(Q p) financial accounting 4

1. FINANCIAL ACCOUNTING -4
MARKS – 50
1) An ordinary partnership business can have:
(a) Not more than 50 partners (b) Not more than 20 partners.
(c) Any number of partners (d) Any number than 2 partners.
2) A banking partnership business can have
(a) Not more than 10 partners (b) Not more than 20 partners.
(c) Not more than 50 partners. (d) Any number of partners.
3) In the absence of an agreement profit and loss are divided by partners in the ratio of:
(a) Capital (b) Equally
(c) Time devoted by each partners. (d) None of these.
4) In the absence of an agreement, Interest on loan advanced by the partner to the firm is
allowed at the rate of:
(a) 6% (b) 5% (c) 12% (d) 9%
5) Current accounts of the partners should be opened when the capitals are:
(a) Fluctuating (b) Fixed
(c) Either fixed or fluctuating (d) None of these
6) Investment in partnership is made by introducing:
(a) Cash (b) None – cash assets
(c) Cash or non – cash assets (d) None of these.
7) Partnership is formed by the partners by:
(a) Written agreement (b) Oral agreement
(c) Written or oral (d) None of these
8) The written agreement of partnership is called:
(a) Partnership deed (b) Articles of association
(c) Memorandum of association (d) Certificate of incorporation

2. 9) Under fixed capital methods, profit will be credited to:
(a) Capital Account (b) Drawings
(c) Current A/c (d) Profit & Loss
10) Partnership business in Pakistan is government by partnership Act of:
(a) 1913 (b) 1932
(c) 1984 (d) 1928
11) The members of partnership firm are individually called as:
(a) Director (b) Investor
(c) Partner (d) Manager
12) The object of partnership is to:
(a) Earn profit (b) Not to earn profit
(c) Welfare of members (d) None of these
13) Liability of partners in a partnership business is:
(a) Limited (b) Un-limited (T)
(c) Limited &unlimited (d) None of these
14) Capital of the partners are maintained by:
(a) Fixed capital method. (b) Fluctuating capital methods.
(c) By any two above methods. (d) None of them.
15) Drawings of the partners are:
(a) Debited to profit & loss A/c (b) Credited to profit & loss A/c
(c) Credited to capital A/c (d) Debited to capital A/c
16) At the time of admission of a new partner the firm is:
(a) Dissolved (b) Continued
(c) Not effected (d) RE-organized
17) At the time of admission an incoming partner contributes as goodwill:
(a) In cash (b) Does not pay cash
(c) May or may not pay cash for good will (d) None of these.
18) Good will is valued as two years purchase of the average profits of three previous years
are Rs.15000, the value of good-will be:
(a) Rs. 15000 (b) Rs. 30000
(c) Rs.20000 (d) Rs. 50000

3. 19) Value of good will agreed upon Rs. 30000 on C,S admission and allowing him ¼ share of
total profit Good will is brought in cash, the amount of good-will be as:
(a) Rs. 30000 (b) Rs. 7500
(c) Rs.150000 (d) Rs. 120000
20) Good will of the firm is valued Rs. 30000. C an incoming partner purchase ¼ share of
total profit Good will be raised in the books.
(a) Rs. 30000 (b) Rs 7500
(c) Rs. 120000 (d) Rs. 7000
21) The partnership may come to an end due to the:
(a) Death of a partner (b) Insolvency of partner
(c) By givingnotice (d) All of the above
22) In case of retirement of a partner full good will is credited to the accounts of:
(a) All partners (b) Only retiring partner
(c) Only remaining partner (d) None of the above
23) Revaluation account is operated to find out gain or loss at the time of:
(a) Admission of a partner (b) Retirement of a partner
(c) Death of a partner (d) All of above (T)
24) Partners equity is effected due to:
(a) Retirement of a partner (b) Admission of a partner
(c) Death of a partner (d) All of above (T)
25) The accounting procedure at the retirement of partner is valued:
(a) Revaluation of assets and liabilities (b) Ascertaining his share of good will
(c) Finding the amount due to him (d) All of above
26) If the remaining partner want to continue the business, after the retirement of a partner, a
new partnership agreement:
(a) Necessary (b) Not necessary
(c) Optioned (d) None of above
27) An account operated to ascertain the loss or gain at the death of a partner is called:
(a) Realization account (b) Revaluation account
(c) Execution account (d) Deceased partner A/c
28) Amount due to out going partner is shown in the balance sheet as his:
(a) Liability (b) Assets
(c) Capital (d) Loan

4. 29) The loss or gain an account of revaluation at the time of retirement of a partner is shared
by:
(a) Remaining partners (b) Retiring partner
(c) All partners (d) None of above
30) On the retirement of a partner any reserve being should be transferred to the capital
account of:
(a) All partners in the old profit sharing ratio
(b) Remaining partners in the new profit sharing ratio
(c) Neither the retiring partner, nor the remaining partner
(d) None of above
31) Retirement or death of a partner.
(a) Is dissolution of partnership agreement
(b) Is dissolution of a firm
(c) May or may not be a dissolution of partnership agreement
(d) None of above
32) If all the partners, but one are insolvent it is:
(a) Dissolution of an agreement
(b) Dissolution of firm
(c) May or may not cause dissolution
(d) None of above
33) If all the partners, but one, are solvent it is:
(a) Dissolution of partnership agreement (b) Dissolution of firm
(c) May or may not cause dissolution (d) None of above
34) At the time of dissolution:
(a) All the assets are transferred to realization A/c
(b) Only current assets are transferred to realization A/c
(c) Non cash assets are transferred to realization A/c
(d) Only liquid and current asset are transferred to realization A/c
35) At the time of dissolution non – cash assets are credited with:
(a) Market value
(b) Book value
(c) As the agreed amount among the partners
(d) Cost or market which ever is low

5. 36) If a partner takes over an asset of the firm, his capital account:
(a) Will be debited with the amount as agreed
(b) Will be credited with the market value of the asset
(c) Will be debited with book value of the asset
(d) None of above
37) Loss on realization is distributed among partners:
(a) According to profit and loss ratio (b) According to capital ratio
(c) As decided among them (d) None of above
38) Loss on realization is:
(a) Debited to partners capital A/c (b) Credited to partners capital A/c
(c) Debited to realization A/c (d) Credited to realization A/c
39) When all partners are insolvent creditors will be:
(a) Paid fully (b) Paid rate ably
(c) Taken over by the partners (d) Paid by government
40) The persons who have entered into a partnership business are individually called:
(a) Realization A/c (b) Partners capital A/c
(c) Sundry debtors (d) Provision for bad debts A/c
41) The persons who have entered into a partnership business are individually called:
(a) Vender (b) Agents
(c) Partners (d) A firm
42) If no provision is made in agreement regarding the duration of the partnership:
(a) Limited partnership (b) Partnership at – will
(c) None (d) Particular partnership
43) A person who declares by word of mouth as partner of the firm is called:
(a) Active partner (b) Estople partner
(c) Dormant partner (d) Nominal partner
44) A person who receives a share of profits from one of the regular partner is called:
(a) Secret partner (b) Quasi
(c) partner in profitonly (d) Sub – partner
45) The agreement among partners which set out the terms on which they had agreed to form
apartnership is called:
(a) Partnership deed (b) Partnership at – will
(c) None ofthese (d) Arbitration clause

6. 46) Every partner has a right to be consulted in all matters affecting the business of:
(a) Sole – tradership (b) Partnership
(c) JSC (d) Both (a) and (b)
47) For the firm interest on drawing is:
(a) Expense (b) Income
(c) Liability (d) None
48) A credit balance on a partner’s current A/c is.
(a) Fixed capital (b) Part of capital
(c) A currentasset (d) Long – term liability
49) Old profit sharing ratio minus new profit sharing ration is equal to:
(a) Sacrificing ratio (b) Ratio of gain
(c) Capital ratio (d) None
50) Revolution A/c is a:
(a) Real A/c (b) Personal A/c
(c) CashA/c (d) Nominal A/c
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