TYBCOM SEM 5 Financial Accounting (Objective Questions with Solution) (Apr 2024, 2023, 2022 Nov 2023, 2022, 2019)

 Paper/Subject Code: 23101/Financial Accounting and Auditing VII - Financial Accounting

TYBCOM SEM 5 

Financial Accounting 

(Objective Questions with Solution)

(Apr 2024, 2023, 2022 Nov 2023, 2022, 2019)

 April 2024

1A) Match the following items from column A with column (any ten): (10)

Column A	Column B
1) Capital Reserve	a) No new company is formed
2) Provision for Income Tax	b) Consolidation of Shares
3) Sales Commission	c) Debit Side of Capital Reduction a/c
4) Internal Reconstruction	d) other expenses
5) Conversion of Shares from smaller denomination to larger denomination	e) Debit side of Bank a/c
6) Payment of Reconstruction Exреnses	f) Reports certain types of wrongdoing
7) Buyback less than 10% of paidup equity capital and free reserves	g) short term provision
8)  Escrow Account	h) Authorized by Board of Directors
9) Profit on Sale of Investment	i) Required for buyback process
10) Pre-acquisition dividend	j) Debit Sild of Investment a/c
11) Whistle blower	k) 32% of Net Profit
12) CSR	I) Credited to Investment a/c
	m) Reserve & Surplus

Ans:

Column A	Column B
1) Capital Reserve	m) Reserve & Surplus
2) Provision for Income Tax	g) short term provision
3) Sales Commission	d) other expenses
4) Internal Reconstruction	a) No new company is formed
5) Conversion of Shares from smaller denomination to larger denomination	b) Consolidation of Shares
6) Payment of Reconstruction Exреnses	c) Debit Side of Capital Reduction a/c
7) Buyback less than 10% of paidup equity capital and free reserves	h) Authorized by Board of Directors
8)  Escrow Account	i) Required for buyback process
9) Profit on Sale of Investment	I) Credited to Investment a/c
10) Pre-acquisition dividend	j) Debit Sild of Investment a/c
11) Whistle blower	f) Reports certain types of wrongdoing
12) CSR	k) 32% of Net Profit

Q.1 B) State whether the following statements are true or false (any ten):    (10)

1) Income received in advance should be recorded in Other Current Liabilities

Ans: True

2) Mining Rights is a intangible Asset

Ans: True

3) Finance cost means the cost incurred by a company on borrowings loans taken.

Ans: True

4) Internal Reconstruction needs to represent a true and fair view of the financial position of the company.

Ans: True

5) Alteration of share capital is a method of internal reconstruction

Ans: True

6) Upon surrender of shares by shareholder, the share capital account should be debited.

Ans: True

7) To increase earnings per share in one of the objectives of buyback of shares

Ans: True

8) Dividend Equalization Reserve is a part of divisible profit and it is available for buyback of shares

Ans: False

9) Equity Share is an example of fixed earning security.

Ans: False

10) Long term investments are valued at cost or market value whichever is lower. 

Ans: True

11) Ethical behavior should be practiced with employees only.

Ans: False

12) Unethical behavior increases reputation of the company.

Ans: False

April 2023

Q1 A State whether the following statements are True or False (Any Ten):     (10)

1) AS 14 is applicable for the Investment Accounting

Ans: False

2) Partly paid-up shares can be bought back

Ans: False

3) General Reserve is a non-free reserve

Ans: False

4) Sundry Creditors are shown in Trade Payables

Ans: True

5) Company is not liquidated in Internal Reconstruction

Ans: True

6) Company has to spend 5% of the Net Profit for the Corporate Social responsibility

Ans: False

7) Ethics are the rules which should be followed by all

Ans: False

8) Profit and Loss Account and Security premium are also the sources of buy back of shares 

Ans: True

9) Loss on sale of investment is debited to profit and Loss Account

Ans: True

10) In Company Balance Sheet, Capital Reserve is shown in the head of Share Capital.

Ans: False

11) Claims forgone by creditors are debited in the capital reduction account

Ans: True

12) Computer Software is the intangible asset.

Ans: True

Q1 B Rewrite the following sentences choosing the correct answer (Any Ten):    (10)

1) Interest on Debenture is calculated on __________ 

(Market Price /Face Value /Fair value) 

Ans: Face Value

2) Bills Payable is shown under __________ 

(Inventories/Other current Liabilities/Trade Payables)

Ans: Other current Liabilities

3) The word 'ethics' is derived from __________ (Latin/French/Greek)

Ans: Greek

4) Statutory Audit is conducted by __________ (Director/internal Auditor/External Auditor)

Ans: External Auditor

5) Employee Salary is shown under __________

(Finance Costs/Employee Benefits Expense/Other Expenses) 

Ans: Employee Benefits Expense

6) Interest on Bank Loan paid is shown under  __________ 

(Other Expenses/Other Income/Finance Costs)

Ans: Finance Costs

7) Sub division of shares is __________

(Value of shares reduced/ Value of Shares Increased/No Changes in Value of shares)

Ans: Value of shares reduced 

8) Debt Equity Ratio after buy back of shares should be in__________  

(1:1/1:2/2:1) 

Ans: 2:1

9) Surrender of shares means  __________

(Giving up possession of shares/Forfeiture of shares/Buyback of shares)

Ans: Giving up possession of shares

10) Dividend on Equity Shares are ascertained on the basis of __________ 

(Authorized Capital/Paid up Capital/Issued Capital)

Ans: Paid up Capital

11) Before Buy back all the shares must be __________  

(Fully paid up/ Partly paid up/ Fully subscribed)

Ans: Fully paid up 

12) Cheque on hand should be shown under the head of __________

(Other Current Assets/Inventories/ Cash and Cash Equivalents)

Ans: Cash and Cash Equivalents

November 2023

Q. 1 a) State whether the following statements are true or false (any 10) : (10)

1) Short term provision is a part of Non Current Liabilities.

Ans: False

2) Contingent liabilities are shown in Balance Sheet under the head Current liabilities.

Ans: False

3) Change in Inventory = Opening Stock of Raw Material less Closing Stock of Raw Material.

Ans: False

4) If the buyback exceeds 10% of the paid-up capital, the board of directors has the authority to approve it by resolution at a meeting.

Ans: False

5) The debt equity ratio must be more than 2:1 after buyback.

Ans: False

6) The buyback must be completed within 15 months from the date of passing the resolution.

Ans: True

7) In the case of internal reconstruction, no new company is created.

Ans: True

8) Alteration of share capital is one of the methods of Internal Reconstruction.

Ans: True

9) Interest is always calculated on the face value of the securities.

Ans: False

10) Profit from the sale of an investment should be debited to the investment account.

Ans: False

11) CSR stands for Corporate Social Responsibility.

Ans: True

12) Ethics is a branch of moral philosophy that guides people about the basic human conduct.

Ans: True

Q. 1 b) Match the following items from column A with column B (any ten):     (10)

Column A	Column B
1) Debentures	a) Subdivision of Shares
2) Mining Rights	b) Not available for buyback
3) Conversion of shares of larger denomination in to shares of smaller denomination	c) Without Interest
4) Credit balance of Capital Reduction account	d) Nothing is to be recorded in cost column
5) Internal Reconstruction	e) Reports certain types of wrongdoing
6) Escrow Account	f) Moral Principles and Values
7) Revaluation Reserve	g) Example of Intangible Asset
8) Investment in Equity Shares	h) Capital Reserve
9) Cum Interest	i) Long term Borrowings
10) Bonus Shares received	j) Example of Variable earning security
11) Whistle blower	k) With Interest
12) Ethics	1) Necessary to open for Buyback Process
	m) Process of reorganization of a company

Ans:

Column A	Column B
1) Debentures	i) Long term Borrowings
2) Mining Rights	g) Example of Intangible Asset
3) Conversion of shares of larger denomination in to shares of smaller denomination	a) Subdivision of Shares
4) Credit balance of Capital Reduction account	h) Capital Reserve
5) Internal Reconstruction	m) Process of reorganization of a company
6) Escrow Account	1) Necessary to open for Buyback Process
7) Revaluation Reserve	b) Not available for buyback
8) Investment in Equity Shares	j) Example of Variable earning security
9) Cum Interest	k) With Interest
10) Bonus Shares received	d) Nothing is to be recorded in cost column
11) Whistle blower
12) Ethics	f) Moral Principles and Values

November 2022

Q.1 A) Select the appropriate answer from the following. [Any 10] : (10)

1) Interest Accrued but not due on bank loan appears in Balance Sheet under the head of __________

a) Trade Payables

b) Short Term Borrowings

c) Other Current Liabilities

d) Short Term Provisions

2) Arrears of Preference dividend is not paid in the Internal Reconstruction Scheme,

a) Debited in Capital Reduction Account

b) Credited in Capital Reduction Account

c) No entry appears

d) Debited in Preference share Capital Account

3) Investment Accounting is governed by

a) AS 13

b) AS 11

c) AS 14

d) AS 2

4) Buy back of shares results in __________

a) Reduction of Share Capital

b) Increase in Share Capital

c) Increase in Goodwill

d) Increase in General Reserve

5) One of the following is not regarding the Internal Reconstruction.

a) No Formation of a New Company

b) Reduction of Liability

c) Reduction of Capital

d) Liquidation of Company

6) Whistle Blowing is

a) Whistle for Traffic clear

b) An act of involving in illegal Activities

c) Not Reporting illegal activities

d) An act of reporting illegal Activities

7) CSR stands for

a) Co Operative Social Responsibility

b) Corporate Social Responsibility

c) Common Service Responsibility

d) Corporate Service Reporting

8) Copy Rights is shown in Company Balance Sheet under the head of

a) Other Non Current Assets

b) Intangible Assets

c) Inventories

d) Current Investments.

9) One of the following is not a fixed income investment

a) Debentures

b) Equity Shares

c) State Government Bonds

d) Central Government Bonds

10) One of the following is not the sources of buy back of shares

a) Capital Redemption Reserve

b) Capital Reserve

c) Profit and Loss Account

d) Statutory Reserve

11) Ex interest price and Cum interest price are the prices relating to

a) Goodwill

b) Equity Shares

c) Preference Shares

d) Debentures

12) One of the following is not the ethics of Professional Accountant

a) Accuracy

b) Accountability

c) Values

d) Frauds

Q.1 B) Match the following items from table A and B (Any 10) : (10)

Column A	Column B
1. Balance in Capital Reduction Account	a) Added to the cost of investment
2. Goodwill written off	b) Increase in number of shares
3. Partly paid Equity Shares	c) Set of Standards and Principles
4. Wages and Bonus	d) Premium on buy back of shares written off
5. Loose tools	e) Excluding interest
6. Pre-Acquisition dividend	f) Transferred to Capital Reserve Account
7. Post-Acquisition Dividend	g) Cannot be bought back
8. General Reserve	h) Employees Benefit Expenses
9. Security Premium	i) Inventories
10. Code of ethics	j) Revenue Receipts
11. Sub division of Shares	k) Debited to Capital Reduction Account
12. Ex Interest price	1) Free Reserve
	m) Transferred to General Reserve Account

Ans:

Column A	Column B
1. Balance in Capital Reduction Account	f) Transferred to Capital Reserve Account
2. Goodwill written off	k) Debited to Capital Reduction Account   b) Increase in number of shares
3. Partly paid Equity Shares	g) Cannot be bought back    c) Set of Standards and Principles
4. Wages and Bonus	h) Employees Benefit Expenses
5. Loose tools	i) Inventories  e) Excluding interest
6. Pre-Acquisition dividend	a) Added to the cost of investment
7. Post-Acquisition Dividend	j) Revenue Receipts
8. General Reserve
9. Security Premium	d) Premium on buy back of shares written off
10. Code of ethics
11. Sub division of Shares
12. Ex Interest price	1) Free Reserve

April 2019

Q.1A) State whether the following statements are True or False (Any 10) (10)

1. In Fixed Assets Note, Opening Net Block Opening Gross Block - Opening Depreciation.

Ans: False.

2. Shareholders Funds are always non-current Liabilities.

Ans: False.

3. Goodwill is classified as Fixed Asset under Schedule III of the Companies Act

Ans: False.

4. Security Premium can be transferred to Capital Reduction Account.

Ans: True

5. A company can subdivide shares of large denomination into shares of smaller denomination.

Ans: True

6. After buy back of equity shares, the debt-equity ratio should not exceed 2:1.

Ans: True

7. Only fully paid up equity shares can be bought back.

Ans: True

8. Interest is calculated on Market Value of securities.

Ans: Fa

9. Ex-Interest price Less Accrued interest Cost of the investment.

Ans: True

10. Corporate Social Responsibility policy to be undertaken by the company are specified in the Companies Act, 2013.

Ans: True

11. The Professional Code of Ethics is voluntary for professional body members.

Ans: False

12. Lowest degree of accountants' ethical behavior leads to creative accounting.

Ans: True

Q1B) Match the following Column A with Column B (any 10)

COLUMN A	COLUMN B
1. Sundry Creditors	Company is liquidated
2. Currents Assets	Variable Income Bearing Securities
3. Internal Reconstruction.	Shares of 1 each converted into shares of ₹10 each
4. Consolidation	Is credited to Profit and Loss A/c
5. No Journal entry is required	Investment Accounting
6. Surrender of shares	For cancelling un-issued shares
7. Equity shares	Source of Buy-Back
8. Profit on Sale of Investments	Giving up possession of shares
9. Accounting Standard 13	Current Liabilities
10. One of the Objective of Buy-Back of Equity Shares	Rules expected to be followed by all
11. Free reserve + Securities Premium	Advance recoverable in Cash
12. Ethics	Increase in the earning per share
	Company is not liquidated
	Rules that must be followed by all

Ans:

COLUMN A	COLUMN B
1. Sundry Creditors	Current Liabilities
2. Currents Assets	Advance recoverable in Cash
3. Internal Reconstruction.	For cancelling un-issued shares
4. Consolidation	Company is not liquidated
5. No Journal entry is required	Company is liquidated
6. Surrender of shares	Giving up possession of shares
7. Equity shares	Source of Buy-Back
8. Profit on Sale of Investments	Is credited to Profit and Loss A/c
9. Accounting Standard 13	Investment Accounting
10. One of the Objective of Buy-Back of Equity Shares	Increase in the earning per share
11. Free reserve + Securities Premium	Variable Income Bearing Securities
12. Ethics	Rules expected to be followed by all

 

November 2019

Q.1. (A) State whether the following statements are True or False (any Ten) :     (10)

1. The buy hack of shares has to be authorized by Articles of Association.

Ans: True

2. Internal reconstruction involves reduction in capital.

Ans: True

3. Amount paid on Forfeited shares is added to paid-up capital in the Balance Sheet.

Ans: False

4. When the rights are sold without subscribing, no entry is made in Investment A/c.

Ans: True

5. Equity shores can be bought back out of Free reserve.

Ans: True

6. Capital Reserve is a non-free reserves.

Ans: True

7. Any company can undertake capital reduction.

Ans: False

8. Liability in respect of bills discounted is not an Example of contingent liability.

Ans: False

9. Short-term investments are carried at its cost price only.

Ans: False

10. No company shall buy back its own shares unless the buyback is less than 10%, of the total paid-up capital and free Reserves of the Company.

Ans: False

11. In Internal reconstruction, amount of shares surrendered by shareholders is transferred to General Reserve Account.

Ans: False

12. In Ethical views, ethics remain same at all the time and every place

Ans: False

Q.1.(B) Fill in the blanks choosing the correct alternative: (any ten)            (10)

1. As per AS 13, the cost of investment sold is to be calculated as per ___________ method.

(FIFO, LIFO, weighted average, simple average) 

Ans: FIFO

2. The components of workplace ethical behavior are _________. 

( honesty, legality, disclosure, all of these)

Ans: all of these

3. The carrying amount of long term investment is to be shown at _________.

(cost, market value, face value, cost or market value whichever is lower)

Ans:  cost

4. Charging cost of family dimmer to be company is  _________.

(misappropriation of assets, fraudulent reporting, ethical reporting, all of these)

Ans: misappropriation of assets

5. The amount not collected by shareholders should be shown as _________.

(current liabilities, capital reserve, share capital, reserve capital)

Ans: share capital

6. Before buyback, all the shares must be _________.

(partly paid up ,fully paid up ,fully subscribed, forfeited)

Ans: fully paid up

7. The ethical issues faced by the accountants include _________.

(accuracy, accountability, values and moral, all of these)

Ans: all of these

8. Payment of dividend is based on _________ capital.

(paid up, authorized, issued, reserve) 

Ans: paid up

9. Schedule III of Companies Act 2013 requires profit and loss account to be prepared in __________.

(horizontal form, vertical form, convenient form, columnar form)

Ans: vertical form

10. Interim dividend of a company can be declared by ________

(shareholders, board of directors, managing director, SEBI)

Ans: board of directors

11. The scheme of Internal reconstruction required sanction from __________. 

(shareholders, articles of association, court, all of these)

Ans: all of these

12. Z Lad, has 8000 equity shares of Rs. 100 each fully paid. Each share is sub-divided into equity shares of Rs.10 each. The number of share after sub-division will be _______

(8000, 80000, 75000, 60000)

Ans: 80,000 (Each ₹100 share is divided into 10 shares of ₹10 each, so 8000 × 10 = 80,000).