CA/CMA/CS ISFS -International School for Financial Studies

1. Accounting is defined as –
(a) An art of recording classifying and summarizing in a significant manner and in terms of money,
transactions and events which are in part, at least, of financial character and interpreting the results
(b) A systematic and regular record of events affecting a firm to obtain a clear financial picture
(c) A method of ascertaining Profit & Loss
(d) Nothing but Book Keeping
2. Accounting in modern age is regarded as:
(a) The act of recording classifying and summarizing the business transactions in monetary units
(b) The source of business information
(c) All of the above
3. ___ is root cause for financial accounting?
(a) Stewardship accounting
(b)Social accounting
(c) Management accounting
(d) Human resource accounting
4. What is the method of recording and classifying the record of financial transaction in monetary terms?
(a) Book Keeping (b) Auditing
(c) Accountancy (d) Cost Accounting
5. Accounting means recording of __
(a) Transactions (b) Events
(b) Both (a) and (b) (d) Neither (a) nor (b)
6. Money owed form an Outsider is an –
(a) Asset (b) Liability (c) Expense (d) Capital
7. Fixed assets are assets which are –
(a) Long Term Assets where benefits from it is likely to extend beyond one accounting period
(b) Assets, which a business firm gets in the beginning of the year
(c) Assets, which financed by bank loan
(d) Immovable assets like Land, Building etc.
8. The obligations of an enterprise other than owner’s fund are known as –
(c) Assets (b) Liabilities (c) Capital (d) None of these
9. Process of recording a transaction in journal is called –
(a) Posting (b) Journalizing (c) Casting (d) Balancing
10. Recording of a transaction in a journal is called –
(a) Posting (b) Entry (c) Transfer (d) Ruling
11. Main object of preparing a ‘Journal’ is –
(a) To ascertain the financial position of the business (b) To Journalize the cash transactions
(b) To made position in the ledger (d) To record the business transactions First of all
12. In Journal, transactions are recorded on –
(a) Chronological Order (b) Ascending order of amount
(b)Descending order of amount (d) None of the above
13. What is the order in which the accounting transactions and events are recorded in the books?
(a) Journal, Subsidiary books, Ledger, Balance Sheet, Profit and Loss Account ( P & L Account)
(b) Ledger, Journal, Ledger, Balance Sheet, P & L A/c
(c) Journal, Ledger, Profit and Loss a/c, Balance Sheet
(d) Profit and Loss A/c, Ledger, Balance Sheet, Journal
14. Personal Accounts are related to –
(a) Assets and Liabilities (b) Expenses, Losses and Incomes
(c) Debtors, Creditors etc. (d) All of these
15. Real accounts are related to –
(a) Assets (b) Expenses, losses and incomes
(b) Debtors, Creditors et c. (d) All of these
16. Nominal Accounts are related to –
(a) Assets and Liabilities (b) Expenses, losses and incomes, gains
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“Important abbreviations in Macro Economics “CPT”
(b) Debtors, Creditors etc. (d) All of these
17. What is the principle of Nominal A/c?
(a) Debit what comes in, credit what goes out
(b) Debit all expenses & losses and credit all incomes & gains
(c) Debt the receiver, credit the giver
(d) Debit all assts, Credit all liabilities
18. In Double Entry system of book-keeping every business transaction affects –
(a) Two accounts (b) Two sides of the same account
(c) The same account on two different dates (d) All of the above
19. Journal is a books of-
(a) Original entry (b) Secondary entry
(c) All cash transactions (d) All non-cash transactions
20. Purchase of furniture for cash would –
(a) Increase fixed assets and reduce current assets
(b) Reduce fixed assets and increase current assets
(c) Increase total assets
(d) Both (a) and (b)
21. The basic rule of book-keeping ‘Debit what comes in and Credit what goods out’ is applicable to –
(a) Personal account (b) Nominal A/c (c) Real A/c (d) None of the above
22. An account is a formal record of changes in terms of _____ nature.
(a) Revenue (b) expense (c) Debit (d) Similar
23. The process of transferring debit and credit items from a journal to their respective accounts in ledger is
(a) Posting (b) Purchase (c) Balancing of an account (d) Arithmetical accuracy test
24. L.F (i.e. Ledger Folio) in journal is filed at the time of
(a) Journalizing (b) Balancing (c) Posting (d) Casting
25. In ledger there are _______ columns
(a) 4 (b) 6 (c) 8 (d) 10
26. Ledger book is popularly known as –
(a) Secondary book of accounts (b) Principle books of accounts
(c) Subsidiary book of accounts (d) Subsidiary book of accounts
27. Ledger is a book of –
(a) Original entry (b) Secondary entry (c) All cash transactions (d) All non-cash transactions
28. Main object of preparing a “ledger” is –
(a) To ascertain debtors and creditors of business
(b) To ascertain the financial position fo business
(c) To ascertain the profit or loss of business
(d) To ascertain the collective effect of all transactions pertaining to a particular account
29. Journal and ledger records transactions in
(a) Chronological order & analytical order respectively
(b) Analytical order and chronological order respectively
(c) Chronological order only (d) Analytical order only
30. In case of debit balance, the words ______ are written on the debit side
(a) To balance b/d (b) To balance c/d (c) By balance b/d (d) By balance c/d
31. In case of credit balance, the words ____ are written on the credit side.
To balance b/d (b) To balance c/d (c) By balance b/d (d) By balance c/d
32. Left side of an A/c is ____ and right side is
(a) Debit, credit (b) Credit, debit (c) Liability, asset (d) None of the three
33. The technique of finding the net balance of an account after considering the totals of both debits and credits
appearing in the account is known as
(a) Posting (b) Purchase (c) balancing of an account (d) Balancing of an account
34. In ledger –
(a) Only personal accounts are maintained (b) Only real accounts are maintained
(c) Only nominal accounts are maintained (d) All the three are maintained
35. Normally the following accounts are balanced –

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(a) Personal accounts and nominal accounts (b) Real accounts and nominal accounts
(c) Personal accounts and real accounts (d) All accounts
36. At the end of accounting year all the nominal accounts of the ledger book are –
(a) Balanced but not transferred to P & L A/c
(b) Not balanced and also the balance is not transferred to the profit and loss account
(c) Balanced & Balance is transferred to balance sheet
(d) Not balanced the balance transferred to the profit and loss account
37. The concerned a/c debited in Journal should be –
(a) Debited in the ledger but reference should be of the respective credit account
(b) Credited in the ledger but reference should be of the respective debit account
(c) Credited in the ledger and reference should also be of the respective credit account
(d) Debited in the ledger and reference should also be of the respective debit account
38. If the total of debit side an account exceeds he total of its credit side it indicates –
(a) Debit balance (b) Credit balance (c) Either debit or credit (d) Neither debit not credit
39. If the total of credit side an account exceeds the total of its debit side, it indicates –
(a) Debit balance (b) income (c) Losses (d) Credit balance
40. Credit balance of a personal account indicates:
(a) Cash balance (b) Amount payable (c) Amount receivable (d) None of the above
41. After the preparation of ledgers, the next step is the preparation of –
(a) Trading accounts (b) Trial balance (c) P & L A/c (d) None of the above
42. Trial Balance is a –
(a) Statement (b) Subsidiary Book (c) List (d) Final Account
43. All the ledger accounts are collectively listed in –
(a) Trial Balance (b) Final accounts (c) Subsidiary Books (d) Ledger
44. _____ is prepared to ascertain the arithmetical accuracy of posting & balancing of accounts:
(a) Cash Book (b) Journal (c) Trial balance (d) bank Reconciliation statement
45. A Trial balance contains the balances of
(a) Only personal and real accounts (b) Only real and nominal accounts
(c) Only nominal and personal accounts (d) All accounts
46. Agreement of Trial Balance is not a ____ proof of accuracy
(a) Submissive (b) Inclusive (c) Exhaustive (d) Conclusive
47. Trial balance is a statement which shows the _____ or the ____ of all the accounts:
(a) Balances, Totals (b) Opening balances, Closing balances
(b) Posted balances, Total of balances (d) Debit balance, Credit balance
48. Which of the following lists the balance and the title of accounts in the Léger on a given date?
(a) P & Account (b) Balance Sheet (c) Earnings Statement (d) Trial balance
49. The equality of debits and credits of the ____ does not mean that the individual accounts are also accurate:
(a) Bank reconciliation statement (b) Cash Book (c) Trial balance (d) None of the time
50. Which of the following is the objective of Trial Balance –
(a) Serves as the summary of all the Ledger accounts
(b) Helps in the preparation of the Trial Balance
(c) Examines mathematical accuracy of account books (d) All of the above
51. A Trial Balance shows
(a) Honestly of accountants (b) Accuracy of Account
(c) Only Arithmetical accuracy of accounts (d) None of these
52. The preparation of a Trial Balance is for –
(a) Locating errors of commission; (b) Locating errors of principle;
(c) Locating clerical errors (d) Both (a) and (c) above
53. The balance of _____ account will be shown in the debit column of trial balance
(a) Cash (b) Creditors account (c) Bank overdraft account (d) Capital account
54. Trial balance is a statement which shown _____of all accounts:
(a) Debit or Credit balances (b) Balances and Totals
(c) Positive and Negative balances (d) Opening and Closing balances
55. Choose the correct statement from below –
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“Important abbreviations in Macro Economics “CPT”
(a) Trial Balance can be prepared before passing transfer entries
(b) Trial Balance can be prepared before passing adjusting entries
(c) Trial Balance can be prepared before passing closing entries (d) All of the above
56. In general, the accounts in the income statement are known as –
(a) Permanent accounts (b) Temporary accounts
(c) Unearned revenue accounts (d) Contra-asset accounts
57. The recording of wages earned but not yet paid is an example of an adjustment that –
(a) Apportions revenues between two or more period (b) Recognizes an accrued expense
(c) Recognizes an unrecorded revenue (d)None of the above
58. The purpose of preparing final accounts is to ascertain –
(a) Profit or loss (b) Capital
(c) The value of assets (d) Profit or loss and financial position
59. Final accounts are prepared –
(a) At the end of calendar year (b) At the end of assessment year
(c) On every Diwali (d) At the end of accounting year
60. In general, the accounts in the income statement are known as-
(a) Permanent accounts (b) Temporary accounts
(c) Unearned revenue accounts (d) Contra asset accounts
61. Accrued Income appears on the –
(a) Credit side of P & L A/c (b) Debit side of P & L A/c
(c) Assets side of Balance Sheet (d) Liabilities side of Balance Sheet
62. The post-closing trial balance will-
(a) Contain only income statement account
(b) Contain only balance sheet accounts
(c) Contain both income statements and balance sheet accounts
(d) Be prepared before closing entries are posted to the ledger
63. The book of prime entry necessary to introduce the annual depreciation is
(a) The cash book (b) The purchases book
(c) The ledger (d) The Journal
64. For a shirt factory, cotton is
(a) Finished goods (b) Work-in-progress
(c) Raw materials (d) Asset
65. For a shirt factory, cloth converted from cotton is
(a) Finished goods (b) Work-in-progress
(c) Raw materials (d) Asset
66. For a shirt factory, shirt is
(a) Finished goods (b) Work-in-progress
(c) Raw materials (d) Asset
67. Work-in-progress in the books of a manufacturer indicates
(a) Partly finished repairs (b) Partly finished goods
(c) Partly installed factory (d) Partly finished construction
68. Sale of scrap is
(a) Shown on Debit of the manufacturing account
(b) Shown on debit of the profit and loss account
(c) Debiting manufacturing A/c and crediting Profit & Loss A/c
(d) Debiting Profit & Loss A/c and crediting manufacturing A/c
69. Manufacturing account is closed by
(a) Debiting manufacturing A/c and crediting trading A/c
(b) Debiting trading A/c and crediting manufacturing A/c
(c) Debiting manufacturing A/c and crediting Profit & Loss A/c
(d) Debiting Profit & Loss A/c and crediting manufacturing A/c
70. Manufacturing account is prepared to:
(a) Ascertain the profit or loss on the goods produced
(b) Ascertain the cost of the manufactured goods

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(c) Show the sale proceeds from the goods produced during the year
(d) Both (b) and (c)
71. In the case of a manufacturer, opening stock of finished goods is shown
(a) On the debit side of manufacturing account (b) On the credit side of trading account
(c) On the debit side of trading account (d)On the assets side of the balance sheet
72. Unearned income is shown as
(a) An asset in the Balance Sheet (b)A liability in the Balance Sheet
(c) By adjusting it in the P & L A/c (d)Both (b) and (c) above
73. Interest on loan appearing in the Trial Balance should be
(a) Debited to P & L A/c (b)Shown as liability in Balance Sheet
(c) Added to the related liability in Balance Sheet (d) None of these
74. Bad debts recovered is
(a) Credited to P & L a/c (b) Debited to P & L A/c
(c) Reduced from debtors in Balance Sheet (d) Added to debtors in Balance Sheet
75. Bank overdraft is shown as a
(a) Current liabilities (b)Contingent liability
(c) Unsecured loan (d) Provision
76. Which of the following entries is correct in respect of reserve for discounts on accounts payable?
(a) Debit P & L a/c and credit reserve for discount on accounts payable a/c
(b) Debit P & L a/c credit accounts payable a/c
(c) Debit accounts payable a/c and credit P/L a/c
(d) None of the above
77. The beginning inventory of the current year is overstated by Rs.5,000 and closing inventory is overstated by
Rs.12,000
(a) Rs.7,000 (overstated) (b)Rs.17,000 (overstated)
(c) Rs.17,000 (understated) (d)Rs.7,000 (understated)
78. Goods distributed as free samples would be
(a) Credit to Trading A/c & Debit to Profit & Loss A/c
(b) Debited to Trading A/c & Credited to Profit & Loss A/c
(c) Credited to sales A/c & debited to purchase A/c
(d) Credited to Trading A/c & Debit to Drawing A/c
79. Bad debts are written off by
(a) Debiting the debtors account and crediting bad debts account
(b) Crediting the debtor’s account and debiting bad debts account
(c) Debiting the provision for bad debts account and crediting the debtor’s account
(d) Crediting the provision for bad debts account and debiting the debtor’s account
80. Which of the following statements is false?
(a) Provision for discount on debtors can be estimated only after computing the provision for doubtful debts
(b) All pre-received incomes under the cash system of accounting are current gains
(c) Capital expenditure should be shown in the books by debiting asset account and crediting supplier or
cash account
(d) None of the above
81. Which of the following statement is true?
(a) The balance of the goods account shows the value of stock in hand
(b) Balancing of all accounts must be done at the end of each day
(c) Balances of nominal accounts are carried forward to the next financial year
(d) Assets which are to remain in business for continuous use and not meant for trading as goods are fixed
assets
82. Computers taken on hire by a business for a period of twelve months should be classified as
(a) Fixed assets (b) Not an asset
(c) Deferred revenue expenditure (d) Current assets
83. Which of the following does not increases the earning capacity of an asset?
(a) Increase in working capacity of an asset (b) Reduction in operation costs

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“Important abbreviations in Macro Economics “CPT”
(c) Replacing damaged parts of an asset (d)All of these
84. Assets appearing in the books having no real value are known as
(a) Current assets (b) Fictitious assets (c) Intangible assets (d) All of the above
85. Financial statements are least useful to
(a) Investors (b) Management (c) Creditors (d) Tax authorities
86. Which of the statement is not correct?
(a) Financial statements do adjust themselves for price level charges
(b) Only business transactions are within the ambit of Financial records
(c) Financial statements have evidential value in the Court of law
(d) Accounting principles have no universal acceptability
87. A buyer returning goods on the ground of poor quality send a note along with the goods stating that no
payment would be made in respect of goods returned, the return note is called
(a) Debit note (b) Credit note (c) Refund note (d) Return note
88. A seller received the returned goods and sending note to the party who return the goods, the note is called
(a) Debit note (b) Credit note (c) Refund note (d) Return note
89. A contra entry is one which
(a) Affects both the sides of the same A/c
(b) Affects both the sides of the trial Balance
(c) Affects one side of a real A/c and other side of a personal A/c
(d) Affects both the sides of the same types of a/c
90. Discount A/c will always have
(c) Only debit balance (b) Only credit balance (c) Debit or credit balance (d)Nil balance
91. Goods purchased costing Rs.60,000 and cash paid Rs.45,000 after receipt of a cash discount Rs.9,000. What is
the percentage of trade discount got?
(a) 15% (b) 10% (c) 7.5% (d)25%
92. Financial statements are prepared
(a) Primarily for the benefit of the parties external to the business
(b) Primarily for the benefit of the Management
(c) For corporate bodies only
(d) All the above
93. The basic purpose of an accounting system is to
(a) Meet an organizations need for accounting information as efficiently as possible
(b) Develop financial statements in conformity of internationally accepted accounting standards
(c) Provide information for decision making
(d) Record changes in the financial position of an organization by applying the concepts of double entry
system
94. Presentation made by the management of a company to make the company appear as financially strong in
the financial statement is called
(a) Financial re-engineering (b)Window dressing
(c) Financial prudence (d)Internal control
95. Which of the following statement shows the details of the company’s profit and loss related activities for a
period of time?
(a) Balance Sheet (b) Income statement
(c) Statement of changes in financial position (d)Auditors Report
96. The balance of the petty cash is
(a) An expense (b)Income (c) An asset (d) Liability
97. Which of the following is not an intangible asset?
(a) Accounts receivable (b) Trade mark (c) Franchise (d) Goodwill
98. Which of the following is an intangible asset?
(a) Account receivable (b) Account payable
(b) Demand deposits in Bank (d) Patents and trademarks
99. Trade-mark is
(a) Current Asset (b)Fictitious asset (c) Tangible asset (d) Intangible asset

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100. A purchased goods costing RS.1,00,000. B sold the goods for Rs.1,50,000. Profit sharing ratio
between A and B equal. If same sets of books is maintained, what will be the profit?
(a) 50,000 (b) 45,000 (c) 40,000 (d)35,000

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“Important abbreviations in Macro Economics “CPT”

KEY
1 A 26 B 51 C 76 D
2 C 27 B 52 D 77 A
3 A 28 D 53 A 78 A
4 A 29 A 54 A 79 B
5 B 30 A 55 D 80 D
6 A 31 C 56 B 81 D
7 A 32 A 57 B 82 B
8 B 33 C 58 D 83 B
9 B 34 D 59 D 84 B
10 B 35 C 60 B 85 D
11 D 36 D 61 C 86 A
12 A 37 A 62 B 87 A
13 C 38 A 63 D 88 B
14 C 39 D 64 C 89 A
15 A 40 B 65 B 90 C
16 B 41 B 66 A 91 B
17 B 42 A 67 B 92 A
18 A 43 A 68 D 93 A
19 A 44 C 69 B 94 B
20 A 45 D 70 B 95 B
21 C 46 D 71 C 96 C
22 D 47 A 72 A 97 A
23 A 48 D 73 A 98 D
24 C 49 C 74 A 99 D
25 C 50 D 75 A 100 A

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