Accountancy MCQs | Chapter-wise Multiple Choice Questions with Answers

Question #121

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Which unique identifier is increasingly linked with PFMS to ensure accurate delivery of benefits?

A. Aadhaar Number

B. Voter ID

C. Passport Number

D. PAN Card

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Correct Answer: Option A

Explanation:
Aadhaar is heavily integrated into PFMS for authenticating beneficiaries and ensuring duplicate or ghost accounts are eliminated.

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Question #122

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Integration of State Treasuries with PFMS achieves which of the following?

A. Privatization of public banks

B. Complete elimination of state governments

C. Tracking of Centrally Sponsored Schemes (CSS) funds up to the implementing agencies

D. Conversion of cash into digital currency

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Correct Answer: Option C

Explanation:
Treasury integration allows the central government to track unspent balances and actual expenditure of funds granted to states for various schemes.

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Question #123

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In the Indian Financial Management System, the apex institution for regulating the money market is:

A. IRDAI

B. Ministry of Corporate Affairs

C. SEBI

D. RBI

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Correct Answer: Option D

Explanation:
The Reserve Bank of India (RBI) controls monetary policy and regulates the money market in India.

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Question #124

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Which body regulates the Capital Market in India?

A. SIDBI

B. SEBI

C. NABARD

D. RBI

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Correct Answer: Option B

Explanation:
The Securities and Exchange Board of India (SEBI) is the statutory body regulating the securities and capital markets.

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Question #125

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All revenues received, loans raised, and money received in repayment of loans by the Government of India form part of the:

A. Contingency Fund of India

B. Consolidated Fund of India

C. Prime Minister's Relief Fund

D. Public Account of India

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Correct Answer: Option B

Explanation:
As per Article 266(1), all these inflows form the Consolidated Fund of India, from which no money can be spent without parliamentary approval.

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Question #126

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Which constitutional body recommends the distribution of net proceeds of taxes between the Union and the States?

A. NITI Aayog

B. Finance Commission

C. Public Accounts Committee

D. GST Council

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Correct Answer: Option B

Explanation:
Constituted under Article 280, the Finance Commission makes recommendations regarding the sharing of tax revenues.

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Question #127

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Money kept in Provident Funds and small savings schemes forms part of the:

A. Consolidated Fund of India

B. RBI Reserves

C. Contingency Fund of India

D. Public Account of India

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Correct Answer: Option D

Explanation:
The Public Account holds money acting as a banker (e.g., provident funds) and does not require parliamentary vote for disbursements.

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Question #128

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A tax is said to be progressive when:

A. The rate of tax decreases as income increases

B. It is levied on essential commodities

C. The rate of tax increases as income increases

D. The rate of tax remains constant

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Correct Answer: Option C

Explanation:
Progressive taxation means higher income earners pay a higher percentage of their income as tax, promoting wealth redistribution.

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Question #129

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Tax evasion is:

A. Postponement of tax payment legally

B. Government policy to waive taxes

C. Illegal non-payment or underpayment of taxes

D. Legal use of tax laws to reduce liability

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Correct Answer: Option C

Explanation:
Tax evasion involves illegal practices like hiding income or inflating expenses to avoid paying true tax liability.

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Question #130

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A specific tax levied for a particular purpose on top of the basic tax rate is known as:

A. Surcharge

B. Excise

C. Tariff

D. Cess

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Correct Answer: Option D

Explanation:
A cess (e.g., Health and Education Cess) is levied for a specific purpose and the revenue must be utilized for that objective only.

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Question #131

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Under the Income Tax Act 1961, the year in which income is earned is called the:

A. Financial Year

B. Assessment Year

C. Accounting Year

D. Previous Year

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Correct Answer: Option D

Explanation:
The Previous Year is the financial year in which the income is earned, which is assessed to tax in the immediately following Assessment Year.

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Question #132

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Which of the following is NOT one of the 5 heads of income under the Income Tax Act?

A. Income from Other Sources

B. Income from Exports

C. Income from Capital Gains

D. Income from Salaries

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Correct Answer: Option B

Explanation:
The 5 heads are: Salaries, House Property, Profits and Gains of Business/Profession, Capital Gains, and Other Sources.

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Question #133

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Agricultural income in India is:

A. Taxable at a flat rate of 10%

B. Exempted under Section 10(1)

C. Fully taxable

D. Taxable only for corporate farmers

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Correct Answer: Option B

Explanation:
Section 10(1) of the Income Tax Act exempts agricultural income from Central Income Tax.

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Question #134

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A characteristic feature of a Direct Tax is that:

A. It is always regressive in nature

B. Its impact and incidence fall on the same person

C. Its incidence can be shifted to another person

D. It is levied on goods and services

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Correct Answer: Option B

Explanation:
In direct taxes like Income Tax, the person upon whom the tax is legally imposed is the one who bears its economic burden.

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Question #135

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Deductions for investments in PPF, LIC, and ELSS fall under which section of the Income Tax Act?

A. Section 80C

B. Section 24(b)

C. Section 80D

D. Section 80G

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Correct Answer: Option A

Explanation:
Section 80C allows a maximum deduction of Rs 1.5 Lakhs for specified investments and expenditures.

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Question #136

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Long Term Capital Gains (LTCG) on the sale of listed equity shares over Rs 1 Lakh is currently taxable at:

A. 30% with indexation

B. 10% without indexation

C. 15% with indexation

D. 20% without indexation

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Correct Answer: Option B

Explanation:
Under Section 112A, LTCG on listed equity shares exceeding Rs 1 lakh in a year is taxed at 10% without the benefit of indexation.

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Question #137

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GST in India is a:

A. Wealth tax

B. Destination-based consumption tax

C. Origin-based tax

D. Direct tax

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Correct Answer: Option B

Explanation:
GST is levied where goods and services are consumed rather than where they are produced.

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Question #138

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Which of the following taxes is subsumed under GST?

A. Value Added Tax (VAT)

B. Stamp Duty

C. Income Tax

D. Customs Duty

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Correct Answer: Option A

Explanation:
State VAT, Central Excise, and Service Tax were among the major indirect taxes subsumed into GST.

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Question #139

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For inter-state supply of goods and services, which of the following is levied?

A. IGST

B. Both CGST and SGST

C. CGST

D. SGST

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Correct Answer: Option A

Explanation:
Integrated GST (IGST) is collected by the Central Government on inter-state sales and imports.

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Question #140

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The mechanism by which a business can reduce its tax liability by claiming credit for taxes paid on purchases is called:

A. Tax Deduction at Source (TDS)

B. Tax Refund

C. Input Tax Credit (ITC)

D. Reverse Charge Mechanism (RCM)

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Correct Answer: Option C

Explanation:
ITC avoids the cascading effect of taxes by allowing a set-off of tax paid on inputs against tax payable on output.

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