FOUNDATION EXAMINATION SET - 1

MODEL QUESTION PAPER TERM – DEC 2023

PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

Time Allowed: 1 Hour Full Marks: 100

Answer all questions. Each question carries 2 marks.

1. Principle which assumes that a business enterprise will not be liquidated in the
near future :
(a) Going concern concept О
(b) Accounting period O
(c) Prudence O
(d) Accounting entity O

2. Salary to Manager will be recorded in the books of accounts but appointment

of manager is not recorded due to______.
(a) Full disclosure О
(b) Accounting period O
(c) Business entity O
(d) Money measurement O

3. Capital expenditure –
i. Car purchased for sale
ii. Machine purchased for business use
iii. Road tax and insurance premium of delivery van
Which one is correct of the following?
(a) i & ii О
(b) ii & iii O
(c) i & iii O
(d) i, ii & iii O

4. Copy Rights A/c is a :

(a) Tangible Real Account О
(b) Intangible Real Account O
(c) Personal Account O
(d) None of these O

5. The book value of asset was after charging 3-year depreciation @ 10 % p.a. is
` 7,290. What was the cost of the machine?

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET - 1
MODEL QUESTION PAPER TERM – DEC 2023
PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

(a) 10,000 О
(b) 11,000 O
(c) 8,000 O
(d) 9,000 O

6. Journal is also known by -----

(a) Memorandum A/c О
(b) Cash books O
(c) Books of original entry O
(d) Proper books O

7. If opening capital is `70,000 and closing capital is `90,000, what is the amount
of profit or loss?
(a) Profit `20,000 О
(b) Loss `20,000 O
(c) Loss `70,000 O
(d) Profit `90,000 O

8. Which method of depreciation is approved by income tax act?

(a) reducing balance method О
(b) Straight line method O
(c) Annuity method O
(d) None of these O

9. Which is the odd account from the following accounts in context to debit
balance or credit balance?
(a) Bills Payable Account О
(b) Creditors Account O
(c) Bills Receivable Account O
(d) Capital Account O

10. Which of the following is a method of preparing Trial Balance :

(a) Total Method or Gross Trial Balance О
(b) Balance Method or Net Trial Balance O
(c) Compound Method O
(d) All of these O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET - 1
MODEL QUESTION PAPER TERM – DEC 2023
PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

11. Benefits of preparing Bank Reconciliation Statement includes ---------

(a) It brings out any errors committed in preparation of Cash book / Bank О
Pass Book
(b) Highlights under delay in clearance of cheques deposited but not credited O
(c) Help know actual bank balance O
(d) All the three O

12. What is the value of sundry creditor at the end of the year -
Opening Sundry Creditor 19,000
Cash paid to Sundry creditors 40,000
Discount received 1,000
Return outwards 4,800
Credit purchases 51,200
(a) 24,400 О
(b) 25,400 O
(c) 23,400 O
(d) 30,200 O

13. What type of transaction is Freight inward?

(a) Revenue О
(b) Capital O
(c) Deferred Revenue O
(d) Fictitious O

14. Which of the options is not an intangible asset?

(a) Land О
(b) Patents O
(c) Goodwill O
(d) Franchise rights O

15. In an account if credit side > debit side, the balance is known as the:
(a) Negative Balance О
(b) Debit balance O
(c) Positive Balance O
(d) Credit balance O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET - 1
MODEL QUESTION PAPER TERM – DEC 2023
PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

16. If goods worth ` 1,750 returned to a supplier is wrongly entered in sales return
book as ` 1,570 , then :
(a) Net Profit will decrease by ` 3,140 О
(b) Gross Profit will increase by ` 3,320 O
(c) Gross Profit will decrease by ` 3,500 O
(d) Gross Profit will decrease by ` 3,320 O

17. Original cost of a machine is ` 1,50,000, residual value ` 10,000, if depreciation

is charged @ 10% per annum under WDV method then depreciation for 3rd
year will be :
(a) ` 12,240 О
(b) ` 11,340 O
(c) ` 12,150 O
(d) ` 14,000 O

18. Debit balance as per bank pass book mean ---------- .

(a) Surplus cash О
(b) Bank Overdraft O
(c) Terms deposits with bank O
(d) None of these O

19. Negotiable Instrument Act was enacted in-------------.

(a) 1981 О
(b) 1881 O
(c) 1871 O
(d) 2001 O

20. A sends goods costing ` 1,00,000 on consignment to yield a profit of 20% on

cost. What is the invoice price :
(a) 1,37,500 О
(b) 1,25,000 O
(c) 1,20,000 O
(d) None O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET - 1
MODEL QUESTION PAPER TERM – DEC 2023
PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

21. ___________________ is earned during the current accounting year but is not
received during that year.
(a) Accrued Income О
(b) Accrued Expense O
(c) Prepaid Income O
(d) Prepaid Expense O

22. P and Q are partners sharing profit and loss in the proportion 2:1 in the Joint
Venture. P keeps accounts of joint venture. Q gave ` 5,000 to P for joint venture
business. P Prepared accounts and showed profit of ` 2,250. P settled Q’s
account. In the books of Q, ` …………. Profit is credited.
(a) ` 2,250 О
(b) ` 750 O
(c) ` 1,500 O
(d) ` 5,750 O

23. What are the three additional days known as that a drawer gives to the drawee
for payment :
(a) Conditional days О
(b) Additional days O
(c) Days of grace O
(d) Days of rebate O

24. In accounting consignment means :

(a) Goods forwarded from one place to another О
(b) Goods forwarded by a person to another O
(c) Goods sent by its owner to his agent O
(d) Goods sent by its owner to his agent for the purpose by sale O

25. The main object of non-profit organisation is—

(a) To earn the Profit О
(b) To Serve the Society O
(c) To Prepare Profit & Loss A/c O
(d) All the above O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET - 1
MODEL QUESTION PAPER TERM – DEC 2023
PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

26. X draws a trade bill of `25,000 for 6 months on Y. After holding the bill for 1.5
months, X discounts the bill with bank @ 10% p.a. The amount of discount on
bill Is :
(a) 937.5 О
(b) 625 O
(c) 1350 O
(d) 612.5 O

27. A purchased goods costing ` 2,60,000 for joint venture with B. B sold a major
part of the goods at cost plus 25% on cost, for ` 2,50,000. Balance of goods
were taken over by B at cost less 10%. Find out profit/loss on Joint Venture.
(a) (Loss) ` 10,000 О
(b) ` 55,250 O
(c) ` 44,000 O
(d) ` 50,000 O

28. Subscription received during the year ` 50,000; Subscriptions outstanding at the
end of the year ` 8,000; Subscription outstanding at the beginning of the year `
6,000. Net Income from subscription will be—
(a) ` 48,000 О
(b) ` 64,000 O
(c) ` 52,000 O
(d) ` 36,000 O

29. Y-draws a trade bill of ` 12,000 for 6 months on X. After holding the bill for
2.5 months, Y discount the bill with bank @ 10% p.a. The amount of discount
on bill is :
(a) ` 100 О
(b) ` 350 O
(c) ` 600 O
(d) ` 250 O

30. Carriage on goods purchased is shown in ------.

(a) Profit and loss A/c О
(b) Capitalized with work in progress O
(c) Trading A/c O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET - 1
MODEL QUESTION PAPER TERM – DEC 2023
PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

(d) Shown in balance sheet O

31. By Profit & Loss Account we get :

(a) Net profit О
(b) Capital O
(c) Gross profit O
(d) Gross loss O

32. Endowment Fund received by a club is a —

(a) Revenue Receipt О
(b) Capital Receipt O
(c) Advance Payment O
(d) Revenue Payment O

33. Which of the following is correct?

(a) Cost of Goods Sold - Opening Stock + Purchases = Closing Stock О
(b) Purchase + Cost of Goods Sold - Opening Stock = Closing Stock O
(c) Cost of Goods Sold + Closing Stock - Opening Stock = Purchase O
(d) Opening Stock + Closing Stock - Purchase = Cost of Goods sold O

34. Income Statement of a charitable institution is known as __________.

(a) Trading A/c О
(b) Profit & Loss A/c O
(c) Income & Expenditure A/c O
(d) Receipts & Payments A/c O

35. If income is ` 16,000 and ‘deficit’ debited to capital fund is ` 4,300, then
expenditure is—
(a) `16,000 О
(b) ` 4,300 O
(c) ` 20,300 O
(d) None of these O

36. Arrangement of Balance Sheet in a logical order is known as ---------.

(a) Dressing balance sheet О
(b) Marshalling balance sheet O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET - 1
MODEL QUESTION PAPER TERM – DEC 2023
PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

(c) Formatting balance sheet O

(d) Make up of balance sheet O

37. Which of the following is not a cost centre?

(a) Purchase department О
(b) Marketing Department O
(c) Managing Director O
(d) Passenger-km travelled O

38. A cost unit is :

(a) The cost per machine hour О
(b) Cost per labour hour O
(c) A unit of production or service in relation to which costs are ascertained O
(d) A measure of work output in a standard hour O

39. Cost unit of Sugar industry is :

(a) Cost per quintal/tonne О
(b) Cost per Cycle O
(c) Cost per meter O
(d) Cost per quintal/tonne O

40. ___________ is the use of same costing principles and/or practice by several
undertakings from common control or comparison of costs.
(a) Marginal costing О
(b) Uniform costing O
(c) Historical costing O
(d) None O

41. If the fixed deposit in a bank is withdrawn for financing a new project, the loss
of interest on such fixed deposits is a/ an __________________ cost.
(a) Opportunity О
(b) Replacement O
(c) Marginal O
(d) Step O

42. Administrative Overheads is related to :

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET - 1
MODEL QUESTION PAPER TERM – DEC 2023
PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

(a) CAS 11 О
(b) CAS 2 O
(c) CAS 10 O
(d) None O

43. Which of the following is a part of Cost Sheet :

(a) Prime Cost О
(b) Cost of Sales O
(c) Factory Cost O
(d) All of these O

44. Process Cost is very much applicable in :

(a) Soft Drink Manufacturing Industry О
(b) Pharmaceutical Industry O
(c) Airline company O
(d) None of these O

45. Gross Factory Cost = `58,000. Net Factory Cost = `54,000. Opening stock of
work-in- progress is `8,000. Find closing stock of work-in-progress.
(a) `12,000 О
(b) `66,000 O
(c) `4,000 O
(d) `1,20,000 O

46. Direct Wages is `2,05,000 If the ratio of direct wages and factory cost is 5:3.
Calculate Factory Cost :
(a) `1,23,000 О
(b) ` 3,41,667 O
(c) ` 6,15,000 O
(d) `1,00,000 O

47. Del-credere commission is paid to the consignee for increasing the cash sales.
(a) TRUE О
(b) FALSE O

48. Discounting means encashment of the bill before due date.

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET - 1
MODEL QUESTION PAPER TERM – DEC 2023
PAPER – 2 SYLLABUS - 2016
FUNDAMENTALS OF ACCOUNTING

(a) TRUE О
(b) FALSE O

49. The surplus of not for profit organisation is distributed among the members.
(a) TRUE О
(b) FALSE O

50. A statement of affairs is prepared from incomplete records.

(a) TRUE О
(b) FALSE O

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Directorate of Studies, The Institute of Cost Accountants of India