[I] Multiple Choice Questions :
1) The interest on Capital Accounts of partners under the fluctuating Capital Account Method is credited to :
(a) Interest Account
(b) Profit and Loss Account
(c) Partners' Capital Accounts
(d) None of these
2) In case of Revaluation Account is prepared, the assets and liabilities appear in the book of reconstituted firm at their :
(a) Old Book Values
(b) Market Values
(c) Revalued Figures
(d) None of the above
3) Weighted average method of calculating goodwill should be followed when :
(a) Profits have increasing trend.
(b) Profits have decreasing trend
(c) Either (a) or (b)
(d) Profit is neither in increasing nor in decreasing trend.
4) A & B are partners sharing profits and losses in the ratio 5:3. On admission, C brings ₹70,000 cash and ₹48,000 against goodwill. New profit sharing ratio between A,B and C are 7:5:4. Find the sacrificing ratio of A:B.
(a) 3:1
(b) 4:7
(c) 5:4
(d) 5:7
5) Partners are supposed to pay interest on drawings only when ______ by the _______.
(a) Provided, Agreement
(b) Agreed, Partners
(c) Agreed, Agreement
(d) Both (a) and (b).
6) A and B are partners sharing profits in the ratio 5:3, they admitted C giving him 3/10th share of profit. If C acquires 1/5 from A and 1/10 from B, new profit sharing ratio will be :
(a) 5:6:3
(b) 2:3:5
(c) 17:11:12
(d) 2:4:6
7) In absence of any provision in the Partnership Deed, interest on Partner's Loan/Advance :
(a) will not be allowed.
(b) will be allowed, if there is profit.
(c) will be allowed even if there is loss.
(d) Both (b) and (c).
8) Working Capital is ₹700,000; Creditors ₹80,000; other Current liabilities ₹400,000; Current ratio
(a) 2 : 1
(b) 2.46 : 1
(c) 2.64 : 1
(d) 2.5 : 1
9) A, B and C are partners sharing profits and losses in the ratio 6:3:3, they agreed to take D into partnership for 1/8th share of profits. Find the new profit sharing ratio.
(a) 12 : 27 : 36 : 42
(b) 14 : 7 : 7 : 4
(c) 1 : 2 : 3 : 4
(d) 5 : 6 : 7 : 8
10) A and B are partners sharing profits and losses in the ratio of 3:2 ( A's Capital is ₹30,000 and B's Capital is ₹15,000). They admitted C and agreed to give 1/5th share of profits to him. How much C should bring in towards his capital ?
(a) ₹9,000.
(b) ₹12,000.
(c) ₹11,250.
(d) ₹11750.
11) In the absence of an agreement, partners are entitled to :
(a) Interest on Loan and Advances.
(b) Commission.
(c) Interest on Capital.
(d) Salary.
12) X and Y are partners sharing profits in the ratio of 3:1. They admitted Z as a partner who pays ₹4,000 as Goodwill the new profit sharing ratio being 2:1:1 among X,Y and Z respectively. The amount of goodwill will be credited to :
(a) X and Y as ₹1,000 and ₹3,000 respectively.
(b) X and Y as ₹ 3,000 and ₹1,000 respectively.
(c) X only.
(d) Y only.
13) The Securities Premium amount may be utilized by a company for _______.
(a) Writing off any loss on sale of fixed asset.
(b) Writing off any loss of revenue nature.
(c) Writing off the expense/discount on the issue of debentures.
(d) All of the above.
14) Dividends are usually paid as a percentage of ____.
(a) Authorized share capital.
(b) Net profit.
(c) Paid-up capital.
(d) Issued capital.
15) G Ltd. acquired assets worth ₹7,50,000 from H Ltd. by issue of shares of ₹100 at a premium of 25%. The number of shares to be issued by G Ltd. to settle the purchase consideration= ?
(a) 6,000 shares
(b) 7,500 shares
(c) 9,375 shares
(d) 4500 shares
16) When debentures are issued as collateral security, the final entry for recording the collateral debentures in the books is ______.
(a) Credit Debentures A/c and debit Cash A/c.
(b) Debit Debentures A/c and credit Debentures suspense A/c.
(c) Debit Debentures suspense A/c and credit Cash A/c.
(d) Debit Debentures suspense A/c and credit Debentures A/c.
17) F Ltd. purchased Machinery from G Company for a book value of ₹4,00,000. The consideration was paid by issue of 10% debentures of ₹100 each at a premium of 25%. The debenture account was credited with ______.
(a) ₹4,00,000.
(b) ₹5,00,000.
(c) ₹3,20,000.
(d) ₹3,00,000.
18) Comparative Balance Sheet is the _____ analysis of Balance Sheet.
(a) Vertical
(b) Increasing
(c) Decreasing
(d) Horizontal
19) Common size Income statement is the ______ analysis of Income statement.
(a) Vertical
(b) Increasing
(c) Decreasing
(d) Horizontal
20) Which is not a Solvency Ratio :
(a) Proprietary ratio.
(b) Interest Coverage ratio.
(c) Net Profit ratio .
(d) Debt to Equity ratio.
Answers
1) The interest on Capital Accounts of partners under the fluctuating Capital Account Method is credited to :
- (c) Partners' Capital Accounts
- The Partners' Capital Accounts keeps track of all adjustments including interest, withdrawal, the share of profit and loss and salaries.
2) In case of Revaluation Account is prepared, the assets and liabilities appear in the book of the reconstituted firm at their :
- (b) Market Values
- When the revaluation is completed, the assets and liabilities appear at their current market values on the Balance Sheet of the reconstituted firm.
3) Weighted average method of calculating goodwill should be followed when :
- (c) Either (a) or (b)
- The weighted average method of calculating goodwill should be followed if there exists a visible increasing or decreasing trend in profits.
4) A & B are partners sharing profits and losses in the ratio 5:3. On admission, C brings ₹70,000 cash and ₹48,000 against goodwill. New profit sharing ratio between A,B and C are 7:5:4. Find the sacrificing ratio of A:B.
- (a) 3:1
5) Partners are supposed to pay interest on drawings only when ______ by the _______.
- (a) Provided, Agreement
- Partners are supposed to pay interest on drawings only when they are provided by the agreement and are agreed upon by the partners.
6) A and B are partners sharing profits in the ratio 5:3, they admitted C giving him 3/10th share of profit. If C acquires 1/5 from A and 1/10 from B, new profit sharing ratio will be :
- (c) 17:11:12
- A's new ratio = 17/40
- B's new ratio = 11/40
- C's share = 12/40
7) In absence of any provision in the Partnership Deed, interest on Partner's Loan/Advance :
- (d) Both (b) and (c).
- Interest on Partner's Loan/Advance by a partner is allowed regardless of profit earned or not earned.
8) Working Capital is ₹700,000; Creditors ₹80,000; other Current liabilities ₹400,000; Current ratio.
- (d) 2.5 : 1
9) A, B and C are partners sharing profits and losses in the ratio 6:3:3, they agreed to take D into partnership for 1/8th share of profits. Find the new profit sharing ratio.
- (b) 14 : 7 : 7 : 4
10) A and B are partners sharing profits and losses in the ratio of 3:2 ( A's Capital is ₹30,000 and B's Capital is ₹15,000). They admitted C and agreed to give 1/5th share of profits to him. How much C should bring in towards his capital ?
- (c) ₹11,250.
11) In the absence of an agreement, partners are entitled to :
- (a) Interest on Loan and Advances.
- If the partners do not make an agreement or deed, then they are entitled to interest on loans and advances and their profit-sharing ratio will be equal.
12) X and Y are partners sharing profits in the ratio of 3:1. They admitted Z as a partner who pays ₹4,000 as Goodwill the new profit sharing ratio being 2:1:1 among X,Y and Z respectively. The amount of goodwill will be credited to :
- (c) X only.
13) The Securities Premium amount may be utilized by a company for _______.
- (c) Writing off the expense/discount on the issue of debentures.
14) Dividends are usually paid as a percentage of ____.
- (d) Issued capital.
- Dividends are paid to shareholders who have paid money.
15) G Ltd. acquired assets worth ₹7,50,000 from H Ltd. by issue of shares of ₹100 at a premium of 25%. The number of shares to be issued by G Ltd. to settle the purchase consideration= ?
- (a) 6,000 shares
- Issue of share of 7,50,00 /125 = 6,000 shares
16) When debentures are issued as collateral security, the final entry for recording the collateral debentures in the books is ______.
- (d) Debit Debentures suspense A/c and credit Debentures A/c.
17) F Ltd. purchased Machinery from G Company for a book value of ₹4,00,000. The consideration was paid by issue of 10% debentures of ₹100 each at a premium of 25%. The debenture account was credited with ______.
- (b) ₹5,00,000.
18) Comparative Balance Sheet is the _____ analysis of Balance Sheet.
- (d) Horizontal
19) Common size Income statement is the ______ analysis of Income statement.
- (a) Vertical
20) Which is not a Solvency Ratio :
- (a) Proprietary ratio.
- The solvency ratios are the debt-to-assets ratio, the interest coverage ratio, the equity ratio, and the debt-to-equity (D/E) ratio.
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