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Wednesday, August 12, 2020

Paper 5: Financial Accounting Multiple Choice Questions and Answers | Set 2 | CMA Intermediate | Fill in the Blanks

Paper 5: Financial Accounting (Fill in the Blanks)
1)         Net Worth is excess of total assets over total liabilities.
2)         The Sales Rs. 180 Lakh, Purchases Rs. 129 Lakh and Opening Stock Rs. 33 Lakh. If the rate of Gross Profit is 50% on cost, then the value of closing stock will be Rs. 42 lakh.
3)         In case of Loss of Profit Policy, Gross Profit is the sum of Net Profit plus Insured Standing Charges.
4)         Interest to be allowed @ 0.75 per cent per month on Partners Capital of Rs. 60 Lakh; Manager's Commission @ 5 per cent of Net Profit before charging such commission. If the Net Profit before charging interest on capital and manager's commission amounted to Rs. 14.85 Lakh, then manager's commission will be Rs. 47,250.
5)         A machinery was purchased on Hire Purchase System. Its cash price was Rs. 5,20,000 which was payable in annual instalments of Rs. 1,80,000 each including interest @ 15 per cent per annum. The amount of interest included in 2nd instalment would be Rs. 62,700.

6)         The Bank A/c is a Personal Account.
7)         Assets are classified as non-current asset and current assets as per Going-Concern Principle.
8)         Recoverable/Fair Value Amount is the higher of asset's net selling price and its value in use.
9)         The Normal Loss is included in the valuation of inventories.
10)      Short-working is the amount by which minimum rent exceeds the actual royalty.
11)      The terms owners equity and Net worth are used interchangeably
12)      The contract of insurance is a contract of Guarantee.
13)      Capital is shown on the liability side because of concept Business Entity.
14)      Current Ratio is a Ratio Solvency.
15)      As per Revised Schedule VI of the Companies Act,1956 ‘unclaimed dividends’ are to be shown under the head Current liabilities.
16)      AS 13 is related to Accounting for Investment.
17)      Stock Velocity = Cost of Goods Sold / Average Stock.
18)      Minimum partners required for a non-banking partnership firm are 2.
19)      Yield method of valuing shares is also known as method  Earning Capacity.
20)      The terms equity and Net worth are used interchangeably.
21)      Minimum partners required for a non-banking partnership firm are Two (2) .
22)      In case of fixed capital accounts method salary payable to partners will be credited to Current account.
23)      Every partner is bound to attend diligently to his Duties in the conduct of the business of the firm.
24)      Compensation given to old partners for sacrifice made in favour new partner is known as Premium.
25)      Partners X,Y and Z change their profit sharing ratio from 5:3:2 to 3:2:1 respectively and goodwill for the purpose is valued at Rs.10,00,000. goodwill will be raised by partners in Old profit sharing ratio.
26)      Goodwill valuation depends predominantly on Future profit earning potential.
27)      Net worth ratio means share holders funds divided by total assets excluding (fictitious assets/prepaid expenses).
28)      When the cost of byproduct cannot be ascertained separately it should be valued at (sale price/net realisable value).
29)      Errors in principle_______  affect tallying Balance Sheet (does/does not).
30)      In case of instalment sale ownership passes at the time of (sale/payment of last instalment).
31)      Solvency ratio means total liabilities divided by (total assets/shareholders funds).
32)      When there is no agreement among the partners, the profit or loss of the firm will be shared in their (capital ratio/equally).
33)      In Hire Purchase transaction the right to sell or transfer of the goods remains with (Seller/ Hirer).
34)      As per the going concern concept, the enterprise should continue to exist (in the foreseeable future/for limited period of time).
35)      Inauguration expenses on opening of a new Branch of an existing business will be (capital/revenue) expenditure.
36)      Trial balance would not disclose (error of omission/omission of posting)
37)      Depreciation is an item of (gross profit/expenditure)
38)      Compensation paid to employees who are retrenched is expenditure (Capital/ Revenue)
39)      Receipts and Payment Account is a Account is nature. (Real/Nominal)
40)      The Trade discount is not recorded in the books of accounts.
41)      Profit or Loss on revaluation is shared among the partners in Old profit sharing Ratio.
42)      At the time of goods sent to consignee, the proforma invoice is prepared by Consignor.
43)      Memorandum revaluation account is prepared when the Book value of assets and liabilities are not altered.
44)      Realisation account is opened at the time of Dissolution of the firm. 
45)      The Trade discount is never entered in the books of accounts.
46)      A bill of exchange drown on 12th April, 2017 for four months, the date of maturity will be 14th August, 2017.
47)      The parties of joint venture is called Co-ventures.
48)      Outstanding subscription is shown in the Assets side of Balance Sheet.
49)      According to AS-2 inventories should be valued at lower of cost and Net realizable value.

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