ASRB NET and ARS / SMS / STO recruitment · India · Agricultural Scientists Recruitment Board (ICAR)
Original practice questions written to the published syllabus · not past papersRecording, reporting and reading business accounts, then using cost and budget information to control an agribusiness.
In the exams: agribusiness management PhD entrance and fellowship examinations, accounting and financial management (heavy); agricultural scientist eligibility tests, business accounting (heavy)
How our questions for ASRB NET and ARS / SMS / STO recruitment spread across the units of Financial & Managerial Accounting. Difficulty: 13 easy, 20 medium, 7 hard.
| Tools of management accounting | 4 | |
| Material, labour and overhead costing | 4 | |
| Marginal costing and cost-volume-profit analysis | 4 | |
| Budgets: sales, purchase, production, cash, flexible, master and zero-based | 4 | |
| Double entry, journal, ledger and trial balance | 3 | |
| Final accounts | 3 | |
| Introduction to company accounts | 3 | |
| Ratio analysis, common-size statements and the Du Pont chart | 3 | |
| Cash-flow and fund-flow statements | 3 | |
| Cost classification | 3 | |
| Accounting concepts and conventions | 2 | |
| Accounting standards | 2 | |
| Accounting software | 2 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
A farmer pays the household grocery bill from the farm business bank account. Which accounting concept requires this payment to be recorded as drawings rather than as a farm expense?
C. Business entity concept
The business entity concept treats the business as separate from its owner, so private spending paid from business funds is drawings, reducing capital. Matching concerns setting expenses against the revenue they earn; it does not decide whose expense it is.
Which book is both a book of original entry and a ledger account?
A. Cash book
Transactions are first recorded in the cash book, and its balances serve directly as the cash and bank ledger accounts. The purchases book is only a book of original entry; totals are posted from it to the ledger.
A farmer producer organisation's cash book shows a bank balance of 45,000 currency units (debit). Cheques issued but not presented are 12,000, cheques deposited but not yet credited are 7,500, and bank charges of 300 have not been entered in the cash book. What balance should the bank statement show?
D. 49,200
Start from the cash book: add unpresented cheques (the bank has not paid them yet), subtract uncleared deposits (not yet credited), subtract charges already debited by the bank: 45,000 + 12,000 − 7,500 − 300 = 49,200. Reversing the signs of the timing items gives 40,200; forgetting charges gives 49,500. Adding all three items gives 64,800.
How does interest on debentures differ from dividend on equity shares?
D. Debenture interest is a charge against profit payable even in a loss year; dividend is an appropriation of profit
Debenture holders are creditors, so interest is an expense regardless of profit. Dividends are distributions to owners out of profit and are not an expense.
In voucher-based accounting software, a 'contra' voucher is used for:
D. Transfers between cash and bank accounts, such as depositing cash into the bank
A contra entry has both sides in cash/bank accounts. Credit sales use sales vouchers, depreciation a journal voucher, and returns debit notes.
A 'profit centre' in responsibility accounting is a unit whose manager is held responsible for:
D. Both revenues and costs, but not the capital invested
Cost centres answer for costs, revenue centres for sales, profit centres for both, and investment centres for profit relative to capital (ROI or residual income).
In a statement of cash flows under IAS 7, cash paid to buy a new tractor is classified as:
A. Investing activity
Acquisition of long-term assets is investing. Operating covers revenue-producing activities; financing covers equity and borrowings.
A rice mill budgets overheads of 1,200,000 currency units and 40,000 machine hours. Actual machine hours were 36,000 and actual overheads 1,150,000. What is the under- or over-absorption?
B. Under-absorbed by 70,000
Rate = 1,200,000 ÷ 40,000 = 30 per hour; absorbed = 36,000 × 30 = 1,080,000. Actual 1,150,000 exceeds absorbed, so under-absorption of 70,000. Comparing budget with actual (50,000) is an expenditure difference, not absorption.
A dairy product line reported sales of 4,000,000 currency units with profit 500,000 in one year and sales of 5,000,000 with profit 800,000 the next. Prices, unit variable cost and fixed costs were unchanged. What are the fixed costs?
A. 700,000
P/V ratio = change in profit ÷ change in sales = 300,000 ÷ 1,000,000 = 30%. Contribution at 4,000,000 = 1,200,000; fixed cost = contribution − profit = 700,000. Adding profit to contribution gives 1,700,000.
A farm has 12 ha of land and 50,000 m³ of irrigation water. Crop X gives a contribution of 60,000 currency units/ha and needs 10,000 m³/ha; crop Y gives 45,000/ha and needs 5,000 m³/ha. Fixed costs are unaffected by the choice. What is the maximum total contribution?
C. 450,000
Water is the binding factor. Contribution per m³: X = 6, Y = 9, so Y ranks first. Water allows 10 ha of Y (within 12 ha of land): 10 × 45,000 = 450,000. Ranking by contribution per hectare picks X and gives only 300,000; 540,000 ignores the water limit. 720,000 plants all 12 ha with X and ignores water.
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