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