SSC CGL Mock – Paper III Finance & Economics Mock Test 02 – Part A · Finance & Accounts
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It is the mirror image of its twin in the general ledger – same amount, opposite side (B12 ch 12, Mirror Rule).
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SSC CGL Mock – Paper III Finance & Economics Mock Test 02 – Part A · Finance & Accounts – 40 questions, subject: Full Mock Tests. 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.
Situation-basedThe sales team of a firm won the confidence of two large customers this year, which will help future sales, but nothing about it appears in the books. Which concept explains this?
Correct Answer: B [Money measurement concept]
Explanation:
Only events that can be measured in money are recorded.
2.
Which of the following is NOT one of the three major considerations that AS 1 names for selecting and applying accounting policies?
Correct Answer: D [Accrual]
Explanation:
The major considerations are prudence, substance over form and materiality; accrual is a fundamental accounting assumption.
3.
CalculationOn 1 April the books of a trader show cash ₹ 45,000, stock ₹ 1,10,000, debtors ₹ 72,000, building ₹ 2,50,000, creditors ₹ 64,000, bank loan ₹ 1,20,000 and outstanding wages ₹ 8,000. In the opening journal entry, Capital Account is credited with
Correct Answer: C [₹ 2,85,000]
Explanation:
Capital = assets ₹ 4,77,000 − liabilities ₹ 1,92,000 = ₹ 2,85,000 (the balancing credit of the opening entry).
4.
Preparing budgets and variance reports to help managers plan and control belongs to which branch of accounting?
Correct Answer: A [Management accounting]
Explanation:
Management accounting gives information to managers for planning, control and decisions.
5.
CalculationDuring 2025-26 a firm paid rent of ₹ 65,500. This included ₹ 5,000 outstanding for March 2025, while the rent of ₹ 5,500 for March 2026 is still unpaid. Rent expense for 2025-26 on the accrual basis is
Correct Answer: D [₹ 66,000]
Explanation:
Expense = cash paid − last year's outstanding + this year's outstanding = ₹ 65,500 − ₹ 5,000 + ₹ 5,500 = ₹ 66,000 (= 12 × ₹ 5,500).
6.
Into which class of accounts does 'Prepaid insurance' fall under the traditional (British) approach?
Correct Answer: A [representative personal account]
Explanation:
Prepaid and outstanding items represent persons and are representative personal accounts.
7.
A debt of ₹ 7,500 due from Ezhil was written off as bad two years ago. Ezhil now pays it by cheque. Which account is credited?
Correct Answer: B [Bad Debts Recovered Account]
Explanation:
A recovery of a debt written off earlier is a gain: Bank A/c Dr, To Bad Debts Recovered A/c.
8.
CalculationA proprietor withdraws ₹ 4,000 at the end of every month during the year. Interest on drawings is charged at 9% p.a. The interest on drawings is
Correct Answer: C [₹ 1,980]
Explanation:
Average period for drawings at the end of each month is 5.5 months: ₹ 48,000 × 9% × 5.5/12 = ₹ 1,980.
9.
CalculationIn a trader's books, supplier Sundar's account shows: opening credit balance ₹ 28,000; goods bought from him ₹ 46,000 and ₹ 19,500; goods returned to him ₹ 3,500; paid to him ₹ 52,000 and discount received ₹ 1,000. The balance of Sundar's account is
Correct Answer: D [₹ 37,000 credit]
Explanation:
Credits ₹ 93,500 − debits ₹ 56,500 = ₹ 37,000 credit: the firm still owes Sundar.
10.
A furniture dealer makes four transactions. Which one is recorded in his Purchases Book?
Correct Answer: C [Chairs bought on credit for resale]
Explanation:
The Purchases Book records only credit purchases of goods dealt in; an asset on credit goes to the journal proper and cash purchases to the cash book.
11.
CalculationThe bank statement of Kumar & Sons shows a credit balance of ₹ 58,900. Cheques issued ₹ 12,400 have not been presented; cheques deposited ₹ 7,250 have not been credited; bank charges are ₹ 320 and a dividend of ₹ 3,600 has been collected by the bank – none of these three bank items is in the cash book. The cash book balance is
Correct Answer: A [₹ 50,470]
Explanation:
From the pass book every sign is reversed: ₹ 58,900 − ₹ 12,400 + ₹ 7,250 + ₹ 320 − ₹ 3,600 = ₹ 50,470 (debit).
12.
CalculationThe cash book shows an overdraft of ₹ 36,000. Cheques issued ₹ 11,500 are not yet presented, cheques deposited ₹ 6,200 are not yet credited, and interest on the overdraft of ₹ 1,450 has been charged only by the bank. The balance as per the pass book is
Correct Answer: B [Overdraft ₹ 32,150]
Explanation:
Treat the overdraft as −36,000: −36,000 + 11,500 − 6,200 − 1,450 = -32,150 → overdraft ₹ 32,150.
13.
Statement-basedConsider the statements:
I. A bank reconciliation statement is an account that forms part of the double entry system.
II. Under the two-stage method, items recorded only by the bank are first entered in the cash book (amended cash book) and the BRS is then prepared.
Which of the statements is/are correct?
I. A bank reconciliation statement is an account that forms part of the double entry system.
II. Under the two-stage method, items recorded only by the bank are first entered in the cash book (amended cash book) and the BRS is then prepared.
Which of the statements is/are correct?
Correct Answer: B [Only II]
Explanation:
A BRS is a statement, not an account; the amended cash book corrects bank-only items first.
14.
CalculationA cheque payment of ₹ 2,750 was entered on the debit side of the bank column of the cash book. The cash book shows ₹ 31,400 (debit) and there is no other difference. The pass book balance is
Correct Answer: C [₹ 25,900]
Explanation:
A wrong-side entry overstates the cash book by twice the amount: ₹ 31,400 − 2 × ₹ 2,750 = ₹ 25,900.
15.
Cash ₹ 6,200 received from Prakash was credited to Prakasam's account. This is
Correct Answer: A [an error of commission – the trial balance still agrees]
Explanation:
The right amount went to the right side of a wrong account of the same class: an error of commission that does not disturb the TB.
16.
CalculationThe trial balance of a firm did not agree. Later these errors were found: (i) Purchases Book overcast by ₹ 1,500; (ii) rent of ₹ 4,800 posted to Rent Account as ₹ 8,400; (iii) discount allowed of ₹ 350 in the cash book not posted to Discount Allowed Account. The balance that had been put in the Suspense Account was
Correct Answer: B [₹ 4,750 credit]
Explanation:
Effects on (Dr − Cr): +1,500 + 3,600 − 350 = +4,750; the credit side was short, so Suspense had a credit balance of ₹ 4,750.
17.
Repairs of ₹ 12,000 to an old machine were debited to Machinery Account. Ignoring depreciation, the effect on the profit of the year is that profit is
Correct Answer: D [overstated by ₹ 12,000]
Explanation:
A revenue expense was treated as an asset, so the expense is missing from the P&L – profit is overstated (B12 ch 6, effect of errors).
18.
A trial balance that lists, for every ledger account, the total of its debit side and the total of its credit side is prepared by the
Correct Answer: C [total method]
Explanation:
Methods: balance, total and total-cum-balance; the total method lists both side totals.
19.
CalculationA second-hand machine is bought for ₹ 1,80,000. Before first use the firm spends ₹ 22,000 on overhaul, ₹ 4,500 on transport, ₹ 7,500 on installation and ₹ 1,000 on fuel for a trial run. It also signs an annual maintenance contract for ₹ 9,000 for the first year of use. The cost of the machine is
Correct Answer: B [₹ 2,15,000]
Explanation:
Every cost of bringing it into use is capital: ₹ 2,15,000; the maintenance contract is a running (revenue) cost.
20.
CalculationA machine bought on 1 July 2023 for ₹ 2,40,000 is depreciated at 10% p.a. on cost (straight line); the books close on 31 March. It is sold on 31 December 2025 for ₹ 1,70,000. The result of the sale is
Correct Answer: D [Loss ₹ 10,000]
Explanation:
Used for 30 months: depreciation ₹ 60,000; book value ₹ 1,80,000; ₹ 1,70,000 − ₹ 1,80,000 = Loss ₹ 10,000.
21.
CalculationA firm buys land and a building together for ₹ 80,00,000: land ₹ 30,00,000 and building ₹ 50,00,000. Depreciation is charged at 5% p.a. by the straight line method on depreciable assets. The annual depreciation is
Correct Answer: A [₹ 2,50,000]
Explanation:
Land has an unlimited life and is not depreciated: 5% of ₹ 50,00,000 = ₹ 2,50,000.
22.
CalculationAn asset costs ₹ 1,65,000, has a residual value of ₹ 15,000 and a life of 4 years. Depreciation for the second year by the sum-of-years-digits method is
Correct Answer: A [₹ 45,000]
Explanation:
Sum of digits = 10; year 2 weight = 3; 3/10 × ₹ 1,50,000 = ₹ 45,000.
23.
Depletion, as a cause of depreciation, applies mainly to
Correct Answer: D [wasting assets such as mines and quarries]
Explanation:
Depletion is the using up of a natural resource by extraction; obsolescence, efflux of time and wear and tear are the other causes.
24.
CalculationOpening stock 200 units @ ₹ 30; purchases 500 units @ ₹ 33 and 300 units @ ₹ 38. Closing stock is 260 units. Its value at periodic weighted average cost is
Correct Answer: C [₹ 8,814]
Explanation:
Average = ₹ 33,900 ÷ 1,000 = ₹ 33.90; 260 × ₹ 33.90 = ₹ 8,814.
25.
CalculationGoods are bought at a list price of ₹ 3,50,000 less 8% trade discount. Freight inward is ₹ 7,500, a non-recoverable duty ₹ 6,000 is paid, GST of ₹ 57,960 is recoverable as input tax credit, and ₹ 2,000 is paid as warehouse rent for storing the goods until sale. The cost of purchase under AS 2 is
Correct Answer: B [₹ 3,35,500]
Explanation:
₹ 3,22,000 + ₹ 7,500 + ₹ 6,000 = ₹ 3,35,500; trade discount deducted, recoverable tax and unnecessary storage excluded.
26.
CalculationClosing stock on 31 March 2025 was undervalued by ₹ 9,000. Reported profits were ₹ 72,000 for 2024-25 and ₹ 88,000 for 2025-26. The correct profits are
Correct Answer: A [₹ 81,000 and ₹ 79,000]
Explanation:
Undervalued closing stock understates this year's profit and overstates next year's (it is next year's opening stock): ₹ 81,000 and ₹ 79,000; the two-year total is unchanged.
27.
AS 2 allows one of these to be added to the cost of inventories. Which one?
Correct Answer: B [Freight inward on raw materials]
Explanation:
Costs of bringing goods to their present location are included; the other three are excluded.
28.
CalculationOpening raw materials ₹ 32,000; purchases of raw materials ₹ 2,18,000; returns of raw materials ₹ 3,000; carriage on raw materials ₹ 5,000; closing raw materials ₹ 40,000; direct wages ₹ 96,000; royalty on production ₹ 14,000; factory rent ₹ 24,000. The prime cost is
Correct Answer: C [₹ 3,22,000]
Explanation:
Materials consumed ₹ 2,12,000 + direct wages ₹ 96,000 + direct expense (royalty) ₹ 14,000 = ₹ 3,22,000; factory rent is an overhead, added after prime cost.
29.
CalculationDebtors ₹ 2,40,000; bad debts in the trial balance ₹ 4,500; old provision for doubtful debts ₹ 9,000. Adjustments: write off further bad debts ₹ 6,000 and keep a provision of 5% on debtors. The total charge to the Profit and Loss Account for bad and doubtful debts is
Correct Answer: D [₹ 13,200]
Explanation:
New provision 5% of ₹ 2,34,000 = ₹ 11,700; charge = ₹ 4,500 + ₹ 6,000 + ₹ 11,700 − ₹ 9,000 = ₹ 13,200.
30.
CalculationA manager's commission is fixed at 5% of the profit left after that very commission is charged. Profit before the commission is ₹ 2,52,000. Find the commission.
Correct Answer: B [₹ 12,000]
Explanation:
₹ 2,52,000 × 5/105 = ₹ 12,000.
31.
CalculationOpening capital ₹ 3,40,000; fresh capital brought in ₹ 50,000; net profit ₹ 92,000; drawings in cash ₹ 48,000 and goods costing ₹ 5,000 taken for personal use. The closing capital is
Correct Answer: C [₹ 4,29,000]
Explanation:
₹ 3,40,000 + ₹ 50,000 + ₹ 92,000 − ₹ 53,000 = ₹ 4,29,000.
32.
In the Balance Sheet of a company prepared under Schedule III to the Companies Act, 2013, which of these is NOT a main head under 'Equity and Liabilities'?
Correct Answer: D [Current assets]
Explanation:
Equity and Liabilities: shareholders' funds, share application money pending allotment, non-current and current liabilities.
33.
A society receives a donation of ₹ 2,00,000 for building an auditorium. It is shown
Correct Answer: A [as an Auditorium Fund on the liabilities side of the Balance Sheet]
Explanation:
A donation for a specific purpose is a capital receipt credited to a specific fund.
34.
CalculationStationery: opening stock ₹ 3,400, closing stock ₹ 2,600; paid to suppliers ₹ 21,500; creditors for stationery ₹ 1,900 at the start and ₹ 2,700 at the end. Stationery consumed, shown in the Income and Expenditure Account, is
Correct Answer: A [₹ 23,100]
Explanation:
Purchases = ₹ 21,500 + ₹ 2,700 − ₹ 1,900 = ₹ 22,300; used = ₹ 3,400 + ₹ 22,300 − ₹ 2,600 = ₹ 23,100.
35.
CalculationA club's capital fund rose from ₹ 4,20,000 to ₹ 5,06,000 during the year. A legacy of ₹ 40,000 and life membership fees of ₹ 25,000 were added directly to the fund. The surplus for the year was
Correct Answer: B [₹ 21,000]
Explanation:
₹ 5,06,000 − ₹ 4,20,000 − ₹ 40,000 − ₹ 25,000 = ₹ 21,000 (B12 ch 10, Fund-Change Surplus).
36.
CalculationFurniture of a sports club carried at ₹ 12,000 is disposed of for ₹ 9,500. The Income and Expenditure Account will show
Correct Answer: D [loss on sale ₹ 2,500 on the expenditure side]
Explanation:
The R&P shows the cash ₹ 9,500; the I&E shows only the loss ₹ 12,000 − ₹ 9,500 = ₹ 2,500 (B12 ch 10).
37.
CalculationOn 1 June Latha draws a 4-month bill for ₹ 45,000 on Babu, who accepts it. Latha discounts it with her bank the same day at 10% p.a. Ignoring days of grace, the amount credited by the bank to Latha is
Correct Answer: C [₹ 43,500]
Explanation:
Discount = ₹ 45,000 × 10 × 4 ÷ 1,200 = ₹ 1,500; ₹ 45,000 − ₹ 1,500 = ₹ 43,500 (B12 ch 11).
38.
A bill receivable that the drawer had discounted with his bank is dishonoured on the due date. The entry in the drawer's books is
Correct Answer: D [Drawee's A/c Dr; To Bank A/c]
Explanation:
On dishonour the drawer credits whoever held the bill at maturity – here the bank (B12 ch 11, Holder-at-Maturity Rule).
39.
CalculationTotal Debtors Account: opening ₹ 70,000, closing ₹ 92,000; cash received from debtors ₹ 2,46,000; returns inward ₹ 7,000; discount allowed ₹ 5,000; bills receivable received ₹ 30,000; bills receivable dishonoured ₹ 4,000; bad debts ₹ 3,000. Credit sales for the period were
Correct Answer: C [₹ 3,09,000]
Explanation:
Credit sales = closing − opening + credit-side items − other debit items = ₹ 22,000 + ₹ 2,91,000 − ₹ 4,000 = ₹ 3,09,000.
40.
Under the self-balancing system, the General Ledger Adjustment Account kept in the debtors' ledger normally shows
Correct Answer: A [a credit balance equal to the debit balance of the Debtors' Ledger Adjustment Account]
Explanation:
It is the mirror image of its twin in the general ledger – same amount, opposite side (B12 ch 12, Mirror Rule).
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