1)."Each individual in an organization must know in advance what one
is expected to achieve." It is related to which of the following steps
of MBO?
(a) Setting of organizational purpose and objectives
(b) Key result areas.
(c) Setting subordinates' objectives
(d) Appraisal

2).Which one of the following statements about MBO (Management by
Objectives) is not correct?
(a) The greater the participation of the manager and his Employees in
setting goals, the more likely that the goals would be achieved
(b) Autonomy in implementation of the plans is a pre Requisite for the
success of MBO
(c) Individual goal setting is not necessary for the success Of MBO
(d) Top level goal setting is a pre-requisite for the success Of MBO.

3). Match List- I with List-II and select the correct answer using the
code given below the lists:
List-I (Description) List-II (Functional Feature
A. Decentralization in Organization 1. Machine-oriented and not man-oriented
B. Chain of communication 2. Line authority
C. Task of top management 3. Setting goals of Organization
D. Movement of task Management 4. Empowerment of sub ordinates

A B C D A B C D
(a) 3 1 4 2 (b) 4 2 3 1
(c) 3 2 4 1 (d) 4 1 3 2
4).What is the job evaluation method in which a number d compensable
factors are identified and then the degree to which each of these
factors is present on the job is determined, called?
(a) Job classification (b) Point rating
(c) Factor comparison (d) Job ranking
5). Consider the following steps with regard to job 'ranking' method:
1. Obtain job information
2. Rank jobs
3. Select jobs
4. Select compensable factors
5. Combine ratings what is the
correct sequence of the steps given above?
a) 1 - 3 - 2 - 5 -4 (b) 2 - 1 - 3 - 5 - 4
(c) 2 - 3 - 1 - 4 - 5 (d) 1 - 3 - 4 - 2 - 5
6). Match List- I with List-II and select the correct answer using the
code given below the lists:
List - I (Concept) List - II (Explanation)
A.Theory of Specialisation 1. Number of subordinates to be supervised
B.Departmentation 2. Plan of reporting in an Organization
C.Span of Management 3. Pattern of grouping Activities
D.Chain of command 4. Breakdown of a complex task

A B C D A B C D
(a) 2 1 3 4 (b) 4 3 1 2
(c) 2 3 1 4 (d) 4 1 3 2
7). What is the method used in a standard costing system which
analyses the factors that resulted in the deviation between standard
costs and actual costs, called?
a) Bill of Materials (b) Progress Report
(c) Variance Analysis (d) Cost Statement
8). Consider the following statements regarding coordination
1. Coordination cannot be voluntarily produced by a number of
cooperating persons
2. Most part of it is the result of voluntary attitudes on the part of
people in an organization.
3. Coordination is a far more inclusive term embracing the idea of cooperation.
4. Charismatic leaders do not give weightage to coordination
Which of the statements given above are correct?
(a) 1 and 2 only (b) 1 and 3 only
(c) 2 and 4 only (d) 1 and 4 only
9). Which one of the following describes best the organization's
values, aspirations and reasons for being?
(a) Vision
(b) Mission
(c) Objectives
(d) Goals
10).In. the Blake and Mouton's Managerial Grid Theory, what is the
point (1.9) known as?
(a) Improverished management
(b) Country club management
(c) Middle of the road management
(d) Team management
11. Ann effective direction tries to get work. accomplished by
subordinates without affecting their need satisfaction adversely.
What. Is this principle of directing known as?
(a) Principle of maximum individual contribution
(b) Principle of harmony of objectives
(c) Principle of efficiency of direction
(d) Principle of authoritative direction

12). In Vroom's theory of motivation, what is valence related to?
List I (Types of Cloud)
(a) The strength of an individual's preference to a total outcome.
(b) The strength of a group's preference to a total outcome.
(c) The strength of a group's preference to a. particular outcome
(d) The strength of an individual's preference to a particular outcome
13. Match List-I (Basic Components of Expectancy Theory) with List-II
(Definition) and select the correct answer using i I the code given
below the Lists :
List-I List-II
A. Expectancy 1. Force directing specific behavioural alternatives
B. Instrumentality 2. Preference of an 'individual for a particular outcome
C. Motivation 3. Probability that effort will lead to good performance
D. Valence 4. Probability that successful performance will lead to
certain outcomes
A B C D A B C D
(a) 1 4 2 3 (b) 2 3 1 4
(c) 1 3 2 4 (d) 2 4 1 3

14). 14. The following information is given:
Sales 70,000
Purchases 40,000
Expenses 8,000
Creditors at the end 15,000
Creditors at the beginning 12,000
What is the value of cash from operations?
(a) Rs 22,000 (b) Rs 19,000
(c) Rs 30,000 (d) Rs 25,000
15. Which one of the following statements is correct?
(a) If the value of current assets (in the current year) increases
(compared with last year), the working capital decreases
(b) If the value of current liabilities (in the current year)
decreases (compared with last year), 'the working capital increases
(c) If the value of current liabilities (in the current year)
increases (compared with last year), the working capital increases
(d),If the value of current assets (in the current year) decreases
(compared with last year), the working capital increases

16).A machinery whose book value was Rs 1,20,000 was sold for Rs
1,68,000. The gain on sale of machinery was taken to Profit and Loss
Account which ultimately showed net profit for the year as Rs
1,50,000. What is the value of funds from operations?
(a) Rs 1,02,000 (b) Rs 1,98,000
(c) Rs 48,000 (d) Rs 1,68,000
17. Which one of the following is the correct statement? Business
draws benefit from the society; it has an obligation to communicate
its contribution to society. For this purpose accounting must
(a) deal with measurement and reporting of the performance to its stakeholders
(b) confine to going concern stipulation
(c) show its concern for revenue recognition and distribution
(d) be secluded from commercial consideration
18. Which one of the following is the correct statement? The most
important factor influencing evolution and growth of auditing is
(a) Industrial Revolution
(b) divorce of ownership from management
(c) establishment of the Institute of Chartered Accountants of India
(d) adoption of mechanised accounting

19. Match List-I with List-II and select the correct answer using the
code given below the Lists :
List-I List-II
(Basis of Classification) (Types of Audit)
A. Time 1. Complete Audit
B. Subject matter 2. Public Audit
C. Extent or coverage 3. Periodical Audit
D. Organization structure 4. Government Audit
5. Cost Audit
A B C D A B C D
(a) 3 4 1 5 (b) 1 5 2 3
(c) 3 5 1 4 (d) 1 4 2 5

20)What does the total auding situation comprise?
(a) Inherent risk, process risk and control risk
(b) Appropriate evidence and oral evidence
(c) Detailed evidence and appropriate evidence
(d) Sufficient evidence and appropriate evidence
21. Which of the following should be obtained as a basis of 10
conclusions by the auditor?
(a) Sufficient evidence and detailed evidence
(b) Terrigenous deposits
(c) Pelagic deposits
(d) Coral reefs
22. Which one of the following is the correct statement? An
independent financial audit is conducted because
(a) the top management may have indulged in fraud and the auditor
would detect the same and report to the shareholders
(b) the audit may result in suggesting improvement in the internal
control system
(c) the audit enhances credibility to financial statement
(d) the audit guaran~ees that no material misstatement intentional or
unintentional-remains in the financial statements

23. What is an in-depth examination to detect a suspected fraud in an
enterprise termed as ?
(a) Internal audit (b) Independent financial audit
(c) Operations audit (d) Investigation

24. Match List- I (Audit Test) with List-II (Situation) and select the
correct answer using the code given below:
list-I list-II
(A) Depth testing 1. Examination in depth by the auditor of the
accounting function or department at an interval planned by auditor
(B)Vouching audit 2. Used in situations where evidence of a single
error gives hint to the auditor of a serious lapse which may require
(C)Discover Sampling 3. Applied in situations where auditor has
absent or unreliable adn as a result, it would be necessary to check
all the documentary evidences.
(d)Rotational test 4. Involves tracing through the entire system
all the aspects of a transaction which the auditor wishes to check.
A B C D A B C D
(a)1 3 4 2 (b)4 2 3 1
(c)1 4 3 2 (d)4 3 2 1
25. Which one of the following is the best way for an auditor to
satisfy himself that the amount of cash-in-hand shown in the balance
sheet is correct ?
(a) To obtain a certificate from the cashier to this effect
(b) To visit the location where cash is kept at the close of business
hours on the last working day of the financial year and count the
cash-in-hand
(c) To visit the location where cash is kept at the close of business
hours on the first working day of the financial year and count the
cash-in-hand
(d) To compare the amount of cash-in-hand at the balance sheet date
with the corresponding amount in the previous year's balance sheet
26. Match List- I (Method of Auditing) with List-II (Pr.ocedure) and
select the correct answer using the code given below the Lists :
list-I list-II
A. Vouching 1. To select and examine a representative sample from
large number of similar items.
B. Audit programme 2.Testion and checking done by quality control
department of an organization .
C. Internal Audit 3. Audit conducted by regular employees of a
business concern.
D. Test Checking 4. The inspection of documentary evidence
supporting and substantiating a transaction.
5. A detailed plan of the auditing work to be performed.
A B C D A B C D
(a)3 1 2 5 (b)4 5 3 1
(c)3 5 2 1 (d)4 1 3 5
27. Match list- I with List-II and select the correct answer using the
code given below the Lists :
list-I list-II
A. Minutes Book 1. Recording entires of creditors payment
B.Log Book 2.Recording entries of raw matrial receipts
C.Subsidiary Ledger 3.Recording entries of resolution passed
D.Stores Ledger 4.Recording entries of production
5. Recording entries of cash withdrawn from bank
A B C D A B C D
(a)2 4 1 3 (b)3 1 5 2
(c)2 1 5 3 (d)3 4 1 2
28) Which of the following are examined to verify the legal charges?
1. Examine the payment made to the lawyer by reference to the bill and
money receipt from the lawyer as well as any amount paid in advice.
2. Examine the basis of allocation of expenditure under capital and revenue head
C.Subsidiary Ledger 3.Recording entries of resolution passed
Inspect the register of law suits, if maintained by the company.
(a) 1 and 3 only (b)1,2 and only
(c)2 and 4 only (d)1,2,3 and 4
29)Which one of the following is the correct statement? Book Debts
should be verified with the help of
(a) book debts from the balance sheet
(b) amount received from debtors
(c) debtors' schedule
(d) certificate of book debts from the management

30. Which one of the following is the correct statement? Negative
confirmation procedure in relation to debtors is applied where
(a) the number of debtors is small & each owes a large sum
(b) the number of debtors is large & each owes a small sum
(c) the number of debtors is small & each owes a small sum
(d) the number of debtors is large & each owes a large sum
31. Under which of the following circumstances an auditor may refuse
to accept the vouchers?
1. The amount written in words does not match with the amount written in figures
2. The date of voucher does not match with the date of entry in the
books of accounts
3. The amount mentioned in the voucher does not correspond to the
entry in the cash book
4. The voucher has not been endorsed by a competent authority
Select the correct answer using the code given below:
(a) 1 'and 2 only (b) 2 and 3 only
(c) 1, 3 and 4 only (d) 1, 2, 3 and 4

32. Which one of the following statements is correct ? The auditor in
a cooperative society conducts the audit on behalf of the
(a) Members of Cooperative Society
(b) Central Government
(c) Registrar of Cooperative Societies
(d) Managing Committee of Cooperative Society
33).Which one of the following statements is correct ? Management
audit is an extension of
(a) cost audit
(b) efficiency auditc
(c) special audit
(d) internal audit
34. In case of insolvency of a partner, how is the loss due to
insolvency borne by other solvent partners ?
(a) Equally
(b) In the profit sharing ratio
(c) In the ratio of their capitals
(d) In the ratio of their assets
35. Which one of the following statements regarding appointment of
auditor is correct ?
((a) A company where sixty percent shares are owned by private
investors and forty percent shares are owned by the Central
Government; private investors shall appoint the auditor
(b) A company where thirty percent shares are owned by the Centre and
twenty-five percent by a State Government; auditor is appointed by the
Comptroller and .Auditor-General of India
(c) A company where thirty percent shares are owned by the State
Government and forty-five percent shares are owned by private
investors; auditor is appointed by the State Government
(d) A company where controlling shares are held neither by Central
Government nor by State Government; auditor is appointed by the
Comptroller and AuditorGeneral of India
36. What is the trading activity that seeks a profit from price
variations of securities in the different markets termed as?
(a) Margin trading (b) Market rigging
(c) Option dealings (d) Arbitrage
37. Consider the following procedures adopted for settlement of
accounts at the time of dissolution of a partnership firm:
1. The loans of partners are returned
2. All outside creditors are paid
3. Capital of each partner is returned
What is the correct sequence of using the proceeds of assets of the firm?
(a) 1 - 2 - 3 (b) 3 - 1 - 2
(c) 2 - 1 - 3 (d) 2 - 3 - 1
38)Consider the following in respect of the procedure adopted for
buying and selling at stock exchange
1. Making the contract
2. Contract note
3. Selection of broker
4. Placing order
5. Settlement
What is the correct sequence of the procedure for dealing at stock exchange
(a) 1-3-2-5-4 (b) 3-1-5-2-4
(c) 1-4-2-3-5 (d) 3-4-1-2-5
39. Consider the following statements :
1. Shares payable in cash must have been a110ted up to the amount of
the minimum subscription
2. Directors must have paid in cash the application and allotment
money in respect of the shares contracted to be taken by them for
cash.
3.No money is liable to be repaid to the applicants by reason of
failure to apply for or to obtain permission for shares or debentures
to be dealt on in any recognised stock exchange.
As per Section 149 (1) of the Companies Act, 1956, the above
conditions are imposed on companies for which one of the following?
(a) For listing of shares at the stock exchange
(b) To obtain Certificate of Commencement of Business
(c) To obtain Certificate of Incorporation
(d) To hold Statutory Meeting of the company
40)Consider the following statements :
The Bill of Lading issued by the Master of ship serves as at an .
1. receipt for the goods shipped
2. open general license
3. evidence of the contract
4. dock challan
Which of the statements given above are correct ?
(a) 1 and 3 only (b) 1 and 2 only
(c) 2 and 4 only (d) 3 and 4 only

41). Consider the following statements
The Life Insurance Contracts are contracts of utmost good faith because
1. only insured knows about his health
2. only insured knows about his family
3. insured cannot attempt to make profit out of his health condition
4. insurer's risk is related to the disclosures made by insured
Which of the statements given above is/are correct ?
(a) 1, 2 and 3 only (b) 1, 2, 3 and 4
(c) 4 only (d) 2, 3 and 4 only
42. In a contract of insurance, under which of the following
principles the insurer, after having paid the loss to the insured,
acquires all rights and remedies as the insured would have enjoyed
regarding the said loss?
(a) Principle of Subrogation
(b) Principle of Contribution
(c) Principle of Causa Proxima
(d) Principle of Insurable Interest
43. Which of the following theories offers ways to profile or ~
analyse individuals to identify the needs that motivate their
behaviour?
(a) Process theories
(b) Content theories
(c) Reinforcement theories
(d) Adams's theory

44. Which one of the following functions involves conceptualising ~
missions and objectives of the organization and also the actions for
achieving them?
(a) Planning
(b) Organizing
(c) Staffing
(d) Directing

45. Which one of the following is the correct hierarchy of the
strategies formulated in organizations?
(a) Corporate strategies - business strategies-functional strategies
(b) Functional strategies - corporate strategies - business strategies .
(c) Business strategies - functional strategies-corporate strategies
(d) Business strategies-corporate strategies-functional strategies
46. Which one of the following helps in determining long, out of his
objectives of an organization, adoption of course of allocation of
resources necessary to achieve the goals?
(a) Rules
(b) Policies
(c) Procedures
(d) Strategies

47. An organization which was earlier operating in highly 51
conditions, is now facing stiff competition in the libera era. For
quick response to rapidly changing environn how should the
organization change its organizati structure?
(a) From flat structure to tall structure
(b) From tall structure to flat structure
(c) From flat structure to bureaucratic structure
(d) From flexible structure to rigid structure
48. Which one of the following approches to the organization gives
managers a way of looling at the organization as a whole and as a part
of the large external environment?
(a).Behavioural science
(b). Contingency
(c). Human relations
(d). Systems.
49.Consider the following steps with regard to a recruitment process.
1. Develope a job specification.
2. Perform job analysis
3. Design job description.
4. Attract a pool of applicants
5. Select the best recruits.
50. Which one of the following training methods compels trainees to
assume different identities
(a). Vestibule
(b). Role playing
(c). On-the-Job training
(d). Job rotation
51. Match List-I (Staff AuthoritY) with List-II (function) and select
the correct answer using the code given below:
List-I List-II
A. Service Staff 1. Provides specialised Authority counselling to
line managers
B. Control Staff 2. Provides service authority Authority
relationship to the line manager
C. Advisory Staff 3. Specific authority for Authority certain functions
D. Functional 4. Not only advises but Staff Authority restrains
line authority
A B C D A B C D
(a) 1 3 2 4 (b) 2 4 1 3
(c) 1 4 2 3 (d) 2 3 1 4
52. Consider the following statements :
1. According to Trait theory of leadership, leaders are born, not made.
2. There is high concern for production but low concern for people. It
is called as Middle of the road management.
3. There is a high concern for both production as well as people. It
is called as Impoverished management. Which of the statements given
above is/are correct ?
(a) 1 only (b) 1 and 2 only
(c) 2 and 3 only (d) 1 and 3 only
53. Consider the following statements : Managerial Grid is a
leadership style that emphasizes on
1. Concern for production
2. concern for people
3. concern for personality traits
4. concern for credibility of leadership
Which of the statements given above are correct ?
(a) 1 and 2 only (b) 2 and 3 only
(c) 3 and 4 only (d) 2 and 4 only
54. Match List-I (Style. of Leadel) with List-II (Approach) and .
select the correct answer using the. code given below
List-I List-II
A. Impoverished Management 1. Highest concern for production and people
B. Country Club Management 2. Highest concern for production but low
concern for people
C. Autocratic Task Managers 3. Very low concern for production but
concern for people
D. Team Managers 4.4. Very low concern for production and people
A B C D A B C D
(a) 4 3 2 1 (b) 2 1 4 3
(c) 4 1 2 3 (d) 2 3 4 1

55. Which one of the following types of leadership is based on
organizational status?
(a) Informal leadership
(b) Diplomatic leadership
(c) Charismatic leadership
(d) Bureaucratic leadership
56. Which of the following is the most appropriate management control
technique for timely completion of a project ?
(a) Organization Chart
(b) Bar Chart
(c) PERT
(b) Load Chart
Directions: The next five (5) items consist of two statements : one
labelled as the 'Assertion (A)' and the other as 'Reason (R)' You are
to examine these two statements carefully and select the answers to
these items using the code given below:
(a) Both A and R are individually true but R is the correct explanation of A
(b) Both A andR are individually true but R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
57. Assertion (A) : The top management in an organization should be
mainly concerned with very important and complex problems and not with
routine day-to-day problems
Reason (R): This is stated by the scalar principle of organization.
58. Assertion (A): Only listed securites are dealt with in the stock exchanges.
Reason (R): Listion at stock exchanges indicates that a company is a
blue chip.
59.Assertion: While vouching an auditor should check entries against
related vouchers and ascertain the genuineness and validity of
vouchers.
Reason (R): Vouching is a method of examination to substantiate an
entry in the books of account.
60. Assertion (A): While vouching an auditor should check entries
against related vouchers and ascertain the genuineness and" validity
of vouchers,
Reason (R): Vouching is a method of examination to substantiate an
entry in the books of account.
61. Assertion (A): The total assets of a business are always equal to
its liabilities.
Reason (R): All assets of the business are claimed either by the
owners or by the outsiders.
62. What is the limit of paid up capital for a company to mandatorily
appoint a whole time company secretary ?
(a) Not less than Rs 25 lakhs
(b) Not less than Rs 50 lakhs
(c) Not less than Rs 1 crore
I (d) Not less than Rs 2 crores
63. Which one of the following statements is correct ? A company's
balance sheet and profit and loss account, other than a banking
company, require the authenticity from
(a) the Managing Director only
(b) the Manager or the Secretary, if any, and by not less than two
Directors of the company one of whom is Managing Director, if there is
one
(c) any two Directors of the company and one of whom is the Managing
Director, if there is one
(d) one of the Directors who is looking after the finance

64. Any dividend remaining unpaid/unclaimed for seven years is
transferred to which one of following accounts ?
(a) Investor Education and Protection Fund (b) Central Government's
General Revenue Fund
(c) Capital Redemption Reserve Account (d) General Reserve Account

65. Consider the following statements : Share premium account may be
used by the company
1. in paying up un-issued share~ of the company to be issued to
members of the company as fully paid bonus shares
2. in providing for premium payable on redemption of preference shares
or debentures
3. in buying back of securities
4. in writing off the expenses or commission paid or discount allowed
on issue of securities
Which of the statements given above is/are correct ?
(a) 1, 2, 3 and 4 (b) 1, 2 and 4 only
(c) 2 and 4 only (d) 3 only

66. Which doctrine emanated from the famous case of Royal British Bank
v. Turquand (1856) 119 ER 886 ?
(a) Doctrine of ultra vires (b) Doctrine of subjugation
(c) Doctrine of indoor management (d) Doctrine of proportional representation

67. In the event of not accepting the recommendations of the Audit
Committee, what is the responsibility of the Board of Directors ?
(a) That it will simply pass a resolution by recording the reasons'
for not accepting the report.
(b) That it will record the reasons and communicate such reasons to
the shareholders
(c) That it will record the reasons and communicate to the Central Government
(d) That it will record the reasons and communicate to the Registrar
of Companies

68. The public documents of a company should not only be read but to
be understood as they are and therefore
deemed to have been read by those who deal with the company. What is
this rule known as ?
(a) The rule of equality (b) The rule of constructive notice
(c) The rule of increasing liability (d) The rule of abrogation

69. What is the penalty for making any statement, promise or forecast
which is false, deceptive or misleading, or by any other dishonest
concealment of material fact to enter into any agreement for acquiring
shares or debentures through the pr'Jspectus ?
(a) With imprisonment extending to five years or with a fine of rupees
one lakh or with both
(b) With imprisonment extending to three years or with a fine of
rupees one lakh or with both
(c) With imprisonment extending to five years only
(d) With a fine of rupees one lakh only

70. Which one of the following statements in the context of the famous
case of Solomon v. Solomon & Co. Ltd. (1897), AC 22, is correct ?
(a) A company is entirely distinct from and independent of its members
even if a member owns virtually the whole of its shares
(b) A company is distinct from and independent of its members; but in
case a member owns virtually the whole of its shares, they are
actually the same
(c) A company and its members are not distinct and independent from each other
(d) A person having issued at least 51% of company's share would only
be treated distinctly

71. Match List-I (Office Equipment) with List-II (Function and
Utility) and select the correct answer using the code given below the
Lists : List-I List-II
A. Pen Drive 1. Fixed data storage device
B. Hard Disc 2. Conversion of Hard copy of text/picture into soft copy
D. Scanner
C. Administrative Manual 3. Mobile data storage device
D. Handbook 4. Weather forecasting.
A B C D A B C D
(a) 3 1 4 2 (b) 2 4 1 3
(c) 3 4 1 2 (d) 2 1 4 3

72)Match List-I (Manual/Handbook) with List-II (Activity) and select
the correct answer using the code given below: List -I List - II
A. Policy Manual 1. Filing, correspondence and communication
B. Organization Manual 2. Selected aspects in combined form
C. Administrative Manual 3. Decisions and pronouncements of management
D. Handbook 4. Responsibility and authority of different positions
A B C D A B C D
(a) 3 2 1 4 (b) 1 4 3 2
(c) 3 4 1 2 (d) 1 2 3 4

73).Which one of the following is the correct statement? The most
appropriate purpose of accounting standards is
(a) to facilitate auditing task of diverse nature
(b) reduction of alternatives and bringing uniformity
(c) to make adequate volume of information available to its end-users
(d) to ensure better tax compliance including VAT

74). Which one of the following is the correct statement? The first
Accounting Standard (AS-1) relates to
(a) information to be disclosed in financial statements
(b) consolidated financial statements
(c) disclosure of accounting policies
(d) reporting of financial information by segments

75). Outstanding wages due for the month of March, 2005 and prepaid
expenses and incomes are taken into account in determining profit or
loss for the year ended on 31st March, 2005 Under which one of the
following systems is the above practice carried out? (a) Cash system
of accounting (b) Accrual system of accounting
(c) Hybrid system of accounting ( d) Stock and debtor system

76. Which one of the following is the correct statement? According to
the convention of conservatism, the stock in trade is valued at (a)
the market price (b) the cost price
(c) the market price or cost price whichever is more B (d) the market
price or cost price whichever is less

77. On which one of the following concepts is determination of
expenses for an accounting period based ? (a) Accounting period
concept (b) Matching concept
(c) Cost concept (d) Money measurement concept

78). Match Ust-I (Accounting Concept) with List-II (Assumption
Involved) and select the correct answer using the code given below the
Lists : List -I List - II
A. Accrual concept 1. Entity shall remain in operation long enough to
carry out its existing commitments
B. Entity concept 2. Existence of business separate from its owners,
creditors,employees and customers, etc.
C. Going concern concept 3. Method of identifying revenue and expenses
with specific period of time
D. Consistency concept 4. Accounting principles and procedures should
be followed uniformly from one period to another
5. All material information should be disclosed in the financial statements
A B C D A B C D
(a) 4 2 1 5 (b) 3 1 2 4
(c) 4 1 2 5 (d) 3 2 1 4

79). Which one of the following is the correct statement? The revenue
is generally considered as realized at the time of (a) receipt of
order (b) Agreement to sell
(c) receipt of cash (d) sale

80). In XY partnership firm, X is to get 10% commission on net profit
before charging any commission, and Y is to get 10% commission after
commissions of both X and Yare charged. Net profit is Rs 40,000. What
is the value (approximate) of commission of Y? (a) Rs 3,272 (b) Rs
4,508
(c) Rs 4,896 (d) Rs 5,255

81)What is the amount of sales, when
Opening stock Rs 50,000
Purchases Rs 1,50,000
Wages Rs 20,000
Closing stock Rs 40,000
and the Gross profit IS 1/7th on sales?
(a) Rsl,37,142 (b) Rs 2,00,000
(c) Rs 2,10,000 (d) Rs 1,86,669

82). If land and property are recorded in the books of accounts at
market price and profit on disposal of an item of the same is credited
to Profit and Loss Account, which accounting principle is violated ?
(a) Cost principle (b) Realization principle
(c) Matching principle (d) Principle of Quality

83). Which one of the following is prescribed by the generally
accepted accounting principles ? (a) Uniformity in accounting
practices in all enterprises within a country (b) Uniform accounting
practices in all enterprises all over the world
(c) Different accounting practices in different industries (d)
Different accounting practices in different regions

84). Given:

Rs
Opening Capital 10,000
Closing Capital 12,000
New Capital introduced 1,000
What is the profit for the year? (a) Rs 4,000 (b) Rs 3,000
(c) Rs 2,000 (d) Rs 1~000

85). Accounting as an information system in business is looked upon as
the process of communication. It consists of the following four steps:
1. Communication 2. Recording of data
3. Business activities and transactions 4. Processing of data

86).Match List-I (Accounting Concept) with List-II (Example) and
select the correct answer using the code given below the Lists List -I
List - II
A. Business entity 1. Capital in the liability side of Balance Sheet
B. Dual aspect 2. Balance Sheet as on 31st December, 2004
C. Accounting period 3. Wages paid Rs 5,000
D. Money measurement 4. Goodwill in Balance Sheet for Rs 10,000
A B C D A B C D
(a) 1 4 2 3 (b) 2 3 1 4
(c) 1 3 2 4 (d) 2 4 1 3

87). Which one of the following contains two frequently discussed
cross-sectional techniques of accounting information and their
analysis? (a) Abridged profit and loss account and balance sheet
(b) Cash flow statement and statement of changes in financial position
(c) Common size statements and financial ratio analysis

88).Which one of the following is the correct statement? When an
auditor finds significant unexplained fluctuations in various
financial ratios while performing analytical review procedures, he
should normally
(a) qualify the audit report
(b) issue a letter of weaknesses to the management
(c) extend his substantive procedures for detailed verification of
transactions and balances
(d) make other quantitative checks

89). During analytical review, which one of the following is used by
an auditor to calculate the Return on Investment (ROI)?
(a) Net profit before tax and interest/Fixed assets plus current assets
(b) Net profit before tax and interest/Fixed assets
(c) Net profit before tax and interest/Working capital
(d) Net profit before tax and interest/Fixed assets plus working capital
90). Text checking is applied in which of the following audit functions?
1. Vouching
2. Cash verification
3. Physical stock verification
4. Internal control evaluation Select the correct answer using the
code given below: (a) 1 and 2 only (b) 2, 3 and 4 only
(c) 1, 2 and 4 only (d) 1 and 3 only

91).Match List-I (Explanation) with List-II (Types of Audit) and
select the correct answer using the code given below List -I List - II
A. Audit work is carried on almost simultaneously with recording
transaction 1. Balance Sheet Audit
B. Auditor starts his work after the final accounts have been prepared
2. Continuous Audit
C. Audit conducted in between two annual audits 3. Interim Audit
D. Some of the books & records of the whole period or specific period
are audited 4. Partial Audit
A B C D A B C D
(a) 2 4 3 1 (b) 3 1 2 4
(c) 2 1 3 4 (d) 3 4 2 1

92). What is/are the purpose(s) of using working papers prepared by an auditor?
1. Planning' and conduct of the audit efficiently
2. Supervision and review of audit work performed by the juniors .
3. Producing the working papers as evidence of the audit work performed by him
Select the correct answer using the code given below.: (a) 1, 2 and 3
(b) 2 only
(c) 2 and 3 only (d) 1 and 3 only

93). Match List-I (Method of Collecting Audit Evidence) with List-II
(Example) and select the correct answer using the code given below the
Lists List -I List - II
A. Observation 1. Auditor finds that although there is no increase in
salaries and wages, contribution to Provident Fund has increased
B. Correlation with related information 2. On a thorough Scrutiny of
payroll auditor comes across 13 entries instead of 12 entries, one
extra entry being for the succeeding month of next year
C. Enquiry 3. Auditor, on a visit of company's godowns, finds that
there is a huge pile of damaged and obsolete stock. On investigation
he is told that the same are not shown as such in the inventory sheets
D.Scanning 4. On a prolonged interaction with various persons
connected with cash transactions auditors find that there is system of
internal check in regard to cash transactions
A B C D A B C D
(a) 3 2 4 1 (b) 4 1 3 2
(c) 3 1 4 2 (d) 4 2 3 1

94). Match List-I (Specific Item) with List-II Relevant internal
Control Query) and select the correct answer using the code given
below the Lists : List -I List - II
A. Fixed assets 1. Are bank reconciliation statements prepared from
time to time?
B. Purchase 2. Are invoices checked and verified in regard to
description of materials, terms of payments, etc?
C. Sales 3. Are all invoices duly approved for payment?
D. Disbursement 4. Who authorises for the sale of scraps?
5. Who prepares payroll ?
A B C D A B C D
(a) 2 3 4 1 (b) 4 1 2 5
(c) 2 1 4 5 (d) 4 3 2 1

95)What is an independent appraisal function established with in an
organisation to examine and evaluate its activities as a service to
the organisation called? (a) Internal auditing (b) Internal Check
(c) Internal Control (d) Adminstrative Control

96. Consider the following statements :
The techniques of auditing' include
1. physical examination of tangible assets
2. confirmation from third parties
3. interview with the article clerk
4. study of the type of the organization
Which of the statements given above are correct ?
(a) 1 and 4 only (b) 2, 3 and 4 only
(c) 1, 2 and 3 only (d) 1 and 2 only

97). Match Ust-I (Accounting Standard) with List-II (Subject and
select the correct answer using the code given below, List -I List -
II
A. AS-13 1. Consolidated Financial Statements
B. AS-2 2. Accounting for Investments
C. AS- 3 3. Cash Flow Statements
D. AS-12 4. Valuation of Inventories
5. Accounting for Government
A B C D A B C D
(a) 3 4 2 5 (b) 2 1 3 4
(c) 3 1 2 4 (d) 2 4 3 5

98). A company purchased a machine for Rs 30 lakhs on 1st April, 2002.
The estimated life of the machine is 9 years and scrap value is Rs 3
lakhs. The company follows straigh~ line method for charging
depreciation.' If the method of depreciation is changed from straight
line method (SLM) to written down method, what is the depreciation
provided on the machine in the financial year 2003-04 ? (a) Rs
3,00,000 (b) Rs 2,70,000
(c) Rs 2,40,000 (d) Rs 2,43,000

99). 99. Which one of the following reasons provides the best
theoretical support for accelerated depreciation?
(a) Assets are more efficient in early years and initialiy generate more revenue
(b) Expenses should be allocated in a manner so as to smoothen earnings
(c) Repairs and maintenance costs will increase in later years so
depreciation should decline
(d) Accelerated depreciation provides earlier replacement because of
time value of money

100). Which one of the following is the correct statement? Drawings by
proprietor in anticipation of future profit, made during the year
would
(a) reduce owner's equity and increase assets
(b) reduce owner's equity and increase liabilities
(c) reduce both owner's equity and assets
(d) increase liabilities and assets and reduce owner's equity
101). In which account are the revenue as well as expenses shown on cash basis?
(a) Income and Expenditure account (b) Profit and Loss account
(c) Profit and Loss Appropriation account (d) Receipts and Payments account

102). X and Yare partners in a firm sharing profits and losses in the
ratio 5:3. They admitted Z into the firm. The new. profit and loss
sharing ratio is 3 : 2 : 1. What are the values of sacrificing ratios
of X and Y? X Y
(a) 1/8 1/24
(b) 1/3 1/6
(c) 3/8 1/24
(d) 1/12 1/12 (Le., equal)

103).Match List.I (Transaction) with List-II (Entry to be Made) and
select the correct answer using the code given below the Lists : List
-I List - II
A. Loss on realization 1. Debit partner's capital account
B. Profit on realization 2. Credit realization account
C. Assets sold 3. Credit partner's capital account
D. Creditors paid 4. Debit drawings account
5. Debit realization account
A B C D A B C D
(a) 1 3 2 5 (b) 2 5 4 3
(c) 1 5 2 3 (d) 2 3 4 5

104. Which one of the following is the correct statement? As per the
provisions in the Companies Act & the relevant Accounting Standard
AS-5, depreciation provision is :
(a) a process of allocation of the depreciable amount of an asset over
its estimated useful life
(b) a process of valuation of the depreciable amount of an asset over
its remaining useful life
(c) a process of writing off the unrealized portion of an asset at the
end of its useful life
(d) simply a statutory provision optional for a business entity

105. Which one of the following is the correct statement? By
maintaining the provision for depreciation account, the asset account
(a) is shown after deducting the annual provision made for depreciation
(b) is maintained at its original cost throughout its lifetime
(c) is reduced annually by the depreciation amount
(d) is reproduced at net realizable value
106. Subscriptions received by a non-profit organization during the
year 2004 amounted to Rs 10,000. The subscriptions outstanding on
31-12-2003 and 31-12-2004 were Rs 2,000 and Rs 4,000 respectively,
while the subscriptions received in advance on those dates were Rs
3,000 and Rs 2,000 respectively. What was the income from
subscriptions of the organization for the year 2004 ? (a) Rs 16,000
(b) Rs 15,000
(c) Rs 13,000 (d) Rs 9,000

107. Which one of the following is the correct statement? In the case
of non-profit organization, ifafter the adjustment of incomes and
expenses related to specific fund the fund balance is negative, it is
transferred to
(a) the assets side of the Balance Sheet
(b) the liabilities side of the Balance Sheet
(c) the credit side of Income and Expenditure Account
(d) the debit side of Income and Expenditure Account
108. If proprietary ratio (Shareholders funds/Net assets) is 0.75; and
the debentures, current liabilities and current assets are Rs 45,000,
.Rs 40,000 and Rs 85,000 respectively, what is the amount of Net Block
(Fixed assets)?
(a) Rs 1,35,000 (b) Rs 1,40,000
(c) Rs 1,80,000 (d) Rs 1,00,000

109. Match List-I (Computation of goodwill) with List-II (Method) and
select the correct answer using the code given below List -I List - II
A. Goodwill is determined on the basis of the excess of actual profits
over the normal profits expected in future 1. Super Profit Method
B. Goodwill is determined on the basis of the total value of the firm
2. Average Profit Method
C. Goodwill is determined on the basis of the time value of money
3.Capitalisation Method
4. Annuity Method

A B C A B C
(a) 1 3 4 (b) 3 1 2
(c) 3 1 4 (d) 1 3 2

110). A company has 5000 shares of 10 each. Companies in the same
business pay 12% dividend and averagee market price of share is Rs 12.
If the company paid for the last three years dividends at 15%, 20% and
16% respectively what is the value of shares of minority holdings
yield method? (a) Rs 12.16 (b) Rs 13.75
(c) Rs 14.17 (d) Rs 15.25

111. Given, Current ratio = 2.5 : 1, Quick ratio = 1.5 : 1, Net
working capital = Rs 30,000; what is the amount of 'Quick Assets' ?
(a) Rs 20,000 (b) Rs 30,000
(c) Rs 45,000 (d) Rs 50,000

112).The capital structure of a company consists of Rs 1,00,000 equity
shares; Rs 50,000, 10% redeemable preference. shares and Rs 30,000, 8%
debentures. What is the capital gearing ratio? (a) 1.66 (b) 1.33
(c) 1.25 (d) 5.00

113). Which one of the following statements is correct ? Sampling in
auditing involves
(a) application of auditing procedures to transactiQns of only a part
of the period under audit selected by the auditor
(b) application of auditing procedures to a sample of transactions
from an account or class of transactions and drawing inferences about
the entire account balance or class of transactions on this basis
(c) application of auditing procedures to only some of the items of
financial statements selected by the auditor
(d) application of auditing procedures to transactions of only a
division or department of the organization selected by the auditor

114. Which one of the following can fill a casual vacancy caused due
to the death or incapability of the existing auditor?
(a) Board of Directors
(b) Shareholders of the Company
(c) Company Law Board
(d) SEBI
115). Which one of the following statements is correct ?
A special resolution is required for appointment of an auditor of a
limited company in which
(a) ten percent of the subscribed share capital is held by an insurance company
(b) seventy-five percent of the subscribed share capital is held by individuals
(c) not less than. twenty-five percent of the subscribed share capital
is held by the Central Government or State Government or other
specified public financial institutions
(d) not less than twenty percent of the subscribed share capital is
held by a nationalised bank
116. What is the maximum number of companies for which a company
auditor on being an individual can be an auditor at one time? (a) 2
(b) 5
(c) 10 (d) 20

117. Which one of the following statements is correct ? When an
auditor fails to obtain sufficient information to warrant an
expression of opinion, he makes a/an (a) disclaimer of opinion (b)
piecemeal opinion
(c) adverse opinion (d) qualified opinion

118. Which one of the following statements is correct ?
An auditor of a limited company may be removed from his office before
the expiry of his term
(a) by passing a special resolution in general meeting
(b) by passing an ordinary resolution in general meeting after
obtaining prior approval of the Central Government
(c) by passing unanimous resolution in the board meeting
(d) without passing a resolution in the general meeting
119. What is a constructive and comprehensive appraisal and
examination of organizational structure, plans, objectives of a
concern termed as ?
(a) Management audit (b) System audit
(c) Cost audit (d) Procedural audit

120. Which one of the following has a critical review of an
organizational structure and administration, and making
recommendations for adjustment and improvement as its basic objective?
(a) Management, audit (b) Internal audit.
(c) Cost audit (d) Internal check

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