Shree Guru Kripa’s Institute of Management A
Name………………………………………. Roll No…………………………………….. Date : 23/11/2013 Morning Batch SHREE GURU KRIPA’S INSTITUTE OF MANAGEMENT REVISION TEST – 1 CPT – ACCOUNTS & LAW Total Marks: 100 Total No. of Questions: 100 1
Time: 2 hours No. of Printed pages: 8 Shree Guru Kripa’s Institute of Management 1.
In Mining, the method used for valuation is known as
–
(a) Depreciation
(b) Diminution
(c) Amortization
(d) Depletion
2.
On 31st December, 2010 Ashok Ltd. purchased a
machine from Mohan Ltd. For ` 1,75,000. This is:
(Year end: 31st December)
(a) A Transaction
(b) An Event
(c) None of these
(d) Both Transaction as well as Event
3.
4.
5.
9.
Under inflationary conditions, which of the methods
will not show lowest value of closing stock? (i) FIFO
(ii) LIFO (iii) Weighted average (iv) All of the above.
(a) (i) and (iii)
(b) (i) and (ii)
(c) (iii) and (iv)
(d) (i) and (iv)
10. Choose the correct statement from below –
(a) Trial Balance can be prepared before passing
transfer entries
(b) Trial Balance can be prepared before passing
adjusting entries
(c) Trial Balance can be prepared before passing
closing entries
(d) All of the above
When overdraft as per Cash book is the starting
point, a cheque of `500 deposited into bank but not
recorded in cash book will be
(a) Added by `500
(b) Deducted by `500
(c) Added by `1,000
(d) Deducted by `1,000
11. Original cost ` 1,26,000. Salvage ` 6,000.
Depreciation for 2nd year @ Unit Production Method,
if units produced in 2nd year was 10,000 and total
estimated product 50,000.
(a) 21,600
(b) 22,680
(c) 25,200
(d) 24,000
Which of the following statement is true –
(a) Building account is a nominal account
(b) Outstanding rent a/c is a Non–Personal account
(c) Every debit has a corresponding credit
(d) Incomes are debited
12. All the following items are classified as fundamental
accounting assumptions except
(a) Consistency
(b) Business entity
(c) Going concern
(d) Accrual
An undervaluation of current years closing inventory
will
(a) Cause current year’s net income to be
overstated
(b) Cause subsequent year’s net income to be
overstated
(c) Cause previous year’s net income to be
overstated
(d) Cause subsequent years incomes to be
unaffected
13. Repainting of building done every 3 years –
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Deferred revenue Expenditure
(d) None of the above
14. Purchase of Goods on credit from A is recorded as –
(a) Debit purchases A/c; Credit cash A/c
(b) Debit A A/c; Credit purchase A/c
(c) Debit purchases A/c; Credit A’s A/c
(d) Debit stock A/c; Credit purchases A/c
6.
When a cheque received is endorsed, entered on –
(a) Credit side of the cash book only
(b) Debit side of the cash book only
(c) Both sides of the cash book
(d) All receipts and payments of cash.
7.
Present liability of uncertain amount, which can be
measured reliably is termed as
(a) Provision
(b) Liability
(c) Contingent liability
(d) None of the above.
15. The inventory system employing accounting records
that continuously disclose the amount of inventory is
called
(a) Periodic
(b) Perpetual
(c) Physical
(d) Retail
8.
Which one of the following types of information, a
long term Creditor would be interested to gather
while reading Annual Reports of an Enterprise?
(a) Profitability
(b) Liquidity
(c) Continuity
(d) Solvency
16. Mr. Krishnaprasad a debtor deposited `300 cash
directly in the Bank account. In the BRS starting with
Pass Book balance
(a) `300 will be added to Pass Book balance
(b) `600 will be deducted from Cash Book balance
(c) This will be ignored as a contra entry
(d) `300 will be deducted from Pass Book balance
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Shree Guru Kripa’s Institute of Management 17. Ram is debtor for Rs.500. Received a cheque for
Rs.480 from him in full settlement and deposited into
bank on the same day. Its entry in 3–Column
Cashbook, is –
(a) In Dr. side of cash column and discount column
(b) In Dr. side of cash and Cr. Side of discount
column.
(c) In Dr. side of bank column and discount column
(d) In Dr. side of bank & Cr. Side of discount
column.
23. The balance of machine on 31st March 2006 is `
72,900. The machine was purchased on 1st April
2003 charging depreciation @10% p.a. The cost
price of the machine as on 1st April 2003 would be –
(a) ` 1,00,000
(b) ` 90,000
(c) ` 81,000
(d) ` 72,900
24. M purchased goods for ` 15,00,000 and sold 4/5th of
the goods for ` 18,00,000 and expenses ` 2,50,000
in the year 2009. He counted net profit as `
3,50,000. Which of the accounting concept was
followed by him?
(a) Entity.
(b) Periodicity.
(c) Matching.
(d) Conservatism.
18. In which of the following methods the asset appears
at its original cost throughout its life?
(a) Machine hour rate
(b) Annuity
(c) Depreciation fund
(d) Depletion
19. At the end of the accounting period the provision is
made for the amount outstanding for the electricity
that has been consumed during the said period. The
statement is based on –
(a) Accrual concept
(b) Matching
(c) Realisation
(d) Money measurement
25. L whose accounting year ends on 30th June, had to
take stock on 21st June, 2009 which amounted to `
67,460. The firm sells goods at cost plus 25%. The
following transaction took place between 21st June
and the 30th June: There was one lot of goods
which had cost ` 2,800 but sold on 22nd June for `
1,200 only due to damage caused by rain. The stock
on 21st June included these goods at cost. While
computing the closing stock to be brought into books
–
(a) ` 1,600 will be deducted from ` 67,460
(b) ` 1,200 will be added to ` 67,460
(c) ` 2,800 will be deducted from ` 67,460
(d) ` 4,000 will be added to ` 67,460
20. F Ltd. took stock on 31-3-2009, the last day of its
accounting year. The stock was valued at ` 50,000
Stock worth ` 3,000 at selling price was lying with
customers on consignment basis. The average gross
profit is 20% on sales. While computing the value at
which the closing stock is to be brought in the books
(a) ` 3,000 will be deducted from ` 50,000
(b) ` 2,400 will be deducted from ` 50,000
(c) ` 3,600 will be added to ` 50,000
(d) ` 3,000 will be added to ` 50,000
26. On payment of Insurance by a businessman for his
wife using business cash, which a/c will be given
effect? –
(a) Insurance Company account
(b) Wife’s account
(c) Drawing account
(d) Miscellaneous expenses account
21. A started business with ` 20,000 cash and ` 11,000
stock. Cash sales & cash purchases were ` 10,000 &
` 5,000. Total sales and purchases amounted to `
70,000 & ` 50,000. Outstanding creditors were `
15,000 and Debtors ` 25,000. Expenses paid `
17,000. Machine was purchased for ` 10,000 out of
which ` 8000 is paid. Trial Balance total will be ––
(a) `
(b) `
(c) `
(d) `
27. If an inflow of economic benefits is probable then a
contingent asset is disclosed –
(a) In the financial statements
(b) In the report of the approving authority (Board
of Directors in the case of a company, and the
corresponding approving authority in the case of
any other enterprise).
(c) In the Cash Flow Statement
(d) None of the above
1,18,000
1,20,000
1,25,000
1,40,000
22. The receipts side of the Cash Book was overcast by
`1,000. In the BRS, starting with Cash Book balance
(a) `2,000 will be added to Cash Book balance
(b) `1,000 will be deducted from Cash Book balance
(c) This will be ignored
(d) `1,000 will be added to Cash Book balance
28. Ten per cent depreciation is to be provided on the
reducing balance method on an asset costing `
50,000. WDV of the asset at the beginning of
second year of its use will be
(a) ` 5,000
(b) ` 4,500
(c) ` 50,000
(d) ` 45,000
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Shree Guru Kripa’s Institute of Management 29. Provision for bad and doubtful debts is created in
anticipation of actual bad debts on the basis of –
(a) Business entity concept
(b) Conservatism Concept
(c) Accrual concept
(d) Full disclosure concept
36. The plant and machinery A/c of a firm had a debit
balance of ` 1,45,800.00 on January 1, 2006. It was
purchased on January 1, 2003. Firm has been following
the practice of charging full years depreciation every year
@ 10% on diminishing balance. The cost of machinery in
2003 will be:
(a) ` 2,00,000.00
(b) ` 2,25,000.00
(c) ` 1,90,000.00
(d) ` 2,50,000.00
Analyse from the following –
January 1
Inventory 100 units at ` 3 each
January 31 Purchases 120 units at ` 4 each
Feb 28
Purchases 110 units at ` 5 each
March 31
Purchases 140 units at ` 6 each
Sales for the period 400 units at ` 8 each
37. The verifiable objective evidence concept envisages
the recording of all accounting transactions.
(a) Supported by verification by auditors
(b) Supported by object perception
(c) Supported by the objective clause in the
memorandum of association
(d) Supported
by
invoices,
correspondence,
vouchers and business documents.
30. Find out the cost of goods sold under FIFO method
of inventory valuation
(a) ` 2,170
(b) ` 3,200
(c) ` 1,750
(d) ` 1,870
38. A company follows weighted average cost method
for the valuation of its inventory. The details of
purchase and issue or raw-materials pertaining to
the company during the week April 1 to April 7, 2009
are as follows:
Date Particulars
Purchases Issue
Rate
(` )
01
Opening
50 Units
44
stock
02
100
47
04
100
Inventory at the end under weighted average
method is
(a) ` 2300
(b) ` 2250
(c) ` 2350
(d) ` 2200
31. Find out the profit under FIFO method of inventory
valuation
(a) ` 1,450
(b) ` 1,870
(c) ` 1,030
(d) ` 420
32. Find out the value of Closing Inventory under FIFO
method of inventory valuation
(a) ` 210
(b) ` 350
(c) ` 420
(d) ` 560
33. It is given that the cost of the stock is ` 100.
However, its current market price is ` 95 (buying)
and ` 90 (selling). If the market price is interpreted
in the sense of replacement cost, the stock should be
valued at
(a) ` 95
(b) ` 100
(c) ` 90
(d) ` 93.
39. Total of Purchases Returns Book is posted to the
ledger –
(a) On the credit sale of purchases
(b) On the credit side of the Purchases Returns A/c
(c) On the debit side of purchases returns A/c
(d) Either (b) or (c)
40. M/s Sudhir and Co. Purchased one machinery on 1st
Jan.2003 costing ` 38,000. On the same date firm
spent ` 2,000 for its erection. On 1st July 2003
additional machinery was purchased for ` 20,000. If
firm provides depreciation @ 15% p.a. on W.D.V.
basis on 30th September every year, find out the
balance to be c/d to on 1st October 2003.
(a) ` 52,500
(b) ` 54.750
(c) ` 54,500
(d) ` 60,000
34. Balance of petty cash book is posted to ledger
(a) In the cash account
(b) In bank account
(c) Nowhere
(d) Either (a) or (b).
35. Cost of Goodwill –
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Deferred Revenue Expenditure
(d) None of the above
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Shree Guru Kripa’s Institute of Management 48. When the goods are returned to a supplier –
(a) An invoice is sent to him
(b) A debit note is sent to him
(c) A credit note is sent to him
(d) A receipt is sent to him
41. Rs.3000 received from sub-tenant for rent and
entered correctly in the cash book is posted to the
debit of the rent account. In the Trial Balance –
(a) Debit total > by Rs.6000 than the credit total.
(b) Debit total > by Rs.3000 than the credit total.
(c) Subject to other entries being correct, total will
agree.
(d) None of the above
49. The totals of debit and credit side of Mr. Raja Ram
as on 31st March, 2006 were Rs.20,000 and
Rs.10,000 respectively. The difference was
transferred to suspense A/c. On 4th April 2006, it
was found that the total of sales book was carried
forward as 5,000 instead of 4,000. The balance of
suspense A/c after rectification of this error will be –
(a) Rs.11,000
(b) Rs. 10,000
(c) Rs. 9,000
(d) Rs. 12,000
42. The total assets of business is ` 1,30,000 and
creditors is ` 60,000. Other liabilities of the business
will amount to:
(a) ` 50,000
(b) ` 2,10,000
(c) ` 60,000
(d) ` 70,000
43. A purchased 1000 kg of rice costing Rs 200 each.
Carriage 2000, insurance 3000. 4/5th of the boxes
were sold by B at Rs 250 per boxes. Remaining stock
were taken over by B at cost. The amount of stock
taken over will be –
(a) ` 40,000
(b) ` 41,000
(c) ` 50,000
(d) ` 50,200
50. A bills receivable of Rs,1,000, which was received
from a debtor in full settlement for a claim of
Rs.1,000, is dishonoured –
(a) Purchases Return Book
(b) Bills Receivable Book
(c) Purchases Book
(d) Journal Proper (General Journal)
51. Bad
(a)
(b)
(c)
(d)
44. When preparing a Bank reconciliation statement, if
you start with balance as per Cash Book, then
dividends directly collected by Bank but not yet
entered in Cash Book within the period are __
(a) Added
(b) Deducted
(c) Not required to be adjusted
(d) None of the above
52. Machinery bought on 1st July 2004 for ` 20,000 was
sold on Dec. 31, 2007 for ` 15,000. Depreciation is
charged @ 10% p.a. on original cost. Accounting
year closes on 31st Dec. each year. profit on sale will
be
(a) 3,000
(b) 2,000
(c) 2,500
(d) 4,000
45. At the end of accounting year all the nominal
accounts of the ledger book are –
(a) Balanced but not transferred to P & L A/c
(b) Not balanced and also the balance is not
transferred to the profit and loss account
(c) Balanced & balance is transferred to balance
sheet
(d) Not balanced the balance transferred to the
profit and loss account.
46. Compensation received from Government
compulsory acquisition of land
(a) Revenue expenditure
(b) Capital expenditure
(c) Deferred revenue expenditure
(d) Capital receipt
53. The following error was discovered after preparing
the Trial Balance but before preparing the Final
Accounts. Indicate the correct rectification –
Sales book was overcast (more total) by Rs.1,000.
The rectification entry is –
for
(a)
(b)
(c)
47. Depreciated value after 2 years of an asset costing `
10,000 depreciated at 10% on fixed installment
method is ` ––– and on reducing balance method is
` ––––
(a) ` 8,100 and ` 8,000
(b) ` 9,000 and ` 8,000
(c) ` 8,000 and ` 8,100
(d) None of the above
(d)
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Debt Written Off –
Journal voucher, Sale Book
Journal Voucher and Journal Proper
Debit Note, Journal Proper
Credit Note, Journal Proper
Suspense A/c Dr.
To Sales Return
Sales A/c Dr.
To Suspense A/c
Sales A/c Dr.
To Suspense A/c
Suspense A/c Dr.
To Sales
1,000
1,000
2,000
2,000
1,000
1,000
1,000
1,000
Shree Guru Kripa’s Institute of Management 54. Stock of Rs.25,000 was destroyed by fire of which
Rs.15,000 was received from Insurance Company –
(a) Revenue Expenditure
(b) Capital Expenditure
(c) Deferred Revenue Expenditure
(d) None of the above
62. Which one of the following is not a wagering
agreement?
(a) A lottery
(b) An agreement to buy a ticket for a lottery
(c) Commercial transaction, the intention of which is
not to deliver the goods but only to pay the
difference in price
(d) A contract of insurance
55. When a firm maintains a simple Cash Book, it need
not maintain
(a) Sales journal
(b) Purchases journal
(c) General Journal
(d) Cash account in the ledger
63. Which of the following persons are competent to
contract?
(a) Person of Indian origin
(b) Person disqualified by law
(c) Minor
(d) Person of unsound mind
56. Mineral deposit
(a) Amortization
(b) Depreciation
(c) Depletion
(d) None of these
64. Which are the following elements that affect the
consent of the party?
(a) Undue Influence
(b) Mis-Representation
(c) Fraud
(d) All of the above
57. Money spent Rs.20,000 as traveling expenses of
directors on trips abroad for purchase of Capital Assets
is –
(a) Capital expenditures
(b) Revenue expenditures
(c) Deferred revenue expenditures
(d) None of the above
65. Which of the following agreements are void?
(a) Agreements the consideration of which is
unlawful
(b) Agreements made under the unilateral mistake
of fact
(c) Agreements made under the mistake of law
(d) Contingent agreement
58. Service charges paid Rs.12,200 wrongly debited to
Salaries A/c in the Ledger. The rectification entry is –
(a) Salaries A/c will be credited by Rs.12,200
(b) Salaries A/c will be credited by Rs.24,400
(c) Salaries A/c will be debited by Rs.12,200
(d) Salaries A/c will be debited by Rs.6,100
66. In which of the following situations specific
performance can be granted?
(a) When there is no exact substitute or alternative
to the subject matter of the contract
(b) When it is probable that compensation in money
is inadequate for non-performance
(c) (a) or (b)
(d) (a) and (b)
59. Overdraft as per Cash Book ` 4500
(1) Cheques sent for collection, not credited by Bank
`6,225
(2) Cheque drawn, not presented for payment
`10,250
Overdraft as per Pass Book will be
(a) `475
(b) `750
(c) `500
(d) None of the three
67. To claim reimbursement of money paid on behalf of
another person, the payment should –
(a) be voluntary
(b) not be voluntary
(c) not be quantified
(d) not be legal
60. The value of an asset after deducting depreciation
from the historical cost is known as –
(a) Fair Value
(b) Book Value
(c) Market Value
(d) Net Realisable Value
68. An agreement between the bidders not to bid
against each other is called
(a) Knock –out agreement
(b) Auction agreement
(c) Partnership agreement
(d) By bidder agreement
61. Which of the following is correct? When a minor has
been supplied with necessaries on credit.
(a) Minor is not liable
(b) Minor’s estate is liable
(c) Minor is personally liable
(d) Minor is liable at his option
69. The
(a)
(b)
(c)
(d)
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bidder at an auction sale can withdraw his bid
Any time during auction
Before fall of hammer
Before payment of price
None of these
Shree Guru Kripa’s Institute of Management 70. Nemo-dat quad non habet means
(a) Result to pay the price of goods
(b) Nobody can give that the himself does not have
(c) Title is not clear
(d) Delivery is not possible
79. A voidable contract is one which
(a) Can be enforced at the option of aggrieved
party
(b) Can be enforced at the option of both the
parties
(c) Cannot be enforced in court of law
(d) Courts prohibit
71. If the consent is caused by coercion is to be proved
by
(a) Both the parties
(b) The aggrieved party
(c) The party causing coercion
(d) None of these
80. Which of the following is not the legal requirement of
a valid acceptance?
(a) It must be communicable
(b) It must be absolute and unconditional
(c) It must be presumed
(d) It must be accepted by a person who has the
authority to accept
72. In case of reciprocal promise, first to do things which
are legal are ________ and second to do things
which are illegal are ________.
(a) Valid, void
(b) Void, voidable
(c) Valid, illegal
(d) Void, void
81. Which are of the following is an essential element of
a valid contract?
(a) Free consent
(b) Consideration
(c) Competent parties
(d) All of the above
73. All agreements in restraint of trade are ________.
(a) Void
(b) Valid
(c) Voidable
(d) Illegal
82. A contract to perform a promise could arise by
(a) Standard form of contracts by promise
(b) Agreement and contract
(c) Promissory Estoppel
(d) All of the above
74. Doctrine of restitution does not apply against a
________.
(a) Person of unsound mind
(b) Fraud
(c) Minor
(d) None of the above
83. X, Y and Z are partners of software business jointly
promise to pay ` 30,000 to A. Over a period of time
Y became insolvent, but his assets are sufficient to
pay 1/4th of his debts. Z is compelled to pay the
whole.
(a) Z has to bear the entire amount of liability
(b) X has to bear the entire loss arising out of Y’s
insolvency
(c) X and Z have to bear equally, the loss arising
out of Y’s insolvency
(d) Z can recover back the entire amount from A.
75. A, a tradesman, leaves goods at B’s house by
mistake. B treats the goods his own. In such case –
(a) B is bound to pay A for the goods
(b) B has no obligations against A
(c) B has to return the same goods to A
(d) B can avoid payment citing A’s mistake
76. Only those agreements, which are valid are
(a) Contract
(b) Proposal
(c) Offer
(d) None of the above
84. In contracts of sale of immovable properties, time is –
(a) not presumed to be the essence of the contract
(b) presumed to be the essence of the contract
(c) no presumption as to time can be raised
(d) all of the above
77. Contractual rights and duties are created by
(a) State
(b) Statute
(c) Parties
(d) Custom
85. Where neither the Creditor nor Debtor makes any
appropriation and there are many debts of equal
standing in the order of time, payment shall be
applied in discharge of –
(a) the smallest debt
(b) the largest debt
(c) each proportionally
(d) any debt to which the amount tallies.
78. An agreement enforceable by law under the Indian
Contract Act, 1872 may be
(a) In writing
(b) Oral
(c) Both (a) and (b)
(d) Either (a) or (b)
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Shree Guru Kripa’s Institute of Management 86. Contract will be valid, if the consideration is
(a) Real & Illusory
(b) Inadequate & unlawful
(c) Real & not Illusory
(d) None of the above
94. Which of the following agreements will not be
declared expressly void?
(a) If parties to it have no contractual capacity
(b) If it is done by mutual mistake
(c) If it is for lawful consideration
(d) If its consent is not free
87. Which of the following statement is true?
(a) Consideration may be past
(b) Consideration may be present
(c) Consideration may be future
(d) All of the above
95. A ___________ agreement is one,
enforceable at the option of one party.
(a) Voidable
(b) Void
(c) Valid
(d) Illegal
88. A wrong representation when made without any
intention to deceive the other party amounts to
(a) Fraud
(b) Undue Influence
(c) Misrepresentation
(d) Coercion
is
96. A contract can be discharged ____________.
(a) By mutual Agreement
(b) By impossibility of performance
(c) By breach of contract
(d) By all the above
89. A contract entered for the benefit of minor.
(a) Void ab initio
(b) Voidable
(c) Valid
(d) Illegal
97. B chartered A’s ship and agreed to load it with a
cargo in Odessa within 45 days. B was unable to
supply the cargo, but A continued to demand it.
Meanwhile war broke out, rendering the performance
impossible. In such case –
(a) Contract is discharged
(b) A cannot sue for damages
(c) Both (a) and (b)
(d) Neither (a) nor (b)
90. Where the consent of both the parties is given by
mistake the contract is
(a) Valid
(b) Void
(c) Voidable
(d) Illegal
98. A contract can be discharged by performance in the
ways of _____________.
(a) Offer to perform
(b) Actual performance
(c) (a) or (b)
(d) (a) and (b)
91. To make a contract voidable coercion must have
been exercised against
(a) Only the promisor
(b) Any other person
(c) (a) or (b)
(d) (a) and (b)
99. A contract dependent on the happening or non
happening of future uncertain event, is a
_____________.
(a) Uncertain contract
(b) Void Contract
(c) Contingent contract
(d) Voidable contract
92. Under the Indian Contract Act, 1872 consent means
agreeing on the same thing
(a) At the same time
(b) In the same sense
(c) At different time
(d) All of the above
100. A contingent contract dependant on the happening
of future uncertain event can be enforced when the
event __________.
(a) Happens
(b) Becomes impossible
(c) Does not happen
(d) Either of these
93. Consideration and object of an agreement is
unlawful if it
(a) Is fraudulent
(b) is forbidden by law
(c) Would defeat the provision of any law
(d) All of the above
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which