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Accounting and Finance for Bankers - 3 (JAIIB)

Comprehensive quiz on accounting and finance concepts for JAIIB bankers covering partnership accounting, journal entries, banking regulations, accounting standards (AS 2, 6, 10, 27, 28, 29, 30), forex management, bills of exchange, capital and revenue expenditure, trial balance and errors, share capital and debentures, ratio analysis, bank reconciliation statements, investment appraisal (NPV, IRR, payback), trading accounts, and computer applications in banking.

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Questions

Question 1 Multiple Choice (Single Answer)

The debit balance of profit and loss account should be

  1. debited to old and new partners in the profit sharing ratio
  2. debited to new partner only
  3. credited to old partners in old profit sharing ratio
  4. debited to old partners in the old profit sharing ratio
Question 2 Multiple Choice (Single Answer)

X, Y and Z are partners sharing in the ratio 4 : 3 : 3. X retires and the new profit ratio is 3 : 7. Goodwill of the firm is valued at Rs. 20,000. What will be the journal entry?

  1. Debit Z and credit X's capital by Rs. 20,000.
  2. Debit Z and credit X's capital by Rs. 8,000.
  3. Debit Z and credit Y's capital by Rs. 20,000.
  4. Debit Z and credit Y's capital by Rs. 8,000.
Question 3 Multiple Choice (Single Answer)

The net profits of a business are Rs. 1,50,000, Rs. 1,75,000 and Rs. 2,75,000 in the last 3 years. These include an investment income @ 20% p.a. of Rs. 20,000 every year, but exclude the annual insurance premium payable Rs. 10,000. Goodwill is to be valued at 1½ year purchase of average profits of 3 years. Calculate the value of goodwill.

  1. Rs. 2,85,000
  2. Rs. 3,15,000
  3. Rs. 2,55,000
  4. Rs. 3,45,000
Question 4 Multiple Choice (Single Answer)

C is a new partner in a firm consisting of partners A and B. He adds Rs. 150,000 as his 1/4th share in profits. The capitals of other partners are to be adjusted on the basis of C's contribution and profit share. Find the amount to be added by A and B, if their initial capital amounts were Rs. 180,000 and Rs. 200,000, respectively.

  1. Rs. 25,000 and Rs. 45,000
  2. Rs. 45,000 and Rs. 25,000
  3. Rs. 20,000 and Nil
  4. Rs. 70,000 and Rs. 50,000
Question 5 Multiple Choice (Single Answer)

Depreciation charged on machinery is Rs. 40,000. The correct entry is


  1. | | ||
    |---|---|---|
    |Machinery A/c Dr|40,000| |
    |To Depreciation A/c| |40,000|

  2. | | ||
    |---|---|---|
    |Depreciation A/c Dr|40,000| |
    |To Machinery A/c| |40,000|

  3. | | ||
    |---|---|---|
    |Cash A/c Dr|40,000| |
    |To Machinery A/c| |40,000|
  4. None of the above
Question 6 Multiple Choice (Single Answer)

A sum of Rs. 25,000 is deposited in State Bank of India. The correct entry is


  1. | | ||
    |---|---|---|
    |State Bank of India's A/c Dr|25,000| |
    |To Cash A/c| |25,000|

  2. | | ||
    |---|---|---|
    |Cash A/c Dr|25,000| |
    |To State Bank of India's A/c| |25,000|

  3. | | ||
    |---|---|---|
    |Vijaya Bank's A/c Dr|25,000| |
    |To Cash A/c| |25,000|
  4. None of these
Question 7 Multiple Choice (Single Answer)

A cheque received from a debtor, Rahul, is of Rs. 9,800 in full settlement of Rs. 10,000. The correct entry is


  1. | | | ||
    |---|---|---|---|
    |Rahul's A/c Dr|10,000| | |
    |To Cash A/c| |9,800| |
    |To Discount A/c| | |200|

  2. | | ||
    |---|---|---|
    |Cash A/c Dr|10,000| |
    |To Rahul's A/c| |10,000|

  3. | | ||
    |---|---|---|
    |Bank A/c Dr|9800| |
    |Discount A/c|200| |
    |To Rahul's A/c| |10,000|
  4. None of the above
Question 8 Multiple Choice (Single Answer)

An old furniture is sold for Rs. 5,000 to Mr. Adarsh in cash. The correct entry is


  1. | | ||
    |---|---|---|
    |Adarsh's A/c Dr|5,000| |
    |To Furniture A/c| |5,000|

  2. | | ||
    |---|---|---|
    |Cash A/c Dr|5,000| |
    |To Furniture A/c| |5,000|

  3. | | ||
    |---|---|---|
    |Bank A/c Dr|5,000| |
    |To Furniture A/c| |5,000|
  4. None of these
Question 9 Multiple Choice (Single Answer)

A B/R, received from Mr. A is endorsed in favour of Mr. B for Rs. 3,000. The correct entry is


  1. | | ||
    |---|---|---|
    |A's A/c Dr|3000| |
    |To B's A/c| |3000|

  2. | | ||
    |---|---|---|
    |B/R A/c Dr|3000| |
    |To B's A/c| |3000|

  3. | | ||
    |---|---|---|
    |B's A/c Dr|3000| |
    |To B/R A/c| |3000|
  4. None of these
Question 10 Multiple Choice (Single Answer)

A cheque of Rs. 6,000 is received from Mr. Sam (our tenant) on account of rent. The correct entry is


  1. | | ||
    |---|---|---|
    |Cash A/c Dr|6,000| |
    |To Rent a/c| |6,000|

  2. | | ||
    |---|---|---|
    |Bank A/c Dr|6,000| |
    |To Sam's A/c| |6,000|

  3. | | ||
    |---|---|---|
    |Bank A/c Dr|6,000| |
    |To Rent A/c| |6,000|
  4. None of these
Question 11 Multiple Choice (Single Answer)

Every banking company incorporated in India is required to transfer at least ________of its profit to the reserve fund.

  1. 10%
  2. 15%
  3. 25%
  4. 30%
Question 12 Multiple Choice (Single Answer)

Form B of the third schedule gives the format of a

  1. Profit and Loss Account
  2. Balance Sheet
  3. Cost Sheet
  4. Statement of Affairs
Question 13 Multiple Choice (Single Answer)

________ is/are related to inter-bank transactions.

  1. Money at call and short notice
  2. Advances
  3. Bills receivable for collection
  4. Acceptance endorsements and other obligations
Question 14 Multiple Choice (Single Answer)

Schedule 17 enclosed to the bank balance sheet relates to

  1. contingent liabilities
  2. provisions and contingencies
  3. disclosures as notes to accounts
  4. details of maturity pattern of assets and liabilities
Question 15 Multiple Choice (Single Answer)

Rahul invested Rs. 70,000 in a bank at the rate of 6.5% p.a simple interest rate. He received Rs. 85,925 after the end of term. Find out the period for which sum was invested by Rahul.

  1. 6.5 years
  2. 2.5 years
  3. 3.5 years
  4. 4.5 years
Question 16 Multiple Choice (Single Answer)

__________ can be defined as a sequence of periodic payments (or receipts) regularly over a specified period of time.

  1. Simple
  2. Compound
  3. Sinking fund
  4. Annuity
Question 17 Multiple Choice (Single Answer)

By calculating the present value of an ordinary annuity,

  1. one may come to know today’s value of a series of future payments
  2. one may come to know the present value of the coupon payments that he will be receiving in future
  3. Both (1) and (2)
  4. None of the above
Question 18 Multiple Choice (Single Answer)

A school is planning to purchase a bus worth Rs. 5,00,000 after 4 years. They have planned to make savings right from this year. Calculate the yearly savings they are required to make to purchase the bus, if the return on investment is 12%. (Take annuity table value up to 3 places.)

  1. Rs. 1,03,210
  2. Rs. 1,04,624
  3. Rs. 1,20,000
  4. Rs. 1,21,630
Question 19 Multiple Choice (Single Answer)

GASB stands for

  1. Governmental Accounting Standards Board
  2. General Accounting Standards Board
  3. Geographic Accounting Standards Board
  4. Gift Accounting Standards Board
Question 20 Multiple Choice (Single Answer)

Accounting standards are issued by

  1. Central Government
  2. State Government
  3. Institute of Chartered Accountants of India
  4. Reserve Bank of India
Question 21 Multiple Choice (Single Answer)

Which of the following is/are the advantage(s) of Accounting Standards?

  1. To eliminate or reduce variation in accounting treatments
  2. To facilitate comparison of financial statements of different companies
  3. To make financial statements more informative
  4. All of the above
Question 22 Multiple Choice (Single Answer)

Accounting standards standardize diverse accounting policies with a view to

  1. eliminate the non-comparability of financial statements and thereby improving the reliability of statements
  2. provide a set of standard accounting policies, norms and disclosure requirements
  3. Both (1) and (2)
  4. None of the above
Question 23 Multiple Choice (Single Answer)

As per AS 2, the cost of inventories should comprise

  1. Costs of Purchase
  2. Costs of Conversion
  3. Both (1) and (2)
  4. None of the above
Question 24 Multiple Choice (Single Answer)

An entity under AS 10 should disclose the information relating to

  1. the gross and net book values of fixed assets at beginning and end of an accounting period showing additions, disposals, acquisitions and other movements
  2. expenditure incurred on account of fixed assets in the course of construction or acquisition
  3. revalued amounts substituted for historical costs of fixed assets with the method applied in computing the revalued amount in the financial statements
  4. All of the above
Question 25 Multiple Choice (Single Answer)

____________ is presented by a parent (holding company) to provide financial information about the economic activities of the group as a single economic activity.

  1. Profit and Loss Account
  2. Consolidated Financial Statement
  3. Working Capital
  4. Fund-Flow Statement
Question 26 Multiple Choice (Single Answer)

The objective of _________ is to ensure that approximate recognition criteria and measurement bases are applied to provision contingent liabilities and sufficient information is disclosed in the notes to the financial statements to enable users to understand their nature, timing and amount.

  1. AS 27
  2. AS 28
  3. AS 29
  4. AS 30
Question 27 Multiple Choice (Single Answer)

Forex management

  1. is part of management science
  2. refers to generation of forex
  3. pertains to use forex
  4. All of the above
Question 28 Multiple Choice (Single Answer)

A/An ____ price is the rate at which the client/market is prepared to buy a specific currency pair in the forex trading market.

  1. bid
  2. ask
  3. spread
  4. None of the above
Question 29 Multiple Choice (Single Answer)

Exchange rate is the value of currency for the purpose of conversion to other currency.

  1. True
  2. False
  3. Partly true
  4. Partly false
Question 30 Multiple Choice (Single Answer)

The ask-bid spread depends upon the breadth and depth of the market for that currency and the volatility of the currency.

  1. True
  2. False
  3. Partly true
  4. Partly false
Question 31 Multiple Choice (Single Answer)

A _______ is a price quotation to deliver the currency in future.

  1. direct quote
  2. indirect quote
  3. cross rate
  4. forward rate
Question 32 Multiple Choice (Single Answer)

The forward rate (60 days) for the rupee is 49.05/$, whereas the spot rate for it is 48.20/$. The forward discount on Indian rupee will be

  1. 10.58%
  2. 4.97%
  3. 9.58%
  4. 5.97%
Question 33 Multiple Choice (Single Answer)

The forward rate (60 days) for the rupee is 47.80/$ and the spot rate for it is 48.20/$. The forward premium on it will be

  1. 10.58%
  2. 4.97%
  3. 9.58%
  4. 5.97%
Question 34 Multiple Choice (Single Answer)

Which of the following is a liability of a firm?

  1. Debit balance of analytical Petty Cash Book
  2. Credit balance of Bank Pass book
  3. Debit balance of Bank column of Cash Book
  4. Credit balance of Bank column of Cash Book
Question 35 Multiple Choice (Single Answer)

Which of these transactions will not be recorded in cash book?

  1. Cash received from debtors
  2. Cash paid to creditors
  3. Salary remained outstanding
  4. Cash deposited with bank
Question 36 Multiple Choice (Single Answer)

Cheques received but deposited on the next day are recorded in

  1. cash column of cash book
  2. bank column of cash book
  3. Both (1) and (2)
  4. None of the above
Question 37 Multiple Choice (Single Answer)

Which of these is not a special purpose journal?

  1. Cash journal
  2. Purchase journal
  3. Debtors journal
  4. Sales journal
Question 38 Multiple Choice (Single Answer)

Journal Entries which pertain to outstanding entries, prepaid entries and depreciation entries are called

  1. Adjustment Entries
  2. Rectification Entries
  3. Transfer Entries
  4. Closing Entries
Question 39 Multiple Choice (Single Answer)

Commission received in advance is of the nature of

  1. Real Account
  2. Nominal Account
  3. Personal Account
  4. None of the above
Question 40 Multiple Choice (Single Answer)

Personal accounts can take the form of

  1. natural person accounts like proprietor’s account, suppliers account, receivers account (like Mohan’s a/c, Shashi’s A/c, Naresh’s a/c), etc.
  2. artificial persons’ and body of persons’ accounts like limited company’s account, bank account, insurance company’s account any governments account, etc.
  3. representative personal accounts like salaries outstanding accounts, unexpired insurance account, interest received in advance account, etc.
  4. All of the above
Question 41 Multiple Choice (Single Answer)

Personal Account shows the credit balance of

  1. cash in hand
  2. the amount payable
  3. income
  4. the amount receivable
Question 42 Multiple Choice (Single Answer)

The basic concept(s) related to Profit and Loss Account is/are

  1. Realization Concept
  2. Matching Concept
  3. Cost Concept
  4. Both (1) and (2)
Question 43 Multiple Choice (Single Answer)

The underlying accounting principle(s) necessitating amortization of intangible asset(s) is/are

  1. Cost Concept
  2. Realization Concept
  3. Matching Concept
  4. Both (1) and (3)
Question 44 Multiple Choice (Single Answer)

X Ltd. purchased goods for Rs. 5 Iakh and sold 9/10th of the value of goods for Rs. 6 Iakh. Net expenses during the year were Rs. 25,000. The company reported its net profit as Rs. 75,000. Which of the following concepts is violated by the company?

  1. Conservatism Concept
  2. Realization
  3. Matching
  4. Accrual
Question 45 Multiple Choice (Single Answer)

Depreciating fixed assets over their useful life is an example of which of the following concepts/conventions?

  1. Money Measurement Concept
  2. Going Concern Concept
  3. Cost Concept
  4. Matching Concept
Question 46 Multiple Choice (Single Answer)

The amount spent in order to produce and sell the goods and services which produce the revenue is called

  1. Revenue
  2. Expense
  3. Assets
  4. Investment
Question 47 Multiple Choice (Single Answer)

Given:

 
Initial capital 
            Assets at the end 
        
            Liabilities at the end|    Rs. 50,000
        
            Rs. 65,000
        
            Rs. 6,000|

Calculate the capital at the end.

  1. Rs. 65,000
  2. Rs. 1,15,000
  3. Rs. 59,000
  4. Rs. 9,000
Question 48 Multiple Choice (Single Answer)

A had a capital of Rs. 75,000. He also had goods amounting to Rs. 15,000 which he had purchased on credit and the payment had not been made. The value of the total assets of the business is

  1. Rs. 90,000
  2. Rs. 60,000
  3. Rs. 75,000
  4. Cannot be calculated
Question 49 Multiple Choice (Single Answer)

When bill discounted with the bank is dishonoured,

  1. acceptor’s account is debited in the books of drawer
  2. bills receivable account is credited in the books of drawer
  3. bank account is debited in the books of drawer
  4. bills payable account is debited in the books of drawer
Question 50 Multiple Choice (Single Answer)

Which of these is not an essential feature of a bill of exchange?

  1. Unconditional
  2. In writing
  3. Certainty of amount
  4. Amount to be paid in foreign currency
Question 51 Multiple Choice (Single Answer)

Drawee means a person who

  1. makes the order
  2. accepts the bill
  3. takes the payment on due date
  4. is the creditor
Question 52 Multiple Choice (Single Answer)

The Acceptor of Bills of Exchange is the

  1. debtor
  2. creditor
  3. seller
  4. None of the above
Question 53 Multiple Choice (Single Answer)

Bills receivable account is a

  1. nominal account
  2. personal account
  3. real account
  4. None of the above
Question 54 Multiple Choice (Single Answer)

Dishonour of cheque is recorded in

  1. double/triple column cash book
  2. sales book
  3. purchases book
  4. bills receivable book
Question 55 Multiple Choice (Single Answer)

A has discounted a 3 month’s bill @ 10% p.a. from bank and has been given a credit of Rs. 11,700 but the bill was dishonoured and a notary charge of 50 was paid by bank. The amount by which A’s account will be debited by bank is

  1. 13,050
  2. 11,050
  3. 12,050
  4. 12,250
Question 56 Multiple Choice (Single Answer)

Raja’s acceptance to Dinesh for Rs. 8,000 renewed @ 18% per annum for 3 months on the condition that Rs. 2,000 are paid in cash immediately. The amount of interest will be

  1. Rs. 360
  2. Rs. 450
  3. Rs. 90
  4. Rs. 270
Question 57 Multiple Choice (Single Answer)

Ram and Shyam were friends and in need of funds. On 1.1.2006, Ram drew a bill for Rs. 2,00,000 for six months on Shyam. On 4.1.2006, Ram got the bill discounted at 10% p.a. and remitted 40% of the proceeds to Shyam. The cheque sent to Shyam is for

  1. Rs. 80,000
  2. Rs. 72,000
  3. Rs. 76,000
  4. Rs. 70,000
Question 58 Multiple Choice (Single Answer)

Legal expenses incurred in defending a suit for breach of contract to supply goods come under

  1. revenue expenditure
  2. capital expenditure
  3. deferred revenue expenditure
  4. None of the above
Question 59 Multiple Choice (Single Answer)

Capital expenditure is an expenditure which

  1. benefits the current accounting period
  2. will benefit the next accounting period
  3. will benefit the current as well as future accounting periods
  4. results in the acquisition of a current asset
Question 60 Multiple Choice (Single Answer)

Which of the following will lead to understatement of net profit?

  1. Amortization of fictitious assets
  2. Treating capital expenditure as revenue expenditure
  3. Treating revenue expenditure as capital expenditure
  4. Creation of general reserve
Question 61 Multiple Choice (Single Answer)

Which of the following is not a process in the preparation of a trial balance?

  1. Recording
  2. Summarizing
  3. Classifying
  4. Interpretation
Question 62 Multiple Choice (Single Answer)

The trial balance of M/s Ram & Co. shows closing stock of Rs. 30,000. It will be recorded in

  1. Trading Account
  2. Profit and Loss Account
  3. Balance Sheet
  4. Both (1) and (3)
Question 63 Multiple Choice (Single Answer)

Balances of accounts are transferred to

  1. Trial Balance
  2. Trading Account
  3. Profit and Loss Account
  4. Balance Sheet
Question 64 Multiple Choice (Single Answer)

Which of the following errors is an error of principle?

  1. Total sales figure was taken as Rs. 19,373 instead of Rs. 19,733.
  2. A discount of Rs. 30 avowed to Mr. A was not recorded in the discount allowed account.
  3. Legal charges for acquisition of building for Rs. 500 were entered in the Legal Expenses Account.
  4. Rs. 1,000 received from Mr. X was posted to the credit of Mr. M.
Question 65 Multiple Choice (Single Answer)

While checking the accounts of ABC, the following discrepancies were noticed, even though the Trial Balance was made to balance by putting the difference to Suspense Account.

(i) Sales day book for the month of June 2012 was found overcast by Rs. 7,000.
(ii) A credit purchase of Rs. 3,000 was omitted to be recorded in the days book.
(iii) Rs. 4,300 received from A credited to A's account as Rs. 3,400.
(iv) Purchase of Office Equipment worth Rs. 5,000 included in trading purchases.

From the above details, what would have been the difference in Trial Balance which was made to balance by opening Suspense Account?

  1. Debit side short by Rs. 9,100
  2. Credit side short by Rs. 9,100
  3. Debit side more by Rs. 7,900
  4. Credit side more by Rs. 6,100
Question 66 Multiple Choice (Single Answer)

Which of the following errors is an error of omission?

  1. Purchase of Rs. 2,000 has been recorded in the Sales Return Book.
  2. Repairs to machinery have been debited to Machinery Accounts.
  3. The total of purchase journal has not been posted to the Purchase Account.
  4. Legal charges paid to Mr. Lawyer have been debited to his account.
Question 67 Multiple Choice (Single Answer)

The law limits the commission payable on the issue of debentures to

  1. 2%
  2. 2½%
  3. 3%
  4. 5%
Question 68 Multiple Choice (Single Answer)

There must be at least __________ gap between two calls.

  1. one month
  2. two month
  3. three month
  4. four month
Question 69 Multiple Choice (Single Answer)

The amount of calls in arrears is reduced from ___________ to arrive at __________.

  1. issued capital: called-up capital
  2. called-up capital: issued capital
  3. paid-up capital; called-up capital
  4. called-up capital; paid-up capital
Question 70 Multiple Choice (Single Answer)

Premium on issue of shares is shown under the head

  1. Shareholder Fund
  2. Non-Current Liabilities
  3. Current Liabilities
  4. None of the above
Question 71 Multiple Choice (Single Answer)

Capital Reserve comes under

  1. part of uncalled capital
  2. reserve and surplus
  3. accumulated profits
  4. reserve capital
Question 72 Multiple Choice (Single Answer)

________ is stated in the Memorandum of Association as the share capital of the company.

  1. Called-up capital
  2. Paid-up capital
  3. Authorized capital
  4. Subscribed capital
Question 73 Multiple Choice (Single Answer)

Subscribed capital refers to the part of the issued capital that has actually been subscribed by the public and subsequently allotted to them by the directors of the company and is

  1. fully paid-up
  2. partly paid-up
  3. Either (1) or (2)
  4. None of the above
Question 74 Multiple Choice (Single Answer)

The premium on issue of shares must be treated as

  1. cost of capital
  2. capital receipt
  3. revenue receipt
  4. capital expense
Question 75 Multiple Choice (Single Answer)

Srei Ltd. issued Rs.1,25,000 equity shares of Rs. 10 each. The amount payable on these shares is as follows:

– 2 on appIication
– 3 on allotment
– 2 onfirstcalI
– Balance in final call

Suman, who has Rs. 5,000 shares, paid full value of shares with the allotment money. The amount to be debited to the bank account at the time of receipt of first call money will be

  1. Rs. 2,50,000
  2. Rs. 2,35,000
  3. Rs. 2,45,000
  4. Rs. 2,40,000
Question 76 Multiple Choice (Single Answer)

Dividend paid before the end of the financial year is known as

  1. interim dividend
  2. unclaimed dividend
  3. proposed dividend
  4. None of the above
Question 77 Multiple Choice (Single Answer)

Interest accrued but not due means

  1. interest not paid as company defaulted in payment of interest
  2. interest not paid as the due date did not arrive
  3. interest paid and received by the debenture holders
  4. All of the above
Question 78 Multiple Choice (Single Answer)

Which among the following statements is not correct?

  1. In India, the accounting standards are issued by Accounting Standards Board under ICAI.
  2. Compliance with accounting standards is the duty of Auditor.
  3. Single entry system is a scientific method of accounting.
  4. Accounting standard 6 relates to depreciation accounting.
Question 79 Multiple Choice (Single Answer)

A purchase of Rs. 6800 has been made by the firm but the amount has been posted to creditor’s account for Rs. 6000. For rectification, the journal entry would be

  1. debit creditor and credit purchase account with Rs. 800
  2. debit purchase account and credit suspense account with Rs. 800
  3. debit suspense account and credit creditor’s account with Rs. 800
  4. debit creditor’s account and credit suspense account with Rs. 800
Question 80 Multiple Choice (Single Answer)

Ratio analysis focuses on

  1. liability
  2. profitability
  3. solvency
  4. All of the above
Question 81 Multiple Choice (Single Answer)

_________ is/are interested in the operational efficiency, earning capacities and financial health of the business.

  1. Management
  2. Shareholders
  3. Investors
  4. Creditors
Question 82 Multiple Choice (Single Answer)

__________ give some yardstick to measure the profit in relative terms with reference to sales, assets or capital employed.

  1. Profitability ratios
  2. Turnover ratios
  3. Financial ratios
  4. Market test ratios
Question 83 Multiple Choice (Single Answer)

_______ ratio is also known as overall profitability ratio or return on capital employed.

  1. Profitability
  2. Return on Investment
  3. Return on Shareholder’s Funds
  4. Return on Assets
Question 84 Multiple Choice (Single Answer)

Return on Shareholder’s Funds =

  1. $ \frac{Net\ Profit\ after\ interest\ and\ Tax}{Shareholder's\ Funds} + 100 $
  2. $ \frac{Net\ Profit\ after\ interest\ and\ Tax}{Shareholder's\ Funds} - 100 $
  3. $ \frac{Net\ Profit\ after\ interest\ and\ Tax}{Shareholder's\ Funds} \times 100 $
  4. $ \frac{Net\ Profit\ after\ interest\ and\ Tax}{Shareholder's\ Funds} \div 100 $
Question 85 Multiple Choice (Single Answer)

A ________ ratio is an indicator of overtrading of total assets, and a ________ ratio reveals idle capacity.

  1. low, low
  2. low, high
  3. high, low
  4. high, high
Question 86 Multiple Choice (Single Answer)

________ is the ratio of total current assets to total current liabilities.

  1. Current Ratio
  2. Liquid Ratio
  3. Debt Equity Ratio
  4. Proprietary Ratio
Question 87 Multiple Choice (Single Answer)

________ ratio is also known fixed charges cover for interest as well as principal amount.

  1. Debt service coverage
  2. Capital gearing
  3. Market test
  4. Earning per share
Question 88 Multiple Choice (Single Answer)

_________ is the indicator of long term solvency position of an enterprise.

  1. Acid Test Ratio
  2. Quick Ratio
  3. Current Ratio
  4. Debt Equity Ratio
Question 89 Multiple Choice (Single Answer)

The ideal quick ratio is

  1. 1 : 2
  2. 1 : 1
  3. 5 : 1
  4. None of the above
Question 90 Multiple Choice (Single Answer)

An amount of Rs. 6,000 is credited twice in the bank column of cash book. Taking credit balances as per pass book as the starting point, what adjustment needs to be done to arrive at the balance as per cash book?

  1. Add Rs. 12,000 to the balance as per pass book.
  2. Add Rs. 8,000 to the balance as per cash book.
  3. Deduct Rs. 6,000 from the balance as per pass book.
  4. Add Rs. 4,000 to the balance as per pass book.
Question 91 Multiple Choice (Single Answer)

Credit balance as per cash book means

  1. surplus cash
  2. bank overdraft
  3. term deposits with bank
  4. None of these
Question 92 Multiple Choice (Single Answer)

If you start with cash book favourable balance in Bank Reconciliation Statement, which item will be added?

  1. Cheque deposited but not credited by the bank
  2. Cheque omitted to be deposited in the bank
  3. Any amount directly collected by the bank on behalf of customer but not recorded in cash book
  4. Overcast debit side of cash book
Question 93 Multiple Choice (Single Answer)

A bank account is a personal account and the account-holders record their transaction with the bank in a similar manner as they do with any other person.

  1. True
  2. False, because bank account is a real account.
  3. False, because account holders record their transaction with the bank in a similar manner as a nominal account.
  4. Both (2) and (3)
Question 94 Multiple Choice (Single Answer)

The money deposited with bank is _______ to bank account while money withdrawn from the bank is _______ to bank account.

  1. debited, credited
  2. credited, debited
  3. debited, debited
  4. credited, credited
Question 95 Multiple Choice (Single Answer)

Providing a _________ is the bank's way of keeping the customers informed of the entries made in their accounts.

  1. bank pass book
  2. bank statement
  3. cheque book
  4. Either (1) or (2)
Question 96 Multiple Choice (Single Answer)

When the interest and dividend are credited by the bank, the amount is recorded in the bank column of cash book

  1. after the entry is posted in the pass book
  2. when the cheque is dishonoured
  3. when the bank charges are levied by the bank
  4. when the interest or dividend is allowed or collected by the bank
Question 97 Multiple Choice (Single Answer)

Bank reconciliation statement as on 30.6.2006

   
Particulars Debit Credit
Balance as per cash book 22,575
Cheque deposited but not yet realized 50,000
Cheque issued but not yet paid 30,000
Bank charges charged by the bank 1,000
Balance as per pass book 1,575
52,575 52,575

The balance to be shown in the balance sheet is

  1. Overdraft Rs. 21,575
  2. Deposit Rs. 22,575
  3. Deposit Rs. 21,575
  4. Overdraft Rs. 1,575
Question 98 Multiple Choice (Single Answer)

Purchase of Rs. 1,870 by cheques has been wrongly posted in the cashbook as Rs. 1,780. This has the effect of

  1. increasing the bank balance and undervaluation of stock consumed by Rs. 90.
  2. decreasing the bank balance and stock consumed by Rs. 90
  3. increasing the bank balance and stock consumed by Rs. 180
  4. decreasing the bank balance and stock consumed by Rs. 180
Question 99 Multiple Choice (Single Answer)

Debit balance as per cash book is Rs. 3,000. Cheque issued but not presented for payment Rs. 500, interest collected by bank Rs. 400 and deposit by a customer directly into his bank Rs. 250. Bank reconciliation statement will show balance of ____ as per passbook.

  1. Rs. 4,150
  2. Rs. 4,000
  3. Rs. 4,500
  4. None of the above
Question 100 Multiple Choice (Single Answer)

A bond of face value Rs. 5,000 carries a coupon interest rate of 12%. It is quoted in the market at Rs. 4,500. What is the current yield of the bond?

  1. 12%
  2. 10%
  3. 13.3%
  4. 14.2%
Question 101 Multiple Choice (Single Answer)

A project requires an initial investment of Rs. 20,000 with annual cashflow of Rs. 4,000. Compute the pay-back period.

  1. 5 years
  2. 9 years
  3. 10 years
  4. 16 years
Question 102 Multiple Choice (Single Answer)

Time value of money means

  1. a sum of money received today has more value than the same amount of money to be received in future because the money received today can be invested today to get some more earning
  2. since there is risk involved in future, an individual would always like to receive money today than to wait for future and be under risk
  3. the money received today can be used for any consumption which one may not be able to do because of future inflation and price rise
  4. All of the above
Question 103 Multiple Choice (Single Answer)

Internal rate of return is the rate of __________ in NPV equation at which the present value of cash flows of a project equals its initial outlay.

  1. cash flow
  2. investment
  3. discount
  4. years
Question 104 Multiple Choice (Single Answer)

Which of the following is/are the advantage(s) of NPV and IRR methods?

  1. They give exact results.
  2. They take into account time value of money.
  3. They focus on cash flows rather than on accounting profits.
  4. Both (2) and (3)
Question 105 Multiple Choice (Single Answer)

Sensitivity analysis for NPV determination identifies

  1. areas of concern in an investment opportunity
  2. those factors which are sensitive to the profitability of the investment opportunity
  3. those areas where more efforts are required to be made to explore more information
  4. All of the above
Question 106 Multiple Choice (Single Answer)

Mr. Rishi sells goods at 20% above cost. His sales were Rs. 10,20,000 during the year. However, he sold damaged goods for Rs. 20,000 costing Rs. 30,000. This sale is included in Rs. 10,20,000. The amount of gross profit is

  1. Rs. 1,90,000
  2. Rs. 2,50,000
  3. Rs. 1,56,667
  4. Rs. 2,00,000
Question 107 Multiple Choice (Single Answer)

Somnath Enterprises wishes to earn a 20% profit margin on selling price. How much should they charge on cost to achieve the required margin?

  1. 50%
  2. 33%
  3. 25%
  4. 20%
Question 108 Multiple Choice (Single Answer)

The following details relate to a trading concern for the year 2010:

Opening stock Rs. 4,000. Purchases and sales during the year Rs. 36,000 and Rs. 35,000, respectively. Profit on sales is 20%. 50% of the closing stock was found to be obsolete and estimated to fetch only 50% of cost. The value for the closing stock at the end of the year will be

  1. Rs. 9,000
  2. Rs. 12,000
  3. Rs. 6,000
  4. Rs. 10,500
Question 109 Multiple Choice (Single Answer)

At the end of the year 2008-09, the ledger of a firm shows the following balances in their balance sheet:

 
Capital 2,00,000
Profit for the year 1,50,000
Provision for tax 75,000
Liabilities 1,00,000
Advance tax paid 60,000
Sundry assets 4,65,000
The total balance sheet would be
  1. Rs. 4,65,000
  2. Rs. 5,25,000
  3. Rs. 5,65,000
  4. Rs. 5,10,000
Question 110 Multiple Choice (Single Answer)
     
Rs. Rs.
Goodwill 70,000 Debtors 35,000
Plant and Machinery 60,000 Furniture 10,000
Investments 25,000 Bills payable 10,000
Outstanding Expenses 5,000 Bills receivable 9,000
Closing Stock 25,000 Cash 6,000
Creditors 45,000 Drawings 12,000
Net Profit 22,000 Capital 1,55,000
Bank overdraft 15,000

Balance sheet total will be

  1. Rs. 2,40,000
  2. Rs. 2,50,000
  3. Rs. 2,30,000
  4. None of these
Question 111 Multiple Choice (Single Answer)

From the following details, find out the amount to be debited to Profit and Loss Account as provision for bad & doubtful debts during 2012-13:

Debtors Rs. 30,000 as on 31.03.2013; Bad debt during the year Rs. 1,500; Provision for bad debts as on 01.04.2012 Rs. 2,000; Provision for doubtful debts to be kept at 5% of total debtors.

  1. Rs. 1,500
  2. Rs. 1,000
  3. Rs. 3,000
  4. Rs. 2,000
Question 112 Multiple Choice (Single Answer)

Sundry debtors on 31st March, 2006 are Rs. 55,200. Further bad debts are Rs. 200. Provision for doubtful debts is to be made on debtors at the rate of 5% and also, provision of discount is to be made on debtors at the rate of 2%. The amount of provision of doubtful debts will be

  1. Rs. 1,045
  2. Rs. 2,750
  3. Rs. 1,100
  4. Rs. 2,760
Question 113 Multiple Choice (Single Answer)

The purpose of accounting is to provide information used in

  1. planning
  2. decision making
  3. organizing
  4. controlling
Question 114 Multiple Choice (Single Answer)

________ are mostly used in scientific and mechanical fields and they provide data in a continuous form.

  1. Analog computers
  2. Digital computers
  3. Both (1) and (2)
  4. None of the above
Question 115 Multiple Choice (Single Answer)

________ is a compilation of related data records maintained in some pre-arranged order.

  1. Data
  2. Record
  3. Data file
  4. System
Question 116 Multiple Choice (Single Answer)

The concept of automated banking through Automated Teller machines (ATMs) is the result of

  1. computersiation
  2. technological innovation
  3. Both (1) and (2)
  4. None of the above
Question 117 Multiple Choice (Single Answer)

Core bank component includes

(i) financial institution infrastructure
(ii) product build
(iii) customers management and customers overview
(iv) account administration
(v) payments
(vi) management information

  1. (i), (ii), (iii) and (iv)
  2. (ii), (iii), (iv) and (v)
  3. (iii), (iv), (v) and (vi)
  4. All of the above
Question 118 Multiple Choice (Single Answer)

A multiple user computer system is beneficial because

  1. it connects several computers through LAN or WAN
  2. more than one person can share the work of data feeding simultaneously
  3. each user can handle particular segment of a transaction
  4. All of the above
Question 119 Multiple Choice (Single Answer)

Compilation of related data records maintained in some pre-arranged order is known as

  1. database
  2. data file
  3. data mart
  4. data group
Question 120 Multiple Choice (Single Answer)

ATMs are capable of

  1. accepting cash/cheque
  2. disbursing cash
  3. making inter-bank transfer
  4. All of the above

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Simple and Compound Interest (3394 questions)

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