CBSE Class 12 Accountancy Question Paper 2023

Set – 1 (67/1/1) Solutions

PART A

(Accounting for Partnership Firms and Companies)

1. (i) Hina and Neena are partners in a firm. Neena withdrew ₹ 10,000 per month at the
beginning of each month during the year ended 31st March, 2022. Interest on drawings
was to be charged @ 6% per annum.

Interest on Neena's drawings for the year ended 31st March, 2022 will be: 1

(a) ₹ 3,900 (b) ₹ 325

(c) ₹ 3,600 (d) ₹ 3,300

Ans: (a) ₹ 3,900

OR

(ii) Vibha and Asha are partners in a firm. Asha withdrew ₹ 1,000 at the end of each
quarter during the year ended 31st March, 2022. Interest on drawings will be
calculated for an average period of : 1

(a) 6 months (b) 4 months

(c) 7 months (d) 6 months

Ans: (c) 7 months

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 2. Aman and Chaman are partners in a firm. On 1st July, 2021 Aman advanced a loan
of ₹ 6,00,000 to the firm. There is no partnership deed. On 31st March, 2022, Aman
was entitled to get the following amount as interest on loan : 1

(a) ₹ 36,000 (b) ₹ 18,000

(c) ₹ 9,000 (d) ₹ 27,000

Ans: (d) ₹ 27,000

3. (i) Akshita Ltd. issued fully paid shares of ₹ 5,00,000 in purchase consideration of net
assets of ₹ 4,70,000. The balance of ₹ 30,000 will be ______ to _______ account. 1

(a) debited, Goodwill

(b) debited, Capital Reserve

(c) credited, Capital Reserve

(d) credited, General Reserve

Ans: (c) credited, Capital Reserve

OR

(ii) Maira Ltd. took over assets of ₹ 12,00,000 and liabilities of ₹ 4,00,000 of Subav Ltd.
for an agreed purchase consideration of ₹ 9,00,000. The amount was payable by issue
of
11% debentures of ₹ 100 each at 10% discount. The number of debentures issued will

be: 1

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(a) 9,000 (b) 10,000

(c) 8,000 (d) 11,000

Ans: (b) 10,000

Read the following hypothetical situation and answer questions number 4 and 5 on the
basis of the given information:

Kavita, Savita and Madhu were partners in a firm with capitals of ₹ 6,00,000, ₹
4,00,000 and ₹ 2,00,000 respectively. After providing interest on capital @ 10% p.a.,
the profits are divisible as follows:

Kavita , Savita and Madhu . Kavita personally guaranteed that savita’s share of
profit after interest on capital would not be less than ₹ 1,00,000 in any year.

The profit for the year ending 31st March, 2022 amounted to ₹ 3,00,000 efore
providing interest on capital.

4. Savita’s share of profit is short of the guaranted amount by: 1

(a) ₹ 40,000 (b) ₹ 70,000 (c) ₹

20,000 (d) ₹ 10,000

Ans: (d) ₹ 10,000

5. The total profits of the firm after adjustment of guaranteed amount will be
distributed between the partners as: 1

(a) Kavita ₹ 60,000, Savita ₹ 40,000 and Madhu ₹ 20,000

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 (b) Kavita ₹ 50,000, Savita ₹ 1,00,000 and Madhu ₹ 30,000 (c) Kavita ₹

60,000, Savita ₹ 90,000 and Madhu ₹ 30,000

(d) Kavita ₹ 60,000, Savita ₹ 1,00,000 and Madhu ₹ 20,000

Ans: (b) Kavita ₹ 50,000, Savita ₹ 1,00,000 and Madhu ₹ 30,000

6. (i) A company forfeited 400 shares of ₹ 10 each, ₹ 8 per share called up for non-
payment of first call of ₹ 2 per share. On forfeiture of these shares, ‘Share Capital’
account will be debited with: 1

(a) ₹ 4,000 (b) ₹ 800

(c) ₹ 3,200 (d) ₹ 2,000

Ans: (a) ₹ 4,000

OR

(ii) Xyle Ltd. forfeited 700 shares of ₹ 10 each issued at a premium of 10% for
nonpayment of allotment money of ₹ 5 per share (including premium) and first and
final call of ₹ 3 per share. On forfeiture of these shares, ‘Share Forfeiture Account’ will
be credited with : 1

(a) ₹ 7,000 (b) ₹ 1,400

(c) ₹ 4,900 (d) ₹ 2,100

Ans: (c) ₹ 4,900

7. (i) Rohit Limited issued 2,000, 9% Debentures of ₹ 100 each at ₹ 95 per debenture.
9%

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 Debentures account will be credited by: 1

(a) ₹ 1,90,000 (b) ₹ 1,10,000

(c) ₹ 2,00,000 (d) ₹ 10,000

Ans: (c) ₹ 2,00,000

OR

(ii) Which of the following statements is incorrect? 1

(a) Interest on debentures is a charge and not an appropriation.

(b) Debentures can be issued at discount.

(c) Debentureholders do not have voting rights.

(d) Debentures cannot be converted into shares.

Ans: (d) Debentures cannot be converted into shares.

8. Aman, Aadhar and Avinash were partners and sharing profits in the ratio of 3 : 2 : 1.
Avinash retired from the firm on 1st July, 2022. On the date of Avinash’s retirement,
the
Balance showed debit balance of ₹ 1,20,000 in the Profit and Loss Account. For calculating

the amount payable to Avinash, this balance will be transferred : 1

(a) To the debit side of the capital accounts of Aman and Aadhar in old profit sharing
ratio.

(b) To the debit side of the capital accounts of Aman, Aadhar and Avinash in old profit
sharing ratio.

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 (c) To the credit side of the capital accounts of Aman and Aadhar in new profit sharing
ratio.

(d) To the credit side of the capital accounts of Aman and Aadhar in their gaining ratio.

Ans: (a) To the debit side of the capital accounts of Aman and Aadhar in old profit sharing
ratio.

9. Nidhi, Kunal and Kabir are partners in a firm sharing profits in the ratio of 2 : 1 : 2.
Kunal retired and the balance in his capital account after making necessary
adjustments on account of reserves, revaluation of assets and reassessment of liabilities
was ₹ 80,000. Nidhi and Kabir agreed to pay him ₹ 1,00,000 in full settlement of his
calm. Kunal’s share of goodwill of the firm, on his retirement was : 1

(a) ₹ 4,000 (b) ₹ 20,000

(c) ₹ 16,000 (d) ₹ 1,80,000

Ans: (b) ₹ 20,000

10. Assertion (A) : Goodwill is a intangible asset.

Reason (R) : Goodwill is the value of the reputation of a firm in respect of profits expected
in future, over and above the normal profits. 1

Select the correct answer from the following:

(a) Assertion (A) is correct, but Reason (R) is wrong.

(b) Assertion (A) is wrong, but Reason (R) is correct.

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(c) Both Assertion (A) and Reason (R) are correct.

(d) Both Assertion (A) and Reason (R) are wrong.

Ans: (c) Both Assertion (A) and Reason (R) are correct.

11. ‘A’ and ‘B’ were partners in a firm sharing profits and losses in the ratio of 7:1. ‘A’
withdraw a fixed amount of ₹ 12,000 at the beginning of each quarter. Interest on
drawings is charged @ 6% p.a. The journal entry for charging interest on drawings at
the end of the year will be: 1

(a) Interest on drawings A/c Dr. ₹ 1,800

To A’s Capital A/c ₹ 1,800

(b) Interest on drawings A/c Dr. ₹ 1,800

To A’s Current A/c ₹ 1,800

(c) A’s Capital A/c Dr. ₹ 1,800

To Interest on drawings A/c ₹ 1,800

(d) Profit and Loss Appropriation A/c Dr. ₹ 1,800
To Interest on drawings A/c ₹ 1,800

Ans: (b) Interest on drawings A/c Dr. ₹ 1,800

To A’s Current A/c ₹ 1,800

12. That part of the authorised capital which is actually issued to the public for
subscription is called : 1

(a) Subscribed capital

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(b) Issued capital

(c) Authorised capital

(d) Reserve capital

Ans: (b) Issued capital

13. Zinki Limited forfeited a share of ₹ 100 issued at a premium of 20% for non-
payment of first call of ₹ 30 per share and final call of ₹ 10 per share. The minimum
price at which this share can be reissued is : 1

(a) ₹ 40 (b) ₹ 60

(c) ₹ 20 (d) ₹ 100

Ans: (a) ₹ 40

14. Akshita and Anurag are partners in a firm sharing profits in the ratio of 2 : 1.

Akshat is admitted in the firm with share in profits. Akshat acquires of his share
from Akshita and of his share from Anurag.

The new profit sharing ratio of Akshita, Anurag and Akshat will be : 1

(a) 3 : 2 : 4 (b) 4 : 3 : 2

(c) 2 : 1 : 1 (d) 4 : 2 : 3

Ans: (b) 4 : 3 : 2

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15. Which of the following will be transferred to Realisation Account at the time of
dissolution of firm ? 1

(i) Provision for Doubtful Debts

(ii) Partners Loan

(iii) General Reserve

(iv) Goodwill

(a) (i) and (iv)

(b) (i), (ii) and (iv)

(c) (i), (iii) and (iv)

(d) (i), (ii) and (iii)

Ans: (d) (i), (ii) and (iii)

16. (i) P, Q and R were partners in a firm sharing profits and losses in the ratio of 4 : 3 :
1. P died on 1st September, 2022. On the date of P’s death, the profits of the firm were
calculated as ₹ 80,000. share of profit will be adjusted by : 1

(a) Debiting Profit and Loss Account with ₹ 40,000.

(b) Debiting Profit and Loss Appropriation Account by ₹ 40,000.

(c) Debiting Profit and Loss Suspense Account with ₹ 80,000.

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(d) Debiting Profit and Loss Suspense Account with ₹ 40,000.

Ans: (d) Debiting Profit and Loss Suspense Account with ₹ 40,000.

OR

(ii) Pooja, Nita and Anita were partners in a firm sharing profits and losses in the ratio
of 3 : 2 : 1. Pooja retired and her share is taken up by Nita and Anita equally. The new
profit sharing ratio of Nita and Anita will be : 1

(a) 2 : 1

(b) 7 : 5

(c) 1 : 1

(d) 3 : 2

Ans: (b) 7 : 5

17. Suman, Vivek and Vinod were partners in a firm sharing profits and losses in the
ratio of 5 : 3 : 2. Suman retired on 1st April, 2022. After making all adjustments
relating to revaluation, goodwill and accumulated profits, etc., the capital accounts of
Vivek and Vinod showed credit balances of ₹ 3,60,000 and ₹ 1,40,000 respectively.

It was decided to adjust the capitals of Vivek and Vinod in their new profit sharing
ratio.
Pass necessary journal entries for bringing in or withdrawal of the necessary amounts.
Show your working clearly. 3

Ans: To adjust the capitals of Vivek and Vinod in their new profit-sharing ratio, follow these
steps:

1. Calculate the New Profit Sharing Ratio

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Original ratio: Suman : Vivek : Vinod = 5 : 3 : 2

After Suman’s retirement, the ratio between Vivek and Vinod remains the same, i.e., 3 : 2.

2. Determine the Total Capital and New Ratios

Total capital = ₹3,60,000 (Vivek) + ₹1,40,000 (Vinod) = ₹5,00,000

The total capital should be divided in the new ratio of 3:2.

Total parts of the ratio = 3 + 2 = 5

Each part = Total capital / Total parts = ₹5,00,000 / 5 = ₹1,00,000

Vivek’s new capital = 3 parts × ₹1,00,000 = ₹3,00,000

Vinod’s new capital = 2 parts × ₹1,00,000 = ₹2,00,000

3. Determine the Amount to be Adjusted

Vivek’s current capital = ₹3,60,000

Vinod’s current capital = ₹1,40,000

4. Calculate the Amount to be Adjusted

Vivek needs to reduce his capital to ₹3,00,000

Amount to withdraw: ₹3,60,000 - ₹3,00,000 = ₹60,000

Vinod needs to increase his capital to ₹2,00,000

Amount to bring in: ₹2,00,000 - ₹1,40,000 = ₹60,000

5. Pass the Necessary Journal Entries

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1. For Vivek's Withdrawal:

Bank Account Dr. ₹60,000

To Vivek’s Capital Account ₹60,000

(Being amount withdrawn by Vivek to adjust his capital as per the new ratio)

2. For Vinod’s Contribution:

Vinod’s Capital Account Dr. ₹60,000

To Bank Account ₹60,000

(Being amount brought in by Vinod to adjust his capital as per the new ratio)

These entries ensure that Vivek and Vinod's capitals are adjusted according to their new
profitsharing ratio.

18. Anu, Manu, Tanu and Kanu were partners in a firm sharing profits and losses in
the ratio of 2 : 1 : 2 : 1. They decided to share profits and losses in the ratio of 4 : 2 : 3 :
1 with effect from 1st April, 2022. On this date, goodwill of the firm was valued at ₹
1,20,000 and General Reserve appeared in the books at ₹ 36,000.

Pass necessary journal entries for the above transactions. Show your workings clearly.
3

Ans: To adjust the goodwill and General Reserve according to the new profit-sharing ratio,
follow these steps:

1. Calculate the Old and New Profit-Sharing Ratios Old Ratio:

Anu : Manu : Tanu : Kanu = 2 : 1 : 2 : 1

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New Ratio:

Anu : Manu : Tanu : Kanu = 4 : 2 : 3 : 1

2. Calculate the Goodwill Adjustment

Goodwill of the firm = ₹1,20,000

Old Profit-Sharing Ratio Total Parts:

2+1+2+1=6

New Profit-Sharing Ratio Total Parts:

4 + 2 + 3 + 1 = 10

Goodwill Sharing:

Anu's share in goodwill: 1,20,000 = 48,000

Manu's share in goodwill: ₹1,20,000 = ₹24,000

Tanu's share in goodwill: ₹1,20,000 = ₹36,000

Kanu's share in goodwill:  ₹1,20,000 = ₹12,000\)

Old Profit-Sharing Ratio:

Anu’s share: =

Manu’s share:

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 2 1
Tanu’s share: =
6 3

Kanu’s share:

Goodwill Adjustment:

4 1
Anu: − ₹1,20,000 = ₹48,000 - ₹40,000 = ₹8,000
10 3

2 1
Manu: −  ₹1,20,000 = ₹24,000 - ₹20,000 = ₹4,000
10 6

3 1
Tanu: − ₹1,20,000 = ₹36,000 - ₹40,000 = -₹4,000
10 3

1 1
Kanu: −  ₹1,20,000 = ₹12,000 - ₹20,000 = -₹8,000
10 6
Journal Entries for Goodwill:

1. Goodwill Adjustment Entry:

Anu’s Capital Account Dr. ₹8,000

Manu’s Capital Account Dr. ₹4,000

To Tanu’s Capital Account ₹4,000

To Kanu’s Capital Account ₹8,000

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 (Being adjustment of goodwill according to the new profit-sharing ratio)

3. Calculate the General Reserve Adjustment

General Reserve = ₹36,000

Old Profit-Sharing Ratio Share:

Anu’s share:  ₹36,000 = ₹12,000\)

Manu’s share:  ₹36,000 = ₹6,000\)

Tanu’s share:  ₹36,000 = ₹12,000\)

Kanu’s share: ₹36,000 = ₹6,000\)

New Profit-Sharing Ratio Share:

Anu’s share:  ₹36,000 = ₹14,400\)

Manu’s share:  ₹36,000 = ₹7,200\)

Tanu’s share: ₹36,000 = ₹10,800\)

Kanu’s share:  ₹36,000 = ₹3,600\)

General Reserve Adjustment:

Anu: ₹14,400 - ₹12,000 = ₹2,400

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Manu: ₹7,200 - ₹6,000 = ₹1,200

Tanu: ₹10,800 - ₹12,000 = -₹1,200

Kanu: ₹3,600 - ₹6,000 = -₹2,400

Journal Entries for General Reserve:

2. General Reserve Adjustment Entry:

Anu’s Capital Account Dr. ₹2,400

Manu’s Capital Account Dr. ₹1,200

To Tanu’s Capital Account ₹1,200

To Kanu’s Capital Account ₹2,400

(Being adjustment of General Reserve according to the new profit-sharing ratio)

These entries ensure that goodwill and general reserve are adjusted according to the new
profitsharing ratio.

19. (a) Annex Ltd. issued 1,00,000 shares of ₹ 10 each at a premium of 10% to the
public for subscription. The whole amount was payable on application. Applications
were received for 3,00,000 shares and the board decided to allot shares to all
shareholders on pro-rata basis.

Pass necessary journal entries for the above transactions in the books of Annex Ltd.
3

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 OR

(b) Shovan Limited took over the assets of ₹ 60,00,000 and liabilities of ₹ 10,00,000
from Swami Limited for an agreed purchase consideration of ₹ 45,00,000. The amount
was payable by issuing 10% debentures of ₹ 100 each at 25% premium.

Pass necessary journal entries for the above transactions in the books of Shovan
Limited.

Ans:

(a) Journal Entries for Annex Ltd.

1. For Application Money Received:

Bank Account Dr. ₹30,00,000

To Share Application Account ₹30,00,000

(Being application money received for 3,00,000 shares at ₹10 each)

2. For Allotment of Shares:

Share Application Account Dr. ₹30,00,000

To Share Capital Account ₹10,00,000

To Securities Premium Account ₹3,00,000

To Share Allotment Account ₹17,00,000

(Being the application money transferred to Share Capital, Securities Premium, and Share
Allotment Accounts on pro-rata basis for allotment of 1,00,000 shares)

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3. For Allotment Money Due:

Share Allotment Account Dr. ₹17,00,000

To Share Capital Account ₹10,00,000

To Securities Premium Account ₹3,00,000

To Bank Account ₹4,00,000

(Being the amount due on allotment of shares)

4. For Allotment Money Received:

Bank Account Dr. ₹17,00,000

To Share Allotment Account ₹17,00,000

(Being allotment money received for 1,00,000 shares)

OR

(b) Journal Entries for Shovan Limited

1. For Purchase of Assets and Assumption of Liabilities:

Assets Account Dr. ₹60,00,000

Loss on Transfer of Liabilities Account Dr. ₹10,00,000

To Liabilities Account ₹10,00,000

To Purchase Consideration Account ₹45,00,000

(Being assets and liabilities taken over, and purchase consideration set up)

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2. For Issue of Debentures:

Purchase Consideration Account Dr. ₹45,00,000

To 10% Debentures Account ₹36,00,000

To Securities Premium Account ₹9,00,000

(Being issue of 10% debentures at 25% premium for the purchase consideration)

Calculation for Debentures:

- Debentures issued = ₹45,00,000 / ₹100 = 45,000 debentures

- Face value of debentures = 45,000 × ₹100 = ₹45,00,000 - Premium on

debentures = 25% of ₹45,00,000 = ₹9,00,000

So, total debentures account entry: ₹36,00,000 (face value) and ₹9,00,000 (premium).

20. (a) On 1st April, 2022, the capital of the firm of Ashu and Madhav is ₹ 1,50,000.
The normal rate of return on capital employed is 10%. Average profits of the firm are
₹ 23,500. Calculate goodwill of the firm based on three years purchase of super profits.
3

(b) Rakshit and Malik are partners in a firm sharing profits and losses in the ratio of 4 :
1. On 1st April, 2021, their capitals were ₹ 1,20,000 and ₹ 80,000 respectively. On 1st
December, 2021, they decided that the total capital of the firm should be ₹ 3,00,000 to
be contributed by them in the ratio of 2 : 1.

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According to the partnership deed, interest on capital is allowed to the partners @ 6%
p.a.

Calculate interest on capital to be allowed for the year ending 31st March, 2022. 3

Ans:

(a) Calculation of Goodwill Based on Super Profits

1. Calculate the Capital Employed:

Capital Employed = ₹1,50,000

2. Determine the Normal Rate of Return:

Normal Rate of Return = 10%

3. Calculate the Normal Profit:

Normal Profit = Capital Employed × Normal Rate of Return

Normal Profit = ₹1,50,000 × 10% = ₹15,000

4. Calculate the Super Profit:

Super Profit = Average Profit - Normal Profit

Super Profit = ₹23,500 - ₹15,000 = ₹8,500

5. Calculate the Goodwill Based on Three Years' Purchase of Super Profits:

Goodwill = Super Profit × Number of Years’ Purchase

Goodwill = ₹8,500 × 3 = ₹25,500

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(b) Calculation of Interest on Capital

1. Determine the Total Capital and the Required Capital Contributions:

Total Capital = ₹3,00,000

Rakshit’s Share = ₹3,00,000 = ₹2,00,000

Malik’s Share = ₹3,00,000 = ₹1,00,000

2. Calculate Interest on Capital for the Year:

For Rakshit:

- Capital for the year = ₹1,20,000 (since the total capital is adjusted from 1st December, only
interest for 9 months is calculated on the old capital)

- Interest on Capital = ₹1,20,000 × 6% × = ₹3,600

For Malik:

- Capital for the year = ₹80,000 (similarly, interest for 9 months is calculated on the old
capital)

- Interest on Capital = ₹80,000 × 6% × = ₹2,400

Interest on Capital After Adjustment (for 3 months with new capital):

Rakshit’s Additional Capital:

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 - Additional Capital = ₹2,00,000 - ₹1,20,000 = ₹80,000 - Interest on Additional Capital =

₹80,000 × 6% × = ₹1,200

Malik’s Additional Capital:

- Additional Capital = ₹1,00,000 - ₹80,000 = ₹20,000

- Interest on Additional Capital = ₹20,000 × 6% × = ₹300

3. Total Interest on Capital:

- Rakshit: ₹3,600 (old capital) + ₹1,200 (additional capital) = ₹4,800

- Malik: ₹2,400 (old capital) + ₹300 (additional capital) = ₹2,700

21. Sandesh Ltd. has an authorised capital of ₹ 30,00,000 divided into equity shares of
₹ 10 each. The company invited applications for issuing 70,000 shares. Applications for
69,000 shares were received. All calls were made and duly received except the first and
final call of ₹ 2 per share on 3,000 shares. These shares were forfeited.

(a) Present the ‘Share Capital’ in the Balance Sheet of the company as per Schedule III,
Part I of the Companies Act, 2013.

(b) Also prepare ‘Notes to Accounts’ for the same

4

Ans:

(a) Share Capital in the Balance Sheet

Sandesh Ltd.

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Balance Sheet as at [Date]

Share Capital

- Authorised Share Capital:

Equity Shares of ₹10 each – 3,00,000 shares

₹30,00,000

- Issued, Subscribed and Paid-up Share Capital:

Equity Shares of ₹10 each – 69,000 shares

₹6,90,000

- Less: Calls in Arrears (3,000 shares × ₹2)

₹6,000

- Forfeited Shares:

3,000 shares (₹10 each)

₹30,000

Total Share Capital

₹6,90,000

Less: Calls in Arrears

₹6,000

Add: Forfeited Shares

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₹30,000

Net Share Capital

₹7,14,000

(b) Notes to Accounts

1.Authorized Share Capital: The authorized share capital of the company is ₹30,00,000
divided into 3,00,000 equity shares of ₹10 each.

2.Issued, Subscribed and Paid-up Share Capital: The company issued 70,000 equity
shares, of which applications for 69,000 shares were received. The paid-up share capital is
₹6,90,000, which reflects the number of shares fully paid up.

3.Calls in Arrears: Calls in arrears amounting to ₹6,000 are outstanding on 3,000 shares for
the first and final call of ₹2 per share.

4.Forfeited Shares: 3,000 shares were forfeited due to non-payment of the first and final
call. The total amount of forfeited shares is ₹30,000. This amount is included under the
‘Forfeited Shares’ in the share capital.

5.Total Share Capital: The total share capital as per the balance sheet is ₹7,14,000 after
adjusting for calls in arrears and adding the forfeited shares.

22. Sudhir, Deepak and Naveen were partners in a firm sharing profits and losses in the

ratio of 2 : 2 : 1. On 31st March, 2022 their Balance Sheet was as under : Balance Sheet

of Sudhir, Deepak and Naveen as at 31st March, 2022

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Sudhir died on 30th June, 2022. The partnership deed provided for the following, on
the death of a partner:

(i) Goodwill of the firm was to be valued at 2 years purchase of average profits of the
previous four years which were ₹ 1,80,000.

(ii) Sudhir’s share of profit or loss till the date of death was to be calculated on the
basis of sales. Sales for the year ended 31st March, 2022 amounted to ₹ 4,00,000
and that from 1 st April, 2022 to 30th June, 2022 amounted ₹ 1,50,000. The profit
for the year ended 31st March, 2022 was ₹ 1,00,000.

(iii) Interest on capital was to be provided @ 7% p.a.

4

Prepare Sudhir’s capital account to be rendered to his executors.

Ans: The balance sheet provided shows the financial position of Sudhir, Deepak, and Naveen
as of 31st March 2022. Here's a summary of the key figures:

Liabilities:

- Creditors: ₹50,000

- General Reserve: ₹1,00,000 - Loan: ₹1,20,000 - Capitals:

- Sudhir: ₹1,60,000

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 - Deepak: ₹1,50,000

- Naveen: ₹1,40,000 - Total Liabilities: ₹7,20,000 Assets:

- Land and Building: ₹2,10,000

- Machinery: ₹1,90,000

- Stock: ₹30,000

- Investments: ₹1,70,000

- Advertisement Suspense A/c: ₹1,20,000

- Total Assets: ₹7,20,000

The partners share profits and losses in the ratio of 2:2:1, which influences how profits or
losses are distributed among them. This balance sheet reflects the firm's assets and liabilities,
ensuring that the total liabilities equal the total assets, maintaining the accounting equation.

23. (a) Pass necessary journal entries for the forfeiture and reissue of shares in the
following cases :

(i) BCG Limited forfeited 75 shares of ₹ 10 each issued at a premium of ₹ 4 per share
for non-payment of allotment money of ₹ 8 per share (including premium). The first and
final call of ₹ 4 per share was not made. The forfeited shares were reissued at ₹ 15 per
share fully paid.

(ii) Geetika Limited forfeited 1,200 shares of ₹ 50 each issued at par for non-payment of
final call of ₹ 10 per share. Out of these, 900 shares were reissued at ₹ 45 per share fully
paid-up. 6

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 OR

(b) Pushkar Limited invited applications for 30,000 shares of ₹ 100 each at 20%
premium. The amount per share was payable as under:

On application – ₹ 40 (including ₹ 10 premium)

On allotment – ₹ 30 (including ₹10 premium)

On first call – ₹ 30

On second and final call – Balance

Applications were received for 40,000 shares and pro-rata allotment was made to the
applicants for 35,000 shares, the remaining applications being refused.

Excess application money was adjusted towards sums due on allotment.

Yogesh, who applied for 700 shares, failed to pay the allotment money and his shares
were forfeited immediately after allotment.

First call was made thereafter and all the money due on first call was received. The
second and final call was not made.

Pass necessary journal entries for the above transactions in the books of Pushkar
Limited. 6

Ans:

(a) Journal Entries for Forfeiture and Reissue of Shares

(i) For BCG Limited

1. Forfeiture of Shares:

Share Capital Account Dr. ₹750

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 Securities Premium Account Dr. ₹300

To Share Allotment Account ₹600

To Share First and Final Call Account ₹300

(Being 75 shares forfeited for non-payment of allotment money and first and final call)

Details:

- 75 shares × ₹10 (face value) = ₹750

- 75 shares × ₹4 (premium) = ₹300

- Allotment money due = 75 shares × ₹8 = ₹600

- Call money due = 75 shares × ₹4 = ₹300

2. Reissue of Forfeited Shares:

Bank Account Dr. ₹1,125

To Share Capital Account ₹750

To Securities Premium Account ₹375

(Being 75 forfeited shares reissued at ₹15 per share fully paid)

Details:

- Reissue price = ₹15 per share × 75 shares = ₹1,125

- Share Capital (face value) = ₹750

- Securities Premium (₹15 - ₹10) × 75 = ₹375

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(ii) For Geetika Limited

1. Forfeiture of Shares:

Share Capital Account Dr. ₹60,000

To Share Final Call Account ₹12,000

(Being 1,200 shares forfeited for non-payment of final call of ₹10 per share)

Details:

- Forfeited shares = 1,200 shares × ₹50 (face value) = ₹60,000

- Final call not paid = 1,200 shares × ₹10 = ₹12,000

2. Reissue of Forfeited Shares:

Bank Account Dr. ₹40,500

To Share Capital Account ₹30,000

To Securities Premium Account ₹10,500

(Being 900 forfeited shares reissued at ₹45 per share fully paid)

Details:

- Reissue price = ₹45 per share × 900 shares = ₹40,500

- Share Capital (face value) = ₹30,000

- Securities Premium (₹45 - ₹50) × 900 = ₹10,500

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 OR

(b) 1. For Application Money Received:

Bank Account Dr. ₹16,00,000

To Share Application Account ₹16,00,000

(Being application money received for 40,000 shares at ₹40 per share) 2.

For Pro-rata Allotment and Adjustment of Excess Application Money:

- Pro-rata Allotment for 35,000 shares:

Share Application Account Dr. ₹14,00,000

To Share Capital Account ₹10,00,000

To Securities Premium Account ₹4,00,000

(Being amount transferred to Share Capital and Securities Premium Accounts for 35,000
shares)

- Adjustment of Excess Application Money:

Share Application Account Dr. ₹5,00,000

To Share Allotment Account ₹5,00,000

(Being excess application money adjusted towards allotment money for 5,000 shares)

3. For Allotment Money Due:

Share Allotment Account Dr. ₹10,50,000

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 To Share Capital Account ₹7,50,000
To Securities Premium Account ₹3,00,000

(Being allotment money due for 35,000 shares at ₹30 per share)

4. For Allotment Money Received (After Adjustment of Excess Application Money):

Bank Account Dr. ₹5,00,000

Share Allotment Account Dr. ₹5,50,000

To Share Allotment Account ₹10,50,000

(Being allotment money received including adjustment of excess application money)

5. For Forfeiture of Shares (Yogesh's 700 shares):

Share Capital Account Dr. ₹70,000

Securities Premium Account Dr. ₹7,000

To Share Allotment Account ₹21,000

To Share First Call Account ₹21,000

(Being 700 shares forfeited for non-payment of allotment money)

6. For First Call Money Due:

Share Capital Account Dr. ₹10,50,000

To Share First Call Account ₹10,50,000

(Being first call money due for 35,000 shares at ₹30 per share)

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7. For First Call Money Received:

Bank Account Dr. ₹10,50,000

To Share First Call Account ₹10,50,000

(Being first call money received)

8. No Entry for Second and Final Call (As it was not made):

- No journal entry is required as the second and final call was not made.

These entries cover the entire process from application to the first call and the forfeiture of
shares.

24. (a) Yuv and Veer were partners in a firm sharing profits and losses in the ratio of
3:
1. Their Balance Sheet as on 31st March, 2022 was as under :

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 They decided to admit Yash in the firm on 1st April, 2022 for share in profits on the
following terms :

(i) Yash will bring in proportionate capital and ₹ 4,000 as his share of goodwill
premium in cash.

(ii) Investments were valued at ₹ 68,000.

(iii) Plant and Machinery was to be depreciated by 10%.

Prepare Revaluation Accounts and Partners Capital Accounts. 6

(b) Reyansh, Aayushman and Sabhya were partners in a firm sharing profits and losses
in the ratio of 5 : 3 : 2. Their Balance Sheet as at 31st March, 2022 was as under :

Reyansh retired on the above date and it was agreed that :

(i)
Goodwill of the firm on Reyansh’s retiremennt was valued at ₹ 12,00,000.
(ii)
Aayushman and Sabhya will share future profits in the ratio of 2 : 3.

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 (iii)
An unrecorded creditor of ₹ 40,000 will be taken into account.

(iv)
Debtors of ₹ 30,000 will be written off as bad debts.

(v)
Amount payable to Reyansh was to be transferred to his loan amount.

Pass necessary journal entries for the above transactions in the books of the firm.

6 Ans:

(a) To solve this problem, we will need to prepare the Revaluation Account and Partners'
Capital Accounts based on the information provided. Let's go through the steps:

1. Revaluation Account:

- Investments are revalued to ₹68,000 (from ₹60,000).

- Plant and Machinery is to be depreciated by 10% (original value is ₹60,000, so

depreciation will be ₹6,000).

Revaluation Account:
Particulars Amount (₹) Particulars Amount (₹)

To Plant and Machinery A/c 6,000 By Investments A/c 8,000

To Revaluation Profit 2,000

Total 8,000 Total 8,000

Revaluation Profit of ₹2,000 will be shared among the existing partners Yuv and Veer in
their profit-sharing ratio, which is 3:1.

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2. Partners' Capital Accounts:

- Yash brings in his proportionate capital and ₹4,000 as goodwill.

- Calculate the new capital amounts and the distribution of revaluation profit.

Calculation for Yash's Capital:

The total capital of Yuv and Veer before Yash's admission is ₹1,27,000. Since Yash is to be
admitted for 1/4th share:

- Yash’s Capital = (1/4) of Total Capital

- Total Capital of Yuv and Veer = ₹1,27,000

- Total Capital (including Yash) = = ₹1,69,333.33

Yash's Capital = = ₹42,333.33

Partners’ Capital Accounts:

Particulars Yuv Veer Yash (₹)
(₹) (₹)
To Revaluation A/c 1,500 500

To Cash/Bank A/c 42,333.33

To Goodwill A/c 4,000

By Balance b/d 79,000 48,000

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 By Revaluation Profit 1,500 500

Total 80,500 48,500 46,333.33

Total 80,500 48,500 46,333.33

Notes:

1. Yash's capital is calculated and he brings ₹42,333.33 in cash, plus ₹4,000 as goodwill
premium.

2. The revaluation profit is distributed in the ratio of 3:1 between Yuv and Veer.

This should give you the necessary accounts and their balances post-admission of Yash into
the partnership.

(b) To address the scenario given, we will pass the necessary journal entries in the books of
the firm upon Reyansh's retirement.

1. Entry for Goodwill Adjustment:

- Goodwill is valued at ₹12,00,000.

- It is shared in the old profit-sharing ratio of 5:3:2 between Reyansh, Aayushman, and
Sabhya.

- Goodwill will now be adjusted between Aayushman and Sabhya in the new profit-sharing
ratio of 2:3.

Journal Entry:

Aayushman’s Capital A/c Dr. 3,60,000

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 Sabhya’s Capital A/c Dr. 7,20,000

To Reyansh’s Capital A/c 12,00,000

(Being adjustment of goodwill made among partners)

2. Entry for Bad Debts:

- ₹30,000 of debtors are written off as bad debts.

Journal Entry:

Profit and Loss A/c Dr. 30,000

To Debtors A/c 30,000

(Being bad debts written off)

3. Entry for Unrecorded Creditor:

- An unrecorded creditor of ₹40,000 is to be taken into account.

Journal Entry:

Revaluation A/c Dr. 40,000

To Sundry Creditors A/c 40,000

(Being unrecorded creditor brought into books)

4. Entry for Transfer of Reyansh’s Capital to Loan A/c:

- The amount payable to Reyansh is transferred to his loan account.

Journal Entry:

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 Reyansh’s Capital A/c Dr. (Balancing Figure)

To Reyansh’s Loan A/c (Balancing Figure)

(Being Reyansh’s capital transferred to his loan account)

5. Entry for Revaluation Account (including bad debts and unrecorded creditor):

- The Revaluation Account will include adjustments for the unrecorded creditor and bad
debts.

Journal Entry:

Profit and Loss A/c Dr. (Total Revaluation Loss)

To Revaluation A/c (Total Revaluation Loss)

(Being revaluation loss transferred to partners’ capital accounts)

6. Entry for Revised Capital Balances of Aayushman and Sabhya:

- After the retirement of Reyansh, the remaining partners adjust their capital accounts based
on the new profit-sharing ratio.

Journal Entry:

Aayushman’s Capital A/c Dr. (Amount)

Sabhya’s Capital A/c Dr. (Amount)

To Combined Capital Balances (Amount)

(Being capital balances of continuing partners adjusted)

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This sequence of journal entries covers the necessary adjustments due to Reyansh’s
retirement, including goodwill, bad debts, unrecorded creditors, and the transfer of his capital
to a loan account. The specific amounts for capital adjustments in the final entry will be
calculated based on the revaluation account balance and the new profit-sharing agreement
between Aayushman and Sabhya.

25. Aadish and Shreyansh were partners in a firm sharing profits and losses in the ratio
of 3 : 2. On 31st March, 2022 their Balance Sheet was as follows

The firm was dissolved on 31st March, 2022 on the following terms :

(i) Debtors realised ₹ 17,000 and plant realised 10% more than the book value.

(ii) Aadish promised to pay Mrs. Aadish’s loan and took away stock at ₹ 20,000.

(iii) Shreyansh took away half of the investments at a discount of 10%.

Remaining investments realised ₹ 4,500.

(iv) Creditors were paid off at a discount of 10%.

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(v) Expenses of realisation amounted to ₹ 7,000.

Prepare Realisation Account. 6

Ans: Let's prepare the Realisation Account based on the dissolution terms provided.
Realisation Account
Particulars Amount Particulars Amount
(₹) (₹)

To Sundry Assets By Debtors (Realised) ₹17,000

- Debtors ₹20,000 By Plant (Realised @10% above ₹1,10,000

book value)

- Stock ₹24,000 By Aadish’s Capital (Stock taken ₹20,000

over)

- Investments ₹30,000 By Shreyansh’s Capital (Half ₹13,500

Investments @ 90%)

- Plant ₹1,00,000 By Investments (Remaining ₹4,500

Realised)

To Creditors (Paid @10% ₹81,000

discount)

To Mrs. Aadish’s Loan ₹30,000

(Taken by Aadish)

To Realisation Expenses ₹7,000

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 To Bank (Balancing Figure) ₹72,000

Total ₹3,64,000 Total ₹3,64,000

Explanation:

1. Sundry Assets:

- Debtors are written off at ₹20,000.

- Stock is written off at ₹24,000.

- Investments are written off at ₹30,000.

- Plant is written off at ₹1,00,000.

2. Realised Amount:

- Debtors realised ₹17,000.

- Plant realised 10% more than its book value, i.e., ₹1,10,000.

- Aadish took stock valued at ₹20,000.

- Shreyansh took away half of the investments (₹15,000) at a 10% discount, i.e., ₹13,500.

- Remaining investments realised ₹4,500.

3. Liabilities Paid Off:

- Creditors paid off at a 10% discount, i.e., ₹81,000.

- Mrs. Aadish’s loan is taken by Aadish at ₹30,000.

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 4. Realisation Expenses:

- The expenses amounted to ₹7,000.

5. Balancing Figure:

- The balancing figure of ₹72,000 represents the amount paid to the bank.

This Realisation Account shows how the assets were realised and how liabilities were settled
during the dissolution of the firm. The balance, if any, would then be transferred to the partners'
capital accounts.

26. Pass necessary journal entries for the following transactions relating to the issue of
debentures : 6

(a) Gagan Limited issued ₹ 10,00,000, 9% Debentures of ₹ 100 each at a premium

of 5%, redeemable at par after four years.

(b) KS Limited issued ₹ 10,00,000, 10% Debentures of ₹ 100 each at par,

redeemable at 10% premium after four years.

(c) QR Limited issued ₹ 10,00,000, 9% Debentures of ₹ 100 each at a discount of

10%, redeemable at a premium of 5% after five years.

Ans:

(a) Gagan Limited Issued ₹10,00,000, 9% Debentures of ₹100 Each at a Premium of 5%,
Redeemable at Par After Four Years

1. When Debentures are Issued:

Bank Account Dr ₹10,50,000

To Debentures Application and Allotment Account ₹10,00,000

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 To Securities Premium Account ₹50,000

(Being the issue of ₹10,00,000, 9% Debentures at a premium of 5%)

2. On Application and Allotment of Debentures:

Debentures Application and Allotment Account Dr ₹10,00,000

To Debentures Account ₹10,00,000

(Being the transfer of the amount from Debentures Application and Allotment Account to
Debentures Account)

(b) KS Limited Issued ₹10,00,000, 10% Debentures of ₹100 Each at Par, Redeemable at
10% Premium After Four Years

1. When Debentures are Issued:

Bank Account Dr ₹10,00,000

To Debentures Account ₹10,00,000

(Being the issue of ₹10,00,000, 10% Debentures at par)

2. At Redemption (Premium on Redemption):

Debentures Redemption Account Dr ₹1,00,000

To Bank Account ₹1,00,000

(Being the payment of 10% premium on redemption of debentures)

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(c) QR Limited Issued ₹10,00,000, 9% Debentures of ₹100 Each at a Discount of 10%,
Redeemable at a Premium of 5% After Five Years

1. When Debentures are Issued:

Bank Account Dr ₹9,00,000

Discount on Issue of Debentures Account Dr ₹1,00,000

To Debentures Account ₹10,00,000

(Being the issue of ₹10,00,000, 9% Debentures at a discount of 10% and redeemable at a

premium of 5%)

2. On Redemption (Premium on Redemption):

Debentures Redemption Account Dr ₹50,000

To Bank Account ₹50,000

(Being the payment of 5% premium on redemption of debentures)

In these entries, the Discount on Issue of Debentures Account reflects the discount allowed
on the debentures, and the Securities Premium Account represents the premium received on
issue.

PART B

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 OPTION I

(Analysis of Financial Statements)

27. (i) Which of the following equations is correct : 1

(a) Cost of Revenue from Operations = Revenue from Operations + Gross Profit

(b) Cost of Revenue from Operations = Opening Inventory Net Purchases + Direct
Expenses Closing Inventory

(c) Cost of Revenue from Operations = Opening Inventory + Closing Inventory

(d) Cost of Revenue from Operations = Revenue from Operations Gross Profit

Ans: (b) Cost of Revenue from Operations = Opening Inventory Net Purchases + Direct
Expenses Closing Inventory

OR

(ii) Which of the following is a tool of Analysis of Financial Statements : 1

(i) Cash Flow Statement

(ii) Statement of Profit and Loss

(iii) Notes to Accounts

(iv) Balance Sheet

Choose the correct option :

(a) (i)

(b) (i) and (ii)

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(c) (ii)

(d) (i), (ii) and (iv)

Ans: (d) (i), (ii) and (iv)

28. From the following information, the ‘Proprietor’s funds’ are: 1

Current Assets ₹ 20,00,000

Non-Current Assets ₹ 40,00,000

Long Term Borrowings ₹ 25,00,000

Proprietary Ratio 25%

(a) ₹ 10,00,000 (b) ₹ 14,00,000

(c) ₹ 24,00,000 (d) ₹ 15,00,000

Ans: (d) ₹ 15,00,000

29. (i) ‘Dividend paid’ by a financial enterprise will come under which kind of activity
from the following while preparing cash flow statement : 1

(a) Operating Activity

(b) Investing Activity

(c) Financing Activity

(d) Both (b) and (c)

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 Ans: (c) Financing Activity

OR

(ii) ‘Interest received on investments’ will come under which type of activity from the
following, while preparing cash flow statement of a non-financial enterprise : 1 (a)
Investing Activity

(b) Financing Activity

(c) Operating Activity

(d) Both (b) and (c)

Ans: (a) Investing Activity

30. Which of the following transactions are shown under financing activities while
preparing cash flow statement : 1

(i) Issue of Equity Shares

(ii) Cash Received from Debtors

(iii) Redemption of Debentures (iv) Cash Paid Against Trade Payables

Choose the correct option :

(a) (i)

(b) (i) and (ii)

(c) (i) and (iii)

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 (d) (i), (ii) and (iv)

Ans: (c) (i) and (iii)

31. Classify the following items under major heads and sub-heads (if any) in the
Balance
Sheet of a company as per Schedule III, Part I of the Companies Act, 2013 : 3

(a) Licenses and Franchise

(b) Loans Repayable on Demand

(c) Accrued Income Ans:

(a) Licenses and Franchise

-
Non-Current Assets
-
Intangible Assets

(b) Loans Repayable on Demand

- Current Liabilities

- Borrowings

(c) Accrued Income

- Current Assets

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- Other Current Assets

32. ‘It is a technique which involves regrouping of data by application of arithmetical

relationships’. Identify the technique and state its two advantages. 3

Ans: The technique described is "Ratio Analysis."

Two Advantages of Ratio Analysis:

1.Performance Evaluation: Ratio analysis helps in assessing the financial performance and
stability of a company by comparing various financial metrics. This provides insights into
operational efficiency, profitability, and liquidity.

2.Trend Analysis: It allows for the examination of financial trends over time. By comparing
ratios across different periods, analysts can identify patterns, make forecasts, and make
informed decisions based on historical data.

33. (i) Calculate Gross Profit Ratio from the following information : 4

Inventory Turnover Ratio : 6 times

Average Inventory : ₹ 4,00,000

Goods are sold at a profit of 25% on cost

OR

(ii) The Current Ratio of a company is 2 : 1. State giving reasons, which of the following
transactions would improve, reduce or not change the ratio : 4

(a) Purchased goods on credit ₹ 40,000

(b) Sale of furniture of ₹ 8,000 at a loss of ₹ 2,000

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(c) Cash received from trade receivables ₹ 15,000

(d) Issued equity shares ₹ 6,00,000

Ans:

(i) Calculate Gross Profit Ratio:

1. Find Cost of Goods Sold (COGS):

COGS
Inventory Turnover Ratio =
Average Inventory

Given:

Inventory Turnover Ratio = 6 times

Average Inventory = ₹4,00,000

COGS = Inventory Turnover RatioAverage Inventory

COGS = 6  ₹4,00,000 = ₹24,00,000

2. Calculate Sales:

Goods are sold at a profit of 25% on cost.

Selling Price = COGS + Gross Profit

Gross Profit = 25% of COGS = 0.25 ₹24,00,000 = ₹6,00,000

Selling Price = ₹24,00,000 + ₹6,00,000 = ₹30,00,000

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 3. Calculate Gross Profit Ratio:

Gross Profit
Gross Profit Ratio = 100
Sales

Gross Profit Ratio = 100 = 20%

The Gross Profit Ratio is 20%.

OR

(ii) Effect on Current Ratio:

The Current Ratio is 2:1, meaning current assets are twice the current liabilities. Here's how
each transaction affects this ratio:

(a) Purchased goods on credit ₹40,000:

- Current Ratio: Decrease

- This increases current liabilities (creditors) without affecting current assets, lowering the ratio.

(b) Sale of furniture of ₹8,000 at a loss of ₹2,000:

- Current Ratio: Decrease

- The sale reduces non-current assets and the loss reduces current assets. Net effect is a
reduction in current assets, thus lowering the ratio.

(c) Cash received from trade receivables ₹15,000:

- Current Ratio: No Change

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 - This increases current assets (cash) while decreasing current assets (receivables) by the
same amount, keeping the ratio unchanged.

(d) Issued equity shares ₹6,00,000:

- Current Ratio: Increase

- This increases current assets (cash) without affecting current liabilities, improving the ratio.

34. Read the following hypothetical text and answer the given questions on the basis of
the same.

In 2011, two young Indian entrepreneurs, Vaishali Bhatia and Vivek Bhatia decided to
start an online auto portal. At that time, there were no major players in the market and they
saw an opportunity to fill the gap. They used a user-friendly website and mobile app which
made it easy for users to research and buy cars. It was converted into a company ‘Car Easy
Ltd.’ in 2018

From the following Balance Sheet of the company as on 31st March, 2022, calculate
‘Cash Flows From Operating Activities’.

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Additional Information :

(i) 10% Debentures were issued on 31st March, 2021.

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(ii) Tax of ₹ 80,000 was paid during the year. 6

Ans: To calculate the "Cash Flows from Operating Activities," we need to follow the indirect
method, starting from the net profit before tax and adjusting for non-cash expenses, changes
in working capital, and any tax paid.

Step 1: Net Profit before Taxation

Given the notes, the surplus in the statement of profit and loss decreased from ₹3,60,000 to
₹75,000. However, we need to consider additional adjustments before determining the net
profit.

Step 2: Adjustments for Non-Cash and Non-Operating Items

- Depreciation: The accumulated depreciation increased from ₹69,000 to ₹1,44,000.

Depreciation for the year = ₹1,44,000 - ₹69,000 = ₹75,000

Interest on Debentures: As the 10% Debentures were issued on 31st March 2021, the interest
expense for one year (2021-2022) would be:

Interest on Debentures = 10%₹1,80,000 = ₹18,000

Step 3: Changes in Working Capital

Inventories: Decrease in Inventories from ₹3,87,000 to ₹3,54,000.

Decrease in Inventories = ₹3,87,000 - ₹3,54,000 = ₹33,000

Trade Payables: Decrease in Trade Payables from ₹60,000 to ₹18,000.

Decrease in Trade Payables = ₹60,000 - ₹18,000 = ₹42,000

Short-term Provisions: Decrease in Provision for Tax from ₹2,10,000 to ₹2,04,000.

Decrease in Provision for Tax = ₹2,10,000 - ₹2,04,000 = ₹6,000

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Step 4: Calculate Cash Flow from Operating Activities

Let's now calculate using the formula:

Cash Flow from Operating Activities = Net Profit before Tax + Depreciation + Interest on
Debentures - Increase in Working Capital - Tax Paid

Substituting the values:

1. Net Profit before Tax: ₹3,60,000 - ₹75,000 (Decrease in surplus)

2. Depreciation: ₹75,000

3. Interest on Debentures: ₹18,000

4. Decrease in Working Capital: (₹33,000 + ₹42,000 + ₹6,000 = ₹81,000)

5. Tax Paid: ₹80,000 Now let's calculate:

Cash Flow from Operating Activities = ₹2,85,000 + ₹75,000 + ₹18,000 - ₹81,000 - ₹80,000

Cash Flow from Operating Activities = ₹3,78,000 - ₹1,61,000

Cash Flow from Operating Activities = ₹2,17,000

Therefore, the Cash Flows from Operating Activities for 'Car Easy Ltd.' is ₹2,17,000.

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 PART – B

OPTION II

(Computerised Accounting)

27. (i) The need of codification is for : 1

(a) The generation of mnemonic codes.

(b) To secure accounts, reports, etc.

(c) The encryption of data.

(d) Easy to process data, keeping proper records. Ans: (d) Easy to process data, keeping

proper records.

(ii) Which of the following software packages is suitable for an organisation where the
volume of accounting transactions is very small and adaptability is very high : 1 (a)
Specific

(b) Tailored

(c) Specific and tailored both

(d) Generic

Ans: (d) Generic

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28. The outcome of an arithmetic expression or function is called : 1

(a) Derived Value

(b) Basic Value

(c) Vertical Value

(d) Horizontal Value

Ans: (a) Derived Value

29. When the accumulated data from various sources is processed in one shot, it is
called:

(a) Real-time processing (b)

Batch processing

(c) Data validation

(d) Processing and Revalidation

Ans: (b) Batch processing

30. (i) The name of accounting information sub-system which is linked with other
subsystems for obtaining information about cost and expenses is : 1

(a) Cash and Bank sub-system

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(b) Expense Accounting sub-system

(c) Costing sub-system

(d) Final Accounts sub-system Ans: (c) Costing sub-system OR

(ii) The process of comparing input data with some unknown data is called : 1

(a) Data validation

(b) Data entry

(c) Information data

(d) Storage data

Ans: (a) Data validation

31. Which error occurs when Excel does not recognise ‘text’ in the formula?

State the steps to correct it. 3

Ans: When Excel does not recognise 'text' in a formula, it usually results in a `#NAME?`
error. This error occurs because Excel doesn't understand part of the formula, often due to
misspelled function names, incorrect range references, or missing quotation marks around
text strings.

Steps to Correct the `#NAME?` Error:

1.Check for Spelling Errors: Verify that all function names and cell references are
correctly spelled.

2.Ensure Proper Quotation Marks: Enclose text strings in double quotation marks (`" "`).
For example, use `=IF(A1="Yes", "Approved", "Denied")`.

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3.Verify Function Names: Confirm that all functions used are correct and available in your
version of Excel.

4.Check Named Ranges: Ensure that any named ranges used in the formula are correctly
defined and spelled.

5.Review Add-Ins and Custom Functions: If using custom functions or add-ins, make sure
they are properly installed and available.

6.Update or Install Missing Add-Ins: If a function or feature requires an add-in, ensure it is

installed and enabled.

Following these steps should help resolve the `#NAME?` error and ensure that Excel
correctly recognises and processes your formula.

32. Explain the terms ‘Memo Voucher’, ‘Post-dated Voucher’ and ‘Userdefined
Voucher’. 3

Ans:

1. Memo Voucher

Definition: A Memo Voucher is a type of voucher used to record a transaction or an event

that has not yet been finalized but is noted for future reference. It is primarily used for
internal tracking and documentation purposes.

Purpose: It serves as a preliminary record for transactions or adjustments that are anticipated
but not yet formally completed. It can be used for internal adjustments or to keep a note of
pending transactions that need to be processed later.

Example: Recording a pending expense or a memo about a forthcoming payment.

2. Post-dated Voucher

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Definition: A Post-dated Voucher refers to a voucher that is dated for a future date, rather
than the date it is issued or recorded. It represents a commitment or transaction that will
occur in the future.

Purpose: It allows for the documentation and accounting of transactions that will take place
on a later date. This is useful for planning and scheduling payments or receipts that are
agreed upon but will only be executed in the future.

Example: A cheque that is issued but dated for a future date, or a planned expense voucher
for a future event.

3. User-defined Voucher

Definition: A User-defined Voucher is a custom voucher type created by users to meet

specific accounting or reporting needs that are not covered by standard voucher types
provided by accounting software.

Purpose: It allows for flexibility and customization in accounting systems, enabling users to
define and track unique types of transactions or records that are specific to their business
operations or reporting requirements.

Example: A customized voucher type for tracking special discounts or adjustments not
typically handled by standard voucher types.

33. (a) What is data formatting ? What tools are used to format a given data ? Explain.
4

OR

(b) List eight uses of accounting software. 4

Ans:

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 (a) Data Formatting refers to the process of arranging and structuring data to make it more
readable, consistent, and usable. It involves adjusting the appearance of data to conform to
specific standards or requirements, which can enhance its presentation and analysis.

Tools Used to Format Data:

1. Spreadsheet Software (e.g., Microsoft Excel, Google Sheets):

Features: Allows users to format cells, apply number formats (e.g., currency, percentage),
adjust font styles, and use conditional formatting to highlight specific data points based on
criteria.

2. Word Processing Software (e.g., Microsoft Word):

Features: Provides tools for formatting text, tables, and documents, including font styles,
sizes, paragraph alignment, and table cell formatting.

3. Database Management Systems (e.g., Microsoft Access, MySQL):

Features: Offers options to format data in tables and reports, such as setting field types,
creating queries with formatted outputs, and designing reports with customized layouts.

4. Data Visualization Tools (e.g., Tableau, Power BI):

Features: Allows for the creation of charts, graphs, and dashboards with formatted data to
visualize trends, patterns, and insights effectively.

5. Programming Languages (e.g., Python, R):

Features: Provides libraries and functions for data formatting, including converting data
types, cleaning data, and formatting output for analysis and reporting.

OR

(b) List Eight Uses of Accounting Software.

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1.Bookkeeping: Automates the recording of financial transactions, including sales,
purchases, and expenses.

2.Financial Reporting: Generates financial statements such as balance sheets, income

statements, and cash flow statements.

3.Invoice Management: Creates, sends, and tracks invoices, and manages accounts
receivable.

4.Expense Tracking: Monitors and categorizes business expenses, facilitating budget

management and expense reporting.

5.Payroll Processing: Manages employee payroll, including calculating salaries, taxes, and
deductions, and generating payslips.

6.Tax Calculation and Filing: Calculates taxes due, prepares tax returns, and helps in
compliance with tax regulations.

7.Bank Reconciliation: Reconciles bank statements with the company's financial records to
ensure accuracy and identify discrepancies.

8.Budgeting and Forecasting: Assists in creating budgets and financial forecasts to plan
and control business finances effectively.

34. What is meant by ‘Present value’ of an investment? Explain the financial function
which helps in its calculation. 6

Ans: The Present Value (PV) of an investment refers to the current worth of a sum of money
or cash flow that will be received or paid in the future, discounted back to the present using a
specific discount rate. It represents how much a future amount of money is worth in today's
terms, taking into account the time value of money.

The concept is based on the principle that a dollar received today is worth more than a dollar
received in the future due to its potential earning capacity. Thus, the present value helps in
evaluating the worth of future cash flows or investments.

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 Financial Function for Calculating Present Value

The financial function used to calculate the Present Value is `PV`, which is available in most
financial calculators and spreadsheet software like Microsoft Excel. This function calculates
the present value of an investment or loan based on a fixed interest rate and a series of future
payments or receipts.

In Microsoft Excel:

- Function Syntax: `=PV(rate, nper, pmt, [fv], [type])`

- `rate`: The interest rate for each period.

- `nper`: The total number of payment periods.

- `pmt`: The payment made each period (if any). If no payments are made, use 0.

- `[fv]`: The future value or cash balance you want to attain after the last payment. If omitted,
it defaults to 0.

- `[type]`: The timing of payments (0 for end of the period, 1 for beginning). If omitted, it
defaults to 0.

Example:

If you want to find the present value of receiving ₹10,000 in 5 years with an annual discount rate
of 8%, you would use the formula in Excel as follows:

=PV(8%, 5, 0, 10000)

This will return the present value of ₹10,000 discounted at 8% over 5 years.

Explanation of the Function:

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The `PV` function calculates the amount you need to invest today (present value) to achieve
a desired future value or series of cash flows, considering the specified interest rate and time
period. This helps in financial planning, investment analysis, and valuation decisions.

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