Model Question Paper
Subject Code: BCA4040
Subject Name: PRINCIPLES OF FINANCIAL ACCOUNTING AND MANAGEMENT
Credits: 4 Marks: 140
Part A: (Descriptive type Questions. Attempt any 4 questions. Each question carries 10 marks)
[4 x 10 = 40 Marks]
1. Define Accounting. Briefly explain the ‘Entity Concept’ and ‘Money Measurement Concept’ of accounting.
2. What is rectification of errors? List and explain the stages where the errors are deducted for rectification.
3. Explain the various steps in financial planning
4. What is inventory management and explain the following
a. Economic Order Quantity
b. Reorder Point
5. Explain the different steps involved in preparation of Fund Flow Statements.
6. What is cost? Discuss the factors involved in estimating the cost.
Part B (One mark questions) [ 50 x1 = 50 Marks]
1. An entity that has neither the intention nor the necessity of the liquidation or of curtailing materially the scale of the operations:
a. The cost concept
b. The Going Concern concept 3
c. The accrual concept
d. The periodicity concept
2. Expenses are recognized by following the:
a. Matching principles
b. Accrual concept
c. Cost concept
d. Periodicity Concept
3. If furniture is purchased in cash, the effect is .
a. Increase in asset
b. Increase in one asset and decrease in another asset
c. Increase in one asset and decrease in liability
d. Increase in current liability
4. Purchased stationery worth Rs. 2500. The transaction results in.
a. Increase in expenses and no effect in asset
b. Increase in expenses and decrease in asset
c. Increase in expenses and increase in liability
d. Increase in expenses and decrease in liability
5. Two control amounts are maintained in the general ledger.
a. Debtors & creditors account
b. Debtors & general ledger
c. Creditors & general ledger
d. Debtors & cash ledger
6. To close 'Rent Received Account' at the end of the year, what closing entry is drawn in Journal proper?
a. Rent Received account Dr To P & L account
b. P & L Account Dr To Rent Received Account
c. Rent Received Account Dr To Total rent account
d. Trading Account Dr To Rent Received account
7. Subsidiary books are also books of original entry because .
a. They contain recorded of transaction
b. They contain original record of transaction
c. They contain non-business transaction
d. They contain record of subsidiary transaction
8. Sales made to John Rs.5120 is wrongly taken as Rs.1520.What rectification entry is passed?
a. John account Dr 5,120 To Sales account 5,120
b. Sales account Dr 1,520 To John account 1,520
c. John account Dr 3,600 To Sales account 3,600
d. Sales account Dr 3,600 To John account 3,600
9. Why is transferring entry needed?
a. To transfer certain minor accounts to a related major head of account.
b. To transfer one account to a related account
c. To transfer one entry to another book
d. To transfer an entry to next accounting year.
10. Weath maximization is possible only when an organization……value of share
a. Increases
b. Decreases
c. Normalises
d. None
11. Wealth maximization to based on.
a. Cash flow
b. Accounting profit
c. Fund flow
d. None
12. Long term investments should be normally created out of
a. Short term basis
b. Medium term basis
c. Long term basis
d. None
13. Capitalization refers to the composition of ……….. funds
a. Short term
b. Long term
c. Mid term
d. None
14. Overcapitalization refers to
a. True value of assets exceeds total capital
b. True value equals total capital
c. Total capital exceeds true value of assets
d. Total capital equals true value
15. Under capitalised is identified when
a. Actual is less than proper capitalization
b. Actual is greater than proper capitalization
c. Proper capitalization is less than actual
d. None
16. Positive net working capital indicate the use of … finance
a. Immediate
b. Concurrent
c. Spontaneous
d. None
17. Temporary working capital is also known as………… working capital
a. Variable
b. Nominal
c. Serial
d. Social
18. In spontaneous finance , reduction in……. is noticed
a. Fixed assets
b. Current assets
c. Working assets
d. Idle assets
19. Cash conversion cycle show the …….interval over which non-spontaneous sources of working capital must be obtained .
a. Space
b, Lunch
c. Sales
d. Time
20. Average inventory is obtained as ……………... stock
a. Opening + closing
b. Opening / closing
c. Opening x closing
d. Opening closing / 2
21. Current ratio deals with
a. Short-term obligation
b. Long-term obligation
c. Mid-term obligation
d. Mutual obligation
22. Current ratio is
a. current assets – current liability
b. current assets + current liability
c. current assets * current liability
d. current asset / current liabilities
23. Acid test ratio excludes
a. Capital
b. Asset
c. Liability
d. Inventory
24. Capital structure affects a firm's
a. Income.
b. Value
c. Profit
d. Saving
25. Stock turn over ratio evaluation the efficiency to manage
a. Debt
b. Stock
c. Cash
d. Current asset
26. Debtors are include in
a. Financial account
b. Current account
c. Cost account
d. Management account
27. DTO involves in debt collection of
a. Velocity
b. Veracity of
c. Capacity
d. None
28. Decrease in WC will be the result of decrease in
a. CL
b. FA
c. FL
d. CA
29. Changes in CL are _____________ correlated to the changes in WC
a. Diagonally
b. Inversely
c. Directly
d. Proportionally
30. Transactions that increase the working capital are
a. Sources of funds
b. Application of funds
c. Use of funds
d. Usage of funds
.
.
.
.
.
.(One mark question continued till 50)
Part C (Two mark questions) [ 25x 2= 50 Marks]
1. The concept tells that to recognize revenue it has to be realized. It does not demand that the revenue has to be received in cash. a. Concept of Prudence
b. The realization concept
c. The matching concept
d. Accrual concept
2. The concept of recording assets and liabilities at historical cost is known as a. Cost Concept
b. Going concern concept
c. Money measurement concept
d. Accrual concept
3. If liabilities to outsiders are more than assets of a business, how do you account for owner's equity?
a. Owner's equity shows nil balance
b. Owner's equity does not appear in the balance sheet
c. It shows excess of loss, having eaten away capital and is shown on asset side
d. Owner's equity is not there and so business is closed
4. The left hand side of the cash book shows.
a. Cash & bank disbursement
b. Cash & bank disbursement & discounts received
c. Cash & bank receipt
d.Cash & bank receipts & discount allowed.
5. Business cash is withdrawn by proprietor for personal use. How does this affect accounting equation?
a. Cash A/c on asset side and capital A./c on liabilities side are reduced by the same amount
b. Cash account is reduced and drawings account is increased
c. Cash account is not affected at all
d. Owner's account is increased and cash A/c balance is reduced
6. John is a creditor to whom Rs 5000 is due, If Rs 3000/- is paid to him, what entry do you make
a. Creditor are Rs 3000 To cash a/c 3000
b. John a/c Dr 5000 To cash a/c 3000
c. cash a/c Dr 3000 To john 3000
d. John a/c Dr 3000 To cash a/c 3000
7. If goods are bought from sundar and co. for Rs 1000 for cash what entry is recorded
a. Sundar and co a/c To purchase are
b. Purchase are Dr To Sundar and co are
c. Sunder a/c Dr To goods are
d. Goods a/c Dr To cash a/c
8. A trial balance will not reveal the following error.
a. A credit sale of Rs.700 to Uday is debited to Uday account only.
b. A credit sale of Rs. 700 made to Uday, posted as debit in the sale account as Rs.700 and credit Uday account Rs.70
c. A cash sale of Rs. 1000, posted as credit sale of Rs. 1000 and debited Cash account by Rs. 100
d. A cash sale of Rs100 posted to the credit sales account only.
9. Identify in the following, where the error of duplication is committed.
a. Radheshyam a/c is debited by Rs. 672 instead of 762
b. Manorama a/c is credited by Rs. 6,770 instead of crediting Manojrama a/c.
c. Kumar a/c shows Rs.574 debited twice for the same transaction
d. Tamal Kanti Roy's is debited by Rs. 17,000 without any corresponding credit entry to any account
10. Financial management is concerned with procurement and effective utilization of funds for the benefit of the: a. Employees
b. Stakeholders
c. Promoters
d. Employees and Stakeholders
11. To establish any business the two main sources of funds are debt and equity. To determine the propotion of debt and equity we formulate; a. Economic plan
b. Financing plan
c. Budget plan
d. Business goal, mission and vision
12. The cardinal rule of efficient financial management is:
a. Profit maximization
b. Shareholder's value maximization
c. Creating real assets
d. Both A and B
13. Through financial planning………….. of asset is enhanced
a. Selectivity
b. Capacity
c. Normality
d. Productivity
14. Short term and long term objectives are needed for to operate in ……..environ a. Dynamite
b. Dynamic
c. Dynasty.
d. None
15. Working Capital is the result of
a. Current assets – current liabilities
b. Current assets + current liabilities
c. Current assets / current liabilities
d. Current assets * current liabilities
16. Acid test ratio is
a. Current assets –stock / current liabilities
b. Current assets / current liabilities
c. Current assets + stock / current liabilities
d. None
17. High debt ratio indicates
a. Too much of equity
b. Too much of debt
c. Too much of cash
d. Too much of risk
18. Redeemable preference shares are taken as debt of
a. Long term
b. Short term
c. Medium
d. None
19. Lower debt equity ratio indicates
a. Comfort zone
b. Conflict zone
c. Complimentary zone
d. Confusion zone
20. Excess of current assets over current liabilities is known as
a. Positive WC
b. Negative WC
c. WC
d. None
.
Subject Code: BCA4040
Subject Name: PRINCIPLES OF FINANCIAL ACCOUNTING AND MANAGEMENT
Credits: 4 Marks: 140
Part A: (Descriptive type Questions. Attempt any 4 questions. Each question carries 10 marks)
[4 x 10 = 40 Marks]
1. Define Accounting. Briefly explain the ‘Entity Concept’ and ‘Money Measurement Concept’ of accounting.
2. What is rectification of errors? List and explain the stages where the errors are deducted for rectification.
3. Explain the various steps in financial planning
4. What is inventory management and explain the following
a. Economic Order Quantity
b. Reorder Point
5. Explain the different steps involved in preparation of Fund Flow Statements.
6. What is cost? Discuss the factors involved in estimating the cost.
Part B (One mark questions) [ 50 x1 = 50 Marks]
1. An entity that has neither the intention nor the necessity of the liquidation or of curtailing materially the scale of the operations:
a. The cost concept
b. The Going Concern concept 3
c. The accrual concept
d. The periodicity concept
2. Expenses are recognized by following the:
a. Matching principles
b. Accrual concept
c. Cost concept
d. Periodicity Concept
3. If furniture is purchased in cash, the effect is .
a. Increase in asset
b. Increase in one asset and decrease in another asset
c. Increase in one asset and decrease in liability
d. Increase in current liability
4. Purchased stationery worth Rs. 2500. The transaction results in.
a. Increase in expenses and no effect in asset
b. Increase in expenses and decrease in asset
c. Increase in expenses and increase in liability
d. Increase in expenses and decrease in liability
5. Two control amounts are maintained in the general ledger.
a. Debtors & creditors account
b. Debtors & general ledger
c. Creditors & general ledger
d. Debtors & cash ledger
6. To close 'Rent Received Account' at the end of the year, what closing entry is drawn in Journal proper?
a. Rent Received account Dr To P & L account
b. P & L Account Dr To Rent Received Account
c. Rent Received Account Dr To Total rent account
d. Trading Account Dr To Rent Received account
7. Subsidiary books are also books of original entry because .
a. They contain recorded of transaction
b. They contain original record of transaction
c. They contain non-business transaction
d. They contain record of subsidiary transaction
8. Sales made to John Rs.5120 is wrongly taken as Rs.1520.What rectification entry is passed?
a. John account Dr 5,120 To Sales account 5,120
b. Sales account Dr 1,520 To John account 1,520
c. John account Dr 3,600 To Sales account 3,600
d. Sales account Dr 3,600 To John account 3,600
9. Why is transferring entry needed?
a. To transfer certain minor accounts to a related major head of account.
b. To transfer one account to a related account
c. To transfer one entry to another book
d. To transfer an entry to next accounting year.
10. Weath maximization is possible only when an organization……value of share
a. Increases
b. Decreases
c. Normalises
d. None
11. Wealth maximization to based on.
a. Cash flow
b. Accounting profit
c. Fund flow
d. None
12. Long term investments should be normally created out of
a. Short term basis
b. Medium term basis
c. Long term basis
d. None
13. Capitalization refers to the composition of ……….. funds
a. Short term
b. Long term
c. Mid term
d. None
14. Overcapitalization refers to
a. True value of assets exceeds total capital
b. True value equals total capital
c. Total capital exceeds true value of assets
d. Total capital equals true value
15. Under capitalised is identified when
a. Actual is less than proper capitalization
b. Actual is greater than proper capitalization
c. Proper capitalization is less than actual
d. None
16. Positive net working capital indicate the use of … finance
a. Immediate
b. Concurrent
c. Spontaneous
d. None
17. Temporary working capital is also known as………… working capital
a. Variable
b. Nominal
c. Serial
d. Social
18. In spontaneous finance , reduction in……. is noticed
a. Fixed assets
b. Current assets
c. Working assets
d. Idle assets
19. Cash conversion cycle show the …….interval over which non-spontaneous sources of working capital must be obtained .
a. Space
b, Lunch
c. Sales
d. Time
20. Average inventory is obtained as ……………... stock
a. Opening + closing
b. Opening / closing
c. Opening x closing
d. Opening closing / 2
21. Current ratio deals with
a. Short-term obligation
b. Long-term obligation
c. Mid-term obligation
d. Mutual obligation
22. Current ratio is
a. current assets – current liability
b. current assets + current liability
c. current assets * current liability
d. current asset / current liabilities
23. Acid test ratio excludes
a. Capital
b. Asset
c. Liability
d. Inventory
24. Capital structure affects a firm's
a. Income.
b. Value
c. Profit
d. Saving
25. Stock turn over ratio evaluation the efficiency to manage
a. Debt
b. Stock
c. Cash
d. Current asset
26. Debtors are include in
a. Financial account
b. Current account
c. Cost account
d. Management account
27. DTO involves in debt collection of
a. Velocity
b. Veracity of
c. Capacity
d. None
28. Decrease in WC will be the result of decrease in
a. CL
b. FA
c. FL
d. CA
29. Changes in CL are _____________ correlated to the changes in WC
a. Diagonally
b. Inversely
c. Directly
d. Proportionally
30. Transactions that increase the working capital are
a. Sources of funds
b. Application of funds
c. Use of funds
d. Usage of funds
.
.
.
.
.
.(One mark question continued till 50)
Part C (Two mark questions) [ 25x 2= 50 Marks]
1. The concept tells that to recognize revenue it has to be realized. It does not demand that the revenue has to be received in cash. a. Concept of Prudence
b. The realization concept
c. The matching concept
d. Accrual concept
2. The concept of recording assets and liabilities at historical cost is known as a. Cost Concept
b. Going concern concept
c. Money measurement concept
d. Accrual concept
3. If liabilities to outsiders are more than assets of a business, how do you account for owner's equity?
a. Owner's equity shows nil balance
b. Owner's equity does not appear in the balance sheet
c. It shows excess of loss, having eaten away capital and is shown on asset side
d. Owner's equity is not there and so business is closed
4. The left hand side of the cash book shows.
a. Cash & bank disbursement
b. Cash & bank disbursement & discounts received
c. Cash & bank receipt
d.Cash & bank receipts & discount allowed.
5. Business cash is withdrawn by proprietor for personal use. How does this affect accounting equation?
a. Cash A/c on asset side and capital A./c on liabilities side are reduced by the same amount
b. Cash account is reduced and drawings account is increased
c. Cash account is not affected at all
d. Owner's account is increased and cash A/c balance is reduced
6. John is a creditor to whom Rs 5000 is due, If Rs 3000/- is paid to him, what entry do you make
a. Creditor are Rs 3000 To cash a/c 3000
b. John a/c Dr 5000 To cash a/c 3000
c. cash a/c Dr 3000 To john 3000
d. John a/c Dr 3000 To cash a/c 3000
7. If goods are bought from sundar and co. for Rs 1000 for cash what entry is recorded
a. Sundar and co a/c To purchase are
b. Purchase are Dr To Sundar and co are
c. Sunder a/c Dr To goods are
d. Goods a/c Dr To cash a/c
8. A trial balance will not reveal the following error.
a. A credit sale of Rs.700 to Uday is debited to Uday account only.
b. A credit sale of Rs. 700 made to Uday, posted as debit in the sale account as Rs.700 and credit Uday account Rs.70
c. A cash sale of Rs. 1000, posted as credit sale of Rs. 1000 and debited Cash account by Rs. 100
d. A cash sale of Rs100 posted to the credit sales account only.
9. Identify in the following, where the error of duplication is committed.
a. Radheshyam a/c is debited by Rs. 672 instead of 762
b. Manorama a/c is credited by Rs. 6,770 instead of crediting Manojrama a/c.
c. Kumar a/c shows Rs.574 debited twice for the same transaction
d. Tamal Kanti Roy's is debited by Rs. 17,000 without any corresponding credit entry to any account
10. Financial management is concerned with procurement and effective utilization of funds for the benefit of the: a. Employees
b. Stakeholders
c. Promoters
d. Employees and Stakeholders
11. To establish any business the two main sources of funds are debt and equity. To determine the propotion of debt and equity we formulate; a. Economic plan
b. Financing plan
c. Budget plan
d. Business goal, mission and vision
12. The cardinal rule of efficient financial management is:
a. Profit maximization
b. Shareholder's value maximization
c. Creating real assets
d. Both A and B
13. Through financial planning………….. of asset is enhanced
a. Selectivity
b. Capacity
c. Normality
d. Productivity
14. Short term and long term objectives are needed for to operate in ……..environ a. Dynamite
b. Dynamic
c. Dynasty.
d. None
15. Working Capital is the result of
a. Current assets – current liabilities
b. Current assets + current liabilities
c. Current assets / current liabilities
d. Current assets * current liabilities
16. Acid test ratio is
a. Current assets –stock / current liabilities
b. Current assets / current liabilities
c. Current assets + stock / current liabilities
d. None
17. High debt ratio indicates
a. Too much of equity
b. Too much of debt
c. Too much of cash
d. Too much of risk
18. Redeemable preference shares are taken as debt of
a. Long term
b. Short term
c. Medium
d. None
19. Lower debt equity ratio indicates
a. Comfort zone
b. Conflict zone
c. Complimentary zone
d. Confusion zone
20. Excess of current assets over current liabilities is known as
a. Positive WC
b. Negative WC
c. WC
d. None
.