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Page 1 Iind SEMESTER B COM (2017 ADMISSION) FINANCIAL ACCCOUNTING – QUESTION BANK 1. out of the Following, Direct Expense Is A School of Distance Education IInd SEMESTER B COM (2017 ADMISSION) FINANCIAL ACCCOUNTING – QUESTION BANK 1. Out Of The following, Direct Expense Is A) Salaries b) carriage outward c) rent of office building d) carriage inward 2. Goodwill is a a) Fixed asset b) current asset c) intangible asset d) fictitious asset 3. Income received in advance is a) An income b) a liability c) an asset d) a loss 4. Sales are equal to a) Cost of goods sold plus profit b) cost of goods sold minus gross profit c) gross profit minus cost of goods sold d) none of these 5. Interest on drawings is a) An expenditure for the business b) an expense for the business c) a gain for the business d) a loss for the business 6. Which of the following is not a fixed asset a) Motor cycles b) furniture c) inventory d) free hold property 7. Which of the following is a current liability a) A five year bank loan b) workmen compensation fund c) bank overdraft d) dividend equalization 8. Which of the following is not an intangible asset a) Stock b) goodwill c) trade mark d) patents. 9. In the case of net worth method of single entry system, the net profit is ascertained by a) Preparing trading and profit and loss account b) comparing opening and closing capital c) preparing d) none of these 10. Capital at the beginning of the year is ascertained by preparing a) Cash account b) opening statement of affairs c) total creditors account d) total debtors account. 11. The amount of opening stock can be ascertained by preparing a) Memorandum trading account b) total creditors account c) total debtors account d) opening statement of affairs. 12. The closing balance in the creditors account can be ascertained from the a) Cash account b) total creditors account c) closing statement of affairs d)none of these. 13. If the rate of G/P is 25% of sales and cost of goods sold is Rs. 150000, the amount of G/P will be a) 30000 b) 25000 c) 40000 d) 50000 14. the depreciation charged on an asset is debited to a) asset account b) depreciation account c) cash account d) none of these 15. in case of straight line method, the amount of deprecation a) fluctuate every year, b) decreases every year c) increases every year d) remains same every year 16. amortization is related to a) Tangible fixed asset b) intangible assets c) any fixed asset d) none of these. 17. Depletion method is more suitable for a) Service industry b) mining industry c) intangible assets d) all of these 18. Depletion is a process of a) Valuation b) allocation c) both valuation and allocation d) none of these. Financial Accounting Page 1 School of Distance Education 19. The main objective of providing depreciation is a) To calculate true profit b) to show the true financial position c) to reduce tax burden d) to provide fund for replacement of assets. 20. Under diminishing balance method, depreciation is calculated on a) Original cost b) written down value c) scrap value d) market value 21. Loss on sale of machinery should be written off against a) Security premium b) sales account c) depreciation fund account d) none of these 22. Loss on sale of asset is a) Debited to asset account b) debited to cash account c) credited to asset account d) debited to profit and loss account. 23. Depreciation arises because of a) Fall in market value of asset b) wear and tear c) recession d) none of these. 24. When provision for depreciation account is maintained, the amount of depreciation is debited to a) Asset account b) depreciation account c) provision for depreciation account d) none of these. 25. If original cost of an asset is rs. 60000 and its scrap value is Rs. 10000, its depreciable cost is a) 70000 b) 50000 c) 60000 d) none of these. 26. Under diminishing balance method, A) The rate of depreciation falls every year b) the amount on which deprecation is calculated falls every year c) the rate as well as amount of depreciation falls every year. D) the rate as well as amount of depreciation remains constant. 27. The term ‘depletion’ applies to decrease in value of a) Tangible asset b) intangible asset c) wasting asset d) current asset. 28. The term amortization applies to decrease in book value of a) Intangible fixed asset b) wasting assets c) tangible fixed assets d) current assets 29. For providing depreciation on lease hold property, the appropriate method is a) Revaluation method b) fixed installment method c) replacement method d) written down value method. 30. Accumulated depreciation is an example of a) An expense b) an unrecorded revenue c) a liability d) a contra account. 31. Share application is classified as a) Real account b) personal account c) impersonal account d) nominal account 32. A newly established company cannot issue shares at par a) Par b) premium c) discount d) none of these 33. The minimum share application is a) 1% of the face value b) 5% of the face value c) 10% of the face value d) 25% of the face value. 34. The difference between subscribed capital and called up capital a) Paid up capital b) uncalled capital c) calls in advance d) calls in arrears. 35. The number of days required from the time of issue of the prospectus to the complete allotment should not exceed a) 30 days b) 60 days c) 90 days d) 120 days 36. The excess price received on the par value of shares should be credited to a) Calls in advance account b) reserve capital c) security premium account d) none of these 37. Which of the following should be deducted from the share capital to determine the paid up capital Financial Accounting Page 2 School of Distance Education a) Calls in advance b) calls in arrears c ) security premium d) discount on issue of shares. 38. The security premium will be shown under the heading a) Share capital b) current liability c) current asset d) none of these. 39. As per Table A of the companies act, the interest on calls in advance is a) 5% b) 10% c)6% d) none of these. 40. The rate of interest a company can charge on calls in arrears according to Table A of the companies act is a) 10% b) 6% c) 5% d) none of these 41. The rate of discount on shares cannot exceed. a) 5% b) 10% c) 6% d) none of these 42. Premium on issue of shares can be used for a) Issue of bonus shares b) distribution of profit c) transferring to general reserve d) none of these. 43. When shares are forfeited the share capital account is debited by a) Paid up amount b) called up amount c) calls in arrears d) nominal value of such shares 44. Which of the following signifies the difference between par value and issue price below par value. a) Security premium b) discount on issue of shares c) calls in arrear. 45. When forfeited shares (which were originally issued at a discount ) are reused at a premium, the amount of such premium will be credited to a) Shares forfeiture account b) security premium account c) capital reserve account d) none of these. 46. When an existing company offers its shares for sale to the existing shareholders, it is known as a) Private placement b) bonus shares c) right issue d) offer for sale 47. Dividends are usually paid on a) Authorized capital b) issued capital c) called up capital d) paid up capital 48. Which of the following should be deducted from the shares capital to find out paid up capital a) Calls in advance b) calls in arrears c) shares forfeited account d) discount on issue of shares. 49. Interest on debenture is a) Adjustment of profit b) appropriation of profit c) charge on profit d) none of these 50. In the balance sheet of a company, debentures are shown under which heading a) Secured loan b) unsecured loan c) provisions d) reserves and surplus 51. In the balance sheet of a company , the discount on issue of debentures is shown under which heading a) Fixed asset b) current asset c) investment d) miscellaneous expenditure 52. Interim dividend is always shown a) P/L appropriation account b) on the asset side of balance sheet c) on the liability side of the balance sheet d) none of these. 53. Unclaimed dividend is shown in the balance sheet under the head a) Current liability b) unsecured loan c) reserve and surplus d ) provision 54. Advance payment of tax is in the nature of a) Capital expenditure b) prepaid expenses c) outstanding expenses d) revenue expenditure 55. Debentures are shown in the balance sheet under head a) Current asset loans and advances b) investments c) secured loan d) unsecured loan Financial Accounting Page 3 School of Distance Education 56. Preliminary expense Is an example of a) Fixed asset b) current asset c) investment d) fictitious asset 57. Divisible profit do not include a) Insurance fund b) reserve fund c) profit and loss account balance d) revaluation reserve 58. The transfer of profit to reserve should not exceed a) 5% of profit b) 10% of profit c)15% of profit d) 20% of profit 59. Loose tools are shown in the balance sheet under a) Fixed asset b) investment c) current asset d) miscellaneous expenditure 60. Discount on shares and debentures are shown in a) P/L Appropriation a/c b) asset side of the b/s c)liability side of the b/s d) none of these.
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