ACCOUNTANCY CLASS XII - MCQs

MULTIPLE CHOICE QUESTIONS

Accounting for partnership firms –Fundamentals

1.Loss is distributed among the partners :             i)  Equally             ii) As per the partnership deed             iii) Ratio of capitals             iv) None of these. Ans (ii) 2. 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?             i)  6 % p.a even if the firm incurs loss             ii) As per the partnership deed             iii)No interest will be provided             iv) None of these. Ans (i) 3.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? i)  Rs 20,000             ii)Rs 12,000             iii)Rs 1,00,000             iv) Rs 1,12,000 Ans (i) 4. Goodwill is a/an : i)  Current asset             ii)Tangible asset          iii) Intangible asset             iv) Fictitious asset Ans (iii) 5. Interest on partner’s capital is : i)  a gain             ii)a loss iii) an appropriation             iv) None of these Ans (iii) 6. Profit or loss on revaluation is shared among the partners in: i)  new profit sharing ratio             ii)capital ratio iii) equal ratio  iv)old profit sharing ratio Ans (iv) 7.Revaluation A/c is prepared to find out the profit or loss on : i)  sale of fixed assets             ii) revaluation of assets and liabilities iii) sale of goods iv) sale of services Ans (ii) 8. According to AS 26, which goodwill is recorded in the books : i)  purchased goodwill             ii) self generated goodwill iii) both (i) and (ii) iv) None of the above Ans (i) 9. Who should compensate to whom in case of change in profit sharing ratio of existing partners? i)  gaining partner to sacrificing partner ii) sacrificing partner to gaining partner iii) both (i) and (ii) iv) None of the above Ans (i) 10. Which is not a method to calculate the goodwill? i)  Average Profit Method ii) super profit method iii)  Regular profit method iv) Capitalization method Ans (i)

Accounting for partnership Firms-Reconstitution and Dissolution

1. At the time of retirement of a partner, if goodwill appears in the balance sheet, it must be written off, the capital accounts of all the partners are debited in…… a) old ratio  b) new ratio c) capital ratio 2. In the event of a death of a partner, the amount of general reserve is transferred to partners capital account in …… a) old ratio  b) new ratio c) capital ratio 3. A,B and C are partners in the ratio 2:2:1. C retired. The  new ratio will be ….. a) 2:1   b) 1:1   c)3:1 4. According to Partnership Act the interest payable to the deceased partner on the amount left by him will be….. a) 6%b)10%    c) bank rate 5. The ratio in which the remaining partner acquire the share of remaining partners is ….. a) sacrificing  ratio  b) old ratio  c) gaining ratio 6. Retiring partners share of goodwill is adjusted through remaining partners capital accounts in ….. a) sacrificing  ratio  b) old ratio  c) gaining ratio 7. The profit or loss disclosed by the revaluation account at the time of retirement of a  partner is transferred to partners capital accounts in …. a) sacrificing  ratio  b) old ratio  c) gaining ratio 8. At the time of retirement or death, undistributed profits and reserves are distributed among the existing partners in …… a) sacrificing  ratio  b) old ratio  c) gaining ratio 9. Gaining ratio = New ratio minus  ……………….. a) sacrificing  ratio  b) old ratio  c) gaining ratio 10. At the time of death of a partner, the share of profit is transferred to which account? a) Profit and loss account  b) profit and loss suspense account   c)profit and loss appropriation account 1 At the time of dissolution of the firm if goodwill appears in the balance sheet, it is transferred to ……… account a) Realisation account b) Partner’s capital account  c) Revaluation account 2. At the time of dissolution of a firm, the assets and liabilities appearing in the balance sheet are transferred to ………….account a) Revaluation account b) realization account c) partners capital account 3. At the time dissolution of the firm loan from partner is transferred to ……. a) Revaluation account b) realization account c) None of these 4. At the time of dissolution of firm, loan from partner’s relative is a) transferred to realization account b) not transferred to realisation account c) Transferred to partners capital account 5. Un recorded asset when realized is credited to a) Revaluation account b) realization account c) None of these 6. Un recorded liabilities when paid are debited to … a) Revaluation account b) realization account c) None of these 7. Deferred revenue Expenditure appearing in the balance sheet will be transferred to which account? a) Revaluation account b) realization account c) partners capital account 8. Where it is agreed that a partner will be paid a lump sum amount for dissolution, if the payment is made by the firm, the payment is debited to .. a) Revaluation account b) all partners capital account c) partners capital account 9. Asset taken over by partner is debited to which account? a) Revaluation account b) realization account c) partners capital account 10. Any liability taken over by the partner is credited to which account. a) Revaluation account b) realization account c) partners capital account

Accounting for share capital

Q1. 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. Ans. A Q2. Interest on calls in advance is: a)      4% b) 5%p.a. c) 6% p.a. d) 6% Ans. C Q3. Shareholders are the: a)      Owners of the company b) lenders of the company      c) customers of the company. Ans. A Q4. Other name for registered capital is: a)      Issued capital b) nominal capital c) reserve capital d) None of the above. Ans. B Q5.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. Ans. B Q6. Share allotment is a: a)      Personal a/c                    b) real a/c                                     c)nominal a/c Ans. C Q7. The minimum share application money is: a)      Rs. 5 per share b)       b)5% of nominal value of shares  c)      c) 10% of nominal value of shares d)      d) none of the above Ans. B Q8. 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 Ans. B Q9. In case of private placement of shares to raise the amount of capital, a company: a)      Invites the public through prospectus b)      Does not invite the public c)      Invite the public through advertisement d)     None of the above Ans. B Q10. 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 Ans.  B

Accounting for Debentures

1.     What type of debentures can be issued by an Indian company? a.     Secured b.     Unsecured c.      Convertible d.     Redeemable Ans: Secured debentures 2.     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 Ans: issued as collateral securities 3.     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 Ans: non current liabilities 4.     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 Ans: during the life of the debentures 5.     Debenture holders are a.     Owners of the company b.     Creditors of the company c.      Vendors of the company d.     Customers of the company Ans: creditors of the company 6.     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 Ans: credited by the face value of debentures 7.     Premium on redemption of debentures is in the nature of a.     Personal account b.     Real account c.      Nominal account d.     None of these Ans: Nominal account 8.     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) Ans : loss on issue of debentures account 9.     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 Ans: at a pre-determined rate 10.                        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 Ans : other current assets

Analysis of financial statements

Q1. Nature of financial statement (a)recorded facts (b)accounting convention (c)postulates (d) all of above     ANS  (D) Q2. 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               ANS(D) Q3. 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      ANS   (c) Q4. 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      ANS   (D) Q5. Share capital is (a)assets (b)fixed assets (c)liabilities (d)balance sheet    ANS (C) Q6. As which act companies  is revised schedule VI (a)1956 (b)1989 (c)1978 (d)1965      ANS (A) Q7. Assets are divide in to (a)8     (b)1      (c)10    (d)2       ANS  (d) Q8. Reserve and surplus are comes in which head (a)non current liability (b)assets (c)fixed assets  (d) shareholder funds    (d) Q9 Secured loans  are (a)long term loan (b)short term loan (c) assets (d)current assets ANS   (A) Q10. Types of financial statement (a)                2  (b)3  (c)5 (d)7   (b)               ANS 2 FINANCIAL STATEMENT ANALYSIS    Q1. How many tools of financial analysis (a)2   (b)3  (c)4  (d)5            ANS 4 Q2. What are the tools of financial management (a)comparative statement (b)common size statement (c)Ratio statement  (d)all of them   ANS (d) Q3 current  ratio is (a) liquidity ratio (b)quick ratio (c)solvency ratio (d)debt equity ratio     ANS   (A) Q4. Solvency ratio is (a)debt equity ratio (b)current ratio (c) quick ratio (d)current assets   ANS  (A) Q5. Activity ratio is (a)stock turn over (b)debtor turnover (c)creditor turnover (d) all of them    ANS  (A) Q6. Quick ratio included (a) current assets (b)liquid assets (c)current liability (d)none of them .    ANS(B) Q7. Stock is not included in (a)current assets (b)quick ratio (c)debt ratio (d)gross profit ANS   (b) Q8. Average stock is find out by (a)0pening stock (b)closing stock (c)both  ANS (C) Q9. 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   ANS  (b) Q10. Inventory turnover ratio is also called (a)stock turnover ratio (b)current ratio  (c)liquid ratio (d)debt turnover ratio        ANS (A)

Cash flow statement

1.     Which of the following is not considered as Cash Equivalents? a. short term deposits in bank b. commercial papers c. treasury bills d. investment ans: Investment 2.     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 Ans: cash and cash equivalents 3.     Bank overdraft will be shown under which heading a. Investing activities b.     Financing activities c.      Cash and cash equivalents d.     Operating activities Ans: Financing activities 4.     Purchase of building results in a. inflow of cash b. outflow of cash c. no flow of cash d. both inflow and outflow ans: outflow of cash 5. Payment of dividend is a. investing activity b. financing activity c.  operating activity ans: financing activity 6. 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 ans: Cash flow from financing activities 7. Dividend paid by a Trading company is classified under which kind of activity while preparing cash flow statement a. Cash flow from operating activities b. Cash flow from Investing activities c. Cash flow from Financing activities d. Cash Equivalent ans: Cash flow from financing activities 8. Which of the following is not source of cash? a. Issue of shares b. Purchase of machinery c. Sale of asset d. Dividend received ans: Purchase of machinery 9. 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 ans: Increase in bills payable 10. 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 ans: Cash flow from investing activities