By QB365 on 31 Dec, 2022
QB365 provides a detailed and simple solution for every Possible Questions in Class 12 Accountancy Subject - Revision Model Question Paper, English Medium. It will help Students to get more practice questions, Students can Practice these question papers in addition to score best marks.
12th Standard
Accountancy
PART - I
Note : i ) All Questions Are Compulsory.
ii) Choose The Most Suitable Answer From The Given Four Correct Alternatives.
Incomplete records are generally maintained by
A company
Government
Small sized sole trader business
Multinational enterprises
Statement of affairs is a
Statement of income and expenditure
Statement of assets and liabilities
Summary of cash transactions
Summary of credit transactions
Balance of receipts and payments account indicates the
Loss incurred during the period
Excess of income over expenditure of the period
Total cash payments during the period
Cash and bank balance as on the date
Income and expenditure account is a
Nominal A/c
Real A/c
Personal A/c
Representative personal account
In the absence of an agreement among the partners, interest on capital is
Not allowed
Allowed at bank rate
Allowed @ 5% per annum
Allowed @ 6% per annum
As per the Indian Partnership Act, 1932, the rate of interest allowed on loans advanced by partners is
8% per annum
12% per annum
5% per annum
6% per annum
The average rate of return of similar concerns is considered as
Average profit
Normal rate of return
Expected rate of return
None of these
Which of the following is true?
Super profit = Total profit / number of years
Super profit = Weighted profit / number of years
Super profit = Average profit – Normal profit
Super profit = Average profit x Years of purchase
The profit or loss on revaluation of assets and liabilities is transferred to the capital account of
The old partners
The new partner
All the partners
The Sacrificing partners
If the old profit sharing ratio is more than the new profit sharing ratio of a partner, the difference is called
Capital ratio
Sacrificing ratio
Gaining ratio
None of these
At the time of retirement of a partner, determination of gaining ratio is required
To transfer revaluation profit or loss
To distribute accumulated profits and losses
To adjust goodwill
None of these
If the final amount due to a retiring partner is not paid immediately, it is transferred to
Bank A/c
Retiring partner’s capital A/c
Retiring partner’s loan A/c
Other partners’ capital A/c
After the forfeited shares are reissued, the balance in the forfeited shares account should be transferred to
General reserve account
Capital reserve account
Securities premium account
Surplus account
The amount received over and above the par value is credited to
Securities premium account
Calls in advance account
Share capital account
Forfeited shares account
Balance sheet provides information about the financial position of a business concern
Over a period of time
As on a particular date
For a period of time
For the accounting period
Which of the following tools of financial statement analysis is suitable when data relating to several years are to be analysed?
Cash flow statement
Common size statement
Comparative statement
Trend analysis
The mathematical expression that provides a measure of the relationship between two figures is called
Conclusion
Ratio
Model
Decision
Current ratio indicates
Ability to meet short term obligations
Efficiency of management
Profitability
Long term solvency
Which submenu displays groups, ledgers and voucher types in Tally?
Inventory vouchers
Accounting vouchers
Company Info
Account Info
What are the predefined Ledger(s) in Tally?
(i) Cash
(ii) Profit & Loss A/c
(iii) Capital A/c
Only (i)
Only (ii)
Both (i) and (ii)
Both (ii) and (iii)
PART - II
Note : Answer Any Seven Questions and Question.No.30 is Compulsory.
From the following particulars ascertain profit or loss:
Rs. | |
---|---|
Capital at the beginning of the year (1st April, 2016) | 2,00,000 |
Capital at the end of the year (31st March, 2017) | 3,50,000 |
Additional capital introduced during the year | 70,000 |
Drawings during the year | 40,000 |
From the following details calculate the amount that will be shown as subscription in Income and Expenditure Account for the year ending 31st March, 2017.
Subscription received for | Rs. |
---|---|
2015-16 | 7,500 |
2016-17 | 60,000 |
2017-18 | 1,500 |
69,000 |
Subscription outstanding for the year 2016-17 is Rs. 2,400. Subscription for 2016-17 received in 2015-16 was Rs.1,000
What is a partnership deed?
The following are the profits of a firm in the last five years:
2014: Rs. 4,000; 2015: Rs. 3,000; 2016: Rs. 5,000; 2017: Rs. 4,500 and 2018: Rs. 3,500
Calculate the value of goodwill at 3 years purchase of average profits of five years.
Rathna Kumar and Arockia Das are partners in a firm sharing profits and losses in the ratio of 3:2. Their balance sheet as on 31st March, 2017 is as follows:
Liabilities | Rs. | Rs. | Assets | Rs. |
---|---|---|---|---|
Capital accounts: | Buildings | 30,000 | ||
Rathna Kumar | 30,000 | Plant | 60,000 | |
Arockia Das | 50,000 | 80,000 | Furniture | 20,000 |
Profit and loss appropriation A/c | 20,000 | Debtors | 10,000 | |
General reserve | 5,000 | Stock | 15,000 | |
Workmen compensation fund | 15,000 | Cash at bank | 15,000 | |
Sundry creditors | 30,000 | |||
1,50,000 | 1,50,000 |
David was admitted into the partnership on 1.4.2017. Pass journal entry to distribute the accumulated profits and reserve on admission.
Mary, Meena and Mariam are partners of a firm sharing profits and losses equally. Mary retired from the partnership on 1.1.2019. On that date, their balance sheet showed accumulated loss of Rs. 75,000 on the asset side of the balance sheet. Give the journal entry to distribute the accumulated loss.
Jeyam Tyres issued 15,000 ordinary shares of Rs.10 each payable as follows:
Rs.3 on application; Rs.5 on allotment; Rs.2 on first and final call. All money were duly received except one shareholder holding 100 shares failed to pay the call money. Pass the necessary journal entries for call (using calls in arrear account).
From the following particulars, prepare comparative income statement of Tharun Co. Ltd.
Particulars | 2016-17 | 2017-18 |
---|---|---|
Rs. | Rs. | |
Revenue from operations | 2,00,000 | 2,50,000 |
Other income | 50,000 | 40,000 |
Expenses | 1,50,000 | 1,20,000 |
Calculate current ratio from the following information:
Particulars | Rs. | Particulars | Rs. |
---|---|---|---|
Current investments | 80,000 | Trade creditors | 1,60,000 |
Inventories | 1,60,000 | Bills payable | 1,00,000 |
Trade receivables | 4,00,000 | Expenses payable | 1,40,000 |
Cash and cash equivalents | 1,20,000 | ||
Prepaid expenses | 40,000 |
What is automated accounting system?
PART - III
Note : Answer Any Seven Questions and Question No.40 is Compulsory.
From the following details, calculate the missing figure
Rs. | |
---|---|
Closing capital as on 31.3.2019 | 1,90,000 |
Additional capital introduced during the year | 50,000 |
Drawings during the year | 30,000 |
Opening capital on 1.4.2018 | ? |
Loss for the year ending 31.3.2019 | 40,000 |
From the following Receipts and Payment Account of Ooty Recreation Club, prepare Income and Expenditure Account for the year ended 31.03.2018
Receipts | Rs. | Payments | Rs. |
---|---|---|---|
To Opening balance | By Sports materials purchased | 10,000 | |
Cash in hand | 5,000 | By Stationery paid | 7,000 |
To Rent received | 10,000 | By Computer purchased | 25,000 |
To Sale of investments | 8,000 | By Salaries | 20,000 |
To Subscription received | 54,000 | By Closing balance | |
Cash in hand | 15,000 | ||
77,000 | 77,000 |
From the following balance sheets of Brindha and Praveena who share profits and losses in the ratio of 3:4, calculate interest on capital at 6% p.a. for the year ending 31st December 2017.
Liabilities | Rs. | Assets | Rs. |
---|---|---|---|
Capital accoun | Sundry assets | 80,000 | |
Brindha | 30,000 | ||
Praveena | 40,000 | ||
Profit and loss appropriation A/c | 10,000 | ||
80,000 | 80,000 |
On 1st July 2017, Brindha introduced an additional capital of Rs. 6,000 and on 1st October 2017, Praveena introduced Rs. 10,000. Drawings of Brindha and Praveena during the year were Rs. 5,000 and Rs. 7,000 respectively. Profit earned during the year was Rs. 31,000.
How is goodwill calculated under the super profits method?
Rajesh and Ramesh are partners sharing profits in the ratio 3:2. Raman is admitted as a new partner and the new profit sharing ratio is decided as 5:3:2. The following revaluations are made. Pass journal entries and prepare revaluation account.
(a) The value of building is increased by Rs. 15,000.
(b) The value of the machinery is decreased by Rs. 4,000.
(c) Provision for doubtful debt is made for Rs. 1,000.
Kavitha, Kumudha and Lalitha are partners sharing profits and losses in the ratio of 5 : 3 : 3 respectively. Kumudha retires from the firm on 31st December, 2018. On the date of retirement, her capital account shows a credit balance of Rs. 2,00,000. Pass journal entries if:
i) The amount due is paid off immediately by cheque.
ii) The amount due is not paid immediately.
iii) Rs. 70,000 is paid immediately by cheque
Anu Company forfeited 200 equity shares of Rs.10 each issued at par held by Thiyagu for nonpayment of the final call of Rs.3 per share. The shares were reissued to Laxman at Rs.6 per share. Show the journal entries for forfeiture and reissue.
From the following particulars, prepare comparative income statement of Abdul Co. Ltd.
Particulars | 2015-16 Rs. |
2016-17 Rs. |
---|---|---|
Revenue from operations | 3,00,000 | 3,60,000 |
Other income | 1,00,000 | 60,000 |
Expenses | 2,00,000 | 1,80,000 |
Income tax | 30% | 30% |
Following is the statement of profit and loss of Maria Ltd. for the year ended 31st March, 2018. Calculate the operating cost ratio.
Particulars | Note No. | Amount Rs. |
---|---|---|
I. Revenue from operations | 8,00,000 | |
II. Other Income | 20,000 | |
III. Total revenue (I +II) | 8,20,000 | |
IV. Expenses: | ||
Purchases of stock-in-trade | 4,50,000 | |
Changes in inventories | -40,000 | |
Employee benefits expenses | 1 | 22,000 |
Other expenses | 2 | 68,000 |
Total expenses | 5,00,000 | |
V. Profit before tax (III-IV) | 3,20,000 |
Particulars | Amount Rs. |
---|---|
1. Employee benefits expenses | |
Wages (direct) | 10,000 |
Salaries | 12,000 |
Total | 22,000 |
2. Other expenses | 20,000 |
Selling and distribution expenses | 28,000 |
Loss on sale of fixed asset | 20,000 |
Total | 68,000 |
What are the pre-defined ledgers available in Tally.ERP 9?
PART - IV
Note : Answer all the Questions.
Ahmed does not keep proper books of accounts. Find the profit or loss made by him for the year ending 31st March, 2018.
Particulars | 1.4.2017 Rs |
31.3.2018 Rs |
---|---|---|
Bank balance | 14,000 (Cr.) | 18,000 (Dr.) |
Cash in hand | 800 | 1,500 |
Stock | 12,000 | 16,000 |
Debtors | 34,000 | 30,000 |
Plant | 80,000 | 80,000 |
80,000 | 40,000 | 40,000 |
Creditors | 60,000 | 72,000 |
Ahmed had withdrawn Rs. 40,000 for his personal use. He had introduced Rs.16,000 as capital for expansion of his business. A provision of 5% on debtors is to be made. Plant is to be depreciated at 10%.
From the following particulars of Chennai Sports Club, prepare Receipts and Payments account for the year ended 31st March, 2018.
Particulars | Rs. | Particulars | Rs. | Rs. |
---|---|---|---|---|
Opening cash balance as on 1.4.2017 | 10,000 | Subscriptions received | ||
Opening bank balance as on 1.4.2017 | 15,000 | 2016 – 2017 | 4,500 | |
Interest paid | 5,000 | 2017 – 2018 | 65,000 | |
Depreciation | 7,000 | 2018 – 2019 | 5,000 | 74,500 |
Upkeep of grounds | 22,500 | Tournament expenses | 12,500 | |
Life membership fees received | 5,500 | Tournament fund receipts | 15,000 | |
Bats and balls purchased | 13,000 | Closing balance of cash (31.3.2018) |
5,000 |
From the following Receipts and Payments Account of Friends Football club, for the year ending 31st March, 2017, prepare Income and Expenditure Account for the year ending 31st March, 2017 and the Balance sheet as on that date.
In the books of Friends Football Club
Receipts | Rs. | Rs. | Payments | Rs. | Rs. |
---|---|---|---|---|---|
To Balance b/d | By Furniture | 7,000 | |||
Cash | 1,000 | By Sports materials purchased | 800 | ||
Bank | 10,000 | 11,000 | By Special dinner expenses | 1,500 | |
To Subscriptions | 5,000 | By Electricity charges | 900 | ||
To Legacies | 6,000 | By Balance c/d | |||
To Collection for special | Cash in hand | 1,800 | |||
dinner | 2,000 | Cash at bank | 12,000 | 13,800 | |
24,000 | 24,000 |
Additional information:
(i) The club had furniture of Rs. 12,000 on 1st April 2016. Ignore depreciation on furniture.
(ii) Subscription outstanding for 2016 - 2017 Rs. 600.
(iii) Stock of sports materials on 31.03.2017 Rs. 100.
(iv) Capital fund as on 1st April 2016 was Rs. 23,000.
A, B, C and D are partners in a firm. There is no partnership deed. How will you deal with the following?
(i) A has contributed maximum capital. He demands interest on capital at 12% per annum.
(ii) B has withdrawn Rs.1,000 per month. Other partners ask B to pay interest on drawings @ 10% per annum to the firm. But, B does not agree to it.
(iii) Loan advanced by C to the firm is Rs. 10,000. He demands interest on loan @ 9% per annum. A and B do not agree with this.
(iv) D demands salary at the rate of Rs. 5,000 per month as he spends full time for the business. B and C do not agree with this.
(v) A demands the profit to be shared in the capital ratio. But, B, C and D do not agree.
From the following information, prepare capital accounts of partners Shanthi and Sumathi, when their capitals are fixed.
Particulars | Shanthi Rs. |
Sumathi Rs. |
---|---|---|
Capital on 1st January 2 | 1,00,000 | 80,000 |
Current account on 1st January 2018 (Cr.) | 5,000 | 3,000 |
Additional capital introduced on 1st June 2018 | 10,000 | 20,000 |
Drawings during 2018 | 20,000 | 13,000 |
Interest on drawings | 500 | 300 |
Share of profit for 20 | 10,000 | 8,000 |
Interest on capital | 6,300 | 5,400 |
Salary | 9,000 | Nil |
Commission | Nil | 1,200 |
Durai and Velan entered into a partnership agreement on 1st April 2018, Durai contributing Rs. 25,000 and Velan Rs. 30,000 as capital. The agreement provided that:
(a) Profits and losses to be shared in the ratio 2:3 as between Durai and Velan.
(b) Partners to be entitled to interest on capital @ 5% p.a.
(c) Interest on drawings to be charged Durai: Rs. 300 Velan: Rs. 450
(d) Durai to receive a salary of Rs. 5,000 for the year, and
(e) Velan to receive a commission of Rs. 2,000
During the year, the firm made a profit of Rs. 20,000 before adjustment of interest, salary and commission. Prepare the Profit and loss appropriation account.
From the following information, calculate the value of goodwill based on 3 years purchase of super profit
(i) Capital employed: Rs. 2,00,000
(ii) Normal rate of return: 15%
(iii) Average profit of the business: Rs. 42,000
Calculate the value of goodwill at 5 years purchase of super profit from the following information:
(a) Capital employed: Rs. 1,20,000
(b) Normal rate of profit: 20%
(c) Net profit for 5 years:
2014: Rs. 30,000; 2015: Rs. 32,000; 2016: Rs. 35,000; 2017: Rs. 37,000 and 2018: Rs. 40,000
(d) Fair remuneration to the partners Rs. 2,800 per annum.
From the following information, compute the value of goodwill as per annuity method:
(a) Capital employed: Rs. 50,000
(b) Normal rate of return: 10%
(c) Profits of the years 2016, 2017 and 2018 were Rs. 13,000, Rs. 15,000 and Rs. 17,000 respectively.
(d) The present value of annuity of Rs. 1 for 3 years at 10% is Rs. 2.4868.
Sriram and Raj are partners sharing profits and losses in the ratio of 2:1. Nelson joins as a partner on 1st April 2017. The following adjustments are to be made:
(i) Increase the value of stock by Rs. 5,000
(ii) Bring into record investment of Rs. 7,000 which had not been recorded in the books of the firm.
(iii) Reduce the value of office equipment by Rs. 10,000
(iv) A provision would also be made for outstanding wages for Rs. 9,500.
Give journal entries and prepare revaluation account.
Prabu, Ragu and Siva are partners sharing profits and losses in the ratio of 3:2:1. Prabu retires from partnership on 1st April 2017. The following adjustments are to be made:
(i) Increase the value of building by Rs. 12,000
(ii) Reduce the value of furniture by Rs. 8,500
(iii) A provision would also be made for outstanding salary for Rs. 6,500.
Give journal entries and prepare revaluation account.
Bharath Ltd. issued 1,00,000 equity shares of Rs. 10 each to the public at par. The details of the amount payable on the shares are as follows:
On application | Rs.5 per share |
On allotment | Rs.3 per share |
On first and final call | Rs.2 per share |
Application money was received for 1,20,000 shares. Excess application money was refunded immediately. Pass journal entries to record the above.
From the following balance sheet of Chandra Ltd, prepare comparative balance sheet as on 31st March 2016 and 31st March 2017.
Particulars | 31st March 2016 | 31st March 2017 |
---|---|---|
Rs. | Rs. | |
I EQUITY AND LIABILITIES | ||
Shareholders’ fund | 1,00,000 | 2,60,000 |
Non-current liabilities | 50,000 | 60,000 |
Current liabilities | 25,000 | 30,000 |
Total | 1,75,000 | 3,50,000 |
II ASSETS | 1,00,000 | 2,00,000 |
Current assets | 75,000 | 1,50,000 |
Total | 1,75,000 | 3,50,000 |
From the following Balance Sheet of James Ltd. as on 31.03.2019 calculate
(i) Debt-equity ratio
(ii) Proprietary ratio
(iii) Capital gearing ratio
Particulars | Amount Rs. |
---|---|
I. EQUITY AND LIABILITIES | |
1. Shareholders' funds | |
(a) Share capital | |
Equity share capital | 2,50,000 |
6% Preference share capital | 2,00,000 |
(b) Reserves and surplus | 1,50,000 |
2. Non-current liabilities | |
Long-term borrowings (8% Debentures) | 3,00,000 |
3. Current liabilities | |
Short-term borrowings from banks | 2,00,000 |
Trade payables | 1,00,000 |
Total | 12,00,000 |
II ASSETS | |
1. Non-current assets | |
Fixed assets | 8,00,000 |
2. Current assets | |
(a) Inventories | 1,20,000 |
(b) Trade receivables | 2,65,000 |
(c) Cash and Cash equivalents | 10,000 |
(d) Other current assets | |
Expenses paid in advance | 5,000 |
Total | 12,00,000 |
Answers
Small sized sole trader business
Statement of assets and liabilities
Cash and bank balance as on the date
Nominal A/c
Not allowed
6% per annum
Normal rate of return
Super profit = Average profit – Normal profit
The old partners
Sacrificing ratio
To adjust goodwill
Retiring partner’s loan A/c
Capital reserve account
Securities premium account
As on a particular date
Trend analysis
Ratio
Ability to meet short term obligations
Account Info
Both (i) and (ii)
Particulars | Rs. |
---|---|
Closing capital (as on 31.3.2017) | 3,50,000 40,000 |
Add: Drawings during the year | |
3,90,000 | |
Less: Additional capital introduced during the year | 70,000 |
Adjusted closing capital | 3,20,000 2,00,000 |
Less: Opening capital (as on 1.4.2016) | |
Profit made during the year | 1,20,000 |
Expenditure | Rs. | Income | Rs. | Rs. |
---|---|---|---|---|
By Subscription | 60,000 | |||
Add: Outstanding subscription for 2016-17 | 2,400 | |||
Subscription received in advance in | ||||
in advance in | 1,000 | 63,400 | ||
Tutorial note
(i) Subscription for the year 2015-16 Rs. 7,500 and for the year 2017-18 Rs. 1,500 do not relate to the current year. So they should not be recorded in Income and Expenditure Account.
(ii) Subscription outstanding for the current year 2016-17 is Rs. 2,400. It should be added with the amount of subscription received during 2016-17.
Partnership deed is a document in writing that contains the terms of the agreement among the partners. It is not compulsory for a partnership to have a partnership deed as per the Indian Partnership Act, 1932. But, it is desirable to have a partnership deed as it serve as an evidence of the terms of the agreement among the partners.
Goodwill = Average profit \(\times\) Number of years of purchase
Average profit = \(\frac { Total\ profit }{ Number\ ofyear } \)
= \(\frac { 4,000+3,000+5,000+4,500+3,500 }{ 5 } \)
= \(\frac { 20,000 }{ 5 } \)= Rs. 4,000
Goodwill = Average profit \(\times\) Number of years of purchase
= 4,000 \(\times\) 3 = Rs.12,000
Date | Particulars | L.F. | Debit Rs. |
Credir Rs. |
|
---|---|---|---|---|---|
2017 | Profit and loss appropriation A/c | Dr. | 20,000 | ||
April 1 | General reserve A/c | Dr. | 5,000 | ||
Workmen compensation fund A/c | Dr. | 15,000 | |||
To Rathna Kumar’s capital A/c (40,000 \(\times\) 3/5) | 24,000 | ||||
To Arockia Das’s capital A/c (40,000 \(\times\) 2/5) | 16,000 | ||||
(Accumulated profit and reserve transferred to old partners’ capital account in the old profit sharing ratio) |
Date | Particulars | L.F | Debit Rs. |
Credit RS. |
|
---|---|---|---|---|---|
2019 January 1 |
Mary’s capital A/c | Dr. | 25,000 | ||
Meena’s capital A/c | Dr. | 25,000 | |||
Mariam’s capital A/c | Dr. | 25,000 | |||
To Profit and loss a/c | 75,000 | ||||
(Accumulated loss transferred to all partners’ capital account in the old profit sharing ratio) |
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) |
Particulars | 2016-17 | 2017-18 | Absolute amount of increase ( +) or decrease (–) |
Percentage increase (+) or decrease (–) |
---|---|---|---|---|
Rs. | Rs. | Rs. | ||
Revenue from operations | 2,00,000 | 2,50,000 | +50,000 | +25 |
Add: Other income | 50,000 | 40,000 | –10,000 | –20 |
Total revenue | 2,50,000 | 2,90,000 | +40,000 | +16 |
Less: Expenses | 1,50,000 | 1,20,000 | –30,000 | –20 |
Profit before tax | 1,00,000 | 1,70,000 | +70,000 | +70 |
Computation of percentage increase for revenue from operations
\(\cfrac { Absolute\ amount\ of\ increase\ or\ decrease }{ Year\ 1\ amount } \times 100=\cfrac { 50,000 }{ 2,00,000 } \times 100=25%\)
Current ratio = \(\frac{Current\ assets}{Current\ liabilities}\) = \(\frac{8,00,000}{4,00,000}\) = 2:1
Current assets = Current investments + Inventories + Trade receivables + Cash and cash equivalents + Prepaid expenses
= 80,000 + 1,60,000 + 4,00,000 + 1,20,000 + 40,000 = Rs.8,00,000
Current liabilities = Trade creditors + Bills payable + Expenses payable
= 1,60,000 + 1,00,000 + 1,40,000 = Rs.4,00,000
(ii) Quick ratio
Quick ratio gives the proportion of quick assets to current liabilities. 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. Quick assets are current assets excluding inventories and prepaid expenses. It is otherwise called liquid ratio or acid test ratio. It is calculated as follows:
Quick ratio = \(\frac{Quick\ assets}{Current\ liabilities}\)
Quick assets = Current assets – Inventories – Prepaid expenses
Higher the quick ratio, better is the short-term financial position of an enterprise.
(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.
Particulars | Rs. |
---|---|
Closing capital (as on 31.3.2019) | 1,90,000 |
Add: Drawings during the year | 30,000 |
2,20,000 50,000 |
|
Less: Additional capital introduced during the year | |
Adjusted closing capital | 1,70,000 2,10,000 |
Less: Opening capital (as on 1.4.2018) (balancing figure) | |
Loss for the year ending 31.3.2019 | (-) 40,000 |
In the books of Ooty Recreation Club
Expenditure | Rs. | Income | Rs. |
---|---|---|---|
To Sports materials purchased | 10,000 | By Rent received | 10,000 |
To Stationery paid | 7,000 | By Subscription received | 54,000 |
To Salaries | 20,000 | ||
To Surplus | 27,000 | ||
(Excess of income over expenditure) | |||
64,000 | 64,000 |
Particulars | Brindha | Praveena | ||
---|---|---|---|---|
Rs. | Rs. | Rs. | Rs. | |
Capital on 31st December 20 | 30,000 | 40,000 | ||
Add: Drawings | 5,000 | 7,000 | ||
35,000 | 47,000 | |||
Less: | ||||
Additional capital | 6,000 | 10,000 | ||
Profit already credited* | 9,000 | 15,000 | 12,000 | 22,000 |
Capital on 1st January | 20,000 | 25,000 |
Profit credited = Profit earned Rs. 31,000 – Balance profit as per balance sheet Rs. 10,000 = Rs. 21,000. This amount is distributed in their profit sharing ratio of 3:4.
Calculation of interest on capital:
Brindha:
On opening capital for 1 year | 20,000 \(\times\) \(\frac{6}{100}\) | Rs. 1,200 |
On additional capital for 6 months | 6,000 \(\times\) \(\frac{6}{100}\) \(\times\) \(\frac{6}{12}\) | Rs. 180 |
Total Interest on capital | Rs. 1,380 |
Praveena:
On opening capital for 1 year | 25,000 \(\times\) \(\frac{6}{100}\) | Rs. 1,500 |
On additional capital for 3 months | 10,000 \(\times\) \(\frac{6}{100}\) \(\times\) \(\frac{3}{12}\) | Rs. 150 |
Total interest on capital | Rs. 1.650 |
a. Purchase of super profit method.
Goodwill is calculated by multiplying the super profit by a certain number of years of purchase.
Goodwill Super profit \(\times\) No. of years of purchase.
b. Annuity method: value of Goodwill is calculated by multiplying the super profit with the present of Value of annuity.
Goodwill super profit \(\times\) Present value annuity factor.
c. Capitalisation of super profit method:
Goodwill = \(\frac{Super\ profit}{
Normal\ rate\ of\ return} \times 100\)
Date | Particulars | L.F. | Debit Rs. |
Credit Rs. |
|
---|---|---|---|---|---|
Buildings A/c | Dr. | 15,000 | |||
To Revaluation A/c (Appreciation in value of buildings recorded) |
15,000 | ||||
Revaluation A/c | Dr. | 5,000 | |||
To Machinery A/c | 4,000 | ||||
To Provision for doubtful debts A/c (Decrease in assets recorded and provision made) |
1,000 | ||||
Revaluation A/c | Dr. | 10,000 | |||
To Rajesh’s capital A/c | 6,000 | ||||
To Ramesh’s capital A/c (Profit on revaluation transferred) |
4,000 |
Particulars | Rs. | Rs. | Particulars | Rs. |
---|---|---|---|---|
To Machinery A/c | 4,000 | By Buildings A/c | 15,000 | |
To Provision for doubtful debts A/c | 1,000 | |||
To Profit on revaluation transferred to | ||||
Rajesh’s capital A/c (3/5) | 6,000 | |||
Ramesh’s capital A/c (2/5) | 4,000 | 10,000 | ||
15,000 | 15,000 |
Date | Particulars | L.F | Debit Rs. |
Credit Rs. |
|
---|---|---|---|---|---|
2018 Dec. 31 |
(i) Kumudha’s capital A/c | Dr. | 2,00,000 | ||
To Bank A/c | 2,00,000 | ||||
(Amount due paid immediately) | |||||
" | (ii) Kumudha’s capital A/c | Dr. | 2,00,000 | ||
To Kumudha’s loan A/c | 2,00,000 | ||||
(Amount due transferred to loan account) | |||||
" | (iii) Kumudha’s capital A/c | 2,00,000 | |||
To Bank A/c | 70,000 | ||||
To Kumudha’s loan A/c | 1,30,000 | ||||
(Rs. 70,000 paid and the balance transferred to loan account) |
Date | Particulars | L.F. | Debit Rs. |
Credit Rs. |
|
---|---|---|---|---|---|
Equity share capital A/c (200 × 10) | Dr. | 2,000 | |||
To Equity share final call A/c (200 × 3) | 600 | ||||
To Forfeited shares A/c (200 × 7) | 1,400 | ||||
(200 shares forfeited) | |||||
Bank A/c (200 × 6) | Dr | 1,200 | |||
Forfeited shares A/c (200 × 4) | Dr | 800 | |||
To Share capital A/c (200 × 10) | 2,000 | ||||
(Forfeited shares reissued) | |||||
Forfeited shares A/c (1,400-800) | Dr. | 600 | |||
To Capital reserve A/c | 600 | ||||
(Gain on reissue of forfeited shares transferred to capital reserve account) |
Particulars | 2015-16 | 2016-17 | Absolute amount of increase (+) or decrease (–) |
Percentage increase (+) or decrease (–) |
---|---|---|---|---|
Rs. | Rs. | Rs. | ||
Revenue from operations | 3,00,000 | 3,60,000 | +60,000 | +20 |
Add: Other income | 1,00,000 | 60,000 | –40,000 | –40 |
Total revenue | 4,00,000 | 4,20,000 | +20,000 | +5 |
Less: Expenses | 2,00,000 | 1,80,000 | –20,000 | –10 |
Profit before tax | 2,00,000 | 2,40,000 | +40,000 | +20 |
Less: Tax (30%) | 60,000 | 72,000 | +12,000 | +20 |
Profit after tax | 1,40,000 | 1,68,000 | +28,000 | +20 |
Operating cost ratio = \(\cfrac { Operating\ cost }{ Revenue\ from\ operations } \times 100=\cfrac { 4,80,000 }{ 8,00,000 } \times 100=60\)%
Cost of revenue from operations = Purchases of stock-in-trade + Change in inventories of stock in trade + Direct expenses (wages)
= 4,50,000 + (40,000) + 10,000 = Rs.4,20,000
Operating expenses = Administrative expenses + Selling and distribution expenses+ Employee benefits expenses (salaries)
= 20,000 + 28,000 + 12,000 = Rs.60,000
Operating cost = Cost of revenue from operations + Operating expenses
= 4,20,000 + 60,000 = Rs.4,80,000
Tutorial Note
Loss on sale of fixed assets is a non-operating item, hence it is ignored.
(iii) Operating profit ratio
Operating profit ratio gives the proportion of operating profit to revenue from operations.
Operating profit ratio is an indicator of operational efficiency of an organisation. It may be computed as follows
Operating profit ratio = \(\cfrac { Operating\ profit }{ Revenue\ from\ operations } \times 100\)
Alternatively, it is calculated as under.
Operating profit ratio = 100 – Operating cost ratio
Operating profit = Revenue from operations – Operating cost
A higher ratio indicates better profitability. Greater the operating ratio, higher is the margin available for paying non-operating expenses
Tutorial note
Operating cost ratio + Operating profit ratio = 100%
In Tally, to record transactions, the transactions are to be identified with the related ledger accounts. In Tally ERP 9, there are two types of pre. defined ledgers.
(i) Cash: Under the group cash-in-hand this ledger is created, you can enter the opening balance as on the books beginning from.
(ii) Profit and loss account : This ledger is created under the group primary. In this ledger previous year's profit or loss is entered as the opening-balance of this ledger.
To create ledger:
Gateway of Tally ➝ Masters >
Accounts Info > Ledgers >
Single Ledger > create
In the books of Ahmed
Calculation of opening capital
Liabilities | Rs | Assets | Rs |
---|---|---|---|
Bank overdraft | 14,000 | Cash in hand | 800 |
Creditors | 60,000 | Stock | 12,000 |
Capital (balancing figure) | 92,800 | Debtors | 34,000 |
Plant | 80,000 | ||
Furniture | 40,000 | ||
1,66,800 | 1,66,800 |
Calculation of closing capital
Liabilities | Rs | Assets | Rs | Rs |
---|---|---|---|---|
Creditors | 72,000 | Bank balance | 18,000 | |
Capital (balancing figure) | 1,04,000 | Cash in hand | 1,500 | |
Stock | 16,000 | |||
Debtors | 30,000 | |||
Less: Provision for doubtful | ||||
debts @ 5% | 1,500 | 28,500 | ||
Plant | 80,000 | |||
Less: Depreciation | 8,000 | 72,000 | ||
Furniture | 40,000 | |||
1,76,000 | 1,76,000 |
Particulars | Rs |
---|---|
Closing capital as on 31.3.2018 | 1,04,000 |
Add: Drawings during the year | 40,000 |
1,44,000 | |
Less: Additional capital introduced during the year | 16,000 |
Adjusted closing capital | 1,28,000 |
Less: Opening capital as on 31.3.2017 | 92,800 |
Profit for the year ending 31.3.2018 | 35,200 |
In the books of Chennai Sports Club
Receipts | Rs. | Rs. | Payments | Rs. | Rs. |
---|---|---|---|---|---|
To Balance b/d: | By Interest paid | 5,000 | |||
Cash | 10,000 | By Telephone expenses | 7,000 | ||
Bank | 15,000 | 25,000 | By Upkeep of grounds | 22,500 | |
To Life membership fees | 5,500 | By Bats and balls purchased | 13,000 | ||
To Tournament fund receipts | 15,000 | By Tournament expenses | 12,500 | ||
To Subscriptions received | By Balance c/d | ||||
2016 – 2017 | 4,500 | Cash | 5,000 | ||
2017 – 2018 | 65,000 | Bank (Bal. fig) | 55,000 | 60,000 | |
2018 – 2019 | 5,000 | 74,500 | |||
1,20,000 | 1,20,000 |
Expenditure | Rs. | Rs. | Income | Rs. | Rs. |
---|---|---|---|---|---|
To Sports materials | |||||
consumed | By Subscription | 5,000 | |||
Purchases | 800 | Add: Outstanding for 2016-17 | 600 | 5,600 | |
Less: Closing stock | 100 | 700 | By Collection for special dinner | 2,000 | |
To Special dinner expenses | 1,500 | ||||
To Electricity charges | 900 | ||||
To Excess of income over expenditure (surplus) | 4,500 | ||||
7,600 | 7,600 |
Liabilities | Rs. | Rs. | Assets. | Rs. | Rs. |
---|---|---|---|---|---|
Capital fund | 23,000 | Furniture | 12,000 | ||
Add: Excess of income | Add: Additions | 7,000 | 19,000 | ||
over expenditure (surplus) | 4,500 | 27,500 | Stock of sports materials | 100 | |
Legacies | 6,000 | Subscription outstanding | |||
for 2016-17 | 600 | ||||
Cash at bank | 12,000 | ||||
Cash in hand | 1,800 | ||||
33,500 | 33,500 |
Since there is no partnership deed, provisions of the Indian Partnership Act, 1932 will apply.
(i) No interest on capital is payable to any partner. Therefore, A is not entitled to interest on capital.
(ii) No interest is chargeable on drawings made by the partner. Therefore, B need not pay interest on drawings.
(iii) Interest on loan is payable at 6% per annum. Therefore C is to get interest at 6% per annum on Rs. 10,000.
(iv) No remuneration is payable to any partner. Hence, D is not entitled to salary.
(v) Profits should be distributed equally.
Date | Particulars | Shanthi Rs. |
Sumathi Rs. |
Date | Particulars | Shanthi Rs. |
Sumathi Rs. |
---|---|---|---|---|---|---|---|
2018 | 2018 | ||||||
Jan 1 | By Balance b/d | 1,00,000 | 80,000 | ||||
Dec 31 | To Balance c/d | 1,10,000 | 1,00,000 | June 1 | By Bank (Additional capital) |
10,000 | 20,000 |
1,10,000 | 1,00,000 | 1,10,000 | 1,00,000 | ||||
2019 | |||||||
Jan 1 | By Balance b/d | 1,10,000 | 1,00,000 |
Date | Particulars | Shanthi Rs. |
Sumathi Rs. |
Date | Particulars | Shanthi Rs. |
Sumathi Rs. |
---|---|---|---|---|---|---|---|
To Drawings | 20,000 | 13,000 | By Balance b/d | 5,000 | 3,000 | ||
To Interest on | By Profit and loss | ||||||
500 | 300 | ||||||
drawings | appropriation A/c | 10,000 | 8,000 | ||||
To Balance c/d | 9,800 | 4,300 | (share of profit) | ||||
By Interest on capital | 6,300 | 5,400 | |||||
By Salary | 9,000 | - | |||||
By Commission | - | 1,200 | |||||
30,300 | 17,600 | 30,300 | 17,600 | ||||
By Balance b/d | 9,800 | 4,300 |
Particulars | Rs. | Rs. | Particulars | Rs. |
---|---|---|---|---|
To Interest on capital A/c: | By Profit and loss A/c | 20,000 | ||
Durai (25,000 \(\times\) 5%) | 1,250 | By Interest on drawings A/c | ||
Velan (30,000 \(\times\) 5%) | 1,500 | Durai | 300 | |
To Salary to Durai A/c | 5,000 | Velan | 450 | |
To Commission to Velan A/c | 2,000 | |||
To Partners’ capital A/c (profit transferred) | ||||
Durai (11,000 \(\times\) 2/5) | 4,400 | |||
Velan (11,000 \(\times\) 3/5) | 6,600 | 11,000 | ||
20,750 | 20,750 |
Normal profit = Capital employed \(\times\) Normal rate of return
= 2,00,000 \(\times\) 15% = Rs. 30,000
Super profit = Average profit - Normal profit
= 42,000 - 30,000
= Rs. 12,000
Goodwill = Super profit \(\times\) Number of years of purchase
= 12,000 \(\times\) 3
= Rs. 36,000
Average profit = \(\frac { Total\ profit }{ Number\ of\ year } \)
Average profit = \(\frac { 30,000+32,000+35,000+37,000+40,000 }{ 5 } \)
Average profit = \(\frac { 1,74,000 }{ 5 } \)
Particulars | Rs. |
---|---|
Average profit before fair remuneration to the partners | 34,800 |
Less: Fair remuneration to the partners | 2,800 |
Average profit | 32,000 |
Normal profit = Capital employed \(\times\) Normal rate of return
= 1,20,000 × 20%
= Rs. 24,000
Super profit = Average profit - Normal profit
= 32,000 – 24,000
= Rs. 8,000
Goodwill = Super profit \(\times\) Number of years of purchase
= 8,000 \(\times\) 5
= Rs. 40,000
Average profit = \(\frac { Total\ profit }{ Number\ of\ year } \)
= \(\frac { 13,000+15,000+17,000 }{ 3 } \)
= \(\frac { 45,000 }{ 3 } \)
= Rs. 15,000
Normal profit = Capital employed \(\times\) Normal rate of return
= 50,000 × 10%
= Rs. 5,000
Super profit = Average profit - Normal profit
= 15,000 - 5,000
= Rs. 10,000
Goodwill = Super profit \(\times\) Value of annuity
= 10,000 \(\times\) 2.4868 = Rs. 24,868
Date | Particulars | L.F. | Debit Rs. |
Credit Rs. |
|
---|---|---|---|---|---|
2017 | Stock A/c | Dr. | 5,000 | ||
April 1 | Investment A/c | Dr. | 7,000 | ||
To Revaluation A/c (Increase in the value of stock and unrecorded investment accounted) |
12,000 | ||||
" | Revaluation A/c | Dr. | 19,500 | ||
To Office equipment A/c | 10,000 | ||||
To Outstanding wages A/c (Reduction in the value of office equipment and provision of outstanding wages recorded) |
9,500 | ||||
" | Sriram’s capital A/c | Dr. | 5,000 | ||
Raj’s capital A/c | Dr. | 2,500 | |||
To Revaluation A/c (Loss on revaluation transferred) |
7,500 |
Particulars | Rs. | Particulars | Rs. | Rs. |
---|---|---|---|---|
To Office equipment A/c | 10,000 | By Stock A/c | 5,000 | |
To Outstanding wages A/c | 9,500 | By Investment A/c | 7,000 | |
By Loss on revaluation transferred to | ||||
Sriram’s capital A/c (2/3) | 5,000 | |||
Raj’s capital A/c (1/3) | 2,500 | 7,500 | ||
19,500 | 19,500 |
Date | Particulars | L.F | Debit Rs. |
Credit Rs. |
|
---|---|---|---|---|---|
2017 April 1 |
Building A/c | Dr. | 12,000 | ||
To Revaluation A/c | 12,000 | ||||
(Increase in the value of building accounted) | |||||
" | Revaluation A/c | Dr. | 15,000 | ||
To Furniture A/c | 8,500 | ||||
To Outstanding salary A/c | 6,500 | ||||
(Reduction in the value of furniture and outstanding salary accounted) | |||||
" | Prabu’s capital A/c | Dr. | 1,500 | ||
Ragu’s capital A/c | Dr. | 1,000 | |||
Siva’s capital A/c | Dr. | 500 | |||
To Revaluation A/c | 3,000 | ||||
(Loss on revaluation transferred to capital accounts) |
Particulars | Rs. | Particulars | Rs. | Rs. |
---|---|---|---|---|
To Furniture A/c | 8,500 | By Building A/c | 12,000 | |
To Outstanding salary A/c | 6,500 | By Loss on revaluation transferred to | ||
Prabu’s capital A/c (3/6) | 1,500 | |||
Ragu’s capital A/c (2/6) | 1,000 | |||
Siva’s capital A/c (1/6) | 500 | 3,000 | ||
15,000 | 15,000 |
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) |
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 |
(i) Debt equity ratio = \(\frac { Long\quad term\quad debt }{ Shareholders\quad funds } \)
Long term debt = Debentures
= Rs.3,00,000
Shareholder's funds = Equity share capital + Reserves and surplus + Preference share capital
= Rs.2,50,000 + 1,50,000 + Rs.2,00,000 = Rs.6,00,000
∴ Debt equity ratio = \(\frac { 3,00,000 }{ 6,00,000 } \) = 0.5 : 1
(ii) Proprietary ratio = \(\frac { Shareholder's\quad funds }{ Total\quad assets } \)
Shareholder's funds = Rs.6,00,000
Total assets = Rs.12,00,000
∴ Proprietary ratio = \(\frac { 6,00,000 }{ 12,00,000 } \) = 0.5 : 1
(iii) Capital gearing ratio = \(\frac { Funds\quad bearing\quad fixed\quad interest\quad and\quad fixed\quad dividend }{ Equity\quad Shareholder's\quad funds } \)
Funds bearing fixed = 6% Preference capital + 8% Debentures
interest and fixed dividend = Rs.2,00,000 + Rs.3,00,000 = Rs.5,00,000
Equity shareholder's funds = Equity share capital + General reserve and Surplus
= Rs.2,50,000 + Rs.1,50,000 = Rs.4,00,000
∴ Capital gearing ratio = \(\frac { 5,00,000 }{ 4,00,000 } \) = 1.25 : 1