MCQs on Finance and Accounts Part - 1

Q.1:- From Income Statement, one cannot see:

• Net Profit before tax
• Net Profit after tax
• The net worth of the business.
• Cost of goods sold

Q.2:- Interest Coverage Ratio is calculated by:

• Profit before Interest and Taxes - Debt Interest
• Profit before Interest and Taxes + Debt Interest
• Profit before Interest and Taxes/Debt Interest
• Debt interest/Profit before Interest and Taxes

Q.3:- What is true about Tax Planning:

• It connotes the exercise carried out by the taxpayer to meet his tax obligations in proper, systematic and orderly manner availing all permissible exemptions, deductions and reliefs available under the statute as may be applicable to his case.
• Planning does not necessarily mean reduction in tax liability but is also aimed at avoiding controversies and consequential litigations.
• It is legitimate provided it is within the framework of law.
• All of the above.

Q.4:- On intra-State supply, which tax is to be levied:

• SGST
• IGST
• CGST and SGST both
• CGST

Q.5:- What is the maximum rate prescribed under section 9 of the CGST Act, 2017:

• not exceeding twenty per cent
• not exceeding fifteen per cent
• not exceeding five per cent
• not exceeding ten per cent

Q.6:- When a tax invoice should be issued by a registered dealer supplying taxable goods, where the supply involves movement of goods:

• The tax invoice has to issued at the time of removal of such goods.
• The tax invoice has to issued before the time of removal of such goods
• Only A and B are correct.
• The tax invoice can be issue at any time.

Q.7:- Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such conditions and restrictions as may be prescribed, shall be credited to:

• The electronic cash book
• The electronic credit book
• The electronic cash ledger
• The electronic credit ledger

Q.8:- The maximum number of monthly instalments permissible under 80 is:

• Twenty four months
• Forty eight month
• Twelve months
• Thirty six months

Q.9:- “zero rated supply” means supplies of goods or services or both:

• Supply of goods or services or both to a Special Economic Zone developer or A Special Economic Zone unit.
• Export of goods or services or both
• Both A and B above
• None of the above

Q.10:- The gifts ________in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

• not exceeding fifty thousand rupees
• exceeding fifty thousand rupees
• not exceeding one lakh thousand rupees
• exceeding one lakh rupees

Q.11:- Debtor Turnover Ratio is calculated by:

• Sales- Average Debtors
• Sales* Average Debtors
• Sales/Average Debtors
• Sales + Average Debtors

Q.12:- The most ideal value for current ration can be:

• 1:1.33
• 1:2
• 1.33: 1.
• 2:1

Q.13:- How to calculate the first method of maximum permissible bank finance as suggested by the Tondon Committee:

• (Current Assets) — 25% of (Current Assets - Other Current Liabilities)
• (Current Assets — Other Current Liabilities) - 25% of (Current Assets - Other Current Liabilities)!
• (Current Assets - Other Current Liabilities)
• (Current Assets - Other Current Liabilities) - 25% of (Current Assets)

Q.14:- What is true about the Payback Period Method:

• The payback period is used to measure of liquidity.
• The payback period is the number of years it takes to recover the initial cost of the investment.
• Both A and B are correct.
• None of the above.

Q.15:- Activities to be treated as supply even if made without consideration is contained in:

• Schedule II
• Schedule III
• Schedule I
• None of the above

Q.16:- The rate of tax under the CGST shall be notified by the:

• The State Government
• The Central Government as per the recommendation of the GST council
• The Central Government
• The GST council

Q.17:- A Register dealer who is engaged in making other supplies opted for the composition scheme, at what rate under

• One percent
• Two and half per cent
• Half per cent
• Zero per cent

Q.18:- What is time limit for taking registration under section 22 or 24:

• Within 30 days from the date on which he becomes liable to registration.
• Within 45 days from the date on which he becomes liable to registration.
• Within 60 days from the date on which he becomes liable to registration.
• Within 15 days from the date on which he becomes liable to registration.

Q.19:- What is the maximum ceiling prescribed for the tax rate under the IGST:

• 30%
• 40%
• 10%
• 20%

Q.20:- Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate:

• Not exceeding 18%
• Not exceeding 24%
• Not exceeding 6%
• Not exceeding 12%

Q.21:- The supplies which shall be under the reverse charge mechanism:

• Notified category of goods or service or both
• Inward supplies of goods or services or both from an unregistered dealer
• Both A and B are correct
• None of the above.

Q.22:- The Net Present Value(NPV) is calculated by:

• It is calculated by totaling the present values of all the cash flows from a project.
• It is calculated by totaling the present values of all the expected incremental cash flows from a project.
• It is calculated by totalling the future values of all the expected incremental cash flows from a project
• None of the above

Q.23:- What is true about American Depository Receipt(ADR):

• The original securities are lodged in Bank/Custodian abroad, and the American Depository Receipts (ADRs) are traded in the US for all intents and purposes as if they were a domestic stock.
• An ADR dividend is paid in US dollars, so it provides a way for American investors to buy foreign securities without having to go abroad, and without having to switch in and out of foreign currencies.
• It is a certificate issued in the United States in lieu of a foreign security.
• All of the above.

Q.24:- Net Profit Ratio is calculate by:

• Net Profit/Credit Sales
• Net Profit/Net Purchases
• Net Profit/Net Sales
• Net Profit/Gross Sales

Q.25:- How the tax liability on a mixed supply shall be determined:

• Mixed supply comprising two or more supplies shall be taxed which attracts the highest rate of tax.
• Mixed supply comprising two or more supplies shall be taxed which attracts the lowest rate of tax.
• Mixed supply comprising two or more supplies shall be taxed as per the discretion of the assessing authority.
• Mixed supply comprising two or more supplies shall be taxed at the average rate of tax.

Q.26:- “input” means:

• Any goods which is being used by the registered dealer for his personal use.
• Any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business
• Any goods of revenue nature
• Any goods of capital nature

Q.27:- Details of outwards supplies of goods or services is to be filed in GSTR-1 and its due date of filing is:

• 20th of the succeeding month
• 15th of the succeeding month
• 5th of the succeeding month
• 1Oth of the succeeding month

Q.28:- Which transaction shall be treated as a supply of goods in the course of inter-State trade or commerce:

• Where supplier and the place of supply are in two different Union territories
• Where supplier and the place of supply are in a State and a Union territory
• Where supplier and the place of supply are in two different States
• All of the above.

Q.29:- There shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of:

• Alcoholic liquor for industrial use
• Alcoholic liquor not for human consumption
• Alcoholic liquor for human consumption
• Alcoholic liquor for medicinal use

Q.30:- Current Ratio is calculated as:

• Current Assets/Current Liabilities
• Current Assets/Fixed Liabilities
• Fixed Assets/Current Liabilities
• Fixed Assets/Fixed Liabilities

Q.31:- What is NOT true about Commercial Paper:

• It is usually issued by companies with a high credit standing.
• It is in the form of a promissory note redeemable at par to the holder on maturity and therefore does not require any guarantee.
• It is non-transferable.
• It is a short term promise to repay a fixed amount that is placed on the market either directly or through a specialized intermediary.

Q.32:- Return of Assets(ROA) is calculated by:

• (Net Profit After Tax - Total Assets)* 100
• (Net Profit After Tax /Total Assets)* 100
• (Net Profit After Tax + Total Assets)* 100
• (Net Profit After Tax *Total Assets)* 100

Q.33:- Who can opt for the composition scheme:

• a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees.
• a registered person, whose aggregate turnover in the preceding financial year did not exceed twenty lakh rupees.
• a registered person, whose aggregate turnover in the preceding financial year did not exceed forty lakh rupees.
• a registered person, whose aggregate turnover in the preceding financial year did not exceed sixty lakh rupees.

Q.34:- Which form is to be used for declaration for claim of input tax credit under section 18(1):

• GSTITC02
• GSTITC03
• GSTITC01
• GSTITC04

Q.35:- Every registered person whose turnover during a financial year exceeds the prescribed limit of Rs One crore, shall get his accounts audited by__________:

• a cost accountant
• a Company Secretary
• a chartered accountant
• Any of the options from A and C

Q.36:- Who may undertake audit of any registered person:

• The Commission of SGST
• Any officer authorised by the Commissioner
• The Commissioner of CGST
• All the options are correct.

Q.37:- Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year:

• Exceeds twenty lakh rupees
• Exceeds twenty five lakh rupees
• Exceeds fifteen lakh rupees
• Exceeds ten lakh rupees

Q.38:- When a tax invoice should be issued by a registered dealer supplying taxable goods, where the supply do not involves movement of goods:

• The tax invoice has to be issued at the time of the goods are delivered
• The tax invoice has to be issued when the goods are made available to the recipient.
• The tax invoice has to issued before the goods are delivered
• All the options are correct.

Q.39:- Which form is to be used for intimation to pay tax under section 10(composition levy):

• GST CMP 02
• GST CMP 04
• GST CMP 01
• GST CMP 03

Q.40:- Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes:

• The amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his person use.
• The amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business.
• The whole of the credit is admissible.
• None of the above.

Q.41:- The validity of the registration certificate once issued is for:

• Perpetual
• Three year
• One year
• Two year

Q.42:- In which area the tax planning measures may be initiated:

• Decides the location of work place, whether any tax heaven/tax rebate is available.
• Plan to avail the exemptions/rebate available in the tax law.
• Decide the form of the organisation according to its size and requirement.
• All of the above.

Q.43:- Earning per shares(EPS) is calculated by:

• Gross Profit after tax and Preference shares dividend/Number of ordinary shares
• Net Profit after tax and Ordinary shares dividend/Number of ordinary shares
• Net Profit after tax and Preference shares dividend/Number of ordinary shares
• Net Profit after tax/Number of ordinary shares

Q.44:- What is correct about the Cash Flow Statement:

• Cash Flow Statement shows how changes in Income Statement and Balance Sheet accounts affect cash and cash equivalents during an accounting period.
• Cash Flow Statement shows how changes in Income Statement and Balance Sheet accounts affect funds and funds equivalents during an accounting period.
• Cash Flow Statement shows how changes in Income Statement and Balance Sheet accounts affect cash and cash equivalents on a given date.
• Cash Flow Statement shows how changes in Income Statement and Balance Sheet accounts affect funds and funds equivalents on a given date.

Q.45:- The components of financial statements are:

• Statement of Retained Earnings
• Statement of Changes in Financial Position
• Income Statement & Balance Sheet
• All of the above.

Q.46:- where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year:

• Exceeds twenty lakh rupees
• Exceeds twenty five lakh rupees
• Exceeds ten lakh rupees
• Exceeds fifteen lakh rupees

Q.47:- Every registered person shall keep and maintain the books ______and records certificate of registration:

• at the address of his tax consultant.
• at his principal place of business
• at the registered office of the business
• at the address of the Proprietor/Partner/Director

Q.48:- Annual return is to be filed in GSTR-9 and its due date is:

• 31st December of subsequent year
• 31st October of subsequent year
• 31st March of subsequent year
• 31st July of subsequent year

Q.49:- Tax Management means:

• Adherence to the compliance of the applicable provisions of law
• Avoiding of levy of interest and penalties can be termed as efficient tax management.
• Filing of various tax returns in time.
• All of the above.

Q.50:- Profit Earning Ratio(PE Ratio) is calculated by:

• Book value per shares /Earning per share
• Market value per shares /Earning per share
• Realizable value per shares /Earning per share
• None of the above.