1706 + Mcqs in Financial Accounting Page 6 McqOptions

251.	Insurance regulation and development authorities act came into effect in
A.	1938
B.	1999
C.	2000
D.	none of these
Answer» B. 1999

Discussion

252.	In the revenue account bonus in reduction of premium is shown as
A.	Liability
B.	income
C.	expense
D.	none of these
Answer» D. none of these

Discussion

253.	When policy matures on the death of the insured, it is expressed as
A.	With profit policy
B.	without profit policy
C.	whole life policy
D.	none of these
Answer» B. without profit policy

Discussion

254.	General insurance policies are taken
A.	One year
B.	two year
C.	three year
D.	none of these
Answer» B. two year

Discussion

255.	Provision created for unsecured doubtful debt is
A.	50%
B.	75%
C.	100%
D.	none of these.
Answer» D. none of these.

Discussion

256.	With effect from 31/03/2005, a doubt full asset is none which has remained in the substandard category for
A.	18 month
B.	12 month
C.	6 month
D.	none of these
Answer» C. 6 month

Discussion

257.	Provision created for substandard is
A.	10%
B.	155
C.	20%
D.	none of these.
Answer» B. 155

Discussion

258.	Which of the following does not include under the head “other asset”
A.	Silver
B.	interest accrued
C.	gold
D.	inter office adjustment
Answer» D. inter office adjustment

Discussion

259.	In a bank balance sheet, unclaimed dividend will be shown under the head
A.	Contingent liabilities
B.	other liabilities
C.	borrowings
D.	none of these.
Answer» C. borrowings

Discussion

260.	A non banking asset is
A.	An item of office equipment
B.	any asset required from the debtors in satisfaction of claim
C.	money at call and short notice
D.	furniture and fixtures
Answer» C. money at call and short notice

Discussion

261.	Banks show the provision for income tax under the head
A.	Contingent assets
B.	contingent liabilities
C.	other liabilities and provisions
D.	borrowings.
Answer» D. borrowings.

Discussion

262.	Rebate on bills discounted is
A.	An item of income
B.	a liability
C.	income received in advance
D.	accrued income.
Answer» D. accrued income.

Discussion

263.	As per the rules framed under the companies Act, 1956, if the dividend proposed by a company is 12% of the paid up capital, the amount to be transferred to reserve must not beless than
A.	5% of current year profit
B.	7.5% of the current year profit
C.	10% of the current year profit
D.	2.5% of the current year profit.
Answer» E.

Discussion

264.	Which of the following would not appear in a limited company’s appropriation a/c
A.	Transfer to revaluation reserve
B.	proposed taxation
C.	interim dividend
D.	transfer to general reserve.
Answer» C. interim dividend

Discussion

265.	Advance payment of tax should be shown on the
A.	Debit side of P/L a/c
B.	debit side of P/L appropriation a/c
C.	asset side of the B/S
D.	liability side of the B/S
Answer» D. liability side of the B/S

Discussion

266.	Scrip dividend means
A.	Unclaimed dividend
B.	arrears of dividend
C.	dividend paid other than cash
D.	cash dividend
Answer» D. cash dividend

Discussion

267.	Which of the following items will be taken in the P/L a/c below the line
A.	Provision for taxation
B.	transfer to sinking fund
C.	contribution to PF
D.	preliminary expenses written off
Answer» D. preliminary expenses written off

Discussion

268.	In the case of joint stock company, goodwill is sown on the asset side under the head
A.	Fixed asset
B.	investment
C.	current asset
D.	miscellaneous expenditure
Answer» B. investment

Discussion

269.	When the proposed dividend exceeds 20% of the paid up capital, percentage of profit to betransferred to reserve is
A.	10%
B.	7.5%
C.	2.5%
D.	5%
Answer» B. 7.5%

Discussion

270.	The amount set aside to meet the loss of bad debt is
A.	Provision
B.	liability
C.	reserve
D.	contingent liability
Answer» B. liability

Discussion

271.	Calls in arrear Is
A.	Shown as current asset
B.	deducted from share capital
C.	shown as current liability
D.	shown under miscellaneous expenditure
Answer» C. shown as current liability

Discussion

272.	Loose tools are shown in the balance sheet under
A.	Fixed asset
B.	investment
C.	current asset
D.	miscellaneous expenditure
Answer» D. miscellaneous expenditure

Discussion

273.	The transfer of profit to reserve should not exceed
A.	5% of profit
B.	10% of profit
C.	15% of profit
D.	20% of profit
Answer» C. 15% of profit

Discussion

274.	Preliminary expense Is an example of
A.	Fixed asset
B.	current asset
C.	investment
D.	fictitious asset
Answer» E.

Discussion

275.	Debentures are shown in the balance sheet under head
A.	Current asset loans and advances
B.	investments
C.	secured loan
D.	unsecured loan
Answer» D. unsecured loan

Discussion

276.	Advance payment of tax is in the nature of
A.	Capital expenditure
B.	prepaid expenses
C.	outstanding expenses
D.	revenue expenditure
Answer» C. outstanding expenses

Discussion

277.	In the balance sheet of a company, debentures are shown under which heading
A.	Secured loan
B.	unsecured loan
C.	provisions
D.	reserves and surplus
Answer» B. unsecured loan

Discussion

278.	In the balance sheet of a company , the discount on issue of debentures is shown under whichheading
A.	Fixed asset
B.	current asset
C.	investment
D.	miscellaneous expenditure
Answer» E.

Discussion

279.	Which of the following should be deducted from the shares capital to find out paid up capital
A.	Calls in advance
B.	calls in arrears
C.	shares forfeited account
D.	discount on issue of shares.
Answer» C. shares forfeited account

Discussion

280.	Interest on debenture is
A.	Adjustment of profit
B.	appropriation of profit
C.	charge on profit
D.	none of these
Answer» D. none of these

Discussion

281.	Dividends are usually paid on
A.	Authorized capital
B.	issued capital
C.	called up capital
D.	paid up capital
Answer» E.

Discussion

282.	When an existing company offers its shares for sale to the existing shareholders, it is knownas
A.	Private placement
B.	bonus shares
C.	right issue
D.	offer for sale
Answer» D. offer for sale

Discussion

283.	When forfeited shares (which were originally issued at a discount ) are reused at a premium,the amount of such premium will be credited to
A.	Shares forfeiture account
B.	security premium account
C.	capital reserve account
D.	none of these.
Answer» C. capital reserve account

Discussion

284.	The rate of discount on shares cannot exceed.
A.	5%
B.	10%
C.	6%
D.	none of these
Answer» C. 6%

Discussion

285.	The rate of interest a company can charge on calls in arrears according to Table A of thecompanies act is
A.	10%
B.	6%
C.	5%
D.	none of these
Answer» D. none of these

Discussion

286.	The excess price received on the par value of shares should be credited to
A.	Calls in advance account
B.	reserve capital
C.	security premium account
D.	none of these
Answer» D. none of these

Discussion

287.	As per Table A of the companies act, the interest on calls in advance is
A.	5%
B.	10%
C.	6%
D.	none of these.
Answer» D. none of these.

Discussion

288.	The difference between subscribed capital and called up capital
A.	Paid up capital
B.	uncalled capital
C.	calls in advance
D.	calls in arrears.
Answer» C. calls in advance

Discussion

289.	The number of days required from the time of issue of the prospectus to the completeallotment should not exceed
A.	30 days
B.	60 days
C.	90 days
D.	120 days
Answer» E.

Discussion

290.	A newly established company cannot issue shares at par
A.	Par
B.	premium
C.	discount
D.	none of these
Answer» D. none of these

Discussion

291.	Share application is classified as
A.	Real account
B.	personal account
C.	impersonal account
D.	nominal account
Answer» B. personal account

Discussion

292.	Accumulated depreciation is an example of
A.	An expense
B.	an unrecorded revenue
C.	a liability
D.	a contra account.
Answer» E.

Discussion

293.	The term amortization applies to decrease in book value of
A.	Intangible fixed asset
B.	wasting assets
C.	tangible fixed assets
D.	current assets
Answer» B. wasting assets

Discussion

294.	For providing depreciation on lease hold property, the appropriate method is
A.	Revaluation method
B.	fixed installment method
C.	replacement method
D.	written down value method.
Answer» C. replacement method

Discussion

295.	The term ‘depletion’ applies to decrease in value of
A.	Tangible asset
B.	intangible asset
C.	wasting asset
D.	current asset.
Answer» D. current asset.

Discussion

296.	Under diminishing balance method,
A.	The rate of depreciation falls every year
B.	the amount on which deprecation is calculated falls every year
C.	the rate as well as amount of depreciation falls every year.
D.	the rate as well as amount of depreciation remains constant.
Answer» C. the rate as well as amount of depreciation falls every year.

Discussion

297.	If original cost of an asset is rs. 60000 and its scrap value is Rs. 10000, its depreciable cost is
A.	70000
B.	50000
C.	60000
D.	none of these.
Answer» C. 60000

Discussion

298.	When provision for depreciation account is maintained, the amount of depreciation is debitedto
A.	Asset account
B.	depreciation account
C.	provision for depreciation account
D.	none of these.
Answer» C. provision for depreciation account

Discussion

299.	Depreciation arises because of
A.	Fall in market value of asset
B.	wear and tear
C.	recession
D.	none of these.
Answer» C. recession

Discussion

300.	Loss on sale of asset is
A.	Debited to asset account
Answer» E.

Discussion

Explore topic-wise MCQs in Finance & Accounting.

Insurance regulation and development authorities act came into effect in

In the revenue account bonus in reduction of premium is shown as

When policy matures on the death of the insured, it is expressed as

General insurance policies are taken

Provision created for unsecured doubtful debt is

With effect from 31/03/2005, a doubt full asset is none which has remained in the substandard category for

Provision created for substandard is

Which of the following does not include under the head “other asset”

In a bank balance sheet, unclaimed dividend will be shown under the head

A non banking asset is

Banks show the provision for income tax under the head

Rebate on bills discounted is

As per the rules framed under the companies Act, 1956, if the dividend proposed by a company is 12% of the paid up capital, the amount to be transferred to reserve must not beless than

Which of the following would not appear in a limited company’s appropriation a/c

Advance payment of tax should be shown on the

Scrip dividend means

Which of the following items will be taken in the P/L a/c below the line

In the case of joint stock company, goodwill is sown on the asset side under the head

When the proposed dividend exceeds 20% of the paid up capital, percentage of profit to betransferred to reserve is

The amount set aside to meet the loss of bad debt is

Calls in arrear Is

Loose tools are shown in the balance sheet under

The transfer of profit to reserve should not exceed

Preliminary expense Is an example of

Debentures are shown in the balance sheet under head

Advance payment of tax is in the nature of

In the balance sheet of a company, debentures are shown under which heading

In the balance sheet of a company , the discount on issue of debentures is shown under whichheading

Which of the following should be deducted from the shares capital to find out paid up capital

Interest on debenture is

Dividends are usually paid on

When an existing company offers its shares for sale to the existing shareholders, it is knownas

When forfeited shares (which were originally issued at a discount ) are reused at a premium,the amount of such premium will be credited to

The rate of discount on shares cannot exceed.

The rate of interest a company can charge on calls in arrears according to Table A of thecompanies act is

The excess price received on the par value of shares should be credited to

As per Table A of the companies act, the interest on calls in advance is

The difference between subscribed capital and called up capital

The number of days required from the time of issue of the prospectus to the completeallotment should not exceed

A newly established company cannot issue shares at par

Share application is classified as

Accumulated depreciation is an example of

The term amortization applies to decrease in book value of

For providing depreciation on lease hold property, the appropriate method is

The term ‘depletion’ applies to decrease in value of

Under diminishing balance method,

If original cost of an asset is rs. 60000 and its scrap value is Rs. 10000, its depreciable cost is

When provision for depreciation account is maintained, the amount of depreciation is debitedto

Depreciation arises because of

Loss on sale of asset is