FINANCIAL ACCOUNTING & ANALYSIS

SELF ASSESSMENT – 2
General Instruction:

 This question paper is of 70 marks

 Part A has 10 Multiple Choice questions for ½ mark each.
 Part B has 15 Multiple Choice questions for 1 mark each.
 Part C has 10 Multiple Choice questions for 2 marks each.
 Part D has essay type questions Attempt any 3 out of 4 for 10 marks each

PART A
Choose the correct option:
1. It includes the records of all receipts and payments made by cash and cheques:
a. Cash book b. Bank book
c. Clearance book d. Receipts and Payment book
2. The exposure draft is sent more than how many institutes for comments:
a. 300 b. 450
c. 600 d. 650
3. It is the systematic allocation of the depreciable amount of an intangible asset over its useful life:
a. Amortisation b. Depreciation
c. Cost of usage d. None of the above
4. In which year were International Financial Reporting Standards regarding disclosure of financial statements
original issued?
a. 1973 b. 1979
c. 1983 d. 1989
5. The format of Financial Statements prescribed in Schedule III of Companies Act, 2013, was voluntary
applicable from:
a. April 2014 b. April 2015
c. April 2016 d. April 2017
6. Which of these is NOT included in current liabilities?
a. short-term borrowings b. capital work-in-progress
c. other current liabilities d. short-term provision
7. Repairs to building and machinery is categorised under which of the following heads?
a. non-current liabilities b. current liabilities
c. Miscellaneous expenditure d. contingent liabilities
8. It refers to potential liabilities that occurs due to an unforeseen or uncertain future event such as court cases
or fire:
a. a. non-current liabilities b. current liabilities
c. Emergencies d. contingent liabilities
9. It refers to the analysis of the percentage increase or decrease in corresponding items in comparative
financial statements:
a. straight line b. vertical analysis
c. horizontal analysis d. fundamental analysis
10. Vertical analysis of a balance sheet uses the common base as the _______ of an organisation:
a. total assets b. total liabilities
c. total equity d. total sales
PART B
1. In which step of accounting process, the recorded transactions are transferred from the journal books to the
ledger:
a. recording entries in the book of original entry b. preparation of voucher
c. posting to the ledger d. preparation of trial balance
2. It records the page number of the ledger on which debit and credit accounts are posted:
a. ledger folio b. ledger follower
c. journal follower d. journal folio
3. Which among the following is NOT the content in a trial balance format?
a. headers b. footer
c. ledger folio d. debit amount
4. Which among the following are those expenses which are not directly related with the process of
production and these expenses are related to management and supporting activities of a business organisation?
a. operating expenses b. revenue
c. administrative expenses d. maintenance expenses
5. It refers to a statement that summaries and presents the financial position of an organisation on any given
date:
a. error of omission b. trial balance
c. profit and loss account d. balance sheet
6. The auditor’s responsibility is restricted to form his opinion and report on which of the enterprise?
a. Balance sheet only b. financial position
c. financial statement d. financial performance
7. Which among the following is NOT the cost of inventories?
a. Cost of purchase b. Cost of conversion
c. Cost designing products d. borrowing cost
8. It refers to any contract that gives rise to both a financial asset of the one enterprise and the financial
liability or equity shares of another enterprise:
a. preference shares b. financial instrument
c. potential equity shares d. none of these
9. The key difference between the two-accounting framework is based on:
a. the presentation of financial statement
b. inventories valuation and revenue recognition
c. fixed assets and disclosure of accounting policies
d. All of these
10. Debit balance of statement of profit and loss shall be reported as a negative figure under the head:
a. Reserves b. Surplus
c. Capital gains and losses d. both (a) and (b)
11. Depreciation and interest paid are treated as which of the following in a cash flow statement:
a. Cash inflow from investing activities b. cash inflow from other activities
c. non-cash item and is added to profit before taxes d. none of these
12. It is one of the most significant methods to measure the interrelationship between two or more related
variable in the financial statement:
a. comparative financial statements b. common size statement
c. fund flow analysis c. ration analysis
13. It refers to a statement that summarises and presents the financial position of an organisation on any given
data:
a. Profit and loss account b. Income statement
c. Balance sheet d. Principle book
14. It is an organisation that depicts how a firm raises capital and pays back to investors through capital
market:
a. operating activities b. Investing activities
c. financial activities d. departmental activities
15. Which of the following is the part of ratio analysis?
a. liquidity ratio b. solvency ratio
c. profitability ratio d. all of these

PART C
1. It occurs when any transaction is not completely or partially recorded in the books of accounts:
a. Errors of Omission b. Error of commission
c. Error of principle d. Error of compensation
2. It refers to an investment that is by its nature readily realisable and is intended to be held for not more than
one year form the date on which such investment is made:
a. Investment b. current investment
c. long term investment d. Investment property
3. As per general instructions for preparation of Profit and Loss account, in respect of a finance company,
revenue from operations shall include revenue from:
a. Interest b. Loan
c. Other financial services d. All of the above
4. It refers to the proportional analysis of a financial statement, where each item on a financial statement is
recorded as a percentage of another item:
a. vertical common size analysis b. Horizontal common size analysis
c. downward common size analysis d. In line common size
5. It refers to financial statement that summarises a company’s assets, liabilities and shareholders’ equity at a
specific point in time:
a. Profit and loss account b. Balance sheet
c. Trial balance d. Book of balancing
6. When financial transactions are recorded in violation of accounting principles, the error is called:
a. Error of Omission b. Error of commission
c. Error of principle d. Error of compensation
7. ICAI is a member of:
a. The International Federation of Accountants
b. South Asian Federation of Accountants
c. Confederation of Asian and Pacific Accountants
d. All of these
8. It refers to the analysis of the percentage increase or decrease in corresponding items in comparative
financial statements:
a. straight line b. vertical analysis
c. horizontal analysis d. fundamental analysis
9. It measures an organisation’s performance in generating earnings over related expenses over a specified
period of time:
a. liquidity ratio b. solvency ratio
c. profitability ratio c. quick ratio
10. Which of the following shows the current financial position of the firm in comparison to prior period data:
a. comparative balance sheet b. comparative income statement
c. downward comparative income statement d. vertical comparative statement

PART D
1. How are fixed assets different from current assets?
(Refer CHPT 3)
2. Explain how is GST treated in accounts?
(Refer CHPT 4)
3. Explain the operating cycle?
(Refer CHPT 7)
4. Explain the difference between horizontal analysis and vertical analysis.
(Refer CHPT 10)

SOLUTIONS OF SELF ASSESSMENT – 2

PART A
1. a. Cash book
2. a. 300
3. a. Amortisation
4. d. 1989
5. b. April 2015
6. b. capital work-in-progress
7. c. miscellaneous expenditure
8. d. contingent liabilities
9. c. horizontal analysis
10. a. total assets
PART B

1. c. posting to the ledger

2. a. ledger folio
3. b. footer
4. c. administrative expenses
5. d. balance sheet
6. c. financial statement
7. d. borrowing cost
8. b. financial instrument
9. d. All of these
10. b. Surplus
11. c. non-cash item and is added to profit before taxes
12. c. ration analysis
13. c. Balance sheet
14. c. financial activities
15. d. all of these

PART C
1. a. Errors of Omission
2. b. current investment
3. d. All of the above
4. a. vertical common size analysis
5. b. Balance sheet
6. c. Error of principle
7. d. All of these
8. c. horizontal analysis
9. c. profitability ratio
10. a. comparative balance sheet

NOTE: This is a Model Question Paper as per new Paper pattern 2022

Questions shall vary in the Examination