# SEBI Grade A 2022- Commerce & Accountancy Question | Set-5

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## Commerce & Accountancy Question for SEBI Grade A

Practice Questions Set for SEBI Grade A 2022. SEBI Grade A Commerce & Accountancy Question Set with answers Phase I & Phase II. SEBI Grade A Study Material, Books, PDFs, Free Notes, and Mock Test for of Commerce Accountancy. As we all know The Security Exchange Board of India (SEBI) has released the SEBI Grade A 2022 Notification for the recruitment of 120+ Assistant Managers across the country.

If you are preparing for SEBI Grade A 2022, you will come across a section on “Commerce & Accountancy”. In this post, you will get sample questions for SEBI Grade A Commerce & Accountancy section. If you prepare this thoroughly, you can very easily crack SEBI Grade A 2022. If you want to crack SEBI Grade A 2022 exam then you should buy Best Books for SEBI Grade A 2022. Before starting the preparation for this exam you will aware of  These questions are important for SEBI Grade A Exam.

## Commerce & Accountancy Practice Question Set-5

1. Which Accounting Standard talks about changes in accounting policies?

1. AS 1
2. AS 30
3. AS 28
4. AS 8
5. None of above

Correct Answer:  E. None of these

Explanation: AS 5 specifies the method of classification and disclosure for the following items:

1. Prior period items
2. Extraordinary items
3. Certain specific items w.r.t. profit and loss from ordinary activities

The standard also describes the treatment of changes in accounting estimates and policies and disclosures to be made on account of such changes.The standard doesn’t deal with tax implication on account of such changes as mentioned above.

2.Calculate net profit ratio from the below mentioned data?

Sales = Rs. 25,20,000

Other Current Assets = Rs. 7,60,000

Cost of sale = Rs. 19,20,000

Fixed Assets = Rs. 14,40,000

Net profit = Rs. 3,60,000

Net worth = Rs. 15,00,000

Inventory = Rs. 8,00,000

Debt = Rs. 9,00,000

Current Liabilities = Rs. 6,00,000

1. 2.4%
2. 3%
3. 6%
5. None of These

Correct Answer:  E. None of these

Explanation: Net profit ratio = Net profit/Sales * 100

3,60,000/25,20,000*100

= 14.285%

3. Payment of insurance premium in advance would lead to recognition of which of the following in the balance sheet?

1. Prepaid asset
2. Prepaid liability
3. Deferred revenue
4. Deferred liability
5. None of these

Explanation: Payment of insurance premium is a prepaid asset in the balance sheet. As the insurance premium is not yet due and any kind of advance paid will not be treated like an expense. Hence, the same is treated like as an advance and a prepaid expense in the balance sheet which will be recognized as expense when it is due.

4. As per AS 13, ‘Accounting for Investments’, an enterprise holding investment properties should account for them as ___________________.

1. Short term investments
2. Current investments
3. Long term investments
4. Non-current investments
5. None of these

Correct Answer: C. Long term investments

Explanation: As per para 30 of AS 13, an enterprise holding investment properties should account for them as long term investments.

5. As per AS 11, what is the treatment of a forward exchange contract intended for trading or speculation purposes?

1. Premium on contract is ignored
2. Premium on contract is amortised equally
3. Losses are marked to market
4. Gains are marked to market
5. Both (c) and (d)

Correct Answer: E. Both (c) and (d)

Explanation: In recording a forward exchange contract intended for trading or speculation purposes, the premium or discount on the contract is ignored and at each balance sheet date, the value of the contract is marked to its current market value and the gain or loss on the contract is recognised.

6. Out of the below mentioned information, what is true about price to earnings ratio?

1. P/E relates earnings per common share to the market price at which the stock trades
2. High P/E indicates that firm is valued highly by market
3. P/E ratio is calculated by dividing share price by EPS
4. All the above
5. None of these

Correct Answer: D. All the above

Explanation: The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple.

P/E ratios are used by investors and analysts to determine the relative value of a company’s shares in an apples-to-apples comparison. It can also be used to compare a company against its own historical record or to compare aggregate markets against one another or over time.

The price-earnings ratio (P/E ratio) relates a company’s share price to its earnings per share.

A high P/E ratio could mean that a company’s stock is over-valued, or else that investors are expecting high growth rates in the future.

7.Calculate debtors velocity ratio from the given data?

Opening Debtors = Rs. 200

Closing debtors = Rs. 400

Sales = Rs. 1000

Sales Return = Rs. 500

1. 7.20
2. 3.60
3. 1.80
4. 2.50
5. None of the above

Correct Answer: E. None of the above

Explanation: Debtor velocity ratio is also called debtor turnover ratio.

Debtors Turnover Ratio = Net Credit Sales / Average Receivables

Net sales = Sales – Sales return = 1000 – 500 = 500

Average receivables = (opening + closing)/2 = (200+400)/2 = 300

= 500/300 = 1.67

8. Which of the following is an example of nominal account?

1. Interest on loans A/c
2. Sales A/c
3. Ram A/c
4. Both (a) and (b)
5. Both (a) and (c)

Correct Answer:  D. Both (a) and (b)

Explanation: A Nominal account is a General ledger account pertaining to all income, expenses, losses and gains.The income statement accounts record and report the company’s revenues, expenses, gains, and losses. When the company is a sole proprietorship, the balances in these accounts will be closed by transferring the net amount into the owner’s capital account. If the business is a corporation, the balances will be transferred to the retained earnings account. Hence, the interest on loans and sales is a nominal account as they pertain to income and expenses.

9. Which of the following accounting concepts states that losses should be anticipated but income and gains should be left unanticipated?

1. Matching concept
2. Going concern concept
3. Periodicity concept
4. Prudence concept
5. None of these

Explanation: The conservatism principle is the general concept of recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received. Thus, when given a choice between several outcomes where the probabilities of occurrence are equally likely, you should recognize that transaction resulting in the lower amount of profit, or at least the deferral of a profit. Similarly, if a choice of outcomes with similar probabilities of occurrence will impact the value of an asset, recognize the transaction resulting in a lower recorded asset valuation.

Under the conservatism principle, if there is uncertainty about incurring a loss, you should tend toward recording the loss. Conversely, if there is uncertainty about recording a gain, you should not record the gain.

10. What will be the written down value of an asset after 3 years if it is purchased for Rs. 200,000 and is depreciated at 20% written down value method?

1. Rs. 80,000
2. Rs. 100,000
3. Rs. 102,871
4. Rs. 104,200
5. Rs. 102,400

Explanation: Written down value = Original cost – Accumulated depreciation till date

 Opening 200000 Dep 1 40000 Closing year 1 160000 Dep 2 32000 Closing year 2 128000 Dep 3 25600 Closing year 3 102400
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