Accountancy 12th Previous Year Question Paper 2017 (CBSE)

Accountancy 

Q.1. Distinguish between ‘Fixed Capital Account’ and ‘Fluctuating Capital Account’ on the basis of credit balance. 

Answer: Fixed Capital Accounts always show a credit balance while fluctuating capital accounts may show credit or debit balance. 

Q.2. A and B were partners in a firm sharing profits and losses in the ratio of 5 : 3. They admitted C as a new partner. The new profit sharing ratio between A, B and C was 3 : 2 : 3. A surrendered ⅕th of his share in favour of C. Calculate B’s sacrifice.

Answer: A’s Old Share = 5/8 

A’s Sacrifice = 1/5 of 5/8 = 1/8 

C’s Share = 3/8 

B’s Sacrifice = C’s share – A’s sacrifice = 3/8 – 1/8 = 2/8 

OR 

Answer: B’s Old Share = 3/8 

B’s new share = 2/8 

B’s Sacrifice = 3/8 – 2/8 = 1/8 

Q.3. P and Q were partners in a firm sharing profits and losses equally. Their fixed capitals were ₹ 2,00,000 and ₹ 3,00,000 respectively. The partnership deed provided for interest on capital @ 12% per annum. For the year ended 31st March, 2016, the profits of the firm were distributed without providing interest on capital. Pass necessary adjustment entry to rectify the error. 

Answer: 

Q.4. X Ltd. invited applications for issuing 500, 12% debentures of ₹ 100 each at a discount of 5%. These debentures were redeemable after three years at par. Applications for 600 debentures were received. Pro-rata allotment was made to all the applicants. 

Pass necessary journal entries for the issue of debentures assuming that the whole amount was payable with the application. 

Answer: 

Q.5. Z Ltd. forfeited 1,000 equity shares of ₹ 10 each for the non-payment of the first call of ₹ 2 per share. The final call of ₹ 3 per share was yet to be made. Calculate the maximum amount of discount at which these shares can be reissued.

Answer: The maximum amount of discount at which these shares can be re-issued is ₹5 per share or ₹ 5000.

 

Q.6. Durga and Naresh were partners in a firm. They wanted to admit five more members to the firm. List any two categories of individuals other than minors who cannot be admitted by them.  

Answer: Any two of the following: 

• Persons of unsound mind / Lunatics 

• Insolvent persons 

• Any other individual who has been disqualified by law 

Q.7. BPL Ltd. converted 500, 9% debentures of ₹ 100 each issued at a discount of 6% into equity shares of ₹ 100 each issued at a premium of ₹ 25 per share. Discount on issue of 9% debentures has not yet been written off. 

Showing your working notes clearly, pass necessary journal entries for conversion of 9% debentures into equity shares. 

Answer: 

Q.8. Kavi, Ravi, Kumar, and Guru were partners in a firm sharing profits in the ratio of 3: 2: 2: 1. On 1.2.2017, Guru retired and the new profit sharing ratio decided between Kavi, Ravi and Kumar were 3 : 1: 1. On Guru’s retirement, the goodwill of the firm was valued at ₹ 3,60,000. 

Showing your working notes clearly, pass necessary journal entry in the books of the firm for the treatment of goodwill on Guru’s retirement. 

Answer: 

Q.9. Disha Ltd. purchased machinery from Nisha Ltd. and paid to Nisha Ltd. as follows : 

(i) By issuing 10,000, equity shares of ₹ 10 each at a premium of 10%. 

(ii) By issuing 200, 9% debentures of ₹ 100 each at a discount of 10%.

(iii) Balance by accepting a bill of exchange of ₹ 50,000 payable after one month. 

Pass necessary journal entries in the books of Disha Ltd. for the purchase of machinery and making payment to Nisha Ltd. 

Answer: 

Q.10. Ganesh Ltd. is registered with an authorized capital of ₹ 10,00,00,000 divided into equity shares of ₹ 10 each. Subscribed and fully paid-up capital of the company was ₹ 6,00,00,000. For providing employment to the local youth and for the development of the tribal areas of Arunachal Pradesh the company decided to set up a hydropower plant there. The company also decided to open skill development centers in Itanagar, Pasighat, and Tawang. To meet its new financial requirements, the company decided to issue 1,00,000 equity shares of ₹ 10 each and 1,00,000, 9% debentures of ₹ 100 each. The debentures were redeemable after five years at par. The issue of shares and debentures was fully subscribed. A shareholder holding 2,000 shares failed to pay the final call of ₹ 2 per share. Show the share capital in the Balance Sheet of the company as per the provisions of Schedule III of the Companies Act, 2013. Also, identify any two values that the company wishes to propagate. 

Answer: 

Values (Any two): 

• Providing employment opportunities to the local youth. 

• Promotion of development in tribal areas. 

• Promotion of skill development in Arunachal Pradesh. 

• Paying attention to regions of social unrest. 

(Or any other suitable value) 

Q.11. Madhu and Neha were partners in the firm sharing profits and losses in the ratio of 3: 5. Their fixed capitals were ₹ 4,00,000 and ₹ 6,00,000 respectively. On 1.1.2016, Tina was admitted as a new partner for 41 to share in the profits. Tina acquired her share of profit from Neha. Tina brought ₹ 4,00,000 as her capital which was to be kept fixed like the capitals of Madhu and Neha. Calculate the goodwill of the firm on Tina’s admission and the new profit sharing ratio of Madhu, Neha, and Tina. Also, pass necessary journal entry for the treatment of goodwill on Tina’s admission considering that Tina did not bring her share of goodwill premium in cash. 

Answer: 

(a) Calculation of Hidden Goodwill: 

Tina’s share = 1⁄4 

Tina’s Capital = ₹  4,00,000 

(a) Total capital of the new firm = 4,00,000 × 4 = 16,00,000 

(b) Existing total capital of Madhu, Neha and Tina 

= ₹  4,00,000 + ₹  6,00 000 + ₹  4,00,000 

= ₹  14,00,000 Goodwill of the firm 

= 16,00,000-14,00,000 = 2,00,000 

Thus, Tina’s share of goodwill = 1⁄4 × 2,00,000 = 50,000 

(b) Calculation of New Profit Sharing ratio : Madhu’s new share 

= 3/8 Neha’s new share = 5/8 – 1/4 

= 3/8 Tina’s share = 1⁄4 

i.e. 2/8 New Ratio = 3:3:2 

(c) 

Q.12. Ashok, Babu, and Chetan were partners in firm sharing profits in the ratio of 4 : 3 : 3. The firm closes its books on 31st March every year. On 31st December 2016, Ashok died. The partnership deed provided that on the death of a partner his executors will be entitled to the following : 

(i) Balance in his capital account. On 1.4.2016, there was a balance of ₹ 90,000 in Ashok’s Capital Account. 

(ii) Interest on capital @ 12% per annum. 

(iii) His share in the profits of the firm in the year of his death will be calculated on the basis of the rate of net profit on sales of the previous year, which was 25%. The sales of the firm till 31st December 2016 were ₹ 4,00,000. 

(iv) His share in the goodwill of the firm. The goodwill of the firm on  Ashok’s death was valued at ₹ 4,50,000. 

 

The partnership deed also provided for the following deductions from the amount payable to the executor of the deceased partner : 

(i) His drawings in the year of his death. Ashok’s drawings till 31.12.2016 were ₹ 15,000. 

 

(ii) Interest on drawings @ 12% per annum which was calculated as 

₹ 1,500. The accountant of the firm prepared Ashok’s Capital Account to be presented to the executor of Ashok but in a hurry he left it incomplete. Ashok’s Capital Account as prepared by the firm’s accountant is given below : 

You are required to complete Ashok’s Capital Account. 

Answer: 

Q.13.  A, B, C, and D were partners in a firm sharing profits in the ratio of 3: 2 : 3: 2. On 1.4.2016, their Balance Sheet was as follows :

From the above date, the partners decided to share the future profits in the ratio of 4 : 3: 2: 1. For this purpose, the goodwill of the firm was valued at ₹ 2,70,000. It was also considered that :

 (i) The claim against Workmen Compensation Reserve has been estimated at ₹30,000 and fixed assets will be depreciated by ₹ 25,000.

(ii) Adjust the capitals of the partners according to the new profit sharing ratio by opening the Current Accounts of the partners.

Prepare Revaluation Account, Partners’ Capital Account, and the Balance Sheet of the reconstituted firm.

Answer: 

Q.14. On 1.4.2015, J.K. Ltd. issued 8,000, 9% debentures of ₹ 1,000 each at a discount of 6%, redeemable at a premium of 5% after three years. The company closes its books on 31st March every year. Interest on 9% debentures is payable on 30th September and 31st March every year. The rate of tax deducted at the source is 10%.

Pass necessary journal entries for the issue of debentures and debenture interest for the year ended 31.3.2016.

Answer: 

Q.15. Pass necessary journal entries on the dissolution of a partnership firm in the following cases :

(i) Dissolution expenses were ₹ 800.

(ii) Dissolution expenses ₹ 800 were paid by Prabhu, a partner.

(iii) Geeta, a partner, was appointed to look after the dissolution work, for which she was allowed a remuneration of ₹ 10,000. Geeta agreed to bear the dissolution expenses. Actual dissolution expenses of ₹ 9,500 were paid by Geeta.

(iv) Janki, a partner, agreed to look after the dissolution work for a commission of ₹ 5,000. Janki agreed to bear the dissolution expenses. Actual dissolution expenses of ₹ 5,500 were paid by Mohan, another partner, on behalf of Janki.

(v) A partner, Kavita, agreed to look after the dissolution process for a commission of ₹ 9,000. She also agreed to bear the dissolution expenses. Kavita took over the furniture of ₹ 9,000 for her commission. Furniture had already been transferred to realisation account.

(vi) A debtor, Ravinder, for ₹ 19,000 agreed to pay the dissolution expenses which were ₹ 18,000 in full settlement of his debt.

Answer: 

Q.16. C and D are partners in a firm sharing profits in the ratio of 4: 1. On 31.3.2016, their Balance Sheet was as follows :

 

On the above date, E was admitted for 1⁄4th share in the profits on the following terms : 

(i) E will bring ₹ 1,00,000 as his capital and ₹ 20,000 for his share of goodwill premium, half of which will be withdrawn by C and D. 

(ii) Debtors ₹ 2,000 will be written off as bad debts and a provision of 4% will be created on debtors for bad and doubtful debts. 

(iii) Stock will be reduced by ₹ 2,000, furniture will be depreciated by ₹ 4,000 and 10% depreciation will be charged on plant and machinery. 

(iv) Investments of ₹ 7,000 not shown in the Balance Sheet will be taken into account. 

(v) There was an outstanding repairs bill of ₹ 2,300 which will be recorded in the books. 

Pass necessary journal entries for the above transactions in the books of the firm on E’s admission.

OR

Q.16. Sameer, Yasmin, and Saloni were partners in the firm sharing profits and losses in the ratio of 4 : 3 : 3. On 31.3.2016, their Balance Sheet was as follows : 

On the above date, Sameer retired and it was agreed that : 

(i) Debtors of ₹ 4,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts will be maintained. 

(ii) An unrecorded creditor of ₹ 20,000 will be recorded.

(iii) Patents will be completely written off and 5% depreciation will be charged on stock, machinery and building.

(iv) Yasmin and Saloni will share future profits in the ratio of 3: 2. 

(v) Goodwill of the firm on Sameer’s retirement was valued at ₹ 5,40,000. 

Pass necessary journal entries for the above transactions in the books of the firm on Sameer’s retirement.

Answer: 

OR

Q.17. VXN Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at a premium of ₹ 8 per share. The amount was payable as follows :

On Application: ₹ 4 per share (including ₹ 2 premium)

On Allotment: ₹ 6 per share (including ₹ 3 premium)

On First Call: ₹ 5 per share (including ₹ 1 premium)

On Second and Final Call: Balance Amount

The issue was fully subscribed. Gopal, a shareholder holding 200 shares, did not pay the allotment money and Madhav, a holder of 400 shares, paid his entire share money along with the allotment money. Gopal’s shares were immediately forfeited after allotment. Afterward, the first call was made. Krishna, a holder of 100 shares, failed to pay the first call money and Girdhar, a holder of 300 shares, paid the second call money also along with the first call. Krishna’s shares were forfeited immediately after the first call. The second and final call was made afterward and was duly received. All the forfeited shares were reissued at ₹ 9 per share fully paid up.

Pass necessary journal entries for the above transactions in the books of the company.

OR

Q.17. JJK Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each at par. The amount was payable as follows :

On Application: ₹ 2 per share

On Allotment: ₹ 4 per share

On First and Final Call: Balance Amount

The issue was oversubscribed three times. Applications for 30% shares were rejected and money refunded. The allotment was made to the remaining applicants as follows :

Category No. of Shares Applied No. of Shares Allotted

I 80,000 40,000

II 25,000 10,000

Excess money paid by the applicants who were allotted shares was adjusted towards the sums due on allotment.

Deepak, a shareholder belonging to Category I, who had applied for 1,000 shares, failed to pay the allotment money. Raju, a shareholder holding 100 shares, also failed to pay the allotment money. Raju belonged to Category II. Shares of both Deepak and Raju were forfeited immediately after allotment. Afterward, the first and final call was made and was duly received. The forfeited shares of Deepak and Raju were reissued at ₹ 11 per share fully paid up.

Pass necessary journal entries for the above transactions in the books of the company.

Answer: 

OR

Answer: 

PART B

(Analysis of Financial Statements)

Q.18. Normally, what should be the maturity period for a short-term investment from the date of its acquisition to be qualified as cash equivalents?

Answer: Maximum maturity period is 90 days/ 3 months for a short-term investment from the date of acquisition to be qualified as cash equivalents.

 

Q.19.  State the primary objective of preparing a cash flow statement. 

Answer: To find out the inflows and outflows of cash and cash equivalents from Operating, Investing, and Financing activities. 

Q.20. What is meant by ‘Analysis of Financial Statements’? State any two objectives of such an analysis.

Answer: Analysis of Financial Statements is 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. 

(Or any other suitable meaning) 

Objectives of ‘Financial Statements Analysis’: (Any two) 

(i) Assessing the earning capacity or profitability of the firm as a whole as well as its different departments so as to judge the financial health of the firm. 

(ii) Assessing managerial efficiency by using financial ratios to identify favorable and unfavorable variations in managerial performance. 

(iii) Assessing the short-term and the long-term solvency of the enterprise to assess the ability of the company to repay principal amount and interest. 

(iv) Assessing the performance of the business in comparison to that of others through inter-firm comparison. 

(v) Assessing developments in the future by forecasting and preparing budgets. 

(vi) To Ascertain the relative importance of different components of the financial position of the firm. 

 

Q.21. The proprietary ratio of M. Ltd. is 0·80: 1. State with reasons whether the following transactions will increase, decrease, or not change the proprietary ratio :

(i) Obtained a loan from bank ₹ 2,00,000 payable after five years.

(ii) Purchased machinery for cash ₹ 75,000.

(iii) Redeemed 5% redeemable preference shares ₹ 1,00,000.

(iv) Issued equity shares to the vendors of machinery purchased for ₹ 4,00,000. 

Answer: 

Transaction Effect on Quick Ratio Reasons
(i) Decrease No change in Shareholders’ funds but total assets will increase by ₹  2,00,000
(ii) No Change No change in total assets and Shareholders’ funds
(iii) Decrease  Both Shareholders’ funds and total assets are decreased by same amount
(iv) Increase Shareholders’ funds and total assets both are increased

 

Q.22. Financial statements are prepared following the consistent accounting concepts, principles, procedures, and also the legal environment in which the business organizations operate. These statements are the sources of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions in a meaningful way. From the above statement identify any two values that a company should observe while preparing its financial statements. Also, state under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013.

 

(i) Capital Reserve

(ii) Calls-in-Advance

(iii) Loose Tools

(iv) Bank Overdraft

Answer: 

Values (Any two): 

• Transparency 

• Consistency 

• Following rules and regulations / Ethical code of conduct 

• Honesty and loyalty towards owners 

• Providing authentic information to users 

(Or any other suitable value) 

Q.23. From the following Balance Sheet of SRS Ltd. and the additional information as of 31.3.2016, prepare a Cash Flow Statement :

Notes to Accounts

Additional Information :

(i) ₹ 50,000, 12% debentures were issued on 31.3.2016.

(ii) During the year a piece of machinery costing ₹ 40,000, on which accumulated depreciation was ₹ 20,000, was sold at a loss of ₹ 5,000.

Answer: 

Notes: 

Calculation of Net Profit before tax: 

Net profit as per statement of Profit & Loss           75,000 

Add: Proposed Dividend                                      1,00,000 

Net Profit before tax & extraordinary items         1,75,000 

PART B 

(Computerized Accounting) 

Q.18. What is meant by a ‘Database Report’ ? 

Answer: A database report is the formatted result of database queries and contains useful data for decision-making and analysis. 

Q.19. What is meant by a ‘Query’ ? 

Answer: Queries provide the capability of combined data from multiple tables and placing specific conditions for the retrieval of data. It is another tabular view of the data showing information from multiple tables, resulting in the presentation of the information required, raised in the query. 

Q.20. Explain ‘Flexibility’ and ‘Cost of the installation’ as considerations before opting for specific accounting software. 

Answer: Flexibility: (It may include the following points) 

• Related to data entry, availability, and design of various reports. 

• Between users (Accountants) 

• Between systems. 

Cost of installation and maintenance: (It may include the following points in explanation) 

• Ability to afford hardware and software 

• Cost-benefit analysis and study of available options 

• Training of staff, cost of updating 

Q.21. Explain any four sub-groups of the Account Group ‘Profit and Loss’

Answer: Any four of the following: 

• Sales Account 

• Purchase Account 

• Direct Income 

• Indirect Income 

• Direct Expenses 

• Indirect Expenses (With appropriate explanation) 

Q.22. Explain the steps involved in the installation of computerized accounting software. 

Answer: Steps in the installation of CPS: 

1. Insert CD in the system 

2. Select C: E:, or D: drive from my computer 

OR 

Start > run > type the filename E:\install.exe 

3. The default directories of application, data, and configuration will open in a window. Change the setting if you wish by providing desired file name and drive name. 

4. Click on install. The installation process will start and a message of successful installation will appear after its completion. The CD can be removed as the application is successfully installed. 

Q.23. What is meant by ‘Conditional formatting’? Explain its benefits. 

Answer: Conditional formatting means a format change, such as background cell shading or font color i.e. applied to a cell when a specified condition for the data in the cell is true. Conditional formatting is often applied to worksheets to find: 

1. Data that is above or below a certain value. 

2. Duplicate data values. 

3. Cells containing specific text. 

4. Data that is above or below average 

5. Data that falls in the top ten or bottom ten values 

Benefits of using conditional formatting: 

1. Helps in answering questions that are important for making decisions. 

2. Guides with help of using visuals. 

3. Helps in understanding the distribution and variation of critical data. 

Accountancy 12th Previous Year Question Paper 2018 (CBSE)

Accountancy

Q.1 Amit and Beena were partners in a firm sharing profits and losses in the ratio of 3 : 1. Chaman was admitted as a new partner for 1⁄6 th share in the profits. Chaman acquired 2⁄5th of his share from Amit. How much share did Chaman acquire from Beena ? 

Answer: Share of profit acquired by Chaman from Aman=  1⁄6 × 2⁄5 = 2⁄30

Therefore, share of profit acquired by Chaman from Beena =  1⁄6 ⁻ 2⁄30 = 3⁄30 = 1⁄10

                                                                 OR

Answer: Share of profit acquired by Chaman from Beena= 3⁄5 × 1⁄6 = 3⁄30 = 1⁄10

 

Q. 2. Neetu, Meetu and Teetu were partners in a firm. On 1st January, 2018, Meetu retired. On Meetu’s retirement the goodwill of the firm was valued at ₹. 4,20,000. Pass necessary journal entry for the treatment of goodwill on Meetu’s retirement.

Answer: 

 

Q.3. Distinguish between ‘Dissolution of partnership’ and ‘Dissolution of partnership firm’ on the basis of settlement of assets and liabilities. 

Answer: 

Basic Dissolution of partnership Dissolution of partnership firm
Settlement of assetsand liabilities Assets and liabilities are revaluedand new balance sheet is drawn Assets are sold andliabilities are paid off

 

Q.4. Ritesh and Hitesh are childhood friends. Ritesh is a consultant whereas Hitesh is an architect. They contributed equal amounts and purchased a building for ₹. 2 crores. After a year, they sold it for ₹. 3 crores and shared the profits equally. Are they doing the business in partnership ? Give reason in support of your answer. 

Answer: No, they are not doing business in partnership because they are not involved in doing sale and purchase of land/ plot on a regular basis/ Mere co-ownership of a property does not amount to partnership.

 

Q.5. Is ‘Reserve Capital’ a part of ‘Unsubscribed Capital’ or ‘Uncalled Capital’ ? 

Answer: Reserve Capital is a part of Uncalled Capital.

 

Q.6. Give the meaning of ‘Debentures issued as Collateral Security’. 

Answer: When the company issues debentures to the lenders as an additonal/ secondary security, in addition to other assets already pledged/ some primary security. Such issue of debentures is called debentures issued as a collateral security.

 

Q.7. Jayant, Kartik and Leena were partners in a firm sharing profits and losses in the ratio of 5 : 2 : 3. Kartik died and Jayant and Leena decided to continue the business. Their gaining ratio was 2 : 3. 

Calculate the new profit sharing ratio of Jayant and Leena. 

Answer: Jayant’s gain= 2⁄5 ×  2⁄10 = 4⁄50 

Leena’s gain = 3⁄5 ×  2⁄10 = 6⁄50  

Jayant’s new share= 5⁄10 + 4⁄50 = 29⁄50 

Leena’s new share = 3⁄10 + 6⁄50 = 21⁄50 

New profit sharing ratio of Jayant and Leena = 29:21 or 29⁄50  : 21⁄50

 

Q.8. What is meant by a ‘Share’ ? Give any two differences between ‘Preference Shares’ and ‘Equity Shares’. 

Answer:  A Share refers to the unit into which the total share capital of the company is divided. 

OR 

               A share means a share in the share capital of the company and includes stock.

Differences between ‘Preference Shares’ and ‘Equity Shares’:

(i) Preference Shares are shares which carry a prefrential right at the time of payment of

dividend and at the time of repayment of capital.

(ii) Equity shares are shares which do not carry a prefrential right at the time of payment of dividend and at the time of repayment of capital.

OR

Differences between ‘Preference Shares’ and ‘Equity Shares’: (Any two)

# Preference Shares  Equity Shares
(i) Share which enjoys preferential right at the time of payment of dividend/Dividend is paid on preference sharesbefore it is paid on equity shares. Shares which do not enjoy preferentialright at the time of payment ofdividend/Dividend is paid on equity shares after it is paid on preference shares.
(ii) Enjoy preferential right at the time ofrepayment of capital. Do not enjoy preferential right at thetime of repayment of capital.
(iii) Rate of dividend may be fixed. Rate of dividend is proposed every yearby the directors and approved by theshareholders.
(iv) Preference shares may be converted into equity shares if the terms of issueprovide for it. Equity shares are not convertible.
(v) Preference shareholders have votingrights in special circumstances. Equity shareholders have voting rightsin all circumstances.
(vi) Preference shareholders do not have the right to participate in the management of the company. Equity shareholders have the right toparticipate in the management of thecompany.
(vii) Arrears on cumulative preference sharesare paid before dividend is paid onequity shares. If dividend is not declared during theyear, it is not accumulated to be paidthe coming years.

 

Q.9. NK Ltd., a truck manufacturing company, is registered with an authorised capital of ₹. 1,00,00,000 divided into equity shares of ₹. 100 each. The subscribed and paid up capital of the company is ₹. 50,00,000. 

The company decided to open technical schools in the Jhalawar district of Rajasthan to train the specially abled children of the area. It is planning to provide them employment in its various production units and industries in the neighbourhood area. To meet the capital expenditure requirements of the project, the company offered 20,000 shares to the public for subscription. The shares were fully subscribed and paid. Present the share capital in the Balance Sheet of the company as per the provisions of Schedule III of the Companies Act, 2013. 

Also identify any two values that the company wants to communicate. 

Answer: 

Balance Sheet of NK Ltd.

As at ………………..(As per revised schedule III)

Notes to Accounts :

Values (Any two):

(i) Concern for the specially abled.

(ii) Creation of job opportunities.

(iii) Development of backward regions.

          (Or any other suitable value)

 

Q.10. Complete the following journal entries left blank in the books of VK Ltd. : VK Ltd. 

Answer:

VK Ltd.

Journal

 

Q.11. Banwari, Girdhari and Murari are partners in a firm sharing profits and losses in the ratio of 4 : 5 : 6. On 31st March, 2014, Girdhari retired. On that date the capitals of Banwari, Girdhari and Murari before the necessary adjustments stood at ₹. 2,00,000, ₹. 1,00,000 and ₹. 50,000 respectively. On Girdhari’s retirement, goodwill of the firm was valued at ₹. 1,14,000. Revaluation of assets and reassessment of liabilities resulted in a profit of ₹. 6,000. General Reserve stood in the books of the firm at ₹. 30,000. 

The amount payable to Girdhari was transferred to his loan account. Banwari and Murari agreed to pay Girdhari two yearly instalments of ₹. 75,000 each including interest @ 10% p.a. on the outstanding balance during the first two years and the balance including interest in the third year. The firm closes its books on 31st March every year. Prepare Girdhari’s loan account till it is finally paid showing the working notes clearly. 

Answer: 

Working Notes:

Calculation of amount payable to Girdhari:          ₹

Girdhari’s Capital                                            1,00,000

Share of goodwill                                                38,000

Share of Revaluation profit                                  2,000

Share of General reserve                                     10,000

                                                                                  1,50,000

(WORKING NOTES MAY BE SHOWN IN ANY FORM)

 

Q.12. Asha and Aditi are partners in a firm sharing profits and losses in the ratio of 3 : 2. They admit Raghav as a partner for ¼ th share in the profits of the firm. Raghav brings ₹. 6,00,000 as his capital and his share of goodwill in cash. Goodwill of the firm is to be valued at two years’ purchase of average profits of the last four years. 

The profits of the firm during the last four years are given below : 

Year Profit (₹)
2013-14 3,50,000
2014-15 4,75,000
2015-16 6,70,000
2016-17 7,45,000

The following additional information is given : 

(i) To cover management cost an annual charge of ₹. 56,250 should be made for the purpose of valuation of goodwill.

(ii) The closing stock for the year ended 31.3.2017 was overvalued by ₹. 15,000. Pass necessary journal entries on Raghav’s admission showing the working notes clearly. 

Answer: 

Working Notes:

Calculation of goodwill:

Profits

2013-14 ₹3,50,000 – ₹56,250 = ₹2,93,750

2014-15 ₹4,75,000 – ₹56,250 = ₹4,18,750

2015-16 ₹6,70,000 – ₹56,250 = ₹6,13,750

2016-17 ₹7,45,000 – ₹56,250 – ₹15,000 = ₹6,73,750

Goodwill of the firm = (₹2,93,750 + ₹4,18,750 + ₹6,13, 750 + ₹6,73,750)/4 x 2 = ₹10,00,000

Raghav’s share of goodwill = 1⁄4 x ₹10,00,000 = ₹2,50,000

OR

Answer: Calculation of goodwill:

Total Profits of four years = ₹3,50,000 + ₹4,75,000 + ₹6,70,000 + ₹7,30,000 = ₹22,25,000

Average Profits = ₹ 5,56,250 – ₹ 56,250 = ₹ 5,00,000

Goodwill of the firm = ₹ 5,00,000 x 2 = ₹10,00,000

Raghav’s share of goodwill = 1⁄4 x ₹10,00,000 = ₹2,50,000

 

Q.13. Pranav, Karan and Rahim were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1.

 On 31st March, 2017 their Balance Sheet was as follows : 

Balance Sheet of Pranav, Karan and Rahim as on 31.3.2017 

Liabilities Amount ₹ Assets Amount ₹
Creditors 3,00,000 Fixed Assets 4,50,000
General Reserve  1,50,000 Stock 1,50,000
Capitals
Pranav – 2,00,000Karan – 2,00,000
Rahim – 1,00,000



5,00,000
DebtorsBank 1,50,000
Total 9,50,000 Total 9,50,000

Karan died on 12.6.2017. According to the partnership deed, the legal representatives of the deceased partner were entitled to the following : 

(i) Balance in his Capital Account. 

(ii) Interest on Capital @ 12% p.a. 

(iii) Share of goodwill. Goodwill of the firm on Karan’s death was valued at ₹. 60,000. 

(iv) Share in the profits of the firm till the date of his death, calculated on the basis of last year’s profit. The profit of the firm for the year ended 31.3.2017 was ₹. 5,00,000. 

Prepare Karan’s Capital Account to be presented to his representatives. 

Answer: 

Working Notes:

Interest on Capital = 12/100 x 73/365 x ₹2,00,000 = ₹4,800

Share of Profits = 2/5 x 5,00,000 x 73/365 = ₹40,000

Share of goodwill = 2/5 X ₹60,000 = ₹24,000

Share of General Reserve = 2/5 x ₹1,50,000 = ₹60,000

 

Q.14. Chander and Damini were partners in a firm sharing profits and losses equally. On 31st March, 2017 their Balance Sheet was as follows : 

On 1.4.2017, they admitted Elina as a new partner for 31 rd share in the profits on the following conditions : 

(i) Elina will bring ₹. 3,00,000 as her capital and ₹. 50,000 as her share of goodwill premium, half of which will be withdrawn by Chander and Damini. 

(ii) Debtors to the extent of ₹. 5,000 were unrecorded. 

(iii) Furniture will be reduced by 10% and 5% provision for bad and doubtful debts will be created on bills receivables and debtors. 

(iv) Value of land and building will be appreciated by 20%. 

(v) There being a claim against the firm for damages, a liability to the extent of ₹. 8,000 will be created for the same. 

Prepare Revaluation Account and Partners’ Capital Accounts. 

Answer:

 

Q.15. On 1st April, 2014, KK Ltd. invited applications for issuing 5,000 10% debentures of ₹. 1,000 each at a discount of 6%. These debentures were repayable at the end of 3rd year at a premium of 10%. Applications for 6,000 debentures were received and the debentures were allotted on pro-rata basis to all the applicants. Excess money received with applications was refunded. 

The directors decided to transfer the minimum amount to Debenture Redemption Reserve on 31.3.2016. On 1.4.2016, the company invested the necessary amount in 9% bank fixed deposit as per the provisions of the Companies Act, 2013. Tax was deducted at source by bank on interest @ 10% p.a. 

Pass the necessary journal entries for issue and redemption of debentures. Ignore entries relating to writing off loss on issue of ebentures and interest paid on debentures. 

Answer:

Q.16. Srijan, Raman and Manan were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. On 31st March, 2017 their Balance Sheet was as follows : 

On the above date they decided to dissolve the firm. 

(i) Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5% commission on sale of assets (except cash) and was to bear all expenses of realisation. 

(ii) Assets were realised as follows : 

Plant 85,000 

Stock 33,000 

Debtors 47,000 

(iii) Investments were realised at 95% of the book value. 

(iv) The firm had to pay ₹. 7,500 for an outstanding repair bill not provided for earlier. 

(v) A contingent liability in respect of bills receivable, discounted with the bank had also materialised and had to be discharged for ₹. 15,000. 

(vi) Expenses of realisation amounting to ₹. 3,000 were paid by Srijan. Prepare Realisation Account, Partners’ Capital Accounts and Bank Account. 

OR 

Q.16. Moli, Bhola and Raj were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. Their partnership deed provided for the following : 

(i) Interest on capital @ 5% p.a. 

(ii) Interest on drawing @ 12% p.a. 

(iii) Interest on partners’ loan @ 6% p.a. 

(iv) Moli was allowed an annual salary of ₹. 4,000; 

Bhola was allowed a commission of 10% of net profit as shown by Profit and Loss Account and Raj was guaranteed a profit of ₹. 1,50,000 after making all the adjustments as provided in the partnership agreement. 

Their fixed capitals were Moli : ₹. 5,00,000; 

Bhola : ₹. 8,00,000 and Raj : ₹. 4,00,000. 

On 1st April, 2016 Bhola extended a loan of ₹. 1,00,000 to the firm. The net profit of the firm for the year ended 31st March, 2017 before interest on Bhola’s loan was ₹. 3,06,000. Prepare Profit and Loss Appropriation Account of Moli, Bhola and Raj for the year ended 31st March, 2017 and their Current Accounts assuming that Bhola withdrew ₹. 5,000 at the end of each month, Moli withdrew ₹. 10,000 at the end of each quarter and Raj withdrew ₹. 40,000 at the end of each half year. 

Answer: 

OR

Answer:

 

Q.17. X Ltd. invited applications for issuing 50,000 equity shares of ₹. 10 each. The amount was payable as follows : 

On Application : ₹. 2 per share 

On Allotment : ₹. 2 per share 

On First Call : ₹. 3 per share 

On Second and Final Call : Balance amount Applications for 70,000 shares were received. Applications for 10,000 shares were rejected and the application money was refunded. Shares were allotted to the remaining applicants on a pro-rata basis and excess money received with applications was transferred towards sums due on allotment and calls, if any. Gopal, who applied for 600 shares, paid his entire share money with application. Ghosh, who had applied for 6,000 shares, failed to pay the allotment money and his shares were immediately forfeited. These forfeited shares were re-issued to Sultan for ₹. 20,000; ₹. 4 per share paid up. The first call money and the second and final call money was called and duly received. Pass necessary journal entries for the above transactions in the books of X Ltd. Open Calls-in-Advance Account and Calls-in-Arrears Account wherever necessary. 

OR 

Q.17. A Ltd. invited applications for issuing 1,00,000 shares of ₹. 10 each at a premium of ₹. 1 per share. The amount was payable as follows : 

On Application : ₹. 3 per share 

On Allotment : ₹. 3 per share (including premium) 

On First Call : ₹. 3 per share 

On Second and Final Call : Balance amount 

Applications for 1,60,000 shares were received. 

Allotment was made on the following basis : 

(i) To applicants for 90,000 shares : 40,000 shares 

(ii) To applicants for 50,000 shares : 40,000 shares 

(iii) To applicants for 20,000 shares : full shares 

Excess money paid on application is to be adjusted against the amount due on allotment and calls. 

Rishabh, a shareholder, who applied for 1,500 shares and belonged to category (ii), did not pay allotment, first and second and final call money. 

Another shareholder, Sudha, who applied for 1,800 shares and belonged to category (i), did not pay the first and second and final call money. 

All the shares of Rishabh and Sudha were forfeited and were subsequently re-issued at ₹. 7 per share fully paid. 

Pass the necessary journal entries in the books of A Ltd. Open Calls-in-Arrears Account and Calls-in-Advance Account wherever required.

Answer

OR

Answer:

 

PART B

(Analysis of Financial Statements) 

Q.18. State the primary objective of preparing a Cash Flow Statement.

Answer:The primary objective of Cash Flow Statement is to provide useful information about cash flows (inflows and outflows) of an enterprise during a particular period underoperating, investing and financing activities.

 

Q.19.‘Interest received and paid’ is considered as which type of activity by a finance company while preparing a Cash Flow Statement ?

Answer: Interest received – Operating activity.

Interest paid – Operating activity.

OR

Answer: Interest received and paid – Operating activity.

 

Q.20. Prepare a common size Balance Sheet of KJ Ltd. from the following information : 

Answer:

In case the examinee has prepared only columns (i) and (ii) in the correct order, one mark may be awarded.

 

Q.21. From the following information obtained from the books of Kundan Ltd., calculate the inventory turnover ratio for the years 2015 − 16 and 2016 – 17 :

                                                     2015 − 16(₹)              2016 − 17(₹)

Inventory on 31st March              7,00,000                17,00,000

Revenue from operations           50,00,000               75,00,000

(Gross profit is 25% on cost of revenue from operations)

In the year 2015 − 16, inventory increased by 2,00,000.

Answer:

Inventory turnover ratio = Cost of Revenue from operations/Average inventory

2015-16 :

Cost of Revenue from operations= ₹50,00,000 -₹10,00,000 = ₹40,00,000

Average inventory = Opening inventory + Closing inventory /2

= (₹5,00,000 + ₹7,00,000)/2 

= ₹6,00,000

Inventory turnover ratio = ₹40,00,000/₹6,00,000 = 6.67 times

2016-17 :

Cost of Revenue from operations= ₹75,00,000 – ₹15,00,000 = ₹60,00,000

Average inventory = Opening inventory + Closing inventory/2

= (₹7,00,000 + ₹17,00,000)/2

= ₹12,00,000

Inventory turnover ratio = ₹60,00,000/₹12,00,000 = 5 times

 

Q.22. JW Ltd. was a company manufacturing geysers. As a part of its long term goal for expansion, the company decided to identify the opportunity in rural areas. Initial plan was rolled out for Bhiwani village in Haryana. Since the village did not have regular supply of electricity, the company decided to manufacture solar geysers. The core team consisting of the Regional Manager, Accountant and the Marketing Manager was taken from the Head Office and the remaining employees were selected from the village and neighbourhood areas. At the time of preparation of financial statements, the accountant of the company fell sick and the company deputed a junior accountant temporarily from the village for two months. The Balance Sheet prepared by the junior accountant showed the following items against the Major Heads and Sub-heads mentioned which were not as per Schedule III of the Companies Act, 2013. 

Item Major Head/Sub-Head
Loose Tools  Trade Receivables
Cheques in Hand Current Investments
Term Loan from Bank Other Long-term Liabilities
Computer Software Tangible Fixed Assets

Identify any two values that the company wants to communicate to the society. Also present the above items under the correct major heads and sub-heads as per Schedule III of the Companies Act, 2013. 

Answer:

Values (Any two):

(i) Development of rural areas.

(ii) Sensitivity towards the environment.

(iii) Generation of employment.

(Or any other suitable value)

Item Head Sub-Head
Loose Tools  Current assets Inventories
Cheques in Hand Current assets Cash and Cash Equivalents
Term Loan from Bank Non Current Liabilities Long Term Borrowings
Computer Software Non Current Assets Fixed – Intangible Assets

 

Q.23. From the following Balance Sheet of JY Ltd. as at 31st March 2017, prepare a Cash Flow Statement : 

Balance Sheet of JY Ltd. as at 31.3.2017 

Notes to Accounts :

Additional Information :

₹ 1,00,000, 10% debentures were issued on 31.3.2017.

Answer: 

Working Notes:

Calculation of Net profit before tax:

                                                         ₹

Net Profit for the year           1,25,000

Add Proposed dividend            75,000

Add Provision for tax            1,25,000

                                                    3,25,000

FULL CREDIT IS TO BE GIVEN IF AN EXAMINEE HAS TAKEN ‘SHORT TERM LOANS AND ADVANCES’ AS INCREASE IN CURRENT ASSETS UNDER OPERATING ACTIVITIES.

In that case,

CASH FROM OPERATIONS = ₹2,52,000

CASH GENERATED FROM OPERATING ACTIVITIES = ₹1,77,500

CASH USED IN INVESTING ACTIVITIES = ₹2,12,500

 

PART B 

(Computerised Accounting) 

Q.18. How does the usage of computer sharpen the competitive edge and enhance the profitability of a business ?

Answer: The quick, accurate and timely access to the information, helps decision making fast and correct, hence it helps the business to earn better.

 

Q.19. Give an example to explain the meaning of ‘stored’ and ‘derived’ attribute.

Answer: The information which is stored e.g. date of birth of a person is an example of stored attribute where as when his/her age is calculated automatically is derived attribute.

 

Q.20. Name the value which represents absence of data. Also state the situations which may require the use of these values.

Answer: The value is called “Null value” The three situations in which these can be used are

1. When a particular attribute does not apply to an entry.

2. Value of an attribute is unknown.

3. Unknown because it does not exit.

 

Q.21. Differentiate between desktop database and server database.

Answer: (Any four)

1. Application : Desktop database can be used by a single user server data base can

be used by many users at the same time.

2. Additional provision for reliability : Desktop database

Doesn’t present this but these provisions are available in server based database.

3. Cost : Desktop database tend to cost less than the server database.

4. Flexibility regarding the performance in front end applications : It is not present in desktop database but server database provide this flexibility.

5. Suitability : Desktop database are suitable for small/home offices and server

database are more suitable for large business organisations.

Q.22. Give four limitations of computerised accounting system.

Answer: Following are the limitations of computerised accounting softwares :

1. Faster obsolescence of technology necessitates investment in shorter period of time.

2. Data may be lost or corrupted due to power interruptions.

3. Data are prone to hacking.

4. Un-programmed and un-specified reports cannot be granted .

 

Q.23. ABC Ltd. operates in two cities  Bengaluru and Mangaluru. House Rent Allowance for Bengaluru is ₹ 5,000 and for Mangaluru is ₹ 4,000. Dearness Allowance is calculated on Basic Pay as follows :

15% of Basic Pay if basic pay is less than ₹ 15,000.

10% of Basic Pay if basic pay is greater than ₹ 15,000.

Standard number of days are taken as 30 days in a month.

Calculate the amount using Excel :

(i) Gross Salary of Mr. Mahesh, who is working in Bengaluru. He has availed leave without pay for 3 days and his Basic Pay is ₹ 25,000.

(ii) Gross Salary of Mr. Ranjan, who is working in Mangaluru. Basic Pay of Mr. Ranjan is ₹ 14,000.

Answer: 

Gross salary of Mr. Mahesh and Ranjan

Basic pay of Mahesh Column A1 = 25000

Basic pay of Ranjan column A2 = 14000

Basic pay earned for Mahesh column B1 = A1* 27/30 = 22500

Basic pay earned for Ranjan column B2 = A2 = 14000

HRA for Mahesh Column C1 = 5000

HRA for Ranjan Column C2 = 4000

DA for Mahesh Column D1 = IF (A1>15000, 10/100*B1, 15/100*B1)

DA for Ranjan Column D2 = IF (A2 > 15000, 10/100*B2, 5/100*B2)

D1 = 2250

D2 = 2100

Gross salary for Mahesh = Column E1 = SUM (B1,C1,D1)

Gross salary for Ranjan = Column E2 = SUM (B2,C2,D2)

Mr. Mahesh’s Salary E1 = 22500 + 5000 + 2250 = ₹29750

Mr. Ranjan’s Salary E2 = 14000 + 4000 + 2100 = ₹20100

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