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