JAIIB Previous Year Question Paper: Principles and Practices of Banking(May 2023) | Mock Test Series for JAIIB Exam 2026 - Bank Exams PDF Download

 Page 1


 
    
1 
Q1. Which of the following statements accurately defines a bullet payment? 
 I. A single lump-sum payment settled at the end of a loan's term. 
 II. Consistent monthly payments spread across the duration of a loan. 
 III. The initial payment made at the commencement of a loan. 
 IV. A substantial payment made during the middle of a loan's term. 
 (A) Only I 
 (B) Only II 
 (C) II, III 
 (D) Either I or III 
 
Q2. Which financial statement would reflect the expenditure incurred on the purchase of raw materials by a 
firm/company? 
 (A) Profit and Loss Statement 
 (B) Trading Account 
 (C) Balance Sheet 
 (D) Either A or B 
 
Q3. What is a key difference between the Net Present Value (NPV) and Internal Rate of Return (IRR) methods of 
investment appraisal? 
 (A) NPV provides the actual monetary gain or loss, while IRR expresses returns as a percentage. 
 (B) NPV assumes reinvestment at the project's internal rate of return, while IRR assumes reinvestment at the cost 
of capital. 
 (C) NPV is used for short-term projects, while IRR is used for long-term projects. 
 (D) NPV is preferred for projects with uncertain cash flows, while IRR is used for projects with predictable cash 
flows. 
 
Q4. Where would revenue generated from a business's core operations typically be recorded? 
 I. P&L Statement 
 II. Balance Sheet 
 III. Trading account 
 IV. Cash flow statement 
 (A) Only I 
 (B) Only III 
 (C) Either I or III 
 (D) I, II & III 
 
Q5. What is the primary focus of Section 10 of the Income Tax Act? 
 (A) Incomes not included in total income 
 (B) Deductions for business expenses 
 (C) Taxation of capital gains 
 (D) None of the above 
 
Page 2


 
    
1 
Q1. Which of the following statements accurately defines a bullet payment? 
 I. A single lump-sum payment settled at the end of a loan's term. 
 II. Consistent monthly payments spread across the duration of a loan. 
 III. The initial payment made at the commencement of a loan. 
 IV. A substantial payment made during the middle of a loan's term. 
 (A) Only I 
 (B) Only II 
 (C) II, III 
 (D) Either I or III 
 
Q2. Which financial statement would reflect the expenditure incurred on the purchase of raw materials by a 
firm/company? 
 (A) Profit and Loss Statement 
 (B) Trading Account 
 (C) Balance Sheet 
 (D) Either A or B 
 
Q3. What is a key difference between the Net Present Value (NPV) and Internal Rate of Return (IRR) methods of 
investment appraisal? 
 (A) NPV provides the actual monetary gain or loss, while IRR expresses returns as a percentage. 
 (B) NPV assumes reinvestment at the project's internal rate of return, while IRR assumes reinvestment at the cost 
of capital. 
 (C) NPV is used for short-term projects, while IRR is used for long-term projects. 
 (D) NPV is preferred for projects with uncertain cash flows, while IRR is used for projects with predictable cash 
flows. 
 
Q4. Where would revenue generated from a business's core operations typically be recorded? 
 I. P&L Statement 
 II. Balance Sheet 
 III. Trading account 
 IV. Cash flow statement 
 (A) Only I 
 (B) Only III 
 (C) Either I or III 
 (D) I, II & III 
 
Q5. What is the primary focus of Section 10 of the Income Tax Act? 
 (A) Incomes not included in total income 
 (B) Deductions for business expenses 
 (C) Taxation of capital gains 
 (D) None of the above 
 
 
 
    
2 
Q6. Under which section of the Income Tax Act can an individual claim deductions on health insurance premiums? 
 I. Section 80C 
 II. Section 80D 
 III. Section 80E 
 IV. Section 80???????? 
 (A) Only I 
 (B) Only IV 
 (C) Only II 
 (D) II, & III 
 
Q7. In which of the following industries is Process Costing most likely to be used? 
 I. Oil refining 
 II. Automobile manufacturing 
 III. Chemical manufacturing 
 IV. Fashion designing 
 (A) Only I 
 (B) Only II 
 (C) Only I & III 
 (D) I, II, III, IV 
 
Q8. Which of the following best describes the concept of "Margin of Safety" in business? 
 (A) The amount of profit a company makes above its competitors 
 (B) The cushion or buffer between actual sales and the break-even point 
 (C) The difference between gross profit and net profit 
 (D) The percentage of revenue allocated for operating expenses 
 
Q9. Consider the given statements in the context of Marginal Costing. Choose the ones that is/are incorrect. 
 I. Under this method, all indirect costs are to be written off against profits, in the period in which they arise. 
 II. Under marginal costing, total costs are segregated into the fixed cost and the variable costs. 
 III. Under marginal costing technique, the inventory valuation may become unrealistic as fixed costs are not 
included in the value of workin-process and finished goods. 
 IV. It assumes that the sales price per unit will remain same irrespective of production and sales. 
 (A) Only II & IV 
 (B) Only II 
 (C) Only I & IV 
 (D) All the statements are correct. 
 
Q10. What is the primary focus of a production budget? 
 (A) Estimating future sales figures 
 (B) Planning the resources needed for production activities 
 (C) Calculating the cost of production 
 (D) Analyzing the profitability of the production process 
 
Page 3


 
    
1 
Q1. Which of the following statements accurately defines a bullet payment? 
 I. A single lump-sum payment settled at the end of a loan's term. 
 II. Consistent monthly payments spread across the duration of a loan. 
 III. The initial payment made at the commencement of a loan. 
 IV. A substantial payment made during the middle of a loan's term. 
 (A) Only I 
 (B) Only II 
 (C) II, III 
 (D) Either I or III 
 
Q2. Which financial statement would reflect the expenditure incurred on the purchase of raw materials by a 
firm/company? 
 (A) Profit and Loss Statement 
 (B) Trading Account 
 (C) Balance Sheet 
 (D) Either A or B 
 
Q3. What is a key difference between the Net Present Value (NPV) and Internal Rate of Return (IRR) methods of 
investment appraisal? 
 (A) NPV provides the actual monetary gain or loss, while IRR expresses returns as a percentage. 
 (B) NPV assumes reinvestment at the project's internal rate of return, while IRR assumes reinvestment at the cost 
of capital. 
 (C) NPV is used for short-term projects, while IRR is used for long-term projects. 
 (D) NPV is preferred for projects with uncertain cash flows, while IRR is used for projects with predictable cash 
flows. 
 
Q4. Where would revenue generated from a business's core operations typically be recorded? 
 I. P&L Statement 
 II. Balance Sheet 
 III. Trading account 
 IV. Cash flow statement 
 (A) Only I 
 (B) Only III 
 (C) Either I or III 
 (D) I, II & III 
 
Q5. What is the primary focus of Section 10 of the Income Tax Act? 
 (A) Incomes not included in total income 
 (B) Deductions for business expenses 
 (C) Taxation of capital gains 
 (D) None of the above 
 
 
 
    
2 
Q6. Under which section of the Income Tax Act can an individual claim deductions on health insurance premiums? 
 I. Section 80C 
 II. Section 80D 
 III. Section 80E 
 IV. Section 80???????? 
 (A) Only I 
 (B) Only IV 
 (C) Only II 
 (D) II, & III 
 
Q7. In which of the following industries is Process Costing most likely to be used? 
 I. Oil refining 
 II. Automobile manufacturing 
 III. Chemical manufacturing 
 IV. Fashion designing 
 (A) Only I 
 (B) Only II 
 (C) Only I & III 
 (D) I, II, III, IV 
 
Q8. Which of the following best describes the concept of "Margin of Safety" in business? 
 (A) The amount of profit a company makes above its competitors 
 (B) The cushion or buffer between actual sales and the break-even point 
 (C) The difference between gross profit and net profit 
 (D) The percentage of revenue allocated for operating expenses 
 
Q9. Consider the given statements in the context of Marginal Costing. Choose the ones that is/are incorrect. 
 I. Under this method, all indirect costs are to be written off against profits, in the period in which they arise. 
 II. Under marginal costing, total costs are segregated into the fixed cost and the variable costs. 
 III. Under marginal costing technique, the inventory valuation may become unrealistic as fixed costs are not 
included in the value of workin-process and finished goods. 
 IV. It assumes that the sales price per unit will remain same irrespective of production and sales. 
 (A) Only II & IV 
 (B) Only II 
 (C) Only I & IV 
 (D) All the statements are correct. 
 
Q10. What is the primary focus of a production budget? 
 (A) Estimating future sales figures 
 (B) Planning the resources needed for production activities 
 (C) Calculating the cost of production 
 (D) Analyzing the profitability of the production process 
 
 
 
    
3 
Q11. Which of the following statements about a bank reconciliation statement is correct? 
 I. A bank reconciliation statement is prepared to identify discrepancies between a company's accounting records 
and the bank statement. 
 II. A credit balance in the bank statement represents overdraft. 
 III. Bank service charges and interest earned are adjustments made on the company's books. 
 IV. A bank reconciliation statement is only necessary for large corporations and is not relevant for small businesses. 
 (A) I and II 
 (B) I and III 
 (C) II and III 
 (D) I, II, and III 
 
Q12. Which of the following statements regarding standard costing are correct? 
 I. Standard costing involves setting predetermined cost levels for materials, labor, and overhead. 
 II. It provides a benchmark for evaluating actual performance against expected costs. 
 III. Standard costing is primarily used for historical cost reporting. 
 IV. Variances in standard costing can provide insights into areas of operational efficiency or inefficiency. 
 (A) I & II 
 (B) I, II & III 
 (C) I, II & III 
 (D) I, II & IV 
 
Q13. What does a high debt/equity ratio indicate for a company? 
 (A) The company has a higher level of financial leverage 
 (B) The company is more conservative in its financing approach 
 (C) The company is at a lower risk of default 
 (D) None of the above 
 
Q14. Which one of the following statements about Corporate Social Responsibility (CSR) is not correct? 
 I. Corporate social responsibility is traditionally grouped in four categories, viz. environmental, philanthropic, 
ethical, and economic responsibility. 
 II. The statutory obligations are laid down in Section 135 of the Companies Act, 2013 which, inter alia, mention 
the activities that a company can undertake under CSR. 
 III. The companies must disclose the details of the CSR activities separately in the Annual report of the Board of 
Directors. 
 (A) Only I 
 (B) Only II 
 (C) Only III 
 (D) All statements are correct 
 
Q15. Which statement accurately describes the relationship between bond price and yield to maturity (YTM)? 
 (A) A bond's price and YTM are directly proportional. 
 (B) A bond's price and YTM are inversely proportional. 
 (C) A bond's price is not affected by its YTM. 
 (D) A bond's price is only affected by its face value. 
 
 
 
Page 4


 
    
1 
Q1. Which of the following statements accurately defines a bullet payment? 
 I. A single lump-sum payment settled at the end of a loan's term. 
 II. Consistent monthly payments spread across the duration of a loan. 
 III. The initial payment made at the commencement of a loan. 
 IV. A substantial payment made during the middle of a loan's term. 
 (A) Only I 
 (B) Only II 
 (C) II, III 
 (D) Either I or III 
 
Q2. Which financial statement would reflect the expenditure incurred on the purchase of raw materials by a 
firm/company? 
 (A) Profit and Loss Statement 
 (B) Trading Account 
 (C) Balance Sheet 
 (D) Either A or B 
 
Q3. What is a key difference between the Net Present Value (NPV) and Internal Rate of Return (IRR) methods of 
investment appraisal? 
 (A) NPV provides the actual monetary gain or loss, while IRR expresses returns as a percentage. 
 (B) NPV assumes reinvestment at the project's internal rate of return, while IRR assumes reinvestment at the cost 
of capital. 
 (C) NPV is used for short-term projects, while IRR is used for long-term projects. 
 (D) NPV is preferred for projects with uncertain cash flows, while IRR is used for projects with predictable cash 
flows. 
 
Q4. Where would revenue generated from a business's core operations typically be recorded? 
 I. P&L Statement 
 II. Balance Sheet 
 III. Trading account 
 IV. Cash flow statement 
 (A) Only I 
 (B) Only III 
 (C) Either I or III 
 (D) I, II & III 
 
Q5. What is the primary focus of Section 10 of the Income Tax Act? 
 (A) Incomes not included in total income 
 (B) Deductions for business expenses 
 (C) Taxation of capital gains 
 (D) None of the above 
 
 
 
    
2 
Q6. Under which section of the Income Tax Act can an individual claim deductions on health insurance premiums? 
 I. Section 80C 
 II. Section 80D 
 III. Section 80E 
 IV. Section 80???????? 
 (A) Only I 
 (B) Only IV 
 (C) Only II 
 (D) II, & III 
 
Q7. In which of the following industries is Process Costing most likely to be used? 
 I. Oil refining 
 II. Automobile manufacturing 
 III. Chemical manufacturing 
 IV. Fashion designing 
 (A) Only I 
 (B) Only II 
 (C) Only I & III 
 (D) I, II, III, IV 
 
Q8. Which of the following best describes the concept of "Margin of Safety" in business? 
 (A) The amount of profit a company makes above its competitors 
 (B) The cushion or buffer between actual sales and the break-even point 
 (C) The difference between gross profit and net profit 
 (D) The percentage of revenue allocated for operating expenses 
 
Q9. Consider the given statements in the context of Marginal Costing. Choose the ones that is/are incorrect. 
 I. Under this method, all indirect costs are to be written off against profits, in the period in which they arise. 
 II. Under marginal costing, total costs are segregated into the fixed cost and the variable costs. 
 III. Under marginal costing technique, the inventory valuation may become unrealistic as fixed costs are not 
included in the value of workin-process and finished goods. 
 IV. It assumes that the sales price per unit will remain same irrespective of production and sales. 
 (A) Only II & IV 
 (B) Only II 
 (C) Only I & IV 
 (D) All the statements are correct. 
 
Q10. What is the primary focus of a production budget? 
 (A) Estimating future sales figures 
 (B) Planning the resources needed for production activities 
 (C) Calculating the cost of production 
 (D) Analyzing the profitability of the production process 
 
 
 
    
3 
Q11. Which of the following statements about a bank reconciliation statement is correct? 
 I. A bank reconciliation statement is prepared to identify discrepancies between a company's accounting records 
and the bank statement. 
 II. A credit balance in the bank statement represents overdraft. 
 III. Bank service charges and interest earned are adjustments made on the company's books. 
 IV. A bank reconciliation statement is only necessary for large corporations and is not relevant for small businesses. 
 (A) I and II 
 (B) I and III 
 (C) II and III 
 (D) I, II, and III 
 
Q12. Which of the following statements regarding standard costing are correct? 
 I. Standard costing involves setting predetermined cost levels for materials, labor, and overhead. 
 II. It provides a benchmark for evaluating actual performance against expected costs. 
 III. Standard costing is primarily used for historical cost reporting. 
 IV. Variances in standard costing can provide insights into areas of operational efficiency or inefficiency. 
 (A) I & II 
 (B) I, II & III 
 (C) I, II & III 
 (D) I, II & IV 
 
Q13. What does a high debt/equity ratio indicate for a company? 
 (A) The company has a higher level of financial leverage 
 (B) The company is more conservative in its financing approach 
 (C) The company is at a lower risk of default 
 (D) None of the above 
 
Q14. Which one of the following statements about Corporate Social Responsibility (CSR) is not correct? 
 I. Corporate social responsibility is traditionally grouped in four categories, viz. environmental, philanthropic, 
ethical, and economic responsibility. 
 II. The statutory obligations are laid down in Section 135 of the Companies Act, 2013 which, inter alia, mention 
the activities that a company can undertake under CSR. 
 III. The companies must disclose the details of the CSR activities separately in the Annual report of the Board of 
Directors. 
 (A) Only I 
 (B) Only II 
 (C) Only III 
 (D) All statements are correct 
 
Q15. Which statement accurately describes the relationship between bond price and yield to maturity (YTM)? 
 (A) A bond's price and YTM are directly proportional. 
 (B) A bond's price and YTM are inversely proportional. 
 (C) A bond's price is not affected by its YTM. 
 (D) A bond's price is only affected by its face value. 
 
 
 
 
 
    
4 
Q16. Which statement best describes the Going Concern Principle in accounting? 
 (A) It means the business is guaranteed to be profitable in the future. 
 (B) It assumes that the business will continue its operations for the foreseeable future. 
 (C) It requires businesses to cease operations if they are not currently profitable. 
 (D) It implies that all expenses should be paid immediately to ensure ongoing operations. 
 
Q17. What does the accrual concept in accounting entail? 
 (A) Recognizing revenue and expenses when they are incurred, regardless of when cash is exchanged 
 (B) Recording revenue and expenses only when cash is received or paid 
 (C) Recognizing revenue and expenses only at the end of the financial year 
 (D) lgnoring revenue and expenses in financial statements 
 
Q18. Depreciation is computed for the following purposes: 
 I. To ascertain the current market value of an asset. 
 II. To distribute the cost of an asset over its useful lifespan. 
 III. To establish the salvage value of an asset. 
 IV. To compute the tax liability associated with an asset. 
 (A) Only I 
 (B) Only II 
 (C) II, III 
 (D) I, II, III, IV 
 
Q19. Which of the following accurately defines the break-even point? 
 (A) The point at which a company covers all its costs and begins to generate profit 
 (B) The point at which a company's revenue equals its total expenses. 
 (C) The point at which a company's total sales revenue equals its variable costs. 
 (D) The point at which a company reaches its maximum production capacity. 
 
Q20. Which accounting rule applies to Cash Account? 
 I. Debit all expenses and losses, credit all incomes and gains 
 II. Debit the receiver, credit the giver 
 III. Debit what comes in, credit what goes out 
 (A) Only I 
 (B) Only II 
 (C) Only III 
 (D) Either I or III 
 
Q21. Which of the following can be used to calculate net worth? 
 I. Total Assets - Creditors 
 II. Capital + Reserves & Surplus 
 III. Current Assets - Current Liabilities 
 IV. Capital - Reserves & Surplus 
 (A) Only I 
 (B) Only I & II 
 (C) Only I & III 
 (D) Only II 
 
Page 5


 
    
1 
Q1. Which of the following statements accurately defines a bullet payment? 
 I. A single lump-sum payment settled at the end of a loan's term. 
 II. Consistent monthly payments spread across the duration of a loan. 
 III. The initial payment made at the commencement of a loan. 
 IV. A substantial payment made during the middle of a loan's term. 
 (A) Only I 
 (B) Only II 
 (C) II, III 
 (D) Either I or III 
 
Q2. Which financial statement would reflect the expenditure incurred on the purchase of raw materials by a 
firm/company? 
 (A) Profit and Loss Statement 
 (B) Trading Account 
 (C) Balance Sheet 
 (D) Either A or B 
 
Q3. What is a key difference between the Net Present Value (NPV) and Internal Rate of Return (IRR) methods of 
investment appraisal? 
 (A) NPV provides the actual monetary gain or loss, while IRR expresses returns as a percentage. 
 (B) NPV assumes reinvestment at the project's internal rate of return, while IRR assumes reinvestment at the cost 
of capital. 
 (C) NPV is used for short-term projects, while IRR is used for long-term projects. 
 (D) NPV is preferred for projects with uncertain cash flows, while IRR is used for projects with predictable cash 
flows. 
 
Q4. Where would revenue generated from a business's core operations typically be recorded? 
 I. P&L Statement 
 II. Balance Sheet 
 III. Trading account 
 IV. Cash flow statement 
 (A) Only I 
 (B) Only III 
 (C) Either I or III 
 (D) I, II & III 
 
Q5. What is the primary focus of Section 10 of the Income Tax Act? 
 (A) Incomes not included in total income 
 (B) Deductions for business expenses 
 (C) Taxation of capital gains 
 (D) None of the above 
 
 
 
    
2 
Q6. Under which section of the Income Tax Act can an individual claim deductions on health insurance premiums? 
 I. Section 80C 
 II. Section 80D 
 III. Section 80E 
 IV. Section 80???????? 
 (A) Only I 
 (B) Only IV 
 (C) Only II 
 (D) II, & III 
 
Q7. In which of the following industries is Process Costing most likely to be used? 
 I. Oil refining 
 II. Automobile manufacturing 
 III. Chemical manufacturing 
 IV. Fashion designing 
 (A) Only I 
 (B) Only II 
 (C) Only I & III 
 (D) I, II, III, IV 
 
Q8. Which of the following best describes the concept of "Margin of Safety" in business? 
 (A) The amount of profit a company makes above its competitors 
 (B) The cushion or buffer between actual sales and the break-even point 
 (C) The difference between gross profit and net profit 
 (D) The percentage of revenue allocated for operating expenses 
 
Q9. Consider the given statements in the context of Marginal Costing. Choose the ones that is/are incorrect. 
 I. Under this method, all indirect costs are to be written off against profits, in the period in which they arise. 
 II. Under marginal costing, total costs are segregated into the fixed cost and the variable costs. 
 III. Under marginal costing technique, the inventory valuation may become unrealistic as fixed costs are not 
included in the value of workin-process and finished goods. 
 IV. It assumes that the sales price per unit will remain same irrespective of production and sales. 
 (A) Only II & IV 
 (B) Only II 
 (C) Only I & IV 
 (D) All the statements are correct. 
 
Q10. What is the primary focus of a production budget? 
 (A) Estimating future sales figures 
 (B) Planning the resources needed for production activities 
 (C) Calculating the cost of production 
 (D) Analyzing the profitability of the production process 
 
 
 
    
3 
Q11. Which of the following statements about a bank reconciliation statement is correct? 
 I. A bank reconciliation statement is prepared to identify discrepancies between a company's accounting records 
and the bank statement. 
 II. A credit balance in the bank statement represents overdraft. 
 III. Bank service charges and interest earned are adjustments made on the company's books. 
 IV. A bank reconciliation statement is only necessary for large corporations and is not relevant for small businesses. 
 (A) I and II 
 (B) I and III 
 (C) II and III 
 (D) I, II, and III 
 
Q12. Which of the following statements regarding standard costing are correct? 
 I. Standard costing involves setting predetermined cost levels for materials, labor, and overhead. 
 II. It provides a benchmark for evaluating actual performance against expected costs. 
 III. Standard costing is primarily used for historical cost reporting. 
 IV. Variances in standard costing can provide insights into areas of operational efficiency or inefficiency. 
 (A) I & II 
 (B) I, II & III 
 (C) I, II & III 
 (D) I, II & IV 
 
Q13. What does a high debt/equity ratio indicate for a company? 
 (A) The company has a higher level of financial leverage 
 (B) The company is more conservative in its financing approach 
 (C) The company is at a lower risk of default 
 (D) None of the above 
 
Q14. Which one of the following statements about Corporate Social Responsibility (CSR) is not correct? 
 I. Corporate social responsibility is traditionally grouped in four categories, viz. environmental, philanthropic, 
ethical, and economic responsibility. 
 II. The statutory obligations are laid down in Section 135 of the Companies Act, 2013 which, inter alia, mention 
the activities that a company can undertake under CSR. 
 III. The companies must disclose the details of the CSR activities separately in the Annual report of the Board of 
Directors. 
 (A) Only I 
 (B) Only II 
 (C) Only III 
 (D) All statements are correct 
 
Q15. Which statement accurately describes the relationship between bond price and yield to maturity (YTM)? 
 (A) A bond's price and YTM are directly proportional. 
 (B) A bond's price and YTM are inversely proportional. 
 (C) A bond's price is not affected by its YTM. 
 (D) A bond's price is only affected by its face value. 
 
 
 
 
 
    
4 
Q16. Which statement best describes the Going Concern Principle in accounting? 
 (A) It means the business is guaranteed to be profitable in the future. 
 (B) It assumes that the business will continue its operations for the foreseeable future. 
 (C) It requires businesses to cease operations if they are not currently profitable. 
 (D) It implies that all expenses should be paid immediately to ensure ongoing operations. 
 
Q17. What does the accrual concept in accounting entail? 
 (A) Recognizing revenue and expenses when they are incurred, regardless of when cash is exchanged 
 (B) Recording revenue and expenses only when cash is received or paid 
 (C) Recognizing revenue and expenses only at the end of the financial year 
 (D) lgnoring revenue and expenses in financial statements 
 
Q18. Depreciation is computed for the following purposes: 
 I. To ascertain the current market value of an asset. 
 II. To distribute the cost of an asset over its useful lifespan. 
 III. To establish the salvage value of an asset. 
 IV. To compute the tax liability associated with an asset. 
 (A) Only I 
 (B) Only II 
 (C) II, III 
 (D) I, II, III, IV 
 
Q19. Which of the following accurately defines the break-even point? 
 (A) The point at which a company covers all its costs and begins to generate profit 
 (B) The point at which a company's revenue equals its total expenses. 
 (C) The point at which a company's total sales revenue equals its variable costs. 
 (D) The point at which a company reaches its maximum production capacity. 
 
Q20. Which accounting rule applies to Cash Account? 
 I. Debit all expenses and losses, credit all incomes and gains 
 II. Debit the receiver, credit the giver 
 III. Debit what comes in, credit what goes out 
 (A) Only I 
 (B) Only II 
 (C) Only III 
 (D) Either I or III 
 
Q21. Which of the following can be used to calculate net worth? 
 I. Total Assets - Creditors 
 II. Capital + Reserves & Surplus 
 III. Current Assets - Current Liabilities 
 IV. Capital - Reserves & Surplus 
 (A) Only I 
 (B) Only I & II 
 (C) Only I & III 
 (D) Only II 
 
 
 
    
5 
Q22. How can Net Working Capital be calculated? 
 I. Total Assets - Total Liabilities 
 II. Current Assets - Current Liabilities 
 III. Current Assets + Current Liabilities 
 IV. Total Assets + Total Liabilities 
 (A) Only I 
 (B) Only II 
 (C) Only III 
 (D) I, II, III, IV 
 
Q23. The formula for calculation of Quick Ratio: 
 I. 
 Current Assets 
 Current Liabilities 
     II. 
 Current Liabilities 
 Current Assets 
 
 III. 
 Current Assets - Inventory 
 Current Liabilities 
 
 IV. 
 Current Liabilities -Inventory 
 Current Assets 
 
 (A) Only I 
 (B) Only III 
 (C) II, III 
 (D) I, II, III, IV 
 
Q24. Under Section 80C of the Income Tax Act, an individual can claim a deduction for: 
 I. Medical insurance premium paid 
 II. Life insurance premiums 
 III. Contribution towards the Public Provident Fund (PPF) 
 IV. Repayments made towards the principal component of home loan EMls 
 (A) Only I 
 (B) Only II 
 (C) Only II & III 
 (D) Only II, III, & IV 
 
Q25. The East India Company, established by the British, was an example of: 
 I. Public Limited Company 
 II. Private Company 
 III. Partnership firm 
 IV. Joint Stock Company 
 (A) Only I 
 (B) Only II 
 (C) Only IV 
 (D) Both III & IV 
 
Q26. A company has total assets worth Rs. 20,00,000  and its owners' equity (capital) is Rs. 8,00,000. What are the 
outside liabilities? 
 (A) ? 12,00,000 
 (B) ?3,00,000 
 (C) ?7,00,000 
 (D) ?8,00,000