Preparation test

WEEKLY TEST
Class 12 - Accountancy
Time Allowed: 3 hours Maximum Marks: 108

Section A
1. Assertion (A): Fixed Capital Accounts of Partners always show credit balances even when the firm suffers [1]
losses year after year.
Reason (R): Current Accounts of Partners are maintained under fluctuating capital method.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

2. Assertion (A): Partnership firm is an organisation where seven or more persons carry on some business activity [1]
on the basis of agreement among them.
Reason (R): The profit or loss arising from the partnership business is shared by the partners in the agreed ratio.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

3. Assertion (A): A share is a fractional part of the share capital and forms the basis of ownership interest in a [1]
company.
Reason (R): Shares refer to the units into which the total share capital of company is divided.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

4. Assertion (A): A company is a legal entity separate and distinct from its members. [1]
Reason (R): A company can enter into a contract. It can sue and be sued in its own name.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

5. Assertion (A): Discount or Loss on Issue of Debentures is written off in the year debentures are allotted. [1]
Reason (R): Discount or Loss on Issue of Debentures is written off in the year debentures are allotted from
Securities Premium (if it exists) and/or from Statement of Profit & Loss as finance cost.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

6. Assertion (A): Debenture Certificate evidences that the company has borrowed amount from the [1]
Debentureholder.

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 Reason (R): Debenture is the written acknowledgement by a company of debt.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

7. Assertion (A): Goodwill is an intangible asset but not a fictitious asset. [1]
Reason (R): Goodwill does not have physical existence. Fictitious assets are not realizable whereas goodwill
can be purchased or sold.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

8. Assertion (A): Goodwill is shown in the books of accounts only when it is purchased. Self generated Goodwill [1]
is not recorded in the books of accounts.
Reason (R): Accounting Standard-26 (AS 26) prescribes that goodwill should not be recognized in the books of
accounts unless some money or money's worth is paid for it.

a) Both A and R are true and R is the correct b) Both A and R are true but R is not the
explanation of A. correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

Section B
9. Read the text carefully and answer the questions: [2]
Nidiya limited was incorporated on 1st April 2017 with a registered office in Mumbai. The capital clause of the
memorandum of Association reflected a registered capital of 8,00,000 equity shares of ₹ 10 each and 1,00,000
preference shares of ₹ 50 each.
Since some large investments were required for building and machinery the company in consultation with
vendors, Ms.VPS Enterprises, issued 1,00,000 equity shares and 20,000 preference shares at par with them in
full consideration of assets acquired. Besides this, the company issued 2,00,000 equity shares for cash at par
payable as ₹ 3 on application, ₹2 second call.
Till date, the 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 the first call on his 200 shares. Shares
of Mr. Ajay were then forfeited and out of the 100 shares were reissued at ₹ 12 per share.
(i) What is the amount of security premium reflected in a balance sheet at the end of the year?

a) ₹ 200 b) ₹ 400

c) ₹ 1,000 d) ₹ 600
(ii) What is the amount transferred to capital reserve?

a) ₹ 600 b) ₹ 900

c) ₹ 300 d) ₹ 200
10. A firm does not have any partnership deed. Based on this fact match the following: [2]

Column A column B

(a) Interest will be allowed at 6% p.a. (i) Drawings of partners.

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 (b) Interest will not be allowed. (ii) Net loss of the firm for an accounting year.

(c) No Interest will be charged. (iii) Capitals contributed by the partners.

(d) Partners shall share equally. (iv) Loan given by a partner to firm.

11. Match the following: [2]

Column A Column B

(a) Cash paid against trade payables (i) Operating activity

(b) Purchase of Marketable Securities (ii) Investing activity

(c) Sale of Patents (iii) Financing activity

(d) Income Tax refund received (iv) Cash & Cash Equivalents

Section C
Question No. 12 to 14 are based on the given text. Read the text carefully and answer the questions: [3]
Balwant and Mohit decided to set up a partnership to sell low-sodium, plant-based vegan snacks. Since both of them
had a family, they decided to withdraw a salary of ₹ 12,000 per quarter.
Balwant also withdrew ₹ 1,00,000 on 31st December 2020 to get her wife treated for Covid-19. The partnership deed
provided for 10 % p.a. interest on drawings.
Mohit introduced ₹ 50,000 as additional capital on 31st January 2021 to increase the inventory. The net distributable
profit was ₹ 2,00,000 which was divided between Balwant and Mohit after providing 25 % to general reserve.

12. Total amount of salary credited to the partner's account is

a) ₹ 12,000 b) ₹ 2,88,000

c) ₹ 48,000 d) ₹ 96,000
13. Interest on Balwant's drawings will be ₹ ________.

a) 10,000 b) 2,500

c) 5,000 d) 7,500
14. Interest on Mohit's capital will be

a) ₹ 10,000 b) None of these

c) ₹ 5.000 d) ₹ 20,000

Question No. 15 to 17 are based on the given text. Read the text carefully and answer the questions: [3]
Mohit and Ankit are partners of a firm. Their capitals at the end of the year 2020-2021 were ₹ 3,00,000 and ₹ 1,50,000.
During the year, Mohit drawings were ₹ 40,000 and Ankit drawings were ₹ 10,000. Profit from profit and loss account
was ₹ 32,000. Out of this, ₹ 24,000 was credited in Mohit's account and the balance was credited in Ankit's capital
account.
Ankit also brought an additional capital of ₹ 32,000 on 1st October, 2020. The partnership deed provided for
Interest on drawings @ 10% p.a.
Interest on any capital introduced during the year @ 10%.

15. What was the profit-sharing ratio of Mohit and Ankit?

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 a) 2 : 1 b) 1 : 1

c) Can't say d) 3 : 1
16. What are Ankit' interests in drawings?

a) ₹ 250 b) ₹ 750

c) ₹ 1,000 d) ₹ 500
17. What are Mohit's interest in the capital?

a) ₹ 800 b) ₹ 1,600

c) ₹ 3,200 d) Can't say

18. List any two items that may appear on the debit side of the Capital Account of a partner when the capitals are [3]
fluctuating.
19. Ram, Ravi and Yogesh are partners in a firm. Their Capital Accounts stood at ₹ 6,00,000; ₹ 5,00,000 and ₹ [3]

4,00,000 respectively on 1st April, 2022.They shared Profits and Losses in the proportion of 4 : 2 : 3. Partners
are entitled to interest on capital @ 8% per annum and salary to Ravi and Yogesh @ ₹ 7,000 per month and ₹
10,000 per quarter respectively as per the provision of the Partnership Deed. Yogesh's share of profit (excluding
interest on capital but including salary) is guaranteed at a minimum of ₹ 1,10,000 p.a. Any deficiency arising on

that account shall be met by Ram. The profit for the year ended 31st March, 2023 amounted to ₹ 4,24,000.
Prepare Profit and Loss Appropriation Account for the year ended 31st March, 2023.
20. Sharma Ltd. is registered with an authorized capital of ₹ 50,00,000, divided into 5,00,000 shares of ₹ 10 each. [3]
The company issued 1,00,000 shares for subscriptions to the public at a premium of ₹ 2 per share. The amount
was payable as follows:

On Application and Allotment ₹ 3 per share

On 1st Call ₹ 4 per share (including premium ₹ 2)

On 2nd and Final Call ₹ 5 per share

Applications were received for 1,20,000 shares and allotment was made pro-rata to all applicants. All calls were

made and were duly received except the 2nd and final call on 1,000 shares held by Ram. His shares were
forfeited and afterwards re-issued at ₹ 8 per share as fully paid up.
Present Share Capital in the Balance Sheet of the company as per Schedule III Part I of the Companies Act,
2013. Also prepare Notes to accounts for the same.
21. A Limited took over the assets of ₹3,00,000 and liabilities of ₹10,000 from B & Co. Ltd., for an agreed purchase [3]
consideration of ₹2,70,000 to be satisfied by issue of 15% debentures of ₹100 at 20% premium. Show the
journal entries in the journal of A Limited.
22. X Ltd. made a profit of Rs.1, 00,000/- after charging depreciation of Rs. 20,000/- on assets and a transfer to [3]
General Reserve of Rs.30,000/-. The Goodwill written off was Rs. 7, 000/- and the gain on sale of machinery
was Rs.3, 000/-. The other information available to you (changes in the value of current assets and current
liabilities) is as follows:
At the end of the year Debtors showed an increase of Rs. 6, 000/-, creditors an increase of Rs.10, 000/-, prepaid
expenses an increase of Rs. 200/-, Bills Receivable a decrease of Rs. 3, 000/-, Bills Payable a decrease of Rs.4,
000/- and outstanding expenses a decrease of Rs. 2, 000/-. Ascertain the cash flow from the operating activities.
23. The profits of a firm for the last five years were: [3]

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 Year → 2011 2012 2013 2014 2015

Profits (Rs.) 45,000 50,000 52,000 65,000 85,000

Calculate the value of goodwill on the basis of two years of purchase of weighted average profits, the weights to
be used are 2011-1, 2012-2, 2013-3, 2014-4 and 2015-5.
Section D
24. A and B are partners in a business sharing profits and losses in the ratio of 3 : 2. Their capitals on 31st March, [4]

2023, after the adjustment of net profits and drawings amounted to ₹ 2,00,000 and ₹ 1,50,000. respectively. Later
on, it was discovered that interest on Capital at 8% per annum, as provided for in the partnership deed, had not
been credited to the partner’s capital accounts before the distribution of profits. The year’s net profit amounted
to ₹ 75,000 and the partners had withdrawn ₹ 24,000 each. Instead of altering the signed balance sheet, it was
decided to make an adjustment entry at the beginning of the new year crediting or debiting the Partner’s
Accounts. Give the necessary journal entry as also a statement of details arriving at the amount of adjusting
entry.
25. Kavya Ltd. forfeited 500 shares of ₹ 10 each for non-payment of first call of ₹ 3 per share. The final call of ₹ 2 [4]
per share is yet to be made. All the forfeited shares were reissued. Pass the necessary Journal entries in the
following cases:
Case 1: If the shares are reissued for ₹ 5 per share.
Case 2: If the shares are reissued for ₹ 9 per share, ₹ 8 called-up.
Case 3: If the shares are reissued for ₹ 8 per share, fully paid-up.
Case 4: If the shares are reissued for ₹ 12 per share, fully called-up.
26. Vinita Ltd. invited applications for issuing 50,000, 9% debenture of ₹ 100 each at a discount of 10% redeemable [4]
at par after 5 years. The debentures were fully subscribed and all money was duly received. The company had a
balance of ₹ 3,00,000 in Securities Premium which it decided to use for writing off the discount/loss on issue of
debentures. It also decided to write off the remaining discount/loss on issue of debentures in the first year.
Pass the Journal entries for issue of debentures and for writing off discount/loss on issue of debentures.
27. The net income of Red Sky Ltd. for the year ended March 31, 2023 was ₹ 4,89,000. Depreciation charged for the [4]
year was ₹ 87,000. Income for the year was arrived at after adjusting for gain on sale of land ₹ 1,05,000, loss on
sale of equipment ₹ 48,000 and writing off cost of equity issue ₹ 25,000.
Other Information:

March 31, 2023 March 31, 2022

₹ ₹

Inventory 1,67,000 1,85,000

Receivables 1,45,000 1,42,000

Prepaid Expenses 8,000 12,000

Cash in Hand and at Bank 32,000 17,000

Payables 1,07,000 95,000

Expenses Outstanding 9,000 13,000

Bank Overdraft 80,000 60,000

Required: Calculate cash from operating activities.

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28. Ram and Dheeraj were partners in an interior designer firm. Their fixed capitals were ₹ 6,00,000 and ₹ 4,00,000 [4]
respectively. There were credit balances in their current accounts ₹ 4,00,000 and ₹ 5,00,000 respectively. The
firm had a balance of ₹ 1,00,000 in the General Reserve. The firm did not have any liability. They admitted
Seema into partnership for 1

4
th share in the profits of the firm. The average profits of the firm for the last five
years were ₹ 5,00,000. Calculate the value of goodwill of the firm by the capitalization of the average profits
method. The normal rate of return of the business is 10%.
Section E
Question No. 29 to 34 are based on the given text. Read the text carefully and answer the questions: [6]
X, Y and Z are partners. Fixed Capitals balance on 1st April 2020: X ₹ 2,00,000; Y ₹ 75,000 and ₹ 3,50,000.
Partnership deed provides:
i. Interest on capital @ 9% p.a. and Interest on drawings 6% p.a.
ii. Salary of 6,000 per month to Y
iii. Profit to be shared as: first 10,000 of profit in the ratio of 5 : 3 : 2; Next 12,000 profit in the ratio of 3 : 2 : 1 and
balance profit (if any) in equal ratio.
X withdrew during the year ₹ 25,000 and Y ₹ 15,000. Z withdrew ₹ 62,500 for his personal use on 1st December 2020.
Firm earned a profit of ₹ 1,70.000 for the year ending 31st March 2021.

29. Total interest on drawings to be shown in Profit and Loss Appropriation Account:

a) 2,450 b) 3,850

c) 3,650 d) 2,650
30. Total Interest on Capital to be shown in Profit and Loss Appropriation Account:

a) 57,250 b) 55,250

c) 56,250 d) 54,250
31. Salary payable to Y:

a) 72,000 b) 70,000

c) 6,000 d) 60,000
32. Profit share of Z will be:

a) 12,400 b) 11,400

c) 18,000 d) 20,000
33. Profit share of X will be:
15,400, 16,400, 17,400, 18,400

a) 16,400 b) 17,400

c) 15,400 d) 18,400
34. Profit share of Y will be:
14,400, 13,400, 12,400, 11,400

a) 12,400 b) 13,400

c) 14,400 d) 11,400

Question No. 35 to 40 are based on the given text. Read the text carefully and answer the questions: [6]

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X, Y and Z running business in partnership since last 8 years. They are sharing profits in the ratio of 2 : 1 : 1. It was
observed in the current year that there was problem in their accounts. It was discovered that the interest on capital and
interest on drawings had been omitted.
On 31st March 2021, the balances in their capital accounts after making adjustments for profits and drawings were ₹
1,60,000; ₹ 1,20,000 and ₹ 80,000 respectively. The profit for the year ended 31st March 2021 was ₹ 40,000.
During the year X and Y each withdrew a total sum of ₹ 24,000 in equal instalments in the beginning of each month
and Z withdrew a total sum of ₹ 48,000 in equal instalments at the end of each month. The interest on drawings was to
be charged @5% p.a. and interest on capital was to be allowed @ 10% p.a.

35. Opening Capital of Z was:

a) 1,34,000 b) 1,20,000

c) 1,18,000 d) 1,64,000
36. Opening Capital of Y was:

a) 1,64,000 b) 1,40,000

c) 1,34,000 d) 1,18,000
37. Opening Capital of X was:

a) 1,66,000 b) 1,50,000

c) 1,64,000 d) 1,60,000
38. At the time of final adjustment, Y's Capital Account will be:

a) Credited with ₹ 3,850 b) Credited with ₹ 900

c) Credited with ₹ 2,950 d) Credited with ₹ 13,400

39. At the time of final adjustment, Z's Capital Account will be:

a) Credited with ₹ 2,950 b) Debited with ₹ 3,850

c) Debited with ₹ 900 d) Credited with ₹ 900

40. At the time of final adjustment, X ’s Capital Account will be:

a) Debited with ₹ 3,850 b) Credited with ₹ 3,850

c) Credited with ₹ 900 d) Credited with ₹ 2,950

41. A, B and C were partners in a firm having capitals of ₹ 1,00,000; ₹ 1,00,000 and ₹ 2,00,000 respectively. [6]
According to the partnership deed the partners were entitled to interest on capital @ 6 % p.a. A being the
working partner was also entitled to a salary of ₹ 5,000 per month. The profits were to be divided as follows:
i. The first ₹ 40,000 in the ratio of 2 : 3 : 5.
ii. Next ₹ 80,000 in the proportion of their capitals.
iii. Remaining profits to be shared equally.

The firm made a profit of ₹ 2,70,000 for the year ended 31st March, 2023 before charging any of the above
items. Prepare the Profit & Loss Appropriation Account and pass necessary journal entry for appropriation of
profits.
42. VLX Ltd. invited applications for issuing 1,00,000 equity shares of ₹ 10 each at par. The amount was payable as [6]
follows:

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 On Application - ₹ 3 per share;
On Allotment - ₹ 4 per share; and
On First and Final Call - ₹ 3 per share.
The issue was over subscribed by three times. Applications for 20% shares were rejected and the money
refunded. Allotment was made to the remaining applicants as follows;

Category No. of Shares Applied No. of Shares Allotted

I 1,60,000 80,000

II 80,000 20,000

Excess money received with applications was adjusted towards sums due on allotment and first and final call.
All calls were made and were duly received except the final call by a shareholder belonging to Category I who
has applied for 320 shares. His shares were forfeited. The forfeited shares were reissued at ₹ 15 per share fully
paid-up.
Pass necessary Journal entries for the above transactions in the book of VLX Ltd. Open calls-in-Arrears and
Calls-in-Advance Account whenever required.
43. Television Ltd. issued 20,000 Equity Shares of ₹ 10 each at a premium of ₹ 5 per share, payable as: [6]
₹ 7 (including premium) on application, ₹ 5 on allotment and the balance after three months of allotment. A
shareholder to whom 200 shares were allotted failed to pay the allotment and call money and his shares were
forfeited. 160 of the forfeited shares were reissued for ₹ 1,600. Give necessary entries in company's Journal,
prepare Ledger Accounts and the Balance Sheet.

44. Calculate Cash Flows from Operating Activities for the year ended 31st March, 2021 from the following [6]

Balance Sheet of Raman Ltd. as at 31st March, 2021:

Balance Sheet of Raman Ltd. as at 31st March, 2021

31.3.2022 31.3.2021
Particulars Note No.
₹ ₹

I - Equity and Liabilities:

1. Shareholder's Funds

(a) Share Capital 7,50,000 7,00,000

(b) Reserves and Surplus 1 1,25,000 55,000

2. Non-Current Liabilities

Long-term Borrowings 1,00,000 62,500

3. Current Liabilities

(a) Short-term Borrowings 2 6,000 5,000

(b) Trade Payables 7,500 41,500

(c) Short-term Provisions 3 9,000 5,500

Total 9,97,500 8,69,500

II - Assets:

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 1. Non-Current Assets

Fixed Assets

(a) Tangible Assets 4 9,30,000 8,05,000

(b) Intangible Assets 5 25,000 15,000

2. Current Assets

(a) Current Investments 4,000 2,500

(b) Inventories 18,500 29,500

(c) Trade Receivables 13,000 11,500

(d) Cash and Cash Equivalents 7,000 6,000

Total 9,97,500 8,69,500

Notes to Accounts:

31.3.2021 31.3.2020
Note No. Particulars
₹ ₹

1 Reserves and Surplus

(Balance in Statement of Profit and Loss) 1,25,000 55,000

2 Short-term Borrowings

Bank Overdraft 6,000 5,000

3 Short-term Provisions

Provision for Tax 9,000 5,500

4 Tangible Assets

Machinery 10,00,000 8,50,000

Accumulated Depreciation (70,000) (45,000)

5 Intangible Assets Patents 25,000 15,000

Additional Information:
Tax paid during the year amounted to ₹ 6,500.
45. Calculate the goodwill of a firm on the basis of two year’s purchase of the weighted average profits of the last [6]
five years. Weights assigned to each year would be: 1, 2, 3, 4 and 5 respectively to the profits ended 31st March
2019, 2020, 2021, 2022 and 2023.
The Profits for these five years were:

Year ended 31st March, 2019 31st March, 2020 31st March, 2021 31st March, 2022 31st March, 2023

Profits (₹) 36,000 1,70,000 1,90,000 2,00,000 3,50,000

Scrutiny of books of accounts revealed the following:

i. An abnormal loss of ₹ 50,000 was incurred during the year ended 31st March, 2019.
ii. An abnormal gain of ₹ 30,000 was earned during the year ended 31st March, 2020.

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 iii. Repairs to Car amounting to ₹ 40,000 was wrongly debited to Vehicles A/c on 1st January, 2022.
Depreciation was charged on Vehicles @ 10% p.a. on Straight Line Method.
iv. Closing Stock as on 31st March 2022 was undervalued by ₹ 50,000.
Section F
46. Read the text carefully and answer the questions: [8]
Elpis Limited applications for 60,000 shares of ₹ 10 each at a premium of 40%, payable as follows:

On Application ₹ 5 (including premium ₹ 1)

On Allotment ₹ 4 (including premium ₹ 1)

On First Call ₹ 3 (including premium ₹ 1)

On Second & Final Call ₹ 2 (including premium ₹ 1)

Applications were received for 96,000 shares out of which 26,000 applications were rejected and pro-rata
allotment was made to remaining applicants.
Shyam to whom 1200 shares were allotted, failed to pay allotment money and his shares were forfeited
immediately after allotment.
Girish, who applied for 2100 shares failed to pay two calls and his shares were forfeited.
Ankit, who was allotted 600 shares did not pay the second call.
(i) How many shares were allotted on Pro-rata basis?

a) 60,000 b) 96,000

c) 80,000 d) 70,000
(ii) What amount is refunded to the applicants, to whom shares were not allotted?

a) 1,10,000 b) 1,30,000

c) 1,20,000 d) 1,40,000
(iii) What is the ratio of pro-rata allotment?

a) 6 : 7 b) 5 : 3

c) 2 : 1 d) 6 : 9
(iv) Shyam applied for how many shares?

a) 1,500 b) 1,200

c) 1,400 d) 1,300
(v) How many shares were allotted to Girish?
i. 1,500
ii. 1,600
iii. 1,700
iv. 1,800

a) Option (i) b) Option (iv)

c) Option (ii) d) Option (iii)

(vi) Excess amount adjusted towards allotment?

a) 60,000 b) 80,000

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 c) 50,000 d) 70,000
(vii) Amount received on Allotment:

a) 1,86,200 b) 1,88,000

c) 2,00,000 d) 1,90,000
(viii) Amount received on Second Call:

a) 1,11,800 b) 1,12,000

c) 1,12,800 d) 1,10,800

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