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12th Standard Accountancy English Medium - Revision Model Question Paper with Answer Key 2022 - 2023

Published on: 31/12/2022

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Questions:

Generic 2

10 x 2 = 20

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

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).

What is automated accounting system?

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

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.

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.

What is a partnership deed?

From the following details calculate the amount that will be shown as subscription in Income and Expenditure Account for the year ending 31^stMarch, 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

10.

From the following particulars ascertain profit or loss:

	Rs.
Capital at the beginning of the year (1^st April, 2016)	2,00,000
Capital at the end of the year (31^st March, 2017)	3,50,000
Additional capital introduced during the year	70,000
Drawings during the year	40,000

Generic 3

10 x 3 = 30

11.

Kavitha, Kumudha and Lalitha are partners sharing profits and losses in the ratio of 5 : 3 : 3 respectively. Kumudha retires from the firm on 31^st 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

12.

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.

13.

Following is the statement of profit and loss of Maria Ltd. for the year ended 31st March, 2018. Calculate the operating cost ratio.

Statement of Profit and Loss
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

Notes to Accounts
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

14.

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%

15.

What are the pre-defined ledgers available in Tally.ERP 9?

16.

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.

17.

How is goodwill calculated under the super profits method?

18.

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 31^st December 2017.

Balance sheet as on 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 1^st 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.

19.

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

20.

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

Generic 5

14 x 5 = 70

21.

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

**Balance Sheet of Sundaram Ltd. as on 31.3.2019**
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

22.

Prabu, Ragu and Siva are partners sharing profits and losses in the ratio of 3:2:1. Prabu retires from partnership on 1^st 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.

23.

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.

24.

From the following balance sheet of Chandra Ltd, prepare comparative balance sheet as on 31st March 2016 and 31^st March 2017.

Particulars	31^st March 2016	31^st 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

25.

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.

26.

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.

27.

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.

28.

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

29.

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.

30.

From the following information, prepare capital accounts of partners Shanthi and Sumathi, when their capitals are fixed.

Particulars	Shanthi Rs.	Sumathi Rs.
Capital on 1^st January 2	1,00,000	80,000
Current account on 1^st January 2018 (Cr.)	5,000	3,000
Additional capital introduced on 1^st 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

31.

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.

32.

From the following Receipts and Payments Account of Friends Football club, for the year ending 31^st March, 2017, prepare Income and Expenditure Account for the year ending 31^st March, 2017 and the Balance sheet as on that date.
In the books of Friends Football Club

Dr. Receipts and Payments Account for the year ended 31^st March, 2017 Cr.
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 1^st 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 1^stApril 2016 was Rs. 23,000.

33.

From the following particulars of Chennai Sports Club, prepare Receipts and Payments account for the year ended 31^st 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

34.

Ahmed does not keep proper books of accounts. Find the profit or loss made by him for the year ending 31^st 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%.

Multiple Choice Question

20 x 1 = 20

35.

If the old profit sharing ratio is more than the new profit sharing ratio of a partner, the difference is called

(a)

Capital ratio

(b)

Sacrificing ratio

(c)

Gaining ratio

(d)

None of these

36.

The profit or loss on revaluation of assets and liabilities is transferred to the capital account of

(a)

The old partners

(b)

The new partner

(c)

All the partners

(d)

The Sacrificing partners

37.

If the final amount due to a retiring partner is not paid immediately, it is transferred to

(a)

Bank A/c

(b)

Retiring partner’s capital A/c

(c)

Retiring partner’s loan A/c

(d)

Other partners’ capital A/c

38.

At the time of retirement of a partner, determination of gaining ratio is required

(a)

To transfer revaluation profit or loss

(b)

To distribute accumulated profits and losses

(c)

To adjust goodwill

(d)

None of these

39.

Which of the following tools of financial statement analysis is suitable when data relating to several years are to be analysed?

(a)

Cash flow statement

(b)

Common size statement

(c)

Comparative statement

(d)

Trend analysis

40.

Balance sheet provides information about the financial position of a business concern

(a)

Over a period of time

(b)

As on a particular date

(c)

For a period of time

(d)

For the accounting period

41.

The amount received over and above the par value is credited to

(a)

Securities premium account

(b)

Calls in advance account

(c)

Share capital account

(d)

Forfeited shares account

42.

After the forfeited shares are reissued, the balance in the forfeited shares account should be transferred to

(a)

General reserve account

(b)

Capital reserve account

(c)

Securities premium account

(d)

Surplus account

43.

Current ratio indicates

(a)

Ability to meet short term obligations

(b)

Efficiency of management

(c)

Profitability

(d)

Long term solvency

44.

The mathematical expression that provides a measure of the relationship between two figures is called

(a)

Conclusion

(b)

Ratio

(c)

Model

(d)

Decision

45.

What are the predefined Ledger(s) in Tally?
(i) Cash
(ii) Profit & Loss A/c
(iii) Capital A/c

(a)

Only (i)

(b)

Only (ii)

(c)

Both (i) and (ii)

(d)

Both (ii) and (iii)

46.

Which submenu displays groups, ledgers and voucher types in Tally?

(a)

Inventory vouchers

(b)

Accounting vouchers

(c)

Company Info

(d)

Account Info

47.

Which of the following is true?

(a)

Super profit = Total profit / number of years

(b)

Super profit = Weighted profit / number of years

(c)

Super profit = Average profit – Normal profit

(d)

Super profit = Average profit x Years of purchase

48.

The average rate of return of similar concerns is considered as

(a)

Average profit

(b)

Normal rate of return

(c)

Expected rate of return

(d)

None of these

49.

As per the Indian Partnership Act, 1932, the rate of interest allowed on loans advanced by partners is

(a)

8% per annum

(b)

12% per annum

(c)

5% per annum

(d)

6% per annum

50.

In the absence of an agreement among the partners, interest on capital is

(a)

Not allowed

(b)

Allowed at bank rate

(c)

Allowed @ 5% per annum

(d)

Allowed @ 6% per annum

51.

Income and expenditure account is a

(a)

Nominal A/c

(b)

Real A/c

(c)

Personal A/c

(d)

Representative personal account

52.

Balance of receipts and payments account indicates the

(a)

Loss incurred during the period

(b)

Excess of income over expenditure of the period

(c)

Total cash payments during the period

(d)

Cash and bank balance as on the date

53.

Statement of affairs is a

(a)

Statement of income and expenditure

(b)

Statement of assets and liabilities

(c)

Summary of cash transactions

(d)

Summary of credit transactions

54.

Incomplete records are generally maintained by

(a)

A company

(b)

Government

(c)

Small sized sole trader business

(d)

Multinational enterprises

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Answers Key:

Generic 2

10 x 2 = 20

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.

Journal entry
Date	Particulars		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)

Journal entries
Particulars		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)

(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.

Comparative income statement of Tharun Co. Ltd for the years ended 31^st March, 2017 and 31^st March, 2018
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
\(\cfrac { Absolute\ amount\ of\ increase\ or\ decrease }{ Year\ 1\ amount } \times 100=\cfrac { 50,000 }{ 2,00,000 } \times 100=25%\)

**Journal entry**
Date	Particulars		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)

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

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.

Dr. Income and Expenditure Account for the year ended 31^st March, 2017 Cr 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.

10.

**Statement of profit or loss for the year ended 31^st March, 2017**
Particulars	Rs.
Closing capital (as on 31.3.2017)	3,50,000 40,000
Add: Drawings during the year	3,50,000 40,000
	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)	3,20,000 2,00,000
Profit made during the year	1,20,000

Generic 3

10 x 3 = 30

11.

Journal entries
Date	Particulars		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)

12.

In the books of Anu Company Journal entries
Particulars		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)

13.

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%

14.

Comparative income statement of Abdul Co. Ltd for the years ended 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.
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

15.

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

16.

**Journal entries**
Particulars		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

**Dr. Revaluation Account Cr.**
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

17.

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 = \(\frac{Super\ profit}{ Normal\ rate\ of\ return} \times 100\)

18.

Particulars	Brindha		Praveena
Particulars	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 1^st 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

19.

In the books of Ooty Recreation Club

Dr. Income and Expenditure Account for the year ended 31st March, 2018 Cr
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

20.

**Statement of profit or loss for the year ended 31st March, 2019**
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	2,20,000 50,000
Adjusted closing capital	1,70,000 2,10,000
Less: Opening capital (as on 1.4.2018) (balancing figure)	1,70,000 2,10,000
Loss for the year ending 31.3.2019	(-) 40,000

Generic 5

14 x 5 = 70

21.

(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

22.

Journal entries
Date	Particulars		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)

Dr. Revaluation Account Cr.
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

23.

In the books of Bharath Ltd. Journal entries
Particulars		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)

24.

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

25.

**Journal entries**
Date	Particulars		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

**Dr. Revaluation Account Cr.**
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

26.

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

27.

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

28.

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

29.

Dr. Profit and loss appropriation account for the year ended 31st March 2019 Cr.
Particulars	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

30.

**Dr. Partners’ Capital Account Cr.**
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

**Dr. Partners’ Current Account Cr.**
Particulars	Shanthi Rs.	Sumathi Rs.	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

31.

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.

32.

Dr. In the books of Friends Football Club Income and Expenditure Account for the year ended
31^st March, 2017 Cr.
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

Balance sheet as on 31^st March, 2017
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

33.

In the books of Chennai Sports Club

In the books of Chennai Sports Club
Dr. Receipts and Payments Account for the year ended
31^st March, 2018 Cr.
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

34.

In the books of Ahmed
Calculation of opening capital

**Statement of affairs as on 31^st March, 2017**
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

**Statement of affairs as on 31^st March, 2018**
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

**Statement of profit or loss for the year ending 31st March, 2018**
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