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UGC-NET Management Commerce Exam Paper (Financial Accounting Quiz - 5)

1. Unique Ltd. has issued 1000, 6% Debentures of Rs.10 each at a premium of Rs.0.20. The interest on debentures is payable semi-annually on September 30 and March The annual interest debited to profit and loss account is

2. The balance in machinery account of Taurus Ltd. as on April 01, 2003 was Rs.85,000. The following transactions took place during the year 2003-2004:
Date Particulars Amount(Rs.)
01-07-2003 Machinery purchased 90,000
01-10-2003 Machinery sold (book value as on April 01, 2003 is Rs.40,000) 50,000
01-01-2004 New machinery purchased 80,000
If the company charges depreciation at the rate of 10% per annum, on written down value method, the amount of depreciation charged for the year 2003-2004 is

3. Rights shares are the shares
[A]Issued by a newly formed company
[B]Legally issued to the public at large
[C]Offered to the existing equity shareholders
[D]That have a right of redemption

4. Which of the following statements is/are true?
I. According to the ‘purchase of super-profit method’ of valuation of goodwill, goodwill is the product of the super profit and the number of years’ purchase.
II. For calculating the amount of goodwill under super profit method, the fair value of the capital employed should be determined.
III. There is only one method of valuing goodwill, i.e., super profit method.
[A]Only (I) above
[B]Only (II) above
[C]Both (I) and (II) above
[D]Both (I) and (III) above

5. The three columns on each side of the three columnar cash book represent
[A]Real accounts and Capital accounts
[B]Personal Accounts and Nominal accounts
[C]Real and Nominal accounts
[D]Real, Personal and Nominal accounts

6. Which of the following is true with regard to the claims against the company not acknowledged as debts?
[A]Shown as current liabilities
[B]Shown as loans and advances
[C]Shown as notes to balance sheet
[D]Shown as directors’ report

7. The increase in equity from major activities of a business entity is known as
[B]Gross profit
[C]Net worth
[D]Net profit

8. Which of the following statements can be used to assess the liquidity of a company?
[A]Balance sheet
[B]Profit and loss account
[C]Profit and loss appropriation account
[D]Bank reconciliation statement

9. Which of the following is not generally used as a valuation base in financial accounting?
[A]Historical Cost
[B]Opportunity cost
[C]Current cost
[D]Realizable value

10. Which of the following subsidiary books serves the purpose of ledger too, in addition to the recording of accounting transactions?
[A]Purchases book
[B]Sales book
[C]Bills receivable book
[D]Cash book

11. Bank reconciliation statement is
[A]A part of the cash book
[B]A ledger account
[C]A part of trial balance
[D]A statement showing the causes for differences between the balances of cashbook and pass book

12. Goods given by a proprietary concern as charity should be
[A]Credited to purchases account
[B]Credited to charity account
[C]Credited to sales account
[D]Debited to proprietor’s drawings account

13. Which of the following items is shown on the debit side of a Trial Balance?
[A]Rent outstanding
[B]Prepaid expenses
[C]Cash sales
[D]Returns outward

14. Closing stock is generally valued at
[A]Cost price
[B]Replacement cost
[C]Market price
[D]Cost price or market price whichever is lower

15. The accounting concept of money measurement is evident under which of the following circumstances?
[A]Making provision for doubtful debts and discount on debtors
[B]Recording all transactions at a price paid for it
[C]Recording non-monetary fixed assets at historical cost less accumulated depreciation
[D]Recording all events/transactions through a common denominator, namely the monetary unit


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