CPT Question banks
Paper 1 : Fundamentals of Accounting
Chapter:1
1) Financial statements do not consider
(a) Assets expressed in monetory terms
(b) Liabilities expressed in monetory terms
(c) Only assets expressd in non-monetory terms
(d) Assets and liabilities expressed in non-monetory terms
2)Which of the following is not sub-field of accounting?
(a) Management of accounting (b) Cost accounting
(c) Financial accounting (d) Book keeping
3) On 1st Jannuary, Sohan paid rent of rs.5000. This can be classified as
(a) An event (b) A transaction
(c) A transaction as well as event (d) Neither transaction nor an event
4)On March 31, 2011 after sale of goods worth rs. 2000, he is left with the
closing stock of rs. 10,000. This is
(a) An event (b) A transaction
(c) A transaction as well as event (d) Neither transaction nor an event
5) A purchased a car for rs. 5,00,000 making down payment of rs.1,00,000
and signing a rs. 4,00,000 bill payable due in 60 days. As a result of this
transaction
(a) Total assets increased by rs. 5,00,000
(b) Total liabilities increased by rs.4,00,000
(c) Total assets increased by rs. 4,00,000
(d) Total assets increased by rs. 4,00,000 with the corresponding increase
in liabilities by rs. 4,00,000
6)Mohan purchased goods for rs. 15,00,000 and sold 4/5th of goods
amounting rs. 18,00,000 and met expenses amounting rs. 2,50,000 during
the year ,2011. Which of the accounting concept was followed by him?
(a) Entity (b) Periodicity (c) Matching (d) Conservatism
7) Capital brought in by proprietor is an example of
(a) Increase in assets and increase in liability
(b) Increase in liability and decrease in assets
(c) Increase in assets and decrease in liabilities
(d) Increase in one asset and decrease in another asset
8) The concept of conservatismwhen applied to the balancesheet results in
(a) Understatement of assets (b) Overstatement of assets
(c) Overstatement of capital (d) None of the above
9) A proprietor , Mr.A has reported a profit of rs. 1,25,000 at the end of
financial year after taking into consideration the following amount:
(i) The cost of an assets of rs. 25,000 has been taken as an expense.
(ii) Mr. A is anticipating a profit of rs.10,000 on the future sale of a car shown
as an assetsin his books.
(iii) Salary of rs.7,000 payable in the financial year has not been taken into account.
(iv) Mr.A purchased an asset for rs. 75,000 but its fair value on the date of purchase
was rs. 85,000. Mr.A recorded the value of assets in his books by rs. 85,000.
On the basis of the above facts answer the following question from the given choices:
What is the correct amount of profit to be reported in the books?
(a) Rs. 1,25,000 (b) rs.1,35,000 (c) rs.1,50,000 (d) rs.1,33,000
10) Acconting policy for inventories from Xeta Enterprises states that inventories are
at the lower of cost determined on weighted average basis or not realisable value.
Which accounting principle is followed in adopting the above policy?
(a) Materiality (b) Prudence (c) Substance over firm (d) All of the above
11) Mohan purchase a machinery amounting rs.10,00,000 on April 1,2001. On 31st
March ,2011 similar machinery could be purchsed for rs.20,00,000 but the NRV
of the machinery purchased on 1.4.2001 was estimated at rs.15,00,000. The
present discounted value of the future net cash inflows that the machinery was
expected to generate in the normal course of business, was calculated as rs.12,00,000.
(i) The current cost of the machinery is
(a) rs.10,00,000 (b) rs.20,00,000 (c) rs.15,00,000 (d) rs.12,00,000
(ii) The present value of machinery is
(a) rs.10,00,000 (b) rs.20,00,000 (c) rs.15,00,000 (d) rs.12,00,000
(iii)The historical cost of the machinery is
(a) rs.10,00,000 (b) rs.20,00,000 (c) rs.15,00,000 (d) rs.12,00,000
(iv) The realizable value of the machinery is
(a) rs.10,00,000 (b) rs.20,00,000 (c) rs.15,00,000 (d) rs.12,00,000.
Chapter:2
1) Journal and ledger records transactions in
(a) A chronological order and analytical order respectively.
(b) An analytical order and chronological order respectively.
(c) A chronological order only
(d) A analytical order only.
2) Rs.1,500 received from sub tenant for the rent and entered correctly in the cashbook is
posted to the debit of the rent account. In the trial balance
(a) The debit total will be greater by rs.3,000 that the credit total.
(b) The debit total will be greater by rs.1,500 that the credit total.
(c) Subject to other entries being correct the total will agree.
(d) None of the above.
3) The sales books
(a) Is a part of journal,
(b) Is a part of ledger,
(c) Is a part of the balancesheet.
4) Salaries due for the month of march will appear
(a) On the receipt side of the cash book
(b) On the payment side of the cash bok
(c) As a contra entry
(d) Nowhere in the cash book
5) Amount of rs.5,000 spent as lawyers fee to defend a suit claiming that the firms factory
site belong to the plaintiff’s land is
(a) Capital expenditure (b) Revenue expenditure
(c) Deffered revenue expenditure (d) None of the above.
6) Present liability of uncertain amount , which can be measured reliably by using a
substantial degree of estimation is termed as
(a) Provision (b) Liability (c) Contigent liability (d) None of the above
7) If the amount is posted in the wrong account or it is written on the wrong side of the
account ,is called
(a) Error of ommission (b) Error of commission
(c) Error of principle (d) Compensating error
Chapter:3
1) When the balance as per pass book is the starting point ,direct payment by bank are :
(a) Added in bank reconcillation statement
(b) Substracted in the bank reconcillation statememnt
(c) Not required to be adjusted in the bank reconcillation statement
(d) Neither of the above
2) Direct payment to the third party on behalf of the account holder is entered in
(a)The cash book when the amount is paid by the bank
(b) The cashbook when the entry is passed in the pass book
(c) The pass book when the entry is posted in the passbook
(d) None of the above
Chapter:4
1)On April,07,2011, i.e., a week after the end of the accounting year 2010-2011 ,a company
undertook physical stock verification. The value of stock as per physical stock verification
was found to be rs.35,000.
The following data pertaining to the period of April,01,2011 to April 07,2011 are given:
i)Goods costing rs.5,000 were sold during the week.
ii)Goods received from consignor amounting to rs.4,000 included in the value of stock.
iii)Goods earlier purchased but returned during the period amounted to rs.1,000.
iv)Goods earlier purchased and accounted but not received rs.6,000.
After considering the above, the value of stock held as on March 31,2011 was
(a) rs.27,000 (b) rs.19,000 (c) rs.43,000 (d) rs.51,000.
2) While finalizing the current year’s profit ,the company realized that there was an error in
the valuation of closing stock of the previous year . In the previous year, closing stock
was valued more by rs.50,000. As a result
(a) Previous year’s profit is overstated and current ear’s profit is also overstated.
(b) Previous year’s profit is understated and current year’s profit is overstated.
(c) Previous year’s profit is understated and current year’s profit is also understated.
(d) Previous year’s profit is overstated and current year’s profit is understated.
Chapter:5
1) H ltd. puchased a machinery on April,01,2006 for rs.360,000. It is estimated that the
machinery will have a useul life of 5 years after which it will have no salvage value.If the
company follows sum-of-year’s -digit method depreciation, the amount of depreciation
charged during the year 2010-11 was
(a) rs.1,00,000 (b) rs.80,000 (c) rs.60,000 (d) rs.20,000
2) On Auguest 01,2008 ,K Travels ltd. bought four metador vans costing rs.1,20,000
each. The company expected to fetch a scrap value of 25% of the cost price of the
vehicles after ten years.The vehicles were depreciated under the fixed installation
method up to March 31,2011. The rate of depreciaton charged up to Marche31,2011.
The rate of depreciation charged up to March 31,2011 was
(a)10.0% (b) 9.0% (c)8.5% (d)7.5%
Chapter:6
1) Under statement of closing work in progress in the period will
(a) Understate cost of goods manufactured in that period.
(b) Overstate current assets.
(c) Overstate gross profit from sales in that period.
(d) Understate net income in that period.
2) The capital of a sole trader would change a result of:
(a) A creditor being paid his account by cheque.
(b) Raw materials being purchased on credit.
(c) Fixed assets being purchased on credit.
(d) Wages being paid in cash.
Chapter:7
1)X of kolkata sends out 500 bags to Y costing rs.400 each at an invoice price of
rs.500 each. Consignor’s expenses rs.4,000 consignee’s non-selling expenses
rs.1,000 and selling expenses rs.2,000. 400 bags were sold.
The amount of consignment stock at Invoice Price will be:
(a) rs.50,900 (b) rs.50,800 (c) rs.50,000 (d) rs.51,000
2)X of kolkata sends out goods costing rs.3,00,000 to Y of Delhi. Commisssion
agreement – 2% on sales + 3% on sales as del-creader commission. The entire
goods is sold by consignee for rs. 4lacs. However, consignee is able to recover
rs.3,95,000 from the debtors. The amount of profit to be transferred to P/L as net
commission by consignee will be:
(a) rs.15,000 (b) rs.22,000 (c) rs.21,000 (d) rs.20,000
3)A and B enter into a joint venture sharing profit and losses in the ratio 3:2. A will
purchase goods and B will affect the sale.A purchase goods costing rs.200,000.
B sold it for rs.300,000. The venture is terminated after 3 months. A is entitelled
to get 10% interest on capital invested irrespective of utillization period. The
amount of interest received by A will be
(a) rs.20,000 (b) rs.10,000 (c) rs.15,000 (d) rs.25,000
4) A bought goods of the value of rs.10,000 and consigned them to B to be sold
by them on a joint venture , profits being divided equally, A paid rs.1,000 for
freight and insurance. A draws a bill on B for rs.10,000 . A got it discounted at
rs.9,500. B sold the goods for rs.15,000. Commission payable to B, rs.500.
The amount to be remmitted by B to A will be:
(a) rs.12,500 (b) rs.3,000 (c) rs.14,500 (d) rs.13,500
5) On 1.6.2011, X drwas a bill on Y for rs.25,000. At maturity Y request X to
accept rs.5,000 in cash and nothing charges incurred rs.100 and for the
balance X draw a bill on Y for 2 months at 12% p.a. Interest amount will be:
(a) rs.410 (b) rs.420 (c) rs.440 (d) rs.400
6) Sale or return day book and sale or return ledger are known as
(a) Principal books
(b) Subsidiary book
(c) Memorendum books
(d) None of te above
Chapter:8
1) X and Y share profits and losses in the ratio of 2:1. They take Z as a
partner and the new profit sharing ratio becomes 3:2:1. Z brings rs .4,500 as
premium for goodwill. The full value of goodwill will be:
(a) rs.4,500 (b) rs.18,000 (c) rs.27,000 (d) rs.24,000
2) Under annuity basis goodwill is calculated by:
(a) No. of years purchased multiplied with average profit.
(b) No. of years purchased multiplied with super profits.
(c) Summation of the discounted value of expected future benifits.
(d) Super profit divided with expected rate of return.
3) A and B shares profits equally. They admit C as an equal partner and assets were
revalued as follows: Goodwill at rs.300,000(bookvalue NIL). Stock at rs.20,000
(bookvalue RS.12,000) ; Mchinery at rs.60,000 (bookvalue rs.55,000). C is to bring
in rs. 20,000 as his capital and necessary cash towards his share of Goodwill.
Goodwill Account will not be shown in the books. Find the profit/loss on revaluation
to be shared among A,B,C.
(a)rs.21,500 :rs.21,500:0 (b) rs.6,500: rs.6,500:0
(c)rs.14,333: rs.14,333:rs.14,333 (d)rs.4,333:rs,4,333:rs.4,333
,
4) Balances of Ram,Hari & Mohan sharing profits and losses in the ratio of 2:3:2 stood
as Ram- rs.10,00,000; Hari-rs.15,00,000; Mohan-rs.10,00,000; Joint Life Policy
rs.3,50,000. Hari desired to retire from the firm and the remaining partners decided
to carry on with the future profit sharing ratio of 3:2. JLP of the partners surrenderred
and cash obtained rs.3,50,000. What should be the treatment for JLP A/c?
(a) Rs.3,50,000 creadited to partner’s capital account in new ratio.
(b) Rs.3,50,000 credited to partner’s capital account in old ratio.
(c)Rs.3,50,000 credited to partners capital account in capital ratio.
(d)Rs.3,50,000 credited to JLP account.
Chapter:9
1)The authorized capital of M ltd. consist of both cumulative preference shares and
equity shares. Each 5%cumulative pref. shares has a par value rs.100. Each equity
shares has a par value rs.10.At the end of the year 2009-2010 and 2010-2011, the
cumulative preference share capital balance was rs2,00,000 and the equity share
capital balance was rs.5,00,000.
If the dividend declaration totalled rs.8,000 and rs.15,000 in the year 2009-10 and 2010-11
respectively,the dividends allocated to the equity share holders in the year 2010-11=?
(a)rs.3,000 (b) rs.5,000 (c)rs.10,000 (d) rs. 12,000
2) Which of the following accounts can be used for transfer to capital redumption reserve
account?
(a) General Reserve (b) Forfeited shares account
(c)Profit prior to incorporation. (d) Securities premium account.
3) Which of the following is true with regard to 10% Debentures issued at a discount of 20%?
(a) The carrying amount of debenture gets reduced each year at a rate of 20%
(b) Issue price and the carrying amount of debentures are equal.
(c) At the time of redemption,the debenture holders will be paid the issue price
(d) The face value and the carrying amount of the debenture are equal.
