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