Food Corporation of India

FCI Management Trainee (Accounts) Exam Paper

1. According to the concept of conservation, the stock in trade is valued at—

(A) Cost price

(B) Market price

(C) Cost or market price which ever is higher

(D) Cost or market price which ever is lower

Ans. (D)

2. The concept of conservation will have the effect of—

(A) Over statement of assets

(B) Understatement of assets

(C) Understatement of liabilities

(D) Understatement of provision for bad and doubtful debts

Ans. (B)

3. Non-financial information is not recorded in accounts due to—

(A) Accrual concept

(B) Entity concept

(C) Dual aspect concept

(D) Money measurement concept

Ans. (D)

4. Balance in ‘Nazrana’s A/C’ in the books of lessee is shown in—

(A) Landlords a/c

(B) P&L a/c

(C) Balance sheet assets side

(D) Balance sheet liabilities side

Ans. (C)

5. The hire-buyer charges depreciation on—

(A) Cash price of the asset

(B) Hire purchase price of the asset

(C) Higher of the two

(D) Lower of the two

Ans. (A)

6. In hire-purchase system, hire-buyer can maintain his accounts under—

(A) Asset accrued method

(B) Total cash price method

(C) Any of the two methods

(D) None of these

Ans. (C)

7. If the rate of gross profit for department X is 25% of cost, the amount of gross profit on sales of Rs. 100000 will be-—

(A) Rs. 16667

(B) Rs. 20000

(C) Rs. 25000

(D) Rs. 33333

Ans. (B)

8. Provision for bad debts of a foreign branch is converted at—

(A) Opening rate of exchange

(B) Closing rate of exchange

(C) Average rate of exchange

(D) Rate applicable to debtors

Ans. (B)

9. If goods are transferred from ‘X’ department to ‘Y’ department at cost +25%, the amount of stock reserve on closing stock of Rs. 20000 in ‘Y’ department will be—

(A) Rs. 4000

(B) Rs. 5000

(C) Rs. 6000

(D) Rs. 3333

Ans. (A)

10. If out of the bills of Rs. 10000 discounted by the insolvent bills of Rs. 4000 are likely be dishonoured, unsecured creditors will include in respect of them an amount of—

(A) Rs. 10000

(B) Rs.6000

(C) Rs. 4000

(D) None of the above

Ans. (C)

11. Partnership firm engaged in banking business can have maximum—

(A) 5 partners

(B) 10 partners

(C) 20 partners

(D) Any number of partners

Ans. (B)

12. Suppose, the partnership deed provides for a salary of Rs. 5000 p.m. to partner ‘X’. If ‘X’ withdraws only Rs. 3000 in a month, the remaining Rs. 2000 will be—

(A) Debited to his capital a/c

(B) Credited to his drawing a/c

(C) Credited to his current a/c

(D) Credited to P & L adjustment a/c

Ans. (A)

13. In absence of any provisions in the partnership agreement, partners can charge on the loans given by them to the firm—

(A) Interest at 6% p.a.

(B) Interest at 12% p.a.

(C) Interest at 15% p.a.

(D) No interest

Ans. (A)

14. A, B and C are partners sharing profits and losses in the ratio 4 : 3 : 2 D is admitted for 1/10th share, the new ratio will be—

(A) 4 : 4 : 3 : 2

(B) 4: 3 : 2: 1

(C) 5 : 4 : 3 : 2

(D) None of the above

Ans. (B)

15. A and B shared profit in the ratio of 3 : 2 C was admitted as a partner for 1/5th share. He acquires 3/20th from A and 1/20th from B. The new profit sharing ratio would be—

(A) 10:6:4

(B) 6:10:4

(C) 8:8:4

(D) 9:7:4

Ans. (D)

16. Goodwill of a firm of A and B is valued at Rs. 60000. Goodwill appears in the books at Rs. 24000. C is admitted for 1/4th share. He will be required to bring for goodwill—

(A) Rs.21000

(B) Rs.9000

(C) Rs. 15000

(D) Rs. 6000

Ans. (D)

17. A plant worth Rs. 800000 has been insured for Rs. 600000. The loss on account of fire is Rs. 500000. The insurance company under average clause will bear the loss to extent of—

(A) Rs. 500000

(C) Rs. 800000

(B) Rs.600000

(D) Rs. 375000

Ans. (A)

18. It is not an item of Income with reference to a voyage a/c—

(A) Passage money

(B) Freight

(C) Primage

(D) Address commission

Ans. (D)

19. The formats of the profit and loss account and Balance sheet in the case of a banking company have been revised w.e.f.—

(A) 1st April 1949

(B) 1st April 1991

(C) 1st April 1992

(D) 1st April 1956

Ans. (C)

20. If accured outstanding premium is given in the trial balance of a general insurance company, then it will be shown in—

(A) Revenue Account

(B) Balance Sheet

(C) Both revenue Account & Balance Sheet

(D) None of the above

Ans. (B)

21. Inventory is valued at lower of the cost or net realisable value on account of the accounting principle of—

(A) Realisation

(B) Consistency

(C) Conservatism

(D) None of the above

Ans. (A)

22. In the period of rising prices, LIFO method may result in—

(A) Lowering the profit

(B) Raising the profit

(C) Raising the tax liability

(D) None of the above

Ans. (B)

23. Given,

Total assets turnover 4

Net Profits 10%

Total Assets Rs. 50000

Net profit will be—

(A) Rs. 15000

(B) Rs. 10000

(C) Rs. 25000

(D) Rs.20000

Ans. (D)

24. A company auditor addresses his audit report to-

(A) Board of directors

(B) Members

(C) Managing director

(D) Company secretary

Ans. (B)

25. Bonus shares means shares issued to—

(A) Workers

(B) Existing equity shareholders

(C) Preferential shareholders in lieu of dividend

(D) Debenture holders in lieu of interest

Ans. (B)

26. Which of the following does not call for physical verification?

(A) Stock

(B) Plant

(C) Loose tools

(D) Goodwill

Ans. (D)

27. Cash from operations is equal to—

(A) Net profit + increase in current assets

(B) Net profit + decrease in current liabilities

(C) Profit from operation ± Adjustment of increase and decrease in current assets and liabilities

(D) Fund from operation ± Adjustment of increase and decrease in current assets and current liabilities

Ans. (C)

28. Average profit of a firm is Rs. 9000 Firm’s capital is Rs. 60000 and normal return on business is expected at 10%. The goodwill by capitalisation method will be-

(A) Rs. 30000

(B) Rs. 20000

(C) Rs. 25000

(D) Rs. 40000

Ans. (A)

29. Which of the following is not a current liability?

(A) Bank overdraft

(B) Redeemable debentures

(C) Account payable

(D) Provision for bad debts

Ans. (B)

30. Amount of under writing commission payable on the issue of debentures is limited to—

(A) 2%

(B) 2.5%

(C) 3%

(D) 5%

Ans. (B)

31. Which of the following acid test ratio can be said to be satisfactory?

(A) 2: 1

(C) 1: 1

(B) 1: 2

(D) None of these

Ans. (C)

32. The two factor theory of motivation was propounded by—

(A) Peter Drucker

(B) Herzberg

(C) McGregor

(D) Maslow

Ans. (B)

33. Which of the following leadership styles is most commonly found now a day?

(A) Autocratic

(B) Democratic

(C) Free rein

(D) Participative

Ans. (B)

34. Deciding in advance what is to be done in future is called—

(A) Management

(B) Coordination

(C) Planning

(D) Decision-making

Ans. (C)

35. The organisation structure where there is direct vertical relationship is called—

(A) Line organisation

(B) Chain organisation

(C) Command organisation

(D) All the above

Ans. (D)

36. When managers devote their attention only to those events where results are highly deviated from normal; ft is called—

(A) Management by objective

(B) Management by exception

(C) Management by crisis

(D) Management by choice

Ans. (B)

37. Under delegation of authority—

(A) Authority is given to subordinates

(B) Authority flows from top to bottom

(C) Delegator of authority is not received of accountability

(D) All the above happens

Ans. (D)

38. The process of determining by observation and study and reporting pertinent information relating to the nature of specific job is called—

(A) Job specification

(B) Job evaluation

(C) Job analysis

(D) Job description

Ans. (C)

39. In case of a private company—

(A) There is restriction on the right to transfer of shares

(B) The number of members is restricted

(C) Invitation to public for the subscription of shares is prohibited

(D) All of the above

Ans. (D)

40. A person at anyone time can not be DIRECT of more than—

(A) 1 Company

(B) 7 Companies

(C) 15 Companies

(D) 20 Companies

Ans. (C)

41. Certificate of commencement of business is not required by a—

(A) Public company

(B) Any type of company

(C) Private company

(D) Private company subsidiary to a public company

Ans. (C)

42. Henry Fayol is known for—

(A) Scientific management

(B) Rationalisation

(C) Industrial psychology

(D) Principles of managements

Ans. (D)

43. The principle of unity of command’ implies—

(A) Unity of thought and action

(B) Unity amongst subordinates

(C) Instructions from staff authority

(D) Instructions from line authority

Ans. (D)

44. A company has equity capital of Rs. 200000. Preference capital of Rs. 100000, 12% debentures of Rs. 100000, long term loan of Rs. 200000 and short term loan of Rs. 100000. The capital gearing ratio will be—

(A) 1:1

(B) 0.5: 1

(C) 0.4: 1

(D) None of the above

Ans. (C)

45. In case of a company, total assets less outside liabilities is called—

(A) Net working capital

(B) Gross working capital

(C) Deferred liabilities

(D) Net worth

Ans. (D)

46. If opening sales is Rs. 10000 purchases Rs. 30000 direct expenses Rs. 4000 and closing stock Rs. 5000 the costs of goods is sold would be—

(A) Rs. 39000

(B) Rs. 40000

(C) Rs.41000

(D) Rs. 44000

Ans. (A)

47. Premium on issue of shares is shown in balance sheet as—

(A) An asset

(B) A liability

(C) An expense

(D) A revenue

Ans. (B)

48. Which of the following is known as ‘backbone of auditing’?

(A) Verification of assets

(B) Internal check

(C) Vouching

(D) Internal audit

Ans. (C)

49. A limited company? 100 shares of Rs. 10/- cash fully called up on which Rs. 4/- per share was paid up. The company reissued 50 shares at the rates of Rs. 8/- each. The amount transferred to capital reserve will be—

(A) Rs. 500

(B) Rs.200

(C) Rs. 250

(D) Rs. 100

Ans. (D)

50. Sale of long term investments indicates—

(A) A change in current assets

(B) Application of funds

(C) Increase in working capital

(D) Source of funds

Ans. (D)

51. Net working capital refers to—

(A) Current assets

(B) Current assets minus current liabilities

(C) Equity share capital minus fixed assets

(D) Retired earnings.

Ans. (B)

52. If sales Rs. 6000 gross profit is 1/3 on cost, purchases are R. 4900 and the closing stock is Rs. 900, the opening stock will be—

(A) Rs.400

(B) Rs.500

(C) Rs. 1100

(D) Rs. 2000

Ans. (B)

53. The primary objective of audit is—

(A) Detection and prevention of frauds

(B) Detection and prevention of errors

(C) Detection of frauds and errors

(D) To ensure the final accounts and statements exhibit true and fair position of business

Ans. (D)

54. ‘An auditor is a watch dog and not a blood hound’. This was observed in case of—

(A) London oil storage company

(B) Kingston cotton Mills Limited

(C) London General Bank

(D) Delightful Cigarette Company Ltd.

Ans. (B)

55. If two or more sugar mills combine together, it is known—

(A) Horizontal combination

(B) Vertical combination

(C) Lateral combination

(D) None of the above

Ans. (A)

56. Surrender value is related to—

(A) Marine insurance

(B) General insurance

(C) Life insurance

(D) Fire insurance

Ans. (C)

57. Over capitalisation refer to—

(A) Excess of capital

(B) Excess rate of dividend payment, on shares

(C) Over estimation of rate of capitalisation

(D) Raising more capital than is warranted by its earning power

Ans. (D)

58. Motivation refers to—

(A) Coordinate the people

(B) Guide the working people

(C) Terrorise the people

(D) Inducing people to work willing by

Ans. (D)

59. Which of the following is not a barrier in communication—

(A) Fear and distrust

(B) Affection

(C) Perception

(D) Noise

Ans. (B)

60. “Management is an art of getting things done through and with formally organised group.” This definition has been by—

(A) Peter Drucker

(B) Henry Fayol

(C) Harod Koontz

(D) F. W. Taylor

Ans. (C)

61. Foreign exchange for import of goods is sanctioned by—

(A) Exim Bank

(B) Reserve Bank of India

(C) State Bank

(D) Ministry of commerce

Ans. (B)

62. The cost of a machine having a span of life of 5 years is Rs. 10000. It has a scrap value of Rs. 1000. The amount of depreciation in the first year under the sum of year’s digit method will be—

(A) Rs. 1600

(B) Rs. 1800

(C) Rs. 2000

(D) Rs. 3000

Ans. (D)

63. Given:

Gross profit Rs. 60000

Gross profit ratio: 20%

Debtor’s velocity 2 months

The amount of debtors will be—

(A) Rs. 30000

(B) Rs. 50000

(C) Rs. 120000

(D) Rs.200000

Ans. (B)

64. Premium on issue of shares can be used for—

(A) Issue of Bonus shares

(B) Payment of Dividends

(C) Payment of operating expenses

(D) Redemption of debentures

Ans. (A)

65. If current ratio is 25, quick ratio (1) 5 and net working capital Rs. 15000. This value of inventory will be—

(A) Rs. 10000

(B) Rs. 15000

(C) Rs. 37500

(D) Rs. 52500

Ans. (A)

66. Unclaimed dividend is shown on the liability side of the balance sheet under the heading—

(A) Revenue and surplus

(B) Provisions

(C) Current liabilities

(D) Miscellaneous items

Ans. (C)

67. Accounting standards in India are prescribed by—

(A) Company Law Board

(B) Institute of charted accountants of India

(C) Institute of coat and works accountants of India

(D) Indian standard Board

Ans. (B)

68. Which of the following is not correct—

(A) Purchase + Opening stock—Cost of goods sold = Closing stock

(B) Opening stock + Purchases — Closing stock = Cost of goods sold

(C) Closing stock + Cost of goods sold — Purchases = Opening stock

(D) Cost of goods sold — Closing stock + Purchases = Opening stock

Ans. (D)

69. A company bought assets worth Rs. 360000 and in lieu issued debentures of Rs. 100 each at a discount of 10%. The number of debentures issued will be—

(A) 3000

(B) 3600

(C) 3960

(D) 400

Ans. (D)

70. A person got insured his goods worth Rs. 10000 for Rs.80QO against fire. Loss by fire to him was Rs. 9000. He can claim—

(A) Rs. 8000

(B) Rs. 9000

(C) Rs. 10000

(D) Rs. 7200

Ans. (D)

71. The data obtained from a newspaper are—

(A) Primary data

(B) Secondary data

(C) Both (A) and (B)

(D) None of these

Ans. (B)

72. Current Ratio of a firm is 3: 1 and working capital is Rs. 60000. What will be the amount of current Assets—

(A) Rs. 30000

(B) Rs90000

(C) Rs. 120000

(D) Rs. 180000

Ans. (B)

73. The income from that house property is taxable under the head “Income from House property”.

(A) The assessee has ownership on that house

(B) The assessee uses that house for his business

(C) The assessee himself lives in that house

(D) The assessee has let out that house on rent for residence

Ans. (A)

74. Following is the deduction in respect of repair under the head of income from house property—

(A) 25% of Annual Value

(B) 30% of Net Annual Value

(C) 1/5 of Annual Value

(D) 1/5 of Net Annual Value

Ans. (B)

75. Single entry system can not be maintained by—

(A) Sole proprietorship

(B) Partnership concerns

(C) Joint stock company

(D) All of these

Ans. (D)

76. Cash account will not be affected by—

(A) Cash paid to creditors

(B) Discount received

(C) Cash sales

(D) Cash received from debtors

Ans. (B)

77. Maximum standard Deduction for employees getting gross salary not more than Rs.100000 is allowed—

(A) Rs. 20000

(B) Rs. 25000

(C) Rs. 30000

(D) Rs. 33000

Ans. (C)

78. Tax audit is compulsory in case of a person carrying on business whose gross receipt) turnover/sales and exceeds—

(A) Rs. 50 Lakhs

(B) Rs. 40 Lakhs

(C) Rs. l0 Lakhs

(D) Rs. 25 Lakhs

Ans. (B)

79. Mr. Rastogi of Meerut was declared insolvent. One of his liabilities related to one months rent due to his landlord. This liability will be treated as—

(A) Preferential Creditor

(B) Partly Secured Creditor

(C) Fully Secured Creditor

(D) Unsecured Creditor

Ans. (A)

80. When two or more companies liquidate to form a new company. It is called—

(A) Amalgamation

(B) Absorption

(C) Reconstruction

(D) Purchase of Business

Ans. (A)

81. A, B and C are partners in a firm. If D is to be admitted to the firm as a new partner—

(A) Old firm has to be dissolved

(B) Old partnership has to be dissolved

(C) Both the old firm and the old partnership have to be dissolved

(D) No need to dissolve either firm or the partnership

Ans. (D)

82. Remington sold one typewriter to Ramesh Chandra under installment purchase system on 1st January 1996, payment for which was to be made as under—

On 01.01.1996 - Rs. 3000

On 31.12.1996 - Rs. 1700

On 31.12.1997 - Rs. 3600

On 31.12.1998 - Rs. 2300

On 31.12.1999 - Rs. 1100

Interest at 10% p.a. is included in each installment. The total interest charged amount to-

(A) Rs.2100

(B) Rs. 1950

(C) Rs. 1800

(D) Rs. 1700

Ans. (B)

83. The liquidator of a company is entit1edio a remuneration of 2% on assets realised, and 3% on the amount distributed to unsecured creditors. The assets realised Rs. 100000 including cash balance of Rs. 3000. Amount available for distribution to unsecured creditors before paying liquidators remui4eration was Rs. 46350 liquidator’s remuneration will be—

(A) Rs.3100

(C) Rs. 3290

(B) Rs.3140

(D) Rs. 3350

Ans. (C)

84. EXIM Bank was established on—

(A) 1st Dec 1984

(B) 1st June 1985

(C) 1st Jan 1982

(D) 1st July 1980

Ans. (C)

85. For capital gain being long term capital gain, an asses see should retain the assets for a period of—

(A) 40 months

(B) 36 months

(C) More than 36 months

(D) Less than 36 months

Ans. (C)

86. The salary received by a member of parliament is—

(A) Exempt from Tax

(B) Taxable under the head of salary

(C) Taxable under the head of other sources

(D) Taxable under the lead of business

Ans. (C)

87. For the purpose of income tax it is necessary for agriculture income that—

(A) Land should be used for agricultural activities

(B) Land should be used for godown

(C) Land should be used for irrigation

(D) None of above

Ans. (A)

88. Depreciation is allowed on—

(A) Tangible Assets

(B) Current Assets

(C) Fixed Assets

(D) Intangible Assets

Ans. (C)

89. When shares are forfeited, the share capital account is debited by—

(A) Nominal value of forfeited shares

(B) Paid up amount of forfeited shares

(C) Called up amount on forfeited shares

(D) Forfeited amount of shares

Ans. (C)

90. The term ‘POIM’ for the four functions of management. Planning, organisation, integration and measuring was given by.—

(A) F.W. Taylor

(B) Harold Smiddy

(C) Tanon Brown

(D) Peter F. Drucker

Ans. (B)