CORPORATE ACCOUNTS 100 mcq.pdf

100 MCQs in 100 Minutes MCQ Questions Underwriting Agreements are of [a] One type [b] Two types [c] Three types [d] Four types Segment Reporting is covered under [a] AS 16 [b] AS 17 [c] AS 18 [d] AS 19 On redemption of...

100 MCQs in 100 Minutes MCQ Questions Underwriting Agreements are of [a] One type [b] Two types [c] Three types [d] Four types Segment Reporting is covered under [a] AS 16 [b] AS 17 [c] AS 18 [d] AS 19 On redemption of Debentures, the amount lying in Debenture Redemption Reserve, which is no longer necessary to be retained, should be transferred to [a] Revaluation Reserve [b] Securities Premium A/c [c] Capital Reserve [d] General Reserve Rate of provisioning by a Bank for Advances doubtful for more than 1 year but less than 3 years is [a] 25% [b] 40% [c] 60% [d] 100% Balance of Interest Accrued on Security Deposit A/c of an Electricity company should be shown [a] under Current Liability, [b] under Non-Current Liability, [c] under Current Asset, [d] under Non-Current Asset. Which of the following items is not a part of cash flow from operating activities? [a] Collection from customers [b] Payment of outstanding wages pg. 1  [c] Payment to suppliers of machinery [d] Advances to foreign suppliers for raw materials While preparing Cash Flow Statement of XY Ltd., a finance company, interest received on loans should be shown as [a] Cash Flow from Operating Activities [b] Cash Flow from Investing Activities [c] Cash Flow from Financing Activities [d] Cash and Cash Equivalent As per Schedule III Current Maturities of Long-Term Borrowings should be shown under [a] Current Assets in Balance Sheet [b] Non-current Liability in Balance Sheet [c] Current Liabilities in Balance Sheet [d] Other Expenses in Statement of Profit and Loss Which of the following is not a criterion for selecting a reportable segment under AS 17? [a] 10% or more of aggregate revenue of all segment [b] 10% or more of aggregate assets of all segment [c] 10% or more of aggregate liabilities of all segment [d] 10% or more of aggregate profit or loss of all segment (higher of the two) Which of the following is not a mandatory financial statement of a General Insurance Company as per IRDA regulations? [a] Revenue Account [b] Profit and Loss Account [c] Balance Sheet [d] Cash Flow Statement A Banking Company needs to transfer a minimum of its profit to reserve fund. [a] 10% [b] 15% [c] 20% [d] 25% In case of an electricity company, depreciation on assets is calculated based on the rates notified by [a] Companies Act 2013 [b] State Electricity Commission pg. 2  [c] Central Electricity Regulatory Commission [d] Income Tax Act 1961 Premium on redemption of redeemable preference shares can be paid out of [a] Capital Redemption Reserve Account [b] Existing Shares Premium Account [c] Proceed of fresh issue of shares [d] All of the above Which of the following is not a component of Cash Flow Statement? [a] Cash payments to suppliers for goods and services [b] Charging of Depreciation [c] Cash advances and loans made to third parties [d] Cash repayments of amounts borrowed The Electricity Act, 2003 replaced which of the following three existing legislations? [a] The Indian Electricity Act, 1910 [b] The Electricity (Supply) Act, 1948 [c] The Electricity Regulatory Commissions Act, 1998 [d] All of the above General Ledger of a Banking Company does not contain [a] Control Accounts of all personal ledgers [b] Assets Accounts [c] Contra Accounts [d] Balance Sheet Which of the following is a principle of insurance? [a] Principle of indemnity [b] Insurable interest [c] Principle of uberrimae fidei [d] All of the above Underwriting commission payable on the shares taken up by the promoters is [a] 2.5% [b] 2% [c] 5% [d] Nil pg. 3  Which of the following reserves cannot be used for the purpose of issuing bonus shares? [a] Revaluation Reserve [b] Dividend Equalization Reserve [c] Capital Redemption Reserve [d] General Reserve In Case of Life Insurance Business, Bonus may be of [a] One type [b] Two types [c] Three types [d] None of the above Instalment of principal amount of long-term loan payable within next 12 months is shown under Balance Sheet of a company under the heading [a] Non-current Assets [b] Non-current Liabilities [c] Current Assets [d] Current Liabilities Which of the following is not a condition of buy-back of securities? [a] Both fully and partly paid-up securities can be bought back. [b] Buy-back must be authorized by the Articles of Association. [c] Buy-back must be authorized by passing a special resolution in general meeting. [d] Buy-back should be completed within 1 year from the date of passing of special resolution. A banking company is required to maintain _____ provision on unsecured portion of doubtful advances. [a] 25% [b] 40% [c] 50% [d] 100% Which of the following is correct? [a] Debenture carries a fixed rate of dividend. [b] A company limited by shares may issue irredeemable preference shares. [c] Unmarked applications are those applications that bear the stamp of the underwriter. [d] Except as provided in Section 54, a company shall not issue shares at a discount. pg. 4  Profit on forfeiture and re-issue of equity shares is credited to [a] Dividend Equalization Reserve [b] General Reserve [c] Capital Reserve [d] Securities Premium In a Balance Sheet prepared under Schedule III of Companies Act, 2013, 'Share application money pending allotment' shall be shown [a] under Shareholder's Fund [b] under Non-Current Liabilities [c] under Current Liabilities [d] as a separate line item. In case of Cash Flow Statement prepared under Direct Method, decrease in current liabilities is [a] added to cash flow from operating activities [b] deducted to cash flow from operating activities [c] added to cash flow from investing activities [d] None of the above For calculation of depreciation, Central Electricity Regulatory Commission has recommended [a] Straight Line Method [b] Optimized Depreciated Replacement Cost Method [c] Written Down Value Method [d] Both (a) and (b) In case of Electricity Company while calculating depreciation for the purpose of tariff as per Regulation 21, the salvage value of the Asset shall be considered as [a] 3% [b] 5% [c] 10% [d] None of the above As per Section 52 of Companies Act 2013, Securities Premium A/c cannot be used [a] to issue fully paid up bonus shares [b] to pay interim dividend [c] to write off the discount on issue of debentures [d] to write off the premium on redemption of preference shares pg. 5  At present, a company can issue preference shares which are [a] irredeemable. [b] redeemable after the expiry of 20 years from the date of issue. [c] redeemable before the expiry of 20 years from the date of issue. [d] redeemable after the expiry of 25 years from the date of issue. In case of purchase of assets under instalment payment system instalments due after 12 months from the reporting date are shown as [a] Current liability [b] Current assets [c] Non-current liability [d] Non-current assets Bonus paid at the end along with the policy amount to the policy holders is called [a] Production bonus [b] Reversionary bonus [c] Gratuitous bonus [d] Maturity bonus In relation to an Electricity Company the amount of security deposit = Load x Load factor of the category in which the customer falls x Current tariff x_________. [a] Billing cycle + 45 days [b] Billing cycle + 30 days [c] Billing cycle + 15 days [d] Billing cycle + 20 days In case of a Banking Company General Ledger does not contain [a] Control Accounts of all personal ledger [b] Assets Accounts [c] Contra Accounts [d] Revenue Accounts Losses of theft are covered by _________insurance policies. [a] Burglary [b] Fire [c] Marine [d] None of the above pg. 6  In case of an Electricity Company, balance of Security Deposit A/c at the end of the accounting period should be disclosed as [a] A non-current asset in the Balance Sheet [b] A current liability in the Balance Sheet [c] A non-current liability in the Balance Sheet [d] A current asset in the Balance Sheet The term "FPO", in the context of issuing shares by a company, refers to [a] Future Public Offer [b] First Public Offer [c] Follow-on Public Offer [d] Full Public Offer Partly paid-up preference shares can be redeemed [a] After obtaining the permission from Company Law Board [b] After passing a special resolution [c] After the permission from the Board of Directors [d] After making them fully paid up Proposed Dividend by a company is [a] Appropriation of profit [b] None of these [c] Charge against the profit [d] Deferred revenue expenditure A company may purchase its own shares out of [a] Free reserves [b] Proceeds of the issue of any shares or other specified securities [c] Securities premium account [d] All of these For the issuer, unpaid matured debentures and interest accrued thereon will be shown under the head [a] Non-current liabilities [b] Non-current assets [c] Current assets [d] Current liabilities How should the revaluation of Fixed Assets be treated in a Cash Flow Statement? [a] Under cash flow from financing activities. [b] Do not appear in cash flow statement [c] Under cash flow from operating activities [d] Under cash flow from investing activities pg. 7  Which of the following are mandatory financial statements of a General Insurance Company as per IRDA regulations? [a] Balance Sheet [b] Profit and Loss Account [c] All of these [d] Revenue Account Grant received specifically for a fixed asset is disclosed in the financial statement: 1) By way of deduction from the gross block of asset 2) The grant is treated as deferred revenue income and charged off on a systematic basis over the useful life of asset. Which of the following is correct? [a] Both I and II [b] Either I or II [c] Only II [d] Only I ABC Ltd. forfeited 1000 shares of Rs.10 each for non-payment of Final Call of Rs.4 each. After the reissue of these shares Rs.1,500 were transferred to Capital Reserve. Shares were reissued for [a] Rs.6,000 [b] Rs.4,500 [c] Rs.5,500 [d] Rs.1,500 Which of the following is/are sources for issue of Bonus Shares by a Company? [a] Free Reserves [b] Securities Premium Account [c] Capital Redemption Reserves Account [d] All of the above A Company may issue Preference Shares for a period exceeding 20 years [a] for Petrochemical Industries [b] for Infrastructure Projects. [c] for Power Sector [d] None of the above Increase in Bank Overdraft is [a] increase in Cash and Cash equivalents [b] decrease in Cash and Cash equivalents [c] inflow from Financial activities [d] outflow from Financial activities pg. 8  In case of Electricity Company while calculating depreciation for the purpose of tariff as per Regulation 21, the salvage value of the Assets shall be considered as [a] 5% [b] 10% [c] 15% [d] None of the above General Ledger of a Banking Company does not contain which of the following? [a] Control Accounts of all Personal Ledger [b] Assets Account [c] Contra Account [d] Balance Sheet Net profit for the year ended 31.03.2022 Rs.30,000, interest received in advance on 1st January, 2022 Rs.4,000 and 31st December, 2022 Rs.6,000. Cash from operations will be___________. [a] Rs.32,000 [b] Rs.44,000 [c] Rs.26,000 [d] Rs.30,000 As per Schedule III of Companies Act, 2013, while preparing the financial statements in case of a Finance Company, interest received from borrowers should be shown under_______. [a] revenue from Operation [b] other Income [c] current assets [d] non-current assets Which of the following is a principle of insurance? [a] Principle of indemnity [b] Insurable interest [c] Principle of uberrimae fidei [d] All of the above Balance of Interest Accrued on Security Deposit A/c of an electricity company should be shown under_______. [a] Current Liability [b] Non-current Liability [c] Current Assets [d] Non-current Assets Which of the following is not a condition of Buy-back of securities/shares? [a] Both fully and partly paid-up securities can be bought back. [b] Buy-back must be authorised by the articles of association. pg. 9  [c] Buy-back must be authorised by passing a special resolution in general meeting. [d] Buy-back should be completed within 1 year from the state of passing of special resolution. In determining the number of shares to be bought back, which of the following tests is not relevant as per Section 68 of the Companies Act 2013? [a] Share outstanding test [b] Resource test [c] Current ratio test [d] Debt-equity ratio test Cash payment to suppliers is a part of________under direct method. [a] cash flow from operating activities [b] cash flow from investing activities [c] cash flow from financing activities [d] cash flow from non-operating activities Trade receivable likely to be settled within the normal operating cycle is________. [a] current assets [b] current liabilities [c] non-current assets [d] non-current liabilities When an insurer transfers a part of the risk to another insurer, it is called________. [a] under insurance [b] reinsurance [c] over insurance [d] double insurance As per Ind AS 2, Inventories, cost of conversion should not include [a] direct material [b] direct labour [c] indirect material [d] abnormal waste materials If total issue size is 2,00,000 and the underwriter commits for 100% underwriting at a commission of 4%, what will be the commission payable, if number of applications received is 1,40,000. The issue price of shares is Rs.12 for each Rs.10 face value shares. [a] Rs.28,800 [b] Rs.28,000 [c] Rs.30,000 [d] Rs.30,800 Which of the following is not a qualitative characteristic of information contained in the financial statements? pg. 10  [a] Comparability [b] Verifiability [c] Timeliness [d] Condensed The objective of Ind AS I Presentation of Financial Statements is to: [a] provide basis for presentation of general-purpose financial statements [b] sets out overall requirements for the presentation of financial statements, [c] sets out guidelines for financial statements structure [d] All of the above Which of the following is a defined contribution plan? [a] Multi-employer plan [b] State Plan [c] Insured Benefits [d] All of the above Which of the following costs are not excluded from cost of inventory? [a] Selling cost [b] Administrative cost [c] Abnormal loss [d] Carriage and freight inward What is the treatment of finance cost as per AS-2? [a] Included in cost [b] Not included in cost [c] Included to the extent it is directly attributable [d] Not covered under AS-2 Fair value before right issue Rs.20. Theoretical ex-right fair value æ18. Calculate right factor. [a] 1.20 [b] 1.15 [c] 1.11 [d] 1.10 01.04.2020 B Ltd. has 1200 ordinary shares outstanding. On 31.08.2021, it issued 400 ordinary shares for cash. On 31.01.21 it bought back 200 ordinary shares. Calculate weighted average number of shares as on 31.03.21. [a] 1,300 [b] 1,400 [c] 1,500 [d] 1,600 pg. 11  Rate of provision on advances doubtful for more than 3 years is [a] 40% [b] 25% [c] 100% [d] Nil Which of the following is/are a part of General Ledger of a Banking Company? [a] Control Accounts of all personal ledgers. [b] Profit and Loss Account. [c] Assets' Accounts. [d] All of the above Which of the following is not a mandatory financial statement of a General Insurance Company as per IRDA regulations? [a] Revenue Account [b] Profit and Loss Account [c] Balance Sheet [d] Cash Flow Statement Date of Bill 15.01.2022 Period 5 months Rate of Discount 8% Calculate rebate on bill discounted, if accounting year ends on 31.03.2022 [a] Rs.852.46 [b] Rs.818.85 [c] Rs.873.22 [d] Rs.825.45 If a loan is identified to be a sub-standard advance with secured exposure of Rs.200 lakh and unsecured portion of Rs. 300 lakh, calculate the provision at applicable rate in case of a banking company. [a] Rs.80 lakhs [b] Rs.85 lakhs [c] Rs. 90 lakhs [d] Rs. 95 lakhs Which of the following items would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities? [a] Depreciation expense [b] Repayment of bonds payable [c] A gain on the sale of land [d] A loss on the sale of equipment pg. 12  Which of the following would be considered a cash-flow item from a "financing" activity? [a] A cash outflow to the government for taxes [b] A cash outflow to repurchase the firm's own common stock [c] A cash outflow to lenders as interest [d] A cash outflow to purchase bonds issued by another company Under which activities cash paid for preferred stock dividends should be shown on the statement of cash flows? [a] Investing activities [b] Financing activities [c] Noncash investing and financing activities [d] Operating activities Which of the following would not be considered a cash flow from "operating" activities? [a] Payments for the inventory [b] Collection from customers [c] Tax payments [d] Payment of debt principle Sale of copyright is concerned with cash flow from: [a] Operating activities [b] Financing activities [c] Investing activities [d] Revenue activities The statement of cash flows does not include cash inflows and outflows for which of the following activities? [a] Financing activities [b] Investing activities [c] Operating activities [d] Revenue activities Which of the following would not represent the cash outflows for the business? [a] Purchase of building for cash [b] The sale of land for cash [c] Retirement of long-term debt [d] The payment of cash for dividends Depreciation is added back to profit when arriving at the cash flow from operating activities as: [a] Depreciation is a non-cash expenditure [b] Depreciation does not affect profit [c] Depreciation only affects the balance sheet, not the profit and loss account [d] None of the above pg. 13  Under which of the following, a business must generate positive net cash flow for it to survive in the long run? [a] Investing activities [b] Financing activities [c] Operating activities [d] Revenue activities Net profit for the year Rs.15,000, interest received in advance on 1st January, 2021 Rs.2,000 and 31st December, 2021 Rs.3,000, cash from operation will be- [a] Rs.16,000 [b] Rs.22,000 [c] Rs.13,000 [d] Rs.15,000 Given salary expenses Rs.40,000, outstanding in the beginning of the year Rs.5,000 and outstanding at the end of the year Rs.10,000. Cash outflow on salary will be: [a] Rs.55,000 [b] Rs.45,000 [c] Rs.35,000 [d] Rs.15,000 If the net profits earned during the year is Rs.50,000 and the amount of debtors in the beginning and end of the year is Rs.10,000 and Rs.20,000 respectively, then the cash from operating activities will be equal to: [a] Rs.30,000 [b] Rs.40,000 [c] Rs.50,000 [d] Rs.60,000 If the net profits earned during the year is Rs.50,000 and the bills receivables have decreased by Rs.10,000 during the year then the cash flow from operating activities will be equal to: [a] Rs.30,000 [b] Rs.40,000 [c] Rs.50,000 [d] Rs.60,000 Which of the following is/are statutory book(s) of company [a] Register of charges [b] Register of Members [c] Register of debenture holders [d] All of the above pg. 14  The net profit on forfeiture and reissue of equity shares is transferred to: [a] Capital Reserve [b] General Reserve [c] Dividend Equalization Reserve [d] Revaluation Reserve _________ of the Companies Act, 2013 prohibits issue of shares at a discount. [a] Section 53 [b] Section 54 [c] Section 61 [d] Section 62 The balance of Securities Premium A/C cannot be utilized for [a] Writing off preliminary expenses [b] Payment of dividend [c] Buyback of shares [d] Discount on issue of shares Given, paid-up share capital Rs.10,00,000 and free reserves Rs.2,00,000, what is the maximum amount permissible for buy-back of shares? [a] Rs.2,00,000 [b] Rs.2,50,000 [c] Rs.2,80,000 [d] Rs.3,00,000 Which of the following would be considered a Cash-Flow item. From an ‘investing activity’ [a] Income tax payments [b] Cash Outflow to purchase bonds issued by another company [c] Cash outflow to the government for taxes [d] None of these As per AS-3 Cash Flow Statement, cash received on sale of shares in case of a manufacturing company is a __________ activity. [a] Operating activity [b] Financing activity [c] Investing activity [d] Revenue activity A mutual fund company received a dividend of Rs.20 lakhs on its investment in another company’s shares. Where will it appear in a Cash Flow Statement? [a] Cash flow from Investing Activities [b] Cash Flow from Financing Activities [c] No cash flow [d] Cash Flow from Operating Activities pg. 15  ________ at advance means where a bank grant advance to its customers against any tangible security. [a] Secured [b] Unsecured [c] Mortgaged [d] None of the above Cost of Production of product M = Rs.250 (Material Cost Rs.120), Replacement cost = Rs.105. Inventory of raw material is 2,000 units. If FG is sold at Rs.270/unit. State value of Closing stock of Raw Material. [a] Rs.2,10,000 [b] Rs.2,40,000 [c] Rs.2,50,000 [d] Rs.2,16,667 On the basis of the following information, calculate the actual return on pension plan assets. Benefits Paid Rs.2,50,000 Contribution Rs.3,25,000 FMV of plan assets at the end Rs.15,00,000 FMV of plan assets at the beginning Rs.10,00,000 [a] Rs.4,25,000 [b] Rs.5,00,000 [c] Rs.75,000 [d] Rs.3,25,000 The financial statements of XYZ Ltd. for the financial year 2020-21 were approved by the BOD on 10.05.2021. A fraud relating to the accounts of 2019-20 was identified on 15.04.2021. Is it an adjusting event? [a] It is an adjusting event [b] Not an adjusting event [c] Not covered under Ind-AS 10 [d] None of the above The expected sales value of stock is 100 lakhs and a commission at 10% on sale is payable to the agent. Calculate NRV. [a] 90 lakhs [b] 110 lakhs [c] 100 lakhs [d] None of the above. pg. 16  MCQ Answers (b) Two types (b) AS 17 (d) General Reserve (b) 40% (b) under Non-Current Liability (c) Payment to suppliers of machinery (a) Cash Flow from Operating Activities (c) Current Liabilities in Balance Sheet (c) 10% or more of aggregate liabilities of all segment (d) Cash Flow Statement (d) 25% (c) Central Electricity Regulatory Commission (b) Existing Shares Premium Account (b) Charging of Depreciation (d) All of the above (d) Balance Sheet (d) All of the above (d) Nil (a) Revaluation Reserve (c) Three Types (d) Current Liabilities (a) Both fully and partly paid-up securities can be bought back (d) 100% (d) Except as provided in Section 54, a company shall not issue shares at a discount. (c) Capital Reserve (d) as a separate line item (b) deducted to cash flow from operating activities (d) Both (a) & (b) (c) 10% pg. 17  (b) to pay interim dividend (c) redeemable before the expiry of 20 years from the date of issue (c) Non-current liability (b) Reversionary bonus (a) Billing cycle + 45 days (d) Revenue Accounts (a) Burglary (c) A non-current liability in the Balance Sheet (c) Follow-on Public Offer (d) After making them fully paid up (a) Appropriation of profit (d) All of these (d) Current liabilities (b) Do not appear in cash flow statement (c) All of these (b) Either I or II (c) Rs.5,500 (d) All of the above (b) for Infrastructure Projects (c) Inflow from Financial activities (b) 10% (d) Balance Sheet (a) Rs.32,000 (a) Revenue from operations (d) all of the above (b) under non-current -liability (a) Both fully and partly paid-up securities can be bought back. (c) Current Ratio Test (a) cash flow from operating activities (a) Current Assets pg. 18  (b) Reinsurance (d) abnormal waste materials (a) Rs.28,800 (d) Condensed (d) All of the above (d) All of the above (d) Carriage & Freight Inward (b) Not included in cost (c) 1.11 (b) Rs.1,400 (c) 100% (d) All of the above (d) Cash Flow Statement (a) Rs.852.46 (c) Rs.90 lakhs (c) A gain on the sale of land (b) A cash outflow to repurchase the firm’s own common stock (b) Financing activities (d) Payment of debt principle (c) Investing activities (d) Revenue activities (b) The sale of land for cash (a) Depreciation is a non-cash expenditure (c) Operating activities (a) Rs.16,000 (c) Rs.35,000 (b) Rs.40,000 (b) Rs.40,000 (d) All of the above (a) Capital Reserve pg. 19  (b) Section 54 (b) Payment of dividend (d) Rs.3,00,000 (b) Cash Outflow to purchase bonds issued by another company (c) Investing Activity (d) Cash Flow from Operating Activities (a) Secured (b) Rs.2,40,000 (a) Rs.4,25,000 (a) It is an adjusting event (a) 90 lakhs pg. 20