II PUC Accountancy Two Marks Repeated Theory Questions With Answers 2023:

Prepared By JOY.K.V M.com ,K-set.

A. Meanings:
1. What is fluctuating capital system. (2022,2016)
Fluctuating capital method is a method of maintaining Partners capital a/cs, in which all adjustments relating
to partners are recorded in their Capital A/cs.
2. Define partnership.(2018,2019,S-2022,2021)
According to sec 4 of the Indian Partnership Act – 1932 “Partnership is the relation between persons who
have agreed to share the profits of a business carried on by all are any of them acting for all”
3. Give the meaning of not-for profit organisations. (2022,S-2019, 2015)
Not-for-Profit Organisations refer to those which are formed to render social services and are set up as
charitable institution which function without any motive of profit.
4. What is sacrifice ratio. (S-2022,S-2020)
It is the Ratio in which the old Partners Sacrifice or surrender a part of their share of profits to the new partner
on account of admission. Sacrifice Ratio is the excess of old share over the new share.
5. Give the meaning of financial statements (2019,S-2022)
Financial statements are the basic and formal annual reports through which the corporate management
communicates financial information to its owners and various other external parties.
6. What is forfeiture of shares? (2019,2016)
Cancellation of the right of a shareholder on shares held by him due to non-payment of money due on such
shares
7. What is dissolution of a partnership firm. (2018)
All the partners of the firm cut off their connections or relation with the firm and the business of the firm is closed
down.
8. What do you mean Financial statement Analysis?
The process of critical evaluation of the financial information contained in the financial statements in order to
understand and make decisions regarding the operations of the firm is called Financial Statement Analysis.
9. Name any two users of financial statement analysis.(2020)
a) Finance manager b) Top management
10. What is under subscription?(2022,2015)
When the number of shares applied for is less than the number of shares for which applications have been
invited for subscription, there is said to be under subscription
11. What do you mean by common size statement. (S-2020)
These are the statements which indicate the relationship of different items of a financial statements with a
common item by expressing each item as a percentage of that common item.
12. What do you mean by Operating activities. (S-2020)
Operating activities are the activities that constitute primary or main activities of an enterprises.
13.What do you mean by Investing activities. (S-2019)
Investing activities are the activities relating to purchase and sale of long term assets.
14. What is meant by fixed capital system? (2015)
Fixed Capital Method is a method of maintaining Partners capital a/cs, in which the capital balances of the
Partners shall remain fixed. All adjustments relating to Partners are recorded in a separate account called
Partners Current Accounts.
15. What is over subscription?
When the public apply for more shares than those offered to them there is said to be over subscription.
16. What are Legacies.?(2016)
Legacies are the gifts received by Not for Profit Organisation under a will, on the death of a donor
17. What is profit and loss appropriation account?(2017)
Profit and Loss Appropriation A/c is the extension of P & L A/c which shows the appropriation of profits
among the Partners after making necessary adjustments.
18. What is partnership deed? (2018)
Partnership Deed is the written agreement on stamp paper containing terms of Partnership, duly signed by all
Partners.
20. What is realisation account?(2018)
Realisation account is an account which is prepared at the time of dissolution of a Partnership firm to
ascertain the profit or loss on realisation of assets and payment of liabilities.

B.Types, Methods,Techniques, Categories, Items, for 2 Marks:

1. Name any two books of accounts maintained by Not-For-Profit Organisation
a. Cashbook b. Journal c. Ledger
2. What are the methods of maintaining capital account of partners? (2020, S-2020)
a. Fixed capital system b. Fluctuating capital system.
3. State any two final accounts of a Partnership firm.
a. Trading and profit and loss account. b. Balance sheet
4. Name any methods for calculation of interest on drawings
a. Average period method. b. Product method.
5. State any two special aspects of partnership accounts.
a. Maintenance of Partners capital accounts b. Dissolution of partnership
6. Name any two contents of Partnership deed. (2019)
a. Name and addresses of the partners b. Profit and loss sharing ratio
7. State any two methods of valuation of goodwill. (2017)
a. Average profit method b. Super profit method
8. State any two rights acquired by a new partner. (2019,2020)
a. Right to share in the assets of the partnership firm. b. Right to share in the profits of the partnership firm.
9. State any two factors which determine the goodwill of the firm. (2016)
a. Nature of the business b. Location of the business
10. State any two methods or types of issue of shares. (2018 ,S-2022,S-2020)
a. Issue at par b. Issue at premium
11. State any two categories of share capital (2020,2022,2021)
a. called up capital b. paid up capital
12. Mention two types of financial statements. (2018,2020,2016)
a. Balance sheet(position statement) b. Statement of profit and loss.
13. State any 2 postulates.
(*Postulates means concepts)
a. Going concern postulate or concept. b. Money measurement postulate or concept
14. Mention any two items which are shown under the head’ Reserves and Surplus’. (2021)
a. Capital reserve c. General reserve.
15. List any two tools or technique of financial statement analysis. (2019,2022,S-2019,2017,2018)
a. Comparative Statements b. Common size statements c. Ratio analysis
16. Mention any two activities which are classified as per AS-3. (2019,2020,S-2022)
a. Operating activities b.Investing activities c.Financing activities.
17. Give the two reasons for admitting a new partner.(2022)
a) To increase the capital b) To improve the managerial ability

C. Features and Objectives Questions For (2 Marks)

1. State any two features of Not-for profit organisation
a. They do not undertake business or trading activities.
b. The funds raised by such organisations through various sources are credited to capital fund .
2.State any two features of Receipt and Payment Account. (2019,2020)
a. It is a real account
b. It is start with opening cash or bank balance and ends with closing cash and bank balance.
3. State any two features of Income and Expenditure Account.
a. It is a nominal account. b. This account similar to profit and loss
4. State any two features of partnership.(S-2019)
a. two or more partners: The minimum members of a partners can be two
b. Sharing profits: The agreement between the partners must be to share profits of the business.
5. State any two features of company? (S-2019)
1.Body corporate: A company is formed according to the provisions of law enforced from time to time.
2. Separate Legal Entity: Which is distinct and separate from its members
3. Limited Liability: The Liability of the members of the company is limited to extent of unpaid amount of shares
held by them.
6. State any two features of financial statements.
a. Recording facts: Its prepared on the basis of facts in the form of cost data recorded in accounting books.
b. Accounting conventions: Certain accounting conventions are followed while preparing financial statements.

D. Chapter wise Objective Questions:

1. Write any two objectives of financial statements. (2019,2021,S-2020)
a. To provide information about the earning capacity of the business. b. to provide information about cash flows
2. State any two objectives of financial statement Analysis. (S-2022)
a. To know the earning capacity of the firm b. To know the financial position of the firm.
3. Write any two objectives of preparing cash flow statement.(2022)
- Provides information about the cash flows(inflows and outflows) of an enterprise.
-Helpful for short-term planning, for preparing cash budget.

E. Merits and Demerits questions for 2 Marks:

1. State any two benefits of financial statements.
a. Basis for fiscal policies b. Helps Stock exchanges
2. State any two importance of financial statement Analysis. (2015
a. Lenders: Help to the lenders who provide long-term finance to the business enterprises.
b. Investors: help the prospective investors , who would like to know the earning capacity and financial position
of the enterprises before investing their funds on the shares of the company.
c. Trade Payables or Creditors: Financial analysis is very helpful to trade payables or trade creditors or suppliers
of goods.
3. State any two users of Financial Statement Analysis. (2019,2020)
a. Finance manager b. Top Management.
4.State any two uses of cash flow statement.
-Helps in balancing its cash inflow and cash outflow, keeping in changing condition
-It Provides information that enables users to evaluate changes in net assets of an enterprise.
5. Give any two limitations of financial statements. (2022,S-2019
a. do not reflect current situation: Prepared on the basis of historical cost.
b. Assets may not realise: Accounting is done on the basis of certain conventions . Some of the assets may not
realise the state value.
c. Aggregate information: It show only aggregate information but not detailed information.
6. State any two limitations of Financial Statement Analysis.
a. Does not consider price level changes b. Is just a study of reports of the company

F.Journal entry for 2 Marks.

I.Journal entry questions On Dissolution of Partnership:

A. Transfer of assets: (2022)
Realisation A/c Dr.
To any or each asset A/c
( assets transferred)
B. transfer of a outside Liability to realisation account
concerned liability A/c Dr.
To Realisation A/c
(Liabilities paid)
C. unrecorded Liability paid on dissolution of a firm (2020)
Realisation A/c Dr.
To Cash/Bank A/c
(Un recorded liability paid)
D. Realisation or Sale of Assets
Cash/Bank A/c Dr.
To Realisation A/c
(assets realized or sold)

E. unrecorded Asset Realised on Dissolution of a Firm

 Cash/Bank A/c Dr.
To Realisation A/c
(un recorded realized or sold)
F. payment of a liability on Dissolution of a firm
Realisation A/c Dr.
To Cash/Bank A/c
(liability paid)
G. realization/dissolution expenses paid by the firm
Realisation A/c Dr.
To Cash/Bank A/c
( dissolution or realization expenses paid by the firm)
H. realisation expenses paid by the partner on behalf of the firm
Realisation A/c Dr.
To Partner’s Capital A/c
(realisation expenses paid by the partner)
I. an asset taken over by a partner on dissolution of a firm (2019,2021,S-2019,2016)
Partner’s capital A/c Dr.
To Realisation A/c
(asset taken over by the partner)
J. liability taken over by a partner on Dissolution of a firm(S-2022,S-2020)
Realisation A/c Dr.
To Partner’s capital a/c
(liability taken over by the partner)
K. transfer of profit on realization
Realisation A/c Dr.
To Partner’s capital accounts
( realisation profit transferred to partners capital accounts)
L. transfer of loss on realization
Partners capital A/c Dr.
To Realisation A/c
( realisation loss transferred to partners capital accounts)
M. payment of partner’s Loan on Dissolution of a Firm. (2015)
Partner’s Loan A/c Dr.
To Cash/Bank A/c
( partners loan paid)
N. Transfer of accumulated profit to Partner’s capital A/c on Dissolution of a firm.
Accumulated profit a/c Dr
To Partners capital A/c
(accumulated profit transferred to partners capital accounts)
O. Give the journal entry for sale of machinery on dissolution of a firm. (2019)
Cash/Bank a/c Dr
To realization a/c
(sale of machinery)
P.How do you treat PBD on Dissolution of a firm?
It is credited to realisation account.
OR PBD a/c Dr.
To Realisation a/c

II. Journal entry questions On Admission of a partner:

1. Pass the journal entry for the decrease in the value of liability.
Liability a/c Dr.
To revaluation a/c
(decrease in the value of liability)

2. Pass the journal entry for increase in the value of building on the admission of a partner.
Building a/c Dr.
To revaluation a/c
(Being increase in the value of building)

3. How do you close revaluation account when there is a profit? (2018)

Revaluation account is debited to old partners capital accounts in old ratio.
OR
Revaluation a/c Dr.
To old partners capital accounts
(profit transferred )
4. Pass the journal entry to write off goodwill raised to the extent of full value.
a. For distribution of goodwill to old partners:
Goodwill A/c Dr.
To Old partners capital a/c’s
b. Writing off Goodwill
All partners capital A/c’s Dr.
To Goodwill A/c
(goodwill written off by all partners in new ratio)
5. Give the journal entry for increase in the value of an asset in case of admission of a partner. (2018)
Revaluation a/c dr.
To concerned asset a/c
(asset value increased )
G.Simple Problems for (2 Marks):
1. Goodwill of the firm valued at two years purchase of the average profit of last four years. The total
profits for last four years is Rs. 40,000.Calcualte the goodwill of the firm. (2019,S-2019)
Solution: Goodwill=Average profit X No. Of Purchase years
Average profit = 40,000÷4=10,000
Goodwill=10,000 X 2=Rs. 20,000

2. Give the Absolute increase and percentage increase for the following:
Previous Year Current Year
Revenue from operations 60,000 75,000
Solution:
Absolute increase=75,000-60,000=Rs.15,000
percentage increase=15,000 X100÷60,000=25%

3. If revenue from operation are Rs. 48,000, opening trade receivables are Rs. 8,000 and closing trade
receivable are 6,000, Calculate cash receipts from customers. (2019)
Solution: Cash receipt from customers = Revenue from operation + Trade receivable in the beginning –Trade
receivable in the end
Cash receipt from customers= 48,000,+8,000-6,000=Rs. 50,000

4. If purchases are Rs. 72,000, opening trade payables are Rs. 12,000 and closing trade payables are Rs.
9,000. Calculate cash payments to suppliers.
Solution: Cash payment to supplier= Purchases + Trade payables in the beginning – Trade payables in the end.
Cash payment to supplier = 72,000 + 12,000 – 9,000 =75,000

H .Differences, Chapter wise Questions for 2 Marks;

1. State two differences between Receipts and Payments Account and Income and
Expenditure Account. (S-2022)
Receipts and Payments a\c Income and Expenditure a\c
a. It is a real account a. It is a nominal account
b. It is summary of cash receipts and b. It is a summary of incomes and expenses.
payments
c. It take both capital and revenue items. c. It take only revenue items
 2. State any two differences between fixed and fluctuating capital accounts.(2021)
Fixed capital system Fluctuating capital system
1.Two accounts are maintained like, 1. Only one account that is capital
partners capital and current account account is maintained for each partner

2. The capitals of the partners shall 2. The capital of the partners fluctuate or
remain fixed unless additional capital change from year to year.
is introduced.

3.State any two differences between sacrificing ratio and gaining ratio.
Sacrifice ratio Gain ratio
a. Calculated at the time of admission of a. Calculated at the time of retirement of a
a partner partner.
b. the old partners agree to sacrifice b. the continuing partners have
their share of profit in favour of the acquired the share from the retiring
incoming partner is called sacrifice partner is called the gain or gaining
ratio. ratio.
4. State any two differences between of partnership and Dissolution of Partnership
Firm. (2017)
Dissolution of Partnership Dissolution of Partnership Firm
a. the business of the firm is not a. the business of the firm is
terminated terminated
b. The books of accounts are not b. The books of accounts are
closed closed.

5. State any two differences between current liabilities and non- current liabilities.
Current Liabilities Non-Current Liabilities.
1. It is paid with in one year or less. 2. It is paid More than one year.
Example: Trade payable Example: Debentures

2. It is short-term of sources of funds. 2. It is long-term sources of funds.

6. State any two differences between and public company and private company.
Public Company Private Company.
Minimum 7 members and maximum number Minimum 2 members and maximum 200
of member is un limited members

There is no restrictions to transfer its shares There is a restrictions to transfer its shares
.

I.Examples:
1. Give two examples of not-for profit organisation. (S-2020,2017,2018)
a) Sports Club b) Publics school, hospital, c. Public library
2.Give any two examples for revenue expenditure.
a. Salary paid b. Printing charges
3. Give any two examples of capital expenditure. (2019)
a) Sports materials purchased b) Computers bought
4. Give any two examples for revenue receipt.
a. Rent received b. Interest on investments.
5. Give any two examples for capital receipt.
a. Legacies b. Life membership fees
6. Write any two examples for financing activities.
Issue of equity shares, Issue of debentures, Repayment of debentures, payment of dividend and interest.