UP TGT Commerce 2021 Official Paper (Previous Year Paper)

The correct answer is 

Key PointsIncome - Revenue or sales are referred to as income. The money a business makes from selling products or services throughout the course of its operations is known as revenue.

Important PointsUnearned income - Unearned income, also known as deferred revenue, is money that a business receives from a customer in exchange for goods or services that will eventually be supplied.

The phrase is used in accrual accounting, which recognizes revenue only after a business has received payment AND before the goods or services have been provided to the client.

Thus, Unearned income is considered a Liabilities.

The correct answer is Median.

Key PointsMeasures of Central Tendency- The statistical measure known as the central tendency is defined as the singular value of the entire distribution or dataset. It seeks to give a precise account of all the data in the distribution.

The three crucial measurements, mean, median, and mode, can be used to determine the dataset's central tendency.

Important PointsMedian - In statistics, the median is the value that, when placed in order, falls in the middle of the supplied collection of data. Either ascending or descending order can be used to organise the data or observations.

For example, the median of 5, 6, and 7 is 6.

Thus, the central value of a serially arranged series is known as Median.

Additional InformationArithmetical mean - The term "arithmetic mean" refers to a value that is determined by dividing the total number of values in a set by the sum of its members. 

Mode - The value that appears most frequently in a set of data is called the mode. The value which a discrete probability distribution's probability mass function reaches its maximum value is known as the distribution's mode. In other words, it is the value that will be sampled most frequently.

The correct answer is Cash price remaining unpaid.

Key PointsHire Purchase System - The hire-purchase system is an exclusive method of buying and selling things. It is a method of paying for a good in recurring payments as you use it. It alludes to a purchasing strategy in which the purchase price is paid in regular installments. It is a way to finance the fixed asset that will be bought in the future.

Important PointsHire Purchase Price = Down payment + (Installment amount x No. of Installments)

Total Interest or Hire Charges = Hire Purchase Price - Cash Price

Interest amount =

Total amount due at the time of installment x Rate of interest/100

Thus, ​Under Hire Purchase System, the interest for each period is computed on Cash price remaining unpaid.

The correct answer is All of the above.

Key PointsPricing strategies - The sum of money a corporation must charge a customer is known as a pricing strategy in business. Pricing is the amount that a client must pay in order to use a good or service. Pricing strategy is a process that decides how much should be paid for a product based on variables like demand, cost, competition, market etc.

Important PointsPredatory pricing - Predatory pricing is when a business drastically reduces the price of its goods or services to eliminate competition. This tactic's main goal is to establish a monopoly in the targeted market.

Price fixing - Price fixing is the practice of market participants agreeing to jointly increase, decrease, or stabilize prices in order to manage supply and demand. The technique damages customers and companies on the receiving end while benefiting the people or businesses involved in determining the pricing.

Deceptive pricing - Deceptive pricing is a tactic used by businesses to lead customers and potential customers to believe they are paying less for items. This tactic often entails employing pricing quotes that are "original," "former," or "normal" throughout the most of a season.

Thus, Pricing strategies includes predatory pricing, price fixing and deceptive pricing.

The correct answer is 5%.

Key PointsShares- A part or portion of a larger amount which is divided among a number of people, or to which a number of people contribute. The person who hold shares are called shareholders.

Important Points

When offering the share capital for public subscription, the following considerations should be made:

1. The application fee must equal at least 5% of the share's face value.
2. Calls must be placed in accordance with the articles of association.
3. The following provisions of Table A shall apply in the absence of its own articles of association:

(a) A minimum of 14 days' notice is given to the shareholders to pay the amount;

(b) The amount of the call should not be more than 25% of the face value of the share; and

(c) A period of one month must pass between two calls.

(d) All calls on shares belonging to the same class must be made uniformly.

Thus, According to the provisions of Companies Act, 2013, the amount of minimum application money to apply for shares should be at least 5 % of the face value of the share.

The correct answer is Assets increased by Rs. 4,00,000 and liabilities increased by Rs. 4,00,000.

Key PointsAssets - A resource having economic worth that a person, business, or nation possesses or controls with the hope that it would someday be useful is referred to as an asset.

Liabilities - Liabilities refer to things that you owe or have borrowed. A legal or regulatory risk or responsibility is another definition of liability.

Important PointsIn above transactions entry for purchased of Assets will be as follows - 

Change in Total Assets = Assets Purchased(Increase in assets) - Cash Paid(decrease in assets) 

= 5,00,000 - 1,00,000

=4,00,000

Changes in Total Liabilities - Bills Payable (Increase in Liabilities)

=4,00,000

Thus. In the above question Total Assets increased by Rs.4,00,000 and  total liabilities increased by Rs.4,00,000.

The correct answer is Interim auditing.

Key PointsAuditing - An official review and verification of a company's financial records is called an audit, or financial audit.

A company's financial statements must be accurate and compliant with legal requirements for them to be audited.

 Important Points

Interim auditing - 

• Before conducting any statutory audits, interim audits are conducted to ensure that transactions are recorded accurately and that the company is operating in a way that is compliant with the law.
• It is an audit carried out between two financial years,
• Its primary goals are the early detection of hazards and the prompt implementation of corrective actions.
• Thus, Interim auditing is generally conducted between two annual audit.

Additional InformationExternal auditing - The process of an external auditor, a qualified independent third party, independently evaluating the company's financial accounts, is known as external audit.

Standard auditing - The term "auditing standard" refers to the level of auditing excellence or quality established by the Tax Institute as a standard that auditors of public financial statements must accept and adhere to.

Final auditing - 

• An audit that is performed after the financial period has ended and the accounts are prepared is known as a final audit.
• It continues in a session until all of the audit work has been completed.
• It is sometimes referred to as an annual or recurring audit.

The correct answer is There is always an inverse relationship between price and demand.

Key PointsDemand - Demand is a term used in economics to describe a consumer's readiness to pay a price for a certain commodity or service as well as their desire to buy those goods and services.

Important Points

Law of Demand - 

• The link between the quantity wanted, and the price is expressed by the law of demand.
• The amount required rises with a decrease in price and falls with a rise in price, according to use Marshall's definition.
• As a result, it illustrates how price and demand are inversely related.
• The direction in which quantity requested shifts in response to a change in price is referred to as the law.

Thus, The law of demand states that if other things remain same there is always an inverse relationship between price and demand.

The incorrect statement is The profit on re-issue of forfeited shares is transferred to General Reserve Account. 

Key PointsShares - a part or portion of a larger amount which is divided among a number of people, or to which a number of people contribute. The person who hold shares are called shareholders.

Important PointsOption 1: Forfeited shares can be reissued.

Explanation:

• Forfeited shares may be issued again as fully paid at a par, premium,  discount.
• It should be noted that the discount permitted on reissue of forfeited shares cannot exceed the amount received on forfeited shares at the time of first issue, and that the discount allowed on reissue of forfeited shares shall be deducted to the 'Forfeited Share Account.'
• Hence, this statement is true

Option 2: A notice of 14 days to shareholders is necessary before forfeiture of shares.

Explanation:

• In the event that the amount on calls is not paid, a firm may forfeit shares. Prior to forfeiture, the corporation must first send the defaulting shareholder a clear 14-day notice that he must pay the outstanding balance plus interest.
• Hence, this statement is true

Option 3: Premium on issue of shares can be used for writing off the preliminary expenses.

Explanation:

• Preliminary expenses are any costs incurred before a firm is created, or before the start of corporate operations.
• Any initial business expenses may be deducted from the Securities Premium Account.
• Hence, this statement is true

Option 4: The profit on re-issue of forfeited shares is transferred to General Reserve Account.

• The profit on re-issue of forfeited shares is transferred to Capital Reserve Account.
• Hence, this statement is false.

Thus, in above question "the profit on re-issue of forfeited shares is   transferred to General Reserve Account is not correct"

The incorrect statement is To accept deposits on interest from the public.

Key PointsReserve Bank of India -The Reserve Bank of India (RBI) was founded in 1935 as a private organisation before becoming India's central bank in 1949.

The RBI's primary objective is to carry out comprehensive supervision of the Indian financial sector, which consists of commercial banks, financial institutions, and non-banking financing companies.

Important PointsFunctions of Reserve Bank of India are as follows - 

1. Monetary Authority - The RBI's primary responsibility is developing and implementing India's monetary policy. The RBI's major problem as a monetary authority is striking a balance between "price stability" and "future economic growth."

2. Currency Issuer - The RBI is in charge of printing and releasing fresh banknotes in India.

3. Regulator and supervisor of the financial system - RBI establishes the guidelines by which Indian banks and the financial system must function.

4. Government banker - The RBI is the retail bank for the Government of India, much as retail and commercial banks provide services to the general public (GOI). For the GOI, RBI also serves as a merchant banker.

5. Foreign Exchange's Manager - In India, all money transfers must follow FEMA regulations (Foreign Exchange Management Act). The RBI is in charge of making sure that transactions follow FEMA regulations.

6. Banker to Banks - The RBI has an account with every bank in India. In this account, they maintain their required reserves and other deposits. Therefore, RBI also serves as a bank to the banks in this way. The RBI is in charge of overseeing interbank transactions. As a rare circumstance, RBI may also extend credit to banks.

Thus, To accept deposits on interest from public is not a function performed by Reserve Bank of India. It is a function of Commercial Banks.

The correct answer is Commercial Banks.

Key PointsExporters can buy the products and services they need to boost their export sales with the help of financing for export working capital (EWC).

Important Points

Where to Find and Apply for a Working Capital Facility for Exports-

Offering facilities for export-related activity are many commercial banks and lenders. In order to be eligible, exporters often need to meet the following criteria:

• Be in operation profitably for at least 12 months (without necessarily exporting);
• Show a need for transaction-based financing; and
• Present documentation proving the existence of a workable transaction. It should be noted that SMEs typically need personal guarantees, collateral assets, or high-value accounts receivable in order to secure commercial EWC facilities. To ensure loan repayment, the lender may put a lien on the exporter's assets such inventory and accounts receivable.
• Usually, the lender and exporter can agree on fees and interest rates.

The correct answer is Objective and scope of the audit of financial statements.

Key PointsAuditing and Assurance Standard:

• The ICAI in India publishes standards for assurance and auditing.
• To create auditing standards, ICAI established the Auditing and Assurance Standard Board (AASB) in 1982.
• As a result, under the Council's authority, AASB produces Statements on Standard Auditing Practices and Auditing and Assurance Standards.
• There are 35 Accounting Standards as per ICAI.

Important Points Auditing and Assurance Standard-2 (AAS-2):

This Standard describes the overall objective and scope of the audit of general purpose financial statements of an enterprise by an independent auditor. The Standards deals with the following important aspects of an audit:

• Objective of an Audit: expression of opinion, the concept of true and fair view
• Responsibility for Financial Statements: responsibility of the management vis a vis auditor
• Scope of Audit: factors determining scope, reliability and sufficiency of audit evidence, disclosure aspects, undiscovered material misstatements, etc.
• The Standard is effective for all audits relating to accounting periods beginning on or after April 1, 1985.

The correct answer is a transaction.

Key PointsA transaction is a commercial occurrence that results in a monetary impact on the financial statements of a company and is noted as an entry in the accounting records of that firm. Here are some examples of transactions:

• Paying a supplier for products or services received.
• Purchasing a property that was previously owned by a seller by paying the seller with cash and a note.
• Paying a worker for the hours they put in.
• Receiving money from a client in exchange for providing goods or services.

Important Points​There are several items that are transactions since transactions comprise any occurrence that has a monetary impact on your financial records. In your account ledger, examples of accounting transactions include:

Cash or credit sales to clients

monies paid for invoices

Acquisitions of fixed assets

Fixed asset depreciation over time

Investments

commercial loans

Investor dividends

sale of property

Consumable supply purchases

As in the above question Ashoka Ltd. purchased a machine from Tata & Sons for Rs. 1,50,000,it also have monetary impact and acquisition of fixed assets is happening, that is why it is a transaction.

The correct answer is Arithmetical accuracy of ledger balances.

Key Points

• A company's trial balance can be used to find inaccuracies in its ledger. The third stage of the accounting cycle is trial balance.
• Checking the accuracy of the previously completed work is required before applying sophisticated accounting methods. As a result, a trial balance serves as the foundation for evaluating a ledger's accuracy.
• A two-column statement of debit and credit balances taken from the ledger makes up the trial balance. In order for the effort done to maintain the ledger to be regarded accurate, the sum of the debit and credit balances must be equal.
• A trial balance can be thought of as an informal accounting statement that is created using ledger account balances. It is ready on a specific date to compile the data and verify the mathematical precision of the books of accounts.

Important Points​Once all transactions have been entered into the ledger, a final check must be made to ensure that the work is accurate before moving on. A trial balance statement should be created in order to check the accuracy of our ledger's accounts.

The format of Trial Balance is given below:

The correct answer is Revenue expenditure.

Key Points

Depreciation:

• Depreciation is the systematic reduction of a fixed asset's recorded cost until the asset's value equals zero.
• Depreciation enables a portion of the cost of a fixed asset to be applied to the income the fixed asset generates, whether significant or small.
• According to the matching principle, this is required since revenues and associated expenses are recorded in the accounting period during which the asset is in use.
• Depreciation of fixed assets is an example of a revenue expenditure transaction.
• When a cost is incurred, it is immediately applied to an expense as a revenue expenditure.

Important PointsRevenue Expenditure :

• Short-term expenses used in the present time or often within a year are referred to as revenue expenditures.
• Revenue expenditures are essentially the same as operating expenses because they cover the costs associated with maintaining a business.

There are two types of Revenue Expenditures which are as follows:

• Maintaining a Revenue Generating Assets: Repair and maintenance costs are included in the maintenance of a revenue-generating asset since they are incurred to maintain ongoing operations rather than to improve or extend the life of the asset.
• Generating Revenue: All ongoing costs connected with running a business, such as rent, office supplies, and utilities, are included in expenses related to revenue generating. Because they are directly related to the time period in which they were incurred, these expenses are also known as period expenses.

The correct answer is Revenue expenditure.

Key PointsRevenue expenditure: This type of expenditure is incurred in the current period and is matched against the revenue generated in the same period. It is a normal expense that is incurred in the course of business and is expected to be repeated in future periods.

Important Points

• As per the Accounting Standard (AS) 26 issued by the Institute of Chartered Accountants of India (ICAI), the concept of deferred revenue expenditure has been eliminated.
• The AS 26 is applicable to all enterprises from 1st April 2004.
• Under this standard, certain expenses that were previously considered as deferred revenue expenditure are now recognized as expenses in the accounting period in which they are incurred.

Hence, 

• Based on the given information, the expenditure of Rs. 20,000 on painting the building should be recorded as a revenue expenditure.
• Revenue expenditures are those expenses that are incurred in the day-to-day operations of a business and are charged to the income statement in the period they occur.
• The painting expense is not expected to provide any future economic benefits or increase the value of the building, which aligns with the treatment as a revenue expenditure.

A company has spent Rs. 20,000 on painting of its building, it is a Revenue expenditure. 

Note: 

• Painting of a new building before using it is considered as capital Expenditure.

The correct answer is Profit-sharing ratio. 

Key PointsDissolution of the firm

• The term "dissolution of the firm" refers to the dissolution of a firm's partnership among all of its partners (Sec. 39 of the Partnership Act, 1932).
• If the remaining partners decide to carry on the business, dissolution of partnership implies a change in the relationship of the partnership.
• In these situations, a new partnership will be formed, but the business will still exist.

Important Points

Once a company is dissolved, it can no longer do regular business.

The partnership agreement governs how accounts between partners are settled following a firm's dissolution.

The Partnership Act established the following provisions (Sec. 48) for the settlement of accounts in the absence of any explicit agreement regarding the method of account settlement following the dissolution of the partnership.

• Losses, including deficiencies of capital, shall be paid first out of profit, next out of capital, and lastly, if necessary, by the partners individually in their profit-sharing ratio.
• The assets of the firm including any sums contributed by the partners make up deficien­cies of capital shall be applied in the following manner and order:
• In paying the debts of the firm to third parties.
• In paying each partner rateably what is due to him from the firm for advances.
• In paying to each partner rateably what is due to him on account of capital, and
• The surplus or capital profit, if any, will be divided among the partners in their profit sharing ratio.

The correct answer is All credit purchases of goods.

Key Points

• A business creates a special purpose subsidiary book called a "buy book" to track all credit purchases.
• A purchase book, invoice book, or purchase daybook are other names for it.

Important PointsPurchase Book:

• Only purchases made for resale, or products connected to a company's primary business operations, are recognised as purchases.
• Example: If a grocery store buys office furniture, it won't be recorded in the purchases book since it counts as the "purchase of an asset" rather than a purchase of products.
• Purchases made with credit are documented in the purchase book while those made with cash are noted in the cash book.

Format of Purchase Book:

The correct answer is Personal Account.

Key PointsDrawings:

A person invests money in his new firm when he first launches it. However, in business, it is referred to as drawing when a person takes something or money out of the company for his or her own personal benefit.

Important PointsDrawing Account : 

• Drawings are simply when a business owner takes money, products, or assets out of the firm for personal use rather than for the benefit of the company or for commercial purposes.
• The assets of the business, which were purchased with the owner's money, are only to be used for business and not for personal use. The owner's own financial withdrawals from the company are referred to as draws.
• Drawings account is a personal account maintained by the business.
• The business exists independently of its owner. Under the business, the owner and the company are not the same, that is why drawing is treated as personal account.

The correct answer is Profit and Loss Appropriation Account

Key Points Profit and Loss Appropriation Account

• It is a separate account that a company creates to indicate how profits or losses are divided among the partners.
• All the provisions of the partnership deed are implemented in this account.
• A firm prepares it after the preparation of profit and loss account at the end of every Financial Year.
• The surplus profit is transferred from the account balance (Credit - Debit) to the capital accounts or current accounts of the partners according to their respective agreed profit distribution ratios.

Important Points Format of Profit and Loss appropriation account:

The Correct Answer is All of the above

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Key Points

Advertising objective

• Advertising objective can be classified by primary purpose  as inform, persuade and remind
• Inform - when the purpose of the company is to inform the audience about its new product, price change, or any othe information.
• Persuade - Persuasive advertising is used when there is increasing competition in the market. Marketers uses this type of advertising to attract customers and prevent them to buy the competitor's products.
• Remind - when company has a good base of customers, it has to remind the customers that they need the product. Even when some brands have a good customer base, during off seasons their sales decreases.So to remind the customers this type of advertising is used.

The correct answer is Vouching

Key Points

Vouching

• Vouching is the process of checking and examining vouchers
• Vouchers are those documents which are produced in support of business transactions. For example - bills, invoices, bank statement etc.
• The vouchers are verified for establishing the authority and authenticity of transactions recorded in the books of account.

 Additional Information Internal Audit: An internal audit assesses a company's internal controls, corporate governance, and accounting procedures and provides risk management.

Verifying: Verifying assets and liabilities involves proving the accuracy of the existence and monetary value of the assets and liabilities listed on the company's balance sheet.

The correct answer is Joint Stock Companies

Key Points

Auditing:

• Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following a documented system of recording transactions.
• It is done to ascertain the accuracy of financial statements provided by the organisation.
• Auditing is compulsory for all types of companies which is registered under companies act, whether the company is private company, public company or joint stock company.
• The books of accounts is to be audited every year in case of a company.

Important Points Joint stock company:

• A joint stock company is an organisation which is owned jointly by all its shareholders.
• Here, all the stakeholders have a specific portion of stock owned, usually displayed as a share.
• A joint stock company has a Separate Legal Entity from its owners.
• Once a firm is born, it can only be dissolved by the functioning of law.
• All the shareholders have limited liability.

Additional Information Sole Proprietorship Unit: A sole proprietorship is a business that can be owned and controlled by an individual, a company or a limited liability partnership. There are no partners in the business. 

Partnership firm: Persons who have entered into partnership with one another to carry on a business are individually called “Partners“; collectively called as a “Partnership Firm”

The Correct Answer is PT = MV + M'V'

Key Points

Fisher's Quantity theory of money:

• This theory states that ceteris paribus(other things remaining constant) as the quantity of money  in circulation increases, the price level also increases in direct proportion and  the value of money decreases and vice versa.
• This theory is based on cash transaction.

Important Points

The formula is PT = MV + M'V'

Where, P means Price level

T means Transaction performed in money I.e. goods and services exchanged in money

• M means total quantity of legal tender money
• M' means total quantity of credit money
• V means velocity of circulation of M
• V' means velocity of circulation of M'

The Correct Answer is $\text {Change in Y-commodity }\over \text{Change in X-commodity}$

Key PointsMarginal Rate of Substitution

• MRS is used to know how much of one commodity is substituted for another commodity.
• It shows the rate at which a consumer is willing to substitute one commodity for another.
• Formula to calculate MRS is $\text {Change in Y-commodity }\over \text{Change in X-commodity}$

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The incorrect Answer is Rationing of Credit Limit

Key Points Quantitative techniques of credit control

• RBI usage of quantitative as well as qualitative techniques for credit control in the economy.
• In quantitative techniques bank rate, Cash Reserve Ratio(CRR), Open market operations, Statutory liquidity ratio(SLR) are covered.
• In qualitative techniques credit rationing, margin requirements etc. are covered.
• Quantitative Technique of credit control is also known as traditional technique whereas Qualitative Technique is known as selective technique.

The incorrect Answer is Convention of accrual accounting

Key Points

• Accounting conventions are rules followed by business organisation as a practice worldwide.
• There is no binding on such organisations to strictly follow those conventions, but same type of industries in the market follows the practices, thats why other organisations follows the same.
• There are four major accounting conventions namely
• Convention of full disclosure
• Convention of materiality
• Convention of Conservatism
• Convention of consistency

Hence, Convention of accrual accounting is not an accounting convention

The correct answer is Responsible Official

Key Points

Voucher

• Every voucher should be signed by a Responsible officer to examine the authority of the document.
• Vouchers are those documents which are produced in support of business transactions. For example - bills, invoices, bank statement etc.
• The vouchers are verified for establishing the authority and authenticity of transactions recorded in the books of account.

The Correct Answer is Principal

Key Points

Errors in accounting

• Repairs of second hand machinery purchased should be debited to Machinery Account as it is a capital expenditure. But it is debited to repair account which is violation of basic accounting principles, so that it is error of principal.
• Error of principal - When an Accountant or bookkeeper violates the basic fundamental principles of accounting at the time of recording the transaction it is called error of principal.
• Error of principal happens when revenue expenditure/income are treated as capital expenditure/income and vice versa, personal expenses/incomes are treated as business expenses/incomes and vice versa, operating expenses/incomes are treated as non operating expense/incomes and vice versa

Additional Information

• Error of omission - This type of error happens when the accountant or bookkeeper totally forgot to record a transaction.
• Error of Commission - This error happens when the entry is posted in wrong ledger account.
• Compensating error - When two or more errors compensate the effect of one another and the trial balance is not affected, the errors are called compensating errors.

The correct answer is Capital Expenditure

Key Points

Capital Expenditure

• Capital expenditure is the amount spent on investment in the business
• The benefit of this type of expenditure is available for longer periods.
• This type of expenditure is non recurring and improves earning capacity of the business
• Capital expenditure is shown on the asset side of the Balance Sheet.
• For example - purchase of fixed assets like land, building, plant and machinery etc.

Important Points

The amount spent on increasing the seating capacity of a cinema hall is non recurring in nature and improves  earning capacity of the business hence it is a capital expenditure.

The Correct Answer is Royalty Receivable Account

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Key PointsSub-Lease

• Sometimes a lessee further leases the property to a third party, which is known as sub-lease.
• For Example A leases a property from B and A further sub lease it to C. Then B is the owner of the property, A is the lessee as well as sub -lessor, and C is sub-lessee
• In this case royalty earned by the lessor is credited to the Royalty Receivable Account.
• For the lessor, royalty is ordinary business income.

The Correct Answer is Uncalled capital

Key Points

 Types of Share Capital

• Subscribed Capital - It is the capital subscribed by the public.
• Called up Capital - It is the capital called up for the payment by the company
• Uncalled capital - The difference between subscribed and called up capital is uncalled capital.

Additional Information

• Paid up capital - This is the capital called up by the company and paid up by the shareholders.
• Calls in arrears - Amount called up by the company but not paid up by the shareholders.
• Calls in advance - Amount paid up by the shareholders before the company make a call.

The Correct Answer is Bad Debts + New Bad Debts +  New Provision - Old Provision

Key Points

 Provision for Bad Debts:

• The provision for Bad Debts refers to the total amount of Doubtful Debts that need to be written off for the next accounting period.
• Doubtful Debt represents an expense that reduces the total accounts receivable of a company for a specific period.

Important Points

Provision for debtors

 

• By above provision for debtors account it is clear that the amount to be transferred to profit and loss account is calculated by adding closing balance and bad debts and deducting opening balance of provision for debtors a/c.
• The profit and loss account is debited by the resultant of the following:
  

Bad Debts + New Bad Debts + New Provision - Old Provision

The Correct Answer is Formal organisation

Key Points Formal Organisation

• It is the type of organisation where rules, duties and responsibilities are clearly defined and given in writing to achieve a specific goal.
• In this type of organisation the hierarchy structure of the organisation is pre determined
• Formal organisation is constructed  by managemment intentionally to achieve specific organisation goal.

The correct answer is Second.

Key PointsTop 5 most populated countries are as follows:

1. China
2. India
3. United States
4. Pakistan
5. Brazil

Important Points

• Fourteen (14) countries have populations greater than 100 million
• Ninety one (91) countries have populations greater than 10 million.
• China and India account for roughly 36% of the world's population.

In News

• India's population in 2023 stands at 142.86 crore, according to the latest United Nations Population Fund data.
• India has overtaken China, which has 142.57 crore, to become the most-populous country in the world.
• The top five countries in terms of population in decreasing order are -- India, China, US, Indonesia and Pakistan, according to the UNFPA report 2023.

The correct answer is George Elton Mayo.

Key PointsThe Hawthorne effect and Hawthorne research are sociological studies done by Elton Mayo in 1927 on workers at the Western Electric Company's Hawthorne Works factory in Cicero, Illinois.

Important Points

• A group of researchers from the Harvard Business School led by Elton Mayo and Fritz Roethlisberger were asked to participate in the investigations in 1927 at the Hawthorne Works of the Western Electric Company in Chicago. The trial continued until 1932.
• The Hawthorne Experiment demonstrated that workers' productivity is not solely dependent on the physical environment in which they work and the amount of money they are paid in compensation. Employee happiness with their working environment has a significant impact on their productivity. Mayo believed that when assessing productivity efficiency, rational criteria were significantly less crucial than emotional factors. Additionally, social group membership was found to be the most potent human factor impacting employee behaviour out of all others.
• Mayo came to the conclusion that work arrangements must satisfy the employee's subjective need for social satisfaction at his workplace in addition to the objective requirements of output.

Additional InformationHawthorne Experiment consists of 4 parts :

1. Illumination Experiment.
2. Relay Assembly Test Room Experiment.
3. Interviewing Programme.
4. Bank Wiring Test Room Experiment

The incorrect option is Sales Book.

Key PointsVouching:

• Vouching is defined as the verification of entries in the books of account by examination of documentary evidence or vouchers, such as invoices, debit and credit notes, statements, receipts, etc.
• All such types of documentary evidence are known as vouchers.

Important Points Vouching of Cash Sales:

• Copy of cash memo: Copy of cash memo given at the time of sales to the customer as a proof of payment. This is needed for Vouching of Cash sales.
• Abstract of salesman: This is the record maintained by the salesman for the sales done by him or by the firm. This is also needed for vouching of Cash sales.
• Cashier's summaries: This represents all the cash entries by the cashier of the firm. It will represent an inflow of cash in case of cash sales. So this is also a proof for vouching cash sales.
• Sales book:  Sales book is a type of subsidiary book maintained by the firm recording all the sales done on credit basis. This book does not record the cash sales transaction and hence this will not prove helpful in vouching of cash sales.

The incorrect statement is on default of payment of instalment, seller has a right to take back the goods.

Key PointsA credit sale system in which payments are made in instalments over time is known as an instalment payment system. In this method, the buyer receives both ownership and possession of the items at the time the contract is signed.

• The vendor cannot respond to the items while the instalment is being paid.
• In that circumstance, the vendor may only file a lawsuit against the customer to recoup unpaid debts.

Important Points

Features of Instalment Payment System

• Under this system, there will be an outright sale of goods/assets.
• The possession as well as the ownership is passed to the buyer right at the time of signing the contract.
• The buyer can make the payment in instalments according to agreement.
• In case of default in payment, the seller cannot repossess the goods, but he can sue the buyer for the recovery of unpaid price.
• The buyer cannot exercise the option of returning the goods and terminate the contract, unless the same becomes void or voidable under the contract act.

In the books of buyer, there are two methods of recording transactions.

1. Without opening of Interest Suspense Account: In this method only Asset's account and Seller's account is prepared.
2. By opening of Interest Suspense Account:** In this method, buyer/purchaser prepares Asset's Account, Seller's Account and Interest Suspense Account.**

The correct answer is the rate at which commercial banks borrow money from RBI.

Key Points

Repo Rate:

• Repo rate is the interest rate at which a nation's central bank (in India, the Reserve Bank of India) loans money to commercial banks in the event of a funding shortage against government securities.
• This is regulated by RBI.
• Monetary authorities use the repo rate to manage inflation.​

Important Points

• In times of inflation, central banks raise the repo rate since doing so discourages banks from borrowing from them. In the end, this lowers the amount of money available to the economy, which aids in halting inflation.
• In the event that inflationary pressures decline, the central bank adopts the opposing stance.

**Additional InformationReverse Repo Rate :**The reverse repo rate is the rate at which a nation's central bank, in this case the Reserve Bank of India, borrows money from domestic commercial banks. It is a tool for monetary policy that can be used to regulate the nation's money supply.

The correct answer is Some factors of production are fixed

Key PointsLaw of Variable Proportion:

According to the law of variable proportion states that when the quantity of one factor of production is increased, while keeping all other factors constant, it will result in the decline of the marginal product of that factor.

Important Points

Example:

Increasing Returns - Stage 1

• Average output rises in the first stage as fixed factors and increasing amounts of labour and capital are used (land).
• The total, average, and marginal products all show growth, although the average and marginal products rise by up to 40 units.
• Later, both begin to decline because the ratio of employees to land was adequate, and the land was not being utilised efficiently.
• The first stage ends.

Decreasing Returns - Stage 2

• Where the first stage ends, or where AP=MP, is where the second stage begins. Average and marginal products begin to decline at this point.
• We should be aware that marginal product declines more quickly than average product.
• Here, the rate of growth of the overall product is decreasing.
• Additionally, the marginal product reaches 0 at 7 units of labour, while the average product never reaches zero
• At this point MP is 0 and TP is maximum

Negative Returns:

• Where the second stage ends, the third stage starts.
• This begins in the eighth unit.
• Here, the average product is still positive even though the marginal product is negative and the total product decreases.
• Any additional dose at this point results in positive annoyance since it decreases the marginal product.

The Correct Answer is 26

Key PointsSteps to calculate missing frequency 

• Step 1 - Determine class in which mode lies - As mode given in the question is 48.6, the class in which mode lies is 40-55.
• Step 2 - Find the value of Z,l,h,f₀,f₁,f₂  -
• Z is the value of mode i.e. 48.6
• l is the lower class limit of modal class 40-55 i.e. 40
• h is the class interval of modal class. Class interval = Upper class limit - Lower class limit i.e. 55-40 = 15
• f₀ is the frequency preceding the modal class i.e. 20
• f₁ is the frequency of the modal class i.e. 44
• f2 is the frequency succeeding the modal class i.e. x.
• Step 3 - Put the data of step 2 in the formula of mode -
• Formula of Mode

Z = $l+ {f_{1}-f_{0}\over 2f_{1}-f_{0}-f_{2}}\times h$ 

Important Points

Solution:

Z = $l+ {f_{1}-f_{0}\over 2f_{1}-f_{0}-f_{2}}\times h$ ​ 

48.6 = $40+ {44-20\over 2\times44-20-x}\times 15$

48.6 - 40 = ${24\over 68-x}\times 15$

${8.6 \over 15} = {24 \over 68-x}$

8.6(68 - $x$) = 15 x 24

584.8 - 8.6 $x$ = 360

8.6$x$ = 224.8

$x$ = 26.1

So the value of missing frequency f₂ is 26 (approx.)

The correct answer is Dual aspect concept.

Key Points

Dual aspect concept

• As per dual aspect concept each transaction affects at least two accounts.
• While doing journal entries according to double accounting system one account is debited while another one is credited.

Important Points

Basic Accounting Equation

• Basic accounting equation states that total of Assets side should be equal to total of Liabilities and Capital.
• Assets = Liabilities + Capital.
• It is based on Dual aspect concept because every entry made in dr. side of the balance sheet has a corresponding entry in credit side of the balance sheet.

Additional Information Cost Concept

• According to this concept fixed assets should be recorded at historical cost instead of market value.

Accrual Period Concept

• As per this concept Each organisation should follow a accounting period for which entries are made and books are closed after a certain period. It may be 1 year, 6 months etc.

Accrual Concept

• Accrual concept states that a transaction should be recorded as and when it occurs.
• All incomes and expenses related to the current period are recorded irrespective of the fact that cash is received or distributed or not.

The Correct Answer is is significant for the users

Key Points  Materiality concept

• As per materiality concept only those items which are significant for the users should be recorded.
• Material items if not recorded does not impact the business decisions.

Important Points

• Real Account - Real Account is related to assets and
• The Golden rule for journal entry of real account is Debit what comes in Credit what goes out

The correct answer is Lessee's Account

Key Points

Recoupment of Short working:

• Recoupment of Short Workings is the term used to describe the process of adjusting Short Working Capital.
• In other words, the recoupment clause in the royalty agreement gives the lessee the opportunity to recoup any extra payments he made to the lessor for adhering to the minimum rent condition in earlier years.
• Short Workings is nothing but the amount by which the minimum rent is more than the actual royalty.

Important Points The Journal entries in the book of Lessor where the actual royalty is less than the minimum rent :

The correct answer is all costs upto putting the goods at the door of the buyer.

Key Points Franco invoice

• Franco invoice includes all costs from godown of exporter upto the godown of importer.
• Franco invoice includes cost of goods, expenses incurred upto boarding of the ship,freight of the ship,insurance and other expenses incurred upto godown of the importer.

The correct answer is Partners Capital A/c

Key Points Interest on capital

• It is expense for partnership firm as firm has to give interest on capital invested by the partners and debited to Interest on capital A/c.
• As partner's receives the interest on capital invested, hence it is credited to partner's capital A/c

Important Points

Partner's Capital A/c

All adjustments related to capital of partners are recorded in partner's capital a/c. Such as share in profits, share of revaluation of assets, drawings made by partners, additional capital introduced, interest on capital, interest on drawings etc.

Additional Information

• Interest A/c - interest is an expense of any firm and to be debited in Interest on capital account.
• Profit and loss A/c - In profit and loss account trading organisations records income and expenses of current year whether cash or non-cash to determine net profit or net loss.
• Profit and loss appropriation A/c -  After profit and loss a/c is prepared, all adjustments related to partners is to be shown in this account, like salary to partner, commission to partner etc.

The correct answer is Receipt and Payment A/c

Key PointsNon trading Firms - 

• Those organisations whose main objective is not to earn profit and to promote arts, science, commerce and research are known as non trading concerns.
• Non trading organisations prepares receipt and payment account instead of cash book, income and expenditure account in place of p and l account and balance sheet.

Important Points

 Receipt and payment Account

• This Account is prepared by non-trading organisations instead of cash book.
• At the debit side of the receipt and payment account all cash receipts are recorded whether of capital nature or revenue nature.
• At the credit side of the receipt and payment account all cash payments are recorded of the capital as well as revenue nature.
• Opening and closing balances of cash and cash equivalents are to be shown on debit and credit side of receipt and payment account respectively.
• The nature of receipt and payment account is of a **real account.**​

Additional Information

​Income and expenditure Account - 

• In income and expenditure account non-trading organisations records income and expenses of current year whether cash or non-cash to determine surplus or deficit.

​Profit and loss Account -

• In profit and loss account, trading organisations records income and expenses of current year whether cash or non-cash to determine net profit or net loss.

​Manufacturing Account -

• This account is prepared by trading concerns to determine gross profit or gross loss.
• Opening stocks, direct expenses, purchases, sales and closing stocks are recorded in this account.

The correct answer is ₹3,000 ∶ ₹3,000

Important Points Calculation of share of amount of goodwill to be distributed among sacrificing partners

Step 1 Find old ratio and new ratio given in the question- 

• Old ratio is 3:2 and new ratio is 5:3:2.
  

Step 2 Calculate sacrificing ratio - 

• Sacrificing ratio = old ratio - new ratio
• A's Sacrificing ratio = ${3 \over 5} - {5 \over 10} = {6-5 \over 10} = {1 \over 10}$
• B's Sacrificing ratio = ${2 \over 5} - {3 \over 10} = {4-3 \over 10} = {1 \over 10}$
• Sacrificing ratio of A and B is 1:1

Step 3 Calculate premium for goodwill shall be shared by A and B in their sacrificing ratio

• A's share in goodwill = 6000$\times$({1\over 2}\) = 3000
• B's share in goodwill = 6000$\times$({1\over 2}\) = 3000

 Premium for goodwill shall be shared by A and B is 3000 : 3000

The correct answer is Negative motivation

Key Points Negative Motivation

• Negative motivation is based on force and fear.
• If the person is afraid of the consequences of not doing the work, it is called negative motivation.
• For example, if an employee doesn't work he is afraid that s/he may lose his job.

Additional InformationExtrinsic motivation

• This type of motivation is temporary, and the person is motivated to get rewards and avoid punishment.
• Rewards may be psychological or physical or financial.

Intrinsic motivation

• When a person is intrinsically motivated he will do the work for his self-satisfaction without any fear, force, or external forces.
• Curiosity, interest, and a sense of accomplishment are sources of intrinsic motivation.

​Positive motivation

• This is a direct motivation in which rewards are given directly to the employee for the work done.
• There is no fear and force, but the work is done to get the rewards.

The correct answer is Dispersion

Key Points Dispersion

• Dispersion measures variation of data from its central value.
• The various methods/measures used to find out dispersion are Range, Inter-quartile Range, Mean Deviation, Quartile Deviation, Variance, Coefficient of Range, Mean Deviation, Quartile deviation, Coefficient of Variation.
• Range - difference between the largest value and smallest value of the data.
• Inter-quartile Range - difference between third and first quartile. IQR = Q₃-Q₁
• Mean Deviation - measures variation of the data from its central value i.e. from mean or median or mode
• Standard Deviation - is used to measure variation of the data from mean
• Quartile Deviation - half of the difference between third and first quartile. Q.D. = ${Q_3-Q_1 \over 2}$
• Variance - it is square of standard deviation and used to determine variability.
• Coefficient of Range, Mean Deviation, Quartile deviation - Relative measures of dispersion.
• Coefficient of Variation - Relative measure of dispersion

Additional Information

Skewness

• It measures skewness of the data i.e. whether data is skewed to the right side or left.

​Correlation

• It is the measure of relationship between two variables.​

Kurtosis

• It measures the shape and peakness of the distribution.

The correct answer is Salesmanship.

Key PointsHuman Wants - 

• Human wants are the term used in economics to refer to all human goals, aspirations, and motivations.
• Economic wants are those that can be met by any form of products and services.
• Economic human needs include things like food, shelter, clothing, and so forth. Non-materialistic desires, such as those for peace, love, affection, etc., cannot be purchased.

Important Points Salesmanship - 

• A salesperson uses salesmanship when conducting personal sales.
• Salesmanship is the art of a seller and a buyer conversing face-to-face while the seller use his persuasive abilities to influence the consumer to make the ultimate purchasing choice.
• Sellers must present all relevant product information and persuade buyers that their product will satisfy their needs in order to convince them to purchase a product.
• Because a salesperson today must connect with a variety of people, it is not as simple as it might seem.

Thus, the ability to change human needs into wants is called Salesmanship.

The correct answer is Decision making.

Key PointsBusiness Office- an office where a business does some or all of its back office operations. Managers, accountants, human resources staff, and other employees required for the efficient operation of a company may have offices in a business office.

Important PointsThe function of a business office are as follows - 

Receiving visitors - Every client or visitor to the company or organisation must report to the office. Visitors are welcomed at the office, where staff members provide them instructions on what to do or where to go.

Receiving Information- Getting information in the form of letters, emails, phone calls, reports, memos, etc. is one of an office's primary responsibilities.

Information Distribution - In addition to receiving information, a workplace also distributes information, both internally and outside. Offices typically provide information in the following formats: letters, memoranda, reports, circulars, etc.

Information recording -  All information is recorded in an office. Information is recorded by the office clerks for safekeeping and record-keeping purposes. Financial information, correspondence, account invoices, and other types of recorded information are a few examples.

Filing - In every business organization, filing is a crucial task. Filing is the process of organizing and storing original records or copies of documents in an organized manner so they can be quickly found when needed. And paperwork is done there, in the office.

Thus, Decision-making is not the function of a business office. This is one of the functions of management of a company.

The correct answer is Profit and Loss Account.

Key Points

Shortworkings - 

• The amount by which the minimum rent exceeds the real royalty is known as short working.
• In other words, the difference is known as short working or redeemable dead rent whenever the minimum rent exceeds the real royalty.
• Short working is frequently referred to by lessor as "royal suspense."

Important PointsUnrecouped amount of shortworkings - 

• The profit and loss account receives any shortworkings that are not recouped.
• Only surplus is available for recovering shortworkings. The procedure for addressing short working capital is called recoupment of short working capital.
• In other words, the recoupment provision in a Royalty Agreement allows the lessee the ability to recover any overpayments given to the lessor as a result of the lessee's prior failure to comply with the minimum rent requirement.
• For example, the right is deemed to be fixed if the lessor agrees to cover losses only for the first four years. Any remaining shortfall will then be passed to the P&L A/C. (Profit And Loss Account) Future years' unpaid labour won't be compensated in any way.

Thus, In the books of lessee the unrecouped amount of shortworkings is transferred to Profit and Loss Account.

The correct answer is Nominal Transaction.

Key PointsDouble Entry System - The term "double-entry accounting" refers to a system of bookkeeping that assists a business in maintaining its account and keeping it balanced so that it reflects the true state of the business's finances.

Important PointsNominal Transaction - Accounting transaction data for revenue, expense, gain, and loss transactions—all of which show up in the income statement—is gathered using nominal accounts.

Therefore, examples of transactions that are documented in nominal accounts include income from the sale of services, the cost of items sold, and a loss on the sale of an asset, salary paid to employees etc.

Thus, According to the Double Entry System, salary paid to a clerk Ramesh is a Nominal Transactions.

Additional InformationReal transaction - the real accounts' balances are carried over and used as the starting balances for the subsequent accounting period. Permanent accounts and real accounts are both used interchangeably.

Personal Transaction - Personal transactions are ones that are made for private gain, including birthday expenses, prizes, and capital.

The correct answer is Frequency distribution.

Key PointsClass Interval - Classes are a subset of the data that are grouped together, and class intervals are the width of the classes determined by subtracting the upper-class limit from the lower-class limit.

Tabulation form of data - A method of presenting data, tabulation, or tabular presentation of data, is the systematic and logical arrangement of data in the form of rows and columns according to the qualities of the data.

It is a clean, self-explanatory structure that is compact.

Important Points

Frequency distribution - 

• In statistics, a frequency distribution is a diagram that shows how many observations were made within a particular period.
• To make a frequency distribution representation easier to grasp, it can be graphical or tabular.
• Frequency distributions are used by traders in the financial industry to monitor price movement and spot patterns.
• Also, A tabular summary of a set of data, which shows the appearance of data elements in several non overlapping classes, is termed as Frequency distribution.

Thus, Summary and presentation of data in tabular form with several non-overlapping classes is referred as Frequency distribution.

The correct answer is To protect the indigenous industries

Key PointsImports - An import is an item or service that is purchased outside of its nation of origin. International trade is made up of imports and exports.

A country has a negative trade balance, or a trade deficit, if the value of its imports exceeds the value of its exports.

Important PointsSafeguard duty - 

• Safeguard Duty is tariff barrier imposed by government on the commodities to ensure that imports in excessive quantities do not harm the domestic industry.
• It is mainly temporary measure undertaken by government in defence of the domestic industry which is harmed or has potential threat getting hared due to sudden cheap surge in imports.

​Thus, The main objective of safeguard duty is to protect the indigenous industries.

The correct answer is Final entry.

Key Points

Ledger - The main book in the accounting system is the ledger. It contains different accounts where transactions relating to that account are recorded.

Important Points

The Books of Ledger -

• A book of ledger is a compilation of each account that has been debited or credited in the main journal as well as any number of specialized journals.
• It is also known as the principal book of accounts as well as the book of final entry.
• It is a book where all ledger accounts and associated financial activities are kept in an organized and categorized manner.
• A ledger is created when all of the accounts are added up and serves as a permanent record of all transactions.

Thus, Ledger is a book of Final entry.

The correct answer is a, b, d, c, e.

Key PointsMaslow's hierarchy of needs theory -

• Many times, a pyramid is used to represent Maslow's hierarchy of requirements.
• The most fundamental requirements are found at the base of the pyramid of wants, while the most complicated demands are found at the top.
• People can advance to the next level of wants once their lower-level demands have been satisfied.
• The psychological and social demands of humans increase as they go up the pyramid.

Important Points

According to Maslow, some wants are more important than others and that people are motivated to fulfil them. The Five stages of Maslow's hierarchy of needs are as follows - 

1. Physiological needs
2. Security needs
3. Social needs
4. Esteem needs
5. Self actualization needs.

​

The correct answer is Total sale price of the books sold.

Key PointsCopyright -

• The legal right of the owner of intellectual property is referred to as copyright.
• The right to copy is the simplest definition of copyright.
• This indicates that the only people who have the sole right to reproduce a work are the original authors of that work and anyone to whom they grant permission.

Important PointsRoyalty - A legally binding payment granted to an individual or business in exchange for continued use of their assets, such as copyrighted works, franchises, and natural resources, is known as a royalty.

Either production or sales are used as the foundation for calculating royalties. The manufacturing account is debited for royalties paid on production whereas the P/L account is charged for royalties received on sales.

Thus, Under copyright agreement the amount of royalty is computed on the basis of Total sale price of the books sold.

The correct answer is Co-ordinating.

Key PointsManagement - The administration and coordination of tasks to accomplish a goal is management. Setting the organization's strategy and organizing staff efforts to achieve these goals through the application of resources available are examples of such administration activities.

Important Points

 Co-ordinating - 

• Co-ordinating is the essence of management.
• Coordination is the systematic synchronisation of efforts through the unification, integration, and harmonisation of subordinates' tasks for the accomplishment of organisational goals.
• Every company organisation has a number of departments, and each department contains a number of people and groups.
• The power that holds all other management functions together, coordination is not a distinct management function.
• Coordination is an issue for managers at all levels as they carry out the tasks of planning, organising, staffing, leading, and controlling.
• All managerial functions involve coordination, which is both implicit and inherent.

The correct answer is Mutually agreed ratio.

Key PointsProfit & Loss ratio - ratio in which profit or loss of partner's share are calculated.

Admission of New Partners - A new partner may be admitted to the firm to augment its existing resources when it needs extra financial resources, managerial assistance or both for the expansion of its business.

Important Points 

Determining/Adjusting partners’ capital -

• According to a mutually agreed-upon formula, the capital contribution of the partner may be changed to reflect their new profit-sharing formula.
• If this occurs, the capital of the new partner is typically used as a base to calculate the new capitals of the former partners, with any necessary adjustments being made through a case or by transfer to the partners' current accounts.
• Other criteria, such as dividing the total amount of capital to be in the company immediately following the new partner's admission, may be available for determining the capital contributions of the partners following the admission of the new partner.
• However, this is subject to mutual agreement whether the partners want their capital to be in new ratio or not.
• Hence, it should be mutually agreed ratio.

 

Hence, After admission of a new partner the capital of all the partner must be in mutually agreed ratio.

The correct answer is 10%.

Key PointsCalls in arrears- is the non-payment of the amount due on allotment/calls by shareholders.

Important PointsRules for charging of interest on calls in arrears:​

• The Articles of Association(AOA) of a company may empower the directors to charge interest at a stipulated rate on calls in arrears.
• If the articles are silent, the rule contained in Table A shall be applicable.
• Table A states that the interest at a rate not exceeding 10% p.a. shall have to be paid on calls in arrear amount on shares for the period intervening between the payment of amount due and the time of actual payment.
• Calls in arrears is a deducted from called up capital to arrive at paid up capital in Balance Sheet.

The correct answer is Bailor and bailee.

Key PointsHire Purchase System

• Hire purchase is a purchasing option where the buyer makes recurring instalment payments for the products.
• However, the buyer must first make a down payment.
• The title of ownership does not pass to the buyer until full payment has been received.
• Both the principal and the interest are included here.

Important Points In the case of hire-purchase agreements, the relationship between the hire-purchaser and seller is of the bailor and bailee which does not allow the hire-purchaser to dispose of the goods in any manner.

The correct answer is Process​..

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Important PointsDecision Making -

• The evaluation of the process by which one might select among several possible courses of action with the intention of achieving goals is known as decision-making.
• The entire management process is linked with managerial decision-making.
• Decision-making involves a series of steps to be performed by a manager hence it can be treated as a process.
• It determines what needs to be done. What is the proper method? When should this be done, and by whom?
• Thus, Decision-making is a Process.

The correct answer is historical cost.

 Key PointsFixed assets - Long-term tangible assets employed in corporate operations are referred to as fixed assets.

They are categorized as property, plant, and equipment (PP&E) on the balance sheet because they offer long-term financial benefits and have a useful life of more than a year.

Important PointsGross Book Value of a fixed assets - 

• A fixed asset's gross book value is its historical cost or a sum that has been substituted for historical cost in the accounting records or financial statements.
• This number is known as net book value when it is displayed after cumulative depreciation.

Thus , Gross Book Value of Fixed assets is known as historical cost.

The correct answer is Distribution of income among factors of production

Key Points Distribution in Economics:

• In economics, distribution refers to how total output, income, or wealth is allocated among people or among the production factors (such as labour, entrepreneurship, land, and capital).
• The production of goods and services is a joint operation. Land, labour, capital, and enterprise—all the various production factors—combine to form productive activity.
• These factors need to be paid or rewarded for their services for producing the wealth.
• Income from Land is distributed as rent, labour in the form of wages, capital in the form of interest and entrepreneurship in the form of profit.

The correct answer is - Profit Prior to Incorporation

Key Points

• Redemption of Preference Shares
• Permitted only out of divisible profits or fresh issue of shares as per Companies Act.
• Profit Prior to Incorporation
• It is treated as a capital profit.
• Capital profits are not available for distribution as dividend.
• Hence, they are not eligible for transfer to Capital Redemption Reserve (CRR).
• Therefore, cannot be used for redemption of preference shares.
• Legal Restriction
• Only revenue profits (free reserves) can be utilized for redemption purposes.

Additional Information

• Free Reserves
• Include General Reserve and retained earnings available for dividend.
• Capital Redemption Reserve (CRR)
• Created when redemption is done out of profits.
• Can be formed only from divisible profits.
• Workmen’s Compensation Fund
• It is a specific reserve, but restriction depends on liability status.
• Insurance Fund
• May be used only if it qualifies as free reserve.

The correct answer is Shipping company

Key Points Bill of Lading :

• A document issued to the shipper by a carrier or its agent that serves as a contract for the transportation of goods.
• It must be presented when taking delivery of the cargo at the destination and serves as a receipt for cargo accepted for transportation.
• It is the legal document is issued by the shipping company.

Important Points Basic Functions of Bill of Lading:

• Evidence of contract of carriage – between the consignor or shipper and the shipping line.
• Receipt of goods – proof that the shipping line has received the cargo.
• Document of title of goods – the titleholder of the bill of lading also owns the cargo.

The correct answer is Ely

Key Points

Definitions based on Common Acceptability of Money:

According to Ely, “Money consists of those things which within a society are of general acceptability.”

This definition means that money consists of all those things which can be easily and generally accepted by the society.

Important Points Following are salient features of money:

• Voluntarily accepted.
• Medium of exchange and standard of value
• Accepted in general by all.
• A medium of exchange
• A standard of value
• A store of value
• A commodity having common acceptability by community.

The correct answer is Planning

Key PointsManagement:

• Management is the process of planning and organising the resources and activities of a business to achieve specific goals in the most effective and efficient manner possible.
• The purpose of management is to unify the efforts of different individuals in an organisation towards achieving a common goal.
• Functions of management are: Planning, Organising, Staffing, Directing, Controlling.

Important Points Planning as primary function of management:

• Planning is the primary function of management.
• Planning involves defining the organisation's performance objectives and deciding what courses of action and resources will be required to accomplish the objectives.
• Planning helps management determine what the organisation's future should be and how to get there.
• A strategic plan bridges the gap between what an organisation is and what it will become.
• Thus, it is a pre-determined course of action to achieve a specified aim or goal.

Additional InformationCommunication: Communication refers to the process by which information is exchanged between two or more people. Each of the management roles—planning, organizing, leading, and controlling—depends on effective communication.

Decision-making: Identifying a decision, acquiring data, and weighing potential solutions are all steps in the decision-making process.

Motivation: Motivation can be defined as stimulating, inspiring and inducing the employees to perform to their best capacity.

The correct answer is First line managers

Key Points First line managers

• The main work of first line managers, is to manage day to day activities, team management on daily basis.
• S/he is the ground level manager that is why s/he requires technical skills to deal with the situation like machine is not working.
• First line manager co-ordinates with the team members in which he requires more technical skills as compared to middle line and top level managers.

Important Points

 Technical skills - Skills related to knowledge and expertise of the field is known as technical skills.

Additional Information Middle level managers

• Middle level manager is subordinate to top level management and top of the first level management and act as an intermediary between the two.
• S/he is responsible for implementation of policies and act as supervisor of the work done by first line manager and lower staff in the organisation.

​Top level managers

• Top level managers are the most important persons and the decision makers of the organisation.
• Making rules and policies, controlling and overseeing, decision-making are the major roles of a top level manager.

The correct answer is Capital Accounts of all partners in their old profit sharing ratio

Key Points Retirement of Partnership:

• A retiring partner or leaving partner is a partner who no longer works for the firm.
• When a partner retires, the partnership firm is reconstituted because the original contract between the partners no longer exists.
• A new contract with the remaining partners may allow the company to continue operating.
• A retiring partner is entitled to get his share of capital, interest on capital, revaluation profit, share of profit etc. up to the date of his retirement.

Important Points Revaluation of Assets and Liabilities at the time of retirement of a partner:

• There may be some assets and liabilities that are not reflected in the records at their current values at the time of retirement or the death of a partner.
• Additionally, some unrecorded assets and liabilities may exist that demand entry into the records.
• In order to determine the net gain or loss from revaluing assets and liabilities and adding unrecorded items to the books, a revaluation account is generated.
• All partners, including those who are retiring or have passed away, receive the Revaluation Profit or Loss and is credited or debited in their Capital Accounts according to their Old Profit Sharing Ratio.

The correct answer is Standard Deviation

Key Points Standard Deviation

• It is a measure of dispersion used to determine the variation or spread of the data from its mean.
• S.D. is best measure of dispersion as it will give a more comparable and accurate result than other measures, thats why it is most commonly used measure of dispersion.

 

Formula to calculate Standard Deviation

• Standard deviation($\sigma$) = $\sqrt{{\Sigma (x-\bar{x})^2 } \over n}$

Important Points​Dispersion - 

• Dispersion is used to determine variation or spread of the data from its central value.
• Measures of dispersion can be absolute as well as relative.
• Absolute measure of dispersion are range, inter quartile range, mean deviation, standard deviation, quartile deviation etc.
• Relative measures of dispersion includes coefficient of range, coefficient of mean deviation, coefficient of standard deviation etc.

Additional Information

• Range -  It is the difference of largest and smallest value of the data.
• Coefficient of variation -  this is relative measure of dispersion used to determine variability of the data. it is calculated by dividing mean from standard deviation and multiplying with 100.
• Quartile Deviation -  this measure is the half of the difference of the **Q₃ **and Q₁

The Correct Answer is increase

Key Points

Demand - Demand means quantity demanded by customers at different prices during a given time period.

Important Points

Inelastic Demand:

• When due to change in price (whether increase or decrease), quantity demanded remains same, it is known as inelastic Demand.
• In case of inelastic Demand, when the price is increased, it will cause the total expenditure of the consumer to increase because total expenditure = quantity demanded × price.
• The demand will not change but the change in price cause consumer's total expenditure to increase.

The correct answer is Daily basis.

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Key Points

Journal

• In journal all day to day financial transactions are recorded and then posted to their respective ledger account.
• Journal keeps records on a daily basis.

Transaction

• Transaction means an economic event of a financial nature and which can be expressed in monetary terms.

Important Points Format of Journal Entry:

The correct answer is Both in Trading and Profit and Loss Account

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Key Points

Final Accounts

• Final accounts are prepared to know profitability and financial position of the business.
• This is prepared at the last stage of accounting and then reported to stakeholders.

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Important Points

Goods distributed as free samples

• Goods distributed as free samples is an advertisement expense for the business.
• Advertisement is an expense for the business so that it will be shown on Dr. Side of profit and loss A/c.
• The journal entry for free samples is

 

• Effect in Trading Account: Purchases account will be deducted by ₹5000 denoting reduction in purchase of goods.
• Effect in Profit and Loss Account: ₹5000 will be shown on Dr. side of Profit and Loss Account denoting ₹5000 as advertisement expense.

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Additional Information

Profit and loss A/c - This A/c is prepared to know profitability of the business. All expenses related to current year is debited and all incomes of current year is credited to find out net profit or net loss.

Trading Account - This Account is prepared to determine gross profit of the business. Opening stock, purchases, direct expenses are recorded on debit side and Sales, closing stock are shown on credit side of trading account.

Balance sheet --This is a statement showing the financial position of the business at the end of the financial year. Liabilities are shown on the left side and assets are shown on the right side of the balance sheet.

The correct answer is Copyright

Key Points Royalty:

• A user must pay a royalty to the owner of the asset or object over which the owner has certain privileges.
• The owner and the user of such property or rights prepare a royalty agreement.
• If money is paid to acquire the property or right, it will be considered a capital expense rather than a royalty.

Important Points

Royalty on Copyright:

• The author (on his book(s), the photographer (of his images), or any other creator of such creative works has a legal right under copyright.
• Based on the sale made by the publisher, a copyright royalty is paid by the publisher (lessor) of a book to the author (lessor) of that book or to the photographer.

 Additional Information

 Royalty on Patent:

• An invention is a product or a technique that, in general, offers a new way of doing something or presents a new technical solution to a problem.
• A patent is an exclusive right awarded for an invention.
• The patent royalty agreement specifies what is being licensed (e.g. a patented product or technique), how the licensee can use it (to manufacture, use or sell the product), and for how long and under what terms they can use it.

Royalty on Mining:

• The lessee of a mine or quarry pays royalty to lessor of the mine or quarry, which is generally based on the production or output basis.

The correct answer is Board of directors.

Key PointsAuditor: 

• An auditor is responsible for evaluating the accuracy and reliability of a business or organization's financial statements.
• The role of the auditor is to examine and confirm that the accounting information provided by an audited company accurately reflects the activities that the company has engaged in.
• At the conclusion of the audit, the auditor's responsibility is to compile a report that assesses the organization's level of accuracy and transparency.

Important Points

 Internal Auditor

• Internal Auditor is appointed by the Board of directors of the company and the main work of internal auditor is to examine the adequacy and effectiveness of internal control system.
• At the conclusion of the audit, the auditor's responsibility is to compile a report that assesses the organization's level of accuracy and transparency.

 Additional Information

Shareholders - They are the persons, company or organisation who owns share in the company. The shareholder receives dividend on the investment they made in the company.

Creditors - They are the persons from whom the business borrows money and purchased goods on credit.

Board of directors - They are top level decision makers who represent shareholders in the board meetings.

The Correct Answer is Top level management

Key Points Strategic Planning

• Strategic planning is the term used for distribution of available resources, decision-making and defining strategy or directions with an objective to achieve organisation goals.
• Strategic planning is developed by Top level management.

Important Points  Top level management

• These are the most important persons responsible for making rules,  regulations and taking decisions about the organisation.
• Top level management consists of chief executives, managing directors, board of directors etc.

Additional Information

Middle level management

• Middle level managers are superior to First line managers and works under the directions of Top level managers.
• Main work of middle  level management are overseeing the works done by first line manager, team building, problem-solving and talent development.

The correct answer is An asset

Key Points Petty cash book

• In petty cash book all day to day petty (small nature) transactions are recorded like refreshment, stationary, postage etc.
• The balance left in petty cash book is an asset.

Important Points

Petty cash book is maintained by using two methods

1. Ordinary system -  In ordinary system chief cashier gives a fixed amount to petty cashier for petty expenses. And after the amount given to the petty cashier is spent wholly, the account is closed.
2. Imprest System -  In imprest system chief cashier gives a fixed amount thereafter at the end of each period chief cashier gives to petty cashier an amount equal to the expenses of the particular period. In this way petty cashier left with a balance of fixed amount in each period.

The correct answer is borrow money from Reserve Bank of India

Key Points

Bank Rate:

• The bank rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks without holding any collateral.
• There will be no repurchasing agreement written up or agreed upon if there is no collateral.
• Short-term loans with collateral are permitted by the RBI. Repo Rate is the term for this.
• The Reserve Bank of India sets bank rates in India.
• As of its ability to restrict liquidity, and it is frequently higher than a Repo Rate.

Therefore, 'Bank rate' is the rate at which commercial banks borrow money from Reserve Bank of India

The correct answer is All the Real, Personal and Nominal Accounts are opened

Key Points Ledger - 

• After the transactions are recorded in the journal, it is then posted in the principal book called as ‘Ledger’.
• Ledgers are balanced at the end of the year to find out differences.

Important Points

Ledger Posting -

• Ledger posting is the process of moving journal entries to the appropriate ledger accounts or
• Ledger posting is the process of entering data from the journal for specific records into the appropriate ledger accounts.
• Posting to the ledger is classifying phase of accounting.
• In Ledger, all the Real, Personal and Nominal Accounts are opened.

Additional Information

• A Real account is a general ledger account for assets and liabilities
• A personal account is an account in the general ledger that is linked to every person, including individuals, businesses, and associations.
• All revenue, costs, losses, and gains are recorded in a nominal account, which is a general ledger account. An interest account is a type of nominal account.

The correct answer is Personal A/c

Key Points Share Allotment Account:

• Share allotment account is an account opened at the time of allotment of shares.
• All the money received by the shareholders is held in this account.
• Share applications, share allotments, and share capital accounts are all personal accounts because they hold money that belongs to shareholders and are used to pay obligations.
• These are to be debited because of the rule "Debit the receiver".

The correct answer is Ownership is transferred immediately.

Key PointsHire Purchase System:

• A way of financing a fixed asset that will be purchased in the future is hire buy.
• Payments are made in instalments for the purchase price under this financing strategy.
• After the final instalment has been paid, ownership of the asset is changed.

Important PointsPrice is paid in instalments

• This statement is true because under hire purchase system the buyer, or the hirer, is responsible for paying the vendor in instalments over the allotted time.

Possession is given immediately

• This statement is true because under hire purchase system possession to the hirer is transferred immediately but ownership is transferred at the time of last instalment payment.

On default the seller has a right to repossess the goods

• This statement is true because under hire purchase system, the seller has the right to take back the items in the event that the hirer fails to make any required instalment payments.
• In that situation, the money already given to the vendor by the hirer will be regarded as rent for the time the products were kept.

Ownership is transferred immediately,

• This statement is false because under hire purchase system the hire purchaser becomes the owner of the asset after paying the last instalment not immediately.

The correct answer is 75 ∶ 36 ∶ 49.

Key PointsOld Ratio = 5:3

Sacrificing Ratio = Old Ratio x Surrender Ratio

R's sacrificing ratio = 5/8 x 1/4 =5/32

S's sacrificing ratio = 3/8 x 2/5 = 6/40 = 3/20

New Ratio = Old Ratio - Sacrificing Ratio

R's New Ratio = 5/8 - 5/32 = 15/32

S's New Ratio = 3/8 - 3/20 = 9/40

T's Share = R's Sacrifice + S's Sacrifice

= 5/32 + 3/20 =49/160

New Profit Sharing Ratio of R:S:T = 15/32 : 9/40 :49/160

= 75 : 36 :49 /160

Hence, new profit sharing ratio = 75:36:49

The correct answer is An agreement

Key Points Partnership:

A partnership is a type of business where two or more persons enter into a legal agreement to be co-owners, share in the organization's profits or losses, and divide the duties for managing it.

Important Points Features of Partnership:

1. Agreement between Partners: A partnership is an outcome of an agreement between partners who have agreed to carry on a legal business and share the profits and losses arising from it. Such an agreement is in the written form or oral form.

2. Two or More Persons: A partnership must consist of at least two (2) people who have a shared objective. In other words, a business can have a minimum of two partners. There is a cap on how many individuals they may have at once, though.

3. Sharing of Profit: The agreement between partners to share the profits and losses of a commercial concern is another important aspect of a partnership. The Partnership Act's definition, on the other hand, clarifies that a partnership is an organisation between individuals who have agreed to split a business's profits; however, the division of losses is implicit. Sharing profits and losses is therefore essential.

4. Business Motive: It is important for a firm to carry some kind of business and should have a profit gaining motive.

5. Mutual Business: The partners act as both the owner and the agent of their company. Any action taken by one partner may have an impact on the other partners and the company. 

6. Unlimited Liability:  Every partner in a partnership has unlimited liability.

The correct answer is All of the above.

Key Points

• The minimum rent is the amount that a landlord will never accept from a tenant who must pay royalties in the case of mining in any given year.
• Other names for minimum rent include fixed rent, dead rent, flat rent, and contract rent.
• The person who must pay the royalty must pay the minimum rent in any given year if the amount of the royalty is less; but, if the amount of the royalty is greater than the minimum rent, the royalty will be paid.

The correct answer is Internal Check.

Key PointsInternal Check:

• The process that entails a proper and rational distribution of work between the members of the staff of the organisation is called Internal Check because the internal control system's internal check is a crucial component.
• It is a system of assigning tasks to employees so that each employee's work is automatically and independently reviewed by another employee.

Additional InformationInternal Audit: An organisation's internal controls, including its corporate governance and accounting procedures, are assessed via internal audits. These audits help to maintain accurate and timely financial reporting and data collecting while ensuring compliance with laws and regulations.

Internal Evaluation- It means evaluation conducted by a person who is part of the project or a person under contract to the project.

Internal Management: The management within an organisation of any company or organisation is known as internal management.

The correct answer is Less than type distribution.

Key Points

Cumulative Frequency Distribution: 

• The cumulative frequency is the sum of all frequencies, where the first class interval's frequency is added to the second class interval's frequency, and the sum is then added to the third class interval's frequency, and so on.
• The cumulative frequency table or cumulative frequency distribution is the table that displays the cumulative frequencies that are distributed over various groups.
• The cumulative frequency distribution is typically used to determine how many observations in the given data set fall above or below a given frequency.

Important Points

Types of Cumulative Frequency Distribution

• Less than Cumulative Frequency: The Less than Cumulative Frequency Distribution is created by summing each previous class's frequency in turn with the class that it is written against. In this form, the size of the cumulate is ordered from lowest to highest.
• More than Cumulative Frequency: The more than type cumulative frequency is an alternative name for the larger than cumulative frequency. Here, the cumulative total frequencies are calculated from the highest class to the lowest class to give the greater than cumulative frequency distribution.

Example :

The correct answer is Book-keeping.

Key PointsBook-keeping: 

• The accounting process includes bookkeeping, which is concerned with recording transactions.
• It is the organised recording and grouping of accounting transactions.
• A useful accounting function that aids in the accounting process is bookkeeping.

Important Points Objectives of Bookkeeping:

• The systematic or organised recording of financial transactions is bookkeeping's main goal.
• To summarise the transactions in a chronological order.
• To provide financial information to both internal and external users, which will be beneficial in making future plans.
• To detect potential errors in recording of information.

The correct answer is Both in Trading Account and Balance Sheet. 

Key PointsTrading Account:

• The gross profit or gross loss of a business as a result of trading operations is calculated using the trading account.
• The majority of trading operations pertain to the buying and selling that takes place in a business.
• Businesses engaged in trade can benefit from having a trading account.
• They can quickly ascertain the business's overall gross profit or loss thanks to this account.

Profit and Loss Account:

• Profit and loss account shows the net profit and net loss of the business for the accounting period.
• This account is prepared in order to determine the net profit or net loss that occurs during an accounting period for a business concern.

Important Points Goods are loss by fire:

When goods are loss by fire they are loss by nature and insurance company has admitted claim in full, therefore it will affect both Trading and Balance sheet.

• Effect on Trading account: Purchases will be deducted by ₹10000 since goods are lost
• Effect on Balance Sheet: Insurance company has admitted the claim in full therefore it will be recorded on Asset side of Balance Sheet.

The correct answer is Conservatism.

Important Points

Principle of Conservatism: 

• The concept of conservatism requires that profits should not to be recorded until realised but all losses, even those which may have a remote possibility, are to be provided for in the books of account.
• This approach of providing for the losses but not recognising the gains until realised is called conservatism approach.

Additional Information

• Principle of Consistency: This principle states that all the methods of accounting should be consistent every year.
• Principle of Full Disclosure: The principle of full disclosure requires that all material and relevant facts concerning financial performance of an enterprise must be fully and completely disclosed in the financial statements and their accompanying footnotes.

The correct answer is Voucher

Key Points

Vouching:

• Vouching is defined as the verification of entries in the books of account by examination of documentary evidence or vouchers, such as invoices, debit and credit notes, statements, receipts, etc.
• All such types of documentary evidence are known as vouchers.

Additional Information Journal Entry: The recording of a transaction in the books of account is called journal entry.

Cash book: Cash book is a subsidiary book in which all cash transactions are recorded.

Pass book: All the cash inflow and outflow transactions in the bank account is recorded in pass book which is maintained by Bank.

The correct answer is Short run. 

Key PointsPerfect Competition Market: 

• The term "perfect competition" refers to a market structure with the highest conceivable level of competition.
• To clarify, a market is considered to display ideal competition if it demonstrates the following traits in its structure:

Important Points

Supernormal Profit under Perfect Competition Market

A perfectly competitive company may experience super normal earnings, normal profits, and even losses in the short term.

If a company generates profits super normal profit, then: AR> AC and the AC curve is lower than the MR / AR curve.

Short Run equilibrium of Perfectly competitive firms:

The theory of perfect competition suggests that supernormal profit can only be earned in the short term. In the long-term firms will make normal profit.

Perfect competition is a market structure which involves:

• Perfect information
• Freedom of Entry and exit

Suppose there is a rise in demand, price rises and a firm can make supernormal profit in the short-term.

The supernormal profit is (AR – AC) x Q2.

• Other firms will be aware of this fact. Since, there are no barriers to entry, firms will be encouraged to enter the market until price falls back down to P1 and normal profits are made.

The correct answer is Three column cash book.

Key PointsContra Entry:

• A Contra entry is one that has an impact on both sides of a single account.
• Transactions that affect both the bank and the cash at the same time are typically reported as a contra entry.
• In the ledger folio column of the Cash Book, it is denoted by the letter "C."
• Cash and bank accounts are included in double and triple column cash books.
• A contra entry occurs when we deposit cash at bank or withdraw cash from bank.

Important Points Three Column Cash Book : 

• The most thorough type of cash book has three money columns on both the receipt (Dr) and payment (Cr) sides to record transactions including cash, bank, and discounts.
• This type of cash book is also known as a three column cash book.
• Large businesses that routinely accept and grant cash discounts as well as make and receive payments in cash in addition to bank transfers typically maintain a triple column cash book

Additional InformationSimple Cash Book : The single column cash book, sometimes referred to as the basic cash book, is a cash book that solely records a company's cash transactions. Similar to a regular cash account, it records all cash receipts on the left (debit) side and all cash payments on the right (credit) side in chronological order.

Petty Cash Book : The petty cash book is a record of small-change expenses that is organised by date. The petty cash book is often a physical ledger book rather than a digital record. The book is therefore a component of a manual data-keeping system. As businesses gradually stop utilising petty cash in favour of using company credit cards, the importance of the petty cash book has decreased.

The correct answer is Fixed assets

Fixed assets are not a source of finance for a company.

Key Points Fixed assets: 

• Fixed assets are long-term tangible assets that businesses employ to make money.
• Due to their long productive lives, fixed assets bring the company long-term financial gain.
• Property, Plant, and Equipment, which appears  on the balance sheet, denotes fixed assets, also referred to as capital assets.
• Fixed assets are difficult to turn into cash.

Important Points Source of finance for a company:

Equity share capital: 

• Equity share capital is  that investors and business owners contribute to a company's capital and utilise to grow or scale up the operations of their venture.
• This is categorised as owned capital.
• Equity share capital remains with the company.
• It is given back only when the company is closed.
• Equity Shareholders possess voting rights and select the company’s management.
• No fixed dividend is paid to equity shareholders.

Preference share capital:

• Preference Share Capital is the funds generated by a company through issuing preference shares
• This is also categorised as owned capital.
• Preference Shareholders have the first claim to their dividend.
• The Preference Shareholders get a fixed rate of dividend.
• Preference shareholders do not get voting rights in the selection of the company’s management.

Debentures:

• A debenture is a tool a lender, such a bank, uses when supplying capital to businesses and people.
• Debentures are considered as liabilities.
• Even if the borrower misses a payment, it permits the lender to enforce loan repayments against the borrower's assets.
• Debentures have a fixed rate of interest, and such interest amount is payable yearly or half-yearly.
• Debenture holders do not get any voting rights.

The correct answer is ₹4.

Key PointsReissue of Shares:

• The price at which the shares are reissued is up to the firm, but the total amount received on the shares cannot be less than the amount that is owed on the shares.
• The sum paid out to both the first allottee and the second buyer is referred to as the entire amount in this context..

Important PointsIn the above question, A company forfeited 100 equity shares of ₹10 each on which a final call of ₹4 per share was unpaid, it means ₹6 is paid.

Hence, the company can reissue the share at minimum price of ₹4, because maximum discount should not be exceeded the paid amount.

The correct answer is Realization Account

Key Points Realization Account:

• Realisation account is an account opened during the dissolution of a partnership firm.
• The objective of preparation of realization account is to calculate profit or loss on dissolution of partnership firm.
• In this account, the transactions related to the realisation of assets and the settlement of liabilities are recorded.

Important Points Format of Realisation Account:

Additional Information Revaluation Account: Revaluation accounts are nominal accounts created for the distribution and transfer of gains and losses on assets and liabilities resulting from changes in the profit-sharing ratio, partner admissions, retirement, and death, as well as increases and decreases in the book value of assets and liabilities.

Partner's Capital Accounts: The account that keeps track of all business activities between partners and the firm is called the Partner's Capital account. Each partner has their own capital account, which is kept independently.

The correct answer is Provision Store

Provision Store is not a form of Large Scale Retail Trading

Key Points Large Scale Retail Trading:

Large scale retail trade is a type of trade in which either a single type of goods or a variety of goods are made available to numerous consumers in a big shop under a single roof or may be made available for the convenience of customers.

In India, generally we find the following types of Large-scale retailing business

• Departmental Store
• Multiple Shops
• Super Market

Important Points Provision Store:

• As the names suggest, these shops sell a variety of everyday things.
• They sell mainly items that individuals need for daily use.
• For instance, you may find many things on stationery, grocery, cosmetics, gift items, biscuits and snacks, etc. in a variety store.
• These merchants typically only accept cash for direct sales. However, for their loyal customers, these merchants may offer discounts, a credit option, and free delivery of the items to the customer's home.

The correct answer is Accounting

Key Points

• Audit: As per The Institute of Chartered Accountants of India (ICAI) “An audit is an independent examination of financial information of any entity, whether profit-oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon”
• Accounting:  Accounting is the art of recording, classifying, and summarising the information of financial nature in the books of accounts to ascertain the true and fair financial position and profit and loss of the organization.

Important Points

• Auditing begins where accounting ends.
• Accounting serves as the backbone of auditing.
• Once the books of accounts are finalized and closed for the accounting year using the accounting process, then only the process of auditing can begin.
• An auditor is supposed to check all the vouchers including cash payments, cash receipts, purchases, sales, fixed assets.

The correct answer is Balance Sheet

Key Points Balance Sheet:

• The balance sheet displays the company’s total assets, and how these assets are financed, through either debt or equity.
• It can also be referred to as a statement of net worth, or a statement of financial position.
• The balance sheet is one of the three fundamental financial statements and is key to both financial modelling and accounting.
• The Balance Sheet is drafted in the form of both 'horizontal' and 'vertical'.
• The balance sheet is based on the fundamental equation:
  

 Assets = Liabilities + Owner's Equity.

Important Points Assets = Liabilities + Owners Equity

Assets: 

• Assets are anything valuable that your company owns, whether it’s equipment, land, buildings, or intellectual property.
• They can be both tangible and intangible.
• Some common asset types include: Accounts receivable, Cash, Inventory, Property and equipment etc.

Liabilities:

• Liability is the financial value of an obligation or debt owed by the business to another organisation or individual.
• Liabilities are recorded on the left-hand side of the horizontal balance sheet, which includes different types of loan, creditors, lender and suppliers.

Owner's Capital:

• The capital, owner's equity, or net worth refers to the owner's investment in the firm or the owner's net recoverable from the business.

The correct answer is Geometrically

Key Points

Malthus' theory of population:

• Population and Food Supply: Malthus theorised that any population grows in geometric progression.
• He believed that a balance between population growth and food supply can be established through preventive and positive checks.

Important Points Major Elements of the Malthusian Theory

Population and Food Supply: 

• The Malthusian theory provided an explanation for why population growth is geometric.
• At this rate, the population would double in 25 years. However, there is an arithmetic increase in the food supply.
• The amount of food available grows more slowly than the population. In other words, there won't be enough food in a few years.
• A growing population is indicated by the food supply shortfall.

Checks on Population:

• Disequilibrium occurs when there is a gap between the rate of population growth and the availability of food.
• People will therefore not have access to even enough food for survival. Due to a scarcity of food, many will perish.
• Malthus referred to the occurrence of adversities like epidemics, wars, starvation, famines, and other natural disasters as positive checks.
• Contrarily, there are artificial checks referred to as preventive checks.

Positive Checks:

• The natural world has its own mechanisms for regulating the expanding human population.
• It raises the population to the level at which food is readily available.
• Famines, earthquakes, floods, diseases, wars, etc. are examples of the positive checks.
• When population expansion becomes out of control, nature becomes more active.

Preventive Checks:

• Late marriage, self Control, and simple living are preventive strategies that help to balance population increase and food availability.
• These procedures not only limit population increase but also have the potential to avoid the terrible effects of positive checks.

The correct answer is Bad money drives good money out of circulation

Key Points Greham,s Law: 

• Greham's Law states that “bad money tends to drive good money out of cir­culation when both are full legal tender”.
• The term “bad money” does not mean coun­terfeit coins. It refers to coins that are worn, clipped, or underweight.
• When both "good money" and "bad money" are in use, people will utilise the "bad money" for purchases while hoarding the "good money."
• Humans have a natural tendency to keep the nicer coins and discard the somewhat old and worn out coins.

The correct answer is Economic survey publication.

Key PointsData - Individual pieces of factual information that are recorded and used for analysis are known as data. The foundation from which statistics are derived is raw data.

Important Points Primary Data - 

• Primary data is a type of information that is gathered by researchers directly from primary sources using methods including tests, questionnaires, and interviews.
• The greatest type of data for study is primary data, which is typically gathered from the source—where the data initially originates from.

The method of collecting primary data are as follows - 

1. Direct Method
2. Indirect Method
3. Questionnaire Method
4. Local Correspondents Method
5. Enumeration Method

In above questions, 

• Direct personal investigation is direct method of primary data
• Indirect oral investigation is indirect method of primary data
• Schedules to be filled in by enumerators is Enumeration Method  by primary data
• Data collected from Economic survey publication is types of  Secondary Data.

Additional Informatio

Indirect Method -

• Information on addiction, marriage proposals, economic condition, witnesses in court, criminal procedures, etc. are examples of the kind of data that can be collected in this way.
• Since the information's authenticity and accuracy are entirely dependent on the third party, this method has a drawback.

The correct answer is Rs. 550.

Key PointsInterest on drawings -  Amount debited to the partners at an agreed rate of interest based on the amount taken out. No interest is to be charged on the drawings made by the partners, if there is no mention in the Deed.

Calculation of Interest on drawings When Fixed Amounts were Withdrawn Every Month-

Interest on drawings =  Total Drawings in a year x Average period/12 x rate of interest/100

 Average period:

       1. When the amount is withdrawn at the beginning of each month= 6.5 months        2. When the amount is withdrawn at the end of each month= 5.5 months        3. When money is withdrawn in the middle of the month=  6 months

Important PointsAverage period = 5.5 months 

The rate of interest = 5% p.a.

Drawing per month= Rs.2000 

Interest on drawing = Total Drawings in a year x Average period/12 x rate of interest/100

= Rs.2000 x 12  x 5.5/12 x 5/100

= Rs.550.

Additional Information

1. Calculation of  Average period when Fixed Amount is withdrawn Quarterly -

• If the amount is withdrawn at the beginning of each quarter = 7.5 months
• If the amount is withdrawn at the end of each quarter = 4.5 months       2. Calculation of interest on drawing When Varying Amounts are Withdrawn at Different Intervals=

                                    =Total of products × Rate × 1/12

Formula for Average period = (Months left after first drawing + Months left after last drawing)/2

The correct answer is Profit and Loss Account.

Key PointsDebentures – Marketable security (a type of Loan) issued by a business or other organization to raise money for long-term activities and growth and yielding a fixed rate of interest. Debentures can be issued at par, at premium and at discount.

Important PointsSinking Fund - 

• A sinking fund is a specific kind of fund that is established with the intention of paying off debt.
• The account holder routinely sets aside a specified sum of money and utilizes it only for that reason.
• Corporations frequently use it for bonds and deposit funds to purchase issued bonds or portions of bonds before the maturity date.
• Each year, profits are used to fund a sinking fund or debt redemption fund in an equal amount.
• After debentures are redeemed, the remaining funds in the Debentures Sinking Fund are moved to the General Reserve account.
• It is transferred to the general reserve account since it is the portion of the redeemed debenture proceeds that is held apart.

Thus, In Sinking Fund for redemption of Debentures Account, the amount is transferred every year from Profit and Loss Account.

The correct answer is All Partner's Personal Accounts.

Key PointsJoint life Insurance Policy - 

• Joint Life Policy refers to a policy that the firm's partners decide to cover the joint lives of other partners.
• The joint life insurance policy's goal is to lessen the firm's financial burden when it comes time to paying a sizable sum to the partner's decedent's estate's legal representative.
• Following the passing of his insured partner, the insurer receives the reimbursement.

Important Points Joint life Insurance Policy Reserve Account - 

• The Joint Life Policy Account will appear on the balance sheet as an asset.
• The amount to be written off may be credited and retained in the Joint Life Policy Reserve Account rather than the Joint Life Policy itself.
• Both the Joint Life Policy A/C and the Joint Life Policy Reserve A/C are reported using this method at their respective surrender values on the Assets and Liabilities side.
• When a partner passes away, the money collected from the insurance company will be credited to the Joint Life Policy Account.
• When insurance amount receive transfer the Joint Life Policy Reserve Account to the Joint Life Policy Account first, and then, if there is a balance, transfer it to the Partners' Capital Accounts at the time the policy is surrendered.
• The balance of Joint Life Policy account will then be divided among the remaining partners in the profit-sharing ratio, including the deceased partner.

The correct answer is auditing.

Key Points Auditing:

As per The Institute of Chartered Accountants of India (ICAI) “An audit is an independent examination of financial information of any entity, whether profit-oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon”

Important Points

• Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following a documented system of recording transactions.
• It is done to ascertain the accuracy of financial statements provided by the organisation.
• Auditing is compulsory for all types of companies which is registered under companies act, whether the company is private company, public company or joint stock company.
• The books of accounts is to be audited every year in case of a company.

The correct answer is F.W. Taylor.

Key PointsManagement - 

• The administration and coordination of tasks to accomplish a goal is management.
• Setting the organization's strategy and organizing staff efforts to achieve these goals through the application of resources available are examples of such administration activities.

Important PointsManagement, according to F. W. Taylor, is the art of recognizing what has to be done and making sure it is carried out as effectively as possible.

Additional InformationHenri Fayol  said, "Managing involves forecasting, planning, organising, commanding, coordinating, and controlling the activity of others."

“Management is concerned with seeing that the job gets done, it tasks all center that on planning and guiding the operations to it are going on the enterprise.” – E.F.L. Brech.

Management is the attainment of pre-established goals by the direction of human performance along pre-established lines. It is the management of people and not the direction of things.” - Oliver Sheldon

"Management is a separate process consisting of activities planning, organising, actuating, and controlling, undertaken to establish and execute stated objectives with the use of human beings and other resources," write Terry and Franklin.

According to Koontz and Weihrich, management is the process of creating and upholding a setting where people may effectively accomplish particular goals when they collaborate in groups.

The correct answer is Government Company.

Key PointsCompany - The term is derived from the Latin word (“com” meaning “with” or “together”; “panis” that is “bread”) Section 2(20) of Companies Act 2013 states that a company means any association of person registered under the present or the previous companies act.

Important PointsGovernment Company - 

• A government corporation is a business or organization in which central government or the state government or partly by both central and state government hold at least 51 percent of the paid-up capital.
• There are numerous government-owned businesses; a few of them include State Trading Corporation of India, Bharat Heavy Electricals Limited, Coal India Limited, Steel Authority of India Limited, and others.

Additional InformationPublic Enterprises - 

• An industrial or commercial venture that the government manages is referred to as a public enterprise.
• Additionally, social welfare and preserving the interests of the general public are such an enterprise's main goals.

Joint Stock Company- A joint-stock corporation is a company that is owned by its stockholders, with each stockholder owning a share according to the number of shares they purchased.

Private Enterprises - A private enterprise is a company that is owned and run by people who independently chose to pursue a particular business idea. It differs from a government institution in that it is not subject to government control.

The correct statement is Closing Stock shown in Trial Balance is recorded in Balance 

Important Points Option 1: Income tax is a trade expense

• This statement is false as Income tax is a personal expense of the proprietor. Business pays tax in the form of corporation or profit tax. Hence, Income tax is not a trade expense.

 Option 2: Closing Stock shown in Trial Balance is recorded in Balance Sheet

• This statement is true as closing stock if present in the trail balance means that the accounting for it has already been done, and it is an asset so recorded only in Balance Sheet.

Option 3: Prepaid Expenses Account is Nominal Account

• This statement is false as prepaid expenses are those expenses which have been paid in advance. Prepaid (unexpired) expense is a personal account and is shown on the Assets side of a balance sheet.

Option 4: Advance received from a customer is credited to Profit and Loss Account as an income.

• This statement is false as advance received from a customer is not treated as revenue. According to the accrual method of accounting, it is handled as a current liability as the goods or service haven't been delivered yet against the advance received. Until a customer invoice is received, it is reflected on the liabilities side of the balance sheet.

The correct answer is Both cash and credit sales.

 Key PointsBranch Accounting - 

• Accounting departments measure, process, and convey financial and non-financial data that has an impact on a company's economic affiliations and interests.
• To gauge the outcomes of an organization's economic activity, the majority of enterprises and corporations employ accounting branches.

Important Points

Dependent branch - A branch is referred to as a dependent branch when the head office, which also manages its accounts, completely controls its policies and administration. The following features are of Dependent Branches - 

• The books of a dependent branch are not kept separately. The Head Office keeps track of every transaction. The branch does, however, keep a Stock Ledger and a Debtors' Ledger.
• To determine the amount owed by debtors, a debtors' ledger is kept. To track the movement of the items from the head office and the amount of stock on hand, a stock ledger is kept.
• In general, the Head Office provides all of the Branch's goods. However, on occasion, the Branch may be permitted to make purchases from local vendors, for which the Head Office is responsible for making the payments.
• Such branches typically only accept cash as payment for goods. With the head office's consent, these branches may sell products.
• The money obtained from cash sales or debtors(maintained on credit sales) is either immediately sent to the head office or deposited intact in the head office's account at a nearby bank. As much as feasible, the head office covers all significant branch expenses.
• The branch may receive petty cash from the Head Office in order to cover its miscellaneous expenses. The branch's petty cash account can be managed using either the simple system or the impress system.
• Thus, Dependent branch can make Both cash and credit sales.

The correct answer is All of the above.

Key Points

Vouching:

• Vouching is defined as the verification of entries in the books of account by examination of documentary evidence or vouchers, such as invoices, debit and credit notes, statements, receipts, etc.
• All such types of documentary evidence are known as vouchers.

Important Points Vouchers:

• The use of vouchers during an audit is essential.
• They are an important source of proof since they verify the reality of the goods and services listed on the financial accounts.
• Primary voucher refers to the written evidence in original. Examples of primary voucher are purchase invoice, cash receipt, bills, Counterfoils, confirmation of balances, bank statements, contracts, etc.
• When the original voucher is not available, copies thereof are produced in support or as subsidiary to remove suspicion and to satisfy the auditor, such a voucher is known as Collateral Voucher.

The correct answer is Charter of the Company.

Key PointsCompany - The term is derived from the Latin word (“com” meaning “with” or “together”; “panis” that is “bread”) Section 2(20) of Companies Act 2013 states that a company means any association of person registered under the present or the previous companies act.

Important PointsMemorandum of Association - 

• A legal document known as the Memorandum of Association outlines the reason the firm was founded.
• It outlines the company's authority and the circumstances under which it must function.
• It is a document that outlines all the guidelines that direct how a business interacts with the outside world.
• It is a foundation on which the company is made.
• The entire structure of the company is detailed in the Memorandum of Association.
• It is the company charter, a crucial document that outlines the fundamental terms on which the business was founded.

The correct answer is Industrialization.

Key Points

Environmental Pollution - 

• Despite not being a recent issue, environmental pollution continues to be one of the biggest dangers to human health and wellbeing as well as one of the leading causes of environmental mortality and morbidity.
• For instance, when materials like plastic, heavy metals, etc. are discharged into the atmosphere. It cannot be broken down naturally and is detrimental to living things.
• In environmental pollution, contaminants come from a source, travel by air or water, and then are released into the ground by people.

Important PointsIndustrial expansion is the main causes of environmental contamination. An imbalance occurs when there are too many physical, chemical, or biological agents present. Here are some instances of pollutants:

Chemical pollutants- They originate from the chemical sector, which produces poisonous goods like pesticides, solvents, plastics, acids, and solvent-based solvents.

Physical pollutants -They originate from phenomena brought on by human activity, such as electromagnetic energy, heat, radioactivity, and noise.

Biological pollutants- They are produced by the fermentation and breakdown of organic waste, such as that found in sewers, factories, and sewers.