MCQ WITH ANSWER CLASS12 Accountancy—--SANDIP BISWAS (SB SIR COMMERCE)
PROFIT &LOSS APPROPRIATION ACCOUNT
1.When is the Partnership Act enforced?
A .when there is no partnership deed
B .where there is a partnership deed but there are differences of opinion between the partners
C. when capital contribution by the partners varies
D. when the partner's salary and interest on capital are not incorporated in the partnership deed
Ans:A
2. Which of the following is not incorporated in the Partnership Act?
A .profit and loss are to be shared equally
B .no interest is to be charged on capital
C .all loans are to be charged interest @ 6% p.a.
D. all drawings are to be charged interest
Ans: D
3.Which one of the following items cannot be recorded in the appropriation account?
A interest on capital
B interest on drawings
C. rent paid to partners
D partner's salary
Ans: C
4.How should interest charged on partners' drawings be dealt with in partnership final accounts?
A .credited as income in profit and loss account
B deducted from profit in allocating the profit among the partners
C. added to profit in allocating the profit among the partners
D. debited as an expense in the profit and loss account
Ans: C
5.Which of the following statements is true?
A minor cannot be admitted as a partner
B .a minor can be admitted as a partner, only into the benefits of the partnership
C .a minor can be admitted as a partner but his rights and liabilities are same of adult partner
D.none of the above
Ans: B
6.Non-registration of a partnership gives rise to a number of disabilities such as:
(i) no partner can bring a suit in any court against the firm or his co-partners.
(ii) the firm cannot file a suit against third party for breach of contract. Which of the above statement(s) is/are true?
A (i) only
B (ii) only
C.both (i) and (ii)
D neither (i) nor (ii)
Ans: C
7. In the absence of partnership deed, interest on partners' loan is payable by the firm @
A. 12% p.a. B .6% p.a.
C. 10% p.a. D .16% p.a.
Ans: B
8.Ostensible partners are those who
A .do not contribute any capital but get some share of profit for lending their name to the business
B. contribute very less capital but get equal profit
C.do not contribute any capital and without having any interest in the business, lend their name to the business
D .contribute maximum capital of the business
Ans:C
9. Sleeping partners are those who
A. take active part in the conduct of the business but provide no capital. However, salary is paid to them.
B .do not take any part in the conduct of the business but provide capital and share profits and losses in the agreed ratio
C .take active part in the conduct of the business but provide no capital. However, share profits and losses in the agreed ratio.
D .do not take any part in the conduct of the business and contribute no capital. However, share profits and losses in the agreed ratio.
Ans: B
10.Ram, a partner of a partnership firm, withdrew Rs. 500 at the beginning of each month. If the rate of interest on drawings is 10% p.a. the amount of interest on Ram's drawings will be
(a)₹600 (b)₹ 350 (C) ₹450 (,d)₹325
(,d)₹325
Ans (b) 325
11. Calculate interest on drawings @ 12% p.a., if a partner of a partnership firm withdrew Rs. 1,000 at the end of each month.
(a)₹600 (b)₹560 (c)₹660 (d)₹450
Ans.: ₹ 660
12 Calculate interest on drawings @ 18% p.a., if a partner of a firm withdrew Rs. 1,500 at the middle of each month.
Ans.: (a)₹ 1,620 (b)₹ 1520 (c)₹ 1600 (d)₹ 1420
Ans : (a)₹ 1620
13.Calculate interest on drawings @ 12% p.a., if a partner withdrew Rs. 4,000 at the beginning of each quarter.
Ans.: (a)₹ 1200 (b) ₹ 1,250 (c)₹1350 (d)₹1450
Ans:(b)₹ 1250
14. Calculate interest on drawings @ 10% p.a., if a partner of a partnership firm withdrew Rs. 8,000 at the end of each quarter.
Ans.: (a)₹ 1,200 (b)₹1300 (c)₹1100(d)₹1150
Ans:(a)₹ 1200
15. Mr. X, a partner of a partnership firm, is entitled to a commission @ 12% on divisible profit after charging such commission. If the divisible profit before charging X's commission is Rs. 70,000, calculate the amount of commission of Mr. X.
Ans.: (a)₹ 7,500 (b)₹7550 (c)₹6550 (d)₹7000
Ans:(a)₹ 7500
16. Joydeep, a partner of a firm, is to receive 12.5% commission on distributable profit before charging such commission. If the distributable profit after charging Joydeep's commission is Rs. 1,08,500, calculate the amount of commission.
Ans.:(a)₹ 15000 (b)₹16000 (c)₹16500(d) ₹
15500
Ans:(d)₹ 15500
Question 16:
What is the purpose of profit and loss appropriation in a company?
a) To calculate the net profit or loss
b) To allocate profits among partners or shareholders
c) To determine the expenses of the business
d) To decide the selling price of goods
Answer: b) To allocate profits among partners or shareholders
Question 17:
Which of the following items is usually deducted from the net profit before its appropriation?
a) Interest on capital
b) Commission to salespersons
c) Rent paid for office premises
d) Depreciation on machinery
Answer: d) Depreciation on machinery
Question 18:
When partners' salaries are given before the appropriation of profits, where will it be recorded?
a) In the trading and profit and loss account
b) In the balance sheet
c) In the current account of the respective partners
d) In the capital account of the respective partners
Answer: c) In the current account of the respective partners
Question 19:
What is the purpose of transferring profits to the general reserve?
a) To distribute profits among partners
b) To provide for future contingencies
c) To pay off liabilities
d) To pay dividends to shareholders
Answer: b) To provide for future contingencies
Question 20:
When a partner withdraws his/her share of profit, what account is debited?
a) Partner's capital account
b) Current account of the partner
c) General reserve account
d) Profit and loss account
Answer: b) Current account of the partner
Question 21:.
When the company earns a net loss, how will it be treated during profit and loss appropriation?
a) It will be distributed among partners equally
b) It will be carried forward to the next accounting period
c) It will be debited to the current account of the senior partner
d) It will be credited to the current account of the junior partner
Answer: b) It will be carried forward to the next accounting period
Question 22:
Which of the following is a non-cash item that affects profit and loss appropriation?
a) Salary paid to employees
b) Dividends paid to shareholders
c) Depreciation on fixed assets
d) Rent paid for office premises
Answer: c) Depreciation on fixed assets
Question 23:
Which of the following reserves is created out of profits and can be utilized for any purpose by the company?
a) Capital reserve
b) Revenue reserve
c) General reserve
d) Specific reserve
Answer: c) General reserve
Question 24:
What is the purpose of charging interest on drawings made by partners?
a) To discourage partners from making withdrawals
b) To increase the profits of the company
c) To calculate the net profit available for appropriation
d) To determine the value of a partner's share in the business
Answer: a) To discourage partners from making withdrawals
I hope these additional questions help you in your preparation.
Question 25:
When a partner's share of the profit is transferred to his/her loan account, how will it be recorded?
a) As a debit in the profit and loss account
b) As a credit in the partner's current account
c) As a debit in the partner's capital account
d) As a credit in the partner's loan account
Answer: d) As a credit in the partner's loan account
Question 26.
Any amount payable to a partner such as interest on loan, interest on capital,salaries,etc. Should be treated as
(a)Appropriation of Profits
((b) Charged against Profits
(c) a & b
(d) None of these
Ans: a
Question 27.
When a partner draws a fixed sum at the beginning of each quarter for all quarters,interest on total drawings will be equal to interest of
(a) 7.5 months (b) 6.5 months
(c) 6 months (d)4.5 months
Ans: 7.5 months
CHAPTER :-CHANGE IN THE PROFIT SHARING RATIO
Question 1.
When there is a change in the profit -sharing ratio of partners ,the accounts of the firm is :
a) maintained under Cash basis
b)maintained in the usual manner
c) maintained in the new set of books
Ans: b
Question 2
:When there is a change in the profit sharing ratio among partners, it implies:
a) Addition of a new partner
b) Retirement of a partner
c) Change in existing partners' capital
d) All of the above
Answer: d) All of the above
Question 3: If the new profit sharing ratio is not specified during a change in ratio, how will profits be shared?
a) Equally among all partners
b) According to the old ratio
c) According to the highest capital contribution
d) As agreed upon by partners
Answer: b) According to the old ratio
Question 4: When a partner's share is transferred to remaining partners, it is known as:
a) Gaining ratio
b) Sacrificing ratio
c) Adjusted ratio
d) Continuing ratio
Answer: a) Gaining ratio
Question 5: In the case of a partnership dissolution, the final settlement involves:
a) Transferring all assets to one partner
b) Distributing liabilities equally among partners
c) Selling all assets and dividing the proceeds
d) Settling liabilities and distributing remaining assets among partners
Answer: d) Settling liabilities and distributing remaining assets among partners
Question 6: If a partner retires and receives a lump-sum payment, it includes:
a) Only the retiring partner's capital
b) Only the retiring partner's share of goodwill
c) Retiring partner's capital and share of goodwill
d) Profits earned in the current year
Answer: c) Retiring partner's capital and share of goodwill
Question 7: A change in the profit sharing ratio can occur due to:
a) Change in partners' salaries
b) Change in partners' drawings
c) Change in partners' capital investments
d) Change in partnership's total assets
Answer: c) Change in partners' capital investments
Question 8: If the existing partners decide to share profits equally after a change in ratio, it is called:
a) New ratio
b) Old ratio
c) Sacrificing ratio
d) Gaining ratio
Answer: a) New ratio
Question 9: In a partnership, the sum of the sacrificing ratios is always equal to:
a) 1
b) Number of partners
c) 0
d) Number of partners minus 1
Answer: a) 1
Question 10: When a partner's share of profits increases due to a change in ratio, it is known as:
a) Sacrificing ratio
b) Gaining ratio
c) Old ratio
d) New ratio
Answer: b) Gaining ratio
Question 11. Goodwill arising due to a change in profit sharing ratio is:
a) Debited to all partners' capital accounts
b) Credited to all partners' capital accounts
c) Credited only to the retiring partner's capital account
d) Credited only to the remaining partners' capital accounts
Answer: d) Credited only to the remaining partners' capital accounts
Question 12.A & B are partners .They admit C for1/4th share.In future ,the ratio between A &B would be 2:1.The New Ratio among ABC
a)2:1:1 b)2:2:1 c)1:2:2 d)2:2:2
Ans: a
Question 13.
X&Y are partners sharing profits in the ratio of 3:2.Y is admitted as a partner .The new profit sharing--ratio among X,Y,&Z is 5:3:2.
Sacrificing ratio of A&B will be
a) 2:1,b)1:1, c)2:3,d)3:2
Ans: b
Question 14.
X,Y &Z are partners sharing profits and Losses in the ratio of 4:3:3.They have decided to change the profit Sharing ratio.X surrendered 1/4th of his share and
Y surrendered 1/3rd of his share in favour of Z.The new profit sharing--ratio will be
a)3:2:5 b)5:2:3 c)3:5::2 d)2:5:3
Ans: a
Question 15.
A change in the profit Sharing ratio between the partners may occur:
a)any time during the accounting year
b)Only at the beginning of the accounting year
c)Only at the end of the accounting year
Ans:a
CHAPTER -ADMISSION OF PARTNER
1)What is the process of admitting a new partner into an existing partnership called?
a) Dissolution
b) Reconstitution
c) Amalgamation
d) Liquidation
Answer: b) Reconstitution
2)Which type of account is credited when a new partner brings in capital?
a) Capital Account
b) Drawings Account
c) Revenue Account
d) Expense Account
Answer: a) Capital Account
3)When a new partner pays an amount for their share of goodwill, which account is debited?
a) Goodwill Account
b) Capital Account of the new partner
c) Old partners' Capital Accounts
d) Profit and Loss Account
Answer: b) Capital Account of the new partner
4)Which method calculates the new partner's capital by adjusting the old partners' capital in their gaining ratio?
a) Fixed Capital Method
b) Fluctuating Capital Method
c) Garner Method
d) Ratio Method
Answer: d) Ratio Method
5)How is the sacrificing ratio of old partners determined during the admission of a new partner?
a) New ratio - Old ratio
b) Old ratio - New ratio
c) Gaining ratio - Old ratio
d) New ratio - Gaining ratio
Answer: b) Old ratio - New ratio
6)What is the effect on the goodwill of the firm when a new partner is admitted?
a) Goodwill increases
b) Goodwill decreases
c) Goodwill remains unchanged
d) Goodwill becomes negative
Answer: a) Goodwill increases
7)Which type of reserve is created to distribute future profits among partners after a new partner is admitted?
a) General Reserve
b) Capital Reserve
c) Revaluation Reserve
d) Profit Equalization Reserve
Answer: d) Profit Equalization Reserve
8)In the absence of a partnership agreement, how is the new partner's share of profits and losses determined?
a) Equally among all partners
b) Proportionate to their capital contribution
c) According to their expertise
d) By mutual agreement of the partners
Answer: b) Proportionate to their capital contribution
9)Which financial statement is prepared to show the changes in the capital accounts of partners after the admission of a new partner?
a) Income Statement
b) Balance Sheet
c) Cash Flow Statement
d) Capital Account Statement
Answer: b) Balance Sheet
10)What is the primary reason for revaluing assets and liabilities when a new partner is admitted?
a) To increase the value of assets
b) To decrease the value of liabilities
c) To distribute the revaluation surplus
d) To adjust the partners' gaining ratio
Answer: d) To adjust the partners' gaining ratio
11)Which method of accounting for the admission of a partner involves the transfer of assets and liabilities at their book values?
a) Revaluation Method
b) Fluctuating Capital Method
c) Garner Method
d) Fixed Capital Method
Answer: d) Fixed Capital Method
12)When a new partner is admitted, how are the old partners' capital accounts adjusted for the new partner's capital?
a) Decreased
b) Increased
c) Closed
d) Unchanged
Answer: b) Increased
13)Which type of reserves are created from past profits and are available for distribution among partners after a new partner is admitted?
a) Capital Reserves
b) Revenue Reserves
c) Secret Reserves
d) Statutory Reserves
Answer: b) Revenue Reserves
14) Purchase goodwill arises when:
a)a value is placed on goodwill in case of partnership firm.
b)One business buys another.
c)None of these
Answer: b
15) Profit &Loss on Revaluation of assets and liabilities is shared by:
a)The Old Partners
b)all the partners
c)none of these
Answer: a
16)What entry is recorded to allocate the share of profits to the new partner upon their admission?
a) Debit: Profit and Loss Account, Credit: New Partner's Capital Account
b) Debit: New Partner's Capital Account, Credit: Profit and Loss Account
c) Debit: New Partner's Capital Account, Credit: Old Partners' Capital Accounts
d) Debit: New Partner's Capital Account, Credit: Cash Account
Answer: b) Debit: New Partner's Capital Account, Credit: Profit and Loss Account
17) A firm's profits during 2015,2016,2017,&2018 were ₹ 160000,₹200000,₹240000,₹320000 respectively .The firm has capital investment of ₹1000000.A fair rate of return on investment is 12%p.a. goodwill based on three year's purchase of the average Super profits for the last 4 years.
a)₹30000 b)₹300000, c)₹150000
Answer: c
18) On 1/1/2020 ,an existing firm had assets of ₹750000 including Cash of ₹50000.The partner's Capital Account showed a balance of ₹600000 and Build up the rest of the reserve.If the normal rate of return is 10% and the goodwill of the firm is₹ 240000 at 4years purchase of super profits , Average prifit of the firm
a)₹125000 b)₹ 135000 c)₹ 100000
Answer: b
19)If the real worth of the business is less than the sum of the fair values of the separate net assets,it represents
a) Negative Goodwill
b) Positive Goodwill
c)None of these
Ans: a
20)Capital employed in a business is ₹400000.The normal rate of return on capital employed is 15%. During the year 2020 the firm earned a profit of ₹480000 .value of goodwill on the basis of 3 years purchase of super profit.
a) ₹58000 b)₹108000,c) ₹100000
Answer: b
CHAPTER =Retirement/Death of a partner
1) On retirement of a partner, the combined shares of the continuing partners
a) will remain the same
b) will reduce
C )will increase
Answer: c
2)On retirement of a partner, the assets and liabilities of the firm are
a)to be revalued upwards only
b)to be revalued downward only
C) to be revalued both upward and downward where necessary
Answer: c
3) On retirement/death of a partner ,the remaining partner/partners who have gained due to change in profit sharing ratio should compensate the
a)remaing partners only
b) retiring Partners only
c) remaing partners as well as retiring Partners.
Ans: c
4)At the time of retirement of a partner, if there is undistributed profit in the Balance Sheet of the firm, it
a)will be distributed in the old profit sharing ratio among all the partners
b) will not be distributed among the partners
c) will be distributed in the capital ratio
Answer: a
9. Upon retirement, joint life policy surrender value will be distributed
a)among all partners in the old ratio
b) among continuing partners in the new ratio
C) to retiring partners only
Answer: a
10)On retirement/death of a partner,the retiring/deceased partner's Capital account will be credited with
a) goodwill of the firm
b)his/her share of goodwill
c)none of these
Answer: b
11)At the time of death of a partner if there is undistributed profit in the Balance sheet of the firm,it
a)will be distributed in the old profit ratio sharing ratio amongst all the partners.
b)will be distributed in the Capital ratio.
c) None of these
Ans: a
12)In case of a" without profits" policy,the holder will get
a)Only the amount Specified in the policy.
b)the amount Specified in the policy plus bonuses
c)None of these
Answer: a
13)The executors of deceased partners are entitled to the share of goodwill as per the
a)equally
b)profit sharing ratio
c) agreement between the partners.
Ans: c
14)The Surrender Value of policy represent
a) a Liability
b)an asset
c)none of these
Ans: b
15) Accumulated profits or losses belong to all partners and should be transferred to
a) All partners Capital Account
b) Revaluation Account
c) none of these
Answer: a
16) The Out going partner's account is settled as per the terms of partnership deed I.e.
a) in lumpsum immediately or Various instalments with or without interest as agreed
b) partly in cash immediately and partly in instalments at the agreed intervals
c) a or b
Answer: c
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