II PUC Accountancy Repeated and Important Theory Questions With Answers 2024

Prepared By JOY.K.V M.com ,B.ed , K-set.

Highlights:
-Two marks repeated Questions (2023 M&S2&S1, M&S2022, M-2021,M&S2020, M&S2019)
-Two Marks 5 Chapters complete Questions and Answers as per P.U Board Question Bank
-One marks Theory (2023 M&S2&S1, M&S2022, M-2021, M&S2020, M&S2019)
-One Marks expected questions for 2024 Annual exam.
-Fill in the blanks and True or False .(2023 M&S2&S1, M&S2022, M-2021,M&S2020, M&S2019)
-Expected Fill in the blanks,True or False, Multiple Choice Questions for 2024 Annual exam.
-Match the following as P.U board and additional Questions.
-Expand Questions with Answers
Previous Year’s Repeated Questions and Answers
A. Meanings,Definitions:
1. What is fluctuating capital system. (2022,2016)
Fluctuating capital method is a method of maintaining Partners capital a/cs, in which all adjustments
relating to partners are recorded in their Capital A/cs.
2. Define partnership.(2018,2019,S-2022,2021,S2-2023,)
According to sec 4 of the Indian Partnership Act – 1932 “Partnership is the relation between persons
who have agreed to share the profits of a business carried on by all are any of them acting for all”
3. Give the meaning of financial statements (2019,S-2022)
Financial statements are the basic and formal annual reports through which the corporate management
communicates financial information to its owners and various other external parties.
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4. What is forfeiture of shares? (2019,2016)
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Cancellation of the right of a shareholder on shares held by him due to non-payment of money due on
such shares
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5. What is under subscription?(2022,2015)

When the number of shares applied for is less than the number of shares for which applications have
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been invited for subscription, there is said to be under subscription

6. What do you mean by Operating activities. (S-2020)
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Operating activities are the activities that constitute primary or main activities of an enterprises.
7.What do you mean by Investing activities. (S-2019)
Investing activities are the activities relating to purchase and sale of long term assets.
8. What is meant by fixed capital system? (2015)
Fixed Capital Method is a method of maintaining Partners capital a/cs, in which the capital balances of
the Partners shall remain fixed. All adjustments relating to Partners are recorded in a separate account
called Partners Current Accounts.
9. What is over subscription? (S1-2023)
When the public apply for more shares than those offered to them there is said to be over subscription.
10. What is profit and loss appropriation account?(2017)
Profit and Loss Appropriation A/c is the extension of P & L A/c which shows the appropriation of
profits among the Partners after making necessary adjustments.
11. What is partnership deed? (2018, S1-2023)
Partnership Deed is the written agreement on stamp paper containing terms of Partnership, duly signed
by all Partners.
12. What is Gain Ratio?
Ans. Gain Ratio is the ratio in which the continuing partners gain the share of retiring partner on his
retirement.
13. Give the meaning of accrued profit.
Ans. The profit or loss from the date of last balance sheet till the date of death of a partner in a partnership
firm is called as accrued profit.
14.What is a company ?
Ans : A company incorporated or registered under the companies Act 2013 or under any other earlier
Companies Act. OR
A Company is an association of persons formed to carry on business with a view to earn profit, having a
common stock called the „share capital , which is divided into equal units called „shares‟ held by the person
called „shareholder‟ OR
A company can be described as an artificial person having a separate legal entity, perpectual succession and
a common seal
15. What is public company ?
Ans : A company which is not a private company or not a subsidiary of a private company.

16. What is cash flow statement ?

Ans : A cash flow statement is a statement showing inflows & outflows of cash and cash equivalents from
operating, investing and financing activities of a company during a particular period.

B.Types, Methods,Techniques, Categories, Items, for 2 Marks:

1. What are the methods of maintaining capital account of partners? (2020, S-2020)
a. Fixed capital system b. Fluctuating capital system.
2. State any two final accounts of a Partnership firm.
a. Trading and profit and loss account. b. Balance sheet
3. Name any methods for calculation of interest on drawings
a. Average period method. b. Product method.
4. State any two special aspects of partnership accounts.
a. Maintenance of Partners capital accounts b. Dissolution of partnership
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5. Name any two contents of Partnership deed. (2019)
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a. Name and addresses of the partners b. Profit and loss sharing ratio
6. State any two methods or types of issue of shares. (2018 ,S-2022,S-2020,S2-2023)
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a. Issue at par b. Issue at premium

7. State any two categories of share capital (2020,2022,2021)
a. called up capital b. paid up capital
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8. Mention two types of financial statements. (2018,2020,2016)

a. Balance sheet(position statement) b. Statement of profit and loss.
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9. State any 2 postulates.

(*Postulates means concepts)
a. Going concern postulate or concept. b. Money measurement postulate or concept
10. Mention any two items which are shown under the head’ Reserves and Surplus’. (2021)
a. Capital reserve c. General reserve.
11. Mention any two activities which are classified as per AS-3. (2019,2020,S-2022,S2-2023)
a. Operating activities b.Investing activities c.Financing activities
12. Mention any two circumstances for Retirement of a Partner.
a. old age of a partner b. Unlawful business c. Lunacy of any partner d. Insolvency of any partner.
13. State any two purposes of calculating New Profit Sharing Ratio.
i. To share the future profits of the firm. ii. To write off the firms good will.
14. Name two methods of treatment of Goodwill?
a. Goodwill is raised at its full value & retained in business
b. Goodwill is raised at its full value and written off by continuing partners
15. Mention any two modes of payment on settlement of Retiring Partner's Capital Account.
i. The settlement is made by cash or cheque.
ii. The settlement is made through bank over draft
16. Write any two ways of settlement of claims to the deceased partner.
i. Immediate full payment ii. The balance treated to loan account
iii. Partly paid in cash & the balance treated to loan a/c.
 C. Features For (2 Marks)
1. State any two features of partnership.(S-2019)
a. two or more partners: The minimum members of a partners can be two
b. Sharing profits: The agreement between the partners must be to share profits of the business.

2. State any two features of company? (S-2019)

1.Body corporate: 2. Separate Legal Entity : 3. Limited Liability:
3. State any two features of financial statements.
a. Recording facts: Its prepared on the basis of facts in the form of cost data recorded in accounting books.
b. Accounting conventions: Certain accounting conventions are followed while preparing financial
statements.
D. Chapter wise Objectives Questions:
1. Write any two objectives of financial statements. (2019,2021,S-2020,S2-2023, S1-2023)
a. To provide information about the earning capacity of the business.
b. to provide information about cash flows
2. Write any two objectives of preparing cash flow statement.(2022)
- Provides information about the cash flows(inflows and outflows) of an enterprise.
-To ascertain amount and certainty of cash flows
-Helpful for short-term planning, for preparing cash budget.

E. Merits and Demerits questions for 2 Marks:

1. State any two benefits of financial statements.
a. Basis for fiscal policies b. Helps Stock exchanges
2.State any two uses of cash flow statement. (S1-2023)
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-Helps in balancing its cash inflow and cash outflow, keeping in changing condition
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-It Provides information that enables users to evaluate changes in net assets of an enterprise.
- Helps in ascertaining the liquidity of an enterprise
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3 . Give any two limitations of financial statements. (2022,S-2019)

a. do not reflect current situation: Prepared on the basis of historical cost.
b. Assets may not realise: Accounting is done on the basis of certain conventions . Some of the assets
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may not realise the state value.

c. Aggregate information: It show only aggregate information but not detailed information.
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F.Simple Problems for (2 Marks):

1. A, B, C are partners in a form sharing Profits and Losses in the ratio of 3:2: 1. If B retires, then
what will be the NPSR of A & B.
Ans. New profit sharing ratio of partners A & B is 3: 1.

2. A, B, C were partners in a firm sharing profits in the ratio of 5:4: 1. The profit of the firm for the
year ending on 31-3-2017 was 1,00,00. B dies on 30-6-2017.
Calculate B's share of profit from 1-4-2017 to 30-6-2017.
Ans. 1,00,000x3/12x4/10=10,000

3. P,Q and R are partners in a firm sharing profits in the ratio of 3;2: 1. R retires and the balance in
his Capital Account after making necessary adjustments workout to be 60,000 .P and Q agreed to pay
him 75,000 in full settlement of his claim. Find out the hidden goodwill.
Hidden good will = (75,000-60,000) =15,000

4. Give the Absolute increase and percentage increase for the following:
Previous Year Current Year
Revenue from operations 60,000 75,000
Solution:
Absolute increase=75,000-60,000=Rs.15,000
percentage increase=15,000 X100÷60,000=25%
5. If revenue from operation are Rs. 48,000, opening trade receivables are Rs. 8,000 and closing trade
receivable are 6,000, Calculate cash receipts from customers. (2019)
Solution: Cash receipt from customers = Revenue from operation + Trade receivable in the beginning –
Trade receivable in the end
Cash receipt from customers= 48,000,+8,000-6,000=Rs. 50,000

6. If purchases are Rs. 72,000, opening trade payables are Rs. 12,000 and closing trade payables are
Rs. 9,000. Calculate cash payments to suppliers.
Solution: Cash payment to supplier= Purchases + Trade payables in the beginning – Trade payables in the
end.
Cash payment to supplier = 72,000 + 12,000 – 9,000 =75,000

G .Differences, Chapter wise Questions for 2 Marks

1. State any two differences between fixed and fluctuating capital
accounts.(2021)
Fixed capital system Fluctuating capital system
1.Two accounts are maintained like, 1. Only one account that is capital
partners capital and current account account is maintained for each partner

2. The capitals of the partners shall 2. The capital of the partners fluctuate or
remain fixed unless additional capital change from year to year.
is introduced. n
2.State any two differences between sacrificing ratio and gaining ratio.
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Sacrifice ratio Gain ratio
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a. Calculated at the time of admission of a. Calculated at the time of retirement of a

a partner partner.
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b. the old partners agree to sacrifice b. the continuing partners have

their share of profit in favour of the acquired the share from the retiring
incoming partner is called sacrifice partner is called the gain or gaining
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ratio. ratio.
c. It is required to distribute the good will c. It is required to write off the goodwill raised
brought in cash by the new partner. to the extent of retiring partner.

3.State any two differences between retirement and death of a partner.

Retirement of a partner Death of a partner

a. Takes place generally at the end of the year a. Takes place at any time during the year

b. Retiring partners capital a/c settlement takes b. Decreased partners capital a/c settlement takes
place between the firm & retiring partner him self. place between the firm & executor's of the deceased
partner.

c. Retiring partner's capital a/c balance is not paid c. Deceased partners capital a/c balance is paid to
to him immediately on his retirement the executors immediately on the date of death.
 4. State any two differences between current liabilities and non- current liabilities.
Current Liabilities Non-Current Liabilities.
1. It is paid with in one year or less. 2. It is paid More than one year.
Example: Trade payable Example: Debentures

2. It is short-term of sources of funds. 2. It is long-term sources of funds.

5. State any two differences between and public company and private company.
Public Company Private Company.
a. Minimum 7 members and maximum a.Minimum 2 members and maximum 200
number of member is un limited members

b.There is no restrictions to transfer its shares b.There is a restrictions to transfer its shares
.

H. Examples:
1. Write any two examples for financing activities.
Issue of equity shares, Issue of debentures, Repayment of debentures, payment of dividend and interest.
2.Write Any two examples for Cash Inflow from Operating activities.
-Cash receipts from sale of goods and the rendering of services.
-Cash receipts from royalties, fees, commissions and other revenues.
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3.Write Any two examples for Cash Outflow from Operating activities.
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-Cash payments to suppliers for goods and services.
-Cash payments to and on behalf of the employees
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4.Write Any two examples for Cash Inflow from Investing activities.
-Cash receipt from disposal of fixed assets including intangibles
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-Interest received in cash from loans and advances.

-Dividend received from investments in other enterprises.
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5.Write Any two examples for Cash Outflow from Investing activities.
-Cash payments to acquire fixed assets including intangibles
-Cash payments to acquire shares, warrants.
-Cash advances and loans made to third party
6. Write Any two examples for Cash Inflow from Financing activities.
-Cash proceeds from issuing shares (equity or/and preference).
-Cash proceeds from issuing debentures, loans, bonds and other short/ long-term borrowings.
7. Write Any two examples for Cash Outflow from Financing activities.
- Cash repayments of amounts borrowed.
- Interest paid on debentures and long-term loans and advances.
- Dividends paid on equity and preference capital.
G.Journal entry for 2 Marks.

1. Pass the journal entry for adjusting retiring partners share of goodwill when no goodwill is raised.
Continuing partners capital A/c Dr.
To Retiring partners capital A/c
(Being retiring partners share of goodwill adjusted.)
2. Pass the journal entry to close Retiring Partner's Capital Account when the payment is made
immediately.
Retiring partners capital A/c Dr.
To Cash/Bank A/c
(The payment made to retiring partner immediately.)
3. Give the journal entry to close Revaluation Account when when it is transferred to Loan A/c.
Loan A/c Dr.
To Revaluation A/c
(Revaluation account balance treated to loan A/c)
4. Give the journal entry to close Revaluation Account when there is a Profit.
Revaluation A/c Dr.
To All the partners capital A/c
(Profit on revaluation a/c distributed in old ratio)
5. Give the journal entry to close Revaluation Account when there is a Loss.
All the partners capital A/c Dr.
To Revaluation A/c
(Loss on revaluation A/c transferred in old ratio)
6. Pass the journal entry for Deceased Partner's Share of profits for the Intervening Period:
Profit & loss suspense A/c Dr.
To Decreased partners capital A/c
(Decreased partners share profit given.)
7. Write the journal entry to close the deceased partner's Capital Account.
Deceased partners capital Dr.
To Deceased partners executors A/c
(Being deceased partner's capital treated to executors a/c)
8. Pass Journal entry for transfer of accrued profit of the deceased partner.
Deceased partners capital a/c Dr.
To Profit & Loss Suspense A/c
(Being accrued profit transferred)
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9. Write the journal entry for cash paid immediately to the executors of the deceased partner.
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Deceased partners executors A/c Dr.
To Cash/Bank A/c
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(Being cash paid immediately to the executor)

10. Give the Journal Entry when retiring partner's whole amount is treated as loan.
Retiring partner's capital A/c Dr.
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To Retiring partners loan A/c

(Retiring partners capital a/c treated. To the retiring partner's loan a/c)
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11. Pass the Journal Entry when retiring partner is partly paid in cash and the remaining amount is
treated as loan
Retiring partner's capital A/c Dr.
To Cash/ Bank A/c
To Retiring partners loan A/c
(Retiring partner partly paid in cash and the balance treated to his loan a/c)
12. Give the Journal entry for transfer of profit on re-issue of forfeited shares.
Ans : Share Forfeiture A/c. ………….
To Capital Reserve A/c ….
(Profit on reissue of forfeited shares)

Two Marks All ChptersTheory For Annual Exam 2024

1. In this year for Two marks only 5 chapters

1. Accounting for partnership basic concepts.
2. Retirement and Death of a partner.
3. Accounting for share capital
4. Financial statements of a company.
5. Cash flow statement.
 1. Accounting for partnership basic concepts.
1) What is Partnership ?
Ans : Partnership is a relation between two or more persons who join hands to set up a business and
share its profits and losses.
2) Define Partnership
Ans : According to sec 4 of the Indian Partnership Act – 1932 “Partnership is the relation between
persons who have agreed to share the profits of a business carried on by all are any of them acting for
all”
3) State any two features of Partnership
Ans : a) Two or more persons b) Agreement between Partners
4) What is Partnership Deed ?
Ans : Partnership Deed is the written agreement on stamp paper containing terms of Partnership,
duly signed by all Partners.
5) What are the methods of maintaining capital accounts of Partners ?
Ans : a) Fixed Capital Method b) Fluctuating Capital Method
6) What is Fixed Capital Method ?
Ans : Fixed Capital Method is a method of maintaining Partners capital a/cs, in which the capital
balances of the Partners shall remain fixed. All adjustments relating to Partners are recorded in a
separate account called Partners Current Accounts.
7) What is fluctuating capital method ?
Ans : Fluctuating capital method is a method of maintaining Partners capital
a/cs, in which all adjustments relating to partners are recorded in their
Capital A/cs.
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8) State any two differences between fixed and fluctuating capital methods.
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Fixed capital system Fluctuating capital system
1.Two accounts are maintained like, 1. Only one account that is capital
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partners capital and current account account is maintained for each partner
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2. The capitals of the partners shall 2. The capital of the partners fluctuate or
remain fixed unless additional capital change from year to year.
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is introduced.
9) What do you mean by Profit and Loss Appropriation Account ?
Ans : Profit and Loss Appropriation A/c is the extension of P & L A/c which shows the appropriation of
profits among the Partners after making necessary adjustments.
10) What is guarantee of profit to a Partner ?
Ans : Guarantee of profit to a partner means giving assurance of certain minimum amount by way of his
share of profits of the firm.
11) What do you mean by past Adjustments?
Ans : Past Adjustments refer to, making necessary rectifications for commissions or omissions noticed
after preparation of final accounts.
12) State any two final accounts of a Partnership firm.
Ans : a) Profit and Loss A/c and b) Balance Sheet
13) In the absence of Partnership deed, specify the rules relating to the followings:
a) Sharing of profits & losses b) Interest on partners capital
Ans : a) Equally b) Not to be allowed
14) State the rules relating to the followings in the absence of Partnership Deed.
a) Interest on drawings b) Interest on advances from Partners
Ans : a) Not to be charged b) 6% p.a.
15) Name any two methods for calculation of Interest on drawings.
Ans : a) Product Method b) Average Period Method
16) When the interest on drawings is generally provided to Partners ?
Ans : Interest on drawings is generally charged on partners when it is specifically expressed in an
agreement.
17) How do you close Profit and Loss Appropriation Account in Partnership ?
Ans: Profit and Loss Appropriation A/c in Partnership is closed by transferring its balance to Partners
Capital or Current A/cs, as the case may be.
18) State any two special aspects of Partnership A/cs.
Ans : a) Maintenance of Partners Capital A/cs.
b) Distribution of P & L among Partners.
19) Name any two contents of Partnership Deed.
Ans : a) Profit Sharing Ratio b) Capitals of Partners

2. Retirement and Death of a partner.

1. Mention any two circumstances for Retirement of a Partner.
a. old age of a partner b. Unlawful business c. Lunacy of any partner d. Insolvency of any partner.
2. What is Gain Ratio?
Ans. Gain Ratio is the ratio in which the continuing partners gain the share of retiring partner on his
retirement.
3. State any two differences between Sacrificing Ratio and Gaining Ratio.
Sacrifice ratio Gainratio
1. It is calculated at the time of admission of a 1. It is calculated at the time of retirement of a
partner. partner.

2. It is required to distribute the good will brought in 2. It is required to write off the goodwill raised to the
cash by the new partner. extent of retiring partner.
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4. State any two purposes of calculating New Profit Sharing Ratio.
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i. To share the future profits of the firm. ii. To write off the firms good will.
5. Name two methods of treatment of Goodwill?
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a. Goodwill is raised at its full value & retained in business

b. Goodwill is raised at its full value and written off by continuing partners.
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6. How do you close the Revaluation Account on Retirement of a Partner?

Ans. The profit or loss (balance) in revaluation account distributed among all the partners in old profit
sharing ratio.
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7. Pass the journal entry for adjusting retiring partners share of goodwill when no goodwill is raised.
Continuing partners capital A/c Dr.
To Retiring partners capital A/c
(Being retiring partners share of goodwill adjusted.)
8. Mention any two modes of payment on settlement of Retiring Partner's Capital Account.
i. The settlement is made by cash or cheque. ii. The settlement is made through bank over draft.
iii. The amount due to retiring partner treated as loan
iv. The amount due party pain in cash and the balance transferred to loan a/c.
9.Pass the journal entry to close Retiring Partner's Capital Account when the payment is made
immediately.
Retiring partners capital A/c Dr.
To Cash/Bank A/c
(The payment made to retiring partner immediately.)

10. Give the journal entry to close Revaluation Account when when it is transferred to Loan A/c.
Loan A/c Dr.
To Revaluation A/c
(Revaluation account balance treated to loan A/c)
11. Give the journal entry to close Revaluation Account when there is a Profit.
Revaluation A/c Dr.
To All the partners capital A/c
(Profit on revaluation a/c distributed in old ratio)
12. Give the journal entry to close Revaluation Account when there is a Loss.
All the partners capital A/c Dr.
To Revaluation A/c
(Loss on revaluation A/c transferred in old ratio)
13. Why do firms revalue the assets and liabilities on Retirement?
To Know the decrease or increase in the value of assets and liabilities on retirement of a partner from the
firm.
11. Why retiring partner is entitled to a share of Goodwill of the firm?
Ans. Because the goodwill earned by the firm with the efforts of all partners including retiring partner.
15. A, B, C are partners in a form sharing Profits and Losses in the ratio of 3:2: 1. If B retires, then
what will be the NPSR of A & B.
Ans. New profit sharing ratio of partners A & B is 3: 1.
16. Pass the journal entry for Deceased Partner's Share of profits for the Intervening Period:
Profit & loss suspense A/c Dr.
To Decreased partners capital A/c
(Decreased partners share profit given.)
Death of a partner
1. Give the meaning of accrued profit.
Ans. The profit or loss from the date of last balance sheet till the date of death of a partner in a partnership
firm is called as accrued profit.
2.State any two differences between retirement and death of a partner.
Retirement of a partner Death of a partner

a. Takes place generally at the end of the year
b. Retiring partners capital a/c settlement takes place
between the firm & retiring partner him self.
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a. Takes place at any time during the year
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b. Decreased partners capital a/c settlement takes
place between the firm & executor's of the deceased

partner.
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c. Retiring partner's capital a/c balance is not paid to c. Deceased partners capital a/c balance is paid to the
him immediately on his retirement executors immediately on the date of death.
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3. Write any two ways of settlement of claims to the deceased partner.

i. Immediate full payment
ii. The balance treated to loan account
iii. Partly paid in cash & the balance treated to loan a/c.
4. Write the journal entry to close the deceased partner's Capital Account.
Deceased partners capital Dr.
To Deceased partners executors A/c
(Being deceased partner's capital treated to executors a/c)
5. Pass Journal entry for transfer of accrued profit of the deceased partner.
Deceased partners capital a/c Dr.
To Profit & Loss Suspense A/c
(Being accrued profit transferred)
6. Write the journal entry for cash paid immediately to the executors of the deceased partner.
Deceased partners executors A/c Dr.
To Cash/Bank A/c
(Being cash paid immediately to the executor)
7. How do you close the executors account when the payment is not made immediately?
Ans. Amount payable to the executors of the deceased partner is transferred to executors loan account.

8. A, B, C were partners in a firm sharing profits in the ratio of 5:4: 1. The profit of the firm for the
year ending on 31-3-2017 was 1,00,00. B dies on 30-6-2017.
Calculate B's share of profit from 1-4-2017 to 30-6-2017.
1,00,000x3/12x4/10=10,000
9. Deceased Partners' Share of Profit
Deceased partners share of profit = P/yr/Avg. Profit x Time period from date of B/S till death 12 months
10. Give the Journal Entry when retiring partner's whole amount is treated as loan.
Retiring partner's capital A/c Dr.
To Retiring partners loan A/c
(Retiring partners capital a/c treated. To the retiring partner's loan a/c)
11. Pass the Journal Entry when retiring partner is partly paid in cash and the remaining amount is
treated as loan
Retiring partner's capital A/c Dr.
To Cash/ Bank A/c
To Retiring partners loan A/c
(Retiring partner partly paid in cash and the balance treated to his loan a/c)
12.P,Q and R are partners in a firm sharing profits in the ratio of 3;2: 1. R retires and the balance in
his Capital Account after making necessary adjustments workout to be 60,000 .P and Q agreed to pay
him 75,000 in full settlement of his claim. Find out the hidden goodwill.
Hidden good will = (75,000-60,000) =15,000

3. Accounting for share capital

1. What is a company ?
Ans : A company incorporated or registered under the companies Act 2013 or under any other earlier
Companies Act. OR
A Company is an association of persons formed to carry on business with a view to earn profit, having a
common stock called the „share capital , which is divided into equal units called „shares‟ held by the person
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called „shareholder‟ OR
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A company can be described as an artificial person having a separate legal entity, perpectual succession and
a common seal
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2) State any two features of a company ?

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Ans :a) Body coporate b) Separate legal entity

3) What is prospectus ?
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Ans : An open invitation to the public to take up the shares of company.

4) What do you mean by over subscription ?
Ans : When the public apply for more shares than those offered to them there is said to be over
subscription.
5) What is calls in arrears ?
Ans : The amount remaining unpaid on allotment or on call is called calls in arrears.
6) Sate any two methods of issue of shares ?
Ans : a) Issue of shares at par b) Issue of shares at a premium
7) What is issue of shares for consideration other than cash ?
Ans : Issuing of shares for purchasing of assets without receiving money in cash.
8) What is forfeiture of shares?
Ans : Cancellation of the right of a shareholder on shares held by him due to non-payment of money due
on such shares.
9) Give the Journal entry for transfer of profit on re-issue of forfeited shares.
Ans : Share Forfeiture A/c. …………. Dr.
To Capital Reserve A/c ….
(Profit on reissue of forfeited shares)
10) State any two categories of share capital
Ans : a) Authorised capital b) Issued capital
11) What is public company ?
Ans : A company which is not a private company or not a subsidiary of a private company.
 4. Financial statements of a company.
1. Give the meaning of financial statements.
Ans : Financial statements are the basic and formal annual reports through which the corporate management
communicates financial information to its owners and various other external parties.
2) Mention two types of financial statement
Ans : a) Statement of profit and loss b) Balance Sheet
3) State any two features of financial statements.
Ans : a) Recorded Facts b) Accounting conventions followed
4) Write any two objectives of financial statements.
Ans : a) To provide information about earning capacity of the business.
b) To provide information about economic resources.
5) State any two benefits of financial statements.
Ans : a) Basis for prospective investors
b) Report on the performance of the management
6) Give any two limitations of financial statements.
Ans : a) Do not reflect current situations b) Assets may not realized at stated values
7) State any two postulates
Ans : a) Money measurement postulate b) Realisation postulate
8) How will you disclose the following items in the Balance sheet of a comp1any ?
a) Loose tools b) Proposed dividends
Ans : A) Loose Tools : Inventories (Current Assets)
B) Proposed Dividends : Short Term Provisions (Current Liabilities)
9) State any two differences between Current Liabilities and Non-current liabilities.
Current Liabilities Non-Current Liabilities.
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1. It is paid with in one year or less. 2. It is paid More than one year.
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Example: Trade payable Example: Debentures

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2. It is short-term of sources of funds. 2. It is long-term sources of funds.

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10) Mention any two items which are shown under the head “Reserves and Surplus
Ans : a) Capital Reserve b) Genaral Reserve.
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5. Cash flow statement.

1. What is cash flow statement ?
Ans : A cash flow statement is a statement showing inflows & outflows of cash and cash equivalents from
operating, investing and financing activities of a company during a particular period.
2) State any two uses of cash flow statement
Ans : a) Helps in ascertaining the liquidity of an enterprise.
b) This statement helps the users to ascertain the amount and certainty of cash flows to be
generated by company.
3) Write any two objectives of preparing cash flow statement
Ans : a) To provide useful information about cash flows
b) To ascertain amount and certainty of cash flows
4) What do you mean by investing activities ?
Ans : Investing activities are the activities relating to purchase and sale of long term assets.
5) Mention any two activities which are classified as per AS – 3
Ans : a) Cash flow from operating Activities
b) Cash flow from investing Activities
c) Cash flow from financing Activities
6) Write any two examples for financing activities.
Ans : a) Cash proceeds from issue of equity shares, b) Cash proceeds from issue of equity Debentures

7) If Revenue from operations are Rs. 48000, opening trade receivables are Rs. 8000,
& closing trade receivables are Rs. 6000. Calculate cash receipts from customers.
Ans : Cash receipts from customers = Revenue from operations + opening trade
receivable – closing trade receivables.
= 48000 + 8000 – 6000= 50,000

8) If purchases are Rs. 72000, opening trade payables are Rs. 12000 & closing trade
payables are Rs. 9000. Calculate cash payments to suppliers.
Ans : Cash payments to suppliers = purchases + opening trade payables – closing
trade payables.
= 72000 + 12000 – 9000 = 75,000

ONE MARKS IMPORTANT THEORY.

One Marks previous year’s questions.

1. State any one content of partnership deed.(S-2023,M-2021)
Name and Address of all the Partners
2. Give any one reason for admission of a new partner(S2-2023)
To Increase the Capital
3. Who is an executor?(S2-2023,M-2021,S-2022)
Executor is the legal representative of a deceased partner in a partnership firm.
4. Name any one type of solvency ratio(S1-2023)
Debt equity ratio, Proprietary ratio
5. Give an example for cash inflow from operating activity.(S1-2023)
- Cash receipts from sale of goods and rendering of services
- Cash receipts from royalties, fees, commissions and other revenues.
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6. When do you prepare Executor’s account?(2023)
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Executors A/c is prepared at the time of death of a Partner
8.When the partners current account are prepared in partnership firm?(M-2019)
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When Partners‟ Capital Accounts are maintained under Fixed Capital Method.
9. What is buyback of shares?(M-2019)
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Purchase of its own shares by a company

10. Give an example for current liability.(M-2019)
Trade payables,creditors.
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11. State any one method of valuation of Goodwill ( S-2019)

a) Average profits method b) Super profits method
12. Give any one objective of financial statement analysis. (S-2019)
To determine the earning capacity of the firm.
13.What do you mean by cash flows?(S-2019)
It implies movement of cash in and out due to some non cash items.
14. When can shares be forfeited?(M-2020,2022)
At the time of non payment of allotment or call money.
15. Give an example for current assets. (M-2020)
Inventories, trade receivables.
16. what is cash flow statement?(M-2020,S-2022)
cash flow statement is a statement showing inflows & outflows of cash and cash equivalents from
operating, investing and financing activities of a company during a particular period.
17. State any one type of reserve. (MQP-2021)
Capital Reserve
18.State anyone user of financial statement analysis. (S-2020)
Investors, Top management.
19. Give the meaning of ratio analysis.(S-2020)
Ratio analysis is the technique of analysis and interpretation of financial statements with the help of
accounting ratios.
20. Give an example for investing activities.(S-2020)
Purchase of non-current assets or Purchase of fixed assets like, buildings, machinery etc.
21. Name any one kind of company.(M-2021)
Companies limited by shares
22. State anyone factor affecting the value of good will. (M-2022)
-Nature of Business, Location of the business.
23. What is gain ratio?(M-2022)
Gain Ratio is the ratio in which the continuing partners gain the share of retiring partner on his retirement.
24. Give an example for non-current asset.(MQP-2023,2021)
Fixed assets, Building, Machinery, Furniture
25. State any one importance of financial statement analysis.(MQP-2023)
1) Helpful to financial Manager 2) Helpful to investors
26. State anyone feature of partnership.(MQP-2021)
Two or more persons
27. What are operating activities? (M-2023)
Operating activities are the activities that constitute primary or main activities of an enterprises.
One marks expected theory Questions:
1. Who is a partner ?
Partner is a person who had entered into Partnership with one another is individually called partner.
2) State any one feature of Partnership Ans :Agreement
3.) What is the minimum number of Partners in a Firm ? Ans : Two
4) Name any one method of maintaining capital accounts of Partners. i) Fixed Capital Method
5) Name any one final account of Partnership firm. Ans : Profit and Loss Account/Balance sheet
6) How do you distribute profit or loss among the Partners in the absence Partnership deed ?
Ans : Equally
7) Why the Profit and Loss Appropriation account is prepared ?
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Ans : It is prepared how the Profit are appropriated among the Partners after making necessary
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adjustments.
8) At what rate interest on advances by Partners is to be paid as per Partnership act?Ans : 6% p.a.
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9) When interest is charged on Partners drawings ?

Ans : Interest is charged on Partners drawings when there is a provision in the agreement among the
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Partners about it.

10) When Partners’ Current Accounts are prepared in Partnership firms?
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Ans : Partners Current Accounts are prepared in Partnership firms, when Partners‟ Capital Accounts are
maintained under Fixed Capital Method.
11) When the Current Accounts of Partners are opened ?
Ans : Current A/cs of Partners are opened in Fixed Capital Method
12) Under fluctuating capital method, how many accounts are maintained for each
partner ? Ans : One
13) State any one feature of fluctuating capital method
Ans : Capital balance of each partner changes year after year.
14) Find out interest at 8% p.a. on capital of Rs. 50,000 for 9 months.
Ans : Rs. 3,000 (50,000x8/100x9/12)
15) Which is the suitable method of calculation of interest on drawings, when fixed amount is
withdrawn every month?
Ans : Average period method
16) Give one example for past adjustment ?
Ans : Commission or interest on capital
17. What do you mean by reconstitution of a Partnership firm ?
Ans : Any change in the existing agreement amounts to reconstitution of the Partnership firm.
18. State any one right acquired by a newly admitted partner.
Ans : The right to acquired share in the assets and profits of the Partnership firm.
19. Why the NPSR is required at the time of admission of a partner ?
Ans : NPSR is required to share the future profit or losses.
20. What is Goodwill ?
Ans : Goodwill is the value of the reputation of a firm in respect of the profits expected in future over and
above the normal profits.
21.What is hidden Goodwill ?
Ans : Hidden Goodwill refers to the difference between total required capital & actual capital of all
Partners
22. Which Account is to be debited to record the Increase in the value of an asset ?
Ans : Assets Account
23.What is revaluation Account ?
Ans : Revaluation A/c is an a/c prepared in connection with recording of increase or decrease in value of
Assets and liabilities and find out the P & L of Revaluation.
24. Which Account will be credited when there is a loss on revaluation ? Ans : Revaluation A/c
25.Which account will be debited, when the cash is brought in by a new partner for his share of
Goodwill ? Ans : Cash / Bank A/c
26) What do you mean by retirement of a partner ?
A partner is said to be retired from a firm when his relation with the firm as a partner comes to an end.
27) Why the Gain Ratio is required on retirement of a partner ?
Ans : It is required for the purpose of writing off Goodwill created to the extent of Retiring Partner‟s
Share.
28) Why the New Ratio is required on retirement of a partner ?
Ans : It is required to share future profits and loss between continuing Partners.
29) Give the formula for calculation of new profit sharing ratio on retirement of a
partner. Ans : New share = Old share + Share gained
30.Which account is credited for the share of accrued profit of a deceased partner ?
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Ans : Deceased Partner‟s capital / Executor‟s A/c
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31) What is intervening period ?
Ans : The period from date of last balance sheet to date of death of a partner is called intervening period.
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32) How do you close the executors Account ?

Ans : Executors A/c is closed by transferring its balance to Executors Loan A/c.
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33.What is issued capital ?

Ans : It is a part of Authorised capital which is actually issued to the public for subscription.
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34) What is minimum paid up capital of a private company ? Ans : 1 lakh Rupees
35) When the Reserved capital is used ?
Ans : In the event of winding up of the company
36) What is over subscription ?
Ans : When the public apply for more shares than those offered to them, there is said to be over
subscription.
37) What is under subscription ?
Ans : When the number of shares applied for is less than the number of shares for which applications
have been invited for subscription.
38) What is issue of shares at premium ?
Ans: It means the issue of shares at a price higher than the face value of shares.
39) When the shares are forfeited ?
Ans : For Nonpayment of allotment and / call money due on shares.
40.What is meant by debentures ?
Ans : Debentures are the written instruments acknowledging debt under the common seal of the
company.
41) What is coupon rate ?
Ans : Coupon rate refers to a specified rate of interest on debentures.
42) What do you mean by zero coupon rate debentures ?
Ans : debentures those do not carry a specific rate of interest.
43) What is meant by issue of debentures for consideration other than cash ?
Ans : issuing debentures to vendors for purchasing of assets.
44) Name of any one method of redemption of debentures.
Ans : Payment in Lump sum
45) What do you mean by redemption of debentures ?
Ans : repayment of the amount of debentures by the company.
46) State any one type / kind of debentures. Ans : Secured Debentures.
47) Can the company purchase its own debentures ? Ans : Yes
48) Debenture Redemption Reserve is shown under which head in the balance sheet ?
Ans : Reserve & Surplus
49) Name the head under which discount on issue of debentures appears in the balance
sheet of a company ? Ans : Other Non-current Assets
50) Name any one internal user of financial statements. Ans : Shareholders
51) Where do you record the money received against share warrants ? Ans : Shareholder‟s Fund
52) How do you treat credit balance of Income statement under the head surplus ?
Ans : It is shown in surplus under „Reserves and Surplus head
53) Write any one feature of current assets.
Ans : These assets are shorter in nature, used for one year, and quickly converted into cash.
54.State any one technique of Financial Statement Analysis. Ans : Comparative Statement
55) State any one user of Financial Analysis. Ans : Investors
56) What is Vertical Analysis ?
Ans : It is a tool of financial analysis, in which data or figures are converted into percentages of a
common base item.
57) What is Horizontal Analysis ?
Ans : It is a technique of financial Analysis, in which data / figures are shown in a comparative form of
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two / more years.
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58) State any one importance of Financial Analysis. Ans : Helpful to finance manager
59) State any one limitation of Financial Analysis.
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Ans : It does not consider price level changes

60) Give the meaning of analysis.
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Ans : Analysis means simplification of financial data by methodical classification.

61.Give the meaning of Interpretation
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Ans : Interpretation means explaining the meaning and significance of data.

62) State any one objective of Ratio Analysis
Ans : To know areas of business which need more attention
63) State any one use of ratio analysis.
Ans : Simplify complex figures and establish relationships
64) Mention any one limitation of ratio analysis. Ans : Ignores price level changes.
65) Mention any one type of ratio. Ans : Liquidity ratio, Current ratio
66) Name any one type of turnover ratio. Ans : Inventory turnover ratio
67) Give the meaning of net profit ratio
Ans : Net profit ratio is a profitability ratio of net profit to revenue from operations.
68) Give the meaning of dividend payout ratio
Ans : Dividend payout ratio refers to the proportion of earnings that are distributed to the shareholders.
69) What is activity ratio ?
Ans : Activity ratio is the ratio that indicate the speed at which activities of the business are being
performed.
70) State one significance of interest coverage ratio.
Ans : It reveals the number of times interest on long term debts is covered by the profits available for
interest.
71.Give an example for investing activities. Ans : Purchase of non-current assets
72.) Give an example for cash inflows from financing activities.
Ans : Cash proceeds from issue of preference or equity shares.
73.) Give an example for cash outflows from financing activities.
Ans : Cash repayment of amounts borrowed.
74) Give an example for extraordinary item
Ans : Loss due to theft or earthquake or flood
75) What is Bond ?
Ans : Bond is an instrument of acknowledgement of debt.
76. A and B are partners sharing profits and losses equally with capitals of Rs. 45000 each. C is
admitted for 1/3rd share and he brings in Rs. 60,000 as his capital Hidden Goodwill is?
Solution: (60,000x3=1,80,000) (45,000x3=1,50,000)
Hidden goodwill= 1,80,000-1,50,000=30,000
Expand:
EPS :Earning Per Share
ICAI: Institute of Chartered Accountants of India.
DRR: Debenture Redemption Reserve
DRFI : Debenture Redemption Fund Investment
AIFIs : All India Financial Institutions.
OPC: One Person Company
TDS: Tax deducted at source
NHB: National Housing Bank
SEBI: Securities and exchange board of India
MCA: Ministry of corporate affairs.
IAS: Indian Accounting Standards
ROI: Return on Investment
ROCE: Return on Capital employed.
RONW: Return on Net worth.
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PBIT: Profit before interest and tax.
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PAT: Profit After Tax
EBIT: Earning before Interest and tax
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DRF: Debenture redemption fund

DDT: Dividend Distribution Tax
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EXPECTED Multiple Choice Questions.

Application Level MCQ Questions:
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1. A and B are Partners sharing profits in the ratio of 3:1. C is admitted into Partnership for 1/4th share the
sacrificing ratio of A and B will be ;
a) Equal b) 3:1 c) 2:1 d) 3:2
2. Abhishek, Rajat and Vivek are Partners sharing profits in the ratio of 5:3:2. If Vivek retires the new profit
sharing Ratio between Abhishek and Rajat will be.
a) 3:2 b) 5:2 c) 5:3 d) None of the above
2) The old profit sharing ratio among Rajender, Satish and Tejpal were 2:2:1. The New profit sharing Ratio
after Satish‟s retirement is 3:2. The gaining ratio is.
a) 3:2 b) 1:1 c) 2:1 d) 2:2
3) Anand, Bahadhur and Chandru are Partners sharing profit equally. On Chandru‟s retirement his share is
acquired by Anand and Bahadhur in the ratio of 3:2. The New profit sharing Ratio between Anand and
Bahadhur will be.
a) 8:7 b) 3:2 c) 4:5 d) 2:3
4.Mahendra Ltd. forfeited 4,000 equity shares of ₹10 each issued at a premium of 2 per share, for non-
payment of first and final call of 4 per share. On forfeiture, 'Share forfeiture Account' will be credited by:
(MQP-2023)
a) 16,000 b) 24,000 c) 30,000 d) 40,000

5.“X” company ltd, purchased machinery for Rs. 20000, payable Rs. 6500 in cash and the balance by issue
of 12% debentures of Rs. 100 each at a discount of 10% How many debentures would be required to issue to
the vendor ?
a) 155 Debentures of 100 Rs. Each b) 150 Debentures of 100 Rs. Each
c) 135 Debentures of 100 Rs. Each d) 145 Debentures of 100 Rs. each
6. Raj company ltd, purchased assets worth Rs. 14,40,000. It issued debentures of Rs. 100 each at a discount
of 4% in full settlement of the purchase consideration. The number of debentures issued to vendors is :
a) 15000 b) 14400 c) 16000 d) 15600

7. KA16 Ltd., Purchased a Land from Chinnmuladhri Hills Ltd., for Rs.12,00,000. Asper purchase agreement
Rs.660,000 were paid in cash. What will be the number of shares to be issued at Rs.100 at a premium of 25%.
A) 5,400 Shares B) 4,320 Shares C) 9,600 Shares D) 12,000 Shares

8. Current liabilities Rs.50,000, current assets Rs.80,000, Inventories Rs.20,000 & Advance tax Rs.5,000
Find out the value of quick assets?
A) Rs.55,000 B) Rs.50,000 C) Rs.60,000 D) Rs.65,000

8. Blue Chip Securities Ltd., states its Net Profit after tax before dividend is Rs.175,000, Current value of share
in market was Rs.13 and 70,000 is the number of ordinary shares. What will be the EPS of Blue Chip Securities?
A) Rs.2.50 B) 2.5:1 C) 2.5Times D) 2.5%

9. Zudia Ltd., issued 15,000 shares at Rs.10 each and received 20,000 applications at Rs.2 per share, 2,000
applicants were rejected, 15,000 shares allotted at Rs.4 per share and remaining 3,000 will be adjusted towards
allotment. How much amount to be received in allotment stage?
A) Rs.60,000 B) Rs.54,000 C) Rs.80,000 D) Rs.74,000

10. Current ratio is 4:1, Stock Rs.120,000 and current assets Rs.240,000, then what about the value of
Current liabilities?
A) Rs.180,000 B) Rs.120,000 C) Rs.60,000 D) 240,000
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Important MCQ Questions:
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7) The agreement between the partners should be in,
a) Oral b) Written c) Oral / written d) None of the above
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8) Partnership deed contains :

a) Name of firm b) Name and address of the Partners c) Profit sharing ratio d) All of the above
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9) If any partner has advanced money to the firm beyond the amount of his capital, he shall be entitled to get
interest on the amount at the rate of
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a) 5% p.a. b) 6% p.a. c) 8 % p.a. d) None of the above

10) When fixed amount is withdrawn on the first day of every month, interest on total amount of the year
ending will be calculated for :
a) 2 & ½ months b) 4 & ½ months c) 6 & ½ months d) None of the above
11) When varying amounts are withdrawn at different intervals, the interest is calculated using,
a) Simple method b) Average method c) Product method d) None of the above
12. In order to form a Partnership there should be at least : (June 2019,M-2021,M-2022)
a) One person b) Two persons c) Seven persons d) None of the above
13.) The business of a Partnership concern may be carried on by :
a) All the Partners b) Any of the them acting for all
c) All Partners or any of them acting for all d) None of the above
14) The agreement between Partners must be to share :
a) Profits b) Losses c) Profits & Losses d) None of the above
15) The liability of a partner for acts of the firm is :
a) Limited b) Unlimited c) Both the above d) None of the above
16) The Partnership Deed should be properly drafted and prepared as per the provisions of the
a) Partnership Act b) Stamp Act c) Companies Act d) None of the above
17) At the time of admission of a new partner general reserve appearing in the old balance sheet is
transferred to. (S-2022)
a) All Partners Capital Accounts b) New Partners Capital Account
c) Old Partners Capital Accounts d) None of the above
18) A,B and C are Partners in a firm. If D is admitted as a new partner.(M-2020)
a) Old firm is dissolved b) Old firm & old Partnership are dissolved
c) Old Partnership is reconstituted d) None of the above
19) On the admission of a new partner, increase in the value of asset is credited to :
a) Profit and loss Adjustment (Revaluation) A/c b) Asset Account
c) Old Partner‟s Capital Accounts d) None of the above
20.If new partner brings cash for his share of Goodwill. Goodwill is transferred to old Partners Capital
accounts in
a) Sacrificing ratio b) Old profit sharing ratio
c) New profit sharing ratio d) None of the above
21) Which of the following are treated as reconstitution of a Partnership firm. (S-2023)
a) Admission of a partner b) Change in profit sharing ratio
c) Retirement of a partner d) All the above
22) Profit or loss on revaluation is shared among the Partners in the.
a) Old profit sharing ratio b) New profit sharing ratio
c) Capital ratio c) Equal ratio
23) Assets and Liabilities are recorded in Balance sheet after the admission of a partner at
a) Original Value b) Revalued Value
c) Realizable Value d) None of the above
24) On the admission of a new partner, the increase in the value of an asset is credited to :
a) Revaluation Account b) Asset Account
c) Old Partners capital Account d) None of the above all account
25. In the absence of an agreement to the contrary it is implied that old Partners will contribute to new
Partner‟s share of profit in the ratio of ;
a) Capital b) Old profit sharing ratio
c) Sacrificing ratio d) Equally
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26) The balance of reserves and other accumulated profits at the time of admission of a new partner are
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transferred to
a) All Partners in the new ratio b) Old Partners in the new ratio
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c) Old Partners in the old ratio d) Old Partners in the sacrificing ratio
27) Goodwill raised in books at the time of admission of partner will be written off in
a) Old profit sharing ratio b) New profit sharing ratio
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c) Sacrificing ratio d) None of the above

28.Revaluation Account is debited for the
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a) Increase in provision for doubtful debts b) Increase in the value of building

c) Decrease in the value of creditors d) Transfer of loss on revaluation
29.In the absence of any information regarding the acquisition of share in the profit of the retiring / deceased
partner by the remaining Partner‟s it is assumed that they will acquire his / her share in
a) Old profit sharing ratio b) Equal Ratio
c) New Profit sharing ratio d) None of the above
30) On retirement / death of a partner the Retiring / Deceased Partner‟s Capital Account will be credited
with.
a) his / her share of Goodwill b) Goodwill of the firm
c) Shares of Goodwill of remaining Partner‟s d) none of the above
31. On retirement / death of a partner the remaining partners who have gained due to change in profit
sharing ratio should compensate the.
a) Retiring Partner‟s only b) Remaining Partners as well as retiring Partners.
c) Remaining Partners only (who have Sacrificed) d) None of the above
32. Accrued profit is ascertained on the following ways.
a) Average Profit b) On Sales c) Pervious years profits d) All of the above
33) Amount due to deceased partner is settled in the following manner :
a) Immediate full payment b) Transferred to loan Account
c) Partly paid in cash and the balance transferred to loan A/c. d) All of the above
34) Deceased Partner‟s share of profit in the accrued profit may be calculated on the basis of.
a) Last year profit b) Average profit of past few years c) Sales d) All of the above
35) Amount payable to the executors of the deceased partner is transferred to.
a) Executors loan Account b) Executors Account
c) Remaining Partners capital A/cs d) None of the above
36. Items to be considered while calculating the amount payable to the deceased partner is.
a) His share of capital b) His share in accrued profit c) His share in reserve d) All the above
37. “Dissolution of partnership” may take place in which of the following ways: (S-2023)
a. Death of a partner b. Dissolution by agreement
c. compulsory dissolution d. dissolution by court
38. The dissolution of partnership may take place by ____________________.
a) Change in existing profit sharing ratio among partners b) Admission of a new partner
c) Retirement of a partner d) All of the above
39.Dissolution of partnership firm takes place when:
(a) All partners terminates their connection with firm
(b) Majority of partners terminates their connection with firm
(c) Two partners terminates their connection with firm (d) None of the above
40.Change in the existing agreement between the partners is called :
(A) Dissolution of Firm (B) Dissolution of Partnership
(C) Dissolution of Business (D) All of the Above
41. …………… is prepared at the time of dissolution :
(A) Revaluation Account (B) Profit & Loss Account
(C) Profit and Loss Appropriation Account (D) Realisation Account
42.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
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43.On dissolution of a firm, out of the proceeds received from the sale of assets will be paid first of all
(A) Partner‟s Capital (B) Partner‟s Loan to Firm
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C) Partner‟s additional capital (D) Outside Creditors

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44.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
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45.In the event of dissolution of a partnership firm, the provision for doubtful debts is transferred to :
(A) Realisation Account (B) Partners Capital Accounts
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(C) Sundry Debtors Account (D) None of the above

47.Unrecorded liability, when paid on dissolution of a firm is debited to :
(A) Partner‟s Capital A/‟cs (B) Realisation A/c
(C) Liabilities A/c (D) Asset A/c
48.Realisation A/c is a :
(A) Nominal A/c (B) Real A/c
(C) Personal A/c (D) Real A/c as well as Personal A/c
49. A partnership firm is compulsorily dissolved :
(A) When the business of the firm is declared illegal (B) When a partner of the firm dies
(C) When a partner of the firm becomes insolvent
(D) When a partner transfers his share to some other person without the consent of other partners
50.At the time of firm‟s dissolution, Balance of General Reserve shown in the Balance Sheet is credited to :
(A) Realisation Account (B) Creditor‟s Account
(C) Partner’s Capital Account (D) Profit & Loss Account
51.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
52.On dissolution, when a partner takes over an unrecorded asset, is credited :
(A) Capital Account of the Partner (B) Cash Account
(C) Asset Account (D) Realisation Account
53. On dissolution of a firm, partner's loan account is transferred to
(a) realisation account (b) partner's capital account (c) partner's current account (d) None of these
54.After transferring liabilities like creditors and bills payables in the realisation account, in the absence of
any information regarding then payment, such liabilities are treated as
(a) never paid (b) fully paid (c) partly paid (d) None of these
55.When realisation expenses are paid by the firm on behalf of a partner, such expenses are debited to
(a) realisation account (b) partner's capital account
(c) partner's loan account (d) None of these
56. Unrecorded assets when taken over by a partner are shown in
(a) debit of realisation account (b) debit of bank account
(c) credit of realisation account (d) dredit of bank account
57. Unrecorded liabilities when paid are shown in
(a) debit of realisation account (b) debit of bank account
(c) credit of realisation account (d) credit of bank account
58. On dissolution of the firm, partner's capital accounts are closed through
(a) realisation account (b) drawings account
(c) bank account (d) loan account
59) Equity shareholders are (June 2019,S-2023,2022)
a) Creditors b) Owners c) Customers of the company d) None of the above
60) Interest on calls in arrears is charged according to table F at the rate of
a) 10% b) 6% c) 8% d) 11%
61) Shares can be forfeited for :
a) Non-payment of calls money b) Failure to attend meeting
c) Failure to repay the loan to the bank d) The pledging of shares as a security
62) Balance of share Forfeiture Account is shown in the Balance sheet under the head.
a) Current liabilities and provisions b) Reserve and surplus
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c) Share capital d) Unsecured loans
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63) Issued capital is part of (S-2023,2020,M-2023)
a) Reserve Capital b) Unissued Capital
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c) Authorised Capital d) None of the above

64) Maximum number of members in a private company is
a) 40 b) 200 c) 70 d) No limits
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65) More applications are received than offered to public is called.

a) Less offers b) Under subscription c) Over subscription d) More offers
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65.Paid up Capital is part of

a) Authorised capital b) Reserve capital c) Called up capital d) Subscribed capital
66 If a shareholder fails to pay call money, it is called as,
a) calls unpaid b) calls in advance c) calls in arrears d) None of the above
67) Minimum number of members in a public company is
a) 20 b) 50 c) No limit d) 7
68. Premium on Redemption of debentures A/c is ………….. A/c.
a) Asset b) Income c) Liability d) Expense
69. Debenture premium cannot be used to
a) Write off the discount on issue of debentures or shares
b) Write off the premium on redemption of shares or debentures
c) Pay dividends d) Write off the capital loss
70. Loss on issue of debentures is treated as :
a) Intangible asset b) Current asset
c) Current Liability d) Miscellaneous expenses
71.In the event of liquidation of the company the debenture holders have priority for
a) Interest b) Principal amount c) Both a & b d) None of the above
72.) Debentures cannot be redeemed at (March 2019)
a) Premium b) Discount c) Par d) More than 10% premium
73) Debentures cannot be redeemed out of
a) Profits b) Provisions c) Capital d) All the above
74.Debentureholders are
a) Owners of the company b) Lenders of the company
c) Debtors of the company d) Trustees of the company
75. Methods of Redemption of debentures are
a) By annual drawings b) By conversion of shares or new debentures
c) By purchasing own debentures in open market d) All of the above
76) A company cannot redeem its debentures fully
a) Out of capital b) Out of profits c) Both a & b above d) None of the above
77.If the market price of the debentures is more than the face value, at the time of redemption this will be a
capital loss and is transferred to …………
a) Capital Reserve b) General Reserve
c) Profit on Redemption of debentures d) Loss on Redemption of debentures
78) Financial statements generally include (March 2019,2023)
a) Comparative statement b) Fund Flow Statement
c) Income Statement and Balance sheet d) None of the above
79) The prescribed form of Balance sheet of the companies has been given in the schedule.
a) VI part I b) VI part II c) VI part IV d) III Schedule
80) Which of the following is shown under the head “fixed assets” (S-2023)
a) Goodwill b) Patents c) Trademarks d) All of the above
81) Current Assets does not include (M-2021)
a) Short Term Investments b) Buildings c) Inventories d) Cash and Cash Equivalents
82) Current liabilities are to be paid within……………… months
a) 3 months b) 6 months c) 9 months d) 12 months
83) External users of financial statements does not include.
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a) Banks b) Shareholders c) Creditors d) Government
84) Share Capital is shown as …………….
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a) Authorised Capital b) Issued Capital c) Subscribed Capital d) All the above

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85) Financial statements are prepared based on.

a) Accounting postulate b) Accounting conventions c) Recorded Facts d) All the above
86. The financial statements of a business enterprise include :
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a) Balance sheet b) Statement of profit and loss c) Cash flow statement d) All the above
87. The most commonly used tools for financial analysis are (M-2020)
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a) Horizontal Analysis b) Vertical Analysis c) Ratio Analysis d) All the above

88) An annual report is issued by a company to its
a) Directors b) Auditors c) Shareholders d) None of the above
89) Comparative statements are also known as (M-2023)
a) Dynamic Analysis b) Horizontal Analysis c) Vertical Analysis d) External Analysis
90) Common size statements are also known as
a) Dynamic Analysis b) Vertical Analysis c) Horizontal Analysis d) External Analysis
91) Percentage of each liability to the total liabilities is shown in
a) Common size Balance Sheet b) Comparative Balance sheet
c) Both the above d) None of the above
92) Balance sheet provides information about financial position of the enterprise.
a) At a point of time b) Over a period time c) For a period of time d) None of the above
93) Comparative statement shows the changes during the year.
a) In absolute terms b) In relative terms c) Both the above d) None of the above
94. Common size statements are useful in comparison of
a) Intra firm for the same or several years b) Inter firm over different years
c) Both (a) & (b) above d) None of the above
95) Financial analysis can be undertaken by
a) Management b) Parties outside the firm c) Both the above d) None of the above
96) The following groups of ratios are primarily measures risk.
a) Liquidity, Activity and profitability b) Liquidity, Activity and Inventory
c) Liquidity, Activity and Debt d) Liquidity, Debt and profitability
97) The ………….. ratios are primarily measures return
a) Liquidity b) Activity c) Debt d) Profitability
98) The ………….. of business firm is measured by its ability to satisfy its short term obligations as they
become due :
a) Activity b) Liquidity c) Debt d) Profitability
99) ………….. ratios are a measure of the speed with which various accounts are converted into revenue
from operations or cash;
a) Activity b) Liquidity c) Debt d) Profitability
100.The……………. is useful in evaluating credit and collection policies.
a) Average payment period b) Current ratio c) Average collection period d) Current Assets Turnover
101.The ……. may indicate that the firm is experiencing stock outs and lost sales.
a) Average payment period b) Inventory turnover ratio
c) Average collection period d) Quick ratio
102. ABC Co. extends credit term of 45 days to its customers. Its credit collection would be considered
poor, if its average collection period was ……….
a) 30 days b) 36 days c) 47 days d) 37 days
103. The ………………. Ratios provide the information critical to the longrun operations of the firm.
a) Liquidity b) Activity c) Solvency d) Profitability
104) Dividend payout ratio refers to proportion of earnings that are distributed to the
a) Shareholders b) Debenture holders c) Creditors d) Lenders
105. Liquidity ratios are expressed in :
a) Pure ratio form b) Percentage c) Rate or Time d) None of the above
106) Example of cash inflows from investing activities are. (S-2023)
a) Cash receipts from disposal of fixed assets
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b) Interest received in cash from loans and advances
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c) Dividend received from investments in other enterprises d) All of the above
107) Which one of the following is not a cash outlow from operating activities ?
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a) Cash payments to suppliers for goods and services

b) Cash payments to and on behalf of the employees
c) Cash payments to acquire fixed assets
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d) Cash payments to an Insurance Company for premium

108) Which of the following is not a cash inflow from investing activities ?
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a ) Cash receipts from disposal of fixed assets

b) Cash receipts from sale of goods and rendering of service.
c) Interest received in cash from loans and advances.
d) Dividend received from investments in other enterprises
109) Fixed assets does not include (S-2023)
a) Machinery b) Building c) Inventories d) Furniture
110) The two solvency ratios are: (S-2023)
a) Inventory turnover ratio and Net assets turnover ratio. b) Gross profit ratio and Net profit ratio.
c) Debt-Equity ratio and proprietary ratio. d) Earning per share and return on net worth.
111).At the time of admission of a partner, undistributed profits appeared in the balance sheet of the old firm
is transferred to the capital accounts of …………. (S-2023)
a) Old Partners in old profit sharing ratio b) Old Partners in new profit sharing ratio
c) All the Partners in new profit sharing ratio d) None of the above
112) Sanjaya, Gopi and Nikhil are partners sharing profits and losses in the ratio of 3:2: 1. If Gopi retires,
the new profit sharing ratio of Sanjaya and Nikhil will be (M-2023)
a) 3:1 b) 3:2 c) 2:1 d) None of the above
113. The Partnership Deed should be properly drafted and prepared as per the provisions of the
A)Partnership Act 1932 B) Partnership Act 1952 C) Stamps Act 1899 D) Stamps Act 1988
114. Be Global Ltd., received 10,000 applications, they have a nominal capital of 20,000 shares at Rs.10 per
share and they were offered 8,000 shares to public, the situation is called?
A) Minimum Subscription B) Under Subscription C) Outstanding Subscription D) Over subscription
 TRUE/FALSE QUESTIONS:

Previous Year’s True or false Questions:

1. Debentures can be converted into shares. (MQP-2023)
2. Debentures is a part of owned capital (S2-2023)
3. Gain ratio= New ratio- old ratio TRUE (S1-2023)
4. A ratio reflects quantitative and qualitative aspects of results. FALSE (M-2023)
5. Financial analysis is used only by the creditors. FALSE (M-2019)
6. General reserve is transferred to continuing partners capital a/c. FALSE (S-2019)
7. Decrease in the value of liability is debited to revaluation a/c. FALSE (S-2020,M-2022)
8. A company is an artificial person. TRUE (M-2021)
9. Goodwill is an Intangible asset. TRUE (S-2022)
10. Liquidity ratios are short term in nature. TRUE (MQP-2022)

Expected True or false Questions:

1) The agreement between Partners must be in writing. Ans : False
2) The clauses of Partnership deed can be altered with the consent of all the Partners. Ans : True
3) If the Partnership deed is silent about the profit sharing ratio, the profit or loss of the firm is to be shared
equally. Ans : True
4) In the absence of Partnership Deed, no partner is entitled to get salary. Ans: True
5) Under Fixed Capital Method, the Partners Capital Accounts will always show a credit balance. Ans True
6) Under Fixed Capital Method, the Partners‟ Capital Accounts will always show a debit balance. False
7) When fixed amount is withdrawn during the middle of every month, interest on total amount is calculated
for 6 months. Ans : True
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8) Accounting treatment for Partnership is similar to that of a sole proprietorship business. Ans : True
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9. Profit and Loss Appropriation Account is merely an extension of the Profit and Loss Account of a firm.
Ans : True
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10) Goodwill brought in cash by new partner is distributed among old partners in their sacrificing ratio:True
11) In case of admission of a partner profit or loss on revaluation is transferred to Old Partners Capital
accounts. Ans :True
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12) Accumulated profit is transferred to all Partners Capital accounts including new partner. Ans : False
13) Increase in the value of an asset is credited to Revaluation account. Ans : True
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14) Goodwill is an intangible asset. Ans : True

15) Share Sacrificing = Old share – New share. Ans : True
16) Accumulated profit is transferred to continuing Partners Capital Accounts. Ans : False
17) Adjustment of Partners capitals of the remaining Partners is to be made in the New Ratio. Ans : True
18) New share = Old share + Share Sacrificing. Ans : False
19) Share gained is computed by deducting old share from New Share. Ans : True
20) Gain ratio is used to adjust the goodwill raised to the extent of retiring partner share only. Ans : True
21) Deceased Partner‟s claim is transferred to his Executors Account. Ans : True
22) Deceased partner may be paid in one lump sum or installments with interest. Ans : True
23) Retirement normally takes place at the end of an accounting period, where as death of a partner may
occur any time. Ans : True
24) Amount payable to be the executors of the deceased partner is transferred to executors loan
account.True
25. Asset taken over by a partner at the time of dissolution of partnership firm is debited to realization
account. Ans : False
26. Dissolution of a partnership is different from dissolution of a firm. Ans : True
27. A partnership is dissolved when there is a death of a partner. Ans : True
28. A firm is dissolved when all partners give consent to it. Ans : True
29. A firm is compulsorily dissolved when a partner decide to retire. Ans : False
30. Dissolution of a firm necessarily involves dissolution of partnership. Ans : True
31. A firm is compulsorily dissolved when all partners or when all except one partner become involvent.
True
32. Court can order a firm to be dissolved when a partner becomes insane. Ans : True
33. Dissolution of partnership can not take place without intervention of the court. Ans : False
34. Shares of a company are generally transferable Ans : True
35) Share application account is a liability account Ans : True
36) Paid up capital may exceed called up capital Ans : False
37) Capital Reserves are created out of a capital profits. Ans : True
38) The part of capital which is called up only on winding up is called reserved capital Ans : True
39) Private companies invite the public to subscribe for its shares Ans : False
40) Forfeiture of shares is cancellation of the rights of shareholders. Ans : True
41) All the shares of buy – back should be fully paid – up. Ans : True
42) The Articles of the Association must authorize the company for the buy-back of shares. Ans : True
43) Debenture is a part of loaned capital. Ans : True
44) Debenture holders have voting rights. Ans : False
45) Debentures bear fixed interest. Ans : True
46) Debentures cannot be issued for consideration other than cash. Ans : False
47) Company can buy – back its debentures. Ans : True
48) Debenture holders are not the members of the company. Ans : True
49) Premium on redemption of debentures is a liability A/c. Ans : True
50) A company cannot purchase its own debentures in the open market. Ans : False
51) Profit on redemption of debentures is in the nature of a capital profit. Ans : True
52) Debentures cannot be issued at discount for more than 10% of the face value Ans : False
53) Loss on issue of debentures is a revenue loss. Ans : False
54) The original cost is the basis of recording transactions. Ans : True
55) Going concern postulate assumes that the enterprise exists for a longer period of time. Ans : True
56) The financial statements do not show current financial condition of a business. Ans : False
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57)While preparing financial statements, inventories valued at market price or cost price whichever is less.
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Ans : True
58) Cash and cash equivalents are to be disclosed in accordance to IAS – 3. Ans : True
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59) Proposed dividend is shown under the head Provisions. Ans : True
59) The financial statements of business enterprise include cash flow statement Ans : False
60) Comparative statements are the form of Horizontal Analysis. Ans : True
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61) In a common size statement, each item is expressed as a percentage of same common base. Ans : True
62) The difference between the inflow and outflow of cash is the net cash flow. Ans : True
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63) Financial Analysis can be undertaken by management or by parties outside firm. Ans : True
64) Financial data will be comparative only when same accounting principles are used. Ans : True
65) Non-monetary aspects are ignored in financial analysis. Ans : True
66) Financial Analysis does not consider price level changes. Ans : True
67) Items of expenditure are shows as a percentage of the net revenue from operations in common size
income statements. Ans : True
68) Long term borrowings are concerned about the ability of a firm to discharge its obligations to pay
interest and repay the principle amount. Ans : True
69) A ratio is always expressed as a quotient of one number divided by another Ans : False
70) A higher interest coverage ratio ensures safety of interest on debts.Ans : True
71) The liquidity ratios are preliminary measures of return. Ans : False
72) Higher gross profit ratio is always a good sign. Ans : True
73) Net profit refers to profit after tax (PAT) Ans : True
74) Price earning ratio= Market price of share / Earning per share. Ans : True
75) According to revised AS-3, preparation and presentation of Cash Flow statement is mandatory for
all listed companies. Ans : True
76) Extraordinary items are recurring in nature Ans : False
77) An enterprise should report cash flow statement from operating activities, either by using direct
method or indirect method. Ans : True
78) Under direct method, items are recorded on the accrual basis in statement of profit and loss.
Ans : True
 FILL IN THE BLANKS BY CHOOSING APPROPRIATE ANSWERS

Previous Year Fill in the blanks questions.

(MQP-2023)
1. At the time of admission of a new partner, general reserve appearing in the old balance sheet is
transferred to old partner’s capital account.
2. If a partner takes over an asset, such partner's capital account is credited.
3. Debenture holders are the creditors of the company.
4. Common Size Statement is also known as vertical analysis.
5. Liquidity ratios are calculated to measure short term solvency of the business.

(S2-2023)
1.New ratio is used for the adjustment of continuing partners capital.
2. Profit on forfeiture of shares is transferred to capital reserve account.
3. Fixed assets are classified as tangible and Intangible assets
4.The term 'Financial analysis' includes both analysis and Interpretation.

(S1-2023)
1. Under Fixed capital method the capitals of the partners shall remain fixed.
2. Goodwill is an intangible asset.
3. Company is an artificial person.
4. Debentures are shown under the head Non-current liabilities in Balance Sheet.
5. Comparative analysis is also known as Horizontal analysis
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(M-2023)
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1. The liability of a partner for acts of the firm is unlimited. (M-2020, S-2022)
2. Goodwill is an intangible asset.
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3. 1000, 10% debentures at par, here 10% means interest rate.

4. Analysis and interpretation are complimentary to each other.
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5. investing activities relate to purchase and sale of fixed asset.

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1. Capital reserve shown under Reserves and surplus head in the balance sheet of a company (M-2019)
2. Partnership as mp separate Legal entity. (S-2019)
3. Old ratio-new ratio= sacrifice ratio (M-2021)
4. Financial statements includes statement of profit and loss and balance sheet. (M-2021)
5. Executors account is generally prepared at the time of Death of a partner. (M-2022)

Expected Fill in the blank questions.

1) Section 4 of Indian Partnership Act, 1932 defines Partnership.
2) A Partnership has no separate Legal entity.
3) Partnership is the result of Agreement between two or more persons to carry on business and share its
profits and losses.
4) It is preferred that the Partners have a written agreement.
5) The agreement should be to carry on some Lawful Business
6) Each partner carrying on the business is the principal as well as the Agent of all other Partners.
7) In the absence of Partnership deed Interest on advance from partner will be charged at 6% p.a.
8) When fixed amounts are withdrawn at the end of every month, interest on the total amount for the year
ending is calculated for 5.5 (5 ½ ). months.
9) Under fluctuating capital method, all the transactions relating to Partners are directly recorded in the
Partners Capital Accounts.
10) Under Fixed Capital Method, all the transactions relating to a partner are recorded in a separate account
called Partner’s Current Account.
11) There is not much difference in the final accounts of a sole proprietary concern and that of a :
Partnership Firm
13) Old Ratio is used to distribute accumulated profits and losses at the time of admission of a new partner.
14) Profit or loss on revaluation is shared among the old Partners in Old ratio.
15) Accumulated losses are transferred to the capital accounts of the old Partners at the time of admission in
their Old ratio.
16) General reserve is to be transferred to Partners Capital accounts at the time of admission of a new
partner.
17) Goodwill brought in by new partner in cash is to be distributed among old Partners in Sacrificing ratio.
18) Asset Account is debited for increase in the value of an asset.
19) Unrecorded asset is to be credited to Revaluation account.
20) Due to change in profit sharing ratio, some Partners will gain in future profits while others will Lose
21) Goodwill account is credited for cash brought in by new partner for his share of Goodwill.
22) New Profit Sharing ratio is required for sharing future profits and also for adjustment of capitals.
23. Profit or loss in revaluation is shared among the Partners in Old ratio on retirement of a partner.
24) Accumulated losses are transferred to the capital Accounts of the Partners at the time of retirement in
their Old. Ratio.
25) General reserve is to be transferred to All the Partners capital Accounts at the time of retirement of a
partner.
26) Goodwill raised to the extent of retiring Partner‟s share only is to be debited to continuing Partners
Capital Accounts in Gain ratio
27) In the absence of any instruction retiring Partners capital A/c is closed by transferring its balance to
Retiring Partner’s loan A/c.
28) New Ratio is used for adjustment of continuing Partners capitals
29) Share gained is calculated by deducting Old share from the new share.
30) The ratio in which the remaining Partners will share future profits after retirement is called New ratio.
31) The balance in the retiring Partner‟s loan A/c is shown on the Liabilities Side of the B/S till the last
n
installment is paid.
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31) The amount paid to the retiring partner in excess of what is due to him is called Hidden Goodwill.
32) In the absence of any agreement as the disposal of amount due to retiring partner Sec 37 of the Indian
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Partnership Act 1932 is applicable.

33) If Goodwill already appears in the books it will be written off by debiting All Partners capital Accounts
in their OPSR.
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33. Executors account is generally prepared at the time of Death of a partner.

34) Accounting treatment at the time of retirement and death is Uniform
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35) The period from date of the last Balance sheet and the date of the Partner‟s death is called Intervening
Period.
36) P & L suspense. Account is debited for the transfer of share of accrued profit of a deceased partner.
37) Accrued profit is calculated on the basis of Previous years profit / Average profit / Sales
38) Amount payable to the executors of the deceased partner is transferred to Executors Loan account.
39. All assets (except cash/bank and fictitious assets) are transferred to the realization account debit side of
account
40. If a liability is assumed by a partner, such partner's Capital Account is Credited
41. If a partner takes over an asset, such Partner's Capital Account is Debited
42. No entry is required when a creditor accepts a fixed asset in payment of his dues.
43. Partner's loan is not recorded in the realization account.
44. Partner's current accounts are transfered to respective partner's Capital accounts.
45. Subscribed capital is the part of the issued capital.
46) Call money received in advance is called Calls in advance
47. 5 Lakhs Rupees is the minimum paid up capital of a public company
48) one months must elapse between two calls.
49) 7 is minimum number of members in a public company.
50) 2 is minimum number of members in a private company.
51) The amount of buy back of shares in any financial year should not exceed 25% of the paid up capital.
52) Minimum paid up capital of a private company is 1 Lakh Rupees
53) Profit on forfeiture of shares is transferred to Capital Reserve Account
54. Debenture holders are the Creditors of the company.
55. Discount on issue of Debenture is a Fictitious Asset.
56. Premium on issue of debentures is a Capital profit
57.When all the debentures are redeemed, Debenture Redemption Reserve A/c is Credited to General
reserve A/c.
58. In case of conversion of the debentures into shares, debenture holders A/c is debited and Share Capital
a/c credited.
59. Debentures which are transferable by mere delivery are called Bearer debentures.
60) Financial statements are the basic and formal annual report.
61) Financial statements include Statement of Profit and Loss and Balance sheet.
62) Income statement and Position Statement (Balance Sheet) are the financial statements.
63. Share Capital appears under the head Shareholders Fund
64) Debit balance of statement of profit and loss shall be shown as Negative Figure under surplus head.
65) The term analysis means simplification of Financial data
66) Interpretation means explaining the meaning and a significance of the data
67) Common size statement is also known as Component percentage statement
68) The term financial analysis includes both analysis and Interpretation
69) Analysis is useless without Interpretation
70) The statement showing the profitability and financial position for different periods of time in a
comparative form is known as Comparative Statement
71) The statement which indicates the relationship of different items of financial statement with a common
item is called Common Size Statement
72) It is possible to assess the profitability, solvency and efficiency through the technique of Ratio Analysis.
73) Analysis of actual movement of cash into and out of an organization is called Cash flow Analysis
74) Inter-firm comparison or comparison of the company‟s position with the related industry as whole is
possible with the help of Common size statement analysis
75) Percentage of each asset to the total assets is show in Common Size Balance sheet.
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76. Ratio can be expressed as a fraction, proportion, percentage and a number of times.
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77) If a ratio is compared with one variable from the statements of Profit and Loss and another variable from
the Balance Sheet it is called Comparative Ratio
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78. Liquidity ratios are calculated to measure the short term solvency of the business.
79. The Profitability ratios are preliminary measures of return.
80. Proprietary ratio expresses relationship of proprietor‟s funds to Net Assets
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81. Purchase of any asset by paying cash is Cash outflow

82) Collection of cash from trade receivable is Cash inflows
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83) Operating activities constitute the Primary or main activities of an enterprise

84) Investing activities relate to purchase and sale of fixed assets.
85. Indirect method of ascertaining cash flows from operating activities begins with the amount of
Net Profit or Loss.
86) Cash flow statement prepared by Indirect method is used by most companies in practice.
87) An increase in accrued income during the particular year is Deducted from the net profit.
88) Goodwill amortised is Added to the profit made during the year for calculating the cash flow from
operating activities.
89) For calculating cash flow from operating activities provision for doubtful debts is added to the profit
made during the year.
90. According to Sec 39 of the Partnership Act, 1932 defines the dissolution of a Partnership firm.

MATCH THE FOLLOWING By PU Board

SL.NO A B
1. Partnership Deed Written Agreement
2. Fixed Capital System Capital A/C balance remains constant
3. Current A/C Fixed capital system
4. Goodwill Intangible asset
5. Sacrifice Ratio Admission of a partner
6. Gain Ratio Retirement of a partner
7. Executors' A/C Death of a partner
8. Realisation A/C Dissolution of Partnership firm
9. Dissolution of Partnership Firm Closing down the business of the firm
 10. Dividend The return on Shares
11. Companies Act 2013
12. Debenture Acknowledgement of debt
13. Share capital Shareholders fund
14. Security Premium Reserves and Surplus
15. Comparative Statement Horizontal Analysis
16. Vertical Analysis Common size Statement
17. Working Capital Current assets-Current Liabilities
18. Profitability Ratios Percentage
19. Purchase of Fixed asset Investing activities
20. Issue of Shares Financing activities
21. Payment of salaries to employees Operating activity.

Match the following additional Questions:

SL.NO A B
1. Partnership Act 1932
2. Interest on drawing Average period method
3. Fixed capital method Current account
4. Fluctuating capital method Capital varies year to year.
5. Sacrifice ratio Old ratio-new ratio
6. Goodwill Reputation of business
7. Revaluation account Admission of a partner
8. Capitalization method Valuation of goodwill
9. Gain ratio New ratio-Old ratio
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10. Executors a/c Death of a partner
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11. Goodwill AS-26

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12. Hidden Goodwill Excess paid over capital balance to paid

13. Executor Legal representative of deceased partner
14. Realization a/c Dissolution of partnership firm.
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15. Dissolution of partnership firm All partners cut off their connection
16. Asset taken over by partner Credit side of realization a/c
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17. Partner‟s loan Settled by payment on dissolution

18. PBD Transferred to credit side realization a/c.
19. Equity shares Owner‟s equity
20. Calls in arrears Unpaid call money
21. Share at premium More than face value of shares
22. Buy back of shares Company purchase its own shares
23. Bond Acknowledgment of debts
24. Coupon rate Interest on debentures
25. Over subscription More applications than company have
26. Under subscription Less applications than company have
27. Debentures borrowed capital
28. Postulate Accounting assumptions
29. Owner Internal users
30. Balance sheet Type of Financial statement
31. Land and Building Tangible asset
32. Trade payables Current liability
33. Tool of financial statement analysis Trend analysis
34. Comparative analysis Horizontal analysis
35. Lenders Users of financial statement analysis
36. Financial statement analysis Critical evaluation of financial statement.
37. Common size analysis Vertical analysis
38. Current ratio Liquidity ratio
39. Proprietary ratio Solvency ratio
40. Inventory turnover ratio Activity ratio
41. Profitability ratio Return on investment
42. Cost of revenue from operation Revenue from operation-Gross profit
43. Cash flow statement Indirect method.
44. Operating activity Cash from sale of goods.
45. Investing activity Interest received in cash
46. Financial activity Cash from issue of shares
47. AS-03 Cash flow statement should be prepared.
48. Gain ratio Retirement of a partner
49. Share capital Shareholders fund
50. Issue of shares Financing activities
51. Dissolution of partnership firm Realisation a/c
52. Security premium Reserves and surplus
53. Liability of a partner Unlimited
54. Format of company Balance sheet Schedule III of companies act,2013
55. Income statement Financial statement
56. Dissolution of Partnership firm All the accounts payable are settled
57. Purchase of land Investing activity
58. Debenture Non-current Liability
59. Share issue at par Share sold at face value
60. Financial statement disclose Monetary information
61. Admission of a partner Reconstitution of partners
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62. Super profit Method Valuation of goodwill
63. Equity shares Normal voting right
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64. Prospectus Public company.

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65. Issued capital Part of authorized capital.

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