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