PC 14

Practice Set-5

1. If a company has contingent liabilities, they appear in the[D1]

(a) Balance Sheet (b) Directors‘ Report
(c) Notes on account to Balance Sheet (d) Chairman‘s report
2. Which of the following is also known as Position Statement?
a. Trial Balance b. Trading & Profit Account
c. Income & Expenditure Account d. Balance Sheet
3. The purchase is reduced by the amount of closing stock and increased by the amount of opening balance
of stock. In such cases the purchase is called
a. Accelerated purchase b. Inflated purchase
c. Adjusted purchase d. Inclusive purchase
4. Pick the correct one
a. Trend percentage is calculated on the basis of Base year
b. Generally, the base year for Trend percentage analysis is First Year
c. Neither A nor B
d. Both A&B
5. Calculate stock turnover ratio
Opening stock Rs 19,000 Closing stock Rs 21,000
Sales Rs 2,00,000 Gross Profit 25% of sale.
a. 10 b. 12.5
c. 5 d. 7.5
6. The following groups of ratios are primarily measure risk
a. liquidity, activity, and profitability b. liquidity, activity, and inventory
c. liquidity, activity, and debt d. liquidity, debt and profitability
7. Calculate the manager’s commission on the profit before charging such commission when the net profit of
the firm is ₹ 50000/- and the rate of commission is 10%
a. ₹ 5000 b. ₹ 4500
c. ₹ 5500 d. ₹ 4950
8. X Ltd., has a current ratio of 3.5:1 and quick ratio of 2:1. If excess of current assets over quick assets
represented by inventories is ₹ 24,000, calculate current assets and current liabilities.
a. ₹ 56,000 & ₹ 16,000 b. ₹ 42,000 & ₹ 12,000
c. ₹ 49,000 & ₹ 14,000 d. ₹ 52,500 & ₹ 15,000
9. Current assets of a company are ₹ 5,00,000. Current ratio is 2.5:1 and Liquid ratio is 1:1. Calculate the value
of current liabilities, liquid assets and inventories.
a. ₹ 5,00,000, ₹ 3,00,000 and ₹ 3,00,000 b. ₹ 2,00,000, ₹ 2,00,000 and ₹ 3,00,000
c. ₹ 3,00,000, ₹ 3,00,000 and ₹ 2,00,000 d. None of the above
10. Which of the following are capital receipt
i. receipt from sale proceeds of fixed assets ii. Receipt from sale of old newspapers
iii. Profits prior to incorporation iv. Profit on redemption of debentures
v. Profit on revaluation of fixed asset & liabilities

a. i, ii, iii and iv b. ii, iii, iv and v

c. i, iii, iv and v d. All of the above
11. When market value of an asset is higher than book value depreciation is[D2]
a. not charged. b. charged at usual rate
c. charged at lower rate d. charged at higher rate
12. Capital reserves are normally created out of
a. free or distributable profits b. normal operating activities
1
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 c. capital profit d. All of the above
13. If the original cost of the asset is ₹ 2,00,000 and depreciation is charged @ 10% p.a. at written down value,
the book value of the assets after a period of three account year will be
a. ₹ 140000 b. ₹ 160000
c. ₹ 162000 d. ₹ 145800
14. Under the revaluation model of fixed assets provided by the international accounting standards, the
revaluation of the fixed assets should be carried out
a. After 10 years b. After 7 years
c. Once 2 to 5 years d. Once 3 to 5 year
15. Suppose that provision for doubtful debts account’s opening balance is ₹3222, closing balance=₹5222 and
bad debts written off during the accounting period amount to ₹500. Work out the total amount needed to
debit in the profit and loss account?
a. ₹2500 b. ₹8444
c. ₹8944 d. ₹7944
16. If actual bad debts are more than the provisions for bad debts, then there will a
a. Credit balance of Provision for Bad Debts Account
b. Debit balance of Provision for Bad Debts Account
c. Debit balance of Bad Debts Account
d. Debit balance of Discount on Debtors Account
17. The ledger folio column of journal is used to[D3]
a. Record the date on which amount posted to a ledger account.
b. Record the number of ledger account to which information is posted.
c. Record the number of amounts posted to the ledger account.
d. Record the page number of the ledger account.
18. Balancing of account means
a. total of debit side b. total of credit side
c. total of debit side and credit side d. figure out the difference between debit and credit
19. Credit balance as per Cash Book - ₹ 20,000, Bank charged interest - ₹ 500
Cheques issued but not presented for payment - ₹ 5000, Overdraft / Balance as per Pass Book will be:
a. ₹ 25,000 b. ₹ 25,500
c. ₹ 15,500 d. ₹ 15,000
20. Which of following errors will be rectified through suspense account
a. Sales return book undercast by Rs. 1,000. b. Sales return by Madhu Rs. 1,000 not recorded.
c. Sales return by Madhu Rs 1,000 recorded as Rs,100.
d. Sales return by Madhu Rs. 1,000 recorded through purchases returns book
21. A Trial balance is prepared
a. After preparation financial statement b. After recording transactions in subsidiary books
c. After posting to ledger is complete
d. After posting to ledger is complete and accounts have been balanced
22. Ledger is a
a. Original Book b. Subsidiary book
c. Both A & B d. Neither A & B
23. Accrued Income is
a. credited in the journal. b. debited in the journal.
c. contra entry made d. not entered
24. When cheque received from customer is given to some other party it is called
a. Negotiate b. Transfer
c. Exchange d. Endorsement
25. Pick the correct one

2
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 i. All ledger accounts are put into five categories namely, assets, liabilities, capital, revenues/gains and
expense losses
ii. All these accounts may further be put into two groups i.e. permanent and temporary accounts.
iii. All permanent accounts those are assets, liabilities and capital accounts are balanced and carried
forward to the next accounting period.
iv. Revenue and expense irrespective of capital or revenue nature are temporary accounts those are closed
at the end of the accounting period by transferring them to the trading and profit and loss account

a. i, ii and iii b. ii, iii and iv

c. i, iii and iv d. All of the above
26. When starting point is favourable bank balance as cash book, the transaction that will be added to the BRS
would be
i. Cheques issued by the firm but not yet presented for payment
ii. Amounts directly deposited in the bank account
iii. Direct payments made by the bank on behalf of the customers
iv. Cheques paid into the bank but not yet collected

a. ii, iii and iv b. i, iii and iv

c. i, ii and iv d. All of the above
27. Products recovered from material discarded in a main process, or from the production of some major
products, where the material value is to be considered at the time of severance from the main product are
called[D4]
a. By-product b. Joint-product
c. Co-product d. Assimilated-product
28. Which of the following is the disadvantage of the time wage system
a. It is difficult to make distinction between efficient and inefficient workers.
b. Labour get flexible work environment as employers are concerned with the output than the time
consumed by the workers at work place.
c. Sometimes, under this method, labours compromise with the quality of product in the hurry of
completing the targets.
d. This method of wage payment increases the efficiency and productivity of the workers
29. Absorption refers to
a. The process of allocation and apportionment of cost to the services department.
b. The process of recovering allocated cost to a particular cost centre by the units produced in that cost
centre.
c. The process of apportioning cost to production departments.
d. All of the above
30. A schedule of materials needed for the job or a unit of production
a. Job Card b. Bill of Material
c. Material Requisition d. Cost Sheet
31. The cost which is to be incurred even when a business unit is closed is a
a. imputed cost b. historical cost
c. sunk cost d. shutdown cost
32. Bonus under Rowan scheme is paid
a. as a proportion of standard time to actual time
b. as a proportion of actual time to standard time
c. as a proportion of time saved to standard time
d. as a proportion of standard time to time saved
33. Operating costing is suitable for
a. job order business b. contractors
3
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 c. sugar industries d. service industries
34. Which of the following costs is not a factory overhead expense?
(a) Depreciation of equipment used in the research department
(b) Salary of quality control inspector
(c) Overtime premium paid to direct labour
(d) Machine maintenance labour cost
35. Normal stores losses are
(a) Part of prime cost (b) Part of production overheads
(c) Part of selling and distribution overheads (d) Written-off to costing and profit and loss account
36. The capacity which is based on the long-term average of sales expectancy is known as
(a) Theoretical capacity (b) Operating capacity
(c) Normal capacity (d) Delated capacity
37. From the Data of a company XYZ is given below, find the Break Even Sales
Particulars `
Sales 15,00,000
Variable cost 9,00,000
Fixed Cost 4,00,000
(a) ` 1, 00,000 (b) `. 2, 00,000
(c) `13, 00,000 (d) None of the given options
38. Calculate the amount of direct labour if:
Direct material = 15,000; Direct labour = 70% of prime cost
(a) 6,429 (b) 30,000
(c) 10,500 (d) 35,000
39. National chains of tyre fitters stock a popular tyre for which the following information is available:
Average usage = 140 tyres per day
Minimum usage = 90 tyres per day
Maximum usage = 175 tyres per day
Lead time = 10 to 16 days
Re-order quantity = 3000 tyres
Based on the above data calculate the maximum level of stock possible:
(a) 2800 (b) 3000
(c) 4900 (d) 5800
Maximum Level =Re-Order Level + Re- Order Quantity-(Minimum Consumption × Minimum reorder period)
Re-order Level = Maximum daily consumption × Maximum delivery period
= 175*16+3000 (90*10)= 2800+3000-900= 4900
40. A firm, which makes yachts, has fixed costs of ` 260,000 per month. The product sells for ` 35,000 per boat,
and the variable costs of production are ` 15,000 per boat. The boatyard can manufacture 20 boats each
month. What is the firm‘s margin of safety at the moment?
(a) 20% (b) 35%
(c) 54% (d) 57%
Variable cost = 15000*20 = 300000, Fixed Cost 260000, Break-even Value = Variable +Fixed Cost= 560000
Sale = 35000*20 = 700000 so Margin of Safety = 700000-560000 = 140000 = 140000/700000= 20%
41. A company buys its annual requirement of 36,000 units in six instalments. Each unit costs Rs.10 and the
ordering cost is Rs.250. The inventory carrying cost is estimated at 20% of the unit value per annum, find
out the amount to be saved if EOQ is applied to
a. ₹ 1500 b. ₹ 2500
c. ₹ 3000 d. ₹ 2000
2𝑋𝐴𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛𝑋𝑂𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡
Economic Order Quantity (EOQ) = √ 𝐶𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑐𝑜𝑠𝑡

4
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 2𝑋36000𝑋250 18000000
=√ =√ = √9000000 = 3000
20% 𝑜𝑓 10 2
42. Labour force at the beginning of the Year 2017 1900 and at the end of the Year 2017 2100. During the year,
25 people left while 40 persons were discharged. 280 workers were engaged out of which only 30 were
appointed in the vacancy created by the number of workers separated and the rest on account of expansion
scheme. The labour turnover as per Replacement Method is
a. 1.5% b. 2.75%
c. 2.25% d. 1.75%
30
2000
x100 =1.5%
43. When standard output in 60 units per hour and standard rate is ₹. 9 per hour. The differential piece rate is
applied is 75% of piece rate when below standard and 125% of piece rate when above the standard. Two
workers A and B have produced in a day 8 hours 360 units and 500 units respectively, the wages payable
respectively will be
a. ₹ 54 and ₹ 75 b. ₹ 40.6 and ₹ 93.75
c. ₹ 35 and ₹ 85.65 d. ₹ 45.2 and ₹ 90.8
Piece rate = Rate for hour/minute = 9 =0.15
Standard output in given hour/minute 60
Standard output is 60x80 = 480 units
Efficiency of A = 360/480 = 75% (Below standard)-eligible for piece rate @ 75%
Efficiency of B = 500/480 = 104% (above standard)- eligible for piece rate @ 125%
75% of piece rate= 0.15*75% = 0.113 and 125% of piece rate = 0.15*125% = 0.1875
So wages of A= 360*0.113= ₹ 40.6 and that of B = 500*.1875= ₹ 93.75

44. When sales are ₹ 20000, Fixed Expenses- ₹ 4000; Break-Even Point- ₹ 10000, the revised Break Even Point
if selling price is reduced by 20% will be
a. ₹ 12000 b. ₹ 14000
c. ₹ 16000 d. ₹ 18000
If selling price is reduced by 20%, the new selling price would be ₹ 80 (say ₹ 100 -₹ 20).
Variable Cost per Unit = 100 - 40% = ₹ 60
New P/V Ratio = (80 - 60)/80 X 100 = 25%
New Break Even Point = Fixed cost/P/V ratio = (4000 X 100)/25 = ₹ 16000

45. A worker takes 6 hours to complete a job against the standard time of 9 hours allowed for the job. The
wage rate is ₹.15/hour and Wage is payable under the Rowan Plan. The rate per hour would
a. remain constant @ ₹ 15 b. increase from ₹ 15 to ₹ 18
c. increase from ₹ 15 to ₹ 20 d. decrease from ₹ 15 to ₹ 12
As per Rowan’s plan
Total Wage=(Actual Time x Rate)+ (Actual Time / Standard Time x Time saved x Rate per Hour)
6
(6 x 15) + (9x3x15) =90+30 =₹ 120
So rate per hour will be 120/6= 20

46. The Cape Cod Cotton Candy Company had the following information available regarding last year's
operations:
Sales (100,000 units) ` 2,00,000 ; Variable costs ` 1,00,000; Contribution margin ` 1,00,000; Fixed costs `
50,000; Net Income ` 50,000, If sales were to increase by 200 units, what would be the effect on net income?
(a) `400 increase (b) `200 increase
(c) `100 increase (d) ` 200 loss

Sale of 100000 unit= 200000- variable + fixed cost = 200000-150000= 50000

Sale of 100200 units = 200400-100200+50000 = 200400-150200= 50200,
5
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 so the difference 50200-50000 = 200
47. The branch of accounting that draws the relevant information mainly from financial accounting and cost
accounting which helps the management in budgeting, assessing profitability, taking pricing decisions,
capital expenditure decisions and so on is[D5]
a. Cost-Accounting b. Financial Accounting
c. Management Accounting d. All of the above
48. The primary qualities that make accounting information useful for decision-making are
a. Relevance and freedom from bias b. Reliability and comparability
c. Comparability and consistency d. None of the above
49. Recording expenses and revenues in the same period in which they occur
a. Accounting Period Principle b. Principle of Money Measurement
c. Matching Principle d. Consistency Principle
50. The business transactions are recorded date wise to create proper record for all transactions. This is part
of which of the following
a. Realization Concept b. Materiality Concept
c. Historical Record Concept d. Accounting Period Concept
51. Every transactions has two aspects i.e., debit and credit, under which of the following accounting principles:
a. Cash Accrual Principle b. Revenue Accrual Principle
c. Dual Aspect Principle d. Double Entry Book-keeping System
52. Accounting Principles means:
i. Which are implemented at the time of recording of accounting transactions
ii. Which are implemented at the time of presentation of Financial Statements.
iii. Which are written and certain
iv. Which are generally acceptable

a. i, ii and iii b. ii, iii and iv

c. i, ii and iv d. All of the above
53. Identified and measured economic events should be recorded in
a. chronological order b. ascending order of economic transaction
c. descending order of economic transaction d. Capital transaction first and revenue later.
54. When information about two different enterprises have been prepared presented in a similar manner the
information exhibits the characteristic of
a. Verifiability b. Relevance
c. Reliability d. None of the above
It leads to comparability.
55. Which of the following practices is not in consonance with the convention of conservatism?
(a) Creating Provision for Bad debts (b) Creating Provision for Discount on Creditors
(c) Creating Provision for Discount on Debtors (d) Creating Provision for tax

The principle of conservatism seeks provisions for all the probable losses. Creating provision for discount
on creditors tantamount to recognition of probable gain in the form of discount and hence it is not in
consonance with conservatism.]
56. Pick the correct one
i. Going Concern Concept assumes that business will be carried on for a definite period
ii. The Capital Losses need not be deducted to ascertain net income
iii. Provision for bad and doubtful debts is created in recognition of conservatism concept
iv. Materiality concept states that all business transactions are to be recorded however insignificant they
may be

a. i, ii and iii b. i, iii and iv

6
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 c. ii, iii and iv d. All of the above
57. Short-term Investment, Marketable Securities, Vacant Land and interest from fixed deposit etc. are
examples of[D6]
a. Operating Assets b. Non-Operating Assets
c. Dead Assets d. Fictitious Assets
58. Discount that is allowed to bulk buyer is
a. Cash Discount b. Quantitative Discount
c. Trade Discount d. All of the above
59. Pick the correct one
i. Private limited company is held by few individuals privately having separate legal entity.
ii. A public limited company is a form of business organization that operates as a separate legal entity from
its owners.
iii. In Private limited company, the shareholders cannot trade shares publicly. Shareholders cannot sell their
shares without the approval of other shareholders
iv. Shares of a public limited company are listed and traded at a stock exchange market freely

a. ii, iii and iv b. i, ii and iii

c. i, iii and iv d. All of the above.
60. Government Company means any company in which not less than
a. 51% of the share capital is held by the by the Government(s).
b. 26% of the share capital is held by the by the Government(s).
3. 33% of the share capital is held by the by the Government(s).
4. 67% of the share capital is held by the by the Government(s).
61. Quorum for Annual General Meeting is
a. Private Limited Company- 2 and Public Limited Company-2
a. Private Limited Company- 2 and Public Limited Company-5
a. Private Limited Company- 5 and Public Limited Company-5
a. Private Limited Company- 5 and Public Limited Company-2

62. High Class Interiors had beginning merchandise inventory of ` 75,000. It made purchases of `160,000 and
recorded sales of ` 220,000 during January. Its estimated gross profit on sales was 30%. On January 31, the
store was destroyed by fire. What was the value of the merchandise inventory loss[D7]?
(a) ` 154,000 (b) ` 160,000
(c) `. 235,000 (d) ` 81,000

Total cost of material = 75000+160000 = 235000

Cost of goods sold = sale – profit = 220000-30% of 220000 = 220000-66000 = 154000
Closing stock at the time of fire = 235000-154000 = 81000
63. ` 4,500 paid to Madan as salary for the month of August 2019, this was debited to his A/c, this is an error
of
(a) Principle (b) Omission
(c) Commission (d) Compensating
64. Opening entries are generally passed through-
(a) General Journal (b) Purchase Journal
(c) Profit and Loss A/c (d) Suspense A/c
65. The balance as per bank statement of a company is `12,000 (Dr.). The company deposited two cheques
worth `9,500, out of which one cheque for `2,300 was dishonoured which was not entered in the cash book.
The credit balance as per cash book is
(a) `21,000 (b) `15,300

7
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 (c) `23,800 (d) `9,700
66. Suspense A/c is generally opened to rectify
(a) Errors of principle (b) One sided errors
(c) Compensating errors (b) All types of errors
67. Pick the correct one[D8]
a. Capital Reserve shall not include any amount regarded as free for distribution through Income and
Expenditure A/c
b. Surplus on revaluation of fixed assets should be treated as Capital Reserves and shown separately.
c. Both A&B
d. none of the given
68. Pick the correct one regarding Ear-marked Fund
i. Amount received as grant/assistance or retained by the entity to be utilised for specific or earmarked
purposes.
ii. Amount remains to be utilised for specific purposes shall not be disclosed under this head instead shall
be shown under the head Corpus Fund
iii. The Plan fund received from Central and State Government are to be shown as distinct category of fund.
iv. Records relating to fixed assets acquired/constructed should be maintained for each earmarked fund.
However, in financial statement, aggregate accumulated cost up-to each year and of each earmarked fund,
unless the assets are taken over, may be disclosed.

a. i, ii and iii b. ii, iii and iv

c. i, iii and iv d. All of the above
69. The head Deferred Credit should be include acceptance and other similar long-term obligations in respect
of acquisition of assets, the liability for payment of which falls in period
a. longer than 12 months as at the date of balance sheet
b. less than 12 months as at the date of balance sheet
c. longer than 18 months as at the date of balance sheet
d. less than 18 months as at the date of balance sheet
70. Pick the correct one
i. Where there is a very large number of library books or where there is an established library, these books
may be disclosed as a separate category of assets.
ii. Library books will include books/journals/information stored in CD ROMs
iii. Fixed assets in the course of construction should be shown against the head Capital-in-Progress till they
are ready for the intended use.
iv. Plant, machinery and equipment acquired and pending installation should also be shown under the head
Capital-in-Progress.

a. i, ii and iii b. ii, iii and iv

c. i, iii and iv d. All of the above
71. In Schedule 4, the amount due against Secured Loan & borrowings and Un-secured Loan & Borrowings shall
be disclosed, if the same is
a. due within a period of less than 12 months as at the Balance Sheet date need to be disclosed
b. due after a period of 12 months as at the Balance Sheet date need to be disclosed
c. due within a period of less than 6 months as at the Balance Sheet date need to be disclosed
b. due after a period of 6 months as at the Balance Sheet date need to be disclosed
72. The budgeted annual sales of a firm is ` 80 lakhs and 25% of the same is cash sales. If the average amount
of debtors of the firm is ` 5 lakhs, the average collection period of credit sales months[D9].
(a) 1.50 (b) 1.00
(c) 0.50 (d) 1.75

8
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 [Hint : Total annual sales = ` 80 lakhs
Total cash sales = 25 % of 80 lakhs. = 20 lakhs.
Total credit sales = 75% of 80 lakhs = 60 lakhs
Average amount of debtors = 5 lakhs = 1 months average credit sales.
Therefore, average collection period is 1 month.]
73. The contribution margin increases when sales volume and price remain the same and
(a) Variable cost per unit decreases (b) Variable cost per unit increases
(c) Fixed costs per unit increase (d) All of the given options
74. Which of the following is not an example of marketing overheads?
(a) Salary of the foreman (b) Publicity expenses
(c) Salaries of sales staff; (d) Secondary packing charges
75. It maintains a cushion for contingencies arising out of uncertainties on either demand/supply side,
a. Re-order quantity b. Minimum Level
c. Safety Stock d. Blanket Stock
76. The pricing of issues only deals with the assigning of pricing to the issues. It has nothing to do with the
actual physical movement of materials.
a. True b. False
77. Pick the incorrect one
a. The normal loss should be transferred to Overhead Control Account
b. The abnormal loss should be written off to the Costing Profit and Loss account.
c. An alternative method is used to price per unit of material so as to cover the abnormal loss
d. None of the given
78. The term used for materials which are badly damaged in manufacturing operations and they cannot be
rectified economically and hence taken out of process to be disposed of in some manner without further
processing
a. Obsolete b. Waste
c. Scrap d. Spoilage
79. Pick the incorrect regarding functions of Time-keeping department
a. Main function of this department is to accurately record the time spent by each worker on the work
place and it will be forwarded to the pay-master department
b. Time-keeping department train the person hired before sending them to the workplace
c. It plays an important role in the accounting and controlling of labour cost
d. Some most prevalent methods are 1. Attendance register 2. Token or disc method 3. Time-recording
clocks 4. Biometric time clock
80. Holiday pay is
a. treated as indirect cost and charged from the factory overheads account and thus it will be recovered
from the production
b. treated as direct cost and charged from the Prime cost and thus it will be included in the cost of item
c. treated as extraordinary cost and charged as administrative expense from the costing profit & loss
account
d. None of the given
81. This scheme that is generally introduced where individual efficiency cannot be established for the payment
of bonus is
a. Piece-rate and hourly rate plan b. Group-bonus and piece rate plan
c. Group-bonus and Hourly-rate plan d. Piece-rate, hourly rate plan and Group-bonus scheme
82. Standard Output in 10 hours is 120 units, actual output in 8 hours is 132 units and wages Rate per hour is
₹ 15, the wages payable under Rowan Plan would be
a. ₹ 144 b. ₹ 150
c. ₹ 135 d. ₹ 165
As per Rowan’s plan
Total Wage=(Actual Time x Rate)+ (Actual Time / Standard Time x Time saved x Rate per Hour)
8
= (8 x 15) + (10x2x15) =120+24 =₹ 144

9
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
83. Selling price 20, variable cost is 12 and fixed cost is ₹ 2000000. If selling price is increased by 10% and fixed
cost remains same, the revised break-even point will be
a. 150000 units b. 200000 units
c. 250000 units d. 300000 units
New contribution is 22-12=10 so BEP will be 2000000/10 = 200000
84. Standard Output in 10 hours is 120 units, actual output in 8 hours is 132 units and wages Rate per hour is
₹ 15, if wages are paid as per Halsey Premium Plan the rate per hour will be
a. ₹ 15 b. ₹ 16.5
c. ₹ 16.88 d. ₹ 17.56
As per Halsey plan
Total Wages = (Actual Hour worked X Rate per Hour) + (Time saved X Rate per hour X 50/100)
= (8 x 15) +[ (10-8) x 15 x 50/100)= 120 + (2 x 15 x 50/100)= 120+15= 135
So the rate per hour will be 135/8 = ₹ 16.875
85. When sales are ₹ 20000, Fixed Expenses- ₹ 4000; ; Break-Even Point- ₹ 10000, the contribution will be
a. ₹ 8000 b. ₹ 10000
c. ₹ 12000 d. ₹ 16000
Break Even point (Quantity) = Fixed Cost x sale = 10000= 4000X20000
Contribution Contribution
So Contribution will be 80000000 = ₹ 8000
10000
86. In a factory the standard time allowed for completing a given task (50units), is 8hours. The guaranteed time
wages are 20 per hour. If a task is completed in less than the standard time, the high rate of 4 per unit is
payable. Calculate the wages of a worker, under the Gantt system, if he completes the task in 8 hours
a. 200 b. 192
c. 166 d. 240

As per Gantt’s Plan

Output below standard-Guaranteed time rate
Output at standard- Time rate + bonus of 20% (usually) of time rate.
Output above standard- High piece rate on worker’s whole output. It is so fixed so as to include a bonus of
20% of the time rate.
The worker who completes the task in 8 hours is at standard so will be paid the guaranteed time wage for
actual hours taken plus a bonus of 20% of time rate i.e. (8 x 20)+20%= 160+32= 192 (24 per hour)
87. Fixed cost - Rs.500000, Variable Cost- Rs. 10 per unit, Selling Price- Rs. 15 per unit, Output level 150000
units, find the amount of profit
a. 500000 b. 750000
c. 600000 d. 250000

Contribution = Selling Price - Marginal Cost

= Rs. 2250000 (15*150000) - Rs. 15000,00 (10*150000) = Rs. 750000
Contribution = Fixed Cost + Profit = Rs. 750000 = Rs. 500000 + Profit
Profit is Rs. 750000-Rs. 500000 = 250000
87. Sales- Rs. 1,00,000; Total Cost- Rs. 80,000; Fixed Cost- Rs. 20,000 and Net Profit- Rs. 20,000, find the Profit
volume ratio
a. 40% b. 25%
c. 60% d. 50%
i) P/V ratio = Contribution/Sales X 100 = (100000 - 60000)/100000 X 100 = 40%
88. Normal usage- 50 per week each, Maximum usage -75 per week each and Minimum usage 25 per week
Re-order quantity is 300 and Re-Order period is 4 to 6 Weeks. Find the average stock level
10
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 a. 450 b. 200
c. 650 d. 425
Average stock level : ½ (Minimum + maximum) Stock level
½ (200 units + 650 units) = 425 units.
89. From the following details, calculate the direct labour hour rate of department P.
(i) The number of workers – 300 (ii) The department works for 325 days in a year. (iii) The department works
for one shift of 8 hours. (iv) 10% of the man – hours is expected to be lost in idle time and, (v) The total
factory overheads of department P are Rs. 105300.
a. 0.135 b. 0.15
c. 0.165 d. 0.17
Number of working hours= 325 days x 8 hours a day =2600 hours
Less idle hours = 10% of 2600 hours = 260
So effective working hours = 2600-260 = 2340
Accordingly, total effective hours of the department= 2340 x 300 = 702000
𝑂𝑣𝑒𝑟ℎ𝑒𝑎𝑑 105300
So direct labour hour rate= = = 0.15
𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑙𝑎𝑏𝑜𝑢𝑟 ℎ𝑜𝑢𝑟 702000
90. Fixed Cost = Rs.40, 000 , Profit = Rs. 20,000, B.E.P. = Rs. 80,000 , find the amount of sale
a. 120000 b. 150000
c. 100000 d. 140000
Sales x P/V Ratio = Fixed cost + Profit OR Sales x P/V Ratio = Contribution
OR Sales = Contribution/P/V Ratio So, = (40,000 + 20,000)/50/100
= (60,000 x 100)/50 =Rs.1, 20,000
91. The cost data pertaining to Product ―X‖ of XL Ltd. are as follows :
Maximum capacity 30,000 units
Normal capacity 15,000 units
Increase in inventory 1,880 units
Variable cost per unit ` 12
Selling price per unit ` 50
Fixed manufacturing overhead costs ` 3,60,000
If the profit under Absorption costing method is ` 1,01,000, the profit under Marginal costing method would
be
(a) ` 1,46,120 (b) ` 1,23,560
(c) ` 55,880 (d) ` 73,340

Fixed cost per unit = ` 3,60,000 / 15,000 units = ` 24

Profit under absorption costing = ` 1,01,000
Adjustment of fixed manufacturing overhead costs of increased inventory = 1,880 units x ` 24 = ` 45,120
Profit under marginal costing = ` 1,01,000 – ` 45,120 = ` 55,880]
92. As per AS-6, Depreciation is a process of[D10]
(a) Valuation (b) Valuation and allocation
(c) Allocation (d) Appropriation
AS-6 on depreciation accounting defines ‘depreciation’ as the measure of wearing out, consumption or
other loss of a value of a depreciable asset arising from use, effluxion of time or obsolescence through
technology and market changes. Depreciation is allocated so as to charge a fair proportion of the
depreciable amount in each accounting period during the expected useful life of the asset.
93. Pick the correct in terms of AS-29
a. An enterprise should recognize a contingent asset and disclose it in financial statements.
b. It may also be disclosed in the report of approving authority, where an inflow is probable.
c. Both A&B
d. None of the given
94. Pick the incorrect matched
11
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
 a. AS 23- Accounting for Investments in Associates in Consolidated Financial Statements
b. AS 11- Accounting for the Effects of Changes in Foreign Exchange Rates
c. AS 15- Borrowing Costs
d. None of the given
95. In term of AS-09 Revenue Recognition, Pick the correct one
i. Under installment sale, Revenue of sale price excluding interest should be recognised on the date of sale.
ii. Under sale with money back policy, It may be appropriate to recognize the sale but to make suitable
provision for returns based on previous experience.
iii. For subscription received for publication, revenue received or billed should be deferred and recognised
either on a straight-line basis over time or where the items delivered vary in value from period to period,
revenue should be based on the sales value of the item delivered.
iv. In case of sale of show ticket, revenue should be recognised when the event takes place.

a. i, ii and iii b. ii, iii and iv

c. i, ii and iv d. All of the above
96. In terms of AS-07 Construction Contract, pick the correct one
i. A Construction contract is a contract specifically negotiated for the construction of an asset or a
combination of assets that are closely interrelated or interdependent in terms of their design, technology
and function or their ultimate purpose or use.
ii. When the outcome of a construction contract can be estimated reliably, contract revenue and contract
cost should be recognized as revenue and expenses by reference to the stage of construction (percentage
of completion)
iii. When the outcome of a construction contract cannot be estimated reliably, Revenue should be
recognized only to the extent of contract costs incurred of which recovery is probable. (i.e. Revenue
recognized = Costs Incurred)
iv. Contract costs should be recognized as an expense in the period in which they are agreed upon.

a. i, ii and iii b. ii, iii and iv

c. i and iv d. All of the above
97. Pick the correct regarding prior-period items in accordance with AS-05 Net Profit or Loss for the Period,
Prior Period Items and Changes in Accounting Policy
a. Prior Period items are incomes or expenses that arise in the current period as a result of ERROR or
OMMISSIONS in the preparation of the financial statements of one or more prior periods.
b. The nature and amount of prior period items should be separately disclosed in the statement of profit
and loss in a manner that their impact on the current profit or loss can be perceived
c. Both A&B
d. None of the given
98. The carrying amount of long-term investments is carried at
a. fair value b. cost
c. fair value or cost whichever is lower d. fair value or cost whichever is higher
99. Pick the correct one regarding payment of retirement benefit to the employees
i. AS 15 deals with accounting of retirement benefit
ii. Payment of retirement benefits may be made out of its own fund or through a trust created for purpose
or through an insurer’s scheme
iii. Appropriation to own fund, contribution to trust or premium to the insurer shall be made through Profit
and Loss account
iv. Such amount is calculated on estimation basis.

a. i, ii and iii b. ii, iii and iv

c. i, ii and iv d. All of the above

12
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)
100. Pick the incorrect one
a. If the risks and returns of an enterprise are affected predominantly by differences in the products,
business segments are recognized as primary segments and geographical segments as secondary segments
and vice versa.
b. If the risks and returns of an enterprise are affected both by differences in the products as well as
differences in the locations in which it operates, then the enterprise should use business segments as its
primary segment and geographical segment as its secondary segment.
c. If risks and returns of an enterprise are affected neither by differences in products/services nor by
differences in geographical areas of operations, the management may elect any of the two as primary with
other being secondary segment.
d. None of the given

13
Prepared by Deepak Kumar Rahi, AAO (LAD/Patna)