• Theoretical Framework of Accounting (CA - CPT)
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Theoretical Framework of Accounting (CA - CPT)

Description: Fundamentals of Accounting
Number of Questions: 15
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Tags: CA - CPT Fundamentals of Accounting Inventories Depreciation Accounting Process Final Accounts Bank Reconciliation Statement Depreciation Accounting
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What is the effect on the net asset if cash received from debtors is Rs. 75,000?

  1. It will increase by 75,000.

  2. It will decrease by 75,000.

  3. There will be no change.

  4. It will decrease by Rs. 75,000 - 25,000= 50,000.

  5. None of the above

Show answer
Correct Option: C
Explanation:

This is the correct option. Debtors have decreased and cash has increased, but total value of assets and liabilities remains the same.

Net asset = Total assets - total liabilities

Anju purchased a table of Rs. 25,000 on credit. By this transaction, assets would

  1. increase by Rs. 25,000

  2. decrease by Rs. 25,000

  3. not change

  4. become less by Rs. 10,000

  5. None of the above

Show answer
Correct Option: A
Explanation:

Assets will increase by Rs. 25,000 as asset will be debited. Though, creditor will also be credited and liabilities will also increase.

Which of the following will be the effect when a fixed asset is sold at cost?

  1. Total assets will increase

  2. Total assets will decrease

  3. No change in total assets

  4. Total liability will increase

  5. None of the above

Show answer
Correct Option: C
Explanation:

There will be no change in total assets. If it is sold on cash, cash will increase and fixed assets will decrease. If it is sold on credit, debtors will increase but total assets will be unaffected.

Which of the following deals with accounting of fixed assets?

  1. AS 6

  2. AS 10

  3. AS 3

  4. AS 15

  5. AS 16

Show answer
Correct Option: B
Explanation:

AS 10 is about accounting for fixed assets.

If capital of the business is Rs. 40,000 and liabilities are Rs. 20,000 then the total assets will be

  1. Rs. 60,000

  2. Rs. 40,000

  3. Rs. 20,000

  4. Rs. 80,000

  5. None of the above

Show answer
Correct Option: A
Explanation:

Total assets = total liabilities + capital = Rs. 40,000 + Rs. 20,000 = Rs. 60,000

Debit balance as per passbook means

  1. bank overdraft

  2. cash in hand

  3. cash balance at bank

  4. total sales

  5. None of the above

Show answer
Correct Option: A
Explanation:

Debit balance in passbook means cash is drawn more than balance available in bank. So, this option is correct.

According to AS 2, cost of inventory should exclude

  1. direct labour cost

  2. interest on loan

  3. production overhead

  4. freight inward

  5. duty and taxes paid

Show answer
Correct Option: B
Explanation:

Interest on loan should not be added to the cost of inventory.

Accounting Standard 2 by the ICAI defines inventory as

  1. asset held for sale in ordinary course of business

  2. fixed asset

  3. current asset

  4. current liability

  5. None of these

Show answer
Correct Option: A
Explanation:

The definition of inventory or closing stock includes: Items which are held for sale in the normal course of business that has finished stock of goods. Work-in-progress (WIP) for such sale. Goods which are not yet finished or ready for sale. Raw material which is not even issued for production while valuation of closing stock or inventory. It also includes consumable stores items.

Closing inventory is shown in balance sheet under which of the following?

  1. Fixed assets

  2. Current liabilities

  3. Current assets

  4. Miscellaneous expenses

  5. None of the above

Show answer
Correct Option: C
Explanation:

Inventory will be shown under current assets.

An asset was purchased for Rs. 6,60,000. Cash paid is Rs. 1,20,000 and the balance bill is drawn for 3 months. For giving effect to this transaction, fixed assets will be debited by which of the following?

  1. Rs. 1,20,000

  2. Rs. 6,60,000

  3. Rs. 5,40,000

  4. No effect

  5. Rs. 7,80,000

Show answer
Correct Option: B
Explanation:

Fixed assets will increase by Rs. 6,60,000. So, fixed assets will be debited by Rs. 6,60,000 |||| |---|---|---| |Particulars|Debit (Rs)|Credit(Rs)| |Fixed asset A/C Dr                                       |6,60,000| | |     To Cash         | |1,20,000| |     To Bills                 payable| |5,40,000|

Cost of goods sold is Rs. 72,000, opening stock is Rs. 23,000 and purchase is Rs. 1,12,000. What will be the value of closing stock?

  1. Rs. 63,000

  2. Rs. 17,000

  3. Rs. 1,61,000

  4. Cannot be determined

  5. None of the above

Show answer
Correct Option: A
Explanation:

Closing stock = Opening stock + purchases - cost of goods sold. Closing stock = Rs. 23,000 + Rs. 1,12,000 - Rs. 72,000 = Rs. 63,000

Entry on credit side of bank passbook implies which of the following?

  1. Cash withdrawn

  2. Cash/cheque deposited

  3. Business expenses

  4. Personal expense

  5. None of the above

Show answer
Correct Option: B
Explanation:

Cash or cheque deposit entry will be shown in credit side as per the rule credit what comes in.

AS 2 deals with which of the following?

  1. Depreciation

  2. Revenue recognition

  3. Inventory

  4. Accounting of investment

  5. Earning per share

Show answer
Correct Option: C
Explanation:

AS 2 deals with inventory.

Which of the following deals with depreciation?

  1. AS 6

  2. AS 2

  3. AS 3

  4. AS 1

  5. AS 9

Show answer
Correct Option: A
Explanation:

AS 6 deals with depreciation.

Credit balance in bank passbook means

  1. bank overdraft

  2. favourable balance

  3. total of bank book

  4. balance at cash book

  5. total of cash book

Show answer
Correct Option: B
Explanation:

Credit side means cash is available in bank account which is considered as favourable balance.

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