ACCOUNTANCY

TERM -1 (2020-21)

Time allowed: 90 mins Maximum Marks: 40

Part-I
Section-A
Instructions:
From Q.no 1 to 18 you are required to attempt any 15 questions.
1. A and B were partners in a firm sharing profits and loss in the ratio of 3:5. With effect form
1st April, 2019, they decided to share profits or losses equally. Due to change in profit sharing
ratio, A’s gain or sacrifice will be:
a) Gain 3/8
b) Gain 1/8
c) Sacrifice 1/8
d) Sacrifice 1/8
2. Tanya Ltd. forfeited 20,000 equity shares of ₹ 100 each for the non-payment of first and
final call of ₹ 40 per share. The maximum amount of discount at which these shares can be
re-issued will be:
a) ₹ 8,00,000
b) ₹ 12,00,000
c) ₹ 20,00,000
d) ₹ 20,000
3. H Ltd. had allotted 20,000 shares to the applicants of 28,000 shares on pro-rata basis. The
amount payable on application was ₹ 2 per share. S applied for 840 shares. The number of
shares allotted and the amount carried forward for adjustment against allotment money
due from S will be:
a) 120 shares; ₹ 240
b) 680 shares; ₹ 320
c) 640 shares; ₹ 400
d) 600 shares; ₹ 480
4. Prem Ltd. forfeited 300 shares of ₹ 10 each, issued at a premium of ₹ 2 for non-payment
of the final call of ₹ 3. Out of these, 200 shares were reissued at ₹ 11 per share. How much
amount would be transferred to capital reserve?
a) ₹ 1,400
b) ₹ 1,000
c) ₹ 2,400
d) ₹ 600
5. Which of the following statement is true?
a) Authorised capital = issued capital
b) Authorised capital > issued capital
c) Paid up capital > issued capital
d) None of the above
6. A and B are partners sharing profits in the ratio of 2 : 3. Their Balance Sheet
shows machinery at Rs. 4,00,000; stock at Rs.80,000 and Debtors at
Rs.3,20,000. Cis admitted and new profit sharing ratio is agreed at 6 : 9 : 5.
Machinery is revaluedat Rs.3,40,000 and a provision is made for doubtful
debts @ 2.5%. A’s share in loss on revaluation amounted to Rs.20,000.
Revalued value of stock will be:
 (a) Rs.98,000

(b) Rs. 1,00,000

(c) Rs. 60,000

(d) Rs.62,000

7. If the Partners’ Capital Accounts are fixed, how the ‘salary payable
to partner’will be recorded?
a. On the debit side of Partners’ Current Account
b. On the debit side of Partners’ Capital Account
c. On the credit side of Partners’ Current Account
d. None of the above
8. TRISHA is a partner in a firm. She withdrew rs.6,000 at the end of each
quarter during the year ended 31st March, 2019. Interest on her drawings
@ 10% p.a. will be :
a. rs.900
b. rs.600
c. rs.1,500
d. rs.1,200
9. A ,Y and Z are partners in 5 : 4 : 1. Z is guaranteed that his share of profit
willnot be less than rs.80,000. Any deficiency will be borne by A and Y in 3
: 2. Firm’sprofit was rs.5,60,000. How much deficiency will be borne by Y ?
a. Rs.2,14,400
b. Rs.14,400
c. Rs.2,09,600
d. Rs.9,600
10. Heena and Sudha share Profit & Loss equally. Their capitals were ₹1,20,000
and ₹ 80,000 respectively. There was also a balance of ₹ 60,000 in General
reserve and revaluation gainamounted to ₹ 15,000. They admit friend Teena
with 1/5 share. Teena brings ₹90,000 as capital. Calculate the amount of
goodwill of the firm.
a) ₹85,000
b) ₹1,00,000
c) ₹20,000
d) None of the above
11. In case of guarantee of minimum profit to a partner deficiency of
guaranteedpartner is from shared by remaining partner in .
a. Profit Sharing Ratio
b. Agreed Ratio
c. Sacrificing Ratio
d. Gaining Ratio
12. Revaluation account is prepared to the assets and liabilities.
a) Distribute
b)Be write off
c) Upscale
 d) Revise
13. Total Capital employed in the firm is Rs. 4,00,000. Normal rate of return
is 15% and profit for the year is Rs. 60,000. Value of goodwill as per
capitalization methodwould be
a) Rs. 4,20,000
b) Rs. 60,000
c) nil
d) Rs. 2,10,000
14. The value which is printed on shares is called?
a) Face value
b) Market value
c) Book value
d) Purchase value
15. A preference share which does not carry the right of sharing in surplus profits is
called
……………
a) Non-Cumulative Preference Share
b) Non-participating Preference Share
c) Irredeemable Preference Share
d) Non-convertible Preference Share
16. A company cannot issue :
a) Redeemable Equity Shares
b) Redeemable Preference Shares
c) Redeemable Debentures
d) Fully Convertible Debentures
17. Partners A, B and C share the profits of a business in the ratio of 3:2:1
respectively. Theyadmit D who brings in ₹60, 000 for his share of goodwill.
A,B,C and D decide to share the profits respectively in the ratio of 5:3:2:2.
Credit will be given to:
a. A ₹6000; B ₹6,000
b. A ₹30,000; B ₹18,000; C ₹12,000
c. A ₹30,000; B ₹20,000 ; C ₹10,000
d. A ₹30,000; B ₹30,000
18. U V and W are partners sharing profits in the ratio of 2:3:5. They also decide
to recordthe effect of the following revaluations and reassessments without
affecting the book values of assets and liabilities by passing a single
adjustment entry:
 The single adjustment entry will
(a) Dr. W and Cr. U by 10,500
(b) Dr. U and Cr. W by Rs. 10,500
(c) Dr. V and Cr. U by Rs. 10,500
(d) Dr. W and Cr. V by Rs. 10,500
Part-II
Section -B
Instructions
From question number 19 to 36, attempt any 15 questions”
19. A and B are partners sharing profits in the ratio of 2 : 3. Their Balance Sheet
shows machinery at Rs. 4,00,000; stock at Rs.80,000 and Debtors at
Rs.3,20,000. Cis admitted and new profit sharing ratio is agreed at 6 : 9 : 5.
Machinery is revaluedat Rs.3,40,000 and a provision is made for doubtful
debts @ 2.5%. A’s share in loss on revaluation amounted to Rs.20,000.
Revalued value of stock will be:

(a) Rs.98,000

(b) Rs. 1,00,000

(c) Rs. 60,000

(d) Rs.62,000
20. North, East and West are partners sharing in the ratio of 5;4:3. They admit South
for 1/7thshare. It is agreed that East would retain his original share. Sacrificing ratio will
be:

a) North, East, and West – 5:4:3

b) North and West – 4:3
c) North and West – 5:4
d) North and West -5:3
21. Anubhav, Shagun and Pulkit are partners in a firm sharing profits and losses in
the ratio of 2:2:1. On 1st April 2021, they decided to change their profit-sharing
ratio to 5:3:2. On that date, debit balance of Profit & Loss A/c ₹30,000 appeared
in the balance sheet and partners decided to pass an adjusting entry for it.
Which of the under mentioned options reflect correcttreatment for the above
treatment?
a. Shagun's capital account will be debited by ₹3,000 and
Anubhav’s capital accountcredited by ₹3,000
b. Pulkit's capital account will be credited by ₹3,000 and Shagun's
capital account will becredited by ₹3,000
c. Shagun's capital account will be debited by ₹30,000 and
Anubhav’s capital accountcredited by ₹30,000
d. Shagun's capital account will be debited by ₹3,000 and Anubhav’s and Pulkit’s
capitalaccount credited by ₹2,000 and ₹1,000 respectively
22. Given below are two statements, one labelled as Assertion (A) and the other labelled as
Reason (R)
Assertion (A): In order to compensate a partner for contributing
 capital to the firm in excess of the profit- sharing ratio, firm pays
such interest on partner’s capital.
Reason (R): Interest on capital is treated a charge against profit.
a) Both A and R are individually true and R is the correct explanation of
A
b) Both A and R are individually true but R is not the correct explanation
of A
c) A is true but R is false
d) A is false but R is true
23. Which one from the below is not a right of a partner?
a) Right to inspect the books of accounts
b) Right to take part in the management of the firm
c) Right to share the profit/losses with other partners in agreed ratio
d) Right to receive salary at the end of every year
24. X, Y, and Z are partners in a firm. At the time of division of profit for the year,
there was dispute between the partners. Profit before interest on partner’s
capital was rs.6,000 and Y demanded interest @24% p.a. on his loan of
rs.80,000. There was no agreement on this point. Calculate the amount
payable to X, Y, and Z respectively.
i. Rs.2,000 to each partner
ii. Loss of rs.4,400 for X and Z; Y will take rs.14,800
iii. rs.400 for X, rs.5,200 for Y and rs.400 for Z
iv. None of the above
25. If equal amount is withdrawn by a partner in the beginning of each month
during a period of 6 months, interest on the total amount will be
charged for ……………… months
a. 2½ b. 3
c. 3½ d. 6
26. Given below are two statements, one labelled as Assertion (A) and the other labelled as
Reason (R)
Assertion (A): At the time of admission of a partner the goodwill
already existing inthe book of accounts, the goodwill is written off
by all partners including new partner.
Reason(R): When goodwill already exists in books at the time of
admission, the existing goodwill must be written off by debiting the
old partners in their old profit sharing ratio.
a) Both Assertion (A) and Reason (R) are true.
b) Both Assertion (A) and Reason (R) are false.
c) Assertion (A) is true and Reason (R) is false.
d) Assertion (A) is false and Reason (R) is true.
27. If applicants for 80,000 shares were allotted 60,000 shares on prorata
basis, theshareholder who was allotted 1,200 shares must have
applied for :
a) 900 Shares
 b) 3,600 Shares
c) 1,600 Shares
d) 4,800 Shares
28. When nominal (face) value of a share is called up by the company but as
some shareholders did not pay the money, the shares are forfeited. The
share capital is shown in the balance sheet (notes) of a company under the
followingheading:
a) Subscribed and fully paid up
b) Subscribed but not fully paid up
c) Subscribed and called up
d) Subscribed but not called up

29. X and Y are partners in the ratio of 3:2. Their fixed capitals are rs.2,00,000and
rs.1,00,000 respectively. After closing the accounts for the year ending 31st
March2019, it was discovered that interest on capital was allowed @ 12%
instead of 10%per annum. By how much amount X will be debited/credited
in the adjustment entry?
a. rs.600 (Debit)
b. rs.400 (Credit)
c. rs.400 (Debit)
d. rs.600 (Credit)
30. Apaar Ltd forfeited 4,000 shares of ₹20 each, fully called up, on which
only application money of ₹6 has been paid. Out of these 2,000 shares were
reissued and ₹8,000 has been transferred to capital reserve. Calculate the
rate at which these shareswere reissued.
a) ₹20 Per share
b) ₹18 Per share
c) ₹22 Per share
d) ₹8 Per share
31. Given below are two statements, one labelled as Assertion (A) and the other labelled as
Reason (R)
Assertion: X ltd. forfeited 2,000 equity shares of ₹ 10 each on which it had received
₹ 10,000. The company can reissue these forfeited shares at ₹ 4 per share.
Reason: Forfeited shares cannot be issued at discount more than the amount
received onthese shares.
a) Both Assertion (A) and Reason (R) are true.
b) Both Assertion (A) and Reason (R) are false.
c) Assertion (A) is true and Reason (R) is false.
d) Assertion (A) is false and Reason (R) is true.
32. P and Q are partners sharing profits and losses in the ratio of 2:1 with
capitals Rs1,00,000 and Rs 80,000 respectively. The interest on capital has
been provided tothem @ 8% instead of 10%. In the rectifying adjustment
entry, Q will be:
a) Debited by Rs 400
b) Credited by Rs 400
c) Debited by Rs 1600
d) Credited by Rs 1600.
 33. Z limited issued shares of Rs.100 each at a premium of 10%. Mr. Q
purchased 500 shares and paid Rs.20 on application but did not pay the
allotmentmoney of Rs.30. If the company forfeited his 30% shares, the
forfeiture account will be credited by
a) Rs. 4500
b) Rs. 3500
c) Rs. 1650
d) Rs. 3000
34. A Building was purchased for Rs.9,00,000 and payment was made in
RS. 100 shares at 20%premium. Securities Premium Reserve A/c will
be ……………….
a) Debited by Rs.1,50,000
b) Credited by Rs.1,50,000
c) Debited by Rs.1,80,000
d) Credited by Rs.1,80,000
35. Das and Sinha are partners in a firm sharing profits in 4:1 ratio. They admitted Pal as
a new partner for ¼ share in the profits, which he acquired wholly from Das. New
Profit sharing ratio of the partners is:-
a) 4:1:1
b) Equally
c) 11:4:5
d) None of these above
36. Deepak Ltd. offered for subscription 5,50,000 equity shares of Rs. 10 each.
The public applied for 5,00,000 shares. The call (Rs. 8 per share) was
received except from Gopal, who holds 4,000 shares has not paid after
application money ofRs. 2 per share and from Shyam who holds 1,000
shares has paid only Rs. 6 per share. Gopal’s shares were forfeited. The
amount of subscribed capital to be disclosed in the Balance Sheet is
a) Rs.39,96,000.
b) Rs.39,74,000.
c) Rs.49,46,000.
d) Rs.49,74,000
Part- I
Section -C
Instructions:
From question number 37 to 41, attempt any 4 questions.
Question no’s 37 and 38 are based on hypothetical situation given below:
Bindiya limited was incorporated on 1stApril 2019 with registered office in
Mumbai. Thecapital clause of memorandum of Association reflected a registered
capital of 8,00,000 equity shares of Rs.10 each and 1,00,000 preference shares of
Rs.50 each. Since some large investments were required for building and
machinery the company in consultation with vendors, M/S. VPS Enterprises,
issued 1,00,000 equity shares and 20,000 preferenceshares at par to them in full
consideration of assets acquired.
Besides this the company issued 2,00,000 equity shares for cash at par payable as
Rs 3 on application, 2 on allotment, 3 on first call and 2 on second call. Till date
second call has not yet been made and all the shareholders have paid except Mr.
Ajay who did not pay allotment and calls on his 300 shares and Mr.Vipul who did
not pay first call on his 200 shares. Shares of Mr. Ajay were then forfeited and out
of them 100 shares were reissued atRs.12 per share.
Based on above information you are required to answer the following

37. How many equity shares of the company have been

subscribed?
a.3,00,000
b. 2,99,500
c. 2,99,800
d. None of these
38. What is the amount of security premium reflected in the balance sheet at
the end ofthe year?
a. Rs.200
b. Rs.600
c. Rs.400
d. Rs. 1,000

Question no’s 39, 40 and 41are based on the hypothetical situation given below:
Kamini and Mohini, are partners sharing in the ratio 2:3. Balance sheet given
below.

BALANCE SHEET

Liabilities Amount Assets Amount

Bills payable 6,20,000 B/R

3,60,000

creditors 1,80,000 Stock

16,00,000

Capital a/c Machinery

18,40,000

16,00,000 Land and 10,00,000

Kamini Building

24,00,000
Mohini

The partners decided the share profits in equal ratio with effect from 1st April
2020. The following adjustments were agreed upon.
Land and Building was valued at 16,00,000 and Machinery at 16,40,000 and were to
appear at value amounts in the balance sheet.
Answer the following questions no. 39 to 41 based on the sum (Direction :
Kamini, Mohini) given above
 39. What was the entry passed in revelation of account with respective machinery
account.
a) Debit machinery account 2,00,000, Credit revaluation account 2,00,000.
b) Debit revaluation account 2,00,000, Credit Machinery account 2,00,000
c) Debit machinery account 16,40,000, Credit revaluation account 16,40,000
d) Debit revaluation account 16,40,000 Credit machinery account 16,40,000
40. What was the final profit or loss of the revaluation account?
(a) Loss 8,00,000
b) Profit 8,00,000
c) Profit 4,00,000
d) Loss 4,00,000
41. What was the gain or sacrifice of share for Kamini
a) Gain 1/10
b) Sacrifice 1/10
c) Sacrifice ⅕
d) Gain 1/5

Part – II
Section – A

Instructions:
From Question number 42 to 48, attempt any 5 questions.
42. Given below are two statements, one labelled as
Assertion (A) and the other labelled as Reason (R)

Assertion (A) The objective of financial statement analysis is to measure the

earning capacity and financial strength of a business and to facilitate comparative
study.
Reason (R) Financial statements of a company are to be prepared as per format
prescribed in Schedule III of the Indian Companies Act, 2013
Codes:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the
correctexplanation of Assertion (A)
b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct explanationof Assertion (A)
c) Assertion (A) is false, but Reason (R) is true
d) Assertion (A) is true, but Reason (R) is false
43. Which Section of the Companies Act, 2013 requires that the Balance Sheet
to be prepared inprescribed form ?
a) Section 128
b) Section 130
c) Section 129
d) Section 212
44. Operating Profit=……………..
a. Current assets – Current liabilities
 b. Capital employed – Debt
c. Revenue from operations - operating cost
d. Revenue from operations – Non-operating expenses

45. Provision for tax appears in a company’s Balance sheet under the sub head –

a) Long term provision

b) Short term provision

c) Other current liability

d) None of the above

46. In which meeting of company directors report is presented ?

a) Directors Meeting
b) Annual General Meeting
c) Manager’s Meeting
d) All of the above
e) Match the following.
47.

(i) Share Option Outstanding (a) Other Long - term Liabilities

(ii) Money received against Share (b) Current Liabilities
warrants
(iii) Premium on Redemption of (c) Shareholders’ Funds
debentures
(iv) Provision for Tax (d) Shareholders’ Funds – Reserves &
Surplus

(I) (i) d; (ii) c; (iii) a; (iv) b ( II) (i) c; (ii) d; (iii) b; (iv) a;
(III) (i) a; (ii) b; (iii) c; (iv) d; (IV) (i) b; (ii) a; (iii) d (iv) c
48. Revenue from operations Rs.6,00,000; Gross profit 20%; Office
expensesRs.30,000; Selling expenses Rs.48,000. Calculate Operating
ratio.
a. 80% b. 85% c. 96.33% d. 93%

Section – B
Instructions:
From Question number 49 to 55, attempt any 6 questions
49. Name the aggregate of Shareholders’ funds and Total Debts.
a) Total Debts
b) Capital employed
c) Total Assets
d) Non-current assets
50. Opening Inventory ₹75,000; Closing Inventory ₹1,05,000; Inventory Turnover Ratio 6;
Gross Profit 20% on cost; what will be Gross Profit?
 a) ₹1,35,000
b) ₹1,08,000
c) ₹90,000
d) ₹18,000
51. Intra – Firm Analysis is also known as :
a) Cross- sectional Analysis (b) Trend analysis
(c) Dividend decision Analysis (d) Debt Analysis

52. Assertion (A)– A low inventory ratio indicates that inventory does not sell
quickly and remains lying in the godown for quite a long time.
(R ) Reason- Inventory turnover ratio is a profitability ratio
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is not the correct explanation of A
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
53. Given below are two statements, one labelled as
Assertion (A) and theother labelled as Reason (R)
Assertion (A) In vertical analysis financial statements for a single year or
on aparticular date are reviewed and analysed with the help of proper
devices like ratios.
Reason (R) Such type of analysis is based on data of a single year. As such
it isalso called static analysis.
Codes:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation ofAssertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the
correct explanationof Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false
54. Debt equity ratio of a company is 1 : 2. Which of the following transactions
willincrease it:
a) Issue of new shares for cash
b) Redemption of Debentures
c) Issue of Debentures for cash
d) Goods purchased on credit
55. Contingent Liabilities are exhibited under the heading:
(a) Fixed Liabilities
(b) Current Liabilities
(c) As a footnote
(d) None of these
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