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