GOVERNMENT COLLEGE OF MANAGEMENT SCIENCES

MANSEHRA
DEPARTMENT OF COMMERCE
MID TERM EXAMINATION- SPRING 2019

Subject: Financial Accounting Max Marks: 15

Class: BS- Commerce - II Time: 1 Hour 30 minutes
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Name: __________________________ Roll No:_________________

Choose the correct answer. (05)

1. Ali and Norman started a business by investing Rs 85000 and 15000 respectively. In what
ratio the profit earned after 2 years be divided between Ali and Nouman respectively.

1. 17:1
2. 17:2
3. 17:3
4. 17:4

2. A, B and C enter into a partnership investing Rs 35000, Rs 45000 and 55000. Find the
their respective shares in annual profit of 40,500

1. 10500, 13500, 19500

2. 10500, 13500, 18500
3. 10500, 13500, 17500
4. 10500, 13500, 16500

3. Rs. 700 is divided among A, B, C so that A receives half as much as B and B half as much
as C. Then C's share is

1. Rs 200
2. Rs 300
3. Rs 400
4. Rs 500

4. The correct entry for recording losses on revaluation would be:

  Debit Credit
1. Revaluation Partners’ capital accounts
2. Partners’ current accounts Revaluation
3. Partners’ capital accounts Revaluation
4. Revaluation Partners’ current accounts

5. On the admission of a new partner, it is believed that the assets have changed in value.
To record a decrease in the value of an asset the double entry should be:

  Debit Credit
1 Asset Capital
2 Asset Revaluation
3 Revaluation Capital
4 Revaluation Asset
 GOVERNMENT COLLEGE OF MANAGEMENT SCIENCES
MANSEHRA
DEPARTMENT OF COMMERCE
MID TERM EXAMINATION- Spring 2019

Subject: Financial Accounting Max Marks: 15

Class: BS- Commerce - II Time: 1 Hour 30 minutes
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Part-II
Note: Attempt any two questions from the following:

Q.1 On 31st December 1996, three partners had the following amounts at the credit of their capital
accounts: A-Rs.50000, B-Rs.30000, and C-Rs.20000. On 1st January 1997 they had to debit of
their drawing accounts: A-7500, B-5000 and C-4000. Profit up to Rs.60000 are divided in the
same proportion as the capital but above that amount, A get 25% , B35% and C 40%. A, B and C
drew during the year 1997 Rs.5000, Rs.4000 and Rs.3000 respectively. The profit for 1997
amounted to Rs.90000 before charging interest on capital (to which all are entitled) at 6%.
You are required to show Profit and Loss Account and Partner capital Accounts.(05)

Q.2 A and B are partners in a firm sharing profit and losses in 7:3. The balance sheet as at 31.3.1997
is as follows:
Liabilities Rs Assets Rs
Sundry Creditors 40000 Cash in hand 36000
Bank Overdraft 20000 Sundry Debtors 46000
Reserve 10000 Less Provision for bad debts 2000 44000
Capital-A 50000 Furniture 30000
Capital-B 40000 Stock in trade 50000

Total 160000 Total 160000

On 1.4.1997 C joins the firms as a 3rd partner for 1/4 share of the future profit of the firm on
th

the following terms:

(a) Goodwill is valued Rs. 40000 and C is to bring necessary amount in cash as a premium for
goodwill.
(b) 20% of the reserve is to be maintains a provision against bad and doubtful debts.
(c) Stock in Trade is to be reduced by 40% and furniture is to be reduced to 40%.
(d) A is to pay off Bank overdraft.
(e) C is to introduce Rs. 30000 as his share of capital to which amount other partners’ capital
shall have to be adjusted.
You are required to show the necessary journal entries to carry out the above transactions
and prepare Balance sheet of the firm immediately after C has become a partner.(05)

Q.3 P Q and R are in partnership business sharing profit and losses in the ratio of 2:2:1. P retired on
31.12.1997 and on that date the Balance Sheet of the firm was as under:
Liabilities Rs Assets Rs.
Capital Accounts Land and Building 10000
P 16000 Plant and Machinery 6000
Q 8000 Furniture 2000
R 8000 Stock 7000
Creditors 12000 Debtors 15000
Cash 4000
44000 44000
On P’s retirement, Goodwill is valued at Rs. 10000 and the assets are revalued as follows:
Land and Building Rs.12000, Plant and Machinery Rs.5000, Furniture Rs.1500, Debtors 12500.
While apportioning profit for the year 1997 an amount of Rs.3000 was given to P in excess. Q
and R provide cash in their profit sharing ratio in order to pay off P.
You are required to pass Journal entries, prepare revaluation account, partner’s capital
account and Balance sheet after P’s retirement.(05)