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LIC AAO Accounting & Finance Questions
Practise accounting & finance (finance) for the LIC Assistant Administrative Officer Examination: 10 multiple-choice questions, each with the correct answer and a worked explanation. Click an option to check it, or “New questions” for another set.
Accounting & Finance practice
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Q1.Depreciation is recorded to:
Show answer & explanation
Answer: B — Allocate an asset’s cost over its useful life
Depreciation matches the cost of a long-lived asset to the periods it benefits.
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Q2.Find the present value of ₹200 received at the end of each year for 8 years at 5%.
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Answer: C — ₹1,293
PV of an ordinary annuity = PMT × [1 − (1 + r)⁻ⁿ]/r = 200 × 6.4632 = ₹1,293.
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Q3.The CAPM expected return equals:
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Answer: A — Rf + β(Rm − Rf)
Capital Asset Pricing Model: risk-free rate + beta × market risk premium.
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Q4.Find the compound interest on ₹19,000 at 5% per annum for 2 years, compounded annually.
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Answer: A — ₹1,947.5
A = P(1 + R/100)^T = 19,000 × 1.05^2 = 20,947.5; CI = A − P = ₹1,947.5.
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Q5.A debit entry increases:
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Answer: C — Assets and expenses
In double entry, debits increase assets and expenses; credits increase liabilities, equity and revenue.
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Q6.Find the present value of ₹1,600 received at the end of each year for 2 years at 6%.
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Answer: B — ₹2,933
PV of an ordinary annuity = PMT × [1 − (1 + r)⁻ⁿ]/r = 1,600 × 1.8334 = ₹2,933.
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Q7.The ethical principle of objectivity requires a professional accountant to:
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Answer: B — Avoid bias, conflicts of interest and undue influence
Objectivity is one of the fundamental principles in the IESBA Code of Ethics.
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Q8.Find the compound interest on ₹15,000 at 10% per annum for 2 years, compounded annually.
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Answer: B — ₹3,150
A = P(1 + R/100)^T = 15,000 × 1.10^2 = 18,150; CI = A − P = ₹3,150.
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Q9.The time value of money means:
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Answer: C — A sum today is worth more than the same sum in the future
Money available now can be invested to earn a return.
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Q10.Find the compound interest on ₹20,000 at 10% per annum for 3 years, compounded annually.
Show answer & explanation
Answer: B — ₹6,620
A = P(1 + R/100)^T = 20,000 × 1.10^3 = 26,620; CI = A − P = ₹6,620.
How to approach accounting & finance questions
Master the accounting equation, the three financial statements and time value of money: FV = PV(1 + r)ⁿ, PV of an annuity = PMT × [1 − (1 + r)⁻ⁿ]/r. Ratios link the statements.
About LIC AAO
LIC Assistant Administrative Officer Examination — conducted by Life Insurance Corporation of India (LIC). Recruits Assistant Administrative Officers, including insurance and financial market awareness.
Original practice questions written for this site in the style and difficulty of each exam’s syllabus. They are not past papers and the site is not affiliated with any exam body. Exam patterns, marking schemes and syllabi change — always check the latest official notification.
LIC AAO practice topics
| Topic | Section | Question source |
|---|---|---|
| Data Interpretation | Data interpretation | Calculated (new numbers every set) |
| Logical Reasoning | Reasoning | Calculated (new numbers every set) |
| English Grammar | English | Question bank |
| Economy & Banking Awareness | General awareness | Question bank |
| Accounting & Finance | Finance | Calculated + question bank |