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Published on: 04/03/2020
12th Standard Accountancy Board Exam Model Question 2019-2020
Download CBSE Class 12th Standard CBSE Accountancy question papers, sample papers, important questions, and previous year solved papers in PDF format. Get free study materials, NCERT solutions, and exam preparation resources for Class 12th Standard CBSE Accountancy
Questions + Answers key
Take MCQ Accountancy Test
1.
What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?
2.
What are the features of Receipt and Payment Account?
3.
List any three items that can be shown as contingent Liabilities in a company's Balance sheet.
4.
On 31st March, 2015, the balance sheet A and B, who shared profits in 3:2 ratio, was as follows
Balance Sheet
as at 31st December, 2015
| Liabilities | Amt (RS) | Assets | Amt (RS) | ||
|---|---|---|---|---|---|
| Creditors | 20,000 | Cash | 5,000 | ||
| Profit and Loss A/c | 15,000 | Sundry Debtors | 20,000 | ||
| Capital A/cs | (-) Provision for Doubtful Debts | (700) | 19,300 | ||
| A | 40,000 | Stock | 25,000 | ||
| B | 30,000 | 70,000 | Plant and Machinery | 35,000 | |
| Patents | 20,700 | ||||
| 1,05,000 | 1,05,000 | ||||
On this date, C was admitted as a partner on the following conditions
(i) C will get 4/15th share of profits.
(ii) C had to bring RS.30,000 as his capital to which amount other partners' capitals shall have to be adjusted.
(iii) He would pay cash for his share of goodwill which would be based on 2.5 years' purchase of average profits of past 4 years.
(iv) These assets would be revalued as under Sundry debtors at book value less 5% provision for Bad debts, stock at RS.20,000, plant and machinery at RS.40,000.
(v) The profits of the firm for the years' ending on 31st March, 2012, 2013 and 2014 were RS.20,000, RS.14,000 and RS.17,000, respectively.
Prepare revaluation account, partners' capital accounts and balance sheet of a new firm.
5.
In which account, gain on cancellation of own debentures transferred?
6.
Can the forfeited shares be re-issued at a discount?
7.
L, M and N were equal partners. On 31st March, 2018, their balance sheet stood as under
| Liabilities | Amt(Rs) | Assets | Amt(Rs) | |
|---|---|---|---|---|
| Creditors | 1,00,800 | Cash | 7,400 | |
| Reserve | 24,000 | Stock | 40,200 | |
| Capital A/cs | Debtors | 1,25,200 | ||
| L | 60,000 | Investments | 32,000 | |
| M | 50,000 | Furniture | 13,000 | |
| N | 30,000 | 1,40,000 | Building | 47,000 |
| 2,64,800 | 2,64,800 | |||
The firm was dissolved on that date. For the purpose of dissolution, investments were valued at Rs36,000 and L took over the investments at this value. Fixed assets realised Rs 59,400 whereas stock and debtors realised Rs1,60,000. Expenses of realisation amounted to Rs2,600. Creditors allowed a discount of Rs1,600. In Addition, one bill receivable for Rs3,000 under discount was dishonoured as the acceptor had become insolvent and was unable to pay anything and hence the bill had to be met by the firm.
Prepare realisation account, partner's capital accounts and cash account showing how the accounts would finally be settled among the partners.
8.
Gyan Ud issued 10,000, 10% debentures of Rs 100 each on 1st October 2014 to be redeemed on 31st July 2015. How will it be shown in the balance sheet as at 31st March 2015?
9.
Out of (i), partner's loan appears on the liabilities side of the balance sheet of the firm and the capital account of such partner shows a debit balance, how will you deal with such a loan?
10.
Kartik and Aroha are partners in a firm sharing profits in the ratio of 2:3 The balance sheet of the firm as at 31st March ,2015 is given below
Balance Sheet
as at 31st March, 2015
| Liabilities | Amt(Rs) | Assets | Amt(Rs) |
|---|---|---|---|
| Creditors | 6,200 | Bills Receivable | 3,600 |
| Bills Payable | 1,800 | Stock | 16,000 |
| Capital A/cs | Machinery | 18,400 |
The partners decided to share profits in equal ratio with effect from 1st April,2015 The following adjustments were agreed upon.
(i)Land and building was valued at Rs 16,000 and machinery at Rs16,400 and were to appear at revalued amounts in the balance sheet.
(ii)The goodwill of the firm was valued at Rs 800 but it was not to appear in books.
Pass the necessary journal entries to give effect to the above and also prepare revaluation account.
11.
X Ltd invited applications for 10,000 shares of Rs 10 each at a premium of Rs.20 per share payable as Rs.20 (including 50% premium) on applications and the balance on allotment. Application money received rs 2,20,000. Name the kind of subscription.
12.
X and Y started business of recycling the old furniture and refurbishing them for sale on 1st July 2017, each partner contributing Rs.1,50,000 as his share of capital. On 1st October, Y makes an additional contribution of Rs.1,00,000 which is treated as a loan.The profit for the period ending March 2018 was Rs.85,000 before charging any interest.All the partners were entitled to a salary of Rs.3,000 each, per quarter the partners had drawn Rs.24,000 each on 1st January, 2015. Prepare the profit and loss appropriation account for the period ended 31st March, 2018 . Identify the values involved in the above question.
13.
IUf selling and distribution expenses have increased from Rs 1,00,000 to Rs 2,00,000, then by how much will it increase or decrease in percentage form?
14.
Why is it necessary to revalue assets and liabilities at the time of retirement of a partner?
15.
Which values are reflected by a business in preparing a cash flow statement?
16.
Identify the value being reflected by continuing partners in giving outgoing partner his share of Goodwill.
17.
Why is it necessary to adjust goodwill at the time of change in profit sharing ratio?
18.
Calculate the current ratio from the following information:
| Particulars | Rs | Particulars | Rs |
|---|---|---|---|
| Total Assets | 4,50,000 | Fixed Tangible Assets | 2,40,000 |
| Long-term Borrowings | 1,00,000 | Non-Current Investments | 1,50,000 |
| Shareholders' Funds | 3,00,000 | Long-term Provisions | 20,000 |
19.
State any six items which are shown under the heading 'Reserves and Surplus' in the Balance Sheet of a Company as per Schedule III, Part-I of the Companies Act,2013.
20.
A and B were partners in a firm sharing profits in the ratio of 3:2. They admitted C and D as new partners. The new profit sharing ratio will be 2:2:1:1. C and D brought Rs.2,75,000 each for their respective capitals and also necessary amount of premium for goodwill in cash. Goodwill was valued at Rs.2,40,000 for the firm. Calculate sacrificing ratio of A and B and pass necessary journal entries for the above transactions in the books of the firm.
21.
Ram, Rahim and Raja are partners who share profits and losses in the ratio of 3 : 2 : 1. According to partnership deed, the minimum profit of Raja will be Rs. 10,000 p.a. The profit for half yearly ended on 31st March, 2008 was Rs. 24,000. Give journal entries for division of profit and prepare Profit and Loss Appropriation Account.
22.
Distinguish between Receipts and Payments Account and Income and Expenditure Account.
23.
Inderjeet Ltd made an issue of 75,000 shares of the par value o f Rs .50 per share. The issue was oversubscribed to the extent of 25,000 shares and allotment as made as under
(i) Applications of 5,000
(ii) Applications of 10,000 shares are allotted in full.
(iii) For the balance 85,000 shares, the pro-rata allotment was made.
Journalise the above transactions, when the company called rs 20 on applications, Rs 20 on allotment and the balance on first and final call. Also, identify the value violated by the company.
24.
The current ratio of a company is 2 : 1. State giving reasons, which of the following would improve, reduce or not change the ratio.
(i) Repayment of a current liability.
(ii) Purchasing goods on cash.
(iji) Sale of office equipment of Rs.4,000 (book value Rs.5,000).
(iv) Sale of goods Rs.11,000 (cost Rs.10,000).
(v) Payment of dividend.
25.
T and P are partners sharing the profits and losses in the ratio of 2 : 3 with capitals of Rs.24,000 and Rs.12,000 respectively.On 1st October,2014, T and P granted loans of Rs.48,000 and Rs,24,000 respectively to the firm. The profits before any interest for the year 2014-2015 amounted to Rs.1,8000. Show the distribution of Profit/Losses by preparing profit and loss account.
26.
A,B and C are partners in a firm sharing profits and losses in the ratio of 3:3:2 Their balance sheet as 31st March,2015 was as under
Balance Sheet
as at 31st March,2015
| Liabilities | Amt(Rs) | Assets | Amt (Rs) |
|---|---|---|---|
| Sundry Creditors | 1,20,000 | Cash at bank | 62,000 |
| Capital A/cs | Sundry Debtors | 1,00,000 | |
| A 4,00,000 | Stock | 2,40,000 | |
| B 4,00,000 | Machinery | 3,18,000 | |
| C 2,00,000 | 10,00,000 | Building | 4,00,000 |
| 11,20,000 | 11,20,000 |
Partners decided that with effect from 1st April,2015 they would share profits and loses in the ratio of 4:3:2.It was agreed that
(i) Stock is to be valued at Rs 2,20,000
(ii) Machinery is to be depreciated by 10%.
(iii) A provision for doubtful debts is to be made on debtors @ 5%.
(iv) Building to be appreciated by 20%
(v) A liability for Rs 6,000 included in sundry creditors is not likely toarise.
Partners agreed that revised values of assets and liabilities are to be recorded in the books.Give the necessary accounting entries to be made in the books of the firm on account of change in profit sharing ratio.Also prepare the revaluation account
27.
A and B are partners sharing profits in the ratio of 3:2. C, the new partner gets 1/5th share entirely from A. Calculate new profit sharing ratio.
28.
Prepare a Cash Flow Statement from the following Balance Sheet :
| Particulars |
Note No. |
31.03.2015 Rs. |
31.03.2014 | |
|---|---|---|---|---|
| I. Equity and liabilities | ||||
| 1. Shareholders' Funds : | ||||
| (a) Share Capital | 6,30,000 |
5,60,000 |
||
| (b) Reserve and Surplus | 1 | 3,08,000 | 1,82,000 | |
| 2. Current Liabilities : |
|
|||
| Trade Payables | 2,80,000 | 1,82,000 | ||
| Total | 12,18,000 | 9,24,000 | ||
| II. Assets | ||||
| 1. Non-current Assets : | ||||
| Fixed Assets | ||||
| Plant | 3,92,000 | 2,80,000 | ||
| 2. Current Assets : | ||||
| (a) Inventories | 98,000 | 1,40,000 | ||
| (b) Trade receivables | 6,30,000 | 4,20,000 | ||
| (c) Cash and Cash Equivalents | 98,000 | 84,000 | ||
| Total | 12,18,000 | 9,24,000 | ||
Notes to Accounts
Note No. 1
| Particulars |
31.03.2013 Rs. |
31.03.2012 Rs. |
|---|---|---|
|
Reserve and Surplus Surplus (Balance in Statement of Profit and Loss) |
3,08,000 | 1,82,000 |
Additional Information :
(i) An old machinery having books value Rs. 42,000 was sold for Rs. 56,000.
(ii) Depreciation provided on machinery during the year was Rs. 28,000.
29.
Pawan,Prem and Poonam were partners in a firm sharing profits in the ratio of 2:1:2. Their fixed capitals were RS.2,00,000, RS.1,50,000 and 2,00,000 respectively. The firm closses its books on 31st March every year. On 31.03.2006 Prem died. The executor of a deceased partner according to the agreement was entitled for the following:
(i) Interest on capital from the first day of the accounting year till the date of his death @ 10% p.a.
(ii) His share of goodwill - The goodwill of the firm for the on Prem's death was valued at RS.3,00,000.
(iii) His share of profits - the profit of the firm for the year ended 31.03.2006 was RS.1,50,000 Prem's executor was paid the sum due in two equal annual instalment with interest @ 10% p.a. prepare Prem's capital account as on 31.03.2006 to be presented to his executor and his executor's loan account for the year ending 31.03.2007 and 31.03.2008.
30.
As at March 31, 2015 the following balances have been extracted from the books of the Indian Chartered Accountants Recreation Club and you are asked to prepare (1) Trading Account for ascertaining gross profit derived from running restaurant and dining room and (2) Income and Expenditure Account for the year ended March 31, 2017 (3) and a Balance Sheet as at that date.
| Debit Balances | Rs. | Credit Balances | Rs. |
|---|---|---|---|
| Stock-in-hand | 1170 | Subscriptions | 9,7110 |
| Purchases | 24,660 | Billiard's Receipts | 7,300 |
| Dining Room | 32,370 | Sunday Receipts | 410 |
| Rent | 10,470 | Interest on Fixed Deposit | 270 |
| Wages | 18,690 | Grant from Institute (permanent) |
42,000 |
| Repairs and Renewals | 5,400 | Income and Exp. A/c (2016) | 1,380 |
| Fuel and Light | 5,280 | ||
| Misc. Expenses | 4,050 | ||
| Cash in hand | 560 | ||
| Cash at bank | 2,760 | ||
| Fixed Deposit | 8,500 | ||
| Sundry Debtors | 2,250 | ||
| China glass, cutlery and linen | 600 | ||
| Billiard Table | 2,070 | ||
| Fixtures and Fittings | 870 | ||
| Furniture | 4,140 | ||
| Club Premises | 30,000 | ||
| 1,53,840 | 1,53,840 |
On March 31, 2016 stock of restaurant consisted of Rs 900 and Rs 60 respectively. Provide depreciations Rs 60 on fixtures and fittings, Rs 390 on billiard table and Rs 560 on furniture.
31.
From the following Balance Sheet of India Ltd. and the additional information given made out the Cash Flow Statement:
| Liabilities | 2007 | 2008 | Assets | 2007 | 2008 |
|---|---|---|---|---|---|
| Share Capital | 3, 00,000 | 4, 00,000 | Goodwill | 1, 15,000 | 90,000 |
| Mortgage Loan | 1, 50,000 | 1, 00,000 | Land & Building | 2, 00,000 | 1, 70,000 |
| General Reserve | 40,000 | 70,000 | Plant | 80,000 | 2, 00,000 |
| P & L A/c | 30,000 | 48,000 | Debtors | 1, 60,000 | 2, 00,000 |
| Proposed Div. | 42,000 | 50,000 | Stock | 77,000 | 1, 09,000 |
| Creditors | 55,000 | 83,000 | Bills Receivable | 20,000 | 30,000 |
| Bills Payable | 20,000 | 16,000 | Cash in hand | 15,000 | 10,000 |
| Provisions for Taxation | 40,000 | 50,000 | Cash at Bank | 10,000 | 8,000 |
| 6, 77,000 | 8, 17,000 | 6, 77,000 | 8, 17,000 |
Additional information:
(1)Depreciation of Rs.1,000/- and Rs.20,000/- has been charged on Plant and Land & Building respectively in 2006-07.
(2)The interim dividend of Rs.20, 000/- has been paid in 2007-08
(3) Income Tax of Rs.35,000/- was paid during the year 2007-08
32.
From the following information related to Naveen Ltd. calculate
(i) Return on investment
(ii) Total assets to debt ratio
Information
Fixed assets Rs.75,00,000, current assets Rs.40,00,000, current liabilities Rs.27,00,000,12% debentures Rs.80,00,000 and net profit before interest, tax and dividend Rs.14,50,000.
33.
Deepak Ltd Company purchased furniture Rs 2,20,000 from M/s Furniture Mart. 50% of the amount was paid to Furniture Mart by accepting a bill of exchange and for the balance the company issued 9% debentures of Rs 100 each at a premium of 10% in favour of Furniture Mart. Pass necessary journal entries in the books of Deepak Ltd Company for above transactions.
34.
Following balances have been extracted from the books of Vardhman Ltd on 31st March 2015.Equity share capital (2,00,000 equity shares of Rs 10 each) Rs 20,00,000. securities premium reserve Rs 4,00,000, 12% debentures Rs 10,00,000, creditors Rs 4,00,000, proposed divident Rs 1,00,000, surplus, i.i. balance in statement of profit and loss (debit) Rs 1,00,000, land and building Rs 18,00,000, government bonds Rs 10,00,000, capital work-in-progress(building) Rs 7,00,000, discount on issue of 12% debentures Rs 2,00,000, cash at bank Rs 1,00,000.Debentures were issued on 1st April, 2014 redeemable after 5 years, i.e. on 31st March 2019.Surplus, i.e. balance in statement of profit and loss is before writing off discount on issue of debentures.
Prepare the balance sheet of the company as per Schedule III, Part I of the Companies Act, 2013.
Identify the value involved in the presentation of balance sheet.
35.
Compute cost of materials consumed from the following information.
Opening inventory of materials Rs 5,00,000, materials purchased Rs 40,00,000 and closing inventory of materials Rs 6,00,000.
36.
From the following balance sheets of Sun Ltd as at 31st March, 2014 and 2015, prepare a common size balance sheet
| Particulars | Note No | 31st March,014 Amt(Rs) | 31st March,2015 Amt(Rs) |
|---|---|---|---|
| I.EQUITY AND LIABILITIES | |||
| 1.Shareholdrs' Funds | |||
| (a) Share Capital | 30,000 | 40,00,000 | |
| (b) Reserves and Surplus | 4,00,000 | 6,00,000 | |
| 2.Non-current Liablities | |||
| Long-term Browings | 10,00,000 | 12,00,000 | |
| 3.Current Liabilities | |||
| Trade Payables | 6,00,000 | 2,00,000 | |
| Total | 50,00,000 | 60,00,000 | |
| II.ASSETS | |||
| 1.Non-Current Assets | |||
| (a) Fixed Assets | |||
| (i) Tangible Assets | 30,00,000 | 40,00,000 | |
| (ii) Intengibla Assets | 6,00,000 | 2,00,000 | |
| 2.Current Assets | |||
| (a) Inventories | 10,00,000 | 12,00,000 | |
| (b) Cash and Cash Equivalents | 4,00,000 | 6,00,000 | |
| Total | 50,00,000 | 60,00,000 |
37.
A, B and C were in partnership sharing profits and losses equally. B retires from the firm. After adjustment, his capital account shows a credit balance of Rs.1,20,000 as on 1st April 2012. The balance due to B is to be paid in three equal instalments annually together with interest @ 5% per annum, Prepare B's loan account until he is entire amount due to him. The firm closes its books on 31st March every year.
38.
Ram,Raj and Rohan and partners sharing profits and loses in the ratio of 4:3:2 They decide to share the future profits and losses in the ratio 2:3:4 with effect from 1st April ,2014 An extract of their balance sheet as at 31st March,2015 is as under.
Balance Sheet (An extract)
as at 31st March,2015
| Liabilities | Amt (Rs) | Assets | Amt (Rs) |
| Workmen Compensation Reser | 45,000 |
Show the accounting treatment under the following alternative cases.
(i)If there is no other information
(ii)If a claim on account of workmen's compensation is estimated at Rs 22,500
(iii) If a claim on account of workmen's compensation is estimated at Rs 48,500
39.
Bora, Singh and Ibrahim were partners in a firm sharing profits in the ratio of 5 : 3 : 1. On 2.3.2015 their firm was dissolved. The assets were realised and the liabilities were paid off. Given below are the Realisation Account, Partners' Capital Account and Bank Account of the firm. The accountant of the firm left a few amounts unposted in these accounts. You are required these accounts by positing the correct amounts:
Dr. Realisation Account Cr.
| Particulars | Rs. | Particulars | Rs. | ||
|---|---|---|---|---|---|
| To Stock | 10,000 | By Provision for bad debts | 5,000 | ||
| To Debtors | 25,000 | By Sundry Creditors | 16,600 | ||
| To Plant and Machinery | 40,000 | By Bills Payable | 3,400 | ||
| To Blank: | By Mortagage Loan | 15,000 | |||
| Sundary Creditors | 16,000 | By Bank - Assets Realized: | |||
| Bills Payable | 3,400 | Stock | 6,700 | ||
| Mortgage Loan | 15,000 | 34,400 | Debtors | 12,500 | |
| To Bank (Outstanding repairs) | 400 | Plant and Machinery | 36,000 | 55,200 | |
| To Bank (Expenses) | 620 | By Bank-Urecorded Assets Realised | 6,220 | ||
| By ...... | ..... | ||||
| 1,10,420 | 1,10,420 | ||||
Dr. Capital Account Cr.
| Particulars |
Bora Rs. |
Singh Rs. |
Ibrahim Rs. |
Particulars |
Bora Rs. |
Singh Rs. |
Ibrahim Rs. |
|---|---|---|---|---|---|---|---|
| ..... | ..... | ..... | ..... | By Balance b/d | 22,000 | 18,000 | 10,000 |
| ..... | ..... | ..... | ..... | By General Reserve | 2,500 | 1,500 | 500 |
| 24,500 | 19,500 | 10,500 | 24,500 | 19,500 | 10,500 |
Dr. Bank Account Cr.
| Particulars | Rs. | Particulars | Rs. |
|---|---|---|---|
| To Balance b/d | 19,500 | By Realisation (Liabilities) | 34,00 |
| To Realisation (Assers realized) | 55,200 | By Realisation (Unrecorded Liabilities) | 400 |
| ..... | .... | By ..... | ..... |
| By ..... | ..... | ||
| 80,920 | 80,920 | ||
40.
State with reason, whether 'deposit of cash into bank' will result into inflow, outflow or no flow of cash.
41.
Investment in sinking fund by a non-profit organization is a/an
Liability
Accumulated fund
Asset
Equity
42.
Which of the following is generally considered as a non profit oriented organization?
Charitable organization
Corporation
Audit firms
Insurance companies
43.
What adjustments are required when existing partners decide to change their profit sharing ratio:
Reserves
Accumulated profits
All
Goodwill
44.
On the reconstitution of a firm change in the value of assets is called ________
Revaluation of assets
Reassessment of assets
Devaluation of assets
Reassessment of liabilities
45.
When good will is brought in cash by new partner, method is known as:
Premium method
Revolution method
Memorandum revolution method
None
46.
When all partners are insolvent creditors will be:
Paid fully
Paid rate ably
Taken over by the partners
Paid by government
47.
On the retirement of a partner any reserve being should be transferred to the capital account of:
All partners in the old profit sharing ratio
Remaining partners in the new profit sharing ratio
Neither the retiring partner, nor the remaining partner
None of above
48.
The accounting procedure at the retirement of partner is valued:
Revaluation of assets and liabilities
Ascertaining his share of good will
Finding the amount due to him
All of above
49.
At the time of a new partner Good will:
Belongs to all partners, new and old
Belongs only to the new partners who is going to be admitted.
Belongs only to the old partner who have credited it
None of the above.
50.
At the time of admission an incoming partner contributes as goodwill:
In cash
Does not pay cash
May or may not pay cash for good will
None of these
51.
How will you deal increase in the balance of Securities Premium Reserve while preparing a Cash Flow Statement?
Cash flow from operating activities
Cash flow from Investing activities
Cash flow from Financing activities
Cash Equivalent
52.
Purchase of building results in
inflow of cash
outflow of cash
no flow of cash
both inflow and outflow
53.
How many tools of financial analysis
2
3
4
5
54.
What are the objectives of financial statement
To provide information about economic resource
To provide information about cash flows
To judge effectiveness of management
All of them
55.
Debenture interest is paid
At a pre-determined rate
At variable rate
At a rate based on net profit of the company
At a rate as determined by the company from time to time
56.
Debentures are shown in the Balance Sheet of a company under the head of
Non current liabilities
Current liabilities
Share capital
None of the above
57.
Securities Premium Reserve collected by the company can be used for:
Issue of bonus shares
Payment of dividend
Any business purpose
None of the above
58.
Balance of forfeiture a/c after the shares have been re-issued is transferred to:
Capital reserve
general reserve
securities premium reserve
None of these.
59.
According to AS 26, which goodwill is recorded in the books:
purchased goodwill
self generated goodwill
both (i) and (ii)
None of the above
60.
Capital employed by a partnership firm is Rs10,00,000.Its average profit is Rs 1,20,000. The normal rate of return in similar type of business is 10%. What is the amount of super profits?
Rs 20,000
Rs 12,000
Rs 1,00,000
Rs 1,12,000
1.
The following steps are taken to prepare Income and Expenditure Account (I&E) from Receipts and Payment Account (R&P).
Step 1: All the revenue expenditures paid for the current accounting period are transferred from the Payments side of R&P to the Expenditure side of I&E.
Step 2: All the revenue receipts for the current accounting period are transferred from the Receipts side of R&P to the Income side of I&E.
Step 3: Expenses outstanding for the current period and expenses paid in advance (prepaid expenses) for the current period in the preceding accounting periods are to be added (adjusted) to their related expenses in the Step 1.
Step 4: Income outstanding (accrued income) for the current period and income received in advance for the current period in the preceding accounting periods are to be added (adjusted) to their related incomes in Step 2.
Step 5: Non-cash items like depreciation, appreciation for the current accounting period are to be adjusted in the I&E.
Step 6: After adjusting all the revenue items for the current accounting period, the Income and the Expenditure sides are totaled. If the sum total of the Income side exceeds (or is lesser than) the sum total of the Expenditure side, then the balancing figure is termed as surplus (or deficit).
2.
The following are the features of Receipt and Payment Account:
1. Nature: It is a Real Account. It is a summarised version of Cash Book.
2. Nature of Transactions: It records only cash and bank transactions. Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.
3. No distinction between Capital and Revenue items: It records all cash and bank receipts and payments of both capital and revenue nature.
4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing balance of the cash and bank (balancing figure) at the end of the accounting period.
5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received during an accounting period.
3.
(i) Claims against the Company not acknowledged as debts.
(ii) Uncalled Liability on partly paid shares.
(iii) Arrears of Dividend on Cumulative preference shares.
4.
Loss on revaluation=RS.300; New profit sharing ratio=33:22:20; Sacrificing ratio=3:2;
Capitals: A=RS.49,500, B=RS.33,000, C=RS.30,000; Balance sheet total=RS.1,32,500
5.
Gain on cancellation of own debentures is transferred to capital reserve account.
6.
Yes, the forfeited shares can be re-issued at a discount.
7.
Loss on realisation=Rs.6,000; Cash paid to L, M and N= Rs.30,000, Rs56,000, Rs.36,000 respectively
8.
They will be shown as 'short-term borrowings' in the balance sheet as at 31st March 2014 because they are repayable within 12 months of the date of issue of debentures.
9.
Partner 's capital account and partner's loan account are not transferred to realisation account.
10.
Revaluation profit: Kartik=Rs 1,600,Aroha=Rs2,400: Kartik gains 1/10 share and Aroha sacrifices 1/10 share.
11.
Over subscription, since number of shares applied = Rs.2,20,000/ Rs. 20 = 11,000 Shares
12.
profit transferred to capital account: X = Rs.32,000
13.
It will increase by 100%
14.
At the time of a partner, the assets and liabilities are revalued, so that the profit/loss on revaluation upto the date of adjusted in all partners' capital accounts in their old profit sharing ratio because such profit or loss on revaluation relates to pre-retirement period.
15.
Values reflected by a business in preparing cash flow statement are:
(i) Respect for law Business shows respect for law by preparing cash flow statement.
(ii) Cash management Business works towards better cash management by preparing cash flow statement.
(iii) Proactive approach Cash flow statement helps in anticipating future cash flows in advance and thus enables proactive attitude towards possible future contingencies.
16.
Recognition Continuing partners have recognised the efforts of the outgoing partner in bringing the firm to its present profitable position.
17.
Whenever there is a change in profit sharing ratio,the gaining partner (i.e.,the partner whose share has increased as a result of change ) is required to compensate the sacrificing partner (i.e.. the partner whose share has decreased as a result of change)
18.
Current Ratio = \(Current \ Assets\over Current \ Liabilities\)
Calculation of Current Assets:
Total Assets = Non-Current Assets+Current Assets
Rs.4,50,000 = Rs.2,40,000+Rs.1,50,000+Current Assets
Current Assets = Rs.4,50,000-Rs.2,40,000-Rs.1,50,000=Rs.60,000
Calulation Of Current Liabilities:
As we know total assets are equal to Total Liabilities
Total Liabilities = Shareholders' Funds+Non-current Liabilities+Current Liabilities
Rs.4,50,000 = Rs.3,00,000+Rs.1,00,000+Rs.20,000+Current Liabilities
Current Liabilities = Rs.4,50,000-Rs.3,00,000-Rs.1,00,000-Rs.20,000=Rs.30,000
Current Ratio = \(RS.60,000\over Rs.30,000\)=2:1
19.
Reserves and Surplus: (i)Capital Reserve (ii)Capital Redemption Reserve (iii)Securities Premium(Reserve) (iv)Revaluation Reserve (v)Debenture Redemption Reserve (vi)Share Options Outstanding Account
20.
(i) Dr.Bank A/c Rs.6,30,000; Cr C's Capital A/c Rs.2,75,000, D's Capital A/c by Rs.2,75,000 and Premium for Goodwill Rs.80,000.
(ii) Dr.premium for Goodwill A/c Rs.80,000; Cr.A/c Rs.64,000 and B's Capital A/c Rs.16,000.
[Hint: Sacrificing Ratio 4:1,C's and D's share of goodwill =Rs.40,000(i.e.,Rs.2,40,000x1/6)each]
21.
Journal Entries
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) | |
|---|---|---|---|---|---|
| 2008 | |||||
| March 31 | Profit and Loss Appropriation A/c | Dr. | 24,000 | ||
| To Ram's Capital A/c | 12,000 | ||||
| To Rahim's Capital A/c | 8,000 | ||||
| To Raja's Capital A/c | 4,000 | ||||
| (For usual division of profit among partners in the ratio of 3 : 2 : 1) | |||||
| March 31 | Ram's Capital A/c | Dr. | 600 | ||
| Rahim's Capital A/c | Dr. | 400 | |||
| To Raja's Capital A/c | 1,000 | ||||
| (For the deficit in guaranteed profit Rs. 1,000 (Rs. 5,0000 - Rs. 4,000) met by Ram and Rahim in their ratio 3 : 2) | |||||
Note : Since minimum guarantee of profit is Rs. 10,000 for accounting period of 12 months, hence it becomes Rs. 5,000 (Rs. 10,000 \(\times\) 6/12) for half yearly accounting period
Profit and Loss Appropriation A/c
Dr. for half-yearly ended on 31 st March, 2008 Cr.
| Particulars | Rs. | Particulars | Rs. | |
|---|---|---|---|---|
| To Ram's Capital A/c : | By Net Profits as per Profit & Loss A/c | 24,000 | ||
| Usual Share of Profit | 12,000 | |||
| Less: Tr. to Raja's Capital | (600) | 11,400 | ||
| To Rahim's Capital A/c : | ||||
| Usual Share of Profit | 8,000 | |||
| Less: Tr. to Raja's Capital | (400) | 7,600 | ||
| To Raja's Capital A/c : | ||||
| Usual Share of Profit | 4,000 | |||
| Add : Tr. from Ram's Capital | 600 | |||
| Add : Tr. from Rahim's Capital | 400 | 5,000 | ||
| 24,000 | 24,000 | |||
22.
|
Basis of Difference |
Receipts and Payments Account |
Income and Expenditure Account |
|
1. Nature |
It is a summary of cash and bank transactions |
It is a summary of current year income and expenses |
|
2. Revenue and Capital |
It records transactions related to both revenue and capital nature. |
It records transactions related to revenue nature only. |
|
3. Debit Side |
Debit side of this account records cash and bank receipts during an accounting period. |
Debit side of this account records expenses and losses incurred in the current accounting period. |
|
4. Credit side |
Credit side of this account records payments in cash and through cheques. |
Credit side of this account records income and gains earned in the current accounting period. |
|
5. Type of account |
It is a Real Account |
It is a Nominal Account |
|
6. Period |
It records receipts and payments made during the year that may be related to the current accounting period or the preceding period and the succeeding accounting period. |
It only records income and expenditure made during the current accounting period. |
|
7. Object |
This account depicts the cash position of an NPO. |
This account shows the net result in terms of surplus or deficits due to the business activities during the year. |
|
8. Opening Balance |
This account begins with the opening balance of cash in hand and cash at bank or overdraft. |
Usually, it has no opening balance but sometimes surplus or deficits forwarded from the last accounting period (if not added to the Capital Fund) can be shown as the opening balance of this account. |
|
9. Closing balance |
The balancing figure of this account is expressed in terms of the closing balance of cash in hand and cash at bank or overdraft. |
The balancing figure is expressed in terms of either surplus (if incomes > expenses) or deficit (if expenses > incomes). |
|
10. Depreciation |
It does not include non-cash items like depreciation, appreciation, etc. |
It includes non-cash items like depreciation, bad-debts, provisions, etc. in order to ascertain the actual net profit or net loss. |
|
11. Adjustment |
Receipts and Payments during the year can be adjusted before preparation of the financial statements. |
Adjustments regarding both cash and non-cash transactions can be made. |
|
12. Transfer of Balance |
The opening balance of this account is brought forward from the last year's Receipts and Payments Account and the closing balance of this account is carried forward to the subsequent year's Receipts and Payments Account and is shown in the Balance Sheet of the current accounting period. |
If the closing balance of this account is surplus then it is added to the Capital Fund in the Balance Sheet. If the closing balance is deficit then it is deducted from the Capital Fund in the Balance Sheet. |
|
13. System |
It is prepared on cash basis. |
It is prepared on accrual basis. |
23.
Amount to be refunded = Rs.1,00,000; Amount to be received at the time of allotment = Rs.11,00,000
24.
(i) Improve (ii) No change (iii) Improve (iv) Improve (v) Improve
25.
Share of loss: T = Rs.144, P=Rs.216
26.
Profit on revaluation = Rs 29,200
27.
New profit sharing ratio=2:1:1
28.
Operating Profit before working capital changes Rs. 1,40,000, Net Cash from Operating Activities Rs. 70,000, Net Cash used in Investing Activities (Rs. 1,26,000), Net Cash used in Financing Activities Rs. 70,000.
29.
Balance of Prem's Current A/c RS.1,05,000.i.e., RS.15000 (Interest) + RS.60,000 (Share of goodwill) + RS.30,000 (share of profit) transferred to Prem's Capital A/c; Balance of Prem's Capital A/c RS.2,55,000 i.e., RS.1,50,000 Balance + RS,1,05,000 of transferred to Prem's Executor's Loan A/c; Interest on Executor's Loan on 31.03.2007 RS.25,5000 and on 31.03.2008 RS.12,750; Payment of 1st Installment on 31.03.2007 RS.1.53.000 i.e., (RS.1,27,500 + RS.25,500) and 2nd Installment on 31.03.2008 RS.1,40,250 i.e., (RS.1,27,500 + RS.12,750).
[Hint: Entry for share of profit: Dr.Profit and Loss Appropriation A/c;Cr. Prem's Current A/c by RS.30,000]
30.
Important Note:
1. Credit side of the Trial Balance of the question is short by Rs 60. Thus, in order to tally both sides of the Trial Balance, Suspense Account will be opened with the difference amount of Rs 60.
2. In the adjustment, Closing Stock should be Rs 960 instead of Rs 900.
| Particulars | Amount Rs. |
Particulars | Amount Rs. |
|---|---|---|---|
| Opening Stock | 1,750 | Receipts from Dining Room | 87,660 |
| Purchases | 24,660 | Closing Stock | 960 |
| Dining Room Exp. | 32,370 | ||
| Profit from Restaurant | 30,420 | ||
| 88,620 | 88,620 |
| Expenditure | Amount Rs. |
Amount Rs. |
Income | Amount Rs. |
|---|---|---|---|---|
| Rent | 10,470 | Subscriptions | 9,450 | |
| Wages | 18,690 | Sundry Receipts | 410 | |
| Repairs an Renewals | 5,400 | Interest on Fixed Deposits | 270 | |
| Fuel and Light | 5,280 | Profit from Restaurant | 30,420 | |
| Misc. Expenses | 4,050 | Billiards Receipts | 7,300 | |
| Depreciation on | ||||
| Fixtures and Fittings | 60 | |||
| Billiards Table | 390 | |||
| Furniture | 560 | 1,010 | ||
| Surplus (Excess of Income over Expenditure) | 2,950 | |||
| 47,850 | 47,850 |
| Liabilities | Amount Rs. |
Amount Rs. |
Assets | Amount Rs. |
Amount Rs. |
|---|---|---|---|---|---|
| Sundry Creditors | 5,310 | Cash in Hand | 560 | ||
| Grant from Institute | 42,000 | Cash at Bank | 2,760 | ||
| Suspense | 60 | Fixed Deposit | 8,500 | ||
| Capital Fund (Income and Exp. A/c | Sundry Debtors | 2,250 | |||
| as on Apr.01, 2016) | 1,380 | China Glass, Cutlery and Linen | 600 | ||
| Add: Surplus | 2,950 | 4,330 | Billiards Table | 2,070 | |
| Less: Depreciation | (390) | 1,680 | |||
| Fixture and Fittings | 870 | ||||
| Less: Depreciation | (60) | 810 | |||
| Furniture | 4,140 | ||||
| Less: Depreciation | (560) | 3,580 | |||
| Club Premises | 30,000 | ||||
| Stock of Restaurant | 960 | ||||
| 51,700 | 51,700 |
31.
Cash Flow from operating activities Rs. 1, 25,000, cash used in investing activities Rs. 120000 cash used in Financing Activities Rs. 12,000, Net decrease in cash and Bank Balance Rs. 7000.
32.
(i) Return on investment=\(\frac { Net\ profit\ before\ interest,\ tax\ and\ preference\ dividened* }{ Capital\ employed* } \times 100\)
\(=\frac { 14,50,000 }{ 88,00,000 } \times 100=16.48\quad \)%
*Capital employed = Fixed assets + Currents assets - Current liabilities
=75,00,000+40,00,000-27,00,000
=88,00,000
(ii) Total assets to debt ratio=\(\frac { Total\ assets* }{ Debt } =\frac { 1,15,00,000 }{ 80,00,000 } \)=1.44:1
*Total assets = Fixed assets + Current assets
=75,00,000+40,00,000
=1,15,00,000
33.
| Date | Particulars | LF | Amt (Dr) | Amt (Cr) | |
|---|---|---|---|---|---|
| Furniture A/c | Dr | 2,20,000 | |||
| To M/s Furniture Mart | 2,20,000 | ||||
| (Being furniture purchased) | |||||
| M/s Furniture Mart | Dr | 1,10,000 | |||
| To Bills Payable A/c | 1,10,000 | ||||
| (Being bills payable accepted in part payment) | |||||
| M/s Furniture Mart | Dr | 1,10,000 | |||
| To 9% Debentures A/c (1,000 x 100) | 1,00,000 | ||||
| To Securities Premium Reserve A/c (1,000 x 10) | 10,000 | ||||
| (Being debentures issued to Furniture Mart in part payment) | |||||
Working Note
\(\text { Number of debentures issued }=\frac{\text { Amount due to } \mathrm{M} / \mathrm{s} \text { Furniture Mart }}{\text { Issue price per debenture }}\)
\(=\frac{1,10,000}{110}\)
= 1,000 debentures
34.
Balance Sheet
as at 31st March 2105
| Particulars | Note No | 31st March 2015(Rs) |
|---|---|---|
| I.Equity and liabilities | ||
| 1.Shareholders Funds | ||
| (a) Share Capital | 1 | 20,00,000 |
| (b) Reserves and Surplus | 2 | 2,60,000 |
| 2.Non-current Liabilities | ||
| Long-term Borrowings | 3 | 10,00,000 |
| 3.Current Liabilties | ||
| (a) Trade Payable | 4 | 4,00,000 |
| (b)Short-term Provisions | 5 | 1,00,000 |
| Total | 37,60,000 | |
| II.Assets | ||
| 1.Non-current Assets | ||
| (a) Fixed assets | ||
| (i) Tangible Assets | 6 | 18,00,000 |
| (ii) Capital work-in-progress | 7 | 7,00,000 |
| (b) Non-current Investments | 8 | 10,00,000 |
| (c) Other Non-current Assets | 9 | 1,20,000 |
| Particulars | Note No | 31st March 2015(Rs) |
|---|---|---|
| 2.Current Assets | ||
| (a) Cash and Cash Equivalents | 10 | 1,00,000 |
| (b) Other Current Assets | 11 | 40,000 |
| Total | 37,60,000 |
| Particulars | Amt(Rs) |
|---|---|
| 1.Share capital | |
| Authorised Capital | |
| ...Equity Shares of Rs 10 each | ... |
| Issued Capital | |
| ...Equity Shares of Rs 10 each | ... |
| Subscribed Capital | |
| Subscribed and Fully Paid-up | |
| 2,00,000 Equity Shares of Rs 10 each | 20,00,000 |
| 2. Reserve and Surplus | |
| Securities Premium Reserve | 4,00,000 |
| (-) Surplus,i.e. Balance in Statement of Profit and Loss* | (1,40,000) |
| 2,60,000 | |
| Surplus, i.e. Balance in Statement of Profit and Loss is after writing-off | |
| Rs 40,000 being 1/5th of Discount on issue of 12% Debentures | |
| 3.Long-term Borrowings | |
| 12% Debentures | 10,00,000 |
| 4.Trade Payable | |
| Creditors | 4,00,000 |
| 5.Short-term Provisions | |
| Proposed Divident | 1,00,000 |
| 6.Tangible Assets | |
| Land and Building | 18,00,000 |
| 7.Capital Work-in-progress | |
| Building under Construction | 7,00,000 |
| 8.Non-current Investments | |
| Governemnt Bonds | 10,00,000 |
| 9.Other Non-current Assets | |
| Unamortised Discount on Issue of Debentures | 1,20,000 |
| 10.Cash and Cash Equivalents | |
| Cash at Bank | 1,00,000 |
| 11.Other Current Assets | |
| Unamortised Discount on Issue of Debentures | 40,000 |
Values involved in the presentation of balance sheet pre:
(i) Complying with the legal provision
(ii) Orderliness
35.
Cost of materials consumed=Opening inventory of materials+ Purchases - Closing inventory of materials
= Rs 5,00,000+Rs 40,00,000-Rs 6,00,000
= Rs 39,00,000.
36.
Common Size Balance Sheet
as at 31st March,2014 and 2015
| Particulars | Absolute Amount | Percentage of Balance Sheet Total 2014(%) | Percentage of Balance Sheet Total 2015(%) | |
|---|---|---|---|---|
| 2014(Rs) | 2015(Rs) | |||
| I.EQUITY AND LIABILITIES | ||||
| 1.Shareholders' Funds | ||||
| (a) Share Capital | 30,00,000 | 40,00,000 | 60 | 66.7 |
| (b) Reserves and Surplus | 4,00,000 | 6,00,000 | 8 | 10.0 |
| 2.Non-current Liabilities | ||||
| Long-term Borrowings | 10,00,000 | 12,00,000 | 20 | 20.0 |
| 3.Current Liabilites | ||||
| Trade Payables | 6,00,000 | 2,00,000 | 12 | 3.3 |
| Total | 50,00,000 | 60,0,000 | 100 | 100 |
| II.ASSETS | ||||
| 1.Non-current Assets | ||||
| (a) Fixed Assets | ||||
| (i) Tangible Assets | 30,00,0000 | 40,00,000 | 60 | 66.7 |
| (ii) Intangible Assets | 6,00,000 | 2,00,000 | 12 | 3.3 |
| 2.Current Assets | ||||
| (a) Inventories | 10,00,000 | 12,00,000 | 20 | 20.0 |
| (b) Cash and Cash Equivalents | 4,00,000 | 6,00,000 | 8 | 10.0 |
| Total | 50,00,0000 | 60,00,000 | 100 | 100 |
37.
Dr B's Loan Account Cr
| Date | Particular | Amt (Rs) | Date | Particular | Amt(Rs) |
|---|---|---|---|---|---|
| 2013 | 2012 | ||||
| Mar 31 | To Bank A/c(Rs.40,000+Rs.6,000) | 46,000 | Apr 1 | By B's Capital A/c | 1,20,000 |
| Mar 31 | To Balance c/d | 80,000 | 2013 | ||
| Mar 31 | By Interest A/c(Rs.1,20,000 x 5/100) | 6,000 | |||
| 1,26,000 | 1,26,000 | ||||
| 2014 | 2013 | ||||
| Mar 31 | To Bank A/c (Rs.40,000+Rs.4,000) | 44,000 | Apr 1 | By Balance b/d | 80,000 |
| Mar 31 | To Balance c/d | 40,000 | 2014 | ||
| Mar 31 | By Interest A/c (Rs.80,000 x 5/100) | 4,000 | |||
| 84,000 | 84,000 | ||||
| 2015 | 2014 | ||||
| Mar 31 | To Bank A/c (Rs.40,000+Rs.2000) | 42,000 | Apr 1 | By Balance b/d | 40,000 |
| 2015 | |||||
| Mar 31 | By Interest A/c (Rs.40,000 x 5/100) | 2,000 | |||
| 42,000 | 42,000 |
38.
| Date | Particulars | LF | Amt(Dr) | Amt(Cr) |
|---|---|---|---|---|
| 2015 | ||||
| Apr1 | ||||
| (i) | Workmen Compensation Reserve A/c Dr | 45,000 | ||
| To Ram's capital | 20,000 | |||
| To Raj's Capital A/c | 15,000 | |||
| To Rohan's Capital A/c | 10,000 | |||
| (Being the transfer of surplus workmen compensation reserve to partners capital accounts in their old profit sharing ratio) | ||||
| (ii) | Wormen Compensation Reserve A/c Dr | 45,000 | ||
| To Provisions for Workmen Compensation Claim A/c | 22,500 | |||
| To Ram's Capital A/c | 10,000 | |||
| To Raj;s Capital A/c | 7,500 | |||
| To Rohan's Capital A/c | 5,000 | |||
| (Being the transfer of surplus workmen Compensation reserve to partners capital accounts in their old profit sharing ratio) | ||||
| (iii) | Workmen Compensation Reserve A/c Dr | 45,000 | ||
| Revaluation A/c To provision for Workmen Compensation Claim A/c |
4,500 | |||
| (Being the transfer of loss on revaluation to partner's capital accounts in their old profit sharing ratio) |
39.
Loss on Realisation Rs. 9,000; Final Payment of Capital: Bora Rs. 19,500 Singh Rs. 16,500 and Ibrahim Rs. 9,500.
[Hint : (i) Amount realised from unrecorded assets Rs. 6,220 transferred from Realisation A/c to the debit side of Bank A/c. (ii) Expenses Rs. 620 transferred from Realisation A/c to the credit side of Bank A/c. (iii) Loss on Realisation transferred to debit side of partners capital a/c i.e., Bora's share Rs. 5,000, Singh Rs. 3,000 and Ibrahim Rs. 1,000 (iv) Final payment to partners capital transferred from partners' Capital a/cs to the credit side of Bank A/c.]
40.
'Deposit of cash into bank' does not result in cash flow.It is simply a movement between two components of cash and cash equivalents.
41.
(c)
Asset
42.
(a)
Charitable organization
43.
(c)
All
44.
(a)
Revaluation of assets
45.
(a)
Premium method
46.
(b)
Paid rate ably
47.
(a)
All partners in the old profit sharing ratio
48.
(d)
All of above
49.
(c)
Belongs only to the old partner who have credited it
50.
(c)
May or may not pay cash for good will
51.
(c)
Cash flow from Financing activities
52.
(b)
outflow of cash
53.
(c)
4
54.
(d)
All of them
55.
(a)
At a pre-determined rate
56.
(a)
Non current liabilities
57.
(b)
Payment of dividend
58.
(a)
Capital reserve
59.
(a)
purchased goodwill
60.
(a)
Rs 20,000
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