JAIIB Paper 3 Module B Quiz 6

Closing inventory reduces the cost of goods sold and is shown as a current asset in the balance sheet, subject to the applicable accounting framework.

A factory building used over multiple years is ordinarily a non-current asset. Cash, inventory and short-term receivables are generally current assets.

Paid-up capital is the amount paid or credited as paid on issued shares. It differs from authorised capital and may be lower than subscribed capital where amounts remain unpaid.

A traditional partnership and a company differ in legal personality, ownership structure and liability. An LLP is a separate body corporate with limited liability under the LLP Act.

An increase in receivables means some recognised revenue has not yet been collected in cash. Under the indirect method, the increase is deducted from profit in calculating operating cash flow.

Loans and advances represent amounts owed to the bank by borrowers and are generally assets, subject to classification, provisioning and applicable reporting rules.

Credit loss provisions/allowances recognise expected or identified credit deterioration under the applicable framework and reduce reported profit, with corresponding allowance or liability treatment as required.

Audit trails support traceability and accountability by recording transaction history and user activity. They help investigation and audit but do not guarantee that fraud cannot occur.

Accounting software automates recording, posting, calculation and reporting. It must still be configured and operated according to accounting principles, internal controls and legal requirements.

Issuing debentures raises borrowings and is a financing cash inflow. Equipment purchases are investing, while customer receipts and supplier payments are operating.

A user able to approve transactions beyond their role violates least-privilege and segregation-of-duties controls. Access reviews and maker-checker approvals help reduce such risk.

The gain is included in accounting profit but the sale proceeds are investing cash flow. The gain is therefore deducted when reconciling profit to operating cash flow under the indirect method.

CBS generally uses connected, centrally managed data and services to support customer accounts and transactions across branches/channels. Security, availability and data integrity are critical.

Profit after tax = profit before tax − tax expense = ₹2,50,000 − ₹60,000 = ₹1,90,000.

From Assets = Liabilities + Equity, if assets remain unchanged and liabilities rise by ₹1 lakh, equity must fall by ₹1 lakh. In practice, the corresponding debit may be an expense or another reduction in equity.

Reconciliation between source/product systems and the general ledger helps detect missing, duplicate, delayed or misclassified postings and supports accurate financial reporting.

Incorrect system configuration can cause many transactions to be processed incorrectly. Change controls, testing, reconciliation and monitoring help detect and mitigate such operational risk.

Assets = liabilities + equity = ₹11 lakh + ₹7 lakh = ₹18 lakh.

Core banking integrates customer/account data and transaction processing across branches and channels, improving service availability while requiring strong security and operational controls.

The statement of profit and loss reports income and expenses over a period and derives profit or loss. The balance sheet shows position at a date.