1

Practice Paper II (TERM -1)

ACCOUNTANCY
SUBJECT CODE: 055

Time Allowed: 1.5 Hours Maximum Marks: 45

General Instructions:
Read the following instructions very carefully and strictly follow them:
1. This question paper comprises two PARTS – I and II. There are 55
questions in the question paper.
2. There is an internal choice provided in each Sections.
I. Part-I, contains three Sections -A, B and C. Section A has
questions from 1 to 18 and Section B has questions from 19 to
36, you have to attempt any 15 questions each in both the
sections.
II. Part I, Section C has questions from 37 to 41. You have to
attempt any four questions.
III. Part II, contains two Sections – A and B. Section A has
questions from 42 to 48, you have to attempt any five questions
and Section B has questions from 49 to 55, you have to
attempt any six questions.
3. All questions are ‘Objective Type Questions’ carrying 1 mark each.
4. Specific Instructions related to each Part and subdivisions (Section)
is mentioned clearly before the questions. Candidates should read
them thoroughly and attempt accordingly.
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Part – I
Section – A
Instructions:- From question number 1 to 18, you have to attempt
any 15 questions.
Q.No
.
1. Rahul, a partner withdrew ₹8,000 at the beginning of every
month for the first 8 months i.e from April to November. Interest
on Drawings was to be charged @ 6% p.a for the year ending
March 31, 2021. Interest on drawings to be charged from Rahul
will be :-
a) ₹ 3,120
b) ₹ 4,080
c) ₹ 2,080
d) ₹ 2,720
2. Subscribed and fully Paid up Share Capital + Subscribed but not
fully paid up share capital + ________ = Subscribed Capital
a) Calls in Arrears
b) Securities Premium Reserve
c) Reserves and Surplus.
d) Share Forfeited Account.
3. Anna and Banna were partners sharing P&L in the ratio 3:2.
Interest on capital for the year ended March 31, 2021 were ₹
15,000 and ₹ 25,000 respectively. Anna was being credited with
Salary of ₹ 30,000 and Banna was credited with commission of ₹
40,000. Their drawings during the year were ₹ 50,000 each. The
profit share of Banna was ₹ 1,20,000 then what was the net profit
for the year made by the firm?
a) ₹ 3,00,000
b) ₹ 4,10,000
c) ₹ 3,70,000
d) ₹ 3,10,000
4. Tinku and Rinku were partners sharing P&L in the ratio 7:5. They
admitted Pinku as a new partner for 20% share. Goodwill of the
firm was valued at ₹ 6,00,000. Goodwill share credited to Tinku
was ₹ 80,000. What was the sacrificing ratio?
a) 7 : 5
b) 1 : 1
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c) 2 : 13
d) 2 : 1
5. A company invited applications for 80,000 shares of ₹10 each and
₹2 premium. The share was payable as ₹3 on application, ₹4 on
allotment (including ₹1 premium) and balance on call. Public had
applied for 75,000 shares. All the money had been duly received
except first call money on 3,000 shares held by Kumar. What will
be the amount received on first call.
a) ₹ 3,75,000
b) ₹ 3,60,000
c) ₹ 3,00,000
d) ₹ 2,88,000
6. Anthony Ltd. forfeited 6,000 shares of Gaurav, for non-payment
of final call money of ₹ 5 per share (including ₹ 2 premium). The
Company issued 4,000 shares to Saurabh at maximum possible
discount as fully paid up i.e ₹ 10 per share. The balance in share
forfeited account after re-issue will be :-
a) ₹ 14,000
b) Nil
c) ₹ 42,000
d) ₹ 6,000
7. Statement I: - Credit Balance of Revaluation Account is
Revaluation gain.
Statement II:- New partner may be admitted without bringing
any capital amount.
a) Both statements are true
b) Both statements are false
c) Only Statement I is true
d) Only Statement II is true
8. Assertion (A) :- Super Profits is always positive.
Reason (R) :- Super Profits is excess of Actual/Average Profits
over Normal Profits.
a) Both A and R are correct and R is correct explanation of A.
b) Both A and R are correct and R is not correct explanation of
A.
c) A is correct but R is incorrect
d) A is incorrect but R is correct
9. Sultan Ltd. was registered with an authorised Capital of ₹
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40,00,000 divided into 2,50,000 equity shares of ₹10 each and

1,50,000, 12% preference shares of ₹10 each. The company
offered 1,00,000 equity shares for public subscription at a
premium of 50%. The share was payable as ₹ 3 on application, ₹
8 on allotment (including premium) and balance whenever
required. Application and Allotment were received in full. Salman,
a shareholder holding 6,000 shares paid all his first call dues
along with allotment itself. Which of the following is correct in
respect to presentation of share capital in balance sheet?
a) Subscribed and Fully Paid up share capital ₹ 6,24,000
b) Subscribed but not Fully Paid up share capital ₹ 6,24,000
c) Subscribed but not Fully Paid up share capital ₹ 5,64,000
and Subscribed and Fully Paid up share capital ₹ 60,000
d) Subscribed but not Fully Paid up share capital ₹ 6,00,000
10. Ram, Shyam and Tarun were partners sharing P&L in the ratio
5:4:3. W.e.f 01 April,2021 they decided that Tarun will get 1/5
share in profits and remaining partners will share P&L equally
among themselves. What will be Gain/sacrifice of Ram?
a) 1/60 (Sacrifice)
b) 1/60 (Gain)
c) 1/15 (Sacrifice)
d) 1/20 (Sacrifice)
11. There must be an interval of at least ______ between the making
of two calls unless otherwise provided by the ________ of the
company.
a) One Month; Articles of Association
b) Three Months; Memorandum of Association
c) One Month; Memorandum of Association
d) Three Months; Articles of Association
12. In definition of Partnership, there is line that “Business is carried
on by all or any one of them acting for all.” What this line
suggest?
a) Mutual Agency
b) Agreement
c) Sharing of Profit
d) Liability of Partnership
13. Assertion (A) :- Goodwill share brought in by new incoming
partner will be distributed amongst existing partners in Old Ratio.
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Reason (R) :- Goodwill appearing in the books is written off in

new ratio at the time of admission of partner.
a) Both A and R are correct and R is correct explanation of A.
b) Both A and R are correct and R is not correct explanation of
A.
c) A is incorrect but R is correct
d) Both A and R are incorrect
14. A, B, C, D and E were running a partnership firm from last 8
years. To expand the business, they decided to admit F as a new
partner. F can be admitted into partnership :
a) If any one of the existing partner wishes for this.
b) If any three of the partners agree for this.
c) If all the existing partners agree for this.
d) If any four of the partners agree for this.
15. The Balance in Securities Premium Reserve can be used for
____________ and ___________ .
a) Converting Partly paid into Fully Paid Bonus Shares;
Redemption of Preference Shares.
b) Issuing Fully Paid Bonus Shares; Creation of DRR.
c) Payment of Dividend ; Busying of Assets.
d) Issuing Fully Paid Bonus Shares; Buy Back of Equity Shares.
16. Which of the following statements is not true?
a) Partnership Agreement can be oral or written.
b) Active Partners will get salary in the absence of partnership
deed, as they have devoted more time into the business.
c) If date of drawings is not given, then Interest on Drawings
will be charged for an average period of half the time period
into consideration.
d) Both a and b
17. X and Y were partners sharing P&L in specific ratio. They admitted
Z as a new partner. New ratio was 5:3:2. If sacrificing ratio
between X and Y was equal, then what was their Old profit
sharing ratio?
a) 1:1
b) 2:3
c) 3:2
d) 5:3
18. When a Public limited company proposes to increase its
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subscribed capital, it is required to offer the shares to promoters,

venture capitalists, financial institutions etc. at a pre-decided
price. Such an issue is termed as:
a) Preferential Allotment
b) Private Placement of Shares
c) Rights Issue
d) Issue of Bonus shares
Part – I
Section – B
Instructions:
➢ From question number 19 to 36, you have to attempt any 15
questions.
19. Goodwill of the firm is ₹3,60,000 being valued at 3 years’
purchase of Super Profits of the firm. Capital Employed was
₹15,00,000 and Normal rate of return is expected to be 12% p.a.
You are required to find the actual profits made by the firm if
there was Loss on sale of Assets of ₹80,000 and Interest on
Investments received as ₹30,000.
a) ₹2,50,000
b) ₹3,50,000
c) ₹3,00,000
d) ₹2,20,000
20. Aviral Ltd. took over Assets of ₹25,00,000 and Liabilities of
₹6,50,000 of Pikashow Ltd. for a certain amount of purchase
consideration. Aviral Ltd. issued 20,000, 8% Preference Shares of
₹100 each at 15% Premium and Demand Draft of ₹3,00,000 in
settlement of purchase consideration. What is the amount of
Purchase Consideration and what is the amount of
Goodwill/Capital Reserve?
a) Purchase Consideration ₹23,00,000; Capital Reserve
₹4,50,000.
b) Purchase Consideration ₹26,00,000; Goodwill ₹7,50,000.
c) Purchase Consideration ₹20,00,000; Goodwill ₹ 1,50,000.
d) Purchase Consideration ₹ 26,00,000; Capital Reserve ₹
2,50,000.
21. A and B share profits in the ratio of 4:1. C is admitted for 1/6th
share for which he pays ₹ 20,000 for goodwill. New profit sharing
ratio is 3:2:1. Journal entry for treatment of goodwill will be:
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a) Premium A/c Dr. 20,000

A’s Capital A/c Dr. 16,000
To B’s Capital A/c 36,000
b) Premium A/c Dr. 5,000
B’s Capital A/c Dr. 4,000
To A’s Capital A/c 9,000
c) Premium A/c Dr. 20,000
B’s Capital A/c Dr. 16,000
To A’s Capital A/c 36,000
d) Premium A/c Dr. 20,000
To A’s Capital A/c 14,000
To B’s Capital A/c 6,000
22. Akbar, Birbal and Chanakya were partners sharing P&L in the ratio
5:3:2. W.e.f 01 April,2021 they decided to share future P&L
equally. On the date there was balance in Workmen
Compensation Reserve of ₹4,00,000 and there was workmen
claim of ₹1,00,000. After providing for workmen claim out of
Workmen Compensation Reserve, firm decided to continue with
the balance of remaining Workmen Compensation Reserve. what
entry will be passed?
a) Workmen Compensation Reserve Dr. 3,00,000
To Akbar’s Capital A/c 1,50,000
To Birba’s Capital A/c 90,000
To Chanakya’s Capital A/c 60,000
b) Workmen Compensation Reserve Dr. 3,00,000
To Akbar’s Capital A/c 1,00,000
To Birbal’s Capital A/c 1,00,000
To Chanakya’s Capital A/c 1,00,000
c) Birbal’s capital A/c Dr. 10,000
Chanakya’s Capital A/c Dr. 40,000
To Akbar’s Capital A/c 50,000
d) Akbar’s Capital A/c Dr. 50,000
To Birbal’s capital A/c Dr. 10,000
To Chanakya’s Capital A/c Dr. 40,000
23. A Company forfeited 3,000 shares of ₹ 10 each (₹ 8 called up) for
non-payment of call money of ₹ 3 per share. Out of these 2,000
shares were re‐issued at ₹ 8 per share and remaining shares were
re‐issued at ₹ 12 per share as fully paid up. What amount will be
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transferred to Capital Reserve?

a) ₹ 17,000
b) ₹ 13,000
c) ₹ 11,000
d) ₹ 15,000
24. Hitman Ltd. was registered with an authorized capital of ₹
50,00,000 divided into shares of ₹ 10 each. The company invited
applications for 1,20,000 shares issued at ₹ 2 premium. All the
money has been duly received except final call of ₹ 3 per share on
8,000 shares (5,000 shares of Kalu and 3,000 shares of Lalu).
The company forfeited 5,000 shares of Kalu and re‐issued 4,000
shares at ₹ 8 per share as fully paid up. Calculate the balance of
Share forfeited to be shown in the books of the company.
a) ₹ 9,000
b) ₹ 7,000
c) ₹ 27,000
d) ₹ 20,000
25. Rancho, Shinchan and Mogambo were partners sharing P&L in the
ratio 5:3:2. On 31st March,2021 the partners decided to share
future P&L in the ratio 1:1:2. Rancho’s Loan of ₹20,000 was
settled by giving him Stock of ₹14,000 and ₹4,000 in Cash. What
entry would be passed for the above transaction?
a) Rancho’s Loan Dr 4,000
To Cash 4,000
b) Rancho’s Loan Dr. 20,000
To Stock 14,000
To Cash 4,000
To Revaluation A/c 2,000
c) Rancho’s Loan Dr. 20,000
To Revaluation A/c 16,000
To Cash 4,000
d) Cash A/c Dr. 4,000
Stock A/c Dr. 14,000
Revaluation A/c Dr. 2,000
To Rancho’s Loan 20,000
26. The value of furniture given in the old Balance Sheet was ₹
1,32,000 which was overvalued by 10%. The effect of the above
transaction in the Revaluation A/c will be:
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a) ₹ 12,000 will be debited to Revaluation A/c

b) ₹ 13,200 will be debited to Revaluation A/c
c) ₹ 12,000 will be credited to Revaluation A/c
d) ₹ 13,200 will be credited to Revaluation A/c
27. Jamunadas Ltd. took over assets worth ₹ 20,00,000 from Taruna
Ltd. by paying 30% through draft payable after 3 months and
balance by issue of shares of ₹ 100 each at a premium of 10%.
The entry to be passed by Jamunadas Ltd for settlement will be :-
a) Taruna Ltd. Dr. 20,00,000
To Share Capital A/c 12,72,700
To Sec. Prem. Res. 1,27,270
To Bank A/c 6,00,000
To P&L A/c 30
b) Taruna Ltd. Dr. 20,00,000
To Share Capital A/c 12,72,700
To Sec. Prem. Res. 1,27,270
To Bills Payable A/c 6,00,000
To Bank A/c 30
c) Taruna Ltd. Dr. 20,00,000
To Share Capital A/c 12,72,700
To Sec. Prem. Res. 1,27,270
To Bank A/c 6,00,030
d) Taruna Ltd. Dr. 20,00,000
Bank A/c Dr. 80
To Share Capital A/c 12,72,800
To Sec. Prem. Res. 1,27,280
To Bills Payable A/c 6,00,000
28. Rana and Yadav were partners earning an average profit of ₹
30,000 with a capital of ₹ 1,00,000 each. The normal rate of
return in the business is 10%. The value of goodwill through
capitalization of super profit method and super profit method will
be _____ and _________ assuming two years as number of
years’ purchase.
a) ₹ 1,00,000 and ₹60,000
b) ₹ 20,000 and ₹ 1,00,000
c) ₹ 60,000 and ₹ 1,00,000
d) ₹ 1,00,000 and ₹ 20,000
29. A company issued 20,000 shares in proportion to 7:5 as applied
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to allotted. Mr. Gaurav got 800 shares on pro-rata basis.

Application and allotment money were ₹ 3 and ₹ 5 per share
respectively. Gaurav failed to pay allotment money. The amount
received at the time of application by Gaurav and allotment
money not received from Gaurav will be
a) ₹ 2,400 and ₹ 4,000
b) ₹ 3,360 and ₹ 4,000
c) ₹ 3,360 and ₹ 3,040
d) Can’t calculate as information is incomplete
30. X ,Y and Z are partners sharing profits and losses in the ratio of
5:3:2. After the final accounts have been prepared, it was
discovered that interest on drawings amounting to ₹ 7,000 and ₹
8,000 for Y and Z respectively had not been taken into
consideration. The adjustment entry for the above omission will
be……
a) Dr. X ₹ 7,500 Cr Y ₹ 5,000 and Cr. Z ₹ 2,500
b) Cr. X ₹ 7,500, Dr. Y ₹ 2,500 and Dr. Z ₹ 5,000
c) Dr. Z ₹ 2,000 Cr. Y ₹ 2, 000
d) (d) Dr. X ₹ 15,000, Cr Y ₹ 7,000 and Cr. Z ₹ 8,000
31. Amar, Akbar and Anthony were sharing P&L in the ratio 5:3:2.
W.e.f 1st April, 2021, they decided to share future P&L in the ratio
2:3:5. On that date following items were appearing in their books
of accounts
(i) Profit and Loss A/c (Cr.) ₹ 60,000.
(ii) Advertisement Suspense A/c ₹ 40,000
The partners decided to pass the adjustment entry without
affecting book values of above mentioned items. The journal entry
passed will be :-

a) Amar’s Capital A/c Dr. 6,000

To Anthony’s Capital A/c 6,000
b) Anthony’s Capital A/c Dr. 6,000
To Anthony’s Capital A/c 6,000
c) Amar’s Capital A/c Dr. 12,000
To Anthony’s Capital A/c 12,000
d) Anthony’s Capital A/c Dr. 18,000
To Amar’s Capital A/c 18,000
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32. Assertion (A) :- Revaluation A/c is prepared at the time of

Admission of Partner only.
Reason (R) :- Admission of partner cause reconstitution of firm
and new agreement is made at the time of Admission of partner.
a) Both A and R are correct and R is correct explanation of A.
b) Both A and R are correct and R is not correct explanation of
A.
c) Both A and R are incorrect
d) A is incorrect but R is correct
33. Sunrisers India Ltd. was registered with an authorised capital of ₹
1,00,00,000 divided into 1,00,000 equity shares of ₹ 100 each.
The company offered for public subscription 60,000 equity shares
at a premium of Rs. 10 per share. Applications for 55,000 shares
were received and allotment was made to all the applicants. All
calls were made and duly received except the second and final call
of ₹ 20 per share on 500 shares. These shares were forfeited and
out of these 250 shares are reissued at par. Calculate the amount
of share capital to be shown in Balance Sheet.
a) ₹ 54,95,000
b) ₹ 55,00,000
c) ₹ 54,75,000
d) ₹ 54,50,000
34. Rahu, Shani, and Kaal are partners sharing Profits and Losses in
the ratio 5:3:2. Rahu had drawn Rs.10,000 at the middle of every
month, Shani had drawn Rs.30,000 at the middle of every
quarter, Kaal had drawn Rs.1,20,000 during the year. Interest on
drawings was to be charged @10% p.a. who will be charged with
highest Interest on drawings..
a) Rahu
b) Shani
c) Kaal
d) Equal Interest on Drawings for all
35. Akshay, Bobby and Chintu are partners sharing P&L in the ratio
5:3:2. With effect from 1st July,2021 they decided to share future
P&L equally. Their books showed debit balance of Profit and Loss
of Rs.3,00,000. What entry will be passed if the firm decided not
to continue with this balance of Profit and Loss.
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a) P&L Dr. 3,00,000

To Akshay 1,50,000
To Bobby 90,000
To Chintu 60,000
b) Aksha Dr. 1,50,000
Bobby Dr. 90,000
Chintu Dr. 60,000
To P&L 3,00,000
c) P&L Dr. 3,00,000
To Akshay 1,00,000
To Bobby 1,00,000
To Chintu 1,00,000
d) Aksha Dr. 1,00,000
Bobby Dr. 1,00,000
Chintu Dr. 1,00,000
To P&L 3,00,000
36. Angel Ltd. forfeited 4,000 shares of Rs.10 each on which only
Application money of Rs. 3 has been paid. Out of these 2,000
shares were re-issued and Rs.4,000 has been transferred to
Capital Reserve. Calculate the rate at which these shares were re-
issued.
a) Rs.10 per share
b) Rs.9 per share
c) Rs.11 per share
d) Rs.8 per share
Part – I
Section – C
Instructions:
➢ From question number 37 to 41, you have to attempt any 4
questions.
Question no.’s 37 and 38 are based on the hypothetical
situation given below.
NTL ltd was registered 6 years back and was doing a great business.
Covid-19 had affected their business badly and now they want to issue
the shares for revival of the company. After taking permission from SEBI,
the company offered 40,000 shares of ₹10 each at par, payable as ₹ 3 on
application, ₹ 2 on allotment, ₹ 4 on first call and ₹ 1 on final call. Public
had applied for 1,30,000 shares of which 50,000 shares were rejected
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altogether. Excess money on application can be utilised towards allotment

and calls. Rajnikant, a shareholder holding 800 shares failed to pay final
call money and his shares were forfeited. These shares were re-issued
@₹12 per share as fully paid up.
Answer the following questions
37. How much amount will be received on first call by the company?
a) ₹ 1,60,000
b) ₹ 1,20,000
c) Nil
d) ₹ 40,000
38. What is the amount transferred to Capital Reserve?
a) ₹ 7,200
b) ₹ 8,800
c) ₹ 8,000
d) ₹ 5,400
Question no.’s 39, 40 and 41 are based on the hypothetical
situation given below.
Florina and Prithviraj became good friends during Super Dancer Chapter 4
and decided to start business as partners. They offered Sanchit also but
Sanchit preferred to be their manager and was being offered commission
of 10% of net profits after charging such commission. Florina and
Prithviraj decided to share profits and losses in the ratio of 2:1. They
introduced capitals of ₹ 10,00,000 and ₹ 8,00,000 on 1st April, 2020. The
partners were allowed interest on capital @ 5% p.a. Drawings of the
partners during the year ended 31st March, 2021 were ₹ 1,00,000 and ₹
1,20,000 respectively. Prithviraj was entitled to get a salary of ₹ 10,000
p.m and Florina was to get commission of ₹ 10,000 per quarter.
Profit for the year before Sanchit’s commission amounted to ₹ 8,80,000.
20% of the net profit is to be transferred to General Reserve.
Answer the following questions.
39. What amount was to be transferred to General Reserve?
a) ₹ 1,76,000
b) ₹ 1,60,000
c) ₹ 78,000
d) None of the above
40. Sanchit’s commission will be :-
a) ₹ 88,000
b) ₹ 39,000
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c) ₹ 80,000
d) No commission to Sanchit as he haven’t accepted the
partnership
41. Share of profit to be transferred to Florina was :-
a) ₹ 2,60,000
b) ₹ 1,30,000
c) ₹ 1,95,000
d) ₹ 5,33,333
Part – II
Section – A
Instructions:
➢ From question number 42 to 48, you have to attempt any 5
questions.
42. Following are Sub-Heads under Current Assets
A- Trade Receivables; B- Inventories; C- Cash and Cash
Equivalents; D-Short Term Loans and Advances; E-Current
Investments; F- Other Current Assets
What will be the correct order?
a) E, A, B, C, D,F
b) E, B, A, C, D, F
c) C, B, A, E, F, D
d) E, B, A , C, F, D
43. If Current ratio is 2.5:1 and Working Capital is ₹6,00,000. Then
Current Assets will be _____ ?
a) ₹10,00,000
b) ₹4,00,000
c) ₹14,00,000
d) Incomplete Information
44. Which is not a part of Inventory as per schedule III (Part -I) of
Balance sheet as per Companies Act 2013?
a) Finished Goods
b) Capital work in progress
c) Loose tools, stores and spares
d) Raw Material
45. What will be the last item under the main head Expenses, while
preparing Statement of Profit and Loss?
a) Other Expenses
b) Employee Benefit Expenses
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c) Finance Cost
d) Depreciation and Amortisation
46. The primary objective of Analysis of Financial Statements is to
assess the ____________ of the firm as a whole so as to judge
the financial health of the firm.
a) Current Profitability and Operational efficiency
b) Calculation of Ratios
c) Preparing Cash Flow Statement
d) Past Profitability
47. Statement I: Goods purchased on credit will always result in
decline in Current Ratio.
Statement II: Goods sold for cash will always result in increase in
Quick Ratio.
a) Both statements are true
b) Both statements are false
c) Only Statement I is true
d) Only Statement II is true
48. The Balance Sheet of the company is presented in _____
a) Horizontal Form with two year data being shown
b) Vertical Form with two year data being shown
c) Time Series Analysis form with three or more than three
years data being shown
d) Vertical form with once current year data being shown
Part – II
Section – B
Instructions:
➢ From question number 49 to 55, you have to attempt any 6
questions.

49. Current Maturities of Long term debts represents

a) Long term Debts to be matured after 5 years.
b) Short term Debts to be matured within operating cycle
c) Long term debts to be matured within operating cycle
period
d) None of the above
50. Return on Investment of Extempore Ltd was 25%. Profits after
Tax was ₹4,20,000 and rate of Tax was 30%. 10% Debentures
appearing in the books were ₹15,00,000. What was the amount of
 16

Capital Employed?
a) ₹15,00,000
b) ₹30,00,000
c) ₹16,80,000
d) ₹7,50,000
51. Assertion (A) : Current Ratio can be equal to Quick Ratio.
Reason (R) : Inventory and Prepaid Expenses may be Nil.
a) Both A and R are correct and R is correct explanation of A.
b) Both A and R are correct and R is not correct explanation of
A.
c) A is correct but R is incorrect
d) A is incorrect but R is correct
52. Debt-Equity ratio of Dhishoom Ltd. was 2:1. Which of the
following transaction will cause a decline in the ratio?
a) Redemption of Debentures on maturity
b) Loss during the year
c) Issue of Debentures
d) Issue of Shares
53. Debt-Equity Ratio of Shinchan Ltd was 0.8:1. If Total Debts
amounted to ₹ 10,00,000 and Current Liabilities are 25% of Non-
Current Liabilities, then Total Assets to Debt ratio will be :-
a) 1.8 : 1
b) 2.25 : 1
c) 2 : 1
d) 2.5 : 1
54. The Interest coverage ratio from the following information will be:
Capital Employed ₹ 10,00,000
Equity ₹ 6,00,000
Profit before tax ₹ 4,20,000 and rate of Tax is 30%.
Company has taken long term loan @ 15% p.a. interest charge
a) 9 Times
b) 8 Times
c) 7 Times
d) 5 Times
55. Assertion (A) :- Change in Inventory can be negative.
Reason (R) :- Change in Inventory is Closing Inventory less
Opening Inventory.
a) Both A and R are correct and R is correct explanation of A.
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b) Both A and R are correct and R is not correct explanation of

A.
c) A is correct but R is incorrect
d) A is incorrect but R is correct

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