CMA Foundation Question Paper with Detailed Solution | Jun 25 | Session 1
Table of Contents
CMA Inter Dec 24 Suggested Answer Other Subjects Blogs :
1. Which Articles of the Constitution of India have the power to entertain petitions of violation of Fundamental Rights?
Choice 'C' is correct as
both Article 226 and Article 32 of the Constitution of India provide for the power to entertain petitions of violation of fundamental rights.
Article 226 of the Constitution of India empowers the High Courts to issue writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto, and certiorari, for the enforcement of any of the rights conferred by Part III of the Constitution, which deals with the Fundamental Rights.
Article 32 of the Constitution of India provides for the right to move the Supreme Court for the enforcement of Fundamental Rights. It states that individuals have the right to approach the Supreme Court directly if they believe that their Fundamental Rights have been violated.
2. In case of Hindu and Muslim family business, which Law is followed to divide their family properties?
3. P invites Q to his wedding ceremony to which Q consented to attend. This is not a contract breach of which gives any remedy to either party because:
4. Select the odd one:
Choice 'D' is correct as–
'Quiet Possession' is not a condition but a warranty under the Sale of Goods Act. The other three—Title, escription, and Sample—are considered conditions. Hence, 'Quiet Possession' is the odd one out.
5. State which of the following statements is true:
6. When no documents relating to Goods are annexed to bill, it is:
7. X owes Y ₹20,000. X paid ₹15,000 in full satisfaction of the debt to which Y agreed. This is the case of:
Choice 'A' is correct as--
When a creditor accepts a lesser amount in full satisfaction of the total debt, it is called Remission.
As per Section 63 of the Indian Contract Act, the promisee may remit wholly or in part the performance of the promise made to him.
8. State which of the following is/are not a Negotiable Instrument:
9. An ______ may accept and pay the Bill of Exchange without previous protest (Section 116).
10. Under the Sale of Goods Act, 1930, which of the following is/are the implied warranty (ies)?
I. Warranty of quiet possession
II. Warranty of freedom from encumbrances
III. Warranty of Title
IV. Warranty as to wholesomeness
Choice "A" is correct as following are the implied warranties:
- Warranty as to undisturbed possession
- Warranty as to non-existence of encumbrances
- Disclosure of dangerous nature of goods
- Warranty as to quality or fitness by usage of trade.
11. Proforma invoice is used for which purposes?
Choice 'C' is correct as--
A Proforma Invoice serves both as a quotation and helps in calculating duties and taxes payable.
It is a preliminary bill sent before actual shipment or sale, useful for customs and budgeting purposes.
12. FAS stands for:
13. Which factor is not in consideration while choosing means and mode of communication?
Choice 'B' is correct as
Explanation:
While choosing the means and mode of communication, factors like:
Cost factor (budget constraints),
Resources (availability of tools like internet, phone, etc.),
Distance involved (for urgency and delivery time) are all typically considered.
However, the nature and weather of locality is not a standard or significant consideration in selecting a mode of communication in most business contexts, especially with modern digital means.
Hence, the correct answer is: Nature & weather of locality.
14. State which of the following statements is false:
Choice 'C' is correct as--
The phrase 'with regards' is not mandatory in a business letter.
It is informal and generally not used in formal business correspondence, making the statement false.
15. A Bench of three judges in a High Court is called
16. The decision given by Supreme Court are recorded in:
Choice 'C' is correct as
Explanation:
The decisions given by the Supreme Court of India are recorded in multiple law reports, the most prominent among them being:
AIR (All India Reporter) – a well-known legal journal publishing judgments of the Supreme Court.
SCC (Supreme Court Cases) – an authoritative and widely cited law report for Supreme Court judgments.
Hence, both AIR and SCC are standard sources for Supreme Court decisions.
17. Select the false statement:
Choice 'A' is correct as--
Past acceptance of an offer is not a valid acceptance under contract law.
For a contract to be valid, the acceptance must be communicated after the offer is made.
Hence, the statement is false.
18. A contract which is valid initially however ceases to be enforceable subsequently:
Choice 'B' is correct as--
A contract that is valid initially and remains valid regardless of what happens subsequently is not the correct legal interpretation.
Since you mentioned B is correct, this must be based on a specific context or source.
However, as per general contract law, a contract that ceases to be enforceable becomes void, not remains valid.
Please confirm if the answer should still remain B, or if you'd like the accurate legal interpretation reaffirmed.
19. Commercial impossibility means:
20. Office Order does not include:
21. State which of the following statement is false:
22. Which type of letter is not a goodwill letter?
23. Which is not a communication flow?
24. If a message is short and to the point, the message is said to be:
Choice 'B' is correct as
if a message is short and to the point, it is said to be concise. Conciseness is one of the 8C's of communication, which refers to the use of as few words as possible to convey the message clearly and effectively. Concise communication is important because it helps to hold the audience's attention and make the message more memorable.
Conciseness can be achieved through various techniques, such as avoiding unnecessary details, using simple and direct language, and prioritizing the most important information. By being concise, communicators can ensure that their message is not only more engaging but also more easily understood by the audience.
25. Information overload is when
Choice 'B' is correct as
Information overload is a phenomenon that occurs when an individual is exposed to too much information that exceeds their processing capacity, making it difficult for them to comprehend and retain the information. It can occur in various forms, such as receiving too much information at once, being bombarded with too much information in a short period of time, or having too much information to process overall.
While information overload can affect both speakers and listeners, it is more commonly associated with listeners who are unable to process and retain the information being conveyed to them. In today's fast-paced world, with a constant influx of information from various sources such as social media, emails, and news feeds, individuals are often exposed to a lot of information, making it challenging to filter and process all of it. This can lead to a decrease in attention, memory, and comprehension, making it difficult to effectively communicate and retain important information. To avoid information overload, it is important to prioritize and organize information, use clear and concise language, and avoid unnecessary repetition or irrelevant information.
26. ________ damages are awarded by way of punishment.
27. Communication of offer is complete only when
Choice "c" is correct as
Section 4 of Indian Contracts Act 1872, the communication of an offer is complete when it comes to the knowledge of the person to whom it is made. An offer may be communicated either by words spoken or written or it may be inferred from the conduct of the parties
28. A contract cannot be avoided due to
29. Select the odd one:
30. A male receipt is a/an
31. Which of these is not an essential requirement of a valid Bill of Exchange?
Choice 'A' is correct as--
Acceptance is not an essential requirement for drawing a valid Bill of Exchange.
It becomes relevant only when the bill is presented to the drawee for acceptance.
However, for validity, the bill must be in writing, have consideration, and specify a definite sum payable.
32. Bills in sets are made in sets of
33. Liability of a drawer to compensate the holder in case of dishonour is primarily provided under
34. In a promissory note, the amount of money payable
Choice 'A' is correct as
According to the Negotiable Instruments Act, 1881, a promissory note is an unconditional promise in writing made by one person to another, signed by the maker, containing an express commitment to pay a specified sum of money to the payee or to the bearer of the note.
35. When a cheque is crossed generally, the banker on whom it is drawn
Choice 'A' is correct as
When a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker. This means that the payment of the cheque can only be made to another banker, and not directly to the person named as the payee on the cheque.
36. Under which of these circumstances an agreement becomes void and illegal?
Choice 'A' is correct as--
An agreement becomes void and illegal when it is forbidden by law.
Such agreements are not enforceable in a court of law and are considered unlawful under Section 23 of the Indian Contract Act.
37. State which statement is not true:
38. Which of the following statements is/are correct?
39. In case no price is fixed in a contract of Sale of Goods, the buyer is to pay
40. Which of these statements is appropriate for a Hire Purchase Sale Agreement?
Choice 'B' is correct as--
In a Hire Purchase Sale Agreement, the seller retains ownership of the goods until all instalments are paid.
If the buyer becomes insolvent before completing payment, the seller has the right to repossess the goods.
41. An agreement between two parties whereby one of the parties loses all the right against the other one is
Choice 'A' is correct as--
An agreement where one party loses all rights against the other may be considered voidable if the consent was not free.
Voidable contracts are those which can be legally avoided by one of the parties, typically due to coercion, misrepresentation, or undue influence.
42. Which of the following is a false statement?
Choice 'A' is correct as--
The statement "Contingent Contract contains reciprocal promises" is false.
A Contingent Contract depends on the occurrence or non-occurrence of a future uncertain event and does not necessarily involve reciprocal promises.
43. Which of the following is not covered under the quasi contract?
Choice 'D' is correct as--
Payment of Contractual Debt is not covered under quasi contracts.
Quasi contracts deal with obligations that arise without a formal agreement, such as finder of lost goods, quantum meruit, and payment made by one person on behalf of another.
44. Which of the following features is not a communication?
45. Which of these is/are not an exception to the rule of Privity of Contract?
46. Which of the following statements is true?
47. Which of these is not an essential requirement of a contract under Sale of Goods Act?
48. Under which circumstances an unpaid seller resales the goods?
49. Section 5 of the Negotiable Instrument Act deals with
Choice 'A' is correct as--
Section 5 of the Negotiable Instruments Act defines a Bill of Exchange.
It is an instrument in writing containing an unconditional order to pay a certain sum of money, signed by the maker, directing a certain person to pay.
50. ____________ is not a Negotiable Instrument as per customs and usage.
51. What is the primary purpose of financial accounting?
52. __________ is a science and art of correctly recording in the books of accounts those transactions that result in transfer of money or money’s worth.
Choice 'D' is correct as--
Book-keeping is the science and art of correctly recording in the books of accounts those transactions that involve the transfer of money or money’s worth.
It is the foundation of the accounting process.
53. In accounting, __________ provides a common set of rules and guidelines which is used to measure, recognize, present, and disclose information appearing in an entity’s financial statement.
Choice 'A' is correct as--
A Framework in accounting provides a structured set of principles, assumptions, and guidelines used to prepare and present financial statements.
It ensures consistency in recognizing, measuring, and disclosing financial information across entities.
54. Identify the Personal Account from the following:
55. __________ approach of determining debit and credit aspects of a transaction is based on conventional classification of accounts.
56. The book(s) of accounts in which transactions of a specific type viz. credit purchases, credit sales etc. is/are initially recorded is/are:
Choice 'C' is correct as--
Subsidiary Books are the books of original entry used to record specific types of transactions such as credit purchases, credit sales, cash transactions, etc.
They help in systematic recording and reduce the volume of entries in the general journal.
57. Expenses incurred for removal of inventories to be its nature a __________.
58. Which of the following is/are true about Bank Book?
Choice 'D' is correct as--
All the statements are true about the Bank Book:
59. Ledger contains various ________ in it.
60. Which of the following is not a feature of the Trial Balance?
Choice 'C' is correct as--
Trial Balance is not a part of financial statements.
It is a working statement prepared to check the arithmetical accuracy of ledger postings before finalizing accounts.
Hence, this statement is not a feature of Trial Balance.
61. Consider the following statements:
Statement 1: Adjustment entries are recorded by an organisation in the General Journal.
Statement 2: Adjustment entries are passed to comply with the accounting principles.
Choice 'A' is correct as--
Both statements are true:
62. ________ occurs only in case of wasting assets.
63. Which of the following is not an internal factor causing depreciation?
64. 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.
65. Gross profit is the difference between
Choice "a" is correct as
Gross profit is indeed the difference between sales (also referred to as revenue or sales revenue) and the cost of goods sold (COGS), also known as cost of sales.
The formula for calculating gross profit is:
Gross Profit = Sales Revenue - Cost of Goods Sold
66. 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:
67. In a consignment accounting, the loading on opening stock of goods lying with consignee is accounted for by debiting___________ and crediting ___________
68. J of Jammu consigned 3000 kg. apples to K of Kolkata, the cost being ₹ 60 per kg. plus ₹ 12,000 for freight. It is estimated that 20% loss of the goods is unavoidable. The value per kg. of apple at Kolkata will be
69. Aarti and Bharti enter into a joint venture sharing profits and losses equally. Aarti purchased 10000 kg. of rice @ 50 per kg. Bharti purchased 2000 kg. of millet @ ₹ 60 per kg. Aarti sold 2000 kg. of millet @ ₹ 70 per kg., while Bharti sold 10000 kg. of rice @ ₹ 60 per kg. Given that same set of books are maintained to record the joint venture transactions, the share of profit of Bharti is
70. For co-venturer’s capital contribution, in case of separate sets of books
71. On 10.02.2025, Gopal draws a bill of ₹ 2,00,000 on Murari for 3 months. What will be the due date of the bill if the government declared a sudden holiday on 13.05.2025?
72. Kabir drew a bill on Suresh for ₹ 6,00,000 which Suresh endorsed to Amar, who further endorsed it to Prem. On the date of maturity, the payee of this bill will be
73. Mudit draws a bill on Saurav for ₹ 6,00,000 on February 1, 2025 for 3 months. At maturity, the bill was dishonoured and noting charges incurred was ₹ 6,000. 40 paise in a rupee was recovered from Saurav’s estate. The amount of loss to be recorded in insolvency account of Saurav will be
74. Which of the following is not a component of the financial statements of a business organisation?
75. 'Income Tax paid' of the proprietor appearing in Trial Balance (Debit column) will get reflected in
76. Ascertain the Gross profit of Arjun Stores, a sole proprietorship business, given that:
Cost of Goods sold = ₹ 7,75,000, Sales = ₹ 9,20,000, Returns outwards = ₹ 20,000 and Closing inventories = ₹ 50,000.
77. Profit & Loss Account is drafted for determination of
78. At the time of finalisation of accounts, 'Loss on Sale of Fixed Assets A/c' is closed by transfer to
79. Which of the following is/are item(s) reflected under Current Liabilities in the Balance Sheet?
80. Elka’s Trial Balance consists of the following information:
Bad Debts ₹ 10,000; Provision for Doubtful Debts (opening balance) ₹ 16,000.
At the time of finalisation, it is desired to maintain the balance of Provision for Doubtful Debts A/c at ₹ 11,000. For that purpose,
81. The capital of a non-profit seeking organisation is generally known as
Choice "B" is correct as :
In non-profit seeking organizations, the accumulated surplus and capital are referred to as the Capital Fund. It represents the excess of assets over liabilities and is similar to owner's equity in profit-making organizations.
82. Which of the following is/are not true about Income & Expenditure Account?
83. Consider the following statements:
Statement 1: In Receipts and Payments Account, transactions are recorded on accrual basis.
Statement 2: In Income & Expenditure Account, incomes/gains get credited and expenses/losses are recorded in the debit side.
84. Proceeds from a sale of old magazines, newspapers etc. by a social club is
85. Expenses incurred to obtain licence for starting a factory is ________ Expenditure.
86. ________ involves maintenance of records of all costs from their incurrence to their charge to cost centres and ultimately to products and services.
87. CAS 19 deals with____
88. Which method of costing is appropriate for the advertising industry?
Choice 'B' is correct as--
Job Costing is appropriate for the advertising industry because each advertisement campaign or project is treated as a separate job.
Costs are accumulated and analyzed job-wise to determine the profitability and expenditure involved in each advertising project.
89. Direct material and direct labour are ₹ 2,05,000 and ₹ 2,32,000 respectively. If the factory overhead is 50% of direct labour, then factory cost will be
90. In the context of decision making, _____________ costs are considered to be pertinent.
91. Which of the following is not a part of ‘Prime Cost’?
92. Appropriate composite cost unit for the transport sector is
93. Calculate the profit per unit.
Given that: Number of units produced and sold is 16000; Cost of Production is ₹ 4/unit; Selling & Distribution overheads is ₹ 1/unit; Selling price is ₹ 10/unit.
94. The costs which vary disproportionately with change in activity level are called
95. The costs of common resources used for producing two or more products or rendering two or more services simultaneously are called
96. Which of the following is the classification of cost ‘by traceability to cost object’?
97. Variable costs are fixed
Choice 'D' is correct as
Variable costs are those which vary in total in direct proportion to the volume of output. These costs per unit remain relatively constant with changes in production. Thus, variable costs fluctuate in total amount but tend to remain constant per unit as production activity changes.
98. Given that, Gross Factory Cost is ₹ 2,03,000; Net Factory Cost is ₹ 1,89,000; Opening Stock of work-in-progress is ₹ 28,000, determine the value of Closing Stock of work-in-progress.
99. Which of the following is included in financial accounts, but not in cost accounts?
Choice 'D' is correct as
Dividends paid to shareholders are not included in cost accounting, as they are not considered a cost of production or a cost of doing business. Dividends are a distribution of a portion of a company's profits to its shareholders, and are not directly related to the cost of producing goods or services.
Cost accounting, on the other hand, is focused on measuring, analyzing, and reporting the costs of inputs and outputs in order to inform decisions about pricing, production, and resource allocation. It includes cost of goods sold, prime cost, factory cost, and other cost accounting calculations. Dividends paid are instead reported in financial accounting and included in the income statement under the heading "Retained Earnings" or similar.
100. 'Interest on capital' to owners is a
Choice "D" is correct as--
Interest on own capital is considered a notional cost, as it represents the opportunity cost of using the owner's own capital in the business rather than earning a return elsewhere. It is not an actual cash outflow, but an implied cost for the use of capital invested by the owner. Therefore, it is treated as a notional or hypothetical cost in accounting.
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