1

ACCOUNTANCY
SECTIONA
QUESTIONNUMBERS110
TOTALMARKS16
CHAPTER1
SINGLEENTRYSYSTEM

1.WhatisSingleEntrySystemofBookkeeping?
Accountingrecordswhicharenotmaintainedaccording
todoubleentryprinciplesisknownasSingleEntry
System.
Inotherwordsanysystemofbookkeepingwhichisnota
completedoublesystemofbookkeeping.
2.Statetwofeaturesofsingleentrysystem.
Itisincompleteandunscientificmethod.
Generallybothaspectsofdebitandcreditarenot
recorded.
Lesscostly.

3.StatetwomeritsofSingleEntrySystem.
Itisveryeasyandsimplemethod.
Itislesscostly
Itissuitableforsmallbusinessconcerns.
4.StatetwodemeritsofSingleEntrySystem.
Itisincompleteandunscientificmethod.
ItisnotpossibletoprepareTrailBalance,Profitandloss
accountandBalancesheet.
5.WhatisStatementofAffairs?
StatementofAffairsislikeaBalancesheet,whichshows
theestimatedvaluesofAssetsandLiabilities.
7.StatetwotypesofSingleEntrySystem.
Puresingleentrysystem.
Simplesingleentrysystem.
QuasiSingleentrysystem.
8.Whatispuresingleentrysystem?
UnderPuresingleentrysystemnosubsidiarybooksare
maintainedonlyledgercontainingthepersonalaccounts
ofdebtorsandcreditorsarekept.
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9.StatetwodifferencesbetweenStatementofAffairsand
BalanceSheet.
StatementofAffairsBalanceSheet
1.Itispreparedunder1.Itispreparedunder
singleentrysystemdoubleentrysystem
2.Valuesofassetsand2.Valuesofassets&
liabilitiesareestimates.liabilitiesaretrue.
10.Stateanytwodifferencesbetweensingleentrysystemand
doubleentrysystem.
SingleentryDoubleentry
systemsystem
1. Bothoneaspect1.Boththeaspects
Recorded.arerecorded
2.Lesscostly2.Costly
3.Itisunsatisfactory3.Itissatisfactorysystem.
system

CHAPTER2
PARTNERSHIPACCOUNTSFUNDAMENTALS
11.Whatispartnership?
APartnershipisanassociationoftwoormorepersons
whoagreetocarryonabusinessjointlyandsharethe
profitsofthatbusiness.
12.StateanytwoessentialfeaturesofPartnership.
.Agreement.
.Sharingofprofit.
.Twoormorepersons.
.Business.
.Unlimitedliability
13.WhatisPartnershipDeedorArticlesofPartnership?.
When the partnership agreement is written and signed
by all the partners and duly stamped it is called
PartnershipDeed.
14.Statetwocontentsofpartnershipdeed.
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.NameofthePartnership.
.Namesandaddressofpartners.
.ProfitSharingRatio.
.CapitalContributionbythepartners.
15.Howdoyoutreatthefollowingintheabsenceof
partnershipdeed?
InterestoncapitalNotallowed
InterestonDrawingsNotChargeable.
InterestonLoan6%p.a.InterestAllowed.
DistributionofProfitorloss EqualRatio.
Salary,commissiontopartnersNotAllowed.
16.Statetwomethodsofmaintainingpartnerscapital
accountsinpartnershipfirm.
FixedcapitalMethod.
FluctuatingCapitalMethod.
17.WhatisFixedCapitalMethod?
Itissystemofmaintainingcapitalaccountsofpartners
underwhichcapitalisrecordedseparatelyinCapital
Accountandallotheritemslike,interestoncapital,
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interestondrawingsetc.,arerecordedinCurrent
Account.Capitalremainsthesameyearafteryear.
18.WhatisFluctuatingCapitalMethod.?
Itissystemofmaintainingcapitalaccountsofpartners
underwhichcapitalandallotheritemslike,intereston
capital,interestondrawingsetc.,arerecordedinCapital
Accountitself.Capitalchangesorfluctuatesyearafter
year.
19.WhatisProfitandLossAppropriationAccount?
Profit and Loss appropriation account is an account
prepared to record the appropriation of profits among
the partners like, interest on capital, Interest on
drawings,salaryetc.,

CHAPTER3
ADMISSIONOFAPARTNER
20.Stateanytworeasonsfortheadmissionofanewpartner.
Securingadditionalcapital.
Securingadditionalmanagerialskills.

21.WhatisSacrificeRatio?
Theratioinwhichtheoldpartnerssacrificeorsurrender
their share of profits to the new partner on his
admissioniscalledsacrificeratio.
22.WhatisRevaluationaccount?OrWhyRevaluationAccount
isprepared?OrWhatistheobjectofpreparing
RevaluationAccount?
RevaluationAccountispreparedtofindoutnetprofitor
netlossontherevaluationofassetsandliabilitiesofthe
firmonadmission,retirementordeathofapartner.
23.WritetheJournalEntryforincreaseinthevalueofasset
ontheadmissionofapartner.
AssetAccountDr.
ToRevaluationAccount.
24.WritetheJournalEntryfordecreaseinthevalueofasset
ontheadmissionofapartner.
RevaluationAccountDr.
ToAssetAccount.

26.Mentiontwofactorswhichdeterminethegoodwillof
apartnershipfirm.
.Pastprofitsofthefirm.
Presentprofitearningcapacity
Superiorityofproductssold.
Monopolypositionofthefirm.
Futureprospectsofthebusiness.
27.GivetheJournalentryforcashbroughtinbytheNew
partnerforGoodwill.
CashAccountDr.
ToGoodwillAccount.
28.HowdoyoucloseRevaluationAccountonAdmissionofa
partnerifthereisaprofit?
RevaluationaccountDr.
ToOldpartnerscapital
Account.

CHAPTER4
RETIREMENTOFAPARTNER
29.WhatisGainRatioorBenefitRatio?
Itistheratioinwhichtheremainingpartnersgainthe
shareofaretiringpartneronhisretirement.
30.GivetheJournalEntryfordistributionofGeneralReserve
onretirementofapartner.
GeneralReserveAccountDr.
ToAllpartnersorRetiring.
Partnerscapitalaccount/s
31.GivetheJournalEntrytoclosetheretiringpartnerscapital
account.
RetiringpartnerscapitalaccountDr.
ToCashorBank/Retiring
partnersLoanaccount.
32.HowdoyoucloseRevaluationAccountonretirementofa
partnerifthereisarevaluationprofit?
RevaluationAccountDr.
ToAllPartnerscapitalaccounts
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33.HowdoyoucloseRevaluationAccountonretirementofa
partnerifthereisarevaluationloss?

AllPartnerscapitalAccountDr.
ToRevaluationAccount
CHAPTER5
DEATHOFAPARTNER
34.WhatisExecutorsAccount?
OR
WhenisExecutorsAccountsopened?
AnExecutorsaccountisanaccountopenedonthe
deathofapartnertotransferthebalanceduetothe
deceasedpartnertohisexecutors.
35.GiveJournalEntryforpaymentofcashimmediatelytothe
Executors.

ExecutorsAccountDr.
ToCashAccount.

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Chapter6
DISSOLUTIONOFPARTNERSHIPFIRM
36.Whatisdissolutionofpartnership?
DissolutionofPartnershipmeansterminationof
relationshipbyoneorfewofthepartnersandremaining
partnerscontinuethebusinessofthefirmunderanew
agreement.
37.WhatdoyoumeandissolutionofPartnershipFirm?
DissolutionofPartnershipfirmmeansterminationof
relationshipbyallthepartnerswiththepartnershipand
completeclosingdownofpartnershipbusiness.
38.WhyRealisationaccountisprepared?
Realisationaccountispreparedtorealisetheassetsand
payoffliabilitiesondissolutionofapartnershipfirm.
39.Givejournalentryfortransferringassettorealisation
account.
RealisationAccountDr.
ToAssetAccount.

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40.GivejournalentryfortransferringLiabilitytoRealisation
account.
LiabilityAccountDr.
ToRealisationAccount.
41.WhatistheJournalEntrytocloseRealisationAccount
whenthereisarealisationprofit?
RealisationAccountDr.
ToAllPartners
CapitalAccount.
42.WhatistheJournalEntrytocloseRealisationAccount
whenthereisarealisationloss?
.AllPartnersCapitalAccountDr.
ToRealisationAccount.
43.GivethejournalentryforAssettakenoverbythepartner.
PartnersCapitalAccountDr
ToRealisationAccount.

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44.GivethejournalentryforLiabilitytakenoverbythe
partner.
.RealisationAccountDr.
ToPartnersCapitalAccount.
45.Passjournalentryforrealisationexpensespaidon
dissolutionoffirm.
.RealisationAccountDr.
ToCash/BankAccount.

Chapter7
ACCOUNTSOFJOINTSTOCKCOMPANIES.
46.WhatisaJointStockCompany?
AJointStockCompanyisavoluntaryassociationof
persons,whocontributemoney,andemployitinsome
businessandsharetheprofitsorlossesofsuchbusiness.
47.WhatismeantbyMinimumSubscription?
.Itreferstotheminimumnumberofsharestobe
appliedbythepublicbeforethecompanycanproceed
withtheallotmentofshares.
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48.WhatisAuthorisedCapital?
AuthorisedCapitalisthemaximumamountofcapital
whichacompanyisauthorisedtocollectfromthepublic.
49.Whatisshare?
Thecapitalofthecompanyisdividedintotonumberof
unitsoffixedvalue,eachunitiscalledshare.

50.MentiontwokindsofsharesofJointstockcompany.
1.EquityShares.
2.PreferenceShares.
51.WhatisCallsinArrears?
Theamountremainingunpaidonallotmentoroncalls,
byashareholdertothecompanyiscalledCallsin
arrears.
52.WhatisCallsinAdvance?
TheAmountreceivedbythecompanybeforethecalls
aremadefromtheshareholdersiscalledCallsin
Advance.

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53.WhatisIssueofSharesatpar?
Itmeansissueofsharesatapriceequaltotheface
valueofshares.
54.WhatisIssueofSharesatPremium?
Itmeansissueofsharesatapricehigherthantheface
valueofshares.
55.WhatisIssueofSharesatdiscount?
Itmeansissueofsharesatapricelowerthantheface
valueofshares.
56.WhatisunderSubscriptionofShares?
Whenthepublicapplyforlessnumberofsharesthan
thoseofferedtothemiscalledUnderSubscription.
57.WhatisOverSubscription?
Whenthepublicapplyformorenumbersharesthan
thoseofferedtothemiscalledOverSubscription.
58.WhatisFullSubscription?
Whenthepublicapplyforequalnumberofshares
offeredtothembythecompanyiscalledFull
Subscription.

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59.WhatisForfeitureofShares?
WhentheShareHolderisunabletopaytheallotmentor
callmoney,theamountalreadypaidbyhimisretained
bythecompanybycancellinghissharesitiscalled
ForfeitureofShares.
60.GiveJournalEntrytoCloseForfeitedSharesAccount.
ForfeitedSharesAccountDr.
ToCapitalReserveAccount.
61.Statetwotypesofdebentures.
a.RegisteredDebentures
b.Unregisteredorsimpleorbearerdebentures

Chapter8
FINALACCOUNTSOFCOMPANIES
62.GivethemeaningofDividend.
Dividendreferstothatportionoftheprofitsofthe
companydistributedamongtheshareholders.
63.WhatisInterimDividend?
Itisdividendforthecurrentyeardeclaredbeforetheend
oftheyearwiththeanticipationofprofitsfortheyear.
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64.GivethemeaningofPreliminaryExpenses.
PreliminaryExpensesaretheexpenseswhichare
incurredduringtheformationofacompany.
Example:
1.RegistrationFee.
2.ExpensesforprintingMemorandumofAssociation&
ArticlesofAssociation.
65.Stateanytwoitemswhichappearundertheheading
ReservesandSurplusintheBalanceSheetofthecompany.
CapitalReserve.
Reservefund.
SecuritiesPremiumAccount.
ProfitandLossappropriationAccount.(CreditBalance).
66.Underwhatheadingdoyoushowthefollowingitemsin
theBalanceSheetoftheCompany.
Callsinadvance CurrentLiabilities.
PreliminaryExpenses Miscellaneous
Expenditure
Debentures SecuredLoans.
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DiscountonissueofShares Miscellaneous
Expenditure
UnclaimedDividend CurrentLiabilities.
ForfeitedSharesAccount Itisaddedtothepaid
upcapital.
SharePremiumAccount ReservesandSurplus
CallsinarrearsItisdeducted
fromCalledupcapital.
Loosetools Currentassets.
GeneralreserveReservesandSurplus
ClosingStock Currentassets.

Chapter9
DEPRECIATIONACCOUNTING
67.WhatisDepreciation.?
Depreciationisthegradual,permanentreductioninthe
valueoffixedasset.

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68.MentiontworeasonsforchargingDepreciationonthe
FixedAsset.
Toreplacetheoldassetafteritslife.
Ifdepreciationisnotchargedvalueoftheassetis
overstatedinthebalancesheetandtruefinancial
positionisnotreflectedinBalancesheet.
69.Mentiontwocauses
ofDepreciation.?
Wearandtearduetotheactualuse.
Effluxoftimeorpassageoftime.
Obsolescence
Depletionorexhaustion.
Permanentfallinthemarketprice.
70.Whatfactorswouldyouconsiderindeterminingthe
amountofDepreciation?
.CostoftheAsset.
ScrapValue
EstimatedLifeoftheAsset.
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71.Howisdepreciationamountcalculated?

CostoftheassetScrapvalue
Depreciation=
EstimatedlifeoftheAsset
72.Nametwomethodsofchargingdepreciation.
.FixedInstallmentMethod.
ReducingBalancemethod.
AnnuityMethod.
RevaluationMethod.

73.WhatismeantbyFixedInstallmentMethodof
Depreciation.?
Underthismethodafixedamountischargedas
depreciationeveryyearandthedepreciationamount
remainsthesameeveryyear.

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74.WhatisDiminishingBalanceMethod.?
Underthismethodthedepreciationischargedatafixed
percentageonthediminishingvalueofthefixedasset
everyyearandtheamountofdepreciationwillchange
everyyear.
75.HowdoyoufindDepreciationunderRevaluationMethod?
Under Revaluation Method the asset is valued at the
begining and at the end of the year and the difference
between opening and closing value is considered as
Depreciation.
76.MentionanytwoassetsforwhichRevaluationMethodof
Depreciationissuitable.
LooseTools.
Stockofgoods.
Packagesetc.,

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Chapter10
FINALACCOUNTSOF
NONTRADINGCONCERNS

77.WhatareNontradingConcerns.?
Nontrading Concerns which do not undertake Trading
i.e., Buying and Selling of goods but they render social
service.
78.GiveTwoexamplesofNontradingConcerns.
Hospitals
Libraries.
SportsClubs.
EducationalInstitutions.
CharitableInstitutions.
79.WhatisCapitalExpenditure?.
Capital Expenditure is an expenditure whose benefit is
not exhausted in just one year but is available for more
thanoneyear.Itisnonrecurringinnature.
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80.GivetwoexamplesforCapitalExpenditure.
PurchaseofFixedAsset.
Expenditureoninstallationoffixedasset.
ResearchandDevelopmentexpenditure.
Additionsorextensionstofixedassets.
81.WhatisRevenueExpenditure?
Revenue Expenditure is an expenditure whose benefit is
exhausted in just one year in which it is incurred. It is
recurringinnature.
82.GivetwoexamplesforCapitalReceipt.
Lifemembershipfees.
Legacies.
83.GivetwoexamplesforRevenueReceipt.
Subscriptionsreceived.
Saleofoldnewspapers.
Interestreceived.
Rentreceived.

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84.Howdoyouclassifythefollowing?
Legacies CapitalReceipt
Saleofold
NewsPapers RevenueReceipt.
Purchaseofbuilding Capitalexpenditure.
Subscriptionsreceived Revenuereceipt

85.WhatisDeferredRevenueExpenditure.?
A heavy expenditure of revenue in nature incurred for
gettingabenefitwhichextendstonumberyearsiscalled
DeferredRevenueExpenditure.
86.WhatisCapitalFund.?
Capital Fund is the difference between the assets and
liabilitiesofNontradingconcerns
87.HowisCapitaldifferfromCapitalFund.?
Capital is the amount of money contributed by the
Owner or Share Holders. But Capital Fund is the
difference between the assets and liabilities of Non
tradingConcerns

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88.HowdoyoutreatLifeMembershipFees.?
Life Membership Fees are non recurring, so they are
treatedasCapitalReceiptsandaddedtotheCapitalFund
ontheLiabilitysideoftheBalanceSheet.
89.WhatareLegacies?
Legacies are the donations or gifts received under a will
onthedeathofthedonorbyNontradingConcerns.

90.HowdoyoutreatLegacies.?
TheyarenonrecurringandaretreatedasCapitalReceipt
andaddedtotheCapitalFundontheLiabilitysideofthe
balancesheet.
91.WhatisReceiptsandPaymentsAccount.?
A Receipts and Payments account is a summary of cash
receipts and cash payments relating to a given period of
timeofanontradingconcern.
92.WhatisIncomeandExpenditureAccount.
Itisarevenueaccountofnontradingconcernsprepared
tofindoutsurplusordeficitforaparticularperiod.
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93.GivetwodifferencesbetweenIncomeandExpenditure
accountandProfitandLossaccount.
INCOME AND EXPENDITURE
ACCOUNT
PROFIT AND LOSS ACCOUN
1. It is a revenue account of non-trading
concerns.
1. It is a revenue account of trading
concerns.
2. It is prepared to find out surplus or deficit. 2. It is prepared to find out Profit or loss.

94.How do you treat Tournament Expenses when separate

TournamentFundismaintained.?
When separate Tournament Fund is maintained
Tournament Expenses should not be entered in the
Income and Expenditure account instead it should be
deducted from Tournament Fund on the Liability side of
theBalanceSheet.

Chapter11.
COMPUTERISEDACCOUNTING
95.WhatisComputerisedAccounting?
Computerisedaccountingmeansmaintainingrecordsof
businessoranyotherorganisationwiththehelpof
computers.

27

96.StatetwofeaturesofComputerisedAccounting?
Accountingoperationscanbedonewithhighspeedand
accuracy.
Therewillbelotoftimesavedinmaintainingaccounting
records.
Itprovidesquickinformationwheneverneeded.
97.Statetwoadvantagesofcomputerisedaccounting?
Theaccountingoperationscanbedoneataveryhigh
speed.
Itislesstimeconsumingandreliable.
Itisveryaccurateastheerrorsareminimal.
Itismoreflexiblei.e.modificationscanbemadeatany
time.
98.Disadvantagesofcomputerisedaccounting:
1. Highcostofinstallation.
2.Operationofcomputersrequirestechnicalknowledge
andtraining.
3.Highmaintenancecost.
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4.Dangerofcomputerviruses.
99.WhatisManualAccounting?
Itisanaccountingsystemunderwhichtheaccounting
recordsaremaintainedmanuallyoraccountworkisdone
manually.
100.MentiontwodifferencesbetweenManualAccounting
andComputerisedAccounting.

MANUAL
Ac c ount i ng
COMPUTERI SED
Ac c ount i ng
a. I t i s
per f or med by
human bei ngs
a. I t i s per f or med
by c omput er s
b. I t i s l ess
c ost l y
b. I t i s mor e c ost l y
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c . Ac c ount i ng
oper at i ons
c annot be done
at a hi gh speed
c .Ac c ount i ng
oper at i ons
c an be done w i t h
hi gh speed
d. I t c onsumes
l ot of t i me
d. I t c onsumes l ess
t i me.

101.Whatisdataprocessing?
Dataprocessingistherestructuring,manipulatingor
reorderingofdatabypeopleormachinestoincreasetheir
usefulnessandvalueforsomeparticularpurpose.
102.WhatisWordProcessing?
WordProcessingissoftwareusedtoproduceletters,
tables,reportswhichcanbeedited,stored,andprinted.

30

103.WhatisSpreadSheet?
Itisalargesheetconsistingofseveralrowsandcolumns
withwhichmathematicalandfinancialcalculationscan
bedonebytheuser.
104.Mentiontwotypesofcomputerfiles.
Masterfile.
Historyfile.
Trasactionfile.
105.WhatisMasterFile?
Itisapermanentfilewhichcontainspermanentrecords
ofaconcernwhichremainconstantforalongperiodof
time.

106.MentiontwotypesofAccountingPackages.
Tally
Windowbasedaccountpackage.
ACE
GenNext.

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107.WhatisTallyinComputers?
Tally is the most widely used accounting package, It
providesvariouskindsofaccountingsolutionsinasimple
way.