Yes, it is true that the liquidity of a business firm is measured by its ability to pay its long-term obligations as they become due. Here, the longterm obligation means payment of principal amount on the due date and payment of interest on the regular basis.
For measuring the long term solvency of any business, we calculate the following ratio.
(i) Debt equity ratio
(ii) Proprietary ratio

(i) Nature of a business makes inventory turnover ratio more important in case of a grocery store as compare to an insurance company.
(ii) A grocery store is a trading concern involved in trading. On the other hand, insurance company is involved in service business and involved in delivering service, so there is no question of inventory because service is perishable in nature and cannot be stored.

The benefits he will get from computerised records are
(i) High speed
(ii) Accuracy
(iii) Reliablility
(iv) Versatility
(v) Storage
Value indicated is - Taking care of public health by showing manufacturing and expire date electronically.

(i) Computerised accounting system refers to the system of maintaining accounts using computers.
(ii) It involves the processing of accounting transactions through the use of computer in order to maintain and produce accounting records and reports.

Under subscription Over subscription 1. In under subscription all the shares offered
may not be taken up by the public. In over subscription all the shares
offered are taken up by the public 2. The shares cannot be allotted, if the
minimum subscription is not received Here all shares are subscribed, so
there is no question of minimum
subscription 3. Under subscription does not require any
special treatment in journal entries. In over subscription additional journal
entries are required for rejection and
adjustment of application money

(i) Allotment means acceptance by a company of the offer made by an applicant to take shares.
(ii) It is done by Board of Directors.
(iii) On allotment, the applicant becomes the shareholder or member of the company.

Funds flow analysis is concerned with preparation of funds flow statement which shows the inflow and outflow of funds in a given period of time. Funds flow analysis is useful in judging the credit worthiness, financial planning and preparation of budgets.

Trend refers to the tendency of movement. Trend analysis refers to the study of movement of figures over a period. The trend may be increasing trend or decreasing trend or irregular

It is so because receipts and payments account is prepared on cash basis of accounting

No, as the balance in receipt and payments account is closing cash and bank balance

It is so because salary or commission paid to a partner is not a charge on profit but an I appropriation of profit.

According to Indian partnership Act, 1932 in the absence of partnership deed, profits are shared equally among the partners. So, the claim of Ramesh to share the profits in the ratio of capitals is not valid.

Revaluation account will be credited

(i) Simple method: Proprietors, who do not have the proper knowledge of accounting principles. Find it much convenient and easier to maintain their business records under this system.
(ii) Less expensive: It is an economical mode of maintaining records as there is no need to appoint specialised accountant.
(iii) Flexible: Owner may record transactions as particular own needs. It can be easily adjusted or changed whenever needed.
(iv) Less time consuming: Maintaining books according to the single entry system is less time consuming, as only few books are to be maintained. Further the books are not as comprehensive as they are under double entry system.

No, as arithmetical accuracy is checked by preparing a trial balance and in case of single entry system a trial balance cannot be prepared as it does not record both aspects of a transaction.

A person may join as a new partner in an existing partnership firm. This is called admission of a partner.

A person who is retired from the firm is known as an outgoing partners or retiring partners.

New profit sharing ratio is the agreed proportion in which future profit will be distributed to the continuing partners

The monopoly condition or limited competition enables the concern to earn high profits which leads to higher value of goodwill

If the firm enjoys good reputations for its product's quality, there will be higher sales and the value of its goodwill will increase.

(a) Debit account
(b) Debit account
(c) Debit account
(d) Credit account

Computation of sacrificing ratio and new profit sharing ratio
Share sacrificed by old partners
Hari =\(\frac { 1 }{ 8 } \)
Saleem = 0
Sacrificing ratio = 1:0
Old ratio of Hari and Saleem is 5:3 that is \(\frac { 5 }{ 8 } :\frac { 3 }{ 8 } \)
New share of old partner = Old share - Share sacrificed
Hari = \(\frac { 5 }{ 8 } -\frac { 1 }{ 8 } =\frac { 5-1 }{ 8 } =\frac { 4 }{ 8 } \)
Saleem = \(\frac { 3 }{ 8 } \)
Share of new partner Joel = \(\frac { 1 }{ 8 } \)
New profit sharing ratio of Hari, Saleem and Joel is \(\frac { 4 }{ 8 } :\frac { 3 }{ 8 } :\frac { 1 }{ 8 } \) that is, 4:3:1.

Journal entry

Date	Particulars		L.F	Debit Rs	Credit Rs
2018	Rosi A/c (45,000)	Dr		15,000
January	Rathi A/c	Dr		15,000
	Rani A/c	Dr		15,000
	To Profit and loss A/c				45,000
	(Accumulated loss transferred to all
	partner's capital account in the old profit sharing ratio)

Working capital statement or schedule of changes in working is prepared to disclose net change in working capitals on two specific dates (generally two balance sheet dates). It is prepared from current assets and current liabilities
Working Capital = current Assets - Current Liabilities.

Share gained by Arya = \(\frac{2}{8}\)
Gaining ratio = \(\frac{2}{8}\): 0 that is, \(\frac{1}{4}:\)0 or 1 : 0
New share of continuing partner = Old share + Share gained
Arya  \(=\frac{3}{8}+\frac{2}{8}=\frac{5}{8}\)
Benin \(=\frac{3}{8}+0=\frac{3}{8}\)
Therefore, new profit sharing ratio of Arya and Benin is \(\frac{5}{8}:\frac{3}{8}\) that is 5:3

(i) Return on investment shows the proportion of net profit. before interest and tax to capital employed (shareholders' funds and long term debts).
(ii) This ratio measures how efficiently the capital employed is used in the business.
(iii) It is an overall measure of profitability of a business concern.
(iv) It is computed as below: Return on Investment (ROI)
= \(\frac { Net\ profit\ before\ interest\ and\ tax }{ Capital\ employed } \) x 100
​​​​​​​Capital employed = Share holder's fund + Non currebt liablities greater the return on investment better is the profitability of a business and vice versa

(i) Quick ratio gives the proportion of quick assets to current liabilities.
(ii) It indicates whether the business concern is in a position to pay its current liabilities as and when they become due, out of its quick assets.
(iii) It is otherwise called liquid ratio or acid test ratio.
(iv) It is calculated as follows:
Quick ratio = \(\frac { Quick\ assets }{ Current\ liabilities } \).
Quick assets = Current assets - Inventries - prepaid expenses. higher the Quick ratio better is the short - term financial position of an enterprises.  

Journal entries

Date	Particulars		L.F	Debit Rs.	Credit Rs.
	Equity share first and final call A/c (15,000 × 2)	Dr.		30,000
	To Share capital A/c				30,000
	(Share first and final call money due)
	Bank A/c (14,900 × 2)	Dr.		29,800
	Calls in arrear A/c (100 × 2)	Dr.		200
	To Equity share first and final call A/c				30,000
	(Amount received on calls and amount not
	received transferred to calls in arrear account)

Accounting report is a compilation of accounting information that are derived from the accounting records of a business concern. Accounting reports may be classified as routine reports and special purpose reports.

(i) Automated accounting is an approach to maintain up-to-date accounting records with the aid of accounting software.
(ii) Under manual accounting system entries are made in different books of accounts while accounting software packages sallow manual entry in one field or one place.

i) When there is a change in the profit Sharing ratio.
ii) When a new partner is admitted into a firm.
iii) When an existing partner retires from the firm or when a partner dies.
iv) When a partnership firm is dissolved.

Goodwill = Average profit \(\times\) Number of years of purchase
Average profit \(=\frac{Total\ profit}{Number\ of\ years}\)
\(=\frac{5,000+8,000-3,000+6,000}{4}\)
\(=\frac{16,000}{4}\) = Rs. 4,000
Average profit = Rs. 4,000
Goodwill = Average profit \(\times\) Number of years of purchase
4,000 \(\times\) 3 = 12,000
Goodwill = Rs. 12,000

Interest on drawings = Amount of drawings \(\times\) Rate of Interest x Period of interest
= Rs. 30,000 \(\times\) \(\frac{6}{100}\) \(\times\) \(\frac{4}{12}\) = Rs. 3,600
Interest on drawings of mani =  Rs. 600

Journal entries

Date	Particular	L.F	Debit Rs.	Credit Rs.
2018	Santhosh's capital A/c          Dr.		600
Dec 31	To Interest on drawings A/c			600
	(Interest on drawings charged)
2018	Interest on drawings A/c       Dr		600
Dec 31	To Profit and loss appropriation A/c			600
	(Interest on drawing account closed)

Calculation of interest on drawings of Priya (using average period)
Total amount of drawings = 4,000 \(\times\) 4 = Rs. 16,000
If drawings are made at the end of every quarter, average period = 4.5
Interest on drawings = Total amount of drawings \(\times\) Rate of interest \(\times\) \(\frac { Average\quad period }{ 12 } \)
= Rs. 16,000 \(\times\) \(\frac { 6 }{ 100 } \times \frac { 4.5 }{ 12 } \) = Rs. 360

(i) Some organisations are established for the purpose of rendering services to the public without any profit motive.
(ii) They may be created for the promotion of art, culture, education, sports, etc. These organisations are called not-for-profit organisation.
(iii) Charitable institutions, educational, institutions, cultural societies, sports and recreation clubs, hospitals, libraries and literary associations are some of the examples of not-for-profit organisations.

Balance sheet as on 31^st March, 2018

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Prize fund	60,000		Prize fund
Add: Interest received on			investment		60,000
prize fund investment
Add: Donation for prize
fund	12,000
	78,000
Less: Prizes distributed	8,000	70,000

Dr                         Total Creditors account              Cr

Particulars	Rs.	Particulars	Rs
To Cash (paid)	4,50,000	By Balance b/d	1,70,000
To Purchase returns	20,000	By Credit purchases	4,90,000
To Balance c/d	1,90,000	(balance figure)
	6,60,000		6,60,000

Dr.              Total creditors account             Cr

Particulars	Rs.	Particulars	Rs.
To Cash A/c (paid)	1,60,000	By Balance b/d	50,000
To Returns outward A/c	6,000	By Credit purchases A/c	1,86,000
To Balance c/d	70,000	(balancing figure)
	2,36,000		2,36,000

Format of bills payable account

Dr.     Bills payable account      Cr.

Particulars	Rs	Particulars	Rs
To Cash / Bank A/c	xxx	By Balance b/d	xxx
(bills payable paid)		(opening balance)
To Sundry creditors A/c	xxx	By Sundry creditors A/c	xxx
(bills payable dishonoured)		(bills accepted)
To Balance c/d	xxx
(closing balance)
	xxx		xxx

In the books of Bharath Ltd. Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c (1,20,000 × 5)	Dr.		6,00,000
	To Equity share application A/c				6,00,000
	(Application money received)
	Equity share application A/c (1,00,000 × 5)	Dr.		5,00,000
	To Equity share capital A/c				5,00,000
	(Transfer of share application money to share capital)
	Equity share application A/c (20,000 × 5)	Dr.		1,00,000
	To Bank A/c				1,00,000
	(Excess share application money refunded)
	Equity share allotment A/c	Dr.		3,00,000
	To Equity share capital A/c				3,00,000
	(Share allotment money due)
	Bank A/c	Dr.		3,00,000
	To Equity share allotment A/c				3,00,000
	(Allotment money received)
	Equity share first and final call A/c	Dr.		2,00,000
	To Equity share capital A/c				2,00,000
	(Share first and final call money due)
	Bank A/c	Dr.		2,00,000
	To Equity share first and final call A/c				2,00,000
	(Share first and final call money received)

Comparative balance sheet of Chandra Ltd as on 31^st March 2016 and 31^st March 2017

Particulars	2015-16	2016-17	Absolute amount of increase ( +) or decrease (–)	Percentage increase (+) or decrease (–)
	Rs.	Rs.	Rs.
I EQUITY AND LIABILITIES
Shareholders’ fund	1,00,000	2,60,000	+1,60,000	+160
Non-current liabilities	50,000	60,000	+10,000	+20
Current liabilities	25,000	30,000	+5,000	+20
Total	1,75,000	3,50,000	+1,75,000	+100
II ASSETS
Non-current assets	1,00,000	2,00,000	+1,00,000	+100
Current assets	75,000	1,50,000	+75,000	+100
Total	1,75,000	3,50,000	+1,75,000	+100