Key Model Question paper

Course: Financial Reporting Course: BBA Semester 4 Paper Code: BB0017

Q.No. Question Statement 1 marks question (question 1 to 20) 1 What is accounting? a. Summary of expenses and incomes b. Record of events in business c. Information system d. Scientific data What are the basic financial statements? a. Trading account and Profit and Loss account b. Cash Flow and Fund Flow statements c. Balance Sheet and Income Statement d. Statement of retained earnings & changes in financial position Share capital is shown on the a. Profit and loss account b. Trading account c. Asset side of balance sheet d. Liabilities side of balance sheet Balance sheet of a company should be drawn in accordance with Part ___ of Schedule _____ of Companies Act 1956. a. 1, VI b. 1, V c. 2, VI d. 2, IV The amount upto which a company can raise share capital by issue of shares is called_______ a. Paid up capital b. Nominal capital c. Equity capital d. Authorised capital Bonus shares are issued a. As fully paid or partly paid b. Through prospectus c. Against cash payment d. to employees only Part III of Schedule VI of the Companies Act 1956 has defined a. profit and loss account b. trading account c. sales d. reserves

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A Bond or Debenture issued by a company is a a. fixed interest-bearing loan b. shown on the asset side of the balance sheet c. contribution by the chairman of the company d. contribution by the employees of the company Gross Block is a term which refers to a. blocks in a company b. liabilities blocking the balance sheet c. assets of the company d. fixed assets Particulars and information to be given in the Profit & Loss Account are laid down in a. Schedule V, Part II of the Companies Act b. Schedule VI, Part I of the Companies Act c. Schedule VI, Part II of the Companies Act d. Schedule VII, Part II of the Companies Act Managerial remuneration under section ____ of the Companies Act a. 196 b. 197 c. 198 d. 199 Decrease in one's equity that arises from the operation of a business during a specified accounting period is ______ a. Expenses b. Sundry Loss c. Miscellaneous Expenses d. Cost Cash generation and cash absorption for a period between two balance sheet dates are presented in a. Profit and loss account b. Cash account c. Cash Flow Statement d. Fund Flow Statement Auditors certificate forming part of financial statements submitted is furnished by a. Internal auditor b. Statutory auditor c. RBI auditor d. Quality auditor Dividend received is shown under a. Cash flow from financing activities b. Cash flow from investing activities c. Cash flow from operating activities d. Cash flow from miscellaneous activities Inter corporate deposits is shown under a. Cash flow from financing activities b. Cash flow from investing activities c. Cash flow from operating activities d. Cash flow from miscellaneous activities Advertisement campaign for public relation/publicity is a. Part of project cost

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b. Not included in project cost c. Capital expenses d. Personal expenses of MD The expenses incurred on the mining rights, patents etc. are capitalised from a. the date of acquisition of such assets b. the date of payment for such assets c. the date of loan for such purchase d. the date of approval by the Finance Manager

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The expenditure incurred on installation of plant and machinery and other assets, which is yet to be capitalised is shown under the head a. plant in progress C b. other assets in progress c. capital work-in-progress d. plant and machinery in progress 20 Preliminary expenses in a project is a. direct expenditure b. indirect expenditure B c. assessment expenditure d. revenue expenditure Q.No. Question Statement Correct 2 marks question (question 21 to 30) Option 21 Date of completion of project and commissioning thereof is i. cut off date for accounting purpose ii. This also indicates the end of the construction period a. Statement (i) and (ii) are correct b. Statement (i) and (ii) are incorrect c. Statement (i) is correct and (ii) is incorrect d. Statement (i) is incorrect and (ii) is correct Direct capital expenditure does not include expenditure on account of : a. Land b. Fuel oil c. Plant and Machinery d. Electrical Installations According to listing agreement between the listed companies and stock exchanges, ________ stipulates that all listed companies/entities whose financial year ends on March 1996 and thereafter will be required to give cash flow statement along with the balance sheet and profit and loss account. a. Clause 42 b. Clause 22 c. Clause 32 d. Clause 52

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The objective of the ___________is to require reporting entities falling within its scope to report on a standard basis their cash generation and cash absorption for a period between two balance sheet dates. a. Statement of affairs b. Income statement c. Cash Flow statement d. Fund Flow statement The balance sheet and profit and loss account is required to be presented in the annual general meeting by the board as per section _____ of the companies act. a. 122 b. 210 c. 166 d. 120 A "Not-for-profit" company should prepare a. Profit and loss account b. Statement of expenses and income c. Income and expenditure account d. Statement of profit and loss As per companies act, the profit and loss account should be submitted in a. Vertical form b. Horizontal form c. The act is silent in regard to form d. Tabular form ____________ may exempt any class of company from compliance with any requirements of Schedule VI in the public interest. a. Company law board b. Companies act c. Ministry of finance d. Central government Provisions regarding forfeiture of shares are found in a. Companies act b. Articles of the company c. Memorandum of association d. Board memorandum Where a company issues shares at premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premium on those shares shall be transferred to

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a. Share capital account b. Reserves c. Premium account d. Share Premium account Q.No. Question Statement 4 marks question (question 31 to 38) 31 Statement I: Reserves refer to amount set aside out of profits of the company or other surpluses of the company which are neither meant to meet any loss in respect of depreciation, renewals, or diminution in the value of assets nor meant to meet any known liability. Statement II: Reserves refer to amount set aside out of sale of assets or employee benefit fund of the company or other surpluses of the company which are neither meant to meet any loss in respect of depreciation, renewals, or diminution in the value of assets nor meant to meet any known liability. a. Statement I and II are correct b. Statement I and II are incorrect c. Statement I is correct and II is incorrect d. Statement I is incorrect and II is correct Statement I: The financial statements are end products of the accounting process starting from recording business transactions expressed in monetary value. Statement II: The financial statements include generalpurpose information to meet the common information needs of the most users. a. Statement I and II are correct b. Statement I and II are incorrect c. Statement I is correct and II is incorrect d. Statement I is incorrect and II is correct Statement I: In case of first annual general meeting, the financial year should not end more than nine months preceding the date of meeting. Statement II: For any subsequent annual general meeting, financial year should begin with the immediately next day of the earlier financial year and should not end more than nine months preceding the date of meeting.

Correct Option

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Statement I and II are correct Statement I and II are incorrect Statement I is correct and II is incorrect Statement I is incorrect and II is correct

Statement I: The quantities of raw materials, purchases, stocks and the turnover shall be expressed in rupee denominations in which these are normally purchased or sold in the market.

Statement II: In the case of trading companies, the imported items shall be classified in accordance with the classification adopted by the Chief Controller of Imports and Exports in granting the import licences. a. Statement I and II are correct b. Statement I and II are incorrect c. Statement I is correct and II is incorrect d. Statement I is incorrect and II is correct Statement I: The profit and loss account shall contain or give by way of a note a statement showing the computation of net profits in accordance with section 309 of the Act with relevant details of the calculation of the commissions payable by way of percentage of such profits to the directors (including managing directors) , or manager (if any) . Statement II: The profit and loss account shall further contain or give by way of a note detailed information in regard to amounts paid to the auditor ,whether as fees, expenses or otherwise for services rendered. a. Statement I and II are correct b. Statement I and II are incorrect c. Statement I is correct and II is incorrect d. Statement I is incorrect and II is correct Xiang Steels Ltd., is a closely held company. The management is contemplating listing the company in the Bombay Stock Exchange after inviting public for subscribing to their share capital. When the listing agreement and disclosure of cash flow statement be applicable? a. Immediately

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b. Only after the company is listed c. Only when mandated by SEBI d. Only when mandated by the Board The accountant of Raghubeer Company Ltd., has listed an item, sale of office furniture under Cash Flow from financing activities. The General Manager (Finance) has objected to this and have suggested that: a. The item is of negligible value and need not be shown in the books b. The item should appear under cash flow from operations. c. The item should appear under cash flow from investing activities d. The account has rightly appropriated the income under correct head No Stock Ltd., recruited staff for its works on 1st January 2010. It was incorporated on 1st April 2010. There was not manufacturing activity until it got its license on 1st July 2010. It started commercial production from 1st August 2010. As per the companies act, from when the Profit and Loss account should be drawn? a. 1st January 2010 b. 1st April 2010 c. 1st July 2010 d. 1st August 2010

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