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