JAIIB Previous Year Question Paper: Accounting and Financial Management for Bankers(October 2023) | Mock Test Series for JAIIB Exam 2026 - Bank Exams PDF Download

 Page 1


 
   
1 
Q1. XYZ Corporation is a manufacturing company that sells its products to customers on credit. The company also 
incurs various expenses throughout the year, such as rent, utilities, and salaries. At the end of the accounting period, 
XYZ Corporation prepares its financial statements, which include the income statement and the balance sheet. 
 Which accounting concept is applied when XYZ Corporation makes adjustments regarding prepaid expenses and 
outstanding expenses in its final accounts and when it recognizes deferred revenue expenditure? 
 (A) Realisation concept 
 (B) Dual Aspect Concept 
 (C) Conservatism Principle 
 (D) Matching Concept 
 
Q2. The auditors of Private Banks are appointed 
 (A) In the Annual General Meeting of the shareholders. 
 (B) By their Board of Directors. 
 (C) By the Chief Executive Officer (CEO) of the bank. 
 (D) By RBI 
 
Q3. ABC Manufacturing Company purchased a machine for Rs. 1,00,000 with an estimated useful life of 5 years and 
an estimated total production of 50,000 units. In the first year, the machine produced 6,500 units. 
 Using the units of production method, what is the depreciation expense for the first year, if the salvage value of the 
machine is Rs. 10,000 ? 
 (A) Rs. 11,700 
 (B) Rs. 11,500 
 (C) Rs. 11,300 
 (D) Rs. 11,900 
 
Q4. Which of the following formulas is accurate of the amount after an year if the interest is compounded quarterly? 
 (A) P ?1+
???? 4
? 
 (B) P(1+4???? )
4
 
 (C) P ?1+
???? 4
?
4
 
 (D) P ?1+
???? 4
?
1
4
 
 
Q5. Company issues preference shares for a period exceeding but less than for projects. 
 (A) 30, 40, commercial 
 (B) 30, 40, infrastructure 
 (C) 20,30, commercial 
 (D) 20,30, infrastructure 
 
Q6. What does the concept of "risk-return tradeoff" imply? 
 (A) The higher the risk, the lower the expected return. 
 (B) The higher the risk, the higher the expected return. 
 (C) The lower the risk, the higher the expected return. 
 (D) Both A and C 
 
Q7. Company ABC has current assets of Rs. 1,50,000 and current liabilities of Rs. 75,000. Calculate the current ratio if 
inventory is Rs. 35,000. 
 (A) 2:1 
Page 2


 
   
1 
Q1. XYZ Corporation is a manufacturing company that sells its products to customers on credit. The company also 
incurs various expenses throughout the year, such as rent, utilities, and salaries. At the end of the accounting period, 
XYZ Corporation prepares its financial statements, which include the income statement and the balance sheet. 
 Which accounting concept is applied when XYZ Corporation makes adjustments regarding prepaid expenses and 
outstanding expenses in its final accounts and when it recognizes deferred revenue expenditure? 
 (A) Realisation concept 
 (B) Dual Aspect Concept 
 (C) Conservatism Principle 
 (D) Matching Concept 
 
Q2. The auditors of Private Banks are appointed 
 (A) In the Annual General Meeting of the shareholders. 
 (B) By their Board of Directors. 
 (C) By the Chief Executive Officer (CEO) of the bank. 
 (D) By RBI 
 
Q3. ABC Manufacturing Company purchased a machine for Rs. 1,00,000 with an estimated useful life of 5 years and 
an estimated total production of 50,000 units. In the first year, the machine produced 6,500 units. 
 Using the units of production method, what is the depreciation expense for the first year, if the salvage value of the 
machine is Rs. 10,000 ? 
 (A) Rs. 11,700 
 (B) Rs. 11,500 
 (C) Rs. 11,300 
 (D) Rs. 11,900 
 
Q4. Which of the following formulas is accurate of the amount after an year if the interest is compounded quarterly? 
 (A) P ?1+
???? 4
? 
 (B) P(1+4???? )
4
 
 (C) P ?1+
???? 4
?
4
 
 (D) P ?1+
???? 4
?
1
4
 
 
Q5. Company issues preference shares for a period exceeding but less than for projects. 
 (A) 30, 40, commercial 
 (B) 30, 40, infrastructure 
 (C) 20,30, commercial 
 (D) 20,30, infrastructure 
 
Q6. What does the concept of "risk-return tradeoff" imply? 
 (A) The higher the risk, the lower the expected return. 
 (B) The higher the risk, the higher the expected return. 
 (C) The lower the risk, the higher the expected return. 
 (D) Both A and C 
 
Q7. Company ABC has current assets of Rs. 1,50,000 and current liabilities of Rs. 75,000. Calculate the current ratio if 
inventory is Rs. 35,000. 
 (A) 2:1 
 
   
2 
 (B) 1.53:1 
 (C) 1:2 
 (D) 1:1.53 
 
Q8. If the risk-free return is 3%, the beta is 1.5 , and the expected return on the market portfolio is 10%, what is the 
required rate of return? 
 (A) 18% 
 (B) 13.5% 
 (C) 12% 
 (D) 11.5% 
 
Q9. Which of the following is not a feature of capital expenditure? 
 (A) Involves long-term assets. 
 (B) Enhances the earning capacity of the business. 
 (C) Incurs regular and recurring costs. 
 (D) Yields benefits over an extended period. 
 
Q10. Acceptances, endorsements and other obligations are shown under head in the balance sheet. 
 (A) Other Assets 
 (B) Other Liabilities 
 (C) Contingent Liabilities 
 (D) Borrowings 
 
Q11. Which of the following is a correct point of difference between cost accounting and financial accounting? 
I. Financial Accounting is primarily concerned with recording, summarizing, and reporting financial transactions 
to external stakeholders, while cost accounting provides detailed information about the costs associated with 
producing goods or providing services within an organization. 
II. The reports in cost accounting, unlike financial accounting, can be generated more frequently (like daily, 
weekly). 
III. The main audience of cost accounting is investors, creditors, government agencies, and the general public, while 
that of financial accounting is managers, executives, and department heads. 
IV. Financial accounting must adhere to established accounting standards and regulations, while cost accounting is 
not subject to external regulatory standards or requirements. 
 (A) I, II and IV only 
 (B) II and IV only 
 (C) I and III only 
 (D) II, III and IV only 
 
Q12. In a small town, Shikha decides to open a bakery. She carefully separates her personal finances from the finances 
of the bakery. She opens a separate bank account for the bakery, maintains distinct accounting records, and ensures 
that all financial transactions related to the bakery are conducted through the business account. Shikha even goes 
the extra mile to obtain a unique business name and legal registration for her bakery. 
 Which accounting concept is primarily applied in Shikha's approach to managing her bakery's finances? 
 (A) Money Measurement Concept 
 (B) Business Entity Concept 
 (C) Going Concern Concept 
 (D) Dual Aspect Concept 
 
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1 
Q1. XYZ Corporation is a manufacturing company that sells its products to customers on credit. The company also 
incurs various expenses throughout the year, such as rent, utilities, and salaries. At the end of the accounting period, 
XYZ Corporation prepares its financial statements, which include the income statement and the balance sheet. 
 Which accounting concept is applied when XYZ Corporation makes adjustments regarding prepaid expenses and 
outstanding expenses in its final accounts and when it recognizes deferred revenue expenditure? 
 (A) Realisation concept 
 (B) Dual Aspect Concept 
 (C) Conservatism Principle 
 (D) Matching Concept 
 
Q2. The auditors of Private Banks are appointed 
 (A) In the Annual General Meeting of the shareholders. 
 (B) By their Board of Directors. 
 (C) By the Chief Executive Officer (CEO) of the bank. 
 (D) By RBI 
 
Q3. ABC Manufacturing Company purchased a machine for Rs. 1,00,000 with an estimated useful life of 5 years and 
an estimated total production of 50,000 units. In the first year, the machine produced 6,500 units. 
 Using the units of production method, what is the depreciation expense for the first year, if the salvage value of the 
machine is Rs. 10,000 ? 
 (A) Rs. 11,700 
 (B) Rs. 11,500 
 (C) Rs. 11,300 
 (D) Rs. 11,900 
 
Q4. Which of the following formulas is accurate of the amount after an year if the interest is compounded quarterly? 
 (A) P ?1+
???? 4
? 
 (B) P(1+4???? )
4
 
 (C) P ?1+
???? 4
?
4
 
 (D) P ?1+
???? 4
?
1
4
 
 
Q5. Company issues preference shares for a period exceeding but less than for projects. 
 (A) 30, 40, commercial 
 (B) 30, 40, infrastructure 
 (C) 20,30, commercial 
 (D) 20,30, infrastructure 
 
Q6. What does the concept of "risk-return tradeoff" imply? 
 (A) The higher the risk, the lower the expected return. 
 (B) The higher the risk, the higher the expected return. 
 (C) The lower the risk, the higher the expected return. 
 (D) Both A and C 
 
Q7. Company ABC has current assets of Rs. 1,50,000 and current liabilities of Rs. 75,000. Calculate the current ratio if 
inventory is Rs. 35,000. 
 (A) 2:1 
 
   
2 
 (B) 1.53:1 
 (C) 1:2 
 (D) 1:1.53 
 
Q8. If the risk-free return is 3%, the beta is 1.5 , and the expected return on the market portfolio is 10%, what is the 
required rate of return? 
 (A) 18% 
 (B) 13.5% 
 (C) 12% 
 (D) 11.5% 
 
Q9. Which of the following is not a feature of capital expenditure? 
 (A) Involves long-term assets. 
 (B) Enhances the earning capacity of the business. 
 (C) Incurs regular and recurring costs. 
 (D) Yields benefits over an extended period. 
 
Q10. Acceptances, endorsements and other obligations are shown under head in the balance sheet. 
 (A) Other Assets 
 (B) Other Liabilities 
 (C) Contingent Liabilities 
 (D) Borrowings 
 
Q11. Which of the following is a correct point of difference between cost accounting and financial accounting? 
I. Financial Accounting is primarily concerned with recording, summarizing, and reporting financial transactions 
to external stakeholders, while cost accounting provides detailed information about the costs associated with 
producing goods or providing services within an organization. 
II. The reports in cost accounting, unlike financial accounting, can be generated more frequently (like daily, 
weekly). 
III. The main audience of cost accounting is investors, creditors, government agencies, and the general public, while 
that of financial accounting is managers, executives, and department heads. 
IV. Financial accounting must adhere to established accounting standards and regulations, while cost accounting is 
not subject to external regulatory standards or requirements. 
 (A) I, II and IV only 
 (B) II and IV only 
 (C) I and III only 
 (D) II, III and IV only 
 
Q12. In a small town, Shikha decides to open a bakery. She carefully separates her personal finances from the finances 
of the bakery. She opens a separate bank account for the bakery, maintains distinct accounting records, and ensures 
that all financial transactions related to the bakery are conducted through the business account. Shikha even goes 
the extra mile to obtain a unique business name and legal registration for her bakery. 
 Which accounting concept is primarily applied in Shikha's approach to managing her bakery's finances? 
 (A) Money Measurement Concept 
 (B) Business Entity Concept 
 (C) Going Concern Concept 
 (D) Dual Aspect Concept 
 
 
   
3 
Q13. Mining Rights and Computer Software are shown under which of the following heads of a balance sheet? 
 (A) Intangible assets 
 (B) Non-current investments 
 (C) Other non-current assets 
 (D) Inventories 
 
Q14. What is the correct journal entry in the drawer's books in the case of payment of a bill of exchange? 
 (A) Debit: Cash/Bank A/c. Credit: Bills Receivable A/c 
 (B) Debit: Bills Payable A/c. Credit: Cash/Bank A/c. 
 (C) Debit: Cash/Bank A/c. Credit: Bills Payable A/c 
 (D) Debit: Bills Receivable A/c. Credit: Cash/Bank A/c. 
 
Q15. The cash flow arising from trading securities is termed as: 
 (A) Operating Cash Flow 
 (B) Investing Cash Flow 
 (C) Financing Cash Flow 
 (D) Market Cash Flow 
 
Q16. Which of the following is not a category of standard used in standard costing? 
 (A) Basic Standard 
 (B) Ideal Standard 
 (C) Currently Attainable Standard 
 (D) Historical Standard 
 
Q17. A reserve specifically represented by earmarked investments shall be termed as a: 
 (A) General Reserve 
 (B) Capital Reserve 
 (C) Fund 
 (D) Surplus 
 
Q18. What is the inherent assumption in the case of simple interest? 
 (A) Interest is calculated only on the initial principal amount. 
 (B) Interest is calculated on the initial principal amount, along with the interest of first year. 
 (C) The interest rate changes periodically. 
 (D) Interest is calculated on both the principal and the accumulated interest. 
 
Q19. Which of the following is not a feature of the straight line method of depreciation? 
 (A) The charge to the Profit & Loss account is spread evenly over the life of such asset. 
(B) This method is more relevant where the particular Asset is expected to give constant/consistent performance 
over an extended period of time over the useful life. 
(C) This method is more relevant where the particular Asset is expected to give better performance in the initial 
periods of use as compared to the latter. 
 (D) All of the above are features of SLM method of depreciation. 
 
Q20. Which of the following statements is correct in the context of interest rate options? 
 I. Interest Rate options are fundamentally of two types: the Cap and the Floor. 
 II. The option contract is on-balance sheet to the parties entering the transaction. 
Page 4


 
   
1 
Q1. XYZ Corporation is a manufacturing company that sells its products to customers on credit. The company also 
incurs various expenses throughout the year, such as rent, utilities, and salaries. At the end of the accounting period, 
XYZ Corporation prepares its financial statements, which include the income statement and the balance sheet. 
 Which accounting concept is applied when XYZ Corporation makes adjustments regarding prepaid expenses and 
outstanding expenses in its final accounts and when it recognizes deferred revenue expenditure? 
 (A) Realisation concept 
 (B) Dual Aspect Concept 
 (C) Conservatism Principle 
 (D) Matching Concept 
 
Q2. The auditors of Private Banks are appointed 
 (A) In the Annual General Meeting of the shareholders. 
 (B) By their Board of Directors. 
 (C) By the Chief Executive Officer (CEO) of the bank. 
 (D) By RBI 
 
Q3. ABC Manufacturing Company purchased a machine for Rs. 1,00,000 with an estimated useful life of 5 years and 
an estimated total production of 50,000 units. In the first year, the machine produced 6,500 units. 
 Using the units of production method, what is the depreciation expense for the first year, if the salvage value of the 
machine is Rs. 10,000 ? 
 (A) Rs. 11,700 
 (B) Rs. 11,500 
 (C) Rs. 11,300 
 (D) Rs. 11,900 
 
Q4. Which of the following formulas is accurate of the amount after an year if the interest is compounded quarterly? 
 (A) P ?1+
???? 4
? 
 (B) P(1+4???? )
4
 
 (C) P ?1+
???? 4
?
4
 
 (D) P ?1+
???? 4
?
1
4
 
 
Q5. Company issues preference shares for a period exceeding but less than for projects. 
 (A) 30, 40, commercial 
 (B) 30, 40, infrastructure 
 (C) 20,30, commercial 
 (D) 20,30, infrastructure 
 
Q6. What does the concept of "risk-return tradeoff" imply? 
 (A) The higher the risk, the lower the expected return. 
 (B) The higher the risk, the higher the expected return. 
 (C) The lower the risk, the higher the expected return. 
 (D) Both A and C 
 
Q7. Company ABC has current assets of Rs. 1,50,000 and current liabilities of Rs. 75,000. Calculate the current ratio if 
inventory is Rs. 35,000. 
 (A) 2:1 
 
   
2 
 (B) 1.53:1 
 (C) 1:2 
 (D) 1:1.53 
 
Q8. If the risk-free return is 3%, the beta is 1.5 , and the expected return on the market portfolio is 10%, what is the 
required rate of return? 
 (A) 18% 
 (B) 13.5% 
 (C) 12% 
 (D) 11.5% 
 
Q9. Which of the following is not a feature of capital expenditure? 
 (A) Involves long-term assets. 
 (B) Enhances the earning capacity of the business. 
 (C) Incurs regular and recurring costs. 
 (D) Yields benefits over an extended period. 
 
Q10. Acceptances, endorsements and other obligations are shown under head in the balance sheet. 
 (A) Other Assets 
 (B) Other Liabilities 
 (C) Contingent Liabilities 
 (D) Borrowings 
 
Q11. Which of the following is a correct point of difference between cost accounting and financial accounting? 
I. Financial Accounting is primarily concerned with recording, summarizing, and reporting financial transactions 
to external stakeholders, while cost accounting provides detailed information about the costs associated with 
producing goods or providing services within an organization. 
II. The reports in cost accounting, unlike financial accounting, can be generated more frequently (like daily, 
weekly). 
III. The main audience of cost accounting is investors, creditors, government agencies, and the general public, while 
that of financial accounting is managers, executives, and department heads. 
IV. Financial accounting must adhere to established accounting standards and regulations, while cost accounting is 
not subject to external regulatory standards or requirements. 
 (A) I, II and IV only 
 (B) II and IV only 
 (C) I and III only 
 (D) II, III and IV only 
 
Q12. In a small town, Shikha decides to open a bakery. She carefully separates her personal finances from the finances 
of the bakery. She opens a separate bank account for the bakery, maintains distinct accounting records, and ensures 
that all financial transactions related to the bakery are conducted through the business account. Shikha even goes 
the extra mile to obtain a unique business name and legal registration for her bakery. 
 Which accounting concept is primarily applied in Shikha's approach to managing her bakery's finances? 
 (A) Money Measurement Concept 
 (B) Business Entity Concept 
 (C) Going Concern Concept 
 (D) Dual Aspect Concept 
 
 
   
3 
Q13. Mining Rights and Computer Software are shown under which of the following heads of a balance sheet? 
 (A) Intangible assets 
 (B) Non-current investments 
 (C) Other non-current assets 
 (D) Inventories 
 
Q14. What is the correct journal entry in the drawer's books in the case of payment of a bill of exchange? 
 (A) Debit: Cash/Bank A/c. Credit: Bills Receivable A/c 
 (B) Debit: Bills Payable A/c. Credit: Cash/Bank A/c. 
 (C) Debit: Cash/Bank A/c. Credit: Bills Payable A/c 
 (D) Debit: Bills Receivable A/c. Credit: Cash/Bank A/c. 
 
Q15. The cash flow arising from trading securities is termed as: 
 (A) Operating Cash Flow 
 (B) Investing Cash Flow 
 (C) Financing Cash Flow 
 (D) Market Cash Flow 
 
Q16. Which of the following is not a category of standard used in standard costing? 
 (A) Basic Standard 
 (B) Ideal Standard 
 (C) Currently Attainable Standard 
 (D) Historical Standard 
 
Q17. A reserve specifically represented by earmarked investments shall be termed as a: 
 (A) General Reserve 
 (B) Capital Reserve 
 (C) Fund 
 (D) Surplus 
 
Q18. What is the inherent assumption in the case of simple interest? 
 (A) Interest is calculated only on the initial principal amount. 
 (B) Interest is calculated on the initial principal amount, along with the interest of first year. 
 (C) The interest rate changes periodically. 
 (D) Interest is calculated on both the principal and the accumulated interest. 
 
Q19. Which of the following is not a feature of the straight line method of depreciation? 
 (A) The charge to the Profit & Loss account is spread evenly over the life of such asset. 
(B) This method is more relevant where the particular Asset is expected to give constant/consistent performance 
over an extended period of time over the useful life. 
(C) This method is more relevant where the particular Asset is expected to give better performance in the initial 
periods of use as compared to the latter. 
 (D) All of the above are features of SLM method of depreciation. 
 
Q20. Which of the following statements is correct in the context of interest rate options? 
 I. Interest Rate options are fundamentally of two types: the Cap and the Floor. 
 II. The option contract is on-balance sheet to the parties entering the transaction. 
 
   
4 
III. Allows the option purchaser to acquire or shed exposure to the underlying asset without the necessity to 
purchase or sell the asset itself. IV. The key element of the option contract is the ability of an option seller to 
get asymmetric exposure to price fluctuations in the underlying asset. 
 (A) I, II, III and IV 
 (B) II and IV only 
 (C) I and IV only 
 (D) I and III only 
 
Q21. Which of the following assets require a general provision of 15% on total outstanding? 
 (A) Standard Asset 
 (B) Doubtful Asset 
 (C) Sub-Standard Asset 
 (D) Loss Asset 
 
Q22. Which of the following are the conditions that need to be met for an asset to be classified as a cash equivalent?  
I. The asset should have a short maturity period, typically twelve months or less from the date of acquisition. 
II. It is subject to an insignificant risk of change in value. 
 III. The asset should be readily convertible into a known amount of cash. 
 (A) II and III only 
 (B) III only 
 (C) I and III only 
 (D) I, II and III 
 
Q23. Which of the following statements is correct in the context of the payback period? 
I. It is expressed in terms of the number of years. 
II. Different industries or companies may have varying acceptable payback periods based on their risk tolerance 
and capital structure. 
II. It takes into account the time value of money. 
IV. It ignores profitability measures. 
V. It considers cash flows beyond the payback period. 
 (A) I, III and V only 
 (B) I, II and V only 
 (C) I, III and IV only 
 (D) I, II and IV only 
 
Q24. The balance of A/c gets reflected in the credit side of the trial balance. 
 (A) drawings 
 (B) purchases 
 (C) suppliers 
 (D) sales return 
 
Q25. When does a bill of exchange become a legal document? 
 (A) Upon acceptance by the drawee 
 (B) Upon issuance by the drawer 
 (C) Upon endorsement by the payee 
 (D) Upon presentation to the bank 
 
Q26. Which of the following statements is correct with respect to bonds?  
Page 5


 
   
1 
Q1. XYZ Corporation is a manufacturing company that sells its products to customers on credit. The company also 
incurs various expenses throughout the year, such as rent, utilities, and salaries. At the end of the accounting period, 
XYZ Corporation prepares its financial statements, which include the income statement and the balance sheet. 
 Which accounting concept is applied when XYZ Corporation makes adjustments regarding prepaid expenses and 
outstanding expenses in its final accounts and when it recognizes deferred revenue expenditure? 
 (A) Realisation concept 
 (B) Dual Aspect Concept 
 (C) Conservatism Principle 
 (D) Matching Concept 
 
Q2. The auditors of Private Banks are appointed 
 (A) In the Annual General Meeting of the shareholders. 
 (B) By their Board of Directors. 
 (C) By the Chief Executive Officer (CEO) of the bank. 
 (D) By RBI 
 
Q3. ABC Manufacturing Company purchased a machine for Rs. 1,00,000 with an estimated useful life of 5 years and 
an estimated total production of 50,000 units. In the first year, the machine produced 6,500 units. 
 Using the units of production method, what is the depreciation expense for the first year, if the salvage value of the 
machine is Rs. 10,000 ? 
 (A) Rs. 11,700 
 (B) Rs. 11,500 
 (C) Rs. 11,300 
 (D) Rs. 11,900 
 
Q4. Which of the following formulas is accurate of the amount after an year if the interest is compounded quarterly? 
 (A) P ?1+
???? 4
? 
 (B) P(1+4???? )
4
 
 (C) P ?1+
???? 4
?
4
 
 (D) P ?1+
???? 4
?
1
4
 
 
Q5. Company issues preference shares for a period exceeding but less than for projects. 
 (A) 30, 40, commercial 
 (B) 30, 40, infrastructure 
 (C) 20,30, commercial 
 (D) 20,30, infrastructure 
 
Q6. What does the concept of "risk-return tradeoff" imply? 
 (A) The higher the risk, the lower the expected return. 
 (B) The higher the risk, the higher the expected return. 
 (C) The lower the risk, the higher the expected return. 
 (D) Both A and C 
 
Q7. Company ABC has current assets of Rs. 1,50,000 and current liabilities of Rs. 75,000. Calculate the current ratio if 
inventory is Rs. 35,000. 
 (A) 2:1 
 
   
2 
 (B) 1.53:1 
 (C) 1:2 
 (D) 1:1.53 
 
Q8. If the risk-free return is 3%, the beta is 1.5 , and the expected return on the market portfolio is 10%, what is the 
required rate of return? 
 (A) 18% 
 (B) 13.5% 
 (C) 12% 
 (D) 11.5% 
 
Q9. Which of the following is not a feature of capital expenditure? 
 (A) Involves long-term assets. 
 (B) Enhances the earning capacity of the business. 
 (C) Incurs regular and recurring costs. 
 (D) Yields benefits over an extended period. 
 
Q10. Acceptances, endorsements and other obligations are shown under head in the balance sheet. 
 (A) Other Assets 
 (B) Other Liabilities 
 (C) Contingent Liabilities 
 (D) Borrowings 
 
Q11. Which of the following is a correct point of difference between cost accounting and financial accounting? 
I. Financial Accounting is primarily concerned with recording, summarizing, and reporting financial transactions 
to external stakeholders, while cost accounting provides detailed information about the costs associated with 
producing goods or providing services within an organization. 
II. The reports in cost accounting, unlike financial accounting, can be generated more frequently (like daily, 
weekly). 
III. The main audience of cost accounting is investors, creditors, government agencies, and the general public, while 
that of financial accounting is managers, executives, and department heads. 
IV. Financial accounting must adhere to established accounting standards and regulations, while cost accounting is 
not subject to external regulatory standards or requirements. 
 (A) I, II and IV only 
 (B) II and IV only 
 (C) I and III only 
 (D) II, III and IV only 
 
Q12. In a small town, Shikha decides to open a bakery. She carefully separates her personal finances from the finances 
of the bakery. She opens a separate bank account for the bakery, maintains distinct accounting records, and ensures 
that all financial transactions related to the bakery are conducted through the business account. Shikha even goes 
the extra mile to obtain a unique business name and legal registration for her bakery. 
 Which accounting concept is primarily applied in Shikha's approach to managing her bakery's finances? 
 (A) Money Measurement Concept 
 (B) Business Entity Concept 
 (C) Going Concern Concept 
 (D) Dual Aspect Concept 
 
 
   
3 
Q13. Mining Rights and Computer Software are shown under which of the following heads of a balance sheet? 
 (A) Intangible assets 
 (B) Non-current investments 
 (C) Other non-current assets 
 (D) Inventories 
 
Q14. What is the correct journal entry in the drawer's books in the case of payment of a bill of exchange? 
 (A) Debit: Cash/Bank A/c. Credit: Bills Receivable A/c 
 (B) Debit: Bills Payable A/c. Credit: Cash/Bank A/c. 
 (C) Debit: Cash/Bank A/c. Credit: Bills Payable A/c 
 (D) Debit: Bills Receivable A/c. Credit: Cash/Bank A/c. 
 
Q15. The cash flow arising from trading securities is termed as: 
 (A) Operating Cash Flow 
 (B) Investing Cash Flow 
 (C) Financing Cash Flow 
 (D) Market Cash Flow 
 
Q16. Which of the following is not a category of standard used in standard costing? 
 (A) Basic Standard 
 (B) Ideal Standard 
 (C) Currently Attainable Standard 
 (D) Historical Standard 
 
Q17. A reserve specifically represented by earmarked investments shall be termed as a: 
 (A) General Reserve 
 (B) Capital Reserve 
 (C) Fund 
 (D) Surplus 
 
Q18. What is the inherent assumption in the case of simple interest? 
 (A) Interest is calculated only on the initial principal amount. 
 (B) Interest is calculated on the initial principal amount, along with the interest of first year. 
 (C) The interest rate changes periodically. 
 (D) Interest is calculated on both the principal and the accumulated interest. 
 
Q19. Which of the following is not a feature of the straight line method of depreciation? 
 (A) The charge to the Profit & Loss account is spread evenly over the life of such asset. 
(B) This method is more relevant where the particular Asset is expected to give constant/consistent performance 
over an extended period of time over the useful life. 
(C) This method is more relevant where the particular Asset is expected to give better performance in the initial 
periods of use as compared to the latter. 
 (D) All of the above are features of SLM method of depreciation. 
 
Q20. Which of the following statements is correct in the context of interest rate options? 
 I. Interest Rate options are fundamentally of two types: the Cap and the Floor. 
 II. The option contract is on-balance sheet to the parties entering the transaction. 
 
   
4 
III. Allows the option purchaser to acquire or shed exposure to the underlying asset without the necessity to 
purchase or sell the asset itself. IV. The key element of the option contract is the ability of an option seller to 
get asymmetric exposure to price fluctuations in the underlying asset. 
 (A) I, II, III and IV 
 (B) II and IV only 
 (C) I and IV only 
 (D) I and III only 
 
Q21. Which of the following assets require a general provision of 15% on total outstanding? 
 (A) Standard Asset 
 (B) Doubtful Asset 
 (C) Sub-Standard Asset 
 (D) Loss Asset 
 
Q22. Which of the following are the conditions that need to be met for an asset to be classified as a cash equivalent?  
I. The asset should have a short maturity period, typically twelve months or less from the date of acquisition. 
II. It is subject to an insignificant risk of change in value. 
 III. The asset should be readily convertible into a known amount of cash. 
 (A) II and III only 
 (B) III only 
 (C) I and III only 
 (D) I, II and III 
 
Q23. Which of the following statements is correct in the context of the payback period? 
I. It is expressed in terms of the number of years. 
II. Different industries or companies may have varying acceptable payback periods based on their risk tolerance 
and capital structure. 
II. It takes into account the time value of money. 
IV. It ignores profitability measures. 
V. It considers cash flows beyond the payback period. 
 (A) I, III and V only 
 (B) I, II and V only 
 (C) I, III and IV only 
 (D) I, II and IV only 
 
Q24. The balance of A/c gets reflected in the credit side of the trial balance. 
 (A) drawings 
 (B) purchases 
 (C) suppliers 
 (D) sales return 
 
Q25. When does a bill of exchange become a legal document? 
 (A) Upon acceptance by the drawee 
 (B) Upon issuance by the drawer 
 (C) Upon endorsement by the payee 
 (D) Upon presentation to the bank 
 
Q26. Which of the following statements is correct with respect to bonds?  
 
   
5 
I. For a given difference between the YTM and coupon rate of the bonds, the smaller the term to maturity, the 
greater will be the change in price with a change in YTM. 
II. For any given change in YTM, the percentage price changes in the case of bonds of a high coupon rate will be 
smaller than in the case of bonds of a low coupon rate, with other things remaining the same. 
III. When the required rate of return (kd) is greater than the coupon rate, the premium on the bond declines as 
maturity approaches. 
IV. A change in the YTM affects the bonds with a lower YTM more than it does bonds with a higher YTM. 
V. When the required rate of return is more than the coupon rate, the value of the bond is greater than its par value. 
 (A) I, II and IV only 
 (B) I, III and V only 
 (C) II only 
 (D) III, IV and V only 
 
Q27. To be useful and helpful to users, financial statements should be: 
 I. Voluminous 
 II. Relevant 
III. Reliable 
 IV. Comparable 
 (A) I and II only 
 (B) II, III and IV only 
 (C) III and IV only 
 (D) I, II, III and IV only 
 
Q28. Company XYZ has a Profit Volume Ratio of 30%, a Sale Price per unit of Rs. 50, and Fixed Costs of Rs. 60,000. 
Calculate the Break-Even Point in units. 
 (A) 3500 units 
 (B) 4000 units 
 (C) 4500 units 
 (D) 5000 units 
 
Q29. ABC Ltd. is considering an investment in a new project that requires an initial investment of Rs. 5,00,000. The 
expected annual net income (after tax) from the project is: 
 1
st
 year = 50,000 
 2
nd
 year = 25,000 
 3
rd
 year = 44,000 
 4
th
 year = 38,000 
 5
th
 year = 46,000 
 The project's useful life is five years. Calculate the Accounting Rate of Return (ARR) for the investment. 
 (A) 10.34% 
 (B) 16.24% 
 (C) 15.48% 
 (D) 21.56% 
 
Q30. Which of the following journal entries is passed in the books of drawee on discounting of bill with a bank by 
drawer? 
 (A) Debit: Bank A/c. Credit: Discount A/c 
 (B) Debit: Discount A/c. Credit: Bank A/c 
 (C) Debit: Discount A/c. Debit: Bank A/c. Credit: Bills Receivable A/c 
 (D) No entry