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