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In this question paper, the questions are covered from the entire syllabus of 12th Accountancy. Questions are prepared as per NCERT guideline with the help of expert teachers.

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Questions:

Generic 3

4 x 3 = 12

Calculate Return on Investment (RoI) and debt to equity ratio from the following information.

Particulars	Amt(Rs.)
Net profit after interest and tax	3,00,000
10% debentures	5,00,000
Tax rate	40%
Capital employed	40,00,000

Durian Furniture Mart Pvt Ltd is a manufacturer of furniture.They sold waste from wood used for manufacturing furniture for Rs 2,00,000. Is the sale of waste revenue from operations?

XYZ Finance Ltd, a company engaged in providing loans and investing into shares has received dividend on shares.The accountant has sought your advice on depicting it in the cash flow statement.Give your advice with reasons.

Prem, Param and Priya were partners in a firm. Their fixed capitals were Prem Rs 2,00,000; Param Rs 3,00,000 and Priya Rs 5,00,000. They were sharing profits in the ratio of their capitals. The firm was engaged in the sale of ready-to-eat food packets at three different locations in the city, each being managed by Prem, Param and Priya.
The outlet managed by Prem was doing more business than the outlets managed by Param and Priya. Prem requested Param and Priya for a higher share in the profits of the firm which Param and Priya accepted.
It was decided that the new profit sharing ratio will be 2 : 1 : 2 and its effect will be introduced retrospectively for the last four years. The profits of the last four years were Rs 2,00,000, Rs 3,50,000, Rs 4,75,000 and 5,25,000 respectively.
Showing your calculations clearly, pass a necessary adjustment entry to give effect to the new agreement between Prem, Param and Priya.

Generic 6

5 x 6 = 30

From the following, ascertain the debt to equity ratio, Equity share capital Rs.2,00,000, reserves and surplus Rs.1,60,000, 10%debentures Rs.1,50,000, current liabilities Rs.1,00,000.

Calculate the current assets when current liabilities are Rs.1,00,000 and working capital is Rs.50,000

L and M are partners sharing profits equally, L withdrew regularly Rs 8,000 in the beginning of every month for six months ended 30th September 2017. Calculate interest on drawings @5% per annum

Following particulars are extracted from notes to accounts to the Balance Sheets of Varun Ltd. as on 31.03.2013 and 31.03.2014. Prepare a Cash Flow Statement.

Particulars	31.03.2014 Rs.	31.03.2013 Rs.
I. Equity and liabilities
Share Capital	1,50,000	1,25,000
Balance in Statement of Profit and Loss	75,000	60,000
Bank Loan	20,000	-
Bills Payable	35,000	20,000
Trade Payables	45,000	20,000
Total	3,25,000	2,55,000
II. Assets
Fixed Assets-Tangible	30,000	20,000
Non-current Investments	10,000	15,000
Inventory	1,20,000	87,000
Trade Receivables	90,000	98,000
Cash and Cash Equivalents	75,000	35,000
Total	3,25,000	2,55,000

Additional Information :
(i) During the year 2013-2014, Rs. 15,000 depreciation was charged on fixed tangible assets.
(ii) Company has paid Rs. 12,000 interim dividend during the year.

The Balance Sheet of Keshav, Nirmal and pankaj who are partners in a firm sharing profits according to their capital as at 31st March, 2012 was as follows:

Liabilities	Rs	Assets		Rs
Creditors	42,000	Buildings		2,00,000
Keshav's Capital	1,60,000	Machinery		1,00,000
Nirmal's Capital	80,000	Stock		36,000
Pankaj capital	80,000	Debtors	40,000
General reserve	40,000	Less:Provision for Bad Debts	(2,000)	38,000
		Cash at Bank		28,000
	4,02,000			4,02,000

On that date Nirmal decided to retire from the firm and was paid for his share in the firm subject to the following:
(i) Buildings to be appreciated by 20%.
(ii) Provision for Bad Debts to be increased to 15% on Debtors.
(iii) Machinery to be depreciated by 20 %.
(iv) Goodwill of the firm is valued at Rs.1,44,000 and the retiring partner's share is adjusted through the capital accounts of remaining partners.
(v) The capital of the new firm be fixed at 2,40,000.
Prepare Revaluation Account, Capital Accounts of the partners, Bank Account and the Balance Sheet after Nirmal's retirement.

Fill up / 1 Marks

4 x 1 = 4

10.

What will be the operating profit ratio if operating ratio is 83.64%?

11.

How the 'Earning capacity of a business' is assessed by "Financial Statement Analysis"?

12.

Why is the management interested in analysing financial statements ?

13.

Give any one purpose for which the amount received as 'Securities Premium' may be utilised.

1 Marks

5 x 1 = 5

14.

Dividend paid by a manufacturing company is classified under which kind of activity while preparing cash flow statement?

15.

Under which type of activity will you classify 'issuing 9% debentures' while preparing cash flow statement.

16.

Declaration of final dividend would result into inflow, outflow or no flow of cash.Give your answer with reason.

17.

Give one difference between an investing activity and financing activity.

18.

Is dissolution of firm and dissolution of partnership one and the same thing?

Generic 8

2 x 8 = 16

19.

From the following information related to Naveen Ltd. calculate
(i) Return on investment
(ii) Total assets to debt ratio
Information
Fixed assets Rs.75,00,000, current assets Rs.40,00,000, current liabilities Rs.27,00,000,12% debentures Rs.80,00,000 and net profit before interest, tax and dividend Rs.14,50,000.

20.

The current ratio of a company is 21:1.2. State with reasons which of the following transactions will increase, decrease or not change the ratio.
(i) Redeemed 9% debentures of Rs.1,00,000 at a premium of 10%.
(ii) Received from debtors Rs.17,000.
(iii)Issued Rs.2,00,000 equity shares to the vendors of machinery.
(iv) Accepted bills of exchange drawn by the creditors Rs.7,000.

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Answers Key:

Generic 3

4 x 3 = 12

Rol = 13.75%; Debt to equity ratio = 1 : 7

Yes, it is revenue from operations because the wood sold as waste is from the manufacturing of furniture.

The company is engaged in the business of providing loans and also investing in shares.Any income arising from these activities should be shown under operating activity.

JOURNAL
Date	Particulars		LF	Amt (Dr)	Amt (Cr)
	Param's Current A/c Priya's Current A/c To Prem's Current A/c (Being profit of last four years adjusted due to change in profit sharing ratio)	Dr Dr		1,55,000 1,55,000	3,10,000

Working Note

**Adjustment Table**
Particulars	Prem (Rs)	Param (Rs)	Priya (Rs)	Total (Rs)
I. Amount already Recorded
Profits of Past Four Years i.e.,
(2,00,000 + 3,50,000 + 4,75,000 + 5,25,000) in the ratio 2 : 3 : 5	3,10,000	4,65,000	7,75,000	15,50,000
II. Amount which should have been Recorded
Profit of Past Four Years i.e. in the Ratio 2:1:2	6,20,000	3,10,000	6,20,000	15,50,000
III. Net Effect (I-II)	3,10,000 (Cr)	1,55,000 (Dr)	1,55,000 (Dr)	Nil

Generic 6

5 x 6 = 30

Debt equity ratio = 0.41 : 1

Current assets will be Rs.1,50,000.

Interest on drawings = Rs 700

Net Cash from Operating Activities Rs. 27,000; Net Cash used in Investing Activities (Rs. 20,000); Net Cash from Financing Activities Rs. 33,000
[Hint : Purchase of fixed tangible assets Rs. 25,000].

Profit on revaluation Rs.16,000; For goodwill: Dr.Keshav Rs.24,000 and Pankaj Rs.12,000, Cr.Nirmal rs.36,000; Gaining ratio 2:1 Nirmal's loan Rs.1,30,000; Capital after adjustment: Keshav Rs.1,64,000 and pankaj rs.82,000; Capital rearranged: Keshav Rs.1,60,000 and pankaj Rs.80,000. Cash withdrawn by Keshav rs.4,000 and pankaj Rs.2,000. Bank Balance Rs.22,000; Balance Sheet Total Rs.4,12,000.

Fill up / 1 Marks

4 x 1 = 4

10.

()
Operating Profit Ratio=100-83.64% =16.36%.

11.

()
Earning capacity of a business is assessed by applying solvency ratios, e.g., debt equity ratio,proprietary ratio, total assets to debt ratio and interest coverage ratio.

12.

()
Management of a firm is interested in analysis of the financial statements to know the solvency, profitability and the capital structure of the firm.

13.

()
According to Section 52 of the Companies Act 2013; Securities Premium may be used for Buying back of its own shares.

1 Marks

5 x 1 = 5

14.

Dividend paid by a manufacturing company is classified as cash used (outflow) in financing activities.

15.

Financing activity.

16.

No flow of cash as final dividend is declared only, not yet paid.

17.

Investing activity is related to purchase and sale of long-term assets (or non-current assets) while financing activity is related to activity that result in change in capital and borrowings of the entity.

18.

()
No, dissolution of firm and dissolution of partnership are not same.

Generic 8

2 x 8 = 16

19.

(i) Return on investment=\(\frac { Net\ profit\ before\ interest,\ tax\ and\ preference\ dividened* }{ Capital\ employed* } \times 100\)
\(=\frac { 14,50,000 }{ 88,00,000 } \times 100=16.48\quad \)%
*Capital employed = Fixed assets + Currents assets - Current liabilities
=75,00,000+40,00,000-27,00,000
=88,00,000
(ii) Total assets to debt ratio=\(\frac { Total\ assets* }{ Debt } =\frac { 1,15,00,000 }{ 80,00,000 } \)=1.44:1
*Total assets = Fixed assets + Current assets
=75,00,000+40,00,000
=1,15,00,000

20.

Given that current ratio = 2.1 : 1.2
Let current assets = Rs.2,10,000
Current liabilities = Rs.1,20,000
(i) Due to redemption of Rs.1,00,000, 9% debentures at a premium of 10%.
Currant assets.will decrease by Rs.1,10,000.
ஃ New current assets = 2,10,000 - 1,10,000
=Rs.1,00,000
ஃ New current ratio =\(\frac { 1,00,000 }{ 1,20,000 } =0.83:1\)
Current ratio will decrease.
(ii) Received from debtors ~ 17,000.
It will not change the current assets and current liabilities.
ஃ The current ratio will not change.
(iii) Issued Rs.2,00,000 equity shares to the vendors of machinery. Current assets and current liabilities will not change and thus, there will be no change in current ratio.
(iv) Accepted bills of exchange drawn by the creditors Rs.7,000.
It will not change the value of current assets and current liabilities and thus current ratio will not change.