- State with reasons, whether the following statements are True or False :
(i) The financial statements are not prepared on the assumption that an enterprise is a going concern and will continue its operation for the foreseeable future.
(ii) Periodic inventory system is a method of ascertaining inventory by taking an actual physical count.
(iii) The provision for discount on creditors is often not provided in keeping with the Principle of conservatism.
(iv) If the errors are detected after preparing trial balance, then all the errors are rectified through suspense account.
(v) Both revenue and capital nature transactions are recorded in the Receipts and Payments Account.
(vi) A fixed charge generally covers all the assets of the company including future one.[2022 December (6 × 2 = 12 Marks)]
- State with reasons, whether the following statements are True or False:
(i) A claim that an enterprise is pursuing through legal process, where the outcome is uncertain, is a Contingent Liability. •
(ii) At the end of the accounting year, all the nominal accounts of the ledger book are balanced.
(iii) The specific due date excludes the addition of grace days to arrive at the due date.
(iv) Any amount spent for replacement of worn out part of a machine is capital expenditure. •
(v) Debentures Suspense Account appears on the Liability side of the Balance Sheet of a Company.
(vi) If the errors are detected after preparing trial balance, then all the errors are rectified through suspense account.[2022 May (6 × 2 = 12 Marks)]
- State with reasons, whether the following statements are True or False:
(i) Any amount spent to minimize the working expenses is revenue expenditure.
(ii) Expenses incurred on the repairs for the first time on purchase of an old building are capital expenditure.
(iii) The provision for bad debts is debited to sundry debtors account.
(iv) Non-participating preference shareholders enjoy voting rights.,
(v) There is no entry passed by the consignee in his books for the remaining stock of goods lying with him.
(vi) Discount column of the cash book is never balanced.[2021 December (6 × 2 = 12 Marks)]
- State with reasons, whether the following statements are True or False:
(i) Goods sold on approval or return basis are not recorded as credit sales ‘initially when they are sent out.
(ii) A Company is not allowed to issue shares at a discount to ‘the public in general.
(iii) Warehouse rent paid for storage of finished inventory should be included in the cost of finished inventory.
(iv) A person holding preference shares of a company cannot hold equity shares of the same company.
(v) Business of partnership comes to an end on death of a partner.
(vi) Cash book is a subsidiary book as well as a principal book.[2021 July (6 × 2 = 12 Marks)]
- State with reasons, whether the following statements are True or False :
(i) Re-issue of forfeited shares is allotment of shares but not a sale.
(ii) Subsidy received from the government for working capital by a manufacturing concern is a revenue receipt.
(iii) The Sale Book is kept to record both the cash and credit sales.
(iv) There are two ways of preparing an account current.
(v) Consignee will not pass any journal entry in his books at time of receiving of goods from Consignor.
(vi) Accounting Standards for non-corporate entities m India are issued by the Central Government.[2021 January (6 × 2 = 12 Marks)]
- State with reasons, whether the following statements are True or False.
(i) In case of admission of a new partner in a partnership firm, the profit/loss on revaluation account is transferred to all partners in their new profit sharing ratio.
(ii) In the balance sheet of X Limited, preliminary expenses amounting to 5 lakhs and securities premium account of Rs. 35 lakhs are appearing. The accountant can use the balance in securities premium account to write off preliminary expenses.
(iii) Insurance claim received on account of plant and machinery completely damaged by fire is a capital receipt.
(iv) Purchase of office furniture & fixtures of 2,500 has been debited to General Expense Account. It is an error of omission.
(v) A Limited is sending goods costing 50,000 to B Limited on consignment basis. The accountant of A Limited is of the opinion that these goods should be sent under a sale invoice.
(vi) A concern proposes to discontinue its business from December 2020 and decides to dispose off all its plants within a period of 3 months. The Balance Sheet as on 31st December, 2020 should continue to indicate the plants at its historical costs as the assets will be disposed off after the Balance Sheet date.[2020 November (6 × 2 = 12 Marks)]
- State with reasons, whether the following statements are True or False:
(i) Trade Discount is a reduction granted by a supplier from the list price of goods or services on business considerations for prompt payment.
(ii) M/s. XYZ & Co. runs a cafe. They renovate some of the old cabins. Because of this renovation some space was made free and number of cabins was increased from 15 to 18. The total expenditure incurred was 30,000 and was treated as a revenue expenditure.
(iii) Valuation of inventory at cost or net realizable value is based on principle of Conservatism.
(iv) In case of bill of exchange, the drawer and the payee may not be the same person but in case of a promissory note, the maker and the payee may be the same person.
(v) A Partnership firm cannot own any Assets.
(vi) Since company has existence independent of its members, it continues to be in existence despite the death, insolvency or change of members.[2019 November (6 × 2 = 12 Marks)]
- State with reasons, whether the following statements are true or false :
(i) Amount spent for the construction of temporary huts, which were necessary for construction of the Cinema House and were demolished when the Cinema House was ready, is capital expenditure.
(ii) If the amount is posted in the wrong account or it is written on the wrong side of the account, it is called error of principle.
(iii) In case of consignment sale, ownership of goods will be transferred to consignee at the time of receiving the goods.
(iv) In case the due date of a bill falls after the date of closing the account, the interest from the date of closing to such due date is known as Red-Ink interest.
(v) Limited Liability Partnership (LLP) 1s governed by Indian Partnership Act, 1932.
(vi) The relationship between sales and fixed assets is expressed a working capital ratio.[2019 May (6 × 2 = 12 Marks)]
- State with reasons, whether the following statements are true or false :
(i) Overhauling expenses for the engine of motor car to get better fuel efficiency is revenue expenditure.
(ii) Depreciation is a non-cash expense and does not result in any cash outflow.
(iii) Fees received for Life Membership is a revenue receipt as it is of recurring nature.
(iv) If Closing Stock appears in the Trial Balance :
The closing inventory is then not entered in Trading Account. It is shown only in the balance sheet.
(v) Inventory Turnover Ratio is also known as Stock Turnover Ratio.
(vi) If del-credere commission is paid to consignee, the loss of bad debts is to be borne by the consignor.[2018 November (6 × 2 = 12 Marks)]
- State with reasons, whether the following statements are true or false:
(i) Expenses in connection with obtaining a license for running the Cinema Hall is Revenue Expenditure.
(ii) Re-issue of forfeited shares is allotment of shares but not a sale.
(iii) If the effect of errors committed cancel out, the .errors will be cai.led compensating errors and the tria balance will disagree.
(iv) There are two ways of preparing an account current.
(v) When there is no partnership deed prevails, the interest on loan of partner to be paid @ 6%.
(vi) Interest coverage ratio indicates the firm’s ability to pay off current interest and installments.[2018 May (6 × 2 = 12 Marks)]