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Accountancy: CUET Mock Test - 7 - CUET MCQ


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30 Questions MCQ Test CUET Mock Test Series - Accountancy: CUET Mock Test - 7

Accountancy: CUET Mock Test - 7 for CUET 2025 is part of CUET Mock Test Series preparation. The Accountancy: CUET Mock Test - 7 questions and answers have been prepared according to the CUET exam syllabus.The Accountancy: CUET Mock Test - 7 MCQs are made for CUET 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Accountancy: CUET Mock Test - 7 below.
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Accountancy: CUET Mock Test - 7 - Question 1

Bill and Monica are partners sharing profits and losses in the ratio of 3:2 having the capital of Rs. 80,000 and Rs. 50,000 respectively. They are entitled to 9% p.a. interest on capital before distributing the profits. During the year firm earned Rs. 7,800 after allowing interest on capital. Profits apportioned among Bill and Monica is: 

Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 1
  • Calculate interest on capital:

    • Bill: 9% of Rs. 80,000 = Rs. 7,200
    • Monica: 9% of Rs. 50,000 = Rs. 4,500
  • Total interest = Rs. 7,200 + Rs. 4,500 = Rs. 11,700
  • Firm profit after interest = Rs. 7,800
  • Net profit available for distribution = Rs. 7,800 - Rs. 11,700 = Rs. -3,900 (Loss)
  • In case of loss, profits are not distributed, hence no option is correct.
Accountancy: CUET Mock Test - 7 - Question 2

Interest and dividend earned by financial company is shown in Statement of Profit & Loss under the sub-head:

Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 2

The correct answer is Revenue from Operations.

Key Points

Revenue from Operations: It refers to the revenue earned by the company from its business operations. As in the given question, the company is financial in nature that's why interest earned and dividend are counted in day to day operations of the company.

Important PointsInterest earned by a Financial company: Interest is a fee charged by a lender to a borrower for lending money. In financial company, these transactions are done on daily basis that's why it is recorded under revenue from operation heading.

Dividend Earned by Financial Company Dividends are payments made by a firm to its stockholders to share profits. They're paid on a regular basis, and they're one among the ways that stock investors might profit from their investments.

Additional InformationOther Income: It refers to the revenue earned by the company from activities other than its business operations.

For Example:

  • Interest Income
  • Dividend received
  • Profit on sale of Investments or fixed assets.
  • Bad debts recovered
  • Excess provision written back
  • Rental Income etc.
Accountancy: CUET Mock Test - 7 - Question 3

Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R).

Assertion (A): A company has postponed paying suppliers, so that the period-end cash balance appears higher in the books of the company. This is an example of window dressing.

Reason (R): Through window dressing, a company can present a better financial position of the firm than the actual position.

In the context of the above statements, which one of the following is correct?

Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 3

The correct answer is Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

Key Points Window Dressing:

  • Actions performed to improve the appearance of a company's financial accounts are known as window dressing.
  • Since it is misleading, the entire concept of window dressing is clearly unethical.
  • Furthermore, it essentially takes outcomes from a future time in order to make the current period appear better, making it exceedingly short-term.

Important Points Assertion (A): A company has postponed paying suppliers, so that the period-end cash balance appears higher in the books of the company. This is an example of window dressing.

The Assertion(A) is true because postpone paying suppliers will result in the period-end cash balance appearing higher than it should be.

Reason (R): Through window dressing, a company can present a better financial position of the firm than the actual position.

The reason is true because

  • When a corporation has a large number of shareholders, window dressing is common so that management may provide the impression of a well-run company to investors who are unlikely to have much day-to-day contact with the company.
  • It can also be utilised when a business has to impress a lender in order to get a loan, as it can present a better financial position of the firm than the actual position.
  • When a firm is closely held, the owners are usually more informed about the company's performance, thus there's no need for financial figures to be embellished.
Accountancy: CUET Mock Test - 7 - Question 4

The following balances are extracted at the end of the accounting period from the books of Radhey Shyam as follows:

Plant & Machinery Rs. 2,00,000

Furniture Rs. 50,000

Building Rs. 5,00,000

Depreciation is to be charged:

20% on plant & machinery, 10% on furniture and 5% on Building. Calculate the amount of depreciation to be charged in the Profit and Loss account.

Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 4

The correct answer is ₹70,000

Key Points

  • Depreciation: It means a decline in the value of fixed assets due to use, the passage of time, or obsolescence or diminution in the intrinsic value of the asset due to use and/or lapse of time.

Important Points

Calculation of depreciation:

  1. Depreciation on Plant & Machinery = ₹2,00,000*20% = ₹40,000
  2. Depreciation on Furniture = ₹50,000*10% = ₹5,000
  3. Depreciation on Building = ₹5,00,000*5%= ₹25,000
  4. Total Depreciation = 40,000+5,000+25,000= ₹70,000
Accountancy: CUET Mock Test - 7 - Question 5
Which method evenly allocates the cost of an asset over its useful life?
Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 5

The answer is (b) Straight-line method.Key Points

The straight-line method is the most common method of depreciation and is the simplest to understand and apply. It evenly allocates the cost of an asset over its useful life by charging the same amount of depreciation expense each year. This method is often used for assets that are expected to depreciate evenly over their useful life, such as buildings and equipment.

The other answer choices are incorrect because:

(a) Double declining balance method is a method that accelerates depreciation in the early years of an asset's useful life. This method is often used for assets that are expected to lose value more quickly in the early years, such as automobiles and machinery.
(c) Sum-of-the-years-digits method is another method that accelerates depreciation in the early years of an asset's useful life. This method is similar to the double declining balance method, but it is less aggressive.
(d) Units of production method is a method that bases depreciation on the number of units produced by an asset. This method is often used for assets that are expected to produce a certain number of units over their useful life, such as machinery and equipment.
Therefore, the straight-line method is the only method that evenly allocates the cost of an asset over its useful life.

Accountancy: CUET Mock Test - 7 - Question 6

Identify the advantage of Computerized Accounting system.

Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 6

Key Points

The built-in controls and untouchable aspects of data management enable accurate accounting reports that are hygienic, trustworthy, and can be depended upon.

Important PointsAdvantages of Computerized Accounting system are:

  1. Increases the efficiency - Computers bring speed and accuracy in preparing the records and accounts.
  2. Fast in preparing accounts - Using accounting software, the entire process of preparing accounts becomes faster.
  3. Security - The data is secure under this system.
  4. Reliable - financial statements prepared by computers are highly reliable and accurate.
Accountancy: CUET Mock Test - 7 - Question 7
The need of codification is:
Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 7

The correct answer is The encryption of data.

Key Points

  • The encryption of data:
    • Encryption is the process of converting information or data into a code, especially to prevent unauthorized access.
    • This is a fundamental aspect of data security, ensuring that even if data is intercepted or accessed without authorization, it remains unreadable and secure.
    • Encryption plays a crucial role in protecting sensitive information, thereby maintaining the confidentiality and integrity of data across various digital platforms.

Additional Information

  • To secure the account, reports etc.:
    • While securing accounts and reports is essential, it is more a goal or outcome of various processes including encryption, rather than a process itself.
    • Security measures encompass a range of practices, of which encryption is a key component.
  • Easy to process data, keeping proper records:
    • This refers to the organization and management of data for efficiency and accuracy in processing and retrieval.
    • Though crucial for operational effectiveness, it doesn't directly relate to the concept of codification, which involves the transformation of data into a secure format through encryption.
  • The generation of mnemonic code:
    • Mnemonic codes are used for aiding memory recall, not specifically for securing data.
    • While they can be part of a security strategy (e.g., creating memorable passwords), they are not synonymous with the encryption process.
Accountancy: CUET Mock Test - 7 - Question 8
Legend can be repositioned on the chart:
Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 8

The correct answer is anywhere.

Key Points

  • Legends can be reposition on the chart anywhere:
    • Legends in charts are flexible elements that describe the symbols, colors, or patterns used in the chart for data visualization.
    • They can be placed in various positions according to the design and readability requirements, including but not limited to corners, sides, or even outside the chart area.
    • This flexibility allows for optimized use of space and enhances the chart's clarity for better data interpretation.

Additional Information

  • On the corner only:
    • While placing the legend in the corner is a common practice for many charts, it is not the only option available. This misconception might stem from default settings in some charting tools.
  • On the right side only:
    • Positioning the legend on the right side is another popular choice, especially for charts where the right side space is not utilized for data visualization. However, this is not a limitation but a design choice.
  • On the bottom of X-axis:
    • Placing the legend at the bottom of the X-axis can be effective, especially for charts where the bottom space can accommodate additional information without cluttering. Yet, this is just one of many viable positions.
Accountancy: CUET Mock Test - 7 - Question 9

Match List - I with List - II.

Choose the correct answer from the options given below :

Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 9

The correct answer is (A) - (II), (B) - (I), (C) - (IV), (D) - (III).

Key Points

  • Over Subscription (A) matches with (II) Application received is more than shares issued.
    • When a company issues shares and receives applications for more shares than are available, it is known as over subscription.
    • This indicates a high demand for the company's shares in the market.
  • Minimum subscription (B) matches with (I) Minimum amount that must be raised by issue of shares.
    • Minimum subscription is the least amount that must be raised by the company through the issue of shares to meet its capital requirements before it can proceed with the allotment of shares.
    • If this amount is not met, the company cannot proceed with the issue, and the application money must be refunded to the applicants.
  • Under Subscription (C) matches with (IV) Application received is less than shares issued.
    • This situation occurs when the company does not receive enough applications to cover all the shares it has issued.
    • Under subscription indicates a lack of demand for the company's shares.
  • Private Placement (D) matches with (III) Allotment of shares without issue of prospectus.
    • Private placement refers to the direct sale of securities to a limited number of sophisticated investors.
    • It bypasses the public offering process and does not require the issuance of a prospectus.

Therefore, the correct pairing is:
(A) - (II): Over Subscription - Application received is more than shares issued
(B) - (I): Minimum subscription - Minimum amount that must be raised by issue of shares
(C) - (IV): Under Subscription - Application received is less than shares issued
(D) - (III): Private Placement - Allotment of shares without issue of prospectus

Accountancy: CUET Mock Test - 7 - Question 10
Pick the odd one out while Calculating Cash Flow from Financing Activities :
Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 10

The correct answer is Rent received.

Key Points

  • Rent received:
    • Rent received is considered an operating activity, not a financing activity. It is associated with the primary operations of the business rather than with its financing.
    • Financing activities involve transactions between the company and its investors or creditors that impact the equity and debt of the business. Rent received does not fit this category.

Additional Information

  • Issue of Shares:
    • Issuing shares involves obtaining equity financing by selling shares of the company to investors. This increases the company's equity and is a financing activity.
  • Repayment of Bank Loan:
    • Repaying a bank loan involves the outflow of funds to settle the company’s debt obligations. This is a financing activity because it affects the company’s financial structure.
  • Redemption of Debentures:
    • Redeeming debentures refers to repaying the borrowed amount to debenture holders. Like loan repayment, it is a financing activity because it involves managing the company's debt.
Accountancy: CUET Mock Test - 7 - Question 11
An annual report is furnished by a company to its :
Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 11

The correct answer is Shareholders.

Key Points

  • Shareholders:
    • An annual report is a comprehensive report on a company's activities throughout the preceding year, intended primarily for shareholders.
    • The purpose of the report is to give shareholders and other interested people information about the company's activities and financial performance.
    • It serves as a means of communication between the company's management and its investors, providing details on operations, financial condition, and future outlook.

Additional Information

  • Directors:
    • While directors are involved in the preparation of the annual report, it is not furnished specifically for them; they already have access to the information being reported as part of their governance role.
  • Auditors:
    • Auditors review the financial statements which are a part of the annual report, but the report itself is not primarily for them. Their role is to provide an independent opinion on those financial statements.
  • Management:
    • Management is responsible for the preparation and accuracy of the annual report. However, the report is designed for shareholders and potential investors, not for the management team itself.
Accountancy: CUET Mock Test - 7 - Question 12

What balance does a Partner’s Current Account has?

Accountancy: CUET Mock Test - 7 - Question 13

Features of a partnership firm are:

Accountancy: CUET Mock Test - 7 - Question 14

Following are the differences between Partnership and Joint Venture except.

Accountancy: CUET Mock Test - 7 - Question 15

 X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before interest on partner’s capital was Rs. 6,000 and Z demanded minimum profit of Rs. 5,000 as his financial position was not good. However, there was no written agreement. Profit to be distributed to X, Y and Z will be

Accountancy: CUET Mock Test - 7 - Question 16

Ram and Mohan, are partner’s. They draw for private use Rs. 6,000 and Rs. 4,000 respectively. Interest is changeable @ 6 percent per annum on drawings. What is the interest?

Accountancy: CUET Mock Test - 7 - Question 17

Ram is a partner. He made drawings as follows:
July 1     Rs. 200
August 1  Rs. 200
September 1 Rs. 300
November 1  Rs. 50
February 1   Rs. 100

If the rate of interest on drawings is 6% and accounts are closed on March 31 the interest on drawing is:

Accountancy: CUET Mock Test - 7 - Question 18

Subject to contract between the partners, interest on capital is to be provided out of profits only. In case of insufficient profits (i.e. net profit less than the amount of interest on capital), the amount of profit is distributed:

Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 18
- When profits are insufficient to cover the interest on capital, the remaining profits must be shared among partners.
- The correct method of distribution in such cases is the capital ratio.
- This means profits are allocated based on the amount of capital each partner has invested in the partnership.
- This approach ensures fairness, as partners with larger investments receive a proportionately larger share of the available profits.
Accountancy: CUET Mock Test - 7 - Question 19

Kapur and Sharma are partners in a partnership firm. Calculate the interest on drawings made by Kapur and Sharma @ 10% p.a. for the year ending 31st December 2013. If, Kapur withdrew Rs. 2,000 per month in the beginning whereas Sharma withdrew same amount at the end of every month.

Accountancy: CUET Mock Test - 7 - Question 20

Aryan and Gauri were partner in a firm sharing profits and losses in the ratio of 2:1. Their capital was R.s. 90,000 and Rs. 60,000 respectively. They were entitled for interest on capital @ 12% p.a. The firm earned a profit of Rs.84,000 after allowing interest on capitals. Profits will be distributed among them will be:

Detailed Solution for Accountancy: CUET Mock Test - 7 - Question 20

The profit for the year is 184000 and that is given after allowing the interest on capital to the partners hence we can directly calculate the profit share for both the partners for Aryan it is 84000×2/3=56000, and for Gauri it is 84000×1/3=28000 hence option B is the correct answer

Accountancy: CUET Mock Test - 7 - Question 21

Seeta and Geeta are partners sharing profits and losses in the ratio 4:1. Meeta was manager who received the salary of Rs. 4,000 p.m. in addition to a commission of 5% on net profits after charging such commission. Profits for the year is Rs. 6,78,000 before charging salary. Find the total remuneration of Meeta

Accountancy: CUET Mock Test - 7 - Question 22

If there is no partnership deed then interest on capital will be charged at ……….p.a.

Accountancy: CUET Mock Test - 7 - Question 23

Interest on Partners capital is:

Accountancy: CUET Mock Test - 7 - Question 24

Partners are suppose to pay interest on drawings only when _______by the _______

Accountancy: CUET Mock Test - 7 - Question 25

Would interest on loan be allowed in the absence of any agreement or when partnership deed is silent?

Accountancy: CUET Mock Test - 7 - Question 26

Seeta and Geeta are partners sharing profits and losses in the ratio 4:1. Meeta was manager who received the salary of Rs. 4,000 p.m. in addition to a commission of 5% on net profits after charging such commission. Profits for the year is Rs. 6,78,000 before charging salary. Find the total remuneration of Meeta

Accountancy: CUET Mock Test - 7 - Question 27

 Guarantee given to a partner ‘A’ by the other partners ‘B & C’ means

Accountancy: CUET Mock Test - 7 - Question 28

What time would be taken into consideration if equal monthly amount is drawn as drawings at the beginning of each month?

Accountancy: CUET Mock Test - 7 - Question 29

How would you close the Partner’s Drawings Account?

Accountancy: CUET Mock Test - 7 - Question 30

In the absence of any agreement, partners are liable to receive interest on their Loans @:

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