Special Accounting Multiple Choice Questions
1. General insurance policies are generally taken for
A. One year
B. two year
C. three year
D. none of these
Answer: A. One year
2. When a policy matures on the death of the insured , it is expressed as:
A. With profit policy
B. without profit policy
C. whole life policy
D. None of these
Answer: C. whole life policy
3. In the revenue account bonus in reduction of premium is shown as
A. Liability
B. Income
C. Expense
D. None of these
Answer: C. Expense
4. The fixed assets of an insurance company are shown in
A. Schedule 6
B. Schedule 7
C. Schedule 8
D. None of these
Answer: D. None of these
5. Insurance Regulations and Development Authorities Act came to effect in :
A. 1938
B. 1999
C. 2000
D. None of these
Answer: B. 1999
6. Which of the following of an insurance company does not fall under ‘ Income from investments’.
A. Interest and dividend
B. Profit on sale of investments
C. Share transfer fees
D. None of these
Answer: C. Share transfer fees
7. Which of the following of an insurance company is included in other asset
A. Loan to director
B. Agent’s balance(dr)
C. Advance tax paid
D. None of these
Answer: B. Agent’s balance(dr)
8. Reserve for unexpired risk is shown under :
A. Reserves and surplu
B. Current liabilities
C. Provisions
D. None of these
Answer: C. Provisions
9. In life insurance business , claims may arise on …………………….
A. death
B. maturity
C. death or maturity
D. none of these
Answer: C. death or maturity
10. Surrender value is an expression that is used in case of ………………. Insurance business .
A. Life
B. Marine
C. Fire
D. None of these
Answer: A. Life
11. …………….. reserve is created to meet any loss due to natural calamity
A. General reserve
B. Special reserve
C. Catastrophe reserve
D. None of these
Answer: C. Catastrophe reserve
12. Life insurance is contract of ………………………………….
A. Guarantee
B. Indemnity
C. Profit
D. None of these
Answer: A. Guarantee
13. General insurance is a contract of ………………………………
A. Guarantee
B. Indemnity
C. Profit
D. None of these
Answer: B. Indemnity
14. Double insurance is common in ……………………. Insurance.
A. Life
B. Fire
C. Marine
D. None of these
Answer: A. Life
15. Re insurance is generally found in ………………. Insurance
A. Fire
B. Marine
C. Life
D. None of these
Answer: D. None of these
16. Commission of an insurance company is shown in schedule
A. 2
B. 3
C. 4
D. None of these
Answer: A. 2
17. To ascertain profit in life insurance business ………………. Prepared.
A. Revenue account
B. Profit and Loss account
C. Valuation balance sheet
D. None of these
Answer: C. Valuation balance sheet
18. ……………….. of an insurance company are shown in schedule 9.
A. Loan
B. Fixed asset
C. cash & bank balance
D. None of these
Answer: A. Loan
19. Insurance Act came into effect in ………………………………………..
A. 1938
B. 1956
C. 1949
D. None of these
Answer: A. 1938
20. The agreement of insurance is called as………
A. Policy
B. Premium
C. Annuity
D. None of these
Answer: A. Policy
21. The consideration in insurance for covering the risk is called………….
A. Claim
B. Premium
C. Annuity
D. None of these
Answer: B. Premium
22. ……………. Is the party who undertakes the risk in insurance
A. Insurer
B. Assurer
C. Underwriter
D. All of these
Answer: D. All of these
23. The party whose risk is covered in insurance is known as
A. Insurer
B. Insured
C. Underwriter
D. None of these
Answer: B. Insured
24. In …………. The insurer agrees to pay a certain sum of money to the Policyholder either on his death or a certain age, whichever is less.
A. Fire insurance
B. Marine insurance
C. Burglary insurance
D. Life insurance
Answer: D. Life insurance
25. General insurance includes ………………………………………..
A. Fire insurance
B. Marine insurance
C. Burglary insurance
D. All of these
Answer: D. All of these
26. LIC was nationalized in …………………………………………
A. 1935
B. 1950
C. 1956
D. 1964
Answer: C. 1956
27. Insurance business in India is regulated by ……………………………..
A. LIC
B. IRDA
C. RBI
D. SEBI
Answer: B. IRDA
28. Under ………….. , the sum assured is given to the beneficiary only On death of policy holder
A. Whole life policy
B. Endowment policy
C. Annuity
D. None of these
Answer: A. Whole life policy
29. ………………… is the amount payable to the insured on the happening of event.
A. premium
B. Annuity
C. Claim
D. Policy
Answer: C. Claim
30. An annual payment which an insurer guarantees to pay for lump sum money received in the beginning is called ………………..
A. Premium
B. Annuity
C. Claim
D. Policy
Answer: B. Annuity
31. The amount given to the policy holder due to his liability of paying Further premium is called ………………………………..
A. Annuity
B. Bonus
C. Surrender value
D. Claim
Answer: C. Surrender value
32. ……………. Is an arrangement between two insurance companies whereby one transfers a part of risk to other .
A. Re insurance
B. Sub insurance
C. Shared policy
D. None of these
Answer: A. Re insurance
33. Revenue account is also called …………………………………
A. Share holders a/c
B. Policy holders a/c
C. Creditors a/c
D. None of these
Answer: B. Policy holders a/c
34. Valuation balance sheet is prepared by ………………… business
A. Fire insurance
B. Marine insurance
C. Life insurance
D. All of these
Answer: C. Life insurance
35. The commission earned by insurance companies from others for giving them business under re insurance is called ……………………
A. Commission on re insurance ceded
B. Commission on re insurance accepted
C. Agents commission
D. None of these
Answer: A. Commission on re insurance ceded
36. The commission given by insurance companies to others for receiving Business under re insurance is called ………………….
A. Commission on re insurance ceded
B. Commission on re insurance accepted
C. Agents commission
D. None of these
Answer: B. Commission on re insurance accepted
37. The profit and loss amount of general insurance companies are prepared in …………………………………..
A. Form A-PL
B. Form B – RA
C. Form B – PL
D. Form B – BS
Answer: C. Form B – PL
38. The principles of subrogation is applicable to ………………………
A. Fire insurance
B. Marine insurance
C. Burglary insurance
D. All of these
Answer: D. All of these
39. Fire insurance, marine insurance etc come under ………………………
A. Life insurance
B. General insurance
C. Burglary insurance
D. Double insurance
Answer: B. General insurance
40. In life insurance investments are come under the schedule ………….
A. Schedule 7
B. Schedule 8
C. Schedule XI
D. Schedule IX
Answer: B. Schedule 8
41. A …………. Company should transfer 25% of its profit to a statutory Reserve
A. Joint stock company
B. Insurance company
C. pvt ltd company
D. Banking company
Answer: D. Banking company
42. Rebate on bill discounted is a ……………………… of the Banking company.
A. Liability
B. Assets
C. Expense
D. Income
Answer: A. Liability
43. Banks are required to transfer …………………. Of their profit to a statutory reserve
A. 25%
B. 20%
C. 15%
D. 10%
Answer: A. 25%
44. Rebate on bills discounted is …………………………….
A. Income
B. Income received in advance
C. Asset
D. income accrued
Answer: B. Income received in advance
45. Banking business in India is largely governed by the Banking Regulation Act……………………..
A. 1932
B. 1956
C. 1949
D. 1938
Answer: C. 1949
46. ………………… in India is largely governed by the Banking Regulation Act 1949 .
A. Insurance business
B. Banking business
C. Joint stock company
D. Co-operative society
Answer: B. Banking business
47. Banking business in India is governed by the ……………….. Act.
A. Partnership
B. Company
C. Insurance
D. Banking regulations
Answer: D. Banking regulations
48. A banking company should transfer 25% of its profit to a …………….
A. General Reserve
B. Capital Reserve
C. Statutory Reserve
D. Reserve fund
Answer: C. Statutory Reserve
49. A ………………….. loan is payable on demand
A. Short term
B. Demand
C. Fixed
D. Long term
Answer: B. Demand
50. Money at call and short notice is an ……………… of the banking company.
A. Liability
B. Asset
C. Income
D. Expense
Answer: B. Asset
51. A demand loan is payable on ……………………………………..
A. Demand
B. At any time
C. after one yea
D. after six months
Answer: A. Demand
52. Banks shown provision for income tax under the head ……………….
A. Other liabilitie
B. Contingent liabilities
C. Other liabilities and provisions
D. None of these
Answer: A. Other liabilitie
53. No profit and loss appropriation account is prepared in case of a…………… company.
A. Co – operative society
B. Partnership
C. Banking company
D. None of these
Answer: C. Banking company
54. Banks are required to prepare final accounts for each ……….. year
A. Financial
B. Calendar
C. Previous
D. None of these
Answer: A. Financial
55. A banking company required to prepare its profit & loss account according to ……………………… of the III schedule of the Banking Regulations Act.
A. Form A
B. Form B
C. Form C
D. Form D
Answer: B. Form B
56. Rebate on bills discounted is shown on the liability side of the ……….
A. Profit & loss a/c
B. Income statement
C. Balance sheet
D. None of these
Answer: C. Balance sheet
57. Revenue reserve means any reserve other than ……………. Reserve
A. General
B. Capital
C. Other reserve
D. None of these
Answer: B. Capital
58. A …………. Company required to prepare its balance sheet according To form A in the III schedule of the Banking Regulation Act
A. Insurance company
B. Joint stock company
C. Banking companies
D. None of the above
Answer: C. Banking companies
59. A banking company required to prepare final accounts according to …………………schedule of the Banking Regulation Act
A. III
B. IV
C. V
D. VI
Answer: A. III
60. A banking company required to prepare its ……………. According to Form B in the III schedule of the Banking Regulations Act
A. Balance sheet
B. Profit & loss appropriations account
C. Profit & loss account
D. Position statement
Answer: C. Profit & loss account
61. A banking company prepares its ……………….. according to Form A Of the Banking Regulations Act
A. Fund flow statement
B. Cash flow method
C. Balance sheet
D. Income statement
Answer: C. Balance sheet
62. Section 5(1) b of Banking Regulations Act , 1949 deals with
A. Banking
B. Insurance
C. Bills
D. Dividend
Answer: A. Banking
63. Banking Regulations Act 1949 Section 17 deals with
A. General Reserve
B. Reserve fund
C. capital reserve
D. Statutory reserve
Answer: D. Statutory reserve
64. Depreciation on bank property , directors fees , and auditors fees are examples of schedule………………………………..
A. 13
B. 14
C. 15
D. 16
Answer: D. 16
65. Assets which does not carry more than normal risk attach to business and no provision in required to be made against such assets are called
A. standard asset
B. substandard asset
C. Fixed asset
D. current asset
Answer: A. standard asset
66. The claim lodged by the business to …………………….. on happening the event is known as insurance claim
A. Banking company
B. Joint stock company
C. Insurance company
D. None of these
Answer: C. Insurance company
67. The account prepared to find out the stock as on the date of fire is known as ……………………………… trading accounts.
A. statement
B. memorandum
C. consolidated
D. joint
Answer: B. memorandum
68. The clause through which the insurance claim due to loss of stock is reduced to the proportion that the policy value is …………………………..
A. Total clause
B. minimum clause
C. maximum clause
D. Average clause
Answer: D. Average clause
69. The ………………………. Is less than the value of stock it is called under insurance?
A. Endowment policy
B. Life policy
C. Accident policy
D. Insurance policy
Answer: D. Insurance policy
70. Insurance claim is a claim ……………………… by the insurance company
A. Lodged
B. Longed
C. Lounged
D. laughed
Answer: A. Lodged
71. Consequential loss policy is also known as ……………………….
A. Loss of cost policy
B. loss of profit policy
C. loss of Operation cost policy
D. loss of operating expenses policy
Answer: B. loss of profit policy
72. It is ………………………….. to ascertain the value of stock as on the date of fire
A. very easy
B. not very easy
C. very difficult
D. not very difficult
Answer: C. very difficult
73. …………………….. is prepared to find out the stock as on the date of fire
A. Trading account
B. Profit and loss account
C. manufacturing account
D. memorandum trading account
Answer: D. memorandum trading account
74. ………………………. Is the difference between standard sales and actual sales of dislocated period
A. short sale
B. Total sales
C. gross sales
D. Net sales
Answer: A. short sale
75. The turnover during that period in the twelve month immediately before the date of damage which corresponds with the indemnity period is called ……………………………….
A. Annual turnover
B. standard turnover
C. total turnover
D. Net turnover
Answer: B. standard turnover
76. Investment made to earn regular income
A. marketable securitie
B. fixed investments
C. Trade Investments
D. short term investments
Answer: C. Trade Investments
77. The price quoted includes interest
A. cum interest
B. ex-interest
C. excluding interest
D. None of these
Answer: A. cum interest
78. Ex – dividend quotation ………………………………
A. including dividend
B. excluding dividend
C. excess of dividend
D. cumulative of dividend
Answer: B. excluding dividend
79. In respect of government security the price quoted is usually
A. Ex- interest
B. cum interest
C. including interest
D. none of above
Answer: A. Ex- interest
80. Short term investments made out of idle cash are called
A. marketable securitie
B. fixed investments
C. trade investments
D. none of these
Answer: A. marketable securitie
81. Trade investment are investment made for ……………. Period
A. short period
B. long period
C. Two years period
D. None of these
Answer: B. long period
82. Ex – interest means ……………………………..
A. Inclusive of interest
B. Including interest
C. Excluding interest
D. None of these
Answer: C. Excluding interest
83. Cum – interest means ………………………………………
A. Excluding interest
B. Exclusive of interest
C. cumulative interest
D. none of the above
Answer: C. cumulative interest
84. Investment made for long period are called ……………………
A. marketable securitie
B. Temporary investments
C. Trade investment
D. Short investment
Answer: C. Trade investment
85. ………………….. investment made for earning regular income
A. short term investment
B. marketable securities
C. Temporary investment
D. Trade investment
Answer: D. Trade investment
86. Investment in government debentures , bonds etC. come under ………
A. variable income bearing securities
B. Temporary income bearing securities
C. Fixed income bearing securities
D. none of the above
Answer: C. Fixed income bearing securities
87. A ledger maintained where separate investment account prepared for a particular scrip is known as ………………………..
A. investment ledger
B. purchase ledger
C. Sales ledger
D. none of these
Answer: A. investment ledger
88. When bonus share are received the average cost of the existingshares are …………………………….
A. Reduced
B. Increased
C. equal
D. none of these
Answer: A. Reduced
89. Bonus shares are issued by ……………….. free reserves
A. Generalizing
B. Capitalizing
C. equalizing
D. None of these
Answer: B. Capitalizing
90. Bonus shares are issued out of ……………………………………………….
A. capital reserve
B. free reserve
C. share premium
D. none of these
Answer: B. free reserve
91. Right shares are issued to ………………….. share holders
A. previou
B. existing
C. future
D. None of these
Answer: B. existing
92. Investment account is ………………………. Account
A. Personal
B. Nominal
C. Real
D. Revenue a/c
Answer: C. Real
93. Sale of right is a ………………….. receipt in case of right issue
A. Revenue
B. capital
C. deferred revenue
D. none of these
Answer: B. capital
94. Brokerage is ………… in the cost of investment in the books of Purchase of investment
A. Added
B. deducted
C. increased
D. subtracted
Answer: A. Added
95. Interest accrued up to the date of sale of investments addedto……………………………..Price.
A. Ex-interest
B. Cum-interest
C. inclusive interest
D. None of these
Answer: A. Ex-interest
96. The cost of right share is ……………………………
A. added to the cost of investment
B. no treatment is required
C. Subtracted from the cost of investments
D. None of the above
Answer: A. added to the cost of investment
97. Long term investments are carried at ………………………..
A. fair value
B. cost price
C. cost or market price which ever is less
D. market price
Answer: B. cost price
98. Cost of investment includes ………….
A. purchase cost
B. brokerage paid
C. stamp duty paid
D. All of the above
Answer: D. All of the above
99. Short term investments are carried at …………………………………..
A. Fair price
B. cost price
C. cost or market price which ever is less
D. Market value
Answer: C. cost or market price which ever is less
100. ………… account is real account
A. Brokerage
B. Stamp duty
C. purchase
D. Investments
Answer: D. Investments
101. The claim lodged by the business to insurance company on happening the event
A. Claim
B. Loss of claim
C. discharge
D. insurance claim
Answer: D. insurance claim
102. The account prepared to find out the stock as on the date of fire …..
A. Trading a/c
B. Stock a/c
C. Memorandum trading a/c
D. loss of stock a/c
Answer: C. Memorandum trading a/c
103. The insurance claim due to loss of stock is reduced to the proportion that the policy value bears to the value of stock
A. Average clause
B. Minimum clause
C. Maximum clause
D. loss of profit clause
Answer: A. Average clause
104. The insurance policy is less than the value of stock
A. Double insurance
B. re –insurance
C. under insurance
D. over insurance
Answer: C. under insurance
105. The insurance indemnifies the insured any loss of profit arising from interruption of the normal activity
A. Loss of profit insurance
B. full insurance
C. total insurance
D. fire insurance
Answer: A. Loss of profit insurance
106. The claim lodged by the business to the insurance company on happening the event of loss is called …………………..
A. Insurance policy
B. Insurance claim
C. Insurance premium
D. None of these
Answer: B. Insurance claim
107. When a fixed asset is destroyed ,the loss of such asset on thedate of fire can be ascertained from
A. record
B. accountant
C. books of accounts
D. None of these
Answer: C. books of accounts
108. When stock is destroyed the ………………….. of loss is difficult
A. computation
B. reduction
C. deduction
D. allocation
Answer: A. computation
109. Business concern often suffer …………… due to different reasons.such as fire, theft, flood, strike, etc
A. Normal losse
B. abnormal losses
C. natural losses
D. None of these
Answer: B. abnormal losses
110. A set of ……………… is to be followed to file a claim with the insurance company
A. rule
B. policies
C. procedure
D. None of these
Answer: C. procedure
111. Salvage value of stock to be ……….. from book value of stock
A. added
B. deducted
C. corrected
D. none of these
Answer: B. deducted
112. Average clause is a …………… in the insurance company
A. reserve
B. fund
C. provision
D. none of these
Answer: C. provision
113. Fire insurance policies contain an “………….” to discharge underinsurance
A. Total clause
B. net clause
C. Gross clause
D. average clause
Answer: D. average clause
114. Fire insurance policies contain an “average clause” to discourage ……………………………..
A. Over insurance
B. fire insurance
C. under insurance
D. None of these
Answer: C. under insurance
115. Net claim on under insurance is equal to Loss of stock x value ofstock On the date of fire
A. Policy value
B. Total value
C. total sales
D. none of these
Answer: A. Policy value
116. Gross profit on short sales are calculated as
A. Gross profit x operating ratio
B. short sales x gross profit ratio
C. Short sales x net profit ratio
D. short sales x operating ratio
Answer: B. short sales x gross profit ratio
117. Short sales is the difference between …………… and actual salesof dislocated period
A. net sale
B. gross sales
C. standard sales
D. total sales
Answer: C. standard sales
118. The amount of insurance ………….. to be paid at regular intervals
A. policy
B. claim
C. commission
D. premium
Answer: D. premium
119. At the time of calculating insurance claim , the average clause is ………………. If the value of stock at the date of fire was more than the policy value.
A. applicable
B. obtainable
C. receivable
D. payable
Answer: A. applicable
120. On dissolution of firm creditors are paid ——–
A. First
B. Second
C. Third
D. Last
Answer: A. First
121. Realization account is a ———- account
A. Personal
B. Real
C. Nominal
D. Both real and nominal
Answer: C. Nominal
122. Firm’s debts are paid first out of ———– assets
A. Partner’s
B. Firm’s
C. Shareholder’s
D. None of these
Answer: B. Firm’s
123. On dissolution, all assets excepting cash are transferred tothe ———- side of realization account
A. Debit
B. Credit
C. Both
D. None of these
Answer: A. Debit
124. Loss of realization is borne by the partners in their —— ratio
A. Capital
B. Sacrificing
C. Profit sharing
D. None of these
Answer: C. Profit sharing
125. On dissolution of firm ——– are paid first
A. Investors
B. Owners
C. Creditors
D. Banks
Answer: C. Creditors
126. When a liability is assumed by a partner his capital accountis ———-
A. Debited
B. Credited
C. deducted
D. None of these
Answer: B. Credited
127. When an unrecorded asset is taken over by one of thepartners, his capital account is —————-
A. Debited
B. Credited
C. Added
D. None of these
Answer: A. Debited
128. The account opened to close the various assets andliabilities of the firm on dissolution is called ————- account
A. Revaluation
B. Amalgamation
C. Realization
D. Reduction
Answer: C. Realization
129. When a firm is dissolved, project or loss on realization isshared by the partner’s in their ————- ratio
A. Profit sharing ratio
B. Capital contribution
C. Asset
D. None of these
Answer: A. Profit sharing ratio
130. In the event of dissolution of firm the partners personal assets are first used for payment of ————– liabilities
A. Firm’s
B. Outsiders
C. External
D. Personal
Answer: D. Personal
131. Goodwill appearing in the balance sheet at Rs. 10,000 proved to be valueless, is not to be recorded on the —————— side of realization account
A. Debit
B. Credit
C. Both
D. None of these
Answer: B. Credit
132. On dissolution, partners loan, if any, will be paid ———
A. First
B. Second
C. Third
D. Lastly
Answer: B. Second
133. ———–of partnership firm means closing the business ofthe firm
A. Admission
B. Retirement
C. Insolvency
D. Dissolution
Answer: D. Dissolution
134. On dissolution, all assets except cash are transferred to———– of realization account
A. Debit
B. Credit
C. Both
D. None of these
Answer: A. Debit
135. If a partner takes over some assets for value on dissolution,realization account should be ———–
A. Debited
B. Credited
C. Both
D. None of these
Answer: B. Credited
136. In the case of dissolution of the firm , the account openedfor closing various items in the balance sheet is called —————-
A. Deficiency account
B. Revolution account
C. Realization account
D. None of these
Answer: C. Realization account
137. A partnership which can be dissolved at any time by givingnotice to other partners is known as ——————
A. Particular partnership
B. Partnership at will
C. General partnership
D. None of these
Answer: B. Partnership at will
138. Liabilities to third parties are paid ————-
A. First
B. Second
C. Third
D. Lastly
Answer: A. First
139. The —— has distinguished the ‘dissolution of partnership’from ‘dissolution of firm’.
A. Companies act 1956
B. Banking regulation act 1949
C. Indian partnership act 1932
D. Insurance act 1938
Answer: C. Indian partnership act 1932
140. Dissolution of a firm leads to
A. Continuing of business with the remaining partners
B. Closure of business
C. Merger with another firm
D. None of these
Answer: B. Closure of business
141. Amount advanced by partner over and above the capital ispaid
A. Before paying outside debts
B. After paying outside debts
C. Along with outside debts
D. Last along with capital
Answer: B. After paying outside debts
142. The nominal account prepared to close the account ofbusiness is ————–
A. Revaluation account
B. Realization account
C. Profit & Loss appropriation account
D. None of these
Answer: B. Realization account
143. Realization account is closed by transfer of profit/loss to
A. Cash account
B. Balance sheet
C. Capital accounts
D. Profit and loss account
Answer: C. Capital accounts
144. Realization account Dr.To partner’s capital a/c; this entry is recorded when
A. Profit is transferred
B. Unrecorded liability is discharged
C. Asset taken over
D. (a) and (b)
Answer: D. (a) and (b)
145. Realization account Dr.To asset a/c, this entry is written
A. To open the asset account
B. To close the asset account
C. To transfer the profit on asset account
D. None of these
Answer: B. To close the asset account
146. Find the odd one
A. Retirement of a partner
B. Death of a partner
C. All the partners except one become insolvent
D. Admission of a partner
Answer: C. All the partners except one become insolvent
147. ————– is a situation where in existing state ofarrangement is changeD.
A. Re- possession
B. Insolvency
C. Reconstruction
D. Dissolution
Answer: D. Dissolution
148. —————- of the Indian Partnership Act, 1932 states that when the partnership between all the partners of a firm comes to an end, it is called dissolution of the firm
A. Section 5
B. Section 39
C. Section 50
D. Section 93
Answer: B. Section 39
149. When the relation of partnership among different partners changes without affecting the entity of the firm it is called——
A. Dissolution of partnership
B. Dissolution of firm
C. Dissolved by mutual agreement
D. Termination
Answer: A. Dissolution of partnership