M.Com Entrance Test Solved Question Paper' 2019 [Dibrugarh University MCOM Regular Entrance Test]

M.Com Entrance Test
Solved Question Paper’ 2019
Dibrugarh University

1. The Consumption at large inventory accumulation is indicated by

(A) Asset turnover ratio

(B) Working capital turnover ratio

(D) All of the above

Ans: (C) inventory turnover ratio

2. Receipt and Payment Account is a summary of

(A) Debit and credit balances of ledger accounts

(B) Cash receipt and payment

(D) Balances of assets and liabilities

Ans: (B) cash receipt and payment

3. The assets held by a business which can be converted in the form of cash, without disturbing the normal operations of a business are known as

(A) tangible assets

(B) intangible assets

(D) current assets

Ans: (D) current assets

4. Which of the following is the type of capital budgeting decision?

(A) Diversification

(B) Replacement

(D) All of the above

Ans: (D) All of the above

https://www.cmatutors.com/2021/01/capital-budgeting-mcq-financial.html

5. Which of the following is the external source of cash?

(A) Long-term loans

(B) Short-term borrowings

(D) All of the above

Ans: (D) All of the above

6. The amount of total cost increased due to increase in additional single unit is called

(A) Average cost

(B) Marginal cost

(D) unit cost

Ans: (B) marginal cost

7. Current assets are also referred to as

(A) net working capital

(B) investments

(D) livestock

Ans: (A) net working capital

8. Carriage Inward is normally debited to

(A) Profit and Loss Account

(B) Manufacturing/Trading Account

(D)None of the above

Ans: (B) Manufacturing/Trading Account

9. The standard liquid ratio is

(A) 2:1

(B) 1:2

(D) 1:3

Ans: (C) 1:1

10. If the present value of cash inflows is greater than the present value of cash outflows, the project would be

(A) accepted

(B) rejected with condition

(D) rejected

Ans: (A) accepted

11. Finance functions are

(A) planning for funds

(B) raising of funds

(D) All of the above

Ans: (D) All of the above

12. The only feasible purpose of Financial Management is

(A) Wealth maximization

(B) Sales maximization

(D) Asset maximization

Ans: (A) Wealth maximization

13. Which one of the following accounting conventions stipulates that contingent assets appear as a footnote of the Balance Sheet?

(A) Materiality

(B) Consistency

(D) Prudence

Ans: (C) Disclosure

14. Which one of the following Balance Sheet equations is correct?

(A) Assets = Owner’s equity

(B) Assets – Liabilities = Owner’s equity

(D) Assets = Liabilities – Owner’s equity

Ans: (B) Assets – Liabilities = Owner’s equity

15. The overall rate of interest payable on various deposits is determined by the basis of directors of the

(A) Head Office of each bank

(B) Central Government

(D) Indian Banks Association

Ans: (C) RBI (Reserve Bank of India)

16. Preparation of Trial Balance helps mainly in

(A) Summarizing business transactions

(B) Verifying that GAAP has been observed

(D) Knowing the arithmetic accuracy of the transactions recorded

Ans: (D) Knowing the arithmetic accuracy of the transactions recorded

17. A and B are partners in a firm sharing profits and losses in the ratio 2:3. C a new partner is admitted for 1/4^th share. A and B old partners share Cs profit into their profit sharing ratio The new profit sharing ratio The new profit sharing ratio of A B and C would be:

(A) 1:1:1

(B) 2:3:4

(D) 6:9:5

Ans: (D) 6:9:5

18. Which one of the following is not a feature in the eye of law in sole proprietorship business?

(A) Undivided risk

(B) No government regulation

(D) Unlimited liability

Ans: (C) Separate entity of the firm

19. Dividend can be paid generally out of

(A) Share premium account

(B) Capital redemption reserve account

(D) All of the above

Ans: (C) Current year’s profit

20. Merchant Banker does not offer services in regard to

(A) Project appraisal

(B) Capital issue

(D) Subscription in equity shares

Ans: (A) Project appraisal

21. Which of the following four assets is an intangible asset?

(A) Advance salary

(B) Copyright

(D) Loose tools

Ans: (B) Copyright

22. The current ratio is 3:2 and the amount of current liabilities is Rs. 40,000. What is the amount of current assets?

(A) Rs. 60,000

(B) Rs. 70,000

(D) Rs. 1, 00,000

Ans: (A) Rs. 60,000

23. When audit is carried out during the accounting period with some interval, it is called:

(A) Periodic audit

(B) Partial audit

(D) Interim audit

Ans: (C) Continuous audit

24. Given the following data extracted from the books of accounts of AB Ltd

Opening Stock – Rs. 30,000

Closing Stock – Rs. 40,000

Purchases – Rs. 1, 25,000

Carriage Inward – Rs. 2,000

Carriage Outward – Rs. 3,000

Return Outward – Rs. 5,000

Sales – Rs. 1, 50,000

The cost of goods sold will be

(A) Rs. 1, 30,000

(B) Rs. 1, 12,000

(D) Rs. 1, 15,000

Ans: (B) Rs. 1, 12,000

[Hint: Cost of goods sold = opening stock + Net purchases + Direct Expenses – Closing Stock]

25. The Life Insurance Corporation of India (LICI) came into existence on

(A) September 1, 1956

(B) July 1, 1956

(D) January 1, 1956

Ans: (A) September 1, 1956

26. The open market operation in money market is an important tool of:

(A) Forex management

(B) Liquidity management

(D) Marketing management

Ans: (B) Liquidity management

27. Preliminary expenses may be written off against

(A) Capital loss

(B) Capital profit

(D) None of the above

Ans: (D) None of the above (Debited to profit and loss account)

28. Cost of products/services is pre-determined under

(A) Standard costing

(B) Historical costing

(D) None of the above

Ans: (A) Standard costing

29. Which is direct cost?

(A) Raw material consumed

(B) Salaries to Administrative Staff

(D) All of the above

Ans: (A) Raw material consumed

30. Preparation of Balance Sheet is an example of

(A) Analyzing

(B) Interpreting

(D) Summarizing

Ans: (D) Summarizing

31. External users of financial accounting information are basically interested in the

(A) Profitability of an enterprise

(B) Solvency of an enterprise

(D) Financial sustainability and (A) and (B)

Ans: (C) Both (A) and (B)

32. Which of the following statements is incorrect?

(A) Prudence is a concept to recognize revenue

(B) Accounting principles are general rules followed in preparation of financial statements

(D) Use of raw material for production should not be created as an event

Ans: (A) Prudence is a concept to recognize revenue

33. Which of the following assets cannot be treated as fixed assets?

(A) Capital work in progress

(B) Patents

(D) Inventories

Ans: (D) Inventories

34. Matching concept of accounting is a pre-requisite for determination of

(A) social responsibility

(B) tax liability

(D) manufacturing cost

Ans: (C) net profit

35. Which of the following accounts is treated as personal account?

(A) Prepaid Rent

(B) Capital Account

(D) All of the above

Ans: (D) All of the above

36. Which of the following expenditures cannot be treated as deferred revenue expenditure?

(A) Huge advertisement expenses paid for next 5 year

(B) Laboratory equipments acquired for research and development

(D) Purchase of a patent right

Ans: (D) Purchase of a patent right

37. Goods sold to Chandrika of Rs. 1, 00,000 is not recorded in any book. It is treated as an

(A) error of principle

(B) error of omission

(D) compensatory error

Ans: (B) error of omission

38. Which of the following is not a correct statement?

(A) Foreign Portfolio Investment (FPI) is usually unsustainable investment

(B) Foreign Direct Investment (FDI) is usually a short-term investment

(D) If an American buys shares of an Indian company. It is called FPI

Ans: (B) Foreign Direct Investment (FDI) is usually a short-term investment

39. Which is the most important branch of Commercial Law?

(A) Law and Practice

(B) Law and Tradition

(D) Law of Contract

Ans: (D) Law of Contract

40. A partnership deed usually contains the particulars relating to

(A) names of the firm and partners

(B) nature of business

(D) All of the above

Ans: (D) All of the above

41. If an initial investment is Rs. 10, 00,000 and annual cash inflows are Rs. 1, 00,000 p.a. for a period of 15 years what will be the payback period?

(A) 15 years

(B) 10 years

(D) 5 years

Ans: (B) 10 years

42. Which of the following is not capitalized along with the purchase price of a fixed asset acquired in 2019?

(A) Excise duty on the asset

(B) Delivery and handling cost

(D) Cost of installation

Ans: (C) GST

43. Which one of the following is correct with respect to going-concern convention?

(A) The enterprise is not going to terminate its operations in the period ahead

(B) The enterprise may go out of business in the next accounting period

(D) The enterprise may not revalue its assets during the current accounting period

Ans: (A) The enterprise is not going to terminate its operations in the period ahead

44. Match List-I with List-II and select the correct answer using the codes given below the Lists

	List –I		List – II
(a)	Goodwill	1.	Current liability
(b)	Overdraft	2.	Fixed asset
(c)	Preliminary expenses	3.	Reserves and surpluses
(d)	Premium on issue of shares	4.	Fictitious asset

Code:

(A) a b c d

2 1 4 3

(B) a b c d

1 2 4 3

1 2 3 4

(D) a b c d

2 1 3 4

Ans: (A) a b c d

2 1 4 3

45. The fund available with a company after paying all claims including tax and dividend is called

(A) net profit

(B) net operating profit

(D) retained earnings

Ans: (D) retained earnings

46. Commercial paper is

(A) long-term corporate security meant for small investors

(B) medium-term corporate security meant for institutional investors

(D) short-term corporate security meant for large-scale investors

Ans: (D) short-term corporate security meant for large-scale investors

47. Social responsibility of business assumes considerable importance towards

(A) owners and workers

(B) consumers and community

(D) All of the above

Ans: (D) All of the above

48. Which one of the following types of information a creditor would be interested to gather while reading annual reports of an enterprise?

(A) Profitability

(B) Liquidity

(D) Solvency

Ans: (B) Liquidity

49. Consider the following statements:

1. Closing Stock is valued on the basis of cost price or net realizable value whichever is lower

2. The manufactured goods in a year are transferred from the manufacturing Account to Trading Account at cost price.

3. The going concern concept assumes that a business will continue its operation indefinitely.

4. Revenue is not increased by taking loans although assets and liabilities are increased

Which of the above statements are correct?

(A) 1,3 and 4

(B) 1 and 2

(D) 1, 2 and 3

Ans: (C) 2 and 3

50. Given the following data

Opening Stock – Rs. 5.000

Closing Stock – Rs. 7,000

Purchases – Rs. 10,000

Manufacturing expenses – Rs. 20,000

Loss of materials due to fire – Rs. 1,000

The cost of production would be

(A) Rs. 28,000

(B) Rs. 29,000

(D) Rs. 30,000

Ans: (C) Rs. 27,000

51. While making an adjusting entry in respect of interest on capital we credit

(A) Capital Account/Current Account of the owner

(B) Profit and Loss Account

(D) Drawings Account

Ans: (A) Capital Account/Current Account of the owner

52. The loss on sale of old furniture is debited to

(A) Profit and Loss Account

(B) Furniture Account

(D) Depreciation Account

Ans: (A) Profit and Loss Account

53. A company can forfeit shares if the

(A) shareholder fails to pay the amount of the call within the stipulate time

(B) shareholder pays calls in advance

(D) shares have been issued at par

Ans: (A) shareholder fails to pay the amount of the call within the stipulate time

54. Consider the following statements: The current ratio would be reduced by

1. collection of book debts

2. payment of trade creditors

3. purchase of machinery for cash

4. cash deposited into bank

Which of the above statements are correct?

(A) 1 and 3

(B) 2 and 3

(D) 1, 3 and 4

Ans: (B) 2 and 3

55. The Memorandum of Association of a company shall be signed by

(A) Director

(B) Shareholder

(D) Promoter and Director

Ans: (C) Subscriber

56. A company purchased the following assets and paid through 1, 00,000 fully paid equity shares of Rs. 10 at a premium of Rs. 2:

Building – Rs. 5, 00,000

Machinery – Rs. 4, 00,000

Stock in Trade – Rs. 1, 00,000

In Funds Flow Statement, this transaction will result in

(A) Funds inflow of Rs. 10,00,000

(B) Funds outflow of Rs. 10,00,000

(D) Funds inflow of Rs. 9,00,000

Ans: (C) Funds inflow of Rs. 1,00,000

57. Under the actual concept. Which one of the following will not be shown as an asset/liability in the Balance Sheet of an entity?

(A) Interest due but not paid

(B) Interest due but not received

(D) Interest paid but not due

Ans: (A) Interest due but not paid

58. A company purchased 8% bonds at a cost of Rs. 12,00,000 face value Rs. 10,00,000 on January 1, 2018 Half yearly interest is payable on this investment on June 30^th and December 31^st every year. The company closes its accounts on 31.3.2018. The amount of accrued interest shown in the Profit and Loss Account for the year ended is

(A) Rs. 10,000

(B) Rs. 60,000

(D) Rs. 80,000

Ans: (C) Rs. 20,000

59. A machine with a WDV of Rs. 10,000 has been sold for Rs. 13,000. The amount of profit is a:

(A) capital receipt and profit involved should be transferred to capital reserve

(B) revenue receipt

(D) capital receipt and profit involved should be transferred to Profit and Loss Account

Ans: (D) capital receipt and profit involved should be transferred to Profit and Loss Account

60. Rs. 10,000 spent on the replacement worn-out parts of an electrical machinery is treated as

(A) capital expenditure

(B) revenue expenditure

(D) capital loss

Ans: (B) revenue expenditure

[Hint: The expenditure given in the question is revenue expenditure because Rs. 10,000 spent on the replacement of worn out parts of an electronic machinery does not increase its earning capacity rather it is a repairs and maintenance cost.]

61. Consider the following statements

A credit purchase during the accounting year which was not recorded in the book of accounts but included in the Closing Stock is to be

1. added to the Credit Purchases account

2. added to the Creditors Account

3. subtracted from the Closing Stock

4. added to the Opening Stock

Which of the statements given above is/are correct?

(A) 3 only

(B) 1 and 2

(D) 2,3, and 4

Ans: (B) 1 and 2

62. Secret reserves are created by means of

(A) transfer to general reserve

(B) providing excessive depreciation

(D) undervaluation of liabilities

Ans: (B) providing excessive depreciation

63. Which of the following is known as “Smart Money”?

(A) Amount deposited into post office savings bank account

(B) Amount deposited into savings bank account

(D) Cash in hand

Ans: (C) Credit card

64. The Government securities are not issued through

(A) auction

(B) contract

(D) private placement with the RBI

Ans: (D) private placement with the RBI

65. Profit prior to incorporation is transferred to

(A) general reserve

(B) capital reserve

(D) None of the above

Ans: (B) capital reserve

66. Dividends are usually paid on

(A) paid-up capital

(B) authorized capital

(D) subscribed capital

Ans: (A) paid-up capital

67. Sinking fund for the redemption at debenture is an instance of

(A) reserve

(B) provision

(D) reserve and surplus

Ans: (D) reserve and surplus

[Hint: A sinking fund for the replacement of a fixed asset is a provision. But a sinking fund for redemption of debentures or repayment of loan is an appropriation of profits.]

68. Audit Committee shall act in accordance with the terms of reference to be specified by the

(A) Statutory Auditors

(B) SEBI

(D) Central Government

Ans: (C) Non-Executive Directors in Audit Committee

69. When the sale increases from Rs. 40,000 to Rs. 60,000 and profit increases by Rs. 5,000; the P/V ratio is

(A) 20%

(B) 30%

(D) 40%

Ans: 25% [Hint: Change in profit/change in sales *100)

70. A company which has a margin of safety of Rs. 4,00,000 makes a profit of Rs. 80,000. Its fixed cost is Rs. 5,00,000 and its breakeven sales will be

(A) Rs. 20 lakh

(B) Rs. 30 lakh

(D) Rs. 40 lakh

Ans: (C) Rs. 25 lakh

[Pv ratio = profit/mos*100 = 20%; BEP = Fixed cost / pv ratio = 25 lacs]

71. Spent Rs. 20,000 as legal expenses for abuse of trademark. It is an example of

(A) capital expenditure

(B) revenue expenditure

(D) direct expenditure

Ans: (B) revenue expenditure

72. Which of the following statements is correct?

(A) The corporate governance is about ethical conduct only

(B) The corporate governance is beyond the realm of law

(D) All of the above

Ans: (D) All of the above

73. Which of the following is a correct statement?

(A) GST is subsuming many indirect taxes already level in India earlier

(B) In India excise duty and service tax are level in the Central Government/ State Government

(D) All of the above

Ans: (D) All of the above

74. In India FDI is prohibited in

(A) lottery business

(B) gambling and betting

(D) All of the above

Ans: (D) All of the above

75. Balance of payments can be favorable if

(A) exports are increased

(B) imports are increased

(D) foreign portfolio investment increases

Ans: (A) exports are increased

76. Macro economics deals with

(A) growth of an economy

(B) total consumption

(D) All of the above

Ans: (D) All of the above

77. Breakeven point is that point where

(A) Total revenue = Total cost

(B) Total revenue = Fixed cost + variable cost

(D) None of the above

Ans: (A) Total revenue = Total cost

78. Life insurance is a

(A) social security measure

(B) safety measure

(D) self-actualisation measure

Ans: (A) social security measure

79. Questions Missing

80.

81.

82.

83.

84.

85.

86.

87. The distinctive characteristic of perpetual succession of a joint-stock company refers to

(A) uninterrupted business in spite of continuous losses

(B) immunity from government direction for the closure of the company

(D) Uninterrupted existence not affected by the death or insolvency of members of the company

Ans: (D) Uninterrupted existence not affected by the death or insolvency of members of the company

88. Which of the following method does not consider time value of money?

(A) Net present value

(B) Internal rate of return

(D) Sum of the present values

Ans: (C) Average rate of return

89. Which of the following can be crossed?

(A) Bill of exchange

(B) Promissory note

(D) All of the above

Ans: (C) Cheque

90. Subscription received in advance during the current year is

(A) an income

(B) an asset

(D) None of the above

Ans: (C) a liability

91. Share Allotment Account is

(A) Expenses Account

(B) Liability Account

(D) Income Account

Ans: (B) Liability Account

92. Premium on issue of shares can be used for

(A) issue of fully paid bonus shares

(B) distribution of profit

(D) None of the above

Ans: (A) issue of fully paid bonus shares

93. A company has issued 10,000 equity shares of Rs. 10 each on which full call has been made. All the money was duly received with the exception of Final call @ Rs. 1 on 500 equity shares. These 500 equity shares will be shown as:

(A) Subscribed and fully paid up

(B) Subscribe but not fully paid up

(D) None of the above

Ans: (B) Subscribe but not fully paid up

94. Debenture holders are

(A) owners of the company

(B) lenders of the company

(D) customers of the company

Ans: (B) lenders of the company

95. Discount or loss on issue of Debentures to be written off after 12 months from the date of Balance Sheet, after the period of operating cycle, is shown as

(A) other current assets

(B) other non-current assets

(D) other current liabilities

Ans: (B) other non-current assets

96. Cash Flow Statement is based upon

(A) accrual basis accounting

(B) cash basis accounting

(D) None of the above

Ans: (B) cash basis accounting

97. Interest received by other than financial enterprise is shown in Cash Flow statement under

(A) operating activities

(B) investing activities

(D) extraordinary activities

Ans: (A) operating activities

98. An example of an activity which is classified as financing activity in case of all enterprises is:

(A) payment of salaries

(B) payment of dividend on shares

(D) payment of interest on borrowings

Ans: (B) payment of dividend on shares

99. Which of the following statements is true about a Balance Sheet?

(A) It is called a statement of condition

(B) It shows the financial position for a period of time

(D) It determines the profit/loss at a point in time

Ans: (C) It shows the financial position at a point in time

100. Assuming a period of inflation which method of inventory valuation would be matching to the cost of goods sold?

(A) LIFO

(B) FIFO

(D) Weighted average

Ans: (A) LIFO

***

M.Com Entrance Test Solved Question Paper' 2019 [Dibrugarh University MCOM Regular Entrance Test]