CA Foundation Accounting Important Questions for January 2027 Exam

Accounting covers a wide range of concepts, rules and calculations, so preparing for the CA Foundation exam requires more than reading the textbook. You need to understand the accounting principles, practise numerical problems and become familiar with the way questions are framed in the examination.

To support your CA Foundation Accounting preparation for January 2027, PW offers dedicated CA batches, live and recorded lectures, study notes, practice questions and other learning resources. Start with important questions from previous examinations, identify topics that need more attention and include regular question practice in your preparation.

CA Foundation Accounting Important Questions with Answers

Practising questions from previous examinations can help you understand how accounting concepts are tested.

Q1. State with reasons whether the following statements are True or False:

(i) Cost of inventories should comprise all costs of purchase.

(ii) According to the decision in the case of Garner vs Murray, the loss due to insolvency of a partner has to be borne by the solvent partners in their profit-sharing ratio.

(iii) Amount spent on demolition of an old building which was necessary for the construction of a new factory building on the same site is Revenue Expenditure.

(iv) As per Section 39 of the Companies Act, 2013, in case of issue of shares, the Application money must be atleast 25% of the issue price of shares.

(v) Adjustments in the form of additional information shall be adjusted in the final accounts of a non-profit organisation only in one place.

(vi) Cash book is a subsidiary book as well as a principal book.

Solution

(i) False: Cost of inventories should comprise all cost of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

(ii) False: According to the decision in case of Garner vs Murray, the loss due to insolvency of a partner has to be borne by the solvent partners in the capital ratio and not profit sharing ratio.

(iii) False: The amount spent on demolition of an old building which is necessary for the construction of a new factory building on the same site is a capital expenditure.

(iv) False: As per Section 39 of the Companies Act, 2013, application money must be at least 5% of the nominal value of shares and not 25% of issue price of shares.

(v) False: Additional information means that information which has been identified just before the preparation of the final accounts. As NPO follows the double entry system of book keeping, there shall be two effects for each of the additional information.

(vi) True: Cash Transactions are Straightway recorded in the cash book and on the basis of such records, ledgers are prepared. Therefore, cash book is a subsidiary book. Since in cash book balances are directly taken from the Trial balance, it is also treated as principal book. Hence, it is a subsidiary book as well as principal book.

Q2. State with reasons whether the following statements are True or False:

(i) Money spent to reduce working expenses is revenue expenditure.

(ii) Transactions regarding the purchase of fixed assets on credit are recorded in the purchase book.

(iii) A present financial obligation of an uncertain amount, which can be measured reliably by using a substantial degree of estimation, is termed as liability.

(iv) Nominal Accounts are kept under Single Entry System.

(v) Winding up of a LLP may be initiated by Tribunal if the LLP has failed to submit the Statements of Accounts and Solvency or the LLP Annual Returns for more than three consecutive financial years with the Registrar.

(vi) As per Section 52 of the Companies Act, 2013, a company may utilize the Securities Premium Account to write off its preliminary expenses.

Solution

(i) False: It may be reasonably presumed that money spent for reducing revenue expenditure would have generated long-term benefits to the entity. So, this is capital expenditure.

(ii) False: Transactions regarding the purchase of fixed asset are not recorded in the purchase book, only the credit purchases of goods are recorded in it. Credit Purchase of fixed assets are recorded through Journal.

(iii) False: A present financial obligation of an uncertain amount, which can be measured reliably by using a substantial degree of estimation is termed as Provision and not liability.

(iv) False: Under the single-entry system of bookkeeping, generally cash book and personal accounts of creditors and debtors are maintained, and no Nominal ledger account is maintained. Nominal ledger Accounts are maintained in Double entry system of accounting.

(v) False: Winding up of an LLP may be initiated by Tribunal if the LLP has failed to submit with the statements of accounts and solvency or the LLP annual returns for more than five consecutive financial years (within prescribed time) with the Registrar not three years.

(vi) True: As per section 52 of the Companies Act, 2013 the securities premium account may be applied to write off preliminary expenses of the company.

Q3. State with reasons whether the following statements are True or False:

(i) The materiality depends only upon the amount of the item and not upon the size of the business, nature and level of information, level of the person making the decision etc.

(ii) While preparing the Income and Expenditure Account as per accrual concept, the income and expenditure is considered in the period in which actual receipts or actual payments are made.

(iii) Profit sharing ratio and capital contribution ratio need not be same.

(iv) Depreciation is not provided in the financial year when the entity incurs loss.

(v) The concept that helps in keeping business affairs free from the influence of the personal affairs of the owner is known as the matching concept.

(vi) A Company cannot issue equity shares at discount to general public.

Solution

(i) False: As per materiality principle, all the items having significant economic effect on the business of the enterprise should be disclosed in the financial statements.

(ii) False: While preparing the Income and Expenditure Account as per accrual concept, the items of revenue nature pertaining to the current period of account are included and not the actual receipt and payments.

(iii) True: Profit sharing can be different from that of capital introduced by each of the partner. It is not necessary that partner contributing more capital should have a higher profit-sharing ratio and vice versa. Profit Sharing ratio is determined by mutual agreement among partners.

(iv) False: Depreciation is a charge against profit and not an appropriation of profit. Therefore, depreciation has to be provided for, even in case of loss in a financial year.

(v) False: The concept that helps in keeping business affairs free from the influence of the personal affairs of the owner is called Business entity concept. Under matching concept all expenses matched with the revenue of that period is taken into consideration.

(vi) True: According to Section 53 of the Companies Act, 2013, a Company cannot issue shares at a discount except in the case of issue of sweat equity shares (issued to employees and directors). Thus, any issue of shares at a discount shall be void.

CA Foundation Accounting Important Questions PDF

Use the CA Foundation Accounting Important Questions PDF to access more theory questions, true-or-false statements and previous examination questions with solutions. Keep it handy while practising so you can check your answers and revisit concepts that need more work.

How to Prepare for CA Foundation Accounting January 2027?

A good preparation plan should combine syllabus coverage, concept learning, question practice and regular revision. Use the following resources alongside your study schedule.

• CA Foundation Accounting Syllabus: Go through the prescribed syllabus and divide the chapters into topics. Track your progress to ensure that you cover all the required areas.

• CA Foundation Accounting PYQs: Practise previous-year questions to understand the question formats, marks distribution and concepts tested in earlier examinations.

• CA Foundation Accounting Notes: Use chapter-wise notes to understand accounting principles, formulas, journal entries and important concepts. Revisit them while solving questions.

• CA Foundation Accounting Practice Questions: Solve questions after completing each topic. Include both theory-based and numerical problems to test your understanding.

• Mock Tests and Sample Papers: Attempt full-length papers under timed conditions to practise managing the examination time and identify areas that need improvement.

• Regular Revision: Maintain a list of difficult concepts and calculation-based questions. Revisit them regularly instead of leaving all revision until the end.

Consistent question practice can help you strengthen your understanding of accounting concepts and improve your approach to numerical and theory-based problems. Use the CA Foundation Accounting Important Questions PDF, PYQs, and notes alongside PW’s CA batches and learning resources as you prepare for the January 2027 examination.