CPT Mock Test – 2
Test Booklet No. – 110011
(1)
Ist Session
Duration : 2 Hours
Date: - 08.06.2015
Total Marks : 100
Following is not an example of external users
(a)
Government
(b)
Management
(c)
Investors
(d)
Suppliers
Ans. b
Explanation: Management is internal user.
(2)
Mohan purchased goods for Rs. 15,00,000 and sold 4/5th of the goods amounting
Rs. 18,00,000 and paid expenses amounting Rs. 2,70,000 during the year, 2009. He
paid Rs. 5,000 for an electricity bill of Dec. 2008 and advance salaries amounting Rs.
15,000 was paid for the month of Jan. 2010. He counted net profit as Rs. 3,50,000.
The net profit calculated by him is correct according to _________
(a)
Entity concept
(b)
Periodicity concept
(c)
Matching concept
(d)
Conservatism concept
Ans. c
Explanation: Matching concept matches the
profit.
(3)
revenue with expresses, to compute
Inventory is valued at cost or market value, whichever is less, is based on ______
(a)
Entity concept
(b)
Money measurement concept
(c)
Accrual concept
(d)
Conservation
Ans. d
Explanation: Conservatism says that extra income should not be recorded, hence
inventory is valued at lower of cost or NRV.
(4)
Bhagat Ltd. depreciate machinery by written down value method year after year due
to:
(a)
Consistency
(b)
Comparability
(c)
Convenience
(d)
All of the above
Ans. a
Explanation: Consistency says that policy once adopted, cannot be changed and is
followed year after year.
(5)
Guru Ltd. purchased a machinery for Rs. 10 lakhs. Installation charges Rs. 20,000,
Market value Rs. 12 lakhs. Company valued the machine at market price at the end
of the year at Rs. 12 lakhs which concept is violated?
MITTAL COMMERCE CLASSES
1|Page
(a)
(b)
(c)
(d)
Cost Concept
Realization Concept
Matching Concept
Accrual Concept
Ans. a
Explanation:
Cost concept says that fixed assets are to be recorded at cost inclusive of all the
expenses incurred on that asset, before that asset is put to use.
(6)
How many Accounting Standards have been issued by ICAI ?
(a) 25.
(b)
20.
(c) 32.
(d)
28
Ans. c
Explanation: Accounting standards issued by ICAI are 32.
(7)
`
Which
(a)
(b)
(c)
(d)
account is the odd one out?
Office furniture & Equipment
Freehold land and Buildings
Inventory of materials
Plant and Machinery
Ans. c
Explanation: Inventory & Materials are current assets and all other are fixed assets.
(8)
Capital of business is Rs. 75,000 and liability is Rs. 25,000 then total assets of
business, would be :
(a) Rs. 1,00,000
(b) Rs. 15,000
(c) Rs. 75,000
(d) Rs. 50,000
Ans. a
Explanation:
Assets
= Liability + Capital
= 25000 + 75000
= Rs. 100000
(9)
A furniture dealer sold furniture for Rs 25000/- to Sunil for cash. In the books of the
dealer ____ A/c is debited and _____ A/c is credited
(a) Cash, Fixed Asset
(b) Cash, Furniture
(c) Cash, Sales
(d) Cash, Sunil
Ans. c
Explanation:
Cash A/c
Dr.
To Sales A/c
MITTAL COMMERCE CLASSES
25000
25000
2|Page
(10)
The
(a)
(b)
(c)
(d)
next step after preparation of Ledger is the preparation of:
Trial Balance
Final Accounts
Cash Flow Statement
Balance Sheet
Ans. a
Explanation: Trial Balance is prepared After Ledger.
(11)
Outstanding salary account is
(a) Real account
(b) Personal account
(c) Nominal account
(d) None of the above
Ans. b
Explanation: Outstanding salary represents representative personal account.
(12)
Trial Balance (Total method)
Dr.
Cr.
Name of the account
(Rs.)
(Rs.)
Cash account
11045
7865
Capital account
10000
---Bank account
7000
100
Purchases account
725
---Sales account
950
---Krishna
375
375
Salary
5
10
Rent Account
150
---Total amount of trial balance according to balance method will be:
(a) Rs. 10,955
(b) Rs. 10,900
(c) Rs. 10,000
(d) Rs. 10,500
Ans. a
Explanation:
Particulars
Cash A/c
Capital A/c
Bank A/c
Purchases A/c
Sales A/c
Salary
Rent
Total
(13)
Trial Balance
Dr.
3180
---6900
725
------150
10955
Cr.
---10000
------950
5
---10955
Purchase day book records:
MITTAL COMMERCE CLASSES
3|Page
(a)
(b)
(c)
(d)
All cash purchases
All credit purchases
Credit purchases of goods in trade
None of the above
Ans. c
Explanation: Purchase book record only credit purchases of goods.
(14)
Cash book is a form of
(a) Trial Balance.
(b) Journal.
(c) Ledger.
(d) All of the above.
Ans. c
Explanation:
Cash book contain debit & credit side, hence it is the form of ledger.
(15)
Rs. 2,500 spent on the overhaul of machines purchased second-hand is
(a) Capital expenditure;
(b) Revenue expenditure;
(c) Deferred revenue expenditure;
(d) None of the above.
Ans. a
Explanation:
Expenses incurred on fixed assets, before the assets are put to use, are added to the
cost of asset and hence are capital expenditure.
(16)
‘A’ purchased a Car on 1.06.2010 for Rs. 5,60,000 and incurred Rs. 25,000 for
repairs on 1-12-2010. He paid Rs. 10,000 for insurance, Rs. 1,500 for petrol. What
amount should be debited to Car A/c ?
(a) Rs. 5,60,000
(b) Rs. 5,96,500
(c) Rs. 5,95,000
(d) Rs. 5,85,000
Ans. a
Explanation: Car is newly purchased and all the other expenses, incurred after the
car is put to use are not to be added to cost.
(17)
In the financial statement, contingent liability is
(a) Recognised
(b) Not recognised.
(c) Adjusted.
(d) None of the above.
Ans. b
Explanation: Financial statement include trading A/c, P&L A/c and Balance sheet.
Contingent Liability is not recorded in above statements.
MITTAL COMMERCE CLASSES
4|Page
(18)
Rs. 50,000 claim for workman’s compensation under dispute is a
(a) Current liability
(b) Contingent liability
(c) Fixed liability
(d) None of the three
Ans. b
Explanation: Compensation, may or may not be payable, hence contingent liability.
(19)
Cheque of Rs. 700 received from Hari Ram in settlement of a debt of Rs. 720, was
dishonoured and returned. Entry for dishonour will be _______
(a) Hari Ram
Dr.
700
To Bank A/c
700
(b) Bank A/c
Dr.
700
Discount A/c
Dr.
20
To Hari Ram
720
(c) Hari Ram
Dr.
720
To Bank A/c
700
To Discount A/c
20
(d) None of the above.
Ans. c
Explanation:
Hari Ram
To Bank A/c
To Discount A/c
(20)
Dr.
720
700
20
Sales to "A" of Rs. 600 not recorded in the books would affect :
(a) Sales A/c
(b) A’s A/c
(c) Cash A/c
(d) Sales A/c and A’s A/c
Ans. d
Explanation:
A's Dr.
600
To Sales A/c
600
Both the accounts are affected.
(21) Overdraft as per Cash book Rs. 6340
Cheque deposited but not credited Rs. 2360
Cheque issued but not presented for payment Rs. 2368
Overdraft as per Pass book will be
(a)
Rs. 6332
(b)
Rs. 6000
(c)
Rs. 6300
(d)
Rs. 6330
Ans. a
MITTAL COMMERCE CLASSES
5|Page
Explanation:
Cash Book
Less:
Add:
Pass Book
(22)
On 31.3.2011 the Bank statement of M/s Shills traders showed a credit balance of
Rs.10,585. During the year the following transactions not entered in cash book.
(i) Bank debited Rs.35 per month as Bank charges
(ii) Quarterly interest credited Rs. 25, 42, 39, 57 respectively.
What is the balance of cash book before such items?
(a) 10547 (b)
10713
(c) 10328 (d)
10842
Ans. d
Explanation:
Pass Book
Add: (35x12)
Less: (25+42+39+57)
Cash Book
(23)
(6340)
(2360)
2368
6332
10585
420
(163)
10842
The following are the details regarding purchases of a certain item during the month
of January.
January 1
Purchases 200 units @Rs.7
Rs. 1,400
January 8
Purchases 900 units @Rs.8
Rs. 7,200
January 25
Purchases 300 units @Rs.9
Rs. 2,700
January 30
Sales
400 units
A physical inventory of the items taken on January 31 shows that there are 1000
units in hand. The valuation of inventory as per FIFO method is:
(a) Rs. 5,400
(b) Rs. 8,300
(c) Rs. 8,600
(d) Rs. 5,000
Ans. b
Explanation :
Date
Particulars
Jan. 1
To Balance
b/d
Jan. 8
Purchases
Jan. 25 Purchases
Jan. 30 Sales
Quantity
200
Cost Pur.
7
Amt.
1400
Balance Qty.
200
Balance Amt.
1400
900
300
400
8
9
200  7
7200
2700
3000
1100
1400
8600
11300
8300
200  8
700  8
300  9
So valuation of closing inventory under FIFO is 8300.
(24)
The cost of inventory as per physical verification of Bharat Ltd. on 10th April, 2012
was Rs. 120000. The following transactions took place between 1st April, 2012 to
10th April, 2012:
Cost of goods sold
Rs. 10000
MITTAL COMMERCE CLASSES
6|Page
Cost of goods purchased
Rs. 10000
Purchase returns
Rs. 1000
The value of inventory as per books on 31st March, 2012 will be :
(a) Rs. 1,19,000
(b) Rs. 1,11,000
(c) Rs. 1,21,000
(d) Rs. 1,20,000
Ans. c
Explanation :
Cost of Physical stock
(+) Cost of goods sold
(–) Net Purchases (10000–1000)
Stock on 31.3.2012
(25)
=
=
=
Rs. 1,20,000
Rs. 10,000
Rs. (9,000)
Rs. 1,21,000
Ankur purchased goods costing Rs. 5000 at an invoice price, which is 50% above
cost. On invoice price he enjoyed 15% trade discount and Rs. 375 cash discount on
cash payment of goods in lump sum at the time of purchase. The purchase price to
be recorded in the books before cash discount will be
(a) Rs. 5000
(b) Rs. 7500
(c) Rs. 6375
(d) Rs. 6000
Ans. c
Explanation :
Cost of Goods = Rs. 5,000
(+) Profit = Rs. 2,500 (5,000 50% )
(-) Trade Discount = Rs. (1,125) [ 7500 15% ]
Purchase price before cash discount = Rs. 6,375
(26)
A boiler was purchased from abroad for Rs. 10,000, shipping and forwarding charges
amounted to Rs. 2000 , Import duty Rs. 7000 and expenses of installation amounted
to Rs. 1000. It was depreciated for three years @ 10% on diminishing balance
method. Balance of machinery A/c at the end of third year will be :
(a) 14,580
(b) 15,000
(c) 14,000
(d) 15,500
Ans. a
Explanation :
Cost of Boiler: Purchase Cost
Add: Shipping and forwarding
charges
Import Duty
Installation exp.
Total Cost
MITTAL COMMERCE CLASSES
Rs.
10000
2000
Cost
(-) Dep. 1st Year @10% p.a.
WDV
20000
2000
18000
7000
1000
20000
(-) Dep 2nd year @ 10% p.a.
WDV
(-) Dep 3rd year @ 10% p.a.
1800
16200
1620
7|Page
WDV . or closing balance
14580
(27) Original Cost Rs. 63000, Salvage value Rs. 3000. Compute depreciation for 2nd year
under production unit method, if units produced in 2nd year was 5000 and total
estimated production is 60000 units.
(a) Rs. 5000
(b) Rs. 6000
(c) Rs. 5250
(d) Rs. 5400
Ans. a
Explanation :
Depreciable value = Cost – scrap value.
Depreciation 
(28)
5000 units
 (63000  3000 )  Rs.5000
60,000 units
On 1.1.2005, a machine costing Rs.10,000 and a piece of furniture costing Rs.20,000
was purchased. Depreciation is provided @ 5% p.a. on furniture and 10% p.a. on
machine. The depreciation for the year ended 31st March, 2005 should be:
(a) Rs. 1,000
(b) Rs. 500
(c) Rs. 1,250
(d) None of the three
Ans. b
Explanation :
Depreciation on machinery = 10,000
10% 
3
 250
12
Depreciation on furniture = 20,000  5% x 3/12= 250
Total Depreciation  250 + 250 = Rs. 500
(29)
On 31st March 2005, Suraj has to pay to M/s Chandra Rs.7,000 on account of credit
purchase from the later. He paid Rs.1,800 on 30th June 2006 after availing a cash
discount of 10%. On 30th September 2006, he paid Rs. 2,850 after availing 5% cash
discount. On account of final settlement, the amount to be paid by Suraj without any
discount will be
(a) Rs. 2,350
(b) Rs. 2,000
(c) Rs.2,200
(d) Rs.2,150
Ans. b
Explanation:
The amount to be paid without any discount will be Rs. 7,000
(-) paid on 30/06/2006
Discount = 200
10 

1,800  
90 

MITTAL COMMERCE CLASSES
8|Page
Total amount =
1800  200   2,000 
(-) paid on 30/09/2006
Discount = 150
(2850 x 5/95 )
Total amt = 2850 + 150 = 3,000
Amount to be paid in final settlement = 7000 – 2000 – 3000 = Rs. 2,000
(30)
The profit of the M/s ABC, a partnership firm before charging managerial commission
is Rs. 44,000. The managerial commission is charged @ 10% on profit after charging
such commission. The amount of managerial commission will be
(a) Rs.4,400
(b) Rs.40,000
(c) Rs.4,000
(d) Rs.39,600
Ans. c
Explanation :
Profit before charging managerial remuneration = Rs. 44,000
Managerial remuneration on profit after charging commission
= 44000 x 10 / 110 = Rs.4000
(31)
Following figures have been
Purchases
Purchase Returns
Sales
Sales Returns
The amount of profit will be
(a) Rs.10,000.
(b) Rs.5,000.
(c) Rs.7,500.
(d) None of the three.
taken from the trial balance of a trader;
Rs.30,000
Rs. 5,000
Rs.40,000
Rs. 5,000
Ans. a
Explanation :
Profit = (Sales – Sales return) – (purchase - purchase return)
= (40000 – 5000) – (30000 – 5000) = Rs. 10000
(32)
On 1st February, 2005, a loan of Rs.10,000 was given @ 12% per annum. Interest
was received for 3 months from February to April in April, 2005. In the financial
statements of the year ended 31st March, 2005 amount of accrued interest should
be:
(a) Rs.100.
(b) Rs.200
(c) Rs.300
(d) Rs.1200
Ans. b
Explanation :
Amt. of accrual interest
MITTAL COMMERCE CLASSES
9|Page
 10, 000 12% 
(33)
2
 200
12
On January 1, 2006 Victory Ltd., purchased a second hand machinery for Rs. 50,000
and spend Rs. 2,000 as shipping and forwarding charges, Rs. 1,000 as import duty,
Rs. 1,000 as carriage inwards, Rs. 500 as repair charges, Rs. 200 as installation
charges, Rs. 400 as brokerage of the middle man and Rs. 100 for an iron pad. Total
cost of machinery is
(a)
Rs. 55,100
(b)
Rs. 55,000
(c)
Rs. 54,600
(d)
Rs. 55,200.
Ans. d
Explanation :
Purchase cost
(+) Shipping and forecasting charges
(+) Import duty
(+)Carriage Inwards
(+) Repair Charges
(+) Installation Charges
(+) Brokerage
(+) Iron Paid
(34)
Mohan’s trial balance contain the following information:
Discount received Rs. 1,000
Provision for discount on creditors Rs. 1,600.
It is desired to maintain a provision for discount on creditors at Rs. 1,100. The
amount to be credited to P & L Account is :
(a) Rs. 1,500
(b) Rs. 3,500
(c) Rs. 1,000
(d) Rs. 500
Ans. d
Explanation :
Provision for discount on creditors
To Balance b/d
To P&L (b/f)
Total
(35)
= Rs. 50,000
=
2,000
=
1,000
=
1,000
=
500
=
200
=
400
=
100
55,200
1600
500
2100
By Discount received
By Balance c/d
Total
1000
1100
2100
Opening stock of the year is Rs. 20,000, Goods purchased during the year is Rs.
1,00,000, Carriage inward Rs. 2,000 and Selling expenses Rs. 2,000. Sales during
the year is Rs. 1,50,000 and Closing Stock is Rs. 25,000. The Gross Profit will be :
(a) Rs. 53,000.
(b) Rs. 55,000.
(c) Rs. 80,000.
(d) Rs. 51,000.
MITTAL COMMERCE CLASSES
10 | P a g e
Ans. a
Explanation :
TRADING ACCOUNT
To Opening stock
20,000 By Sales
To Purchases
1,00,000 By Closing Stock
To Carriages
2,000
To Gross Profit (B/F)
53,000
Total
1,75,000 Total
Selling expenses are indirect expenses and it will be included in P&L A/c.
(36)
1,50,000
25,000
175000
Goods costing Rs. 1,20,000 were sent on consignment basis. These goods are
invoiced to give a gross margin of 20% on invoice price. The amount of loading is:
(a) Rs. 24,000.
(b) Rs. 30,000.
(c) Rs. 20,000.
(d) None of the above
Ans. b
Explanation :
Suppose Invoice Price Rs. 100,
Profit @ 20% i.e. Rs. 20,
Cost = Rs. 80,
Profit on cost =
20
 100  25%
80
Cost = Rs. 1,20,000,
Profit @ 25% i.e. 1,20,000 x
(37)
25
 Rs.30,000
100
A manager gets 5% commission on net profit after charging such commission, gross
profit Rs. 58000 and expenses of indirect nature other than manager’s commission
are Rs. 16000. Commission amount will be
(a) Rs. 2900
(b) Rs. 2000
(c) Rs. 1500
(d) Rs. 2200
Ans. b
Explanation :
Suppose Net Profit Rs. 100
Commission @ 5% i.e. Rs. 5
Profit before commission Rs. 105
In question profit before comm. [58000-16000] = Rs. 42000
Commission =
(38)
42000
105
x 5 = Rs. 2000
Naveen of Nagpur sends out 1,000 boxes costing Rs. 1,00,000 to Deepak of Delhi at
cost +20%. Consignor’s expenses were:
Freight
Rs. 6,000
MITTAL COMMERCE CLASSES
11 | P a g e
Insurance
Rs. 2,000
Consignee’s expenses were:
Loading and Unloading charges
Rs. 10,000
Salesman salary
Rs. 6,000
and Commission 2% on Gross sale.What will be the amount of profit, if 3/4th goods
sold by consignee at Rs. 100000 :
(a) Rs. 5,500
(b) Rs. 6,500
(c) Rs. 7,500
(d) Rs. 3,500
Ans. d
Explanation :
Consignment A/c At cost
To Goods on Consignment
100,000 By Deepak [Sale]
To Cash [consignor exp.] (6,000 +2,000)
8000 By value of stock
To Deepak [consignee exp.]
16000 With Deepak
To Deepak [Comm[ 2% on 100,000
2000
To P & L Acc. (profit)
3500
129500
Value of Stock
Purchase cost 100,000  ¼ =
Consignor Exp. 8000  ¼ =
Consignee non selling exp. 10,000  ¼ =
(39)
129500
25000
2000
2500
29500
A & B purchased a piece of land for Rs. 60,000 and sold it for Rs. 80,000. A had
contributed Rs. 40,000 and Rs. 20,000. The profit on venture will be
(a) Rs. 30,000
(b) Rs. 20,000
(c) Rs. 60,000
(d) NIL
Ans. b
Explanation :
Sale value of land
Less: Cost on land
Profit on Venture
(40)
100,000
29,500
80,000
60,000
20,000
Mohan and Sohan enter into joint venture sharing profits and losses equally. Mohan
purchased 100 kg of rice @ Rs. 20 per kg. Brokerage paid Rs. 200, carriage Rs. 300.
Sohan sold 90 kg of rice @ Rs. 22 per kg. Balance rice was taken over by Sohan at
cost. The value of rice taken over to be recorded in joint venture will be :
(a) Rs. 200
(b) Rs. 250
(c) Rs. 220
(d) Rs. 230
Ans. b
Explanation :
MITTAL COMMERCE CLASSES
12 | P a g e
Value of 10 kg as under :
Purchase price 10 kg  20 = Rs. 200
Add: Expenses
Total
(41)
500
100
𝑥 10
= Rs. 50
= Rs. 250
X of Kolkata sent out 2000 boxes costing Rs. 100 each with the instruction that sales
are to be made at cost + 45%. X draws a bill on Y for an amount equivalent to 60%
of sales value. The amount of bill will be
(a) Rs. 1,74,000
(b) Rs. 2,00,000
(c) Rs. 2,90,000
(d) Rs. 1,20,000
Ans. a
Explanation :
Cost of Boxes = 2000 x 100 =
Add : Profit (200000 x 45%)
Sales Value
Amount of Bill = 290000 x 60% = Rs. 174000.
(42)
Bill of Rs. 5000 accepted by Rajan, was endorsed by Rohit to Raj on account of final
settlement of Rs. 5200. The benefit of Rs. 200 earned by Rohit was
(a) Credited to discount received account by Rs. 200
(b) Debited to discount allowed account by Rs. 200
(c) Debited to rebate account by Rs. 200
(d) None of the above
Ans. a
Explanation :
Entry in the Books of Rohit
Raj. a/c
Dr.
5200
To B/R a/c
5000
To Discount a/c
200
Dr.
Discount A/c
Particular
Amount
Particular
By Raj.
(43)
200000
90000
290000
Cr.
Amount
200
A bill is drawn on 28th March, 2006 for one month after sight. The date of
acceptance is 2nd April, 2006. The due date of the bill will be
(a) 1st May, 2006.
(b) 28th April, 2006.
(c) 5th May, 2006.
(d) 2nd May, 2006.
Ans. c
Explanation :
In case of after sign bill due date is calculated from date of acceptance, so due date
will be :
MITTAL COMMERCE CLASSES
13 | P a g e
2 April, 2006 + 1 Month + 3 Days of Grace = 5 May, 2006.
(44)
On 1st January, 2006, Mohan draws upon Sohan a bill of exchange for three months
for Rs. 2,000 as mutual accommodation. On 4th January, 2006 Mohan discounts the
bill @ 6% per annum and sent half of the proceeds to Sohan. The amount of
proceeds sent to Sohan will be :
(a) Rs. 1,000
(b) Rs. 970
(c) Rs. 985
(d) Rs. 2,000.
Ans. c
Explanation :
Amount Received = 2000  (2000 
Amount send to Sohan = 1970 
(45)
3
6

)  1970
12 100
1
 985
2
A send some goods costing Rs. 3,500 at a profit of 25% on sale to B on sale or
return basis. B returned goods costing Rs. 800. At the end of the accounting period
i.e. on 31st December, 2005, the remaining goods were neither returned nor were
approved by him. On 31st Dec. 2005, the stock on approval will be shown in the
balance sheet at Rs. :
(a) 2000
(b) 2700
(c) 2700 Less 25% of 2700
(d) 3500
Ans. b
Explanation:
Stock shown in the balance sheet at cost price.
Stock on Approval = 3500 – 800 = Rs. 2700
(46)
Mr. X is a partner in a firm. He withdraws Rs. 200 at the end of each month. If rate
of interest is @ 5% p.a., the interest on drawings is
(a) Rs. 65
(b) Rs. 55
(c) Rs. 60
(d) Rs. 50
Ans. b
Explanation :
If fixed amount is withdrawn at the end of each month then interest on drawings is
charged for 5.5 months.
200 x 12 = 2400 x 5/100 x 5.5/12 = Rs. 55.
(47)
If the Goodwill A/c is raised in the books of accounts, the amount is credited to
(a) Profit and Loss Adjustment A/c
(b) Partner’s Capital A/c
MITTAL COMMERCE CLASSES
14 | P a g e
(c)
(d)
Revaluation A/c
None of these.
Ans. b
Explanation :
If goodwill account is raised in the books of accounts then following entry passed
Goodwill A/c Dr.
To Partners Capital A/c
(48)
A, B and C were partners in a firm sharing profits and losses in the ratio of 2:2:1
respectively with the capital balance of Rs. 50,000 each for A and B, for C Rs.
25,000. B declared to retire from the firm and balance in reserve on the date was Rs.
15,000. If goodwill of the firm was valued at Rs. 30,000 and profit on revaluation
was Rs. 7,050 then what amount will be transferred to the loan account of B?
(a) Rs. 70,820.
(b) Rs. 50,820.
(c) Rs. 25,820.
(d) Rs. 58,820.
Ans. a
Explanation :
Capital Rs. 50000 + Reserve (15000 x
𝑥𝑥. 12000) + Profit share (7050 x
(49)
2
5
2
5
= 𝑥𝑥. 6000) + Goodwill (30000 x
2
5
=
= 𝑥𝑥. 2820)  B’s Loan a/c = Rs. 70820.
A partnership firm earned net profits during the last 3 years is follows –
2001
15,000
2002
20,000
2003
25,000
The capital investment in the firm throughout the above mentioned period has been
Rs. 1,00,000. Having regard to the risk involved 15% is considered to be a fair
return on capital. Goodwill on the basis of 2 years purchase of super profit during the
above mentioned 3 years will be :
(a) Rs. 8,000
(b) Rs. 10,000
(c) Rs. 12,000
(d) Rs. 15,000
Ans. b
Explanation :
Average profit 
15000  20000  25000
 20000
3
Normal profit = 100000 x
15
100
= 𝑥𝑥. 15000
Super profit = 20000 - 15000 = Rs. 5000
Goodwill = 5000 × 2 = Rs. 10000
(50)
A & B are partners sharing profits and losses in the ratio 5:3. On admission C brings
Rs. 70,000 cash and Rs. 48,000 against goodwill. New profit sharing ratio between
A, B and C are 7:5:4. Find the scarificing ratio for 'A' and 'B' :
MITTAL COMMERCE CLASSES
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(a)
(b)
(c)
(d)
3:1.
4:7.
5:4.
2:1.
Ans. a
Explanation :
Sacrifice Ratio = Old Ratio – New Ratio
𝑥=
5
7
10−7 3
−
=
=
8 16
16
16
𝑥=
3
5
6−5 1
−
=
=
8 16
16 16
= 3:1
(51)
On 1st October 2009, Z retires from firm. The amount payable to Z Rs. 80,000
transferred to his loan account.
After 6 months payment of Rs. 40,000 inclusive interest is paid to Z and remaining
amount will be paid after 6 months with interest. Calculate amount of second
installment, if rate of interest 10% per annum.
(a) 44000
(b) 46200
(c) 84000
(d) 88000
Ans. b
Explanation :
Calculation of amount payable to Z by making Z’s loan account
Date
Particular
Amount Date
Particular
31.3.2010 To Cash
40,000
1.10.2009 By Z capital
31.3.2010 To Balance c/d
44,000
31.3.2010 By Interest
(80,000 
30.9.2010
To
Cash
Payment)
(Final
84,000
46,200
_____
46,200
(52)
Amount
80,000
4000
10 6
 )
100 12
1.4.2010
By Balance B/d
84,000
44,000
30.9.2010
By interest
22,00
( 44,000 
10 6
 )
100 12
46,200
A company forfeited 2,000 shares of Rs. 10 each (which were issued at par) held by
Mr. John for non-payment of allotment money of Rs.4 per share. The called-up value
per share was Rs.9. On forfeiture, the amount debited to share capital will be
(a) Rs. 10,000
(b) Rs. 8,000
(c) Rs. 2,000
(d) Rs. 18,000.
MITTAL COMMERCE CLASSES
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Ans. d
Explanation :
At the time of forfeiture following entry is passed
Share capital A/c Dr. ( No of Share forfieted × Called up capital ) i.e 2000 × 9 = Rs. 18,000
So Rs. 18000 shall be debited at the time of forfeiture.
(53)
G Ltd. acquired assets worth Rs.7,50,000 from H Ltd. by issue of shares of Rs.100 at
a premium of 25%. The number of shares to be issued by G Ltd. to settle the
purchase consideration will be
(a) 6,000 shares
(b) 7,500 shares
(c) 9,375 shares
(d) 5,625 shares
Ans. a
Explanation :
Total amount of purchase Consideration = 7, 50,000
Issued price per share ( 100 + 25 ) = 125
So , No of Share issued =
(54)
7,50, 000
 6000 Shares.
125
E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro rata
basis. The amount payable on application is Rs.2. F applied for 420 shares. The
number of shares allotted and the amount carried forward for adjustment against
allotment money, due from F will be :
(a) 60 shares; Rs.120
(b) 340 shares; Rs.160
(c) 320 shares; Rs.200
(d) 300 shares; Rs.240
Ans. d
Explanation :
Applicants of 14000 Share were allotted 10,000 shares.
So applicant of 420 shares allotted =
10, 000
 420 = 300 Shares.
14, 000
And excess money received on Application = (420 – 300 ) × 2 = Rs. 240
(55)
Asha Ltd. issued shares of Rs. 100 each at a premium of 25%. Mamta, who has
2,000 shares of Asha Ltd., failed to pay first and final call totaling Rs.5. Premium was
taken by Asha Ltd. at the time of allotment. On forfeiture of Mamta’s shares, the
amount to be debited to Share premium account will be
(a) Rs. 5,000
(b) Rs. 10,000
(c) Rs. 15,000
(d) Nil
Ans. d
Explanation :
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Securities premium has been paid with the allotment so, at the time of forfeiture of
shares no amount shall be debited to Sec. Premium A/c.
(56)
Jadu Ltd. reissued 2,000 shares of face value Rs. 10 per share, which were forfeited
by crediting Share forfeiture account by Rs. 3,000. These shares were reissued at Rs.
9 per share. The amount to be transferred to Capital Reserve account will be :
(a) Rs. 3,000
(b) Rs. 2,000
(c) Rs. 1,000
(d) Nil
Ans. c
Explanation :
Amount Forfeited by the Company = 3,000
(–) Discount on re-issue of share = 2000 (2000 × 1)
Amount to be transferred to capital reserve = Rs. 1000.
(57)
A company on non-receipt of First Call money of Rs.2 per share and Final Call money
of Rs.3 per share from Rahul, debited Call-in-Arrears account by Rs. 2,000 and
Rs.3,000 respectively. After due notice, 1,000 shares of Rs.10 each were forfeited
from Rahul. The amount to be credited to First Call Account at the time of entry for
forfeiture will be :
(a) Rs.2,000.
(b) Rs.3,000.
(c) Nil.
(d) Rs.10,000.
Ans. c
Explanation :
When call in arrear account is opened than calls in arrear A/c shall be credited at the
time of forfeiture of shares.
(58)
Preference shares of Rs. 3,00,000 are redeemable at par for which fresh equity
shares of Rs. 1,20,000 are issued at 20% premium. What amount should be
transferred to capital redemption reserve account?
(a) Rs. 60,000
(b) Rs. 24,000
(c) Rs. 36,000
(d) Rs. 1,80,000
Ans. d
Explanation :
Any amount withdrawn from free Reserve for the Redemption of preference share is
transferred to capital Redemption Reserve A/c. Amount Withdrawn from free Reserve
(3,00,000 – 120,000) = Rs. 1,80,000.
(59)
On May 01, 2003, Y Ltd. issued 7%. 40,000 convertible debentures of Rs.100 each
at a premium of 20%. Interest is payable on September 30 and March 31, every
year. Assuming that the interest runs from the date of issue, the amount of interest
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expenditure debited to profit and loss account for the year ended March 31, 2004 will
be
(a) Rs. 2,80,000
(b) Rs. 2,33,333
(c) Rs. 3,36,000
(d) Rs. 2,56,667
Ans. d
Explanation :
Interest of Debenture = 40,000 × 100 ×
7 11

 256667
100 12
1 May 2003 to 31 March 2004.
(60)
Ravi Ltd. issued 1,40,00,000, 9% debentures of Rs. 100 each at a discount of 6%,
redeemable at a premium of 5% after 3 years payable as Rs. 50 on application and
Rs. 44 on allotment. Total amount of loss on issue of debentures will be :
(a) Rs. 8,40,00,000
(b) Rs. 7,00,00,000
(c) Rs. 15,40,00,000
(d) Rs. 1,40,00,000
Ans. c
Explanation :
Loss per debenture = 100 × (6% + 5%) = Rs. 11
Total loss = 1,40,00,000 × 11 = Rs. 15,40,00,000
(61)
Contract, which ceases to be enforceable by law becomes a/an(a)
Unenforceable Contract
(b)
Void Agreement
(c)
Void Contract
(d)
Voidable Contract.
Ans. c
Explanation: Section 2(j) defines void contract as a contract which ceases to be
enforceable by law.
(62)
Every
(a)
(b)
(c)
(d)
contract is agreement but every agreement is not contract:False
True
False with some exceptions
Partly True
Ans. b
Explanation: Because as per 2(h) every agreement is contract if enforceable by law.
(63)
S agrees to sell his DVD player to R promising to deliver it on the date of payment. R
promises to pay the amount, within one month, hence. This is an example of —
(a)
Void Contract
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(b)
(c)
(d)
Illegal Contract
Unilateral Contract
Bilateral Contract
Ans. d
Explanation: Where the obligation or promise in a contract is outstanding on the part
of both the parties, it is known as the bilateral contract.
(64)
K advertises in newspaper that any person who found his lost dog, can get a reward
of Rs. 5000. This is a case of—
(a)
General offer
(b)
Special offer
(c)
Standing offer
(d)
Invalid Offer
Ans. a
Explanation: General offer is an offer made to the public in general and hence any
one can accept and do the desired act.
(65)
A proposes by letter, to sell his house to B at Rs. 10000. Communication of the
proposal is complete when
(a)
A posts the letter
(b)
B receives the letter
(c)
B acknowledges to A that he has received the letter.
(d)
(b) or (c) , whichever is earlier
Ans. b
Explanation: As per Sec- 4, the communication of an offer is complete when it comes
to the knowledge of the person to whom it is made.
(66)
Which of the following is an offer?
(a)
Mere quotation of terms by trader
(b)
Quotation of the lowest price in answer to an enquiry
(c)
Advertisement for sale or auction of goods
(d)
Bids in an auction sale
Ans. d
Explanation: Auction sale is invitation to offer but bids made by bidder under auction
sale is termed as offer.
(67)
Revocation of offer need not be communicated to the offeree.
(a)
True
(b)
Partly true
(c)
False
(d)
None of above.
Ans. c
Explanation: Communication is must both at the time of making, or, revocation of
offer and acceptance.
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(68)
When
(a)
(b)
(c)
(d)
Silence may be treated as Acceptance.
When Party binds other party
When it is liability to speak
When it is public matter
None out of these
Ans. b
Explanation: because Silence cannot be treated as acceptance unless it was liability
of party to speak.
(69)
Promise made with intention of not to perform is :(a)
Fraud
(b)
Coercion
(c)
under influence
(d)
mis-statement
Ans. a
Explanation: Because as per Sec. 17(3) promise mode with intention of not to
perform will be fraud.
(70)
In order to convert a proposal into a promise, the acceptance must —
(a)
Be clear
(b)
Be absolute
(c)
Be unqualified
(d)
Be absolute and unqualified.
Ans. d
Explanation: Rule regarding acceptance is that it must be unconditional and
unqualified. If it is conditional or qualified then it leads to counter offer.
(71)
K obtained a release deed from his wife and son under a threat of committing
suicide. The transaction can be set aside on the ground of(a)
Coercion
(b)
Undue Influence
(c)
Mistake
(d)
Fraud
Ans. a
Explanation: As per Sec. 15 "Coercion" is the committing, or threatening to commit
any act forbidden by Indian penal code, or the unlawful detaining or threatening to
detain any property, to the prejudice of any person (1) whatever with the intention
of coursing any person to enter into an agreement. And suicide comes under
"Coercion".
(72)
The burden of proof that the consent was obtained by Coercion lies on —
(a)
the person who wants to relieve himself of the consequences of coercion.
(b)
the person who employs the coercion
MITTAL COMMERCE CLASSES
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(c)
(d)
either-(a) or (b)
both (a) and (b)
Ans. a
Explanation: The burden of proof that the consent was obtained by Coercion lies on
the person who wants to relieve himself of the consequences of coercion.
(73)
A girl who lost her parents lived with her cousin brother who was in the position of
her parents. She executed an unconscionable gift deed in his favour. This gift deed
can be set aside on grounds of-.
(a)
Mistake.
(b)
Undue Influence.
(c)
Fraud
(d)
Coercion.
Ans. b
Explanation: As per sec. 16, A contract is said to be induced by "Undue influence".
Where the relations subsisting between parties are such that one of the parties is in
a position to dominate the will of the other and uses that position to obtain an unfair
advantage of the other. A person is deemed to be in a position to dominate the will
of the other, when he holds authority real or apparent authority over the other, or
when he stands in a fiduciary relation to the other.
(74)
Mistake as to Foreign Law is treated in the same manner as –
(a)
Mistake of Indian Law
(b)
Mistake of fact
(c)
Misrepresentation
(d)
Fraud
Ans. b
Explanation: Mistake as to foreign law is treated in the same manner as mistake of
fact. (Section – 20)
(75)
K gave a loan to the guardian of a Minor to enable him to celebrate the Minor’s
marriage in contravention of Child Marriage Restraint Act. The agreement is —
(a)
Valid
(b)
Valid if ratified by the Minor
(c)
not enforceable
(d)
voidable
Ans. c
Explanation: The agreement is not enforceable because it is forbidden by law due to
unlawful of consideration as well as object in the agreement.
(76)
A promises to paint a picture for B by a certain day at a certain price. A dies before
the promised day. Which one of the following is the correct legal position?
(a)
The agreement becomes unlawful
(b)
The agreement lapses for both the parties
MITTAL COMMERCE CLASSES
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(c)
(d)
The agreement becomes voidable at the option of A’s legal representative
The agreement is void ab-initio.
Ans. b
Explanation: Agreement based on personal skill cannot be enforceable after the
death of the party. Hence, it lapses for both the parties.
(77)
A contract to marry a person shall be performed by —
(a)
Promisor himself
(b)
Representative of the Promisor competent to perform
(c)
A third person
(d)
Any of the above.
Ans. a
Explanation: Contract which involve the exercise of personal skill or diligence, or
which are founded on personal confidence between the parties must be performed by
the promisor himself.
(78)
The Partnership Act, 1932 came into force on —
(a)
1st day of April 1932
(b)
1st day of October 1932
(c)
1st day of January
(d)
31st day of December 1932.
Ans. b
Explanation: The Partnership Act, 1932 came into force on 1st day of October 1932.
(79)
According to the partnership Act, “Business” includes —
(a)
Trade
(b)
Occupation
(c)
Profession
(d)
All of the above
Ans. d
Explanation: According to the Partnership Act, the term "Business" includes trade,
occupation and profession.
(80)
The Ratio in which Partners share profits and losses are —
(a)
Based on agreement
(b)
Based on the Income Tax
(c)
Equal
(d)
As decided by the Registrar of Firms
Ans. a
Explanation: The ratio in which partners share profits and losses are based on
agreement. And in absence of any information in the agreement, such are shared
equally.
MITTAL COMMERCE CLASSES
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(81)
To form a Partnership, the partners should share
(a)
Only profits
(b)
Only losses
(c)
Both profits and losses
(d)
Profits and losses but some may get a share only in the profits
Ans. d
Explanation: To form a partnership, the partners should share profits and losses. But
some partners may get a share only in the profits subject to the provision inserted in
the partnership deed.
(82)
In a joint family business there can be _________ members
(a)
Maximum 20
(b)
Unlimited
(c)
No. of persons decided by the government
(d)
Maximum 10
Ans. b
Explanation: As there is no maximum number limit on membership in HUF.
(83)
If there is a contract that the Partner shall not carry on the business other than that
of the Firm while he is a Partner, such contract is —
(a)
Valid
(b)
Void
(c)
Voidable at the option of the Partner
(d)
Voidable at the option of the Firm.
Ans. a
Explanation: While forming partnership, partners may mutually decides the terms
and conditions of it in the partnership deed and if the provisions of such deed is
lawful, then such are valid and enforceable. So, if there is a contract that the partner
shall not carry on the business other than that of the firm while he is a partner, such
contract is valid.
(84)
If all partners, of the Firm are declared insolvent —
(a)
Firm is also declared insolvent
(b)
Solvent Partner has to repay the debts of the firm
(c)
Firm is automatically dissolved
(d)
None of the above
Ans. c
Explanation: As per section – 34, ordinarily but not invariably, the insolvency of a
partner results in dissolution of a firm, but the partners are competent to agree
among themselves that the adjudication of a partner as an insolvent will not give rise
to dissolution of the firm. Secondly, on insolvency of a partner, his estate ceases to
be liable for any act of the firm done after the date of the order, and the firm also is
not liable for any act of such a partner after such date.
MITTAL COMMERCE CLASSES
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(85)
“Delivery” as defined under Section 2(2) of the sale of Goods Act, means voluntary
transfer of
(a)
Possession
(b)
Ownership
(c)
Risk
(d)
All of the above
Ans. a
Explanation: As per section -2(2) of the Sale of Goods Act, delivery means voluntary
transfer of possession by one person to another.
(86)
Which
(a)
(b)
(c)
(d)
is an instance of Symbolic Delivery of Goods —
Abandonment by a person who is in possession of the goods
Transfer of a Bill of Lading
Physical Delivery of goods
All of the above
Ans. b
Explanation: Symbolic Delivery - When there is a delivery of a thing in token of a
transfer of something else, i.e., delivery of goods in case of transit may be made by
handing over documents of title to goods, like bill of lading or railway receipt or
delivery orders or the key of a warehouse containing the goods is handed over to
buyer.
(87)
Which
(a)
(b)
(c)
(d)
of these is not a Document of Title of Goods?
Multimodal Transport Document
Bill of Lading
Promissory Note
Railway Receipt
Ans. c
Explanation: Promissory Note is not a document of title of goods, because it is a
indebt certificate of particular amount/debt.
(88)
Under the Sale of Goods Act “.... Goods” means goods which not yet in existence at
the time of making the contract of sale
(a)
Ascertained Goods
(b)
Future Goods
(c)
Specific Goods
(d)
Perishable Goods
Ans. b
Explanation: As per section -2(6) of the Sale of Goods Act, future goods means
goods to be manufactured or produced or acquired by the seller after making the
contract of sale.
(89)
A, a fisherman, agrees to sell B, a certain type of fish, provided there is no cyclonic
storm. The goods are
MITTAL COMMERCE CLASSES
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(a)
(b)
(c)
(d)
Future goods
Specific goods
Unascertained Goods
Contingent Goods
Ans. d
Contingent goods are such goods availability of which depends upon future
contingency of event. Here in the given question the goods are not future but
depends upon contingent event i.e., cyclonic storm.
(90)
In case the acquisition of goods by the Seller depends upon a contingency which
may or may not happen —
(a)
It is an invalid agreement.
(b)
It is a valid agreement to sell.
(c)
It is a valid contract of Sale.
(d)
It is a illegal and void agreement.
Ans. b
Explanation: As per section – 4 (3) of the Sale of Goods Act, where under a contract
of sale the transfer of the property in the goods is to take place at a future time or
subject to some condition thereafter to be fulfilled, the contract is called an
agreement to sell.
(91)
Under the Sale of Goods Act, a Condition is a stipulation essential for the …. of the
contract.
(a)
Collateral Purpose
(b)
Main Purpose
(c)
both (a) and (b)
(d)
Either (a) or (b)
Ans. b
Explanation: A condition is stipulation essential to the main purpose of the contract,
the breach of which gives right to repudiate the contract and to claim damages.
(92)
M purchased a hot water bottle from a chemist. The bottle burst and injured his wife.
The chemist is liable on account of
(a)
Breach of express condition as to quality
(b)
Breach of implied condition as to quality
(c)
Personal injury caused to the buyer's wife
(d)
Hot water bottle sales are illegal
Ans. b
Explanation: Section – 16 of the Sale of Goods Act states about the implied condition
as to quality or fitness. Here in the given case it is the breach of implied condition as
to quality and chemist is liable for it.
(93)
In which of the following situations "Caveat Emptor" is applicable –
(a)
Seller makes a misrepresentation and buyer relies on it
MITTAL COMMERCE CLASSES
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(b)
(c)
(d)
Seller makes a false representation amounting to fraud, the buyer believes
the same
Seller provides reasonable opportunity to the buyer to examine the goods
Seller actively conceals a defect in the goods
Ans. c
Explanation: Caveat Emptor means "Let the buyer beware". This is applicable Where
seller provides reasonable opportunity to the buyer to examine the goods.
(94)
The bidder at an auction sale can withdraw his bid __________.
(a)
any time during auction
(b)
before fall of hammer
(c)
before payment of price
(d)
cannot withdraw at all.
Ans. b
Because proposal can be withdrawn before dispatch of acceptance.
(95)
A, B & C were 3 Partners in a Partnership Firm Sharing Profits & Loss equally. Their
Capital contribution were Rs. 20,000, Rs. 10,000 & Rs. 2000 respectively. Firm is
dissolved & C could not pay anything and firm realised only Rs. 20,000 from its
property. Calculate the total amount of Loss to be borne by A :
(a)
Rs. 5333
(b)
Rs. 5000
(c)
Rs. 6000
(d)
Rs. 8000
Ans. a
Explanation: Rs. 5333
(96)
Who can become a partner in a partnership firm :
(a)
A company
(b)
Minor
(c)
HUF
(d)
Partnership Firm
Ans. a
Explanation: A company
(97)
A Gratuitous or bare promise, devoid of consideration, is called(a)
Res extfincta
(b)
Nudum Pactum
(c)
Uberrima fides
(d)
Contractu
Ans. b
Explanation: Nudum Pactum
MITTAL COMMERCE CLASSES
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(98)
A third party to a contract _____________ the parties to the contract:
(a)
Can sue conditionally
(b)
Cannot sue
(c)
Can sue unconditionally
(d)
None of the above
Ans. a
Explanation: Can sue conditionally
(99)
Where a buyer neglects to accept delivery of the goods, the seller may sue for
______.
(a)
Payment
(b)
Damages for non acceptance
(c)
Damages for non acceptance and charges for care and custody of the goods
(d)
All of the above
Ans. c
Explanation: Damages for non acceptance and charges for care and custody of the
goods
(100) Promotion of litigation in which one had no interest is
(a)
Champerty
(b)
Maintenance
(c)
Stifing litigation
(d)
None of the above
Ans. b
Explanation: Maintenance.
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