1.

Capital is the difference between (a) Debit site of Manufacturing Account (b) Debit site of Trading Account

(a) Income and Expenses (b) Sales and Cost of goods sold (b) Credit site of Manufacturing Account (d) Asset side of Statement of Financial

(c) Assets and Liabilities (d) None of the above Position

2. Manufacturing account is prepared 8. Prepaid Rent is shown as:

(a) To ascertain the profit or loss on the goods purchased (a) Current asset

(b) To ascertain the cost of the manufactured goods (b) Current Liability

(c) To show the sale proceeds from the goods produced during the year (c) Fixed asset

(d) Both (b) and (c) (d) Income9. If closing stock appears in the Trial Balance it appears in:

3. Over statement of closing work in progress in the period will (a) Trading account

(a) Understate cost of goods manufactured in that period (b) Statement of Profit or Loss

(b) Understate current assets (c) Statement of Financial Position

(c) Understate gross profit from the sales in that period (d) Profit and loss appropriation

(d) Overstate net income in that period 10. Opening stock rs 100,000 , Sales Rs 500,000 , Gross profit @ 25% on cost . Purchase Rs

4. Sales is equal to 600,000 then Closing stock is

(a) Cost of goods sold – Gross Profit (b) Cost of goods sold + Gross Profit a) Rs 125,000

(c) Gross Profit – Cost of goods sold (d) Cost of goods sold + Net Profit b) Rs 225,000

5. Contingent Liability is c) Rs 300,000

a) an ascertained liability but its amount and due date are indeterminate d) Rs 325,000

b) an ascertained liability but its amount and due date are determinate 11. Opening Stock Rs 40,000 , purchases Rs 360,000 , Closing Stock Rs 130,000 but the market

c) an unascertained liability but its amount and due date are determinate value of the closing stock was Rs 120,000 ,Sales Rs 380,000, Carriage inward Rs 6,000 ,

d) an unascertained liability but its amount and due date are indeterminate Fireight inward Rs 4,000, salary expense Rs 50,000, return inward Rs 20,000, return outward

6. Sales Rs 100,000, Cost of goods sold Rs 80,000 Closing stock Rs 10,000, Operating Rs 40,000. The Gross Profit for the year is

expenses Rs 5,000 , fireignt Inward Rs 1000, Freight outward Rs 3,000 . The operating a) Rs 60,000

Profit is b) Rs 70,000

a) Rs 15,000 c) Rs 90,000

b) Rs 25,000 d) Rs. 1,10,000

c) Rs 24,000 12. Bills receivable discounted but not due till date of final account is shown as:

d) None (a) Liabilities

7. Amount of by product should be shown in (b) Assets

(c) Profit & Loss A/c 2. How do you treat the following at the time of preparation of financial Statements of a nonprofit
making organization/
(d) Notes to Accounts (contingent liabilities)
(i) Donation; (ii) Life membership fees; (iii) Admission Fees
13. Only personal and real accounts are shown in:
(iv) Subscription (v) Liabilities for expenses.
(a) Trial balance
3. From the following information prepared Receipts and Payments Accounts and Income
(b) Statement of Financial Position
and Expenditure Accounts of ABC Club for the year ended 31st December 2018.
(c) Trading A/c
Subscription received for the year 2018 Rs. 120,000, Subscription receipts for 2017 Rs,
(d) Profit & Loss A/c
20,000, Subscription received in advance for 2019 Rs. 5,000. Donations received Rs.
14. Cost of Raw material consumed rs 100,000, Closing stock of Raw material Rs 30,000
25,000, Sale of old furniture Rs, 200 (cost Rs. 500. WDV Rs. 400) Wages of groundman
Opening Work in progress Rs 60,000, Closing Work in progress Rs 15000. Manufacturing
Rs. 24,000, General Expenses Rs. 30,000, Expenses for the tournaments Rs. 50,000,
overheads rs 8000 , Sales of scrap Rs 3000 , selling overheads Rs 10,000. The cost of
Repairs to ground Rs. 10,000, Audit fees Rs. 500, cash at bank Rs. 60,000, Subscription
manufactured goods is
outstanding Rs. 15,000. Wages outstanding Rs. 10,000, Office furniture Rs. 15,000,
a) Rs 150,000
Depreciation is usually charged @ 20%. The Club decided to keep Rs. 500 in hand at the
b) Rs 160,000
end of the year and to invest the balance other than balance laying with bank in 20% in
c) Rs 153,000
shares of XYZ Ltd.
d) None15. Closing stock of work in progress Rs 30,000 cost of manufactured goods Rs 100,000.
4. The Receipt and Payment Account of B.P. Memorial Hospital is given below form which
Opening stock of finished goods Rs 20,000 closing stock of finished good rs 25000 the
you are required to prepare an income and Expenditure Account for the year ended
manufacturing cost of finished goods sold is
31.12.2018.
a) Rs 95000
Receipts and Payments AccountsReceipts Rs. payments Rs.
b) Rs 105,000
Sale of Investment 50,000 Salary o Staff 425,000
c) Rs 65,000
Bill of cost 11,25,000 General Expenses 75,000
d) None of above
Audit Fees 10,000
II. Short Descriptive Questions (SDQs)
Balances:
1. ‗Manufacturing Account is prepared to find out cost of goods produced‘ Explain.
Cash in hand 340,000
2. Define Statement of Financial Position. What are the objectives of Statement of Financial
Cash at Bank 325,000
Position?
11,75,000 11,75,000
3. Differentiate between Trading Account and Profit & Loss Account. ANSWER Multiple Choice
Questions (MCQs) 1 c 6 a 11 d 2 b 7 c 12 d 3 d 8 a 13 b 4 b 9 c 14 a 5 d 10 c 15 a1. Express the process of Other information:
Receipts and Payments Account prepared by non-profit making
i. Specialist's fees Rs. 250,000
organization. How does it differ from Income and Expenditure Account?
ii. Bill for equipment Rs. 550,000
iii. Charge depreciation @ 10% on equipments, balance of which at the beginning of the distributing the profits. During the year firm earned Rs. 7,800 after allowing interest on

year was Rs. 750,000 capital. Profits apportioned among A and B is

iv. Misc. income not accounted Rs. 500 a) 4,680 and 3,120. b) 4,800 and 3,000.

v. During the year the hospital authority made a camp for children eye operation for which c) 5,000 and 2,800. d) None of the above.

is expended Rs. 15,000. The contractor did not raise the bill yet. 2. The relationship between persons who have agreed to share the profit of a business carried

vi. Donations not accounted for Rs. 15,000 on by all or any of them acting for all is known as

vii. The Chairman of the hospital traveled to foreign country and collected donations a.Joint venture b. Partnership

amounting to Rs. 15,00,000 which are not yet accounted and traveling expenses c. Association of Person d. Body of individuals

amounting to Rs. 40,000 are yet to be adjusted. 3. What would be the profit sharing ratio if the partnership act is complied with

You are also required to redraft the Receipts and Payments Account. a. As per Agreement b. Equally

5. Kathmandu Football Association gives you the following Statement of Financial Position c. To capital ratio d. None of the above

dated 31.12.2017 4. In the absence of an agreement , partners are entitled to

Liabilities Rs. Assets Rs. a. Salary b. Commission

Capital Fund 11,00,000 Lease hold ground 450,000 c. Interest on Loan d. Profit share in capital ratio

Tournament Fund 200,000 Furniture 50,000 5. Following is the difference between partnership deed and partnership agreement

Prize Fund 100,000 Tournament Fund Investment 200,000 a) Partnership deed is in writing and partnership agreement is oral

Current Liabilities 50,000 Prize Fund Investment 100,000 b) Partnership deed is signed by all the partners but partnership agreement is signed by

Other Investment 300,000 majority of the partners

Sports Equipments 50,000 c) Partnership deed is registered in the court of law whereas partnership agreement is not

Cash at Bank 280,000 registered

Cash in hand 20,000 d) Partnership deed is not subject to changes unless all partners agree to it. Partnership

14,50,000 14,50,000 agreement can be amended with the consent of more than 50% partners

Receipts during the year: Subscription are Rs, 10,00,000, Donations for tournament are Rs. 6. Ram and Shyam are partners with the capital of Rs 25,000 and Rs 15,000 respectively .

15,000. Donation for Prize are Rs. 25,000, Income from investment s Rs. 60,000. Interest payable on capital is 10% p.a .Find the interest on capital for both the partners when

Expenditure: Sports material is Rs. 250,000. Repairs to the ground is Rs. 50,000, Wages to the profit earned by the firm is Rs 2400

the staff is Rs. 250,000, Expenses for tournament are 50,000. Expenses for prize are Rs. a. Rs 2500 and Rs 1500 b. Rs 1500 and Rs 900

40,000, Construction cost of Club Building is Rs. 125,00. Multiple Choice Questions (MCQs) c. Rs 1200 and Rs 1200 d. None of the above

1. A and B are partners sharing profits and losses in the ratio of 3:2 having the capital of Rs.

80,000 and Rs. 50,000 respectively. They are entitled to 9% p.a. interest on capital before 638 |The Institute of Chartered Accountants of Nepal
FUNDAMENTALS OF ACCOUNTING - CAP I CHAPTER- 8 13. The profits for the last three years are Rs 40,000 Rs 60,000 and Rs 66,500 . The total

7. Manjila and pooja are partners sharing profit and losses in the ratio 4:1. Dipika was manager liabilities of the firm are Rs 10,00,000 of which outsiders liabilities is Rs 542,500 . The rate

who received the salary of Rs 4000 p.m in addition to a commission of 5% on net profits of interest expected from capital invested is 10%. The value of goodwill on capitalization is

after charging such commission. Profit for the year is rs 678,000 before charging salary. a. Rs 97,000 b. Rs 97,250

Find the total remuneration of Dipika c. Rs 97,500 d. Rs 97,750

a. Rs 78,000 b. Rs 88,000 14. The profit for 2016 is Rs 4000, for 2017 is Rs 52,200 and for 2018 is Rs 62,400. Closing

c. Rs 87,000 d. Rs 48,000 stock for 2017 and 2018 includes the defective items of Rs 4,400 and Rs 12,400 respectively

8. What time would be taken in consideration if equal monthly amount is drawn as drawing at which were considered as having market value NIL. The value of goodwill on average profit

the end of each month method is

a. 6 months b. 6.5 months

c. 5.5 months d. 5 months The Institute of Chartered Accountants of Nepal | 639

9. The profit of last three years are Rs 42,000, Rs 39,000, and Rs 45,000 find out the goodwill UNIT 1: Introduction to Partnership Accounts

of the two year‘s purchase UNIT 1: Introduction to Partnership Accounts

a. Rs 42,000 b. Rs 84,000 a. Rs 35,200 b. Rs 35,400

c. Rs 120,000 d. Rs 36,000 c. Rs 35,600 d. Rs 35,800

10. Following are the factors affecting goodwill except 15. A, B and C are partners in a firm. Profits before interest on partner‘s loan was Rs 12,000 and

a. Nature of business b. Efficiency of management B determined interest @24% p.a on his loan of Rs 160,000 . There was no agreement on this

c. Technical know how d. Location of customers point. Calculate the amount payable to A,B and C respectively

11. Weighted average method of calculation of goodwill should be followed when a) Rs 4000 to each partner

a. Profit are uneven b. Profits has increasing trend b) Loss of Rs 8,800 for A and C but B will take Rs 29,600

c. Profits has decreasing trend d. Either b or c c) A- Rs 800, B- Rs 10,400 and C-Rs 800

12. A and B are partners with capitals of Rs 10,000 and Rs 20,000 respectively and sharing d) Rs 4800 to each partner

profit equally. They admitted C as their third partner with a fourth profits of the firm on the ANSWER Multiple Choice Questions (MCQs) 1 A 6 A 11 D 2 B 7 A 12 C 3 B 8 C 13 C 4 C 9 B 14 B 5 A 10 A
15 C
payment of Rs 12,000.The amount of hidden goodwill is

a. Rs 10,000 b. Rs 6,000

c. Rs 8,000 d. Rs 24,000

(Solution: Total Capital = 12000*4/1 = 48000

Goodwill of old partners (3/4) = 48000-(10000+20000+12000) = 6000

Total Hidden Goodwill = 6000*4/3 = 8,000