Practice Accounts Questions and Answers

• A company measures its financial asset at amortised cost. It earns fixed interest and has no intention to sell before maturity. Which Ind AS permits this m...
• A company expected material cost to be ₹50 per unit for 1,000 units. Actual cost was ₹55 per unit for 950 units. What is the material cost variance?
• A firm has current assets of ₹8 lakh and current liabilities of ₹5 lakh. If it collects ₹1 lakh from debtors and uses it to pay creditors, what happe...
• According to the Modigliani-Miller (MM) theory (ignoring taxes), what is the impact of debt on the value of a firm?
• According to Walter’s Model, a firm with high return on investment (RoI) and low cost of capital should:
• A company sets a standard cost of ₹50 per unit. Actual cost was ₹55 per unit for 1,000 units. The material price variance was ₹3,000 (A) and usage va...
• A factory produces a product with selling price ₹500, variable cost ₹300 and fixed cost ₹9,00,000. Due to market conditions, price is reduced by 10%....
• A private company wants to issue shares to selected individuals through a private placement. Which section of the Companies Act, 2013 governs this process?
• A firm has increasing profits but declining cash flows. The management claims business is doing well. What should an analyst examine to validate the claim?
• Company A and Company B merge to form Company AB. Assets and liabilities are taken over at book value, and shareholders of both companies continue to have ...
• ABC Ltd. offers its existing shareholders the right to buy one share for every four held at ₹100 when the current market price is ₹150. What is the the...
• A software firm enters a contract for software license, customization, and after-sales support. Revenue is recognized over time for customization but at a ...
• Company signs a ₹12 crore contract to deliver a software + annual maintenance for 3 years. Software is delivered in year 1 (₹8 Cr value), rest allocate...
• The net profit as per cost accounts is ₹2,00,000, but financial accounts show ₹1,80,000. Upon examination, over-absorption of overheads by ₹20,000 is...
• In an organization, the actual sales were ₹10 lakh while the budgeted sales were ₹12 lakh. The cost was ₹6 lakh vs budgeted cost of ₹7 lakh. What i...
• ABC Ltd. issues debentures worth ₹5 lakh and uses ₹3 lakh of it to purchase fixed assets. What is the net effect on funds from operations in the fund f...
• What will be the future value of ₹50,000 invested today for 3 years at a compound annual interest rate of 10%?
• A project has three outcomes: best case ₹20L, base case ₹15L, worst case ₹10L. If the probability of each is 1/3, what is the expected NPV?
• Under Companies Act, 2013, a company can declare dividend from:
• H Ltd owns 80% of S Ltd. S Ltd made a profit of ₹10 lakh this year. There are unrealized profits in closing stock of ₹1 lakh due to inter-company sale....
• X Ltd. and Y Ltd. amalgamate to form a new company Z Ltd. X Ltd.’s assets are ₹50 lakh, liabilities ₹20 lakh. Y Ltd.’s assets are ₹30 lakh, liabi...
• Input = 10,000 units @ ₹20/unit, Normal loss = 10%, Scrap value = ₹2/unit. What is cost per unit of output assuming no abnormal loss?
• In a manufacturing company, budgeted production is 10,000 units and budgeted fixed overheads are ₹5,00,000. If actual output is 12,000 units, what is the...
• A company issued ₹10 lakh equity, redeemed ₹5 lakh debentures, paid dividend ₹2 lakh. Received interest ₹1 lakh. What is net cash from financing?
• Annual Lettable Value = ₹3,60,000 Municipal Taxes = ₹30,000 Interest on Housing Loan = ₹2,50,000 Compute taxable income under head "House Property"....
• A company incurs heavy advertising expenditure of ₹2 crore in launching a new product. It wishes to defer the expense over 4 years. As per accounting sta...
• In a textile mill, cotton passes through spinning, weaving, and dyeing departments. Loss occurs at each stage. Which costing method is best suited?
• The standard cost of labour for 1 unit is 2 hours at ₹50 per hour. Actual production is 100 units and actual labour cost is ₹11,000 for 200 hours. What...
• ABC Ltd. has current assets of ₹8 lakh and current liabilities of ₹5 lakh. It wants to maintain a current ratio of 2:1. How much current liability shou...
• According to Modigliani-Miller theory, if a firm’s investment policy is fixed, how does dividend decision affect the value of the firm?
• A company reported a net profit of ₹10 lakh. During the year, depreciation was ₹4 lakh, accounts receivable increased by ₹2 lakh, inventory decreased...
• Project A has cash flows of ₹-10 lakh (initial), ₹3L, ₹4L, ₹5L over 3 years. Project B has the same initial investment but generates ₹6L, ₹4L, ...
• A company has current liabilities of ₹5 lakh and current assets of ₹6 lakh. Inventory is ₹2 lakh. What is the quick ratio?
• A company issues 10,000 shares at ₹100 each at a premium of ₹20. ₹80 (including premium) is received on application. How is the premium accounted?
• A company has Net Sales = ₹80 lakh, Cost of Goods Sold = ₹60 lakh, Inventory = ₹15 lakh. What is Inventory Turnover Ratio?
• A company invests in listed equity shares held for trading purposes. As per Ind AS 109, how should these be measured?
• A project has an expected NPV of ₹5 crore, a standard deviation of ₹2 crore, and a coefficient of variation of 0.4. If the company has another project ...
• A construction company signs a ₹50 crore contract for building a bridge over 5 years. It recognizes revenue based on the percentage-of-completion method....
• Company A absorbs Company B. Purchase consideration is settled partly in cash and partly in shares. Which accounting method is used if the takeover is in t...
• A company has fixed costs of ₹10 lakh, variable cost per unit ₹50, and selling price per unit ₹75. If sales units are 60,000. Compute margin of safet...