Question : The ratio of Current Assets (Rs.16,00,000) to Current Liabilities (Rs.10,00,000) is 1.6: 1. The accountant of the firm is interested in maintaining a Current Ratio of 2: 1, by paying off a part of the Current Liabilities. The amount of the Current Liabilities will be that should be paid, so that the Current Ratio at the level 2: 1 may be maintained.
Option 1: Rs 4,00,000
Option 2: Rs 5,00,000
Option 3: Rs 8,00,000
Option 4: Rs 10,00,000
Correct Answer: Rs 4,00,000
Solution : Answer = Rs 4,00,000
C. Assets = 16,00,000
C. liab = 10,00,000
C.Ratio =1.6:1
Let the amount of the current liab should be paid = $x$
$\frac{16,00,000-x}{10,00,000-x}$ = $\frac{2}{1}$
16,00,000-$x$ = 20,00,000 - 2$x$
$x$ = 4,00,000
C. liab should be paid = Rs. 4,00,000
Hence, the correct option is 1.
Answer laterQuestion : Select the correct direct form of the given sentence.
The receptionist asked me if I wanted to meet the accountant.
Option 1: The receptionist said to me, "Did you want to meet the accountant?"
Option 2: The receptionist said to me, "Do I want to meet the accountant?"
Option 3: The receptionist said to me, "Have you met the accountant?"
Option 4: The receptionist said to me, "Do you want to meet the accountant?"
Correct Answer: The receptionist said to me, "Do you want to meet the accountant?"
Solution : The correct choice is the fourth option.
Narration Conversion:
- The verb asked is changed to said in the direct form.
- If is changed to do when converting a question from the indirect form to the direct form.
- The first-person pronoun I is changed to the second-person pronoun you.
- The simple present tense is changed to the simple past tense.
Therefore, the direct form is: The receptionist said to me, "Do you want to meet the accountant?"
Question : The ratio of Current Assets (Rs.3,00,000) to Current Liabilities is Rs.2,00,000 then the ratio is 1.5:1. The accountant of this firm is interested in maintaining a Current Ratio of 2:1 by acquiring some Current Assets on Credit. The amount of Current Assets which must be acquired for this purpose.
Option 1: Rs 1,00,000
Option 2: Rs 50,000
Option 3: Rs 1,50,000
Option 4: Rs 2,00,000.
Correct Answer: Rs 1,00,000
Solution : Answer = Rs 1,00,000
Let the current assets that should be purchased on credit be X
$\frac{3,00,000+X}{2,00,000+X}$ =2:1
Then the value of X Rs.1,00,000.
Hence, the correct option is 1.
Question : Fardeen Ltd. received interest on an item and the accountant classified it unde Investing Activity while preparing Cash Flow Statement. Name another item for which such a treatment is possible.
Option 1: Dividend paid
Option 2: Dividend received
Option 3: Issue of equity shares
Option 4: Interest on call - in arrear
Correct Answer: Dividend received
Solution : Answer = Dividend received
Interest received on investments is typically classified as an investing activity in the Cash Flow Statement. Similarly, dividends received, being an income from investments, can also be classified as an investing activity. Both involve returns earned from investments made by the company, hence they fall under the investing category.
Hence, the correct option is 2.
Question :
Assertion (A) : Rajiv and Vinod, who share the profit and losses in 2 : 3, are dissolving the firm. There is a general reserve in the balance sheet of Rs.60000. The accountant transferred Rs.24000 in Rajiv's capital account and Rs.36000 in Vinod's capital account.
Reason (R) : The undistributed profit and losses and reserves are always transferred to partners' capital account in their profit sharing ratio and not to the realisation account.
Option 1: Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct eplanation of Assertion (A).
Option 2: Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct eplanation of Assertion (A).
Option 3: Assertion (A) is true, but Reason (R) is false
Option 4: Assertion (A) is false, but Reason (R) is true.
Correct Answer: Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct eplanation of Assertion (A).
Solution : Since capital is an investment made by the partners themselves, the firm will only return the capital to the partners at the time of a partner's dissolution once all other debts, including any loans made in proportion to the partners' capital, have been settled.
Hence the Correct answer is option 1.
Question : The ratio of Current Assets (Rs.16,00,000) to Current Liabilities (Rs.10,00,000) is 1.6: 1. The accountant of the firm is interested in maintaining a Current Ratio of 2: 1, by paying off a part of the Current Liabilities. The amount of the Current Liabilities will be that should be paid, so that the Current Ratio at the level 2: 1 may be maintained.
Option 1: Rs 4,00,000
Option 2: Rs 5,00,000
Option 3: Rs 8,00,000
Option 4: Rs 10,00,000
Correct Answer: Rs 4,00,000
Solution : Answer = Rs 4,00,000
C. Assets = 16,00,000
C. liab = 10,00,000
C.Ratio =1.6:1
Let the amount of the current liab should be paid = $x$
$\frac{16,00,000-x}{10,00,000-x}$ = $\frac{2}{1}$
16,00,000-$x$ = 20,00,000 - 2$x$
$x$ = 4,00,000
C. liab should be paid = Rs. 4,00,000
Hence, the correct option is 1.
Question : Select the option that expresses the given sentence in direct speech.
The officer asked the accountant why the accounts had not been reconciled.
Option 1: The officer said to the accountant, "Why have the accounts not being reconciled?"
Option 2: The officer said to the accountant, "Why the accounts had not been reconciled?"
Option 3: The officer said to the accountant, "Why the accounts have not been reconciled?"
Option 4: The officer said to the accountant, "Why have the accounts not been reconciled?"
Correct Answer: The officer said to the accountant, "Why have the accounts not been reconciled?"
Solution : The correct choice is the fourth option.
In the direct speech, the exact words spoken by a person are enclosed in quotation marks and attributed to the speaker. The reported question from the indirect speech is directly presented within quotation marks in the direct speech version.
The steps of conversion are as follows:
- The reporting verb "asked" would be changed to "said".
- Rewrite the reported clause as a direct question: "Why have the accounts not been reconciled?"
- Since the reported speech is already in past perfect tense and there are no pronoun changes needed, no adjustments are required.
- Add quotation marks around the reported speech.
Therefore, the correct answer would be: The officer said to the accountant, "Why have the accounts not been reconciled?"
Question : Fardeen Ltd. received interest on an item and the accountant classified it unde Investing Activity while preparing Cash Flow Statement. Name another item for which such a treatment is possible.
Option 1: Dividend paid
Option 2: Dividend received
Option 3: Issue of equity shares
Option 4: Interest on call - in arrear
Correct Answer: Dividend received
Solution : Answer = Dividend received
Interest received on investments is typically classified as an investing activity in the Cash Flow Statement. Similarly, dividends received, being an income from investments, can also be classified as an investing activity. Both involve returns earned from investments made by the company, hence they fall under the investing category.
Hence, the correct option is 2.
Question : Ram is the personal manager of X limited company. He have been directed by the directors of the company to select a chartered accountant for the company. Which of the following process he will choose?
Option 1: Recruitment
Option 2: Selection
Option 3: Training
Option 4: None of the above
Correct Answer: Selection
Solution : Selection is the process of identifying and choosing the best person out of a number of prospective candidates for a job.
Hence, option B is correct.
Question : Assertion A:- In many situations, the accountant has to make a choice out of alternatives available, e.g., choice in the method of inventory valuation, choice in the method of depreciation (straight line or written down value)
Reason R: - The subjectivity is inherent in personal judgment, the financial statements are, therefore, not free from bias. It is a limitation of financial statements.
Option 1: Both Assertion A and reason R are correct but reason R is not the correct explanation of Assertion A
Option 2: Both Assertion A and reason R are correct but reason R is the correct explanation of Assertion A
Option 3: Both Assertion A is correct but the reason R is not correct
Option 4: Both Assertion A and reason R are not correct
Correct Answer: Both Assertion A and reason R are correct but reason R is the correct explanation of Assertion A
Solution : Answer = Both Assertion A and reason R are correct but reason R is the correct explanation of Assertion A
In many situations, the accountant has to make a choice out of alternatives available, e.g., a choice in the method of inventory valuation, or a choice in the method of depreciation (straight line or written down value). The subjectivity is inherent in personal judgment, the financial statements are, therefore, not free from bias. It is a limitation of financial statements.
Hence, the correct option is 2.
