Correct : A. Apportionment of the cost of the asset over its useful life
2. The profit on depreciation policy is transferred to:
Correct : A. Depreciation reserve account
3. In case of Annuity Method, the amount of depreciation is:
Correct : B. Fixed for all the year
4. For providing depreciation on leasehold property, the appropriate method of depreciation
is:
Correct : C. Fixed Installment Method
5. Depletion Method of depreciation is used in:
Correct : B. Mines, Quarries etc.
6. The interest lost on the acquisition of an asset is taken into account in calculating depreciation in:
Correct : B. Annuity Method
7. In this method depreciation is charged on the cost of asset every year:
Correct : A. Straight Line Method
8. AS 6 revised is an accounting standard for:
Correct : B. Depreciation Accounting
9. These reserves are created out of revenue profits of the business for a specific purpose:
Correct : A. Specific Reserves
10. These are the reserves created only to strengthen the financial position or the business and to keep the funds available for any future contingency or expenditure that may be required:
Correct : B. General Reserves
11. These reserves are created out of capital profits:
Correct : C. Capital Reserves
12. These reserves are not shown in the balance sheet:
Correct : C. Secret reserves
13. A reserve is created but its identity is merged with some other account or group of accounts so that the existence of the reserve is not known:
Correct : C. Undisclosed Reserves
14. The value of asset can be reduced to zero under this method ____
Correct : B. Written down value method
15. Provision for depreciation account appears on the _____
Correct : A. Asset side
16. If the asset is sold, the provision for depreciation relating to the asset sold is transferred to:
Correct : B. Liability account
17. Depreciation is charged on___
Correct : A. Continuous basis
18. Loss of usefulness occasioned by improved production methods is known as____
Correct : A. Physical deterioration
19. Depreciation applies to___
Correct : B. Wasting assets
20. Depletion applies to____
Correct : D. Fixed assets
21. Income tax authorities recognize this method ___
Correct : B. Written down value method.
22. Amortization applies to
Correct : C. Intangible assets.
23. Mines quarries oilfields and forest are example of
Correct : C. Wasting assets.
24. In depreciation calculation the life of an asset is:
Correct : B. An estimate
25. Depreciable amount plus residual value of a fixed asset:
Correct : C. Cost of the fixed asset
26. Cost of fixed asset minus accumulated depreciation expenses of the fixed asset:
Correct : A. Book value of a fixed asset
27. The estimate about useful life of a fixed asset:
Correct : B. Can be changed
28. XYZ has imported a machine from abroad. Which of the following is not the element of a machine’s cost?
Correct : D. Refundable Tax
29. Which of the following fixed asset is not depreciated in ordinary circumstances:
Correct : C. Land
30. In calculation of depreciation, all of the following items are actually estimates except:
Correct : C. Historical Cost
31. Depreciation means
Correct : D. Reduction in the books value of the fixed asset
32. Provision for Depreciation is
Correct : B. A charge against the profit
33. A machine is purchased at a cost of Rs. 5,00,000. Its useful life is 5 years with a scrap value of Rs. 50,000. It is sold for Rs. 40,000 at the end of 5 years. The profit or loss on the sale would be:
Correct : D. Loss of Rs. 1,000
34. Depreciation of loose tools is provided by
Correct : B. Revaluation method
35. Which of the following is not one of the five areas into which social accounting can be divided?
Correct : A. Environmental auditing
36. Human resource accounting attempts to place a value on:
Correct : B. The whole workforce
37. Which of the following is not a reason that explains why more firms are reporting on
social matters?
Correct : B. Increased efficiency
38. The amount of depreciation charged on a machinery will be debited to:
Correct : B. Depreciation Account
39. Loss on sale of machinery will be:
Correct : B. Credited to machinery A/c
40. Which of the term is used to write off in reference to tangible fixed assets.
Correct : A. Depreciation
41. Reduction in the book value of an asset over a period of time is called
Correct : B. Depreciation
42. Which among the following is not a reason for depreciation?
Correct : D. Repair of an asset
43. Depreciation is charged on
Correct : B. Fixed asset
44. Depreciation helps in determining
Correct : A. Accurate level of profit
45. The asset which is an exception from depreciation is
Correct : C. Land
46. Which of the following is true about the straight-line method?
Correct : B. Cost of depreciation remains constant
47. Annual depreciation of machine is 40000, cost of machine is 500000, rate of depreciation according to straight-line method will be
Correct : D. 8%
48. Value of an asset is 9 lakh, scrap value is 125000, estimated life is 10 years the cost of depreciation under straight-line method will be
Correct : C. 77500
49. Depreciation is a process of:
Correct : B. Allocation of cost
50. Shares which are not preference shares are called:
Correct : C. Equity shares
51. The amount of share premium received by the company is shown in the Balance Sheet under the heading:
Correct : B. Reserves and Surplus
52. Return of shares voluntarily by a shareholder to the company for cancellation is called:
Correct : A. Surrender of Shares
53. A situation where a company receives applications for a smaller number of shares than offered to the public for subscription is termed as:
Correct : B. Under Subscription
54. Shares having preferential right as to dividend and repayment of capital are termed as in
Correct : B. Preference Shares
55. The amount paid as premium for an insurance policy taken for redemption of debentures is credited at the end of the accounting period to:
Correct : B. Debentures Redemption Fund Account
56. The balance sheet of the debentures sinking fund after redemption of debentures is credited at the end of the accounting period to:
Correct : B. General Reserve
57. Debentures issued as Collateral Security for Rs. 10,000 will be debited to:
Correct : A. Debentures Suspense Account
58. In case debentures of Rs. 10,000 are issued at par but payable at a premium of 10% the premium payable will be debited to:
Correct : C. Loss on issue of Debentures Account
59. If debentures of the nominal value of Rs. 1,00,000 are issued at discount of 10% for net assets worth Rs. 80,000, the balance of Rs. 10,000 will be debited to:
Correct : A. Goodwill Account
60. A reserve created for redemption of debentures at a future date:
Correct : B. Debentures Redemption Reserve
61. Which of the following statement is false?
Correct : C. A shareholder is the agent of a company
62. Which of the following are characteristics of the company?
Correct : D. All of the above
63. Which of the company’s capital is not shown in balance sheet?
Correct : D. Reserve Capital
64. Securities Premium Account is shown on the liabilities side under the head:
Correct : B. Reserves and Surplus
65. As per section 78 of Company’s Act amount collected as premium on securities cannot
be utilized for:
Correct : B. Purchase of fixed assets
66. The portion of the Authorized Capital which can be called-up only on the liquidation of
the Company is called:
Correct : B. Reserve Capital
67. A Company can issue share at a discount if:
Correct : D. All of the above
68. A new company set up by existing companies with five year track record can issue share at premium provided:
Correct : D. All the above
69. Debenture holders are the:
Correct : B. Creditors
70. Debenture holder receive:
Correct : A. Fixed Interest
71. Share Capital in the balance sheet is shown under:
Correct : B. Liability
72. A private invitation to the public to purchase shares of a company is called:
Correct : A. Prospectus
73. A document which gives company’s relationship with outside world is called:
Correct : B. Memorandum of association
74. A share of a public company is:
Correct : C. Transferable
75. Share premium money can be used for:
Correct : C. Issue of fully paid bonus shares
76. Discount allowed on reissue of forfeited shares is debited to:
Correct : B. Forfeited Shares account
77. The balance of the forfeited shares account after reissue of forfeited shares account is transferred to:
Correct : A. Capital Reserve Account
78. If a share of Rs.10, on which Rs. 6 has been paid, is forfeited, it can be reissued at the minimum price of:
Correct : B. Rs. 4 per share
79. A situation where accompany receives application for a greater number of shares than offered to the public for s7ubscription is termed as:
Correct : B. Oversubscription
80. A company is a person created by
Correct : D. Law
81. Transferability of share is permitted by:
Correct : C. All public companies
82. Share Application account is a
Correct : D. Personal Account
83. A company can issue sweat-equity shares to:
Correct : C. The directors and the employees of the company
84. As per Articles of Association of the Companies Act 2013, a company has to pay interest on calls in advance at the rate of:
Correct : D. 12%
85. Debenture is a part of:
Correct : B. Loan capital
86. Interest on Debenture is:
Correct : B. A charge against the profit
87. Debenture is treated in books of account as:
Correct : A. Personal account
88. Shareholder’s funds include:
Correct : D. Share capital and reserve and surplus
89. Short term provisions in the Balance Sheet include:
Correct : D. All the above
90. The amount of capital that a company can issue at par value is called:
Correct : A. Authorized capital
91. Cash loaned to a company is called:
Correct : B. Debentures
92. The appropriation account is also called:
Correct : A. Statement of changes in owner’s equity
93. A company is allowed by law to sell 200 000 shares at Rs.2.00 each. Three-quarters (3/4) of these shares were bought by the public. What is the issued share capital?
Correct : B. Rs. 300 000
94. The share of profit a shareholder will receive is called:
Correct : A. Dividend
95. Share allotment account is a ------------------
Correct : A. Personal Account
96. Premium received on issue of shares is shown on-----------.
Correct : B. liability side of the balance sheet
97. Premium on issue of shares can be used for -----------.
Correct : B. writing off capital losses
98. Premium received on issue of shares cannot be utilized for ---------.
Correct : D. for distribution of dividend
99. When shares issued at premium which of the following account is credited?
Correct : A. Share premium account
100. Mr. X has underwritten 40,000 Shares, but the public applied for 50,000 shares. Therefore, Mr. B will get commission on the issue price of