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