SSC CGL Finance – Accounting Concepts, Conventions & GAAP – Level 2 · Exam Level · Paper III Sprint

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SSC CGL Finance – Accounting Concepts, Conventions & GAAP – 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.  
Statement-basedStatement-based (AS 1):
I. If the fundamental accounting assumptions are followed, their acceptance need not be disclosed.
II. Disclosure of accounting policies can remedy a wrong treatment of an item.

Correct Answer: C [Only I]

Explanation:

AS 1: disclose only if an assumption is not followed; disclosure cannot remedy a wrong treatment.

2.  
Match the followingMatch the practice with the concept:
P. Outstanding salary charged this year Q. Hire-purchase van shown as the buyer's asset R. Same depreciation method every year
1. Substance over form 2. Consistency 3. Matching

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

Explanation:

Outstanding salary – matching; hire purchase – substance over form; same method – consistency.

3.  
Stock items: X cost ₹ 12,000, NRV ₹ 10,500; Y cost ₹ 8,000, NRV ₹ 9,600; Z cost ₹ 15,000, NRV ₹ 14,200. Value of closing stock is:

Correct Answer: D [₹ 32,700]

Explanation:

Item by item: 10,500 + 8,000 + 14,200 = 32,700.

4.  
Unfinished goods cost ₹ 44,000 so far. They can be sold for ₹ 50,000 after completion costing ₹ 6,000; selling expenses will be ₹ 2,500. They are shown in stock at:

Correct Answer: A [₹ 41,500]

Explanation:

NRV = 50,000 − 6,000 − 2,500 = 41,500 < cost 44,000.

5.  
On 20 March an order for goods worth ₹ 1,20,000 is received with an advance of ₹ 30,000. Goods are delivered on 10 April. Sales revenue recognised for the year ending 31 March is:

Correct Answer: A [Nil]

Explanation:

Revenue is earned on delivery (next year); the advance is a liability.

6.  
Debtors ₹ 3,00,000; further bad debts ₹ 12,000; provision for doubtful debts to be 4%; old provision ₹ 15,000. The amount charged to the Profit and Loss Account is:

Correct Answer: C [₹ 8,520]

Explanation:

12,000 + 4% of 2,88,000 (11,520) − 15,000 = 8,520.

7.  
Assertion–Reason
A: Fixed assets are shown at cost less depreciation, not at their break-up value.
R: The business is assumed to be a going concern.

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

Explanation:

Because the firm will keep using the assets, sale value is irrelevant.

8.  
Revenue ₹ 6,00,000. Expenses paid ₹ 4,10,000, which include ₹ 6,000 paid in advance for next year. Expenses of this year still unpaid ₹ 14,000. Profit for the year is:

Correct Answer: B [₹ 1,82,000]

Explanation:

Expenses = 4,10,000 − 6,000 + 14,000 = 4,18,000 → profit 1,82,000.

9.  
Which of the following is NOT an accounting convention?

Correct Answer: B [Going concern]

Explanation:

Going concern is a basic concept / fundamental assumption; the other three are conventions.

10.  
NFRA was constituted under which section of the Companies Act, 2013?

Correct Answer: D [Section 132]

Explanation:

s. 132(1); constituted on 1 October 2018 (nfra.gov.in).

11.  
Chronological orderArrange in chronological order:
1. NFRA constituted 2. ICAI's Accounting Standards Board constituted 3. Companies (Indian Accounting Standards) Rules notified 4. Chartered Accountants Act passed

Correct Answer: C [4 – 2 – 3 – 1]

Explanation:

Answer: 4 – 2 – 3 – 1. 1949 → 1977 → 2015 → 2018.

12.  
Trick SpotterFive stock items are given with cost and NRV. The quickest correct way to value closing stock is:

Correct Answer: A [Take the lower figure in each row and add]

Explanation:

AS 2 compares item by item (or groups of similar items).

13.  
True/false countHow many statements are true?
I. Revenue is recognised only when cash is received.
II. Matching requires outstanding expenses of the year to be charged.
III. Under the cost concept, land is shown at its purchase price.
IV. Materiality depends only on amount, never on nature.

Correct Answer: C [Two]

Explanation:

II and III are true; revenue is recognised when earned; materiality depends on size and nature.

14.  
Two-quantity comparisonTwo-quantity comparison (stock: item A cost ₹ 10,000, NRV ₹ 12,000; item B cost ₹ 9,000, NRV ₹ 7,500):
Quantity I: value of stock item by item
Quantity II: lower of total cost and total NRV

Correct Answer: B [Quantity I < Quantity II]

Explanation:

QI = 10,000 + 7,500 = 17,500; QII = lower of 19,000 and 19,500 = 19,000.

15.  
Spot My MistakeA trader valued closing stock at its selling price ₹ 90,000 (cost ₹ 72,000) and NRV is above cost. By how much is the profit overstated?

Correct Answer: B [₹ 18,000]

Explanation:

Stock should be at cost 72,000 (lower than NRV); overstatement = 18,000 – conservatism violated.

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