PART A - (25M)

1.If a company produces and sales 1000 units of a product in a year using 20 units of raw material per
product produced, calculate the material required to be purchased when:

Opening raw material stock: 1200 units

Closing raw material stock: 10% of material required for production for the year
A. 20800 units
B. 19200 units
C. 20000 units
D. 19000 units
Answer: 20800 units
2. Out of the following what will come before annual depreciations under straight line?
A. Total Depreciation + Plus installation charges cost
B. Acquisition Cost – Scrap value ÷ Expected life
C. Acquisition cost + Scrap value ÷ Expected life
D. None of these
Answer: Acquisition Cost – Scrap value ÷ Expected life
3. Functional budgets are prepared for specific functions within an organization, such as:
a) Sales and marketing
b) Human resources
c) All functions
d) Depreciation calculation

Answer: c) All functions

4. What is segment reporting in annual reports?
a) Reporting on divisions or units of a company
b) Reporting on customer feedback
c) Reporting on future projects
d) Reporting on inventory levels

Answer: a) Reporting on divisions or units of a company

5. What is the purpose of "notes to financial statements" in an annual report?
a) To provide a summary of the CEO's achievements
b) To explain accounting policies and provide additional information
c) To show comparative financial data
d) To calculate depreciation expenses

Answer: b) To explain accounting policies and provide additional information

6. In a comparative statement, financial data is typically presented for:

a) One period only
b) Two or more periods
c) Current fiscal year only
d) Random periods

Answer: b) Two or more periods

7. Management discussion and analysis (MD&A) in annual reports provides insights into:
a) The CEO's personal life
b) The company's strategic goals and performance
c) Legal disputes
d) Depreciation methods
Answer: b) The company's strategic goals and performance
8. What are some recent trends in accounting practices?
a) Moving toward paper-based record keeping
b) Increasing reliance on manual calculations
c) Embracing automation and data analytics
d) Decreasing transparency in financial reporting
Answer: c) Embracing automation and data analytics
9. Which accounting principle emphasizes recording expenses when they are incurred rather than when
they are paid?
a) Consistency principle
b) Accrual principle
c) Matching principle
d) Materiality principle
Answer: b) Accrual principle

10. What is the main purpose of the double-entry accounting system?

a) To track only expenses
b) To ensure that assets always equal liabilities
c) To maintain financial records
d) To calculate depreciation
Answer: c) To maintain financial records
11. What does a general ledger primarily contain?
a) Daily transaction records
b) Trial balance
c) Historical cost of assets
d) Comparative financial data
Answer: a) Daily transaction records
12. Common size analysis expresses each line item in the financial statement as a percentage of:
a) Total liabilities
b) Total equity
c) Total expenses
d) Total revenue
Answer: d) Total revenue
13. What does the trend analysis focus on when assessing a company's financial performance?
a) Short-term results
b) Historical data
c) Consistency over time
d) Future projections
Answer: c) Consistency over time
14. What does the debt to equity ratio measure in ratio analysis?
a) A company's liquidity
b) A company's profitability
c) The extent of financial leverage
d) Depreciation expenses
Answer: c) The extent of financial leverage
15. In ratio analysis, the current ratio is calculated as:
a) Current assets divided by current liabilities
b) Total assets divided by total liabilities
c) Net income divided by total revenue
d) Depreciation expenses divided by total assets
Answer: a) Current assets divided by current liabilities
16. Cash flow from operating activities in the Cash Flow Statement primarily includes:
a) Investments in securities
b) Cash received from customers
c) Cash paid for long-term debt
d) Depreciation expenses
Answer: b) Cash received from customers

17. What does "Functional Budgets" refer to in budgeting?

a) Budgets for different functional departments or areas within an organization
b) Budgets for specific functions like marketing only
c) Budgets for individual employees
d) Depreciation budget
Answer: a) Budgets for different functional departments or areas within an organization

18. Flexible budgets are designed to:

a) Stay fixed throughout the fiscal year
b) Accommodate changes in activity levels
c) Only consider fixed costs
d) Determine depreciation expenses
Answer: b) Accommodate changes in activity levels

19. In the context of segment reporting, what is an operating segment?

a) Any division or business unit
b) Any employee within the organization
c) A geographical location of the company
d) A regulatory authority
Answer: a) Any division or business unit

20. "Notes to financial statements" in an annual report are often used to provide details on:
a) Personal information about employees
b) Subsidiary companies' performance
c) The CEO's hobbies
d) Depreciation methods
Answer: b) Subsidiary companies' performance

21. In a comparative statement, financial data is typically presented for:

a) One period only
b) Two or more periods
c) Five consecutive years
d) The next fiscal year
Answer: b) Two or more periods

22. Management discussion and analysis (MD&A) often discusses:

a) Employee personal matters
b) The company's strategies, challenges, and future plans
c) The political landscape
d) Depreciation calculations
Answer: b) The company's strategies, challenges, and future plans
23. What is a recent trend in accounting related to sustainability reporting?
a) Decreased emphasis on environmental and social factors
b) Greater focus on financial metrics only
c) Integration of environmental, social, and governance (ESG) factors into reporting
d) Ignoring transparency in financial reporting
Answer: c) Integration of environmental, social, and governance (ESG) factors into reporting
24. What is the purpose of the accounting principle known as the "conservatism principle"?
a) To overstate assets and income
b) To understate liabilities and expenses
c) To maximize shareholder returns
d) To facilitate depreciation calculations
Answer: b) To understate liabilities and expenses
25. Which type of budgeting approach involves setting budgets based on the assumption that all activities
will start from zero, and departments must justify their expenses each year?
a) Incremental budgeting
b) Activity-based budgeting
c) Zero-Based Budgeting (ZBB)
d) Flexible budgeting
Answer: c) Zero-Based Budgeting (ZBB)
PART(B) – Short Answer Questions – (5X5 = 25)
1. John is a sole proprietor having a provision store. Following are the transactions during the month of
January, 2021. Journalize them.

JAN Rs.
Commenced business with cash 80,000
Deposited cash with bank 40,000
Purchased goods by paying cash 5,000
Purchased goods from Lime & Co. on credit 10,000
Sold goods to Joy and received cash 11,000
Paid salaries by cash 5,000
Paid Lipton & Co. by cheque for the purchases made on 4th Jan.
Bought furniture by cash 4,000
Paid electricity charges by cash 1,000
Bank paid insurance premium on furniture as per standing instructions 300
2. Prepare Trial Balance for the following Balances as on 31st March 2021

Balances ₹

Cost of Goods Sold 5,20,000

Opening Stock 50,000

Closing Stock 50,000

Salary and Wages 50,000

Sales 8,00,000

Plant & Machinery 2,00,000

Drawing 50,000

Investment 4,30,000

Creditors 1,00,000

Capital 4,00,000

3.

Amount
Particulars
(Rs)

Share Capital 20,000

Retained Earnings 10,000

Short Term Debt 5,000

 Long Term Debt 6,000

Total Assets 40,000

Compute Net Worth From the above data

4. What is the main objective of accounting? What are the 3 main functions of accounting?
5. Answer the following questions:
a) Mention two characteristics of assets?
b) What are intangible assets?
c) Give two examples of tangible and intangible assets?

PART (C) – Long Answer Questions (2X10 = 20)

1. Ms. Anisha has the following transactions in the month of July. Record them in the journal, show
postings in the ledger, and balance the accounts.

July 1st : Anisha started the business with a capital of 75,000

1st : Purchased goods from Roy on credit 25,000
2nd : Sold goods to Ram 20,000
3rd : Purchased goods from Ann 15,000
4th : Sold goods to Tanvi for cash 16,000
5th : Goods returned to Roy 2,000
6th : Bought furniture for 15,000
7th : Bought goods from Zain 12,000
8th : Cash paid to Roy 10,000
9th : Sold goods to John 13,500
10th : Goods returned from Ram 3,000
11th : Cash received from John 5,500
12th : Goods taken by Anisha for domestic use 3,000
13th : Returned Goods to Zain 1,000
14th : Cash received from Ram 12,000
15th : Bought machinery for 18,000
16th : Sold part of the furniture for 1,000
17th : Cash paid for the purchase of bicycle for Anisha's son
1,500
 19th : Cash sales 15,000
20th : Cash purchases 13,500

2. BCC Advertising, owned by Ms Ramya, provides advertising consulting services. During January
2021, the following events occurred:

Jan. 2 Owner contributed Rs. 50,000 and a new computer costing Rs. 30,500 to start his business.
Jan. 4 Office supplies were purchased on account for Rs. 5,000.
Jan. 10 BCC Advertising obtained 12% 5-year loan of Rs. 30,000 from the bank.
Jan. 12 BBC Advertising paid the utility bills for Rs. 3,750.
Jan. 15 Paid the Rs. 4,000 in Accounts Payable from the purchase of office supplies on Jan. 4.
Jan. 24 Advertising services completed in January were billed to client Aruns’ Cafe at Rs. 19,300.
Jan. 27 BBC Advertising received Rs. 6,500 from Aruns’ Cafe, a client, as payment on account.
Jan. 30 Ms Ramya withdrew Rs. 7,000 of cash for personal use.

You are required to create Journal Entry, General ledger account and make a trial balance?