Chapter: Accounting Standards
1.

The global key professional accounting body is

A. The International Accounting Standards Board
B. The Institute of Chartered Accountants of India
C. The Financial accounting standard boa
Answer» A. The International Accounting Standards Board
2.

International Public Sector Accounting Standards were issued by

A. International Accounting Standards Board.
B. International Auditing Practices Committee.
C. International Federation of Accountants.
D. None of the above
Answer» C. International Federation of Accountants.
3.

The process of recording financial data up to trial balance is

A. Book keeping
B. Classifying
C. Summarizing
D. Analyzing
Answer» A. Book keeping
4.

In which of the following cases, accounting estimates are needed?

A. Employs benefit schemes
B. Impairment of losses
C. Inventory obsolescence
D. All of the above
Answer» D. All of the above
5.

The long term assets that have no physical existence but, possess a value is known as,

A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Answer» C. Intangible assets
6.

Which of these best explains fixed assets?

A. Are bought to be used in the business.
B. Are expensive items bought for the business
C. Are items which will not wear out quickly
D. Are of long life and are not purchased specifically for resale
Answer» A. Are bought to be used in the business.
7.

The assets that can be easily converted into cash within a short period (i.e., 1 year or less is known as,

A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Answer» A. Current assets
8.

Which of the following statement is correct?

A. The amount of Goodwill or Capital Reserve is found out in the books of purchasing company only
B. The amount of Goodwill or Capital Reserve is found out in the books of vendor company only.
C. Goodwill = Net Assets – Purchase price
D. The face value of shares of purchasing company will be taken in to account while calculating purchase consideration.
Answer» C. Goodwill = Net Assets – Purchase price
9.

Hitesh Ltd.’s purchase consideration is Rs.12,345 and Net Assets Rs.3,568, then...........

A. Goodwill Rs. 8,777
B. Capital Reserve Rs. 8,777
C. Goodwill Rs. 15,913
D. Capital Reserve Rs. 15,913
Answer» A. Goodwill Rs. 8,777
10.

If the two companies have different accounting policies in respect of the same item, then they make necessary changes to adopt .............. accounting policies.

A. Same
B. Different
C. Important
D. Some
Answer» A. Same
11.

When two or more companies carrying on similar business decide to combine, a new company is formed, it is known as…………………………

A. Merger
B. Amalgamation
C. Absorption
D. Demerger
Answer» B. Amalgamation
12.

When one of the existing companies take over business of another company or companies, it is known as…………………………………

A. Merger
B. Amalgamation
C. Absorption
D. Demerger
Answer» C. Absorption
13.

In case of .............., one existing company takes over the business of another company and no new company is formed

A. Merger
B. Amalgamation
C. Absorption
D. Demerger
Answer» C. Absorption
14.

While calculating purchase consideration ............... values of assets is to be considered.

A. Total
B. Half
C. Net
D. 25%
Answer» C. Net
15.

Net Assets minus Capital Reserve is………………………

A. Purchase consideration
B. Goodwill
C. Liabilities
D. Total Assets
Answer» A. Purchase consideration
16.

The original amount of preference share capital should be transferred to ............ account in the time of amalgamation in the books of vendor co.

A. Equity shareholders
B. Preference share holders
C. Debenture holders
D. vendors
Answer» B. Preference share holders
17.

………………………………………………..method the amount of depreciation expenses remains same throughout the useful life of a fixed assets

A. Straight line method
B. Annuity methods
C. Purchase value method
D. Written down value methods
Answer» A. Straight line method
18.

Depreciation arise because of………………………..

A. Abnormal quality
B. Normal wear and tear
C. Excessive use of a product
D. Low quality product
Answer» B. Normal wear and tear
19.

Loss Prior to incorporation is treated as ........... Loss, and Vendor’s Salaries are chargeable to ................ incorporation period.

A. Pre
B. During
C. Post
D. In between
Answer» C. Post
20.

Which type of asset class includes those assets which have only definite use and become valueless when the yield is over?

A. Fixed asset
B. Current asset
C. Fictitious asset
D. Wasting asset
Answer» D. Wasting asset
21.

Financial accounting is concerned with –

A. Recording of business expenses and revenue
B. Recording of costs of products and services
C. Recording of day to day business transactions
D. None of the above
Answer» C. Recording of day to day business transactions
22.

Accounting principles are generally based upon:

A. Practicability
B. Subjectivity
C. Convenience in recording
D. None of the above
Answer» A. Practicability
23.

The system of recording based on dual aspect concept is called:

A. Double account system
B. Double entry system
C. Single entry system
D. All the above
Answer» B. Double entry system
24.

Fixed assets and current assets are categorized as per concept of:

A. Separate entity
B. Going concern
C. Consistency
D. Time period
Answer» B. Going concern
25.

Accounting standards and Standards on Auditing establish standards which have to be complied with to ensure that financial statements are prepared in accordance with ______.

A. Generally acceptable Audit Procedure
B. Accounting Principles
C. Ind AS
D. Accounting Standards
Answer» A. Generally acceptable Audit Procedure
26.

Change in accounting estimate is __________

A. Prior Period Item
B. Change in accounting policy
C. Extra-ordinary item
D. Ordinary item
Answer» B. Change in accounting policy
27.

Indian accounting standards are the International financial reporting standards converged standards issued by the central government of India under the supervision and control of accounting standards board of ICAI and in consultation with __________.

A. Ministry of corporate affairs
B. NFRA
C. Accounting Standards Board
D. All of the above
Answer» B. NFRA
28.

Preparation of consolidated Balance Sheet of Holding Co. and its subsidiary company as per

A. As 11
B. AS – 22
C. AS 21
D. AS – 23
Answer» A. As 11
29.

The share of outsiders in the Net Assets in subsidiary company is known as under :

A. Assets
B. subsidiary company's liability
C. Minority Interest
D. outsiders liability
Answer» D. outsiders liability
30.

Pre-acquisition profit in subsidiary company is considered as:

A. Revenue profit
B. Capital profit
C. Goodwill
D. Non of the above
Answer» B. Capital profit
31.

Excess of paid up value of the shares over cost of investment is considered as:

A. Goodwill
B. Capital Reserve
C. Minority Interest
D. Non of above
Answer» A. Goodwill
32.

Profit earned after acquisition of share is treated as

A. Capital profit
B. Revenue profit
C. General Reserve
D. Revaluation Loss
Answer» A. Capital profit
33.

Preparation of consolidated statement as per AS 21 is

A. Optional
B. Mandatory for listed Companies
C. Mandatory for Pvt. L
Answer» B. Mandatory for listed Companies
34.

Holding Co. share in revenue profits of subsidiary company is adjusted in :

A. Cost of control
B. Shown on Assets side of Balance sheet
C. Profit and loss account
D. None of above
Answer» C. Profit and loss account
35.

Unrealised profit on goods sold and included in stock is deducted from :

A. Capital Profit
B. Revenue Profit
C. Fixed Assets
D. Minority interest
Answer» B. Revenue Profit
36.

Face value debentures of subsidiary co. held by Holding Company is deducted from

A. Debentures
B. Cost of control
C. Minority interest
D. Debentures in consolidated balance sheet
Answer» B. Cost of control
37.

Which of the following statement is true:

A. There is no change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of pre-acquisition profit.
B. There is change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of post-acquisition profit.
C. There is change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of pre-acquisition profit.
D. There is no connection between the issue of bonus shares and the calculation of capital reserve.
Answer» A. There is no change in the amount of capital reserve before and after issue of bonus share of the issue is made from out of pre-acquisition profit.
38.

Minority Interest includes :

A. Share in share capital
B. Share in Capital profit
C. Share in Revenue profit
D. All of the above
Answer» D. All of the above
39.

The Time interval between the date of acquisition of shares in subsidiary company and date of Balance Sheet of Holding Company is known as :

A. Pre-acquisition period
B. Post-acquisition period
C. Pre-commencement period
D. Pre-incorporation period
Answer» B. Post-acquisition period
40.

Pre-acquisition dividend received by Holding company is credited to

A. Profit & loss A/c
B. Capital profit
C. Investment A/c
D. Non of the above
Answer» C. Investment A/c
41.

Post Acquisition dividend received by Holding Company is debited to :

A. Bank A/c
B. profit & loss A/c
C. Dividend A/c
D. Investment A/c
Answer» B. profit & loss A/c
42.

Which Exchange rate will be considered for conversion of share capital of subsidiary company.

A. Opening Rate
B. Closing rate
C. Average Rate
D. Rate of which date share acquired (actual)
Answer» D. Rate of which date share acquired (actual)
43.

A subsidiary company shall be excluded from consolidation when:

A. Control is intended to be temporary
B. It operates under severe long-term restrictions which significantly impair its ability to transfer funds to the parent
C. Always included for consolidation
D. Both a and b.
Answer» D. Both a and b.
Chapter: Accounting for Amalgamation, Absorption and External
44.

Shares received from the new company are recorded at –

A. Face value
B. Average price
C. Market value
D. None of the above
Answer» C. Market value
45.

When two or more companies carrying on similar business decide to combine, a new company is formed, it is known as ..................

A. Amalgamation
B. Absorption
C. Internal reconstruction
D. External reconstruction
Answer» A. Amalgamation
46.

When one of the existing companies take over business of another company or companies, it is known as ...........

A. Amalgamation
B. Absorption
C. Internal reconstruction
D. External reconstruction
Answer» B. Absorption
47.

While calculating purchase price, the following values of assets are considered

A. Book value
B. New values fixed
C. Average values
D. Market values
Answer» B. New values fixed
48.

While calculating purchase price, the following values of assets are considered

A. Book value
B. New values fixed
C. Average values
D. Market values
Answer» C. Average values
49.

Which of the following statement is correct?

A. The amount of Goodwill or Capital Reserve is found out in the books of purchasing company only
B. The amount of Goodwill or Capital Reserve is found out in the books of vendor company only.
C. Goodwill = Net Assets – Purchase price
D. The face value of shares of purchasing company will be taken in to account while calculating purchase consideration.
Answer» A. The amount of Goodwill or Capital Reserve is found out in the books of purchasing company only
50.

If the two companies have different accounting policies in respect of the same item, then they make necessary changes to adopt .............. accounting policies.

A. LIFO method
B. FIFO method
C. Weighted method
D. Uniform
Answer» D. Uniform
51.

The Amalgamation Adjustment Account appears in the books, it is shown under the heading of ......... in the balance sheet.

A. Reserve and Surplus
B. Fixed Assets
C. Investments
D. Miscellaneous expenditure
Answer» D. Miscellaneous expenditure
52.

If amalgamation is in the ..............., the General Reserve or Profit and Loss A/c balance will not be shown in the balance sheet.

A. Form of Merger
B. Form of purchase
C. Net assets method
D. Consideration method
Answer» B. Form of purchase
53.

If the intrinsic values of shares exchanged are not equal, the difference is paid in ...........

A. Cash
B. Debenture
C. Pref. share
D. Assets
Answer» A. Cash
54.

In case of .............., one existing company takes over the business of another company and no new company is formed.

A. Amalgamation
B. Absorption
C. Reconstruction
D. None of the Above
Answer» B. Absorption
55.

In amalgamation of two companies

A. Both companies lose their existence
B. Both companies continue
C. Any one company continues
D. none
Answer» A. Both companies lose their existence
56.

When purchasing company pays purchase consideration, it will be debited to

A. Business purchase account
B. Assets account
C. Liquidator of selling company’s account
D. none
Answer» C. Liquidator of selling company’s account
57.

When the purchasing company bears the liquidation expenses, it will debit the expenses to

A. Vendor Company’s Account
B. Bank Account
C. Goodwill Account
D. none
Answer» C. Goodwill Account
58.

When the Vendor (seller) company agrees to bear liquidation expenses, it will debit

A. Realisation Account
B. Bank Account
C. Goodwill Account
D. none
Answer» A. Realisation Account
59.

When the purchasing company does not take over a particular liability and the vendor company pays that liability, it will debit it to

A. Realisation Account
B. Bank Account
C. Liability Account
D. none
Answer» A. Realisation Account
60.

When the Net Assets are less than the Purchase Consideration, the difference will be

A. Debited to Goodwill A/c.
B. Debited to General Reserve
C. none of these
D. none
Answer» A. Debited to Goodwill A/c.
61.

While calculating purchase consideration ............... values of assets is to be considered.

A. Book value
B. Revalued price
C. Average price
D. Capital
Answer» B. Revalued price
62.

Net Assets minus Capital Reserve is _________

A. Goodwill
B. Total assets
C. Purchase consideration
D. None of these
Answer» C. Purchase consideration
63.

Hitesh Ltd.’s purchase consideration is Rs.12,345 and Net Assets Rs.3,568, then..........

A. Goodwill Rs. 8,777
B. Capital Reserve Rs. 8,777
C. Goodwill Rs. 15,913
D. Capital Reserve Rs. 15,913
Answer» A. Goodwill Rs. 8,777
64.

The original amount of preference share capital should be transferred to ............ account in the time of amalgamation in the books of vendor co.

A. Preference shareholders Account
B. Capital Reserve Account
C. Equity share capital Account
D. Equity share capital Account
Answer» A. Preference shareholders Account
65.

The share capital, to the extent already held by the purchasing company, is closed by the vendor company by crediting it to:

A. Share capital account
B. Purchasing company's account
C. Realisation account.
D. none
Answer» C. Realisation account.
66.

In case of inter-company holdings, the purchasing company, at the time of payment of the purchase consideration, surrenders the shares in the vendor company by crediting:

A. Vendor company's account
B. Shares in the vendor company account
C. Share capital account.
D. none
Answer» B. Shares in the vendor company account
67.

The vendor company transfers preliminary expenses (at the time of absorption) to:

A. Equity shareholders' account
B. Realisation account
C. Purchasing company's account.
D. none
Answer» B. Realisation account
68.

A Ltd. and B Ltd. go into liquidation and a new company X Ltd. is formed. It is a case of:

A. Absorption
B. External reconstruction
C. Amalgamation.
D. none
Answer» C. Amalgamation.
69.

For amalgamation in the nature of merger, the shareholders holding at least ______ or more of the equity shares of the transferor company becomes the equity shareholders of the transferee company.

A. 51%
B. 90%
C. 99%
D. 100%
Answer» B. 90%
70.

As per AS–14 purchase consideration is what is payable to

A. Shareholders
B. Creditors
C. Debenture holders
D. Shareholders and Debenture holders.
Answer» A. Shareholders
71.

In the case of ………………………. only one of the combining companies survives and the other losses its separate identity.

A. Acquisition
B. Merger
C. Amalgamation
D. Formation
Answer» A. Acquisition
72.

……………….is the amount payable by the purchasing companies to the vendor company for taking over the business of vendor company.

A. Goodwill
B. Total assets
C. Purchase consideration
D. None of these
Answer» C. Purchase consideration
73.

In absorption there is one ……………………and no formation.

A. Merger
B. Liquidation.
C. Demerger
D. Formation
Answer» B. Liquidation.
74.

In external liquidations, there is one liquidation and one ………………

A. Formation
B. Merger
C. Demerger
D. Purchase consideration
Answer» A. Formation
75.

When two or more companies carrying on similar business decide to combine, a new company is formed, it is known as ..................

A. Amalgamation
B. Absorption
C. Internal reconstruction
D. External reconstruction
Answer» A. Amalgamation
76.

When one of the existing companies take over business of another company or companies, it is known as ...........

A. Amalgamation
B. Absorption
C. Internal reconstruction
D. External reconstruction
Answer» B. Absorption
77.

Which of the following statement is correct?

A. The amount of Goodwill or Capital Reserve is found out in the books of purchasing company only
B. The amount of Goodwill or Capital Reserve is found out in the books of vendor company only.
C. Goodwill = Net Assets – Purchase price (
D. The face value of shares of purchasing company will be taken in to account while calculating purchase consideration.
Answer» A. The amount of Goodwill or Capital Reserve is found out in the books of purchasing company only
Chapter: Company Final Accounts
78.

The form of balance sheet is………………..

A. Vertical
B. Horizontal
C. Horizontal and vertical
D. None of the above
Answer» C. Horizontal and vertical
79.

The term current asset doesn’t cover

A. Car
B. Debtors
C. Stock
D. Prepaid expenses
Answer» A. Car
80.

P&L statement is also known as

A. Statement of operations
B. Statement of income
C. Statement of earnings
D. All of the above
Answer» B. Statement of income
81.

Which of the following is true about financial statements? I)Financial statement gives a summary of accounts. II) Financial statements can be stated as recorded facts.

A. Only I
B. Only II
C. Both I andII
D. None of the above
Answer» C. Both I andII
82.

The statement of financial position and the balance sheet are synonyms

A. True
B. False
C. none
D. none
Answer» A. True
83.

Which of the following statements are true? I) Financial statements are only interim report. II) Financial statements are also known as annual records. III) Financial statements are historic.

A. Both I and II
B. Both I and III
C. Both II and III
D. I, II, III
Answer» C. Both II and III
84.

Certain assumptions are essential to prepare financial statements.

A. True
B. False
C. none
D. none
Answer» A. True
85.

Premium received on issue of shares cannot be utilised for ---------.

A. for the issue of bonus shares .
B. for writing of preliminary expenses
C. for providing premium payable on redemption
D. for distribution of dividend.
Answer» D. for distribution of dividend.
86.

In case of public limited company, after getting the-----------the company can start the business

A. Memorandum of Association
B. Table A
C. Certificate of commencement of business
D. Articles of Association
Answer» C. Certificate of commencement of business
87.

Trade Payables are recorded in………………….

A. Current Liabilities
B. Current Assets
C. Equity
D. Inventories
Answer» A. Current Liabilities
88.

In company Final Accounts Goodwill is shown under……………

A. Current Liabilities
B. Current Assets
C. Fixed Assets
D. Inventories
Answer» C. Fixed Assets
89.

Dividend is payable on the amount of…………………………..

A. Profit
B. Reserves
C. Loss
D. Income
Answer» A. Profit
90.

The dividend paid between two annual general meeting is known a……………………….

A. Final dividend
B. Ex Dividend
C. Interim Dividend
D. Dividend
Answer» C. Interim Dividend
91.

Unclaimed dividend recorded on the…………………….. the balance sheet.

A. Liability
B. Assets
C. Credit
D. Debit
Answer» A. Liability
92.

A liability which can be measured only by using a substantial degree of estimation is called……………………….

A. Contingent liabilities
B. Contingent Assets
C. Fixed Assets
D. Non Current Liabilities
Answer» A. Contingent liabilities
93.

Unquoted shares means……………………….

A. Listed Shares
B. Quoted Shares
C. Unquoted Shares
D. Unlisted Shares
Answer» D. Unlisted Shares
94.

Bills receivable is ……………………..assets.

A. Current
B. Non - current
C. Fixed Assets
D. Investment
Answer» A. Current
95.

The amount of profit kept a side to maintain uniform rate of dividend is called………………

A. Ex Dividend
B. Final Dividend
C. Undistributed Dividend
D. Dividend
Answer» C. Undistributed Dividend
96.

Director’s remuneration shall not exceed ………………. % of the net profits.

A. 10%
B. 20%
C. 15%
D. 13.333%
Answer» A. 10%
Chapter: Company Liquidation Accounts
97.

Voluntary winding up:

A. If period fixed for the company is expired.
B. If company passes a special resolution the company wound up voluntarily.
C. Members voluntary winding up is applicable to solvent companies only.
D. All of the above
Answer» D. All of the above
98.

Compulsory winding up:

A. If a company unable to pay its debt
B. If the number of members of company reduced below statutory limit.
C. If a company does commence its business within a year from its incorporation.
D. All of the above.
Answer» D. All of the above.
99.

The first item in order of payment to be made by liquidator is:

A. Secured creditors
B. Preferential creditors
C. Liquidation expenses
D. Preferential creditors
Answer» C. Liquidation expenses
100.

Liquidator’s statement of receipts and payment is know as:

A. Cash flow statement
B. Cash book
C. Liquidator’s final statement of account
D. Deficiency accounts.
Answer» C. Liquidator’s final statement of account
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