Introduction
Final revision before exams can be daunting. To ease your journey, here are 50 concise questions with answers to help you cover key concepts in Class 12th Accountancy quickly and efficiently.
Unit 1: Accounting for Partnership Firms
1. What is a partnership deed?
A legal document specifying the rights and duties of partners in a partnership.
2. What happens if no partnership deed exists?
Provisions of the Indian Partnership Act, 1932 apply.
3. Define goodwill.
Goodwill is the reputation or premium value of a business.
4. What is a sacrificing ratio?
The ratio in which old partners surrender their share of profit in favor of a new partner.
5. What is a revaluation account?
An account used to record the revaluation of assets and liabilities during admission, retirement, or death of a partner.
Unit 2: Accounting for Companies
6. What are equity shares?
Shares representing ownership of a company with voting rights.
7. What is meant by authorized capital?
The maximum capital a company is authorized to raise.
8. Define ESOP.
Employee Stock Option Plan allows employees to buy shares of the company at a predetermined price.
9. What is the purpose of a Securities Premium Reserve?
It is used for issuing bonus shares, writing off preliminary expenses, or premium on redemption of debentures.
10. What is meant by redemption of debentures?
Repayment of the amount borrowed through debentures.
Unit 3: Analysis of Financial Statements
11. What are financial statements?
Statements that provide information about the financial performance and position of a business.
12. What are comparative financial statements?
Statements showing financial data of two or more years side by side for comparison.
13. Define current ratio.
Current Ratio = Current Assets / Current Liabilities.
14. What is a cash flow statement?
A statement summarizing cash inflows and outflows from operating, investing, and financing activities.
15. What is a proprietary ratio?
Proprietary Ratio = Proprietor’s Funds / Total Assets.
Unit 4: Cash Flow Statement
16. Define cash equivalents.
Short-term, highly liquid investments easily convertible into cash.
17. What are the main activities classified in a cash flow statement?
Operating, Investing, and Financing activities.
18. How is depreciation treated in a cash flow statement?
Added back to net profit in the operating activities section.
19. What is the indirect method of cash flow preparation?
Starts with net profit and adjusts for non-cash items and changes in working capital.
20. Why is bank overdraft treated as a short-term borrowing?
Because it is repayable on demand.
Practical Problems
21. Pass a journal entry for goods withdrawn by the proprietor worth ₹5,000 for personal use.
Drawings A/c Dr. ₹5,000
To Purchases A/c ₹5,000
22. Rectify this error: Wages paid ₹10,000 recorded as Repairs.
Repairs A/c Dr. ₹10,000
To Wages A/c ₹10,000
23. Calculate goodwill using the average profit method. Profits: ₹50,000, ₹60,000, ₹70,000. Goodwill = 2 years’ average profit.
Goodwill = (₹50,000 + ₹60,000 + ₹70,000) ÷ 3 × 2 = ₹1,40,000
24. Journalize: Machinery purchased for ₹1,00,000 with GST @18%.
Machinery A/c Dr. ₹1,18,000
Input GST A/c Dr. ₹18,000
To Bank A/c ₹1,18,000
25. What is the formula for Inventory Turnover Ratio?
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory.
Additional Concepts
26. What is accrued income?
Income earned but not received.
27. Define contingent liability.
A liability that may or may not arise based on the outcome of an event.
28. What are reserves?
Profits retained in the business for future use.
29. What is a suspense account?
A temporary account used to rectify errors.
30. Define depreciation.
A systematic allocation of the cost of a tangible asset over its useful life.
Revision Mix
31. Name two liquidity ratios.
Current Ratio, Quick Ratio.
32. What is the purpose of a balance sheet?
To show the financial position of a business.
33. State two methods of calculating depreciation.
Straight Line Method (SLM), Written Down Value Method (WDV).
34. What is trade discount?
A reduction in price offered to buyers for bulk purchases.
35. What is the matching principle?
Expenses should be recognized in the same period as the revenues they help to generate.
Key Terms
36. Define capital expenditure.
Expenditure incurred to acquire or upgrade fixed assets.
37. What is a liability?
An obligation arising from past events, expected to result in an outflow of resources.
38. What are deferred expenses?
Expenses paid in advance but not yet incurred.
39. What is working capital?
Working Capital = Current Assets – Current Liabilities.
40. What are intangible assets?
Non-physical assets like goodwill, patents, and trademarks.
Exam Boosters
41. Name two solvency ratios.
Debt to Equity Ratio, Interest Coverage Ratio.
42. What is the format of a Trading Account?
Debit: Opening Stock, Purchases, Direct Expenses.
Credit: Sales, Closing Stock.
43. What is abnormal loss?
Loss arising from unexpected events like fire or theft.
44. Define gross profit.
Gross Profit = Sales – Cost of Goods Sold.
45. What is profit and loss appropriation account?
An account to distribute net profit among partners.
Quick Facts
46. Name one accounting standard in India.
AS-26: Intangible Assets.
47. What is marshalling?
Grouping assets and liabilities in a particular order.
48. Define internal reconstruction.
Reorganizing a company’s financial structure without liquidating.
49. What are the two bases of accounting?
Cash Basis, Accrual Basis.
50. What is book value?
The value of an asset as per the books of accounts.
Conclusion
These 50 questions cover key concepts essential for Class 12th Accountancy exams. Keep practicing, stay confident, and ace your exams!
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