JAIIB-AFMB – Mock Test- 8

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1. 
Read the statements related to issue of Bonus Shares by a company and find out which are correct? 1 The bonus issue refers to capitalisation of reserves and profit. 2 It results, in conversion of the reserve and surplus into share capital. 3 The company issues shares to its existing equity shareholders without any consideration 4 By issue of bonus shares, the net worth of the company increases to the extent of value of bonus shares

2. 
A firm has stocks of 10, debtors 12, trade creditors of 7, cash 1, bank overdraft 4, prepaid expenses 2 and expenses outstanding 2. Which of the following is not correct:

3. 
When the statement of cash flows is used in conjunction with other financial statements, provides information that enables users to evaluate which of the following? 1 changes in net assets of an entity 2 changes in financial structure 3 ability to affect the amounts and timing of cash flows to adapt to changing circumstances and opportunities.

4. 
Which of the following statements are True or False in connection with distinction between Bills of Exchange and Cheque? 1 A bill of exchange can be drawn upon any person but not on a bank. 2 A cheque does not require any acceptance. 3 The acceptor of a bill of exchange is allowed specific days of grace to make payment, after the date of maturity of the bill. 4 A bill of exchange must be stamped. A cheque does not require any stamp.

5. 
A firm purchased a machinery for Rs.2 lac. It is to be depreciated by 20% at written down value method. What will be the amount of depreciation for 3rd year?

6. 
In addition to maximizing shareholder value, the businesses should act in a manner that benefits society. This is an implied practice followed under which concept?

7. 
Amount due on shares can be called up in the following manner (a) in one lot (b) certain amount with application (b) certain amount on allotment (d) balance amount on calls

8. 
Which statistical tools are used in financial management for measuring the risk?

9. 
When the business is commenced by a firm and cash is brought, which of the following journal entries is passed (which one is more appropriate):

10. 
If there is a high proportion of debt in the capital structure of a firm, what will be impact? 1) profitability can decline to dangerous level 2) problems in servicing of debt 3) affecting the viability of the operations

11. 
If an expenditure helps in generating revenue over a no. of years, it is:

12. 
As per RBI guidelines, the Computer-Assisted Audit Techniques (CAATS) may be used in which of the following critical areas? 1 Detection of revenue leakages 2 Treasury Functions 3 Assessing impact of control weaknesses 4 Monitoring customer transactions under AML requirements

13. 
Firm –A has sales of 4000 and debtors of 200. Firm-B has debtors of 500 and sales of 8000. In this connection which of the following is not correct:

14. 
Accounting Standard Ind AS-1 prescribes certain line items amount of which should appear in profit and loss account. The term line item means which of the following?

15. 
Company XYZ Limited's equity is 45% and debt is 55% in the total capital structure. The weighted average cost of capital (WACC)? cost is 15% and that of debt it is 11%. What is cost of equity?

16. 
In case of payment of interest on bonds, some day-count conventions are followed. In which type of day- count practice, the no. of days in a year would be taken as 365 even if it is a leap year having 366 days?

17. 
Fill in the blanks – In core banking systems, office accounts are bifurcated between accounts which have a requirement of entering a mandatory reference number while passing the entry (it is called _____ accounts) and accounts which do not have such a mandate (it is called ____ accounts).

18. 
When a vouchers covers both the transaction i.e. debit as well as credit transaction, it is called:

19. 
Firm B has total debtors of Rs.10 lac. It has already made a provision for bad and doubtful debt of 2% of total debtors. Now the firm wants to increase the provision to 3%. What adjustment will be required?

20. 
The profit and loss account of a business firm has shown net profit of Rs.3 lac. What will be journal entry to dispose it off.

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