Financial Accounting Quiz - 16

1. Declared dividend should be classified in the Balance Sheet as a
[A]Provision
[B]Current liability
[C]Reserve
[D]Current asset


2. The issued capital of Marval Ltd. is Rs.12,00,000 divided into 1,20,000 shares which were issued at a premium of 100%. The company offers two shares for every three shares held to its existing shareholders. If the rights issue price is Rs.410 per share and the market value at the time of rights issue is Rs.560 per share, the value of right is
[A]Rs.60
[B]Rs.20
[C]Rs.150
[D]Rs.410


3. AVON Ltd. purchased a machinery in exchange of its debentures. The machinery was installed on March 31, 2003. The value of securities exchanged is Rs.1,85,000. It is expected that the machinery will have a useful life of 10 years after which it will have a salvage value of Rs.5,000. The machinery was put to use with effect from April 01, 2003. The company follows straight line method of depreciation, the amount of depreciation charged for the year 2003-04 is
[A]Rs.18,000
[B]Rs.20,500
[C]Rs.15,500
[D]Rs.15,000


4. On April 01, 2002, Ray Ltd. purchased furniture for Rs.60,000. The book value of the furniture on March 31, 2004 is Rs.43,350. If the company charges depreciation on furniture under written down value method, the rate of depreciation is
[A]0.35
[B]0.3
[C]0.25
[D]0.15


5. Consider the following data pertaining to Dhamaka Ltd.:
The company has issued 10,000 shares of Rs.100 each at a premium of Rs.15. M/s Underwriters & Brokers have taken 100 percent underwriting at a percentage of maximum allowable commission under the Companies Act, 1956. The applications were received for 10,000 shares and allotment was made in full.
The commission payable to M/s Underwriters & Brokers is
[A]Rs.10,000
[B]Rs.57,500
[C]Rs.50,000
[D]Rs.25,000


6. Brijesh Ltd. issued 10,000 equity shares of Rs.100 each at a premium of Rs.20 payable as follows:
On application Rs.30
On allotment Rs.50 (inclusive of premium)
On first call Rs.20
On final call Rs.20
Applications were received for 10,500 shares.
The company rejected the excess applications for 500 shares and the balance were allotted in full. The company forfeited 500 shares of Mrs. Mithili for non-payment of first call of Rs.20 per share after making the second call. On forfeiture, the Share Capital account will be
[A]Debited by Rs.60,000
[B]Credited by Rs.10,000
[C]Debited by Rs.50,000
[D]Credited by Rs.50,000


7. Consider the following data pertaining to Universe Ltd. as on March 31, 2004:
Total sundry debtors as per Trial Balance Rs.40,600
Bad debts identified after the preparation of Trial Balance Rs.600
Provision for bad debts to be created @ 5% on sundry debtors
Provision for discount on sundry debtors to be created @ 2%.
The amount of provision for discount on sundry debtors to be created for the period ended March 31, 2004 is
[A]Rs.760
[B]Rs.2,000
[C]Rs.771
[D]Rs.800


8. H. Ltd. acquired 80% shares of S. Ltd. on October 01, 2003. At the time of acquisition, the plant and machinery of S. Ltd. was revalued by H. Ltd. at 20% above its book value of Rs.5,00,000. At the time of consolidation of Balance Sheet on March 31, 2004, the share of H. Ltd. in the profit on revaluation is
[A]Rs.80,000 (Capital profit)
[B]Rs.80,000 (Revenue profit)
[C]Rs.40,000 (Capital profit)
[D]Rs.40,000 (Revenue profit)


9. Consider the following profits pertaining to Vennela Ltd. for the last 3 years:
Year Rs.
1 -- 3,30,000
2 -- 4,20,000
3 -- 4,80,000
The weighted average profit of the company is
[A]Rs.4,50,000
[B]Rs.4,35,000
[C]Rs.4,10,000
[D]Rs.3,85,000


10. The following information is given about PS Ltd.:
Inventories Rs.4.0 lakhs
Sundry debtors Rs.3.0 lakhs
Cash and Bank balances Rs.5.0 lakhs
Short-term bank borrowings Rs.1.0 lakhs
Accounts payable Rs.2.2 lakhs
The quick ratio for the firm is
[A]5.45
[B]3.75
[C]3.64
[D]2.5


11. Which of the following ratios indicates a firm’s ability to pay its debts in the short run?
[A]Liquidity ratios
[B]Turnover ratios
[C]Coverage ratios
[D]Profitability ratios


12. Which of the following is not a method of computing purchase consideration in case of an amalgamation?
[A]Lump sum method
[B]Net asset method
[C]Net payment method
[D]Super profit method


13. The financial statement which reflects the static picture of the sources and uses of funds is
[A]Funds flow statement
[B]Cash flow statement
[C]Balance sheet
[D]Bank reconciliation statement


14. If machinery account is debited with the amount of repairs incurred on the machine, this is an example of
[A]Compensating error
[B]Error of principle
[C]Error of commission
[D]Error of omission


15. The time interval between the dates of balance sheets of holding company and subsidiary company for the purpose of consolidation of accounts
[A]Can be more than 1 year
[B]Can be more than 9 months but less than 1 year
[C]Can be more than 6 months but less than 9 months
[D]Cannot be more than 6 months