Accountancy Nios plus two Welcome to your Accountancy Nios plus two Total Questions: 138 Name Mobile No: 1. Tanu, Manu, and Rena share profits in the ratio 4 : 3 : 2. Tanu retires, and the remaining partners decide to share Tanu’s share in their existing ratio. What is the new profit-sharing ratio of Manu and Rena? 1 : 1 3 : 2 2 : 3 5 : 4 None Hint 2. What is a major limitation of the Single Entry System when it comes to judging the financial position of a business? It requires complex software Statement of Affairs is based on estimates, not records Profit and Loss Account is very accurate It always shows a surplus None Hint 3. What is the formula used to calculate profit under the Statement of Affairs Method? Profit = Capital at beginning + Drawings – Closing capital Profit = Opening capital – Closing capital + Additional capital Profit = (Capital at end + Drawings – Additional Capital – Capital at beginning) Profit = Assets – Liabilities None Hint 4. The formula for Cost of Goods Sold is: Net Purchases – Closing Stock Opening Stock + Closing Stock + Direct Expenses Net Sales – Gross Profit Opening Stock + Net Purchases + Direct Expenses – Closing Stock None Hint 5. Which of the following is an indirect expense? Salary of Office Staff D) Purchases Purchases Wages Carriage Inward None Hint 6. Rekha and Nitesh share profits in the ratio 5:3. They admit Nitu for 1/4th share. What will be the remaining share of Rekha and Nitesh? 1/2 3/4 3/8 5/8 None Hint 7. If the partnership deed is silent, at what rate is interest payable to the deceased partner’s legal representative on the amount due? 5% per annum No interest is paid 6% per annum 10% per annum None Hint 8. Which of the following is a Long-term Liability? Bank Overdraft Loan on Mortgage Bills Payable Creditors None Hint 9. Which of the following is an example of a Liquid Asset? Goodwill Machinery Land Marketable Securities None Hint 10. When profit-sharing ratio changes between existing partners, the partner gaining profit must: Pay capital to the losing partner Pay goodwill to the sacrificing partner Be paid by the sacrificing partner Receive interest on capital None Hint 11. Which of the following is a Current Asset? Building Cash at Bank Land Trademark None Hint 12. Where is Net Loss shown in the Balance Sheet? Deducted from Capital Not shown at all Shown on the Asset side Added to Capital None Hint 13. Wasting Assets refer to: Assets that are intangible Assets that appreciate over time Assets that have long-term use Assets that reduce in value through use None Hint 14. Why is a Revaluation Account prepared at the time of retirement of a partner? To distribute goodwill among partners To compute new capital of partners To record changes in the value of assets and liabilities To determine the interest on capital None Hint 15. A firm earns a profit of ₹1,200. The normal profit is ₹700, and the normal rate of return is 10%. What is the goodwill of the firm? ₹12,000 ₹5,000 ₹7,000 ₹500 None Hint 16. Which of the following would not appear in the Profit and Loss Account? Advertisement Expenses Opening Stock Depreciation on machinery Rent Received None Hint 17. On which side of the Balance Sheet is Capital shown? None of these Asset side Liability side Both sides None Hint 18. What is deducted from Sales in the Trading Account to get Net Sales? Returns Inward Returns Outward Discount Allowed Carriage Outward None Hint 19. Which of the following is a Current Liability? Trade Creditors Reserves Share Capital Loan from Bank (10 years) None Hint 20. What is the correct formula to calculate Gross Profit? Net Sales + Expenses Opening Stock + Net Purchases – Closing Stock Cost of Goods Sold – Net Sales Net Sales – Cost of Goods Sold None Hint 21. Which of the following should be deducted from closing capital to find adjusted closing capital? Drawings Assets at the end Opening capital Additional capital introduced during the year None Hint 22. According to Kohler, the Single Entry System is: A system where usually only cash and personal accounts are maintained A complete double-entry system A system that follows uniform accounting principles A system where only real accounts are recorded None Hint 23. Which of the following is recorded in the debit side of the Receipts and Payments Account? All receipts during the year All payments made during the year Only capital receipts Opening and closing stock None Hint 24. M and N share profits in the ratio 3:2. They decide to share equally. Who sacrifices and who gains? There is no gain or sacrifice M sacrifices, N gains Both gain equally M gains, N sacrifices None Hint 25. Munish’s capital account shows a credit balance of ₹20,000. Which of the following will be added to his capital account while settling his dues? Drawings ₹2,000 Loan taken from the firm ₹5,000 His share of goodwill ₹7,000 Interest on drawings ₹1,500 None Hint 26. Which item appears on the credit side of the Profit and Loss Account? Rent Paid Commission Received Depreciation Wages None Hint 27. Which journal entry is correct for subscription due in the previous year but received during the current year? Subscriptions A/c Dr. To Subscription Outstanding A/c Subscriptions A/c Dr. To Cash A/c Subscription Outstanding A/c Dr. To Subscriptions A/c Subscription Outstanding A/c Dr. To Cash A/c None Hint 28. Which of the following appears on the Assets side of the Balance Sheet? Bank Loan Creditors Machinery Capital None Hint 29. What does a Balance Sheet show? Profit or loss of the business Financial position on a particular date Sales and Purchases details Cash received and paid None Hint 30. What happens when the debit side of Profit and Loss Account is more than its credit side? Net Profit Gross Profit Net Loss Gross Loss None Hint 31. If goodwill of the firm is valued at ₹5,00,000 and a partner gains 1/5th share, how much compensation does he pay? ₹25,000 ₹2,50,000 ₹1,00,000 ₹50,000 None Hint 32. What is an honorarium in the context of Not-for-Profit Organisations? Remuneration to regular employees Commission paid on services Payment to persons involved but not employees A type of donation None Hint 33. How is the capital/general fund shown in the Balance Sheet of a Not-for-Profit Organisation? As an asset As income As a liability As an expense None Hint 34. Which of the following is not a factor affecting goodwill? Efficient managementv Location of the business Quality of products Salary of employees None Hint 35. Which is a Current Liability? Mortgage Loan Bank Loan Bills Payable Capital None Hint 36. Which of the following is a direct expense shown in the Trading Account? Rent Carriage Inward Salaries Interest Paid None Hint 37. Which of the following will be recorded on the expenditure side of the Income and Expenditure Account after necessary adjustments? Sale of old sports materials Donation received for construction of a building Subscription received for current year Rent paid including outstanding amount for current year None Hint 38. What principle must be followed while making adjustments in financial statements? Realisation principle Matching principle Single-entry principle Double-entry principle None Hint 39. When the value of an asset increases at the time of retirement, what is the correct journal entry? Asset A/c Dr. To Revaluation A/c Asset A/c Dr. To Partner’s Capital A/c Revaluation A/c Dr. To Partner’s Capital A/c Revaluation A/c Dr. To Asset A/c None Hint 40. What is the first item posted on the debit side of the Trading Account? Opening Stock Purchases Sales Closing Stock None Hint 41. What should be true when the Balance Sheet is correctly prepared? Liabilities > Assets1 Net Profit = Net Loss Assets = Liabilities Assets > Liabilities None Hint 42. What is the primary objective of Not-for-Profit Organisations (NPOs)? To earn maximum profits To increase shareholder value To provide service to members and society To sell goods and services for revenue None Hint 43. If the credit side of the Income and Expenditure Account is more than the debit side, the difference is called: Profit Reserve Fund Surplus Capital Fund None Hint 44. Net Sales are calculated as: Opening Stock + Purchases Sales – Sales Returns Sales + Sales Returns Purchases – Purchase Returns None Hint 45. Which of the following is added to Capital in the Balance Sheet? Loan Net Loss Drawings Net Profit None Hint 46. What is the name of the statement prepared under Single Entry System in place of a Balance Sheet? Statement of Accounts Trial Balance Statement of Affairs Statement of Financial Position None Hint 47. An increase in the value of assets is recorded in the journal by: Crediting the Revaluation Account Crediting the Asset Account Debiting the Revaluation Account Debiting the Capital Account None Hint 48. How many sides does a Balance Sheet have? Four Two One Three None Hint 49. Tangible Assets include: Cash Patents Goodwill Building None Hint 50. Which of the following items appears on the Asset side of the Balance Sheet? Bills Payable Stock Bank Loan Drawings None Hint 51. If the credit side of the Trading Account exceeds the debit side, the result is: Net Profit Operating Loss Gross Profit Gross Loss None Hint 52. Where is the opening cash or bank balance shown while preparing the Receipts and Payments Account? On the debit side In the Balance Sheet only As a footnote On the credit side None Hint 53. At the time of retirement, how is the retiring partner’s share of goodwill treated in the books of accounts? Transferred to goodwill reserve Debited to the capital account of the retiring partner Credited to the capital account of all partners Credited to the capital account of the retiring partner and debited to remaining partners in their gaining ratio None Hint 54. Which of the following is NOT a revenue expense? Salaries Carriage Inward Rent Interest on Loan None Hint 55. In the Statement of Affairs Method, profit is calculated by comparing: Assets with liabilities Income with expenditure Opening and closing capital after adjustments Total sales with total purchases None Hint 56. None 57. Which of the following appears on the Liabilities side of the Balance Sheet? Cash Debtors Bank Loan Stock None Hint 58. If a business has not paid rent for March and closes its books on March 31, what should be done? Pay the rent immediately Record it in next year’s books Make an adjustment entry to include unpaid rent Ignore the rent as it will be paid later None Hint 59. Which of the following is an item of revenue expenditure in the Income and Expenditure Account? Depreciation on books Purchase of furniture Donation received Construction of building None Hint 60. When is Gross Profit recorded in the Trading Account? When total of debit side > credit side When there is Net Loss When both sides are equal When total of credit side > debit side None Hint 61. Why is a Balance Sheet prepared? To record cash flow To find out net profit To calculate gross profit To know financial position of the business None Hint 62. When a new partner is admitted to a partnership firm, which of the following does not require adjustment? Interest on drawings Goodwill Revaluation of assets and liabilities Sacrificing ratio None Hint 63. Which of the following is deducted from the retiring partner’s capital account? Drawings and interest on drawings Share of revaluation profit Interest on capital Share in accumulated reserves None Hint 64. Gross Profit is transferred to which account? Suspense Account Cash Book Profit and Loss Account Capital Account None Hint 65. If Cost of Goods Sold is more than Net Sales, the result is: Net Profit Gross Profit Net Loss Gross Loss None Hint 66. The insurance premium paid up to June 30 is an example of which type of adjustment? Depreciation Prepaid Expense Accrued Income Outstanding Expense None Hint 67. Which of the following is NOT a part of the process involved in the Conversion Method? Preparing Cash and Bank Summary Preparing Bills Receivable and Bills Payable Accounts Preparing Profit and Loss Appropriation Account Preparing Total Debtors and Creditors Accounts None Hint 68. Subscription received during the year includes ₹2,000 for the previous year and ₹3,000 for the next year. How will this be treated in the Income and Expenditure Account for the current year? ₹5,000 deducted from income ₹5,000 added to income ₹5,000 transferred to capital fund ₹5,000 shown as outstanding None Hint 69. What is the primary purpose of preparing a Balance Sheet for a Not-for-Profit Organisation? To show financial position at year-end To assess tax liability To calculate profit or loss To record daily transactions None Hint 70. What is the main objective of the Conversion Method in incomplete records? To convert incomplete records into complete records To eliminate the need for Debtors and Creditors accounts To identify only the closing cash balance To avoid preparing the Balance Sheet None Hint 71. Which of the following is a Current Asset? Debtors Building Furniture Goodwill None Hint 72. Which of the following is an advantage of the Single Entry System? Provides detailed control over all assets Requires thorough knowledge of accounting principles Suitable for large companies with complex transactions Less expensive and simple to maintain None Hint 73. On which side of the Trading Account is Closing Stock shown? Not shown in Trading Account Credit side Both sides Debit side None Hint 74. While preparing the Income and Expenditure Account, which portion of subscription is included as income? Only the amount relating to the current year Only the amount received in advance for next year Only the amount received during the year Total amount shown in Receipts and Payments Account None Hint 75. Indirect incomes such as interest and commission received are: Recorded on the credit side of Profit & Loss Account Recorded in the Balance Sheet Deducted from Gross Profit Added to Trading Account None Hint 76. Preliminary expenses not yet written off are known as: Liquid Assets Fictitious Assets Tangible Assets Intangible Assets None Hint 77. Which of the following methods is not used for ascertaining profit from incomplete records? Conversion Method Cash Flow Method Statement of Affairs Method Net Worth Method None Hint 78. Which of the following is not a source of income for Not-for-Profit Organisations? Subscriptions Sale of shares Admission fees Donations None Hint 79. What is meant by marshalling of assets and liabilities? Recording transactions in journal Preparing Profit and Loss Account Arranging items in Balance Sheet in a specific order Posting to ledger accounts None Hint 80. Which of the following is deducted from Capital in the Balance Sheet? Building Drawings Cash in hand Creditors None Hint 81. In case of a change in profit-sharing ratio, the amount of goodwill to be adjusted is calculated based on: Equal share of capital Fixed interest rate Gaining and sacrificing ratio Average capital employed None Hint 82. Which of the following is an example of an outstanding expense? Salary paid in advance Interest received for next year Rent unpaid at the end of the year Commission not yet received None Hint 83. What is the correct journal entry for distributing accumulated profits and reserves among partners? Profit & Loss A/c Dr. To Revaluation A/c Revaluation A/c Dr. To Partners’ Capital A/c Partners’ Capital A/c Dr. To Reserves A/c Reserves A/c Dr., Profit & Loss A/c (Profit) Dr. To Partners’ Capital A/c None Hint 84. What is the final step in preparing the Balance Sheet? Transfer expenses Tally both sides Calculate depreciation Close ledger accounts None Hint 85. Which of the following is shown on the credit side of the Profit & Loss Account? Salaries Commission Received Discount Allowed Rent Paid None Hint 86. Which of the following best describes the nature of the Receipts and Payments Account? A summary of cash transactions during the year A record of only revenue transactions A ledger account of incomes and expenses A record of credit transactions only None Hint 87. Why is it difficult to detect frauds in the Single Entry System? Because it uses too much documentation Because only cash transactions are recorded Because personal accounts are maintained Because internal check is not possible None Hint 88. If a new partner pays goodwill privately to the existing partners, what journal entry is passed in the firm’s books? Credit goodwill account and debit capital account Debit new partner’s capital account and credit goodwill account No journal entry is made Debit goodwill account and credit cash account None Hint 89. What is the correct journal entry when the amount due to the retiring partner is paid in lump sum? Profit & Loss A/c Dr. To Retiring Partner’s Capital A/c Retiring Partner’s Capital A/c Dr. To Cash/Bank A/c Cash A/c Dr. To Retiring Partner’s Capital A/c Retiring Partner’s Capital A/c Dr. To Revaluation A/c None Hint 90. What does goodwill represent in accounting? The amount invested in shares and securities Excess capital employed in the business The capitalised value of extra profit earned due to reputation The physical assets of a firm None Hint 91. Profit or loss on revaluation is transferred to: Only the new partner All partners including the new partner Government Reserve Fund Only the existing partners in old profit-sharing ratio None Hint 92. After the retirement of a partner, if a remaining partner’s capital account shows an excess balance compared to the new adjusted capital, what should be done? Excess amount should be transferred to goodwill Partner should withdraw the excess amount Capital account should be closed Partner should bring additional capital None Hint 93. Which of the following is an Intangible Asset? Stock Trademark Loan Plant and Machinery None Hint 94. According to Accounting Standard 10 (AS-10), goodwill should be recorded in the books only when: It is approved by all the partners The firm earns super profit Consideration in money or money’s worth is paid The capital is brought in cash None Hint 95. The Receipts and Payments Account includes: Only non-cash transactions Only current year’s revenue transactions All cash transactions regardless of the year or nature Only capital payments and receipts None Hint 96. Which of the following is not treated as revenue income in the Income and Expenditure Account of a Not-for-Profit Organisation? Grant-in-aid Donation for building fund General donation (small and recurring) Subscription None Hint 97. Which of the following is deducted from Purchases in the Trading Account? Carriage inward Returns Inward Returns Outward Sales None Hint 98. How does an adjustment item appear in financial statements? Only in the Balance Sheet In two places — one as debit and one as credit Only on the debit side of the Profit and Loss Account Only on the credit side of the Trading Account None Hint 99. What is the purpose of preparing a Balance Sheet? To calculate gross profit To determine cash flow To show financial position on a specific date To record daily transactions None Hint 100. Subscription received in the Receipts and Payments Account may relate to: Only the current year Only the next year Only the previous year Current, previous, and next year None Hint 101. Intangible Assets are those which: Can be seen and touched Have physical existence Are converted into cash easily Cannot be seen or touched None Hint 102. Which of the following is not included in the Profit and Loss Account? Depreciation Office Rent Commission Received Carriage Inward None Hint 103. Which of the following statements correctly distinguishes the Receipts and Payments Account from the Cash Book? Receipts and Payments Account shows credit transactions only Cash Book is used only by Not-for-Profit Organisations Receipts and Payments Account is prepared at the end of the year; Cash Book is maintained daily Cash Book is prepared annually; Receipts and Payments Account is prepared daily None Hint 104. What is the correct journal entry for distributing accumulated losses among existing partners? Partners’ Capital A/c Dr. To Revaluation A/c Profit & Loss A/c Dr. To Partners’ Capital A/c Reserves A/c Dr. To Partners’ Capital A/c Partners’ Capital A/c Dr. To Profit & Loss A/c None Hint 105. Which account helps in ascertaining bills payable accepted and paid? Bills Receivable Account Total Creditors Account Bills Payable Account Profit and Loss Account None Hint 106. Subscription outstanding for the current year is: Deducted from subscription income in Income and Expenditure Account Ignored altogether Added to subscription income and shown as an asset Added to subscription income and shown as a liability None Hint 107. Which of the following is true about the Cash Book but not about the Receipts and Payments Account? It shows each transaction multiple times based on the date of occurrence It is prepared only by Not-for-Profit Organisations It is used as a basis for preparing final accounts It includes both cash and non-cash items None Hint 108. Which of the following is a Non-current Asset? Cash in hand Stock Furniture Debtors None Hint 109. Which of the following is treated as a capital receipt in the Receipts and Payments Account? Life membership fees Sale of old newspapers Subscription Honorarium None Hint 110. Which of the following accounts is similar to the Profit and Loss Account in Not-for-Profit Organisations? Income and Expenditure Account Capital Account Balance Sheet Receipts and Payments Account None Hint 111. Which of the following is not credited to the capital account of a deceased partner? Share in Joint Life Policy Drawings till date of death Share of profit till date of death Share of goodwill None Hint 112. Which of the following items appears on the credit side of the Trading Account? Net Sales Opening Stock Carriage Inward Wages None Hint 113. In Liquidity Order, which of the following assets is listed first? Building Furniture Land Cash None Hint 114. Claims of outsiders in a Balance Sheet are known as: Liabilities Drawings Capital Assets None Hint 115. Anuj, Babu, and Rani are partners sharing profits in the ratio 5 : 4 : 2. Babu retires and his share is taken over entirely by Rani. What is the new profit-sharing ratio between Anuj and Rani? 4 : 7 5 : 4 5 : 6 6 : 5 None Hint 116. The purpose of preparing a Revaluation Account at the time of admission of a partner is to: Calculate goodwill of the firm Show capital brought in by new partner Determine the new profit-sharing ratio Record changes in values of assets and liabilities None Hint 117. Net Profit is determined after: Adding capital Deducting only selling expenses Deducting direct expenses Deducting all indirect expenses from gross profit and adding other incomes None Hint 118. Owner’s funds include: Bills Payable Bank Overdraft Loan from Bank Capital and Reserves None Hint 119. If the new partner does not bring goodwill in cash, the amount is: Added to drawings Credited to revaluation account Transferred to general reserve Deducted from his/her capital account None Hint 120. Why are accounting adjustments necessary at the end of an accounting period? To reduce the volume of transactions To calculate correct profit or loss and show true financial position To maintain inventory records To calculate the sales tax correctly None Hint 121. How is a loss on revaluation treated at the time of retirement of a partner? Debited to all partners’ capital accounts in the existing ratio Credited to Revaluation A/c Credited to the retiring partner’s capital account Debited to the continuing partners’ capital accounts only None Hint 122. Subscription received in advance at the end of the year is shown in the Balance Sheet as: Asset Liability Income Expense None Hint 123. What does the balance of the Income and Expenditure Account indicate if total income exceeds total expenditure? Surplus Profit Reserve Net gain None Hint 124. The sacrificing ratio is calculated by: New Ratio – Old Ratio New Ratio ÷ Old Ratio Old Ratio – New Ratio Old Ratio × New Ratio None Hint 125. How are fixed assets shown in the Balance Sheet of an NPO? At original cost without adjustment At market value At adjusted value after depreciation Only if donated None Hint 126. The result of Profit and Loss Account is: Total Assets Net Sales Net Profit or Net Loss Gross Profit or Gross Loss None Hint 127. Which of the following is included in the Trading Account? Wages and Carriage Inward Salaries to Manager Interest Paid Office Rent None Hint 128. Under the Simple Average Profit Method, the formula for goodwill is: Average Profit × Number of years of purchase Super Profit × Number of years of purchase Total Assets – Total Liabilities Capital Employed × Normal Rate of Return None Hint 129. Under time basis method, if last year’s profit was ₹1,20,000 and a partner dies 3 months after the beginning of the year with a 1/4 profit share, what is his/her share of profit till death? ₹15,000 ₹7,500 ₹30,000 ₹10,000 None Hint 130. According to Accounting Standard 10 (AS-10), when can goodwill be recorded in the books of accounts? Only when all partners agree Only when consideration in money is paid for it Only when goodwill is internally generated Only when a partner retires None Hint 131. At the time of admission of a new partner, the existing accumulated profits and reserves are: Transferred to Revaluation Account Credited to all partners including new partner in new ratio Credited only to new partner Credited to existing partners in their old profit-sharing ratio None Hint 132. The Profit and Loss Account is prepared to: Find out the capital Determine Net Profit or Net Loss Calculate Gross Profit Show the position of assets None Hint 133. Which of the following is not included in the amount due to the retiring partner? Interest on capital Salary for the next year Share in accumulated profits His/her share of goodwill None Hint 134. At the time of retirement of a partner, accumulated reserves and undistributed profits are: Distributed among all partners in the gaining ratio Distributed among all partners in the old profit sharing ratio Distributed among continuing partners only Transferred to Goodwill Account None Hint 135. Which of the following is prepared to find credit sales in the Conversion Method? Total Debtors Account Bills Payable Account Trading Account Cash and Bank Summary None Hint 136. Which of the following is a Fixed Asset? Cash Bills Receivable Debtors Machinery None Hint 137. A, B, and C are partners sharing profits in the ratio 3 : 2 : 1. B retires, and his share is taken equally by A and C. What is the new profit-sharing ratio between A and C? 5 : 2 2 : 1 3 : 1 4 : 2 None Hint 138. Which of the following is not a feature of the Single Entry System? Uniform system followed by all firms Does not generally prepare real and nominal accounts Suitable for small businesses like sole traders Depends on original vouchers for information None Hint Time's up Share: admin Previous post Test 8 June 12, 2025 Next post TEST 9 June 13, 2025
