Accountancy MCQs | Chapter-wise Multiple Choice Questions with Answers

Question #1761

Under the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971, the CAG audits the accounts of:

A. Only the Union Government

B. Union and State Governments only

C. Union, State Governments, and Government Companies

D. Union, State Governments, Government Companies, and bodies substantially financed by the government

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
The CAG's DPC Act, 1971, empowers the CAG to audit the Consolidated Fund of India and States, government companies, and any other bodies or authorities substantially financed by government grants or loans.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1762

Share Report

A firm's break-even point is 4,000 units. The variable cost per unit is ₹20, and the fixed cost is ₹40,000. What is the selling price per unit?

A. ₹25

B. ₹35

C. ₹40

D. ₹30

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
At BEP, Total Contribution = Fixed Costs. Contribution per unit = Fixed Cost / BEP units = 40,000 / 4,000 = ₹10. Selling Price = Variable Cost + Contribution = 20 + 10 = ₹30.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1763

Share Report

S1: Under GST, the Reverse Charge Mechanism (RCM) is applicable on the supply of notified services by an unregistered person to a registered person. S2: Under RCM, the recipient of the service is liable to pay GST and can also claim ITC on the same, subject to normal ITC rules. Which statement(s) is/are correct?

A. Both S1 and S2

B. S2 only

C. Neither S1 nor S2

D. S1 only

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option A

Explanation:
Both statements are correct. RCM shifts the liability to pay GST to the recipient for notified services from unregistered suppliers, and the recipient can claim ITC if the service is used for business and not blocked under Section 17(5).

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1764

Share Report

In financial management, the 'Modigliani-Miller (MM) Hypothesis without taxes' states that the value of a firm is:

A. Directly proportional to its debt level

B. Inversely proportional to its debt level

C. Maximized at a debt-equity ratio of 1:1

D. Independent of its capital structure

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
The MM Hypothesis without taxes asserts that in a perfect market, the value of a firm is determined by its real assets and earning capacity, making it completely independent of how those assets are financed (capital structure).

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1765

Share Report

S1: Under Ind AS 19, actuarial gains and losses on defined benefit plans are recognized in Other Comprehensive Income (OCI). S2: These actuarial gains and losses recognized in OCI are subsequently reclassified to the Profit and Loss account in future periods. Which statement(s) is/are correct?

A. S2 only

B. Both S1 and S2

C. Neither S1 nor S2

D. S1 only

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
Ind AS 19 requires remeasurements (actuarial gains/losses) of defined benefit plans to be recognized in OCI. S2 is incorrect because these amounts are recognized directly in retained earnings and are NOT reclassified (recycled) to P&L in subsequent periods.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1766

Share Report

Under the Income Tax Act, the deduction under Section 80IAC is available for eligible startups. What is the maximum period for which this deduction can be claimed?

A. 5 consecutive years out of the first 10 years

B. 3 consecutive years out of the first 10 years

C. 10 consecutive years from the year of incorporation

D. 3 consecutive years out of the first 5 years

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option B

Explanation:
Section 80IAC allows an eligible startup to claim a 100% deduction of profits for 3 consecutive assessment years out of the first 10 years from the year of incorporation.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1767

Share Report

Assertion (A): In a bank reconciliation statement, if we start with the overdraft balance as per the Cash Book, cheques deposited but not credited by the bank will be added. Reason (R): Cheques deposited but not credited increase the bank balance as per the pass book, but not the cash book. Choose the correct option.

A. Both A and R are true but R is NOT the correct explanation of A

B. A is false but R is true

C. Both A and R are true and R is the correct explanation of A

D. A is true but R is false

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
A is false. If starting with an overdraft as per the Cash Book, cheques deposited but not credited (which increase the pass book balance) must be deducted to increase the overdraft amount, not added. R is true as a standalone statement.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1768

Share Report

Under Ind AS 102, if a share-based payment transaction is settled in cash (e.g., Stock Appreciation Rights), how is it measured?

A. At the fair value of the liability at each reporting date and at the date of settlement

B. At the fair value of the equity instruments at the grant date

C. At the fair value of the liability at the grant date, not subsequently remeasured

D. At the intrinsic value of the equity instruments at the vesting date

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option A

Explanation:
Ind AS 102 requires cash-settled share-based payments to be measured at the fair value of the liability, which must be remeasured at the end of each reporting period and at the date of settlement until it is paid.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1769

Share Report

S1: In the context of PFMS, the 'Direct Benefit Transfer' (DBT) scheme mandates the use of Aadhaar for authentication. S2: DBT transfers funds directly from the government treasury to the beneficiary's bank account. Which statement(s) is/are correct?

A. S1 only

B. Both S1 and S2

C. S2 only

D. Neither S1 nor S2

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option B

Explanation:
Both statements are correct. DBT aims to eliminate leakages by transferring funds directly to beneficiaries' accounts via PFMS, and it heavily relies on Aadhaar seeding and authentication for identity verification.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1770

Share Report

A company issues 10,000, 9% preference shares of ₹100 each, redeemable at a premium of 10%. The shares are issued at par. What is the amount to be transferred to the Capital Redemption Reserve (CRR)?

A. ₹9,00,000

B. ₹11,00,000

C. ₹10,00,000

D. ₹1,00,000

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option C

Explanation:
When preference shares are issued at par and redeemed at a premium, the CRR must be created out of free reserves equal to the nominal value of the shares redeemed. Therefore, CRR = 10,000 * ₹100 = ₹10,00,000. The premium on redemption is provided out of securities premium or P&L.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1771

Share Report

Under GST, the 'Composition Scheme' is not available to which of the following?

A. Retail traders

B. Restaurant services

C. Casino and gambling services

D. Manufacturers of garments

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option C

Explanation:
The Composition Scheme under GST is specifically barred for suppliers of services (other than restaurant services), casual taxable persons, non-resident taxable persons, and suppliers of ice cream, pan masala, tobacco, and casino/gambling services.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1772

Share Report

S1: Under Ind AS 36, an impairment loss recognized in prior periods for an asset other than goodwill must be reversed if there has been a change in the estimates used to determine the asset's recoverable amount. S2: The increased carrying amount of an asset due to reversal of an impairment loss cannot exceed the carrying amount that would have been determined had no impairment loss been recognized. Which statement(s) is/are correct?

A. Both S1 and S2

B. S1 only

C. Neither S1 nor S2

D. S2 only

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option A

Explanation:
Both statements are correct as per Ind AS 36. Impairment losses (except for goodwill) must be reversed when conditions change, but the asset's carrying amount cannot exceed its hypothetical carrying amount (net of depreciation) had no impairment occurred.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1773

Share Report

In cost accounting, the 'Economic Batch Quantity' (EBQ) formula is identical to the EOQ formula. If the setup cost per batch is ₹500, annual demand is 10,000 units, and carrying cost is ₹10 per unit per annum, what is the EBQ?

A. 2,000 units

B. 1,000 units

C. 1,414 units

D. 500 units

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option B

Explanation:
EBQ = Square root of (2 * Annual Demand * Setup Cost) / Carrying Cost per unit. EBQ = sqrt((2 * 10,000 * 500) / 10) = sqrt(1,000,000) = 1,000 units.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1774

Share Report

Assertion (A): The 'Going Concern' assumption implies that the enterprise will continue in operation for the foreseeable future. Reason (R): This assumption justifies the preparation of financial statements on a historical cost basis rather than a liquidation value basis. Choose the correct option.

A. Both A and R are true and R is the correct explanation of A

B. A is true but R is false

C. Both A and R are true but R is NOT the correct explanation of A

D. A is false but R is true

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option A

Explanation:
The Going Concern assumption means the business will not liquidate. This justifies using historical cost and depreciating assets over their useful lives, rather than valuing them at immediate break-up or liquidation values. R correctly explains A.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1775

Share Report

Under the Partnership Act, if a partner is expelled, what happens to his liability for acts of the firm done before his expulsion?

A. He is completely released from all liabilities

B. He is only liable if the remaining partners agree to indemnify him

C. He remains liable to third parties for acts done before expulsion until public notice is given

D. His liability is transferred to the remaining partners automatically

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option C

Explanation:
Under Section 36 of the Indian Partnership Act, an expelled partner remains liable to third parties for acts of the firm up to the date of his expulsion, until a public notice of his expulsion is given.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1776

Share Report

S1: In financial management, the 'Net Present Value' (NPV) method assumes that cash inflows are reinvested at the cost of capital. S2: The 'Internal Rate of Return' (IRR) method assumes that cash inflows are reinvested at the IRR itself. Which statement(s) is/are correct?

A. S1 only

B. S2 only

C. Neither S1 nor S2

D. Both S1 and S2

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
Both statements correctly identify the reinvestment rate assumptions of the two capital budgeting techniques. NPV assumes reinvestment at the cost of capital (discount rate), while IRR assumes reinvestment at the IRR.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1777

Share Report

Under Ind AS 115, 'Variable Consideration' (like bonuses or penalties) can only be included in the transaction price if:

A. The entity has received the cash for the variable consideration.

B. The customer has explicitly agreed to the variable amount in the contract.

C. It is highly probable that a significant reversal in the amount of cumulative revenue will not occur.

D. The performance obligation is fully satisfied.

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option C

Explanation:
Ind AS 115 imposes a constraint on variable consideration. It can only be included in the transaction price to the extent that it is highly probable that a significant reversal of revenue will not occur when the uncertainty is resolved.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1778

Share Report

A government department incurs an expenditure of ₹5,00,000 on the repair of a building. Under the General Financial Rules (GFR), this expenditure should be classified as:

A. Contingent expenditure

B. Revenue expenditure, as it maintains the existing condition

C. Deferred revenue expenditure, to be written off over 5 years

D. Capital expenditure, as it improves the building

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option B

Explanation:
Under standard accounting and GFR principles, routine repairs and maintenance that do not increase the capacity or useful life of an asset are classified as revenue expenditure, not capital.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1779

Share Report

S1: Under GST, the 'Time of Supply' for goods supplied on an approval basis is 6 months from the date of removal. S2: If the goods are not rejected within 6 months, the time of supply is the date of removal. Which statement(s) is/are correct?

A. Neither S1 nor S2

B. Both S1 and S2

C. S1 only

D. S2 only

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option B

Explanation:
Section 12(6) of the CGST Act states that for supply on approval, the time of supply is 6 months from the date of removal, or the date of invoice if earlier. If not rejected within 6 months, it is the date of removal. Both are correct.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #1780

Share Report

In the context of the Indian Financial System, the 'Securities and Exchange Board of India' (SEBI) was given statutory powers by which of the following Acts?

A. RBI Act, 1934

B. Companies Act, 2013

C. Securities Contracts (Regulation) Act, 1956

D. SEBI Act, 1992

View Answer & Solution Discuss

Get Complete Subject PDF for Accountancy and Statistics

Correct Answer: Option D

Explanation:
SEBI was initially set up as a non-statutory body in 1988 but was granted statutory powers and authority through the SEBI Act, 1992.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Accountancy and Book Keeping MCQs

Practice Questions

More Accountancy and Statistics Topics