Fill in the blanks questions

Set 01
( P & L suspense, Ratio , New Profit Sharing Ratio, Fluctuate, 7, Investing, One,
Goodwill, Old, Asset)
1. …….. is minimum number of members in a public company.
2. ……….. months must elapse between two calls.
3. ……….. ratio is required for sharing future profits and also for adjustment of
capitals.
4. …………. activities relate to purchase and sale of fixed assets.
5. …………. from time to time.
6. ………….. account is credited for cash brought in by new partner for his share of
Goodwill.
7. ………….. ratio is used to distribute accumulated profits and losses at the time of
retirement of a partner.
8. ……………. Account is debited for the transfer of share of accrued profit of a
deceased partner.
9. …………….. Account is debited for increase in the value of an asset.
10. …………….. can be expressed as a fraction, proportion, percentage and a number of
times.
Set 02
( 5 Lakhs Rupees, Financial, Non-current liabilities, Rate of Interest, Old, New
2, Debt – Equity, Subscribed capital, Liquidity)
NACC, C R PATNA
1. …………….. is minimum number of members in a private company.
2. …………….. is the minimum paid up capital of a public company
3. …………….. is the part of the issued capital.
4. …………….. ratio measures the relationship between long term debt and equity.
5. …………….. ratios are calculated to measure the short term solvency of the
business.
6. …………….. statements are the basic and formal annual report.
7. ……………… Ratio is used to distribute accumulated profits and losses at the time
of admission of a new partner.
8. ………………. Ratio is used for adjustment of continuing Partners capitals 1000,
10% debentures issued at par, 10% means …………..
9. Debentures A/c is shown under the head ………… in the Balance sheet.
10. Loans which are repayable within …………….. months are called as short term

Set 03
(Complimentary, Old, Interpretation, Legal, Financial Statement Analysis,
Uniform, Ratio, Artificial, Deducted from, Executors Loan)
1. A …………….. is a mathematical number calculated as a reference to relationship of
two or more numbers.
2. A company is an …………….. person.
3. A Partnership has no separate …………………… entity
4. Accounting Ratios are an important tool of ……………..
5. Accounting treatment at the time of retirement and death is …………….
6. Accumulated losses are transferred to the capital accounts of the old Partners at
the time of admission in their …………….. ratio.
7. Amount payable to the executors of the deceased partner is transferred to ………
account.
8. An increase in accrued income during the particular year is …………. the net profit.
9. Analysis and interpretation are …………… to each other
10. Analysis is useless without ……………..

Set 04
(Vertical, Current liabilities, Calls in advance, Reserves and Surplus, Old, Cash flow
Analysis, Indirect, Inflows and outflows, Horizontal, Rate of interest)
1. Analysis of actual movement of cash into and out of an organization is called
…………
2. Call money received in advance is called………….
3. Capital reserve is shown under …………….. head in the balance sheet of the
company
4. Cash flow statement prepared by ………….. method is used by most companies in
practice.
5. NACC, C R PATNA
Cash Flow Statement shows …………. and …………. of cash and cash equivalents..
6. Common size analysis is also known as …………….. analysis.
7. Comparative analysis is also known as …………….. analysis.
8. Coupon rate is …………… at which the amount is paid by the company on its
debentures.
9. Current ratio is the proportion of current assets to ……………..
10. Accumulated losses are transferred to the capital Accounts of the Partners at the
time of retirement in their …………. Ratio.
Match the Following
1) Gain Ratio - Financing Activities
2) Share capital - Operating Activity
3) Working capital - Reserves & Surplus
4) Issue of shares - Current Assets – Current Liabilities
5) Payment of salaries to employees - Retirement of Partner
6) security Premium - The return on shares
7) Dividend - Shareholders fund
 Fill in the blanks questions
Set 05
(Creditors, Fictitious, Deducted from, Negative, Cash inflows, Death, Agent, Bearer,
Debenture Suspense A/c, Lose)
1. Debenture holders are the …………….. of the company.
2. Debentures issued as collateral security will be debited to …………. A/c
3. Debentures which are transferable by mere delivery are called ……… debentures.
4. Debit balance of statement of profit and loss shall be shown as …………….. figure
under surplus head.
5. Discount on issue of Debenture is a …………. Asset.
6. Due to change in profit sharing ratio, some Partners will gain in future profits while
others will ………………
7. Each partner carrying on the business is the principal as well as the………… of all
other Partners.
8. Collection of cash from trade receivable is ……………
9. Executors account is generally prepared at the time of ……………. of a partner.
10. Expenses paid in advance at the end of the year are ………….. the profit made during
the year.
Set 06

NACC, C R PATNA
(Gain, Added to, All Partners capital, Intangible, Hidden Goodwill, Statement of
Profit and Loss, Two ,Sacrificing, Comparative Ratio)
1. Financial statements include …………….. and Balance sheet.
2. Fixed assets are classified as tangible and …………….. assets
3. General reserve is to be transferred to ……………. Accounts at the time of retirement
of a partner.
4. Goodwill amortised is ……….. the profit made during the year for calculating the
cash flow from operating activities.
5. Goodwill brought in by new partner in cash is to be distributed among old Partners
in …………….. ratio.
6. Goodwill is an …………………. asset.
7. Goodwill raised to the extent of retiring Partner’s share only is to be debited to
continuing Partners Capital Accounts in ………… ratio.
8. 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 ……………..
9. If the amount brought by new partner is more than his share in capital, the excess is
known as …………………
10. In order to form a Partnership, there should be at least ……………… persons.

Set 07
(Retiring Partner’s loan, Surplus of the Enterprise, All the Partners capital, Share
Capital, Position Statement, Partners Capital, 37, Net Profit or Loss, 6% p.a,
Common size statement analysis)
 1. If Goodwill already appears in the books it will be written off by debiting …………..
accounts in their OPSR.
2. In case of conversion of the debentures into shares, debenture holders A/c is
debited and …………… a/c credited.
3. General reserve is to be transferred to …………… accounts at the time of admission
of a new partner.
4. In the absence of any agreement as the disposal of amount due to retiring partner
Sec ………. of the Indian Partnership Act 1932 is applicable.
5. In the absence of any instruction retiring Partners capital A/c is closed by
transferring its balance to …………….. A/c.
6. In the absence of Partnership deed Interest on advance from partner will be charged
at ………………..
7. Income statement and …………….. are the financial statements.
8. Income Statement is prepared to ascertain …… .
9. Indirect method of ascertaining cash flows from operating activities begins with the
amount of …………………..
10. Inter-firm comparison or comparison of the company’s position with the related
industry as whole is possible with the help of ……………..
Set 08
(1 Lakh Rupees, Sacrificing Ratio, Profit and Loss, Gain Ratio, Difficult, meaning,
Ratio, written, 25%, Primary)
1. Interpretation means explaining the …………….. and a significance of the data
NACC, C R PATNA
2. Interpretation without analysis is ……………..
3. It is possible to assess the profitability, solvency and efficiency through the
technique of …………….. Analysis.
4. It is preferred that the Partners have a …………………… agreement.
5. Minimum paid up capital of a private company is …………..
6. NBFC registered with the RBI create redemption reserve equivalent to at least
………….. of the value of outstanding debentures issued through public issue.
7. New ratio – old ratio = …………..
8. Old Ratio - New ratio = ………………….
9. Operating activities constitute the ……………….. activities of an enterprise
10. P & L Appropriation A/c is merely an extension of ……… Account of a firm.

Match the Following

1) Partnership Deed - Dissolution of partnership firm
2) Executor’s A/c - Common size statement
3) Companies Act - Percentage
4) Vertical Analysis - Admission of New Partner
5) Profitability Ratios - Written Agreement
6) Realisation A/c - 2013
7) Sacrifice Ratio - Death of Partner
 Set 09
(Cash outflow, Capital profit, Capital Reserve, Agreement, Net Assets, End of itself,
Acid Test Ratio, Gross profit, Old, Common Size)
1. Partnership is the result of ………………… between two or more persons to carry on
business and share its profits and losses.
2. Percentage of each asset to the total assets is show in …………… Balance sheet.
3. Premium on issue of debentures is a ……………..
4. Profit on forfeiture of shares is transferred to ………… Account
5. Profit or loss on revaluation is shared among the old Partners in ……………… ratio.
6. Proprietary ratio expresses relationship of proprietor’s funds to ……………..
7. Purchase of any asset by paying cash is ………….
8. Quick Ratio is also known as ……………..
9. Ratio of gross profit to revenue from operations is known as …………….. ratio
10. Ratios are means to an end rather than the ……………..

Set 10
(Lawful, Liabilities, Operating, Shareholders Fund, 4, Average Collection Period,
Profitability, Inventory Turnover Ratio, 25%, Hidden)
1. Section ……………… of Indian Partnership Act, 1932 defines Partnership.
2. Share Capital appears under the head ……………..
3. Tax on operating profit should be classified as ……….. cash flows.
NACC, C R PATNA
4. The …………….. is useful in evaluating credit and collection policies.
5. The …………….. measures the activity of a firm’s inventory.
6. The …………….. ratios are preliminary measures of return.
7. The agreement should be to carry on some ……………. Business
8. The amount of buy back of shares in any financial year should not exceed
…………….. % of the paid up capital.
9. The amount paid to the retiring partner in excess of what is due to him is called
…………… Goodwill.
10. The balance in the retiring Partner’s loan A/c is shown on the ………. Side of the B/S
till the last installment is paid.

Set 11
(Common Size Statement, Unlimited, Old, Financial position, Sinking Fund,
Financial data, Intervening, Comparative Statement, Cash, New)
1. Share gained is calculated by deducting ……………… share from the new share.
2. The balance of Sinking Fund, Investment A/c after realization of investments is
transferred to ……………. A/c.
3. The liability of a partner for his acts is …………………..
4. The object of preparation of balance sheet is to ascertain the ……………..
5. The period from date of the last Balance sheet and the date of the Partner’s death is
called ……………. Period.
6. The Quick assets are those assets which are quickly convertible into ……………..
7. The ratio in which the remaining Partners will share future profits after retirement is
called ………….. ratio.
8. The statement showing the profitability and financial position for different periods of
time in a comparative form is known as ……………..
9. The statement which indicates the relationship of different items of financial
statement with a common item is called ………..
10. The term analysis means simplification of ……………..

Set 12
(5 ½ , Partnership Firm, Interpretation, Fixed capital, Partners Capital,
Revaluation, Debenture Redemption Reserve (DRR), Partner’s Current, Fixed,
General reserve)
1. The term financial analysis includes both analysis and ……………..
2. There is not much difference in the final accounts of a sole proprietary concern and
that of a …………………….
3. Under …………….. method, the capitals of the Partners shall remain fixed. Under
Fixed Capital Method, all the transactions relating to a partner are recorded in a
separate account called ……………… Account.
4. Under Fixed Capital Method, the amount of capital remains …………………
5. Under fluctuating capital method, all the transactions relating to Partners are
directly recorded in the ………….. Accounts.
6. Under fluctuating capital method, the Partner’s Capital Account balances
NACC, C R PATNA
7. Unrecorded asset is to be credited to ………….. account.
8. When all the debentures are redeemed, Debenture Redemption Reserve A/c is
Credited to ……………. A/c.
9. When fixed amounts are withdrawn at the end of every month, interest on the total
amount for the year ending is calculated for ………….. months.
10. When the debentures are redeemed out of profits, an equal amount is transferred
to……… A/c.

Match the Following

1) Fixed Capital System - Acknowledgement of debt
2) Current A/c - Investing Activity
3) Goodwill - Horizontal analysis
4) Dissolution of partnership firm - Capital A/c Balance remains
constant
5) Debenture - Fixed Capital system
6) Comparative Statement - Closing down the business of the
firm
7) Purchase of fixed asset - Intangible asset
d) None of the above
5. Purchases means
a) Cost of Revenue from operations + opening inventory – closing inventory
b) Cost of revenue from operations – opening inventory + Closing Inventory
c) Cost of revenue from operations – opening trade receivables + closing trade
receivables
d) None of the above

NACC, C R PATNA

Match the Following

 NACC, C R PATNA

True or False
The agreement between Partners must be in writing. False
The clauses of Partnership deed can be altered with the consent of all the Partners.
True
If the Partnership deed is silent about the profit sharing ratio, the profit or loss of
the firm is to be shared equally. True
In the absence of an agreement, a partner is entitled to claim interest at the rate of
10% p.a. on the amount of capital contributed by him. False
In the absence of Partnership Deed, no partner is entitled to get salary.
True
Under Fixed Capital Method, the Partners Capital Accounts will always show a
credit balance. True
Under Fixed Capital Method, the Partners’ Capital Accounts will always show a
debit balance. False
P & L Appropriation A/c shows how the profits are appropriated among the
Partners. True
When fixed amount is withdrawn during the middle of every month, interest on
total amount is calculated for 6 months. True
1 If there is a loss, no interest on capital is to be paid to Partners, even if there is a
provision in the Partnership deed. True
1 Accounting treatment for Partnership is similar to that of a sole proprietorship
business. True
1 There are two methods by which the capital accounts of Partners can be
maintained. True NACC, C R PATNA
1 Profit and Loss Appropriation Account is merely an extension of the Profit and
Loss Account of a firm. True
1 Interest on Partners capital is debited to Partners Capital Accounts. False
1 In case of Guarantee of profit to a partner, assurance may be given by one
partner. True
1 Goodwill brought in cash by new partner is distributed among old partners in
their sacrificing ratio. True
1 In case of admission of a partner profit or loss on revaluation is transferred to Old
Partners Capital accounts. Ans :True
1 Accumulated profit is transferred to all Partners Capital accounts including new
partner. False
1 The debit balance of profit and loss account shown in the assets side of the
Balance sheet will be debited to Old Partners capital accounts. True
2 Increase in the value of an asset is credited to Revaluation account. True
2 The traditional name of Revaluation A/c is profit and loss Adjustment A/c
True
2 Decrease in the value of liability is debited to Revaluation Account. False
2 Goodwill is an intangible asset. True
2 Sacrificing ratio is required to distribute the cash brought in by new partner
among old Partners for his share of Goodwill. Ans :True
2 Share Sacrificing = Old share – New share. True
2 Profit or loss on revaluation is transferred to all Partners Capital Accounts in case
of retirement of a partner. True
2 Accumulated profit is transferred to continuing Partners Capital Accounts.
False (June 201
2 Adjustment of Partners capitals of the remaining Partners is to be made in the
New Ratio. True
2 New share = Old share + Share Sacrificing. False
3 Share gained is computed by deducting old share from New Share. True
3 Increase in the value of asset is debited to Revaluation Account. False
3 Gain ratio is used to adjust the goodwill raised to the extent of retiring partner
share only. True
3 Full value of goodwill raised on retirement, is credited to all Partners Capital
NACC, C R PATNA
Accounts including retiring partner in their old ratio. True
3 Sec 37 of the Indian Partnership Act 1932 states that the outgoing partner has an
option to receive either interest @ 6% p.a. till the date of payment or such share of
profits which has been earned with his money. True
3Deceased Partner’s claim is transferred to his Executors Account. True
3 Deceased Partners share of profit for the year intervening period may be
calculated on the basis of last year profit / average profits of past few years or on
the basis of sales. True
3 Deceased partner may be paid in one lump sum or installments with interest.
True
3 Retirement normally takes place at the end of an accounting period, where as
death of a partner may occur any time. True
3 Amount payable to be the executors of the deceased partner is transferred to
executors loan account. True
4 A company is an artificial person True
4 Shares of a company are generally transferable True
4 Share application account is a liability account True
4 Paid up capital may exceed called up capital False
4 Capital Reserves are created out of a capital profits. True
4 The part of capital which is called up only on winding up is called reserved capital
True
4 Private companies invite the public to subscribe for its shares False
4 Forfeiture of shares is cancellation of the rights of shareholders. True
4 All the shares of buy – back should be fully paid – up. True
4 The Articles of the Association must authorize the company for the buy-back of
shares. True
5 Debenture is a part of loaned capital. True
5 Debentureholders have voting rights. False
5 Debentures bear fixed interest. True
5 Debentures cannot be issued for consideration other than cash. False
5 Company can buy – back its debentures. True
5 Interest on debentures is not shown in P & L Statement. False
5 Debentureholders are not the members of the company. True
5 Premium on redemption of debentures is a liability A/c. True
NACC, C R PATNA
5 Debenture cannot be issued as a collateral security. False
5 A company can issue irredeemable debentures. True
6 Redemption of debentures is made by the company in accordance with the terms
of issue. True
6 A company cannot purchase its own debentures in the open market. False
6 Profit on redemption of debentures is in the nature of a capital profit. True
6 Debentures cannot be issued at discount for more than 10% of the face value
False
6 Loss on issue of debentures is a revenue loss. False
6 The original cost is the basis of recording transactions. True
6 Going concern postulate assumes that the enterprise exists for a longer period of
time. True
6 The financial statements do not show current financial condition of a business.
False
6 The stationery is valued at cost. True
6 Provisions are maintained for known liabilities. True
7 While preparing financial statements, inventories valued at market price or cost
price whichever is less. True
7 Cash and cash equivalents are to be disclosed in accordance to IAS – 3. True
7 Rounding off of figures in financial statements is not mandatory. False
7 In the Balance sheet of a company goodwill is shown under the heading of “Fixed
Assets”. True
7 Proposed dividend is shown under the head Provisions. True
7 The financial statements of business enterprise include cash flow statement
False
7 Comparative statements are the form of Horizontal Analysis. True
7 Common size statements and Financial Ratios are the two tools employed in
Vertical Analysis. True
7 Financial Analysis is used only by the creditors. False (March 201.
7 Financial Analysis helps an analyst to arrive at a decision. True
8 In a common size statement, each item is expressed as a percentage of same
common base. True
8 The difference between the inflow and outflow of cash is the net cash flow.
True
NACC, C R PATNA
8 The flow of cash into the business is called positive cash flow of financial
statement. True
8 Financial Analysis can be undertaken by management or by parties outside firm.
True
8 Financial data will be comparative only when same accounting principles are
used. True
8 Non-monetary aspects are ignored in financial analysis. True
8 Financial Analysis does not consider price level changes. True
8 Items of expenditure are shows as a percentage of the net revenue from
operations in common size income statements. True
8 The only purpose of financial reporting is to keep the managers informed about
the progress of operations. False
8 Analysis of data provided in the financial statements is termed as Financial
Analysis. True
9 Long term borrowings are concerned about the ability of a firm to discharge its
obligations to pay interest and repay the principle amount. True
9 A ratio is always expressed as a quotient of one number divided by another
False
9 Ratios help in comparisons of a firm’s results over a number of accounting
periods as well as with other business enterprises. True
9 A ratio reflects quantitative and qualitative aspects of results. False
9 Liquidity ratios are essentially short term in nature. True
9 Current ratio is the proportion of current assets to current liabilities. True
9 The Quick assets are those assets which cannot be quickly converted into cash.
False
9 A higher interest coverage ratio ensures safety of interest on debts.True
9 The liquidity ratios are preliminary measures of return. False
9 Higher gross profit ratio is always a good sign. True
Dividend payout ratio refers to the proportion of earnings distributed to the
shareholders. True
Net profit refers to profit after tax (PAT) True
Price earning ratio= Market price of share / Earning per share. True
Cash flow statement is the first important financial statement. False
According to revised AS-3, preparation and presentation of Cash Flow statement is
NACC, C R PATNA
mandatory for all listed companies. True
Extraordinary items are recurring in nature False
An enterprise should report cash flow statement from operating activities, either by
using direct method or indirect method. True
Under direct method, items are recorded on the accrual basis in statement of profit
and loss. True

Expand
ICAI - Institute of Chartered Accountants of India.
D.R.R- Debenture Redemption Reserve
D R F I - Debenture Redemption Fund Investment
AIFIs - All India Financial Institutions
EPS = Earnings Per Share

One word/ Sentence answers

Who is a partner ?
Partner is a person who had entered into Partnership with one another
is individually called partner.
What do you mean by Partnership Firm ?
Partnership Firm is an association of two or more persons who carry a joint
business and share the profits.
State any one feature of Partnership
Ans :Agreement
What is the minimum number of Partners in a Firm ?
Two
Name any one content of Partnership Deed.
Name and Address of all the Partners
Name any one method of maintaining capital accounts of Partners.
i) Fixed Capital Method
Name any one final account of Partnership firm.
Profit and Loss Account
How do you distribute profit or loss among the Partners in the absence Partnership
deed ?
Equally
NACC, C R PATNA
Why the Profit and Loss Appropriation account is prepared ?
It is prepared how the Profit are appropriated among the Partners
after making necessary adjustments.
1 At what rate interest on advances by Partners is to be paid as per Partnership
act?
6% p.a.
1 When interest is charged on Partners drawings ?
Interest is charged on Partners drawings when there is a provision in
the agreement among the Partners about it.
1 When Partners’ Current Accounts are prepared in Partnership firms?
Partners Current Accounts are prepared in Partnership firms, when
Partners’ Capital Accounts are maintained under Fixed Capital Method.
1 State any one special aspect of Partnership accounts.
Maintenance of Partners Capital A/cs.
1 When the Current Accounts of Partners are opened ?
Current A/cs of Partners are opened in Fixed Capital Method
1 Under fluctuating capital method, how many accounts are maintained for each
partner ?
One
1 State any one feature of fluctuating capital method
Capital balance of each partner changes year after year.
1 State any one situation in which provision of payment of interest on partners
capital is made.
If there is an agreement and there is a profit.
1 Find out interest at 8% p.a. on capital of Rs. 50,000 for 9 months.
Interest = 50,000 × 8/100 × 9/12 = Rs. 3,000
1 Which is the suitable method of calculation of interest on drawings, when fixed
amount is withdrawn every month?
Average period method
2 Give one example for past adjustment ?
Commission or interest on capital
2 What is Partnership ?
Partnership is an agreement between two or more persons (called Partners for
sharing the profits of a business carried on by all or any of them
acting for all. NACC, C R PATNA
2 What do you mean by reconstitution of a Partnership firm ?
Any change in the existing agreement amounts to reconstitution of the
Partnership firm.
2 State any one reason for admission of a new partner.
To Increase the Capital
2 State any one right acquired by a newly admitted partner.
The right to acquired share in the assets and profits of the Partnership
firm.
2 Why the NPSR is required at the time of admission of a partner ?
NPSR is required to share the future profit or losses.
2 What is Goodwill ?
Over a period of time, a well established business develops an advantage
of good name, reputation and wide business connections, and it is termed as
Goodwill.
2 State any one factor affecting the value of Goodwill. Nature of Business
2 What is Normal profit ?
Normal profit means normal return on capital employed.
2 State any one method of valuation of Goodwill. (June 201
Average profit Method
3 Give the formula for Sacrificing ratio.
Sacrificing Ratio = Old Ratio – New Ratio
3 Which Account is to be debited to record the Increase in the value of an asset .
Assets Account
3 What is revaluation Account ?
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.
3 Which Account will be credited when there is a loss on revaluation ?
Revaluation A/c
3 Which account will be debited, when the cash is brought in by a new partner for
his share of Goodwill ?
Cash / Bank A/c
3 What is hidden Goodwill ?
NACC, C R PATNA
Hidden Goodwill refers to the difference between total required capital &
actual capital of all Partners.
3 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.
3 Give the formula for calculating Gain ratio.
Gaining Ratio = New Ratio – Old share
3 Why the Gain Ratio is required on retirement of a partner ?
It is required for the purpose of writing off Goodwill created to the extent of
Retiring Partner’s Share.
3 Why the New Ratio is required on retirement of a partner ?
It is required to share future P/L between continuing Partners.
4 When do you prepare Executors Account ?
Executors A/c is prepared at the time of death of a Partner
4 Give the formula for calculation of new profit sharing ratio on retirement of a
partner. New share = Old share + Share gained
4 What do you mean by Hidden Goodwill ?
It refers to the amount paid to Retiring Partner in excess of actual
amount due to him.
4 Portion gained = New Share - …………… Old Share
4 What are the different ways in which a partner can retire from the firm.
a) Due to old age. B) Insolvent
4 Distinguish between sacrificing ratio and gaining ratio.
Sacrificing Ratio Gaining Ratio
1. It is calculated at the time of It is calculated at the time of
admission of partner retirement of a partner
4 Why a retiring / deceased partner is entitled to share of goodwill of the firm.
Because he is also contributed for the development and reputation of the firm.
4 Who is an Executor ?
Executors is a legal representative of a deceased partner. He is entitled to
receive claims of deceased partner.
4 Who is an ‘Executor’ ?
Executor is the legal representative of a decased partner in a partnership
firm.
NACC, C R PATNA
4 When do you prepare Executor’s A/c?
Executor’s A/c is prepared at the time of death of a partner.
5 Which account is credited for the share of accrued profit of a deceased partner ?
Deceased Partner’s capital / Executor’s A/c
5 What is intervening period ?
The period from date of last balance sheet to date of death of a partner is
called intervening period.
5 How do you close the executors Account ?
Executors A/c is closed by transferring its balance to Executors Loan A/c.
5 State any one kind of a company.
Companies limited by shares
5 What is issued capital ?
It is a part of Authorised capital which is actually issued to the public for
subscription.
5 What is buy – back of shares ?
Purchase of its own shares by a company
5 What is minimum paid up capital of a private company ?
1 lakh Rupees
5 When the Reserved capital is used ?
In the event of winding up of the company
5 What is over subscription ?
When the public apply for more shares than those offered to them, there
is said to be over subscription.
5 What is under subscription ?
When the number of shares applied for is less than the number of shares for
which applications have been invited for subscription, there is said to be
under subscription.
6 What is issue of shares at far ?
Ans :It means issue of shares at a price equal to face value of share of
company.
6 What is issue of shares at premium ?
Ans: It means the issue of shares at a price higher than the face value of
shares.
6 When the shares are forfeited ?
NACC, C R PATNA
For Non payment of allotment and / or call money due on shares.
6 What is meant by debentures ?
Debentures are the written instruments acknowledging debt under the
common seal of the company.
6 What is Bond ?
Bond is an instrument of acknowledgement of debt.
6 What is coupon rate ?
Coupon rate refers to a specified rate of interest on debentures.
6 What do you mean by zero coupon rate debentures ?
Zero coupon rate debentures refer to the debentures those do not carry a
specific rate of interest.
6 What is meant by issue of debentures for consideration other than cash ?
Issue of debentures for consideration other than cash means issuing
debentures to vendors for purchasing of assets.
6 What do you mean by the issue of debentures as a collateral security ?
Issue debentures as a collateral security mean issuing debentures to the
lenders in addition to some other assets already pledged.
6 Name of any one method of redemption of debentures.
Payment in Lump sum
7 What do you mean by redemption of debentures ?
Redemption of debentures refers to repayment of the amount of
debentures by the company.
7 State any one type / kind of debentures.
Secured Debentures.
7 Can the company purchase its own debentures ?
Yes
7 Debenture Redemption Reserve is shown under which head in the balance
sheet ?
Reserve & Surplus
7 Name the head under which discount on issue of debentures appears in the
balance sheet of a company ?
Other Non-current Assets
7 Name any one type of financial statements.
Balance sheet
NACC, C R PATNA
7 State any one feature of financial statements.
Recorded Facts
7 Name any one internal user of financial statements.
Shareholders
7 Write any one objective of financial statements
To provide information about profitability and financial position
7 State any one type of reserve.
Capital Reserve
8 Give an example for non-current asset.
Building
8 Where do you record the money received against share warrants ?
Shareholder’s Fund
8 How do you treat credit balance of Income statement under the head surplus ?
It is shown in surplus under ‘Reserves and Surplus head
8 Write any one feature of current assets.
Involved in entity’s operating cycle
8 How do you treat preliminary expenses ?
Preliminary expenses are to be written off completely in the year in
which, such expenses are incurred first from securities premium reserve, next
from surplus.
8 What do you mean by Financial Statements Analysis ?
Ans Financial Statement Analysis means simplification of financial data by
methodical classification given in financial statement.
8 State any one object of financial statement analysis. (June 201
To identify the reasons for change in the profitability / financial position of
the firm.
8 State any one technique of Financial Statement Analysis.
Comparative Statement
8 State any one user of Financial Analysis.
Investors
8 What is Vertical Analysis ?
It is a tool of financial analysis, in which data or figures are converted
into percentages of a common base item.
9 What is Horizontal Analysis ?
NACC, C R PATNA
It is a technique of financial Analysis, in which data / figures are shown
in a comparative form of two / more years.
9 State any one importance of Financial Analysis.
Helpful to finance manager
9 State any one limitation of Financial Analysis.
It does not consider price level changes
9 Give the meaning of analysis.
Analysis means simplification of financial data by methodical
classification.
9 Give the meaning of Interpretation
Interpretation means explaining the meaning and significance of data.
9 Give the meaning of Ratio Analysis
Ratio Analysis is the indispensable part of interpretation of results
revealed by the financial statements.
9 State any one objective of Ratio Analysis
To know areas of business which need more attention
9 State any one use of ratio analysis.
Simplify complex figures and establish relationships
9 Mention any one limitation of ratio analysis.
Ignores price level changes.
9 Mention any one type of ratio. Liquidity ratio, Current ratio
Give one example for Current Assets Cash
Give one example for Current liability Creditors ( March 201
What is current ratio ?
Current ratio is the proportion of current assets to current liabilities.
What is Quick ratio ?
Quick ratio is the ratio of Quick assets to current liabilities.
Name any one type of turnover ratio.
Inventory turnover ratio
Give the meaning of net profit ratio
Net profit ratio is a profitability ratio of net profit to revenue from operations.
Give the meaning of dividend payout ratio
Dividend payout ratio refers to the proportion of earnings that are distributed
to the shareholders.
What is activity ratio ? NACC, C R PATNA
Activity ratio is the ratio that indicate the speed at which activities of the
business are being performed.
State one significance of interest coverage ratio.
It reveals the number of times interest on longterm debts is covered by
the profits available for interest.
What is the main objective of cash flow statement ?
The primary objective of cash flow statement is to provide useful information
about the cash flows of an enterprise.
Mention any one benefit of cash flow statement.
Assessing the ability of the enterprise to generate cash and cash
equivalents
Give the meaning of cash flows
It implies movement of cash in and out due to some non cash items.
What are operating activities ?
Operating activities are the activities that constitute primary or main
activities of an enterprises.
Give an example for investing activities.
Purchase of non-current assets
Give an example for cash inflows from financing activities.
Cash proceeds from issue of preference or equity shares.
Give an example for cash outflows from financing activities.
Cash repayment of amounts borrowed.
Give an example for extraordinary item
Loss due to theft or earthquake or flood

Two marks questions

What is Partnership ?
Partnership is a relation between two or more persons who join hands to set
up a business and share its profits and losses.
Define Partnership
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”
NACC, C R PATNA
State any two features of Partnership
a) Two or more persons
b) Agreement between Partners
c) Unlimited liability
What is Partnership Deed ?
Partnership Deed is the written agreement on stamp paper containing terms
of Partnership, duly signed by all Partners.
What are the methods of maintaining capital accounts of Partners ?
a) Fixed Capital Method
b) Fluctuating Capital Method
What is Fixed Capital Method ?
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.
What is fluctuating capital method ?
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.
State any two differences between fixed and fluctuating capital methods.
Fixed Capital Method Fluctuating Capital Method
Adjustments are made in Current A/c Adjustments are made in Partners capital A/cs.
Capital balance remains unchanged Capital balance fluctuates year by year.
What do you mean by Profit and Loss Appropriation Account ?
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.
1 What is guarantee of profit to a Partner ?
Guarantee of profit to a partner means giving assurance of certain minimum
amount by way of his share of profits of the firm.
1 What do you mean by past Adjustments?
Past Adjustments refer to, making necessary rectifications for commissions or
omissions noticed after preparation of final accounts.
1 State any two final accounts of a Partnership firm.
NACC, C R PATNA
a) Profit and Loss A/c and b) Balance Sheet
1 In the absence of Partnership deed, specify the rules relating to the followings:
a) Sharing of profits & losses b) Interest on partners capital
a) Equally b) Not to be allowed
1 State the rules relating to the followings in the absence of Partnership Deed.
a) Interest on drawings b) Interest on advances from Partners
a) Not to be charged b) 6% p.a.
1 Name any two methods for calculation of Interest on drawings.
a) Product Method b) Average Period Method
1 When the interest on drawings is generally provided to Partners ?
Interest on drawings is generally charged on partners when it is specifically
expressed in an agreement.
1 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.
1 State any two special aspects of Partnership A/cs.
a) Maintenance of Partners Capital A/cs.
 b) Distribution of P & L among Partners.
1 Name any two contents of Partnership Deed.
a) Profit Sharing Ratio b) Capitals of Partners
2 Mention any two circumstances for retirement of a partner.
Ans: (a) When all remaining partners’ give their consent.
(b) Old age of a partner
(c) Misunderstanding with other partner.
2. What is gain ratio?
Ans: The gain ratio is the ratio in which the remaining partners gain or
acquire the share of retiring partner on his retirement.
22. State any two differences between sacrificing ratio and gaining ratio.
Sacrifice ratio Gain ratio
a) It is calculated at the time of a) It is calculated at the time of
admission of a partner. retirement of a partner
b) Share sacrifice = Old ratio – New ratio b) Share gained = New ratio – Old ratio
c) It is the ratio which decreases the old c) It is the ratio which increases the
partner’s share of profit remaining partners’ share of profit
NACC, C R PATNA
23. State any two purposes of calculating new profit sharing ratio.
Ans: (a) To share the future profits of the firm.
(b) To write off the firms goodwill.
(c) To adjust the remaining partners’ capital.
24. Name two methods of treatment of goodwill.
Ans: (a) Goodwill is created at its full value and retained in the books.
(b) Goodwill is created at its full value and written off immediately.
(c) Goodwill is created to the extent of retiring partners share and written off
immediately.
25. How do you close revaluation account on retirement of a partner?
Ans: By transferring profit or loss on revaluation account to the capital
account of all the partners in their old ratio.
26. Pass the journal entry for adjusting retiring partner’s share of goodwill when no
goodwill is raised.
Ans: Remaining partners Capital A/c………………………………Dr. xxx ----
To Retiring partner’s Capital A/c ---- xxx
(Being retiring partner’s share of goodwill adjusted
in remaining partners capital a/c in their new ratio)
27. Mention any two modes of payment on settlement of Retiring Partner’s Capital
A/c.
Ans: (a)Settlement is made in lump sum by cash or by cheque.
(b) Amount due to retiring partner is treated as loan.
(c) Amount due to retiring partner is partly paid in cash and the balance
amount transferred to his loan a/c.
28. Pass the journal entry to close Retiring Partner’s Capital Account when the
payment is made immediately.
Ans: Retiring partner’s Capital A/c …………………………………Dr. xxx ----
To Cash/ Bank A/c ---- xxx
(Being retiring partner’s a/c is settled by payment)
29. Give the journal entry to close Revaluation Account when there is a profit.
Ans: Revaluation A/c……………………………………………….Dr. xxx ----
To All Partners’ Capital A/c ---- xxx
(Being profit on revaluation transferred to partners Capital a/c)
30. Give the journal entry to close Revaluation Account when there is a loss.
NACC, C R PATNA
Ans: All partners’ Capital A/c……………………………………….Dr. xxx ----
To Revaluation A/c ---- xxx
(Being loss on revaluation transferred to partners’ Capital a/c)
31. Why do firms revalue the assets and liabilities on retirement?
Ans: On retirement of the partner the assets and liabilities of the firm are
revalued in order to ascertain true position of the business. The value of
some of the assets and liabilities may be increased or decreased. To record the
increase or decrease in the value of assets and liabilities firms prepare
revaluation a/c.
32. Why retiring partner is entitled to a share of goodwill of the firm?
Ans: The retiring partner is entitled to his share of goodwill at the time of
retirement because the goodwill has been earned by the firm with the efforts
of all partners including retiring partner.
33. A, B and C are partners in a firm sharing Profits and Losses in the ratio of
3:2:1. If “C” retires, then what will be the NPSR of A & B.
Ans: If C retires the new profit sharing ratio of A and B is 3:2.
34. Give the journal entry when the retiring partner is partly paid in cash and the
remaining amount is treated as loan.
Ans: Retiring Partner’s Capital A/c…………………………. Dr. xxx ----
To Cash/ Bank A/c………………………… ---- xxx
To Retiring Partners loan A/c………………. ---- xxx
(Being part payment to retiring partner made on his retirement
and remaining amount transferred His loan a/c)
35. Give the journal entry when retiring partner’s whole amount is treated as loan.
Ans: Retiring Partner’s Capital A/c……………………………. Dr. xxx ----
To Retiring Partner’s loan A/c ……………………... ---- xxx
(Being amount due to retiring partnrer transferred to his loan A/c)
36. Give the meaning of accrued profit .
Ans: The profit from the date of last balance sheet till to the date of a death of
a partner in a partnership firm is considered as accrued profit.
37. State any two differences between retirement and death of a death.
Ans:
Retirement of a partner Death of a partner
NACC, C R PATNA
Retirement of a partner is planned Death
of a partner is uncertain
reconstitution of partnership reconstitution of partnership
Usually at the end of accounting It may occurs any time of accounting
period period

38. Write any two ways of settlement of claims to the deceased partner.
Ans: (a) Immediate full payment by cash
(b) Partly paid in cash and balance transferred to loan account
39. Write the journal entry to close the deceased partner’s Capital Account.
Ans: Deceased partners’ capital A/c……………………………..Dr xxx ----
To Deceased partners executor A/c ---- xxx
(Being balance of deceased partner capital account transferred)
40. Pass Journal entry for transfer of accrued profit of the deceased partner.
Ans: Profit and Loos suspense A/c……………………………..Dr xxx ----
To Deceased partners capital A/c ---- xxx
(Being accrued profit transferred to deceased partner)
41. Write the journal entry for cash paid immediately to the executors of the
deceased partner.
Ans: Deceased partners executor A/c ……………………………..Dr xxx ----
To Bank A/c ---- xxx
(Being payment made to deceased partner executors)
42. What is a company ?
According to Companies Act of 2013 section 2(2 company means “A company
incorporated under this act or under any previous company law”.
4 State any two features of a company ?
Ans :a) Body corporate
b) Separate legal entity
c) Artificial Persons
d) Limited liability
4 What is prospectus ?
Prospectus is an open invitation to the public to take up the shares of
company.
4 What do you mean by over subscription ?
NACC, C R PATNA
When the public apply for more shares than those offered to them there
is said to be over subscription.
4 What is calls in arrears ?
If the shareholders fail to pay the amount due on allotment or on any of the
call then amount remaining unpaid on allotment or on call is known as calls-
in-Arrears or Unpaid Calls.
4 Sate any two methods of issue of shares ?
a) Issue of shares at par
b) Issue of shares at a premium
c) Public Issue
d) Private Placement
4 What is issue of shares for consideration other than cash ?
When a company enters into an arrangement with the vendors from whom it
has purchased assets, if the latter agrees to accept the payment in the form of
fully paid shares of the company issued to them then it is known as issue of
shares for consideration other than cash.
4 What is forfeiture of shares ?
Cancellation of the right of a shareholder on shares held by him due to
non-payment of money due on such shares.
5 Give the Journal entry for transfer of profit on re-issue of forfeited shares.
Share Forfeiture A/c. …………. Dr. xxx ….
To Capital Reserve A/c …. xxx
(Profit on reissue of forfeited shares)
5 State any two categories of share capital
a) Authorised capital
b) Issued capital
c) Subscribed capital
5 Define Share.
Ans: According to Indian Companies Act of 1956 or 2013 “A share is the share
in share capital of the company”.
5 What is Authorised capital?
Ans: Authorized or Registered or Nominal Capital is the amount of capital
which a company is authorized to raise from the public by the issue of shares.
It is mentioned in the capital clause of the memorandum of association of the
company. NACC, C R PATNA
5 Give the meaning of paid-up capital.
Ans: Paid-up capital is that portion of the called up capital which has been
actually received from or paid by the shareholders.
5 What are calls in advance?
Ans: Sometimes company may receive entire amount due on shares from the
shareholder even though amount has not been called up by the company. An
amount received by company before calls made is called calls in advance.
5 What is public company ?
A company which is not a private company or not a subsidiary of a private
company is known as public company
5 Give the meaning of financial statements.
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
5 Mention two types of financial statement
a) Statement of profit and loss
b) Balance Sheet
5 State any two features of financial statements.
a) Recorded Facts
b) Accounting conventions followed
5 Write any two objectives of financial statements.
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.
a) Basis for prospective investors
b) Report on the performance of the management
5 Give any two limitations of financial statements. (June 201
a) Do not reflect current situations
b) Assets may not realized at stated values
5 State any two postulates
a) Money measurement postulate
b) Realisation postulate
6 How will you disclose the following items in the Balance sheet of a comp1any ?
NACC, C R PATNA
a) Loose tools b) Proposed dividends
A) Loose Tools : Inventories (Current Assets)
B) Proposed Dividends : Short Term Provisions (Current Liabilities)
6 State any two differences between Current Liabilities and Non-current liabilities.

Current liabilities Non Current liabilities

a) Expected to be settled within 12 a) Expected to be settled after 12
months months
b) Held primarily for the purpose of b) Held as source for long term
being traded finance
6 Mention any two items which are shown under the head “Reserves and Surplus”
a) Capital Reserve b) Securities Premium Reserve
6 What is cash flow statement ?
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.
6 State any two uses of cash flow statement
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.
6 Write any two objectives of preparing cash flow statement
a) To provide useful information about cash flows
b) To ascertain amount and certainty of cash flows
6 What do you mean by operating activities ?
As per AS-3, operating activities are the activities that constitute the primary
or main activities of an enterprise.
6 What do you mean by investing activities ?
Investing activities are the activities relating to purchase and sale of long
term assets.
6 Mention any two activities which are classified as per AS – 3
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.
a) Cash proceeds from issue of equity shares,
NACC, C R PATNA
b) Cash proceeds from issue of Debentures
c) Cash Proceeds from borrowing long term loans
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.
Cash receipts from customers = Revenue from operations + opening trade
receivable – closing trade receivables.
= 48000 + 8000 – 6000
= 50000
7 If purchases are Rs. 72000, opening trade payables are Rs. 12000 & closing trade
payables are Rs. 9000. Calculate cash payments to suppliers.
Cash payments to suppliers = purchases + opening trade payables – closing
trade payables.
= 72000 + 12000 – 9000
= 75000
NACC, C R PATNA