Q1. A, B, and C are partners sharing profits in the ratio of 3:2:1. C is guaranteed a minimum profit of ₹1,50,000. The firm incurred a net loss of ₹3,00,000 for the year. What will be the final effect on A's Capital Account?
Correct Answer: Option A (Debited by ₹1,50,000)
Explanation: Detailed explanation will be updated shortly.
Q2. X Ltd. forfeited 500 shares of ₹10 each (fully called up) for non-payment of the final call of ₹3 per share. Out of these, 300 shares were re-issued. What is the maximum permissible discount that can be offered on the re-issue of these 300 shares?
Correct Answer: Option A (₹1,500)
Explanation: Detailed explanation will be updated shortly.
Q3. A manufacturing company, Zenith Tech Ltd., has its financial statements showing the following items: (i) Dividend received on shares held as a temporary investment, (ii) Interest paid on a long-term bank loan, (iii) Refund of income tax. How will these be classified in the Cash Flow Statement?
Correct Answer: Option A ((i) Operating, (ii) Financing, (iii) Operating)
Explanation: Detailed explanation will be updated shortly.
Q4. A company's Current Ratio is 1.8:1 and its Quick Ratio is 1.2:1. If its current liabilities are ₹2,00,000, which of the following transactions would improve *only* the Quick Ratio but not the Current Ratio?
Correct Answer: Option A (Sale of goods costing ₹20,000 for ₹20,000 on credit.)
Explanation: Detailed explanation will be updated shortly.
Q5. A company acquired machinery worth ₹4,40,000 and paid the consideration by issuing 12% Debentures of ₹100 each at a 10% discount. The entry for writing off the 'Loss on Issue of Debentures' will be passed in the same year. Which account will be debited to write off this loss?
Correct Answer: Option A (Statement of Profit and Loss for ₹40,000)
Explanation: Detailed explanation will be updated shortly.
Q6. During the dissolution of a firm, an unrecorded liability of ₹50,000 was discovered. Partner 'P' agreed to discharge this liability by giving his personal car, valued in his own books at ₹45,000, to the creditor in full settlement. What will be the journal entry in the firm's books?
Correct Answer: Option A (Realisation A/c Dr. 50,000 To P's Capital A/c 50,000)
Explanation: Detailed explanation will be updated shortly.
Q7. Alpha Ltd. invited applications for 1,00,000 shares. Applications were received for 1,80,000 shares. The directors decided to reject applications for 20,000 shares, allot in full to applicants of 10,000 shares, and make a pro-rata allotment to the remaining applicants. If application money was ₹3 per share, how much money was refunded?
Correct Answer: Option A (₹60,000)
Explanation: Detailed explanation will be updated shortly.
Q8. Ram and Shyam are partners. They admit Ghanshyam for a 1/4th share in profits. Ghanshyam brings ₹3,00,000 as his capital. Based on his share and contribution, the total implied capital of the firm should be ₹12,00,000. However, the combined adjusted capital of Ram and Shyam before Ghanshyam's admission is ₹7,50,000. What is the value of the firm's hidden goodwill?
Correct Answer: Option A (₹1,50,000)
Explanation: Detailed explanation will be updated shortly.
Q9. In the Balance Sheet of a company prepared as per Schedule III of the Companies Act, 2013, 'Interest Accrued but Not Due on Borrowings' is presented under which head and sub-head?
Correct Answer: Option A (Head: Non-Current Assets; Sub-head: Other Non-Current Assets)
Explanation: Detailed explanation will be updated shortly.
Q10. A machine with a book value of ₹80,000 (Cost ₹1,20,000; Accumulated Depreciation ₹40,000) was sold for ₹65,000. In the Cash Flow Statement, how will this transaction be reflected?
Correct Answer: Option A (Inflow of ₹65,000 under Investing Activities and ₹15,000 added under Operating Activities.)
Explanation: Detailed explanation will be updated shortly.
Q11. A partnership deed provides for a commission of 10% of the net profit to Partner X. The firm incurred a net loss of ₹2,00,000 during the year. The accountant, being new, credited X's Capital Account with a commission based on an incorrect assumption of profit. This is an error of:
Correct Answer: Option A (Principle, as commission is a charge against profit.)
Explanation: Detailed explanation will be updated shortly.
Q12. A non-banking financial company (NBFC) has 10,000, 9% Debentures of ₹100 each outstanding. It decides to redeem 20% of these debentures out of profits. What is the amount that must be transferred to the Debenture Redemption Reserve (DRR) before redemption begins?
Correct Answer: Option A (₹2,00,000)
Explanation: Detailed explanation will be updated shortly.
Q13. The Debt-Equity Ratio of a company is 0.8:1. Which of the following transactions will lead to a decrease in this ratio?
Correct Answer: Option A (Issue of new shares for cash.)
Explanation: Detailed explanation will be updated shortly.
Q14. On the retirement of partner Z, the firm's revaluation profit was ₹30,000 and goodwill was valued at ₹1,20,000. Z's profit-sharing ratio was 1/5. His capital balance after all adjustments (except goodwill) was ₹2,50,000. The continuing partners decided to pay him ₹1,00,000 immediately and transfer the balance to his loan account. What is the amount transferred to Z's Loan Account?
Correct Answer: Option A (₹1,50,000)
Explanation: Detailed explanation will be updated shortly.
Q15. As per Schedule III, Part I of the Companies Act, 2013, how are 'Calls-in-Arrears' presented in the Balance Sheet?
Correct Answer: Option A (As a separate line item under 'Current Assets'.)
Explanation: Detailed explanation will be updated shortly.
Q16. In the Comparative Statement of Profit and Loss of a company, Revenue from Operations increased by 25% and Total Expenses increased by 20%. If the revenue and expenses in the base year were ₹10,00,000 and ₹6,00,000 respectively, what is the percentage change in the Net Profit?
Correct Answer: Option A (25%)
Explanation: Detailed explanation will be updated shortly.
Q17. A partner, Aryan, made the following drawings during the year: ₹20,000 on 1st July, ₹10,000 on 30th September, and ₹12,000 on 1st February. The partnership deed is silent on interest on drawings. The firm closes its books on 31st March. How much interest on drawings will be charged to Aryan?
Correct Answer: Option A (Based on an average period of 6 months.)
Explanation: Detailed explanation will be updated shortly.
Q18. A company's Cash Flow Statement shows the following:
- Issue of Equity Shares: ₹5,00,000
- Redemption of 10% Preference Shares (at par): ₹2,00,000
- Payment of Interim Dividend: ₹50,000
- Interest paid on Debentures: ₹30,000
What is the Net Cash Flow from/used in Financing Activities?
Correct Answer: Option A (Cash flow of ₹2,20,000)
Explanation: Detailed explanation will be updated shortly.
Q19. At the time of dissolution, a creditor for ₹70,000 accepted stock valued at ₹55,000 and paid the firm ₹10,000 in cash as full settlement. Which of the following represents the correct accounting treatment in the firm's books?
Correct Answer: Option A (Bank A/c Dr. 10,000; To Realisation A/c 10,000)
Explanation: Detailed explanation will be updated shortly.
Q20. To calculate goodwill using the Super Profit method, a firm's profits for the last three years were:
Year 1: ₹4,00,000 (after debiting loss by fire ₹50,000)
Year 2: ₹5,50,000 (including a non-recurring income of ₹40,000)
Year 3: ₹4,80,000
The firm's normal rate of return is 10% on capital employed of ₹40,00,000. What is the firm's Average Adjusted Profit?
Correct Answer: Option A (₹4,80,000)
Explanation: Detailed explanation will be updated shortly.