2955 + Interview Questions in Accounts in Class 12 Page 4 InterviewSolution

151.	Why depreciation and liabilites written back are not considered in Cash Flow Statement ?
Answer» SOLUTION :They are not CONSIDERED because they are NON CASH TRANSACTIONS .

Discussion

152.	Why are ''Reserves & Surplus'' distributed at the time of reconstitution on firm?
Answer» SOLUTION :These belong to OLD partner. As such, these should be DISTRIBUTED AMONG them.

Discussion

153.	Why are loose tools, stores and spares not included in Current Assets while calculating Liquidity Ratios?
Answer» Solution : Loose tools, stores and SPARES are not included in Current Assets while CALCULATING Liquidity Ratios because they are not HELD with the purpose ofConversion into Cash and Cash EQUIVALENTS.

Discussion

154.	Why are reserves and accumulated profits credited to the partner's capital accounts in case of change in profit sharing ratio amongst the existing partners?
Answer» SOLUTION :Reserves and accumulated profits are CREDITED to the capital accounts of all partners in their old profits sharing ratio because they have been set apart out of the profits earned in the period before change. If they are not ADJUSTED at present, they will get adjusted later in their new profit sharing ratio which will result in loss to SACRIFICING partner and GAIN to the gaining partner.

Discussion

155.	Why are investors interested in analysing Financial Statement?OrState the interest of investors in the Analysis of Financial Statements.
Answer» SOLUTION :Investors are INTERESTED in ANALYSING the Financial Statement to ASSESS the SAFETY of their investments and reurn.

Discussion

156.	Why are inventories not considered as Quick Assets?
Answer» Solution :(i) There is uncertainty as to WHETHER or not and at what PRICE the inventories can be sold. (ii) Time is required to CONVERT the raw-materials into finished goods and SELLING them to convert into CASH and Cash Equivalents.

Discussion

157.	Who should compensate whom in case of a change in Profit-sharing Ratio of existing partneers?
Answer» Solution :Gaining Partner(s) (i.e., the partner whose share in profit has increased due to change in profit-sharing ratio) COMPENSATES the SACRIFICING partners (i.e., partnes whose share in profit is DECREASED due to change in profit-sharing ratio)by paying amount PROPORTIONATE to the value of firm's Goodwill.

Discussion

158.	Why are bank charges charged by the bank not included in finance costs?
Answer» SOLUTION :Bank charges are not included in finance COSTS because they are not INCURRED on borrowings but are cost of availing the services of the bank such as charges for getting a draft MADE.

Discussion

159.	Who of the following is not the Internal User of Financial Statements ?
Answer» CREDITORS Shareholders Management Employees Solution :Creditors

Discussion

160.	Who are the users of Accouting information ?
Answer» Solution :The user of Accounting informationinclude present and potenal investors, mangment ,emlopyees,lenders, suppliers and other TRADE Creditors ,CUSTOMER GOVERNMENT and its agencies and the PUBLIC .

Discussion

161.	Whlle preparing Common - size Income Statement , each item of Income Statement is expressed as % of
Answer» REVENUE from OPERATIONS. Other income. Total Income. Profit before Tax. Solution :Revenue from Operations.

Discussion

162.	Whlch of the following represent capital receipt :
Answer» Life MEMBERSHIP SUBSCRIPTION Donation Subscription Interest on INVESTMENTS ANSWER :A

Discussion

163.	While preparing the Cash Flow Statement of Sharda Ltd. 'Depreciation provided on fixed assets' was added to net profit to calculate Cash Flow from Operating Activities. Was the accountant correct in doing so? Give reason.Or The accountant of Manav Ltd. while preparing Cash Flow Statement added depreciation provided on fixed assets to net profit for calculating Cash Flow from Operating Activities. Was the accountant correct in doing so? Give reason.
Answer» SOLUTION :YES, the accountant of SHARDA Ltd./Manav Ltd. Was correct because 'Depreciation provided on fixed assets' is a non-cash EXPENSE.

Discussion

164.	While preparing the Cash Flow Statement of Alka Ltd. 'dividend paid' was shown as an Operating Activity by the accountant of the company. Was he correct in doing so? Give reason.
Answer» SOLUTION :No, the accountant of Alka LTD. Was not correct because 'dividend paid' is a Financing ACTIVITY not an OPERATING Activity (i.e., principal revenue producing activity).

Discussion

165.	Whiletransferringassets to realisationaccount ………………. Isomitted tobe transferred :
Answer» Patents Goodwill Cash Investments Answer :C

Discussion

166.	while preparing the Balance Sheet of a compnay 'Securities Premium' is shown under :
Answer» CURRENT Liability Share Capital Long-term BORROWINGS NONE of the above Answer :D

Discussion

167.	While preparing Common - size Balance , each item of Balance Sheet is expressed as % of
Answer» CURRENT ASSETS. Non - current Assets. Non - current Liabilities. TOTAL Assets. Solution :Total Assets.

Discussion

168.	While preparing the Balance Sheet of a Company which item is shown under the head 'Long term Borrowings' ?
Answer» 6% DEBENTURES SECURITY Premium Reserve TRADE Payables None of the above Answer :A

Discussion

169.	While preparing Cash Flow Statement, what type of activity is 'Payment of cash to acquire shares of another company by a trading company?
Answer» SOLUTION :INVESTING ACTIVITY.

Discussion

170.	While preparing Cash Flow Statement, the accountant of 'Rachana Ltd'. A financing company, included 'Interest received on loan' in Financing Activities.Was he correct in doing so? Give reason.
Answer» Solution :No, the accountant was not correct because 'Interest received on LOAN' for a FINANCING COMPANY is an Operating ACTIVITY and not a Financing Activity.

Discussion

171.	While preparing Cash Flow Statement, the accountant of a financing company showed 'Dividend Received Rs. 50,000 on investments' as an Investing Activity'. Was he correct in doing so? Give reason.
Answer» Solution :No, the accountant was not CORRECT because 'Dividend Received Rs. 50,000' is an Operating ACTIVITY for a FINANCE company and not an Investing Activity.

Discussion

172.	While calculating profit which will be added to net profit:
Answer» PROFIT on Sale of ASSET Increases in General Reserves Interest received Refund of Tax Answer :B

Discussion

173.	While calculating operating profit which will be added to net profit:
Answer» PRELIMINARY EXPENSES WRITTEN off Depreciation Loss on Sale of Asset All of the above ANSWER :D

Discussion

174.	While calculating cash flow from operating activities which will be added:
Answer» INCREASE in Inventory Increase in Creditors Devrease in Billls PAYABLE Increase in TRADE Receivables Answer :B

Discussion

175.	While calculating cash flow from operating activities which will be deducted:
Answer» Decrease in Prepaid EXPENSES INCREASE in PAYABLES Increase in Trade RECEIVABLES Decrease in Trade Receivables Answer :C

Discussion

176.	Which type of income and expenses are recorded in Income and Expenditure Account?
Answer» SOLUTION :Both CASH and non-cash expenses and REVENUE income are recorded in the Income and Expenditure Account.

Discussion

177.	Which technique of financial analysis shows a comparative study of items or components of financial statements for two or more years?
Answer» COMMON - SIZE Statement. Ratio Analysis. ComparativeStatement. None of these. Solution :ComparativeStatement.

Discussion

178.	Which segment is the best segment of the Company ?
Answer» Solution :FMCG-Cigraretters and Other is the BEST SEGMENT ,because it CONTRIBUTES about 86% to the profit of the company

Discussion

179.	Which segment has highest revenue
Answer» Solution :FMCG- Cigarettessegment has HIGHEST revenue it has AROUND 43% revenue to thetotal revenue from OPERATIONS of the campany

Discussion

180.	Which ratio is not a part of SolvencyRatio?
Answer» CURRENT RATIO DEBT to EQUITY Ratio Total ASSETS to Debt Ratio Proprietary Ratio Solution :Current Ratio

Discussion

181.	Which ratio is not a part of Solvency Ratio ?
Answer» CURRENT RATIO DEBT to EQUITY Ratio Total ASSETS to Debt Ratio Proprietary Ratio Solution :Current Ratio

Discussion

182.	Which purchases are shown under Purchases of Stock-in-Trade?
Answer» SOLUTION :N/a

Discussion

183.	Which preparing the Balance Sheet of a company 'Underwriting Commission' is shown under which head ?
Answer» Unamortized Expenditure Current Assets Non-Current Assets Current Liability Answer :A

Discussion

184.	Which one of the following items is shown under the heading 'current liabilities' in the Balance Sheet of a company?
Answer» Investments Reserve Funds Unclaimed DIVIDEND Livestock Answer :C

Discussion

185.	Which one of the following items is not a tool used for financial analysis ?
Answer» COMPARATIVE Statements Ratio Analysis Common SIZE Statements Statement of DIVIDEND Distribution Answer :D

Discussion

186.	Which one of the following items is not a method/tool of analysis of financial statements ?
Answer» Accounting Ratio Break Even Point Statement of RECEIPTS and Payments Fund FLOW Statement Answer :C

Discussion

187.	Which one of the following is tool of financial analysis ?
Answer» ComparativeStatement. Common - SIZE Statements. Cash FLOW Statement All of these. Solution :All of these.

Discussion

188.	Which one of the following is Commitment ?
Answer» PROPOSED Dividend Interim Dividend Unpaid/Unclaimed Dividend Dividend ARREARS on CUMULATIVE PREFERNCE Shares Answer :D

Discussion

189.	Which one of the following items is not a part of subscribed capital ?
Answer» Equity SHARES Preference Shares FORFEITED Shares BONUS Shares Answer :C

Discussion

190.	Which one fo the following items is not a method/tool of analysis of financial statements ?
Answer» TREND Analysis Cash FLOW Statement Comparative Statements Answer :B

Discussion

191.	Which of the following transactions will improve the quick ratio?
Answer» Sale of GOODS for CASH Sale of goods on credit Issue of new SHARES for cash All of the Above ANSWER :D

Discussion

192.	Which of the following transactions will improve the Current Ratio:
Answer» Cash Collected from Trade Receivables PURCHASE of GOODS for cash Payment to Trade PAYABLES Credit purchase of Goods Answer :C

Discussion

193.	Which of the following statement is false :
Answer» A - A Company can ISSUE redeemable debentures. B - A Company can issue debentures with VOTING rights. C - A Company can issue convertible debentures. D - A Company can BUY its own debentures and shares. Answer :B

Discussion

194.	Which of the following statement is false ?
Answer» DEBENTURE is a form of PUBLIC borrowing. It is customary to PREFIX debentures with the agreed rate of interest. Debenture interest is a CHARGE against profits. The issue PRICE and redemption value of debentures cannot differ. Answer :D

Discussion

195.	Which of the following statement is correct ?
Answer» Goodwill is a FICTITIOUS ASSET Goodwill is a current asset Goodwill is a wasting asset Goodwill is an INTANGIBLE asset Solution :Goodwill is an intangible asset

Discussion

196.	Which of the following items will not be shown in profit and Loss Appropriation Account?
Answer» INTEREST on Capital Commission to a PARTNER Interest on Drawings Interest on Partner's LOAN Solution :Interest on Partner's Loan

Discussion

197.	Which of the following items will not be shown in the debit of profit and Loss Appropriation Account?
Answer» INTEREST Capital Commission to a partner Interest on DRAWINGS Salary to partners Solution :Interest on Drawings

Discussion

198.	which of the following items is shown under the head 'Current Liabilities' while preparing the Balance Sheet of a company?
Answer» SECURITIES PREMIUM Reserve Debentures Livestock None of the above Answer :D

Discussion

199.	Which of the following items will not be shown in the debits of Profit and Loss Appropriation Account ?
Answer» INTEREST on Capital Commission to a partner Interest on DRAWINGS Salary to partners Solution :Interest on Drawings

Discussion

200.	Which of the following items is shown under the head 'Current Asset' while preparing the Balance Sheet of a company ?
Answer» TRADE INVESTMENT UNDERWRITING Commission Inventories Livestock Answer :C

Discussion

Explore topic-wise InterviewSolutions in .

Why depreciation and liabilites written back are not considered in Cash Flow Statement ?

Why are ''Reserves & Surplus'' distributed at the time of reconstitution on firm?

Why are loose tools, stores and spares not included in Current Assets while calculating Liquidity Ratios?

Why are reserves and accumulated profits credited to the partner's capital accounts in case of change in profit sharing ratio amongst the existing partners?

Why are investors interested in analysing Financial Statement?OrState the interest of investors in the Analysis of Financial Statements.

Why are inventories not considered as Quick Assets?

Who should compensate whom in case of a change in Profit-sharing Ratio of existing partneers?

Why are bank charges charged by the bank not included in finance costs?

Who of the following is not the Internal User of Financial Statements ?

Who are the users of Accouting information ?

Whlle preparing Common - size Income Statement , each item of Income Statement is expressed as % of

Whlch of the following represent capital receipt :

While preparing the Cash Flow Statement of Alka Ltd. 'dividend paid' was shown as an Operating Activity by the accountant of the company. Was he correct in doing so? Give reason.

Whiletransferringassets to realisationaccount ………………. Isomitted tobe transferred :

while preparing the Balance Sheet of a compnay 'Securities Premium' is shown under :

While preparing Common - size Balance , each item of Balance Sheet is expressed as % of

While preparing the Balance Sheet of a Company which item is shown under the head 'Long term Borrowings' ?

While preparing Cash Flow Statement, what type of activity is 'Payment of cash to acquire shares of another company by a trading company?

While preparing Cash Flow Statement, the accountant of 'Rachana Ltd'. A financing company, included 'Interest received on loan' in Financing Activities.Was he correct in doing so? Give reason.

While preparing Cash Flow Statement, the accountant of a financing company showed 'Dividend Received Rs. 50,000 on investments' as an Investing Activity'. Was he correct in doing so? Give reason.

While calculating profit which will be added to net profit:

While calculating operating profit which will be added to net profit:

While calculating cash flow from operating activities which will be added:

While calculating cash flow from operating activities which will be deducted:

Which type of income and expenses are recorded in Income and Expenditure Account?

Which technique of financial analysis shows a comparative study of items or components of financial statements for two or more years?

Which segment is the best segment of the Company ?

Which segment has highest revenue

Which ratio is not a part of SolvencyRatio?

Which ratio is not a part of Solvency Ratio ?

Which purchases are shown under Purchases of Stock-in-Trade?

Which preparing the Balance Sheet of a company 'Underwriting Commission' is shown under which head ?

Which one of the following items is shown under the heading 'current liabilities' in the Balance Sheet of a company?

Which one of the following items is not a tool used for financial analysis ?

Which one of the following items is not a method/tool of analysis of financial statements ?

Which one of the following is tool of financial analysis ?

Which one of the following is Commitment ?

Which one of the following items is not a part of subscribed capital ?

Which one fo the following items is not a method/tool of analysis of financial statements ?

Which of the following transactions will improve the quick ratio?

Which of the following transactions will improve the Current Ratio:

Which of the following statement is false :

Which of the following statement is false ?

Which of the following statement is correct ?

Which of the following items will not be shown in profit and Loss Appropriation Account?

Which of the following items will not be shown in the debit of profit and Loss Appropriation Account?

which of the following items is shown under the head 'Current Liabilities' while preparing the Balance Sheet of a company?

Which of the following items will not be shown in the debits of Profit and Loss Appropriation Account ?

Which of the following items is shown under the head 'Current Asset' while preparing the Balance Sheet of a company ?