CHAPTER I
Choose the correct answer
1. Incomplete records are
generally maintained by
(a)
A company (b)
Government
(c)
Small sized sole trader business (d) Multinational enterprises
2. Statement of affairs is
a
(a)
Statement of income and expenditure (b)
Statement of assets and liabilities
(c)
Summary of cash transactions (d)
Summary of credit transactions
3. Opening statement of
affairs is usually prepared to find out the
(a)
Capital in the beginning of the year (b)
Capital at the end of the year
(c)
Profit made during the year (d)
Loss occurred during the year
4. The excess of assets
over liabilities is
(a)
Loss (b)
Cash
(c)
Capital (d)
Profit
5. Which of the following
items relating to bills payable is transferred to total creditors account?
(a)
Opening balance of bills payable (b) Closing balance of bills payable
(c)
Bills payable accepted during the year (d)
Cash paid for bills payable
6. The amount of credit
sales can be computed from
(a)
Total debtors account (b)
Total creditors account
(c)
Bills receivable account (d) Bills payable account
7. Which one of the
following statements is not true in relation to incomplete records?
(a)
It is an unscientific method of recording transactions
(b)
Records are maintained only for cash and personal accounts
(c)
It is suitable for all types of organisations
(d)
Tax authorities do not accept
8. What is the amount of
capital of the proprietor, if his assets are ₹ 85,000 and liabilities are ₹ 21,000?
(a)
₹ 85,000 (b)
₹ 1,06,000
(c)
₹ 21,000 (d)
₹ 64,000
9. When capital in the
beginning is ₹ 10,000, drawings during
the year is ₹ 6,000, profit made
during the year is ₹ 2,000 and the additional
capital introduced is ₹ 3,000, find out the
amount of capital at the end.
(a)
₹ 9,000 (b)
₹ 11,000
(c)
₹ 21,000 (d)
₹ 3,000
10. Opening balance of
debtors: ₹ 30,000, cash received: ₹ 1,00,000, credit sales:
₹ 90,000; closing balance
of debtors is
(a)
₹ 30,000 b)
₹ 1,30,000
c) ₹ 40,000 d)
₹ 20,000
Answers
1. (c)
2. (b) 3. (a) 4. (c) 5. (c) 6. ( a) 7.(c) 8. ( d) 9. (a) 10.( d)
CHAPTER
II
Choose the correct answer
1. Receipts and payments
account is a
(a)
Nominal A/c (b)
Real A/c
(c)
Personal A/c (d)
Representative personal account
2. Receipts and payments
account records receipts and payments of
(a)
Revenue nature only (b)
Capital nature only
(c)
Both revenue and capital nature (d) None of the above
3. Balance of receipts and
payments account indicates the
(a)
Loss incurred during the period
(b)
Excess of income over expenditure of the period
(c)
Total cash payments during the period
(d)
Cash and bank balance as on the date
4. Income and expenditure
account is a
(a)
Nominal A/c ( b)
Real A/c
(c)
Personal A/c (d)
Representative personal account
5. Income and Expenditure
Account is prepared to find out
(a)
Profit or loss (b)
Cash and bank balance
(c)
Surplus or deficit ( d) Financial position
6. Which of the following
should not be recorded in the income and expenditure account?
(a)
Sale of old news papers (b) Loss on sale of asset
(c)
Honorarium paid to the secretary (d) Sale proceeds of furniture
7. Subscription due but not
received for the current year is
(a)
An asset (b)
A liability
(c)
An expense (d)
An item to be ignored
8. Legacy is a
(a)
Revenue expenditure (b)
Capital expenditure
(c)
Revenue receipt (d)
Capital receipt
9. Donations received for a
specific purpose is
(a)
Revenue receipt (b)
Capital receipt
(c)
Revenue expenditure (d)
Capital expenditure
10. There are 500 members in
a club each paying ₹ 100 as annual
subscription. Subscription due but not received for the current year is ₹ 200; Subscription
received in advance is ₹ 300. Find out the amount
of subscription to be shown in the income and expenditure account.
a) ₹ 50,000 b)
₹ 50,200
c) ₹ 49,900 d)
₹ 49,800
Answers
1. (b)
2. (c) 3. (d) 4. (a) 5. (c) 6. (d) 7. (a) 8. (d) 9. (b) 10. (a)
CHAPTER
III
Choose the correct answer
1. In the absence of a
partnership deed, profits of the firm will be shared by the partners in
(a)
Equal ratio (b)
Capital ratio
(c)
Both (a) and (b) (d)
None of these
2. In the absence of an
agreement among the partners, interest on capital is
(a)
Not allowed (b)
Allowed at bank rate
(c)
Allowed @ 5% per annum (d)
Allowed @ 6% per annum
3. As per the Indian
Partnership Act, 1932, the rate of interest allowed on loans advanced by partners
is
(a)
8% per annum (b)
12% per annum
(c)
5% per annum (d)
6% per annum
4. Which of the following
is shown in Profit and loss appropriation account?
(a)
Office expenses (b)
Salary of staff
(c)
Partners’ salary (d)
Interest on bank loan
5. When fixed capital
method is adopted by a partnership firm, which of the following items will
appear in capital account?
(a)
Additional capital introduced (b)
Interest on capital
(c)
Interest on drawings (d)
Share of profit
6. When a partner withdraws
regularly a fixed sum of money at the middle of every month, period for which
interest is to be calculated on the drawings on an average is
(a)
5.5 moths (b) 6 months
(c)
12 months (d) 6.5 months
7. Which of the following
is the incorrect pair?
(a)
Interest on drawings – Debited to capital account
(b)
Interest on capital – Credited to capital account
(c)
Interest on loan – Debited to capital account
(d)
Share of profit – Credited to capital account
8. In the absence of an
agreement, partners are entitled to
(a)
Salary (b)
Commission
(c)
Interest on loan (d)
Interest on capital
9. Pick the odd one out
(a)
Partners share profits and losses equally
(b)
Interest on partners’ capital is allowed at 7% per annum
(c)
No salary or remuneration is allowed to partners
(d)
Interest on loan from partners is allowed at 6% per annum.
10. Profit after interest on
drawings, interest on capital and remuneration is ₹ 10,500. Geetha, a
partner, is entitled to receive commission @ 5% on profits after charging such
commission. Find out commission.
(a)
₹ 50 (b)
₹ 150
(c)
₹ 550 (d)
₹ 500
Answers
1 (a)
2(a) 3(d) 4(c) 5 (a) 6(b) 7(c) 8(c) 9(b) 10(d)
CHAPTER
IV
Choose the correct answer
1. Which of the following
statements is true?
(a)
Goodwill is an intangible asset (b) Goodwill is a current asset
(c)
Goodwill is a fictitious asset (d)
Goodwill cannot be acquired
2. Super profit is the
difference between
(a)
Capital employed and average profit (b)
Assets and liabilities
(c)
Average profit and normal profit (d) Current year’s profit and
average profit
3. The average rate of
return of similar concerns is considered as
(a)
Average profit (b)
Normal rate of return
(c)
Expected rate of return (d)
None of these
4. Which of the following
is true?
(a)
Super profit = Total profit / number of years
(b)
Super profit = Weighted profit / number of years
(c)
Super profit = Average profit – Normal profit
(d)
Super profit = Average profit × Years of purchase
5. Identify the incorrect pair
(a)
Goodwill under Average profit method - Average profit × Number of years of
purchase
(b)
Goodwill under Super profit method - Super profit × Number of years of purchase
(c)
Goodwill under Annuity method - Average profit × Present value annuity factor
(d)
Goodwill under Weighted average - Weighted average profit × Number of years of
profit
method purchase
6. When the average profit
is ₹ 25,000 and the normal
profit is ₹ 15,000, super profit is
(a)
₹ 25,000 (b)
₹ 5,000
(c)
₹ 10,000 (d)
₹ 15,000
7. Book profit of 2017 is ₹ 35,000; non-recurring
income included in the profit is ₹ 1,000 and abnormal loss charged in the
year 2017 was ₹ 2,000, then the adjusted
profit is
(a)
₹ 36,000 (b)
₹ 35,000
(c)
₹ 38,000 (d)
₹ 34,000
8. The total capitalised
value of a business is ₹ 1,00,000; assets are ₹ 1,50,000 and liabilities
are ₹ 80,000. The value of
goodwill as per the capitalisation method will be
(a)
₹ 40,000 (b)
₹ 70,000
(c)
₹ 1,00,000 (d)
₹ 30,000
Answers
1 (a)
2(c) 3(b) 4(c) 5 (c) 6(c) 7(a) 8(d)
CHAPTER
V
Choose the correct answer
1. Revaluation A/c is a
(a)
Real A/c (b)
Nominal A/c
(c)
Personal A/c (d)
Impersonal A/c
2. On revaluation, the
increase in the value of assets leads to
(a)
Gain (b)
Loss
(c)
Expense (d)
None of these
3. The profit or loss on
revaluation of assets and liabilities is transferred to the capital account of
(a)
The old partners (b)
The new partner
(c)
All the partners (d)
The Sacrificing partners
4. If the old profit
sharing ratio is more than the new profit sharing ratio of a partner, the
difference
is called
(a)
Capital ratio (b)
Sacrificing ratio
(c)
Gaining ratio (d)
None of these
5. At the time of
admission, the goodwill brought by the new partner may be credited to the capital
accounts of
(a)
all the partners (b)
the old partners
(c)
the new partner (d)
the sacrificing partners
6. Which of the following
statements is not true in relation to admission of a partner
(a)
Generally mutual rights of the partners change
(b)
The profits and losses of the previous years are distributed to the old
partners
(c)
The firm is reconstituted under a new agreement
(d)
The existing agreement does not come to an end
7. Match List I with List
II and select the correct answer using the codes given below:
List I List
II
(i)
Sacrificing ratio 1.
Investment fluctuation fund
(ii)
Old profit sharing ratio 2.
Accumulated profit
(iii)
Revaluation Account 3.
Goodwill
(iv)
Capital Account 4.
Unrecorded liability
Codes:
(i) (ii)
(iii) (iv)
(a)
1 2
3 4
(b)
3 2
4 1
(c)
4 3
2 1
(d)
3 1
2 4
8. Select the odd one out
(a)
Revaluation profit (b)
Accumulated loss
(c)
Goodwill brought by new partner (d)
Investment fluctuation fund
9. James and Kamal are
sharing profits and losses in the ratio of 5:3. They admit Sunil as a
partner
giving him 1/5 share of profits. Find out the sacrificing ratio.
(a)
1:3 (b)
3:1
(c)
5:3 (d)
3:5
10. Balaji and Kamalesh are
partners sharing profits and losses in the ratio of 2:1. They admit Yogesh into
partnership. The new profit sharing ratio between Balaji, Kamalesh and Yogesh is
agreed to 3:1:1. Find the sacrificing ratio between Balaji and Kamalesh.
(a)
1:3 (b)
3:1
(c)
2:1 (d)
1:2
Answer
1. (b)
2. (a) 3. (a) 4. (b) 5.(d) 6. (d) 7. (b) 8. (c) 9. (c) 10. (d)
CHAPTER
VI
Choose the correct answer
1. A partner retires from
the partnership firm on 30th June. He is liable for
all
the
acts of the firm up to the
(a)
End of the current accounting period (b)
End of the previous accounting period
(c)
Date of his retirement (d) Date of his final
settlement
2. On retirement of a
partner from a partnership firm, accumulated profits and losses are
distributed
to the partners in the
(a)
New profit sharing ratio (b)
Old profit sharing ratio
(c)
Gaining ratio (d)
Sacrificing ratio
3. On retirement of a
partner, general reserve is transferred to the
(a)
Capital account of all the partners (b)
Revaluation account
(c)
Capital account of the continuing partners
(d)
Memorandum revaluation account
4.
On revaluation, the increase in liabilities leads to
(a)
Gain (b)
Loss
(c)
Profit (d)
None of these
5. At the time of
retirement of a partner, determination of gaining ratio is required
(a)
To transfer revaluation profit or loss (b)
To distribute accumulated profits and losses
(c)
To adjust goodwill (d)
None of these
6. If the final amount due
to a retiring partner is not paid immediately, it is transferred to
(a)
Bank A/c (b)
Retiring partner’s capital A/c
(c)
Retiring partner’s loan A/c (d)
Other partners’ capital A/c
7. ‘ A’ was a partner in a
partnership firm. He died on 31st March 2019. The final amount due to him is ₹ 25,000 which is not paid
immediately. It will be transferred to
(a)
A’s capital account (b)
A’s current account
(c)
A’s Executor account (d)
A’s Executor loan account
8. A, B and C are partners
sharing profits in the ratio of 2:2:1. On retirement of B, goodwill of the firm
was valued as ₹ 30,000. Find the
contribution of A and C to compensate B:
(a)
₹ 20,000 and ₹ 10,000 (b) ₹ 8,000 and ₹ 4,000
(c)
₹ 10,000 and ₹ 20,000 (d) ₹ 15,000 and ₹ 15,000
9. A, B and C are partners
sharing profits in the ratio of 4:2:3. C retires. The new profit
sharing
ratio between A and B will be
(a)
4:3 (b)
3:4
(c)
2:1 (d)
1:2
10. X, Y and Z were partners
sharing profits and losses equally. X died on 1st April 2019. Find out the share of X in the
profit of 2019 based on the profit of 2018 which showed ₹ 36,000.
(a)
₹ 1,000 (b)
₹ 3,000
(c)
₹ 12,000 (d)
₹ 36,000
Answers
1 (c)
2(b) 3(a) 4(b) 5 (c) 6(c) 7(d) 8(b) 9(c) 10(b)
CHAPTER
VII
Choose the correct answer
1. A preference share is
one
(i)
which carries preferential right with respect to payment of dividend at fixed
rate
(ii)
which carries preferential right with respect to repayment of capital on
winding up
(a)
Only (i) is correct (b)
Only (ii) is correct
(c)
Both (i) and (ii) are correct (d)
Both (i) and (ii) are incorrect
2. That part of share
capital which can be called up only on the winding up of a company
is
called:
(a)
Authorised capital (b)
Called up capital
(c)
Capital reserve (d)
Reserve capital
3. At the time of
forfeiture, share capital account is debited with
(a)
Face value (b)
Nominal value
(c)
Paid up amount (d)
Called up amount
4. After the forfeited
shares are reissued, the balance in the forfeited shares account
should
be transferred to
(a)
General reserve account (b)
Capital reserve account
(c)
Securities premium account (d)
Surplus account
5. The amount received over
and above the par value is credited to
(a)
Securities premium account (b)
Calls in advance account
(c)
Share capital account (d)
Forfeited shares account
6. Which of the following
statement is false?
(a)
Issued capital can never be more than the authorised capital
(b)
In case of under subscription, issued capital will be less than the subscribed
capital
(c)
Reserve capital can be called at the time of winding up
(d)
Paid up capital is part of called up capital
7. When shares are issued
for purchase of assets, the amount should be credited to
(a)
Vendor’s A/c (b)
Sundry assets A/c
(c)
Share capital A/c (d)
Bank A/c
8. Match the pair and
identify the correct option
(1)
Under subscription - (i) Amount prepaid for calls
(2)
Over subscription - (ii) Subscription above the offered shares
(3)
Calls in arrear - (iii) Subscription below the offered shares
(4)
Calls in advance - (iv) Amount unpaid on calls
(1)
(2) (3) (4)
(a)
(i) (ii) (iii) (iv)
(b)
(iv) (iii) (ii) (i)
(c)
(iii) (ii) (iv) (i)
(d)
(iii) (iv) (i) (ii)
9. If a share of ₹ 10 on which ₹ 8 has been paid up is
forfeited. Minimum reissue price is
(a)
₹ 10 per share (b) ₹ 8 per share
(c)
₹ 5 per share (d) ₹ 2 per share
10. Supreme Ltd. forfeited
100 shares of ₹ 10 each for non-payment
of final call of ₹ 2 per
share.
All these shares were re-issued at ₹ 9 per share. What amount will be
transferred to
capital
reserve account?
(a)
₹ 700 (b)
₹ 800
(c)
₹ 900
(d) ₹ 1,000
Answers
1 (c) 2(d) 3(d) 4(b) 5 (a)
6(b) 7(c) 8(c) 9(d) 10(a)
CHAPTER
VIII
Choose the correct answer
1. Which of the following statements
is not true?
a)
Notes and schedules also form part of financial statements.
b)
The tools of financial statement analysis include common-size statement
c)
Trend analysis refers to the study of movement of figures for one year
d)
The common–size statements show the relationship of various items with some
common
base, expressed as percentage of the common base
2. Balance sheet provides
information about the financial position of a business concern
a)
Over a period of time b)
As on a particular date
c)
For a period of time d)
For the accounting period
3. Which of the following
tools of financial statement analysis is suitable when data
relating
to several years are to be analysed?
a)
Cash flow statement b)
Common size statement
c)
Comparative statement d)
Trend analysis
4. The financial statements
do not exhibit
a)
Non-monetary data b)
Past data
c)
Short term data d)
Long term data
5. Which of the following
is not a tool of financial statement analysis?
a)
Trend analysis b)
Common size statement
c)
Comparative statement d)
Standard costing
6. The term ‘fund’ refers
to
a)
Current liabilities b)
Working capital
c)
Fixed assets d)
Non-current assets
7. Which of the following
statements is not true?
a)
All the limitations of financial statements are applicable to financial
statement analysis also.
b)
Financial statement analysis is only the means and not an end.
c)
Expert knowledge is not required in analysing the financial statements.
d)
Interpretation of the analysed data involves personal judgement.
8. A limited company’s
sales has increased from ₹ 1,25,000 to ₹ 1,50,000. How does this
appear
in comparative income statement?
a)
+ 20 % b)
+ 120 %
c)
– 120 % d)
– 20 %
9. In a common-size balance
sheet, if the percentage of non-current assets is 75, what
would
be the percentage of current assets?
a)
175 b)
125
c)
25 d)
100
10. Expenses for a business
for the first year were ₹ 80,000. In the second
year, it was
increased
to ₹ 88,000. What is the
trend percentage in the second year?
a)
10 % b)
110 %
c)
90 % d)
11%
Answers
1. (c)
2. (b) 3. (d) 4. (a) 5. (d) 6. (b) 7.(c) 8. (a) 9. (c) 10.(b)
CHAPTER
IX
Choose the correct answer
1. The mathematical expression
that provides a measure of the relationship
between
two figures is called
(a)
Conclusion (b)
Ratio
(c)
Model (d)
Decision
2. Current ratio indicates
(a)
Ability to meet short term obligations (b) Efficiency of management
(c)
Profitability (d)
Long term solvency
3. Current assets excluding
inventory and prepaid expenses is called
(a)
Reserves (b)
Tangible assets
(c)
Funds (d)
Quick assets
4. Debt equity ratio is a
measure of
(a)
Short term solvency (b)
Long term solvency
(c)
Profitability (d)
Efficiency
5. Match List I with List
II and select the correct answer using the codes given below:
List I List II
(i)
Current ratio 1.
Liquidity
(ii)
Net profit ratio 2.
Efficiency
(iii)
Debt-equity ratio 3. Long term solvency
(iv)
Inventory turnover ratio 4.
Profitability
Codes:
(i) (ii)
(iii) (iv)
(a)
1 4
3 2
(b)
3 2
4 1
(c)
4 3
2 1
(d)
1 2
3 4
6. To test the liquidity of
a concern, which of the following ratios are useful?
(i)
Quick ratio
(ii)
Net profit ratio
(iii)
Debt-equity ratio
(iv)
Current ratio
Select
the correct answer using the codes given below:
(a)
(i) and (ii) (b)
(i) and (iv)
(c)
(ii) and (iii) (d)
(ii) and (iv)
7. Proportion of share
holders' funds to total assets is called
(a)
Proprietary ratio (b)
Capital gearing ratio
(c)
Debt equity ratio (d)
Current ratio
8. Which one of the
following is not correctly matched?
(a)
Liquid ratio – Proportion
(b)
Gross profit ratio – Percentage
(c)
Fixed assets turnover ratio – Percentage
(d)
Debt-equity ratio – Proportion
9. Current liabilities ₹ 40,000; Current assets ₹ 1,00,000 ; Inventory ₹ 20,000 . Quick ratio is
(a)
1:1 (b)
2.5:1
(c)
2:1 (d)
1:2
10. Cost of revenue from
operations ₹ 3,00,000; Inventory in
the beginning of the year ₹ 60,000; Inventory at the close of the year ₹ 40,000. Inventory
turnover ratio is
(a)
2 times (b)
3 times
(c)
6 times (d)
8 times
Answers:
1. (b)
2. (a) 3. (d) 4. (b) 5. (a) 6. (b) 7.(a) 8. (c) 9. (c) 10.(c)
CHAPTER
X
Choose the correct answer
1. Accounting report
prepared according to the requirements of the user is
(a)
Routine accounting report (b)
Special purpose report
(c)
Trial balance (d)
Balance sheet
2. Function key F11 is used
for
(a)
Company Features (b)
Accounting vouchers
(c)
Company Configuration (d)
None of these
3. Which submenu displays
groups, ledgers and voucher types in Tally?
(a)
Inventory vouchers (b)
Accounting vouchers
(c)
Company Info (d)
Account Info
4. What are the predefined
Ledger(s) in Tally?
(i)
Cash (ii) Profit & Loss A/c (iii) Capital A/c
(a)
Only (i) (b)
Only (ii)
(c)
Both (i) and (ii) (d)
Both (ii) and (iii)
5. Contra voucher is used
for
(a)
Master entry (b)
Withdrawal of cash from bank for office use
(c)
Reports (d)
Credit purchase of assets
6. Which is not the default
group in Tally?
(a)
Suspense account (b)
Outstanding expense
(c)
Sales account (d)
Investments
7. Salary account comes
under which of the following head?
(a)
Direct Incomes (b)
Direct Expenses
(c)
Indirect Incomes (d)
Indirect Expenses
8. ₹ 25,000 withdrawn from
bank for office use. In which voucher type, this transaction will be recorded
(a)
Contra Voucher (b)
Receipt Voucher
(c)
Payment Voucher (d)
Sales Voucher
9. In which voucher type
credit purchase of furniture is recorded in Tally
(a)
Receipt voucher (b)
Journal voucher
(c)
Purchase voucher (d)
Payment voucher
10. Which of the following
options is used to view Trial Balance from Gateway of Tally?
(a)
Gateway of Tally -> Reports -> Trial Balance
(b)
Gateway of Tally -> Trial Balance
(c)
Gateway of Tally -> Reports -> Display -> Trial Balance
(d)
None of these
Answers
1(b) 2
(a) 3 (d) 4 (c) 5 (b) 6 (b) 7 (d) 8 (a) 9 (b) 10 (c)
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