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