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