SAMPLE QUESTION PAPER - 4

SUBJECT- ACCOUNTANCY (055)

CLASS XII (2024-25)

Time Allowed: 3 hours Maximum Marks: 80

General Instructions:
1. This question paper contains 34 questions. All questions are compulsory.
2. This question paper is divided into two parts, Part A and B.
3. Part - A is compulsory for all candidates.
4. Part - B has two options i.e. (i) Analysis of Financial Statements and (ii)
Computerised Accounting. Students must attempt only one of the given options.
5. Question 1 to 16 and 27 to 30 carries 1 mark each.
6. Questions 17 to 20, 31and 32 carries 3 marks each.
7. Questions from 21 ,22 and 33 carries 4 marks each
8. Questions from 23 to 26 and 34 carries 6 marks each
9. There is no overall choice. However, an internal choice has been provided in 7
questions of one mark, 2 questions of three marks, 1 question of four marks and 2
questions of six marks.
Part A:- Accounting for Partnership Firms and Companies
1. S, B and J were partners in a firm. T was admitted as a new partner in the partnership [1]
th
firm for 1

5
share of profits.
Sacrificing ratio of S, B and J:

a) 3 : 2 : 1 b) 1 : 1 : 1

c) 2 : 2 : 1 d) 2 : 1 : 1

2. Assertion (A): Each partner is a principal as well as an agent for all the other partners. [1]
Reason (R): As per the definition of Partnership Act, partnership business may be
carried on by all the partners or any of them acting for all.

a) Both Assertion (A) and Reason b) Both Assertion (A) and Reason
(R) are correct, but Reason (R) (R) are correct and Reason (R) is
 is not the correct explanation of the correct explanation of
Assertion (A). Assertion (A).

c) Assertion (A) is correct, but d) Assertion (A) is incorrect, but

Reason (R) is incorrect. Reason (R) is correct.

3. When shares are forfeited, Share Capital Account is debited with: [1]

a) called-up value of shares b) nominal value of shares

c) paid-up value of shares d) market value of shares

OR
Naman Ltd. issued 10,000, 7% Debentures of ₹ 100 each at a discount of ₹ 4. It has a
balance in Securities Premium Reserve of ₹ 25,000. It will write off Discount on Issue of
Debentures as

a) ₹ 40,000 from Statement of b) ₹ 15,000 from Securities

Profit & Loss. Premium and ₹ 25,000 from
Statement of Profit & Loss
(Finance Cost).

c) ₹ 25,000 from Securities d) ₹ 40,000 from Securities

Premium and ₹ 15,000 from Premium.
Statement of Profit & Loss
(Finance Cost)

4. What is gaining ratio: [1]

a) In which profit sharing ratio of b) In which profit sharing ratio of

gaining partners increase gaining partners decrease

c) In which profit sharing ratio of d) In which profit sharing ratio of

sacrificing partners increase sacrificing partners decrease

OR
Veena and Yuvansh are partners. Veena withdrew ₹ 50,000 and Yuvansh withdrew ₹
40,000 during the year for their personal use. There was a loss of ₹ 2,500 during the year.
 As per the partnership deed interest on drawings is to be charged @ 10% p.a
Veena's share of Profit/Loss.

a) Veena's Share of Profit ₹ 3,500 b) Veena's Share of Profit ₹ 3,250

c) Veena's Share of Loss ₹ 3,500 d) Veena's Share of Profit ₹ 1,000

5. A and B are partners in a partnership firm without any agreement. A has withdrawn ₹ [1]
50,000 out of his Capital as drawings. Interest on drawings may be charged from A by
the firm:

a) @5% Per Annum b) @6% Per Month

c) No interest can be charged d) @6% Per Annum

6. Issued 4,000, 12% debentures of ₹ 100 each at a premium of 4%, redeemable at a [1]
premium of 10%. In such case:

a) Premium on Redemption will be b) Loss on Issue will be debited by

credited by ₹ 24,000 ₹ 40,000

c) Loss on Issue will be debited by d) Loss on Issue will be debited by

₹ 24,000 ₹ 56,000

OR
When debentures are issued as secondary securities it is called

a) Issue for consideration other b) Issued at premium

than cash

c) Issue as collateral securities d) Issued at a discount

7. Assertion (A): Shares cannot be allotted unless minimum subscription is received. [1]
Reason (R): SEBI has prescribed that a company issuing shares to public cannot allot
shares unless it receives subscription of 90% of the shares issued.

a) Both A and R are true and R is b) Both A and R are true but R is
the correct explanation of A. not the correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

 8. How to calculate the share of the goodwill of Retiring or deceased partner? [1]

a) Value of the firm’s goodwill × b) Value of the firm’s goodwill ×

outgoing partner's share of profit Sacrificing partner’s share

c) Value of the firm’s goodwill × d) Value of the firm’s goodwill ×

new partner's profit share Gainer partner’s share

OR
X, Y and Z started a business in partnership on 1st October 2020. The profit sharing ratio
was decided among the partners 2 : 1 : 1. Z was guaranteed a profit of ₹ 28,000 p.a.
Deficiency amount (if any) will be borne by X and Y in the ratio of 3 : 2. The firm earned
profit for the year ending 31st March 2021 ₹ 20,000.
How much deficiency is borne by X and Y?

a) X ₹ 13,800 and Y ₹ 9,200 b) X ₹ 5,400 and Y ₹ 3,600

c) X ₹ 10,800 and Y ₹ 7,200 d) X ₹ 12,000 and Y ₹ 6,000

Question No. 9 to 10 are based on the given text. Read the text carefully and answer the [2]
questions:
A, B and C are partners in a firm sharing profits and losses in the ratio of 2:2:1. Their
capitals(Fixed) are ₹ 1,00,000, ₹ 80,000 and ₹ 70,000 respectively. For the year 2018-19,
interest on capital was to be credited to them @ 9% p.a. instead of 12%.

9. What was the net amount should be credited to partner B?

a) ₹ 2,400 b) ₹1,200

c) ₹ 1,500 d) ₹ 1,800

10. What was the net amount should be credited to partner C?

a) ₹ 2,100 b) ₹ 1,700

c) ₹ 2,000 d) ₹ 1,800

11. X and Y are partners in the ratio of 3 : 2. Their capitals are ₹ 2,00,000 and ₹ 1,00,000 [1]
respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of ₹ 15,000
for the year ended 31st March 2023. As per partnership agreement, interest on capital
is treated a charge on profits. Interest on Capital will be:
 a) X ₹ 10,000; Y ₹ 5,000 b) X ₹ 9,000; Y ₹ 6,000

c) X ₹ 16,000; Y ₹ 8,000 d) No Interest will be allowed

12. X Ltd. forfeited 2,000 shares of ₹10 each (which were issued at par) held by Naveen [1]
for non-payment of allotment money of ₹4 per share. The called-up value per share
was ₹ 9. On forfeiture, the amount debited to Share Capital Account will be

a) ₹ 18,000 b) ₹ 2,000

c) ₹ 8,000 d) ₹ 10,000

13. Elpis Ltd. Is registered with authorised capital of ₹ 10,00,000 divided into 1,00,000 [1]
Equity share of ₹ 10 each. Out of which 80,000 shares are offered to the public and
applications were received for 75,000 shares only. Company called ₹ 8 per share till
now.
(a) Authorised share capital (i) 8,00,000
(b) Issued share capital (ii) 6,00,000
(c) Subscribed share capital (iii) 10,00,000
(d) Called up capital (iv) 7,50,000

a) (a) - (iii), (b) - (iv), (c) - (i), (d) - b) (a) - (ii), (b) - (iii), (c) - (i), (d) -
(ii) (iv)

c) (a) - (iii), (b) - (i), (c) - (iv), (d) - d) (a) - (ii), (b) - (iii), (c) - (iv), (d)
(ii) - (i)

14. What is the nature of rent paid to a partner? [1]

a) Nominal Account b) Representative Person’s

Personal Account

c) Artificial Personal Account d) Real Account

15. The incoming partner cannot acquire his share of profits: [1]

a) From one or more partners (not b) From the old partners in their
from all partners) old profit sharing ratio
 c) From the old partners in their d) From the old partners in some
new profit sharing ratio agreed ratio

OR
Mehak and Chehak were partners with capitals of ₹ 40,000 each. They admitted Aadi as a
new partner for 1

5
share in the profits of the firm. Aadi brought ₹ 80,000 as his capital. On
Aadi's admission, the Profit and Loss Account of the firm showed a debit balance of ₹
10,000. Value of goodwill of the firm on Aadi's admission will be:

a) ₹ 2,40,000 b) ₹ 4,00,000

c) ₹ 2,30,000 d) ₹ 2,50,000

16. At the time of dissolution, Loan to Partner is [1]

a) received from the partner. b) transferred to Partner's Capital

Account.

c) transferred to Realisation d) transferred to Partner's Current

Account. Account.

17. P, Q and R are partners sharing profits equally. They decided that in future R will get [3]
1

7
share in profits. On the day of change, firm’s Goodwill is valued at ₹ 42,000. Give
Journal Entries arising on account of change in profit sharing ratio.
[Hint: New Ratios 3

7
:
3

7
:
1

7
. P and Q gain 2

21
each and R sacrifices 4

21
]

18. C and D are partners in a business and their capitals at the end of the year were ₹ [3]
7,00,000 and ₹ 6,00,000 respectively. Calculate their opening capitals from the
following information:
a. Drawings of C and D for the year were ₹ 75,000 and ₹ 50,000 respectively.
b. D introduced capital of ₹ 1,00,000 during the year.
c. Interest on capital credited to the Capital Accounts of C and D were ₹ 15,000 and ₹
10,000 respectively.
d. Interest on drawings debited to the Capital Accounts of C and D were ₹ 7,500 and ₹
5,000 respectively.
e. Share of loss debited to Capital Account of each Partner was ₹ 20,000
 OR
Ananya, Bhavi and Chandni were partners in a firm with capitals of ₹ 3,00,000, ₹ 2,00,000
and ₹ 1,00,000 respectively.
According to the provisions of the partnership deed:
i. Ananya and Chandni were each entitled to a monthly salary of ₹ 1,500.
ii. Bhavi was entitled to a salary of ₹ 4,000 per annum.
The profit for the year ended 31st March, 2022, ₹ 80,000 was divided between the partners
in their profit sharing ratio of 3 : 3 : 2 without providing for the above adjustments.
Pass the necessary adjustment entry to rectify the above omissions in the books of the firm.
Show your working notes clearly.

19. X Ltd. has 4,000 12% debentures of ₹100 each on 1st April 2018. According to the [3]
terms of issue interest on debentures is payable half-yearly on 30th September and
31st March and the rate of tax deducted at source is 10%. Pass necessary journal
entries for interest on debentures for the year 2018-19.

OR
Complete the following journal entries:
Journal Entries in the books of Sundram Ltd.
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Furniture A/c Dr. 3,00,000
To Ravindram Ltd.
3,00,000
(Being furniture purchased)
................................................. Dr. ----
................................................
(Being a part payment made to Ravindram Ltd. by an ----
issue of a promissory note of Rs. 1,00,000)
................................................ Dr. ----
............................................... ----
............................................... ----
(Being the balance of payment made by issue of
 Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
16,000 equity shares of Rs. 10 each at a premium of
25%)

20. Average profit of Sharma & Co. is ₹ 50,000 per year. Average capital employed in the [3]
business is ₹ 3,00,000. If the normal rate of return on capital employed is 10%,
calculate goodwill of the firm by:
i. Super Profit Method at three years' purchase; and
ii. Capitalisation of Super Profit Method.

21. Neha Fabrics Ltd. invited applications for issuing 5,00,000 shares of ₹ 10 each at a [4]
premium of ₹ 4 per share. The amounts were payable as follows:
On Application and Allotment ₹ 8 per share.
On First & Final Call - Balance (including premium of ₹ 4)
Applications were received for 6,50,000 shares and allotment was made as follows:
i. To applicants for 1,40,000 shares - 100% shares.
ii. To applicants for 60,000 shares - Nil
iii. Balance of the applicants were allotted shares on pro-rata basis.
Excess money received with applications was adjusted towards sums due on first and
final call. Kavita, who belonged to category (i) and was allotted 6,000 shares and
Hitesh, who belonged to category (ii) and who had applied for 5,000 shares failed to
pay the first and final call money. Their shares were forfeited. 60% of forfeited shares
of Kavita and Hitesh were re-issued at a discount of ₹ 1 per share fully paid-up.
Pass necessary journal entries for the above transactions in the books of the company.

22. Anju, Manju and Sanju sharing profit in the ratio of 3 : 1 : 1 decided to dissolve their [4]
firm. On March 31, 2014 their position was as follows:
Balance Sheet Anju, Manju and Sanju
as on March 31, 2017
Liabilities Amount ₹ Assets Amount ₹
Creditors 60,000 Cash at Bank 55,000
Loan 15,000 Stock 83,000
Capitals: Furniture 12,000
 Anju 2,75,000 Debtors 2,42,000
Manju 1,10,000 Less: Provision for doubtful debts 12,000 2,30,000
Sanju 1,00,000 4,85,000 Buildings 2,00,000
Manju’s loan 20,000
5,80,000 5,80,000
It is agreed that:
i. Anju takes over the Furniture at ₹ 10,000 and Debtors amounting to ₹ 2,00,000 at ₹
1,85,000. Anju also agrees to pay the creditors,
ii. Manju is to take over Stock at book value and Buildings at book value less 10%,
iii. Sanju is to take over remaining Debtors at 80% of book value and responsibility for
the discharge of the loan,
iv. The expenses of dissolution amounted to ₹ 2,200.
Prepare Realisation Account, Bank Account, and Capital Accounts of the partners.

23. Meson Ltd. was registered with a capital of ₹ 4,00,000 in shares of ₹ 100 each. It [6]
issued 2,000 of such shares payable ₹ 25 per share on application; ₹ 25 on allotment; ₹
20 on first call; and the balance as and when required.
All moneys payable on application and allotments were duly received; but when the
first call of ₹ 20 per share was made, one shareholder holding 100 shares failed to pay
the amount due and another shareholder holding 200 shares paid them in full. Record
these transactions in the journal of the Company.

OR
Petromax Ltd. issued 50,000 shares of Rs. 10 each at a premium of Rs. 2 per share payable
as Rs 3 on an application, Rs 5 including premium on an allotment and the balance in
equal installments over two calls. Applications were received for 92,000 shares and the
allotment was done as under:
A. Applicants of 40,000 shares - Allotted 30,000 Shares
B. Applicants of 40,000 shares - Allotted 20,000 Shares
C. Applicants of 12,000 shares - Nil
Suresh, who had applied for 2,000 shares (Category A) did not pay any money other than
application money.
 Chander, who was allotted 800 shares (Category B) paid the call money due along with
allotment.
All other allottees paid their dues as per schedule. Pass necessary Journal entries in the
books of Petromax Ltd. to record the above.

24. X and Y are partners sharing profits in the ratio of 2 : 1. Their Balance Sheet as at 31st [6]
March, 2023 was:
Liabilities ₹ Assets ₹
Sundry Creditors 25,000 Cash/Bank 5,000
General Reserve 18,000 Sundry Debtors 15,000
Capital A/cs: Stock 10,000
X 75,000 Investments 8,000
Y 62,000 1,37,000 Printer 5,000
Fixed Assets 1,37,000
1,80,000 1,80,000
They admit Z into partnership on 1st April, 2023 on the following terms:
i. Z brings in ₹ 40,000 as his capital and he is given th share in profits.
1

ii. Z brings in ₹ 15,000 for goodwill, half of which is withdrawn by old partners.
iii. Investments are valued at ₹ 10,000. X takes over Investments at this value.
iv. Printer is to be reduced (depreciated) by 20% and Fixed Assets by 10%.
v. An unrecorded stock on 31st March, 2023 is ₹ 1,000.
vi. By bringing in or withdrawing cash, the Capitals of X and Y are to be made
proportionate to that of Z on their profit-sharing basis.
Pass Journal entries, prepare Revaluation Account, Capital Accounts and new Balance
Sheet of the firm.

OR
L, M and N were partners in a firm sharing profits in the ratio of 2 : 1 : 1. On 1st April,
2013 their balance sheet was as follows:
Balance Sheet
as at 1st April, 2013
 Amount Amount
Liabilities Assets
(Rs) (Rs)

General Reserve 4,40,000 Land 8,00,000

Workmen's Compensation
3,60,000 Building 6,00,000
Fund
Creditors 2,40,000 Furniture 2,40,000
Capital A/cs Debtors 4,00,000
(-) Provision for Doubtful Debts
L 6,00,000 3,80,000
20,000
M 4,80,000 Stock 4,40,000
N 4,80,000 15,60,000 Cash 1,40,000
26,00,000 26,00,000
======== =======

On the above date, N retired. The following were agreed:

i. Goodwill of the firm was valued at Rs 6,00,000.
ii. Land was to be appreciated by 40% and building was to be depreciated by Rs 1,00,000.
iii. Furniture was to be depreciated by Rs 30,000.
iv. The liabilities for workmen’s compensation fund was determined at Rs 1,60,000.
v. Amount payable to N was transferred to his loan account.
vi. Capitals of L and M were to be adjusted in their new profit sharing ratio and for this
purpose current accounts of the partners will be opened.
Prepare revaluation account, partner's capital accounts and the balance sheet of the new
firm.

25. X, Y, and Z were partners sharing profits in the ratio 3: 2: 1. On 31st March 2008, their [6]
Balance Sheet stood as under :
Liabilities Amt(Rs.) Assets Amt(Rs.)
Capitals: Cash at Bank 70,000
X 75,000 Investments 50,000
 Liabilities Amt(Rs.) Assets Amt(Rs.)
Y 70,000 Patents 15,000
Z 50,000 1,95,000 Stock 25,000
Creditors 72,000 Debtors 20,000
General Reserve 24,000 Buildings 75,000
Machinery 36,000
2,91,000 2,91,000

Z died on May 31st, 2008. It was agreed that

a. Goodwill was valued at 3 years’ purchase of the average profits of the last five
years, which were 2003: Rs. 40,000; 2004: Rs. 40,000; 2005: Rs. 30,000; 2006: Rs.
40,000 and 2007: Rs. 50,000.
b. Machinery was valued at Rs. 70,000, Patents at Rs. 20,000 and Buildings at Rs.
66,000.
c. For the purpose of calculating Z’s share of profits until the date of death, it was
agreed that the same be calculated based on the average profits for the last 2 years.
d. The executor of the deceased partner is to be paid the entire amount due by means
of a cheque.
Prepare Z’s Capital Accounts to be rendered to the executor and also a journal entry
for the settlement of the amount due to Z’s executor.

26. On 1st June, 2022, Y Ltd. issued 6,000, 12% Debentures of ₹ 100 each at par [6]
redeemable at a premium of 7% at the end of third year.
Pass the Journal entries for issue of Debentures and writing off Loss on Issue of
Debentures. Also prepare Loss on Issue of Debentures Account.

Part B :- Analysis of Financial Statements

27. When bad position of the business is tried to be depicted as good, it is known as: [1]

a) Personal Bias b) All of these

c) Price Level Changes d) Window Dressing

OR
 Financial Statements are prepared on certain basic assumptions (pre-requisites) known as
________

a) Postulates b) Basis of Accounting

c) Provisions of Companies Act, d) Accounting Standards

2013

28. Working Capital 30,000; current ratio 3 : 1 Current liabilities will be: [1]

a) 15,000 b) 30,000

c) 22,500 d) 7,500

29. Paid ₹ 5,00,000 to acquire shares in Neligare Industries and received a dividend of ₹ [1]
30,000 after acquisition. This transaction will result in:

a) Cash outflow from financing b) Cash outflow from investing

activities ₹ 4,70,000 activities ₹ 4,70,000

c) Cash inflow from investing d) Cash inflow from financing

activities ₹ 4,70,000 activities ₹ 4,70,000

OR
GSC Ltd. purchased machinery of ₹ 10,00,000 issuing a cheque of ₹ 2,50,000 and 10%
Debentures of ₹ 7,50,000. In the Cash Flow Statement, the transaction will be shown as:
i. Outflow under Investing Activity ₹ 10,00,000, inflow under Financing Activity as
Receipt for Debentures ₹ 7,50,000.
ii. Outflow under Investing Activity ₹ 2,50,000.
iii. Inflow of ₹ 7,50,000 as Financing Activity.
iv. None of these.

a) only ii b) i and ii

c) iv and i d) iii and iv

30. Under which type of activity will you classify the sale of shares of another company [1]
while preparing cash flow statement?
 a) Financing Activity b) Investing and Financing

c) Operating Activity d) Investing Activity

31. Identify the major heads and sub-heads under which the following items will be [3]
shown in the Balance Sheet of a company as per Schedule III of Companies Act, 2013:
i. Patents
ii. Patents being developed by the Company
iii. Current Maturities of Long term Debts
iv. Computer and related equipment
v. Goods acquired for trading
vi. 10% Debentures
vii. Debentures with maturity period in current financial period.

32. From the following particulars determine the Closing Debtors:- [3]
₹
Total Revenue from Operations 24,00,000
Cash Revenue from Operations 4,60,000
Revenue from Operations Returns (out of credit revenue from operations) 20,000
Trade Receivables Turnover Ratio 6 Times
Opening Debtors 2,50,000
Opening B/R 14,000
Closing B/R 12,000

33. Following information is related to Harsh Ltd. [4]

(₹ in Lakhs)
31.3.2023 31.3.2022
Particulars
₹ ₹
Equity Share Capital 16.00 16.00
Preference Share Capital 2.00 2.00
Reserves and Surplus 5.40 4.00
 Non-Current Liabilities 14.40 14.00
Current Liabilities 7.20 4.00
Non-Current Assets
Property, Plant and Equipment and Intangible Assets 30.60 28.00
Current Assets 14.40 12.00
You are required to prepare a Common Size Balance Sheet.

OR
From the following particulars obtained from the books of Mark Ltd., prepare a
Comparative Statement of Profit and Loss:
2017-18 2016-17
Particulars Note No.
(₹) (₹)
Revenue from operations 50,00,000 40,00,000
Purchase of stock-in trade 40,00,000 30,00,000
Changes in inventory 10,00,000 8,00,000
Other expenses 5,00,000 4,00,000
Other incomes 2,50,000 2,00,000

34. From the following Balance Sheets of XYL limited, prepare Cash Flow Statement: [6]
Note 31.3.2023 31.3.2022
Particulars
No. (₹) (₹)
I. EQUITY AND LIABILITIES:
(1) Shareholder’s Funds:
{a) Share Capital 5,00,000 4,50,000
(b) Reserve and Surplus 1 1,18,000 70,000
(2) Current Liabilities
(a) Trade Payables 1,49,000 1,17,000
(b) Short term Provisions (Provision for Tax) 50,000 40,000
TOTAL 8,17,000 6,77,000
II. ASSETS:
(1) Non-Current Assets:
(a) Property , Plant and Equipment and
Intangible Assets
(i) Property, Plant and Equipment 2 3,70,000 2,80,000
(ii) Intangible Assets 3 90,000 1,15,000
(2) Current Assets:
(a) Inventory 1,09,000 77,000
(b) Trade Receivables 2,30,000 1,80,000
(c) Cash & Cash Equivalents 18,000 25,000
TOTAL 8,17,000 6,77,000
Notes:
31.3.2023 (₹) 31.3.2022 (₹)
(1) Reserve & Surplus:
General Reserve 70,000 40,000
Profit & Loss Balance 48,000 30,000
1,18,000 70,000
(2) Property, Plant and Equipment:
Land and Building 1,70,000 2,00,000
Plant 2,00,000 80,000
3,70,000 2,80,000
(3) Intangible Assets:
Goodwill 90,000 1,15,000
Additional Information:

a. Contingent Liability 31.3.2023 31.3.2022

Proposed Dividend (₹) 50,000 42,000
b. Depreciation of ₹ 10,000 and ₹ 20,000 has been charged on plant, land and
buildings respectively.
c. An interim dividend of ₹ 20,000 has been paid.
d. Income tax of ₹ 35,000 has been paid.
e. Rent Received during the year ₹ 10,000.
 SOLUTION
SAMPLE QUESTION PAPER - 4
SUBJECT- ACCOUNTANCY (055)
CLASS XII (2024-25)
Part A:- Accounting for Partnership Firms and Companies
1.
(b) 1 : 1 : 1
Explanation:
When old ratio is given and incoming partner's new share is given then old ratio is the sacrificing ratio.
2.
(b) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion
(A).
Explanation:
Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion
(A).
3. (a) called-up value of shares
Explanation:
The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on
shares. It credits the Shares Allotment Amount or Shares Call Account with amount called-up on
forfeited shares but due from the shareholders.
OR
(c) ₹ 25,000 from Securities Premium and ₹ 15,000 from Statement of Profit & Loss (Finance Cost)
Explanation:
₹ 25,000 from Securities Premium and ₹ 15,000 from Statement of Profit & Loss (Finance Cost).
4. (a) In which profit sharing ratio of gaining partners increase
Explanation:
Gaining Ratio is calculated at the time of admission or retirement or death of a partner. It is the excess of
the new ratio over the old ratio of old partners except for a retired or deceased partner. The formula for
gaining ratio:
Gaining Ratio = New Ratio - Old ratio
OR
(d) Veena's Share of Profit ₹ 1,000
Explanation:
Interest on Drawings:
Veena = 50,000 X 10/100 X 6/12 = 2,500
Yuvansh = 40,000 X 10/100 X 6/12 = 2,000
Profit= Interest on drawings - loss
 = 4,500 - 2,500 = 2,000
Profit would be distributed equally. So Veena’s share of profit = 1,000
5.
(c) No interest can be charged
Explanation:
No interest can be charged
6.
(b) Loss on Issue will be debited by ₹ 40,000
Explanation:
Loss on Issue will be debited by ₹ 40,000
Loss on issue of debenture = (4,000× 100) × 10%
Loss on issue of debenture = ₹ 40,000
OR

(c) Issue as collateral securities

Explanation:
Issue as collateral securities
7. (a) Both A and R are true and R is the correct explanation of A.
Explanation:
Both A and R are true and R is the correct explanation of A.
8. (a) Value of the firm’s goodwill × outgoing partner's share of profit
Explanation:
At the time of retirement, the share of goodwill is calculated for the retired or deceased partner as
follows: Value of the firm’s goodwill × His Share of profit
OR

(b) X ₹ 5,400 and Y ₹ 3,600

Explanation:
Share of profit comes to Rs.9000 which is divine in the ratio 3:2 between X and Y.
9. (a) ₹ 2,400
Explanation:
₹ 2,400
10. (a) ₹ 2,100
Explanation:
₹ 2,100
11.
(c) X ₹ 16,000; Y ₹ 8,000
Explanation:
200000x8%=16000
 100000x8%=8000
12. (a) ₹ 18,000
Explanation:
The company debits a certain amount to the share capital at the time of forfeiture of shares which is
always the called up value. And the called-up value is that amount which any company demands from its
shareholders periodically every year.
The share capital is debited because the called up amount which the company was expecting from was
shareholders has not been deposited and thus they have to reduce the capital balance by debiting share
capital account.
Share capital amount can be calculated as under:
Share Capital Amount = Called up value per share × No. of shares Substitute values in the above
equation
Share Capital Amount = ₹ 9 × 2000 shares = ₹ 18,000
The amount debited to share capital is ₹ 18,000.
13.
(c) (a) - (iii), (b) - (i), (c) - (iv), (d) - (ii)
Explanation:
(a) - (iii), (b) - (i), (c) - (iv), (d) - (ii)
14. (a) Nominal Account
Explanation:
Rent paid to a partner is an expense for the business. All expenses and losses are considered as Nominal
account. Rent paid to the partner is a charge against the profit and it will be paid whether there is profit
or loss in the business. Rent paid to the partner is expenses hence charged from P& L A/c.
15.
(c) From the old partners in their new profit sharing ratio
Explanation:
A new partner can acquire his share of profits from the old partners in their old profit sharing ratio or
from one partner or from the old partners equally. But he cannot acquire his share of profit from the old
partners in the new profit sharing ratio because the new profit sharing ratio is fixed only after the
admission of the new partner. New partner only can get his share from only old partner or partners.
OR

(d) ₹ 2,50,000
Explanation:
₹ 2,50,000
Total capital of the firm on the basis of new partner capital = 80,000

1
= 4,00,000
5

Total capital of all partner = 40,000 + 40,000 + 80,000 - 10,000 = 1,50,000

Goodwill = 4,00,000 - 1,50,000 = 2,50,000
16. (a) received from the partner.
Explanation:
received from the partner.
17. Old Ratio of P, Q and R = 1

3
:
1

3
:
1

New Ratio of P, Q and R = 3

7
:
3

7
:
1

Sacrifice or Gain:
7 − 9
P= 1

3
−
3

7
=
21
=
2

21
(Gain)
7 − 9
Q= 1

3
−
3

7
=
21
=
2

21
(Gain)
7 − 3
R= 1

3
−
1

7
=
21
=
4

21
(Sacrifice)
In the books of ....
Journal
Dr. Cr.
Date Particular L.F.
(₹) (₹)
April
P's Capital A/c (2/21 of 42,000) Dr. 4,000
1
Q's Capital A/c (2/21 of 42,000) Dr. 4,000
To R's Capital A/c (4/21 of 42,000)
(R compensated by P and Q for the sacrifice made by him)(Refer 8,000
working Note)
18. CALCULATION OF OPENING CAPITAL
Particulars C (₹) D (₹)
Capitals at the end 7,00,000 6,00,000
Add: Drawings during the year 75,000 50,000
Interest on Drawings 7,500 5,000
Share of Loss for the year 20,000 20,000
8,02,500 6,75,000
Less: Capital Introduced during the year ... 1,00,000
Interest on Capital 15,000 (15,000) 10,000 (1,10,000)
Capitals in the beginning 7,87,500 5,65,000
OR
Books of Ananya, Bhavi and Chandni
Journal
Amount Amount
Date Particulars L.F
(₹) (₹)
 2022 March
Bhavi’s Capital A/c Dr. 11,000
31
To Ananya’s Capital A/c 3,000
To Chandani’s Capital A/c
(Adjustment entry passed for omission of salary to 8,000
partners)
Table Showing Adjustments
Particulars Ananya (₹) Bhavi (₹) Chandni (₹) Firm (₹)
Salary to be credited 18,000 4,000 18,000 40,000
₹ 40,000 to be debited in 3 : 3 : 2 15,000 15,000 10,000 40,000
Difference 3,000 11,000 8,000
Cr. Dr. Cr.
19. X Ltd.
Journal
Date Particulars L.F. (₹) (₹)
2018 Sep
Debenture Interest Account ... Dr. 24,000
30
To Debenture holders Account 21,600
To TDS Payable Account 2,400
(Being Debenture Interest due to debenture holders, TDS deducted
@10%)
" Debenture holders A/c ... Dr. 21,600
TDS Payable A/c ... Dr. 2,400
To Bank A/c 24,000
(Being Payment made to Debenture holders and tax deposited)
2019 Mar
Debenture Interest A/c ... Dr. 24,000
31
To Debenture holders A/c 21,600
To TDS Payable A/c 2,400
(Being Debenture Interest due to debenture holders, TDS @10%)
" Debenture holders A/c ... Dr. 21,600
TDS Payable A/c ... Dr. 2,400
To Bank A/c 24,000
 (Being Payment made to Debenture holders and tax deposited)
" Statement of Profit and Loss ... Dr. 48,000
To Debenture Interest A/c 48,000
(Being Debenture Interest account transferred to Statement of Profit
and Loss)
OR
In the books of Sundram Ltd.
Journal Entries
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Furniture A/c Dr. 3,00,000
To Ravindram Ltd.
3,00,000
(Being furniture purchased)
Ravindram Ltd. Dr. 1,00,000
To Bills Payable A/c
(Being a part payment made by an issue of a promissory note of Rs. 1,00,000
1,00,000)
Ravindram Ltd. Dr. 2,00,000
To Equity Share Capital A/c 1,60,000
To Securities Premium Reserve A/c
(Being the balance of payment made by issue of 16,000 equity shares 40,000
of Rs. 10 each at a premium of 25%)
Calculation Of Amount Of Security Premium Reserve = 16,000* 10* 25% = 40,000
It is noted that securities premium account is shown in the balance sheet under the head reserve and
surplus.
20. i. Goodwill = Super Profit × No. of Years of Purchase
= 20,000 × 3 = ₹ 60,000
ii. Goodwill = Super Profit × 100

Normal Rate of Return

= 20,000 × 100

10
= ₹ 2,00,000
Working Notes:
Average Profit = ₹ 50,000 (given)
Normal Rate of Return
Normal Profit = Capital Employed × 100

= 3,00,000 × 10

100
= ₹ 30,000
Super Profit = Average Profit - Normal Profit
Super Profit= 50,000 - 30,000 = ₹ 20,000.
21. Applied Allotted
Category (I) 1,40,000 1,40,000
Category (II) 60,000 0
Category (III) 4,50,000 3,60,000
Total 6,50,000 5,00,000
Working Note of Category (III)
i. Excess money Received on Application & Allotment
= 4,50,000 shares - 3,60,000 shares
= 90,000 share × ₹ 8
= ₹ 7,20,000
Entire excess of ₹ 7,20,000 will be Adjusted on first & final call
ii. Number of share allotted to Hitesh
= 5,000 × 3,60,000

4,50,000

= 4,000 shares
Excess money received on application and allotment
= (5,000 share - 4,000 shares) × ₹ 8
= ₹ 8,000
Entire excess of ₹ 8,000 will Adjusted on first & final call
Amount not received on first & final call
= (4,000 share× ₹ 6) - ₹ 8,000
= ₹ 24,000 - ₹ 8,000
Not received = ₹ 16,000
Journal Entry
Particulars L.F. Amount (Dr.) Amount (Cr.)
Bank A/c Dr. 52,00,000
To Share Application & Allotment 52,00,000
(Amount received on Application & Allotment)

Share Application & Allotment A/c Dr. 52,00,000

To Share Capital A/c 40,00,000
To Share first & final call A/c 7,20,000
To Bank (6,000 × ₹ 8) 4,80,000
(Amount transferred to share capital)

Share first & final call A/c Dr. 30,00,000

To Share Capital 10,00,000
To Security Premium 20,00,000
(Share first & final call made)

Bank A/c Dr. 22,28,000

To Share first & final call A/c 22,28,000
(Amount received on first & final call)

Share Capital A/c Dr. 60,000

Security Premium A/c Dr. 24,000
To Share forfeiture 48,000
To Share first & final call 36,000
(Kavita Share forfeited)

Share Capital A/c Dr. 40,000

Security Premium A/c Dr. 16,000
To Share forfeiture 40,000
To Share first & final Call 16,000
(Hitesh share forfeited)

Bank A/c Dr. 54,000

Share forfeiture a/c Dr. 6,000
To Share Capital (6,000 × 10) 60,000
(Share reissued at discount)

Share forfeiture A/c Dr. 46,800

To Capital Reserve 46,800
(Amount transfer to Capital Reserve)
Amount Received on First & Final Call:
Particulars Amount (₹)
Share first & final call 30,00,000
Less: Excess amount adjusted (7,20,000)
Less: Amount of Kavita (6,000 × 6) (36,000)
Less: Amount of Hitesh (16,000)
Net amount received 22,28,000
 Amount of forfeiture on 6,000 share
= 48,000+40,000

6,000+4,000
× 6, 000

= ₹ 52,800
Amount transferred to capital reserve
= ₹ 52,800 - ₹ 6,000
= ₹ 46,800
22. Books of Anju, Manju and Sanju
Realisation Account
Dr. Cr.
Amount Amount
Particulars Particulars
₹ ₹
Stock 83,000 Provision for doubtful debts 12,000
Furniture 12,000 Creditors 60,000
Debtors 2,42,000 Loan 15,000
Debtors 2,00,000 Anju’s capital:
Anju capital (creditors) 60,000 Furniture 10,000
Sanju capital (loan) 15,000 Debtors 1,85,000 1,95,000
Bank (realisation
2,200 Manju’s capital:
expenses)
Stock 83,000
Buildings 1,80,000 2,63,000
Sanju’s capital: (remaining debtors less 20% of book
33,600
value)
Loss transferred to:
Anju’s capital 21,360
Manju’s capital 7,120
Sanju’s capital 7,120 35,600
6,14,200 6,14,200
Partners Capital Accounts
Dr. Cr.
Manju Manju
Date Particulars J.F. Anju ₹ Sanju ₹ Date Particulars J.F. Anju ₹ Sanju ₹
₹ ₹
 Realisation
1,95,000 2,63,000 33,600 Balance b/d 2,75,000 1,10,000 1,10,000
(assets)
Realisation Realisation
21,360 7,120 7,120 60,000 - -
(loss) (creditors)
Bank 1,18,640 - 74,280 Realisation - - 15,000
Manju loan
- 20,000
(loan)
Bank - 1,40,120 -
3,35,000 2,70,120 1,15,000 3,35,000 2,70,120 1,15,000
Alternatively, Manju's loan may be first paid through bank account then the amount payable by Manju
on account of debit balance in her capital account. ₹1,60,120 can be corrected form her.
Bank Account
Dr. Cr.
Date 2017 Particulars Amount ₹ Date 2017 Particulars Amount ₹
Balance b/d 55,000 Realisation (expenses) 2,200
Manju’s capital 1,40,120 Anju’s capital 1,18,640
Sanju’s capital 74,280
1,95,120 1,95,120
23. JOURNAL
Date Particulars L.F. Dr. (₹) Cr. (₹)
Bank A/c Dr. 50,000
To Share Application A/c
50,000
(Application money received)

Share Application A/c Dr. 50,000

To Share Capital A/c
50,000
(Application money transferred to Share Capital A/c)

Share Allotment A/c Dr. 50,000

To Share Capital A/c
50,000
(Allotment due)

Bank A/c Dr. 50,000

To Share Allotment A/c
50,000
(Allotment money received)
 Share First Call A/c Dr. 40,000
To Share Capital A/c
40,000
(First call due on 2,000 shares @ ₹ 20 per share)

Bank A/c Dr. 44,000

To Share First Call A/c 38,000
To Calls in Advance A/c (200 × ₹ 30) 6,000
Alternatively*
Bank A/c Dr. 44,000
Calls in Arrears A/c (100 × ₹ 20) Dr. 2,000
To Share First Call A/c 40,000
To Calls in Advance A/c (200 × ₹ 30)
(First Call received on 1,900 shares @ ₹ 20 per share; plus second call 6,000
received in advance on 200 shares @ ₹ 30 per share)
*Alternative entry debiting Calls in Arrears A/c can be passed in all the questions.
BALANCE SHEET OF MESON LTD.
as at ________
Note Current Previous
Particulars
No. year year
I. EQUITY AND LIABILITIES: ₹ ₹
Shareholder’s Funds:
(a) Share Capital 1 1,38,000
Current Liabilities:
Other Current Liabilities 2 6,000
1,44,000
II. ASSETS:
Current Assets:
Cash and Cash Equivalents 3 1,44,000
Notes to Accounts:
₹ ₹
(1) Share Capital
Authorised: 4,00,000
4,000 shares of ₹ 100 each
Issued:
2,000 shares of ₹ 100 each 2,00,000
Subscribed but not Fully Paid Capital:
2,000 shares of ₹ 100 each ₹ 70 called up 1,40,000
Less: Calls in arrears (2,000) 1,38,000
(2) Other Current Liabilities:
Calls in Advance 6,000
(3) Cash and Cash Equivalents:
Cash at Bank 1,44,000
Hint: In this question second call is not made by the directors, hence the entries are to be passed upto
first call only.
OR
Books of Petromax Ltd.
Journal Entries
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Bank A/c Dr. 2,76,000
To Share Application A/c
(Being the application money received on 92,000 shares @ Rs 3 per 2,76,000
share)
Share Application A/c Dr. 2,76,000
To Share capital A/c (50,000× Rs. 3) 1,50,000
To Bank A/c (12,000 × Rs. 3) 36,000
To Share Allotment A/c (30,000× Rs. 3)
90,000
(Being the share application money adjusted)
Share Allotment A/c (50,000 × Rs. 5) Dr. 2,50,000
To Share Capital A/c (50,000× Rs. 3) 1,50,000
To Securities Premium Reserve A/c (50,000 × Rs. 2)
1,00,000
(Being the allotment money due on 50,000 shares)
Bank A/c (W.N. 4) Dr. 1,57,200
Calls-in-Arrears A/c Dr. 6,000
To Share Allotment A/c 1,60,000
To Calls-in-Advance A/c 3,200
(Being the allotment money received except for 1,500 shares of
Date Particulars L.F. Dr.(Rs.) Cr.(Rs.)
Suresh and call money is also received in advance for 800 shares)
Share First Call A/c (50,000 × Rs. 2) Dr. 1,00,000
To Share Capital A/c
1,00,000
(Being the first call money due on 50,000 shares)
Bank A/c Dr. 95,400
Calls-in-Advance A/c (800 × Rs. 2) Dr. 1,600
Calls-in-Arrears A/c (1,500 × Rs. 2) Dr. 3,000
To Share First Call A/c
(Being the first call money received except for 1,500 shares and 1,00,000
calls-in-advance adjusted towards 800 shares on first call money)
Share Final Call A/c Dr. 1,00,000
To Share Capital A/c
1,00,000
(Being the final call money due on 50,000 shares)
Bank A/c Dr. 95,400
Calls-in-Advance A/c Dr. 1,600
Calls-in-Arrears A/c Dr. 3,000
To Share Final Call A/c
(Being the final call money received except for 1,500 shares and 1,00,000
calls-in-advance adjusted towards 800 shares)
Working Notes:
1. Money due from Suresh on Allotment:
i. Number of shares allotted to Suresh = 30,000/40,000 × 2,000 = 1,500 Shares.
ii. Application money paid by Suresh = 2,000 × Rs 3 = Rs 6,000.
iii. Application money required = 1,500 × Rs 3 = Rs 4,500.
iv. Excess application money adjusted on allottment = [(ii) Rs. 6,000 — (iii) Rs. 4,500] = Rs. 1,500.

v. Money due from Suresh on allotment = 1,500 × Rs 5 7,500

Less : Excess application money adjusted (iv) 1,500
Money due from Suresh on allotment 6,000

2. Calculation of Money received on Allotment:

Total amount due on allotment 2,50,000
Less : Excess application money adjusted 90,000
1,60,000
 Calculation of Money received on Allotment:
Less : Money not paid by Suresh (WN 1) 6,000
Money received on Allotment: 1,54,000
3. Calls-in-Advance in case of 800 shares = 800 × Rs. 4 = Rs 3,200
4. Total Money received at the Time of Allotment
= Rs. 1,54,000 (Note 2) + Rs. 3,200 (Note 3) = Rs. 1,57,200
5. The Companies Act 2013 (Sec 52(1)) requires that the amount of premium received on securities to be
credited to Securities Premium Account. Securities Premium is a capital receipt which is shown under
the head Reserve & Surplus on the liability side of the balance sheet.
6. If a shareholder defaults in payment of the call amount due on allotment or on any calls according to
the terms, the amount not received against the amount called is Calls in arrears. The unpaid amount
may or may not be transferred to Calls in arrears account. Company can charge interest on calls in
arrears as per mentioned in articles of association or 6% as per Table F(if articles are silent). The
Directors have right to wave the interest.
24. In the books of the firm
Journal Entries
Debit Credit
Date Particulars L.F.
(₹) (₹)
2023
Revaluation A/c Dr. 14,700
Apr-01
To Typewriter A/c 1,000
To Fixed Assets A/c
(Decrease in value of typewriter and fixed assets transferred to 13,700
Revaluation Account)

Apr-01 Unrecorded stock A/c Dr. 1,000

Investment A/c Dr. 2,000
To Revaluation A/c
(Increase in Unrecorded stock and investment transferred to 3,000
Revaluation Account)

Apr-01 X’s Capital A/c Dr. 7,800

Y’s Capital A/c Dr. 3,900
To Revaluation A/c
(Revaluation loss transferred to old partners X and Y’s Capital 11,700
Account in their old profit sharing ratio)
Apr-01 Reserve Fund A/c Dr. 18,000
To X’s Capital A/c 12,000
To Y’s Capital A/c
(Reserve Fund distributed among old partners in old profit 6,000
sharing ratio)

Apr-01 Cash A/c Dr. 55,000

To Z’s Capital A/c 40,000
To Premium for Goodwill A/c
15,000
(Z brought capital and share of goodwill)

Apr-01 Premium for Goodwill A/c Dr. 15,000

To X’s Capital A/c 10,000
To Y’s Capital A/c
(Premium for Goodwill distributed between X and Y in their 5,000
sacrificing ratio i.e 2 : 1)

Apr-01 X’s Capital A/c Dr. 5,000

Y’s Capital A/c Dr. 2,500
To Cash
7,500
(Half of the Premium for Goodwill withdrawn by X and Y)

Apr-01 X’s Capital A/c Dr. 10,000

To Investments A/c
10,000
(X took over the Investment)

Apr-01 Cash A/c Dr. 5,800

To X’s Capital A/c
5,800
(X’ brought cash to make up deficiency in capital)

Apr-01 Y’s Capital A/c Dr. 26,600

To Cash A/c
26,600
(Y withdrew excess capital after all adjustments)
Cash/Bank Account
Dr. Cr.
Particulars (₹) Particulars (₹)
To Balance b/d 5,000 By X’s Capital A/c 5,000
To Z’s Capital A/c 40,000 By Y’s Capital A/c 2,500
To Premium for Goodwill A/c 15,000 By Y’s Capital A/c 26,600
To X’s Capital A/c 5,800 By Balance c/d 31,700
65,800 65,800
Revaluation Account
Dr. Cr.
Particulars (₹) Particulars (₹)
To Printer A/c (5,000 × 20%) 1,000 By Investment A/c 2,000
To Fixed Assets A/c (1,37,000 × 10%) 13,700 By Unrecorded stock A/c 1,000
By Revaluation Loss transferred to:
X Capital A/c 7,800
Y Capital A/c 3,900
14,700 14,700
Partners’ Capital Accounts
Dr. Cr.
Particulars X Y Z Particulars X Y Z
To Revaluation A/c 7,800 3,900 By Balance b/d 75,000 62,000
To Investment A/c 10,000 By Reserve Fund A/c 12,000 6,000
To Cash A/c 5,000 2,500 By Cash A/c 40,000
To Balance c/d 74,200 66,600 40,000 By Premium for Goodwill A/c 10,000 5,000
97,000 73,000 40,000 97,000 73,000 40,000
To Cash A/c 26,600 By Balance b/d 74,200 66,600 40,000
To Balance c/d 80,000 40,000 40,000 By Cash A/c 5,800
80,000 66,600 40,000 80,000 66,600 40,000
Balance Sheet
as on March 31, 2023 after Z’s admission
Liabilities (₹) Assets (₹)
Cash (5,000+40,000+15,000+5,800-26,600
Sundry Creditors 25,000 31,700
-5,000-2,500)
Capital Account balances: Sundry Debtors 15,000
X 80,000 Stock (10,000+1,000) 11,000
Y 40,000 Printer (₹ 5,000 – ₹ 1,000) 4,000
Z 40,000 1,60,000 Fixed Assets (₹ 1,37,000 - ₹ 13,700) 1,23,300
 1,85,000 1,85,000
Working Notes: 1 Sacrificing Ratio
Old ratio X : Y = 2 : 1
Sacrificing Ratio = 2 : 1
Working Notes: 2 Distribution of Revaluation Loss
Revaluation loss transferred to X's Capital = 11,700 × 2

3
= ₹ 7,800
Revaluation loss transferred to Y's Capital = 11,700 × 1

3
= ₹ 3,900
Working Notes: 3 Distribution of Premium for Goodwill
X will get = 15,000 × 2

3
= ₹ 10,000
Y will get = 15,000 × 1

3
= ₹ 5,000
Working Notes: 4
Total Capital of the firm on the basis of Z's share = 40,000 × 4

1
= ₹ 1,60,000
Total Capital of the firm 1,60,000
Less: Z’s Capital 40,000
Combined Capital of X and Y 1,20,000
X's share of Capital = 1,20,000 × 2

3
= ₹ 80,000
Y's share of Capital = 1,20,000 × 1

3
= ₹ 40,000
OR
Revaluation Account
Amount Amount
Particulars Particulars
(Rs) (Rs)
To Building A/c 1,00,000 By Land A/c 3,20,000
To Furniture A/c 30,000
To Profit transferred to Capital A/cs
L 95,000
M 47,500
N 47,500 1,90,000
3,20,000 3,20,000
======= =======
Partners’ Capital Accounts
L M N L M N
Particulars Amount Amount Amount Particulars Amount Amount Amount
(Rs) ( Rs) ( Rs) ( Rs) ( Rs) ( Rs)
To N's Capital
1,00,000 50,000 By Balance b/d 6,00,000 4,80,000 4,80,000
A/c
To N's Loan
8,37,500 By General Reserve 2,20,000 1,10,000 1,10,000
A/c
To M's Current By Revaluation A/c (
1,20,000 95,000 47,500 47,500
A/c (?) Profit)
To Balance c/d 10,35,000 5,17,500 By L's Capital A/c 1,00,000
- By M's Capital A/c 50,000
By Workmen's
Compensation Fund 1,00,000 50,000 50,000
A/c
By L's Current
1,20,000
A/c(Balancing figure)
11,35,000 6,87,500 8,37,500
11,35,000 6,87,500 8,37,500
======== ======= =======
Balance Sheet
as at 1st April, 2013
Amount Amount
Liabilties Assets
(Rs) ( Rs)
Capital A/cs Land 8,00,000
L 10,35,000 (+) Appreciation 3,20,000 11,20,000
M 5,17,500 15,52,500 Building 6,00,000
Liabilities for Workmen Compensation
1,60,000 (-) Depreciation 1,00,000 5,00,000
Fund
Creditors 2,40,000 Furniture 2,40,000
L's Current Account 1,20,000 (-) Depreciation 30,000 2,10,000
N's Loan Account Debtors 4,00,000
(-) Provision for Doubtful Debts
3,80,000
20,000
Stock 4,40,000
M's Current A/c 1,20,000
Cash 1,40,000
29,10,000 29,10,000
========= =========
Working Notes:
 A partner ceases to be a partner on his retirement or death and as such, the amount of claim of the
retiring partner or the d5ceased partner has to be settled by the firm. The problems that arise at the time
of retirement of a partner from the firm are:
(1) Ascertainment of new profit sharing ratio,
(2) Ascertainment of gaining ratio,
(3) Treatment of goodwill,
(4) Adjustment for revaluation of assets and liabilities,
(5) Adjustment in respect of unrecorded assets and liabilities,
(6) Adjustment in respect of accumulated profits/losses,
(7) Methods of payment to retiring partner.
i. Finn’s goodwill = Rs 6,00,000
N’s share of goodwill = 6,00,000 × = 1,50,000 to be contributed by L and M in gaining ratio i.e.,2 :1;
1

L = 1,50,000 × =Rs 1,00,000; M =1,50,000 × = Rs 50,000

2

3
2

ii. Calculation of Proportionated Capital

L’s capital after all adjustment = 9,15,000
M’s capital after all adjustment = 6,37,500
Total capital of new firm = Rs 15,52,500
L’s new capital = 15,52,500 × = Rs 10,35,000
2

M’s new capital = 15,52,500 × = Rs 5,17,500

1

25. Z's Capital Account

Dr. Cr.
Particulars Amt(Rs) Particulars Amt(Rs)
To Z's Executor's A/c 80,250 By Balance b/d 50,000
By General reserve(24,000 x 1/6) 4,000
By Revaluation A/c(30,000 x 1/6 working notes) 5,000
By X's Capital A/c (20,000 x 3/5 ) 12,000
By Y's Capital A/c (20,000 x 2/5 ) 8,000
By P and L Suspense A/c (working notes X) 1,250
80,250 80,250
Journal
Dr. Cr.
Date Particulars L.F.
(Rs) (Rs)
2008 March
Z's Capital A/c Dr. 80,250
31
To Z's Executor's A/c 80,250
(Being the amount due to Z transferred to Z’s Executor’s A/c
 Dr. Cr.
Date Particulars L.F.
(Rs) (Rs)
on Z’s death)
Z's Executor A/c Dr. 80,250
To Bank A/c
80,250
(Being executor's A/c Settled)
Working Notes:
i. Revaluation Account
Dr. Cr.
Particulars Amt(Rs) Particulars Amt(Rs)
To Building A/c 9,000 By Machinery A/c 34,000
To Profit transferred to Capital A/cs: By Patents A/c 3,300
X (30,000 x 3/6) 15,000
Y (30,000 x 2/6) 10,000
Z (30,000 x 1/6 ) 5,000 30,000
39,000 39,000
ii. Goodwill = 3 x average profit
iii. Average Profit = Total profit / number of years
iv. Total profit = 40, 000 + 40, 000 + 30, 000 + 40, 000 + Rs. 50, 000 = 2, 00, 000.
v. Number of years = 5
vi. So Average Profit = 2,00,000 / 5 = 40,000
vii. Goodwill = 2 x average profit i.e 40000 X 3 = Rs. 1,20,000
Z’s share of Goodwill = 1,20,000 × = Rs. 20,000
1

viii. Z’s share in profit = Average profit × 1

6
×
2

12

ix. Average profit = 50,000 + 40000 / 2 = 45,000

x. Z’s share in profit = Rs. 45,000 × 1

6
×
2

12
= Rs. 1,250
26. JOURNAL OF Y LTD.
Date Particulars L.F. Dr. (₹) Cr. (₹)
2022
Bank A/c Dr. 6,00,000
June 1
To Debentures Application and Allotment A/c
6,00,000
(Application money received for 6,000; 12% Debentures)

Debentures Application and Allotment A/c Dr. 6,00,000

Loss on Issue of Debentures A/c Dr. 42,000
 To 12% Debentures A/c 6,00,000
To Premium on Redemption of Debentures A/c
(Debentures allotted and premium payable on redemption 42,000
accounted)

2023
March Statement of Profit & Loss (Finance Cost) Dr. 42,000
31
To Loss on Issue of Debentures A/c
42,000
(Loss on Issue of Debentures written off)
Notes:
1. Loss on Issue of Debentures is written off in the year debentures are allotted.
2. Loss on Issue of Debentures is written off from Statement of Profit & Loss because the company does
not have balance in Securities Premium.
Dr. LOSS ON ISSUE OF 12% DEBENTURES ACCOUNT Cr.
Date Particulars ₹ Date Particulars ₹
By Statement of Profit &
2022 To Premium on Redemption of 2023 March
42,000 Loss 42,000
June 1 Debentures A/c 31
(Finance Cost)
42,000 42,000
Part B :- Analysis of Financial Statements
27.
(d) Window Dressing
Explanation:
Window Dressing
OR
(a) Postulates
Explanation:
Postulates
28. (a) 15,000
Explanation:
Current Asset/Current Liabilities = 3/1
Current Asset = 3 Current Liabilities
Current Asset – Current Liabilities = 30,000
3 Current Liabilities – Current Liabilities = 30,000
2 Current Liabilities = 30,000
Current Liabilities = 15,000
29.
(b) Cash outflow from investing activities ₹ 4,70,000
Explanation:
To classify this transaction based on cash flow activities:
i. Acquisition of shares is considered an investing activity because it involves the purchase of
financial assets (shares). This results in a cash outflow of ₹ 5,00,000.
ii. Dividend received is considered cash inflow from operating activities (not related to the
acquisition). However, in the context of this specific question, we need to look at the net cash impact
of the share acquisition transaction itself, which is ₹ 5,00,000 minus ₹ 30,000 = ₹ 4,70,000.
Thus, the correct answer is cash outflow from investing activities ₹ 4,70,000, because the net cash used
in the acquisition of shares is an investment-related transaction.
Correct answer: Cash outflow from investing activities ₹ 4,70,000.
OR
(a) only ii
Explanation:
debentures issued against purchase of machinery is non cash transaction
30.
(d) Investing Activity
Explanation:
Sale of shares of other company are part of investment which is now sold by the company. It is sale of
investment, so it will take place in investing activity.

31. S.no. Items Headings Sub-headings

Non Current Property, Plant and Equipment and Intangible
(i) Patents
Assets Assets - Intangible Assets
Patents being developed by the Non Current Property, Plant and Equipment and ; Intangible
(ii)
Company. Assets Assets - Intangible; Assets under development.
Current Maturities of Long Current
(iii) Short-term Borrowings
term Debts. Liabilities
Computer and related Non-Current Property, Plant and Equipment and Intangible
(iv)
equipment. Assets Assets - Property, Plant and Equipment
(v) Goods acquired for trading Current Assets Inventories
Non Current
(vi) 10% Debentures Long-term Borrowings
Liabilities
Debentures with maturity
Current
(vii) period in current financial Other Current Liabilities
Liabilities
period
32. Net Credit Revenue from operations = Total Revenue from operations – Cash revenue from operations -
Sales Return
= 24,00,000 – 4,60,000 – 20,000 = 19,20,000
Trade Receivables Turnover Ratio = Net Credit Revenue from operations / Average Trade Receivables
6 = 19,20,000 / Average Trade Receivables
Average Trade Receivables = 19,20,000 / 6 = 3,20,000
(Opening Debtors + Closing Debtors + Opening B/R + Closing B/R) / 2 = Average Trade Receivables
(2,50,000 + Closing Debtors + 14,000 + 12,000) / 2 = 3,20,000
Closing Debtors = 6,40,000 – 2,76,000 = 3,64,000
33. HARSH LTD.
COMMON SIZE BALANCE SHEET
as at 31.3.2022 and 31.3.2023
(₹ in Lakhs)
Absolute Percentage of Balance Sheet
Note Amounts Total
Particulars
No. 2022 2023
2022 % 2023 %
₹ ₹
I. EQUITY AND LIABILITIES:
(1) Shareholder's Funds
(a) Share Capital 1 18.00 18.00 45(i) 40(iv)
(b) Reserves & Surplus 4.00 5.40 10(ii) 12(v)
(2) Non-Current Liabilities 14.00 14.40 35(iii) 32(vi)
(3) Current Liabilities 4.00 7.20 10 16
40.00 45.00 100 100
II. ASSETS:
(1) Non-Current Assets
Property, Plant and Equipment and
28.00 30.60 70 68
Intangible Assets
(2) Current Assets 12.00 14.40 30 32
40.00 45.00 100 100
Working Notes:

i. Share Capital: 2022 2023

Equity Share Capital 16.00 16.00
Preference Share Capital 2.00 2.00
 18.00 18.00
ii. All percentages will be calculated on the basis of total of Balance Sheet.
Hence, in 2022 percentages will be based on ₹ 40 Lakhs.
in 2023 percentages will be based on ₹ 45 Lakhs.
Thus,
i. 18

40
× 100 = 45%
ii. 4

40
× 100 = 10%
iii. 14

40
× 100 = 35%
iv. 18

45
× 100 = 40%
v. 5.40

45
× 100 = 12%
vi. 14.40

45
× 100 = 32% and so on.
OR
Mark Ltd.
COMPARATIVE STATEMENT OF PROFIT & LOSS
for the years ended 31st March 2018 and 31st March 2019
Note Absolute Change Percentage Change
Particulars 2017-18 2018-19
No. (Increase or Decrease) (Increase or Decrease)
1 2 3 4 5
A B B-A=C C

A
× 100 = D
₹ ₹ ₹ %
Revenue from
I. 40,00,000 50,00,000 10,00,000 25
operations
Add: Other
II. 2,00,000 2,50,000 50,000 25
income
III. Total Income 42,00,000 52,50,000 10,50,000 25
IV. Less: Expenses
Purchase of stock
30,00,000 40,00,000 10,00,000 33.33
in trade
Changes in
8,00,000 10,00,000 2,00,000 25
inventory
Other Expenses 4,00,000 5,00,000 1,00,000 25
Total Expenses 42,00,000 55,00,000 13,00,000 30.95
Profit Before Tax ____ (2,50,000) (2,50,000) ____
34. CASH FLOW STATEMENT OF XYL LIMITED
for the year ended 31st March 2023
 Particulars ₹ ₹
A. Cash Flows from Operating Activities: 1,55,000
Profit before Tax (Working Note 1)
Adjustments for non-cash and non-operating items:
Add: Depreciation on Plant 10,000
Depreciation on Land and Building 20,000
Goodwill written off 25,000 55,000
2,10,000
Less: Rent Received 10,000
Operating profit before working capital changes 2,00,000
Add: Increase in Current Liabilities:
Trade Payables 32,000
2,32,000
Less: Increase in Current Assets:
Inventory 32,000
Trade Receivables 50,000 (82,000)
Cash generated from operating activities 1,50,000
Less: Income Tax paid (35,000)
Net Cash from operating activities 1,15,000
B. Cash Flows from Investing Activities:
Sale of Land and Building(2) 10,000
Purchase of Plant(3) (1,30,000)
Rent Received 10,000
Net Cash used in investing activities (1,10,000)
C. Cash Flows from Financing Activities:
Issue of share capital 50,000
Payment of proposed dividend (for 2022) (42,000)
Interim dividend paid (20,000)
Net Cash used in financing activities (12,000)
Net Decrease in cash and cash equivalents (7,000)
Add: Cash and cash equivalents in the beginning of the period 25,000
Cash and cash equivalents at the end of the period 18,000
Working Notes:
1. Profit before Tax:
₹
st
Profit & Loss Balance on 31 March, 2023 48,000
st
Less: Profit & Loss Balance on 31 March, 2022 30,000
18,000
Add: Proposed Dividend for 2022 42,000
Interim Dividend paid 20,000
Transfer to General Reserve 30,000
(4)
Provision for Taxation 45,000
1,55,000
There will be no effect of proposed dividend of 2023.

2. Dr. LAND AND BUILDING ACCOUNT Cr.

Particulars ₹ Particulars ₹
To Balance b/d 2,00,000 By Depreciation A/c 20,000
By Bank A/c (Balancing figure, being sale) 10,000
By Balance c/d (Given) 1,70,000
2,00,000 2,00,000

3. Dr. PLANT ACCOUNT Cr.

Particulars ₹ Particulars ₹
To Balance b/d 80,000 By Depreciation A/c (Given) 10,000
To Bank A/c (Balancing figure being purchase) 1,30,000 By Balance c/d (Given) 2,00,000
2,10,000 2,10,000

4. Dr. PROVISION FOR TAX ACCOUNT Cr.

Particulars ₹ Particulars ₹
To Bank A/c (Payment made)
35,000 By Balance b/d (Given) 40,000
(Given)
By Statement of P & L (Balancing figure, being
To Balance c/d (Given) 50,000 45,000
provision made in 2023)
85,000 85,000
5. Rent received is deducted from Profits because it is related to investment in property. It will be shown
as inflow of cash under Investing Activity.