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Fundamentals of Accounting
QUESTION PAPER
CPT
FUNDAMENTALS OF ACCOUNTING

SECTION – A : FUNDAMENTALS OF ACCOUNTING (60 MARKS)

Q.1. Drawings account is in the nature of
(a) Personal account
(b) Real account
(c) Nominal account
(d) None of the above

Q.2. Income tax paid by the sole-proprietor from business bank account is debited to
(a) Income tax account
(b) Bank account
(c) Capital account
(d) Not to be shown in the business books

Q.3. Following is the example of internal users of financial statements:
(a) Government
(b) Investors
(c) Lenders
(d) Employees

Q.4. Recording of a transaction in a journal is called
(a) Posting
(b) Entry
(c) Transfer
(d) Ruling

Q.5. Narrations are given at the end of
(a) Final accounts
(b) Trial balance
(c) Each ledger account
(d) Each journal entry

Q.6. The concerned account debited in the journal should be
(a) Debited in the ledger but reference should be of the respective credit account.
(b) Credited in the ledger but reference should be of the respective debit account.
(c) Credited in the ledger and reference should also be of the respective credit account
(d) Debited in the ledger and reference should also be of the respective debit account

Q.7. The basic consideration(s) in distinction between capital and revenue expenditures is/are
(a) Nature of business
(b) Effect on revenue generating capacity of business
(c) Purpose of expenses
(d) All of the above

Q.8. Unintentional omission or commission of amounts and accounts in the process of recording transactions are known as
(a) Frauds
(b) Misinterpretation
(c) Errors
(d) None of the above

Q.9. “Treating a revenue expense as a capital expenditure” is an example of
(a) Compensating error
(b) Error of principle
(c) Error of omission
(d) Error of commission

Q.10. Under bank reconciliation statement, while adjusting the cash book
(a) All the errors and omissions in the cashbook are taken into consideration
(b) All the errors and omissions in the passbook are taken into consideration
(c) Delays in recording in the passbook due to difference in timing are taken into consideration
(d) All of the above

Q.11. In ledger, there are ___ columns
(a) 4
(b) 6
(c) 8
(d) 10

Q.12. In journal, transactions are recorded on ___.
(a) Chronological order
(b) Ascending order of amount
(c) Descending order of amount
(d) None of the above

Q.13. If an effect of an error is cancelled by the effect of some other error, it is commonly known as ___.
(a) Errors of principle
(b) Compensating errors
(c) Errors of omission
(d) Errors of commission

Q.14. When opening inventory is overstated, net income for the accounting period will be ___.
(a) Overstated
(b) Not be affected
(c) Understated
(d) None of the above

Q.15. Inventories should be generally valued at lower of cost or ____.
(a) Fair market value
(b) Replacement value
(c) Present value
(d) Net realisable value

Q.16. Joint venture account is a ___.
(a) Personal account
(b) Real account
(c) Nominal account
(d) None of the above

Q.17. At the time of admission of a new partner, if the value of goodwill is shown in the books, it is written back by ___.
(a) Old partners in old profit/loss sharing ratio
(b) All the partners including the new partner in new profit/loss sharing ratio
(c) Old partners in sacrificing ratio
(d) New partner in gaining ratio

Q.18. Commission provided by the consignor to the consignee to promote credit sale is known as ___.
(a) Ordinary commission
(b) Del-credere commission
(c) Over riding commission
(d) Special commission

Q.19. ____ is unavoidable and should be spread over the entire consignment while valuing consignment inventory.
(a) Abnormal loss
(b) Normal loss
(c) Extra-ordinary loss
(d) None of the three

Q.20. Generally, when the size of the venture is ____, the co-venturers keep separate set of books of account for the joint venture.
(a) Small
(b) Medium
(c) Big
(d) All of the above

Q.21. Monu, the acceptor of the bill has to honour a bill on 31st March 2010. Due to financial crisis, he is unable to pay the amount of bill of Rs. 20,000. Therefore, he approaches Sonu on 20th March 2010 for extension of bill for further 3 months. Sonu agrees to extend the credit period by drawing a new bill for Rs. 20,500 together with interest of Rs. 1,000 in cash. In this case, old bill of Rs. 20,000 will be considered as
(a) Discounted
(b) Dishonoured
(c) Cancelled
(d) Retired

Q.22. Ankit consigned goods costing Rs. 2,50,000 to Mukesh on 1st January 2010 by incurring Rs. 20,000 on freight. Some goods were lost in transit. For remaining goods Mukesh spend Rs. 15,000 to take the delivery including storage charges. During the quarter, Mukesh sold 3/4 of the goods received by him for Rs. 3,00,000 and charged commission @10% on it to Ankit. At the end of the quarter, Ankit asked the details of goods lost, sold, expenses commission and balance due to him alongwith the consignment inventory from Mukesh. As desired, Mukesh sent the periodical detail statement commonly known as
(a) Account statement
(b) Account sales
(c) Statement of affairs
(d) Summary statement

Q.23. The following information pertains to XYZ 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%
(a) Rs. 75,000
(b) Rs. 72,750
(c) Rs. 71,250
(d) Rs. 69,000

Q.24. K 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. T applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from T
(a) 60 shares; Rs. 120 
(b) 340 shares; Rs. 160
(c) 320 shares; Rs. 200
(d) 300 shares; Rs. 240

Q.25. T of Kolkata sent out 2,000 boxes costing 100 each with the instruction that sales are to be made at cost + 45%. T 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

Q.26. A purchase of Rs. 1,870 by cheques has been wrongly posted in the cashbook as Rs. 1,780. This has the effect of
(a) Increasing the bank balance by Rs.90
(b) Decreasing the bank balance by Rs.90
(c) Increasing the bank balance by Rs.180
(d) Decreasing the bank balance by Rs.180

Q.27. M/s New Delhi Stationers purchase 1,000 pcs of cover file @ Rs. 275 per 100 pcs. The wholesaler charged 5% sales tax on cost price. Transport charges were Rs. 50. The purchase price per piece of cover file will be
(a) Rs. 2,937.50
(b) Rs. 293.75
(c) Rs. 29.375
(d) Rs. 2.9375

Q.28. A consignee sold goods costing Rs. 50,000 at a profit of Rs. 10,000. Out of total sales, 30% was credit sale. As per the agreement the consignee will get 5% ordinary commission, 2% del-credere commission on credit sale and 3% over-riding commission on amount in excess of cost price. The amount of commission will be
(a) Rs. 3,360
(b) Rs. 3,660
(c) Rs. 4,500
(d) Rs. 3,000

Q.29. In a Joint venture between X and Y, X, on purchase of goods, spend Rs.2,000 on freight, Rs.1,000 as godown rent, and also raised a loan from bank of Rs.50,000 at 18% p.a. repayable after 1 month. Y spend Rs. 5,000 as selling expenses and he also raised a loan from bank of Rs.1,50,000 at 18% repayable after 2 months. The total expenses of Joint venture other than purchases will be
(a) Rs. 8,000
(b) Rs. 8,250
(c) Rs. 5,250
(d) Rs. 13,250

Q.30. The bill of Rs. 10,000 accepted by Ritesh on 1 July 2009, was discounted by Hitesh on 15 July 2009 for Rs. 9,600. On 4th October 2009, the bill was dishonoured and bank notified it for Rs. 200. The amount to be received from Ritesh would be
(a) Rs. 10,600
(b) Rs. 10,000
(c) Rs. 10,200
(d) Rs. 10,400

Q.31. Z Ltd. sends out its goods Rs. 1,20,000 to one of its dealer on Sale or Return basis. On 31st March he received an approval letter for goods of Rs. 80,000. Z Ltd. charge 25% profit on cost. The cost price of the unapproved goods with the dealer will be
(a) Rs. 32,000
(b) Rs. 40,000
(c) Rs. 80,000
(d) Rs. 64,000

Q.32. X, Y and Z are in partnership with no partnership deed. X brought Rs.80,000, B Rs.60,000 and Z Rs.40,000 as capital. X does not take part in day to day activities, Y acts as general manger and Z acts as a sales manager. The profit during the year was Rs. 1,50,000. The share of each partner in profit will respectively be
(a) Rs.66,667: Rs.50,000: Rs.33,333
(b) Rs.50,000: Rs.50,000: Rs.50,000
(c) Nil: Rs. 75,000: Rs.75,000
(d) None of the above

Q.33. A second hand car is purchased for Rs. 2,00,000, the amount of Rs. 25,000 is spent on its repairs, Rs. 5,000 is incurred to get the car registered in owner’s name and Rs. 2,000 is paid as dealer’s commission. The amount debited to car account will be
(a) Rs. 2,32,000
(b) Rs. 2,25,000
(c) Rs. 2,30,000
(d) Rs. 2,05,000

Q.34. Ansul, Vipin and Prkash are partners in a firm with no partnership agreement. They invested Rs.1,00,000, Rs.75,000 and Rs.50,000 as capital in the firm. The profit for the year was Rs.2,50,000. Prkash demands interest on loan of Rs.20,000 advanced by him at the market rate of interest which is 12% p.a. The amount of interest to be received by him
(a) Rs. 2,400
(b) Nil
(c) Rs. 1,200
(d) Rs. 3,600

Q.35. In a joint venture between Sonu and Monu, Sonu purchased goods costing Rs.2,40,000. Monu sold goods costing Rs 1,60,000 at Rs 2,40,000. Balance goods were taken over by Sonu at same gross profit percentage as in case of sale. The amount of goods taken over will be:
(a) Rs. 1,20,000
(b) Rs. 80,000
(c) Rs. 40,000
(d) Rs. 1,00,000

Q.36. Best Ltd. issued 60,000 shares of Rs. 9 each at par. The application money was Rs. 2, allotment money was Rs. 4, and first call was of Re.1. The amount of final call will be
(a) Rs. 3
(b) Rs. 2
(c) Re.1
(d) Nil

Q.37. A partnership firm maintains its accounts on calendar year basis. B, one of its partner died on 31st March 2010. The profit for the year 2009 was Rs. 75,000, which was distributed among all the three partners equally. The share of profit of B for the year 2010 on the basis of the year 2009 will be
(a) Rs.18,750
(b) Rs.25,000
(c) Nil
(d) Rs.6,250

Q.38. Akash Ltd. issued shares of Rs. 100 each at a premium of 25%. Mohitm who has 2,000 shares of Akash Ltd., failed to pay first and final call of Rs.5. Premium was taken by Akash
Ltd. at the time of allotment. On forfeiture of Mohit’s shares, the amount to be debited to securities premium account will be
(a) Rs.5,000
(b) Rs.10,000
(c) Rs.15,000
(d) Nil

Q.39. 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 of a partner till the date of payment on the final amount due to the dead partner at ____ percent per annum.
(a) 7
(b) 4
(c) 6
(d) 12

Q.40. Sonu sent out certain goods to Monu of Delhi. 1/10 of the goods were lost in transit. Invoice value of goods lost Rs 25,000. Invoice value of goods sent out on consignment will
(a) Rs.2,50,000
(b) Rs.25,000
(c) Rs.2,500
(d) Rs.1,25,000

Q.41. Sonu Ltd. purchased land and building from Monu Ltd. for a book value of Rs.5,00,000. The consideration was paid by issue of 10% Debentures of Rs.100 each at a discount of 20%. The debentures account will be credited with
(a) Rs.6,00,000
(b) Rs.6,25,000
(c) Rs.5,00,000
(d) Rs.5,50,000

Q.42. JPL Ltd. reissued 2,000 shares, which were forfeited by crediting Share forfeiture account by Rs.3,000. These shares were reissued 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

Q.43. A machine purchased on 1st April 2010 for Rs. 10,000 is showing a balance of Rs. 6,000 as on 1st April 2012 when depreciation is charged on S.L.M. basis. Now, company wants to switch over to W.D.V method by charging depreciation @ 20%. The amount of excess/ short depreciation of last two years will be
(a) Excess depreciation Rs.400
(b) Short depreciation Rs.400
(c) Excess depreciation Rs.1,600
(d) Short depreciation Rs.1,600

Q.44. receivables of M/s Sachin amounts to Rs. 25,000 and bad debts Rs.3,000. M/s Sachin provides for Doubtful debts @ 2% and for discount @ 1%. The amount of net trade receivables to be shown in the Balance Sheet will be
(a) Rs. 21,560
(b) Rs. 22,000
(c) Rs. 21,780
(d) Rs. 21,344

Q.45. A, B and C share profits and losses in the ratio of 4:4:2. They have a joint life insurance policy of Rs.1,00,000, whose premium is paid by the firm. Surrender value of the policy at the beginning of the year 2010 in the balance sheet is Rs. 80,000. On the death of A on 2nd January 2010, the amount to be credited in C’s account will be
(a) Rs. 20,000
(b) Rs. 4,000
(c) Rs. 8,000
(d) Nil

Q.46. A, B and C are equal partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before salary of partners’ capital was Rs. 60,000 and B claimed salary for his extra services to the firm @ 2,000 p.m. There was no agreement on this point. Calculate the amount payable to A, B and C respectively.
(a) Rs. 20,000 to each partner
(b) Rs. 12,000 to each partner
(c) Rs.12,000 to A and C and Rs.36,000 to B
(d) Rs. 24,000 to B and Rs.18,000 to A and C

Q.47. Raj consigned 100 sets of TVs to Sundeep @ Rs.10,000 each. 5 TVs were damaged in transit due to unavoidable reason whose price was adjusted in the remaining TVs. The new price of each TV will be
(a) Rs. 10,000
(b) Rs. 10,200
(c) Rs. 15,000
(d) Rs. 10,526

Q.48. A draws a bill on B for Rs 30,000 for mutual accommodation. A discounted that bill for Rs.28,000 from bank and remitted Rs.14,000 to B. On due date A will send to B
(a) Rs. 14,000
(b) Rs.14,500
(c) Rs.15,000
(d) Rs.15,500

Q.49. X and Y enter into a joint venture for purchase and sale of Type-writer. X purchased Typewriter costing Rs. 1,20,000. Repairing expenses Rs. 10,000, printing expenses Rs 10,000. Y sold it at 20% margin on selling price. The sales value will be:
(a) Rs. 1,25,000
(b) Rs. 1,50,000
(c) Rs. 1,00,000
(d) Rs. 1,40,000

Q.50. Surya Ltd. issued 5,000, 15% Debentures of Rs.100 each at a premium of Rs.10 each. These debentures were to be redeemed at a premium of Rs.4 each after 5 years. The amount to be credited to the securities premium account will be
(a) Rs.25,000
(b) Rs.50,000
(c) Rs.40,000
(d) Rs.60,000

Q.51. Bright Ltd. has 10,000 5% preference shares of Rs. 10 each to be redeemed after 5 years. The company forfeited 500 preference shares on which final call of Rs 2 has not been received after due notice, and cancelled these shares on account of redemption. Remaining shares were redeemed out of reserves of the company. The amount to be credited to capital redemption reserve will be
(a) Rs.1,00,000
(b) Rs. 95,000
(c) Rs. 99,000
(d) Rs. 99,500

Q.52. BPL Ltd. issued 25,000 equity shares of Rs. 10 each payable at Rs. 2 on application, Rs. 3 on allotment, Rs. 2 on first call and the balance in the final call. Archit, who has 1,000 shares paid full value of shares with allotment money. The amount to be debited to bank account at the time of receipt of first call money will be
(a) Rs.50,000
(b) Rs.47,000
(c) Rs.49,000
(d) Rs.48,000

Q.53. Books of Sonu, shows on 1st January 2010 furniture Rs. 20,000. During the year a part of the furniture whose book value on 1st January 2010 is Rs. 1,200 has been exchanged with another furniture by paying additional Rs. 500. Sonu charge depreciation @ 10% p.a. The net amount of the furniture to be shown in the balance sheet will be
(a) Rs 18,508
(b) Rs 20,440
(c) Rs 18,396
(d) Rs 18,478

Q.54. In the bank reconciliation statement, when balance as per the cash book is taken as the starting point, then direct deposits from the customer of Rs. 2,500 in the bank will be
(a) Added
(b) Subtracted
(c) Ignored
(d) None of the above

Q.55. Debit balance as per Cash Book of Tipsy Enterprise as on 31.3.2010 is Rs. 1,500. Cheques deposited but not cleared amounts to Rs. 100 and Cheques issued but not presented is of Rs. 150. The bank allowed interest amounting Rs. 50 and collected dividend Rs. 50 on behalf of Tipsy Enterprise. After reconciliation, balance as per pass book should be
(a) Rs. 1,600
(b) Rs. 1,450
(c) Rs. 1,650
(d) Rs. 1,850

Q.56. If a sales return of Rs.1,500 has been wrongly posted to the credit of the purchase returns account, but has been correctly entered in the trade receivable’s account, the total of the
(a) trial balance would show the debit side to be Rs.3,000 more than the credit
(b) trial balance would show the credit side to be Rs.3,000 more than the debit
(c) the debit side of the trial balance will be Rs.1,500 more than the credit side
(d) the credit side of the trial balance will be Rs.1,500 more than the debit side

Q.57. The total cost of goods available for sale with a company during the current year is Rs.12,00,000 and total sales during the period is Rs.13,00,000. If the gross profit margin of the company is 33 1/3% on cost, the closing inventory during the current year is
(a) Rs. 4,00,000
(b) Rs. 3,00,000
(c) Rs. 2,25,000
(d) Rs. 2,60,000

Q.58. On 31st March 2009, Sonu 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 2009 after availing a cash discount of 10%. On 30th September 2009, he paid Rs. 2,850 after availing 5% cash discount. On account of final settlement, the amount to be paid by Sonu without any discount will be
(a) Rs. 2,350
(b) Rs. 2,000
(c) Rs. 2,200
(d) Rs. 2,150

Q.59. profit of the M/s XYZ, 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

Q.60. A bad debt recovered during the year is a
(a) Capital expenditure
(b) Revenue expenditure
(c) Capital receipt
(d) Revenue receipt

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