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This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 851. |
State whether the following statements are True or False (i) Receipts and Payments Account shows the receipts and payments of revenue nature only. (ii) Receipt from the sale of an old asset is an income (iii) Receipts and Payments Account is a summary of cash transactions (iv) Surplus of Non-Trading Organisation is destributed among the members (v) Income and Expenditure Account is equivalent to the Profit and Loss Account of a business enterprise. (vi) Proceeds from the sale of old newspaper are taken as income. (vii) Receipts and Payments Account shows total income and expenditure (viii) Only revenue nature items are shown in the Income and Expenditure Account. (ix) Scholarships granted to students provided by government is debited to Income and Expenditure Account. (x) Payment of honorarium is a revenue expenditure (xi) Any expenditure relating to special fund is deducted from the special fund. (xii) Loss on sale of fixed asset is debited to income and Expenditure Account. Whereas gain (profit) on sale of fixed asset is credited to Income and Expenditure Account |
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| 852. |
State whether the following statements are True or False (i) Efficiency of management does not affect the goodwill of business. (ii) Purchased goodwill may arise on acquisition of an existing business firm. (iii) Goodwill can be defined as the present value of anticipated profits. (iv) Self - Generated Goodwill is recorded in the books of account as some consideration is paid for it. (v) Under capitalisation of super Profit Method, goodwill is ascertined by capitallsing the super Profit on the basis of Normal Rate of Return. |
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| 853. |
State whether the following statements are True or False (i) Debenture is an evidence of company's borrowing (ii) Shares are not borrowing of a company whereas Debentures are borrowings of the company. (iii) Unlike shares, debentures can be issued at a discount. (iv) ABC Ltd. issued 10,000 , 8% Debentures of Rs 100 each at Rs 98. It is a case of issue of debentures (v) Debenture may or may not be secured by a charge on the assets of the company. (vi) Debentures are relatively riskier than shares. (vii) Debentures are repaid after reparyment of share capital. (viii) Debentures are normally shown as Long-term Borrowing under Non-current Liabilities. (ix) Debentures, out of Long-term Borrowings, that are due for redemption within 12 Months from the date of Balances Sheet are shown as Short -term Borrowings. (x) Debenturess are always issued payable in compsum. (xi) Premim received on Debentures is credited to Securities Premium Reserve. (xii) A company has issued 5,000, 10% Debentures of Rs 1,000 each as security for a loan of Rs 75,00,000. It may or may not pass an entry for the issue of such debentures. (xiii) Purchase consideration can be paid partly by cheque, an acceptance and balance by issue of debentures at par or discount or premium. (xiv) Loss on Issue of Debentures is written off in the year the debentures are issued from Statement of Profit and Loss alone. (xv) Loss on issue of Debentures is written off in the year the debentures are issued from Securities Premium Reserve, if it exists and then from Statements of Profit and Loss. (xvi) Debentures Account is credited with the amount received for the debentures. |
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| 854. |
State whether the following statements are True or False (i) Current Accounts are maintained in case of fluctuating capital system. (ii) Partners are entitled to get interest @ 6%p.a. on the loan given to the firm, if Partnership Deep is silent on the issue. (iii) At least two person are necessary to form a partnership (iv) In the absence of an agreement, profits and losses are distributed among the partners equally. (v) A partner who devotes more time to a business than others is entitled to get a salary. (vi) A partner who has invested more capital in the firm is entitled to get interest on the difference in capital amount. (vii) When a partner draws a fixed sum in the middle of each month for 12 months, interest on total drawings will be equal to interest of 6 months at an agreed rate per annum. (ix) If the Partnership Deep is silent, interest @ 6% would be charged (x) Interest on partner's loan is to be given @ 10% p.a. if the deed is silent about the rate. (xi) Valid partnership can be formulated even without a written agreement between the partners. (xii) Partners are mutual agents of each other so far as the business of the firm is concerned. |
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| 855. |
State whether the following statements are True or False: (i) Comparison of values of a firm with those of another firm is termed as inter-firm comparison. (ii) comparison of values of two years of the firm is termed as intra-firm comparison. (iii) Revenue from Operations is not taken as 100 in preparing common-size Statement of Profit and Loss. (iv) Total of Assets/Liabilities part is taken as base for preparing Common-size Balance Sheet. (v) Comparative Statements are the tools of financial statement analysis. |
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| 856. |
State whether the following statements are True or False (i) Debenture Redemption Reserves is set aside by all companies except. All India Financial Institutions regulated by RBI and Banking Companies. (ii) Debenture Redemption Investment is made by the companies required to set aside amount to Debenture Redemption Reserve. (iii) Debenture Redemption Reserve can be used only for redemption of debentures. (iv) Debenture Redemption Investment (DRI) can be used by a company for any purposes after the debentures have been redeemed. (v) Debenture Redemption Reserve is not set aside in case the debentures are fully convertible only into shares. (vi) Debenture Redemption Reserve is set aside, in the case of Partly Convertible Debentures, on the convertible part of the debentures. (vii) Debenture Redemption Reserve may be set aside by a company out of any reserve. (viii) Debenture Redemption Reserve is set aside by a company out of amount available for payment of divided. (ix) General Reserve can be transferred to Debenture Redemption Reserve. (x) Surplus, i.e., Balance in Statement of Profit and Loss can not be transferred to Debentures Redemption Reserve. (xi) At least 25% of the redeemable value of debentures should be set aside to Debentures Redemption Reserve before the redemption of debentures. (xii) If a company sets aside profit to Debenture Redemption Reserve, it mean redemption is not fully out of capital. (xiii) If a company sets aside profit equivalent to full nominal (face) value of debentures to Debenture Redemption Reserve, it means redemption is fully out of profits. (xiv) Redemption of Debentures by a Banking Company can be redemption purely out of capital. (xv) Once the debentures are redeemed, the amount of Debenture Redemption Reserve is transferred to Capital Reserve. (xvi) Discount or Loss on Issue of Debentures is written off from Securities Premium Reserve as section 52(2) of Companies Act, 2013 permits so. |
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| 857. |
State whether the following statements are True or False (i) Cash equivalents are short-term, highly liquid investments that are readily convertible into known amount of cash and which are subject to insignificant change in value. (ii) Operating Activities are the principal revenue producing activities of an enterprise and those activities which are not investing or financing activities. (iii) Shares issued to promoters in consideration of their services are shown as Financing Activity. (iv) Gratuity paid to a retiring employee is an Operating Activity. (v) Income Tax paid is always shown as Operating Activity. (vi) Divident paid is always shown as Financing Activity. (vii) Dividend paid is always shown as Financing Activity. (viii) Debentures issued for consideration other than Cash is shown as in flow under Financing Activity. (ix) Deperciation and Amortisation are added to Net profit before Tax and Extradordinary items, they being non-cash expense. (x) Prellminary expenses paid during the year are added to Net Profit before Tax and Extra-ordinary items and shown as outflow under Financing Activity. |
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| 858. |
State whether the following statements are True or False : (i) Change in profit-sharing ratio of the existing partners results in the reconstitution of the partnership firm (ii) Change in profit -sharing ratio does not change the relationship among the existing partners. (iii) The partners whose shares have decreased as a result of change in profit -sharing ratio are known as sacrificing partners. (iv) The partners whose shares have increased as result of change in profit-sharing ratio are known as gaining partners. (v) Reserve Accumulated profit /Loss should always be distributed at the time of reconstitution of partnership even if the qestion is silent. (vi) There is no difference between 'furniture reduced by 20% and 'furniture reduce to 20%' (vii) After revalution, assets and liabilities may or may not be shown in the Balance Sheet at the revised value. |
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| 859. |
State whether the following statements are True or False (i) An objective of financial analysis is to determine operating efficiency and profitability (ii) Determining operating efficiency and profitability is not an objective of financial analysis (iii) Financial analysis is used for credit analysis. (iv) The purpose of financial statement analysis be trade creditors is to determining whether the amount due to them is safe. (v) Financial statement analysis does not ignore qualitative elements |
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| 860. |
State whether the following statements are True or False (i) Authorised Capital us shown in the Note to Accounts on Share Capital (ii) Authorised Capital for Equity Share Capital and Preference Share Capital is not shown separately in the Note to Accounts on Share Capital. (iii) Issued Share Capital is that part of Authorised Share Capital that is issued for subscription whether subscirbed or not. (iv) Issued Share Capital can be more than the Authorised Share Capital. (v) Subscribed Capital is the part of Issued Capital that is subscribed. (vi) Subscribed Captial need not be shown separately for Equity Share Capital and Preference Share Capital. (vii) Shares on which the company has received the entire nominal (face) value, whether called or not, are shown as Subscribed and Fully Paid-up. (viii) Shares on which the company has not received the call made are shown as Subscribed but not Fully Paid-up. (ix) A company, at its discretion may or may not prepare Note to Accounts on line item of the Balance Sheet. (x) Authorised Capital cannot be more than Issued Share Capital. (xi) Subscribed Share Capital can be less than or equal to the Issued Share Capital but cannot be more. (xii) A part of share capital that will be called -up at the of winding up of the company is Reserve Capital. (xiii) Shares can be issued to public at a discount. (xiv) Shares can be issued to employees at a discount. (xv) Shares are always issued at par. (xvi) Securities Premium received on issue of shares is credited to Securities Premium Reserve Account. (xvii) Securities Premium Reserve cannot be used for writing off Loss on Issue of Debentures. (xviii) Securities Premium Reserve can be used for issuing Partly Paid Bonus Shares. (xix) Securities Premium Reserve can be used for writing off preliminary expenses. (xx) Pro rata allotment is made in the event shares are underscribed (xxi) Shares cannot be issued unless minimum subscription is received by the company. (xxii) If a company does not receive the amount called by it on shares, it can forfeit the shares. (xxiii) Forfeited shares can be reissued by the company on the terms as secided by it. (xxiv) Profit on reissue of foreited shares is transferred to Capital Redemption Reserve. (xxv) Application Money received over and above the allotment money is always transferred to Calls in Advance Account. (xxvi) In the case of undersubscription, allontment money and calls amount is demanded on the basis of shares applied and shares issued. (xxvii) Preference Shares do not have preferential right as to dividened and repayment of share capital at the time of company's winding up. (xxviii) Preference Shares cannot be issued at premium. (xxix) Equity Shares cannot be issued at discount whereas Preference Share can be issued at discount. (xxx) Cumulative Preference Shares mean that arrears of dividend is payable before dividend is paid on Preference Shares. (xxxi) Preference Share Capital is not shown as Shareholders' Funds but is shown as Long -term Borrowings: |
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| 861. |
State whether the following statements are True or False : (i) Assets are revalued and liabilities are reassessed at the time of admission of a partner. (ii) Accumulated profits and losses are transferred to Revalution Account at the time of admission of a partner. (iii) Constingent liability becoming a certain liability is debited to Revalution Account at the time of admission of a partner. (iv) The purpose of Revaluation Account is to ascertain the gain/loss arising on account of Revaluation of Assets and Reassessment of Liabilities. (v) A new partner is liable is liable for the past losses of the firm. (vi) On revaluation of assets and liabilities, Capital Accounts of old partners do not change. (vii) Old Partners are not allowed to withdraw the amount of the goodwill brought in by the new parnter. (viii) Unless agreed otherwise, the new profit-sharing ratio of old partners will be the same as their old profit-sharing ratio. (ix) It is necessary that partners should have capitals in their profit-sharing ratio. (x) A new partner brings goodwill into the firm to acquire right to share the future profit of the firm. |
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| 862. |
State whether the following statements are True or False (i) Accounting ratio is a mathematical expression of relationship between two items or group of items in the financial statements (ii) Price level changes are igonred in ratio analysis. It is an advantage of Ratio Analysis. (iii) Quick Ratio establishes the relationship between current assets and current liabilities (iv) In calculating Debt-Equity ratio, all external debts are considered. (v) Debit balance in Surplus i.e., Balance in Statement of Profit and Loss is not deducted to calculate Shareholder's Funds to calculate Debt-Equity Ratio. (vi) The objective of calculating Proprietary Ratio is to measure proportion of fixed assets financed by the Shareholder's Funds. (vii) In Debt to Total Assets Ratio, debt includes only long-term Borrowings and Long-term Provisions. (viii) Interest Coverage ratio shows the amount of profit available to cover the interest. (ix) The formula for Trade Payables Turnover Ratio is Net Credit Purchases/Average Trade Receivables. (x) Loose tools and Stores and Spares are excluded to calculate Working Capital to calculate Working Capital Turnover Ratio. (xi) Gross profit helps in fixing selling prices and assessing efficiency of trading activities. |
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| 863. |
State whether the following statements are True or False : (i) 1,000, 10% Debentures of Rs 100 each out of 10,000, 10% Debentures are redeemable within the 12 months of the date fo Balance Sheet. They will be shown in the Current Liabilities as Short-term Borrowings in the Balance Sheet. (ii) Dividend is paid on Paid-up Capital. (iii) Debentures are shown under the head Other Long-term Liabilities in the Balance Sheet. (iv) Share Application Money Pending Allotment is shown as a line item. (v) Loose Tools and Stores and Spares are shown as inventories in the Balance Sheet. (vi) Bills Receivable is shown as Trade Receivables in the Balance Sheet. (vii) Reserve Capital is part of Share Capital that a Company resolves not to call at any time it desires. |
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| 864. |
State whether the following statements are True or False : (i) A partner can retire from the firm with the consent of all other partners only. (ii) In the event of death, the combined share of profit of the continuing partners will decreases. (iii) A family member of the retring partner will automatically become the new partner in a reconsituted firm. (iv) Galn or loss on revaluation of assets at the time of retirement of a partner is a capital profit. (v) In the event of death, profit or loss on Revaluation Account is transferred to the continuing partners in the old profit-sharing ratio. (vi) The amount due to retiring partner, if not paid in cash, is transferred to his Loan Account. (vii) At the time of retirement/death, undistributed profit/losses and reserves are distributed among all the partners in their old profit-sharing ratio. (viii) The amount due to the retiring partner is always settled in case. (ix) The firm is under obligation to pay an agreed rate of interset for the unpaid balance to the retiring partner. (x) Gaining Ratio is calculated at the time of retirement or death of a partner and change in profit -sharing ratio. |
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| 865. |
State whether cash deposited in bank will result in inflow, outflow or no flow of cash. |
| Answer» Solution :No FLOW. Cash DEPOSITED in BANK represents MOVEMENT between items of cash or cash equivalent. It is not operating, investing or financing activity. | |
| 866. |
State whether cash deposited in bank will be classified under which kind of activity? |
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Answer» CASH FLOW from OperatingActivities |
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| 867. |
State under which major headings the following items will be presented in the Balance Sheet of a company as per Schedule III of Companies Act, 2013: (i) Trademarks (ii) Capital Redemption Reserve (iii) Income Received in Advance (iv) Stores and Spares (v) Office Equipments (vi) Current Investments |
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Answer» (i) Non-CURRENT Assets, (ii) Shareholders' FUNDS, (III) Current LIABILITIES, (iv) Current Assets, (V) Non-Current Assets, (vi) Current Assets. |
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| 868. |
State under which major headings the following items will be presented in the Balance Sheet of a company as per revised Schedule VI, Part I of the Companies Act, 1956 (Now ScheduleIII, Part I of the Companies Act, 2013): (i) Long-term Borrowings(ii) Trade Payables(iii) Provision for Tax(iv) Securities Premium Reserve (v) Patents(vi) Accrued Incomes. |
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Answer» SOLUTION :Major HEADINGS: (i) Non-current LIABILITIES(ii) Current Liabilities (iii) Current Liabilities (iv) SHAREHOLDER FUNDS (v) Non-Current Assets(vi) Current Assets. |
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| 869. |
State two situations is which interest on partners' capital is generally provided. |
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Answer» Solution :Following are two situations in which INTEREST on partners' capital is generally PROVIDED: (a) When profit-sharing is EQUAL but capital contributed by partners are unequal. (b) When profit-sharing is unequal but capital contributed by partners are equal. |
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| 870. |
State two purposes for which securities premium reserve can be used by a company. |
| Answer» SOLUTION :(1) For writing off the preliminary EXPENSES or UNDERWRITING COMMISSION allowed on issue of shares to the shareholders of the Company. | |
| 871. |
State two profitability ratios based on sales. |
| Answer» SOLUTION :(i) GROSS PROFIT Ratio(II) Net Profit Ratio. | |
| 872. |
State two items which are not included in current assets to compute current ratio. |
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| 873. |
State two essential features of a Public Company. |
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Answer» SOLUTION :(i) There is not restriction on the transfer of its shares. (ii) MINIMUM NUMBER of its MEMBERS is 7 and there is no restriction on maximum number. |
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| 874. |
State two essential features of a Private Company. |
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Answer» Solution :(i) It RESTRICTS the right to transfer its shares. (II) It limits the number of its MEMBERS to 200 (exclusive of past and PRESENT employees). |
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| 875. |
State two essential features of a company. |
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Answer» SOLUTION :(i) It is an artificial PERSON created by LAW. (ii) It has a separate legal ENTITY. |
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| 876. |
State two current assets which are not considred to be liquied assets |
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| 877. |
State the various ways by which a ratio can be expressed |
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| 878. |
State two characterstics of a 'Not-for-Profit Organisation'. |
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Answer» Solution :(i) Non-for-Profit ORGANISATION is a Separate Legal Entity i.e., its is now OWNED by any individual or ENTERPRISE. (ii) It is managed by the people who have been elected by its MEMBRES or trustees, known as MANAGING or Executive Committee. |
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| 879. |
State the steps other than rejecting applications that a company can take in case of oversubscription. |
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Answer» SOLUTION :(i) To make PRO rata allotment to all the applicants, or (ii) (a)Accepting some applications in full, and (b) Allotting the remaining on pro rato basis. |
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| 880. |
State the steps other than rejecting applications that a company can take in case of over-subscription. |
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Answer» Solution :(i) To MAKE pro-rata allotment to the REMAINING APPLICANTS , or (II) Accepting some applications in full and alloting the remaining on pro-rata basis. |
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| 881. |
State the significance of Analysis of Financial Statement to 'Top Management'. |
| Answer» Solution :FINANCIAL Statement ANALYSIS is useful for taking financial decision or PREPARING BUDGETARY programmes. | |
| 882. |
State the significance of Analysis of Financial Statement to the 'lenders'. |
| Answer» Solution :On the basis of Analysis of Financial Statement, LENDERS can decide whether principal amount as well as interest THEREON, would be PAID in TIME. | |
| 883. |
State the ratio in which the partners share profits or lesses an revaluation of assets and liabilities, when there is a change in profit-sharing ratio among existing partners. Or State the ratio in which the partners share the gain or loss on revaluation of assets and liabilities. |
| Answer» Solution :Partners share gain (profit) or LOSS on REVALUATION of assets and LIABILITIES in their old profit-sharing ratio/existing profit-sharing ratio. | |
| 884. |
State the ratio in which the partners share profits or losses on revaluation of assets and liabilities, when there is a change in profit sharing ration amongst existing partners? |
| Answer» SOLUTION :In OLD PROFIT SHARING RATIO. | |
| 885. |
State the provisions of Companies Act, 2013 for thecreation of 'Debentures Redemption Reserve'. |
| Answer» Solution :As per the provisions of theCompanies Act, 2013, thecompanies should set aside out of profits AVAILABLE for DISTRIBUTION as dividend to DEBENTURES Redemption RESERVE (DRR) at least 25% of the nominal (face) value of debentures outstanding before theredemption ofdebentures. | |
| 886. |
State the ratio in which the partnersshare gain (profit) or loss on realisation of various assets and payment of various liabilities . |
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| 887. |
State the meaning of Redemption of Debentures Out of Profits. |
| Answer» Solution :REDEMPTION of Debentures Out of Profits MEANS debentures are redeemed out of profits and therefore, AMOUNT equal to 100% of the nominal (face) value of Debentures Outstanding is transferred from Surplus, i.e., Balance in STATEMENT of Profit and LOSS to Debenture Redemption Reserve. | |
| 888. |
State the meaning of Redemption of Debentures Out of Capital. |
| Answer» Solution :When DEBENTURES are REDEEMED WITHOUT profits being transferred to Debentures Redemption Reserve (DRR), at the time of redemption of debentures, such redemption is SAID to be out of capital. | |
| 889. |
State the meaning of Non-convertible Debentures. |
| Answer» SOLUTION :Non-CONVERTIBLE DEBENTURES are those debentures which are not convertible into SHARES. | |
| 890. |
State the meaning of Accounting Standards |
| Answer» SOLUTION :ACCOUNTING Standards are accounting rules and PROCEDURES relating to measurement, valuation and disclosure ISSUED by the recognised EXPERT accauntancy body | |
| 891. |
State the major heads on the liabilities side of the Balance Sheet of a company as per Schedule III, Part I of the Companies Act, 2013. |
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| 892. |
State the interest of trade unions in the Analysis of Financial Statements. |
| Answer» SOLUTION :EMPLOYEES and trade unions are interested in their welfare, i.e., better EMOLUMENTS, bonus, better WORKING conditions and security of their jobs. So, they are always interested in profitability and STRENGTH of the concern. | |
| 893. |
State the limitation of ratio analysis regarding qualitative aspect. |
| Answer» Solution :As RATIOS are arithmetical expressions, QUALITATIVE aspect cannot be presented through ratios. Therefore, in MAKING decision with the help of ratio, utmost care should be taken, as ratio is only one-sided APPROACH to measure the efficiency of the business. | |
| 894. |
State the interest of tax authorities in the Analysis of Financial Statements. |
| Answer» Solution :Tax Authorities are interested to ANALYSE the financial statements to KNOW about the performance of the company and to collect various TYPES of TAXES/. | |
| 895. |
State the first heading under Equity and Liabilities part of the Balance Sheet of a company as per the Schedule III. |
| Answer» SOLUTION :SHAREHOLDERS FUNDS. | |
| 896. |
State the basis of accounting on which 'Receipts and Payments Account' is prepared in case of Not-for-Profit Organisation. |
| Answer» SOLUTION :RECEIPTS and Payments Account. Is prepared on Cahs BASIS of ACCOUNTING. | |
| 897. |
State the basis of accounting on which Receipts and Payments Account is prepared in case of Not-for-Profit Organisation. |
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| 898. |
State the conditions for an investment of qualify as Cash Equivalent. |
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Answer» Solution :For an INVESTMENT to Equivalent: 1, It MUST be READILY canvertible to a known amount of cash. 2. It must be subject to an insignificant risk of change in value . THEREFORE,an investment normally qualifies as cash Equivalent only when it has a short-term Borrowings, i.e Bank Overdraft. |
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| 899. |
State the basis of accounting, on which a Receipts and Payments Account is prepared in case of Not-for-Profit Organisation. Or What is the basis for perparing Recepits and Payments Account? |
| Answer» SOLUTION :CACH BASIS of ACCOUNTING. | |
| 900. |
State Sports Club sells an old Table Tennis Table (Book value Rs.7,000) for Rs.8,500 Show how the sale would be shown in the Receipts and Payments Account. |
Answer» SOLUTION :
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