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 .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 - 2 .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 - 3 .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 - 4 .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 - 5 .Choose the sentence which speak about illegal association

• The unregistered association of 10 persons to do banking business
• The unregistered association of 50 persons to do non banking business
• The unregistered association of 20 persons to do business other than banking
• The unregistered association of 10 persons to do business other than banking

Q - 6 .Money received in advance from shareholder before it is actually called up by the company is -----

• Debited to Calls in arrears Account
• Debited to Calls in Advance Account
• Credited to Calls in Advance Account
• Credited to Share Capital Account

Q - 7 .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 - 8 .In banking company, matured term deposit to be shown under-----

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

Q - 9 .Any facts, observations, occurrences are called -----

• data
• record
• file
• system

Q - 10 .Select the source which is not valid for issue of bonus shares

• Share premium
• Revaluation reserve created by revaluation of fixed assets
• Capital reserve
• Capital redemption reserve

Q - 11 .One of the statements in respect of Profit & Loss Adjustment account is incorrect, rest are correct. Mark the incorrect sentence.

• The account is credited with closing balance of profit and loss account of last year
• The account is credited with current year s net profit
• The account is debited with provision for taxes
• The account is debited with provision for dividend

Q - 12 .In the books of ABC Enterprises, a partnership firm, when Mr. C, a partner decided to resign from the firm, a revaluation of assets and liabilities was done and Revaluation account was prepared which showed the following position: At the credit side of Revaluation Account, Stock A/c Rs.25000, Premises A/c Rs.52000 and Creditors A/c Rs. 8000 were shown while at debit side of Revaluation Account Reserve for Doubtful Debts A/c. Rs.15000, As Capital A/c.Rs.20000, Bs Capital A/c. Rs.20,000 and Cs Capital A/c. Rs.20000 were shown. Accountant has interpreted the Revaluation Account as follows. One of the interpretations by him is incorrect. Select the incorrect sentence.

• Stock is revalued upwardly by Rs. 25000
• Creditors are revised upwardly by Rs.8000
• Premises are revised upwardly by Rs.52000
• A provision on debtors of Rs. 15,000 is made for doubtful debts

Q - 13 .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 - 14 .A company wishes to pay dividend on shares. State which of the following may be used for the purpose.

• Premium of shares
• Profit on re-issue of forfeited shares
• General Reserve
• None of the above

Q - 15 .Advances given to a staff by a bank as a employer should be included in-----

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

Q - 16 .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 - 17 .Which of the following is true

• Trial balance ensures arithmetical accuracy.
• Trial balance errors are not located then the difference is sent to suspense a/c.
• Trial balance is base for final accounts.
• All of the above.

Q - 18 .Mr. X was issued 100 shares of Rs.10 each. He failed to pay call money of Rs. 5 per share. The shares were forfeited and re-issued to Mr. Y at Rs.9. When the entry recording the re-issue of shares was passed in all, four accounts were affected. The debit and credit effect of these four accounts is given below. One of the accounts is given wrong effect. Select that account from the following.

• Debit bank account by Rs.900
• Debit forfeited shares by Rs.500
• Credit share capital by Rs.1000
• Credit forfeited shares by Rs.400

Q - 19 .Choose the incorrect statement in case of dissolution of partnership from the following statements

• On the dissolution of the firm , first creditors like wages outstanding etc. will have to be paid
• Goodwill will be raised in the books when a firm is dissolved
• The loan from the spouse of a partner is treated just like a loan from outside parties
• After the books are closed, no account will show any balance.

Q - 20 .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 - 21 .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 - 22 .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 - 23 .Select from the following a sentence which is wrong

• If assets increase and liabilities do not , the capital will increase
• If assets increase and liabilities also increase by same sum , the capital will remain same
• A reduction in the amount of assets will amount to equivalent reduction in the net worth
• An increase in the amount of liabilities with no corresponding increase in liabilities will increase the amount of capital

Q - 24 .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 - 25 .The list given below consists of various securities. Identify the security which is SLR security

• Securities issued by local authorities
• Shares
• Bonds
• subsidiaries

Q - 26 .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 - 27 .Select the incorrect statement in respect of form of balance sheet of companies(Liabilities side).

• sinking fund is shown under unsecured loans
• Loans and Advances from banks are grouped under the head Secured Loans
• Unclaimed Dividend is grouped under the head current liabilities
• Proposed dividend is grouped under provisions.

Q - 28 .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 - 29 .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 - 30 .Acceptances, endorsements and guarantees are shown as_______

• other assets
• contingent liabilities
• advances
• other liabilities and provisions

Q - 31 .The name of the accounts with the coverage of various items in building that account is given below. One of the items covered in on of the accounts is wrong. Select this account

• Closing balance of provisions held towards NPA -
• Interest Earned - interest on advances plus income on investments plus interest on deposit with RBI plus income earned by way of dividends from subsidiaries plus discount on bills less unexpired discount
• Reserves & surplus - Opening balance plus additions during the year less deductions during the year
• Term deposits - from banks and from Others

Q - 32 .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 - 33 .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 - 34 .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 - 35 .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 - 36 .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 - 37 .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 - 38 .The provisional requirement for standard asset is-----

• 0.40%(revised) of total outstanding
• 10%(revised) of total outstanding
• 40%(revised) of total outstanding
• 100%(revised) of total outstanding

Q - 39 .In sum of digits method for 5 years which of the following is the 1st year s allocation ratio

• 1/15
• 2/15
• 4/15
• 5/15

Q - 40 .Freight expenses for moving new machinery to factory is

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

Q - 41 .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 - 42 .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 - 43 .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 - 44 .A new company cannot issue shares-----

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

Q - 45 .Income for the year = I, Outstanding Income for previous year = Id, Outstanding Income of current year = Idi, then Receipts for the year is

• I - Idi + Id
• I + Idi - Id
• I + Idi + Id
• None of the above.

Q - 46 .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 - 47 .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 - 48 .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 - 49 .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 - 50 .Select from the following , a statement which speaks about liabilities of an entity.

• The liabilities consist of claims of the owners
• The liabilities consist of claims of the owners and outsiders
• The liabilities consist of claims of the outsiders
• None of these

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