FINANCIAL ACCOUNTING

Issue of Debentures 1. Company cannot sell charged assets until the debentures are repaid in case of debenture with fixed charge. 2. Debenture in the nature of contingent liability on which no interest is payable are known as debenture issued as collateral security. 3. In the balance sheet of a company, premium payable on redemption of debentures a/c is shown under secured loan 4. In the balance sheet of a company, interest accrued but not due on debenture a/c shown under current liabilities and provisions. 5. Loss on issue of debentures is treated as different revenue expenditure. 6. Bearer debentures need not to be registered with the company. 7. Debentures issued as a collateral security are in the natures of a contingent liability. 8. Debentures stock cannot be partly paid. 9. On winding up, debenture holders must be repaid before cumulative preference shareholders. 10. The premium collected on issue of debentures is transferred to security premium a/c. Redemption and buy back of debentures 1. According to SEBI guidelines, the company is required to create a debenture redemption reserve aquivalent to 50 % of the issue size. 2. Debentures can be redeemed out of capital or profit. 3. Balance of sinking fund, after redemption of debenture is transferred to general reserve a/c 4. Profit on cancelling of debenture is transferred to capital reserve 5. Loss on sale of sinking fund investments will be debited to sinking fund a/c. 6. A company may redeem debentures out of capital of the maturity period is less than 18 months. 7. Sinking fund a/c always shows credit balance. 8. Profit on the cancellation of own debenture is capital profit. 9. Debentures Redemption Reserve is to be created even if debentures are redeemed through conversion. 10. Debentures can be redeemed by payments in annual investments. 11. Debentures can be purchase in open market from cancellation. 12. Till the date of redemption of debentures Premium on Redemption of Debentures appears on the liability side of balance sheet. 13. A company issuing debentures is requested to create Debentures Redemption Reserve if the maturity period is more than 18 month. 14. Profit on re-sale of own debentures held as sinking fund investment by the company itself is credited to sinking fund a/c. 15. Amount of sinking fund = amount payable on redemption x sinking fund. 16. At the time of purchase of own debentures ex-interest price is debited to own debenture and cum-interest price is credited to Bank a/c. 17. Debentures issued at discount and redeemable at premium what should be entry.. Cash/Bank A/c Dr Discount A/c Dr Loss of issued debentures A/c Dr

To debenture A/c To Premium on redemption of debenture A/c 18. Fixed charge debentures are secured on specific assets of the company. 19. Floating charge debentures are secured on all asset of the company. 20. After cancellation of own debentures the debentures cannot be re-issued.

Multiple choice question

ISSUE OF DEBENTURES 1. The debenture issued in exchange of existing debentures is roll over. a. Conversion b. Redemption c. Roll over d. Cancellation 2. The loss on issue of debentures is deferred revenue expenditure a. Fictitious b. Revenue c. Differed Revenue d. Capital 3. The debentures issued as collateral security should shown as contingent liability a. Shown as loan b. Shown as current liability c. Shown as contingent liability d. Not to be disclosed 4. Debentures carrying charge on all the asset is known as floating a. Floating b. Fixed c. Mortgage d. Naked 5. Loss on issue of debenture is treated as Miscellaneous Expenditure a. Tangible asset b. Current asset c. Current liability d. Miscellaneous REDEMPTION OF DEBENTURES 1. To provide funds for redemption a company may create sinking fund. a. Create sinking fund b. Create redemption fund c. Remain inactive

d. Open new bank a/c 2. The companies act requires creation of debenture redemption reserve by a company issuing debenture. a. Capital redemption reserve b. Capital reserve c. Debenture redemption reserve d. Statutory reserve 3. Kavita ltd issued 50000 8% Debentures of Rs. 10each at par, which are redeemable after 5 years at a premium of 20. The amount of loss on redemption of debentures to be written of every year is 20000 a. Rs. 40000 b. Rs. 10000 c. Rs. 20000 d. Rs. 5000 4. The balance in own debenture account should be carried over at lower of cost market value a. Cost b. Lower value c. Lower of cost and MV d. Market value 5. The term of purchase of own debenture can be cum-interest/ex-interest. a. Cum-interest/ex-interest b. Nominal value c. Market value d. Ex-interest 6. Balance of sinking fund, after redemption of debenture is transferred to General Reserve a. Profit and Loss A/c b. General reserve c. Capital Redemption Reserve d. Debenture Redemption Reserve 7. Balance of sinking fund for redemption of debenture is shown under Reserve and Surplus. a. Secured loans b. Unsecured loans c. Reserves nad surplus d. Investment 8. When debentures are redeemed out of profit, the amount be transferred to General Reserve should be equal to the nominal value of debenture redeemed a. Premium payable on redemption b. Amount payable on redemption c. The nominal value of debenture redeemed d. None of the above 9. Debenture can be redeemed only out of capital or profits a. the proceeds of fresh issue of debenture b. divisible profit c .capital or profits d .capital 10. A company may redeem debentures out of capital if the maturity period is less than 18 months a.12months b.18months c.24months

d. none of the above

ISSUE OF DEBENTURES 11. In a balance sheet of a company, debenture premium is shown reserve and surplus a. secured loan b. unsecured loan c. contingent liability d. revenue and surplus 12. Interest on debentures are calculated on its face value a. face value b. value payable on redemption c. market value d. issue price 13. Discount on issue of debenture is a capital loss to be w/o over the period of debenture a. revenue loss to be charged in the year of issue b. capital loss to be w/o from capital revenue c. capital loss to be w/o over the period of debenture d. capital loss to be shown as goodwill 14. In balance sheet of a company, interest accrued but not due on debenture a/c is shown under current liability and provision a. share capital b. secured loan c. unsecured loan d. current liability &provision 15. In balance sheet of a company, interest accrued and due on debenture a/c is shown under secured loan a. secured loan b. share capital c. current liability and provision d. unsecured laon

Issue and redemption of denture Group a

1. Debenture issued is 2. Debenture is 3. Issue of debenture at discount Payable at premium leads to 4. Interest on debenture 5. Issue in exchange of existing debenture 6. Unpaid debenture interest 7. Loss on issue of debenture 8. Debenture as collateral security 9. Debenture company require law of 10. Zero coupon bonds interest 11. Debenture redeemed 12. Fund for redemption 13. Uncollected redemption money 14. Redemption of debenture 15. Sinking fund investment interest 16. Balance of sinking fund after Debenture 17. Company issuing debenture 18. Debenture company should be Authorised by _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

answers
loan collateral security loss to company payable on face value roll over shown as loan deferred revenue expenditure shown as contingent liability debenture redemption reserve 0% issue of cheque created sinking fund loan issue of debenture credited to sinking fund account transferred to general reserve require debenture redemption reserve By Companys act term of issue of debenture

AUDIT Multiple choice questions

1) Balance sheet audit includes verification of a) Assets b) Liabilities c) Income and expenditure d) ALL OF THE ABOVE

2) Balance sheet audit does not include a) Verification of assets and liabilities b) Continuous audit c) Internal audit system d) ROUTINE CHECKING

3) Concurrent audit is part of a) Internal check system b) Continuous audit C) INTERNAL AUDIT SYSYTEM d) None of the above

4) Audit of banks is an example of A) STATUTORY AUDIT b) Continuous audit c) Balance sheet audit d) Both b and c

5) Manufacture and other companies order 1998 is supersede by a) COMPANIES AUDIT REPORT ORDER 2003 b) Companies act 1956 c) Banking companies act d) Chartered accountant act

6) Special audit can be ordered by a)CENTRAL GOVERNMENT b) State government c) Municipality d)grampanchayat

7) Cost audit is compulsory for a)private companies b)manufacturing companies c)SPECIFIED COMPANIES d)trading companies

8) Audit in depth is synonymous for a) Complete audit b) Completed audit c) Final audit d) DETAILED AUDIT

9) Which of the following is not the fact of efficiency cum performance audit?

a)economy audit b) Efficiency audit c) EXPENDITURE AUDIT d) Effectiveness audit

10)in India balance sheet audit is synonymous to a)ANNUAL AUDIT b) Continuous audit c) Detailed audit d)statutory audit

Fill in the blanks

1) Audit of cooperative society is STATUTORY audit.

2) CONTINUOUS audit is also known as audit in installments.

3) Balance sheet audit is done only if the internal control system is very STRONG.

4) PERIODIC audit is less expensive and suitable for small enterprises.

5) OCCASIONAL AUDIT is done occasionally.

6) STATUTORY audit is compulsory under the law.

7) EFFICIENCY AUDIT is part of performance audit. 8) Cash audit is PARTIAL AUDIT.

9) Continuous audit is COSTLY.

10) SOCIAL AUDIT contributes to social growth.

Match the Following

1. Internal Check is a Component of 2. Management consultancy is

a. An external job b. Deals with matter related to answers to question raised by the auditors

3. Internal Auditors are appointed by 4. Safe guarding the assets 5. Directors responsibility statement 6. The time limit for holding AGM is 7. Share holders are to be sent a notice at least 8. Internal audit framework was developed by 9. Non-audit service 10. Special assignment

c. No assurance is given by the auditor d. Internal audit e. 21 days before the date of AGM f. Protective function g. 6 months

h. Special kind of services due to laws etc.

i. Management j. COSO

1-d,2-a,3-i,4-f,5-b,6-g,7-e,8-j,9-c,10-h

state the following statement are true or false:----

1. continuous audit helps the company to present its audited accounts to Shareholders immediately after the close of financial year - true

2. Interim audit of a company is compulsory under the Indian companies act 1956 - false

3. Auditor is not concerned with the compliance with the accounting principles - false

4. Audit of accounts is voluntary in partnership firm - true

5. Statutory audit is voluntary - false

6. Management audit is statutory audit - false

7. Internal audit is appointed by the management - true

8. Continuous auditor is done at the end of the year - false

9. In complete audit every voucher is examined - true

10. In continuous audit accounting and auditing is done simultaneously - true

TAXATION
True or False 1. Residential status of the assesee depends on the stay of the assessee in India during the assessment year. >>>>False 2. Total income of a person is determined on the basis of his citizenship in India. >>>False 3. Income deemed to accrue or arise in India is taxable in case of non-resident. >>>True 4. An Indian company is always treated as non-resident company. >>>True 5. A resident in India cannot become resident in any other country for the same assessment year. >>>False 6. Income deemed to accrue or arise in India or taxable in case of all the assessee. >>>True 7. Income which accrue or arise outside India and also in India is taxable in case of both OR and NOR. >>>False 8. Past untaxed profits brought into India is always taxable. >>>False 9. If the assessee does not satisfy the basic condition he will be treated as resident assessee. >>>True 10. A foreign company is always non-resident in India. >>>True

1. 2. 3. 4. 5.

Non-resident Foreign income Remittance in India Income received in India An Indian company

a. b. c. d. e.

Not taxable Always ordinary resident Does not satisfy basic condition Non taxable for non-resident Taxable for OR, NOR, OR

(1-c), (2-d), (3-a), (4-e), (5-b)

1. A person who is not resident 2. Indian company 3. Income from foreign business controlled in India 4. Citizen of India, leaving India for employment 5. A HUF with NOR Karta

a. Resident b. Resident only if stay in India exceeds 182 days in previous year c. Non-resident d. Always ordinary resident e. Taxable for OR and NOR

(1-c), (2-a), (3-e), (4-b), (5-d)

MARKETING AND HUMAN RESOURCE MANAGEMENT 1. During Product Development Stage, the firm may adopt Skimming pricing strategy where the product is totally new or it does not have competitive brands. (Psychological/Mark-Up/Skimming)

2. Brand Extension is the process of extending an existing brand name to other brands in the same product category or in different product category. (Brand Extension/Brand Equity/Brand Positioning)

3. In Market Penetration pricing policy, the manufacturer charges low price initially and raises the same in due course when the product becomes popular. (Target Oriented/Market Penetration/Marginal Cost)

4. Free samples, discounts, exchange offers, free gifts, in- store demonstrations, etc., are some of the commonly used Consumer-Oriented promotion tools. (Sales-Force Incentives/Trade-Oriented/Consumer- Oriented) 5. During the Growth stage, demand for the product increases.

(Maturity/Growth/Decline)

6. Under the Break-Even pricing method, the manufacturer will determine the level of output where the revenues will equal cost, assuming a certain selling price. (BreakEven/Cost-Plus/Target-Oriented)

7. Brand Positioning can be defined as an effort aimed at creating and maintaining in the mind of target customers and intended image for the brand, relative to other brands. (Brand Equity/ Brand Positioning/Brand Extension)

8. Free Sample is one of the consumer-oriented promotion (Credit Terms/Free Samples/Stock Return)

9. Width refers to the number of different product lines the company carries. (Width/Depth/Consistency)

10. Demand Position is one of the external factors influencing the price of a product. (Product Life Cycle/Demand Position/Credit Policy)

11. Credit Terms is one of the trade-oriented promotion tools. (Credit Term/Free Samples/Coupons) 12. Product Mix refers to the set of products, which are offered for sale by a firm. (Promotion Mix/Price Mix/Product Mix)

13. Brand Equity is defined as the incremental value of a business above the value of its physical assets due to market position achieved by its brand and the extension potential of the brand. (Equity/Positioning/Extension)

14. Advertising is defined as, Any paid form of non- personal presentation and promotion of ideas, goods or services by an identified sponsor. (Advertising/Salesmanship/Public Relations)

15. Personal Selling means, Oral presentation in a conversation with one or more prospective purchases for the purpose of making sales. (Public Relations/Advertising/Personal Selling)

Match The Column.

Sr. No. 1 2 3 4 5 6 7 8 9 Group A Marketing Mix Marginal Cost Pricing Brand Trade promotion Product Mix Flexible pricing strategy Basic Product Specialty Goods Warranty Group B Allowances to intermediaries. Advertising. Electronic mail. Premium car. Selling price is arrived at by adding margin to the products cost. 4Ps. Shorter channel preferred. Number of different product of company. It makes distinction between fixed costs & variable costs.

10

Perishable Products

Name or mark intended to identify the product & differentiate if from competing products.

11 12 13 14

Brand Extension Direct Marketing Cost Plus Pricing Product Width

Existing name used for new product. Consists of sub variables such as channels of distribution, transportation, warehousing. Core product converted into product benefit. Assurance given about the quality of the product sold or hired. The manufacture charges different prices to similar customers.

15

Promotion Mix

Sr. no.

Group A

Answers

1 2

Marketing Mix Marginal Cost Pricing

4Ps. It makes distinction between fixed costs & variable costs. Name or mark intended to identify the product & differentiate if from competing products.

Brand

4 5

Trade promotion Product Mix

Allowances to intermediaries. Consists of sub variables such as channels of distribution, transportation, warehousing.

Flexible pricing strategy

The manufacture charges different prices to similar customers. Core product converted into product benefit. Premium car. Assurance given about the quality of the product sold or hired. Shorter channel preferred. Existing name used for new product. Electronic mail. Selling price is arrived at by adding margin to the products cost. Number of different product of company. Advertising.

7 8 9

Basic Product Specialty Goods Warranty

10 11 12 13

Perishable Products Brand Extension Direct Marketing Cost Plus Pricing

14 15

Product Width Promotion Mix

True and false

1. Sometimes if the product is unique, it becomes necessary to charge a higher price while introducing a product. This is called a penetration price strategy FALSE 2. The broader concept of product not only includes the physical elements but also the psychological elements associated with the brand TRUE 3. Consumer goods are those goods use by consumers for business purpose FALSE 4. Convenience goods are those goods that the customer usually purchase frequently, immediately and with a minimum effort TRUE 5. Grave stones and cemetery plots are example of unsought goods TRUE 6. Augmented product is a product where the product or the service provide exceeds customers expectation - TRUE 7. Brand helps in differentiating a product from competing products TRUE 8. Brand equity is the incremental value of a business above the value of its physical assets due to the market position achieved by its brand and the extension potential of the brands TRUE 9. Under market skimming pricing strategy price is set at the highest possible level TRUE 10. Under cost plus price method, the selling price at the product is arrived at by adding a standard mark up TRUE 11. A channel of distribution is the route taken by the title to the product as it moves from the producer to te ultimate consumer or the industrial user TRUE 12. Specialty advertising involves low cost items like calendars, key chains, etc. bearing the companys name, address, and a sales massage TRUE 13. Lobbing involves dealing with legislators and government officials to promote or defect a legislation - TRUE 14. Atmospheres includes packaged environments that create or reinforce the buyers a leanings towards product purchase TRUE 15. Consumer promotional tools are those tools directed towards the intermediaries FALSE

ECONOMICS
MCQ and Fill ups 1) Capital Market is the market for medium & long term funds. a) Financial Market b) Capital Market c) Equity Market d) Corporate Debt Market 2) Gild Edged Market deals in government & semi government securities. a) Financial intermediaries b) Developmental Financial institutions c) Industrial securities market d) Gild Edged Market 3) SEBI was set up as a statutory body in 1992. a) 1988 b) 1992 c) 1994 d) 1989 4) Secondary Market deals in securities already issued or existing or outstanding a) Primary Market b) Secondary Market c) Both a & b d) None 5) Rolling Settlement is an important measure to enhance the efficiency and integrity of the securities market. a) Screen based Trading b) Derivatives Trading c) Depository system d) Rolling Settlement 6) Derivatives are contracts between counterparties whose value is derived from that of the underlying asset. a) Screen based Trading b) Rolling Settlement c) Underwriting d) Derivatives

7) Which of the following is not capital market? a) Gild Edged Market b) Financial intermediaries c) Money market d) Industrial securities market 8) Which of the following statement regarding equity issues is correct? a) There is no assurance on the rate of return to the investors in equities. b) Equities cannot be issued by corporate and the financial intermediaries. c) Both a & b d) None 9) There are 23 recognized stock exchanges in the country. a.23 b.26 c.30 d.22

10) The funds demanded from industry, trade , agricultural government are generally long term. a. short term b. long term