Account and Audit Mock Test Question

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We have created some questions for Account and Audit.

Question. What are the fundamentals of accounting?

Revenues, expenditures, properties, liabilities, income statement, balance sheet, and statement of cash flows are some of the common accounting words you’ll learn. As we demonstrate how to report transactions, you can become acquainted with accounting debits and credits.

Question. What are the 4 forms of accounting?

Understanding the Four Types of Accounting

Corporate Accounting.
Public Accounting.
Government Accounting.
Forensic Accounting.

Accounting, also known as accountancy, is the calculation, collection, and sharing of financial and non-financial data about companies and firms.

Account

When preparing a Bank Reconciliation Statement, if you start with a debit balance as per the Cash Book, then cheques issued but not presented within the period are__________

(a) Added

(b) Deducted

(d) None of the above.

Under inflationary conditions, ________ method will show highest value of closing stock?

(a) FIFO

(b) LIFO

(d) None of the above

In the case of downward revaluation of an asset, which is for the first time revalued,_______ account is debited.

(a) Fixed Asset

(b) Revaluation Reserve

(c) Profit & Loss account

(d) General Reserve

The portion of the acquisition cost of the asset, yet to be allocated is known as________

(a) Written down value

(b) Accumulated value

(d) Salvage value

If a concern proposes to discontinue its business from March 2005 and decides to dispose off all its assets within a period of 4 months, the Balance Sheet as on March 31, 2005 should indicate the assets at their _________

(a) Historical cost

(b) Net realizable value

(d) Cost price or market value, whichever is lower

The balance of the petty cash is _________

(a) an expense,

(b) income,

(c) an asset.

(d) liability

Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyer’s risk. Therefore, such goods should be treated as part of

(a) Sales.

(b) Closing stock.

(d) Sales return.

As per Section 37 of the Indian Partnership Act, 1932, the executors would be entitled at their choice to the interest calculated from the date of death till the date of payment on the final amount due to the dead partner at ________ percentage per annum.

(a) 7.

(b) 4.

(c) 6.

(d) 12.

If del-credere commission is allowed for bad debt, consignee will debit the bad debt amount to:

(a) Commission Earned A/c

(b) Consignor A/c

(d) General Trading A/c

Mr. A purchased a machinery costing Rs. 1,00,000 on 1st October, 2005. Transportation and installation charges were incurred amounting Rs. 10,000 and Rs. 4,000 respectively. Dismantling charges of the old machine in place of which new machine was purchased amounted Rs. 10,000. Market value of the machine was estimated at Rs. 1,20,000 on 31st March 2006. While finalising the annual accounts, A values the machinery at Rs. 1,20,000 in his books. Which of the following concepts was violated by A?

(a) Cost concept

(b) Matching concept

(d) Periodicity concept.

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, 2005. He paid Rs. 5000 for an electricity bill of Dec. 2004 and advance salaries amounting Rs. 15,000 was paid for the month of Jan. 2006. He counted net profit as Rs.3,50,000. The profit calculated by him is correct according to

(a) Entity concept.

(b) Periodicity concept.

(c) Matching concept.

(d) Conservatism concept.

W Ltd. issued 20,000, 8% debentures of Rs.10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year will be

(a) Rs.40,000

(b) Rs.10,000

(d) Rs.8,000

S Ltd. issued 2,000, 10% Preference shares of Rs.100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of Rs.100 each at a premium of 20% per share. At the time of redemption of Preference Shares, the amount to be transferred by the company to the Capital Redemption Reserve Account will be

(a) Rs.50,000

(b) Rs.40,000

(d) Rs.2,20,000

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

(d) 5,625 shares

The following information pertains to X Ltd.: Equity share capital called up – Rs.5,00,000, Calls in arrear – Rs. 40,000, Calls in advance – Rs. 25,000, Proposed dividend -15%. The amount of dividend payable will be

(a) Rs.75,000

(b) Rs.72,750

(d) Rs.69,000

The subscribed share capital of S Ltd. is Rs.80,00,000 of Rs.100 each. There were no calls in arrear till the final call was made. The final call made was paid on 77,500 shares. The calls in arrear amounted to Rs.62,500. The final call on share will be

(a) Rs.25

(b) Rs.7.80

(d) Rs.62.50

A Company wishes to earn a 20% profit margin on selling price. Which of the following is the profit mark up on cost, which will achieve the required profit margin?

(a) 33%.

(b) 25%.

(d) None of the above.

A, B and C are the partners sharing profits and losses in the ratio of 5:3:2, took a joint life policy of Rs. 30,000. On the death of B what amount will be payable to each partner.

(a) A – Rs. 22,000 and B – Rs. 8,000.

(b) A – Rs. 14,000 and B – Rs. 16,000.

(c) A – Rs. 15,000, B – Rs. 9,000 and C – Rs. 6,000.

(d) A – Rs. 10,000, B – Rs. 8,000 and C – Rs. 10,000.

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 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 as Rs. 30,000 and profit on revaluation was Rs. 7,050 then what amount will be transferred to the loan account of C?

(a) Rs. 70,820.

(b) Rs. 50,820.

(d) Rs. 58,820.

A and B, who share profits and losses in the ratio of 3:2 has the following balances: Capital of A Rs. 50,000; Capital of B Rs. 30,000; Reserve Fund Rs. 15,000. They admit C as a partner, who contributes to the firm Rs. 25,000 for 1/6th share in the partnership. If C is to purchase 1/6th share in the partnership from the existing partners A and B in the ratio of 3:2 for Rs. 25,000, find closing capital of C.

(a) Rs. 25,000.

(b) Rs. 19,000.

(c) Rs. 20,000.

(d) Rs. 18,000.

P and Q are partners sharing Profits in the ratio of 2:1. R is admitted to the partnership with effect from 1st April on the term that he will bring Rs. 20,000 as his capital for 1/4th share and pays Rs. 9,000 for goodwill, half of which is to be withdrawn by P and Q. How much cash can P & Q withdraw from the firm (if any)?

(a) 3,000:1,500.

(b) 6,000:3,000.

(d) None of the above.

A and B are partners sharing profits in the ratio 5:3, they admitted C giving him 3/10th share of profit. If C acquires 1/5th share from A and 1/10th from B, new profit sharing ratio will be:

(a) 5:6:3.

(b) 2:4:6.

(d) 17:11:12

A, B and C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs. 20,000 capital and Rs. 5,000 being half of the premium for goodwill. The value of goodwill of the firm is

(a) Rs. 10,000

(b) Rs. 40,000.

(d) None of the above.

A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000. The amount of hidden goodwill is:

(a) 6,000.

(b) 10,000.

(d) None of the above.

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 as A:B

(a) 3:1.

(b) 4:7.

(d) 2:1.

Bill and Monica are partners sharing profits and losses in the ratio of 3:2 having the capital of Rs. 80,000 and Rs. 50,000 respectively. They are entitled to 9% p.a. interest on capital before distributing the profits. During the year firm earned Rs. 7,800 after allowing any interest on capital. Profits apportioned among Bill and Monica is:

(a) 4,680 and 3,120.

(b) 4,800 and 3,000.

(d) None of the above.

A merchant sends out his goods casually to his dealers on approval basis. All such transactions are, however, recorded as actual sales and are passed through the sales book. On 31-12-2005, it was found that 100 articles at a sale price of 200 each sent on approval basis were recorded as actual sales at that price. The sale price was made at cost plus 25%. The amount of stock on approval will be amounting

(a) Rs.16,000.

(b) Rs. 20,000.

(d) None of the above.

On 16.6.05 X draws a bill on Y for Rs 25,000 for 30 days. 19th July is a public holiday, due date of the bill will be:

(a) 19th July

(b) 18th July

(d) 16th July

Mr Bobby sold goods worth Rs 25,000 to Mr Bonny. Bonny immediately accepted a bill on 1.11.01, payable after 2 months. Bobby discounted this bill @ 18% p.a. on 15.11.01. On the due date Bonny failed to discharge the bill. Later on Bonny became insolvent and 50 paise is recovered from Bonny’s estate. How much amount of bad debt will be recorded in the books of Bobby?

(a) 12,500

(b) 9,437

(d) 13,650

Ram’s acceptance to Din for Rs 8,000 renewed at 3 months on the condition that Rs 4,000 be paid in cash immediately and the remaining amount will carry interest @12% p.a. The amount of interest will be:

(a) 120

(b) 80

(d) 160

A draws a bill on B for Rs. 30,000. A wants to endorse it to C in settlement of Rs. 35,000 at 2% discount with the help of B’s acceptance and balance in cash. How much cash A will pay to B?

(a) 4,300

(b) 4,000

(d) 5,000

A drew a bill on B for Rs. 50,000 for 3 months. Proceeds are to be shared equally. A got the bill discounted at 12% p.a. and remits required proceeds to B. The amount of such remittance will be:

(a) 24,250

(b) 25,000

(d) 32,333

A and B enter into a joint venture to underwrite the shares of K Ltd. K Ltd make an equity issue of 100000 equity shares of Rs 10 each. 80% of the issue are subscribed by the party. The profit sharing ratio between A and B is 3:2. The balance shares not subscribed by the public, purchased by A and B in profit sharing ratio. How many shares to be purchased by A?

(a) 80000 shares

(b) 72000 shares

(c) 12000 shares

(d) 8000 shares

R and M entered into a joint venture to purchase and sell new year gifts. They agreed to share the profit and losses equally. R purchased goods worth Rs 1,00,000 and spent Rs 10,000 in sending the goods to M. He also paid Rs 5,000 for insurance. M spent Rs 10,000 as selling expenses and sold goods for Rs.2,00,000. Remaining goods were taken over by him at Rs 5,000. Find out profit on venture.

(a) Rs.70,000

(b) Rs.75,000

(c) Rs.80,000

(d) Rs.85,000

A purchased goods costing 2,00,000, B sold 4/5th of the goods for Rs 2,50,000. Balance goods were taken over by B at cost less 20%. If a same set of books is maintained, find out profit on venture.

(a) Rs. 82000

(b) Rs .90000

(d) None

AUDIT
36. ………. Not necessarily restricted to a financial year. It can extend for a period consisting of a number of years
a. Investigation
b. Audit
c. Accounting
d. None of above

37. ……… is generally conducted for a financial year
a. Investigation
b. Audit
c. Inquiry
d. Accounting

38. ………… is an evaluation and analysis of the business operation conducted by the internal audit staff.
a. External Audit
b. Internal Control
c. Internal Audit
d. Cost audit

39. An internal Audit is carried out by ………
a. Employee of organization
b. Chartered accountant working within organization
c. Officers of organization
d. Any of the above

40. The internal Audit is…….
a. Mandatory
b. Not mandatory
c. Compulsory
d. All of the above

41. An organization gets the internal audit done with a view to evaluate……..
a. Effectiveness of internal control
b. Soundness of financial years
c. Effectiveness of business processes
d. All of the above

42. Which of the following is/are objective of internal audit?
a. To review the working of business
b. To protect the assets of organization
c. To evaluate the internal check system
d. All of above

43. Which of the following is/are benefit of internal audit?
a. Internal audit is helpful to have effective control over business activities
b. The assets protection is possible through internal audit
c. The internal audit is helpful to apply division of labour
d. All of above

44. ……….. is generally conducted to ascertain whether the Balance sheet and Profit and loss A/c presents a true and fair view of the financial position
a. Cost audit
b. Financial Audit
c. Secretarial Audit
d. Management accounting Audit

45. Which of the following party is/are interested in financial audit?
a. Trade creditors
b. Bank & Financial institutions
c. Tax authorities
d. All of above

46. Though auditors are appointed equity shareholders in certain auditor can be appointed by
a. Directors
b. Central government
c. (a) or (b)
d. Debenture holders

47. Auditors are generally appointed by equity shareholders in…………
a. Annual general meeting
b. Board Meeting
c. Special Meeting
d. Extraordinary general meeting

48. ………… is a process to check that the company has compiled with the legal and procedural requirements and also followed the due processes.
a. Cost audit
b. Financial Audit
c. Secretarial Audit
d. Management accounting audit

49. Secretarial audit is also known as…………
a. Compliance audit
b. Test audit
c. System audit
d. Sampling audit

50. ……….has been assigned the role of secretarial auditor under section 2(2)(c)(v) of the Company secretaries Act, 1980.
a. Practicing CA
b. Practicing CS
c. Practicing CWA
d. Practicing CFA