JAIIB - Accounting & Finance for Bankers Practice Quiz Answer

Practice Set 1

1. Coupon Rate is
a. Rate at which a bond is purchased
b. Market rate of return of a debenture
c. Total Maturity Amount of Debenture
d. Rate of Interest at which bond is issued

Ans. Rate of Interest at which bond is issued

2. Calculating future value of cash flow is known as
a. Discounting
b. Yielding
c. Hedging
d. Compounding

Ans. Compounding

3. Formula to calculate Present Value of Maturity Amount (P-Present Value, F-Future Value, r-Rate of Interest, n-Period
a. P=F*(1+r)^n
b. P=F/(1+r)^n
c. P=F^n/(1+r)
d. P=F^n*(1+r)

Ans. P=F/(1+r)^n

4. Which of the following is direct quote ?
a. In USA: 1 Euro = US $1.9530
b. In India: 1 US $ = Rs. 66.74
c. In Germany: 1 DM=US $ 1.2940
d. None of these

Ans. In India: 1 US $ = Rs. 66.74

5. Capital Adequacy is
a. Capital as a percentage of risk weighted assets excluding non-fund based assets
b. Capital as a percentage of risk weighted assets excluding non-fund based and non-performing assets
c. Capital as a percentage of all risk weighted assets excluding non-performing assets
d. Capital as a percentage of full risk weighted assets including non-fund based and non-performing assets

Ans. Capital as a percentage of full risk weighted assets including non-fund based and non-performing assets

6. Which of the following are true?
a. Real accounts always have debit balances
b. P&L a/c appears in trial balance
c. Nominal accounts always have credit balances
d. Debit balance in ledger account is credit balance in trial balance

Ans. Debit balance in ledger account is credit balance in trial balance

7. How much money a maid will have to pay after four years if she borrows Rs. 5000 per year at  5 percent
a. 12900
b. 21550
c. 2100
d. 19400

Ans. 21550

8. All recurring expenses are
a. Capital Expense
b. Revenue Expense
c. Deferred Capital expense
d. Deferred Revenue Expense

Ans. Revenue Expense

9. A bill of exchange has how many parties
a. 2
b. 3
c. 4
d. 5

Ans. 3

10. Which one is true for Balance Sheet Equation
a. Assets=Equities
b. Liabilities=Asset - Capital
c. Capital=Assets-Liabilities
d. All of the Above

Ans. All of the Above



Practice Set 2


1. Zero Coupon bond carries
a. Zero Risk
b. Fixed rate of interest payable on redemption of the bond
c. Do not carry any interest. It is issued at a lower price than its redemption
d. None of these

Ans. Do not carry any interest. It is issued at a lower price than its redemption

2. The cost formulae recommended by Accounting Standard 2 for valuation of inventories are
a. FIFO or weighted average
b. LIFO or latest purchase price
c. Standard cost
d. None of these

Ans. FIFO or weighted average

3. Where does the net profit appear in the balance sheet?
a. Asset Side
b. Liabilities Side
c. Assets or Liabilities
d. None of these

Ans. None of these

4. Which one is not correct
a. Capital=Assets-Liabilities
b. Assets=Liabilities+Capital
c. Liabilities=Assets-Capital
d. None of these

Ans. None of these

5. In Bill of Exchange, the party which is ordered  to pay the amount is known as
a. Acceptor
b. Drawee
c. Drawer
d. Payee

Ans. Drawee

6. Mix of debt and equity is known as
a. Capital structure of the firm
b. Organizational structure of the firm Financial
c. Structure of the Firm
d. Bond equity structure of the firm

Ans. Capital structure of the firm

7. Which of the following is not a deferred revenue expenditure Preliminary expenses for setting up a company
a. Amount raised through Rights issue
b. Huge sales c. promotion expenditure in launch of new product
d. Cost of preparing project report

Ans. Amount raised through Rights issue

8. In written down value method of Depreciation, the value of the asset is always
a. Zero
b. Less than Zero
c. More than zero
d. None of these

Ans. More than zero

9. IRR is the value of the discount rate at which the NPV of a project is
a. Equal to Zero
b. Less than zero
c. Equal to Zero
d. None of these

Ans. Equal to Zero

10. The cash price of laptop is 25000. It is offered on hire purhase with the following terms - Down Payment 5000/- and balance in equated 24 installment with interest

at 10%. The amount of monthly equated installment will be

a. Rs. 1000
b. Rs. 750
c. Rs. 867 Plus interest on amount outstanding
d. 1250

Ans. 1000


Practice Set 3


1. Transfer of bill to some others is called
a. Transfer of the bill
b. Discounting the bill
c. Endorsement of the bill
d. Negotiation of the bill

Ans. Negotiation of the bill

2. Expenditure incurred on ‘Research & Development’ is an example of
a. Capital expenditure
b. Revenue expenditure
c. Deferred revenue expenditure
d. None of these

Ans. Capital expenditure

3. In FIFO method of inventory valuation
a. Closing stock is at latest price
b. Issue of stocks to production is at earliest price
c. Both above
d. None of these

Ans. Both above


4. Freight expenses for moving new machinery to factory is
a. Revenue expenses
b. Deferred revenue expenditure
c. Capital expenditure
d. None of the above

Ans. Capital expenditure


5.The Hirer has a right to terminate the agreement at any time after giving notice to the hire vendor
a. of 8 days
b. of 10 days
c. of 14 days
d. of 30 days

Ans. of 14 days


6.In final account of non-trading concern, all revenue receipts and expenditure are recorded in
a. Receipts & Payments A/c
b. Revenue & Expenses A/c
c. Profit & Loss A/c
d. Income & Expenditure A/c

Ans. Income & Expenditure A/c


7.If huge revenue expenditure incurred in one year but the benefit of it may accrue in 2-3 years, it is called
a. Capital Expenditure
b. Revenue Expenditure
c. Deferred Capital Expenditure
d. Deferred Revenue Expenditure

Ans. Deferred Revenue Expenditure


8. As per Indian Partnership Act, there can be maximum  --- number of partners in the partnership
a. 5
b. 7
c. 10
d. No limit

Ans. No limit

9. If Ram and Shyam sharing profits in the proportion of 3/8 and 5/8. They admit C with 1/2 share. The sacrifices made by A and B is in the ratio 1:3. New Profit sharing
a. 1:2:1
b. 2:1:1
c. 1:1:2
d. 3:8:1

Ans. 1:1:2

10 . Manohar started a business with 20000/-. During the year he made a profit of Rs. 5000. He owes Rs. 3000 to suppliers of goods. What is total assets of business? a. 25000
b. 28000
c. 20000
d. 22000

Ans. 28000

Practice Set 4

1. If two bonds X and Y has been issued with face value Rs. 100 each at 14% coupon rate then what will be YTM (Yield to Maturity)
a) 14
b) 10
c) 12
d) 9

Ans. 14

2. A company is purchasing an equipment  that will cost 3000 and will produce cash flow 500 every year upto 12 years from one year onward from purchasing. What will be NPV if appropriate discount rate is 10%.[(Hint - Twelve Year Annuity Formula PV=a/i[1-1/(1+i)^n]
a) 3407
b) 407
c) 814
d) None of these

Ans. 407

3. When a bill of exchange is dishounoured, the holder gets it on the bill by
a) Drawee
b) Notary
c) Payee
d) Court

Ans. Notary

4.On allocation of finance income Rs. 20000 over lease period of 3 years, what amount will be allocated 2nd year  
a) 3000
b) 666
c) 333
d) 600

Ans. 666

5. The debit balance in the Income and Expenditure A/c indicates
a) The excess of income over expenditure
b) the excess of expenditure over income
c) the excess of cash receipts over cash payments
d) None of these

Ans. the excess of expenditure over income

6. Which one is not part of Asset in Final Account
a) Cash
b) Bills Receivable
c) Debtors
d) Bank Overdraft

Ans. Bank Overdraft

7. When separate set of books are kept for keeping the account of Joint Venture, then
a) Joint Venture, co-ventures and joint bank A/Cs are opened
b) Memorandum Joint Venture Account is prepared
c) Transactions take the form of ordinary accounting system
d) Only Joint venture and personsal A/Cs are maintained

Ans. Joint Venture, co-ventures and joint bank A/Cs are opened

8. Lessor gets benefit from leasing as it helps
a) in tax planning
b) in expanding his business
c) in capital investment reduction
d) in tax planning and business expansion

Ans. in tax planning and business expansion

9.Gaining ratio is calculated by
a) old ratio - new ratio
b) new ratio - old ratio
c) new proportion - old proportion
d) old proportion - new proportion

Ans. new proportion - old proportion

10. A bond whose face value is 2000 bears a coupon rate of 7% and has a maturity period of 5 years and the required rate of return is 10% then what is the value of bond?
a) 1670.23
b) 1772.74
c) 1540.65
d) 1450.74


Ans. 1772.74

Practice Set 5

1. Mohan purhsased a bond in Jan 2016. Rate of return earned by Mohan is

a) Maturity

b) Fund Value

c) Coupon

d) YTM

Ans. YTM

2. Double entry of book keeping refers

a) Two sides of each account always tally

b) Transactions that are entered twice only is recognized

c) Every transaction is entered by two person to avoid mistakes

d) two aspects of every transaction are recorded in the book

Ans. two aspects of every transaction are recorded in the book

3. Goodwill is

a) Fixed Asset

b) Current Asset

c) Tangible Asset

d) Intangible Asset

Ans. Intangible Asset

4. Depreciation is recorded in ----- side of P/L A/C

a) Credit

b) Debit

c) It is not recorded in P/L A/C

d) It is recorded in Final A/C

Ans. Debit

5.If the current ratio is 2 then how cash collected from customers will impact on current ratio

a) Current Ratio Will Decline

b) Current Ratio Will Improve

c) It is not related to Current Ratio

d) Current ratio remain unchanged

Ans. Current ratio remain unchanged

6. Which one is not a valuation method

a) Base Stock

b) Adjusting Selling Price

c) Average Cost

d) All of the above

Ans. All of the above

7. All losses and expenses are recorded as

a) Credited

b) Debited

c) Cash Book Entry

d) None of the above

Ans. Debited

8. A bond whose face value is 1000 bears a coupon rate of 10% and has a maturity period of 5 years and the required rate of return is 12% then. If interest rate increased by 1% what will be % change in bond value?

a) 3.74

b) 2.74

c) 3.45

d) 4.1

Ans. 3.74

9. Closing stock of trial balance is taken to

a) Balance Sheet

b) Trading A/c

c) Both of the Above

d) None of these

Ans. Balance Sheet

10. Along with Depreciation, it is desired that sufficient funds are available to replace the asset. This fund is available in

a) Straight Line Method

b) Written Down Method

c) Diminishing balance method

d) Sinking fund method

Ans. Sinking fund method