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15th October 2014, 04:13 PM
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Join Date: Apr 2013
Re: IAF CET Exam Solved Question Papers

As you are looking for the last year solved question paper of Indian Air Force Common Entrance test (IAF – CET) Exam, so here I am sharing the same with you

1. Depreciation Accounting is a process of:
(a) allocation of cost
(b) valuation of assets
(c) provision for replacement of assets
(d) estimation of net profit
Ans. (a)

2. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Amortisation 1.Diminution of the life of the asset due to excessive use.
B. Depreciation 2.Exhaustion of natural resources
C. Depletion 3.Expiration of tangible assets
D. Obsolescence 4.Expiration of intangible. assets
5. Economic deterioration due to improved inventions
Codes:
A B C D
(a) 1 2 3 4
(b) 1 2 4 5
(c) 5 2 3 4
(d) 4 3 2 5
Ans. (d)

3. Given that the value of furniture on 1.1.93 is Rs.8000, furniture purchased during the year is Rs. 4,000 sale of furniture on no loss no profit basis is Rs. 2,000 and the furniture is valued at Rs. 7000 on 31.12.93, the depreciation for the year 1993 will be:
(a) Rs. 1000
(b) Rs. 3000
(b) Rs. 5,000
(c) Rs. 7,000
Ans. (b)

4. Which one of the following methods of inventory valuation matches current cost with current revenues?
(a) Last In first Out
(b) First In First Out
(c) Simple average
(d) Weighted average
Ans. (a)

5. Which of the following statements are correct?
1. Inventory includes raw materials, finished goods and goods in process.
2. Inventory is a part, of the working capital.
3. Inventory includes goods likely to be purchased in the coming months.
Select the correct answer using the codes given below:
(a) 1, 2 and 3
(b) 2 and 3
(c) 1 and 3
(d) 1 and 2
Ans. (d)

6. The success of perpetual inventory system depends upon:
(a) placing order for materials at regular intervals
(b) exercising control over the issue of materials
(c) recording the receipt and issue of materials immediately after each transaction
(d) recording the receipt of materials by storekeeper in the ‘Bin Cards’.
Ans. (c)

7. A person starts a business with a capital of Rs. 45000.
He purchases goods on credit worth Rs. 5,000.
These transactions can be expressed in an Accounting Equation as:
(a) Rs. 5,000 = Rs. 50,000-Rs. 45,000
(b) Rs. 50,000 = Rs. 50,000 + 0
(c) Rs. 50,000 = Rs. 45,000 + Rs. 5,000
(d) Rs. 45,000 = Rs. 50,000 – Rs. 5,000
Ans. (c)

8. Which of the following are applicable to Sinking Fund Method of depreciation?
1. Periodic depreciation is smaller than the asset’s actual annual depreciable cost.
2. Amount of the interest constantly declines due to asset’s reducing balances.
3. Annual net incidence on P/LA/c remains constant due to incorporation of only fixed depreciation.
4. Periodic depreciation is recorded through the Asset Account.
Select the correct answer using the codes given
Codes:
(a) 2 and 4
(b) 1 and 3
(c) l, 2and3
(d) 2, 3 and 4
Ans. (b)

9. The value of which one of the following assets increases in the initial years of its life remains constant Thereafter and finally begins to decline?
(a) Livestock
(b) Patents
(c) Goodwill
(d) Machinery
Ans. (b)

10. Consider the following factors:
1. Margin of safety
2. Lead time
3. Ordering Cost
4. Economic Order Quantity
5. Average Quantity Consumed
6. Storage Cost
The ordering level is fixed by taking into account.
(a) 1, 4 and 6
(b) 1.2 and 5
(c) 2, 3 and 4
(d) 3, 5 and 6
Ans. (b)

11. Match List-I with List-II and select the correct answer using the codes given below the list:
List-I List—II
(Accounting (Principle involved)
Concept)

A. Consistency 1.Losses are anticipated and accounted for in advance but
profits are not accounted for until realized.
B. Comparability 2. All the relevant financial information should be summarized and
presented in the accounting statements.
C. Conservatism 3. Accounting procedures in an entity should be followed
uniformly from period to period.
D. Disclosure 4. Accounting statements of different periods of an entity and those
of different entities of a period should be based on the same
accounting principles and procedures.

5. Personal judgment of accountants should not influence
accounting measurements.

Codes:
A B C D
(a) 4 3 5 2
(b) 3 4 1 2
(c) 4 3 1 5
(d) 3 4 2 5
Ans. (b)

12. Which one of the following should be considered as revenue expenditure?
(a) Rs.1000 paid for the erection of a new plant
(b) Cost of Rs. 10,000 incurred in increasing the sitting accommodation of a hotel
(c) Damages paid on account of breach of a contract to supply certain goods
(d) Repairs to machinery purchased second hand.
Ans. (c)

13. The written down value of a plant is Rs. 6,000 (the original value being Rs. 10,000). It is sold for Rs. 12000 during the current financial year. Which one of the following is true in this regard?
(a) Capital Profit = Rs. 6,000
(b) Revenue Profit = Rs. 6,000
(c) Capital Profit = Rs. 2,000 and Revenue Profit = Rs.4000
(d) Capital Profit = Rs. 12,000
Ans. (c)

14. Match List-I (Item of expenditure / receipt) with List-II (Nature of expenditure / receipt) and select the correct answer using the codes given below the lists:

List- I List – II
A. Carriage charges on a new machine 1. Revenue Receipt
purchased for factory
B. Legal expenses incurred in defending 2. Revenue Expenditure
a case of violation of a provision of Factories
Act
C. Grant in aid re from the Government for the 3. Deferred Revenue Expenditure
construction of a building
D. Amount received for a part of the office 4. Capital Expenditure
building sub-let
5. Capital Receipt
Codes:
A B C D
(a) 2 3 1 5
(b) 4 2 5 1
(c) 3 4 1 5
(d) 4 3 1 5
Ans. (b)

15. Profit under single entry system of book keeping means:
(a) the difference between opening and closing cash balances as reduced by fresh capital introduced.
(b) the difference between opening net assets and closing net assets as increased by drawings and reduced by new capital introduced.
(c) Profit shown by Trading and Profit and Loss Account and Balance Sheet.
(d) The amount of closing cash balance as reduced by expenses.
Ans. (b)

16. Given that:
Opening Capital : Rs.5, 000
Closing Capital : Rs.6, 000
Drawings : Rs.1, 000
New capital Invested: Rs. 500
the profit for the year will be:
(a) Rs. 2,000
(b) Rs. 1,500
(c) Rs. 1,000
(d) Rs. 500
Ans. (b)

17. Which of the following are prepared by the organizations keeping only incomplete accounting records?
I. Cash Book
II. Customers’ Accounts
III. Expenses Accounts
IV. Day Books
Choose the correct answer using the codes given below:
(a) I, II and III
(b) 1, II and IV
(c) I, III and IV
(d) I III and IV
Ans. (b)

18. Match List-I (Financial Statements and Accounts) with List-II (Special matters associated with Statements and Accounts) and select the correct answer using the codes given below the list:
List-I List-II
A. Receipts and Payments Account 1. Revenue
B. Income and Expenditure Account 2. Cash
C. Dividend Equalization Reserve 3. Liability
D. Club Subscription Received in Advance Account 4. Balance Sheet
5. General Reserve
Codes:
A B C D
(a) 2 1 4 3
(b) 3 2 4 5
(c) 2 1 5 3
(d) 1 2 4 5
Ans. (c)

19. Interim payments to partners of a dissolved partnership firm are made according to the:
(a) assumption that remaining unrealized assets would be able to realize their book value
(b) balances of capital of the partners
(c) existing profit-sharing ratios of the partners
(d) assumption that the realizable value of the remaining assets is zero
Ans. (d)

20. A, B and C are partners in a business sharing profit in the ratio of 2:2: 1. C dies on 31.3.94. The profits for the Financial Year 1993-1994 (April-March) is Rs. 64,000. The share of the deceased partner in the profits for the year will be Rs:
(a) 12,800
(b) 9,600
(c) 6,400
(d) 3:200
Ans. (a)

21. A and B are partners sharing profits and losses in the ratio of 2: 5. They admit C on the condition that he will bring good will in cash which is distributed between A and B. C’s share in future profit and losses is to be 1, The new profit sharing ratio of A, Band C will be:

(a) 6: 15:7
(b) 15:6:7
(c) 7:6: 15
(c) 6: 7: 15
Ans. (a)

22. In a common size Balance Sheet each item expressed as a percentage of:
(a) Equity Capital
(b) Debt Capital
(c) Fixed Assets
(d) Total Assets
Ans. (a)

23. Which of the following pairs is/are correctly matched?
1. Sinking Fund: Replacement of wasting assets
2. Secret Reserve: Overvaluation of liabilities
3. General Reserve: Provision for drop in value of assets
Select the correct answer using the codes given below codes:
(a) 1, 2 and 3
(b) 1 and 3
(c) 2 alone
(d) 1 alone
Ans. (c)

24. Match List-I and with List-land select the correct answer using the codes given below the lists:

List-I List-II
A. Dividend 1. Accumulated Reserves
B. Interest 2. Always paid whenever the firm makes a profit
C. Bonus shares 3. Can be used for issue of Bonus shares
D. Premium on share Price 4. Can be paid out of capital
5. Divisible part of profit
Codes:
A B C D
(a) 2 1 5 4
(b) 5 4 1 3
(c) 5 1 2 4
(d) 2 5 1 3
Ans. (b)

25. An estimate of the assets and liabilities of a firm as on a given date is called:
(a) Balance sheet
(b) Statements of Affairs
(c) Statement of Capital
(d) Income Statement
Ans. (b)

26. A provision is a:
(a) General Reserve
(b) Specific Reserve
(c) Capital Reserve
(d) Contingency Reserve
Ans. (b)

27. ‘Final Accounts’ of a Manufacturing company generally include the following types of documents:
1. Balance Sheet
2. Manufacturing Account
3. Profit and Loss Account
4. Trading Account
5. Profit and Loss Appropriation Account
The correct sequence in which these documents are prepared is:
(a) 1, 4, 3, 2, 5
(b) 2, 4, 3, 5, 1
(c) 1, 2, 4, 3, 5
(d) 2, 4, 5, 3, 1
Ans. (b)

28. While preparing Annual Financial Statements, the balance of Bill Receivable A/c can be treated as:
1. an Accrued Income
2. an item of Assets
3. a” Personal Account” balance
Of these statements
(a) 2 and 3 are correct
(b) 1 and 3 are correct
(c) 1and 2 is correct
(d) none is correct
Ans. (a)

29. While preparing the Annual Financial Statements, the balance of Prepaid Rent A/c should be treated as the balance of a:
(a) personal account
(b) real account
(c) nominal account
(d) deferred expenditure Account
Ans. (a)

30. Advance received from customers is:
(a) an item of current liability
(b) an item of non-current asset
(c) an item of contingent liability
(d) an item of non-cash cost
Ans. (a)

31. Which one of the following statements is incorrect?
(a) Share premium received on issue of shares can be utilized for writing off the preliminary expenses of the company
(b) Capital Redemption Reserve is available only for issuing fully paid bonus shares
(c) Discount on issue of shares is shown as a reduction from Capital Account in the Balance Sheet
(d) At the time of Rights issue, the existing shareholders gain because the shares are generally issued at a price lower than the market price.
Ans. (c)

32. The directors of a limited company resolved to forfeit 1,000 equity shares of Rs.10 each, Rs. 7.50 paid up, for non-payment of the final call money of Rs. 2.50 per share. 700 of these shares were re-issued at Rs. 7 per share. The amount to be transferred to the Capital Reserve Account would be:
(a) Rs. 2,500
(b) Rs. 3,150
(c) Rs. 3,500
(d) Rs. 3750
Ans. (b)

33. The nominal and book value of Sinking Fund Investments Account are respectively Rs. 100,000 and Rs. 96,000; The company has sold investments of the nominal value of Rs. 20,000 at a price that was sufficient to redeem the debentures of Rs. 20,000 at Rs. 102. The profit on sale of investments is:
(a) Rs. 800
(b) Rs. 1,000
(c) Rs. 1,200
(d) Nil
Ans. (c)

34. A company’s Balance Sheet inter alia contains Rs. 1, 60,000 fully paid 10% redeemable preference shares, Rs. 1,000 as shares Premium and Rs. 1, 31,000 as Revenue Reserves. It resolves to immediately redeem the above mentioned shares at 5% prem. by maximum utilization of earnings from fresh issue. If the issue is made at 20% premium, the MINIMUM amount of Fresh equity issue proceeds will be:

(a) Rs. 28,800
(b) Rs. 32,000
(c) Rs. 36,000
(d) Rs. 37,000
Ans. (c)

35. The following accounting entries are required in connection with the allotment of shares of a company:
1. Adjustment entry in respect of the discount allowed, if any, on the issue of shares.
2. Transfer entry for the application money received on shares allotted.
3. Adjustment entry for the excess application money, if any, being adjusted against the allotment money due:
The correct sequence of these entries is:
(a) l, 2
(b) 2,
(c) 2, 3, 1
(d) 3, 2, 1
Ans. (c)

36. When shares are forfeited, called up amount on shares is debited to
(a) Forfeiture Account
(b) Capital Reserve Account
(c) General Reserve Account
(d) Capital Account
Ans. (d)

37. Which one of the following statements is NOT correct?
(a) Bonus shares can be issued out of General Reserves
(b) Bonus shares can be issued in lieu of dividends
(c) Bonus shares can be issued even if the shares of the company are partly paid up
(d) Bonus shares can be issued even if there is a default in the payment of any term loans outstanding to any Public Financial Institution
Ans. (c)

38. Operating Ratio is given by:

(a) Total Operating Profit
Total shareholders’ Equity
(b) Total Operating Cost
Total Operating Revenue
(c) Total Operating Cost
Total Capital Employed
(d) Total Operating Profit
Total Operating Capital
Ans. (a)

39. Interest Coverage Ratio is given by:

(a) Net Profit
Interest on Debt
(b) Debt Capital
Interest on Debt
(c) Earnings Before Interest and Taxes
Interest on Debt
d Profit Before Tax
Interest on Debt
Ans. (c)

40. Given that:
Current Ratio = 2.5
Acid test ratio = 1.5
Net working capital = Rs. 60,000
The value of current-liabilities will be:
(a) Rs. 15000
(b) Rs. 40,000
(c) Rs. 60,000
(d) Rs. 100,000
Ans. (b)

41. Match List-I (Ratios) with List-II (Method of Calculation) and select the correct answer using the codes given below the lists:
List-I List-II
A. Debt-Equity Ratio 1. Equity Capital
Total Debt Capital
B. Proprietary Ratio 2 External Equity
Owners’ Equity
C. Capital Gearing ratio 3. Total shareholder’s Fund
Total Assets
D. ROI 4. Profit Before Int. & Tax
Net Assets
Codes:
A B C D
(a) 2 3 1 4
(b) 2 3 4 1
(c) 3 2 1 4
(d) 3 2 4 1
Ans. (a)

42. Match List-I and List-Il and select the correct using the codes given below the lists:
List-I List-II
A. Financial Leverage 1. Efficiency
B. Quick Ratio 2. Profitability
C. Stock Turnover Ratio 3. Risk
D; Margin on sales 4. Liquidity

Codes:
AB C D
(a) 3 4 1 2
(b) 4 3 1 2
(c) 4 3 2 1
(d) 3 4 2 1
Ans. (a)

43. Trading on equity take place:
(a) when capital other than that of equity shareholders also employed
(b) only when equity capital is employed
(c) only when debenture funds are employed
(d) when profits are ploughed back
Ans. (d)

44. Payout ratio means the ratio of:
(a) debtors to creditors
(b) profit distributed to profit retained
(c) earnings that are distributed through dividends
(d) interest payment to dividends
Ans. (c)

45. Given that:
Sales = Rs. 50,000
Variable cost = 20,000
Fixed cost = 10,000
Capital employed = Rs. 200,000
The profit-volume ratio will be:
(a) l0%
(b) 15%
(c) 50%
(d) 60%
Ans. (d)

46. Match List-I with List-II and select the correct answer using the codes given below the lists:
List-I List-II
A. Operating income 1. Cost of sold to average stock
B. Capital Employed 2. Profits before depreciation, interest and taxes
C. Inventory Turnover 3. Net fixed Assets Investment and Net Working capital
D. Gross Cash Flow 4. Total Funds invested
5. Profit before interest and taxes only
Codes:
A B C D
(a) 2 1 4 5
(b) 2 3 4 2
(c) 2 1 3 2
(d) 5 3 1 2
Ans. (d)

AUDITING
47. Consider the following activities:
1. Valuation
2. Verification
3. Vouching
The correct sequence of these activities undertaken by auditor is:
(a) 3, l, 2
(b) 3, 2, l
(c) 2, 3, 1
(d) 1, 2, 3
Ans. (b)

48. Consider the following statements:
Continuous adult is useful because:
1. more detailed checking is possible
2: audit can be completed quite quickly
3. figures in the accounts cannot be altered as the auditor visits several times during the year
4. Internal check can be done away with
Of these statements:
(a) 1 and 2 are correct
(b) 2 and 4 are correct
(c) 2, 3 and 4 are correct
(d) 1, .3 and 4 are correct
Ans. (d)

49. Match List-I (Nature of audit) with List-II (Related types of audit) and select the correct answer using the codes given below the list:

List-I List-II
A. Audit work is carried on almost 1.Balance Sheet Audit
simultaneously with the recording of transactions
B. Auditor starts his work when the final accounts have 2.Continuous Audit
been prepared
C. Audit conducted in between two annual audits 3.Interim Audit
D. Some of the books and records of the whole period are audited 4. Cost Audit
5. Partial Audit
Codes:
A B C D
(a) 4 1 2 3
(b) 2 1 5 3
(c) 2 1 3 5
(d) 1 2 3 4
Ans. (c)

50. Which one of the following would be sufficient ground for an auditor to submit a qualified report even though the management had given a note to the accounts?
(a) Securities belonging to the client are lodged with a depository.
(b) Fixed assets have been mortgaged.
(c) Bank balance as shown by the pass-book is different from that indicated by the cash book.
(d) Closing stock is valued at cash plus 10%.
Ans. (d)


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