Asam TY Project

FINANCIAL ACCOUNTING

Issue of Debentures

1. Company cannot sell charged assets until the debentures are repaid in case of debenture with fixed charge.

2. Debenture in the nature of contingent liability on which no interest is payable are known as debenture issued as collateral security.

3. In the balance sheet of a company, premium payable on redemption of debentures a/c is shown under secured loan

4. In the balance sheet of a company, interest accrued but not due on debenture a/c shown under current liabilities and provisions.

5. Loss on issue of debentures is treated as different revenue expenditure.6. Bearer debentures need not to be registered with the company.7. Debentures issued as a collateral security are in the natures of a contingent liability.8. Debentures stock cannot be partly paid.9. On winding up, debenture holders must be repaid before cumulative preference

shareholders.10. The premium collected on issue of debentures is transferred to security premium a/c.

Redemption and buy back of debentures

1. According to SEBI guidelines, the company is required to create a debenture redemption reserve aquivalent to 50 % of the issue size.

2. Debentures can be redeemed out of capital or profit.3. Balance of sinking fund, after redemption of debenture is transferred to general reserve a/c4. Profit on cancelling of debenture is transferred to capital reserve5. Loss on sale of sinking fund investments will be debited to sinking fund a/c.6. A company may redeem debentures out of capital of the maturity period is less than 18

months.7. Sinking fund a/c always shows credit balance.8. Profit on the cancellation of own debenture is capital profit.9. Debentures Redemption Reserve is to be created even if debentures are redeemed through

conversion.10. Debentures can be redeemed by payments in annual investments.11. Debentures can be purchase in open market from cancellation.12. Till the date of redemption of debentures ‘Premium on Redemption of Debentures’ appears

on the liability side of balance sheet.13. A company issuing debentures is requested to create Debentures Redemption Reserve if the

maturity period is more than 18 month.14. Profit on re-sale of own debentures held as sinking fund investment by the company itself is

credited to sinking fund a/c.15. Amount of sinking fund = amount payable on redemption x sinking fund.16. At the time of purchase of own debentures ex-interest price is debited to own debenture

and cum-interest price is credited to Bank a/c.17. Debentures issued at discount and redeemable at premium what should be entry…..

Cash/Bank A/c DrDiscount A/c DrLoss of issued debentures A/c Dr

To debenture A/cTo Premium on redemption of debenture A/c

18. Fixed charge debentures are secured on specific assets of the company.19. Floating charge debentures are secured on all asset of the company.20. After cancellation of own debentures the debentures cannot be re-issued.

Multiple choice question

ISSUE OF DEBENTURES

1. The debenture issued in exchange of existing debentures is roll over.a. Conversionb. Redemptionc. Roll overd. Cancellation

2. The loss on issue of debentures is deferred revenue expenditurea. Fictitiousb. Revenuec. Differed Revenued. Capital

3. The debentures issued as collateral security should shown as contingent liabilitya. Shown as loanb. Shown as current liabilityc. Shown as contingent liabilityd. Not to be disclosed

4. Debentures carrying charge on all the asset is known as floatinga. Floating b. Fixedc. Mortgaged. Naked

5. Loss on issue of debenture is treated as Miscellaneous Expenditurea. Tangible assetb. Current assetc. Current liabilityd. Miscellaneous

REDEMPTION OF DEBENTURES

1. To provide funds for redemption a company may create sinking fund.a. Create sinking fundb. Create redemption fundc. Remain inactive

d. Open new bank a/c2. The companies act requires creation of debenture redemption reserve by a company issuing

debenture.a. Capital redemption reserveb. Capital reservec. Debenture redemption reserved. Statutory reserve

3. Kavita ltd issued 50000 8% Debentures of Rs. 10each at par, which are redeemable after 5 years at a premium of 20. The amount of loss on redemption of debentures to be written of every year is 20000

a. Rs. 40000b. Rs. 10000c. Rs. 20000d. Rs. 5000

4. The balance in own debenture account should be carried over at lower of cost market valuea. Costb. Lower valuec. Lower of cost and MVd. Market value

5. The term of purchase of own debenture can be cum-interest/ex-interest.a. Cum-interest/ex-interestb. Nominal valuec. Market valued. Ex-interest

6. Balance of sinking fund, after redemption of debenture is transferred to General Reservea. Profit and Loss A/cb. General reservec. Capital Redemption Reserved. Debenture Redemption Reserve

7. Balance of sinking fund for redemption of debenture is shown under Reserve and Surplus.a. Secured loansb. Unsecured loansc. Reserves nad surplusd. Investment

8. When debentures are redeemed out of profit, the amount be transferred to General Reserve should be equal to the nominal value of debenture redeemed

a. Premium payable on redemptionb. Amount payable on redemptionc. The nominal value of debenture redeemedd. None of the above

9. Debenture can be redeemed only out of capital or profitsa. the proceeds of fresh issue of debentureb. divisible profitc .capital or profitsd .capital

10. A company may redeem debentures out of capital if the maturity period is less than 18 monthsa.12monthsb.18monthsc.24months

d. none of the above

ISSUE OF DEBENTURES

11. In a balance sheet of a company, debenture premium is shown reserve and surplusa. secured loanb. unsecured loanc. contingent liabilityd. revenue and surplus

12. Interest on debentures are calculated on its face value a. face valueb. value payable on redemptionc. market valued. issue price

13. Discount on issue of debenture is a capital loss to be w/o over the period of debenturea. revenue loss to be charged in the year of issueb. capital loss to be w/o from capital revenuec. capital loss to be w/o over the period of debentured. capital loss to be shown as goodwill

14. In balance sheet of a company, interest accrued but not due on debenture a/c is shown under current liability and provisiona. share capitalb. secured loanc. unsecured loand. current liability &provision

15. In balance sheet of a company, interest accrued and due on debenture a/c is shown under secured loana. secured loanb. share capital c. current liability and provisiond. unsecured laon

Issue and redemption of denture

Group a answers

1. Debenture issued is _ loan2. Debenture is _ collateral security3. Issue of debenture at discount

Payable at premium leads to _ loss to company4. Interest on debenture _ payable on face value5. Issue in exchange of existing debenture _ roll over6. Unpaid debenture interest _ shown as loan7. Loss on issue of debenture _ deferred revenue expenditure8. Debenture as collateral security _ shown as contingent liability9. Debenture company require law of _ debenture redemption reserve10. Zero coupon bonds interest _ 0%11. Debenture redeemed _ issue of cheque12. Fund for redemption _ created sinking fund13. Uncollected redemption money _ loan 14. Redemption of debenture _ issue of debenture15. Sinking fund investment interest _ credited to sinking fund account16. Balance of sinking fund after

Debenture _ transferred to general reserve17. Company issuing debenture _ require debenture redemption reserve

By Company’s act18. Debenture company should be

Authorised by _ term of issue of debenture

AUDIT

Multiple choice questions

1) Balance sheet audit includes verification of

a) Assets

b) Liabilities

c) Income and expenditure

d) ALL OF THE ABOVE

2) Balance sheet audit does not include

a) Verification of assets and liabilities

b) Continuous audit

c) Internal audit system

d) ROUTINE CHECKING

3) Concurrent audit is part of

a) Internal check system

b) Continuous audit

C) INTERNAL AUDIT SYSYTEM

d) None of the above

4) Audit of banks is an example of

A) STATUTORY AUDIT

b) Continuous audit

c) Balance sheet audit

d) Both b and c

5) Manufacture and other companies order 1998 is supersede by

a) COMPANIES AUDIT REPORT ORDER 2003

b) Companies act 1956

c) Banking companies act

d) Chartered accountant act

6) Special audit can be ordered by

a)CENTRAL GOVERNMENT

b) State government

c) Municipality

d)grampanchayat

7) Cost audit is compulsory for

a)private companies

b)manufacturing companies

c)SPECIFIED COMPANIES

d)trading companies

8) Audit in depth is synonymous for

a) Complete audit

b) Completed audit

c) Final audit

d) DETAILED AUDIT

9) Which of the following is not the fact of efficiency cum performance audit?

a)economy audit

b) Efficiency audit

c) EXPENDITURE AUDIT

d) Effectiveness audit

10)in India balance sheet audit is synonymous to

a)ANNUAL AUDIT

b) Continuous audit

c) Detailed audit

d)statutory audit

Fill in the blanks

1) Audit of cooperative society is STATUTORY audit.

2) CONTINUOUS audit is also known as audit in installments.

3) Balance sheet audit is done only if the internal control system is very STRONG.

4) PERIODIC audit is less expensive and suitable for small enterprises.

5) OCCASIONAL AUDIT is done occasionally.

6) STATUTORY audit is compulsory under the law.

7) EFFICIENCY AUDIT is part of performance audit.

8) Cash audit is PARTIAL AUDIT.

9) Continuous audit is COSTLY.

10) SOCIAL AUDIT contributes to social growth.

Match the Following

1. Internal Check is a Component of a. An external job

2. Management consultancy is b. Deals with matter related to answers to

question raised by the auditors

3. Internal Auditors are appointed by c. No assurance is given by the auditor

4. Safe guarding the assets d. Internal audit

5. Director’s responsibility statement e. 21 days before the date of AGM

6. The time limit for holding AGM is f. Protective function

7. Share holders are to be sent a notice at

least

g. 6 months

8. Internal audit framework was developed

by

h. Special kind of services due to laws etc.

9. Non-audit service i. Management

10. Special assignment j. COSO

1-d,2-a,3-i,4-f,5-b,6-g,7-e,8-j,9-c,10-h

state the following statement are true or false:----

1. continuous audit helps the company to present its audited accounts to

Shareholders immediately after the close of financial year - true

2. Interim audit of a company is compulsory under the Indian companies

act 1956 - false

3. Auditor is not concerned with the compliance with the accounting principles - false

4. Audit of accounts is voluntary in partnership firm - true

5. Statutory audit is voluntary - false

6. Management audit is statutory audit - false

7. Internal audit is appointed by the management - true

8. Continuous auditor is done at the end of the year - false

9. In complete audit every voucher is examined - true

10. In continuous audit accounting and auditing is done simultaneously - true

TAXATION

True or False

1. Residential status of the assesee depends on the stay of the assessee in India during the assessment year.>>>>False

2. Total income of a person is determined on the basis of his citizenship in India.>>>False

3. Income deemed to accrue or arise in India is taxable in case of non-resident.>>>True

4. An Indian company is always treated as non-resident company.>>>True

5. A resident in India cannot become resident in any other country for the same assessment year.>>>False

6. Income deemed to accrue or arise in India or taxable in case of all the assessee.>>>True

7. Income which accrue or arise outside India and also in India is taxable in case of both OR and NOR.>>>False

8. Past untaxed profits brought into India is always taxable.>>>False

9. If the assessee does not satisfy the basic condition he will be treated as resident assessee.>>>True

10. A foreign company is always non-resident in India.>>>True

1. Non-resident a. Not taxable2. Foreign income b. Always ordinary resident3. Remittance in India c. Does not satisfy basic condition4. Income received in India d. Non taxable for non-resident5. An Indian company e. Taxable for OR, NOR, OR

(1-c), (2-d), (3-a), (4-e), (5-b)

1. A person who is not resident a. Resident2. Indian company b. Resident only if stay in India exceeds

182 days in previous year3. Income from foreign business

controlled in Indiac. Non-resident

4. Citizen of India, leaving India for employment

d. Always ordinary resident

5. A HUF with NOR Karta e. Taxable for OR and NOR

(1-c), (2-a), (3-e), (4-b), (5-d)

MARKETING AND HUMAN RESOURCE MANAGEMENT

1. During Product Development Stage, the firm may adopt Skimming pricing strategy

where the product is totally new or it does not have competitive brands.

(Psychological/Mark-Up/Skimming)

2. Brand Extension is the process of extending an existing brand name to other brands in

the same product category or in different product category. (Brand Extension/Brand

Equity/Brand Positioning)

3. In Market Penetration pricing policy, the manufacturer charges low price initially and

raises the same in due course when the product becomes popular.

(Target Oriented/Market Penetration/Marginal Cost)

4. Free samples, discounts, exchange offers, free gifts, in- store demonstrations, etc.,

are some of the commonly used Consumer-Oriented promotion tools.

(Sales-Force Incentives/Trade-Oriented/Consumer- Oriented)

5. During the Growth stage, demand for the product increases.

(Maturity/Growth/Decline)

6. Under the Break-Even pricing method, the manufacturer will determine the level of

output where the revenues will equal cost, assuming a certain selling price. (Break-

Even/Cost-Plus/Target-Oriented)

7. Brand Positioning can be defined as an effort aimed at creating and maintaining in

the mind of target customers and intended image for the brand, relative to other

brands.

(Brand Equity/ Brand Positioning/Brand Extension)

8. Free Sample is one of the consumer-oriented promotion

(Credit Terms/Free Samples/Stock Return)

9. Width refers to the number of different product lines the company carries.

(Width/Depth/Consistency)

10. Demand Position is one of the external factors influencing the price of a product.

(Product Life Cycle/Demand Position/Credit Policy)

11. Credit Terms is one of the trade-oriented promotion tools. (Credit Term/Free

Samples/Coupons)

12. Product Mix refers to the set of products, which are offered for sale by a firm.

(Promotion Mix/Price Mix/Product Mix)

13. Brand Equity is defined as the incremental value of a business above the value of its

physical assets due to market position achieved by its brand and the extension

potential of the brand.

(Equity/Positioning/Extension)

14. Advertising is defined as, “Any paid form of non- personal presentation and

promotion of ideas, goods or services by an identified sponsor.”

(Advertising/Salesmanship/Public Relations)

15. Personal Selling means, “Oral presentation in a conversation with one or more

prospective purchases for the purpose of making sales.”

(Public Relations/Advertising/Personal Selling)

Match The Column.

Sr. No. Group ‘A’ Group ’B’

1 Marketing Mix Allowances to intermediaries.

2 Marginal Cost Pricing Advertising.

3 Brand Electronic mail.

4 Trade promotion Premium car.

5 Product Mix Selling price is arrived at by adding margin to the products cost.

6 Flexible pricing strategy 4Ps.

7 Basic Product Shorter channel preferred.

8 Specialty Goods Number of different product of company.

9 Warranty It makes distinction between fixed costs & variable costs.

10 Perishable Products Name or mark intended to identify the product & differentiate if from competing products.

11 Brand Extension Existing name used for new product.

12 Direct Marketing Consists of sub variables such as channels of distribution, transportation, warehousing.

13 Cost Plus Pricing Core product converted into product benefit.

14 Product Width Assurance given about the quality of the product sold or hired.

15 Promotion Mix The manufacture charges different prices to similar customers.

Sr. no. Group ‘A’ Answers

1 Marketing Mix 4Ps.

2 Marginal Cost Pricing It makes distinction between fixed costs & variable costs.

3 Brand Name or mark intended to identify the product & differentiate if from competing products.

4 Trade promotion Allowances to intermediaries.

5 Product Mix Consists of sub variables such as channels of distribution, transportation, warehousing.

6 Flexible pricing strategy The manufacture charges different prices to similar customers.

7 Basic Product Core product converted into product benefit.

8 Specialty Goods Premium car.

9 Warranty Assurance given about the quality of the product sold or hired.

10 Perishable Products Shorter channel preferred.

11 Brand Extension Existing name used for new product.

12 Direct Marketing Electronic mail.

13 Cost Plus Pricing Selling price is arrived at by adding margin to the products cost.

14 Product Width Number of different product of company.

15 Promotion Mix Advertising.

True and false

1. Sometimes if the product is unique, it becomes necessary to charge a higher price while introducing a product. This is called a penetration price strategy – FALSE

2. The broader concept of product not only includes the physical elements but also the psychological elements associated with the brand – TRUE

3. Consumer goods are those goods use by consumers for business purpose – FALSE4. Convenience goods are those goods that the customer usually purchase frequently,

immediately and with a minimum effort – TRUE5. Grave stones and cemetery plots are example of unsought goods – TRUE6. Augmented product is a product where the product or the service provide exceeds

customer’s expectation - TRUE7. Brand helps in differentiating a product from competing products – TRUE8. Brand equity is the incremental value of a business above the value of its physical

assets due to the market position achieved by its brand and the extension potential of the brands – TRUE

9. Under market skimming pricing strategy price is set at the highest possible level – TRUE

10. Under cost plus price method, the selling price at the product is arrived at by adding a standard mark up – TRUE

11. A channel of distribution is the route taken by the title to the product as it moves from the producer to te ultimate consumer or the industrial user – TRUE

12. Specialty advertising involves low cost items like calendars, key chains, etc. bearing the company’s name, address, and a sales massage – TRUE

13. Lobbing involves dealing with legislators and government officials to promote or defect a legislation - TRUE

14. Atmospheres includes “packaged environments” that create or reinforce the buyer’s a leanings towards product purchase – TRUE

15. Consumer promotional tools are those tools directed towards the intermediaries – FALSE

ECONOMICS

MCQ and Fill ups

1) Capital Market is the market for medium & long term funds.a) Financial Marketb) Capital Marketc) Equity Marketd) Corporate Debt Market

2) Gild Edged Market deals in government & semi government securities.a) Financial intermediariesb) Developmental Financial institutionsc) Industrial securities marketd) Gild Edged Market

3) SEBI was set up as a statutory body in 1992.a) 1988b) 1992c) 1994d) 1989

4) Secondary Market deals in securities already issued or existing or outstandinga) Primary Marketb) Secondary Marketc) Both a & bd) None

5) Rolling Settlement is an important measure to enhance the efficiency and integrity of the securities market.a) Screen based Tradingb) Derivatives Tradingc) Depository systemd) Rolling Settlement

6) Derivatives are contracts between counterparties whose value is derived from that of the underlying asset.a) Screen based Tradingb) Rolling Settlementc) Underwritingd) Derivatives

7) Which of the following is not capital market?a) Gild Edged Marketb) Financial intermediariesc) Money market d) Industrial securities market

8) Which of the following statement regarding equity issues is correct?a) There is no assurance on the rate of return to the investors in equities. b) Equities cannot be issued by corporate and the financial intermediaries.c) Both a & bd) None

9) There are 23 recognized stock exchanges in the country.a.23b.26c.30d.22

10) The funds demanded from industry, trade , agricultural government are generally long term.

a. short term

b. long term