Business
Business
with Answers
Question 1.
Receipts and Payments A/c is a summary of:
(a) All Capital Receipts and Payments
(b) All Revenue Receipts and Payments
(c) All Revenue and Capital Receipts and Payments
(d) None of the above
Answer
Answer: (c) All Revenue and Capital Receipts and Payments
Question 2.
Subscription received by a schoblfbr organising annual V function is treated as:
(a) Capital Receipt
(b) Revenue Receipt
(c) Asset
(d) Earned Income
Answer
Answer: (c) Asset
Question 3.
Out of the following items, which one is shown in the Receipts and Payments Account?
(a) Outstanding Salary
(b) Depreciation
(c) Life Membership Fees
(d) Accrued Subscription
Answer
Answer: (b) Depreciation
Question 4.
In case specific fund is maintained, the expenses exceeding the amount of the fluids, should be recorded
on:
(a) Liabilities side of the Balance Sheet
(b) Debit side the Income and Expenditure Account
(c) Credit side of the Income and Expenditure Account
(d) Assets side of the Balance Sheet
Answer
Answer: (b) Debit side the Income and Expenditure Account
Question 5.
All receipts from sale of consumable items are treated as:
(a) Capital Receipts
(b) Revenue Receipts
(c) Both (a) and (b)
(d) None of these
Answer
Answer: (b) Revenue Receipts
Question 6.
Capital fUnd is calculated:
(a) Income-Expenditure
(b) Assets Liabilities
(c) Capital + Liabilities
(d) None of these
Answer
Answer: (b) Assets Liabilities
Question 7.
Subscription redeved in advance during the current year is:
(a) An income
(b) An Asset
(c) A liability
(d) None of these
Answer
Answer: (c) A liability
Question 8.
Balance of Income and Expenditure Account shows:
(a) Cash in hand
(b) Capital Fund
(c) Net Profit
(d) Excess of Income over Expenditure or Vice Versa
Answer
Answer: (d) Excess of Income over Expenditure or Vice Versa
Question 9.
Property received as a result of the will of the deceased person is called:
(a) Legacy
(b) Honorarium
(c) Donation
(d) Subscription
Answer
Answer: (a) Legacy
Question 10.
Receipts and Payments Account usually indicates:
(a) Surplus
(b) Capital Fund
(c) Debit Balance
(d) Credit Balance
Answer
Answer: (c) Debit Balance
Question 11.
Income and Expenditure Account generally indicates:
(a) Surplus/Deficit
(b) Cash Balance
(c) Capital Fund
(d) Net Profit/Loss
Answer
Answer: (a) Surplus/Deficit
Question 12.
Donation received for a special purpose:
(a) Should be credited to Income and Expenditure A/c
(b) Should be credited to a separate account and shown in the Balance Sheet
(c) Should be shown on the Assets side of the Balance Sheet
(d) None of these
Answer
Answer: (b) Should be credited to a separate account and shown in the Balance Sheet
Question 13.
In not-for-profit organisation, excess of expenditure over income is called :
(a) Loss
(b) Profit
(c) Deficit
(d) Surplus
Answer
Answer: (c) Deficit
Question 14.
Which of the following is a non-profitable organisation ?
(a) Jharkhand Academic Council
(b) Tata Steel
(c) Air India
(d) Reliance Co. Ltd.
Answer
Answer: (a) Jharkhand Academic Council
Question 15.
Income and Expenditure Account is preparedly :
(a) Trending Organisation
(b) Non-trading Organisation
(c) Both (a) and (b)
(d) None of these
Answer
Answer: (b) Non-trading Organisation
Question 16.
Sale of old newspapers is:
(a) Capital Receipt
(b) Revenue Receipt
(c) Asset
(d) Profit
Answer
Answer: (b) Revenue Receipt
Question 17.
Income and expenses related to the prize fund is shown in:
(a) Income and Expenditure Account
(b) Assets side of the Balance Sheet
(c) Liabilities side of the Balance Sheet
(d) Cash Account
Answer
Answer: (a) Income and Expenditure Account
Question 18.
Which of the following is not a not-for-profit organisation:
(a) School
(b) Hospital
(c) Club
(d) Partnership Firm
Answer
Answer: (d) Partnership Firm
Question 19.
Subscription received during the year 50,000 Rs. Subscriptions outstanding at the end of the year 8,000
Rs. Subscription outstanding at the beginning of the year 6,000 Rs. Net Income from subscription will be :
(a) 48,000 Rs.
(b) 64,000 Rs.
(c) 52,000 Rs.
(d) 36,000 Rs.
Answer
Answer: (c) 52,000 Rs.
Question 20.
Subscription received during the year ₹ 1,80,000 Subscriptions outstanding at the end of the year ₹
20,000 Subscriptions received in advance at the end of the year ₹ 10,000. The amount of subscription to
be credited to Income and Expenditure Account will be:
(a) ₹ 2,10,000
(b) ₹ 1,90,000
(c) ₹ 1,70,000
(d) ₹ 2,00,000
Answer
Answer: (b) ₹ 1,90,000
Question 21.
In case specific fund is maintained, the expenses exceeding the amount of the funds, should be recorded
on:
(a) Liabilities side of the Balance Sheet
(b) Debit side of the Income and Expenditure Account
(c) Credit side of the Income and Expenditure Account
(d) Assets side of the Balance Sheet
Answer
Answer: (b) Debit side of the Income and Expenditure Account
Question 22.
Income and Expenditure Account is:
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) None of these
Answer
Answer: (c) Nominal Account
Question 23.
Life Membership Fees received by a club is shown in :
(a) Income and Expenditure A/c
(b) Balance Sheet
(c) Receipts and Payments A/c
(d) None of these
Answer
Answer: (b) Balance Sheet
Question 24.
Receipts and Payments Account is a :
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) None of these
Answer
Answer: (b) Real Account
Question 25.
Income and Expenditure Account is prepared :
(a) By Business Organisation
(b) By Industrial Organisation
(c) By Not-for-Profit Organisation
(d) By All Organisations
Answer
Answer: (c) By Not-for-Profit Organisation
Question 26.
Payment of honorarium to secretary is treated as :
(a) Capital expenditure
(b) Revenue expenditure
(c) An Income
(D/) None of these
Answer
Answer: (b) Revenue expenditure
Question 27.
Outstanding subscription is a:
(a) Income
(b) Asset
(c) (a) and (b) both
(d) None of these
Answer
Answer: (c) (a) and (b) both
Question 28.
Legacies should be treated as :
(a) A Liability
(b) A Revenue Receipt
(c) An Income
(d) None of these
Answer
Answer: (a) A Liability
Question 29.
The excess of assets over liabilities in non-trading concerns is termed as:
(a) Capital Fund
(b) Capital
(c) Profit
(d) Net Profit
Answer
Answer: (a) Capital Fund
Question 30.
For a non-trading concern, honorarium paid is:
(a) An Income
(b) An Asset
(c) An Expense
(d) None of these
Answer
Answer: (c) An Expense
Question 31.
Entrance fees, unless otherwise stated, is treated as:
(a) A Capital Receipt
(b) A Revenue Income
(c) A Liability
(d) None of these
Answer
Answer: (b) A Revenue Income
Question 32.
Specific donation is:
(a) Capital Receipt
(b) Revenue Receipt
(c) Asset
(d) None of these
Answer
Answer: (a) Capital Receipt
Question 33.
Income and Expenditure Account records transactions of:
(a) Capital nature only
(b) Revenue nature only
(c) (a) and (b) both
(d) None of these
Answer
Answer: (b) Revenue nature only
Question 34.
Life membership fee received by a club is:
(a) Revenue Receipt
(b) Capital Receipt
(c) (a) and (b) both
(d) None of these
Answer
Answer: (b) Capital Receipt
Question 35.
All receipts of capital nature are shown in :
(a) Income and Expenditure A/c
(b) Balance Sheet
(c) P. & L. A/c
(d) None of these
Answer
Answer: (b) Balance Sheet
Question 36.
All items of revenue in nature are shown in:
(a) Income and Expenditure A/c
(b) Balance Sheet
(c) (a) and (b) both
(d) None of these
Answer
Answer: (a) Income and Expenditure A/c
Question 37.
Which of the following is not a not-for-profit organisation ?
(a) College
(b) Sports Club
(c) Maruti Udyog
(d) Hospital
Answer
Answer: (c) Maruti Udyog
Question 38.
Subscriptions received in advance by a club are shown on… .of the Balance Sheet
(a) Assets Side
(b) Liabilities Side
(c) Debit Side
(d) Credit Side
Answer
Answer: (b) Liabilities Side
Question 39.
Which of the following is not an income ?
(a) Subscription
(b) Donation
(c) Sale of Ticket
(d) Endowment Fund
Answer
Answer: (d) Endowment Fund
Question 40.
Most transaction in non-trading concerns are:
(a) Cash
(b) Credit
(c) Both (a) and (b)
(d) None of these
Answer
Answer: (a) Cash
Question 41.
The main object of non-profit organisation is:
(a) To earn Profit
(b) To Serve the Society
(c) To Prepare Profit & Loss A/c
(d) All the above
Answer
Answer: (b) To Serve the Society
Question 42.
Subscription received by an organisation is:
(a) Capital Receipt
(b) Revenue Receipt
(c) Both (a) and (b)
(d) None of the above
Answer
Answer: (b) Revenue Receipt
Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers
Chapter 1 Accounting for Partnership Firms — Fundamentals. Accountancy MCQs for Class 12
Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Students
can solve NCERT Class 12 Accountancy Accounting for Partnership Firms — Fundamentals MCQs
Pdf with Answers to know their preparation level.
Answer: D
2. Following are essential elements of a partnership firm except: (CPT; June 2012)
(A) At least two persons
(B) There is an agreement between all partners
(C) Equal share of profits and losses
(D) Partnership agreement is for some business.
Answer
Answer: C
3. In case of partnership the act of any partner is : (C.S. Foundation Dec. 2012)
(A) Binding on all partners
(B) Binding on that partner only
(C) Binding on all partners except that particular partner
(D) None of the above
Answer
Answer: A
Answer
Answer: B
5. Oustensible partners are those who
(A) do not contribute any capital but get some share of profit for lending their name to the
business
(B) contribute very less capital but get equal profit
(C) do not contribute any capital and without having any interest in the business, lend their name
to the business
(D) contribute maximum capital of the business
Answer
Answer: C
Answer
Answer: B
Answer
Answer: C
8. What should be the minimum number of persons to form a Partnership :
(A) 2
(B) 7
(C) 10
(D) 20
Answer
Answer: A
Answer
Answer: D
Answer
Answer: B
11. Which one of the following is NOT an essential feature of a partnership?
(A) There must be an agreement
(B) There must be a business
(C) The business must be carried on for profits
(D) The business must be carried on by all the partners
Answer
Answer: D
12. X, Y and Z are partners sharing profits and losses equally. Their capital balances on March, 31,
2012 are ₹80,000, ₹60,000 and ₹40,000 respectively. Their personal assets are worth as follows : X
— ₹20,000, Y — ₹15,000 and Z — ₹10,000. The extent of their liability in the firm would be : (C.S.
Foundation; June 2013)
(A) X — ₹80,000 : Y — ₹60,000 : and Z — ₹40,000
(B) X — ₹20,000 : Y — ₹15,000 : and Z — ₹10,000
(C) X — ₹1,00,000 : Y — ₹75,000 : and Z — ₹50,000
(D) Equal
Answer
Answer: B
Answer
Answer: D
(ii) Partnership Deed
14. Forming a Partnership Deed is :
(A) Mandatory
(B) Mandatory in Writing
(C) Not Mandatory
(D) None of the Above
Answer
Answer: C
Answer
Answer: D
Answer
Answer: D
Answer
Answer: A
18. In the absence of Partnership Deed, the interest is allowed on partner’s capital: (CPT; June
2011)
(A) @ 5% p.a.
(B) @ 6% p.a.
(C) @ 12% p.a.
(D) No interest is allowed
Answer
Answer: D
19. In the absence of a partnership deed, the allowable rate of interest on partner’s loan account
will be :
(A) 6% Simple Interest
(B) 6% p.a. Simple Interest
(C) 12% Simple Interest
(D) 12% Compounded Annually
Answer
Answer: B
20. A and B are partners in partnership firm without any agreement. A has given a loan of ₹50,000
to the firm. At the end of year loss was incurred in the business. Following interest may be paid to
A by the firm :
(A) @5% Per Annum
(B) @ 6% Per Annum
(C) @ 6% Per Month
(D) As there is a loss in the business, interest can’t be paid
Answer
Answer: B
21. A and B are partners in a pertnership firm without any agreement. A has withdrawn ?50,000
out of his Capital as drawings. Interest on drawings may be charged from A by the firm :
(A) @ 5% Per Annum
(B) @ 6% Per Annum
(C) @ 6% Per Month
(D) No interest can be charged
Answer
Answer: D
22. A and B are partners in a partnership firm without any agreement. A devotes more time for
the firm as compare to B. A will get the following commission in addition to profit in the firm’s
profit:
(A) 6% of profit
(B) 4% of profit
(C) 5% of profit
(D) None of the above
Answer
Answer: D
23. In the absence of partnership deed, the following rule will apply :
(A) No interest on capital
(B) Profit sharing in capital ratio
(C) Profit based salary to working partner
(D) 9% p.a. interest on drawings
Answer
Answer: A
Answer
Answer: D
25. Interest on capital will be paid to the partners if provided for in the partnership deed but only
out of: (C.S. Foundation; December, 2012)
(A) Profits
(B) Reserves
(C) Accumulated Profits
(D) Goodwill
Answer
Answer: A
26. Which one of the following items cannot be recorded in the profit and loss appropriation
account?
(A) Interest on capital
(B) Interest on drawings
(C) Rent paid to partners
(D) Partner’s salary
Answer
Answer: C
27. If any loan or advance is provided by partner then, balance of such Loan Account should be
transferred to :
(A) B/S Assets side
(B) B/S Liability Side
(C) Partner’s Capital A/c
(D) Partner’s Current A/c
Answer
Answer: B
28. A, B and C were Partners with capitals of ₹50,000; ₹40,000 and ? 30,000 respectively carrying
on business in partnership. The firm’s reported profit for the year was ₹80,000. As per provision
of the Indian Partnership Act, 1932, find out the share of each partner in the above amount after
taking into account that no interest has been provided on an advance by A of ₹20,000 in addition
to his capital contribution.
(A) ₹26,267 for Partner B and C and ₹27,466 for Partner A.
(B) ₹26,667 each partner.
(C) ₹33,333 for A ₹26,667 for B and ₹20,000 for C.
(D) ₹30,000 each partner.
Answer
Answer: A
29. X, Y, and Z are partners in a firm. At the time of division of profit for the year, there was
dispute between the partners. .Profit before interest on partner’s capital was ₹6,000 and Y
determined interest @24% p.a. on his loan of ₹80,000. There was no agreement on this point.
Calculate the amount payable to X, Y, and Z respectively.
(A) ₹2,000 to each partner.
(B) Loss of ₹4,400 for X and Z; Twill take ₹14,800.
(C) ₹400 for A, ₹5,200 for Land ₹400 for Z.
(D) None of the above.
Answer
Answer: C
30. X, Y, and Z are partners in a firm. At the time of division of profit for the year, there was
dispute between the partners. Profit before interest on partner’s capital was ₹6,00,000 and Z
demanded minimum profit of ₹5,00,000 as his financial position was not good. However, there
was no written agreement on this point.
(A) Other partners will pay Z the minimum profit and will share the loss equally.
(B) Other partners will pay Z the minimum profit and will share the loss in capital ratio.
(C) Xand T will take ₹50,000 each and Z will take ₹5,00,000.
(D) ₹2,00,000 to each of the partners.
Answer
Answer: D
31. On 1st June 2018 a partner introduced in the firm additional capital ₹50,000. In the absence
of partnership deed, on 31st March 2019 he will receive interest :
(A) ₹3,000
(B) Zero
(C) ₹2,500
(D) ₹1,800
Answer
Answer: B
32. On 1st January 2019, a partner advanced a loan of ₹1,00,000 to the firm. In the absence of
agreement, interest on loan on 31st March 2019 will be :
(A) Nil
(B) ₹1,500
(C) ₹3,000
(D) ₹6,000
Answer
Answer: B
33. A partner introduced additional capital of ₹30,000 and advanced a loan of ₹40,000 to the firm
at the beginning of the year. Partner will receive year’s interest:
(A) ₹4,200
(B) ₹2,400
(C) Nil
(D) ₹1,800
Answer
Answer: B
Answer
Answer: C
Answer
Answer: A
Answer
Answer: C
37. Which of the following items are recorded in the Profit & Loss Appropriation Account of a
partnership firm?
(A) Interest on Capital
(B) Salary to Partner
(C) Transfer to Reserve
(D) All of the above
Answer
Answer: D
Answer: B
Answer
Answer: D
40. According to Profit and Loss Account, the net profit for the year is ₹4,20,000. Salary of a
partner is ₹5,000 per month and the commission of another partner is ₹10,000. The interest on
drawings of partners is ₹4,000. The net profit as per Profit and Loss Appropriation Account will be
:
(A) ₹3,54,000
(B) ₹3,46,000
(C) ₹4,09,000
(D) ₹4,01,000
Answer
Answer: A
41. A and B are partners. According to Profit and Loss Account, the net profit for the year is
₹2,00,000. The total interest on partner’s drawings is ₹1,000. As salary is ₹40,000 per year and B’s
salary is ₹3,000 per month. The net profit as per Profit and Loss Appropriation Account will be :
(A) ₹1,23,000
(B) ₹1,25,000
(C) ₹1,56,000
(D) ₹1,58,000
Answer
Answer: B
42. According to Profit and Loss Account, the net profit for the year is ₹1,40,000. The total
interest on partner’s capital is? 8,000 and a partner is to be allowed commission of ₹5,000. The
total interest on partner’s drawings is ₹1,200. The net profit as per Profit and Loss Appropriation
Account will be :
(A) ₹1,28,200
(B) ₹1,44,200
(C) ₹1,25,800
(D) ₹1,41,800
Answer
Answer: A
43. Sangeeta and Ankita are partners in a firm. Sangeeta’s capital is ₹70,000 and Ankita’s Capital
is ₹50.000. Firm’s profit is ₹60,000. Ankita share in profit will be :
(A) ₹25,000
(B) ₹3 0,000
(C) ₹35,000
(D) ₹20,00
Answer
Answer: B
44. A, B and C are partners. A’s capital is ₹3,00,000 and B’s capital is ₹1,00,000. C has not invested
any amount as capital but he alone manages the whole business. C wants ?30,000 p.a. as salary.
Firm earned a profit of ₹1,50,000. How much will be each partner’s share of profit:
(A) A ₹60,000; B ₹60,000; C ₹Nil
(B) A ₹90,000; B ₹30,000; C ₹Nil
(C) A ₹40,000; B ₹40,000 and C ₹40,000
(D) A ₹50,000; B ₹50,000 and C ₹50,000.
Answer
Answer: D
45. Net profit of a firm is ₹49,500. Manager is entitled to a commission of 10% on profits before
charging his commission. Manager’s Commission will be :
(A) ₹4,950
(B) ₹4,500
(C) ₹5,500
(D) ₹495
Answer
Answer: A
46. Net profit of a firm is ₹79,800. Manager is entitled to a commission of 5% of profits after
charging his commission. Manager’s Commission will be :
(A) ₹4,200
(B) ₹380
(C) ₹3,990
(D) ₹3,800
Answer
Answer: D
47. Ram and Shyam are partners in the ratio of 3 : 2. Before profit distribution, ‘ Ram is entitled to
5% commission of the net profit (after charging such commission). Before charging commission,
firm’s profit was ₹42,000. Shyam’s share in profit will be :
(A) ₹16,000
(B) ₹24,000
(C) ₹26,000
(D) ₹16,400
Answer
Answer: A
48. A, B and C are partners in the ratio of 5 : 3 : 2. Before B’s salary of ₹17,000 firm’s profit is
₹97,000. How much in total B will receive from the firm?
(A) ₹17,000
(B) ₹40,000
(C) ₹24,000
(D) ₹41,000
Answer
Answer: D
Hint: Total amount received by die partner will be Salary + Share of Profit
49. A, B and C are partners in a firm without any agreement. They have contributed 750,000,
730,000 and 720,000 by way of capital in the firm. A was unable to work for six months in a year
due to illness. At the end of year, firm earned a pro lit of 7 15,000. A’s share in the profit will be :
(A) 77.500
(B) 73,750
(C) 75,000
(D) 72,500
Answer
Answer: C
50. In a partnership lirm, partner A is entitled a monthly salary of ₹7,500. At the end of the year,
firm earned a profit of ₹75,000 after charging T’s salary. If the manager is entitled a commission
of 10% on the net profit after charging his commission, Manager’s commission will be :
(A) ₹7,500
(B) ₹16,500
(C) ₹8,250
(D) ₹15,000
Answer
Answer: D
51. Seeta and Geeta are partners sharing profits and losses in the ratio 4 : 1. Meeta was manager
who received the salary of ₹4,000 p.m. in addition to a commission of 5% on net profits after
charging such commission. Profit for the year is ₹6,78,000 before charging salary. Find the total
remuneration of Meeta.
(A) ₹78,000
(B) ₹88,000
(C) ₹87,000
(D) ₹76,000
Answer
Answer: A
Answer
Answer: D
(iv) Capital Accounts of Partners
53. Which accounts are opened when the capitals are fixed?
(A) Only Capital Accounts
(B) Only Current Accounts
(C) Capital Accounts as well as Current Accounts
(D) Either Capital Accounts or Current Accounts
Answer
Answer: C
54. Which accounts are opened when the capitals are fluctuating?
(A) Only Capital Accounts
(B) Only Current Accounts
(C) Capital Accounts as well as Current Accounts
(D) Either Capital Accounts or Current Accounts
Answer
Answer: A
Answer
Answer: C
56. Which item is recorded on the credit side of partner’s current accounts :
(A) Interest on Fanner’s Capitals
(B) Salaries of Partners
(C) Share of profits of Partners
(D) All of the Above
Answer
Answer: D
57. If the Partners’ Capital Accounts are fixed ‘salary payable to partner’ will be recorded :
(A) On the debit side of Partners’ Current Account
(B) On the debit side of Partners’ Capital Account
(C) On the credit side of Partners’ Current Account
(D) None of the above
Answer
Answer: C
58. It the Partner’s Capital Accounts are fixed, interest on capital will be recorded:
(A) On the credit side of Current Account
(B) On the credit side of Capital Account
(C) On the debit side of Current Account
(D) On the debit side of Capital Account
Answer
Answer: A
59. If the Partner’s Capital Accounts are fluctuating, in that case following item/items will be
recorded in the credit side of capital accounts :
(A) Interest on capital
(B) Salary of partners
(C) Commission of partners
(D) All of the above
Answer
Answer: D
Answer
Answer: B
Answer
Answer: D
Answer
Answer: D
63. Interest on Partner’s drawings will be debited to :
(A) Profit and Loss Account
(B) Profit and Loss Appropriation Account
(C) Partner’s Current Account
(D) Interest Account
Answer
Answer: C
64. When partners’ capital accounts are floating, which one of the following items will be written
on the credit side of the partners’ capital accounts? :
(A) Interest on drawings
(B) Loan advanced by partner to the firm
(C) Partner’s share in the firm’s loss
(D) Salary to the activ e partners
Answer
Answer: D
65. When partners’ capital accounts are fixed, which one of the following items will be written in
the partner’s capital account? :
(A) Partner’s Drawings
(B) Additional capital introduced by the partner in the firm
(C) Loan taken by partner from the firm
(D) Loan Advanced by partner to the firm
Answer
Answer: B
66. Interest on partner’s drawings will be credited to
(A) Profit and Loss Account
(B) Profit and Loss Appropriation Account
(C) Partner’s Capital Accounts
(D) None of the Above
Answer
Answer: B
Answer
Answer: C
Answer
Answer: D
69. Xand Y are partners in the ratio of 3 : 2. Their capitals are ?2,00,000 and ₹1,00,000
respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ?60,000 for the year
ended 31st March 2019. Interest on Capital will be :
(A) X ₹16,000; Y ₹8,000
(B) V ₹8.000; Y ₹4,000
(C) X ₹14,400; Y ₹9,600
(D) No Interest will be allowed
Answer
Answer: A
70. X and Y are partners in the ratio of 3 : 2. Their capitals are ₹2,00,000 and ₹1,00,000
respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹15,000 for the year
ended 31st March 2019. Interest on Capital will be :
(A) X ₹16,000; Y ₹8,000
(B) X ₹9,000; Y ₹6,000
(C) X ₹10,000; Y ₹5,000
(D) No Interest will be allowed
Answer
Answer: C
71. X and Y are partners in the ratio of 3 : 2. Their capitals are ?2,00,000 and ₹1,00,000
respectively. Interest on capitals is allowed @ 8% p.a. Firm incurred a loss of ₹60,000 for the year
ended 31st March 2019. Interest on Capital will be :
(A) X ₹16,000; Y ₹8,000
(B) A ₹8,000; Y ₹4,000
(C) X ₹14,400; Y ₹9,600
(D) No Interest will be allowed
Answer
Answer: D
72. X and Y are partners in the ratio of 3 : 2. Their capitals are ₹2,00,000 and ₹1,00,000
respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹15,000 for the year
ended 31st March 2019. As per partnership agreement, interest on capital is treated a charge on
profits. Interest on Capital will be :
(A) X ₹16,000; Y ₹8,000
(B) X ₹9,000; Y ₹6,000
(C) X ₹10,000; Y ₹5,000
(D) No Interest will be allowed
Answer
Answer: A
73. A and B contribute ₹1,00,000 and ?₹60,000 respectively in a partnership firm by way of capital
on which they agree to allow interest @ 8% p.a. Their profit or loss sharing ratio is 3 : 2. The profit
at the end of the year was ₹2,800 before allowing interest on capital. If there is a clear agreement
that interest on capital will be paid even in case of loss, then S’s share will be:
(A) Profit ₹6,000
(B) Profit ₹4,000
(C) Loss ₹6,000
(D) Loss ₹4,000
Answer
Answer: D
Answer
Answer: D
75. Where will you record interest on drawings : (CPT; June 2011)
(A) Debit Side of Profit & Loss Appropriation Account
(B) Credit Side of Profit & Loss Appropriation Account
(C) Credit Side of Profit & Loss Account
(D) Debit Side of Capital/Current Account only.
Answer
Answer: B
Answer
Answer: A
77. If date of drawings of the partner’s is not given in the question, interest is charged for how
much time
(A) 1 month
(B) 3 months
(C) 6 months
(D) 12 months
Answer
Answer: C
78. Vikas is a partner in a firm. His drawings during the year ended 31st March, 2019 were ?
72,000. If interest on drawings is charged @ 9% p.a. the interest charged will be :
(A) ₹324
(B) ₹6,480
(C) ₹3,240
(D) ₹648
Answer
Answer: C
79. If a fixed amount is withdrawn by a partner on the first day of every month, interest on the
total amount is charged for …………… months :
(A) 6
(B) 61/2
(C) 51/2
(D) 12
Answer
Answer: B
80. If a fixed amount is withdrawn by a partner on the last day of every month, interest on the
total amount is charged for …………… months :
(A) 12
(B) 6 1/2
(C) 5 1/2
(D) 6
Answer
Answer: C
81. If a fixed amount is withdrawn by a partner in the middle of every month, interest on the total
amount is charged for …………… months
(A) 6
(B) 6 1/2
(C) 5 1/2
(D) 12
Answer
Answer: A
82. In a partnership firm, a partner withdrew ₹5,000 per month on the first day of every month
during the year for personal expenses. If interest on drawings is charged @ 6% p.a. the interest
charged will be : (C.S. Foundation, Dec. 2012)
(A) ₹3,600
(B) ₹1,950
(C) ₹1,800
(D) ₹1,650
Answer
Answer: B
83. Ajay is a partner in a firm. He withdrew ₹2,000 per month on the last day of every month
during the year ended 31st March, 2019. If interest on drawings is charged @ 9% p.a. the interest
charged will be :
(A) ₹990
(B) ₹1,080
(C) ₹1,170
(D) ₹2,160
Answer
Answer: A
84. Sushil is a partner in a firm. He withdrew ₹4,000 per month in the middle of every month
during the year ended 31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest
charged will be :
(A) ₹2,080
(B) ₹1,760
(C) ₹3,840
(D) ₹1,920
Answer
Answer: D
85. If fixed amount is withdrawn by a partner on the first day of each quarter, interest on the total
amount is charged for …………….. months
(A) 4.5
(B) 6
(C) 7.5
(D) 3
Answer
Answer: C
86. If a fixed amount is withdrawn by a partner on the last day of each quarter, interest on the
total amount is charged for ……………… months
(A) 6
(B) 4.5
(C) 7.5
(D) 3
Answer
Answer: B
87. If a fixed amount is withdrawn by a partner in each quarter, interest on the total amount is
charged for ……………….. months
(A) 3
(B) 6
(C) 4.5
(D) 7.5
Answer
Answer: B
88. Anuradha is a partner in a firm. She withdrew ₹6,000 in the beginning of each quarter during
the year ended 31st March, 2019. Interest on her drawings @ 10% p.a. will be :
(A) ₹900
(B) ₹1,200
(C) ₹1,500
(D) ₹600
Answer
Answer: C
89. Bipasa is a partner in a firm. She withdrew ₹6,000 at the end of each quarter during the year
ended 31st March, 2019. Interest on her drawings @ 10% p.a. will be :
(A) ₹900
(B) ₹600
(C) ₹1,500
(D) ₹1,200
Answer
Answer: A
90. Charulata is a partner in a firm. She withdrew ₹10,000 in each quarter during the year ended
31st March, 2019. Interest on her drawings @ 9% p.a. will be:
(A) ₹1,350
(B) ₹2,250
(C) ₹900
(D) ₹1,800
Answer
Answer: D
91. If equal amount is withdrawn by a partner in the beginning of each month during a period of
6 months, interest on the total amount will be charged for ……………… months
(A) 2.5
(B) 3
(C) 3.5
(D) 6
Answer
Answer: C
92. If equal amount is withdrawn by a partner in the end of each month during a period of 6
months, interest on the total amount will be charged for ………………… months
(A) 2.5
(B) 3
(C) 3.5
(D) 6
Answer
Answer: A
93. If equal amount is withdrawn by a partner in each month during a period of 6 months,
interest on the total amount will be charged for …………… months
(A) 6
(B) 3
(C) 2.5
(D) 3.5
Answer
Answer: B
94. X is a partner in a firm. He withdrew regularly ₹1,000 at the beginning of every month for the
six months ending 31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest
charged will be :
(A) ₹240
(B) ₹140
(C) ₹100
(D) ₹120
Answer
Answer: B
95. Y is a partner in a firm. He withdrew regularly ₹3,000 at the end of every month for the six
months ending 31st March, 2019. If interest on drawings is charged @ 10% p.a. the interest
charged will be :
(A) ₹375
(B) ₹450
(C) ₹525
(D) ₹900
Answer
Answer: A
96. Z is a partner in a firm. He withdrew regularly ?2,000 every month for the six months ending
31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest charged will be :
(A) ₹480
(B) ₹280
(C) ₹200
(D) ₹240
Answer
Answer: D
97. A partner withdraws ₹8,000 each on 1st April and 1st Oct. Interest on his drawings @ 6% p.a.
on 31 st March will be :
(A) ₹480
(B) ₹720
(C) ₹240
(D) ₹960
Answer
Answer: B
98. A partner draws ₹2,000 each on 1st April 2018, 1st July 2018, 1st October, 2018 and 1st
January 2019. For the year ended 31st March, 2019 interest on drawings @ 8% per annum will
be :
(A) ₹540
(B) ₹320
(C) ₹960
(D) ₹400
Answer
Answer: D
99. A partner withdraws from firm ₹7,000 at the end of each month. At the rate of 6% per annum
total interest will be :
(A) ₹5,040
(B) ₹2,310
(C) ₹3,570
(D) ₹1,370
Answer
Answer: B
Answer
Answer: C
101. Sony and Romy are equal partners with fixed capitals of ₹4,00,000 and ₹3,00,000
respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered
that interest on capitals was provided @ 8% instead of 10% p.a. In the adjusting entry :
(A) Sony will be credited by ₹8,000 and Romy will be credited by ₹6,000.
(B) Sony will be debited by ₹8,000 and Romy will be debited by ₹6,000.
(C) Sony will be debited by ₹1,000 and Romy will be credited by ₹1,000.
(D) Sony will be credited by ₹1,000 and Romy will be debited by ₹1,000.
Answer
Answer: D
102. Asha and Vipasha are equal partners with fixed capitals of ₹5,00,000 and ₹2,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 6% instead of 5% p.a. In the adjusting entry :
(A) Asha will be debited by ₹1,500 and Vipasha will be credited by ₹1,500;
(B) Asha will be credited by ₹1,500 and Vipasha will be debited by ₹1,500;
(C) Asha will be debited by ₹5,000 and Vipasha will be debited by ₹2,000;
(D) Asha will be credited by ₹5,000 and Vipasha will be credited by ₹2,000;
Answer
Answer: A
103. P and Q sharing profits in the ratio of 2 : 1 have fixed capitals of ₹90,000 and f60,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 6% instead of 8% p.a. In the adjusting entry :
(A) P will be credited by ₹1,800 and Q will be credited by ₹1,200;
(B) P will be debited by ₹200 and Q will be credited by ₹200;
(C) P will be credited by ₹200 and Q will be debited by ₹200;
(D) P will be debited by ₹1,800 and Q will be debited by ₹1,200;
Answer
Answer: B
104. A and B sharing profits in the ratio of 7 : 3 have fixed capitals of ₹2,00,000 and ₹1,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 12% instead of 10% p.a. In the adjusting entry :
(A) A will be debited by ₹4,000 and B will be debited by ₹2,000;
(B) A will be credited by ₹4,000 and B will be credited by ₹2,000;
(C) A will be debited by ₹200 and B will be credited by ₹200;
(D) A will be credited by ₹200 and B will be debited by ₹200;
Answer
Answer: D
105. Xand 7are partners in the ratio of 3 : 2. Their fixed capitals are ₹2,00,000 and ₹1,00,000
respectively. After clsoing the accounts for the year ending 31st March 2019, it was discovered
that interest on capital was allowed @ 12% instead of 10% per annum. By how much amount A
will be debited/credited in the adjustment entry :
(A) ₹600 (Debit)
(B) ₹400 (Credit)
(C) ₹400 (Debit)
(D) ₹600 (Credit)
Answer
Answer: C
106. X, Y and Z are equal partners with fixed capitals of ₹2,00,000, ₹3,00,000 and ?4,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals @ 8% p.a. was omitted to be provided. In the adjusting entry :
(A) Dr. X and Cr. Y by ₹8,000
(B) Cr. X and Dr. Z by ₹8,000
(C) Dr. X and Cr. Z by ₹8.000
(D) Cr. X and Dr. Y by ₹8,000
Answer
Answer: C
107. P, Q and R arc equal partners with fixed capitals of ₹5,00,000, ₹4,00,000 and ₹3,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 7% instead of 9% p.a. In the adjusting entry :
(A) P will be credited by ₹2,000 and Q will be debited by ₹2,000.
(B) P will be debited by ₹2,000 and Q will be credited by ₹2,000.
(C) P will be debited by ₹2,000 and R will be credited by ₹2,000.
(D) P will be credited by ₹2,000 and R will be debited by ₹2,000.
Answer
Answer: D
108. X, 7and Z are equal partners with fixed capitals of ₹5,00,000, ?3,00,000 and ₹1,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 6% instead of 5% p.a. In the adjusting entry :
(A) Dr. X and Cr. Z by ₹2,000
(B) Cr. X and Dr. Z by ₹2,000
(C) Dr. X and Cr. Y by ₹2,000
(D) Cr. X and Dr. Y by ₹2,000
Answer
Answer: A
109. P, Q, and R sharing profits in the ratio of 2 : 1 : 1 have fixed capitals of f4,00,000, ₹3,00,000
and ₹2,00,000 respectively. After closing the accounts for the year ending 31st March 2019 it was
discovered that interest on capitals was provided @ 6% instead of 8% p.a. In the adjusting entry :
(A) Cr. P ₹1,000; Dr. Q ₹1,500 and Cr. R ₹500
(B) Dr. P ₹500; Cr. Q ₹1,500 and Dr. R ₹1,000
(C) Cr. P ₹500; Dr. Q ₹1,500 and Cr. R ₹1,000
(D) Dr. P ₹1,000; Cr. Q ₹1,500 and Dr. R ₹500
Answer
Answer: D
110. A, B and C sharing profits in the ratio of 2 : 2 : 1 have fixed capitals of ₹3,00,000, ₹2,00,000
and ₹1,00,000 respectively. After closing the accounts for the year ending 31st March 2019 it was
discovered that interest on capitals was provided @ 12% instead of 10% p.a. In the adjusting
entry :
(A) Cr. A ₹1,200; Dr. B ₹800 and Dr. C ₹400
(B) Dr. A ₹1,200; Cr. B ₹800 and Cr. C ₹400
(C) Cr. A ₹800; Cr. B ₹400 and Dr. C ₹1,200
(D) Dr. A ₹800; Dr. B ₹400 and Cr. C ₹1,200
Answer
Answer: B
111. X, Y, and Z are partners in the ratio of 4 : 3 : 2. Salary to X ₹15,000 and to Z ₹3,000 omitted
and profits distributed. For rectification, now X will be credited :
(A) ₹15,000
(B) ₹1,000
(C) ₹12,000
(D) ₹7,000
Answer
Answer: D
Answer
Answer: C
113. Guarantee given to partner ‘A’ by the other partners ‘B & C’ means :
(A) In case of loss, ‘A’ will not contribute towards that loss.
(B) In case of insufficient profits, ‘A’ will receive only the minimum guarantee amount.
(C) In case of loss or insufficient profits, ‘A’ will withdraw the minimum guarantee amount.
(D) All of the above.
Answer
Answer: C
114. P, Q and R are partners in a firm in 3 : 2 : 1. R is guaranteed that he will get minimum of
₹20,000 as his share of profit every year. Firm’s profit was ₹90,000. Partners will get:
(A) P ₹40,000; Q ₹30,000; R ₹20,000;
(B) P ₹42,500; Q ₹27,500; R ₹20,000;
(C) P ₹45,000; Q ₹30,000; R ₹15,000;
(D) P ₹42,000; Q ₹28,000; R ₹20,000;
Answer
Answer: D
115. A, Y and Z are partners in the ratio of 5 : 4 : 3. A has given to Za guarantee of minimum
₹10,000 profit. For the year ending 31st March 2019, firm’s profit is ₹28,800. Js share in profit will
be :
(A) ₹9,200
(B) ₹9,600
(C) ₹7,200
(D) ₹12,000
Answer
Answer: A
116. E, Fand G share profits in the ratio of 4 : 3 : 2. G is given a guarantee that his share of profits
will not be less than ₹75,000. Deficiency if any, would be borne by E and F equally Firm’s profit
was ₹2,70,000. As share of profit will be :
(A) ₹90,000
(B) ₹82,500
(C) ₹97,500
(D) ₹75,000
Answer
Answer: B
117. X, Y, and Z are partners in the ratio of 6 : 4 : 1. In the firm, A has guaranteed Z for his
minimum profit of ₹15,000. Firm’s profit was ₹99,000. In the firm profit As share will be :
(A) ₹30,000
(B) ₹15,000
(C) ₹48,000
(D) ₹45,000
Answer
Answer: C
118. P, Q, and R are partners in 3 : 2 : 1. R is guaranteed that his share of profit will not be less
than ₹70,000. Any deficiency will be borne by P and Q in the ratio of 2 : 1. Firm’s profit was
₹2,40,000. Share of P will be :
(A) ₹1,00,000
(B) ₹1,10,000
(C) ₹1,20,000
(D) ₹1,02,000
Answer
Answer: A
119. A Y and Z are partners in 5 : 4 : 1. Z is guaranteed that his share of profit will not be less than
₹80,000. Any deficiency will be borne by A and Y in 3 : 2. Firm’s profit was ₹5,60,000. How much
deficiency will be borne by Y :
(A) ₹2,14,400
(B) ₹14,400
(C) ₹2,09,600
(D) ₹9,600
Answer
Answer: D
120. P and Q are partners sharing profits in the ratio of 1 : 2. R was manager who received the
salary of ₹10,000 p.m. in addition to commission of 10% on net profits after charging such
commission. Total remuneration to R amounted to ₹1,80,000. Profit for the year before charging
salary and commission was :
(A) ₹7,20,000
(B) ₹6,00,000
(C) ₹7,80,000
(D) ₹6,60,000
Answer
Answer: C
121. X and Y are partners. X draws a fixed amount at the beginning of every month. Interest on
drawings is charged @8% p.a. At the end of the year interest on X’s drawings amounts to
*₹2,600. Drawings of A’were :
(A) ₹8,000 p.m.
(B) ₹7,000 p.m.
(C) ₹6,000 p.m.
(D) ₹5,000 p.m.
Answer
Answer: D
122. A and B are partners. B draws a fixed amount at the end of every month. Interest on
drawings is charged @15% p.a. At the end of the year interest on B’s drawings amounts to
₹8,250. Drawings of B were :
(A) ₹12,000 p.m.
(B) ₹10,000 p.m.
(C) ₹9,000 p.m.
(D) ₹8,000 p.m.
Answer
Answer: B
123. A and B are partners with a profit-sharing ratio of 2 : 1 and capitals of ₹3,00,000 and
₹2,00,000 respectively. They are allowed 6% p.a. interest on their capitals and are charged 10%
p.a. interest on their drawings. Their drawings during the year were A ₹60,000 and B ₹40,000. B’s
share of net profit as per profit and loss appropriation account amounted to ₹40,000. Net Profit
of the firm before any appropriations was :
(A) ₹1,22,000
(B) ₹1,13,000
(C) ₹1,17,000
(D) ₹1,45,000
Answer
Answer: D
124. A and B are partners in a firm. They are entitled to interest on their capitals but the net profit
was not sufficient for this interest, then the net profit will be distributed among partners in : (CPT,
Dec. 2012)
(A) Agreed Ratio
(B) Profit Sharing Ratio
(C) Capital Ratio
(D) Equally
Answer
Answer: C
Answer
Answer: (c) Lord Elton
Question 2.
Goodwill is to be calculated at one and half year’ purchase of average profit of last 5 years. The firm
earned profits during 3 years as ₹ 20,000 ₹ 18,000 and ₹ 9,000 and suffered losses of ₹ 2,000 and
₹5,000 in last 2 years. The amount of goodwill will be :
(a) ₹ 12,000
(b) ₹ 10,000
(c) ₹ 15,000
(d) None of these
Answer
Answer: (a) ₹ 12,000
Question 3.
When there is no Goodwill Account in the books and goodwill is raised,…………….account will be debited :
(a) Partner’s Capital
(b) Goodwill
(c) Cash
(d) Reserve
Answer
Answer: (b) Goodwill
Question 4.
The amount of goodwill is paid by new partner :
(a) for the payment of capital
(b) for sharing the profit
(c) for purchase of assets
(d) None of these
Answer
Answer: (b) for sharing the profit
Question 5.
At the time of admission of a new partners general reserve appearning in the old Balance Sheet is
transferred to:
(a) All Partner’s Capital Accounts
(b) New Partner’s Capital Account
(c) Old Partners’. Capital Accounts
(d) None of these
Answer
Answer: (c) Old Partners’. Capital Accounts
Question 6.
Profit or Loss on Revaluation is borne by:
(a) Old Partners
(b) New Partners
(c) All Partners
(d) Only Two Partners
Answer
Answer: (a) Old Partners
Question 7.
Share of goodwill brought by new partner in case is shared by old partners in :
(a) Sacrificing Ratio
(b) Old Ratio
(c) New Ratio
(d) Equal Ratio
Answer
Answer: (a) Sacrificing Ratio
Question 8.
A, Band Care three partners sharing profits and losses in the ratio of 4:3:2. D is admitted for 1/10 share,
the new ratio will be :
(a) 10 : 7 : 7 :4
(b) 5 : 3 : 2 : 1
(c) 4 : 3 : 2 : 1
(d) None of these
Answer
Answer: (c) 4 : 3 : 2 : 1
Question 9.
A and B are partners in a firm sharing profits in the ratio of 3:2. They admit C as a new partner for 1/3 rd
share in the profits of the firm. The new profit sharing ratio of A, B and C would be :
(a) 3 : 2 : 1
(b) 3 : 2 : 2
(c) 3 : 2 : 3
(d) 6 : 4 : 5
Answer
Answer: (d) 6 : 4 : 5
Question 10.
X and Y are partners sharing profits in the ratio of 1:1. They admit Z for 1/5 th share who contributed
₹25,000 for his share of goodwill. The total value of goodwill of the firm will be :
(a) ₹ 2,50,000
(b) ₹ 50,000
(c) ₹ 1,00,000
(d) ₹ 1,25,000
Answer
Answer: (c) ₹ 1,00,000
Question 11.
A, B and C are partners in a firm. If D is admitted as a new partner, then:
(a) Old firm is dissolved
(b) Old firm and old partnership is dissolved
(c) Old Partnership is reconsitituted
(d) None of these
Answer
Answer: (c) Old Partnership is reconsitituted
Question 12.
In which ratio, the cash brought in for goodwill by the new partner is shared by the existing partners :
(a) Profit sharing ratio
(b) Capital ratio
(c) Sacrificing ratio
(d) None of these
Answer
Answer: (c) Sacrificing ratio
Question 13.
Sacrificing ratio is ascertained at the time of:
(a) Death of a partner
(b) Retirement of a partner
(c) Admission of a partner
(d) None of these
Answer
Answer: (c) Admission of a partner
Question 14.
If at the time of admission of new partner, Profit and Loss Account balance appears in the books, it will
the transferred to:
(a) Profit & Loss Appropriation A/c
(b) All Partners’ Capital A/cs
(c) Old Partners’ Capital A/cs
(d) Revaluation A/c
Answer
Answer: (c) Old Partners’ Capital A/cs
Question 15.
State the ‘true’ statement:
(a) Profit & Loss Adjustment A/c is prepared for revaluated of assets and liabilities on the admission of a
partner
(b) The new partner is liable for the past losses of the firm
(c) In case the new partner is unable to bring in cash for goodwill, Goodwill Account may be raised in the
firm’s books as per AS-26
Question 16.
Excess of the credit side over the debit side of Revaluation account is:
(a) Profit
(b) Loss
(c) Gain
(d) Expense
Answer
Answer: (a) Profit
Question 17.
Balance sheet prepared after new partnership agreement, assets and liabilities are recorded at:
(a) Original Value
(b) Revalued Figure
(c) At Realisable Value
(d) Either of (a) or (b)
Answer
Answer: (b) Revalued Figure
Question 18.
Assets and Liabilities are shown at their revalued values in :
(a) New Balance Sheet
(b) Revaluation A/c
(c) All Partner’s Capital A/c’s
(d) Realisation A/c
Answer
Answer: (a) New Balance Sheet
Question 19.
Which of the following assets is compulsorily revalued at the time of admission of a new partner :
(a) stock
(b) Fixed Assets
(c) Investment
(d) Goodwill
Answer
Answer: (d) Goodwill
Question 20.
A and B are partners. C is admitted with 1/5 share. C brings 7 1,20,000 as his share towards capital. The
total net worth of the firm is :
(a) ₹ 1,00,000
(b) ₹ 4,00,000
(c) ₹ 1,20,000
(d) ₹ 6,00,000
Answer
Answer: (d) ₹ 6,00,000
Question 21.
A and B share profits and losses in the ratio of 3:4. C was admitted for 1/5 th share. New profit sharing
ratio will be:
(a) 3 : 4 : 1
(b) 12 : 16 : 7
(c) 16 : 12 : 7
(d) None of these
Answer
Answer: (b) 12 : 16 : 7
Question 22.
The opening balance of Partner’s Capital Account is credited with:
(a) Interest on Capital
(b) Interest on Drawings
(c) Drawings
(d) Share in loss
Answer
Answer: (a) Interest on Capital
Question 23.
Share of goodwill brought in cash by the new partner is called:
(a) Assets
(b) Profit
(c) Premium
(d) None of these
Answer
Answer: (c) Premium
Question 24.
If the incoming partner brings the amount of goodwill in cash and also a balance exists in Goodwill A/c,
then the Goodwill A/c is written off among the old partners:
(a) In new profit-sharing ratio
(b) In old profit-sharing ratio
(c) In sacrificing ratio
(d) In gaining ratio
Answer
Answer: (b) In old profit-sharing ratio
Question 25.
A and B share profits and losses in the ratio of 3 : 1.C is admitted into partnership for 1/4 share. The
sacrificing ratio of A and B is :
(a) Equal
(b) 3 : 1
(c) 2 : 1
(d) 3 : 2
Answer
Answer: (b) 3 : 1
Question 26.
A and B are partners sharing profites in the ratio of 3 : 1. They admit C for 1/4 share in future profits. The
new profit sharing ratio will be:
(a) A916, B316, C416
(b) A816, B416, C416
(c) A1010, B216, C416
(d) A816, B916, C1016
Answer
Answer: (a) A916, B316, C416
Question 27.
Formula of Sacrificing ratio is:
(a) New Ratio – Old Ratio
(b) Old Ratio – New Ratio
(c) Gain Ratio – Sacrificing Ratio
(d) New Ratio – Sacrificing Ratio .
Answer
Answer: (b) Old Ratio – New Ratio
Question 28.
The accumulated profits and reserves are transferred to:
(a) Realisation A/c
(b) Partner’s Capital A/cs
(c) Bank A/c
(d) Savings A/c
Answer
Answer: (b) Partner’s Capital A/cs
Question 29.
A, B and C are equal partners. D is admitted to the firm for non-ourth share. D brings ₹ 20,000 as capital
and ₹ 5,000 being half of the premium for goodwill. The value of goodwill of the firm is :
(a) ₹ 10,000
(b) ₹ 40,000
(c) ₹ 30,000
(d) None of these
Answer
Answer: (b) ₹ 40,000
Question 30.
On the admission of a new partner, increase in the value of assets is debited to which account ?
(a) Revaluation Account
(b) Assets Account
(c) Old Partners’ Capital Accounts
(d) None of these
Answer
Answer: (b) Assets Account
Question 31.
Z is admitted in a firm for a 1/4 share in the profit for which he brings 7 30,000 for goodwill. It will be
taken away by the old partners X and Y in :
(a) Old profit-sharing ratio
(b) New profit-sharing ratio
(c) Sacrificing ratio
(d) Capital ratio
Answer
Answer: (c) Sacrificing ratio
Question 32.
On the admission of a new partner, the decrease in the value of assets is debited to:
(a) Revaluation Account
(b) Assets Account
(c) Old Partners’ Capital Accounts
(d) None of these
Answer
Answer: (a) Revaluation Account
Question 33.
When the new partner pays for goodwill in cash, the amount should be debited in the firm’s book to:
(a) Goodwill Account
(b) Cash Account
(c) Capital Account of new partner
(d) None of these
Answer
Answer: (b) Cash Account
Question 34.
The balance of Revaluation Account or Profit & Loss Adjustment Account is transferred to Old Partners’
Capital Accounts in their :
(a) Old profit-sharing ratio
(b) New profit-sharing ratio
(c) Equal ratio
(d) Capital ratio
Answer
Answer: (a) Old profit-sharing ratio
Question 35.
X and Y share profits in the ratio of 3 : 2 Z was admitted as a partner who gets 1/5 share. Z acquires 3/20
from X and 1/20 from Y. The new profit sharing ratio will be :
(a) 9 : 7 : 4
(b) 8 : 8 : 4
(c) 6 : 10 : 4
(d) 10 : 6 :4
Answer
Answer: (a) 9 : 7 : 4
Question 36.
The opening balance of Partner’s Capital Account is credited with:
(a) Interest on Capital
(b) Interest on Drawings
(c) Drawings
(d) Share in loss
Answer
Answer: (a) Interest on Capital
Question 37.
At the time of admission of a new partner, Undistributed Profits appearing in the Balance Sheet of the old
firm is transferred to the Capital Account of:
(a) Old partners is old profit-sharing ratio
(b) Old partners in new profit-sharing ratio
(c) All the partners in the new profit-sharing ratio
(d) None of these
Answer
Answer: (a) Old partners is old profit-sharing ratio
Question 38.
Z is admitted in a firm for al/4 share in the profit for which he brings 7 30,000 for goodwill. It will be taken
away by the old partners X and Y in :
(a) Old profit-sharing ratio
(b) New profit-sharing ratio
(c) Sacrificing ratio
(d) Capital ratio
Answer
Answer: (c) Sacrificing ratio
Question 39.
General Reserval at the time of admission of a new partner is transferred to :
(a) Revaluation Account
(b) Old Partner’s Capital Account
(c) Profit and Loss Adjustment Account
(d) Realisation Account
Answer
Answer: (b) Old Partner’s Capital Account
Question 40.
Change in profit-sharing ratio of existing partners results in:
(a) Revaluation of Firm
(b) Reconstitutions of Firm
(c) Dissolution of Firm
(d) None of these
Answer
Answer: (b) Reconstitutions of Firm
Question 41.
X, Y and Z are partners in a firm, they divided profit and loss in the ratio of 4:3:1. They decided to share
profit In the ratio 5:4:3. X’s and Y’s sacrifices are :
(a) 224:124
(b) 124:324
(c) 224:324
(d) None of these
Answer
Answer: (a) 224:124
Question 42.
On reconstitution of a partnership firm, recording of an unrecorded liability wil result in:
(a) Gain to the existing partners
(b) Loss to the existing partners
(c) Neither gain nor loss to the existing partners
(d) None of these
Answer
Answer: (b) Loss to the existing partners
Question 43.
Increase In the value of assets on reconstitution of the partnership firm results into :
(a) Gain to the existing partners
(b) Loss to the existing partners
(c) Neither gain nor loss to the existing partners
(d) None of these
Answer
Answer: (a) Gain to the existing partners
Question 44.
The balance of Revaluation Account is transferred to old Partner’s Capital Accounts in their:
(a) Old Profit-sharing Ratio
(b) New Profit-sharing Ratio
(c) Equal Ratio
(d) None of these
Answer
Answer: (a) Old Profit-sharing Ratio
Question 45.
X and Y share profits in the ratio 2 :3. In future they have decided to share profits in equal ratio. Which
partner will sacrifice in which ratio ?
(a) X sacrifice 1/10
(b) Y sacrifice 1/5
(c) Y sacrifice 1/10
(d) None of these
Answer
Answer: (c) Y sacrifice 1/10
Question 46.
Change in the partnership agreement results in:
(a) Reconstitution of Firm
(b) Dissolution of Firm
(c) Amalgamation of Firm
(d) None of these
Answer
Answer: (a) Reconstitution of Firm
Question 47.
Change in the partnership agreement:
(a) Changes the relationship among the partners
(b) Results in end of partnership business
(c) Dissolves the partnership firm
(d) None of these
Answer
Answer: (a) Changes the relationship among the partners
Question 48.
Excess of credit side over the debit side in Revalution Account is:
(a) Profit
(b) Loss
(c) Receipt
(d) Expense
Answer
Answer: (a) Profit
Question 49.
A, B and C are partners in a firm, if D is admitted as a new partner:
(a) Old firm is dissolved
(b) Old firm and old partnership are dissolved
(c) Old partnership is reconstituted
(d) None of these
Answer
Answer: (c) Old partnership is reconstituted
Question 50.
Recording of an unrecorded asset on the reconstltutlam of a partnership firm will be:
(a) A gain to the existing partners
(b) A loss to the existing partners
(c) Neither a gain nor a loss to the existing partners
(d) None of these
Answer
Answer: (a) A gain to the existing partners
Question 51.
Revaluation Account or Profit & Loss Adjustment Account is a:
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) None of these
Answer
Answer: (c) Nominal Account
Question 52.
A, B, C and D are partners sharing their profits and losses equally. They change their profit sharing ratio to
2:2:1:1. How much will C sacrifice ?
(a) 1/6
(b) 1/12
(c) 1/24
(d) None of these
Answer
Answer: (d) None of these
Question 53.
Sacrificing Ratio:
(a) New Ratio – Old Ratio
(b) Old Ratio – New Ratio
(c) Gaining Ratio – Old Ratio
(d) Old Ratio – Gaining Ratio
Answer
Answer: (b) Old Ratio – New Ratio
Question 54.
Gaining Ratio:
(a) New Ratio – Old Ratio
(b) Old Ratio – Sacrificing Ratio
(c) New Ratio – Sacrificing Ratio
(d) Old Ratio – New Ratio
Answer
Answer: (a) New Ratio – Old Ratio
Question 55.
X and Y share profit and loss in 3:2. From 1st January, 2017 they agreed to share profit equally. Their
sacrifice or gain will be :
(a) Sacrifice by X: 1/10
(b) Sacrifices by Y : 1/10
(c) Both (a) and (b)
(d) Non of these
Answer
Answer: (c) Both (a) and (b)
Question 56.
At the time of admission of a new partner, General Reserve a appearing in the old Balances Sheet is
transferred to:
(a) All Partner’s Capital Accounts .
(b) New Partners’ Capital Accounts
(c) Old Partner’s Capital Accounts
(d) None of these
Answer
Answer: (c) Old Partner’s Capital Accounts
Question 57.
Change in profit-sharing ratio of existing partners results in:
(a) Revaluation of Firm
(b) Reconstitution of Firm
(c) Dissolution of Firm
(d) None of these
Answer
Answer: (b) Reconstitution of Firm
Question 58.
Generally the interest on capital is considered as :
(a) An appropriation of profit
(b) An Asset
(c) An Expense
(d) None of these
Answer
Answer: (a) An appropriation of profit
Question 59.
Increase in the value of assets on reconstitution of the partnership firm results into:
(a) Gain to the existing partners
(b) Loss to the existing partners
(c) Neither a gain nor a loss to the existing partners
(d) None of these
Answer
Answer: (a) Gain to the existing partners
Question 60.
Following are the factors affecting goodwill except:
(a) Nature of business
(b) Efficiency of Management
(c) Technical Knowledge
(d) Location of the Customers
Answer
Answer: (c) Technical Knowledge
Question 61.
The profit of the last three years are ₹ 42,000, ₹ 39,000 and ₹ 45,000. Value of goodwill at two years
purchases of the average profits will be :
(a) ₹ 42,000
(b) ₹ 84,000
(c) ₹ 1,26,000
(d) ₹ 36,000
Answer
Answer: (b) ₹ 84,000
Question 62.
Under average profit basis goodwill is calculated by :
(a) No. of years’ purchased x Average profit
(b) No. of years’ purchased x Super profit
(c) Super Profit -r Expected Rate of Return
(d) None of these
Answer
Answer: (a) No. of years’ purchased x Average profit
Question 63.
Goodwill is:
(a) Tangible Asset
(b) Intangible Asset
(c) Current Asset
(d) None of these
Answer
Answer: (b) Intangible Asset
Question 64.
An asset which is not ficitious but intangible in nature, having realisable value is :
(a) Machinery
(b) Building
(c) Furniture
(d) Goodwill
Answer
Answer: (d) Goodwill
Question 65.
Which of the following is not a method of valuation of Goodwill:
(a) Revaluation Method
(b) Average Profit Method
(c) Super Profit Method
(d) Capitalisation Method
Answer
Answer: (a) Revaluation Method
Question 66.
The excess of average profits over the normal profits are called :
(a) Super Profits
(b) Fixed Profits
(c) Abnormal Profits
(d) Normal Profits
Answer
Answer: (a) Super Profits
Question 67.
Goodwill is a…………….asset
(a) Useless
(b) Tangible
(c) Worthless
(d) Valuable
Answer
Answer: (c) Worthless
Question 68.
Under super profit basis goodwill is calculated by :
(a) No. of years’ purchased x Average Profit
(b) No. of years’ purchased x Super profit
(c) Super profit -r Expected rate of return
(d) None of these
Answer
Answer: (b) No. of years’ purchased x Super profit
Question 69.
Profits of the last three years were ₹ 6,000, ₹ 13,000 and ₹ 8,000 respectively. Goodwill at two years
purchase of the average net profit will be :
(a) ₹ 81,000
(b) ₹ 27,0000
(c) ₹ 9,000
(d) ₹ 18,000
Answer
Answer: (d) ₹ 18,000
Question 70.
What do you mean by Super Profit ?
(a) Total Profit/No. of Years
(b) Average Profit – Normal Profit
(c) Weighted Profit/No. of Years’ Purchase
(d) None of these
Answer
Answer: (b) Average Profit – Normal Profit
Question 71.
Capital employed in a business is ₹ 1,50,000. Profits are ₹ 50,000 and the normal rate of profit is 20%.
The amount of goodwill as per capitalisation method will be:
(a) ₹ 2,00,000
(b) ₹ 1,50,000
(c) ₹ 3,00,000
(d) ₹ 1,00,000
Answer
Answer: (d) ₹ 1,00,000
Question 72.
Weighted average method of calculating goodwill is used when:
(a) Profits are equal
(b) Profit has increasing trend
(c) Profit has decreasing trend
(d) Either (b) or (c)
Answer
Answer: (d) Either (b) or (c)
Question 73.
The monetary value of reputation of the business is called:
(a) Goodwill
(b) Super Profit
(c) Surplus
(d) Abnormal Profit
Answer
Answer: (a) Goodwill
Question 74.
A firm has an average profit of ₹ 60,000 Rate of return on capital employed is 12.5% p.a. Total capital
employed in the firm was ₹ 4,00,000. Goodwill on the basis of two years purchase of super profit is :
(a) ₹ 20,000
(b) ₹ 15,000
(c) ₹ 10,000
(d) None of these
Answer
Answer: (a) ₹ 20,000
Question 75.
Under capitalisation method, goodwill is calculated by :
(a) Average Profit x No. of Years’ Purchase
(b) Super Profit x No. of Years’ Purchase
(c) Total of the discounted value of expected future benefits
(d) Super Profit -r Expected Rate of Return
Answer
Answer: (d) Super Profit -r Expected Rate of Return
Question 76.
“Goodwill is nothing more than probability that the old customer will resort to the old place.” This
definition of goodwill was given by :
(a) Spicer and Pegler
(b) ICAI
(c) Lord Eldon
(d) AICPA
Answer
Answer: (c) Lord Eldon
Question 77.
What will be the value of goodwill at twice the average of last three years profit if the profits of the last
three years were ₹ 4,000, ₹ 5,000 and ₹ 6,000 ?
(a) ₹ 5,000
(b) ₹ 10,000
(c) ₹ 8,000
(d) None of these
Answer
Answer: (b) ₹ 10,000
Question 78.
The Valuation of Goodwill is not necessary in Sole Trading:
(a) On selling the Firm
(b) On making a partner
(c) On estimation of Assets
(d) On Closing the Firm
Answer
Answer: (d) On Closing the Firm
Answer
Answer: (c) Old Profit Sharing Ratio
Question 2.
X, Y and Z were partners sharing profits in the ratio of 5 : 3 : 2. Goodwill does not appear in the books but
it is agreed to be worth 1,00,000 Rs.. X retires from the firm and Y and Z decide to share profits equally.
X’s share of goodwill will be debited to Y’s and Z’s Capital A/cs in………ratio:
(a) 12:12
(b) 2 : 3
(c) 3 : 2
(d) None of these
Answer
Answer: (b) 2 : 3
Question 3.
x,y are z are partners and share profits in the ratio of 5 : 3 : 2. y retires and x takes 1/10 from y and z takes
1/5 from y. The new profit sharing ratio will be :
(a) 7 : 13
(b) 13 : 7
(c) 3 : 2
(d) 1 : 1
Answer
Answer: (c) 3 : 2
Question 4.
The old profit-sharing ratio among Rajender, Satish and Tejpal were 2 : 2 : 1. The new profit-sharing ratio
after Satish’s retirement is 3 : 2. The gaining ratio is :
(a) 3 : 2
(b) 2 : 1
(c) 1 : 1
(d) 2 : 3
Answer
Answer: (c) 1 : 1
Question 5.
The amount due to the deceased partner is paid to his……….
(a) Father
(b) Friend
(c) Wife
(d) Executors
Answer
Answer: (d) Executors
Question 6.
In case of death of a partner, the whole amount standing to the credit of his capital account is transferred
to :
(a) Capital Accounts of all partners
(b) Capital Accounts of remaining partners
(c) His Executor’s Account
(d) Account of the Government
Answer
Answer: (c) His Executor’s Account
Question 7.
On the death of a partner in a firm payments are made to;
(a) Capital A/c
(b) Executor’s A/c
(c) Current A/c
(d) Loan A/c
Answer
Answer: (b) Executor’s A/c
Question 8.
X, Y and Z share profits in the ratio of 12:13:16,Z dies. New ratio of X and Y will be :
(a) 3 : 2.
(b) 2 : 3
(c) 2 : 1
(d) None of these
Answer
Answer: (a) 3 : 2.
Question 9.
The executors of deceased partner will be paid interest on the amount due from the date of death of the
partner at:
(a) 5% p.a.
(b) 6% p.a.
(c) 7% p.a.
(d) 8% p.a.
Answer
Answer: (b) 6% p.a.
Question 10.
In the event of death of a partner, the accumulated profits and losses are shared by the partners in their:
(a) Old Profit-sharing Ratio
(b) New Profit-sharing Ratio
(c) Capital Ratio
(d) None of these
Answer
Answer: (a) Old Profit-sharing Ratio
Question 11.
On the death of a partner, the amount of Joint Life Insurance Policy is credited to the Capital Accounts of:
(a) Only the deceased partner
(b) All partners including the deceased partner
(c) Remaining partners, in the new profit-sharing ratio
(d) Remaining partners, in their old profit-sharing ratio
Answer
Answer: (b) All partners including the deceased partner
Question 12.
On death of a partner, the remaining partner(s) who have gained due to change in profit-sharing ratio
should compensate the:
(a) Deceased partner
(b) Remaining partners (who have sacrificed) as well as decreased partner
(c) Remaining partners (who have sacrificed)
(d) None of these
Answer
Answer: (a) Deceased partner
Question 13.
B, C and D are partners sharing profit in the ratio 7:5:4. D died on 30th June, 2016 and profits for the year
2015-16 were ₹ 12,000. How much share in profits for the period 1st April, 2016 to 30th June, 2016 will
be credited to D’s Account:
(a) ₹ 3,000
(b) ₹ 750
(c) Nil
(d) ₹ 1,000
Answer
Answer: (b) ₹ 750
Question 14.
A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. C died on 31st March, 2016. The
profits of the financial year ending 31st March, 2016 is ₹ 64,000. The share of the deceased partner in the
profits will be:
(a) ₹ 9,200
(b) ₹ 12,800
(c) ₹ 3,100
(d) ₹ 6,100
Answer
Answer: (b) ₹ 12,800
Question 15.
JLP of the partners is a/an…………..account
(a) Nominal
(b) Personal
(c) Liability
(d) Asset
Answer
Answer: (d) Asset
Question 16.
Joint Life Policy amount received by a firm is distributed in:
(a) Opening Capital Ratio
(b) Closing Capital Ratio
(c) Old Profit-sharing Ratio of Partners
(d) New Profit-sharing Ratio
Answer
Answer: (c) Old Profit-sharing Ratio of Partners
Question 17.
A, B and C are partners sharing profits in the ratio of 3 : 2 : 1. They had a Joint Life Policy of ₹ 3,00,000.
Surrender value of JLP in Balance Sheet is ₹ 90,000. C dies what is share of each partner in JLP ?
(a) ₹ 1,05,000 ; ₹ 70,000; ₹ 35,000
(b) ₹ 45,000 ; ₹ 30,000; ₹ 15,000
(c) ₹ 1,50,000 ; ₹ 1,00,000 ; ₹ 50,000
(d) ₹ 1,95,000 ; ₹ 1,30,000 ; ₹ 65,000
Answer
Answer: (c) ₹ 1,50,000 ; ₹ 1,00,000 ; ₹ 50,000
Question 18.
X, Y and Z are partners sharing profits in the ratio of 7 : 5 :4. On 30th June, 2015 Z died and profits for the
year ending 31st March, 2016 were ₹ 2,40,000. How much share in profits for the period 1st April to 30th
June, 2015 will be credited to Z’s account assuming the profit occurred evenly throughout the year ;
(a) ₹ 60,000
(b) ₹ 15,000
(c) ₹ 20,000
(d) Nil
Answer
Answer: (b) ₹ 15,000
Question 19.
Revaluation Account is prepared at the time of …………
(a) Admission of a partner
(b) Retirement of a partner
(c) Death of a partner
(d) All of the above
Answer
Answer: (d) All of the above
Question 20.
As per section 37 to the Indian Partnership Act, 1932, the executors would be entitled at their choice to
interest calculated from the date of death till the date of payment on the final amount due to the
deceased partner at………..percent per annum.
(a) 7
(b) 4
(c) 6
(d) 8
Answer
Answer: (c) 6
Question 21.
X, Y and Z are the partners sharing profits in the ratio 2 : 1 : 1. Firm has a joint life policy of ₹ 1,20,000 and
in the balance sheet it is appeaming at the surrender value, i.e., ₹ 20,000. On the death of X how this JLP
will be distributed among partners:
(a) 50,000 : 25,000 : 25,000
(b) 60,000 : 30,000 : 30,000
(c) 40,000 : 35,000 : 25,000
(d) whole ₹ 1,20,000 to A
Answer
Answer: (b) 60,000 : 30,000 : 30,000
Question 22.
On death of a partner, the firm gets for joint life policy taken for all partners.
(a) Policy amount
(b) Surrender value
(c) Policy amount of deceased partner
(d) Surrender value of all partners
Answer
Answer: (a) Policy amount
Question 23.
A, B and C are partners sharing profits and losses in the ratio of 3 : 2 :1. On 1.3.2016 C died. The average
profits of the firm for last four years were ₹ 72,000 Books are closed on 31st December. C’s share of
profit till the date of his death will be:
(a) ₹ 2,000
(b) ₹ 12,000
(c) ₹ 1,400
(d) ₹ 24,000
Answer
Answer: (a) ₹ 2,000
Question 24.
A, B and C are partners sharing profits and losses in the ratio of 3 : 2 :1. C dies and goodwill of the firm is
valued at ₹ 60,000. The amount payable to the executor’s of the deceased partner will be :
(a) ₹ 30,000
(b) ₹ 25,000
(c) ₹ 10,000
(d) ₹ 20,000
Answer
Answer: (c) ₹ 10,000
Question 25.
M, L and A are partners sharing profits in the ratio of 9:4:3. They have taken a joint life policy of ₹ 96,000.
A dies. What is the share of A in the JLP amount ?
(a) ₹ 18,000
(b) ₹ 24,000
(c) ₹ 54,000
(d) ₹ 20,000
Answer
Answer: (a) ₹ 18,000
Question 26.
Which account is prepared at the time retirement or death of a partner to show the changes in the value
of assets and liabilities:
(a) Revaluation A/c
(b) Realisation A/c
(c) Partner’s Capital A/c
(d) None of these
Answer
Answer: (a) Revaluation A/c
Question 27.
What are the methods of calculating share of the deceased partner in the profit of the firm upto the date
of death:
(a) On time basis
(b) On sales basis
(c) Both (a) and (b)
(d) None of these
Answer
Answer: (c) Both (a) and (b)
Question 28.
If three partners A, B & C are sharing profits as 5:3:2, then on the death of a partner A, how much B & C
will pay to A’s executor on account of goodwill ? Good-will is to be calculated on the basis of 2 years
purchase of last 3 years average profits. Profits for the last three years are 10,80,000 Rs. :
(a) ₹ 2,16,000 and ₹ 1,42,000
(b) ₹ 2,44,000 and ₹ 2,16,000
(c) ₹ 3,60,000 and ₹ 2,16,000
(d) ₹ 2,16,000 and ₹ 1,44,000
Answer
Answer: (d) ₹ 2,16,000 and ₹ 1,44,000
Question 29.
On death of a partner, his excutor is paid the profits of
the deceased partner for the relevant period. This payment is recorded in Profit & Loss A/c :
(a) Adjustment
(b) Appropriation
(c) Suspense
(d) Reserve
Answer
Answer: (c) Suspense
Question 30.
On the retirement of a partner any accumulated profit should be credited to the capital accounts of:
(a) All partners in old profit-sharing ratio
(b) Remaining partners in new profit-sharing ratio
(c) Retiring partner only in his share
(d) None of these
Answer
Answer: (a) All partners in old profit-sharing ratio
Question 31.
On the retirement of a partner, full amount of goodwill may be credited to the capital accounts of:
(a) Retiring partners
(b) Remaining partners
(c) All partners
(d) None of these
Answer
Answer: (c) All partners
Question 32.
Outgoing partner is compensated for parting with firm’s future profits in favour of remaining partners.
The remaining partners contribute to such compensation in:
(a) Gaining Ratio
(b) Capital Ratio
(c) Sacrificing Ratio
(d) Profit-sharing Ratio
Answer
Answer: (a) Gaining Ratio
Question 33.
Gaining ratio is calculated :
(a) At the time of admission of a new partner
(b) At the time of retirement of a partner
(c) On the dissolution of partnership firm
(d) None of these
Answer
Answer: (b) At the time of retirement of a partner
Question 34.
How unrecorded assets are treated at the time of retriement of a partner ?
(a) Credited to Revaluation Account
(b) Credited to Capital Account of Retiring Partner
(c) Debited to Revaluation Account
(d) Credited to Partner’s Capital Accounts
Answer
Answer: (a) Credited to Revaluation Account
Question 35.
On the retirement of a partner, profit on revaluation of assets and liabilities should be credited to the
Capital Accounts of:
(a) All partners in the old profit-sharing ratio
(b) The remaining partners in their old profit-sharing ratio
(c) The remaining partners in their new profit-sharing ratio
(d) None of these
Answer
Answer: (a) All partners in the old profit-sharing ratio
Question 36.
On retirement of a partner, the retiring Partner’s Capital Account will be credited with:
(a) His/her share of goodwill
(b) Goodwill of the firm
(c) Share of goodwill of remaining partners
(d) None of these
Answer
Answer: (a) His/her share of goodwill
Question 37.
Joint life policy be taken by the firm on the lives of:
(a) All the partners jointly
(b) All the partners separately
(c) All employees of the firm
(d) Both (a) and (b)
Answer
Answer: (d) Both (a) and (b)
Question 38.
A, Band Care equal partners in a firm. B retires and the remaining partners decide to share profits of the
new firm in the ratio of 5 : 4. Gaining ratio will be:
(a) 2 : 1
(b) 1 : 2
(c) 4 : 5
(d) 5 : 4
Answer
Answer: (a) 2 : 1
Question 39.
A, B are C are sharing profits in the ratio of 12:13÷16 C retired. Gaining ratio will be :
(a) 2 : 1
(b) 2 : 3
(c) 3 : 2
(d) 1 : 2
Answer
Answer: (c) 3 : 2
Question 40.
The amount of General Reserve is transferred to all partner’s capital accounts in:
(a) New Profit-sharing Ratio
(b) Capital Ratio
(c) Old Profit-sharing Ratio
(d) None of these
Answer
Answer: (c) Old Profit-sharing Ratio
Question 41.
Abhishek, Rajat and Vivek are partners sharing profits in the ratio of 5 : 3 : 2. If Vivek retires, the new profit
sharing ratio between Abhishek and Rajat will be:
(a) 3 : 2
(b) 5 : 3
(c) 5 : 2
(d) None of these
Answer
Answer: (b) 5 : 3
Question 42.
The balance of Joint Life Policy Account and Joint Life Policy Reserve A/c is:
(a) Always Equal
(b) Always Unequal
(c) Not Necessary
(d) None of these
Answer
Answer: (c) Not Necessary
Question 43.
Anand, Bahadur and Chander are partners sharing profit equally. On Chander’s retirement, his share is
acquired by Anand and Bahadur in the ratio of 3: 2. The new profit-sharing ratio between Anand and
Bahadur will be:
(a) 8 : 7
(b) 4 : 5
(c) 3 : 2
(d) 2 : 3
Answer
Answer: (a) 8 : 7
Question 44.
Profit and loss on revaluation at the time of retirement is shared by:
(a) Remaining Partners
(b) All Partners
(c) New Partner
(d) None of these
Answer
Answer: (b) All Partners
Question 45.
X, Y, Z are equal partners in a firm. Z retires from the firm. The new profit-sharing ratio between X and Y is
1:2. The gaining ratio will be:
(a) 3 : 2
(b) 2 : 1
(c) 4 : 1
(d) Only Y gains by 1/3
Answer
Answer: (d) Only Y gains by 1/3
Question 46.
X, Y, Z are partners sharing profits in the ratio of 3 : 4 : 4. Y retires and X and Z share their profits in equal
ratio. New ratio of X and Z will be :
(a) 1 : 2
(b) 2 : 1
(c) 3 : 1
(d) 1 : 1
Answer
Answer: (d) 1 : 1
Question 47.
A, B and C are partners. Their capitals are ₹ 1,00,000, ₹ 75,000 and ₹ 50,000 respectively. On C’s
retirement his share is acquired by A and B in the ratio of 6 : 4 Gaining ratio will be :
(a) 3 : 2
(b) 2 : 2
(c) 2 : 3
(d) None of these
Answer
Answer: (a) 3 : 2
Question 48.
At the time of retirement of partner, firm gets from the insurance company against joint policy taken
jointly for all the partners :
(a) Policy Amount + Bonus
(b) Surrender Value
(c) Policy Amount
(d) None of these
Answer
Answer: (b) Surrender Value
Question 49.
Gaining Ratio is :
(a) New Ratio-sacrificing ratio
(b) Old Ratio-sacrificing ratio
(c) New ratio-old ratio
(d) Old ratio-new ratio
Answer
Answer: (c) New ratio-old ratio
Question 50.
Partnership Act provides that interest on amount of capital balance left by the retired partner be paid at:
(a) 5%
(b) 6%
(c) Bank Rate
(d) 8%
Answer
Answer: (b) 6%
Question 51.
Heri, Roy and Prasad are partners and profit-sharing ratio is 3: 5:1. Roy now wants to retire and his share
is taken by Prasad. Find the new ratio of Hari and Prasad:
(a) 1 : 2
(b) 2 : 1
(c) 3 : 5
(d) Equal
Answer
Answer: (a) 1 : 2
Question 52.
A, B and C are partners with profit-sharing ratio as 5 :3 :2. A retires. Find the gaining ratio :
(a) 3 : 2
(b) 5 : 3
(c) 5 :2
(d) None of these
Answer
Answer: (a) 3 : 2
Question 53.
Surrender value of an insurance policy means that value:
(a) Which is received an death of a partner
(b) Which is received when a policy matures
(c) Which can be received before the due date of the policy
(d) None of the above
Answer
Answer: (c) Which can be received before the due date of the policy
Question 54.
P, Q and R are partners and share profit in the ratio of 5:3:2. R retires and surrenders 3/5th of his share in
favour of P and 2/5th of the share to Q. Find new profit sharing ratio:
(a) 7 : 3
(b) 1 : 2
(c) 31 : 19
(d) None of these
Answer
Answer: (c) 31 : 19
Question 55.
Govind, Hari and Pratap are partners. On retirement of Govind, the goodwill already appears in the
Balance Sheet at ₹ 24,000. The goodwill will be written off:
(a) By debiting all Partners’ Capital Accounts in their old profit-sharing ratio
(b) By debiting remaining Partners’ Capital Accounts in their new profit-sharing ratio
(c) By debiting retiring Partner’s Capital Account from his share of goodwill
(d) None of these
Answer
Answer: (a) By debiting all Partners’ Capital Accounts in their old profit-sharing ratio
Question 56.
Goodwill is paid out of the retiring partner in :
(a) Old Profit-sharing Ratio
(b) Capital Ratio
(c) Equal Ratio
(d) None of these
Answer
Answer: (a) Old Profit-sharing Ratio
Question 57.
On retirement of a partner, his share of goodwill is written off among continuing partners in there :
(a) New Profit-sharing Ratio
(b) New Capital Ratio
(c) Gaining Ratio
(d) None of these
Answer
Answer: (c) Gaining Ratio
Question 58.
On retirement of a partner, the retiring partner’s capital account will be credited with :
(a) His/her share of goodwill
(b) Goodwill of the firm
(c) Shares of goodwill of remaining partners
(d) None of these
Answer
Answer: (a) His/her share of goodwill
Dissolution of a Partnership Firm Class 12 MCQs Questions with Answers
Question 1.
In the event of dissolution of partnership firm, the provision for doubtful debts is transferred to :
(a) Realisation Account
(b) Partners’ Capital Accounts
(c) Sundry Debtors Account
(d) None of the above
Answer
Answer: (a) Realisation Account
Question 2.
On dissolution, if a partner undertakes to make payment of a liability of the firm, the account to be
debited is:
(a) profit & Loss Account
(b) Realisation Account
(c) Partner’s Capital Account
(d) Cash Account
Answer
Answer: (b) Realisation Account
Question 3.
At the dime of firm’s dissolution, Balance of General Reserve shown in the Balance Sheet is credited to :
(a) Realisation Account
(b) Creditors’ Account
(c) Partners’ Capital Accounts
(d) Profit & Loss Account
Answer
Answer: (c) Partners’ Capital Accounts
Question 4.
On dissolution, goodwill account is transferred to :
(a) In the Capital Accounts of Partners
(b) In the Credit of Cash Accounts
(c) In the Debit of Realisation Account
(d) In the Credit of Realisation Account
Answer
Answer: (c) In the Debit of Realisation Account
Question 5.
At the time of dissolution of partnership firm, fictitions assets are transferred to :
(a) Capital Accounts of Partners
(b) Realisation Account
(c) Cash Account
(d) Partners’ Loan Account
Answer
Answer: (a) Capital Accounts of Partners
Question 6.
On dissolution of a firm, a partner paid 1,500 Rs. for firm’s realisation expenses. Which account will be
debited ?
(a) Cash Account
(b) Realisation Account
(c) Capital Account of the Partner
(d) Profit & Loss A/c
Answer
Answer: (b) Realisation Account
Question 7.
On taking responsibility of payment of realisation expenses by a partner, the account credited will be :
(a) Realisastion Account
(b) Cash Account
(c) Capital Account of the Partner
(d) None of the above
Answer
Answer: (c) Capital Account of the Partner
Question 8.
When realisation expenses are paid by the firm on behalf of a partner, such expenses are debited to :
(a) Realisation Account
(b) Partners’ Capital Account
(c) Partner’s Loan Account
(d) None of these
Answer
Answer: (b) Partners’ Capital Account
Question 9.
Which of the following is transferred to Realisation Account ?
(a) Balance of Profit Account
(b) Balance of Profit & Loss Account
(c) Amount realised on sale of assets
(d) Reserves
Answer
Answer: (c) Amount realised on sale of assets
Question 10.
On disolution of firm, loss calculated in realisation account is debited/credited to which account ?
(a) Cash Account
(b) Partners’ Capital Accounts
(c) Realisation Account
(d) None of these
Answer
Answer: (b) Partners’ Capital Accounts
Question 11.
Which of the following is not transferred to Realisatsion Account ?
(a) Balance of Cash Account
(b) Balance of Reserves
(c) Balance of Profit & Loss Account
(d) All of the above
Answer
Answer: (d) All of the above
Question 12.
On taking responsibility of payment of a liability of ₹ 20,000 by a partner, the account credited will be :
(a) Realisation Account
(b) Cash Account
(c) Capital Account of the Partner
(d) Liability Account
Answer
Answer: (c) Capital Account of the Partner
Question 13.
Cash balance shown in the Balance Sheet is shown on dissolution of firm in :
(a) Realisation Account
(b) Cash Account
(c) Capital Account
(d) None of the Account
Answer
Answer: (b) Cash Account
Question 14.
There was an Unrecorded asset of ₹ 12,000 which was taken over by a partner at ₹ 10,500. Partner’s
Capital Account will be debited by…….
(a) ₹ 12,000
(b) ₹ 10,500
(c) ₹ 1,500
(d) ₹ 32,500
Answer
Answer: (b) ₹ 10,500
Question 15.
On dissolution of a firm, Bank overdraft is transferred to:
(a) Cash Account
(b) Bank Account
(c) Realisation Account
(d) Partners’ Capital Account
Answer
Answer: (c) Realisation Account
Question 16.
On dissolution of a firm, Partner’s Loan Account is transferred to:
(a) Realisation Account
(b) Partner’s Capital Account
(c) Partner’s Current Account
(d) None of these
Answer
Answer: (d) None of these
Question 17.
The accumulated profits and reserves are transferred to:
(a) Realisation Accounts
(b) Partners’ Capital Accounts
(c) Bank Account
(d) None of these
Answer
Answer: (b) Partners’ Capital Accounts
Question 18.
On dissolution, Goodwill Account is transferred to :
(a) In the Capital Accounts of Partners
(b) On the Credit side of Cash Account
(c) On the Debit side of Realisation Account
(d) On the Credit side of Realisation Account
Answer
Answer: (c) On the Debit side of Realisation Account
Question 19.
On dissolution, when a partner takes over an asset……….is debited :
(a) Realisation Account
(b) Partner’s Capital Account
(c) Cash Account
(d) Asset Account
Answer
Answer: (b) Partner’s Capital Account
Question 20.
After transferring liabilities like creditors and bills payable in the Realisation Account in the absence of
any informations regarding their payment, such liabilities are treated as :
(a) Never paid
(b) Fully paid
(c) Partly paid
(d) None of these
Answer
Answer: (b) Fully paid
Question 21.
Unrecorded liabilities when paid are shown in :
(a) Debit side of Realisation Account
(b) Debit side of Bank Account
(c) Credit side of Realisation Account
(d) Credit side of Bank Account
Answer
Answer: (a) Debit side of Realisation Account
Question 22.
Payment of credit balance of Partners’ Capital Accounts at the time of dissolution of a firm is made to:
(a) Partners
(b) Firm
(c) Wife
(d) None of these
Answer
Answer: (a) Partners
Question 23.
On dissolution of a firm Partner’s Loan A/c is transferred to:
(a) Realisation A/c
(b) Partners’ Capital A/cs
(c) Suspense A/c
(d) None of these
Answer
Answer: (d) None of these
Question 24.
At the time of dissolution of firm book value of assets is recorded in which side of the Realisation
Account ?
(a) Debit Side
(b) Credit Side
(c) All of the above
(d) Liabilities Side
Answer
Answer: (a) Debit Side
Question 25.
Realisation expenses are recorded in which side of Realisation A/c:
(a) Liabilities
(b) Assets
(c) Credit
(d) Debit
Answer
Answer: (c) Credit
Question 26.
Realisation Account is a :
(a) Personal A/c
(b) Nominal A/c
(c) Read A/c
(d) None of these
Answer
Answer: (b) Nominal A/c
Question 27.
On dissolution of the firm, Partners’ Capital Accounts are closed through :
(a) Realisation Account
(b) Drawings Account .
(c) Bank Account
(d) Loan Account
Answer
Answer: (c) Bank Account
Question 28.
Unrecorded assets when taken over by a partner are shown in:
(a) Debit side of Realisation A/c
(b) Debit side of Bank A/c
(c) Credit side of Realisation A/c
(d) Credit side of Bank A/c
Answer
Answer: (c) Credit side of Realisation A/c
Question 29.
Expenses on dissolution of firm is called :
(a) Realisation Expenses
(b) Legal Expenses
(c) Loss Expenses
(d) None of these
Answer
Answer: (a) Realisation Expenses
Question 30.
Sundry creditors amounted to ₹ 8,000. They were paid at a discount of 5 %. Realisation A/c will be
debited by :
(a) ₹ 8,000
(b) ₹ 7,600
(c) ₹ 400
(d) ₹ 8,400
Answer
Answer: (b) ₹ 7,600
Question 31.
Amount realised from sale of assets is recorded in :
(a) Debit side of Realisation Account
(b) Credit side of Realisation Account
(c) Liabilities side of Balance Sheet
(d) Assets side of Balance Sheet
Answer
Answer: (b) Credit side of Realisation Account
Question 32.
A firm can be voluntarily dissolved by the partners :
(a) On Majority basis
(b) On 3/4 Member’s decision
(c) On 1/2 Member’s decision
(d) None of these
Answer
Answer: (d) None of these
Question 33.
On dissolution of a firm, amount realised from an unrecorded asset is credited to:
(a) partners’ Capital Accounts
(b) Cash Account
(c) Realisation Account
(d) Revaluation Account
Answer
Answer: (c) Realisation Account
Question 34.
Profit/loss on Realisation Account is distributed among partners:
(a) In Profit-sharing Ratio
(b) In Capital Ratio
(c) Equally
(d) None of these
Answer
Answer: (a) In Profit-sharing Ratio
Question 35.
Which of the following is correct profit or loss in case the amount received from the sale of assets is ₹
50,000, total assets is ₹ 60,000, total liabilities ₹ 20,000 and realisation expenses ₹ 2,000 ?
(a) ₹ 12,000 Loss
(b) ₹ 32,000 Profit
(c) ₹ 30,000 Loss
(d) ₹ 12,000 Profit
Answer
Answer: (a) ₹ 12,000 Loss
Question 36.
What will be the total assets (except cash) of the firm from the following: if Creditor ₹ 15,000, Partner’s
loan ₹ 10,000, Partners’ capital ₹ 40,000. Cash in hand ₹ 5,000
(a) ₹ 60,000
(b) ₹ 65,000
(c) ₹ 70,000
(d) ₹ 55,000
Answer
Answer: (b) ₹ 65,000
Question 37.
If the total assets are ₹ 3,25,000 and the total outside liabilities ₹ 45,000 then the amount of all partner’s
capital will be:
(a) ₹ 3,70,000
(b) ₹ 2,80,000
(c) ₹ 3,00,000
(d) None of these
Answer
Answer: (b) ₹ 2,80,000
Question 38.
Insolvency of a partner will come under what type of dissolution of a firm ?
(a) Dissolutiuon by Court
(b) Compulsory Dissolution
(c) On happening of certain contingencies
(d) None of these
Answer
Answer: (c) On happening of certain contingencies
Question 39.
On firm’s dissolution, which one of the following account should be prepared at the last ?
(a) Realisation Account
(b) Partner’s Capital Accounts
(c) Cash/Bank Account
(d) Partner’s Loan Account
Answer
Answer: (c) Cash/Bank Account
Question 40.
On dissolution of a firm, realisation account is debited with:
(a) All assets to be realised
(b) All outside liabilities of the firm
(c) Cash received on sale of assets
(d) Any assets taken over by one of the partners
Answer
Answer: (a) All assets to be realised
Question 41.
On dissolution of a firm, out of the proceeds received from the sale of assets will be paid first of all:
(a) Partner’s Capitals
(b) Partner’s Loan to Firm
(c) Partner’s additional capital
(d) Outside Creditors
Answer
Answer: (d) Outside Creditors
Accounting for Share Capital Class 12 MCQs Questions with Answers
Question 1.
Reserve share capital means :
(a) Part of authorised capital to be called at the beginning
(b) Portion of uncalled capital to be called only at liquidation
(c) Over subscribed capital
(d) Under subscribed capital
Answer
Answer: (b) Portion of uncalled capital to be called only at liquidation
Question 2.
When full amount is due on any call but it is not received, then the short fall is debited to :
(a) Calls-in-advance
(b) Calls-in-arrear
(c) Share Capital
(d) Suspense Account
Answer
Answer: (b) Calls-in-arrear
Question 3.
The difference between subscribed capital and called up capital is called :
(a) Calls-in-arear
(b) Calls-in-advance
(c) Uncalled capital
(d) None of these
Answer
Answer: (c) Uncalled capital
Question 4.
Which statement is issued before the issue of shares ?
(a) Prospectus
(b) Articles of Association
(c) Memorandum of Association
(d) All of these
Answer
Answer: (d) All of these
Question 5.
Company can utilise securities premium for :
(a) Writing off loss incurred on revaluation of asset
(b) Issuing fully paid bonus shares
(c) Paying divided
(d) Writing off trading loss
Answer
Answer: (b) Issuing fully paid bonus shares
Question 6.
When a company issues fully paid shares to promoters
for their services, the journal entry will be:
(a) Bank A/c Dr.
To Share Capital A/c
(b) Good will A/c Dr.
To Share Capital A/c
(c) Promoters Personal A/c Dr.
To Share Capital A/c
(d) Promotion Expenses A/c Dr.
To Share Capital A/c
Answer
Answer: (b) Goodwill A/c Dr.
To Share Capital A/c
Question 7.
When a company issues shares at a premium, amount of premium may be received by the company :
(a) Along with application money
(b) Along with application money
(c) Along with calls
(d) Along with any of the above
Answer
Answer: (d) Along with any of the above
Question 8.
Share Application Account is :
(a) Personal Account
(b) Real Account
(c) Nominal/ Account
(d) None of these
Answer
Answer: (a) Personal Account
Question 9.
Secrities Premium can not be applied :
(a) For paying dividend to members
(b) For issuing bonus shares to members
(c) For writing off preliminary expenses of company
(d) For writing off discount on issue of debentures
Answer
Answer: (a) For paying dividend to members
Question 10.
A joint stock company is :
(a) An artificial legal person
(b) Natural person
(c) A general person
(d) None of these
Answer
Answer: (a) An artificial legal person
Question 11.
Equity shareholders are :
(a) Customers
(b) Creditors
(c) Debtors
(d) Owners
Answer
Answer: (d) Owners
Question 12.
Reserve capital means :
(a) A part of subscribed uncalled capital
(b) Reserve Profit
(c) A part of Capital Reserve
(d) A part of Capital Redemption Reserve
Answer
Answer: (a) A part of subscribed uncalled capital
Question 13.
Securities Premium is shown under which head in the Balance Sheet ?
(a) Reserve and Surplus
(b) Miscellaneous Expenditure
(c) Current Liabilities
(d) Share Capital
Answer
Answer: (a) Reserve and Surplus
Question 14.
Shares may be issued :
(a) At par value
(b) At FYemimum
(c) At Discount
(d) Both (a) & (b)
Answer
Answer: (d) Both (a) & (b)
Question 15.
Capital included in the liabilities of a company is called :
(a) Authorised Capital
(b) Issued Capital
(c) Subscribed Capital
(d) Paid-up Capital
Answer
Answer: (d) Paid-up Capital
Question 16.
An issue of shares which is not a public issue but offered to a selected group of persons is called :
(a) Public offer
(b) Private placement of shares
(c) Initial public offer
(d) None of these
Answer
Answer: (d) None of these
Question 17.
If a share of ₹ 10 on which ₹ 8 has been called and ₹ 6 is paid is forfeited, the Share Capital Account
should be debited with :
(a) ₹ 8
(b) ₹ 10
(c) ₹ 6
(d) ₹ 2
Answer
Answer: (a) ₹ 8
Question 18.
When shares are forfeited, the Share Capital Account is debited with:
(a) Nominal value of Shares
(b) Market value of Shares
(c) Called-up value of Shares
(d) Paid-up value of Shares
Answer
Answer: (c) Called-up value of Shares
Question 19.
If the loss on reissue of shares is less than the amount forfeited, the ‘surplus’ or profit is transferred to :
(a) Capital Reserve
(b) Revenue Reserve
(c) Profit & Loss A/c
(d) None of these
Answer
Answer: (a) Capital Reserve
Question 20.
J. Ltd. re-issue 2,000 shares which where forfeited by crediting share forfeiture account by ₹ 3,000.
These shares were re-issued at ₹ 9 per share. The amount transferred to capital reserve will be :
(a) ₹ 3,000
(b) ₹ 2,000
(c) ₹ 1000
(d) Nil
Answer
Answer: (c) ₹ 1000
Question 21.
If a share of ₹ 10 on which ₹ 8 has been paid up is forfeited, it can be reissued at the minimum price
of…….
(a) 10 Rs. per share
(b) 8 Rs. per share
(c) 5 Rs. per share
(d) 2 Rs. per share
Answer
Answer: (d) 2 Rs. per share
Question 22.
Z & Co. forfeited 100 shares of 10 Rs. each for non-payment of final call of 2 Rs. per share. All the
forfeited shares were re-issued at 9 Rs. per share. What amount will be transferred to Capital Reserve A/c
?
(a) 700 Rs.
(b) 800 Rs.
(c) 900 Rs.
(d) 1,000 Rs.
Answer
Answer: (a) 700 Rs.
Question 23.
Forfeiture of shares results in the reduction of:
(a) Paid-up Capital
(b) Authorised Capital
(c) Fixed Assets
(d) Reserve Capital
Answer
Answer: (a) Paid-up Capital
Question 24.
Amount of calls in Arrear is :
(a) Added to capital
(b) Deducted from share capital
(c) Shown on the assets side
(d) Shown an the equity and liability side
Answer
Answer: (b) Deducted from share capital
Question 25.
Discount allowed on reissue of forfeited shares is debited to:
(a) Share Capital A/c
(b) Share Forfeiture A/c
(c) Profit & Loss A/c
(d) General Reserve A/c
Answer
Answer: (b) Share Forfeiture A/c
Question 26.
A company has…………
(a) Separate Legal Entity
(b) Perpetual Existence
(c) Limited Liability
(d) All the above
Answer
Answer: (d) All the above
Question 27.
The liability of members in a company is :
(a) Limited
(b) Unlimited
(c) Stable
(d) Fluctuating
Answer
Answer: (a) Limited
Question 28.
Equity shareholders are :
(a) Creditors of the company
(b) Owners of the company
(c) Customers of the company
(d) None of these
Answer
Answer: (b) Owners of the company
Question 29.
Balance of Forfeited Shares Account after reissue of forfeited shares is transferred to :
(a) Profit & Loss A/c
(b) Capital Reserve Account
(c) General Reserve Account
(d) None of these
Answer
Answer: (b) Capital Reserve Account
Question 30.
Under the provisions of Companies Act, company can issue:
(a) Only equity shares
(b) Only preference shares
(c) Preference shares and equity shares
(d) None of these
Answer
Answer: (c) Preference shares and equity shares
Question 31.
Reight shares are the shares, which :
(a) Are issued to the Direction of the company
(b) Are issued to existing shareholders of the company
(c) Are issued to promoters in consideration of their services
(d) Are issued to the vendors for purchasing assets
Answer
Answer: (b) Are issued to existing shareholders of the company
Question 32.
Total amount of liabilities side includes :
(a) Authorised Capital
(b) Issued Capital
(c) Subscribed Capital
(d) Paid-up Capital
Answer
Answer: (d) Paid-up Capital
Question 33.
A company issues its shares at premium under which Section of Indian Companies Act, 2013 ?
(a) 78
(b) 79
(c) 52
(d) 53
Answer
Answer: (c) 52
Question 34.
Shares can be forfeited :
(a) For failure to attend meetings
(b) For non-payment of call money
(c) For failure to repay the loan to the Bank
(d) For which shares are pledged as a security
Answer
Answer: (b) For non-payment of call money
Question 35.
Shareholders get:
(a) Interest
(b) Dividend
(c) Commission
(d) Profit
Answer
Answer: (b) Dividend
Question 36.
According to Table E of the Companies Act, 2013 interest on calls in arrears charged should not exceed :
(a) 5% p.a.
(b) 6% p.a.
(c) 8%p.a.
(d) 10%p.a.
Answer
Answer: (d) 10%p.a.
Question 37.
Premium on issue of shares is a :
(a) Capital Gain
(b) Capital Loss
(c) General Profit
(d) General Loss
Answer
Answer: (a) Capital Gain
Question 38.
Premium on issue of shares is shown on which side of the Balance sheet.
(a) Assets
(b) Liabilities
(c) Both
(d) None of these
Answer
Answer: (b) Liabilities
Question 39.
Share Allotment Account is :
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) None of these
Answer
Answer: (a) Personal A/c
Question 40.
The portion of the authorised capital which can be called-up only on the liquidation of the company is
called:
(a) Issued Capital
(b) Called-up Capital
(c) Uncalled Capital
(d) Reserve Capital
Answer
Answer: (d) Reserve Capital
Question 41.
Premium on issue of shares can be used for :
(a) Issue of Bonus shares
(b) Distribution of Profit
(c) Transferring to General Reserve
(d) All these
Answer
Answer: (a) Issue of Bonus shares
Question 42.
If equity share of ₹ 10 Rs. each is issued at ₹ 12 each, it is called:
(a) Issued at Par
(b) Issued at Premium
(c) Issued at Discount
(d) None of these
Answer
Answer: (b) Issued at Premium
Question 43.
The maximum capital beyond which a company is not allowed to raise funds, by issue of shares is called
…………..
(a) Issued capital
(b) Reserve capital
(c) Authorised capital
(d) Subscribed capital
Answer
Answer: (b) Reserve capital
Question 44.
As per Table F the maximum rate of interest on calls in advance paid is:
(a) 8% p.a.
(b) 12% p.a.
(c) 5 % p.a.
(d) None of these
Answer
Answer: (b) 12% p.a.
Question 45.
As per the Companies Act, only preference shares, which are redeemable within …………. can be issued.
(a) 24 years
(b) 22 years
(c) 30 years
(d) 20 years
Answer
Answer: (d) 20 years
Question 46.
Which one of the following is the registered capital of the company ?
(a) Paid-up capital
(b) Uncalled capital
(c) Authorised capital
(d) Issued capital
Answer
Answer: (c) Authorised capital
Question 47.
Dividends are usually paid on :
(a) Authorised Capital
(b) Issued Capital
(c) Called-up Capital
(d) Paid-up Capital
Answer
Answer: (d) Paid-up Capital
Question 48.
If vendors are issued fully paid shares of ₹ 1,00,000 in consideration of net assets of ₹ 1,20,000 the
balance of ₹ 20,000 will be credited to :
(a) Goodwill Account
(b) Capital Reserve Account
(c) Vendor’s Account
(d) Profit & Loss Account
Answer
Answer: (b) Capital Reserve Account
Question 49.
Which account should be debited when shows an issued to promoters:
(a) Share Capital A/c
(b) Assets A/c
(c) Promoter’s A/c
(d) Goodwill A/c
Answer
Answer: (d) Goodwill A/c
Question 50.
According to Section 52 of the Compaines Act, the amount in the Securities Premium Account cannot be
used for the purpose of:
(a) Issue of fully Paid Bonus Shares
(b) Writing Off Losses of the Company
(c) Writing off Preliminary Expenses
(d) Writing Off Commission or Discount on Issue of Shares
Answer
Answer: (b) Writing Off Losses of the Company
Question 51.
10,000 equity shares of 10 Rs. each were issued to public at a premium of ₹ 2 per share payable on
allotment.
Applications were received for ₹ 12,000 shares. Amount of securities premium account will be :
(a) ₹ 20,000
(b) ₹ 24,000
(c) ₹ 4,000
(d) ₹ 1,600
Answer
Answer: (a) ₹ 20,000
Question 52.
A Ltd. purchased a machinery for 1,80,000 Rs. for which it is paying by issue of shares of 100 Rs. each at
20% premium. How many shares will be issued as consideration. ?
(a) 2,500
(b) 2,000
(c) 1,500
(d) 3,000
Answer
Answer: (c) 1,500
Question 53.
Right Shares are issued to :
(a) Promoters for the Services
(b) Holders of Convertible Debentures
(c) Existing Shareholders
(d) All of the above
Answer
Answer: (c) Existing Shareholders
Question 54.
A company is registered with a share capital of ₹ 1,00,000 Rs. divided into ₹ 10,000 shares of ₹ 10 each.
Of these shares 9,990 shares are held by Rajeev and 10 Shares are held by Sanjay. In the eye of law it is
treated as:
(a) Partnership
(b) Private Company
(c) Public Compancy
(d) Government Company
Answer
Answer: (b) Private Company
Question 55.
Which of the following should be deducted from the called-up capital to find out paid-up capital:
(a) Calls-in-advance
(b) Calls-in-arrear
(c) Share forfeiture
(d) Discount on issue of shares
Answer
Answer: (b) Calls-in-arrear
Issue and Redemption of Debentures Class 12 MCQs Questions with
Answers
Question 1.
When all debentures are redeemed, balance in the Debenture Redemption Fund Account is transferred to:
(a) Capital Reserve
(b) General Reserve
(c) Profit & Loss Appropriation A/c
(d) None of these
Answer
Answer: (a) Capital Reserve
Question 2.
According to SEBI guidelines, a Company will have to create debenture redemption reserve equivalent to
the amount of the following percentage of debenture issued:
(a) 50%
(b) 25%
(c) 70%
(d) 100%
Answer
Answer: (b) 25%
Question 3.
The balance of ‘Sinking Fund Account’ after the redemption of debentures is transferred to :
(a) Profit & Loss Account
(b) Profit & Loss Appropriation Account
(c) General Reserve Account
(d) Sinking Fund Account
Answer
Answer: (c) General Reserve Account
Question 4.
Profit on cancellation of own debentures is transferred to:
(a) Profit & Loss Account
(b) Profit & Loss Appropriation Account
(c) General Reserve Account
(d) Capital Reserve Account
Answer
Answer: (d) Capital Reserve Account
Question 5.
If debenture of ₹ 1,00,000 were issued for discount of ₹ 10,000, which are redeemable after four years.
Then amount of discount to be written off from P. & L. Account each year is :
(a) ₹ 3,000
(b) ₹ 4,000
(c) ₹ 2,500
(d) ₹ 5,000
Answer
Answer: (c) ₹ 2,500
Question 6.
Debentures can be redeemed out of:
(a) Profit
(b) Capital
(c) Provision
(d) All of the above
Answer
Answer: (d) All of the above
Question 7.
Premium on redemption of debentures is a :
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) Suspense A/c
Answer
Answer: (c) Nominal A/c
Question 8.
Premium on redemption of debentures is generally provided at the time of ……………
(a) Issue of debentures
(b) Redemption of debentures
(c) Writing off
(d) After 10 years
Answer
Answer: (b) Redemption of debentures
Question 9.
Debentures cannot be redeemed at:
(a) Par
(b) Premium
(c) Discount
(d) More than 10% premium
Answer
Answer: (c) Discount
Question 10.
If debentures purchased in open market are not immediately cancelled, they are treated as :
(a) Current Assets
(b) Current Liabilities
(c) Investment
(d) Capital
Answer
Answer: (c) Investment
Question 11.
Sources of finance of the redemption of debentures are:
(a) Redemption out of profits
(b) Redemption out of capital
(c) The proceeds from fresh issue of shares/debentures
(d) All the above
Answer
Answer: (d) All the above
Question 12.
A company issued 1,000, 12% debentures of ₹ 100 each at 10% premium. 12% stand for:
(a) Rate of dividend
(b) Rate of Tax
(c) Rate of interest
(d) None of these
Answer
Answer: (c) Rate of interest
Question 13.
A company should transfer to Debenture Redemption Reserve A/c at least what percent of the amount of
debentures issued before the commencement of redemption of debentures-
(a) 50%
(b) 25%
(c) 15%
(d) 100%
Answer
Answer: (b) 25%
Question 14.
If redemption of debentures is made by conversion method, the amount to be transferred to ‘Debenture
Redemption Reserve Account’ will be equal to…….percent of converted amounted.
(a) 40
(b) 50
(c) 60
(d) Not required
Answer
Answer: (d) Not required
Question 15.
Loss on Issue of Debenture Account is shown:
(a) On Assets side of Balance Sheet
(b) On Liabilities side of Balance Sheet
(c) On Credit side of P & L Account
(d) None of these
Answer
Answer: (a) On Assets side of Balance Sheet
Question 16.
Profit on sale of Sinking Fund Investment is transferred to:
(a) Profit & Loss Account
(b) General Reserve
(c) Sinking Fund Account
(d) Capital Reserve
Answer
Answer: (c) Sinking Fund Account
Question 17.
Premium on Redemption of Debentures A/c is:
(a) Asset
(b) Expenses
(c) Liability
(d) Revenue
Answer
Answer: (c) Liability
Question 18.
Interest on sinking fund investment is credited to :
(a) Profit & Loss A/c
(b) Sinking Fund A/c
(c) General Reserve A/c
(d) Sinking Fund Investment A/c
Answer
Answer: (b) Sinking Fund A/c
Question 19.
Sinking fund investment is:
(a) An Income
(b) An exause
(c) An Asset
(d) A Liability
Answer
Answer: (c) An Asset
Question 20.
When debentures are issued at par and are redeemable at a premium, the loss on such an issue is
debited to :
(a) Profit & Loss A/c
(b) Debenture Application and Allotment A/c
(c) Loss on Issue of Debentures A/c
(d) Premium on Redemption A/c
Answer
Answer: (c) Loss on Issue of Debentures A/c
Question 21.
Own debentures are those debentures of the company which ?
(a) The company allots to its own promotors
(b) The company allots to its directors
(c) The company purchases from the markets and hold them as investments
(d) None of these
Answer
Answer: (c) The company purchases from the markets and hold them as investments
Question 22.
When debentures are redeemed out of profits, an equivalent amount is transferred to :
(a) General Reserve
(b) Debenture Redemption Reserve
(c) Capital Reserve
(d) Profit & Loss A/c
Answer
Answer: (b) Debenture Redemption Reserve
Question 23.
Profit on sale of debentures redemption fund investment in the first instance in credited to :
(a) Debenture Redemption Fund A/c
(b) Profit & Loss Appropriation A/c
(c) General Reserve A/c
(d) Sinking Fund A/c
Answer
Answer: (a) Debenture Redemption Fund A/c
Question 24.
When debentures are issued at a discount and are redeemable at a premium, which of the following
accounts is debited at the time of issue ?
(a) Debentures A/c
(b) Premium on Redemption of Debentures A/c
(c) Loss on Issue of Debentures A/c
(d) Profit & Loss A/c
Answer
Answer: (c) Loss on Issue of Debentures A/c
Question 25.
According to SEBI guidelines what percentage of the amount of debentures must be transferred to
Debenture Redemption Reserve, before the commencement of redumption of debentures, in case of
convertible debentures ?
(a) 25%
(b) 50%
(c) 100%
(d) zero
Answer
Answer: (d) zero
Question 26.
Profit on redemption of debentures in transferred to which account ?
(a) Capital Reserve Account
(b) Sinking Gund Account
(c) General Reserve Account
(d) Profit & Loss Account
Answer
Answer: (a) Capital Reserve Account
Question 27.
Profit on cancellation of own debentures is :
(a) Revenue Profit
(b) Capital Profit
(c) Operating Profit
(d) Trading Profit
Answer
Answer: (b) Capital Profit
Question 28.
6,000 debentures of ₹ 10 each where discharged by issuing equity shares of ₹ 10 each at 20% premium.
The number of shares issued will be :
(a) 50,000
(b) 60,000
(c) 5,000
(d) 6,000
Answer
Answer: (c) 5,000
Question 29.
Every company required to create DRR shall on or before the 30th April of each year, deposit or invest, a
sum which shall not be less than…………of the amount of its debentures maturing (to be redeemed) during
the year ending on 31st March of the next year.)
(a) 10%
(b) 15%
(c) 25%
(d) 50%
Answer
Answer: (b) 15%
Question 30.
A Sinking Fund is a part of:
(a) Fixed Liabilities
(b) Current Liabilities
(c) Reserves and Surplus
(d) Fixed Assets
Answer
Answer: (c) Reserves and Surplus
Question 31.
A company issued 1000, 12% debentures of ₹ 100 each at 10% premium. 12% stand for :
(a) Rate of Dividend
(b) Rate of Tax
(c) Rate of Interest
(d) None of these
Answer
Answer: (c) Rate of Interest
Question 32.
BST Ltd. want to redeem its 900, 10% debentures at 105% by converting them into shares of ₹ 10 each at
₹ 9 each. The number of shares to be issued will be :
(a) 9,000 Shares
(b) 10,500 Shares
(c) 10,000 Shares
(d) 8,500 Shares
Answer
Answer: (b) 10,500 Shares
Question 33.
‘Premium on Redemption of Debentures A/c is in the nature of:
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) None of these
Answer
Answer: (c) Nominal A/c
Question 34.
Deep Ltd. issue 10,00,000, 7 % debentures of 100 Rs. each at a discount of 4%, redeemable after 5 years
at a premium of 6%. Loss issue of debentures is :
(a) ₹ 10,00,000
(b) ₹ 6,00,000
(c) ₹ 16,00,000
(d) ₹ 4,00,000
Answer
Answer: (a) ₹ 10,00,000
Question 35.
Debenture is a :
(a) Loan certificate
(b) Cash certificate
(c) Credit certificate
(d) None of these
Answer
Answer: (a) Loan certificate
Question 36.
Debenture holders are the :
(a) Customers of the Company
(b) Owners of the Company
(c) Creditors of the Company
(d) None of these
Answer
Answer: (c) Creditors of the Company
Question 37.
In case of issue of debentures as a collateral security for loan from the bank which account will be
debited :
(a) Bank Account
(b) Bank Loan Account
(c) Debentures Account
(d) Debentures Suspense Account
Answer
Answer: (d) Debentures Suspense Account
Question 38.
If debentures of ₹ 4,50,000 are issued for the consideration of net assets of ₹ 5,00,000 balance ₹ 50,000
will be credited to:
(a) Profit & Loss A/c
(b) Goodwill A/c
(c) General Reserve A/c
(d) Capital Reserve A/c
Answer
Answer: (d) Capital Reserve A/c
Question 39.
Debentures which are transferred by mere delivery are called:
(a) Registered Debentures
(b) First Debentures
(c) Bearer Debentures
(d) None of these
Answer
Answer: (c) Bearer Debentures
Question 40.
In the Balance Sheet of a Company, Debentures are shown under the head :
(a) Unsecured Loans
(b) Long-term Loans
(c) Current Liabilities
(d) Reserve and Surplus
Answer
Answer: (b) Long-term Loans
Question 41.
Discount on issue of Debentures is in the nature of:
(a) Revenue Loss
(b) Capital Loss
(c) Deferred Revenue Expenditure
(d) None of there
Answer
Answer: (b) Capital Loss
Question 42.
On liquidation of a company, principal amount of debentures is returned:
(a) First of all
(b) Last of all
(c) Before Equity Capital
(d) None of those
Answer
Answer: (a) First of all
Question 43.
Interest payable on debentures is :
(a) An appropriation of profits of the company
(b) A charge against profits of the company
(c) Transfer to Sinking Fund
(d) None of the above
Answer
Answer: (b) A charge against profits of the company
Question 44.
Debentures cannot be redeemed at:
(a) Premium
(b) Discount
(c) Par
(d) None of these
Answer
Answer: (b) Discount
Question 45.
Debentures represent:
(a) Director’s Share in a Company
(b) Investments by Equity Shareholders
(c) Long-term Debt of the Business
(d) None of these
Answer
Answer: (c) Long-term Debt of the Business
Question 46.
Debentures carries interest at: .
(a) 12% p.a.
(b) Fixed Rate
(c) 20% p.a.
(d) 6% p.a.
Answer
Answer: (b) Fixed Rate
Question 47.
Generally debentures are :
(a) Secured
(b) Unsecured
(c) Partly Secured
(d) None of these
Answer
Answer: (a) Secured
Question 48.
Premium on issue of debentures is a for Company :
(a) Revenue Receipt
(b) Profit
(c) Capital Receipt
(d) All of these
Answer
Answer: (c) Capital Receipt
Question 49.
For a company discount on issue of debentures is :
(a) Capital Loss
(b) Revenue Loss
(c) General Loss
(d) None of these
Answer
Answer: (a) Capital Loss
Question 50.
‘Premium on issue of debentures’ is shown in the Balance Sheet on:
(a) Assets side
(b) Liabilities side
(c) None of these
(d) All of these
Answer
Answer: (b) Liabilities side
Question 51.
The balance of discount on debentures is shown in the Balance Sheet on:
(a) Assets side
(b) Liabilities side
(c) None of these
(d) All of these
Answer
Answer: (a) Assets side
Question 52.
Rate of interest on debentures is :
(a) 12% p.a.
(b) 20% p.a.
(c) Fixed Rate
(d) 15% p.a.
Answer
Answer: (c) Fixed Rate
Question 53.
Discount on issue of Debentures should be written off:
(a) Out of Securities Premium Account
(b) Out of Capital Profits
(c) Out of Statements of Profit and Loss
(d) In the above order over the period of debentures
Answer
Answer: (d) In the above order over the period of debentures
Question 54.
F Ltd. purchased machinery for a book value of ₹ 4,00,000. The consideration was paid by issue of 10%
Debentures of ₹ 100 each at a discount of 20%. The Debenture Account will be credited by :
(a) ₹ 4,00,000
(b) ₹ 5,00,000
(c) ₹ 3,20,000
(d) ₹ 4,80,000
Answer
Answer: (b) ₹ 5,00,000
Question 55.
Debenture holder gets:
(a) Di vidend
(b) Profit
(c) Interest
(d) Interest at fixed rate
Answer
Answer: (c) Interest
Question 56.
Loss on issue of debentures is generally written off in :
(a) 5 years
(b) 10 years
(c) 15 years
(d) Over the period of redemption
Answer
Answer: (d) Over the period of redemption
Question 57.
When debentures are issued as collateral security, which entry has to be passed ?
(a) Debenture Suspense A/c Dr.
To Debentures
(b) No entry has to be made
(c) (a) or (b)
(d) None of these
Answer
Answer: (c) (a) or (b)
Question 58.
Debenture holder receives:
(a) Dividend
(b) Interest
(c) Both Dividend and Interest
(d) Bonus
Answer
Answer: (b) Interest
Question 59.
Debenture holders are called of the company.
(a) Creditors
(b) Debtors
(c) Owners
(d) Bankers
Answer
Answer: (a) Creditors
Question 60.
A company issued ₹ 1,00,000 12% debentures of ₹ 100 each. The amount of interest on debentures will
be:
(a) ₹ 12,000
(b) ₹ 1,20,000
(c) ₹ 12,00,000
(d) None of these
Answer
Answer: (c) ₹ 12,00,000
Question 61.
Premium on redemption of debentures account is :
(a) A real account
(b) A nominal account
(c) A personal account
(d) None of these
Answer
Answer: (c) A personal account
Question 62.
Debenture premium can be used to :
(a) Write off the discount on issue of shares or debentures
(b) Write off the premium on redemption of shares or debentures
(c) Write off capital loss
(d) All of the above
Answer
Answer: (d) All of the above
Question 63.
Which of the following is false ?
(a) A company can issue redeemable debentures
(b) A company can issue debentures with voting rights
(c) A company can buy its own shares
(d) A company can buy its own debentures
Answer
Answer: (b) A company can issue debentures with voting rights
Question 64.
Debenture is the part of:
(a) Share Capital
(b) Long-term Borrowings
(c) Owned Capital
(d) None, of these
Answer
Answer: (b) Long-term Borrowings
Question 65.
Consideration of Debenture is:
(a) Profit
(b) Dividend
(c) Interest
(d) None of these
Answer
Answer: (c) Interest
Question 66.
Premium on Redemption of Debenture A/c is.:
(a) Asset
(b) Liability
(c) Expense
(d) Revenue
Answer
Answer: (b) Liability
Question 67.
Debenture is a :
(a) Loan Certificate
(b) Cash Certificate
(c) Credit Certificate
(d) None of these
Answer
Answer: (a) Loan Certificate
Question 68.
Loss on issue of debentures is recorded as :
(a) Intangible Asset
(b) Current Asset
(c) Current Liability
(d) Miscellaneous Expenditure
Answer
Answer: (d) Miscellaneous Expenditure
Financial Statements of a Company Class 12 MCQs Questions with Answers
Question 1.
Which of the following is the element of financial statements?
(a) Balance Sheet
(b) Profit & Loss A/c
(c) Both (a) and (b)
(d) None of these
Answer
Answer: (c) Both (a) and (b)
Question 2.
Which of the following is not required to be prepared under the Companies Act:
(a) Statement of Profit & Loss
(b) Balance Sheet
(c) Anditor’s Report
(d) Fund Flow Statement
Answer
Answer: (c) Anditor’s Report
Question 3.
Equity ₹ 90,000 Liabilities ₹ 60,000 Profit of the year ₹ 20,000. Then total assets will be :
(a) ₹ 1.70,000
(b) ₹ 1,50,000
(c) ₹1,10,000
(d) ₹ 80,000
Answer
Answer: (a) ₹ 1.70,000
Question 4.
The reserve which is created for a particular (specific) purpose and which is a charge against revenue is
called:
(a) Capital Reserve
(b) General Reserve
(c) Secret Reserve
(d) Specific Reserve
Answer
Answer: (d) Specific Reserve
Question 5.
An Annual Report is issued by a company to its:
(a) Directors
(b) Authors
(c) Shareholders
(d) Management
Answer
Answer: (c) Shareholders
Question 6.
The profit and loss disclosed by the accounts of a company is:
(a) Transferred to share capital account
(b) Shown under the head of ‘Current liabilities’ and provisions
(c) Shown under the head ‘Reserves and Surplus
(d) None of these
Answer
Answer: (c) Shown under the head ‘Reserves and Surplus
Question 7.
The assets of a business can be classified as :
(a) Fixed and Non-fixed Assets
(b) Tangible and Intangible Assets
(c) Non-Current and Current Asset
(d) None of these
Answer
Answer: (c) Non-Current and Current Asset
Question 8.
The term financial statements includes :
(a) Statement of Profit & Loss
(b) Balance Sheet
(c) Statement of Profit & Loss and Balance Sheet
(d) None of these
Answer
Answer: (c) Statement of Profit & Loss and Balance Sheet
Question 9.
Balance Sheet is a :
(a) Account
(b) Statement
(c) Both (a) and (b)
(d) All the above
Answer
Answer: (b) Statement
Question 10.
Financial statements are the product of accounting process.
(a) First
(b) Second
(c) End
(d) None of these
Answer
Answer: (c) End
Question 11.
Financial statements disclose :
(a) Monetary information
(b) Qualitative information
(c) Non-monetary information
(d) All the above
Answer
Answer: (a) Monetary information
Question 12.
Statement of Profit & Loss is also called………:
(a) Operating Profit
(b) Balance Sheet
(c) Income Statement
(d) Trading Account
Answer
Answer: (c) Income Statement
Question 13.
Preliminary expenses are shown in the Balance Sheet under the head:
(a) Non-current assets
(b) Current assets
(c) Non-current liabilities
(d) Deducted from securities premium reserve
Answer
Answer: (d) Deducted from securities premium reserve
Question 14.
Debit Balance of Profit & Loss Statement will be shown on:
(a) Assets Side of Balance Sheet
(b) Liabilities Side of Balance Sheet
(c) Under the head Reserve & Surplus
(d) Under the head Reserves and Surplus as a negative item
Answer
Answer: (d) Under the head Reserves and Surplus as a negative item
Question 15.
Patents and copyrights fall under the category of:
(a) Current Assets
(b) Liquid Assets
(c) Intangible Assets
(d) None of these
Answer
Answer: (c) Intangible Assets
Question 16.
Goodwill falls under which category of assets:
(a) Current Assets
(b) Tangible Assets
(c) Intangible Assets
(d) None of the above
Answer
Answer: (c) Intangible Assets
Question 17.
Contingent Liabilities are exhibited under the heading:
(a) Fixed Liabilities
(b) Current Liabilities
(c) As a footnote
(d) None of these
Answer
Answer: (c) As a footnote
Question 18.
Provision for Provident Funds is shown in the Balance Sheet of a company under the head :
(a) Reserves and Surplus
(b) Non-current Liabilities
(c) Provision
(d) Contingent Liabilities
Answer
Answer: (b) Non-current Liabilities
Question 19.
Preliminary Expenses are shown in the Balance Sheet under which head ?
(a) Fixed Assets
(b) Reserves and Surplus
(c) Loans & Advances
(d) None of these
Answer
Answer: (d) None of these
Question 20.
Financial Statements are :
(a) Anticipated facts
(b) Recorded facts
(c) Estimated facts
(d) None of these
Answer
Answer: (b) Recorded facts
Question 21.
The term current assets includes :
(a) Stock
(b) Debtors
(c) Cash
(d) All of these
Answer
Answer: (d) All of these
Question 22.
Which of the following is not a part of financial statement of a company ?
(a) Profit & Loss A/c
(b) Balance Sheet
(c) Ledger Account
(d) Cash Flow Statement
Answer
Answer: (c) Ledger Account
Question 23.
Under which heading of Balance Sheet is general reserve shown:
(a) Miscellaneous Expenditure
(b) Share Capital
(c) Reserves & Surplus
(d) None of these
Answer
Answer: (c) Reserves & Surplus
Question 24.
Current Assets on the Assets side of Balance Sheet of a Company includes:
(a) Sundry Debtors
(b) Cash in hand
(c) Stock
(d) All of these
Answer
Answer: (d) All of these
Question 25.
As per provisions of Companies Act, 2013 under which Section, the final accounts of a company is
prepard :
(a) 128
(b) 210
(c) 129
(d) 212
Answer
Answer: (c) 129
Question 26.
According to which part of Schedule III of the Indian Companies Act, 2013, Indian companies have to
prepare Balance Sheet:
(a) Part 1
(b) Part 2
(c) Part 3
(d) Part 4
Answer
Answer: (a) Part 1
Question 27.
Balance sheet of companies is now prepared in :
(a) Horizontal Form
(b) Vertical Form
(c) Either (a) or (b) Form
(d) None of these
Answer
Answer: (b) Vertical Form
Question 28.
Goodwill of a company is shown on the assets side of the Balance Sheet under the head.
(a) Current Assets
(b) Non-current Assets
(c) Miscellaneous Expenditure
(d) None of these
Answer
Answer: (b) Non-current Assets
Question 29.
The form of Balance Sheet as per Companies Act, 2013 is:
(a) Horizontal
(b) Horizontal or Vertical
(c) Vertical
(d) None of these
Answer
Answer: (c) Vertical
Question 30.
Which of the following assets is not shown undeer the head ‘Fixed Asset’ in the Balance Sheet ?
(a) Goodwill
(b) Bills Receivable
(c) Buildings
(d) Vehicle
Answer
Answer: (b) Bills Receivable
Question 31.
Securities Premium Account is shown on the liabilities side in the Balance Sheet Under heading
(a) Reserves and Surplus
(b) Current Liabilities and Provisions
(c) Share Capital
(d) Contingent Liabilities
Answer
Answer: (a) Reserves and Surplus
Question 32.
Debentures are shown in the Balance Sheet under the head of:
(a) Short-term Loan
(b) Secured Loan
(c) Current Liability
(d) Share Capital
Answer
Answer: (b) Secured Loan
Question 33.
Divident is usually paid :
(a) On Authorised Capital
(b) On Ussued Capital
(c) On Paid-up Capital
(d) On Called-up Capital
Answer
Answer: (c) On Paid-up Capital
Question 34.
Amount set aside to meet losses due to bad debts is called:
(a) Reserve
(b) Provision
(c) Liability
(d) None of these
Answer
Answer: (b) Provision
Question 35.
Which Section of the Companies Act, 2013 requires that the Balance Sheet to be prepared in prescribed
form ?
(a) Section 128
(b) Section 130
(c) Section 129
(d) Section 212
Answer
Answer: (c) Section 129
Question 36.
The prescribe from the Balance Sheet has given in the Schedule:
(a) VI Part I
(b) VI Part II
(c) III Part I
(d) VII Part IV
Answer
Answer: (c) III Part I
Question 37.
Share capital is shown in Balance Sheet under. the head ?
(a) Authorised Capital
(b) Issued Capital
(c) Paid-up Capital
(d) Shareholders’ Funds
Answer
Answer: (d) Shareholders’ Funds
Answer
Answer: (c) Both (a) and (b)
Question 2.
Which of the following is not required to be prepared under the Companies Act:
(a) Statement of Profit & Loss
(b) Balance Sheet
(c) Anditor’s Report
(d) Fund Flow Statement
Answer
Answer: (c) Anditor’s Report
Question 3.
Equity ₹ 90,000 Liabilities ₹ 60,000 Profit of the year ₹ 20,000. Then total assets will be :
(a) ₹ 1.70,000
(b) ₹ 1,50,000
(c) ₹1,10,000
(d) ₹ 80,000
Answer
Answer: (a) ₹ 1.70,000
Question 4.
The reserve which is created for a particular (specific) purpose and which is a charge against revenue is
called:
(a) Capital Reserve
(b) General Reserve
(c) Secret Reserve
(d) Specific Reserve
Answer
Answer: (d) Specific Reserve
Question 5.
An Annual Report is issued by a company to its:
(a) Directors
(b) Authors
(c) Shareholders
(d) Management
Answer
Answer: (c) Shareholders
Question 6.
The profit and loss disclosed by the accounts of a company is:
(a) Transferred to share capital account
(b) Shown under the head of ‘Current liabilities’ and provisions
(c) Shown under the head ‘Reserves and Surplus
(d) None of these
Answer
Answer: (c) Shown under the head ‘Reserves and Surplus
Question 7.
The assets of a business can be classified as :
(a) Fixed and Non-fixed Assets
(b) Tangible and Intangible Assets
(c) Non-Current and Current Asset
(d) None of these
Answer
Answer: (c) Non-Current and Current Asset
Question 8.
The term financial statements includes :
(a) Statement of Profit & Loss
(b) Balance Sheet
(c) Statement of Profit & Loss and Balance Sheet
(d) None of these
Answer
Answer: (c) Statement of Profit & Loss and Balance Sheet
Question 9.
Balance Sheet is a :
(a) Account
(b) Statement
(c) Both (a) and (b)
(d) All the above
Answer
Answer: (b) Statement
Question 10.
Financial statements are the product of accounting process.
(a) First
(b) Second
(c) End
(d) None of these
Answer
Answer: (c) End
Question 11.
Financial statements disclose :
(a) Monetary information
(b) Qualitative information
(c) Non-monetary information
(d) All the above
Answer
Answer: (a) Monetary information
Question 12.
Statement of Profit & Loss is also called………:
(a) Operating Profit
(b) Balance Sheet
(c) Income Statement
(d) Trading Account
Answer
Answer: (c) Income Statement
Question 13.
Preliminary expenses are shown in the Balance Sheet under the head:
(a) Non-current assets
(b) Current assets
(c) Non-current liabilities
(d) Deducted from securities premium reserve
Answer
Answer: (d) Deducted from securities premium reserve
Question 14.
Debit Balance of Profit & Loss Statement will be shown on:
(a) Assets Side of Balance Sheet
(b) Liabilities Side of Balance Sheet
(c) Under the head Reserve & Surplus
(d) Under the head Reserves and Surplus as a negative item
Answer
Answer: (d) Under the head Reserves and Surplus as a negative item
Question 15.
Patents and copyrights fall under the category of:
(a) Current Assets
(b) Liquid Assets
(c) Intangible Assets
(d) None of these
Answer
Answer: (c) Intangible Assets
Question 16.
Goodwill falls under which category of assets:
(a) Current Assets
(b) Tangible Assets
(c) Intangible Assets
(d) None of the above
Answer
Answer: (c) Intangible Assets
Question 17.
Contingent Liabilities are exhibited under the heading:
(a) Fixed Liabilities
(b) Current Liabilities
(c) As a footnote
(d) None of these
Answer
Answer: (c) As a footnote
Question 18.
Provision for Provident Funds is shown in the Balance Sheet of a company under the head :
(a) Reserves and Surplus
(b) Non-current Liabilities
(c) Provision
(d) Contingent Liabilities
Answer
Answer: (b) Non-current Liabilities
Question 19.
Preliminary Expenses are shown in the Balance Sheet under which head ?
(a) Fixed Assets
(b) Reserves and Surplus
(c) Loans & Advances
(d) None of these
Answer
Answer: (d) None of these
Question 20.
Financial Statements are :
(a) Anticipated facts
(b) Recorded facts
(c) Estimated facts
(d) None of these
Answer
Answer: (b) Recorded facts
Question 21.
The term current assets includes :
(a) Stock
(b) Debtors
(c) Cash
(d) All of these
Answer
Answer: (d) All of these
Question 22.
Which of the following is not a part of financial statement of a company ?
(a) Profit & Loss A/c
(b) Balance Sheet
(c) Ledger Account
(d) Cash Flow Statement
Answer
Answer: (c) Ledger Account
Question 23.
Under which heading of Balance Sheet is general reserve shown:
(a) Miscellaneous Expenditure
(b) Share Capital
(c) Reserves & Surplus
(d) None of these
Answer
Answer: (c) Reserves & Surplus
Question 24.
Current Assets on the Assets side of Balance Sheet of a Company includes:
(a) Sundry Debtors
(b) Cash in hand
(c) Stock
(d) All of these
Answer
Answer: (d) All of these
Question 25.
As per provisions of Companies Act, 2013 under which Section, the final accounts of a company is
prepard :
(a) 128
(b) 210
(c) 129
(d) 212
Answer
Answer: (c) 129
Question 26.
According to which part of Schedule III of the Indian Companies Act, 2013, Indian companies have to
prepare Balance Sheet:
(a) Part 1
(b) Part 2
(c) Part 3
(d) Part 4
Answer
Answer: (a) Part 1
Question 27.
Balance sheet of companies is now prepared in :
(a) Horizontal Form
(b) Vertical Form
(c) Either (a) or (b) Form
(d) None of these
Answer
Answer: (b) Vertical Form
Question 28.
Goodwill of a company is shown on the assets side of the Balance Sheet under the head.
(a) Current Assets
(b) Non-current Assets
(c) Miscellaneous Expenditure
(d) None of these
Answer
Answer: (b) Non-current Assets
Question 29.
The form of Balance Sheet as per Companies Act, 2013 is:
(a) Horizontal
(b) Horizontal or Vertical
(c) Vertical
(d) None of these
Answer
Answer: (c) Vertical
Question 30.
Which of the following assets is not shown undeer the head ‘Fixed Asset’ in the Balance Sheet ?
(a) Goodwill
(b) Bills Receivable
(c) Buildings
(d) Vehicle
Answer
Answer: (b) Bills Receivable
Question 31.
Securities Premium Account is shown on the liabilities side in the Balance Sheet Under heading
(a) Reserves and Surplus
(b) Current Liabilities and Provisions
(c) Share Capital
(d) Contingent Liabilities
Answer
Answer: (a) Reserves and Surplus
Question 32.
Debentures are shown in the Balance Sheet under the head of:
(a) Short-term Loan
(b) Secured Loan
(c) Current Liability
(d) Share Capital
Answer
Answer: (b) Secured Loan
Question 33.
Divident is usually paid :
(a) On Authorised Capital
(b) On Ussued Capital
(c) On Paid-up Capital
(d) On Called-up Capital
Answer
Answer: (c) On Paid-up Capital
Question 34.
Amount set aside to meet losses due to bad debts is called:
(a) Reserve
(b) Provision
(c) Liability
(d) None of these
Answer
Answer: (b) Provision
Question 35.
Which Section of the Companies Act, 2013 requires that the Balance Sheet to be prepared in prescribed
form ?
(a) Section 128
(b) Section 130
(c) Section 129
(d) Section 212
Answer
Answer: (c) Section 129
Question 36.
The prescribe from the Balance Sheet has given in the Schedule:
(a) VI Part I
(b) VI Part II
(c) III Part I
(d) VII Part IV
Answer
Answer: (c) III Part I
Question 37.
Share capital is shown in Balance Sheet under. the head ?
(a) Authorised Capital
(b) Issued Capital
(c) Paid-up Capital
(d) Shareholders’ Funds
Answer
Answer: (d) Shareholders’ Fund
Analysis of Financial Statements Class 12 MCQs Questions with Answers
Question 1.
Interpretation of Financial Statements includes:
(a) Criticisms and Analysis
(b) Comparison and Trend Study
(c) Drawing Conclusion
(d) All the above
Answer
Answer: (d) All the above
Question 2.
Horizontal Analysis is also known as :
(a) Dynamic Analysis
(b) Structural Analysis
(c) Static Analysis
(d) None of these
Answer
Answer: (a) Dynamic Analysis
Question 3.
Vertical Analysis is also known as :
(a) Static Analysis
(b) Dynamic Analysis
(c) Structural Analysis
(d) None of these
Answer
Answer: (a) Static Analysis
Question 4.
Comparative Statements are also known as :
(a) Dynamic Analysis
(b) Horizontal Analysis
(c) Vertical Analysis
(d) External Analysis
Answer
Answer: (b) Horizontal Analysis
Question 5.
Common-size Statement are also known as:
(a) Dynamic Analysis
(b) Horizontal Analysis
(c) Vertical Analysis
(d) External Analysis
Answer
Answer: (c) Vertical Analysis
Question 6.
The most commonly used tools for financial analysis are:
(a) Comparative Statements
(b) Common-size Statement
(c) Accounting Ratios
(d) All the above
Answer
Answer: (d) All the above
Question 7.
The analysis of financial statement by a shareholder is an example of:
(a) External Analysis
(b) Internal Analysis
(c) Vertical Analysis
(d) Horizontal Analysis
Answer
Answer: (a) External Analysis
Question 8.
For calculating trend percentages any year is selected as:
(a) Current year
(b) Previous year
(c) Base year
(d) None of these
Answer
Answer: (c) Base year
Question 9.
Tools for comparison of financial statements are :
(a) Comparative Balance Sheet
(b) Comparative Income Statement
(c) Common-size Statement
(d) All the above
Answer
Answer: (d) All the above
Question 10.
Trend ratios and trend percentage are used in :
(a) Dynamic analysis
(b) Static analysis
(c) Horizontal analysis
(d) Vertical Analysis
Answer
Answer: (c) Horizontal analysis
Question 11.
Comparative Financial Statements show:
(a) Financial position of a concern
(b) Earning capacity of a concern
(c) Both of them
(d) None of these
Answer
Answer: (c) Both of them
Question 12.
Comparative financial analysis process shows the comparison between the items of which statement:
(a) Balance Sheet
(b) Profit & Loss Statement
(c) (a) and (b) both
(d) None of these
Answer
Answer: (c) (a) and (b) both
Question 13.
Which of these are not the method of financial statement analysis ?
(a) Ratio Analysis
(b) Comparative Analysis
(c) Trend Analysis
(d) Capitalisation Method
Answer
Answer: (d) Capitalisation Method
Question 14.
Common-size financial statements are mostly prepared:
(a) In proportion
(b) In percentage
(c) (a) and (b) both
(d) None of these
Answer
Answer: (b) In percentage
Question 15.
Tangible assets of company increased from T 4,00,000 to T 5,00,000. What is the percentage of change ?
(a) 20%
(b) 25%
(c) 33%
(d) 50%
Answer
Answer: (b) 25%
Question 16.
A company’s shareholders fund was 7 8,00,000 in the year 2015. It because 7 12,00,000 in the year 2016.
What is percentage of change ?
(a) 100%
(b) 25%
(c) 50%
(d) 33.3%
Answer
Answer: (c) 50%
Question 17.
A company’s net sales are ₹ 15,00,000; cost of sales is ₹ 10,00,000 and indirect expenses are ₹ 3,00,000,
the amount gross profit will be:
(a) ₹ 13,00,000
(b) ₹ 5,00,000
(c) ₹ 2,00,000
(d) ₹ 12,00,000
Answer
Answer: (c) ₹ 2,00,000
Question 18.
Sales less Cost of goods sold is called :
(a) Operating Profit
(b) Gross Profit
(c) Net Profit
(d) Total Profit
Answer
Answer: (b) Gross Profit
Question 19.
If total assets of a firm are 7 12,00,000 and its non of non-current assets to total assets ?
(a) 50%
(b) 75%
(c) 25%
(d) 80%
Answer
Answer: (b) 75%
Question 20.
If total assets of a firm are 7 10,00,000 and its non-current assets are 7 6,00,000, what will be the
percentage of current assets on total assets ?
(a) 60%
(b) 50%
(c) 40%
(d) 30%
Answer
Answer: (c) 40%
Question 21.
In a common-size Balance Sheet, total equity and liabilities are assumed to be equal to :
(a) 1,000
(b) 100
(c) 10
(d) 1
Answer
Answer: (b) 100
Question 22.
Break-even point refers to that point where :
(a) Total Costs are more than Total Sales
(b) Total Costs are less than Total Sales
(c) Total Costs are half of the Total Sales
(d) Total Cost are equal to total sales
Answer
Answer: (d) Total Cost are equal to total sales
Question 23.
Payment of Income Tax is considered as :
(a) Direct Expenses
(b) Indirect Expenses
(c) Operating Expenses
(d) None of these
Answer
Answer: (b) Indirect Expenses
Question 24.
Vertical Analysis is also known as :
(a) Fluctuation Analysis
(b) Static Analysis
(c) Horizontal Analysis
(d) None of these
Answer
Answer: (b) Static Analysis
Question 25.
Financial analysis is useful:
(a) For Investors
(b) For Shareholders
(c) For Debenture holders
(d) All the above
Answer
Answer: (d) All the above
Question 26.
Analysis of financial statements involve :
(a) Trading A/c
(b) Profit & Loss statement
(c) Balance Sheet
(d) All the above
Answer
Answer: (d) All the above
Question 27.
Financial analysis is significant because it:
(a) Ignores qualitative aspect
(b) Judges operational efficiency
(c) Suffers from the limitations of financial statements
(d) It is affected by personal ability and bias of the analysis
Answer
Answer: (b) Judges operational efficiency
Question 28.
What is shown by the Income Statement ?
(a) Accuracy of books of accounts
(b) Profit or loss of a certain period
(c) Balance of Cash Book
(d) None of these
Answer
Answer: (b) Profit or loss of a certain period
Question 29.
What is shown by Balance Sheet ?
(a) Accuracy of books of accounts
(b) Profit or loss of a specific period
(c) Financial position on a specific date
(d) None of the above
Answer
Answer: (c) Financial position on a specific date
Question 30.
Which of the following is the purpose or objective of financial analysis ?
(a) To assess the current profitability of the firm
(b) To measure the solvency of the firm
(c) To assess the short-term and long-term liquidity position of the firm
(d) All the above
Answer
Answer: (d) All the above
Question 31.
Out of the following which parties are interested in financial statements ?
(a) Managers
(b) Financial Institutions
(c) Creditors
(d) All the these
Answer
Answer: (d) All the these
Question 32.
Which of the following is not a limitations of financial statement analysis ?
(a) To measure the financial strength
(b) Affected by window-dressing
(c) Do not reflect changes in price level
(d) Lack of Qualitative Analysis
Answer
Answer: (a) To measure the financial strength
Question 33.
Break-even Analysis shows:
(a) Relationship between cost and sales
(b) Relationship between production and purchases
(c) Relationship between cost and revenue
(d) None of these
Answer
Answer: (a) Relationship between cost and sales
Question 34.
Which of the following shows the actual financial position of n enterprise ?
(a) Fund Flow
(b) Balance Sheet
(c) P & L A/c
(d) Ratio Analysis
Answer
Answer: (b) Balance Sheet
Question 35.
The financial statements of a business enterprise include:
(a) Balance Sheet
(b) Profit & Loss Account
(c) Cash Flow Statement
(d) All the above
Answer
Answer: (d) All the above
Question 36.
An annual report is issued by company to its :
(a) Directors
(b) Auditors
(c) Shareholders
(d) Management
Answer
Answer: (c) Shareholders
Question 37.
Balance Sheet provides information about financial position of the enterprise :
(a) At a Point of Time
(b) Over a Period of Time
(c) For a Period of Time
(d) None of the above
Answer
Answer: (a) At a Point of Time
Question 38.
Profit & Loss Account is also called :
(a) Balance Sheet
(b) Income Statements
(c) Operating Profit
(d) Investment
Answer
Answer: (b) Income Statements
Question 39.
Which of the following statement is correct ?
(a) Assets = Liabilities + Shareholders funds
(b) Assets = Total funds
(c) Assets = Funds of outsiders .
(d) None of the above
Answer
Answer: (a) Assets = Liabilities + Shareholders funds
Question 40.
In which meeting of company directors report is presented ?
(a) Directors Meeting
(b) Annual General Meeting
(c) Manager’s Meeting
(d) All of the above
Answer
Answer: (b) Annual General Meeting
Question 41.
On the basis of process, which of the following is the type of financial analysis ?
(a) Horizontal Analysis
(b) Vertical Analysis
(c) Ratio Analysis
(d) (a) and (b) both
Answer
Answer: (d) (a) and (b) both
Question 42.
Which Of the following is limitation of financial analysis ?
(a) Window-dressing
(b) Basis of Valuation
(c) Lack of Accuracy
(d) All the above
Answer
Answer: (d) All the above
Question 43.
Which of the following is not the limitations of financial analysis ?
(a) Lack of Accuracy
(b) Based on Historical facts
(c) Basis of Valuation
(d) Information of Profit and Loss
Answer
Answer: (d) Information of Profit and Loss
Question 44.
When Financial Statements of two or more organisations are analysed, it is called :
(a) Intra-firm Analysis
(b) Inter-firm Analysis
(c) Vertical Analysis
(d) None of these
Answer
Answer: (b) Inter-firm Analysis
Question 45.
Which of the following statement correct ?
(a) Retained Earnings = Total Income
(b) Retained Earnings = Revenue-expenses
(c) Retained Earnings = Gross Profit
(d) None of the above
Answer
Answer: (b) Retained Earnings = Revenue-expenses
Question 46.
Which of the following is a type of Financial Analysis on the basis of material used ?
(a) Internal Analysis
(b) External Analysis
(c) Internal Audit
(d) Both (a) and (b)
Answer
Answer: (d) Both (a) and (b)
MCQ Questions for Class 12 Accountancy Chapter 10 Accounting Ratios with
Answers
November 27, 2020 by Prasanna
Check the below NCERT MCQ Questions for Class 12 Accountancy Chapter 10 Accounting Ratios with
Answers Pdf free download. MCQ Questions for Class 12 Accountancy with Answers were prepared
based on the latest exam pattern. We have provided Accounting Ratios Class 12 Accountancy MCQs
Questions with Answers to help students understand the concept very well.
Answer
Answer: (a)
Question 2.
Proprietory Ratio indicates the relationship between proprietor’s funds and….
(a) Reserve
(b) Share Capital
(c) Total Assets
(d) Debentures
Answer
Answer
Answer: (c)
Question 4.
Which one of the following ratios is most important in determining the long-term solvency of a company ?
(a) Profitability Ratio
(b) Debt-Equity Ratio
(c) Stock Turnover Ratio
(d) Current Ratio
Answer
Question 5.
Total Assets ₹ 8,10,000
Total Liabilities ₹ 2,60,000
Current Liabilities ₹ 40,000
Debt-equity ratio is:
(a) 0.05 : 1
(b) 0.4 : 1
(c) 2.5 : 1
(d) 4 : 1
Answer
Answer
Question 7.
Total Assets ₹ 7,70,000
Total Liabilities ₹ 2,60,000
Current Liabilities ₹ 40,000
Total Assets to Debt Ratio is:
(a) 3.5 : 1
(b) 2.56 : 1
(c) 2.8 : 1
(d) 3 : 1
Answer
Question 8.
Profitability Ratios are generally expressed in :
(a) Simple Ratio
(b) Percentage
(c) Times
(d) None of these
Answer
Answer
Question 10.
The gross profit ratio is the ratio of gross profit to :
(a) Net Cash Sales
(b) Net Credit Sales
(c) Closing Stock
(d) Net Total Sales
Answer
Question 11.
Operating Ratio is:
(a) Profitability Ratio
(b) Activity Ratio
(c) Solvency Ratio
(d) None of these
Answer
Question 12.
Which of the following is an operating’ income ?
(a) Sale of Merchandise
(b) Interest Income
(c) Dividend Income
(d) Profit on the sale of old car
Answer
Question 13.
Which of the following non-operating expense?
(a) Rent
(b) Selling Expenses
(c) Wages
(d) Loss on Sale of Machinery
Answer
Question 14.
The following groups of ratios primarily measure risk
(a) Liquidity, activity and profitability
(b) Liquidity, activity and common stock
(c) Liquidity, activity and debt
(d) Activity, debt and profitability
Answer
Question 15.
To know the return on investment, by capital employed we mean:
(a) Net Fixed Assets
(b) Current Asset-Current Liabilities
(c) Gross Block
(d) Fixed Assets + Current Assets-Current Liabilities
Answer
Answer
Question 17.
Ratio based on figures of profit & loss as well a the Balance sheet are:
(a) Profitability Ratios
(b) Operation Ratio
(c) Liquidity Ratio
(d) Composite Ratio
Answer
Question 18.
Debtors Turnover Ratio :
Answer
Answer: (c)
Question 19.
When opening stock is ₹ 50,000 closing stock ₹ 60,000 and cost of goods sold is ₹ 2,20,000, then stock
turn over ratio is:
(a) 2 times
(b) 3 times
(c) 4 times
(d) 5 times
Answer
Question 20.
What does Creditors Turnover Ratio take into account:
(a) Total credit purchases
(b) Total credit sales
(c) Total cash sales
(d) Total cash purchases
Answer
Question 21.
Cost of goods sold :
(a) Sales – Net profit
(b) Sales – Gross profit
(c) Purchases – Opening Stock
(d) None of the above
Answer
Answer
Answer: (b) 1 : 1
Question 23.
The ideal current ratio is :
(a) 2 : 1
(b) 1 : 2
(c) 3 : 2
(d) 3 : 4
Answer
Answer: (a) 2 : 1
Question 24.
Operating Ratio is:
(a) Profitability Ratio
(b) Activity Ratio
(c) Solvency Ratio
(d) None of these
Answer
Question 25.
Profitability Ratio is generally shown in :
(a) Simple Ratio
(b) Percentage
(c) Times
(d) None of these
Answer
Question 26.
If sales is 7 4,20,000 sales returns is 7 20,000 and cost of goods sold 7 3,20,000 gross profit ratio will be :
(a) 20%
(b) 25%
(c) 15%
(d) 10%
Answer
Question 27.
Stock turnover ratio comes under :
(a) Liquidity Ratio
(b) Profitability Ratio
(c) Activity Ratio
(d) None of these
Answer
Question 28.
The satisfactory ratio between internal and external equity is. :
(a) 1 : 2
(b) 2 : 1
(c) 3 : 1
(d) 4 : 1
Answer
Answer: (b) 2 : 1
Question 29.
Current Ratio includes:
(a) Stock
(b) Debtors
(c) Cash
(d) All of these
Answer
Question 30.
Current Ratio =
(a) Current Assets/Current Liabilities
(b) Liquid Assets/Current Liabilities
(c) Liquid Assets/Current Assets
(d) Fixed Assets/Current Assets
Answer
Question 31.
Liquid Assets include :
(a) Bills Receivable
(b) Debtors
(c) Cash Balance
(d) All of these
Answer
Question 32.
Which of the following assets is not taken into consideration in calculating acid-test ratio ?
(a) Cash
(b) Bills Receivable
(c) Stock
(d) None of these
Answer
Question 33.
When Cash is 7 10,000 Stock is 7 25,000, B/R is 7 5,000 Creditors is 7 22,000 and Bank Overdraft is 7
8,000 then current ratio is :
(a) 2 : 1
(b) 4 : 3
(c) 3 : 4
(d) 1 : 2
Answer
Answer: (b) 4 : 3
Question 34.
The two basic measures of liquidity are :
(a) Inventory Turnover and Current Ratio
(b) Current Ratio and Liquid Ratio
(c) Current Ratio and Average Collection Period
(d) Current Ratio and Debtors Turnover Ratio
Answer
Answer
Answer: (c)
Question 36.
The term ‘Current Liabilities’ does not include: .
(a) Sundry Creditors
(b) Debentures
(c) Bills Payable
(d) Outstanding Expenses
Answer
Question 37.
The term‘Current Assets’include
(a) Long-term Investment
(b) Short-term Investment
(c) Furniture
(d) Preliminary Expenses
Answer
Question 38.
Liquid Ratio is also known as:
(a) Current Ratio
(b) Quick Ratio
(c) Capital Ratio
(d) None of these
Answer
Question 39.
To test the liquidity of a concern which of the following ratios is useful ?
(a) Capital Turnover Ratio
(b) Acid Test Ratio
(c) Stock Turnover Ratio
(d) Net Profit Ratio
Answer
Question 40.
Which of the following transactions will improve the current ratio ?
(a) Purchase of good for cash
(b) Cash received from customers
(c) Payment of creditors
(d) Credit purchase of goods
Answer
Question 41.
Debt-equity ratio is :
(a) Liquidity Ratio
(b) Activity Ratio
(c) Solvency Ratio
(d) Operating Ratio
Answer
Answer: (c) Solvency Ratio
Question 42.
The formula for finding out Debt-Equity Ratio is:
(a) Long-term Debts/Shareholders’ Funds
(b) Debentures/Equity Capital
(c) Net Profit/Total Capital
(d) None of these
Answer
Question 2.
Issue of shares in consideration of purchase of plant and machinery results into :
(a) Inflow of Cash
(b) Outflow of Cash
(c) Neither Inflow nor Outflow
(d) None of these
Answer
Answer: (c) Neither Inflow nor Outflow
Question 3.
If net profit is 7 50,000 after writing off goodwill 7 10,000 then the cash flow from operating activities will
be:
(a) ₹ 60,000
(b) ₹ 40,000
(c) ₹ 50,000
(d) ₹ 30,000
Answer
Answer: (a) ₹ 60,000
Question 4.
If net profit is ₹ 35,000 after writing off good will ₹ 6,000 and loss on sale of furniture ₹ 1,000, cash flow
from operating activities will be :
(a) ₹ 35,000
(b) ₹ 42,000
(c) ₹ 29,000
(d) ₹ 28,000
Answer
Answer: (b) ₹ 42,000
Question 5.
Cash sales in :
(a) Operating Activity
(b) Investing Activity
(c) Financing Activity
(d) None of these
Answer
Answer: (a) Operating Activity
Question 6.
Cash from operating activities will decrease due to :
(a) Increase in Current Assets
(b) Decrease in Current Liabilities
(c) Neither of the two
(d) Both (a) and (b)
Answer
Answer: (d) Both (a) and (b)
Question 7.
Which of the following is an example of Cash Flow from Operating Activities ?
(a) Purchase of Machinery
(b) Issue of Shares
(c) Purchases of Inventory for Cash
(d) Purchases of Investment
Answer
Answer: (c) Purchases of Inventory for Cash
Question 8.
While calculating operating profit which will be added to net profit:
(a) Interest received
(b) Profit on sale of Asset
(c) Increase in General Reserve
(d) Refund of Tax
Answer
Answer: (c) Increase in General Reserve
Question 9.
While calculating cash flow from operating netivities which will be deducted ?
(a) Increase in Creditors
(b) Increase in Debtors
(c) Decrease in Debtors
(d) Decrease in Prepaid Expenses
Answer
Answer: (b) Increase in Debtors
Question 10.
While calculating cash flow from operating activities, which will be added ?
(a) Increase in Stock
(b) Increase in Creditors
(c) Decrease in Bills Payable
(d) Increase in Debtors
Answer
Answer: (b) Increase in Creditors
Question 11.
An example of Cash Flow from Investing Activities :
(a) Cash Sales
(b) Issue of Shares
(c) Payment of cash for purchase of machinery
(d) Payment of Dividend
Answer
Answer: (c) Payment of cash for purchase of machinery
Question 12.
An example of Cash Flows from Financing Activity is :
(a) Sale of goods
(b) Sale of Investment
(c) Cash receipts from issue of shares
(d) Interest received
Answer
Answer: (c) Cash receipts from issue of shares
Question 13.
How will you treat payment of ‘Interest of Debentures’ while preparing a Cash Flow Statement ?
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Cash Equivalents
Answer
Answer: (c) Cash Flow from Financing Activities
Question 14.
Where will you show purchase of goodwill in Cash Flow Statement:
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Cash Equivalent
Answer
Answer: (b) Cash Flow from Investing Activities
Question 15.
Interest received by a finance company is classified under which kind of activity while preparing a Cash
Flow Statement ?
(a) Cash Flow from Operating Activities
(b) Investing Activities
(c) Financing Activities
(d) Cash Equivalent
Answer
Answer: (a) Cash Flow from Operating Activities
Question 16.
Which of the following item is considered as cash equivalents:
(a) Bank Overdraft
(b) Bills Receivable
(c) Debtors
(d) Short-term Investment
Answer
Answer: (a) Bank Overdraft
Question 17.
Which of the following item is not considered as cash equivalents ?
(a) Bank Overdraft
(b) Commercial Papers
(c) Treasury Bills
(d) Investment
Answer
Answer: (d) Investment
Question 18.
Cash payment to employees is a Cash Flow from:
(a) Operating Activities
(b) Investing Activities
(c) Finance Activities
(d) All the above
Answer
Answer: (a) Operating Activities
Question 19.
Which of the following is not a Cash in Flow ?
(a) Sale of Fixed Asset
(b) Purchase of Fixed Asset
(c) Issue of Debentures
(d) Sale of Goods for Cash
Answer
Answer: (b) Purchase of Fixed Asset
Question 20.
In cash flow statement, the item of ‘Interest’ is shown in:
(a) Operating Activities
(b) Investing Activities
(c) Financial Activities
(d) In both (d) & (c)
Answer
Answer: (d) In both (d) & (c)
Question 21.
Which of the following is not a Cash Outflow:
(a) Increase in Creditors
(b) Increase in Debtors
(c) Increase in Stock
(d) Increase in prepaid expenses
Answer
Answer: (a) Increase in Creditors
Question 22.
Cash from operation is equal to :
(a) Net Profit + Increase in Current Assets
(b) Net Profit + Decrease in Current Liabilities
(c) Operating Profit + Adjustment of Current Assets and Current Liabilities
(d) All of the above
Answer
Answer: (b) Net Profit + Decrease in Current Liabilities
Question 23.
Income tax refund is a cash of:
(a) Source
(b) Application
(c) Both (a) & (b)
(d) None of these
Answer
Answer: (a) Source
Question 24.
Cash Flow Statement in based upon:
(a) Cash basis of accounting
(b) Accrual basis of accounting
(c) (a) and (b) both
(d) None of these
Answer
Answer: (a) Cash basis of accounting
Question 25.
Cash Flow Statement is related to:
(a) AS-3
(b) AS-6
(c) AS-9
(d) AS-12
Answer
Answer: (b) AS-6
Question 26.
Cash Flow Statement is prepared from:
(a) Balance Sheet
(b) Profit & Loss Account
(c) Additional Information
(d) All of these
Answer
Answer: (d) All of these
Question 27.
Following Is included in Cash Flow from Operating Activities:
(a) Royalties, Fees, Commission
(b) Purchase of Debentures
(c) Purchase of Machinery
(d) issue of Shares
Answer
Answer: (a) Royalties, Fees, Commission
Question 28.
Following are included in cash equivalent:
(a) Treasury Bill
(b) Trade Bill
(c) Bank Deposits of Short Maturity Period
(d) All of above
Answer
Answer: (d) All of above
Question 29.
Claims received from Insurance Companies are treated as:
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) None of these
Answer
Answer: (a) Cash Flow from Operating Activities
Question 30.
Which activity comes under ‘Operating Activities’ ?
(a) Purchase of Land
(b) Issue of Debentures
(c) Proceeds from Issuance of Equity Shares
(d) Cash Sales
Answer
Answer: (d) Cash Sales
Question 31.
Which of the following is not a cash inflow ?
(a) Decrease in Debtors
(b) Issue of Debentures
(c) Decrease in Creditors
(d) None of these
Answer
Answer: (c) Decrease in Creditors
Question 32.
Which one of following is not a non-cash item ?
(a) Cash Sales
(b) Goodwill written off
(c) Depreciation
(d) Provision of Bad Debts
Answer
Answer: (a) Cash Sales
Question 33.
Cash flow statement according to AS-3 is mandatory to:
(a) All enterprises
(b) Companies listed on a stock exchange
(c) Enterprises having turnover expending 50 Rs crore
(d) (b) & (c) both
Answer
Answer: (d) (b) & (c) both
Question 34.
Decrease in Current Asset is……….in operating profit
(a) Subtracted
(b) Added
(c) Divided
(d) Multiplied
Answer
Answer: (b) Added
Question 35.
Following are true about cash equivalent:
(a) More Liquid Short-term Investment
(b) Minimum risk
(c) Maturity of 3 months or less than 3 months
(d) All the above
Answer
Answer: (d) All the above
Question 36.
Which of the following activity comes under Financial Activities ?
(a) Receipts from issurence of Equity Shares
(b) Cash Sales
(c) Bank Overdraft
(d) Purchase of Debentures
Answer
Answer: (a) Receipts from issurence of Equity Shares
Question 37.
An analysis of cash flow is useful for..—.planning.
(a) Short-term
(b) Long-term
(c) Medium-term
(d) Very Long-period
Answer
Answer: (a) Short-term
Question 38.
Which calculating cash flow from operating activities which is added net profit ?
(a) Increase in Stock
(b) Decrease in Stock
(c) Increase in Debtors
(d) Decrease in Creditors
Answer
Answer: (b) Decrease in Stock
Question 39.
Which of the following is not the source of Cash ?
(a) Purchase of Fixed Assets
(b) Funds from Operations
(c) Issue of Debentures
(d) Sale of Fixed Assets
Answer
Answer: (a) Purchase of Fixed Assets
Question 40.
While calculating profit from operating activities, which will be added back to net profit:
(a) Goodwill Written off
(b) Depreciation
(c) Loss oh Sale of Fixed Assets
(d) All the Above
Answer
Answer: (d) All the Above
Question 41.
Profit during the year ₹ 20,000. During the year, there was increase in stock by ₹ 9,000 and decrease in
debentures of ₹ 5,000. What is the amount of cash from operating activities ?
(a) ₹ 6,000
(b) ₹ 16,000
(c) ₹ 24,000
(d) ₹ 34,000
Answer
Answer: (b) ₹ 16,000
Question 42.
Given:
Net Profit during the year ₹ 1,00,000
Debtors in the beginning the year of ₹ 30,000
Debtors at the end of the year ₹ 36,000
What is the amount of cash from operating activities ?
(a) ₹ 30,000
(b) ₹ 94,000
(c) ₹ 1,06,000
(d) ₹ 1,66,000
Answer
Answer: (b) ₹ 94,000
Question 43.
Net Profit during the year ₹ 30,000
Creditors in the beginning ₹ 24,000
Creditors at the end ₹ 16,000
What is the amount of cash from operating activities :
(a) ₹ 30,000
(b) ₹ 34,000
(c) ₹ 22,000
(d) ₹ 40,000
Answer
Answer: (c) 7 22,000
Question 44.
Redemption of Debentures/Preference shares results into:
(a) Source of fund
(b) Use Or application of fund
(c) No flow of fund
(d) No flow of cash
Answer
Answer: (b) Use Or application of fund
Question 45.
Which of the following is not an example of cash outflows ?
(a) Repayment of loans
(b) Decrease in creditors
(c) Issue of debentures
(d) None of these
Answer
Answer: (c) Issue of debentures
Accounting for Partnership Firms — Fundamentals
Class 12 Accountancy MCQs Pdf
Select the Best Alternate and tally your answer with the Answers given at the end of the book:
(i) Features or Characteristics of Partnership
1. Features of a partnership firm are :
(A) Two or more persons are carrying common business under an agreement.
(B) They are sharing profits and losses in the fixed ratio.
(C) Business is carried by all or any of them acting tor all as an agent.
(D) All of the above.
Answer
Answer: D
2. Following are essential elements of a partnership firm except: (CPT; June 2012)
(A) At least two persons
(B) There is an agreement between all partners
(C) Equal share of profits and losses
(D) Partnership agreement is for some business.
Answer
Answer: C
3. In case of partnership the act of any partner is : (C.S. Foundation Dec. 2012)
(A) Binding on all partners
(B) Binding on that partner only
(C) Binding on all partners except that particular partner
(D) None of the above
Answer
Answer: A
Answer
Answer: B
Answer
Answer: C
6. Sleeping partners are those who
(A) take active part in the conduct of the business but provide no capital. However, salary is paid
to them.
(B) do not take any part in the conduct of the business but provide capital and share profits and
losses in the agreed ratio
(C) take active part in the conduct of the business but provide no capital. However, share profits
and losses in the agreed ratio.
(D) do not take any part in the conduct of the business and contribute no capital. However, share
profits and losses in the agreed ratio.
Answer
Answer: B
Answer
Answer: C
Answer
Answer: A
Answer
Answer: D
Answer
Answer: B
Answer
Answer: D
12. X, Y and Z are partners sharing profits and losses equally. Their capital balances on March, 31,
2012 are ₹80,000, ₹60,000 and ₹40,000 respectively. Their personal assets are worth as follows : X
— ₹20,000, Y — ₹15,000 and Z — ₹10,000. The extent of their liability in the firm would be : (C.S.
Foundation; June 2013)
(A) X — ₹80,000 : Y — ₹60,000 : and Z — ₹40,000
(B) X — ₹20,000 : Y — ₹15,000 : and Z — ₹10,000
(C) X — ₹1,00,000 : Y — ₹75,000 : and Z — ₹50,000
(D) Equal
Answer
Answer: B
Answer
Answer: D
Answer
Answer: C
Answer
Answer: D
16. Which of the following is not incorporated in the Partnership Act?
(A) profit and loss are to be shared equally
(B) no interest is to be charged on capital
(C) all loans are to be charged interest @6% p.a.
(D) all drawings are to be charged interest
Answer
Answer: D
Answer
Answer: A
18. In the absence of Partnership Deed, the interest is allowed on partner’s capital: (CPT; June
2011)
(A) @ 5% p.a.
(B) @ 6% p.a.
(C) @ 12% p.a.
(D) No interest is allowed
Answer
Answer: D
19. In the absence of a partnership deed, the allowable rate of interest on partner’s loan account
will be :
(A) 6% Simple Interest
(B) 6% p.a. Simple Interest
(C) 12% Simple Interest
(D) 12% Compounded Annually
Answer
Answer: B
20. A and B are partners in partnership firm without any agreement. A has given a loan of ₹50,000
to the firm. At the end of year loss was incurred in the business. Following interest may be paid to
A by the firm :
(A) @5% Per Annum
(B) @ 6% Per Annum
(C) @ 6% Per Month
(D) As there is a loss in the business, interest can’t be paid
Answer
Answer: B
21. A and B are partners in a pertnership firm without any agreement. A has withdrawn ?50,000
out of his Capital as drawings. Interest on drawings may be charged from A by the firm :
(A) @ 5% Per Annum
(B) @ 6% Per Annum
(C) @ 6% Per Month
(D) No interest can be charged
Answer
Answer: D
22. A and B are partners in a partnership firm without any agreement. A devotes more time for
the firm as compare to B. A will get the following commission in addition to profit in the firm’s
profit:
(A) 6% of profit
(B) 4% of profit
(C) 5% of profit
(D) None of the above
Answer
Answer: D
23. In the absence of partnership deed, the following rule will apply :
(A) No interest on capital
(B) Profit sharing in capital ratio
(C) Profit based salary to working partner
(D) 9% p.a. interest on drawings
Answer
Answer: A
Answer
Answer: D
25. Interest on capital will be paid to the partners if provided for in the partnership deed but only
out of: (C.S. Foundation; December, 2012)
(A) Profits
(B) Reserves
(C) Accumulated Profits
(D) Goodwill
Answer
Answer: A
26. Which one of the following items cannot be recorded in the profit and loss appropriation
account?
(A) Interest on capital
(B) Interest on drawings
(C) Rent paid to partners
(D) Partner’s salary
Answer
Answer: C
27. If any loan or advance is provided by partner then, balance of such Loan Account should be
transferred to :
(A) B/S Assets side
(B) B/S Liability Side
(C) Partner’s Capital A/c
(D) Partner’s Current A/c
Answer
Answer: B
28. A, B and C were Partners with capitals of ₹50,000; ₹40,000 and ? 30,000 respectively carrying
on business in partnership. The firm’s reported profit for the year was ₹80,000. As per provision
of the Indian Partnership Act, 1932, find out the share of each partner in the above amount after
taking into account that no interest has been provided on an advance by A of ₹20,000 in addition
to his capital contribution.
(A) ₹26,267 for Partner B and C and ₹27,466 for Partner A.
(B) ₹26,667 each partner.
(C) ₹33,333 for A ₹26,667 for B and ₹20,000 for C.
(D) ₹30,000 each partner.
Answer
Answer: A
29. X, Y, and Z are partners in a firm. At the time of division of profit for the year, there was
dispute between the partners. .Profit before interest on partner’s capital was ₹6,000 and Y
determined interest @24% p.a. on his loan of ₹80,000. There was no agreement on this point.
Calculate the amount payable to X, Y, and Z respectively.
(A) ₹2,000 to each partner.
(B) Loss of ₹4,400 for X and Z; Twill take ₹14,800.
(C) ₹400 for A, ₹5,200 for Land ₹400 for Z.
(D) None of the above.
Answer
Answer: C
30. X, Y, and Z are partners in a firm. At the time of division of profit for the year, there was
dispute between the partners. Profit before interest on partner’s capital was ₹6,00,000 and Z
demanded minimum profit of ₹5,00,000 as his financial position was not good. However, there
was no written agreement on this point.
(A) Other partners will pay Z the minimum profit and will share the loss equally.
(B) Other partners will pay Z the minimum profit and will share the loss in capital ratio.
(C) Xand T will take ₹50,000 each and Z will take ₹5,00,000.
(D) ₹2,00,000 to each of the partners.
Answer
Answer: D
31. On 1st June 2018 a partner introduced in the firm additional capital ₹50,000. In the absence
of partnership deed, on 31st March 2019 he will receive interest :
(A) ₹3,000
(B) Zero
(C) ₹2,500
(D) ₹1,800
Answer
Answer: B
32. On 1st January 2019, a partner advanced a loan of ₹1,00,000 to the firm. In the absence of
agreement, interest on loan on 31st March 2019 will be :
(A) Nil
(B) ₹1,500
(C) ₹3,000
(D) ₹6,000
Answer
Answer: B
33. A partner introduced additional capital of ₹30,000 and advanced a loan of ₹40,000 to the firm
at the beginning of the year. Partner will receive year’s interest:
(A) ₹4,200
(B) ₹2,400
(C) Nil
(D) ₹1,800
Answer
Answer: B
Answer
Answer: C
35. In the absence of Partnership Deed :
(A) Interest will not be charged on partner’s drawings
(B) Interest will be charged @. 5% p.a. on partner’s drawings
(C) Interest will be charged @ 6% p.a. on partner’s drawings
(D) Interest will be charged @ 12% p.a. on partner’s drawings
Answer
Answer: A
Answer
Answer: C
37. Which of the following items are recorded in the Profit & Loss Appropriation Account of a
partnership firm?
(A) Interest on Capital
(B) Salary to Partner
(C) Transfer to Reserve
(D) All of the above
Answer
Answer: D
38. Is rent paid to a partner appropriation of profits?
(A) It is appropriation of profit
(B) It is not appropriation of profit
(C) If partner’s contribution as capital is maximum
(D) If partner is a working partner.
Answer
Answer: B
Answer
Answer: D
40. According to Profit and Loss Account, the net profit for the year is ₹4,20,000. Salary of a
partner is ₹5,000 per month and the commission of another partner is ₹10,000. The interest on
drawings of partners is ₹4,000. The net profit as per Profit and Loss Appropriation Account will be
:
(A) ₹3,54,000
(B) ₹3,46,000
(C) ₹4,09,000
(D) ₹4,01,000
Answer
Answer: A
41. A and B are partners. According to Profit and Loss Account, the net profit for the year is
₹2,00,000. The total interest on partner’s drawings is ₹1,000. As salary is ₹40,000 per year and B’s
salary is ₹3,000 per month. The net profit as per Profit and Loss Appropriation Account will be :
(A) ₹1,23,000
(B) ₹1,25,000
(C) ₹1,56,000
(D) ₹1,58,000
Answer
Answer: B
42. According to Profit and Loss Account, the net profit for the year is ₹1,40,000. The total
interest on partner’s capital is? 8,000 and a partner is to be allowed commission of ₹5,000. The
total interest on partner’s drawings is ₹1,200. The net profit as per Profit and Loss Appropriation
Account will be :
(A) ₹1,28,200
(B) ₹1,44,200
(C) ₹1,25,800
(D) ₹1,41,800
Answer
Answer: A
43. Sangeeta and Ankita are partners in a firm. Sangeeta’s capital is ₹70,000 and Ankita’s Capital
is ₹50.000. Firm’s profit is ₹60,000. Ankita share in profit will be :
(A) ₹25,000
(B) ₹3 0,000
(C) ₹35,000
(D) ₹20,00
Answer
Answer: B
44. A, B and C are partners. A’s capital is ₹3,00,000 and B’s capital is ₹1,00,000. C has not invested
any amount as capital but he alone manages the whole business. C wants ?30,000 p.a. as salary.
Firm earned a profit of ₹1,50,000. How much will be each partner’s share of profit:
(A) A ₹60,000; B ₹60,000; C ₹Nil
(B) A ₹90,000; B ₹30,000; C ₹Nil
(C) A ₹40,000; B ₹40,000 and C ₹40,000
(D) A ₹50,000; B ₹50,000 and C ₹50,000.
Answer
Answer: D
45. Net profit of a firm is ₹49,500. Manager is entitled to a commission of 10% on profits before
charging his commission. Manager’s Commission will be :
(A) ₹4,950
(B) ₹4,500
(C) ₹5,500
(D) ₹495
Answer
Answer: A
46. Net profit of a firm is ₹79,800. Manager is entitled to a commission of 5% of profits after
charging his commission. Manager’s Commission will be :
(A) ₹4,200
(B) ₹380
(C) ₹3,990
(D) ₹3,800
Answer
Answer: D
47. Ram and Shyam are partners in the ratio of 3 : 2. Before profit distribution, ‘ Ram is entitled to
5% commission of the net profit (after charging such commission). Before charging commission,
firm’s profit was ₹42,000. Shyam’s share in profit will be :
(A) ₹16,000
(B) ₹24,000
(C) ₹26,000
(D) ₹16,400
Answer
Answer: A
48. A, B and C are partners in the ratio of 5 : 3 : 2. Before B’s salary of ₹17,000 firm’s profit is
₹97,000. How much in total B will receive from the firm?
(A) ₹17,000
(B) ₹40,000
(C) ₹24,000
(D) ₹41,000
Answer
Answer: D
Hint: Total amount received by die partner will be Salary + Share of Profit
49. A, B and C are partners in a firm without any agreement. They have contributed 750,000,
730,000 and 720,000 by way of capital in the firm. A was unable to work for six months in a year
due to illness. At the end of year, firm earned a pro lit of 7 15,000. A’s share in the profit will be :
(A) 77.500
(B) 73,750
(C) 75,000
(D) 72,500
Answer
Answer: C
50. In a partnership lirm, partner A is entitled a monthly salary of ₹7,500. At the end of the year,
firm earned a profit of ₹75,000 after charging T’s salary. If the manager is entitled a commission
of 10% on the net profit after charging his commission, Manager’s commission will be :
(A) ₹7,500
(B) ₹16,500
(C) ₹8,250
(D) ₹15,000
Answer
Answer: D
51. Seeta and Geeta are partners sharing profits and losses in the ratio 4 : 1. Meeta was manager
who received the salary of ₹4,000 p.m. in addition to a commission of 5% on net profits after
charging such commission. Profit for the year is ₹6,78,000 before charging salary. Find the total
remuneration of Meeta.
(A) ₹78,000
(B) ₹88,000
(C) ₹87,000
(D) ₹76,000
Answer
Answer: A
Answer
Answer: D
Answer
Answer: C
54. Which accounts are opened when the capitals are fluctuating?
(A) Only Capital Accounts
(B) Only Current Accounts
(C) Capital Accounts as well as Current Accounts
(D) Either Capital Accounts or Current Accounts
Answer
Answer: A
Answer
Answer: C
56. Which item is recorded on the credit side of partner’s current accounts :
(A) Interest on Fanner’s Capitals
(B) Salaries of Partners
(C) Share of profits of Partners
(D) All of the Above
Answer
Answer: D
57. If the Partners’ Capital Accounts are fixed ‘salary payable to partner’ will be recorded :
(A) On the debit side of Partners’ Current Account
(B) On the debit side of Partners’ Capital Account
(C) On the credit side of Partners’ Current Account
(D) None of the above
Answer
Answer: C
58. It the Partner’s Capital Accounts are fixed, interest on capital will be recorded:
(A) On the credit side of Current Account
(B) On the credit side of Capital Account
(C) On the debit side of Current Account
(D) On the debit side of Capital Account
Answer
Answer: A
59. If the Partner’s Capital Accounts are fluctuating, in that case following item/items will be
recorded in the credit side of capital accounts :
(A) Interest on capital
(B) Salary of partners
(C) Commission of partners
(D) All of the above
Answer
Answer: D
60. Interest on partner’s capitals will be debited to :
(A) Profit and Loss Account
(B) Profit and Loss Appropriation Account
(C) Partner’s Capital Accounts
(D) None of the Above
Answer
Answer: B
Answer
Answer: D
Answer
Answer: D
64. When partners’ capital accounts are floating, which one of the following items will be written
on the credit side of the partners’ capital accounts? :
(A) Interest on drawings
(B) Loan advanced by partner to the firm
(C) Partner’s share in the firm’s loss
(D) Salary to the activ e partners
Answer
Answer: D
65. When partners’ capital accounts are fixed, which one of the following items will be written in
the partner’s capital account? :
(A) Partner’s Drawings
(B) Additional capital introduced by the partner in the firm
(C) Loan taken by partner from the firm
(D) Loan Advanced by partner to the firm
Answer
Answer: B
Answer
Answer: B
67. For the firm interest on capital is :
(A) Capital Payment
(B) Capital Receipt
(C) Loss
(D) Income
Answer
Answer: C
Answer
Answer: D
69. Xand Y are partners in the ratio of 3 : 2. Their capitals are ?2,00,000 and ₹1,00,000
respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ?60,000 for the year
ended 31st March 2019. Interest on Capital will be :
(A) X ₹16,000; Y ₹8,000
(B) V ₹8.000; Y ₹4,000
(C) X ₹14,400; Y ₹9,600
(D) No Interest will be allowed
Answer
Answer: A
70. X and Y are partners in the ratio of 3 : 2. Their capitals are ₹2,00,000 and ₹1,00,000
respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹15,000 for the year
ended 31st March 2019. Interest on Capital will be :
(A) X ₹16,000; Y ₹8,000
(B) X ₹9,000; Y ₹6,000
(C) X ₹10,000; Y ₹5,000
(D) No Interest will be allowed
Answer
Answer: C
71. X and Y are partners in the ratio of 3 : 2. Their capitals are ?2,00,000 and ₹1,00,000
respectively. Interest on capitals is allowed @ 8% p.a. Firm incurred a loss of ₹60,000 for the year
ended 31st March 2019. Interest on Capital will be :
(A) X ₹16,000; Y ₹8,000
(B) A ₹8,000; Y ₹4,000
(C) X ₹14,400; Y ₹9,600
(D) No Interest will be allowed
Answer
Answer: D
72. X and Y are partners in the ratio of 3 : 2. Their capitals are ₹2,00,000 and ₹1,00,000
respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹15,000 for the year
ended 31st March 2019. As per partnership agreement, interest on capital is treated a charge on
profits. Interest on Capital will be :
(A) X ₹16,000; Y ₹8,000
(B) X ₹9,000; Y ₹6,000
(C) X ₹10,000; Y ₹5,000
(D) No Interest will be allowed
Answer
Answer: A
73. A and B contribute ₹1,00,000 and ?₹60,000 respectively in a partnership firm by way of capital
on which they agree to allow interest @ 8% p.a. Their profit or loss sharing ratio is 3 : 2. The profit
at the end of the year was ₹2,800 before allowing interest on capital. If there is a clear agreement
that interest on capital will be paid even in case of loss, then S’s share will be:
(A) Profit ₹6,000
(B) Profit ₹4,000
(C) Loss ₹6,000
(D) Loss ₹4,000
Answer
Answer: D
Answer
Answer: D
75. Where will you record interest on drawings : (CPT; June 2011)
(A) Debit Side of Profit & Loss Appropriation Account
(B) Credit Side of Profit & Loss Appropriation Account
(C) Credit Side of Profit & Loss Account
(D) Debit Side of Capital/Current Account only.
Answer
Answer: B
Answer
Answer: A
77. If date of drawings of the partner’s is not given in the question, interest is charged for how
much time
(A) 1 month
(B) 3 months
(C) 6 months
(D) 12 months
Answer
Answer: C
78. Vikas is a partner in a firm. His drawings during the year ended 31st March, 2019 were ?
72,000. If interest on drawings is charged @ 9% p.a. the interest charged will be :
(A) ₹324
(B) ₹6,480
(C) ₹3,240
(D) ₹648
Answer
Answer: C
79. If a fixed amount is withdrawn by a partner on the first day of every month, interest on the
total amount is charged for …………… months :
(A) 6
(B) 61/2
(C) 51/2
(D) 12
Answer
Answer: B
80. If a fixed amount is withdrawn by a partner on the last day of every month, interest on the
total amount is charged for …………… months :
(A) 12
(B) 6 1/2
(C) 5 1/2
(D) 6
Answer
Answer: C
81. If a fixed amount is withdrawn by a partner in the middle of every month, interest on the total
amount is charged for …………… months
(A) 6
(B) 6 1/2
(C) 5 1/2
(D) 12
Answer
Answer: A
82. In a partnership firm, a partner withdrew ₹5,000 per month on the first day of every month
during the year for personal expenses. If interest on drawings is charged @ 6% p.a. the interest
charged will be : (C.S. Foundation, Dec. 2012)
(A) ₹3,600
(B) ₹1,950
(C) ₹1,800
(D) ₹1,650
Answer
Answer: B
83. Ajay is a partner in a firm. He withdrew ₹2,000 per month on the last day of every month
during the year ended 31st March, 2019. If interest on drawings is charged @ 9% p.a. the interest
charged will be :
(A) ₹990
(B) ₹1,080
(C) ₹1,170
(D) ₹2,160
Answer
Answer: A
84. Sushil is a partner in a firm. He withdrew ₹4,000 per month in the middle of every month
during the year ended 31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest
charged will be :
(A) ₹2,080
(B) ₹1,760
(C) ₹3,840
(D) ₹1,920
Answer
Answer: D
85. If fixed amount is withdrawn by a partner on the first day of each quarter, interest on the total
amount is charged for …………….. months
(A) 4.5
(B) 6
(C) 7.5
(D) 3
Answer
Answer: C
86. If a fixed amount is withdrawn by a partner on the last day of each quarter, interest on the
total amount is charged for ……………… months
(A) 6
(B) 4.5
(C) 7.5
(D) 3
Answer
Answer: B
87. If a fixed amount is withdrawn by a partner in each quarter, interest on the total amount is
charged for ……………….. months
(A) 3
(B) 6
(C) 4.5
(D) 7.5
Answer
Answer: B
88. Anuradha is a partner in a firm. She withdrew ₹6,000 in the beginning of each quarter during
the year ended 31st March, 2019. Interest on her drawings @ 10% p.a. will be :
(A) ₹900
(B) ₹1,200
(C) ₹1,500
(D) ₹600
Answer
Answer: C
89. Bipasa is a partner in a firm. She withdrew ₹6,000 at the end of each quarter during the year
ended 31st March, 2019. Interest on her drawings @ 10% p.a. will be :
(A) ₹900
(B) ₹600
(C) ₹1,500
(D) ₹1,200
Answer
Answer: A
90. Charulata is a partner in a firm. She withdrew ₹10,000 in each quarter during the year ended
31st March, 2019. Interest on her drawings @ 9% p.a. will be:
(A) ₹1,350
(B) ₹2,250
(C) ₹900
(D) ₹1,800
Answer
Answer: D
91. If equal amount is withdrawn by a partner in the beginning of each month during a period of
6 months, interest on the total amount will be charged for ……………… months
(A) 2.5
(B) 3
(C) 3.5
(D) 6
Answer
Answer: C
92. If equal amount is withdrawn by a partner in the end of each month during a period of 6
months, interest on the total amount will be charged for ………………… months
(A) 2.5
(B) 3
(C) 3.5
(D) 6
Answer
Answer: A
93. If equal amount is withdrawn by a partner in each month during a period of 6 months,
interest on the total amount will be charged for …………… months
(A) 6
(B) 3
(C) 2.5
(D) 3.5
Answer
Answer: B
94. X is a partner in a firm. He withdrew regularly ₹1,000 at the beginning of every month for the
six months ending 31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest
charged will be :
(A) ₹240
(B) ₹140
(C) ₹100
(D) ₹120
Answer
Answer: B
95. Y is a partner in a firm. He withdrew regularly ₹3,000 at the end of every month for the six
months ending 31st March, 2019. If interest on drawings is charged @ 10% p.a. the interest
charged will be :
(A) ₹375
(B) ₹450
(C) ₹525
(D) ₹900
Answer
Answer: A
96. Z is a partner in a firm. He withdrew regularly ?2,000 every month for the six months ending
31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest charged will be :
(A) ₹480
(B) ₹280
(C) ₹200
(D) ₹240
Answer
Answer: D
97. A partner withdraws ₹8,000 each on 1st April and 1st Oct. Interest on his drawings @ 6% p.a.
on 31 st March will be :
(A) ₹480
(B) ₹720
(C) ₹240
(D) ₹960
Answer
Answer: B
98. A partner draws ₹2,000 each on 1st April 2018, 1st July 2018, 1st October, 2018 and 1st
January 2019. For the year ended 31st March, 2019 interest on drawings @ 8% per annum will
be :
(A) ₹540
(B) ₹320
(C) ₹960
(D) ₹400
Answer
Answer: D
99. A partner withdraws from firm ₹7,000 at the end of each month. At the rate of 6% per annum
total interest will be :
(A) ₹5,040
(B) ₹2,310
(C) ₹3,570
(D) ₹1,370
Answer
Answer: B
Answer
Answer: C
101. Sony and Romy are equal partners with fixed capitals of ₹4,00,000 and ₹3,00,000
respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered
that interest on capitals was provided @ 8% instead of 10% p.a. In the adjusting entry :
(A) Sony will be credited by ₹8,000 and Romy will be credited by ₹6,000.
(B) Sony will be debited by ₹8,000 and Romy will be debited by ₹6,000.
(C) Sony will be debited by ₹1,000 and Romy will be credited by ₹1,000.
(D) Sony will be credited by ₹1,000 and Romy will be debited by ₹1,000.
Answer
Answer: D
102. Asha and Vipasha are equal partners with fixed capitals of ₹5,00,000 and ₹2,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 6% instead of 5% p.a. In the adjusting entry :
(A) Asha will be debited by ₹1,500 and Vipasha will be credited by ₹1,500;
(B) Asha will be credited by ₹1,500 and Vipasha will be debited by ₹1,500;
(C) Asha will be debited by ₹5,000 and Vipasha will be debited by ₹2,000;
(D) Asha will be credited by ₹5,000 and Vipasha will be credited by ₹2,000;
Answer
Answer: A
103. P and Q sharing profits in the ratio of 2 : 1 have fixed capitals of ₹90,000 and f60,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 6% instead of 8% p.a. In the adjusting entry :
(A) P will be credited by ₹1,800 and Q will be credited by ₹1,200;
(B) P will be debited by ₹200 and Q will be credited by ₹200;
(C) P will be credited by ₹200 and Q will be debited by ₹200;
(D) P will be debited by ₹1,800 and Q will be debited by ₹1,200;
Answer
Answer: B
104. A and B sharing profits in the ratio of 7 : 3 have fixed capitals of ₹2,00,000 and ₹1,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 12% instead of 10% p.a. In the adjusting entry :
(A) A will be debited by ₹4,000 and B will be debited by ₹2,000;
(B) A will be credited by ₹4,000 and B will be credited by ₹2,000;
(C) A will be debited by ₹200 and B will be credited by ₹200;
(D) A will be credited by ₹200 and B will be debited by ₹200;
Answer
Answer: D
105. Xand 7are partners in the ratio of 3 : 2. Their fixed capitals are ₹2,00,000 and ₹1,00,000
respectively. After clsoing the accounts for the year ending 31st March 2019, it was discovered
that interest on capital was allowed @ 12% instead of 10% per annum. By how much amount A
will be debited/credited in the adjustment entry :
(A) ₹600 (Debit)
(B) ₹400 (Credit)
(C) ₹400 (Debit)
(D) ₹600 (Credit)
Answer
Answer: C
106. X, Y and Z are equal partners with fixed capitals of ₹2,00,000, ₹3,00,000 and ?4,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals @ 8% p.a. was omitted to be provided. In the adjusting entry :
(A) Dr. X and Cr. Y by ₹8,000
(B) Cr. X and Dr. Z by ₹8,000
(C) Dr. X and Cr. Z by ₹8.000
(D) Cr. X and Dr. Y by ₹8,000
Answer
Answer: C
107. P, Q and R arc equal partners with fixed capitals of ₹5,00,000, ₹4,00,000 and ₹3,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 7% instead of 9% p.a. In the adjusting entry :
(A) P will be credited by ₹2,000 and Q will be debited by ₹2,000.
(B) P will be debited by ₹2,000 and Q will be credited by ₹2,000.
(C) P will be debited by ₹2,000 and R will be credited by ₹2,000.
(D) P will be credited by ₹2,000 and R will be debited by ₹2,000.
Answer
Answer: D
108. X, 7and Z are equal partners with fixed capitals of ₹5,00,000, ?3,00,000 and ₹1,00,000
respectively. After closing the accounts for the year ending 31st March 2019 it was discovered
that interest on capitals was provided @ 6% instead of 5% p.a. In the adjusting entry :
(A) Dr. X and Cr. Z by ₹2,000
(B) Cr. X and Dr. Z by ₹2,000
(C) Dr. X and Cr. Y by ₹2,000
(D) Cr. X and Dr. Y by ₹2,000
Answer
Answer: A
109. P, Q, and R sharing profits in the ratio of 2 : 1 : 1 have fixed capitals of f4,00,000, ₹3,00,000
and ₹2,00,000 respectively. After closing the accounts for the year ending 31st March 2019 it was
discovered that interest on capitals was provided @ 6% instead of 8% p.a. In the adjusting entry :
(A) Cr. P ₹1,000; Dr. Q ₹1,500 and Cr. R ₹500
(B) Dr. P ₹500; Cr. Q ₹1,500 and Dr. R ₹1,000
(C) Cr. P ₹500; Dr. Q ₹1,500 and Cr. R ₹1,000
(D) Dr. P ₹1,000; Cr. Q ₹1,500 and Dr. R ₹500
Answer
Answer: D
110. A, B and C sharing profits in the ratio of 2 : 2 : 1 have fixed capitals of ₹3,00,000, ₹2,00,000
and ₹1,00,000 respectively. After closing the accounts for the year ending 31st March 2019 it was
discovered that interest on capitals was provided @ 12% instead of 10% p.a. In the adjusting
entry :
(A) Cr. A ₹1,200; Dr. B ₹800 and Dr. C ₹400
(B) Dr. A ₹1,200; Cr. B ₹800 and Cr. C ₹400
(C) Cr. A ₹800; Cr. B ₹400 and Dr. C ₹1,200
(D) Dr. A ₹800; Dr. B ₹400 and Cr. C ₹1,200
Answer
Answer: B
111. X, Y, and Z are partners in the ratio of 4 : 3 : 2. Salary to X ₹15,000 and to Z ₹3,000 omitted
and profits distributed. For rectification, now X will be credited :
(A) ₹15,000
(B) ₹1,000
(C) ₹12,000
(D) ₹7,000
Answer
Answer: D
Answer
Answer: C
113. Guarantee given to partner ‘A’ by the other partners ‘B & C’ means :
(A) In case of loss, ‘A’ will not contribute towards that loss.
(B) In case of insufficient profits, ‘A’ will receive only the minimum guarantee amount.
(C) In case of loss or insufficient profits, ‘A’ will withdraw the minimum guarantee amount.
(D) All of the above.
Answer
Answer: C
114. P, Q and R are partners in a firm in 3 : 2 : 1. R is guaranteed that he will get minimum of
₹20,000 as his share of profit every year. Firm’s profit was ₹90,000. Partners will get:
(A) P ₹40,000; Q ₹30,000; R ₹20,000;
(B) P ₹42,500; Q ₹27,500; R ₹20,000;
(C) P ₹45,000; Q ₹30,000; R ₹15,000;
(D) P ₹42,000; Q ₹28,000; R ₹20,000;
Answer
Answer: D
115. A, Y and Z are partners in the ratio of 5 : 4 : 3. A has given to Za guarantee of minimum
₹10,000 profit. For the year ending 31st March 2019, firm’s profit is ₹28,800. Js share in profit will
be :
(A) ₹9,200
(B) ₹9,600
(C) ₹7,200
(D) ₹12,000
Answer
Answer: A
116. E, Fand G share profits in the ratio of 4 : 3 : 2. G is given a guarantee that his share of profits
will not be less than ₹75,000. Deficiency if any, would be borne by E and F equally Firm’s profit
was ₹2,70,000. As share of profit will be :
(A) ₹90,000
(B) ₹82,500
(C) ₹97,500
(D) ₹75,000
Answer
Answer: B
117. X, Y, and Z are partners in the ratio of 6 : 4 : 1. In the firm, A has guaranteed Z for his
minimum profit of ₹15,000. Firm’s profit was ₹99,000. In the firm profit As share will be :
(A) ₹30,000
(B) ₹15,000
(C) ₹48,000
(D) ₹45,000
Answer
Answer: C
118. P, Q, and R are partners in 3 : 2 : 1. R is guaranteed that his share of profit will not be less
than ₹70,000. Any deficiency will be borne by P and Q in the ratio of 2 : 1. Firm’s profit was
₹2,40,000. Share of P will be :
(A) ₹1,00,000
(B) ₹1,10,000
(C) ₹1,20,000
(D) ₹1,02,000
Answer
Answer: A
119. A Y and Z are partners in 5 : 4 : 1. Z is guaranteed that his share of profit will not be less than
₹80,000. Any deficiency will be borne by A and Y in 3 : 2. Firm’s profit was ₹5,60,000. How much
deficiency will be borne by Y :
(A) ₹2,14,400
(B) ₹14,400
(C) ₹2,09,600
(D) ₹9,600
Answer
Answer: D
120. P and Q are partners sharing profits in the ratio of 1 : 2. R was manager who received the
salary of ₹10,000 p.m. in addition to commission of 10% on net profits after charging such
commission. Total remuneration to R amounted to ₹1,80,000. Profit for the year before charging
salary and commission was :
(A) ₹7,20,000
(B) ₹6,00,000
(C) ₹7,80,000
(D) ₹6,60,000
Answer
Answer: C
121. X and Y are partners. X draws a fixed amount at the beginning of every month. Interest on
drawings is charged @8% p.a. At the end of the year interest on X’s drawings amounts to
*₹2,600. Drawings of A’were :
(A) ₹8,000 p.m.
(B) ₹7,000 p.m.
(C) ₹6,000 p.m.
(D) ₹5,000 p.m.
Answer
Answer: D
122. A and B are partners. B draws a fixed amount at the end of every month. Interest on
drawings is charged @15% p.a. At the end of the year interest on B’s drawings amounts to
₹8,250. Drawings of B were :
(A) ₹12,000 p.m.
(B) ₹10,000 p.m.
(C) ₹9,000 p.m.
(D) ₹8,000 p.m.
Answer
Answer: B
123. A and B are partners with a profit-sharing ratio of 2 : 1 and capitals of ₹3,00,000 and
₹2,00,000 respectively. They are allowed 6% p.a. interest on their capitals and are charged 10%
p.a. interest on their drawings. Their drawings during the year were A ₹60,000 and B ₹40,000. B’s
share of net profit as per profit and loss appropriation account amounted to ₹40,000. Net Profit
of the firm before any appropriations was :
(A) ₹1,22,000
(B) ₹1,13,000
(C) ₹1,17,000
(D) ₹1,45,000
Answer
Answer: D
124. A and B are partners in a firm. They are entitled to interest on their capitals but the net profit
was not sufficient for this interest, then the net profit will be distributed among partners in : (CPT,
Dec. 2012)
(A) Agreed Ratio
(B) Profit Sharing Ratio
(C) Capital Ratio
(D) Equally
Answer
Answer: C
Admission of a Partner Class 12 Accountancy
MCQs Pdf
Choose the Best Alternate :
1. A new partner may be admitted into a partnership :
(A) With the consent of any one partner
(B) With the consent of majority of partners
(C) With the consent of all old partners
(D) With the consent of 2/3rd of old partners
Answer
Answer: C
Answer
Answer: B
Answer
Answer: D
4. X and Y are partners sharing profit in the ratio of 3 : 2. Z was admitted with 1/4 share in profits
which he acquires equally from X and Y. The new ratio will be:
(A) 9 : 6 : 5
(B) 19 : 11 : 10
(C) 3 : 3 : 2
(D) 3 : 2 : 4
Answer
Answer: B
5. A and B share profits in the ratio of 2 : 1. C is admitted with 1/4 share in profits. C acquires 3/4
of his share from A and 1/4 of his share from B. The new ratio will be:
(A) 2 : 1 : 1
(B) 23 : 13 : 12
(C) 3 : 1 : 1
(D) 13 : 23 : 12
Answer
Answer: B
6. B and N are partners in a firm sharing profits in the ratio of 3 : 2. They admit S as a partner for
l/4th share in the profits. S acquires his share from B and N in the ratio of 2 : 1. The new profit-
sharing ratio will be :
(A) 2:1:4
(B) 19:26: 15
(C) 3:2:4
(D) 26 : 19 : 15
Answer
Answer: D
7. A and B are partners sharing profits and losses in the ratio of 7 : 5. They agree to admit C, their
manager, into partnership who is to get 1/6th share in the profits. He acquires this share as
1/24th from A and 1/8th from B, The new profit sharing ratio will be :
(A) 13 : 7 : 4
(B) 7 : 13 : 4
(C) 7 : 5 : 6
(D) 5 : 7 : 6
Answer
Answer: A
8. A and B share profits in the ratio of 3 : 2. They agreed to admit C on the condition that A will
sacrifice 325th of his share of profit in favour of C and B will sacrifice 125th of his profits in favour
of C. The new profit sharing ratio will be :
(A) 12 : 9:4
(B) 3 : 2 : 4
(C) 66 : 48 : 11
(D) 48 : 66 : 11
Answer
Answer: C
9. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is
admitted. A surrenders 1/15th share of his profit in favour of C and B surrenders 2/15th of his
share in favour of C. The new ratio will be :
(A) 8 : 4 : 3
(B) 42 : 26 : 7
(C) 4 : 8 : 3
(D) 26 : 42 : 7
Answer
Answer: B
10. A and B are partners sharing profit or loss in the ratio of 4 : 1. A surrenders 1/4 of his share
and B surrenders 112 of his share in favour of C, a new partner. What will be the C’s share?
Answer
Answer: D
11. A and B are partners in a business sharing profits and losses in the ratio of 7 : 3 respectively.
They admit C as a new partner. A sacrificed 1/7th share of his profit and B sacrificed 1/3rd of his
share in favour of C. The new profit sharing ratio of A, B and C will be : (C.S. Foundation, June,
2013)
(A) 3 : 1 : 1
(B) 2 : 1 : 1
(C) 2 : 2 : 1
(D) None of the above
Answer
Answer: A
12. A and B are partners sharing profit or loss in the ratio of 3 : 2. C is admitted into partnership
as a new partner. A sacrifices 1/3 of his share of B sacrifices 1/4 of his share in favour of C. What
will be the C’s share in the firm?
Answer
Answer: C
13. A and B are partners in a firm sharing profits and losses in the ratio of 2 : 3. C is admitted for
1/5 share in the profits of the firm. If C gets it wholly from A, the new profit sharing ratio after C’s
admission will be :
(A) 1 : 3 : 3
(B) 3 : 1 : 1
(C) 2 : 2 : 1
(D) 1 : 3 : 1
Answer
Answer: D
14. A and B are partners sharing profits in the ratio of 4 : 3. They admitted C as a new partner who
gets 1/5th share of profit, entirely from A. The new profit sharing ratio will be :
(A) 20 : 8 : 7
(B) 13 : 15 : 15
(C) 13 :15:7
(D) 15 : 13 : 5
Answer
Answer: C
15. A, B, C, D are in partnership sharing profits and losses in the ratio of 9 : 6 : 5 : 5. E joins the
partnership for 20% share. A. B, C and D would in future share profits among themselves as 3/10 :
4/10 : 2/10 : 1/10. The new profit sharing ratio will be:
(A) 3:4:2: 1:5
(B)9:6:5:5:5
(C) 6 : 8 : 4 : 2 : 5
(D) 8 : 6 : 4 : 2 : 5
Answer
Answer: C
16. A and B are in partnership sharing profits and losses as 3 : 2. C is admitted for 1/4th share.
Afterwards, D enters for 20 paisa in the rupee. The new profit sharing ratio after D’s admission will
be :
(A) 9 : 6 : 5 : 5
(B) 6 : 9 : 5 : 5
(C) 3 : 2 : 4 : 5
(D) 3 : 2 : 5 : 5
Answer
Answer: A
Answer
Answer: B
18. X and Y are partners sharing profits in the ratio of 3 : 2. Z is admitted as a partner. Calculate
sacrifi cing ratio if new profit sharing ratio is 9 : 7 : 4.
(A) 3 : 1
(B) 3 : 2
(C) 1:3
(D) 9 : 7
Answer
Answer: A
19. A and B are partners sharing profits in the ratio of 5 : 3. A surrenders 14th of his share and B
surrenders 15 of his share in favour of C, a new partner. What is the sacrificing ratio?
(A) 4 : 5
(B) 5 : 4
(C) 12 : 25
(D) 25 : 12
Answer
Answer: D
20. A and B are partners sharing profits in the ratio of 11 : 4. C was admitted. A surrendered 111th
of his share and B14 of his share in favour of C. The sacrificing ratio will be :
(A) 11 : 4
(B) 1 : 1
(C) 4:11
(D) 7 : 4
Answer
Answer: B
21. P and Q are partners sharing profits in the ratio of 9 : 7. R is admitted as a partner with 920th
share in the profits, which he takes 15th from P and 14th from Q Sacrificing ratio will be :
(A) 5 : 4
(B) 9 : 7
(C) 7 : 9
(D) 4 : 5
Answer
Answer: D
22. A, B and C are partners sharing in the ratio of 5 : 4 : 3. They admit D for 17th share. It is agreed
that B would retain his original share. Sacrificing ratio will be :
(A) A, B and C — 5 : 4 : 3
(B) A and C — 4 : 3
(C) A and C — 5 : 4
(D) Z and C — 5 : 3
Answer
Answer: D
23. A and B are partners sharing profits and losses in the ratio of 5 : 4. C is admitted for 15th
share. A and B decide to share equally in future. Sacrificing
ratio will be :
(A) 5 : 4
(B) 2 : 7
(C) 7 : 2
(D) 1 : 1
Answer
Answer: C
24. A and B are partners. They admit C for 13rd share. In future the ratio between A and B would
be 2 : 1. Sacrificing ratio will be :
(A) 2 : 1
(B) 1 : 1
(C) 5:1
(D) 1 : 5
Answer
Answer: D
Treatment of Goodwill :
25. A and B are partners sharing profits and losses as 2 : 1. C is admitted and profit sharing ratio
becomes 4 : 3 : 2. Goodwill is valued at ₹94,500. C brings required goodwill in cash. Goodwill
amount will be Credited to :
(A) A ₹14,000 and B ₹7,000
(B) A ₹12,000 and B ₹9,000
(C) A ₹21,000
(D) A ₹94,500
Answer
Answer: C
26. X and 7 are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into
partnership with 15th share in profits which he acquires equally from A and Y. Z brings in ₹40,000
as goodwill in cash. Goodwill amount will be credited to :
(A) X ₹20,000; Y ₹20,000
(B) X ₹25,000; Y ₹15,000
(C) X ₹24,000; T ₹16,000
(D) X ₹4,000; Y ₹4,000
Answer
Answer: A
27. A and B are partners sharing profits and losses in the ratio of 3 : 2. C is admitted into
partnership for 15th share in profit. He pays ₹1,00,000 as goodwill. The ratio of the partners A, B
and C in the new firm would be 3 : 1 : 1. Goodwill will be credited to:
(A) Only A ₹1,00,000
(B) Only B ₹1,00,000
(C) A ₹60,000; B ₹40,000
(D) A ₹75,000; B ₹25,000
Answer
Answer: B
28. A and B are partners in a firm sharing profits in the ratio of 2 : 1. C is admitted as a partner. A
and B surrender 12 of their respective share in favour of C. C is to bring his share of premium for
goodwill in cash. The goodwill of the firm is estimated at ? 60,000. Credit will be given to :
(A) A ₹15,000; B ₹15,000
(B) A ₹40,000; B ₹20,000
(C) A ₹30,000; B ₹30,000
(D) A ₹20,000; B ₹10,000
Answer
Answer: D
29. P and S are partners sharing profits in the ratio of 3 : 2. R is admitted with 15th share and he
brings in ₹84,000 as his share of goodwill which is Credited to the Capital Accounts of P and S
respectively with ₹63,000 and ₹21,000. New profit sharing ratio will be :
(A) 3 : 1 : 5
(B) 9 : 7 : 4
(C) 3 : 2 : 5
(D) 7 : 9 : 4
Answer
Answer: B
30. Partners A, B and C share the profits of a business in the ratio of 3 : 2 : 1 respectively. They
admit D who brings in ₹60,000 for his share of goodwill. A, B, C and D decide to share the profits
respectively in the ratio of 5 : 3 : 2 : 2. Credit will be given to :
(A) A ₹6,000; B ₹6,000
(B) A ₹30,000; B ₹18,000; C ₹12,000
(C) A ₹30,000; B ₹20,000; C ₹10,000
(D) A ₹30,000; B ₹30,000
Answer
Answer: D
31. A and B are partners sharing profits and losses as 2 : 1. C and D are admitted and profit
sharing ratio becomes 3 : 2 : 4 : 1. Goodwill is valued at ?90,000. C and D bring required goodwill
in Cash. Credit will be given to :
(A) A ₹30,000; B ₹15,000
(B) A ₹66,000; B ₹24,000
(C) A ₹33,000; B ₹12,000
(D) A ₹27,000; B ₹18,000
Answer
Answer: C
32. A and B are partners sharing profits and losses in 3 : 2. They admit C into partnership for 330th
share in the profits. A surrenders 13rd of his share and B surrenders 14th of his share in favour of
C. Goodwill of the firm is valued at ₹3,00,000 but C is unable to bring his share of goodwill in
cash. Credit will be given to :
(A) A ₹54,000; B ₹36,000
(B) A ₹60,000; B ₹30,000
(C) A ₹2,00,000; B ₹1,00,000
(D) A ₹1,80,000; 5 ₹1,20,000
Answer
Answer: B
33. A and B are partners sharing profits in the ratio of 7 : 5. C is admitted into the partnership
for 16th share which he acquires 124th from A and 18th from B. C does not pay anything for his
share of goodwill. On C’s admission firm’s goodwill was valued at ₹1,80,000. Credit will be given
to :
(A) A ₹22,500; B ₹7,500
(B) A ₹7,500; B ₹22,500
(C) A ₹45,000; B ₹1,35,000
(D) A ₹1,35,000; B ₹45,000
Answer
Answer: B
34. X and Y are partners in a firm sharing profits in the ratio of 5 : 3. They admitted Z as a new
partner. The new profit sharing ratio will be 4 : 3 : 2. The firm’s goodwill on Z’s admission was
valued at ₹1,26,000. But Z could not bring any amount of goodwill in Cash. Credit will be given to
:
(A) X ₹17,500; Y ₹10,500
(B) X ₹16,000; Y ₹12,000
(C) X ₹22,750; Y ₹5,250
(D) A ₹1,02,375; Y ₹23,625
Answer
Answer: C
35. A and B are partners sharing profits in the ratio of 3 : 2. They admit C into the partnership
with 14th share in future profits. The new profit sharing ratio is 5 : 4 : 3. The firm’s goodwill on C’s
admission was valued at ₹1,44,000. But C could not bring any amount for goodwill in Cash. Credit
will be given to :
(A) A ₹80,000; B ₹64,000
(B) A ₹20,000; B ₹16,000
(C) A ₹1,05,600; B ₹38,400
(D) A ₹26,400; B ₹9,600
Answer
Answer: D
36. P, Q and R share profits in the ratio of 5 : 3 : 2. S is entitled for 15th share in profits which he
acquires equally from P, Q and R. Goodwill of the firm is to be valued at three year’s purchase of
last four year’s profits which are ₹50,000; ₹60,000; (-) ₹30,000 and ₹40,000. S cannot bring his
share of goodwill in cash. Credit will be given to :
(A) P ₹30,000; Q ₹30,000; R ₹30,000
(B) P ₹6,000; Q ₹6,000; R ₹6,000
(C) P ₹45,000; Q ₹27,000; R ₹18,000
(D) P ₹9,000; Q ₹9,000; R ₹9,000
Answer
Answer: B
37. When a new partner brings his share of goodwill in cash, the amount is debited to:
(A) Goodwill A/c
(B) Capital A/c of the new partner
(C) Cash A/c
(D) Capital A/cs of the old partners
Answer
Answer: C
38. When a new partner does not bring his share of goodwill in cash, the amount is debited to :
(A) Cash A/c
(B) Premium A/c
(C) Current A/c of the new partner
(D) Capital A/cs of the old partners
Answer
Answer: C
39. If at the time of admission, some profit and loss account balance appears in the books, it will
be transferred to : (CPT; Dec. 2011)
(A) Profit & Loss Adjustment Account
(B) All partners’ Capital Accounts
(C) Old partners’ Capital Accounts
(D) Revaluation Account
Answer
Answer: C
Answer
Answer: A
41. If the new partner brings his share of goodwill in cash, it will be shared by old partners in :
(A) Ratio of sacrifice
(B) Old profit sharing ratio
(C) New profit sharing ratio
(D) In Capital ratio
Answer
Answer: A
42. A and B share profits and losses equally. They have ₹20,000 each as capital. They admit C as
equal partner and goodwill was valued at ₹30,000. C is to bring in ₹30,000 as his capital and
necessary cash towards his share of goodwill. Goodwill Account will not remain open in books. If
profit on revaluation is ₹13,000, find the closing balance of the capital accounts.
(A) ₹31,500; ₹31,500; ₹30,000
(B) ₹31,500; ₹31,500; ₹20,000
(C) ₹26,500; ₹26,500; ₹30,000
(D) ₹20,000; ₹20,000; ₹30,000
Answer
Answer: A
43. In the absence of an express agreement as to who will contribute to new partners’ share of
profi t, it is implied that the old partners will contribute :
(A) Equally
(B) In the ratio of their capitals
(C) In their old profit sharing ratio
(D) In the gaining ratio
Answer
Answer: C
Answer
Answer: B
45. If the incoming partner brings the amount of goodwill in Cash and also a balance exists in
goodwill account, then this goodwill account is written off among the old partners in
(A) The new profit sharing ratio
(B) The old profit sharing ratio
(C) The sacrificing ratio
(D) The gaining ratio
Answer
Answer: B
46. If, at the time of admission, the revaluation A/c shows a profit, it should be credited to :
(A) Old partners capital accounts in the old profit sharing ratio.
(B) All partners capital accounts in the new profit sharing ratio.
(C) Old partners capital accounts in the new profit sharing ratio.
(D) Old partners capital accounts in the sacrificing ratio.
Answer
Answer: A
Answer
Answer: C
48. In case of admission of a partner, the entry for unrecorded investments will be:
(A) Debit Partners Capital A/cs and Credit Investments A/c
(B) Debit Revaluation A/c and Credit Investment A/c
(C) Debit Investment A/c and Credit Revaluation A/c
(D) None of the above
Answer
Answer: C
49. When the balance sheet is prepared after the new partnership agreement, the assets and
liabilities are recorded at:
(A) Historical cost
(B) Current cost
(C) Realisable value
(D) Revalued figures
Answer
Answer: D
50. Goodwill of a firm of A and B is valued at ₹30,000. It is appearing in the books at ₹12,000. C is
admitted for 1/4 share. What amount he is supposed to bring for goodwill?
(A) ₹3,000
(B) ₹4,500
(C) ₹7,500
(D) ₹10,500
Answer
Answer: C
51. A and B are partners of a partnership firm sharing profits in the ratio of 3 : 2 respectively. C
was admitted for 1/5th share of profit. Machinery would be appreciated by 10% (book value
₹80,000) and building would be depreciated by 20% (₹2,00,000). Unrecorded debtors of ₹1,250
would be brought into books now and a creditor amounting to ₹2,750 died and need not pay
anything on this account. What will be profit/loss on revaluation?
(A) Loss ₹28.000
(B) Loss ₹40,000
(C) Profits ₹28,000
(D) Profits ₹40,000
Answer
Answer: A
52. X and Y are partners sharing profits in the ratio 5:3. They admitted Z for 1/5th profits, for
which he paid ₹60,000 against capital and ₹30,000 against goodwill. Find the capital balance for
each partner taking Z’s capital as base capital.
(A) ₹1,50,000; ₹60,000 and ₹60,000
(B) ₹1,50,000; ₹60,000 and ₹90,000
(C) ₹1,50,000; ₹90,000 and ₹60,000
(D) ₹1,50,000; ₹90,000 and ₹90,000
Answer
Answer: C
53. Ramesh and Suresh are partners sharing profits in the ratio of 2 : 1 respectively. Ramesh
Capital is ₹1,02,000 and Suresh Capital is ₹73,000. They admit Mahesh and agree to give him
1/5th share in future profit. Mahesh brings ₹14,000 as his share of goodwill. He agrees to
contribute capital in the new profit sharing ratio. How much capital will be brought by Mahesh?
(C.S. Foundation, June 2013)
(A) ₹43,750
(B) ₹45,000
(C) ₹47,250
(D) ₹48,000
Answer
Answer: C
54. A and B are partners in a firm having capital balances of ₹54,000 and ?36,000 respectively.
They admit C in partnership for 1/3rd share and C is to bring proportionate amount of capital.
The capital amount of C would be : (C.S. Foundation, Dec. 2012)
(A) ₹90,000
(B) ₹45,000
(C) ₹5,400
(D) ₹36,000
Answer
Answer: B
55. A and B are in partnership sharing profits in the ratio of 3 : 2. They take C as a new partner.
Goodwill of the firm is valued at ₹3,00,000 and C brings ₹30,000 as his share of goodwill in cash
which is entirely credited to the Capital Account of A. New profit sharing ratio will be :
(A) 3 : 2 : 1
(B) 6 : 3 : 1
(C) 5 : 4 : 1
(D) 4 : 5 : 1
Answer
Answer: C
56. X and Tare partners sharing profits in the ratio of 4 : 3. Z is admitted for 1/5th share and he
brings in ₹1,40,000 as his share of goodwill in cash of which ₹1,20,000 is credited to X and
remaining amount to Y. New profit sharing ratio will be :
(A) 4 : 3 : 5
(B) 2 : 2 : 1
(C) 1 : 2 : 2
(D) 2 : 1 : 2
Answer
Answer: B
57. A and B are partners sharing profits in the ratio of 2 : 3. Their Balance Sheet shows Machinery
at ₹2,00,000; Stock at ₹80,000 and Debtors at ₹1,60,000. C is admitted and new profit sharing
ratio is agreed at 6 : 9 : 5. Machinery is revalued at ₹1,40,000 and a provision is made for doubtful
debts @5%. A’s share in loss on revaluation amount to ₹20,000. Revalued value of Stock will be :
(A) ₹62,000
(B) ₹1,00,000
(C) ₹60,000
(D) ₹98,000
Answer
Answer: D
58. A, B and C are partners sharing profits in ratio of 3 : 2 : 1. They agree to admit D into the firm.
A. B and C agreed to give 1/3rd, 1/6th, 1/9th share of their profit. The share of profit of D will be :
Answer
Answer: D
59. X and Y are partners sharing profits in the ratio 2 : 3. They admitted Z for 1/5th share of
profits, for which he paid ₹1,20,000 against capital and 760,000 as goodwill. Find the capital
balances for each partner taking Z’s capital as base capital.
(A) ₹3,00,000, ₹1,20,000 and ₹1,20,000
(B) ₹3,00,000, ₹1,20,000 and ₹1,80,000
(C) ₹1,92,000, ₹2,88,000 and ₹1,20,000
(D) ₹3,00,000, ₹1,80,000 and ₹1,80,000
Answer
Answer: C
60. A, B, C and D are partners. A and B share 2/3rd of profits equally and C and D share remaining
profits in the ratio of 3 : 2. Find the profit sharing ratio of A, B, C and D. (CPT; Dec. 2012)
(A) 5 : 5 : 3 : 2
(B) 7 : 7 : 6 : 4
(C) 2.5 : 2.5 : 8 : 6
(D) 3 : 9 : 8 : 3
Answer
Answer: A
61. Sacrificing ratio is used to distribute in case of admisstion of a partner : (CPT; Dec. 2012)
(A) Reserves
(B) Goodwill
(C) Revaluation Profit
(D) Balance in Profit and Loss Account
Answer
Answer: B
62. X and Y are partners in a firm with capital of ₹1,80,000 and ₹2,00,000. Z was admitted for
1/3rd share in profits and brings ₹3,40,000 as capital, calculate the amount of goodwill: (CPT;
June 2012)
(A) ₹2,40,000
(B) ₹1,00,000
(C) ₹1,50,000
(D) ₹3,00,000
Answer
Answer: D
63. A and B are partners sharing profits and losses in the ratio of 5 : 3. On admission, C brings
₹70,000 as cash and ₹43,000 against Goodwill. New profit ratio between A, B and C is 7 : 5 : 4.
The sacrificing ratio of A and B is: (CPT; Dec. 2012)
(A) 3 : 1
(B) 1 : 3
(C) 4 : 5
(D) 5 : 9
Answer
Answer: A
Answer
Answer: A
Answer
Answer: B
3. What treatment is made of accumulated profits and losses on the retirement of a partner?
(A) Credited to all partner’s capital accounts in old ratio.
(B) Debited to all partner’s capital accounts in old ratio.
(C) Credited to remaining partner’s capital accounts in new ratio.
(D) Credited to remaining partner’s capital accounts in gaining ratio.
Answer
Answer: A
Answer
Answer: B
5. What journal entry will be recorded for writing off the goodwill already existing in Balance
Sheet at the time of retirement of a partner?
(A) Retiring Partner’s Capital A/c Dr. To Goodwill A/c
(B) All Partner’s Capital A/cs (including retiring) Dr. (in old ratio) To Goodwill A/c
(C) Remaining Partner’s Capital A/cs Dr. (in gaining ratio) To Goodwill A/c
(D) Remaining Partner’s Capital A/cs Dr. (in new ratio) To Goodwill A/c
Answer
Answer: B
6. What journal entry will be recorded for deceased partner’s share in profit from the closure of
last balance sheet till the date of his death?
(A) Profit and Loss A/c To Deceased Partner’s Capital A/c Dr.
(B) Deceased Partner’s Capital A/c To Profit and Loss A/c Dr.
(C) Deceased Partner’s Capital A/c To Profit and Loss Suspense A/c Dr.
(D) Profit and Loss Suspense A/c To Deceased Partner’s Capital A/c Dr.
Answer
Answer: D
7. On retirement of a partner, goodwill will be credited to the Capital Account of:
(A) Retiring Partner
(B) Remaining Partners
(C) All Partners
(D) None of the Above
Answer
Answer: A
Answer
Answer: C
Answer
Answer: A
10. A, B and C are partners in 3 : 4 : 2. B wants to retire from the firm. The profit on revaluation on
that date was ₹36,000. New ratio of A and C is 5 : 3. Profit on revaluation will be distributed as :
(A) A ₹16,000; B ₹12,000; C ₹8,000
(B) A ₹12,000; B ₹16,000; C ₹8,000
(C) A ₹22,500; C ₹13,500
(D) A ₹23,625; C ₹12,375
Answer
Answer: B
11. A, B and C are partners sharing profits in the ratio of 5 : 2 : 1. If the new ratio on the
retirement of A is 3 : 2, what will be the gaining ratio?
(A) 11: 14
(B) 3 : 2
(C) 2 : 3
(D) 14 : 11
Answer
Answer: D
12. P, Q and R are partners sharing profits in the ratio of 5 : 4 : 3. Q retires and P and R decide to
share future profits equally. Gaining Ratio will be :
(A) 5 : 3
(B) 1 : 1
(C) 1 : 3
(D) 3 : 1
Answer
Answer: C
13. A, B and C are partners sharing profits in the ratio of 1/2 : 1/4 : 1/4. New ratio on the
retirement of B will be :
(A) 2 : 4
(B) 1 : 2
(C) 2 : 1
(D) 1/4 : 1/2
Answer
Answer: C
14. A, B and C are partners sharing profits in the ratio of 1/4 : 3/10 : 9/20. The New ratio on the
retirement of C will be :
(A) 6 : 5
(B) 5 : 6
(C) 4 : 3
(D) 4 : 10
Answer
Answer: B
15. X, Y and Z have been sharing profits in the ratio of 4 : 2 : 1 Z retires. X and Y take Z’s share
equally. New profit sharing ratio will be :
(A) 5 : 2
(B) 5 : 3
(C) 9 : 5
(D) 4 : 2
Answer
Answer: C
16. P, Q and R have been sharing profits and losses in the ratio of 5 : 3 : 2. Q retires. His share is
taken by P and R in the ratio of 2 : 1. New profit sharing ratio will be:
(A) 6 : 4
(B) 7 : 3
(C) 7 : 2
(D) 6 : 3
Answer
Answer: B
17. A, B and C share profits and losses of the firm equally. B retires from business and his share is
purchased by A and C in the ratio of 2 : 3. New profit sharing ratio between A and C respectively
would be : (C.S. Foundation, Dec. 2012)
(A) 01 : 01
(B) 02 : 02
(C) 07 : 08
(D) 03 : 05
Answer:
Answer: C
18. P, Q and R have been sharing profits in the ratio of 8 : 5 : 3. P retires. Q takes 3/16th share
from P and R takes 5/16th share from P. New profit sharing ratio will be :
(A) 1 : 1
(B) 10 : 6
(C) 9 : 7
(D) 5 : 3
Answer
Answer: A
19. A, B and C are equal partners. C retires. He surrenders 3/5th of his share in favour of A and 2/5
th in favour of B. New ratio will be :
(A) 3 : 2
(B) 8 : 7
(C) 7 : 8
(D) 2 : 3
Answer
Answer: B
20. P, Q and R are partners sharing profits in the ratio of 4 : 3 : 2. Q retires and his share was taken
up by P and R in the ratio 3 : 2. New profit sharing ratio will be :
(A) 16 : 29
(B) 29 : 16
(C) 3 : 2
(D) 2 : 3
Answer
Answer: B
21. L, P and G are three partners sharing profits in the ratio 15 : 9 : 8. G retires. L and P decided to
share profits in equal ratio. Gaining ratio will be :
(A) 15 : 9
(B) 9 : 15
(C) 7 : 1
(D) 1 : 7
Answer
Answer: D
22. On 1st April, 2019 A, B and C were partners sharing profits and losses in the ratio of 5 : 3 : 2
respectively. On this date B retires. The new profit sharing ratio of A and C will be 3 : 2. Gaining
ratio will be :
(A) 1 : 2
(B) 2 : 1
(C) 1 : 1
(D) 5 : 2
Answer
Answer: A
23. B, P and L sharing profits in the ratio 4:3:2. B retires, P and L decided to share profits in future
in the ratio of 5 : 3. Gaining ratio will be :
(A) 11 : 21
(B) 21 : 11
(C) 11 : 13
(D) 13 : 11
Answer
Answer: B
24. P, Q and R were partners sharing profits in the ratio 2 : 2 : 1 .Q retires and the new profit
sharing ratio of P and R will be 3 : 1. Gaining ratio will be :
(A) 1 : 7
(B) 2 : 1
(C) 1 : 2
(D) 7 : 1
Answer
Answer: D
25. A, B and C are equal partners in a firm. B retires and the remaining partners decide to share
the profits of the new firm in the ratio of 5 : 4. Gaining ratio will be :
(A) 1 : 1
(B) 1 : 2
(C) 2 : 1
(D) 5 : 4
Answer
Answer: C
26. A, B and C are partners sharing profit or loss in the ratio of 3 : 2 : 1. B retires and after B’s
retirement A and C agreed to share profit or loss in the ratio of
3 : 2 in future. Their gaining ratio will be :
(A) 3 : 1
(B) 1 : 3
(C) 3 : 7
(D) None of the above
Answer
Answer: C
27. A, B and C are partners sharing profit or loss in the ratio of 4 : 3 : 2. C retires and after C’s
retirement 4 and B agreed to share profit or loss in the ratio of 4 : 3 in future. Their gaining ratio
will be :
(A) 3 : 2 W
(B) 4 : 3
(C) 3 : 4
(D) 1 : 1
Answer
Answer: B
28. A, B and C are partners sharing profit or loss in the ratio of 2 : 3 : 4. A retires and after A’s
retirement B and C agreed to share profit or loss in the ratio of 3 : 4 in future. Their gaining ratio
will be :
(A) 2 : 3
(B) 4 : 3
(C) 3 : 4
(D) 1 : 1
Answer
Answer: C
29. A, B and C were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. The capital
balance are ₹50,000 for A, ?₹70,000 for B, ₹35,000 for C. B decided to retire from the firm and
balance in. reserve on the date was ₹25,000. If goodwill of the firm was valued at ₹30,000 and
profit on revaluation was ₹7,500 then, what amount will be payable to B1
(A) ₹70,820
(B) ₹76,000
(C) ₹75,000
(D) ₹95,000
Answer
Answer: D
30. P, Q and R are sharing profits and losses equally. R retires and the goodwill is appearing in the
books at ₹30,000. Goodwill of the firm is valued at . ₹1,50,000. Calculate the net amount to be
credited to R’s Capital A/c.
(A) ₹60,000
(B) ₹50,000
(C) ₹40,000
(D) ₹10,000
Answer
Answer: C
31. Ram, Krishna and Ganesh were sharing profits and losses in the ratio of 5 : 3 : 2. Ram retires
and Krishna and Ganesh share the future profits and losses equally. Goodwill of the firm is valued
at ₹1,00,000. Calculate the amount of goodwill to be debited to Krishna’s and Ganesha’s Capital
A/c.
(A) ₹60,000 & ₹40,000
(B) ₹20,000 & ₹30,000
(C) ₹40,000 & ₹60,000
(D) ₹30,000 & ₹20,000
Answer
Answer: B
32. A, B and C are partners with profit sharing ratio 4 : 3 : 2. B retires and goodwill was valued
₹1,08,000. If A & C share profits in 5 : 3, find out the goodwill shared by A and C in favour of B.
(A) ₹22,500 and ₹13,500
(B) ₹16,500and ₹19,500
(C) ₹67,500 and ₹40,500
(D) ₹19,500 and ₹16,500
Answer
Answer: D
33. A, B and C are sharing profits in the ratio of 3 : 2 : 1. B retires and on the day of B’s retirement
Goodwill is valued at ₹60,000. A and C decided to share future profits in the ratio of 3 : 2. Journal
entry will be :
(A) A’s Capital A/c Dr. 18,000 C’s Capital A/c Dr. 42,000 To B’s Capital A/c 60,000
(B) A’s Capital A/c Dr. 6,000 C’s Capital A/c Dr. 14,000 To B’s Capital A/c 20,000
(C) A’s Capital A/c Dr. 36,000 C’s Capital A/c Dr. 24,000 To B’s Capital A/c 60,000
(D) A’s Capital A/c Dr. 12,000 C’s Capital A/c Dr. 8,000 To B’s Capital A/c 20,000
Answer
Answer: B
34. P, Q and R share profits in the ratio of 5:4:3.// retires and the new ratio is 5 : 3. If R is given ?
6,000 as goodwill, journal entry will be :
(A) P’s Capital A/c Dr. 1,000 Q’s Capital A/c Dr. 5,000 To R’s Capital A/c 6,000
(B) P’s Capital A/c Dr. 5,000 Q’s Capital A/c Dr. 1,000 To R’s Capital A/c 6,000
(C) P’s Capital A/c Dr. 3,750 Q’s Capital A/c Dr. 2,250 To R’s Capital A/c 6,000
(D) P’s Capital A/c Dr. 3,333 Q’s Capital A/c Dr. 2,667 To R’s Capital A/c 6,000
Answer
Answer: B
35. X, Y and Z were partners in a firm sharing profits in the ratio of 3 : 2 : 1. X retired and the new
profit sharing ratio between Yand Z will be 5 : 4. On Xs retirement the goodwill of the firm was
valued at ₹54,000. Journal entry will be :
(A) Y’s Capital A/c Dr. 24,000 Z’s Capital A/c Dr. 30,000 To X’s Capital A/c 54,000
(B) Y’s Capital A/c Dr. 15,000 Z’s Capital A/c Dr. 12,000 To X’s Capital A/c 27,000
(C) Y’s Capital A/c Dr. 12,000 Z’s Capital A/c Dr. 15,000 To X’s Capital A/c 27,000
(D) X’s Capital A/c Dr. 27,000 To Y’s Capital A/c 12,000 To Z’s Capital A/c 15,000
Answer
Answer: C
36. A, B and C are partners sharing profits in the ratio of 3 : 4 : 5. B retires and the goodwill of the
firm is valued at ₹42,000. A and C decide to share profits in the ratio of 3 : 4. Journal entry will
be :
(A) A’s Capital A/c Dr. 6,000 C’s Capital A/c Dr. 8,000 To B’s Capital A/c 14,000
(B) A’s Capital A/c Dr. 7,500 C’s Capital A/c Dr. 6,500 To B’s Capital A/c 14,000
(C) A’s Capital A/c Dr. 22,500 C’s Capital A/c Dr. 19,500 To B’s Capital A/c 42,000
(D) B’s Capital A/c Dr. 14,000 To Z’s Capital A/c 7,500 To C’s Capital A/c 6,500
Answer
Answer: B
37. P, Q and R were partners sharing profits in the ratio 5 : 3 : 2 respectively. P retires from the
firm and Q and R decide to share future profits equally. Goodwill is valued at ₹50,000.
Adjustment entry for goodwill will be :
(A) Q’s Capital A/c Dr. 15,000 R’s Capital A/c Dr. 10,000 To P’s Capital A/c 25,000
(B) Q’s Capital A/c Dr. 20,000 R’s Capital A/c To Dr. 30,000 T’s Capital A/c 50,000
(C) Q’s Capital A/c Dr. 12,500 R’s Capital A/c Dr. 12,500 To P’s Capital A/c 25,000
(D) Q’s Capital A/c Dr. 10,000 R’s Capital A/c Dr. 15,000 To P’s Capital A/c 25,000
Answer
Answer: D
38. X, Y and Z are partners sharing profits in the ratio of 2 : 3 : 5. Goodwill already appearing in
their books at a value of ₹60,000. X retires and Yand decided to share future profits equally.
Journal entry w ill be :
(A) F s Capital A/c To A’s Capital A/c Dr. 12,000 12,000
(B) Fs Capital A/c To/Fs Capital A/c Dr. 60,000 60,000
(C) Xs Capital A/c Dr. 2,400 Fs Capital A/c Dr. 3,600 Z’s Capital A/c To Goodwill A/c Dr. 6,000
12,000
(D) Xs Capital A/c Dr. 12,000 Fs Capital A/c Dr. 18,000 Z’s Capital A/c Dr. 30,000
Answer
Answer: D
39. A, B and C are partners in a firm sharing profit/loss in the ratio of 2 : 2 : 1. On March 31, 2019,
C died. Accounts are closed on Dec., 31 every year. The sales for the year 2018 was ₹6,00,000 and
the profits were ?60,000. The sales for the period from Jan. 1, 2019 to March 31, 2019 were ?
2,00,000. The share of deceased partner in the current year’s profits on the basis of sales is :
(A) ₹20,000
(B) ₹8,000
(C) ₹3,000
(D) ₹4,000
Answer
Answer: D
40. A, B and C were partners sharing profits and losses in the ratio of 2 : 2 : 1. Books are closed on
31st March every year. C dies on 5th November, 2018. Under the partnership deed, the executors
of the deceased partner are entitled to his share of profit to the date of death, calculated on the
basis of last year’s profit. Profit for the year ended 31st March, 2018 was ₹2,40,000. C’s share of
profit will be :
(A) ₹28,000
(B) ₹32,000
(C) ₹28,800
(D) ₹48,000
Answer
Answer: C
41. P, Q and R were partners sharing profits in the ratio of their Capital ‘ contribution which were
₹6,00,000; ₹4,00,000 and ₹5,00,000 respectively. Their books are closed on 31st March every year.
P dies on 24th August, 2018. Under the partnership deed, deceased partner is entitled to his
share of profit/loss to the date of death based on the average profits of preceding three years.
Profits were 2015 ₹50,000; 2016 ₹1,20,000 (Loss); 2017 ₹30,000 and 2018 ₹60,000. P’s share of
profit/loss will be :
(A) ₹3,200
(B) ₹6,400
(C) ₹12,000
(D) ₹4,800
Answer
Answer: D
Answer
Answer: C
2. Court can make an order to dissolve the firm when :
(A) Some partner has become fully mad
(B) Partnership deed is fully followed
(C) Continued future profits are expected
(D) Firm is running legal business
Answer
Answer: A
Answer
Answer: A
4. On dissolution of a firm, out of the proceeds received from the sale of assets will be paid first
of all
(A) Partner’s Capital
(B) Partner’s Loan to Firm
(C) Partner’s additional capital
(D) Outside Creditors
Answer
Answer: D
5. At the time of dissolution of firm, “Loan of partners” (Loans given by partners to the firm) is
paid out of the amount realised on sale of assets :
(A) After making the payment of loans given by third party
(B) After making the payment of balance of Capital Accounts of partners
(C) After making the payment of above (A) and (B)
(D) Before the payment of loans given by third party
Answer
Answer: A
6. At the time of dissolution of firm, at which stage the balance of partner’s capital accounts is
paid?
(A) After making the payment to third party’s loans
(B) Before making the payment of partners in respect of their loans
(C) After making the payment to third party for their loans as well as partners loans
(D) None of the above.
Answer
Answer: C
7. On firm’s dissolution, which one of the following account should be prepared at the last?
(A) Realisation Account
(B) Partner’s Capital Accounts
(C) Cash Account
(D) Partner’s Loan Account
Answer
Answer: C
8. In the event of dissolution of a partnership firm, the provision for doubtful debts is transferred
to :
(A) Realisation Account
(B) Partners Capital Accounts
(C) Sundry Debtors Account
(D) None of the above
Answer
Answer: A
Answer
Answer: B
Answer
Answer: B
11. On dissolution of a partnership firm, profit or loss on realisation is distributed among the
partners
(A) In capital ratio
(B) In Profit sharing ratio
(C) Equally
(D) None of the above
Answer
Answer: B
12. On dissolution of the firm, amount received from sale of unrecorded asset is credited to :
(A) Partner’s Capital Accounts
(B) Profit and Loss Account
(C) Realisation Account
(D) Cash Account
Answer
Answer: C
Answer
Answer: A
14. In the event of dissolution of firm, the partner’s personal assets are first used for payment of
the :
(A) Firm’s liabilities
(B) The personal liabilites
(C) None of the two
(D) Any of the two
Answer
Answer: B
15. A partnership firm is compulsorily dissolved :
(A) When the business of the firm is declared illegal
(B) When a partner of the firm dies
(C) When a partner of the firm becomes insolvent
(D) When a partner transfers his share to some other person without the consent of other
partners
Answer
Answer: A
16. At the time of firm’s dissolution, Balance of General Reserve shown in the Balance Sheet is
credited to :
(A) Realisation Account
(B) Creditor’s Account
(C) Partner’s Capital Account
(D) Profit & Loss Account
Answer
Answer: C
Answer
Answer: C
18. At the time of dissolution of partnership firm, fictitious assets are transferred to :
(A) Capital Accounts of Partners
(B) Realisation Account
(C) Cash Account
(D) Partners’ Loan Account
Answer
Answer: A
19. At time of dissolution of partnership firm, the balance of profit and loss account shown in the
assets side of Balance sheet of the firm is transferred to:
(A) Realisation Account
(B) Cash Account
(C) Capital Accounts of partners
(D) Loan Accounts of partners
Answer
Answer: C
20. At the time of dissolution of partnership firm, the amount of ‘Bills Payable’ shown in the
liability side of Balance Sheet is transferred to :
(A) Capital Accounts of Partners
(B) Realisation Account
(C) Cash Account
(D) Loan Account of Partners
Answer
Answer: B
Answer
Answer: B
Answer
Answer: B
23. On dissolution, the balance of ‘Profit & Loss Account’ appearing on the assets side of a
Balance Sheet is transferred to :
(A) On the debit of Realisation Account
(B) On the credit of Realisation Account
(C) On the debit of Partner’s Capital Accounts
(D) On the credit of Partner’s Capital Accounts
Answer
Answer: C
24. On dissolution of a firm, a partner paid ₹700 for firm’s realisation expenses. Which account
will be debited?
(A) Cash Account
(B) Realisation Account
(C) Capital Account of the Partner
(D) Profit & Loss A/c
Answer
Answer: B
25. On taking responsibility of payment of realisation expenses by a partner, the account credited
will be :
(A) Realisation Account
(B) Cash Account
(C) Capital Account of the Partne
(D) None of the Above
Answer
Answer: C
Answer
Answer: B
Answer
Answer: B
28. Which of the following is transferred to Realisation Account:
(A) Balance of Cash Account
(B) Balance of Profit & Loss Account
(C) Amount realised on sale of assets
(D) Reserves
Answer
Answer: C
Answer
Answer: D
30. On taking responsibility of payment of a liability of ₹50,000 by a partner, the account credited
will be :
(A) Realisation Account
(B) Cash Account
(C) Capital Account of the Partner
(D) Liability Account
Answer
Answer: C
31. Cash balance shown in the Balance Sheet is shown on dissolution of firm in :
(A) Realisation Account
(B) Cash Account
(C) Capital Account
(D) None of the Account
Answer
Answer: B
32. On firm’s dissolution, on realisation of goodwill (which was shown in Balance Sheet) will be
credited to :
(A) Cash A/c
(B) Realisation A/c
(C) Profit & Loss A/
(D) None of the A/c
Answer
Answer: B
33. On dissolution of a firm, its Balance Sheet revealed total creditors ₹50,000; Total Capital
₹48,000; Cash Balance ₹3,000. Its assets were realised at 12% less. Loss on realisation will be :
(A) ₹6,000
(B) ₹11,760
(C) ₹11,400
(D) ₹3,600
Answer
Answer: C
34. On firm’s dissolution, when a partner voluntarily gives his personal asset to firms’ creditor as
payment, the account credited will be :
(A) Realisation A/c
(B) Partner’s Capital A/c
(C) Cash A/c
(D) None of the A/c
Answer
Answer: B
35. On dissolution, when a partner takes over an unrecorded asset, is credited :
(A) Capital Account of the Partner
(B) Cash Accoun
(C) Asset Account
(D) Realisation Account
Answer
Answer: D
Answer
Answer: B
Answer
Answer: A
38. On dissolution, the balance of a partner’s capital account appearing on the assets side of a
balance sheet is transferred to :
(A) On the Debit of Realisation Account
(B) On the Credit of Realisation Account
(C) On the Debit of Partner’s Capital Account
(D) On the Credit of Cash Account
Answer
Answer: C
Answer
Answer: C
40. Sundry Creditors amounted to ?8,000. These were paid at a discount of 5%. Realisation
account will be debited by
(A) ₹8,000
(B) ₹7,600
(C) ₹400
(D) ₹8,400
Answer
Answer: B
41. There was an Unrecorded asset of ?2,000 which was taken over by a partner at ? 1,500.
Partner’s Capital Account will be debited by
(A) ₹2,000
(B) ₹1,500
(C) ₹500
(D) ₹3,500
Answer
Answer: B
42. On dissolution of a firm, an unrecorded furniture of the value of ₹5,000 was taken up by a
partner for ₹4,300. Which Account will be credited and by how much amount? :
(A) Cash Account by ₹4,300
(B) Realisation Account by ₹700
(C) Partner’s Capital Account by ₹5,000
(D) Realisation Account by ₹4,300
Answer
Answer: D
43. On the basis of following data, final payment to a partner on firm’s dissolution ‘ will be made :
Debit balance of Capital Account ₹14,000; Share of his profit on realisation ₹43,000; Firm’s asset
taken over by him for ₹17,000.
(A) ₹31,000
(B) ₹29,000
(C) ₹12,000
(D) ₹60,000
Answer
Answer: C
Answer
Answer: A
45. An unrecorded asset was valued at ₹1,00,000. On firm’s dissolution, it was sold for 52%.
Realisation account will be credited with :
(A) ₹52,000
(B) ₹48,000
(C) ₹1,00,000
(D) None of the Above
Answer
Answer: A
46. On firm’s dissolution, a partner undertook firm’s creditors at ? 17,000. In this case the account
will be credited :
(A) Creditors A/c
(B) Cash A/c
(C) Realisation A/c
(D) Partner’s Capital A/c
Answer
Answer: D
Answer
Answer: B
48. …………… is prepared at the time of dissolution :
(A) Revaluation Account
(B) Profit & Loss Account
(C) Profit and Loss Appropriation Account
(D) Realisation Account
Answer
Answer: D
Answer
Answer: C
50. If total assets are ₹2,00,000; total liabilities are ₹40,000; amount realised on sale of assets is
₹1,75,000 and realisation expenses are ₹3,000, the profit or loss on realisation will be :
(A) Profit ₹12,000
(B) Loss ₹68,000
(C) Loss ₹28,000
(D) Loss ₹25,000
Answer
Answer: C
51. On dissolution of a firm, debtors were ₹17,000. Of these ₹500 became bad and the rest
realised 60%. Which account will be debited and by how much amount?
(A) Realisation Account by ₹16,500
(B) Profit & Loss Account by ₹500
(C) Cash Account by ₹9,900
(D) Debtors Account by ₹7,100
Answer
Answer: C
52. In the Balance Sheet Total Debtors appear at ₹50,000 and Provision for Doubtful Debts
appear at ₹1,500. How much amount will be realised from Debtors, if bad debts amount to
₹10,000 and remaining debtors are realised at a discount of 5%
(A) ₹38,000
(B) ₹36,500
(C) ₹36,575
(D) ₹39,500
Answer
Answer: A
53. How much amount will be paid to Creditors for ₹25,000 if ₹5,000 of the creditors are not to
be paid and the remaining creditors agreed to accept 5% less amount?
(A) ₹18,750
(B) ₹19,000
(C) ₹19,750
(D) ₹20,000
Answer
Answer: B
54. P, a partner, is to bear all expenses of realisation for which he is to be paid ₹2,000. P had to
pay realisation expenses of ₹2,500. How much amount will be debited to Realisation Account?
(A) ₹500
(B) ₹2,500
(C) ₹4,500
(D) ₹2,000
Answer
Answer: D
55. How much amount will be paid to A, if his opening capital is ₹2,00,000 and his share of
realisation profit amounts to ₹10,000 and he has taken over assets valuing ₹25,000 from the
firm?
(A) ₹2,35,000
(B) ₹1,65,000
(C) ₹2,15,000
(D) ₹1,85,000
Answer
Answer: D
56. Investments valued ₹2,00,000 were not shown in the books. One of the creditors took over
these investments in full satisfaction of his debt of ₹2,20,000. How much amount will be
deducted from creditors?
(A) ₹20,000
(B) ₹2,20,000
(C) ₹4,20,000
(D) ₹2,00,000
Answer
Answer: B
57. If creditors are ?25,000, capital is ?1,50,000 and cash balance is ?10,000, what will be the
amount of sundry assets?
(A) ₹1,75,000
(B) ₹1,85,000
(C) ₹1,65,000
(D) ₹1,40,000
Answer
Answer: C
58. If opening capitals of partners are A ₹3,00,000, B ₹2,00,000 and C ₹1,00,000 and their
drawings during the year are A ₹50,000, B ₹40,000 and C ₹30,000 and creditors are ₹60,000,
what will be the amount of assets of the firm?
(A) ₹5,40,000
(B) ₹4,20,000
(C) ₹4,80,000
(D) ₹6,60,000
Answer
Answer: A
59. If total assets of a firm are ₹12,00,000 and total liabilities are ₹2,40,000, what will be the
capitals of P, Q and R if they share profits in the ratio of their capitals and profit sharing ratio is 1 :
2:3:
(A) P ₹4,80,000; Q ₹3,20,000; R ₹1,60,000
(B) P ₹1,60,000; Q ₹3,20,000; R ₹4,80,000
(C) P ₹2,00,000; Q ₹4,00,000; R ₹6,00,000
(D) P ₹6,00,000; Q ₹4,00,000; R ₹2,00,000
Answer
Answer: B
60. On dissolution of a firm, a partner’s capital account has a credit balance of ₹42,000. His share
of profit in realisation account is ?9,000. He has paid firm’s realisation expenses ₹3,000. He will
finally get a payment of:
(A) ₹39,000
(B) ₹42,000
(C) ₹54,000
(D) ₹48,000
Answer
Answer: C
61. On dissolution of a firm, a partner took over ₹17,000 investments for ₹14,000. Which one of
the following account will be debited/credited with how much amount?
(A) Partner’s Capital Account Debit with ₹14,000
(B) Partner’s Capital Account Credit with ₹17,000
(C) Realisation Account Credit with ₹17,000
(D) Realisation Account Credit with ₹3,000
Answer
Answer: A
Answer
Answer: A
63. At the time of dissolution of a firm, Creditors are ₹70,000; Partners’ capital is ₹1,20,000; Cash
Balance is ₹10,000. Other assets realised ₹1,50,000. Profit/Loss in the realisation account will be :
(A) ₹60,000 (Loss)
(B) ₹80,000 (Profit)
(C) ₹40,000 (Loss)
(D) ₹30,000 (Loss)
Answer
Answer: D
64. On dissolution of a firm, debtors ₹17,000 were shown in the Balance Sheet. Out of this ₹2,000
became bad. One debtor became insolvent. 70% were recovered from him out of ₹5,000. Full
amount was recovered from the balance debtors. On account of this item, loss in realisation
account will be :
(A) ₹5,100
(B) ₹1,500
(C) ₹3,500
(D) ₹2,000
Answer
Answer: C
65. X, Yand Z are partners in a firm in the ratio of 4 : 3 : 2. On firm’s dissolution, firm’s total assets
are 7₹70,000, creditors are ₹15,000. Realisation expenses are ₹2,100. Assets realised 15% more
than the book-value. Creditors were . paid 2% more. For profit/loss on realisation, Fs capital
account will be debited/credited with :
(A) Credit ₹8,100
(B) Credit ₹2,700
(C) Debit ₹2,700
(D) Debit ₹2,400
Answer
Answer: B
66. On dissolution of a firm, firm’s Balance Sheet total is ₹77,000. On the assets side of the
Balance Sheet items were shown preliminary expenses ₹2,000; Profit & Loss Account (Debit)
Balance ₹4,000 and Cash Balance ₹1,800. Loss on realisation was ₹6,300. Total assets (including
cash balance) realised will be :
(A) ₹69,200
(B) ₹71,000
(C) ₹64,700
(D) ₹62,900
Answer
Answer: C
67. On dissolution of a firm, partners’ capital accounts balance was ₹63,000; creditors balance was
₹12,000 and profit & loss account debit balance was ₹6,000. Profit on realisation of assets was
₹7,800. Total amount realised from assets was:
(A) ₹81,000
(B) ₹76,800
(C) ₹70,800
(D) ₹None
Answer
Answer: B
68. On dissolution of a firm, a partner took-over the investments of ₹15,000 at ₹19,000. By how
much amount the Realisation Account will be credited?
(A) ₹4,000
(B) ₹19,000
(C) Nil
(D) ₹23,000
Answer
Answer: B
69. Anu, Bina and Charan are partners. The firm had given a loan of ₹20,000 to Bina. On the event
of dissolution, the loan will be settled by : (C.B.S.E. Sample Paper, 2015)
(A) Transferring it to debit side of Realization Account.
(B) Transferring it to credit side of Realization Account.
(C) Transferring it to debit side of Bina’s Capital Account.
(D) Bina paying Anu and Charan privately.
Answer
Answer: C
Financial Statements of Not-for-Profit Organisations
(N.P.O.) Class 12 Accountancy MCQs Pdf
Select the Best Alternate and tally your answer with the Answers given at the end of the book :
1. Receipts and Payments Account generally shows :
(A) A Debit balance
(B) A Credit balance
(C) Surplus or Deficit
(D) Capital Fund
Answer
Answer: A
Answer
Answer: A
Answer
Answer: A
4. The amount of ‘Subscription received from members’ by a Non-profit organi sation is shown in
which of the following?
(A) Debit side of Income and Expenditure Account
(B) Credit side of Income and Expenditure Account
(C) Liability side of Balance Sheet
(D) Assets side of Balance Sheet
Answer
Answer: B
Answer
Answer: B
Answer
Answer: A
7. The amount of ‘Entrance Fees’ received by a Non-profit organisation (if it is received regularly)
is shown in which of the following?
(A) Liability side of Balance Sheet
(B) Assets side of Balance Sheet
(C) Debit side of Income and Expenditure Account
(D) Credit side of Income and Expenditure Account
Answer
Answer: D
8. Out of following items, which one is shown in the Receipts and Payments Account?
(A) Outstanding Salary
(B) Depreciation
(C) Life Membership Fees
(D) Accrued Subscription
Answer
Answer: C
Answer
Answer: C
Answer
Answer: B
Answer
Answer: C
Answer
Answer: D
Answer
Answer: D
15. Which of the following represent capital receipt:
(A) Life Membership Subscription
(B) Donation
(C) Subscription
(D) Interest on Investments
Answer
Answer: A
Answer
Answer: B
17. The amount received for sale of old sports materials by a Non-profit organisation is shown in
which of the following?
(A) Debit side of Income and Expenditure Account
(B) Liability side of Balance Sheet
(C) Credit side of Income and Expenditure Account
(D) Assets side of Balance Sheet
Answer
Answer: C
18. If there is a ‘Match Fund’, then match expenses and incomes are transferred to:
(A) Income and Expenditure A/c
(B) Assets side of Balance Sheet
(C) Liabilities side of Balance Sheet
(D) Both Income and Expenditure A/c and to Balance Sheet
Answer
Answer: C
Answer
Answer: C
20. Subscription received in cash during the year amounted to ₹40,000; subscription outstanding
at the end of previous year was ₹1,500 and outstanding at the end of current year was ₹2,000.
Subscription received in advance for next year was ₹800. The amount credited to Income &
Expenditure Account will be:
(A) ₹38,700
(B) ₹39,700
(C) ₹40,300
(D) ₹41.300
Answer
Answer: B
21. Subscription received in cash during the year amounted to ₹5,00,000; subscription
outstanding at the end of previous year was ₹20,000 and outstanding at the end of current year
was ₹25,000. Subscription received in advance for next year was ₹8,000 and received in advance
during previous year was ₹7,000. The amount credited to Income & Expenditure Account will be :
(A) ₹5,04,000
(B) ₹5,06,000
(C) ₹4,96,000
(D) ₹4,94,000
Answer
Answer: A
22. Subscription received in cash during the year amounted to 760,000; subscription received in
advance for next year was 73,000 and received in advance during previous year was 72,000.
Subscription in arrear at the end of current year was 75,400. The amount credited to Income &
Expenditure Account will be :
(A) ₹53,600
(B) ₹66,400
(C) ₹55,600
(D) ₹64,400
Answer
Answer: D
23. Subscription received in cash during the year amounted to ₹3,00,000; subscription received in
advance for next year was ₹10,000 and received in advance during previous year was ₹8,000.
Subscription in arrear at the end of previous year was ₹18,000 and subscription in arrear at the
end of current year was ₹12,000. The amount credited to Income & Expenditure Account will be :
(A) ₹2,96,000
(B) ₹3,04,000
(C) ₹2,92,000
(D) ₹3,08,000
Answer
Answer: C
24. What amount will be credited to the Income and Expenditure Account for the year ending
31st March, 2010 on the basis of the following information? :
Answer
Answer: B
25. There are 200 members, each paying an annual subscription of 7 1,000; subscription received
during the year 7 1,95,000; subscriptions received in advance at the beginning of the year 73,000
and at the end of the year 72,000. – Amount shown in Income & Expenditure Account will be :
(A) ₹2,00,000
(B) ₹1,96,000
(C) ₹1,94,000
(D) ₹2,01,000
Answer
Answer: A
26. The opening balance of Prize Fund was ₹32,800. During the year, donations reoeived towards
this fund amounted to ₹15,400; amount spent on prizes was 712,300 and interest received on
prize fund investment was ₹4,000. The closing balance of Prize Fund will be :
(A) ₹56,500
(B) ₹64,500
(C) ₹39,900
(D) ₹31,900
Answer
Answer: C
27. Salary paid in cash during the current year was ₹80,000; Outstanding salary at the end was
₹4,000; Salary paid in advance last year pertaining to the current year was ₹3,200; paid in
advance during current year for next year was ₹5,000. The amount debited to Income and
Expenditure Account will be:
(A) ₹85,800
(B) ₹77,800
(C) ₹82,200
(D) ₹74,200
Answer
Answer: C
28. Salary paid in cash during the current year was ₹30,000; Outstanding salary at the end of
previous year was ₹2,000 and outstanding salary at the end of current year was ₹3,000. Salary
paid in advance during current year for next year was ₹2,600. The amount debited to Income and
Expenditure Account will be :
(A) ₹33,600
(B) ₹26,400
(C) ₹31,600
(D) ₹28,400
Answer
Answer: D
29. Salary paid for the year ended 31st March, 2010 amounted to ₹75,000. How much amount
will be recorded in Income and Expenditure Account in the following case?
(A) ₹75,700
(B) ₹74,300
(C) ₹75,300
(D) ₹74,700
Answer
Answer: D
30. How much amount will be shown in Income and Expenditure Account in the following case?
Answer
Answer: A
31. How much amount will be shown in Income and Expenditure Account in the following case? :
Answer
Answer: B
32. If a General Donation of huge amount is received by a school, that donation is treated as :
(A) Revenue Receipt (Income)
(B) Capital Receipt (Liability)
(C) Assets
(D) Earned Income
Answer
Answer: B
33. If a general donation of smaller amount is received by a school, that donation will be shown in
:
(A) Liability Side
(B) Asset Side
(C) Debit side of Receipt and Payment A/c
(D) Credit side of Receipt and Payment A/c
Answer
Answer: C
34. Out of the billowing items, which one is shown in the ‘Receipts and Payments Account” of a
not for profit organisation?
(A) Accrued subscription
(B) Outstanding salary
(C) Depreciation
(D) None of these
Answer
Answer: D
35. Out of the following items, which is not shown in the ‘Receipts and Payments A/c’ of a not for
profit organisation? ‘
(A) Subscription received in advance
(B) Subscription due
(C) Last year subscription received
(D) All of the above
Answer
Answer: B
36. Out of the following items, which is shown in the ‘Receipts and Payments A/c’ of a not for
profit organisation?
(A) Subscription received in advance
(B) Last year subscription received
(C) Current year subscription received
(D) All of the above
Answer
Answer: D
Answer
Answer: D
2. Shareholders are :
(A) Customers of the Company
(B) Owners of the Company
(C) Creditors of the Company
(D) None of these
Answer
Answer: B
Answer
Answer: C
4. A Company is created by :
(A) Special act of the Parliament
(B) Companies Act
(C) Investors
(D) Members
Answer
Answer: B
Answer
Answer: C
Answer
Answer: A
7. Liability of a shareholder is limited to ………………… of the shares allotted to him :
(A) Paid up Value
(B) Called up value
(C) Face value
(D) Reserve Price
Answer
Answer: C
Answer
Answer: B
Answer
Answer: B
Answer
Answer: D
Answer
Answer: C
Answer
Answer: A
14. To whom dividend is given at a fixed rate in a company?
(A) To equity shareholders
(B) To preference shareholders
(C) To debenture holders
(D) To promoters
Answer
Answer: B
Answer
Answer: D
16. The shares on which there is no any pre-fixed rate of dividend is decided, but the rate of
dividend is fluctuating every year according to the availability of profits, such share are called :
(A) Equity Share
(B) Non-cumulative preference share
(C) Non-convertible preference share
(D) Non-guaranteed preference share
Answer
Answer: A
17. Preference shares, in case the holders of these have a right to convert their preference shares
into equity shares at their option according to the terms of issue, such shares are called :
(A) Cumulative Preference Share
(B) Non-cumulative Preference Share
(C) Convertible Preference Share
(D) Non-convertible Preference Share
Answer
Answer: C
18. A preference share which does not carry the right of sharing in surplus profits is called
……………
(A) Non-Cumulative Preference Share
(B) Non-participating Preference Share
(C) Irredeemable Preference Share
(D) Non-convertible Preference Share
Answer
Answer: B
19. Which shareholders have a right to receive the arrears of dividend from future profits :
(A) Redeemable Preference Shares
(B) Participating Preference Shares
(C) Cumulative Preference Shares
(D) Non-Cumulative Preference Shares
Answer
Answer: C
20. Which shareholders are returned their capital after some specified time :
(A) Redeemable Preference Shares
(B) Irredeemable Preference Shares
(C) Cumulative Preference Shares
(D) Participating Preference Shares
Answer
Answer: A
21. The following statements apply to equity/preference shareholders. Which one of them applies
only to preference shareholders?
(A) Shareholders risk the loss of investment
(B) Shareholders bear the risk of no dividends in the event of losses
(C) Shareholders usually have the right to vote
(D) Dividends are usually given at a set amount in every’ financial year.
Answer
Answer: D
Answer
Answer: C
Answer
Answer: D
24. The portion of the capital which can be called-up only on the winding up of the Company is
called (CPT Dec. 2012)
(A) Authorised Capital
(B) Called up Capital
(C) Uncalled Capital
(D) Reserve Capital
Answer
Answer: D
Answer
Answer: B
Answer
Answer: D
Answer
Answer: D
29. In the Balance Sheet of a company, under the heading share capital, at the last is shown :
(A) Authorised Share Capital
(B) Subscribed Share Capital
(C) Issued Share Capital
(D) Reserve Share Capital
Answer
Answer: B
30. Which of the following is not shown under the heading ‘Share Capital’ in a Balance Sheet:
(A) Subscribed Capital
(B) Issued Capital
(C) Reserve Capital
(D) Authorised Capital
Answer
Answer: C
31. Reserve Capital is a part of:
(A) Paid-up Capital
(B) Forfeited Share Capital
(C) Assets
(D) Capital to be called up only on liquidation of company
Answer
Answer: D
32. Which of the following statements is true? (C.S. Foundation, Dec. 2012)
(A) Authorised Capital = Issued Capital
(B) Authorised Capital > Issued Capital
(C) Paid up Capital > Issued Capital
(D) None of the above
Answer
Answer: B
Answer
Answer: A
Answer
Answer: C
35. In case of private placement of shares and company does not invite the general public for
subscription of shares in that case, company instead of issuing prospectus :
(A) Prepares the statement in lieu of prospectus
(B) Prepares the Report
(C) Prepares the Budget
(D) Prepares the Asset side of Balance Sheet
Answer
Answer: A
36. In case of private placement of shares, to raise the amount of capital a company :
(A) invites the public through prospectus
(B) does not invite the public
(C) invites the public through advertisement
(D) invites the public through memorandum of association
Answer
Answer: B
Answer
Answer: D
Answer
Answer: D
40. Which of the following will define, when appropriation of a certain number of shares is made
to an applicant in response to his application? (C.S. Foundation, Dec. 2012)
(A) Share allotment
(B) Share forfeiture
(C) Share trading
(D) Share Purchase
Answer
Answer: A
41. Issue of shares at a price lower than its face value is called :
(A) Issue at a Loss
(B) Issue at a Profit
(C) Issue at a Discount
(D) Issue at a Premium
Answer
Answer: C
42. According to Companies Act, Minimum Subscription has been fixed at ……….. of the issued
amount.
(A) 25%
(B) 50%
(C) 90%
(D) 100%
Answer
Answer: C
Answer
Answer: B
44. Persons who start a company are called ……………….
(A) Shareholders
(B) Directors
(C) Promoters
(D) Auditors
Answer
Answer: C
Answer
Answer: B
Answer
Answer: B
47. As per SEBI Guidelines, Application money should not be less than ……………. of the issue price
of each share.
(A) 10%
(B) 15%
(C) 25%
(D) 50%
Answer
Answer: C
48. 4,000 Equity Shares of ₹10 each were issued at 8% premium to the promoters of a company
for their services. Which account will be debited?
(A) Share Capital Account
(B) Goodwill Account/Incorporation Cost Account
(C) Securities Premium Reserve Account
(D) Cash Account
Answer
Answer: B
49. If vendors are issued fully paid shares of ₹1,25,000 in consideration of net assets of ?1,50,000,
the balance of ₹25,000 will be credited to :
(A) Statement of Profit & Loss
(B) Goodwill Account
(C) Security Premium Reserve Account
(D) Capital Reserve Account
Answer
Answer: C
50. Issue of shares at a price higher than its face value is called :
(A) Issue at a Profit
(B) Issue at a Premium
(C) Issue at a Discount
(D) Issue at a Loss
Answer
Answer: B
51. On issue of shares Premium is :
(A) Profit
(B) Income
(C) Revenue Receipt
(D) Capital Profit
Answer
Answer: D
Answer
Answer: D
Answer
Answer: C
54. When a company issues shares at a premium, the amount of premium should be received by
the company :
(A) Along with application money
(B) Along with allotment money
(C) Along with calls
(D) Along with any of the above
Answer
Answer: D
Answer
Answer: D
56. For whal purpose securities premium reserve account cannot be utilized? (CPT; Dec. 2010)
(A) Amortization of preliminary expenses
(B) Distribution of dividend
(C) Issue of fully paid bonus shares
(D) Buy Back of own shares
Answer
Answer: B
Answer
Answer: B
58. A Company issued 50,000 shares of ₹20 each at 5% premium. ₹10 were payable on
application and balance on allotment. What will be the allotment amount?
(A) ₹5,00,000
(B) ₹4,75,000
(C) ₹5,50,000
(D) ₹5,25,000
Answer
Answer: C
Answer
Answer: B
Answer
Answer: B
61. As per Table F, the Company is required to pay …………. interest on the amount of calls in
advance
(A) 12% p.a.
(B) 5% p.a.
(C) 10% p.a.
(D) 6% p.a.
Answer
Answer: A
Answer
Answer: D
Answer
Answer: B
64. The subscribed capital of a company is ?80,00,000 and the nominal value of the share is ? 100
each. There were no calls in arrear till the final call was made. The final call made was paid
on,77,500 shares only. The balance in the calls in arrear amounted to ?62,500. Calculate the final
call on share.
(A) ₹7
(B) ₹20
(C) ₹22
(D) ₹25
Answer
Answer: D
65. A shareholder holding 600 shares paid the amount of call @ ₹5 per share on 1st November
2018 whereas the call was due on 1st March 2019. Interest on calls in advance as per Table F will
be :
(A) ₹45
(B) ₹60
(C) ₹50
(D) ₹120
Answer
Answer: D
66. From which account, expenses on issue of shares will be written off first of all:
(A) Statement of Profit and Loss
(B) Miscellaneous Expenditure Account
(C) Share Issue Expenses Account
(D) Securities Premium Reserve Account
Answer
Answer: D
Answer
Answer: B
68. Authorised capital of a Company is div ided into 5,00,000 shares of ₹10 each. It issued
3,00,000 shares. Public applied for 3,60,000 shares. Amount of issued capital will be :
(A) ₹30,00,000
(B) ₹36,00,000
(C) ₹50,00,000
(D) ₹6,00,000
Answer
Answer: A
69. A Company invited applications for 1,00,000 shares and it received applications for 1,50,000
shares. Applications for 30,000 shares were rejected and the remaining were allotted shares on
prorata basis. How many shares an applicant for 3,000 shares will be allotted :
(A) 2,500 Shares
(B) 3,600 Shares
(C) 4,500 Shares
(D) 2,000 Shares
Answer
Answer: A
70. E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro-rata basis. The
amount payable on application was ₹2. F applied for 420 shares. The number of shares allotted
and the amount carried forward for adjustment against allotment money due from F will be : (C.F.
Foundation, June 2013)
(A) 60 shares; ₹120
(B) 340 shares; ₹160
(C) 320 shares, ₹200
(D) 300 shares; ₹240
Answer
Answer: D
71. If applicants for 80,000 shares were allotted 60,000 shares on prorata basis, the shareholder
who was allotted 1,200 shares must have applied for :
(A) 900 Shares
(B) 3,600 Shares
(C) 1,600 Shares
(D) 4,800 Shares
Answer
Answer: C
72. A Company offered 50,000 shares of ?10 each at par payable as to ?3 on applications, ?5 on
allotment and the balance on final call. Applications were received for 60,000 shares and the
allotment was made pro-rata. The excess application money was to be adjusted on allotment and
call. How much amount will be transferred from Share Application A/c to Share Allotment A/c?
(A) ₹1,80,000
(B) ₹30,000
(C) ₹1,50,000
(D) ₹50,000
Answer
Answer: B
73. A company issued 4,000 equity shares of ₹10 each at par payable as under : On application
₹3; on allotment ₹2; on first call ₹4 and on final call ₹1 per share.
Applications were received for 13,000 shares. Applications for 3,000 shares were rejected and pro-
rata allotment was made to the applicants for 10,000 shares. How much amount will be received
in cash on first call? Excess application money is adjusted towards amount due on allotment and
calls.
(A) ₹6,000
(B) Nil
(C) ₹16,000
(D) ₹10,000
Answer
Answer: A
74. A company issued 4,000 equity shares of ₹10 each at par payable as under : On application
₹3; on allotment ₹2; on first call ₹4 and on final call ?1 per share.
Applications were received for 10,000 shares. Allotment was made pro-rata. How much amount
will be received in cash on allotment?
(A) ₹8,000
(B) ₹12,000
(C) Nil
(D) None
Answer
Answer: C
75. A company issued 5.000 equity shares of ₹100 each at par payable as to :
₹40 on application; ?50 on allotment and ₹10 on call.
Applications were received for 8,000 shares. Allotment was made on pro-rata. How much amount
will be received in cash on allotment?
(A) ₹2,50,000
(B) ₹1,20,000
(C) ₹1,30,000
(D) ₹50,000
Answer
Answer: C
76. A Company purchased a building for ₹3,60,000 and issued as payment equity shares at 20%
premium. Journal Entry will be :
Answer
Answer: C
77. A Company purchased a Building for ₹12,00,000 out of which ₹2,00,000 were paid in cash.
Balance amount was paid by issue of equity shares of ₹10 each at 25% premium. How many
shares will be issued by the Company :
(A) 1,00,000 Shares
(B) 80,000 Shares
(C) 1,20,000 Shares
(D) 96,000 Shares
Answer
Answer: B
78. If shares of ₹4,00,000 are issued for purchase of assets of ₹5,00,000, ₹1,00,000 will be treated
as ……………………. :
(A) Discount
(B) Premium
(C) Profit
(D) Loss
Answer
Answer: B
79. A Building was purchased for ₹9,00,000 and payment was made in ? 100 shares at 20%
premium. Securities Premium Reserve A/c will be ……………….
(A) Debited by ₹1,50,000
(B) Credited by ₹1,50,000
(C) Debited by ₹1,80,000
(D) Credited by ₹1,80,000
Answer
Answer: B
80. A company purchased machinery for ₹1,80,000 and in consideration issued shares at 20%
premium. What will be the face value of shares issued :
(A) ₹1,50,000
(B) ₹1,44,000
(C) ₹1,80,000
(D) ₹2,16,000
Answer
Answer: A
Answer
Answer: A
82. Which one of the following items is not a part of subscribed capital?
(A) Equity Shares
(B) Preference Shares
(C) Forfeited Shares
(D) Bonus Shares
Answer
Answer: C
83. At the time of forfeiture of shares the share capital account is debited with (CPT, June 2011)
(A) Face value
(B) Called up value
(C) Paid up value
(D) Issued value
Answer
Answer: B
Answer
Answer: C
85. If the Premium on the forfeited shares has already been received, then Securities Premium A/c
should be : (CPT, June 2011)
(A) Credited
(B) Debited
(C) No treatment
(D) None of these
Answer
Answer: C
86. Balance of share forfeiture account is shown in the balance sheet under the head ……………
(CPT, Dec. 2010)
(A) Share Capital Account
(B) Reserve and Surplus
(C) Current Liabilities and Provisions
(D) Unsecured Loans
Answer
Answer: A
87. On an equity share of ₹10 the company has called up ₹8 but ₹6 have been received by the
company is forfeited, the capital account should be debited by:
(A) ₹10
(B) ₹8
(C) ₹6
(D) ₹2
Answer
Answer: B
88. If a share of ₹10 issued at a premium of ₹3 on which the full amount has been called and ₹8
(including premium) paid is forfeited the capital account should be debited with:
(A) ₹5
(B) ₹8
(C) ₹10
(D) ₹13
Answer
Answer: C
89. If a share of ₹10 issued at a premium of n on which ₹9 (including premium) have been called
and ₹7 including premium is paid is forfeited, the capital account should be debited by :
(A) ₹10
(B) ₹7
(C) ₹8
(D) ₹9
Answer
Answer: C
90. 600 shares of ₹10 each were forfeited for non-payment of ₹2 per share on first call and ₹5
per share on final call. Share Forfeiture Account will be credited with:
(A) ₹1,200
(B) ₹1,800
(C) ₹3,000
(D) ₹4,200
Answer
Answer: B
91. 800 shares of ₹10 each issued at 20% premium were forfeited for non-payment of allotment
money of ₹5 (including premium) and first & final of 73 per share. Share Forfeiture Account will
be credited with :
(A) ₹1,600
(B) ₹2,400
(C) ₹3,200
(D) ₹4,800
Answer
Answer: C
92. 800 shares of ₹10 each issued at 30% premium (to be paid on allotment) were forfeited for
non-payment of ₹2 per share on first call and 72 per share on final call. Share Forfeiture Account
will be credited with :
(A) ₹2,400
(B) ₹4,800
(C) ₹3,200
(D) ₹7,200
Answer
Answer: B
93. A Company forfeited 300 shares of ₹10 each, ₹8 per share called up, on which A had paid
application and allotment money of ₹6 per share. Share Forfeiture Account will be credited with :
(A) ₹600
(B) ₹1,800
(C) ₹1,200
(D) ₹2,400
Answer
Answer: B
94. On 300 equity shares of ₹10 the company has called up ₹8 but ₹6 have been received by the
company are forfeited, the forfeiture account should be credited by :
(A) ₹2,400
(B) ₹1,200
(C) ₹1,800
(D) ₹600
Answer
Answer: C
95. If 400 shares of ₹10 issued at a premium of ₹3 on which the full amount has been called and
₹8 (including premium) have been received are forfeited, the forfeiture account should be
credited with :
(A) ₹3,200
(B) ₹2,000
(C) ₹1,200
(D) ₹2,800
Answer
Answer: B
96. If 500 shares of ₹10 issued at a premium of ₹1 on which ₹9 (including premium) have been
called and ₹7 including premium have been paid are forfeited, the forfeiture account should be
credited by :
(A) ₹3,000
(B) ₹3,500
(C) ₹4,000
(D) ₹4,500
Answer
Answer: A
Answer
Answer: C
98. X Ltd. forfeited 500 shares of ₹10 each, ₹7 called up, issued at a premium of ₹2 per share to
be paid at the time of allotment for non-payment of first call of X2 per share. Entry on forfeiture
will be :
Answer
Answer: D
99. The amount of discount on reissue of forfeited shares cannot exceed : (CPTDec., 2012)
(A) 5% of the face value
(B) 10% of the face value
(C) The amount received on forfeited shares
(D) The amount not received on forfeited shares
Answer
Answer: C
Answer
Answer: B
101. The balance of the forfeited shares account after re-issue of forfeited shares is transferred
to :
(A) Statement of Profit & Loss
(B) Share Capital A/c
(C) Capital Reserve A/c
(D) General Reserve A/c
Answer
Answer: C
102. A Ltd. forfeited 500 shares of ₹10 each fully called up for non-payment of final call of ₹3 per
share 300 of these shares were reissued at ?9 per share, fully paid up. What is the amount to be
transferred to Capital Reserve Account?
(A) ₹3,500
(B) ₹2,100
(C) ₹3,200
(D) ₹1,800
Answer
Answer: D
103. L Ltd. forfeited 400 shares of ₹10 each, ₹7 called up, for non-payment of first call of ₹2 per
share. Out of these, 300 shares were reissued for ₹6 per share as ₹7 paid up. What is the amount
to be transferred to Capital Reserve Account?
(A) ₹1,700
(B) ₹1,200
(C) ₹2,100
(D) ₹300
Answer
Answer: B
104.400 shares of ₹10, on which ?8 has been called and ?5 has been paid, are forfeited. Out of
these, 300 shares are re-issued for ?9 as fully paid. What is the amount to be transferred to.
Capital Reserve Account?
(A) ₹1,200
(B) ₹1,600
(C) ₹2,000
(D) ₹1,700
Answer
Answer: A
105. R Ltd. forfeited 600 shares of ₹100 each ₹70 called up on which Mahesh has paid application
and allotment money of ₹50 per share. Of these, 400 shares were re-issued to Naresh as fully
paid-up for ₹110 per share. What is the amount to be transferred to Capital Reserve?
(A) ₹30,000
(B) ₹36,000
(C) ₹24,000
(D) ₹20,000
Answer
Answer: D
106. Madhu Ltd. forfeited 800 shares of ₹10 each issued at 10% premium to Shyam ( ₹9 called up)
on which he did not pay ₹3 of allotment (including premium) and first call of ₹2. Out of these,
600 shares were re-issued to Ram as fully paid up for ₹9 per share. What is to amount to be
transferred to capital Reserve?
(A) ₹2,400
(B) ₹1,800
(C) ₹3,000
(D) ₹3,600
Answer
Answer: A
107. If a share of 7 100 on which 760 has been paid, is forfeited, it can be re-issued at the
minimum price of:
(A) ₹60
(B) ₹100
(C) ₹40
(D) ₹140
Answer
Answer: C
108. A Company forfeited 1,000 shares of ₹10 each fully called, on which ₹6,000 has been paid.
Out of these 800 shares were reissued upon payment of ₹6,600. What is the amount to be
transferred to Capital Reserve?
(A) ₹4,800
(B) ₹6,000
(C) ₹4,600
(D) ₹3,400
Answer
Answer: D
109. A company forfeited 700 shares of 710 each, on which only 75 per share was paid. Of these,
200 shares were reissued at 79 per share. Amount from Share Forfeiture Account to Capital
Reserve Account will be transferred :
(A) ₹800
(B) ₹200
(C) ₹3,500
(D) ₹2,500
Answer
Answer: A
110. 300 equity shares of ₹10 each were issued at ₹5 per share premium. Only ₹4 per share on
application has been paid on these shares. These shares were forfeited. Later on out of these, 200
shares were reissued at ₹12 per share as fully paid. What will be amount of Capital Reserve?
(A) ₹500
(B) ₹1,200
(C) ₹200
(D) ₹800
Answer
Answer: D
111. 700 shares of ₹10 each were reissued as ₹9 paid up for ₹7 per share. Entry for reissue will be
:
Answer
Answer: C
112. A Ltd. forfeited 2,000 shares of ₹10 each fully called up for non-payment of final call of ₹2
per share. 1,200 of these shares were reissued at 7₹7 per share, fully paid up. What is the amount
to be transferred to Capital Reserve Account?
(A) ₹7,600
(B) ₹1,200
(C) ₹12,400
(D) ₹6,000
Answer
Answer: D
113. Using information given in Q. 112 what is the net balance in Share Forfeiture Account:
(A) ₹9,600
(B) ₹6,400
(C) ₹16,000
(D) ₹2,800
Answer
Answer: B
114. 6 Ltd. forfeited 300 shares of ₹100 each, ₹70 called up, for non-payment of first call of ₹20
per share. Out of these, 200 shares were reissued for 760 per share as ₹70 paid up. What is the
amount to be transferred to Capital Reserve Account?
(A) ₹13,000
(B) ₹8,000
(C) ₹2,000
(D) ₹7,000
Answer
Answer: B
115. 2,000 shares of ₹10, on which ₹7 has been called and ₹5 has been paid, are forfeited. Out of
these, 1,500 shares are re-issued for ₹9 as fully paid. What is the amount to be transferred to
Capital Reserve Account?
(A) ₹6,000
(B) ₹7,500
(C) ₹10,000
(D) ₹8,500
Answer
Answer: A
116. X Ltd. forfeited 400 shares of ₹20 each ₹15 called up on which application and allotment
money of ₹11 per share has been received. Of these, 100 shares were re-issued as fully paid-up
for ₹24 per share. What is the amount to be transferred to Capital Reserve?
(A) ₹1,500
(B) ₹4,400
(C) ₹1,100
(D) ₹3,500
Answer
Answer: C
117. z Ltd. forfeited 300 shares of ₹10 each issued at 20% premium ( ₹9 called up) on which ₹4 of
allotment (including premium) and first call of ₹2 has not been received. Out of these, 100 shares
were re-issued as fully paid up for ₹9 per share. What is to amount to be transferred to capital
Reserve?
(A) ₹400
(B) ₹300
(C) ₹500
(D) ₹600
Answer
Answer: A
118. Using information given in Q. 117, what is the net balance left in Share Forfeiture Account:
(A) ₹1,400
(B) ₹1,500
(C) ₹900
(D) ₹1,000
Answer
Answer: D
119. P Ltd. forfeited 150 shares of ₹10 each, issued at a premium of ₹2, for non-payment of the
final call of ₹3. Out of these, 100 shares were re-issued at ₹11 per share. How much amount
would be transferred to capital reserve? (C.S. Foundation, Dec. 2012)
(A) ₹700
(B) ₹500
(C) ₹1,200
(D) ₹300
Answer
Answer: A
120. XY Limited issued 2,50,000 equity shares of ₹10 each at a premium of ₹10 each payable as
₹2.5 on application, ₹4 on allotment and balance on the first and final call. Applications were
received for 5,00,000 equity shares but the company allotted to them only 2,50,000 shares. Excess
money was applied towards amount due on allotment. Last call on 500 shares was not received
and shares were forfeited after due notice. This is a case of: (C.S. Foundation, June 2013)
(A) Over subscription
(B) Pro-rata allotment
(C) Forfeiture of Shares
(D) All of the above
Answer
Answer: D
121. Metacaf Ltd. issued 50,000 shares of ₹100 each payable ₹20 on application (on 1st May
2012); ₹30 on allotment (on 1st January 2013); ₹20 on first call (on 1st July 2013) and the balance
on final call (on 1st February 2014). Shankar, a shareholder holding 5,000 shares did not pay the
first call on the due date. The second call was made and Shankar paid the first call amount along
with the second call. All sums due were received.
Total amount received on 1st February was : (C.B.S.E. Sample Paper, 2015)
(A) ₹15,00,000
(B) ₹16,00,000
(C) ₹10,00,000
(D) ₹11,00,000
Answer
Answer: B
Issue of Debentures Class 12 Accountancy MCQs
Pdf
Multiple Choice Questions
Select the Best Alternate :
1. Debenture holders are : (CPT June, 2010)
(A) Owners of the Company
(B) Debtors of the Company
(C) Creditors of the Company
(D) Promoters of the Company
Answer
Answer: C
Answer
Answer: A
Answer
Answer: C
4, Interest payable on debentures is :
(A) an appropriation of profits of the company
(B) a charge against profits of the company
(C) transferred to sinking fund investment account
(D) transferred to general reserve
Answer
Answer: B
Answer
Answer: D
Answer
Answer: C
Answer
Answer: D
Answer
Answer: B
Answer
Answer: B
Answer
Answer: B
11. The Principal amount of debentures will be repaid by the company either at the end of a
specified period or by instalments during the life time of the company. Such types of debentures
are called :
(A) Redeemable Debentures
(B) Irredeemable Debentures
(C) Convertible Debentures
(D) Bearer Debentures
Answer
Answer: A
12. The debentures whose principal amount is not repayable by the company during its life time,
but the payment is made only at the time of Liquidation of the company, such debentures are
called :
(A) Bearer Debentures
(B) Redeemable Debentures
(C) Irredeemable Debentures
(D) Non-Convertible Debentures
Answer
Answer: C
Answer
Answer: B
14. Discount on issue of Debentures is in the nature of
(A) Revenue loss
(B) Capital loss
(C) Deferred Revenue Expenditure
(D) None of the above
Answer
Answer: B
Answer
Answer: D
16. ‘A’ Fimited purchased the assets from ‘B’ Limited for ₹5,40,000. ‘A’ Limited issued 10%
debentures of ₹100 each at 10% discount against the payment. The number of debentures
received by ‘B’ Limited will be :
(A) 54,000
(B) 5,400
(C) 60,000
(D) None of the above
Answer
Answer: D
17. ‘A’ Limited purchased the assets from ‘B’ Limited for ₹5,40,000. ‘A’ Limited issued 10%
debentures of ₹100 each at 20% premium against the payment. The number of debentures
received by ‘B’ Limited will be :
(A) 4,500
(B) 5,400
(C) 45,000
(D) 6,000
Answer
Answer: A
18. ‘A’ Limited purchased the assets from ‘B’ Limited for ₹8,10,000. ‘A’ Limited issued 10%
debentures of ₹100 each at 10% discount against the payment. The number of debentures
received by ‘B’ Limited will be :
(A) 8,100
(B) 9,000
(C) 90,000
(D) None of the above
Answer
Answer: B
Answer
Answer: D
20. On issue of debentures as a collateral security, which account is credited? (C.S. Foundation,
Dec. 2012)
(A) Debentures Account
(B) Bank Loan Account
(C) Debenture Holdings Account
(D) Debenture Suspense Account
Answer
Answer: A
Answer
Answer: B
22. When debentures of ₹1,00,000 are issued as Collateral Security against a loan of ₹1,50,000,
the entry for issue of debentures will be :
(A) Credit Debentures ₹1,50,000 and debit bank A/c ₹1,50,000
(B) Debit Debenture Suspense A/c ₹1,00,000 and Credit Bank A/c ₹1,00,000
(C) Debit Debenture Suspense A/c ₹1,00,000 and Credit Debentures A/c ₹1,00,000.
(D) Debit Cash A/c ₹1,50,000 and Credit Bank A/c ₹1,50,000
Answer
Answer: C
23. Interest on debentures issued as a collateral security is paid on : (CPT Dec. 2008)
(A) Nominal value of debentures
(B) No interest is paid
(C ) Face value of debentures
(D) Paid up value of debentures
Answer
Answer: B
24. Loss on Issue of Debentures is written off:
(A) In the year of the issue of debentures
(B) During the life of the debentures
(C) Within 3 years of the issue of debentures
(D) In the year of redemption of debentures
Answer
Answer: A
25. When debentures are to be redeemed at premium an extra entry has to be made at the time
of issue of debentures, which a/c should be credited in this entry?
(A) Loss on issue of debentures a/c
(B) Debenture redemption premium a/c
(C) Bank a/c
(D) Debenture holder’s a/c
Answer
Answer: B
Answer
Answer: A
27. X Ltd. acquired assets of ₹20 lakhs and took over creditors of ₹20 thousand from FLtd. A Ltd.
issued 8% debentures of ₹200 each at a discount of 10% as purchase consideration. Number of
debentures issued will be :
(A) 11,000
(B) 9,000
(C) 10,000
(D) 10,100
Answer
Answer: A
28. X Ltd. purchased a building for ₹60,00,000 payable as 20% in Cash and balance by allotment
of 8% debentures of ₹500 each at a premium of 20%. Number of debentures issued will be :
(A) 9,600
(B) 8,000
(C) 12,000
(D) 10,000
Answer
Answer: B
29. Sunrise Ltd purchased a building for ₹5,00,000 payable as 15% in cash and balance by
allotment of 9% debentures of ₹100 each at a premium of 25%. Number of debentures issued
will be :
(A) 4,250
(B) 4,000
(C) 5,000
(D) 3,400
Answer
Answer: D
30. If Vendors are issued debentures of ₹80,000 in consideration of net assets of ₹1,00,000, the
balance of ₹20,000 will be credited to :
(A) Statement of Profit & Loss
(B) Goodwill Account
(C) General Reserve Account
(D) Capital Reserve Account
Answer
Answer: D
31. If Vendors are issued debentures of ₹4,40,000 in consideration of assets of ₹5,00,000 and
liabilities of ₹1,00,000, the balance of ₹40,000 will be debited to:
(A) General Reserve Account
(B) Capital Reserve Account
(C) Goodwill Account
(D) Statement of Profit & Loss
Answer
Answer: C
32. A Ltd. issued 1,000, 10% debentures of ₹100 each at a premium of 5%. What will be the total
amount of interest for one year :
(A) ₹10,500
(B) ₹10,000
(C) ₹5,250
(D) ₹5,000
Answer
Answer: B
33. On 1st April 2007, Sunrise Limited issued 5,000, 8% debentures of ₹100 each at a discount of
5%. What will be the total amount of interest for the year ending 31st March 2008? .
(A) ₹38,000
(B) ₹42,000
(C) ₹40,000
(D) ₹25,000
Answer
Answer: C
34. Globe Ltd. issues 20,000, 9% debentures of ? 100 each at a discount of 5% redeemable at the
end of 5 years at a premium of 6%. For what amount ‘Loss on Issue of Debentures Account’ will
be debited?
(A) ₹1,00,000
(B) ₹1,20,000
(C) ₹2,80,000
(D) ₹2,20,000
Answer
Answer: D
35. Issued 5,000, 12% debentures of ₹100 each at a discount of 2%, redeemable at a premium of
5%. In such case :
(A) Loss on Issue will be Credited by ₹10,000.
(B) Loss on Issue will be debited by ₹35,000.
(C) Premium on Redemption will be debited by ₹25,000.
(D) Premium on Redemption will be credited by ₹35,000.
Answer
Answer: B
36. Issued 4,000, 12% debentures of ₹100 each at a premium of 4%, redeemable at a premium of
10%. In such case : k
(A) Loss on Issue will be debited by ₹24,000
(B) Loss on Issue will be debited by ₹56,000
(C) Loss on Issue will be debited by ₹40,000
(D) Premium on Redemption will be credited by ₹24,000
Answer
Answer: C
Answer
Answer: C
2. A company issuing debentures with a maturity period of not more than 18 months, in that case
the creation of Debentures Redemption Reserve will be :
(A) 50% of the amount of debentures issued
(B) 25% of the amount of debentures issued
(C) 100% of the amount of debentures issued
(D) None of the above
Answer
Answer: D
3. According to the guidelines issued by Securities and Exchange Board of India (SEBI) what
percentage of the amount of debentures must be transferred to ‘Debentures Redemption
Reserve’ before the commencement of redemption of debentures, in case of convertible
debentures?
(A) 25%
(B) 50%
(C) 100%
(D) Zero
Answer
Answer: D
4. A Ltd. wants to redeem 5,000, 5% Debentures of ₹100 each at 5% premium. How much
amount it must transfer to Debenture Redemption Reserve, if it has already a balance of
₹1,00,000 in Debenture Redemption Reserve Account?
(A) ₹4,00,000
(B) ₹1,50,000
(C) ₹2,00,000
(D) ₹2,50,000
Answer
Answer: B
5. A Company issuing debentures with a maturity periof of not more than …………….. need not
create Debenture Redemption Reserve.
(A) 2 months
(B) 6 months
(C) 12 months
(D) 18 months
Answer
Answer: D
6. Where is ‘Debenture Redemption Reserve’ transferred after the redemption of all debentures?
(A) Capital Reserve Account
(B) General Reserve Account
(C) Statement of Profit and Loss
(D) Sinking Fund Account
Answer
Answer: B
2. A company issuing debentures with a maturity period of not more than 18 months, in that case
the creation of Debentures Redemption Reserve will be :
(A) 50% of the amount of debentures issued
(B) 25% of the amount of debentures issued
(C) 100% of the amount of debentures issued
(D) None of the above
Answer
Answer: D
3. According to the guidelines issued by Securities and Exchange Board of India (SEBI) what
percentage of the amount of debentures must be transferred to ‘Debentures Redemption
Reserve’ before the commencement of redemption of debentures, in case of convertible
debentures?
(A) 25%
(B) 50%
(C) 100%
(D) Zero
Answer
Answer: D
4. A Ltd. wants to redeem 5,000, 5% Debentures of ₹100 each at 5% premium. How much
amount it must transfer to Debenture Redemption Reserve, if it has already a balance of
₹1,00,000 in Debenture Redemption Reserve Account?
(A) ₹4,00,000
(B) ₹1,50,000
(C) ₹2,00,000
(D) ₹2,50,000
Answer
Answer: B
5. A Company issuing debentures with a maturity periof of not more than …………….. need not
create Debenture Redemption Reserve.
(A) 2 months
(B) 6 months
(C) 12 months
(D) 18 months
Answer
Answer: D
6. Where is ‘Debenture Redemption Reserve’ transferred after the redemption of all debentures?
(A) Capital Reserve Account
(B) General Reserve Account
(C) Statement of Profit and Loss
(D) Sinking Fund Account
Answer
Answer: B
Answer
Answer: B
Answer
Answer: B
3. Which of the following is not required to be prepared under the Companies Act
(A) Statement of Profit and Loss
(B) Balance Sheet
(C) Report of Director’s and Auditor’s
(D) Funds Flow Statement
Answer
Answer: D
Answer
Answer: A
5. In a Company’s Balance Sheet …………………. appear under the head ‘non-current assets’.
(A) Goodwill
(B) Patents
(C) Vehicles
(D) All of the above
Answer
Answer: D
Answer
Answer: B
Answer
Answer: B
8. Short-term Borrowings appear in a Company’s Balance Sheet under the head …………………..
(A) Current Assets
(B) Current Liabilities
(C) Non-Current Liabilities
(D) Non-Current Assets
Answer
Answer: B
Answer
Answer: D
10. Goodwill appears in a Company’s Balance Sheet under the Sub-head ………………….
(A) Unamortized Assets
(B) Non-Current Investment
(C) Intangible Assets
(D) Tangible Assets
Answer
Answer: C
11. Share Forfeiture Account appears in a Company’s Balance Sheet under the Sub-head
……………….
(A) Share Capital
(B) Reserve & Surplus
(C) Contingent Liability
(D) Commitments
Answer
Answer: A
12. Expenses allowed on issue of shares appears in a Company’s Balance Sheet under :
(A) Share Capital
(B) Current Liability
(C) Unamortized Expenditure
(D) Contingent Liability
Answer
Answer: C
Answer
Answer: D
14. Prepaid Expenses appear in a Company’s Balance Sheet under the Sub-head ………………
(A) Other Current Assets
(B) Short-term Loans & Advances
(C) Intangible Assets
(D) Other Non-Current Assets
Answer
Answer: A
15. ……………… appear in a Company’s Balance Sheet under the Sub-head Short-term Provision
(A) Interest Accrued but not due on Borrowings
(B) Provision for Tax
(C) Unpaid Dividend
(D) Calls in Advance
Answer
Answer: B
16. Provision for Tax appears in a Company’s Balance Sheet under the Sub-head ……………………
(A) Short-term Provisions
(B) Reserves and Surplus
(C) Long-term Provisions
(D) Other Current Liabilities
Answer
Answer: A
17. Bills Receivables appear in a Company’s Balance Sheet under the Sub-head ……………………..
(A) Current Investments
(B) Cash Equivalents
(C) Trade Receivables
(D) Short term Loans and Advances
Answer
Answer: C
18. Trade Investments appear in a Company’s Balance Sheet under the Sub-head ………………….
(A) Current Investments
(B) Non-Current Investments
(C) Intangible Assets
(D) Short-term Loans and Advances
Answer
Answer: B
19. ‘Claims against the Company not acknowledged as debts’ is shown under the head ……………….
(A) Current Liabilities
(B) Non-Current Liabilities
(C) Commitments
(D) Contingent Liabilities
Answer
Answer: D
20. Unclaimed dividend appears in a Company’s balance Sheet under the Sub-head ………………
(A) Short-term Borrowings
(B) Trade Payables
(C) Other Current Liabilities
(D) Short-term Provisions
Answer
Answer: C
21. Interest accrued and due on debentures appear in a Company’s Balance Sheet under the Sub-
head ……………..
(A) Short-term Borrowings
(B) Trade Payables
(C) Other Current Liabilities
(D) Short-term Provisions
Answer
Answer: C
22. Interest accrued but not due on loans appear in a Company’s Balance Sheet under the Sub-
head ………………
(A) Short-term Borrowings
(B) Trade Payables
(C) Other Current Liabilities
(D) Short-term Provisions
Answer
Answer: C
23. 6% Debentures appear in a Company’s Balance Sheet under the Sub-head ………………….
(A) Long-term Provisions
(B) Long-term Borrowings
(C) Other Current Liabilities
(D) Other Long-term Liabilities
Answer
Answer: B
24. Interest accrued on Investments appear in a Company’s Balance Sheet under the Sub-head
………………….
(A) Non-Current Investments
(B) Current Investments
(C) Other Current Assets
(D) Other Non-Current Assets
Answer
Answer: C
25. ‘Accumulated Dividend Arrears’ on preference shares is shown in the Company’s Balance
Sheet as :
(A) Current Liability
(B) Contingent Liability
(C) Commitments
(D) Short-term Provision
Answer
Answer: C
26. 50,000, 9% Debentures redeemable within 12 months of the date of Balance Sheet will be
shown under :
(A) Short-term Borrowings
(B) Short-term Provision
(C) Other Current Liability
(D) Trade Payables
Answer
Answer: C
Answer
Answer: D
28. Which of the following items is shown under the head ‘Current Assets’ while preparing the
Balance Sheet of a company?
(A) Trade Investment
(B) Underwriting Commission
(C) Inventories
(D) Livestock
Answer
Answer: C
29. While preparing the Balance Sheet of a company ‘Underwriting Commission’ is shown under
which head?
(A) Unamortized Expenditure
(B) Current Assets
(C) Non-Current Assets
(D) Current Liability
Answer
Answer: A
30. Which of the following items is shown under the head ‘Current Liabilities’ while preparing the
Balance Sheet of a company?
(A) Securities Premium Reserve
(B) Debentures
(C) Livestock
(D) None of the above
Answer
Answer: D
31. While preparing the Balance Sheet of a company ‘Securities Premium’ is shown under :
(A) Current Liability
(B) Share Capital
(C) Long-term Borrowings
(D) None of the above
Answer
Answer: D
32. Which of the following items is shown under the head ‘Non-Current Assets’ while preparing
the Balance Sheet of a company?
(A) Underwriting Commission
(B) Current Investment
(C) Inventory
(D) Patents
Answer
Answer: D
33. Under which heading the item ‘Bills Discounted but not yet matured’ will be shown in the
Balance Sheet of a company?
(A) Current Liability
(B) Current Assets
(C) Contingent Liabilities
(D) Unamortized Expenditure
Answer
Answer: C
34. Which one of the following items is shown under the heading ‘current liabilities’ in the
Balance Sheet of a company?
(A) Investments
(B) Reserve Fund
(C) Unclaimed Dividend
(D) Livestock
Answer
Answer: C
35. While preparing the Balance Sheet of a Company which item is shown under the head ‘Long
term Borrowings’?
(A) 6% Debentures
(B) Security Premium Reserve
(C) Trade Payables
(D) None of the above
Answer
Answer: A
36. Share Capital of a Company consists of 5,00,000 Shares of ₹10 each, ₹8 called up. All the
shareholders have duly paid the called up amount. Share capital will be shown as :
(A) Subscribed and Fully Paid
(B) Subscribed but not fully paid
(C) Any of the above
(D) None of the above
Answer
Answer: B
37. A Company has issued 2,00,000 Equity Shares of ₹10 each and it has called the entire nominal
value of the share. It has received the entire amount except final call of ₹3 per share on 5,000
shares. Subscribed Capital will be shown as follows:
Answer
Answer: C
Answer
Answer: A
Financial Statements Analysis Class 12 Accountancy MCQs
Pdf
Multiple Choice Questions
Select the best alternate and check your answer with the answers given at the en.d of the
book.
1. Feature of financial analysis is to present the data contained in financial statements in
(A) Easy form
(B) Convenient and rational groups
(C) Comparable form
(D) All of the Above
Answer
Answer: D
Answer
Answer: A
Answer
Answer: B
Answer
Answer: C
Answer
Answer: D
Answer
Answer: D
Answer
Answer: B
8. When bad position of the business is tried to be depicted as good, it is known as
………………………..
(A) Personal Bias
(B) Price Level Changes
(C) Window Dressing
(D) All of the Above
Answer
Answer: C
Answer
Answer: C
Answer
Answer: D
Answer
Answer: B
Answer
Answer: C
Answer
Answer: D
Answer
Answer: C
15. For whom analysis of financial statements is not significant?
(A) Political Adviser of Prime Minister
(B) Investors
(C) Management
(D) Financial Institutions
Answer
Answer: A
Answer
Answer: D
Answer
Answer: D
3. Which one of the following items is not a tool used for financial analysis?
(A) Comparative Statements
(B) Ratio Analysis
(C) Common Size Statements
(D) Statement of Dividend Distribution
Answer
Answer: D
4. Which one of the following items is not a method/tool of analysis of financial statements?
(A) Trend Analysis
(B) Statement of Affairs
(C) Cash Flow Statement
(D) Comparative Statements
Answer
Answer: B
5. Which one of the following items is not a method/tool of analysis of financial statements?
(A) Accounting Ratio
(B) Break Even Point
(C) Statement of Receipts and Payments
(D) Fund Flow Statement
Answer
Answer: C
6. Which one of the following items is not a method/tool of analysis of financial statements?
(A) Fund Flow Statement
(B) Common Size Statement
(C) Statement of Trade Receivables
(D) Cash Flow Statement
Answer
Answer: C
7. Which of the following is the objective of comparative Statements?
(A) To make the data simpler and understandable
(B) To indicate the trend
(C) To help in forecasting
(D) All of the Above
Answer
Answer: D
Answer
Answer: D
Answer
Answer: C
Answer
Answer: A
12. In which analysis total cost are equal to total revenue from Operations :
(A) Trend Analysis
(B) Ratio Analysis
(C) Break-Even Point Analysis
(D) Fund Flow Statement Analysis
Answer
Answer: C
13. Fixed Assets of a company increased from ₹3,00,000 to ₹4,00,000. What the percentage
of change?
(A) 25%
(B) 33.3%
(C) 20%
(D) 40%
Answer
Answer: B
14. A Company’s current liabilities decreased from ₹4,00,000 to ₹3,00,000. What is the
percentage of change?
(A) 25%
(B) 33.3%
(C) 20%
(D) 40%
Answer
Answer: A
15. A company’s working capital is ₹10 lakh (Negative balance) in the year 2018. It became
₹15 lakh (Positive balance) in the year 2019. What is the percentage of change?
(A) 150%
(B) 100%
(C) 250%
(D) 50%
Answer
Answer: C
16. A company’s Revenue from Operations are ₹20,00,000; Cost of Revenue from
Operations is ₹14,00,000 and indirect expenses are ₹2,00,000. What is the amount of Gross
Profit?
(A) ₹18,00,000
(B) ₹4,00,000
(C) ₹8,00,000
(D) ₹6,00,000
Answer
Answer: D
17. Revenue from Operations ₹4,00,000; Cost of Revenue from Operations 60% of Revenue
from Operations; Operating expenses ₹30,000 and rate of income tax is 40%. What will be
amount of profit after tax?
(A) ₹64,000
(B) ₹78,000
(C) ₹ 52,000
(D) ₹96,000
Answer
Answer: B
18. Revenue from Operations ₹8,00,000; Gross Profit Ratio 32%; Indirect Exp. 10% of Gross
Profit and income tax 40%. What will be the amount of profit after tax?
(A) ₹1,38,240
(B) ₹1,02,400
(C) ₹92,160
(D) ₹1,53,600
Answer
Answer: A
19.Revenue from Operations ₹4,00,000; Cost of Revenue from Operations 60% of Revenue
from Operations, indirect expenses 15% of Gross Profit; Income Tax 40%. Calculate net profit
after tax
(A) ₹64,000
(B) ₹54,400
(C) ₹81,600
(D) ₹96,000
Answer
Answer: C
Answer
Answer: B
21. Interest on Loans is
(A) Direct Expenses
(C) Operating Expenses
(B) Indirect Expenses
(D) None of the Above
Answer
Answer: B
22. Revenue from Operations less cost of Revenue from Operations is called :
(A) Net Profit
(B) Operating Profit
(C) Gross Profit
(D) Total Profit
Answer
Answer: C
23. Which objective is not fulfilled by comparative Statement of Profit & Loss :
(A) To compare the items of Statement of Profit & Loss of two years
(B) To know the absolute changes in items of Statement of Profit & Loss
(C) To show the change in financial position
(D) To know the percentage changes in items of Statement of Profit & Loss
Answer
Answer: C
Answer
Answer: C
25. Which of the following is not a form of presenting financial analysis :
(A) Absolute figure Comparison
(B) Ratio Method
(C) Cumulative figures and averages
(D) Annual Report
Answer
Answer: D
Answer
Answer: B
Answer
Answer: D
29. Amount left after deducting gross profit from Revenue from Operations is generally ;
(A) Cost of Revenue from Operations
(B) Material consumed
(C) Opening Inventory + Purchases – Closing Inventory
(D) All of the above
Answer
Answer: D
Answer
Answer: B
Answer
Answer: D
2. Main objective of Common Size Balance Sheet is :
(A) To establish relationship between revenue from operations and other items of statement
of profit & loss
(B) To present changes in assets and liabilities
(C) To present changes in various items of income and expenses
(D) All of the Above
Answer
Answer: B
Answer
Answer: B
Answer
Answer: C
Answer
Answer: C
Answer
Answer: A
Answer
Answer: D
8. Total assets of a firm are ₹20,00,000 and its fixed assets are ₹8,00,000. What will be the
percentage of fixed assets on total assets?
(A) 60%
(B) 40%
(C) 29%
(D) 71%
Answer
Answer: B
9. If total assets of a firm are ₹8,20,000 and its fixed assets are ₹5,90,400, what will be the
percentage of current assets on total assets?
(A) 42%
(B) 58%
(C) 28%
(D) 72%
Answer
Answer: C
10. If net revenue from operations of a firm are ₹1,20,000; cost of revenue from operations is
₹66,000 and operating expenses are ₹21,600, what will be the percentage of operating
income on net revenue from operations?
(A) 55%
(B) 45%
(C) 73%
(D) 27%
Answer
Answer: D
11. If net revenue from operations of a firm are ₹15,00,000; Gross Profit is ₹9,00,000 and
operating expenses are ₹75,000, what will be percentage of operating income on net revenue
from operations?
(A) 45%
(B) 55%
(C) 35%
(D) 65%
Answer
Answer: B
12. Main objective of Trend Analysis is
(A) To make comparative study of the financial statements for a number of years
(B) To indicate the direction of movement
(C) To help in forecasts of various items
(D) All of the Above
Answer
Answer: D
13, What will be the trend percentage, if the Inventory of a firm is ?2,00,000; ?2,40,000; ?
3,00,000 and ?4,00,000 respectively?
(A) 1, 1.2, 1.5,2
(B) 10, 12, 15,20
(C) 100, 120, 150, 200
(D) None of the Above
Answer
Answer: C
14. In a common size Balance Sheet, total liabilities are assumed to be equal to
(A) 1
(B) 10
(C) 100
(D) 1,000
Answer
Answer: C
15. In a common size Statement of Profit & Loss, the amount of net revenue from operations
is assumed to be equal to
(A) 1
(B) 10
(C) 100
(D) 1,000
Answer
Answer: C
16. The objective of common size Statement of Profit & Loss is not to
(A) Present Changes in Various items of incomes and expenses
(B) Judge the cost items
(C) Establish relationship between revenue from operations and other items of statement of
profit & loss
(D) Judge the relative financial soundness for different enterprises
Answer
Answer: D
Answer
Answer: D
Answer
Answer: B
3. Common Size Statements are prepared
(A) In the form of Ratios
(B) In the form of Percentages
(C) In both of the Above
(D) None of the Above
Answer
Answer: B
Answer
Answer: C
Answer
Answer: C
Answer
Answer: A
7. In the Balance Sheet of a Common Size Statement:
(A) Figure of share capital is assumed to be 100
(B) Figure of current liabilities is assumed to be 100
(C) Figure of fixed assets is assumed to be 100
(D) Figure of total assets is assumed to be 100
Answer
Answer: D
8. Total assets of a firm are ₹20,00,000 and its fixed assets are ₹8,00,000. What will be the
percentage of fixed assets on total assets?
(A) 60%
(B) 40%
(C) 29%
(D) 71%
Answer
Answer: B
9. If total assets of a firm are ₹8,20,000 and its fixed assets are ₹5,90,400, what will be the
percentage of current assets on total assets?
(A) 42%
(B) 58%
(C) 28%
(D) 72%
Answer
Answer: C
10. If net revenue from operations of a firm are ₹1,20,000; cost of revenue from operations is
₹66,000 and operating expenses are ₹21,600, what will be the percentage of operating
income on net revenue from operations?
(A) 55%
(B) 45%
(C) 73%
(D) 27%
Answer
Answer: D
11. If net revenue from operations of a firm are ₹15,00,000; Gross Profit is ₹9,00,000 and
operating expenses are ₹75,000, what will be percentage of operating income on net revenue
from operations?
(A) 45%
(B) 55%
(C) 35%
(D) 65%
Answer
Answer: B
Answer
Answer: D
13, What will be the trend percentage, if the Inventory of a firm is ?2,00,000; ?2,40,000; ?
3,00,000 and ?4,00,000 respectively?
(A) 1, 1.2, 1.5,2
(B) 10, 12, 15,20
(C) 100, 120, 150, 200
(D) None of the Above
Answer
Answer: C
14. In a common size Balance Sheet, total liabilities are assumed to be equal to
(A) 1
(B) 10
(C) 100
(D) 1,000
Answer
Answer: C
15. In a common size Statement of Profit & Loss, the amount of net revenue from operations
is assumed to be equal to
(A) 1
(B) 10
(C) 100
(D) 1,000
Answer
Answer: C
16. The objective of common size Statement of Profit & Loss is not to
(A) Present Changes in Various items of incomes and expenses
(B) Judge the cost items
(C) Establish relationship between revenue from operations and other items of statement of
profit & loss
(D) Judge the relative financial soundness for different enterprises
Answer
Answer: D
Accounting Ratios Class 12 Accountancy MCQs Pdf
Multiple Choice Questions
Select the best alternate and check your answer with the answers given at the end of the
book.
(A) Liquidity Ratios
1. Two basic measures of liquidity are :
(A) Inventory turnover and Current ratio
(B) Current ratio and Quick ratio
(C) Gross Profit ratio and Operating ratio
(D) Current ratio and Average Collection period
Answer
Answer: B
2. Current Ratio is :
(A) Solvency Ratio
(B) Liquidity Ratio
(C) Activity Ratio
(D) Profitability Ratio
Answer
Answer: B
3. Current Ratio is :
(A) Liquid Assets/Current Assets
(B) Fixed Assets/Current Assets
(C) Current Assets/Current Liabilities
(D) Liquid Assets/Current Liabilities
Answer
Answer: C
Answer
Answer: C
Answer
Answer: D
Answer
Answer: C
7. Current assets include only those assets which are expected to be realised within
……………………..
(A) 3 months
(B) 6 months
(C) 1 year
(D) 2 years
Answer
Answer: C
8. The ………………… of a business firm is measured by its ability to satisfy its short term
obligations as they become due.
(A) Activity
(B) Liquidity
(C) Debt
(D) Profitability
Answer
Answer: B
Answer
Answer: A
Answer
Answer: B
Answer
Answer: C
Answer
Answer: A
Answer
Answer: D
Answer
Answer: B
15. Patents and Copyrights fall under the category of:
(A) Current Assets
(B) Liquid Assets
(C) Intangible Assets
(D) None of Above
Answer
Answer: C
16. Cash Balance ₹15,000; Trade Receivables ₹35,000; Inventory ₹40,000; Trade Payables
₹24,000 and Bank Overdraft is ₹6,000. Current Ratio will
be :
(A) 3.75 : 1
(B) 3 : 1
(C) 1 : 3
(D) 1 : 3.75
Answer
Answer: B
17. Trade Receivables ?40,000; Trade Payables ₹60,000; Prepaid Expenses ₹10,000;
Inventory ₹1,00,000 and Goodwill is ₹15,000. Current Ratio will be :
(A) 1 : 2
(B) 2 : 1
(C) 2.33 : 1
(D) 2.5 : 1
Answer
Answer: D
18. Cash Balance ₹5,000; Trade Payables ₹40,000; Inventory ₹50,000; Trade Receivables
₹65,000 and Prepaid Expenses are ₹10,000. Liquid Ratio will be
(A) 1.75 : 1
(B) 2 : 1
(C) 3.25 : 1
(D) 3 : 1
Answer
Answer: A
19. Current Assets ₹4,00,000; Current Liabilities ₹2,00,000 and Inventory is ₹50,000. Liquid
Ratio will be :
(A) 2 : 1
(B) 2.25 : 1
(C) 4 : 7
(D) 1.75 : 1
Answer
Answer: D
20. Which of the following transactions will improve the Current Ratio :
(A) Cash Collected from Trade Receivables
(B) Purchase of goods for cash
(C) Payment to Trade Payables
(D) Credit purchase of Goods
Answer
Answer: C
21. Which of the following transactions will improve the quick ratio?
(A) Sale of goods for cash
(B) Sale of goods on credit
(C) Issue of new shares for cash
(D) All of the Above
Answer
Answer: D
22. A company’s Current Ratio is 2 : 1. After cash payment to some of its creditors, Current
Ratio will:
(A) Decrease
(B) Increase
(C) As before
(D) None of these
Answer
Answer: B
23. A Company’s Current Assets are ₹8,00,000 and its current liabilities are ₹4,00,000.
Subsequently, it purchased goods for ₹1,00,000 on credit. Current ratio will be
(A) 2 : 1
(B) 2.25 : 1
(C) 1.8 : 1
(D) 1.6 : 1
Answer
Answer: C
24, A company’s Current assets are ₹3,00,000 and its current liabilities are ₹2,00,000.
Subsequently, it paid ₹50,000 to its trade payables. Current ratio will be
(A) 2 : 1
(B) 1.67 : 1
(C) 1.25 : 1
(D) 1.5 : 1
Answer
Answer: B
25. Current Assets of a Company were ? 1,00,000 and its current ratio was 2 : 1. After this
the company paid ?25,000 to a Trade Payable. The Current Ratio after the payment will be :
(A) 5 : 1
(B) 2 : 1
(C) 3 : 1
(D) 4 : 1
Answer
Answer: C
26. Current liabilities of a company were ₹2,00,000 and its current ratio was 2.5 : 1. After this
the company paid ₹1,00,000 to a trade payable. The current ratio after the payment will be :
(A) 2 : 1
(B) 4 : 1
(C) 5 : 1
(D) None of the above
Answer
Answer: B
27. A Company’s liquid assets are ₹10,00,000 and its current liabilities are ₹8,00,000.
Subsequently, it purchased goods for ₹1,00,000 on credit. Quick ratio will be
(A) 1.11 : 1
(B) 1.22 : 1
(C) 1.38 : 1
(D) 1.25 : 1
Answer
Answer: A
28. A Company’s liquid assets are ₹5,00,000 and its current liabilities are ₹3,00,000.
Thereafter, it paid 1,00,000 to its trade payables. Quick ratio will be:
(A) 1.33 : 1
(B) 2.5 : 1
(C) 1.67 : 1
(D) 2 : 1
Answer
Answer: D
29. The is a measure of liquidity which excludes generally the least liquid asset.
(A) Current ratio, Accounts receivable
(B) Liquid ratio, Accounts receivable
(C) Current ratio, inventory
(D) Liquid ratio, inventory
Answer
Answer: D
30. Assuming that the current ratio is 2 : 1, purchase of goods on credit would:
(A) Increase Current ratio
(B) Decrease Current ratio
(C) have no effect on Current ratio
(D) decrease gross profit ratio
Answer
Answer: B
31. Assuming that the current ratio is 2 : 1, Cash paid against Bills Payable would:
(A) increase current ratio
(B) Decrease Current ratio
(C) have no effect on Current ratio
(D) decrease gross profit ratio
Answer
Answer: A
32. Assuming liquid ratio of 1.2 : 1, cash collected from debtors would :
(A) increase liquid ratio
(B) decrease liquid ratio
(C) have no effect on liquid ratio
(D) increase gross profit ratio
Answer
Answer: C
33. Liquid Assets :
(A) Current Assets – Prepaid Lxp.
(B) Current Assets – Inventory + Prepaid Exp.
(C) Current Assets – Inventory – Prepaid Exp.
(D) Current Assets + Inventory – Prepaid Exp.
Answer
Answer: C
34. Current Assets ₹85,000; Inventory ₹22,000; Prepaid Expenses ₹3,000. Then liquid
assets will be :
(A) ₹63,000
(B) ₹60,000
(C) ₹82,000
(D) ₹1,10,000
Answer
Answer: B
35. A Company’s Quick Ratio is 1.5 : 1; Current Liabilities are ₹2,00,000 and Inventory is
₹1,80,000. Current Ratio will be :
(A) 0.9 : 1
(B) 1.9 : 1
(C) 1.4 : 1
(D) 2.4 : 1
Answer
Answer: D
36. A Company’s Quick Ratio is 1.8 : 1; Liquid Assets are ₹5,40,000 and Inventory is
₹1,50,000. Its Current Ratio will be :
(A) 2 : 1
(B) 2.3 : 1
(C) 1.8 : 1
(D) 1.3 : 1
Answer
Answer: B
37. A Company’s Current Ratio is 2.8 : 1; Current Liabilities are ₹2,00,000; Inventory is
₹1,50,000 and Prepaid Expenses are ₹10,000. Its Liquid Ratio will be :
(A) 3.6 : 1
(B) 2.1 : 1
(C) 2 : 1
(D) 2.05 : 1
Answer
Answer: C
Answer
Answer: C
39. On the basis of following data, the liquid ratio of a company will be : Current Ratio 5 : 3;
Current Liabilities ₹75,000 and Inventory ₹25,000
(A) 1 : 1
(B) 2:1.8
(C) 3 : 2
(D) 4 : 3
Answer
Answer: D
40. Current ratio of a firm is 9 : 4. Its current liabilities are ₹1,20,000. Inventory is ₹30,000. Its
liquid ratio will be :
(A) 1 : 1
(B) 1.5 : 1
(C) 2 : 1
(D) 1.6 : 1
Answer
Answer: C
41. A firm’s current ratio is 3.5 : 2. Its current liabilities are ?80,000. Its working capital will be :
(A) ₹1,20,000
(B) ₹1,60,000
(C) ₹60,000
(D) ₹2,80,000
Answer
Answer: C
42. A Company’s Current Ratio is 3 : 1 and Liquid Ratio is 1.2 : 1. If its Current Liabilities are
₹2,00,000, what will be the value of Inventory?
(A) ₹2,40,000
(B) ₹3,60,000
(C) ₹4,00,000
(D) ₹40,000
Answer
Answer: B
43. A Company ’ s Current Ratio is 2.5 : 1 and Liquid Ratio is 1.6 : 1. If its Current Assets are
₹7,50,000, what will be the value of Inventory?
(A) ₹4,50,000
(B) ₹4,80,000
(C) ₹2,70,000
(D) ₹1,80,000
Answer
Answer: C
44. Current Ratio of a Company is 2.5 : 1. If its working capital is ₹60,000, its current liabilities
will be :
(A) ₹40,000
(B) ₹60,000
(C) ₹1,00,000
(D) ₹24,000
Answer
Answer: A
45. A Company’s Current Assets are ₹6,00,000 and working capital is ₹2,00,000. Its Current
Ratio will be :
(A) 3 : 1
(B) 1.5 : 1
(C) 2 : 1
(D) 4 : 1
Answer
Answer: B
46. A Company’s Current Ratio is 2.4 : 1 and Working Capital is ₹5,60,000. If its Liquid Ratio
is 1.5, what will be the value of Inventory?
(A) ₹6,00,000
(B) ₹2,00,000
(C) ₹3,60,000
(D) ₹6,40,000
Answer
Answer: C
47. A Company’s Current Ratio is 2.5 : 1 and its Working Capital is ₹60,000. If its Inventory is
₹52,000, what will be the liquid Ratio?
(A) 2.3 : 1
(B) 2.8 : 1
(C) 1.3 : 1
(D) 1.2 : 1
Answer
Answer: D
48. If a Company’s Current Liabilities are ₹80,000; Working Capital is ₹2,40,000 and
Inventory is ₹40,000, its quick ratio will be:
(A) 3.5 : 1
(B) 4 : 1
(C) 4.5 : 1
(D) 3 : 1
Answer
Answer: A
49. A Company’s Liquid Assets are ₹2,00,000, Inventory is ₹1,00,000, Prepaid Expenses are
₹20,000 and Working Capital is ₹2,40,000. Its Current Ratio will be:
(A) 1.33 : 1
(B) 4 : 1
(C) 2.5 : 1
(D) 3 : 1
Answer
Answer: B
Answer
Answer: B
Answer
Answer: A
Answer
Answer: C
54. Fixed Assets ₹5,00,000; Current Assets ₹3,00,000; Equity Share Capital ₹4,00,000;
Reserve ₹2,00,000; Long-term Debts ₹40,000. Proprietary Ratio will be :
(A) 75%
(B) 80%
(C) 125%
(D) 133%
Answer
Answer: A
55. The ………….. ratios provide the information critical to the long run operation of the firm.
(A) Liquidity
(B) Activity
(C) Solvency
(D) Profitability
Answer
Answer: C
Answer
Answer: B
Answer
Answer: B
58. Proprietary Ratio indicates the relationship between Proprietor’s Funds and
(A) Long-Term Debts
(B) Short Term & Long Term Debts
(C) Total Assets
(D) Debentures
Answer
Answer: C
Answer
Answer: D
60. Equity Share Capital ₹20,00,000; Reserve 5,00,000; Debentures ₹10,00,000; Current
Liabilities ₹8,00,000. Debt-equity ratio will be :
(A) .4 ; 1
(B) .32 : 1
(C) .72 : 1
(D) .5 : 1
Answer
Answer: A
61. Debt equity ratio of a company is 1 : 2. Which of the following transactions will increase it:
(A) Issue of new shares for cash
(B) Redemption of Debentures
(C) Issue of Debentures for cash
(D) Goods purchased on credit
Answer
Answer: C
Answer
Answer: D
63. On the basis of following data, the Debt-Equity Ratio of a Company will be:
Equity Share Capital ₹5,00,000; General Reserve ₹3,20,000; Preliminary Expenses ₹20,000;
Debentures ₹3,20,000; Current Liabilities ₹80,000.
(A) 1 : 2
(B) 52 : 1
(C) 4 : 1
(D) 37 : 1
Answer
Answer: C
64. On the basis of following information received from a firm, its Debt-Equity Ratio will be :
Equity Share Capital ₹5,80,000; Reserve Fund ₹4,30,000; Preliminary Expenses ₹40,000;
Long term Debts ₹1,28,900; Debentures ₹2,30,000.
(A) 42 : 1
(B) 53 : 1
(C) 63 : 1
(D) 37 : 1
Answer
Answer: D
65. On the basis of following data, the proprietary ratio of a Company will be :
Equity Share Capital ₹6,00,000; Debentures ₹2,40,000; Statement of Profit & Loss Debit
Balance ₹40,000.
(A) 74%
(B) 65%
(C) 82%
(D) 70%
Answer
Answer: D
66. On the basis of following information received from a firm, its Proprietary Ratio will be :
Fixed Assets ?3,30,000; Current Assets ₹1,90,000; Preliminary Expenses ₹30,000; Equity
Share Capital ₹2,44,000; Preference Share Capital ₹1,70,000; Reserve Fund ₹58,000.
(A) 70%
(B) 80%
(C) 85%
(D) 90%
Answer
Answer: C
67. On the basis of following data, a Company’s Total Assets-Debt Ratio will be: Working
Capital ₹2,70,000; Current Liabilities ₹30,000; Fixed Assets ₹4,00,000; Debentures
₹2,00,000; Long Term Bank Loan ₹80,000.
(A) 37%
(B) 40%
(C) 45%
(D) 70%
Hint: Working Capital + Current Liabilities = Current Assets
Answer
Answer: B
68. On the basis of following information received from a firm, its Total Assets-Debt Ratio will
be :
Working Capital ₹3,20,000; Current Liabilities ₹1,40,000; Fixed Assets ₹2,60,000;
Debentures ₹2,10,000; Long Term Bank Debt ₹78,000.
(A) 40%
(B) 60%
(C) 30%
(D) 70%
Answer
Answer: A
Answer
Answer: D
71. Revenue from Operations ₹8,00,000; Gross Profit Ratio 25%; Opening Inventory
₹1,00,000; Closing Inventory ₹60,000. Inventory Turnover Ratio will be :
(A) 10 Times
(B) 7.5 Times
(C) 8 Times
(D) 12.5 Times
Answer
Answer: B
72. On the basis of following data, the cost of revenue from operations by a company will be :
Opening Inventory ₹70,000; Closing Inventory ?₹80,000; Inventory Turnover Ratio 6 Times.
(A) ₹1,50,000
(B) ₹90,000
(C) ₹4,50,000
(D) ₹4,80,000
Answer
Answer: C
73. Opening Inventory of a firm is ₹80,000. Cost of revenue from operations is ?6,00,000.
Inventory Turnover Ratio is 5 times. Its closing Inventory will be:
(A) ₹1,60,000
(B) ₹1,20,000
(C) ₹80,000
(D) ₹2,00,000
Answer
Answer: A
74. Cost of revenue from operations ₹6,00,000; Inventory Turnover Ratio 5; Find out the
value of opening inventory, if opening inventory is ₹8,000 less than ” the closing inventory.
(A) ₹1,12,000
(B) ₹1,16,000
(C) ₹1,28,000
(D) ₹1,24,000
Answer
Answer: B
75. Revenue from Operations ₹2,00,000; Inventory Turnover Ratio 5; Gross Profit 25%. Find
out the value of Closing In ventory, if Closing Inventory is ₹8,000 more than the Opening
Inventoiy.
(A) ₹38,000
(B) ₹22,000
(C) ₹34,000
(D) ₹26,000
Answer
Answer: C
76. If the inventory turnover ratio is divided into 365, it becomes a measure of
(A) Sales efficiency
(B) Average Age of Inventory
(C) Sales Turnover
(D) Average Collection Period
Answer
Answer: B
77. If average inventory is ₹50,000 and closing inventory is ₹2,000 less than the opening
inventory, opening and closing inventory will be :
(A) ₹52,000 and ₹50,000
(B) ₹50,000 and ₹48,000
(C) ₹48,000 and ₹46,000
(D) ₹51,000 and ₹49,000
Answer
Answer: D
78. Opening Inventory ₹50,000; Closing Inventory ₹40,000 and cost of revenue from
operations ₹7,20,000. What will be Inventory Turnover Ratio?
(A) 18 Times
(B) 16 Times
(C) 14.4 Times
(D) 8 Times
Answer
Answer: B
79. Average Inventory ₹60,000; Inventory Turnover Ratio 8; Gross Profit 20% on revenue
from operations; what will be Gross Profit?
(A) ₹1,20,000
(B) ₹96,000
(C) ₹80,000
(D) ₹15,000
Answer
Answer: A
80. Opening Inventory ₹75,000; Closing Inventory ₹1,05,000; Inventory Turnover Ratio 6;
Gross Profit 20% on cost; what will be Gross Profit?
(A) ₹1,35,000
(B) ₹1,08,000
(C) ₹90,000
(D) ₹18,000
Answer
Answer: B
81. Opening Inventory ₹40,000; Purchase ₹4,00,000; Purchase Return ₹12,000, what will be
Inventory turnover ratio if Closing Inventory is less than Opening Inventory by ₹8,000?
(A) 9 Times
(B) 10.78 Times
(C) 11 Times
(D) 8.82 Times
Answer
Answer: C
82. The formula for calculating the Trade Receivables Turnover Ratio is :
Answer
Answer: C
83. Total revenue from operations ₹9,00,000; Cash revenue from operations ₹3,00,000;
Debtors ₹1,00,000; B/R ₹20,000. T rade Receivables Turnover Ratio will be :
(A) 5 Times
(B) 6 Times
(C) 7.5 Times
(D) 9 Times
Answer
Answer: A
84. Total revenue from operations ₹27,00,000; Credit revenue from operations ₹18,00,000;
Opening Debtors ₹3,20,000; Closing Debtors ₹4,00,000; Provision for Doubtful Debts
₹60,000. Trade Receivables Turnover Ratio will be :
(A) 7.5 times
(B) 9 times
(C) 6 times
(D) 5 times
Answer
Answer: D
85. Credit revenue from operations ₹24,00,000; Trade Receivables Turnover Ratio 6 times;
Opening Debtors ₹3,20,000. Closing Debtors will be :
(A) ₹4,00,000
(B) ₹4,80,000
(C) ₹80,000
(D) ₹7,20,000
Answer
Answer: B
86. A firm makes credit revenue from operations of ₹2,40,000 during the year. If the trade
receivables turnover ratio is 8 times, calculate closing debtors, if the closing debtors are more
by ₹6,000 than the opening debtors :
(A) ₹33,000
(B) ₹36,000
(C) ₹24,000
(D) ₹27,000
Answer
Answer: A
87. Credit revenue from operations ₹3,00,000. Trade Receivables Turnover Ratio 5;
Calculate Closing Debtors, if closing debtors are two times in comparison to Opening
Debtors.
(A) ₹40,000
(B) ₹60,000
(C) ₹ 80,000
(D) ₹1,20,000
Answer
Answer: C
88. Credit revenue from operations ₹5,60,000; Debtors ₹70,000; B/R ₹10,000. Average
Collection Period will be :
(A) 52 Days
(B) 53 Days
(C) 45 Days
(D) 46 Days
Answer
Answer: B
89. Credit revenue from operations ₹6,00,000; Cash revenue from operations ? 1,50,000;
Debtors ₹1,00,000; B/R ₹50,000. Average Collection Period will be :
(A) 2 Months
(B) 2.4 Months
(C) 3 Months
(D) 1.6 Months
Answer
Answer: C
90. On the basis of following data, a Company’s closing debtors will be:
Credit revenue from operations ₹9,00,000; Average Collection period 2 months; Opening
debtors are ₹15,000 less as compared to closing debtors.
(A) ₹1,42,500
(B) ₹1,57,500
(C) ₹1,80,000
(D) ₹75,000
Answer
Answer: B
91. Total credit revenue from operations of a firm is ₹5,40,000. Average collection period is 3
months. Opening debtors are ₹1,10,000. Its closing debtors will be :
(A) ₹1,35,000
(B) ₹1,60,000
(C) ₹2,20,000
(D) ₹1,80,000
Answer
Answer: B
Answer
Answer: B
Answer
Answer: C
94. Total Purchases ₹4,50,000; Cash Purchases ₹1,50,000; Creditors ₹50,000; Bills Payable
₹10,000. Trade Payables Turnover Ratio will be :
(A) 7.5 times
(B) 6 times
(C) 9 times
(D) 5 times
Answer
Answer: D
95. Credit Purchases ₹6,00,000; Trade Payables Turnover Ratio 5; Calculate closing
creditors, if closing creditors are ? 10,000 less than opening creditors.
(A) ₹1,15,000
(B) ₹1,25,000
(C) ₹1,30,000
(D) ₹1,10,000
Answer
Answer: A
96. Credit Purchases ₹9,60,000; Cash Purchases ₹6,40,000; Creditors ₹2,40,000; Bills
Payable ₹80,000. Average Payment Period will be :
(A) 3 months
(B) 4 months
(C) 2.4 months
(D) 6 months
Answer
Answer: B
97. Current Assets ₹5,00,000; Current Liabilities ₹1,00,000; Revenue from Operations
₹28,00,000. Working Capital turnover Ratio will be:
(A) 7 times
(B) 5.6 times
(C) 8 times
(D) 10 times
Answer
Answer: A
98. On the basis of following data, the Waiting Capital Turnover Ratio of a company will be :
Liquid Assets ₹3,70,000; Inventory ₹80,000; Current Liabilities ₹1,50,000; Cost of levcnue
from operations ₹7,50,000.
(A) 2.5 Times
(B) 3 Trimes
(C) 5 Times
(D) 3.8 Times
Answer
Answer: A
99. A firm’s cwTent assets are ₹3,60,000; Cur from operations is ₹12,00,000. Its worki
(A) 3 Times
(B) 5 Trimes
(C) 8 Times
(D) 4 Times
Answer
Answer: B
Answer
Answer: D
102. A film’s credit revenue from operations is ₹3,60,000, cash revenue from operations is
₹70,000, Cost of reverse from operations is ₹3,61,200, Its gross profit ratio will be :
(A) 11%.
(B) 23.2%
(C) 18%
(D) 20%
Answer
Answer: D
103. On the basis of following data, a Company’s Gross Profit Ratio will be :
Net Profit ₹40,000; Office Expenses ₹20,000; Selling Expenses ₹36,000; Total revenue from
operations ₹6,00,000.
(A) 16%
(B) 20%
(C) 6.67%
(D) 12.5%
Answer
Answer: A
104. What will be the amount of Gross Profit. if revenue from operations are ₹6,00,000 and
Gross . Profit Ratio is 20% of cost?
(A) ₹1,50,000
(B) ₹1,00,000
(C) ₹1,20,000
(D) ₹5,00,000
Answer
Answer: B
105. What will be the amount of Gross Profit, if revenue from operations are ₹6,00,000 and
Gross Profit Ratio 20% of revenue from operations?
(A) ₹1,50,000
(B) ₹1,00,000
(C) ₹1,20,000
(D) ₹5,00,000
Answer
Answer: C
106. Revenue from operations is ₹1,80,000; Rate of Gross Profit is 25% on cost. What will be
the Gross Profit?
(A) ₹45,000
(B) ₹36,000
(C) ₹40,000
(D) ₹60,000
Answer
Answer: B
Answer
Answer: B
109. Total Revenue from Operations ₹15,00,000; Cost of Revenue from Operations
₹9,00,000 and Operating Expenses ₹2,25,000. Calculate operating ratio :
(A) 75%
(B) 25%
(C) 60%
(D) 15%
Answer
Answer: A
110. Purchases ₹7,20,000; Office Expenses ₹30,000; Selling Expenses ₹90,000; Opening
Inventory ₹1,40,000; Closing Inventory ₹80,000; Revenue from Operations ₹12,00,000.
Calculate operating ratio
(A) 60%
(B) 75%
(C) 70%
(D) 65%
Answer
Answer: B
111. Revenue from Operations ₹6,00,000; Gross Profit 20%; Office Expenses ₹30,000;
Selling Expenses ?₹48,000. Calculate operating ratio (A) 80%
(B) 85%
(C) 96.33%
(D) 93%
Answer
Answer: D
Answer
Answer: D
Answer
Answer: C
Answer
Answer: B
Answer
Answer: C
Answer
Answer: D
6. While calculating operating profit which will be added to net profit:
(A) Preliminary Expenses Written off
(B) Depreciation
(C) Loss on Sale of Asset
(D) All of the Above
Answer
Answer: D
Answer
Answer: B
8. While calculating cash flow from operating activities which will be deducted:
(A) Decrease in Prepaid Expenses
(B) Increase in Trade Payables
(C) Increase in Trade Receivables
(D) Decrease in Trade Receivables
Answer
Answer: C
9. While calculating cash flow from operating activities which will be added :
(A) Increase in Inventory
(B) Increase in Creditors
(C) Decrease in Bills Payable
(D) Increase in Trade Receivables
Answer
Answer: B
10. Cash from Operating activities will decrease due to :
(A) Increase in Current Assets
(B) Decrease in Current Liabilities
(C) Neither of the two
(D) Both A and B above
Answer
Answer: D
11. Which of the following is incorrect about the statement of cash flows?
(A) It provides information about the cash receipt and cash payments of an enterprise.
(B) It reconciles ending cash balance with the balance as per bank statement.
(C) It provides information about the operating, investing and financing activities.
(D) It explains the deviation of cash from Earnings.
Answer
Answer: B
Answer
Answer: D
Answer
Answer: C
Answer
Answer: A
15. Which of the following is an example of cash flow from Operating Activities?
(A) Issue of Shares
(B) Purchase of Machinery
(C) Purchase of Investment
(D) Purchase of Inventory for Cash
Answer
Answer: D
Answer
Answer: D
17. An example of Cash Flows from Investing Activity is :
(A) Cash Revenue from Operations
(B) Commission Received
(C) Payment of cash for purchase of fixed assets
(D) Dividend paid
Answer
Answer: C
Answer
Answer: A
Answer
Answer: B
20. If a machine whose original cost is ₹40,000 having accumulated depreciation ₹12,000,
were sold for ₹34,000 then while preparing Cash Flow Statement its effect on cash flow will
be :
(A) Cash flow from financing activities ₹34,000
(B) Cash flow from financing activities ₹6,000
(C) Cash flow from investing activities ₹34,000
(D) Cash flow from investing activities ₹6,000
Answer
Answer: C
21. If 6% Pref. share capital ₹2,00,000 were redeemed at a premium of 5%, while preparing
Cash Flow Statement its effect on cash flow will be :
(A) Cash used from financing activities ₹2,12,000
(B) Cash received from financing activities ₹2,12,000
(C) Cash used (Payment) from financial activities ₹2,10,000
(D) Cash used (Payment) from financial activities ₹2,00,000
Answer
Answer: C
22. If the amount of goodwill is ₹40,000 at the beginning of a year and ₹48,000 at the end of
that year then while preparing cash flow statement its effect oncash flow will be :
(A) Cash used (Payment) in Investing Activities ₹8,000
(B) Cash received from operating activities ₹8,000
(C) Cash used (Payment) from Operating Activities ₹8,000
(D) Cash used (Payment) from Financial Activities ₹8,000
Answer
Answer: A
23. How will you deal increase in the balance of ‘Securities Premium Reserve’ while
preparing a Cash Flow Statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) Cash Equivalent
Answer
Answer: C
24. Fine Garments Ltd. is engaged in the export of readymade garments. The company
purchased a machinery of ₹10,00,000 for the use in packaging of such garments. Cash flow
due to the purchase of machinery will be cash flow from:
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) Cash Equivalent
Answer
Answer: B
25. A Ltd., engaged in the business of retailing of two wheelers, invested ₹50,00,000 in the
shares of a manufacturing company. Dividend received on this investment will be :
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) Cash Equivalent
Answer
Answer: B
26. How will you treat payment of dividend in a Cash flow statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) Cash Equivalent
Answer
Answer: C
27. How will you treat Bank Overdraft in a Cash Flow Statement?
(A) Cash Flow from Operating Activities ’
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) Cash Equivalent
Answer
Answer: C
28. Where will you show purchase of Goodwill in a Cash Flow Statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) Cash Equivalent
Answer
Answer: B
29. How will you treat payment of ‘Interest on Debentures’ while preparing a Cash Flow
Statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) Cash Equivalent
Answer
Answer: C
30. Interest received by a finance company is classified under which kind of activity while
preparing a Cash flow statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) No Cash Flow
Answer
Answer: A
31. State whether cash deposited in bank will be classified under which kind of activity?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) No Cash Flow
Answer
Answer: D
32. Mention the net amount of ‘Source’ or ‘Use’ of cash when a fixed asset having book value
of ₹15,000 is sold at a loss of ₹5,000.
(A) Use ₹5,000
(B) Source ₹10,000
(C) Use ₹15,000
(D) Source ₹15,000
Answer
Answer: B
33. Dividend paid by a Trading company is classified under which kind of activity while
preparing cash flow statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) No Cash Flow
Answer
Answer: C
34. A company receives a dividend of ₹2 Lakhs on its investment in other company’s shares.
In case of a Finance Company, it will be classified under which kind of activity?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) No Cash Flow
Answer
Answer: A
35. How will you classify loans given by Tata Finance Company?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) No Cash Flow
Answer
Answer: A
Answer
Answer: A
37. A Mutual Fund Company receives a dividend of ₹20 Lakhs on its investments in another
company’s shares. Where will it appear in a Cash Flow Statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) No Cash Flow
Answer
Answer: A
38. Dividend paid by a finance company is classified under which kind of activity while
preparing cash flow statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) No Cash Flow
Answer
Answer: C
39. Dividend paid by a manufacturing company is classified under which kind of activity while
preparing cash flow statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) No Cash Flow
Answer
Answer: C
40. Interest paid by an investment company will come under which kind of activity while
preparing cash flow statement?
(A) Cash Flow from Operating Activities
(B) Cash Flow from Investing Activities
(C) Cash Flow from Financing Activities
(D) No Cash Flow
Answer
Answer: A
Answer
Answer: A
Answer
Answer: D
44. Cash deposit with the bank with a maturity date after two months belongs to which of the
following in the cash flow statement: (C.B.S.E. Sample Paper, 2015)
(A) Investing activities
(B) Financing activities
(C) Cash and Cash equivalent
(D) Operating activities
Answer
Answer: C