AFM - III QB.docx

**CLASS: SYBCOM** **SUBJECT: ACCOUNTANCY AND FINANCIAL MANAGEMENT** **QUESTION BANK** **Q. MULTIPLE CHOICE QUESTIONS:** 1\. \_\_\_\_\_\_\_\_\_ is the primary requirement for admitting a new partner in a partnership? a\. Consent of all existing partners b. Approval from a government agency c\....

**CLASS: SYBCOM** **SUBJECT: ACCOUNTANCY AND FINANCIAL MANAGEMENT** **QUESTION BANK** **Q. MULTIPLE CHOICE QUESTIONS:** 1\. \_\_\_\_\_\_\_\_\_ is the primary requirement for admitting a new partner in a partnership? a\. Consent of all existing partners b. Approval from a government agency c\. A written contract d. No requirements 2\. When a new partner is admitted, the profit-sharing ratio \_\_\_\_\_\_. a\. remains the same b. increased for all partners c\. is usually adjusted d. decreased for all partners 3\. Amalgamation in a business refers to \_\_\_\_\_\_. a\. Merging of two or more companies b. Selling a company c\. Closing down a business d. Hiring new employees 4\. After amalgamation the firms in the assets are \_\_\_\_\_\_\_\_\_. a\. discarded b. combined c\. sold individually d. divided among shareholders 5\. Piecemeal distribution of firm refers to \_\_\_\_\_\_\_\_\_\_. a\. Selling all assets at once b. Gradually distributing assets over time c\. Liquidating the entire firm immediately d. Hiring new staff 6\. Excess of income over expenses is \_\_\_\_\_. a\. Net Profit b. Net Loss c\. Realized value d. Executed value 7\. There cannot be more than \_\_\_ partners in a partnership firm. a\. 50 b. 60 c\. 70 d. 80 8\. The executor is entitled to all the rights of a \_\_\_\_\_. a\. Deceased partner b. Active partner c\. Sleeping partner d. new partner 9\. The credit balance of the realization account shows \_\_\_\_\_. a\. Loss b. Profit c\. Income d. Expenses 10\. A partnership firm has \_\_\_\_ liability. a\. Limited b. Unlimited c\. Equal d. Partial 11\. Purchase consideration = Asset less \_\_\_\_ liabilities both at the market value. a\. External b. Internal c\. Current d. non-current 12\. On amalgamation of the firm, \_\_\_\_ account is opened. a\. Realization b. Profit & Loss c\. Profit & Loss Appropriation d. Trading 13\. In excess capital method, the minimum capital is equal to the \_\_\_\_\_ base capital. a\. lowest b. highest c\. Equal d. partial 14\. Income tax payable by the firm as on the date of dissolution is treated as \_\_\_ creditors. a\. Preferential b. Sundry c\. Secured d. Unsecured 15\. Indian partnership act is in force since \_\_\_\_. a\. 1932 b. 1947 c\. 1950 d. 1960 16\. Profit on realization is \_\_\_ to the partner's capital account. a\. Credited b. Debited c\. Realized d. Written off 17\. Excess capital method is known as \_\_\_\_ method. a\. Highest Relative b. Maximum loss c\. Lowest Relative d. Minimum loss 18\. Current account showing debit balance is shown in the balance sheet on \_\_\_\_ side. a\. Asset b. Liabilities c\. Debit d. Credit 19\. Expenses payable are shown on the \_\_\_\_ side of the balance sheet. a\. Liabilities b. Asset c\. Debit d. Credit 20\. Unproductive wages are debited to the \_\_\_\_\_\_ Account. a\. Profit & Loss b. Trading c\. Realization d. Profit & Loss Appropriation **Q. State the following statements are true or false:** 1\. Interest on drawings is an income of the firm. 2\. Dues payable to employees is a preferential liability of the firm. 3\. In amalgamation of firms, the old firms are called as Amalgamating firms. 4\. Excess capital method is also called as Quotient method. 5\. As per partnership Act, interest @ 6% p.a. is allowed on partners loan. 6\. Profit or loss on realization is transferred to the partner's capital account in capital ratio. 7\. Provision for discount on debtors shows debit balance. 8\. Outstanding wages is a nominal account. 9\. Closing stock is valued at market price only. 10\. Assets taken over by the partner is credited to his capital account. 11\. The partners must conduct a lawful business. 12\. Drawings appears on the debit side of the capital account. 13\. General reserve is credited to the partner's capital account. 14\. Unpaid salaries of the employees are preferential liabilities. 15\. Goodwill requires special treatment on amalgamation. 16\. Piecemeal distribution refers to the process of distributing the assets of a firm gradually rather than all at once. 17\. Amalgamation refers to the combination of two or more companies into a single entity. 18\. Shareholders of the merging firms often receive shares in the new company. 19\. Admission of a partner occurs when a new individual joins an existing partnership. 20\. Existing partners may need to adjust their profit-sharing ratios when a new partner is admitted. Q. SHORT NOTES: 1\. Excess Capital Method 2\. Net Asset Method of Purchase Consideration. 3\. Preferential Creditors 4\. Retirement of Partner. 5\. Realization Account. 6\. Purchase Consideration and its types. 7\. Benefits of conversion of firm into company. 8\. Amalgamation of Firms 9\. Admission of Partners 10\. Conversion of firm into company. 11\. Interest on partners loan 12\. Fluctuating Capital method 13\. Order of Payment of External liabilities 14\. Highest Relative capital method of piecemeal distribution. 15\. External Liabilities