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Test: Accounting & Financial Management of Banking - 2 - Bank Exams MCQ


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100 Questions MCQ Test Mock Test Series for JAIIB Exam 2025 - Test: Accounting & Financial Management of Banking - 2

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Test: Accounting & Financial Management of Banking - 2 - Question 1

A company reports a decrease in cash flow from operating activities and increase in cash flow from investing activities. What can be inferred about the company's fund flow?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 1

If a company reports a decrease in cash flow from operating activities and an increase in cash flow from investing activities, it can be inferred that the company's fund flow has shifted from its core operations to its investments. This could mean that the company is generating less cash from its day-to-day business operations and is instead generating more cash from its investments, such as the sale of long-term assets or the receipt of investment income.

Test: Accounting & Financial Management of Banking - 2 - Question 2

Salary for the month of March has been incurred during the month but will be paid in April.
What type of adjustment entry is this?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 2

Adjustment Entries Relating to Income and Expenditure

  • Some of the expenses may have been incurred but not paid. For example, salary for the month of March has been incurred during the month but will be paid in April. For this, adjusting entries will be passed in the ledger by debit to charges (salary) account and credit to 'Salary payable' account.
  • Some of the expenses may have been paid in advance but not incurred. If a payment has been made in advance i.e. it does not pertain to the accounting period in question, it is not treated as an expense, and the person who received the amount is treated as a debtor.
  • Some incomes may have accrued but not received. For example, interest accrued on a fixed deposit with the bank which will be paid by the bank on maturity along with the principal. For accounting this interest income, credit 'interest income' account and debit 'interest receivable' account.
  • Some incomes may have been received but not accrued. If an income has been received but not accrued, it should not be accounted for. For example, advance payment of rent by a tenant. This should not be taken into account. Therefore, 'Rent Received' account should be debited and 'Advance Rent Received' account should be credited.

Hence option (c) is correct

Test: Accounting & Financial Management of Banking - 2 - Question 3

Which of the following statement/s is/are correct regarding units of production method?
I. This method is a usage based method.
II. This is a method assumes a higher depreciation charge and a greater tax benefit in the early years of an asset's life
III. The depreciation amount is not based on passage of time but actual use of the asset.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 3

UNITS OF PRODUCTION METHOD

Accounting Standards in India (AS-10 and Ind AS-16) recognize 3 methods of calculating depreciation. These are the Straight line method, Diminishing Balance method and the Units of Production method.

This method is a usage based method. The depreciation amount is not based on passage of time but actual use of the asset. This method is suited to those assets which depreciate in proportion to their use rather than having a useful life measured in number of years. In this method, the useful life is measured in terms of production output or number of units which an asset is capable of producing during its lifetime. This method gives a very accurate measure of the depreciation but suffers from the drawback of the need to maintain elaborate records.

Hence the correct answer is Option (c).

Test: Accounting & Financial Management of Banking - 2 - Question 4

According to the Companies Act, What is the interest rate chargeable under Table F for calls in arrears and calls in advance?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 4

Interest is chargeable at a rate not exceeding 12 % per annum on calls in advance and 10 % per annum on calls in arrears according to Table F.
Calls in arrears refer to the total unpaid amount on shares
Calls in advance refer to the total money received which is not yet called up by the company.

Test: Accounting & Financial Management of Banking - 2 - Question 5

Which of the following statements are correct regarding the Password Protection ?
I. Users should ensure that nobody is watching when they are entering password into the system.
II. Users who have been authorised to use the smart cards or private keys should safeguard them carefully as compromising the same could have wide ramifications.
III. Users should change their password regularly.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 5

Password Protection

  • Users should not share their passwords with anyone including colleagues and IT staff. Users should also not ask others (including customers and colleagues) for their passwords. All passwords are to be treated as sensitive, confidential information. If the password needs to be shared under unavoidable circumstances, care should be taken to change it at the next log in by the owner of the password.
  • Users should ensure that nobody is watching when they are entering password into the system. Users should also not watch when others are entering passwords in their system.
  • User should not keep a written copy (in paper or electronic form) of their password in an easily locatable place. If the password needs to be written down, ensure that these are stored securely and are masked or scrambled (e.g. by changing one or more characters of the password).
  • Users should change their password regularly. While some applications will enforce password change and complexity on users automatically, it may not be feasible to enforce it for all accounts and for all applications. Users must change their passwords under any of the following circumstances:
  • At least once in thirty days
  • As enforced by system (applications and operating system)
  • If password has been shared with someone else
  • As soon as possible, after a password has been compromised or after you suspect that a password has been compromised. (e) Users who have been authorised to use the smart cards or private keys should safeguard them carefully as compromising the same could have wide ramifications.

Hence option (a) is correct.

Test: Accounting & Financial Management of Banking - 2 - Question 6

Which of the following statements is correct
I. The Financial statements of Banking Companies need to be signed by the manager or the principal officer of the company and all the directors when there are fewer than 3 directors in the banking company.
II. The financial statements and auditors' reports of the bank need to be submitted to RBI within 3 months from the end of the period to which it refers.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 6

The Financial statements of Banking Companies need to be signed by the manager or the principal officer of the company and all the directors when there are less than 3 directors in the banking company and at least 3 Directors when there are more than 3 directors. The financial statements and auditors' reports of the bank need to be submitted to RBI within 3 months from the end of the period to which it refers. The period may be further extended by 3 months by RBI Approval.

Test: Accounting & Financial Management of Banking - 2 - Question 7

Consider the following statements and choose the correct answer.
Statement I: A computerized accounting system is that accounting information system that helps in processing the financial transactions events.
Statement II: A computerized accounting system is not as per GAAP( generally accepted accounting principles)

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 7

A computerized accounting system is that accounting information system that helps in processing the financial transactions and events as per GAAP(generally accepted accounting principles) and leads to the generation of reports as per the requirements of the users.

Hence option b is correct.

Test: Accounting & Financial Management of Banking - 2 - Question 8

Match the following List I with List II regarding the items in the profit and loss account of the banking company with its schedule.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 8
  • Profit and loss account of a banking company is prepared in vertical form. Form B of the 3rd schedule of the banking regulation act 1949 is to be used for preparing the P&L account.
  • Interest on all sort of advances, discount on bills, income on investment, interest on balance with RBI etc are shown under schedule 13
  • Commission, exchange and brokerage, profit on sale of investment, profit on revaluation of investment, profit and exchange transaction, income by the way of dividend from subsidiary et cetera are shown in schedule 14
  • Interest on deposit interest on borrowings are shown under schedule 15
  • Salaries and wages of staff render rates and taxes printing and stationery advertisement depreciation on banks property directors' fee auditors fee law charge postage or shown under schedule 16
Test: Accounting & Financial Management of Banking - 2 - Question 9

ABC ltd had advanced a loan amounting to Rs 4,00,000. Invested Rs 5,000,00 in shares. And purchased machinery for Rs 8,00,000. It receives a dividend of Rs 40,000 on investment on shares. The company sold an old machine of the book value of Rs 87,000. And at a loss of Rs 10,000. Compute cash flows from investing activities.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 9

Cash flow from investing activities (CFI) is one of the sections on the cash flow statement that reports how much cash has been generated or spent from various investment- related activities in a specific period. Investing activities include purchases of physical assets, investments in securities, or the sale of securities or assets. Purchase of assets represents cash outflow and sale of assets represents cash inflow. In the above case, cash flow from investing activities is calculated as follows:
[Less: Purchase of machinery= (Rs 8,00,000)
Less: Purchase of investments(in shares) = (Rs5,00,000)
Add: Sale of machinery=Rs 77,000 (87,000-10,000)
Cash flow from investing activities= (12,23,000)]

Test: Accounting & Financial Management of Banking - 2 - Question 10

There are three types of ledgers in the accounting system. Match the following with the appropriate option.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 10

The three types of Ledgers are:-

  • Wages, sales, purchases, electricity, travel, advertising, rent, insurance, repairs, receivables, payables, and non-current assets are all recorded in the General or nominal ledger. Although cash and bank accounts are legally part of this ledger, they are frequently kept in a separate book due to the volume of cash and bank transactions.
  • The Payables ledger (sometimes known as the creditors' ledger or the purchase ledger) is a record of all payments made to creditors. Although the overall amount owing to suppliers is noted in the general ledger, the specifics of what is owed to whom are documented here as well. Each supplier has his or her account. The payables balance in the general ledger should match the total of the amounts owed in this ledger.
  • The Receivables ledger (also known as the debtors' ledger or the sales ledger) is a book that keeps track of money owed to you. The overall amount owed by customers is recorded in the general ledger, but the specifics of what is owed from whom are also noted here. Each credit consumer has his or her account. The total of the sums owing in this ledger should match the main ledger's receivables balance.

Thus, the correct option is (a)

Test: Accounting & Financial Management of Banking - 2 - Question 11

Which of the following is not a feature of cost accounting

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 11

Statement of Cost is a memorandum statement which is not made according to the double entry system. It is a statement which is made for calculating total cost, per unit cost and budget cost of product. Cost Accounting classifies, costs records, presents, and interprets it in a significant manner which is used by internal management for cost control and decision-making. It provides the cost details for each cost object i. e. product, process, job, operation, contracts, etc by preparing cost statements as and when required by using historical and predetermined costs.

Test: Accounting & Financial Management of Banking - 2 - Question 12

A furniture manufacturer has received an order to supply 150 identical wooden chairs. The company estimates the material cost at ₹125,000, labor cost at ₹60,000, and manufacturing overheads at ₹25,000. The fixed/non-manufacturing overheads are allocated at 15% of the material cost. What will be the cost of one chair, applying the batch costing system?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 12

[Total cost = Material cost + Labour cost + Manufacturing overheads + Fixed/non-manufacturing overheads
= ₹125,000 + ₹60,000 + ₹25,000 + (15% of ₹125,000)
= ₹125,000 + ₹60,000 + ₹25,000 + ₹18,750
= ₹228,750
Cost of one chair = Total cost / Number of chairs
= ₹228,750 / 150
= ₹1,525]

Test: Accounting & Financial Management of Banking - 2 - Question 13

From the information given below, calculate the total amount of depreciation charged after two years under Straight Line Method.
Machine I - Original Cost - 45,000, Scrap Value - 5,000 , Number of Years - 10
Machine II - Original Cost - 25,000 , Scrap Value - 2,500 , Number of Years - 15

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 13

Depreciation on straight line method= (Original Cost- Scrap Value)/ No of years
Depreciation on first machine will be = (45,000-5000)/10
= 4000 per year.
Depreciation on second machine will be = (25,000-2500)/15
= 1500 per year.
Total depreciation = (4000+1500)
= 5500
Thus, the correct option is (b)

Test: Accounting & Financial Management of Banking - 2 - Question 14

Following are the differences between GAAP and IFRS. Choose the correct differences.
I. GAAP is a framework based on principles based approach while IFRS is based on legal authority
II. GAAP is more detailed and perspective while IFRS is more high level and flexible
III. GAAP requires more disclosure while IFRS require fewer disclosure
IV. GAAP is more focused on the historical cost of the asset while IFRS allow for more flexible in the valuation of asset

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 14

GAAP stands for generally accepted accounting principles which are the generally accepted standard for financial reporting in the United State. IFRS stands for international financial reporting standard, which are a set of internationally accepted accounting standards used by most of the world's country.

The key differences between gap and I FRS include

  • GAAP is a framework based on legal authority while IFRS is based on a principle based approach.
  • GAAP is more detailed and perspective while IFRS s more high level and flexible
  • GAAP requires more disclosure while IFRS require fewer disclosure
  • GAAP is more focused on the historical cost of the asset while I FRS allow for more flexible in the valuation of asset
Test: Accounting & Financial Management of Banking - 2 - Question 15

From the following information calculate interest earned under schedule 13
Interest on deposit 12000
Commission (Cr) 12000
Interest and loan 54000
Discount on bill discounted 8200
Interest on overdraft 17600
Interest on cash credit 13500
Sundry Charges (Dr) 10000

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 15

Interest earned - schedule 13

Test: Accounting & Financial Management of Banking - 2 - Question 16

A company's actual sales volume for the year was 20,000 units Sales cost per unit is Rs50. The company had prepared a flexible budget based on 25,000 units. The flexible budget showed a variable cost of Rs 40 per unit. The fixed cost was Rs 2,00,000 . The actual variable cost was Rs 7,80,000 and actual fixed cost was Rs 2,30,000. What will be the total flexible budgeted profit?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 16

The flexible budgeted profit is calculated based on the flexible budget, which is prepared for 25,000 units.
[The data for the flexible budget is as follows:
Sales revenue = 25,000 units* Rs 50 = Rs 12,50,000
Variable costs = 25,000 units* Rs 40= Rs 10,00,000
Fixed costs = Rs 2,00,000
Total costs = Rs fixed cost + variable costs = 10,00,000 + 2,00,000 =Rs 12,00,000
Flexible budgeted profit = Sales revenue - Total costs = 12,50,000 - 12,00,000 = Rs 50,000]

Test: Accounting & Financial Management of Banking - 2 - Question 17

Which of the following statement/s is/are correct regarding Break-Even Analysis?
I. In narrow sense it is concerned with computing the break-even point
II. In broad sense this technique is used to determine the possible profit/loss at any given level of production or sales.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 17

Break-Even Analysis
Break-even analysis is a generally used method to study the CVP analysis. This technique can be explained in two ways:

  • In narrow sense it is concerned with computing the break-even point. At this point of production level and sales there will be no profit and loss i.e. total cost is equal to total sales revenue.
  • In broad sense this technique is used to determine the possible profit/loss at any given level of production or sales.

Hence the correct answer is Option (c).

Test: Accounting & Financial Management of Banking - 2 - Question 18

Identify which of the following is the correct statement given below towards functions performed by the back office ?
Statement I : Its functions include settlements, clearances, record maintenance, regulatory compliance, accounting, and IT services.
Statement II : Undertaking safe custody of valuables, important documents, and securities by providing safe deposit vaults or lockers.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 18

A back-office in banks is an area where essential functions are carried out. The objective of a back office at a bank is to provide the financial infrastructure that enables the rest of the bank to run and prosper.
Statement I is correct because it is the function of back office
Statement II is wrong. They are the utility functions performed by banks.
Utility Functions of bank are :

  • Issuing letters of credit, traveller's cheque, etc.
  • Undertaking safe custody of valuables, important documents, and securities by providing safe deposit vaults or lockers.
  • Providing customers with facilities of foreign exchange dealings
  • Underwriting of shares and debentures
  • Dealing in foreign exchanges
  • Social Welfare programmes
  • Project reports
  • Standing guarantee on behalf of its customers, etc.
Test: Accounting & Financial Management of Banking - 2 - Question 19

12% Debentures were issued by AAA ltd.
Face value = Rs 10, Payable as under Application Rs 2, Allotment Rs 8

Mohit, a debenture holder failed to pay the allotment money, AAA ltd forfeited the debentures and recorded the same as in the case of shares. What amount should be debited to 12% Debentures during forfeiture?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 19

The company typically demands the entire face value of the bond all at once. There is a strong likelihood that some of the debenture-holders will refuse to pay the instalment amount when required by the company if it is collected in installments, such as through the Debenture Application, Debenture Allotment, and Debentures Calls accounts. The term "calls in arrears" refers to such unpaid calls (installments). According to section 122 of the Companies Act of 1956, debentures are a contract with a company to take up and pay for any debentures of the company that may be enforced by a decree for specific performance. Therefore, under the provisions of the Companies Act of 1956, debentures cannot be forfeited by the company. Only legal action in court may be taken by the company to realise calls on debentures that are in arrears, and interest on such calls may be charged following the prospectus. However, it cannot forfeit the Debentures.

Test: Accounting & Financial Management of Banking - 2 - Question 20

Which of the following provisions regarding the clubbing of income of minors is true?
I. Clubbing provisions are not applicable in respect of the income of a minor married daughter.
II. The income of the minor will be included in the income of that parent, whose total income, excluding the minor's income, is lower.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 20

Clubbing of minor's income is dealt with in [Section 64(1A) ] of Income-tax Act
(i) All income of a minor is to be included in the income of his or her parent, However, the income derived by the minor from manual work or any activity involving minor skill, talent or specialised knowledge will not be included in the income of his parent.
(ii) The income of the minor will be included in the income of that parent, whose total income, excluding the minor's income, is greater.
(iii) Once the clubbing of the minor's income is done with that of one parent, it will continue to be clubbed with that parent only in the coming years.
(iv) Where the marriage of the parents does not subsist, the income of the minor will be includible in the income of that parent who maintains the minor child in the relevant previous year.
(v) Income of a minor child suffering from any disability shall be assessed in the hands of the child and not the parent.
(vi) Income of a minor married daughter is also assessable under the clubbing provision.

Test: Accounting & Financial Management of Banking - 2 - Question 21

What will be the balance as per pass book?
Balance as per Cash Book(Dr.) = 7200
Out of cheques worth Rs.4,000 issued, Rs.2,800 is not presented for payment
Direct deposit by a customer in the bank account - Rs. 3500
Out of cheques worth Rs.4000 sent for bank collection, cheques of Rs.2100 not credited by bank.
Debit side of the Cash book overcast by 200.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 21

Balance as per Cash Book(Dr.) = 7200
Add: Cheques issued, but not presented for payment (4000-2800) = 1200
Direct deposit by a customer in the bank account, = 3500
Less: Cheques sent for bank collection, but not credited by bank (4000-2100) =1900
Debit side of the Cash book overcast by= 200.
Balance as per pass book (Cr.) = 9800
Thus, the correct option is (d)

Test: Accounting & Financial Management of Banking - 2 - Question 22

Match the following in reference to the examples of different kind of expenditures.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 22

If an expenditure is made not for the purpose of bringing into existence any capital asset or advantage of enduring nature but for running the business or working it with a view to produce the profits is revenue expenditure. Stock in trade and 1,500 paid for servicing the company's car including Rs 500 paid for change of oil are examples of it.

Capital expenditure is generally restricted to expenditures that add fixed asset units or that have the effect of increasing the capacity, efficiency, life span, or economy of operation of an existing fixed asset. Overhaul expenses of Rs 10,000 spent on second hand machinery purchased and 18,000 spent for construction of temporary huts, which were necessary for construction of the cinema house and were demolished when the cinema house was ready.

Thus, the correct option is (d)

Test: Accounting & Financial Management of Banking - 2 - Question 23

Which among the following restricts the access to user data by hackers?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 23

A firewall is a network security device that monitors incoming and outgoing network traffic and permits or blocks data packets based on a set of security rules.
The number of viruses is increasing Daily which might corrupt the system data, and may lead to the loss of data to any unauthorized persons. It can be prevented through:

  • Installing anti-virus programs.
  • Installing a firewall in order to restrict access to user data by hackers
  • Multiple backup options.
Test: Accounting & Financial Management of Banking - 2 - Question 24

Identify which of the following the correct statement is given below.

  • Statement I: Accounting principles are static.
  • Statement II: Incomes receivable must be added in revenues and incomes received in advance must be deducted from revenues.
Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 24

Statement I is incorrect, accounting principles are not static, they are bound to change with the passage of time in response to the change in business practices, government policies and needs of the users of accounting information.

Statement II is correct, Incomes receivable must be added in revenues and incomes received in advance must be deducted from revenues. It is an important consideration for the matching concept. Matching costs with revenues, revenues should be recognised and then costs incurred for generating revenue should be recognized. It is very important for correct determination of net profit. All costs which are applicable to revenue of the period should be charged against that revenue.

Thus, the correct option is (d)

Test: Accounting & Financial Management of Banking - 2 - Question 25

Match the columns with reference to share capital of a company:

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 25

The correct match is as follows-

Hence, the correct answer is option (d).

Test: Accounting & Financial Management of Banking - 2 - Question 26

Which of the following is the basic difference between financial accounting and cost accounting?
I. Financial accounting aims at rendering information all over while cost accounting safeguarding the interests of the business.
II. Financial accounting reveals profits and losses of the business as a whole while cost accounting shows, by analysis and localisation, the unit costs.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 26

Both financial accounting and cost accounting are concerned with systematic recording and presentation of financial data.

  • Financial accounting reveals profits and losses of the business as a whole during a particular period, while cost accounting shows, by analysis and localisation, the unit costs and profits and losses of different product lines.
  • Financial accounting aims at safeguarding the interests of the business and its proprietors and others connected with it. This is done by providing suitable information to various parties, such as shareholders or partners, present or prospective creditors etc. Cost accounting on the other hand, renders information for the guidance of the management for proper planning, operation, control and decision making.

Hence, option (b) is the correct answer.

Test: Accounting & Financial Management of Banking - 2 - Question 27

Which of the following statement/s is/are incorrect regarding hedging approach of working Capital Management strategy
I. Under this approach the permanent working capital requirement should be financed by long term funds
II. According to this approach the expected life of an asset is matched with the period of source of finance with which the asset is financed
III. This approach is known as matching approach and self liquidating approach

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 27

Hedging approach: according to the hedging approach the permanent working capital requirements should be financed by long term funds while the temporary or seasonal working capital requirement should be financially out of short term funds or current liability. According to this approach, the expected life of an asset is matched with the period of source of finance with which the asset is financed. In other words, the life of an asset should match with the maturity of the source of finance. That is why it is also known as matching approach and self liquidating approach

Test: Accounting & Financial Management of Banking - 2 - Question 28

Fill in the blanks about the differences between a trial balance and a balance sheet?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 28

The key difference between a trial balance and a balance sheet is one of scope. A balance sheet records not only the closing balances of accounts within a company but also the assets, liabilities, and equity of the company. It is usually released to the public, rather than just being used internally, and requires the signature of an auditor to be regarded as trustworthy. A trial balance is a less formal document. There are no special conventions about how trial balances should be prepared, and they may be completed as often as a company needs them. A trial balance is often used as a tool to keep track of a company's finances throughout the year, whereas a balance sheet is a legal statement of the financial position of a company at the end of a financial year.
Thus, the correct option is (b)

Test: Accounting & Financial Management of Banking - 2 - Question 29

Which of the following statement/s is/are correct regarding marginal costing?
I. Under marginal costing, total costs are segregated into the fixed cost and the variable costs.
II. Only the average variable cost of a unit is considered as its value.
III. Marginal costing involves both cost recording and cost analysis

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 29

FEATURES OF MARGINAL COSTING
Marginal costing is distinct from other costing techniques. Its unique features can be summarised as under:

  • Marginal costing involves both cost recording and cost reporting.
  • Under marginal costing, total costs are segregated into the fixed cost and the variable costs. Some costs which have features of both fixed and variable costs, are segregated as semi-variable costs.
  • Only the average variable cost of a unit is considered as its value.
  • Fixed costs are not taken into account for calculating the product cost and are charged to revenue of the period in which they are incurred.
  • Marginal contribution of a product or department is taken into account for calculating its profitability.

Hence the correct answer is Option (a).

Test: Accounting & Financial Management of Banking - 2 - Question 30

Which of the following classes is to be shown under the head Share Capital ?
I. Shares in the company held by each shareholder holding more than 5 per cent shares specifying the number of shares held
II. The rights, preferences and restrictions attaching to each class of shares not including restrictions on the distribution of dividends and the repayment of capital
III. The number of shares issued, subscribed and fully paid, and subscribed but not fully paid

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 30

Share Capital

For each class of share capital (different classes of preference shares to be treated separately):

  • the number and amount of shares authorised;
  • the number of shares issued, subscribed and fully paid, and subscribed but not fully paid;
  • par value per share;
  • a reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period;
  • the rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital;
  • shares in respect of each class in the company held by its holding company or its ultimate holding company including shares held by or by subsidiaries or associates of the holding company or the ultimate holding company in aggregate;
  • shares in the company held by each shareholder holding more than 5 per cent shares specifying the number of shares held;
  • shares reserved for issue under options and contracts/commitments for the sale of shares/ disinvestment, including the terms and amounts;
  • for the period of five years immediately preceding the date as at which the Balance Sheet is prepared:
    • Aggregate number and class of shares allotted as fully paid-up pursuant to contract(s) without payment being received in cash.
    • Aggregate number and class of shares allotted as fully paid-up by way of bonus shares.
    • Aggregate number and class of shares bought back.
  • terms of any securities convertible into equity/preference shares issued along with the earliest date of conversion in descending order starting from the farthest such date;
  • calls unpaid (showing aggregate value of calls unpaid by directors and officers);
  • forfeited shares (amount originally paid-up).

Hence option (d) is correct

Test: Accounting & Financial Management of Banking - 2 - Question 31

From the following information calculate the amount should be shown in the purchase book
Purchased from A Ltd on credit
15 Tables @ Rs.2 000 per piece, 25 Chairs @ Rs. 1250 per piece. Trade discount on all items @ 5%.
Purchased from B Ltd on cash
20 Benches @ Rs.1000 per piece, 15 Desk @ Rs. 1250 per piece

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 31

All credit purchases of goods are recorded in the purchases journal whereas cash purchases are recorded in the cash book.
In the above problem we take the credit purchases only

Hence the correct answer is Option (d).

Test: Accounting & Financial Management of Banking - 2 - Question 32

Directions: ABC company purchases machinery for $30,000. This asset's salvage value is $500 and its useful life is 10 years. Estimated units over asset's life is 50,000

Q. Calculate the value of depreciation with the help of Unit of Production Method for the actual to be 5000 units.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 32

The formula is= (Asset cost - Salvage value) /estimated units over asset's life x actual units made
($30,000 - 500) /5,000 x 5,000 = $2,950
ABC's depreciation expense is $2,950 for the year. This method will produce results that vary annually depending on the number of units made.
Thus, the correct option is (d)

Test: Accounting & Financial Management of Banking - 2 - Question 33

Which of the following are the characteristics of a flexible budget?
(l) It recognizes different cost behavior patterns.
(ll) It is designed to change as the volume of output changes
(lll) It provides budgeted costs for any level of activity, making it more realistic and useful for management in making decisions
(lV) It does not change with the level of activity actually attained

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 33

The characteristics of a flexible budget are

  • Option (l) - A flexible budget recognizes different cost behavior patterns. This means that a flexible budget takes into account how costs change in relation to changes in production levels. It recognizes that different costs behave differently with changes in activity levels, and as such, allocates costs based on how they are expected to behave.
  • Option (ll) - a flexible budget is designed to change as the volume of output changes. As actual output levels change, a flexible budget adjusts accordingly to reflect the expected costs at the new level of output.
  • Option (lll) is correct as well - a flexible budget provides budgeted costs for any level of activity, making it more realistic and useful for management in making decisions. It is designed to provide more accurate budgeted costs at any level of activity, not just the planned level of output. As a result, it is more useful for management to make informed decisions about how to manage costs at various levels of output
Test: Accounting & Financial Management of Banking - 2 - Question 34

Arrange the given steps of digital KYC in the correct chronological order.
I. Uploading of Evidence
II. Collection of Information
III. Verification

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 34

The process for digital KYC is as follows:

  • Collection of Information: The first step in the KYC procedure is to collect personal information about the customer. They are required to fill an online KYC registration form on their preferred portal through which they wish to carry out financial transactions. Whether the information given is correct and updated will depend on the due diligence of the applicant.
  • Uploading of Evidence: After the information is collected, the applicant is required to validate the information they put in the form with relevant documents. These documents serve as evidence proving that the prior information entered by the user is authentic and not fake.
  • Verification: Once the documents have been uploaded, the template for the documents is both identified and examined against various checks. This ensures that the document has not been tampered with in any way.

Hence, the correct answer is option (c) .

Test: Accounting & Financial Management of Banking - 2 - Question 35

Company PST ltd has the following information for the year ended [December 31st 2018.
Net income = Rs 50,000
Depreciation expenses = Rs 10,000
Accounts receivable increased by Rs 5000
Accounts payable decreased by Rs 2000
Inventory increased by Rs 8000]
Calculate the cash flow from operating activities for the year ended December 31st 2018.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 35

Cash flow from operating activities are calculated using the indirect method. Adjustments are made for non-cash expenses and changes in working capital accounts.
[Net income= Rs 50,000;
Add: Depreciation expenses = Rs 10,000;
Add: Decrease in accounts payable=Rs 2000;
Less: Increase in accounts receivable= Rs 5000;
Less: Increase in inventory= Rs 8000;
Cash flow from operating activities = Rs 49,000.]

Test: Accounting & Financial Management of Banking - 2 - Question 36

Operating cycle concept is important for management of cash and management of working capital because the longer the operating cycle the more financial resources the company needs. Which of the following factor(s) is/are NOT included in the operating cycle concept?
I. Raw material storage period
II. Work-in-progress holding period
III. Credit period allowed by suppliers
IV. Finished goods storage period

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 36

Operating cycle concept is important for management of cash and management of working capital because the longer the operating cycle the more financial resources the company needs. Therefore, the management has to remain cautious that the operating cycle should not become too long. Most businesses cannot finance the operating cycle (accounts receivable days + inventory days) with accounts payable financing alone.

In the form of an equation, the operating cycle process can be expressed as follows: Operating Cycle = R + W + F + D - C
Where,
R = Raw material storage period
W = Work-in-progress holding period
F = Finished goods storage period
D = Receivables (Debtors) collection period.
C = Credit period allowed by suppliers (Creditors)
Hence, option (b) is the correct answer.

Test: Accounting & Financial Management of Banking - 2 - Question 37

Which of the following statement/s is/are correct regarding Role of accounting
I. Language of a business
II. Current economic reality
III. Contemporary record
IV. Service to users

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 37
  • As a language - it is perceived as the language of business which is used to communicate information on enterprises.
  • As current economic reality- it is viewed as the means of determining the true income of an entity namely the change of wealth over time.
  • As a historical record- it is viewed as a chronological record of financial transactions of an organisation at actual amounts involved.
  • Service to users-specialized information is viewed as a service which is in demand in society, with accountants being willing to and capable of providing it.
Test: Accounting & Financial Management of Banking - 2 - Question 38

From the following information given calculate the current ratio.

Inventories = 60,000 Trade receivables = 55,000, Trade payables = 91,000, Cash and cash equivalent = 67,000, Furniture = 56,000

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 38

[Current ratio= Current assets/current liabilities]
[Current assets = Inventories + trade receivables + cash and cash equivalent = 1,82,000
Current liabilities= Trade payables= 91,000
Current ratio= 1,82,000/91,000 = 2/1= 2:1 ]
Hence, the correct answer is Option (a).

Test: Accounting & Financial Management of Banking - 2 - Question 39

Which of the following statements are correct regarding the Profit and Loss Ledger?
I. The totals of debits and credits each day are posted to the profit and loss account in the general ledger from voucher summary sheets.
II. The account heads in the profit and loss ledgers are more detailed than those shown in the published profit and loss accounts of banks.
III. These books are not prepared from vouchers.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 39

Profit and Loss Ledger

  • Some banks maintain a profit and loss account in the general ledger and maintain separate books for each revenue or expense head/sub-head. Some banks maintain columnar books having separate columns for each revenue and expense head/sub-head, while others maintain separate books for revenue and expense heads/sub-heads. These books are prepared from vouchers. The totals of debits and credits each day are posted to the profit and loss account in the general ledger from voucher summary sheets. For managerial purposes, the account heads in the profit and loss ledgers are more detailed than those shown in the published profit and loss accounts of banks. For example, there are separate accounts for basic salary, dearness allowance and various other allowances, which are grouped together in the published accounts. Similarly, various accounts comprising general charges, interest paid, interest received, etc. are maintained separately in the profit and loss ledgers. Hence option (c) is correct.
Test: Accounting & Financial Management of Banking - 2 - Question 40

Based on the information given calculate the labour rate variance
The standard time for the job is 500 hours
The standard rate per hour is Rs 70
Actual time took 600 hours
Actual wages paid Rs 45000

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 40

Labor Rate Variance or LRV is the variation between the actual and expected or standard cost of labor. This variance is due to the difference in the standard and actual labor rate, while labor hours remain the same for production.
Std. labour cost = (500 hours X 70) =Rs 35,000
Actual wages paid 40000
Actual rate per hour: 45000/600 hours = Rs 75
Labour Rate variance = Actual time (Std. rate - Actual rate)
= 600 hours (70 - 75) = 3000 (A)

Test: Accounting & Financial Management of Banking - 2 - Question 41

Which of the following are the purposes of the information presented by management accounting, according to CIMA?
(l) Formulating a strategy
(ll) Planning and controlling activities
(lll) Decision making
(lV) Optimizing the use of resources

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 41

(l) Formulating strategy: Management accounting provides information that helps the management to formulate and implement strategies that are aligned with the organization's goals and objectives. This involves analyzing the market, competitors, internal strengths and weaknesses, and other factors that influence the organization's success.

(ll) Planning and controlling activities: Management accounting helps the management to plan and control the organization's activities by providing information about past and present performance, and forecasting future performance. This includes setting budgets, identifying cost drivers, analyzing variances, and implementing corrective actions.

(lll) Decision making: Management accounting provides information that helps the management to make informed decisions related to investment, pricing, product mix, and other strategic issues. This involves analyzing costs, revenues, profitability, and other factors that affect the decision.

(lV) Optimizing the use of resources: Management accounting provides information that helps the management to optimize the use of resources, including financial, human, and physical resources. This involves analyzing the cost-benefit of various options, identifying cost-saving opportunities, and implementing efficient processes

Test: Accounting & Financial Management of Banking - 2 - Question 42

Which of the following statements is true with respect to zero rating under Goods and Services Tax?
I. Exports will be treated as zero rated supplies.
II. Input tax credit will be exempted.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 42

Zero- rating under Goods and services regime:
Exports will be treated as zero rated supplies. No tax normally will be payable on exports of goods or services. However, input tax credit used in the export product will be available and the same will be available as refund to the exporters. Also goods / services may be supplied without levy of GST (here IGST) .

Hence, option (a) is the correct answer.

Test: Accounting & Financial Management of Banking - 2 - Question 43

The inward clearing instruments are given to the Service Branch by the CPC in two lots. In this reference, choose the correct statement:
Statement I: The first lot represents the good (unrejected) instruments which have been fully sorted by the Reader Sorter machines.
Statement II: The second lot of instruments are sorted drawee branch-wise and transaction code wise.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 43

The inward clearing instruments are given to the Service Branch by the CPC in two lots.

  • The first lot represents the good (unrejected) instruments which have been fully sorted by the Reader Sorter machines.
  • The second lot consists of the instruments that were rejected during the process and had to be manually sorted.
  • While the first lot of instruments are sorted drawee branch-wise and transaction code wise, the second lot of instruments are sorted bank/branch-wise only. In addition, there could be other lots of instruments such as 'At Par' instruments sorted to the designated branch/ Service Branch.

Hence, the correct answer is option (a).

Test: Accounting & Financial Management of Banking - 2 - Question 44

Match the following List I with List II regarding Types of accounts

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 44

Personal Accounts
These accounts show the transactions with customers, suppliers, moneylenders, banks and the owner. Personal accounts can take the following forms:

  • Natural personal accounts: The term natural person means persons who are the creation of God. For example, proprietor's account, supplier's account, receiver's account (Mohan's a/c, Rajesh's a/c, etc.).
  • Artificial personal accounts: These accounts include the accounts of corporate bodies or institutions that are recognised as persons in business dealings. For example, any limited company's account, bank account, insurance company's account, any firm's account, any club's account, etc.
  • Representative personal account: These are accounts that represent a certain person or group of persons. In books, the names of the parties will appear. Since these accounts are many in number and of the same nature, the amounts standing against these accounts are added and put under one common title. For example, if the business is not able to pay rent, say, for fifteen shops, then all property owners of these shops stand as creditors and the amount due to them is added and put under one common head known as 'Rent Outstanding Account'. This account is a personal account representing many property owners. Salary outstanding, rent prepaid, interest outstanding, interest received in advance, etc., are some of the other examples.

Real Accounts Real accounts may be of the following types:

  • Tangible real accounts: These are accounts of such things that are tangible, i.e. which can be seen, touched or felt, physically. Examples - land, building, furniture, cash, etc. (please note that a bank account is the account of some banking company that is an artificial person).
  • Intangible real accounts: These accounts represent such things that cannot be touched. Of course, they can be measured in terms of money. Examples are goodwill, trademarks, patent rights, etc.

Nominal Accounts
Nominal accounts are opened in the books to explain the nature of the transactions. For example, in a business, salary is paid to the employees, rent is paid to the property owner, wages are paid to the workers, commission is paid to the salespersons, then in fact, cash goes out of the business, that is real, but the salary, rent, wages, commission, etc. as such do not exist. These accounts are opened to explain how the cash has been spent. Nominal accounts include accounts of all expenses, losses, incomes and gains.

Hence the correct answer is Option (c).

Test: Accounting & Financial Management of Banking - 2 - Question 45

Assertion: Zero Based Budgeting is a more time consuming and resource intensive process than traditional budgeting.
Reason: Zero Based Budgeting requires managers to justify all expenses and activities.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 45

Option A is correct as zero based budgeting requires the managers to justify the expenses related activities from the scratch rather than making adjustments in the previous year budget. ZBB is a time consuming process as it requires detailed analysis. The reason correctly explains why the assertion is true.

Test: Accounting & Financial Management of Banking - 2 - Question 46

Unit of a debt-oriented fund held for 3 years is an example of__

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 46

As per section 2(42A), short-term capital asset means a capital asset held by an assessee for not more than 36 months immediately preceding the date of its transfer. If held for more than 36 months it's a long-term capital asset.

  • Exceptions: A security (other than a unit) listed in a recognized stock exchange, a unit of an equity-oriented fund or a unit of the Unit Trust of India or a Zero Coupon Bond will, however, be considered as a long-term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer.
  • Further, a share of a company (not being a share listed in a recognized stock exchange in India) or immovable property, being land or building or both would be treated as a short-term capital asset if it was held by an assessee for not more than 24 months immediately preceding the date of its transfer.
Test: Accounting & Financial Management of Banking - 2 - Question 47

The difference between the issue price and __________ of the share is known as the premium.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 47
  • Face value means the nominal value of shares as specified in the legal document of the company. It is often used to calculate the initial price of a company.
  • Issue price is the price at which the company issues its shares to the public for the very first time.
  • Market value of a security means the current value of the security in the open market.
  • Called up value of the shares means the amount of money that has been requested by the company from its shareholders for the payment of shares they have agreed to buy.
    The difference between the face value and issue price is known as Premium.
Test: Accounting & Financial Management of Banking - 2 - Question 48

Match the following List I with List II regarding types of accounting

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 48
  • Financial accounting assists in keeping a systematic record of financial transactions and the preparation and presentation of financial reports in order to arrive at a measure of organizational success and financial soundness. It relates to the past period, serves the stewardship function and is monetary in nature. It is primarily concerned with the provision of financial information to all stakeholders.
  • Cost accounting assists in analyzing the expenditure for ascertaining the cost of various products manufactured or services rendered by the firm and fixation of prices thereof. It also helps in controlling the costs and providing necessary costing information to management for decision-making.
  • Management accounting deals with the provision of necessary accounting information to people within the organization to enable them in decision-making, planning and controlling business operations. Management accounting draws the relevant information mainly from financial accounting and cost accounting which helps the management in budgeting, assessing profitability, taking pricing decisions, capital expenditure decisions and so on.
Test: Accounting & Financial Management of Banking - 2 - Question 49

Match the following List I with List II

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 49
  • Present Value: Present value refers to the current worth of a future sum of money or stream of cash flows given a specified rate of return. Present Value of a cash flow is calculated on the basis of formula as given below PV = Cash Flow/ (1+r) t
  • An annuity: is a stream of regular periodic payment made or received for a specified period of time. In an ordinary annuity, payments or receipts occur at the end of each period.
  • Perpetuity: is an annuity in which the periodic payments or receipts begin on a fixed date and continue indefinitely or perpetually. Fixed coupon payments on permanently invested (irredeemable) sums of money are prime examples of perpetuities.
  • Sinking fund : It is the fund which is created for a specified purpose by way of sequence of periodic payments over a time period at a specified interest rate. Size of the sinking fund deposit is computed by using the formula i.e. FVA=R[FVIFA(i,n) , where FVA is the amount to be saved, R, the periodic payment, n, the payment period.
Test: Accounting & Financial Management of Banking - 2 - Question 50

Match the following List I with List II regarding different types bonds

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 50

Serial bond

  • A serial bond is a bond issue that is structured so that a portion of the outstanding bonds mature at regular intervals until all of the bonds have matured. Because the bonds mature gradually over a period of years, these bonds are used to finance projects that provide a consistent income stream for bond repayment. The entire bond issue is sold to the public on the same date, and the maturity dates are stated in the offering documents.

Puttable Bond

  • A puttable bond allows the bondholders to put or sell the bond back to the company before it has matured. This is valuable for investors who are worried that a bond may fall in value, or if they think interest rates will rise and they want to get their principal back before the bond falls in value.
  • The bond issuer may include a put option in the bond that benefits the bondholders in return for a lower coupon rate or just to induce the bond sellers to make the initial loan. A puttable bond usually trades at a higher value than a bond without a put option but with the same credit rating, maturity, and coupon rate because it is more valuable to the bondholders.

Mortgage bond

  • A mortgage bond is secured by a mortgage, or a pool of mortgages, that are typically backed by real estate holdings and real property, such as equipment. In the event of a default situation, mortgage bondholders could sell off the underlying property backing a bond to compensate for the default. Mortgage bonds tend to be safer than corporate bonds and, therefore, typically have a lower rate of return.
Test: Accounting & Financial Management of Banking - 2 - Question 51

Treating a Capital Expenditure as a Revenue Expenditure will result in an error of _____?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 51

When a transaction is recorded in contravention of accounting principles, it is an error of principle. In this case, capital expenditure is treated as revenue expenditure against the accounting principles. 

Test: Accounting & Financial Management of Banking - 2 - Question 52

Drawing power registers in banking companies should be updated _____ to record the value of securities hypothecated.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 52

In banks, the drawing power register should be updated every month to record the value of securities hypothecated these entries should be checked by an officer.

Test: Accounting & Financial Management of Banking - 2 - Question 53

In the case of an operating lease, what shall be the treatment in the books of the lessor, which among the following are incorrect? (Suppose machinery is given on operating lease)

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 53

In the case of an operating lease as the machinery would have been recognized as an asset in the books of the lessor, Depreciation shall be the expense of the lessor and hence charged to profit and loss a/c.

Test: Accounting & Financial Management of Banking - 2 - Question 54

In discounted Pay Back period calculation, the present value of each cash inflow is calculated by taking the start of the first period as:

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 54

In discounted Pay Back period calculation, the present value of each cash inflow is calculated by taking the start of the first period as Zero.

Test: Accounting & Financial Management of Banking - 2 - Question 55

A 10%, 6-year, bond, with a face value of Rs. 1000 has been purchased by Mr Mohit for Rs. 900. What is his yield till maturity?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 55

Yield to Maturity = [Annual Interest + {(FV-Price)/Maturity}] / [(FV+Price)/2]
Annual Interest = Annual Interest Payout by the Bond; FV = Face Value of the Bond; Price = Current Market Price of the Bond; Maturity = Time to Maturity i.e. the number of years till Maturity of the Bond. = 100+1000-900/6/ 1000+900/2×100 = 100+16.67/ 950 × 100 = 12.28%

Test: Accounting & Financial Management of Banking - 2 - Question 56

Bank deposit with a short maturity period is an example of ____.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 56

Cash and cash equivalents include short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value and security with a short maturity period say three months or less from the date of acquisition.

Test: Accounting & Financial Management of Banking - 2 - Question 57

In this case when the BRS is started with the favourable balance of the bank statement, how the deposit recorded in the cash column of the cash book will be treated?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 57

When the beginning of the Bank Reconciliation Statement was the favourable balance as per the passbook, then the amount recorded in the cash column for the deposit will be subtracted. In this case, Rs.50000 will be subtracted.

Test: Accounting & Financial Management of Banking - 2 - Question 58

In the given case, what are items that will be added to the Bank Reconciliation Statement if it was started with the balance as per the passbook?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 58

When the Bank Reconciliation Statement was started with the balance as per pass book in the given case, then only the deposit that is not credited by the bank will be added.

Test: Accounting & Financial Management of Banking - 2 - Question 59

In how many days the dividend which remains unpaid should be transferred to unpaid dividend account?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 59

The company should, within 7 days from the date of expiry of the said period of 30 days, transfer the total amount of dividend which remains unpaid or unclaimed to a special account to be opened by the company on that behalf in any scheduled bank to be called the unpaid dividend account.

Test: Accounting & Financial Management of Banking - 2 - Question 60

An Equipment of cost Rs.1000000 is depreciated Straight Line Method assuming 10 years of working life and the residual value for 4 years. At the end of the 4th year, the equipment revalued upwards by Rs.50000 remaining useful life was reassessed at 9 years. Calculate the Depreciation for the fifth year?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 60

Remaining useful life according to the previous estimate = 6 years; Remaining useful life according to the revised estimate = 5 years; Depreciation from 5th year onwards = 650000 / 5 = Rs.130000 per annum.

Test: Accounting & Financial Management of Banking - 2 - Question 61

Mr Mohit expects an annuity of Rs 5000 semi-annually @ a rate of 9% compounding for 10 years. How much he must invest now so that after 18 years continuously for 10 years he gets Rs 5000 semi-annually?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 61

The formula for Present value annuity = Annuity x PVIFA (Present value interest factor annuity), (i, n) = 5000 × (PVIFA (9%/2, 10×2)) = 5000 × (PVIFA (4.5%, 20) = 5000 × 13.007936 = 69039.68
Therefore After 18years, he gets Rs 69039.68 to calculate how much he must invest now, PV = FV× 1/ (1+i)n; PV = 69039.68 × 1/ (1+ 9%/2)18×2; PV = 13334.97

Test: Accounting & Financial Management of Banking - 2 - Question 62

Direction: Read the information carefully and answer the questions based on the given information below.
Vishal sold goods to Varun for Rs.25000 on 23/10/2021. 10000 was immediately paid. 3 months bill was drawn and accepted for the remaining amount. Vishal got the bill discounted with his bank for Rs.13000 on 10/12/2021.

Q. What will be the date of maturity of the bill drawn above by Vishal?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 62

The bill was drawn for 3 months on 23/10/2021. The date of maturity of the bill will fall on 26/01/2022 after adding the 3 days of grace. But 26th January was a government holiday.

Test: Accounting & Financial Management of Banking - 2 - Question 63

Direction: Read the information carefully and answer the questions based on the given information below.
Vishal sold goods to Varun for Rs.25000 on 23/10/2021. 10000 was immediately paid. 3 months bill was drawn and accepted for the remaining amount. Vishal got the bill discounted with his bank for Rs.13000 on 10/12/2021.

Q. In the books of Vishal, which account will be credited while recording the journal for the drawing of the bill?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 63

When the bill was drawn, the entry to be made on the drawer's account was
Bills receivable a/c dr.
To Drawee's a/c
In this case, Varun's a/c will be credited while making the journal entry for the recording of the drawing of the bill by Vishal.

Test: Accounting & Financial Management of Banking - 2 - Question 64

Direction: Read the information carefully and answer the questions based on the given information below.
Vishal sold goods to Varun for Rs.25000 on 23/10/2021. 10000 was immediately paid. 3 months bill was drawn and accepted for the remaining amount. Vishal got the bill discounted with his bank for Rs.13000 on 10/12/2021.

Q. A bill of exchange is drawn by a _____?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 64

A bill of exchange is generally drawn by the creditor/seller upon his debtor/buyer. It has to be accepted by the drawee (the debtor) or someone on his behalf.

Test: Accounting & Financial Management of Banking - 2 - Question 65

Direction: Read the following case study carefully and answer the questions.
J Ltd. runs a cold beverage business and earned good profits in the current year and received income from other sources. The current financial year is 2022-23. Following are the extracts of the asset side of the Balance sheet:
Investments in
Shares of B ltd. - Rs. 16,50,000
(Purchased on 15.08.2022)
Debentures of AQ ltd. - Rs. 7,50,000
(Purchased on 14.01.2019)
Preference shares of PQR ltd. - Rs. 20,00,000
(Purchased on 04.04.2021)

Q. What does the term "current investment" mean?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 65

A current investment is an investment in its nature readily realizable and is intended to be held for not more than one year on which such investment is made. 

Test: Accounting & Financial Management of Banking - 2 - Question 66

Direction: Read the following case study carefully and answer the questions.
J Ltd. runs a cold beverage business and earned good profits in the current year and received income from other sources. The current financial year is 2022-23. Following are the extracts of the asset side of the Balance sheet:
Investments in
Shares of B ltd. - Rs. 16,50,000
(Purchased on 15.08.2022)
Debentures of AQ ltd. - Rs. 7,50,000
(Purchased on 14.01.2019)
Preference shares of PQR ltd. - Rs. 20,00,000
(Purchased on 04.04.2021)

Q. If the value of debentures held is decreased to Rs. 6,00,000 in the market due to a temporary decline, what shall be the value of the debentures appearing in the books at the end of the following year?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 66

Long-term investments are usually carried at cost. The carrying amount of long-term investments is determined on an individual investment basis.

Test: Accounting & Financial Management of Banking - 2 - Question 67

Calculate the Net Present Value for a project with a net investment of Rs.169000 and net cash flows for 1st year is Rs 43000, 2nd year is Rs.75000 and 3rd year is Rs.22000. Further, the company's cost of capital is 10%.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 67

Test: Accounting & Financial Management of Banking - 2 - Question 68

_____ is one of the functions performed by the back office in banking companies.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 68

Inter-office reconciliation is one of the functions performed by the back office in banking companies.

Test: Accounting & Financial Management of Banking - 2 - Question 69

Costs that are charged as expenses against the revenue of the period in which they are incurred are known as _____.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 69

Period costs, refers to those costs which are not assigned to the products but are charged as expenses against the revenue of the period in which they are incurred. 

Test: Accounting & Financial Management of Banking - 2 - Question 70

Accounts that are related to assets of the firm except debt are ____.

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 70

Real accounts are the balance sheet transactions that includes assets such as tangible, Intangible, fixed assets, etc., except debt, liabilities, and Equity shareholders' account.

Test: Accounting & Financial Management of Banking - 2 - Question 71

If there are any fraudulent activities in banking companies, to whom should be reported by the Auditor?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 71

The Head of internal (HIA) audit shall directly report to either the Audit Committee of the Board or Whole Time Director. 

Test: Accounting & Financial Management of Banking - 2 - Question 72

A Machine costing Rs.500000 is Depreciated on the Straight-Line Method, assuming 10 years working life and Nil scrap value, for 3 years. The estimate of remaining useful life after 3rd was reassessed at 5 years. Calculate the depreciation for the fourth year?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 72

Remaining useful life according to the previous estimate = 7 years; Remaining useful life according to the revised estimate = 5 years Depreciation from 4th year onwards = 350000 / 5 = Rs.70000 per annum

Test: Accounting & Financial Management of Banking - 2 - Question 73

Using the concepts of working capital, Which among the following is not a formula to find the average cost per unit?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 73

Using the concepts of working capital, "(total variable cost/no of units) + fixed cost" is not a formula to find the average cost per unit.

Test: Accounting & Financial Management of Banking - 2 - Question 74

An exporter has an export bill of Yen 25000. The inter-bank foreign currency rates for spot delivery are 1 USD = Rs.55.32. In Japan the yen rate is = USD 2.832. How much amount in the Indian Rupees will be paid to the exporter?

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 74

Cross rate = 55.32 × 2.832 = 156.66624; Total amount 156.66624 × 25000 = Rs. 3,916, 656

Test: Accounting & Financial Management of Banking - 2 - Question 75

Standard cost comprises of ____
I. Direct Material Cost
II Direct Employee (Labour) Cost and
III. Overheads

Detailed Solution for Test: Accounting & Financial Management of Banking - 2 - Question 75

Standard cost comprises of: I. Direct Material Cost, II Direct Employee (Labour) Cost and, III. Overheads

Test: Accounting & Financial Management of Banking - 2 - Question 76

As per the RBI guidelines, the cancellation of inter-branch entries has to be done within _____ period.