Accounting for Non Profit Institution

:
1. Receipts and Payments Account generally shows :
(A) A Debit balance
(B) A Credit balance
(C) Surplus or Deficit
(D) Capital Fund

Answer
Answer: A

2. 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
Answer: A

3. Income and Expenditure Account reveals :

(A) Surplus or Deficiency
(B) Cash in Hand
(C) Net Profit
(D) Capital Account

Answer
Answer: A

4. The amount of ‘Subscription received from members’ by a Non-profit organi sation is

shown in which of the following?
(A) Debit side of Income and Expenditure Account
(B) Credit side of Income and Expenditure Account
(C) Liability side of Balance Sheet
(D) Assets side of Balance Sheet

Answer
Answer: B
5. 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
Answer: B

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

(A) Capital Receipt (i.e., Liability)
(B) Revenue Receipt {i.e., Income)
(C) Asset
(D) Earned Income

Answer
Answer: A

7. 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
Answer: D

8. Out of following items, which one is shown in the Receipts and Payments Account?
(A) Outstanding Salary
(B) Depreciation
(C) Life Membership Fees
(D) Accrued Subscription

Answer
Answer: C
9. 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
Answer: C

10. 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
Answer: B

11. Receipts and Payments Account is a :

(A) Personal Account
(B) Real Account
(C) Nominal Account
(D) Real and Nominal Account, both

Answer
Answer: B

12. Income and Expenditure Account is a :

(A) Personal Account
(B) Real Account
(C) Nominal Account
(D) Real and Nominal Account, both

Answer
Answer: C

13. Credit side balance in Income & Expenditure Account reveals :

(A) Excess of cash receipts overpayments
(B) Excess of cash payments over receipts
(C) Excess of expenditure over income
(D) Excess of income over expenditure

Answer
Answer: D

14. Source of income for a not-for-profit organisation is :

(A) Subscription from Members
(B) Donation
(C) Entrance Fees
(D) All of the above

Answer
Answer: D

15. Which of the following represent capital receipt:

(A) Life Membership Subscription
(B) Donation
(C) Subscription
(D) Interest on Investments

Answer
Answer: A

16. 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
Answer: B

17. 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
Answer: C

18. 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
Answer: C

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

(A) an income
(B) an asset
(C) a liability
(D) none of these

Answer
Answer: C

20. Subscription received in cash during the year amounted to ₹40,000; subscription
outstanding at the end of previous year was ₹1,500 and outstanding at the end of
current year was ₹2,000. Subscription received in advance for next year was ₹800. The
amount credited to Income & Expenditure Account will be:
(A) ₹38,700
(B) ₹39,700
(C) ₹40,300
(D) ₹41.300

Answer
Answer: B

21. Subscription received in cash during the year amounted to ₹5,00,000; subscription
outstanding at the end of previous year was ₹20,000 and outstanding at the end of
current year was ₹25,000. Subscription received in advance for next year was ₹8,000
and received in advance during previous year was ₹7,000. The amount credited to
Income & Expenditure Account will be :
(A) ₹5,04,000
(B) ₹5,06,000
(C) ₹4,96,000
(D) ₹4,94,000

Answer
Answer: A

22. Subscription received in cash during the year amounted to 760,000; subscription
received in advance for next year was 73,000 and received in advance during previous
year was 72,000. Subscription in arrear at the end of current year was 75,400. The
amount credited to Income & Expenditure Account will be :
(A) ₹53,600
(B) ₹66,400
(C) ₹55,600
(D) ₹64,400

Answer
Answer: D

23. Subscription received in cash during the year amounted to ₹3,00,000; subscription
received in advance for next year was ₹10,000 and received in advance during previous
year was ₹8,000. Subscription in arrear at the end of previous year was ₹18,000 and
subscription in arrear at the end of current year was ₹12,000. The amount credited to
Income & Expenditure Account will be :
(A) ₹2,96,000
(B) ₹3,04,000
(C) ₹2,92,000
(D) ₹3,08,000

Answer
Answer: C

24. What amount will be credited to the Income and Expenditure Account for the year
ending 31st March, 2010 on the basis of the following information? :

Subscriptions received during the year 2009-10 were ₹4,00,000.

(A) ₹3,84,000
(B) ₹4,16,000
(C) ₹3,86,000
(D) ₹4,14,000

Answer
Answer: B

25. There are 200 members, each paying an annual subscription of 7 1,000;
subscription received during the year 7 1,95,000; subscriptions received in advance at
the beginning of the year 73,000 and at the end of the year 72,000. – Amount shown in
Income & Expenditure Account will be :
(A) ₹2,00,000
(B) ₹1,96,000
(C) ₹1,94,000
(D) ₹2,01,000

Answer
Answer: A

26. The opening balance of Prize Fund was ₹32,800. During the year, donations
reoeived towards this fund amounted to ₹15,400; amount spent on prizes was 712,300
and interest received on prize fund investment was ₹4,000. The closing balance of
Prize Fund will be :
(A) ₹56,500
(B) ₹64,500
(C) ₹39,900
(D) ₹31,900

Answer
Answer: C

27. Salary paid in cash during the current year was ₹80,000; Outstanding salary at the
end was ₹4,000; Salary paid in advance last year pertaining to the current year was
₹3,200; paid in advance during current year for next year was ₹5,000. The amount
debited to Income and Expenditure Account will be:
(A) ₹85,800
(B) ₹77,800
(C) ₹82,200
(D) ₹74,200

Answer
Answer: C
28. Salary paid in cash during the current year was ₹30,000; Outstanding salary at the
end of previous year was ₹2,000 and outstanding salary at the end of current year was
₹3,000. Salary paid in advance during current year for next year was ₹2,600. The
amount debited to Income and Expenditure Account will be :
(A) ₹33,600
(B) ₹26,400
(C) ₹31,600
(D) ₹28,400

Answer
Answer: D

29. Salary paid for the year ended 31st March, 2010 amounted to ₹75,000. How much
amount will be recorded in Income and Expenditure Account in the following case?

(A) ₹75,700
(B) ₹74,300
(C) ₹75,300
(D) ₹74,700

Answer
Answer: D

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

During 2009-10 payment made for Stationery was ₹60,000.

(A) ₹57,800
(B) ₹62,200
(C) ₹61,800
(D) ₹58,200

Answer
Answer: A
31. How much amount will be shown in Income and Expenditure Account in the
following case? :

Payment made for medicines during 2009-10 was ₹2,5 0,000.

(A) ₹2,53,000
(B) ₹2,47,000
(C) ₹2,57,000
(D) ₹2,43.000

Answer
Answer: B

32. 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
Answer: B

33. If a general donation of smaller amount is received by a school, that donation will be
shown in :
(A) Liability Side
(B) Asset Side
(C) Debit side of Receipt and Payment A/c
(D) Credit side of Receipt and Payment A/c

Answer
Answer: C

34. Out of the billowing 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
Answer: D

35. 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
Answer: B

36. Out of the following items, which is shown in the ‘Receipts and Payments A/c’ of a
not for profit organisation?
(A) Subscription received in advance
(B) Last year subscription received
(C) Current year subscription received
(D) All of the above

Answer
Answer: D

JOINT VENTURE ACCOUNT

1. M and N enter into a Joint venture where M supplies goods worth
Rs.6000 and spends Rs.100 on various expenses. N sells the entire lot
for Rs. 7,500 meeting selling expenses amounting to Rs. 200. Profit
sharing ratio equal. N remits to M the amount due. The amount of
remittance will be:

(a) Rs.6,700
(b) Rs.7,300
(c) Rs.6,400
(d) Rs.6,100
2. A purchased goods costing 42500. B sold goods costing Rs 40000 at
Rs 50000. Balance goods were taken over by A at same gross profit
percentage as in case of sale. The amount of goods taken over will be:

(a) Rs.3,125
(b) Rs.2,500
(c) Rs.3,000
(d) none

3. Which of the following statement is true?

(a) Only one venture bears the risk

(b) Only one venture can sell the goods
(c) Only one venture can purchase the goods
(d) In joint venture, provisions of partnership act applies

4. Which of the following statement is true:

(a) In case of separate sets of books method of Joint Venture, co-venture's

contribution of goods is debited in Joint Bank A/c
(b) Co-venture's contribution in cash is debited in Venture's personal account
(c) Discount on discounting of B/R is debited to Venture's personal account
(d) Contract money received is credited to Joint Venture Account.

5. For opening Joint Bank account, in case of separate sets of books:

(a) Venture A/c will be debited and Ventures A/c will be credited
(b) Joint Bank A/c is debited and Ventures Capital A/c is credited
(c) Joint Venture A/c is debited and Joint Bank A/c will be credited
(d) Joint Bank A/c will be debited and Joint Venture A/c will be credited

6. For purchase of plant from Joint Bank Account, in case separate sets
of books are maintained, the correct journal entry will be:

(a) Plant A/c will be debited and Joint Bank A/c will be credited
(b) Joi Venture A/c will be debited and Joint Bank A/c will be credited
(c) Plant A/c will A/c Debited and Ventures Capital A/c will be credited
(d) Joint Venture A/c will be debited and Plant A/c will be credited

7. For material supplied from own stock by any of the venture, the
correct journal entry will be; (In case of separate sets of books)
(a) Joint Venture A/c will be debited and Ventures Capital A/c will be
credited
(b) Joint Venture A/c will be debited and Joint Bank A/c will be credited
(c) Joint Venture A/c will be debited and Material A/c will be credited
(d) Joint Bank A/c will be debited and Joint Venture A/c will be credited

8. A and B enter into a joint venture to underwrite the shares of K Ltd. K

Ltd make an equity issue of 100000 equity shares of Rs 10 each. 80% of
the issue are subscribed by the party. The profit sharing ratio between A
and B is 3:2. The balance shares not Subscribed by the public,
purchased by A and B in profit sharing ratio. How many shares to be
purchased by A.

(a) 80,000 Shares

(b) 72,000 Shares
(c) 12,000 Shares
(d) 8,000 Shares

9. A and B enter into a joint venture to underwrite shares of K Ltd. K Ltd

make an equity issue of 200000 equity shares. 80% of the shares
underwritten by the venture. 160000 shares are subscribed by the
public. How many shares are to be subscribed by the venturer?

(a) Nil
(b) 32,000
(c) 36,000
(d) None

10. A and B purchased a piece of land for Rs 20,000 and sold it for
Rs.60,000 in 2005. Originally A had contributed Rs 12000 and B Rs.8000.
What will be the profit on venture?

(a) Rs. 40,000

(b) Rs. 20,000
(c) Rs. 60,000
(d) Nil

11. A and B enter into adjoint venture-sharing profit and-fesses in the

ratio 2:1. A purchased goods costing Rs 2,00,000. B sold the goods for
Rs 2,50,000. A is entitled to get 1% Commission on purchase and B is
entitled to get 5% commission on sales. The profit on venture will be:

(a) Rs.35,500
(b) Rs.36,000
(c) Rs.34,000
(d) Rs.38,000

12. P and Q enter into a Joint Venture sharing profits and losses in the
ratio 3:2. P purchased goods costing Rs 2,00,000: Other expenses of P
Rs 10000. Q sold the goods for 180000. Remaining goods were taken
over by Q at Rs 20000. The amount of final remittance to be paid by Q to
P will be:

(a) 2,15,000
(b) 2,04,000
(c) 2,10,000
(d) None

13. C and D entered into a Joint Venture to construct a bridge. They did
not open separate set of books. They shared profits and losses as 3:2. C
contributed Rs.1,50,000 for purchase of materials. D paid wages
amounting to Rs.80,000. Other expenses were paid as:

D-15,000
C-5,000

C purchased one machine for Rs: 20,000. The machine was taken over
by C for Rs 10,000. Total contract value of Rs. 3,00,000 was received by
D. What will be the profit on venture?

(a) Rs.30,000
(b) Rs.40,000
(c) Rs.20,000
(d) Rs.15,000

14. R and M entered into a joint venture to purchase and sell new year
gifts. They agreed to share the profit and losses equally. R purchased
goods worth Rs 1,00,000 and spent Rs 10,000 in sending the goods to M.
He also paid Rs 5000 for insurance. M spent Rs.10,000 as selling
expenses and sold goods for 200000. Remaining goods were taken over
by him at Rs 5000. What will be the amount to be remitted by M to R as
final settlement?

(a) Rs.1,55,000
(b) Rs.1,50,000
(c) Rs.1,15,000
(d) Rs.80,000

15. R and M entered into a joint venture to purchase and sell new year
gifts. They agreed to share the profit and losses equally. R purchased
goods worth Rs.1,00,000 and spent Rs 10,000 in sending the goods to M.
He also paid Rs 5000 for insurance. M spent Rs 10,000 as selling
expenses and sold goods for 2,00,000. Remaining goods were taken
over by-him at Rs.5,000. Find out profit on venture?

(a) Rs.70,000
(b) Rs.75,000
(c) Rs.80,000
(d) Rs.85,000

16. A and B enter into a joint venture sharing profit and losses in the
ratio 3:2. A WI purchase goods and B will affect the sale. A purchase
goods costing Rs 2,00,000. B sold it for Rs.3,00,000. The venture is
terminated after 3 months. A is entitled to get 10% interest on capital
invested irrespective of utilization period.. The amount of interest
received by A will be

(a) 20,000
(b) 10,000
(c) 15,000
(d) 25,000

17. A bought goods of the value of Rs 10000 and consigned them to B to

be sold by them on a joint venture, profits being divided equally. A
draws a bill on B for an amount equivalent to 80% of cost on
consignment. The amount of bill will be:

(a) Rs.10,000
(b) Rs.8,000
(c) Rs.6,000
(d) Rs.9,000

18. A bought goods of the value of Rs.10,000 and consigned them to B

to be sold by them on a. joint venture, profits being divided equally, A
paid Rs.1,000 for freight and insurance. A draws a bill on B for Rs 10000.
A got it discounted at Rs.9,500. B sold the goods for Rs 15,000.
Commission payable to B, Rs 500. Find out the profit on venture ?

(a) Rs.3,000
(b) Rs.3,500
(c) Rs.4,000
(d) Rs.3,200

19. A bought goods of the value of Rs.10,000 and consigned them to B

to be sold by them on a joint venture, profits being divided equally, A
paid Rs. 1,000 for freight and insurance. A draws a bill on B for Rs.
10,000. A got it discounted at Rs.9,500. B sold the goods for Rs. 15,000.
Commission payable to B, Rs 500. The amount to be remitted by B to A
will be:

(a) Rs.12,500
(b) Rs.13,000
(c) Rs.14,500
(d) Rs.13,500

20. If any stock is taken over by the venturer, it will be treated as an:

(a) Income of the joint venture, hence credited to Joint Venture Account
(b) Expenses of Joint enture, hence debited to Joint Venture Account
(c) To be ignored from Joint Venture Transaction
(d) It will be treated in the personal book of the venturer and not in the books
of Jt Venture.

21. Advise which of the statement is true:

(a) The Joint Venture can be formed by a single person only.

(b) A legal deed should be drafted before forming Joint Venture.
(c) The profit be shared between the venturer in agreed ratio.
(d) Joint Venture follows going concern concept.
22. A and B were partners in a joint venture sharing profits and losses in
the proportion of 3/5th and 2/5th respectively. A supplies goods to the
value of Rs.80,000 and incurs expenses amounting Rs.6,000. B supplies
goods to the value of Rs.14,000 and his expenses amount to Rs 2000. B
sells goods on behalf of the joint venture and realizes Rs 150000. B
entitled to a commission of 5% on sales. B settles his account by bank
draft. Find out A's share of profit on venture?

(a) Rs.24,300
(b) Rs.25,000
(c) Rs.26,000
(d) Rs.20,300

23. A and B were partners in a joint venture sharing profits and losses in
the proportion of 3/5th and 2/5th respectively. A supplies goods to the
value of Rs.60,000 and incurs expenses amounting Rs.6,000. B supplies
goods to the value of Rs.16,000 and his expenses amount to Rs.3,000. B
sells goods on behalf of the joint venture and realizes Rs.1,20,000. B
entitled to a commission of 5% on sales. B settles his account by bank
draft. How much amount, B will pay to A as final settlement?

(a) Rs.83,400
(b) Rs.93,200
(c) Rs.80,000
(d) Rs.66,000

24. A and V enter into a joint venture to sell a consignment of biscuits

sharing profits and losses equally. A provides biscuits from stock
Rs.10,000. He pays expenses amounting to Rs.1,000. V incurs further
expenses on carriage Rs.1,000. He receives cash for sales Rs.15,000. He
also takes over goods to the value of Rs.2,000. What will be the amount
to be remitted by V to A?

(a) Rs.13,500
(b) Rs.15,000
(c) Rs.11,000
(d) Rs.10,000

25. A and V enter into a joint venture to sell a consignment of biscuits

sharing profits and losses equally. A provides biscuits from stock
Rs.10,000. He pays expenses amounting to Rs.1,000. V incurs further
expenses on carriage Rs.1,000. He receives cash for sales Rs.15,000. He
also takes over goods to the value of Rs.2,000. Find out profit on
venture?

(a) Rs.3,000 
(b) Rs.5,000
(c) Rs.6,000
(d) Rs.3,500

26. A purchased 1,000 kg of rice costing Rs.200 each. Carriage 2,000,

insurance 3,000. 4/5th of the boxes were sold by B at Rs.250 per boxes.
Remaining stock were taken Over by B at cost. The amount of stock
taken over will be:

(a) Rs40,000
(b) Rs.41,000
(c) Rs.50,000
(d) Rs.50,200

27: Goods costing Rs. 10,000 destroyed by an accident, insurance claim

nil. 

(a) Rs 10000 will be credited to Joint Venture Account.

(b) No Entry will be made in the books of Joint Venture
(c) Rs 10000 will be debited in Joint Venture Account as Loss
(d) Rs 8000 will be credited in Joint Venture Account

28. A and B were partners in a joint venture sharing profits and losses in
the proportion of 3/5th and 2/5th respectively. A supplies goods to the
value of Rs 60000 and incurs expenses amounting Rs 6000. B supplies
goods to the value of Rs 14000 and his expenses amount to RS 1000. B
sells goods on behalf of the joint venture and realizes Rs 100000. B
entitled to a commission of 5% on sales. B settles his account by bank
draft. Find out the profit on venture?

(a) Rs.14,400
(b) Rs.14,000
(c) Rs.13,000
(d) Rs.13,200
29. A purchased goods costing 1,00,000. B sold the goods for
Rs.1,50,000. Profit sharing ratio between A and B equal. If same sets of
books is maintained, what will be the final remittance?

(a) B will remit Rs.1,25,000 to A

(b) B will remit Rs.150000 to A
(c) A will remit Rs.1,00,000 to B
(d) B will remit Rs.25000 to A

30. A purchased goods costing 200000, B sold 4/5th of the goods for Rs
250000. Balance goods were taken over by B at cost less 20%. If same
sets of books is maintained, find out profit on venture?

(a) Rs.82,000
(b) Rs.90,000
(c) Rs.50,000
(d) none

31. A purchased goods costing Rs.2,00,000. B sold the goods for Rs

2,80,000. Unused material costing Rs 10,000 taken over by Aat Rs.8,000.
A is entitled to get 1% commission on purchase. B is entitled to get 2%
commission on sales. Profit sharing ratio equal. A's share of profit on
venture will be:

(a) Rs.40,000
(b) Rs40,400
(c) Rs40,600
(d) Rs40,200

32. A and B enter into joint venture sharing profit and loss equally. A
purchased 100 kg of rice @ Rs 20/kg. Brokerage paid Rs 200, carriage
paid Rs 300. B sold 90 kg of rice @ Rs 22/ kg. Balance rice were taken
over by B at cost. The value of rice taken over to be recorded in joint
venture will be:

(a) Rs.200
(b) Rs.250
(c) Rs.230
(d) Rs.220

33. A and B enter into a joint venture sharing profit and losses equally. A
purchased 5,000 kg of rice @ RS 50/kg. B purchased 1,000 kg of wheat
@ RS 60/kg. A sold 1,000 kg of wheat @ RS 70/kg and B sold 5,000 kg of
rice @ RS 60/kg. The profit on venture when same sets of book is
maintained will be:

(a) Rs.1,10,000
(b) Rs.1,00,000
(c) Rs.1,20,000
(d) Rs.60,000

34. A and B enter into a joint venture sharing profits and losses equally.
A purchased 5,000 kg of rice@ Rs 50/kg. B purchased 1,000 kg of wheat
@Rs 60/kg. A sold 1,000 kg of wheat @ Rs 70/kg and B sold 5000 kg of
rice @Rs 60/kg. What will be the final remittance?

(a) B will remit Rs. 2,10,000 to A

(b) A will remit Rs, 2,10,000 to B
(c) A will remit Rs. 200000 to B
(d) B will remit Rs 180000 to A

35. A and B enter into a Joint Venture by opening a joint bank account
contributing Rs.10,00,000. The profit sharing ratio between A and B is
3:2. How much amount to be Contributed by A?

(a) Rs.6,00,000
(b) Rs.4,00,000
(c) Rs.3,00,000
(d) Rs.5,00,000

36. A, B and C are co-venturer. The relative Profit sharing ratio between
A and B is 3:2 and between B and C is also 3:2. Find out the PSR
between A, B and C.

(a) 3:2:2
(b) 9:6:4
(c) 4:3:2
(d) 3:2:1

37. A and B entered into a joint venture. They opened a joint bank
account by contributing Rs.2,00,000 each. The expenses incurred on
venture is exactly equal to Rs.2,00,000. Once the work is completed,
contract money received by cheque Rs 4,00,000 and in shares Rs
50,000. 
The shares are sold for Rs 40,000. What will be the profit on venture?

(a) Rs.2,50,000
(b) Rs.2,40,000
(c) Rs.4,40,000
(d) Rs.4,50,000

38. If a venturer draws a bill on his co-venturer and if the drawer

discounts the bill with same sets of books maintained, the discounting
charges will be borne by:

(a) The drawer of the bill

(b) The drawee of the bill
(c) The discounting charges will be recorded in memorandum account
(d) The discounting charges will be borne by bank

39. Which of the following statement is not true?

(a) Joint venture is a going concern

(b) Joint venture is terminable in nature
(c) Joint venture does not follow accrual basis of accounting
(d) The co-venturer shares the profit in agreed ratio

40. A and B were partners in a joint venture sharing profits and losses in
the proportion of 4/5th and 1/5th respectively. A supplies-Goods to the
value of Rs.50,000 and incurs expenses amounting to Rs 5,400.B
supplies goods to the value of Rs.14,000 and his expense amount to
Rs.800. B sells goods on behalf of the joint venture and realizes
Rs.92,000. B is entitled to a commission of 5 per cent on sales. B settles
his account by bank draft. What will be the final remittance?

(a) B will remit Rs.69,160 to A

(b) A will remit Rs.69,160 to B
(c) A will remit Rs.69,000 to B
(d) B will remit Rs.69,000 to A

41. A and B were partners in a joint venture sharing profits and losses in
the proportion of 4/5th and 1/5th respectively. A supplies goods to the
value of Rs.50,000 and incurs expenses amounting to Rs 5,400. B
supplies goods to the value of Rs.14,000 and his expense amount to
Rs.800. B sells goods on behalf of the joint venture and realizes
Rs.92,000. B is entitled to a commission of 5 per cent on sales. B settles
his account by bank draft.
What will be the profit on venture?

(a) Rs.17,200
(b) Rs.17,000
(c) Rs.18,000
(d) Rs.18,200

42. In a joint venture A contributes RS 5000 and B contributes RS 10000.

Goods are purchased for Rs 11200. Expenses amount to Rs 800. Sales
amount to Rs 14000 the remaining goods were taken by B at an agree
price of Rs 400. A and B share profit and losses in the ratio of 1:2
respectively. As a final settlement, how much A will receive?

(a) 5,800
(b) 6,000
(c) 5,000
(d) 10,800

43. Which of the following statement is true?

(a) There is no difference between Jt Venture and Partnership

(b) Consignment and Jt Venture is same
(c) In case of Jt Venture, none of the act is applicable
(d) In case of Jt Venture, the number of related party is one only.

44. A and B enter into a venture sharing profit and losses in the ratio 2:3.
Goods purchased by A for Rs. 45,000. Expenses incurred by A Rs.13,500
and by B Rs.5,200. B sold the goods for Rs.85,000. Remaining stock
taken over by B at Rs.7,200. What will be the final remittance to be made
by B to A:

(a) Rs.69,900
(b) Rs.11,400
(c) Rs.17,100
(d) Rs.7,200
45. If separate sets of books is maintained and suppliers grant discount
at the time of making the payment for purchase of goods, such discount
received-will be treated as:

(a) Income of Joint Venture, hence credited to Joint Venture A/c

(b) Will be credited to Joint Bank A/c.
(c) Will be credited to Co-venture's Capital A/c
(d) Will be ignored from the books

46. If unsold goods costing Rs 20000 is taken over by Venturer at Rs

15000, the Joint Venture A/c will be credited by:

(a) Rs.20,000
(b) Rs.15,000
(c) Rs.50,001
(d) Nil

47. A and B enter into a venture sharing profits and losses in the ratio
2:3. Goods purchased by A for Rs. 45,000. Expenses incurred by A,
Rs.13,500 and by B Rs.5,200. B sold the goods for Rs.85,000. Remaining
stock taken over by B at Rs.7,200. The profit on venture will be:

(a) Rs.28,500
(b) Rs.21,300
(c) Rs.35,700
(d) Rs.9,800

48. State which of the statement is true?

(a) Memorandum Jt Venture Account is prepared to find out profit on

venture
(b) Memorandum Jt venture Account is prepared to find out amount due from
co-venturer
(c) Memorandum Jt Venture Account is prepared when separate sets of books
is maintained
(d) In Memorandum Jt Venture Account only one venture's transaction is
recorded

49. A and B enter into a joint venture for purchase and sale of Type-
writer. A purchased Typewriter costing Rs.1,00,000. Repairing expenses
Rs.10,000, printing expenses Rs 10,000. B sold it at 20% margin on
selling price. The sales value will be:

(a) Rs.1,25,000
(b) Rs.1,50,000
(c) Rs.1,00,000
(d) Rs.1,40,000

50. Which of the following statement is true?

(a) When separate set of books is maintained, expenses paid by venturer will
be credited to joint bank account.
(b) When separate set of books is maintained, expenses paid by
venturer will be credited to venturer's capital account.
(c) When separate set of books is maintained, expenses paid by venturer will
be credited to Jt. venture account.
(d) When separate set of books is maintained, expenses paid by venturer will
be credited to Outstanding Expenses Account.

51. In case of joint venture, a minor:

(a) Can be a co-venturer for the benefit of the venture.

(b) Can be a co-venturer if all other co-venturers agree
(c) Can be a co-venturer if permitted by the competent authority.
(d) Cannot be a co-venturer.

52. Which of the following statement is true?

(a) Co-ventures always shares profits and losses equally.

(b) Number of co-ventures can never be more than two.
(c) The relationship between co-venturers is principal & agent.
(d) Co-venturers may contribute funds for running the venture.

53. A&B has started a joint venture for purchase and sale of garments:
Initial capital contribution was Rs.25,000 and Rs.50,000 respectively.
There is no written agreement about share of profit loss amongst them.
They purchased garments worth Rs.50,000 and sold for Rs.75,000. The
profit of Rs.25,000 shared by them as:-

(a) Rs.8,333 and Rs.16,667

(b) Rs.10,000 and Rs.15,000
(c) Rs.12,500 and Rs.12,500
(d) Rs.20,000 and Rs.5,000

54. Karthik and Dhoni enter into a joint venture sharing profit and loss in
the ratio 2:1. Karthik purchased the goods costing Rs.2,00,000. Dhoni
sold the goods for Rs.2,50,000. Karthik is entiled to get 1% commission
on purchase and Dhoni is entitled to get 5% commission on sales. The
profit on venture will be

(a) Rs.35,500
(b) Rs.36,000
(c) Rs.34,000
(d) Rs.38,000

55. The minimum number of co-venture will be at-least _________ in

joint venture business.

(a) 2
(b) 5
(c) 7
(d) 4

56. Which of the following is true?

(a) Co-ventures always shares profit equally.

(b) Number of co-ventures can never be more than two.
(c) The relationship between co-ventures is principal and agent.
(d) Co-ventures may contribute funds running the venture.

57. C&D enter into a joint venture to share profit in the ratio 5:3. A part
from the profit, D is entitled to a commission of 5% of net profit after
charging such commission. If net profit of joint venture is Rs.33,600
before charging such commission. What will be share proft C and D:

(a) C will get profit Rs.19,950 and D Rs.11,970

(b) C will get profit Rs.20,000 and D Rs.12,000
(c) C will get profit Rs.21,000 and D Rs.12,600
(d) C will get profit Rs.21,600 and D Rs.12,600

58. Aastha and Shivani entered into a joint venture sharing profits and
losses in the ratio 2:1. Aastha purchased goods costing Rs.30,000.
Shivani sold the goods for Rs.40,000. Aastha was entitled to get 1%.
Commission on purchase and Shivani was entitled for 5% commission
on sales. Aastha's and Shivani's share in profit on venture Would be:

(a) Rs.1,467 and Rs.733 respectively

(b) Rs.5,133 and Rs.2,567 respectively
(c) Rs.4,400 and Rs.2,200 respectively
(d) Rs.3,667 and Rs.1,833 respectively.

59. In case of joint venture business, the method of accounting to be

followed is
decided by:

(a) Separate act for joint venture

(b) Accounting Standard
(c) Co-ventures as per their convenience
(d) ICAI

60. In case of joint venture, for purchase of machinery from Joint Bank
A/c, in case separate set of books are maintained, the correct journal
entry will be:

(a) Debit Machinery A/c and Credit Joint Bank A/c

(b) Debit Joint Venture A/c and Credit Joint Bank A/c
(c) Debit Machinery A/c and Credit Venture's Capital A/c
(d) Debit Joint Venture A/c and Credit Machinery A/c

61. A and B were partners in joint venture sharing profit and losses in
proportion of 3:2. A supplies goods to the value of Rs.60,000 and incurs
expenses amounting Rs.6,000. B supplies to the value of Rs.14,000 and
his expenses amounted Rs.1,000. B sells goods on behalf of the joint
venture and realizes Rs.1,00,000. B is entailed to a commission of 5% on
sales. B settles his account by a bank draft. Find out the profit on
venture.

(a) Rs.14,400
(b) Rs.14,000
(c) Rs.13,000
(d) Rs.13,200

62. In a joint venture X contributes Rs.25,000 and Y contributes

Rs.50,000. Goods are purchased for Rs.56,000. Expenses amount to
Rs.4000, sales amount to Rs.70,000, the remaining goods costing
Rs.3,000 were taken over by Y at an agreed price of Rs.2,000. X and Y
share profit and losses in ratio of 1:2 respectively. As a final settlement,
how much X will receive?

(a) Rs.29,333
(b) Rs.30,000
(c) Rs.25,000
(d) Rs.29,000

Consignment
1. P sends out goods costing Rs.3, 00,000 to Y at cost + 25%, consignor’s
expenses Rs.5, 000. 1/10th of goods were lost in transit. Insurance claim
received Rs.3, 000. The net loss on account of abnormal loss is:
(a)    Rs.27,500
(b)    Rs.25,500
(c)    Rs.30,500
(d)    Rs.38,000
The abnormal loss is {(3,00,000+5,000) x 1/10} – 3000 = 30500 – 3000 = 27500.
Hence option (a) is correct

2. X sends out goods costing Rs.2, 00,000 to Y. 3/5th of the goods were sold
by consignee for Rs.1, 40,000. Commission is 2% on sales + 20% of goods
sold exceeding cost price. The amount of commission will be:
(a)    Rs.5,667
(b)    Rs.6,800
(c)    Rs.6,000
(d)    Rs.5,600
Value of 3/5 th goods sold = 3/5 x2,00,000 = 1,20,000. Extra price received
(profit) = 1,40,000 – 120000=20000. Commisssion = 2% of 1,40,000 + 20% of
(20,000) = 2800+ 4000= 6800
Hence option (b) is correct

3. A proforma invoice is sent by:

(a)    Consignee to consignor
(b)    Consignor to consignee
(c)    Debtors to consignee
(d)    Debtors to consignor
A pro-forma invoice is sent by consignor to consignee giving description and
value of goods sent.
Hence option (b) is correct.
4. P sold goods to Q on consignment. Q sold the goods to R. R sold the
goods to S. Who is the debtor in the books of P :
(a)    Q
(b)    R
(c)    S
(d)    all of Q, R & S.
Here Q is consignee. Actual customer of P is R whom the goods were sold by his
consignee Q. S is customer of R, not of  P. So, R is the debtor in the books of P.
So, answer is (b).

5. Commission provided by the consignor to the consignee to cover bad

debt is known as
(a)    Ordinary commission
(b)    Del credere Commission
(c)    Over-riding commission
(d)    Special commission.
Del-credere commission is the commission which is provided by the consignor to
the consignee to promote credit sales and which is allowed to cover loss of due
to bad debts only. Hence option (b) is correct.

6. Over-riding commission is calculated on:

(a)    Cash sales
(b)    Credit sales only
(c)    Sales at higher price
(d)    Credit sales less cash sales.
Over-riding commission is an additional commission payable to consignee by
consignor on total sales amount for making sales at above specific price or at
above invoice price.
Hence option (c) is correct.

7. If the del credere commission is 10%, cash sales is Rs.5,000 and credit
sales is Rs.10, 000. Calculate the amount of del credere commission.
(a)    Rs.1,500
(b)    Rs.1,000
(c)    Rs.500
(d)    None of the above.
Del-credere commission is calculated on total sales i.e. cash and credit sales
(unless there is any agreement to pay on Credit sales only). So, the amount of
del-credere commission = Rs.(10,000 +5,000) x 1/10 = Rs.1,500. Hence option
(a) is correct

8. Del credere commission is allowed to cover-

(a)    Normal loss
(b)    Abnormal loss
(c)    Loss due to bad debts
(d)    All of the above
Del-credere commission will save consignor from loss of bad debts .  So, option
(c) is correct.

9. X sent goods costing Rs 2,00,000 to his consignee Y, to be sold at 20%

above cost. Y sold goods of  Invoice value of Rs.1,20,000 on credit, and
30,000 in cash. Goods costing 12000 were destroyed in Fire. Y is entitled to
Commission of 10% + 2% Del credere commission on sale. What would be
commission payable to Y
(a)    18000                                                          √   
(b)    3600                                                                
(c)    24000                                                              
(d)    12000                                                              
Y will get commission of 10+2=12% on (1,20,000+30,000), i.e on 12% on
1,50,000 = 18,000. So, option (a) is correct.

10. The unsold stock on consignment is valued at-

(a)    Original cost of the goods
(b)    Original cost + expenses incurred by both consignor and consignee
(c)    Original cost + expenses incurred only by the consignee
(d)    Original cost + all expenses incurred by consignor & consignee
The unsold stock on consignment is valued at Original cost + expenses incurred
by both consignor and consignee. So, option (b) is correct.

11. Consignment Stock is valued

(a)    Cost price
(b)    Market price
(c)    Selling price
(d)    Cost or net realizable value, whichever is less.
Like Closing stock, the Stock with consignee is valued at cost or net realizable
value whichever is less. So, option (d) is correct.

12. X sends out goods costing Rs.3, 00,000 to Y at cost + 20%. Consignor’s
expenses Rs.6, 000. 10% of the goods were lost in transit. 2% of the goods
evaporated (normal loss).  Insurance claim received Rs.2, 000. The net loss
on account of abnormal loss is:
(a)    Rs.28,600
(b)    Rs.26,600
(c)    Rs.31,600
(d)    Rs.27,000
Net abnormal loss = [{(3,00,000 + 6,000)} x 10 /100] – 2,000 = Rs.(3,06,000 x
10 /100) – 2,000 = Rs.30,600 – 2,000 = Rs.28,600. So, option (a) is correct.
(evaporation is normal loss, hence not counted)

13. Goods sent to consignment at cost + 33.33%.  The percentage of

loading on invoice price will be:
(a)    25%
(b)    33.33%
(c)    20%
(d)    None of the above.
Goods sent on consignment = Cost + 33.33 % i.e. (100 + 33.33) % = 133.33 %.
Invoice price 133.33 when cost price 100. Invoice price is 100, when cost price =
100 x 100/ 133.33 = 75 % (Cost price). So, the % of loading =(100 – 75)% =
25%. So, option (a) is correct.

14. Goods sent out on consignment Rs.7, 60,000. Opening consignment

stock Rs.48, 000. Cash sales Rs.7, 50,000. Consignor’s expenses Rs.30,
000. Consignee’s expenses Rs.22, 000. Commission Rs.20,000. Closing
consignment stock Rs.2, 70,000. The profit on consignment is:
(a)    Rs.1,50,000
(b)    Rs.1,40,000
(c)    Rs.92,000
(d)    None of the above.
Profit on consignment = (Sales + Closing stock) – (Goods sent out + Opening
stock + Consignor’s expenses + Consignee’s expenses + Commission)
= Rs.(7,50,000 + 2,70,000) – Rs.(7,60,000 + 48,000 + 30,000 + 22,000 + 20,000)
= Rs.(10,20,000 – 8,80,000) = Rs.1,40,000. So, option (b) is correct.

15. X sends out 50 boxes to Y of Delhi costing Rs.200 / box. Consignor’s

expenses
Rs.2, 000. Consignee’s expenses on selling Rs.1, 500. 3/5 th of the goods
sold by consignee, ½ of the balance goods were lost in consignee’s
godown due to fire. The value of abnormal loss will be:
(a)    Rs.2,700
(b)    Rs.2,400
(c)    Rs.4,200
(d)    None of the above.
Total cost of goods = Rs.(50 boxes x Rs.200) + 2,000 = Rs.12,000
Cost of goods sold = Rs.12, 000 x (3 /5) = Rs.7, 200.
So, the value of abnormal loss (half the goods lost) = Rs. ½ x (12,000 – 7, 200) =
Rs.2, 400.
So, option (b) is correct.
16. Goods costing Rs.2, 00,000 sent out to consignee at cost + 25%. Invoice
value of the goods will be:
(a)    Rs.2,50,000
(b)    Rs.2,40,000
(c)    Rs.3,00,000
(d)    None of the above.
 Invoice value of the goods = 2,00,000 + 25% of 2,00,000 = 2,00,000 +
50,000=.2, 50,000.
So, option (a) is correct.

17. Goods of the invoice value Rs.2, 50,000 sent out to consignee at 20%
profit on cost. The loading amount will be:
(a)    Rs.40,000
(b)    Rs.48,000
(c)    Rs.50,000
(d)    None of the above.
The amount of loading Amount = Rs.2, 50,000 x 20 /100 = Rs.50, 000. So, option
(c) is correct.

18. In the books of consignor, the profit of consignment will be transferred

to:
(a)    General Trading A/c
(b)    General P/L A/c
(c)    Drawings A/c
(d)    None of the above.
In the books of consignor, the profit of consignment will be transferred to General
P/L A/c. So, option (b) is correct.

19. Relation between Consignor and consignee is as a  

(a)    Master and servant
(b)    Debtors and creditor
(c)    Principal and agent
(d)    Seller and buyer.
Relationship between consignor and consignee is that of principal and agent. So,
option (c) is correct.

20. Balance of consignment account shows

(a)    Stock lying with consignee
(b)    Profit and loss on consignment
(c)    Amount due from consignee
(d)    Amount due to consignee.
The balance of consignment account shows profit and loss on consignment. So,
option (b) is correct.
21. Consignment stock A/c is a
(a)    Representative personal A/c
(b)    Real A/c
(c)    Nominal A/c
(d)    Personal A/c.
Consignment stock A/c is a Representative personal A/c. So, option (b) is
correct.
22. Which of these accounts are opened in the books of consignee?
(a)    Consignor A/c
(b)    Goods sent on consignment A/c
(c)    Consignee personal A/c
(d)    Consignment A/c.
23. The balance of consignment stock is shown
(a)    Assets side of balance sheet
(b)    Liability side of balance sheet
(c)    By way of foot note
(d)    As a contingent assets.
The balance of consignment stock is called closing stock and like any other
business it is a current assets and shown assets side of Balance sheet. So,
option (a) is correct.
24. In case del credere commission is allowed to consignee, then the
Consignee bears
(a)    Bad debts
(b)    Consignor’s expenses
(c)    Consignee’s expenses
(d)    All of the above.
In case of del-credere commission, is allowed to consignee, then the loss of bad
debts will be borne by consignee. So, option (a) is correct.