CA Final
Multiple Choice Questions
Part 3
Business & Profession
1. Any income which is earned illegally shall ...........
a. be included to profit
b. be excluded / deducted
c. not be take into account
d. either b or c
2. Rate of depreciation in case of oil well:
a. 40%
b. 20%
c. 15%
d. 30%
3. Non-monetary items in foreign currency shall be converted into reporting
currency by using which exchange rate?
a. closing rate
b. average rate
c. actual rate effective on date
d. all the above
4. What all sources are taken under “PGBP”
a. Business
b. Profession
c. Vocation
d. a & b
e. a,b and c
5. ICDS are made applicable from
a) A.Y.2016-17
b) F.Y.2016-17
c) F.Y.2017-18
d) A.Y.2018-19
6. The claim for escalation for price and export incentive shall be deemed to
be income of ………….
a) Previous year, if reasonable certainty for realization is involved
b) Current year, if realization certainty involved
c) At the option of the assessee stating valid reasons
d) All of the options are incorrect
7. Sale of Goods and rendering of services are recognized under:
a) ICDS-X
b) ICDS-IV
c) ICDS-V
d) ICDS-VIII
8. Determine which of the following method of accounting maybe used in the
calculation of income under the head- “Profits and gains from business and
profession” or “Income from other sources”?
a) Mercantile system of accounting
b) Cash system of accounting
c) Both of the above maybe used
d) casual accounting
9. Inventory of services rendered is recognized at-
a) Cost
b) NVR
c) Cost or NVR whichever is less
d) Cost less cost to sell
10.Non-Monetary item exchange differences shall be ---------- as per ICDS-IV
a) Recognised
b) Not recognised
c) Ignored
d) Partially recognized and partially not
11.As per ICDS-2, inventories mean-
a) Items held for sale in ordinary course of business
b) Process of production for sale
c) Material or supplies to be consumed in production process or in
services
d) All of the above
12.Revenue from services with duration of not more than……….. days to be
recognized when rendering of services under contract is completed or
substantially complted.
a) 60 days
b) 90 days
c) 120 days
d) 180 days
13.Capital receipts under head “PGBP” shall be …………
a) Added to income
b) Deducted from income
c) Shall not take in to account
d) Shown as separate line item
14.ICDS-3 is applicable for-
a) Construction contract
b) Foreign currency
c) Inventory
d) Revenue Recognition
15.ICDS is not applicable to:
a) All assessee
b) Individual and HUF who are required to get audit u/s 44AD
c) Individual and HUF who are not required to get audit u/s 44AD
d) 1 & 2
16.ICDS doesn’t recognize-
a) Materiality
b) Prudence
c) Both of the above
d) All the above are incorrect
17.ICDS is applicable for income chargeable under-
a) PGBP
b) IOS
c) Neither of 1 and 2
d) Both of the above
18.ICDS-3 recognises income on:
a) Estimated basis
b) Valuation basis
c) Percentage of completion basis
d) All of the above
19.Tax on profit is charged on:
a) Gross Receipts
b) Gross Receipts less disallowed expenses
c) Gross Receipts less allowed expenses
d) All of the above
20.Revenue can be recognized on straight line basis over specific period, when
services are provided by an indeterminate number of acts-
a) Over such period
b) Straight line
c) Lump sum in year of receipt
d) All of the above
21.Income from enhanced compensation shall be considered as
income……………
a) In the year it is received
b) In the year in which it is deemed to be received
c) In any year at the option of the assessee
d) If the income received is exempt
22.Depreciation under ICDS-V shall be charged in accordance with :
a) Income Tax Act 1961
b) Companies Act 2013
c) Notified Rate –CBEC
d) Straight line over the useful life
23.As per ICDS I, treatment of presentation have to be governed by:
a) Substance
b) Legal form
c) Substance and not merely legal form
d) Legal and not merely substance form
24.A person who provides assistance in astrology is said to be in……..
a) Business
b) Profession
c) Partly in business
d) Vocation
25.In case a person has multiple business, income earned from each business
shall be…………
a) Separately computed
b) Consolidated
c) Planned Differently
d) Any of above based on conditions
26.Fair value of Tangible fixed assets acquired in exchange of share shall be at
its……………..
a) Actual cost
b) Market Price
c) Actual cost less expenses of exchange
d) Market price less expenses of exchange
27.Opening WDV of the block of assets was Rs.15 lakh. During the year, asset
was acquired under this block on 15th June2017 amounting to Rs. 10 Lakh.
Rate of depreciation of the block is 15%. Calculate the amount of
depreciation available during the P.Y.
a) Rs. 3.5 Lakh
b) Rs. 3.75 lakh
c) Rs. 3.00 lakh
d) Rs.2.25 Lakh
28.Where the asset is received as gift then cost of the asset will be-
a) Actual cost to previous owner
b) Nominal Value
c) WDV on date of receipt of gift
d) None of the above
29.R, an assessee carries on business in respect of which it holds tenancy
rights. It carries out improvements to the said building at a cost of Rs. 2
lakhs and claims depreciation @ 10% thereon. Which one of the following
is the correct answer?
a) No depreciation will be available, on the grounds that the assessee is
not the owner of the building
b) Depreciation will be allowed of Rs.20 thousand
c) Deduction will be allowed of Rs. 2 Lakh
d) The amount of Rs.2.2 lakh will be capitalized
30.Transaction in which a contract for the purchase or sale of any commodity
including stocks and shares is periodically of ultimately settled otherwise
than by the actual delivery or transfer of the commodity or scrips is known
as:
a) Wagering Transaction
b) Speculative Transaction
c) Deemed Speculative Transaction
d) Either A or C
31.Actual cost to assessee in case of sale and repurchase is:
a) WDV at the time of first sale
b) Actual price for which the asset is reacquired
c) Lower of A& B
d) Higher of A & B
32.If the asset acquired outside India by a non-resident is brought by him to
India & used for business, then in that case what shall be the cost of
addition?
a) Value of the asset at the time of bringing the asset to India less
depreciation
b) Actual cost of asset less actual depreciation
c) Actual cost of asset less notional depreciation
d) Any of the above
33.Under the Income Tax Act 1961, Depreciation on machinery is charged on :
a) Purchase Price of the machinery
b) Market Price of the Machine
c) Written Down value
d) A or B which is less
34.Mr. Vaibhav, deriving business income, owns a car whose WDV as on 1 st
april 2016 was Rs.3Lakh. This is the only asset in the block of assets with
rate of 15%. It is estimated that 1/3 rd of the total usage of the car is for
personal use in both years. The WDV of the block of assets as on 31 st
March, 2018 would be-
a) Rs.216750
b) Rs.243000
c) Rs.255000
d) Nil
35.While computing the actual cost of any asset falling within a block, portion
of cost of asset which has been met directly by the central government or a
state government or any authority under any law or any other person, in
the form of a subsidy or grant :
a) Added to purchase price
b) Subtracted from purchase price
c) Added to WDV
d) Claimed as Revenue Expenditure
36.What is the rate of depreciation charged on Computer Software:
a) 10%
b) 60%
c) 40%
d) 15%
37.Assessee is having stock existing in the business. Valuation of the stock will
be at :
a) Cost
b) Market Price
c) Cost or MRP whichever is less
d) Cost or MRP whichever is high
38.In which of the following case no depreciation is allowable:
a) Block Exist but WDV ceases to exist
b) WDV exist but the block ceases to exist
c) WDV and Block both ceases to exist
d) All of the above
39.Raman & Co., a Partnership firm, received Rs.5 lakh from Insurance
Company under Keyman Insurance Policy consequent to demise of Partner
Pramod. The amount of premium of Rs.230000 paid earlier was claimed as
deduction u/s 37 by the firm.
a) Tax-free u/s 10(10D)
b) Fully taxable as Income
c) Rs.270000 is taxable
d) Rs.230000 is taxable
40.While Computing the actual cost of any asset falling within a block, direct
cost attributable to bring the asset to its present location and working
condition for its intended use(i.e. expenses incurred for acquiring the asset
e.g. freight, insurance, etc.)
a) Be added to the purchase price
b) Be subtracted from the purchase price
c) Be subtracted from WDV
d) Be claimed as revenue expenditure.
41.HSK, an LLP has taken keyman insurance policy on the life of its managing
partner. The policy got matured on 13th September 2017 and an amount of
rupees 75 lakhs was paid by the insurers to the Managing partner. The
amount so received on maturity of the policy
a. fully exempt under section 10(10D)
b. 50% of rupees 75 lakh is exempt
c. rupees 75 lakh is taxable
d. rupee 25 lakh is exempt and Rs 50 lakh is taxable
42.Mr. X, the manager of XYZ Ltd. since 2002, was terminated by the Company
on 1st Aug 2017 y paying a compensation of Rs.200 Lakhs. Such
Compensation is:
a) Chargeable under the Wealth tax Act 1957
b) Not Chargeable under Income Tax Act
c) Chargeable u/s 17(3)(i)
d) Chargeable u/s 28(ii)(a)
43.Depreciation when the asset is used for less than 180 days during the year
of acquisition shall be at Block rate of:
a) 50%
b) 100%
c) 20%
d) 15%
44.Actual Cost in case of sale and Lease back is:
a) WDV in the hands of lessor before sale
b) WDV at the time of transfer
c) Higher of A & B
d) Lower of A & B
45.Export incentives taxable under this head includes-
a) Cash Compensatory Support
b) Duty Drawback
c) Profit on transfer of DPEB
d) All of the above
46.Opening WDV off the block of assets was Rs 15 lakh. During the year, asset
was acquired under this block on 15 January 2018 amounting to rupees 10
lakh. One of the assets falling within the block was sold for rupees 5.5 lakh
on 14 January 2018. Rate of depreciation of block is 10%. Calculate the
amount of depreciation available during the previous year.
a. rupees 1.95 lakh
b. rupees 2.5 lakh
c. rupees 2.25 lakh
d. Rs 1.45 lakh
47.Rate of Depreciation chargeable on fully temporary wooden structure:
a) 100%
b) 50%
c) 40%
d) 15%
48.Opening WDV off the block of assets was Rs 15 lakh. During the year, asset
was acquired under this block on 15 June 2017 amounting to rupees 10
lakh. One of the assets falling within the block was sold for rupees 5.5 lakh
on 14 January 2018. Rate of depreciation of block is 10%. Calculate the
amount of depreciation available during the previous year for the block.
e. rupees 1.95 lakh
f. rupees 2.5 lakh
g. rupees 2.25 lakh
h. Rs 1.45 lakh
49.Sale of products from test run before production run is-
a) Deducted from actual cost
b) Added to actual cost of assets
c) Charged as pre-profits
d) Charged as preliminary expenses
50.If the asset is revalued then depreciation u/s 98 shall be allowed on-
a) Original amount
b) Revalued Amount
c) At fair value of similar asset
d) Market Value-Notional Depreciation
51.Under the Income Tax Act 1961, “Notional profit” from speculative business
is:
a) taxable under the head income from “Profits and Gains from
Business and Profession”
b) taxable under the head “Income from other sources”
c) either A or B
d) not taxable
52.If the Computer is purchased on 11th May 2017 then at what rate
depreciation will be provided on it?
a) 40%
b) 60%
c) 30%
d) 20%
53.Adhu Ltd. owns machinery (rate of depreciation is 15%), the written down
value of which as on 1st April 2017 is Rs.30 Lakh. Due to fire, entire assets in
the block were destroyed and the insurer paid Rs.25 lakh. The eligible
depreciation in respect of block :
a) Rs.450000
b) Rs. 75000
c) Rs. 400000
d) Nil
54.If the block of asset ceases to exist on the last day of the previous year,
depreciation admissible for block of assets will be:
a) Nil
b) 50% of the value of the block of assets on the first day of the
previous year
c) The total value of the block of the assets on the first day of the
previous year
d) 50% of the value of the block of assets on last day of the previous
year
So. No. Solution
1. A
2 C
3 C
4 E
5 B
6 A
7 B
8 C
9 A
10 B
11 D
12 B
13 C
14 A
15 C
16 C
17 D
18 C
19 C
20 A
21 A
22 A
23 C
24 B
25 A
26 A
27 B
28 C
29 B
30 B
31 C
32 C
33 C
34 B
35 B
36 C
37 C
38 D
39 B
40 A
41 C
42 D
43 A
44 B
45 D
46 D
47 C
48 E
49 A
50 A
51 D
53 A
53 D
54 A
