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 .Direct deposit by a customer in the bank

• Shows a higher passbook balance than cash book.
• Shows a lesser passbook balance than cash book.
• Shows no difference.
• None of the above.

Q - 2 .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 - 3 .In respect of asset side of the balance sheet one of the items is presented in a proper order, rests are disorderly. Select the orderly presented item from the following.

• Investments, Fixed Assets, Current Assets & Loan Advances, Profit & Loss Account(Dr. balance), Miscellaneous Expenditure
• Fixed Assets, Investments, Current Assets & Loan Advances, Profit & Loss Account(Dr. balance) , Miscellaneous Expenditure
• Fixed Assets, Investments, Current Assets & Loan Advances, Miscellaneous Expenditure, Profit & Loss Account(Dr. balance)
• Fixed Assets, Current Assets & Loan Advances, Profit & Loss Account(Dr. balance), Miscellaneous Expenditure

Q - 4 .The liability side of the balance sheet of ABC International Ltd. is showing following position: Paid up share capital Rs.25 Lakh ( 25,000 shares of Rs.100 each fully paid up)Share premium Rs.5 Lakh, Capital Reserve Rs. 3 Lakh, General Reserve Rs. 15 Lakh and Profit & Loss account Rs. 15 Lakh .It was decided to use minimum free reserve for issue of 1:1 bonus shares.. The accounts and the amount with which the account is debited are given below in sets. One of the set is correct. Select the same.

• Share Premium Account (Rs.5 Lakh), Capital Reserve Account ( Rs. 1 Lakh), General Reserve Account (15 Lakh) & Profit & Loss Account by Rs. 4 Lakh
• Share Premium Account (Rs. Nil Lakh), Capital Reserve Account ( Rs. Nil Lakh), General Reserve Account (10 Lakh) & Profit & Loss Account by Rs. 15 Lakh
• Share Premium Account (Rs.5 Lakh), Capital Reserve Account ( Rs. 3 Lakh), General Reserve Account (15 Lakh) & Profit & Loss Account by Rs. 2 Lakh
• Share Premium Account (Rs.5 Lakh), Capital Reserve Account ( Rs. 1 Lakh), General Reserve Account (4 Lakh) & Profit & Loss Account by Rs. 15 Lakh

Q - 5 .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 - 6 .In comparing lease & hire purchase (H P) Of the following which one is not true?

• In lease the user of the asset does not retain it, while in H P he does.
• In lease the user does not claim depreciation while he does in H P.
• Payment of rentals is on instalment basis in both.
• The users of assets in both lease & H P run the risk of obsolescence.

Q - 7 .Companies are required to transfer certain percentage of their profit after tax to reserves, to declare dividend. The various rates of transfer based on the rates of dividend are given below in pair. Select the wrong pair.

• Rate of dividend exceeds 10% but not 12.50- Transfer to reserve @ Nil%
• Rate of dividend exceeds 12.50% but not 15%- Transfer to reserve @ 5%
• Rate of dividend exceeds 15% but not 20%- Transfer to reserve @ 7.50%
• Rate of dividend exceeds 20% - Transfer to reserve @ 10%

Q - 8 .From the following ,find a sentence which is false in respect of partnership

• If the partnership is following the  Fixed Capital Account Method salary payable to a partner is credited to the partner s curr
• Drawings made by partners are never entered in the Profit and Loss Appropriation Account.
• In the  Fluctuating Capital Account Method the balance in the capital account always remains the same
• The capital account of a partner is required to be opened in both the Fixed Capital Account Method and Fluctuating Capital Account Method

Q - 9 .Select the incorrect statement in respect of form of balance sheet of companies ( Asset side).

• Live Stock is grouped under the head  current Asset
• Balance of unutilized monies raised by issue is grouped under the head  Investments
• Interest paid out of capital during construction is grouped under the head  Miscellaneous Expenditure
• Vehicles are grouped under the head  Fixed Asset

Q - 10 .Any facts, observations, occurrences are called -----

• data
• record
• file
• system

Q - 11 .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 - 12 .A and B are two partners in a firm sharing profits and losses as 2:1. they admitted C as a partner with 25% share in the profits of the firm. Hence , the new profit sharing ratio , after admission of C would be _______

• 15:15:10
• 20:10:10
• 03:01:01
• None of the above

Q - 13 .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 - 14 .Freight expenses for moving new machinery to factory is

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

Q - 15 .Identify a pair which is mismatch from the following pairs in respect of Company Accounts

• Discount on issue of shares  Profit and Loss Account
• Bill discounted  contingent liabilities
• Interest accrued and due on debentures  Secured Loans
• Mortgage Loan  Secured Loans

Q - 16 .The two portion of each pair relating to partnership accounts has got some relationship. However one of the pairs is a mismatch and has no relationship. Select this pair from the following

• Management of business - business may be run by one or some or all partner
• Treatment of losses - insolvency of a partner
• Loan from partners - No interest as partners are owners
• Goodwill - super profit method

Q - 17 .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 - 18 .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 - 19 .Which of the following are true

• Nominal accounts always have credit balances.
• Real accounts always have debit balances.
• Debit balance in ledger account is credit balance in trial balance.
• P&L a/c appears in trial balance.

Q - 20 .Mr. Q and Mr. R were partners of a firm sharing profit and losses in the ratio of 3:2. They take S into partnership. It was agreed that S will pay Rs.1,00,000 as his share of goodwill which will be retained in business and also bring Rs.3,00,000 as capital for one fourth share in the future profits. The book value of the stock was 41,000 but was to be revalued at Rs.50,000, Accountant has passed following entries, but Mr. Q feels that one of the entry is wrong. Select the wrong entry from the following.

• Debit cash and credit Goodwill for Rs.1,00,000
• Debit cash and credit S s Capital for Rs.3,00,000
• Debit Goodwill for Rs.1,00,000 and credit Q s Capital by Rs. 60000 & R s Capital by Rs. 40,000
• Debit Stock and credit Profit & Loss Adjustment A/c by Rs.9,000

Q - 21 .As per accounting standards which of the following is not a preferred method

• LIFO
• FIFO
• WACM
• All of them

Q - 22 .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 - 23 .Receipts and payments statement shows

• Only revenue receipts and payments during a year.
• Only capital receipts & payments during a year.
• Both capital and revenue receipts during a year.
•  Cash Only transactions.

Q - 24 .For a Non- Trading Organization, a P & L A/c called an Income & Expenditure A/c because.

• They often make losses.
• They are forbidden by statute to make profits
• By object of their association they are non profit making bodies.
• Their income & expenditure statement are a combination of capital & revenue receipts.

Q - 25 .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 - 26 .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 - 27 .Advances given to a staff by a bank as a employer should be included in-----

• other assets
• advances
• investments
• none of the above

Q - 28 .A new company cannot issue shares-----

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

Q - 29 .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 - 30 .O and P are two partners sharing profits in the ratio of 7:3. They admit Q into partnership as a partner from 1st April 2006 on 3/7th share in the profit. What is the new profit sharing ratio

• 14:06:14
• 07:03:03
• 02:02:03
• None of the above

Q - 31 .One of the pairs given below is wrong. Select the wrong pair.

• Outstanding expenses - Nominal account
• Profit and Loss Account (Dr. balance)  Application of funds
• Net worth less reserves & surplus - Capital
• Balance sheet - Financial position

Q - 32 .Select the True statement from the following

• Interest on drawing is an income to the partnership firm
• Joint Venture is a permanent partnership firm
• Goodwill is a tangible asset of the firm
• In the absence of partnership agreement , partners share profit and loss in proportion to the capital contributed by the partners.

Q - 33 .Which of the following is true

• Total lease rent = cost of asset - total finance income + residual value
• Total finance income = total lease rent  cost of asset + residual value
• Total finance income = cost of asset  total lease rent + residual value
• Cost of the asset = total lease rent + residual value + total finance income

Q - 34 .A, B and C are three partner sharing profits in the ratio of 3:1:1. C retires and his share is purchased by B. the new profit sharing ratio shall be-----

• 03:01
• 07:03
• 03:02
• None of the above

Q - 35 .One of the items is a misfit in a group namely  other income of a banking company. Select this item from the following

• Income on Investments
• Profit on sale of investments
• Profit on revaluation of investments
• Profit on exchange transactions

Q - 36 .A and B sharing profits and losses in the ratio of 2:1. C is admitted as partner giving him 1/4 share. The new profit sharing ratio will be_____

• 02:01:01
• 04:04:02
• 03:03:02
• None of the above

Q - 37 .Which of the following is true for leasing and hire purchase

• Lessor and vendor can claim depreciation.
• Lessor and hirer can claim depreciation.
• Lessee and hirer can claim depreciation.
• Lessee and vendor can claim depreciation.

Q - 38 .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 - 39 .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 - 40 .Which of the following is true

• Bank Reconciliation Statement(BRS) is an account.
• BRS is prepared by the bank.
• BRS shows causes of disagreement between cash book & passbook.
• BRS shows only excess of cash book over passbook.

Q - 41 .Reconciliation of overcasting on receipts side of cash book

• Increases the balance in the cash book.
• Increases the balance in the passbook.
• Decreases the balance in the cash book.
• Decreases the balance in the passbook.

Q - 42 .The two portion of each pair relating to admission of a partner has got some relationship. However one of the pairs is mismatch and has no relationship. Select this pair from the following

• Admission of a partner - gain ratio
• Reserves & surplus - Old partners
• Goodwill - new partner
• Revaluation of assets & liabilities - Profit & Loss adjustment account

Q - 43 .Which of the following is not a deferred revenue expenditure

• Preliminary expenses for setting up a company.
• Amount raised through Rights issue.
• Huge sales promotion expenditure in launch of new product
• Cost of preparing project report

Q - 44 .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 - 45 .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 - 46 .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 - 47 .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 - 48 .Select the incorrect statement in respect of  financial Statements of Banks

• a banking company is not required to prepare financial statements in accordance with Schedule VI of the Companies Act , 1956.
• The Act prescribes special forms of balance sheet and profit and loss account for the preparation of its final accounts
• These are set out in form A and form B of the first schedule to the Banking regulation Act, 1949
• Form A gives format of a balance sheet and form  B gives the format of a profit and loss account

Q - 49 .Following are the journal during the process of application to allotment stage . One of the entries is wrong. Select the wrong entry.

• Debit bank account and credit share application account ( when application money is received)
• Debit share application account and credit share capital account (application transferred to share capital account)
• Debit share capital and credit share allotment account ( for recording allotment money being fallen due )
• Debit bank account and credit share allotment account ( for receipt of allotment money)

Q - 50 .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

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