FIRST TERM EXAMINATION

SUBJECT- ACCOUNTANCY
CLASS XII (2025-2026)
TIME 3 HOURS MAX. MARKS 80

GENERAL INSTRUCTIONS:

Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start
writing during this time.)
(i) The Question Paper contains three sections.
(ii) Part A and B is compulsory for all candidates.
(iii) There are internal choices provided in each part.
(Iv) The intended marks for questions or parts of questions are given in the brackets [].
(v) All calculations should be shown clearly.
(vi) All working, including rough work, should be done on the same page as, and adjacent to, the
rest of the answer.

(PART A 46 marks ) Marks

i) Anil and Sunil are partners in a firm. On 1st April 2024, their capital balances show 1
as ₹3,00,000 and ₹2,00,000 respectively. On the same date, firm’s goodwill valued
by Capitalisation of average profit method is determined at ₹3,50,000. Capitalised
value of average profits and average profits are ₹8,50,000 and ₹1,70,000 respectively.
What will be the normal commercial yield on capital invested in such business?
(a) 30%
(b) 10%
(c) 20%
(d) 15%
ii) Akhil, Viren and Sarla are partners in a firm who share profits in [Link] ratio. On the
date of Sarla’s retirement from the firm, the books show the Workmen Compensation
Reserve of ₹ 12,000 Akhil and Viren decide to share profit in equal ratio after Sarla’s retirement. 1
Choose the correct journal for the treatment of Workmen Compensation
Reserve if the continuing partners decide to show Workmen Compensation
Reserve in the reconstituted Balance Sheet.
(a) Debit Workmen Compensation Reserve A/c ₹ 12,000; Credit Akhil’s Capital
A/c ₹4,800; Credit Viren’s Capital A/c ₹ 3,600 and Sarla’s Capital A/c ₹ 3,600
(b) Debit Workmen Compensation Reserve A/c ₹ 3,600 and Credit Sarla’s Capital
A/c ₹ 3,600.
(c) Debit Sarla’s Capital A/c ₹ 3,600; Credit Akhil’s Capital A/c ₹ 1,200 and Credit
Viren’s Capital A/c ₹ 2,400.
(d) Debit Akhil’s Capital A/c ₹ 1,200; Debit Viren’s Capital A/c ₹ 2,400 and Credit
Sarla’s Capital A/c ₹ 3,600.
 iii)Assertion: Himmat singh a partner in a firm with four partners has advanced a loan of ₹50,000 1
to the firm for lst six months of the financial year without any agreement. He claims an interest on
loan of ₹3,000 despite the firm being in loss for the year.

Reasoning: In the absence of any agreement / provision in the partnership deed, provisions of Indian
Partnership Act, 1932 would apply.

a) Both A and R are correct, and R is the correct explanation of A.

b) Both A and R are correct, but R is not the correct explanation of A.
c) A is correct but R is incorrect.
d) A is incorrect but R is correct.
Iv)If 10,000 shares of ₹10 each were forfeited for non-payment of final call money of ₹3 per share and 1
only 7,000 of these shares were re-issued @₹ 11 per share as fully paid up, then what is the minimum
amount that company must collect at the time of re-issue of the remaining 3,000 shares?
a) ₹ 21,000
b) ₹ 9,000
c) ₹ 16,000
d) ₹ 30,000

V) Assertion (A) :- A Company is Registered with an authorised Capital of 5,00,000 Equity Shares of 1
₹10 each of which 2,00,000 Equity shares were issued and subscribed. All the money had been called
up except ₹2 per share which was declared as ‘Reserve Capital’. The Share Capital reflected in
balance sheet as ‘Subscribed and Fully paid up’ will be Zero.

Reason ( R ) :- Reserve Capital can be called up only at the time of winding up of the company.

(a) Both Assertion (A) and Reason (R) are Correct and Reason (R) is the correct explanation of
Assertion (A)
(b) Both Assertion (A) and Reason (R) are Correct, but Reason (R) is not the correct
explanation of Assertion (A)
(c) Assertion (A) is incorrect, but Reason (R) is Correct.
(d) Assertion (A) is correct, but Reason (R) is incorrect
 Vi)R ,S and T were partners sharing profits in the ratio [Link]. R retired and his dues 1
towards the firm including Capital balance, Accumulated profits and losses share,
Revaluation Gain amounted to ₹ 5,80,000. R was being paid ₹ 7,00,000 in full settlement.
For giving that additional amount of ₹ 1,20,000, S was debited for ₹ 40,000. Determine
goodwill of the firm.
a). ₹ 1,20,000
b). ₹80,000
c). ₹2,40,000
d). ₹ 3,60,000
1
OR
Amma , baba and chacha are partners, chacha has been given a guarantee of minimum profit of
₹8,000 by the firm. Firm suffered a loss of ₹5,000 during the year. Capital account of baba will be
________ by₹_________.
a) Credited, ₹6,500.
b) Debited, ₹6,500.
c) Credited, ₹1,500.
d) Debited, ₹1,500.

Vii)A, B, and C are partners in a firm sharing profits and losses in the ratio of 1
[Link]. The partnership agreement provides the following:
Interest on capital: 10% p.a.
C’s Capital: ₹1,00,000
C is entitled to a salary of ₹24,000 p.a.
C has guaranteed that the firm will earn a minimum net profit of ₹2,10,000 (after
all appropriations).
The net profit for the year before appropriations was ₹1,80,000.
You are required to:
(a) Calculate the amount of deficiency to be borne by C under the guarantee. 3
(b) Pass the journal entry for the same.

Rancho Ltd. took over assets worth ₹ 20,00,000 from PK Ltd. by paying 30% through bank draft and 1
balance by issue of shares of ₹ 100 each at a premium of 10%. The entry to be passedby Rancho Ltd
for settlement will be :-

A. PK Ltd. Dr. 20,00,000

To Share Capital A/c 12,72,700
To Securities Premium A/c 1,27,270
To Bank A/c 6,00,000
To Statement of P&L 30
(Being settlement of amount due to
vendors)
B. PK Ltd. Dr. 20,00,000
To Share Capital A/c 12,72,700
To Securities Premium A/c 1,27,270
To Bank A/c 6,00,030
(Being settlement of amount due to
vendors)
 C. PK Ltd. Dr. 20,00,000
To Share Capital A/c 12,72,700
To Securities Premium A/c 1,27,300
To BankA/c 6,00,000
(Being settlement of amount due to
vendors)
D. PK Ltd. Dr. 20,00,000
To Share Capital A/c 12,73,000
To Securities Premium A/c 1,27,300
To Bank A/c 5,99,700
(Being settlement of amount due to
vendors)

A company forfeited 3,000 shares of ₹10 each, on which only ₹5 per share (including ₹1 premium) 1
has been paid. Out of these few shares were re-issued at a discount of ₹1 per share were and ₹6,000
were transferred to Capital Reserve. How many shares were re-issued?
a) 3,000 shares
b) 1,000 shares
c) 2,000 shares
d) 1,500 shares

On the day of dissolution of the firm ‘Roop Brothers’ had partner’s capital amounting to 1
₹1,50,000 , external liabilities ₹35,000, Cash balance ₹8,000 and P&LA/c(Dr.) ₹7,000. If
Realisation expense and loss on Realisation amounted to₹5,000 and ₹25,000 respectively, the
amount realised by sale of assets is:
a) ₹1,64,000
b) ₹1,45,000
c) ₹1,57,000
d) ₹1,50,000

1
2 Anshul, Babita and Chander were partners in a firm running a successful business of car accessories. 3
They had agreed to share profits and losses in the ratio of 1/2 : 1/3 : 1/6 respectively. After running
business successfully and without any disputes for 10 years,Babita decided to retire due to old age and
the Anshul and Chander decided to share future profits and losses in the ratio of 3 : 2. The accountant
passed the following journal entry for Babita share of goodwill and missed some information. Fill in
the missing figures in the following Journal entry and calculate the gaining ratio.
Date Particulars L.F Dr Cr
Anshul’s Capital A/c Dr ----------
Chander’s Capital A/c Dr 21,000
To Babita’s Capital A/c ------------
(Chander’s share of Goodwill
debited to the amounts of continuing
partners in their gaining ratio)

3 P, Q and R were partners with fixed capital of ₹ 40,000, ₹32,000and ₹24,[Link] distributing the 3
profit of ₹48,000 for the year ended 31st March 2022 in their agreed ratio of 3 : 1 : 1it was observed
that:
(1) Interest on capital was provided at 10% p.a. instead of 8% p.a.
(2) Salary of ₹ 12,000 was credited to P instead of Q.
You are required to pass a single journal entry in the beginning of the next year to rectify the above
omissions.
OR
Cheese and Slice are equal partners. Their capitals as on April 01, 2022 were Rs. 50,000 and Rs.
1,00,000 respectively. After the accounts for the financialyear ending March 31, 2023 have been
prepared, it is observed that interest on capital @ 6% per annum and salary to Cheese @ ₹5,000 per
annum, as provided in the partnership deed has notbeen credited to the partners’ capital accounts before
distribution of profits.

You are required to give necessary rectifying entries using P&L adjustment account.
 3

4 Lilly Ltd. forfeited 100 shares of ₹10 each issued at10% premium (₹8 called up ) on which a
shareholder did not pay ₹3 of allotment (including premium) and first call of ₹2. Out of these 60
shares were reissued to Ram as fully paid for ₹8 per share and 20 shares to Suraj as fully paid up
@ ₹12 per share at different intervals of time.

Prepare Share Forfeiture account.

5 Atishyokti Ltd. company was registered with an authorized capital of ₹ 20,00,000 divided into
2,00,000 Equity Shares of ₹ 10 each, payable ₹ 3 on application, ₹ 6 on allotment (including ₹ 1
premium) and balance on call. The company offered 80,000 shares for public subscription. All
the money has been duly called and received except allotment and call money on 5,000 shares
held by
Manish and call money on 4,000 shares held by Alok. Manish’s shares were forfeited and out of these
3,000 shares were re-issued ₹ 9 per share as fully paid up. Show share capital in the books of the
company. Also prepare notes to accounts.

5 Sun and Kiran are partners sharing profits and losses equally. They decided to dissolve their firm. 6
Assets and Liabilities have been transferred to Realisation Account. Pass necessary Journal entries
for the following:
a) All partners are agreed that the process of realisation at the time dissolution will be accomplished
by Sun for which he will be paid ₹10,000 along with the amount of expense which amounted to
2% of total value realised from the Assets on dissolution. Some assets were sold for Cash at a
cumulative Value of ₹12,00,000 and the remaining were taken over by creditors at a valuation of
₹3,00,000.
b) Deferred Advertisement Expenditure A/c appeared in the books at ₹28,000.
c) Out of the Stock of ₹1,20,000; Kiran (a partner) took over 1/3 of the stock at a discount of 25%
and 50% of remaining stock was took over by a Creditor of ₹30,000 in full settlement of his
claim. Balance amount of stock realized at ₹25,000.
d) An outstanding bill for repairs and renewal of₹3,000 was settled through an unrecorded asset
which was valued at ₹10,000. Balance being settled in Cash.
6 6
New Company Ltd. has a nominal capital of Rs. 2,50,000 in shares of Rs. 10. Of these, 4,000 shares were
issued as fully paid in payment of building purchased, 8,000 shares were subscribed by the public and during the
first year Rs. 5 per share were called-up, payable Rs. 2 on application, Rs. 1 on allotment, Rs. 1 on first call and
Rs. 1 on second call. The amounts received in respect of these shares were:
On 6,000 shares Full amount called
On 1,250 shares. ₹ 4 per share
On 500 shares ₹ 3 per share
On 250 shares ₹ 2 per share
The Directors forfeited the 750 shares on which less than Rs. 4 had been paid. The shares were
subsequently reissued at Rs. 3 per share.
Pass journal entries recording the above transactions and prepare the company's Balance
Sheet.

OR

6
'Telecom Ltd. issued 20,000 Equity Shares of Rs. 10 each at a premium of Rs. 5 per share
payable as: Rs. 7 (including premium) on application, Rs. 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 Rs. 1,600.
Give necessary journal entries and the company’s balance sheet.

7 A, B, and C were partners in a firm sharing profits and losses in the ratio of [Link]. Their capital balances on
1st April 2024 were:
A: ₹3,00,000
B: ₹2,40,000
C: ₹2,10,000
On 31st July 2024, C died. The partnership deed provided for:
1. Interest on capital at 10% p.a.
2. A commission of 5% on net profit to B for managing the business after C’s death.
3. C’s share of profit up to the date of death is to be based on average profit of last three years, which were:
2021–22: ₹2,00,000
2022–23: ₹1,50,000
2023–24: ₹2,70,000
Goodwill of the firm is not shown in the books but is to be valued at 3 years’ purchase of the average profit
of the last three years, and C’s share of goodwill is to be adjusted in gaining ratio.
After C’s death, A and B decided to share profits equally. General Reserve appearing in the books as on 1st
April 2024 was ₹90,[Link] of assets and liabilities resulted in
Furniture appreciated by ₹20,000
A debtor of ₹10,000 to be written off as bad
A provision for outstanding expenses ₹5,000 to be created.
You are required to:
Prepare C’s Capital Account showing full working notes and calculate the amount payable to C’s
executors as on the date of death (31st July 2024).
2
PART B - 34 marks
 A, B, and C are partners in a firm sharing profits in the ratio of [Link]. The firm is dissolved on 31st March
2025, and the following transactions took place:
➢ An unrecorded liability of ₹15,000 for a tax penalty is paid by the firm.
8 ➢ B agrees to take over debtors (book value ₹50,000) at ₹48,000, but a debtor of ₹5,000 was earlier
written off and now recovered in full.
➢ C agrees to pay the firm’s loan of ₹20,000 out of his private funds, but later the firm reimbursed
him by cheque.
➢ Realisation expenses of ₹12,000 were initially borne by A, but later the firm agreed to bear 75%
of the expenses.
Pass the necessary journal entries for the above transactions.
8
Mohan and Sohan are partners in a firm, sharing profits and losses in the ratio of 3 : 2.
Their fixed capitals as on 1st April, 2023, were ` 15,00,000 and ` 10,00,000 respectively.
9
Their Partnership Deed provides for the following:
(i) Partners are to be allowed interest on their capitals @ 10% per annum.
(ii) They are to be charged interest on drawings @ 4% per annum.
(iii) Mohan is to get salary of ` 5,000 per month.
(iv) Sohan is to get commission @ 5% of the corrected net profit of the firm before charging
such commission.
(v) Mohan is to get rent of ` 7,500 per month for the use of his premises by the firm.
Mohan withdrew a fixed amount in the beginning of every month on which he was charged
interest of ` 3,250, at the rate mentioned in the deed.
Sohan withdrew a fixed amount at the end of every month on which he was charged interest of
` 2,750, at the rate mentioned in the deed.
On 31st March, 2024, Sohan introduced further capital of ` 5,00,000.
Profit for the year ended 31st March, 2024, before providing for any of the above was `
10,00,000.
You are required to:
(i) Calculate the drawings made by Mohan every month. [1]
(ii) Calculate the drawings made by Sohan every month. [1]
(iii) Pass the Journal entry for capital introduced by Sohan. [1]
(iv) Pass the adjusting entry and closing entry for Sohan’s Commission.[2]
(v) Pass the Journal entry for transfer of credit balance (being profit) of Profit
& Loss Appropriation A/c. [1]
(vi) Prepare the Profit & Loss Appropriation Account of the firm for the year
2023–24. [4]
Or
Arun, Varun and Karan are partners in a firm sharing profits and losses in the ratio of
2 : 2 : 1. Their capitals are ` 10,00,000, ` 15,00,000 and ` 5,00,000 respectively.
After final accounts for the year ended on 31st March, 2024 were prepared, following balances
of Partners’ Current Accounts were determined:
Arun—` 1,40,000; Varun—` 1,60,000 and Karan—` 1,00,000.
Subsequently, following errors were noticed on 1st April, 2024:
(i) Interest on Capital @ 10% p.a. had been allowed to the partners, although there was
no provision for it in the partnership deed.
(ii) Salary of ` 64,000 p.a. to Arun and ` 80,000 p.a. to Varun was not allowed to them,
 despite provision being there in the partnership deed for the same.
(iii) Commission of ` 8,000 per month was not allowed to Karan, despite provision being
there for such commission in the partnership deed.
You are required to prepare Partners’ Current Accounts on 1st April, 2024 after
rectifying the above errors.
(Application) [10]

Royal Ltd. issued 1,00,000 shares of ` 10 each payable as: ` 2 on application, ` 3 on allotment,
10 ` 3 on first call and ` 2 on second and final call.
Applications were received for 1,50,000 shares and shares were allotted on a pro rata basis
to the applicants of 1,20,000 shares. All shareholders paid the allotment money except one
shareholder who was allotted 2,000 shares. These shares were forfeited. The first call was
made after the shares were forfeited. The forfeited shares were reissued @ ` 9 per share as
` 8 paid-up after first call.
The second and final call was not yet made.
You are required to:
(i) Prepare the Cash Book to record the above issue of shares.[3]
(ii) Pass Journal entries in the Journal Proper. [7]

A, B and C were partners sharing P&L in the ratio [Link]. A died on 30th June, 2019. Entry for
11 treatment of goodwill
after his death was passed as follows:-
Date. Particulars 31.03.2020 31.03.2019

B’s Capital A/c Dr. 1,80,000

C’s Capital A/c Dr. 1,20,000

To A’s Capital A/c. 3,00,000

(Entry for goodwill treatment passed at the time of death of

partner
.
A’s profit till date of death was estimated as ` 1,20,000, based on the average profits of past three
years Final
dues payable to A’s executors on the date of death was calculated as ` 8,40,000 out of which `
2,40,000 was paid
immediately by giving him Furniture valued for the same and balance was to be paid in three
equal annual
instalments starting from 30 June, 2020, together with interest rate as specified in Section 37 of
Indian Partnership
Act, 1932.
Pass necessary entry for profit share to be credited to A’s Capital and also prepare A’s executors 6
account till final
Settlement