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Commerce Test

Description: Commerce
Number of Questions: 25
Created by:
Tags: Commerce UPSC Bank Shares Indian Accounting Standards & International Accounting Standards Committee Capital and Revenue Transactions Final Accounts (With Adjustments) Final Accounts Accounting Principles and Accounting Equation Company Accounts History and Administration of Company Law in India Social Responsibility Accounting Exchange control
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Directions: Choose the correct option for the given question.What is Capital Redemption Reserve Account available for ?

  1. Redemption of redeemable preference shares

  2. Redemption of redeemable debentures

  3. Reorganization of share capital

  4. Issue of fully paid bonus shares

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Government grants related to income as per the Accounting Standard (AS)-12 should be

  1. presented as a credit in the statement of Profit and Loss.

  2. presented as a deferred income on the asset side of the balance sheet.

  3. presented as a capital grant on the liability side of balance sheet.

  4. presented both in the profit and loss statement and in the balance sheet.

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

What is the renewal fees paid for a patent right?

  1. Capital expenditure

  2. Revenue expenditure

  3. Deferred revenue expenditure

  4. Development expenditure

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

According to the Accounting Standard (AS)-2, the inventory is to be valued at which of the following?

  1. Actual cost or sales value, whichever is lower

  2. Historical cost

  3. Net realizable value

  4. Historical cost or net realizable value, whichever is lower

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Match List-I with List-II and select the correct answer using the code given below the lists. List I (Item) (a) Earnings per share (b) Cash flow statement (c) Inventory valuation (d) Disclosure of accounting policies List-II (Accounting Standard)

  1. AS-3
  2. AS-20
  3. AS-1
  4. AS-2

  1. (a)3 (b)1 (c)4 (d)2

  2. (a)2 (b)4 (c)1 (d)3

  3. (a)3 (b)4 (c)1 (d)2

  4. (a)2 (b)1 (c)4 (d)3

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Which of the following is affected by treatment of an accrued item in accounting?

  1. Profit and loss account only

  2. Profit and loss appropriation account

  3. Balance sheet only

  4. Profit and loss account and balance sheet

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

On 1.4.2007, a firm's capital was Rs. 2,00,000, assets Rs. 2,40,000 and liabilities Rs. 40,000. It sold goods costing Rs. 10,000 for Rs. 12,000. What will be the position of accounting equation after this transaction has been recorded in accounts ?(Assets = Capital + Liabilities)

  1. Rs. 2,42,000 = Rs. 2,02,000 + Rs. 40,000

  2. Rs. 2,52,000 = Rs. 2,12,000 + Rs. 40,000

  3. 2,30,000 = Rs. 2,00,000 + Rs. 30,000

  4. 2,22,000 = Rs. 1,82,000 + Rs. 40,000

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

If Opening Stock Rs. 15,000 Purchases Rs. 37,500 Direct Expenses Rs. 1,500 Closing Stock Rs. 7,500 Operating Expenses Rs. 3,000 Sales are Rs. 60,000 during the year, what is the net profit ?

  1. Rs. 12,000

  2. Rs. 10,500

  3. Rs. 7,500

  4. Rs. 3,000

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

Which of the following statements about preparation of financial statements of a limited liability company is correct ?

  1. Financial statements should be prepared according to the cash basis of accounting only.

  2. Financial statements should be prepared according to the accrual basis of accounting only.

  3. Financial statements should be prepared according to either the cash basis or accrual basis of accounting.

  4. Financial statements should be prepared according to both the accrual and cash basis of accounting.

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

How is profit prior to incorporation treated as?

  1. Revenue reserve

  2. Secret reserve

  3. Capital reserve

  4. General reserve

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.

Match List-I with List-II and select the correct answer using the code given below the lists. List-I (Nature of Expenditures/Receipts) (a) Capital receipts (b) Capital expenditure (c) Revenue expenditure (d) Revenue receipt List II (Example)

  1. Sale of fixed assets
  2. Improvement of fixed assets
  3. Income received as interest
  4. Interest on loan for business

  1. (a)1 (b)2 (c)4 (d)3

  2. (a)3 (b)4 (c)2 (d)1

  3. (a)1 (b)4 (c)2 (d)3

  4. (a)3 (b)2 (c)4 (d)1

Show answer
Correct Option: A

Directions: Choose the correct option for the given question.

Expenses need to be recorded in the period in which the associated revenues are recognised. This is to be ensured as per which of the following accounting principles?

  1. Revenue recognition

  2. Cost benefit

  3. Matching

  4. Periodicity

Show answer
Correct Option: A

Directions: Choose the correct option for the given question.

Which of the following is not correct?

  1. Mutual Fund ensures its participants a professional management of portfolio selection.

  2. Mutual Fund schemes can be open-ended or close-ended.

  3. Balanced Mutual Fund aims at earning current income and capital appreciation.

  4. Mutual Fund is an investment company and a merchant banker.

Show answer
Correct Option: D

Directions: Choose the correct option for the given question.

Income and expenses for the year 2006 (in Rs.) are: Fee received in cash 24,000 Accrued fee 6,000 Rent for chamber paid 6,000 Outstanding rent 2,000 Salary paid to staff 6,000 Miscellaneous expenses paid 200 Salary paid in advance to staff included in the above : Rs. 1,000. What is the income under accrual basis?

  1. Rs. 11,800

  2. Rs. 13,200

  3. Rs. 16,800

  4. Rs. 30,000

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

Which of the following has replaced the Budla system in India?

  1. Rolling settlement

  2. Trading in equity derivatives

  3. Depository system

  4. Online trading

Show answer
Correct Option: A

Directions: Choose the correct option for the given question.

Which of the following statements is not correct?

  1. Business firms combine to avoid wasteful competition.

  2. Business combination is possible only among joint stock companies.

  3. Business firms may combine to take advantage of patent rights of individual firms.

  4. During economic depression, small firms are absorbed by financially sound large firms.

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

What is the theory of social responsibility that focuses on how companies respond to issues, rather than trying to determine their ultimate social responsibility, called?

  1. Corporate social performance

  2. Corporate social responsiveness

  3. Stewardship principle

  4. Enlightened self-interest

Show answer
Correct Option: A

Directions: Choose the correct option for the given question.

What is a systematic evaluation of a company's activities in a given area of social interest such as environmental protection, workplace safety or community involvement, called?

  1. Social responsibility

  2. Social accounting

  3. Social audit

  4. Social forecasting

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.

What is cross rate?

  1. A rate of exchange derived from Central Bank.

  2. A rate of exchange between two currencies, other than those that form a market's principal rates.

  3. A rate of exchange derived from the quotations for buying currencies.

  4. A rate of exchange quoted by a dealer in foreign exchange for selling currencies.

Show answer
Correct Option: B

Directions: Choose the correct option for the given question.

Which of the following statements is not correct?

  1. Working capital is made available by the banks to the export sector at subsidized rates of interest.

  2. Market Development Fund provides the necessary financial assistance for market promotion.

  3. Export Houses/Star Trading houses are granted additional license against exports made during the preceding year.

  4. Export profits enjoy a variety of tax concessions in India.

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.

In foreign trade, what is the price quoted by a supplier which includes all charges incurred up to door delivery of goods to the buyer, called?

  1. Loco price

  2. C.I.F. price

  3. Franco price

  4. Landed price

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.

Under which principle, all the rights of an insured are transferred to insurance company after making payment of claim?

  1. Subrogation

  2. Utmost good faith

  3. Contribution

  4. Average clause

Show answer
Correct Option: A

Directions: Choose the correct option for the given question.

Which of the following statements is correct in respect of Duty Drawback Scheme?

  1. Relieving export goods of duties paid for components used for manufacturing the export goods.

  2. Providing cash incentives to exporters to compensate the duty paid by them in foreign countries.

  3. Compensating importers to the extent of import duty paid by them for importing life-saving drugs.

  4. Providing a facility for withdrawing the duty paid by exporters, if their exports are rejected in foreign countries.

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.

Consider the following statements:

  1. Letter of credit cannot be opened by mail.
  2. Contracts of export of goods and services against payment to be secured partly or fully beyond 90 days are treated as deferred payment exports. Which of the statements given above is/are correct?

  1. (1) only

  2. (2) only

  3. Both (1) and (2)

  4. Neither (1) nor (2)

Show answer
Correct Option: C

Directions: Choose the correct option for the given question.In a marine insurance, when must the insurable interest exist?

  1. At the time of making contract

  2. At the time of loss of subject matter

  3. Both at the time of making contract and at the time of loss of subject matter

  4. At the time of termination of the policy

Show answer
Correct Option: B
Explanation:

 in a marine insurance, insurable interest exist at the time of loss of subject matter.

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