Commerce

Practice Test 17
Kautilya 2.0
Accountancy
Full Syllabus

Q1 The phrase "Members may come, Members may Q5 As per the SEBI guidelines, the minimum
go but the Company goes on forever" highlights subscription cannot be less than 90% of the:
which of the feature of a company? (A) Issued Capital
(A) Limitied Liability (B) Subscribed Capital
(B) Separate Legal Existence (C) Registered Capital
(C) Common Seal (D) Reserve Capital
(D) Perpetual Succession
Q6 While making cash flow statement, the gain on
Q2 The profits for last three years are given below: sale of fixed assets will be:
1st Year = Rs.12,000 (after charging abnormal (A) Added to operating activities
loss of Rs.2000) (B) Subtracted from operating activities
2nd Year = Rs.9,000 (including abnormal gain of (C) Added to financing activities
Rs.3000) (D) Subtracted from investing activities
3rd Year = Rs.5,000 (a capital expenditure of
Q7 Which of the following formulae is correct?
Rs.8000 was treated as revenue expenditure.)
(A) New Ratio = Old Ratio - Sacrficing Ratio
What will be the amount of goodwill on the
(B) New Ratio = Old Ratio + Gaining Ratio
basis of 3years' purchase of last 3 years
(C) Sacrificing Ratio = Old Ratio - New Ratio
average profit.
(D) All of the above
(A) Rs.30,000 (B) Rs.23,000
(C) Rs.33,000 (D) Rs.40,000 Q8 Which of the following statements is/are
correct?
Q3 1000 shares of Rs.10 each (fully called up) were
forfeited for non-payment of call money of Rs.2 1. Dissolution of Partnership and Reconstitution
per share. Out of these shares, 800 shares were of Partnership are same.
reissued @ Rs.7 per share. 2. Dissolution of Partnership and Dissolution of
What amount will be credited to capital Firm are same.
reserve? 3. Dissolution of Partnership results in
(A) Rs.4000 (B) Rs.5000 Dissolution of Firm.
(C) Rs.5600 (D) Rs.4600 4. Dissolution of Firm results in Dissolution of
Partnership.
Q4 What amount will be debited to Loss on Issue of
Debentures, if the debentures of Rs.100 are (A) Both 1 and 2 (B) Only 1
issued at 3% premium and redeemed at 10% (C) Both 1 and 4 (D) Both 2 and 3
premium.
Q9 XYZ Ltd. tookover the Sundry Assets of
(A) Rs.3 (B) Rs.10
Rs.1,05,000 and Liabilities of Rs.35,000 of A Ltd.
(C) Rs.13 (D) Rs.7

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for a purchase consideration of Rs.90,000. In (A) Inflow of Rs. 5000

this case: (B) Inflow of Rs. 6000
(A) Goodwill will be debited by Rs.20,000 (C) Outflow of Rs. 5000
(B) Goodwill will be debted by Rs.30,000 (D) Outflow of Rs. 6000
(C) Capital Reserve will be credited by
Q14 Which of the following statements is/are
Rs.35,000
correct for "Interest received on Investment"?
(D) Capital Reserve will be credited by
Rs.20,000 1. It is added to operating activities.
2. It is added to investing activities.
Q10 The working capital turnover ratio is 4 times,
3. It is subtracted from financing activities.
Cost of Revenue from Operations is Rs.75,000,
4. It is subtracted from operating activities.
Gross profit ratio is 25% and Current Liabilities
are of Rs.15000, Find Current Assets. (A) Both (1) and (2)
(A) Rs.45000 (B) Rs.38437 (B) Both (1) and (4)
(C) Rs.40000 (D) Rs.33750 (C) Both (2) and (4)
(D) Both (2) and (3)
Q11 The major head of Calls-in advance in the
Balance Sheet of a company as per Schedule Q15 X Ltd. issued 30,000 shares of Rs.10 each,
III, of the Companies Act,2013 is: payable as Rs. 2 on application, Rs.5 on
(A) Other Current Liabilities allotment and Rs.3 on first and final call.
(B) Non-Current Liabilities Applications were received for 50,000 and the
(C) Current Liabilities allotment was made on pro-rata basis. The Mr.
(D) Share Capital X, the holder of 600 shares failed to pay
allotment and call money and Mr. Y the
Q12 A and B are partners in a firm sharing profits in applicant of 500 shares failed to pay allotment
the ratio of 3:2. They admitted C as a partner and call money. Ascertain the amount not
for 1/4th share, who brought capital of received on allotment.
Rs.24,000. The adjusted capitals of A and B (A) Rs.1100 (B) Rs.2200
were 40,000 and 28,000. It was decided to (C) Rs.5500 (D) Rs.3300
adjust the capitals of A and B according to C's
share. Q16 The nature of Discount on Debenture is:
Which of the following statements are correct in (A) Capital Loss
this respect? (B) Revenue Loss
(A) A and B will bring Rs.3200 each. (C) Capital Gain
(B) A will bring Rs. 3200 and B will withdraw (D) Deferred revenue expenditure
Rs.800
Q17 The sub-head of Unpaid Dividend in the
(C) B will bring Rs. 800 and A will withdraw
Balance Sheet of a company as per schedule
Rs.3200
III, of companies Act 2013 is:
(D) B will bring Rs. 3200 and A will withdraw
(A) Other Current Liabilities
Rs.800
(B) Current Liabilities
Q13 What will be the amount of cash inflow or (C) Shareholders' Funds
outflow from all activities from the given details: (D) Non-current Liabilities

Q18 Which of the following will result in cash used in

financing activities?

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(A) Interest paid on loan balance sheet was as below:

(B) Issue of shares
(C) Purchase of shares of another company.
(D) All of these.

Q19 Shiv, Bhola and Mahadev are partners in a firm

sharing profits in the ratio of 5:3:2. Bhola retired,
and his share was taken by Shiv and Mahadev On the above date, it was decided to dissolve
in the ratio of 3:2. What will be the new profit the firm.
sharing ratio of Shiv and Mahadev? (a) A agreed to take some of the sundry assets
(A) 8:17 (B) 5:2 for Rs.9,000 (being 90% of the book value).
(C) 17:8 (D) 3:2 (b) The remaining assets were realised at 150%
of the book value.
Q20 X Ltd. purchased a Machinery cost Rs.90,000
(c) B agreed to pay 25% of the liabilities.
from Hari Ram and paid him by issuing 12%
(d) Expense on realisation amounted to
debentures of Rs.100 each at 10% discount. The
Rs.3,000
number of debentures issued to Hari Ram will
Prepare Realisation A/c, Partner's Capital A/cs,
be:
Partner's Loan A/c and Cash A/c.
(A) 1000 (B) 900
(C) 1100 (D) 9000 Q27 From the details given below, calculate cash
from/used in investing activities.
Q21 State the grounds on which the Court can order
for the dissolution of the firm? Particulars 31/3/2021 31/3/2020
Plant and
Q22 State any two effects of forfeiture of shares? 1,50,000 1,25,000
Machinery

Q23 Give 5 examples of Cash from financing Accumulated

activities.
Q24 Define Capital Reserve and Reserve Capital.
Q25 X and Y are partners in a firm sharing profits
equally. They admitted Z as a partner for 1/4th
share in the profit on 1/4/2022. On that date,
the Workmen Compensation Reserve as per
balance sheet amounted to Rs.30,000.
Pass necessary journal entries if:
1. The workmen compensation claim
amounted to Rs.22,000.
2. The workmen compensation claim
amounted to Rs.30,000.
3. The workmen compensation claim
amounted to Rs.40,000.
Q26 A and B are partners in a firm sharing profits in
the ratio of 3:2. On 31st March 2022, their
Depreciation 30,000 25,000
on P&M
Additional information:
(a) Depreciation charged on P&M during the
year amounted to Rs.40,000.
(b) A piece of machinery costing Rs.50,000 was
sold for Rs.18,000.
Q28 Pass necessary journal entries for the following
transactions:
(a) Issued 1000 @10% debentures of Rs.10 each
at par, redeemable at 10% premium.
(b) Issued 1000 @10% debentures of Rs.10 each
at 5% discount, redeemable at 10% premium.
(c) Issued 1000 @10% debentures of Rs.10 each
at 5% discount, redeemable at par.
(d) Issued 1000 @10% debentures of Rs.10 each
at 5% premium, redeemable at 10% premium.

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Q29 A, B, and C are partners in a firm sharing profits

and losses equally. There capitals as on
1/4/2021 were Rs.5,00,000; Rs.3,00,000 and
Rs.2,00,000 respectively. They were entitled to
receive interest on capital @ 5% per annum, B
was entitled to receive a salary of Rs.5,000 per
month and C was entitled to receive a
commission of Rs.20,000. The net profit during
the year 2021-22 was Rs.1,00,000.
Prepare Profit and Loss Appropriation A/c.
Q30
Show your workings clearly.

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Answer Key
Q1 (D) Q16 (A)

Q2 (C) Q17 (A)

Q3 (A) Q18 (A)

Q4 (B) Q19 (C)

Q5 (A) Q20 (A)

Q6 (B) Q21 -

Q7 (D) Q22 -

Q8 (C) Q23 -

Q9 (A) Q24 -

Q10 (C) Q25 -

Q11 (C) Q26 Profit on Realisation = Rs.31,000

Q12 (C) Q27 Cash used in Investing Activities: Rs.57,000

Q13 (D) Q28 -

Q14 (C) Q29 Capital Reserve = Rs.6,800

Q15 (D) Q30 -

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Hints & Solutions

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Q1 Text Solution: Dissolution of Partnership and Reconstitution

Perpetual Succession means that the life of the
company is not dependent up on the life of the
members, thus the phrase "Members may come,
Members may go but the Company goes on
forever" highlights this feature.
Q2 Text Solution:
of Partnership are same.
Dissolution of Firm results in Dissolution of
Partnership.
Q9 Text Solution:
Net Assets = 1,05,000 - 35,000 = 70,000
Purchase Consideration = 90,000
Goodwill = 90000 - 70000 = 20000
Goodwill will be debited by Rs.20,000

Q10 Text Solution:

Cost of Revenue from Operations = 75000
GP ratio = 25%
Gross Profit = 75000 ×
25
= 25000
100−25

Revenue from Operations = 75000 + 25000 =

1,00,000
Q3 Text Solution: Working Capital Turnover ratio =
Revenue f rom operations
Share forfeiture account to be credited at the W orking C apital

time of forfeiture = Rs.8 per share (the amount ⇒ 4 =

1,00,000

W orking C apital
that has been received)
⇒ W orking C apital = 25, 000
Share forfeiture account to be debited at the Working Capital = Current Assets - Current
time of reissue = Rs.3 per share (face value - Liabilities
reissue price) 25,000 = Current Assets - 15000
Capital Reserve = (8 − 3) × 800 = 4000
Current Assets = Rs.40000
Q4 Text Solution: Q11 Text Solution:
Loss on Issue of debenture account will be The major head of Calls-in advance in the
debited by the amount of premium on Balance Sheet of a company as per Schedule
redemption of shares that is III, of the Companies Act,2013 is Current
100 × 10% = Rs. 10 . Liabilities.
Q5 Text Solution: Q12 Text Solution:
As per the SEBI guidelines, the minimum Total capital of the firm = 24000 × 4 = 96000
subscription cannot be less than 90% of the Capital brought by C = 24000
Issued Capital. Remaining Capital =
Q6 Text Solution: 96000 − 24000 = 72000

Gain on sale of fixed asset is a non-operating A's Capital should be = 72000 ×

3

5
= 43200

income, so it will be added in Operating B's Capital should be = 72000 ×

2
= 28800
5

Activities. So, A will withdraw = Rs.3200 and

Q7 Text Solution: B will bring = Rs.800
All the given formulae are correct. Q13 Text Solution:
Q8 Text Solution: Cacluation of Cash Equivalents
The correct satements are: Opening Closing

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Current Q17 Text Solution:

3000 2000
Investment The sub-head of Unpaid Dividend in the
Cash in Balance Sheet of a company as per schedule
5000 4000 III, of companies Act 2013 is: Other Current
Hand
Cash at Liabilities
10000 6000
Bank Q18 Text Solution:
18000 12000 Interest paid on loan - Cash used in financing
Cash outflow from all activities = 18000 - 12000 activities
= 6000 Q19 Text Solution:
Share of Bhola =
3

10

Shiv took from Bhola =

3 3 9
Q14 Text Solution: 10
×
5
=
50

Mahadev took from Bhola =

3 2 6
Interest received on Investment will be: 10
×
5
=
50

New share of Shiv =

5 9 34
added to investing activities. 10
+
50
=
50

subtracted from operating activities New share of Mahadev =

2 6 16
+ =
10 50 50

Q15 Text Solution: Therefore, the new profit sharing ratio is 34:16 =

Calculation of Calls-in-arrear of Mr. X 17:8

Allotted Applied Q20 Text Solution:

30000 50000 Amount to be paid to Hari Ram = Rs.90,000

1 50000 Face Value of a debenture = Rs.100

30000
Discount on issue on a debenture = 100 x 10% =
600 50000
× 600 = 1000
30000
Rs.10
Money Received on Application =
Issue price per debenture = Rs.(100 - 10) = Rs.90
1000 × 2 = 2000 90,000
No. of debentures issued = = 1000
Application money = 600 × 2 = 1200
90

Surplus = 2000 − 1200 = 800 Q21 Text Solution:

Allotment money due = 600 × 5 = 3000 At the suit of a partner, the court may order a
Money not received on allotment = partnership firm to be dissolved on any of the
3000 − 800 = 2200 following grounds:
Calculation of Calls-in-arrear of Mr. Y (a) when a partner becomes insane;
Applied Allotted (b) when a partner becomes permanently
incapable of performing his duties as a partner;
50000 30000
(c) when a partner is guilty of misconduct which
1 30000

50000
is likely to adversely affect the business of the
500 30000
× 500 = 300
50000 firm;
Money Received on Application = (d) when a partner persistently commits breach
500 × 2 = 1000
of partnership agreement;
Application money = 300 × 2 = 600
(e) when a partner has transferred the whole of
Surplus = 1000 − 600 = 400
his interest in the firm to a third party;
Allotment money due = 300 × 5 = 1500
(f) when the business of the firm cannot be
Money not received on allotment = carried on except at a loss; or
1500 − 400 = 1100
(g) when, on any ground, the court regards
Total money not received on allotment = dissolution to be just and equitable.
Rs.3300
Q22 Text Solution:

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The two effects of forfeiture of shares is given

below:
The defaulting shareholder does not remain a
shareholder of the company any more.
The amount received on the defualting shares
is forfeited and transferred to the Share
Forfeiture A/c.

Q23 Text Solution:

5 examples of Cash from financing activities
are:

1. Issue of Shares
2. Issue of Debentures Q27 Text Solution:
3. Borrowing of Loan
4. Increase in Bank Overdraft
5. Increase in Cash Credit

Q24 Text Solution:

Capital Reserve is the part of profit that is
reserved by the company for a particular
purpose such as to finance long-term projects
or to write off capital expenses..
Reserve capital is the part of uncalled capital,
that is called up only on the event of company's
liquidation is known as Reserve Capital. Q28 Text Solution:
Q25 Text Solution:

Q26 Text Solution:

Q29 Text Solution:

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Q30 Text Solution:

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