Goodwill under Annuity Method - Average Profit×Present value annuity factor
Correct Answer
b.
Goodwill under Average Profit Method - Average Profit×Number of years of purchase
c.
Goodwill under Weighted Average Profit Method - Weighted Average Profit×Number of years of purchase
d.
Goodwill under Super Profit Method - Super Profit×Number of years of purchase
Step-by-Step AI Explanation
Verified Method
The Annuity Method calculates goodwill as $Super Profit \times Present Value Annuity Factor$. Option A incorrectly cites 'Average Profit' instead of 'Super Profit', making it the incorrect pair. Options B, C, and D are standard correct formulas used in accounting.
Q2mcq1 mark
Balaji and Kamalesh are partners sharing profit 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.
2 : 1
b.
1 : 3
Correct Answer
c.
1 : 2
d.
3 : 1
Step-by-Step AI Explanation
Verified Method
Sacrificing Ratio = Old Ratio - New Ratio. For Balaji: $\frac{2}{3} - \frac{3}{5} = \frac{10-9}{15} = \frac{1}{15}$. For Kamalesh: $\frac{1}{3} - \frac{1}{5} = \frac{5-3}{15} = \frac{2}{15}$. The ratio is 1:2. Wait, re-calculating: $\frac{1}{15} : \frac{2}{15}$ is 1:2. The correct option is C. Let's re-verify the input options. Actually, calculating again: Balaji sacrifice = $\frac{10-9}{15} = 1/15$. Kamalesh sacrifice = $\frac{5-3}{15} = 2/15$. Ratio is 1:2. Given the provided options, option C is the correct answer.
Q3short answer1 mark
Balaji and Kamalesh are partners sharing profit and losses in the ratio of 2 : 1. They admit Yogesh into partnership. The new profit sharing ratio between Balaji, Kamalesh
Step-by-Step AI Explanation
Verified Method
To calculate the new profit-sharing ratio, one must know the share provided to the incoming partner (Yogesh) or the proportion sacrificed by the existing partners. As the specific ratio of Yogesh is missing in the question text, the ratio cannot be determined. Generally, if Yogesh is admitted for 1/n share, the new ratio is calculated by multiplying the old partners' shares by (1 - 1/n).
Q3mcq1 mark
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.
Both (i) and (ii) are correct
Correct Answer
b.
Only (i) is correct
c.
Both (i) and (ii) are incorrect
d.
Only (ii) is correct
Step-by-Step AI Explanation
Verified Method
Preference shares, by definition, enjoy two specific priorities over equity shares: (i) priority in receiving dividends at a fixed rate, and (ii) priority in the repayment of capital in the event of company winding up (liquidation).
Q4short answer
Goods purchased on credit from Mohaideen for ` 20,000.
Step-by-Step AI Explanation
Verified Method
Journal Entry:\n\n| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |\n| :--- | :--- | :--- | :--- | :--- |\n| | Purchases A/c Dr. | | 20,000 | |\n| | To Mohaideen's A/c | | | 20,000 |\n| | (Being goods purchased on credit from Mohaideen) | | | |
Q4mcq1 mark
Which one of the following is incorrect regarding the limitations of incomplete records ?
a.
Lack of proper maintenance of records.
b.
Difficulty in preparing trial balance.
c.
Errors and frauds can be detected easily.
Correct Answer
d.
Difficulty in ascertaining financial position.
Step-by-Step AI Explanation
Verified Method
Incomplete records (Single Entry System) lack a double-entry mechanism, making the detection of errors and frauds very difficult, not easy. Options A, B, and D are legitimate limitations of incomplete records.
Q5mcq1 mark
Accounting report prepared according to the requirements of the user is :
a.
Trial Balance
b.
Routine accounting report
c.
Balance Sheet
d.
Special purpose report
Correct Answer
Step-by-Step AI Explanation
Verified Method
Routine accounting reports (like Trial Balance or Balance Sheet) are prepared for general purposes. A 'Special purpose report' is designed specifically to meet the unique requirements or information needs of a particular user.
As per the Indian Partnership Act, 1932 the rate of interest allowed on loans advanced by partners is :
a.
5% per annum
b.
8% per annum
c.
6% per annum
Correct Answer
d.
12% per annum
Step-by-Step AI Explanation
Verified Method
According to Section 13(d) of the Indian Partnership Act, 1932, in the absence of an agreement, interest on a loan advanced by a partner to the firm is payable at 6% per annum.
Q7mcq1 mark
Debt equity ratio is a measure of :
a.
Profitability
b.
Short-term Solvency
c.
Efficiency
d.
Long-term Solvency
Correct Answer
Step-by-Step AI Explanation
Verified Method
Debt-Equity ratio indicates the proportion of long-term debt to shareholders' equity, which assesses the long-term financial structure and solvency of a company. It is not related to short-term liquidity, profitability, or efficiency.
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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
a.
(i) & (iii)
b.
(i) & (ii)
c.
(ii) & (iv)
d.
(i) & (iv)
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Profit after interest on drawings, interest on capital and remuneration is ` 10,500. Sangeetha, a partner is entitled to receive commission at 5% on profits after charging such commission. Find out the commission.
a.
` 550
b.
` 50
c.
` 500
d.
` 150
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Kumar is a partner who withdrew ` 20,000 on 1st April 2018. Interest on drawing is charged at 10% per annum. Calculate interest on drawings on 31st December 2018.
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Anu and Arul were partners sharing profits and losses in the ratio of 3 : 2. On 31.03.2017 Malathi was admitted as a partner. On the date of admission, the book of the firm showed a reserve fund of ` 50,000. Pass Journal entry to distribute the reserve fund.
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The following particulars are available in respect of a business carried on by a partnership firm. (a) Profits earned : 2016 - ` 30,000. (b) Profit of 2016 includes a non-recurring income of ` 3,000. Calculate profit after adjustment.
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How the following items will appear in the Income and Expenditure Account of a club for the year ending 31st March 2019 ? Receipts and Payments Account for the year ended 31st March 2019. Receipts: To Subscription 2017-2018 5,000; 2018-2019 48,000; 2019-2020 3,000. Total: 56,000. There are 300 members in the club each paying an annual subscription of ` 200 per annum. Subscription still outstanding for the year 2017-2018 is ` 1,000.
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Mannan and Ramesh share profits and losses in the ratio 3 : 1. The capital on 1st April 2017 was ` 80,000 for Mannan and ` 60,000 for Ramesh and their current accounts show a credit balance of ` 10,000 and ` 5,000 respectively. Calculate interest on capital at 5% p.a. for the year ending 31st March 2018 and show the journal entries.
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For the purpose of admitting a new partner, a firm has decided to value its goodwill at 3 years purchase of the average profit of the last 4 years using weighted average method. Profits of the past 4 years and the respective weights are as follows: Particulars 2015 2016 2017 2018; Profit (`): 20,000, 22,000, 24,000, 28,000; Weight: 1, 2, 3, 4. Compute the value of goodwill.
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Govind and Gopal are partners in a firm sharing profit and loss in the ratio 5 : 4. They admit Rahim as a partner. Govind surrenders 2/9 of his share in favour of Rahim. Gopal surrenders 1/9 of his share in favour of Rahim. Calculate the new profit sharing ratio and sacrificing ratio.
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Vetri and Ranjit are partners, sharing profits in the ratio 3 : 2. Their balance sheet as on 31st December 2017 is as under. On 01.01.2018 they admit Suriya into their firm. (i) Suriya brings ` 10,000 as capital for 1/4 share of profit. (ii) After adjustment, Revaluation profit ` 6,000. Prepare Partner’s Capital account.
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Following are the balances of Ganesh as on 31.12.2018.
Particulars ` Particulars `
Cash 5,000 Debtors 16,000
Stock of goods 18,000 Creditors 9,000
Bills receivable 7,000 Cash at bank 24,000
Furniture 3,000 Bills payable 6,000
Land and Buildings 30,000
Prepare statement of affairs as on 31st December 2018 and calculate Capital as on that date.
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Vetri and Ranjit are partners, sharing profits in the ratio 3 : 2. Their balance sheet as on 31st December 2017 is as under.
Liabilities ` ` Assets `
Capital accounts Stock 30,000
Vetri 30,000 Debtors 10,000
Ranjit 20,000 50,000 Cash in hand 35,000
Reserve fund 5,000
Sundry creditors 20,000
75,000 75,000
On 01.01.2018 they admit Suriya into their firm.
(i) Suriya brings ` 10,000 as capital for 1/4 share of profit.
(ii) After adjustment, Revaluation profit ` 6,000.
Prepare Partner’s Capital account after admission.
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From the following information, compute the value of goodwill by capitalising super profit.
(i) Capital employed is ` 4,00,000.
(ii) Normal rate of return is 10%.
(iii) Profit for 2016 : ` 62,000; 2017 : ` 61,000 and 2018 : ` 63,000.
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From the following particulars of Poompuhar Literary Association, prepare Receipts and Payments account for the year ended 31st March, 2019.
Particulars ` Particulars `
Opening Cash in hand as on 01.04.2018 5,000 Subscription received 20,000
Bank overdraft as on 01.04.2018 4,000 Repairs and renewals 2,500
Printing & Stationery 1,500 Conveyance Paid 2,750
Interest Paid 3,250 Books Purchased 10,000
Sale of Investments 1,000 Insurance Premium Paid 4,000
Purchase of refreshment 1,500 Sundry receipts 750
Outstanding salary 2,000 Government grants received 6,000
Endowment fund receipts 2,000 Sale of refreshments 1,500
Lighting charges 1,300 Depreciation on buildings 2,000
Cash at bank on 31.03.2019 2,000
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From the following Balance Sheet of Arunan Ltd. as on 31.03.2019, calculate (i) Proprietary Ratio (ii) Capital Gearing Ratio.
Balance Sheet of Arunan Ltd. as on 31.03.2019
I. 1. Shareholder's Funds (a) Share Capital: Equity Share Capital 1,50,000; 8% Preference Share Capital 2,00,000; (b) Reserves and surplus 1,50,000
2. Non-current liabilities: Long-term borrowings (9% Debentures) 4,00,000
3. Current liabilities: (a) Short-term borrowings from banks 25,000; (b) Trade payables 75,000; Total 10,00,000
II. 1. Non-current assets: Fixed assets 7,50,000
2. Current assets: (a) Inventories 1,20,000; (b) Trade receivables 1,00,000; (c) Cash & Cash equivalents 27,500; (d) Other current assets Expenses paid in advance 2,500; Total 10,00,000
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From the following particulars, prepare comparative income statement of Abdul Co. Ltd.
Particulars 2015-16 (`) 2016-17 (`)
Revenue From Operations 3,00,000 3,60,000
Other income 1,00,000 60,000
Expenses 2,00,000 1,80,000
Income Tax 30% 30%
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Murali and Sethu are partners in a firm. Murali is to get a commission of 10% of net profit before charging any commission. Sethu is to get a commission of 10% on net profit after charging all commission. Net profit for the year ended 31st March 2019 before charging any commission was ` 1,10,000. Find the amount of commission due to Murali and Sethu.
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Sundar and Suresh are partners sharing profits in the ratio of 3 : 2. Their balance sheet as on 1st January, 2017 was as follows:
Liabilities ` ` Assets `
Capital accounts: Sundar 30,000; Suresh 20,000; 50,000; Creditors 50,000; General Reserve 10,000
Buildings 25,000; Furniture 13,000; Stock 25,000; Debtors 15,000; Bills Receivable 14,000; Bank 18,000
Total 1,10,000 1,10,000
They decide to admit Sugumar into partnership for 1/4 share in the profits on the following terms:
(i) Sugumar has to bring in ` 30,000 as Capital.
(ii) Revaluation loss ` 15,000.
(iii) That the stock be valued at ` 20,000.
(iv) That the Furniture be depreciated by ` 2,000.
(v) That the value of building be depreciated by 20%.
Prepare Capital A/c’s & Balance Sheet after admission.
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From the following particulars calculate Total Purchases.
Particulars `
Sundry creditors on 01.04.2017 75,000
Bills Payable on 01.04.2017 60,000
Paid cash to creditors 3,70,000
Paid for Bills Payable 1,00,000
Purchases Returns 15,000
Cash Purchases 3,20,000
Creditors on 31st March 2018 50,000
Bills Payable on 31st March 2018 80,000
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From the following Receipts and Payment Account of Trichy Recreation Club, prepare Income and Expenditure Account for the year ended 31.03.2018. Receipts: Opening balance Cash in hand 11,000; Dividend received 27,600; Sale of old Newspaper 3,000; members Subscription 31,000; Locker rent 8,000; Interest on investments 1,250; Sale of Furniture 5,000 (Book value ` 4,400). Payments: Furniture purchased 10,000; Rent 2,800; Secretary's honorarium 15,000; Postage 1,700; General Expenses 4,350; Printing & Stationery 45,000; Audit Fees 5,000; Closing balance Cash in hand 3,000.
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Chandru, Vishal and Ramanan are partners in a firm sharing profits and losses equally. Their balance sheet as on 31st March, 2018 is as follows: Liabilities: Capital accounts (Chandru 60,000, Vishal 70,000, Ramanan 70,000) 2,00,000; Bills Payable 80,000. Assets: Furniture 60,000; Machinery 1,20,000; Sundry debtors 33,000 (-) Provision for doubtful debts 3,000 = 30,000; Bills Receivable 50,000; Cash at Bank 20,000. Ramanan retired on 31st March 2019 subject to the following conditions: (i) Machinery is valued at ` 1,50,000. (ii) Value of Furniture brought down by ` 10,000. (iii) Provision for doubtful debts should be increased to ` 5,000. (iv) Investment of ` 30,000 not recorded in the books is to be recorded now. Prepare Revaluation Account and Pass Journal entries.
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From the following particulars of Mani Ltd. and Kani Ltd., prepare a common size Income Statement for the year ended 31st March 2019. Particulars: Revenue from operation (Mani Ltd: 2,00,000, Kani Ltd: 2,50,000); Other Income (Mani Ltd: 30,000, Kani Ltd: 25,000); Expenses (Mani Ltd: 1,10,000, Kani Ltd: 1,25,000).
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Following is the extract of the balance sheet of Babu Ltd., as on 31st March, 2018: 1. Shareholder’s Funds (a) Share Capital 35,000 (b) Reserve and surplus 12,500; 2. Non-current liabilities Long-term borrowings 15,000; 3. Current liabilities (a) Trade payables 10,000 (b) Other current liabilities 7,500 (c) Short-term provisions 21,000. Net profit before Interest and Tax for the year was ` 25,000. Calculate the return on Capital employed for the year.
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Record the following transactions in Tally. (1) Robert commenced a transport business with a Capital of ` 1,00,000. (2) An account was opened with a State Bank of India and deposited ` 30,000. (3) Purchased Furniture by paying cash ` 10,000. (4) Goods purchased on credit from Mohaideen for ` 20,000. (5) Cash sales made for ` 8,000.
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Following are the balances of Ganesh as on 31.12.2018. Cash: 5,000; Stock of goods: 18,000; Bills receivable: 7,000; Furniture: 3,000; Land and Buildings: 30,000; Debtors: 16,000; Creditors: 9,000; Cash at bank: 24,000; Bills payable: 6,000. Prepare statement of affairs as on 31st December 2018 and calculate Capital as on that date.
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Vetri and Ranjit are partners, sharing profits in the ratio 3 : 2. Their balance sheet as on 31st December 2017 is as under: Liabilities: Capital accounts (Vetri 30,000, Ranjit 20,000), Reserve fund 5,000, Sundry creditors 20,000. Assets: Stock 30,000, Debtors 10,000, Cash in hand 35,000. On 01.01.2018 they admit Suriya into their firm. (i) Suriya brings ` 10,000 as capital for 1/4 share of profit. (ii) After ad
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From the following Balance Sheet of Arunan Ltd. as on 31.03.2019, calculate (i) Proprietary Ratio (ii) Capital Gearing Ratio. Balance Sheet Items: Share Capital (Equity 1,50,000; 8% Preference 2,00,000); Reserves and surplus 1,50,000; Long-term borrowings (9% Debentures) 4,00,000; Current liabilities (Bank 25,000; Trade payables 75,000). Assets: Fixed assets 7,50,000; Inventories 1,20,000; Trade receivables 1,00,000; Cash & Equivalents 27,500; Expenses paid in advance 2,500.
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Sundar and Suresh are partners sharing profits in the ratio of 3 : 2. Balance sheet as on 1st January, 2017: Liabilities (Capital 30,000/20,000; Creditors 50,000; General Reserve 10,000); Assets (Buildings 25,000; Furniture 13,000; Stock 25,000; Debtors 15,000; Bills Receivable 14,000; Bank 18,000). They admit Sugumar for 1/4 share: (i) Sugumar brings 30,000 capital. (ii) Revaluation loss 15,000. (iii) Stock value 20,000. (iv) Furniture depreciated by 2,000. (v) Building depreciated by 20%. Prepare Capital A/c’s & Balance Sheet after admission.
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From the following Receipts and Payment Account of Trichy Recreation Club, prepare Income and Expenditure Account for the year ended 31.03.2018.
Receipts ` Payments `
To Opening balance
Cash in hand 11,000 By Furniture purchased 10,000
To Dividend received 27,600 By Rent 2,800
To Sale of old Newspaper 3,000 By Secretary's honorarium 15,000
To members Subscription 31,000 By Postage 1,700
To Locker rent 8,000 By General Expenses 4,350
To Interest on investments 1,250 By Printing & Stationery 45,000
To Sale of Furniture 5,000 By Audit Fees 5,000
(Book value ` 4,400) By Closing balance
Cash in hand 3,000
86,850 86,850
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From the following particulars of Mani Ltd. and Kani Ltd., prepare a common size Income Statement for the year ended 31st March 2019.
Particulars Mani Ltd. ` Kani Ltd. `
Revenue from operation 2,00,000 2,50,000
Other Income 30,000 25,000
Expenses 1,10,000 1,25,000
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How the following items will appear in the Income and Expenditure Account of a club for the year ending 31st March 2019 ? Receipts and Payments Account for the year ended 31st March 2019. (Table details provided)
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For the purpose of admitting a new partner, a firm has decided to value its goodwill at 3 years purchase of the average profit of the last 4 years using weighted average method. (Weights/Profits provided). Compute the value of goodwill.
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