This MCQ Test on the accounting for reserves and accumulated profits and accumulated lossesl on admission of a new partner has 15 practice questions. it covers the accounting treatment for all types of reserves on admission like workmen compnesation reserve, investment fluctuation reserve, general reserve, balance in profit and loss A/c , etc. The test covers conceptual questions for all above aspects. This MCQ test suits well for conceptual clarity for your board exams
CBSE class 12 accountancy MCQ questions
The below MCQ test is designed as per the latest syllabus prescribed by CBSE board. With the rise in weightage of MCQ questions, the practice of MCQ questions becomes very important. The quiz is equally useful for students of CUET exams.
How to attempt the quiz
One by one go through the below questions and select the right option. Do all the questions and in the end press submit. Instantly you will get your score and the explanation against each question. Go through your mistakes and reattempt the quiz any number of times as needed.
MCQ Quiz - Practice Questions
MCQ Quiz
Question 1
Reserves and accumulated profits on admission are transferred to:
B
Correct Answer: Old partners in old profit-sharing ratio
Reserves and accumulated profits belong to old partners who created them, so distributed in their old profit-sharing ratio.
Question 2
Accumulated losses are transferred to old partners by:
B
Correct Answer: Debiting their Capital Accounts in old ratio
Accumulated losses are borne by old partners, so their Capital/Current Accounts are debited in old profit-sharing ratio.
Question 3
When book values of reserves are to remain same, then in the new balance sheet
D
Correct Answer: All reserves appear as it is
When book values of reserves are to remain same, then in the new balance sheet, all reserves appear as it is as no adjustment entries on admission are passed in the reserves accounts
Question 4
Examples of accumulated profits include:
A
Correct Answer: Profit & Loss A/c (Cr. balance), General Reserve
Accumulated profits are undistributed profits like General Reserve, P&L A/c credit balance, Reserve Fund, Contingency Reserve, etc.
Question 5
Profit and Loss Account with debit balance represents:
C
Correct Answer: Accumulated loss
Debit balance in P&L A/c represents accumulated losses and is shown on assets side of Balance Sheet.
Question 6
When book values of reserves are to remain same, adjustment is done through:
D
Correct Answer: Capital Accounts of gaining and sacrificing partners
When reserves continue at book value, adjustment entry debits gaining partner and credits sacrificing partner without disturbing reserve.
Question 7
The entry to transfer General Reserve to old partners is:
D
Correct Answer: Dr. General Reserve, Cr. Old Partners Capital A/c
General Reserve is debited and old partners Capital/Current Accounts credited in old profit-sharing ratio to distribute it.
Question 8
When Profit & Loss A/c has credit balance (profit), then at the time of admission of a new partner, it is:
A
Correct Answer: Debited and old partners Capital A/c credited
P&L A/c credit balance (accumulated profit) is debited and old partners Capital A/c credited in old ratio.
Question 9
Accumulated losses like Profit & Loss A/c (Dr. balance) are shown in Partners Capital Account on:
D
Correct Answer: Debit side
Accumulated losses are debited to old partners Capital Accounts (debit side entry) to reduce their capital in old ratio.
Question 10
At the time of admission of a new partner, workmen compensation Reserve when no claim exists is transferred to:
C
Correct Answer: Old partners in old ratio
When no claim exists at the time of admission of a new partner, entire Workmen Compensation Reserve is transferred to old partners Capital A/c in old profit-sharing ratio.
Question 11
When claim against Workmen Compensation Reserve is less than workment compensation reserve amount:
D
Correct Answer: Claim transferred to Claim A/c, balance to old partners in old ratio
Debit Workmen Comp. Reserve, Credit Claim A/c for claim amount and old partners Capital for balance in old ratio.
Question 12
When workmen compensation claim is more than Workmen Compensation Reserve, then excess claim is:
B
Correct Answer: Debited to Revaluation Account
Excess of claim over reserve (shortage) is a loss, so debited to Revaluation Account and shared by old partners.
Question 13
Investment Fluctuation Reserve when market value equals book value is:
A
Correct Answer: Transferred to old partners Capital A/c in old ratio
When no fluctuation exists (MV = BV), entire Investment Fluctuation Reserve is distributed to old partners in old ratio.
Question 14
When market value of investments is less than book value by amount less than reserve then transfer :
B
Correct Answer: Loss amount to Investments A/c, balance to old partners
Dr. Investment Fluctuation Reserve, Cr. Investments for fall amount, Cr. Old partners Capital for surplus in old ratio.
Question 15
When fall in investment value exceeds Investment Fluctuation Reserve, excess is:
D
Correct Answer: Debited to Revaluation Account
Dr. Investment Fluctuation Reserve and Revaluation A/c (for excess), Cr. Investments. Excess loss goes to Revaluation Account.
