Accountancy Nios plus two Welcome to your Accountancy Nios plus two Total Questions: 138 Name Mobile No: 1. Wasting Assets refer to: Assets that reduce in value through use Assets that have long-term use Assets that appreciate over time Assets that are intangible None Hint 2. Profit or loss on revaluation is transferred to: All partners including the new partner Government Reserve Fund Only the new partner Only the existing partners in old profit-sharing ratio None Hint 3. Net Sales are calculated as: Sales + Sales Returns Purchases – Purchase Returns Opening Stock + Purchases Sales – Sales Returns None Hint 4. Which of the following is NOT a revenue expense? Interest on Loan Carriage Inward Rent Salaries None Hint 5. Which of the following is not credited to the capital account of a deceased partner? Share of profit till date of death Drawings till date of death Share of goodwill Share in Joint Life Policy None Hint 6. If the credit side of the Trading Account exceeds the debit side, the result is: Operating Loss Gross Profit Gross Loss Net Profit None Hint 7. 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 ₹7,000 ₹12,000 ₹500 None Hint 8. What is the correct journal entry for distributing accumulated profits and reserves among partners? Partners’ Capital A/c Dr. To Reserves A/c Profit & Loss A/c Dr. To Revaluation A/c Revaluation A/c Dr. To Partners’ Capital A/c Reserves A/c Dr., Profit & Loss A/c (Profit) Dr. To Partners’ Capital A/c None Hint 9. 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 10. What is the first item posted on the debit side of the Trading Account? Opening Stock Closing Stock Purchases Sales None Hint 11. 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 12. Which of the following should be deducted from closing capital to find adjusted closing capital? Additional capital introduced during the year Opening capital Assets at the end Drawings None Hint 13. 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? 4 : 7 5 : 6 5 : 4 6 : 5 None Hint 14. Which of the following is a Current Liability? Reserves Share Capital Loan from Bank (10 years) Trade Creditors None Hint 15. Which of the following appears on the Assets side of the Balance Sheet? Creditors Capital Bank Loan Machinery None Hint 16. What principle must be followed while making adjustments in financial statements? Single-entry principle Realisation principle Double-entry principle Matching principle None Hint 17. Which of the following will be recorded on the expenditure side of the Income and Expenditure Account after necessary adjustments? Subscription received for current year Donation received for construction of a building Sale of old sports materials Rent paid including outstanding amount for current year None Hint 18. 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 19. While preparing the Income and Expenditure Account, which portion of subscription is included as income? Total amount shown in Receipts and Payments Account Only the amount received in advance for next year Only the amount relating to the current year Only the amount received during the year None Hint 20. Subscription outstanding for the current year is: Ignored altogether 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 None Hint 21. Which of the following items appears on the Asset side of the Balance Sheet? Drawings Stock Bank Loan Bills Payable None Hint 22. 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 23. Which of the following is an indirect expense? Wages Purchases Carriage Inward Salary of Office Staff D) Purchases None Hint 24. 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 25. 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 26. 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? ₹10,000 ₹30,000 ₹7,500 ₹15,000 None Hint 27. What is deducted from Sales in the Trading Account to get Net Sales? Carriage Outward Returns Inward Returns Outward Discount Allowed None Hint 28. Which of the following is treated as a capital receipt in the Receipts and Payments Account? Subscription Life membership fees Sale of old newspapers Honorarium None Hint 29. Which item appears on the credit side of the Profit and Loss Account? Commission Received Wages Depreciation Rent Paid None Hint 30. The Receipts and Payments Account includes: Only current year’s revenue transactions Only non-cash transactions Only capital payments and receipts All cash transactions regardless of the year or nature None Hint 31. Which of the following would not appear in the Profit and Loss Account? Rent Received Advertisement Expenses Depreciation on machinery Opening Stock None Hint 32. M and N share profits in the ratio 3:2. They decide to share equally. Who sacrifices and who gains? There is no gain or sacrifice Both gain equally M gains, N sacrifices M sacrifices, N gains None Hint 33. If the credit side of the Income and Expenditure Account is more than the debit side, the difference is called: Profit Surplus Reserve Fund Capital Fund None Hint 34. Net Profit is determined after: Adding capital Deducting only selling expenses Deducting direct expenses Deducting all indirect expenses from gross profit and adding other incomes None Hint 35. How does an adjustment item appear in financial statements? Only on the debit side of the Profit and Loss Account Only on the credit side of the Trading Account Only in the Balance Sheet In two places — one as debit and one as credit None Hint 36. What is the correct journal entry for distributing accumulated losses among existing partners? Partners’ Capital A/c Dr. To Profit & Loss A/c 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 None Hint 37. Which of the following accounts is similar to the Profit and Loss Account in Not-for-Profit Organisations? Income and Expenditure Account Receipts and Payments Account Balance Sheet Capital Account None Hint 38. When a new partner is admitted to a partnership firm, which of the following does not require adjustment? Interest on drawings Revaluation of assets and liabilities Sacrificing ratio Goodwill None Hint 39. Which of the following is not included in the amount due to the retiring partner? Share in accumulated profits Interest on capital Salary for the next year His/her share of goodwill None Hint 40. 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 41. Which account helps in ascertaining bills payable accepted and paid? Bills Payable Account Profit and Loss Account Bills Receivable Account Total Creditors Account None Hint 42. 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 requires complex software Statement of Affairs is based on estimates, not records It always shows a surplus None Hint 43. 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 44. Claims of outsiders in a Balance Sheet are known as: Capital Drawings Liabilities Assets None Hint 45. What is the primary purpose of preparing a Balance Sheet for a Not-for-Profit Organisation? To record daily transactions To show financial position at year-end To assess tax liability To calculate profit or loss None Hint 46. According to Accounting Standard 10 (AS-10), goodwill should be recorded in the books only when: The firm earns super profit It is approved by all the partners The capital is brought in cash Consideration in money or money’s worth is paid None Hint 47. Why is a Balance Sheet prepared? To find out net profit To record cash flow To calculate gross profit To know financial position of the business None Hint 48. 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 49. At the time of admission of a new partner, the existing accumulated profits and reserves are: Credited to existing partners in their old profit-sharing ratio Credited only to new partner Transferred to Revaluation Account Credited to all partners including new partner in new ratio None Hint 50. What is the formula used to calculate profit under the Statement of Affairs Method? Profit = Opening capital – Closing capital + Additional capital Profit = Assets – Liabilities Profit = Capital at beginning + Drawings – Closing capital Profit = (Capital at end + Drawings – Additional Capital – Capital at beginning) None Hint 51. When profit-sharing ratio changes between existing partners, the partner gaining profit must: Pay goodwill to the sacrificing partner Receive interest on capital Be paid by the sacrificing partner Pay capital to the losing partner None Hint 52. The result of Profit and Loss Account is: Net Profit or Net Loss Total Assets Gross Profit or Gross Loss Net Sales None Hint 53. Gross Profit is transferred to which account? Capital Account Cash Book Profit and Loss Account Suspense Account None Hint 54. On which side of the Trading Account is Closing Stock shown? Not shown in Trading Account Both sides Debit side Credit side None Hint 55. 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 eliminate the need for Debtors and Creditors accounts To convert incomplete records into complete records None Hint 56. Which of the following is an Intangible Asset? Stock Loan Plant and Machinery Trademark None Hint 57. What is the correct formula to calculate Gross Profit? Net Sales + Expenses Opening Stock + Net Purchases – Closing Stock Cost of Goods Sold – Net Sales Net Sales – Cost of Goods Sold None Hint 58. Which of the following is deducted from Purchases in the Trading Account? Sales Returns Outward Returns Inward Carriage inward None Hint 59. 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 60. Which of the following is recorded in the debit side of the Receipts and Payments Account? All receipts during the year Only capital receipts Opening and closing stock All payments made during the year None Hint 61. What is the name of the statement prepared under Single Entry System in place of a Balance Sheet? Statement of Financial Position Statement of Accounts Statement of Affairs Trial Balance None Hint 62. 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 Revaluation A/c Dr. To Asset A/c Asset A/c Dr. To Partner’s Capital A/c None Hint 63. Which of the following appears on the Liabilities side of the Balance Sheet? Stock Cash Debtors Bank Loan None Hint 64. Which of the following is a Long-term Liability? Bank Overdraft Creditors Loan on Mortgage Bills Payable None Hint 65. Which of the following is a Current Asset? Building Trademark Cash at Bank Land None Hint 66. None 67. Owner’s funds include: Capital and Reserves Bank Overdraft Loan from Bank Bills Payable None Hint 68. 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 summary of cash transactions during the year A record of only revenue transactions None Hint 69. In the Statement of Affairs Method, profit is calculated by comparing: Income with expenditure Opening and closing capital after adjustments Assets with liabilities Total sales with total purchases None Hint 70. Which of the following is shown on the credit side of the Profit & Loss Account? Commission Received Rent Paid Salaries Discount Allowed None Hint 71. Which of the following is not a feature of the Single Entry System? Uniform system followed by all firms Depends on original vouchers for information Suitable for small businesses like sole traders Does not generally prepare real and nominal accounts None Hint 72. How many sides does a Balance Sheet have? Two One Three Four None Hint 73. Subscription received in the Receipts and Payments Account may relate to: Current, previous, and next year Only the current year Only the next year Only the previous year None Hint 74. In Liquidity Order, which of the following assets is listed first? Building Cash Land Furniture None Hint 75. Which of the following is a Current Asset? Furniture Goodwill Building Debtors None Hint 76. Which of the following is an item of revenue expenditure in the Income and Expenditure Account? Depreciation on books Donation received Construction of building Purchase of furniture None Hint 77. The Profit and Loss Account is prepared to: Find out the capital Show the position of assets Calculate Gross Profit Determine Net Profit or Net Loss None Hint 78. What is the primary objective of Not-for-Profit Organisations (NPOs)? To increase shareholder value To provide service to members and society To earn maximum profits To sell goods and services for revenue None Hint 79. 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? 5/8 3/8 3/4 1/2 None Hint 80. 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 Receipts and Payments Account is prepared at the end of the year; Cash Book is maintained daily Cash Book is used only by Not-for-Profit Organisations Receipts and Payments Account shows credit transactions only None Hint 81. What does a Balance Sheet show? Sales and Purchases details Profit or loss of the business Cash received and paid Financial position on a particular date None Hint 82. Which of the following is not treated as revenue income in the Income and Expenditure Account of a Not-for-Profit Organisation? Subscription Grant-in-aid Donation for building fund General donation (small and recurring) None Hint 83. What is the final step in preparing the Balance Sheet? Calculate depreciation Tally both sides Close ledger accounts Transfer expenses None Hint 84. 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 consideration in money is paid for it Only when goodwill is internally generated None Hint 85. Intangible Assets are those which: Are converted into cash easily Have physical existence Cannot be seen or touched Can be seen and touched None Hint 86. If Cost of Goods Sold is more than Net Sales, the result is: Gross Profit Net Loss Net Profit Gross Loss None Hint 87. Which of the following methods is not used for ascertaining profit from incomplete records? Cash Flow Method Net Worth Method Conversion Method Statement of Affairs Method None Hint 88. According to Kohler, the Single Entry System is: A complete double-entry system A system that follows uniform accounting principles A system where only real accounts are recorded A system where usually only cash and personal accounts are maintained None Hint 89. Preliminary expenses not yet written off are known as: Liquid Assets Tangible Assets Fictitious Assets Intangible Assets None Hint 90. 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 Interest on drawings ₹1,500 Loan taken from the firm ₹5,000 Drawings ₹2,000 None Hint 91. What does goodwill represent in accounting? The physical assets of a firm Excess capital employed in the business The amount invested in shares and securities The capitalised value of extra profit earned due to reputation None Hint 92. At the time of retirement, how is the retiring partner’s share of goodwill treated in the books of accounts? Credited to the capital account of the retiring partner and debited to remaining partners in their gaining ratio Debited to the capital account of the retiring partner Credited to the capital account of all partners Transferred to goodwill reserve None Hint 93. 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 shown as outstanding ₹5,000 deducted from income ₹5,000 transferred to capital fund None Hint 94. 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 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 None Hint 95. Why is it difficult to detect frauds in the Single Entry System? Because personal accounts are maintained Because only cash transactions are recorded Because internal check is not possible Because it uses too much documentation None Hint 96. Which of the following is an example of a Liquid Asset? Land Goodwill Marketable Securities Machinery None Hint 97. Which of the following is NOT a part of the process involved in the Conversion Method? Preparing Bills Receivable and Bills Payable Accounts Preparing Total Debtors and Creditors Accounts Preparing Profit and Loss Appropriation Account Preparing Cash and Bank Summary None Hint 98. Which of the following is deducted from Capital in the Balance Sheet? Building Drawings Creditors Cash in hand None Hint 99. What is the purpose of preparing a Balance Sheet? To show financial position on a specific date To determine cash flow To calculate gross profit To record daily transactions None Hint 100. Which of the following is included in the Trading Account? Interest Paid Wages and Carriage Inward Office Rent Salaries to Manager None Hint 101. Which of the following is added to Capital in the Balance Sheet? Loan Net Profit Net Loss Drawings None Hint 102. Which of the following is not a factor affecting goodwill? Efficient managementv Location of the business Quality of products Salary of employees None Hint 103. Which of the following items appears on the credit side of the Trading Account? Net Sales Opening Stock Wages Carriage Inward None Hint 104. Which of the following is not a source of income for Not-for-Profit Organisations? Admission fees Subscriptions Sale of shares Donations None Hint 105. Tangible Assets include: Goodwill Building Cash Patents None Hint 106. What is an honorarium in the context of Not-for-Profit Organisations? Remuneration to regular employees A type of donation Payment to persons involved but not employees Commission paid on services None Hint 107. Where is the opening cash or bank balance shown while preparing the Receipts and Payments Account? On the debit side As a footnote On the credit side In the Balance Sheet only None Hint 108. Which of the following is an advantage of the Single Entry System? Provides detailed control over all assets Requires thorough knowledge of accounting principles Less expensive and simple to maintain Suitable for large companies with complex transactions None Hint 109. The sacrificing ratio is calculated by: New Ratio ÷ Old Ratio New Ratio – Old Ratio Old Ratio × New Ratio Old Ratio – New Ratio None Hint 110. What does the balance of the Income and Expenditure Account indicate if total income exceeds total expenditure? Surplus Net gain Profit Reserve None Hint 111. 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? 4 : 2 5 : 2 3 : 1 2 : 1 None Hint 112. Which of the following is not included in the Profit and Loss Account? Office Rent Commission Received Carriage Inward Depreciation None Hint 113. What happens when the debit side of Profit and Loss Account is more than its credit side? Net Loss Net Profit Gross Loss Gross Profit None Hint 114. 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 115. What is the correct journal entry when the amount due to the retiring partner is paid in lump sum? Cash A/c Dr. To Retiring Partner’s Capital A/c Retiring Partner’s Capital A/c Dr. To Revaluation A/c Retiring Partner’s Capital A/c Dr. To Cash/Bank A/c Profit & Loss A/c Dr. To Retiring Partner’s Capital A/c None Hint 116. Which of the following is a Fixed Asset? Cash Debtors Machinery Bills Receivable None Hint 117. On which side of the Balance Sheet is Capital shown? Both sides None of these Liability side Asset side None Hint 118. How are fixed assets shown in the Balance Sheet of an NPO? At original cost without adjustment At adjusted value after depreciation Only if donated At market value None Hint 119. The insurance premium paid up to June 30 is an example of which type of adjustment? Accrued Income Prepaid Expense Depreciation Outstanding Expense None Hint 120. Which is a Current Liability? Bills Payable Capital Mortgage Loan Bank Loan None Hint 121. In case of a change in profit-sharing ratio, the amount of goodwill to be adjusted is calculated based on: Average capital employed Gaining and sacrificing ratio Equal share of capital Fixed interest rate None Hint 122. 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 bring additional capital Excess amount should be transferred to goodwill Capital account should be closed Partner should withdraw the excess amount None Hint 123. When is Gross Profit recorded in the Trading Account? When there is Net Loss When total of debit side > credit side When both sides are equal When total of credit side > debit side None Hint 124. The formula for Cost of Goods Sold is: Net Purchases – Closing Stock Net Sales – Gross Profit Opening Stock + Closing Stock + Direct Expenses Opening Stock + Net Purchases + Direct Expenses – Closing Stock None Hint 125. Which journal entry is correct for subscription due in the previous year but received during the current year? Subscription Outstanding A/c Dr. To Cash A/c Subscriptions A/c Dr. To Subscription Outstanding A/c Subscriptions A/c Dr. To Cash A/c Subscription Outstanding A/c Dr. To Subscriptions A/c None Hint 126. Where is Net Loss shown in the Balance Sheet? Added to Capital Deducted from Capital Shown on the Asset side Not shown at all None Hint 127. Which of the following is a Non-current Asset? Debtors Furniture Cash in hand Stock None Hint 128. What should be true when the Balance Sheet is correctly prepared? Liabilities > Assets1 Assets > Liabilities Assets = Liabilities Net Profit = Net Loss None Hint 129. Which of the following is an example of an outstanding expense? Rent unpaid at the end of the year Commission not yet received Salary paid in advance Interest received for next year None Hint 130. If the new partner does not bring goodwill in cash, the amount is: Transferred to general reserve Deducted from his/her capital account Added to drawings Credited to revaluation account None Hint 131. What is meant by marshalling of assets and liabilities? Preparing Profit and Loss Account Arranging items in Balance Sheet in a specific order Recording transactions in journal Posting to ledger accounts None Hint 132. Why are accounting adjustments necessary at the end of an accounting period? To calculate the sales tax correctly To reduce the volume of transactions To calculate correct profit or loss and show true financial position To maintain inventory records None Hint 133. Which of the following is a direct expense shown in the Trading Account? Interest Paid Rent Carriage Inward Salaries None Hint 134. 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? 2 : 3 1 : 1 5 : 4 3 : 2 None Hint 135. Subscription received in advance at the end of the year is shown in the Balance Sheet as: Expense Asset Liability Income None Hint 136. 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 Transferred to Goodwill Account Distributed among continuing partners only None Hint 137. An increase in the value of assets is recorded in the journal by: Debiting the Revaluation Account Crediting the Asset Account Debiting the Capital Account Crediting the Revaluation Account None Hint 138. If goodwill of the firm is valued at ₹5,00,000 and a partner gains 1/5th share, how much compensation does he pay? ₹25,000 ₹2,50,000 ₹50,000 ₹1,00,000 None Hint Time's up Share: admin Previous post Test 8 June 12, 2025 Next post TEST 9 June 13, 2025
