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Monday, May 28, 2012

Financial Accounting Basics - Questions Answers (Accounting Quiz - 7)

1. According to which of the following accounting concepts consolidated financial statements are prepared when a parent-subsidiary relationship exists?
[A]Going concern
[B]Business entity
[C]Materiality
[D]Cost


2. Which of the following factors is used as multiplier of super profits in valuation of goodwill of a business?
[A]Average capital employed in the business
[B]Simple profits
[C]Number of years’ purchase
[D]Normal rate of return


3. XLNT Ltd. purchased 12% bonds with a face value of Rs.2,00,000 at a discount of 15% in the open market as investments and intends to hold them to maturity. The market value of the investments is Rs.1,80,000. The investments should be accounted at
[A]Rs.2,24,000
[B]Rs.2,00,000
[C]Rs.1,84,000
[D]Rs.1,70,000


4. Which of the following statements is false with regard to consolidated financial statements?
[A]The object of consolidated financial statement is to present financial position of a parent and its subsidiary as a single economic activity
[B]These are prepared in the same format as that followed by the parent, for preparation of its separate financial statements
[C]These are not substitutes for separate financial statements
[D]Dissimilar activities of parent and its subsidiary can be a reason for non-preparation of consolidated financial statements


5. XY Ltd. has a share capital of 6,000 equity shares of Rs.100 each having a market value of Rs.176 per share. The company wants to raise additional funds and offers to existing equity shareholders the right to apply for a new share at Rs.106 per share for every four shares held by them. The value of right is
[A]Rs.176
[B]Rs.120
[C]Rs. 56
[D]Rs. 14


6. H. Ltd. acquired 80% shares of S. Ltd. on December 1, 2002. S. Ltd. owed Rs.50,000 for purchase of stock from H. Ltd. The entire stock was held by S. Ltd. as on March 31, 2003. H. Ltd. made a profit of 30% on selling price. The unrealized profit on that stock was
[A]Rs.16,000
[B]Rs.15,000
[C]Rs.14,400
[D]Rs.12,000


7. Aski Ltd purchased land and building from Cibera Company for a book value of Rs.2,00,000. The consideration was paid by issue of 12% debentures of Rs.100 each at a discount of 20%. The debenture account is credited with
[A]Rs.2,60,000
[B]Rs,2,50,000
[C]Rs.2,40,000
[D]Rs.1,00,000


8. The excess price received over the par value of shares, should be credited to
[A]Calls-in-advance account
[B]Share capital account
[C]Reserve capital account
[D]Securities premium account


9. 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


10. On July 1, 2002, Delux Ltd. purchases 100 of its own 12% debentures for a price of Rs.9,900 which is the cum-interest price. The company pays interest half-yearly on September 30 and March 31 every year. The cost of 100 debentures is
[A]Rs.10,300
[B]Rs.10,000
[C]Rs. 9,900
[D]Rs. 9,600


11. Amazon Ltd. issued 20,000 shares of Rs.100 each at a premium of Rs.10 per share, of which 18,000 shares are subscribed for. The amount to be paid is as follows:
Rs.60 - on application, including premium of Rs.10
Rs.30 - on allotment
Rs.20 - on first and final call.
Call money was not received on 1,000 shares. On forfeiture of these shares, the amount standing to the credit of securities premium account is
[A]Rs.2,00,000
[B]Rs.1,80,000
[C]Rs.1,60,000
[D]Rs.1,40,000


12. Consider the following data pertaining to Detofex Ltd.:
Particulars Rs.
Nominal equity share capital 25,000
Issued and called-up capital 24,000
Paid-up capital 24,000
Calls in advance 1,000
20% Preference share capital (fully paid-up) 25,000 If the company declares a dividend of 20%, the total dividend payable is
[A]Rs.10,100
[B]Rs.10,000
[C]Rs. 9,900
[D]Rs. 9,800


13. Consider the following data pertaining to Sapru Ltd. as on April 1, 2002:
Particulars Rs.
12% Debentures 50,000
Debenture sinking fund 40,000
Debenture sinking fund investment (represented by 18%, secured bond worth Rs.46,000) 40,000
The company sold the investments at 80% on March 31, 2003 and the debentures were paid off. The loss incurred on account of sinking fund investment account is
[A]Rs.6,000
[B]Rs.4,000
[C]Rs.3,700
[D]Rs.3,200


14. Which of the following denotes the dividend declared by the directors between two annual general meetings?
[A]Proposed dividend
[B]Final dividend
[C]Interim dividend
[D]Declared dividend


15. Which of the following is a real account?
[A]Salary account
[B]Cash account
[C]Outstanding rent account
[D]Sundry creditors account


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