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Questions:

Multiple Choice Question

99 x 1 = 99

In non-profit accounting, the sale of old newspapers is generally considered as a/an

(a)

Expenses

(b)

Expenditure

(c)

Income

(d)

Capital receipt

The amount or property received by a non- profit organization as stated by the will of a deceased person is commonly referred to as

(a)

Donation

(b)

Honorarium

(c)

Legacy

(d)

Endowment

Income and expenditure accounts show

(a)

Cash available to an organization

(b)

Closing capital of an organization

(c)

Cash available in the bank account

(d)

Surplus or deficit for the current accounting period

Rs10,000 received as the annual membership subscription. Out of this, Rs.2000 is pertaining to the previous accounting period whereas Rs.1000 is receivable at the end of the current accounting period. Calculate the amount of subscription that will be shown in the income and expenditure account for this accounting

(a)

Rs.10,000

(b)

Rs.9000

(c)

Rs.12,000

(d)

Rs.8,000

Subscription received but not yet earned is considered as a/an

(a)

Asset

(b)

Liability

(c)

Income

(d)

Expenditure

Which of the following is the accounting equation for a non-profit organization?

(a)

Asset = Capital + Liabilities

(b)

Capital + Liabilities = Assets

(c)

Accumulated fund + Liabilities = Assets

(d)

Liabilities = Asset + Accumulated fund

XYZ club has a bar that maintains a separate trading account for its trading activities. Which of the following is the treatment of profit or loss on bar trading activities?

(a)

Profit or loss is directly shown in the balance sheet

(b)

Profit or loss is to be presented in income and expenditure account

(c)

Profit and loss is credit in income statement

(d)

Profit or loss is added to accumulated fund

The capital of a non-profit organization is generally known as

(a)

Equity

(b)

Accumulated fun

(c)

Cash fund

(d)

Financial reserve

Which of the following is to be recorded in an income and expenditure account?

(a)

Purchase of a fixed asset

(b)

Capital expenditure incurred on a fixed asset

(c)

Profit on the sale of a fixed asset

(d)

Sale of a fixed asset

10.

Income and expenditure account is based on

(a)

Cash accounting

(b)

Accrual accounting

(c)

Government accounting

(d)

Management accounting

11.

Rent expense of a non-profit organization paid in advance. Which of the following is the correct classification of rent?

(a)

Expense

(b)

Lisbility

(c)

Equity

(d)

Asset

12.

Non-profit organizations prepare all of the following accounts except the

(a)

Receipts and payment accounts

(b)

Income and Expenditure accounts

(c)

Balance sheet

(d)

Income statement

13.

Which of the following is generally considered as a non profit oriented organization?

(a)

Charitable organization

(b)

Corporation

(c)

Audit firms

(d)

Insurance companies

14.

The purpose of revaluation account is to ascertain the

(a)

Reassessment

(b)

None

(c)

Both A and B

(d)

Revaluation Profit/Loss

15.

What adjustments are required when existing partners decide to change their profit sharing ratio:

(a)

Reserves

(b)

Accumulated profits

(c)

All

(d)

Goodwill

16.

Revaluation of assets on the reconstitution of partnership is necessary because their present value may be different from their _____

(a)

Market Value

(b)

Net Value

(c)

Place value

(d)

Book value

17.

An account prepared to carry out the scheme of revaluation of assets and reassessment of liabilities :

(a)

Devaluation account

(b)

Memorandum of revaluation

(c)

Memorandum of valuation

(d)

Revaluation account

18.

Accounting Standard ____ requires goodwill should be recorded in the books of accounts only when some money or money’s worth is paid for it.

(a)

(b)

(c)

(d)

19.

Who is a sacrificing partner :

(a)

Whose share has decrease as a result of change

(b)

Whose share has increase as well as decrease as a result of change

(c)

Whose share has does not get affected as a result of change

(d)

Whose share has increase as a result of change

20.

How sacrificing ratio is calculated

(a)

All of these

(b)

Sacrificing ratio = Old ratio – Gaining ratio

(c)

Sacrificing ratio = New ratio – Old ratio

(d)

Sacrificing ratio = Old ratio – New ratio

21.

The circumstances when change in profit sharing ratio is needed:

(a)

All of these

(b)

When new partner admitted

(c)

When existing partner’s decide

(d)

When existing partner retires

22.

What is the meaning of change in the profit sharing ratio:

(a)

In which all partner including the deceased partner executor partner share future profit and loss

(b)

Purchase of shares of profit by one partner form another partner

(c)

In which all partner including the retired partner share future profit and loss

(d)

In which all partner including the new partner share future profit and loss

23.

Which of the following is responsible for the Reconstitution of Partnership?

(a)

Retirement of an existing partner

(b)

Change in existing profit sharing ratio

(c)

Death of a partner

(d)

All of these

24.

The decision is Garner Vs Murray was given in:

(a)

1904

(b)

1905

(c)

1933

(d)

1804

25.

At the time of dissolution all the assets of firm are transferred to the realization A/c:

(a)

Market value

(b)

Book value

(c)

Cost value

(d)

Bale value

26.

Revolution A/c is a:

(a)

Real A/c

(b)

Personal A/c

(c)

Cash A/c

(d)

Nominal A/c

27.

Old profit sharing ratio minus new profit sharing ration is equal to:

(a)

Sacrificing ratio

(b)

Ratio of gain ratio

(c)

Capital

(d)

None

28.

A credit balance on a partner’s current A/c is.

(a)

Fixed capital

(b)

Part of capital

(c)

A current asset

(d)

Long – term liability

29.

A person who receives a share of profits from one of the regular partner is called:

(a)

Secret partner

(b)

Quasi

(c)

partner in profit only

(d)

Sub – partner

30.

If no provision is made in agreement regarding the duration of the partnership:

(a)

Limited partnership

(b)

Partnership at – will

(c)

None

(d)

Particular partnership

31.

Loss on realization is:

(a)

Debited to partners capital A/c

(b)

Credited to partners capital A/c

(c)

Debited to realization A/c

(d)

Credited to realization A/c

32.

Loss on realization is distributed among partners:

(a)

According to profit and loss ratio

(b)

According to capital ratio

(c)

As decided among them

(d)

None of above

33.

On the retirement of a partner any reserve being should be transferred to the capital account of:

(a)

All partners in the old profit sharing ratio

(b)

Remaining partners in the new profit sharing ratio

(c)

Neither the retiring partner, nor the remaining partner

(d)

None of above

34.

The loss or gain an account of revaluation at the time of retirement of a partner is shared by:

(a)

Remaining partners

(b)

Retiring partner

(c)

All partners

(d)

None of above

35.

Amount due to out going partner is shown in the balance sheet as his:

(a)

Liability

(b)

Asset

(c)

Capital

(d)

Loan

36.

An account operated to ascertain the loss or gain at the death of a partner is called:

(a)

Realization account

(b)

Revaluation account

(c)

Execution account

(d)

Deceased partner A/c

37.

If the remaining partner want to continue the business, after the retirement of a partner, a new partnership agreement:

(a)

Necessary

(b)

Not necessary

(c)

Optioned

(d)

None of above

38.

The accounting procedure at the retirement of partner is valued:

(a)

Revaluation of assets and liabilities

(b)

Ascertaining his share of good will

(c)

Finding the amount due to him

(d)

All of above

39.

Revaluation account is operated to find out gain or loss at the time of:

(a)

Admission of a partner

(b)

Retirement of a partner

(c)

Death of a partner

(d)

All of above

40.

The partnership may come to an end due to the:

(a)

Death of a partner

(b)

Insolvency of partner

(c)

By giving notice

(d)

All of the above

41.

In the revaluation account a decrease in the value of plant and machinery:

(a)

Appears on the debit side

(b)

Appears on the credit side.

(c)

Appears on the debit side of good will account

(d)

Does not appear at all

42.

At the time of a new partner Good will:

(a)

Belongs to all partners, new and old

(b)

Belongs only to the new partners who is going to be admitted.

(c)

Belongs only to the old partner who have credited it

(d)

None of the above.

43.

At the time of admission of a new partner, general reserve is:

(a)

Debited to capital of old partners

(b)

Credited to capital of old partners

(c)

Allowed to remain is balance sheet

(d)

Debited to current account

44.

An incoming partner pays his share of good will in cash, and profit sharing ration of old partner is changed, Good – will be distributed among old partners:

(a)

As their old profit ratio

(b)

According to new ration

(c)

According to sacrifice ratio

(d)

None of these

45.

Good will of the firm is valued Rs. 30000. C an incoming partner purchase 1/4 share of total profit Good will be raised in the books.

(a)

Rs. 30000

(b)

Rs. 7500

(c)

Rs. 120000

(d)

Rs. 7000

46.

Value of good will agreed upon Rs. 30000 on C,S admission and allowing him 1/4 share of total profit Good will is brought in cash, the amount of good-will be as:

(a)

Rs. 30000

(b)

Rs. 7500

(c)

Rs. 150000

(d)

Rs. 120000

47.

At the time of admission an incoming partner contributes as goodwill:

(a)

In cash

(b)

Does not pay cash

(c)

May or may not pay cash for good will

(d)

None of these

48.

At the time of admission of a new partner the firm is:

(a)

Dissolved

(b)

Continued

(c)

Not effected

(d)

RE-organized

49.

A Ltd engaged in the business retailing of Air-Conditioners, invested Rs. 25, 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

50.

Which of the following is not application of cash?

(a)

Increase in debtors

(b)

Increase in Inventory

(c)

Increase in bills payable

(d)

Increase in prepaid expenses

51.

Which of the following is not source of cash?

(a)

Issue of shares

(b)

Purchase of machinery

(c)

Sale of asset

(d)

Dividend received

52.

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

53.

Cash deposit with the bank with a maturity date after two months belongs to which of the following in the cash flow statement.

(a)

Investing activities

(b)

Financing activities

(c)

Cash and cash equivalents

(d)

Operating activities

54.

Inventory turnover ratio is also called

(a)

stock turnover ratio

(b)

current ratio

(c)

liquid ratio

(d)

debt turnover ratio

55.

The two basis measure of liquidity are

(a)

inventory turnover & current ratio

(b)

current ratio &liquid ratio

(c)

gross profit &operating ratio

(d)

current ratio &average collection period

56.

Average stock is find out by

(a)

Opening stock

(b)

closing stock

(c)

both

57.

Stock is not included in

(a)

current assets

(b)

quick ratio

(c)

debt ratio

(d)

gross profit

58.

Quick ratio included

(a)

current assets

(b)

liquid assets

(c)

current liability

(d)

none of them

59.

Activity ratio is

(a)

stock turn over

(b)

debtor turnover

(c)

creditor turnover

(d)

all of them

60.

Solvency ratio is

(a)

debt equity ratio

(b)

current ratio

(c)

quick ratio

(d)

current assets

61.

current ratio is

(a)

liquidity ratio

(b)

quick ratio

(c)

solvency ratio

(d)

debt equity ratio

62.

What are the tools of financial management

(a)

comparative statement

(b)

common size statement

(c)

Ratio statement

(d)

all of them

63.

How many tools of financial analysis

(a)

(b)

(c)

(d)

64.

Types of financial statement

(a)

(b)

(c)

(d)

65.

Secured loans are

(a)

long term loan

(b)

short term loan

(c)

assets

(d)

current assets

66.

Reserve and surplus are comes in which head

(a)

non current liability

(b)

assets

(c)

fixed assets

(d)

shareholder funds

67.

Assets are divide in to

(a)

(b)

(c)

(d)

68.

As which act companies is revised schedule VI

(a)

1956

(b)

1989

(c)

1978

(d)

1965

69.

Share capital is

(a)

assets

(b)

fixed assets

(c)

liabilities

(d)

balance sheet

70.

What is the limitations of financial statement

(a)

basis for fiscal policies

(b)

basis for granting of credit

(c)

guide to the value of the investment already made

(d)

do not reflect current situation

71.

What are the importance of financial statement

(a)

Disclosing accounting policies

(b)

information about activities of business affecting the society

(c)

report on stewarding function

(d)

all of them

72.

What are the objectives of financial statement

(a)

To provide information about economic resource

(b)

To provide information about cash flows

(c)

To judge effectiveness of management

(d)

All of them

73.

Nature of financial statement

(a)

recorded facts

(b)

accounting convention

(c)

postulates

(d)

all of above

74.

Discount or loss on issue of debentures to be written off within 12 months of the date of Balance Sheet is shown as

(a)

Other current assets

(b)

Other non current assets

(c)

Other long term liabilities

(d)

Other current liabilities

75.

Debenture interest is paid

(a)

At a pre-determined rate

(b)

At variable rate

(c)

At a rate based on net profit of the company

(d)

At a rate as determined by the company from time to time

76.

In case debentures of Rs.10,000 are issued at par but payable at a premium of 10%, the premium payable will be debited to

(a)

Debentures Suspense account

(b)

Premium on redemption of debentures account

(c)

Loss on issue of debentures account

(d)

Both (a) and (c)

77.

Premium on redemption of debentures is in the nature of

(a)

Personal account

(b)

Real account

(c)

Nominal account

(d)

None of these

78.

At the time of issue of debentures, Debenture account is

(a)

Credited by the amount received

(b)

Credited by the issue price of the debenture

(c)

Credited by the face value of the debenture

(d)

None of the above

79.

Debenture holders are

(a)

Owners of the company

(b)

Creditors of the company

(c)

Vendors of the company

(d)

Customers of the company

80.

When debentures are issued at a discount, should be written off the discount

(a)

In the year of the issue of debentures

(b)

Within 5 years of the issue of debentures

(c)

During the life of the debentures

(d)

In the year of redemption of debentures

81.

Debentures are shown in the Balance Sheet of a company under the head of

(a)

Non current liabilities

(b)

Current liabilities

(c)

Share capital

(d)

None of the above

82.

When debentures are issued as secondary securities it is called

(a)

Issue for consideration other than cash

(b)

Issue as collateral securities

(c)

Issued at a discount

(d)

Issued at premium

83.

What type of debentures can be issued by an Indian company?

(a)

Secured

(b)

Unsecured

(c)

Convertible

(d)

Redeemable

84.

Securities Premium Reserve collected by the company can be used for:

(a)

Issue of bonus shares

(b)

Payment of dividend

(c)

Any business purpose

(d)

None of the above

85.

Which of the following statement is true:

(a)

Authorized capital=Issued capital

(b)

Authorized capital > Issued capital

(c)

Paid up capital > Issued capital

(d)

None of the above

86.

When shares issued are 10,000 but applied shares are 8,000 then it is a case of:

(a)

Over-subscription

(b)

under subscription

(c)

pro-rata

(d)

None of the above.

87.

Other name for registered capital is:

(a)

Issued capital

(b)

nominal capital

(c)

reserve capital

(d)

None of the above

88.

Shareholders are the:

(a)

Owners of the company

(b)

lenders of the company

(c)

customers of the company

89.

Balance of forfeiture a/c after the shares have been re-issued is transferred to:

(a)

Capital reserve

(b)

general reserve

(c)

securities premium reserve

(d)

None of these.

90.

Which is not a method to calculate the goodwill?

(a)

Average Profit Method

(b)

super profit method

(c)

Regular profit method

(d)

Capitalization method

91.

Who should compensate to whom in case of change in profit sharing ratio of existing partners?

(a)

gaining partner to sacrificing partner

(b)

sacrificing partner to gaining partner

(c)

both (i) and (ii)

(d)

None of the above

92.

Goodwill is a/an :

(a)

Current asset

(b)

Tangible asset

(c)

Intangible asset

(d)

Fictitious asset

93.

According to AS 26, which goodwill is recorded in the books:

(a)

purchased goodwill

(b)

self generated goodwill

(c)

both (i) and (ii)

(d)

None of the above

94.

Revaluation A/c is prepared to find out the profit or loss on:

(a)

sale of fixed assets

(b)

revaluation of assets and liabilities

(c)

sale of goods

(d)

sale of services

95.

Profit or loss on revaluation is shared among the partners in:

(a)

new profit sharing ratio

(b)

capital ratio

(c)

equal ratio

(d)

old profit sharing ratio

96.

Interest on partner’s capital is :

(a)

a gain

(b)

a loss

(c)

an appropriation

(d)

None of these

97.

Capital employed by a partnership firm is Rs10,00,000.Its average profit is Rs 1,20,000. The normal rate of return in similar type of business is 10%. What is the amount of super profits?

(a)

Rs 20,000

(b)

Rs 12,000

(c)

Rs 1,00,000

(d)

Rs 1,12,000

98.

A partnership deed is silent for the payment of interest on partners’s loan but there was a loss instead of profits during the year 2013-14. At what rate will the interest on partner’s loan be allowed?

(a)

6 % p.a even if the firm incurs loss

(b)

As per the partnership deed

(c)

No interest will be provided

(d)

None of these.

99.

Loss is distributed among the partners:

(a)

Equally

(b)

As per the partnership deed

(c)

Ratio of capitals

(d)

None of these.

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Answers Key:

Multiple Choice Question

99 x 1 = 99

(d)
Surplus or deficit for the current accounting period

(b)
Rs.9000

(b)
Liability

(b)
Accumulated fun

10.

(b)
Accrual accounting

11.

(d)
Asset

12.

13.

(a)
Charitable organization

14.

(d)
Revaluation Profit/Loss

15.

16.

(d)
Book value

17.

(d)
Revaluation account

18.

(d)
10

19.

(a)
Whose share has decrease as a result of change

20.

(d)
Sacrificing ratio = Old ratio – New ratio

21.

(a)
All of these

22.

(b)
Purchase of shares of profit by one partner form another partner

23.

(d)
All of these

24.

(a)
1904

25.

(b)
Book value

26.

(d)
Nominal A/c

27.

(a)
Sacrificing ratio

28.

(b)
Part of capital

29.

(d)
Sub – partner

30.

(b)
Partnership at – will

31.

(a)
Debited to partners capital A/c

32.

(a)
According to profit and loss ratio

33.

(a)
All partners in the old profit sharing ratio

34.

35.

(d)
Loan

36.

(b)
Revaluation account

37.

(a)
Necessary

38.

(d)
All of above

39.

(d)
All of above

40.

(d)
All of the above

41.

(a)
Appears on the debit side

42.

43.

(b)
Credited to capital of old partners

44.

45.

(a)
Rs. 30000

46.

(b)
Rs. 7500

47.

48.

(a)
Dissolved

49.

(b)
Cash flow from Investing activities

50.

51.

(b)
Purchase of machinery

52.

53.

54.

(a)
stock turnover ratio

55.

(b)
current ratio &liquid ratio

56.

57.

(b)
quick ratio

58.

(b)
liquid assets

59.

(a)
stock turn over

60.

(a)
debt equity ratio

61.

(a)
liquidity ratio

62.

(d)
all of them

63.

64.

(a)
2

65.

(a)
long term loan

66.

(d)
shareholder funds

67.

(d)
2

68.

(a)
1956

69.

70.

(d)
do not reflect current situation

71.

72.

(d)
All of them

73.

(d)
all of above

74.

75.

(a)
At a pre-determined rate

76.

77.

78.

79.

(b)
Creditors of the company

80.

81.

(a)
Non current liabilities

82.

(b)
Issue as collateral securities

83.

(a)
Secured

84.

(b)
Payment of dividend

85.

(b)
Authorized capital > Issued capital

86.

(b)
under subscription

87.

(b)
nominal capital

88.

(a)
Owners of the company

89.

(a)
Capital reserve

90.

(a)
Average Profit Method

91.

(a)
gaining partner to sacrificing partner

92.

93.

(a)
purchased goodwill

94.

(b)
revaluation of assets and liabilities

95.

(d)
old profit sharing ratio

96.

97.

(a)
Rs 20,000

98.

(a)
6 % p.a even if the firm incurs loss

99.

(b)
As per the partnership deed

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