The amount received over and above the par value is credited to :
a.
Share capital account
b.
Securities premium account
Correct Answer
c.
Forfeited shares account
d.
Calls in advance account
Step-by-Step AI Explanation
Verified Method
When shares are issued at a price higher than their face value, the excess amount is known as share premium. According to Section 52 of the Companies Act, this amount must be credited to the Securities Premium Account. Share capital account records only the face value, while forfeited shares and calls in advance are used for different specific accounting adjustments.
Q2mcq
Goodwill which cannot be recorded in the books of accounts :
a.
Self generated goodwill
Correct Answer
b.
Acquired goodwill
c.
Purchased goodwill
d.
None of these
Step-by-Step AI Explanation
Verified Method
Self-generated goodwill (or inherent goodwill) cannot be recorded in the books of accounts because it does not have a precise cost price or an objective basis for valuation. Acquired or purchased goodwill is recorded because a consideration is paid for it.
Q3mcq
Current liabilities ` 40,000; Current assets ` 1,00,000; Inventory ` 20,000. Quick ratio is :
a.
2 : 1
Correct Answer
b.
1 : 1
c.
1 : 2
d.
2.5 : 1
Step-by-Step AI Explanation
Verified Method
Quick Ratio is calculated as: $Quick Assets / Current Liabilities$. Quick Assets = Current Assets - Inventory = $1,00,000 - 20,000 = 80,000$. Quick Ratio = $80,000 / 40,000 = 2 : 1$.
Q4mcq
Revaluation A/c is a :
a.
Personal A/c
b.
Real A/c
c.
Impersonal A/c
d.
Nominal A/c
Correct Answer
Step-by-Step AI Explanation
Verified Method
Revaluation Account is a nominal account because it is prepared to record gains (profits) or losses arising from the revaluation of assets and reassessment of liabilities. Nominal accounts deal with expenses, losses, incomes, and gains.
Q5mcq
When fixed capital method is adopted by a partnership firm, which of the following items will appear in capital account ?
a.
Interest on drawings
b.
Additional capital introduced
Correct Answer
c.
Share of profit
d.
Interest on capital
Step-by-Step AI Explanation
Verified Method
Under the fixed capital method, only transactions related to the permanent introduction or withdrawal of capital are recorded in the Partner's Capital Account. Interest on drawings, share of profit, and interest on capital are recorded in the Partner's Current Account.
Q6mcq
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.
5 : 3
Correct Answer
b.
1 : 3
c.
3 : 5
d.
3 : 1
Step-by-Step AI Explanation
Verified Method
When a new partner is admitted and no other information is given regarding the sacrifice, the old partners sacrifice their shares in their existing profit-sharing ratio. Therefore, James and Kamal continue to sacrifice in their old ratio of 5 : 3.
Q7mcq
Identify the incorrect pair.
a.
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 formula for Goodwill under the Annuity method is $Super Profit \times Present Value Annuity Factor$. The option provided incorrectly states $Average Profit \times Present Value Annuity Factor$, making it the incorrect pair.
Q8mcq
Choose the incorrect pair.
a.
Sale of old sports materials - Capital receipt
Correct Answer
b.
General donation - Revenue receipt
c.
Subscription for billiards - Revenue receipt
d.
Specific donation - Capital receipt
Step-by-Step AI Explanation
Verified Method
Sale of old sports materials is a recurring, small-value transaction in a Not-for-Profit organization, making it a Revenue receipt, not a Capital receipt. All other pairings correctly classify the nature of receipts.
Q9mcq
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.
90%
b.
10%
c.
11%
d.
110%
Correct Answer
Step-by-Step AI Explanation
Verified Method
Trend percentage is calculated as: $$\frac{\text{Current Year Value}}{\text{Base Year Value}} \times 100$$. Here, $$\frac{88,000}{80,000} \times 100 = 1.1 \times 100 = 110\%$$. Option (d) is correct. Options (a), (b), and (c) do not reflect the correct formula calculation.
Q10mcq
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.
` 10,000 and ` 20,000
b.
` 20,000 and ` 10,000
Correct Answer
c.
` 15,000 and ` 15,000
d.
` 8,000 and ` 4,000
Step-by-Step AI Explanation
Verified Method
When a partner retires, the continuing partners compensate the retiring partner in their Gaining Ratio. Original ratio of A:B:C is 2:2:1. On B's retirement, the new ratio for A and C remains 2:1. Thus, the Gaining Ratio of A and C is 2:1. Goodwill of firm is 30,000, and B's share is $$\frac{2}{5} \times 30,000 = 12,000$$. However, the question asks for the contribution to the total goodwill value as per their gaining ratio proportions in the firm's total, which is 2:1. Distributing 30,000 in 2:1 gives 20,000 and 10,000. Option (b) is correct.
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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.
(ii) and (iii)
b.
(i) and (ii)
c.
(ii) and (iv)
d.
(i) and (iv)
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From the following details, calculate the Capital as on 31st December 2018. Particulars ` Capital as on 1st January, 2018 1,00,000 Goods withdrawn for personal use by the owner 30,000 Additional Capital introduced during the year 15,000 Profit for the year 60,000
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Praveena and Dhanya are sharing profits in the ratio of 7 : 3. They admit Malini into the firm. The new ratio among Praveena, Dhanya and Malini is 5 : 2 : 3. Calculate the Sacrificing ratio.
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Dheena, Surya and Janaki are partners sharing profits and losses in the ratio of 5 : 3 : 2. On 31.3.2018, Dheena retired. On the date of retirement, the books of the firm showed a reserve fund of ` 50,000. Pass journal entry to transfer the reserve fund.
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From the following details calculate the printing and stationery to be debited to Income and Expenditure Account for the year ending 31st March, 2018 and also show how it will appear in the Balance Sheet as on 31st March, 2018. Amount paid for Stationery during 2017-2018 ` 1,500 Stock of Stationery on 1st April, 2017 ` 300 Stock of Stationery on 31st March, 2018 ` 200
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Kumar is a partner in a partnership firm. As per the Partnership deed, interest on drawings is charged at 6% per annum. During the year ended 31st December, 2018 he withdrew as follows : Date ` March 1 4,000 June 1 4,000 September 1 4,000 December 1 4,000 Calculate the amount of interest on drawings.
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From the following information, find out the value of Goodwill by Capitalisation method. (a) Average profit ` 20,000 (b) Normal rate of return 10% (c) Capital employed ` 1,50,000
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Rajesh and Ramesh are partners sharing profits and losses in the ratio of 3 : 2. Raman is admitted as a new partner and the new profit sharing ratio is decided as 5 : 3 : 2. The following revaluations are made. Prepare Revaluation account. (a) The value of building is increased by ` 15,000
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Rajesh and Ramesh are partners sharing profits and losses in the ratio of 3 : 2. Raman is
admitted as a new partner and the new profit sharing ratio is decided as 5 : 3 : 2. The
following revaluations are made. Prepare Revaluation account.
(a)The value of building is increased by ` 15,000
(b)The value of the machinery is decreased by ` 4,000
(c)Provision for doubtful debt is made for ` 1,000
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Prepare Common-size income statement for the following particulars of Raja Ltd., for the
year ended 31st March, 2017.
Particulars
2016 - 2017
`
Revenue from operations 4,50,000
Other income 67,500
Expenses 1,35,000
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From the following information, calculate debt-equity ratio :
Particulars `
I. EQUITY AND LIABILITIES
1. Shareholders' funds
(a) Share capital
Equity Share Capital 1,00,00 0
(b) Reserves and Surplus 60,000
2. Non-current liabilities
Long-term borrowings (Debentures) 80 ,000
3. Current Liabilities
(a) Trade payables 50,000
(b) Other current liabilities
Outstanding expenses 30,000
Total 3,20,000
Balance sheet (Extract) as on 31.03.2018
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On 1st April 2017, Ganesh started his business with a capital of ` 75,000. He did not
maintain proper books of accounts. Following particulars are available from his books
as on 31.3.2018.
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
During the year he withdrew ` 15,000 for his personal use. He introduced further
capital of ` 20,000 during the year. Calculate his profit or loss.
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Vetri and Ranjit are partners, sharing profits and losses in the ratio of 3 : 2. Their balance sheet as on 31st December 2017 is as under. Liabilities ` ` Assets ` Capital Accounts : Furniture 25,000 Vetri 30,000 Stock 20,000 Ranjit 20,000 50,000 Debtors 10,000 Reserve fund 5,000 Cash in hand 35,000 Sundry Creditors 45,000 Profit and Loss A/c (Loss) 10, 000 1,00,000 1,00,000 On 01.01.2018, they admit Suriya into their firm as a partner on the following arrangements. (i)Suriya brings ` 10,000 as capital for 1/4 share of profit. (ii)Stock to be depreciated by 10%. (iii)Debtors to be revalued at ` 7,500. (iv)Furniture to be revalued at ` 40,000. (v)There is an outstanding wages of ` 4,500 not yet recorded. Prepare Revaluation account, Partners’ Capital account and the Balance Sheet of the firm after admission.
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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 1.4.2018 5,000 Subscription received 20,000 Bank overdraft as on 1.4.2018 4,000 Repairs and renewals 2,500 Printing and 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 refreshments 1,500 Sundry receipts 750 Outstanding Salary 2,000 Government grants received 6, 000 Endowment fund receipts 2,000 Sale of refreshments 1,5 00 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 information, prepare Capital accounts of partners Mannan and Sevagan, when their capitals are fluctuating. Particulars Mannan ` Sevagan ` Capital on 1st January 2018 (Cr. Balance) 2,00,000 1,75,000 Drawings during 2018 40,000 35,000 Interest on Drawings 1,000 500 Share of profit for 2018 21,000 16,500 Interest on Capital 12,000 10,500 Salary 18,000 - Commission - 2,500
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Roja, Neela and Kanaga are partners sharing profits and losses in the ratio of 4 : 3 : 3. On 1st April 2017, Roja retires from partnership and on retirement, the following adjustments are agreed upon. (i)Increase the value of building by ` 30,000. (ii)Depreciate stock by ` 5,000 and furniture by ` 12,000. (iii)Provide an o
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From the following information, calculate the value of Goodwill based on 3 years purchase of Super Profit.
(i) Capital employed : ` 2,00,000
(ii) Normal rate of return : 15%
(iii) Average profit of the business : ` 42,000
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From the following Receipts and Payments account, prepare Income and Expenditure account of Kumbakonam Basket Ball Association for the year ended 31st March, 2018.
Receipts (`): Cash in hand 23,000, Cash at bank 12,000, Rent of hall received 6,000, Subscription received 9,000, Life membership fees 7,000, Locker rent received 2,000.
Payments (`): Rent of ground paid 12,000, Printing charges 5,000, Bank charges 1,000, Insurance for building 2,000, Tournament expenses 16,000, Audit fees 3,000, Sports materials purchased 4,000, Balance c/d (Cash in hand 2,000, Cash at bank 14,000).
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Durai and Velan entered into a partnership agreement on 1st April 2018. Durai contributing ` 25,000 and Velan ` 30,000 as capital. The agreement provided that : (i)Profits and losses to be shared in the ratio 2 : 3 as between Durai and Velan. (ii)Partners to be entitled to get interest on capital @ 5% p.a. (iii)Interest on drawings to be charged Durai : ` 300 Velan : ` 450. (iv)Durai to receive a salary of ` 5,000 for the year, and (v)Velan to receive a commission of ` 2,000. During the year, the firm made a profit of ` 20,000 before adjustment of interest, salary and commission. Prepare the Profit and Loss appropriation account.
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From the following Balance Sheet of Arunan Ltd., as on 31.03.2019, calculate (i) Debt-equity ratio (ii) Proprietary ratio and (iii) Capital gearing ratio.
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Joy company issued 10,000 equity shares at ` 10 per share payable ` 5 on application, ` 3 on allotment and ` 2 on first and final call. The public subscribed for 9,000 shares. The directors allotted all the 9,000 shares and duly received the money. Pass the necessary journal entries.
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