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BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
COMMON PROFICIENCY TEST
Model Test Paper – BOS/CPT – 16
Time : 4 hours
Maximum Marks : 200
The test is divided into four sections
...
An increase in owner’s capital is recorded by:
(a)
(c)
2
...
(b) State Govt
...
(b) Lenders
(d) All the above
Cost of advertisement for the products of a company is a_________
(a)
(c)
5
...
(b) Crediting the capital account
...
Users of accounting information include
(a)
(c)
3
...
Crediting the cash account
...
rent account
person, trade receivables or trade payables
...
Debit the receiver, Credit the giver
None of the above
...
The accounting policies once adopted are not changed unless there is an urgent need for
such change is based on
(a)
(c)
8
...
Purchase Return book
Purchase book
(b)
(d)
Bill receivable book
Journal Proper
Balance Sheet
Trading Account
(b)
(d)
Profit & Loss Account
Manufacturing account
...
(b)
(d)
In case of Debit Balance the words __________ are written on the debit side
...
Cattle, loose tools etc
...
Credit balance
Both Debit and Credit balance
Unpaid salary of Rs
...
(b)
(d)
While preparing the trial balance from the ledger balances, the drawings account is placed in:
(a)
(c)
12
...
2000 passed through the sales book
...
Accrual concept
Conservation
Depletion method of depreciation is used in _____
(a)
(c)
10
...
Money measurement concept
Consistency
Trading account
Balance sheet
(b)
(d)
Profit & Loss account
None of the three
Amount spent for replacement of worn out part of machine is:
(a)
(b)
(c)
(d)
Deferred Revenue expenditure
Revenue expenditure
Capital expenditure
None of the above
...
_________ is not added in the total of Balance sheet
...
(b)
(d)
Capital
None of the three
Short period
Very short period
(b)
(d)
Long period
None of the three
Account sales
Account statement
(b)
(d)
Summary Statement
Statement of affairs
...
25,00,000 and sold 80% of such goods during
the accounting year ended 31st March, 2009
...
4,00,000
...
He violated the concept of:
(a)
(c)
23
...
250,000 to Mohan on 1st Jan 2006 by incurring Rs
...
Some goods were lost in transit
...
15,000 to
take the delivery including storage charges
...
3,00,000 and charged commission @ 10% on it
...
As desired, agent sent the periodical
details statement commonly known as:
(a)
(c)
22
...
(a)
(c)
21
...
(a)
(c)
20
...
Fixed liability
Contingent liability
Money measurement
Cost
(b)
(d)
Conservatism
Periodicity
An item of Rs
...
The
rectifying journal entry will be:
(a)
(b)
(c)
(d)
Rent A/c Dr
To Cash
Prepaid rent A/c Dr
...
To suspense
None of the three
500
500
500
500
500
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
500
429
MODEL TEST PAPER - 16
24
...
50,000
1,30,000
5,000
10,000
Rs
...
180,000
(b)
(d)
Rs
...
178,000
An asset is purchased for Rs
...
Useful life of the asset is 10 years and the residual value is Rs
...
Rate of depreciation will be ______
(a)
(c)
10%
12%
26
...
Opening inventory
Closing inventory
Purchase return
Sales return
5,570
8,880
390
524
Rs
...
(b)
(d)
Dr Salary and Cr Purchases A/c
Dr Mohan and Cr purchases
Dr Salary and Cr Purchases
None of the above
Rs
...
10,000
Rs
...
Rs
...
4,000
Inventory worth Rs
...
7,500) taken by Mohan office clerk
...
Journal entry will be
(a)
(b)
(c)
(d)
28
...
3,000
Rs
...
55,000
...
6,000
Rs
...
5,000
None of the above
...
Capital introduced by Mr
...
04
...
300,000, further capital introduced during
the year was Rs
...
Mr
...
2,000 on the first day
of each month
...
Profit earned during the year was
Rs
...
Capital at the end of the financial year will be __________
(a)
(c)
31
...
11,500
Rs
...
7,500
Nil
Rs
...
9,000
(b)
(d)
Rs
...
8,500
Mohan and Krishna are equal partners
...
New profit sharing ratio will be __________
(a)
(c)
35
...
To Sales return
Sales return of Dr
...
135,000
Residual value
Rs
...
Company charged depreciation for the first 5 years on straight line method
...
In the 6 th year
amount of depreciation will be __________
(a)
(c)
34
...
3,95,000
None of the three
A purchased goods costing Rs
...
B sold goods costing Rs
...
50,000
...
4,000
...
(b)
(d)
A cheque of Rs
...
Rectifying Journal entry will be ____________
(a)
32
...
3,45,350
Rs
...
Expenses incurred by the consignor on sending goods to consignee are Rs
...
1500 on freight and Rs
...
300 on Octroi, Rs
...
1000 selling
expenses
...
1,800
Rs
...
2,100
Rs
...
A, B and C are partners sharing profits in the ratio of 4:3:2
...
A and C decide to
share profits in future in the ratio of 5:3
...
Rs
...
60
Rs
...
10,000
(b)
(d)
Rs
...
11,000
Sales account
Charity account
(b)
(d)
Purchases account
None of the three
Rs
...
10,000
(b)
(d)
Rs
...
(b)
(d)
A company issued Rs
...
Loss on issue of debentures will be:
(a)
(c)
41
...
150
Rs
...
500 given as charity should be credited to
(a)
(c)
40
...
25 per article sold plus one fourth of the
amount by which gross sale proceeds less his total commission thereon exceeded a sum at
the rate of Rs
...
He sold 450 articles at Rs
...
Commission amount
will be____
(a)
(c)
39
...
forfeited 20 shares of Rs
...
60 called up) issued at par to Ram
on which he had paid Rs
...
All the forfeited shares were reissued to Syam as
Rs
...
45 per share
...
(a)
(c)
38
...
Alok Ltd
...
10 each fully called up held by Ram for non payment
of allotment money of Rs
...
4 per share
...
2000
...
200
Rs
...
250
None of the three
Common Proficiency Test (CPT) Volume - I
43
...
100,000 at discount of 6% on Jan
2009
...
20,000 made on 31st
December each year
...
Discount written off in the fifth year will be _______
(a)
(c)
44
...
A and B are partners
...
10,000 and B’s capital is Rs
...
a
...
300 per month
...
8,000
...
Rs
...
(b)
(d)
A, B and C are partners sharing profits in the ratio of 4:3:2 D is admitted for 1/3rd share in
future profits
...
Rs
...
600
A Rs
...
1720
A Rs
...
2000
(b)
(d)
A Rs
...
1,440
None of the three
A, B and C entered into partnership on 1st April, 2009 to share profits and losses in the ratio
of 4:3:3
...
a
...
40,000 in any year
...
A Rs
...
200,000
C Rs
...
160,000
...
(b)
(d)
Rs
...
C is admitted as a partner
...
Sacrificing ratio will be _______
(a)
(c)
49
...
1,750
Rs
...
A company issues 50,000 equity shares of Rs
...
20
(b)
On Allotment Rs
...
25
(d)
On Final Call Rs
...
Her shares were forfeited
...
6,000
Rs
...
6,500
None of the above
...
A, B and C are equal partners with capitals of Rs
...
75,000 and Rs
...
On C’s retirement his share is acquired by A and B in the ratio of 6:4 respectively
...
(b)
(d)
Rs
...
Rs
...
15,000
(b)
(d)
Rs
...
Rs
...
40,000
(b)
(d)
Rs
...
18,000
Rs
...
18,400
None of the above
...
5,000 is to be exchanged for a new machinery
of Rs
...
The old machinery has been valued at Rs
...
Loss on
exchange will be _________
(a)
(c)
57
...
4,150
Rs
...
8,000; at 10%on Plant and Machinery of
Rs
...
2,00,000
...
Capital Accounts
None of the three
A started business with Rs
...
2,000 furniture
...
50,000 including Rs
...
Rs
...
Cash balance will be ___________
(a)
(c)
55
...
The firm earned profit during the first 3 years as Rs
...
2,000 and 5,000 in last 2 years
...
Revaluation A/c
Realisation A/c
Dr
...
3000
...
500, Interest collected by Bank Rs
...
250
...
(b)2:2
(d)None of the above
On admission of a partner, unrecorded investments worth Rs
...
1500 will be recorded in
(a)
(c)
52
...
4,000
Rs
...
4,200
NIL
Goods of Rs
...
The profit included in the sales was 20% on cost
...
600
Rs
...
500
None of the three
Common Proficiency Test (CPT) Volume - I
58
...
(b)
(d)
Error of omission
All of the above
...
700 received from Hariram in settlement of a debt of Rs
...
Entry for dishonour will be _______
(a)
(b)
(c)
(d)
60
...
Dr
...
Dr
...
720
700
20
Paid rent to landlord Rs
...
2,004
...
2400
Dr
...
2400
2004
396
SECTION – B : MERCANTILE LAWS (40 MARKS)
61
...
(b)
(d)
Hire purchase
Auction sale
Which of the following modes of delivery of goods is considered effective for a valid contract
of sale
(a)
(c)
63
...
The Right of Lien means:
(a)
(b)
(c)
(d)
65
...
(b)
(d)
Suit for specific performance
All of these
Resell goods
Not resell goods
Resell after giving notice to the buyer
Resell goods without giving notice to the buyer
Special Contract Law
Company Law
Mercantile Law
Business Law
Chapter XI of the Indian Contract Act
Indian Partnership Act, 1932
Indian Partnership Act, 1934
Companies Act, 1956
Association of persons formed with the object to promote some beneficial purposes, is
called as(a)
(c)
71
...
Only for the expenses
All of these
The Indian Partnership Act is one of the branches of _____
(a)
(b)
(c)
(d)
69
...
Only for the price
Either for the price and expenses
In case of breach of contract by the seller, the buyer has rights:
(a)
(c)
67
...
In a Joint Hindu family business:
(a)
(b)
(c)
(d)
73
...
(b)
(c)
(d)
(b)
(c)
(d)
He has a right to share of the property and profits of the firm as may have been agreed
upon
...
With consent of all other partners
With the consent of main partner
With the consent of sleeping partner
No consent of any partner
An agreement to share earnings of smuggling business is:
(a)
(c)
78
...
(b)
(d)
Which is not true regarding the rights of a minor partner:
(a)
76
...
A male member becomes a member by his birth
A female does not become its member by birth
A male member becomes a member by the permission of Karta
A male becomes member by operation of law
He has ratified the contract
The third party has acquired right in good faith
Contract is not separable
All of these
Standing offer means:
(a)
(b)
Offer allowed to remain open
Offer made to public in general
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
437
MODEL TEST PAPER - 16
(c)
(d)
80
...
O
...
Contracts, F
...
B
...
Acquires no better title to the goods than the seller had
Acquires same title of the goods as the owner had
No title of goods
None of these
Only claim damages
Treat the contract as repudiated
Treat the Contract illegal
All of these
File a suit for damages for non delivery of goods
File suit for specific performance
File suit for injunction
All of these
existing goods
specific goods
(b)
(d)
future goods
contingent goods
Concurrent conditions
Mutual conditions
(b)
(d)
Principal conditions
All of these
A contract of sale involves transfer of __________
(a)
(c)
88
...
(b)
(d)
Only __________ can be subject matter of a sale
(a)
(c)
86
...
Free on Board
Free on Bill of Lading
If there is breach of warranty, the aggrieved party can ________
(a)
(b)
(c)
(d)
84
...
Free on Bill
Free on Boarded Ship
In case the goods are destroyed or damaged or lost by accident, the loss will fall on ____
(a)
(c)
82
...
The unpaid seller may exercise his right of stoppage in transit __________
(a)
(b)
(c)
(d)
90
...
Actual seller
Any person who is in a position of seller
Consignor of goods
All of these
The seller of goods is deemed to be an unpaid seller _________
(a)
(b)
(c)
(d)
94
...
When the goods are delivered to a carrier
When the goods are delivered to a bailee
When seller waives his right of lien
All of these
The transit comes to an end
(a)
(b)
(c)
(d)
92
...
Secondary to the main purpose of contract of sale
None of these
Where the goods are of perishable nature
When the seller expressly reserves a right of resale
After giving reasonable notice
All of these
C
...
F
...
Partnership is the relation
(a)
(b)
(c)
(d)
97
...
(b)
(d)
Permanent incapabity of a partner
Retirement of a partner
The good will must be included in the assets
The good will must not be included in the assets
The good will should be separated before settlement
The goodwill should be distributed among all the partners
A invited B to a Birthday party
...
500 as a present on his
birthday
...
What are remedies for A (a)
(b)
(c)
(d)
100
...
Between persons
Between firms
Among numberless persons who have agreed to share the profits of a business carried on
by them
Established by way of land of agency
...
500
A can file a suit for breaking the promise
A cannot file a suit for breaking the promise
...
10,000 but the debt is barred by the limitation Act
...
5000 on account of the debt
...
10,000 is a valid contract
SECTION – C : GENERAL ECONOMICS (50 MARKS)
101
...
Economics is a science of wealth – Alfred Marshall
“The range of our enquiry becomes restricted to that part of social welfare that can be
brought directly or indirectly into relation with measuring Rod of money”
...
“Economics is the Science which studies human behaviour as a relationship between ends
and scares means which have alternative uses
...
– A
...
Pigou
Which of the following falls under Micro Economics ?
(a)
(c)
National Income
Factor Pricing
440
© The Institute of Chartered Accountants of India
(b)
(d)
General Price level
National Saving and Investment
Common Proficiency Test (CPT) Volume - I
103
...
Policy relating to non-banking financial institution
Policy relating to public revenue and public expenditure
Policy relating to money and banking in a country
All of the above
...
M2
M4
If a point on a demand curve of any commodity lies on X Axis then price elasticity of demand
of that commodity at that point will be : __________
(a)
(c)
109
...
M1
M3
W
...
O
...
Collection of data
Perception of the problem
Monetary policy means:
(a)
(b)
(c)
(d)
106
...
Testing of Hypothesis
Classification of data
Indian tax structure relies on a very narrow population base
Direct taxes are differential, indirect taxes are progressive in nature
The ratio of Direct taxes to indirect taxes which was 40:60 in 1951 declined to 20:80 in
1991
The total tax revenue is highly insufficient to meet the expenditure requirement of the
economy
Which of the following statements about Central Bank is incorrect?
(a)
(b)
(c)
(d)
Central bank regulates currency in accordance with the requirements of business and the
general public
Central banks performs general banking and agency service for the state
Central bank generally deals with the public and tries to encourage saving habits among
people
None of the above
...
Structural unemployment results due to:
(a)
(b)
(c)
(d)
112
...
Elasticity of supply is perfectly inelastic
Elasticity of supply is relatively greater-elastic
Elasticity of supply is inelastic
Elasticity of supply is relatively less-elastic
One characteristic not typical of oligopolistic industry is:
(a)
(b)
(c)
(d)
116
...
The magnitude of under-utilisation varies from 20% to 60% in different industrial sectors
The average under-utilization being in the region of 40% to 50%
Over optimistic demand projection is one of the factors responsible for under utilization
in industries
All of the above
Marginal cost is defined as
(a)
(b)
(c)
(d)
114
...
A change caused by a decline in demand for production in particular industry and consequent
disinvestments and reduction in its manpower requirement
Too much importance to non-price competition
Price leadership
Horizontal demand curve
A small number of firms in the industry
Which of the following statements is incorrect about the benefits of value added tax?
(a)
(b)
(c)
(d)
Overall tax burden will be rationalized
There is a provision of self-assessment
Price will in general fall
There will be less transparency
442
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
117
...
(a)
(c)
118
...
Add, subtract
Subtract, add
According to 1991 the sex ratio (females per 1000 males) was _________
(a)
(c)
124
...
(a)
(c)
123
...
(a)
(c)
122
...
, 2014) is _______ and SLR is ________ for entire net demand and
time liabilities of the scheduled commercial banks
...
Positive
Zero, positive or negative
If NNP figure is available at market prices we will ________ indirect taxes and ________
subsidies to the figure to get National Income of the economy
...
(b)
(d)
The cost of tax collection has increased from Rs
...
(a)
(c)
119
...
(a)
(b)
(c)
(d)
Regional Rural Banks
Reserve Bank of India
National Bank for Agriculture and Rural Development
Co-operative Banks
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
443
MODEL TEST PAPER - 16
126
...
(a)
(c)
127
...
(a)
(c)
132
...
28
16
...
60
70
Nehru Rozgar Yojana, Urban Basic Services Programmes were merged with ___________
(a)
(c)
129
...
40
49
Prices, demand
Demand supply
(b)
(d)
Profits supply
Supply, demand
At present, the responsibility for the provision of finance for Agriculture, Trade and small
industries has been handed over to:
(a)
(c)
SBI
NABARD, SIDBI
(b)
(d)
NABARD
NABARD, EXIM and SIDBI
Figure given below gives the PPC for producing two types of commodities X and Y
...
Which point in the above figure shows that the two commodities cannot be produced
with given technology?
(a)
(c)
134
...
S
None of the above
Which point or points in above figure show that outputs are being produced at least cost
combination of resources?
(a)
(c)
136
...
P
Q
It refers to the disposal of private sector’s equity in the market
It refers to the transfer of assets from public to private sector ownership
It means integrating the domestic economy with the world economy
None of the above
Which of the following is false about disinvestments?
(a)
(b)
(c)
(d)
As a result, the total realization of the government from various rounds of disinvestments
has been much below the target
The disinvestments was started in 1991-92
Adequate efforts were not made to build up the much needed linkages between the public
enterprises and the capital market
None of the above
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
445
MODEL TEST PAPER - 16
A competitive firm sells as much as of its product it chooses at a market price of Rs
...
Its fixed cost is Rs
...
Use table 1 to answer questions 138-141
...
1
Qty
...
When production is 35 units, the average variable cost is: __________
(a)
(c)
139
...
72
...
85
...
3
...
450
(b)
(d)
Rs
...
370
To maximize output, the firm should produce
(a)
(c)
141
...
Rs
...
25
Rs
...
57
30
45
(b)
(d)
35
50
If the market price drops from Rs
...
74, the firm short run response should be:
__________
(a)
(b)
(c)
(d)
Continue to produce the same number of units as before the drop in price
Produce 10 units
Produce 20 units
Produce 25 units
446
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Read the following data and answer Questions Number 142-147
XYZ are three commodities where X and Y are complements whereas X and Z are substitutes
...
40 per piece
...
After some time he decreases the price of X to Rs
...
Following the price
decrease :
He is able to sell 150 pieces of X per month
The demand for Y increases from 25 units to 50 units
The demand for commodity Z decreases from 150 to 75 units
...
The price elasticity of demand when the price of X decreases from Rs
...
20
per piece will be equal to:
(a)
(c)
143
...
5
–0
...
6
+1
Demand is unit elastic
Demand is perfectly elastic
(b)
(d)
Demand is highly elastic
Demand is inelastic
0
...
25
(b)
(d)
0
...
35
We can say that commodity X in economics is a/an
(a)
(c)
148
...
What is income elasticity of demand for commodity X?
(a)
(c)
147
...
5
What can be said about price elasticity of demand for X?
(a)
(c)
146
...
0
0
...
(b)
(d)
The cross elasticity of monthly demand for Y when the price of X decrease from Rs
...
20 is equal to:
(a)
(c)
144
...
5
1
...
1,50,000
...
55,000 and normal profit is Rs
...
95,000
Rs
...
1,25,000
Rs
...
3 to Answer Questions 149 – 150
Unit of Labour
—
—
1
500
500
2
—
430
3
1290
—
What is the total output when 2 units of labour are employed?
(a)
(c)
150
...
Total Output
690
830
(b)
(d)
930
680
What is the marginal output of the third unit of labour?
(a)
(c)
390
370
(b)
(d)
380
360
SECTION – D : QUANTITATIVE APTITUDE (50 MARKS)
151
...
(a)
(c)
152
...
M
...
M
...
A finite set
As null set
For open end classification, which of the following is the best measure of central tendency?
(a)
(c)
155
...
(b)
(d)
The set of cubes of the natural number is
(a)
(c)
153
...
0
2
...
0
None of these
Common Proficiency Test (CPT) Volume - I
157
...
lim
x 0
(a)
(c)
164
...
nth term
(a)
(c)
165
...
M
...
(b)
(d)
The value of log 6 216 6 is equal to
(a)
(c)
162
...
M
...
Poisson distribution
None of these
To find coefficient of correlation by scatter diagram method is not suitable, if the number of
observations is very large
(a)
(c)
160
...
Binomial distribution
Probability distribution
4
5
(b)
(d)
3
11
The score of 10 students in a test with maximum marks 50 were as follows 28, 36, 34, 28, 48,
22, 35, 27, 19, 41, then variance is equal to _____________
(a)
(c)
69
...
61
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(b)
(d)
59
...
61
449
MODEL TEST PAPER - 16
166
...
A disc is drawn from the bag
...
(a)
(c)
7,864
...
32
(b)
(d)
7,684
...
32
Poisson distribution
Probability distribution
(b)
(d)
Binomial distribution
None of these
10
9
...
5
{
}
x 2 – 2x – 3
,
x+1
for x – 1 ; The value of f ( – 1) is
1
-4
(b)
(d)
–1
None of these
(b)
(d)
3x-2
None of these
(b)
2
(d)
0
d
(x -1)(x - 2) is equal to
dx
(a)
(c)
173
...
(b)
(d)
The median of the following items, 6, 10, 4, 3, 9 11, 22, 18 is ______________
(a)
(c)
171
...
(a)
(c)
170
...
24,000
...
(b)
(d)
7 distinct things are to be divided in 3 groups, consisting of 2, 2 and 3 things respectively,
number of ways this can be done is equal to ___________
(a)
(c)
168
...
If ratio of second to seventh terms in an A
...
, where first term is –7 is 1/7
...
(a)
(c)
175
...
1
, then value of f(x) – f (1/x) is equal to
x3
(b)
1
x3
1
(d)
None of these
2x + 2y – 3 = 0
y– x + 4 = 0
(b)
(d)
x–y+3=0
None of these
2:3
2:1
(b)3:2
(d)1:2
dx
x x is equal to
2 log (1+ x ) + K
log + K
(b)
(d)
log (1+) + K
None of these
Find the sum of first twenty five terms of A
...
series whose nth term is
...
120
34,600
In a group of persons, average weight is 60 kg
...
(a)
(c)
179
...
Find the
equation of diagonal AC
...
(b)
(d)
0
(c)
177
...
(a)
(c)
176
...
76
...
Find the sum
...
5,000
Rs
...
8,000
Rs
...
A bag contains Rs
...
Find the number of each type of coins?
(a)
(c)
183
...
00
3,662
...
4,725
...
3,266
...
585
0
...
885
None of these
The marks obtained by 10 students in an examinations were as follows:
70, 65, 68, 70, 75, 73, 80, 70, 83, 86
...
False
None of these
3% of a given lot of manufactured parts are defective, what is the probability that in a
sample of 4 items none will be defective
...
(b)
(d)
Out of numbers 1 to 120, one is related at random, what is the probability that it is divisible
by 8 or 10
...
True
Both
Find the present value of an ordinary annuity of 8 quarterly payments of Rs
...
a
...
(a)
(c)
186
...
Find the numbers
...
(b)
(d)
The relation ‘Is a factor of’ is the set of integers is symmetric relation
...
30, 40, 50
60, 80, 100
5
...
5
(b)
(d)
5
...
6
For a set of 100 observations, taking assumed mean as 4, the sum of the deviations is –
11 cm and the sum of squares of these deviations is 257 cm2
...
13%
25
...
13%
52
...
The coefficient of rank correlation of marks obtained by 10 students in English and
Economics was found to be 0
...
Find correct
coefficient of rank correlation
...
27
9
(b)
(d)
6
None of these
0
...
212
(b)
(d)
0
...
100
200
If 2x + 5y – 9=0 and 3x-y-5=0 are two regression equation, then find the value of mean of x
and mean of y
...
(b)
(d)
How many numbers greater than 2000 can be formed with the digits 1, 2,3,4,5?
(a)
(c)
195
...
What is the estimates of the proportion of defective articles in the entire batch
...
0
...
Find all possible number of samples of size two
with replacement
...
(b)
(d)
The mean of normal distribution is 500 and 16% of the values are greater than 600
...
D
...
(a)
(c)
192
...
514
0
...
If 3 times of Ramesh’s age 6 years ago be subtracted from twice his present age, the
result would be equal to his present age
...
(b)
(d)
9
8
The sum and product of the equation 3x2 – 2x – 6 = 0 are
(a)
(c)
200
...
3q
...
...
SECTION – A : FUNDAMENTALS OF ACCOUNTING (60 MARKS)
1
...
(b)
(d)
Deferred revenue expenditure
None of the above
Credited to Bad Debt recovered A/c
Debited to Profit and Loss A/c
Credited to Trade Receivables A/c
None of the above
Sales Return Account
Journal proper
(b)
(d)
Cash Book
None of the above
(b)
(d)
Nominal A/c
Both (a) and (b)
Bills payable is ______
(a)
(c)
6
...
Measurement
Ledger posting
Debts written off as bad if recovered subsequently are
(a)
(b)
(c)
(d)
4
...
25,000 incurred on structural alterations to existing asset whereby its revenue earning
capacity is increased is _______
(a)
(c)
3
...
Sales return book records _______
(a)
(c)
8
...
(b)
Inflow of assets or decrease of liabilities
...
Outflow of assets or incurrence of liabilities
...
Technical know-how
...
Location of customers
...
(a)
(c)
15
...
(b)
(d)
Income is reflected in the form of –
(a)
(c)
13
...
No
...
No
...
Present value of Re 1 for number of years at specified rate is multiplied with super profit
of the year
...
Parties to Bill of Exchange are:
(a)
(c)
11
...
(b)
(d)
For calculation of goodwill as per Average profit method:
(a)
(b)
(c)
9
...
The term “Sales” includes the sales of fixed assets for cash as well as on credit
...
The term “Closing inventory” means the goods lying unsold at the beginning of current
accounting period
...
A, B & C entered into a partnership sharing profits & losses at the ratio of 5:3:2
...
General reserve
balance was Rs 10,000
...
Depreciation on machinery in trial balance is recorded in ____________
(a)
(c)
Trading A/c
Balance Sheet
(b)
(d)
Profit & Loss A/c
None of the three
18
...
2,500 received for loss of inventory by fire has been deposited by
proprietor into his private bank account and has not recorded in the business book
...
2,500
To Insurance company A/c
2,500
(b)
Insurance company A/c
Dr
...
2,500
To Insurance company A/c
2,500
(d)
Drawings A/c
Dr
...
Fixed capital A/c is credited with _______
(a)
(c)
20
...
Capital
Gain
(b)
(d)
Expense
None of the three
Ramesh, the acceptor of the bill has to honour a bill on 31st March 2010
...
20,000
...
Ram agrees to extend the
credit period by drawing a new bill for Rs
...
1000 in cash
...
20,000 will be considered as:
(a)
(c)
22
...
Interest on capital
Salary of the partner
Discounted
Cancelled
(b)
(d)
Dishonoured
Retired
M/s Kapoor Bros, which was registered in the year 2000, has been following straight line
method (SLM) of depreciation
...
200 lakhs as a result of which the firm would qualify to be declared as
a sick industrial unit
...
Common Proficiency Test (CPT) Volume - I
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457
MODEL TEST PAPER - 17
Auditors objection is justified because (a)
(b)
(c)
23
...
Depreciation method can be changed only from WDV to SLM and not Vice Versa
...
(d)
Method of depreciation cannot be changed under any circumstances
...
5,000 useful life of the plant is 10 years and residual
value is Rs
...
Rate of depreciation will be ____
(a)
(c)
24
...
26
...
9%
15%
Gross Profit
Carriage Outwards
Rent paid
Bad Debts
Apprentice premium (Cr
...
51,000
5,800
6,400
2,600
1,500
1,000
10%
12½%
(a)
Rs
...
36,700
(c)
Rs
...
40,000
A started business with Rs
...
2,000 furniture
...
50,000 including Rs
...
Rs
...
Purchases amounted to Rs
...
10,000 cash purchase
...
15,000
has been paid to suppliers
...
19,300
...
6,000
(b)
Rs
...
5,700
(d)
Rs
...
50,000
...
2,000 on the
first day of each month interest on drawings is provided @ 10%
...
1,300
(b)
Rs
...
1,500
(d)
Rs
...
500 passed through B/P book
...
To B/P
B/R A/c
Dr
...
B/R A/c
Dr
...
458
© The Institute of Chartered Accountants of India
Rs
...
500
500
500
500
500
1000
Common Proficiency Test (CPT) Volume - I
28
...
7,500 were sold at 25% profit on selling price
...
Rs
...
8,000
Rs
...
(b)
(d)
3,00,000
6,000
4,10,000
10,000
80,000
12,000
4,000
8,000
60,000
Rs
...
62,000
(b)
(d)
Rs
...
65,000
Trial Balance containing obvious errors is given below:
Dr
...
)
Purchases
60,000
Reserve Fund
Cr
...
)
20,000
Sales
1,00,000
Purchase return
1,000
Sales Return
Opening Inventory
2,000
30,000
Closing Inventory
40,000
Sundry Expenses
20,000
Outstanding Expenses
2,000
Cash at Bank
5,000
Fixed Assets
50,000
Trade receivables
80,000
Trade payables
30,000
Capital
94,000
Suspense A/c
10,000
2,72,000
Common Proficiency Test (CPT) Volume - I
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2,72,000
459
MODEL TEST PAPER - 17
Total of corrected trial balance will be ________
(a)
(c)
31
...
2,000
Rs
...
Closing Inventory
40,000
Drawings
12,000
Net Profit
18,000
Capital
70,000
Debtors
40,000
Cash at Bank
8,000
Balance sheet total will be:
(a)
Rs
...
1,20,000
34
...
2,47,000
Rs
...
2,100
Rs
...
Y followed WDV Method and SLM Method of Depreciation during 2006 and
2007 respectively
...
(b)
(d)
Bank overdraft as per Cash book is
Rs
...
1000
Cheque issued but not cashed
Rs
...
Rs
...
2,50,000
(b)
(d)
Materiality Principle
Consistency Principle
statement
Cash
Bills receivable
Bills payable
Machinery
Depreciation provision
Liabilities for expenses
Creditors
(b)
(d)
Rs
...
1,15,000
Rs
...
The cost of each
machine is Rs
...
Panna Lal spends Rs
...
Ram Ji Lal receives
the consignment and informed that 90 machines have been sold at Rs
...
Expenses
paid by Ram Ji Lal are freight Rs
...
200, Godown rent Rs
...
150
...
Profit on
consignment will be:
(a)
(c)
Rs
...
200
(b)
(d)
Rs
...
160
35
...
4500
...
307 as
forwarding charges
...
Bhawna
sold 1,350 Kg of flour at Rs
...
Her selling expenses being Rs
...
Valuation of closing inventory will be ________
460
Common Proficiency Test (CPT) Volume - I
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(a)
(c)
36
...
250
Rs
...
forfeited 40 shares of 100 each (Rs
...
20 per share
...
60 paid up for Rs
...
Amount transferred to capital reserve will be ________
(a)
(c)
38
...
Rs
...
350
Rs
...
200
(b)
(d)
Rs
...
120
The following information pertains to Quick Ltd
...
10,00,000
40,000
25,000
5%
Equity share capital called up
Calls in arrear
Calls in advance
Proposed dividend
The amount of dividend payable is ________
(a)
(c)
39
...
300
Rs
...
200
Rs
...
20,000 on 1st January 2006 and followed the
diminishing balance method @ 15%
...
3000 per year from the very
beginning and the necessary amount of unabsorbed depreciation of 2006 to 2008 to be
adjusted in 2009
...
Rs
...
49,250
Ram Ltd
...
10 each @ Rs
...
2 originally
paid up)
...
(b)
(d)
Which of the following is fixed asset?
(a)
(c)
40
...
48,000
Rs
...
1,282
Rs
...
1,300
Rs
...
had a provision for bad debts of Rs
...
During
2009-2010 Rs
...
1,95,000 before writing off
Common Proficiency Test (CPT) Volume - I
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461
MODEL TEST PAPER - 17
bad debts
...
Rs
...
5,332
(b)
(d)
Rs
...
5,000
Following figures have been taken from the books of a trader
Rs
...
Rs
...
15,000
(b)
(d)
Rs
...
2006
40,000
2007
50,000
2008
60,000
2009
50,000
The value of goodwill on the basis of three years purchase of average profits based on last
four years will be _________
(a)
(c)
45
...
1,50,000
None of three
Goods destroyed by fire Rs
...
This
adjustment will be entered in:
(a)
(c)
46
...
1,00,000
Rs
...
Rs
...
Rs
...
1
...
600
Rs
...
300
Rs
...
Machinery bought on 1st July 2006 for Rs
...
31, 2009 for
Rs
...
Depreciation is charged @ 10% p
...
on original cost
...
Profit on sale will be _________
(a)
(c)
48
...
15,000
Rs
...
500
Dr
...
500
Dr
...
500
500
500
Repairs to building wrongly debited to Building A/c
Total of purchase Journal is short by Rs
...
None of the above
...
8,000 renewed for 3 months on the condition that
Rs
...
a
...
Rs
...
14,000
Which of the following errors will effect the trial balance?
(a)
(b)
(c)
(d)
51
...
2,000
Rs
...
The debit total of trial
balance was short by Rs
...
He transferred the deficiency to suspense A/c
...
2009 was undercast by
Rs
...
Necessary Journal entry to rectify the error will be:
(a)
50
...
10,000, shipping and forwarding charges
amounted to Rs
...
7,000 and expenses of installation amounted to
Rs
...
It was depreciated for three years @ 10% on diminishing balance method, Balance of
machinery A/c at the end of third year will be _____
(a)
(c)
49
...
3,000
Rs
...
120
Rs
...
100
Rs
...
1,15,000 from Indian Traders
...
10,000 by cross cheque and the remaining amount by issue of Equity
Shares of the face value of Rs
...
10
...
Amount of securities premium will be
(a)
(c)
Rs
...
5,000
Common Proficiency Test (CPT) Volume - I
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(b)
(d)
Rs
...
4,000
463
MODEL TEST PAPER - 17
53
...
15,000 per television
...
500 per television sold plus one fourth of the amount by which the gross sale proceeds
less total commission there on exceeded a sum calculated at the rate of Rs
...
Amount of commission will be
(a)
(c)
54
...
36,000
Rs
...
36,400
Rs
...
Capital on January 1, 2009
Capital on January 1, 2010
Drawings made during the year
Additional Capital introduced during the year
Profit of the firm will be
(a)
(c)
58
...
50,000
Rs
...
A Joint Bank A/c was opened where in A contributed Rs
...
20,000
...
Material Purchased
65,000
Wages paid
6,000
Administrative expenses paid by B
3,000
Selling expenses
6,170
Expenses paid by A
1,630
Sales
1,12,000
Remaining inventory was taken by A for Rs
...
Joint venture profit will be
(a)
(c)
56
...
06
...
25,000 for 30 days
...
The maturity date of the bill will be _________
(a)
(c)
55
...
45,000
Rs
...
4,500
Rs
...
15,200
16,900
4,800
2,000
Rs
...
5,000
In the bank reconciliation statement, when balance as per cash book is taken as the starting
point, then interest collected by bank Rs
...
2,500 will be:
(a)
(c)
Added
Ignored
464
© The Institute of Chartered Accountants of India
(b)
(d)
Subtracted
None of the above
Common Proficiency Test (CPT) Volume - I
59
...
Revenue receipt
Capital expenditure
(b)
(d)
Capital receipt
Revenue expenditure
A draws a bill on B for Rs
...
A discounted the bill for
Rs
...
24,000 to B
...
25,000
Rs
...
24,000
Rs
...
An agreement to do an impossible act is:
(a)
(c)
62
...
Becomes void on C’s death
Should be performed by A and B along with C’s legal representatives
Should be performed by A and B alone
Should be renewed between A, B, and D
Which is true statement in voidable contract, the injured party
(a)
(b)
(c)
(d)
65
...
(b)
(d)
A, B, and C jointly promised to pay Rs
...
C
dies
...
Void
Illegal
Death of promisor
By Lunacy of promiser
(b)
(d)
By insolvency of promiser
By death or insolvency of promiser
Which does not relate with seller’s suits?
(a)
(b)
(c)
(d)
Suit for price
Suit for damages for non acceptance
Suit for repudiation of contract by the buyer before due date
Suit for taking back the goods
Common Proficiency Test (CPT) Volume - I
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465
MODEL TEST PAPER - 17
67
...
(a)
(c)
68
...
A competent person
Non-resident Indian
A Joint Hindu family arises
(a)
(c)
73
...
Suit for price and damages for non-acceptance
Suit for damages for non-acceptance
Suit for price only
Cannot sue for price and damages
Which of the statement is true in case of an auction sale
(a)
(b)
(c)
(d)
71
...
At the time of contract of sale
All of these
Where seller refuses to deliver the goods to the buyer
(a)
(b)
(c)
(d)
69
...
Which is correct
...
The term goods includes
(a)
(c)
76
...
A minor may be admitted to the benefits of partnership with no consent of other partners
A minor may be admitted to the benefits of partnership with the consent of his parents
A minor may be admitted to the benefits of partnership with the guarantee of his parents
Compulsory
Not necessary
Compulsory if the court orders to do so
Compulsory if the government thinks fit to do so
Implied
Implied and Express both
(b)
(d)
Express
None of these
Under the doctrine of Caveat Emptor the seller is _____________
(a)
(b)
(c)
(d)
82
...
(b)
(d)
In case of partnership, registration of firm is:
(a)
(b)
(c)
(d)
80
...
Money
All of these
The term business includes _________
(a)
(c)
78
...
Stocks and shares
Actionable claim
Responsible for bad selection of goods by the buyer
Not responsible for the bad selection of goods by the buyer
Both of these
None of these
The unpaid seller loses the right of lien
(a)
(b)
(c)
(d)
Where seller waived the right of lien
By estoppel
Where the buyer obtains possession of goods
Any of the above
Common Proficiency Test (CPT) Volume - I
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467
MODEL TEST PAPER - 17
83
...
Buyer cannot reject the goods
Seller is liable to punishment
Transfer
Delivery
(b)
(d)
Possession
None of these
Maximum 20
Unlimited
No
...
(b)
(d)
An unregistered firm _____________
(a)
(b)
(c)
(d)
89
...
Has an option to buy the goods
Must buy the goods
Must return the goods
Is not given the possession of goods
Voluntary transfer of possession by one person to another is known as _________
(a)
(c)
87
...
(b)
(d)
In a hire purchase agreement the hirer ___________
(a)
(b)
(c)
(d)
85
...
In absence of specific agreement partner is entitled to interest at the rate of ____________
an advances made for the purpose of business of the firm
(a)
(c)
92
...
Court
Two partners
On attaining majority the minor partner has to decide within ______ whether he shall
continue in the firm or leave it
...
(b)
(d)
When a partner agrees to share his profits derived from the firm with a third person, that
third person is known as ____________
(a)
(c)
96
...
10%
12%
A partner is
(a)
(b)
(c)
(d)
94
...
6%
8%
With the consent of all other partners
With the consent by sleeping partner
With the consent of main partner
No consent of any partner
Where a partner in a firm is adjudicated insolvent
(a)
(b)
(c)
(d)
He ceases to be a partner
He does not cease to be a partner
He ceases to be a partner with the consent of all other partner
He ceases to be a partner by order of the court
Common Proficiency Test (CPT) Volume - I
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469
MODEL TEST PAPER - 17
99
...
It is the case of :
(a)
(c)
100
...
5,000, which is paid in advance, ‘A’ is too ill
to sing
...
5,000 to B
A is not liable to refund the many
‘B’ should force ‘A’ to sing
‘A’ is liable to refund only 50% of advance money to B
SECTION – C : GENERAL ECONOMICS (50 MARKS)
101
...
Indifference curve
None
zero
negative
(b)
(d)
positive
none
upward
horizontal
(b)
(d)
downward
vertical
positive
zero
(b)
(d)
negative
infinity
If all inputs are trebled and the resultant output is doubled, this is a case of:
(a)
(c)
107
...
Marginal Utility theory
Revealed preference
In case of Giffen goods, demand curve will slope :
(a)
(c)
105
...
(b)
(d)
Cardinal measure of utility is required in:
(a)
(c)
103
...
Demand curve can be derived from:
(a)
(c)
109
...
MR curve cannot be defined
AR curve cannot be defined
the short run supply curve cannot be defined
none of the above
Period in which supply cannot be increased is called (a)
(c)
116
...
Giffen goods
none
The upper portion of the kinked demand curve is relatively (a)
(c)
114
...
Veblen goods
Both (a) & (b)
In the case of monopoly:
(a)
(b)
(c)
(d)
112
...
(b)
(d)
The exception to law of demand are:
(a)
(c)
110
...
Full capacity is utilized only when there is (a)
(c)
119
...
it is highly hypothetical and imaginary
it ignores the interdependence between the goods
it cannot be measured in terms of money because marginal utility of money changes
all of the above
Banks are regulated by:
(a)
(b)
(c)
(d)
125
...
(b)
(d)
Increase in money supply will lead to:
(a)
(c)
123
...
Perfect competition
Oligopoly
Which among the following is the drawback of consumer surplus (as explained in marginal
utility analysis)?
(a)
(b)
(c)
(d)
121
...
Monopoly
Price discrimination
RBI
CLB
In case RBI wants to increase rate of interest then it should:
(a)
(c)
sell securities
hold securities
472
© The Institute of Chartered Accountants of India
(b)
(d)
buy securities
none of the above
Common Proficiency Test (CPT) Volume - I
127
...
(b)
(d)
20%
30%
Free play of market forces
Monetary authority
(b)
(d)
Commercial banks
None of the above
31st March
1st April
(b)
(d)
31st April
1st March
Defence
Atomic energy
(b)
(d)
Airlines
Railways
negative
zero
(b)
(d)
positive
none of the above
(b)
(d)
State governments
None of the above
VAT is levied by:
(a)
(c)
136
...
Demand for Credit is Zero
Demand for Credit is higher than supply
Demand for Credit is low
None of the above
Which budget in India is passed separately?
(a)
(c)
134
...
(b)
(d)
The cash reserve ratio is determined by :
(a)
(c)
132
...
2014)
(a)
(c)
131
...
(b)
(d)
Commercial banks provide:
(a)
(c)
129
...
In 2011, the population was more than :
(a)
(c)
138
...
the area inside the budget line
the area between the average revenue and marginal revenue curves
the difference between the maximum amount a person is willing to pay for a good and its
market price
none of the above
A firm encounters its shut down point when:
(a)
(b)
(c)
(d)
144
...
(b)
(d)
Increase in population can be caused by (a)
(c)
142
...
110 crs
...
Consumer surplus means ________
(a)
(b)
(c)
140
...
100 crs
...
primary sector
tertiary sector
(b)
(d)
secondary sector
none of the above
Mark the correct statement (a)
(b)
(c)
(d)
India
India
India
India
is a purely capitalist economy
is a stagnant economy
is a developing economy
is a resources poor economy
474
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
146
...
1949
1935
(b)
(d)
1956
1901
1986-87
1991-92
(b)
(d)
1988-89
1995-96
Liberalisation process in India was initiated by (a)
(c)
150
...
(b)
(d)
The Reserve Bank of India was set up in :
(a)
(c)
148
...
A good estimator posses the following property
(a)
(c)
152
...
Consistency
All these
Mean may lead to fallacious conditions in the absence of original observations
(a)
(c)
154
...
Unbiasedness
Efficiency
Poisson distribution
Sampling fluctuations
The chart that was logarithm of the variable is known as
(a)
(c)
Line chart
Multiple line chart
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(b)
(d)
Ratio chart
Component line chart
475
MODEL TEST PAPER - 17
156
...
(b)
(d)
f(–x) = f(x)
None of these
P01 x P12 x P20 = 1
P10 x P20 x P21 = 1
(b)
(d)
P02 x P10 x P20 = 1
None of these
Add
Multiply
(b)
(d)
Subtract
Divide
P(AB)
P (A/B)
(b)
(d)
P(A+B)
None of these
3
1
(b)
(d)
2
3/2
The fourth proportional to (a2– ab + b2), (a3 + b3) and (a-b) is equal to _________
(a)
(c)
165
...
False
None of these
Probability of occurrence of A as well as B is denoted by _________
(a)
(c)
163
...
(a)
(c)
162
...
Can have any unit
Is expressed as the product of units of two variable
...
Mean deviation
All these measure
If A and B are two mutually exclusive events, then P(AUB) = P (A) + P (B)
(a)
(c)
159
...
Standard deviation
Quartile deviation
a 2 + b2
1
(b)
(d)
a 2 – b2
None of these
The sum of series 4 , 0,– 4 ,–8……… …
...
Number of arrangement that can be made by word ‘APPLE’ is _______
(a)
(c)
167
...
600
Rs
...
625
Rs
...
40
120
A person lend _______ at simple interest in order of getting Rs
...
a
...
(b)
(d)
1
e
1
log( x - 1)dx is equal to _______
0
(a)
(c)
170
...
(b)
(d)
0
–2
9, 36
18, 72
(b)
(d)
29, 56
None of these
A man has only 20 paise coins and 25 paise coins in his purse
...
11
...
1
–3/4
Find two numbers such that mean proportional between them is 18 and third proportional
to them is 144
...
Point
Both
Find the value of m, if one of root is –3/2 of the equation x2+x–m=0
(a)
(c)
172
...
A line intersects x-axis at (–-2, 0) and cuts off an intercept of 3 from the positive side of
y-axis, the equation of line is
(a)
(c)
176
...
1/7
2/5
(b)
(d)
3/7
2/7
60% and 40%
70% and 30%
(b)
(d)
75% and 25%
80% and 20%
9
...
7
(b)
(d)
9
...
0%
(b)
(d)
20
...
30%
0
...
60
(b)
(d)
0
...
80
A class consists of 10 boys and 20 girls of which half the boys and half the girls have blue
eyes
...
(a)
(c)
183
...
8, then coefficient of correlation shall be _________
(a)
(c)
182
...
8 to Rs
...
5
...
(a)
(c)
181
...
2x – 2y-3 = 0
None of these
The mean annual salary of all employees in a company is Rs
...
The mean salary of
male and female employees is Rs
...
17,000 respectively
...
(a)
(c)
179
...
What is the possibility of C winning the race?
(a)
(c)
178
...
(a)
(c)
m=2
m=±1
478
© The Institute of Chartered Accountants of India
(b)
(d)
m=1
m = –4
Common Proficiency Test (CPT) Volume - I
184
...
(a)
(c)
185
...
801, 17
...
a
...
If the person
expects to receive Rs
...
(a)
(c)
186
...
265, 20
...
735, 25
...
5,000
Rs
...
03
(b)
(d)
Rs
...
03
None of these
Out of 6 teachers and four boys, a committee of eight is to be formed
...
(a)
(c)
45
30
(b)
(d)
55
50
(b)
(d)
57
56
(b)
(d)
3
None of these
3
187
...
Evaluate lim
x2
(a)
(c)
189
...
y
...
1
1
- 2
)
x - 2 x - 3x + 2
Compute the value of lim (
(a)
(c)
191
...
55
55
...
(x + 1) (x + 4)
dx
x
0
(a)
(c)
194
...
0
4
...
5
3
...
1%
6
...
9%
None of these
100
0
(b)
(d)
m+n
m–n
3 units
4 units
(b)
(d)
5 units
2 units
...
7
15
The relation “is father of” Over the set of family members is the relation
(a)
(c)
199
...
(d)
The sum of first m terms of an A
...
is same as the sum of first n terms
...
48
5
For a 10 year deposit, what interest rate payable annually is equivalent to 5% interest payable
quarterly ?
(a)
(c)
196
...
The numbers 3, 2, 4, 2, 3, 3, P have mean m-1
...
1
5
{1,2,3,4,6}
{1,2,3,6}
(b)
(d)
{1,4,6}
None of these
There are four hotels in a certain city
...
(a)
(c)
0
...
675
(b)
(d)
0
...
525
480
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
COMMON PROFICIENCY TEST
Model Test Paper – BOS/CPT – 18
Time : 4 hours
Maximum Marks : 200
The test is divided into four sections
...
Loss leads to reduction in:
(a)
(c)
2
...
Profit and Loss account
Trial balance
Balance Sheet
None of the above
Rent payable to the landlord Rs
...
00 is credited to
(a)
(c)
5
...
(b)
(d)
Financial position of the business is ascertained on the basis of :
(a)
(b)
(c)
(d)
3
...
for Rs
...
This will be recorded in
(a)
(c)
Cash book
Bills receivable book
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(b)
(d)
Journal proper
Sales book
481
MODEL TEST PAPER - 18
7
...
Sales book
Purchase return book
June 1, 2010
June 5, 2010
(b)
(d)
June 4, 2010
None of the above
Cash
Trade receivables
(b)
(d)
Inventory
Furniture & Fittings
Revenue expenditure
Deferred capital expenditure
(b)
(d)
Capital expenditure
None of the three above
Mr
...
1,00,000
...
(b)
(d)
Rs
...
00 spent on maintenance of plant and machinery is:
(a)
(c)
12
...
Revenue expenditure
Capital loss
On April 1, 2010, a bill was drawn for two months
...
(b)
(d)
Petty expenses paid in cash are recorded in:
(a)
(c)
9
...
At the time of death of a partner, firm gets _______ from the insurance company against
the joint life policy taken jointly for all the partners
(a)
Policy amount
(b)
Surrender value
(c)
Policy amount or surrender value whichever is higher
(d)
Policy amount or surrender value whichever is lower
15
...
While preparing a Bank Reconciliation Statement, if you start with overdraft as per Cash
Book, then interest debited in pass book but not yet in cash book with in the period is
(a)
(c)
Added
Not required to be adjusted
482
© The Institute of Chartered Accountants of India
(b)
(d)
Deducted
None of the above
Common Proficiency Test (CPT) Volume - I
17
...
As per Section 37 of the Indian Partnership Act, 1932 the executors would be entitled at
their choice to the interest calculated from date of death till the date of payment on the final
amount due to the dead partner at _______ percent per annum
...
Interest on capital
Profit of the year
Remuneration to the partners
All of the above
Capital
Profit
(b)
(d)
Reserves
Premium for goodwill
Money measurement
Conservatism
(b)
(d)
Cost
Periodicity
A machine was purchased for Rs
...
01
...
12
...
1,50,000
...
Do you prefer to count this profit? If you count
which of the following concepts will be violated?
(a)
(c)
23
...
25,00,000 and sold 70% of such goods during the
accounting year ended 31st March, 2010 the market value of the remaining goods was
Rs
...
5,00,000 and not Rs
...
(b)
(d)
If the incoming partner brings any additional amount in cash other than his capital
contribution then it is termed as ________
(a)
(c)
21
...
Fixed assets
Current assets
Investments
Intangible fixed assets
Realisation
Accrual
(b)
(d)
Conservatism
Matching
The plant and machinery account of a firm had a debit balance of Rs
...
It was purchased on January 1, 2007
...
The cost of
machinery in 2007 will be:
(a)
(c)
Rs
...
00
Rs
...
00
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(b)
(d)
Rs
...
00
Rs
...
00
483
MODEL TEST PAPER - 18
24
...
80,000
...
00
2,00,000
...
00
2,50,000
...
6,000
...
00
12,000
...
00
60,000
...
(b)
(d)
Rs
...
00
Rs
...
00
Rs
...
1,01,200
(b)
(d)
Rs
...
1,11,200
Rs
...
00
Rs
...
00
(b)
(d)
Rs
...
00
Rs
...
00
According to Table F of the Companies Act, Interest on calls in arrears is charged at the
rate of
(a)
(c)
29
...
67,000
...
75,000
...
10,000
...
Repairing expenses Rs
...
00 and
miscellaneous expenses Rs
...
00 were incurred for the Computer
...
The sale value will be:
(a)
(c)
28
...
75,000
...
60,000
...
1,00,000 but the amount was wrongly posted to
furniture account as Rs
...
11,200 was omitted
to be posted in the ledger
...
(b)
(d)
Mohan started business with Rs
...
00 cash and Rs
...
00 furniture
...
50,000
...
5,000
...
Rs
...
00 sales were outstanding at
the end of the year
...
30,000
...
10,000
...
Rs
...
00 has been paid to suppliers
...
Trial Balance total will be (a)
(c)
26
...
62,000
...
80,000
...
A second hand car is purchased for Rs
...
00 the amount of Rs
...
00 is spent on its
repairs, Rs
...
00 is incurred to get the car registered in owner’s name and Rs
...
00 is
paid as dealer’s commission
...
Rs
...
00
Rs
...
00
(b)
(d)
Rs
...
00
Rs
...
00
Mr
...
He made drawings as follows:
July 1
200
...
00
September
300
...
00
February 1
100
...
Rs
...
75
Rs
...
00
(b)
(d)
Rs
...
00
Rs
...
00
A started business on Jan 1 with a capital of Rs
...
On 31st Dec, his position was
Trade payables Rs
...
40,000, furniture Rs
...
1,300, Cash Rs
...
He made drawings @ Rs
...
1,000 which he brought on 1st Oct
...
Business profit will be
(a)
(c)
33
...
16,000
Rs
...
3,000 on freight and also raised a loan from
Bank of Rs
...
a
...
5,000 as selling expenses
and he also raised a loan from Bank of Rs
...
The
total expenses of Joint Venture will be:
(a)
(c)
34
...
15,000
Rs
...
8,000
Rs
...
8,500
Rs
...
10,000
...
2,000
...
7,000 and expenses of installation amounted to
Rs
...
Amount debited to boiler A/c will be
(a)
(c)
Rs
...
19,000
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(b)
(d)
Rs
...
20,000
485
MODEL TEST PAPER - 18
35
...
250 each to B of Faridabad
...
1,500 and transit insurance Rs
...
00
B incurred following expenses:
Unloading charges
Rs
...
Carriage
Rs
...
Selling expenses
Rs
...
420
(a)
(c)
36
...
52,000
Rs
...
7,000
Rs
...
6,800
None of the above
Added
Ignored
(b)
(d)
Substracted
None of the three
Goods costing Rs
...
The amount of sales will be
(a)
(c)
40
...
52,488
Rs
...
10, cheques paid in but dishonoured
Rs
...
950 will be –
(a)
(c)
39
...
26,000
Rs
...
350 each to B of Varanasi to sell it on consignment basis
...
1,800 for freight and insurance
...
28,000
...
900 and their commission to Rs
...
Consignment
profit will be
(a)
(c)
38
...
80,000
...
Balance of furniture account at the end of the
fourth year will be:
(a)
(c)
37
...
26,400
Rs
...
Value of closing inventory will be -
Rs
...
9,000
(b)
(d)
Rs
...
11,000
A bill is drawn on 28 March, 2010 for one month after sight
...
The maturity date of the bill will be
(a)
(c)
1st March 2010
5th May 2010
486
© The Institute of Chartered Accountants of India
(b)
(d)
28th April 2010
2nd May 2010
Common Proficiency Test (CPT) Volume - I
41
...
A and B are partners sharing profits in the ratio of 3:2
...
Sacrificing ratio will be
(a)
(c)
43
...
18,000
None of the three
Rs
...
15,000
(b)
(d)
Rs
...
40,000
Rs
...
50,000
None of the three
Purchases book
Cash book
(b)
(d)
Sales book
None of the three
Debentures issued as collateral security is
(a)
(b)
(c)
(d)
48
...
15,000
Rs
...
10,000 by a stationery dealer will be recorded in
(a)
(c)
47
...
20,000 and has invested capital amounting to Rs
...
In
the same class of business normal rate of earning is 10%
...
(b)
(d)
A and B are partners sharing in the ratio of 3:2
...
15,000 as capital and necessary amount for his share of goodwill
...
60,000
...
1:1
1:3
A, B and C were in partnership sharing profits in the ratio of 4:2:1 respectively
...
7,500
...
31,500
...
Equity is owner’s stake and the debenture is a debt
...
Debenture holders get preferential treatment over the equity holders at the time of
liquidation
...
Added in the total of liabilities
Added in the total of assets
Both (a) and (b)
None of the three
Premium on issue of debentures is recorded on the liability side under the heading
...
A company issues 100 debentures of Rs
...
These are repayable
out of profits by equal annual drawings over 5 years
...
(b)
(d)
Cash book
None of the three
Profit & Loss Account
Balance Sheet
(b)
(d)
Profit & Loss Appropriation Account
None of the above
Rs
...
200
(b)
(d)
Rs
...
80
Z Ltd
...
2,00,000 payable as to Rs
...
00 in
cash and the balance by an issue of 6% debentures of Rs
...
Discount amount will be
(a)
(c)
54
...
K
...
forfeited 20 shares of Rs
...
60 called up) issued at par to Mohan on
which he had paid Rs
...
Out of these 15 shares were reissued to Sohan as Rs
...
45 per share
...
4:3:2:1:1
None of the three
Securities premium is recorded in
(a)
(c)
52
...
5:4:3:2:1
3:3:4:2:1:1
Rs
...
12,000
(b)
(d)
Rs
...
1,00,000 15%, debentures at a discount of 5%, redeemable after 10
years at a premium of 10%
...
Opening Debtors
Total sales
Cash sales
Cash received from Debtors
Bad debts
Return inward
Bills received from Debtors
Debtors at end will be
(a)
(c)
Rs
...
60,000
488
© The Institute of Chartered Accountants of India
(b)
(d)
15,000
None of the three
Rs
...
70,000
Rs
...
Goods costing Rs
...
Invoice value of goods will
be
(a)
(c)
57
...
2,00,000
Legal Services A/c by Rs
...
2,00,000
Promoters expenses A/c Rs
...
11,000
Rs
...
10,000
Rs
...
10,00,000 was purchased on 01
...
2009
...
100,000 were incurred
...
a
...
Rs
...
12,25,000
X Y Z and Company employs a team of ten workers who were paid Rs
...
31, 2009
...
The
amount of salaries for the year ended 31st Dec
...
(b)
(d)
2,000 shares of Rs
...
For this, company credited share capital A/c and
debited
...
Rs
...
12,00,000
Rs
...
2,10,000
(b)
(d)
Rs
...
1,26,000, Salvage value – nil, Useful life - 6 years
...
18,000
Rs
...
6,000
Nil
SECTION – B : MERCANTILE LAWS (40 MARKS)
61
...
(b)
(d)
23rd Nov
...
, 1872
(b)
(d)
The Indian Contract Act, 1872
None of the above
(b)
(d)
Obligation
Promise
The contract is defined in (a)
(c)
63
...
, 1872
26th Sept
...
Proposal when accepted becomes (a)
(c)
65
...
(b)
(d)
The merchantile agents include
(a)
(c)
72
...
Acceptance of a proposal
Promise
Which of the following is true, delivery means (a)
(b)
(c)
(d)
70
...
Set of reciprocal promises
Contract
Existing goods are such goods as are in existence (a)
(c)
68
...
(b)
(d)
Agreement is a (a)
(c)
66
...
The term business includes (a)
(c)
75
...
(b)
(d)
A voidable agreement is (a)
(b)
(c)
(d)
81
...
All the essential elements of a valid contract must be present in partnership agreement
No need of essential elements of a valid contract in a partnership contract
Only consideration should be present in partnership agreement
All of these
Who can enter into a contract of partnership ?
(a)
(c)
79
...
Every occupation
All of these
Which is correct ?
(a)
(b)
(c)
(d)
77
...
Every trade
Every profession
Illegal contract
Not enforceable by law
Enforceable at the option by both the parties
Enforceable at the option of one party
An offer to be valid must
(a)
(b)
Be communicated to the person to whom it is made
Be communicated to the third party
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
491
MODEL TEST PAPER - 18
(c)
(d)
83
...
Revocation
All of these
Altogether void
Illegal
(b)
(d)
Voidable
None of these
Void
Illegal
(b)
(d)
Voidable
None of these
The Transfer of Property Act, 1882 (b)
The Sales of Goods Act, 1930
(d)
The Indian Partnership Act, 1932
The Indian Contract Act, 1872
Let the buyer beware
Let the buyer and seller both beware
(b)
(d)
Let the seller beware
None of these
Express contract means ________
(a)
(b)
(c)
(d)
91
...
Counter offer
Rejection of offer by offeree
The term consideration is defined in (a)
(c)
89
...
(b)
(d)
An agreement entered into by a minor’s ________
(a)
(c)
87
...
(a)
(c)
86
...
Be communicated to the promisor
Be communicated to the promisee
Which is
Which is
Which is
Which is
made by words either spoken or written
made by deeds
made by both words and deeds
made by promises
A valid offer must be _________
(a)
(b)
(c)
(d)
Capable by creating legal relation
Capable of creating social relation
Capable of creating business relation
Capable of creating social and business relation
492
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
92
...
(b)
(d)
Agreement to sale
Auction sale
Passing of goods
Ownership of goods
(b)
(d)
Custody of goods
Both (a) and (b)
The buyer has became insolvent
The seller must be unpaid
(b)
(d)
The goods are in transit
All of these
A partner may be expelled from partnership subject to ______
(a)
(b)
(c)
(d)
99
...
At the time of contract of sale
Before the time of contract of sale
After the time of contract of sale
All of these
The property in goods means
(a)
(c)
97
...
promisee
any of these
Existing goods are such goods as are in existence ______
(a)
(b)
(c)
(d)
95
...
promisor
any other person
The power of expulsion of a partner should be conferred by the contract between two
partners
The power should be exercised by majority of partners
The power should be exercised in good faith
All of these
A agrees to pay a sum of money to B if a certain ship does not return
...
A refuses to pay, what will be the advice to B
...
A, B, and C enter into a partnership agreement under which ‘C’ is not liable for the
losses
...
Examine the position of C
(a)
(b)
(c)
(d)
C is liable to D only
C is liable to D jointly with A and B also
C is not liable to D
C is not liable to D jointly with A and B
SECTION – C : GENERAL ECONOMICS (50 MARKS)
101
...
first
third
(b)
(d)
second
fourth
Great Route Tarry
Gross Registered Tonnage
(b)
(d)
Green Revaolution Technology
None of the above
45
58
(b)
(d)
28
50
1901-11
1921-31
(b)
(d)
1911-21
1931-41
Which one of the following resources is the most crucial input in India’s new agricultural
technology, responsible for the Green Revolution?
(a)
(c)
108
...
(b)
(d)
The government aimed to reduce Infant Mortality Rate per 1000 to ______ by 2012
...
184
10
GRT stands for
(a)
(c)
105
...
(a)
(c)
104
...
Advancing loans
Issuing notes
Fertilizers
Agricultural Machinery
(b)
(d)
HYV seeds
Irrigation
Which of the following states has the lowest literacy rate?
(a)
(c)
Bihar
West Bengal
494
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(b)
(d)
Uttar Pradesh
Orissa
Common Proficiency Test (CPT) Volume - I
109
...
(b)
(d)
15-16%
30-35%
identified certain thrust areas for growth
started “served from India” brand
revamped Duty Free Export-Credit
all of the above
Treasury Bills
Bill of exchange
(b)
(d)
Immovable property
Bearer cheques
last
27th
(b)
(d)
1st
10th
Gross National Income at market prices minus depreciation
Net Domestic Product at factor price plus or minus earnings from abroad
Gross Domestic Product minus indirect taxes and subsidies
Gross National Product at factor price plus or minus depreciation
Which one of the following assumptions is not necessary for the cardinal utility theory ?
(a)
(c)
117
...
40 million
25 million
India ranks ______ in the world in terms of postal network
...
(b)
(d)
Which one of the following offers the least liquidity?
(a)
(c)
114
...
raw material
none of the above
In July 1991, India devalued the rupee by about
(a)
(c)
112
...
(a)
(c)
111
...
The IC curve approach assumes :
(a)
(c)
119
...
Correcting the fiscal imbalance by reducing the fiscal deficit as a percentage of GDP
Increasing imports
Devaluation of the rupee
big banks should try to open offices in each district
there should be stiff competition among the various nationalized banks
individual bank should adopt particular districts for intensive development
all the banks should make intensive efforts to mobilize deposits
Income tax
Excise tax
(b)
(d)
Agricultural tax
Wealth tax
Which one of the following sources of Central revenue belongs to the category of indirect
taxes?
(a)
(c)
125
...
(b)
(d)
The basic aim of the lead bank scheme is that (a)
(b)
(c)
(d)
123
...
consistency
all of the above
Demand deposits with banks are considered as money because they are:
(a)
(b)
(c)
(d)
121
...
rationality
transitivity
Corporation tax
Wealth tax
(b)
(d)
Customs
Interest Receipts
The rapid increase of public debt of the Central Government since 1950-51 has been due to
(a)
(b)
(c)
(d)
uncontrolled inflation
mounting shares of state government from revenues raised by the central government
mounting costs of financing public expenditure
rising population
496
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
126
...
(b)
(c)
(d)
selectively allocate credit to commercial banks
selectively allocate credit among borrowers
regulate the quantity of demand deposits created by commercial banks
regulate the quantity of credit created by commercial banks
slope of the price line is equal to indifference curve
he saves 10% of his income
borrows an amount equal to his income from the bank
none of the above
greater than the savings of the private corporate sector but less than the savings of the
public sector
less than the savings of the private corporate sector but more than savings of the public
sector
greater than the savings of the private corporate sector as well as the savings of the public
sector
less than the savings of the private corporate sector as well as the savings of the public
sector
Which is the Central Bank of India?
(a)
(c)
132
...
It
It
It
It
A consumer is at equilibrium when :
(a)
(b)
(c)
(d)
130
...
(b)
(d)
Which one of the following is the major characteristic of foreign direct investment (FDI)?
(a)
(b)
(c)
(d)
128
...
Unemployment rate in India is defined as the ratio of number of persons unemployed to
total
(a)
(c)
134
...
5
3
...
(b)
(d)
In India, which one of the following is NOT a cooperative organization?
(a)
(c)
139
...
0
10
...
is rising in relative and absolute terms
is falling in relative terms but rising in absolute terms
is falling in both relative and absolute terms
has not changed at all over the years
In order to provide acess to electricity to all areas including villages and hamlets _________
programmed was started
...
Population excluding children
Population excluding the aged
If the Indian economy aimed at an annual growth rate of 8 per cent in national income,
assuming as incremental capital – output ratio of 3
...
(b)
(d)
The population of India living below the poverty line
(a)
(b)
(c)
(d)
135
...
M3 is equal to :
(a)
(c)
142
...
334
0
...
29
0
...
(b)
(d)
Which one of the following is NOT an important import item of India at present?
(a)
(c)
149
...
Public limited companies
Departmental organizations
According to the Human Development Report-2013, the GINI index for India in 2011-12 was :
(a)
(c)
147
...
Public corporations
Private Limited companies
Which one of the following agencies in India is responsible for computation of national
income?
(a)
(c)
145
...
(a)
(c)
144
...
Currency with public
M1 + Post office savings
marginal utility
consumers surplus
(b)
(d)
total utility
producers’ surplus
The incremental capital output ratio (ICOR) during the XI plan of India was
(a)
(c)
5
...
0
Common Proficiency Test (CPT) Volume - I
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(b)
(d)
3
...
37
499
MODEL TEST PAPER - 18
SECTION – D : QUANTITATIVE APTITUDE (50 MARKS)
151
...
17:13
169:17
(b)
2
13 : 17
(d)
None of these
The duplicate ratio of 5:7 is
(a)
(b)
15:21
(c)
153
...
The value of 2 × (128)–1/7 is
(a)
(c)
155
...
3
6
log 3 × log 5 × log 7
log 3 – log 5 – log 7
log (5/7) is equal to
(a)
(b)
log 5 + log 7
(c)
157
...
x–y=5
5x + 5y = 1
(b)
(d)
x+y=5
None of these
The equation of the line parallel to the line joining (7,5) and (2,9) and passing through the
point (3, –4) is
(a)
(c)
4x + 5y + 8 = 0
4x – 5y – 8 = 0
500
© The Institute of Chartered Accountants of India
(b)
(d)
4x – 5y + 8 = 0
None of these
Common Proficiency Test (CPT) Volume - I
159
...
x=0
x = –a, –b
(b)
(d)
x = a, b
None of these
First quadrant
Third quadrant
(b)
(d)
Second quadrant
Fourth quadrant
Rs
...
a
...
Linear equation
None of these
The inequalities x 0, y 0 indicates
(a)
(c)
162
...
Quadratic equation
Cubic equation
Rs
...
12,110
(b)
(d)
Rs
...
None of these
720
6
(b)
(d)
0
–120
In how many ways can 8 persons sit at a round table for a meeting?
(a)
(c)
166
...
nr
40320
5040
(b)
(d)
64
720
There are 7 routes from station X to station Y
...
1 1 1
,
to is
3 32 33
The sum of the series 1, ,
4
3
1
3
(a)
(c)
168
...
3
2
The number of subsets of the set {2, 4, 6, 8} is
(a)
(c)
169
...
(b)
(d)
(a)
171
...
+ 100 is
If A = {1, 2, 3, 4} and B = {5, 6, 7}, then cardinal number of A X B is
(a)
(c)
173
...
2
lim
x3
(a)
(c)
4
12
(b)
(d)
7
None of these
does not exist
–
(b)
(d)
+
None of these
(b)
(d)
6
None of these
1
x
x2 - 9
x-3
Does not exist
1
502
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
175
...
e
...
10
1
(b)
(d)
If y = ax3 + bx2 + cx + d, then
Undefined
None of these
dy
is equal to
dx
(a)
(b)
ax4 bx3 cx4
dx
4
3
2
(c)
177
...
aa-1
5x a + logx + 10xax-1
(a)
(c)
1
178
...
5 6
x
3
5
3
(d)
None of these
3
5
logx
dx is equal to
x
(a)
(b)
1
(log x )2 k
2
(c)
180
...
216 × 310 × 54
The value of 12 6
is equal to
2 × 3 × 53
(a)
(c)
182
...
+ log n
0
1, 2
0, 1, 2
log n + log (n+1) – log 2
1
(b)
(d)
0, 1
1, 2, 3
(b)
(d)
Real and unequal
Imaginary and equal
The roots of the equation x2 - x + 1 = 0 are
Imaginary and unequal
Real and equal
Interest earned on Rs
...
a
...
(b)
(d)
The roots of the equation x2 - 3x + 2 = 0 are
(a)
(c)
186
...
+n) is equal to
(a)
(c)
185
...
6480
3240
The value of ya - m ym - n yn - a is equal to
(a)
(c)
183
...
540
Rs
...
450
Rs
...
2
(a)
(c)
189
...
The nth term of the sequence 2, 4, 6, 8 …
...
(b)
(d)
The sum of the series 1,
(a)
(c)
192
...
to is ______
10 102
9
10
1
9
(b)
1
(d)
None of these
If a, b, c are in A
...
, then 2b = _____
(a)
(b)
a+c
(c)
193
...
P
...
ac
a+b
If A = {1, 3, 5} , B = {0, 2}, then A B is ______
(a)
(c)
{0, 1, 2, 3, 5}
{1, 3, 5, 7, 9, 13}
(b)
(d)
None of these
(b)
(d)
55
...
Evaluate the value of
(3x
2
+ 5x + 2)dx
0
(a)
(c)
196
...
55
57
7
12
(b)
(d)
1
None of these
(b)
(d)
+
1
1
x (x - a) 2 is equal to _______
lim
(a)
(c)
0
–
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
505
MODEL TEST PAPER - 18
198
...
lim
x
(a)
(c)
200
...
SECTION – A : FUNDAMENTALS OF ACCOUNTING (60 MARKS)
1
...
1,500 spent on repairs before using a second hand car purchased recently is a
(a)
(c)
2
...
The maturity date of
the bill will be
(a)
(c)
6
...
Revenue expenditure
None of the three
All of the following have debit balance except
(a)
(c)
4
...
Capital expenditure
Deferred revenue expenditure
Nov
...
31, 2009
(b)
(d)
Nov
...
In a sole trade, income tax is recorded as
(a)
(c)
8
...
Profit and Loss account
Trading account
(b)
(d)
Balance Sheet
Manufacturing account
Debit
Unfavourable
(b)
(d)
Credit
None of the three
Debit; Debit and Total and balances (b)
Posted balances; Total of balances (d)
Opening Balances; Closing balances
Debit balance; Credit balance
Personal account
Nominal account
(b)
(d)
Real account
None of the three
Credits
Either (a) or (b)
(b)
(d)
Debits
None of the three
Abnormal loss on consignment is credited to ______
(a)
(c)
17
...
(a)
(c)
16
...
Next working day
Holiday itself
Trial balance is a statement which shows the ______ or the ______ of all the accounts
(a)
(c)
14
...
(b)
(d)
Capital expenditures are recorded in the
(a)
(c)
12
...
Liabilities
None of the three
If the date of maturity of a bill is a unforeseen holiday, then bill will mature on
(a)
(c)
10
...
Drawings
Expenses
Profit and Loss account
Consignment account
(b)
(d)
Consignees’ account
None of the three
(b)
(d)
Fixed asset
None of the three
Land and building is a
(a)
(c)
Current asset
Fictitious asset
508
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
18
...
84,000, Rs
...
90,000
...
(a)
(c)
19
...
10,000 cash
...
50,000 including
Rs
...
Rs
...
Purchases
amounted to Rs
...
10,000 cash purchase Rs
...
Salaries paid amounted to Rs
...
2,400, Stationery Rs
...
Drawings were 4,000
...
1,000 and machines purchased
Rs
...
Cash balance will be
(a)
(c)
24
...
purchased equipment from Y Ltd
...
50,000 on 1st April 2009 the freight and
cartage of Rs
...
3,000 is incurred
on installing the equipment to make it possible for the intended use
...
60,000 and the accountant of the company wants
to disclose the machinery at Rs
...
However, the auditor
emphasizes that the machinery should be valued at Rs
...
Trading account
Balance Sheet
When depreciation is recorded by charging to Asset Account, the asset appears(a)
(c)
22
...
1,68,000
Rs
...
‘C’ was
admitted for 1/6 share in the future profits with a capital of Rs
...
The new profit
sharing ratio will be
(a)
(c)
21
...
19,000 in trial balance will be recorded in
(a)
(c)
20
...
84,000
Rs
...
15,000
Rs
...
15,500
None of the three
If sales revenue is Rs
...
3,10,000
...
1,90,000
Rs
...
2,00,000
None of the three
509
MODEL TEST PAPER - 19
25
...
5,000 passed through bills payable book
...
(b)
(c)
(d)
5000
B/R A/c
B/P A/c
To Arun
None of the three
Dr
...
5000
5000
5000
5000
10000
Rs
...
1,200
(b)
(d)
Rs
...
Accrued Interest
To Customer
Accrued interest
To Interest
Cash a/c Dr
...
Dr
...
500
Rs
...
600
None of the three
A manager gets 5% commission on net profit after charging such commission
...
48,000 and expenses of indirect nature other than manager’s commission are Rs
...
Commission amount will be
(a)
(c)
30
...
Rs
...
600 (sales price) sent on sale on approval basis were included in sales book
...
Closing inventory will increase by
(a)
(c)
29
...
5000
Interest earned but not received, adjustment entry will be
(a)
28
...
A machinery of Rs
...
5,200
...
500
and Commission paid to the selling agent was 420 and wages paid to workers for removing
the machine was Rs
...
Profit on sale of machinery will be
(a)
(c)
27
...
2,000
Rs
...
1,800
None of the three
What shall be the commission of the manager if the rate of commission is 5% on net
profit before charging such commission and when gross profit is Rs
...
6,000?
(a)
(c)
Rs
...
1,500
510
© The Institute of Chartered Accountants of India
(b)
(d)
Rs
...
X sells goods at cost plus 60%
...
16,000
...
Rs
...
15,000
1
%
3
33
(c)
35%
(d)
None of the three
Rs
...
2,000
(b)
(d)
Rs
...
8,660
Rs
...
200
16,500
63,500
46,850
2,500
450
18,210
Rs
...
9,000
Capital introduced in the beginning by Ram Rs
...
2,000; Drawings Rs
...
12,750
...
30%
Following balances have been taken from the books of VED & Co
...
General expenses
800 Discount allowed
Rent paid
3,710 Opening inventory
Electric charges
190 Sales
Carriage inward
850 Purchases
Return outwards
110 Wages
Salaries
1110 Sales Return
Closing inventory
Net profit of the business will be ______
(a)
(c)
35
...
Cost price of goods sold is Rs
...
Commission will be
(a)
(c)
34
...
9,000
None of the three
A trader sells goods at a profit of 25% on sale
...
34,200
...
(b)
(d)
Loss Rs
...
6,000
Profit Rs
...
4,500
(1)
Cheques sent for collection but not credited by Bank Rs
...
10,250
Overdraft as per Pass Book will be
(a)
(c)
Rs
...
500
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(b)
(d)
Rs
...
G’s trial balance contains the following information –
Bad debts Rs
...
5,000; Trade receivables
Rs
...
Trade receivables will appear in the balance sheet at
(a)
(c)
38
...
21,000
Rs
...
22,500
None of the three
An inexperienced book-keeper has drawn up a trial balance for the year ended 30th June, 2010
...
Rs
...
Rs
...
25,580
Rs
...
25,000
None of the three
39
...
527
Rs
...
274
730
477
Rs
...
Common Proficiency Test (CPT) Volume - I
40
...
1,000 to S
...
, 2004, R accepted a bill drawn by S for the amount for
3 months
...
S agreed on the
conditions that Rs
...
a
...
Later on, R became insolvent and 40% of the amount could be recovered from his estate
...
Rs
...
50
Rs
...
8,000
None of the three
Rs
...
16,000
(b)
(d)
Rs
...
C to make purchases and D to effect sales
...
1,00,000 was sent by D to C for this joint venture
...
80,000 and
spent Rs
...
His other
expenses were 2½% purchase commission and miscellaneous expenses Rs
...
D spent
Rs
...
3,750 an Octroi at the time of taking delivery
...
1,88,500
...
1,500; Garage rent
Rs
...
6,850 and other expenses Rs
...
Profit on venture will be
(a)
(c)
44
...
300
None of the three
Amit of Delhi sent 200 chairs @ Rs
...
Amit paid freight
of Rs
...
200 as insurance in transit
...
100 as Cartage and Rs
...
At the end of the year, 150 chairs were sold
...
350
...
(b)
(d)
A of Allahabad sent on consignment to B of Bareilly 1,000 transistors costing Rs
...
A
paid freight amounting to Rs
...
45
...
B incurred an expenditure of Rs
...
Amount of abnormal loss will be
(a)
(c)
42
...
400
Rs
...
36,150
Rs
...
36,000
None of the three
A, B and C are partners sharing profits in the ratio of 5:4:1
...
5,000
...
The Profits for the year 2009 amounted to Rs
...
The amount of C’s deficiency to be shared by A and B will be
(a)
(c)
Rs
...
600 each
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(b)
(d)
Rs
...
513
MODEL TEST PAPER - 19
45
...
1,20,000,
Rs
...
60,000 respectively
...
Adjusting entry will be
(a)
(b)
(c)
(d)
46
...
300
Rs
...
300
Dr
...
A surrenders ¼th part of his share
and B surrenders ½ part of his share in favour of C, a new partner
...
Dr
...
D was admitted in the firm as a new
partner with 1/6th share
...
Raja’s Current A/c
To Mala’s Current A/c
Raja’s Capital A/c
To Mala’s Capital A/c
Mala’s Current A/c
To Raja’s Current A/c
None of the three
2:1
1:1
(b)1:2
(d)None of the three
Goodwill of the firm is valued at three year’s purchase of the average profits of the last five
years
...
2005
40,000
Profit
2006
20,000
Loss
2007
10,000
Profit
2008
60,000
Profit
2009
80,000
Profit
Goodwill amount will be
(a)
(c)
49
...
1,02,000
Rs
...
1,00,000
None of the three
(i)
Actual average profit
Rs
...
9,70,000
(iv)
Current Liabilities
Rs
...
1,50,000
Rs
...
1,40,000
None of the three
Common Proficiency Test (CPT) Volume - I
50
...
” This transaction will be recorded in
(a)
(c)
51
...
15,000
None of the three
Rs
...
28,000
(b)
(d)
Rs
...
3,200
Rs
...
3,000
None of the three
Rs
...
2,000
(b)
(d)
Rs
...
purchased the business of Y Ltd
...
90,000 payable in fully paid shares of
Rs
...
No
...
(b)
(d)
D Ltd
...
10 each fully called up, on which the holder has paid only
application money of Rs
...
Out of these 500 shares were reissued as Rs
...
Capital Reserve will be credited by
(a)
(c)
55
...
10,000
Rs
...
forfeited 400 shares of Anil of Rs
...
2 per share and reissued to Sunil as fully paid for Rs
...
Amount transferred
to Capital Reserve will be
(a)
(c)
54
...
1,20,000
and Rs
...
They admitted Z as a partner with Rs
...
Adjust the capitals of the partners according to Z’s capital and his
share in the business
...
(b)
(d)
The capitals of A and B after all adjustments and revaluations are Rs
...
16,000
respectively
...
Capital to be
brought by C will be
(a)
(c)
52
...
A company purchased an established business for Rs
...
1,30,000 in cash
and the balance by 12% debentures of Rs
...
Discount on issue of
debentures will be
(a)
(c)
Rs
...
32,000
Common Proficiency Test (CPT) Volume - I
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(b)
(d)
Rs
...
Issued 2,000, 12% Debentures of Rs
...
Loss on issue of debentures will be
(a)
(c)
58
...
12,000
None of the three
Rs
...
1,45,000
(b)
(d)
Rs
...
(b)
(d)
(i)
1,00,000 Equity shares of 10 each fully called up
...
10,000
(iii)
Calls in advance
Rs
...
Rs
...
10,000
Profit/Loss = Closing Capital + Additional Capital –Drawings made –Opening Capital
Profit/Loss = Closing Capital –Drawings–Additional Capital -Opening Capital
Profit/Loss = Closing Capital – Drawings – Additional Capital –Opening Capital
Profit/Loss = Closing Capital + Drawings – Additional Capital –Opening Capital
On 1st January 2010, Badri of Kanpur consigned 100 cases, cost price Rs
...
Balance of
Goods sent on consignment A/c transferred to General Trading A/c will be
(a)
(c)
Rs
...
8,000
(b)
(d)
Rs
...
Which of example is the case of Undue influence, where one party is in a position to influence
the will of other party?
(a)
(b)
(c)
(d)
62
...
Which of the following statement is true?
(a)
(b)
(c)
(d)
64
...
A threat to commit suicide does not amount to coercion
Undue influence involves use of physical pressure
Ignorance of law is no excuse
Silence always amounts to fraud
A party substitutes a new contract for the old
When the parties to a contract agree to rescind it
When the parties to a contract agree to alter it
...
A person of unsound mind
All of these
On the valid performance of the contractual obligation by the parties the contract is:
(a)
(c)
69
...
Minor
Foreign enemy
Which of the following statement is true?
(a)
(b)
(c)
(d)
67
...
If there is no consideration, there is no contract
Past consideration is no consideration in India
Consideration must result in a benefit to both the parties
Consideration must be adequate
A contract between one person to another for exchange of property in goods
A contract between buyer and seller for exchange of property in goods
a contract between buyer and seller intending to exchange property in goods for a price
All of these
Which of the following sentence is true ?
(a)
(b)
(c)
(d)
There should be immediate delivery of goods
There should be immediate payment of price
There may be delivery of goods and payment of price on to be made at some future date
...
Where there is an agreement to sell specific goods and goods subsequently perish before
risk passes to the buyer, the agreement becomes
(a)
(c)
72
...
Sample only
Sample and description both
In partnership a new partner can be admitted
(a)
(b)
(c)
(d)
78
...
(b)
(d)
A stipulation essential to the main purpose of the contract is:
(a)
(c)
76
...
Voidable
None of these
Where the goods are sold by sample as well as by description the implied condition is that
the bulk of the goods supplied must correspond with
(a)
(c)
74
...
Void
Illegal
The value of reputation which the firm establishes overtime
The value of reputation which the firm earns due to integrity, efficient service to the
customers
The value of reputation earned by the firm due to quality of its products, industry etc
...
A contract dependant on the happening of future uncertain event, is a _______
(a)
(c)
81
...
Becomes impossible
Either of these
Delivery means _____
(a)
(b)
(c)
(d)
86
...
Happens
Does not happen
A contract with the minor which is beneficial for him is ________
(a)
(c)
84
...
(b)
(d)
A contingent contract depending on the happening of future uncertain event can be enforced
when the event
...
Uncertain contract
Void contract
The seller can transfer to the buyer of goods a better title than he himself has
The seller cannot transfer to the buyer of goods a better title than he himself has
The seller can transfer to the buyer of goods no title than the himself has
None of these
When the owner is estopped for the conduct from denying the sellers authority to sell,
the transferee will get _____
(a)
(b)
(c)
(d)
A good title as against the true owner
A better title as against the true owner
No title as against the true owner
None of these
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MODEL TEST PAPER - 19
88
...
When the time of sending the goods has not been fixed by the parties the seller must send
them within ______
(a)
(b)
(c)
(d)
90
...
The seller
The third party
The term goods under the Sale of Goods Act, 1930 does not include _________
(a)
(c)
94
...
The buyer
The buyer and seller both
The seller of goods is deemed to be an unpaid seller when ______
(a)
(b)
(c)
(d)
92
...
A good title to the goods as against the original buyer
Better title as against the true buyer
No title as against the true owner
None of these
Sale
Hire purchase agreement
(b)
(d)
Agreement to sell
Quasi Contract
A stipulation in a contract of Sale of goods where violation by seller gives a right of recision
to buyer, is called _______
(a)
(c)
Guarantee
Condition
520
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(b)
(d)
Warrantee
Term
Common Proficiency Test (CPT) Volume - I
96
...
A stipulation which is collaterals to the main purpose of contract gives the buyer only right
to claim the damages, is known as ______
(a)
(c)
98
...
Condition
Warranty
The number of partners in firm carrying any banking business should not exceed
(a)
(c)
99
...
‘C’
did not manufacture those goods what is your advise:–
(a)
(b)
(c)
(d)
A is discharged from his obligation
A is not discharged from his obligation and is liable to ‘B’ for damages
B can say to A to get manufactured the goods from other party
Contract becomes void
...
Which of the following curve cannot be u-shaped?
(a)
(c)
102
...
Average total cost
Average fixed cost
Extravagant
Unlimited
(b)
(d)
Scarce
Restricted
The average fixed cost :
(a)
(b)
remains the same whatever the level of output
increase as output increases
Common Proficiency Test (CPT) Volume - I
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MODEL TEST PAPER - 19
(c)
(d)
104
...
its total cost will be zero
its fixed cost will be positive
(b)
(d)
its variable cost will be positive
its average cost will be zero
The average total cost of producing 50 units is Rs
...
1000
...
slopes downwards at first and then upwards
slopes upwards, then remains constant and then falls
slopes downwards
none of the above
If a firm produces zero output in the short period :
(a)
(c)
106
...
10
Rs
...
30
Rs
...
Demand curve in most cases slopes
(a)
(c)
109
...
downward towards right
upward towards left
Alfred Marshall
Paul Samuelson
(b)
(d)
Edwin Camon
Fredric Bonham
Price elasticity of demand is defined as
(a)
Changein quantity demanded
Changein price
(b)
Proportionate change in quantity demanded
Changein price
(c)
Changein quantity demanded
Proportion change in price
(d)
Proportion changein quantity demanded
Proportion change in price
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111
...
(b)
(d)
comforts
capital goods
marginal utility starts declining
marginal utility become zero
marginal utility is equal to marginal utility of money
total utility is increasing
consumer has full knowledge of all relevant information
all commodities are homogenous and divisible
prices of commodities remain the same throughout the analysis
all of the above
The ‘substitution effect’ takes place due to change in
(a)
(b)
(c)
(d)
118
...
inversely related to its quantity
not proportional to its quantity
independent of its quantity
none of the above
Consumer stops purchasing the additional units of the commodity when (a)
(b)
(c)
(d)
116
...
ordinal concept
none of the above
Marginal utility of a commodity depends on its quantity and is
(a)
(b)
(c)
(d)
114
...
cardinal concept
indeterminate concept
income of the consumer
prices of the commodity
relative prices of the commodities
all of the above
Under income effect, consumer
(a)
(b)
(c)
(d)
moves along the original indifference curve
moves to higher or lower indifference curve
always purchases higher quantities of both the commodities
none of the above
Common Proficiency Test (CPT) Volume - I
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MODEL TEST PAPER - 19
119
...
One of the essential conditions of perfect competition is (a)
(b)
(c)
(d)
121
...
(b)
(d)
A perfectly competitive firm has control over
(a)
(b)
(c)
(d)
125
...
MC = MR
MC cuts the MR from below
MC is rising when it cuts the MR
All of the above
Which of the following influences most the price level in the very short-run period?
(a)
(c)
123
...
firm is the price-giver and industry the price taker
firm is the price taker and industry the price giver
both are the price takers
none of the above
It is possible to substitute the monopolized product with another monopolized product
Entry of new firms is possible to produce the same product
The amount of output produced is very small
None of the above
The demand curve facing an industrial firm under monopoly is a/an (a)
(c)
horizontal straight line
downward sloping
524
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(b)
(d)
indeterminate
upward sloping
Common Proficiency Test (CPT) Volume - I
127
...
A monopoly producer usually earns ______ even in the long run
(a)
(c)
129
...
(b)
(d)
In short run, a firm in monopolistic competition
(a)
(b)
(c)
(d)
134
...
only normal profits
none of the above
Consumer’s surplus left with the consumer under price discrimination is :
(a)
(c)
132
...
super normal profits
losses
Price discrimination is not possible :
(a)
(c)
130
...
Per capita national income means __________
(a)
(c)
137
...
N
...
The Reserve Bank of India
division of death rate by birth rate
multiplication of death rate by birth rate
addition of death rate and birth rate
subtraction of death rate from birth rate
the number of children dying before reaching the school going age
the number of children dying before reaching 3 years of age
the proportion of children dying within a year of their birth
none of the above
Density of population indicates the
(a)
(b)
(c)
(d)
143
...
abundant population
abundant natural resources
abundant inequalities to distribution of income
abundant surplus manpower in agriculture
Growth rate of population can be measured by
(a)
(b)
(c)
(d)
141
...
(b)
(d)
The most important remedy to the problem of poverty in India is :
(a)
(b)
(c)
(d)
139
...
many sellers producing differentiated product
few sellers producing differentiated product
Capital - and ratio
Land - output ratio
Land - labour ratio
the number of person per square kilometre
Occupational structure refers to the
(a)
(b)
number of people living in a country
size of working force in a country
526
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Common Proficiency Test (CPT) Volume - I
(c)
(d)
144
...
(b)
(d)
101 crores
125 crores
225
324
(b)
(d)
280
330
income of its population
size of its population
(b)
(d)
geographical area
income of the government
changed significantly
remained more or less static
moved against services and in favour of agriculture
shown trends which cannot be titled in any pattern
Which of the following is correct?
(a)
(b)
(c)
(d)
150
...
2001
1991
The real determinant of the size of market in a country is the
(a)
(c)
148
...
2005
2011
The population of India in 2012-13 was more than__________
(a)
(c)
146
...
Less than 5 percent of population pays income tax in India
...
If y = 5xx, then
(a)
(c)
dy
is equal to _____
dx
5xx(1– log x)
5xx(1+ log x)
Common Proficiency Test (CPT) Volume - I
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(b)
(d)
5xx–1
None of these
527
MODEL TEST PAPER - 19
152
...
154
...
(b)
(d)
8, 2
6, 4
(b)7, 3
(d)5, 5
For the numbers 1, 2, 3 ……, n standard deviation is ______
(a)
n2 1
12
(b)
(c)
157
...
M
...
M
...
Telephone interview
Personal interview
n2 1
12
(d)
n2 1
12
None of these
For a group of 8 students, the sum of squares of differences in ranks for Economics and
English marks was 50
...
(a)
(c)
0
...
30
528
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(b)0
...
A number is selected from the numbers 1, 2, 3, 4 …
...
The probability for it to be divisible
by 4 or 7 is ____
...
3
25
1
25
(d)None of these
If 15 days are selected at random, then the probability of getting two Fridays are _________
(a)
(c)
160
...
19
(d)0
...
543, 23
...
451, 22
...
6421, 23
...
0
...
29
A company estimates the mean life of a drug under typical weather conditions
...
25 (months)2
The interval estimate with a confidence level of 90% is _________
(a)
(c)
161
...
1
2
(b)6
(d)3
log (12 + 22 + 32) is equal to _________
(a)
(c)
165
...
3
2
log 12 + log 22 + log 32
log 2 – log 7
(b)
(d)
log 2 + log 7
None of these
(b)
(d)
log (2×3×5×7)
None of these
log (3 × 5 ×7)2 is equal to _________
(a)
(c)
2(log 3 + log 5 + log 7)
2(log 3 – log 5 – log 7)
Common Proficiency Test (CPT) Volume - I
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MODEL TEST PAPER - 19
166
...
0, 4, –3
None of these
3, 5, 7
3, –5, –7
(b)
(d)
–3, –5, –7
–3, –5, 7
Imaginary and unequal
Real and equal
(b)
(d)
Real and unequal
None of these
–2, –3
4, 8
(b)
(d)
2, 3
None of these
x² – 4x + 1 = 0
x² – 4x – 1 = 0
(b)
(d)
x² + 4x + 1 = 0
None of these
First quadrant
Third quadrant
(b)
(d)
Second quadrant
Fourth quadrant
The inequalities x > 0, y < 0 represents _________
(a)
(c)
175
...
1, 4, –3
0, –4, 3
If one root of the quadratic equation is 2 3 , the equation is _________
(a)
(c)
173
...
(b)
(d)
The roots of the equation x2 – 18x + 81 = 0 are _________
(a)
(c)
171
...
0, –2, –3
None of these
The equation x3 – x2 – 12x = 0 is satisfied by _________
(a)
(c)
169
...
2, 3
0, 2, 3
First quadrant
Third quadrant
(b)
(d)
Second quadrant
Fourth quadrant
Simple interest on Rs
...
5% p
...
is _________
(a)
(c)
Rs
...
8520
530
© The Institute of Chartered Accountants of India
(b)
(d)
Rs
...
Rs
...
a
...
Rs
...
20
Rs
...
20
(b)
(d)
Rs
...
16
Rs
...
16
Rs
...
4818
...
Rs
...
10
None of these
If n + 1 = 20 n 1 , then value of n is
(a)
(c)
182
...
Rs
...
2341
Rs
...
a
...
Rs
...
3,000 is invested at annual rate of interest of 10% p
...
The amount after two years if
compounding is done quarterly is _________
(a)
(c)
179
...
2,000 is invested at annual rate of interest of 10% p
...
The amount after two years if
compounding is done half yearly is _________
(a)
(c)
178
...
121
Rs
...
In how many ways can 11 persons sit at a round table?
(a)
(c)
185
...
The number of ways, in which a committee of 6 can be formed
from them, if the committee is to include at least 2 girls, is _________
(a)
(c)
192
...
(b)
(d)
How many different arrangements are possible from the letters of the word CALCULATOR?
(a)
(c)
190
...
The number of ways of forming such a
committee is _________
(a)
(c)
189
...
10
How many different numbers can be formed by using any four out of six digits
1, 2, 3, 4, 5, 6, no digit being repeated in any number?
(a)
(c)
187
...
In how many ways can
these be placed on a shelf if the books on the same subject are to be together?
(a)
(c)
186
...
The 20th term of the A
...
1, 3, 5, 7, …
...
9
8
(b)
(d)
2499
9801
(b)
(d)
385
384
10
None of these
2501
None of these
(b)
(d)
386
None of these
(b)
(d)
4410
44100
The eleventh term of the G
...
(a)
(c)
200
...
+ 203 is equal to
(a)
(c)
199
...
+ 102 is equal to
(a)
(c)
198
...
, 99 is equal to _________
(a)
(c)
197
...
(b)
(d)
The sum of the series 1,2,3,4,…
...
39
35
1
, 1, 2, 2², ……
...
nth term to 10 term is
(a)
(c)
1024
1025
(b)
(d)
1023
None of these
Common Proficiency Test (CPT) Volume - I
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533
MODEL TEST PAPER - 19
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Common Proficiency Test (CPT) Volume - I
BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
COMMON PROFICIENCY TEST
Model Test Paper – BOS/CPT – 20
Time : 4 hours
Maximum Marks : 200
The test is divided into four sections
...
Rings and pistons of an engine were changed at a cost of Rs
...
Trade receivables account
Bad debts account
(b)
(d)
Loan account
Bank overdraft
Trading account
Balance Sheet
(b)
(d)
Profit and Loss a/c
None of the above
On 01
...
2011, A draws a bill on B “for 30 days after sight”
...
09
...
The maturity date of the bill will be
(a)
(c)
5
...
(b)
(d)
Which of the following is nominal account
(a)
(c)
3
...
10
...
10
...
10
...
10
...
Which of the following account will have credit balance?
(a)
(c)
7
...
Prudence
Materiality
(b)
(d)
Substance over form
All of the above
Historical cost
Realisable value
(b)
(d)
Current cost
All of the above
Old profit sharing ratio
Capital ratio
(b)
(d)
New profit sharing ratio
Equal ratio
In case of admission of a partner, the first account prepared is
(a)
(c)
15
...
Only cash transactions
(b)
Cash, Bank and discount transactions
Cash purchases and cash sale transactions
Which of the followings is a valuation principal?
(a)
(c)
13
...
31,000
None of the above
Selection of accounting policies is based on:
(a)
(c)
12
...
Rs
...
36,000
The value of an asset after reducing depreciation from the historical cost is known as
(a)
(c)
10
...
(b)
(d)
The book value of the assets as on 1st April, 2011 is Rs
...
Depreciation is charged
on the assets @ 10%
...
64,000
...
Debentures A/c
Prepared insurance
Revaluation account
(b)
Profit and Loss adjustment account (d)
Realisation account
Bank account
After the death of a partner, amount payable is received by
(a)
(c)
Government
Executor of the dead partner
536
© The Institute of Chartered Accountants of India
(b)
(d)
Firm
None of the three
Common Proficiency Test (CPT) Volume - I
16
...
5,000
...
500
...
Deducted
None of the above
An expense
An asset
(b)
(d)
Income
Liability
Added in the bank reconciliation statement
Subtracted in the bank reconciliation statement
Not required to be adjusted in the bank reconciliation statement
None of the above
Capital ratio
Gaining ratio
(b)
(d)
Sacrificing ratio
Profit sharing ratio
Sometimes, in case of admission of a partner, all partners may agree to show the assets and
liabilities in the new balance sheet at their old figures even when they agree to revalue them
...
The account is known as
(a)
(c)
22
...
The remaining partners contribute to such compensation amount in
(a)
(c)
21
...
8%
None of the three
Debit balance of the cash is
(a)
(c)
19
...
9%
10%
Memorandum Revaluation A/c
Profit & Loss Adjustment A/c
(b)
(d)
Revaluation A/c
None of the above
(b)
(d)
Listed in NSE
None of the above
In case of Private companies shares are:
(a)
(c)
Listed in BSE
Not listed in any stock exchange
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
537
MODEL TEST PAPER - 20
23
...
X as on Dec
...
Goodwill
Rs
...
35,000
Plant & Machinery
60,000
Furniture
10,000
Investments
25,000
Bills payable
10,000
Outstanding expenses
5,000
Bills Receivable
9,000
6,000
Closing inventory
25,000
Cash
Creditors
45,000
Drawings
Net Profit
22,000
Capital
Bank overdraft
15,000
12,000
1,55,000
Balance Sheet total will be
(a)
(c)
24
...
2,40,000
Rs
...
19,000
Rs
...
30,000
Rs
...
5,000
(b)
(d)
25
...
Salaries
Rs
...
4,000
Interest on overdraft
Rs
...
17,700
Rs
...
17,000
None of the three
...
Trial Balance shows the following balance
Dr
...
Capital Income tax
Income tax advance payment
Capital A/c balance will be
(a)
Rs
...
40,000
27
...
570
Rs
...
500
None of the three
Current liability
Fixed liability
(b)
(d)
Contingent liability
None of the three
Rs
...
350
(b)
(d)
Rs
...
5,000 on “Sale on approval” basis for which
consent of the customer was not received upto Dec
...
Goods sent on approval included
profits at 25% on cost
...
Rs
...
(b)
(d)
Rs
...
10,000
1,600
As per trial balance
Rs
...
31, 2009
Bad Debts
1,850
Dec
...
(ii)
Make a provision for discount on Trade receivables 2%
...
Cr
...
50,000
Rs
...
4,000
(b)
(d)
Rs
...
2009 Loose Tools A/c showed the balance of Rs
...
On 31st Dec
...
4,680
...
1,440
...
1,080
Rs
...
1,200
None of the three
539
MODEL TEST PAPER - 20
32
...
31, 2009
Loan paid on June 30, 2009
Loan paid on Sept
...
(b)
(c)
(d)
Rs
...
Rs
...
1,000
Dr
...
Rs
...
151 was entered in the Purchase Book as Rs
...
51 rectifying entry will be
(a)
(b)
(c)
(d)
35
...
A of Rs
...
A
...
Rs
...
50
Rs
...
a
...
To Suppliers A/c
To Suspense A/c
Purchases A/c
Dr
...
To Suppliers
None of the three
Rs
...
100
36
136
136
136
136
The accountant of the firm M/s ABC is unable to tally the following trial balance
...
No
...
2
...
Account heads
Debit (Rs
...
)
12,500
2,500
15,000
Wrong placing of sales account
Incorrect totalling
...
540
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
36
...
80,000 and Rs
...
They are entitled to 9% p
...
interest on capital
before distributing the profits
...
7,800 after allowing interest
on capital
...
(b)
(d)
Rs
...
6,000
(b)
(d)
Rs
...
Rs
...
2,300
Rs
...
800
Rs
...
Rs
...
8,250
Rs
...
6,500
None of the three
Ram, the manager, is entitled to get a commission of Rs
...
125 per article sold
...
73,800
...
Rs
...
9,800
Bank overdraft as per cash book on 31st Dec
...
(b)
(d)
Balance as per Cash Book on 31
...
2010
Cheque issued and presented on 4th April
Cheque sent to bank but not credited
B/P paid by Bank not entered in cash Book
Balance on per pass book will be
(a)
(c)
38
...
4,680 and Rs
...
5,000 and Rs
...
12,500
Rs
...
12,510
None of the three
Vimal of Kanpur consigned to his agent Nirmal of Allahabad 100 machines at Rs
...
He paid the following expenses-packing charges Rs
...
400 and freight Rs
...
600 for cartage and octroi
...
500 for godown charges
...
He was entitled to a
commission of 6%
...
6,820
Rs
...
6,800
None of the three
541
MODEL TEST PAPER - 20
41
...
of Nagpur consigned D of Delhi 1,000 Kgs
...
13 per Kg
...
750 on cartage, Insurance and freight
...
of oil was spoiled (Normal loss) D spent Rs
...
His
selling expenses were Rs
...
of oil sold
...
(b)
(d)
Rs
...
35,500
Rs
...
35,000
None of the three
Capital introduced in the beginning by Shyam Rs
...
4,000
...
3,000 and closing capital is Rs
...
The
amount of profit for the year will be
(a)
(c)
46
...
8,125
Rs
...
A purchased
goods costing Rs
...
B sold the goods for Rs
...
A is entitled to get 1%
commission purchase and B is entitled to get 5% commission on sales
...
Rs
...
(b)
(d)
Cost of machine Rs
...
Residual value Rs
...
Useful life 10 years the company
charged depreciation for the first 5 years on straight line method
...
Depreciation amount for 6th
year will be
...
Rs
...
2,200
Rs
...
3,500
(b)
(d)
Rs
...
They admit C with 1/5 share in profits,
which he acquires equally from both i
...
1/10 from A and 1/10 from B
...
A and B are partners in a firm sharing profits and losses in the ratio of 3:2
...
A surrenders 1/5th share of his profit in favour of C and B surrenders 2/5th
share of his profit in favour of C
...
12:6:7
12:4:5
(b)
(d)
12:5:6
None of the three
The profits of a firm for the last 5 years were as follows:
Year ended 31st March
2005
2006
2007
2008
2009
Profits (Rs
...
The weights to be used are
2005
2006
1
2
Goodwill amount will be
(a)
(c)
49
...
1,30,000
None of the three
Rs
...
45,000
(b)
(d)
Rs
...
3,00,000; sales Rs
...
If margin 20% on sales then closing
inventory will be
(a)
(c)
51
...
1,31,200
Rs
...
Their capitals
on Dec
...
1,02,900 and Rs
...
Mohan was admitted as a
new partner on Jan
...
He contributes Rs
...
He brings
his capital in profit sharing ratio
...
(a)
(c)
50
...
84,000
Rs
...
80,000
None of the three
A’s acceptance to B for Rs
...
1000 and a new bill
for the balance plus Rs
...
The amount of the new bill will be
(a)
(c)
Rs
...
1,500
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(b)
(d)
Rs
...
Ramesh, an employee gets a salary of Rs
...
7,000 (cost
price Rs
...
6,000
...
Rs
...
650
Rs
...
12,00,000
(b)
(d)
Rs
...
800
Rs
...
600
None of the three
Rs
...
1,500
(b)
(d)
Rs
...
Ltd
...
3,50,000 and liabilities of Rs
...
for a purchase consideration of Rs
...
The Promising Co
...
paid the purchase
consideration by issuing 12% debentures of Rs
...
Number of
Debentures issued will be
(a)
(c)
58
...
forfeited 500 shares of Rs
...
2 per share
...
8 per share
...
Rs
...
600
X Ltd
...
10 each issued at par to Ravi on which he had paid Rs
...
50 per share on application and Rs
...
50 per share on allotment
...
3 on first call, Share capital in case of forfeiture will be debited by
(a)
(c)
56
...
3,000
None of the three
Chandra Ltd
...
100 each at par
...
30; on allotment Rs
...
35 on first and final call
...
All the money was duly received
except the first and final call on 200 shares cash book balance will be
(a)
(c)
55
...
A receives a bill from B for Rs
...
01
...
On 04
...
2010
...
A got the bill discounted at 12%
...
Rs
...
4,000
3,000 debentures
2,800 debentures
(b)
(d)
3,100 debentures
None of the three
A Company issued 2,000, 12% debentures of Rs
...
Loss on issue of debentures will be
(a)
(c)
Rs
...
11,000
544
© The Institute of Chartered Accountants of India
(b)
(d)
Rs
...
On 1st Jan
...
issued 14% Rs
...
Amount of discount to be written off every year will be
(a)
(c)
60
...
1,200
Rs
...
1,000
None of the three
The Company issued debentures of the face value of Rs
...
These debentures are redeemable by annual drawings of Rs
...
each year
...
Discount to be written off in the fifth year will be
(a)
(c)
Rs
...
800
(b)
(d)
Rs
...
Which does not came into the category of delivery?
(a)
(c)
62
...
Symbolic
Perpetual
In C
...
F
...
I
...
stands for:
(a)
(b)
(c)
(d)
64
...
Actual
Constructive
Actual delivery
Constructive delivery
(b)
(d)
Symbolic delivery
Specific delivery
Which is true regarding the expulsion of a partner?
(a)
(b)
(c)
(d)
The expulsion must be in the interest of the partnership
The partner to be expelled is served with notice
He should be given an opportunity of being heard
All of these
Common Proficiency Test (CPT) Volume - I
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545
MODEL TEST PAPER - 20
66
...
(b)
(d)
Void
Illegal
Void
Voidable
(b)
(d)
Valid
Illegal
Void
Voidable
(b)
(d)
Valid
Illegal
Quasi contract
Wagering agreement
(b)
(d)
Contingent contract
Voidable contract
Voidable
Valid
(b)
(d)
Void
None of these
Consideration must move at the desire of the
(a)
(c)
75
...
He has ratified the contract
Third party has acquired right in good faith
Contract is not separable
All of these
A agrees to pay Rs
...
(a)
(c)
73
...
(b)
(d)
Where the consent of both the parties is given by mistake, the contract is:
(a)
(c)
71
...
Partnership deed
Separate legal entity
A party entitled to rescind the contract, loses the remedy where
(a)
(b)
(c)
(d)
69
...
This is a
(a)
(c)
68
...
Contingent contract is
(a)
(c)
77
...
Partners dues are paid off
The registrar strikes off the name
...
(b)
(d)
Each of the partner is ________
(a)
(c)
82
...
Duration not fixed
Duration fixed
Dissolved at any time
Can be dissolved on the happening of an event
Every partner has the right
(a)
(b)
(c)
(d)
80
...
(b)
(d)
A partnership at will is one
(a)
(b)
(c)
(d)
78
...
It is not a right of partner ________
(a)
(c)
86
...
Dissolution by agreement
Compulsory dissolution
Dissolution in the happening of certain contingency
Dissolution by leaving insolvent partner
Every citizen is at liberty to conduct________
(a)
(c)
91
...
To buy or sell goods on account
To borrow money for the purposes of firm
To enter into partnership on behalf of firm
To engage a lawyer to defend actions against firm
________ does not relate the dissolution of firm
(a)
(b)
(c)
(d)
89
...
(b)
(d)
It is not included in the implied authority of a partner ________
(a)
(b)
(c)
(d)
87
...
There can be a stranger to a ________
(a)
(c)
Contract
Agreement
548
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(b)
(d)
Consideration
Promise
Common Proficiency Test (CPT) Volume - I
93
...
Valid
Voidable
(b)
(d)
Void
None of these
Promisor alone
Agent of the promisor
(b)
(d)
Legal representative of promisor
All of these
Past
Future
(b)
(d)
Present
All of these
Coercion
Misrepresentation
(b)
(d)
Undue influence
Fraud
A sells to B a horse which A knows to be unsound
...
Choose the best alternative
(a)
(b)
(c)
(d)
100
...
(b)
(d)
Consideration may be ________
(a)
(c)
98
...
Luxuries
All the things
An agreement the object of which is unlawful is ________
(a)
(c)
96
...
Necessaries
Necessities
The relation between A and B would make it A’s duty to tell B if the horse is unsound
If A is silent, silence will not be equivalent to speech
Here it is not duty of A to tell the horse’s defect
A is not bound to tell the defect as the rule of caveat emptor applies
M, a minor aged 17, broke right arm in a cricket match
...
Does the physician have a valid claim for his services
...
(a)
(b)
(c)
(d)
The physician cannot claim for his services due to contract with minor which is void
The physician has a valid claim for his services which are included in the “Necessaries”
The physician has no claim for minor’s “necessaries” and minor will be personally liable
The physician can claim for his services from minor’s parents
SECTION – C : GENERAL ECONOMICS (50 MARKS)
101
...
At shut down point :
(a)
(c)
103
...
(1) only
(1), (2) and (3) only
The difference between the price a consumer is willing to pay and the price he actually
pays is called (a)
(c)
108
...
(b)
(d)
In a perfect competitive market
(a)
(b)
(c)
(d)
106
...
Total revenue is equal to TVC
All of the above
If as a result of change in price, the quantity supplied of the good remains unchanged, we
say elasticity of supply is:
(a)
(c)
104
...
National income of a country is also known as :
(a)
(b)
(c)
(d)
111
...
The level and rate of taxation
Who ultimately bears the money burden of the tax
The growth of taxation
The way in which a tax is collected
Which of the following is an example of perfect competition?
(a)
(b)
(c)
(d)
114
...
Gross National Product at market prices
Net National Product at factor cost
Gross Domestic Product at factor cost
Net Domestic Product at Market prices
Market for agricultural goods
Market for soaps
Market for petroleum products
Market for clothes
The main objective of fiscal policy in developing countries is to :
(1)
(2)
(3)
(4)
(a)
(c)
115
...
(b)
(d)
The excess of pubic expenditure over public revenue
The sum of deficit on revenue account and deficit on capital account
That portion of government expenditure which is financed through the sale of 91 days
Treasury Bills and drawing down of cash balances
All of the above
A Government budget is defined as:
(a)
(b)
A description of the fiscal policies of the government and the financial plans
A financial plan describing estimated receipts and proposed expenditures and Disbursement
under various heads
Common Proficiency Test (CPT) Volume - I
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551
MODEL TEST PAPER - 20
(c)
(d)
117
...
(b)
(c)
(d)
Does not own any land
Workers on a land holding of less than one hectare
Works on a land holding for wages
Keeps shifting between agriculture and non-agriculture jobs
Provide credit and other facilities to small and marginal farmers, agricultural labours and
artisans in rural areas
Provide credit to the common people in rural areas
Take over the functions of Agricultural Refinance Corporation of India
Supplement scheduled commercial banks
Tenth
Sixth
(b)
(d)
Fourth
Second
The second plan’s programme of industrialization was based on the ______ model
(a)
(c)
124
...
(a)
(c)
123
...
Average cost curve
Marginal revenue curve
The marginal farmer in India is defined as a cultivator who :
(a)
(b)
(c)
(d)
121
...
Budget line
Indifference map
Human Development Index (HDI) is a composite index of :
(a)
(b)
(c)
(d)
119
...
C
...
V
...
Which of the following equation is correct?
(a)
PY
PX
(b)
MRTSX =
(c)
126
...
Blocked entry
The low LAC costs
(b)
(d)
The high price he charges
Advertising
He operates in more than one market
He makes more profit because he discriminates
He maximizes his profits in each market
He charges different prices in each market
Recognize their independence
Tend to keep prices constant
(b)
(d)
Do not collude
All of the above
The demand for a factor of production is said to be a derived demand because
(a)
(b)
(c)
(d)
132
...
Minimum
Falling
Which of the following statements is not true about a discriminating monopolist?
(a)
(b)
(c)
(d)
130
...
Maximum
Raising
If the demand curve confronting an individual firm is perfectly elastic, then :
(a)
(b)
(c)
(d)
128
...
Positive income elasticity implies that as income rises, demand for the commodity
(a)
(c)
Rises
Remains unchanged
Common Proficiency Test (CPT) Volume - I
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(b)
(d)
Falls
Becomes zero
553
MODEL TEST PAPER - 20
133
...
Open market operations by a Central bank involve :
(a)
(b)
(c)
(d)
135
...
Outward oriented growth
Export promotion
Import restrictions
Emphasizing comparative advantage
Which is the soft lending arm of the World Bank?
(a)
(c)
139
...
Loans and advances
Money at call and short notice
Bills discounted and purchased
Investment in government securities
CENVAT stands for :
(a)
(b)
(c)
(d)
137
...
It has no branches
It is the banker of the government
It deals with general public
None of the above
Number of workers living in a country
Size of working population in the industrial sector
Distribution of working population among different occupations
Nature of different occupations in the economy
The ‘Year of Great Divide’ with regard to population growth in India is :
(a)
(c)
1911
1947
554
© The Institute of Chartered Accountants of India
(b)
(d)
1921
1971
Common Proficiency Test (CPT) Volume - I
141
...
The Eleventh Five Year Plan (2007-12) kept a target of a GDP growth rate ____
(a)
(c)
143
...
(b)
(d)
Economic development has retarded in India mainly due to :
(a)
(c)
148
...
(a)
(c)
147
...
(b)
(d)
The largest share of foreign aid in India has been used in the programme of :
(a)
(c)
145
...
Foreign Import Export Organization
Federation of Import Export Organization
Forum of Indian Export Organization
Federation of Indian Export Organization
Initiative for determined planned economic development
Rapid population growth
Predominant agrarian set-up
Slow Industrial Progress
The percentage of people working in agriculture sector came down to around ________in
2013-14
...
The Government aimed at reducing the Maternal Mortality Rate (MMR) to ______ per
1000 live births by the end of the Eleventh Plan
...
The series
1 1 1 1
...
1
3
1
6
(d)
None of these
The series 1 + 10–1 + 10–2 + 10–3
...
9
10
10
9
(d)
None of these
The sum of the series 1,-1,1,-1,1…… to 100 terms is equal to
(a)
(c)
154
...
}, then A B is equal to
(a)
(c)
157
...
}, then A B is equal to
(a)
(c)
156
...
1
0
Set of all integers
(b)
(d)
Set of all positive integers
None of these
(b)
(d)
Null set
None of these
The set of squares of positive integers is
(a)
(c)
A finite set
An infinite set
556
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
158
...
If f(x) =
(a)
(c)
165
...
(b)
(d)
x2 25
, f(5) is
If f(x) =
x5
(a)
(c)
163
...
5
8
If B is any set then B B is
(a)
(c)
161
...
15
3
If f(x) =
0
4
5
, then f(0) is
x
+
5
x2 1
, x 1, f(1) = A
x 1
For what value of A, f(x) is continuous at x = 1?
(a)
(c)
1
0
Common Proficiency Test (CPT) Volume - I
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(b)
(d)
2
None of these
557
MODEL TEST PAPER - 20
166
...
lim
x 0
(a)
(c)
168
...
+
Doesnot exist
lim
(a)
(c)
169
...
+ n
is equal to
n2
(a)
(b)
1
2
(c)
171
...
+ n 2
is equal to
n
n3
lim
(a)
(b)
0
(c)
172
...
+ n3
is equal to
n
n4
lim
(a)
1
4
(b)
1
(c)
0
(d)
None of these
558
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
173
...
(c)
176
...
Discontinuous at x = 0
Continuous at x = 0
dy
is equal to
dx
(a)
(b)
2 at
(c)
177
...
2
1
If y = 2x2 + 3x + 10, then
(a)
(c)
179
...
The value of
6x
+ 3e 2x + 5 dx is equal to
5
(a)
3
x 6 e 2x 5x k
2
(b)
30x 4 6e 2x
(c)
3
x 6 e ex
2
(d)
None of these
(a)
x3
1
2x
3
x
(b)
x3
1
2x k
3
x
(c)
x2
k
3
(d)
None of these
(b)
(d)
5xex + 5ex +5x + c
None of these
2
181
...
1
The value of x dx is
x
The value of
(a)
(c)
183
...
1
1
log 1 2
2
x
1
log 1 2
x
(d)
None of these
(b)
log (x log x) (c)
(d)
None of these
The value of the integral
1
c
(a)
x log x
(c)
log (log x) + c,
1
185
...
The value of
2x + 5
is
0
(a)
(c)
54
19
(b)
(d)
3
187
...
189
...
5200 per month and that for a group of 6
female is Rs
...
What is the combined salary?
Rs
...
(b)
(d)
If the quartile deviation of x is 8 and 3x + 6y = 20, then the quartile deviation of y is
(a)
(c)
192
...
6,160
Rs
...
4
3
3
4
Statistics is applied in
(a)
(c)
190
...
50
0
...
40
None of these
A number is selected from the set S = {1, 2, 3, 4 …
...
The probability that it would be
divisible by 4 or 7 is
(a)
(c)
0
...
36
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
(b)
(d)
0
...
Suresh is selected for three different posts
...
The
probability, that Suresh would be selected, is
(a)
(c)
195
...
5
None of these
0
...
27
(b)
(d)
0
...
(b)
(d)
Eight balls are distributed at random in three containers
...
0
...
6
0
...
47
(b)
(d)
0
...
M
...
The probability,
that during one particular minute there will be no phone calls, is
(a)
(b)
1
e
(c)
198
...
(b)
(d)
2
32
are
e
5, 15
None of these
A population consists units a, b, c, d, e, f
...
6, 14
4, 16
– t –10
10
15
(b)
(d)
If y = x10 + 5log 3x + 6e2x + 10 then
(a)
10x 9 15x 12e2x
(c)
10x 9
5
6e 2x
x
562
© The Institute of Chartered Accountants of India
12
None of these
dy
is equal to
dx
5
12e 2x
x
(b)
10x 9
(d)
None of these
Common Proficiency Test (CPT) Volume - I
Answer of Model Test Papers
Model Test Paper – BOS/CPT-1
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(c)
2
(d)
3
(c)
4
(b)
5
(d)
6
(b)
7
(c)
8
(a)
9
(c)
10
(b)
11
(c)
12
(d)
13
(c)
14
(a)
15
(a)
16
(a)
17
(a)
18
(a)
19
(c)
20
(b)
21
(a)
22
(c)
23
(d)
24
(b)
25
(a)
26
(a)
27
(b)
28
(b)
29
(b)
30
(a)
31
(a)
32
(c)
33
(d)
34
(d)
35
(b)
36
(a)
37
(d)
38
(a)
39
(d)
40
(b)
41
(b)
42
(c)
43
(a)
44
(d)
45
(b)
46
(c)
47
(a)
48
(a)
49
(a)
50
(b)
51
(c)
52
(d)
53
(d)
54
(d)
55
(d)
56
(c)
57
(c)
58
(b)
59
(d)
60
(b)
SECTION – B : MERCANTILE LAWS
61
(c)
62
(d)
63
(a)
64
(b)
65
(d)
66
(d)
67
(b)
68
(c)
69
(a)
70
(b)
71
(c)
72
(b)
73
(d)
74
(b)
75
(d)
76
(d)
77
(a)
78
(c)
79
(a)
80
(c)
81
(b)
82
(a)
83
(a)
84
(a)
85
(c)
86
(c)
87
(a)
88
(b)
89
(b)
90
(c)
91
(b)
92
(b)
93
(c)
94
(d)
95
(c)
96
(a)
97
(b)
98
(d)
99
(b)
100
(b)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
563
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(a)
102
(a)
103
(b)
104
(c)
105
(b)
106
(d)
107
(d)
108
(b)
109
(a)
110
(d)
111
(b)
112
(a)
113
(d)
114
(a)
115
(c)
116
(c)
117
(a)
118
(b)
119
(c)
120
(b)
121
(a)
122
(a)
123
(a)
124
(c)
125
(d)
126
(d)
127
(c)
128
(a)
129
(c)
130
(c)
131
(c)
132
(d)
133
(c)
134
(b)
135
(a)
136
(a)
137
(c)
138
(c)
139
(c)
140
(c)
141
(b)
142
(c)
143
(a)
144
(c)
145
(d)
146
(d)
147
(a)
148
(c)
149
(a)
150
(b)
SECTION – D : QUANTITATIVE APTITUDE
151
(d)
152
(d)
153
(b)
154
(a)
155
(b)
156
(d)
157
(b)
158
(a)
159
(b)
160
(a)
161
(d)
162
(b)
163
(a)
164
(a)
165
(b)
166
(a)
167
(d)
168
(a)
169
(b)
170
(a)
171
(b)
172
(c)
173
(a)
174
(d)
175
(a)
176
(c)
177
(a)
178
(a)
179
(b)
180
(b)
181
(b)
182
(c)
183
(c)
184
(a)
185
(d)
186
(c)
187
(c)
188
(c)
189
(b)
190
(a)
191
(c)
192
(a)
193
(b)
194
(a)
195
(a)
196
(c)
197
(c)
198
(a)
199
(b)
200
(a)
564
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
MODEL TEST PAPER–BOS/CPT-2
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(d)
2
(b)
3
(c)
4
(d)
5
(d)
6
(c)
7
(a)
8
(b)
9
(b)
10
(c)
11
(a)
12
(a)
13
(a)
14
(c)
15
(a)
16
(b)
17
(c)
18
(a)
19
(c)
20
(a)
21
(a)
22
(c)
23
(d)
24
(a)
25
(a)
26
(d)
27
(a)
28
(b)
29
(c)
30
(a)
31
(c)
32
(a)
33
(d)
34
(b)
35
(a)
36
(a)
37
(a)
38
(a)
39
(b)
40
(a)
41
(a)
42
(a)
43
(a)
44
(c)
45
(c)
46
(a)
47
(b)
48
(a)
49
(a)
50
(a)
51
(b)
52
(b)
53
(c)
54
(a)
55
(b)
56
(c)
57
(b)
58
(a)
59
(b)
60
(a)
SECTION – B : MERCANTILE LAWS
61
(c)
62
(d)
63
(d)
64
(a)
65
(c)
66
(d)
67
(c)
68
(a)
69
(d)
70
(a)
71
(d)
72
(d)
73
(c)
74
(b)
75
(d)
76
(c)
77
(a)
78
(d)
79
(d)
80
(b)
81
(d)
82
(b)
83
(c)
84
(b)
85
(d)
86
(a)
87
(b)
88
(c)
89
(c)
90
(b)
91
(c)
92
(a)
93
(b)
94
(c)
95
(a)
96
(a)
97
(d)
98
(d)
99
(a)
100
(a)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
565
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(b)
102
(d)
103
(a)
104
(c)
105
(a)
106
(a)
107
(c)
108
(c)
109
(a)
110
(d)
111
(d)
112
(d)
113
(b)
114
(b)
115
(b)
116
(d)
117
(d)
118
(b)
119
(b)
120
(b)
121
(b)
122
(c)
123
(c)
124
(a)
125
(d)
126
(c)
127
(a)
128
(c)
129
(c)
130
(a)
131
(b)
132
(d)
133
(b)
134
(a)
135
(c)
136
(d)
137
(b)
138
(b)
139
(b)
140
(a)
141
(d)
142
(c)
143
(a)
144
(d)
145
(b)
146
(b)
147
(c)
148
(a)
149
(c)
150
(a)
SECTION – D : QUANTITATIVE APTITUDE
151
(b)
152
(a)
153
(d)
154
(d)
155
(c)
156
(b)
157
(c)
158
(c)
159
(a)
160
(d)
161
(d)
162
(b)
163
(b)
164
(b)
165
(c)
166
(d)
167
(c)
168
(b)
169
(b)
170
(a)
171
(c)
172
(a)
173
(a)
174
(c)
175
(b)
176
(c)
177
(d)
178
(b)
179
(a)
180
(d)
181
(b)
182
(c)
183
(b)
184
(a)
185
(a)
186
(c)
187
(c)
188
(a)
189
(a)
190
(c)
191
(d)
192
(c)
193
(d)
194
(a)
195
(b)
196
(b)
197
(a)
198
(b)
199
(a)
200
(b)
566
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
MODEL TEST PAPER–BOS/CPT-3
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(d)
2
(b)
3
(a)
4
(d)
5
(c)
6
(d)
7
(a)
8
(c)
9
(b)
10
(c)
11
(c)
12
(c)
13
(c)
14
(a)
15
(c)
16
(a)
17
(b)
18
(c)
19
(c)
20
(b)
21
(b)
22
(c)
23
(b)
24
(d)
25
(b)
26
(c)
27
(a)
28
(a)
29
(d)
30
(c)
31
(a)
32
(c)
33
(d)
34
(c)
35
(b)
36
(b)
37
(d)
38
(d)
39
(a)
40
(b)
41
(b)
42
(c)
43
(c)
44
(b)
45
(a)
46
(a)
47
(d)
48
(a)
49
(b)
50
(a)
51
(c)
52
(b)
53
(b)
54
(a)
55
(d)
56
(c)
57
(c)
58
(a)
59
(d)
60
(b)
SECTION – B : MERCANTILE LAWS
61
(b)
62
(d)
63
(a)
64
(b)
65
(c)
66
(d)
67
(d)
68
(a)
69
(c)
70
(b)
71
(c)
72
(b)
73
(b)
74
(d)
75
(b)
76
(d)
77
(c)
78
(c)
79
(d)
80
(b)
81
(c)
82
(b)
83
(c)
84
(a)
85
(a)
86
(b)
87
(a)
88
(a)
89
(b)
90
(a)
91
(d)
92
(d)
93
(d)
94
(b)
95
(c)
96
(a)
97
(d)
98
(d)
99
(b)
100
(a)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
567
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(c)
102
(a)
103
(b)
104
(a)
105
(d)
106
(a)
107
(b)
108
(b)
109
(c)
110
(d)
111
(d)
112
(b)
113
(c)
114
(a)
115
(d)
116
(c)
117
(a)
118
(b)
119
(b)
120
(d)
121
(d)
122
(b)
123
(b)
124
(b)
125
(c)
126
(a)
127
(a)
128
(c)
129
(c)
130
(a)
131
(b)
132
(b)
133
(d)
134
(b)
135
(d)
136
(c)
137
(d)
138
(d)
139
(c)
140
(b)
141
(c)
142
(c)
143
(a)
144
(a)
145
(b)
146
(a)
147
(c)
148
(a)
149
(d)
150
(d)
SECTION – D : QUANTITATIVE APTITUDE
151
(d)
152
(b)
153
(c)
154
(a)
155
(d)
156
(a)
157
(d)
158
(d)
159
(a)
160
(c)
161
(b)
162
(b)
163
(a)
164
(c)
165
(b)
166
(a)
167
(a)
168
(d)
169
(b)
170
(b)
171
(a)
172
(b)
173
(c)
174
(c)
175
(a)
176
(b)
177
(b)
178
(c)
179
(c)
180
(c)
181
(b)
182
(b)
183
(c)
184
(a)
185
(c)
186
(c)
187
(b)
188
(b)
189
(b)
190
(b)
191
(b)
192
(b)
193
(c)
194
(c)
195
(c)
196
(c)
197
(d)
198
(b)
199
(c)
200
(c)
568
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
MODEL TEST PAPER–BOS/CPT-4
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(d)
2
(b)
3
(a)
4
(c)
5
(c)
6
(a)
7
(a)
8
(b)
9
(d)
10
(d)
11
(b)
12
(c)
13
(a)
14
(c)
15
(a)
16
(d)
17
(c)
18
(b)
19
(b)
20
(d)
21
(c)
22
(b)
23
(d)
24
(b)
25
(c)
26
(a)
27
(d)
28
(d)
29
(d)
30
(b)
31
(b)
32
(a)
33
(d)
34
(c)
35
(a)
36
(b)
37
(c)
38
(c)
39
(b)
40
(c)
41
(b)
42
(b)
43
(b)
44
(c)
45
(a)
46
(b)
47
(c)
48
(c)
49
(a)
50
(b)
51
(c)
52
(c)
53
(d)
54
(b)
55
(a)
56
(c)
57
(b)
58
(c)
59
(a)
60
(a)
SECTION – B : MERCANTILE LAWS
61
(a)
62
(d)
63
(a)
64
(b)
65
(c)
66
(d)
67
(d)
68
(b)
69
(c)
70
(a)
71
(c)
72
(d)
73
(c)
74
(d)
75
(a)
76
(d)
77
(d)
78
(b)
79
(c)
80
(b)
81
(a)
82
(a)
83
(c)
84
(b)
85
(a)
86
(b)
87
(b)
88
(b)
89
(b)
90
(b)
91
(c)
92
(d)
93
(b)
94
(c)
95
(a)
96
(c)
97
(d)
98
(b)
99
(a)
100
(a)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
569
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(c)
102
(a)
103
(c)
104
(d)
105
(c)
106
(b)
107
(d)
108
(d)
109
(b)
110
(c)
111
(d)
112
(d)
113
(c)
114
(b)
115
(a)
116
(c)
117
(a)
118
(c)
119
(b)
120
(b)
121
(c)
122
(c)
123
(c)
124
(b)
125
(d)
126
(b)
127
(c)
128
(a)
129
(c)
130
(c)
131
(c)
132
(b)
133
(d)
134
(c)
135
(b)
136
(b)
137
(d)
138
(c)
139
(a)
140
(d)
141
(b)
142
(a)
143
(c)
144
(d)
145
(b)
146
(b)
147
(d)
148
(d)
149
(b)
150
(b)
SECTION – D : QUANTITATIVE APTITUDE
151
(c)
152
(a)
153
(b)
154
(b)
155
(d)
156
(b)
157
(c)
158
(b)
159
(b)
160
(d)
161
(d)
162
(c)
163
(a)
164
(a)
165
(c)
166
(d)
167
(d)
168
(c)
169
(b)
170
(b)
171
(a)
172
(c)
173
(b)
174
(c)
175
(b)
176
(b)
177
(b)
178
(d)
179
(c)
180
(a)
181
(b)
182
(c)
183
(c)
184
(a)
185
(a)
186
(c)
187
(c)
188
(b)
189
(a)
190
(a)
191
(c)
192
(c)
193
(c)
194
(c)
195
(b)
196
(a)
197
(d)
198
(d)
199
(c)
200
(b)
570
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
MODEL TEST PAPER–BOS/CPT-5
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(a)
2
(c)
3
(d)
4
(b)
5
(d)
6
(a)
7
(d)
8
(c)
9
(b)
10
(a)
11
(c)
12
(a)
13
(b)
14
(c)
15
(d)
16
(c)
17
(a)
18
(b)
19
(b)
20
(c)
21
(c)
22
(b)
23
(d)
24
(d)
25
(a)
26
(a)
27
(d)
28
(b)
29
(d)
30
(c)
31
(a)
32
(b)
33
(a)
34
(c)
35
(a)
36
(b)
37
(d)
38
(d)
39
(c)
40
(a)
41
(b)
42
(c)
43
(a)
44
(d)
45
(b)
46
(a)
47
(d)
48
(c)
49
(b)
50
(b)
51
(a)
52
(d)
53
(d)
54
(a)
55
(c)
56
(a)
57
(c)
58
(b)
59
(c)
60
(d)
SECTION – B : MERCANTILE AWS
61
(d)
62
(b)
63
(c)
64
(a)
65
(d)
66
(d)
67
(d)
68
(b)
69
(d)
70
(d)
71
(c)
72
(d)
73
(a)
74
(d)
75
(d)
76
(c)
77
(d)
78
(c)
79
(b)
80
(a)
81
(d)
82
(b)
83
(a)
84
(a)
85
(a)
86
(b)
87
(a)
88
(a)
89
(a)
90
(c)
91
(c)
92
(d)
93
(b)
94
(d)
95
(d)
96
(d)
97
(d)
98
(a)
99
(a)
100
(d)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
571
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(c)
102
(d)
103
(a)
104
(b)
105
(c)
106
(b)
107
(b)
108
(c)
109
(d)
110
(b)
111
(d)
112
(b)
113
(d)
114
(b)
115
(a)
116
(b)
117
(a)
118
(a)
119
(b)
120
(a)
121
(b)
122
(c)
123
(a)
124
(c)
125
(a)
126
(a)
127
(a)
128
(a)
129
(b)
130
(a)
131
(c)
132
(d)
133
(b)
134
(b)
135
(d)
136
(d)
137
(d)
138
(d)
139
(d)
140
(c)
141
(c)
142
(d)
143
(c)
144
(b)
145
(d)
146
(a)
147
(a)
148
(b)
149
(c)
150
(b)
SECTION – D : QUANTITATIVE APTITUDE
151
(b)
152
(a)
153
(c)
154
(a)
155
(d)
156
(c)
157
(c)
158
(d)
159
(d)
160
(d)
161
(b)
162
(b)
163
(c)
164
(b)
165
(a)
166
(b)
167
(a)
168
(a)
169
(d)
170
(c)
171
(d)
172
(a)
173
(b)
174
(a)
175
(a)
176
(a)
177
(c)
178
(c)
179
(a)
180
(d)
181
(d)
182
(d)
183
(c)
184
(a)
185
(b)
186
(b)
187
(b)
188
(c)
189
(a)
190
(c)
191
(b)
192
(b)
193
(a)
194
(c)
195
(c)
196
(a)
197
(c)
198
(a)
199
(c)
200
(b)
572
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
MODEL TEST PAPER–BOS/CPT-6
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(d)
2
(d)
3
(c)
4
(d)
5
(d)
6
(a)
7
(c)
8
(d)
9
(c)
10
(b)
11
(b)
12
(b)
13
(a)
14
(b)
15
(b)
16
(b)
17
(c)
18
(c)
19
(c)
20
(d)
21
(c)
22
(b)
23
(b)
24
(b)
25
(d)
26
(c)
27
(a)
28
(b)
29
(b)
30
(c)
31
(c)
32
(a)
33
(b)
34
(d)
35
(c)
36
(b)
37
(d)
38
(c)
39
(c)
40
(b)
41
(a)
42
(c)
43
(b)
44
(c)
45
(c)
46
(d)
47
(b)
48
(d)
49
(c)
50
(c)
51
(c)
52
(d)
53
(b)
54
(d)
55
(c)
56
(c)
57
(d)
58
(c)
59
(b)
60
(d)
SECTION – B : MERCANTILE LAWS
61
(b)
62
(c)
63
(c)
64
(b)
65
(d)
66
(c)
67
(d)
68
(b)
69
(d)
70
(d)
71
(b)
72
(d)
73
(a)
74
(b)
75
(b)
76
(d)
77
(a)
78
(d)
79
(b)
80
(a)
81
(a)
82
(a)
83
(b)
84
(a)
85
(b)
86
(a)
87
(b)
88
(d)
89
(d)
90
(b)
91
(a)
92
(d)
93
(c)
94
(a)
95
(b)
96
(c)
97
(d)
98
(d)
99
(a)
100
(b)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
573
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(d)
102
(b)
103
(b)
104
(c)
105
(d)
106
(a)
107
(c)
108
(b)
109
(d)
110
(b)
111
(a)
112
(b)
113
(d)
114
(c)
115
(d)
116
(c)
117
(a)
118
(a)
119
(d)
120
(c)
121
(b)
122
(b)
123
(d)
124
(c)
125
(c)
126
(c)
127
(d)
128
(d)
129
(d)
130
(b)
131
(a)
132
(b)
133
(c)
134
(c)
135
(c)
136
(d)
137
(b)
138
(c)
139
(a)
140
(d)
141
(d)
142
(a)
143
(b)
144
(c)
145
(a)
146
(b)
147
(d)
148
(c)
149
(d)
150
(b)
SECTION – D : QUANTITATIVE APTITUDE
151
(b)
152
(b)
153
(d)
154
(d)
155
(d)
156
(b)
157
(c)
158
(b)
159
(a)
160
(d)
161
(a)
162
(c)
163
(b)
164
(c)
165
(c)
166
(b)
167
(a)
168
(c)
169
(b)
170
(c)
171
(b)
172
(b)
173
(b)
174
(d)
175
(c)
176
(b)
177
(c)
178
(c)
179
(b)
180
(c)
181
(c)
182
(b)
183
(b)
184
(d)
185
(b)
186
(a)
187
(b)
188
(c)
189
(b)
190
(d)
191
(a)
192
(b)
193
(b)
194
(b)
195
(a)
196
(a)
197
(a)
198
(c)
199
(b)
200
(b)
574
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
MODEL TEST PAPER–BOS/CPT-7
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(b)
2
(c)
3
(a)
4
(d)
5
(d)
6
(c)
7
(b)
8
(a)
9
(a)
10
(a)
11
(b)
12
(a)
13
(c)
14
(c)
15
(d)
16
(d)
17
(c)
18
(a)
19
(b)
20
(c)
21
(b)
22
(a)
23
(a)
24
(b)
25
(c)
26
(b)
27
(d)
28
(a)
29
(d)
30
(c)
31
(c)
32
(a)
33
(b)
34
(c)
35
(d)
36
(c)
37
(a)
38
(b)
39
(c)
40
(d)
41
(a)
42
(a)
43
(c)
44
(b)
45
(c)
46
(d)
47
(d)
48
(d)
49
(a)
50
(c)
51
(b)
52
(c)
53
(b)
54
(c)
55
(c)
56
(a)
57
(d)
58
(b)
59
(c)
60
(a)
SECTION – B : MERCANTILE LAWS
61
(d)
62
(d)
63
(c)
64
(a)
65
(a)
66
(b)
67
(d)
68
(b)
69
(a)
70
(d)
71
(d)
72
(c)
73
(d)
74
(d)
75
(d)
76
(d)
77
(d)
78
(c)
79
(c)
80
(c)
81
(d)
82
(d)
83
(b)
84
(c)
85
(d)
86
(d)
87
(a)
88
(a)
89
(a)
90
(b)
91
(b)
92
(c)
93
(a)
94
(a)
95
(d)
96
(b)
97
(a)
98
(d)
99
(c)
100
(a)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
575
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(b)
102
(d)
103
(d)
104
(d)
105
(c)
106
(a)
107
(c)
108
(a)
109
(d)
110
(d)
111
(c)
112
(a)
113
(d)
114
(b)
115
(c)
116
(b)
117
(a)
118
(a)
119
(c)
120
(b)
121
(c)
122
(d)
123
(a)
124
(c)
125
(b)
126
(b)
127
(a)
128
(d)
129
(c)
130
(b)
131
(b)
132
(a)
133
(b)
134
(c)
135
(d)
136
(a)
137
(b)
138
(c)
139
(c)
140
(b)
141
(c)
142
(b)
143
(b)
144
(c)
145
(a)
146
(d)
147
(c)
148
(b)
149
(a)
150
(d)
SECTION – D : QUANTITATIVE APTITUDE
151
(c)
152
(b)
153
(d)
154
(d)
155
(c)
156
(b)
157
(b)
158
(c)
159
(c)
160
(a)
161
(c)
162
(a)
163
(a)
164
(b)
165
(b)
166
(c)
167
(c)
168
(a)
169
(d)
170
(a)
171
(b)
172
(d)
173
(c)
174
(a)
175
(a)
176
(c)
177
(b)
178
(c)
179
(a)
180
(b)
181
(a)
182
(a)
183
(a)
184
(a)
185
(d)
186
(b)
187
(b)
188
(d)
189
(b)
190
(d)
191
(c)
192
(c)
193
(c)
194
(b)
195
(b)
196
(b)
197
(b)
198
(a)
199
(b)
200
(c)
576
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
MODEL TEST PAPER–BOS/CPT-8
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(d)
2
(d)
3
(c)
4
(c)
5
(c)
6
(b)
7
(c)
8
(c)
9
(b)
10
(b)
11
(d)
12
(a)
13
(d)
14
(d)
15
(c)
16
(c)
17
(c)
18
(b)
19
(c)
20
(d)
21
(c)
22
(d)
23
(b)
24
(c)
25
(b)
26
(c)
27
(c)
28
(c)
29
(a)
30
(d)
31
(a)
32
(c)
33
(b)
34
(c)
35
(c)
36
(d)
37
(d)
38
(c)
39
(b)
40
(a)
41
(d)
42
(c)
43
(c)
44
(a)
45
(b)
46
(c)
47
(a)
48
(c)
49
(c)
50
(d)
51
(b)
52
(a)
53
(b)
54
(d)
55
(d)
56
(a)
57
(c)
58
(d)
59
(d)
60
(b)
SECTION – B : MERCANTILE LAWS
61
(a)
62
(d)
63
(b)
64
(a)
65
(b)
66
(c)
67
(d)
68
(a)
69
(c)
70
(a)
71
(c)
72
(d)
73
(d)
74
(d)
75
(d)
76
(d)
77
(b)
78
(d)
79
(b)
80
(a)
81
(c)
82
(d)
83
(d)
84
(a)
85
(b)
86
(b)
87
(c)
88
(a)
89
(b)
90
(c)
91
(b)
92
(b)
93
(b)
94
(b)
95
(d)
96
(d)
97
(c)
98
(d)
99
(c)
100
(d)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
577
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(a)
102
(b)
103
(d)
104
(a)
105
(c)
106
(c)
107
(c)
108
(d)
109
(a)
110
(c)
111
(a)
112
(c)
113
(a)
114
(d)
115
(b)
116
(c)
117
(a)
118
(b)
119
(c)
120
(c)
121
(d)
122
(b)
123
(a)
124
(d)
125
(d)
126
(c)
127
(c)
128
(c)
129
(b)
130
(a)
131
(b)
132
(b)
133
(a)
134
(c)
135
(d)
136
(b)
137
(b)
138
(a)
139
(d)
140
(d)
141
(c)
142
(b)
143
(c)
144
(b)
145
(a)
146
(c)
147
(d)
148
(a)
149
(c)
150
(b)
SECTION – D : QUANTITATIVE APTITUDE
151
(b)
152
(b)
153
(c)
154
(d)
155
(c)
156
(b)
157
(d)
158
(c)
159
(a)
160
(c)
161
(c)
162
(b)
163
(c)
164
(c)
165
(b)
166
(c)
167
(d)
168
(c)
169
(a)
170
(a)
171
(c)
172
(c)
173
(a)
174
(d)
175
(a)
176
(a)
177
(b)
178
(c)
179
(c)
180
(d)
181
(b)
182
(d)
183
(b)
184
(c)
185
(c)
186
(c)
187
(c)
188
(b)
189
(b)
190
(a)
191
(c)
192
(c)
193
(a)
194
(d)
195
(b)
196
(a)
197
(c)
198
(c)
199
(a)
200
(a)
578
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
MODEL TEST PAPER–BOS/CPT-9
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(c)
2
(b)
3
(b)
4
(c)
5
(a)
6
(c)
7
(c)
8
(d)
9
(c)
10
(b)
11
(c)
12
(b)
13
(a)
14
(b)
15
(d)
16
(c)
17
(c)
18
(b)
19
(c)
20
(b)
21
(d)
22
(d)
23
(a)
24
(b)
25
(c)
26
(a)
27
(c)
28
(d)
29
(c)
30
(a)
31
(d)
32
(c)
33
(a)
34
(b)
35
(a)
36
(b)
37
(b)
38
(b)
39
(d)
40
(a)
41
(b)
42
(b)
43
(c)
44
(c)
45
(a)
46
(a)
47
(d)
48
(c)
49
(a)
50
(b)
51
(c)
52
(d)
53
(b)
54
(a)
55
(c)
56
(b)
57
(d)
58
(c)
59
(b)
60
(d)
SECTION – B : MERCANTILE LAWS
61
(c)
62
(c)
63
(d)
64
(c)
65
(d)
66
(d)
67
(a)
68
(b)
69
(c)
70
(a)
71
(a)
72
(c)
73
(c)
74
(b)
75
(d)
76
(d)
77
(d)
78
(a)
79
(d)
80
(a)
81
(d)
82
(a)
83
(c)
84
(b)
85
(b)
86
(d)
87
(c)
88
(b)
89
(a)
90
(c)
91
(b)
92
(c)
93
(a)
94
(b)
95
(a)
96
(c)
97
(a)
98
(c)
99
(b)
100
(b)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
579
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(c)
102
(d)
103
(c)
104
(a)
105
(b)
106
(b)
107
(d)
108
(b)
109
(c)
110
(c)
111
(b)
112
(c)
113
(a)
114
(a)
115
(d)
116
(b)
117
(d)
118
(d)
119
(a)
120
(c)
121
(b)
122
(a)
123
(c)
124
(a)
125
(a)
126
(c)
127
(d)
128
(b)
129
(d)
130
(b)
131
(a)
132
(c)
133
(c)
134
(d)
135
(b)
136
(c)
137
(b)
138
(c)
139
(a)
140
(b)
141
(d)
142
(a)
143
(b)
144
(d)
145
(d)
146
(a)
147
(b)
148
(c)
149
(c)
150
(a)
SECTION – D : QUANTITATIVE APTITUDE
151
(c)
152
(a)
153
(b)
154
(b)
155
(b)
156
(b)
157
(b)
158
(a)
159
(b)
160
(d)
161
(a)
162
(b)
163
(a)
164
(b)
165
(b)
166
(c)
167
(b)
168
(b)
169
(a)
170
(b)
171
(b)
172
(b)
173
(b)
174
(c)
175
(b)
176
(c)
177
(b)
178
(b)
179
(a)
180
(a)
181
(a)
182
(d)
183
(c)
184
(a)
185
(c)
186
(a)
187
(c)
188
(a)
189
(b)
190
(a)
191
(d)
192
(a)
193
(c)
194
(a)
195
(d)
196
(a)
197
(b)
198
(a)
199
(d)
200
(c)
580
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
MODEL TEST PAPER–BOS/CPT-10
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(a)
2
(b)
3
(b)
4
(c)
5
(b)
6
(c)
7
(b)
8
(a)
9
(b)
10
(c)
11
(b)
12
(d)
13
(c)
14
(a)
15
(b)
16
(d)
17
(a)
18
(a)
19
(d)
20
(b)
21
(b)
22
(c)
23
(b)
24
(b)
25
(a)
26
(c)
27
(a)
28
(c)
29
(a)
30
(a)
31
(b)
32
(d)
33
(b)
34
(b)
35
(c)
36
(a)
37
(c)
38
(b)
39
(d)
40
(a)
41
(a)
42
(d)
43
(c)
44
(b)
45
(b)
46
(b)
47
(b)
48
(b)
49
(c)
50
(c)
51
(c)
52
(b)
53
(b)
54
(c)
55
(a)
56
(c)
57
(a)
58
(c)
59
(b)
60
(a)
SECTION – B : MERCANTILE LAWS
61
(d)
62
(d)
63
(d)
64
(d)
65
(c)
66
(d)
67
(d)
68
(c)
69
(d)
70
(c)
71
(c)
72
(a)
73
(a)
74
(d)
75
(d)
76
(c)
77
(d)
78
(d)
79
(a)
80
(b)
81
(b)
82
(a)
83
(a)
84
(c)
85
(b)
86
(c)
87
(a)
88
(a)
89
(c)
90
(b)
91
(b)
92
(d)
93
(c)
94
(b)
95
(a)
96
(c)
97
(b)
98
(c)
99
(d)
100
(c)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
581
ANSWERS
SECTION – C : GENERAL ECONOMICS
101
(c)
102
(d)
103
(c)
104
(c)
105
(d)
106
(d)
107
(b)
108
(b)
109
(a)
110
(c)
111
(a)
112
(a)
113
(b)
114
(b)
115
(b)
116
(d)
117
(d)
118
(c)
119
(a)
120
(a)
121
(b)
122
(b)
123
(c)
124
(d)
125
(d)
126
(a)
127
(b)
128
(b)
129
(a)
130
(b)
131
(a)
132
(d)
133
(b)
134
(c)
135
(d)
136
(a)
137
(b)
138
(d)
139
(b)
140
(c)
141
(c)
142
(d)
143
(b)
144
(c)
145
(a)
146
(c)
147
(a)
148
(a)
149
(c)
150
(b)
SECTION – D : QUANTITATIVE APTITUDE
151
(a)
152
(a)
153
(a)
154
(a)
155
(a)
156
(b)
157
(c)
158
(d)
159
(b)
160
(a)
161
(c)
162
(a)
163
(a)
164
(a)
165
(b)
166
(a)
167
(b)
168
(a)
169
(b)
170
(a)
171
(c)
172
(b)
173
(b)
174
(b)
175
(b)
176
(b)
177
(a)
178
(a)
179
(c)
180
(c)
181
(d)
182
(a)
183
(b)
184
(a)
185
(b)
186
(a)
187
(c)
188
(c)
189
(b)
190
(a)
191
(a)
192
(b)
193
(d)
194
(b)
195
(b)
196
(b)
197
(c)
198
(c)
199
(c)
200
(a)
582
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-11
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(c)
2
(a)
3
(d)
4
(a)
5
(a)
6
(a)
7
(c)
8
(b)
9
(c)
10
(c)
11
(b)
12
(a)
13
(c)
14
(d)
15
(b)
16
(a)
17
(d)
18
(b)
19
(b)
20
(c)
21
(b)
22
(d)
23
(a)
24
(b)
25
(a)
26
(a)
27
(a)
28
(d)
29
(c)
30
(d)
31
(b)
32
(d)
33
(a)
34
(d)
35
(a)
36
(c)
37
(d)
38
(a)
39
(a)
40
(a)
41
(b)
42
(b)
43
(b)
44
(a)
45
(a)
46
(a)
47
(a)
48
(a)
49
(b)
50
(b)
51
(a)
52
(b)
53
(a)
54
(a)
55
(b)
56
(a)
57
(d)
58
(a)
59
(a)
60
(b)
SECTION-B : MERCANTILE LAWS
61
(b)
62
(d)
63
(a)
64
(b)
65
(d)
66
(a)
67
(d)
68
(a)
69
(d)
70
(d)
71
(a)
72
(d)
73
(c)
74
(c)
75
(c)
76
(d)
77
(a)
78
(d)
79
(c)
80
(b)
81
(d)
82
(c)
83
(c)
84
(c)
85
(c)
86
(a)
87
(a)
88
(b)
89
(c)
90
(d)
91
(b)
92
(d)
93
(b)
94
(c)
95
(b)
96
(b)
97
(d)
98
(c)
99
(a)
10 0
(d)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
583
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(a)
10 2
(c)
10 3
(a)
10 4
(c)
10 5
(c)
10 6
(d)
10 7
(b)
10 8
(a)
10 9
(d)
11 0
(b)
111
(d)
11 2
(d)
11 3
(b)
11 4
(d)
11 5
(b)
11 6
(c)
11 7
(d)
11 8
(a)
11 9
(b)
12 0
(b)
12 1
(a)
12 2
(d)
12 3
(c)
12 4
(c)
12 5
(c)
12 6
(b)
12 7
(c)
12 8
(c)
12 9
(c)
13 0
(c)
13 1
(a)
13 2
(b)
13 3
(b)
13 4
(c)
13 5
(d)
13 6
(c)
13 7
(b)
13 8
(a)
13 9
(a)
14 0
(c)
14 1
(c)
14 2
(d)
14 3
(d)
14 4
(a)
14 5
(d)
14 6
(d)
14 7
(a)
14 8
(d)
14 9
(d)
15 0
(c)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(b)
15 2
(d)
15 3
(c)
15 4
(d)
15 5
(d)
15 6
(d)
15 7
(b)
15 8
(a)
15 9
(b)
16 0
(b)
16 1
(d)
16 2
(a)
16 3
(b)
16 4
(b)
16 5
(b)
16 6
(d)
16 7
(a)
16 8
(b)
16 9
(a)
17 0
(b)
17 1
(c)
17 2
(a)
17 3
(a)
17 4
(b)
17 5
(a)
17 6
(b)
17 7
(b)
17 8
(d)
17 9
(a)
18 0
(b)
18 1
(c)
18 2
(a)
18 3
(a)
18 4
(d)
18 5
(b)
18 6
(b)
18 7
(b)
18 8
(a)
18 9
(c)
19 0
(b)
19 1
(a)
19 2
(a)
19 3
(b)
19 4
(c)
19 5
(a)
19 6
(b)
19 7
(c)
19 8
(d)
19 9
(a)
20 0
(c)
584
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-12
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(d)
2
(a)
3
(c)
4
(c)
5
(a)
6
(a)
7
(d)
8
(b)
9
(b)
10
(b)
11
(d)
12
(c)
13
(b)
14
(a)
15
(b)
16
(c)
17
(c)
18
(a)
19
(a)
20
(c)
21
(a)
22
(c)
23
(b)
24
(a)
25
(a)
26
(a)
27
(b)
28
(a)
29
(a)
30
(d)
31
(a)
32
(b)
33
(c)
34
(b)
35
(b)
36
(a)
37
(b)
38
(b)
39
(b)
40
(b)
41
(b)
42
(b)
43
(b)
44
(b)
45
(c)
46
(a)
47
(a)
48
(a)
49
(a)
50
(c)
51
(a)
52
(a)
53
(a)
54
(a)
55
(a)
56
(c)
57
(a)
58
(a)
59
(a)
60
(b)
SECTION–B : MERCANTILE LAWS
61
(d)
62
(d)
63
(d)
64
(c)
65
(b)
66
(b)
67
(a)
68
(a)
69
(d)
70
(b)
71
(d)
72
(d)
73
(d)
74
(d)
75
(c)
76
(a)
77
(c)
78
(a)
79
(a)
80
(d)
81
(a)
82
(a)
83
(c)
84
(c)
85
(d)
86
(a)
87
(c)
88
(a)
89
(c)
90
(b)
91
(b)
92
(a)
93
(b)
94
(c)
95
(d)
96
(a)
97
(b)
98
(a)
99
(a)
10 0
(b)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
585
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(c)
10 2
(b)
10 3
(a)
10 4
(a)
10 5
(a)
10 6
(b)
10 7
(b)
10 8
(d)
10 9
(c)
11 0
(a)
111
(b)
11 2
(c)
11 3
(c)
11 4
(d)
11 5
(b)
11 6
(a)
11 7
(c)
11 8
(b)
11 9
(d)
12 0
(b)
12 1
(a)
12 2
(b)
12 3
(c)
12 4
(d)
12 5
(c)
12 6
(a)
12 7
(a)
12 8
(d)
12 9
(b)
13 0
(a)
13 1
(c)
13 2
(d)
13 3
(a)
13 4
(a)
13 5
(d)
13 6
(d)
13 7
(b)
13 8
(d)
13 9
(a)
14 0
(b)
14 1
(d)
14 2
(b)
14 3
(a)
14 4
(b)
14 5
(c)
14 6
(c)
14 7
(c)
14 8
(b)
14 9
(d)
15 0
(b)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(a)
15 2
(d)
15 3
(a)
15 4
(a)
15 5
(c)
15 6
(a)
15 7
(a)
15 8
(a)
15 9
(a)
16 0
(c)
16 1
(b)
16 2
(a)
16 3
(b)
16 4
(a)
16 5
(b)
16 6
(c)
16 7
(a)
16 8
(b)
16 9
(c)
17 0
(d)
17 1
(b)
17 2
(a)
17 3
(c)
17 4
(a)
17 5
(b)
17 6
(b)
17 7
(b)
17 8
(d)
17 9
(c)
18 0
(b)
18 1
(b)
18 2
(a)
18 3
(b)
18 4
(a)
18 5
(a)
18 6
(b)
18 7
(b)
18 8
(a)
18 9
(c)
19 0
(c)
19 1
(c)
19 2
(a)
19 3
(a)
19 4
(c)
19 5
(c)
19 6
(b)
19 7
(a)
19 8
(a)
19 9
(c)
20 0
(b)
586
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-13
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(c)
2
(b)
3
(c)
4
(d)
5
(a)
6
(c)
7
(c)
8
(d)
9
(a)
10
(b)
11
(b)
12
(c)
13
(b)
14
(b)
15
(b)
16
(d)
17
(a)
18
(a)
19
(a)
20
(c)
21
(c)
22
(d)
23
(b)
24
(b)
25
(a)
26
(c)
27
(a)
28
(b)
29
(d)
30
(a)
31
(b)
32
(a)
33
(a)
34
(d)
35
(a)
36
(a)
37
(a)
38
(a)
39
(b)
40
(a)
41
(a)
42
(b)
43
(a)
44
(a)
45
(b)
46
(b)
47
(b)
48
(c)
49
(a)
50
(b)
51
(b)
52
(a)
53
(a)
54
(a)
55
(a)
56
(b)
57
(d)
58
(b)
59
(c)
60
(b)
SECTION–B : MERCANTILE LAWS
61
(d)
62
(c)
63
(c)
64
(c)
65
(d)
66
(d)
67
(b)
68
(d)
69
(b)
70
(b)
71
(a)
72
(b)
73
(d)
74
(b)
75
(c)
76
(b)
77
(d)
78
(d)
79
(d)
80
(b)
81
(a)
82
(c)
83
(b)
84
(b)
85
(b)
86
(a)
87
(d)
88
(b)
89
(a)
90
(c)
91
(b)
92
(d)
93
(b)
94
(c)
95
(d)
96
(d)
97
(a)
98
(c)
99
(d)
10 0
(a)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
587
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(d)
10 2
(c)
10 3
(c)
10 4
(b)
10 5
(d)
10 6
(b)
10 7
(b)
10 8
(a)
10 9
(a)
11 0
(a)
111
(c)
11 2
(b)
11 3
(b)
11 4
(d)
11 5
(c)
11 6
(b)
11 7
(a)
11 8
(d)
11 9
(c)
12 0
(c)
12 1
(a)
12 2
(b)
12 3
(c)
12 4
(b)
12 5
(a)
12 6
(c)
12 7
(c)
12 8
(c)
12 9
(d)
13 0
(d)
13 1
(c)
13 2
(d)
13 3
(b)
13 4
(b)
13 5
(c)
13 6
(c)
13 7
(d)
13 8
(b)
13 9
(c)
14 0
(a)
14 1
(d)
14 2
(d)
14 3
(d)
14 4
(d)
14 5
(a)
14 6
(a)
14 7
(c)
14 8
(a)
14 9
(b)
15 0
(d)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(d)
15 2
(a)
15 3
(a)
15 4
(b)
15 5
(b)
15 6
(d)
15 7
(a)
15 8
(c)
15 9
(a)
16 0
(a)
16 1
(b)
16 2
(a)
16 3
(c)
16 4
(d)
16 5
(c)
16 6
(b)
16 7
(a)
16 8
(b)
16 9
(c)
17 0
(c)
17 1
(a)
17 2
(d)
17 3
(a)
17 4
(b)
17 5
(a)
17 6
(b)
17 7
(a)
17 8
(c)
17 9
(c)
18 0
(b)
18 1
(a)
18 2
(c)
18 3
(b)
18 4
(d)
18 5
(a)
18 6
(b)
18 7
(a)
18 8
(a)
18 9
(b)
19 0
(b)
19 1
(d)
19 2
(b)
19 3
(a)
19 4
(c)
19 5
(c)
19 6
(c)
19 7
(a)
19 8
(b)
19 9
(c)
20 0
(c)
588
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-14
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(a)
2
(a)
3
(c)
4
(c)
5
(c)
6
(b)
7
(a)
8
(d)
9
(a)
10
(a)
11
(b)
12
(c)
13
(c)
14
(b)
15
(d)
16
(a)
17
(b)
18
(d)
19
(d)
20
(c)
21
(a)
22
(c)
23
(a)
24
(b)
25
(b)
26
(a)
27
(b)
28
(b)
29
(a)
30
(a)
31
(b)
32
(c)
33
(b)
34
(c)
35
(d)
36
(a)
37
(a)
38
(a)
39
(a)
40
(a)
41
(c)
42
(b)
43
(a)
44
(b)
45
(a)
46
(d)
47
(a)
48
(a)
49
(a)
50
(a)
51
(a)
52
(a)
53
(b)
54
(a)
55
(a)
56
(a)
57
(a)
58
(a)
59
(a)
60
(c)
SECTION–B : MERCANTILE LAWS
61
(d)
62
(d)
63
(d)
64
(b)
65
(b)
66
(c)
67
(d)
68
(a)
69
(d)
70
(d)
71
(d)
72
(d)
73
(d)
74
(d)
75
(d)
76
(d)
77
(c)
78
(b)
79
(d)
80
(a)
81
(a)
82
(b)
83
(a)
84
(a)
85
(b)
86
(b)
87
(b)
88
(c)
89
(b)
90
(b)
91
(d)
92
(a)
93
(d)
94
(a)
95
(d)
96
(a)
97
(c)
98
(d)
99
(c)
10 0
(c)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
589
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(c)
10 2
(a)
10 3
(b)
10 4
(d)
10 5
(b)
10 6
(b)
10 7
(b)
10 8
(b)
10 9
(b)
11 0
(a)
111
(b)
11 2
(a)
11 3
(a)
11 4
(d)
11 5
(d)
11 6
(b)
11 7
(d)
11 8
(a)
11 9
(b)
12 0
(a)
12 1
(b)
12 2
(c)
12 3
(a)
12 4
(a)
12 5
(c)
12 6
(c)
12 7
(b)
12 8
(b)
12 9
(d)
13 0
(d)
13 1
(c)
13 2
(c)
13 3
(b)
13 4
(b)
13 5
(d)
13 6
(a)
13 7
(a)
13 8
(b)
13 9
(b)
14 0
(d)
14 1
(d)
14 2
(c)
14 3
(c)
14 4
(c)
14 5
(d)
14 6
(c)
14 7
(b)
14 8
(d)
14 9
(d)
15 0
(d)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(a)
15 2
(c)
15 3
(a)
15 4
(b)
15 5
(a)
15 6
(d)
15 7
(a)
15 8
(b)
15 9
(c)
16 0
(b)
16 1
(a)
16 2
(b)
16 3
(c)
16 4
(d)
16 5
(a)
16 6
(a)
16 7
(c)
16 8
(a)
16 9
(c)
17 0
(d)
17 1
(b)
17 2
(a)
17 3
(a)
17 4
(c)
17 5
(c)
17 6
(d)
17 7
(a)
17 8
(b)
17 9
(a)
18 0
(c)
18 1
(b)
18 2
(a)
18 3
(b)
18 4
(a)
18 5
(a)
18 6
(c)
18 7
(a)
18 8
(d)
18 9
(b)
19 0
(a)
19 1
(b)
19 2
(a)
19 3
(b)
19 4
(a)
19 5
(c)
19 6
(c)
19 7
(a)
19 8
(b)
19 9
(a)
20 0
(b)
590
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-15
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(b)
2
(b)
3
(b)
4
(d)
5
(d)
6
(a)
7
(a)
8
(c)
9
(d)
10
(a)
11
(c)
12
(b)
13
(a)
14
(c)
15
(c)
16
(a)
17
(b)
18
(c)
19
(c)
20
(c)
21
(d)
22
(b)
23
(c)
24
(a)
25
(b)
26
(a)
27
(b)
28
(a)
29
(b)
30
(a)
31
(a)
32
(a)
33
(c)
34
(a)
35
(d)
36
(b)
37
(a)
38
(b)
39
(d)
40
(a)
41
(a)
42
(a)
43
(a)
44
(b)
45
(c)
46
(d)
47
(a)
48
(a)
49
(a)
50
(b)
51
(a)
52
(a)
53
(a)
54
(c)
55
(b)
56
(c)
57
(a)
58
(a)
59
(c)
60
(a)
SECTION–B : MERCANTILE LAWS
61
(c)
62
(d)
63
(b)
64
(d)
65
(b)
66
(c)
67
(d)
68
(c)
69
(c)
70
(a)
71
(d)
72
(d)
73
(b)
74
(a)
75
(d)
76
(a)
77
(a)
78
(a)
79
(d)
80
(a)
81
(d)
82
(b)
83
(a)
84
(a)
85
(a)
86
(a)
87
(b)
88
(b)
89
(d)
90
(a)
91
(a)
92
(a)
93
(b)
94
(d)
95
(a)
96
(a)
97
(a)
98
(a)
99
(d)
10 0
(a)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
591
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(c)
10 2
(b)
10 3
(c)
10 4
(d)
10 5
(d)
10 6
(c)
10 7
(c)
10 8
(d)
10 9
(c)
11 0
(d)
111
(b)
11 2
(c)
11 3
(c)
11 4
(d)
11 5
(a)
11 6
(d)
11 7
(d)
11 8
(c)
11 9
(c)
12 0
(a)
12 1
(c)
12 2
(d)
12 3
(b)
12 4
(c)
12 5
(d)
12 6
(d)
12 7
(a)
12 8
(c)
12 9
(d)
13 0
(b)
13 1
(b)
13 2
(a)
13 3
(b)
13 4
(a)
13 5
(c)
13 6
(a)
13 7
(a)
13 8
(c)
13 9
(b)
14 0
(c)
14 1
(b)
14 2
(a)
14 3
(d)
14 4
(b)
14 5
(c)
14 6
(b)
14 7
(c)
14 8
(b)
14 9
(b)
15 0
(a)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(a)
15 2
(b)
15 3
(c)
15 4
(a)
15 5
(a)
15 6
(b)
15 7
(b)
15 8
(d)
15 9
(b)
16 0
(a)
16 1
(c)
16 2
(b)
16 3
(a)
16 4
(c)
16 5
(d)
16 6
(a)
16 7
(c)
16 8
(d)
16 9
(b)
17 0
(a)
17 1
(c)
17 2
(a)
17 3
(a)
17 4
(a)
17 5
(c)
17 6
(a)
17 7
(b)
17 8
(b)
17 9
(a)
18 0
(c)
18 1
(a)
18 2
(a)
18 3
(b)
18 4
(c)
18 5
(a)
18 6
(d)
18 7
(a)
18 8
(d)
18 9
(c)
19 0
(a)
19 1
(b)
19 2
(a)
19 3
(c)
19 4
(b)
19 5
(c)
19 6
(a)
19 7
(b)
19 8
(a)
19 9
(d)
20 0
(d)
592
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-16
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(b)
2
(d)
3
(c)
4
(b)
5
(c)
6
(b)
7
(c)
8
(a)
9
(b)
10
(a)
11
(a)
12
(d)
13
(a)
14
(a)
15
(c)
16
(b)
17
(c)
18
(d)
19
(c)
20
(b)
21
(a)
22
(b)
23
(c)
24
(a)
25
(b)
26
(b)
27
(c)
28
(a)
29
(b)
30
(a)
31
(b)
32
(a)
33
(b)
34
(a)
35
(a)
36
(a)
37
(b)
38
(a)
39
(b)
40
(a)
41
(a)
42
(b)
43
(a)
44
(a)
45
(d)
46
(a)
47
(a)
48
(a)
49
(b)
50
(a)
51
(a)
52
(a)
53
(a)
54
(a)
55
(b)
56
(b)
57
(b)
58
(d)
59
(c)
60
(c)
SECTION–B : MERCANTILE LAWS
61
(c)
62
(d)
63
(b)
64
(c)
65
(a)
66
(d)
67
(d)
68
(a)
69
(b)
70
(c)
71
(a)
72
(a)
73
(d)
74
(a)
75
(b)
76
(d)
77
(b)
78
(d)
79
(a)
80
(b)
81
(a)
82
(a)
83
(a)
84
(d)
85
(a)
86
(a)
87
(b)
88
(b)
89
(b)
90
(d)
91
(a)
92
(d)
93
(d)
94
(d)
95
(a)
96
(c)
97
(d)
98
(a)
99
(a)
10 0
(d)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
593
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(c)
10 2
(c)
10 3
(a)
10 4
(c)
10 5
(c)
10 6
(c)
10 7
(c)
10 8
(d)
10 9
(b)
11 0
(c)
111
(d)
11 2
(d)
11 3
(c)
11 4
(a)
11 5
(c)
11 6
(d)
11 7
(d)
11 8
(b)
11 9
(c)
12 0
(c)
12 1
(b)
12 2
(d)
12 3
(c)
12 4
(d)
12 5
(c)
12 6
(c)
12 7
(b)
12 8
(b)
12 9
(b)
13 0
(c)
13 1
(d)
13 2
(d)
13 3
(d)
13 4
(d)
13 5
(b)
13 6
(b)
13 7
(d)
13 8
(c)
13 9
(b)
14 0
(a)
14 1
(d)
14 2
(d)
14 3
(b)
14 4
(d)
14 5
(d)
14 6
(b)
14 7
(c)
14 8
(d)
14 9
(b)
15 0
(d)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(a)
15 2
(b)
15 3
(c)
15 4
(c)
15 5
(a)
15 6
(b)
15 7
(b)
15 8
(a)
15 9
(a)
16 0
(d)
16 1
(a)
16 2
(b)
16 3
(b)
16 4
(c)
16 5
(a)
16 6
(d)
16 7
(b)
16 8
(a)
16 9
(b)
17 0
(c)
17 1
(c)
17 2
(a)
17 3
(b)
17 4
(b)
17 5
(c)
17 6
(a)
17 7
(c)
17 8
(d)
17 9
(a)
18 0
(b)
18 1
(d)
18 2
(b)
18 3
(b)
18 4
(a)
18 5
(c)
18 6
(a)
18 7
(b)
18 8
(d)
18 9
(a)
19 0
(b)
19 1
(b)
19 2
(c)
19 3
(a)
19 4
(a)
19 5
(c)
19 6
(d)
19 7
(a)
19 8
(b)
19 9
(a)
20 0
(c)
594
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-17
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(d)
2
(a)
3
(a)
4
(a)
5
(c)
6
(a)
7
(a)
8
(b)
9
(c)
10
(d)
11
(a)
12
(c)
13
(b)
14
(a)
15
(c)
16
(a)
17
(b)
18
(c)
19
(d)
20
(c)
21
(c)
22
(c)
23
(a)
24
(b)
25
(c)
26
(a)
27
(c)
28
(a)
29
(c)
30
(b)
31
(b)
32
(d)
33
(a)
34
(b)
35
(a)
36
(d)
37
(a)
38
(a)
39
(a)
40
(b)
41
(a)
42
(c)
43
(a)
44
(b)
45
(d)
46
(b)
47
(b)
48
(a)
49
(c)
50
(b)
51
(a)
52
(c)
53
(a)
54
(b)
55
(b)
56
(a)
57
(a)
58
(a)
59
(a)
60
(a)
SECTION–B : MERCANTILE LAWS
61
(a)
62
(b)
63
(d)
64
(d)
65
(d)
66
(d)
67
(c)
68
(a)
69
(a)
70
(a)
71
(d)
72
(a)
73
(b)
74
(d)
75
(a)
76
(a)
77
(d)
78
(a)
79
(b)
80
(c)
81
(b)
82
(d)
83
(c)
84
(a)
85
(a)
86
(c)
87
(b)
88
(b)
89
(a)
90
(a)
91
(a)
92
(a)
93
(a)
94
(d)
95
(c)
96
(a)
97
(a)
98
(a)
99
(a)
10 0
(a)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
595
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(d)
10 2
(a)
10 3
(c)
10 4
(a)
10 5
(a)
10 6
(c)
10 7
(a)
10 8
(c)
10 9
(c)
11 0
(b)
111
(c)
11 2
(d)
11 3
(b)
11 4
(c)
11 5
(a)
11 6
(a)
11 7
(b)
11 8
(b)
11 9
(b)
12 0
(d)
12 1
(d)
12 2
(b)
12 3
(a)
12 4
(b)
12 5
(a)
12 6
(a)
12 7
(a)
12 8
(c)
12 9
(b)
13 0
(c)
13 1
(c)
13 2
(c)
13 3
(d)
13 4
(a)
13 5
(b)
13 6
(d)
13 7
(c)
13 8
(b)
13 9
(c)
14 0
(b)
14 1
(d)
14 2
(b)
14 3
(b)
14 4
(b)
14 5
(c)
14 6
(d)
14 7
(c)
14 8
(c)
14 9
(b)
15 0
(b)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(d)
15 2
(a)
15 3
(a)
15 4
(c)
15 5
(b)
15 6
(a)
15 7
(c)
15 8
(a)
15 9
(b)
16 0
(a)
16 1
(c)
16 2
(a)
16 3
(d)
16 4
(b)
16 5
(a)
16 6
(c)
16 7
(a)
16 8
(c)
16 9
(b)
17 0
(a)
17 1
(c)
17 2
(a)
17 3
(b)
17 4
(a)
17 5
(c)
17 6
(c)
17 7
(a)
17 8
(d)
17 9
(a)
18 0
(b)
18 1
(a)
18 2
(a)
18 3
(b)
18 4
(a)
18 5
(c)
18 6
(a)
18 7
(c)
18 8
(a)
18 9
(b)
19 0
(d)
19 1
(b)
19 2
(a)
19 3
(d)
19 4
(b)
19 5
(a)
19 6
(c)
19 7
(b)
19 8
(d)
19 9
(a)
20 0
(b)
596
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-18
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(b)
2
(c)
3
(c)
4
(c)
5
(c)
6
(d)
7
(b)
8
(c)
9
(b)
10
(d)
11
(a)
12
(a)
13
(a)
14
(a)
15
(c)
16
(a)
17
(b)
18
(c)
19
(d)
20
(d)
21
(c)
22
(b)
23
(a)
24
(a)
25
(a)
26
(b)
27
(d)
28
(b)
29
(d)
30
(d)
31
(a)
32
(a)
33
(d)
34
(d)
35
(a)
36
(a)
37
(b)
38
(b)
39
(b)
40
(c)
41
(d)
42
(a)
43
(a)
44
(a)
45
(b)
46
(a)
47
(c)
48
(d)
49
(a)
50
(b)
51
(c)
52
(b)
53
(b)
54
(b)
55
(a)
56
(b)
57
(a)
58
(c)
59
(a)
60
(a)
SECTION–B : MERCANTILE LAWS
61
(a)
62
(b)
63
(a)
64
(c)
65
(a)
66
(b)
67
(a)
68
(c)
69
(b)
70
(d)
71
(d)
72
(a)
73
(a)
74
(d)
75
(a)
76
(a)
77
(d)
78
(d)
79
(c)
80
(b)
81
(b)
82
(a)
83
(a)
84
(a)
85
(d)
86
(a)
87
(b)
88
(d)
89
(a)
90
(a)
91
(a)
92
(d)
93
(a)
94
(a)
95
(b)
96
(c)
97
(d)
98
(d)
99
(b)
10 0
(c)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
597
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(c)
10 2
(d)
10 3
(b)
10 4
(c)
10 5
(b)
10 6
(b)
10 7
(b)
10 8
(a)
10 9
(b)
11 0
(a)
111
(c)
11 2
(d)
11 3
(b)
11 4
(b)
11 5
(a)
11 6
(c)
11 7
(a)
11 8
(d)
11 9
(a)
12 0
(a)
12 1
(b)
12 2
(c)
12 3
(b)
12 4
(b)
12 5
(c)
12 6
(a)
12 7
(a)
12 8
(b)
12 9
(a)
13 0
(c)
13 1
(b)
13 2
(a)
13 3
(c)
13 4
(b)
13 5
(a)
13 6
(a)
13 7
(c)
13 8
(c)
13 9
(b)
14 0
(d)
14 1
(b)
14 2
(b)
14 3
(d)
14 4
(b)
14 5
(a)
14 6
(a)
14 7
(a)
14 8
(d)
14 9
(b)
15 0
(c)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(a)
15 2
(c)
15 3
(c)
15 4
(a)
15 5
(b)
15 6
(c)
15 7
(b)
15 8
(a)
15 9
(b)
16 0
(b)
16 1
(a)
16 2
(b)
16 3
(c)
16 4
(a)
16 5
(c)
16 6
(a)
16 7
(b)
16 8
(c)
16 9
(b)
17 0
(b)
17 1
(a)
17 2
(c)
17 3
(a)
17 4
(b)
17 5
(a)
17 6
(a)
17 7
(b)
17 8
(c)
17 9
(b)
18 0
(a)
18 1
(b)
18 2
(a)
18 3
(b)
18 4
(c)
18 5
(a)
18 6
(b)
18 7
(c)
18 8
(a)
18 9
(b)
19 0
(a)
19 1
(b)
19 2
(b)
19 3
(a)
19 4
(a)
19 5
(b)
19 6
(c)
19 7
(b)
19 8
(c)
19 9
(a)
20 0
(b)
598
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-19
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(a)
2
(a)
3
(a)
4
(c)
5
(a)
6
(b)
7
(a)
8
(c)
9
(a)
10
(a)
11
(b)
12
(b)
13
(d)
14
(a)
15
(b)
16
(c)
17
(b)
18
(b)
19
(c)
20
(a)
21
(b)
22
(b)
23
(d)
24
(a)
25
(c)
26
(a)
27
(b)
28
(a)
29
(a)
30
(a)
31
(a)
32
(a)
33
(a)
34
(a)
35
(a)
36
(a)
37
(b)
38
(a)
39
(a)
40
(b)
41
(a)
42
(b)
43
(a)
44
(a)
45
(d)
46
(a)
47
(a)
48
(a)
49
(a)
50
(d)
51
(a)
52
(a)
53
(a)
54
(a)
55
(d)
56
(b)
57
(a)
58
(a)
59
(d)
60
(a)
SECTION–B : MERCANTILE LAWS
61
(b)
62
(a)
63
(a)
64
(b)
65
(d)
66
(c)
67
(d)
68
(a)
69
(c)
70
(c)
71
(a)
72
(c)
73
(c)
74
(a)
75
(a)
76
(d)
77
(a)
78
(d)
79
(a)
80
(b)
81
(a)
82
(c)
83
(c)
84
(a)
85
(b)
86
(b)
87
(a)
88
(a)
89
(a)
90
(b)
91
(a)
92
(d)
93
(a)
94
(b)
95
(c)
96
(a)
97
(c)
98
(c)
99
(b)
10 0
(b)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
599
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(c)
10 2
(b)
10 3
(c)
10 4
(a)
10 5
(c)
10 6
(a)
10 7
(c)
10 8
(a)
10 9
(a)
11 0
(d)
111
(a)
11 2
(a)
11 3
(a)
11 4
(a)
11 5
(c)
11 6
(d)
11 7
(c)
11 8
(b)
11 9
(b)
12 0
(d)
12 1
(d)
12 2
(a)
12 3
(d)
12 4
(d)
12 5
(a)
12 6
(c)
12 7
(a)
12 8
(a)
12 9
(d)
13 0
(c)
13 1
(c)
13 2
(c)
13 3
(d)
13 4
(b)
13 5
(d)
13 6
(d)
13 7
(b)
13 8
(d)
13 9
(d)
14 0
(d)
14 1
(c)
14 2
(d)
14 3
(c)
14 4
(c)
14 5
(d)
14 6
(c)
14 7
(a)
14 8
(b)
14 9
(b)
15 0
(d)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(c)
15 2
(a)
15 3
(b)
15 4
(c)
15 5
(a)
15 6
(b)
15 7
(a)
15 8
(b)
15 9
(a)
16 0
(a)
16 1
(a)
16 2
(c)
16 3
(b)
16 4
(d)
16 5
(a)
16 6
(c)
16 7
(a)
16 8
(b)
16 9
(a)
17 0
(c)
17 1
(b)
17 2
(a)
17 3
(b)
17 4
(d)
17 5
(a)
17 6
(b)
17 7
(a)
17 8
(c)
17 9
(a)
18 0
(a)
18 1
(c)
18 2
(b)
18 3
(a)
18 4
(b)
18 5
(a)
18 6
(d)
18 7
(a)
18 8
(b)
18 9
(a)
19 0
(c)
19 1
(a)
19 2
(b)
19 3
(a)
19 4
(b)
19 5
(a)
19 6
(c)
19 7
(a)
19 8
(c)
19 9
(a)
20 0
(b)
600
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Model Test Paper – BOS/CPT-20
SECTION – A : FUNDAMENTALS OF ACCOUNTING
1
(a)
2
(c)
3
(c)
4
(c)
5
(b)
6
(a)
7
(b)
8
(c)
9
(b)
10
(d)
11
(d)
12
(d)
13
(a)
14
(a)
15
(c)
16
(a)
17
(a)
18
(c)
19
(a)
20
(c)
21
(a)
22
(c)
23
(a)
24
(b)
25
(a)
26
(a)
27
(a)
28
(b)
29
(a)
30
(c)
31
(a)
32
(a)
33
(c)
34
(a)
35
(c)
36
(a)
37
(a)
38
(a)
39
(b)
40
(a)
41
(a)
42
(a)
43
(d)
44
(a)
45
(b)
46
(a)
47
(a)
48
(a)
49
(a)
50
(a)
51
(b)
52
(a)
53
(c)
54
(a)
55
(a)
56
(a)
57
(a)
58
(a)
59
(a)
60
(a)
SECTION–B : MERCANTILE LAWS
61
(d)
62
(d)
63
(c)
64
(d)
65
(d)
66
(c)
67
(a)
68
(d)
69
(b)
70
(a)
71
(a)
72
(c)
73
(b)
74
(a)
75
(c)
76
(b)
77
(c)
78
(c)
79
(a)
80
(c)
81
(a)
82
(b)
83
(d)
84
(d)
85
(d)
86
(c)
87
(d)
88
(d)
89
(d)
90
(b)
91
(a)
92
(b)
93
(a)
94
(a)
95
(b)
96
(d)
97
(d)
98
(b)
99
(a)
10 0
(b)
Common Proficiency Test (CPT) Volume - I
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601
ANSWERS
SECTION–C : GENERAL ECONOMICS
10 1
(d)
10 2
(d)
10 3
(a)
10 4
(d)
10 5
(b)
10 6
(d)
10 7
(c)
10 8
(c)
10 9
(a)
11 0
(b)
111
(d)
11 2
(b)
11 3
(a)
11 4
(d)
11 5
(d)
11 6
(d)
11 7
(c)
11 8
(a)
11 9
(c)
12 0
(b)
12 1
(a)
12 2
(c)
12 3
(c)
12 4
(d)
12 5
(c)
12 6
(b)
12 7
(d)
12 8
(a)
12 9
(c)
13 0
(d)
13 1
(c)
13 2
(a)
13 3
(b)
13 4
(a)
13 5
(a)
13 6
(c)
13 7
(c)
13 8
(a)
13 9
(c)
14 0
(b)
14 1
(d)
14 2
(b)
14 3
(d)
14 4
(b)
14 5
(d)
14 6
(a)
14 7
(c)
14 8
(a)
14 9
(a)
15 0
(b)
SECTION–D : QUANTITATIVE APTITUDE
15 1
(b)
15 2
(c)
15 3
(c)
15 4
(a)
15 5
(a)
15 6
(c)
15 7
(c)
15 8
(a)
15 9
(b)
16 0
(d)
16 1
(c)
16 2
(c)
16 3
(c)
16 4
(d)
16 5
(b)
16 6
(a)
16 7
(b)
16 8
(c)
16 9
(a)
17 0
(b)
17 1
(a)
17 2
(a)
17 3
(c)
17 4
(a)
17 5
(b)
17 6
(a)
17 7
(c)
17 8
(b)
17 9
(b)
18 0
(a)
18 1
(b)
18 2
(a)
18 3
(b)
18 4
(c)
18 5
(a)
18 6
(b)
18 7
(a)
18 8
(d)
18 9
(a)
19 0
(c)
19 1
(a)
19 2
(b)
19 3
(c)
19 4
(a)
19 5
(c)
19 6
(a)
19 7
(c)
19 8
(a)
19 9
(c)
20 0
(b)
602
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 1
1
...
2
...
3
...
4
...
5
...
6
...
7
...
8
...
9
...
10
...
11
...
12
...
13
...
14
...
15
...
16
...
17
...
18
...
19
...
20
...
21
...
22
...
23
...
80,900
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
603
ANSWERS
24
...
20,000
25
...
84,000
Profit = sales – cost of goods sold = 1,20,000 – 84,000 = Rs
...
Abnormal loss = cost of goods of the goods damaged + consignor’s expenses of the goods damagedthe insurance claim received = 1/10 of 3,00,000 + 1/10of 5,000 – 3,000 = 30,000 + 500 – 3,000 = Rs
...
Cash received on sales – opening stock – expenses incurred by A – expenses incurred by V +
drawings made by V = profit incurred
Or 15,000 – 10,000 – 1,000 – 1,000 + 2,000 = Rs
...
Bank will be credited with full value of the bill i
...
Rs
...
Stock with customers on approval will be shown in the balance sheet at cost price or market price
whichever is less
...
2,700
30
...
4,680
And B will get 3/5 of 7,800 = Rs
...
Partners
Old ratio
New ratio
Sacrifice/gain
Sacrificing ratio
A
5/8
7/16
5/8-7/16 = 3/16
A:B = 3/16:1/16 = 3:1
B
3/8
5/16
3/8-5/16 = 1/16
C
—
4/16
Gain
32
...
Amount
Rs
...
)
Add: Cheques issued but not presented
Less: Cheques deposited but not cleared
Balance as per the pass book (Dr
...
Total cost of a fixed asset = cost of acquiring the asset + all other incidental cost involved in
bringing the asset into working situation
604
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Amount debited to the car account = purchase cost + repairs + registration cost + dealers commission
= 10,000 + 1,000 + 500 + 1,200 = Rs
...
Purchase return account (cr) under casted by Rs 84 and sales return account (dr) over casted by
Rs 84
...
35
...
Salaries account should come
on Dr
...
side
...
Goodwill = (29,600 + 28,700 + 28,900 + 24,000 + 26,800) × 3/5 = Rs
...
20,700
37
...
So the amount to be debited to the share capital account will be 2,000 × 9 = Rs
...
Amount to be transferred to capital redemption reserve account = face value of the shares to be
redeemed i
...
Rs
...
e
...
1,50,000 = Rs
...
Premium on redemption = 20% of Rs
...
40,000
Amount to be written off every year = 40,000/5 = Rs
...
Let × be the invoice value of goods sent out
Goods lost in transit will be 1/10 of × = Rs
...
1,25,000
41
...
2,00,000
Total amount to be received on issue of debentures at 20% discount = Rs
...
2,50,000
42
...
60
43
...
e
...
18,000
44
...
45,000 Or x = Rs
...
56,250 = Rs
...
When the incoming partner is not bringing goodwill and the goodwill is adjusted through the capital
accounts of the partners then NO goodwill will be shown in the balance sheet after admission
...
46
...
Thus The Indian Partnership Act is to be applied for settling the
dispute
...
a
...
80,000 will be the interest on loan = Rs
...
e
...
1,200 will be distributed among the three partners
equally
Thus Rs
...
5,200 for Y, and Rs
...
Let the cost price be x
...
20,000
Thus × = 20,000 × 100/125 = Rs
...
Amount to be paid to C = 35,000 × 98/100 = Rs
...
30,000
Hence amount to be settled in cash = Rs
...
Cost of the typewriter = Rs
...
1,25,000
50
...
27,000
Invoice value of the goods sold = 27,000 + 33
...
36,000
Sale price = 36,000 × 120/100 = Rs
...
Rent paid for 1-1-2009 to 30-9-2009 = 1200 × 9/12 = Rs
...
400
Thus rent paid shown in profit & loss account for the year ended 31-12-2009 = 900 + 400 = Rs
...
Sum of the years digit = 5(5 + 1)/2 = 15
Year
Depreciable
base
Depreciation
factor
Depreciation
expenses
Accumulated
depreciation
1
3,00,000
5/15
3,00,000 × 5/15 = 1,00,000
1,00,000
2
3,00,000
4/15
3,00,000 × 4/15 =
80,000
1,80,000
3
3,00,000
3/15
3,00,000 × 3/15 =
60,000
2,40,000
4
3,00,000
2/15
3,00,000 × 2/15 =
40,000
2,80,000
5
3,00,000
1/15
3,00,000 × 1/15 =
20,000
3,00,000
Thus depreciation amount to be charged during the fifth year i
...
2009-2010 will be Rs
...
Let the closing stock be x
Then opening stock = x – 3,000
Average stock = (opening stock + closing stock)/2 = (x + x – 3,000)/2 = x – 1,500 = Rs
...
e
...
13,500
54
...
e
...
e
...
5,950
55
...
Purchase return account (cr) under casted by Rs
...
1000
...
57
...
30,000
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
607
ANSWERS
58
...
Dr
2100
To accounts receivable from Mohan
2100
59
...
e
...
18,000
60
...
Book keeping is not a sub-field of Accounting
...
Revenue from products’ sale is realized at the time of sale
...
Expenses for an accounting period are recognised on ‘Matching’ principle
...
Accounting principles, policies are standardized to ensure transparency, consistency and comparability
...
Change in accounting estimate means differences between certain parameters estimated (or
restimated) and actual results achieved
...
Inventory of raw materials is odd one out
...
7
...
8
...
9
...
10
...
11
...
12
...
13
...
14
...
15
...
16
...
17
...
18
...
19
...
20
...
21
...
22
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
609
ANSWERS
23
...
40,000
Amount to be written off every year = 40,000/5 = Rs
...
Amount to be transferred to capital redemption reserve account = face value of the shares to be
redeemed i
...
Rs
...
e
...
1,50,000 = Rs
...
Let x shares were issued by Ltd
...
7,50,000
Or
Or
26
...
7,50,000
x = Rs
...
6,000 shares
Dividend will be paid on the amount called up and received i
...
called up value – calls in arrears
Or dividend payable = 15% of (5,00,000 – 40,000) = 15% of 4,60,000 = Rs
...
Total no
...
80,000 shares
Fully paid shares = Rs
...
80,000 – 77,500 = Rs
...
62,500
Final calls on 2,500 shares = Rs
...
25
28
...
2x/
...
When any one of the partner dies the life insurance policy money is distributed among the partners in the
profit sharing ratio i
...
A : 30,000 × 5/10 = Rs
...
9,000
C : 30,000 × 2/10 = Rs
...
Amount to be transferred to B’s loan account will be:
Capital
50,000
Reserve
15,000 × 2/5 = Rs
...
12,000
Profit on revaluation
7,050 × 2/5
Total
= Rs
...
70,820
610
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
31
...
25,000
Less: Capital towards goodwill = Rs
...
20,000
32
...
Under this problem, new
partner bring his share of goodwill in cash form in the firm and it is taken by old partner in their sacrifice
ratio
...
9,000 for goodwill, half of which is withdrawn by P and Q
Withdrawal by P and Q = 1/2 of 9,000 = 4,500
New profit sharing ratio:
P’s share
= 2/3 of 3/4 = 1/2
Q’s share
= 1/3 of 3/4 = 1/4
P’s sacrifice = 2/3 – 1/2 = 1/6
Q’s sacrifice = 1/3 – 1/4 = 1/12
P and Q will withdraw in their sacrificing ratio i
...
2 : 1
Thus P withdraws 2/3 of 4,500 = Rs
...
1,500
33
...
e
...
When the value of goodwill is not given in the question then hidden goodwill is calculated with reference
to the total capital of the firm and the profit sharing ratio
...
This method is generally used when the new partner is unable to bring in his share of goodwill which is at
the same time unknown
...
First, we will multiply the capital brought by the new partner with his reciprocated ratio
...
Secondly, we total up the actual capitals of all the partners including the capital brought by the new
partner as well
...
Hidden goodwill = 25,000 × 6 – (50,000 + 30,000 + 15,000 + 25,000) = Rs
...
5,000 which will be shared by existing partners in 3 :
2 ratio
So, the capital account of C will show closing balance of 25,000 – 5,000 = Rs
...
Half of the premium = Rs
...
10,000
Since D’s share i
...
¼ of the total share in goodwill = Rs
...
Hidden goodwill is that goodwill the amount of which is not mentioned in the deed , but the amount of
which has to calculated by capitalisation method or with the help profit sharing ratio
...
6,000
36
...
The ratio in which they agree to sacrifice their share of profits in favour of incoming
partner is calledsacrificing ratio
...
The
amount of compensation is paid by the new partner to the existing partner for acquiring the share of profit
which they have surrendered in the favour of the new partner
...
Profit after allowing interest on capital = Rs
...
4,680
And profit apportioned to Monika = 2/5 of 7,800 = Rs
...
when goods are sent on approval basis then at the end of the financial year the goods lying with customers
will be valued at cost or market price whichever is less
...
25x = 20,000
Thus the cost x = 20,000/1
...
16,000
39
...
e
...
40
...
Such a person is called insolvent
...
It means, the bills accepted by him will be naturally dishonored
...
The unsatisfied balance
is treated as bad debts
...
25,000
Thus when Bonny became insolvent and 50 paise is recovered from Bonny’s estate
Amount recovered from bonny = 50% of 25,000 = Rs
...
Sometimes, acceptor of a bill finds himself unable to meet his acceptance on the due date
...
The acceptor in this case will of course have to pay interest for the extended period
...
a
...
The drawer or holder of the bill may endorse (transfer) the bill in favor of his trades payable for the
clearance of his own debts
...
34,300
Amount of the bill endorsed = Rs
...
4,300
43
...
Here amount of the bill = 50,000
Amount to be paid to bank on discounting at 12% pa = 50,000 × 12/100 × 3/12 = Rs
...
48,500
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
613
ANSWERS
The amount of remittance to B will be = 48,500/2 = Rs
...
Total shares subscribed by public = 1,00,000 × 80% = Rs
...
20,000
Shares purchased by A in his profit sharing ratio = 3/5 of 20,000 = 12,000 shares
45
...
2,00,000
Add: drawings = Rs
...
1,00,000
Less: transportation cost = Rs
...
5,000
Less: selling exp
...
10,000
Thus profit = Rs
...
Sale price of the 4/5th goods = Rs
...
2,00,000
Drawings = 1/5 of 2,00,000 – 20% of (1/5 of 2,00,000) = 40,000 – 8,000 = Rs
...
82,000
47
...
e
...
15,000 in this case
...
Remuneration paid for services is called commission
...
Here normal
commission = 2% of 70,000 = 1,400
Special commission = 20% of (gross sales-all commission-cost of goods sold)
Let special commission be x
Then x = 20% of (70,000 – 1,400 – x – 3/5 × 1,00,000) = 20% of (70,000 – 1,400 – 60,000 – x)
Or
x = 20% of (8,600 – x)
Or
x = 1,720 –
...
2x = 1,720
Or
x = 1,433
Thus total commission = 1,433 + 1,400 = Rs
...
The amount to be credited to trading account will be the balance of “Goods sent on consignment account”
this can be derived as follows:
Goods sent on consignment
Particulars
Amount Particulars
Amount
By Consignement A/c
(Rs
...
20 × 1,000 Boxes)
To Trading A/c
50
...
Commission is always paid on sales
...
Since
delcredere commission is given, the consignee will bear the bad debt loss
Thus profit on consignment can be determined as follows
Consignment a/c
Particulars
Amount Particulars
Amount
To goods sent on consignment
2,00,000 By consignee A/c
2,10,000
To cash-expenses
5,000 By inventory on consignment
To consignee A/c-expenses
2,000
To consignee A/c-ordinary commission
3,000
To consignee A/c-delcredere commission
2,000
To profit and loss on consignment
51
...
Cost of Goods Sold = Opening inventory + Purchases + Direct Expenses – Closing inventory
Total cost of goods sent on consignment = Cost of the goods + expenses incurred by the consignor
= 1,00,000 + 5,000 = Rs
...
21,000
52
...
4,00,000 – Rs
...
90,000
53
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
615
ANSWERS
Let x be the cost of goods sold
Then profit = 25% of x
Thus sales = x + 25% of x = 1
...
2,000
Or x = 2,000/1
...
1,600
54
...
Straight line depreciation is calculated as follows:
Depreciation per annum = (Cost – Residual Value) / Useful Life
Where:
Cost includes the initial and any subsequent capital expenditure
...
As the residual value
is expected to be recovered at the end of an asset’s useful life, there is no need to charge the portion of
cost equaling the residual value
...
Since repair on the machinery was made on 1
...
2009 and not before the machinery was put to use and
it was also not a capital expenditure, it will not be considered while calculating the cost of the machinery
...
13,000
55
...
Under WDV method, depreciation is charged at a fixed rate every year, on the reducing balance
...
Lets find the WDV as on 30-9-2010 of the machine in question
original cost as on 1-3-2009 = 60,000
31-3-2010 depreciation @ 20% pa = 60,000 × 0
...
12,000
31-3-2010 wdv = 60,000 – 12,000 = Rs
...
4,800
30-9-2010 wdv = 48,000 – 4,800 = Rs
...
13,200
616
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
56
...
2,25,000
57
...
5,25,000
58
...
59
...
60
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
617
ANSWERS
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 3
1
...
2
...
3
...
4
...
5
...
6
...
4,00,000
In the liabilities side:
Increase in bills payable = Rs
...
4,00,000 with corresponding increase in liabilities by Rs
...
Bad debts recovered are credited to Bad debts recovered amount
...
Withdrawal by proprietor are debited to drawings A/c and credited to Cash A/c
...
Contra entries are passed in three column cash book
...
Consignment A/c is nominal as it shows profit/loss
...
Due to periodicity concept, life of an enterprise is divided into accounting periods (intervals)
...
Accounting policies refer to accounting principles and methods of applying those principles
...
Dividends are paid on paid up capital
...
Remaining partners contribute to compensation amount in gaining ratio
...
Petty cash balance is asset
...
Interest on capital to be paid only from profits in given case
...
Performa invoice is sent by consignor to consignee
...
In the given case, discount charges will be recorded in Memorandum A/c
...
Z will be payee of bill
...
Here profit margin on sale is given and we are required to find the profit margin on cost
...
2x
Thus cost price = selling price – profit = x –
...
8x
And the markup on cost will be = 0
...
8 × 100 = 25%
21
...
22
...
23
...
Pricing of inventory assumes significance
when different lots are purchased at varying prices at different timings
...
90,000
1,15,000
2,75,000
1,00,000
2,10,000
Net realisable value (Rs
...
Rs
...
So
if the asset was expected to last for six years, the sum of the years’ digits would be obtained by adding:
6 + 5 + 4 + 3 + 2 + 1 to get a total of 21
...
e
...
Total depreciable
cost
Depreciation
rate
Depreciation
expense
Accumulated
depreciation
Book value
at end of year
1,26,000
(original cost)
1,26,000
6/21
36,000
(1,26,000 × 6/21)
36,000
90,000
So Rs
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
619
ANSWERS
25
...
Thus gross profit = sales – cost of goods sold = 4,00,000 – 3,10,000 = Rs
...
Closing inventory = opening inventory + purchases – cost of goods sold
Cost of goods sold = x (say) = total sales – gross profit = 80,000 – 25% of 80,000
Or x = 80,000 – 20,000 = 60,000
Purchases = cost of goods available for sale – opening inventory = 1,00,000 – 20,000 = 80,000
Thus closing inventory = 20,000 + 80,000 – 60,000 = Rs
...
The venture was entered for purchase and sale of a particular piece of land
...
Thus profit = 60,000 – 20,000 = 40,000
28
...
It means, the bills accepted by him will be naturally dishonored
...
Later on something may be received from his estate
...
Here 40 p per rupee has been recovered
...
20,000
29
...
(1)
Given closing inventory = opening inventory + 3,000
Closing inventory – opening inventory = 3,000
...
13,500
30
...
e
...
In this case it is Rs
...
e
...
In
this case it would be 12,00,000/15% = 80,00,000
620
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
(e)
31
...
Here
goodwill will be = 80,00,000 – 8,00,000 = Rs
...
Below table shows the calculation of the sacrificing ratio
...
New share
4/16
Bank reconciliation statement as on …
Particulars
Amount
Amount
Balance as per cash book (Cr)
(1,500)
Add:
Cheques issued but not presented for payment
100 + 50 + 125
275
400
(400)
_______
Less:
Cheques deposited but not cleared
Balance as per pass book (Dr)
33
...
•
The cost of site preparation
...
•
Installation costs
...
•
Other cost incurred to make the asset work, i
...
computer software for a computer
...
•
In summary, the cost of acquisition includes the purchase cost plus any reasonable costs incurred
in placing the asset into a position where it is ready for use
...
Sales = opening inventory + purchases less return + gross profit – closing in ventory
Let sales be x = 22,000 + 1,10,000 + 20% of x – 25,000
Or
x = 1,07,000 + 20% of x
Or
x – 20% of x = 1,07,000
80% of x = 1,07,000
x = 1,07,000 × 100/80 = Rs
...
The difference is due to wrong placing of salaries A/c
...
side instead
of Cr
...
Under this method goodwill is calculated on the basis of the average of some agreed number of past
years
...
Goodwill = Average Profits × Number of years of Puchase
Before calculating the average profits the following adjustments should be made in the profits of the firm:
(a)
Any abnormal profits shoulld be deducted from the net profits of that year
...
(c)
Non operating incomes eg
...
Here average profit of last 5 years will be (85,000 + 90,000 + 70,000 + 1,00,000 + 80,000)/5 = 85,000
Agreed number of years = 3 years
Thus goodwill = 85,000 × 3 = Rs
...
Abnormal Loss: It refers to the abnormal loss of stock due to fire, theft or accident
...
Gross profit = sales – cost of goods sold (COGS)
Let COGS = x then
Or
4/3 of x = 2,00,000
Or
x = 1,50,000
Or
Gross profit = 1/3 of 1,50,000 = 50,000
Closing inventory = opening inventory + purchases + gross profit – sales – goods destroyed =
80,000 + 1,60,000 + 50,000 – 2,00,000 – 30,000 = Rs
...
Trading account discloses the gross profit and gross loss and for this it only records the sales and direct
cost of goods sold
...
18,000
2,300
50,600
_______
1,58,700
_______
_______
1,58,700
_______
The shares are being issued at a premium thus the value of each share issued will be 100 + 25 = Rs
...
Invoice value of the goods lost = 1/10th of the total invoice value of the goods sent = 12,500
Thus total invoice value of the goods sent = 12,500 × 10 = Rs
...
The debentures are being issued at a discount thus the value of each debenture will be 100 – 20 = Rs
...
5,00,000 should be credited to
debentures account
...
Premium on redemption = 20% of 5,00,000 = Rs
...
10,000
43
...
The new partner when admitted, has to compensate for all these
sacrifices made by the old ones
...
Hence, at the time of admission of the new partner, it is necessary to account the valuation of goodwill in
the firm
...
The premium brought in by Z in the above case = Rs
...
27,000
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
623
ANSWERS
44
...
The average is then multiplied by the agreed number of years
...
84,000
45
...
Interest will accrue on a timely basis e
...
Month to month or period to period
...
If the company has to prepare the financial statements, it has to provide for the interest expense up to
that period and show it under interest accrued but not due
...
Thus interest
accrued but not due will be for 3 months i
...
from 1st April 2010 to 30th Jun 2010
Or interest accrued but not due = 20,00,000 × 14% × 3/12 = Rs
...
46
...
Here commission to the partners are also considered as expenditure
...
35,500
...
Straight line method depreciates cost evenly through out the useful life of the fixed asset
...
•
Residual Value is the estimated scrap value at the end of the useful life of the asset
...
•
Useful Life is the estimated time period an asset is expected to be used from the time it is
available for use to the time of its disposal or termination of use
...
7
...
Cost of the machinery = purchase price + installation expenses = 1,20,000 + 10,000 = 1,30,000
Depreciation = (1,30,000 – 5,000)/5 = Rs
...
The drawer or holder of the bill may endorse (transfer) the bill in favor of his trades payable for the
clearance of his own debts
...
e
...
Total amount to be settled = 35,000
Amount to be settled after discount = 35,000 × 98% = Rs
...
4,300
49
...
2,05,000
1/5th inventory was taken over by B on cost will be equal to 1/5th of 2,05,000 = Rs
...
When goods are sent on approval basis then at the end of the financial year the goods lying with customers
will be valued at cost or market price whichever is less
...
1,10,000
51
...
Therefore, prepaid expense
must be not be shown as expense in the accounting period in which it is paid but instead it must be
presented as such in the subsequent accounting periods in which the services in respect of the prepaid
expense have been performed
...
Electricity charges paid = 1-1-2009 to 30-9 -2009 + 1-10-2009 to 31-12-2009 = 2,400 × 9/12 + 3,200 ×
3/12 = 1,800 + 800 = Rs
...
Invoice value = cost + markup
Invoice value = 2,00,000 + 20% of 2,00,000 = 2,00,000 + 40,000 = Rs
...
On the death of a partner, The representatives are entitled to Share of profit upto the date of death
...
1,500
54
...
16,000
Thus commission = 2% of 1,60,000 + 10% of 16,000 = 3,200 + 1,600 = Rs
...
Bank Reconciliation Statement as on 31-3-2012
Particulars
Amount
Amount
Balance as per cash book (dr)
1500
Add:
Cheques issued but not presented
150
Dividend collected by bank on behalf of ABC Ltd
...
In the given case, total of Dr
...
2,000 more than Cr
...
57
...
Therefore the capital of other partners is ascertained
by dividing the total capital in the new profit sharing ratio
...
For journal entry for renewal in books of A will be, BR and cash will be debited and L and interest will be
credited
...
59
...
(ii)
Credit Share Forfeited A/c with the amount received up to the time of forfeiture
...
This cancels the effect of
debit to such calls which take place when the amount is made due
...
18,000
60
...
the retiring
partner is entitled to his share of goodwill in the firm
...
Thus the contribution of X and Z to compensate Y will be
Y’s share in goodwill = 30,000 × 2/5 = 12,000
X’s contribution = 12,000 × 2/3 = 8,000
Z’s contribution = 12,000 × 1/3 = 4,000
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
627
ANSWERS
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 4
1
...
2
...
3
...
Govt
...
4
...
5
...
6
...
7
...
8
...
9
...
10
...
11
...
12
...
13
...
14
...
15
...
16
...
is charged by allocating depreciable cost in proportion of annual output to the life time output is
Production units method
...
A bill drawn outside India on person resident in India is foreign bill
...
General Reserve at time of admission of new partner is transferred to the old partner’s Capital accounts
...
A suspense A/c facilitates preparation of Financial Statements even when Trial Balance has not tallied
...
Recording of transactions in ledger is called posting
...
The referred norms are called Accounting Standards
...
In the given case, the treatment by auditor is justified due to Historical cost concept
...
Mr
...
A for the year will be nil
...
The provision created to cover the next year’s bad debt expense out of the current year’s debtors is
known as provision for bad debts
...
The provision created to cover the expense of discount that may be allowed to the debtors during the
coming year when they pay their debt on time
...
Thus provision for doubtful debt = 5% of (55,200 – 200) = Rs
...
According to annuity method, the purchase of the asset concerned is considered an investment of capital,
earning interest at certain rate
...
The annual charge to be made by way of depreciation is found out from annuity tables
...
Thus depreciation to be charged = asset value × the annuity = 40,000 ×
...
9,239
26
...
Under this method, the rate of depreciation remains constant year after year whereas the amount goes
on decreasing
...
1x
31-3-2008
wdv
...
9x =
...
9x –
...
81x
31-3-2010
depreciation@10%
...
81x –
...
729x = 72,900
So 0
...
1,00,000 = the cost of the machine
27
...
Interest will
accrue on a timely basis e
...
Month to month or period to period
...
If the company has to prepare the
financial statements, it has to provide for the interest expense up to that period and show it under interest
accrued but not due
...
e
...
2,56,667
28
...
Shares for a period exceeding 20 years (if not issued for
infrastructure projects)
...
When issue is over-subscribed, the company will have to allot to each applicant according to the number
of share applied by him
...
Pro
rata actually means ‘in proportion’
...
240
30
...
(ii)
Credit Share Forfeited A/c
...
(iii)
Credit ‘Unpaid Calls A/c’ with the amount due on forfeited shares
...
So the amount to be debited to share capital account will be = total number of shares forfeited × called up
value of each share = 200 × 8 = Rs
...
On the death of a partner, the representatives are entitled to Share of profit upto the date of death
...
1,500
32
...
Thus goods lying with customers will be 55,000
× 2 = Rs
...
33
...
•
The cost of site preparation
...
•
Installation costs
...
•
Other cost incurred to make the asset work, ie computer software for a computer
...
In summary, the cost of acquisition includes the purchase cost plus any reasonable costs incurred in
placing the asset into a position where it is ready for use
...
12,700
34
...
Thus the bank will deduct from A’s bank balance the amount of the bill plus noting charges
...
e
...
12,020
35
...
3,125
36
...
Interest is charged on drawings for the reason that the amount has been withdrawn
by the partners without allowing it for being used for the purpose of the business
...
Drawings of X at the end of each month =
Interest on drawings = 5% of 200 × (11 + 10 + 9 + …
...
55
37
...
The average is then multiplied by the agreed number of years
...
= Rs
...
When shares issued at par are forfeited the accounting treatment will be as follows:
(i)
Debit Share Capital Account with amount called up (whether received or not) per share up to the
time of forfeiture
...
with the amount received up to the time of forfeiture
...
This cancels the effect of
debit to such calls which take place when the amount is made due
...
af shares allotted to A × amount received
by A = 100 × 6 = Rs
...
BRS as on 31-3-2012
Particulars
Amount
Balance as per cash book (dr)
Amount
5,000
Add:
Cheques issued but not presented
2,000
_______
2,000
Less:
Cheques deposited but not cleared
Wrong debit by bank
1,500
20
_______
Balance as per the pass book (cr)
40
...
Interest will accrue on a timely basis e
...
month to month or period to period
...
If the company has to prepare the financial statements, it has to provide for the Interest expense up to
that period and show it under interest accrued but not due
...
will be for the period Oct
...
= (6% of 30,000) × 3/12 = Rs
...
The provision created to cover the next year’s bad debt expense out of the current year’s debtors is
known as provision for bad debts
...
Accounts receivable = 30,000
Less furthur bad debts = 3,000
632
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Provision for bad debts = 10% of (30,000 – 3,000) = Rs
...
The drawings are usually made by the partners at regular intervals
...
Monthly/quarterly drawings method: If uniform amount is withdrawn at each time and the interval between
two withdrawals also is uniform
...
Time period in this method is calculated as follows:
When drawings are for 12 months period and at the beginning of each month = Total drawings × Rate/
100 × 6
...
5/12 = 650
And interest on drawings of B will be = 500 × 12 × 10/100× 6
...
975
43
...
3,900
Interest on capital of A = 5% of 40,000 = Rs
...
1,250
Profit after interest = 3,900 – 2,000 – 1,250 = Rs
...
390
And profit shared by B = 650 × 2/5 = Rs
...
The expenditure will shown as prepaid expense in Financial statements for the year ended 31
...
09
...
Sometimes, acceptor of a bill finds himself unable to meet his acceptance on the due date
...
The acceptor in this case will of course have to pay interest for the extended period
...
2,000
Amount due = Rs
...
270
The amount of renewed bill will be = 6,000 + 270 = Rs
...
Straight line method depreciates cost evenly throughout the useful life of the fixed asset
...
Residual Value is the estimated scrap value at the end of the useful life of the asset
...
Useful Life is the estimated time period an asset is expected to be used from the time it is available for
use to the time of its disposal or termination of use
...
56,000
Depreciation = (56,000 – 6,000)/10 = Rs
...
Partners are entitled to receive interest at an agreed rate of interest on any Loan given by them to the
firm
...
If there is no agreement regarding the rate of interest, it is taken as 6% p
...
So as nothing is mentioned in the deed of partnership regarding the interest on loan so interest on Gopal’s
loan will be paid at 6% pa
...
12,000 = Rs
...
Interest is paid on capital for the reason that it has been used for the purpose of the partnership business
...
2009
...
4,500
49
...
e
...
For calculating Goodwill:
(i) Normal Profits = Capital Invested × Normal rate of return/100
(ii) Super Profits = Actual Profits – Normal Profits
(iii) Goodwill = Super Profits × No
...
5% = 50,000
Super profit = 60,000 – 50,000 = 10,000
Goodwill = 10,000 × 2 = Rs
...
To calculate the gain or loss on the sale of a fixed asset, one has to figure out the asset’s book value up
to the date of sale
...
A
certain percentage is applied to the previous year’s book value, to arrive at the current year’s depreciation/
book value, which shows a declining balance, weighted for earlier years, and lower and lower for later
years, as the machine grows older
...
2 = 40,000
31-12-2009 wdv = 2,00,000 – 40,000 = 1,60,000
30-6-2010 depreciation for the half year = 1,60,000 × 20% × 1/2 = 16,000
30-9-2010 wdv = 1,60,000 – 16,000 = 1,44,000
30-9-2010 sale price = 1,60,000
Thus profit on sale = 1,60,000 – 1,44,000 = Rs
...
The basic accounting equation, also called the balance sheet equation, represents the relationship between
the assets, liabilities, and owner’s equity of a business
...
For each transaction, the total debits equal the total credits
...
= liabilities + owners equity
Value of physical stock as on 15
...
2010 = Rs
...
80,000
Less purchases made between 31-3-2010 and 15-4-2010 = 50,000
Value of closing stock as on 31-3-2010 = Rs
...
Joint Venture a/c
Date Particulars
To Coventurers a/c-A-supplies
Amount Date Particulars
Amount
1,00,000
1,20,000
To Coventurers a/c-B-freight
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
By Coventurers a/c
By Closing Stock
5,250
635
ANSWERS
and Insurance
5,000
To Coventurers a/c-profit
(1,05,000 × 5/100)
20,250
_______
1,25,250
_______
_______
1,25,250
_______
54
...
1,000 with corresponding credit to Sales Return
...
L ast-In, First-Out is one of the common techniques used in the valuation of inventory on hand at the end
of a period and the cost of goods sold during the period
...
) later are sold first and those which are manufactured or
acquired early are sold last
...
This method is exactly opposite to first-in, first-out
method
...
50
5
3,000
2,200
March 12
400
5
...
5
2,200
300
5
1,500
th
Closing inventory as on 15 March will be Rs
...
Cost of the computer = purchase cost + repairing expenses + miscellaneous expenses = 10,000 + 1,000
+ 500 = 11,500
Let the sale price be x
Then profit will be 20% of x i
...
0
...
2x = 0
...
14,375
57
...
95,000
So the amount of the bill drawn will be Rs
...
58
...
e
...
59
...
Here amount of the bill = 50,000
Amount to be paid to bank on discounting at 12% pa = 50,000 × 12/100 × 3/12 = Rs
...
48,500
The amount of remittance to B will be = 48,500/2 = Rs
...
Drawings A/c is a personal account
...
Income Tax paid by sole-proprietor from business bank A/c is debited to his Capital A/c
...
Employees are internal users
...
4
...
5
...
6
...
7
...
8
...
9
...
10
...
11
...
12
...
13
...
14
...
15
...
16
...
17
...
18
...
19
...
20
...
21
...
22
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
637
ANSWERS
23
...
Until such time as the company actually pays the shareholders, the cash amount of the
dividend is recorded within a dividends payable account as a current liability
...
69,000
24
...
The excess application money is adjusted towards the sum due on allotment
...
So the proportion in which the shares will be allotted = total shares allotted/total shares applications
received = 10,000/14,000 = 5/7
F applied for 420 shares so the total shares allotted to him will be = 420 × 5/7 = 300 shares
So excess application money received from F = (420 – 300) × 2 = Rs
...
Cost of the boxes sent by X = 2,000 × 100 = 2,00,000
Sales price of the boxes sent = 2,00,000 + 45% of 2,00,000 = 2,90,000
The amount of bill drawn by X on Y will be = 60% of 2,90,000 = Rs 1,74,000
26
...
As the purchase of Rs
...
1,780 in the
cashbook, the cash book will show the bank balance more than actual by Rs
...
27
...
275 per 100 pc = Rs
...
137
...
50
Thus purchase price per piece = (2,750 + 137
...
2
...
Remuneration paid for services is called commission
...
Extra commission
paid to consignee for timely collection of debs and avoids bad debts is called Del creder commission
...
Over-riding commission is an extra commission allowed to the consignee in addition to the normal
commission
...
Thus ordinary commission = 5% of 60,000 = 3,000
Del creder commission = 2% of (30% of 60,000) = 360
Overriding commission = 3% of (60,000 – 50,000) = 300
Total commission = Rs
...
Total expenses:
Expense head
Amount
Freight
2,000
Godown rent
1,000
Interest on loan taken by A(18% of 50,000 × 1/12)
750
Selling expenses by B
Interest on loan taken by B(18% of 1,50,000 × 2/12)
Total
30
...
13,250
_________
If noting charges are paid by the bank (if the bill has been discounted) it will be realised by the bank from
the drawer, who will charge it from drawee
...
i
...
10,000 + 200 = Rs
...
When goods are sent on approval basis then at the end of the financial year the goods lying with customers
will be valued at cost or market price whichever is less
...
80,000
Goods still lying with the dealer = 1,20,000 – 80,000 = 40,000
So cost of goods lying with the dealer = 40,000 × 100/125 = Rs
...
By profit sharing ratio in a partnership firm, we mean the ratio in which the profits and losses of the firm
are to be distributed amongst the partners
...
Thus the profits Rs
...
e
...
50,000
C
33
...
50,000
Rs
...
So the amount debited to car account will be = purchase cost + initial repairs + registration + dealers
commission = 2,00,000 + 25,000 + 5,000 + 2,000 = Rs
...
Partners are entitled to receive interest at an agreed rate of interest on any Loan given by them to the
firm
...
If there is no agreement regarding the rate of interest, it is taken as 6% p
...
So as nothing is mentioned in the deed of partnership regarding the interest on loan so interest on
Prafful’s loan will be paid at 6% pa
...
1,200
35
...
1,20,000
36
...
Total value per share
Application money
2
Allotment money
4
First call
1
Final call (9 – 2 – 4 – 1)
37
...
Thus share in profits for the period 1st April 2010 to 30th June 2010 to be credited to D’s Account will
be calculated as follows:
Profit for the period on the basis of last year’s profit will be 75,000 × 3/12 = Rs
...
6,250
640
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
38
...
In this case the journal entry of forfeiture of shares will be
similar to the entry made as if the shares had been issued at par
...
39
...
40
...
2,50,000
41
...
80
Total value of machinery purchased = 5,00,000
Number of debentures issued in consideration = total value of machinery purchased/value per debenture
= 5,00,000/80 = 6,250 debentures
Thus the actual value of the debentures issued = 6,250 × 100 = Rs
...
42
...
The amount of discount allowed is debited to
Share Forfeited Account
...
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited
amount on such shares
...
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will
be profit for the company
...
In the above question discount per share = Rs
...
2,000
Amount available in shares forfeiture account = Rs
...
1,000
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
641
ANSWERS
43
...
When a change in the method of depreciation is made, depreciation should be recalculated
in accordance with the new method from the date of the asset coming into use
...
The original cost of the machine = Rs
...
4,000
Rate of depreciation according to WDV method = 20%
Depreciation for the 1st year according to wdv method = 20% of 10,000 = 2,000
WDV as on 31-3-2011 will be = 10,000 – 2,000 = 8,000
Depreciation for the 2nd year = 20% of 8,000 = Rs
...
400
44
...
The provision for bad debt is calculated on the trade receivable’
balance obtained after deducting the bad debt written off
...
The provision for discount on trade receivable
is calculated on the trade receivable balance after deducting the bad debt and the provision for bad debt
amount
...
21,344
45
...
20, 000 × 2/10
Rs
...
46
...
Thus the claim of Y for getting salary is wrong and will not be allowed
...
e
...
Amount payable to
X, Y and Z will be 60,000/3 = Rs
...
47
...
9,50,000
642
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Since the cost of damaged TVs were adjusted with the remaining TVs thus the cost of the remaining
TVs will be 9,50,000 + 50,000 = Rs
...
10,526
48
...
On the maturity Rs
...
e
...
15000
...
Joint Venture A/c
Particulars
Amount
Particulars
Amount
To coventurers a/c-A-supplies
1,20,000
By coventurers a/c-B_sales
1,50,000
To coventurers a/c-A-repairs
10,000
To coventurers a/c-A-printing
10,000
To coventurers a/c-profit
50
...
Thus amount to be transferred to debenture premium account = 5,000 × 10 = Rs
...
Capital Redemption Revere is an account to which is credited the nominal value of shares that have been
redeemed insofar as the redemption was not paid for by the proceeds of a new issue of shares and was
not a payment out of capital
...
1,00,000
52
...
So at the time of
first call money received and debited to bank account will be = (25,000 – 1,000) × 2 = Rs
...
Value of furniture as on 1-1-2010 = Rs
...
1,200
This furniture was sold during the year so depreciation for half year will be charged on it
...
60
Thus bookvalue of the furniture exchanged after depreciation will be = 1,200 – 60 = Rs
...
1,640
Value of old furniture after depreciation will be = (20,000 – 1,200) × 9/10 = 16,920
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
643
ANSWERS
The value of new furniture after charging half year depreciation = 1,640 – 1,640 × 10% × 6/12 = 1,558
Thus the total value of furniture shown in the balance sheet will be = 16,920 + 1,558 = Rs
...
Direct Credits or Direct Deposits are amounts deposited directly by someone into an account of the
company
...
Direct Credits are useful
where regular receipts are expected from known parties (such as rent, interest on investment, royalties,
etc) who can deposit the money without the involvement of the payee
...
Bank records the amount received as soon as the transfer through direct credit is made but the business
entity records the amount when it receives intimation by the bank through bank statement or otherwise
...
The difference needs to be added to the balance of the cash book when taken as the starting point in the
preparation a bank reconciliation
...
BRS as on 31-3-2012
Particulars
Amount
Balance as per cash book(dr)
Amount
1500
Add:
Cheques issued but not presented
150
Dividend collected by bank on behalf of ABC ltd
50
Interest allowed by bank
50
+ 250
_______
100
_______
(100)
_______
1650
_______
Less:
Cheques deposited but not cleared
Balance as per the pass book
56
...
1500 and sales return account (dr) will be under casted by
Rs
...
57
...
9,75,000
Closing inventory = goods available for sale-cost of goods sold = 12,00,000 – 9,75,000 = Rs
...
Total amount to be paid = Rs
...
1,800
The amount paid before discount will be = 1,800 × 10/9 = Rs
...
5,000
Amount paid on 30-9-2009 after 5% discount = 2,850
The amount paid before discount = 2,850 × 100/95 = Rs
...
2,000
59
...
44,000
Profit after charging managerial commission = 44,000 – x
Managerial commission = x = 10% of profit after charging managerial commission = 10% of (44,000 –
x)
x = 10% of (44,000 – x)
x = 4,400 – x/10
x + x/10 = 4,400
11x/10 = 4,400
Managerial commission = x = 4,400 × 10/11 = Rs
...
Recovered bad debt is revenue in nature
...
Transactions between owner and business are recorded as per Entity concept
...
Salary is expense, Account payable is liability, sales is revenue, Trade Receivable is an asset
...
Annual financial statements pertain to individual business entity
...
An employee dismissed from job is not a transaction
...
5
...
All other three are
objectives of accounting
...
Personal expenses of owners (paid by firm) are called drawings
...
Purchase Journal records credit purchase of goods dealt in by firm
...
Trial balance gives the list of balances of all accounts (given in ledger)
...
Dep
...
10
...
11
...
12
...
13
...
whereas right side is Cr
...
Every transaction affects at least 2 accounts
...
All expenses and income accounts appearing in trial balance are Ist of either to Trading or Profit & Loss
A/c
...
Scrap value means amount realised at end of useful life of asset
...
Petty cashier works on Imprest system
...
Proforma invoice is prepared by consignor and sent to consignee to inform him about essential particulars
of goods
...
Carriage charges paid for new plant should be debited to Plant A/c
...
20
...
21
...
22
...
646
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
23
...
e
...
Under this method goodwill is calculated on the basis of the average of some agreed number of past
years
...
Goodwill = Average Profits × Number of years of Purchase
Here average profit of last 4 years will be (40,000 + 50,000 + 60,000 + 50,000)/4 = Rs
...
1,50,000
25
...
15
Total value of assets acquired = Rs
...
When a new partner is admitted in the firm, the existing/old partners have to sacrifice, what is given to
the new partner, from their future profits, the reputation they have gained in their past efforts and the side
of capital they have taken before
...
The compensation for such sacrifice can be termed as ‘goodwill’
...
For adjustment of goodwill C’s account will be debited by his share in the firm’s goodwill
...
1,50,000
Share of C in profit = 1/6
Thus C’s account will be debited by 1,50,000 × 1/6 = Rs
...
Profit = sales less return – purchase less return
Sales less return = sales – sales return = 40,000 – 5,000 = Rs
...
25,000
Thus amount of profit = 35,000 – 25,000 = Rs
...
Under WDV method, depreciation is charged at a fixed rate every year, on the reducing balance
...
Lets find the WDV as on 30-3-2010 of the furniture and fixture in question
Balance of furniture and fixture as on 1-4-2009 = Rs
...
5,000
31-3-20 10 depreciation @10%pa on the opening balance = 10,000 × 10% = Rs
...
250
31-3-2010 total depreciation = 1,000 + 250 = Rs
...
Cost of goods consigned to Mr
...
10,000
Plus freight and carriage = Rs
...
11,000
Abnormal loss i
...
goods lost in transit = 11,000 × 10/100 = Rs
...
When shares issued at par are forfeited the accounting treatment will be as follows:
(i) Debit Share Capital Account with amount called up (whether received or not) per share up to the
time of forfeiture
...
with the amount received up to the time of forfeiture
...
This cancels the effect of debit
to such calls which take place when the amount is made due
...
Thus the amount received on such shares = 1,000 × 3
...
3,500
The shares forfeited account will be credited by Rs
...
The debentures are being issued at a premium thus the value of each debenture will be 1,000 + 20% of
1,000 = 1,200
Total value of asset purchased = Rs
...
Discount 4% of Rs
...
4,00,000
Premium on repayment 6% of Rs
...
6,00,000
Total loss on issue of debentures = 4,00,000 + 6,00,000 = Rs
...
The retiring partner is entitled to his/her share of goodwill at the time of retirement because the goodwill
is the result of the efforts of all partners including the retiring one in the past
...
Therefore, in case of retirement of a partner, the goodwill is
adjusted through partner’s capital accounts
...
His/
her share of goodwill and remaining partner’s capital account is debited in their gaining ratio
...
25,000
Gaining ratio
Partners
Old ratio
New ratio
Gaining ratio
Jai
3/10
1/2
½ – 3/10 = 2/10
Jagdish
2/10
1/2
½ – 2/10 = 3/10
Thus Jai’s account will be debited by = 25,000 × 2/5 = Rs
...
15,000
34
...
holiday, the bill will mature on the next working day
...
Cost of machinery as on 1st april 2007 = Rs
...
20,000
Depreciation for half year till 30th sept 2009 = 10,000/2 = Rs
...
75,000
Sales consideration of the machine = Rs
...
14,000
36
...
Closing inventory = 700 units
Since FIFO is followed the closing inventory 700 units will include the purchases made on Jan 30 and Jan
25th
Value of the closing inventory = 400 units @ Rs
...
9 = 4,000 + 2,700 = Rs
...
In the books of Sen there is bills payable(dr
...
5,000 and there is bills receivable(cr
...
5,000 accepted by Tania
...
Rs
...
Rs
...
And it is used to measure the arithmetical accuracy
of balances
...
If the mistake is detected before the preparation of the final accounts, the rectifying
entry is passed
...
Rs
...
Rs
...
)
Amount
10000
Add:
Cheques issued but not presented
4000
_______
4000
_______
3000
_______
(3000)
_______
11000
_______
Less:
Cheques deposited but not cleared
Balance as per the pass book (cr
...
40
...
1, 000, will affect trial balance
...
41
...
So he may
approach the drawer of the bill before the maturity date arrives, to cancel the old bill and draw a new bill
with extended date
...
Total amount of the bill = Rs
...
4,000
Amount due = Rs
...
120
42
...
1
...
1
...
3
...
3
...
3
...
500
43
...
Here interest from February to March is earned by the company
but received in April
...
200
44
...
4,80,000
Invoice price = 125% of the cost price
Thus invoice price = 125% of 4,80,000 = Rs
...
1,20,000
45
...
Commission is always paid on sales
...
500 per unit
Here total units sold by B = 150 units on credit + 75 units for cash = 225 units
Thus the amount of commission will be = 225 × 500 = Rs
...
A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a
new entity and new assets by contributing equity
...
Joint venture A/C
Date
Particulars
Amount
Date
Particulars
To coventurers a/c-purchases
75,000
By coventurers a/c-sales
To coventurers a/c-expenses
10,950
By coventurers a/c-
To coventurers a/c-profit
47
...
So he may
approach the drawer of the bill before the maturity date arrives, to cancel the old bill and draw a new bill
with extended date
...
Total amount of the bill = Rs
...
4,000
Amount due = Rs
...
225
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
651
ANSWERS
48
...
49
...
Here amount of the bill = Rs
...
500
50
...
At the time of admission of a partner, existing partners have to surrender some of their share in favour of
the new partner
...
Some amount is paid to the existing partners for their sacrifice
...
Sacrificing Ratio is calculated as follows:
Sacrificing Ratio = Existing Ratio – New Ratio
Old ratio
New ratio
Sacrificing ratio
X
2/3
2/3 of ¾ = 1/2
2/3 – 1/2 = 1/6
Y
1/3
1/3 of ¾ = 1/4
1/3 – 1/4 = 1/12
Z’s share in profit = 1/4 of 76,000 = Rs
...
25,000 i
...
the guaranteed amount
So Z’s share = Rs
...
51,000 will be distributed among X and Y in the ratio 2:1
X’s share = 51,000 × 2/3 = Rs
...
17,000
51
...
Hidden goodwill is that goodwill the amount of which is not mentioned in the deed, but the amount of
which has to calculated by capitalisation method or with the help profit sharing ratio
...
So to calculate the value of this hidden goodwill we will follow these steps:
1
...
2
...
3
...
652
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Assumed capital = 8,00,000 × 4 = Rs
...
22,00,000
Hidden goodwill = 32,00,000 – 22,00,000 = Rs
...
Cash book is a financial journal that contains all cash receipts and payments, including bank deposits and
withdrawals
...
53
...
40,000
54
...
Application money received on over applied shares are returned by the company
...
10,00,000
55
...
90,000
Thus value of equity shares of Rs
...
90,000
The number of equity shares to be issued = 90,000/9 = 10,000 shares
56
...
LIFO assumes that goods which made their way
to inventory (after purchase, manufacture etc
...
Thus LIFO assigns the cost of newer inventory to cost of goods sold and
cost of older inventory to ending inventory account
...
Since the firm is following LIFO method for valuation of inventory the closing inventory i
...
15,000 units + 20,000 units – 30,000 units = 5,000 units will be valued @ of the opening inventory
Per unit value of the opening inventory = 1,50,000/15,000 = Rs
...
50,000
57
...
So the amount debited to machinery account will be = purchase cost + shipping forwarding + import duty
+ carriage inwards + repair charges + installation charges + brokerage + iron pad
= 50,000 + 2,000 + 1,000 + 1,000 + 500 + 200 + 400 + 100 = Rs
...
Interest on capital allowed = 12%
Capital invested = Rs
...
12,000
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
653
ANSWERS
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 7
1
...
2
...
3
...
4
...
5
...
of totals of Dr
...
Side of trial balance is B/F of to Suspense A/c
...
Inventories should be issued in the sequence in which they are purchased on the basis of FIFO
...
Value of an asset after deducting dep
...
8
...
9
...
10
...
02
...
05
...
11
...
Side of the ledger account if total of Dr
...
Side
...
Cost of small calculator is accounted as expense due to Materiality concept
...
Base stock is minimum quantity of inventory held as precaution
...
M/s Surendran & Co
...
15
...
16
...
17
...
18
...
19
...
20
...
21
...
22
...
654
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
23
...
The capital contribution increases the owner or partner’s equity interest in the entity
...
e
...
3,00,000
Vijay’s contribution = 6,00,000 × 3/10 = Rs
...
1,20,000
24
...
Allotment of equity
shares will be on the basis of shares subscribed by the public and not on the shares issued to the public for
subscription
...
25
...
When Debentures are issued for cash at par :
Following journal entries will be made :
(i)
Application money is received
Bank A/c
Dr
To Debentures Application A/c
(Application money received for Debentures)
(2) Transfer of debentures application money to debentures account on their allotment
Debentures Application A/c
Dr
To Debentures A/c
(Application money transferred to debenture account on allotment)
Here the total amount is received with application so the amount to be transferred to the 10% Debenture
account will be (5,000 × 100) = Rs
...
Capital Redemption Revere is created when a company buys it owns shares which reduce its share
capital
...
Here the face value of preference shares redeemed = Rs
...
50,000
Thus amount to be transferred to capital redemption reserve = 1,00,000 – 50,000 = Rs
...
When the company has the debentures in Financial statements with entitlement to interest
...
g
...
However the so accrued will become accrued and due on the said due dates
...
Interest from 1-6-2010 to 30-9-2009 i
...
for 4 months from the date of issue of debentures = 9% of
4,00,000 × 4/12 = 12,000
Interest from 1-10-2009 to 31-3-2010 = 9% of 4,00,000 × 6/12 = 18,000
Total interest to be debited to profit and loss for the year ended 31-3-2010 will be = 12,000 + 18,000 = Rs
...
If any amount has been called by the company either as allotment or call money and a shareholder has
not paid that money, this is known as calls in arrears
...
Calls in advance and calls an arrears are not entitled for any dividend declared by the company
...
3,00,000 – Rs
...
Dividend payable = 20% of 2,85,000 = Rs
...
29
...
The amount of discount allowed is debited to
Share Forfeited Account
...
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited
amount on such shares
...
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will
be profit for the company
...
In the above question discount per share = 10 – 9 = Rs 1
Total discount on the 1800 reissued shares = Rs
...
5,000 ×
1,800/3,000 = Rs
...
1,200
30
...
The excess application money is adjusted towards the sum due on allotment
...
656
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
So the proportion in which the shares will be allted = total shares allotted/total shares applications received
= 10,000/12,000 = 5/6
Total shares held by Kittu = 1,000
Thus total shares applied by Kittu = 1,000 × 6/5 = 1,200
So excess application money received from Kittu = (1,200 – 1,000) × 2 = Rs
...
3,000
Allotment money adjusted with excess application money = Rs
...
2,600
31
...
Most often, this insurance is purchased to aid
the business in continuing to operate in case of the death or dismemberment of one partner
...
3,00,000
the share of the partners in the total policy will be in their profit sharing ratio
thus share of Me in the policy will be = 3,00,000 × 2/10 = Rs
...
In case of retirement and death, goodwill is adjusted through the partners’ account in Gaining Ratio
...
To Retiring or Deceased Partner’s Capital Account
(Goodwill adjusted in the gaining ratio)
Calculation of gaining ratio
Partners
Old ratio
New ratio
Gaining ratio
Vijay
3/6
Vineet
2/6
2/3
2/3-2/6 = 2/6
Vivek
1/6
1/3
1/3-1/6 = 1/6
So the gaining ratio Vineet and Vivek is 2 : 1
Vijay’s share in goodwill = 3/6 of 18,000 = Rs
...
6,000
Vijay’s share of goodwill debited to Vivek’s capital account = 1/3 of 9,000 = Rs
...
Calculation of new profit sharing ratio
Partners
Old ratio
Gain
New ratio
Amit
5/12
3/12 × 4/7 = 1/7
5/12 + 1/7 = 47/84
Rohit
4/12
3/12 × 3/7 = 3/28
4/12 + 3/28 = 148/336 = 37/84
Sumit
3/12
Thus the new ratio between Amit and Rohit = 47:37
34
...
Under this method we calculate the average profits and then assess the capital needed for earning such
average profits on the basis of normal rate of return, such capital is called capitalized value of average
profits
...
To calculate
goodwill using average profit, the average net profit for a given number of past years are multiplied by an
agreed number of years
...
Here profit for the year = 12,00,000
Reasonable rate of return = 15%
Thus capitalized value of profit = 12,00,000 × 100/15 = 80,00,000
Capital employed = 80,00,000
Thus Goodwill = 80,00,000-80,00,000 = NIL
36
...
On the closing date the cost of goods lying with customers is Rs
...
12,000, so the cost of goods lying with customers will be Rs
...
37
...
3,000 (Rs
...
38
...
It means, the bills accepted by him will be naturally dishonored
...
Later on something may be received from his estate
...
Here 30 p per rupee has been recovered
...
3,000
And the amount of bad debt will be = 10,000 – 3,000 = Rs
...
Joint venture a/c
Particulars
Amount Particulars
To coventurers a/c-Ram-
By coventurers a/c-Shyam_sales
purchases
20,000 By Coventureres-shyam-drawings
To coventurers a/c-Ram-freight
25,000
2,000
1,000
To coventurers a/c-shyam-carriage
To coventurers a/c-profit
Amount
500
5,500
______
27,000
______
______
27,000
______
Amount to be paid to Ram by Shyam = cost of goods purchased + expenses incurred by Ram + share in
profit on venture = 20,000 + 1,000 + 2,750 = Rs
...
Cost price means original cost of the unsold inventory plus proportionate amount of the expenses which
are necessary to put the goods
...
Generally all expenses incurred
till the goods reach consignee’s godown etc
...
Expenses
incurred in storage and selling the goods after the goods reach consignee’s godown are not to be considered
in the cost of the unsold stock (closing stock)
...
600
Selling expenses = Rs
...
1,800
41
...
42
...
Gross profit is a company’s residual
profit after selling a product or service and deducting the cost associated with its production and sale
...
It excludes indirect expenses such as distribution costs
...
53,000
43
...
The
suspense account is used because the proper account could not be determined at the time that the
transaction was recorded
...
(1)
When return inward was undercast dr side of trial balance must be showing Rs
...
1,000 less so suspense account would have been debited
(3)
When salaries was posted twice the credit side of the trial balance must be showing Rs
...
Trial balance
Partculars
LF
Amount
Capital
Computer
4,00,000
25,000
Air conditioner and furniture
1,00,000
Fixed Deposits
2,00,000
Salaries
8,00,000
Fee received
12,00,000
Travelling expenses
1,50,000
Rent and office expenses
2,40,000
Cash balances
1,80,000
Bank overdraft
_______
16,95,000
_______
Total
45
...
Here the historical cost of the closing inventory will be = 1,000 × 3
...
3,250
And the selling cost per unit = Rs
...
25
660
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
So the selling price of the closing inventory will be = 1,000 × 4
...
4,250
46
...
5 lacs units
1,50,000 × 11/30 = 55,000
Thus Annual depreciation for 1-3 year, using production units method will be Rs
...
47
...
Rs
...
Statement showing the value of physical inventory as on 31
...
2012
Particulars
Inventory as on 31
...
2012
2,80,000
Less inventory on consignment
Less goods damaged
Value of inventory as on 31
...
2012
49
...
The cost of the asset and also interest thereon are written down annually
by equal installments until the book value of the asset is reduced to nil or its bread up value at the end of
its effective life
...
The annual charge for depreciation will be credited to asset account and debited to depreciation account,
while the interest will be debited to asset account and credited to interest account
...
282012 = Rs
...
Outstanding interest means the interest which is accrued but not received during the current period
...
18,000
And the interest received = Rs
...
3000
51
...
With hypothecation, the lender has
the right to seize the asset if the borrower cannot service the loan as stipulated by the terms in the loan
agreement
...
Let the closing stock be x (say)
Then the hypothecated value of stock will be 80% of x
And the customer can withdraw 80% of (80% of x) = Rs
...
0
...
2,50,000 which is the closing stock
...
On Profits before charging such commission:
Manager’s commission = Net Profits X (Percentage of commission / 100)
2
...
24,000
53
...
Here out of four floors of the building 1 is used for residential purposes and 3 floors are used for official
purposes
...
Total depreciation = 80,000
Depreciation to be charged in the business books = 80,000 × 3/4 = Rs
...
Statement showing the value of closing inventory as on 31
...
2012
Particulars
Rs
...
Inventory as on 7
...
2012
Add sales during the period
Less purchases during the period
1,80,000
Sales-gross profit (20% on sales)
= (80/100) × 2,50,000
1,50,000
2,00,000
(1,50,000)
Value of inventory as on 31
...
2012
2,30,000
Total application money received with application = 12,000 × 100 = Rs
...
2,00,000
55
...
1,40,00,000 ×
...
8,40,000
Premium on redemption
Rs
...
05 = Rs
...
= Rs
...
12,000 × 90 – 10,000 × 90
Rs
...
1,80,000
57
...
Since here all the shares redeemed was paid for by the proceeds of nea issue of equity shares thus
amount to be transferred to the capital redemption reserve = nil
58
...
A bill of exchange is a “negotiable instrument” i
...
a document which is
transferable by delivery without notice to the party liable (drawee)
...
500
Entry to be passed =
Dinesh A/c
To Bills receivable
To Discount received
Dr
...
500 earned by Ritesh was Credited to discount received account by Rs
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
663
ANSWERS
59
...
Company will give 14 days’ notice;
after 14 days if shareholder did not pay then company will forfeit his shares and cut off his name from the
register of shareholder
...
On non-receipt of the first call and final call money from Rahul, calls in arrear account was debited and
there was no money lying in the first call account or the final call account
...
60
...
664
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 8
1
...
2
...
3
...
4
...
5
...
balance
...
6
...
7
...
8
...
9
...
10
...
11
...
12
...
13
...
14
...
balance
...
Purchase of fixed asset (on credit basis) is recorded in Journal Proper
...
Recording of transactions and events is Accounting
...
The ratio of sacrifice is same as old profit sharing ratio, unless otherwise agreed
...
Continuing partners acquire the outgoing partner’s share in gaining ratio
...
Bill of exchange is called Bill payable by one who is liable to pay
...
Calls in arrear is deducted from called up capital to arrive at paid up
...
In the given case, sale will be treated at time of delivery only
...
Cost concept has been followed in the given case
...
A Bank reconciliation is a process that explains the difference between the bank balance shown in an
organisation’s bank statement, as supplied by the bank, and the corresponding amount shown in the
organization’s own accounting records at a particular point in time
...
Bank reconciliation statement as on 31st March 2012
Particulars
Amount
Balance as per cash book(dr)
Amount
1,00,000
Less:
Cheques deposited but not cleared
10,000
_______
Balance as per pass book(cr)
24
...
Gross profit is a company’s residual
profit after selling a product or service and deducting the cost associated with its production and sale
...
It excludes indirect expenses such as distribution costs and sales force cost
...
25,000
25
...
They exercise control over the enterprise and
consequently share revenues, expenses and assets
...
By coventureres-Y-drawings
By coventurers a/c-loss
2,000
2,000
_______
65,000
_______
Discounting bills of exchange is a financial service, where the Bank purchases drawn bills, from the
domestic trade transactions, confirmed in particular with an invoice - with right of recourse to you - and
credits you with the amount of the bill of exchange less discount interest and additional costs related to
the bill, accrued in advance from the discount date to the bill payment term
...
2,000
666
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Less:6% of 2,000 × 3/12 = 30
Amount received from bank by Mohan = 2,000 – 30 = 1,970
Amount sent to Sohan = 1/2 of 1,970 = Rs
...
Sale or return basis is an arrangement by which a retailer pays only for goods sold, returning those that
are unsold to the wholesaler or manufacturer
...
If they do not buy, those goods will return to us
...
Here as No confirmation has been received from Annu Ltd
...
So the goods will be
included in the closing inventory at cost or market price whichever is lower
...
e
...
10,000
...
Interest on capital will be provided as per the partnership deed
...
Profit before interest proportioned to the partners as they are EQUAL PARTNERS are:
Somesh = 6,000 × 1/2 = Rs
...
3,000
The interest to be provided on capital = 5% of 1,20,000 = Rs
...
e
...
Thus:
Somesh’s share = 1/3 × 6,000 = Rs
...
4,000
Thus for rectification Somesh’s account will be debited by Rs 1,000
...
Calculation of new profit sharing ratio
Partners
Old ratio
New ratio
A
3/6 = 1/2
(1-2/6) × 3/5 = 2/5 × 30 = 12
B
2/6 = 1/3
(1-2/6) × 2/5 = 4/15 × 30 = 8
C
1/6
1/6 × 30 = 5
D
1/6 × 30 = 5
Since C is retaining his old share in profit the remaining (1-1/6-1/6) will be shared by A and B in their
mutual profit sharing ratio i
...
3:2
...
Owner of enterprise pays interest on drawings due to entity concept
...
Hidden goodwill is that goodwill the amount of which is not mentioned in the deed , but the amount of
which has to calculated by capitalisation method or with the help profit sharing ratio
...
Such capital is called capitalised value of average
profits
...
1,00,000
32
...
1,21,000
_______
Inventory must be recorded at the lower of cost or net realizable value
...
These may include costs incurred directly in the production of inventory such as
direct labor and production overheads (i
...
conversion costs) and other expenses such as transportation
and handling charges, taxes and duties that may not be recoverable from tax authorities
...
Similarly, selling and distribution expenses, storage costs and excessive expenditure resulting from abnormal
wastage shall not be included in the cost of inventory
...
This is simply the expected
revenue from the sale of inventory after deducting any further costs that are necessary in order to sell the
inventory
...
Units
Cost per unit
Realization Value at which
value per unit recorded =
(NRV)
lower of cost
or NRV
Value
recorded
1
2
10
11
10
20
2
10
5
4
4
40
3
2
2
2
2
4
Value of closing inventory
34
...
The average is then multiplied by the agreed number of years
...
Goodwill = Average Profits × Number of years of Purchase
Before calculating the average profits the following adjustments should be made in the profits of the firm:
(a)
Any abnormal profits should be deducted from the net profits of that year
...
(c)
Non operating incomes e
...
Income from investments etc should be deducted from the net profits
of that year
...
35,000
Profit for the year 2011: profit add abnormal loss = 50,000 + 10,000 = Rs
...
47,500
Goodwill = 47,500 × 1 = Rs
...
Discounting bills of exchange is a financial service, where the Bank purchases drawn bills, from the
domestic trade transactions, confirmed in particular with an invoice - with right of recourse to you - and
credits you with the amount of the bill of exchange less discount interest and additional costs related to
the bill, accrued in advance from the discount date to the bill payment term
...
3,000
Common Proficiency Test (CPT) Volume - I
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ANSWERS
36
...
Since any amount paid for the personal expenses for the proprietor from the firm will be treated as
drawings, the amount Rs
...
38
...
The provision for bad debt is calculated on the accounts
receivable’ balance obtained after deducting the bad debt written off
...
15,000
While recording salaries the amount of PF will be deducted from the salary and the balance amount will
be shown in the profit and loss A/C
...
15,000
...
Straight line method depreciates cost evenly throughout the useful life of the fixed asset
...
Residual Value is the estimated scrap value at the end of the useful life of the asset
...
Useful Life is the estimated time period an asset is expected to be used from the time it is available for
use to the time of its disposal or termination of use
...
56,000
670
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Depreciation = (56,000 – 6,000)/10 = Rs
...
The equity shares are being issued at a premium of 20% thus the value of each share will be 10 + 2 =
Rs
...
3,64,800
Number of shares issued in consideration = total value of assets purchased/value per share = 3,64,800/
12 = 30,400 shares
To record this transaction share capital needs to be credited by the face value of the shares issued i
...
30,400 × 10 = Rs
...
When the shares forfeited are reissued at discount, Bank account is debited by the amount received and
Share capital account is credited by the paid up amount
...
This is for adjusting the amount of discount so allowed from the amount
forfeited at the time of forfeiture
...
In that case the share forfeited account after reissue will show a zero balance
...
This profit is a capital gain to the company and is transferred to Capital
Reserve account
...
200 × 5 – 900 = Rs
...
5 = Rs
...
400
43
...
(ii)
Credit Share Forfeited A/c
...
(iii) Credit ‘calls in arrear A/C’ with the amount due on forfeited shares
...
Here the amount due from the forfeited shares were = 1,000 × 2 + 1,000 × 3 = Rs
...
Invoice value of the goods destroyed = 1,600 which is 25% above cost
Thus cost = (100/125) × 1,600 = 1,280
Insurance claim will be settled at the actual value of the goods destroyed
Thus insurance claim accepted will be 50% of 1,280 = Rs
...
Expenses which have been incurred but not been paid for till the end of the accounting year are known
as Accrued expenses or outstanding expenses
...
(Based on the matching principle)
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ANSWERS
Outstanding expenses are liabilities for the business
...
Here Salary has been paid for 11 months from April 2011 to February, 2012 amounting Rs
...
So the salary for 1 month is outstanding
Salary for 11 months = 22,000
Salary for 1 month = 22,000/11 = Rs
...
2,000
...
Many times during the operation of business, the owner may take out some cash from the business for
his personal use
...
Considering the
fact that the business is a separate accounting entity, it charges an interest on the drawings to the owner
...
If the dates on which the amounts are drawn are not given, interest is
calculated on the whole amount on the assumption that the money was drawn evenly throughout the
year
...
Here drawings = Rs
...
2,500
47
...
Such differences may occur, for example, because a cheque or a list of cheques issued by the organization
has not been presented to the bank, a banking transaction, such as a credit received, or a charge made by
the bank, has not yet been recorded in the organisation’s books, or either the bank or the organization
itself has made an error
...
Betterments, which extend the useful life or improve the efficiency of the asset and meet the capitalization
threshold of the asset class to which it relates, must be added to the historical cost and amortized
...
Thus Rs
...
The amount is Capital in nature
...
Total amount of sales = Rs
...
20,000
Thus sales made at 25% profit on sale = 10,20,000 – 20,000 = Rs
...
2,40,000
50
...
Sometimes, it just so
happens that some events are either not recorded or it is recorded in the wrong head of account or wrong
figure is recorded in the correct head of account
...
These errors in
accounting require rectification
...
Here the total of the debit and credit side of a trial balance of Mr
...
20,000 and Rs
...
Thus suspense account will have a credit balance of Rs
...
Now purchase return book which has a credit balance was overcasted by Rs
...
1,400 =
Rs
...
Thus we have to credit suspense account and debit purchase return account by rs 100
...
100 the balance of suspense account will be Rs
...
51
...
3
...
4
...
3
...
(24,000)
_______
3,46,000
_______
Goods are normally sent on cost price to the consignee but some time the consignor makes the invoice at
the selling price i
...
proforma invoice price
...
In such cases the entries are made by the consignor in his books at the invoice price
...
10,000
Invoice value of the goods sent = 10,000 + 25% of 10,000 = Rs
...
On the death of a partner, the representatives are entitled to Share of profit upto the date of death
...
Thus share in profits for the period 1st january 2012 to 30th June 2012 to be credited to C’s Account will
be calculated as follows:
Profit for the period on the basis of last year’s profit will be 24,000 × 6/12 = Rs
...
6,000
54
...
5,00,000
Liabilities
Decrease
Increase
Decrease
5,00,000
Making a down payment of Rs
...
4,00,000
4,00,000
Thus total increase in assets = 5,00,000 – 1,00,000 = Rs
...
4,00,000
Correct option is (d) i
...
Both (b) and (c)
55
...
4
...
50,000 will be capitalized as its an asset
...
Outstanding expense amount is added to that particular expense account in the Profit and loss
or Trading Account because it was the expense for that year
...
200
_______
3,200
_______
Trade discounts are generally ignored for accounting purposes in that they are omitted from accounting
records
...
Here the cost of goods sold = 10,000
Invoice price will be = 10,000 + 10% of 10,000 = 11,000
Trade discount = 5% of 11,000 = Rs
...
A debt from accounts receivable that is recovered either in whole or in part after it has been written off
or classified as a bad debt is known as bad debt recovery
...
In accounting, the bad debt recovery would credit the “bad debts” account and the net amount of the
account is transferred to profit and loss account
...
58
...
1,500 and the when
he received Rs
...
500 excess salary so it should be debited to
salaries paid in advance as per the matching principle
...
The original cost of an asset takes into consideration all of the costs that can be attributed to its purchase
and to putting the asset to use
...
Thus repairs incurred to bring the old furniture bought to use will be capitalized and will be included in the
total cost of the asset and will not be debited to repairs account
...
This is an error of commission where an amount is posted in the wrong account but on the same side so
in this case there will be no effect on the trial balance since the amount is placed on the correct side
though in the wrong account
...
Common Proficiency Test (CPT) Volume - I
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675
ANSWERS
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 9
1
...
2
...
3
...
4
...
5
...
is a personal account
...
Depreciation is charged due to physical wear and tear of asset
...
A promissory note doesn’t require acceptance
...
Sales return, BR, carriage inwards all have debit balance
...
balance
...
Total of sales journal not posted to sales account is an error of omission
...
Prepaid salary has debit balance
...
Equality of Dr
...
of trial balance does not ensure accuracy of individual accounts
...
Change in method of depreciation is change in accounting policy not estimate
...
Cr
...
14
...
side of Manufacturing A/c
...
Goodwill is an intangible asset
...
Joint venture account shows profit/loss, hence nominal in nature
...
Abnormal loss on consignment is credited to consignment A/c but debited to P&L A/c
...
Bank debits the account of customer when he withdraws money
...
3 days of grace are added in case of time bills for calculation of Maturity date
...
Cash discount allowed should be credited to customer’s A/c
...
When a new stock (share) issue has more buyers than there are shares to satisfy their orders
...
Here 25,000 shares
were issued whereas application was received for 75,000 shares
...
‘Pro-Rata’ Used to describe a proportionate allocation
...
Pro-rata allotment accounting tells you the system of use surplus of
over-subscription money for adjusting the allotment money and other calls
...
So this is the case of prorate allotment
...
Requirements may include paying any allotment or call money owed, or avoiding selling or
transferring shares during a restricted period
...
The issuing company can re-issue forfeited shares at par, a premium or
a discount as determined by the board of directors
...
So this is the case of forfeiture of shares
...
22
...
Profit till date will be calculated on the basis of last years profit
...
In case of revaluation, the depreciation is calculated on the total revalued amount over a period of
balance useful lives assessed on the date of revaluation
...
Along with this, the revaluation
reserve is amortised to the income statement based on the useful life of the asset to which it relates
...
Date
Particular
1
...
2008
Cost of machinery
Less : Depreciation for 3 years on straight line basis
1
...
2011
Wdv of the machinery
1
...
2011
Revaluation of machinery
1
...
2011
New cost of the machinery
Amount
Amount
15,00,000
15,00,000/15
× 3 = 3,00,000
3,00,000
12,00,000
3,00,000
15,00,000
Depreciation = Rs
...
1,25,000
24
...
35,500 (A – Rs
...
12,000 and C – Rs
...
25
...
Therefore, purchases, along with any payables in the case of a credit purchase, are recorded
net of any trade discounts offered
...
11,250
Thus purchases to be recorded before cash discount = invoice price –trade discount = 75,000 – 11,250 =
Rs
...
26
...
35,500
...
35000 in full settlement of her account
...
Common Proficiency Test (CPT) Volume - I
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ANSWERS
500
...
dr
500
M/S Nandini A/c
27
...
A building improvement should be capitalized as a betterment and recorded
as an addition of value to the existing building
...
•
Installation or upgrade of plumbing and electrical wiring
...
5,00,000 and cost of improvement in electric wiring system is Rs
...
These 2 expenses will be capitalized
...
25,000
28
...
Because it generally generates a loss when
it is written off, a bad debt recovery usually produces income
...
So the bad debt recovered from Anshul will not
effect the account of Anshul and the rectification entry to be passed will be:
Anshul’s A/c Dr
...
6,000
To Bad debts recovered A/c Rs
...
29
...
e
...
The causes for difference may be interest
charged directly by bank not entered in cash book
...
If this difference is adjusted before
the preparation of the reconciliation statement then it will not effect the reconciliation statement
...
500 charged directly by the bank was not entered in the cash book and the same
678
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
was adjusted in the cashbook before reconciliation statement
...
30
...
It includes delivery and handling cost
...
Cost to Company (CTC) is the salary package of an employee
...
CTC is not the actual salary of an
employee, it also includes all the facilities an employee is getting during the service period
...
Cost of sales is similar to cost of goods sold
...
Cost to company has no relevance in the given problem
...
3,75,000
will be transferred to cost of goods manufactured
...
Remuneration paid for services is called commission
...
Over-riding
commission is an extra commission allowed to the consignee in addition to the normal commission
...
Commission on goods sold on invoice price = 5% of 2,00,000 = 10,000
Commission on goods sold 10% above cost = 5% of 1,10,000 = 5,500
Total commission = 10,000 + 5,500 = Rs
...
Loss of quantity of goods in the normal course of business and inherent and thus inevitable or unavoidable,
such as loss because of loading and unloading of goods, leakage, evaporation or shrinkage is known as
normal loss
...
The total cost of goods sent is
charged to the units remaining
...
In other words
such loss is absorbed by the remaining units
...
8,925
Since 15% loss is unavoidable
The balance oranges left = 1,000 – 15% of 1,000 = 850 Kgs
Thus cost per orange after adjusting loss will be = 8,925/850 = Rs
...
50
33
...
A joint venture takes place when two parties
come together to take on one project
...
20,000 which is the cost of consignment
...
16,000
...
Accounting Estimates involve management’s judgment of expected future benefits and obligations relating
to assets and liabilities (and associated expense and income) based on information that best reflects the
conditions and circumstances that exist at the reporting date
...
Estimates must be revised when new information becomes
available which indicates a change in circumstances upon which the estimates were formed
...
e
...
Therefore,
carrying amounts of assets and liabilities and any associated expense and gains are adjusted in the period
of change in estimate
...
Here the company should account for the change in estimate prospectively by allocating the net carrying
amount of the machinery over its remaining useful life
...
Depreciation expense for the machine would therefore be as follows:
Depreciation
Expense
Accumulated Depreciation
Working
31
...
2010
1,00,000
1,00,000
(10,00,000/10)
31
...
2011
1,00,000
2,00,000
(9,00,000/9)
31
...
2012
80,000
2,80,000
((10,00,000 – 2,00,000)/10)
Although expected useful life of the machine has increased at the end of second year, depreciation
expense recorded in previous years is not affected
...
680
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
35
...
Remuneration paid for services is called
commission
...
Over-riding commission is an extra commission allowed
to the consignee in addition to the normal commission
...
Here cost of the goods sent on consignment = 1,00,000
Invoice price = cost + 25% = 1,00,000 + 25% of 1,00,000 = 1,25,000
Invoice price of the goods sold = 3/5th of the total invoiced goods = 3/5th of 1,25,000 = 75,000
Commission on sales = 2% on sales = 2% of 85,000 = 1,700
Overriding commission = 20% on gross sales less all commission exceeding its invoice value
Let the overriding commission be x
Total commission = 1,700 + x
Gross sales less all commission = 85,000 – 1700 – x
Overriding Commission = 20% of (85,000 – 75,000 – 1,700 – x) = x
Or 1,660 –
...
2x = 1,660
Or x = 1,383
Total commission = 1,383 + 1,700 = Rs
...
Consignment is the act of consigning, which is placing any material in the hand of another, but retaining
ownership until the goods are sold or person is transferred
...
Here cost of goods sent on consignment = Rs
...
By balance c/d-balance
receivable
500
3,000
________
15,000
________
In the cases where a bill is payable at a fixed period after sight, the time is to be calculated from the date
of the acceptance if it is accepted
...
If the month in
which the period would change has no corresponding day, the period shall be liable to change on the last
day of such month
...
In calculating the date at which promissory
note or bill of exchange made payable a certain number of days after sight , the day of the date of
presentment for acceptance or sight shall be excluded
...
And for finding the date of maturity 3 days as days of grace is added to
the due date
...
12
...
By adding 30 days to this date we get 7
...
2012
...
1
...
38
...
Here amount of the bill = Rs
...
600
682
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
39
...
So he may
approach the drawer of the bill before the maturity date arrives, to cancel the old bill and draw a new bill
with extended date
...
When a bill of exchange is dishonored, the holder can get such fact noted on the bill by a notary public
...
The noting is done by recording the
fact of dishonored, the date of dishonor, the reason of dishonor, if any
...
In case the bill is renewed the interest will not be charged on the noting charges which will be treated
separately and will not be clubbed with the amount of the bill
...
5,000
Amount of the renewed bill = Rs
...
400
40
...
The agent will sell the
goods for him and receive a commission in return
...
The consignor should include all the unsold goods on consignment in his
closing stock
...
All the expenses and income are
recorded in this account
...
41
...
They exercise control over the enterprise and
consequently share revenues, expenses and assets
...
Goods bought on joint venture as well as expenses incurred in connection with the business are debited
Common Proficiency Test (CPT) Volume - I
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683
ANSWERS
to the joint venture account and credited to the coventurers’s account or the joint bank account
...
If the parties have taken over plant or materials etc
...
The joint
venture account will now show profit or loss which will be transferred to the personal accounts of the
respective parties in their profit sharing ratio
...
2,500
17000
________
Debenture is a certificate/instrument acknowledging a debt
...
he cannot do so with a debenture
...
if the debentures were originally issued at a premium if the current balance of premium
or the premium received on debentures originally issued is less than the premium on redemption then the
case of loss on redemption of debentures arise
...
issued 15,000, 15% debentures of Rs
...
The premium on redemption of debentures = 20% of 15,00,000 = 3,00,000
Loss on redemption of debentures = Rs
...
43
...
This method is also called the
Sale on Approval basis
...
However, if the goods are sent on sale or return basis,
the unsold goods must be included in the stock at cost
...
684
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Here Varun Ltd
...
When a letter of approval was received from a customer for Rs
...
So No entry is required for receiving the letter of approval from the customer
...
Super Profits are the profits earned above the normal profits
...
e
...
Steps for calculating
Goodwill under this method are given below:
(i)
Normal Profits = Capital Invested × Normal rate of return/100
(ii)
Super Profits = Actual Profits – Normal Profits
(iii)
Goodwill = Super Profits × No
...
6,000
45
...
Interest will
accrue on a timely basis e
...
Month to month or period to period
...
If the company has to prepare the financial statements, it has to provide for the interest expense up to
that period and show it under interest accrued but not due
...
e
...
46
...
They exercise control over the enterprise and
consequently share revenues, expenses and assets
...
Goods bought on joint venture as well as expenses incurred in connection with the business are debited
to the joint venture account and credited to the coventurers’s account or the joint bank account
...
If the parties have taken over plant or materials etc
...
The joint
venture account will now show profit or loss which will be transferred to the personal accounts of the
respective parties in their profit sharing ratio
...
________
25,000
________
Sometimes it is decided by the existing partners to change their Profit sharing ratio
...
The partners who are going to gain due to this change
in the profit sharing ratio should compensate the sacrificing partner/partners
...
A Change in the profit sharing ratio of the firm
means that gaining partner is going to purchase from the sacrificing partner his share of profits
...
Gaining/sacrificing ratio
Partners
New ratio
Old ratio
Gain/(sacrifice)
A
4/9
1/3
4/9-1/3 = 1/9
B
3/9
1/3
3/9-1/3 = 0
C
2/9
1/3
2/9-1/3 = (1/9)
Here we see that A is gaining 1/9th share and C is sacrificing 1/9th share because of the change in the
profit sharing ratio
...
48
...
10,000
The journal entry for the same will be
A’s capital account
To C’s capital account
dr
cr
686
© The Institute of Chartered Accountants of India
10,000
10,000
Common Proficiency Test (CPT) Volume - I
When a new partner is admitted in the firm, the existing/old partners have to sacrifice, what is given to
the new partner, from their future profits, the reputation they have gained in their past efforts and the side
of capital they have taken before
...
The compensation for such sacrifice can be termed as ‘goodwill’
...
If the new partner brings in cash for his share of goodwill, in addition to his capital, it is known as premium
method
...
4,500 which equals to his share in the firm which
is 1/6
Thus the total value of goodwill of the firm will be 4,500 × 6 = Rs
...
When a new partner comes into the business, old partners have to give him his profit share from their
portion
...
In academic accounting, change in profit sharing ratio can be presented in various ways
...
When the profit
sharing ratio is revised among existing partners, there ought to be a partial sacrifice of profit share by
some partners in favour of others
...
Following is the formula for calculating sacrificing ratio:
Sacrificing ratio = Old ratio – new ratio
Gaining/sacrificing ratio
Partners
New ratio
Old ratio
Gain/(sacrifice)
Hum
7/16
5/8
7/16-5/8 = (3/16)
Tum
5/16
3/8
5/16-3/8 = (1/16)
Woh
4/16
4/16
So the sacrificing ratio between Hum:Tum will be 3/16:1/16 = 3:1
50
...
The amount of discount allowed is debited to
Share Forfeited Account
...
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited
amount on such shares
...
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will
be profit for the company
...
In the above question discount on shares reissued = number of shares reissued × discount allowed per
share = 150 × (75-65) = Rs
...
3,750
The surplus amount to be transferred to capital reserve account = 3,750 – 1,500 = Rs
...
Equity shares are issued at a premium of 10%
...
2,00,000
52
...
(ii) Credit Share Forfeited A/c
...
(iii) Credit ‘Unpaid Calls A/c’ with the amount due on forfeited shares
...
forfeited shares account will be
credited by the amount which has been received in respect of forfeited shares
...
2 per share and allotment money @ Rs
...
Thus amount to be transferred to the shares forfeited account will be = 300 × 2 + 300 × 4 = Rs
...
On the death of a partner, the representatives are entitled to Share of profit upto the date of death
...
Here the profit of the accounting year 2011-2012 i
...
last year = 24,000
The profit sharing ratio of Raj, Jai and Hari is 7 : 5 : 4
Thus share in profits for the period 1st April 2012 to 30th June 2012 to be credited to Hari’s Account will
be calculated as follows:
Profit for the period on the basis of last year’s profit will be Rs
...
6,000
Share of Hari in profit = 4/16 of 6,000 = Rs
...
Here 10,000 equity shares of Rs
...
2 per share
...
The excess application money and the premium money
received will be shown in the current liabilities till the further course of action is decided
...
20,000
55
...
The excess application money is adjusted towards the sum due on allotment
...
So the proportion in which the shares will be alloted = total shares allotted/total shares applications
Here company offers to the public 10,000 shares for subscription and receives application for 12,000
shares
...
e
...
A redeemable preference share can be redeemed either –
Entirely out of fresh issue of new preference or equity shares
(but not debentures)
...
Or
Partly out of fresh issue and partly out of divisible profits
...
3,00,000
...
Total value of preference shares to be redeemed = Rs
...
3,00,000
Total value of shares to be issued = 2,00,000
Value per equity share = Rs
...
Whenever a company redeems its preference shares then the nominal value or face value of the shares is
put into capital redemption reserve fund
...
Capital Redemption Revere is also created when a company buys it owns shares which reduce its share
capital
...
The capital redemption reserve fund is transferred from undistributed profits i
...
A redeemable preference share can be redeemed entirely out of fresh issue of new preference or equity
shares but not debentures
...
50,000
58
...
The premium is
transferred to securities premium account
...
50 each are issued at premium of 10%
The face value of debentures issued is = 15,00,000 × 50 = 7,50,00,000
Thus the amount of premium will be = 10% of 7,50,00,000 = Rs
...
In this problem G Ltd
...
for a book value of Rs
...
100 each at a discount of 20%
the debentures are being issued at a discount thus the value of each share issued will be 100 – 20% of
100 = 100 – 20 = 80
Total value of land and building acquired = Rs
...
2,50,000
60
...
20,000 × 10 = Rs
...
40,000
This loss on redemption of debenture will be written off over the period for which the debentures are
issued
...
The amount of loss on redemption of debentures to be written off every year will be 40,000/5 = Rs
...
Expense will be Rs
...
2
...
3
...
4
...
5
...
6
...
7
...
8
...
9
...
10
...
Only error of partial
omission do affect trial balance
...
Unintentional mistakes are errors
...
Trial balance shows the Dr
...
Balance of all accounts
...
It is easy to detect Errors than to Frauds
...
The words ‘To bal
...
Side in case of Dr
...
15
...
16
...
17
...
Account Receivable normally has Dr
...
19
...
20
...
21
...
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ANSWERS
22
...
23
...
Drawings
accounting is used when an owner of a business wants to withdraw cash for private use
...
This drawings account is deducted from the capital account
...
X spends Rs
...
5,000 and since drawings is deducted from the capital account the balance of the capital
account goes down by Rs 5,000
...
6,95,000 and Rs
...
24
...
Under this principle, revenue is
recognized by the seller when it is earned irrespective of whether cash from the transaction has been
received or not
...
The revenue earned will
be reported as part of sales revenue in the income statement for the current accounting period
...
Mohan sold merchandise for Rs
...
Customers paid him Rs
...
10,000 shortly
...
25
...
Gross profit is a company’s residual
profit after selling a product or service and deducting the cost associated with its production and sale
...
It excludes indirect expenses such as distribution costs and sales force cost
...
90,000
26
...
After the credit entry is made by the bank the balance as
per Pass book will also increase and thus both the balances will agree
...
Hence the balances of both the books disagree
...
5,000 deposited, cheques aggregating Rs
...
2,000 credited in April and the rest have not been collected
...
Thus cheques amounting to
5,000 – 1,500 = 3,500 has not been credited in the bank statement and so this amount is to be subtracted
from the balance of the cash book
...
3,500
...
A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a
new entity and new assets by contributing equity
...
Profit on venture can be ascertained with the help of the joint venture account
...
When the
goods are sold, the amount thereof is debited to the coventurer’s account or the joint bank account and
credited to the joint venture account
...
, the value will
be debited to the account of the party concerned and credited to the joint venture account
...
Joint venture A/c
Date Particulars
Amount
To purchases-land
30,000
To net profit
28
...
A bill may be dishonoured by non-acceptance or non-payment
...
When a bill is dishonoured by non-acceptance, an immediate right of
recourse against the drawer and endorser accrues to the holder
...
If the drawer has accepted the bill, but on the due date, he refuses to make payment of the bill, it is called
dishonour by non-payment
...
Here the bill returned dishonored as Y became insolvent and 40 paise per rupee is recovered from his
estate
...
40,000
29
...
A surplus is used to describe
many excess assets including income, profits, capital and goods
...
Here surplus will be:
Goods sold
1,47,000
Add goods in hand
15,000
Less purchases
1,15,000
Less rent paid
5,000
________
42,000
________
Surplus
30
...
Therefore, sales, along with any receivables in the case of a credit sale, are recorded net of any
trade discounts offered
...
33
Thus sales to be recorded = invoice price –trade discount = 660 – 33 = Rs
...
When a credit sale involves the application of sales tax, the receivable balance includes the amount of
sales tax since it will be recovered from the customer
...
Sales tax account is credited since this is the amount of tax payable that will be paid to tax authorities
...
10,000, plus 10% sales tax
...
e
...
10,000
...
The goods withdrawn by Ganesh for personal use will be debited to his salary Rs
...
9,500 again in cash for salary he got Rs
...
33
...
Following accounting entries would therefore be required:
Debit
Cash embezzlement a/c
Credit
Cash A/c
694
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Here Rs
...
Cash embezzlement a/c and Cr
...
6,000
...
In financial accounting, every single event occurring in monetary terms is recorded
...
Whatever the reason may be, there is always a chance of error in the books of accounts
...
When there is a difference in a trial balance a suspense account is
opened with the amount of the difference so that the trial balance agrees (pending the discovery and
correction of the errors causing the difference)
...
1,000
...
35
...
Expenses A/c
...
side
...
The amount of the profits (or loss) as arising to the partnership firm in a year or period is apportioned in
accordance with the terms of the partnership agreement relating to the sharing of profits and losses
...
7,800 after allowing interest on capital
...
4,680
Gita’s share = 2/5 of 7,800 = Rs
...
A sale to A recorded in Purchases book would affect sales, Purchases and A
...
“Super Profit”, means the excess of chargeable profit that has been earned by the company
...
In other words the excess of the chargeable profits
must be in excess of its deduction of its chargeable profits
...
25,000
Normal rate of return = 20%
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ANSWERS
So normal profit = 20% of 1,00,000 = Rs
...
5,000
39
...
Such capital is called capitalised value of average
profits
...
20,000
Normal rate of return = 15%
Capitalised Value of Average Profits = 20,000/15% = Rs
...
33,333
40
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
Sometimes it is decided by the existing partners to change their Profit sharing ratio
...
The partners who are going to gain due to this change
in the profit sharing ratio should compensate the sacrificing partner/partners
...
A Change in the profit sharing ratio of the firm
means that gaining partner is going to purchase from the sacrificing partner his share of profits
...
Gaining/sacrificing ratio
Partners
New ratio
Old ratio
Gain/(sacrifice)
A
3/10
1/4
3/10-1/4 = 2/40
B
3/10
1/4
3/10-1/4 = 2/40
C
2/10
1/4
1/5-1/4 = (1/20)
D
2/10
1/4
1/5-1/4 = (1/20)
Here we see that D is sacrificing 1/20th share
42
...
If any call has been made but while paying that call, some shareholders paid the amount of the rest of
calls also, then such amount will be called as calls in advance
...
Here Equity share capital called up = Rs
...
40,000
Calls in advance = Rs
...
5,00,000 – 40,000 = Rs
...
69,000
43
...
When shares issued at par are forfeited the accounting treatment will be as follows:
(i)
Debit Share Capital Account with amount called up (whether received or not) per share up to the
time of forfeiture
...
with the amount received up to the time of forfeiture
...
This cancels the effect of debit
to such calls which take place when the amount is made due forfeited shares account will be
credited by the amount which has been received in respect of forfeited shares
...
2 per share but did not pay the allotment money so 30 shares
held by him was forfeited
...
60
44
...
The average is then multiplied by the agreed number of years
...
Goodwill = Average Profits × Number of years of Purchase
Here goodwill is to be calculated on purchase of two years profit
...
43,000; Rs
...
45,000
Average profit = (43,000 + 38,000 + 45,000)/3 = Rs
...
84,000
45
...
The customer do not pay for the goods until they confirm
to buy
...
When goods are sent on approval basis then at the end of the financial year the
goods lying with customers will be valued at cost or market price whichever is less
...
3,500 at profit of 25% on sale to Sohan on sale or return basis of
which Sohan return goods costing Rs
...
At the year end the remaining goods were neither returned
nor approved by him
...
So the goods will be included
in the closing inventory at cost or market price whichever is lower
...
3,500
Cost of goods returned by Sohan = Rs
...
2,700
46
...
So he may
approach the drawer of the bill before the maturity date arrives, to cancel the old bill and draw a new bill
with extended date
...
Here A’s acceptance to B for Rs
...
1,000 and a new bill is
drawn for the balance plus Rs
...
Total amount of the old bill = 2,500
Amount paid in cash = Rs
...
1,500
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Interest on renewable = Rs
...
1550
47
...
A joint venture takes place when two parties
come together to take on one project
...
10,000 and consigned them to B to be sold on joint venture
Here the cost of goods sent on consignment = Rs
...
A draws bill on B for 80% of the cost of consignment, thus the amount of the bill drawn will be = 80% of
10,000 = Rs
...
48
...
Consigning goods at invoice price aims to
achieve the following merchandising objectives:
1
...
Push old stocks
3
...
Promote another goods (tie up with consigned goods), and
5
...
8x = 1,80,000
So invoice price = x = 1,80,000/0
...
2,25,000
49
...
After receiving the goods by consignee, the goods
are stored by the consignee before selling them to customers
...
The goods may be lost, destroyed or damaged either in transit or in
consignee’s store
...
They
are like theft, riots, accidents, fire, earthquake etc
...
The abnormal loss should be adjusted before ascertaining the result of the consignment
...
Here 1,000 typewriters costing Rs
...
10,000 is spent for
freight etc
...
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ANSWERS
The cost of the consignment of 1,000 typewriters = 1,000 × 250 + 10,000 = Rs
...
5,200
50
...
After receiving the goods by consignee, the goods
are stored by the consignee before selling them to customers
...
The goods may be lost, destroyed or damaged either in transit or in
consignee’s store
...
For examples
shrinkage, evaporation, leakage and pilferage
...
The normal loss is borne by goods units
...
The following formula may be used for the
valuation of unsold stock
...
Here 1,000 Kg
...
3 per kg
...
400
freight
...
e
...
Total value of goods sent = 1,000 × 3 + 400 = Rs
...
400
51
...
Straight line depreciation is calculated as follows:
Depreciation per annum = (Cost – Residual Value) / Useful Life
Here Cost of the machinery = purchase price + installation expenses = 10,00,000 + 1,00,000 = Rs
...
1,10,000
52
...
Consigning goods at invoice price aims to
achieve the following merchandising objectives: 1
...
Push old stocks 3
...
Promote another goods (tie up with consigned goods), and 5
...
6,25,000
53
...
Gross profit is a company’s residual
profit after selling a product or service and deducting the cost associated with its production and sale
...
It excludes indirect expenses such as distribution costs and sales force cost
...
4,00,000
...
1,00,000
54
...
1,000 each in the yearending 31st
December, 2010
...
10,000
...
Thus the salaries for the year ended 31st
december 2011 will be = 10,000 + 10% of 10,000 = 11,000
...
A transaction relating to bank has to be recorded in both the books i
...
Cash Book and Pass Book but
sometimes it happens that a bank transaction is recorded only in one book and not recorded simultaneously
in other book this causes difference in the two balances
...
A Bank reconciliation is a process that explains the difference between the
bank balance shown in an organisation’s bank statement, as supplied by the bank, and the corresponding
amount shown in the organization’s own accounting records at a particular point in time
...
Closing inventory means the value and quantity of inventory on hand at the end of an accounting period
...
1,00,000
Sales = Rs
...
18,000
Closing inventory = opening in ventory + purchases + gross profit – sales = Nil + 1,00,000 + 18,000 –
90,000 = Rs
...
Building improvements are capital events that materially extend the useful life of a building or increase
the value of a building, or both
...
Expenditures to be capitalized as improvements to buildings include
•
Additions to buildings, such as expansions, extensions, enlargements, etc
...
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ANSWERS
•
Installation or upgrade of window or door frames, upgrading of windows or doors, built-in closets
and cabinets, etc
...
•
Exterior renovation, such as installation or replacement of siding, roofing, masonry, etc
...
The amount spent for such
renovation will be capitalized and thus the amount to be charged to profit and loss account will be NIL
...
Money paid to MTNL Rs
...
Therefore, this will be treated as an asset
...
When shares issued at par are forfeited the accounting treatment will be as follows:
(i)
Debit Share Capital Account with amount called up (whether received or not) per share up to the
time of forfeiture
...
with the amount received up to the time of forfeiture
...
This cancels the effect of debit
to such calls which take place when the amount is made due forfeited shares account will be
credited by the amount which has been received in respect of forfeited shares
...
10 each held by Mr
...
4 per share
...
8
...
8,000
60
...
It is calculated
through the subtraction of assets from liabilities
...
Formulas of closing capital :
closing capital =
opening capital + profit
OR
opening capital + profit + additional capital – drawings
OR
closing assets - closing liabilities
here opening capital = 300000
capital introduction during the year = 200000
drawings = 1500 × 12 = 18000
closing capital = 450000
profit/(loss) for the year = closing capital-opening capital-capital introduced during the year + drawings
= 4,50,000 – 3,00,000 – 2,00,000 + 18,000 = Rs
...
702
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Common Proficiency Test (CPT) Volume - I
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 11
1
...
All others do not effect
...
Financial statements are part of Accounting and not book-keeping
...
For depreciation, valuation of inventories and investments, different accounting polices can be adopted
...
Total of sales book is posted to sales account
...
Amount of dishonoured bill wrongly debited to general expenses account, is an error of principle
...
Bank account is personal account as it is in name of individual
...
Cost of travel of sales manager is deferred revenue as it is incurred to develop new markets and the
benefit will be for more than one year
...
Advance received from customers is not considered sale due to accural
...
Income includes received as well as receivable
...
Mohan Stationers will not debit purchase of stationery in Stationery A/c but it will debit in purchases
...
Advertisement exepnditure is revenue
...
Cost of goods sold is calculated by Trading A/c
...
Amount spent on newly purchased car is debited to car A/c only
...
Suspense A/c (Dr
...
side) as it is nominal
amount, it will be expensed off
...
Liability for bill discounted is a contingent liability
...
Direct expenses of consigneee are added in valuation of consignment inventory
...
Premium on issue of shares is recoreded on equity and liabilities side of balance sheet
...
Interest is calculated on face value of securities
...
Income tax of sole trader is his personal expense
...
Expense includes expenses payable also as per Accrual concept
...
The valuation has been done as per conservation in the given case
...
The given case is of over-subscription, pro-rate allotment and forfeiture of shares
...
The direct costs attributable to the production of the goods sold by a company
...
It excludes indirect expenses such as distribution costs and sales force costs
...
Cost of goods sold (COGS) = Cost of goods manufactured + Opening finished goods inventory – Ending
finished goods inventory
Or opening inventory + purchases – closing inventory
Here cost of goods sold = 3,700 + 20,800 – 2,500 = Rs
...
Straight line method depreciates cost evenly throughout the useful life of the fixed asset
...
Residual Value is the estimated scrap value at the end of the useful life of the asset
...
Useful Life is the estimated time period an asset is expected to be used from the time it is available for
use to the time of its disposal or termination of use
...
25,000
Salvage value = Rs
...
2,400
25
...
26
...
Net profit is gross profit minus all operating costs not included in
the calculation of gross profit, esp wages, overheads, and depreciation
...
4,4200
27
...
This list will contain the name of the nominal ledger account and the value of that
nominal ledger account
...
The debit balance values will be listed in the debit column of the trial balance and
the credit value balance will be listed in the credit column
...
704
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Trial balance of ……
...
Particulars
l/f
Amount (dr)
Rs
...
Capital (cash + inventory)
31,000
Closing cash
5,000
Opening inventory
11000
Total sales
Total purchases
70,000
50,000
Outstanding trades payables
15,000
Outstanding trades receivables
25,000
Expenses
17,000
Machine
10,000
Outstanding payable for machinery
Total
_______
2,000
_______
1,18,000
_______
1,18,000
_______
28
...
It is not complete omission
...
Closing inventory means the value and quantity of inventory on hand at the end of an accounting period
...
1,00,000
Sales = Rs
...
18,000
Closing inventory = opening in ventory + purchases + gross profit – sales = nil + 1,00,000 + 18,000 –
90,000 = Rs
...
A debt from accounts receivable that is recovered either in whole or in part after it has been written off
or classified as a bad debt is known as bad debt recovery
...
In accounting, the bad debt recovery would credit the “bad debts recovered” account and the net amount
of the account is transferred to profit and loss account
...
500 towards a debit of
Rs
...
This bad debt recovery would credit the “bad debts recovered” account by Rs
...
So the bad debt recovered from Mohan will not
effect his account and the correct option is (d)
...
When owner withdraws money from a business for personal expenses it is known as drawings
...
The bookkeeping
entries are recorded on the drawings account
...
since any amount paid for the personal
expenses for the proprietor from the firm will be treated as drawings, the amount Rs
...
drawings and Cr
...
1,200
...
The original cost of an asset takes into consideration all of the costs that can be attributed to its purchase
and to putting the asset to use
...
Here an old machine was purchased for Rs
...
5,000 and Rs
...
Thus repairs incurred to bring the old furniture bought to use will be capitalized and will be included in the
total cost of the asset and will not be debited to repairs account
...
Owner’s capital refers to the sum of the business resources owned by the business owners
...
When a business pays all its debts, the amount remaining
belongs to the business owner and it is the one that is referred to as Owners Capital or Owners Equity
...
20,000
Borrowings during the year = Rs
...
5,000
Profit earned during the year = Rs
...
25,000
34
...
Thus, the inventory at the end of a year consists of the goods
most recently placed in inventory
...
In a period of rising prices, this method yields a higher ending inventory, a lower cost of goods
sold, a higher gross profit (assuming constant price)
...
)
Total cost (Rs
...
13650
13
1350 + 4600 =
5950
March 31st Closing inventory
35
...
These withdrawals from the business are considered as Drawings
...
Where interest is charged it is usually calculated at fixed rate percent from the date of each drawing to
the date the accounts are closed
...
In such case interest will be charged for 6 months
...
2,400
Interest on drawings = 5% of 2,400 × 6/12 = Rs
...
The rectifying entry will be to debit purchases and to credit sales and A
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Here the carriage outward is expenses related to sales and will not be included in cost of goods sold and
office rent is also indirect expense and will not be included in cost of goods sold
...
50,600
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ANSWERS
38
...
Commission is always paid on sales
...
Such
additional commission is generally allowed:
(i)
To provide additional incentive to the consignee for the purpose of introducing and creating a market
for a new product
(ii) To provide incentive for supervising the performance of other agents in a particular area
(iii) To provide incentive for ensuring that the goods are sold by the consignee at the highest possible
price
...
2,00,000 and 4/5th of the goods were sold by consignee at
Rs
...
1,60,000
So surplus above the invoice value = 1,76,000 – 1,60,000 = 16,000
Commission on goods sold upto invoice price = 2% of 1,60,000 = Rs
...
1,600
Total commission = 3,200 + 1,600 = Rs
...
Trade discounts are generally ignored for accounting purposes in that they are omitted from accounting
records
...
Here the cost of goods sold = 1,000
Invoice price will be = 1,000 + 10% of 1,000 = 1,100
Trade discount = 5% of 1,100 = Rs
...
1,045
40
...
They exercise control over the enterprise and
consequently share revenues, expenses and assets
...
Goods bought on joint venture as well as expenses incurred in connection with the business are debited
to the joint venture account and credited to the coventurer’s account or the joint bank account
...
If the parties have taken over plant or materials etc
...
The joint
venture account will now show profit or loss which will be transferred to the personal accounts of the
respective parties in their profit sharing ratio
...
Amount
60,000
Date Particulars
Amount
By joint bank-sale of land
30,000
_______
60,000
_______
90,000
_______
60,000
_______
The retiring partner is entitled to his share of goodwill at the time of retirement because the goodwill
earned by the firm is the result of the efforts of all the partners including the retiring partners
...
At the time of retirement
of partner the goodwill is evaluated on the basis of agreement among the partners
...
Hence goodwill account cannot be raised
...
The following entry is
made:
Continuing partners capital account
Dr
...
Debenture is a certificate/instrument acknowledging a debt
...
He cannot do so with a debenture
...
if the debentures were originally issued at a discount and redeemed at premium then the
case of loss on issue of debentures arise
...
issued Rs
...
The discount on issue of debentures = 5% of 1,00,000 = Rs
...
5,000
Thus total loss on issue of debentures = 5,000 + 5,000 = Rs
...
Super Profits are the profits earned above the normal profits
...
e
...
Steps for calculating
Goodwill under this method are given below:
(i)
Normal Profits = Capital Invested × Normal rate of return/100
(ii) Super Profits = Actual Profits – Normal Profits
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ANSWERS
(iii) Goodwill = Super Profits × No
...
1,00,000
and 15% is considered to be a fair return on capital
...
15,000
Average profit of the last three years = (15,000 + 20,000 + 25,000)/3 = 60,000/3 = Rs
...
10,000
44
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
They admit C as a
partner
...
So the sacrificing ratio
is given
...
When a company acquires any asset, the purchase consideration can be settled either in cash or in any
way as decided between the seller and the company
...
In this problem G Ltd
...
for a book value of Rs
...
100 each at a premium of 25%
The shares are being issued at a premium thus the value of each share issued will be 100 + 25% of 100
= 100 + 25 = Rs
...
7,50,000
Number of shares issued = total value of assets acquired/value per share = 7,50,000/125 = 6,000 shares
710
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Common Proficiency Test (CPT) Volume - I
46
...
18,000
This combined capital constitutes ¾th of the total capital
So total capital of the firm will be = 18,000 × 4/3 = Rs
...
6,000
C has bought Rs
...
That means the surplus brought by him is Goodwill
Thus C’s share in Goodwill = 8,000 – 6,000 = Rs
...
And the total value of goodwill will be = 2,000 × 3 = Rs
...
The original cost of an asset takes into consideration all of the costs that can be attributed to its purchase
and to putting the asset to use
...
Thus repairs incurred to bring the second hand car bought to use and the registration cost together with
dealers commission will be capitalized and will be included in the total cost of the asset
...
17,700
Correct option is (a)
48
...
He/she is required to bring an amount proportionate
to his/her share of profit
...
Here the capital account of Ramesh and Suresh show the balance of Rs
...
73,000
respectively
...
Mahesh’s capital is calculated as follows:
Total share = 1
Mahesh’s share in the profit = 1/5
Remaining share = 1 – 1/5 = 4/5
4/5 share of profit combined capital of Ramesh & Suresh
= Rs
...
73,000 = Rs
...
1,75,000 × 5/4
= Rs
...
2,18,750 × 1/5 = Rs
...
43,750 as his Capital
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ANSWERS
49
...
Such differences may occur, for example, because a cheque or a list of cheques issued by the organization
has not been presented to the bank, a banking transaction, such as a credit received, or a charge made by
the bank, has not yet been recorded in the organisation’s books, or either the bank or the organization
itself has made an error
...
16,490
Goods are normally sent on cost price to the consignee but some time the consignor makes the invoice at
the selling price i
...
proforma invoice price
...
In such cases the entries are made by the consignor in his books at the invoice price
...
33,000
Let Invoice value of the goods sent = x = 33,000 + 1/6 of x
Or
Or
5/6th of x = 33,000
Or
51
...
39,600
Consignment is the act of consigning, which is placing any material in the hand of another, but retaining
ownership until the goods are sold or person is transferred
...
Y A/c
Particulars
Amount
To joint venture a/c
91,000
Particulars
By joint venture a/c
By bank a/c
_______
91,000
_______
Amount
5,000
86,000
_______
91,000
_______
Joint venture A/c
Date Particulars
To purchases-material
supplied
To bank-expenses
To net profit transferred to-
Amount
Date Particulars
By Y a/c-bal
...
_______
91,000
_______
After making the Trading and Profit and Loss account of a Partnership firm the next step is to divide the
profits or losses among the partners and to make other appropriations like interest on capital, salary,
commission etc
...
e
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
713
ANSWERS
This account is prepared to show the division of profit and other appropriations among partners like
salary, commission, interest on capital, interest on drawings etc
...
To Salaries of Partners
2,500
To Interest on Partners’
Capitals (3000 + 1800)
Particulars
Rs
...
_______
15,000
_______
_______
15,000
_______
When a new partner comes into the business, old partners have to give him his profit share from their
portion
...
In academic accounting, change in profit sharing ratio can be presented in various ways
...
When the profit
sharing ratio is revised among existing partners, there ought to be a partial sacrifice of profit share by
some partners in favour of others
...
Following is the formula for calculating new ratio:
New ratio = Old ratio – Sacrificing ratio
New ratio
Partners
Old ratio
Gain/(sacrifice)
New ratio
A
5/8
(1/10)
21/40
B
3/8
(1/10)
11/40
1/5
1/5
C
So the new ratio between A : B will be 21/40 : 11/40 = 21 : 11
55
...
The new partner when admitted, has to compensate for all these
sacrifices made by the old ones
...
Hence, at the time of admission of the new partner, it is necessary to account the valuation of goodwill in
the firm
...
714
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Sacrificing ratio = Old ratio – New ratio
New ratio
Partners
Old ratio
New ratio
(Gain)/sacrifice
A
4/9
3/9
1/9
B
3/9
2/9
1/9
C
2/9
2/9
0
Since C is not sacrificing anything
...
56
...
10)
...
When shares issued at par are forfeited the accounting treatment will be as follows:
(i)
Debit Share Capital Account with amount called up (whether received or not) per share up to the
time of forfeiture
...
with the amount received up to the time of forfeiture
...
This cancels the effect of debit
to such calls which take place when the amount is made due
...
Here total called up value of the shares is 100 × 10 = Rs
...
Thus share capital account will be
debited by Rs
...
When the shares forfeited are reissued at discount, Bank account is debited by the amount received and
Share capital account is credited by the paid up amount
...
This is for adjusting the amount of discount so allowed from the amount
forfeited at the time of forfeiture
...
In that case the share forfeited account after reissue will show a zero balance
...
This profit is a capital gain to the company and is transferred to Capital
Reserve account
...
6,000
Amount available for the reissued shares in shares forfeiture account = number of shares reissued ×
amount forfeited per share = 300 × (100 – 25) = 300 × 75 = Rs
...
16,500
59
...
The customer do not pay for the goods until they confirm
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
715
ANSWERS
to buy
...
When goods are sent on approval basis then at the end of the financial year the
goods lying with customers will be valued at cost or market price whichever is less
...
The sale price was made cost plus 25%
...
Selling price of goods sent = 100 × 200 = Rs
...
16,000
Thus The amount of inventory on approval will be Rs
...
60
...
Until such time as the company actually pays the shareholders, the cash amount of the
dividend is recorded within a dividends payable account as a current liability
...
Here dividend payable will be 10% of (25,00,000 – 10,000) = Rs
...
Book keeping is not sub-field of Account
...
Capital brought by proprietor is example of increase in asset and increase in liability
...
Cost of shifting is deferred revenue expense
...
Salary payable to clerk is credited to o/s salary A/c
...
Total of purchase return book is posted to Cr
...
6
...
7
...
8
...
9
...
10
...
11
...
12
...
13
...
14
...
15
...
16
...
side in case of cr
...
17
...
18
...
19
...
20
...
21
...
22
...
23
...
This amount includes the
cost of the materials used in creating the good along with the direct labor costs used to produce the good
...
COGS appear on the
income statement and can be deducted from revenue to calculate a company’s gross margin
...
35,000
24
...
A
certain percentage is applied to the previous year’s book value, to arrive at the current year’s depreciation/
book value, which show a declining balance, weighted for earlier years, and lower and lower for later
years, as the asset grows older
...
15x
1-1-2008
wdv
x – 0
...
85x
31-12-2008
depreciation
15% of 0
...
1275x
1-1-2009
wdv
0
...
1275x = 0
...
7225x = 0
...
7225x – 0
...
614125x =
We got 0
...
2,40,000
Thus cost of machinery on 1
...
2007 will be Rs
...
25
...
Gross profit is a company’s residual
profit after selling a product or service and deducting the cost associated with its production and sale
...
It excludes indirect expenses such as distribution costs and sales force cost
...
16,100
718
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
26
...
COGS
Cr
...
3,20,000
...
The original cost of an asset takes into consideration all of the costs that can be attributed to its purchase
and to putting the asset to use
...
Thus here installation of machinery will be included in the purchase cost of the asset and the journal entry
will be
Dr
...
Cash A/c Rs
...
Net worth method is also called statement of affairs method or capital comparison method
...
If there are other capital related items such as drawing, additional capital, interest on
capital etc
...
These items include:
Drawing: If the drawing is made during the year, it should be added to the amount of closing capital
...
Interest on capital: If the interest is provided on capital, it should be deducted from the amount of
closing capital
...
Closing inventory is the amount of inventory that a business still has on hand at the end of a reporting
period
...
The amount of closing inventory
can be ascertained with a physical count of the inventory
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
719
ANSWERS
The amount of closing inventory is used to arrive at the cost of goods sold in a periodic inventory system
with the following calculation:
Opening inventory + Purchases – Closing inventory = Cost of goods sold
SO closing inventory = opening inventory + purchases – cost of goods sold
Cost of goods sold = sales –margin on sales = 80,000 – 20% of 80,000 = 64,000
Closing inventory = 1,00,000 – 64,000 = Rs
...
Securities premium amount may be applied by the company for all the purposes mentioned in the options
given in the question
...
Dividends payable are dividends that a company’s board of directors has declared to be payable to its
shareholders
...
Here dividend payable will be 5% of (4,60,000 – 7,500) = Rs
...
The shares issued to promoters will be debited to goodwill account
...
Number of shares will be calculated as 9,00,000/125 = 7,200
...
When shares issued at par are forfeited the accounting treatment will be as follows:
(i)
Debit Share Capital Account with amount called up (whether received or not) per share up to the
time of forfeiture
...
with the amount received up to the time of forfeiture
...
This cancels the effect of debit
to such calls which take place when the amount is made due forfeited shares account will be
credited by the amount which has been received in respect of forfeited shares
...
Thus share capital account will be
debited by Rs
...
35
...
The amount of discount allowed is debited to
Share Forfeited Account
...
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited
amount on such shares
...
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will
be profit for the company
...
In the above question discount on shares reissued = number of shares reissued × discount allowed per
share = 500 × (10 – 9) = Rs
...
3,000
...
2,500
...
Forfeited share A/c will be credited with total shares × amount received up to the time of forfeiture = 600
× (10 – 2 – 3) = Rs
...
37
...
38
...
Straight line
depreciation is calculated as follows:
Depreciation per annum = (Cost – Residual Value) / Useful Life
Where:
Cost includes the initial and any subsequent capital expenditure
...
As the residual value
is expected to be recovered at the end of an asset’s useful life, there is no need to charge the portion of
cost equaling the residual value
...
Here Cost of the asset = Rs
...
500
Depreciation = (5,000 – 500)/10 = Rs
...
Cost price is also known as cp is the original price of any item
...
Cost price is used in establishing profitability in the following
ways:
Selling price (excluding tax) less cost results in the profit in money terms
...
16,000
Let the cost price be x
Then x + 60% of x = 16,000
Or
Or
40
...
6x = 16,000
x = 16,000/1
...
10,000
The sales price (SP) of goods or commodities is the price at which a particular product or commodity is
sold across channels or markets
...
25x
Cost price = x – 0
...
75x = 34,200
x = 34,200/0
...
45,600
41
...
Manager’s commission is calculated in two ways
1
...
On Profits after charching such commission:
Manager’s commission = Net Profits X (Percentage of commission / 100 + % of commission)
3
...
8x = 40,000
Or x = Rs
...
2,500
42
...
Manager’s commission is calculated in two ways
1
...
On Profits after charging such commission:
Manager’s commission = Net Profits × (Percentage of commission / 100 + % of commission)
3
...
48,000
Net profit = 48,000 – 6,000 = Rs
...
2,000
722
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
43
...
44
...
45
...
Sale value (4,200 –450)
Book value (3,000 – 400)
Profit on sale
46
...
This is the
application of the Matching Concept which requires expenses to be recognized against periods from
which associated revenue from the expense is expected to be earned
...
Similarly, as opening inventory is consumed in the current accounting
period, it must therefore be added to the cost of goods sold
...
1,40,000
47
...
According to
this method profit or loss of the business is determined by making comparison between the capital of two
dates of a period
...
are to be adjusted to ascertain the amount of profit or loss
...
Additional capital: If additional capital is introduced in the business during the year, it should be deducted
from the amount of closing capital
...
Closing capital = Profit for the year –income tax + Opening capital + additional capital – drawings +
interest on capital – interest on drawings
Profit or loss for the year = 2,770 – 550 + 5,000 – 650 + 500 – 120 = 6,950 (profit)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
723
ANSWERS
48
...
Gross profit is a company’s residual
profit after selling a product or service and deducting the cost associated with its production and sale
...
It excludes indirect expenses such as distribution costs and sales force cost
...
Cost of goods sold in the above case = opening inventory + purchases during the year + carriage inward
– closing inventory = 9,600 + 11,850 + 200 – 3,500 = 18,150
Gross profit = sales – cost of goods sold = 24,900 – 18,150 = Rs
...
The provision for doubtful debts is identical to the allowance for doubtful accounts
...
The provision is used under accrual basis accounting, so that an expense is recognized for
probable bad debts
An increase in provision for bad debts is recorded as follows:
DEBIT
the difference (new provision minus old one) to Income Statement
CREDIT
provision for bad debts
Here opening Provision for Bad Debts is Rs
...
370
...
Calim receivable will be shown as asset in balance sheet
...
Consignment is the act of consigning, which is placing any material in the hand of another, but retaining
ownership until the goods are sold or person is transferred
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold in the above case = 3,10,000
Gross profit = sales – cost of goods sold = 4,00,000 – 3,10,000 = Rs
...
In this case the amount due to retiring partner is paid in instalments
...
This loan is paid in one or
more instalments
The loan amount carries some interest
...
(ii) Interest at an agreed rate,
Interest due on loan amount is credited to retiring partners’ loan account
...
Here it was agreed that he should be paid Rs
...
So the balance will be
= 10,950 – 4,950 = Rs
...
6,000/3 = Rs
...
= Rs
...
360
1st Instalment at the end of 1st Year = Rs
...
360
= Rs
...
= Rs
...
2,240
Interest @ 6% pa
...
120
3rd Instalment at the end of 3rd Year = 2,000 + 120 = Rs
...
When a new partner comes into the business, old partners have to give him his profit share from their
portion
...
In academic accounting, change in profit sharing ratio can be presented in various ways
...
When the profit
sharing ratio is revised among existing partners, there ought to be a partial sacrifice of profit share by
some partners in favour of others
...
Following is the formula for calculating sacrificing ratio:
Sacrificing ratio = Old ratio – New ratio
Gaining/sacrificing ratio
Partners
New ratio
Old ratio
Gain/(sacrifice)
A
5/12
3/6
5/12 – 1/2 = (1/12)
B
4/12
2/6
4/12 – 1/3 = (nil)
C
2/12
1/6
1/12 – 1/6 = nil
D
1/12
So the sacrificing ratio between A:B:C will be 1/12:nil:nil
55
...
56
...
This includes raw materials, work-in-process, and goods inventory
...
It can also be determined by using a perpetual
inventory system and cycle counting to continually adjust inventory records to arrive at ending balances
...
2,25,000
726
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
57
...
The formula for calculating credit sales
is cash received minus receivables at the start ofthe period, plus receivables at the end of the period
...
Step 3
Add amounts owed from customers at the end of the period to the previous figure calculated
...
37,900
Total sales = credit sales + cash sales = 28,400 + 37,900 = Rs
...
Rs
...
Let the selling price be x
Thus the profit margin in 20% of x
And the cost price will be x – 20% of x = 80% of x
So the profit margin on cost will be = 20% of x/80% of x × 100 = 0
...
8x × 100 = 25%
59
...
110
Total value of building purchased = 99,00,000
Number of debentures issued in consideration = total value of building purchased/value per debenture =
99,00,000/110 = 90,000 debentures
Thus the actual value of the debentures issued = 90,000 × 100 = Rs
...
9,00,000
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
727
ANSWERS
60
...
It is issued generally by a public company to
individuals/institutions who lend it money (invest in their debentures)For an investor investing in a debenture
is just like investing in a fixed deposit with the difference that while he can withdraw the amount invested
in a fixed deposit any time he/she likes with a loss of interest
...
The
amount invested on a debenture will be repaid only on the expiry of the period for which the debenture
has been issued
...
Here Green Ltd
...
100 each at a discount of 5% repayable after 5
years at a premium of 5%
...
25,000
The premium on redemption of debentures = 5% of 5,00,000 = Rs
...
50,000
728
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 13
1
...
2
...
3
...
4
...
5
...
6
...
7
...
8
...
9
...
10
...
All others are external
...
In compensating errors, effect of one error is cancelled by effect of some other error
...
General reserve is transferred to partner’s capital account at time of retirement of partner
...
Interest on partner’s capital is appropriation and not expense
...
Noting charges are paid at time of dishonour of bill
...
Credit note is sent when customer returns goods
...
A known liability is provision if its amount and due date are indeterminate
...
Left side is debit side and right side is credit side of an account
...
Expenses paid but not incurred during current accounting period are prepaid
...
Profit/loss on realization is shared among partners in old profit sharing ratio
...
Correct profit will be Rs
...
7,00,000 + 1,00,000 less Rs
...
21
...
40,000 (1,40,000 – 1,00,000) and revenue profit will be Rs
...
22
...
23
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
729
ANSWERS
In this question A bill of exchange matures on 16th July
...
Bill will mature on the
preceding day i
...
15 th July
...
LIFO is not recommended by AS 2
...
As per balance method, Trial balance will be prepared as follows:
Cash A/c
3,180
Capital
10,000
Bank
6,900
Purchases
725
Sales
950
Salary
5
Rent
26
...
In the absence of a partnership deed and where there is no indication as to the agreement between the
partners in this aspect, it should be considered as equal share for all partners
...
1,200
B
Dr
...
2,400
Owner’s capital refers to the sum of the business resources owned by the business owners
...
When a business pays all its debts, the amount remaining
belongs to the business owner and it is the one that is referred to as Owners Capital or Owners Equity
...
5,000
28
...
29
...
30
...
31
...
Provisions are charges against
profits
...
32
...
Gross profit is a company’s residual
profit after selling a product or service and deducting the cost associated with its production and sale
...
It excludes indirect expenses such as distribution costs and sales force cost
...
21,000
Profit = sales – cost of goods sold = Rs
...
9,000
33
...
70,000; Cash sales Rs
...
25,000
...
60,000
Cash received from customers = 60,000 – 25,000 = Rs
...
Machinery is a Capital asset, not to be included in current assets
...
A Bank reconciliation is a process that explains the difference between the bank balance shown in an
organisation’s bank statement, as supplied by the bank, and the corresponding amount shown in the
organization’s own accounting records at a particular point in time
...
Bank reconciliation statement of …
...
1,650
______
2,370
______
A Bank reconciliation is a process that explains the difference between the bank balance shown in an
organisation’s bank statement, as supplied by the bank, and the corresponding amount shown in the
organization’s own accounting records at a particular point in time
...
Bank reconciliation statement of …
...
Gross profit is a company’s revenue minus its cost of goods sold
...
732
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold in the above case = opening inventory + purchases + carriage inward + wages –
goods sent on consignment = 14,500 + 75,995 + 1,700 + 825 – 20,000 = 73,020
Gross profit = sales – cost of goods sold = 93,750 – 73,020 = Rs
...
Sale of plant and machinery is a capital receipt, not reserve
...
Fixed installment or straight line method depreciates cost evenly throughout the useful life of the fixed
asset
...
Residual Value is the estimated scrap value at the end of the useful life of the asset
...
Useful Life is the estimated time period an asset is expected to be used from the time it is available for
use to the time of its disposal or termination of use
...
5,200
Salvage value = Rs
...
500
Depreciation for 3 years = 500 × 3 = Rs
...
3,700
40
...
The cost of the asset and also interest thereon are written down annually
by equal installments until the book value of the asset is reduced to nil or its bread up value at the end of
its effective life
...
The annual charge for depreciation will be credited to asset account and debited to depreciation account,
while the interest will be debited to asset account and credited to interest account
...
9,996
...
55 = Rs
...
45
41
...
42
...
Note that here the
date of bill is excluded
...
12
...
Add 30days will give us 7
...
10
Add 3 days of grace gives us 10
...
10
Thus Jan 10th is the due date
...
Owner’s capital refers to the sum of the business resources owned by the business owners
...
When a business pays all its debts, the amount remaining
belongs to the business owner and it is the one that is referred to as Owners Capital or Owners Equity
...
7,095
(profit)
44
...
Sometimes, it just so
happens that some events are either not recorded or it is recorded in the wrong head of account or wrong
figure is recorded in the correct head of account
...
These errors in accounting require rectification
...
Here the total of the debit and credit side of a trial balance of Mr
...
20,000 and Rs
...
Thus suspense account will have a credit balance of Rs
...
Now it was found that the total of sales book was carried forward as 5,000 instead of 4,000 i
...
the sales
account has been overcasted by 1000Rs
...
1,000
...
1,000 the balance of suspense account
will be 10,000 (cr) + 1,000 (cr) = Rs
...
45
...
250 with corresponding credit to
suspense a/c
...
The journal entry to transfer net income to owner’s equity is a debit to Income Summary, and a credit
Capital
...
The entry will be P/L A/c Dr
...
6,300; To Capital A/c Rs
...
Cross profit is difference between sales and cost of goods sold
...
Credit balance in leger will either be a revenue or a liability not an expense or asset
...
Consignment is the act of consigning, which is placing any material in the hand of another, but retaining
ownership until the goods are sold or person is transferred
...
Amount spent on structural alteration will be capital in nature
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
735
ANSWERS
51
...
The average is then multiplied by the agreed number of years
...
Goodwill = Average Profits × Number of years of Purchase
Profit of the year 1 : 6,000
Profit for the year 2 : 6,000 × 2 = 12,000
Profit for year 3 : 12,000 × 1
...
12,000
Goodwill = 12,000 × 1 = Rs
...
When a new partner comes into the business, old partners have to give him his profit share from their
portion
...
In academic accounting, change in profit sharing ratio can be presented in various ways
...
When the profit
sharing ratio is revised among existing partners, there ought to be a partial sacrifice of profit share by
some partners in favour of others
...
Following is the formula for calculating new ratio:
New ratio = Old ratio – Sacrificing ratio
New ratio
Partners
Old ratio
Gain/(sacrifice)
New ratio
A
3/6
(1/6)
3/6 – 1/6 = 2/6
B
2/6
2/6
C
1/6
1/6
So the new ratio between A : B : C : D will be 1/3 : 1/3 : 1/6 : 1/6
53
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
Joint venture A/c
Particulars
Amount
To Joint bank-purchases
66,600
To Joint bank-expenses
By joint bank-sales
Amount
6,629
To C-commission
Particulars
89,000
5,340
To Net profit transferred
to-ABC
55
...
3 on application
and Rs
...
2 on first call
...
500
...
500
...
Consignment inventory will be recorded in consignor’s balance sheet at invoice value less stock reserve
on it
...
Insurance charges will not be included in the cost of inventory
...
58
...
It may be settled by issuing shares in the
company or debentures also
...
purchased the business of Y Ltd
...
90,000 payable in fully paid shares of 10
each; shares were issued at a premium of 25%
...
5 = Rs
...
5
Total value of business acquired = Rs
...
5 = 7,200 shares
...
Here a company on non-receipt of First Call money of Rs
...
3 per
share from Rahul, debited Call-in-Arrears account by Rs
...
3,000 respectively
...
10 each were forfeited from Rahul
...
So the amount to be credited to First Call Account at the time of entry for forfeiture will be NIL
...
When a company acquires any asset, the purchase consideration can be settled either in cash or in any
way as decided between the seller and the company
...
In this problem X Ltd
...
20,00,000 at Rs
...
30,00,000 at Rs
...
55,00,000 and paid Rs
...
Total consideration to be paid = Rs
...
45,00,000
The debentures are being issued at a premium thus the value of each debentures issued will be 100 +
20% of 100 = 100 + 20 = Rs
...
738
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 14
1
...
2
...
3
...
4
...
5
...
6
...
112 need to be subtracted while preparing Bank Reconciliation to arrive at the balance as per passbook
...
Bills receivable is a current asset
...
8
...
All others will be having credit balances
...
Wages paid to Ram debited wrongly to his account is an error of principle
...
10
...
2
...
Thus 30
...
2010 will be maturity
date
...
Balance of goods sent on consignment A/c is transferred to Trading A/c
...
12
...
13
...
14
...
15
...
16
...
e
...
17
...
18
...
19
...
20
...
Purchase of goods (in trade) on credit basis are
recorded in purchase book
...
Securities premium is not free for distribution as dividend
...
22
...
23
...
Note that here the
date of bill is excluded
...
24
...
So he may
approach the drawer of the bill before the maturity date arrives, to cancel the old bill and draw a new bill
with extended date
...
When a bill of exchange is dishonored, the holder can get such fact noted on the bill by a notary public
...
The noting is done by recording the
fact of dishonored, the date of dishonor, the reason of dishonor, if any
...
In case the bill is renewed the interest will not be charged on the noting charges which will be treated
separately and will not be clubbed with the amount of the bill
...
5,000
Interest for 1 months @12% pa = Rs
...
5,050
25
...
When the acceptor of a bill is prepared
to make the payment of the bill before the due date, he may ask the holder to accept the payment,
provided he receives some rebate or discount for the unexpired period
...
Here Preet accepted a 90 days bill of Rs
...
02
...
On 13
...
2010, Preet
wished to retire the bill
...
a
...
3
...
180
740
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
26
...
Consignment Account
To Goods sent on consignment
(at cost price) 1,00,000 × 100/125
By Consignee A/c (Sales)
80,000
To Consignee’s A/c(indirect expenses) 40,000
To Profit
27
...
The valuation of
abnormal loss is done on the same basis as the unsold stock is valued
...
300 to his agent at Bareilly
...
500
towards freight and insurance
...
So this is abnormal loss
...
4,575
28
...
300 to his agent at Bareilly
...
500
towards freight and insurance
...
So this is abnormal loss
...
4,575
Value of Stock just before being unloaded at the consignees godown
= Cost of Goods + Consignors Direct Expenses + Proportionate Consignee Direct Expenses
The cost of the goods/stock implies the value at which the goods are consigned by the consignor to the
consignee
...
Moreover any direct expenses incurred by the consignee in relation
to the transportation of the goods, octroi duties, insurance in transit etc
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
741
ANSWERS
Therefore, the direct expenses incurred till that point would include the consignor expenses and that part
of the consignee expenses which relate to the expenses incurred on the stock before being unloaded
...
25,925
Add: Clearing charges = 1,000
Total cost = 26,925
Total units sold = 70 units
Units remaining in inventory = 15 packets
So the value of inventory = 26,925 × 15/85 = Rs
...
Joint venture A/c
Date Particulars
To Elder-goods
Amount
2,500
To Elder-expenses
To Large-goods
By Large-sales
Amount
6000
200
2,000
To Large-expenses
150
To Large-commission
300
To Net profit
30
...
issued to public 15,000 shares of Rs
...
2
...
The amount payable was as follows:
On application
Rs
...
4 per share (including premium)
On first and final call
Rs
...
Perfect holder of 100 shares did not pay allotment and call money
...
Perfect
...
10
Total amount called up for the forfeited shares = 100 × 10 = Rs
...
1,000
...
A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a
new entity and new assets by contributing equity
...
742
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Profit on venture can be ascertained with the help of the joint venture account
...
When the
goods are sold, the amount thereof is debited to the coventurer’s account or the joint bank account and
credited to the joint venture account
...
, the value will
be debited to the account of the party concerned and credited to the joint venture account
...
Joint venture A/c
Date Particulars
Amount
To joint bank-material
Date Particulars
1,62,000
To joint bank-wages paid
By joint bank-contract price
60,000
2,00,000
By B-drawings
6,000
By loss on joint venture
______
2,22,000
______
32
...
8,000 and so it is decided to raise a loan A/c in
the name of U
...
Journal entry will be
U’s Loan A/c
Dr
...
4,000
4,000
In case of retirement and death, goodwill is adjusted through the partners’ account in Gaining Ratio
...
34
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
Under this method we calculate the average profits and then assess the capital needed for earning such
average profits on the basis of normal rate of return, such capital is called capitalized value of average
profits
...
To calculate
goodwill using average profit, the average net profit for a given number of past years are multiplied by an
agreed number of years
...
Here profit for the year = 12,00,000
Reasonable rate of return = 15%
Thus capitalized value of profit = 12,00,000 × 100/15 = 80,00,000
Capital employed = 80,00,000
Thus Goodwill = 80,00,000 – 80,00,000 = NIL
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold in the above case = Rs
...
10,000
37
...
Particulars
Balance as per cash book (cr)
744
© The Institute of Chartered Accountants of India
Amount
Amount
13,500
Common Proficiency Test (CPT) Volume - I
Less:
Cheques issued but not presented for payment
6,000
(6,000)
3,000
3,000
______
10,500
______
Add:
Cheque deposited but not credited
Balance as per pass book (dr)
38
...
39
...
The entry will be basic
salary account Dr
...
1,000
professional tax
Cr
...
2,000
SWF
Cr
...
1,700
Salary payable account
Cr
...
50000
40
...
10,000 (9,200 + 800)
...
Purchases was under casted thus profit was overcasted resulting in distribution of overcasted profit
among partners
...
Again since purchases are not booked
trade payables are also under casted
...
20,000
B’s Capital
Dr
...
20,000
To Suppliers (creditors) A/c
60,000
42
...
43
...
Sometimes, it just so
happens that some events are either not recorded or it is recorded in the wrong head of account or wrong
figure is recorded in the correct head of account
...
These errors in accounting require rectification
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
745
ANSWERS
Here there was an error in the trial balance
...
Later on, it was found
that the opening inventory of Rs
...
1,800
...
720 i
...
the difference
...
720
To Opening inventory
44
...
The average is then multiplied by the agreed number of years
...
Goodwill = Average Profits × Number of years of Purchase
Profit of the year 2006: 40,000
Profit for the year 2007: 50,000
Profit for year 2008: 60,000
Profit for the year 2009: 50,000
Average profit of last 4 years = (40,000 + 50,000 + 60,000 + 50,000)/4 = Rs
...
1,50,000
45
...
It may be settled by issuing shares in the company
or debentures also
...
purchased assets from AB Ltd
...
1,50,000
and the consideration was paid by issue of shares of Rs
...
5
...
15
...
1,50,000 Number of shares issued = total value of assets acquired/value per share
= 1,50,000/15 = 10,000 shares
...
Under WDV method, depreciation is charged at a fixed rate every year, ON THE REDUCING
BALANCE
...
Let’s find the WDV as on the end of the third year of the furniture in question
Balance of furniture as on 1
...
2006 = 10,000
1-1-2006
Cost of machinery
10,000
31-12-2006
Depreciation
25% of 10,000 = 2,500
1-1-2007
WDV
7,500
31-12-2007
Depreciation
1,875
746
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
1-1-2008
WDV
5,625
31-12-2008
Depreciation
1,406
1-1-2009
WDV
4,219
At the end of the third year it was sold for Rs
...
Loss on sale will be wdv – sale proceeds = 4,219 – 1,000 = Rs
...
Under WDV method, depreciation is charged at a fixed rate every year, ON THE REDUCING
BALANCE
...
Let’s find the WDV as on 1-1-2006 of the plant and machinery in question
Balance of plant and machinery as on 1-1-2009 = 1,47,390
Let Original cost of plant and machinery purchased on 1-1-2006 = x (say)
1-1-2006
Cost of machinery
X
31-12-2006
Depreciation
15% of x = 0
...
15x = 0
...
85x = 0
...
85x – 0
...
7225x
31-12-2008
Depreciation
15% of 0
...
108375x
1-1-2009
WDV
0
...
108375x = 0
...
614125 x = 1,47,390
So x = Rs
...
1
...
2,40,000
...
Manager’s commission is calculated in two ways
1
...
On Profits after charging such commission:
Manager’s commission = Net Profits × (Percentage of commission /100 + % of commission)
Here the managers commission is 10% of net profit after charging such commission
So the managers commission will be = 22,000 × (10/110) = Rs
...
Debenture is a certificate/instrument acknowledging a debt
...
He cannot do so with a debenture
...
If the debentures were originally issued at a discount and redeemed at premium then the
case of loss on issue of debentures arise
...
issued Rs
...
The discount on issue of debentures = 4% of 1,00,00,000 = Rs
...
6,00,000
Thus total loss on issue of debentures = 4,00,000 + 6,00,000 = Rs
...
Interest on drawings is also charged like interest on capital, if it is provided in the partnership agreement
...
In many cases, however,
drawings are made by mutual agreement and no interest is charged at all
...
Calculation of interest on drawings
Date of drawings
Number of months
Amount
Feb 1
11
12,000
Apr 30
8
6,000
Jun 30
6
9,000
Aug 31
4
12,000
Oct 1
3
8,000
Dec 31
0
7,000
12,000 × 11 + 6,000 × 8 + 9,000 × 6 + 12,000 × 4 + 8,000 × 3 × 9/100 × 1/12
51
...
Here Interest on capital at 6% p
...
is to be allowed
...
3,00,000
...
18,000
52
...
This
decrease is measured as depreciation
...
Gaining ratio is calculated when a partner retires/dies
...
When the shares forfeited are reissued at discount, Bank account is debited by the amount received and
Share capital account is credited by the paid up amount
...
This is for adjusting the amount of discount so allowed from the amount
forfeited at the time of forfeiture
...
In that case the share forfeited account after reissue will show a zero balance
...
This profit is a capital gain to the company and is transferred to Capital
Reserve account
...
300
Amount available for the reissued shares in shares forfeiture account = number of shares reissued ×
amount forfeited per share = 100 × (10 – 2) = 100 × 8 = Rs
...
500
55
...
purchased land and building from H Ltd
...
2,00,000 and the
consideration was paid as Rs
...
1,000
each at a discount of 10%
the debentures are being issued at a discount thus the value of each share issued will be 1,000 – 10% of
1,000 = 1,000 – 100 = Rs
...
2,00,000
Cash paid = 65,000
Balance to be paid by issue of debentures = 1,35,000
Number of debentures issued = total value of assets acquired/value per debenture = 1,35,000/900 = 150
debentures
Discount on issue of debentures will be 150 × 100 = Rs
...
For recording unrecorded investment in the faks, the entry will be debit investment by giving credit to
Revaluation A/c
...
The amount of debenture discount can be written off in two ways :
1
...
When the debentures are to be redeemed
after a fixed period, the amount of discount will be distributed equally within the number of years
spreaded between the issue of debentures and their redemption
...
Debentures are redeemed in instalments
...
In that case the amount of debenture discount will be written off each year in
proportion to the amount of debentures redeemed
...
1,00,000 at a discount of 6% on Jan
...
These debentures are redeemable by annual drawings of Rs
...
each year
...
Total discount = 6% of 1,00,000 = Rs
...
Calculation of discount to be written off every year
Date
Discount written off
31
...
2009
1,00,000
6000 × 5/15 = 2000
31
...
2010
80,000
6000 × 4/15 = 1600
31
...
2011
60,000
6000 × 3/15 = 1200
31
...
2012
40,000
6000 × 2/15 = 800
31
...
2013
58
...
The amount of discount allowed is debited to
Share Forfeited Account
...
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited
amount on such shares
...
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will
be profit for the company
...
In the above question discount on shares reissued = number of shares reissued × discount allowed per
share = (250 × 10 – 2000) = Rs
...
750
750
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
The surplus amount to be transferred to capital reserve account = 750 – 500 = Rs
...
Debenture is a certificate/instrument acknowledging a debt
...
For an investor investing in a
debenture is just like investing in a fixed deposit with the difference that while he can withdraw the
amount invested in a fixed deposit any time he/she likes with a loss of interest
...
The amount invested on a debenture will be repaid only on the expiry of the period for which
the debenture has been issued
...
Here a Co
...
2,00,000 Debentures at 5% discount, redeemable at 10% premium after 10 years
...
10,000
The premium on redemption of debentures = 10% of 2,00,000 = Rs
...
30,000
60
...
Here A, B & C are partners sharing profits & losses in equal ratio
...
10,000 out of his private funds
...
To A’s Capital
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
Rs
...
10,000
751
ANSWERS
SECTION — A : FUNDAMENTALS OF ACCOUNTING
Suggested Answer/Hints
Model Test Paper — BOS/CPT – 15
1
...
2
...
3
...
4
...
5
...
6
...
7
...
8
...
9
...
10
...
e
...
1,800
...
11
...
12
...
13
...
14
...
15
...
16
...
17
...
18
...
19
...
and 4 on Cr
...
20
...
21
...
22
...
13,500 (25,000 – 11,500) by giving
corresponding credit to A
...
The goods are consigned from one place to another
...
It is natural that some loss to the goods
may take place within that period
...
The loss which could be avoided by proper planning and care are abnormal loss
...
These losses could occur in transit or in consignee’s
store and solely to be borne by consignor
...
The valuation of
abnormal loss is done on the same basis as the unsold stock is valued
...
1,00,000 at an invoice price of the Rs
...
Sharma incurs some expenditure in relation to such consignment:
1/10th of the consignment is damaged in transit
...
12,000
...
Consignment is the act of consigning, which is placing any material in the hand of another, but retaining
ownership until the goods are sold or person is transferred
...
Fixed installment or straight line method depreciates cost evenly throughout the useful life of the fixed
asset
...
Residual Value is the estimated scrap value at the end of the useful life of the asset
...
Useful Life is the estimated time period an asset is expected to be used from the time it is available for
use to the time of its disposal or termination of use
...
1,26,000
Salvage value = Rs
...
20,000
26
...
27
...
28
...
e
...
29
...
30
...
31
...
32
...
capital is the difference between the
liabilities and assets
...
1,89,000
And liabilities = owing to Z Ltd
...
1,85,000
33
...
It is used for recording goods returned to us by
our customers
...
F
...
10
Garf & Co
...
17
Mittal and Co
...
are saree dealers the return of typewriter is not related to trade and so will not
find place in the sales return book
...
Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in
the double-entry accounting system
...
Corrected trial balance
Dr
...
) Cr Balance (Rs
...
Whenever a company redeems its preference shares then the nominal value or face value of the shares is
put into capital redemption reserve fund
...
Capital Redemption Revere is also created when a company buys it owns shares which reduce its share
capital
...
The capital redemption reserve fund is transferred from undistributed profits i
...
A redeemable preference share can be redeemed entirely out of fresh issue of new preference or equity
shares but not debentures
...
The benefit of Rs
...
37
...
38
...
6,00,000 only as it is restricted to the amount of insured value
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold = opening inventory + purchases – closing inventory
Thus purchases = cost of goods sold + closing inventory – opening inventory = 80,700 + 6,000 – 5,800 =
Rs
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold = opening inventory + purchases + direct expenses – closing inventory
Cost of goods sold = 8,500 + 30,700 + 4,800 – 9,000 = Rs
...
Gross profit is a company’s revenue minus its cost of goods sold
...
756
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold in the above case = 70,800
Profit = sales – cost of goods sold = 1,30,200 – 70,800 = Rs
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
In the above case
lets find out gross profit with the help of trading account
...
96
_____
2,896
4,000
______
24,840
______
Total
______
24,840
______
The balance sheet equation is that total assets equals liabilities plus owner’s equity
...
Thus total of balance sheet will be equal to total of all assets or total of liabilities plus owner’s equity
...
5,14,000
44
...
A
certain percentage is applied to the previous year’s book value, to arrive at the current year’s depreciation/
book value, which show a declining balance, weighted for earlier years, and lower and lower for later
years, as the asset grows older
...
58,000 with an accumulated depreciation reserve of
Rs
...
a
...
9,280
45
...
The provision is the
estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet
collected
...
1,250
Closing Provision for Bad Debts = 5% on (trade receivables – bad debts) = 5% on 10,000 = 500
Opening provision less bad debts = 1,250 – 300 = 950
Decrease in provision for bad debts = 950 – 500 = 450
Provision for bad debts credited to Profit and Loss A/c will be Rs
...
46
...
In units of production method, higher depreciation is charged when their is higher activity and
less is charged when there is low level of operation
...
The following formula is used to calculate depreciation under this method:
Depreciation =
Number of Units Produced
Life in Number of Units
× (Cost – Salvage Value)
Life in Number of Units
Here Number of Units Produced in 1-3 years = 5 + 5 + 5 = 15 lakhs
Life in number of units = 30 lakhs
Cost of the machine = 11,00,000
Salvage value = nil
So depreciation for 1-3 year will be = (5 + 5 + 5)/30 × (11,00,000) = Rs
...
A joint venture takes place when two parties come together to take on one project
...
For rectifiction, Ajit needs to be debited by Rs
...
49
...
Such differences may occur, for example, because a cheque or a list of cheques issued by the organization
has not been presented to the bank, a banking transaction, such as a credit received, or a charge made by
the bank, has not yet been recorded in the organisation’s books, or either the bank or the organization
itself has made an error
...
400 was wrongly credited by Bank as Rs
...
If the balance as
pr cash book is the starting point then in the bank reconciliation statement cash balance will be added by
400 + 900 = Rs
...
Bank reconciliation statement of …
...
100
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
100
100
759
ANSWERS
Add:
Cheques drawn but not presented for payment
6,000
6,000
Bank charges recorded twice in cash book
Balance as per pass book (cr)
51
...
For this purpose an another account is prepared i
...
profit and Loss appropriation
account
...
Profit and Loss Appropriation Account
Particulars
Rs
...
2,000
To Profit transferred to Partners
capital or current account
Particulars
By Profit and Loss account
(Profit transferred from P & L account)
4,000
To interest on drawings (64 + 88)
8,848
152
Ratan
Karan
________
9,000
________
Note: Calculation of interest on drawings
________
9,000
________
Ratan
Date of drawings
Number of months
Amount
Interest @8%
Jun 30
9
600
36
Sept 30
6
500
20
Dec 31
3
400
8
760
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Karan
Calculation of interest on drawings
Date of drawings
Number of months
amount
Interest @8%
Jun 30
9
800
48
Sept 30
6
700
28
Dec 31
3
600
12
Total
52
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
53
...
the combined capital of A and B = 18,000 + 12,000 = Rs
...
14,000 for 1/5th share
...
When a new partner is admitted in the firm, the existing/old partners have to sacrifice, what is given to
the new partner, from their future profits, the reputation they have gained in their past efforts and the side
of capital they have taken before
...
The compensation for such sacrifice can be termed as ‘goodwill’
...
And this goodwill will be shared by the old partners in their profit sharing ratio
...
Thus goodwill amount brought by D will be shared by A and B only
and equally
...
The retiring partner is entitled to his share of goodwill at the time of retirement because the goodwill
earned by the firm is the result of the efforts of all the partners including the retiring partners
...
At the time of retirement
of partner the goodwill is evaluated on the basis of agreement among the partners
...
Hence goodwill account cannot be raised
...
The following entry is
made:
Continuing partners capital account Dr
...
56
...
10 × 0
...
57
...
100 each at par
...
Thus share capital account will be debited by total called up value of the shares but discount account has
to be credited
...
10,000
...
1,000 (100 × 10)
58
...
Here 1,000 shares of Rs
...
For this, company credited
Share Capital Account and debited Goodwill account by Rs
...
59
...
All debentures are to be redeemed after a fixed period
...
The amount of discount on issue of
debentures to be written off each year is calculated as
Amount of discount to be written off annually
= Total amount of Discount/Number of years
2
...
In that case the amount of
debenture discount will be written off each year in proportion to the amount of debentures redeemed
...
1,00,000 (Payable after five years) and Discount allowed
on issue of debentures Rs
...
Amount of discount to be written off annually
= Total amount of Discount/Number of years = 2,000/5 = Rs
...
Dividends payable are dividends that a company’s board of directors has declared to be payable to its
shareholders
...
Here dividend payable will be 5% of (4,60,000 – 7,500) = Rs
...
Owner capital increase is done by crediting capital account
...
Suppliers, creditors, lenders all are users of accounting information
...
Accounting standards in India are issued by ICAI in India
...
Cost of advertisement for the existing products is revenue in nature
...
Personel accounts belong to persons, trade receivables or payables
...
are real
whereas expenses, losses, gains, revenue etc
...
6
...
7
...
8
...
Bank column may have credit balance
...
Depletion method of depreciation is used in natural resources (mines etc
...
Goods purchased from A wrongly passed through sales book
...
11
...
12
...
It
will be recorded in journal proper
...
Capital expenditures are recorded in balance sheet
...
14
...
balance
...
Outstanding wages in trial balance is a liability, to be recorded in balance sheet
...
16
...
17
...
18
...
19
...
20
...
21
...
764
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
22
...
As per conservatism, valuation should be
done at lower of cost or market value
...
For bringing prepaid rent in the faks at the beginning of year, prepaid rent should be debited by corresponding
credit to Suspense A/c
...
Credit sales
= Rs
...
1,25,000
Cash sales
Total
25
...
50,000
= Rs
...
Straight line depreciation is calculated as follows:
Depreciation per annum = (Cost – Residual Value) / Useful Life
Where:
Cost includes the initial and any subsequent capital expenditure
...
As the residual value
is expected to be recovered at the end of an asset’s useful life, there is no need to charge the portion of
cost equaling the residual value
...
Here Cost of the asset = Rs
...
5,000
Depreciation/year = (25,000 – 5,000)/10 = Rs
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold = opening inventory + purchases less purchase return + direct expenses – closing
inventory = 5,570 + 13,816 – 390 + 1,650 – 8,880 = 11,766
And gross profit = sales less sales return – cost of goods sold = 15,248 – 524 – 11,766 = Rs
...
Journal Entry for the given case should be to debit salary (expense) and to credit purchases (goods)
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
765
ANSWERS
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold = opening inventory + purchases – closing inventory
Thus purchases = cost of goods sold + closing inventory – opening inventory = 1,00,000 + 10,000 – 5,000
= Rs
...
Expenses which have been incurred but not been paid for till the end of the accounting year are known
as Accrued expenses or outstanding expenses
...
55,000
...
5,000
And the outstanding rent for march 2010 will be Rs
...
Owner’s capital refers to the sum of the business resources owned by the business owners
...
When a business pays all its debts, the amount remaining
belongs to the business owner and it is the one that is referred to as Owners Capital or Owners Equity
...
If the dates on which the amounts are drawn are not given,
interest is calculated on the whole amount on the assumption that the money was drawn evenly throughout
the year
...
At the close of the accounting period the interest on drawings accounts is closed by
transfer to the profit and loss account
...
Therefore, if drawings are made at the beginning of
each month, interest should be calculated on the whole amount for 6 and half months
...
5/12 = Rs
...
3,45,350
31
...
32
...
They exercise control over the enterprise and
consequently share revenues, expenses and assets
...
Joint venture A/c
Date Particulars
Amount
To A- purchases
Date Particulars
42,500
By B-sale
To net profit transferred to-AB 11,500
_______
54,000
_______
33
...
New cost for the purpose of depreciation will be
gross cost less accumulated depreciation on the date of revaluation
...
This
is done to ensure that depreciation on the revalued amounts shouldn’t inflate/ deflate the income statement
...
(70,000 – 5,000)/8
8,125
When a new partner comes into the business, old partners have to give him his profit share from their
portion
...
In academic accounting, change in profit sharing ratio can be presented in various ways
...
When the profit
sharing ratio is revised among existing partners, there ought to be a partial sacrifice of profit share by
some partners in favour of others
...
Following is the formula for calculating sacrificing ratio:
Sacrificing ratio = Old ratio – new ratio
Gaining/sacrificing ratio
Partners
Old ratio
Gain/(sacrifice)
New ratio
Mohan
½
(1/4 × 1/2) = (1/8)
½ – 1/8 = 3/8
Krishna
½
(1/8)
3/8
¼
2/8
Ram
So the sacrificing ratio between Mohan : Krishna : Ram will be 3 : 3 : 2
...
Value of inventory just before being unloaded at the consignees godown
= Cost of Goods + Consignors Direct Expenses + Proportionate Consignee Direct Expenses
The cost of the goods/inventory implies the value at which the goods are consigned by the consignor to
the consignee
...
Moreover any direct expenses incurred by the consignee
in relation to the transportation of the goods, octroi duties, insurance in transit etc
...
Therefore, the direct expenses incurred till that point would include the consignor expenses and that part
of the consignee expenses which relate to the expenses incurred on the stock before being unloaded
...
1,000 for packing,
Rs
...
500 for insurance, while expenses incurred by the consignee on behalf of
consignment are Rs
...
800 Godown rent and Rs
...
So Expense amount to be excluded while calculating consignment inventory will be = godown rent +
selling expenses = 800 + 1,000 = Rs
...
In case of retirement and death, goodwill is adjusted through the partners’ account in Gaining Ratio
...
37
...
The amount of discount allowed is debited to
Share Forfeited Account
...
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited
amount on such shares
...
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will
be profit for the company
...
In the above question discount on shares reissued = number of shares reissued × discount allowed per
share = 20 × 15 = Rs
...
400
768
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
The surplus amount to be transferred to capital reserve account = 400 – 300 = Rs
...
Remuneration paid for services is called commission
...
Over-riding
commission is an extra commission allowed to the consignee in addition to the normal commission
...
Here Consignee is entitled to get a commission of Rs
...
125 per
articles sold
...
11,250
Let the total commission be x (say)
Extra commission = 1/4(sales proceeds – x – 125 × articles sold) = 1/4 of (73,800 – x – 125 × 450)
Or x – 11,250 = 1/4 (17,550 – x)
Or 4 (x – 11,250) = 17,550 – x
Or 4x – 45,000 = 17,550 – x
Or 5x = 62,550
Or x = Rs
...
39
...
40
...
It is issued generally by a public company to
individuals/institutions who lend it money (invest in their debentures)For an investor investing in a debenture
is just like investing in a fixed deposit with the difference that while he can withdraw the amount invested
in a fixed deposit any time he/she likes with a loss of interest
...
The
amount invested on a debenture will be repaid only on the expiry of the period for which the debenture
has been issued
...
Here A company issued Rs
...
The discount on issue of debentures = 5% of 1,00,000 = Rs
...
10,000
Thus total loss on issue of debentures = 5,000 + 10,000 = Rs
...
Amount spent for reduction in working expenses will give benefit for more than one accounting period,
thus it is capital in nature
...
When the shares forfeited are reissued at discount, Bank account is debited by the amount received and
Share capital account is credited by the paid up amount
...
This is for adjusting the amount of discount so allowed from the amount
forfeited at the time of forfeiture
...
In that case the share forfeited account after reissue will show a zero balance
...
This profit is a capital gain to the company and is transferred to Capital
Reserve account
...
500
Amount available for the reissued shares in shares forfeiture account = number of shares reissued ×
amount forfeited per share = 250 × (10 – 3-4) = Rs
...
250
43
...
All debentures are to be redeemed after a fixed period
...
The amount of discount on issue of debentures to
be written off each year is calculated as
Amount of discount to be written off annually
= Total amount of Discount/Number of years
2
...
Debentures may also be redeemed in instalments but
over a fixed period
...
Here company issued debentures of the face value of Rs
...
1, 2009
...
20,000 made on 31st Dec
...
The
directors decided to write off discount based on the debentures outstanding each year
...
6,000
Calculation of discount to be written off every year
Date
Debentures to be redeemed
Discount written off
31
...
2009
1,00,000
6,000 × 5/15 = 2,000
31
...
2010
80,000
6,000 × 4/15 = 1,600
31
...
2011
60,000
6,000 × 3/15 = 1,200
770
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
31
...
2012
6,000 × 2/15 = 800
31
...
2013
44
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
The maximum amount of discount allowed at the time of reissue implies the maximum amount of discount
that a company can allow at the time of reissue of the forfeited shares
...
Whether the forfeited shares were originally issued at par or at premium
...
If the forfeited shares were originally issued at par or at premium , then these forfeited shares can be
reissued with the maximum discount equal to the amount received (or paid by) the original shareholder
...
Thus option (d) is the correct option
...
After making the Trading and Profit and Loss account of a Partnership firm the next step is to divide the
profits or losses among the partners and to make other appropriations like interest on capital, salary,
commission etc
...
e
...
This account is prepared to show the division of profit and other appropriations among partners like
salary, commission, interest on capital, interest on drawings etc
...
To B’s capital a/c-Salaries of
Partner
3,600
To Interest on Partners’ Capitals
(6% of 16000)
Particulars
By Profit and Loss account
(Profit transferred from P & L account)
8,000
960
To Profit transferred to partners
capital or current account
A : 1/2 of 3,440 = 1,720
B : 1/2 of 3,440 = 1,720
3,440
______
8000
______
47
...
______
8000
______
Profit and Loss Appropriation Account
(for the year ending on 31st March 2008)
Particulars
Particulars
To Interest on Capital:
A
15,000
B
10,000
C
07,500
By Profit before adjustments
To net Profit transferred
A
...
(1,27,500 × 3/10) = 38,250
C
...
So the amount to be sacrificed by A to make C’s profit as Rs
...
1,750
48
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
49
...
(ii) Credit Share Forfeited A/c
...
(iii) Credit ‘Unpaid Calls A/c’ with the amount due on forfeited shares
...
Here Shveta holding 100 shares did not pay final call money
...
6,500
50
...
New ratio = old ratio + gaining ratio
Calculation of gaining ratio
Partners
Old ratio
Gain/(sacrifice)
A
½
6/10 of ½ = 3/10
B
½
4/10 of ½ = 2/10
C
New ratio
½
Thus the gaining ratio between A and B will be 3:2
...
On admission of a partner, unrecorded investments worth Rs
...
1,500 will be recorded in Revaluation A/c because old partner will only get profit or loss
through all business activities were done before coming of new partner
...
52
...
Such differences may occur, for example, because a cheque or a list of cheques issued by the organization
has not been presented to the bank, a banking transaction, such as a credit received, or a charge made by
the bank, has not yet been recorded in the organisation’s books, or either the bank or the organization
itself has made an error
...
Particulars
Amount
Amount
Balance as per cash book (dr)
3,000
Add:
Cheques issued but not presented for payment
500
Interest collected by bank
400
Cheque deposited by customer direct into the bank
250
Balance as per pass book (cr)
53
...
The average is then multiplied by the agreed number of years
...
Goodwill = Average Profits × Number of years of Purchase
Before calculating the average profits the following adjustments should be made in the profits of the firm:
(a) Any abnormal profits should be deducted from the net profits of that year
...
(c) Non operating incomes e
...
Income from investments etc should be deducted from the net profits
of that year
...
8,000
Goodwill = 8,000 × 1
...
12,000
...
Calculation of cash balance at the end:
Opening balance
10000
Add:
Cash sales
5,000
Collection from receivables (50,000 – 5,000 – 10,000)
Cash balance at the end
774
© The Institute of Chartered Accountants of India
35,000
40,000
_______
50,000
_______
Common Proficiency Test (CPT) Volume - I
55
...
This
decrease is measured as depreciation
...
Value
18,400
Assets such as automobiles, computer equipments, and office furniture, are customarily traded in for
new assets of the same kind
...
If the dealer grants an exchange
value greater than the book value, then a gain is realized on exchange of the asset
...
As per
prudent and accepted accounting practices, the loss will be taken to the profit and loss account of the
year concerned, and profit on exchange will be deducted from the value of the new asset
...
800 for exchange purpose
...
4,200
57
...
This method is also called the
Sale on Approval basis
...
However, if the goods are sent on sale or return basis,
the unsold goods must be included in the inventory at cost
...
600
Let the cost price be x
So sales price = 600 = x + 20% of x = 1
...
500
58
...
59
...
further we have to make Hari Ram debit again for Rs
...
60
...
Sometimes, it just so
happens that some events are either not recorded or it is recorded in the wrong head of account or wrong
figure is recorded in the correct head of account
...
These errors in accounting require rectification
...
Here paid rent to landlord Rs
...
2,004
...
396
So the rectifying entry will be
Rent A/c
Dr
...
Ledger posting is function of book-keeping not accounting
...
If revenue earning capacity is increased, it will be treated as capital
...
Recovered bad debts will be credited to bad debts recovered A/c not P&L A/c or Trade Receivables
...
Total of sales return book is posted to debit of Sales Return A/c
...
Bill payable is in name of some individual, thus personal
...
Due to Money measurement concept, all assets which can be measured in money terms, are recorded
...
7
...
8
...
of years under Average profit method for
calculation of goodwill
...
Rent is an expense or if received (income)
...
10
...
Thus all are parties
...
Financial transaction involves transfer of money or money’s worth
...
Income is reflected in form of inflow of assets or decrease of liabilities
...
Location of business, nature of business, technical know-how all affect goodwill except management
efficiency
...
Profit/loss on revaluation is shared among partners in old profit sharing ratio
...
‘Closing inventory’ means goods lying unsold at the end of previous accounting period or at beginning of
current accounting period
...
General reserve will be transferred to old partners in the old profit sharing ratio
...
Depreciation on machinery is recorded in P&L A/c as it is an expense
...
For rectification, we need to credit Insurance company (receipt of claim) and debit drawings a/c as
proprietor has deposited this cheque in his personal account
...
Fixed capital account is not credited with interest, profit or salary of partner
...
20
...
21
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
777
ANSWERS
22
...
23
...
Straight line depreciation is calculated as follows:
Depreciation per annum = (Cost – Residual Value) / Useful Life
Where:
Cost includes the initial and any subsequent capital expenditure
...
As the residual value
is expected to be recovered at the end of an asset’s useful life, there is no need to charge the portion of
cost equaling the residual value
...
Here Cost of the asset = Rs
...
500
Depreciation/year = (5,000 – 500)/10 = Rs
...
Net profit is calculated by subtracting a company’s total expenses from total revenue, thus showing what
the company has earned (or lost) in a given period of time (usually one year)
...
Here net profit = gross profit – Carriage Outwards – Rent paid – Bad Debts + Apprentice premium –
Printing & Stationery = 51,000 – 5,800 – 6,400 – 2,600 + 1,500 – 1,000 = Rs
...
25
...
Where interest on drawings is charged it is usually calculated at fixed rate percent from the date of each
drawing to the date the accounts are closed
...
The amount of interest is debited to proprietor’s drawings accounts and is credited to the
interest on drawings amount
...
It may, however, be noted that if the withdrawals are of uniform amount and are made at regular
intervals, then interest on drawings can be calculated on the total of the amount drawn, for the average
of the periods applicable to first and last installment
...
Here Ram Gopal withdrew Rs
...
So interest on drawings will be = 10% of (2000 × 12) × 6
...
1,300
27
...
Sometimes, it just so
happens that some events are either not recorded or it is recorded in the wrong head of account or wrong
figure is recorded in the correct head of account
...
These errors in accounting require rectification
...
So the rectifying entry will be
B/P A/c
Dr
...
500
To A
28
...
P
...
P
...
P
...
P
...
Here Goods costing Rs
...
Let the sales = x (say)
Then profit = 25% of x =
...
25x
Or 0
...
10,000
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold = opening inventory + purchases less purchase return + direct expenses – closing
inventory = 80,000 + 3,00,000 – 6,000 + 12,000 + 4,000 + 8,000 – 60,000 = 3,38,000
And gross profit = sales less sales return – cost of goods sold = 4,10,000 – 10,000 – 3,38,000 = Rs
...
Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in
the double-entry accounting system
...
Dr
...
)
Purchases
Cr
...
)
60,000
Reserve Fund
20,000
Sales
1,00,000
Purchase return
1,000
Sales Return
2,000
Opening Inventory
30,000
Closing Inventory
Sundry Expenses
20,000
Outstanding Expenses
2,000
Cash at Bank
5,000
Fixed Assets
50,000
Trade receivables
80,000
Trade payables
30,000
Capital
31
...
Particulars
Amount
Balance as per cash book(cr)
Amount
2,500
Add:
Cheques deposited in the Bank but not cleared
780
© The Institute of Chartered Accountants of India
1,000
1,000
Common Proficiency Test (CPT) Volume - I
Less:
Cheques drawn but not presented for payment
1,400
Balance as per pass book(dr)
32
...
33
...
20,000
3,000
30,000
Liability for expenses
Dep
...
Consignment account
Date Particulars
Amount
Date Particulars
Amount
To goods sent on consignment
A/c(100 × 150)
15,000
By Ram Ji Lal-sales
(90 × 180)
16,200
To bank- packing and dispatch
500
By closing inventory
1,620
To Ram Ji Lal-freight
500
To Ram Ji Lal-carriage and octroi
200
To Ram Ji Lal-godown rent
100
To Ram Ji Lal-insurance
150
To Ram Ji Lal-commission
To profit on consignment
1,215
155
________
17,820
________
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
________
17,820
________
781
ANSWERS
Valuation of closing stock:
Cost of goods consigned = 15,000
Add: packing and dispatch = 500
Add:freight = 500
Add: Carriage = 200
Total cost = 16,200
Cost of unsold goods = 16,200 × 10/100 = 1,620
35
...
The treatment of normal loss is to charge it to consignment account
...
Value of inventory is inflated to cover the normal loss
...
No separate entry is made in the books of consignor in case of normal
...
The value of unsold stock on consignment
is increased because the value of stock is the proportion of the cost of the goods consigned and direct
expenses that the quantity of inventory bears to the total quantity of goods consigned as diminished by the
normal loss of goods
...
4,500
...
307 as forwarding
charges
...
Bhawna sold 1,350 Kg of flour at Rs
...
Units lost = 5 % of 1,500 = 75 kgs
Closing inventory = 95% of 1,500 – 1,350 = 75 kgs
Cost of goods consigned = 4,500 + 307 = Rs
...
253
...
Furniture and fittings is a fixed asset not current
...
When the shares forfeited are reissued at discount, Bank account is debited by the amount received and
Share capital account is credited by the paid up amount
...
This is for adjusting the amount of discount so allowed from the amount
forfeited at the time of forfeiture
...
In that case the share forfeited account after reissue will show a zero balance
...
This profit is a capital gain to the company and is transferred to Capital
Reserve account
...
450
...
600
The surplus amount to be transferred to capital reserve account = 600 – 450 = Rs
...
Dividends payable are dividends that a company’s board of directors has declared to be payable to its
shareholders
...
Here dividend payable will be 5% of (Equity share capital called up - Calls in arrear ) = 5% of (10,00,000
– 40,000) = Rs
...
39
...
all others are current
...
Loss on reissue will be Re
...
The total amount of Rs
...
41
...
This
decrease is measured as depreciation
...
A change from one method of providing depreciation to another should be made
only if the adoption of the new method is required by statute or for compliance with an accounting
standard or if it is considered that the change would result in a more appropriate preparation or presentation
of the financial statements of the enterprise
...
The deficiency or surplus arising from the retrospective recomputation of depreciation
in accordance with the new method would be adjusted in the accounts in the year in which the method
of depreciation is changed
...
In case the change
in the method results in surplus, it is recommended that the surplus be initially transferred to the
‘Appropriations’ part of the profit and loss account and thence to General Reserve through the same part
of the profit and loss account
...
12006
20,000
31
...
2006
17,000
3,000
3,000
31
...
2007
14,450
2,550
3,000
31
...
2008
12,282
2,168
3,000
7,718
9,000
Total depreciation
Depreciation by
Depreciation by
diminishing balance fixed installment
method
method
Deficiency = 1,282
Thus Adjusted amount will be: Rs
...
The provision for doubtful debts is identical to the allowance for doubtful accounts
...
The provision is used under accrual basis accounting, so that an expense is recognized for
probable bad debts
An increase in provision for bad debts is recorded as follows
DEBIT
the difference (new provision minus old one) to Income Statement*
CREDIT
provision for bad debts
*Note : In the Income Statement this is recorded as an increase in provision for bad debts and listed in expenses
Here opening Provision for Bad Debts is Rs
...
5,332
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Cost of goods sold in the above case = purchases less returns = 60,000 – 10,000 = 50,000
Profit = sales less return – cost of goods sold = 80,000 – 10,000 – 50,000 = Rs
...
Under average profit method goodwill is calculated on the basis of the average of some agreed number
of past years
...
This is the simplest and the
most commonly used method of the valuation of goodwill
...
(b) Any abnormal loss should be added back to the net profits of that year
...
g
...
Profit of the year 1 : 40000
Profit for the year 2 : 50000
Profit for year 3 : 60000
Profit for year 4 : 50000
Average profit of last 4 years = (40,000 + 50,000 + 60,000 + 50,000)/4 = Rs
...
1,50,000
45
...
46
...
600
Interest on loan paid = 300
Thus interest outstanding = 600 – 300 = Rs
...
Fixed installment or straight line method depreciates cost evenly throughout the useful life of the fixed
asset
...
12
...
12
...
15,000
...
2,000
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
785
ANSWERS
48
...
A
certain percentage is applied to the previous year’s book value, to arrive at the current year’s depreciation/
book value, which show a declining balance, weighted for earlier years, and lower and lower for later
years, as the asset grows older
...
Here A boiler was purchased from abroad for Rs
...
2,000, Import duty Rs
...
1,000
...
20,000
Cost of machinery
1st year depreciation
1st year wdv
2nd year depreciation
2nd year wdv
3rd year depreciation
3rd year wdv
49
...
Sometimes, it just so
happens that some events are either not recorded or it is recorded in the wrong head of account or wrong
figure is recorded in the correct head of account
...
These errors in accounting require rectification
...
Here Syam prepared a trial balance for his factory on 31st March, 2010
...
500
...
After a close examination he found
that the purchase day book for Sept
...
500
...
500
To Suspense
500
50
...
1,000, it will affect trial balance
...
Sometimes, acceptor of a bill finds himself unable to meet his acceptance on the due date
...
The acceptor in this case will of course have to pay interest for the extended period
...
The
advantages of noting is that the evidence of dishonored is secured
...
For doing all this the notary
public charges his fees which is called noting charges
...
Here Total amount of the A’s acceptance = 8,000
Amount paid = 4,000
Amount of the renewed bill = Rs
...
120
52
...
1,15,000
Payment made by cheque = 10,000
Remaining amount to be paid by issue of shares = 1,05,000
Value per share including premium = Rs
...
5
Thus number of shares to be issued = 1,05,000/10
...
1,00,000
Thus securities premium = 1,05,000 – 1,00,000 = Rs
...
Remuneration paid for services is called commission
...
Over-riding
commission is an extra commission allowed to the consignee in addition to the normal commission
...
Here B sold 50 televisions at Rs
...
He was entitled to commission of Rs
...
12,500 per television sold
...
Let the total commission be x(say)
Extra commission = 1/4 (sales proceeds – x – 12,500 × articles sold) = 1/4 of (7,50,000 – x – 12,500 × 50)
Or x – 25,000 = 1/4 (1,25,000 – x)
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
787
ANSWERS
Or 4 (x – 25,000) = 1,25,000 – x
Or 4x – 1,00,000 = 1,25,000 – x
Or 5x = 2,25,000
Or x = Rs
...
54
...
In this question A bill of exchange matures on 19th July
...
Bill will mature on the
preceding day i
...
18 th july
...
Rs
...
The expired portion of capital expenditure is expense, unexpired is asset
...
Owner’s capital refers to the sum of the business resources owned by the business owners
...
When a business pays all its debts, the amount remaining
belongs to the business owner and it is the one that is referred to as Owners Capital or Owners Equity
...
4,500 (profit)
58
...
Such differences may occur, for example, because a cheque or a list of cheques issued by the organization
has not been presented to the bank, a banking transaction, such as a credit received, or a charge made by
the bank, has not yet been recorded in the organisation’s books, or either the bank or the organization
itself has made an error
...
500 and direct deposit by a customer into his bank Rs
...
59
...
60
...
Here amount of the bill = 50,000
Thus amount received from bank on discounting = Rs
...
25,000 to B
...
Capital reduces due to loss
...
Balance sheet inform the picture of assets and liabilities i
...
financial position
...
Determination of expenses for accounting period is based on matching concept
...
Rent payable (liability) will be credited to outstanding rent a/c
...
Entry for bad debts is passed in Journal not in sales or cash book
...
Goods sold on credit basis will be recorded in sales book
...
Compensation paid to retrenched employee is revenue in nature
...
Petty cash book is meant for petty expenses paid in cash
...
Maturity date is three days after 2 months i
...
June 4
...
Furniture and fittings is fixed asset not current
...
Maintenance of capital asset is revenue expense
...
Creation of provision for discount is based on conservatism
...
Interest on capital will be paid to partners only from current profits
...
Policy amount is received from insurance company against JLP taken jointly for all partners at time of
death of a partner
...
Revaluation A/c is opened at admission and retirement of a partner
...
Interest debited in pass book will be added in cash book
...
Inventory is a current asset (realizable in cash in short period of time)
...
The rate is 6% p
...
as per Partnership Act
...
Fluctuating capital account is credited with interest on capital, profit of year and remuneration to partners
...
Additional amount is called premium for goodwill
...
Conservatism has been followed in the given case
...
Conservatism will be violated if we count the way given in the question
...
Under WDV method, depreciation is charged at a fixed rate every year, on the reducing balance
...
790
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Let’s find the WDV as on 1-1-2006 of the plant and machinery in question
Balance of plant and machinery as on 1-1-2010 = 145800
Let Original cost of plant and machinery purchased on 1-1-2006 = x (say)
1-1-2007
Cost of machinery
X
31-12-2007
depreciation
10% of x = 0
...
10x = 0
...
9x = 0
...
9x – 0
...
81x
31-12-2009
depreciation
10% of 0
...
081x
1-1-2010
wdv
0
...
081x = 0
...
729x = 1,45,800
So x = Rs
...
1
...
2,00,000
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
In the above case
lets find out gross profit with the help of trading account
...
Particulars
62,000
_______
4,60,000
_______
Total
_______
4,60,000
_______
A trial balance is a list of all the General ledger accounts (both revenue and capital) contained in the
ledger of a business
...
The value of the nominal ledger will hold either a debit balance value or a credit
balance value
...
The purpose of a trial balance is to prove that
the value of all the debit value balances is equal the total of all the credit value balances
...
Balance (Rs
...
)
Capital
12,000
Sales
50,000
Purchases
30,000
Cash
5,700
Trade receivable
10,000
Trade payables(30000 – 10000 – 15000)
5,000
Expenses
19,300
Furniture
2,000
_______
_______
67,000
_______
67,000
_______
Total
Calculation of cash balance at the end:
Opening balance
10,000
Add:
Cash sales
5,000
Collection from receivables (50000 – 5000 – 10000)
35,000
40,000
Less:
Cash purchases
10,000
Payment to suppliers
15,000
Expenses paid
Cash balance at the end
26
...
Sometimes, it just so
happens that some events are either not recorded or it is recorded in the wrong head of account or wrong
figure is recorded in the correct head of account
...
These errors in accounting require rectification
...
Here new machine was purchased for Rs
...
10,000 and cash received from customers Rs
...
The fixed asset account is undercasted by 1,00,000 – 10,000 = Rs
...
And since cash
received from customers 11200 was omitted to be posted so the asset side is undercasted by Rs
...
Thus the difference in trial balance due to such errors will be 90,000 – 11,200 = Rs
...
792
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
27
...
2x
Cost = x – 0
...
8x = 11,500
or x = Rs
...
28
...
29
...
30
...
Directly attributable costs may include:
– Delivery costs
– Costs associated with acquiring the asset such as stamp duty and import duties
– Costs of preparing the site for installation of the asset
– Professional fees, such as legal fees and architects’ fees
Here A second hand car is purchased for Rs
...
00 the amount of Rs
...
00 is spent on its
repairs, Rs
...
00 is incurred to get the car registered in owner’s name and Rs
...
00 is paid as
dealer’s commission
...
12,700
...
Where interest on drawings is charged it is usually calculated at fixed rate percent from the date of each
drawing to the date the accounts are closed
...
The amount of interest is debited to partners drawings accounts and is credited to the interest
on drawings amount
...
Calculation of interest on drawings
Date of drawings
Number of months
Amount
Interest @ 6%
Jul 1
9
200
9
Aug 1
8
200
8
Sept 1
7
300
10
...
25
Feb 1
2
100
1
Total
32
...
75
Owner’s capital refers to the sum of the business resources owned by the business owners
...
When a business pays all its debts, the amount remaining
belongs to the business owner and it is the one that is referred to as Owners Capital or Owners Equity
...
58,300
Closing liabilities = Rs
...
53,600
Profit = Rs
...
38,600 = Rs
...
A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a
new entity and new assets by contributing equity
...
Total expenses on joint venture:
Freight by A = 3,000
Add:selling expenses by B = 5,000
Add:interest on loan by A = 18% of 50,000 for 1 month = 750
Add:interest on loan by B = 18% of 1,50,000 for 2 months = 4,500
Total expenses on joint venture = Rs
...
The cost of a fixed asset includes all amounts incurred to acquire the asset and any amounts that can be
directly attributable to bringing the asset into working condition
...
794
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Here A boiler was purchased from abroad for Rs
...
2,000, Import duty Rs
...
1,000
...
20,000
35
...
Value of inventory after being placed in the consignees godown
= Cost of Goods + Consignors Direct Expenses + Proportionate Consignee Direct Expense
The cost of the goods/stock implies the value at which the goods are consigned by the consignor to the
consignee
...
Moreover any direct expenses
incurred by the consignee in relation to the transportation of the goods, octroi duties, insurance in transit,
unloading charges etc
...
Therefore, the direct expenses incurred till that point would include the consignor expenses and that part
of the consignee expenses which relate to the expenses incurred till they are unloaded
...
Under WDV method, depreciation is charged at a fixed rate every year, on the reducing balance
...
Depreciation
1st year
Cost of machinery
WDV
80,000
1st year
8,000
72,000
2nd year
7,200
64,800
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
795
ANSWERS
3rd year
6,480
58,320
4th year
5,832
52,488
Balance of furniture account at the end of the fourth year will be: Rs
...
37
...
Consignment account
Date Particulars
To goods sent on
consignment A/c(50 × 350)
To bank-freight and insurance
Amount
Date Particulars
Amount
17,500
By B-sales
28,000
1,800
To B-selling expenses
900
To B-commission
To profit on consignment
38
...
Such differences may occur, for example, because a cheque or a list of cheques issued by the organization
has not been presented to the bank, a banking transaction, such as a credit received, or a charge made by
the bank, has not yet been recorded in the organisation’s books, or either the bank or the organization
itself has made an error
...
10 will be reduced from the balance, cheques paid in but dishonoured Rs
...
950 will also be added
...
Cost Price: The price, at which an article is purchased, is called its cost price, abbreviated as C
...
Selling Price: The price, at which an article is sold, is called its selling prices, abbreviated as S
...
Profit or Gain: If S
...
is greater than C
...
, the seller is said to have a profit or gain
...
7,500 were sold at 25% profit on selling price
...
25x
Sales = cost + profit
Or x = 7500 +
...
75x = 7,500
Or x = Rs
...
When the bill is payable at a stated number of days then the due date will be that day which comes after
adding the specified number of days to the date of the bill plus 3 more days of grace
...
The date of accepting the bill is 2
...
10
...
05
...
05
...
41
...
42
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
Profit and Loss Appropriation Account
(for the year ending on 31st March 2008)
Particulars
To net Profit transferred
Particulars
31,500
By Profit before adjustments
A
...
(31,500 × 2/7) = 9,000
B 10,000
C
...
So the amount to be sacrificed by A to make C’s profit as Rs
...
Will be = 7,500 – 4,500 = Rs
...
When a new partner is admitted in the firm, the existing/old partners have to sacrifice, what is given to
the new partner, from their future profits, the reputation they have gained in their past efforts and the side
of capital they have taken before
...
The compensation for such sacrifice can be termed as ‘goodwill’
...
Here the share in profit is 1/5th
The total value of goodwill = 60,000
Thus C’s share of goodwill brought by him = 1/5 of 60,000 = Rs
...
Under this method we calculate the average profits and then assess the capital needed for earning such
average profits on the basis of normal rate of return, such capital is called capitalized value of average
profits
...
To calculate
goodwill using average profit, the average net profit for a given number of past years are multiplied by an
agreed number of years
...
Here profit for the year = 20,000
Reasonable rate of return = 10%
Thus capitalized value of profit = 20,000 × 100/10 = 2,00,000
Capital employed = 1,50,000
Thus Goodwill = 2,00,000 – 1,50,000 = 50,000
...
Credit purchase of stationery worth Rs
...
47
...
48
...
49
...
All debentures are to be redeemed after a fixed period
...
The amount of discount on issue of debentures to
be written off each year is calculated as
Amount of discount to be written off annually
= Total amount of Discount/Number of years
2
...
In that case the amount of
debenture discount will be written off each year in proportion to the amount of debentures redeemed
...
So the amount of
debenture discount will be written off each year in proportion to the amount of debentures redeemed
...
12
...
12
...
12
...
12
...
12
...
50
...
51
...
52
...
The amount of discount allowed is debited to
Share Forfeited Account
...
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited
amount on such shares
...
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will
be profit for the company
...
In the above question discount on shares reissued = number of shares reissued × discount allowed per
share = 15 × 15 = Rs
...
300
The surplus amount to be transferred to capital reserve account = 300 – 225 = Rs
...
Total value of plant and machine purchased = Rs
...
900
Thus number of shares to be issued = 1,35,000/900 = 150 debentures
Face Value of debentures issued = 150 × 1000 = Rs
...
Thus Discount amount will be = 1,50,000 – 1,35,000 = Rs
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
799
ANSWERS
54
...
It is issued generally by a public company to
individuals/institutions who lend it money (invest in their debentures)
...
He cannot do so with a
debenture
...
if the debentures were originally issued at a discount and redeemed at
premium then the case of loss on issue of debentures arise
...
issued Rs
...
The discount on issue of debentures = 5% of 1,00,000 = Rs
...
10,000
Thus total loss on issue of debentures = 5,000 + 10,000 = Rs
...
55
...
56,000
56
...
e
...
The idea is that consignee should not know the actual cost of
the goods
...
Here the goods are sent to the consignee at cost + 25%
Cost of goods sent = Rs
...
A company may issue shares without cash to the promoters of the company for the services rendered by
them by debiting goodwill account
...
100 each were issued to a promoter of the
company for their legal services, rendered in the formation of the company
...
2,00,000
...
Salaries for the year ending 31st Dec 2009 = 10 × 1,000 = Rs
...
12,000
...
Fixed installment or straight line method depreciates cost evenly throughout the useful life of the fixed
asset
...
Residual Value is the estimated scrap value at the end of the useful life of the asset
...
Useful Life is the estimated time period an asset is expected to be used from the time it is available for
use to the time of its disposal or termination of use
...
10,00,000
Add: Installation charges = 1,00,000
Total cost of the machine = 11,00,000
Depreciation/year = 11,00,000 × 20% = Rs
...
Sum of the years’ digits depreciation method, like reducing balance method, is a type of accelerated
depreciation technique that allocates higher depreciation expense in the earlier years of an asset’s useful
life
...
Hence, for an asset that has a useful life of 6 years, the un-depreciated useful life to be used in calculating
depreciation shall be 6 years in the first year of depreciation, 5 years in the second year and so on
...
18,000
...
The amount spent on second hand car purchased recently is capital expenditure
...
Commission received in advance (belonging to some person) is a personal account
...
6% debentures is a liability and has credit balance
...
4
...
5
...
e
...
6
...
Wages and salaries is debited to Trading A/c
...
Income tax of proprietor is recorded as his personal expense i
...
drawings
...
Purchase of an asset on credit basis is recorded in Journal Proper
...
9
...
10
...
11
...
12
...
13
...
14
...
15
...
16
...
17
...
18
...
84,000 + 78,000 + 90,000 divided by 3 = Rs
...
19
...
20
...
A’s share = 3/6
B’s share = 2/6
New ratio will be 3/6 : 2/6 : 1/6
3 : 2 : 1
...
If depreciation is recorded by charging to asset, asset will appear at original cost less depreciation
...
The emphasis of the auditor is due to historical cost concept
...
Calculation of cash balance at the end:
Opening balance
10,000
Add:
Cash sales
Collection from receivables (50,000 – 5,000 – 10,000)
5,000
35,000
40,000
Less:
Cash purchases
10,000
Payment to suppliers
15,000
Salaries paid
3,000
Rent
2,400
Stationery
900
Miscellaneous expenses
1,000
Machine purchased
8,000
Drawings
4,000
Cash balance at the end
44,300
_______
5,700
_______
Option (d) is correct
...
Gross profit is a company’s revenue minus its cost of goods sold
...
Cost of goods sold is the direct costs attributable to the production or purchase of the goods sold by a
company
...
Here gross profit = sales revenue – cost of goods sold = 5,00,000 – 3,10,000 = Rs
...
25
...
Sometimes, it just so
happens that some events are either not recorded or it is recorded in the wrong head of account or wrong
figure is recorded in the correct head of account
...
These errors in accounting require rectification
...
Here bills received was passed through bills payable so bills received account is undercasted and bills
payable account is overcasted and Arun A/c also needs rectification
...
5,000
B/P A/c
Dr
...
10,000
At the time of sale of the machinery the depreciation provision of the machinery is to be deducted from
the original value of machine and all the expenses associated to promote the sale of machine is deducted
from the sale proceeds
...
1,130
...
Adjustment entry for interest earned but not received will be to debit Accured Interest (as asset) and to
credit interest income
...
Sale or return is a term sale, where the seller sold goods on the basis of return, there might be a chance
of return of goods, or acceptance of goods, or acceptance of part of goods
...
When the transactions of sending the goods on sale or return basis are few, the seller may treat it as
normal sale and record it in the books accordingly
...
When the goods sent on sale or approval basis
are treated as sale, for the goods not yet approved, the sale entry is reversed at the year end
...
2x = 600
Or 1
...
2 = Rs
...
Manager’s commission is calculated in two ways
1
...
On Profits after charging such commission:
Manager’s commission = Net Profits × (Percentage of commission / 100 + % of commission)
Here the managers commission is 5% of net profit after charging such commission
So the managers commission will be = (48,000 – 6,000) × (5/105) = Rs
...
Manager’s commission is calculated in two ways
1
...
On Profits after charging such commission:
Here commission is 5% on net profit before charging such commission
So the commission of the manager will be = (48,000 – 6,000) × 5/100 = Rs
...
Cost price is also known as cp
...
The cost is the total outlay required to
produce a product or carry out a service
...
Total sales were of Rs
...
Let cost price = x (say)
The selling price = cost price + 60% of cost price
Thus 16000 = x + 60% of x
Or 1
...
6 = Rs
...
Cost price is also known as cp
...
The cost is the total outlay required to
produce a product or carry out a service
...
Here trader sells goods at a profit of 25% on sale
...
75x
Or x = 34,200/0
...
45,600
And profit = 25% of 45,600 = Rs
...
Cost price of goods = 40,000
Let sale price = x(say)
Thus sale price – profit = x – 20% of x = 40,000
Or 0
...
8 = Rs
...
Commission = 5% of 50,000 = Rs
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
805
ANSWERS
34
...
Gross profit is a company’s residual
profit after selling a product or service and deducting the cost associated with its production and sale
...
It excludes indirect expenses such as distribution costs and sales force cost
...
Net profit is calculated by subtracting a company’s total expenses from total revenue, thus showing
what the company has earned (or lost) in a given period of time (usually one year)
...
Here net profit = gross profit – General expenses – Discount allowed – Rent paid – Electric charges –
Salaries = 14,670 – 800 – 200 – 3,710 – 190 – 1,110 = Rs
...
Owner’s capital refers to the sum of the business resources owned by the business owners
...
When a business pays all its debts, the amount remaining
belongs to the business owner and it is the one that is referred to as Owners Capital or Owners Equity
...
36
...
Such differences may occur, for example, because a cheque or a list of cheques issued by the organization
has not been presented to the bank, a banking transaction, such as a credit received, or a charge made by
the bank, has not yet been recorded in the organisation’s books, or either the bank or the organization
itself has made an error
...
Particulars
Amount
Balance as per cash book (cr)
Amount
4,500
Add:
Cheques deposited in the Bank but not cleared
806
© The Institute of Chartered Accountants of India
6,225
6,225
Common Proficiency Test (CPT) Volume - I
Less:
Cheques drawn but not presented for payment
10,250
Balance as per pass book (dr)
10,250
475
37
...
The provision is the
estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet
collected
...
Trade receivables will appear in balance sheet at Rs
...
9)
...
Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in
the double-entry accounting system
...
Trial balance of…
...
Cr
...
Rs
...
A Bank reconciliation is a process that explains the difference between the bank balance shown in an
organisation’s bank statement, as supplied by the bank, and the corresponding amount shown in the
organization’s own accounting records at a particular point in time
...
bank reconciliation statement of …
...
527
_____
Sometimes, acceptor of a bill finds himself unable to meet his acceptance on the due date
...
The acceptor in this case will of course have to pay interest for the extended period
...
The
advantages of noting is that the evidence of dishonored is secured
...
For doing all this the notary
public charges his fees which is called noting charges
...
Here Total amount of the R’s acceptance = 1,000
Amount paid = 500
Amount of the renewed bill = Rs
...
Amount recovered = 40% of 500 = Rs
...
300
...
The goods are consigned from one place to another
...
It is natural that some loss to the goods
may take place within that period
...
The loss which could be avoided by proper planning and care are abnormal loss
...
These losses could occur in transit or in consignee’s
store and solely to be borne by consignor
...
The valuation of
abnormal loss is done on the same basis as the unsold stock is valued
...
80 each
...
1,000 and cartage Rs
...
B received only 900 sets as 100 sets were destroyed in
transit
...
Valuation of damage
Cost of 1000 transistors sent = 80000
Add:freight and insurance = 1,000
Add:cartage = 45
Total cost of 100 packets sent = 81,045
So the cost of 15 packets destroyed = 81,045 × 100/1,000 = Rs
...
50
42
...
Since the goods have reached the consignees godown, we can consider the consignor expenses
on the goods to have been incurred
...
, would also have to be considered
as having been incurred on the goods
...
Now the cost of the 200 chairs received by the consignee = 60,000
Rs
...
15,200
...
A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a
new entity and new assets by contributing equity
...
Profit on venture can be ascertained with the help of the joint venture account
...
When the
goods are sold, the amount thereof is debited to the coventurer’s account or the joint bank account and
credited to the joint venture account
...
, the value will
be debited to the account of the party concerned and credited to the joint venture account
...
Joint venture A/c
Date Particulars
Amount
Date Particulars
Amount
To C-purchases
80,000
By D-sales
1,88,500
To C-reconditioning expenses
43,500
To C-purchase commission
2,000
To C-miscellaneous exp
...
________
1,88,500
________
________
1,88,500
________
Profit and Loss Appropriation Account
(for the year ending on 31st March 2009)
Particulars
To net Profit transferred
Particulars
40,000
By Profit before adjustments
40,000
A
...
(40,000 × 4/10 = 16,000) – 500
= 15500
C
...
810
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
So the amount to be sacrificed by A and B equally to make C’s profit as 5000Rs
...
1,000
A’s sacrifice = 500
B’s sacrifice = 500
45
...
1,200
And Roopa’s account was credited less by (5,400 – 4,500) = Rs
...
600
So the adjusting ebtry will be
Interest on partners account…
...
cr
To Mala’s Current A/c…
...
cr
46
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
47
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
48
...
The average is then multiplied by the agreed number of years
...
Goodwill = Average Profits X Number of years of Purchase
Before calculating the average profits the following adjustments should be made in the profits of the firm:
(a) Any abnormal profits should be deducted from the net profits of that year
...
(c) Non operating incomes e
...
Income from investments etc should be deducted from the net profits of
that year
...
34,000
Goodwill = 34,000 × 3 = Rs
...
Under this method we calculate the average profits and then assess the capital needed for earning such
average profits on the basis of normal rate of return, such capital is called capitalized value of average
profits
...
To calculate
goodwill using average profit, the average net profit for a given number of past years are multiplied by an
agreed number of years
...
Here profit for the year = 72,000
Reasonable rate of return = 10%
Thus capitalized value of profit = 72,000 × 100/10 = 7,20,000
Capital employed = assets – current liabilities = 9,70,000 – 4,00,000 = 5,70,000
Thus Goodwill = 7,20,000 – 5,70,000 = Rs
...
Bill payable discounted in cash by supplier will not affect us
...
51
...
The new partner when admitted, has to compensate for all these
sacrifices made by the old ones
...
Hence, at the time of admission of the new partner, it is necessary to account the valuation of goodwill in
the firm
...
40,000
This combined capital constitutes 4/5 th of the total capital
So total capital of the firm will be = 40,000 × 5/4 = Rs
...
10,000
52
...
2,25,000
Thus combined capital of X and Y = 2,25,000 × 2/3 = Rs
...
90,000
So cash to be paid back to X = 1,20,000 – 90,000 = Rs
...
When the shares forfeited are reissued at discount, Bank account is debited by the amount received and
Share capital account is credited by the paid up amount
...
This is for adjusting the amount of discount so allowed from the amount
forfeited at the time of forfeiture
...
In that case the share forfeited account after reissue will show a zero balance
...
This profit is a capital gain to the company and is transferred to Capital
Reserve account
...
3,200
The surplus amount to be transferred to capital reserve account = Rs
...
This is the case of Reissue of forfeited shares at premium and at par, originally issued at par
In this case the whole of the amount that has been credited to Shares Forfeited A/c is transferred to
Capital Reserve A/c on the reissue of such shares
...
forfeited 800 shares of Rs
...
3 per share
...
11 per share fully
paid up
...
1,500
55
...
90,000
Amount to be paid by issue of shares = 90,000
Value per share = Rs
...
Remaining amount to be paid by issue of 12% debentures = 4,00,000 – 1,30,000 = 2,70,000
Value per debenture after discount = Rs
...
3,00,000
Thus Discount amount will be = 3,00,000 – 2,70,000 = Rs
...
57
...
100 ×
...
100 ×
...
14,000
...
Dividends payable are dividends that a company’s board of directors has declared to be payable to its
shareholders
...
Here dividend payable will be 15% of (Equity share capital called up – Calls in arrear ) = 15% of
(1000000 – 10000) = Rs
...
Profit or loss is equal to closing capital + drawing less (addition during year and opening capital)
...
Goods are normally sent on cost price to the consignee but some time the consignor makes the invoice at
the selling price i
...
proforma invoice price
...
In such cases the entries are made by the consignor in his books at the invoice price
...
7,500, at a proforma
invoice price of 25% profit on sales to his agent Anil of Allahabad
...
For the goods sent on consignment (at invoice price)
Consignment to
...
Dr
...
75)
10,000
2
...
A/c
(25% of 10000)
2,500
3
...
Dr
...
Amount spent is capital expenditure as it has increased ful efficiency of Rings and Pistons
...
Bad debts is in nature of expense, hence nominal account
...
Expired portion of capital expenditure is expense
...
4
...
e
...
10
...
5
...
6
...
Carriage inward, prepaid insurance, bills receivable
all have debit balances
...
Depreciation @ 10% for half year = Rs
...
loss on sale = 31,000 (Rs
...
64,000)
...
Three column cash book records cash, bank and discount
...
Value of an asset after reducing depreciation is called book value
...
Trial balance may be prepared by all the methods
...
Selection of accounting policy is based on prudence, substance over form and materiality
...
Current cost, Historical cost and Realizable value all are valuation principles
...
Profit/loss on revaluation is shared among the old partners in old profit ratio
...
At first, revaluation account is prepared at time of admission of a partner for revaluation of assets/
liabilities
...
Amount payable is received by executor of the dead partner
...
Rate of depreciation is 9%
...
450 per year (Rs
...
17
...
18
...
19
...
20
...
21
...
22
...
Shares of public companies are listed
...
A balance sheet is also known as the statement of financial position tells about the assets, liabilities and
equity of a business at a specific point of time
...
A balance sheet is an extended form of the accounting equation
...
X
Balance Sheet as on December 31st,2009
Liabilities
Amount
Assets
Amount
Capital
Add: Net profit
Less: Drawings
(1,55,000 + 22,000 – 12,000)
1,65,000
Plant and machinery
60,000
Furniture
10,000
Bills payable
10,000
Goodwill
70,000
Bank overdraft
15,000
Investments
25,000
Trades payable
45,000
Closing inventory
25,000
5,000
Trade receiveble
35,000
Bills receivables
9,000
Cash
6,000
Total
2,40,000
Outstanding expenses
Total
24
...
Gross profit is a company’s residual
profit after selling a product or service and deducting the cost associated with its production and sale
...
It excludes indirect expenses such as distribution costs and sales force cost
...
11,000
25
...
Here net profit = gross profit – salaries – interest on overdraft – office expenses – rent paid – general
expenses – advertisement + commission received = 35,000 – 4,000 – 200 – 5,000 – 2,000 – 5,100 – 5,000
+ 4,000 = Rs
...
26
...
Here Capital 50,000 Income tax paid 10,000 and Income tax advance payment is Rs
...
So Capital A/c balance will be = 50,000 – 10,000 – 1,600 = Rs
...
Common Proficiency Test (CPT) Volume - I
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817
ANSWERS
27
...
The provision is the
estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet
collected
...
In accounting, provision for discount on trade receivables shows the reserve amount for adjusting loss
due to discount allowed to our trade receivables
...
So, businessman accepts less money than actual from those customers who will pay
before maturity of debt
...
So, these provision will be called provision for discount on trade receivables
...
570
...
Claim for compensation under dispute is contingent liability
...
Expenses which have been incurred but not been paid for till the end of the accounting year are known
as Accrued expenses or outstanding expenses
...
900
Interest on loan paid = 600
Thus Outstanding interest on loan will be Rs
...
Sale or return is a term sale, where the seller sold goods on the basis of return, there might be a chance
of return of goods, or acceptance of goods, or acceptance of part of goods
...
When the transactions of sending the goods on sale or return basis are few, the seller may treat it as
normal sale and record it in the books accordingly
...
When the goods sent on sale or approval basis
are treated as sale, for the goods not yet approved, the sale entry is reversed at the year end
...
5,000 on “Sale on approval” basis for which consent
of the customer was not received upto Dec
...
Thus this entry will be reversed and the amount will be
included in inventory at cost
...
5,000
Cost + 25% of cost = 5,000
Or
125% of cost = 5,000
Inventory on approval will be = Cost = 5,000/125% = Rs
...
Opening balance of tools = 4,320
Add: Tools purchased = 1,440
Less closing balance of tools account = 4,680
Depreciation = Rs
...
Calculation of interest on loan
Date
Amount
Interest @ 9% pa
30
...
2009-30
...
2009
Amount of loan
15000
337
...
6
...
9
...
1
...
6
...
Particulars
1867
...
Sometimes, it just so
happens that some events are either not recorded or it is recorded in the wrong head of account or wrong
figure is recorded in the correct head of account
...
These errors in accounting require rectification
...
Here bills received was passed through bills payable so bills received account is undercasted and bills
payable account is overcasted
...
1,000
B/P A/c
Dr
...
2,000
In financial accounting, every single event occurring in monetary terms is recorded
...
Whatever the reason may be, there is always a chance
of error in the books of accounts
...
When there is a
difference in a trial balance a suspense account is opened with the amount of the difference so that the
trial balance agrees (pending the discovery and correction of the errors causing the difference)
...
151 was entered in the Purchase Book as Rs
...
51 thus purchase account is undercasted by 151 – 15 = 136Rs
...
100 rectifying entry will be
Purchase A/c
Dr
...
36
...
so the difference in trial balance
is due to wrong placing of this account
...
______
7,800
______
A Bank reconciliation is a process that explains the difference between the bank balance shown in an
organisation’s bank statement, as supplied by the bank, and the corresponding amount shown in the
organization’s own accounting records at a particular point in time
...
Bank reconciliation statement of …
...
9,500
______
A Bank reconciliation is a process that explains the difference between the bank balance shown in an
organisation’s bank statement, as supplied by the bank, and the corresponding amount shown in the
organization’s own accounting records at a particular point in time
...
820
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
Bank reconciliation statement of …
...
Remuneration paid for services is called commission
...
Over-riding
commission is an extra commission allowed to the consignee in addition to the normal commission
...
Here Ram, the manager, is entitled to get a commission of Rs
...
125 per
article sold
...
73,800
...
Let the total commission be x (say)
Extra commission = 1/4 (sales proceeds – x – 125 × articles sold) = 1/4 of (73,800 – x – 125 × 450)
Or x – 11250 = 1/4 (17,550 – x)
Or x – 11250 = 4,387
...
5 + 11,250 = 15,637
...
12,510
40
...
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
821
ANSWERS
Consignment account
Date Particulars
To goods sent on
consignment A/c(100 × 500)
To bank-packing charges
Amount
Date Particulars
50,000
By Nirmal-sales (60 × 700)
600
To nirmal-cartage
600
To Nirmal-godown charges
21,440
400
To bank-freight
42,000
By closing inventory
2,000
To bank-forwarding charges
Amount
500
To Nirmal-commission
(6% of 42,000)
To profit on consignment
2,520
6,820
______
______
63,400
______
63,400
______
Valuation of closing inventory:
Cost of goods consigned = 50,000
Add: packing and dispatch = 2,000
Add: freight = 600
Add: forwarding charges = 400
Add: cartage by consignee = 600
Total cost = 53,600
Cost of unsold goods = 53,600 × 40/100 = 21,440
41
...
The treatment of normal loss is to charge it to consignment account
...
Value of inventory is inflated to cover the normal loss
...
No separate entry is made in the books of consignor in case of normal
...
The value of unsold stock on consignment
is increased because the value of stock is the proportion of the cost of the goods consigned and direct
expenses that the quantity of inventory bears to the total quantity of goods consigned as diminished by the
normal loss of goods
...
of Nagpur consigned D of Delhi 1,000 Kgs
...
13 per Kg
...
750 on cartage, Insurance and freight
...
of oil was spoiled (Normal loss) D spent Rs
...
His selling expenses
were Rs
...
of oil sold
...
14,250
Value of closing inventory = units of unsold inventory × (original cost of goods consigned + direct expenses)/
(total units – units lost)
= 150 × 14,250/950 = 2,250Rs
...
In case of revaluation, the depreciation is calculated on the total revalued amount over a period of
balance useful lives assessed on the date of revaluation
...
Along with this, the revaluation
reserve is amortised to the income statement based on the useful life of the asset to which it relates
...
Date
Particular
Amount
Cost of machinery
Less
1,35,000
Depreciation for 5 years on straight line basis
(1,35,000 – 5,000)/10 × 5 =
65,000
End of 5th year Wdv of the machinery
6th year
Depreciation
Amount
70,000
(70,000 – 5,000)/8
8,125
43
...
44
...
They exercise control over the enterprise and consequently
share revenues, expenses and assets
...
Goods bought on joint venture as well as expenses incurred in connection with the business are debited
to the joint venture account and credited to the coventurer’s account or the joint bank account
...
If the parties have taken over plant or materials etc
...
The joint
venture account will now show profit or loss which will be transferred to the personal accounts of the
respective parties in their profit sharing ratio
...
Owner’s capital refers to the sum of the business resources owned by the business owners
...
When a business pays all its debts, the amount remaining
belongs to the business owner and it is the one that is referred to as Owners Capital or Owners Equity
...
3,430
46
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
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© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
47
...
Thus change in profit sharing ratio is an important aspect to be considered on reconstitution by
admission
...
The
existing partners may decide to change their profit sharing ratio for various reasons
...
The sacrifice of one or a group of partners becomes the gain of the
remaining partners
...
48
...
In this method
each year profit is assigned a weight i
...
1, 2, 3, 4 etc
...
The total of products is divided by the total of weight
...
After this the value of goodwill is calculated to multiplied the weight average
profit into the agreed number of year’s purchase
...
Latest year profit is assigned the highest weight
...
1,31,200
Common Proficiency Test (CPT) Volume - I
© The Institute of Chartered Accountants of India
825
ANSWERS
49
...
The new partner when admitted, has to compensate for all these
sacrifices made by the old ones
...
Hence, at the time of admission of the new partner, it is necessary to account the valuation of goodwill in
the firm
...
This combined capital constitutes 4/5 th of the total capital
So total capital of the firm will be = 1,76,400 × 5/4 = Rs
...
44,100
...
Closing inventory is the amount of inventory that a business still has on hand at the end of a reporting
period
...
2,16,000
Thus closing inventory = purchases – cost of goods sold = 3,00,000 – 2,16,000 = Rs
...
51
...
So he may
approach the drawer of the bill before the maturity date arrives, to cancel the old bill and draw a new bill
with extended date
...
When a bill of exchange is dishonored, the holder can get such fact noted on the bill by a notary public
...
The noting is done by recording
the fact of dishonored, the date of dishonor, the reason of dishonor, if any
...
In case the bill is renewed the interest will not be charged on the noting charges which will be treated
separately and will not be clubbed with the amount of the bill
...
1,550
52
...
10,000
...
6,000 again in cash for salary he got
Rs (6,000 + 6,000 – 10,000) = 2,000 excess salary so it should be debited to salaries paid in advance as
per the matching principle
...
Bills of exchange is a financial service, where the Bank purchases drawn bills, from the domestic trade
transactions, confirmed in particular with an invoice - with right of recourse to you - and credits you with
826
© The Institute of Chartered Accountants of India
Common Proficiency Test (CPT) Volume - I
the amount of the bill of exchange less discount interest and additional costs related to the bill, accrued in
advance from the discount date to the bill payment term
...
600
...
Amount received on application = 14,000 × 30 = Rs
...
4,90,000
Amount received on first and final call = 13,800 × 35 = Rs
...
1,39,3000
55
...
100 × 8 (2
...
50 + 3) = Rs
...
56
...
The amount of discount allowed is debited to
Share Forfeited Account
...
Now the amount of discount allowed on reissue of shares at the most can be equal to the forfeited
amount on such shares
...
But in case, this amount of discount is less than the amount forfeited, the remaining forfeited amount will
be profit for the company
...
In the above question discount on shares reissued = number of shares reissued × discount allowed per
share = 500 × 2 = Rs
...
Amount available for the reissued shares in shares forfeiture account = number of shares reissued ×
amount forfeited per share = 500 × (8) = Rs
...
3,000
...
Total value of business purchased = Rs
...
110
Thus number of debentures to be issued = 3,30,000/110 = 3,000 debentures
58
...
The amount of the premium payable is debited to Loss on Issue of Debentures A/c at the time of issue
of debentures
...
Common Proficiency Test (CPT) Volume - I
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827
ANSWERS
So here the Loss on issue of debentures will be = 5% of 2,00,000 = Rs
...
The amount of debenture discount can be written off in two ways :
1
...
When the debentures are to be redeemed after
a fixed period, the amount of discount will be distributed equally within the number of years spreaded
between the issue of debentures and their redemption
...
Debentures are redeemed in instalments
Debentures may also be redeemed in instalments but over a fixed period
...
Here On 1st Jan
...
issued 14% Rs
...
Total discount = 6% of 1,00,000 = Rs
...
1,200
60
...
1,00,000 at a discount of 6% on
Jan
...
These debentures are redeemable by annual drawings of Rs
...
each year
...
Total discount = 6% of 1,00,000 = Rs
...
12
...
12
...
12
...
12
...
12
...
400