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