Jaiib Account Qs

8/18/2019 Jaiib Account Qs

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ACCOUNTS1 When money is given on loan, a fee is charged by the lender, which is called:

A. commission

B. fee

C. interest

D. discountC When money is given on loan, a fee is charged by the lender, which is called, interest.

2 Simle rate of interest or flat rate of interest is the amo!nt of interest which is aid every year as

a """"" of the

amo!nt borrowed:

A. fixed percentage

B. varying percentage

C. fluctuating percentage

D. percentage as per discretion of the lender A Simle rate of interest or flat rate of interest is the amo!nt of interest which is aid every year as

a fi#ed ercentage of the amo!nt borrowed

3 Simle interest is calc!lated as:

A. principal x rate

B. product x rate x time

C. principal x rate x time

D. principal x time

C Simle interest is calc!lated as rincial # rate # time

4 $oan is obtained by % for !rchase of a car for &s.'.() lac at '*+ interest rate over two years.

What is the amo!nt of total simle interest

A. 42000

B. 3000C. 30000

D. 24000

- Amo!nt of interest /'.() lac # '* # *0 1 ')) 23)))

! $oan is obtained by % for !rchase of a car for &s.'.() lac at '*+ interest rate over two years.

What is the amo!nt of total amo!nt to be aid at simle rate of interest

A. 1"000

B. 1#2000

C. 10000

D. 1!0000

A 4rincial 5 interest '()))) 5 23))) 6/'.() lac # '* # *0 1 ')) 23)))7 '83)))

$oan is obtained by % for !rchase of a car for &s.'.() lac at '*+ interest rate over two years.

What is the amo!nt of wee9ly ayment at simle rate of interest

A. 33$".12

B. 34!".1$

C. 3!#.$2

D. 3$#.02

C Total amo!nt ayable '()))) 5 23))) 6/'.() lac # '* # *0 1 ')) 23)))7 '83))) 1 (* 2(3.;*

# Como!nd interest is aid on which of the following:


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A. principal amount

B. interest amount

C. principal amount and interest already accrued

D. principal amount and interest to accrue

C Como!nd interest is calc!lated on the rincial amo!nt and interest already accr!ed till date of

como!nding of interest. The eriod of como!nding may differ.

" yearly como!nding r is divided

by * and n is m!ltilied by *. =or ?!arterly como!nding r is divided by @ and n is m!ltilied by @.

=or monthly como!nding r is divided by '* and n is m!ltilied by '*.

10 yearly como!nding r is divided

by * and n is m!ltilied by *. =or ?!arterly como!nding r is divided by @ and n is m!ltilied by @.

=or monthly como!nding r is divided by '* and n is m!ltilied by '*.

12 % invested &s.'))))) in a ban9 =& at 3+ .a. for one year.

yearly basis, the amo!nt ayable shall be

A. 10000

B. 100$0

C. 10130

D. 1010

- 4 /'5r1*0n # * '))))) # '.)2 # '.)2 ')3);)


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13 % invested &s.'))))) in a ban9 =& at 3+ .a. for one year.


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C. 11$2.!

D. 12111.23

- 4 /'5r1@0 n # @ ')))) # '.)* # '.)* # '.)* # '.)* # '.)* # '.)* # '.)* # '.)* '''3.(;

20 Which of the following form!lae can be !sed for calc!lation of e?!ated monthly instalment

/D'7 888.()

22 E raised a ho!se loan of &s.') lac at '*+ rate of interest reayable in ') years. Calc!late the

D'7 '))) # /2.2))28 1 ).2))28 ').;8''0 ');8.''

23 Which of the following statement is not correct regarding interest rates:A. fixed interest remains fixed throughout the period of the loanB. floating interest is reuired to ,e re/set periodically throughout the period of the loan

C. total amount of interest is lo*er if interest rate is simple *hen compared to compound rate

D. total amount of interest is lo*er if interest rate is compounded *hen compared to simple rate

Total amo!nt of interest is higher when calc!lated with como!nding effect.


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- Ann!ity means a series of fi#ed ayments to be made or to be received over a re>determined

eriod

/similar to ayment of D< of ho!se loan or receit of fi#ed interest on a term deosit0.

2 Ann!ity means /a0 a series of ayments /b0 ayments of fi#ed amo!nt /c0 ayments to be

received or made /d0

ayment for a fi#ed eriod.A. a to c only

B. a , and d only

C. , c and d only

D. a to d all together

Ann!ity incl!des all these feat!res i.e. /a0 it is a series of ayments /b0 the ayments is of fi#ed

amo!nt /c0 the ayments can be received or made /d0 the ayment are for a fi#ed eriod.

2# When the ann!ities are made or received in the beginning of the eriod, these are called:

A. ordinary annuities

B. annuities due

C. initial annuities

D. ,ase period annuities- The beginning of the eriod ann!ities are called Ann!ity !e and when ayments are at end of

the eriod, these are 9nown as ordinary ann!ities.

2" When the ann!ities are made or received at the end of a eriod, these are called:


B. annuities due


D. ,ase period annuities

A The beginning of the eriod ann!ities are called Ann!ity !e and when ayments are at end of

the eriod, these are called ordinary ann!ities..

2$ E rented his ho!se for * years at a monthly rent of &s.'())) to be received in advance. This is ane#amle of


B. annuities due


D. ,ase period annuities- The beginning of the eriod ann!ities are called Ann!ity !e.

30 E is to receive interest on govt. bonds each year, by year end for years. This is an:


B. annuities due


D. ,ase period annuitiesA The beginning of the eriod ann!ities are called Ann!ity !e.

31 =!t!re val!e of an ordinary ann!ity can be calc!lated as:

A. C &1'r(n /1 x r

B. C &1'r(n /1 ) r

C. C &1'r(n '1 ) r D. C &1'r(n '1 x r

-


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interest and n stands for no. of ayments.

32 E is to invests &s.'))))) by end of each year for ( years at (+ rate of interest. Bow m!ch

amo!nt he will receive

A. s.!!!23B. s.!241

C. s.!!2!3D. s.!24##

C C 6 /'5r0n >'7 1 r '))))) 6 /'5).)(0( >'7 1 ).)( &s.((*(32

33 The resent val!e of ordinary ann!ity can be calc!lated as:

A. C &1'r(n /1 ) r

B. C &1'r(n /1 ) r &1'r(n

C. C &1'r(n /1 x r &1'r(n

D. C &1'r(n /1 ) r &1'r(- The resent val!e of an ordinary ann!ity is calc!lated as C 6 /'5r0n >'7 1 r /'5r0n

34 E is to receive &s.')))), as interest on bonds by end of each year for ( years at (+ rate of

interest. Calc!late the resent val!e of the amo!nt he is to receiveA. s.434$2.0

B. s.423$#.#0

C. s.432$4."0

D. s.4324$.22C C 6 /'5r0n >'7 1 r /'5r0n ')))) 6 /'5).)(0( >'7 1 ).)( /'5).)(0( &s.@2*;@.8)

3! 4o!lation of a town is '))))). The rate of change is @+ er ann!m. What it will be after (

years.

A. 12$20!

B. 121!

C. 1221!

D. 12101- C /'5r0n '))))) /'5).)@0( '))))) # '.*'33( '*'33(.

3 4o!lation of a town is '))))). The rate of change is @+ er ann!m. What it was ( years ago

A. "21$3

B. "22!#

C. "04$3D. "2121

A C 1 /'5r0n '))))) 1 /'5).)@0( '))))) 1 '.*'33( 8*';2

3# %FE !rchased machinery of &s.'))))). &ate of dereciation is ')+. At WG val!e method,

what is the amo!nt of dereciation for @ years.

A. 343$0B. 332$1

C. 3310$

D. 33012A ereciated val!e C /'> r0n '))))) /).;0@ '))))) # ).3(3' 3(3'). ereciation '))))) >

3(3') 2@2;)

3" %FE !rchased machinery of &s.'))))). &ate of dereciation is ')+. At WG val!e method,

what is the dereciated val!e at the end of @ years


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A. !3"

B. !10

C. !#"0

D. !$20

- ereciated val!e C /'> r0n '))))) /).;0@ '))))) # ).3(3' 3(3').

3$ %FE !rchased machinery of &s.'))))). &ate of dereciation is ')+. What is average rate ofdereciation

A. 12.2!1-

B. 12.$!-

C. 13.#!-

D. 13.$"1-

C ereciated val!e C /'> r0n '))))) /).;0@ '))))) # ).3(3' 3(3'). ereciation '))))) >

3(3') 2@2;) Average dereciation /2@2;) 1 ')))))0 1 /')) 1 @0 '2.(3+

40 % wants to borrow &s.*())) immediately and another &s.*)))) after a eriod of * years at ')+

interest. Be wants to ay it in monthly instalments for ( years. Calc!late the amo!nt of monthly

ayment

A. s."#$.3"B. s."$#.!4

C. s.""2.31

D. s."3.#"

A We shall !se the form!la A Hr 1 6 '> H' 1 /'5r0 n 7I where & is the amo!nt er ayment eriod, n

no. of

eriods, r rate er eriod . &ate of interest being .a. and calc!lation to be made monthly, the

&O<

).')1'* and no. of time eriod ( # '* '(. -efore calc!lation, we shall convert the f!t!re val!e

&s.*@))) to resent val!e *@))) 1 ' 1 /'5).')1'*0 *@ '3288.';.

Bence total amo!nt '3288.'; 5 *())) @'288.';

D< @'288.'; # /).')1'*0 1 /6 '> H' 1 /'5).')1'*0 3) I7 &s.8;.28

41 A erson wants to receive &s.'*() every ?!arter for ( years at '*+ .a. rate of interest. Bow

m!ch he sho!ld invest now.

A. s.1"$$."!

B. s.1"$!.!"

C. s.1"!$."!D. s.1"$!."!

C We will !se the form!la A /6 '> H' 1 /'5r0 n I7 1 r0 where & is the amo!nt er ayment eriod, n

no. of

eriods, rrate er eriod . &ate of interest being .a. and calc!lation to be made ?!arterly, the

&O< '*1@ 2+ and no. of time eriod ( # @ *)

'*() /6 '> H' 1 /'5).)20 *) I7 1 ).)20 '8(;3.8(

42 % borrowed an amo!nt of &s.()))) for 8 years at '8+ rate of interest. What shall be the

monthly ayment.

A. s.$".11

B. s.$".1

C. s.$".11

D. s.$".1

We !se the form!la A Hr 1 6 '> H' 1 /'5r0 n 7I where & is the amo!nt er ayment eriod, n no. of

eriods, r rate er eriod . &ate of interest being .a. and calc!lation to be made ?!arterly, the


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&O< '81'* '.(+ and no. of time eriod 8 # '* ;3

()))) # ).)'(/6 '> H' 1 /'5).)20 *) I7 &s.;83.'3

43 % wants to receive &s.@)))) er ann!m for *) years by investing at (+. Bow m!ch will have to

invest now

A. s.4$"4""

B. s.4"$4$!C. s.4$312"

D. s.4"$$!4

A We have to find resent val!e of an ann!ity by !sing the form!la A & 6'>/'5r0>n 7 1 r or A /6 '>

H' 1 /'5r0 n I7 1 r0 . where & is the amo!nt er ayment eriod, n no. of eriods, rrate er eriod

@)))) /6 '> H' 1 /'5).)(0*) I7 1 ).)(0 &s.@;8@88

44 % wants to receive a fi#ed amo!nt for '( years by investing &s.; lac at ;+ interest rate. Bow

m!ch he will receive ann!ally.

A. s.101!$

B. s.110$"3

C. s.111!3

D. s.1142"2C We shall !se the form!la A Hr 1 6 '> H' 1 /'5r0 n 7I where & is the amo!nt er ayment

eriod, n no. of eriods, r rate er eriod . ;))))) # /).);0 1 /6 '> H' 1 /'5).);0'( I7 &s.'''3(2

4! Which of the following form!la is !sed for calc!lation of resent val!e of an ann!ity

A. A ) r ) 1/ 1 ) &1'r( n 5

B. A r ) 1/ 1 ) &1'r( n 5

C. A r 1/ 1 ) &1'r( n 5

D. A r ) 1'r( n 5

- To calc!late resent val!e of an ann!ity, the form!la is A Hr 1 6 '> H' 1 /'5r0 n 7I. n 7 1 r also.

4 Which of the following form!la is !sed for calc!lation of f!t!re val!e of an ann!ity:A. A &1'r( n /15 ) rB. A ) &1'r( n /15 ) r

C. A &1'r( n '15 ) r

D. A &1'r( n /15 x r

A The following form!la is !sed A 6 H /'5r0 n >'I 1 r7

4# When a f!nd is created to meet the need of a secified amo!nt in f!t!re and it is acc!m!lated by

means of e?!al eriodic deosits, it is called """ f!nd:

A. mutual fund

B. sin+ing fund

C. accumulated fund

D. any of the a,ove- When a f!nd is created to receive a secified amo!nt in f!t!re and it is acc!m!lated by means of

e?!al eriodic deosits, it is called sin9ing f!nd.

4" To calc!late val!e of a sin9ing f!nd, which of the following form!lae can be !sed:

A. A &1'r( n /15 ) r

B. A ) &1'r( n /15 ) r

C. A &1'r( n '15 ) rD. A &1'r( n /15 x r


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A '7 &s.2(*8)


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!4 % obtained a loan of &s.;*8*) at ')+, which he is to ay in @ e?!al ann!al instalment. Calc!late

the amo!nt of instalment

A. s.2"2"3

B. s.2$2"2

C. s.2$4#D. s.2$"22

- '7;*8*) # ).') 6 /'5).')0@ 1 /'5).')0@ >'7 &s.*;*8*

!! The como!nd interest on a s!m for * years is &s.'(2 and simle interest is &s.**( for 2 years.

What is rate of interest and the rincial amo!nt

A. 4- s.1"#!

B. 3- s.1"#!

C. 4- s.20#!

D. 3- s.20#!A Simle interest for * years &s.'() and como!nd &s.'(2. The difference of &s.2 reresents

interest on &s.( /ga of &s.**(>'()0. Bence &o< 21(#')) @+. The rincial /**( # '))0 1 /@ #

20 &s.'8(

! % !rchased a ho!se and the ayment terms are /a0 &s.') lac immediately and balance &s..()

lac after * years. The rate of interest is 3+ .a. and to be como!nded semi>ann!ally. What is the

cash val!e of the ho!se.

A. s.1$3$!B. s.1$#0

C. s.13!

D. s.133!

C &s..() lac disco!nted at 3+ on half>yearly basis by !sing the form!la =G 1 /'5r0n

()))) 1 /'5).)20@ ()))) 1 /'5r0n &s.33323( Total cash val!e &s.') lac 5 &s.33323(

&s.'33323(

!# % had to ay certain amo!nt to E and had two otions /a0 to ma9e ayment of l!m s!mamo!nt of &s.'*)))) immediately or /b0 to ay &s.'()))) in ( years at (+ .a. rate of interest

/half>yearly como!nding0. Which otion is more beneficial for %.

A. 6e should opt for &a( ,eing lo*er amount

B. 6e should opt for &,( ,eing lo*er at s.11#1#$

C. 6e should opt for &,( ,eing lo*er at s.11$1$#D. 6e should opt for &,( ,eing lo*er at s.11#$#1

- The resent val!e &s.'()))) =G 1 /'5r0n '()))) 1 /'5).)*(0') &s.''';

!" The ossibility of loss on acco!nt of defa!lt by a borrower in reayment of his obligation on

time, is called:

A. credit ris+

B. mar+et ris+ C. default ris+

D. operational ris+

A Credit ris9 is the ris9 on acco!nt of ossible defa!lt in reayment by the borrowers.

!$ =or meas!rement of credit ris9, which of the following is not a correct aroach, as adoted in


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C. internal rating/,ased advance approach

D. none of the a,ove

Credit ris9 is meas!red on the basis of these aroaches.


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A. specific ris+ in mar+et ris+

B. specific ris+ in operational ris+

C. specific ris+ in credit ris+

D. specific ris+ in liuidity ris+

A Caital charge for secific ris9 in mar9et ris9, is designed to rotect against an adverse

movement in rice of an individ!al sec!rity d!e to factors related to the individ!al iss!er.

Caital charge for general mar9et ris9 , is designed to cat!re the ris9 of loss arising from

changes in the """""".

A. mar+et prices

B. mar+et interest rates.

C. all mar+et varia,les

D. value of the portfolio

- Caital charge for general mar9et ris9 , is designed to cat!re the ris9 of loss arising from

changes in the mar9et interest rates.

# To start with, in


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C. ;inimum capital standards supervisory revie* and mar+et discipline

D. is+ ;anagement :upervisory ' Dinim!m caital standards, 4illar>* s!ervisory review and 4illar>2

mar9et

isciline

#2 Which of the following does not match with regard to the 2 illars of -asel


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B. 9nternal capital adeuacy appraisal process

C. 9nternal capital adeuacy assessment process

D. 9nternal capital assessment and adeuacy process

C


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A. assets *hich are contracted for steady income and are held till maturity li+e loans

B. lia,ilities that are contracted to support the assets to ,e held till maturity li+e deposits

C. investments that are contracted for steady income and are held till maturity

D. investment under availa,le for sale category and held for trading category

-an9ing boo9 reresents assets and liabilities that are contracted for earning a steady income

and these are held till mat!rity. #amles are loans and deosits.

"4 Which of the following is referred to as CO& CA4orld Ban+ group institutions

C.


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D. BBB rating / #!-- ); for !nrated comanies, the ris9 weight will be

'()+ if the amo!nt e#ceeds &s.() cr.

$2 '). The ris9 weightage will be /which is correct0:

A. 100- as applica,le to unrated claims

B. 12!- as the claim is unrated and a,ove s.1! cr

C. 1!0- as the claim is unrated and a,ove s.10 cr

D. 200- as the claim is unrated and a,ove s.10 cr

C =or any fresh sanctions or renewal d!ring *));>'), for !nrated comanies, the ris9 weight will be

'()+ if the amo!nt e#ceeds &s.') cr.

$3 =or caital ade?!acy !rose, the e#os!re in retail ortfolio shall carry a ris9 weight of:

A. 100-B. #!-C. !0-

D. 20-

- =or retail ortfolio, the ris9 weight is (+ as er -asel *.

$4 Which of the following is incl!ded in retail ortfolio for the !rose of ris9 weight for CA&:

A. consumer credit including credit card

B. loan against shares or capital mar+et exposure

C. education loans

D. all the a,ove

C Only ed!cation loans are incl!ded. Others are e#cl!ded from the retail ortfolio.

$! Which of the following wo!ld ?!alify to be incl!ded in retail ortfolio:

A. if its total turnover is less than s.!0 cr B. if total exposure of the ,an+ is 0.2- of overall regulatory retail portfolio

C. if the amount of exposure is restricted to s.!0 cr.

D. all the a,ove.

C The amo!nt of e#os!re sho!ld be restricted to &s.( cr. The other conditions are correct.

$


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residential roerty, the ris9 weight wo!ld be:

A. #!- if the loan is up to s.30 lac and 100- if the loan is a,ove s.30 lac.

B. !0- if the loan is up to s.30 lac and #!- if the loan is a,ove s.30 lac.

C. !0- if the loan is up to s.30 lac and !0- if the loan is a,ove s.30 lac.

D. #!- if the loan is up to s.30 lac and #!- if the loan is a,ove s.30 lac.-


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D. net present valueC The val!e stated on the bond certificate is called face val!e.


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C. s.10"#.4!

D. s.1011.2!

A The cash flow for different years will be disco!nted at + and resent val!e calc!lated as !nder:

'st year /8) # ' 1 '.) @.0 5 *nd year /8) # ' 1 /'.) # '.)0 3;.880 5 2rd year /')8) # ' 1

/'.) # '.) # '.)0 88'.3)0 ')*3.*( /in the 2rd year both the co!on of &s.8) and face val!e of

&s.'))) will be received, while in the 'st and *nd year only the co!on of &s.8) will be received0.

110 A bond has been iss!ed with a face val!e of &s.*)))) at '*+ co!on for 2 years. The re?!ired

rate of ret!rn is ') +. What is the val!e of the bond

A. s.20"$.#0

B. s.20$""."0

C. s.20"$".30

D. s.20$1".40

- The cash flow will be disco!nted at ')+ for 2 years, searately for co!on for 2 years and face

val!e

receivable at the end of 2rd year. The resent val!e factor /4Gyearly

basis

A. s.102!.4#

B. s.103!.32

C. s.1042."4

D. s.10!2.3#

The cash flow will be disco!nted at 8 for 2 years, searately for co!on for 3 half years and face

val!e receivable at the end of 2rd year. The resent val!e factor /4G


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B. 10.00-

C. $.0$-

D. ".#1-

A ')) 1 ;)) ''.''+

11! A ')+ bond with face val!e of &s.'))) is !rchased at &s.'')). What is the c!rrent yield

A. 11.11-B. 10.00-

C. $.0$-

D. ".#1-

C ')) 1 '')) ;.);+

11 The rate of ret!rn earned by an investor who !rchases the bond and holds it till its mat!res is

called:

A. rate of return

B. current yield of the ,ond

C. yield to maturity

D. any of the a,ove

C The rate of ret!rn earned by an investor who !rchases the bond and holds it till its mat!res iscalled yield to mat!rity.

11# A ')+, 3 years bond, with face val!e of &s.'))) has been !rchased by E for &s.;)). What is

his yield till mat!rity.

A. 12.!0-

B. 12.20-

C. 11."0-

D. 11.0-

A 8').807

FTD '*+ 5 /2+0 # 6'. 1 ')3.;;7

FTD '*+ 5 /2+0 # ).'33

FTD '*+ 5 ).@;8 '*.@;8 say '*.()+

11" When the re?!ired rate of ret!rn is e?!al to the co!on rate, the val!e of the bond is:A. less than face value

B. more than face value

C. eual to face value

D. maturity value

C Theory > When the re?!ired rate of ret!rn is e?!al to the co!on rate, the val!e of the bond is

e?!al to face val!e or ar val!e

11$ When the re?!ired rate of ret!rn is more than the co!on rate, the val!e of the bond is :


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A. less than face value



D. maturity value

A Theory > When the re?!ired rate of ret!rn /9d0 is more than the co!on rate, the val!e of the

bond is less than the face val!e or ar val!e

120 When the re?!ired rate of ret!rn is less than the co!on rate, the val!e of the bond is :

A. less than face value



D. maturity value

- Theory > When the re?!ired rate of ret!rn /9d0 is less than the co!on rate, the val!e of the bond

is greater than the face val!e or ar val!e

121 When the re?!ired rate of ret!rn /9d0 is greater than the co!on rate, the disco!nt on the bond

"""", as mat!rity aroaches.

A. increases

B. declinesC. remains same


- Theory > When the re?!ired rate of ret!rn /9d0 is greater than the co!on rate, the disco!nt on

the bond declines, as mat!rity aroaches.

122 When the re?!ired rate of ret!rn /9d0 is less than the co!on rate, the remi!m on the bond

""", as mat!rity

aroaches:

A. increases

B. declines

C. remains same

D. none of the a,ove- Theory > When the re?!ired rate of ret!rn /9d0 is less than the co!on rate, the remi!m on the

bond

declines, as mat!rity aroaches.

123 The mar9et rice of a bond is """" to its yield to mat!rity:

A. inversely proportional

B. positively proportional

C. eual


A Theory > The mar9et rice of a bond is inversely roortional to its yield to mat!rity.

124 =or a given difference between the FTD and the co!on rate of a bond, the longer the term tomat!rity, the """"" with a change in FTD:

A. smaller *ill ,e the change in the price

B. greater *ill ,e the change in the price

C. greater *ill ,e the change in the maturity value

D. smaller *ill ,e the change in the maturity value

- Theory > =or a given difference between the FTD and the co!on rate of a bond, the longer the

term to mat!rity, the greater will be the change in the rice with a change in FTD.


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series of co!on

ayments and the rincial ayment is disco!nted at the new rate for the entire no. of years to

mat!rity.

12! =or a given mat!rity, the change in bond rice will be """" with the decrease in the FTD of the

bond than the change in bond rice with an e?!al increase in the FTD of the bond.

A. smaller B. greater

C. eual


- Theory > =or a given mat!rity, the change in bond rice will be greater with the decrease in the

FTD of the bond than the change in bond rice with an e?!al increase in the FTD of the bond.

Which means that for e?!al siJed increase and decreases in the FTD, the rice movement are not

symmetrical.

12 =or any given change in FTD, the +age rice changes, in case of bonds of a high co!on rate,

will be """ than in case of bonds of a low co!on rate, other things remaining the same.

A. smaller

B. greater C. eual


A Theory > =or any given change in FTD, the +age rice changes, in case of bonds of a high

co!on rate, will be smaller than in case of bonds of a low co!on rate, other things remaining the

same.

12# A change in the FTD affects the rice of the bonds with a """" FTD more than it does the

rice of bonds with a """" FTD.

A. lo*er higher

B. higher lo*er

C. lo*er lo*er

D. higher higher - Theory > A change in the FTD affects the rice of the bonds with a higher FTD more than it does

the rice of bonds with a lower FTD.

12" % !rchased two bonds -ond>' and -ond>* with face val!e of &s.'))) each and co!on of 8+

and mat!rity of @ years and 3 years resectively. ' is &s.'))). * with face val!e of &s.'))) each and co!on of 8+and mat!rity of @ years and 3 years resectively.


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D. 4.14-A At 8+ FTD, the mar9et rice of 3 year -ond>* is &s.'))). ' wo!ld be:

A. s.42."3 increase

B. s.42."3 decreaseC. s.32.43 increase

D. s.32.43 decrease

At 8+ FTD, the mar9et rice of @ year -ond is &s.'))).


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13! E invested in '*.(+ ( year bond of face val!e of &s.')) each. The e#ected mar9et rate is '(+.

What is the d!ration of the bond.

A. 3 yr 4 months

B. 3 yr monthC. 3 yr $ month

D. 4 years 2(.'' 1;@.''

13 Which of the following is not correct regarding d!ration

A. duration is less than the term to maturity

B. 9n case of 7ero coupon ,onds the duration term to maturity

C. duration and 8; are positively correlated

D. none of the a,oveC d!ration and FTD are inversely correlated. Other otions are correct

13# Which of the following is correct regarding d!ration

A. Duration of perpetual ,ond 1 'r ) r

B. longer the term of a coupon paying ,ond to maturity the greater the difference ,et*een its term to

maturityand duration

C. larger the coupon rate smaller the duration of the ,ond

D. all the a,ove

All the above statements are correct.

13" An increase in the fre?!ency of co!on ayments """" the d!ration and a decrease in

fre?!ency of co!ons """" it.

A. decreases increases

B. decreases decreases

C. increases increases

D. increases decreases

A Theory > An increase in the fre?!ency of co!on ayments decreases the d!ration and a decreasein

fre?!ency of co!ons increase it.

13$ !ration of bond """" , as the bond aroaches mat!rity.

A. increasesB. remains same

C. decreases


C Theory > !ration of bond declines, as the bond aroaches mat!rity.

140 The sensitivity of the bond rice to changes in the interest rate is called:

A. duration of the ,ond

B. ,ond volatilityC. yield to maturity of the ,ond

D. intrinsic value of the ,ond

- The sensitivity of the bond rice to changes in the interest rate is called bond volatility.

141


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C D # change in the rate

>*.32 # ).)' ).)*32 *.32+

14 '*+ , @ year bonds of &s.')) each were !rchased by % for &s.')). Calc!late the FTD for %.

A. 12.30-

B. 12.00-

C. 11.$0-

D. 11."0-

- Since the !rchase rice and face val!e of the bond is e?!al i.e. &s.')), the FTD will be e?!al tothe co!on rate.

14# '*+ , @ year bonds of &s.')) each were !rchased by % for &s.')).


26/142

'* # 4G )) 1 /'5).')0' )) 1 '.' 323.23 5 *nd year /'))) 1 /'5).')0* '))) 1

'.*' 0

8*3.@@ 5 2rd year /'*)) 1 /'5).')02 '*)) 1 '.22' 0 ;)'.(8 Total &s.*[email protected]

1!2 =or roKect araisal, which of the following airs, are disco!nting techni?!es

A. net present value internal rate of return

B. net present value accounting rate of return

C. pay ,ac+ period accounting rate of return

D. pay ,ac+ period internal rate of returnA Net resent val!e internal rate of ret!rn are the disco!nting techni?!es for roKect or

investment

araisal. 4aybac9 eriod and acco!nting rate of ret!rn are non>disco!nting techni?!es.

1!3 Under net resent val!e method of roKect araisal,

A. the future cash flo* is compared *ith the initial investment made in the pro@ect

B. the net present value is compared *ith the initial investment made in the pro@ectC. the present value is compared *ith the initial investment made in the pro@ect


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D. the present value is compared *ith the a,solute value of future cash flo*sC Under net resent val!e method of roKect araisal, the resent val!e is comared with the

initial

investment made in the roKect. The difference between two, is the net resent val!e which can be

ositive or negative or Jero.

1!4 The net resent val!e of an investment at a given disco!nt rate can be:A. positive

B. negative

C. 7ero

D. any of these

The net resent val!e of an investment at a given disco!nt rate can be ositive, negative or Jero.

1!! The net resent val!e of an investment can be calc!lated by !sing the form!la:

A. summation EC1 ) &1'r(1 ' C2 ) &1'r(2 ' FF C n ) &1'r(n ' '1

B. summation EC1 ) &1'r(1 ' C2 ) &1'r(2 ' FF C n ) &1'r(n ' /1

C. EC1 ) &1'r(1 x C2 ) &1'r(2 x FF C n ) &1'r(n ' /1

D. summation EC1 ) &1'r(1 / C2 ) &1'r(2 / FF C n ) &1'r(n ' /1

- Net resent val!e s!mmation C' 1 /'5r0' 5 C* 1 /'5r0* 5 PP C n 1 /'5r0n 5 >'. Bere ' standsfor initial investment.

1!


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shareholders. 4roKect with negative net resent val!e red!ces the wealth of shareholders.

10 An investor invested &s..() lac in a roKect that gives rofit of &s.* lac in the 'st year, &s.*.3)

lac in the *nd year and &s.@.() lac in the 2rd year. At ')+ disco!nt rate, what is the resent val!e

of the cash inflows

A. s.#.1! lac

B. s.#.2! lacC. s.#.3! lac

D. s.#.4! lac

C The resent val!e of cash inflow will be &s.'.8* lac for 'st year, &s.*.'( lac for *nd year and

&s.2.28 lac for 2rd year, total being &s..2( lac.

11 An investor invested &s..() lac in a roKect that gives rofit of &s.* lac in the 'st year, &s.*.3)

lac in the *nd year and &s.@.() lac in the 2rd year. At ')+ disco!nt rate, what is the net resent

val!e of the roKect

A. s.0.4! lac positive

B. s.0.4! lac negative

C. s.0.1! lac positive

D. s.0.1! lac negative The resent val!e of cash inflow will be &s.'.8* lac for 'st year, &s.*.'( lac for *nd year and

&s.2.28 lac for 2rd year, total being &s..2( lac. Bence &s..2( less &s..() lac ).'( lac

12 ' where ) is '7 1 6r/'5r0n7


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&s.*)@@*

1 E made an investment of &s.'8))) and he e#ects a ret!rn of &s.2))) er ann!m for '* years.

What is the net resent val!e of the cash flow at ')+ disco!nt rate

A. s.2244

B. s.234C. s.2442

D. s.2!44C The calc!lation can be made by !sing Ann!ity form!la i.e. 4G C 6/'5r0n >'7 1 6r/'5r0n7

&s.*)@@* > '8))) &s.*@@*

1# E made an investment of &s.'8))) and he e#ects a ret!rn of &s.2))) er ann!m for '* years.

What is the resent val!e of the cash flow at '(+ disco!nt rate

A. s.123

B. s.1#!

C. s.1$"

D. s.1#214

A The calc!lation can be made by !sing Ann!ity form!la i.e. 4G C 6/'5r0n >'7 1 6r/'5r0n7

&s.'3*32

1" E made an investment of &s.'8))) and he e#ects a ret!rn of &s.2))) er ann!m for '* years.

What is the net resent val!e of the cash flow at '(+ disco!nt rate

A. /1#3#

B. /13#

C. '1#3#

D. '13#

A The calc!lation can be made by !sing Ann!ity form!la i.e. 4G C 6/'5r0n >'7 1 6r/'5r0n7

&s.'3*32 N4G '3*32 > '8))) >'2

1$ A comany invests &s.* lac on a new machine to be !sed for Kob wor9. /oerating e#enses 5 dereciation 5 ta#0 '3)))) > /3@))) 5 @)))) 5

(3))0 &s.()@))

4G C 6/'5r0n >'7 1 6r/'5r0n7 ()@)) 6/'5).'0n >'7 1 6).'/'5).'0(7 &s.';')(3

1#1 A comany invests &s.* lac on a new machine to be !sed for Kob wor9.


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*)+ on S$D basis. The e#ected earning is &s.'.3) lac er ann!m for ( years. The firm will have

to inc!r @)+ as oerating e#enses and shall ay ')+ ta#. Calc!late the net resent val!e of the

cash flow by disco!nting it at ')+.

A. s."$44 negative

B. s."$44 positiveC. s.$34" negative

D. s.$34" positiveA Cash inflow &even!e > /oerating e#enses 5 dereciation 5 ta#0 '3)))) > /3@))) 5 @)))) 5

(3))0 &s.()@))

4G C 6/'5r0n >'7 1 6r/'5r0n7 ()@)) 6/'5).'0n >'7 1 6).'/'5).'0(7 &s.';')(3

N4G ';')(3 > *))))) > &s.8;@@

1#2 Original cost of a machinery is &s.* lac and its salvage val!e &s.@)))) after its !se by the firm

for ( years. The amo!nt of dereciation shall be:

A. s.40000

B. s.3000

C. s.32000


C /Original cost > salvage val!e0 1 no. of years &s.*))))) > @)))) '3)))) 1 ( &s.2*)))

1#3 Original cost of a machinery is &s.* lac and its salvage val!e &s.@)))) after its !se by the firm

for ( years. The dereciated val!e at the end of @th shall be:

A. s.#2000B. s.#0000

C. s."000

D. s.000

A Ann!al ereciation /Original cost > salvage val!e0 1 no. of years &s.*))))) > @))))

'3)))) 1 (

&s.2*))) Total dereciation for @ years 2*))) # @ '*8))). Bence the dereciated val!e * lac Q

'*8))) &s.*))).

1#4 A firm !rchased a machinery for &s.* lac. ;*))

&s.')*8))


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1# A firm !rchased a machinery for &s.* lac. ;*))

&s.')*8)). $oss ')*8)) > '))))) &s.*8))

1## A com!ting machine costs &s.')))). The life of the machinery is 2 years. What is the amo!nt

of dereciation in the *nd year as er do!ble declining balance method

A. 1#

B. 3333

C. #

D. none of the a,ove- &ate of dereciation !nder S$D ')) 1 2 22.22+. So rate of dereciation !nder do!ble

declining method 22.22 # * 33.3+. 'st year dereciation ')))) # 33.3 + 333. WG

')))) > 333 2222. *nd year dereciation as er do!ble declining balance method 2222 #

33.3+ ****. -!t the dereciation !nder S$D for *nd year is &s.2222. Bence higher of two is to

be ta9en. Bence for *nd year, the dereciation 2222

1#" Under do!ble declining method of dereciation, if the amo!nt of dereciation in any year is less

than the amo!nt of dereciation calc!lated as er S$D:

A. the amount calculated as per :G; to ,e ta+en

B. the amount calculated as per dou,le declining ,alance method to ,e ta+en

C. the lo*er of the t*o amounts to ,e ta+en

D. none of the a,oveA DH method

D. :G; method

- Where the e?!iment may be re?!ired to be relaced earlier than its !sef!l life /as in case of

com!ters0, accelerated dereciation method is more s!itable.

1"0 Which method of dereciation rovides greater ta# shielding effect than the S$D method of

dereciation

A. dou,le declining ,alance method

B. accelerated depreciation method

C. >DH methodD. sum of the years digits

- The accelerated dereciation method rovides greater ta# shielding effect than the S$D method


32/142

of

dereciation. The method is o!lar for writing off the e?!iment which may be relaced before

the end of its !sef!l life, as in case of com!ters.

1"1 Where an asset ass!mes higher dereciation and greater ta# benefit in the early years of life of

the asset, which of the following methods of dereciation is more s!itable

A. dou,le declining ,alance methodB. accelerated depreciation method

C. >DH method

D. sum of the years digits

S!m of the years digits method is !sed where an asset ass!mes higher dereciation and greater

ta# benefit in the early years of life of the asset.

1"2 An asset /say a com!ter0 has a life of ( years. What will be dereciation +age in the *nd year,

on the basis of s!m of years digits method.

A. 20.2!-

B. 2!.!#-

C. 2.#-

D. 2$.1-C ( 5 @ 5 2 5 * 5 ' '( Bence in the *nd year it will be @1'( *3.3+

1"3 A com!ter is !rchased for &s.()))) and its salvage val!e is ass!med as &s.*))). What will be

amo!nt of

dereciation in the *nd year, on the basis of s!m of years digits method.

A. s.12"02

B. s.120#

C. s.11$"!

D. s.11"4!

A &ate of dereciation ( 5 @ 5 2 5 * 5 ' '( Bence in the *nd year it will be @1'( *3.3+.

Amo!nt of

dereciation /()))) > *)))0 # *3.3+ '*8)*

1"4 A com!ter is !rchased for &s.()))) and its salvage val!e is ass!med as &s.*))). What will be

dereciated val!e at the end of *nd year, on the basis of s!m of years digits method.

A. s.3#$1"

B. s.3#1$"

C. s.3"14

D. s.3"22- &ate of dereciation ( 5 @ 5 2 5 * 5 ' '( Bence in the *nd year it will be @1'( *3.3+.

Amo!nt of

dereciation /()))) > *)))0 # *3.3+ '*8)*. ereciation val!e ()))) > '*8)* &s.2';8

1"! A com!ter is !rchased for &s.()))) and its salvage val!e is ass!med as &s.*))). What will be

amo!nt of rofit or loss, if the com!ter is sold for &s.2())) at the end of *nd year. The calc!lationis to be made on the basis of s!m of years digits method.

A. s.2"4 profit

B. s.2"4 loss

C. s.21$" profit

D. s.21$" loss

&ate of dereciation ( 5 @ 5 2 5 * 5 ' '( Bence in the *nd year it will be @1'( *3.3+.

Amo!nt of

dereciation /()))) > *)))0 # *3.3+ '*8)*. ereciation val!e ()))) > '*8)* &s.2';8.


33/142

$oss

2';8 > 2())) *';8

1" The home c!rrency rice of one !nit of foreign c!rrency is called:

A. selling rateB. ,uying rate

C. direct rateD. indirect rate

C The home c!rrency rice of one !nit of foreign c!rrency is called direct rate, where the home

c!rrency !nit is variable and foreign c!rrency !nit is fi#ed. #amle ' US &s.@3.')

1"# ' US &s.@(.;) is an e#amle of:

A. selling rate

B. ,uying rate

C. direct rate

D. indirect rate

C


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alicable.

1$" A c!rrency is said to be at a remi!m, when:

A. future rate is lo*er and spot rate is higher B. future rate is higher and spot rate is lo*er

C. future rate and spot rate are sameD. none of the a,ove

- A c!rrency is said to be at a remi!m, when f!t!re rate is higher and sot rate is lower.

1$$ To calc!late a forward rate in case of direct ?!ote, if there is remi!m:

A. the premium is added to purchase rate and deducted from selling rate

B. the premium is deducted from purchase rate and added to selling rate

C. the premium is added to purchase rate and selling rate

D. the premium is deducted from purchase rate and selling rateC To calc!late a forward rate in case of direct ?!ote the remi!m is added to !rchase rate and

selling rate.

200 To calc!late a forward rate in case of direct ?!ote, if there is disco!nt:A. the discount is added to purchase rate and deducted from selling rate

B. the discount is deducted from purchase rate and added to selling rate

C. the discount is added to purchase rate and selling rate

D. the discount is deducted from purchase rate and selling rate

To calc!late a forward rate, in case of direct ?!ote, the disco!nt is ded!cted from the !rchase

rate and selling rate.

201 Sot !ro US '.2*)) 1 '). One month forward @)>2(, * month forward (>), 2 month

forward ')(>')). * month US can be !rchased at:

A. ).))@) '.2'3)

203 The forward rate has """ comonents namely """:A. t*o components sale and purchase

B. t*o components spot rate and for*ard points

C. three components spot rate premium and discount

D. three components spot rate for*ard points for*ard load

- The forward rate has two comonents namely, sot rate and forward oints.

204 The sot rate is !ro ' US '.2*)) and * month forward !ro ' US '.22*(. The forward

oints are e?!al to: A. 12!


36/142

B. 2!0

C. 320

D. 32!

A The sot rate is !ro ' US '.2*)) and * month forward !ro ' US '.22*(. The forward

oints are e?!al to '*( i.e. difference between sot rate and forward rate.

20! Which of the following is not a factor that contrib!tes to determine the forward oints forcalc!lation of forward rate

A. demand and supply position for the settlement date

B. mar+et expectation a,out the future developments

C. interest rate differential ,et*een t*o countries


All these are the factors that contrib!te to determine the forward oints for calc!lation of

forward rate.

20 """"""" is an oeration, thro!gh which a erson can ma9e ris9 free rofits by !nderta9ing

offsetting transactions /say borrow foreign c!rrency in one mar9et and lend in other mar9et0.

A. s*ap

B. ar,itrageC. for*ard

D. spot

- Arbitrage is an oeration, thro!gh which a erson can ma9e ris9 free rofits by !nderta9ing

offsetting transactions /say borrow foreign c!rrency in one mar9et and lend in other mar9et0

sim!ltaneo!sly.

20# The forward oints can be calc!lated as:

A. &spot rate x interest rate differential ) for*ard period( ) &100 x no. of days in the year(

B. &spot rate ) interest rate differential x for*ard period( ) &100 x no. of days in the year(

C. &spot rate x interest rate differential x for*ard period( ) &100 x no. of days in the year(

D. &spot rate x interest rate differential x for*ard period( x &100 x no. of days in the year(

C =orward oints /sot rate # interest rate differential # forward eriod0 1 /')) # no. of days inthe year0.

20" =orward differential is 9nown as:

A. s*ap rate

B. ar,itrage rateC. for*ard rate

D. spot rate

A =orward differential is also 9nown as Swa &ate.

20$


37/142


38/142

transactions, the roerty and tools they own, the debts they owe and debts other owe them.

21 Which of the following tyes of acco!nting system is associated with the rearation and

resentation of acco!nting and controlling information, in a form that assists the management, in

the form!lation of olicies and in decision ma9ing, on the vario!s matters connected with

oerations of the b!siness enterrise.

A. ste*ardship accountingB. financial accounting

C. social responsi,ility accounting

D. management accounting. The e#lanation given in the ?!estion above, relates to management acco!nting.

21# The managements of b!sinesses are held resonsible for what the b!siness contrib!tes to the

social well>being and rogress, !nder an acco!nting system called:

A. ste*ardship accounting

B. human resources accounting


D. management accounting.

C Under social resonsibility acco!nting, the managements of b!sinesses are held resonsible forwhat the b!siness contrib!tes to the social well>being and rogress.

21" The acco!nting system that involves acco!nting for investment in eole and relacement costs

as well as the acco!nting for the economic val!es of eole to an organisation, is called:

A. inflation accounting



D. management accounting.

- Under h!man reso!rces acco!nting, the acco!nting system involves acco!nting for investment in

eole and relacement costs as well as the acco!nting for the economic val!es of eole to an

organisation.

21$ """" acco!nting is concerned with the adK!stment in the val!e of assets and of rofits, in the

light of changes in the rice level.

A. inflation accounting


C. social responsi,ility accountingD. management accounting.

A The inflation acco!nting is concerned with the adK!stment in the val!e of assets and of rofits, in

the light of changes in the rice level.

220 The machinery is recorded in the boo9s of a firm at the rice aid to the s!lier 5 the

e#enses of bringing and installing the machinery. This is d!e to alication of:

A. money measurement conceptB. cost concept

C. ,usiness entity concept

D. reali7ation concept- very b!siness transaction is recorded in the boo9s of acco!nt at cost rice. These costs are

re?!ired to !t the machinery in wor9ing order.

221 The monetary val!e assigned to vario!s assets is derived from:

A. money measurement concept


39/142

B. cost concept


D. reali7ation concept

- The cost concet says that an asset is worth the rice aid for or the cost inc!rred to ac?!ire it.

Bence it sho!ld be recorded accordingly.

222 When the romoter of a b!siness withdraws certain goods from the b!siness for his ersonal!se, his drawing acco!nt is debited. This is done d!e to alication of :

A. going concern concept

B. cost concept



C The b!siness and romoter are two different entities. Doney !t in by the romoter in b!siness,

is liability of the b!siness. Similarly, assets drawn from b!siness by the romoter will be debited to

his acco!nt.

223 The rofit made by a firm is a liability for the b!siness and loss made by a firm is an asset. This

is d!e to alication of:

A. going concern conceptB. cost concept



C The rofit is the amo!nt that the romoter is entitled to withdraw from the b!siness d!e to which

it is

liability of the b!siness. $oss is the amo!nt that is recoverable by the b!siness from the romoter

d!e to which it becomes asset for the b!siness.

224 Which of the following transaction is not covered by the alication of going concern concet:

A. future income not to ,e ta+en into account

B. fixed assets are valued at their cost and not the mar+et value

C. current assets are valued at mar+et price or cost *hichever is lessD. provisions are created to meet any future lia,ility

A No f!t!re income is ta9en into acco!nt d!e to alication of realiJation concet and not d!e to

the going concern concet.

22! The acco!nting concets !sed in rearation of acco!nts are:

A. methods for presentation of financial statementsB. ,road assumption for preparation of accounts

C. ,asic rules for preparation the accounts

D. all the a,ove

- These are broad ass!mtions that are ta9en into acco!nt for rearation of acco!nts by the

b!siness firms.

22


40/142

22# A b!siness firm has to ma9e all adK!stments for reaid e#enses and o!tstanding e#enses d!e

to alication of:

A. going concern concept

B. accounting period concept

C. matching conceptD. dual aspect concept

C As er matching concet, the income of a artic!lar eriod is re?!ired to be matched with thee#enses of the same eriod.

22"


41/142

D. consistency conceptC The accr!al concet recogniJes that in act!al b!siness oerations, the receit or ayment of cash

may not coincide, b!t for fair acco!nting, if there is right to receive or obligation to ay, it sho!ld be

recorded.


42/142

cost rice b!t the e#ected rice at which it may be sold.


43/142

244 Which of the following does not match

A. A:/1 K Disclosure of accounting policies

B. A:/3 K Cash flo* statements

C. A:/ K Accounting for fixed assetsD. A:/$ K evenue recognition

C AS >3 relates to dereciation acco!nting and not the fi#ed assets acco!nting.

24! Which of the following acco!nting standards does not match:

A. A:/1# K segment reporting

B. A: /20K Consolidated financial accounting

C. A:/2 K 9ntangi,le assets

D. A:/2$ K %rovisions contingent lia,ilities and contingent assets

- AS>*) relates to earning er share. Consolidated financial acco!nting is covered !nder AS>*'.

24 Which of the following acco!nting standards hels in better !nderstanding of financialstatements:

A. A:/1 K Disclosure of accounting policies

B. A:/3 K Cash flo* statements

C. A:/ K Accounting for fixed assetsD. A:/$ K evenue recognition

A AS>' on disclos!re of acco!nting olicies hels in better !nderstanding of financial statements.

24# @ deals with imortant event haened after the acco!nting date /s!ch as imosition of

enalty by the Ta# a!thorities0.

24" The acco!nting r!les !sed to reare financial statements for the !blicly traded comanies

are called:

A. Accounting :tandards

B. enerally Accepted Accounting %rinciplesC. enerally follo*ed accounting standard

D. any of the a,ove

- Menerally Acceted Acco!nting 4rinciles are the acco!nting r!les !sed to reare financial

statements for the !blicly traded comanies.

24$ As er Menerally Acceted Acco!nting 4rinciles, the financial statements sho!ld be /a0

relevant /b0 reliable /c0 comarable /d0 consistent :A. a to d all

B. a to c only

C. , to d only

D. a c and d only

A As er Menerally Acceted Acco!nting 4rinciles, the financial statements sho!ld be /a0 relevant

/b0 reliable /c0 comarable /d0 consistent.

2!0 Which of the following organisation in US of America, infl!ences the develoment of Menerally


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Acceted Acco!nting 4rinciles:

A. J: :ecurities and

divisional

organisation.

2!2 Which of the following is a method !sed !nder Transfer 4ricing:A. compara,le uncontrolled price method

B. cost plus method

C. resale price method

D. all the a,ove

The methods !sed !nder Transfer 4ricing incl!de comarable !ncontrolled rice method, cost

l!s method and resale rice method.

2!3 Which method comares the rice at which a controlled transaction is cond!cted to the rice at

which a comarable !ncontrolled transaction is cond!cted.

A. compara,le uncontrolled price method

B. cost plus method

C. resale price methodD. none of the a,oveA The comarable !ncontrolled rice method, comares the rice at which a controlled transaction

is

cond!cted to the rice at which a comarable !ncontrolled transaction is cond!cted.

2!4 Menerally the """ method is !sed for the trade of finished goods, !nder transfer ricing:


B. cost plus method

C. resale price method


- Menerally the cost l!s method is !sed for the trade of finished goods, !nder transfer ricing

2!!


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2! deserate arties wo!ld agree

to a

transaction.

2!" The Bead Office of a ban9 eval!ates the erformance of its branches, by !sing :A. generally accepted accounting practices

B. accounting standards

C. transfer price mechanism

D. any of the a,ove.

C The Bead Office of a ban9 eval!ates the erformance of its branches, by !sing transfer rice

mechanism.

2!$ The Transfer rice mechanism !sed in ban9s means:

A. the interest charged ,y the surplus funds ,ranch to the deficit funds ,ranch on transfer of funds.

B. the interest charged ,y the head office to the deficit funds ,ranch on transfer of funds.

C. the interest charged ,y the surplus funds ,ranch to the head office on transfer of funds.

D. the interest and other costs charged ,y the surplus funds ,ranch to the deficit funds ,ranch on transferof funds.

A The Transfer rice mechanism !sed in ban9s means, the interest charged by the s!rl!s f!nds

branch to the deficit f!nds branch on transfer of f!nds.

20 Which of the following !nconventional methods !nder transfer ricing is the !nified version of

resale rice method and cost l!s method:


B. profit split method

C. transactional net margin method

D. all the a,ove

C The transactional net margin method is the !nified version of resale rice method and cost l!smethod.

21 Which of the following is descrition of the nominal acco!nt

A. an account of a person from *hom the firm purchased goods

B. account of machinery

C. account of *ages paid to a la,ourer *hile his services *ere used for construction of factory ,uilding.

D. none of the a,ove None of these acco!nts falls !nder nominal category. Wages aid to labo!rer for !sing his


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services for constr!ction of factory b!ilding, are a real acco!nt /asset acco!nt0.

22 ebit what comes in and credit the giver are the r!les to debit and credit in resect of:

A. real account nominal account

B. real account personal account

C. nominal account personal account

D. personal account real account- ebit what comes in is the r!le alicable for real acco!nt and credit the giver is the r!les to

credit a

ersonal acco!nt.

23 ebit all e#enses and credit what goes o!t, are the r!les, for debit and credit to:

A. nominal account personal account

B. real account nominal account

C. nominal account real account

D. personal account nominal account

C ebit all e#enses is the r!le alicable to a nominal acco!nt and credit what goes o!t, is the

r!les, for credit to real acco!nt.

24 =irm sold old machinery to %FE, for cash. This transaction involves:

A. one real account and other personal account

B. ,oth the real accounts

C. ,oth the personal accounts

D. one real account and other nominal account

- Old machinery and cash, both are real acco!nts.

2! A firm made rofits and the owners did not withdraw these rofits to f!ll e#tent. The retained

amo!nt of rof its will be shown as:

A. part of assets

B. part of current lia,ilities

C. part of capital of the o*nersD. part of the reserves &etained rofits become art of the reserves and not of caital. These are liabilities of the firm

towards the romoters of the firm.

2 The acco!nting concets are art of which of the following:

A. format of presentation of accounting ,oo+s

B. format for preparation of final accounts

C. ,road assumptions

D. particular set of guidelines

C The acco!nting concets are broad ass!mtions.

2# Cash boo9 9ees records of :A. all ,usiness transactions

B. all cash receipts and cash paymentsC. all cash and non/cash transactions

D. only trading related cash receipts and payments.

- Cash boo9 9ees records of all cash receits and cash ayments, irresective whether these are

on reven!e acco!nt or caital acco!nt.

2" Which of the following is correct in the conte#t of cash boo9:


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A. all receipts are recorded on the credit side and payments on the de,it side.

B. all receipts are recorded on the de,it side and payments on the credit side.

C. all receipts and payments are recorded on the credit side

D. all receipts and payments are recorded on the de,it side

-


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D. summari7ingC The rocess of recording transaction in the ledger is called osting.

2#! Which of the following is a boo9 of analytical records

A. cash ,oo+ B. @ournal

C. ledger D. none of the a,ove

C $edger is a boo9 of analytical records.

2# Which of the following is a boo9 of chronological record

A. cash ,oo+

B. @ournal

C. ledger

D. none of the a,ove- o!rnal is the boo9 of chronological record.

2## The rocess of e?!aliJing the two sides of an acco!nt by !tting the difference on the side

where the amo!nt is short, is called:

A. ,alancingB. @ournali7ing

C. posting

D. summari7ing

A The rocess of e?!aliJing the two sides of an acco!nt by !tting the difference on the side where

the

amo!nt is short, is called balancing.

2#"


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D. expenses-


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D. none of the a,ove All these are val!ation acco!nts, which are also called contra acco!nts

2$0


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C. , and d

D. a and d

C A credit entry to a nominal acco!nt means some income has been received or some gain has been

made.

2$ The art of recording b!siness transactions with a view to have a ermanent record of them and

of showing their effect on wealth, is called:A. accounting

B. ,oo+/+eeping

C. analysis of accounts

D. management accounting

- -oo9>9eeing refers to recording the b!siness transactions with the obKective of having

ermanent record of the transactions and their effect on wealth.

2$# Which of the following is not art of acco!nting cycle:

A. analy7ing

B. recording

C. classifying

D. summari7ingA AnalyJing is an activity which is !sed after the acco!nting cycle is comlete. The other are otions

art of the acco!nting cycle.

2$" Which of the following is not correct regarding the cash boo9 of a firm:

A. it is a ,oo+ of secondary entry

B. it +eeps record of all cash transactions

C. it is divided into t*o sides li+es a ledger

D. the cash ,oo+ is ledger account also

A Cash boo9 is a boo9 of original entry beca!se all the cash transactions are originally recorded.

Other

feat!res are correct.

2$$ The rocess of e?!aliJing the two sides of an acco!nt by !tting the difference on the side

where the amo!nt is short, is called:

A. suaring

B. ,alancing

C. postingD. summari7ing

- -alancing refers to e?!aliJing the two sides of an acco!nt by !tting the difference on the side

where the amo!nt is short, so as the ma9e the total of transactions on both the sides of the acco!nt

e?!al.

300 Which of the following statement does match:

A. de,it ,alance in the accounts is either an asset or an expense

B. ,alance in the personal accounts is either a lia,ility or an assetC. nominal account represents asset or lia,ility

D. real account normally represents the asset

C -alance in the nominal acco!nt reresent either an e#ense or income. Nominal acco!nts relate

to trading, man!fact!ring or rofit and loss acco!nt

301 Acco!nts are classified into following categories:

A. t*o categories namely personal accounts and impersonal accounts

B. three categories namely personal accounts notional accounts and real accounts


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C. t*o categories namely nominal accounts and real account

D. four categories namely personal impersonal nominal and real

A There are two broad categories namely ersonal acco!nts and imersonal acco!nts. divided into real acco!nts and nominal acco!nts.

302 Which of the following statement does not match the tye of acco!nt:

A. accounts of persons that are creation of od / natural personal accountsB. accounts of ,usiness entities created through some la* / artificial personal accounts

C. accounts that represent a certain person or group of persons / nominal account

D. accounts that represent the tangi,le articles li+e cash / real accounts

C The acco!nts that reresent a certain erson or gro! of ersons are called reresentative

ersonal acco!nt s!ch as rent ayable, commission receivable etc.

303 The acco!nts of things that cannot be to!ched b!t can be meas!red in money terms are called:

A. nominal accounts

B. tangi,le real accounts

C. intangi,le real accounts

D. representative personal accounts

C The acco!nts of things that cannot be to!ched b!t can be meas!red in money terms are calledreal

intangible acco!nts s!ch as goodwill, atents.

304 Which of the following acco!nts is not a ersonal acco!nt:

A. ,an+ loan account

B. rent paya,le account

C. trade mar+

D. capital account of the partner

C Trade mar9 is a real intangible acco!nt. Other acco!nts fall in the category of ersonal acco!nts

30! The classification of which of the following acco!nts is not correct:

A. land and ,uilding / real tangi,le account

B. ,an+ account / artificial personal accountC. capital account of the partner / natural personal account

D. *ages paya,le / nominal expense account Wages ayable is a reresentative ersonal acco!nt. Wages aid is a nominal e#enses acco!nt.

30 The r!les of debit or credit in which of the following is correct:

A. de,it *hat comes in / personal account

B. credit the giver / real accountC. de,it all expenses / nominal account

D. credit *hat goes out / nominal account

C ebit what comes in, relates to real acco!nts, credit the giver relates to ersonal acco!nts and

credit what goes o!t relates to real acco!nt.

30# =irm % !rchased goods from =irm F on cash basis.


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the following rincile:

A. since salary account is de,ited the other account has to ,e credited

B. credit the giver as cash is given

C. credit *hat goes out

D. any of the a,oveC Cash acco!nt is a real acco!nt and the debit and credit r!le alicable for real acco!nt is debit

what comes in and credit what goes o!t.

30$ A debit in a real acco!nt imlies /which is not correct0:

A. the value of the asset has increased

B. the ,usiness has disposed the existing assets

C. the ,usiness has acuired more of that asset


- When asset is disosed off, it imlies that the acco!nt will be credited and not debited. When

val!e of asset increases or more of that asset is ac?!ired, it imlies debit in a real acco!nt.

310 =irm A !rchased goods from =irm -. Which of the following entries will be made in the boo9s

of =irm A:

A. de,it purchase account and credit goods accountB. de,it ?irm B account and credit purchase account

C. de,it goods account and credit cash account

D. de,it goods account and credit ?irm B account

Moods is a real acco!nt d!e to which it will be debited by following the r!le, debit what comes in.

=irm - is a ersonal acco!nt and it will be credited by following the r!le credit the giver.

311 =irm % made ayment of rent to its landlord in cash. Which of the following is correct Ko!rnal

entry in the boo9s of

=irm A

A. de,it cash and credit rent account

B. de,it landlord and credit rent account

C. de,it rent account and credit cash accountD. de,it rent account and credit landlord account

C &ent is a nominal e#ense acco!nt d!e to which it will be debited. Cash is a real acco!nt d!e to

which it will be credited as cash has gone o!t.

312 Which of the following e#lanation does not match:

A. a summari7ed record of transactions / an account

B. the ,oo+ that contains all the accounts / ledger

C. process of transferring the transaction from a @ournal to a ledger / @ournali7ing

D. the net difference of de,it and credit total of an account / ,alance

C The rocess of transferring the transaction from a Ko!rnal to a ledger is called osting.

313 The descrition given to which of the following transaction does not match:A. trade discount is the discount given for purchases made in large uantity

B. cash discount received represents the discount on account of ,ul+ purchases made ,y the firm

C. trial ,alance is the statement that sho*s all ledger ,alances as on a particular date

D. cash discount allo*ed is the discount given *hen payment is received ,efore the due date.

- Cash disco!nt received reresents the disco!nt when ayment is made before the d!e date.

314 What is the aroriate e#lanation of the Ko!rnal:

A. it is ,oo+ of dou,le entry


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B. it is a ,oo+ of secondary entry

C. it is a ,oo+ of original entry

D. it is a ,oo+ of duplicate entry

C A Ko!rnal is boo9 of original entry as all transactions in the b!siness are recorded first in the

Ko!rnal /for cash transactions in the cash boo90.

31! The e#lanation given to which of the following is not correct:A. *hen total of the de,it side is greater than the total of credit side / De,it ,alance

B. *hen total of credit side is eual to total of de,it side / 7ero ,alance

C. the account ,oo+ *here the cash transactions are recorded first / @ournal

D. account ,oo+ *here the records of nominal accounts are maintained / ledger

C The cash transactions are recorded first in the cash boo9 which is also a boo9 of original entry.

Non>cash transactions are recorded in the Ko!rnal.

31 The credit balance in the caital acco!nt is :

A. lia,ility in the ,alance sheet

B. asset in the ,alance sheet

C. sho*s de,it ,alance

D. none of the a,oveA


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A


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334 Salary is aid to %, a cler9 in the firm. The amo!nt shall be credited to:

A. account of L

B. salary account

C. ,an+ account

D. none of the a,ove Salary is aid to %, a cler9 in the firm. The amo!nt shall be credited to cash acco!nt.

33! Moods were sold by A-C firm to another firm, b!t the other firm has ret!rned the same. The

amo!nt shall be credited to:

A. sales account

B. sales returns account

C. account of other firm

D. purchase account

C The amo!nt will be debited to sales ret!rns acco!nt and credited to acco!nt of other firm.

33 A firm ret!rned the goods it !rchased to the seller firm. The amo!nt shall be credited to:

A. seller firm account

B. ,uyer firm account

C. purchase account

D. purchase returns account Amo!nt shall be credited to !rchase ret!rns acco!nt and debited to seller firm acco!nt..

33# A firm wants to write off a bad debt.


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B. credit to an account

C. decrease in ,alance in an account

D. increase in ,alance in an account

A The left side entry in acco!nt means debit to an acco!nt.

342 The right side entry in an acco!nt means:

A. de,it to an account

B. credit to an accountC. decrease in ,alance in an account

D. increase in ,alance in an account

- The right side entry in acco!nt means credit to an acco!nt.

343 The nominal acco!nts are transferred to """ at year end:

A. ,alance sheet

B. funds flo*

C. profit and loss account

D. any of the a,oveC The nominal acco!nts are transferred to rofit and loss acco!nt, at year end.

344 The balances in the real or ersonal acco!nts are:

A. transferred to ,alance sheet

B. transferred to profit and loss accountC. carried over to next year

D. closed at the year end

C The balances in the real or ersonal acco!nts are carried over to ne#t year.

34!


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B. interest credited ,y the ,an+

C. amount paid on the ,asis of standing instruction

D. cheue issued ,y the firm and paid ,y the ,an+


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D. none of the a,ove- irect deosit is recorded first by the ban9, it red!ces the balance in overdraft acco!nt and

increases the balance in c!rrent acco!nt at ban9.


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31 The cash boo9 of the firm has been showing a credit balance of &s.**2)).


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3


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3#3


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D. all the a,oveA The ban9 reconciliation statement is reared by the b!siness firm, maintaining ban9 acco!nt .

3"1 When the balance as the ass boo9 is starting oint, the che?!es iss!ed and not resented are:

A. added

B. deductedC. +ept constant

D. none of the a,ove- When the balance as the ass boo9 is starting oint, the che?!es iss!ed and not resented are

ded!cted.

3"2 When the ayment side of the cash boo9 is overcast, the ass boo9 is the starting oint, the

amo!nt:

A. shall ,e added

B. shall ,e deducted

C. shall ,e +ept constant

D. any of the a,ove- When the ayment side of the cash boo9 is overcast, the ass boo9 is the starting oint, the

amo!nt shall be ded!cted.

3"3 Which of the following is a feat!re of the trial balance /which one is not correct0:A. it is a list of de,it and credit ,alances ta+en from the ledger

B. it does not include cash and ,an+ ,alances

C. main o,@ective is to esta,lish arithmetical accuracy of transactions

D. it is usually prepared at the end of the year.-


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B. error of commission

C. error of principle

D. compensating error

- S!ch error is called an error of commission.

3"" One mista9e has n!llified the wrong effect of another mista9e.


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C. error of principle

D. compensating error

C This is an error that involves nominal acco!nt /e#ense0 and ersonal acco!nt /liability0. Bence it

is an error of rincile.

3$4 The firm had aid salary of &s.())) to a staff member b!t his ersonal acco!nt has been

debited. 4ass the Ko!rnal entry for rectification of this entry.A. de,it salary account and credit cash account

B. de,it cash account and credit staff mem,er account

C. de,it salary account and credit staff mem,er account

D. de,it salary account and credit cash account

C The ersonal acco!nt that has been debited has to be credited and the salary acco!nt which was

not

debited has to be debited.

3$!


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A. compensation

B. principle

C. commission

D. omission

C 4osting wrong amo!nt on wrong side of an acco!nt is an error of commission.

40# Total rent amo!nt is !ndercast by &s.2)) and total of rinting and stationery acco!nt is

overcast by &s.2)). This is an error of:A. compensation

B. principle

C. commission

D. omission

A


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C. a @ournal entry is passed for the difference

D. any of the a,ove

- After rearation of trial balance, if there is difference, the difference is temorarily transferred

to an

acco!nt called s!sense acco!nt.

413


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41" Which of the following statement is not correct, in the conte#t of trial balance

A. *rong ,alancing of an account affects the trial ,alance

B. trial ,alance ta+es care of arithmetic accuracy

C. trial ,alance can ,e prepared at the end of accounting year only

D. if de,it and credit side of trial ,alance does not tally there *ill ,e need to open a suspense accountC Trial balance can be reared any time and not necessarily, at the end of acco!nting year.

41$ Which of the following statement is a correct statement, in the conte#t of trial balanceA. purchases are sho*n on the credit side of the trial ,alance

B. ,an+ account is sho*n on the credit side of the trial ,alance

C. trial ,alance is prepared after preparing the final account

D. security deposited ,y a firm is sho*n on the de,it side of the trial ,alance

4!rchases are shown on debit side, ban9 acco!nt on debit side and final acco!nts are reared

after trial balance.

420 Which of the following does not match in the conte#t of trial balance

A. *hen gross trial ,alance is prepared the net ,alance of each account is ta+en / correct

B. de,it ,alance of a ledger account is sho*n on credit side of the trial ,alance / incorrect

C. overdraft is sho*n on credit side of trial ,alance / correct

D. ledger ,alances are carried to trial ,alance / correct

A


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42! Which of the following is not the reven!e e#endit!re

A. it is sho*n in the profit and loss account

B. the ,enefit is availa,le for a long period

C. the expenditure is for *or+ing capital and maintaining the fixed assets

D. the amount spent is relatively small.- The benefit of this e#endit!re is for a short eriod, of say, one year.

42 The e#endit!re for which ayment has been made or a liability has been inc!rred. -!t it iscarried forward on the ass!mtion that benefit will be available for a no. of years, is called:

A. recurring expenditure

B. deferred revenue expenditure

C. revenue expenditure

D. capital expenditure

- S!ch e#endit!re is called deferred reven!e e#endit!re.


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!rchase of machinery /c0!rchase of raw material

A. a to c all

B. only a and ,

C. only , and c

D. only a and c 4!rchase of machinery is a caital e#endit!re, while the others are reven!e e#enses.

433


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43$ Which of the following is a reven!e receit

A. capital introduced ,y the promoters

B. loan raised from the ,an+

C. premium received on shares

D. none of the a,ove All the above are caital receits. These are non>rec!rring nat!re. =!rther, the f!nds are

available over a long eriod.440 A firm inc!rred legal e#enses in connection with /a0 filing of s!it to recover the d!es of the

firm /b0 raising a !blic iss!e /c0 defending a s!it by the firm. Which of these is caital

e#endit!re

A. , only

B. c only

C. a and c only

D. a and , only

A #enses inc!rred on filing of s!it or defending the s!it are reven!e e#enses while the e#enses

on !blic iss!e are caital e#enses.

441 An e#endit!re has been inc!rred to maintain good wor9ing conditions of the machines.


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D. all the a,ove All these reasons are correct.

44 When the b!siness is commenced by a firm and cash is bro!ght, which of the following Ko!rnal

entries is assed /which one is more aroriate0:

A. de,it cash and credit capital account or any other asset accountB. de,it cash and credit capital account

C. de,it cash and credit capital account or any other lia,ility accountD. de,it any lia,ility account and credit cash account

C When b!siness is commenced, cash comes in d!e to which it is debited and a liability acco!nt

s!ch as caital acco!nt or any other acco!nt, s!ch as loan acco!nt of a artner, may be credited.

Bence this otion is more aroriate.

44# When goods are !rchased by the firm o!t of the cash bro!ght in as caital, what Ko!rnal entry

is re?!ired to be assed:

A. de,it cash and credit the stoc+ account

B. de,it purchase account and credit cash account

C. de,it purchase account and credit capital account

D. de,it cash account and credit purchase account

- When goods are !rchased, the goods are coming in and cash is going o!t. Bence goods or

!rchase acco!nt is debited and cash acco!nt is credited.

44" When sale of goods ta9es lace on cash basis to another firm, what Ko!rnal entry is assed:

A. de,it the other firm account and credit cash account

B. de,it the goods account and credit cash account

C. de,it the cash account and credit sales account

D. de,it the cash account and credit the account of other firm

C When the goods have been sold, the sales acco!nt will be credited and the cash acco!nt will be

debited.

44$ When sale of goods ta9es lace on credit basis to another firm /say =irm A0, what Ko!rnal entryis assed:

A. de,it ?irm A account and credit sales account

B. de,it the goods account and credit cash accountC. de,it the cash account and credit sales accountD. de,it the cash account and credit other firm account

A When the goods have been sold on credit, the sales acco!nt will be credited and the acco!nt of

other firm will be debited.

4!0


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C. de,it the related expenses outstanding account and credit the related expenses account

D. no @ournal entry is reuired as the expenses have ,een pre/paid and *ill ,e used in the next financial

year.

- When e#enses have been aid in advance, the re>aid e#enses acco!nt shall be debited and

the related e#enses acco!nt shall be credit.

4!2 =irm>- was to ay wages amo!nting to &s.'8)))) to its wor9ers. -!t it co!ld not ay wages for

the last two months of the financial year. What Ko!rnal entry will be re?!ired, if the er monthwages are same.

A. de,it the *ages paya,le account and credit the *ages account for s.1"0000

B. de,it the *ages account and credit expenses paya,le account for s.30000

C. de,it the *ages account and credit expenses paya,le account for s.1"0000

D. de,it the *ages paya,le account and credit the *ages account for s.30000

- =or * months, the amo!nt of wages will be &s.2)))) at &s.'())) er month. Wages acco!nt will

be debited and e#enses ayable acco!nt shall be credited for this amo!nt.

4!3 =irm>% was to receive some commission d!ring the year which it co!ld not. What Ko!rnal entry

shall be assed for this adK!stment:

A. de,it the commission account and credit commission due ,ut not received.

B. de,it the account of related customer and credit commission incomeC. de,it the income due ,ut not received account and credit the commission account

D. no entry *ill ,e reuired since the income has not ,een received and there is uncertainty

C Where the income is d!e and not received, the income d!e and not received acco!nt shall be

debited and the related income acco!nt shall be credited.

4!4 =irm > - received certain misc. income in advance that was not d!e. What Ko!rnal entry shall

be re?!ired to be assed. A. de,it related income account &misc. income( and credit income received in

advance account.

B. de,it the income received in advance account and credit the related income account

C. de,it the related income account and credit the profit and loss account

D. de,it the profit and loss account and credit the party from *hom that amount has ,een received.

A Where income is received in advance, the related income acco!nt shall be debited and the income

received in advance acco!nt shall be credited.!23 The !nsold stoc9s with the consignee are val!ed in the boo9s of the consignor, at which of the

following:

A. cost price or mar+et price *hichever is lo*er

B. cost price ' expenses incurred ,y the consignor and consignee

C. cost price ' expenses incurred ,y the consignor D. cost price ' expenses incurred ,y the consignee

- The val!ation will ta9e into acco!nt the cost rice as well the e#enses inc!rred by the consignee

and the consignor.

!24 When does the del credere commission aid to the consignee in the case of consignment /which

of the following is not correct0:

A. the goods are sold at credit at the ris+ of consignor

B. the goods are sold at credit at the ris+ of consigneeC. all losses shall go to the consignee

D. all collection charges and discounts are to the account of consignee

- The goods are sold on credit by the consignee for which he is liable. Since he is ta9ing e#tra ris9,

he earns additional commission, which is called del credere commission.

!2! When does the consignee allow normal commission and not del credere commission:

A. losses due to ,ad de,ts are ,orne ,y the consignor B. losses due to ,ad de,ts are ,orne ,y the consignee


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C. losses due to ,ad de,ts are ,orne ,y ,oth of them on pro/rata ,asis

D. none of the explanation is correct

A When normal commission is aid, the ris9 is that of the consignor for losses d!e to bad debt etc.

When del credere commission is aid, the ris9 is that of the consignee.

!2


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C. consignee account

D. capital account of the consignor.

- vent!rers are debited to:A. their personal account

B. @oint venture account

C. ,an+ account

D. cash account

- The e#enses inc!rred by the co>vent!rers are debited to the Koint vent!re acco!nt.

!3" Which of the following statement is correct:

A. the co/venturers al*ays share the profits in eual proportion

B. the co/venturers have to share the expenses incurred on the @oint venture

C. the @oint venture continues even after the specific tas+ is accomplished


- The co>vent!rers share the rofit, in the ratio fi#ed by them and the vent!re comes to an endwhen the secific tas9 is finished. #enses are shared by them.

!3$ Which of the following statement is not correct:

A. the co/venturers are agents and principal of each other

B. the co/venturers have unlimited lia,ility

C. the @oint venture cannot ,e a trading concern

D. all the a,ove Co>vent!rers are not agents and rincial, they have liability as er the contract and they can be


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a trading concern also.

!40 Which of the following Ko!rnal entry in case of Koint vent!re does not match:

A. for expenses incurred from @oint ,an+ account / de,it the @oint venture account

B. for expenses incurred from @oint ,an+ account / credit the ,an+ accountC. for assets ,rought in ,y the co/venturers / de,it the co/venturer account

D. for expenses incurred ,y the co/venturers / de,it the @oint venture accountC =or assets bro!ght in by the co>vent!rers the Koint vent!re acco!nt is debited and co>vent!rers

acco!nt is credited.

!41


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D. a c and d onlyA The lease can be finance or caital lease, oerating lease, service lease and leveraged lease.

4!! A firm has fi#ed assets of &s.2 lac on which it rovides dereciation at ')+. The a!ditors want

that the dereciation sho!ld be '(+. =irm agrees to ma9e the adK!stment. What Ko!rnal entry shall

be assed:

A. de,it the depreciation account and credit the fixed assets account for s.4!000

B. de,it the depreciation account and credit the fixed assets account for s.1!000C. de,it the fixed asset account and credit the depreciation account for s.1!000

D. no ,oo+ entry is reuired to ,e passed as the depreciation is a non/cash expenditure

- The difference amo!nt of dereciation at (+ i.e. &s.'())) will be debited to dereciation acco!nt

and

credited to fi#ed asset acco!nt.

4!


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40 =irm - had made rovision on boo9 debts at (+, which was fo!nd to be e#cessive by the

a!ditors in the light of imroved economic conditions. Be s!ggests that a rovision of @+ is

ade?!ate. 4resently, the amo!nt of boo9 debts is &s.') lac. What Ko!rnal entry will be re?!ired.

A. de,it the provision on ,oo+ de,t account and credit the expenses provision account for s.40000.

B. de,it the provision on ,oo+ de,t account and credit the expenses provision account for s.10000.C. de,it the expenses provision on ,oo+ de,t account and credit the provision account for s.10000.

D. de,it the expenses provision on ,oo+ de,t account and credit the provision account for s.40000.- The e#cess rovision will have to be reversed by debiting the rovision on boo9 debt acco!nt and

crediting the e#enses rovision on boo9 debt acco!nt.

41 =irm>- wants to write off balance of a debtor amo!nting to &s.')))). What Ko!rnal entry shall

be assed.

A. de,it the expenses provision on ,oo+ de,t and credit the related ,oo+ de,t account for s.10000

B. de,it the related ,oo+ de,t account and credit the expenses provision on ,oo+ de,t account for

s.10000

C. de,it the related ,oo+ de,t account and credit the provision on ,oo+ de,t account for s.10000

D. de,it the provision on ,oo+ de,t account and credit the related ,oo+ de,t account for s.10000.

To write off the acco!nt, the rovision on boo9 debt acco!nt shall be debited and the related boo9

debtacco!nt shall be credited.

42 =or transfer of closing of stoc9s of goods from trading acco!nt, what Ko!rnal entry shall be

re?!ired

A. de,it trading account and credit the ,alance sheet stoc+

B. de,it closing stoc+ account and credit trading account

C. de,it trading account and credit the stoc+ account

D. de,it the stoc+ account and credit the profit and loss account

- =or transferring the closing stoc9 from the trading acco!nt, the closing stoc9 will be debited and

the trading acco!nt shall be credited.

43 When the rovision for o!tstanding e#enses is made, which of the following is not correct,

regarding its effect:A. the profit declinesB. the lia,ility in the ,alance sheet declines

C. the profits declines and lia,ility increas

Jaiib Account Qs

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