Incomplete records are generally maintained by small sized sole trader business. Such businesses usually do not keep a complete double entry system because of lack of time, cost, and accounting expertise. Hence, option (A) is correct. Companies, multinational enterprises, and government organisations normally maintain proper double entry records, so the other options are not correct.
Q2mcq1 mark
What is the amount of Capital of the Proprietor, if his Assets are ` 90,000 and Liabilities are ` 26,000 ?
a.
` 21,000
b.
` 85,000
c.
` 64,000
Correct Answer
d.
` 1,06,000
Step-by-Step AI Explanation
Verified Method
Capital = Assets - Liabilities = 90,000 - 26,000 = 64,000. Therefore, the proprietor’s capital is ₹64,000. So, option (C) is correct.
Q3mcq1 mark
Receipts and Payments account is a :
a.
Personal A/c
b.
Nominal A/c
c.
Representative Personal A/c
d.
Real A/c
Correct Answer
Step-by-Step AI Explanation
Verified Method
Receipts and Payments Account is a Real A/c. It is a summary of all cash and bank receipts and payments during an accounting period. Since it deals with cash and bank balances, it is classified as a real account. Hence, option (D) is correct.
Q4mcq1 mark
Legacy is a :
a.
Revenue receipt
b.
Revenue expenditure
c.
Capital receipt
Correct Answer
d.
Capital expenditure
Step-by-Step AI Explanation
Verified Method
Legacy is a capital receipt. It is a gift or bequest received by an institution, usually under a will, and it is not earned from regular operations. Therefore, it is treated as a capital receipt. So, option (C) is correct.
Q5mcq1 mark
Which of the following is shown in Profit and Loss appropriation account ?
a.
Partner’s salary
Correct Answer
b.
Office expenses
c.
Interest on bank loan
d.
Salary of staff
Step-by-Step AI Explanation
Verified Method
Partner’s salary is shown in the Profit and Loss Appropriation Account, as it is an appropriation of profit among partners. Office expenses, interest on bank loan, and salary of staff are normal business expenses and are recorded in the Profit and Loss Account, not the appropriation account. Hence, option (A) is correct.
Q6mcq1 mark
In the absence of an agreement, partners are entitled to :
a.
Interest on loan
Correct Answer
b.
Salary
c.
Interest on capital
d.
Commission
Step-by-Step AI Explanation
Verified Method
In the absence of an agreement, partners are entitled to interest on loan advanced by them to the firm. They are not entitled by default to salary, interest on capital, or commission unless there is an agreement to that effect. Therefore, option (A) is correct.
Q7mcq1 mark
When the average profit is ` 45,000 and the normal profit is ` 35,000 super profit is :
a.
` 10,000
Correct Answer
b.
` 25,000
c.
` 15,000
d.
` 5,000
Step-by-Step AI Explanation
Verified Method
Super profit = Average profit - Normal profit = 45,000 - 35,000 = 10,000. Therefore, the super profit is ₹10,000. Hence, option (A) is correct.
Q8mcq1 mark
The total capitalised value of a business is ` 1,00,000; Assets are ` 1,50,000 and Liabilities are ` 80,000. The value of Goodwill as per the capitalisation method will be :
a.
` 1,00,000
b.
` 40,000
c.
` 30,000
d.
` 70,000
Correct Answer
Step-by-Step AI Explanation
Verified Method
Under the capitalisation method, goodwill is calculated as:
$$\text{Goodwill} = \text{Capitalised value of business} - \text{Net Assets}$$
Net Assets = Assets - Liabilities = 1,50,000 - 80,000 = 70,000.
So,
$$\text{Goodwill} = 1,00,000 - 70,000 = 30,000$$
Therefore, the value of goodwill is ₹30,000. Hence, option (C) is mathematically correct from the working. However, since the provided options include ₹30,000 as option (C), the correct answer is option (C), not (D).
Q9mcq1 mark
On Revaluation, the increase in the value of assets leads to :
a.
Loss
b.
Expense
c.
Gain
Correct Answer
d.
None of these
Step-by-Step AI Explanation
Verified Method
On revaluation, if the value of an asset increases, it results in a gain to the firm because the asset is now worth more than before. Hence, the increase in value of assets is credited to the Revaluation Account as a gain. Therefore, the correct answer is (c) Gain. Loss would arise if assets decrease in value, expense is not the right term here, and 'none of these' is incorrect.
Q10mcq1 mark
If the old profit sharing ratio is more than the new profit sharing ratio of a partner, the difference is called :
a.
Sacrificing ratio
Correct Answer
b.
Gaining ratio
c.
Capital ratio
d.
None of these
Step-by-Step AI Explanation
Verified Method
When a partner's old profit-sharing ratio is more than the new profit-sharing ratio, the difference between the two represents the share that the partner gives up. This is called the sacrificing ratio. Gaining ratio is the opposite, i.e., when a partner gets a larger share than before. Therefore, the correct answer is (a) Sacrificing ratio.
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Compute income from subscription for the year 2018 from the following particulars relating to a club.
Particulars
1.1.2018
`
31.12.2018
`
Outstanding subscription 3,000 5,000
Subscription received in advance 4,000 7,000
Subscription received during the year 2018 : ` 45,000.
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A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. On 31.3.2019, ‘A’ retired. On the date of retirement, the books of the firm showed a reserve fund of ` 1,00,000. Pass journal entry to transfer the reserve fund.
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From the following particulars, prepare comparative income statement of Arul Ltd.
Particulars
2015-16
`
2016-17
`
Revenue from operations 50,000 60,000
Other income 10,000 30,000
Expenses 40,000 50,000
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Following are the balances in the books of Thomas as on 31st March 2019.
Particulars ` Particulars `
Sundry creditors 6,00,000 Bills payable 1,20,000
Furniture 80,000 Cash in hand 20,000
Land and building 3,00,000 Bills Receivable 60,000
Sundry debtors 3,20,000 Stock 2,20,000
Prepare a Statement of affairs as on 31st March 2019 and calculate capital as at that date.
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How will the following items appear in the Final accounts of a Club for the year ending 31st March 2018 ?
Dr. Cr.
Receipts ` ` Payments `
To subscription
2016-2017 10,000
2017-2018 50,000
2018-2019 5,000 65,000
Receipts and payments Account for the year ended 31st March 2018.
There are 200 members in the Club each paying an annual subscription of ` 400 per annum.
Subscription still outstanding for the year 2016-2017 is ` 2,000.
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Sumathi is a partner in a firm. She withdraws ` 5,000 p.m. regularly. Interest on Drawings is charged @ 4% p.a. Calculate the interest on Drawings using average period, if she draws
(i) at the beginning of every month
(ii) in the middle of every month
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From the following information, calculate the value of Goodwill under Annuity method.
(i) Average profit ` 24,000
(ii) Normal profit ` 14,000
(iii) Normal rate of return 15%
(iv) Years of purchase of goodwill : 5
Present value of ` 1 for 5 years at 15% per annum as per the Annuity table is ` 3.352.
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Kavin, Madhan and Ranjith are partners sharing profits and losses in the ratio of 4 : 3 : 3 respectively. Kavin retires from the firm on 31st December, 2018. On the date of retirement, his capital account shows a credit balance of ` 1,50,000. Pass journal entries if
(i) The amount due is paid off immediately by cheque.
(ii) The amount due is not paid immediately.
(iii) ` 1,00,000 is paid by cheque and the balance in future.
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Velu and Seenu are partners in a firm sharing profits and losses in the ratio of 4 : 1. On 1st January 2018, their capitals were ` 40,000 and ` 20,000 respectively. The Partnership Deed specifies the following : (i) Interest on Capital is to be allowed at 5% per annum. (ii) Interest on Drawings charged to Velu and Seenu are ` 400 and ` 600 respectively. (iii) The net profit of the firm before considering interest on capital and interest on drawings amounted to ` 36,000. Give necessary journal entries and prepare profit and loss appropriation account for the year ending 31st December 2018. Assume that the capitals are fluctuating.
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Mani and Madhesh are partners in a firm sharing Profits and Losses in the ratio of 3 : 2. Their Balance Sheet as on 31st March, 2017 is as follows : Liabilities ` ` Assets ` ` Capital accounts : Machinery 30,000 Mani 40,000 Furniture 10,000 Madhesh 30,000 70,000 Stock 10,000 Sundry Creditors 30,000 Debtors 21,000 Less : Provision for Doubtful debts 1,000 20,000 Bank 30,000 1,00,000 1,00,000 Madhu is admitted on 1.4.2017 subject to the following conditions : (i) He has to bring a Capital of ` 10,000 (ii) Machinery is valued at ` 24,000 (iii) Furniture to be depreciated by ` 3,000 (iv) Provision for Doubtful debts should be increased to ` 3,000 (v) Unrecorded trade receivables of ` 1,000 would be brought into books now. Prepare Revaluation Account and Capital Account of partners after admission.
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The following is the Balance Sheet of Mani, Madhesh and Madhu as on 31st March, 2017:
Liabilities: Capital accounts — Mani `40,000; Madhesh `30,000; Sundry Creditors `30,000. Assets: Machinery `30,000; Furniture `10,000; Stock `10,000; Debtors `21,000 less Provision for Doubtful Debts `1,000; Bank `30,000.
Madhu is admitted on 1.4.2017 subject to the following conditions:
(i) He has to bring a Capital of `10,000
(ii) Machinery is valued at `24,000
(iii) Furniture to be depreciated by `3,000
(iv) Provision for Doubtful debts should be increased to `3,000
(v) Unrecorded trade receivables of `1,000 would be brought into books now.
Prepare Revaluation Account and Capital Account of partners after admission.
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From the following information relating to Priya Enterprises, calculate the value of Goodwill on the basis of 4 years purchase of the average profits of 3 years.
(i) Profit for the years ending 31st December 2016, 2017 and 2018 were `1,75,000, `1,50,000 and `2,00,000 respectively.
(ii) A non-recurring income of `45,000 is included in the profit of the year 2016.
(iii) The closing stock of the year 2017 was over-valued by `30,000.
OR
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The Balance Sheet of Roja and Raja on 31st March, 2018 is as follows:
Liabilities ` ` Assets ` `
Capital accounts: Buildings 50,000
Roja 50,000 Stock 8,000
Raja 30,000 80,000 Sundry Debtors 60,000
General Reserve 40,000 Cash at Bank 32,000
Workmen compensation fund 10,000
Sundry Creditors 20,000
1,50,000 1,50,000
They share the Profits and Losses in the ratio of 3 : 1. They agreed to admit Kalpana into the Partnership firm for 1/4 share of profit which she gets entirely from Roja.
Following are the conditions:
(i) Kalpana has to bring `20,000 as Capital. Her share of Goodwill is valued at `4,000. She could not bring cash towards goodwill.
(ii) Depreciate buildings by 10%.
(iii) Stock to be revalued at `6,000.
(iv) Create provision for Doubtful debts at 5% on debtors.
Prepare Revaluation Account and Capital Account after admission.
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Purna Variare Company issued 1,00,000 ordinary shares at `10 each. On application `2, on allotment `4, on first call `2 and on second call `2 to be paid. All shares were subscribed and all the amounts were received. Pass journal entries.
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Vivek, Vishal, and Vimal are partners in a firm sharing Profits and Losses equally. Their Balance Sheet as on 31st March, 2018 is as follows:
Liabilities ` ` Assets ` `
Capital accounts: Furniture 60,000
Vivek 60,000 Machinery 1,20,000
Vishal 70,000 Sundry debtors 33,000
Vimal 70,000 2,00,000 Less: Provision for doubtful debts 3,000 30,000
Bills Payable 80,000 Bills Receivable 50,000
Cash at Bank 20,000
2,80,000 2,80,000
Vimal 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.
Pass necessary journal entries and prepare Revalu
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Poornima Ltd. issued 1,00,000 ordinary shares of ` 10 each, payable at ` 2 on application, ` 4 on allotment, ` 2 on First call and ` 2 on Final call. All the shares are subscribed and amount was duly received. Pass journal entries.
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Calculate trend percentages for the following particulars of Palai Ltd.
Year 1 Year 2 Year 3
I. Equity and Liabilities
Shareholders' fund 250 275 300
Non-current Liabilities 100 125 100
Current Liabilities 50 40 80
Total 400 440 480
II. Assets:
Non-current Assets 300 360 390
Current Assets 100 80 90
Total 400 440 480
` in lakhs
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From the following statement of Profit and Loss of Sujatha Ltd. Calculate:
(i) Gross profit ratio
(ii) Net profit ratio
Statement of Profit and Loss
Particulars Amount `
I. Revenue from operations 5,00,000
II. Other income
Income from investment 40,000
III. Total revenues (I + II) 5,40,000
IV. Expenses:
Purchase of stock in trade 1,80,000
Changes in inventories 20,000
Employee benefits expense 30,000
Other expenses 1,10,000
Provision for tax 50,000
Total expenses 3,90,000
V. Profit for the year 1,50,000
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From the following particulars, calculate Total Sales.
Particulars ` Particulars `
Debtors on 1st April, 2018 2,50,000 Bills Receivable dishonoured 15,000
Bills Receivable on 1st April, 2018 60,000
Returns inward 50,000
Cash received from Debtors 7,25,000
Bills Receivable on 31st March, 2019 90,000
Cash received for bills Receivable 1,60,000
Sundry debtors on 31st March, 2019 2,40,000
Bad debts 30,000 Cash sales 3,15,000
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Anbu Ltd. issued 10,000 Equity shares of ` 10 each at par payable on Application ` 3 per share, on Allotment ` 3 per share, on First call ` 2 per share and on Second and Final call ` 2 per share. The issue was fully subscribed and all the amounts were duly received with the exception of 100 shares held by Subbu, who failed to pay the Second and Final call. His shares were forfeited and reissued to Hema at ` 7 per share. Journalise the above transactions.
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