Practice Question Paper-11

Part-A
(Accounting for Partnership Firms and Companies)
Q.1 Aand Bare partners. The net divisible proft as per Proft and Loss Appropriation A/c is 2,50,000. The total interest on partner's drawing is
74,000. A's salary is T4,000 per quarter and B's salary is 40,000 per annum. The net profit/loss earned during this year was: (1 mark)
(a) 3,02,000 (b) 1,98,000 (c) 73,06,000 (d) 2,50,000
OR
Mohit, Shobhit and Rohit are partners sharing profits and losses in the ratio 2:1:1.Rohit is guaranteed aprofit of? 14,000. The firm incured
a profit ofR 20,000 during the year. Calculate the amount of deficiency borne by Mohit and Shobhit. (1 mark)
(a) Mohit T6,000 and Shobhit3,000 (b) Mohit 4,000 and Shobhit 2,000
(c) Mohit 2,000 and Shoblhit1,000 (d) None of these
Q.2 Statement-I: Debentures cannot be issued at a premium.
Statement-ll: Acollateral security is a subsidiary security.
(a) Both che statements are true. (b) Both the statements are false.
(c) Statement-I is true, Statement-II is false. (d) Statement-II true, Statement-I is false. (1 mark)
OR
Assertion (A): Debentures can be issued at par, a premium or at a discount.
Reason (R): Debentures cannot be issued at a discount.
(a) (A) is correct, but (R) is wrong. (b) Both (A) and (R) are correct.
(c) (A) is wrong, but (R) is correct. (d) Both (A) and (R) are wrong. (1 mark)
Q.3 Milan, Khilan and Silam were partners sharing profts in the ratio of 2:2:1.They decided to share furure profits in the ratio of 7:5 :3 with
effect from lst April, 2023. After the revaluation of assets and re-assessment of liabilities, Revaluation account showed a loss of 15,000. The
amount to be debited in the capital account of Milan because of loss on revaluation will be: (1 mark)
(a) 15,000 (b) R6,000 (c) 7,000 (d) 5,000
Q.4 Red, Blue and white were partnes in affrm sharing profits in the ratio of 1:2:2. They decided to share future profits in the ratio of 7:5:3
with efect from lst April, 2023. Their Balance sheet as on that date showed abalance ofT22,500 in Deferred Revenue Expendirure Account. The
amount to be debited respectively to the capital accounts of Red, Blue and white for writing off Deferred Revenue Expenditure wil be: (1 mark)
(a) 7,500, 7,500, and 7,500 (b) R4,500, 79,000, and 9,000 (c) T10,500, 7,500, and 4,500 (d) 711,250, Nil and 711,250
Q.5 Assertion (A): It is necessary to revalue assets and liabilities of a firm in case of admission of a partner.
Reason (R): It is because the incoming partner is neither put to an advantage nor to disadvantage due to change in the value of assers and liabilities.
(a) Both (A) and (R) are correct and (R) is the correct reason of (A). (b) Both (A) and (R) are correct bur (R) is not the correct reason of (A).
(c) Only (R) is correct. (d) Both (A) and (R) are wrong. (1 mark)
OR
Assertion (A): Change in the profit sharing ratio of the existing partners amounts to dissolution of the partnership firm.
Reason (R): Change in the profit sharing ratio of the existing partners results in a change in the existing agreement berween the partners
leading to reconstitution of the firm.
(a) (A) is correct, but (R) is wrong. (b) (A) is wrong, but (R) is correct.
(c) Both (A) and (R) are correct. (d) Both (A) and (R) are wrong. (1 mark)
Q.6 Statement-I: The company can buy back its own shares either from the free reserves, securities premium or from the proceeds of any shares or
other specified securities.
Statement-II: In case shares are bought back out of free reserves, the company must transter a sum equal to the nominal value of shares
bought back to Capital Redemption Reserve Account.
(a) Both the statementS are true. (b) Both the statements are false.
(c) Starement-I is true, Statement-II is false. (d) Statement-II is true, Statement-I is false. (1 mark)
OR
Assertion (A): The amount of application money received is transferred to share capital account on the date of receipt of applicaion money.
Reason (R): It is transferred on the date of allotment of shares as it now has formally become part of the share capital.
(a) (A) is correct, but (R) is wrong. (b) Both (A) and (R) are correct.
(c) (A) is wrong, but (R) is correct. (d) Both (A) and (R) are wrong. (1 mark)
Answer the question no. 7-9 on the basis of the following hypothetical case study:
On March 3lst, 2023, the balances in che capital accounts of E, Mand Iafter making adjustnents for profits and drawings were 1,60,000,
?1,20,000 and 80,000 respectively. Subsequently, it was discovered that che interest on capital and drawings had been omitted. The profit for the
year ended 3lst March, 2023 was 40,000. During the year Eand Meach withdrew atotal sum of T24,000 in equal installments in the beginningof
cach month and I withdrew atotal sum of TAB, 000 in equal install1ments at the end of each month. The interest on drawings was to be charged @59%
pa. and interest on capital was to be allowed @10% p.a. The profit sharing ratio among the partners was 2: 1:1.
Q.7 What will the amount of interest on drawings made by the partners? (1 mark)
(a) E and M each K650 and I I,100 (b) E and M each 7,800 and I 13,200
(c) E and M each 1,300 and I 2,200 (d) E and M each i5,600and I 26,400
 Q.8 What will the amount of interest on capitals of partners? (1 mark)
(a) ER16,000;M 12,000and I 8,000 (b) EZ16,400;M 13,400 and I 11,800
(c) ER14,000;M 11,000 and I 7,000 (d) ER18,400;M 14,400 and I 12,800
Q.9 What will be the adjustment entry to rectify the error? (1 mark)
(a) Debit Es Capital A/R 7,700 ;Credit M's apital Alc? 5,900 and Is Capital Alc 1,800
(6) Debit I's Capital AeR 900 and EsCapital AR 3,850 ;Credit M's Capital A/c 2,950
(c) Debit Es Capital A/R 1,925:Credit M's Capital Ale 1,475 and I's Capital Alc 450
(a) Debit EsCapital A/c 3,850 ;Credit M'sCapital A/c 2,950 and I's Capital Alc 900
Q10 assumed
In the absence of any information regarding the acquisition of share in profit of the retiringldeceased partner by the remaining partners,
that they will acquire his/her share:
it is
(1 mark)
(a) Old Profit Sharing Ratio (b) New Profit Sharing Ratio (c) Equal Ratio (d) None of these
OR
Under which of the following situations, there no need to compute the gaining ratio? (1 mark)
(a) When che continuing partners acquire the reriring/deceased partner in the old profit sharing ratio.
(6) When he ratio in which the continuing partnes acquire the share of the retiringldeceased partner is specified.
(c) Both (a) and (b)
(d) When the continuing partners agree on a specified new profit sharing ratio.
QIl A, Band Care partners sharing profits and losses in the ratio of 5:3:2. Crecired and his capital balance after adjustments regarding reserves,
accumulated profits/ losses and gain/loss on revaluation was 2,50,000. C was paid 3,00,000 in full settlement. The amount of goodwill of
the firm is: (1 mark)
(a) 50,000 (b) 3,00,000 (c) 2,50,000 (d)5,50,000
Q12 The retiring/deceased partner is compensated for his share of goodwill by: (1 mark)
(a) allthe continuing partners in their old profit sharing ratio.
(b) the continuing partners who have gained due to acquisition of share of profit from the retiríng/deceased partner in their old profit sharing ratio.
(c) the continuing partners who have gained the share of profit from the retiring/ deceased partner in gaining ratio.
(d) the continuing partner whose gain due to acquisition of share of profit from the retiring/deceases partner is maximum.
Q.13 On dissolution of a firm, partner's loan account is transferred to: (1 mark)
(a) Realisation Account (b) Partner's Capital Account (c) Partner's Current Account (d) Cash/Bank Account
Q.14 A company forfeited 1,000shares of10 each, 7 being called up, for the non-payment of 2on first call. All these shares were reissued at 5
per share. What amount will be debited to share forfeiture account? (1 mark)
(a) 5,000 (b) 2,000 (c) 7,000 (d) 10,000
Q.15 Beta ltd. issued 10,000shares of10 each at 20% premium which was over-subscribed to the extent of 5,000 shares. All money to be paid on
application only and shares were allotted on pro-rata basis. The company will refund (1 mark)
(a) 60,000 (b) 50,000 (c) 40,000 (d) Nil
Q.16 When, sweat equity shares are issued at a discount, the amount of discount is debited to which is in the nature of for
the company. (l mark)
(a) Discount on issue of share Account, Capital loss (b) Discount on issue of share ACcount, Revenue loss
(b) Statement of Profit and Loss Account, Revenue loss (d) None of these
Q.17 Yadu, Madhu and Vidu are partners sharing profits and losses in the ratio of 2:2:1. Their fixed capitals on April 01, 2022 were; Yadu 5,00,000,
Madhu 4,00,000and Vidhu 3,50,000. As per the partnership deed, partners are entitled to interest on capital 5% p.a., and Yadu has to be paid
a salary of R2,000 per month while Vidu would be receiving a commission of*18,000. Net loss of the firm as per profit and loss account for the year
ending March 31, 2023 amounted o 75,000. Prepare proft and loss appropriation account for the year ending March 31, 2023. (3 marks)
Q.18 Mita, Gopal and Farhan were partners sharing profits and losses in the ratio 3 :2:1. On 31st March, 2023 they decide to change the profit
sharing ratio to 5 :3:2. On this date, the Balance Sheet showed deferred advertisement expenditure 30,000and contingency reserve T9,000.
Goodwill was valued at 4,80,000. Pass the necessary journal entries for the above transactions. (3 marks)
Q.19 Asha, Naveen and Shalini were partners in a firm sharing profits in the ratio of 5 :3 : 2. Goodwill appeared in their books at a value of
F80,000 and General Reserve at R40,000, Naveen decided to retire from the firm. On the date of his retirement goodwill of the firm was
valued at 1,20,000. New ratio of Asha and Shalini is 2:3. Record Journal Entries. (3 marks)
OR
Asha, Deepa and Lata are partners in a firm sharing profits in the ratio of 3:2: 1. Deepa retires. After making all adjustments relating to
revaluation, goodwill and accumulated profit etc., the capital accounts of Asha and Lata showed a credit balance of ?1,60,000 and T80,000
respectively. It was decided to adjust the capitals of Asha and Lata in their new profit sharing ratio. You are required to calculate the new capitals
of the partners and record necessary journal entries, if the excess or shortage of capital has to be adjusted by opening current accounts. (3 marks)
Q.20 XLd. invited applications for issuing 1,000, 9% debentures of I00each at adiscount of 6%. Applications for 1,200 debentures were received.
Pro-rata allotment was made to all the applicants, Balance in securities premium account was 3,500. Pass Journal Entries assuming that the whole
amount was payable with applicaions. (3 marks)
OR
ABC Ltd. purchased assets of 4,20,000 and took over liabilicies of 40,000 of XYZ Ltd. at a value of 3,60,000. ABC Ltd. issued 10%
Debentures of 100 each at a discount of 10% in fullsetclement of the purchase consideracion.
Pass journal entries for the above transactions including the entry for writing off Discount on issue of debentures. (3 marks)
 Q.21 Arti, Bharti and Seema are parthers sharing profits in the proportion of 3: 2: 1 and their Balance Sheet as on March 31, 2023 stood as follows:
Liabilities Amount ) Assets Amount )
Bills Payable 12,000
Buildings 21,000
Creditors 14,000 Cash in Hand 12,000
General Reserve 12,000 Bank 13,700
Capitals: Debtors 12,000
Arti 20,000 Bills Receivable 4,300
Bharti 12,000 Stock 1,750
Seema 8,000 40,000 Investment 13,250
78,000 78,000
Bharti dicd on June 12, 2023 and according to the deed of the said parthership.her executors are entitled to be paid as under:
(a) The capital to her credit the time of her death and interest thereon @10% per annum.
(b) Her proportionate share of reserve fund.
(c) Her share of profits for the intervening period will be based on the sales during that period, which were calculated as 1,00,000. The rate
of profit during past three years had been 10% on sales.
(d) Goodwill according to her share of profit to be calculated by taking twice the amount of the average profit of the last three years less 209%.
The profits of the previous years were: 2020-21 F8,200; 2021-22 79,000; 2022-23 79,800.
The investments were sold for 16,200 and her executors were paid out.
Prepare Bharti's capital account and her executors' account. Show your workings clearly. (4 marks)
Q.22 YLrd. has an authorised capital ofIS,00,000 divided into 1,00,000 equity shares of 10 each and 50,000, 9% preference shares of T10 each.
The company invited applications for all the preference shares but only 90,000 equity shares. AIl the preference shares were subscribed, called
and paid while subscriptions were received for only 85,000 equity shares. During the first year Z8 per share were called. Ram holding 1,000
shares and Shyam holding 2,000 shares did not pay first call of 2. Shyam's shares were forfeited after the first call and later on 1,500 of the
forfeited shares were reissued at 6 per share, 8 called up. Present the share capital in the Balance Sheet of the company. Also, show the notes
to account. (4 marks)
Q.23 X and Ywere partners in the profit-sharing ratio of 3: 2. Their balance sheet as at March 31, 2023 was as follows:
Liabilities Amount O Assets Amount )
Creditors 56,000 Plant and Machinery 70,000
General Reserve 14,000 Buildings 98,000
Capital Accounts: Stock 21,000
X 1,19,000 Debtors 42,000
112,000 2,31,000 (H Provision 7.000 35,000
Cash in Hand 77,000
3,01,000 3,01,000
Z was admited for 1/6th share. Z will bring 56,000 as his share of capital, but was not able to bring any amount to compensate the
sacrificing partners. Goodwill of the firm is valued at 84,000. Plant and Machinery were found to be undervalued by 14,000 Building was
to brought up to 1,09,000. All debtors are good. Capitals of Xand Ywill be adjusted on the basis of Z's share and adjustments will be done by
opening necessary current accounts. You are required to prepare revaluation account and partners' capital account. (6 marks)
OR
PQ and Rwere partners in a firm sharing profits in the ratio of 3:2:1 respectively. On March 3lst, 2023, he balance sheet of the firm
stood as follows:
Liabilities Amount ) Assets Amount
Creditors 13,000 Cash 4,700
Bills Payable 590 Debtors 8,000
Capital Accounts: Stock 11,690
P 15,000 Buildings 23,000
10,000 Profit and Loss Account 1,200
R 10,000 35,000
48,590 48,590
Q retired on the above-mentioned date on the following terms:
(i) Buildings to be appreciated by 7,000
(ii) A provision for doubtful debts to be made at 5 % on debtors.
(iii) Goodwill of the firm is valued at? 18,000.
(iv) 2,800 was to be paid to Qimmediately and che balance in his capital account to be transferred to his loan account
carrying interest as per the agreement.
() Remaining partner decided to maintain equal capital balances, by opening current account.
Prepare the Revaluation Account and Partner's Capital Accounts. (6 marks)
Q.24 Bora, Singh and Ibrahim were partners in a firm sharing profits in the ratio of 5:3:1. On 2.3.2023 their firm was dissolved. The assets were
realised and the liabilities were paid off. Given below are the Realisation Account, Partners CapitalAccounts and Bank Account of the firm. The
accountant of the firm left a few amountsunposted. You are required to complete these accounts by posting che correct amounts. (6 marks)
 Dr. Realisation Account Cr.
Particulars Amount Particulars Amount O
To Stock Alc 10,000 By Provision for bad debts A/c 5,000
To Debtors A/c 25,000 By Sundry Creditors Alc 16,600
To Plant and Machinery Alc 40,000 By Bills Payable A/c 3,400
To Bank Alc By Mortgage Loan A/c 15,000
Sundry Creditors 16,000 By Bank Alc (assets realised)
Bills Payable 3,400 Stock 6,700
Mortgage Loan 15.000 34,400 Debtors 12,500
To Plant && Machinery 36.000 55,200
To Bank Alc (Expenses) 620 By
By
1,10,420 1,10,420
Dr, Partners' Capital Accounts Cr.
Particulars Bora ) Singh ) Ibrahim ) Particulars Bora ) Singh ). Ibrahim
By Balance b/d 22,000 18,000 10,000
By General Reserve 2,500 1,500 500
24,500 19,500 10,500 24,500 19,500 10,500
Dr. Bank A/c Ce

Particulars Amt. ) Particulars Amt. )

To Balance b/d 19,500 By
To By Realisation Alc (Outstanding vepain) 400
To Realisation A/c (unrecorded assets realised) By
6,220 By...
80,920 80,920
Q.25 Rose Bond Limited purchased a business for 22,00,000. 4,00,000 were paid immediately through RTGS and the balance purchase
consideration was paid by issue of 6% debentures of T100each at 10% discount. Balance in Securities Premium account is 1,20,000.
() Calculate the number of debentures to be issued to the vendor.
(ii) Calculate the amount of annual fixed obligation associated with debentures.
(ii) Calculate the amount of discount on issue of debentures to be written off against revenue profits of the year.
(iv) Pass Journal entries to record the above transactions. (6 marks)
Q26 Konark Ltd. invited applications for issuing 3,00,000 shares of 10 each. The amount per share was payable as follows: 3 on application, 3 on
allotment and 4 on first and final call. Owing to over subscription, allotment was done as follows: (i) Applicants of 2,40,000 shares were alloted
2,00,000 shares. (ii) Applicants of 1,20,000 shares were allotted 80,000 shares. (ii) Applicants of 40,000shares were alloted 50% shares.
Divij, a shareholder, belonging to group (ii) who had applicd for 6,000 shares, failed to pay allotment and call money. Faisal, another
shareholder, who was alloted 10,000 shares, paid the call money along with allotment. Faisal belonged to group (). Divij's shares were
forfeited afer che first and final call. Half of the forfeited shares were reissued a 10 per share fully paid. Journalise. (6 marks)
OR

Rathi Ltd. invited applications for issuing 1,00,000 shares of 10 each at apremium of ®2 per share. Amount per share was payable as follows:
On Application - 4 (including premium 1); On Allotment -4 (including premium l); On First and Final Call - Balance
Owing to over subscription, allotment was done as follows: (i) Applicants of 80,000 shares were alloted shares in the ratio 4:3. (i1) Applicants
of 50,000 shares were alloted shares in the ratio 5 :4. (ii) No shares were alloted to the applicants of 20,000 shares.
Yatin,who belonged to category (ii)and who had applied for 5,000 shares failed to pay the allotment and call money. His shares were forfeited.
Later, half of Yatin' s forfeired shares were reissucd @18 per share as fully paid up. Journalise. (6 marks)

Part-B
(Analysis of Financial Statements)
Q.27 Shyamsundar Ltd.' is a financing company. Under which activity will the amount of interest paid on a loan setded in the current year be
shown? (1 mark)
(a) Investing activity (b) Financing activity
(c) Both inancing and Operating activities (d) Operating activity
OR
Which of the follovwing is an operating activity? (1 mark)
(a) Interest received in cash from loans and advances (b) Cash payments to acquire securities for dealing or trading purposes
(c) Cash payments to acquire capitalized research and development (d) Cash repayment of amount borrowed
Q.28 Statement-I: Amurual fund company invested 5,00,000 in shares of Prayag Lrd. and received dividend ofT45,000 during the yeat. Dividend
received will be shown as investing activities in theCash Flow Statement.
Statement-I: If the net profits made during the year are ?50,000 and the bills receivables have decreased by T10,000 during che year then che
cash flow from operating activiries will be equal to 40,000.
(a) Both the statements are true. (b) Both the statements are false.
(c) Statement-I is true, Statement-IIis false. (d) Statement-II is true, Statement-I is false. (lmark)
Q.29 From the following, Return on Capital Employed will be: (1 mark)
Particulars Amount )
Net Profit after Tax 1,00,000
10% Long-term Borrowing 5,00,000
Share Capital 1,50,000
Tax rate 50%
(a) 25% (b) 334% (c) 20% (d) 40%
Q.30 'Security Deposits' appear in the Balance Sheet of a company under the head/sub head (1 mark)
(a) Current Investnments (b) Long Term Loans and advances
(c) Short-Term Loans and advances (d) Short-Term Borrowings
OR
Which of the following is not an item under Current Assets? (1 mark)
(a) Cash and Cash Equivalents (b) Capital Advances
(c) Short-term Loans and Advances (d) Inventories
Q31 The Revenue from operations of a firm is R6,00,000. Its inventory turnover ratio is 3 times. It gross profit ratio in 25% calculate its opening
inventory and closing inventory. The opening inventory is 25% of closing inventory. (3 marks)
Q32 Explain the following expenses incurred to earn the income as shown in the Statement of Profit and Loss: (3 marks)
(() Employees benefit expenses (ii) Finance cost (ii) Depreciation and amortisation expenses
Q33 Calculate Current Ratio: Inventory turnover ratio 5 times; Inventory at the end is two times more than the inventory in the beginning; Revenue
from Operations 3,00,000; Gross profit is 25% on cost of revenue from operations; Current liabilitiesZ50,000 and Quick ratio 0.8: 1 (4 marks)
OR
Quick ratio of acompany is 1 :1. State, with reason, whether the following transactions will increase, decrease or not change the ratio: (4 marks)
() Cash collected from debtors (i) Purchase of loose tools 2,000. (ii) Sale of goods on credit 3,000.(iv) Payment of dividend
Q.34 From the following Balance Sheet of Computer India Ltd., prepare cash flow statement.
Particulars Note No. 31.3.2023 ) 31.3.2022 )
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share capital 50,000 40,000
(b) Reserve and surplus 1 3,700 3,000
2. Non-Current Liabilities
Long-term borrowings (10% Debentures) 6,500 6,000
3. Current liabilities
(a) Short-term borrowings (bank overdrafi) 6,800 12,500
(b) Trade payables 11,000 12,000
(c) Short-term provisions (provision for tax) 10,000 8,000
Total 88,000 81,500
II. ASSETS
1. Non-current assets
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and Equipment 2 25,000 30,000
2. Current assets
(a) Inventories 35,000 30,000
(b) Trade receivables 24,000 20,000
(c) Cash and cash equivalents 3,500 1,200
(d) Short-term loans and advances 500 300
Total 88,000 81,500
Notes to Accounts:
Particulars 31,3.2023 ) 31.3.2022 ()
1. Reserve and surplus:
Statement of Profit and Loss 1,300 1,000
General reserve 2,400 2,000
3,700 3,000
2. Property, Plant and Equipment:
Machinery 40,000 41,000
Less: AcCumulated Depreciation (15,000) (11,000)
25,000 30,000
Additional Information: Additional 10% debentures were issued on 31.3.2023. Proposed dividend for the year 2021-22 and 2022-23 were
2,500 and 3,000 respectively. (6 marks)