SSC CGL Finance – Accounting: Meaning, Scope, Limitations & Basic Concepts – Level 2 · Exam Level · Paper III Sprint

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SSC CGL Finance – Accounting: Meaning, Scope, Limitations & Basic Concepts – Level 2 · Exam Level · Paper III Sprint – 15 questions, subject: Finance & Economics (Tier II Paper III). Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
A firm's assets are ₹ 9,25,000 and its liabilities are 30% of its assets. Its capital is:

Correct Answer: B [₹ 6,47,500]

Explanation:

Liabilities = 2,77,500 → capital = 9,25,000 − 2,77,500 = 6,47,500.

2.  
Goods costing ₹ 25,000 are sold for ₹ 31,000 cash. The effect on the accounting equation is:

Correct Answer: A [Assets +₹ 6,000; capital +₹ 6,000]

Explanation:

Cash +31,000, stock −25,000 → assets +6,000; profit 6,000 raises capital.

3.  
Machinery is purchased for cash. The effect on the accounting equation is:

Correct Answer: D [Total assets unchanged (one asset up, another down)]

Explanation:

Machinery ↑, cash ↓ by the same amount – a swap within assets.

4.  
Opening capital ₹ 2,50,000; closing capital ₹ 3,10,000; drawings ₹ 30,000; fresh capital ₹ 20,000. Profit for the year is:

Correct Answer: C [₹ 70,000]

Explanation:

3,10,000 − 2,50,000 + 30,000 − 20,000 = 70,000.

5.  
Match the followingMatch the user with the main interest:
P. Bank that gave a loan Q. Tax authorities R. Management
1. Tax payable 2. Capacity to repay 3. Planning and control

Correct Answer: D [P-2, Q-1, R-3]

Explanation:

Lenders – repayment capacity; government – tax; management – planning and control.

6.  
Assertion–Reason
A: Drawings are not shown as an expense in the Profit and Loss Account.
R: Drawings reduce the owner's capital.

Correct Answer: A [Both A and R are true and R explains A]

Explanation:

Drawings are a withdrawal by the owner, so they reduce capital and are not charged against profit.

7.  
Odd one out

Correct Answer: C [Creditors]

Explanation:

Creditors is a liability; the other three are current assets.

8.  
Salary paid in cash during the year ₹ 2,34,000. Outstanding salary was ₹ 18,000 at the start and ₹ 21,000 at the end. Salary expense of the year is:

Correct Answer: B [₹ 2,37,000]

Explanation:

2,34,000 + 21,000 − 18,000 = 2,37,000.

9.  
Arrange in orderArrange in the correct order:
1. Classifying 2. Recording 3. Communicating 4. Summarising

Correct Answer: A [2 – 1 – 4 – 3]

Explanation:

Record (journal) → classify (ledger) → summarise (final accounts) → communicate.

10.  
True/false countHow many of these statements are true?
I. Every expense is an expenditure.
II. Every expenditure is an expense of the same year.
III. A gain arises from events incidental to the main business.
IV. Capital introduced by the owner is revenue of the business.

Correct Answer: B [Two]

Explanation:

I and III are true (even depreciation is an expense whose cost was spent at some time); a capital expenditure is not a same-year expense and capital is not revenue.

11.  
Two-quantity comparison
Quantity I: Capital when assets are ₹ 5,60,000 and liabilities ₹ 1,85,000
Quantity II: Credit purchases when opening creditors are ₹ 40,000, payments ₹ 3,50,000 and closing creditors ₹ 65,000

Correct Answer: C [Quantity I = Quantity II]

Explanation:

QI = 3,75,000; QII = 3,50,000 + 65,000 − 40,000 = 3,75,000 – equal.

12.  
Which of the following is NOT a limitation of accounting?

Correct Answer: C [It provides information to users for decisions]

Explanation:

Giving information to users is an objective, not a limitation (HEMP-W lists the limitations).

13.  
Reverse questionAfter paying ₹ 30,000 to a creditor, a firm's assets are ₹ 4,70,000 and capital ₹ 3,90,000. What were its liabilities just before the payment?

Correct Answer: D [₹ 1,10,000]

Explanation:

Liabilities now = 80,000; the payment reduced them by 30,000 → 1,10,000 before.

14.  
Accounting information that is available in time and can influence a decision is said to be:

Correct Answer: D [Relevant]

Explanation:

Relevance = timely and capable of making a difference to a decision.

15.  
Trick SpotterOnly opening capital, closing capital, drawings and fresh capital are given. The fastest way to find profit is:

Correct Answer: B [Closing − Opening + Drawings − Fresh capital]

Explanation:

Capital Detective: capital changes only through profit, drawings and fresh capital.

➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Finance & Economics (Tier II Paper III) book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-finance-economics

📘 SSC CGL 2026 – General Studies – Finance & Economics (Tier II Paper III)
Here you get the answer with a one-line explanation. 1,064 original questions with worked answers · Part A Finance & Accounts and Part B Economics & Governance notes · practice sets + 3 mock tests
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