In this Question Paper given 50 questions for Accounting & Finance for Bankers, You have to complete them within 60 minutes. After clicking on FINISH TEST button a result of your test will be displayed.

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Q - 1 .While preparing the final accounts of the company, the adjustments [(i) to (iv)] are to be made by passing necessary entries. One of the entries passed is wrong entry. Select the wrong entry.(i) Depreciate plant ,WDV of which is Rs.3,30,000 at 15% (ii) Write off Rs.5,000 from Preliminary Expenses (iii) Half years debenture interest due (12% debentures of Rs. 3,00,000) (iv) a claim of Rs. 25,000 for workmens compensation is disputed by the company.

• Debit Depreciation on plant by Rs.49,500 credit plant by 49,500 AND Debit Profit & Loss Account by 49,500 and Credit Depreciation on plant by 49,500
• Debit Profit and Loss Account by Rs.5,000 and Credit Preliminary Expenses
• Debit Debenture Interest by Rs.18,000 & Outstanding Liability for Deb. Interest by 18,000 AND Debit Profit and Loss Account by Rs.18,000 and Credit Debenture Interest by Rs.18000
• Debit Wages by Rs.25,000 & Credit Outstanding Liability for Workers compensation AND Debit Profit and Loss Account by Rs.25,000 and Credit Wages by Rs.25,000

Q - 2 .Goods worth Rs.2000 sold to Vijay was entered in purchase account; The rectification is

• Credit purchases and credit sales to the extent of Rs.2000 each & debit Vijay by Rs.2000
• Debit purchases and debit sales to the extent of Rs.2000 each & credit Vijay.
• Debit sales to the extent of Rs.4000.
• Credit purchases to the extent of Rs.4000.

Q - 3 .Select the incorrect statement

• Authorized capital is the capital with which the company is registered
• Issued capital is equal to its authorized capital
• Authorized capital, issued capital, subscribed capital, called up capital and paid up capital cannot be same
• The amount which the company has asked its shareholders to pay is called up capital of the company.

Q - 4 .One of the accounts is wrongly debited to  Profit and Loss Appropriation A/c of a company. Name the wrong account debited

• Interim dividend
• Proposed dividend
• Provision for tax
• Capital redemption reserve

Q - 5 .Choose the wrong pair from the following. The information given in the pair is pertaining to banking companies

• Reserves & surplus - Share premium
• Time deposits - Matured time deposits
• Borrowings in India - Refinance from NABARD
• Other Liabilities & Provisions - Inter office/branch adjustments(net

Q - 6 .Which of the following will not affect Trial Balance

• Goods sold on credit not recorded in books.
• Overstating of sales register.
• Rent account credited instead of debit.
• Salary debited to the extent 1/2 the amount.

Q - 7 .Which of the following is not true

• Depreciation is an expense charged to the P & L a/c.
• Depreciation is not a part of the operating costs.
• Assets that are depreciated are tangible assets.
• Depreciation is like an insurance expense.

Q - 8 .DT Ltd. issued shares of Rs.10 each at 10 % premium, payable on application Rs.2, on allotment Rs.3 (including premium), on first call Rs.2 and on final call Rs.4. One of the shareholders, applied for 100 shares but fail to pay allotment and first call money. At this stage, the said shares were forfeited. Select the account which was wrongly credited.

• Credit Forfeited shares Account by Rs.200
• Credit Share allotment Account by Rs.200
• Credit share premium Account by Rs.100
• Credit Share first call Account by Rs.200

Q - 9 .If the net worth of the business is Rs.500, fixed assets are Rs. 500, current assets Rs.300, investments Rs.300, current liabilities Rs. Nil, what is the amount of claim to outsiders?

• Rs. Nil
• Rs. 1100
• Rs.500
• Rs.600

Q - 10 .Select the false statement in respect of assets

• a banking company is allowed to acquire assets for its own use
• a banking company is allowed to grant loans against the security of assets belonging to its customers
• a banking company is allowed to take possession of such assets in case of default committed by the borrower
• a banking company is not allowed to sale the assets against the security of which it has granted loans

Q - 11 .Select the incorrect sentence

• Whenever, there is no profit or inadequate profit, dividend cannot be declared
• The right to claim dividend lapses when there is no profit in case of cumulative preference shares
• When the company makes profit , arrears of preference dividend are cleared first
• The Act prohibits the issue of any preference shares which are irredeemable

Q - 12 .Choose the wrong pair from the following. The information given in the pair is pertaining to banking companies

• The company is an artificial person
• A member of a company may bind the company by its actions.
• The shareholders are not liable for the acts of the company
• The premium received on shares may be distributed among shareholders.

Q - 13 .If the goodwill account is raised for Rs.50,000, the amount is debited to____

• The capital accounts of partners
• Goodwill account
• Cash account
• None of the above

Q - 14 .If a trader enjoys an overdraft facility, then

• His passbook will show debit balance.
• His cash book will show debit balance .
• excess of deposits over withdrawals
• None of the above

Q - 15 .Select the correct statement in respect of doubtful debts

• Which has remained NPA for a period not exceeding 18 months?
• Which has remained NPA for a period exceeding 18 months
• Which is considered uncollectible by bank/ internal auditor or RBI Inspection
• None of the above

Q - 16 .Choose the correct treatment for premium paid on  Joint Life Policy when premium paid is treated as an expense.

• Premium amount is debited to P & L account every year and when claim becomes due then to be shared by all partners
• Every year amount debited to Joint Life Policy Account and balance is shown on asset side at surrender value . The difference between surrender value and premium paid is written off to Profit and Loss account
• Joint Life Policy and Joint Life reserve Account are adjusted to bring them down to surrender value of policy.
• None of the above.

Q - 17 .Which of the following is most desirable 1000/- sold for 1200/- is entered in sales register. The rectification is

• Pricing issue of goods to match current material costs
• Overstating profits
• Understating profits
• none of the above

Q - 18 .In LIFO method of inventory valuation

• Issue of stocks to production is at latest price
• Closing stock is at latest price
• Both a and b
• Neither a nor b

Q - 19 .A new company cannot issue shares-----

• at par
• at discount
• at premium
• none of the above

Q - 20 .If a share of Rs.10 issued at a premium of Rs.1 on which Rs.9 ( including premium) have been called and Rs.7( including premium) paid is forfeited, the capital account should be debited by_________

• Rs.8
• Rs.10
• Rs.9
• Rs.7

Q - 21 .Select the incorrect statement in respect of calls in advance

• The company may accept from shareholders , the uncalled amount on shares even before it is fallen due
• The article of association must permit such acceptance of advance call money
• Interest on calls in advance can be paid but the maximum is upto 6%
• The amount of calls in advance is part of the paid up share capital

Q - 22 .If the adjustment in the values of assets at the time of the admission of a partner shows a profit, it should be credited to the capital accounts of-----

• The old partners in their new profit-sharing ratio
• All partners in their new profit sharing ratio
• The old partners in their old profit sharing ratio
• None of the above

Q - 23 .In case any sum has been written off on a reduction of capital or revaluation of assets, each balance sheet subsequent to such reduction or revaluation must show the reduced figures and date of reduction for a period of _________

• 1 year thereafter
• 2 years thereafter
• 3 years thereafter
• 5 year thereafter

Q - 24 .In operating lease the period is

• Less than the useful life of the asset.
• Greater than the useful life of the asset.
• Equal to the useful life of the asset.
• None of above

Q - 25 .The financial statement of bank consists of ________ schedules

• 18 Schedules
• 16 Schedules
• 17 Schedules
• Schedules

Q - 26 .Sales return of amount Rs.1000 from Vijay was wrongly entered in purchase book. The rectification is

• Debit sales to the extent of Rs.2000.
• Credit purchases to the extent of Rs.2000
• Credit Vijay Rs.2000, debit sales and purchases to the extent Rs.1000, each.
• Debit sales return by Rs.1000 and credit purchases by Rs.1000

Q - 27 .Freight expenses for moving new machinery to factory is

• Revenue expenses
• Deferred revenue expenditure
• Capital expenditure
• None of the above

Q - 28 .The firm sells goods on credit for Rs.50000, the cost of the goods sold is Rs.30000.The effect of the transaction is that, the capital of the firm-----

• increases by Rs.50000
• reduces by Rs.40000
• increases by Rs. 20000
• reduces by Rs. 20000

Q - 29 .The list given below provides the close relationship between the items of each pair. One of the pairs has no such close relationship. Identify this pair.

• Banking company  trustees and executors
• Form B - Profit and Loss Account
• Ledger book - Letter of credit register
• Other liabilities and provisions - Schedule 5

Q - 30 .Investments, Advances, Fixed Assets and other Assets are part of Schedule Nos.--respectively

• 6,7,8,9
• 7,8,9,10
• 8,9,10,11
• 9,10,11,12

Q - 31 .Which of the following is false

• Replacement of defective part of machinery is revenue expenditure
• Daily wages paid for erection /installing of machinery is capital expenditure
• Underwriting commission for issue of shares is revenue expenditure
• Excess of sale price of Machinery over its W D Value but less than cost price is treated as revenue receipt

Q - 32 .For an expense to be classified as revenue or capital depends on

• Kind of expense
• Duration of the benefit of the expenditure
• Effect on revenue earning capacity
• All of the above

Q - 33 .Select the incorrect statement in respect of utilization of share premium

• it is used for the purpose of buy back of shares
• it used for payment of dividend in case of inadequacy of profits
• it is used for writing off preliminary expenses
• it is used for issue of fully paid bonus shares

Q - 34 .The two portion of each pair relating to retirement of a partner has got some relationship. However one of the pair is mismatch and has no relationship. Select this pair from the following

• Retirement - voluntary action
• Gain - retiring partner
• Share of goodwill - borne by continuing partners
• Reserve & surplus - belong to all partners

Q - 35 .Opening balance of asset = Oi, Closing balance of asset = Oc, Depn. = D, Then addition to the asset during the year is

• Oc  D  Oi
• Oi + D  Oc
• Oc + D  Oi
• Oi  D  Oc

Q - 36 .Preliminary Expenses is-----

• Fictitious Asset
• Current liability
• Current asset
• None of the above

Q - 37 .Choose the wrong pair from the following. The information given in the pair is pertaining to banking companies

• Demand Deposits -
• rebate on bills discounted - unexpired discount
• Operating Expenses
• Other Income - Profit on sale of investments less loss on sale of investments

Q - 38 .The investment under held to maturity should not exceed _____ of banks total investment

• 25%
• 75%
• 5%
• None of the above

Q - 39 .Depreciation on banks property is part of Operating Expenses. Some of the items included under this category are listed below. One of the expenses is wrongly included. Identify that item of expense.

• depreciation on motor cars
• depreciation on stationary and stamps
• depreciation on furniture
• depreciation on non-banking assets

Q - 40 .L,K and P are partners. The following differences as listed at (i) to (iv) have arisen due to misunderstanding. The answer to each point is given at (a) to (d). One of the solutions is incorrect. Identify the wrong solution. (i) L used Rs.25,000 belonging to the firm and made a profit of Rs.4,000. K wants the amount to be given to the firm (ii) P used Rs.10,000 belonging to the firm and suffered a loss of Rs. 3000. He wants the firm to bear the loss (iii) L & K wishes to appoint S as new partner. P does not agree (iv) L has given loan of Rs. 50,000 to the firm, he wants interest at 6% ( there is no partnership deed)

• K is right .L must pay Rs.29,000 to the firm
• P is right . Firm should bear profit as well as losses.
• P is right. No new partner can be admitted without the consent of all.
• L is right. He is entitled for interest at 6% in the absence of partnership agreement.

Q - 41 .On the retirement of the partner, the profits on revaluation of assets should be credited to the accounts of-----

• All the partners in their profit sharing ratio
• The remaining partners in their new profit sharing ratio
• The remaining partners in their old profit sharing ratio
• None of the above

Q - 42 .A firm earns Rs.10,000 as its normal profits. The rate of normal return being 10%. The assets of the firm amount to Rs.72,000 and liabilities to Rs.24,000. Find out the value of goodwill.

• Rs.52,000
• Rs.1,00,000
• Rs.28,000
• Nil

Q - 43 .One of the accounts is wrongly grouped under the head  Investments while preparing the balance sheet of the company. Single out

• Investments in government or trust securities
• Investments in shares ,debentures or bonds
• Immovable properties
• Interest accrued on investments

Q - 44 .Suspense a/c is not used in which of the following cases.

• before trial balance.
• after trial balance.
• before final accounts.
• none of the above.

Q - 45 .In banking company, matured term deposit to be shown under-----

• demand deposits
• saving bank deposits
• term deposits
• other liabilities and provisions

Q - 46 .While preparing the final accounts of the company, the adjustments [(i) to (iv)] are to be made by passing necessary entries. One of the entries passed is wrong entry. Select the wrong entry.(i) Provide dividend 5% of paid up share capital (Share capital of Rs. 5,00,000 consisting of shares of Rs. 10 each fully paid) (ii) Insurance for unexpired period is Rs.2000 (iii) A provision of Rs. 25,000 is to be made for income tax (iv) a provision of Rs. 5000 is to be made for doubtful debts

• Debit Dividend by Rs.25000 & Credit Bank by Rs.25000
• Prepaid Insurance by Rs.2000 & Insurance by Rs.2000
• Debit Profit & Loss Account by Rs.25,000 & Credit Provision for Tax by Rs.25,000
• Debit Profit & Loss by Rs.5,000 & Credit Provision for doubtful debts by Rs.5,000

Q - 47 .The scheduled banks are required by RBI to transfer at least ______ of their disclosed profit after adjustment/provision towards bonus to staff

• 20%
• 15%
• 10%
• None of the above

Q - 48 .Noting charges are

• Paid to bank for dishonour
• Paid to drawer for dishonour
• Paid to notary public for recording dishonour
• None of the above.

Q - 49 .From the account given below, select the account which is wrongly included in Profit & Loss Appropriation Account at the debit side

• Drawings Account
• Partners Salary Account
• Interest on Loan Account
• Commission to Partners Account

Q - 50 .As per accounting standards which of the following is not a preferred method

• LIFO
• FIFO
• WACM
• All of them

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