CMA Foundation Fundamentals of Financial and Cost Accounting Important Question | Dec 25

Table of Content

Fundamentals of Financial Accounting

1. Accounting Fundamentals
2. Bank Reconciliation Statement
3. Depreciation
4. Consignment
5. Joint Venture
6. Bills of Exchange (excluding Accommodation Bill, Insolvency)
7. Preparation of Financial Statements of Sole Proprietorship
8. Preparation of Financial Statements of a Not-for-Profit Organisation

Fundamentals of Cost Accounting

1. Fundamentals of Cost Accounting

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Fundamentals of Financial Accounting

Accounting Fundamentals

Question : 1

Ledger contains various________    in it :

1. Transactions
2. Entries
3. Accounts
4. None

Solution:

Question : 2

Money spent ₹ 10,000 as travelling expenses of the directors on trips abroad for purchases of capital assets is

1. Capital expenditures
2. Revenue expenditures
3. Deferred revenue expenditures
4. None of the above

Solution:

Question : 3

The main Purpose of Financial Accounting is?

1. To Provide financial information to shareholders 
2. To maintain Balance Sheet
3. To minimize taxes
4. To keep track of liabilities

Solution:

Question : 4

Trial Balance is used to check the accuracy of _________________.

1. Balance Sheet balances 
2. Ledger Accounts balances
3. Cash Flow Statement balances
4. Income Statement balances

Solution:

Question : 5

A recovery of bad debt _____________________.

1. increases net income
2. decreases net income
3. increases gross profit and net income
4. None of the above 

Solution : 

Solution:

Question : 6

An expenditure is capital in nature when 

1. The receiver of the amount is going to treat it for the purchase of fixed assets. 
2. It increases the quantity of fixed assets.  
3. It is paid as interest on loans for the business.  
4. It maintains of fixed asset. 

Solution:

Question : 7

Prepaid rent is a :

1. Nominal A/c
2. Representative Personal A/c
3. Tangible Assets A/c
4. None

Solution:

Question : 8

The debts written off as bad, if recovered subsequently are

1. Credited to Bad Debts Recovered A/c 
2. Credited to Trade Receivables Account 
3. Debited to Profit and Loss Account
4. None

Solution:

Question : 9

A Trial Balance shows

1. Honesty of accountants
2. Accuracy of account
3. Only arithmetical accuracy of accounts
4. None of these

Solution:

Question : 10

In an Account if debit > credit side, the balance is known as the

1. Negative balance
2. Debit balance
3. Positive balance
4. Credit balance

Solution:

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Bank Reconciliation Statement

Question : 11

The balance of the petty cash is:

1. An expense 
2. An income 
3. An asset
4. A liability

Solution:

Question : 12

Which of the following is/are true about Bank Book?

1. It is a subsidiary book of account.
2. It is also known as Bank Journal.
3. Usually, larger organisations with substantial volume of bank transactions maintain this book of account.
4. All of the above

Solution:

Question : 13

Bank balance as per Pass Book (Cr.) ₹ 1,000. Cheque deposited worth ₹ 2,000 but not yet collected. Find the bank balance as per Cash Book.

1. Cash Book (Dr.) ₹ 1,000
2. Cash Book (Cr.) ₹ 1,000
3. Cash Book (Dr.) ₹ 3,000
4. Cash Book (Cr.) ₹ 3,000

Solution:

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Depreciation

Question : 14

A Machinery with original cost of Rs. 10, 00,000 and Nil Salvage value acquired on 1st April 2019 with 4 years useful life was depreciated using Straight Line Method. It was decided to sell the machinery on 1st October 2022 for Rs. 1, 20,000. What shall be the gain or (loss) on the sale of Machinery .

1. Gain of Rs. 1,20,000 
2. Loss of Rs. 5,000 
3. Loss of Rs. 1,30,000
4. Gain of Rs. 5,000 

Solution:

Question : 15

The portion of the acquisition cost of the tangible asset, yet to be allocated is known as 

1. Accumulated value
2. Written down value 
3. Realisable Value
4. Both (b) & (c) 

Solution:

Question : 16

Which of the following is not an internal factor causing depreciation?

1. Wear and tear of asset
2. Expiry of legal life of asset
3. Physical deterioration of asset
4. Exhaustion of asset

Solution:

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Consignment

Question : 17

In consignment business, the commission also allows to consignor to compensate for bearing the risk of bad debts arising out of credit sales is known as:

1. Ordinary Commission.
2. Extra Ordinary Commission.
3. Del-credere Commission
4. Over-riding Commission.

Solution:

Question : 18

Which of these is/are recurring (indirect expenses)? 

1. transit insurance and freight
2. octroi
3. loading and unloading 
4. godown rent and insurance 

Solution:

Question : 19

X sends out 100 bags to Y costing ₹1,000 each. 60 bags were sold at10% above cost price. Sale value will be :

1. ₹ 66,000
2. ₹ 65,000
3. ₹ 60,000.
4. ₹ 65,500

Solution:

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Joint Venture

Question : 20

Goods costing ₹10,000 destroyed by an accident, insurance claim nil :

1. ₹10,000 will be credited to joint venture account
2. No entry will be made in the books of joint venture 
3. ₹10,000 will be debited in Joint venture account as loss
4. ₹ 8,000 will be credited in joint venture account

Solution:

Question : 21

A and B purchased a piece of land for ₹40,000 and sold it for ₹60,000 in 2021. Originally A had contributed ₹24,000 and B ₹16,000. What will be the profit on venture?

1. ₹ 20,000
2. ₹ 16,000
3. ₹ 30,000
4. Nil

Solution:

Question : 22

A, for joint venture with B, purchased goods costing ₹2,00,000. B sold 80% of the goods for ₹2,50,000. Balance of goods were taken over by B at cost less 25%. Find out profit on venture?

1. 80,000
2. 90,000
3. 50,000
4. None of the above

Solution:

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Bills of Exchange (excluding Accommodation Bill, Insolvency)

Question : 23

Payment of Bills of exchange is received :

1. by drawer
2. by holder in due course of due date
3. by endorsee
4. by bank

Solution:

Question : 24

X Sold goods to Y for ₹30,00,00. ½ of the amount will be received in cash and the balance through a B/R for what amount X should draw a bill Y.

1. ₹ 1,50,000
2. ₹ 3,00,000
3. ₹ 1,00,000
4. ₹ 1,20,000

Solution:

Question : 25

Retirement of bill means

1. Making payment before the due date. 
2. Cancellation of the bill.
3. Sending the bill for collection. 
4. Endorsing the bill in fayour of third party. 

Solution:

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Preparation of Financial Statements of Sole Proprietorship 

Question : 26

Expenses due but not yet paid are known as __

1. Real Expenses
2. Paid Expenses
3. Outstanding Expenses
4. None of the above

Solution:

Question : 27

Gross profit is equal to

1. sales – cost of goods sold
2. sales – closing stock + purchase
3. opening stock + purchases – closing stock
4. none of the above

Solution:

Question : 28

Consider the following data and identify the amount which will be deducted from sundry debtors in Balance sheet.

particulars	₹
Bad debts (from trial balance)	₹1,600
Provision for doubtful debts (old)	₹2,000
	₹800

 

1. ₹ 400
2. ₹ 800
3. ₹ 2,000
4. ₹ 2,400

Solution:

Question : 29

Inventory is:

1. Included in the category of fixed assets
2. An investment
3. A part of current assets
4. An intangible fixed asset

Solution:

Question : 30

Based on which of the following concepts, is share capital account shown on the liabilities side of a balance sheet? 

1. business entity concept 
2. money measurement concept
3. going concern concept
4. matching concept

Solution:

Question : 31

At the time of preparation of financial accounts, bad debts recovered account will be transferred to

1. Debtors A/c 
2. Profit & Loss A/c 
3. Profit & loss Adjustment A/c 
4. Profit & loss Appropriation A/c 

Solution:

Question : 32

Gross profit is the difference between:

1. sales and purchases
2. sales and cost of sales
3. sales and total expenses.
4. All of the above

Solution:

Question : 33

Bills Receivable discounted but not due till date of final accounts it shown as:

1. Liabilities
2. Assets
3. P & L A/c
4. Foot noted (contingent liabilities)

Solution:

Question : 34

If the manager is entitled to a commission of 5% on profits before deducting this commission, he will get a commission of Rs______________on a profit of Rs.8,400

1. 400
2. 442.11
3. 420
4. none of these

Solution:

Question : 35

All those to whom business ownes money are:

1. debtors
2. owners
3. creditors
4. competitors

Solution:

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Preparation of Financial Statements of a Not-for-Profit Organisation 

Question : 36

Solution:

Question : 37

Solution:

Question : 38

Solution:

Question : 39

Solution:

Question : 40

Solution:

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Fundamentals of Cost Accounting 

Question : 41

Solution:

Question : 42

Solution:

Question : 43

Solution:

Question : 44

Solution:

Question : 45

Solution:

Question : 46

Solution:

Question : 47

Solution:

Question : 48

Which method of costing is used for determination of costs for printing industry?

1. process costing
2. operating costing
3. batch costing
4. job costing

Solution:

Question : 49

Over which of the following costs, management is likely to have least control

1. wages cost
2. building insurance cost
3. machinery breakdown cost

4. advertisement cost

Solution:

Question : 50

In behavioral analysis’, costs are divided into

1. production and non-production costs
2. controllable and non-controllable costs
3. direct and indirect costs

4. fixed and variable costs

Solution:

Question : 51

The following is included in financial accounts, but not in cost accounts.

1. carriage and freight
2. Excise duty
3. Royalty
4. Dividend paid

Solution:

Question : 52

Advertisements are treated as

1. direct expenses
2. cost of production
3. selling overheads
4. distribution overheads

Solution:

Question : 53

The guidance and regulation by executive action of the cost of operating an undertaking is said to be

1. Budgetary control
2. cost control
3. cost analysis
4. None

Solution:

Question : 54

From the following information, find out purchases. Raw material consumed = Rs.26, 500. Closing Stock = Rs. 4,500  Opening Stock = Rs. 3,000 

1. ₹ 25,000
2. ₹ 29,500
3. ₹ 28,000
4. ₹ 22,000

Solution:

Question : 55

Gross Factory Cost = Rs. 52,000. Net Factory Cost = Rs. 74,000.Opening stock of work-in- progress is Rs. 9,000. Find closing stock of work-in-progress.

1. ₹ 31,000
2. ₹ 13,000
3. ₹ 22,000
4. ₹ 15,000

Solution:

Question : 56

Which method of costing is most commonly used in the Soft Drinks industry?

1. Job Costing 
2. Process Costing 
3. Batch Costing
4. Multiple Costing

Solution:

Question : 57

The works cost plus administration expenses

1. Total Cost
2. Cost of production
3. cost of sales
4. Factory cost

Solution:

Question : 58

Which of the following is a part of both Prime cost and conversion cost ?

1. Direct Material
2. Indirect Labour
3. Direct Labour
4. All of the above

Solution:

Question : 59

Direct expenses are also known as

1. Overhead expenses
2. Manufacturing Expenses 
3. Administrative Expenses 
4. chargeable expenses

Solution:

Question : 60

The semi- finished goods is also known as ____in cost accounting

1. Raw materials
2. work-in-progress
3. Finished good
4. Direct materials

Solution: