CUET 2025 Mock Test 1: Accountancy (50 MCQs)
Questions:
Which of the following is not an example of a partnership deed clause?
A) Distribution of profit and loss
B) Salaries of partners
C) Capital employed in the business
D) Method of asset valuation
What is the nature of a partnership?
A) Legal entity
B) Voluntary association of individuals
C) Unilateral contract
D) Registered body
If the partners in a partnership firm agree to divide profit and loss equally, this is known as:
A) Equal Profit Sharing Ratio
B) Profit and Loss Appropriation
C) Capital Contribution
D) Fixed Ratio
The method used for the allocation of profits in a partnership firm is called:
A) Profit and Loss Appropriation Account
B) Equal Sharing Ratio
C) Capital Sharing Ratio
D) Gross Profit Calculation
When a partner retires or dies, the revaluation of assets is done to:
A) Determine the new partner's share
B) Ascertain the market value of assets and liabilities
C) Record the value of goodwill
D) Calculate the partnership profit
In case of dissolution of a partnership, what account is prepared to settle the assets and liabilities?
A) Profit and Loss Account
B) Realization Account
C) Capital Account
D) Balance Sheet
When a partner withdraws from the firm, which of the following accounts is debited?
A) Partner’s Capital Account
B) Cash Account
C) Partner’s Current Account
D) Profit and Loss Appropriation Account
A partnership firm’s profit is usually distributed according to:
A) The capital invested by partners
B) The number of hours worked by each partner
C) The profit-sharing ratio agreed by partners
D) The income of each partner's family
A firm’s income is shown in which of the following?
A) Balance Sheet
B) Profit and Loss Account
C) Cash Flow Statement
D) Shareholders’ Equity
When goodwill is purchased, it is recorded in:
A) Profit and Loss Account
B) Asset Side of Balance Sheet
C) Liabilities Side of Balance Sheet
D) Capital Reserve
What is the basic purpose of financial accounting?
A) To maintain records of all transactions
B) To prepare financial statements for external users
C) To assess the performance of employees
D) To prepare tax reports
If shares are issued at a premium, the premium amount is credited to:
A) Share Capital Account
B) Profit and Loss Account
C) Share Premium Account
D) Reserves Account
Which of the following is true about debentures?
A) They represent ownership in the company
B) They are a form of loan raised by the company
C) They are a type of current liability
D) They are considered as long-term investments
If the value of the asset increases, the amount is credited to:
A) Revaluation Account
B) Profit and Loss Account
C) Asset Side of Balance Sheet
D) Liabilities Side of Balance Sheet
What is the purpose of a company’s balance sheet?
A) To determine the profitability of the company
B) To show the company’s financial position at a given point in time
C) To calculate the net worth of the company
D) To report cash inflows and outflows
The financial statement that shows the profitability of a business is called:
A) Balance Sheet
B) Profit and Loss Account
C) Cash Flow Statement
D) Statement of Shareholder Equity
A company’s total liabilities are shown on the:
A) Asset Side of Balance Sheet
B) Liability Side of Balance Sheet
C) Profit and Loss Account
D) Statement of Changes in Equity
The issue of shares at a discount results in:
A) Loss for the company
B) Additional capital raised
C) A reduction in share capital
D) No effect on the financial position
Which of the following financial ratios indicates a company's ability to meet its short-term obligations?
A) Debt to Equity Ratio
B) Current Ratio
C) Return on Assets Ratio
D) Gross Profit Margin
The Cash Flow Statement primarily reflects:
A) Net cash inflows and outflows during a period
B) Total revenues of a company
C) Changes in share capital
D) Amount of dividends declared
The income statement for a business reports:
A) Net profit or loss for a specific period
B) Total assets
C) Total liabilities
D) Retained earnings
What does the ‘Trial Balance’ check for?
A) Correctness of the profit and loss account
B) The mathematical accuracy of the ledgers
C) Accuracy of tax calculations
D) Financial health of the business
The relationship between debt and equity is measured by:
A) Debt to Equity Ratio
B) Return on Investment
C) Working Capital
D) Quick Ratio
Depreciation is charged on:
A) Tangible assets
B) Intangible assets
C) Current assets
D) None of the above
Which of the following is not a type of capital expenditure?
A) Purchase of fixed assets
B) Payment of wages
C) Investment in new equipment
D) Cost of improvement to assets
The financial position of a company can be assessed using:
A) Profit and Loss Account
B) Cash Flow Statement
C) Balance Sheet
D) Statement of Changes in Equity
Which of the following is included in the assets section of a balance sheet?
A) Shareholders' equity
B) Borrowings
C) Tangible fixed assets
D) Retained earnings
Which account records the effect of transactions on capital?
A) Revenue Account
B) Expense Account
C) Capital Account
D) Realization Account
The accounting principle which states that the business will continue indefinitely is known as:
A) Going Concern Concept
B) Accrual Concept
C) Matching Concept
D) Consistency Concept
In case of a company, the issue of shares is governed by:
A) Companies Act
B) Reserve Bank of India guidelines
C) Income Tax Act
D) Securities Exchange Board of India
What is the term used to describe the process of transferring ownership of an asset to another person?
A) Valuation
B) Amortization
C) Transfer of Title
D) Realization
Which of the following would not be recorded in the books of accounts?
A) Sale of goods
B) Purchase of raw materials
C) Loan repayment
D) Meeting expenses of employees
In the case of a limited company, the balance sheet includes:
A) Fixed assets only
B) Long-term liabilities only
C) Both assets and liabilities
D) Shareholder’s equity
The amount spent on a new machine is classified as:
A) Revenue expenditure
B) Capital expenditure
C) Operating expense
D) Deferred cost
What is a ‘Ledger’ in accounting?
A) A permanent record of all transactions
B) A temporary record of business operations
C) A summary of income and expenses
D) A document used to make final payments
What does the term ‘accrual accounting’ mean?
A) Recording transactions when cash is received
B) Recording transactions when cash is paid
C) Recording transactions when they occur, regardless of cash flow
D) None of the above
A company’s fixed assets are recorded at:
A) Market value
B) Purchase price
C) Fair value
D) Depreciated cost
What is the primary purpose of a ‘Trial Balance’?
A) To detect errors in recording transactions
B) To ensure that debits and credits balance
C) To prepare the final accounts
D) All of the above
The allocation of profit or loss between partners is known as:
A) Capital Account Adjustment
B) Appropriation of Profit
C) Capitalization
D) Profit Reversal
What type of account is a ‘Drawings Account’?
A) Personal Account
B) Real Account
C) Nominal Account
D) Both A and B
What is the relationship between liabilities and equity called?
A) Debt-Equity Ratio
B) Financial Leverage
C) Capital Structure
D) Return on Equity
Which of the following is an example of non-current liability?
A) Short-term loan
B) Share capital
C) Bank overdraft
D) Debentures
What is the first step in the accounting cycle?
A) Preparing financial statements
B) Posting journal entries
C) Identifying and analyzing transactions
D) Closing temporary accounts
Which of the following is not a common feature of financial statements?
A) Statement of Comprehensive Income
B) Profit and Loss Account
C) Sales Invoice
D) Balance Sheet
Depreciation is calculated using:
A) Purchase cost
B) Useful life
C) Residual value
D) All of the above
The method used to record financial transactions in accounting is:
A) Single-entry system
B) Double-entry system
C) Cash basis accounting
D) Accrual basis accounting
Which of the following is not an example of current assets?
A) Cash in hand
B) Prepaid expenses
C) Fixed assets
D) Accounts receivable
Which of the following statements is true regarding dividends?
A) They are paid from the capital of the company
B) They are paid from the reserves of the company
C) They are paid from the profits of the company
D) They are never paid to shareholders
What is the formula for calculating Return on Equity (ROE)?
A) Net Income / Total Assets
B) Net Income / Shareholders’ Equity
C) Net Income / Debt
D) Net Income / Total Revenue
What does a company’s retained earnings represent?
A) Profits reinvested into the company
B) Total revenue earned by the company
C) Total liabilities of the company
D) The net worth of the company
ANSWER KEY
D) Method of asset valuation
B) Voluntary association of individuals
A) Equal Profit Sharing Ratio
A) Profit and Loss Appropriation Account
B) Ascertain the market value of assets and liabilities
B) Realization Account
A) Partner’s Capital Account
C) The profit-sharing ratio agreed by partners
B) Profit and Loss Account
B) Asset Side of Balance Sheet
B) To prepare financial statements for external users
C) Share Premium Account
B) They are a form of loan raised by the company
A) Revaluation Account
B) To show the company’s financial position at a given point in time
B) Profit and Loss Account
B) Liability Side of Balance Sheet
A) Loss for the company
B) Current Ratio
A) Net cash inflows and outflows during a period
A) Net profit or loss for a specific period
B) The mathematical accuracy of the ledgers
A) Debt to Equity Ratio
A) Tangible assets
B) Payment of wages
C) Balance Sheet
C) Tangible fixed assets
C) Capital Account
A) Going Concern Concept
A) Companies Act
C) Transfer of Title
D) Meeting expenses of employees
C) Both assets and liabilities
B) Capital expenditure
A) A permanent record of all transactions
C) Recording transactions when they occur, regardless of cash flow
B) Purchase price
B) To ensure that debits and credits balance
B) Appropriation of Profit
D) Both A and B
C) Capital Structure
D) Debentures
C) Identifying and analyzing transactions
C) Sales Invoice
D) All of the above
B) Double-entry system
C) Fixed assets
C) They are paid from the profits of the company
B) Net Income / Shareholders’ Equity
A) Profits reinvested into the company