Professional Documents
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Class 12 - Accountancy
Sample Paper 08
Maximum Marks: 40
Time Allowed: 90 minutes
General Instructions:
Read the following instructions very carefully and strictly follow them:
1. This question paper comprises three PARTS – I, II and III. There are 69 questions in the question paper.
2. Part - I -is compulsory for all candidates.
3. Part - II Analysis of Financial Statement
4. 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.
5. All questions carry equal marks. There is no negative marking.
6. 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)
1. What journal entry is to be recorded in the books of account when Balance of Profit and Loss Account
is transferred to the Profit and Loss Appropriation account.
a. Profit and Loss A/c Cr.
To Profit and Loss Appropriation A/c
b. Profit and Loss A/c Dr.
To Reserve A/c
c. Profit and Loss A/c Dr.
To Profit and Loss Appropriation A/c
d. Profit and Loss A/c Dr.
To capital A/c
2. ________ on the reconstitution of partnership is necessary because their present value may be different
from their book value.
a. Reassessment of assets
b. Assessment of assets
c. Revaluation of assets
d. Valuation of assets
3. It is better to have the agreement in writing to avoid any ________.
a. Dispute
b. Case
c. Loss
d. Audit
4. Buyer's advantage lies in the excess of the normal return on capital employed. The excess of
b. Payment of dividend
c. Issue of bonus shares
d. Any business purpose
26. Assertion (A): A change in profit sharing ratio amounts to dissolution of partnership firm.
Reason (R): Existing agreement comes to an end and a new agreement comes into existence.
a. Both A and R are true and R is the correct explanation of A.
b. Both A and R are 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.
27. Specify the rate of interest to be used on calls in arrear as per the TABLE - F.
a. 20% p.a.
b. 26 % p.a.
c. 10% p.a.
d. 16% p.a.
28. According to AS 26, which goodwill is recorded in the books :
a. both (i) and (ii)
b. None of the above
c. purchased goodwill
d. self generated goodwill
29. According to Companies Act company cannot issue its share at ________.
a. Par
b. Discount
c. Both Discount and Par
d. Premium
30. Among following which statement is not true about a private company?
a. Restriction on the right to transfer its shares
b. The private company ends with the words ‘Private Limited’.
c. Atleast 2 directors
d. Minimum paid-up capital is 5,00,000
31. Assertion (A): Equity shares are those shares that do not preference shares.
Reason (R): Equity shares are the least issued class of shares and carry the minimum risks and
rewards of the business.
a. Both A and R are true and R is the correct explanation of A.
b. Both A and R are 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.
32. Minimum directors a public company can have compulsorily ________.
a. 2
b. 3
c. 7
d. 15
33. A, B and C are partners sharing profits in the ratio of 3:2:1. They admit D for share. C would retain
his old share. Calculate C’s sacrifice
a.
b.
c. NIL
d.
34. Which of the following statement is incorrect about Preference Shares?
a. Can be converted
b. Return of capital on winding up of company
c. Right to receive Dividend
d. No Dividend
35. Share Forfeiture account is a ________.
a. Nominal Account
b. Fictitious Account
c. Personal Account
d. Real account
36. Which type of shares cannot be issued as per the Companies Act, 2013?
a. Irredeemable Preference Shares
b. Equity Shares
c. Bonus Shares
d. Preference Shares
Part - I (Section - C)
Question No. 37 to 38 are based on the given text. Read the text carefully and answer the
questions:
Q and R are partners, who share profits in the ratio of 3 : 2. From 1st April 2018, they decide to share
profits equally. For the purpose of reconstitution, the partnership deed provides for the valuation of
goodwill at 2 years' purchase of super-profits.
The normal profits are estimated at ₹ 1,00,000 while actual average profits were ₹ 1,25,000. On 31st
March 2018, the general reserve appears in the books at ₹ 80,000. The partners also decided to revalue
buildings by appreciating their value by ₹ 20,000.
You are required to give effect to the above adjustments by passing a single journal entry.
Question No. 39 to 41 are based on the given text. Read the text carefully and answer the
questions:
Rahul and Modi are two partners into firm sharing profits equally. On 1st January 2020, they decided to
admit Vikas as a new partner into the firm for th share. Vikas brings 10,00,000 for his share to capital
and premium of goodwill in cash. Half goodwill is withdrawn by the old partners. Goodwill of the firm
is valued on the basis of one year purchase of profits or losses of preceding last 3 years. Profits of last
four years are ₹6,00,000 in 2016, ₹7,00,000 in 2017, ₹8,00,000 in 2018 and ₹15,00,000 in 2019.
d. Intangible Asset
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47. How a Company’s balance sheet is different from the balance sheet of partnership firm?
a. A company‘s Balance Sheet format is fixed under schedule III .Whereas, there is no standard form
prescribed under the Indian partnership Act,1932 for a partnership Firm’s balance sheet.
b. In case of a company‘s Balance sheet previous year‘s figures are required to be given whereas it is
not so in the case of a partnership firm’s balance sheet.
c. Not different
d. For company‘s Balance Sheet and partnership balance sheet format is fixed under schedule III.
48. Which Ratio shows the relationship between current assets with current liabilities
a. Gross profit ratio
b. Quick ratio
c. Current ratio
d. Debt ratio
Part - II (Section - B)
49. Common-size financial statements are mostly prepared in:
a. percentage
b. proportion
c. None of these
d. both proportion and percentage
50. Current Liabilities are not required to calculate the ……..
a. Current Ratio
b. Quick Ratio
c. Both Current Ratio and Quick Ratio
d. Interest Coverage Ratio
51. Payment of Income Tax is considered as:
a. None of these
b. Direct Expenses
c. Operating Expenses
d. Indirect Expenses
52. Assertion (A): Goods sold for Cash at cost price, will not increase the Gross Profit Ratio.
Reason (R): Revenue from the operation will increase but closing inventory will decrease with the
same amount.
a. Both A and R are true and R is the correct explanation of A.
b. Both A and R are 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.
53. Assertion (A): Internal analysis carried out by management is more detailed, extensive, and correct.
Reason (R): Management has access to all the information relating to the organization.
a. Both A and R are true and R is the correct explanation of A.
b. Both A and R are 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.
54. If Total Assets are ₹1,25,000, Total Debts, i.e., external debts are ₹1,00,000 and Current Liabilities are
₹50,000, Debt-Equity Ratio will be:
a. 1 : 2
b. 2 : 1
c. 1:3
d. 1 : 1
55. Which of the following is fictitious Asset?
a. Preliminary Expense
b. Goodwill
c. Income Tax
d. Loose Tools
Class 12 - Accountancy
Sample Paper 08
Solution
Part - I (Section - A)
1. (c) Profit and Loss A/c Dr.
To Profit and Loss Appropriation A/c
Explanation: Correct Journal Entry is Profit and loss A/c Debit and Profit and loss appropriation
account Credit. To find out the net profit all charge items should be deducted and all non-operating
incomes should be added to the profit. Net Profit shown by profit and loss account is transferred to the
credit side of profit and loss appropriation account.
Journal Entry will be:
P & L A/c ... Dr
To P & L Appropriation A/c
2. (c) Revaluation of assets
Explanation: At the time of reconstitution of partnership firm, it is necessary to prepare revaluation
account or revalue the assets and re-assess the liabilities. The present value of the assets will be
different from the previous book value of assets. This is known Revaluation of Assets.
3. (a) Dispute
Explanation: Partnership deed plays important role in regulating the duties and responsibilities of
each partner. A written partnership deed is useful to resolve disputes and misunderstanding among
partners because everything is in written form. If there are any disputes it can be resolved.
4. (c) Super profit
Explanation: Super profit
5. (d) ₹12,000
Explanation: There are two ways to provide commission:
i. Before charging such commission = Net Profit before the commission
ii. After charging such commission = Net profit before commission + Rate
In the above case, the commission will be calculated as 1,20,000 = 12,000.
6. (c)
Bank A/c Dr. 3000
Explanation: All unrecorded assets, which are realized will be recorded in the credit side of
revaluation account. In this question amount of Rs.3,000 will be recorded in the credit side of
revaluation account through a bank account. It will be added to the bank account also.
Entry will be:
Bank A/c Dr. 3000
deducted normal profits from the actual average profits (average profits - normal profits). To find out
the value of goodwill of the firm, super profit should be Capitalized i.e. super profits 100/Normal
Rate of Return (NRR).
Value of Goodwill = Super Profit 100/NRR.
8. (d) Hidden Goodwill
Explanation: It is known as hidden goodwill.
Following formula should be used to calculate the value of hidden goodwill:
Total Capital of the new firm - Combined capital of all partners (including new partner capital) =
Hidden Goodwill
9. (c) Intangible asset
Explanation: Goodwill is an intangible asset, which cannot be seen or touched but it plays important
role in earning more and more profits. If a business firm is having a good reputation in the market, it
will enjoy more profits and goodwill in future. Goodwill is an intangible asset which is shown in non-
current assets in the balance sheet.
10. (c) P and Q debit with Rs. 4,000 each and R Credit with Rs. 8,000
Explanation: Change in Ratio:
Old Ratio = 1:1:1
R's new share = or
Remaining share = 1 - =
P's new share = =
Q's new share = =
New Ratio = 4:4:2 = 2:2:1
Sacrifice or Gain of partners:
P = - = Gain
Q = - = Gain
R = - = Sacrifice
11. (c) Allowed in full irrespective of profit
Explanation: When interest on capital is treated as charge, amount of interest will be paid in full
irrespective of profits/losses. In a normal situation, interest on capital is an appropriation; it means it
will be paid out of profits and up to the profits only. But in some cases it is paid as a charge, it means
whether there is profit or loss, it will be paid. Only in such cases, interest on capital is treated as a
charge. if there is loss or profit is less than the amount of interest on capital, interest will be paid full
and loss will be bear by a partner in their profit sharing ratio.
12. (a) 15,000
Explanation: Amount to be brought by B:
Old Ratio = 6:4
New Ratio = 5:3:2
Total capital of the firm = New partner's capital reciprocal of new partner's share
Total capital of the firm = 70,000 = 3,50,000
Y’s new capital = 3,50,000 = 1,05,000
His adjusted capital is 1,20,000
Cash to be withdrawn is 1,20,000 - 1,05,000 = 15,000
13. (b) Written off to the old partners
Explanation: Goodwill existing in the old balance sheet of a partnership firm before admitting a new
partner will be written off to the capital accounts of the old partners in their old profit sharing ratio.
silent.
28. (c) purchased goodwill
Explanation: purchased goodwill
29. (b) Discount
Explanation: As per the Companies Act, 2013, (new guidelines), a company cannot issue its shares at
discount. The company can issue its shares at par and premium only. Either equity or preference no
share can be issued at discount.
30. (d) Minimum paid-up capital is 5,00,000
Explanation: Minimum paid-up capital of a private company is 1,00,000. A private company cannot
transfer its shares and all private companies’ ends with the words ‘Private Limited’. The company can
take min 2 and max 15 directors.
31. (c) A is true but R is false.
Explanation: Equity shares are the most commonly issued class of shares and carry the maximum
risks and rewards of the business.
32. (b) 3
Explanation: According to the Companies Act, a public company should have at least 3 Directors and a
maximum of 15 directors.
33. (c) NIL
Explanation: Calculation of C’s Sacrifice:
Old Share = 3 : 2 : 1
New Share = 12 : 8 : 5 : 5
Sacrifice ratio = Old ratio - new ratio
C’s Sacrifice = - = Nil
34. (d) No Dividend
Explanation: Preference Shares are those shares on which dividend to be paid as a fixed amount.
Divided into preference shareholders is paid before dividend-paying to equity shareholders. These
shares are convertible and can be redeemed.
35. (a) Nominal Account
Explanation: All accounts which are prepared for the calculation of profit or loss are nominal
accounts. Rule related to the nominal account is Debit all expenses and losses and credit all gains.
36. (a) Irredeemable Preference Shares
Explanation: There are two types of preference shares in context to the redemption i.e. Redeemable
and Non-redeemable preference shares. As per the Companies Act, 2013, companies cannot issue
Irredeemable Preference Shares. Redeemable preference shares are those which can be redeemed by
the company although the company can issue redeemable preference shares, equity shares, bonus
shares.
Part - I (Section - C)
37. (b) None of these
Explanation: None of these
38. (a)
Explanation:
39. (a) All of these
Explanation: All of these
40. (d) ₹10,00,000
Explanation: ₹10,00,000
41. (c) ₹8,00,000
Explanation: ₹8,00,000
Part - II (Section - A)
42. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
43. (b) Titles and Masthead
Explanation: As Per the Indian Accounting Standard (IND AS), 38 - Intangible Assets outlines the
accounting requirements for intangible assets, which are non-monetary assets which are without
physical substance and identifiable (either being separable or arising from contractual or other legal
rights). Intangible assets meeting the relevant recognition criteria are initially measured at cost,
subsequently measured at cost or using the revaluation model, and amortised on a systematic basis
over their useful lives (unless the asset has an indefinite useful life, in which case it is not amortised).
44. (d) Comparative statements
Explanation: A comparative statement is a document that compares a particular financial statement
with prior period statements or with the same financial report generated by another company. Analyst
and business managers use the income statement, balance sheet and cash flow statement for
comparative purposes.
45. (b) No Change
Explanation: There will be no effect on current ratio because there is increase in cash and decrease in
debtors with the same amount. Both debtors and cash comes under current assets.
46. (a) Fictitious Asset
Explanation: Goodwill is an intangible asset, but it cannot be called a fictitious asset because even
though these intangible assets (examples beside goodwill are patents and trademark) do not have a
physical existence, these are resources owned and used in the normal operation of the business. Note
that an asset can be tangible like plant & machinery, land, and intangible goodwill but both assets are
in fact necessary for the operation of a business
On the other hand, a fictitious asset is not an asset it is a loss, as no benefit is derived from these items
whether at present or in the future. Examples of fictitious assets are
a. Discount on issue of shares & debentures
b. Deferred revenue expenditure etc. and are to be written off over a period of time.
47. (a) A company‘s Balance Sheet format is fixed under schedule III .Whereas, there is no standard form
prescribed under the Indian partnership Act,1932 for a partnership Firm’s balance sheet.
Explanation: Partnership firm's balance sheet is a T format balance sheet where capital and liabilities
are shown on left hand side and assets are shown on right hand side. There is no need of sub dividing
assets and liabilities into sub heads. A Company's balance sheet has a vertical format under which
assets,liabilities and capital has to be sub divided into sub headings like shareholders fund,non current
assets,current assets,current liabilities etc.
48. (c) Current ratio
Explanation: Current Ratio shows relationship between current assets and current liabilities.
Part - II (Section - B)
49. (a) percentage
Explanation: Common-size statements are mostly prepared in percentage.
50. (d) Interest Coverage Ratio
Explanation: Interest coverage ratio is calculated by dividing a company's earnings before interest and
taxes by the company's interest expenses for the same period.
51. (d) Indirect Expenses
Explanation: Payment of Income Tax is considered an indirect expense for an enterprise.
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52. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
53. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
54. (b) 2 : 1
Explanation: Total Debts = 1,00,000
Current Liabilities = 50,000
Equity = Total Assets - Total Liabilites
= 1,25,000 - 1,00,000 = 25,000
Long-term Debts = Total Debts - Current Liabilities
= 1,00,000 - 50,000 = 50,000
Debt-Equity Ratio = = = 2 : 1
55. (a) Preliminary Expense
Explanation: Preliminary expenses are those expenses which are incurred during the formation of the
company. Benefits of such expenses extend for more than one accounting year, therefore, such
expenses are not fully debited to statement of profit and loss in any single year but it is written off
over each year in part.