The CBSE Class 12th Accountancy Practical Exam is a crucial component of the syllabus, assessing students on their understanding of accounting concepts and practical application skills. To help you prepare effectively, we have compiled 50 important viva questions along with answers that are commonly asked during the exam. These questions cover topics like Financial Statements, Ratio Analysis, Cash Flow Statements, and Accounting for Not-for-Profit Organizations.
1. General Accounting Concepts
Q1: What is accounting?
A: Accounting is the process of identifying, recording, classifying, summarizing, and interpreting financial information to make informed business decisions.
Q2: Define a “liability.”
A: Liability is an obligation of a business to pay money or provide goods or services to another party in the future.
Q3: What are the three golden rules of accounting?
A:
- Personal Account: Debit the receiver, credit the giver.
- Real Account: Debit what comes in, credit what goes out.
- Nominal Account: Debit all expenses and losses, credit all incomes and gains.
Q4: What is the accounting equation?
A: Assets = Liabilities + Capital.
Q5: What is a “journal” in accounting?
A: A journal is a book of original entry where all financial transactions are recorded chronologically.
2. Financial Statements
Q6: What is the purpose of financial statements?
A: Financial statements provide information about a company’s financial performance and position, helping stakeholders make informed decisions.
Q7: What are the components of financial statements?
A: Balance Sheet, Profit and Loss Account, and Cash Flow Statement.
Q8: What is the difference between revenue expenditure and capital expenditure?
A: Revenue expenditure is incurred for day-to-day operations, while capital expenditure is incurred to acquire or improve fixed assets.
Q9: What is the format of a Balance Sheet?
A: A Balance Sheet is prepared in a vertical format showing assets on one side and liabilities and capital on the other.
Q10: What is meant by depreciation?
A: Depreciation is the reduction in the value of a fixed asset due to wear and tear, obsolescence, or usage over time.
3. Ratio Analysis
Q11: What is ratio analysis?
A: Ratio analysis is a quantitative method used to evaluate the financial performance of a company by analyzing relationships between financial statement items.
Q12: Define current ratio.
A: Current Ratio = Current Assets / Current Liabilities.
Q13: What does a debt-equity ratio indicate?
A: It indicates the proportion of debt and equity used to finance a company’s assets.
Q14: How is the net profit ratio calculated?
A: Net Profit Ratio = (Net Profit / Revenue) × 100.
Q15: What is the ideal current ratio?
A: The ideal current ratio is 2:1.
4. Cash Flow Statements
Q16: What is a cash flow statement?
A: A cash flow statement shows the inflow and outflow of cash during a specific period, categorized into operating, investing, and financing activities.
Q17: Differentiate between operating and investing activities.
A: Operating activities are related to the core business operations, while investing activities involve the acquisition or disposal of long-term assets.
Q18: What is the formula for cash flow from operating activities?
A: Net Profit + Non-Cash Expenses − Changes in Working Capital.
Q19: What is free cash flow?
A: Free cash flow is the cash available after accounting for capital expenditures required to maintain or expand the asset base.
Q20: How do you calculate cash flow from financing activities?
A: Cash flow from financing activities includes transactions related to raising or repaying capital and debt, e.g., issue of shares or repayment of loans.
5. Accounting for Not-for-Profit Organizations (NPOs)
Q21: What is a not-for-profit organization?
A: An organization that operates to provide services rather than to earn a profit, e.g., NGOs, clubs, and societies.
Q22: What is a Receipts and Payments Account?
A: It is a summary of all cash and bank transactions of an NPO during a specific period.
Q23: How is a subscription treated in accounting for NPOs?
A: Subscriptions are treated as revenue and recorded in the Income and Expenditure Account.
Q24: Define the term “fund-based accounting.”
A: It is a system of accounting used by NPOs to manage specific funds separately, ensuring funds are used only for their intended purposes.
Q25: What is the difference between Income and Expenditure Account and Profit and Loss Account?
A: An Income and Expenditure Account is prepared by NPOs, while a Profit and Loss Account is prepared by profit-oriented businesses.
6. Partnership Accounting
Q26: What is partnership accounting?
A: It involves accounting for the financial transactions of a partnership firm.
Q27: Define partnership deed.
A: A partnership deed is a written agreement among partners specifying the terms and conditions of the partnership.
Q28: How are profits shared in a partnership?
A: Profits are shared according to the ratio specified in the partnership deed. If not specified, profits are shared equally.
Q29: What is goodwill? How is it calculated?
A: Goodwill is an intangible asset representing the reputation of a business. It is calculated using methods like average profit or super profit.
Q30: What happens if a partner retires?
A: The retiring partner’s share of capital, goodwill, and revaluation of assets and liabilities is adjusted.
7. Miscellaneous Questions
Q31: What is meant by “bank reconciliation statement”?
A: It is a statement prepared to reconcile the differences between the cash book and bank statement.
Q32: What is TDS?
A: TDS stands for Tax Deducted at Source, a mechanism where tax is deducted at the time of making payments.
Q33: What is a “provision” in accounting?
A: A provision is an amount set aside to cover a known liability whose exact amount or timing is uncertain.
Q34: What is the accrual basis of accounting?
A: Revenue and expenses are recorded when they are earned or incurred, regardless of when cash is received or paid.
Q35: What are contingent liabilities?
A: Contingent liabilities are potential obligations that may arise depending on the outcome of future events.
Additional Questions
Q36: Explain the dual aspect concept.
A: Every transaction has two effects – a debit and a credit.
Q37: What is a trial balance?
A: A trial balance is a statement that lists all ledger balances to check the mathematical accuracy of the books.
Q38: What is amortization?
A: Amortization is the gradual writing off of intangible assets over their useful life.
Q39: Define reserves.
A: Reserves are portions of profits set aside to strengthen the financial position of a company.
Q40: What is an “error of omission”?
A: An error of omission occurs when a transaction is not recorded in the books.
Practical Case-Based Questions
Q41: How do you prepare a ledger account?
Q42: What is the importance of adjusting entries? Q43: How is bad debt recorded in the books? Q44: What are the steps to prepare a Cash Flow Statement? Q45: How do you calculate interest on a partner’s capital?
Exam Tips
- Understand the basics of each concept.
- Practice solving practical problems regularly.
- Familiarize yourself with the exam’s marking scheme.
- Stay updated with any changes in the syllabus.
- Manage your time effectively during the viva and practical exam.
By reviewing these questions and answers, you’ll be better prepared to face the viva confidently. Best of luck with your CBSE Class 12th Accountancy Practical Exam!
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