CA Foundation Practice Set 1

Which accounting concept assumes that a business will continue to operate indefinitely, allowing assets to be recorded at historical cost rather than liquidation value?

1. A.Matching concept
2. B.Going Concern concept✓
3. C.Conservatism concept
4. D.Money Measurement concept

Correct answer: B

The process of transferring entries from the journal to the respective accounts in the ledger is known as

1. A.Posting✓
2. B.Casting
3. C.Balancing
4. D.Journalising

Correct answer: A

A cheque issued by a firm but not yet presented for payment at the bank will cause the balance as per the bank statement (pass book) to be ___ the balance as per the cash book, on that date.

1. A.Higher than✓
2. B.Lower than
3. C.Equal to
4. D.Unrelated to

Correct answer: A

As per AS 2 (Valuation of Inventories), inventories are valued at the lower of cost and

1. A.Market price
2. B.Net Realisable Value✓
3. C.Replacement cost
4. D.Selling price

Correct answer: B

Under the Written Down Value (WDV) method, depreciation for a year is calculated by applying a fixed rate to the

1. A.Original cost of the asset
2. B.Book value of the asset at the beginning of the year✓
3. C.Market value of the asset
4. D.Estimated salvage value

Correct answer: B

When a bill of exchange is dishonoured by non-payment, the noting charges incurred are ultimately borne by

1. A.The drawer, in all cases
2. B.The party responsible for the dishonour, usually the drawee/acceptor✓
3. C.The bank that presented the bill
4. D.The payee, regardless of fault

Correct answer: B

Outstanding expenses appearing in the trial balance (as an adjustment) are shown in the Balance Sheet as a

1. A.Current asset
2. B.Current liability✓
3. C.Part of capital
4. D.Contingent liability

Correct answer: B

In the absence of a partnership deed, under the Indian Partnership Act, 1932, partners are entitled to interest on their capital at

1. A.6% per annum
2. B.No interest on capital at all✓
3. C.12% per annum
4. D.The prevailing bank rate

Correct answer: B

Which regulatory body is primarily responsible for regulating and developing the securities market in India?

1. A.Reserve Bank of India (RBI)
2. B.Securities and Exchange Board of India (SEBI)✓
3. C.Insurance Regulatory and Development Authority of India (IRDAI)
4. D.Competition Commission of India (CCI)

Correct answer: B

An agreement entered into by a minor (a person below 18 years of age) is

1. A.Voidable at the option of the minor
2. B.Void ab initio✓
3. C.A valid and binding contract
4. D.An illegal agreement

Correct answer: B

The maxim 'Nemo dat quod non habet', reflected in the Sale of Goods Act, 1930, means that

1. A.No one can transfer a better title to goods than he himself possesses✓
2. B.The buyer must always beware
3. C.The seller must always beware
4. D.Goods once sold can never be returned

Correct answer: A

Registration of a partnership firm under the Indian Partnership Act, 1932 is

1. A.Compulsory before the firm can commence business
2. B.Optional, though certain legal disabilities attach to an unregistered firm✓
3. C.Prohibited under the Act
4. D.Required only when the firm converts to an LLP

Correct answer: B

Under the Companies Act, 2013, the minimum number of members required to incorporate a private company is

1. A.7
2. B.2✓
3. C.1
4. D.3

Correct answer: B

If a : b = 2 : 3 and b : c = 4 : 5, then a : c equals

1. A.8 : 15✓
2. B.2 : 5
3. C.6 : 20
4. D.3 : 4

Correct answer: A

The value of log₁₀ 100 is

1. A.1
2. B.2✓
3. C.10
4. D.100

Correct answer: B

A square matrix whose determinant is equal to zero is called a

1. A.Singular matrix✓
2. B.Non-singular matrix
3. C.Identity matrix
4. D.Symmetric matrix

Correct answer: A

In two-dimensional geometry, the solution region of a single linear inequality in two variables is represented graphically by a

1. A.Single point
2. B.Straight line only
3. C.Half-plane✓
4. D.Circle

Correct answer: C

The compound interest on ₹10,000 for 2 years at 10% per annum, compounded annually, is

1. A.₹2,000
2. B.₹2,100✓
3. C.₹2,200
4. D.₹1,000

Correct answer: B

The number of distinct ways to arrange all the letters of the word 'BOOK' is

1. A.24
2. B.12✓
3. C.6
4. D.4

Correct answer: B

The sum of the first 20 terms of the arithmetic progression 2, 4, 6, 8, ... is

1. A.400
2. B.420✓
3. C.380
4. D.440

Correct answer: B

Two fair dice are thrown together. The probability of getting a sum of 7 is

1. A.1/6✓
2. B.1/12
3. C.1/9
4. D.1/36

Correct answer: A

Find the next number in the series: 3, 6, 12, 24, ?

1. A.36
2. B.40
3. C.48✓
4. D.30

Correct answer: C

A man walks 5 km towards South and then turns left and walks 3 km. Which direction is he now facing?

1. A.East✓
2. B.West
3. C.North
4. D.South

Correct answer: A

Pointing to a photograph, a man said, 'She is the daughter of my grandfather's only son.' How is the woman related to the man?

1. A.Sister✓
2. B.Mother
3. C.Daughter
4. D.Wife

Correct answer: A

Statements: All roses are flowers. All flowers are plants. Conclusions: I. All roses are plants. II. All plants are roses. Which conclusion(s) follow logically?

1. A.Only conclusion I follows✓
2. B.Only conclusion II follows
3. C.Both conclusions follow
4. D.Neither conclusion follows

Correct answer: A

Business economics is primarily concerned with the application of ___ to business decision-making.

1. A.Economic theory and analytical tools✓
2. B.Political theory
3. C.Sociological principles
4. D.Accounting standards

Correct answer: A

The law of demand states that, other things remaining constant (ceteris paribus), price and quantity demanded of a good are

1. A.Directly related
2. B.Inversely related✓
3. C.Unrelated
4. D.Always equal

Correct answer: B

In the short run, which cost remains unchanged irrespective of the level of output produced?

1. A.Variable cost
2. B.Fixed cost✓
3. C.Marginal cost
4. D.Total cost

Correct answer: B

Under conditions of perfect competition, an individual firm is a price

1. A.Maker
2. B.Taker✓
3. C.Controller
4. D.Setter

Correct answer: B

The Cash Reserve Ratio (CRR) is the minimum percentage of deposits that commercial banks in India are required to maintain as reserves with the

1. A.Central Government
2. B.State Bank of India
3. C.Reserve Bank of India✓
4. D.NABARD

Correct answer: C