Online Test

Question # 1

Non-profit seeking organization income and expenditure account performs the same function as profit seeking organization's

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Trading and profit and loss account

Balance sheet

Bank account

Petty cash book

The person to whom the goods are sent is known as

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Consignor

Consignee

Drawer

Drawee

When the incoming partner pays the firm for goodwill in cash, the amount should be debited in firms books to

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Goodwill account

Capital account of the incoming partner

Cash account

All of the above

In case of retirement funds for payment may be provided out of

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Firm's own resources

Borrowing by the firm

Additional funds may be bought in by continuing partners

All of the above

In single entry system ledger contains the accounts of,

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Debtors, creditors and cash

Wages and carriage

Salaries and insurance

Assets and liabilities

The liability of the members is limited according to undertaking of members to contribute to the assets of the company in the event of its being wound up,

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Company limited by shares

Unlimited company

Company limited by guarantee

Association not for profit

Depreciation may be ascertained exactly in case of

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Lease holds property

Machinery

Patent right

"a" and "c"

A company is formed by,

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Owners

Directors

Managers

Employees

In case of dissolution, the transfer of undivided profit should be debited to:

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Realization account

Revaluation account

Profit and loss account

Partner's capital account

In single entry system real accounts are not maintained so the preparation of,

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Correctly

Effectively

Wrongly

Approximately

The debit balance of interest on loan account is transferred to:

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Partner's capital account

Profit & loss account

Partner's loan account

Trading account

In case of dissolution, the payment of liabilities should be credited to:

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Realization account

Cash account

Profit and loss account

Liabilities account

If depreciation is not taken into account, the value of asset in the books.

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May be more

May be less

No change

May be more or less

Companies ordinance defines the company under section,

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1(7)

2(7)

3(7)

2(8)

The permanent and continuous diminution in the quality, quantity or value of an asset:

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Appreciation

Diminution

Reduction

Depreciation

Opening capital is calculated by taking the difference between,

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Opening assets and closing assets

Opening assets and closing liabilities

Opening assets and Opening liabilities

Closing assets and closing liabilities

In case of dissolution closing of various liabilities are credited to:

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Realization account

Revaluation account

Profit and loss account

Liabilities account

In case of retirement, revaluation loss should be debited to:

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Retiring partner's capital A/c

Remaining partners capital A/c

All partners capital A/c

Revaluation A/c

Partnership agreement cantinas

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Name of partnership business

Nature of partnership business

Ratio in which profits and losses are to be shared by partners

All of the above

X, Y and Z are partners in a firm. If B is to be admitted as a new partner

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Old partnership has to be dissolved

Old firm has to be dissolved

Both old firm and partnership have to be dissolved

Neither firm nor parnership needs to be dissolved

The register which is maintained by consignor to keep full record of goods consigned is called

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Consignment outward book

Consignment inward book

Consignment purchases book

Consignment in transit book

The basic club record or book of original entry in non-profit making organization

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Purchase book

Sales book

Cash book

"a" and "b"

To calculate the true net profit or net loss in single entry system it is necessary that the amount of fresh capital should be subtracted from,

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Adjusted closing capital

Closing capital

Cash in hand

Cash at bank

In case of retirement, when goodwill is raised with retiring partner's share but written off is credited to:

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Retiring partners capital A/c

Cash A/c

Goodwill A/c

Remaining partners capital A/c

In partnership other than banking business the members mus not exceed,

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20

15

10

5

Receipts and payments account records the transactions of

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Revenue nature

Capital nature

Revenue and capital nature

None of these

In the absence of an agreement, partners shall

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Be paid salaries

Not be paid salaries

Be paid salaries to those who work for the firm

Paid salaries to all the partners

When interest is allowed on the capitals of the partners, it is calculated on the

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Capital in the beginning of the year

Capital at the end of the year

Capital at the end less drawings if any

Average capital

The court may dissolve the firm:

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When a partner has become of unsound mind

A partner is guilty of misconduct in carrying on the business

A business of the firm cannot be carried on except at a loss

All of the above

In Partnership, in case of banking business, the partners must not exceed,

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20

15

10

5

In case of dissolution, when all the partners are solvent, closing of various assets are credited to:

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Realization account

Revaluation account

Profit and loss account

Assets account

It is prepared by non-profit making organizations to determine surplus or deficit

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Trading account

Profit and loss account

Receipts and payments account

Income and expenditure account

In the absence of an agreement, interest on loan advanced by a partner to the firm is allowed at the rate of

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Six per cent

Five per cent

Twelve per cent

Seven percent

We cannot prepare the trial balance and precise balance sheet under,

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Single entry system

Double entry system

"a" and "b"

Barter system

Under single entry system sometimes,

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Double aspects of a transaction are recorded

Single aspect of a transaction is recorded

No aspect of a transaction is recorded

All of the above

In case of dissolution, partners personal assets are first used for the payment of:

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Personal liabilities

Firm's liabilities

Court liabilities

None of these

Retirement of a partner dissolves

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Partnership

Firm

Business

"b" & "c"

How many methods are available to calculate the profit or loss under single entry system,

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One

Two

Three

Four

Maximum members in private company are,

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10

50

100

150

When goods are dispatched by the consignor to the consignee, it will be from consignor's view point

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Consignment inward

Consignment outward

Consignment in transit

All of these

Non-profit making organizations

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Buy goods

Manufacture goods

Sell goods

None of these

In private company directors should be at least,

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4

3

2

1

Single entry system contains,

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A daybook or general journal

A cash book

Ledger accounts for individual customers and creditors

All of the above

In case of dissolution, the payment of unrecorded liability is debited to:

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Realization account

Liability account

Revaluation account

Cash account

Due to drawings made during the year, the closing capital will,

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Increase

Decrease

Constant

Multiply

In case of dissolution, the sale of unrecorded asset is debited to:

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Realization account

Sale account

Asset account

Cash account

In case of retirement, when goodwill is raised at full value, is credited to:

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Retiring partners capital A/c

Remaining partners capital A/c

All partners capital A/c

Goodwill A/c

Decrease in the value of an asset due to change in habit or taste of people.

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Efflux of time

Accident

Obsolescence

Wear and tear

If the incoming partner is to bring his share of goodwill is cash, and there exists any balance in goodwill account, then this goodwill account is to be written off among old partners in

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New profit sharing ratio

Old profit sharing ratio

Sacrificing ratio

Gaining ratio

Receipts and payments account records transaction relating to

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Past year

Future year

Present year

All of the above

The value of goodwill is calculated by multiplying the average profit of a given number of past years by an agreed number under

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Average profits method

Super profits method

Capitalization method

Revaluation method

In case of retirement of partner, full goodwill is credited to the accounts of

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Retiring partner

Remaining partners

All the partner

None of these

The relationship between seller and buyer of goods is that of a

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Principal and agent

Debtor and creditor

Banker and customer

Consignor and customer

Fluctuation

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Does not reduce productive capacity

May rise or fall the value of an asset

Is generally irregular

All of these

Dissolution due to completion of venture, death of partner, Insolvency of partner or expiry of the terms fixed is called:

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Dissolution by agreement

Dissolution by notice

Dissolution on the happening of certain contingencies

Dissolution by court

In increased net worth method, profit or loss is calculated by preparing,

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Income and expenditure account

Profit and loss account

Statement of profit or loss

Balance sheet

Suppose A, B & C are partners, sharing profits in the ratio of 2:2:1 respectively, What will be the new ratio if C retires in the absence of an agreement?

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2:2

2:1

2:3

1:2

The essential element of partnership is

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There must be an agreement entered into by all the persons concerned

The agreement must be to share the profits of a business

The business must be carried on by all or any of them acting for all

All of the above

On retirement of a partner, the share of retiring partner is taken by

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New partner

Remaining Partners

Government

Legal representatives of retiring partner

The method for preparing the final accounts in trading concerns and non-profit making organizations are

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Same

Different

Easy

Difficult

Internal causes of depreciation:

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Wear and tear

Depletion

Obsolescence

"a" and "b"

The company which can be formed by at least two members,

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Private company

Public company

Sole proprietorship

All of the above

Goodwill is valued when

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Profit is earned

Loss is suffered

One year is completed

New partner is admitted

The share of profit to a new partner in the future profits without any express agreement as to who will contribute to new partner's share of profit is implied that old partners contribute

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Equally

In proportion of their capital

In their profit sharing ratio

None of these

According to provision of companies ordinance 1984 dividend cannot be declared without.

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Appreciation

Depreciation

Replacement of assets

"a" and "b"

In the absence of an agreement to the contrary, the partners

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Are entitled for 6% interest on their capitals, only when there are profits

Are entitled for 9% interest on their capitals, only when there are profits

Are entitled for interest on capital at the bank rate, only when there are profits

Are not entitled for any interest on their capitals

Income and expenditure account records the transactions of

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Revenue nature

Capital nature

Revenue and capital nature

None of the these

General reserve or accumulated profits at the time of dissolution is transferred to:

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Realization account

Solvent partners capital account

Insolvent partner's capital account

All partners capital accounts

A new partner may be admitted to a partnership

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With the consent of all the old partners

With the consent of any one of the partners

With the consent of two third of the old partners

Without consent of old partners

Depreciation which occurs due to certain inherent normal causes in known as:

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Internal depreciation

External depreciation

Seasonal depreciation

All of these

Receipts and payments account shows

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Debit and credit balances of ledgers

Incomes and expenditures

Cash receipts and payments

Assets and liabilities

This is the principal form of company,

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Company limited by shares

Unlimited company

Company limited by guarantee

Association not for profit

To calculate the value of capital both at the beginning and at the end of year in single entry system we prepare,

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Balance sheet

Trading account

Trial balance

Statement of affairs

According to the decision of Garner Vs Murray rule, the loss of insolvent partner is to be shared by solvent partners in the:

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New profit sharing ratio

Old profit sharing ratio

Capital ratio

Gaining ratio

Non-profit making organizations are established for

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Profit

Charitable or religious purpose

To manufacture goods

To help the rich people

Example of non-profit making organization

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Fan factory

Sugar industry

Hospital

Shoe factory

Joint life policy at the time of dissolution is transferred to:

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Realization account

Solvent partners capital

Insolvent partner's capital account

All partners capital account

The remuneration of the consignee for selling the goods of the consignor is called

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Salary

Interest

Dividend

Commission

Goodwill is an:

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Expense

Profit

Asset

Liability

Maximum members in public company are,

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10

100

None of these

Partnership act is

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1932

1912

1962

1984

The company in which members are personally liable for the debts of company

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Company limited by shares

Unlimited company

Company limited by guarantee

Association not for profit

On the admission of a new partner the decrease in the value of assets is debited to

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Profit and loss adjustment account

Assets account

Old partners capital account

New partner capital account

Shareholders are,

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Owners

Directors

Managers

Employees

In case of retirement, goodwill raised with retiring partners share but written off to remaining partners in the:

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Gaining ratio

Sacrifice ratio

New ratio

Capital ratio

A person who is elected to run the club

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Treasurer

Secretary

Chairperson

President

Depreciation occurs

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Up to one year

Up to two years

Till the last day of the estimated working life of asset

Up to the replacement of old asset

External causes of depreciation.

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Obsolescence

Efflux of time

Accident

All of these

The balance of memorandum revaluation account is transferred to capital accounts of all partners in:

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Capital ratio

Old profit sharing auto

New profit sharing ratio

Sacrifice ratio

How many kinds of companies are registered under company ordinance 1984?

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Two

Three

Four

Five

Decline in the value proportionate to the quantum of production e.g. mine, quarry etc.

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Amortization

Depletion

Depreciation

Wear and tear

Suppose the average profit of last five years is Rs.7000, normal profits Rs.4000, then the value of goodwill on the basis of three years purchase under super profits method will be

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Rs.6000

Rs.9000

Rs.12000

Rs.15000

The benefit and advantage of the good name or reputation of a business.

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Liability

Goodwill

Amortization

Depreciation

The balance left in the capital accounts in case of dissolution is transferred to:

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Revaluation account

Realization account

Bank account

Profit & loss appropriation A/c

Goodwiil is an

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Tangible asset

Intangible asset

Wasting asset

Fictitious asset

In single entry system nominal accounts and some assets accounts balances are not available so it is not possible to prepare,

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Debtors account

Creditors account

Trial balance

Statement of affairs

Gaining ratio is calculated on:

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Admission

Retirement

Death

'b' & 'c'

It is paid to consignee if he take risk of bad debts

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Commission

General commission

Ordinary commission

Delcredre commission

It sets out the terms on which partners agreed to form a partnership

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Partnership agreement

Partnership deed

"a" and "b"

None of these

It is prepared to find out the result of dissolution, i.e. profit or loss:

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Realization account

Revaluation account

Profit and loss account

Profit and loss appropriation account

The interest on partners capital accounts is to be credited to

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Partners capital accounts

Profits and loss account

Interest account

Trading account

Consignee is

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Principal

Owner

Debtor of the consignee

None of these

The businessmen can increase the sale of their products

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By opening their own branches in different parts of the country and abroad

By adopting agents in their own country as well as abroad

By a huge head office building

"a" and "b"

In consignment expenses after delivery of goods to consignee are borne by

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Purchaser

Seller

Consignor

Consignee

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

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Sacrificing ratio

Gaining ratio

Distributing ratio

None of these

It is an artificial person recognized by law,

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Joint stock company

Partnership

Sole proprietorship

"b" and "c"

The excess of actual profits over normal profits is known as

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Profit

Loss

Super profits

Super loss

The maximum amount which each partner will draw from the business in anticipation of the share of profit is his:

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Drawings

Profit

Loss

Capital

Depreciation is an:

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Expense

Revenue

Liability

Capital

In the absence of an agreement, profit and loss are divided by partners in the ratio of

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Capital

Time devoted by each partner

Equally

Interest on capital

A partner has a right to

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Take part in the conduct of business

Inspect the books of the firm

Share in profit

All of these

The gradual decrease in the efficiency of an asset is called:

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Appreciation

Depreciation

Construction

Reconstruction

Suppose A, B & C are partners, sharing profits in the ratio of 1/2,1/3,1/6 respectively, What will be the new ratio if A retires in the absence of an agreement?

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1/3 : 1/6

1/3 : 1/2

1/3 : 1/5

1/2 : 1/6

Single entry system is suitable where,

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Small amount of cash transactions are more

Large amount of cash transaction are more

Smallamount of cash transaction are more

Largeamount of cash transaction are more

The value of goodwill can be calculated with the help of

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Average profits method

Super profits method

Capitalization method

All of the above

Non-profit seeking organizations prepare

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Manufacturing account

Trading account

Income and expenditure account

Profit and loss account

In the absence of an agreement, the partners are entitled to interest on capital at the rate of:

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5% p.a.

6% p.a.

10% p.a.

None of these

The act of sending goods by owner to his agent for sale is called

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Consignment

Sales

Purchases

Partnership

In case of dissolution, assets taken over by a partner should be debited to:

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Realization account

Partner's capital account

Asset account

Cash account

Suppose A, B & C are partners, sharing profits in the ratio of 7:4:3 respectively, What will be the new ratio if B retires in the absence of an agreement?

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7:4

7:3

4:3

3:7

Non-profit making organization is also known as

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Non-profit seeking concern

Non-trading concern

Trading concern

"a" and "b"

Double entry system means

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The recording of same things twice

Double accounting

The two sides of every transaction are recorded

Entry at two dates

Depreciation

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Reduces productive activity

Reduces value of asset gradually

IS a regular loss

All of these

A company is managed by,

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Shareholders

Managers

Directors

Employees

The company which can be formed by at least seven members,

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Private company

Public company

Partnership

Sole proprietorship

Single entry system is generally adopted by,

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Small business concerns

Large business concerns

Medium business concerns

All of the above

On retirement of a partner in partnership it is necessary to calculate

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New profit sharing ratio

Goodwill

Revaluation of assets and liabilities

All of these

All transactions relating to non-profit seeking concerns are recorded in the books of account strictly according to

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Single entry system

Double entry system

Treble entry system

"a" and "b"

In cash book

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Each entry is followed by narration

Ledger reference is recorded

Each transaction is recorded in chronological order

All of the above

A receipts and payments account is similar to

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An income and expenditure

A statement of affair

A cash or a bank account

A profit or loss account

In case of retirement amount of general reserve or any other profit is credited to all the partners in:

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Old profit sharing ratio

New profit sharing ratio

Sacrifice ratio

Gaining ratio

Consignee

Choose an answer

Bear expenses or losses in consignment

Share profit made on the sale of goods

Receives his commission from the consignor

All of the above

On the admission of a partner, goodwill account is to be raised should be debited to

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Partners capital accounts

Goodwill account

Cash account

New partner capital account

In consignment all the expenses, either paid by the consignor himself or by the consignee are borne by the

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Consignor

Consignee

Purchases

All of these

Dissolution of firm by the consent of all the partners is called:

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Dissolution by agreement

Dissolution by court

Dissolution on the happening of certain contingencies

Dissolution by notice

In the absence of an agreement, interest on drawings is to be charged by the firm at the rate of:

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5% p.a.

6% p.a.

8% p.a.

None of these

Due to fresh capital introduced during the year, the closing capital will,

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Increase

Decrease

Constant

Multiply

The physical deterioration in asset due to use in business.

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Depletion

Obsolescence

Wear and tear

Accident

We write depreciation on the

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Debit side of trading account

Credit side of trading account

Debit side of profit and loss account

Credit side of profit and loss account

Dissolution of firm due to the insolvency or due to the happening of an event, which makes it unlawful for partners to carry on partnership is called:

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Dissolution by agreement

Compulsory dissolution

Dissolution on the happening of certain contingencies

Dissolution by court

In income and expenditure account

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Expense are recorded on debit side

Revenues are recorded on credit side

Does not start with any opening balance

All of the above

The need for provision of depreciation is necessary to.

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Ascertainment of true profit or loss

Ascertainment of true cost of production

Replacement of assets

All of these

The parties involved in consignment are

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Two

Three

Four

Five

The relationship between consignor and consignee is that of

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Principal and agent

Debtor and creditor

Buyer and seller

None of these

The consignee sells the goods on behalf of

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Drawer

Drawee

Consignor

Agent

What will be the value of goodwill on two years purchase of the average profit of the last three years? The profit earned during the last three years are Rs. 10000, Rs.12000 and Rs.14000

Choose an answer

Rs.24000

Rs.20000

Rs.12000

Rs.36000

The valuation of goodwill arises on

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The admission of a new partner

The retirement or death of a partner

The dissolution or sale of firm's business

All of the above

In single entry system,

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Personal accounts are maintained

Real accounts are maintained

Nominal accounts are maintained

None of the above

The amount of loan advanced by a partner to partnership is transferred to:

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Partner's capital account

Partner's drawings account

Partner's loan account

none of these

On the admission of a new partner the increase in the value of assets is debited to

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Profit and loss adjustment account

Assets account

Old partners capital account

New partner capital account

According to companies ordinance, single entry system cannot be adopted by,

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Sole proprietorship

Partnership

"a" and "b"

Joint stock companies

Depreciation means:

Choose an answer

Exhaustion of the effective life of an asset

Diminution in intrinsic value of an asset

Reduction in the value of fixed asset due to use in business

All of the above

The current account of a partner

Choose an answer

Will always have a credit balance

Will always have a debit balance

May have a debit balance or a credit balance

None of these

Net worth is equal to,

Choose an answer

Assets - Liabilities

Liabilities - Assets

Liabilities + Capital

Capital + Assets

Both aspects of a transaction must be recorded in,

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Single entry system

Barter system

Double entry system

Islamic system

In accountancy 'consignment' signifies

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Goods forwarded from one place to another

Goods forwarded by a person to another

Goods dispatched by its owner to his agent

Goods dispatched by its owner tho his agent for the purpose of sale

Which business has the perpetual existence,

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Sole proprietorship

Partnership

"a" and "b"

Joint stock company

Where a partner to entitled to interest on capital subscribed by him, such interest will be payable

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Only out of profits

Only out of capitals

Out of profits or out of capitals

None of these

Reserve of bad and doubtful appearing in the books at the time of dissolution is transferred to:

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Debtors account

Revaluation account

Reserve for bad debts account

Realization account

The end or termination of partnership is called:

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Admission

Retirement

Death

Dissolution

In non-profit making organization final accounts contains

Choose an answer

Income and expenditure account and balance sheet

Receipts and payments account and balance sheet

Receipts and payments account and statement of affairs

Profit and loss account and balance sheet

The manufacturer or wholesaler who sends his goods for sale purpose is known as

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Consignee

Consignor

Agent

Drawer

Income and expenditure account shows

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Cash in hand

Surplus or deficit

Cash at bank

Capital account

The profit on the revaluation of assets and liabilities on the retirement of a partner should be credited to the capital account / accounts of:

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Retiring partner

Remaining partners

All the partners

None of these

Closing capital in single entry system is calculated by preparing,

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Opening statement of affairs

Closing statement of affairs

Opening balance sheet

Closing balance sheet

Depreciation is charged on

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Fixed assets only

Current assets only

Both fixed assets and current assets

All of these

The relationship between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all is called

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Sole proprietorship

Partnership

Joint stock company

Individual

The official signature of the company,

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Partnership deed

Common seal

Common act

1984

In case of consignment, risk attached to the goods sold before the goods consigned are sold lies with the

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Consignee

Consignor

Buyer

Debtor

Suppose A, B & C are partners, sharing profits in the ratio of 1/2,3/10,2/10 respectively, What will be the new ratio if B retires and his share is taken up by A and C in the ratio of 2:1.

Choose an answer

5 : 3

5 : 7

7 : 3

10 : 3

Depreciation is charge against

Choose an answer

Expense

Revenue

Liability

Capital

In case of retirement, when goodwill is raised but written off is credited to:

Choose an answer

Retiring partners capital A/c

Remaining partners capital A/c

All partners capital A/c

Goodwill A/c

Gaining ratio is equal to:

Choose an answer

New ratio + Old ratio

New ratio - Old ratio

Old ratio - New ratio

Old ratio + New ratio

Joint stick company is formed under

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Finance society act 1913

Partnership act 1932

Companies ordinance 1984

Common carrier act 1865

Current accounts of the partners should be opened when the capitals are

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Fluctuating

Fixed

Either fixed or fluctuating

Variable

In receipt and payments account

Choose an answer

No narration is written

No ledger reference is recorded

Daily cash balance cannot be ascertained

All of the above