1. Introduction to Partnership and Partnership Final
Accounts
Q.1.Select the correct option and rewrite
the sentences. (1 mark each)
(1) To find out Net Profit or Net Loss of
the business Account is prepared.
(a) Trading (b) Capital (c) Current (d)
Profit & Loss
(2) A is an Intangible Asset.
(a) Goodwill (b) Stock (c) Cash (d)
Furniture the
(3) In the absence of an agreement,
interest on loan advanced by partner to the firm is allowed at the rate of
(a) 5% (b) 6 % (c) 10 % (d) 9 %
(4) Liability of partners in a partnership business is -------
(a) limited (b) unlimited (c) limited and unlimited (d) none of the
above
(5) The Indian Partnership Act is in force
since-----------------
(a)
1932 (b) 1881 (c) 1956 (d) 1984
(6) Maximum number------------- of partners in a firm
are according to the Companies Act, 2013.
(a) 10 (b) 25 (c) 20(d) 50
Ans.
(1) To find out Net Profit or Net Loss of
the business Profit & Loss Account is prepared.
(2) A Goodwill is an Intangible Asset
(3) In the absence of an agreement,
interest on loan advanced by the partner to the firm is allowed at the rate of
6%.
(4) Liability of partners in a partnership business is unlimited.
(5) The Indian Partnership Act is in force since 1932.
(6) Maximum number of partners in a firm
are 50 according to the Companies Act, 2013.
Note:
While answering this question, students should write the full statements and
underline the answer word or figure as shown. However, hereafter, we have given
only the answer word or figure.
(1) When dates of drawings are not given,
interest on drawings is charged for months.
(a) three (b) six (c) nine (d) twelve
2) If fixed capital method is adopted, net
divisible profit is transferred to Account.
(a) Partner's Current (b) Partner's Capital
(c) Profit and Loss (d) Trading
(3) A statement showing financial position
of a business is called a
(a) Balance Sheet (b) Trial Balance (c)
Capital A/C (d) Trading A/C
(4) Wages paid for installation of
machinery should be debited to Account.
(a) Machinery (b) Wages (C) Trading (d)
Profit and Loss
(5) Return outwards are deducted from
(a) Purchase (b) Sales (C) Capital (d)
Debtors
(6) Credit balance of Profit and Loss
Account indicates
(a) Gross Profit (b) Gross Loss (c) Net
Profit (d) Net Loss
(7) Royalty paid on production is shown in
the
(a) Balance Sheet (b) Trading A/C Profit
and Loss A/C (d) Partner's Current A/C
(8) Advertisement expenditure to be written
off yet, will appear on the side of the Balance Sheet.
(a) Debit (b) Liabilities (C) Assets (d)
Credit
(9) Personal medical bill of a partner,
paid from the business is known as of the partner.
(a)cash (d) drawings(c) capital (b) profit
Ans
(1) six (2) Partner's Current (3) Balance
Sheet (4) Machinery (5) Purchase (6) Net Profit (7) Trading A/C (8) Assets (9)
Drawings.
2 : Accounts of 'Not For Profit' Concerns
1. (1) Not for Profit concern renders
services to public at large.
(a) commercial (b) social (c) individual
(d) group
(2) Donation for Scholarship Fund is
(a) Capital Receipt (b) Revenue Receipt (c)
Capital Expenditure (d) Revenue Expenditure
(3) Income and Expenditure Account is a Account.
(a) Capital (b) Real (c) Personal (d)
Nominal
(4) Outstanding subscription at the end of
the accounting year represents
(a) Liability (b) an Expenditure(c) an
Asset (d) Capital Fund
(5) Excess of Income over Expenditure is
termed as
(a) Deficit (b) Profit (C) Surplus (d) Loss
(6) Not for Profit concern prepares Account instead of Profit and Loss Account to know the result.
(a) Trading (b) Income and Expenditure (c)
Cash (d) Receipts and Payments
(7) The closing balance of Receipts and
Payments Account usually represents
(a) Closing stock (b) Cash and Bank Balance
(C) Surplus (d) Deficit
(8) Not for Profit organisation is also
called organisation.
(a) service (b) trading (c) profit making
(d) commercial
(9) Expenditure on Purchase of Building is
a Expenditure.
(a) Capital (b) Revenue (c) General (d)
Recurring
Ans.
(1) social (2) Capital Receipt (3) Nominal (4) an Asset (5) Surplus (6) Income and Expenditure (7) Cash and Bank Balance (8) service (9) Capital.
(1) Usually, is a major source of revenue
income for 'Not for Profit' concerns.
(a) subscription (b) donations (c) legacies
(d) entrance fees
(2) The excess of assets over liabilities
is termed as
(a) surplus (b) deficit (c) capital fund
(d) loan
(3) Only incomes and expenses are shown in
the Income and Expenditure Account.
(a) revenue (b) capital (c) business (d)
non-recurring
(4) Both capitalised receipts and capital
expenditure are shown in the
(a) Profit and Loss A/C (b) Balance Sheet
(C) Trading A/C (d) Income and Expenditure A/C
(5) Subscriptions received from the members
is considered as receipts.
(a) capital (b) revenue (C) non-recurring
(d) commercial
(6) Fund which provides permanent source of
income to non-trading organisation is called fund.
(a) Endowment (b) general (c) specific (d)
capital
(7) For a public hospital, expenditure on
the purchase of medicines is a Expenditure.
(a) General (b) Non-recurring (c) Capital
(d) Revenue
(8) The main purpose of incurring a
expenditure is to earn an income or to increase the earning capacity of the
business.
(a) Recurring (b) capital (c) revenue (d)
business
Ans.
(1) Subscription (2) capital
fund (3) revenue (4) Balance Sheet (5) revenue (6) Endowment (7) Revenue (8)
capital.
3 : Reconstitution of Partnership (Admission of Partner)
(1) Anuj and Eeshan are two partners
sharing profits and losses in the ratio of 3: 2.They decided to admit Aaroh for
1/5th share, the new profit sharing ratio will be
(a) 12:8:5 (b) 4:3:1 (C) 12:8:1 (d) 12:3:1
(2) Excess of proportionate capital over
actual capital represents
(a) Equal capital (b) surplus capital (c)
deficit capital (d) gain
(3) is credited when unrecorded asset is
brought into business.
(a) Revaluation Account (b) Balance Sheet
(c) Trading Account (d) Partners Capital Account
(4) When goodwill is withdrawn by the
partner Account is credited.
(a) Revaluation (b) Cash / Bank (c) Current
(d) Profit and Loss Adjustment
(5) If asset is taken over by the partner Account
is debited.
(a) Revaluation (b) Capital (c) Asset (d)
Balance Sheet
(6) Account is debited when unrecorded
liability is brought into business.
(a) Liability (b) Revaluation (c) Capital
(d) Current
(7) The Ratio is useful for making
adjustment for goodwill among the old partners.
(a) New (b) Sacrifice (c) Old (d) Profit
and Loss
Ans.
(1) 12:8:5 (2) deficit capital (3)
Revaluation Account (4) Cash /Bank (5) Capital (6) Revaluation (7) Sacrifice.
(a) all (b) old (C)new (d) none of these
(2) When the reserve fund is distributed to
old partners, the Account is debited.
(a) Capital (b) Current (c) Reserve Fund
(d) Profit and Loss
(3) Goodwill brought in by a new partner is
shared by the old partners in their Ratio.
(a) New (b) Gain (c) Sacrifice (d) Balance
(4) Ratio is a ratio surrendered by old
partners in favour of a new partner.
(a) Sacrifice (b) Gain (c) New (d) Old
(5) When goodwill is written off, partners'
capital accounts are
(a) credited (b) debited (c) increase (d)
none of these Account is
(6) If an asset is appreciated, Revaluation
(a) Debited (b) credited (c) depreciated
(d) neutralised
Ans.
(1) Old (2) Reserve Fund (3) Sacrifice (4)
Sacrifice (5) debited 6) credited.
4: Reconstitution of Partnership (Retirement of Partner)
1. (1) The profit or loss from revaluation
on retirement of partner is shared by-------
(a) the remaining partners(b) all the
partners (c) only retiring partner (d) bank
(2)
Decrease in the value of assets should be ----------To Profit and Loss Adjustment
Account.
a) Debited (b) credited (c) added (d) equal
(3) The balance of the capital account of
retired partner is transferred to his account, if it is not paid.
a) Loan (b) personal (c) current (d) son’s
(4) Gain ratio Ratio less Old Ratio.
a)New (b) Equal (c) Capital (d) Sacrifice
(5) New Ratio Old Ratio + Ratio.
a) Gain (b) Capital (c) Sacrifice (d)
Current
Ans.
(1) all the partners (2) debited (3) loan
(4) New (5) Gain.
2 (1) A, B and C are partners sharing profits
in the ratio of 5:3 : 2. If B retires then new ratio will be…………………….
a)1: 5:2 (b) 5:3 (0) 3:2 (d) 1
(2) Increase in the value of assets should
be ………….to Profit and Loss Adjustment Account.
a) Debited (b) credited (c) added (d) none
of these
(3) A, B and C are partners, sharing profits
and losses in the ratio of ½, 1/3 and 1/6 respectively, if B retires, the new
ratio will be…………….
a) 4:1 (b) 3:1 (C) 3:2 (d) 2:1
(4) On retirement of a partner, the balance
of retiring partner’s Current Account is transferred to his ………..Account.
A) Drawings (b) Capital (c) Wife’s Loan (d)
Son’s
(5) – -------Ratio is a ratio which continuing
partners are benefited on retirement of a partner.
a)New (b) Sacrifice (c) Gain (d) Old the
(6) Debit balance of Profit and Loss Suspense
Account is shown in new Balance Sheet -- ----------------on side.
(a) Assets (b) Liabilities (c) Debit (d)
None of these
Ans.
(1) 5 : 2 (2) credited (3) 3:1 (4) Capital (5) Gain (6) Assets.
5 : Reconstitution of Partnership (Death of Partner)
1) Benefit Ratio is the ratio in which…………
a)The old partner gain on admission of a new partner (b) the Goodwill of a new partner on admission is credited to old Partners (c) the continuing partners’ benefits on retirement or death of a partner (d) all partners are benefitted.
(2) The ratio by which existing partners
are benefited on
(a)
gain ratio (b) sacrifice ratio (c) profit ratio (d) capital ratio
(3) Profit and Loss Suspense Account is
shown in the new Balance Sheet side.
(a) debit (b) credit (C) assets (d)
liabilities (4) Death is a compulsory
(a) Dissolution (b) Admission (c)
Retirement (d) Winding up
(5) The balance on the Capital Account of a
partner, on his death is transferred to Account.
(a) Relatives (b) Legal Heir's Loan/Executor's Loan (c)
Partner's Capital (d) Partner's Loan
(6) Share of profit of a deceased partner till the date of death is --------
(a) debited to Profit and Loss Adjustment A/C (b) credited to Profit and Loss Adjustment A/C (c) debited to Profit and Loss Suspense A/C (d) credited to Profit and Loss Suspense A/C
(7) The interest on drawings of a deceased partner is credited to----------------
(a) Current AC (b) Revaluation AC (C) Capital A/C (d) Profit and Loss Suspense A/C
Ans.
(1) the continuing partners'
benefits on retirement or death of a partner (2) gain ratio (3) assets (4)
Retirement (5) Legal Heir's Loan Executor's Loan (6) debited to Profit and Loss
Suspense A/c (7) Profit and Loss Suspense A C.
6 : Dissolution of Partnership Firm
(1) In case of dissolution, assets and liabilities are transferred to Account.
(a) Bank (b) Partner's Capital (c) Realisation
(d) Partner's Current
2) Dissolution expenses are credited to
Account.
(a)
Realisation (b) Cash / Bank (c) Partner’s Capital (d) Partner’s Loan
3) Deficiency of insolvent partner will be
suffered by solvent partners in their ratio
a) Capital (b) profit sharing (c) sale (d)
liquidity
4) If any asset is taken over by partner
from firm his Capital Account will be
a) Credited (b) debited (c) added (d)
divided
5) If any unrecorded liability is paid on
dissolution of the firm Account is debited.
a) Cash/Bank (b) Realisation (c) Partner’s
Capital (d) Loan
6) Partnership is completely dissolved when
all the partners of the firm become
a) Solvent (b) insolvent (c) creditor (d)
debtors
7) Assets and liabilities are transferred
to Realisation Account at their values.
a) Market (b) purchase (c) sale (d) book
8) If the number of partners in a firm falls
below two, the firm stands
a)Dissolved (b) established (c) realisation
(d) restructured
(9) Realisation Account is – on realisation
of asset.
a)Debited (b) credited (C) deducted (d)
closed
(10) All activities of partnership firm
ceases on of
a)Dissolution (b) admission (c) retirement
(d) death
(11) When a partner takes over a liability,
his Capital Account is Firm.
a)Debited (b) credited (c) deducted (d)
none of these
(12) Debit balance of insolvent Partner’s
Capital Account is known as
a) Capital deficiency (b) capital surplus
(c) profit (d) loss
Ans.
(1) Realisation (2) Cash/Bank (3) profit sharing (4) debited (5) Realisation (6) insolvent (7) book (8) dissolved (9) credited (10) dissolution (11) credited (12) capital deficiency.
7: Bills of Exchange
1. (1) The person on whom a bill is drawn
is called a…………
(a) Drawee (b) Payee (c) Drawer (d)
Acceptor
(2) Before acceptance the bill is called a………….
(a) Order (b) Request (c) Draft (d)
Instrument
(3) When the due date of bill drawn falls
due on a public holiday, the payment must be made on the day.
(a) same (b) preceding (c) next (d) any
(4) The due date of the bill drawn for 2
months on 23rd Nov. 2019 will be
(a) 23rd Jan. 2020 (b) 25th Jan. 2019 (c)
26th Jan. 2019 (d) 25th Jan. 2020
(5) Noting charges are borne by
(a) Notary Public (b) Drawee (c) Drawer (d)
Endorsee
(6) There are parties to bill of exchange.
(a) five (b) four (c) three (d) two
7) When a bill is drawn for 2 months after
date on 3rd Jan. 2020, due date will be
Its………….
(a) 3rd Jan. 2020(b) 3rd Mar. 2020 (c) 5th
Mar. 2020 (d) 6th Mar. 2020
(8) Notary Public is……………..
(a) Govt. Officer (b) Drawer (c) Payee (d)
Endorsee
(9) When Acceptor or Drawee does not pay
the amount of bill to the holder on the due date it is known as the bill.
(a) returning (b) discounting (c) honouring
(d) dishonouring
(10) The person who accepts the bill treats
the bill as ……………
(a) Bills Payable (b) Promissory Note (c)
Draft (d) Bills Receivable
Ans.
(1) Drawee (2) Draft (3) preceding (4) 25th
Jan. 2020 (5) Drawee (6) three (7) 6th Mar. 2020 (8) Govt. Officer (9)
dishonouring (10) Bills Payable.
(1) A bill of exchange is required to be………………..
by drawee.
(a) drafted (b) discounted (c) accepted (d)
endorsed
2) The person to whom the amount of the
bill is made payables called………….or…………..is a person to whom the amount on a
bill is payable.
(a) Endorsee (b) Drawer (c) Drawee (d)payee
(3) When the acceptor accepts the bill with
certain conditions, the acceptance is called . Acceptance.
(a) Qualified (b) General (c) Clean (d)
Special
(4) The drawee becomes an on acceptance of
a bill.
(a) acceptor (b) owner (C) endorser (d)
drawer
(5) Borrowing money from a bank on the
security of a bill of exchange is called
(a) Honouring (b) Endorsing (c) Discounting
(d) Retiring
(6) If a bill is drawn on 3rd July, 2020 for
40 days, its payment must be made on
(a) 14th August, 2020 (b) 15th August, 2020
(c) 13th August, 2020 (d) 16th August, 2020
(7) When a bill is dishonoured, the is held
responsible for the noting charges.
(a) holder (b) drawee (c) drawer (d)
endorser
Ans.
(1) accepted (2) Payee (3) Qualified (4)
acceptor (5) Discounting (6) 14th August, 2020 (7) drawee.
8 : Company Accounts : Issue of Shares 1.
(1) The balance of Share Forfeiture A/c is
transferred to after re-issue of these shares.
(a) Reserve Capital (b) Capital Reserve (c)
Profit & Loss (d) Share Capital
2)
Premium received on issue of shares is shown to
(a)
Liabilities side of Balance Sheet (b) Assets side of Balance Sheet (C) Profit
& Loss A/c - debit side (d) Profit & Loss A/C - credit side
(3) The document inviting to subscribe the
shares of a company is……….
(a) Prospectus (b) Memorandum of
Association (c) Articles of Association (d) Share certificate
(4)
As per SEBI guidelines minimum amount payable on share application should be of
Nominal Value of shares.
(a) 10% (b) 15 % (c) 2 % (d) 5%
(5) When shares are forfeited the Share
Capital Account is
(a) credited (b) debited (c) neither
debited nor credited (d) None of the given
(6) The liability of shareholder in Joint
Stock Company is
(a) joint and several (b) limited (C)
unlimited (d) huge
(7) The Share Capital which a company is
authorised to issue by its Memorandum of Association is
(a) Nominal Capital / Authorised Capital
(b) Issued Capital (c) Paid-up Capital (d) Reserve Capital
(8) The unpaid amount on allotment and
calls may be transferred to Account.
(a) Calls-in-Advance (b) Calls (c)
Calls-in-Arrears (d) Allotment
(9) There must be a provision in
(a) Articles of Association (b) Memorandum of Association (c) Prospectus for forfeiture of shares. (d) Balance Sheet
Ans.
(1) Capital Reserve (2) Liabilities side of Balance Sheet (3) Prospectus (4) 5 % (5) debited (6) limited (7) Nominal Capital / Authorised Capital (8) Calls-in-Arrears (9) Articles of Association.
2 (1) Paid-up value of all shares allotted is
called capital.
(a) Uncalled (b) issued (c) subscribed (d)
nominal
(2) If the articles are silent regarding
interest on Calls-in-Advance, the minimum rate of interest to be charged is
p.a.
(a) 5 % (b) 6 % (c) 8 % (d) none of these
(3) is deducted from the share capital to
know paid-up value of shares.
(a) Calls-in-Advance (b) Calls-in-Arrears
(C) Forfeited Shares (d) Discount on Issue (4) The capital with which a company
is registered is called
(a) Issued Capital (b) Subscribed Capital(c)
Authorised Capital (d) Called-up Capital
(5) If a share of 100 is issued at * 120,
it is said to be issued a
(a) At par (b) at a premium (c) at a
discount (d) none of these
Ans.
(1) subscribed (2) 6 % (3) Calls-in-Arrears (4) Authorised Capital at a premium.
9 : Analysis of Financial Statements
1. Gross Profit Ratio indicates the
relationship of gross profit to the………….
a) Net cash (b) Net sales (c) Net purchases
(d) Gross sales
(2) Current ratio=_______________
Current
Liabilities
(a) Quick assets (b) Quick Liabilities c) Current
assets (d) None of these
(3) Liquid assets=----------------------
a)Current assets + Stock (b) Current assets
– Stock (c) Current assets – Stock + Prepaid Expenses (d) None of these
(4) Cost of goods sold=-----------------------
a)Sales – Gross profit (b) Sales – Net
profit c) Sales proceeds (d) None of these
(5) Net profit ratio is equal to-----------------------
(a) Operating ratio (b) Operating net
profit ratio (c) Gross profit ratio (d) Current ratio
6) The common size statement requires
--------------
(a) common base (b) journal entries c) cash flow (d) current ratio
Ans.
(1) Net sales (2) Current assets (3) Current assets – Stock (4) Sales – Gross profit (5) Operating ratio (6) common base.
2. (1) Bill payable is--------------------
a)Long-term loan (b) current liability (c)
liquid assets (d) net loss
(2) Generally current ratio should be-------------
a)2:1 (b) 1:1 (c) 1:2 (d) 3:1
(3) From financial statement analysis the
creditors are specially interested to know..
a)Liquidity (b) Profits (c) Sale (d) Share
capital
(4)
The methodical classification of financial statement is called------------
a)An interpretation b)An analysis (c) ratio
(d) Profit and Loss A/C
(5) The short-term deposits are ----------------
(a) net cash (b) cash equivalent (c) cash
flow (d) cash outflow
(6) The relationship between net profit
before tax, interest and dividend and capital employed is known from --------------------
(a) Current ratio (b) Quick ratio (c) ROI
(d) ROCE
(7) ROCE should be --------------------than
ROI.
(a) less (b) higher (c) equal (d) none of
these
Ans.
(1) Current liability (2) 2:1
(3) Liquidity (4) an analysis (5) cash equivalent (6) ROI (7) higher.
10 : Computer in Accounting
(1) The primary document for recording all
financial transactions in Tally is the-------
(a) Journal (b) Trial sheet (c) Voucher (d)
File
(2) ----------------Displays the balance
day wise for a selected voucher type.
(a) Record book (b) Ledger book (c) Journal
book (d) Day book
(3) Fixed Deposit A/c comes under-------------
group.
(a) Investment (b) Current liability (C)
Bank A/C (d) Current asset
(4) Computer, disk drives, monitors,
printers, etc. are included in------------
(a) Software (b) Hardware (c) Packages (d)
Personnel
5)-----------------is the set of programme
that direct the computer to perform the desired task.
(a) Software (b) Hardware (c) Packages (d)
Personnel
(6) --------------are critical to the
success of any endeavour because people operate the system.
(a) Software (b) Hardware (c) Packages (d)
Persons
(7) Customized software is prepared to meet
--------------of the customer.
(a) Special requirement (b) easiness (c)
savings (d) basic need
(8) Tailored software is prepared for the --------------size
business.
(a) Small (b) medium (c) large (d) small and medium
(9)---------------------- application can be downloaded and installed from websites.
(a) Ready to use (b) Customized (c)
Tailored (d) Free and open source
Ans
(1) Voucher (2) Day book (3)
Investment (4) Hardware (5) Software (6) Persons (7) special requirement (8)
large (9) Free and open source.
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