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