variable expenses at 50% capacity:
• Material
• Labour 600000
• Salesman commission 640000
95000
Estimate direct labour hours 120000.

47.Draw up a flexible budget for the production at 75% and 100% capacity on the basis of the
following data for 50% activity
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Particulars Rs
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Materials 100
Labour 50 ce
Variable expenses 10
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(direct)
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Administrative 40
expenses (50% fixed)
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Selling & 50
distribution expenses
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(60% fixed)
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Present production (50% activity) : 1000 units.

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48. A company produces a standard product in it's factory at the rate of 5 units per standard
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hour. During Oct 1999, the budgeted production was 1000 units. The actual production was
9000 units and the actual hours worked were 190. Schedule working days for the month we're
25 but actual number of days worked were only 24. Calculate a) capacity ratio b) calendar
ratio c) activity ratio d) efficiency ratio.
49. Prepare a flexible budget from the following data

Capacity : 50%(10,000 units)
Selling price per unit :RS 200
Materials : 100
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Labour : 30
Factory overhead : 30(RS 12 fixed)
Administrative overhead : 20(RS 10 fixed)
At 60% working, material cost per unit increased by 2% and selling price per unit falls by 2%
At 80% working, material cost per unit increased by 5% and selling price per unit falls by
5%. Estimate the profits at 60% and 80% working.
50. Discuss about the limitations of budgeting?
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(AUTONOMOUS)
COIMBATORE-641029
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A
QUESTION BANK
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MARKETING
NOVEMBER 2019
1
Question Bank
MARKETING
CONTENTS
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1 Section A 3
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2 Section B 8
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3 Section C
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Prepared by
S.K. Arunkumar
Coimbatore-29.
2
MARKETING
SECTION - A
UNIT I
1. Marketing is the performance of business activities that direct the flow ____________ from the
producer to the consumer.
a) Goods &Services b) Goods c) Services d) Products & Services.
2. _________ goods are long-lasting products that lead to development of the finished product.
a) Industrialb) consumer c) non-durable d) un-sought goods.
3. ____________ Emphasis on studying with the existing technology and reducing the cost of
)
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production.
a) Marketing b) Selling c) Advertising d) Manufacturing.
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4. The main objective of marketing is
a) Increasing sales b) Increasing production c) Identifying the needs of the consumers d) none of
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the above.
5. __________ is wants for specific products by the people who are able to pay.
a) Supplies b) Demands c) Needs d) Likings.
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6. People’s needs are satisfied by __________.
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a) Products b) Services c) Money d) Products and Services.
7. The marketing concept concentrates on __________.
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a) Manufacturer b) Dealer c) Consumerd) Marketers.

8. Modern marketing concept is one which
(a) Begins with the producer and ends with the customer
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(b) Begins with the customer and ends with the producer
(c) Begins and ends with the customer
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(d) None
9. Modern marketing concept is

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a) Customer oriented b)Production oriented c) sales oriented d) None of the above.

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10. When exchanges are confined within a family such a market can be called as ___________.
a) Local Market b) National market c) World Market d) Family Market.
11. The end of all marketing activities is the _________ of human wants
a) Satisfaction b) Creation c) Motivating d) Changing.
12.___________ goods are meant for final consumption by consumers and not for sale
a) Industrial goods b) Consumer goods c) Convenience goods d) Specialty goods
13. Company has control on one of the forces
a) External forces b) Internal force c) Both d) None of the above.
14. In the functional approach, the focus of marketing study is
a) Storage b) Transportation c) Financing d) all the above.
15. The concept of marketing is
a) A process of thinking b) A process of decision c) A process of action d) A process of sales.
3
16. E-marketing means __________.
a) Electronic marketing b) e-mail marketing c) marketing through post d) none
17. ____________ means merchandise, wares, traffic or a place of business.
a) Market b) location c) factory d) All of the above.
18. ___________ refers to a market where some kind of maladjustment in demand and supply is
adjusted.
a) Perfect market b Imperfect Market c) electronic market
19. Produce Exchange ia also known as _________.
a) Commodity exchange b) capital market c) money market d) None of the above
20. Short term securities are in _________.
a) Commodity exchange b) capital market c) money market d) None of the above
UNIT II
21. One of the geographic segmentation factors is _________.
)
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a) Climate b) sex c) lifestyle d) age.
22. _________ are largely controlled by management.
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a) Internal forces b) External forces c) Micro& macro forces
23. Market Segmentation can be made on the following basis
(a) Product basis (b) Regions basis (c) Customers basis (d) All the above
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24.__________ is the creation and delivery of a standard of living to society
a) Advertising b) Publicity c) Marketing d) Positioning
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25 In marketing, the term _______ environment refers to the level of population growth, age, sex,
education pattern, family influences and shifts
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a) Demographic b) Economic c) Socio-cultural d) Political

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26. ________ motives are based on personal feelings which include pleasure, comfort, status etc.
a) Emotional b) Rational c) Both d) None of these.
27. It is the process of dividing a potential market into distinct sub-markets of consumers with
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common needs and characteristics

a) Market Segmentation b) Market Targeting c) Market Positioning d) Market Penetration
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28. Buyers are divided into different groups on the basis of lifestyle or personality and values.
a) Psychographic segmentation b) Behavioural Segmentation c) Demographic Segmentation d)
None of the above.
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29. _________ refers to the size of segmented market

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a) Substantiality b) Measurability c) Accessibility d) Representability.

30. The process of classifying customers into groups with different needs characteristics or
behaviour is called ________.
a) Market Targeting b) Market Segmentation c) Market positioning d) None of the above.
31. Forces that create new technologies, creating new product and market opportunities
a) Technological environment b) Political environment c) Social environment d) None of the
above
32. The degree to which a market segment can be reached and served
a) accessibility b) actionability c) profitability d)none of the above.
33. It involves identifying new markets for current products
a)product development b) market penetration c) market development d) none of the above.
4
34. Dividing the market into groups according to the different benefits that consumers seek from
the product
a) Demographic segmentation b) benefit segmentation c) Behaviour segmentation
35. Individuals are motivated to buy goods by
a) External forces b) Internal forces c) Both d) None of the above.
36. It includes product line and quality, brand, packaging and services
a) The price mix b) The product mix c) the promotion mix d) the place mix.
37. __________ is the complete set of all products offered for sale by a company.
a) Product line b) Product mix c) Potential product d) Generic product.
38. The stage in the product life cycle in which sales growth slows or levels off
a) Maturity stage b) Decline stage c) Growth stage d) None of the above.
39. __________ provides written information about the product.
a) Brand Name b) Package c) Label d) Direct marketing.
)
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40. The idea on paper is converted into product
a) Business Analysis b) Test marketing c) Product Development d) Product Analysis
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UNIT III
41. It includes product line and quality, brand, packaging and services
a) The price mix b) The product mix c) the promotion mix d) the place mix.
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42. When advertising is reached to the residential place of the people, it’s called
a) Promotional advertising b) Outdoor advertising c) Indoor advertising d) .Direct
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Advertising
43. It is applied to the product or to the package
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a) Brand label b) grade label c) descriptive label d) none of the above.

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44. An Advertisement copy must have

a) Description b) Narration c) Exposition d) All the above.
45. _________ provides a written information about the product.
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a) Brand Name b) Package c) Label d) Direct marketing.

46. Promotion is basically a
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a) message is transmitted b) a communication process c) develops a new product d) none of

the above
47. Sales Promotion tools includes
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a) Appeals b) Coupons c) Vertical marketing d) None of the above

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48. Which of the following is an element of marketing mix?

a) Product b) Price c) Promotion d) All
49. A name which suggests something about the product and its functions is
a) Coined name b) Descriptive name c Arbitrary name d) Suggestive name
50. It refers to brand names or marks which are registered with the Government
a) Copy right b) Trade mark c) Branding d) Brand name.
51. It is a process by which a product is branded
a) Branding b) Brand name c) Brand d) Brand mark.
52. A firm may decide upon a policy of adopting distinctive brand for each of its product.
a) Company brand b) Combination Device c) Individual Brand d)Family Brand.
53. Salesmanship involves the act of
a) Inversion b) eras ion c) pennalian d) none of the above
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54. AGMARK is meant for the
a) Industrial products b) Agricultural products c) Consumer products (d) All
55. A successful salesmen adopts a formula
a) Direct Selling b) AIDAS c) Outdoor advertising d) Indirect Selling
56. The set of beliefs consumers hold about a particular brand
a) Brand loyalty b) Brand equity c) Brand image d) None of the above.
57.____________ is limited to one line of product.
a) Individual brand b) family brand c) Company brand d) Combination device.
58. The buyer and supplier get together with a view to discuss the contents of contract is called
_____________.
a) Assembling b) Contractual c) Negotiation d) Contractual.
59.___________ is good to increase the sales and at the same time to known the consumer’s need
and desire.
)
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a) Sales promotion b) Personal selling c) Market research d) None of the above.
60. The decision of a manufacturer to choose a family brand or individual brand depends on
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___________.
a) Name of the product b) Varieties Manufactured c) Promotional aspects d) All the above.
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UNIT IV
61. The basic objective of ________ is “getting the right goods to the right places at the right time
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for the least cost”.
a) Advertising b) sales promotion c) physical distribution d) segmentation.
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62. Assessing consumer reaction to price is a very important fact of ________.

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a) Product testing b) test marketing c) marketing researches d) none of the above.

63. ___________ is the generic property of the product to satisfy a need or want of the consumer.
a) Price b) Utility c) Value d) demand.
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64. The following factor is important in deciding the ‘channel of distribution’ for a product.
a) Nature of the market b) Nature of the product c) Competition in the market d) All
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65. Multiple pricing means

a) charging different prices to different consumers b) same price for same use c) Different prices
for different uses d) On the basis of the users capacity.
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66. The pricing strategy followed by BATA Shoe Company

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a) Cost oriented pricing b) Dual pricing c) Administered pricing d) Psychological pricing

67. The better marketing strategy for homogeneous product is
a) Differentiated marketing b) Undifferentiated marketing c) Concentrated marketing
d) None
68. ___________ is the mechanism or device for translation into quantitative terms the perceived
value of the product to the customer at a point of time.
a) Price b) Cost c) Profit d) Margin.
69. The process used for wrapping the products for its protection is called as -
a) Labeling b) Packaging c) Branding d) None of the above.
70. The desired market position and price image for the brand can be decided by
a) Product line pricing b) Tender Pricing c) Pricing Procedure d) Differentiated pricing.
71. This price strategy is characterized by high initial price
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a) Penetrating price b) Skimming price c) Monopoly pricing d) None of the above.
72. __________ is characterized by partial absorption of the transport cost by the co.
a) Administered price b) Base point pricing c) Zone pricing d) Dual pricing
73. Skimming pricing means
a) Fixing a high initial price b) Fixing a low initial price c) Fixing a marginal price d) None of
the above.
74. __________ is made on the basis of cost of production plus an additional margin of cost
a) Cost demand based b) Demand based c) Cost based d) Competition based.
75. __________ is characterized by partial absorption of the transport cost by the company
a) Administered price b) Base point pricing c) Zone pricing d) Dual pricing.
76. The changes in price are caused by the passage of time which involves
a) Place risk b) Competition risk c) Time risk d) Personal risk.
77. _______ is made on the basis of cost of production + an additional margin of cost
)
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a) Cost demand based b) demand based c) cost based d) competition device.
78. The price to be paid on sale depends upon bargaining
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a)Price lining b) Dual Pricing c)Negotiated Pricing d) Monopoly Pricing d) None.
79. It is that at which sales revenue is just equal to total costs.
a) optimum level b) maximum level c) normal level d) break even point.
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80. A market where buyers are more than the sellers is known as
a) Buyers market b) Sellers market c) Consumers market d) Organised market
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UNIT V
81. The needs that an Individual seeks first is a) individual needs b) Safety c) Physiological
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needs d) Social needs

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82. Individuals are motivated to buy goods by

a) External Forces b) External Forces c) Both d) None of the above
83. The consumer protection act was passed in a) 1986 b) 1976 c) 1996 d) 1966
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84. Consumer behaviour is influenced by

a) Economic factors b) social factors c) Cultural factors d) All of the above
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85. A knowledge o consumer behaviour would render immense help for a) Policy b)
Implementing Strategies c) Financial Assistance d) All the above
86. ________ refers to thought, strong feelings, urge, motion, etc., which make a buyer to react.
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a) Motive b) Communication c) Financial Assistance d) Co-ordination

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87. __________ factors refer to a set of learned beliefs and determine human behaviour.
a) Cultural b) Social c) Economic d) None of the above
88. _________ is an inner urge that moves a person to some actions.
a) Motive b) Communication c) Financial Assistance d) Co-ordination
89. _________ shapes the human behaviour.
a) Perception b) Motivation c) Learning d) Attitudes
90. __________ are the changes in an individual’s behaviour arising from past experience.
a) Perception b) Motivation c) Learning d) Attitudes
91. The ultimate object of production is
a) Consumption b) selling c) profit-making d) to render service
92. He is placed at the top of the organizational chart.
a) Consumer b) Manufacturer c) Markets d) Retailers
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93. Caveat Emptor means
a) Let the buyer beware b) let the seller beware c) to protect the consumer d) None of the
above
94. Caveat vendor means
a) let the buyer beware b) let the seller beware c) to protect the consumer d) None of the
above
95. __________ is a collective Endeavour of the consumer to protect interest against
exploitations.
a) Consumerism b) Selling c) Marketing d) None
96. Consumer Movement emerged first in
a) America b) India c) Britain d) Germany
97. State Commission is also known as
a) Consumer Disputes Redress Commission b) National Commission of lower level c)
)
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Consumer Protection d) Disputes Redress Commission
98. A person who buys and consumes goods is called ________.
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a) Consumer b) Manufacturer c) Markets d) Retailers
99. A buyer’s reason behind the purchase from a particular seller is called
a) Patronage motives b) Product buying motive c) both d) None of the above
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100. The Prevention of food and Adulteration Act was passed in the year
a) 1990 b) 1986 c) 1982 d) 1954
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SECTION – B
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UNIT I
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1. Define Market and Marketing.

2. Distinguish between selling and marketing.
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3. Explain the importance of marketing and scope.

4. Explain the marketing characteristics of consumer goods.
5. What do you mean by social marketing?
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6. What is a market? What do you mean by consumer goods?

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7. What are the objectives of marketing advantages and disadvantages?

8. Write note on classification of consumer goods.
9. What are the facilitating functions in marketing and nature?
10. Differentiate between standardisation and grading
UNIT II
11. Define Market Segmentation.
12. Write a note on Benefit Segmentation.
13. What are the uncontrollable and controllable variables?
14. Define Product Mix. Give example.
15. What constitutes a right product?
16. Discuss the benefits of PLC.
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17. Discuss the significance of product planning.
18. Explain Product mix strategies.
19. Differentiate between product and service.
20. What is a new product? Explain the various approaches to forecast sales of a new product.
UNIT III
21. What is brand policy? Give an example.
22. What are the different types of brand?
23. What are the characteristics of a good package?
24. What is brand positioning?
25. Explain the different kinds of brand name.
26. What are the functions of branding?
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27. What are the qualities of a good brand?
28. Explain the advantages of branding.
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29. Explain the growth of packaging.
30. Write a note on the improvements made in packaging for the existing products in the market.
UNIT IV
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31. Explain the various objectives of pricing?
32. Discuss about any four kinds of pricing.
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33. Explain the competitor’s reactions to price changes.
34. What do you mean by multi product pricing?
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35. Discuss about the importance of pricing.

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36. What are the internal factors that affect the pricing decisions?
37. What are the main developments in the service sector?
38. Write a note on skimming pricing and penetrating pricing with examples.
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39. What is meant by Channels of Distribution?

40. Explain the advantages of franchising.
SC
UNIT V
41. Who is a consumer?
A
42. What are the weaknesses of the consumer?

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43. How to protect the consumer?

44. What are the rights of the consumer?
45. Define Consumers.
46. Define Consumerism.
47. State any three objects of Consumer Protection Act.
48. What are state consumer councils?
49. State the various buying motives.
50. How will you measure consumer satisfaction?
9
SECTION – C
UNIT I
1. Discuss clearly the benefits of modern concept of marketing?

2. What are the approaches to the study of marketing? Explain its Merits & Demerits.
3. Explain the marketing functions detail.
4. Discuss about the .merits and demerits of e-marketing.
5. Explain the factors influencing marketing concept?
6. What is buying? Explain the sub-functions of buying.
7. Explain the importance of standardizing and grading of a Product.
8. Write a detailed on social functions of marketing.
9. How would you deal with marketing risks?.
)
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10. Briefly discuss the scope of marketing.
UNIT II
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11. Explain the various marketing strategies implemented during the stages of product life cycle
12. Explain the stags in new product development process.
13. What are the factors that contribute the failure of a new product?
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14. What is meant by Product Life Cycle? Explain its concept wit examples.
15. Discuss briefly the problems of introducing a new product in the market.
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16. Describe the important aspects of Product Planning.
17. What is the need for Product Policy? Describe its qualities.
m
18. Why do many products turn out to be market failure?

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19. Explain the various product mix strategies.

20. Explain the various categories of new market.
UNIT III
-C
21. Explain the advantages and disadvantages of Branding.

22. Explain the advantages of Packaging.
SC
23. Explain the term label. Give the functions, advantages and disadvantages.
24. Describe alternative packaging strategy options available to a company. Discuss their relative
strengths and weakness.
A
25. Explain the different kinds of brands .What are the types of Brand Names? Write the
K
characteristics.
26. Explain the kinds of brand name with their special characteristics.
27. Define Advertising. Discuss its objectives
28. Discuss about the problems of advertising in India.
29. Discuss briefly the use and objectives of advertising. What are their limitations?
30. Explain the steps in preparing an advertisement copy.
UNIT IV
31. Discuss the various basic pricing policies.
32. Explain the factors influencing price determination.
33. Explain the steps involved in determining the price.
34. Discuss various methods of pricing
35. What type of pricing will you prefer for a new product? Give reasons.
10
36. What are the special problems encountered by a manufacture after fixing price for his
product?
37. Define a channel of distribution? Explain the factors influencing the selection of channels.
38. Discuss the services of the Wholesaler?
39. Discuss the advantages and disadvantages of Supermarket.
40. What are the basic channels of distribution for various types of goods?
UNIT V
41. Discuss the need for consumer protection.
42. Explain the rights and responsibilities of the consumers?
43. Explain the scope and conditions relating to consumerism?
44. Write a detailed note on consumerism?
45. What are the functions of consumer guidance society in India?
46. Who is a consumer? What are the weaknesses of the consumer?
)
G
47. Write about redressal machinery under the Consumer Protection Act, 1986.
48. Describe briefly the objects and scope of the Consumer Protection Act, 1986.
(U
49. What do you mean by buying motives? Explain its type.
50. Define the concept of buyer behaviour. Why is it desirable to study it in marketing?
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er
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SC
A
K
11
SECTION – A
(ANSWERS)
Q.N ANS Q.N ANS Q.N ANS Q.N ANS Q.N ANS
O O O O O
1 b) GOODS 21 a) Climate 41 c) the 61 c) 81 a)
promotion physical individual
mix distributi needs
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on
2 a) 22 a) Internal 42 c) Indoor 62 b) test 82 c) Both
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Industrial forces advertising marketin
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3 d) 23 (d) All the 43 c) 63 a) Price 83 a) 1986
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Manufactu descriptive
above
ring label
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4 c) 24 a) 44 a) 64 d) All 84 d) All of
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Identifying Advertisin Description the above

the needs g
om
of the
consumers
5 b) 25 a) 45 a) Brand 65 a) 85 b)
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Demands Demograp Name charging Implemen

hic different ting
SC
prices to Strategies
different
consumer
A
s
6 a) 26 a) 46 b) a 66 d) 86 a) Motive
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Products Emotional communic Psycholog

ation ical
process
7 c) 27 a) Market 47 b) Coupons 67 c) 87 a) Cultural
Consumer Segmenta Concentr
tion ated
marketin
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8 (c) Begins 28 a) 48 d) All 68 a) Price 88 a) Motive
and ends Psychogra
with the phic
customer segmentat
12
ion
9 a) 29 c) 49 a) Coined 69 b) 89 a)
Customer Accessibili name Packaging Perceptio
oriented ty n
10 d) Family 30 a) Market 50 b) Trade 70 b) Tender 90 c)
Market. Targeting mark Pricing Learning
11 a) 31 a) 51 a) Branding 71 a) 91 a)
Satisfactio Technolog Penetrati Consumpt
n ical ng price ion
environm
ent
12 b) 32 b) 52 d)Family 72 d) Dual 92 a)
Consumer actionabili Brand. pricing Consumer
goods ty
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13 b) Internal 33 a)product 53 a) 73 b) Fixing a 93 a) Let the
force developm Inversion low initial buyer
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ent price beware
14 d) all the 34 c) 54 b) 74 a) Cost 94 b) let the
above. Behaviour Agricultural demand seller
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segmentat products based beware
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15 a) A 35 c) Both 55 a) Direct 75 c) Zone 95 a)
process of Selling pricing Consumer
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thinking ism
16 a) 36 b) The 56 c) Brand 76 c) Time 96 a)
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Electronic product image risk America

marketing mix
17 a) Market 37 b) Product 57 a) 77 a) Cost 97 a)
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mix Individual demand Consumer

brand based Disputes
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Redress
Commissi
on
A
18 b) 38 b) Decline 58 c) 78 d) None. 98 a)
Imperfect stage Negotiatio Consumer
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Market n
19 a) 39 b) 59 c) Market 79 d) break 99 d) None
Commodit Package research even of the
y point. above
exchange
20 c) money 40 d) Product 60 d) All the 80 c) 100 d) 1954
market Analysis above. Consume
rs market
13
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A
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-C
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14
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(U
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(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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SC
TITLE OF THE PAPER: BANKING THEORY LAW AND PRACTICE

A
K
APRIL 2019
1
Question Bank
MODERN BANKING
)
CONTENTS
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1 Section A
ce 3
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2 Section B 8
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3 Section C 15
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SC
A
Prepared by
K
S.Poorni
Coimbatore-29.
2
SECTION A
UNIT I
1. _________ provides facilities for acceptance of deposits and provision of loans.
a) Banking b) Insurance c) Securities d) Finance
2. Banking regulations act of India was enacted during _________.
a) 1950 b) 1959 c) 1949 d) 1948
3. The Reserve Bank of India act was passed in ________.
a) 1934 b) 1949 c) 1952 d) 1930
)
4. The most important financial intermediary in the Indian financial system is ____ bank.
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a) Co-operative b) Development c) Commercial d) Investment
5. The largest commercial bank in India is ________.
a) Canara bank b) Indian overseas bank

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c) State bank of India
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d) South Indian bank
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6. Basic type of account is called _______ account.

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a) Fixed b) Saving c) Current d) Nominal
7. ________ account have no limitation on transactions.

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a) Fixed b) Savings c) Current d) Nominal

SC
8. _______ accounts have higher rate of interest.

A
a) Fixed b) Savings c) Current d) Nominal

K
9. _______ is called as demand loan.
a) Call loan b) Cash credit c) Overdraft d) Bills discounting
10. Interest is calculated daily on _______.
a) Call loan b) Cash credit c) Overdraft d) Bills discounting
11. Providing loan more than the credit limit is ________.
a) Cash credit b) Call loans c) Overdraft d) Bills discounting
12. The first development bank was established in _________.
3
a) 1948 b) 1950 c) 1949 d) 1952
13. The origin of the banking system in India can be traced with the foundation of
Bank of Calcutta in ________.
a) 1786 b) 1947 c) 1913 d) 1865
14. The Imperial bank of India named the ________.
a) Bank of India b) Canara bank c) Indian bank d) State bank of India
15. The banks operate primarily for _______.
a) Profit b) Service c) Allocation d) Settlement
)
16. _______ refers to a section of financial market where financial instruments with high
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Liquidity and short term maturities are traded.
(U
a) Money market b) Capital market c) Securities d) Banking
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17. The busy season of money market covers the period from ________.
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a) Nov to April b) April to May c) March to April d) May to Oct
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18. The slack season of money market covers the period from ________.
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a) Nov to April b) April to May c) March to April d) May to Oct
19. _______ money markets comprise the legal financial institutions backed by the RBI.
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a) Unorganised b) Organised c) Inter-call d) Foreign

SC
20. The maturity period for money market is _______.
a) 10yrs b) 5yrs c) 3yrs d) 1yr

A
K
UNIT II
21. _______ deposits can be withdrawn by individuals without any prior notice to the bank.
a) Demand b) Time c) Fixed d) Current
22. _______ refers to the deposits that are for certain period of time.
a) Demand b) Time c) Securities d) Current
23. The power of commercial banks to expand deposits though loans, advances and
Investment is known as ________.
4
a) Collecting income b) credit creation c) Demand deposits d) Time deposits
24. _______ banks are called the factories of credit.
a) Development b) Organised c) Commercial d) Agro
25. The deposits where the customer is free to withdraw the amount whenever he wants
by cheques is called _______ deposits.
a) Secondary b) Derivative c) Time d) Primary
26. Primary deposits are also called as _______ deposits.
a) Time b) Passive c) Derivative d) Credit
)
27. Deposits which arise on account of granting loan or purchase of assets by a bank are
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Called ______ deposits.
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a) Derivative b) Primary c) Passive d) Demand
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28. Derivative deposits are also called as _______ deposits.
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a) Passive b) Active c) Primary d) Time
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29. Credit creation will be large during the period of ________.

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a) Prosperity b) Depression c) Inflation d) Stake
30. Credit creation will be small during the period of _______.

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a) Prosperity b) Depression c) Inflation d) Stake

SC
31. _______ has the sole right to issue currency notes of various denominations.
a) Indian bank b) Reserve bank of India c) Commercial bank

A
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d) Foreign banks
32. _____ is the tool of credit control which controls the cost and volume of credit.
a) Qualitative b) Quantitative c) Capital market d) Money market
33. The minimum percentage of total deposits kept by banks with RBI is ________.
a) Cash reserve ratio b) Statutory liquid ratio c) Open market operations
d) Policy rates
5
34. Buying and selling of government securities by the RBI in open market is called ______.
a) Open market operations b) Policy rates c) Reserve ratios d) credit rationing
35. _____ is the policy under which RBI influences the volume of credit in the economy by
manipulating the bank rate.
a) Marginal standing b) Liquidity adjustment c) Bank rate d) Credit rationing
36. The interest rate at which RBI provides liquidity to banks under liquidity adjustment
Facility is known as ________.
a) Bank rate b) credit rate c) Repo rate d) Penal rate
)
37. ______ is controlling the amount of credit available for certain industrial sectors to
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Ensure that all sectors get adequate amount of credit.
(U
a) Credit rationing b) Moral suasion c) Changing margin requirement
d) Regulating consumer credit

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er
38. RTGS means ________.
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a) Real time gross settlement b) Regulating the gross settlement

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c) Real time government securities d) Real time gross services
39. _______ financing is an amount that an entrepreneur receives for the purpose of being
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Eligible for a start up loan.

SC
a) Seed b) Expansion c) Bayout d) None
40. Banking services delivered through the channel of smart mobile phones is termed as ___.
A
K
a) Internet banking b) E-banking c) Mobile banking d) Telephone banking
UNIT III
41. A banker becomes a _______ when he receives gold ornaments and important
documents for safe custody from customer.
a) Bailee b) Trustee c) Agent d) Debtor
42. When money is deposited for a specific purpose, till that purpose is fulfilled, the banker
is regarded as ______ for that money.
6
43. ______ is employed to do any act for another or to represent another in dealing with third
Person.
44. The _______ relationship exists between banker and customer, when the banker buys
and sells shares, collects cheques, bills etc.
a) Agent-Principal b) Debtor-Creditor c) Bailee d) Trustee
45. When a customer opens an account with a bank and if the account has a credit balance,
)
then the relationship is that of ______.
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a) Debtor & Creditor b) Pledger & Pledgee c) Agent & Principal
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d) Advisor & Client
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46. When the banker owes money to the customer then he becomes ________.
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a) Creditor b) Debtor c) Agent d) Principal
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47. In case of loan, the banker is a _______.

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a) Creditor b) Debtor c) Agent d) Principal
48. When the customer pledges certain assets or security with the bank to get a loan,
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he becomes the ________.

SC
a) Pledger b) Pledgee c) Bailer d) Bailee

A
K
49. When the banker gives a sale deposit locker to the customer, he becomes the ______.
a) Licensee b) Licensor c) Bailer d) Bailee
50. ________ is a contract for delivering goods by one party to another to be held in trust for
A specific period and returned when the purpose is ended.
a) Hypothecation b) Sales c) Pledgement d) Bailment
51. ______ is the party that delivers property to another.
a) Bailee b) Bailer c) Pledgee d) Pledger
7
52. _______ is the party to whom the property is delivered.
a) Bailee b) Bailer c) Pledgee d) Pledger
53. The banker becomes _______ when the customer hypothecates certain movable or
non-movable property or assets with the banker to get a loan.
a) Hypothecatee b) Hypothecator c) Bailee d) Bailer
54. When a customer hypothecates certain movable or non-movable property or assets with
The banker to get a loan, he becomes a _________.
a) Hypothecatee b) Hypothecator c) Bailee d) Bailer
)
55. The right of a creditor to retain goods and securities owned by the debtor bailed to the
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Bank until the loan due from the debtor is repaid is called the ________.
(U
a) Right of lien b) Right of set-off c) Right of appropriation
d) Right to charge interest

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56. In _______ the creditor dosen’t have the right to retain all the properties of the debtor.
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a) General lien b) Special lien c) Particular lien d) Individual lien

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57. A _____ can allow the judgement creditor to recover debt from the debtor’s wages and
Salary.
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a) Garnishee order b) Right of set-off c) Right of appropriation

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d) Right of lien
A
K
58. ______ is an order of the court allowing a creditor to collect the money owed from
someone who owes money to the debtor.
a) Bailment b) Pledgement c) Garnishment d) None
59. The person or business who owes money to the debtor is called the ________.
a) Bailee b) Pledgee c) Garnishee d) Hypothecatee
60. Banks can merge two accounts in the name of the same customer under the right of ____.
a) Lien b) Set-off c) Appropriation d) Interest charged
UNIT IV
8
61. An account opened by a customer to make a deposit and withdrawal of small sums of
money is known as _______ account.
a) Savings b) Fixed c) Current d) Special
62. KYC means __________.
a) Know your credit b) Know your customer c) Know your collection
d) Know your conditions
63. A special type of bank account opened by traders, businessmen, corporate bodies and
others who operate the account frequently is known as ________ account.
)
a) Savings b) Fixed c) Current d) Partnership
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64. _______ type of account is not eligible for interest.
(U
a) Savings b) Fixed c) Current d) Joint
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65. The receipt issued by a banker on the acceptance of deposits for a fixed time period is
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known as _______ receipt.
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a) Saving deposit b) Fixed deposit c) Current deposit d) None

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66. A type of an account opened by a customer where the money is deposited for a longer
Period of time and to get a regular income is known as _______ account.

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a) Savings b) Fixed c) Current d) Special

SC
67. ________ account is a type of a deposit account operated by a banker which combines
A
K
the advantages of savings accounts and fixed deposit account.
a) Flexi-deposit b) Reinvestment c) Recurring deposit d) Floating rate deposit
68. _______ account is a type of account where the customer makes a deposit on a periodical
interval upto a certain period of time.
a) Flexi b) Reinvestment c) Recurring d) Floating
69. A type of account operated by a banker where the rate of interest payable on the deposit
made by a customer is allowed to vary is known as ________.
a) Recurring b) Floating c) current d) Fixed
9
70. A letter obtained by a banker from a prospective customer before a banker can open an
account in the name of the prospective customer is known as _______.
a) Letter of introduction b) Permission letter c) Account opening letter
d) Application form
71. The _______ contains the rules and regulations of the bank with the terms and conditions
of deposit.
a) Introduction letter b) Application form c) Account opening letter
d) Permission letter
)
72. The type of bank account that gives the advantage of financial leverage is _____ account.
G
a) Current b) Savings bank c) Fixed deposit d) Unfixed deposit
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73. The facility of overdraft is usually granted to _______ account holders.
a) Current b) Savings bank

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c) Fixed deposit d) All types
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74. Senior citizen deposit account can be opened by an Indian citizen who is of _______.
m
a) 58yrs of age b) 65yrs of age c) 70yrs of age d) 60yrs of age

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SC
75. Accounts that are opened and operated by a banking company for the mutual benefit of
the banker and the customer are called ________ account.

A
K
a) Bank account b) Venture c) Royal d) Mutual
76. ATM/Debit card is usually given to holders of _______ account.
a) Savings b) Current c) Fixed d) Un-fixed
77. Fixed deposit are also called _______ deposits.
a) Flexi b) Recurring c) Time d) Savings
78. Fixed deposit receipt is a _______ instrument.
a) Non-negotiable b) Negotiable c) Non-transferable d) Financial
79. _______ cannot be drawn against the fixed deposit receipt.
10
a) Overdraft b) Cheques c) Amount d) Demand draft
80. ________ constitutes a conclusive and unquestionable record of the transactions between
the banker and the customer.
a) Passbook b) Receipts c) Drafts d) Vouchers
UNIT V
81. Instruments of credit that are transferable from one person to another are called _______.
a) Negotiable instruments b) Non-negotiable instruments
c) Credit creation d) Overdraft
)
82. Every negotiable instrument shall be made for ________.
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(U
a) Acceptance b) Consideration c) Transfer d) Endorsement
83. _______ is the maker of an instrument.
a) Maker b) Drawee c) Drawer d) Endorser

ce
er
84. ______ is the person who promises to pay amount stated in an instrument.
m
a) Maker b) Drawer c) Drawee d) Payee

om
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85. ______ is the person who is directed to make payment of an instrument.

SC
a) Drawer b) Maker c) Drawee d) Payee

A
86. _______ is the person who is entitled to the payment of an instrument.

K
a) Payee b) Drawee c) Endorsee d) Holder
87. _______ is the person who signs and accepts to make payment of an instrument.
a) Drawer b) Maker c) Endorser d) Acceptor
88. ______ is a person who transfers an instrument.
a) Drawer b) Maker c) Endorser d) Endorsee
89. The person to whom an instrument is transferred is called ________.
a) Endorsee b) Holder c) Endorser d) Drawee
90. The person who is entitled to have the possession of an instrument in his own name and
11
who is entitled to receive payment thereon is called ______.
a) Endorsee b) Holder c) Endorser d) Drawee
91. _______ is a bill of exchange drawn on a specified banker and not expressed to be
payable otherwise than on demand.
a) Cheque b) Promissory note c) Bill of exchange d) None
92. Where a cheque is not presented for payment within a reasonable period from the date of
its issue, it is called a ________ cheque.
a) Order b) Bearer c) Stale d) Marked
)
93. Where a cheque bears a date subsequent to the one on which it is actually drawn, it is
G
called a ______ cheque.
(U
a) Stale b) Post-dated c) Marked d) Order
94. MIRC stands for _________.

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a) Magnetic Ink Character Recognition b) Marked Ink Character Recognition
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c) Magnetic Ink Copy Recognition d) Magnetic Ink Code Recognition

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95. _______ cheque is the technology introduced by the RBI for speeding up the cheque
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clearing process.
SC
a) Bank draft b) Order c) MICR d) Marked
96. The ______ negotiable instrument is not payable to the holder at the counter.
A
K
a) Crossed b) Marked c) Post-dated d) MICR
97. In case of ______ cheque, it is essential that the paying banker gets himself satisfied
about the true identity of the presenter of the cheque.
a) Bearer b) Order c) Marked d) Stale
98. A _______ crossing refers to drawing of two transverse parallel lines with or without any
words across the face of a cheque.
a) General b) Special c) Non-negotiable d) Account payee
99. _______ endorsement refers to signing on the back of the negotiable instrument only the
12
name of the person making it.
a) Special b) General c) Converted d) Partial
100. _______ endorsement is a type of endorsement that limits or negatives the liability of
the endorser.
a) Conditional b) Restrictive c) Facultative d) Contingency
SECTION B
UNIT I
)
1. How is the term banking defined under the provisions of the banking regulations act,
G
(U
1949?
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2. What were the three presidency banks set up in India?
er
3. State the purpose for which SBI was set up.
m
4. Can you sketch the structure of banking in India?

om
5. How will you state the objectives for which banks were nationalized in India?
6. What according to you is privatization of banks?

-C
7. How would you define the term Indian money market?

SC
8. What was the development witnessed in the second phase of the growth of the Indian
A
Banking system?
K
9. Can you explain the role and the functions of Indian banking system?
10. What are the components of the Indian banking system?
UNIT II
1. How do you define commercial banks?
2. What do you know of the credit creation function of a banker?
3. Can you state the objective of setting up of RBI?
4. How does the RBI act as banker’s bank?
5. What are the functions of RBI?
13
6. How do you explain ‘E-banking’?
7. Can you explain electronic fund transfer?
8. What is internet banking?
9. Bring out the major advantages of internet banking.
10. Discuss the different mobile banking services offered by a bank.
UNIT III
1. How is a bank customer defined?
2. How does a banker act as an agent of a customer?
)
3. What is the role of a banker as a trustee for a customer?
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(U
4. Can you explain the rights of the banker?
5. Can you derive the obligations of the banker?

ce
er
6. ‘A banker can act as an agent to the bank itself’. Explain.
m
7. How can you explain the term garnishee order?

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8. Why is the relationship of banker and customer called a trustee and beneficiary?
9. Can you identify the relationship of banker and customer as bailor and bailee?
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10. Can you broadly categorize the relationship of banker and customer?
SC
UNIT IV
A
1. Who is a minor?
K
2. How can you explain about a lunatic?
3. What are the formalities of opening a new account?
4. Can you explain the term joint accounts?
5. What could be the procedures of opening account for joint stock companies?
6. Can you identify the special types of accounts?
7. Can minor open bank account?
8. What is a minor account?
9. How to open a bank account for a minor?
14
10. How to deal with bank accounts of lunatic person?
UNIT V
1. What are negotiable instruments?
2. What is the enactment concerning the negotiable instruments in India?
3. Who do you think is a drawer of a negotiable instrument?
4. Can you define a cheque?
5. How will a order cheque be defined?
6. How can you explain a post dated cheque?
)
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(U
7. Can you explain why a cheque should be marked?
8. How to define a MICR cheque?

ce
9. What could be the characteristic features of negotiable instruments?
er
10. Can you identify the parties to a ‘negotiable instrument’?
m
SECTION C
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(Knowledge levels K2 – Understanding, K3 - Applying, K4 – Analyzing, K5 –

Evaluating are followed in relation to course outcomes specified as per Bloom’s
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Taxonomy)
UNIT I
SC
1. State the significance of banking system in the economic development of a country.

A
2. Can you elaborate and explain the classification of banks?

K
3. What was the development witnessed under each phase of the growth in Indian banking
System?
4. How will you discuss on the history and growth of Indian banking system?
5. What are the features and drawbacks of Indian money market?
6. Write a note on the three presidency banks of the Indian banking system.
7. Can you explain the banking activities undertaken by the Indian bank association?
8. How will you identify the reasons under which the banks were nationalized?
15
9. What is that factor which has lead to development after nationalization?
10. Can you identify the reasons which lead to privatization?
UNIT II
1. Can you elaborate the functions rendered by modern commercial banking?
2. What is the significant role played by commercial banks in the general economic
development of a country?
3. Write a note on the administrative setup of the RBI.
)
4. Can you elaborate on the credit control measures of RBI?
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(U
5. How will you bring out the benefits of e-banking and financial services?
6. Discuss the development and growth of e-banking in the Indian scenario.

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7. How does internet banking help in cost saving for both banker and the customer?
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8. Can you explain the features of ‘mobile banking’?
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9. How is phone banking defined and the features stated?

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10. Trace the evolution and history of ATM.
UNIT III
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1. Can a banker stop operations on a bank account of a customer for non-fulfilment of

SC
KYC norms.
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2. How can you describe the relationship between the banker and the customer?
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3. How does a banker act as a debtor and creditor for a customer?
4. Discuss the type and the nature of relationship of a banker with the special type of
Customers such as minors, partnership firms, joint stock companies.
5. What are the general relationship of a banker and customer?
6. What are the special relationship of a banker and customer?
7. Can you identify the principal and agent relationship of banker and customer?
8. How can you say a banker to be an agent to the customer?
9. Can you state the need of a garnishee order?
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10. What are the types of obligations of banker?
UNIT IV
1. What are the precautions to be taken by a banker while opening an account for the
minor?
2. What are the precautions to be taken by a banker while opening an account for the joint
stock companies?
3. Can you elaborate the precautions to be taken by a banker while opening an account
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for the married women?
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4. How will you explain the precautions to be taken by a banker while dealing with lunatic
customers?
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5. Outline the guidelines to be followed by a banker while opening an account in joint
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names.
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6. Can you explain the steps involved in opening a bank account for the partnership firms?
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7. What are the documents to be examined by a banker to establish the genuineness of the
customer in the case of individuals and partnership firms?

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8. Can you identify the types of accounts?

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9. How can you differentiate savings account and current account?

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10. What are the procedures of opening a savings account?

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UNIT V
1. Bring out the features and similarities of negotiable instruments.
2. Can you explain the cheque clearing process with the use of MICR cheques?
3. How can you examine the different types of cheques?
4. Who do you think are the parties to a negotiable instrument?
5. What are the assumptions underlying the use of negotiable instrument?
6. Can you analyse the purpose for which a negotiable instrument is crossed?
7. State the need for crossing a negotiable instrument.
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8. How does general crossing differ from special crossing?
9. Analyze the different types of conditional endorsement.
10. Discuss the essential precautions to be taken by a paying banker while making payment
on the cheque of a customer.
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Key answers: SECTION A

UNIT I
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1.a) Banking 2.c) 1949 3.a) 1934 4.c) Commercial 5.c) State bank of India 6.b) Saving
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7.c) Current 8. a) Fixed 9.a) Call loan 10.a) Call loan 11.c) Overdraft 12.a) 1948
13.a) 1786 14.d) State bank of India 15.a) Profit 16.a) Money market 17.a) Nov to April
18.d) May to Oct 19.b) Organised 20.d) 1yr

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UNIT II
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1.a) Demand 2.b) Time 3.b) credit creation 4.c) Commercial 5.d) Primary 6.b) Passive
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7.a) Derivative 8.b) Active 9.a) Prosperity 10.b) Depression 11.b) Reserve bank of India
12.b) Quantitative 13.a) Cash reserve ratio 14.a) Open market operations 15.c) Bank rate
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16.c) Repo rate 17.a) Credit rationing 18.a) Real time gross settlement 19.a) Seed
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20.c) Mobile banking

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UNIT III
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1.a) Bailee 2.b) Trustee 3.c) Agent 4.a) Agent-Principal 5.a) Debtor & Creditor
6.b) Debtor 7.a) Creditor 8.a) Pledger 9.b) Licensor 10.d) Bailment 11.b) Bailer
12.a) Bailee 13.a) Hypothecatee 14.b) Hypothecator 15.a) Right of lien
16.c) Particular lien 17.a) Garnishee order 18.c) Garnishment 19.c) Garnishee
20.b) Set-off
UNIT IV
1.a) Savings 2.b) Know your customer 3.c) Current 4.c) Current 5.b) Fixed deposit
6.b) Fixed 7.a) Flexi-deposit 8.c) Recurring 9.b) Floating 10.a) Letter of introduction
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11.b) Application form 12.a) Current 13.a) Current 14.d) 60yrs of age 15.a) Bank account
16.a) Savings 17.c) Time 18.b) Negotiable 19.b) Cheques 20.a) Passbook
UNIT V
1.a) Negotiable instruments 2.b) Consideration 3.c) Drawer 4.a) Maker 5.c) Drawee
6.a) Payee 7.d) Acceptor 8.c) Endorser 9.a) Endorsee 10.b) Holder 11.a) Cheque
12.c) Stale 13.b) Post-dated 14.a) Magnetic Ink Character Recognition 15.c) MICR
16.a) Crossed 17.b) Order 18.a) General 19.b) General 20.a) Conditional
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(AUTONOMOUS)
COIMBATORE-641029
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QUESTION BANK
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TITLE OF THE PAPER: BUSINESS ACCOUNTING

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NOVEMBER 2019
1
Question Bank
BUSINESS ACCOUNTING
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CONTENTS
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1 Section A 3
2 Section B 11
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3 Section C 20
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Prepared by
G.VANITHAMANI

Coimbatore-29.
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SECTION – A 1 MARKS
UNIT I
1. Accounting equation signifies
(a) Capital of a business is equal to assets
(b) Liabilities of a business are equal to assets
(c) Capital of a business is equal to liabilities
(d) Assets of a business are equal to the total of capital and liabilities
2. ‘Cash withdrawn by the proprietor from the business for his personal use’ causes
(a) Decrease in assets and decrease in owner’s capital
(b) Increase in one asset and decrease in another asset
(c) Increase in one asset and increase in liabilities
(d) Increase in asset and decrease in capital
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3. A firm has assets of Rs.1, 00,000 and the external liabilities of Rs.60,000. Its capital would be
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(a) Rs1, 60,000 (b) Rs.60,000
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(c) Rs 1,00,000 (d) Rs. 40,000
4. The incorrect accounting equation is
(a) Assets = Liabilities + Capital (b) Assets = Capital + Liabilities
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(c) Liabilities = Assets + Capital (d) Capital = Assets – Liabilities
5. Accounting equation is formed based on the accounting principle of
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(a) Dual aspect (b) Consistency
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(c) Going concern (d) Accrual
6. Real account deals with
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(a) Individual persons (b) Expenses and losses

(c) Assets (d) Incomes and gains
7. Which one of the following is representative personal account?
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(a) Building A/c (b) Outstanding salary A/c

(c) Mahesh A/c (d) Balan& Co
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8. Prepaid rent is a
(a) Nominal A/c (b) Personal A/c
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(c) Real A/c (d) Representative personal

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A/c
9. Withdrawal of cash from business by the proprietor should be credited to
(a) Drawings A/c (b) Cash A/c
(c) Capital A/c (d) Purchases A/c
10. In double entry system of book keeping, every business transaction affects
(a) Minimum of two accounts (b) same account on two different dates
(c) Two sides of the same account (d) Minimum three accounts
11. The receiving aspect in a transaction is called as?
(a) Debit aspect (b) credit aspect
(c) Dual aspect (d) consistency aspect
12. Murali account is an example for
(a) Personal account (b) real account (c) Real account (d) cash account
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13. Capital account is classified under
(a) Personal account (b) real account
(c) Real account (d) cash account
14. Goodwill is an example of
(a) Tangible real account (b) Intangiblereal account
(c) real account (d) nominal account
15. Commission received is an example of
(a) Real account (b) personal account
(c) Nominal account (d) tangible account
16. Trial balance is a
(a) Statement (b) Account
(c) Ledger (d) Journal
17. The difference of totals of both debit and credit side of trial balance is transferred to:
)
(a) Trading account (b) Difference account
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(c) Suspense account (d) Miscellaneous account
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18. Trial balance is prepared:
(a) At the end of the year (b) On a particular date
(c) For a year (d) During the year
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19. Drawings account is classified under
(a) Personal account (b) impersonal account
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(c) Real account (d) nominal account
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20. Impersonal accounts are classified into
(a) 2 types (b) 3 types
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(c) 4 types (d) 5 types
UNIT II
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21. Purchases book is used to record

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(a) All purchases of goods (b) all credit purchases of assets

(c) All credit purchases of goods (d) all purchases of assets
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22. A periodic total of the purchases book is posted to the

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(a) Debit side of the purchases account (b) debit side of the sales account
(c) Credit side of the purchases account (d) credit side of the sales account
23. Sales book is used to record
(a) All sales of goods (b) all credit sales of assets
(c) All credit sales of goods (d) all sales of assets and goods
24. The total of the sales book is posted periodically to the credit of (a)
Sales account (b) Cash account (c)
Purchases account (d) Journal proper
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25. Purchase returns book is used to record
(a) Returns of goods to the supplier for which cash is not received immediately
(b) Returns of assets to the supplier for which cash is not received immediately
(c) Returns of assets to the supplier for which cash is received immediately
(d) due to damaged goods
26. Sales return book is used to record
(a) Returns of goods by the customer for which cash is paid immediately
(b) Returns of goods by the customer for which cash is not paid immediately
(c) Returns of assets by the customer for which cash is not paid immediately
(d) Due to Damaged goods
27. Purchases of fixed assets on credit basis is recorded in
(a) Purchases book (b) Sales book
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(c) Purchases returns book (d) Journal proper
28. The source document or voucher used for recording entries in sales book is
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(a) Debit note (b) Credit note
(c) Invoice (d) Cash receipt
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29. Which of the following statements is not true?
(a) Cash discount is recorded in the books of accounts
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(b) Assets purchased on credit are recorded in journal proper
(c) Trade discount is recorded in the books of accounts
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(d) 3 grace days are added while determining the due date of the bill
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30. Closing entries are recorded in

(a) Cash book (b) Ledger
(c) Journal proper (d) Purchases book
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31. Cash book is a

(a) Subsidiary book (b) Principal book
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(c) Journal proper (d) Both subsidiary book and principal book
32. The cash book records
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(a) All cash receipts (b) All cash payments

(c) Both (a) and(b) (d) All credit transactions
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33. When a firm maintains a simple cash book, it need not maintain
(a) Sales account in the ledger (b) Purchases account in the ledger
(c) Capital account in the ledger (d) Cash account in the ledger
34. A cash book with discount, cash and bank column is called
(a) Simple cash book (b) Double column cash book
(c) Three column cash book (d) Petty cash book
35. In Triple column cash book, the balance of bank overdraft brought forward will appear in
(a) Cash column debit side (b) Cash column credit side
(c) Bank column debit side (d) Bank column credit side
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36. Which of the following is recorded as contra entry?
(a) Withdrew cash from bank for personal use
(b) Withdrew cash from bank for office use
(c) Direct payment by the customer in the bank account of the business
(d) When bank charges interest
37. If the debit and credit aspects of a transaction are recorded in the cash book,
(a) Contra entry (b) Compound entry
(c) Single entry (d) Simple entry
38. The balance in the petty cash book is
(a) An expense (b) A profit
(c) An asset (d) A liability
39. Petty cash may be used to pay
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(a) The expenses relating to postage and conveyance
(b) Salary to the Manager
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(c) Purchase of furniture and fixtures
(d) Purchase of raw materials
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40. Small payments are recorded in a book called
(a) Cash book (b) Purchase book
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(c) Bills payable book (d) Petty cash book
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UNIT III
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41. Under the net worth method the basis for ascertaining the profit is
(a) The difference between the capitals on two dates. (b)
The difference between the liabilities on two dates. (c)
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The difference between the gross assets on two dates. (d)

The difference between the net assets on two dates.
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42. Incomplete records are generally used by

(a) Small traders (b) Company
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(c) Government (d) Public

43. Credit sales is obtained from
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(a) Bills Receivable account (b) Total debtors account

(c) Total creditors account (d) Bills payable account
44. Single Entry System is
(a) A Scientific method (b) An Incomplete Double Entry System
(c) Statement of affairs (d) Statement of profit or loss
45. The capital of a business is ascertained by preparing
(a) Trading account (b) Statement of profit or loss
(c) Statement of affairs (d) An Incomplete Double Entry System
46. The excess of assets over liabilities is
(a) Net profit (b) Gross profit
(c) Capital (d) Drawings
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47. The total assets of a proprietor are Rs.5,00,000. His liabilities Rs.3,50,000. Then his capital in
the business is
(a) Rs. 2,50,000 (b) Rs. 1,50,000 (c) Rs. 3,50,000 (d) Rs. 4,50,000
48. A firm has assets worth Rs.60,000 and capital Rs.45,000. Then its liabilities is
(a) Rs. 50,000 (b) Rs. 1,15,000
(c) Rs. 15,000 (d) Rs. 40,000
49. A statement of affairs resembles a
(a) Profit and loss account (b) Trading account
(c) Balance sheet (d) Subsidiary books
50. Incomplete records are those records which are not kept under.
(a) Double entry system (b) single entry system
(c) statement of affairs (d) Statement of profit or loss
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51. Closing stock is an item of .
(a) Fixed asset (b) Current asset
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(c) Fictitious asset (d) Intangible asset
52. Balance sheet is
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(a) An account (b) A statement
(c) Neither a statement nor an account (d) A statement of an account
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53. Net profit of the business increases the
(a) Drawings (b) Receivables
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(c) Debts (d) Capital

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54. Carriage inwards will be shown

(a) In the trading account (b) In the profit and loss account
(c) On the liabilities side (d) On the assets side
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55. Bank overdraft should be shown

(a) In the trading account (b) Profit and loss account
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(c) On the liabilities side (d) On the assets side

56. Balance sheet shows the of the business.
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(a) Profitability (b) Financial position

(c) Sales (d) Purchases
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57. Drawings appearing in the trial balance is

(a) Added to the purchases (b) Subtracted from the purchases
(c) Added to the capital (d) Subtracted from the capital
58. Salaries appearing in the trial balance is shown on the
(a) Debit side of trading account (b) Debit side of profit and loss account
(c) Liabilities side of the balance sheet (d) Assets side of the balance sheet
59. Current assets does not include
(a) Cash (b) Stock (c) Furniture (d) Prepaid expenses
60. Goodwill is classified as
(a) A current asset (b) A liquid asset
(c) A tangible asset (d) An intangible asset
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UNIT IV
61.Under straight line method, the amount of depreciation is
(a) Increasing every year (b) Decreasing every year
(c) Constant for all the years (d) Fluctuating every year
62. If the total charge of depreciation and maintenance cost are considered, the method that
provides a uniform charge is
(a) Straight line method (b) Diminishing balance method
(c) Annuity method (d) Insurance policy method
63. Under the written down value method of depreciation, the amount of depreciation is
(a) Uniform in all the years (b) Decreasing every year
(c) Increasing every year (d) No changes in value
64. Depreciation provided on machinery is debited to
(a) Depreciation account (b) Machinery account
(c) Trading account (d) Provision for depreciation account
)
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65. Cash received from sale of fixed asset is credited to
(a) Profit and loss account (b) Fixed asset account
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(c) Depreciation account (d) Bank account
66. Depreciation is provided on
(a) Fixed assets (b) Current assets
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(c) Outstanding charges (d) All the assets
67. Depreciation is caused by
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(a) Lapse of time (b) Usage (c) Obsolescence (d) All the above
68. Depreciation is the process of
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(a) Allocation of cost of the asset to the period of its useful life
(b) Valuation of assets
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(c) Maintenance of an asset in a state of efficiency

(d) Adding value to the asset
69. For which of the following assets, the depletion method is adopted for writing off cost of the
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asset?
(a) Plant and machinery (b) Mines and quarries
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(c) Buildings (d) Trademark

70. A depreciable asset may suffer obsolescence due to
(a) Passage of time (b) Wear and tear
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(c) Technological changes (d) Lack of maintain

71. Which method shall be efficient, if repairs and maintenance cost of an asset increases as
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it
grows older.
(a) Straight line method (b) Reducing balance method
(c) Sinking fund method (d) Annuity method
72. Depreciation is to be calculated from the date when
(a) Asset is put to use (b) Purchase order is made
(c) Asset is received at business premises (d) Invoice of assets is received
73. If the rate of depreciation is same, then the amount of depreciation under straight linemethod
vis-à-vis written down value method will be
(a) Equal in all years
(b) Equal in the first year but higher in subsequent years
(c) Equal in the first year but lower in subsequent years
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(d) Lower in the first year but equal in subsequent years.
74. Residual value of an asset means the amount that it can fetch on sale at the of its useful
life.
(a) Beginning (b) End
(c) Middle (d) During
75. If selling price is less than the book value of the asset it denotes
(a) Loss (b) capital profit
(c) Expenditure (d) profit
76. Profit made on sale of fixed asset is debited to
(a) Profit and Loss account (b) Fixed Asset account
(c) Depreciation account (d) Trading account
77. Loss on sale of fixed asset appear on the
(a) Credit side of Depreciation account (b) debit side of fixed asset account
)
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(c) Credit side of fixed asset account (d) debit side of depreciation account
78. The amount of depreciation charged on machinery will be debited to
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(a) Machinery account (b) Depreciation account
(c) Cash account (d) Profit and loss account
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79. Total amount of depreciation provided on the written down value method at the rate of 10% p.a.
on Rs.10,000 for first three years will be
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(a) Rs. 2,107 (b) Rs. 2,710 (c) Rs. 2,701 (d) Rs. 2,010
80. If selling price is more than the book value of the asset on the date of sale, it is
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(a) a loss (b) an income

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(c) a profit (d) an expenses
UNIT V
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81. Cost accounting is a branch of accounting that deals with

(a) An instrument of management control
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(b) Classification, recording

(c) Nothing more than a detailed analysis of expenditure
(d) Useful only in such organization which have profits as the aim
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82. Which method of costing is best suited for interior decoration?

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(a) Contract costing (b) operating costing

(c) Job costing (d) process costing
83. The total of all direct expenses is known as
(a) Prime cost (b) work cost
(c) Selling cost (d) Administration cost
84. Office cost is also known as
(a) Prime cost (b) administration cost
(c) Work cost (d) selling cost
85. Cost of production=
(a) Work cost + Office and administration overheads
(b) Prime cost + Factory overheads
(c) Works cost + prime cost
(d) Works cost + Selling and distribution overheads
86. Tender is an estimation of
(a) Cost (b) selling price
(c) Profit (d) distribution
87. The quantity of material to be ordered at one time is known as
(a) EOQ (b) LIFO
(c) HIFO (d) FIFO
88. Re-ordering level=Maximum consumption x
(a) Re-order period (b) Maximum re-order period
(c) Minimum re-order period (d) Normal re-order period
89. In automobile industry cost unit is
(a) Hours (b) number
(c) Wages (d) ideal time
90. Storage ledger is maintained in
(a) Stores department (b) cost department
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(c) Production department (d) sales department
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91. Describe the method of costing to be applied in case of Nursing Home
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(a) Operating Costing (b) Process Costing
(c) Contract Costing (d)Job
Costing
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92.Consider the following information for costing purpose?
Sales Rs. 80,000
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Opening stock Rs. 10,000
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Net Purchases Rs. 45,000
Cost of Goods sold Rs. 50,000
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Determine the value of the ending merchandise inventory.

(a) Rs. 10,000 (b) Rs. 15,000
(c) Rs. 5,000 (d) Rs. 25,000
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93. Which of the following equation is correct and used in costing?

(a) Opening stock + purchases + closing stock = Cost of goods sold
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(b) Cost of goods sold – closing stock – purchases = Opening stock

(c) Cost of goods sold + closing stock – opening stock = Purchases
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(d) Opening stock + cost of goods sold – purchases = Closing stock

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94. Cost of Goods sold is classified as which type of account?

(a) Asset (b) Liability (c) Revenue (d)
Expense
95. A firm had beginning finished goods inventory of Rs. 15,000, ending finished goods inventory
of Rs. 20,000 and cost of goods sold of Rs. 80,000. What was the cost of goods manufactured?
(a) Rs. 80,000 (b) Rs. 85,000 (c) Rs. 75,000 (d) Rs. 65,000
96. Direct Labour is an element of?
(a) Prime cost (b) Conversion cost
(c) Total production cost (d) All of the given options
97. Which of the following cost is used in the calculation of cost per unit?
(a) Total production cost (b) Cost of goods available for sales
(c) Cost of goods manufactured (d) Cost of goods Sold
98. Direct expenses are such expenses
(a) Which are directly paid to the employee
(b) Which are directly associated with the purchase
(c) Which are directly associated with the sale
(d) All of above
99.The basic objective ofcost accounting is
(a)Recording of cost (b)Reporting of cost
(c)cost control (d) profit earning
100.In cinema halls, composite cost unit is
(a) seat per show (b) Cost of screening
(c) Salary of staff cost control (d) Rent of cinema hall profit earning
)
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SECTION – B 5 MARKS
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UNIT I
1. Define Accounting. Enumerate the functions of accounting.
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2. Discuss the Golden Rules of accounting.
3. Brief the branches of accounting.
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4. Bring out the advantages and limitations of journalize.
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5. Complete the missing items.
Assets = Liabilities + Capital
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` (a) 30,000 20,000 ?

(b) 60,000 25,000 ?
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(c) ? 25,000 30,000

(d) ? 10,000 80,000
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(e) 25,000 ? 15,000

(f) 40,000 ? 30,000
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6. Journalize the following transactions of Mr.Ravi,

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2014, June 1 Ravi invested Rs.5,00,000 cash in the business

3 Paid into Bank Rs.80,000
5 Purchased buildings for Rs. 3,00,000
7 Purchased goods for Rs. 70,000
10 Sold goods for Rs.80,000
15 Withdrew cash from Bank Rs. 10,000
25 Paid electric charges Rs. 3,000
30 Paid Salary Rs. 15,000
7. Journalize the following transactions,
Particulars Rs
2014, Feb 1 Purchased Stationery 1,000
5 Purchase Machinery from Mena and co. 30,000
6 Purchased goods from Madan and co. for cash 40,000
7 Sold goods for cash 1,00,000
8 Sold goods on Credit to Rani 25,000
9 Paid insurance premium of owner by cheque 1,000
10 Cheque issued to mena and co. for the amount due
11 Goods distributed as advertising samples 100
12 Cash sent to Bank 300
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8. M/s Arun Bros commenced their business on 1-1-2015, with Rs. 1,60,000.
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The following are their transactions during January 2015.
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Particulars Rs
Jan 2 Bought goods for cash 80,000
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4 Purchased goods for Arul 32,000
7 Goods sold for cash 64,000
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8 Sold goods to Rajesh 32,000
10 Machinery purchased for cash. 24,000
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12 Purchase of land. 8,000

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20 paid freight. 8,000

25 Settled Arul'sA/c with. 31,200
26 Insurance paid. 4,800
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29 Rajesh settled his account with 30,800

30 Salaries paid 4,000
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31 Sale of land. 4,000

Journalise the above transactions; post them to ledger of books.
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9. Enter the following transactions in the Journal of Mr.Radhakrishnan and post them in ledger
and balance the same.
Particulars Rs
2014, Jan 1 Radhakrishnan commenced business with cash 15,00,000
3 Paid into bank 5,00,000
5 Bought goods 3,60,000
7 Paid Travelling Charges 5,000
10 Sold goods 2,50,000
15 Sold goods to balan 2,40,000
20 Purchased Goods From Narayanan 50,000
25 Withdrew cash 60,000
10. The Followingbalance are arrived at from the Books of Thiru Sunil as on 30-4-
2011.Prepare a trial balance as on30-4-2011.
Capital 1,00,000 Salaries 25,000
Drawings 25,000 Rent 10,000
Purchase 4,50,000 Taxes 1,500
Sales 6,50,000 Insurance 3,000
Return inwards 3,500 Sundry debtors 40,000
Return outwards 4,500 Sundry creditors 30,000
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Carriage inwards 5,500 Cash on hand 2,500
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Carriage outwards 4,000 Cash at bank 12,500
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Duty on purchases 10,000 Furniture 5,000
Stock(opening) 55,000 Land 1,02,000
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Motor van 30,000
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UNIT II
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11. What are the various types of subsidiary books?

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12. Discuss the advantages of subsidiary books?

13. From the following transactions of Ram for July, 2013 prepare the Purchase Book
and
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Ledger accounts connected with this book.

2013, July 5 Purchased on credit from Kannan and co.
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50 Iron Boxes @ Rs. 500

10 Grinders @ Rs. 3,000
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6 Purchased for cash from Siva and Bros.

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25 Fans @ Rs. 1,250

10 Purchased from Balan and sons on credit.
20 Grinders @ Rs. 2,500
20 Purchased on Credit, one computer from Kumar for Rs. 35,000
14. From the transactions given below prepare the Sales Book of Ram for July 2013.
2013, July 5 Sold on Credit ToSs Traders.
10 Chairs @ Rs.250
10 Tables @ Rs. 850
Less 10% discount
8 Sold to Raja for cash.
15 chairs @ Rs. 250
20 sold to Mohan & co.
5 Almirah @Rs. 2,200
10 Tables @ Rs. 850
23 Sold on Credit to Narayanan Old Computer for Rs. 5,000
28 Sold to kumaran from Cash
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15 Chairs @ Rs. 250
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15. Enter the following transactions in the purchases return book of Hari and post them into
the ledger.
ce
2014 Jan 5 Returned goods to Anand 5 chairs@ Rs.200 each,
14 Returned goods to Chandran 4 chairs @ Rs.200 each and 10 tables @
er
Rs.350 each, due to inferior quality.
16. Write the following transactions in proper subsidiary books ofMr.Rajasekaran.
m
2003 May 10 Purchased goods from Raman Rs.15,000

om
14 Returned goods to Raman Rs.500

18 Purchased goods from Sekaran Rs.10,000
20 Pradeep sold goods to us Rs.20,000
-C
24 Sent a debit note to Sekaran for goods damaged in transit Rs.1,000.

SC
17. Prepare a Double Column Cash Book from the following transactions of Mr.Gopalan:
Particulars Rs
A
2004 Jan. 1 Cash in hand 4,000

6 Cash Purchases 2,000
K
10 Wages paid 40
11 Cash Sales 6,000
12 Cash received from Suresh and 1,980
allowed him discount 20
19 Cash paid to Meena 2,470
and discount received 30
27 Cash paid to Radha 400
28 Purchased goods for cash 2,070
18. What is cash book? What are its features?

19. Record the following transactions in the analytical petty cash book of Mr.Manoharan.
Balance the book on 6th May, 2003.Give Journal entries and post the balances to
concerned ledger accounts.
2003 May 1. Received for petty cash payment Rs.1,500
2. Paid taxi hire Rs. 250
3. Bought stamps Rs. 75
4. Paid for carriage Rs. 120
4. Paid for Telegrams Rs. 75
4. Paid for auto Rs. 125
5. Paid for carriage Rs. 300
6. Bought revenue stamps Rs. 50
20. Enter the following transactions in cash book with cash and discount column of
)
G
Nandakumar.
2003 Jan 1 Cash in hand Rs.60,000.
(U
3 Bought goods from Premnath Rs.10,000.
4 Opened a current account with bank Rs.15,000.
ce
7 Withdraw from bank Rs.5,000.
8 Sold goods to Kandan for Rs.10,000 credit on terms 2% cash discount if
er
payable within two weeks.
10 Paid cash to Premnath, less 1% C.D.
m
14 Received a cheque from Arul Rs.3,400, allowed him discount Rs.100.

om
15 Kandan settled his account.
UNIT III
-C
21. Write the difference between trial balance and balance sheet.
SC
22. Write notes on (a) Trading Account (b) Profit and Loss Account (c) Balance sheet.
23. The trial balance shows on 31.3.2002, Sundry Debtors Rs.1,25,000.
Adjustment:
A
1. Bad debts to be written off Rs. 5,000

K
2. Provide @ 5% Provision for bad and doubtful debts and

3. Provide @ 2% Provision for discount on debtors
24. Prepare a trading account of Vasu from the following figures.
Particulars Rs
Opening stock 500
Purchases 2,500
Sales 3,600
Closing stock 300
25. The following are some of the balances extracted from the ledger of Mr.Sundaram as on
31st December 2010. Prepare a trading account.
Particulars Debit (Rs) Credit (Rs)

Stock 1.1.2010 12,500
Purchases 1,00,000
Sales 1,50,000
Return outwards 5,000
Return inwards 10,000
Salaries 4,400
Wages 7,500
Rent 2,750
)
Carriage inwards 750
G
Power,coal,gas 1,000
(U
Stock on 31.12.2010 was valued at Rs.14,000.
26. Prepare profit and loss account of Mrs.Nalini for the year ended 31st Dec. 2011 from the
ce
following. er
Gross profit 1,25,000 Discount paid 600
m
Salaries 15,000 Discount received 1,000

om
Rent 5,000 Interest paid 500

Carriage outwards 1,000 interest received 700
Selling expenses 500 Commission earned 2,000
-C
Income from investment 1,500

SC
27. From the following particulars, prepare a balance sheet of Mr.Venugopal as on 31st
A
December 2013.
K
Capital 40,000 Drawings 4,400
Cash in hand 360 Cash at bank 7,200
Furniture 3,700 Plant 10,000
Net profit 1,660 General reserve 1,000
Closing stock 14,800
28. The following information was extracted from the books ofM/s.Sudha Ltd. Prepare final
accounts on 31.3.2012.
Opening stock 12,500 Sales 1,89,000
Depreciation 7,000 Commission 2,000
Carriage inwards 700 Capital 1,71,300
Furniture 8,000 Creditors 17,500
Carriage outwards 500 Bills payable 5,000
Plant & machinery 2,00,000 Return outwards 13,800
Cash 8,900
Salaries 7,500
Debtors 19,000
Discount 1,500
)
G
Wages 16,000
(U
Sales returns 14,000
Purchase 86,000
3,98,600 3,98,600
ce
29. The following is the Trial Balance extracted from the books of Mr.Kumar as on 31.3.17.
er
Prepare Trading and Profit and Loss account and Balance sheet on 31.3.96.
m
Debit Balances Rs Credit Balances Rs
Buildings 30,000 Capital 40,000
om
Machinery 31,400 Purchase returns 2,000

Furniture 2,000 Sales 2,80,000
Motor Car 16,000 Sundry Creditors 9,600
-C
Purchases 1,88,000 Discount received 1,000

Sales returns 1,000 Provision for bad 600
SC
and doubtful debts

Sundry Debtors 30,000
General Expenses 1,600
A
Cash at Bank 9,400

K
Rates and Taxes 1,200

Bad Debts 400
Insurance premium 800
Discount allowed 1,400
3,33,200 3,33,200
Adjustments:
i) Outstanding rates and taxes Rs.1,600.
ii) Insurance Premium Prepaid Rs.200.
iii) Maintain Provision for bad and doubtful debts at 5% ondebtors.
iv) Depreciate Motor car by 10%., Furniture by 4% andBuildings by 3%.
v) Stock on 31.3.96 Rs.20,000.
30. From the undermentioned Trial Balance of Mr.Saleem as on 31.3.2011, prepare Trading
and Profit and Loss Account andBalance sheet as on that date.
Cash in Hand 1,500 Capital 80,000
Purchases 1,20,000 Bank loan @ 4% 20,000
Opening stock 40,000 Bills payable 25,000
Sundry Debtors 60,000 Sundry Creditors 25,000
Plant and Machinery 50,000 Sales 2,00,000
Furniture 20,000 Provision for bad & 1,500
doubtful debts
Bills Receivable 15,000 Interest 1,000
Rent and Taxes 10,000
)
G
Wages 16,000
Salaries 20,000
(U
3,52,500 3,52,500
Additional information supplied:
ce
i) Closing stock Rs.50,000.
ii) Provide for outstanding liabilities.
er
Rent and taxes Rs.2,000.
Wages Rs.3,000.
m
Salaries Rs.4,000.
iii) Depreciation on Plant and Machinery @5% and on furniture@ 10%.
om
iv) Provide 4% interest on Bank loan.

v) Write off bad debts Rs.2,000.
-C
UNIT IV
SC
31. Define Depreciation. Discuss their types.

32. What are the factors determining the amount of depreciation?
33. Give the formula to find out the amount and rate of depreciation under straight
A
line method of depreciation.

K
34. What are the causes for depreciation?

35. Calculate the rate of depreciation under straight line method.
Purchase price of a machine Rs. 80,000
Expenses to be capitalisedRs.20,000
Estimated residual value Rs.4,000
Expected useful life 4 years
36. A machine was purchased for Rs.2,40,000 on 1.1.2012. This is expected to last for five
years. Estimated scrap at the end of five years is Rs.40,000. Find out the rate of
depreciation under the Straight Line Method.
37. Ganesh & Co. purchased a Machinery worth Rs.3,00,000 on 1st October 2010. They spent
Rs.20,000 on its erection. The firm writes off depreciation at the rate of 10% on
the
original cost every year. The books are closed on 31st March of every year. Prepare
Machinery account and Depreciation account for three years.
38. Ragul purchased machinery on April 1, 2014 forRs.2,00,000. On 1st October 2015, a new
machine costing Rs.1,20,000 was purchased. On 30th September 2016, the
machinery purchased on April 1, 2014 was sold for Rs.1,20,000. Books of accounts
are closed on
31st March and depreciation is to be provided at 10% p.a. on straight line method. Prepare
machinery account and depreciation account for the years 2014-15 to 2016-17.
39. A firm purchased a machine for Rs.1,00,000 on 1-7-2015. Depreciation is written off at
20% on reducing balance method. The firm closes its books on 31st December each year.
Show the machinery account up to 31-12-2017.
40. Distinguish between straight line method and written down value method of
)
G
providing depreciation.
(U
UNIT V
41. Define cost sheet. Explain the purposes of cost sheet.
ce
42. Enumerate elements of costing.
43. What are the types of costing?
er
44. Write short notes on
(a) Chargeable expenses (c) Works cost (e) Cost of production
m
(b) Prime cost (d) Work-in-progress (f) Cost of Sales

om
45. Calculate the Raw Material consumed from the following details:
Particulars Rs
Raw materials purchased 80,000
-C
Sale of Material scrap 1,000

Opening stock of Raw materials 12,000
SC
Closing stock of Raw materials 21,000

46. Compute the prime cost:
A
Particulars Rs
K
Direct Material used 82,000

Productive wages 17,000
Royalty paid 11,000
Hire charges of special Machines for the job 13,000
47. Calculate works cost:
Particulars Rs
Factory expenses 700
Office expenses 300
Selling expenses 900
Material consumed 3,400
48. Prepare cost sheet from the following particulars.
Particulars Rs
Direct materials 1,00,000
Direct wages 25,000
Direct expenses 5,000
Wages of foremen 2,500
Electric power 500
Lighting: Factory 1,500
Office 500
Rent:Factory 5,000
Office 2,500
Salaries to salesman 1,250
Advertising 1,250
)
Income tax 10,000
G
Sales 1,89,500
(U
49. Explain (a) Simple average method (b) Weighted average method
50. From the following particulars prepare the stores ledger by adopting First in First
Out method.
ce
Particulars Rs
2013- March 1 Purchased 300 units @ Rs 2 per unit
er
2 Purchased 600 units @ Rs 3 per unit
5 Issued 400 units
m
8 Issued 200 units

om

12 Issued 400 units
-C
SECTION – C 8 Marks
SC
1. What are the basic assumptions of accounting?

2. Distinguish journal and ledger.
A
3. Define Double Entry System. Explain its advantages and disadvantages.

4. Enumerate concepts and convention of accounting.
K
5. Record the following transactions in the Journal of Tmt.Bhanumathi.

2014, Feb. 3 Bought goods for cash Rs.84,500
7 Sold goods to Dhanalakshmi on credit Rs.55,000
9 Received commission Rs.3,000
10 Cash Sales Rs.1,09,000
12 Bought goods from Mahalakshmi Rs.60,000
15 Received five chairs from Revathi& Co. at Rs.400 each
20 Paid Revathi& Co., cash for five chairs
28 Paid Salaries Rs.10,000
Paid Rent Rs.5,000
6. Journalise the following transactions of Mrs.Rama
Particulars Rs
2004, Jan 1 Mrs.Rama commenced business with cash 30,000
2 Paid into bank 21,000
3 Purchased goods by cheque 15,000
7 Drew cash from bank for office use 3,000
15 Purchased goods from Siva 15,000
20 Cash sales 30,000
25 Paid to Siva 14,750
Discount Received 250
31 Paid rent 500
)
G
Paid Salaries 2,000
(U
7. Enter the following transactions in journal and post them in the ledger of Govindarajan and
balance them.
2013, Aug 1 Govindarajan commenced his business with the following.
ce
Plant and Machinery Rs.2,50,000.
Stock Rs. 90,000.
er
Furniture Rs.7,000.
m
Cash Rs. 50,000.
Sundry creditors Rs. 1,50,000.
om
2 Sold goods to Sundar Rs. 1,50,000.

3 Bought goods from Natarajan Rs.65,000.
4 Sundar paid cash Rs. 1,25,000.
-C
6 Returned damaged goods to Natarajan Rs.2,000.

10 Paid to Natarajan Rs.28,000.
SC
31 Paid rent Rs. 5,000.

Paid salaries Rs. 9,000.
A
K
8. Post the following transactions direct into ledger of Thiru.Karthik and balance them.
Particulars Rs
2003, Oct 1 Received cash from Ramesh 1,60,000.
5 Bought goods for cash 60,000.
7 Sold to Suresh 30,000.
15 Bought from Dayalan 40,000.
18 Sold to Ganesan 50,000.
20 Withdrew cash for personal use 18,000.
25 Received commission 20,000.
30 Paid rent 5,000.
31 Paid salary 10,000.
9. The Following balances were extracted from the ledger of Mr.Ramakrishna on 31st March
2003.you are required to prepare a trial balance as on that date.
Drawings 60,000 Cash in hand 9,000
Capital 2,40,000 Cash at bank 25,000
Sundry Creditor 4,30,000 Salaries 95,000
Bills payable 40,000 Sales return 10,000
Sundry debtors 5,00,000 Purchase return 11,000
Bills receivable 52,000 Commission Paid 1,000
Plant&Machinery 45,000 Trading expenses 25,000
Opening Stock 3,70,000 Discount earned 5,000
)
Rent 20,000 Bank Overdraft 60,000
G
Purchase 7,08,000 Sales 11,80,000
(U
10. From the following transactions prepare Trial balance.
ce
Particulars Rs
Anand Commenced business on 1-4-2000 with cash 1,00,000
er
2 Purchased furniture for cash 2,000
4 Bought goods for cash 2,000
m
6 Bought goods on credit from Kalyan 4,000

8 Sold goods for cash 3,000
om
10 Sold goods on credit to Ramanan 5,000

12 Purchased goods on credit from Raju 10,000
-C
14 Ramanan returned goods 500

16 Returned goods to Raju 400
SC
20 Sold goods on credit to Mohan 8,000

25 Paid Kalyan 3,000
A
28 Received cash from Mohan 6,000

30 Rent paid 500
K
30 Salaries paid 2,000
UNIT II
11. Give the specimen of ‘triple column cash book’.

12. What are the rules for making entries in the double column cash book with cash and bank
column?
13. Enter the following transactions in the Purchase Book ofM/s.Subhashree.
2013 March 1 Purchased 100 Kg. of coffee seeds from Suresh @ Rs.40 per Kg.
5 Purchased 80 Kg. of tea dust from Hari @ Rs.20 per Kg.
12 Bought from Rekha Sugars, Trichy 1,200 Kg.of Sugar @ Rs.8 per Kg.
18 Bought from Perumal Sweets, 40 tins of Sweets @ Rs.200 per tin.
20 Purchased from Govinda Biscuit Company, Chennai 20 tins of biscuits @
Rs.400 per tin.
14. Enter the following transactions in the proper subsidiary books ofMr.Somu
2003Nov. 1 Bought from Gopal 300 bags of wheat Rs.1,000 per bag less discount 10%
3 Purchased from Madhavan 150 bags of rice Rs.900per bag less trade discount 10%
5 Returned to Gopal 10 bags of wheat which werepurchased on 1.11.03.
7 Sold to Shiva 50 bags of rice Rs.1,200 per bag lessTrade Discount 5%.
12 Sold to Sharma 25 bags of Wheat Rs.1,300 per bagless Discount 10%.
14 Returned 15 bags of rice to Madhavan.
15 Shiva returned 5 bags of rice.
)
G
17 Bought from Rajan 200 bags of wheat Rs.950 perbag
24 50 bags of wheat returned to Rajan
(U
15. Enter the following transactions in the appropriate Special Journal of M/s. Sita& Co.
ce
2002 Oct 2 Bought goods from Satish Rs.2,400 as per invoice No.63.
4 Sold to Sivagami goods Rs.1,600 as per invoiceNo.71.
er
7 Returned to Satish goods of Rs.250 as per debitnote No.4
8 Sivagami returned goods Rs.150 as per credit noteNo.8
m
12 Sold to Vijaya goods of Rs.950 as per invoice No.72

om
14 Purchased from Velan goods worth Rs.1,100

18 Returned to Sampath goods of Rs.150 as per debitnote No.5
22 Vijaya returned goods of Rs.240 Credit Note No.9.
-C
16. Enter the following transactions in the single column cash book of Mrs. Lalitha.
SC
Particulars Rs
2002 Aug. 1 Cash in hand 46,000
A
3 Paid in to Bank 12,000

4 Cash sales 24,000
K
5 Credit sales to Mani 3,000

7 Printing charges 3,000
9 Received cheque from Natesan 8,000
12 Dividend received 2,000
14 Computer purchased Rs. 35,000
17 Cash received from Mani Rs. 3,000
24 Cash withdrawn from bank Rs. 2,000
17. Prepare Double Column Cash Book with cash and bank columns from the following:
Particulars Rs
2003 Jan 1 Cash in hand 22,000
Cash at bank 5,000
2 Sold goods for cash 15,000
4 Cash withdrawn from bank 2,000
5 Credit purchases from Deena 15,000
6 Cash deposited into bank 5,000
10 Paid wages by cheque 10,000
14 Cash received from sale of furniture10,000 and out of it paid
into bank Rs. 2,000.
)
18 Bank charges charged by the bank 1,300
G
20 Cheque issued to Deena 15,000
(U
24 Received a cheque for Rs.1,000 from Pasubathy, deposited into the bank.
28 Deena, to whom we have issued a cheque for credit purchases has
reported that our cheque is dishonoured.
ce
er
18. Enter the following transactions in the Three Column Cash Bookof Mr.Albert for the year 2002.
m
Particulars Rs
om
May 1 Cash in hand 30,000

Cash at bank 2,000
3 Received cheque for goods sold to Arun and banked it 1000
-C
5 Paid into bank Rs. 4,000

9 Paid cash to David from whom goods worth 6,000 were purchased
SC
for credit on 1st May on term 2% cash discount within two weeks.
10 Paid to Robert by cheque Rs.2,400 in full settlement of his account 2,500
A
12 Received cash from Nathan 4,750

K
Discount allowed 250

19 Interest allowed by bank 200
20 Robert to whom we have issued a cheque has reported that our
Cheque is dishonoured.
22 Roshan got exchange a five hundred rupee note.
31 Paid into Bank all cash in excess of 5,000
19. Record the following transactions in an analytical petty cash bookofMr.Senthil and balance
the same.
On 1st April 2003 the pettycashier started with an imprest of Rs. 1,500.
2003 Rs.April 1 Postage stamps purchased Rs.50
3 Sweeper and scavanger paid Rs.25
5 Conveyance to manager Rs.457
6 Telegram to Mumbai Rs.44
7 Stationery purchased Rs.68
10 Lorry hire for goods sent Rs.250
13 Cartage and cooly on goods bought Rs.75
18 Repair to cycles Rs.30
19 Service charges to Typewriters Rs.75
)
G
22 Ink and Gum purchased Rs.23
24 Advertisement charges Rs.100
(U
27 subscription paid to The Hindu Rs.125
28 Tea to customers Rs.12
ce
20. Enter the following transactions in a petty cash book ofMr.Murugan maintained on imprest
er
system with analytical columns:
2003 July 15 Cash in hand Rs.143
m
Received from the chief cashier Rs.607

om
16 Bought stamps Rs.25

17 Paid cartage Rs.40
18 Tea and lunch expenses to customers Rs.74
-C
19 Telegram sent Rs.23

20 Paid taxi hire Rs.150
SC
21 Purchased envelops Rs.22

22 Paid for repairs of typewriter Rs.65
A
23 Purchased one bottle of ink Rs.12

27 Paid Railway fare to manager Rs.187
K
31 Paid to coolie Rs.20
UNIT III
21. Give the specimen of Trading Account, Profit and Loss account and Balance sheet.
22. What is Balance sheet? List out its significance.
23. Describe intangible assets. Give examples.
24. Discuss the steps involved in the preparation of financial statements of accounts of a firm
25. Prepare Trading Account for the year ending 31st March 2014 from the following
information.
Opening stock 1,70,000 Purchases return 10,000
Sales 2,50,000 Wages 50,000
Sales return 20,000 Purchases 1,00,000
Carriage inward 20,000 Closing stock 1,60,000
26. The following balances are taken from the books of M/s. RSP Ltd. Prepare profit and loss
account for the year ended 31st March 2012.
Gross profit 5,25,000 Salaries & wages 1,00,000
Rent 10,000 Depreciation 5,000
)
G
Interest on loan 5,000 Office expenses 1,500
Distribution charges 2,500 Salesman salary 8,000
(U
Bad debts 2,200 Stationery and printing 500
Commission received 3,000 Discount received 2,000
Interest received 5,000 Advertising 9,000
ce
Taxes and insurance 2,000
er
27. From the following balances extracted from the books of Mrs.Mala, prepare final accounts
for the year ending 31st March2013. Closing stock as on 31.03.2013 was Rs.72,500.
m
Particulars Debit Credit
Rs Rs
om
Mrs.Mala’s Capital 95,000

Plant & Machinery 37,000
Repairs to Machinery 9,150
-C
Wages 42,000
Salaries 6,000
SC
Income tax 750

Cash and bank balances 3,000
Land and building 1,11,750
A
Purchases 1,80,000
K
Purchase Returns 3,000

Sales 3,75,000
Interest 2,250
Bills payable 4,500
Commission (Cr) 6,000
Debtors 52,500
Creditors 40,650
Opening Stock 55,500
Drawings 12,000
Suspense account 2,750
5,26,900 5,26,900
28. From the following Trial Balance of M/s. Ram & Sons, prepare trading and profit and loss
account for the year ending on 31st March 2016 and the balance sheet as on the date:
Rs Rs
Opening Stock (1.4.2015) 5,000
Purchases 16,750
Discount allowed 1,300
Wages 6,500
Sales 30,000
Salaries 2,000
Travelling expenses 400
Commission 425
)
G
Carriage inward 275
Administration expenses 105
(U
Trade expenses 600
Interest 250
Building 5,000
ce
Furniture 200
Debtors 4,250
er
Creditors 2,100
Capital 13,000
m
Cash 2,045
om
45,100 45,100
Stock on 31st March 2016 was Rs. 6,000.

-C
29. The following balances are extracted from the books of Mr.Venugopal as on 31st March
SC
2014. Prepare Trading, Profitand Loss Account and the Balance Sheet.
Rs Rs
A
Capital 1,20,000
K

Drawings 16,000
Commission 11,000
Bank Overdraft 25,000
Cash in Hand 2,500
Stock (1.4.2013) 1,00,000
Furniture 80,000
Purchases 3,00,000
Sales 5,00,000
Wages 50,000
Insurance Premium 1,000
Salaries 15,000
Sundry Creditors 50,000
Sundry Debtors 1,50,000
Bills Payable 25,000
7,31,000 7,31,000
Adjustments:
1. Closing Stock Rs. 1,00,000
2. Write off bad debts Rs. 20,000
3. Create provision for Bad and doubtful debts @ 5%
4. Create provision for discount on debtors @ 2%
5. Create provision for discount on creditors @ 2%
)
30. From the following Trial Balance of Tmt.Selvapriya as on 31st March 2015, prepare Trading
G
and Profit and Loss account andBalance sheet taking into account the adjustments.
(U
ce
Purchases 2,00,000 Capital 3,00.000
Salaries 10,000 Sales 2,50,000
er
Rent 7,500 Sundry creditors 1,05,000
Insurance premium 1,500
m
Drawings 50,000
Machinery 1,40,000
om
Cash at bank 22,500

Computers 1,25,000
Furniture 50,000
-C
Cash 10,000
Opening Stock 26,000
SC

6,55,000 6,55,000
A
Adjustments:
K
1. Closing stock as on 31.3.2005 Rs. 39,000

2. Rent outstanding Rs. 1,000
3. Provide interest on capital @ 10% andon Drawings @ 8%.
UNIT IV
31. What are the objectives of providing depreciation?

32. Explain the methods of Depreciation.
33. State the advantages and limitations of written down value method of depreciation.
34. State the advantages and limitations of straight line method of depreciation.
35. Sudha& Co., purchased a Machinery for Rs.64,000 on 1st April 1996. They spent Rs.28,000
on the repairs and installed the same. Depreciation is writtenoff at 10% p.a. on the Straight
Line Method. On 30th June, 1998 the machinery was found to be unsuitable and sold for
Rs.52,000. Assume that the accounts are closed on 31st December every year. Pass
the journal entries and prepare Machinery account and Depreciation account for three years.
36. Michel & Co. purchased a second hand plant for Rs.4,70,000 on 1 st July 2001. They spent
Rs.30,000 on the repairs and installed the plant. Depreciation is written off at 10% p.a. on
the Straight Line Method. On 30th September 2003, the plant was found to be unsuitable
and sold for Rs.3,50,000. Prepare Plant account and Depreciation account for three
years assuming that the accounts are closed on 31st March every year.
37. On 1st April, 2001, Excel Company Limited purchased a machine for Rs.56,000. On
the date of purchase it was estimated that the effective life of the machine will be 10 years
)
G
and after 10 years it’s scrap value will be Rs.6,000. Prepare Machine Account and
Depreciation Account for three years, Depreciation is charged on Straight Line
(U
Method. Accounts are closed on 31st March of every year.
38. Raj & Co purchased a machine on 1st January 2014 for Rs.90,000. On 1st July 2014, they
ce
purchased another machine for Rs.60,000. On 1st January 2015, they sold the
machine purchased on 1st January 2014 for Rs.40,000. It was decided that the
er
machine be depreciated at 10% per annum on diminishing balance method. Accounts are
closed on 31st December every year. Show the machinery account for the years 2014 and
m
2015.
om
39. Sivam Printing Press purchased a printing machinery costing Rs.3,00,000 on 1.4.2001. After
three years the machinery was sold for Rs.2,80,000. The firm charges depreciation @ 10%
per annum on Diminishing Balance Method. Accounts are closed on 31st March every year.
-C
Pass journals, prepare Machinery account and Depreciation account.

40. Chennai Printing House purchased a Machinery for Rs.4,60,000 on 1st July 2001. It spent
SC
Rs.40,000 on the repairs and installed the machinery. Depreciation is written off at 10% p.a.
on Diminishing Balance Method. On 31st October 2003, the machinery was found to
A
be unsuitable and sold for Rs.4,10,000. Prepare Machinery account and Depreciation
account
K
for three years assuming that the accounts are closed on 31st March every year.
UNIT V
41. Discuss the types of costing.
42. Explain the scope and objectives of cost accounting.
43. Distinguish between financial accounting and cost accounting.
44. Enumerate the specimen of coat sheet.
45. The following details have been obtained from the cost records of Raja Sekhar Ltd, Prepare
a Cost sheet
Particulars Rs
st
Stock of Raw Materials on 1 Dec 2010 75,000
Stock of Raw materials on 31st Dec 2010 91,500
Direct wages 52,500
Indirect wages 2,750
Sales 2,11,000
Work-in-progress 1st dec2010 28,000
Work-in-progress 31st dec2010 35,000
Purchases of raw materials 66,000
Factory rent, rates and power 15,000
)
Depreciation of plant and machinery 3,500
G
Expenses on purchases 1,500
(U
Carriage outwards 2,500
Advertising 3,500
Office rent and taxes 2,500
ce
Traveller’s wages and commission 6,500
st
Stock of finished goods (1 Dec 2010) 54,000
er
Stock of finished goods (31stDec 2010) 31,000
m
46. A manufacturer presents the following details about the various expenses incurred. Prepare
cost sheet.
om
Particulars Rs
Raw materials consumed 70,000
-C

Factory rent 2,400
SC
Bad debts 440

Printing and stationery 620
Legal expenses 350
A
Carriage outwards 1,540

Indirect materials 560
K
Power 4,600
Depreciation of furniture 160
Postage expenses 465
Repairs of plant and machinery 1,200
Salesman expenses 3,400
Advertising 500
Direct wages 85,000
General manager salary 36,000
Factory manager salary 18,000
Depreciation on Plant and Machinery 1,240
Audit fees 350
47. The following information is extracted from the stores ledger. Issues are to be priced on the
principle of ‘FIFO’ Method. Write the stores ledger account.
Jan 1 opening balance 500 units @Rs.4
5 Purchases 200 units @Rs.4.25
12 Purchases 150 units @Rs. 4.10
20 Purchases 300 units @ Rs.4.50
25 Purchases 400 units @ Rs.4
Issues of Materials were as follows:
Jan 4 200 units
10 400 units
15 100 units
19 100 units
)
G
26 200 units
30 250 units
(U
48. The received side of the stores ledger account shows the following transactions.
ce
Jan 1 Opening balance 700 units @ Rs.4
5 received from vendor 200 units @ Rs.4.25
er
12 received from vendor 250 units @Rs. 4.10
20 received from vendor 500 units @ Rs.4.50
m
25 received from vendor 500 units @ Rs.4
Issues of Materials were as follows:
om
Jan 4 400 units

10 200 units
15 150 units
-C
19 100 units
26 200 units
SC
30 250 units
49. Show the stores ledger entries as they would appear when using simple average method.
A
Units Price
K
May 1 Balance In Hand B/F 300 2.00

2 Purchased 200 2.20
4 Issued 150 -
11 Issued 150 -
19 Issued 200 -
27 Issued 150 -
50. The following transactions occur in the purchase and issue of a material. Prepare store
ledger using weighted average method.
Jan 2 Purchased 4,000 units @ Rs. 4 per unit
Feb 5 Issued 2,000 units
10 Purchased 6,000 units @ Rs.6 per unit
12 Issued 4,000 units
Mar 2 Issued 1,000 units
15 Purchased 4,500 units @ Rs. 5.50 per unit
)
G
(U
ce
er
m
om
-C
SC
A
K
ANSWERS
UNIT I
1. (d) Assets of a business are equal to the 11. (a) debit aspect
total of capital and liabilities
2. (a) Decrease in assets and decrease 12. (a) Personal account
in
owner’s capital
3. (d) Rs. 40,000 13. (a) Personal account
4. (c) Liabilities = Assets + Capital 14. (b) intangible real account
)
G
5. (a) Dual aspect 15. (c) nominal account
(U
6. (c) Assets 16. (a) Statement
7. (b) Outstanding salary A/c 17. (c)Suspense account
ce
8. (d) Representative personal A/c 18.
er (c)For a year
9. (b) Cash A/c 19. (c)personal account
10. (a) Minimum 2 accounts 20. (a) 2 types
m
UNIT II
om
21. (c) all credit purchases of goods 31. (d) Purchases book
22. (a) debit side of the purchases account 32. (c) Journal proper
-C
23. (c) all credit sales of goods 33. (d) All credit transactions
SC
24. (a) Sales account 34. (c) Capital account in the ledger
25. (a) Returns of goods to the supplier for 35. (d) Bank column credit side
A
which cash is not received

K
immediately.
26. (b) Returns of goods by the 36. (b)Withdrew cash from bank for office
customer use
for which cash is not paid immediately
27. (d) Journal proper 37. (c) Single entry
28. (c) Invoice 38. (c) An asset
29. (c) Trade discount is recorded in the 39. (a) The expenses relating to postage
books of accounts and conveyance
30. (c) Journal proper 40. (d) Petty cash book
UNIT III
41. (a) The difference between the 51. (b) Current asset
capital on two dates.
42. (a) Small traders 52. (b) A statement
43. (b) Total debtors account 53. (d) Capital
44. (b) An Incomplete Double Entry 54. (a) In the trading account
System
45. (c) Statement of affairs 55. (c) On the liabilities side
)
46. (c) Capital 56. (b) Financial position
G
47. (b) Rs. 1,50,000 57. (d) Subtracted from the capital
(U
48. (c) Rs. 15,000 58. (b) Debit side of profit and loss account
ce
49. (c) Balance sheet 59. (c) Furniture
50. (a) Double entry system 60. (d) An intangible asset
er
m
UNIT IV
om
61. (c) Constant for all the years 71. (b) Reducing balance method
62. (b) Diminishing balance method 72. (a) Asset is put to use
-C
63. (b) Decreasing every year 73. (b) Equal in the first year but higher in
subsequent years
SC
64. (a) Depreciation account 74. (b) End

65. (b) Fixed asset account 75. (a) loss
A
66. (a) Fixed assets 76. (b) Fixed Asset account

K
67. (d) a, b and c 77. (c) credit side of fixed asset account
68. (a) Allocation of cost of the asset to the 78. (b) Depreciation account
period of its useful life
69. (b) Mines and quarries 79. (b) Rs. 2,710
70. (c) Technological changes 80. (c) a profit
UNIT V
81. (b) Classification, recording 91. (c) Contract Costing
82. (c) job costing 92. (b) Rs. 15,000
83. (a) prime cost 93. (c) Cost of goods sold + closing stock –
opening stock = Purchases
84. (b) administration cost 94. (d) Expense
85. (a) Work cost + Office and 95. (b) Rs. 85,000
administration overheads
86. (b) selling price 96. (d) All of the given options
)
87. (a) EOQ 97. (c) Cost of goods manufactured
G
88. (c) Minimum re-order period 98. (b) Which are directly associated
(U
with the purchase
ce
89. (b) number 99. (c)cost control
90. (a) Stores department 100. (a) seat per show
er
m
om
-C
SC
A
K

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KONGUNADU ARTS AND SCIENCE COLLEGE

DEPARTMENT OF Commerce (UG)

S.No Name of the Subject

15. Financial Services

17. Higher Financial Accounting

19. Indirect Tax

20. Management Accounting

22. Banking Theory Law And Practice

23. Business Accounting

TITLE OF THE PAPER: FUNDAMENTALS OF FINANCIAL ACCOUNTING

DEPARTMENT OF COMMERCE (UG)

Department of Commerce (UG)

FUNDAMENTALS OF FINANCIAL ACCOUNTING

S.NO CONTENT PAGE NO.

Department of Commerce (UG),

Kongunadu Arts & Science College,

a) Total b) Interest c) Imprest d) Small

a) Journal b) Ledger c) Day book d) Trial balance

8. ________ is the second important stage in the accounting cycle or process.

9. An account is usually in the _______ format and contains two sides.

a) Credit b) Left c) Debit d) Right

a) Financial b) Cost c) Managing d) Bank reconciliation

a) Debited b) Credited c) Balanced d) Traded

34. ________is the incidental residue from certain types of manufacture.

36. _______ is a ledger account.

a) Trading b) Final c) Balance d) Trial

47. _________ is an Indian version of bill of exchange.

a) Holder b) Hundi c) Stamp d) Notary

a) Endorsement b) Promissory note c) Stamp d) Documents

a) Closing b) Trading c) Retiring d) Balancing

a) Epoque b) Forward c) Red-Ink d) Daily balance

a) Consignor b) Consignee c) Agent d) Consignment

a) Payee b) Consignor c) Consignee d) Agent

a) Partnership b) Co-venturer c) Sole d) Firm

75. Joint venture business follows the account on ______ basis.

a) Partial record b) Memorandum Joint Venture c) Both a & b d) None of these

a) Single entry b) Double entry c) Triple entry d) Debit

a) Assets b) Liabilities c) Debit d) Credit

90. _________ is a primary source of income of a non-profit organisation.

a) Subscriptions b) Entry fees c) Membership d) Donation

1 .Journalise the following transaction in the books of Sri T.N of Coimbatore:

Oct 1 Commenced business with Rs.50, 000

4 Paid carriage Rs.50

8 Purchased machinery for Rs.20, 000

10 Sold goods to Raja on account for Rs.15, 000

25 copies of corporate Accounting @ Rs.150 per copy

10 copies of Financial Accounting @ Rs.130 per copy

8 copies of Business Statistics @ Rs.100 per copy

10 copies of principles of Economics @ Rs.75 per copy

Nov 1 Cash in hand Rs.390

Return outward 750 Return inward 1,000

Stock (1.1.99) 30,000 Discount (dr.) 350

Debtors 45,000 Creditors 25,000

Salaries 6,800 Carriage inwards 750

Bad debts provision 525 Rent and Taxes 10,000

Advertisement 2,000 Cash in hand 900

11. What is an `Adjusted cash book’?

12. Distinguish between `Trial balance’ and `Balance sheet’.

Opening stock 80,000

Gross profit 55,000 Repairs 500

Office rent 500 Interest(Dr.) 480

Discount to customers 360 Bad debts 2,100

Salaries 900 Trade expenses 300