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Thursday, May 19, 2011

Solved Commerce Model Test Paper for FCI General Accounting and Finance, RBI DVC SAIL and other PSU in India

Solved Commerce Model Test Paper for FCI General Accounting and Finance, RBI ,DVC ,SAIL and other PSU in India
Free Online Solved Commerce Questions
1. A trader does not keep a complete set of books and gives the following information:
He started business with Rs. 10,000 on 1st June, 2000. He drew at the rate of Rs. 500 per month for the last six months. He also introduced further capital of Rs. 2,000 in the business during the year. His total assets on 31st December, 2000 were Rs. 23,700 and his creditors were Rs. 3,000 on the same date. Outstanding expenses on 31st December, 2000 were Rs. 500. His net profit during the year would be:
(a) Rs 11,200
(b) Rs. 11,500
(c) Rs. 13,000
(d) Rs. 14,200
Ans. (a)

2. The capital of a firm is Rs. 80,000. The reasonable return in the industry is 7.5 percent. If the profit earned by the firm during past five years was Rs. 8,000; Rs. 9,000; Rs. 7,000; Rs. 8,500 ad Rs. 10,000; then the super profit of the firm will be:
(a) Rs. 2,000
(b) Rs. 2,500
(c) Rs. 3,000
(d) Rs.. 3,500
Ans. (b)

3. Consider the following:
A football club has received the following subscriptions during the. year ending 3 1st March 2001:
31-3-00 31-3-01
subscription 19,500 22,500
Advance subscription 12,800 9,500
Subscription received during the year 2000 -01 Rs. 2, 45,000. The subscription income of the club for the year 2000-01 was:
(a) Rs. 2, 63,800
(b) Rs. 2, 80,000
(c) Rs. 2, 47,700
(d) Rs. 2, 84,000
Ans. (a)

4. The basis adopted for piecemeal distribution of cash among the partners should be such that amounts finally left unpaid are in the ratio in which:
(a) capital stands on the date of dissolution
(b) profits and losses are shared
(c) capital balances stood at the beginning of partnership
(d) private assets appear on the date of dissolution
Ans. (b)

5. ‘A’ and ‘B’ are partners in a firm sharing profits and losses in the ratio of 2 : 3, ‘C’, a new partner is admitted for 1/4th share. ‘A’ and ‘B’, old partners share C’s profit into their profit sharing ratio. The new profit sharing ratio of ‘A’ ‘B’ and C’ would be:
(a) 1: 1: 1
(b) 2: 3: 4
(c) 1: 2: 2
(d) 6: 9: 5
Ans. (d)

6. Match List-I (Fund) with List-II (Purpose of fund) and select the correct answer using the Code given below the lists:
List-I List-II
A. Sinking fund 1. Maintaining stable rate of dividend
B. Capital redemption 2. Periodica1 redemption of debenture
C. Dividend equalization fund 3. Strengthening financial position
D. General reserve fund 4. Redeeming preference shares
(a) 4 2 1 3
(b) 2 4 3 1
(c) 4 2 3 1
(d) 2 4 1 3
Ans. (d)

7. If opening stock = Rs. 2, 45,000; purchases = Rs. 15, 00,000; sales = Rs. 17, 40,000 and rate of gross profit = 20% on cost of goods sold, then the closing stock would be at
(a) Rs. 3, 53,000
(b) Rs. 2, 95,000
(c) Rs. 2, 45,000
(d) Rs. 1, 95,000
Ans. (b)

8. Match List-I with List-II and select the correct answer using the Code given below the lists:
List-I List-II
A. Goodwill 1.Current liability
B. Overdraft 2. Fixed Assets
C. Preliminary expenses 3. Reserves and surpluses
D. Premium on issue of shares 4. Fictitious assets
(a) 2 1 4 3
(b) 1 2 4 3
(c) 1 2 3 4
(d) 2 1 3 4
Ans. (a)

9. Which one of the following will lead to understatement of net profit?
(a) Amortization of Fictitious Assets
(b) Treating capital expenditure as revenue expenditure
(c) Treating revenue expenditure as capital expenditure
(d) Creation of general reserve
Ans. (b)

10. Preparation of Trial Balance helps, mainly in:
(a) summarizing business transactions
(b) verifying that ‘generally accepted accounting principles have been observed
(c) finalizing the ‘sources and uses of funds’ statement
(d) locating errors, if any, in books of accounts
Ans. (d)

11. Provisions are amounts set aside out of profits and other surpluses for:
(a) meeting a liability, the amount of which can be determined with exact figure
(b) any known liability of which the amount cannot be determined with substantial accuracy
(c) meeting an eventuality arising out of revaluation of assets in ordinary course of business
(d) meeting a liability arising out of arbitration
Ans. (b)

12. The fund available with a company after paying all claims including tax and dividend is called:
(a) net profit
(b) net operating profit
(c) capital profit
(d) retained earnings
Ans. (d)

13. Match List-I (Items) with List-II (Recorded in) and select the correct answer using the Code given below the lists:
List-I List-II
A. Wrapping material 1. Trading account
B. Wages and salaries 2. Profit and loss account
C. Prepaid expenses 3. Balance sheet
D. Opening stock
(a) 2 1 1 3
(b) 2 1 3 1
(c) 3 2 2 1
(d) 3 2 1 3
Ans. (b)

14. The following information .about share-capital is required to be disclosed in the balance sheet of a Ltd. Company:
1. Issued, subscribed and paid-up capital
2. Add forfeited shares
3. Less calls in arrear from directors
4. Less calls in arrear from others
The chronological order of their disclosure under the head ‘Share Capital’ in the balance sheet would be:
(a) 1, 2, 3, 4
(b) 1, 3, 4, 2
(c) 1, 4, 3, 2
(d) 1, 2, 4, 3
Ans. (b)

15. On 31st March, 2001, the closing stock of X Ltd. was Rs. 3, 45,000. On April 1, 2001, stock of Rs. 2, 25,000 was destroyed by fire. The company closes its account on 31st March. If the balance sheet of the company on 31st March 2001 was finalized on 25th April 2001, then the balance sheet will show the closing stock at:
(a) Rs. 3, 45,000 with no mention of fire
(b) Rs. 1, 20,000 with no mention of fire
(c) Rs. 3, 45,000 showing loss by fire in footnote
(d) Rs. 1, 20,000 showing loss by fire in footnote
Ans. (c)

16. ‘X’ who holds 100 shares of Rs. 10/-each, fail to pay a call of Rs. 2/-. The directors forfeited all the shares and subsequently reissued 50 shares of Rs. 6/- each as fully paid. The amount to be transferred to ‘Capital Reserve A/c’ would be :
(a) Rs. 200
(b) Rs. 00
(c) Rs. 400
(d) Rs. 800
Ans. (a)

17. Consider the following:
The investment portfolio of a 31-12-2000 stood as follows:
1. 8% Debentures of X Co. Ltd. (Rs. 6,000). Interest payable on 31st March and 30th September.
2. 7% Debentures of Y Co. Ltd. (Rs. 4,000). Interest payable on 30th June and 31St December.
3. 10% Debentures of Z Co. Ltd. (Rs. 9,000). Interest payable on 1st June and 1st December.
Amount of interest accrued on the closing date will be:
(a) Rs. 335
(b) Rs. 1,025
(c) Rs. 195
(d) Rs. 830
Ans. (a)

18. ABCD Company issues 3,000, 15% debentures of Rs. 100 each at a discount of 7.5% repayable at a premium of 5% at the end of 5 years. The loss on issue of debentures will be:
(a) Rs. 22,500
(b) Rs. 30,000
(c) Rs. 37,500
(d) Rs. 45,000
Ans. (c)

19. The following information had been made available from the profit and loss account for the year ending on 31st March, 2001.
Gross profit : Rs. 2, 00,000
Gross profit margin : 20 %
Stock velocity : 4
If, in current year, the sales are expected to increase by 50%, then the average inventory required would be:
(a) Rs. 2, 00,000
(b) Rs. 2, 50,000
(c) Rs. 3, 00,000
(d) Rs. 3, 50,000
Ans. (c)

20. If earning per share of a company is Rs. 5 and the priced earning ratio of other similar companies is 4. Then the market value of the share of the company would be:
(a) Rs. 0.80
(b) Rs. 1.25
(c) Rs. 9
(d) Rs. 20
Ans. (d)

21. Match List-I (Transactions) with List-II (Impact on current ratio) and select the correct answer using the Code given below the lists:
List-I List-II
A. Goods sold at profit 1. Improvement
B. Creditors paid 2. Deterioration
C. Debts realized 3. No change
D. Materials purchased on credit
(a) 1 3 2 2
(b) 2 3 1 3
(c) 1 1 3 2
(d) 2 1 3 3
Ans. (c)

22. If the cost of goods sold is Rs. 1, 00,000/-the value of opening stock is Rs. 20,000/- and the value of closing stock is Rs. 80,000/- then the stock turnover ratio would be:
(a) 5 times
(b) 4 times
(c) 2 times
(d) 1 time
Ans. (c)

23. Match List-I with List-II and select the correct answer using the Code given below the lists:
List-I List-II
A. Technique of Cash Management 1. Fund Flow Analysis
B. Technique of Working Capital Management 2. Economic Order Quantity
C. Technique of Inventory Management 3. Common size Balance Sheet
D. Technique of Analysis of Financial Statements 4. Cash Flow Analysis
(a) 1 4 2 3
(b) 1 4 3 2
(c) 4 1 3 2
(d) 4 1 2 3
Ans. (d)

24. Match List-I with List-Il and select the correct answer the Code given below the lists:
List-I List-II
A. Current Ratio 1. Sufficiency of EBIT to cover interest charges
B. Debt-Equity Ratio 2. Short-term solvency
C. Net Profit Margin Ration 3. Exposure to financial risk
D. Interest Coverage Ratio 4. Earnings left for Share holders
(a) 2 3 1 4
(b) 3 2 1 4
(c) 3 2 4 1
(d) 2 3 4 1
Ans. (d)

25. X Ltd. has current ratio of 2: 1 and quick ratio of 1.5:
1. If its current liabilities are Rs. 80,000 then the value of stock would be:
(a) Rs. 1, 60,000
(b) Rs. 1, 20,000
(c) Rs. 40,000
(d) Rs. 80,000
Ans. (c)

26. Match List-I with List-II and select the correct answer using the Code given below the lists:
List-I List-II
A. Leverage Ratio 1. Short-term solvency
B. Liquid Ratio 2. Earning capacity
C. Turnover Ratio 3. Relationship of Debt and Equity
D. Profitability Ratio 4. Efficiency of Assets Management
(a) 2 1 4 3
(b) 3 2 1 4
(c) 4 3 1 2
(d) 3 1 4 2
Ans. (d)

27. EPS is calculated as:
(a) EBIT
Equity Shares
(b) EBIT — Preference Dividend Equity shares
Equity shares
(c) EIT
Equity Shares
(d) EAT — Preference Dividend
Equity shares
Ans. (d)

28. Consider the following information provided by XY Ltd:
Net profit before depreciation and taxes Rs. 44,000
Depreciation for the year Rs. 8,000
Goodwill written-off during the year Rs. 10,000
Rate of tax 50 %
The cash flow of XY Ltd. from operations will be:
(a) Rs. 36,000
(b) Rs. 28,000
(c) Rs. 26,000
(d) Rs. 13,000
Ans. (a)

29. If profit made during the year is Rs. 10,000; increase and decrease in the current assets is Rs. 5,000 and Rs. 4,000 respectively, then the cash from operation equals:
(a) Rs. 9,000
(b) Rs. 10,000
(c) Rs. 11,000
(d) Rs. 19,000
Ans. (a)
30. Match List-I with List-II and select the-correct answer the Code given below the lists:
List-I List-II
A. Auditor is a watch dog but not a blood hound 1. Union Bank of Allahabad case
B. An auditor should sign the balance 2. Hedley Byrne and Co. Ltd. Vs. Hiller sheet with open eyes. He should not depend on 4 partner’s case
the officials of the company.
C. Capital profit cannot be divided as dividend 3. Kingston Cotton Mills case
unless all the assets have been revaluated and
the profit has been actually realized.
D. An action for negligence can be brought 4. Foster Vs. The Trinidad Lake Ashalte
against the auditor in tort by a person with Co. Case
whom he is not in a contractual relationship
but to whom he owes duty
(a) 1 3 2 4
(b) 3 1 2 4
(c) 1 3 4 2
(d) 3 1 4 2
Ans. (d)

31. Consider the following statements:
1. Audit working papers enable the auditor to know the weaknesses of the internal check system
2. Audit programme assures adherence to the principles of auditing and accounting
3. Manipulation of accounts are done by under valuation of assets
4. Internal check maximizes the possibilities of errors and frauds
Which of the above statements are correct?
(a) 1, 2 and 3
(b) 2, 3 and 4
(c) 1, 2 and 4
(d) l, 2, 3 and 4
Ans. (a)

32. Consider the following with regard to furniture and fixtures:
1. Valuation with reference to bills and invoices
2. Authorization of expenditure and its capitalization
3. Adequate provision of depreciation
4. Whether furniture is mortgaged or free from any mortgage
The correct sequence to adopted by the auditor during the course of analytical review, vouching and examination of documents, would be:
(a) 1, 2, 3, 4
(b) 2, 3, 1, 4
(c) 3, 4, 2, l
(d) 4, l, 2, 3
Ans. (a)

33. The accounts of a company shall be audited by the company auditor, or by a person qualified to be appointed as auditor, if the company has to:
(a) windup
(b) amalgamate
(c) finalize branch office accounts
(d) declare interim dividend
Ans. (c)

34. Consider the following documents’;
1. Audit Report
2. Audited Final Accounts
3. Audit Note Book
4. List of Lost Vouchers
5. Audit Programme
Which of the above documents are Auditor’s working papers?
(a) 1, 2 and 4
(b) 1, 3 and 4
(c) l, 3, 4 and 5
(d) 2, 3, 4 and 5
Ans. (c)

35. Match List-I with List-II and select the correct answer using the Code-given below the lists:
Lists-I List- II
A. Interest on capital in construction works 1. Performance and Propriety
B. Management Audit 2.Capital Expenditure
C. Financial Audit 3.Authorization of Expenditure
D. Valuation in Balance Sheet 4. Critical review by Management
5. Entity concept
(a) 2 4 5 3
(b) 4 1 2 5
(c) 2 1 3 4
(d) 4 2 3 1
Ans. (a)

36. Which one of the following is NOT included under the rights and powers of an Auditor in the Companies Act 1956?
(a) Right of access to books of Accounts
(b) Right to call for a General Meeting
(c) Right to receive notice of and attend the General Meeting
(d) Right to make statement at the General Meeting
Ans. (b)

37. The Companies Act, 1956 requires the annual accounts to show a ‘true and fair view’ of the financial position of the company instead of ‘true and correct view’ because:
(a) too much of dependence on arithmetical accuracy may lead to window dressing
(b) annual accounts should not only be made correctly but should also convey an overall fair view without any misleading impression
(c) all financial transactions cannot be correctly expressed in terms of money
(d) most of the stake holders do not have reasonable idea about accounting rules and regulations
Ans. (b)

38. Which of the following is NOT correct about the management auditor?
(a) He appraises and reviews the past performance and the plans of the company
(b) He evaluates the performance of management and finds out whether they are efficient or not
(c) He works simultaneously with the statutory auditor verifying the financial state of affairs of the company
(d) He examines both financial and non-financial records of the organization.
Ans. (c)

39. Which one of the following pairs is NOT correctly matched?
(a) internal check : Staff of the concern
(b) Internal Audit : Chartered Accountant
(c) Cost Audit : Cost accountant or Chartered Accountant
(d) Propriety Audit Auditor : Comptroller and General of India.
Ans. (b)

40. Consider the following statements:
The important techniques of auditing are:
1. test check and sampling
2. flow charting of interrelated operations in the accounting system of an organization
3. using Internal Control Questionnaire
4. collecting information on price fluctuations from market-research organizations
Which of the above statements are correct?
(a) 1, 2 and 3
(b) 1, 2 and 4
(c) 2, 3 and 4
(d) 1, 3 and 4
Ans. (b)

41. As per the Companies Act 1956, who among the following must be included in the Audit Committee constituted in a company?
(a) Managing Director and whole-time Director
(b) Auditor and Internal Auditor
(c) Company Secretary
(d) Directors who are not whole-time and Managing Director
Ans. (a)

42. Consider th following duties of the auditor:
1. He should see that the provisions of Sec.78 have been complied with
2. He should see that the sum available has been utilized in the manner as laid down by the Articles.
3. He should examine the Prospectus, the Articles and the Minutes of the Directors meeting to see whether the issue of shares at a premium is duly authorized or not.
The correct sequence of these duties in case of audit of issue of shares at a premium is:
(a) 1, 2, 3
(b) 2, 1.3
(c) 3, 1, 2
(d) 3, 2, 1
Ans. (a)

43. Match List-I with List-II and select the correct answer using the Code given below the lists:
List-I List-II
A. The Indian Partnership Act 1. Listing of company shares
B. SEBI 2. Member’s mutual benefit
C. The Cooperative Societies Act 3. Brokers deal with their customers
D. Stock exchange 4. Listed companies are supervised
5. No compulsory registration
(a) 3 2 4 5
(b) 5 4 2 1
(c) 5 2 4 1
(d) 3 4 2 5
Ans. (b)

44. Match List-I with List-II and select the correct answer using the Code given below the lists:
List-I List-II
A. Public limited company 1. One man one vote
B. Partnership firm 2. Can make public issue
C. Cooperative society 3. Restricted membership
D. Private limited company 4. Unlimited liability
5. Direct supervision
(a) 5 4 2 3
(b) 2 4 1 3
(c) 5 3 2 1
(d) 2 3 1 4
Ans. (b)

45. A partner under his ‘Implied Authority’ can:
(a) enter into partnership with others on behalf of the firm
(b) submit a dispute relating to the business of the firm for arbitration
(c) defend any suit field against the firm
(d) withdraw any suit or proceedings filed on behalf of the firm
Ans. (c)

46 Combination of Printing and Dyeing in a textile company is called:
(a) circular combination
(b) vertical combination
(c) allied combination
(d) horizontal combination
Ans. (b)

47. Consider the following rights:
1. The right of a partner to sue for dissolution of the firm accounts thereof
2. The power of the receiver to realize the properties of an insolvent partner
3. The right of the firm to sue any partner
4. The right of a partner to file a suit against the firm for enforcing his rights
Which of the above rights are NOT affected due to non-registration of a partnership firm?
(a) l and 2
(b) 2 and 3
(c) 1, 2 and 3
(d) 2, 3 and 4
Ans. (a)

48. Which one of the following firms is considered to be illegal to do trading business?
(a) A firm with 11 partners
(b) A firm with 18 partners
(c) A firm with 20 partners
(d) A firm with 22 partners
Ans. (d)

49. A voluntary association, of traders, industrialists, bankers and professionals formed for the purpose of promotion of common business interests in a particular locality is called:
(a) Association of Industrialists
(b) Chamber of Commerce
(c) Entrepreneurs Association
(d) Bankers Union
Ans. (b)

50. The most suitable form of business organization for the people of weaker section is:
(a) partnership firm
(b) cooperative society
(c) sole-trading business
(d) joint stock company
Ans. (b)

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