ANSWER KEY IS AVAILABLE ONLY ON ‘GREWAL CONCEPTUAL LEARNING

APP’ (AVAILABLE ON PLAYSTORE AND APPSTORE).

FOR ANY FURTHER ASSISTANCE, YOU MAYPaper

Practice EMAIL US
IVAT reemagrewal@grewaleducation.com
(TERM -1) or call
at 9560102856.
ACCOUNTANCY
SUBJECT CODE: 055

Practice Paper IV (TERM -1)

ACCOUNTANCY
SUBJECT CODE: 055

Time Allowed: 90 Minutes Maximum Marks: 40

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.
1
 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.

Part – I
Section – A

Instructions:
➢ From question number 1 to 18, you have to attempt any 15
questions.

1. Which of the following statements is/are correct about

Revaluation Account?
Statement I :- Another name of Revaluation Account is Profit and
Loss Adjustment Account.
Statement II :- Gain(Profit)/Loss on Revaluation Account is
distributed in old profit – sharing ratio.
Statement III :- All unrecorded assets and liabilities are recorded
in it.
(A) All the statements are correct

2
(B) Only statement I and III are correct
(C) Only statement I and II are correct
(D) Only Statement II and III are correct.

2. Angle and Circle were partners sharing profits and losses in the
ratio of 3:2. Their Capitals were ₹8,00,000 and ₹4,00,000
respectively and interest on capital was to be allowed @ 8% p.a
as charge on profits. For the year ended March 31, 2021 the firm
earned profit of ₹ 60,000. Interest on Capitals that will be
credited to them will be:
(A) ₹ 80,000 and ₹ 40,000 respectively
(B) ₹ 64,000 and ₹ 32,000 respectively
(C) ₹ 40,000 and ₹ 20,000 respectively
(D) ₹ 36,000 and ₹ 24,000 respectively

3. A company forfeited 5,000 shares of ₹ 10 each on which ₹6

(including ₹2 premium) has been received. If these shares are
issued as fully paid up, they can be re-issued at a minimum price
of ______ per share.
(A) ₹ 4 per share
(B) ₹ 10 per share
(C) ₹ 6 per share
(D) ₹ 14 per share

3
4. Balance in Share Forfeited Account is added to ________ and
_________ to determine Share Capital Account to be shown in
the Balance Sheet.
(A) Subscribed and fully paid up capital; Subscribed but not fully
paid up capital
(B) Subscribed but not fully paid up capital; Issued Share Capital
(C) Authorised Share Capital; Issued Share Capital
(D) Subscribed and fully paid up capital; Issued Share Capital

5. What is the correct sequence of the following:

(i) Allotment of Shares
(ii) Calls in Arrears
(iii) Application for shares
(iv)Forfeiture of shares

(A) (i) ; (iii) ; (iv) ; (ii)

(B) (iii) ; (ii) ; (i) ; (iv)
(C) (iii) ; (i) ; (ii) ; (iv)
(D) (iii) ; (iv) ; (ii) ; (i)

6. Profit & Loss Account of ₹ 40,000 is appearing in the assets side

of the balance sheet at the time of admission of partner. This
balance will be _______ .
(A) Debited to Revaluation A/c
(B) Credited to Partners’ Capital A/cs in old profit–sharing ratio.
(C) Debited to old Partners’ Capital A/cs in old profit–sharing
ratio.
(D) Debited to old Partners’ Capital A/cs in Sacrificing ratio.
4
7. Ram and Balram were partners sharing profits in the ratio of 3 :
1. For the year ended March 31, 2021, Ram was credited with
₹2,40,000 for his share of profit. The firm earned profits of
______ during the year.
(A) ₹ 2,40,000
(B) ₹ 4,80,000
(C) ₹ 1,80,000
(D) ₹ 3,20,000

8. Mangal, Shani and Kaal were partners sharing profits and losses
in the ratio of 5 : 3 : 2. W.e.f. 1st April, 2021 they decided to
share future profits in such a way that Shani was having gain of
1/30. What will be the new profit share of Shani?
(A) 2/5
(B) 2/15
(C) 1/3
(D) 4/15

9. Ikka and Dukka were partners sharing profits and losses in the
ratio of 4 : 3. They admitted Teeka as a new partner. According
to the deed, the ratio between Dukka and Teeka will be same as
was between Ikka and Dukka. What will be the new profit–sharing
ratio?
(A) 1:1:1
(B) 16 : 12 : 9
(C) 4:3:4
(D) 4:3:3
5
10. Under Fixed Capital Accounts Method, which of the following is
not recorded in the Capital Account?
(A) Capital withdrawn
(B) Goods withdrawn
(C) Capital introduced
(D) Capital balance

11. Goodwill of the firm will not be affected by ________ .

(A) Location of Business
(B) Quality and Price of goods
(C) Number of competitors
(D) Customer satisfaction

12. Goodwill of the firm was valued at ₹ 4,50,000, based on 3 years’

purchase of super profits. If Normal Average Profits are ₹
2,00,000, the amount of Actual Average Profits was _______
(A) ₹ 1,50,000
(B) ₹ 50,000
(C) ₹ 1,00,000
(D) ₹ 3,50,000

13. Assertion (A): Revaluation Gain (Profit) will be transferred to

debit of Partners’ Capital Accounts in their old profit–sharing ratio.
Reason(R): Revaluation Gain (Profit) arises due to change in the
existing values assets and liabilities and belongs to old partners.
6
 (A) Both A and R are correct and R is the correct explanation of
A.
(B) Both A and R are correct but R is not the correct explanation
of A.
(C) A is incorrect but R is correct
(D) Both A and R are incorrect.

14. Rahu-Ketu Ltd. forfeited 5,000 shares of ₹ 10 each, which were

issued at 20% premium for non-payment of final call of ₹ 3 per
share. The amount of share forfeited will be _________
(A) ₹ 35,000
(B) ₹ 15,000
(C) ₹ 45,000
(D) ₹ 25,000

15. Random Ltd. purchased Machinery of ₹ 35,00,000 from Swarovski

Technology Ltd. by paying 20% through cheque and balance by
issue of shares of ₹ 100 each at 40% premium. Number of shares
issued will be _______ .
(A) 2,50,000 shares
(B) 2,00,000 shares
(C) 25,000 shares
(D) 20,000 shares

16. Angad a partner withdrew ₹ 10,000 at the beginning of every

month from April, 2020 to November, 2020. For the year ended

7
 March 31, 2021, Interest on Drawings @ 12% p.a will be charged
for an average period of ______ months.
(A) 8.5 months
(B) 6.5 months
(C) 6 months
(D) 12 months

17. Capital Employed for the purpose of Goodwill valuation is

calculated by ______________.
(A) Partners’ Capitals and Loans less Goodwill, Non–trade
Investments and Fictitious Assets.
(B) Partners’ Capitals and Reserves less Goodwill, Non–trade
Investments and Fictitious Assets.
(C) Loans and Reserves.
(D) Total Assets (including Goodwill, Non–trade Investments
and Fictitious Assets) less Partners’ Capital.

18. PG, RG and MG were partners sharing profits and losses in the
ratio of 7 : 5 : 3. MG was being guaranteed that her share of
profits will not be less than ₹ 2,00,000 and deficiency if any would
be borne by PG and RG equally. For the year ended March 31,
2021, firm made profits of ₹ 30,00,000. What will be the profit
share of MG?
(A) ₹ 2,00,000
(B) ₹ 6,00,000
(C) ₹ 8,00,000
(D) ₹ 4,00,000

8
 Part – I
Section – B

Instructions:
➢ From question number 19 to 36, you have to attempt any
15 questions.

19. Divya, Amita and Akul were partners sharing profits and losses in
the ratio of 4 : 3 : 2. W.e.f. April 01, 2021 they decided to share
future profits and losses in the ratio of 2 : 2 : 1. On that date the
following balances appeared in the books of account, which they
want to continue in the books of account of reconstituted firm as
well.
General Reserve ₹ 2,00,000
Profit and Loss A/c (Cr.) Balance ₹ 1,00,000
Deferred Revenue Expenditure ₹ 75,000
What adjustment entry will be passed?
(A) Debit Divya’s Capital A/c by ₹ 10,000; Debit Akul’s Capital
A/c by ₹ 5,000 and Credit Amita’s Capital A/c by ₹
15,000
(B) Debit Divya’s Capital A/c by ₹ 16,667; Debit Akul’s Capital
A/c by ₹ 8,333 and Credit Amita’s Capital A/c by ₹
25,000
(C) Debit Amita’s Capital A/c by ₹ 15,000; Credit Divya’s
Capital A/c by ₹ 10,000 and Credit Akul’s Capital A/c by
₹ 5,000
(D) Debit Amita’s Capital A/c by ₹ 25,000 ; Credit Divya’s
Capital A/c by ₹ 16,667 and Credit Akul’s Capital A/c by
₹ 8,333
9
20. Assertion (A): Profit transferred to Reserve is debited to Profit
and Loss Appropriation Account.
Reason (R): Reserve is credited to Partners’ Capital Accounts in
their old profit–sharing ratio in the next year even if there is no
reconstitution.
(A) Both Assertion(A) and Reason(R) are correct and Reason(R)
is the correct explanation of A.
(B) Both Assertion(A) and Reason(R) are correct but Reason(R)
is not the correct explanation of Assertion(A).
(C) Assertion(A) is correct and Reason(R) is incorrect.
(D) Both Assertion(A) and Reason(R) are incorrect.

21. Gaurav, Manish and Alok are partners with capitals of

₹25,00,000; ₹12,00,000 and ₹23,00,000 respectively. For the
year ended March 31, 2021, Interest on Capital was allowed to
them @ 10% p.a. instead of 12% p.a., the adjustment entry will
be:
Based on the above statements, choose the correct option:
(A) Dr. Gaurav’s Capital A/c by ₹ 10,000 and Alok’s Capital A/c
by ₹ 6,000; Cr. Manish’s Capital A/c by ₹ 16,000.
(B) Dr. Gaurav’s Capital A/c by ₹ 5,000 and Alok’s Capital A/c
by ₹ 3,000; Cr. Manish’s Capital A/c by ₹ 8,000.
(C) Dr. Manish’s Capital A/c by ₹ 16,000; Cr. Gaurav’s Capital
A/c by ₹ 10,000 and Alok’s Capital A/c by ₹ 6,000.
(D) Dr. Manish’s Capital A/c by ₹ 8,000 ;Cr. Gaurav’s Capital
A/c by ₹ 5,000 and Alok’s Capital A/c by ₹ 3,000.

10
22. Goodwill of the firm was valued at ₹2,40,000, being valued at 4
years’ purchase of super profits. Capital Employed was
₹10,00,000 and normal rate of return was 15%. Abnormal Loss
was ₹40,000 and Abnormal Gain was ₹10,000. The actual profit
earned by the firm was ______.
(A) ₹ 2,10,000
(B) ₹ 1,80,000
(C) ₹ 2,40,000
(D) ₹ 1,60,000

23. Sumit and Amit were partners sharing profits in the ratio of 3 : 2.
W.e.f. 1st April, 2021 they decided to share future profits in the
ratio of 2 : 1. On that date the extract of balance sheet was as
follows:

Liabilities (₹) Assets (₹)

Investments Fluctuation Plant 5,00,000
Reserve 1,50,000 Furniture 3,00,000
Investments 6,00,000

On the date of reconstitution, Plant was to be reduced to ₹

2,00,000 and Furniture was to be reduced by ₹ 2,00,000.
Investments were having market value of ₹ 5,50,000. For
Revaluation Gain (Profit) or Loss Sumit’s Capital A/c will be:
(A) Credited by ₹ 3,00,000
(B) Debited by ₹ 3,00,000
(C) Credited by ₹ 2,40,000
(D) Debited by ₹ 2,40,000

11
24. Ranjan was a debtor whose dues of ₹ 25,000 were declared bad
last year, has now promised to pay ₹ 10,000 in full settlement.
What entry will be passed at the time of change in profit-sharing
ratio among existing partners?
(A) Cash A/c Dr. 10,000
To Bad Debts Recovered A/c 10,000
(B) Debtors A/c Dr. 10,000
To Bad Debts Recovered A/c 10,000
(C) Debtors A/c Dr. 10,000
To Revaluation A/c 10,000
(D) Revaluation A/c Dr. 10,000
To Debtors A/c 10,000

25. Virat and Rohit were partners sharing profits in the ratio 5 : 3.
They admitted Rahul as a new partner for 20% share. The
following entry was passed for goodwill treatment.
₹ ₹
Premium for Goodwill A/c …Dr. 1,00,000
Rahul’s Current A/c …Dr. 20,000
Rohit’s Capital A/c …Dr. 30,000
To Virat’s Capital A/c 1,50,000

What was the new profit–sharing ratio?

(A) 5:3:2
(B) 1:1:1
(C) 35 : 13 : 12
(D) 15 : 17 : 8

12
26. Vivo and Oppo were partners in a firm sharing profits in the ratio
of 7 : 3. They admitted Realme as a new partner for ¼ share.
Realme was being guaranteed that his share of profits will not be
less than ₹ 1,50,000 p.a. Deficiency if any would be borne by
Vivo and Oppo in the ratio of 2 : 3. For the year ended March 31,
2021, Vivo borne deficiency towards Realme of ₹ 12,000. What
was the profits earned by the firm for the year ended March 31,
2021?
(A) ₹ 7,20,000
(B) ₹ 1,20,000
(C) ₹ 6,00,000
(D) ₹ 4,80,000

27. Anthony had applied for 2,000 shares and was allotted 1,600
shares. He had paid Application Money of ₹ 5 on application
(including ₹ 1 premium) but did not pay allotment of ₹ 5
(including ₹ 2 premium). His shares were forfeited after
allotment. The amount of share forfeited will be ______ and Calls
in Arrears will be _____ .
(A) ₹ 10,000 and ₹ 6,000
(B) ₹ 8,400 and ₹ 6,000
(C) ₹ 8,000 and ₹ 6,000
(D) ₹ 8,400 and ₹ 8,000

28. Dhwani Ltd. is registered with an authorised capital of ₹

50,00,000 divided into 5,00,000 shares of ₹ 10 each. The
company issued 2,00,000 shares for public subscription at ₹ 2
premium, payable ₹ 3 on application, ₹ 6 on allotment (including
premium) and balance as first and final call. Applications were
received for 2,50,000 shares and all the applicants were allotted
13
 on pro-rata basis. Rakesh who had applied for 10,000 shares did
not pay allotment and call money. Rajesh holding 15,000 shares
did not pay call money. Their shares were forfeited and later re-
issued 20,000 shares @ ₹ 8 per share as fully paid up. In the
balance sheet, the number of subscribed shares will be _____ and
shares forfeited will be _____ .
(A) 2,00,000 shares and 25,000 shares
(B) 1,97,000 shares and 3,000 shares
(C) 2,47,000 shares and 3,000 shares
(D) 1,95,000 shares and 5,000 shares

29. Tom and Jerry were partners sharing profits in the ratio of 2 : 3.
They had capitals of ₹ 10,00,000 and ₹ 5,00,000 respectively.
Interest on Capital was to be allowed @ 10% p.a. Tom had given
a loan of ₹ 4,00,000 to the firm. Firm had given a loan of ₹
2,00,000 to Jerry carrying interest @ 10% p.a. The partners have
decided to transfer 10% of the net divisible profit to Reserve
every year.
For the year ended March 31, 2021 the firm made profits of ₹
5,94,000 before any interest calculations. The amount transferred
to Reserve will be ________ .
(A) ₹ 44,000
(B) ₹ 54,000
(C) ₹ 40,363
(D) ₹ 40,000

30. Sansani Ltd. forfeited 10,000 shares of ₹ 10 each, for non-

payment of final call of ₹ 5 per share (including ₹ 2 premium).
Out of these 6,000 shares were re-issued @ ₹ 12 per share.
14
 Amount transferred to Capital Reserve will be ______ and
balance in share forfeited after re-issue of 6,000 shares will be
______ .
(A) ₹ 30,000 and ₹ 20,000
(B) ₹ 42,000 and Nil
(C) ₹ 42,000 and ₹ 28,000
(D) ₹ 54,000 and ₹ 40,000

31. Shikhar had applied for 900 shares, and was allotted in the ratio
of 3:2. He had paid Application Money of ₹ 3 per share and could
not pay allotment money of ₹ 5 per share. First and Final call of ₹
2 per share was paid along with previous dues. The following
entry will be passed at the time of first call received:
Bank A/c Dr. X
To Shares First Call A/c Y
To Calls in Arrears A/c Z

Here X, Y and Z are:

(A) ₹ 6,300; ₹ 1,800; ₹ 4,500
(B) ₹ 3,300; ₹ 1,200; ₹ 2,100
(C) ₹ 3,900; ₹ 1,800; ₹ 2,100
(D) ₹ 4,200; ₹ 1,200; ₹ 3,000

32. Arjun and Krishna were partners sharing profits and losses in the
ratio of 3:2. Their balance sheet showed Workmen Compensation
Reserve of ₹ 2,50,000. They decided to share future profits
equally and on that date Workmen Compensation Claim of ₹
1,00,000 existed. The entry passed will be:
15
 (A) Workmen Compensation
Reserve A/c …Dr. 2,50,000
To Workmen Compensation
Claim A/c 1,00,000
To Arjun’s Capital A/c 75,000
To Krishna’s Capital A/c 75,000

(B) Workmen Compensation

Reserve A/c …Dr. 2,50,000
To Workmen Compensation
Claim A/c 1,00,000
To Revaluation A/c 1,50,000

(C) Workmen Compensation

Claim A/c …Dr. 1,00,000
Arjun’s Capital A/c …Dr. 90,000
Krishna’s Capital A/c …Dr. 60,000
To Workmen Compensation
Reserve A/c 2,50,000

(D) Workmen Compensation

Reserve A/c …Dr. 2,50,000
To Workmen Compensation
Claim A/c 1,00,000
To Arjun’s Capital A/c 90,000
To Krishna’s Capital A/c 60,000

33. Bhagwant Ltd. issued 1,00,000 equity shares of ₹ 10 each at ₹ 11

per share, payable as ₹ 4 on application (including premium); ₹ 5
on allotment and the balance on final call. Applications were
received for 2,70,000 shares out of which applications for 20,000
shares were rejected and their money was refunded. Shares were
allotted on pro rata basis to the remaining applicants. Money
overpaid on application was applied towards sums due on
allotment only. All the money were duly received except from one
shareholder holding 2,000 shares who failed to pay the final call
money.
16
 Amount to be refunded while adjusting application money was
___.
(A) ₹ 80,000
(B) ₹ 1,00,000
(C) ₹ 1,80,000
(D) ₹ 6,80,000

34. Albela Ltd. took over assets of ₹ 40,00,000 and liabilities of ₹

7,00,000 from Aladdin Ltd. and issued them 3,00,000 equity
shares of ₹ 10 each at 20% premium along with bank draft of ₹
2,00,000. It will result in
(A) Capital Reserve of ₹ 9,00,000
(B) Goodwill of ₹ 5,00,000
(C) Capital Reserve of ₹ 5,00,000.
(D) Goodwill of ₹ 3,00,000

35. Assertion(A): All the assets and liabilities are recorded in

Revaluation Account, irrespective of the fact whether there is
change in the market value or not.
Reason(R): Gain (Profit)/Loss on Revaluation will be transferred
to Partners’ Capital Accounts in their old profit – sharing ratio.

(A) Both Assertion(A) and Reason(R) are correct.

(B) Only Assertion(A) is correct.
(C) Only Reason(R) is correct.
(D) Both Assertion(A) and Reason(R) are incorrect.

17
 36. Sunsaar Ltd. registered with an authorised capital of ₹
1,00,00,000 divided into 1,00,000 equity shares of ₹ 100 each
offered 80,000 equity shares for public subscription at a premium
of ₹ 10 per share. Applications for 95,000 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 5,000 shares. These shares were forfeited and out of
these 3,000 shares were reissued at ₹ 110 per share as fully paid
up. Calculate the amount of share capital to be shown in the
Balance Sheet.

(A) ₹ 80,00,000
(B) ₹ 78,00,000
(C) ₹ 93,00,000
(D) ₹ 79,60,000

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.

GCL Ltd. was formed with an authorised capital of ₹ 2,00,00,000

divided in 5,00,000, 12% Preference Shares of ₹ 10 each and
balance as Equity Shares of ₹ 10 each. The company offered 40% of
the Equity Shares for public subscription and applications were over-
subscribed by 2,00,000 shares. The company allotted all the shares
in proportion.
18
 All the money has been duly received except final call of ₹ 4 per
share (including ₹ 1 premium) on 20,000 shares.

37. What is the ratio of pro-rata allotment ?

(A) 17 : 15
(B) 4:3
(C) 11 : 10
(D) None of the above

38. The amount received by the company on final call was _____ .
(A) ₹ 23,20,000
(B) ₹ 17,40,000
(C) ₹ 24,00,000
(D) ₹ 18,00,000

Question no.’s 39, 40 and 41 are based on the hypothetical

situation given below.
Mogambo and Shakaal were partners sharing profits and losses in the
ratio of 3 : 2. On April 1, 2021 they admitted Gabbar as a new partner
for 20% share. Gabbar brought in Capital of ₹ 5,00,000 and goodwill
premium of ₹ 1,00,000 which he distributed equally between Mogambo
and Shakaal.
Balance sheet of Mogambo and Shakaal as on March 31, 2021 was as
follows:

Liabilities (₹) Assets (₹)

Bills Payable 1,20,000 Cash in Hand 20,000
Creditors 1,40,000 Bills Receivable 1,80,000
General Reserve 80,000 Stock 1,10,000
19
Investment Fluctuation 20,000 Investments 2,50,000
Reserve (Market Value ₹ 2,35,000)
Capital A/c : Debtors 2,50,000
Mogambo 7,00,000 Less: PDD (10,000) 2,40,000
Shakaal 6,00,000 13,00,000 Building 8,00,000
Goodwill 60,000
16,60,000 16,60,000
Adjustments :-
(i) Debtors of ₹ 50,000 were proved bad. Firm decided to
create Provision for Doubtful Debts at the existing rate.
(ii) Stock was valued at ₹ 1,50,000 and Building was to be
increased by ₹ 2,00,000.
(iii) The partners decided to carry on with the existing balance
of General Reserve in the books of Reconstituted firm.
39. The new profit sharing ratio will be
(A) 12 : 8 : 5
(B) 2:2:1
(C) 5:3:2
(D) 3:2:5

40. Provision for Doubtful Debts to be shown in the books of

reconstituted firm will be ……..
(A) ₹ 8,000
(B) ₹ 10,000
(C) ₹ 60,000
(D) ₹ 48,000

20
41. Entry for General Reserve treatment will be …………….

(A) General Reserve A/c …Dr. 80,000

To Mogambo’s Capital A/c
48,000
To Shakaal’s Capital A/c
32,000

(B) General Reserve A/c …Dr. 80,000

To Mogambo’s Capital A/c
40,000
To Shakaal’s Capital A/c
40,000

(C) Gabbar’s Capital A/c …Dr. 80,000

To Mogambo’s Capital A/c
40,000
To Shakaal’s Capital A/c
40,000
(D) Gabbar’s Capital A/c …Dr. 16,000
To Mogambo’s Capital A/c 8,000
To Shakaal’s Capital A/c 8,000

21
 Part – II
Section – A

Instructions:
➢ From question number 42 to 48, you have to attempt any 5
questions.

42. Given below are two statements, one labelled as Assertion (A)
and the other labelled as Reason (R):
Assertion (A): Current Ratio can be equal to Quick Ratio.
Reason (R): Inventory and Prepaid expenses are subtracted
from Current Assets to determine Quick Assets.
Based on the above two statement, chose the correct option:
(A) Both Assertion(A) and Reason(R) are true, but Reason(R) is
not the correct explanation of Assertion(A).
(B) Both Assertion(A) and Reason(R) are true and Reason(R) is
a correct explanation of Assertion(A).
(C) Both Assertion(A) and Reason(R) are incorrect.
(D) Assertion(A) is incorrect but Reason(R) is correct.

43. If Opening Inventory was ₹ 40,000 and Closing Inventory was ₹

60,000 then change in Inventory will be ______.
(A) ₹ 20,000
(B) ₹ 50,000
(C) (₹ 20,000)
(D) ₹ 1,00,000

22
44. Pick the odd one out of the following.
(A) Gross Profit Ratio
(B) Net Profit Ratio
(C) Interest Coverage Ratio
(D) Operating Profit Ratio

45. The persons who have advanced amount to the business for long-
term basis will be interested in:
(A) Liquidity Ratios
(B) Solvency Ratios
(C) Turnover Ratios
(D) Activity Ratios

46. What is the correct sequence?

(i) Short Term Provisions
(ii) Trade Payables
(iii) Short Term Borrowings
(iv) Other Current Liabilities
(A) (i) ; (ii) ; (iv) and (iii)
(B) (iii) ; (ii) ; (iv) and (i)
(C) (iii) ; (ii) ; (i) and (iv)
(D) (ii) ; (iv) ; (iii) and (i)

23
 47. Match the items given in Column I with the headings/subheadings
(Balance sheet) as defined in Schedule III of Companies Act
2013.

Column I Column II
(I) Loose Tools (a) Intangible fixed assets
(Ii) Cash Credit (b)Other Current Liabilities
(III) Share Application money due (c) Long term Provisions
for
refund
(IV) Formulae and Recipes (d) Inventories
(V) Provision for Warranty Claims (e) Short Term Borrowings

Choose the correct option:

(A) (I)-(d), (II)-(c), (III)- (e), (IV)- (a), (V)-(b)
(B) (I)-(d), (II)- (e), (III)-(b), (IV)- (c), (V)-(a)
(C) (I)-(d), (II)- (e), (III)-(b), (IV)- (a), (V)-(c)
(D) (I)- (d), (II)- (b), (III)- (e), (IV)-(a), (V)-(c)

48. If Profit before Tax was ₹ 4,80,000, Tax rate was 20%, 12%
Debentures were ₹10,00,000 and 10% Bank Loan was ₹ 8,00,000
then what was the amount of profits to be considered for Interest
Coverage Ratio as a numerator?

(A) ₹ 4,80,000.
(B) ₹ 6,80,000.

24
 (C) ₹ 8,00,000.
(D) ₹ 2,00,000

Part – II
Section – B

Instructions:
➢ From question number 49 to 55, you have to attempt any 6
questions.

49. Inventory Turnover Ratio of Santa Ltd was 8 times. If Average

Inventory was of ₹ 40,000 and Gross Profits are ₹ 80,000 the
Revenue from Operations was.......
(A) ₹ 3,20,000
(B) ₹ 2,40,000
(C) ₹ 4,00,000
(D) None of the above

50. Fixed assets of a company were ₹ 35,00,000 (including non-trade

investments of ₹ 10,00,000). Its current assets were ₹ 8,30,000
and current liabilities were ₹ 3,30,000. For the year ended March
31, 2021, Net Profit before Tax of the company was ₹ 18,00,000.
The tax rate was 30%. Find Return on Investment ratio.
(A) 42 %
(B) 31.5 %
(C) 60 %
(D) 45 %

25
51. If Operating Cycle is of 8 months, then any amount payable
within 12 months will be ___________ liability and amount
payable after 12 months will be _______ liability.
(A) Current; Current
(B) Current; Non – Current
(C) Non – Current; Current
(D) Non – Current; Non – Current.

52. Given below are two statements, one labelled as Assertion (A)
and the other labelled as Reason (R):

Assertion (A): Non–Trade Investments are subtracted from sum

of Debt and Equity to determine Capital Employed.

Reason (R): Non–Trade Investments are those which are not

related to the core operations of the company and will not result
in growth and expansion of the business.

Based on the above two statement, choose the correct option:

(A) Both Assertion(A) and Reason(R) are correct and Reason(R)

is the correct reason of Assertion(A).

(B) Both Assertion(A) and Reason(R) are correct but Reason(R)

is not the correct reason of Assertion(A).

(C) Both Assertion(A) and Reason(R) are incorrect.

(D) Assertion(A) is correct but Reason(R) is incorrect.

53. Current Ratio of Rana Ltd. was 3:1 and Working Capital was ₹
2,00,000. If Inventory was ₹ 60,000 (including Loose Tools of ₹
10,000) then Quick Ratio will be:
26
 (A) 2.4 : 1
(B) 2.5 : 1
(C) 3.6 : 1
(D) 3.5 : 1

54. Which of the following transaction will result in increase in Debt to

Equity Ratio but no change in Current Ratio?
(A) Issue of Shares for consideration other than Cash.
(B) Redemption of Debentures
(C) Goods of ₹ 2,00,000 were sold for ₹ 1,50,000
(D) Loss of Machinery by fire

55. From the following information, obtained from the books of Lala Ji
Ltd., find out Gross Profit Ratio:
Revenue from Operations ₹ 6,00,000
Purchases ₹ 2,00,000
Carriage Inwards ₹ 30,000
Salaries ₹ 1,00,000
Decrease in Inventory ₹ 40,000
Wages ₹ 60,000

(A) 45 %
(B) 41.67 %
(C) 71.67 %
(D) 50 %
27
ANSWER KEY IS AVAILABLE ONLY ON ‘GREWAL CONCEPTUAL LEARNING
APP’ (AVAILABLE ON PLAYSTORE AND APPSTORE).

FOR ANY FURTHER ASSISTANCE, YOU MAY EMAIL US AT reemagrewal@grewaleducation.com or call

at 9560102856.

28