Featured Post

TNTET 2017 BREAKING NEWS

TNTET 2017 BREAKING NEWS | ஆசிரியர் தகுதித்தேர்வு நடத்த அனைத்து ஏற்பாடுகளும் தயார்...ஓரிரு நாட்களில் முறையான அறிவிப்பு வெளியாகிறது...| விண்ண...

Tuesday, February 11, 2014

CPT Accounting Questions and Answers - Part 3

In the 3rd part of CA-CPT accounting questions and answers, we will cover questions from 21st to 30th and explain the reasons why we have written the correct answer. It will increase your understanding to choose correct answer fastly.




21. Mr. A purchased a machinery costing Rs. 1,00,000 on 1st October, 2009. Transportation and installation charges were incurred amounting Rs. 10,000 and Rs. 4,000 respectively. Dismantling charges of the old machine in place of which new machine was purchased amounted Rs. 10,000. Market value of the machine was estimated at Rs. 1,20,000 on 31st March 2010. While finalising the annual accounts, A values the machinery at Rs. 1,20,000 in his books. Which of the following concepts was violated by A? 

(a) Cost concept (b) Matching concept (c) Realisation concept (d) Periodicity concept.

Correct Answer : (a)

Reason Behind This : As per cost concept, A can not show market value in the books. He can show only original total cost in the books. He has only right to depreciate his fixed asset.

22. M/s ABC Brothers, which was registered in the year 2000, has been following Straight Line Method (SLM) of depreciation. In the current year it changed its method from Straight Line to Written Down Value (WDV) Method, since such change would result in the additional depreciation of Rs. 200 lakhs as a result of which the firm would qualify to be declared as a sick industrial unit. The auditor raised objection to this change in the method of depreciation. The objection of the auditor is justified because

(a) Change in the method of depreciation should be done only with the consent of the auditor (b) Depreciation method can be changed only from WDV to SLM and not vice versa (c) Change in the method of depreciation should be done only if it is required by some statute or change would result in more appropriate presentation of financial statement or for compliance with the accounting standard (d) Method of depreciation cannot be changed under any circumstances

Correct Answer : (c)

Reason Behind This : We can change method of depreciation as per the rules of accounting standard 1.

I am reproducing relevant para 26 of AS1 below for ready reference. "26. Any change in the accounting policies which has a material effect in the current period or which is reasonably expected to have a material effect in later periods should be disclosed. In the case of a change in accounting policies which has a material effect in the current period, the amount by which any item in the financial statements is affected by such change should also be disclosed to the extent ascertainable. Where such amount is not ascertainable, wholly or in part, the fact should be indicated." Learn more about accounting standard 1 at here
23. If cost of goods sold is Rs.80,700, Opening inventory Rs.5,800 and Closing inventory
Rs.6,000. Then the amount of purchase will be

(a) Rs.80,500 (b) Rs.74,900 (c) Rs.74,700 (d) Rs.80,900

Correct Answer : (d)


Reason Behind This : Calculate purchase from basic formula

cost of goods sold = opening stock + purchase + direct expenses - closing stock
or

Cost of goods sold - opening stock + closing stock = Purchase

24. Original cost = Rs. 1,26,000. Salvage value = 6,000. Useful Life = 6 years. Annual depreciation
under SLM will be
(a) Rs.21,000 (b) Rs.20,000 (c) Rs.15,000 (d) Rs.14,000 

Correct Answer : (b)

Reason Behind This : Annual Depreciation = {original cost - salvage value} / useful life

25. A new firm commenced business on 1st January, 2009 and purchased goods costing Rs. 90,000 during the year. A sum of Rs. 6,000 was spent on freight inwards. At the end of the year the cost of goods still unsold was Rs.12,000. Sales during the year Rs.1,20,000. What is the gross profit earned by the firm?

(a) Rs. 36,000 (b) Rs. 30,000 (c) Rs. 42,000 (d) Rs. 38,000

Correct Answer : (a)

Reason Behind This :

Cost of goods sold = 90000 + 6000 -12000

Gross profit = 120000 - 84000 =36000

26. X of Kolkata sends out goods costing Rs. 3,00,000 to Y of Mumbai at cost + 25%. Consignor’s expenses Rs. 5,000. 1/10th of the goods were lost in transit. Insurance claim received Rs. 3,000. The net loss on account of abnormal loss is


(a) Rs.27,500 (b) Rs.25,500 (c) Rs.30,500 (d) Rs.27,000

Correct Answer : (a)

Reason Behind This : Abnormal loss will be calculated on the cost of goods.

Abnormal loss = (goods cost + consignor's expenses for delivery ) / 10 - insurance claim received


27. Sun owed ` 2,000 to Moon. On 1st October, 2012, Sun accepted a bill drawn by Moon for the amount for 3 months. Before the due date, Sun approached Moon for renewal of the bill. Moon agreed on the conditions that ` 1,000 to be paid immediately together with interest on the remaining amount at 12% p.a. for 3 months and for the balance Sun accepted a new bill for 3 months. Later on, Sun became insolvent and 40% of the amount could be recovered from his estate. Bad debt amount will be
(a) ` 800 (b) ` 600 (c) ` 500 (d) None of the three.

Correct Answer : (b)

Reason Behind This : Sun was unable to pay his debt Rs. 2000. So, he took another contract.
Pay Rs. 1000 immediately and balance pay after 3 months with interest 12% p.a. for 3 months. But before 3 months, he became insolvent. A man became insolvent and question is showing that we got only 40% of his basic principle. So, bad debt is 60% of his balanced debt. 1000*60% = RS. 600

28. On admission of a partner, unrecorded investments worth ` 5000 and unrecorded
liability towards suppliers for `1500 will be recorded in 

(a) Revaluation A/c (b) Capital Accounts (c) Realisation A/c (d) None of the three 

Correct Answer : (a)

Reason Behind This : Because old partner will only get profit or loss through all business activities were done before coming of new partner. If there is any increase or decrease in these unrecorded assets and liabilities through revaluation account, it will be distributed between old partners.

29. Debts written off as bad if recovered subsequently are
(a) Credited to Bad Debt recovered A/c (b) Debited to Profit and Loss A/c (c) Credited to Debtors A/c (d) None of the above 

Correct Answer : (a)

Reason Behind This : When we receive the cash from debtor whose fund was declared as bad debt, following entry will pass.

cash account Dr.
Bad Debt Recovered account Cr.

It means, recovered amount will be credited to bad debts account in the ledger.

30. It is essential to standardize the accounting principles and policies in order to ensure
(a) Transparency (b) Consistency (c) Comparability (d) All of the above

Correct Answer : (d)

Reason Behind This : Transparency, consistency and comparability all are necessary for making financial statement better. Lack of any one of these principles, we can not say the financial statements are showing fair and true view of the financial position of organisation.

No comments: