Accountancy MCQs | Chapter-wise Multiple Choice Questions with Answers

Question #1821

In the context of the Indian Financial System, the 'Forward Markets Commission' (FMC) was the regulator for which market before its merger with SEBI?

A. Money Market

B. Commodity Derivatives Market

C. Government Securities Market

D. Foreign Exchange Market

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Correct Answer: Option B

Explanation:
The Forward Markets Commission (FMC) was the regulatory authority for the commodity derivatives market in India before it was merged with SEBI in 2015.

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Question #1822

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Assertion (A): Under Ind AS 2, inventories are measured at the lower of cost and net realizable value (NRV). Reason (R): This ensures that assets are not overstated and losses are recognized in the period they occur, adhering to the prudence concept. Choose the correct option.

A. A is true but R is false

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

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

D. A is false but R is true

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Correct Answer: Option C

Explanation:
Ind AS 2 mandates the lower of cost and NRV rule. This is a direct application of the prudence (conservatism) concept, ensuring assets aren't overstated and potential losses are recognized immediately. R correctly explains A.

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Question #1823

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Under the Income Tax Act, the 'TDS' on payment of rent for plant and machinery exceeding ₹1,80,000 per annum is governed by which section, and what is the rate?

A. Section 194J at 10%

B. Section 194I at 10%

C. Section 194C at 2%

D. Section 194I at 2%

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Correct Answer: Option D

Explanation:
Section 194I(a) mandates TDS at 2% on rent paid for the use of plant, machinery, or equipment, provided the rent exceeds ₹1,80,000 in a financial year.

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Question #1824

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S1: In a partnership, if a partner's loan to the firm is interest-free, and the deed is silent, no interest is allowed. S2: If the partner's loan is interest-bearing as per the deed, it is treated as a liability and interest is charged to the Profit and Loss Account. Which statement(s) is/are correct?

A. Both S1 and S2

B. S2 only

C. S1 only

D. Neither S1 nor S2

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Correct Answer: Option A

Explanation:
Both statements are correct. If the deed is silent, no interest on a partner's loan is allowed. If the deed specifies an interest rate, it is treated as an expense and charged to the P&L Account, not the P&L Appropriation Account.

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Question #1825

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Under the General Financial Rules (GFR) 2017, the 'Competent Authority' for sanctioning expenditure from the Contingency Fund of India is:

A. The President of India

B. The Finance Minister

C. The Prime Minister

D. The Parliament

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Correct Answer: Option A

Explanation:
The Contingency Fund of India is an imprest placed at the disposal of the President of India, who is the competent authority to sanction advances from it to meet unforeseen expenditures.

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Question #1826

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S1: Under Ind AS 109, financial assets are classified into three measurement categories: Amortized Cost, Fair Value Through Other Comprehensive Income (FVTOCI), and Fair Value Through Profit or Loss (FVTPL). S2: Equity investments are always measured at Amortized Cost. Which statement(s) is/are correct?

A. S2 only

B. Neither S1 nor S2

C. S1 only

D. Both S1 and S2

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Correct Answer: Option C

Explanation:
S1 is correct as per Ind AS 109. S2 is incorrect because equity investments do not have contractual cash flows that are solely payments of principal and interest (SPPI), so they cannot be measured at Amortized Cost; they are measured at FVTPL or FVTOCI.

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Question #1827

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Under GST, the 'Annual Return' (GSTR-9) must be filed by:

A. Only input service distributors

B. Every registered person, except composition dealers, casual taxable persons, and non-resident taxable persons

C. Every registered person, including composition dealers

D. Only those with turnover exceeding ₹2 Crores

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Correct Answer: Option B

Explanation:
GSTR-9 is the annual return filed by regular registered taxpayers. Composition dealers, casual taxable persons, non-resident taxable persons, and ISDs file different specific returns (like GSTR-9A, 9B, 9C) and are excluded from the standard GSTR-9.

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Question #1828

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In the context of PFMS, the 'Public Accounts Committee' (PAC) examines:

A. The tax collection policies

B. The appropriation accounts and the audit reports of the CAG

C. The monetary policy of the RBI

D. The annual budget estimates

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Correct Answer: Option B

Explanation:
The Public Accounts Committee (PAC) of the Parliament examines the appropriation accounts (showing how grants were spent) and the audit reports submitted by the Comptroller and Auditor General (CAG).

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Question #1829

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Assertion (A): Under Ind AS 36, if an impairment loss is recognized, the depreciation charge for the asset must be adjusted in future periods. Reason (R): The depreciation charge is based on the revised carrying amount of the asset after the impairment loss. Choose the correct option.

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

B. A is false but R is true

C. A is true but R is false

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

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Correct Answer: Option A

Explanation:
Ind AS 36 requires that after recognizing an impairment loss, the asset's depreciation charge must be adjusted to allocate the revised carrying amount over its remaining useful life. R correctly explains A.

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Question #1830

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Under the Income Tax Act, the deduction under Section 80C has a maximum limit of ₹1,50,000. Which of the following is NOT eligible for deduction under Section 80C?

A. Equity Linked Savings Scheme (ELSS) Mutual Funds

B. Life Insurance Premium

C. Public Provident Fund (PPF)

D. National Pension System (NPS) Tier-I

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Correct Answer: Option D

Explanation:
Contributions to NPS Tier-I are eligible for deduction under Section 80CCD(1) (within the 80C limit) and an additional ₹50,000 under 80CCD(1B). However, the question asks what is not eligible *under 80C specifically*. Actually, NPS Tier 1 is under 80CCD. Let me rephrase to be precise.

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Question #1831

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Under the Income Tax Act, which of the following is NOT eligible for deduction under the specific Section 80C limit of ₹1,50,000?

A. Life Insurance Premium

B. Public Provident Fund (PPF)

C. Medical Insurance Premium for self

D. Sukanya Samriddhi Account

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Correct Answer: Option C

Explanation:
Medical insurance premiums are eligible for deduction under Section 80D, not Section 80C. LIC, PPF, and Sukanya Samriddhi are all eligible under Section 80C.

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Question #1832

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S1: In a cash flow statement under Ind AS 7, taxes on income are generally classified as cash flows from operating activities. S2: However, if it is practicable to identify the tax cash flow with an investing or financing activity, it must be classified accordingly. Which statement(s) is/are correct?

A. S1 only

B. S2 only

C. Neither S1 nor S2

D. Both S1 and S2

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Correct Answer: Option D

Explanation:
Both statements are correct as per Ind AS 7. Taxes on income are generally operating, but if they can be specifically identified with a financing or investing transaction (like tax on sale of an asset), they should be classified with that activity.

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Question #1833

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Under the Companies Act 2013, the 'Corporate Social Responsibility' (CSR) committee must consist of:

A. At least 3 directors, out of which at least 1 must be an independent director

B. At least 2 directors, out of which at least 1 must be an independent director

C. At least 3 directors, all of whom must be independent directors

D. At least 2 directors, both of whom must be independent directors

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Correct Answer: Option A

Explanation:
Section 135 of the Companies Act 2013 mandates that the CSR Committee must consist of at least 3 directors, out of which at least 1 must be an independent director.

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Question #1834

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S1: Under GST, the 'E-way bill' is valid for 1 day for every 100 km of movement of goods. S2: For over-dimensional cargo, the validity is 1 day for every 20 km. Which statement(s) is/are correct?

A. S1 only

B. Both S1 and S2

C. S2 only

D. Neither S1 nor S2

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Correct Answer: Option B

Explanation:
Both statements are correct as per Rule 138 of the CGST Rules. Normal goods have a validity of 1 day per 100 km, while over-dimensional cargo has a validity of 1 day per 20 km.

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Question #1835

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In the context of the Indian Financial System, the 'Securities Appellate Tribunal' (SAT) hears appeals against the orders of:

A. Ministry of Corporate Affairs

B. Reserve Bank of India

C. SEBI, PFRDA, and IRDAI

D. Competition Commission of India

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Correct Answer: Option C

Explanation:
The Securities Appellate Tribunal (SAT) is a statutory body that hears appeals against orders passed by SEBI, PFRDA (Pension Fund Regulatory and Development Authority), and IRDAI (Insurance Regulatory and Development Authority).

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Question #1836

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Assertion (A): Under Ind AS 1, an entity must present a statement of changes in equity as part of its complete set of financial statements. Reason (R): This statement provides information about the changes in the carrying amount of each component of equity during the period. 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

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Correct Answer: Option A

Explanation:
Ind AS 1 requires the statement of changes in equity to show how each component of equity (share capital, reserves, retained earnings) changed during the period due to profits, dividends, and other comprehensive income. R correctly explains A.

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Question #1837

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Under the Income Tax Act, the 'TDS' on payment of professional fees exceeding ₹30,000 in a financial year is governed by which section, and what is the rate for individuals/HUFs?

A. Section 194J at 2%

B. Section 194Q at 0.1%

C. Section 194C at 1%

D. Section 194J at 10%

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Correct Answer: Option D

Explanation:
Section 194J mandates TDS at 10% on fees for professional services (and technical services) if the payment exceeds ₹30,000 in a financial year.

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Question #1838

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S1: In standard costing, the 'Material Mix Variance' arises when the actual mix of materials used differs from the standard mix. S2: If the actual mix is changed due to the unavailability of a specific material, the variance is calculated using the original standard mix. Which statement(s) is/are correct?

A. Neither S1 nor S2

B. S1 only

C. Both S1 and S2

D. S2 only

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Correct Answer: Option B

Explanation:
S1 is correct. S2 is incorrect because when the actual mix is altered due to unavailability, the Material Mix Variance must be calculated using the Revised Standard Mix, not the original standard mix.

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Question #1839

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Under the General Financial Rules (GFR) 2017, the 'Contingent Expenditure' includes:

A. Salary and wages of regular staff

B. Expenditure on capital assets

C. Expenditure on unforeseen events like natural calamities or legal claims

D. Expenditure on routine maintenance

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Correct Answer: Option C

Explanation:
Contingent expenditure under GFR refers to expenditure that is not certain and depends on the occurrence of unforeseen events, such as natural disasters, accidents, or legal claims against the government.

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Question #1840

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In financial management, the 'Degree of Operating Leverage' (DOL) at a given level of sales is calculated as:

A. Sales / Contribution

B. Contribution / EBIT

C. EBIT / Net Profit

D. Contribution / Net Profit

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Correct Answer: Option B

Explanation:
The Degree of Operating Leverage (DOL) measures the sensitivity of EBIT to changes in sales. It is calculated as Contribution divided by EBIT (Earnings Before Interest and Taxes).

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