All Free Accounting MCQs with Answers
Every Accounting question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
1,971 questions · page 98 of 99
- A. Rs. 10,000
- B. Rs. 20,000
- C. Rs. 25,000
- D. Rs. 30,000
Explanation: C takes 1/10 of the total profit share from each of A and B, so both old partners sacrifice equally. Therefore, the Rs.
Correct answer: Rs. 25,000- A. New profit-sharing ratio
- B. Old profit-sharing ratio
- C. Sacrificing ratio of new partner
- D. Capital ratio after admission
Explanation: A revaluation profit arises from changes in the value of assets and liabilities before the new partner joins.
Correct answer: Old profit-sharing ratio- A. Rs. 6,500
- B. Rs. 7,200
- C. Rs. 7,800
- D. Rs. 8,400
Explanation: For equal monthly drawings made at the beginning of each month, the average period is 6.5 months. Interest is Rs.
Correct answer: Rs. 7,800- A. Profit of Rs. 18,000
- B. Profit of Rs. 22,000
- C. Loss of Rs. 18,000
- D. Loss of Rs. 22,000
Explanation: The asset produces a loss of Rs. 20,000 because it is sold below book value. Settling the liability for Rs.
Correct answer: Loss of Rs. 18,000- A. 1:1
- B. 2:1
- C. 3:1
- D. 4:1
Explanation: A's old share is 1/2 and new share is 2/3, so A gains 1/6. C's old share is 1/6 and new share is 1/3, so C also gains 1/6.
Correct answer: 1:1- A. Interest is allowed at 6% annually
- B. Interest is allowed at the bank rate
- C. Interest is not allowed on capital
- D. Interest is allowed at 10% annually
Explanation: When the agreement is silent, a partner is not entitled to interest on capital merely because capital has been invested.
Correct answer: Interest is not allowed on capital- A. A charge against gross profit
- B. An appropriation of net profit
- C. A liability to outside creditors
- D. A deduction from fixed capital
Explanation: A partner acts as an owner rather than an employee, so the partner's salary is normally an appropriation of profit.
Correct answer: An appropriation of net profit- A. Rs. 100,000
- B. Rs. 125,000
- C. Rs. 150,000
- D. Rs. 200,000
Explanation: Goodwill equals average profit multiplied by the agreed years' purchase. Therefore, Rs. 50,000 × 3 gives Rs. 150,000.
Correct answer: Rs. 150,000- A. Rs. 6,000
- B. Rs. 10,000
- C. Rs. 12,000
- D. Rs. 20,000
Explanation: C's normal share is one-fifth of Rs. 100,000, or Rs. 20,000. The guarantee creates a deficiency of Rs. 10,000, which A must bear.
Correct answer: Rs. 10,000- A. Debit A Rs. 400 and credit B Rs. 400
- B. Credit A Rs. 400 and debit B Rs. 400
- C. Debit A Rs. 4,000 and credit B Rs. 4,000
- D. Credit A Rs. 4,000 and debit B Rs. 4,000
Explanation: After allowing interest, the divisible profit is Rs. 34,000, giving A Rs. 20,400 and B Rs. 13,600. Their correct totals are A Rs.
Correct answer: Credit A Rs. 400 and debit B Rs. 400- A. Rs. 25,000
- B. Rs. 75,000
- C. Rs. 100,000
- D. Rs. 400,000
Explanation: The new partner's Rs. 100,000 represents one-fourth of total capital, so the implied total capital is Rs. 400,000.
Correct answer: Rs. 100,000- A. Partners' capitals, partner loans, outside liabilities
- B. Outside liabilities, partner loans, partners' capitals
- C. Partner loans, partners' capitals, outside liabilities
- D. Outside liabilities, partners' capitals, partner loans
Explanation: Firm assets are first used to pay outside creditors. Any remaining amount pays partner loans, and the balance is then applied to partners'…
Correct answer: Outside liabilities, partner loans, partners' capitals- A. 5 percent
- B. 6 percent
- C. 8 percent
- D. 10 percent
Explanation: A partner is generally entitled to interest at 6 percent per annum on a loan or advance made to the firm when the agreement is silent.
Correct answer: 6 percent- A. Interest on partners' drawings
- B. Share of profit transferred to partners
- C. Interest on partners' capital
- D. Commission received from partners
Explanation: Interest on partners' capital is an appropriation of profit and is debited to the Profit and Loss Appropriation Account.
Correct answer: Interest on partners' capital- A. Debit the retiring partner and credit continuing partners
- B. Debit continuing partners in gaining ratio and credit retiring partner
- C. Debit all partners equally and credit the bank account
- D. Debit the revaluation account and credit outside creditors
Explanation: The continuing partners obtain the retiring partner's share of future profits, so they compensate the retiring partner for his share of…
Correct answer: Debit continuing partners in gaining ratio and credit retiring partner1956. At dissolution, an unrecorded asset is sold for cash. Which entry correctly records the transaction?
- A. Debit Realisation Account and credit Cash Account
- B. Debit Cash Account and credit Realisation Account
- C. Debit Unrecorded Asset Account and credit Cash Account
- D. Debit Cash Account and credit Capital Accounts
Explanation: An unrecorded asset has no existing book balance to transfer. The cash received is debited, while the gain from its realization is…
Correct answer: Debit Cash Account and credit Realisation Account- A. Debit Cash and credit Goodwill
- B. Debit Goodwill and credit the existing partner
- C. No entry is made in the firm's books
- D. Debit the new partner's capital and credit Cash
Explanation: A private payment takes place outside the firm's books and does not change firm assets or liabilities.
Correct answer: No entry is made in the firm's books- A. According to their capital contributions
- B. According to their salary allowances
- C. Equally among all partners
- D. According to their drawings
Explanation: In the absence of an agreement, the usual legal rule is that partners share profits equally.
Correct answer: Equally among all partners- A. Rs. 60,000
- B. Rs. 80,000
- C. Rs. 140,000
- D. Rs. 180,000
Explanation: Super profit is Rs. 20,000, calculated as average profit minus normal profit. Goodwill is therefore Rs.
Correct answer: Rs. 60,000- A. Rs. 20,000
- B. Rs. 30,000
- C. Rs. 45,000
- D. Rs. 60,000
Explanation: An existing reserve belongs to the old partners and is distributed in their old profit-sharing ratio. B receives one-third of Rs.
Correct answer: Rs. 30,000