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