Yearly Archives: 2022

NCERT MCQ ON Business Environment:

Question1: Which of the following does not characterise the business environment?

a) Uncertainty

b) Employees

c) Relativity

d) Complexity

Answer: B

Question2: Which of the following best indicates the importance of business environment?

a) Identification

b) Improvement in performance

c) Coping with rapid changes

d) All of them

Answer: D

Question3: Which of the following is an example of social environment?

a) Money supply in the economy

b) Consumer Protection Act

c) The Constitution of the country

d) Composition of family

Answer: D

Question4: Liberalisation means

a) Integration among economies

b) Reduced government controls and restrictions

c) Policy of planned disinvestments

d) None of them

Answer: B

Question5: Which of the following does not explain the impact of Government policy changes on business and industry?

a) More demanding customers

b) Increasing competition

c) Change in agricultural prices

d) Market orientation

Answer: C

Question6: Business environment is a group of powers.

a) Special

b) General

c) Internal

d) Special and General

Answer: D

Question7: Which factor is not included in Macro Environment?

a) Economic Environment

b) Competitors

c) Social Environment

d) Political Environment

Answer: B

Question8: The entry of the multinational companies in large numbers in the Indian market has created .

a) Huge Demand

b) Huge Supply

c) Tough Competition

d) Huge Demand and Supply

Answer: C

Question9: Reducing the role of Public Sector and increasing the role of Private Sector fall sunder .

a) Liberalisation

 b) Privatisation

c) Liberalisation and Privatisation

d) Globalisation

Answer: B

Question10: Under the Reserve Bank keeps control on the money supply in order to achieve the objectives of the general economic policy.

a) Fiscal Policy

b) Monetary Policy

c) Trade Policy

d) Industrial Policy

Answer: B

Question11: The income and expenditure policy of the government is called.

a) Fiscal Policy

b) Industrial Policy

c) Trade Policy

d) Monetary Reforms

Answer: A

Question12: In all the countries there is a free-flow of goods and services under which of the following does it come?

a) Liberalisation

b) Privatisation

c) Liberalisation and Privatisation

d) Globalisation

Answer: D

Question13: Which of the following deals with the process of simplification of Import-Export?

a) Liberalisation

b) Privatisation

c) Liberalisation and Privatisation

d) Globalisation

Answer: A

Question14: With the introduction of Photostat Machines in the market, the carbon paper industry was adversely affected. Which component of environment was responsible for it?

a) Economic

b) Political

c) Technical

d) All the above

Answer: C

Question15: Which factor is not included in Internal Environment?

a) Objective

b) Policies

c) Public

d) Production-Method

Answer: C 

Question16: Globalisation aims at ____

• a) All the options
• b) Export Promotion
• c) Foreign exchange reforms
• d) Import liberalisation

Answer: All the options

Question17: Which of the following does not explain the impact of Government policy changes on business and industry?

• a) Change in agricultural prices
• b) Market orientation
• c) More demanding customers
• d) Increasing competition

Answer: Change in agricultural prices

Question18: A possible obstacle to growth of privatisation is

• a) Sale of least profitable enterprises
• b) Profit earned by public enterprises
• c) Licensing
• d) All the options

Answer: Sale of least profitable enterprises

Question19: Which one is not an element of internal environment?

• a) Money and capital market
• b) Marketing capabilities
• c) Operational Capabilities
• d) Personal Capabilities

Answer: Money and capital market

Question20: Globalisation means

• a) Adopting a global outlook
• b) Setting of firms branches in other countries
• c) Earning profit from Exports
• d) Attracting foreign investment

Answer: Adopting a global outlook

Question21: Privatisation of ownership through sale of equity share is called

• a) Disinvestment
• b) Denationalisation
• c) Contracting
• d) None of the options

Answer: Disinvestment

Question22: Which among these can be condition for the success of privatisation

• a) Barriers to enter the market
• b) Alternative institutional arrangements
• c) Measurability of performance
• d) All the options

Answer: Barriers to enter the market

Question23: The pre-liberalisation era of Indian Economy was under the grip of

• a) Unfavourable and alarming balance of payment
• b) Fiscal Deficit
• c) Under-employment
• d) Unemployment

Answer: Unfavourable and alarming balance of payment

Question24: Which among these is not a method of privatisation

• a) Sale of Business
• b) Denationalisation
• c) Franchising
• d) All the options

Answer: Sale of Business

Question25: What are the decisions taken by government of India pertaining to Industrial Sector in the new industrial policy of 1991?

• a) All the options
• b) VRS to shed the excess load of workers
• c) Disinvestment of public sector share holding
• d) Referring sick units to BIFR

Answer: All the options

Question26: Which among the following is not opened for private sector participation

• a) Railways
• b) Power sector
• c) Telecommunication sector
• d) Education sector

Answer: Railways

Question27: Company images and brand equity is factor affecting business

• a) Externally
• b) Internally
• c) Government Policy
• d) None of the options

Answer: Externally

Question28: Relaxing the restrictions and controls imposed on Business and industry means

• a) Liberalisation
• b) Privatisation
• c) Globalisation
• d) None of the options

Answer: Liberalisation

Question29: By which act government checks restrictive trade?

• a) MRTP Act
• b) Industrial Policy Act 1991
• c) FEMA act
• d) None of the options

Answer: MRTP Act

Question30: Liberalization means

• a) Liberating the industry, trade and economy from unwanted restrictions
• b) Reducing number of reserved industries from 17 to 8
• c) Opening up of economy to the world by attaining international competitiveness
• d) Free determination of interest rates

Answer: Liberating the industry, trade and economy from unwanted restrictions

Question31: Which is not essential feature of Globalisation

• a) The government redefined the role of public sector.
• b) Import liberalisation
• c) Export promotion
• d) Foreign exchange reforms

Answer: The government redefined the role of public sector.

Question32: Which is not essential feature of Privatisation

• a) No restriction on expansion or contraction of business
• b) The government redefined the role of public sector.
• c) Policy of planned disinvestments of the public sector.
• d) Refining of sick enterprises to the Board of Industrial and Financial Reconstruction.

Answer: No restriction on expansion or contraction of business

Question33: Which is not essential feature of Liberalisation

• a) The government redefined the role of public sector.
• b) No restriction on expansion or contraction of business
• c) Free movement of goods and services.
• d) Freedom in fixing the prices of goods and services.

Answer: The government redefined the role of public sector.

Question34: What is the Impact of Government policy changes on business and industry

• a) All the options
• b) Increasing Competition
• c) More Demanding Customer
• d) Rapidly Changing Technological Environment

Answer: All the options

Question35: ___________The new set of economic reforms that aim at giving greater role to the private sector in the nation building process and a reduced role to the public sector.

• a) Privatisation
• b) Liberalisation
• c) Globalisation
• d) None of the options

Answer: Privatisation

Question36: How many important features of New Economic Policy, 1991

• a) 3
• b) 2
• c) 4
• d) 5

Answer: 3

Question37: Why it is important for business enterprises to understand their environment

• a) All the options
• b) It Enables the Firm to Identify Opportunities
• c) It Helps the Firm to Identify Threats
• d) It Helps in Coping with Rapid Changes

Answer: All the options

Question38: Advance understanding of business environment will help in

• a) Planning and Policy Formulation
• b) Privatisation
• c) Developing new principles of management
• d) Liberalisation

Answer: Planning and Policy Formulation

Question39: Globalisation aims at ____

• a) All the options
• b) Export Promotion
• c) Foreign exchange reforms
• d) Import liberalisation

Answer: All the options

Question40: Through Environmental scanning a business firm can enjoy the ___________

• a) First Mover Advantage
• b) Benefit of taxes
• c) Last Mover Advantage
• d) None of the options

Answer: First Mover Advantage

Question41: The complete awareness and understanding of business environment is called _________

• a) Environmental Scanning
• b) Technological advancement
• c) Liberalisation
• d) Privatisation

Answer: Environmental Scanning

Question42: For the protection of a consumers right, there is

• a) Consumer Protection Act, 1986
• b) Consumer protection Act 1984
• c) Consumer Protection Act, 1932
• d) Consumer Protection Act, 1956

Answer: Consumer Protection Act, 1986

Question43: Advertisements of cigarettes carry the statutory warning. This is because of

• a) Legal Environment
• b) Social Environment
• c) Political Environment
• d) None of the options

Answer: Legal Environment

Question44: Technological improvements and innovations result in__

• a) Render existing products obsolete
• b) Increase in tax
• c) Reduction in profit margins
• d) None of the options

Answer: Render existing products obsolete

Question45: Increased competition in the market will _______

• a) Reduce the profit margin
• b) Increase the tax
• c) Increase the profit
• d) Increase the cost of production

Answer: Reduce the profit margin

Question46: What will be the affect of increase in tax by the government

• a) Increase in cost of production
• b) Creates fear in the minds of investors
• c) Increase in profit margin
• d) None of the options

Answer: Increase in cost of production

Question47: What creates fear in the minds of investors to invest in long term projects?

• a) Political Uncertainty
• b) Privatisation
• c) Globalisation
• d) All the options

Answer: Political Uncertainty

Question48: Reduction in the role of public sector is due to _________

• a) Privatisation
• b) Political Environment
• c) Liberalisation
• d) Globalisation

Answer: Privatisation

Question49: Giving freedom to Indian business and industries from all unnecessary government controls and restrictions is an example of ____________

• a) Liberalisation
• b) Privatisation
• c) Globalisation
• d) All the options

Answer: Liberalisation

Question50: Technological environment includes changes relating to

• a) All the options
• b) Scientific improvement
• c) Method of production
• d) Use of new equipment

Answer: All the options

Question51: Booking of Railway tickets through internet from home or office is an example of _________

• a) Technological Environment
• b) Political Environment
• c) Economic Environment
• d) All the options

Answer: Technological Environment

Question52: Advertisement of alcoholic beverages is prohibited. This is an example of __________

• a) Legal Environment
• b) Economic Environment
• c) Political Environment
• d) All the options

Answer: Legal Environment

Question53: Subsidy to cotton textile businesses is the __________

• a) Political Environment
• b) Legal Environment
• c) Social Environment
• d) Economic Environment

Answer: Political Environment

Question54: The trend of health and fitness has created a demand for products like gyms, bottled mineral water and food supplements etc., these are the example of

• a) Social Environment
• b) Political Environment
• c) Legal Environment
• d) Economic Environment

Answer: Social Environment

Question55: Gross Domestic Product (GDP) is concerned with ____________

• a) Economic Environment
• b) Social Environment
• c) Political Environment
• d) Legal Environment

Answer: Economic Environment

Question56: Which of the following does not explain the impact of Government policy changes on business and industry?

• a) Change in agricultural prices
• b) Market orientation
• c) More demanding customers
• d) Increasing competition

Answer: Change in agricultural prices

Question57: ________reduces the control of government and encourages private participation

• a) Liberalization
• b) Privatization
• c) Globalization
• d) All the options

Answer: Liberalization

Question58: Liberalisation means

• a) Reduced government controls and restrictions
• b) Integration among economies
• c) Policy of planned disinvestments
• d) None of the options

Answer: Reduced government controls and restrictions

NCERT MCQ ON Principles of Management :

Question1:  Who is the considered as the father of Scientific Management?

a)  Henry Fayol

b)  Gilberth

c)  F W Taylor

d)  Harold Koontz                                            

Answer: C

Question2:  Who is known as father of General Management?

a) Henry Fayol

b) Gilberth

c) F  W Taylor

d) Harold Koontz.                                                            

Answer: A

Question3:  Harmony Not discord principle is concerned with                       

a)  Management should share the gain of the company with workers

b)  Investigation of Task

c)  Scientific inquiry

d)  Observation and Analysis.

Answer: A

Question4:  Unity of  Direction is concerned with         

a)  One head one plan

b)  One head different plans

c)  Planning by employee

d)  Planning by production manager                            

Answer: A

Question5:  Espirit De Corps mean               

a)  Gang plank

b)  Gang boss

c)  Order

d)  Union is strength.                                                 

Answer: D

Question6:  Gang plank is concerned about ______________

a)  Contact not allowed

b)  Indirect contact

c)  Direct contact

d)  Contact before application.                                    

Answer: C
 Question7:  Which of the following is not considered with F W Taylor?

a)  Method Study

b)  Motion Study

c)  Time Study

d)  Scalar chain                                                         

Answer: D

Question8:  Functional foremanship is concerned with   ______

a)  Marketing

b)  Division of work

c)  Insurance

d)  Gang plank                                                          

Answer: B

Question9:  The main objective of functional foremanship is _____ 

a)  Not to provide free time to workers

b)  Separate planning functions from executive functions

c)  To separate top level management from CEO

d)  Not to divide the work.      

Answer: B

Question10:  The main objective of the motion Study is ______ 

a)  To provide more work to the workers

b)  To separate planning functions with other functions

c)  To eliminate unproductive movement

d)  To study standard time.                             

Answer: C

Question11: Science not rule of thumb principle is given by _______ 

a)  Hanry  Fayol

b)  L M Prasad

c)  F W Taylor

d)  L H Haney.                                              

Answer: C

Question12:  What is the main motive of Fatigue Study?

a)  Calculation of standard time

b)  Calculation of standard output

c)  Calculation of frequent rest interval to be given to the employees

d)   Direct contact.

Answer:  C

Question13: Which principle of management discuss about route clerk and gang boss? 

a)  Equity

b)  Order 

c)  Functional Foremanship

d)  Motion study.                                           

Answer: C

Question14: Principle of Order is concerned with                 

a) Orderly arrangements of various  resources

b)  Giving order to employees

c)  Receiving order from top level

d)  None of the above.                                    

Answer: A

Question15:  Which principle of management suggest the concept of replacing I with we.

a)  Order

b)  Equity

c)  Espirit De Corp

d)  None of these.                                          

Answer: C

 Question16: Which is the principles of management given by Fayol

• a) All the options
• b) Unity of direction
• c) Equity
• d) Centralisation and decentralisation

Answer: All the options

Question17: Which is the techniques of scientific work

• a) All the options
• b) Time study
• c) Motion study
• d) Fatigue study

Answer: All the options

Question18: Which is determines the standard time taken to perform a well-defined job.

• a) Time Study
• b) Motion study
• c) Fatigue study
• d) Method study

Answer: Time Study

Question19: The method of time study will depend Upon

• a) Volume and frequency of the task
• b) Volume
• c) frequency of the task
• d) None of the options

Answer: Volume and frequency of the task

Question20: Which are the objectives achieved through time study

• a) All the options
• b) Determine the number of workers
• c) Frame suitable incentive schemes.
• d) Determines labour costs

Answer: All the options

Question21: ___________study refers to the study of movements like lifting, putting objects, sitting and changing positions

• a) Motion study
• b) Time Study
• c) Fatigue study
• d) Method study

Answer: Motion study

Question22: On close examination of body motions, e.g., it is possible to find out Which types motions

• a) All the options
• b) Motions which are productive
• c) Motions which are incidental
• d) Motions which are unproductive.

Answer: All the options

Question23: _________________study seeks to determine the amount and frequency of rest intervals in completing a task

• a) Fatigue Study Fatigue
• b) Method study
• c) Motion study
• d) Time Study

Answer: Fatigue Study Fatigue

Question24: Which is the objective of standardisation

• a) All the options
• b) To reduce product to fixed types, sizes, features etc.
• c) To establish interchangeability of various parts.
• d) To establish standards of excellence and quality in materials.

Answer: All the options

Question25: Which nature is not present in Principles of management

• a) Absolute
• b) Behavioural
• c) Flexible
• d) Universal

Answer: Absolute

Question26: What is the aim of Method study

• a) To find one best method of doing the job
• b) To find None method of doing the job
• c) To find Time method of doing the job
• d) All the options

Answer: To find one best method of doing the job

Question27: Who was the first to identity functions of management

• a) Henry Fayol
• b) James Lundy
• c) Harold Koontz
• d) F.W.Taylor

Answer: Henry Fayol

Question28: How are the principles developed

• a) All the options
• b) On the basis of observation
• c) on the basis of experimentation
• d) Personal experiences of the managers

Answer: All the options

Question29: Harmony, Not Discord principle is concerned with______________

• a) Management should share the gains of company with workers
• b) Observation and Analysis
• c) Scientific inquiry
• d) Investigation of Task

Answer: Management should share the gains of company with workers

Question30: Which is the objective of standardisation

• a) All the options
• b) To reduce product to fixed types, sizes, features etc.
• c) To establish interchangeability of various parts.
• d) To establish standards of excellence and quality in materials.

Answer: All the options

Question31: Which is determines the standard time taken to perform a well-defined job.

• a) Time Study
• b) Motion study
• c) Fatigue study
• d) Method study

Answer: Time Study

Question32: How many principles are given by Henry Fayol

• a) 14
• b) 20
• c) 18
• d) 16

Answer: 14

Question33: Lifetime of Henry Fayol is ______________

• a) 1841 to 1925
• b) 1841 to 1930
• c) 1845 to 1925
• d) 1845 to 1930

Answer: 1841 to 1925

Question34: Name and explain that principle of Fayol which suggest that communication from top to bottom should follow the official lines of command?

• a) Principle of Scalar Chain
• b) Remuneration of Employees
• c) Centralization and Decentralization
• d) Unity of Direction

Answer: Principle of Scalar Chain

Question35: Identify the technique of scientific management When uniformity is introduced in materials. Machine, tools, method of works and working conditions after, due research.

• a) Standardization of works
• b) Method Study
• c) Differential Piece Wage system
• d) Fatigue study

Answer: Standardization of works

Question36: Identify the technique of scientific management when specialists supervise each worker

• a) Functional Foremanship
• b) Method Study
• c) Motion Study
• d) Time study

Answer: Functional Foremanship

Question37: Which of the following is not an objective of management

• a) Earning profits
• b) Growth of the organisation
• c) Providing employment
• d) Policy making

Answer: Earning profits

Question38: Which is not a function of management of the following

• a) Cooperating
• b) Planning
• c) Controlling
• d) Staffing

Answer: Cooperating

Question39: Hina & Harish are typist in a company having same educational qualification. Hina is getting Rs.3000 per month and Harish Rs. 4000 per month as salary far the same working hour. Which principle of management is violated in this case? Name and explain the principle?

• a) Principle of fair remuneration.
• b) Principle of Equity
• c) Principle of Order
• d) Principle of initiative

Answer: Principle of fair remuneration.

Question40: Why is it said that principles of management are flexible

• a) Because they can be modified
• b) Because they can be Fixed
• c) Because they can be modified and Because they can be Fixed
• d) None of the options

Answer: Because they can be modified

Question41: Who gave 14 general principles of Management

• a) Henri Fayol
• b) F.W.Taylor
• c) Harold Koontz
• d) Gilbreth

Answer: Henri Fayol

Question42: Henri Fayol was a

• a) Mechanical engineer
• b) French Doctor
• c) Russian Mechanical engineer
• d) All the options

Answer: Mechanical engineer

Question43: Henri Fayol Period was

• a) 1841-1925
• b) 1851-1925
• c) 1861-1925
• d) 1841-1926

Answer: 1841-1925

Question44: Henri Fayol was a

• a) French Mechanical engineer
• b) French Doctor
• c) Russian Mechanical engineer
• d) All the options

Answer: French Mechanical engineer

Question45: Taylors book Principles of Scientific Management was published

• a) 1911
• b) 1912
• c) 1914
• d) 1915

Answer: 1911 

Question46: F.W. Taylor period was

• a) 1856 to 1915
• b) 1856 to 1925
• c) 1756 to 1925
• d) 1750 to 1925

Answer: 1856 to 1915

Question47: Significance of the Principles of Management

• a) All the options
• b) Providing managers with useful insights into reality
• c) Optimum utilization of resource and effective administration
• d) Scientific decisions.

Answer: All the options

Question48: Which principle of management aims at securing the loyalty and devotion of the employees by giving them fair and just treatment?

• a) Principle of Equity.
• b) Principle of Order.
• c) Unity of Direction
• d) None of the options

Answer: Principle of Equity.

Question49: Which principle of management is violated if an employee is asked to receive orders from two superiors?

• a) Principle of unity of Command
• b) Principle of Order.
• c) Principle of Equity.
• d) All the options

Answer: Principle of unity of Command

Question50: Workers should be encouraged to develop and carry out their plans for improvements. Identify the principle of management formulated by Fayol.

• a) Principle of initiative.
• b) Unity of Direction
• c) Principle of Order.
• d) Principle of Equity.

Answer: Principle of initiative.

Question51: Taylors principles are specific as they are

• a) Scientific in nature.
• b) Doctor in nature.
• c) Manager in nature.
• d) All the options

Answer: Scientific in nature.

Question52: Taylors principles are

• a) Specific
• b) General
• c) Universal
• d) None of the options

Answer: Specific

NCERT MCQ ON Nature and Significance of Management:

Question1: Which is not a function of Management of the following?

a) Planning

b) Controlling

c) Cooperating.

d) Staffing.

Answer: C

Question2:  Setting Objective is a function of:-

a) Middle level management

b) Operational level management

c) Top level Management

d) None of the above

Answer: C

Question3: Which one of the following sequence of process of management is correct:

a) Planning, Controlling, Organising, Staffing

b) Staffing, Planning, Organising, Controlling

c) Planning, Organising, Staffing, Controlling

d) Organising, Planning, Staffing, Controlling

Answer:  C

Question4:  Management ensures:

a) Providing employment opportunities

b) Maintaining profit

c) Ensuring maximum utilisation of resources

d) Control on cost

Answer:  C

Question5: A manager obtains the required capital at 12% interest while the prevailing rate of interest happens to be10%. How would you describe such a manager?

a) Efficient

b) Effective

c) Efficient and Effective

d) Inefficient

Answer:  B

Question6: Whose specialty happens to be ‘personal skill’?

a) Profession

b) Art

c) Science

d) None of these

Answer:  B

Question7: At what level of management does the Chief Executive Officer operate?

a) Top-level

b) Middle-level

c) Lower-level

d) None of these

Answer:  A

Question8: ‘Thinking before doing’, under which function of management is this performed?

a) Controlling

b) Directing

c) Organising

d) Planning

Answer:  D

Question9: ‘Arrangement of various resources for achieving Target, under which function of management is this performed

a) Controlling

b) Directing

c) Organising

d) Planning

Answer:  C

Question10: Under what function of management does the ‘corrective action’ fall?

a) Planning

b) Organising

c) Directing

d) Controlling

Answer:  D

Question11: Coordination is

a) Function of management

b) The essence of management

c) an objective of management

d) none of the above

Answer:  B

Question12: Number of levels of management are:

a) one 

b) two

c) three 

d) four

Answer:  C

Question13: Which of the following is true?

a) Coordination is not equally important at all levels of management

b) Coordination has no importance

c) Coordination is equally important at all levels of

d) None of these

Answer: C

Question14: What out of the following has been called the essence of management?

a) Communication

b) Coordination c) Supervision

d) Leadership

Answer:  B

Question15: The following is not an objective of management

a) Earning profits

b) growth of the organisation

c) providing employment

d) policy making

Answer: D  

Question16: Mr. Gaurav is working as the Finance Manager of XYZ ltd. At what level of management is he working

• a) Middle level
• b) Lower Level
• c) Top level
• d) All the options

Answer: Middle level

Question17: Your uncle is serving as a foreman in a factory. At what level of management is he working

• a) Lower Level
• b) Middle level
• c) Top level
• d) All the options

Answer: Lower Level

Question18: Which force binds all other functions of management

• a) Coordination
• b) Production
• c) Finance
• d) Staffing

Answer: Coordination

Question19: Planning, Organising, Staffing, Directing and Controlling is the sequence of functions in a process, Name it.

• a) Management
• b) Production
• c) Finance
• d) Staffing

Answer: Management

Question20: Name the process that synchronises the activities of different departments.

• a) Coordination
• b) Staffing
• c) Production
• d) Finance

Answer: Coordination

Question21: Which is The reasons that bring out the importance or the necessity for coordination

• a) All the options
• b) Growth in the size
• c) Functional Differentiation
• d) Specialisation

Answer: All the options

Question22: In which level coordination in the activities of workers to ensure work progresses as per plans

• a) Lower level
• b) Middle level
• c) Top level
• d) None of the options

Answer: Lower level

Question23: In which level needs coordination to integrate activities of the organisation for accomplishing the organisational goals

• a) Top level
• b) Middle level
• c) Lower level
• d) None of the options

Answer: Top level

Question24: Which are the characteristics of coordination

• a) All the options
• b) Coordination integrates group efforts
• c) Coordination ensures unity of action
• d) Coordination is a continuous process

Answer: All the options

Question25: Lack of coordination results in

• a) All the options
• b) Overlapping
• c) Duplication
• d) Delay

Answer: All the options

Question26: The meaning of coordination is to balance its various activities are

• a) All the options
• b) Sale & Purchase
• c) Production
• d) Finance

Answer: All the options

Question27: Finding out deficiencies in implementation of plans, Identify the functions of this management

• a) Controlling
• b) Staffing
• c) Directing
• d) Co-Ordination

Answer: Controlling

Question28: Recruitment and selection of the personnel, Identify the functions of the management

• a) Staffing
• b) Directing
• c) Controlling
• d) Co-Ordination

Answer: Staffing

Question29: Motivating employees and giving instructions to them to perform the tasks assigned to them, Identify the functions of this management

• a) Directing
• b) Staffing
• c) Controlling
• d) Co-Ordination

Answer: Directing

Question30: Name the level at which the managers are responsible for implementing and controlling the plans and strategies of the organisation

• a) Middle Level
• b) Top Level
• c) Lower Level
• d) All the options

Answer: Middle Level

Question31: Rakesh is working as Regional Manager in ABC Ltd. Name the level at which he is working.

• a) Middle Level
• b) Top Level
• c) Lower Level
• d) All the options

Answer: Middle Level

Question32: Which are the objectives of management

• a) All the options
• b) Survival
• c) Profit
• d) Growth

Answer: All the options

Question33: In order to be successful an organisation must change its goals according to the needs of environment. Which characteristic of management is highlighted here

• a) Dynamic
• b) Intangible Force
• c) Universal
• d) All the options

Answer: Dynamic

Question34: An educational institution as well as a business organization both need to be managed. Which characteristic of management is highlighted here

• a) Universal
• b) Intangible Force
• c) Dynamic
• d) All the options

Answer: Universal

Question35: Management is multi-dimensional. Which is the dimensions of it

• a) Work and People
• b) Work
• c) People
• d) None of the options

Answer: Work and People

Question36: Managements main considerations are

• a) Time and Cost
• b) Time
• c) Cost
• d) None of the options

Answer: Time and Cost

Question37: Management can be defined as, the process of getting things done with the aim of achieving organizational goals

• a) Effectiveness and Efficiency
• b) Effectiveness
• c) Efficiency
• d) None of the options

Answer: Effectiveness and Efficiency

Question38: ______is needed at all levels of management and in all departments.

• a) Co-Ordination
• b) Cooperation
• c) Staffing
• d) None of the options

Answer: Co-Ordination

Question39: Reasons which clarify that management as a function is gaining importance day by day.

• a) All the options
• b) Multidisciplinary
• c) Goal oriented
• d) Dynamic function

Answer: All the options

Question40: Management is an activity conducted in a group through

• a) All the options
• b) Cooperation
• c) Collaboration
• d) Co-Ordination

Answer: All the options

Question41: At which level of management the managers are responsible for the welfare and survival of the organization?

• a) Top management
• b) Middle Level
• c) Supervisory Level
• d) All the options

Answer: Top management

Question42: Surya Enterprise Ltd. manufactures toys. The production department produces more of toys than required and sales department is not able to sell the total production. What quality of management do you think the company is lacking? 

• a) Co-ordination.
• b) Staffing
• c) Controlling
• d) None of the options

Answer: Co-ordination.

Question43: A petrol pump needs to be managed as much as a school or a hospital. Which Characteristic of management has been highlighted here?

• a) Management is all pervasive.
• b) Only School
• c) Only Hospital
• d) All the options

Answer: Management is all pervasive.

Question44: Which function of management is concerned with finding the right people for the right job?

• a) Staffing
• b) Planning
• c) Controlling
• d) Co-operating

Answer: Staffing

Question45: Name the process of designing and maintaining an environment in which individual working together in groups efficiently accomplish selected aims.

• a) Management
• b) Partnership
• c) Consultancy
• d) None of the options

Answer: Management

Question46: The task of management is to make people work towards achieving the organisations goals, by making their strengths effective and their weaknesses irrelevant. Which dimension of management is being referred here?

• a) Management of People
• b) Management of Work
• c) Management of Operations
• d) None of the options

Answer: Management of People

Question47: Coordination is the essence of management because

• a) Coordination is a part of all management functions
• b) Coordination is a part of Planning management functions
• c) Coordination is a part of Staffing management functions
• d) Coordination is a part of Controlling management functions

Answer: Coordination is a part of all management functions

Question48: Management is an Art because

• a) Existence of theoretical Knowledge and Application of knowledge
• b) Existence of theoretical Knowledge
• c) Application of knowledge
• d) None of the options

Answer: Existence of theoretical Knowledge and Application of knowledge

Question49: Management is a science because

• a) Systematic body of Knowledge and Principles are based on repeated experiments
• b) Systematic body of Knowledge
• c) Principles are based on repeated experiments
• d) None of the options

Answer: Systematic body of Knowledge and Principles are based on repeated experiments 

Question50: To meet the objectives of the firm the Management of ABC Ltd., offers employment to physically challenged person. Identify the organization and objective it is trying to achieve?

• a) It is social objective
• b) It is Profit objective
• c) It is social objective and It is Profit objective
• d) None of the options

Answer: It is social objective

Question51: Who is known as the Father of Modern Management Theory

• a) Henry Fayol.
• b) Stanley Vence
• c) Peter F. Drucker
• d) Bayard Wheeler

Answer: Henry Fayol.

Question52: Which function of management is bridges the gap between where we stand today and where we want to reach.

• a) Planning
• b) Efficiency
• c) Co-Ordination
• d) Staffing

Answer: Planning

Question53: Objectives of Management are______

• a) All the options
• b) Achieve maximum output with minimum efforts
• c) Optimum use of resource
• d) Maximum prosperity

Answer: All the options

Question54: Management is all pervasive because it is required

• a) In all type of business
• b) Only in Big Organisation
• c) Only in Small Organisation
• d) Only in Partnership business

Answer: In all type of business

Question55: Which force is consisted as the essence of management

• a) Co-Ordination
• b) Less Communication
• c) Lack of Co-Ordination
• d) All the options

Answer: Co-Ordination

Question56: Management is the process of conducting which set of function ____________

• a) All the options
• b) Planning
• c) Organizing
• d) Staffing

Answer: All the options

Question57: Management is considered an art due to

• a) All the options
• b) Existence of Theoretical Knowledge
• c) Personalised Application
• d) Based on Practice and Creativity

Answer: All the options

Question58: Where is need of Management

• a) All the options
• b) Top Level
• c) Middle Level
• d) Supervisory Level

Answer: All the options

Question59: What is the Scope of Management

• a) All the options
• b) Production Management
• c) Financial Management
• d) Office Management

Answer: All the options

Question60: What is the Nature of Management

• a) All the options
• b) Management is an Universal Process
• c) Management is a profession
• d) Management is an Acquired and inborn Quality

Answer: All the options

Question61: According to the nature of management, Management can be considered as

• a) Science and Art Both
• b) Only Science
• c) Only Art
• d) Neither a science nor an art

Answer: Science and Art Both

Question62: Management word uses as _____

• a) A Process
• b) A Subject
• c) A Time Waste
• d) All the options

Answer: A Process

Question63: Management is considered as a multi-faceted concept because it is a complex activity that has __________main dimensions.

• a) 3
• b) 2
• c) 4
• d) 5

Answer: 3

Question64: Management is a _______ Process

• a) Goal Oriented
• b) Target Oriented
• c) Very Easy
• d) All the options

Answer: Goal Oriented

Question65: What are the characteristics of Management

• a) All the options
• b) Management is a social process
• c) Management is a purposeful process
• d) Management is a Collective process

Answer: All the options

Question66: Rakesh is working as Regional Manager in ABC Ltd. Name the level at which he is working.

• a) Middle Level
• b) Top Level
• c) Lower Level
• d) All the options

Answer: Middle Level

Question67: Which is the Scope of Management

• a) All the options
• b) Production Management
• c) Financial Management
• d) Office Management

Answer: All the options

Question68: Management is both Science and Art. Science can be defined as _________

• a) Systematised body of knowledge
• b) Restricted Entry
• c) How to apply knowledge
• d) All the options

Answer: Systematised body of knowledge

Question69: Management is _________________

• a) Multi Dimensional
• b) Individual Activity
• c) Not required in small business firms
• d) Tangible force

Answer: Multi Dimensional

Question70: Organisational objective is not concerned with__________

• a) Supply of quality goods
• b) Survival
• c) Profit
• d) Growth

Answer: Supply of quality goods

Question71: Which is not a separate function of management out of the following

• a) Cooperating
• b) Planning
• c) Controlling
• d) Staffing

Answer: Cooperating

Question72: Why Management is considered as Multi dimensional function

• a) All the options
• b) Management of work
• c) Management of People
• d) Management of operation

Answer: All the options

Question73: Which are the functions performed by operational Level

• a) All the options
• b) Looking to safety of workers
• c) To boost morale of workers.
• d) Representing the problems of workers before the middle level management

Answer: All the options

Question74: Management is essential for successful running of an enterprise, How

• a) All the options
• b) Management increases efficiency
• c) Ensures optimum utilization of resources
• d) Management creates dynamic organization

Answer: All the options

Question75: Survival profit and growth are essential target of any business which objectives of management is referred here

• a) Organizational objectives
• b) Social objectives
• c) Personal objectives
• d) All the options

Answer: Organizational objectives

Question76: Superintendent are included at which level of management

• a) Supervisory Level
• b) Top level
• c) Middle level
• d) None of the options

Answer: Supervisory Level

Question77: Departmental managers are included at which level of management

• a) Middle level
• b) Top level
• c) Lower level
• d) None of the options

Answer: Middle level

Question78: In which functions of management, standards are compared with actual, deviations are find out and corrective steps are taken

• a) Controlling
• b) Production
• c) Finance
• d) Staffing

Answer: Controlling

Question79: Name the function of management which establishes organization structure and establishes authority and responsibility relations

• a) Organizing
• b) Finance
• c) Staffing
• d) Production

Answer: Organizing

Question80: Doing the task with minimum cost name the term associated with management

• a) Efficiency
• b) Staffing
• c) Production
• d) Finance

Answer: Efficiency

Question81: Which function of management bridges the gap between where we stand today and where we want to reach

• a) Planning
• b) Staffing
• c) Coordination
• d) Finance

Answer: Planning

 

NCERT MCQ ON Dissolution of Partnership Firm:

Question1: Dissolution of the firm means

• a) All of the options
• b) Business of the firms ends
• c) Assets Sold
• d) Liabilities paid

Answer: All of the options

Question2: The modes by which a firm may be dissolved are

• a) All of the options
• b) By Mutual agreement
• c) Compulsory Dissolution
• d) By Notice

Answer: All of the options

Question3: Why is realisation account prepared

• a) Closing the accounts
• b) Opening the account
• c) For profit sharing
• d) None of the options

Answer: Closing the accounts

Question4: How will goodwill account appearing in the balance sheet be treated in case of dissolution of the firm

• a) By transferring to realisation A/c (Dr. Side)
• b) By transferring to realisation A/c (Cr. Side)
• c) Both Side
• d) None of the options

Answer: By transferring to realisation A/c (Dr. Side)

Question5: How will you treat accumulated profit/losses at the time of dissolution of the firm

• a) Transferred to partners Capital A/C
• b) Transferred to partners Capital A/C
• c) Transferred to partners Salary A/C
• d) None of the options

Answer: Transferred to partners Capital A/C

Question6: what will be the accounting treatment of balance of the realisation account

• a) Transferred to partners Capital A/C in their profit sharing ratio
• b) Transferred to partners Capital A/C in their old ratio
• c) Transferred to partners Capital A/C in their new ratio
• d) None of the options

Answer: Transferred to partners Capital A/C in their profit sharing ratio

Question7: At the time of dissolution of the firm , if goodwill appears in the balance sheet , it is transferred to

• a) Realisation A/c
• b) Revaluation A/c
• c) Capital A/c
• d) Current Account

Answer: Realisation A/c

Question8: At the time of dissolution of the firm , the assets and liabilities appearing in the balance sheet are transferred to

• a) Realisation A/c
• b) Real Account
• c) Capital A/c
• d) None of the options

Answer: Realisation A/c

Question9: at the time of dissolution of firm, loan from partner is

• a) Not transferred to realisation A/c
• b) Transferred to realisation A/transferred to partners capital A/c
• c) None of the options

Answer: Not transferred to realisation A/c

Question10: Where it is agreed that a partner will be paid a lump sum amount for dissolution, if the payment is made by the firm, the payment is debited to

• a) Concerned partners capital Account
• b) Realisation Account
• c) All the partners capital Account
• d) None of the options

Answer: Concerned partners capital Account

Question11: Unrecorded assets when realised is credit to

• a) Realisation A/c
• b) Partners capital A/c
• c) Current Account
• d) None of the options

Answer: Realisation A/c

Question12: Unrecorded Liabilities when paid are debited to

• a) Realisation A/c
• b) Partners capital A/c
• c) Current Account
• d) None of the options

Answer: Realisation A/c

Question13: Why a new partner is admitted in the firm?

• a) For Increase the Capital of the firm.
• b) For Increase the Number of partners
• c) For Increase the Profit sharing Ratio
• d) None of the options

Answer: For Increase the Capital of the firm.

Question14: Which is the main right of a partner?

• a) Share the Profits of the firm.
• b) Stop other partners for drawings
• c) Share the old profits of the firm
• d) All of the options

Answer: Share the Profits of the firm.

Question15: According to Section 30 of Partnership Act 1932:

• a) A Minor can be admitted as a partner by the consent of all partners for the time being.
• b) New partner will bring capital and goodwill in cash
• c) New partner will inspect the books of accounts
• d) New partner is allowed to share old profits

Answer: A Minor can be admitted as a partner by the consent of all partners for the time being.

Question16: The incoming partner cannot acquire his share of profits :

• a) From the old partners in their new profit sharing ratio
• b) From the old partners in their old profit sharing ratio
• c) From one or more partners (not from all partners)
• d) From the old partners in some agreed ratio

Answer: From the old partners in their new profit sharing ratio

Question17: At the time of admission of a new partner, the new partner acquires his share from the old partners in the:

• a) Sacrificing ratio
• b) New Ratio
• c) New Ratio
• d) Old ratio

Answer: Sacrificing ratio

Question18: Sacrifice ratio is used only for

• a) Distribution of Premium for goodwill
• b) Revaluation profit
• c) Distribution of Reserve
• d) Revaluation of Assets

Answer: Distribution of Premium for goodwill

Question19: Section ____ of the Indian Partnership Act provides that a new partner shall not be inducted into a firm without the consent of all existing partners

• a) 31
• b) 35
• c) 40
• d) 45

Answer: 31

Question20: When a new partner is admitted he acquires his share of profits from the old partners , this will ____ the old partners shares in profits:

• a) Reduce
• b) Remain same
• c) No change
• d) Decrease

Answer: Reduce

Question21: Is admission of a new partner a reconstitution of partnership firm:

• a) Yes
• b) It is dissolution of firm
• c) It is called merger
• d) None of the options

Answer: Yes

Question22: Why new profit ratio is determined even for old partners?

• a) Change in the agreement among all partners
• b) No change in agreement
• c) Due to change in external environment
• d) All of the options

Answer: Change in the agreement among all partners

Question23: Sacrificing ratio is calculated for

• a) old partners
• b) new partners
• c) all partners (including new)
• d) None of the options

Answer: old partners

Question24: Revaluation Account is also known as ________

• a) Profit and Loss Adjustment Account
• b) Asset Account
• c) Profit and Loss Account
• d) None of the options

Answer: Profit and Loss Adjustment Account

Question25: At the time of increase in the value of assets which account should be debited while preparing Revaluation Account?

• a) Asset A/c
• b) Partners Capital A/c
• c) Revaluation Account
• d) None of the options

Answer: Asset A/c

Question26: Revaluation account is not prepared at the time of _________________

• a) Dissolution
• b) Admission
• c) Retirement
• d) All of the options

Answer: Dissolution

Question27: Which of the following is calculated at the time of Retirement of a Partner?

• a) Gaining Ratio
• b) Old Ratio
• c) Profit Sharing ratio
• d) All of the options

Answer: Gaining Ratio

Question28: When the New ratio is deducted with Old Ratio we get:

• a) Gaining Ratio
• b) Sacrifice only
• c) Profit Sharing ratio
• d) None of the options

Answer: Gaining Ratio

Question29: Gaining Ratio is Applicable for:

• a) Retiring partners share of goodwill only
• b) For the distribution of Reserves and profits
• c) For the Calculation of profit
• d) For Revaluation

Answer: Retiring partners share of goodwill only

Question30: Gaining ratio is the ratio in which continuing partners have ______ the share from the outgoing partner

• a) Acquired
• b) Sacrificed
• c) Both Acquired and Sacrificed
• d) None of the options

Answer: Acquired

Question31: Why there is need to calculate New profit share ratio

• a) After retirement of a partner, there will be change in the continuing partners ratio.
• b) After retirement of a partner, there is no change in the continuing partners ratio.
• c) To settle the loan amount due to outgoing partner
• d) All of the options

Answer: After retirement of a partner, there will be change in the continuing partners ratio.

Question32: Except outgoing partner, which other partner can be credited at the time of settlement of goodwill amount?

• a) Sacrificing partner
• b) Gaining partner
• c) All the partners
• d) None of the options

Answer: Sacrificing partner

Question33: Retirement or death of a partner will create a situation for the continuing partners, which is known as:

• a) Reconstitution of Firm
• b) Dissolution of firm
• c) Amalgamation
• d) None of the options

Answer: Reconstitution of Firm

Question34: New Ratio Old Ratio is called

• a) Gaining Ratio
• b) Profit Sharing ratio
• c) Sacrificing ratio
• d) None of the options

Answer: Gaining Ratio

Question35: How sacrificing ratio is differ from gaining ratio on the basis of mode of calculation

• a) calculated by taking difference between old and new ratio
• b) calculated by taking difference between new and old ratio
• c) calculated by taking difference between old and gaining ratio
• d) None of the options

Answer: calculated by taking difference between old and new ratio

Question36: Which of the following is effect of the retirement of a partner?

• a) share of remaining partners increases
• b) share of remaining partners remains same
• c) share of remaining partners decreases
• d) All of the options

Answer: share of remaining partners increases

Question37: Only in Balance Sheet At the time of retirement of a partner, general reserve given in the balance sheet should be credited to all the partners (including outgoing partner) in their old profit sharing ratio.

• a) Credit side of Capital account of all the partners
• b) Debit side of Capital account of all the partners
• c) Both
• d) None of the options

Answer: Credit side of Capital account of all the partners

Question38: Which of the following is prepared at the time of retirement of a partner?

• a) Revaluation Account
• b) Profit and Loss Suspense Account
• c) Both
• d) None of the options

Answer: Revaluation Account

Question39: Which of the following item is not shown in the credit side of deceased partners capital account?

• a) Share of loss
• b) Share of profit
• c) Revaluation profit
• d) All of the options

Answer: Share of loss

Question40: Bad debts recovered will be recorded in:

• a) Cr. Side of revaluation account
• b) Dr. Side of revaluation account
• c) Both
• d) None of the options

Answer: Cr. Side of revaluation account

Question41: At the time of dissolution of firm, “Loan of partners” (Loans given by partners to the firm) is paid out of the amount realised on sale of assets :

a) After making the payment of loans given by third party

b) After making the payment of balance of Capital Accounts of partners

c) After making the payment of above a) and b)

d) Before the payment of loans given by third party

Answer: A

Question42: At the time of dissolution of firm, at which stage the balance of partner’s capital accounts is paid?

a) After making the payment to third party’s loans

b) Before making the payment of partners in respect of their loans

c) After making the payment to third party for their loans as well as partners loans

d) None of the above.

 Answer: C

Question43: On firm’s dissolution, which one of the following account should be prepared at the last?

a) Realisation Account

b) Partner’s Capital Accounts

c) Cash Account

d) Partner’s Loan Account

Answer: C

Question44: On dissolution of a firm, a partner paid Rs.700 for firm’s realisation expenses. Which account will be debited?

a) Cash Account

b) Realisation Account

c) Capital Account of the Partner

d) Profit & Loss A/c

 Answer: B

Question45: On taking responsibility of payment of realisation expenses by a partner, the account credited will be :

a) Realisation Account

b) Cash Account

c) Capital Account of the Partnei

d) None of the Above

Answer: C

Question46: On dissolution of firm, loss calculate in realisation account is debited/credited to which account?

a) Cash Account (Credit)

b) Partners’ Capital Accounts (Debit)

c) Partners’ Capital Accounts (Credit)

d) Realisation Account (Debit)

Answer: B

Question47: On dissolution of a firm, an unrecorded furniture of the value of Rs.5,000 was taken up by a partner for Rs.4,300. Which Account will be credited and by how much amount? :

a) Cash Account by Rs.4,300

b) Realisation Account by Rs.700

c) Partner’s Capital Account by Rs.5,000

d) Realisation Account by Rs.4,300

 Answer: D

Question48: On the basis of following data, final payment to a partner on firm’s dissolution will be made :

Debit balance of Capital Account Rs. 14,000; Share of his profit on realisation Rs.43,000; Firm’s asset taken over by him for Rs. 17,000.

a) Rs.31,000

b) Rs.29,000

c) Rs. 12,000

d) Rs.60,000

Answer: C

Question49: On payment of expenses of dissolution, account will be debited :

a) Realisation Account

b) Cash Account

c) Profit & Loss Account

d) None of the Above

Answer: A

Question50: Investments valued Rs.2,00,000 were not shown in the books. One of the creditors took over these investments in full satisfaction of his debt of Rs.2,20,000. How much amount will be deducted from creditors?

a) Rs.20,000

b) Rs.2,20,000

c) Rs.4,20,000

d) Rs.2,00,000

Answer: B

Question:51 If creditors are Rs.25,000, capital is X 1,50,000 and cash balance is X 10,000, what will be the amount of sundry assets?

a) Rs. 1,75,000

b) X 1,85,000

c) X 1,65,000

d) X 1,40,000

Answer: C

Question52: If opening capitals of partners are A Rs.3,00,000, B Rs.2,00,000 and C Rs.1,00,000 and their drawings during the year are A Rs. 50,000, B Rs.40,000 and C Rs. 30,000 and creditors are Rs.60,000, what will be the amount of assets of the firm?

a) Rs.5,40,000

b) Rs.4,20,000

c) Rs.4,80,000

d) Rs.6,60,000

Answer: A

Question53: On dissolution of a firm, firm’s Balance Sheet total is Rs.77,000. On the assets side of the Balance Sheet items were shown preliminary expenses Rs.2,000; Profit & Loss Account (Debit) Balance Rs.4,000 and Cash Balance Rs. 1,800. Loss on realisation was Rs.6,300. Total assets (including cash balance) realised will be :

a) Rs.69,200

b) Rs.71,000

c) Rs.64,700

d) Rs.62,900

Answer: C

Question54: On dissolution of a firm, partners’ capital accounts balance was Rs.63,000; creditors balance was Rs. 12,000 and profit & loss account debit balance was Rs.6,000. Profit on realisation of assets was Rs.7,800. Total amount realised from assets was:

a) Rs.81,000

b) Rs.76,800

c) Rs.70,800

d) None

Answer: B

Question55: On dissolution of a firm, a partner took-over the investments of Rs. 15,000 at Rs. 19,000. By how much amount the Realisation Account will be credited?

a) Rs.4,000

b) Rs. 19,000

c) Nil

d) Rs.23,000

Answer: B

Question56: Anu, Bina and Charan are partners. The firm had given a loan of Rs. 20,000 to Bina. They decided to dissolve the firm. In the event of dissolution, the loan will be settled by

a) transferring it to debit side of Realisation Account.

b) transferring it to credit side of Realisation Account.

c) transferring it to debit side of Bina’s Capital Account.

d) Bina paying Anu and Charan privately.

Answer: C

Question57: Rohit, a partner is to carry out dissolution and he gets Rs. 50,000 as remuneration. Realisation Expenses were Rs. 25,000. Realisation Account will be debited with

a) Rs. 50,000.

b) Rs. 75,000.

c) Rs. 25,000.

d) Rs. 1,00,000.

Answer: B

Question58: The firm paid realisation expenses of Rs. 10,000 on behalf of Nihar,a partner with whom it was agreed at Rs. 25,000. Realisation Expenses came to Rs. 35,000. Realisation Account will be debited by

a) Rs. 10,000.

b) Rs. 35,000.

c) Rs. 25,000.

d) Rs. 70,000.

Answer: C

Question59: Amount received from sale of unrecorded asset at the time of dissolution ofthe firm is credited to

a) Partners’ Capital Accounts.

b) Profit and Loss Account.

c) Realisation Account.

d) Cash Account.

Answer: C

Question60: On dissolution, Goodwill Account is transferred to

a) In the Capital Accounts of Partners.

b) On the Credit of Cash Account.

c) On the Debit of Realisation Account

d) On the Credit of Realisation Account.

Answer: C

Question61: At the time of dissolution of partnership firm, Deferred Revenue Expenditure (Advertisement Expenditure) is transferred to

a) Capital Accounts of Partners.

b) Realisation Account.

c) Cash Account.

d) Loan by Partner Account.

Answer: A

Question62: Court can make an order to dissolve the firm when :

a) Some partner has become fully mad

b) Partnership deed is fully followed

c) Continued future profits are expected

d) Firm is running legal business

Answer: A

Question63: On dissolution of a firm, realisation account is debited with

a) All assets to be realised

b) All outside liabilities of the firm

c) Cash received on sale of assets

d) Any asset taken over by one of the partners

 Answer: A

Question64: On dissolution of a firm, out of the proceeds received from the sale of assets ………… wiltjbe paid first of all

a) Partner’s Capital

b) Partner’s Loan to Firm

c) Partner’s additional capital

d) Outside Creditors

Answer: D

Question65: On firm’s dissolution, on realisation of goodwill (which was shown in Balance Sheet) will be credited to :

a) Cash A/c

b) Realisation A/c

c) Profit & Loss A/c

d) None of the A/c

Answer: B

NCERT MCQ ON Reconstitution of a Partnership Firm — Retirement/Death of a Partner:

Question1: A, B and C are partners sharing profit or loss in the ratio of 2 : 3 : 4. A retires and after A’s retirement B and C agreed to share profit or loss in the ratio of 3 : 4 in future. Their gaining ratio will be :

(a) 2 : 3

(b) 4 : 3

(c) 3 :4

(d) 1 : 1

Answer: C

Question2: A, B and C were partners in a firm sharing profits and losses in the ratio of 2:2:1. The capital balance are Rs.50,000 for A, Rs.70,000 for B, Rs.35,000 for C. B decided to retire from the firm and balance in reserve on the date was Rs.25,000. If goodwill of the firm was valued at Rs.30,000 and profit on revaluation was Rs.7,500 then, what amount will be payable to B?

(a) Rs.70,820

(b) Rs.76,000

(c) Rs.75,000

(d) Rs.95,000

 Answer: D

Question3: P, Q and R are sharing profits and losses equally. R retires and the goodwill is appearing in the books at Rs.30,000. Goodwill of the firm is valued at Rs. 1,50,000. Calculate the net amount to be credited to R’s Capital A/c.

(a) Rs.60,000

(b) Rs.50,000

(c) Rs.40,000

(d) Rs. 10,000

Answer: C

Question4: A, B and C are partners sharing profits in the ratio of 5 : 2 : 1. If the new ratio on the retirement of A is 3 : 2, what will be the gaining ratio?

(a) 11: 14

(b) 3 : 2

(c) 2 : 3

(d) 14:11

Answer: D

Question5: P, Q and R are partners sharing profits in the ratio of 5 : 4 : 3. Q retires and P and R decide to share future profits equally. Gaining Ratio will be :

(a) 5 : 3

(b) 1 : 1

(c) 1 : 3

(d) 3 : 1

Answer: C

Question6: A, B and C are partners sharing profits in the ratio of 1/2 : 1/4 : 1/4. New ratio on the retirement of B will be :

(a) 2 : 4

(b) 1 : 2

(c) 2 : 1

(d) 1/4 : 1/2

Answer: C

Question7: What treatment is made of accumulated profits and losses on the retirement of a partner?

(a) Credited to all partner’s capital accounts in old ratio

(b) Debited to all partner’s capital accounts in old ratio.

(c) Credited to remaining partner’s capital accounts in new ratio.

(d) Credited to remaining partner’s capital accounts in gaining ratio.

 Answer: A

Question8: At the time of retirement of a partner, profit on revaluation will be credited to:

(a) Capital Account of retiring partner

(b) Capital Accounts of all partners in the old profit-sharing ratio.

(c) Capital Accounts of the remaining partners in their old profit-sharing ratio

(d) Capital Accounts of the remaining partners in their new profit-sharing ratio

Answer: B

Question9: What journal entry will be recorded for writing off the goodwill already existing in Balance Sheet at the time of retirement of a partner?

(a) Retiring Partner’s Capital A/c      Dr.

To Goodwill A/c

(b) All Partner’s Capital A/cs (including retiring)      Dr. (in old ratio)

To Goodwill A/c

(c) Remaining Partner’s Capital A/cs           Dr. (in gaining ratio)

To Goodwill A/c

(d) Remaining Partner’s Capital A/cs       Dr. (in new ratio)

To Goodwill A/c

Answer: B

Question10: Partner’s Capital Account is debited

(a) to record the General Reserve.

(b) to record the gain on revaluation.

(c) to record the Profit and Loss A/c (Dr.).

(d) to record the shortage of capital brought in.

 Answer: A

Question11: The amount due to deceased partner is paid to

(a) His Father.

(b) His Wife.

(c) His Legal Heir,

(d) Remaining Partners.

Answer: B

Question12: Gaining ratio is

(a) Old Profit-sharing Ratio – New Profit-sharing Ratio.

(b) Old Profit-sharing Ratio – New Profit-sharing Ratio.

(c) New Profit-sharing Ratio – Old Profit-sharing Ratio,

(d) New Profit-sharing Ratio – Old Profit-sharing Ratio.

Answer: B

Question13: On retirement of a partner, unrecorded assets are

(a) debited to Revaluation Account.

(b) credited to Revaluation Account.

(c) credited to Partner’s Capital Account.

(d) debited to Profit and Loss Appropriation Account.

Answer: B

Question14: At the time of retirement of a partner, profit (gain) on revaluation will be credited to the Capital Accounts of

(a) retiring partner.

(b) all partners in their old profit-sharing ratio.

(c) the remaining partners in their old profit-sharing ratio.

(d) the remaining partners in their new profit-sharing ratio.

 Answer: B

Question15: increase in liability at the time of retirement of a partner is

(a) credited to Revaluation Account.

(b) debited to Revaluation Account.

(c) debited to Profit and Loss Account.

(d) debited to Profit and Loss Appropriation Account

Answer: B

Question16: A, B and C are partners in a firm sharing profit/loss in the ratio of 2 : 2 : 1. On March 31, 2019, C died. Accounts are closed on Dec., 31 every year. The sales for the year 2018 was Rs.6,00,000 and the profits were Rs.60,000. The sales for the period from Jan. 1,2019 to March 31, 2019 were Rs.2,00,000. The share of deceased partner in the current year’s profits on the basis of sales is :

(a) Rs.20,000

(b) Rs.8,000

(c) Rs.3,000

(d) Rs.4,000

 Answer: D

Question17: A, B and C were partners sharing profits and losses in the ratio of 2 : 2 : 1. Books are closed on 31st March every year. C dies on 5th November, 2018. Under the partnership deed, the executors of the deceased partner are entitled to his share of profit to the date of death, calculated on the basis of last year’s profit. Profit for the year ended 31 st March, 2018 was Rs.2,40,000. C s share of profit will be :

(a) Rs.28,000

(b) Rs.32,000

(c) Rs.28,800

(d) Rs.48,000

Answer: C

Question18: P, Q and R were partners sharing profits in the ratio of their Capital contribution which were Rs.6,00,000; Rs.4,00,000 and Rs.5,00,000 respectively. Their books are closed on 31st March every year. P dies on 24th August, 2018. Under the partnership deed, deceased partner is entitled to his share of profit/loss to the date of death based on the average profits of preceding three years. Profits were 2015 Rs.50,000; 2016 Rs. 1,20,000 (Loss); 2017 Rs.30,000 and 2018 Rs.60,000. P’s share of profit/loss will be :

(a) Rs.3,200

(b) Rs.6,400

(c) Rs. 12,000

(d) Rs. 4,800

Answer: D

Question19: Retiring partner is compensated for parting with the firm’s future profits in favour of remaining partners. The remaining partners contribute to such compensation amount in :

(a) Gaining Ratio

(b) Capital Ratio

(c) Sacrificing Ratio

(d) Profit Sharing Ratio

Answer: A

Question20: ‘Gaining Ratio’ means :

(a) Old Ratio – New Ratio

(b) New Ratio – Old Ratio

(c) Old Ratio – Sacrificing Ratio

(d) New Ratio – Sacrificing Ratio

Answer: B

Question21: On 1st April, 2019 A, B and C were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. On this date B retires. The new profit sharing ratio of A and C will be 3 : 2. Gaining ratio will be :

(a) 1 :2

(b) 2 : 1

(c) 1 : 1

(d) 5 : 2

Answer: A

Question22: B, P and L sharing profits in the ratio 4:3:2. B retires, P and L decided to share profits in future in the ratio of 5 : 3. Gaining ratio will be :

(a)11:21

(b)21: 11

(c) 11 : 13

(d) 13 : 11

Answer: B

Question23: P, Q and R were partners sharing profits in the ratio 2 : 2 : 1. Q retires and the new profit sharing ratio of P and R will be 3 : 1. Gaining ratio will be :

(a) 1 : 7

(b) 2 : 1

(c) 1 : 2

(d) 7 : 1

Answer: D

Question24: Which of the following statement is correct?

(a) Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in sacrificing ratio.

(b) Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in gaining ratio.

(c) Goodwill at the time of retirement of a partner is debited to remaining Partners’ Capital Accounts in sacrificing ratio.

(d) Goodwill at the time of retirement of a partner to the extent of retiring Partner’s Share is debited to remaining Partners’ Capital Accounts in gaining ratio.

Answer: D

Question25: Revaluation Account is prepared to give effect to

(a) change in value of assets alone.

(b) change in value of liabilities alone.

(c) undistributed profits and losses.

(d) change in the values of assets and liabilities.

Answer: D

Question26: On the retirement of Hari from the firm of Hari, Ram and Sharma, the Balance Sheet showed a debit balance of Rs. 12,000 in the Profit and Loss Account. For calculating the amount payable to Hari, this balance will be transferred

(a) to the credit of the Capital Accounts of Hari, Ram and Sharma equally.

(b) to the debit of the Capital Accounts of Hari, Ram and Sharma equally.

(c) to the debit of the Capital Accounts of Ram and Sharma equally.

(d) to the credit of the Capital Accounts of Ram and Sharma equally.

 Answer: B

Question27: A, B and C are partners sharing profits in the ratio of 3:2:1, C retired. New profit-sharing ratio will be

(a) 1:3.

(b) 3:2.

(c) 1:1.

(d) None of these.

Answer: B

Question28: A, S and C are partners sharing profits in the ratio of 3: 2:1, C retired, and new profit-sharing ratio is 3:2. Gaining ratio will be

(a) 3:2.

(b) 1:2.

(c) 2:1.

(d) None of these.

Answer: A

Question29: A, B and C are equal partners in a firm. B retires and the remaining partners decide to share the profits of the new firm in the ratio of 5 : 4. Gaining ratio will be :

(a) 1 :1

(b) 1 : 2

(c) 2 : 1

(d) 5 : 4

Answer: C

Question30: A, B and C are partners sharing profit or loss in the ratio of 3 : 2 : 1. B retires and after B’s retirement A and C agreed to share profit or loss in the ratio of 3 : 2 in future. Their gaining ratio will be :

(a) 3 : 1

(b) 1 : 3

(c) 3:7

(d) None of the above

Answer: C

Question31: A, B and C are partners sharing profit or loss in the ratio of 4 : 3 : 2. C retires and after C’s retirement A and B agreed to share profit or loss in the ratio of 4 : 3 in future. Their gaining ratio will be :

(a) 3 : 2

(b) 4 : 3

(c) 3 : 4

(d) 1 : 1

Answer: B

Question32: A, B and C were partners sharing profits in the ratio of 4:5:3. C died and remaining partners decided to share profits in the ratio of 7:8, the gaining ratio will be .

(a) 8:7.

(b) 4:5.

(c) 1:1.

(d) 2:1.

 Answer: A

Question33: A, B and C were partners, sharing profit and losses in the ratio of 3:2:1. B died, the firm decided to value the goodwill on the basis of 3 years’ purchase of average of 5 years profits. The profits of the firm for the last five years before charging interest on capital were Rs. 11,000, Rs. 9,000, Rs. 11,000, Rs. 7,000 and Rs. 8,000. The capital of the firm stood at Rs. 50,000 and interest rate is 8%. Value of goodwill will be

(a) Rs. 10,000.

(b) Rs. 15,600.

(c) Rs. 21,000.

(d) Rs. 11,000.

Answer: B

Question34: A, B and C are partners sharing profits in the ratio of 1/4 : 3/10 : 9/20. The New ratio on the retirement of C will be :

(a) 6 : 5

(b) 5 : 6

(c) 4 : 3

(d) 4 : 10

Answer: B

Question35: X, y and Z have been sharing profits in the ratio of 4 : 2 : 1 Z retires. X and Y take Z’s share equally. New profit sharing ratio will be :

(a) 5 : 2

(b) 5 : 3

(c) 9 : 5

(d) 4 : 2

Answer: C

Question36: P, Q and R have been sharing profits and losses in the ratio of 5 : 3 : 2. Q retires. His share is taken by P and R in the ratio of 2 : 1. New profit sharing ratio will be:

(a) 6 : 4

(b) 7 : 3

(c) 7 : 2

(d) 6 : 3

Answer: B

Question37: X, Y and Z were partners sharing profits in the ratio of 2:2:1. Y died on 30th June, 2020 and profit for the accounting year ended 31st March, 2020 was Rs. 36,000. If profit share of deceased partner is to be calculated on the basis of previous year’s profit, amount of profit credited to Y’s Capital Account will be

(a) Rs. 3,000.

(b) Rs. 2,400.

(c) Rs. 3,600.

(d) Rs. 2,800.

 Answer: C

Question38: Choose the odd one:

(a) Revaluation Account

(b) Realisation of assets.

(c) Adjustment of goodwill.

(d) Gaining ratio.

Answer: B

Question39: The Partnership Deed does not have a clause on rate of interest to be paid on amount due to heirs of deceased partner. At what rate interest on the outstanding amount shall be payable?

(a) At the rate at which the banks grant loan.

(b) At the rate of interest provided ¡n the Partnership Act, 1932.

(c) At the rate of interest demanded by the heirs of the deceased partner.

(d) 8% p.a.

Answer: B

Question40: On the death of a partner, his share in the profits of the firm till the date of his death is transferred to the

(a) Debit of Profit and Loss Account

(b) Credit of Profit and Loss Account.

(c) Debit of Profit and Loss Suspense Account.

(d) Credit of Profit and Loss Suspense Account

 Answer: C

Question41: A, Band Care partners sharing profit and losses in the ratio of 2:2:1.B died, at that time goodwill of the firm valued at Rs. 30,000. What contribution has to be made by A and C in order to pay B’s Executor?

(a) Rs. 20,000 and Rs. 10,000.

(b) Rs. 15,000 and Rs. 15,000.

(c) Rs. 8,000 and Rs. 4,000.

(d) Rs. 6,000 and Rs. 6,000.

 Answer: C

Question42: A, B and Care partners in a firm, sharing profits in the ration of 2:2:1.Their Capital Accounts stood as Rs. 50,000, Rs. 50,000 and Rs. 25,000 respectively. B died, and balance in the reserve on that date was Rs. 15,000. If goodwill of the firm is Rs. 30,000 and profit on revaluation is Rs. 7,050, what amount will be transferred to B’s Executor’s Account?

(a) Rs. 50,820.

(b) Rs. 70,820.

(c) Rs. 8,820.

(d) Rs. 60,820.

Answer: B

Question43: A, B and C are equal partners. C retires. He surrenders 3/5th of his share in favour of A and 2/5th in favour of B. New ratio will be :

(a) 3 : 2

(b) 8 : 7

(c) 7:8

(d) 2 : 3

Answer: B

Question44: P, Q and R are partners sharing profits in the ratio of 4 : 3 : 2.Q retires and his share was taken up by P and R in the ratio 3 : 2. New profit sharing ratio will be :

(a) 16 : 29

(b) 29 : 16

(c) 3 : 2

(d) 2 : 3

 Answer: B

Question45: L, P and G are three partners sharing profits in the ratio 15 : 9 : 8. G retires. L and P decided to share profits in equal ratio. Gaining ratio will be :

(a) 15: 9

(b) 9:15

(c) 7 : 1

(d) 1 : 7

Answer: D

Question46: On retirement of a partner, goodwill will be credited to the Capital Account of:

(a) Retiring Partner

(b) Remaining Partners

(c) All Partners

(d) None of the Above

Answer: A

Question47: On the death of a partner, the amount due to him will be credited to :

(a) All partner’s Capital Accounts

(b) Remaining partner’s Capital Accounts

(c) His Executor’s Account

(d) Governments’ Revenue Account

 Answer: C

NCERT MCQ ON Reconstitution of a Partnership Firm — Admission of a Partner :

Question1: Sacrificing ratio is ascertained at the time of

• a) Admission of a new partner
• b) Death of partner
• c) Retirement of partner
• d) None of the options

Answer: Admission of a new partner

Question2: share of goodwill brought in by new partner in cash is shared by old partners in

• a) Sacrificing ration
• b) Old ratio
• c) New ratio
• d) All of the options

Answer: Sacrificing ration

Question3: Excess of the credit side over the debit side of revaluation account

• a) Profit
• b) Loss
• c) Gain
• d) Expense

Answer: Profit

Question4: Balance sheet prepared after new partnership agreement, assets and liabilities are recorded at

• a) Revalued figure
• b) Original value
• c) At realisable value
• d) None of the options

Answer: Revalued figure

Question5: Share of goodwill brought in by new partner in cash is called

• a) Premium
• b) Profit
• c) Assets
• d) Liabilities

Answer: Premium

Question6: Profit or loss on revaluation is borne by

• a) Old Partners
• b) New partners
• c) All partners
• d) All of the options

Answer: Old Partners

Question:7 When the new partners pays for goodwill in cash, the amount should be debited in the firms book to

• a) Cash A/c
• b) Goodwill A/c
• c) Capital Account
• d) All of the options

Answer: Cash A/c

Question8: When is brought in cash by the new partner, then the method is known as

• a) Premium Method
• b) Revaluation Method
• c) Memorandum Revaluation Method
• d) None of the options

Answer: Premium Method

Question9: On the admission of a new partner, if goodwill account is to be raised then this should be debited to

• a) Goodwill Account
• b) Old Partners capital Account
• c) Profit & Loss Appropriation A/c
• d) None of the options

Answer: Goodwill Account

Question10: When we use super profit Method for goodwill Valuation

• a) Firm earns higher Profit
• b) Firm earns normal Profit
• c) Average profit
• d) None of the options

Answer: firm earns higher Profit 

Question11: Any change in agreement of partnership is called

• a) Reconstitution of partnership firm
• b) Dissolution of partnership firm
• c) Reconstitution of partners
• d) None of the options

Answer: Reconstitution of partnership firm

Question12: Which circumstances a partnership firm may be reconstituted

• a) All of the options
• b) Admission of a partner
• c) Retirement/Death of a partner
• d) Change in Profit Sharing Ratio

Answer: All of the options

Question13: At the time of admission of a new partner, Which adjustments are required

• a) All of the options
• b) Accounting treatment of Goodwill.
• c) Accounting treatment of accumulated profit.
• d) Calculation of new profit sharing ratio and sacrificing ratio.

Answer: All of the options

Question14: At the time of admission of a new partner, Which adjustments are required

• a) Calculation of new profit sharing ratio and sacrificing ratio.
• b) Accounting treatment of Goodwill.
• c) Accounting treatment of accumulated profit.
• d) All of the options

Answer: Calculation of new profit sharing ratio and sacrificing ratio.

Question15: Profit Sharing ratio is the ration in which the partners have agreed to share

• a) Profit & Losses
• b) Profit only
• c) Losses only
• d) None of the options

Answer: Profit & Losses

Question16: In guarantee of profit, given to a partner

• a) Minimum Guarantee profit
• b) Equal Profit
• c) 0.25
• d) None of the options

Answer: Minimum Guarantee profit

Question17: In the partnership, every partner has the right to

• a) Both
• b) Consulted about the business
• c) Participate in management
• d) None of the options

Answer: Both

Question18: Which clause should be mentioned in partnership deed

• a) All of the options
• b) Description of Firms
• c) Nature of business
• d) Description of partners

Answer: All of the options

Question19: in the absence of partnership deed, Interest on Capital and drawing to be

• a) Not paid
• b) Paid
• c) 6% p.a
• d) None of the options

Answer: Not paid

Question20: a partner may retire from firm

• a) Both
• b) With an Express agreement among the partners
• c) With the consent of all the partners
• d) None of the options

Answer: Both

Question21: The interest on capital account of partners under the fluctuating capital account method credited to

• a) Partners capital account
• b) Interest account
• c) Profit & Loss A/c
• d) None of the options

Answer: Partners capital account

Question22: In the absence of agreement to the contrary , partners share profit and losses in the

• a) Equal ratio
• b) Rate of average capital
• c) 0.25
• d) None of the options

Answer: Equal ratio

Question23: Partners Salary is debited to

• a) Profit & loss Appropriation A/c
• b) Profit & loss A/c
• c) Revaluation A/c
• d) None of the options

Answer: Profit & loss Appropriation A/c

Question24: Which items may appear on the credit side of the partners current account

• a) Interest on Capital
• b) Salary
• c) Commission
• d) All of the options

Answer: Interest on Capital

Question25: If the partners capital account are fixed , Commission payable to partner will show

• a) Cr. Side of current A/C
• b) Dr. Side of current A/C
• c) Both
• d) None of the options

Answer: Cr. Side of current A/C

Question26: The firm number of partner increase

• a) Admission of a new partner
• b) Dissolution of a new partner
• c) Retirement of new partner
• d) Death of new partner

Answer: Admission of a new partner

Question27: If partners capitals are fixed, premium for goodwill will be:

• a) Credited to the current A/cs of the Sacrificing partners
• b) Credited to the Partners Capital A/cs
• c) Credited to the P/L Adjustment A/c
• d) None of the options

Answer: Credited to the current A/cs of the Sacrificing partners

Question28: When the incoming partner pays his share of goodwill privately to the sacrificing partner outside the business Which account should be debited in the books of account

• a) No entry should be recorded
• b) Premium for goodwill A/c
• c) Partners capital A/c
• d) None of the options

Answer: No entry should be recorded

Question29: If a new partner is admitted during the year the profits for the year should be divided between ____ period on an agreed basis

• a) Pre-admission and post admission
• b) Old profit sharing
• c) Equal
• d) None of the options

Answer: Pre-admission and post admission

Question30: Which of following account is prepared at the time of admission of a new partner?

• a) Revaluation Account
• b) Realisation Account
• c) Profit & loss A/c
• d) None of the options

Answer: Revaluation Account 

Question31: A and B are partners sharing profits and losses in the ratio of 7 : 5. They agree to admit C, their manager, into partnership who is to get l/6th share in the profits. He acquires this share as l/24th from A and l/8th from B. The new profit sharing ratio will be :

(a) 13:7:4

(b) 7 : 13 : 4

(c) 7 : 5 : 6

(d) 5 ; 7 : 6

 Answer: A

Question32: A and B share profits in the ratio of 3 : 2. They agreed to admit C on the condition that A will sacrifice —th of his share of profit in favour of C and B will sacrifice yrth of his profits in favour of C. The new profit sharing ratio will be :

(a) 12 : 9 : 4

(b) 3 : 2 : 4

(c) 66:48: 11

(d) 48: 66: 11

 Answer: C

Question33: A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is admitted. A surrenders 1/15th share of his profit in favour of C and B surrenders 2/15th of his share in favour of C. The new ratio will be :

(a) 8 : 4 : 3

(b) 42 : 26 : 7

(c) 4 : 8 : 3

(d) 26 : 42 : 7

Answer: B

Question34: A and B are partners sharing profits and losses as 2 : 1. C is admitted and profit sharing ratio becomes 4:3:2. Goodwill is valued at Rs.94,500. C brings required goodwill in cash. Goodwill amount will be Credited to :

(a) A 114,000 and B Rs. 7,000

(b) A Rs. 12,000 and B Rs. 9,000

(c) A Rs.21,000

(d) A Rs.94,500

Answer: C

Question35: X and Y are partners sharing profits and losses in the ratio of 3 : 2. They admit Z into partnership with |th share in profits which he acquires equally from X and Y. Z brings in Rs.40,000 as goodwill in cash. Goodwill amount will be credited to :

(a) X Rs.20,000; Y Rs.20,000

(b) X Rs.25,000; Y Rs.15,000

(c) X Rs.24,000; Y Rs. 16,000

(d) X Rs. 4,000; Y Rs. 4,000

Answer: A

Question36: 4 and 5 are partners sharing profits in the ratio of 7 : 5. C is admitted into the partnership for 1/6th share which he acquires 1/24th from A and 1/8fh from B. C does not pay anything for his share of goodwill. On C’s admission firm’s goodwill was valued at Rs. 1,80,000. Credit will be given to :

(a) A Rs. 22,500; B Rs. 7,500

(b) A Rs. 7,500; B Rs. 22,500

(c) A Rs. 45,000; B Rs. 1,35,000

(d) A Rs.1,35,000; B Rs. 45,000

Answer: B

Question37: X and Y are partners in a firm sharing profits in the ratio of 5 : 3. They admitted Z as a new partner. The new profit sharing ratio will be 4 : 3 : 2. The firm’s goodwill on Z’s admission was valued at Rs. 1,26,000. But Z could not bring any amount of goodwill in Cash. Credit will be given to :

(a) X Rs. 17,500; Y Rs.10,500

(b) X Rs. 16,000; Y Rs.12,000

(c) X Rs. 22,750; Y Rs. 5,250

(d) X Rs. 1,02,375; Y Rs.23,625

 Answer: C

Question38: A and B are partners sharing profits in the ratio of 3 : 2. They admit C into the partnership with 1/4th share in future profits. The new profit sharing ratio is 5 : 4 : 3. The firm’s goodwill on C’s admission was valued at Rs. 1,44,000. But C could not bring any amount for goodwill in Cash. Credit will be given to :

(a) A Rs. 80,000; B Rs.64,000

(b) A Rs. 20,000; B Rs. 16,000

(c) A Rs. 1,05,600; B Rs.38,400

(d) A Rs. 26,400; B Rs. 9,600

Answer: D

Questio39: A and B are sharing profits and losses in the ratio of 3: 2. They admit C as a partner and give him 2/10th share in the profits. The new profit-sharing ratio will be

(a) 12:8:5.

(b) 3:2:2.

(c) 3:2:5.

(d) 2:1:2.

 Answer: A

Question40: A and B are sharing profits and losses in the ratio of 5: 3. They admit C as a partner and give him 3/10th share of the profits. This share he will get 1 /5th from A and 1/10th from B. The new profit-sharing ratio will be

(a) 5:6:3.

(b) 2:4:6.

(c) 17:11:12.

(d) 18:24:38.

 Answer: C

Question41: Profit or Loss on revaluation of assets and reassessment of liabilities is transferred to Partners’ Capital Accounts in their

(a) Capital Ratio.

(b) Equal Ratio.

(c) Old Profit-sharing Ratio.

(d) Gaining Ratio.

Answer: C

Question42: Goodwill of a firm of A and B is valued at Rs.30,000. It is appearing in the books at Rs. 12,000. C is admitted for 1/4 share. What amount he is supposed to bring for goodwill?

(a) Rs.3,000

(b) Rs.4,500

(c) Rs.7,500

(d) Rs. 10,500

Answer: C

Question43: P and Q are partners in a firm having capitals of Rs. 15,000 each. R is admitted for 1/3rd share for which he has to bring Rs. 20,000 for his share of capital. The amount of goodwill will be

(a) Rs. 8,000.

(b) Rs. 10,000.

(c) Rs. 9,000.

(d) Rs. 11,000.

 Answer: B

Question44: When the new partner brings cash for goodwill, the amount is credited to

(a) Revaluation Account.

(b) Cash Account.

(c) Premium for Goodwill Account.

(d) Realisation Account.

Answer: C

Question45: At the time of admission, if the profit-sharing ratio among the old partners does not change then sacrificing ratio will be

(a) equal.

(b) according to the contribution of capital.

(c) their old profit-sharing ratio.

(d) according to new partner.

Answer: C

Question46: If the new partner brings his share of goodwill in cash, it will be shared by old partners in :

(a) Ratio of sacrifice

(b) Old profit-sharing ratio

(c) New profit-sharing ratio

(d) In Capital ratio

Answer: A

Question46: A and B share profits and losses equally. They have Rs.20,000 each as capital. They admit C as equal partner and goodwill was valued at Rs.30,000. C is to bring in Rs.30,000 as his capital and necessary cash towards his share of goodwill. Goodwill Account will not remain open in books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital accounts.

(a) Rs.31,500; Rs.31,500; Rs.30,000

(b) Rs.31,500; Rs.31,500; Rs.20,000

(c) Rs.26,500; Rs.26,500; Rs.30,000

(d) Rs.20,000; Rs.20,000; Rs.30,000

 Answer: A

Question47: In the absence of an express agreement as to who will contribute to new partners’ share of profit, it is implied that the old partners will contribute :

(a) Equally

(b) In the ratio of their capitals

(c) In their old profit-sharing ratio

(d) In the gaining ratio

Answer: C

Question48: A and B are partners sharing profit in the ratio of 3 : 2. They admit C as a partner by giving him 1/3 share in future profits. The new ratio will be :

(a) 12: 8:5

(b) 8: 12 : 5

(c) 5:5:12

(d) None of the Above

 Answer: D

Question49: X and Y are partners sharing profit in the ratio of 3 : 2. Z was admitted with 1/4 share in profits which he acquires equally from X and Y. The new ratio will be:

(a) 9:6: 5

(b) 19: 11: 10

(c) 3 : 3 : 2

(d) 3 : 2 : 4

 Answer: B

Question50: A and B share profits in the ratio of 2 : 1. C is admitted with 1/4 share in profits. C acquires 3/4 of his share from A and 1/4 of his share from B. The new ratio will be:

(a) 2 : 1 : 1

(b) 23 : 13 : 12

(c) 3:1:1

(d) 13 : 23 : 12

Answer: B

Question51: A and B are partners in a firm sharing profits in the ratio of 2 : 1. C is admitted as a partner. A and B surrender 1/2 of their respective share in favour of C. C is to bring his share of premium for goodwill in cash. The goodwill of the firm is estimated at Rs. 60,000. Credit will be given to :

(a) A Rs. 15,000; B Rs. 15,000

(b) A Rs.40,000; B Rs. 20,000

(c) A Rs.30,000; B Rs. 30,000

(d) A Rs.20,000; B Rs. 10,000

 Answer: D

Question52: P and S are partners sharing profits in the ratio of 3 : 2. R is admitted with 1/5th share and he brings in Rs.84,000 as his share of goodwill which is Credited to the Capital Accounts of P and S respectively with Rs.63,000 and Rs.21,000. New profit sharing ratio will be :

(a) 3 : 1 : 5

(b) 9 : 7 : 4

(c) 3 : 2 : 5

(d) 7 : 9 : 4

Answer: B

Question53: Partners A, B and C share the profits of a business in the ratio of 3 : 2 : 1 respectively. They admit D who brings in Rs.60,000 for his share of goodwill. A, B, C and D decide to share the profits respectively in the ratio of 5 : 3 : 2 : 2. Credit will be given to :

(a) A Rs. 6,000; B Rs.6,000

(b) A Rs.30,000; B Rs. 18,000; C Rs. 12,000

(c) A Rs.30,000; B Rs.20,000; C Rs. 10,000

(d) A Rs.30,000; B Rs.30,000

Answer: D

Question54: A new partner may be admitted into a partnership ;

(a) With the consent of any one partner

(b) With the consent of majority of partners

(c) With the consent of all old partners

(d) With the consent of 2/3rd of old partners

 Answer: C

Question55: On the admission of a new partner :

(a) Old firm is dissolved .

(b) Old partnership is dissolved

(c) Both old partnership and firm are dissolved

(d) Neither partnership nor firm is dissolved

Answer: C

Question56: B and N are partners in a firm sharing profits in the ratio of 3 : 2. They admit S as a partner for l/4th share in the profits. S acquires his share from B and N in the ratio of 2 : 1. The new profit-sharing ratio will be :

(a) 2:1:4

(b) 19: 26: 15

(c) 3:2:4

(d) 26: 19: 15

Answer: D

Question57: Unrecorded assets or liabilities are transferred to

(a) Partners’ Capital Accounts.

(b) Revaluation Account.

(c) Profit and Loss Account.

(d) Partners’ Current Accounts.

 Answer: B

Question58: X and Y are partners sharing profits in the ratio of 3: 2, and capitals as Rs. 100,000 and Rs. 50,000 respectively. Z is admitted for 1/5th share in profits. The amount Z will contribute as capital will be

(a) Rs. 50,000.

(b) Rs. 35,000.

(c) Rs. 37,500.

(d) Rs. 60,000.

 Answer: C

Question59: X and Y are partners sharing profits and losses in the ratio of 3:2. Z was admitted for the 1/5th share and for this he brings Rs. 150,000, as capital. If capitals are to be proportionate to profit-sharing ratio, the respective capitals of the partners will be

(a) Rs. 3,00,000: Rs. 3,00,000: Rs.1,50,000.

(b) Rs. 3,60,000: Rs. 2,40,000: Rs. 1,50,000.

(c) Rs. 1,50,000: Rs.’ 1,50,000: Rs. 1,50,000.

(d) Rs. 1,50,000: Rs. 2,00,000: Rs. 4,00,000.

Answer: B

Question60: Revaluation Account or Profit and Loss Adjustment A/c is a

(a) Real Account

(b) Personal Account

(c) Nominal Account

(d) Asset Account

 Answer: C

Question61: In case of admission of a partner, the entry for unrecorded investments will be:

(a) Debit Partners Capital A/cs and Credit Investments A/c

(b) Debit Revaluation A/c and Credit Investment A/c

(c) Debit Investment A/c and Credit Revaluation A/c

(d) None of the above

 Answer: C

Question62: When the balance sheet is prepared after the new partnership agreement, the assets and liabilities are recorded at:

(a) Historical cost

(b) Current cost

(c) Realisable value

(d) Revalued figures

Answer: D

NCERT MCQ ON Accounting for Partnership: Basic Concepts:

Question1: Goodwill can be classified into which categories

• a) Purchased Goodwill
• b) Self generated Goodwill
• c) Both
• d) None of the options

Answer: Purchased Goodwill

Question2: Super profit method is for goodwill valuation

• a) Super profit x No. of years
• b) Average profit x No. of years
• c) Weighted Average profit x No. of years
• d) None of the options

Answer: Super profit x No. of years

Question3: Purchased Goodwill is

• a) Assets-Liabilities
• b) Assets-Profit
• c) Both
• d) None of the options

Answer: Assets-Liabilities

Question4: If the amount of super profit is negative , what does it indicate?

• a) There is no goodwill
• b) There is average goodwill
• c) Both
• d) None of the options

Answer: There is no goodwill

Question5: Which goodwill is recorded in books of accounts ?

• a) Purchased Goodwill
• b) Self -generated Goodwill
• c) Both
• d) None of the options

Answer: Purchased Goodwill

Question6: When does need valuation of goodwill

• a) Both
• b) On Retirement or death of a partner
• c) Admission of partner
• d) None of the options

Answer: Both

Question7: Which Factors affecting the value of Goodwill :

• a) All of the options
• b) Quality of products
• c) Location of business
• d) Efficient management

Answer: All of the options

Question8: Which Methods of valuation of goodwill

• a) All of the options
• b) Super profit method
• c) Capitalization method
• d) Average profit method

Answer: All of the options

Question9: When sacrificing ratio is used

• a) Admission of New partner
• b) dissolution of partnership agreement
• c) dissolution of partnership firm
• d) None of the options

Answer: Admission of New partner

Question10: In which ratio the profit or loss on revaluation is shared by the old partners

• a) Old Profit sharing ratio
• b) New Profit sharing ratio
• c) Equally
• d) None of the options

Answer: Old Profit sharing ratio 

 

Question11: Old profit sharing ratio- new profit sharing ratio is equal to

• a) Sacrificing Ratio
• b) Gaining Ratio
• c) Profit sharing Ratio
• d) None of the options

Answer: Sacrificing Ratio

Question12: A new Partner can be admitted in the firm, When

• a) All partners Agreed
• b) Some Partners Agreed
• c) Dormant Partner agreed
• d) None of the options

Answer: All partners Agreed

Question13: When a partner does bring cash for goodwill, an account is raised at

• a) New Profit sharing
• b) Old Profit sharing Value
• c) Profit Sharing
• d) None of the options

Answer: New Profit sharing

Question14: When partners decide to show assets and liabilities at old value, Which accounts is opened

• a) Memorandum Revaluation A/C
• b) Capital A/c
• c) Profit & Loss Appropriation A/c
• d) None of the options

Answer: Memorandum Revaluation A/C

Question15: When Goodwill account is raised , then credit is given to old partners capital Account in

• a) New Profit sharing Ratio
• b) Old Profit sharing ratio
• c) Gaining Ratio
• d) None of the options

Answer: New Profit sharing Ratio

Question16: The valuation of goodwill is not necessary in sole trading

• a) On closing the firm
• b) On making a partner
• c) On selling the firm
• d) None of the options

Answer: On closing the firm

Question17: The profit of the last three years are 42000, 39000, 45000 Rs., Value of goodwill at two years purchase of the average profit will be

• a) 84000
• b) 42000
• c) 126000
• d) None of the options

Answer: 84000

Question18: find the goodwill of firm using capitalisation method, the total capital employed in the firm 80000 Rs., reasonable rate of return 15%, Profit for the year 120000 Rs.

• a) 720000
• b) 820000
• c) 120000
• d) None of the options

Answer: 720000

Question19: What do you mean by super profit

• a) Average profit – Normal profit
• b) Total Profit/No. of years
• c) Average profit + Normal profit
• d) None of the options

Answer: Average profit – Normal profit

Question20: The excess of average profit over the normal profit is called

• a) Super Profit
• b) Fixed Profit
• c) Abnormal Profit
• d) Net profit

Answer: Super Profit

Question21: Weighted Average method of calculating goodwill is used when

• a) Both
• b) Profit has increasing trend
• c) Profit has decreasing trend
• d) None of the options

Answer: Both

Question22: The monetary value of reputation of the business is called

• a) Goodwill
• b) Super profit
• c) Surplus
• d) None of the options

Answer: Goodwill

Question23: When the value of goodwill is not given at the time of admission of a new partner, it IS inferred from the capital of the new firm and profit sharing ratio. This concept is called

• a) Hidden Goodwill
• b) Purchased Goodwill
• c) Average Goodwill
• d) None of the options

Answer: Hidden Goodwill

Question24: Why new partner needs to bring goodwill?

• a) To compensate the sacrificing partners
• b) For Revaluation Account
• c) For Revaluation Assets
• d) All of the options

Answer: To compensate the sacrificing partners

Question25: The balance of revaluation A/c is transferred to old partners capital account in their

• a) Old Profit sharing ratio
• b) New profit sharing ratio
• c) Equal ratio
• d) None of the options

Answer: Old Profit sharing ratio

Question26: Interest on partners capital is calculated on

• a) Capital in the beginning
• b) Capital in the end
• c) Average capital
• d) None of the options

Answer: Capital in the beginning

Question27: Account is prepared only one time in during the life of firm

• a) Realisation Account
• b) Revaluation A/c
• c) Profit & loss A/c
• d) None of the options

Answer: Realisation Account

Question28: Revaluation account is prepared on

• a) Reconstitution of partnership firm.
• b) Dissolution of partnership firm
• c) Both
• d) None of the options

Answer: Reconstitution of partnership firm.

Question29: Goodwill can be classified into which categories

• a) Purchased Goodwill
• b) Self generated Goodwill
• c) Both
• d) None of the options

Answer: Purchased Goodwill

Question30: When a partner does bring cash for goodwill, an account is raised at

• a) New Profit sharing
• b) Old Profit sharing Value
• c) Profit Sharing
• d) None of the options

Answer: New Profit sharing

 

NCERT MCQ ON Accounting for Not-for-Profit Organisation:

Question1. Which of the following is an example of not-profit-organisation:

(a) Public hospitals 

(b) Corporations 

(c) Audit firm 

(d) Insurance companies.

Ans:  A

Question2. <100000 received as annual subscription. Out of this <20000 is of pervious year whereas <10000 is receivable at the end of the current year. Amount of subscription that will be show in income and expenditure account will be

(a) <1, 00,000 

(b) <90, 000 

(c) <1, 20,000 

(d) <80, 000

Ans:  B

Question3. Surplus of Not-for –Profit organisations

(a) Distributed among the members

(b) Is not distributed among the members

(c) May be or May not be distributed among the members

(d) Is debited to General fund.

Ans: B

Question4. If Life Membership fees of <5000 wrongly treated as revenue receipt then effect of this error on surplus and closing balance of capital fund will be

(a) Capital fund increased and surplus increased by<5000

(b) Capita fund decreased and surplus increased by<5000

(c) No effect on capital fund but surplus increased by<5000

(d) Capital fund decreased by <5000 but no effect on surplus.

Ans:  C

Question5. Income and Expenditure Account is based on

(a) Cash Basis of Accounting.

(b) Accrual Basis of Accounting.

(c) Mixed Basis of Accounting.

(d) Management Accounting.

Ans: B

Question6. Delhi cricket club gives the following information. Opening Stadium Fund is <10, 00,000. Donation for Stadium fund received during the year Rs.500000. Income from Stadium Fund Investment Rs.100000. Amount spent during the year on construction of stadium is Rs.600000. Identify which of the following statement is correct in respect to preparation of Balance sheet.

(a) Rs.600000 shown on the asset side of the Balance sheet.

(b) Rs.600000 shown on the asset side of the Balance sheet Also Rs.600000 is transferred to the credit of Income and Expenditure account,

(c) Rs.600000 shown on the asset side of the Balance sheet Also Rs.600000 is transferred from Stadium fund to General fund in the Balance sheet.

(d) Rs.600000 is shown as an expense in the Income and Expenditure account and Rs.600000 is transferred to the credit pf Income and Expenditure account from Stadium fund.

Ans: C

Question7. Subscriptions received during the year Rs.5,000,amount received in advance for the next year is Rs.300. Amount outstanding for current year was Rs.400. The amount to be credited to the Income and Expenditure account is

(a) 4,000

(b) 5100 

(c) 4200 

(d) 4600

Ans: B

Question8. Subscription received during the year Rs.50, 000. ;Subscriptions Outstanding at the end of the year` 8,000; Subscription outstanding at the beginning of the year ` 6,000. Net Income from subscription will be 

(a) 48,000 

(b) 64,000 

(c) 52,000 

(d) 36,000 Ans: C
Question9. When the Tournament Expenses incurred are more than the Tournament Fund, then the excess amount is excess amount is

(a) Debited to Income and Expenditure account

(b) Credited to Tournament Fund

(c) Shown on the Asset side of Balance sheet

(d) Credited to Income and Expenditure Account

Ans:  A

Question10. Which of the following is prepared to find out the income of a trading concern?

(a) Receipts and Payments a/c

(b) Income and Expenditure a/c

(c) Profit and Loss a/c

(d) Balance Sheet.

Ans: C

Question11. If Income is Rs.16,000 and deficit debited to Capital Fund is Rs.4,300 then Expenditure is: 

(a) 16,000 

(b) 4,300 

(c) 20,300 

(d) None of these

Ans: C

Question12. The Main purpose of Not-for- Profit organisation is :

(a) To earn profit 

(b) to serve the society 

(c) To improve the economy 

(d) None of the above.

Ans: B

Question13. If 10% Interest on Investment appearing in the Receipts side is Rs.7000, then the value of investment will be:

(a) Rs.1,00,000 

(b) 70,000 

(c) 56,000 

(d) 49,000

Ans: B

Question14. Entrance fees received amounted to Rs.50,000. In this 25% is to be capitalized. Mention the amount to be shown in income side of Income and Expenditure account:

(a) 12,500 

(b)13,200 

(c) 50,000 

(d) 37,500

Ans:  D

Question15. Subscription outstanding for the year 2018-19 is Rs.2500. Subscription outstanding for the year 2017-18 was Rs.5000 out of which Rs.3000 were received during the year 2018-19. The outstanding subscription to be shown in the Income and expenditure for current year 2018-19 is :

(a) Rs. 500 

(b) Rs.1000 

(c) Rs.2500 

(d) Rs.3000

Ans:  A

Question16. Furniture (Book value) Rs.5,000 were sold for Rs. 4,500. New Furniture worth Rs.10,000 were purchased during the year. The amount which is to be debited to Income and Expenditure account is :

(a) Profit on sale Rs.500 

(b) Loss on sale Rs.500 

(c) Sale of furniture Rs.4500 

(d) Purchase of Rs.10000

Ans: B

Question17. Stock of medicines on 1.4.18 were Rs.5000. Medicines purchased during the year is Rs.5000. Medicines sold during the year is Rs.2500. Closing stock of medicines are Rs.3000. Stock of medicines used during the year 2019 is:

(a) Rs.7000 

(b) Rs.2500 

(c) Rs.5000 

(d) Rs.10000

Ans:  A

Question18. Receipts and payments account makes no difference between:

(a) Capital Receipts and Capital payments 

(b) Revenue receipts and revenue payments

(c) Current year and previous year 

(d) All the above.

Ans: D

Question19. Out of the following items, which is not shown in the ‘Receipts and Payments A/c’ of a not for profit organisation?

(a) Subscription received in advance

(b) Subscription due

(c) Last year subscription received

(d) All of the above

Answer: B

Question20. Specific Donation received by NPO is shown in the

(a) Credit side of Income and Expenditure Account,

(b) Debit side of Income and Expenditure Account

(c) Liabilities side of Balance Sheet.

(d) As is decided by the management.

Answer: C

Question21. Features of a partnership firm are :

(a) Two or more persons are carrying common business under an agreement.

(b) They are sharing profits and losses in the fixed ratio.

(c) Business is carried by all or any of them acting for all as an agent.

(d) All of the above.

Answer: A

Question22. Following are essential elements of a partnership firm except:

(a) At least two persons

(b) There is an agreement between all partners

(c) Equal share of profits and losses

(d) Partnership agreement is for some business.

Answer: A

Question23. Life Membership Fee received by NPO is accounted as

(a) Revenue Receipt.

(b) Capital Receipt.

(c) an Asset.

(d) Miscellaneous Receipt.

Answer: B

Question24. Salaries paid during the year ended 31st March, 2020 is Rs. 36,000. Salaries paid in advance at the end of previous year were Rs. 54,000. The amount of Salaries to be debited to income and Expenditure Account for the year ended 31st March, 2020 will be

(a) Rs. 54,000.

(b) Rs. 36,000.

(c) Rs. 90,000.

(d) Rs. 18,000.

Answer: C

Question25. If a General Donation of huge amount is received by a school, that donation is treated as :

(a) Revenue Receipt (Income)

(b) Capital Receipt (Liability).

(c) Assets

(d) Earned Income

Answer: B

Question26. There are 200 members, each paying an annual subscription of Rs. 1,000; subscription received during the year Rs. 1,95,000; subscriptions received in advance at the beginning of the year Rs. 3,000 and at the end of the year Rs.2,000. Amount shown in Income & Expenditure Account will be :

(a) Rs. 2,00,000

(b) Rs. 1,96,000

(c) Rs. 1,94,000

(d) Rs. 2,01,000

Answer: A

Question27. The opening balance of Prize Fund was Rs.32,800. During the year, donations received towards this fund amounted to Rs. 15,400; amount spent on prizes was Rs. 12,300 and interest received on prize fund investment was Rs.4,000. The closing balance of Prize Fund will be :

(a) Rs. 56,500

(b) Rs.64,500

(c) Rs.39,900

(d) Rs. 31,900

Answer: C

Question28. The amount received for sale of old sports materials by a Non-profit organisation is shown in which of the following?

(a) Debit side of Income and Expenditure Account

(b) Liability side of Balance Sheet

(c) Credit side of Income and Expenditure Account

(d) Assets side of Balance Sheet

Answer: C

Question29. If there is a ‘Match Fund’, then match expenses and incomes are transferred to:

(a) Income and Expenditure A/c

(b) Assets side of Balance Sheet

(c) Liabilities side of Balance Sheet

(d) Both Income and Expenditure A/c and to Balance Sheet

Answer: C

Question30. Not-for-profit organisations prepare:

(a) Trading Account

(b) Trading & Profit and Loss Account

(c) Income and Expenditure Account

(d) All of the above

Answer: C

Question31. The Receipts and Payments Account is a summary of:

(a) Debit and Credit balance of Ledger Accounts

(b) Cash Receipts and Payments

(c) Expenses and Incomes

(d) Assets and Liabilities

Answer: B

Question32. Identify capital receipt from the following:

(a) Life Membership Fees

(b) Rent Receipt

(c) Entrance fees

(d) Sports expenses.

Answer: A

Question33. General Donation received by NPO is shown in the

(a) Credit side of income and Expenditure Account,

(b) Debit side of income and Expenditure Account

(c) Liabilities side of Balance Sheet

(d) Assets side of the Balance Sheet.

Answer: A

Question34. Subscriptions received in advance by a club are shown

(a) in the credit side of the Income and Expenditure Account.

(b) in the assets side of the Balance Sheet.

(c) in the liabilities side of the Balance Sheet.

(d) in the payments side of Receipts and Payments Account.

Answer: C

Question35. Subscription received during the year 2019-20: Rs. 1,50,000. Outstanding Subscription as on 31st March, 2019: Rs. 1,00,000. The amount shown as subscription receipt will be

(a) Rs. 50,000.

(b) Rs. 1,50,000.

(c) Rs. 1,00,000.

(d) Rs. 1,25,000.

Answer: A

Question36. Out of the following, which is Unrestricted Fund?

(a) Annuity Fund

(b) Sports Fund

(c) Capital Fund

(d) Endowment Fund

Answer: C

Question37. Subscription received in advance during the current year is

(a) an income.

(b) an asset.

(c) a liability.

(d) None of these.

Answer: C

Question38. The opening balance of Prize Fund was Rs.32,800. During the year, donations received towards this fund amounted to Rs. 15,400; amount spent on prizes was Rs. 12,300 and interest received on prize fund investment was Rs.4,000. The closing balance of Prize Fund will be :

(a) Rs. 56,500

(b) Rs.64,500

(c) Rs.39,900

(d) Rs. 31,900

Answer: C

Question39. Salary paid in cash during the current year was Rs. 80,000; Outstanding salary at the end was Rs.4,000; Salary paid in advance last year pertaining to the current year was Rs.3,200; paid in advance during current year for next year was Rs.5,000. The amount debited to Income and Expenditure Account will be:

(a) Rs.85,800

(b) Rs.77,800

(c) Rs. 82,200

(d) Rs. 74,200

Answer: C

Question40. How much amount will be shown in Income and Expenditure Account in the following case?

                                     1-4-2019       31-3-2020

Creditors for Stationery   8,000            6,000

Stock of Stationery          3,000            3,200

During 2019-20 payment made for Stationery was Rs.60,000.

(a) Rs.57,800

(b) Rs.62,200

(c) Rs.61,800

(d) Rs.5 8,200

Answer: A

Question41. Income and Expenditure Account is prepared on

(a) Cash Basis.

(b) Accrual Basis.

(c) Both (a) and (b).

(d) Sales Basis,

Answer: B

Question42. Main source of Income for a Not-for-Profit Organisation is

(a) Rent.

(b) Salaries.

(c) Donations and Subscriptions.

(d) Sale of Assets.

Answer: C

Question43. Credit purchase of stationery is Rs. 64,000, which is 80% of total purchase, compute cash purchase of stationery,

(a) Rs. 16,000

(b) Rs. 24,000

(c) Rs. 8,000

(d) Rs. 40,000.

Answer: A

Question44. Choose NPO from the following:

(a) Reliance Industries Limited

(b) Indian Hoc Important Federation

(c) Infosys Ltd.

(d) Private Hospital

Answer: B

Question.45 Receipts and Payments Account is prepared on

(a) Cash Basis.

(b) Time Basis.

(c) Accrual Basis.

(d) Sales Basis.

Answer: A

Question46. Amount received from sale of grass by a club should be treated as :

(a) Capital Receipt

(b) Revenue Receipt

(c) Asset

(d) Earned Income

Answer: B

Question47. Legacy Donation received by NPO to be used for specific purpose is accounted as

(a) Revenue Receipt.

(b) Capital Receipt.

(c) an Asset.

(d) is decided by the Management.

Answer: B

Question48. The amount of ‘Entrance Fees’ received by a Non-profit organisation (if it is received regularly) is shown in which of the following?

(a) Liability side of Balance Sheet

(b) Assets side of Balance Sheet

(c) Debit side of Income and Expenditure Account

(d) Credit side of Income and Expenditure Account

Answer: D

Question49. Furniture as on 31st March, 2019 Rs. 4,40,000. Furniture (having Book value as on 1st April, 2018 of Rs. 40,000) sold at a loss of 20% on 31st December, 2018. Furniture is depreciated @ 10% p.(a) Furniture costing Rs. 3,00,000 was also purchased on 1st October, 2018. Calculate Loss on sale of furniture.

(a) Rs. 9,400

(b) Rs. 6,400

(c) Rs. 8,000

(d) Rs. 7,400

Answer: D

Question50. Receipts and Payments Account is a summary of

(a) Debit and Credit balances of Ledger Account.

(b) Cash receipts and payments.

(c) incomes and Expenses.

(d) Balances of assets and liabilities.

Answer: B

Question51. Subscription received by a school for organising annual function is treated as:

(a) Capital Receipt (i.e., Liability)

(b) Revenue Receipt (;.e., Income)

(c) Asset

(d) Earned Income

Answer: A

Question52. Choose NPO from the following:

(a) Reliance Industries Limited

(b) Indian Hoc Important Federation

(c) Infosys Ltd.

(d) Private Hospital

Answer: B

Question53. Title of the account which shows Surplus/Deficit of NPO is

(a) Cash Book.

(b) Income and Expenditure Account.

(c) Receipts and Payments Account.

(d) Balance Sheet.

Answer: B

Question54. Out of the following items, which one is shown in the ‘Receipts and Payments Account’ of a not for profit organisation?

(a) Accrued subscription

(b) Outstanding salary

(c) Depreciation

(d) None of these

Answer: D

Question55. Income and Expenditure Account reveals:

(a) Surplus or Deficiency

(b) Cash in Hand

(c) Net Profit

(d) Capital Account

Answer: A

Question56. Salary paid for the year ended 31st March, 2020 amounted to Rs.75,000. How much amount will be recorded in Income and Expenditure Account in the following case?

                                31-3-2019    31-3-2020

Outstanding Salary    6,500             6,000

Prepaid Salary           1,200             1,000

(a) Rs.75,700

(b) Rs.74,300

(c) Rs.75,300

(d) Rs.74,700

 Answer: D

Question57. Receipts and Payments Account is a

(a) Real Account.

(b) Nominal Account.

(c) Personal Account.

(d) Revenue Account

Answer: A

Question58. If there is a ‘Match Fund’, then Match Expenses and Match Incomes are transferred to

(a) Income and Expenditure A/(c)

(b) Assets side of Balance Sheet.

(c) Match Fund in Liabilities side of Balance Sheet.

(d) Both Income and Expenditure A/c and to Balance Sheet.

Answer: C

Question59. Identify revenue receipt from the following:

(a) Donations for Building

(b) Subscription

(c) Life Membership Fees

(d) Legacy donation for Library.

Answer: B

Question60. Donation received for a special purpose:

(a) Should be credited to Income and Expenditure Account

(b) Should be credited to separate account and shown in the Balance Sheet

(c) Should be shown on the assets side

(d) Should not be recorded at all.

Answer: B

Question61. Calculate the amount of credit purchase from the following information:

Particulars	1st April, 2019(Rs.)	31st March, 2020 (Rs.)
Creditors for Stationery	4,600	11,800

During the year ended 31st March, 2020, payment made to creditors of Rs. 56,800.

(a) Rs. 54,000

(b) Rs. 64,000

(c) Rs. 74,000

(d) Rs. 44,000

Answer: B

Question62. Out of the following items, which is not shown in the ‘Receipts and Payments A/c’ of a not for profit organisation?

(a) Subscription received in advance

(b) Subscription due

(c) Last year subscription received

(d) All of the above

Answer: B

Question63. Subscription received in advance during the current year is :

(a) an income

(b) an asset

(c) a liability

(d) none of these

Answer: C

Question64. Subscription received in cash during the year amounted to Rs.5,00,000; subscription outstanding at the end of previous year was Rs.20,000 and outstanding at the end of current year was Rs.25,000. Subscription received in advance for next year was Rs. 8,000 and received in advance during previous year was Rs.7,000. The amount credited to Income & Expenditure Account will be :

(a) Rs.5,04,000

(b) Rs.5,06,000

(c) Rs.4,96,000

(d) Rs.4,94,000

Answer: A

Question65. Compute Rent for the year ended 31st March, 2020 from the following:

                                                    1.4.2019                  31.3.2020

Outstanding Rent                          Rs. 19,000                Rs. 14,000

Prepaid Rent                                 Rs. 5,600                 Rs. 10,400

Answer: B

Question66. Receipts and Payments Account is a :

(a) Personal Account

(b) Real Account

(c) Nominal Account

(d) Real and Nominal Account, both

Answer: B

Question67.Income and Expenditure Account records transactions of:

(a) Revenue nature only

(b) Capital nature only

(c) Both revenue and capital nature

(d) Income of only revenue nature and expenditure of revenue and capital nature.

Answer: A

Question68. Salaries paid during the year ended 31st March, 2020 is Rs. 36,000. Salaries paid in advance at the end of previous year were Rs. 54,000. The amount of Salaries to be debited to income and Expenditure Account for the year ended 31st March, 2020 will be

(a) Rs. 54,000.

(b) Rs. 36,000.

(c) Rs. 90,000.

(d) Rs. 18,000.

Answer: C

NCERT MCQ ON Cash Flow Statement:

Question1: Sale of Copyrights is concerned with_______

• a) Investing Activities
• b) Operating Activities
• c) Both Operating Activities and Financing Activities
• d) Financing Activities

Answer: Investing Activities

Question2: Dividend Received is concerned with_________

• a) Investing Activities
• b) Operating Activities
• c) Financing Activities
• d) Both Operating Activities and Financing Activities

Answer: Investing Activities

Question3: Refund of income tax is the part of

• a) Operating activities in Cash Flow Statement
• b) Financing Activities in Cash Flow Statement
• c) Investing Activities in Cash Flow Statement
• d) All of the options

Answer: Operating activities in Cash Flow Statement

Question4: Rent received is classified under

• a) Investing Activities
• b) Operating Activities
• c) Cash and Cash Equivalents
• d) Financing Activities

Answer: Investing Activities

Question5: In indirect method, Which is used to calculate the amount of net cash flow from operating activities

• a) Net income figure from the income statement
• b) Net loss figure from Profit & Loss
• c) Net Profit figure from Profit & Loss
• d) All of the options

Answer: Net income figure from the income statement

Question6: Which activities are the same for Computation of Direct and indirect method

• a) Cash Flow from Financing Activities and Cash flow from Investment activities
• b) Cash Flow from Operating Activities and Cash flow from Investment activities
• c) Cash Flow from Operating Activities and Cash flow from Financial activities
• d) All of the options

Answer: Cash Flow from Financing Activities and Cash flow from Investment activities

Question7: The main difference in direct and indirect method is to calculate the

• a) Cash flow from operating activities
• b) Cash Flow from Financing Activities
• c) Cash Flow from Investing Activities
• d) All of the options

Answer: Cash flow from operating activities

Question8: Which is the Method for the preparation of cash flow statement

• a) Both Direct and Indirect
• b) Direct Method
• c) Indirect Method
• d) Average Method

Answer: Both Direct and Indirect

Question9: How many methods for the preparation of cash flow statement

• a) 2
• b) 3
• c) 4
• d) 5

Answer: 2

Question10: A cash flow statement is also prepared to determine the

• a) Liquidity position of the organisation
• b) Debt position of the organisation
• c) Net Profit position of the organisation
• d) Net Profit position of the organisation

Answer: Liquidity position of the organisation

Question11: The most important objective of cash flow statement is that helps to ascertain the and outflows of cash and from

• a) All of the options
• b) Gross inflows
• c) Outflows of cash
• d) Cash equivalents

Answer: All of the options

Question12: What are the objectives of preparing cash flow statement

• a) All of the options
• b) To determine the liquidity position of the organisation
• c) To know about the requirement of cash in future
• d) To ascertain the gross inflows and outflows of cash

Answer: All of the options

Question13: When Company repurchases shares, pays dividends or pays off debt, it records a

• a) Cash outflow
• b) Cash inflow
• c) Not related to cash
• d) All of the options

Answer: Cash outflow

Question14: When the company issues new shares, it records a

• a) Cash inflow
• b) Cash outflow
• c) Not related to cash
• d) All of the options

Answer: Cash inflow

Question15: Cash flows from financing activities are those that take place between

• a) Firm and its investors
• b) Sundry Creditors and Sundry Debtors
• c) Net profit & loss
• d) All of the options

Answer: Firm and its investors

Question16: Cash flows from investing activities are those

• a) All of the options
• b) Property
• c) Plant
• d) Intangible assets.

Answer: All of the options

Question17: Under Cash Flow from Operating Activities incorporates are

• a) All of the options
• b) Cash received from customers
• c) Paid to suppliers
• d) Paid for operating costs

Answer: All of the options

Question18: The cash flow statement begins with the

• a) Cash Flow from Operating Activities
• b) Cash Flow from Financing Activities
• c) Cash Flow from Investing Activities
• d) None of these

Answer: Cash Flow from Operating Activities

Question19: The primary objective of cash flow statement is to provide useful information about

• a) Cash Flow
• b) Net Profit
• c) Net Loss
• d) All of the options

Answer: Cash Flow

Question20: A cash flow statement shows

• a) Both Inflow and Outflow
• b) Inflow cash
• c) Outflow cash
• d) Not related to cash

Answer: Both Inflow and Outflow

Question21: For calculating cash flow from operating activities, provision for doubtful debts is __________the profit made during the year

• a) Added to
• b) Deducted from
• c) Divided to
• d) All of the options

Answer: Added to

Question22: An increase in accrued income during the particular year is ____________for calculating the cash flow from operating activities (added to/deducted from).

• a) Added to
• b) Deducted from
• c) Divided to
• d) All of the options

Answer: Added to

Question23: Expenses paid in advance at the end of the year are______________the profit made during the year

• a) Deducted from
• b) Added to
• c) Divided to
• d) All of the options

Answer: Deducted from

Question24: If the net profits made during the year are Rs. 50,000 and the bills receivables have decreased by Rs. 10,000 during the year then the cash flow from operating activities will be equal to Rs.

• a) Rs. 60,000
• b) Rs. 40,000
• c) Rs. 70,000
• d) Rs. 50000

Answer: Rs. 60,000

Question25: If the net profits earned during the year is Rs. 50,000 and the amount of debtors in the beginning and the end of the year is Rs. 10,000 and Rs.20,000 respectively, then the cash from operating activities will be equal to Rs.

• a) Rs. 40,000
• b) Rs. 60,000
• c) Rs. 70,000
• d) Rs. 50000

Answer: Rs. 40,000

Question26: Total Sales Rs, 500000, Credit Sales Rs. 225000, Total Purchase Rs. 248000, Credit Purchase Rs. 108000, Cash Operating Exp Rs. 40000, Cash From Operation will be

• a) Rs. 95000
• b) Rs. 90000
• c) Rs. 60000
• d) RS. 70000

Answer: Rs. 95000

Question27: Net Profit for the year Rs. 15000 , Interest Received in advance on 1st Jan 2004 Rs. 2000 and 31st December 2004 Rs. 3000, Cash from operation will be

• a) Rs. 16000
• b) Rs. 22000
• c) Rs, 13000
• d) Rs. 15000

Answer: Rs. 16000

Question28: Opening Stock Rs. 7000, Closing stock Rs. 10000, Cash Purchase Rs. 82000. Sales Rs. 125000 including credit sales Rs. 18000, Cash generated from operations Equal

• a) Rs. 22000
• b) Rs. 42000
• c) Rs. 28000
• d) Rs. 30000

Answer: Rs. 22000

Question29: Total sales Rs. 200000, Debtors at the beginning Rs. 15000, Debtors at the ending Rs. 28000, Cash Sale will be

• a) Rs. 187000
• b) Rs 213000
• c) Rs. 215000
• d) Rs. 210000

Answer: Rs. 187000

Question30: Which of the following is an example of non cash Exp

• a) Depreciation
• b) Wages and salaries
• c) Telephone Exp
• d) All of the options

Answer: Depreciation

Question31: If the net operating profit of a business is Rs. 90000 and the debtors have decreased during the year by Rs. 30000, cash from operation equal to

• a) Rs. 120000
• b) Rs. 90000
• c) Rs. 60000
• d) Rs. 50000

Answer: Rs. 120000

Question32: Cash from operation will increase due to

• a) Decrease in stock
• b) Increase in stock
• c) Increase in Bills receivable
• d) Decrease in Bills receivable

Answer: Decrease in stock

Question33: Cash flow statement is prepared from

• a) All of the options
• b) Balance sheet
• c) Profit and Loss
• d) Additional Information

Answer: All of the options

Question34: Cash from operation will decrease due to

• a) Increase in Current assets
• b) Decrease in Current assets
• c) Increase in Current Liabilities
• d) Decrease in Current Liabilities

Answer: Increase in Current assets

Question35: Increase in the amount of bills receivable results in

• a) Decrease in cash
• b) Increase in cash
• c) No change in cash
• d) All of the options

Answer: Decrease in cash

Question36: Which of the following is not a cash outflow

• a) Increase in outstanding Exp.
• b) Increase in Prepaid Exp.
• c) Increase in Stock
• d) Increase in Bills receivable

Answer: Increase in outstanding Exp.

Question37: Which of the following is not a cash inflow

• a) Purchase of fixed assets
• b) Sale of goods
• c) Issue of debentures
• d) Sales of fixed assets

Answer: Purchase of fixed assets

Question38: Acquisition of assets or Acquisition of an enterprise by means of issue of shares and debentures is _________ transaction

• a) Non Cash
• b) Cash
• c) Both
• d) None of these

Answer: Non Cash

Question39: According to AS-3 (Revised) redemption of preference share is _______ activity

• a) Financing
• b) Investing
• c) Operating
• d) All of the options

Answer: Financing

Question40: Marketable securities is treated as ___________ in cash flow statement

• a) Cash equivalent
• b) Non Cash equivalent
• c) Both
• d) All of the options

Answer: Cash equivalent

Question41: An example of cash flow from investing activity is :

a) Issue of debenture

b) Repayment of long-term loan

c) Purchase of raw materials for cash

d) Sale of investment by non-financial enterprise.

Answer: D

Question42: An example of Cash Flows from Investing Activity is :

a) Cash Revenue from Operations

b) Commission Received

c) Payment of cash for purchase of fixed assets

d) Dividend paid

Answer: C

Question:43 An Example of cash flow from financing activity is :

a) Payment of dividend

b) Receipt of dividend on investment

c) Cash received from customer

d) Purchase of fixed asset

Answer: A

Question44: A company receives a dividend of X2 Lakhs on its investment in other company’s shares. In case of a Finance Company, it will be classified under which kind of activity?

a) Cash Flow from Operating Activities

b) Cash Flow from Investing Activities

c) Cash Flow from Financing Activities

d) No Cash Flow

Answer: A

Question45: How will you classify loans given by Tata Finance Company?

a) Cash Flow from Operating Activities

b) Cash Flow from Investing Activities

c) Cash Flow from Financing Activities

d) No Cash Flow

Answer: A

Question46: How will you classify deposits by customers in Axis Bank?

a) Cash Flow from Operating Activities

b) Cash Flow from Investing Activities

c) Cash Flow from Financing Activities

d) No Cash Flow

Answer: A

Question47: Which of the following item is considered as Cash Equivalents?

a) Marketable Securities

b) Debtors

c) Investment

d) Bills of Exchange

Answer: A

Question48: Which of the following is considered as Cash Equivalents?

a) Bank deposits for 2 months

b) Commercial Papers

c) Treasury Bills

d) All of the above

Answer: D

Question49: Cash deposit with the bank with a maturity date after two months belongs to which of the following in the cash flow statement:

a) Investing activities

b) Financing activities

c) Cash and Cash equivalents

d) Operating activities

Answer: C

Question50: Which of the following is shown under Financing Activity?

a) interest paid

b) Commission Received

c) Cash received against sale of goods

d) Cash paid for purchase of goods.

Answer: A

Question51: Which of the following is not included in Cash and Cash Equivalents?

a) Balances with Banks

b) Bank deposits with 100 days of maturity

c) Cheques and Drafts on hand

d) Cash on hand

Answer: B

Question52: Which of the following is not part of Cash and Cash Equivalents?

a) Inventories

b) Current investments

c) Short-term Deposits

d) Marketable Securities

Answer: A

Question53: ‘Koval Ltd! is a financing company. Under which activity will the amount of interest paid on a loan settled in the current year be shown?

a) investing Activities

b) Financing Activities

c) Both Investing and Financing Activities

d) Operating Activities

Answer: D

Question54: GSC Ltd. purchased machinery of Rs. 10,00,000 issuing a cheque of Rs. 2,50,000 and 10% Debentures of Rs. 7,50,000. ln the Cash Flow Statement, the transaction will be shown as

a) Outflow under Investing Activity Rs. 10,00,000, inflow under Financing Activity as Receipt for Debentures Rs. 7,50,000.

b) Outflow under investing Activity Rs. 2,50,000.

c) Inflow of Rs. 7,50,000 as Financing Activity.

d) None of the above.

Answer: B

Question55: Angel Ltd., a stock broker, purchased 5,000 shares of Tata Housing Ltd. it is

a) Operating Activity.

b) Investing Activity.

c) Financing Activity.

d) General Activity.

Answer: B

Question56: According to AS-3 (Revised) purchase of fixed assets is

• a) Investing
• b) Operating
• c) Financing
• d) All of the options

Answer: Investing

Question57: AS-3 (revised ) deals with statement of changes in financial position on ________

• a) Cash Basis
• b) Non Cash Basis
• c) On Accrual Basis
• d) All of the options

Answer: Cash Basis

Question58: Increase in stock results in _____________ of cash

• a) Outflow cash
• b) Inflow cash
• c) No change in cash
• d) All of the options

Answer: Outflow cash

Question59: Increase in creditors results in _____________ of cash

• a) Inflow cash
• b) Outflow cash
• c) No change in cash
• d) All of the options

Answer: Inflow cash

Question60: Refund of income tax is a __________

• a) Inflow cash
• b) Outflow cash
• c) No change in cash
• d) All of the options

Answer: Inflow cash

Question61: Cash flow statement is based upon _________ basis of accounting

• a) On Cash basis
• b) On Accrual Basis
• c) Non Cash Basis
• d) All of the options

Answer: On Cash basis

Question62: Which is the classification of cash flow statement

• a) All of the options
• b) Cash Flow from Operating Activities
• c) Cash Flow from Financing Activities
• d) Cash Flow from Investing Activities

Answer: All of the options

Question63: Redemption of Preference shares comes under

• a) Cash Flow from Financing Activities
• b) Cash Flow from Operating Activities
• c) Cash Flow from Investing Activities
• d) All of the options

Answer: Cash Flow from Financing Activities

Question64: Cash flow statement is useful for

• a) Short Term financial analysis
• b) Long Term financial analysis
• c) 10 Years
• d) 5 Years

Answer: Short Term financial analysis

Question65: The word fund means the difference of _______ and _______

• a) Current Assets and Current Liabilities
• b) Sundry Creditors and Sundry Debtors
• c) Profit and Loss
• d) All of the options

Answer: Current Assets and Current Liabilities 

 

Question66: Cash Receipts from sale of goods by a trading company come under which activity while preparing cash flow statement?

• a) Operating Activity
• b) Investing Activity
• c) Operating and Financing Activities
• d) Financing Activity

Answer: Operating Activity

Question67: Which of the following is not a source of finance

• a) Fixed Assets
• b) Debentures
• c) Bank Overdraft
• d) Bank Loan

Answer: Fixed Assets

Question68: Purchase of office equipment will affect

• a) Investing Activities
• b) Operating Activities
• c) Financing Activities
• d) Both Operating and Financing Activities

Answer: Investing Activities

Question69: Purchase of shares of other company will be considered as

• a) Investing activities
• b) Operating Activities
• c) Financing Activities
• d) All of the options

Answer: Investing activities

Question70: Decrease in value of Patents

• a) Add (operating activities)
• b) Less (operating activities)
• c) Add (Investing activities)
• d) Add (Financing activities)

Answer: Add (operating activities)

Question71: Purchase of plant and machinery will be

• a) Deducted in investing activities
• b) Deducted in Financing Activities
• c) Added in Investing Activities
• d) Added in Financing Activities

Answer: Deducted in investing activities

Question72: Loss on sale of furniture will be

• a) Add (operating activities)
• b) Less (Investing activities)
• c) Less (operating activities)
• d) Add (Investing activities)

Answer: Add (operating activities)

Question73: Cash deposit with the bank with a maturity date after two months belongs to which of the following

• a) Cash and Cash Equivalents
• b) Investing Activities
• c) Financing Activities
• d) Both Investing and Financing

Answer: Cash and Cash Equivalents

Question74: Payment of dividend will come under financing activities when it is paid by_____

• a) All of these
• b) Manufacturing Company
• c) Trading Company
• d) finance Company

Answer: All of these

Question75: Which items will be added in operating activities

• a) All of the options
• b) Decrease in stock
• c) Increase in creditors
• d) Increase in outstanding expenses

Answer: All of the options

Question76: What will be effect of Decrease in Trade receivables on cash Inflow

• a) Add in operating activities
• b) Less in financing activities
• c) Add in financing activities
• d) Less in operating activities

Answer: Add in operating activities

Question77: Which is shown as addition in financing activities

• a) Increase in Bank Overdraft
• b) Decrease in Bank Overdraft
• c) Both Increase and Decrease in Bank Overdraft
• d) Redemption of Debentures

Answer: Increase in Bank Overdraft

Question78: Interest on long term borrowings is an Expense relating to financial activities and shown as ______ of cash.

• a) Outflow
• b) Inflow
• c) Income
• d) All of the options

Answer: Outflow

Question79: Which is not considered with operating activities:

• a) Issue of Equity shares
• b) General Reserve
• c) Income tax
• d) Loss on sale of assets

Answer: Issue of Equity shares

Question80: Interest received will be considered as financing activity when________

• a) Interest received on calls in arrear
• b) Redemption of debentures takes place
• c) Bank overdraft is settled
• d) Interest received on investments

Answer: Interest received on calls in arrear

Question81: Dividend paid by a finance company comes under_______

• a) Operating Activities
• b) Investing Activities
• c) Manufacturing Activity
• d) Financing Activity

Answer: Operating Activities

Question82: Dividend Received is considered as operating activity when______

• a) Received by a finance company
• b) Received by a Trading Company.
• c) Received by a manufacturing company
• d) Received by any company

Answer: Received by a finance company

NCERT MCQ ON Accounting Ratios:

Question1: Accounting ratios are an important tool of

• a) Financial statement analysis
• b) Trial Balance
• c) Financial statement analysis and Trial Balance
• d) None of the options

Answer: Financial statement analysis

Question2: When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as

• a) Accounting ratio
• b) Financial ratio
• c) Costing ratio
• d) None of the options

Answer: Accounting ratio

Question3: Which ratio is considered as safe margin of solvency?

• a) Current ratio
• b) Liquid ratio
• c) Current ratio
• d) None of the options

Answer: Current ratio

Question4: Current ratio is stated as a crude ratio because

• a) It measures only the quantity of current assets
• b) It measures only the quality of current assets
• c) It measures only the quantity of current assets and It measures only the quality of current assets
• d) None of the options

Answer: It measures only the quantity of current assets

Question5: Liquid ratio is also known as

• a) Quick ratio and Acid test ratio
• b) Quick ratio
• c) Acid test ratio
• d) None of the options

Answer: Quick ratio and Acid test ratio

Question6: Debt-equity ratio is a sub-part of

• a) Long-term solvency ratio
• b) Debtors turnover ratio
• c) Short-term solvency ratio
• d) None of the options

Answer: Long-term solvency ratio

Question7: Liquid assets is determined by

• a) Current assets-stock-Prepaid expenses
• b) Current assets +stock+ prepaid expenses
• c) Current assets +Prepaid expenses
• d) None of the options

Answer: Current assets-stock-Prepaid expenses

Question8: Higher the ratio, the more favourable it is, doesn t stands true for

• a) Operating ratio
• b) Liquidity ratio
• c) Net profit ratio
• d) Stock turnover ratio

Answer: Operating ratio

Question9: The most precise test of liquidity is

• a) Absolute Liquid ratio
• b) Quick ratio
• c) Current ratio
• d) None of the options

Answer: Absolute Liquid ratio

Question10: Collection of debtors

• a) Decreases current ratio
• b) Increases current ratio
• c) Has no effect on current ratio
• d) None of the options

Answer: Decreases current ratio 

 

Question11: In ABC analysis A class consist of items having

• a) Accurate records
• b) Good records
• c) Minimal records
• d) No records

Answer: Accurate records

Question12: In the Balance sheet of a firm, the debt equity ratio is 2:1.The amount of long term sources is Rs.12 lac. What is the amount of tangible net worth of the firm?

• a) Rs.8 lakh
• b) Rs.6 lakh
• c) Rs.4 lakh
• d) None of the options

Answer: Rs.8 lakh

Question13: Accounting Ratios are mathematical expression of the relationship between

• a) Two Accounting Figures
• b) Two Shareholders
• c) Two Debtors
• d) None of the options

Answer: Two Accounting Figures

Question14: Ratio Analysis is a tool to measure the

• a) Financial Status
• b) Profit status
• c) Loss Status
• d) None of the options

Answer: Financial Status

Question15: When ratios are calculated on the basis of accounting information, they are called

• a) Accounting ratios
• b) Working Capital Ratio
• c) Profit ratio
• d) None of the options

Answer: Accounting ratios

Question16: Objectives of Ratio Analysis

• a) All of the options
• b) To know the areas of an enterprise which need more attention
• c) To know about the potential areas which can be improved on
• d) Helpful in comparative analysis of the performance

Answer: All of the options

Question17: Ratio Analysis helpful in

• a) Comparative analysis of the performance and Budgeting and forecasting
• b) Comparative analysis of the performance
• c) Budgeting and forecasting
• d) None of the options

Answer: Comparative analysis of the performance and Budgeting and forecasting

Question18: Ratio Analysis provide analysis of the

• a) Liquidity
• b) Solvency
• c) Profitability
• d) None of the options

Answer: Liquidity

Question19: Ratio Analysis provide information useful for

• a) Preparing the plans for future
• b) Share holders
• c) Debentures holder
• d) None of the options

Answer: Preparing the plans for future

Question20: Advantages of Ratio Analysis

• a) All of the options
• b) It is useful in analysis of key financial figures
• c) It is useful in analysis of financial statements
• d) Better understand financial numbers

Answer: All of the options

Question21: Current ratio is stated as a crude ratio because

• a) It measures only the quantity of current assets
• b) It measures only the quality of current assets
• c) It measures only the quantity of current assets and It measures only the quality of current assets
• d) None of the options

Answer: It measures only the quantity of current assets

Question22: Limitations of Ratio Analysis

• a) All of the options
• b) Accounting ratios ignore qualitative factors
• c) Absence of universally accepted terminology
• d) Ratios are affected by window-dressing

Answer: All of the options

Question23: Ratio Analysis Price level changes

• a) Ignored
• b) Noticed
• c) Ignored and Noticed
• d) None of the options

Answer: Ignored

Question24: Ratio Analysis ignored

• a) Qualitative factors
• b) Quantity Factors
• c) Qualitative factors and Quantity Factors
• d) None of the options

Answer: Qualitative factors

Question25: Ratio Analysis affected by

• a) All of the options
• b) Window-dressing
• c) Personal bias
• d) Ability of the analyst

Answer: All of the options

Question26: An accounting ratio is a

• a) Mathematical expression
• b) Logical expression
• c) Mathematical expression and Logical expression
• d) None of the options

Answer: Mathematical expression

Question27: Accounting ratios classified as under

• a) All of the options
• b) Liquidity Ratios
• c) Current ratio
• d) Solvency Ratios

Answer: All of the options

Question28: Current ratio is also known as

• a) Working capital ratio
• b) Profit Sharing Ratio
• c) Working capital ratio and Profit Sharing Ratio
• d) None of the options

Answer: Working capital ratio

Question29: Which Ratio establishes relationship between current assets and current liabilities

• a) Current ratio
• b) Liquidity Ratios
• c) Solvency Ratios
• d) None of the options

Answer: Current ratio

Question30: Current Ratio is

• a) Current Assets/Current Liabilities
• b) Current Assets-Current Liabilities
• c) Current Assets x Current Liabilities
• d) None of the options

Answer: Current Assets/Current Liabilities

Question31: Which Items Included in Current Assets for get the current ratio

• a) All of the options
• b) Current investments
• c) Current Stock
• d) Trade receivables (bills receivable and sundry debtors less provision for doubtful debts)

Answer: All of the options

Question32: Which Items Included in Current Assets for get the current ratio

• a) All of the options
• b) Short-term borrowings
• c) Cash balance
• d) Short-term provisions

Answer: All of the options

Question33: Liquid ratio is also known as

• a) Quick Ratio and Test Ratio
• b) Quick Ratio
• c) Test Ratio
• d) None of the options

Answer: Quick Ratio and Test Ratio

Question34: Liquid Ratio is

• a) Liquid Assets or Quick Assets/Current Liabilities
• b) Liquid Assets or Quick Assets+Current Liabilities
• c) Liquid Assets or Quick Assets-Current Liabilities
• d) None of the options

Answer: Liquid Assets or Quick Assets/Current Liabilities

Question35: Items Included in Liquid/Quick Assets

• a) All of the options
• b) Items Included in Liquid/Quick Assets
• c) Trade receivables
• d) Cash and cash equivalents

Answer: All of the options

Question36: Items excluded in liquid assets are

• a) Inventories and prepaid expenses
• b) Inventories
• c) Prepaid expenses
• d) None of the options

Answer: inventories and prepaid expenses

Question37: Which ratios judge the long-term financial position of an enterprise

• a) Solvency Ratios
• b) Quick Ratio
• c) Test Ratio
• d) None of the options

Answer: Solvency Ratios

Question38: Establishes the relationship between long-term debt (external equities) and the equity (internal equities)

• a) Debt to Equity ratio
• b) Quick Ratio
• c) Test Ratio
• d) None of the options

Answer: Debt to Equity ratio

Question39: Debt to Equity ratio establishes the relationship between

• a) long-term debt (external equities) and the equity (internal equities)
• b) long-term debt (external equities) and the current Assets(internal equities)
• c) long-term debt (external equities) and the equity (internal equities) and long-term debt (external equities) and the current Assets(internal equities)
• d) None of the options

Answer: long-term debt (external equities) and the equity (internal equities)

Question40: Debt to Equity Ratio is

• a) Debt (Long-term external equities)+Equity (Shareholders funds)
• b) Debt (Long-term external equities)-Equity (Shareholders funds)
• c) Debt (Long-term external equities)+Equity (Shareholders funds) and Debt (Long-term external equities)-Equity (Shareholders funds)
• d) None of the options

Answer: Debt (Long-term external equities)+Equity (Shareholders funds)

Question41: Cash Balance Rs.5,000; Trade Payables Rs.40,000; Inventory Rs.50,000; Trade Receivables Rs.65,000 and Prepaid Expenses are Rs. 10,000. Liquid Ratio will be

a) 1.75 : 1

b) 2 : 1

c) 3.25 : 1

d) 3 : 1

Answer: A

Question42: Current Assets Rs.4,00,000; Current Liabilities Rs.2,00,000 and Inventory is Rs.50,000. Liquid Ratio will be :

a) 2 : 1

b) 2.25 : 1

c) 4 : 7

d) 1.75 : 1

Answer: D

Question43: Which of the following transactions will improve the Current Ratio :

a) Cash Collected from Trade Receivables

b) Purchase of goods for cash

c) Payment to Trade Payables

d) Credit purchase of Goods

Answer: C

Question44: Current Assets Rs.85,000; Inventory Rs.22,000; Prepaid Expenses Rs.3,000. Then liquid assets will be :

a) Rs.63,000

b) 60,000

c) X 82,000

d) X 1,10,000

Answer: B

Question45: A Company’s Quick Ratio is 1.5 : 1; Current Liabilities are Rs.2,00,000 and Inventory is X 1,80,000. Current Ratio will be :

a) 0.9:1

b) 1.9:1

c) 1.4:1

d) 2.4:1

Answer: D

Question46: A Company’s Quick Ratio is 1.8 : 1; Liquid Assets are Rs.5,40,000 and Inventory is Rs. 1,50,000. Its Current Ratio will be :

a) 2 : 1

b) 2.3 : 1

c) 1.8:1

d) 1.3:1

Answer: B

Question47: What will be the amount of Gross Profit, if revenue from operations are Rs.6,00,000 and Gross Profit Ratio 20% of revenue from operations?

a) Rs. 1,50,000

b) Rs. 1,00,000

c) Rs. 1,20,000

d) Rs. 5,00,000

Answer: C

Question48: Revenue from operations is Rs. 1,80,000; Rate of Gross Profit is 25% on cost. What will be the Gross Profit?

a) Rs.45,000

b) Rs.36,000

c) Rs.40,000

d) Rs.60,000

Answer: B

Question49: Operating ratio is :

a) Cost of revenue from operations + Selling Expenses/Net revenue from operations

b) Cost of production + Operating Expenses/Net revenue from operations

c) Cost of revenue from operations + Operating Expenses/Net Revenue from Operations

d) Cost of Production/Net revenue from operations.

Answer: C

Question50: Two basic measures of liquidity are :

a) Inventory turnover and Current ratio

b) Current ratio and Quick ratio

c) Gross Profit ratio and Operating ratio

d) Current ratio and Average Collection period

Answer: B

Question51: Current Ratio is :

a) Solvency Ratio

b) Liquidity Ratio

c) Activity Ratio

d) Profitability Ratio

Answer: B

Question52: Current Ratio is :

a) Liquid Assets/Current Assets

b) Fixed Assets/Current Assets

c) Current Assets/Current Liabilities

d) Liquid Assets/Current Liabilities

Answer: C

Question53: Debt Equity Ratio is :

a) Liquidity Ratio

b) Solvency Ratio

c) Activity Ratio

d) Operating Ratio

Answer: B

Question54: Debt Equity Ratio is :

a) Long Term Debts/Shareholder’s Funds

b) Short Term Debts/Equity Capital

c) Total Assets/Long term Debts

d) Shareholder’s Funds/Total Assets

Answer: A

Question55: Proprietary Ratio is :

a) Long term Debts/Shareholder’s Funds

b) Total Assets/Shareholder’s Funds

c) Shareholder’s Funds/Total Assets

d) Shareholder’s Funds/Fixed Assets

Answer: C

Question56: lf Current Ratio ofa firm is 2.5 :1 and its Current Liabilities are ,00,000. Its Working Capital will be

a) 3,00,000.

b) 3,75,000.

c) 11,00,000.

d) 7,00,000.

Answer: A

Question57: Non-current Assets of a firm are 26,00,000, Current Assets are 9,00,000 and Shareholders’ Funds are 21,50, 000.TotaI debts of the firm will be

a) 43,50,000.

b) 13,50,000.

c) 21,50,000.

d) 38,50,000.

Answer: B

Question58: Sincere Ltd. has a Proprietary Ratio of 25%. To maintain this ratio at 30%, management may ~

a) increase Equity.

b) Reduce Debt.

c) Either Increase Equity or Reduce Debt.

d) lncrease Current Assets.

Answer: C

Question59: From the following, which ratio is not a part of Profitability Ratio:

a) Proprietary Ratio

b) Gross Profit Ratio

c) Operating Ratio

d) Net Profit Ratio

Answer: A

Question60: From the following information, calculate Proprietary Ratio: Share Capital 5,00,000, Non- current Assets 22,00,000, Reserves and Surplus 3,00,000, Current Assets 10,00,000.

a) 100%

b) 70%

c) 40%

d) 25%

Answer: D

Question61: The two basic measures of operational efficiency of a company are

a) Inventory Turnover Ratio and Working Capital Turnover Ratio

b) Liquid Ratio and Operating Ratio.

c) Liquid Ratio and Current Ratio.

d) Gross Profit Margin and Net Profit Margin.

Answer: A

Question62: A Company’s Current Ratio is 3 : 1 and Liquid Ratio is 1.2 : 1. If its Current Liabilities are Rs.2,00,000, what will be the value of Inventory?

a) Rs.2,40,000

b) Rs.3,60,000

c) Rs.4,00,000

d) Rs.40,000

Answer: B

Question63: A Company’s Current Ratio is 2.5 : 1 and Liquid Ratio is 1.6 : 1. If its Current Assets are Rs.7,50,000, what will be the value of Inventory?

a) Rs.4,50,000

b) Rs.4,80,000

c) Rs.2,70,000

d) Rs. 1,80,000

Answer: C

Question64: Current Ratio of a Company is 2.5 : 1. If its working capital is Rs. 60,000, its current liabilities will be :

a) Rs.40,000

b) Rs.60,000

c) Rs. 1,00,000

d) Rs.24,000

Answer: A

Question65: Quick Assets do not include

a) Cash in hand

b) Prepaid Expenses

c) Marketable Securities

d) Trade Receivables

Answer: B

Question66: Current Assets do not include :

a) Prepaid Expenses

b) Inventory

c) Goodwill

d) Bills Receivable

Answer: C

Question67: Quick Ratio is also known as :

a) Liquid Ratio

b) Current Ratio

c) Working Capital Ratio

d) None of the Above

Answer: A