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12th Standard CBSE Accountancy Public Exam Sample Question 2020

Published on: 04/03/2020

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Questions:

Generic 3

20 x 3 = 60

What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?

What are the features of Receipt and Payment Account?

Can an retiring partners or legal representative of a deceased partner share in the subsequent profit?

If gross profit ratio of a firm is 33.33%, then what does it indicate?

At what figures, the assets and liabilities appear the books of reconstituted firm in case a revaluation account is prepared?

Realisation account shows profit of Rs1,00,000. In which ratio will it be shared by the partners?

X Ltd purchased machinery for Rs 5,00,000 from Y Ltd. Half of the amount was paid by accepting a bill of exchange drawn by Y Ltd payable after three months. The balance was paid by issue of equity shares of Rs 10 each at a premium of 25%.

Pass necessary journal entries in the books of X Ltd for these transactions.

Sundram Ltd purchased furniture for Rs 3,00,000 from Ravindram Ltd Rs 1,00,000 were paid by drawing a promissory note in favour of Ravindram Ltd. the balance was paid by issue of equity shares of Rs 10 each at apremium of 25%.

Pass necessary journal entries in the books of Sundram Ltd. Also, identify the value shown by the company in issuing shares for consideration other than cash,

L,M and N are partners sharing profits in the ratio of 3:2:1 respectively.From 1st April,2014 they decided to share profits in the ratio of 2:3:1 The partnership deed provides that in the event of any change in profit sharing ratio, the goodwill should be valued at three years purchase of the average of five years profits.The profits and losses of the precedding five years are
Profit:1------Rs 1,44,000; II-----Rs 3,60,000; III---- Rs 4,08,000; IV----4,56,000
Loss:V---- Rs 1,68,000.
Showing the working clearly, give the necessary journal entry to record the above change.

10.

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.

11.

Satish is interested in investing in Data Unlimited, a company providing 4G services.However, before investing, his financial advisor who undoubtedly is his wife, advises him to go through the financial statements of the company.Satish falls under which category of user?

12.

All the partners of a firm want to dissolve the firm. Sonu, a partner wants that his loan of Rs 32,000 should be paid off before the payment of Mrs Monu's loan. But Monu, another partner wants that Mrs Monu's loan must be paid before the payment of Sonu's loan. Who is correct?

13.

P, Q and R were partners in a firm sharing profits in the ratio of 5:4:3.Their capitals were Rs.40,000, Rs.50,000 and Rs.1,00,000 respectively.State the ratio in which the goodwill of the firm amounting to Rs.1,20,000 will be adjusted on the retirement of R.

14.

Why is it necessary to adjust goodwill at the time of change in profit sharing ratio?

15.

State with reason, whether at the time of admission of a partner, partnership is dissolved or partnership firm is dissolved.

16.

How is interest drawings calculated, if the drawings are made at regular intervals as on the first day of each month?

17.

Given below is the information extracted from the books of Shyam Ltd.:

Particulars	2012-13	2011-12
Revenue from Operations	20,00,000	17,50,000
Cost of material Consumed	11,70,000	9,75,000
Other Expenses	11,500	7,700
Income Tax	40%	40%

Prepare a Comparative Statement of Profit and Loss for the year 2012-13 on the basis of the above information.

18.

Mention any one difference between premium on issue of debentures and premium on redemption of debentures

19.

What is meant by redemption of debentures at a premium ?

20.

A and B start business on July 1, 2004, each partner contributing Rs. 1,50,000 as his share of capital. Three months later, on October 1, 2004, B makes an additional contribution of Rs. 1,00,000 which is treated as a loan. The profit for the period ending March 2005 was Rs. 85,000 before charging any interest or salary. All the partners were entitled to a salary of Rs. 3,000 each, per quarter. The partners had drawn Rs. 24,000 each on 1st January 2005. Prepare the Profit and Loss Appropriation Account for the period ended March 31,2005.

Generic 8

13 x 8 = 104

21.

Receipt and Payment Account of Maitrey Sports Club showed that Rs 68,500 were received by way of subscriptions for the year ended on March 31, 2017.
The additional information was as under:
1. Subscription Outstanding as on March 31, 2016 were Rs 6,500,
2. Subscription received in advance as on March 31, 2016 were Rs 4,100,
3. Subscription Outstanding as on March 31, 2017 were Rs 5,400,
4. Subscription received in advance as on March 31, 2017 were Rs 2,500.
Show how that above information would appear in the final accounts for the year ended on March 31, 2017 of Maitrey Sports Club.

22.

A and B were partners sharing profits in the ratio of 3:2. On 31st December, 2015, their balance sheet was as follows
Balance Sheet
as at 31st December, 2015

Liabilities		Amt (RS)	Assets	Amt (RS)
Capital A/cs			Land and Building	80,000
A	60,000		Plant and Machinery	40,000
B	50,000	1,10,000	Stock	22,000
Reserves		20,000	Sundry Debtors	16,000
Sundry Creditors		32,000	Cash	4,000
		1,62,000		1,62,000

On the above date, C was admitted into partnership on the following terms
(i) C was to pay RS.40,000 as capital and RS.20,000 as goodwill for 1/4th share in profits.
(ii) Land and Buildings were to be revalued at RS.90,000 and plant and machinery at RS.50,000. Stock was to be written down by RS.4,000. Creditors included RS.1,000 no longer payable.
(iii) Capital of partners of the new firm were to be in the profit sharing ratio and for this purpose current accounts were to be opened.
Prepare revaluation account, partners' capital accounts and balance sheet.

23.

Cambridge Ltd issued 50,000 shares of Rs 10 each at a premium of Rs 2 per share, payable as follows

Rs 3 on application, Rs 6 on allotment (including premium) and Rs 3 on call.

Applications were received for 75,000 shares and a pro-rata allotment was made as follows To the applications of 40,000 shares, 30,000 shares were issued and for the rest, 20,000 shares were issued. All money due were received except the allotment and call money from Tom who had applied for 1,200 shares (out of group of 40,000). All his shares were forfeited. The forfeited shares were re-issued for Rs 7 per share fully paid-up.

Pass necessary journal entries for the above transactions.

24.

Following is the balance sheet of Ram, Mohan and Sohan as at 31st December, 2010.
Balance Sheet
as at 31st December, 2010

Liabilities		Amt(Rs)	Assets	Amt(Rs)
Sundry Creditors		10,000	Tools	3,000
Workmen Compensaton Reserve		7,500	Furniture	18,000
Capital A/cs			Stock	16,000
Ram	20,000		Debtors	12,000
Mohan	10,000		Cash at Bank	8,000
Sohan	10,000	40,000	Cash in Hand	500
		57,500		57,500

Ram, Mohan and Sohan shared profit and losses in the ratio 2:2:1.Sohan died on 31st March, 2011.Under the partnership agreement, the executors of Sohan were entitled to
(i)Amount standing to the credit of his capital account.
(ii)Interest on capital which amounted to Rs.150.
(iii)His share of goodwill Rs.5,000.
(iv)His share of profit from the closing of last financial year to the date of death which amounted to Rs.750.
Sohan's executors were paid Rs.1,400 on 1st April, 2011 and the balance in four equal yearly instalments from 31st March, 2012 with interest @6% per annum.
Pass necessary journal entries and draw up Sohan's account to be rendered to his executors and Sohamn's executor's account till it is finally paid.

25.

Calculate inventory turnover ratio from the data given below
Inventory at the beginning of the year Rs.10,000, inventory at the end of the year Rs.5,000, carriage Rs.2,500 revenue from operations i.e. sales Rs.50,000, purchases Rs.25,000.

26.

Manish Ltd issued Rs 38,00,000, 8% debentures of Rs 100 each on 1st April, 2013. The terms of issue stated that the debentures were to be redeemed at a premium of 5% on 30th June, 2015. The company decided to transfer out of profits Rs 5,00,000 to debenture redemption reserve on 31st March, 2014 and Rs 4,50,000 on 31st March, 2015.
Pass necessary journal entries regarding the issue and redemption of debentures, without providing for either the interest or loss on issue of debentures.

27.

Following balances have been extracted from the books of Vardhman Ltd on 31st March 2015.Equity share capital (2,00,000 equity shares of Rs 10 each) Rs 20,00,000. securities premium reserve Rs 4,00,000, 12% debentures Rs 10,00,000, creditors Rs 4,00,000, proposed divident Rs 1,00,000, surplus, i.i. balance in statement of profit and loss (debit) Rs 1,00,000, land and building Rs 18,00,000, government bonds Rs 10,00,000, capital work-in-progress(building) Rs 7,00,000, discount on issue of 12% debentures Rs 2,00,000, cash at bank Rs 1,00,000.Debentures were issued on 1st April, 2014 redeemable after 5 years, i.e. on 31st March 2019.Surplus, i.e. balance in statement of profit and loss is before writing off discount on issue of debentures.
Prepare the balance sheet of the company as per Schedule III, Part I of the Companies Act, 2013.
Identify the value involved in the presentation of balance sheet.

28.

L, M and were partners in a firm in a firm sharing profits in ratio of 3:4:5. their fixed capital were Rs.4,00,000, Rs.5,00,000 and Rs.6,00,000 respectively.the partnership deed provide for the following
(i) Interest on capital @6% per annum
(ii) Salary of Rs.30,000 per annum to N.
(iii) Interest on Partner's drawings will be charged @12% per annum.
During the year ended 31st March,2015, the firm earned a profit of Rs.2,70,000. L withdrew Rs.10,000 on 1st April, 2017, M withdrew Rs.12,000 on 30th September, 2017 and N withdrew Rs.15,000 on 31st December, 2017. Prepare profit and loss appropriation account for the year ended 31st March, 2018.

29.

From the following, calculate the net cash flow from operating activities.

Particulars	Note No.	31st March, 2015 Amt(Rs.)	31st March, 2014 Amt(Rs.)
Equity and liabilities
1.Shareholder's Funds
(a) Share Capital	1	3,75,000	3,75,000
(b) Reserves and Surplus	2	1,55,000	1,55,000
2.Non-current Liabilities(8% Debentures)		1,30,000	75,000
3.Current Liabilities
(a) Short-term Borrowing (8% Bank loan)		20,000	25,000
(b) Trade Payables		60,000	55,000
(c) Short-term Provisions (Provision for tax)		25,000	20,000
Total		7,65,000	5,40,000
2.Assets
1.Non-current Assets
(a) Tangible Fixed Assets (Net)		4,30,000	3,10,000
(b) Intangible Assets (Goodwill)		7,500	20,000
(c) Non-current Investments		62,500	40,000
2.Current Assets
(a) Current Investments		2,500	7,500
(b) Inventories		97,500	50,000
(c) Trade Receivables		1,00,000	1,00,000
(d) Cash and Cash Equivalents		65,000	12,500
Total		7,65,000	5,40,000

Note to Accounts

Particulars	2015(Rs.)	2014(Rs.)
1.Share Capital
Equity Share Capital	2,75,000	2,25,000
5% Preference Share Capital	1,00,000	1,50,000
	3,75,000	3,75,000
2.Reserves and Surplus
General Reserve	75,000	60,000
Statement of Profit and Loss	75,000	(70,000)
Securities Premium Reserve	5,000	---
	1,55,000	(10,000)

Additional Information
During the year, a piece of machinery costing Rs.30,000 on which depreciation charged was Rs.10,000 was sold for Rs.10,000.Depreciation provided on fixed assets Rs.30,000.Dividend on equity shares@8% was paid on opening balance.Income tax Rs.22,500 was provided.Additional debentures were issued at par on 1st October 2013 and bank loan was repaid on the same date.At the end of the year, preference shares were redeemed at a premium of 5%.

30.

Calculate revenue from operations, other income and total revenue of a financial company from the following information.
Miscellaneous income Rs 10,000, interest on loans Rs 60,00,000, divident Rs 2,00,000, profiton sale of building Rs 30,00,000.

31.

Rearrange the following in the form of a comparative income statement or statement of profit and loss.

Particulars	31st March, 2014 Amt(Rs)	31st March,2015 Amt(Rs)
Revenue from Operations (Net Sales)	16,00,000	19,20,000
Purchase of Stock-in-trade	9,00,000	11,00,000
Changes in Inventories of stock-in-trade	1,00,000	60,000
Other Expenses
Office and And Administration	2,80,000	3,80,000
Selling and Distribution	1,80,000	1,40,000
General Expenses	20,000	10,000

32.

Kumar,Gupta and Kavita were partners in a firm sharing profits and loses equally.The firm was engaged in the storage and distribution of canned juice and its godowns were located at three different places in the city.Each godown was being managed individually by Kumar Gupta and Kavita Because of increase in business activities at the godown managed by Gupta, he had to devote more time.Gupta demanded that his share in the profits of the firm be increased,to which Kumar and Kavita agreed. The new profit sharing ratio was agreed to be 1:2:1.
For this purpose,the goodwill of the firm was valued at two years purchase of the average profits of last five years.
The profits of the last five years were as follows

Year	Profit (Rs)
I	4,00,000
II	4,80,000
III	7,33,000
IV (Loss)	33,000
V	2,20,000

,You are required to
(i)Calculate the goodwill of the firm.
(ii) Pass necessary journal entry for the treatment of goodwill on change in profit sharing ratio of Kumar, Gupta and Kavita.

33.

Bora, Singh and Ibrahim were partners in a firm sharing profits in the ratio of 5 : 3 : 1. On 2.3.2015 their firm was dissolved. The assets were realised and the liabilities were paid off. Given below are the Realisation Account, Partners' Capital Account and Bank Account of the firm. The accountant of the firm left a few amounts unposted in these accounts. You are required these accounts by positing the correct amounts:

Dr. Realisation Account Cr.

Particulars		Rs.	Particulars		Rs.
To Stock		10,000	By Provision for bad debts		5,000
To Debtors		25,000	By Sundry Creditors		16,600
To Plant and Machinery		40,000	By Bills Payable		3,400
To Blank:			By Mortagage Loan		15,000
Sundary Creditors	16,000		By Bank - Assets Realized:
Bills Payable	3,400		Stock	6,700
Mortgage Loan	15,000	34,400	Debtors	12,500
To Bank (Outstanding repairs)		400	Plant and Machinery	36,000	55,200
To Bank (Expenses)		620	By Bank-Urecorded Assets Realised		6,220
			By ......		.....
		1,10,420			1,10,420

Dr. Capital Account Cr.

Particulars	Bora Rs.	Singh Rs.	Ibrahim Rs.	Particulars	Bora Rs.	Singh Rs.	Ibrahim Rs.
.....	.....	.....	.....	By Balance b/d	22,000	18,000	10,000
.....	.....	.....	.....	By General Reserve	2,500	1,500	500
	24,500	19,500	10,500		24,500	19,500	10,500

Particulars

Bora

Rs.

Singh

Rs.

Ibrahim

Rs.

Particulars

Bora

Rs.

Singh

Rs.

Ibrahim

Rs.

.....

By Balance b/d

22,000

18,000

10,000

.....

By General Reserve

2,500

1,500

500

24,500

19,500

10,500

24,500

19,500

10,500

Dr. Bank Account Cr.

Particulars	Rs.	Particulars	Rs.
To Balance b/d	19,500	By Realisation (Liabilities)	34,00
To Realisation (Assers realized)	55,200	By Realisation (Unrecorded Liabilities)	400
.....	....	By .....	.....
		By .....	.....

	80,920		80,920

1 Marks

2 x 1 = 2

34.

Dividend received by a finance company will come under which activity while preparing a cash flow statement?

35.

While preparing cash Flow Statement of Alka Ltd. 'dividend paid' was shown as an operating activity by the accountant of the company. Was the correct in doing so? Give reason.

Generic 6

7 x 6 = 42

36.

Explain the statement: “Receipt and Payment Account is a summarised version of Cash Book”.

37.

L, M and N are partners in a firm sharing profits in the proportion of 3:2:1.Their balance sheet on 31st March, 2015 stood as follows
Balance Sheet
as at 31st March, 2015

Liabilities		Amt(Rs)	Assets	Amt(Rs)
Bills Payable		12,000	Buildings	21,000
Creditors		14,000	Cash in Hand	12,000
General Reserve		12,000	Cash at Bank	13,700
Capital A/cs			Debtors	12,000
L	20,000		Bills Receivable	4,300
M	12,000		Stock	1,750
N	8,000	40,000	Investments	13,250
		78,000		78,000

M died on 30th June and her executors are entitled to be paid as under
(i)Capital to her credit at the time of her death and interest thereon @10% per annum.
(ii)Her proportionate share of general reserve.
(iii)Her share of profits for the intervening period will be based on the sales during that period.Sales were calculated as Rs.1,20,000.The rate of profit during past three years had been 10% on sales.
(iv)Goodwill according to her share of profit to be during p[ast by taking twice the amount of profits of the last three years less 20%.The profits of the previous three years were: I=-Rs.8,200,, II=Rs.9,000, III=Rs.9,800.
The investments were sold at par and her executors were paid out.Prepare M's capital account and her executor's account.

38.

DP Shah Company Ltd made an issue of 1,00,000 equity shares of Rs 10 each at a premium of 30% payable as follows

On application Rs 3.50 per share, on allotment Rs 6.50 per share, balance on first and final call.

Applications were received for 2,00,000 equity shares and the directors made pro-rata allotment. Harsh, who had applied for 1,600 shares did not pay the allotment and final call money, as a result his shares were forfeited. Later on, 60% of the forfeited shares were re-issued at Rs 8 per share fully paid-up.

Pass necessary journal entries for the mentioned transactions in the books of the company.

39.

Zee Ltd purchased plant and machinery for Rs.2,00,000 payable as Rs.40,000 in cash and balance by allotment of 6% debentures of Rs.1,000 each at a premium of 25%. Journalise the above transactions.

40.

Following is the statement of profit and loss of Rohan Ltd. Calculate the inventory turnover ratio.
Statement of Profit and Loss
for the year ended 31st March 2015

Particulars	Note No.	Amt(Rs.)
I Revenue from Operations (Sales)		2,00,000
II Expenses
Purchases of Stock-in-trade		1,20,000
Changes in Inventory of Stock-in-trade	1	20,000
Other Expenses	2	30,000
Total Expenses		1,70,000
III Profit before Tax for the Year (I-II)		30,000
IV (-) Tax		5,000
V Profit for the Year (III -IV)		25,000

Notes to Accounts

Partiulars	Note No.	Amt(Rs.)
1. Changes in Inventory of Stock-in-trade
Opening Inventory		40,000
(-) Closing Inventory		20,000
		20,000
2. Other Expenses
Carriage and Freight Inwards		10,000
Carriage and Freight Outwards		12,500
Miscellaneous Expenses		7,500
		30,000

41.

Rochelle and Mandana are partners sharing profits and losses in the ratio of 3:2. Keith is admitted as a partner for 1/5 share. Make entries in the firm's journal, the following adjustments.
(i) The value of buildings increased by RS.2,00,000.
(ii) The landlord has decided to waive the outstanding rent, of RS.5,000 appearing in the books.
(iii) Prepaid insurance RS.2,500 is to be brought into account.
(iv) Investments and investment fluctuation fund appear in the balance sheet at RS.50,000 and RS.5,000 respectively. Presently, the value of investments is RS.42,000.
(v) On 31st December, 2015, goods of RS.20,000 were received by the firm on account of credit purchases. This transaction has not yet been recorded in the books of the firm. (Unrecorded creditors of RS.20,000 and unrecorded stock of RS.20,000).

42.

Preeti and Ranta started business on 1st April, 2017 with capital of Rs.15,00,000 and Rs.9,00,000 respectively.On 1st October, 2017, they decided that their capital should be Rs.12,00,000 each. The necessary adjustment in capitals were made by introducing or withdrawing by cheque. Interest on capital is allowed @ 8% per annum. compute interest on capital for the year ending 31st March,2018.

Multiple Choice Question

20 x 1 = 20

43.

XYZ club has a bar that maintains a separate trading account for its trading activities. Which of the following is the treatment of profit or loss on bar trading activities?

(a)

Profit or loss is directly shown in the balance sheet

(b)

Profit or loss is to be presented in income and expenditure account

(c)

Profit and loss is credit in income statement

(d)

Profit or loss is added to accumulated fund

44.

Rent expense of a non-profit organization paid in advance. Which of the following is the correct classification of rent?

(a)

Expense

(b)

Lisbility

(c)

Equity

(d)

Asset

45.

Accounting Standard ____ requires goodwill should be recorded in the books of accounts only when some money or money’s worth is paid for it.

(a)

(b)

(c)

(d)

46.

On the reconstitution of a firm change in the value of assets is called ________

(a)

Revaluation of assets

(b)

Reassessment of assets

(c)

Devaluation of assets

(d)

Reassessment of liabilities

47.

If no provision is made in agreement regarding the duration of the partnership:

(a)

Limited partnership

(b)

Partnership at – will

(c)

None

(d)

Particular partnership

48.

At the time of dissolution:

(a)

All the assets are transferred to realization A/c

(b)

Only current assets are transferred to realization A/c

(c)

on cash assets are transferred to realization A/c

(d)

Only liquid and current asset are transferred to realization A/c

49.

An account operated to ascertain the loss or gain at the death of a partner is called:

(a)

Realization account

(b)

Revaluation account

(c)

Execution account

(d)

Deceased partner A/c

50.

In case of retirement of a partner full good will is credited to the accounts of:

(a)

All partners

(b)

Only retiring partner

(c)

Only remaining partnerNone of the above

(d)

None of the above

51.

In the revaluation account an increase in the value of land and building:

(a)

Appears on the debit side

(b)

Appears on the credit side

(c)

Appears on the credit side of good will account

(d)

Does not appear at all

52.

Good will of the firm is valued Rs. 30000. C an incoming partner purchase 1/4 share of total profit Good will be raised in the books.

(a)

Rs. 30000

(b)

Rs. 7500

(c)

Rs. 120000

(d)

Rs. 7000

53.

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

(a)

Cash flow from operating activities

(b)

Cash flow from Investing activities

(c)

Cash flow from Financing activities

(d)

Cash Equivalent

54.

How will you deal increase in the balance of Securities Premium Reserve while preparing a Cash Flow Statement?

(a)

Cash flow from operating activities

(b)

Cash flow from Investing activities

(c)

Cash flow from Financing activities

(d)

Cash Equivalent

55.

The two basis measure of liquidity are

(a)

inventory turnover & current ratio

(b)

current ratio &liquid ratio

(c)

gross profit &operating ratio

(d)

current ratio &average collection period

56.

What is the limitations of financial statement

(a)

basis for fiscal policies

(b)

basis for granting of credit

(c)

guide to the value of the investment already made

(d)

do not reflect current situation

57.

Premium on redemption of debentures is in the nature of

(a)

Personal account

(b)

Real account

(c)

Nominal account

(d)

None of these

58.

When debentures are issued as secondary securities it is called

(a)

Issue for consideration other than cash

(b)

Issue as collateral securities

(c)

Issued at a discount

(d)

Issued at premium

59.

The minimum share application money is:

(a)

Rs. 5 per share

(b)

5% of nominal value of shares

(c)

10% of nominal value of shares

(d)

none of the above

60.

Other name for registered capital is:

(a)

Issued capital

(b)

nominal capital

(c)

reserve capital

(d)

None of the above

61.

Who should compensate to whom in case of change in profit sharing ratio of existing partners?

(a)

gaining partner to sacrificing partner

(b)

sacrificing partner to gaining partner

(c)

both (i) and (ii)

(d)

None of the above

62.

Profit or loss on revaluation is shared among the partners in:

(a)

new profit sharing ratio

(b)

capital ratio

(c)

equal ratio

(d)

old profit sharing ratio

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Answers Key:

Generic 3

20 x 3 = 60

The following steps are taken to prepare Income and Expenditure Account (I&E) from Receipts and Payment Account (R&P).
Step 1: All the revenue expenditures paid for the current accounting period are transferred from the Payments side of R&P to the Expenditure side of I&E.
Step 2: All the revenue receipts for the current accounting period are transferred from the Receipts side of R&P to the Income side of I&E.
Step 3: Expenses outstanding for the current period and expenses paid in advance (prepaid expenses) for the current period in the preceding accounting periods are to be added (adjusted) to their related expenses in the Step 1.
Step 4: Income outstanding (accrued income) for the current period and income received in advance for the current period in the preceding accounting periods are to be added (adjusted) to their related incomes in Step 2.
Step 5: Non-cash items like depreciation, appreciation for the current accounting period are to be adjusted in the I&E.
Step 6: After adjusting all the revenue items for the current accounting period, the Income and the Expenditure sides are totaled. If the sum total of the Income side exceeds (or is lesser than) the sum total of the Expenditure side, then the balancing figure is termed as surplus (or deficit).

The following are the features of Receipt and Payment Account:
1. Nature: It is a Real Account. It is a summarised version of Cash Book.
2. Nature of Transactions: It records only cash and bank transactions. Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.
3. No distinction between Capital and Revenue items: It records all cash and bank receipts and payments of both capital and revenue nature.
4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing balance of the cash and bank (balancing figure) at the end of the accounting period.
5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received during an accounting period.

If the amount due to the retiring partner or legal representative of a deceased partner is not settled and the business is carried on, the retiring partner or legal representative of a deceased partner at his option is entitled to receive either interest @6% per annum till the amount is paid off or a share of the amount profit which has been earned by using the amount due to him.

It indicates that a firm earns profit of 33.33 paise on every rupee of sale.

When revaluation account is prepared, the assets and liabilities appear in the balance sheet of new firm at their revised (Revalued) figures.

Profit on realisation is shared by all partners in their old profit sharing ratio.

Number of shares issued = 20,000 shares

Number of shares issued = 16,000 shares.

Goodwill=Rs 7,20,000; Debit M=Rs 1,20,000 and Credit L=Rs 1,20,000 L's sacrifice 1/6;M's gain 1/6.

10.

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.

11.

Satish is a potential investor for Data Unlimited.Therefore, he is an external user.

12.

Monu is correct, as according to Section 48, third party's debts are to be paid first before the payment of partner's loan.

13.

R's share of Goodwill, i.e. Rs.30,000 (1,20,000 x 3/12) will be contributed by P and Q in their gaining ratio. i.e. 5:4

14.

Whenever there is a change in profit sharing ratio,the gaining partner (i.e.,the partner whose share has increased as a result of change ) is required to compensate the sacrificing partner (i.e.. the partner whose share has decreased as a result of change)

15.

At the time of admission of a partner, partnership is dissolved and not the partnership firm because the firm continues to carry on its business.

16.

If the drawings are made regularly on the first day of each month, the interest on drawings will be calculated for 6\(1 \over 2\) months i.e.
interest on drawing=total drawings\(\times \frac { rate }{ 100 } \times \frac { 6.5 }{ 12 } \)

17.

Percentage change : Revenue from Operations 14.29%, Cost 20%, Other Expenses 49.35%, Cost 20%, Other Expenses (33.33%),Others 6.67% each

18.

Premium on issue of debentures is a capital profit to a company; whereas premium on redemption of debentures is a capital loss to a company.

19.

When debentures are redeemed at more than the face value of debentures.

20.

Interest on B's loan Rs. 3,000 salary Rs. 12,000 each. Divisible profit Rs. 58,000 transferred to A's capital and B's capital A/cs Rs. 29,000 each.

Generic 8

13 x 8 = 104

21.

Books of Maitrey Sports Club Income and
Expenditure Account as on March 31, 2017
Dr. Cr.
Income	Amount Rs.	Amount Rs.
Subscription	68,500
Less: O/s on Mar. 31, 2016	(6,500)
	62,000
Add: Advance on Mar. 31, 2016	4,100
Add: O/s on Mar. 31, 2017	5,400
	71,500
Less: Advance on Mar. 31, 2017	(2,500)	69,000

Balance Sheet as on March 31, 2016
Liabilities	Amount Rs.	Assets	Amount Rs.
Subscription in Advance	4,100	Subscription Outstanding	6,500

Balance Sheet as on March 31, 2016
Liabilities	Amount Rs.	Assets	Amount Rs.
Subscription in Advance	2,500	Subscription Outstanding	5,400

22.

Dr Revaluation A/c Cr

Particulars		Amt (RS)	Particulars	Amt (RS)
To Stock A/c		4,000	By Land and Building	10,000
To Profit Transferred To			By Plant and Machinery	10,000
A	10,200		By Creditors	1,000
B	6,800	17,000
		21,000		21,000

Dr Partners' Capital Account Cr

Particulars	A (RS)	B (RS)	C (RS)	Particulars	A (RS)	B (RS)	C (RS)
To Balance c/d	94,200	72,800	40,000	By Balance b/d	60,000	50,000	-
				By Cash A/c	-	-	40,000
				By Premium for Goodwill A/c	12,000	8,000	-
				By Revaluation A/c	10,200	6,800	-
				By Reserve A/c	12,000	8,000	-
	94,200	72,800	40,000		94,200	72,800	40,000
To Current A/c	1,050	10,700	-	By Balance b/d	94,200	72,800	40,000
To Balance c/d	93,150	62,100	51,750	By Current A/c	-	-	11,750
	94,200	72,800	51,750		94,200	72,800	51,750

Adjustment of Capital
Total capital of the firm=94,200+72,800+40,000=RS.2,07,000
New capital of the partners
A=RS.2,07,000\(\times \)9/20=RS.93,150
B=RS.2,07,000\(\times \)6/20=RS.62,100
C=RS.2,07,000\(\times \)5/20=RS.51,750
Balance Sheet
as at 31st December, 2015

Liabilities		Amt (RS)	Assets	Amt (RS)
Capital A/cs			Land and Building	90,000
A	93,150		Plant and Machinery	50,000
B	62,100		Stock	18,000
C	1,750	2,07,000	Sundry Debtors	16,000
Current A/cs			Cash (RS.40,000+RS.20,000)	64,000
A	1,050		C's Current A/c	11,750
B	10,700	11,750
Sundry Creditors		31,000
		2,49,750		2,49,750

23.

Capital reserve = Rs 900

24.

Journal

Date	Particulars		Amt(Dr)	Amt(Cr)
2011
Mar 31	Interest on Capital A/c	Dr	150
	To Sohan's Capital A/c			150
	(Being the interest credited to Sohan's capital account upto 31st March)
Mar 31	Ram's Capital A/c	Dr	2,500
	Mohan's Capital A/c	Dr	2,500
	To Sohan's Capital A/c			5,000
	(Being Sohan's share of goodwill credited to his capital account)
Mar 31	Profit and Loss Suspense A/c	Dr	750
	To Sohan's Capital A/c			750
	(Being the share of profit credited)
Mar 31	Workmen Compensation Reserve A/c	Dr	7,500
	To Ram's Capital A/c			3,000
	To Mohan's Capital A/c			3,000
	To Sohan's Capital A/c			1,500
	(Being workmen compensation reserve credited to capital accounts)
Mar 31	Sohan's Capital A/c	Dr	17,400
	To Sohan's Executor's A/c			17,400
	(Being the transfer of balance in Sohan's capital account to Sohan's executor's account)
Apr 1	Sohan's Executor's A/c	Dr	1,400
	To Cash/Bank A/c			1,400
	(Being the amount paid to Sohan's executors)

Dr Sohan's Capital Account Cr

Date	Particulars	Amt(Rs)	Date	Particulars	Amt(Rs)
2011			2011
Mar 31	To Sohan's Executor's A/c	17,400	Jan 1	By Balance b/d	10,000
			Mar 31	By Interest on Capital A/c	150
			Mar 31	By Ram's A/c	2,500
			Mar 31	By Mohan's Capital A/c	2,500
			Mar 31	By Profit and Loss Suspense A/c	750
			Mar 31	By Workmen Compensation Reserve A/c	1,500
		17,400			17,400

Dr Sohan's Executor's Account Cr

Date	Particulars	Amt(Rs)	Date	Particulars	Amt(Rs)
2011			2011
Apr 1	To Bank A/c	1,400	Mar 31	By Sohan's Capital A/c	17,400
Dec 31	To Balance c/d	16,720	Dec 31	By Interest A/c	720
				[(Rs.17,400-Rs.1,400) x 6/100 x 9/12]
		18,120			18,120
2012			2012
Mar 31	To Cash A/c	4,960	Jan 1	By Balance b/d	16,720
	[Rs.4,000+Rs.720+Rs.240]		Mar 31	By Interest A/c	240
Dec 31	To Balanbce c/d	12,540		[Rs.16,000 x 6/100 x 3/12]
			Dec 31	By Interest A/c	540
				[Rs/.12,000 x 6/100 x 9/12]
		17,500			17,500
2013			2013
Mar 31	To Cash A/c	4,720	Jan 1	By Balance b/d	12,540
	[Rs.4,000+Rs.540+Rs.180]		Mar 31	By inrterest A/c	180
Dec 31	To Balance c/d	8,360		[Rs.12,000 x 6/100 x 3/12]
			Dec 31	By Interest A/c	360
				[Rs.8,000 x 9/12 x 6/100]
		13,080			13,080
2014			2014
Mar 31	To Cash A/c	4,480	Jan 1	By Balance b/d	8,360
Dec 31	[Rs.4,000+Rs.360+Rs.120]		Mar 31	By Interest A/c	120
Dec 31	To Balance c/d	4,180		[Rs.8,000 x 3/12 x 6/100]
			Dec 31	By Interest A/c	180
				[Rs.4,000 x 6/100 x 9/12]
		8,660			8,660
2015			2015
Mar 31	To Cash A/c	4,240	Jan 1	By Balance b/d	4,180
	[Rs.4,000+Rs.180+Rs.60]		Mar 31	By Interest A/c	60
				[Rs.4,000 x 6/100 x 3/12 ]
		4,240			4,240

25.

Inventory turnover ratio=Cost of revenue from operations i. e. cost of goods sold* / Average inventory**
\(\\ =\frac { 32,500 }{ 7,500 } =4.33\quad times\)
*Cost of revenue from operations i.e. cost of goods sold
= Opening inventory + Purchases + Carriage - Closing inventory
= 10,000 + 25,000 + 2,500 - 5,000
=Rs.32,500
**Average Inventory=Opening inventory+Closing inventory/2
\(\\ =\frac { 10,000+5,000 }{ 2 } =\frac { 15,000 }{ 2 } =Rs.7,500\)

26.

Journal

Date	Particulars		Amt(Dr)	Amt(Cr)
2013 Apr 1	Bank A/c To Debenture Application and Allotment A/c (Being application money received)	Dr	38,00,000	38,00,000
Mar31	Debenture Application and Allotment A/c Loss on Issue of Debentures A/c To 8% Debentures A/c To Premium on Redemption of Debentures A/c (Being debentures issued at par and redeemable at 5% premium)	Dr Dr	38,00,000 1,90,000	38,00,000 1,90,000
2014 Mar31	Surplus, i.e. Balance in Statement of Profit and Loss To Debenture Redemption Reserve A/c (Being reserve created out of profits)	Dr	5,00,000	5,00,000
2015 Mar31	Surplus, i.e. Balance in Statement of Profit and Loss To Debenture Redemption Reserve A/c (Being reserve created out of profits)	Dr	4,50,000	4,50,000
2015 Apr30	Debenture Redemption Investment A/c To Bank A/c (Being the amount placed in fixed deposit equal to 15% of the nominal value of debentures)	Dr	5,70,000	5,70,000
Jun30	Bank A/c To Debenture Redemption Investment A/c (Being the debenture redemption investment encashed on redemption of debentures)	Dr	5,70,000	5,70,000
Jun30	8% Debentures A/c Premium on Redemption of Debentures A/c To Debentureholders' A/c (Being debentures due for redemption)	Dr Dr	38,00,000 1,90,000	39,90,000
	Debentureholders' A/c To Bank A/c (Being amount paid to debentureholders)	Dr	39,90,000	39,90,000
	Debenture Redemption Reserve A/c To General Reserve A/c (Being debenture redemption reserve transferred to general reserve account)	Dr	9,50,000	9,50,000

27.

Balance Sheet
as at 31st March 2105

Particulars	Note No	31st March 2015(Rs)
I.Equity and liabilities
1.Shareholders Funds
(a) Share Capital	1	20,00,000
(b) Reserves and Surplus	2	2,60,000
2.Non-current Liabilities
Long-term Borrowings	3	10,00,000
3.Current Liabilties
(a) Trade Payable	4	4,00,000
(b)Short-term Provisions	5	1,00,000
Total		37,60,000
II.Assets
1.Non-current Assets
(a) Fixed assets
(i) Tangible Assets	6	18,00,000
(ii) Capital work-in-progress	7	7,00,000
(b) Non-current Investments	8	10,00,000
(c) Other Non-current Assets	9	1,20,000

Particulars	Note No	31st March 2015(Rs)
2.Current Assets
(a) Cash and Cash Equivalents	10	1,00,000
(b) Other Current Assets	11	40,000
Total		37,60,000

Particulars	Amt(Rs)
1.Share capital
Authorised Capital
...Equity Shares of Rs 10 each	...
Issued Capital
...Equity Shares of Rs 10 each	...
Subscribed Capital
Subscribed and Fully Paid-up
2,00,000 Equity Shares of Rs 10 each	20,00,000
2. Reserve and Surplus
Securities Premium Reserve	4,00,000
(-) Surplus,i.e. Balance in Statement of Profit and Loss*	(1,40,000)
	2,60,000
Surplus, i.e. Balance in Statement of Profit and Loss is after writing-off
Rs 40,000 being 1/5th of Discount on issue of 12% Debentures
3.Long-term Borrowings
12% Debentures	10,00,000
4.Trade Payable
Creditors	4,00,000
5.Short-term Provisions
Proposed Divident	1,00,000
6.Tangible Assets
Land and Building	18,00,000
7.Capital Work-in-progress
Building under Construction	7,00,000
8.Non-current Investments
Governemnt Bonds	10,00,000
9.Other Non-current Assets
Unamortised Discount on Issue of Debentures	1,20,000
10.Cash and Cash Equivalents
Cash at Bank	1,00,000
11.Other Current Assets
Unamortised Discount on Issue of Debentures	40,000

Values involved in the presentation of balance sheet pre:
(i) Complying with the legal provision
(ii) Orderliness

28.

Profit and Loss Appropriation Account
Dr for the year ended 31st march, 2015 Cr

Particulars		Amt(Rs)	Particulars		Amt(Rs)
To Intrest on capital			By net profit as per profit and loss A/c		2,70,000
L's current A/c	24,000		By Intrest on drawings A/cs
M's current A/c	30,000		L's current A/c	1,200
N's Current A/c	36,000	90,000	M's current A/c	720
To Salary			N's Current A/c	450	2,370
N's Current A/c		30,000
To Profit transferred to
L's current A/c	38,092.50
M's current A/c	50,790.00
N's Current A/c	63,487.50	1,52,370
		2,72,370			2,72,370

Working Note
1. As capitals are fixed, therefore interest, salary and share of profit will be transferred to partners' current accounts.
2. Calculation of Interest on Drawings
\(L=10,000 \times \frac{12}{100}=Rs. 1,200 ; \quad M=12,000 \times \frac{12}{100} \times \frac{6}{12}=Rs. 720 ; \quad N=15,000 \times \frac{12}{100} \times \frac{3}{12}=Rs. 450\)
3. Interest on Capital
\(L=4,00,000 \times \frac{6}{100}=Rs. 24,000 ; \quad M=5,00,000 \times \frac{6}{100}=Rs. 30,000 ; \quad N=6,00,000 \times \frac{6}{100}=Rs. 36,000\)

29.

Calculation of Net Cash Flow from Operating Activities

Particulars		Amt(Rs.)
Cash Flow from Operating Activities
Net Profit before Tax (WN 1)		2,08,000
Adjustments for
(+) Depreciation on Fixed Assets	30,000
Loss on Sale of Machinery (WN 2)	10,000
Interest on Debentures\(\left[ \left( Rs.75,000\times 8/100 \right) +\left( Rs.55,000\times 8/100\times 6/12 \right) \right] \)	8,200
Interest on Bank Loan \(\left[ \left( Rs.25,000\times 8/100\times 6/12 \right) +\left( Rs.20,000\times 8/100\times 6/12 \right) \right] \)	1,800
Goodwill Amortised	12,500
Premium on Redemption of Preference Shares	2,500	65,000
Operating Profit before working Capital Changes		2,73,000
(+) Decrease in Current Assets and Increase in Current Liabilities Trade Payables	5,000
(-) Increase in Current Assets and Decrease in Current Liabilities Inventories	(47,500)	(42,500)
Net Cash Flow from Operating Activities before Tax		2,30,500
(-) Tax Paid (WN3)		(17,500)
Net Cash inflow from Operating Activities after Tax		2,13,000

30.

Particulars		Amt(Rs)
I. Revenue from Operations
Interest on Loans		60,00,000
Divident		2,00,000
		62,00,000
II. Other Income
Profit on sale of Building	30,00,000
Miscellaneous Income	10,000	30,10,000
III. Total Revenue(I+II)		92,10,000

31.

Comparative Statement of Profit and Loss
for the years ended 31st march, 2014 and 2015

Particulars	31st March 2014 Amt(Rs)	31st March 2015 Amt(Rs)	Absolute change (Increase or Decrease) (Rs)	Percentage Change (Increase or Decrease) (Rs)
I. Revenue from Operations(Net Sales)	16,00,000	19,20,000	3,20,000	20.00
II. Expenses
(a) Purchase of Stock-in-trade	9,00,000	11,00,000	2,00,000	22.22
(b) Changes in Inventories of Stock-in-trade	1,00,000	60,000	(40,000)	(40.00)
(c) Other Expenses	4,80,000	5,30,000	50,000	10.42
Total Expenses	14,80,000	16,90,000	2,10,000	14.19
III. Profit before and after Tax(1-III)	1,20,000	2,30,000	1,10,000	91.67

32.

(i) Calculation of Goodwill of the firm
Average profits =\(\frac { 4,00,000+4,80,000+7,33,000-33,000+2,20,000 }{ 5 } \)
     \(=\frac { 18,00,000 }{ 5 } =Rs3,60,000\)
   Goodwill=Average profitsxNumber of years purchase
   =3,60,000x2=Rs 7,20,000
(ii) JOURNAL

Particulars	Amt (Cr)	Amt (Cr)
Gupta's Capital A/c Dr	1,20,000
To Kumar's Capital A/c		60,000
To Kavita's Capital A/c (Being recording of Gupta's shares of goodwill on change in profit sharing ratio)		60,000

Calculation of sacrifice or Gain of each partner
Sacrificing ratio=Old share - New share
   Kumar \(=\frac { 1 }{ 3 } -\frac { 1 }{ 4 } =\frac { 4-3 }{ 12 } =\frac { 1 }{ 12 } \) Sacrifice
   Gupta \(=\frac { 1 }{ 3 } -\frac { 2 }{ 4 } =\frac { 4-6 }{ 12 } =\left( \frac { 2 }{ 12 } \right) \) Gain
Kavita   \(=\frac { 1 }{ 3 } -\frac { 1 }{ 4 } =\frac { 4-3 }{ 12 } =\frac { 1 }{ 12 } \)
Gupta will pay for goodwill \(=7,20,000x\frac { 2 }{ 12 } Rs1,20,000\)

33.

Loss on Realisation Rs. 9,000; Final Payment of Capital: Bora Rs. 19,500 Singh Rs. 16,500 and Ibrahim Rs. 9,500.

[Hint : (i) Amount realised from unrecorded assets Rs. 6,220 transferred from Realisation A/c to the debit side of Bank A/c. (ii) Expenses Rs. 620 transferred from Realisation A/c to the credit side of Bank A/c. (iii) Loss on Realisation transferred to debit side of partners capital a/c i.e., Bora's share Rs. 5,000, Singh Rs. 3,000 and Ibrahim Rs. 1,000 (iv) Final payment to partners capital transferred from partners' Capital a/cs to the credit side of Bank A/c.]

1 Marks

2 x 1 = 2

34.

Operating activities.

35.

The accountant is not correct because dividend paid by company will be treated as cash flow from financing activities.

Generic 6

7 x 6 = 42

36.

Receipts and Payments Account is a summary of the Cash Book. This account is prepared by those organisations which maintain their books on cash basis. All cash receipts are recorded on the Receipts side (i.e. Debit side) and all cash payments are recorded on the Payments side (i.e. Credit side) of Receipts and Payments Account. It is prepared on the basis of cash and bank transactions recorded in the Cash Book. It begins with the opening balance of cash and bank and ends with the closing balances of cash and bank (balancing figure) at the end of the accounting period. It records all the cash and bank transactions both of capital and revenue nature. It not only records the cash and bank transactions relating to the current accounting period, but also cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period. This account only helps us to ascertain the closing balance of the cash and bank and helps in assessing the cash position of an NPO. It also forms the basis for the preparation of Income and Expenditure Account.
Similarities between Receipt and Payments Account and Cash Book
The following are the features of Receipt and Payment Account that are common to those of Cash Book:
1. Nature: It is a summarised version of the Cash Book. Similar to the Cash Book, the Receipt and Payment Account is also a Real Account.
2. Nature of Transactions: It records only cash and bank transactions similar to a Two-Column Cash Book. Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.
3. No distinction between Capital and Revenue items: It records all the cash and bank receipts and payments of both capital and revenue nature. Likewise, the transactions recorded in the Cash Book are also of both capital and revenue nature.
4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing balance of the cash and bank (balancing figure) at the end of the accounting period.
5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received during an accounting period. Similarly, a Cash Book also helps us to assess the cash position of an organisation.
Thus, on the basis of the above mentioned points and similarities, the statement 'Receipt and Payment Account is a summarised version of Cash Book' is justified.