CMA Foundation Question Paper with Detailed Solution | Dec 25 | Session 1
Table of Contents
CMA Inter Dec 24 Suggested Answer Other Subjects Blogs :
1. Which among the following is not a source of law?
Choice D is correct.
Sources of law are those which have legal authority and binding force, such as custom, judicial precedents, and established practices recognised by courts.
The opinion of lawyers is only advisory in nature and does not have any legal sanction.
Courts are not bound to follow lawyers’ opinions, hence it is not a source of law.
2. In Indian Parliament, House of the people is called
Choice B is correct.
In the Indian Parliament, the House of the People is known as the Lok Sabha.
It consists of representatives directly elected by the people of India.
Lok Sabha is the lower house of Parliament and plays a key role in law-making and control over the executive.
3. The subjects on which law can be made by both Central and State is called
4. A Bill introduced by any Member of Parliament is called
Choice C is correct.
A Private Member’s Bill is a bill introduced by any Member of Parliament who is not a minister.
Its main purpose is to draw attention to specific public issues or propose changes in existing laws.
Unlike a Government Bill, it does not reflect government policy and has limited chances of becoming law.
5. Writ petition can be made in High Court under which Article of the Constitution?
6. When both parties do not have equal rights and liabilities in a contract, it is called
Choice B is correct.
A unilateral contract is one where obligations are not equal on both sides.
One party has already performed his obligation, while the other party is yet to perform.
Hence, rights and liabilities are not mutual at the same time.
7. A job notification by a company is
Choice B is correct.
A job notification is an invitation to make an offer, not an offer itself.
Interested candidates apply for the job, which amounts to making an offer.
The company may accept or reject the offer.
8. Parties to a contract need not discuss about the contract with others. This is called
9.Inter vivos means
10.In case of reciprocal performance
Choice C is correct.
Reciprocal promises involve mutual obligations on both parties.
Each party is both a promisor and a promisee.
Therefore, both parties must perform their respective promises.
11. Voluntary transfer of goods with consideration is called
Choice " B " is correct as -
The voluntary transfer of possession from one person to another is referred to as delivery. Delivery is a crucial concept in contracts and property law, indicating the transfer of control and possession of an item from one party to another. Ownership may be transferred through delivery, but they are distinct concepts. Gift, on the other hand, is a specific type of transfer that involves giving something voluntarily without expecting payment in return. A license is a permission or authority to do something on another's land, so it is not directly related to the voluntary transfer of possession.
12. A person gives a proposal to another person and dies after few days before it is accepted. The offer is
13. Mutual discharge of contract cannot be by
14. Ratification of a contract
Choice B is correct.
Ratification has a retrospective effect, meaning it relates back to the date when the act was originally done.
Once ratified, the act is treated as if it was authorised from the beginning.
Thus, ratification can be retrospective.
15. Select the odd one
16. Ramesh gets an appointment offer which requires him to accept within 10 days and join within 30 days. He keeps quiet. The offer
Choice B is correct.
When an offer prescribes a specific time limit for acceptance, it must be accepted within that time.
If the offeree remains silent beyond the stipulated period, the offer lapses automatically.
Hence, the offer is revoked due to lapse of time.
17. Who among the following is competent to contract?
18. Acceptance by the best friend of the offeree is
Choice A is correct.
Acceptance must be made only by the person to whom the offer is made.
A third person, even a close friend, has no authority to accept the offer.
Thus, such acceptance is not acceptance at all.
19. Which of the following will amount to discharge of contract by operation of law?
20. Any relationship in the nature of a contract but not a clear contract is called
Choice A is correct.
A quasi contract is not based on agreement but is imposed by law.
It is created to prevent unjust enrichment.
Thus, such relationships are termed quasi contracts.
21.Price fixed by Govt./Regulator is called
22.When goods are not existing with the seller at the time of making the contract, they are called _____ goods.
Choice B is correct.
Goods which are yet to be manufactured or acquired by the seller are known as future goods.
A contract for such goods is an agreement to sell.
Ownership passes only when goods come into existence.
23.In normal sale by a shop, the title to goods to the consumer is evidenced by
24.Agreement “to sale” ______ agreement of sale.
25.Doctrine of ‘caveat emptor’ means
Choice "A" is correct as --
in case of sale of goods, the doctrine Caveat Emptor means let the buyer beware. When sellers display their goods in the open market, it is for the buyers to make a proper selection or choice of the goods. If the goods turn out to be defective he cannot hold the seller liable. The seller is in no way responsible for the bad selection of the buyer. The seller is not bound to disclose the defects in the goods which he is selling. It is the duty of the buyer to satisfy himself before buying the goods that the goods will serve the purpose for which they are being bought.
26.Implied conditions means
27.‘Deliverable state’ means
Choice D is correct.
Deliverable state refers to a condition in which the goods are ready for delivery to the buyer.
The seller must do whatever is necessary to put the goods in such a state.
It does not relate to the cost or mode of delivery.
28.In case of agreement of sale, the goods are
29. An agreement to sale becomes an agreement of sale by
Choice C is correct.
An agreement to sell becomes a sale when both buyer and seller perform their respective obligations.
This results in the transfer of ownership from seller to buyer.
Thus, it becomes an agreement of sale.
30. Right to resale, withhold and lien is available to
Choice A is correct.
An unpaid seller is one who has not received the full price of goods.
The Act grants him rights such as lien, stoppage in transit, and resale.
These rights protect the seller’s interest.
31. In course of negotiation, a bill goes from one person to other. They are called
32. In case of cheque, the drawer is
Choice A is correct.
The drawer is the person who draws the cheque.
He is the account holder who gives instructions to the bank to pay a certain sum.
Therefore, the drawer is the account holder.
33. Which of the following parties can be a payee also?
34. Currency note is
Choice C is correct.
A currency note has all the features of a promissory note.
However, it is not treated as a promissory note under the Act due to express legal exclusion.
Thus, it is not a negotiable instrument under this category.
35. In case of dishonor of cheque, the notice by the bank is given to the
36. Which of the following instrument can be made payable to bearer?
Choice D is correct.
A bill of exchange and a promissory note can both be made payable to bearer.
They are transferable by delivery.
Hence, both instruments can be payable to bearer.
37. A cheque is drawn on
38. In case of difference between bill of exchange and cheque, which of the following statement is wrong?
Choice D is correct.
A bill of exchange requires acceptance by the drawee.
A cheque does not require acceptance.
Therefore, saying both are to be accepted by the drawee is wrong.
39. Which statement, out of the following, is correct?
Choice C is correct.
A bill of exchange must contain the name of the payee.
Without mentioning the payee, the bill is invalid.
Hence, this statement is correct.
40. A cheque has to be presented to the bank of the payee within ____ days of issue.
41. Informal communication with colleagues is called
42. Instruction from boss to subordinate is ______ communication.
43. Which among the following is not a feature of referencing?
Choice A is correct.
Referencing helps in identifying sources, showing understanding, and preparedness.
It does not create or reflect the original idea of the author.
Original ideas belong to content creation, not referencing.
44. When a long cumbersome process is shown easily through graphical mode it is called
45. Which report out of the following is uniform for all companies?
46. Which is not a psychological barrier to communication?
Choice D is correct.
Psychological barriers include emotions, perceptions, and mental blocks.
Proper medium of communication is a technical or organizational aspect.
Hence, it is not a psychological barrier.
47. In virtual organization which barrier to communication is not within the control of persons?
Choice C is correct.
Network disturbance depends on technology and infrastructure.
Individuals cannot control internet failures or connectivity issues.
Thus, it is beyond personal control.
48. Stage 1 of intercultural sensitivity is
49. When a person believes his/her culture is superior to others, it is called
Choice C is correct.
Ethnocentrism refers to judging other cultures based on one’s own culture.
Such individuals believe their culture is the best.
It creates barriers in intercultural communication
50. When a manager communicates with his staff, the audience is considered to be
51. ______ is an activity which is concerned with recording and classifying financial data related to business operations in order of its occurrence.
Choice A is correct.
Book-keeping is the activity concerned with recording and classifying financial transactions in the books of accounts.
Transactions are recorded in chronological order as they occur in business operations.
It forms the basic and primary stage of accounting and provides the foundation for accounting.
52. Which of the following is not a framework of accounting?
53. Which of the following is not a concept of accounting?
Choice C is correct.
The dual aspect, periodicity, and matching are well-recognised accounting concepts used for recording and measuring business transactions.
The accounting cycle refers to the process or sequence of accounting steps, not a concept.
Hence, accounting cycle concept is not a concept of accounting.
54. Annual maintenance fee of factory machine is an example of
55. Goods purchased from Sonu but wrongly entered in the account of Simmu. The rectification of error will result in
Choice D is correct.
This is an error of wrong posting of creditor’s name.
The total purchases and expenses remain the same.
Therefore, there is no effect on net profit.
56. ______ is a representation of the inter-relationship between three important aspects of accounting namely, Assets, Liabilities and Equity.
Choice B is correct.
The Accounting Equation shows the relationship: Assets = Liabilities + Equity.
It is the foundation of the double-entry system.
Every transaction affects this equation.
57. On purchase of old furniture, ₹ 2,000 incurred on freight charges should be debited to
58. Which of the following documents is not required for preparing the Bank Reconciliation Statement?
59. Which of the following is not correct?
Choice D is correct.
The correct rule is Debit all expenses and losses, credit all incomes and gains.
Option (D) wrongly states debit incomes and credit expenses.
Hence, it is incorrect.
60. Purchase Book records the transactions related to
61. Equipment sold on credit basis to Mr. Arora should be recorded in
62. Which of the following asset is considered to be non-depreciating?
63. Prepaid insurance is, by nature, a
Choice D is correct.
Prepaid insurance represents an expense paid in advance which will benefit future periods.
It shows a claim against services to be received, hence treated as an asset.
Such items are classified as representative personal accounts
64. If original cost of a machine is ₹ 1,26,000 and rate of depreciation is 10% per annum, then the depreciation of the machine for 2nd year under Written Down Value Method will be
Choice C is correct.
Original cost = ₹ 1,26,000
1st year depreciation @10% = ₹ 12,600 → WDV = ₹ 1,13,400
2nd year depreciation @10% on ₹ 1,13,400 = ₹ 11,340.
65. A sum of ₹ 2,50,000 was paid as compensation to an employee who was retrenched. It is a
66.Which one is used without a trade transaction but for mutual benefit?
67. D of Darjeeling sent 10,000 kg of tea costing ₹ 200 per kg to B of Bundi. Incurred:
Freight ₹ 36,000 and Transit Insurance ₹ 24,000.
During transit, 200 kg of tea were lost due to theft. The value of loss to be recorded in Consignment Account is
Choice 'D' is correct as--
Cost per kg of tea = ₹ 200
Total non-recurring expenses = ₹ 36,000 + ₹ 24,000 = ₹ 60,000
Expenses per kg = ₹ 60,000 ÷ 10,000 kg = ₹ 6 per kg
Value per kg for loss = ₹ 200 + ₹ 6 = ₹ 206
Value of loss = 200 kg × ₹ 206 = ₹ 41,200
68. When consignor sends goods to consignee he prepares and sends a
69. Which of the following accounts is debited by the consignee on receipts of goods from consignor?
70. A joint venture with B purchased goods costing ₹ 5,00,000. B sold 80% of the goods for ₹ 6,25,000. Balance of goods were taken over by B at cost less 20%. The profit on joint venture will be
Choice 'A' is correct as--
Total cost of goods = ₹ 5,00,000
Cost of 80% goods sold = ₹ 4,00,000; Sale value = ₹ 6,25,000 → Profit = ₹ 2,25,000
Balance 20% goods cost = ₹ 1,00,000; taken over at cost less 20% = ₹ 80,000 → Loss = ₹ 20,000
Net profit on joint venture = ₹ 2,25,000 − ₹ 20,000 = ₹ 2,05,000
71. Joint venture account is of the nature of Joint Venture
Choice 'C' is correct as--
A Joint Venture Account is prepared to ascertain the profit or loss of a specific venture.
It records incomes and expenses related to the venture.
Since it determines profit or loss, it is a Nominal Account.
72. A Bill of Exchange worth ₹ 9,00,000 was discounted by Tanuj with his banker for ₹ 8,73,000. At maturity the bill was dishonoured and noting charges of ₹ 1,200 was incurred. How much amount will the bank deduct from Tanuj’s bank balance at the time of such dishonour? Bills of Exchange
Choice 'D' is correct as--
On dishonour of a discounted bill, the bank recovers the full face value of the bill from the drawer.
Face value of bill = ₹ 9,00,000
Add: Noting charges = ₹ 1,200
Total amount deducted from Tanuj’s bank balance = ₹ 9,01,200
73. D of Delhi sends out certain goods to K of Kolkata at cost plus 25%. ½ (50%) of the goods received by K is sold at ₹ 3,52,000 at 10% above Invoice Price. The Invoice Value of goods sent out is Consignment
Choice 'D' is correct as--
Goods are invoiced at cost plus 25%, so calculation is based on invoice price.
50% of goods were sold at 10% above invoice price for ₹ 3,52,000.
Invoice value of 50% goods = ₹ 3,52,000 ÷ 1.10 = ₹ 3,20,000.
Therefore, total invoice value of goods sent = ₹ 3,20,000 × 2 = ₹ 6,40,000
74. If Opening Capital, Drawings and Closing Capital are ₹ 14,00,000, ₹ 3,00,000 and ₹ 18,00,000 respectively, then the profit for the year would be Preparation of Financial Statements of Sole Proprietorship
75. At the end of the accounting year the balance of Nominal accounts are transferred to Preparation of Financial Statements of Sole Proprietorship
76. Under the Permanence Approach of Marshalling, Preparation of Financial Statements of Sole Proprietorship
77. The Manufacturing account is prepared to Preparation of Financial Statements of Sole Proprietorship
Choice 'B' is correct as–
The Manufacturing Account is prepared to ascertain the cost of goods manufactured during the accounting period. This cost is transferred to the Trading Account. It does not determine profit or loss directly.
78. Fixed assets are disclosed in the Balance Sheet at Preparation of Financial Statements of Sole Proprietorship
79. Ascertain the value of Closing inventory, given that: Opening inventory ₹ 2,00,000; Sales ₹ 10,00,000; Purchases ₹ 8,00,000; Wages ₹ 40,000; Gross Profit rate 25% on Sales Preparation of Financial Statements of Sole Proprietorship
Choice 'C' is correct as--
Gross Profit = 25% of Sales = 25% of ₹ 10,00,000 = ₹ 2,50,000
Cost of Goods Sold = Sales − Gross Profit = ₹ 10,00,000 − ₹ 2,50,000 = ₹ 7,50,000
COGS = Opening Stock + Purchases + Wages − Closing Stock
₹ 7,50,000 = ₹ 2,00,000 + ₹ 8,00,000 + ₹ 40,000 − Closing Stock
Closing Stock = ₹ 3,00,000
80. Which of the following is not a component of the financial statements of a sole proprietorship? Preparation of Financial Statements of a Not-for-Profit Organisation
Choice 'D' is correct as--
A sole proprietorship prepares Trading Account, Profit & Loss Account, and Balance Sheet.
The Receipts and Payments Account is prepared only by Not-for-Profit Organisations.
Hence, it is not a component of financial statements of a sole proprietorship.
81. Legacy receipt by a non-profit organisation is treated as
Choice "A" is correct as :
An amount received by a non profit organization as per will is called as legacy. It should be considered as receipts and to be recorded in the receipts and payment account. Legacy should be recorded as capital receipt because it it received for a specific purpose. This has to be added to capital fund and to be taken in the balance sheet.
82. Capital Fund of a non-profit organisation is also known as
Choice "B" is correct as :
The capital for a non-profit organisation is not funded by the owner and thus has to be mentioned as capital fund. This is because capital fund is that account which records all those transactions which are related to capital nature.
83. The books of Ganga Welfare Trust show subscriptions received during the year 2024–25 as ₹ 1,11,250 and advance subscriptions on 31.03.2025 as ₹ 15,000. If outstanding subscription on 31.03.2025 was ₹ 11,250, then the subscription to be credited in the Income and Expenditure Account would be
Choice 'A' is correct as--
Subscriptions credited to Income & Expenditure Account are calculated on accrual basis.
Received during the year ₹ 1,11,250
Add: Outstanding subscription ₹ 11,250
Add: Advance subscription (relating to next year) is already received but pertains to current receipts adjustment → effectively total income for year = ₹ 1,25,000
Hence, subscription to be credited is ₹ 1,25,000.
84. Which of the following items are shown in the Income and Expenditure Account?
Choice "C" is correct as :
An income and expenditure account unlike receipts and payments accounts records only items of revenue nature transactions that relate to the current year.
85. Which of the following is/are true regarding Receipts & Payments Account?
86. Costs are often measured in terms of a product, a service to a hotel guest or a sales territory. These are known as ______.
87. In India, which of the following formulates the Cost Accounting Standards (CAS)?
Choice 'B' is correct as--
In India, the Cost Accounting Standards (CAS) are formulated by the Cost Accounting Standards Board (CASB).
CASB functions under the Institute of Cost Accountants of India.
It issues standards to bring uniformity and consistency in cost accounting practices.
88. Which method of costing is appropriate for colleges?
89. The process of assigning a whole item of cost, or of revenue, to a single cost unit, centre, account or time period is referred to as
Choice 'C' is correct as--
Allocation is the process of charging the entire cost to a single cost unit or cost centre.
It is done when the cost is directly identifiable with a particular unit or centre.
Apportionment is used only when costs need to be shared among multiple centres.
90. ______ are also called irrecoverable costs.
Choice "A" is correct as
Indirect material cost refers to materials used in the production process but not directly traceable to a specific product. These costs are part of factory overheads (also known as manufacturing overheads), which include all indirect costs incurred during the production process. Factory overheads encompass indirect labor, indirect materials, and other costs like utilities, maintenance, and depreciation of factory equipment
91. Indirect materials cost is a part of
92. In which year was cost audit introduced under the Indian Companies Act?
93. From the following data of a factory, ascertain the amount of Prime Cost:
Direct materials: ₹ 1,20,000;
Direct labour: ₹ 20,000;
Factory overheads: ₹ 35,000;
Chargeable expenses: 50% of Direct labour.
Choice 'D' is correct as--
Prime Cost includes Direct Materials + Direct Labour + Direct Expenses.
Direct expenses = 50% of Direct Labour = 50% of ₹ 20,000 = ₹ 10,000.
Prime Cost = ₹ 1,20,000 + ₹ 20,000 + ₹ 10,000 = ₹ 1,50,000.
94. Which of the following is an example of cost driver?
95. Which of the following is the classification of costs “by nature of production or operation process”?
Choice 'A' is correct as--
Classification by nature of production or operation process refers to how production is carried out.
It includes Job costing, Batch costing, Contract costing, Process costing, and Joint costing.
These methods are selected based on the type of production process involved.
96. Identify the correct sequence of costs appearing in a Cost Sheet drafted under Absorption costing technique:
(i) Cost of Goods Sold
(ii) Works cost
(iii) Cost of Production
(iv) Prime cost
Choice 'D' is correct as--
In a Cost Sheet under Absorption Costing, costs are accumulated step-by-step.
First comes Prime Cost (iv), then Works Cost (ii) after adding factory overheads.
Next is Cost of Production (iii) after adding office overheads.
Finally, after adjusting opening and closing stock, Cost of Goods Sold (i) is arrived at.
97. Determine the amount of purchase of raw materials from the given particulars:
Raw materials consumed: ₹ 1,27,200;
Opening stock of raw materials: ₹ 14,400;
Closing stock of raw materials: ₹ 21,600.
Choice 'D' is correct as--
Raw materials consumed = Opening stock + Purchases − Closing stock
Purchases = Raw materials consumed + Closing stock − Opening stock
= ₹ 1,27,200 + ₹ 21,600 − ₹ 14,400
= ₹ 1,34,400
98. CAS-14 deals with
99. Consider the following statements:
Statement I: Budgets are financial and/or quantitative statements prepared and approved prior to a defined period of time.
Statement II: Budgets are formal quantifications of the plans of management.
Choice 'C' is correct as--
Statement I is true because budgets are prepared in advance for a defined future period.
Statement II is also true as budgets represent the formal quantitative expression of management’s plans.
Hence, both statements are correct.
100. ______ costing differentiates between fixed cost and variable cost.
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