Q/A

1. What do you mean by realization account?

Ans. Realization account Is prepared in order to realize the assets
of the firm and the amount so realized is utilized for the payment
of liabilities of firm according to the provisions of Act.
2. Difference between realization and revaluation account?
Ans. Write any 1 from the differences on page no. 1.4 from
unit 2.
3. 4 circumstances under which the firm is closed?
Ans. Dissolution on the happening of contingencies
By notice of partnership at will
Compulsory dissolution or by the operation of law
Dissolution by court
4. 2 important decisions of Garner vs Murray?
Ans. The loss on account of the insolvency of a partner is a
capital loss and as such should be borne by other solvent
partners in the proportion of their capital.
The solvent partners should bring in cash equal to
their share of loss on realization. But if the solvent partner
has nil balance or a debit balance in capital account then
he will not bear the loss of the insolvent partner.
5. How will u treat unrecorded asset and what is unrecorded
asset?
Ans. Assets which are not appearing In the books.
Cash/bank a/c dr.
To realization a/c
FIBS
1. Only _______ liabilities should be transferred to realization
account. [external]
2. Except _____ and ______ all assets should be transferred to
realization account. [cash,bank & fictitious]
3. Methods of purchase consideration are ___, ___,____.
[lumpsum, net payment, net assets]
4. ___ is the amount paid by the purchasing company to the
vendor firm for taking over the assets and liabilities.
[ purchase consideration]
5. Unrecorded liability paid at the time of dissolution is ____ to
realization a/c. [ debited]
6. After making the payment to third parties, the _____ due to
partner is paid. [loan]
7. The practice before Garner vs Murray decision was to share the
deficieny of the insolvent partner by the solvent partner in
their ___ ratios.
[ profit and loss ratio]
8. Entry for the asset taken over by a creditor is ____ but entry for
the net payment to the creditor is made. [ not made]
9. If A contributed 50000 and B 30000 what will be their ratio. [
5;3]
10. The shares and debentures received from of a company
should be valued according to their ______
[present worth]
MCQ
1. ____ is transferred to realization account, as the purchasing
company purchase all assets. [b]
a- Capital a/c b-cash a/c c-both a & b d-none
2. The profit and loss on realization obtained will be
transferred to the capital account in _____ ratio. [a]
a- Profit sharing b-capital c-gaining d-none
3. In case of sale to company, the company will discharge the
amount due in form of cash,shares and ______.[c]
a-loan b-capital c-debentures d-bonds
4. The purchase consideration for the business is generally paid
by the company in the form of its own _______. [c]
a-shares b-debentures c-both a & b d-bonds
5. _______ is added to adjustment in capital accounts and
transferred to all partners if capitals are flucating in case of
partners insolveny. [a]
a-general reserve b-assets c-liabilities d-loan
6. If capitals are fixed in insolvency, then the loss on insolvent
parther will be shared by solvent partner in ____. [b]
a-profit sharing b-capital c-sales ratio d-sacrificing
7. Garner vs Murray is case realted to ____ of a partner. [c]
a-death b-dissolution c-insolvency d-retirement
8. In dissolution of partnership all assets of the firm ate
transferred at _______ to a newly opened realization
account. [b]
a-new values b-book value c-market value d-capital value
Multiple choice

__________ is artificial person created by law

1. Individual
2. Contractor
3. Company
4. None of the above

Companies act 2013 Is an amendment to the companies act

1. 1947
2. 1990
3. 1956
4. 1979

__________ refers to total amount of money which is obtained from subscribers of the shares of the
company

1. Share capital
2. Assets
3. Liabilities
4. Profit

Final accounts is of trading account profit and loss and __________

1. Realisation
2. Revaluation
3. Balance sheet
4. Cash flow statement

Sundry creditors is ___________ type of liability

1. Current
2. Long term
3. Fixed
4. Short term

Debtors are shown under ___________ side of balance sheet

1. Right (assets)
2. Left (liabilities)
3. Both a and b
4. None of the above

Capital profit must be transferred to

1. Capital reserve
2. Profit and loss
 3. Revaluation
4. Realisation

Under profit prior to incorporation, gross profit is allocated based on ___________

1. Time
2. Sales
3. Weight
4. Purchase

Expenses remain constant overall the financial year then they can be divided in ____________

1. Sales ratio
2. Time ratio
3. Purchase ratio
4. None of the above

After incorporation of a company all profit or loss is transferred to ______________

1. Trading
2. Revaluation
3. Profit and loss
4. Realisation

Fill in the blanks

A company is registered under act _______________

A company is a ___________ entity

Companies are classified into ____________ categories

The amount of authorised capital issued for public subscription is known as ____________

Balance sheet is prepared to know the ____________ position of the company

RBDD stands for ____________

The profit or loss incurred before the incorporation of the company is known as __________

Post incorporation profit is also referred as ____________

Bad debts and advertisements are allocated based on _____________ ratio

Depreciation is allocated based on __________ ratio

Very short questions

Define company .
 Write a note on company’s act 2013 .

What do you mean by profit prior to incorporation ?

What is a post incorporation profit ?

Show accounting treatment of profit prior to incorporation .

Fill in the blanks

Companies act 1956

Separate legal entity

Five

Issued capital

Financial

Reserve for bad and doubt full debts

Profit and loss prior to incorporation

Revenue profits

Sales

Time

Multiplechoice

1. B
2. C
3. A
4. B
5. A
6. A
7. A
8. B
9. A
10. C

COMPANY ACCOUNTS – BASIC

 MULTIPLE CHOICE QUESTIONS
1. Companies profit divided among shareholder is ..
a. interest
b. reserve
c. dividend
d. surplus

2. Debenture carrying charge on particular asset on the company is know

as..
a. fixed
b. mortgage
c. naked
d. floating

3. Operating profit is
a. profit after deducting financial costs
b. profit after deducting taxes
c. profit after deducting normal operating expenses including depreciation
d. equal to net profit

4. Financially, shareholders are rewarded by

a. interest
b. profits
c. dividends
d. none of these

5. Revenue
a. causes a decrease in shareholder’s equity
b. causes a decrease or an increase in shareholder’s equity
c. has no impact on shareholder’s equity
d. causes an increase in shareholders’ equity

FILL IN THE BLANKS

1. Minimum number of members in case of public company is----
2. When two or more companies carrying on similar business decide
to combine, a new company is formed, it is known as ..................
3. The shares received from the new company is recorded at…………..
4. Share allotment account is a ------------------.
5. When shares issued at premium …………… account is credited.

ONE MARK QUESTIONS

1. What are the two types of shares a company can issue?

2. Define debentures.
3. Differentiate between a debenture holder and share holder.
4. Define company.
5. What is the charge given to debenture holders?

KEY
 MCQ’S
1. C
2. D
3. C
4. C
5. D

FIB
1. 7
2. amalgamation
3. market value
4. personal account
5. share premium account

ONE MARK ANSWERS

1. 1.equity shares
2.prefernce shares

2. a debenture is a medium- to long-term

debt instrument used by large companies to borrow money, at a
fixed rate of interest.
3. Shareholders are the owners of the company whereas
debentureholders are the lenders or the borrowers of the
company.
4. It is a legal entity made up of an association of people, be
they natural, legal, or a mixture of both, for carrying on
a commercial or industrial enterprise.
5.Interest is given to debenture holders.