CUET Accountancy Sample Paper Set B

Question: What is the main objective of not for profit organisation?
a) Service
b) Profit
c) Security
d) Integrity

Answer: a

Question: What is usually not a major source of income of a NPO?
a) Member Donation
b) Trading income/ sale of goods
c) Legacies
d) Government grant

Answer: b

Question: Which account is prepared by NPO in replace of normal capital account?
a) Equity account
b) Shareholders account
c) General Fund account
d) Capital Reserve account

Answer: c

Question: What is not a feature of Receipt and Payments account?
a) Transactions relate to current year, preceding year and succeeding year
b) It can contain revenue and capital receipts
c) No distinction is made whether the transactions are done through bank or cash
d) It helps in ascertaining the profit/loss for the year

Answer: d

Question: Which of the following is a summary of cash book?
a) Bank reconciliation statement
b) Revaluation account
c) Income and expenditure account
d) Receipts and payments account

Answer: d

Question: In case of NPO, what is the membership fee paid by member at periodical intervals called?
a) Legacies
b) Subscription
c) Life membership
d) Endowment fund

Answer: b

Question: Which of the following is termed as admission fee paid only once by the member at the time of becoming a member?
a) Subscription
b) Entrance fee
c) Legacies
d) Life membership fee

Answer: b

Question: Which of the following cannot be capitalised in the capital fund of NPO?
a) Life membership fee
b) Legacies
c) Sale of periodicals
d) Entrance Fees

Answer: c

Question: For which of the following objectives of English Winglish club, the general donation will be used?
a) Extension of existing building
b) Construction of new computer lab
c) Creation of book bank
d) Payment of electricity bill for March 2021

Answer: d

Question: What does closing balance of Income and Expenditure account represents?
a) Cash in hand/ Bank balance
b) Amount gambled by the trustees
c) Excess of income over expenditure
d) No balance appears as debit side matches with credit side

Answer: c

Question: Persons who have entered into partnership with one another are individually called ‘partners’ and collectively called?
a) Association of partners
b) Firm
c) Body of Individuals
d) Joint stock corporation

Answer: b

Question: What is the agreement of partnership called?
a) Partnership Memorandum
b) Partnership Contract
c) Partnership Deed
d) Partnership Arrangement

Answer: c

Question: Which of the following is not included in partnership deed?
a) Rules regarding operation of bank accounts
b) Mode of auditor’s appointment
c) The accounting period of the firm
d) Rules of admitting the new partners

Answer: d

Question: Calculate the interest on loan of Rs. 100000 given by the partner for 73 days in a year when partnership deed is silent?
a) Rs. 1200
b) Rs. 1500
c) Rs. 2400
d) No interest is paid

Answer: a

Question: A and B are partners in a firm with PSR 1:1. The capital balances of A and B are 100000 and 150000 respectively. The profit of the firm is 10000 for the year. Calculate the interest on capital when partnership deed is silent about it?
a) Interest shall be paid @6% p.a.
b) Interest shall be paid equally
c) Interest shall be paid only till 10000
d) No interest shall be paid

Answer: d

Question: A and B are partners in a firm with PSR 3:1. The capital balances of A and B are 100000 and 150000 respectively. The profit of the firm is 10000 for the year. Calculate the interest on capital when partnership deed provides interest on capital @10%?
a) Interest shall be paid @10% till exhaustion of profits
b) Interest shall be paid @10% completely
c) Interest shall be paid only in profit sharing ratio
d) No interest shall be paid

Answer: a

Question: Mr. Shivam, partner of M/s XYZ Company, has given a loan of Rs. 100000 on 01/04/2021 to the firm. The partnership deed is silent on the interest on loan given by partner. How will be the interest on such loan accounted for the year ended 31/03/2022 as per Indian Partnership Act?
a) Interest shall be paid Rs. 12000
b) Interest shall be paid Rs. 6000
c) No interest is to be charged as the partnership deed is silent
d) It will be treated as capital, and interest on capital shall be provided

Answer: b

Question: What are the necessary adjustments to arrive at closing balance of partner’s capital account?
a) Addition to capital
b) Drawings made in kind
c) Share of profits/ loss
d) All of these

Answer: d

Question: What shall be the average months when Mr. A has made drawings of Rs. 10000 on 1st of every quarter for 4 quarters?
a) 7.5 months
b) 4 months
c) 4.5 months
d) The concept of average months does not applies to drawings drawn at beginning of every quarter

Answer: a

Question: How do we treat interest of capital in P&L account?
a) It is treated as an expense
b) It is not recorded in the P&L account
c) It is treated as an income
d) None of the above

Answer: a

Question: Which of the following is correct about partnership agreement?
a) No partner can withdraw from partnership after signing the agreement
b) All the signing partners are not legally bind with the agreement
c) It is a registered document and contains all the terms and conditions of partnership
d) It cannot be amended with the consent of majority partners

Answer: c

Question: A and B are partners in a firm with capital of Rs. 100000 and Rs. 50000 respectively. What is the interest on capital @10% if they have earned profits of Rs. 6000?
a) Rs. 10000 and Rs. 5000
b) Rs. 3000 and Rs. 3000
c) Rs. 4000 and Rs. 2000
d) Rs. 2000 and Rs. 4000

Answer: c

Question: What amongst the following is a feature of partnership?
a) The main objective is to purchase assets in joint name
b) The profit and loss is to be shared equally only
c) Partners are only entitled to profits
d) Two or more persons are required to form partnership

Answer: d

Question: From which of the following will the interest on capital @ 5% (as decided in the partnership deed) shall be provided by the firm?
Net profits for the year: 5 lac
Accumulated profits: 15 lac
Capital of Partner A: 10 lac and B: 12 lac
DR Reserve: 6 lac
Goodwill: 14 lac
a) From net profits
b) From accumulated profits
c) From DR Reserve
d) From goodwill

Answer: a

Question: What is the partnership ratio when partnership deed says the ratio is based on amount invested by the partners?
a) Equally
b) As decided in partnership deed
c) As per capital contribution
d) As decided by court of law

Answer: c

Question: Mr. A, the partner of ABC & Co. has current account balance of Rs. 5 lac. Which side will it be reflected?
a) Debit
b) Credit
c) A or B
d) Current account balances are fixed

Answer: b

Question: A, B and C are partners. A contributed Rs 100000, B and C contributed Rs 10000 respectively. Profits of the business is Rs 6000 but A wants to get 20% on capital. How will be the profits distributed? (No partnership deed between partners)
a) Equally, No interest on capital to A
b) Equally after providing interest on capital to A
c) Equally after providing interest on capital to all the partners
d) Profits will not be distributed unless there is change in partnership deed

Answer: a

Question: Which of the following is not a difference between partnership and JV?
a) JV is for a short term and partnership is for long term
b) JV is run by joint venturers and partnership is run by partners
c) No law is required for JV, Indian Partnership Act is required for partnership
d) MOU is required for JV and basic understanding is required for partnership

Answer: d

Question: The withdrawal by the partner due to bad health or change in interest of business can be termed as?
a) Admission of partner
b) Retirement of partner
c) Dissolution of the firm
d) Suspension of partner

Answer: b

Question: A and B are partners in a firm in ratio 3:2. They admitted C for 20% share in profits and losses which he gets equally from the existing partners. What shall be the new PSR?
a) 3:2:1
b) 12:8:3
c) 12:8:5
d) 5:3:2

Answer: d

Question: A and B are partners in a firm in ratio 5:3. They admitted C for 1/7 share in profits and losses. The new PSR is 4:2:1 What shall be the sacrificing ratio?
a) 3:5
b) 3:8
c) 5:3
d) 8:3

Answer: a

Question: Which of the following is not a method of goodwill?
a) Average Profits method
b) Super Profits method
c) Normal Profits method
d) Capitalisation method

Answer: c

Question: What shall be 3 years purchase goodwill based upon the following profits of 3 years?
Year        Weight       Profits
  1                1            15000
  2                2            30000
  3                3            45000
a) 105000
b) 108000
c) 85500
d) 75500

Answer: a

Question: What shall be 3 years purchase goodwill based upon the following profits of 3 years when capital employed is 500000 and return on capital is 2%?
Year               Profits
   1                  15000
   2                  20000
   3                  25000
a) 10000
b) 30000
c) 20000
d) 25000

Answer: b

Question: ABC Ltd. Has average profits of Rs. 80000 with normal rate of return at 10%. What is the value of goodwill if the net assets are Rs. 500000?
a) 50000
b) 30000
c) 42000
d) No or negative goodwill

Answer: b

Question: Bank account — Dr. To Premium for goodwill account
Goodwill A/c = Dr.
To Sacrificing partner’s capital a/c
When is the above entry recorded?
a) When goodwill already exists in business
b) When new partner brings goodwill in cash
c) When new partner brings goodwill partly
d) Goodwill does not exist in business

Answer: b

Question: Which account is debited when new partner brings goodwill partly?
a) New partner’s current account
b) Sacrificing partner’s capital accounts
c) Goodwill account
d) Premium for goodwill account

Answer: a

Question: What is the treatment of general reserve appearing before the admission of partner?
a) Old partners to share in old ratio
b) New partners to share in new ratio
c) Old partners to share in sacrificing ratio
d) New partners to share in gaining ratio

Answer: a

Question: How is loss in revaluation account incurred?
a) With increase in asset and increase in liability
b) With increase in asset and decrease in liability
c) With increase in liability and decrease in asset
d) With decrease in asset and decrease in liability

Answer: c

Question: What is generally adjusted so as to be proportionate with new profit sharing ratio at the time of admission of new partner?
a) Partner’s share in goodwill
b) Partner’s capital
c) Partner’s remuneration
d) Partner’s individual tax liability

Answer: b

Question: How is new profit sharing ratio decided by the partners for new partner?
a) Through order of court
b) Based on existing balance in capital accounts
c) Mutually decided
d) As per 7thpay commission

Answer: c

Question: How are capitalization of profits takes place in capitalization method?
a) Average profits * 100 / Normal rate of return
b) Super profits * 100 / Normal rate of return
c) Average profits / Intrinsic value of the business * 100
d) Super profits / Intrinsic value of the business * 100

Answer: a

Question: Ram, Lakhan, Karan are equal partners. They admitted Arjun as partner with capital Rs. 2 lac and half of premium for goodwill Rs. 50000 for 25% share. What is the value of goodwill of firm?
a) Rs 1 lac
b) Rs. 8 lac
c) Rs. 2 lac
d) Rs. 4 lac

Answer: d

Question: Calculate 5 years goodwill on average profits?
   Years                   Profit/ (Loss)
   2015                    -50000
   2016                    -100000
   2017                     750000
   2018                     600000
a) 15 lac
b) 1 lac
c) 20 lac
d) 17.5 lac

Answer: a

Question: A, B and C are partners in a firm sharing profits the ratio of 3:2:1. D is admitted into the firm for 1/4 share in profits, which he gets as 1/8 from A and 1/8 from B. The total capital of the firm is agreed upon as Rs. 1,20,000 and D is to bring in cash equivalent to 1/4 of this amount as his capital. The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits. The capitals of A, B and C after all adjustments are Rs. 40,000, Rs. 35,000 and Rs. 30,000 respectively. How much should be the capital brought in or (withdrawn) by A, B and C?
a) 5000; -5000; -100000
b) 10000; -5000; -50000
c) -5000; -10000; 100000
d) 5000; -10000; -100000

Answer: a

Question: Chetan was admitted with equal share in profits contributing 250000 as capital and 100000 as goodwill and Abhay and Beena’s old profit sharing profits in 3:2. New PSR shall be 1:1:1. In what ratio will the premium distributed 
a) Abhay 80000 and Beena 20000
b) Abhay 50000 and Beena 50000
c) Abhay 33333.3, Beena 33333.3 and Chetan 33333.3
d) Abhay Rs. 60000 and Beena Rs. 40000

Answer: a

Question: Chetan was admitted with equal share in profits contributing 25000 as capital and 10000 as goodwill and Abhay and Beena’s old profit sharing profits in 3:2. New PSR shall be 1:1:1. Chetan has compensate Abhay and Beena outside the firm. How will this be treated in the books of accounts?
a) Only capital amount is to be raised in books
b) Goodwill is to be raised and distributed in old ratio
c) Goodwill is to be raised and distributed in new ratio
d) Outside firm settlement is not allowed

Answer: a

Question: Mohun and Sohun shares profit and losses equally. They admitted Ramesh as an equal partner. The assets were valued at:
Asset              Book               New
                       Value               Value
Goodwill          0                     30000
Inventory        12000              20000
Machinery       55000             60000
Ramesh brings in capital as Rs. 20000 and necessary share of goodwill. How will profit/ loss on revaluation shared amongst the partners?
a) 6500:6500:0
b) 5000:5000:5000
c) 7433:7433:7433
d) 7433:7433:0

Answer: a

Question: At which amount is the fixed assets and liabilities appearing in balance sheet after admission of a new partner?
a) Historical cost
b) Transition cost
c) Revalued amount
d) Current cost

Answer: c

Question: Which of the following asset is compulsorily revalued at the admission of partner?
a) Goodwill
b) Closing Stock
c) Trademarks
d) Land & Building

Answer: a