MCQs for Financial Accounting Management (Accounting Quiz - 11)

1. The interest on calls in advance is paid for the period from the
[A]Date of receipt of application money to the date of appropriation
[B]Date of receipt of allotment money to the date of appropriation
[C]Date of receipt of advance to the date of appropriation
[D]Date of appropriation to the date of dividend payment


2. Which of the following items should not appear under the head ‘unsecured loans’ in the Balance Sheet of a company?
[A]Sinking funds
[B]Loans and advances from subsidiaries
[C]Short term loans and advances from banks
[D]Loans and advances from others


3. Share premium cannot be used to
[A]Issue bonus shares
[B]Redeem preference shares
[C]Write-off preliminary expenses
[D]Write-off discount on issue of shares


4. Rishi Ltd. issued 1,50,000 shares of Rs.100 each at a discount of 10%. Rama, to whom 300 shares were allotted failed to pay the final call of Rs.30 per share and hence, all his shares were forfeited. At the time of forfeiture, the amount transferred to share forfeiture account was
[A]Rs. 9,000
[B]Rs.18,000
[C]Rs.21,000
[D]Rs.27,000


5. Suma Ltd. announced a rights issue of four shares of Rs.100 each at a premium of 160% for every five shares held by the existing shareholders. The market value of the share at the time of rights issue is Rs.440. The value of right is
[A]Rs.124
[B]Rs.352
[C]Rs. 80
[D]Rs.110


6. Which of the following statements is true?
[A]A company will be deemed to be a holding company of another if, it holds more than 50 percent of both equity and preference share capital
[B]The financial year of the holding company and its subsidiary company must end on the same date
[C]The share capital of the subsidiary company does not appear in the Consolidated Balance Sheet
[D]The inter company owing will be shown in the Consolidated Balance Sheet


7. On December 01, 2002 H Ltd. acquired 60% shares in S Ltd. The balance of profit and loss account of S Ltd. on April 01, 2002 and March 31, 2003 was Rs.90,000 and Rs.1,50,000, respectively. The profit is earned evenly throughout the year. The share of capital profit of H Ltd. in the profits of the subsidiary as on March 31, 2003 is
[A]Rs. 36,000
[B]Rs. 60,000
[C]Rs. 72,000
[D]Rs. 78,000


8. On April 01, 2002, Sura Chemicals Ltd. issued 10,000, 18% Debentures of Rs.100 each. The company reserves the right to redeem its debentures in any year by purchase in open market. Interest on debentures is payable on September 30, and March 31, every year.
• On July 1, 2002, the company purchased 2,000 of its own 18% debentures at Rs.98 cuminterest.
• The company cancelled its own 2,000 debentures on March 31, 2003.
The profit on cancellation of debentures transferred to Capital reserve is
[A]Rs. 4,000
[B]Rs. 9,000
[C]Rs.36,000
[D]Rs.13,000


9. Consider the following profits pertaining to a company for the last 3 years:
Year Profit (Rs.)
2008-09 Rs.3,30,000
2009-10 Rs.4,20,000
2010-11 Rs.4,80,000
The weighted average profit of the company for the purpose of valuation of goodwill is
[A]Rs.4,50,000
[B]Rs.4,35,000
[C]Rs.4,10,000
[D]Rs.3,85,000


10. If a Company believes that some of its debtors may "default", it should act on this by making sure that sufficient provision is created in the books. This is an example of
[A]Matching concept
[B]Money measurement concept
[C]Consistency concept
[D]Conservatism concept


11. Which of the following best describes a trial balance?
[A]It is a special type of account
[B]It shows the double entries made
[C]It is a list of balances in accounts in the books
[D]It shows the financial position of the business


12. Manoj Ltd. forfeited 200 shares of Rs.10 each, Rs.8 called up, for non-payment of call money of Rs.2 per share. Application money of Rs.2 per share and allotment money of Rs.4 per share have already been received by the company. The company has the practice of transferring the money due to Calls in arrears account. The journal entry for forfeiture involves
[A]Debit to Share capital account of Rs.2,000
[B]Credit to Share Final call account of Rs.400
[C]Credit to Share Forfeiture account of Rs.1,600
[D]Credit to Calls in arrears account of Rs.400


13. Which of the following is not an error of commission?
[A]Recording of wrong amount in the subsidiary books
[B]Wrong totaling of subsidiary books
[C]Not recording of a transaction in the subsidiary books
[D]Posting on the wrong side of an account


14. The credit balance as per pass book as on March 31, 2003 of Madhu Ltd. was Rs.10,000. As on that date it was further revealed that cheques issued but not presented for payment amounted to Rs.8,000 and cheques deposited but not yet cleared amounted to Rs.20,000. The bank balance as per Cash book stood at
[A]Rs.38,000 (favorable)
[B]Rs.22,000 (favorable)
[C]Rs. 2,000 (unfavorable)
[D]Rs.18,000 (unfavorable)


15. Dividend recommended by the Board of Directors till it is adopted in the Annual General Meeting by the shareholders is
[A]Shown in Balance Sheet as proposed dividends under the head of current liabilities
[B]Shown in Balance Sheet as proposed dividends under the head of provisions
[C]Shown in Balance Sheet as declared dividends under the head of provisions
[D]Shown in Balance Sheet as a deduction under profit and loss account