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FINANCIAL ACCOUNTING AND MANAGEMENT



FINANCIAL & MANAGEMENT ACCOUNTING
MBA-I
MB0025

1-Mark

1. A business is an artificial entity distinct from its proprietors. This is based on which concept?
a) accrual concept                           b) money measurement concept
c) entity concept                             d) periodicity concept
Ans. (c)

2. ---------------  has more than one owner who have agreed to share profits of a business, carried on by all or any of them acting for all.
a)Corporate entity                            b)partnership firm
c)all business entity             d)sole proprietorship firm
      Ans. (b)

3. “Anticipate no profit but provide all possible losses”. Which concept says so?
a) the realization concept                 b) the matching concept
c) concept of prudence                   d)the accrual concept
Ans.(c)

4.The valuation of assets & liabilities principle depends on which concept ?
a)the cost concept                          b)money measurement concept
c)the periodicity concept                 d)the going concern concept
Ans . (d)

5.According to the income tax law,1961 , business unit should follow a uniform   
    accounting period i.e.:
a)fiscal year                                    b)calendar year
c)both of the years                          d)none.
Ans. (a)

6.A happening of consequence to an entity known as--------------
a)event                                           b)vouchers
c)books                                          d)journal
Ans. (a)

7.Which of the following is a type of vouchers ?
a)receipt voucher                             b)payment vouchers
c)journal vouchers                           d)all of these
Ans(d)



8. -----------------  is drawn to record all non-cash transactions and events.
a)receipt voucher                             b)payment vouchers
journal vouchers                              d) all of the above

Ans.( c)

9.FASB stands for:
a)financial accounting standard board
b)financial accounting state board
c)none of the above
Ans.(a)

10.Which of the following equation is correct ?
a) assets = liability + capital
b) liability =assets + capital
c) assets = capital – liability
d) none of the above
Ans. (a)

11.  ------------ is the residual interest of owners in assets over liabilities.
a)assets                              b)capital
c)capitalization                    d) liability
Ans. (b)

12.The income and expenses should be recognized as & when they are earned and incurred , irrespective of whether the money is received or paid in connection thereof.
a)accrual concept                b)cost concept
c)cash basis                       d)none of the above

Ans.(a)

13. If you pass in MBA. It will give you a great deal of satisfaction .this  expression can not be made in money term . This is because of which concept ?
a)accrual                             b)money measurement
c)cost concept                    d)business entity concept
Ans. (b)

14. -------------  is a book of first entry or prime entry .
a)primary book                    b)secondary book
c)cash book                        d)all of above

Ans. (a)

15. ------------- records credit sale of goods.
a) purchase day book
b) sale day book
c) journal day book
Ans. (b)

16. ------------ is a documentary evidence in writing , containing an unconditional
 order signed by the maker , directing a certain person to pay a certain sum of money    to the bearer of the instrument.
a)B/E                                  b)B/R
c)B/P                                  d)all

Ans. (a)

17. ------------- records goods returned to the suppliers.
a)return inward                     b)return outward
c)sales return                      d) none of the above
      Ans (b)

18.Ram commenced business with Rs. 15000.
The J.E for this is:
a) Ram’s a/c      Dr.                         b)Ram’s capital a/c  Dr.
          To cash a/c                                       To cash a/c
c) Cash a/c     Dr.                            d) Capital a/c            Dr.
          To Ram’s capital a/c                          To Ram’s a/c
Ans. ( c)


19.Withdrew cash from bank for private use Rs. 20,000.
The J.E is :       Cash a/c   Dr.
                                 To Bank a/c

a) true                                 b)false
Ans. (b)

20.-------------- records daily cash & bank receipt and payment.
a)cash book                        b)bank book
Ans. (a)

21. Cost sheet shows the total cost of  _______ only.
a. Purchase                               b. Production
c. Sales                                    d. All of above

Ans. (b)

22. PRIME Cost + Factory overhead =?
a. Factory Cost             b. Production Cost
c. Selling & Distribution             d. Total Cost    
Ans. (a)
23 A Cost Sheet with sales & profit data are called _________ .
a. Expert Cost Sheet                 b. Extended Cost Sheet
c. Cost Sheet production           d. None of above
Ans.(b)

24 _________ refers to the cost of materials, which become a major part of the finished product.
a. Direct labor cost                    b. Direct expense cost
c. Direct material cost    d. All of above
Ans.  (c )


25 Sunk cost is relevant cost.
a. True                          b. False

Ans (b)

26 Depreciation is a type of which cost.
a. Non-cash cost                       b. Incremental cost
c. Sunk cost                             d. Imputed cost

Ans. (a)

27. Opportunity cost is also known as opportunity lost.
a. True                          b. False

Ans (a)

28. A cost, which can be influenced by the action of a specified number of an undertaking, is called.
a. Controllable cost                   b. Non-Controllable cost
c. Incremental                            d. Detrimental cost

Ans. (c)

29. P/V ratio = C/S
a. True                                      b. False

Ans. (b)

30. Which of the following is correct.
a. C=S+VC                               b. C=F+P
c. S=C-VC                                d. All of the above

Ans. (b)

31. P/V stands for profit/value ratio.
a. True                                      b. False

Ans. (b)

32.-------------- will have separate accounts for each customer.
a)journal ledger                                     b)creditor ledger
c) debtor ledger                                    d)cash ledger

Ans(c)


33. In a B.E. chart, the horizontal axis (x-axis) represents _________ .
a. Cost of production                b. Output
c. Input                         d. Profit

Ans. (c)

34. Variable Cost = Marginal Cost.
a. True                          b. False

Ans. (a)

35. Sales - ____________ = Margin of safety
a. Break even point                   b. Break even sales
c. P/V ratio                               d. Profit

Ans.( b)

36. Which of the following heads is not an application of marginal costing.
a. Competition              b. Recession
c. Special customer                   d. None of above

Ans.(c )

37. The consolidated summary of various functional budget is called:
a. Functional budget      b. Flexible budget
c. Master budget           d. Fixed budget

Ans.(d)

38. F.C = P/V X S – F.
a. True                          b. False

Ans. (b)

39. Which of the following is correct.
a. P/V ratio = Change in profit X 100                  b. P/V ratio = C/S
                      Change in sales
c. P/C ratio = C/S                                                          d. All of the above

Ans.(a)

40. Graphical representation of cost & revenue showing their relations at different volumes of output is called _________.
a. Break even chart                    b. Break-even point
c. Margin of safety                    d. Profit/volume ratio

Ans. (d)

  1. Main ledger is type of  secondary book.
a)true                                  b)false

Ans. (b)

  1. Subsidiary ledger is:
a) general ledger
b)debtor ledger
c) creditor ledger
d) all of the above
Ans. (b)

43.   A formal record of a particular type of transaction is known as:
   a. Ledger                                     b. Account
   c. Posting                                    d. Balancing
Ans.(d)

44.   Trail Balance is a part of book of Accounts.
a. True                                            b. False
Ans.(a)

45.    The purpose of trail balance is to:
a. Check the arithmetical accuracy of ledger balances.
b. Have an overview of the operations of the business as on a particular date.
c. Both a & b.
d. None of above.
Ans.(c)

46.   ________ is a separate statement proposed to test the accuracy of the ledger balances.
a. Final Accounts                            b. Trail Balance
c. Journal Entries                            d. Balance Sheet
Ans.(a)

47.  “ The amount at any given volume of output by which the aggregate costs are changes if the volume of output is increased or decreased by one unit” is called:
a. Absorption                                  b. Marginal Costing
c. Variable Costing              d. C.V.P analysis

Ans.(a)

48. The establishment of budget relating responsibilities of executives to the requirements of a policy and continuous comparison of actual with budgeted result is called:
a. Budget                                        b. Budgeting system
c. Budgetary control                        d. All of the above

Ans.(c )

49. Fixed and flexible budgets are divided according to which category.
a. Scope                             b. Efficiency
c. Period                             d. None of the above
Ans.(a)

50. __________ is the target of each section of a organization.
a. Cost                                           b. Profit
c. Budget                                        d. All of the above
Ans.(a)

51. Fund may be interpreted in which ways:
a. Cash                                           b. Total Current assets
c. Net working capital                      d. All of above
Ans.(d)

52. Fund flow statement is also known as:
a. Fund statement                     b. Statement of source & application of fund
c. Inflow & outflow of fund        d. All of above
Ans.(d)

53. The term fund means.
a. Gross working capital            b. Net working capital
c. Net working capital                d. All of above

Ans.(d)

54. According to _________, the FFS describe the sources from which additional funds were derived and the uses to which these funds are put.
a. Robert Anthony                     b. None of above
c. ICAI, India                             d. None of above
Ans. (b)

55. Fund flow statement reveals the inflow and outflow of cash during a particular period.
a. True                                      b. False
Ans.(a)

56. Which of the following is the use of CFS.
a. It helps in short term financial decision relating to liquidity.
b. It explain the reasons for low cash balances.
c. It shows source & uses of cash.
d. All of above.

Ans.(d)

57 Cash flow is also prepared in statement form.
a. True                                      b. False
Ans.(b)

58. Fund flow statement is prepared to explain the reasons for low cash balance.
a. True                                      b. False
Ans.(a)

59. CFO = Increase in C.A + Increase in C.L.
a. True                          b. False 
Ans.(b)


2-Marks

Q. If:  share – capital – 1,60,000
            general reserves – 60,000
            profit & loss A/c – 1,00,000
            loan @ 15% interest – 2,00,000
            sales for the yr. – 5,60,000
            tax paid -               40,000
Profit for the current year after Interest & tax – 80,000
1. Debt – Equity ratio is:
a. 3,20,000                                b. 2,20,000
c. 1,80,000                                d. 2,60,000
Ans.(c)

2. Interest coverage ratio is:

a. 4 times                                  b. 5 times
c. 6 times                                  d. 3 times
Ans. (c )

3. Return coverage ratio is:

a. 28.9%                                   b. 5 times
c. 6 times                                  d. 3 times
Ans.(b)

4. Capital turnover ratio is:
a. 1.50 times                             b. 1.08 times
c. 1.80 times                             d. 2.02 times
Ans.(c )


5. The sale accounting is under cast by Rs 15,000. This could be rectify as:
        
Sales Account


 


                                                  By rectification                        15000
  
a. True                                            b. False

Ans.(a)

6. Calculate B.E.P from the following figures.
TS = Rs 50,00,000                     VC = Rs 2,75,000
N.P.= Rs 1,08,000                     BEP= ?

a. Rs. 2,30,000              b. Rs. 2,60,000
c. Rs. 3,00,000              d. Rs. 3,30,000
Ans.(a)


7. ------------- records credit purchases of traded goods and ------------- records                    
      credit sale of traded goods.
a)       goods return , goods purchased
b)      purchase day book , sale day book
c)       purchase return , sales return
d)       sales day book , purchase day book
Ans.(b)

8. State in which journal the following items would be recorded
A) cash purchase of goods 1)purchase
B) credit sale of goods                   2)journal
C) credit sale of  furniture     3)sale

a)       A,1 ; B,3 ; C,2
b)      A,2 ; B,3 ; C,3
c)       A,1 ; B,2 ; C,3
Ans.(b)

9. For financial accounting the auditing is________ & for management accounting thr auditing is _________.
a)  rigid, flexible                                    b) voluntary, legal
c) compulsory, voluntary                       d)objective ,subjective
Ans.(c )

10.interest accrued on fixed deposit of  Rs. 20000 at 12% simple interest on 31-12-07, not yet received . the entry is:
a) Income a/c                Dr.        24000
            To outstanding income a/c         24000

b) Outstanding income a/c         Dr         24000
               To interest on FD a/c                          24000

d)                                          none of above
Ans. (b)

11.In ______________ method, depreciation is calculated on cost of the asset and in _________ method depreciation is charged on the reducing balance of the book value  assets.
a)       Diminishing balance, fixed installment
b)      Reducing balance, fixed installment,
c)       Fixed installment, diminishing balance
d)      All of above
Ans.(c )

12.capital is_________ when it is withdrawn & is ___________ when deposited.
a)       Debited, credited
b)      Debited, debited,
c)       Credited, debited
d)      Credited, credited


13. _______, _________ and ___________ are the turn used in the science of financial accounting.

  1. Book keeping, journal, ledgers
  2. Book keeping, accounting, accountancy
  3. Journal, ledger, final accounts
  4. All of the above

Ans. (b)

14. Which of the following statement is not true:

i. Purchase return take place when the goods bought are not sold as for the specification.
ii. Debit note is a document to slow the supplier account being debited

  1. Both I and ii
  2. Only I
  3. Only ii
  4. Neither I & ii

Ans. (d)

15. DER compares _________ with ________.

  1. Debenturer & Reserves
  2. Debt & Equity
  3. Current assets & current liabilities
  4. Redeemable & irredeemable

Ans. (b)

16. Which of the following statement are true.

i. Increase in current assets will increase working capital 
ii. Decrease in current liabilities will decrease working capital

  1. Both i & ii
  2. Only I
  3. Only ii
  4. Neither I & ii

Ans. (b)

17. The WDV of a machinery at the beginning and at the end were Rs. 2,00,000 and 1,75,000. An old machine whose written down value was Rs. 12,000 was sold for Rs. 6,500. Rs. 3200 depreciation was charged during the current year. The purchase price is :

  1. Rs. 20,000
  2. Rs. 19,000
  3. Rs. 1,68,000
  4. Rs. 1,56,000

Ans. (b)

18. Calculate the selling price if marginal cost is Rs. 2,400 and MCSR is 20%.

  1. Rs. 5,000
  2. Rs. 4,000
  3. Rs. 3,000
  4. Rs. 2,000

Ans. (c)

19. __________ activities are the principal revenue producing activities of the enterprise & other activities that are not investing financing activities

  1. Financial
  2. Operating
  3. Investing
  4. None of the above

Ans. (b)]

20. If the depreciation value is not given, it has to be found out as:

Opening balance of fixed assets + ____________ - ___________ - closing balance of fixed assets

  1. Purchase, direct expenses
  2. Purchases, fixed assets sold
  3. Fixed assets sold, sales
  4. Written of value, direct expenses

Ans. (b)




4-Marks


1. Calculate stock turnover ratio:
if opening stock = 75000, closing stock = 1,00,000
Credit sales = 2,00,000, cash sales = Rs. 50,000
Gross profit is 25%, STR is :

  1. 2 times
  2. 3 times
  3. 2.8 times
  4. 2.1 times

Ans. (d)

2. Journal proper contain which of the following aspects:

  1. Opening journal entries
  2. Closing journal entries
  3. Adjusting entries
  4. Rectification entries
  5. Transferring entries
  6. Credit purchase of assets & sale of assets
  7. Withdrawal of goods by the proprietor for his personal use
  8. Loss of goods due to natural causes

  1. a, c, d, e, f
  2. a, b, c, d
  3. d, e, f, g
  4. All from a-h

Ans. (d)

3. Match the following –

I. Liquidity ratio                                                             I. Gross profit, net profit
II. Solvency ratio                                                           II. Current ratio, liquidity ratio
III. Activity ratio                                                 III. Debt equity ratio
IV. Profitability ratio                                           IV. Stock turn-over ratio

  1. I-I, II-II, III-IV, IV-III
  2. I-II, II-III, III-IV, IV-I
  3. I-II, II-IV, III-III, IV-I
  4. I-IV, II-III, III-I, IV-II

Ans. (b)

4. Which of the following statement:

i. Goods taken by the proprietor personal use are credited to sales account                   
ii. Balance-sheet is an account because it is included in the scope of final accounts iii. Stock at the end, if appear in the trial balance is taken only to the balance-sheet
iv. Salary paid in advance is not an expense because it neither reduces assets not increases liabilities

  1. i, iii, iv
  2. I, ii
  3. Ii, iii
  4. Iii, iv

Ans. (d)

5. The increase in working capital is:

  1. 26,000
  2. 20,000
  3. 19,000
  4. 21,000

Ans. (d)

6. Which of the following are the characteristics of fund flow statement:

i. No opening or closing balances are recorded
ii. It is prepared on the basis of ledger principle
iii. “To” and “By” are indicated
iv. It is rigid
v. Only cash receipt & payments are recorded
vi. It is related with accrual basis

  1. i, iii, iv, v
  2. I, ii, iv, vi
  3. I, iii, iv
  4. I, iii, vi

Ans. (d)

7. Net cash loan for operating activities is –

  1. Rs. 10,600
  2. Rs. 65,400
  3. Rs. 67,400
  4. Rs. 60,100

Ans. (c)

8. Which of the following statement does not match with the concerned answer:

1. Error of omission can be detected only after a careful review of ledger balance of previous year - True
2. Error of principle affects the value of revenue & capital items – False
3. It is very difficult to find out the compensating errors – False
4. Error of commission affects trial balance – True

  1. 1, 2, 3
  2. 2, 3
  3. 2, 3, 4
  4. 1, 3

Ans. (c)

9. The liquid Ratio is:

  1. 1:2
  2. 2:1
  3. 1:1
  4. 2:3

Ans. (c)

10. Debt equity ratio is:

  1. 1:2
  2. 0.75%
  3. 2:1
  4. 1:0.75

Ans. (b)

11. Capital gearing ratio is:

  1. 1:1
  2. 1:2
  3. 2:1
  4. 0.7:1

Ans. (a)

12. Match the following –

A.
I. According to ________ concept, revenue is considered as being earned on the date on which it is realized.
II. According to _________ principle, insignificant facts, which do not influence any decisions of the investors or any interested group need not communicated
III. According to _______ concept, the cost of applying a principle should not be more than the benefits derived from.
IV. According to _______ concept, Revenue earned during a period is compared with the expenditure incurred to earn that income.

B.
I-Making cost & Revenue
II. Modifying
III. Income recognition
IV. Materially

  1. I-I, II-II, III-IV, IV-III
  2. I-III, II-IV, III-II, IV-I
  3. I-II, II-III, III-IV, IV-I
  4. None of the above

Ans. (b)

13. The Net Profit during the year is:

  1. 2,10,000
  2. 1,11,800
  3. 95,800
  4. 1,15,800

Ans. (d)

14. Which of the following statements are not correct:

  1. S-V = F+P
ii. MUV = (SQ*SR) – (AQ*AP)
iii. Working capital = Current liabilities – Current Assets
iv. Contribution = MCSR / * 100
v. Cost variance  Standard cost – actual cost

  1. ii, iii, iv, v
  2. I, ii, iii
  3. Iii, iv
  4. Ii, iii, iv

Ans. (d)

15. Which of the following A/c are debited:

1. Drawing A/c
2. Bills payable a/c
3. Debtors A/c
4. Outstanding income A/c
5. Loss on sale income A/c
6. Pre received income A/c
7. Reserve for future expenses or losses
8. Cash at bank

  1. 3, 5, 6, 7, 8
  2. 1, 2, 4, 5, 8
  3. 1, 3, 4, 5, 8
  4. 1, 3, 5, 6, 7, 8

Ans. (c)

                                     

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