Accountancy: CUET Mock Test - 4 - CUET MCQ

They come under the head current assets.

The correct answer is Rs. 12000

Important Points A : B : Reserve = 1/2 : 1/3 : 1/6 = 3 : 2 : 1

Profit sharing Ratio A : B = 3 : 2

Balance of reserve on the date of death = Rs. 30000

At the time of retirement or death of the partner, the Balance in reserves and other accumulated profit is distributed among partners in old ratio.

B's share in Reserve = 30000 x 2/5 = Rs. 12000.

The correct answer is ₹7000 on the receipts side.

Key Points

• The receipts and payments account is a summary of actual cash receipts and payments of a non-profit organization over a specific period, typically a year.
• It records transactions on a cash basis, meaning it only includes transactions where cash has actually been received or paid, regardless of when the transaction was initiated or completed.
• In the context of the sale of furniture, the amount to be recorded in the receipts and payments account is the actual cash received from the sale, which is ₹7000.
• The book value of the furniture (₹10,000) and the loss on sale (₹3000) are accounting figures relevant for preparing the income and expenditure account and the balance sheet but do not affect the cash-based accounting of the receipts and payments account.
• Therefore, the sale of furniture will be shown as ₹7000 on the receipts side of the receipts and payments account, reflecting the actual cash inflow from the transaction.

Additional Information

• The difference between the book value of an asset and the amount received from its sale is recognized as a gain or loss in the income and expenditure account, not in the receipts and payments account.
• The receipts and payments account provides a straightforward view of the organization's cash flow, which is crucial for assessing its immediate financial health and cash management.

The correct answer is Reserve and Surplus.

Key Points

• Reserve and Surplus:
  • Security Premium is shown under the head 'Reserve and Surplus' in the Balance Sheet as per accounting standards.
  • This amount is considered a part of the shareholders' equity, representing extra money paid by shareholders above the nominal value of the shares issued.
  • It is used for purposes specified by the company's articles of association or as prescribed by law, such as issuing fully paid bonus shares to shareholders or writing off preliminary expenses.

Additional Information

• Share Capital:
  • This includes the nominal value of shares and is not the correct head for showing Security Premium as it strictly represents the capital raised by issuing shares at their face value.
• Equity Share Capital:
  • Refers specifically to the funds raised through the issuance of equity shares. While Security Premium is related to equity, it is not shown under this head but rather under reserves and surplus.
• Shares and Liabilities:
  • This is a broader category in the Balance Sheet that encompasses all shares, debts, and other liabilities but does not specifically account for Security Premium, which has its designated place under reserves and surplus.

The correct answer is [Ctrl] + [F1].

Key Points

[Ctrl] + [F1]:

• This keyboard shortcut is universally used in Microsoft Office applications to toggle the visibility of the ribbon, effectively collapsing or expanding it.
• The ribbon is the strip at the top of the program window that contains groups of commands. Collapsing it can provide more space on the screen for document content.
• Using [Ctrl] + [F1] allows users to quickly access this feature without navigating through menus or options, improving efficiency.

Additional Information

[Ctrl] + [F3], [Ctrl] + [F5], and [Ctrl] + [F7]:

• These shortcuts are used for different purposes within various applications and do not control the visibility of the ribbon.
• For example, [Ctrl] + [F3] might be used to define a name in Excel, [Ctrl] + [F5] to restore the window size of the program, and [Ctrl] + [F7] to move the window in certain applications.
• It’s important for users to familiarize themselves with keyboard shortcuts specific to their tasks and applications for improved productivity.

The correct answer is I - (c); II - (a); III - (b).

Partnership - A relationship between people who have agreed to split the profits of a firm that is run by all of them or by any of them acting on behalf of all of them. Those Persons included in Partnership are called Partners.
Dormant partner - a partner who does not participate in the active operations of a firm or partnership but is entitled to a share of the profits and is responsible for a share of the losses; - sometimes known as a sleeping partner or silent partner.
Nominal partner - A nominal partner has no actual or substantial interest in the partnership firm. A nominal partner is someone who is not a partner but simply lends his name to the firm for the sake of business.
Active partner - An active partner, also known as a participating business partner, is an investor who participates in the day-to-day management of the company partnership. This is the most popular type of partnership, and it's also one of the easiest to form.
Other types of partners in Partnership: 
Partner by Estoppels - by words spoken or written, he presents himself as a partner
Partner in Profit Only - Only the firm's profit is shared. No losses are shared by the enterprise. In the firm, there is no active participation.
Minor Partner- can be admitted to the partnership's advantage. Under the age of eighteen. The minor's private property cannot be seized.
Partnership - A relationship between people who have agreed to split the profits of a firm that is run by all of them or by any of them acting on behalf of all of them. Those Persons included in Partnership are called Partners.

The correct answer is  a- (iv); b- (i); c- (ii); d- (iii).

• Discount on issue of shares is shown on the Assets side of the balance sheet under the head 'Miscellaneous Expenditure'.
• Unclaimed dividend is short term liability which is shown on the liabilities Side of the balance sheet under the head 'Other current liabilities'.
• The balance in Forfeited share account is shown in the balance sheet under the head 'Share capital'.
• Work in progress is shown on the assets side of the balance sheet under the head 'Current assets'.

Miscellaneous expenditure refers to the expenditure that has not been written off during the current financial year.

• Current liabilities are the short term debt obligations of a company that are due to be paid within a year. For example, accounts payable, accrued expenses, short term loans.
• Subscribed capital refers to that part of issued capital which has been subscribed by the shareholders of a business.
• Current assets are those assets which can easily be converted into cash and whose benefit is derived within a year. For example, sundry debtors, bills receivable, inventory, marketable securities.

The correct answer is a - 2, b - 4, c - 1, d - 3.
 The correct matching is:

Here is the explanation for each of the matches:

• Buy back of shares is a financing activity because it involves a company raising money by issuing new shares or by buying back existing shares.
• Interest received on long term investment is an investing activity because it involves a company earning income from its investments.
• Cash payment of suppliers is an operating activity because it involves a company paying for goods or services that it has purchased.
• Purchase and sale of goods is an operating activity because it involves a company buying and selling goods as part of its normal business operations.

The correct answer is A - ii, B - iv, C - i, D - iii.

• Operating System or OS in a computer manages all of the software and hardware and performs tasks like input-output handling, process management and multitasking as well.
• It provides security, memory management, device management etc.
• There are various OS like Windows, Linux, macOS etc. Ubuntu, Fedora, Kali Linux, and ParrotOS are examples of Linux OS.
• The applications in the computer are classified into different types such as system software, application software and console software.
• Command Line Interface or CLI is a console application used to run programs, used by programmers, and administrators for fetching faster results etc.

A) Amount Due to Retiring Partner: The total amount owed (capital, goodwill, profits) is credited to the retiring partner’s capital account before settlement. Matches (I) "Credited to Partner's Capital Account."
B) Gaining Partner’s Capital Account: The remaining partners who gain profit share debit their capital accounts to compensate the retiring partner for goodwill. Matches (II) "Debited for Goodwill Adjustment."
C) Loan to Retiring Partner: If the firm cannot pay the retiring partner immediately, the amount due is transferred to a loan account. Matches (IV) "Alternative to Immediate Cash Payment."
D) Profit & Loss Adjustment: Revaluation profits or losses are distributed among all partners (including the retiring one) in their old ratio. Matches (III) "Distributed in Old Ratio."

A partnership deed is a written agreement between the partners that specifies various terms such as capital contributions, profit-sharing ratio, interest on capital, and other responsibilities

The Indian Partnership Act does not require the partnership agreement to be in writing. It can also be oral, although a written deed is preferred.

The partnership deed includes important details such as the objective of the business, capital contributions, profit-sharing ratio, and the terms regarding interest on capital and loans.

The clauses of the partnership deed can be altered with the mutual consent of all the partners.

If the partnership agreement does not address a particular issue, the relevant provisions of the Indian Partnership Act, 1932 apply.

A partnership is formed when individuals come together with the intention of conducting business for profit, not merely for co-ownership of a property.

Joint ownership of land does not create a partnership unless the parties are involved in the business of buying and selling land for profit.

To be considered a partner, individuals must agree to share both the profits and losses of a business, not just co-own property.

A partnership specifically involves carrying on a business for profit, not just ownership of assets like land.

If Rohit and Sachin are engaged in the business of buying and selling land for profit, they are considered partners, as they are conducting a business together.

Financial statements help the investors to assess long-term and short-term solvency as well as the profitability of the concern.

The fiscal policies, particularly taxation policies of the government, are related with the financial performance of corporate undertakings. The financial statements provide basic input for industrial, taxation and other economic policies of the government.

Current assets = Inventories + Trade receivables + Cash and cash equivalents + Current investments
Current assets = 50,000 + 70,000 + 50,000 + 2,30,000 = ₹ 4,00,000

Public deposits are long-term borrowings and are non-current liabilities, hence not shown on the assets side of the balance sheet.

The general reserve is a type of reserve in a company's financial records.

• It can be used for any purpose that the company decides, such as expansion or settling debts.
• This flexibility makes the general reserve a useful tool for financial planning.
• Unlike other reserves, it does not have specific restrictions or earmarked uses.

It is included in ‘other incomes’ in the statement of profit and loss.

Lending is an operating activity for financial companies, so interest on loans is an operating income for them, hence included under revenue from operations.

Financial statements are crucial for several reasons:

• They serve as a basis for granting credit. Lenders use them to assess a company's ability to repay loans.
• They provide a basis for prospective investors to evaluate potential investments, helping them make informed decisions.
• They act as a guide to the value of investments already made, offering insights into a company's financial health and performance.

Therefore, financial statements are important for all of the above reasons.

The management has the responsibility to safeguard the owner’s investment and increase its value by managing the business efficiently.

The objectives of financial statements include:

• Providing information about the economic resources and obligations of a business, such as assets and liabilities.
• Offering insights into the earning capacity of the business, helping stakeholders understand its profitability.
• Supplying details about cash flows, which are crucial for assessing liquidity and financial health.
• Allowing assessment of the effectiveness of management in utilising resources efficiently and effectively.