QUIZ - 2

1 0.25 mark will be deducted for every wrong answer.

After giving effect of outstanding salary at the year end, the following balances appear in the books
of accounts.
Salary payable Rs. 7, 430
Salary Expenses Rs. 92,560
Determine the actual salary paid.

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1 Rs. 92,560
2 Rs. 85,130
3 Rs. 99,990
4 Rs. 7,430

2 0.25 mark will be deducted for every wrong answer.

X Ltd. has made a profit of Rs. 5,00,000 without giving effect to accrued expenses of Rs. 50,000 in
the accounts. As a result of this
0 I do not want to answer this Question
1 Profits are overstated by Rs. 50,000 and liabilities overstated by Rs. 1,00,000
2 Profits are understated by Rs. 50,000 and liabilities understated by Rs. 50,000
3 Profits are overstated by Rs. 50,000 and liabilities understated by Rs. 50,000
4 No effect

3 0.25 mark will be deducted for every wrong answer.

Owners equity stands at Rs. 10,50,000 after the business enterprise made a profit of Rs. 1,30,000.
But it was found that while determining the profit the following data were overlooked.
Credit sales of Rs. 18,000
Accrued expenses Rs. 5,000
Depreciation on equipment Rs. 2,500
If above data are given effect in the accounts, the owners equity would

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1 Increase by Rs. 1,40,500
2 Decrease by Rs.10,500
3 Increase by Rs. 10,500
4 Decrease by Rs. 7,500

4 0.25 mark will be deducted for every wrong answer.

X Ltd. borrowed Rs. 10,00,000 on 1st April 2011, at an interest of 15% p.a. payable on 30th of June
and 31st of Dec. every year, for five years. The company is regular in interest payment. While
finalizing the accounts as on 31st of March 2012, what is the amount of interest, if any, X Ltd. has to
consider and what will be the appropriate head for disclosure?
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1 Rs. 1,50,000; interest accrued and due under Current asset
2 Rs. 1,50,000; interest accrued and not due under non-current liability
3 Rs. 75,000; interest accrued and due under Current liability
4 Rs. 37,500; interest accrued and not due under Current liability
5 0.25 mark will be deducted for every wrong answer.
Accumulated depreciation in the beginning and at the end of an accounting period is Rs. 25,000 and
Rs. 30,000 respectively. The amount shown in the Income statement as depreciation expense for the
current year is
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1 Rs. 30,000
2 Rs. 5,000
3 Rs. 55,000
4 Rs. 27,500

6 0.25 mark will be deducted for every wrong answer.

X Ltd. purchased a 24-month property insurance for Rs.12,000 on 1.4.2011. The policy is effective
immediately. The company follows calendar year. On 30th June, 2012, the company purchased a 36-
month fire insurance for Rs. 24,000. Insurance expense for the accounting year ended 31st
December, 2012 is
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1 Rs. 10,000
2 Rs. 12,000
3 Rs. 36,000
4 Rs. 5,500

7 0.25 mark will be deducted for every wrong answer.

A machine costing Rs. 2,00,000 is sold for Rs. 1,25,000. The machine has been depreciated to the
extent of Rs. 95,000 on the date of sale. How much is to be reported in the statement of cash flows?
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1 Rs. 1,05,000 under investing activity
2 Rs. 1,25,000 under investing activity
3 Rs. 2,20,000 under financing activity
4 Rs. 20,000 under investing activity

8 0.25 mark will be deducted for every wrong answer.

X Ltds trade receivables as on 1.4.2012 stands at Rs. 50,000. During the year, the company made a
further sale of Rs. 4,20,000 out of which 50% are cash sales. It was estimated that a debtor for Rs.
20,000 has become bankrupt and wont be able to pay. The amount at which trade receivables will
appear in the balance sheet of March 31, 2013 is
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1 Rs. 4,20,000
2 Rs. 2,40,000
3 Rs. 2,10,000
4 Rs. 4,70,000
9 0.25 mark will be deducted for every wrong answer.
X Ltd. bought a machine costing Rs.2,00,000 with a useful life of 5 years. After using the machine for
2 years the company wanted to change the method of depreciation from W.D.V to straight line.
W.D.V rate of depreciation is 30%. What is the impact on profit in year 3 as a result of this change in
the method of depreciation?
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1 Profit will go down by Rs. 102,000
2 Profit will be up by Rs. 22,000
3 Profit will go down by Rs. 40,000
4 Profit will be up by Rs. 182,000

10 0.25 mark will be deducted for every wrong answer.

A machine costing Rs. 1,00,000 and having a useful life of 10 years is in use for the past 8 years. The
management feels that the machines cash generating capacity will decline in the coming years due
to certain adverse conditions affecting the business. The management expects to realize Rs. 30,000
after giving a commission of Rs. 2,000 to the selling agent from the sale of this machine. The present
value of future cash flows is estimated to be Rs. 26,025. Find the impairment loss if any.

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1 Rs. 20,000
2 Rs. 10,000
3 Rs. 3,975
4 No impairment loss

11 0.25 mark will be deducted for every wrong answer.

The cost and useful life of an asset are Rs. 60,000 and six years respectively. In the beginning of the
fourth year, the revalued price of the asset is Rs. 90,000. Which of the following options would be
correct?
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1 Revaluation reserve of Rs. 30,000 to be added to shareholders interest
2 Revaluation reserve of Rs.15,000 to be charged to profit and loss account by way of extra
depreciation
3 Revaluation reserve of Rs. 15,000 to be added to shareholders interest
4 Devaluation of Rs. Rs.15,000 to be charged to profit and loss account by way of extra
depreciation

12 0.25 mark will be deducted for every wrong answer.

The following data are given in respect of current investment of XYZ Pvt. Ltd. No. of shares: 15,000
Cost: Rs. 1, 50,000
Market value as on 31.3.2012: Rs.1, 55,000
No. of shares sold during Jan. 2012: 3000
Closing value of shares as on 31.3.2012 is

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1 Rs. 1,50,000
2 Rs. 1,19,010
3 Rs. 1,55,000
4 Rs. 1,20,000
13 0.25 mark will be deducted for every wrong answer.
On 1.4.2012, X Ltd. acquired plant and machinery amounting to Rs.350 lac and advanced a supplier
Rs. 20 lac for supplying additional assets under a modernization plan. On the same day, the company
arranged a loan of Rs. 500 lac for this purpose and utilized the balance amount for working capital
purpose. Installation was completed on 31.3.2013. Total interest paid during the year was Rs. 50 lac.
Can X Ltd. capitalize interest? If yes, how much?
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1 Entire amount of Rs. 50 lac
2 Rs. 35 lac only
3 Rs. 37 lac only
4 None of the above

14 0.25 mark will be deducted for every wrong answer.

X Ltd. purchased a machine costing Rs. 20,00,000 with a residual value and useful life of Rs. 2,00,000
and six years respectively. In the beginning of 4th year, the company estimated that the machine will
have a remaining useful life of 5 years. What will be the depreciation expense for year 4?
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1 Rs. 1,80,000
2 Rs. 3,00,000
3 Rs. 9,00,000
4 None of the above

15 0.25 mark will be deducted for every wrong answer.

Y Ltd.s revenue for the year 2012-13 stands at Rs. 5,00,000. Unearned revenue account appearing
in the balance sheet for the year 2011-12 is Rs. 60,000. Of these Rs. 20,000 has been earned in the
year 2012-13. In addition, Rs. 15,000 has been earned but not billed. The revenue that will appear in
the income statement of the year 2012-13 is

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1 Rs. 515,000
2 Rs. 535,000
3 Rs. 575,000
4 Rs. 595,000