Q1. A sports club has a ‘Tournament Fund’ with a balance of ₹2,00,000. During the year, it incurred tournament expenses of ₹75,000 and received donations specifically for the tournament amounting to ₹30,000. The club also earned interest of ₹10,000 from the investment of the Tournament Fund. What amount will be shown in the Income & Expenditure Account for the year?
Correct Answer: Option A (₹35,000 (Expense))
Explanation: Detailed explanation will be updated shortly.
Q2. P, Q, and R are partners sharing profits in the ratio of 3:2:1. Q retires from the firm. P and R decide to share future profits in the ratio of 5:3. The gaining ratio will be:
Correct Answer: Option A (2:2)
Explanation: Detailed explanation will be updated shortly.
Q3. X Ltd. forfeited 500 shares of ₹10 each, originally issued at a premium of ₹2 per share, for non-payment of the final call of ₹3 per share. The allotment money of ₹5 (including premium) was duly received. These shares were reissued as fully paid up for ₹9 per share. What amount will be transferred to the Capital Reserve?
Correct Answer: Option A (₹2,000)
Explanation: Detailed explanation will be updated shortly.
Q4. Assertion (A): At the time of dissolution of a firm, an unrecorded asset taken over by a creditor in full settlement of his claim does not require any entry in the firm's books.
Reason (R): The transaction represents a set-off between an unrecorded asset and an unrecorded liability, resulting in a net-zero effect on the Realisation Account.
Correct Answer: Option A (: At the time of dissolution of a firm, an unrecorded asset taken over by a creditor in full settlement of his claim does not require any entry in the firm's books.
Reason (R): The transaction represents a set-off between an unrecorded asset and an unrecorded liability, resulting in a net-zero effect on the Realisation Account.)
Explanation: Detailed explanation will be updated shortly.
Q5. A company issued 10,000, 12% Debentures of ₹100 each, redeemable at a premium of 5% after 5 years. The issue was fully subscribed. At the time of issue, 'Loss on Issue of Debentures Account' will be debited by:
Correct Answer: Option A (₹1,20,000)
Explanation: Detailed explanation will be updated shortly.
Q6. If the Operating Ratio of a company is 75%, what would be its Operating Profit Ratio?
Correct Answer: Option A (75%)
Explanation: Detailed explanation will be updated shortly.
Q7. While preparing a Cash Flow Statement, 'Interest paid on Debentures' is classified as a cash flow from:
Correct Answer: Option A (Operating Activities)
Explanation: Detailed explanation will be updated shortly.
Q8. M and N are partners. M draws a fixed amount at the beginning of every month for 6 months ending 31st March 2024. If the interest on drawings is charged @12% p.a. and the total interest on drawings is ₹1,050, what is the monthly drawing amount?
Correct Answer: Option A (₹5,000)
Explanation: Detailed explanation will be updated shortly.
Q9. Zenith Ltd. purchased machinery worth ₹9,50,000 from Premier Machines Ltd. The payment was made by issuing Equity Shares of ₹100 each at a premium of 25%. The Securities Premium Reserve account will be credited by:
Correct Answer: Option A (₹1,90,000)
Explanation: Detailed explanation will be updated shortly.
Q10. A transaction involving an increase in the Debt-Equity Ratio and a decrease in the Current Ratio could be:
Correct Answer: Option A (Issue of equity shares for cash.)
Explanation: Detailed explanation will be updated shortly.
Q11. A firm's goodwill is valued at ₹90,000. C is admitted for a 1/4th share in profits. He is unable to bring his share of goodwill in cash. A and B are existing partners sharing profits equally. The journal entry for the adjustment of goodwill will involve debiting:
Correct Answer: Option A (C's Capital Account by ₹22,500)
Explanation: Detailed explanation will be updated shortly.
Q12. Which of the following items is shown under the sub-head 'Other Current Liabilities' in the Balance Sheet of a company as per Schedule III?
Correct Answer: Option A (Provision for Tax)
Explanation: Detailed explanation will be updated shortly.
Q13. A company redeems its 5,000, 9% Debentures of ₹100 each at a premium of 10%. It had a balance of ₹40,000 in the Securities Premium Reserve and ₹70,000 in the General Reserve. The premium on redemption will be written off against:
Correct Answer: Option A (Securities Premium Reserve ₹40,000 and Statement of P&L ₹10,000)
Explanation: Detailed explanation will be updated shortly.
Q14. Given: Opening Stock ₹50,000; Closing Stock ₹70,000; Purchases ₹4,00,000; Wages ₹30,000; Carriage Inwards ₹10,000. If the Gross Profit is 20% on Sales, the Revenue from Operations is:
Correct Answer: Option A (₹4,80,000)
Explanation: Detailed explanation will be updated shortly.
Q15. A partner, Z, died on 30th June 2023. As per the agreement, his share of profit till the date of death was to be calculated on the basis of the average profits of the last three years. The profits for the last three years were: 2020-21: ₹1,20,000; 2021-22: ₹80,000 (Loss); 2022-23: ₹1,40,000. Z's share in the firm was 1/4. The amount to be credited to Z's Capital Account for his share of profit will be:
Correct Answer: Option A (₹12,500)
Explanation: Detailed explanation will be updated shortly.
Q16. From the following, identify the transaction that will result in a cash inflow from investing activities:
Correct Answer: Option A (Cash received from a debtor against a bill receivable.)
Explanation: Detailed explanation will be updated shortly.
Q17. In a Computerised Accounting System, the process of grouping transactions of a similar nature at one place is known as:
Correct Answer: Option A (Data Entry)
Explanation: Detailed explanation will be updated shortly.
Q18. A, B and C are partners. The firm has given a loan of ₹20,000 to partner B. The partnership deed is silent on the interest on such a loan. At the end of the year, the firm will charge interest from B at:
Correct Answer: Option A (6% per annum)
Explanation: Detailed explanation will be updated shortly.
Q19. A company's comparative Statement of Profit and Loss shows that its Revenue from Operations increased from ₹20,00,000 to ₹25,00,000 and its Cost of Materials Consumed increased from ₹12,00,000 to ₹16,00,000. Which statement is correct?
Correct Answer: Option A (The percentage increase in Revenue is more than the percentage increase in Cost.)
Explanation: Detailed explanation will be updated shortly.
Q20. On dissolution, the balance of the Partner's Loan Account appearing on the liabilities side of the Balance Sheet is transferred to:
Correct Answer: Option A (Realisation Account)
Explanation: Detailed explanation will be updated shortly.