Introduction to Corporate Accounting – Corporate and Management Accounting MCQ

Going through the Introduction to Corporate Accounting – Corporate and Management Accounting CS Executive MCQ Questions with Answers you can quickly revise the concepts.

Introduction to Corporate Accounting – Corporate and Management Accounting MCQs

Question 1.
The financial statements of company shall be in the form provided in:……….
(A) Schedule IV
(B) Schedule III
(C) Schedule V
(D) Schedule VI
Answer:
(B) Schedule III

Question 2.
Part I of the Schedule HI to the Companies Act, 2013 gives the -……..
(A) Format of Income Statement
(B) General instructions for preparation of Profit & Loss Account
(C) Format of Balance Sheet
(D) Format of Comparative Statements
Answer:
(C) Format of Balance Sheet

Question 3.
As per Section 129(2) of the Companies Act, 2013, at every of a company,the Board of Directors of the company shall lay before such meeting financial statements for the financial year.
(A) Board Meeting
(B) Annual General Meeting
(C) Extraordinary General Meeting
(D) Ordinary General Meeting
Answer:
(B) Annual General Meeting

Question 4.
The company shall attach along with its financial statement, a separate statement containing the salient features of the financial statement of its subsidiary or subsidiaries in as per the Companies (Accounts) Rules, 2014.
(A) Form No. AOC-1
(B) Form No. AOC-2
(C) Form No. AOC-3
(D) Form No. AOC-4
Answer:
(A) Form No. AOC-1

Question 5.
Notes to accounts shall contain information in addition to that presented in the Financial Statements and shall provide where required:
1. Narrative descriptions or disaggregation’s of items recognized in those statements
2. Information about items that do not qualify for recognition in those statements.
Select the correct answer from the options given below –
(A) 1 only
(B) 2 only
(C) 1 but not 2
(D) Both 1 and 2
Answer:
(D) Both 1 and 2

Question 6.
If the turnover of the company is less than ₹ 100 Crore, the figures appearing in the Financial Statements may be rounded off to nearest –
(A) To the nearest hundreds
(B) To the nearest hundreds and thousands
(C) To the nearest hundreds, thousands, lakhs or millions thereof.
(D) To the nearest hundreds, thousands, lakhs or millions, or decimals thereof.
Answer:
(D) To the nearest hundreds, thousands, lakhs or millions, or decimals thereof.

Question 7.
Statement I:
Where the financial statements of a company do not comply with the accounting standards referred, the company shall disclose in its financial statements, the deviation from the accounting standards but the reasons for such deviation and the financial effects, if any, arising out of such deviation are not required to be given.

Statement II:
As per Section 129 of the Companies Act, 2013 the word “subsidiary” shall include associate company and joint venture.
Select the correct answer from the options given below –
(A) Statement I is true but Statement II is false.
(B) Statement I is false but Statement II is true.
(C) Both Statement I and Statement II are true
(D) Both Statement I and Statement II are false
Answer:
(B) Statement I is false but Statement II is true.

Question 8.
If the turnover of the company more than 100 Crore, the figures appearing in the Financial Statements may be rounded off to nearest -……..
(A) To the nearest hundreds, thousands, lakhs or millions, or decimals thereof.
(B) To the nearest lakhs, millions or crores, or decimals thereof
(C) To the nearest millions or crores or decimals thereof
(D) To the nearest crores or decimals thereof
Answer:
(B) To the nearest lakhs, millions or crores, or decimals thereof

Question 9.
Under which heading the Deferred Tax Liabilities appears in the balance sheet
(A) Current Liabilities
(B) Non-Current Liabilities
(C) Deferred Liabilities
(D) Contingent Liabilities
Answer:
(B) Non-Current Liabilities

Question 10.
An auditor of a company signed the balance sheet, profit & loss account and schedules/notes and furnished the auditor’s report on the same date on which the reports were signed by the directors on behalf of the board. One of the director raised objection stating that the audit cannot be completed and certified in a day. Which of the following statement is correct
(A) Section 143 gives the auditors access at all times to the books of account and vouchers of the company, which amply suggests that they do not have to remain idle at any time after their appointment as auditors.
(B) If the auditor signs the balance sheet on the same date on which the directors have approved it, it may not be inferred from the circumstances that the auditor has not performed the audit efficiently.
(C) There is no violation of Section 134 where the audit is completed before approved of the balance sheet by the Board of directors.
(D) All of the above
Answer:
(D) All of the above

Question 11.
An asset shall be classified as current:
(A) If it is held primarily for the purpose of being traded.
(B) If it is not possible to classify such asset as non-current asset.
(C) If for the asset normal operating cycle cannot be identified.
(D) If such asset expected to be realized after twelve months after the reporting date.
Answer:
(A) If it is held primarily for the purpose of being traded.

Question 12.
A copy of the financial statements, including consolidated financial statement, along with all the documents attached to financial statements, duly adopted at the AGM, shall be filed with the Registrar within ……….of the date of AGM in prescribed manner along with prescribed fees.
(A) 10 days
(B) 30 days
(C) 60 days
(D) 90 days
Answer:
(B) 30 days

Question 13.
As per Schedule III of the Companies Act, 2013, where the normal operating cycle cannot be identified, it is assumed to have duration of -…………
(A) 3 months
(B) 6 months
(C) 9 months
(D) 12 months
Answer:
(D) 12 months

Question 14.
As per Rule 12 of the Companies (Accounts) Rules, 2014, a financial statement shall be filed in which should be pre-certified by Practicing CA.
(A) Form AOC-3
(B) Form AOC-4
(C) Form AOC-5
(D) Form AOC-6
Answer:
(B) Form AOC-4

Question 15.
A liability shall be classified as current when it satisfies any of the following criteria:
(A) It is expected to be settled in the Company’s normal operating cycle.
(B) It is due to be settled within twelve months after the reporting date
(C) The company does not have an un-conditional right to defer settlement of the liability for at least twelve months after the reporting date.
(D) All of the above
Answer:
(D) All of the above

Question 16.
OPC shall file a copy of the financial statements duly adopted by its member, along with all the documents which are required to be attached to such financial
statements, within from the closure
of the financial year.
(A) 30 days
(B) 60 days
(C) 120 days
(D) 180 days
Answer:
(D) 180 days

Question 17.
Which of the following is required to be disclosed in notes to accounts in respect of ‘Share Capital
(A) A reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period
(B) Aggregate number and class of shares bought back
(C) Shares in the company held by each shareholder holding more than 5%.
(D) All of the above
Answer:
(D) All of the above

Question 18.
As per Rule 3 of the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015, all companies having has to file their Balance Sheet, Profit & Loss A/c and other documents with the Registrar using the Extensible Business Reporting Language (XBRL).
(A) Issued capital of ₹ 5 Crore or above
(B) Authorized capital of more than₹ 10 Crore
(C) Paid-up capital of ₹ 5 Crore or above
(D) Subscribed capital of ₹ 25 Crore or above
Answer:
(C) Paid-up capital of ₹ 5 Crore or above

Question 19.
Which of the following appears under the heading ‘Reserves & Surplus’ in the balance sheet
(A) Share Options Outstanding Account
(B) Share Application Money Pending Allotment
(C) Long Term Provisions
(D) Secrete Reserves
Answer:
(A) Share Options Outstanding Account

Question 20.
As per Schedule HI of the Companies Act, 2013, a Company shall disclose by way of notes additional information regarding aggregate expenditure and income in relation to any item of income or expenditure which exceeds:
(A) 0.5% of the revenue from operations
(B) ₹ 10,000
(C) 1% of the revenue from operations ₹ 1,00,000, whichever is higher
(D) 0.5% of the revenue from operations ₹ 10,000, whichever is less.
Answer:
(C) 1% of the revenue from operations ₹ 1,00,000, whichever is higher

Question 21.
As per Rule 3 of the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015, all companies having turnover of has to file their Balance Sheet, Profit & Loss A/c and other documents with the Registrar using the Extensible Business Reporting Language (XBRL)
(A) ₹ 50 Crore or above
(B) ₹ 100 Crore or above
(C) ₹ 250 Crore or above
(D) ₹ 500 Crore or above
Answer:
(B) ₹ 100 Crore or above

Question 22.
As per Section 128. of the Companies Act, 2013, every company shall prepare and keep at its books of account and other relevant books and papers and financial statement for every financial year
(A) Corporate Office
(B) Registered Office
(C) Corporate Office or Registered Office
(D) Head Office
Answer:
(B) Registered Office

Question 23.
Which of the following will be shown in the balance sheet under the heading ‘cash and cash equivalents
(A) Earmarked balances with banks
(B) Bank deposits with more than twelve months maturity
(C) Cheques, drafts on hand
(D) All of the above
Answer:
(D) All of the above

Question 24.
Which of the following type of company is required to file their accounts in Extensible Business Reporting Language (XBRL) format
(A) Banking companies
(B) Insurance companies
(C) Non-Banking Financial companies
(D) None of the above
Answer:
(D) None of the above

Question 25.
Declared dividend must be paid within of declaration.
(A) 5 days
(B) 10 days
(C) 30 days
(D) 60 days
Answer:
(C) 30 days

Question 26.
Retained earnings are – …………
(A) An indication of a company’s liquidity.
(B) The same as cash in the bank.
(C) Not important when determining dividends.
(D) The cumulative earnings of the company after dividends.
Answer:
(D) The cumulative earnings of the company after dividends.

Question 27.
Which of the following type of company is required to file their accounts in Extensible Business Reporting Language (XBRL) format
(I) Subsidiary of Indian Listed Company
(II) Companies which are required to prepare their financial statements in accordance with the Companies (Indian Accounting Standards) Rules, 2015
(III) Private company having turnover of ₹ 99 Crore.
(IV) Public companies having paid-up capital of ₹ 3 Crore.
Select the correct answer from the options given below –
(A) (I)&(II)
(B) (II) & (IV)
(C) (II)&(III)
(D) (I), (II) & (III)
Answer:
(A) (I)&(II)

Question 28.
The primary goal of a publicly-owned firm interested in serving its stockholders should be to
(A) Maximize expected total corporate profit
(B) Maximize expected EPS
(C) Maximize the stock price per share
(D) Maximize expected net income.
Answer:
(C) Maximize the stock price per share

Question 29.
In the real world, we find that dividends -…………………
(A) Usually exhibit greater stability than earnings.
(B) Fluctuate more widely than earnings
(C) Tend to be a lower percentage of earnings for mature firms
(D) Are usually set as a fixed percentage of earnings
Answer:
(A) Usually exhibit greater stability than earnings.

Question 30.
Which of the following statement is correct
(A) A company may, if so authorized by its articles, pay dividends in proportion to the amount paid-up on each share.
(B) Dividend cannot be paid on calls-in- advance.
(C) All the provisions of the Companies Act, 2013 that are applicable to final dividend are also applicable to interim dividend.
(D) All of the above
Answer:
(D) All of the above

Question 31.
As per provisions of the Companies Act, 2013, dividend can be paid -……
1. Out of current profit
2. Out of revaluation reserve
3. Out of profits of previous financial years
4. Out of money provided by the Central or State Government
5. Out of free reserve
Select the correct answer from the options given below.
(A) 1 and 5 only
(B) 1,2,3 & 5
(C) 1, 3 and 5 only
(D) 1,3,4 and 5
Answer:
(D) 1,3,4 and 5

Question 32.
As per Section 128 of the Companies Act, 2013, a company may, before the declaration of any dividend in any financial year, transfer ………… to the reserves of the company.
(A) 25% of its profit after tax
(B) 10% of its profit before tax
(C) such percentage of its profits for that financial year as board of directors may consider appropriate
(D) such percentage of its profits for that financial year as equity shareholder may consider appropriate
Answer:
(C) such percentage of its profits for that financial year as board of directors may consider appropriate

Question 33.
As per Rule 7 of the Companies (Declaration & Payment of Dividend) Rules, 2014, in the event of inadequacy or absence of profits in any year, a company may declare dividend out of surplus subject to the fulfillment of the condition that rate of dividend declared shall not exceed the average of the rates at which dividend was
declared by it in the immediately
preceding that year.
(A) 5 years
(B) 10 years
(C) 3 years
(D) 4 years
Answer:
(C) 3 years

Question 34.
As per Rule 7 of the Companies (Declaration & Payment of Dividend) Rules, 2014, in the event of inadequacy or absence of profits in any year, a company may declare dividend out of surplus subject to the fulfillment of the condition that total amount to be drawn from such accumulated profits shall not exceed …….as appearing in the latest audited financial statement.
(A) 1/10th of the total assets
(B) 1 / 5th of the sum of its paid-up share capital
(C) 1/10th of the sum of its paid-up share capital and free reserves
(D) 1 /5th of the sum of its paid-up share capital and free reserves
Answer:
(C) 1/10th of the sum of its paid-up share capital and free reserves

Question 35.
As per Rule 7 of the Companies (Declaration & Payment of Dividend) Rules, 2014, in the event of inadequacy or absence of profits in any year, a company may declare dividend out of surplus subject to the fulfilment of the condition the balance of reserves after such withdrawal shall not
fall below as appearing in the latest
audited financial statement.
(A) 10% of its paid-up share capital
(B) 15% of its paid-up share capital
(C) 15% of its paid-up share capital and free reserve
(D) 10% of its paid-up share capital and free reserve
Answer:
(C) 15% of its paid-up share capital and free reserve

Question 36.
As per the provisions of the Companies Act, 2013, the amount of the dividend, including interim dividend, shall be deposited in a scheduled bank in a separate account within ………… from the date of declaration of such dividend.
(A) 30 days
(B) 15 days
(C) 10 days
(D) 5 days
Answer:
(D) 5 days

Question 37.
After declaration of dividend, the company has to pay dividend within ……. of declaration of dividend. If amount of dividend remains unpaid or unclaimed for 30 days of declaration of dividend, then in next…….. the company has to transfer the amount unclaimed to the to a special account in any scheduled bank to be called the “Unpaid Dividend Account”.
(A) 5 days; 5 days
(B) 30 days; 7 days
(C) 30 days; 5 days
(D) 10 days; 7 days
Answer:
(B) 30 days; 7 days

Question 38.
In the Balance Sheet Corporate Dividend Tax will be shown as a liability under the heading –
(A) Current Liabilities
(B) Non-Current Liabilities
(C) Tax Liabilities
(D) Deferred Liabilities
Answer:
(A) Current Liabilities

Question 39.
Any money transferred to the unpaid dividend account of a company which remains unpaid or unclaimed for a period
of from the date of such transfer must be transferred by the company to Investor Education and Protection Fund
(A) 3 years
(B) 5 years
(C) 7 years
(D) 10 years
Answer:
(C) 7 years

Question 40.
A Company has a paid up equity share capital of ₹ 37,50,000(of ₹ 10each) and 11% preference share capital of ₹ 12,50,000 (of ₹ 100 each). The balance of profit brought forward from the previous Balance Sheet was ₹ 95,000. Profit for the year ended on 31.3.2018 amounted to ₹ 14,50,000 after tax. The directors proposed a dividend of 24% on equity share capital, after the following provisions:
(I) Transfer 10% of current profits to general reserves.
(II) Provision of dividend on preference shares
Assume corporate dividend tax rate 17%. Closing balance of Profit & Loss A/ c will be –
(A) ₹ 1,86,125
(B) ₹ 3,62,500
(C) ₹ 2,48,350
(D) ₹ 1,75,425
Answer:
(A) ₹ 1,86,125

Question 41.
Trial Balance of Complex Ltd., as at 31.3.2019 shows the following item:

Particulars	Dr. (₹ )	Cr. (₹ )
Advance income tax Provision for tax for year ended 31.3.2018	55,000	30,000

(1) Advance payment of income tax includes ₹35,000 for 2017-2018.
(2) Actual tax liability for 2017-2018 amounts to ₹ 38,000 and no effect for the same has so far be given in accounts.
(3) Provision for income tax has to be made for 2018-2019 for ₹ 40,000.
You are required to calculate:
(a) Liability for taxation for last year Le. 2017-2018;
(b) Extra provision to be made in current year for last year.
(A) ₹ 8,000; ₹ 3,000
(B) ₹ 5,000; ₹ 12,000
(C) ₹ 3,000; ₹ 8,000
(D) ₹ 12,000; ₹ 5,000
Answer:
(C) ₹ 3,000; ₹ 8,000

Question 42.
A company had made provision for tax ₹ 70,000 for last year. Actual tax liability for the last financial year settled at ₹ 68,000. If had paid advance tax for last year ₹ 65,000. Which of the following statement is correct in relation tax treatment in accounts of the company
(A) Liability for taxation for the last year is ₹ 3,000
(B) Provision to write back for the last year ₹ 2,000
(C) Adjustment entry is required to be passed in current year by debiting Provision for Tax A/c and crediting Advance Income Tax A/c ₹ 65,000.
(D) All of the above are correct.
Answer:
(D) All of the above are correct.

Question 43.
Yash Ltd. has only one type of capital, viz, 40,000 equity shares of ₹ 100 each. It also has got reserves totalling ₹ 20,00,000. The company closes its books on 31st March each year. It has paid dividends @ 15% up to 2015-2016 and 20% thereafter. In2018-2019, the company suffered a loss of ₹ 2,50,000; therefore, it wishes to draw required amount out of the reserves to pay dividend at 12%. As the Companies (Declaration of Dividend Out of Reserves) Rules, 2014 how much maximum percentage of dividend can be paid by the company out of reserves.
(A) 12%
(B) 10%
(C) 8.75%
(D) 6.55%
Answer:
(C) 8.75%
Dividends can be declared out of past years profits transferred to reserves. In this case, the company has to comply with the Companies (Declaration of Dividend Out of Reserves) Rules, 2014. It lay down the following conditions subject to which a dividend may be declared by a company in the event of inadequacy or absence of profits in any year out of the profits earned by it in previous years and transferred to reserves.

(1) The rate of dividend declared shall not exceed the average of the rates at which dividend was declared by it in the 3 years immediately preceding that year.

Average rate of dividend = 55/3 = 18.3396
So, 18.3396 dividend can be paid at first instance.
Amount required for dividend at 18.3396 = 40,00,000 X 18.3396 = ₹ 7,33,200.

(2) The total amount to be drawn from such accumulated profits shall not exceed 1 / 10th of the sum of its paid-up share capital and free reserves as appearing in the latest audited financial statement.
1/10th of (Paid up capital + Free Reserve)
= (40,00,000 + 20,00,000) × 1 /10
= 6,00,000.
Thus, above amount in condition (1) will be restricted to ₹ 6,00,000.

(3) The amount so drawn shall first be utilized to set off the losses incurred in the financial year in which dividend is declared before any dividend in respect of equity shares is declared.

So, rate of dividend = 3,50,000/40,00,000 × 100 = 8.75%

(4) The balance of reserves after such withdrawal shall not fall below 15% of its paid up share capital as appearing in the latest audited financial statement.

Paid up capital × 15% = 40,00,000 × 15% = 6,00,000
As balance of reserve ie. 16,50,000 is more than 6,00,000. This condition is fulfilled.
So, rate of dividend can be 8.75%.

Question 44.
Due to paucity of profits, MUSKAT LTD. an Indian company proposes to declare dividends out of its general reserves.
10% pref. shares (₹ 100 each) — 10,00,000
Equity shares (₹ 100 each) — 30,00,000
General reserve — 8,00,000
Securities premium — 2,00,000
Credit balance of P & L A/c — 20,000
Net profit for the year (after tax) — 1,80,000
Average dividend for last 3 years — 15%
As the Companies (Declaration of Dividend Out of Reserves) Rules, 2014 how much maximum percentage of dividend can be paid by the company out of reserves.
(A) 10%
(B) 8%
(C) 12%
(D) 15%
Answer:
(A) 10%

Dividends can be declared out of past years profits transferred to reserves. In this case, the company has to comply with the Companies (Declaration & Payment of Dividend) Rules, 2014. It lay down the following conditions subject to which a dividend may be declared by a company in the event of inadequacy or absence of profits in any year out of the profits earned by it in previous years and transferred to Reserves.
(1) The rate of dividend should not exceed the average rate of dividend of last 3 years:
(2) The total amount to be drawn from the accumulated profits = up to 1 / 10th of the sum of the paid-up capital and free reserves of the company. The amount so drawn shall first be utilized to set off the losses incurred in the financial year before any dividend in respect of preference or equity shares is declared.
(3) The balance of reserves after such drawal shall not fall below 15% of the paid-up share capital of the company.

Condition 1:
Average rates of dividend i.e. 15%
So 15% dividend can be paid at first instance.

Condition 2:

So, rate of dividend = 4,00,000/40,00,000 × 100 = 10%

Condition 3:
The balance of reserves after such drawal shall not fall below 15% of the paid-up share capital of the company.

Question 45.
The paid-up capital of Apsara Ltd. consisted of 5,00,000 equity shares of ₹ 10 each and 50,000, 8% preference shares of ₹ 100 each. The statement of profit and loss of the company for the year ended 31.3.2019 showed net profit before tax of ₹ 20,00,000. Net profit brought forward from previous year’s balance sheet amounted to ₹ 6,00,000. Company makes a provision of 40% for income tax. Following appropriations were proposed by the company:
Answers:
(a) To pay final dividend @ ₹ 1.50 per share to equity shareholders.
(b) To transfer 5% of net profit to general reserve.
Assume corporate dividend tax rate 17%.
Closing balance of Profit & Loss A/ c will be –
(A) ₹ 3,94,500
(B) ₹ 2,94,500
(C) ₹ 4,94,500
(D) ₹ 1,94,500
Answer:
(A) ₹ 3,94,500