JAIIB OCTOBER | 2100 MCQs | AFM Module A | Class 4

Module B 01 : Class - 1/5

By - Mahesh Sir
Q. The Cash flow activities of a firm are further
categorized among how many parts?

A. 2
B. 3
C. 4
D. 5

ANS : B
Cash flow Statements
• The cash flow activities of a firm are further categorized
among three major parts, and they are:

➢ Operational Activities
➢ Financing Activities
➢ Investing Activities
Q. Which of the following is a correct entry with
reference to Operational activities in the cash flow
statement?

1. Cash received from the sale of goods

2. Cash payments to suppliers for goods and services
3. Cash receipts from royalties, fees and commission
A. Option 1 & 3
B. Option 1 & 2
C. All are correct
D. All are incorrect

ANS : C
Cash from operating activities includes:

➢ Cash received from the sale of goods

➢ Cash payments to suppliers
➢ Cash receipts from royalties, fees and commissions
➢ Cash payment to or on behalf of employees
➢ Cash receipts and payments of an insurance entity for premium and
claims
Q. Which of the following is correct with respect to cash flows
regarding investing activities?

A. Cash receipts from royalties, fees and commission

B. Cash receipts and payments of an insurance entity for premiums
and claims
C. Cash payment to acquire property, plants and equipment

D. Cash proceeds from issuing shares or other equity instruments

ANS : C
Cash flows arising from investing activities are:

● Cash payment to acquire PPE, intangible or other long-

term assets.
● Cash receipts from the sale of PPE, intangible or other
long-term assets.
● Cash inflows from the sale of equity and debt
instruments of other entities in joint ventures.
● Cash advances and loans made to other parties.
Q. As per the cash flow statements _________
activities are the principal revenue-producing
activities of a firm.

A. Operating activities
B. Financing activities
C. Investing activities
D. All the above

ANS : A
Operating Activities:

Activities that are the revenue-producing activities

of an organisation.

Operating activities as per the cash flow statement

consist of inflows and outflows of cash resulting
from transactions that affect the firm's net profit
or loss.
Q. Accounting Standard 3 and Ind AS ________
provide detailed guidelines for preparing cash flow
statements.

A. Ind AS 2
B. Ind AS 5
C. Ind AS 7
D. Ind AS 10

ANS : C
Accounting Standard 3 and Ind AS 7 provide

detailed guidelines for preparing cash flow

statements. As per these standards, entities need

to provide detailed guidelines for preparing cash

flow statements along with the presentation and

disclosure of cash flow information.

Q. XYZ Ltd net profits during the year are Rs. 5,00,000 and
the bills receivables have decreased by Rs. 1,00,000
during the year then the cash flow from operating
activities will be equal to Rs ______.

A. Rs 4,00,000
B. Rs 5,00,000
C. Rs 6,00,000
D. Rs 1,00,000

ANS : C
Operating activities = Net profits during the year +
Decreased bills receivables
= 5,00,000 + 1,00,000
= 6,00,000
Q. ABC Enterprise sales during the year 2023 was Rs.
1,00,000 and the amount receivable at the beginning
and the end of the year is Rs. 20,000 and Rs.30,000
respectively, then the cash from operating activities
will be equal to _________.

A. Rs 70,000
B. Rs 80,000
C. Rs 90,000
D. Rs 1,10,000

ANS : C
Cash from operating activities = Sales + Beginning
account receivable - Ending account receivable
= 1,00,000 + 20,000 - 30,000
= 90,000
Q. Which part of Schedule III of the Companies Act
discusses the format of the Balance Sheet?

A. Part I
B. Part II
C. Part III
D. Part IV

ANS : A
Part I of Schedule III of the Companies Act
discusses the format of the Balance Sheet while
part II of Schedule III discusses the format of
profit & loss account.
Q. Under ___________ of Companies Act, 2013 governs
the preparation of the final accounts. This section states
that the financial statements shall give a true and fair
view of the state of affairs of the company or companies

A. Section 128
B. Section 129
C. Section 130
D. Section 131

ANS : B
Under Section 129 of Companies Act, 2013 governs the

preparation of the final accounts. This section states that

the financial statements shall give a true and fair view of

the state of affairs of the company or companies comply

with the accounting standards notified under section 133.

Q. Money received against a share warrant comes
under which headings of the Balance Sheet?

A. Current Asset
B. Current Liabilities
C. Non-current Liabilities
D. Shareholders Fund

ANS : D
Shareholder’s Funds consist of share capital,

reserve and surplus, money received against

share warrants.
Q. Suppose COGS of an XYZ company is ₹ 200
crore, Opening Stock =₹ 20 crores, Closing Stock=₹
40 crore. Determine the Purchases made.

A. 220 Crores
B. 240 Crores
C. 250 Crores
D. 260 Crores

ANS : A
𝑪𝑶𝑮𝑺 = 𝑶𝒑𝒆𝒏𝒊𝒏𝒈 𝑺𝒕𝒐𝒄𝒌 + 𝑷𝒖𝒓𝒄𝒉𝒂𝒔𝒆𝒔 − 𝑪𝒍𝒐𝒔𝒊𝒏𝒈 𝑺𝒕𝒐𝒄𝒌
𝟐𝟎𝟎 = 𝟐𝟎 + 𝑷𝒖𝒓𝒄𝒉𝒂𝒔𝒆𝒔 − 𝟒𝟎
𝑷𝒖𝒓𝒄𝒉𝒂𝒔𝒆𝒔 = 𝟐𝟐𝟎 ₹ 𝒄𝒓𝒐𝒓𝒆
Q. Consider the following data of a firm:
Gross Sales=₹ 4550 crore
Return Outward=₹ 60 crore
Return Inward=₹ 50 crore
Direct Cost=₹ 2000 crore
Calculate the Gross Profit of the Firm?
A. 2000 Crores
B. 2500 Crores
C. 2240 Crores
D. 4500 Crores

ANS : B
Net Sales=Gross Sales-Return Inward
Net Sales=4550-50=₹ 4500 crores

Gross Profit=Net Sales-Direct Cost

Gross Profit=4500-2000=₹ 2500 crore
Q. All of the following are a part of Non-current
Liabilities except:

A. Long-term provisions
B. Deferred Tax Liabilities
C. Other long-term liabilities
D. Trade Payables

ANS : D
● A non-current liability is the one which is not expected to be

settled in a year.

● Whereas a current liability is one which is expected to be

settled in a year.

● Non-current Liabilities- Long-term borrowings, Deferred tax

liabilities(Net), Other Long term Liabilities and Long term

provisions.

● Current Liabilities- Short-term borrowings, Trade Payables,

other current liabilities, Short-term provisions

Q. Account which is prepared to show the
distribution of profits/losses among the partners or
partner’s capital is called ________.

A. Income and Expenditure account

B. Profit and loss account
C. Profit and loss appropriation account
D. None of the above

ANS : C
Profit and Loss appropriation account is a nominal account which
follows the rule of “Debit all expenses and losses and Credit all
Incomes and Gains”.
The account is Prepared after the profit and loss account and
shows how the net profit(after all adjustments) is distributed
among the partners of a partnership firm. The appropriation of
net profit is done after considering all the relevant adjustments
such as interest on the partner’s capital, interest on drawings,
partner’s salaries and commissions etc.
Q. A liability which may arise depending on the
outcome of a particular event is known as:

A. Current liability
B. Non- current liability
C. Contingent liability
D. Other Current liability

ANS : C
● A current liability is a potential liability that may occur

in future, such as pending lawsuits or guarantees etc.

● Contingent liabilities are shown as liabilities on the

balance sheet and as expenses on the income

statement.
Q. Which of the following terms refers to the use of
software to automate financial process?

A. Automation
B. Computerisation
C. Integration
D. Digitalisation

ANS : A
The term Automation refers to the use of software or
technology to automate financial process automatically reducing
the need for manual intervention.

Automation has many advantages like it increases efficiency,

minimizes the risk of errors in financial operations.
Q. What is a characteristic of computerized accounting?

A. Speed
B. Accuracy
C. Economical
D. All the above

ANS : D
The features of computerized accounting are as follows:

● It has speed.
● It has high accuracy.
● Various informative reports can be generated.
● It is more economical.
A computerized system may be a single stand-alone unit or have
multiple users.
Q. What is the time frame for Submission of Audited
Annual accounts of banking companies with RBI?

A. 15 days
B. 1 month
C. 3 month
D. 6 month

ANS : C
As per sections 31 and 32, three copies of the Balance sheet

and P&L account with the auditor's report need to be

submitted with RBI within 3 months from the end of the

period to which they refer.

Q. How many Schedules are defined to be made
for the Balance sheet of the banking company in
Form A?

A. 6
B. 8
C. 10
D. 12

ANS : D
There are 12 Schedules that are defined in Section 29 which

states that banks should make their balance sheet in Form

A. However, there are in Total 18 Schedules. 12 schedules

are for Form A (Balance sheet) and balance 6 schedules

(from Schedule 13 to Schedule 18) are defined for Form B

Profit & loss account.

JAIIB OCTOBER | 2100 MCQs | AFM Module A | Class 4
Module B 02 : Class - 2/5

By - Mahesh Sir
Q. In which types shares, shareholders enjoy
voting right?

A. Equity
B. Preference
C. Participating
D. Redeemable

ANS : A
Equity & Preference share Capital

Equity share capital

I. With voting right

II. With differential rights as to dividends & voting right

The law defines preference shares as that part of share capital of

the company which enjoys the preferential right;

a) As to the payment of dividend at a fixed rate, and

b) As to the return of capital on winding up of the company.
Q. In which types of Preference shares give the
shareholder a right to dividends that may have
been missed in the past.?

A. Cumulative
B. Redeemable
C. Participating
D. Convertible

ANS : A
Cumulative preference shares
Cumulative preference shares give the
shareholder a right to dividends that may
have been missed in the past. Dividends
are paid by companies to reward
shareholders.

They are entitled to these before the

holders of common shares can receive
dividends once more.
Q. In which types of Preference shares that can be bought back by
the issuing company within its predetermined maturity period?

A. Cumulative
B. Redeemable
C. Participating
D. Convertible

ANS : B
Redeemable preference shares

Redeemable preference shares are those preference shares

that can be bought back by the issuing company within its
predetermined maturity period.

Irredeemable preference shares are those preference shares

that cannot be bought back by the issuing company till the
company is a going concern and in existence.
Q. In which types of Preference Shares, they cannot be converted
into common stock, they are still prioritised over them?

A. Non-cumulative
B. Irredeemable
C. Non-participating
D. Non-convertible

ANS : D
Convertible or non-convertible preference shares

Convertible preference share; These shares can be readily

converted into equity shares.

Non-convertible; Though these types of preference

shares cannot be converted into common stock, they are
still prioritised over them.
Q. Capital which is stated in the Memorandum of Association
(MOA), is called?

A. Authorised capital
B. Issued capital
C. Subscribed Capital
D. Paid-up capital

ANS : A
Authorised capital

Capital which is stated in the Memorandum of

Association.

The amount stated as Authorised Capital is the

amount up to which the company can raise the
capital. This is also known as Nominal or Registered
Capital.
Q. The part of issued capital which has been subscribed by
the public, is called?

A. Issued capital
B. Subscribed Capital
C. Called up capital
D. Paid-up capital

ANS : B
Subscribed Capital

It is that part of issued capital which has been actually

subscribed by the public. It can be less than the issued
capital or at the most equal to issued capital.

Subscribed shares are shares that investors have promised to

buy. These shares are usually subscribed as part of an initial
public offering (IPO).
Q. Any amount of money that has already been paid by
investors in exchange for shares, is called?

A. Issued capital
B. Subscribed Capital
C. Called up capital
D. Paid-up capital

ANS : D
Paid-up capital

Any amount of money that has already been paid by

investors in exchange for shares of stock is paid-up capital.

That amount of capital which has actually been paid by the

shareholders.
Q. A formal and legal document issued by a body
corporate which acts for inviting offers from the public for
subscription is called?

A. Prospectus,
B. Receiving Applications,
C. Allocation
D. All the above

ANS : A
Issue of Prospectus

A prospectus is basically a formal and legal document

issued by a body corporate which acts for inviting offers
from the public for subscription or purchase of any
securities. Every public company is entitled to issue the
prospectus for its shares or debentures.

It comprises of complete data regarding the enterprise and

the way in which the money is to be collected from the
prospective investors.
Q. What are the key fundamental steps of the process of issuing the
shares?

A. Prospectus,
B. Receiving Applications,
C. Allocation
D. All the above

ANS : D
Receipt of Applications:

When the prospectus is circulated to the public, prospective

investors contemplating to sign up and subscribe the share
capital of the enterprise would make an application along
with the application money and deposit it with a scheduled
bank as mentioned in the prospectus.

Allocation of shares:

Once the minimum subscription has been done, the shares

can be allocated. Normally, there is always oversubscription
of shares, so the allocation is done on pro-rata ground.
Q. An issue of shares offered at a special price by a company to its
existing shareholders in proportion to their holding of old shares,
is called?

A. Employee stock Option Scheme

B. Bonus Share
C. Sweat Equity Shares
D. Right Issue of Share

ANS : D
Right Issue of Share

Right issue; an issue of shares offered at a special price

by a company to its existing shareholders in proportion

to their holding of old shares.

Q. Which types of shares issue results, in conversion of the
reserve and surplus into share capital?

A. Employee stock Option Scheme

B. Bonus Share
C. Sweat Equity Shares
D. Right Issue of Share

ANS : B
Q. Partnership firms whose liability does not extend to their
personal assets are called?

A. Limited Partnership
B. Liabilities Partnership
C. Limited Liabilities
D. Limited Liabilities Partnership

ANS : D
Limited Liabilities Partnership

LLP is an alternative corporate business form that gives the

benefits of limited liability of a company and the flexibility
of a partnership.

The LLP is a separate legal entity, is liable to the full extent

of its assets but liability of the partners is limited to their
agreed contribution in the LLP.
Q. A private limited company has how many shareholders?

A. 2 to 200
B. 1 to 49
C. 7 to 51
D. 2 to 50

ANS : A
Q. Periodical legal audit is applicable for loan accounts with credit
exposure of Rs how many crore and above_____.

A. 0.50 crore
B. 1 crore
C. 5 crore
D. 10 crore

ANS : C
RBI vide its circular dated Jul 07, 2013, directed the banks that
they should also subject the title deeds and other documents in
respect of all credit exposures of Rs.5 crore and above to
periodic legal audit and re-verification of title deeds with
relevant authorities as part of regular audit exercise till the loan
stands fully repaid.
Q. Which of the following is/are the feature of joint stock company?

A. Incorporated association
B. Artificial person
C. Perpetual succession
D. All of the above

ANS : D
Incorporated association
A company is a registered body of individuals. According to the
Companies Act 2013, it is compulsory to register a joint stock
company.

Artificial Person

It is an artificial person created by law. It is different from its

members. It can enter into contracts, purchase and sell the
properties, can sue and be sued upon.

Perpetual Succession
A company has a perpetual succession. Death or insolvency of
any shareholder does not affect existence of the company.
Q. Which of the following is/are the feature of joint stock company?

A. Common seal
B. Limited liability
C. Separation of management from ownership
D. All of the above

ANS : D
Common Seal

As the company is an artificial person created by law, it cannot sign

its name. So it has a common seal on which the company’s name is
engraved. The common seal is treated as the company’s signature.
Limited Liability

The liability of the members of the joint stock company is limited to

the face value of shares held by them.

Separation of management from ownership

Even though the shareholders are true owners they do not

participate in the management of the company. They elect their
representatives known as the Board of Directors.
Q. A company created or incorporated by a special Act
passed by the Central or State Legislature?

A. Charted Company
B. Statutory Company
C. Registered Company
D. Foreign Company

ANS : B
Statutory company

A statutory company is one that is created or incorporated by a

special Act passed by the Central or State Legislature.

The statutory companies are owned by Government and are

given independent legal status, e.g. LIC, Air India, FCI, etc.
JAIIB OCTOBER | 2100 MCQs | AFM Module A | Class 4
Module B 03 : Class - 3/5

By - Mahesh Sir
Q. Suppose the price of an underlying asset of an options contract
has the probability of increasing. What must be exercised by an
investor?

A. Buy put option

B. Buy call option
C. Sell call option
D. None of the above

ANS : B
 Price of an underlying asset Buy/Sell

Probability of an increase Buy call option // Sell put option

Probability of decrease Buy put option // Sell call option

Q. A company's balance sheet shows total assets of Rs.
5,00,000 and total liabilities of Rs. 3,00,000. What is the
owner's equity (capital) according to the balance sheet
equation?

a) Rs. 1,00,000
b) Rs. 2,00,000
c) Rs. 3,00,000
d) Rs. 5,00,000

ANS : B
According to the balance sheet equation, Assets = Liabilities +
Owner's Equity. To calculate the owner's equity (capital), we
need to subtract the total liabilities from the total assets.

Given:
Total assets = Rs. 5,00,000
Total liabilities = Rs. 3,00,000

Owner's Equity = Total Assets - Total Liabilities

Owner's Equity = Rs. 5,00,000 - Rs. 3,00,000
Owner's Equity = Rs. 2,00,000
Q. Which shares, with or without the preference
shareholders' consent, may be converted into or
swapped for equity shares at a later time?

A. Participating Preference shares

B. Redeemable Preference shares
C. Convertible Preference shares
D. Cumulative Preference shares

ANS : C
Convertible Preference share

Convertible Preference shares is a type of

preferred stock that gives holders the option to
convert their preferred shares into a fixed
number of common shares after a specified date.
Q. The company may accept from its
shareholders the uncalled amount on shares
even before the amount is called up. The
amount so received is called?

A. Calls in Arrear
B. First Call
C. Second Call
D. Calls in Advance

ANS : D
When the company receives such amounts in advance,
they are credited to the “Calls in Advance account” and
this account should be shown separately between share
capital and reserves and surplus in the balance sheet.
Q. According to Section 43 of the Companies Act 2013,
the share capital of the company shall consist of which
of the following:

1. Equity shares with voting rights

2. Equity shares with differential rights as to dividend,
voting or otherwise stated.
3. Preference share capital

A. Statement 1 only
B. Statement 2 & 3 only
C. Statement 1, 2 & 3 only
D. None the above
ANS : C
Section 43 of the companies act 2013 came into force
on 1st April 2014.

The share capital of a company limited by shares shall

be of two kinds namely,

[Link] share capital(With voting rights or with

differential rights as to dividend, voting or both)

[Link] share capital

Q. Which of the following statements is correct in the context of the
Balance Sheet Equation?

A. The sum total of balance of reserves & surplus and capital is the net
worth of a business.
B. Conversion of loan into equity results in change of only assets.
C. Repayment of loan results in a change in liabilities, however, the
total liabilities are the same.
D. All the statements are correct.

ANS : A
Balance Sheet Equation
➢The net worth of a business is a sum total balance of reserves
& surplus and capital. Net worth is the liability of a business
entity towards its owners.

➢The second statement is incorrect as conversion of loan into

equity results in only change in liabilities, with total liabilities
remaining the same.

➢The third statement is also incorrect as repayment of loan

affects both assets and liabilities.
Q. Shares which are discounted and are issued by a
company to its employees or directors and are given in
exchange for a value added by an employee or directors
are called:

A. Forfeited shares
B. Sweat Equity shares
C. Employees Stock Option Scheme(ESOS)
D. Discounted equity shares

ANS : B
As per Section 54 of the Companies Act, a company may issue
sweat equity shares if the following conditions are fulfilled.
1)the issue is authorized by a special resolution passed by the
company.
2)the resolution specifies the number of shares, the current
market price and or classes of directors or employees to whom
such shares are to be issued.
3) Where the equity shares of the company are listed on the
recognised stock exchange.
Sweat equity shares are essential when creating a startup with
low amounts of funding.
Q. Which of the following items does not appear on the credit side
of the P&L Appropriation A/c?

A. Net profit of the year

B. Transfer to general reserve
C. Amount withdrawn from general reserve
D. Balance of surplus bought from previous year

ANS : B
Credit & Debit side of the P&L A/c
The credit side of the P&L Appropriation account contains the following:
➢ Balance of surplus bought from previous year
➢ Net profit of the year
➢ Amount withdrawn from general reserve
➢ Income tax provision that is no longer required or excess provision that is
written back
Debit side contains the following:
➢ Debenture Redemption Reserve
➢ Transfer to reserve
➢ Transfer to dividend
➢ Dividend Distribution Tax
➢ Income tax provided for previous year
➢ Surplus to balance sheet
Q. A private company is a company that by its articles
except in case of one person company limits the
number of its members to:

A. 2
B. 7
C. 50
D. 200

ANS : D
The minimum and a maximum number of members in a
private limited company is 2 and 200. There shall be a
Minimum of 2 Directors to form a private company and
the maximum number of Directors under the companies
act,2013 is also restricted to 200. A Private company
restricts the right to transfer its shares and prohibits any
invitation to the public to subscribe to any security of the
company.
Q. A company which exercises control over more than
one-half of the shares of another company or controls
the composition of its Board of directors is known as:

A. One Person Company

B. Holding Company
C. Associate Company
D. Government Company

ANS : B
A holding company is a business entity-usually a
corporation or limited liability company. A holding
company doesn’t manufacture anything, does not
conduct business or sell anything. Rather holding
companies hold the controlling stock in other companies.

Examples of Holding Companies: TATA Sons, Aditya Birla

Group, Godrej Industries etc.
Q. Hindustan Unilever Ltd has incurred heavy
advertisement expenditure on the launch of the new
Shampoo. As an Accountant of HUL, how will you treat
this advertisement expenditure?

A. Capital Expenditure
B. Revenue Expenditure
C. Deferred Revenue Expenditure
D. Operating expenditure

ANS : C
The benefit of such advertisement will be taken by the
company over the next few financial years hence it will be
treated as Deferred revenue expenditure. Its estimated
benefit will be split into estimated years and will be charged
proportionally to the P & L account. And balance will be
shown in Assets in the balance sheet as an asset.
Q. Which of the following is an example of a Fictitious
Asset?

A. Goodwill
B. Building
C. Underwriting Commission
D. Debtors

ANS : C
Fictitious Assets have no Realizable value and are not
real assets but these are shown in Financial
statements. Fictitious assets are actual cash
expenditure which was incurred and its benefit will
come over a number of years hence these are shown
as Amortisation over one or more Financial years.
Q. How can we categorize Trademark as an Asset?

A. Fictitious Asset
B. Fixed Asset
C. Intangible Asset
D. Current Asset

ANS : C
Trade mark is an asset which is Not tangible. But it has its

value if sold in the open market. It has no physical

existence but has its value. Hence it will be shown as

intangible assets in the Balance sheet.

Q. Which of the following financial statements will
show Gross loss?
A. Balance sheet
B. Profit & loss Account
C. Trading Account
D. Cash flow statement

ANS : C
Trading Account is an account that reflects Gross profit

/Gross loss incurred to an Entity from Core Trading

activities. We can book only direct expenses in a trading

account. If the Total of the Credit side (Total sales +

Closing stock) Exceeds the Total of the Debit side(opening

stock + Purchases + Direct expenses) then the balance will

be Gross profit else it will be Gross loss.

Q. Expenditure which occurs on a repeated basis or
frequently in business and is incurred to maintain
regular functioning of the business are:

A. Capital Expenditure
B. Revenue Expenditure
C. Preliminary Expenditure
D. Deferred Revenue Expenditure

ANS : B
Revenue Expenditure is of Re-Occurrence in nature and is

short term expenses. For example- Salaries of employees,

Maintenance charges of owned office buildings, and

utility bills of the business. These do not give a boost to

earning capacity but are essential for Running the

business.
Q. All of the following are a part of Non-current
Liabilities except:

A. Deferred Tax Liabilities

B. Long-term Borrowings
C. Trade Payables
D. Other long-term Liabilities

ANS : B
➢ A non-current liability is the one which is not expected
to be settled in a year.
➢ Whereas a current liability is one which is expected to
be settled in a year.
➢ Non-current Liabilities- Long-term borrowings,
Deferred tax liabilities(Net), Other Long term
Liabilities and Long term provisions.
➢ Current Liabilities- Short-term borrowings, Trade
Payables, other current liabilities, Short-term
provisions
Q. Copyrights, patents, Goodwill and other intellectual
property rights are shown under _________.

A. Tangible Assets
B. Non-Current Investments
C. Intangible assets
D. Other non-current assets

ANS : C
An intangible asset is an asset which has no physical value
but has a long-term value for the business.

Intangible assets are long-term assets and are shown in

the Balance sheet of the company under non-current
assets and subhead Fixed Assets.
Q. Account which is prepared to show the distribution
of profits/losses among the partners or partner’s
capital is called ________.

A. Profit and loss account

B. Income and Expenditure account
C. Profit and loss appropriation account
D. None of the above

ANS : C
Profit and Loss appropriation account is a nominal
account which follows the rule of “Debit all expenses and
losses and Credit all Incomes and Gains”.
The account is Prepared after the profit and loss account
and shows how the net profit(after all adjustments) is
distributed among the partners of a partnership firm. The
appropriation of net profit is done after considering all
the relevant adjustments such as interest on the partner’s
capital, interest on drawings, partner’s salaries and
commissions etc.
Q. An entity shall classify an asset as current when:

A. It expects to realize the asset, or intends to sell or

consume it, in its normal operating cycle.
B. It holds the asset primarily for the purpose of
trading.
C. It expects to realize the asset within 12 months
after the reporting period.
D. The asset is cash or cash equivalent (as defined in
Ind AS 7).

Which of the following is/are correct?

ANS : ALL THE ABOVE

Q. In case of limited companies, sections that make it
compulsory for a company to keep certain books of
account and govern the preparation of the final
accounts are:

A. Section 133 and section 129

B. Section 128 and section 129
C. Section 128 and Section 133
D. Section 132 and Section 133

ANS : B
In case of a limited company, it is compulsory to prepare

the profit and loss account and the balance sheet every

year. Under the Companies Act 2013, Section 128 makes it

compulsory for a company to keep certain books of

accounts, while Section 129 governs the preparation of

the final accounts.

Q. _________ indicates the financial condition or the
state of affairs of a business at a particular moment in
time.

A. Balance Sheet
B. Profit & Loss Account
C. Trading Account
D. Cash Flow Statement

ANS : A
Balance Sheet is the most significant financial statement.

It indicates the financial condition or the state of affairs of

a business at a particular moment in time. It contains

information about the resources and obligations of a

business entity, and the owner’s interest in the business

at a particular point in time.

JAIIB OCTOBER | 2100 MCQs | AFM Module A | Class 4
Module B 04 : Class - 4/5

By - Mahesh Sir
Q. Which Act gives the format of the Balance sheet and
the Profit and Loss account in which the bank accounts
should be presented?
A. Companies Act
B. Indian Contract Act
C. SARFAESI Act
D. Banking Regulation Act

ANS : D
The Banking Regulation Act gives the format of the Balance
sheet and the profit and loss account in which the banks should
prepare the final accounts. This format is given in the third
schedule annexed to the Banking Regulation Act.

RBI has issued guidelines to follow the new form A (proforma

balance sheet) and form B(proforma profit and loss account) for
all banking companies doing business in India.
Q. _____ is an arrangement by which the bank agrees to
lend money up to a fixed limit against a pledge or
hypothecation of some securities.

A. Advances
B. Overdraft
C. Cash Credit
D. Loan

ANS : C
Cash credit is referred to as short-term funding or loan for a
company so that it can meet its working capital
requirements. Cash credit is a sort of loan that is offered to
businesses by financial institutions like banks.

Note: Customers need not draw the whole amount at one

time.
Q. Asset which has remained NPA for a period not
exceeding twelve months is known as __________.

A. Sub-Standard Asset
B. Standard Asset
C. Loss Account
D. Doubtful Asset

ANS : A
Asset which has remained NPA for a period not exceeding twelve
months is known as Sub-Standard asset. Asst which has
remained substandard category for a period of more than 12
months will be classified as a Doubtful Asset.

Note: A sub-standard asset requires a provision of 15% on the

secured portion and 25% on the unsecured portion.
Q. Which of the following investments by banks are
required to meet the Statutory Liquidity Ratio?

A. Debentures and Bonds

B. Commercial paper, units of mutual funds
C. Shares and Subsidiaries/joint ventures
D. Government securities and Approved securities

ANS : D
SLR is a reserve requirement that banks are expected to keep before
offering credit to customers. SLR is fixed by RBI and is a form of
control over the credit growth in India. The current SLR rate is 18%,
however, the RBI has the authority to raise it to 40%.

Government securities and Approved securities are generally used for

meeting statutory liquidity ratios and are called SLR Securities. The
remaining securities mentioned above are non-SLR Securities.
Q. Given:
Debtors - 50000
Bad debts -5000
Provision for bad debts - 8% on debtors
What is the amount of Debtors to be shown in the balance
sheet?

A. 41000
B. 44000
C. 41100
D. 41400
ANS : D
Q. Banks are required to make Pillar 3 disclosures on at
least ____ basis, irrespective of whether financial
statements are audited.

A. Monthly
B. Quarterly
C. Half-Yearly
D. Yearly

ANS : C
The RBI has directed the banks to follow additional, disclosure
requirements contained in the “Master Circular” on Basel
3 Capital Regulations. Banks are required to make Pillar 3
disclosures at least on a half-yearly basis, irrespective of
whether financial statements are audited, with the exception of
the following Disclosures:

[Link] Adequacy
[Link] Risk: General disclosures for all banks; and
[Link] Risk: Disclosures for Portfolios Subject to the
Standardized Approach.
Q. Interest Received- 100000
Discount -20000
Unexpired Discount-2000
Dividend on investments -10000
Commission-5000
Calculate Total Income to be shown under Profit and Loss
Account.

A. 137000
B. 127000
C. 133000
D. 97000
ANS : C
Q. Reserves and Surplus are shown under which
schedule under the Balance sheet?

A. Schedule 8
B. Schedule 2
C. Schedule 5
D. Schedule 6

ANS : B
Reserves and surplus are shown under Schedule 2 on the
Liabilities side of the Balance sheet.

Reserves and surplus contain the following reserves:

Statutory reserves, capital reserves, share premiums, foreign

currency translation reserves, investment reserves, special
reserves under the income tax act, revenue and other reserves,
and capital reserves on consolidation.
Q. Which of the following is a function of an
accounting system?

A. Answering customer queries

B. Recording financial transactions
C. Tracking employee attendance
D. Managing inventory levels

ANS : B
The functions of accounting are as follows:

➢ It records financial transactions by creating accounting

records.
➢ It records financial activities by documenting
transactions using accounting entries.
➢ The financial statements are created in compliance with
accounting standards.

➢ Various financial reports are prepared based on data

available in financial statements.
Q. Which of the following terms refers to the use of
software to automate financial process?

A. Computerisation
B. Digitalisation
C. Integration
D. Automation

ANS : D
The term Automation refers to the use of software or
technology to automate financial process automatically
reducing the need for manual intervention.

Automation has many advantages like it increases

efficiency, minimizes the risk of errors in financial
operations.
Q. What is a characteristic of computerized
accounting?

A. Speed
B. Economical
C. Accuracy
D. All of the above

ANS : D
The features of computerized accounting are as follows:

➢ It has speed.
➢ It has high accuracy.
➢ Various informative reports can be generated.
➢ It is more economical.

➢ A computerized system may be a single stand-alone unit

or have multiple users.
Q. Which statement correctly reflects the nature of
the data file?

A. A collection of programs that process data.

B. A physical device used for storing computer data.
C. A structured collection of related data records.
D. None of the above
ANS : C
A data file is a structured collection of data records. These

records are organized and stored systematically. It results in an

effective retrieval of the data. Data files store various types of

information, such as customer details, account balances,

transaction histories, and other relevant data required for

banking operations.
Q. Which of the following describes a benefit of
computerized accounting?

A. Error-free accounting
B. Low cost of operation
C. Multiple set of printouts available
D. All of the above

ANS : D
The advantages of using computerized accounting are:

➢ It is more accurate.
➢ It has high speed.
➢ The cost of operation is low.
➢ We can have various reports from the same accounting data.
➢ Error-free accounting.
➢ Automated completion of every record by entering just one
entry into the computer.

➢ Multiple sets of printouts are available.

Q. How does the implementation of computerized
banking operations benefit customers?

A. Increased accessibility to banking services through

multiple channels.
B. Greater autonomy in managing personal finances.
C. Reduced security risks and protection against fraud.
D. Improved accuracy and reduced errors in financial
transactions.

ANS : A
Computerized banking operations allow customers to access

their accounts and perform transactions through various

channels, such as online banking, mobile banking, and ATMs.

This provides convenience and flexibility in managing their

finances anytime and anywhere.

Q. Which of the following is a disadvantage of
computerized accounting?

A. Requirement of special programmes and

professionals
B. Qualified staff required for operations
C. High cost of the computer peripherals and
stationary
D. All of the above

ANS : D
The disadvantages of computerized accounting are as follows:

➢ Requirement of special programmes and professionals.

➢ Qualified staff required for operations.
➢ Costly computer peripherals and stationery.

➢ Performing regular backups is essential.

➢ Computer Virus.

➢ Backing up data on a regular basis is necessary due to the

possibility of data loss caused by a variety of factors.
Q. Which of the following statements is incorrect
regarding password construction?

A. Own name should not be used.

B. Personal information should not be used.
C. Common words in dictionaries should not be used.
D. Strong passwords should have a minimum of 2
characters

ANS : D
Some of the guidelines for password construction are:

➢ Own name, its short form of own name, own initials etc
shouldn’t be used.
➢ Personal Information shouldn’t be used
➢ Common words in the dictionaries shouldn’t be used

➢ A strong password should have a minimum of eight

characters and can be constructed by using numbers,
special characters, and capital letters.
Q. Calculate Net Profit/Loss for ABC Bank Ltd for the
year ended 31st March 2023.
Discount on Bills Discounted-200000 A. Loss of 40000
Interest received on: B. Profit of 10000
Cash Credits-100000
Overdrafts-50000 C. Profit of 20000
Commission Charged-40000
Interest paid on: D. Loss of 20000
Fixed Deposit- 200000
Savings Bank Account-50000
Rent and Taxes-20000
Audit Fees-80000
Provision for Contingencies-60000
JAIIB OCTOBER | 2100 MCQs | AFM Module A | Class 4
Module B 05 : Class - 5/5

By - Mahesh Sir
Q. Calculate Net Profit/Loss for ABC Bank Ltd for the
year ended 31st March 2023.
Discount on Bills Discounted-200000 A. Loss of 40000
Interest received on: B. Profit of 10000
Cash Credits-100000
Overdrafts-50000 C. Profit of 20000
Commission Charged-40000
Interest paid on: D. Loss of 20000
Fixed Deposit- 200000
Savings Bank Account-50000
Rent and Taxes-20000
Audit Fees-80000
Provision for Contingencies-60000
Q. A formal and legal document issued by a body
corporate which acts for inviting offers from the public for
subscription is called?

A. Prospectus,
B. Receiving Applications,
C. Allocation
D. All the above

ANS : A
Issue of Prospectus

A prospectus is basically a formal and legal document

issued by a body corporate which acts for inviting offers
from the public for subscription or purchase of any
securities. Every public company is entitled to issue the
prospectus for its shares or debentures.

It comprises of complete data regarding the enterprise and

the way in which the money is to be collected from the
prospective investors.
Q. A company created or incorporated by a special Act
passed by the Central or State Legislature?

A. Charted Company
B. Statutory Company
C. Registered Company
D. Foreign Company

ANS : B
Statutory company

A statutory company is one that is created or incorporated by a

special Act passed by the Central or State Legislature.

The statutory companies are owned by Government and are

given independent legal status, e.g. LIC, Air India, FCI, etc.
Q. An issue of shares offered at a special price by a company to its
existing shareholders in proportion to their holding of old shares,
is called?

A. Employee stock Option Scheme

B. Bonus Share
C. Sweat Equity Shares
D. Right Issue of Share

ANS : D
Right Issue of Share

Right issue; an issue of shares offered at a special price

by a company to its existing shareholders in proportion

to their holding of old shares.

Q. Periodical legal audit is applicable for loan accounts with credit
exposure of Rs how many crore and above_____.

A. 0.50 crore
B. 1 crore
C. 5 crore
D. 10 crore

ANS : C
RBI vide its circular dated Jul 07, 2013, directed the banks that
they should also subject the title deeds and other documents in
respect of all credit exposures of Rs.5 crore and above to
periodic legal audit and re-verification of title deeds with
relevant authorities as part of regular audit exercise till the loan
stands fully repaid.
Q. Which of the following is a correct entry with
reference to Operational activities in the cash flow
statement?

1. Cash received from the sale of goods

2. Cash payments to suppliers for goods and services
3. Cash receipts from royalties, fees and commission
A. Option 1 & 3
B. Option 1 & 2
C. All are correct
D. All are incorrect

ANS : C
Cash from operating activities includes:

➢ Cash received from the sale of goods

➢ Cash payments to suppliers
➢ Cash receipts from royalties, fees and commissions
➢ Cash payment to or on behalf of employees
➢ Cash receipts and payments of an insurance entity for premium and
claims
Q. Money received against a share warrant comes
under which headings of the Balance Sheet?

A. Current Asset
B. Current Liabilities
C. Non-current Liabilities
D. Shareholders Fund

ANS : D
Shareholder’s Funds consist of share capital,

reserve and surplus, money received against

share warrants.
Q. A company which exercises control over more than
one-half of the shares of another company or controls
the composition of its Board of directors is known as:

A. One Person Company

B. Holding Company
C. Associate Company
D. Government Company

ANS : B
Q. Capital which is stated in the Memorandum of Association
(MOA), is called?

A. Authorised capital
B. Issued capital
C. Subscribed Capital
D. Paid-up capital

ANS : A
Authorised capital

Capital which is stated in the Memorandum of

Association.

The amount stated as Authorised Capital is the

amount up to which the company can raise the
capital. This is also known as Nominal or Registered
Capital.
Q. What is the time frame for Submission of Audited
Annual accounts of banking companies with RBI?

A. 15 days
B. 1 month
C. 3 month
D. 6 month

ANS : C
As per sections 31 and 32, three copies of the Balance sheet

and P&L account with the auditor's report need to be

submitted with RBI within 3 months from the end of the

period to which they refer.

Q. Given:
Debtors - 50000
Bad debts -5000
Provision for bad debts - 8% on debtors
What is the amount of Debtors to be shown in the balance
sheet?

A. 41000
B. 44000
C. 41100
D. 41400
ANS : D
Q. Which of the following is/are the feature of joint stock company?

A. Incorporated association
B. Artificial person
C. Perpetual succession
D. All of the above

ANS : D
Incorporated association
A company is a registered body of individuals. According to the
Companies Act 2013, it is compulsory to register a joint stock
company.

Artificial Person

It is an artificial person created by law. It is different from its

members. It can enter into contracts, purchase and sell the
properties, can sue and be sued upon.

Perpetual Succession
A company has a perpetual succession. Death or insolvency of
any shareholder does not affect existence of the company.
Common Seal

As the company is an artificial person created by law, it cannot sign

its name. So it has a common seal on which the company’s name is
engraved. The common seal is treated as the company’s signature.
Limited Liability

The liability of the members of the joint stock company is limited to

the face value of shares held by them.

Separation of management from ownership

Even though the shareholders are true owners they do not

participate in the management of the company. They elect their
representatives known as the Board of Directors.
Q. Interest Received- 100000
Discount -20000
Unexpired Discount-2000
Dividend on investments -10000
Commission-5000
Calculate Total Income to be shown under Profit and Loss
Account.

A. 137000
B. 127000
C. 133000
D. 97000
ANS : C
Q. Reserves and Surplus are shown under which
schedule under the Balance sheet?

A. Schedule 8
B. Schedule 2
C. Schedule 5
D. Schedule 6

ANS : B
Reserves and surplus are shown under Schedule 2 on the
Liabilities side of the Balance sheet.

Reserves and surplus contain the following reserves:

Statutory reserves, capital reserves, share premiums, foreign

currency translation reserves, investment reserves, special
reserves under the income tax act, revenue and other reserves,
and capital reserves on consolidation.
Q. Which statement correctly reflects the nature of
the data file?

A. A collection of programs that process data.

B. A physical device used for storing computer data.
C. A structured collection of related data records.
D. None of the above
ANS : C
A data file is a structured collection of data records. These

records are organized and stored systematically. It results in an

effective retrieval of the data. Data files store various types of

information, such as customer details, account balances,

transaction histories, and other relevant data required for

banking operations.
Q. Consider the following data of a firm:
Gross Sales=₹ 4550 crore
Return Outward=₹ 60 crore
Return Inward=₹ 50 crore
Direct Cost=₹ 2000 crore
Calculate the Gross Profit of the Firm?
A. 2000 Crores
B. 2500 Crores
C. 2240 Crores
D. 4500 Crores

ANS : B
Net Sales=Gross Sales-Return Inward
Net Sales=4550-50=₹ 4500 crores

Gross Profit=Net Sales-Direct Cost

Gross Profit=4500-2000=₹ 2500 crore
Q. How many Schedules are defined to be made
for the Balance sheet of the banking company in
Form A?

A. 6
B. 8
C. 10
D. 12

ANS : D
There are 12 Schedules that are defined in Section 29 which

states that banks should make their balance sheet in Form

A. However, there are in Total 18 Schedules. 12 schedules

are for Form A (Balance sheet) and balance 6 schedules

(from Schedule 13 to Schedule 18) are defined for Form B

Profit & loss account.

Q. In which types shares, shareholders enjoy
voting right?

A. Equity
B. Preference
C. Participating
D. Redeemable

ANS : A
Equity & Preference share Capital

Equity share capital

I. With voting right

II. With differential rights as to dividends & voting right

The law defines preference shares as that part of share capital of

the company which enjoys the preferential right;

a) As to the payment of dividend at a fixed rate, and

b) As to the return of capital on winding up of the company.
Q. Any amount of money that has already been paid by
investors in exchange for shares, is called?

A. Issued capital
B. Subscribed Capital
C. Called up capital
D. Paid-up capital

ANS : D
Paid-up capital

Any amount of money that has already been paid by

investors in exchange for shares of stock is paid-up capital.

That amount of capital which has actually been paid by the

shareholders.
Q. A company's balance sheet shows total assets of Rs.
5,00,000 and total liabilities of Rs. 3,00,000. What is the
owner's equity (capital) according to the balance sheet
equation?

a) Rs. 1,00,000
b) Rs. 2,00,000
c) Rs. 3,00,000
d) Rs. 5,00,000

ANS : B
Q. Shares which are discounted and are issued by a
company to its employees or directors and are given in
exchange for a value added by an employee or directors
are called:

A. Forfeited shares
B. Sweat Equity shares
C. Employees Stock Option Scheme(ESOS)
D. Discounted equity shares

ANS : B
As per Section 54 of the Companies Act, a company may issue
sweat equity shares if the following conditions are fulfilled.
1)the issue is authorized by a special resolution passed by the
company.
2)the resolution specifies the number of shares, the current
market price and or classes of directors or employees to whom
such shares are to be issued.
3) Where the equity shares of the company are listed on the
recognised stock exchange.
Sweat equity shares are essential when creating a startup with
low amounts of funding.
Q. A private company is a company that by its articles
except in case of one person company limits the
number of its members to:

A. 2
B. 7
C. 50
D. 200

ANS : D
The minimum and a maximum number of members in a
private limited company is 2 and 200. There shall be a
Minimum of 2 Directors to form a private company and
the maximum number of Directors under the companies
act,2013 is also restricted to 200. A Private company
restricts the right to transfer its shares and prohibits any
invitation to the public to subscribe to any security of the
company.
Q. _________ indicates the financial condition or the
state of affairs of a business at a particular moment in
time.

A. Balance Sheet
B. Profit & Loss Account
C. Trading Account
D. Cash Flow Statement

ANS : A
Q. ITC Ltd has incurred heavy advertisement
expenditure on the launch of the new Biscuits. As an
Accountant of HUL, how will you treat this
advertisement expenditure?

A. Capital Expenditure
B. Revenue Expenditure
C. Deferred Revenue Expenditure
D. Operating expenditure