CA CPT Mock Test - 1 (Session 1) - CA Foundation MCQ

When unapproved goods are existing on last day of the year, then it should be included in closing stock and valued at cost and market value whichever is lower.

Cost of remaining goods = 3500−800=2700

Market value of remaining goods (including 25% profit on sale)= (2700/(100−25))×100=3600

So Stock on approval will be shown at 2700 in balance sheet.

The forfeiture account will be credited by Rs. 60. Let's break down the details:

- B Ltd. issued shares of Rs. 10 each, so the total value of 30 shares purchased by Mr. C is 30 x 10 = Rs. 300.
- Mr. C paid Rs. 2 on application for each share, so the total amount paid on application is 30 x 2 = Rs. 60.
- He did not pay the allotment money of Rs. 3 and further call money.

When the company forfeits the shares, the forfeiture account is credited with the amount received by the company, which is the application money paid by Mr. C. So, in this case, the forfeiture account will be credited by Rs. 60.

C giving 2% discount (35, 000*2% = 700) to A.
Actual payment to C = 35, 000 -700 = 34, 300.
A endorse Rs. 30,000 frm B.
So, the balance of (34,300 - 30,000) Rs.4,300 has to be paid to C by A.

Cost of the goods sold = 45,000 × 2/3 × 9/10 = Rs. 27,000
Invoice value of the goods sold = 27,000 + 33.33% of 27,000 = 27,000 + 100/300 × 27,000 = 27,000 + 9,000 = Rs. 36,000
Sale price = 36,000 × 120/100 = Rs. 43,200

To calculate the rent paid as shown in the profit and loss account for the year ended 31st December 2016, we need to determine the rent expense for the period 1st January 2016 to 31st December 2016.

Here's the breakdown of the calculation:

Rent for the year 1st October 2015 to 30th September 2016:
- Total rent paid: Rs. 1,200
- Rent period: 12 months (October 2015 to September 2016)

Rent for the year 1st October 2016 to 30th September 2017:
- Total rent paid: Rs. 1,600
- Rent period: 12 months (October 2016 to September 2017)

Now, we need to find the rent expense for the period 1st January 2016 to 31st December 2016.

Rent expense for the period 1st January 2016 to 30th September 2016:
- Rent for 9 months (January 2016 to September 2016)
- Calculation: (Rs. 1,200 / 12 months) * 9 months = Rs. 900

Rent expense for the period 1st October 2016 to 31st December 2016:
- Rent for 3 months (October 2016 to December 2016)
- Calculation: (Rs. 1,600 / 12 months) * 3 months = Rs. 400

Adding both the rent expenses:
- Rent expense for the year ended 31st December 2016 = Rs. 900 (January to September) + Rs. 400 (October to December) = Rs. 1,300

Hence, the correct answer is Rs. 1,300.

The correct answer is (c) Rs. 30,000.

In accounting, expenses are the costs incurred during the normal course of business operations. The given costs can be categorized as follows:

1. Expensed items:
- Repair cost (Rs. 25,000)
- Whitewash expenses (Rs. 5,000)

2. Capitalized items (these are not expensed in the books, but rather added to the asset's cost):
- Cost of extension of building (Rs. 2,50,000)
- Cost of improvement in electrical wiring system (Rs. 19,000)

Now, let's calculate the amount to be expensed in the books:
- Repair cost: Rs. 25,000
- Whitewash expenses: Rs. 5,000
Total amount to be expensed = Repair cost + Whitewash expenses = Rs. 25,000 + Rs. 5,000 = Rs. 30,000

The correct answer is d. Rs. 18,000.

To understand the calculation, let's break down the information given:

- Number of forfeited shares: 1,000
- Par value of each share: Rs. 20
- Called-up value per share: Rs. 18
- Allotment money not paid: Rs. 8 per share

Now, let's calculate the amount debited to share capital on forfeiture:

1. Total called-up value = Number of forfeited shares x Called-up value per share
Total called-up value = 1,000 x 18
Total called-up value = Rs. 18,000

2. Total allotment money not paid = Number of forfeited shares x  Allotment money not paid
Total allotment money not paid = 1,000 x 8
Total allotment money not paid = Rs. 8,000

3. Amount debited to share capital = Total called-up value - Total allotment money not paid
Amount debited to share capital = Rs. 18,000 - Rs. 8,000
Amount debited to share capital = Rs. 10,000

However, in this case, we are only concerned with the amount debited to share capital on forfeiture. Since the called-up value per share is Rs. 18, the amount debited to share capital on forfeiture will be:

Amount debited to share capital = Number of forfeited shares x Called-up value per share
Amount debited to share capital = 1,000 x 18
Amount debited to share capital = Rs. 18,000

Therefore, the correct answer is d. Rs. 18,000.

The correct answer is d: All of the above - Transparency, Consistency, and Comparability. Accounting principles and policies are standardized for several reasons:

Transparency:
- Standardized accounting principles help businesses provide a clear and accurate picture of their financial position.
- They ensure that financial statements are prepared using a consistent set of rules and guidelines, making it easier for investors, creditors, and other stakeholders to understand and interpret the information presented.
- Transparent financial reporting builds trust and confidence in a company's financial health, which is essential for attracting investments and maintaining stakeholder relationships.

Consistency:
- Standardized accounting principles ensure that a company's financial statements are prepared consistently from year to year and across different reporting periods.
- This enables stakeholders to identify trends, assess financial performance, and make informed decisions about the company's future prospects.
- Consistency in accounting practices also helps reduce the risk of errors and misstatements, which can lead to financial scandals or regulatory penalties.

Comparability:
- By adhering to standardized accounting principles, companies can produce financial statements that are comparable with those of their peers and competitors.
- This is crucial for investors and other stakeholders who want to evaluate a company's performance relative to others in the same industry or sector.
- Comparability also facilitates benchmarking, which can help companies identify areas where they may be underperforming and make necessary improvements.

In summary, standardizing accounting principles and policies is essential for ensuring transparency, consistency, and comparability in financial reporting. This not only benefits the companies themselves but also helps protect the interests of investors and other stakeholders who rely on accurate and reliable financial information for decision-making purposes.

To determine the number of shares to be issued by G Ltd. to settle the purchase consideration of assets, we can follow these steps:

1. Calculate the total value of shares, including the premium:
- Given that the shares are issued at a premium of 25%, this means the total value per share is Rs. 100 + (25% of Rs. 100) = Rs. 125.

2. Determine the number of shares required to cover the value of assets:
- The total value of the assets acquired is Rs. 7,50,000.
- To find the number of shares needed to cover this value, we can divide the total value of assets by the value per share: 7,50,000 / 125 = 6,000 shares.

So, G Ltd. will issue 6,000 shares to settle the purchase consideration of assets.
The correct answer is: 6,000 shares

To calculate the amount of dividend payable for X Ltd., we need to consider the net called-up equity share capital, which is the called-up share capital minus calls in arrear plus calls in advance. Then, we can apply the rate of dividend to find the total dividend payable.

1. Calculate the net called-up equity share capital:
- Called-up equity share capital: Rs. 5,00,000
- Calls in arrear: Rs. 40,000
- Calls in advance: Rs. 25,000
Net called-up equity share capital = (Called-up equity share capital - Calls in arrear + Calls in advance)
= (5,00,000 - 40,000 + 25,000)
= Rs. 4,85,000

2. Calculate the dividend payable:
- Rate of dividend: 15%
Dividend payable = (Net called-up equity share capital * Rate of dividend) / 100
= (4,85,000 * 15) / 100
= Rs. 72,750

However, since there are calls in advance, we need to deduct the dividend paid on these shares:
Dividend paid on calls in advance = (Calls in advance * Rate of dividend) / 100
= (25,000 * 15) / 100
= Rs. 3,750

3. Calculate the final dividend payable:
Final dividend payable = Dividend payable - Dividend paid on calls in advance
= 72,750 - 3,750
= Rs. 69,000

So, the amount of dividend payable for X Ltd. is Rs. 69,000 (option d).

Here, total number shares issued is Rs 80,00,000/Rs 100 i.e. 80,000. Final call was paid on 77,500 which makes total shares on which call was not received to 80,000-77,500 i.e. 2,500. Calls in arrears were Rs 62,500, therefore final call here will be Rs 62,500/2500 i.e. Rs 25.

The problem states that Ram's acceptance to Dinesh for Rs. 8,000 is renewed for 3 months on the condition that Rs. 4,000 be paid in cash immediately, and the remaining amount will carry interest @ 12% p.a.

Let's break down the information:

- Initial amount: Rs. 8,000
- Amount paid in cash: Rs. 4,000
- Remaining amount: Rs. 8,000 - Rs. 4,000 = Rs. 4,000
- Interest rate: 12% p.a.
- Time period: 3 months (1/4 of a year)

Now, to calculate the interest on the remaining amount, we use the formula:
Interest = (Principal × Rate × Time) / 100

In this case:
- Principal = Remaining amount = Rs. 4,000
- Rate = 12% p.a.
- Time = 3 months = 1/4 year

Plugging in the values:
Interest = (4,000 × 12 × 1/4) / 100
Interest = (4,000 × 3) / 100
Interest = 12,000 / 100
Interest = Rs. 120

Therefore, the amount of interest will be Rs. 120. The correct answer is a.

Total Cost Price of Goods = Rs.2,00,000
S.P of 4/5th Goods = Rs.2,50,000
Therefore, Bal. Goods = Rs.40,000
Therefore, S.P of Bal. Goods = 40,000 - 20% = 32,000 Rs.
Total S.P = 2,50,000 + 32,000 = Rs. 2,82,000
Therefore, Profit = S.P - C.P
= 2,82,000 - 2,00,000 = Rs.82,000

Correct Answer :- a

Explanation : The total cost of the machinery purchased will be 120000 + 10000 expenses = 130000

Residual value = 5000

Time Period = 10 yrs

Annual Depreciation = (130000 - 5000)/10

= 12,500

Rs. 2,500 spent on the overhauling on purchase of second hand machinery to put it in working condition and to derive endurable long- term advantage is a capital expenditure.

The correct answer is (b) - Ascertain the cost of the manufactured goods.
Manufacturing account is a statement prepared by a manufacturing business to determine the cost of goods manufactured during a specific accounting period. The main purpose of preparing a manufacturing account is to ascertain the cost of the manufactured goods.

Here are the reasons why the other options are incorrect:

•  Ascertain the profit or loss on the goods produced: While the manufacturing account helps to ascertain the cost of goods manufactured, it does not directly show the profit or loss on the goods produced. The profit or loss is calculated in the trading and profit & loss account after considering the cost of goods sold and other incomes and expenses.
• Show the sale proceeds from the goods produced during the year: The manufacturing account does not show the sale proceeds from the goods produced during the year. The sale proceeds are recorded in the trading account, which is prepared separately.
• Both (b) and (c): As explained above, the manufacturing account does not show the sale proceeds from the goods produced during the year. Therefore, this option is incorrect.

In summary, the primary purpose of preparing a manufacturing account is to ascertain the cost of the manufactured goods during a specific accounting period. It helps the business to determine the cost of production, which is useful for pricing, inventory valuation, and cost management.

The correct answer is: Assets and liabilities expressed in monetary terms.

Financial statements are formal records of the financial activities and position of a business, person, or other entity. They provide an overview of a business's financial condition in both short and long-term aspects. Financial statements typically include the balance sheet, income statement, and cash flow statement.

Financial statements consider:
1. Assets expressed in monetary terms: These are the resources owned by a business that have a measurable monetary value. Examples include cash, accounts receivable, inventory, buildings, and equipment. These assets are recorded in the financial statements at their monetary value, either at their historical cost or fair market value, depending on the applicable accounting standards.

2. Liabilities expressed in monetary terms: These are the obligations of a business that also have a measurable monetary value. Examples include accounts payable, loans, and bonds payable. Like assets, liabilities are recorded in the financial statements at their monetary value.

Financial statements do not typically include:
Assets expressed in non-monetary terms: These are resources that cannot be easily quantified in monetary terms, such as human capital, intellectual property, or brand value. While these assets can contribute significantly to a company's success, they are not included in the financial statements because they do not have a clear, measurable monetary value.

To summarize, financial statements consider both assets and liabilities expressed in monetary terms, as they provide a clear and quantifiable measure of a business's financial position. Non-monetary assets, while potentially valuable, are not included in financial statements due to their lack of a clear, measurable monetary value.

To calculate the gross profit, we follow these steps:

Step 1: Calculate the Gross Profit
- Gross Profit = Sales Revenue - Cost of Goods Sold

Step 2: Subtract Expenses
- Net Profit = Gross Profit - Expenses

Now let's use the given values to calculate the Gross Profit:

- Sales Revenue = Rs. 4,00,000
- Cost of Goods Sold = Rs. 3,10,000
- Expenses = Rs. 60,000

Gross Profit Calculation:
- Gross Profit = 4,00,000 - 3,10,000
- Gross Profit = Rs. 90,000

So, the correct answer is (b) Rs. 90,000.

To find the sacrificing ratio among A and B, we need to compare their old ratio (before C's admission) and the new ratio (after C's admission). Let's break down the calculation into steps.

Old Ratio (A : B) = 5 : 3
New Ratio (A : B : C) = 7 : 5 : 4

Now, we need to find the ratio for A and B only from the new ratio. To do this, we need to make the sum of the new ratio equal to the sum of the old ratio.
Sum of old ratio = 5 + 3 = 8
Sum of new ratio = 7 + 5 + 4 = 16

Now, we need to make the sum of the new ratio equal to the sum of the old ratio. To do this, we can divide the new ratio by 2 (since 16 / 2 = 8).
Adjusted new ratio for A and B = (7 : 5 : 4) / 2 = 3.5 : 2.5 : 2

Now, we have the adjusted new ratio for A and B as 3.5 : 2.5. To find the sacrificing ratio, we need to compare this adjusted new ratio with the old ratio.
Sacrificing ratio (A : B) = Old Ratio - Adjusted New Ratio
Sacrificing ratio (A : B) = (5 : 3) - (3.5 : 2.5) = (5 - 3.5) : (3 - 2.5) = 1.5 : 0.5

Now, we can simplify the sacrificing ratio by dividing both parts by 0.5.
Simplified sacrificing ratio (A : B) = (1.5 : 0.5) / 0.5 = 3 : 1
Hence, the sacrificing ratio among A and B is 3:1. Therefore, the correct answer is (a) 3:1.

To calculate the gross profit, we need to follow these steps:

Calculate the cost of goods sold (COGS):
- Opening Stock
- Add Purchases
- Add Carriage on Purchases
- Subtract Closing Stock

Calculate the gross profit:
- Sales
- Subtract COGS

Let's calculate the gross profit based on the given data:

Calculate the cost of goods sold (COGS):
- Opening Stock: Rs. 20,000
- Add Purchases: Rs. 85,800
- Add Carriage on Purchases: Rs. 2,300
- Total before subtracting Closing Stock: Rs. 108,100
- Subtract Closing Stock: Rs. 18,000
- COGS: Rs. 90,100

Calculate the gross profit:
- Sales: Rs. 1,40,700
- Subtract COGS: Rs. 90,100
- Gross Profit: Rs. 50,600

So, the correct answer is (d) Rs. 50,600.

When the shares are issued at premium and the company has received that premium at the time of forfeiture the Premium A/c remains unchanged.

This all is because the company cannot demand the premium again on forfeiture of shares even when they have received the amount due on premium.

The correct answer is: Insurance Premium A/c Dr. 1,800. To Prepaid Insurance Premium 1,800.

The insurance premium paid on January 1, 2015, is Rs. 2,400. The financial year ends on March 31 every year, which means the premium covers 12 months (January to December). Since the opening entry is on April 1, 2015, three months (January, February, and March) of the insurance premium have already been used.

Here's a detailed breakdown of the calculation:

1. Determine the monthly premium:
- Total premium: Rs. 2,400
- Duration: 12 months
- Monthly premium: Rs. 2,400 / 12 = Rs. 200

2. Calculate the used and unused portions of the premium:
- Used portion (January to March): 3 months x Rs. 200 = Rs. 600
- Unused portion (April to December): 9 months x Rs. 200 = Rs. 1,800

3. Create the opening entry on April 1, 2015:
- Insurance Premium A/c Dr. 1,800
- To Prepaid Insurance Premium 1,800

This entry shows that the total insurance premium paid (Rs. 2,400) is divided into two parts: the used portion (Rs. 600) and the unused portion (Rs. 1,800). The opening entry on April 1, 2015, reflects the remaining unused portion of the insurance premium (Rs. 1,800) as a prepaid insurance premium, which will be used in the following nine months (April to December).

The need for rectifying accounting errors arises after the preparation of the trial balance. The trial balance is crucial for the identification of such errors before proceeding with its rectification.

The correct answer is d) Production units method.

Production Units Method:
The Production Units Method, also known as the Units of Production Method or Units of Activity Method, is a depreciation method where depreciation is charged based on the actual usage or output of the asset. In this method, depreciable cost is allocated in proportion to the annual output relative to the probable lifetime output.

The main features of the Production Units Method include:
- It takes into account the actual usage or output of the asset.
- Depreciation is higher when the asset is more productive and lower when it is less productive.
- It is suitable for assets whose productivity varies over time or depends on usage.

The Production Units Method is useful for assets that have variable productivity levels and provides a more accurate reflection of the asset's wear and tear over time than other methods, such as the straight-line or declining balance methods.

To calculate the provision for doubtful debts, we first need to subtract the bad debts from the total debtors. Then, we can calculate the provision for doubtful debts based on the given percentage.

Step 1: Calculate net debtors
Total debtors on 31st March 2016: Rs. 55,200
Bad debts: Rs. 200

Net Debtors = Total Debtors - Bad Debts
Net Debtors = Rs. 55,200 - Rs. 200
Net Debtors = Rs. 55,000

Step 2: Calculate provision for doubtful debts
Provision for doubtful debts = Net Debtors x Percentage of Provision for Doubtful Debts
Provision for doubtful debts = Rs. 55,000 x 5%
Provision for doubtful debts = Rs. 2,750

So, the amount of provision for doubtful debts is Rs. 2,750. The correct answer is (b) Rs. 2,750.

WDV = COST (1 - r)^n
WDV = 72900
72900 = cost (1 - 0.1)^3
72900 = cost (0.9)^3
cost = 72900/0.729
cost =100000

To find the cost of the asset, we can follow these steps:

1. Calculate the total depreciation over the asset's life:
- Depreciation per year: Rs. 2,500
- Estimated life of the asset: 10 years
- Total depreciation = Depreciation per year * Estimated life
- Total depreciation = Rs. 2,500 * 10 = Rs. 25,000

2. Add the estimated scrap value to the total depreciation:
- Estimated scrap value: Rs. 3,200
- Cost of the asset = Total depreciation + Estimated scrap value
- Cost of the asset = Rs. 25,000 + Rs. 3,200 = Rs. 28,200

So the cost of the asset is Rs. 28,200. The correct answer is option b.

To calculate the share in profits for D's account for the period 1st April 2016 to 30th June 2016, we need to follow these steps:

1. Calculate the total ratio:
The total ratio of R, J, and D is 7:5:4. We can add the ratios to find the total ratio.
Total ratio = 7 + 5 + 4 = 16

2. Calculate D's share in total profits:
D's share in total profits can be calculated by multiplying D's ratio (4) by the total profits (Rs. 24,000) and dividing by the total ratio (16).
D's share = (4/16) * Rs. 24,000

3. Calculate the number of months for which D was a partner:
D died on 30th June 2016, and we need to calculate the share for the period 1st April 2016 to 30th June 2016. So, D was a partner for 3 months (April, May, and June).

4. Calculate the total number of months in the accounting year:
The accounting year is from 1st April 2015 to 31st March 2016, which is 12 months.

5. Calculate D's share in profits for the period 1st April 2016 to 30th June 2016:
We can do this by multiplying D's share in total profits by the number of months D was a partner and then dividing by the total number of months in the accounting year.
D's share for 3 months = (D's share in total profits) * (3 months) / (12 months)

Now, let's calculate the values:

D's share = (4/16) * Rs. 24,000 = Rs. 6,000
D's share for 3 months = (Rs. 6,000) * (3 months) / (12 months) = Rs. 1,500

So, the share in profits for the period 1st April 2016 to 30th June 2016 that will be credited to D's account is Rs. 1,500. The correct answer is b.

The correct answer is c: Rs. 4,500.

Here's a detailed explanation:
- Interest on capital is calculated for the period from 1st July, 2016 to 31st December, 2016, which is a total of 6 months.
- Interest on capital is to be charged at 10% per annum.

Calculating interest on capital for Mr. A:
- Mr. A's capital contribution is Rs. 40,000.
- To calculate interest for 6 months, we need to divide the annual rate (10%) by 2, which gives us 5%.
- Interest for Mr. A = 5% of Rs. 40,000 = (5/100) * 40,000 = Rs. 2,000.

Calculating interest on capital for Mr. B:
- Mr. B's capital contribution is Rs. 50,000.
- Interest for Mr. B = 5% of Rs. 50,000 = (5/100) * 50,000 = Rs. 2,500.

Total interest on capital for both partners:
- Total interest = Interest for Mr. A + Interest for Mr. B
- Total interest = Rs. 2,000 + Rs. 2,500 = Rs. 4,500.

Therefore, the interest on capital for both partners is Rs. 4,500.