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| Type | NFR Policy |
|---|---|
| Topic | freight |
| Currency | Currency not verified |
Imprest Suspense head Debit : Relevant revenue head Credit
MCQ Practice – 30 MCQ - AFA 70% CBT 2024 Question Paper Question - 1 The earnings of Railways are classified under how many number of alpha numerical digits? (AFA 70% 2024) A. 2 B. 3 C. 4 D. 5 Answer - 1 C. 4 Next slide: Explanation Earnings / Revenue - 4 Alpha Numeric Digits Major Head - 1001 – IR Misc. Receipts – Dividends of PSUs, Grants etc Major Head – 1002 – IR Revenue Receipts (X,Y &Z) – Commercial Lines Major Head – 1003 – IR Revenue Receipts (X,Y & Z) – Strategic Lines 3 Abstracts Revenue 4 Alpha Numeric (first two digits) Share Examples X Passenger Revenue 90 25 % Passenger fares X Other Coaching Revenue 91 1 % Parcels, luggage, penalties, platform tickets, cancellation charges, Spl trains etc Y Goods Revenue 92 68% Freight fares - Z Sundry Revenue 93 6% Rent, NFR- Non Fare Revenue (publicity), parking fees, catering etc Question - 2 If the Assets of a business on 31st March 2023 are worth Rs. 5,00,000 and its capital is Rs. 3,50,000. Then what shall be its Liabilities on 31st March 2023 (AFA 70% 2024) A. Rs. 8,50,000 B. Rs. 1,50,000 C. Rs. 3,50,000 D. Rs. 5,00,000 Answer - 2 B. Rs. 1,50,000 Next slide: Explanation The Fundamental Accounting Equation Assets = Liabilities + Capital Accounting Equation Accounting Equation: Assets = Capital plus Liabilities or Liabilities = Assets minus Capital Assets = 5,00,000, Capital = 3,50,000. We need to find Liabilities. Liabilities= 5,00,000 minus 3,50,000 = 1,50,000 The accounting equation ensures the financial balance of the business. Assets represent everything the business owns. Capital is the owner's stake in the business. Liabilities represent the claims of outsiders This approach is foundational to understanding the financial position of any business. Question - 3 A Profit on the disposal of a fixed asset can also be described as an (AFA 70% 2024) A. Over provision for depreciation on the asset B. Increase in Fixed Assets on the Balance Sheet C. Under provision for depreciation on the asset D. None of these Answer - 3 A. Over provision for depreciation on the asset Next slide: Explanation Explanation – 3 When a profit is realized on the disposal of a fixed asset, it often occurs because the asset was depreciated more than its actual usage or wear and tear. This means that the accumulated depreciation on the asset was higher than necessary, leading to its book value being lower than the price at which it was sold. Depreciation is the allocation of the cost of an asset over its useful life. If the depreciation is over-provided, the book value of the asset will be understated. Upon selling, the difference between the sale price and the book value results in a profit because the asset’s value was understated due to excessive depreciation. Practical Example: Original Cost of Asset: ₹1,00,000, Accumulated Depreciation (over-provided): ₹80,000, Book Value = ₹1,00,000 – ₹80,000 = ₹20,000. Where as Sale Price: ₹50,000 Here: The book value of the asset was ₹20,000. The sale price was ₹50,000. Profit on Sale = ₹50,000 - ₹20,000 = ₹30,000. The profit occurred because depreciation was over-provided, making the book value lower than it should have been. Thus, the profit on disposal is related to the over provision for depreciation. Question - 4 Original cost= Rs. 1,26,000; Salvage value= Rs. 6,000. Useful life= 6 Years. Annual depreciation under Straight Line Method ? (AFA 70% 2024) A. Rs. 21,000 B. Rs. 20,000 C. Rs. 15,000 D. Rs. 14,000 Answer - 4 B. Rs. 20,000 Next slide: Explanation STRAIGHT-LINE DEPRECIATION COST OF ASSET - SALVAGE VALUE USEFUL LIFE SLM – Straight Line Method of Depreciation SLM - Annual Depreciation=Original Cost−Salvage Value/Useful Life Given Data: Original Cost = ₹1,26,000, Salvage Value = ₹6,000, Useful Life = 6 years Calculation: Annual Depreciation = ₹1,26,000−₹6,000 / 6 years = ₹20,000 Definition of SLM of Depreciation: The Straight-Line Method (SLM) is a simple and commonly used method of depreciation.
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