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B Com Exam  >  B Com Tests  >  Advanced Corporate Accounting  >  Test: Final Accounts- 1 - B Com MCQ

Test: Final Accounts- 1 - B Com MCQ


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20 Questions MCQ Test Advanced Corporate Accounting - Test: Final Accounts- 1

Test: Final Accounts- 1 for B Com 2024 is part of Advanced Corporate Accounting preparation. The Test: Final Accounts- 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Final Accounts- 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Final Accounts- 1 below.
Solutions of Test: Final Accounts- 1 questions in English are available as part of our Advanced Corporate Accounting for B Com & Test: Final Accounts- 1 solutions in Hindi for Advanced Corporate Accounting course. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free. Attempt Test: Final Accounts- 1 | 20 questions in 10 minutes | Mock test for B Com preparation | Free important questions MCQ to study Advanced Corporate Accounting for B Com Exam | Download free PDF with solutions
Test: Final Accounts- 1 - Question 1
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According to Indian company law, if a company earns nil profit and the managerial remuneration exceeds 10%, what is the limitation imposed on the managerial remuneration?

Detailed Solution for Test: Final Accounts- 1 - Question 1
When a company earns nil profit and the managerial remuneration exceeds 10%, the managerial remuneration is limited to the range of Rs. 75,000 to Rs. 2,00,000.
Test: Final Accounts- 1 - Question 2
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Which of the following items is NOT included in the calculation of managerial remuneration in case of nil profit?

Detailed Solution for Test: Final Accounts- 1 - Question 2
When calculating managerial remuneration in case of nil profit, items like contribution to provident fund, gratuity, encashment of leave at the end of the tenure, children’s education allowance, and leave travel concession are not included. However, profit on the sale of fixed assets is not part of this calculation.
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Test: Final Accounts- 1 - Question 3
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What is the definition of "effective capital of the company" as per the Indian company law?

Detailed Solution for Test: Final Accounts- 1 - Question 3
The effective capital of a company, as defined by Indian company law, refers to the paid-up capital excluding reserves. It is important to note this definition when calculating certain financial aspects related to managerial remuneration.
Test: Final Accounts- 1 - Question 4
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In case a company earns a profit, how is the net profit calculated for the purpose of calculating managerial remuneration?
Detailed Solution for Test: Final Accounts- 1 - Question 4
When calculating net profit for the purpose of managerial remuneration in case of a company earning a profit, the formula is Gross profit + Profit on sale of fixed assets - Usual working charges - Bonus or commission paid or payable to company staff - Tax liability by central govt. except income tax liability - Interest on mortgage - Repair expenses - Normal depreciation - Liability of legal charges/damages - Bad debts.
Test: Final Accounts- 1 - Question 5
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Which of the following is NOT deducted when calculating net profit for managerial remuneration calculation?
Detailed Solution for Test: Final Accounts- 1 - Question 5
When calculating net profit for the purpose of managerial remuneration in case of a company earning a profit, tax liability by the central government is not deducted. However, items like remuneration payable to other directors, capital losses, and unpaid losses and penalties are deducted.
Test: Final Accounts- 1 - Question 6
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As per Indian company law, how are current liabilities classified when preparing the balance sheet?
Detailed Solution for Test: Final Accounts- 1 - Question 6
Current liabilities, when preparing the balance sheet, are classified into short-term liabilities and long-term liabilities. This classification helps provide a clear understanding of the company's obligations that are due within the current reporting period and those that extend beyond.
Test: Final Accounts- 1 - Question 7
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What term refers to the time between the acquisition of assets for processing and their realization in cash or cash equivalents?
Detailed Solution for Test: Final Accounts- 1 - Question 7
The time between the acquisition of assets for processing and their realization in cash or cash equivalents is known as the operating cycle. It represents the time it takes for a company to convert its resources into cash through its operational activities.
Test: Final Accounts- 1 - Question 8
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Which of the following is NOT a component of shareholders' funds in a company's balance sheet?
Detailed Solution for Test: Final Accounts- 1 - Question 8
Share application money pending allotment is not a component of shareholders' funds in a company's balance sheet. Shareholders' funds consist of share capital, reserves and surplus, and money received against share warrants.
Test: Final Accounts- 1 - Question 9
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Which category of assets includes items like goodwill, patents, trademarks, and copyrights?
Detailed Solution for Test: Final Accounts- 1 - Question 9
Intangible assets include items like goodwill, patents, trademarks, copyrights, and other non-physical assets that have value but lack a physical presence. These assets are classified separately from tangible assets in the balance sheet.
Test: Final Accounts- 1 - Question 10
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What should a company disclose under "Contingent liabilities and commitments (to the extent not provided for)" in its balance sheet?
Detailed Solution for Test: Final Accounts- 1 - Question 10
Under "Contingent liabilities and commitments (to the extent not provided for)," a company should disclose guarantees and unsettled claims against the company. This section provides insight into potential liabilities and obligations that may arise in the future but are not fully recognized or accounted for at the balance sheet date.
Test: Final Accounts- 1 - Question 11
Save
According to Indian company law, if a company earns nil profit and the managerial remuneration exceeds 10%, what is the limitation imposed on the managerial remuneration?
Detailed Solution for Test: Final Accounts- 1 - Question 11
When a company earns nil profit and the managerial remuneration exceeds 10%, the managerial remuneration is limited to the range of Rs. 75,000 to Rs. 2,00,000.
Test: Final Accounts- 1 - Question 12
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Which of the following items is NOT included in the calculation of managerial remuneration in case of nil profit?
Detailed Solution for Test: Final Accounts- 1 - Question 12
When calculating managerial remuneration in case of nil profit, items like contribution to provident fund, gratuity, encashment of leave at the end of the tenure, children’s education allowance, and leave travel concession are not included. However, profit on the sale of fixed assets is not part of this calculation.
Test: Final Accounts- 1 - Question 13
Save
What is the definition of "effective capital of the company" as per the Indian company law?
Detailed Solution for Test: Final Accounts- 1 - Question 13
The effective capital of a company, as defined by Indian company law, refers to the paid-up capital excluding reserves. It is important to note this definition when calculating certain financial aspects related to managerial remuneration.
Test: Final Accounts- 1 - Question 14
Save
In case a company earns a profit, how is the net profit calculated for the purpose of calculating managerial remuneration?
Detailed Solution for Test: Final Accounts- 1 - Question 14
When calculating net profit for the purpose of managerial remuneration in case of a company earning a profit, the formula is Gross profit + Profit on sale of fixed assets - Usual working charges - Bonus or commission paid or payable to company staff - Tax liability by central govt. except income tax liability - Interest on mortgage - Repair expenses - Normal depreciation - Liability of legal charges/damages - Bad debts.
Test: Final Accounts- 1 - Question 15
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Which of the following is NOT deducted when calculating net profit for managerial remuneration calculation?
Detailed Solution for Test: Final Accounts- 1 - Question 15
When calculating net profit for the purpose of managerial remuneration in case of a company earning a profit, tax liability by the central government is not deducted. However, items like remuneration payable to other directors, capital losses, and unpaid losses and penalties are deducted.
Test: Final Accounts- 1 - Question 16
Save
As per Indian company law, how are current liabilities classified when preparing the balance sheet?
Detailed Solution for Test: Final Accounts- 1 - Question 16
Current liabilities, when preparing the balance sheet, are classified into short-term liabilities and long-term liabilities. This classification helps provide a clear understanding of the company's obligations that are due within the current reporting period and those that extend beyond.
Test: Final Accounts- 1 - Question 17
Save
Which of the following is NOT a component of shareholders' funds in a company's balance sheet?
Detailed Solution for Test: Final Accounts- 1 - Question 17
Share application money pending allotment is not a component of shareholders' funds in a company's balance sheet. Shareholders' funds consist of share capital, reserves and surplus, and money received against share warrants.
Test: Final Accounts- 1 - Question 18
Save
What term refers to the time between the acquisition of assets for processing and their realization in cash or cash equivalents?
Detailed Solution for Test: Final Accounts- 1 - Question 18
The time between the acquisition of assets for processing and their realization in cash or cash equivalents is known as the operating cycle. It represents the time it takes for a company to convert its resources into cash through its operational activities.
Test: Final Accounts- 1 - Question 19
Save
Which category of assets includes items like goodwill, patents, trademarks, and copyrights?
Detailed Solution for Test: Final Accounts- 1 - Question 19
Intangible assets include items like goodwill, patents, trademarks, copyrights, and other non-physical assets that have value but lack a physical presence. These assets are classified separately from tangible assets in the balance sheet.
Test: Final Accounts- 1 - Question 20
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What should a company disclose under "Contingent liabilities and commitments (to the extent not provided for)" in its balance sheet?
Detailed Solution for Test: Final Accounts- 1 - Question 20
Under "Contingent liabilities and commitments (to the extent not provided for)," a company should disclose guarantees and unsettled claims against the company. This section provides insight into potential liabilities and obligations that may arise in the future but are not fully recognized or accounted for at the balance sheet date.
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Final Accounts- 1 MCQs with Answers

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