CBSE Sample Papers for Class 12 Accountancy Set 5 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 12 Accountancy with Solutions Set 5 are designed as per the revised syllabus.

CBSE Sample Papers for Class 12 Accountancy Set 5 with Solutions

Time : 3 Hr.
Max. Marks : 80

General Instructions:

This question paper contains 34 questions. All questions are compulsory.
This question paper is divided into two parts, Part A and B.
Part – A is compulsory for all candidates.
Part – B has two options i.e.
- Analysis of Financial Statements and
- Computerised Accounting. Students must attempt only one of the given options.
Question 1 to 16 and 27 to 30 carries 1 mark each.
Question 17 to 20, 31 and 32 carries 3 marks each.
Question from 21, 22 and 33 carries 4 marks each.
Question from 23 to 26 and 34 carries 6 marks each. .
There is no overall choice. However, an internal choice has been provided in 7 questions of one mark, 2 questions of three marks, 1 question of four marks and 2 questions of six marks.

PART – A (60 Marks)
(Accounting For Partnership Firms & Companies)

Question 1.
Sia and Ram are partners in a firm sharing profits and losses in their capital ratios. Their capitals are ₹ 2,00,000 and ₹ 3,00,000. They admitted Laxman as a new partner for \(\frac { 1 }{ 5 }\) th share which he acquired wholly from Sia. The new profit sharing ratio of Sia, Ram and Laxman will be:
(a) 2 : 1 : 2
(b) 1 : 3 : 1
(c) 4 : 1 : 1
(d) 1 : 5 : 4 (1)
Answer:
(b) 1 : 3 : 1

Explanation: The old profit sharing ratio of Sia and Ram is in capital ratio i.e. 2:3.
Laxman acquired whole ratio from Sia. So New profit sharing ratio:
Sia’s new share = \(\frac { 2 }{ 5 }\) – \(\frac { 1 }{ 5 }\) = \(\frac { 1 }{ 5 }\)
Ram’s new share = \(\frac { 3 }{ 5 }\)
Laxman’s share = \(\frac { 1 }{ 5 }\)
New profit sharing ratio = 1 : 3 : 1

Question 2.
In a firm, a partner Sam earns annual profit of ₹ 2,00,000. The normal rate of return is 10%. The assets and liabilities of the firm are ₹13,20,000 and ₹ 5,00,000 respectively. The goodwill of the firm is:
(a) 11,80,000
(b) 12,00,000
(c) 10,80,000
(d) 9,20,000 (1)
Answer:
(a) 11,80,000

Explanation:

= ₹ 2,00,000 x \(\frac { 100 }{ 10 }\)
= ₹ 20,00,000
Capital Employed = Total assets – Liabilities
= ₹ 13,20,000 – 5,00,000 = ₹ 8,20,000
Goodwill = Capitalised value – Capital Employed
= ₹ 20,00,000 – ₹ 8,20,000 = ₹ 11,80,000

Question 3.
Sequence of issue of shares in public
(a) Receive application money, Issue prospectus, Make allotments, Make calls
(b) Make calls, Make allotments, Receive application money, Issue prospectus
(c) Issue prospectus, Receive application money, Make allotments, Make calls
(d) Receive application money, Make allotments, Issue prospectus, Make calls

ABC Ltd. issued 3000,10% debentures of ₹ 100 each and the whole amount was received at the time of application. For the received application, the journal entry will be passed:

Answer:
(c) Issue prospectus, Receive application money, Make allotments, Make calls

Explanation: The proper sequence of public issue of shares:

Step 1: Issue Prospectus
In the first step, the company issue prospectus to the public. The prospectus is a call for participation to the general public to subscribe shares of the company. A prospectus contains all the knowledge of the corporate, its financial structure, previous year balance sheets, and profit and loss statements, etc. It also states the way during which the capital collected is going to be spent. When inviting deposits from the general public at large a company must issue a prospectus or a document rather than a prospectus.

Step 2: Receive Application Money
When the prospectus is issued, prospective investors can now apply for shares. They must fill out an application and deposit the requisite application money within the scheduled bank mentioned within the prospectus.

Step 3: Make Allotments Once the minimum subscription has been reached, the shares are often alLotted. Letters of Allotment are sent to those that are allotted their shares. This leads to a legitimate contract between the corporate and therefore the applicant, who will now be a part-owner of the company. After the allotment, the company can collect the share capital because it wishes, in one go or installments.

Step 4: Make Calls
Calls are the amount that remains left. The company called that remaining amount in form of calls. It’s up to the company that it may demand a whole amount of share from a shareholder in one installment or different installments. Each installment is known as the first call, second call, etc.

Explanation: When full amount of debentures received on application itself then the entry has been passed from Debenture application and allotment account. In other words, Debenture application and allotment account will be opened.

Question 4.
If a fixed amount is withdrawn on 15th of every month, for what period the interest on total amount withdrawn will be calculated?
(a) 5 months
(b) 6 months
(c) 6.5 months
(d) 7.5 months

At the time of admission, if the book value and the market value of investment is same Investment Fluctuation Reserve is transferred to …………… account of the old partners in their …………..ratio.
(a) Capitals, Old
(b) Current, New
(c) Capital, New
(d) None of these (1)
Answer:
(b) 6 months

Explanation: If the amount is withdrawn in the middle of the month, then interest on drawing will be calculated by taking 6 months consideration.

(a) Capitals, Old

Explanation: If the value of book value and market value of investment is same, in that case Investment Fluctuation Reserve distributed among old partners in their capital accounts in old ratio.

Question 5.
Bishwas is a partner in a partnership firm. As per the partnership deed, interest on drawings is charged at 12% p.a. During the year ended 31st December 2022 he drew as follows:

Date	Amount (₹)
March 1	6,000
June 1	4,000
September 1	5,000
December 1	2,000

(a) 1,200
(b) 1,100
(c) 1,000
(d) 1,500 (1)
Answer:
(b) 1,100

Explanation: Calculation of interest on drawing under product method

Date of drawings	Amount withdrawn	Period up to December 31	Product
March 1	6,000	10	60,000
June 1	4,000	7	28,000
September 1	5,000	4	20,000
December 1	2,000	1	2,000

Interest on drawing = Sum of product x Rate ofinterest x \(\frac { 1 }{ 12 }\)
= ₹ 1,10,000 x \(\frac { 12 }{ 100 }\) x \(\frac { 1 }{ 12 }\) = ₹ 1,100

Question 6.
A part of capital which is called up by company at the period of closing of company is:
(a) Authorized capital
(b) Issued capital
(c) Reserve capital
(d) Uncalled capital

ABC Ltd. purchased machinery from XYZ Ltd. of ₹ 4,50,000. ABC Ltd. issued 18% debentures of 100 each at discount of 20%. The number of debentures issued of:
(a) 5625
(b) 6000
(c) 4500
(d) None of these (1)
Answer:
(c) Reserve capital

Explanation: The amount which remains uncalled by company for their liquidation time is known as reserve capital. It is only available for creditors.

(a) 5625

Explanation: Value of assets = ₹ 4,50,000
Value of each debentures = ₹ 100
Discount on issue = 20%
Issue Price = 100 – (20% of 100) = ₹ 80
Number of debentures = Value of assets purchased / Issue Price
= ₹ 4,50,000/80 = 5625

Question 7.
Which of the following is not considered under or not included Income and Expenditure account:
(a) Opening Balance of cash
(b) Adjustments
(c) Outstanding salary
(d) Audit Fees (1)
Answer:
(a) Opening Balance of cash

Explanation: Opening balance of cash is the part of Receipt and Payment Account.

Question 8.
P, Q, R and S are partners in a firm sharing profits and losses in 3 : 2 : 3 : 2 ratio. At the time of retirement of R, goodwill valued at ₹ 2,00,000. R’s share will be given by continuing partners. New profit sharing ratio of P, Q and S will be 3 : 1 : 6. The amount debited by D’s capital account:
(a) 60,000
(b) 10,000
(c) 50,000
(d) 80,000

On 1st January 2021, Sumit advanced a loan of ₹ 1,00,000 to the firm. In the absence of agreement, interest on loan on 31st March 2021:
(a) Nil
(b) 1500
(c) 2000
(d) 3000 (1)
Answer:
(d) ₹ 80,000
Explanation:
Journal

Gain/Sacrifice:
Gaining Ratio = New ratio – Old ratio
P = \(\frac { 3 }{ 10 }\) – \(\frac { 3 }{ 10 }\) = Nil (no gain, no sacrifice)
Q = \(\frac { 1 }{ 10 }\) – \(\frac { 2 }{ 10 }\) = – 1/10 (Sacrifice)
S = \(\frac { 2 }{ 10 }\) – \(\frac { 2 }{ 10 }\) = 4/10 (Gain)

(b) 1500

Explanation: Interest on loan is allowed only 6%p.a. if partnership is silent regarding interest.

Interest is calculated from 1st Jan to 31st March i.e. 3 months.
Interest on Loan = ₹ 1,00,000 x \(\frac { 6 }{ 100 }\) x \(\frac { 3 }{ 12 }\)
= ₹ 1500.

Question 9.
Assertion (A): Interest on Partner’s capital may be shown in Profit and Loss Account.
Reason (R): If Partners treat interest on capital as a charge.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false (1)
Answer:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)

Explanation: Interest on partner’s capital is appropriation of profit in normal circumstances but if it is mentioned in the deed that it is treated as charge against profit, in that case it is recorded in Profit and Loss Account.

Question 10.
Shyam and Karan are partners in a firm sharing profits and losses in the ratio of 3:2. On 1st April, 2021 they decided to admit C their new ratio is decided to be equal. Pass the necessary journal entry to distribute Investment Fluctuation Reserve of ₹ 60,000 at the time of C’s admission, when Investment appear in the books at ₹ 2,10,000 and its market value is ₹ 1,90,000. (1)
Answer:

Question 11.
Which of the following is not taken at the debit side of Deceased partner’s capital account:
(a) Accumulated Losses
(b) Goodwill A/c
(c) Interest on capital
(d) None of these

600 shares of ₹ 10 each were forfeited for non-payment of ₹ 2 per share on first call and ₹ 5 per share on final call. Share Forfeiture Account will be credited with:
(a) ₹ 4200
(b) ₹ 3200
(c) ₹ 1200
(d) ₹ 1800 (1)
Answer:
(c) Interest on capital

Explanation: Interest on capital is the income of partners so it is taken at the credit side of partner’s capital account.

(d) 1800

Explanation: Application amount i.e. 600 shares x ₹ 3 per share = ₹ 1800 transferred to share forfeiture account.

Read the following paragraph and answer the following Question:
Any changes in the relations of partnership will result in the reconstitution of the partnership firm. All the reserves and surplus will be distributed among the partners into existing profit-sharing ratio. When it is decided by the partners to make changes in the existing ratio, a separate account is opened, which is known as profit and loss adjustment or revolution account to make the revaluation of assets and reassessment of liabilities With a motive to calculate actual economic benefits.

Question 12.
Any change in the relationship of existing partners which results in an end of the existing agreement and enforces making of new agreement is called:
(a) Revaluation of partnership
(b) Reconstitution of partnership
(c) Realization of partnership
(d) None of the above (1)
Answer:
(b) Reconstitution of partnership

Explanation: Reconstitution of partnership means any change in the relationship of existing partners which results in an end of the existing agreement and enforces making of new agreement or new agreement came into existence.

Question 13.
In case of change in profit-sharing ratio, the accumulated profits are distributed to the partners in:
(a) New ratio
(b) Old ratio
(c) Sacrificing ratio
(d) Equal ratio (1)
Answer:
(b) old ratio

Exptanation: Accumulated profits/Losses and Reserves are shared by partners in their old ratio during the reconstitution of partnership. Old Profit Sharing Ratio of P and K = 3 : 2

Question 14.
A and R are partners sharing profits in the ratio of 5 : 3. G was admitted for \(\frac { 1 }{ 5 }\) share and was asked to contribute proportionate capital and ₹ 4000 for premium. The Capital of A and R, after all adjustments relating to revaluation, goodwill etc.worked out to ₹ 45,000 and ₹ 35000 respectively. The capital brought in by G would be:
(a) ₹ 16000
(b) ₹ 20,000
(c) ₹ 16800
(d) ₹ 80,000 (1)
Answer:
(b) ₹ 20,000
Explanation:
Remaining profit share of A and R = 1 – \(\frac { 1 }{ 15 }\) = \(\frac { 4 }{ 5 }\)
Total capital of A and R = ₹ 45,000 + ₹ 35000
= ₹ 80,000
New capital of the firm
= ₹ 80,000 x \(\frac { 5 }{ 4 }\)
= ₹ 1,00,000
G’s Capital = ₹ 1,00,000 x \(\frac { 1 }{ 5 }\) = ₹ 20,000

Question 15.
Hindustan Ltd. issued 10,000 equity shares of 100 each payable as follows: ₹ 20 on application, ₹ 30 on allotment, ₹ 20 on first call and ₹ 30 on second and final call. 10,000 shares were applied for and allotted. All money due was received with the exception of both calls on 300 shares held by Sia. These shares were forfeited. The company does not maintain call-in-arrears account. Pass Journal entries. (1)
Answer:
(a) Journal

Question 16.
Arrange the sequence of payment in the case of dissolution of partnership firm:
A. To each partner due to him/her from the firm for advances other than capital
B. To each partner’s due capital
C. To the external liabilities
(a) ABC
(b) BCA
(c) CAB
(d) CBA (1)
Answer:
(c) CAB

Explanation: Firstly after realization of assets, the amount used for payment to external or third party. Then advances given by partner to the firm paid and then with the remaining amount partners capital paid.

Question 17.
Aashi and Ashish are partners with the capital of Rs. 80,000 and Rs. 60,000, respectively, and sharing profits and losses equally. They admit Amit as a partner on 1st April 2019 for 1/4th share in profits of the firm. Amit brings a cheque for Rs.80,000 as his capital and no amount for his share of goodwill. Calculate the amount of hidden goodwill and necessary journal entry. (3)
Answer:
(a) Journal

Calculation of Hidden Goodwill
Amit’s capital for \(\frac { 1 }{ 4 }\) th share = Rs.80.000
Total capital of the new firm on the basis of Amit’s Capital= 80,000 x \(\frac { 4 }{ 1 }\) = 3,20,000
Less: Actual total capital of Aashi, Ashish and Amit (80,000 + 60,000 + 80,000) 2,20,000
Hidden Goodwill of the firm 1,00,000
Amit’s share in the hidden goodwill = 1,00,000 x \(\frac { 1 }{ 4 }\) = 25,000.

Question 18.
A, B, and C were partners. Their capitals were ₹ 30,000, ₹ 20,000, and ₹ 10,000 respectively. According to the partnership deed, they were entitled to interest on capital @ 5% p.a. In addition, B was also entitled to draw a salary of ₹ 500 per month. C was entitled to a commission of 5% on the profits after charging the interest on capital, but before charging the salary payable to B, The net profits for the year were ₹ 30,000, distributed in the ratio of their capitals without providing for any of the above adjustments. The profits were to be shared in the ratio of 2 : 2 : 1. Pass the necessary adjustment entry showing the workings clearly.

Ram and Mohan were partners in a firm sharing profits in the ratio of 4 : 1. On 1-3-2018, they admitted Sohan as a new partner for \(\frac { 1 }{ 3 }\) rd share in the profits of the firm. The profit and Loss a/c on the date of admission showed a balance of 32,000(Dr.). The firm also had a reserve of 1,00,000. Sohan is to bring 60,000 as a premium for his share of goodwill. Showing your calculation clearly, pass necessary journal entries to record the above transactions. (3)
Answer:
TABLE SHOWING ADJUSTMENT

Particulars	A	B	C	D
Profit wrongly credited in capital ratio (I)	15,000 Dr.	10,000 Dr.	5,000 Dr.	30,000 Cr.
Appropriations to be made:
(i) Interest on capital	1500 Cr.	1000 Cr.	500 Cr.	3,000 Dr.
(ii) Salary to B		6,000 Cr.		6,000 Dr.
(iii) Commission to C			1,350 Cr.	1,350 Dr.
(iv) Divisible profit in 2:2:1	7,860 Cr.	7,860 Cr.	3,930 Cr.	19,650Dr.
Net Effect	5640 Dr.	4860 Cr.	780 Cr.	Nil

Journal Entry

OR
Journal

Question 19.
Tata motors invited applications for issuing 20,000 equity shares @₹ 100 each at a premium of ₹ 35 per share. The whole amount is payable on the application. The issue was fully subscribed. Pass necessary journal entries.

On 1st April 2019, P ltd. issued 6,000, 12% Debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 7% at the end of third year. On 31 March 2020 Securities Premium Reserve exists in the books at ₹ 50,000. Pass necessary journal entry for time of issue of debentures and writing off loss on issue of debentures. (3)
Answer:
Journal

Journal

Question 20.
Ram and Mohan were partners in a firm sharing profits in the ratio of 4 : 1. On 1-3-2018, they admitted Sohan as a new partner for \(\frac { 1 }{ 3 }\) rd share in the profits of the firm. The profit and Loss a/c on the date of admission showed a balance of 32,000(Dr.). The firm also had a reserve of 1,00,000. Sohan is to bring 60,000 as a premium for his share of goodwill. Showing your calculation clearly, pass necessary journal entries to record the above transactions. (3)
Answer:
Journal Entry

Question 21.
Spencer Paints Ltd. was registered with an authorized capital of 50,00,000 divided into 5,00,000 equity shares of ₹ 10 each. The company issued 2,00,000 equity shares at a premium of ₹ 3 per share, payable as follows: ₹ 4 on application, ₹ 5 on the allotment (including premium), ₹ 2 on the first call, and ₹ 2 on second and final call. All shares were subscribed and all the money was duly received. Share issue expenses amounted to 75,000 which were fully written off against Security Premium. Prepare necessary journal entries and bank account. (4)
Answer:
Journal

Dr. Cash Book (Bank Column) Cr

Question 22.
Following is the Balance Sheet of Ashwani and Bharat on March 31, 2017.
Balance Sheet Ashwani and Bharat as of March 31, 2017

The firm was dissolved on that date. The following was agreed transactions took place.

Ashwani promised to pay Mrs. Ashwani’s loan and took away stock for Rs.8,000.
Bharat took away half of the investment at 10% less. Debtors realized for Rs.38,000. Creditors

were paid at less than Rs.380. Buildings realized for Rs.1,30,000, Goodwill Rs.12,000, and the remaining Investment were sold at Rs.9,000. An old typewriter not recorded in the books was taken over by Bharat for Rs. 600. Realization expenses amounted to Rs. 2,000. Prepare Realisation Account, Partner’s Capital Account, and Bank Account. (4)
Answer:
Books of Ashwani and Bharat
Dr. ReaLisation A/c Cr.

Dr. Partners’ CapitaL Account Cr.

Dr. Bank Account Cr.

Question 23.
Sunrise Ltd. was registered with a capital of ₹ 4,00,000 shares of ₹ 100 each. It issued 2,000 of such shares payable 25 per share on application, 25 on the allotment, 20 on the first call, and the balance as and when required. All money payable on application and allotments were duly received: but when the first call of 20 per share was made, one shareholder holding 100 shares failed to pay the amount due and another shareholder holding 200 shares paid them in full. Record these transactions in the journal of the company.

Pass the necessary journal entry of the following cases:
(a) A company issues 1,000, 9% debentures of ₹ 100 each at par but repayable at a premium of 5%.
(b) A company issued ₹ 1,00,000, 9% debentures of ₹ 100 each at a discount of 5% but redeemable at premium of 5%.
(c) A company issued 1,000, 9% debentures of ₹ 100 each at premium of 5% and redeemable at premium of 5%. (6)
Answer:
journal

Balance Sheet of Sunrise Ltd.
As at ……….

Notes to Accounts:

OR

Question 24.
Arjun, Bhim and Nakul are partners sharing profits & losses in the ratio of 14:5:6 respectively. Bhim retires and surrenders his \(\frac { 5 }{ 25}\) th share in favour of Arjun. The good will of the firm is valued at 2 years purchase of super profits based on average profits of last 3 years. The profits for the last 3 years are ₹ 50,000, ₹ 55,000 & ₹ 60,000 respectively. The normal profits for the similar firm are ₹ 30,000. Goodwill already appears in the books of the firm at ₹ 75,000. The profit for the first year after Bhim’s retirement was ₹ 1,00,000. Give the necessary Journal Entries to adjust Goodwill and distribute profits showing your workings.

The Balance Sheet of Mohit, Neeraj, and Sohan who are partners in the firm sharing profits according to their capitals as of March 31, 2017, was as under:

Answer:

Calculation of value of Good will
Average profit = Total Profit/Number of Years = \(\frac { 50, 000 + 55,000 + 60,000 }{ 3 }\)
= \(\frac { 1,65,000 }{ 3 }\)
Average profit = 55,000
Normal profit = 30,000 (Given)
Super Profit = Average Profit – Normal Profit
= 55,000 – 30,000
= 25,000
Goodwill = Super profit x No. of purchase gear
= 25,000 x 2 = 50,000
Share of Goodwill of Bhim = 50,000 x 525= 10,000
Calculation of New Profit Sharing Ratio
Bhim Surrenders his share in favor of Arjun. So,
Arjun’s New Share = 1425 + 525 = 1925
Nakul’s New Share = 625

New Profit Sharing Ratio:
Arjun:Nakul = 19:6

Appropriation of New Profit
Arjun’s Share = 1,00,000 x 1925 = 76,000
Nakul’s Share = 1,00,000 x 625 = 24,0008

Distribution of Existing Goodwill among all partners
Arjun’s Share = 75,000 x 1425 = 42,000
Bhim’s Share = 75,000 x 525 = 15,000
Nakul’s Share = 75,000 x 625 = 18,000

Dr. RevaLuation Account Cr.

Partners’ CapitaL Accounts Cr.

Balance Sheet as of March, 31, 2017

Cash to be brought in or withdrawn by Mohit and Sohan :

Particulars	Mohit	Sohan
(a) New capitals (Rs.1,20,000 in the ratio of 2:1) 2,000 1,000	80,000	40,000
(b) Existing capital (after adjustments) as calculated	82,000	41,000
Cash to be brought (paid off)	2,000	1,000

Question 25.
P, Q, and R were partners in a firm sharing profits in the ratio of 5: 4: 1. Their capitals were P Rs. 4,00,000, Q Rs. 3,00,000 and R Rs. 50,000. The firm closes its books on 31st March every year. On 31st March 2006, Q died. According to the partnership deed, theexecutor of a deceased partner was entitled to:
(i) Interest on capital from the first day of the accounting year till the date of his death @ 10% per annum.

(ii) His share of goodwill – The goodwill of the firm on Q’s death was valued at Rs. 6,00,000.

(iii) His share of profit – The profit of the firm for the year ended 31st March 2006 was Rs. 3,00,000. Q’s executor was paid the sum due in two annual installments with interest @ 10% per annum.Prepare Q’s capital account at the time of his death on 31st March 2006 to be presented to his executor and his executor’s loan account for the year ended 31st March 2007 and 2008. (6)
Answer:
Dr. Q’s Capital A/c Cr

Dr. Q’s Executors Loan Account A/c Cr.

Question 26.
Pass necessary Journal Entries for the following transactions in the books of N.R. Ltd:
(a) Redeemed 1200, 9% Debentures of ₹ 175 each by converting into New 10% Debentures ₹ 100 each issued at a premium of 5%.

(b) Redeemed 19,000, 6% Debentures of ₹ 50 each by converting them into Equity Shares of ₹ 100 each. The Equity Shares were issued at a discount of 5%. (6)
Answer:
Case (i)
Jounal Entries

Working Note:
No. of debentures issued = \(\frac { 1200 x 175 }{ 105 }\) = 2,000

Case (ii)
Journal Entries

PART – B (20 Marks)
Analysis of Financial Statements (Option – I)

Question 27.
Which schedule provides the format of Balance sheet of a company:
(a) Revised Schedule VI Part I
(b) Revised Schedule VI Part II
(c) Revised Schedule VI Part III
(d) None of these

In the company’s Balance Sheet, Short term borrowings shown under the head:
(a) Non-current Assets
(b) Current Liabilities
(c) Current Assets
(d) Non-current Liabilities (1)
Answer:
(a) Revised Schedule VI Part I

Explanation: Revised Schedule VI explains the formats of the Balance Sheet (Part I) and the Statement of Profit and Loss (Part II) of a company which should be prepared for an accounting year.

(b) Current Liabilities

Explanation: Current liabilities includes all the liabilities which are payable within an accounting year or within 12 months. Short term borrowings are due borrowings for 12 months. Ex- Overdraft, Loan from bank etc.

Question 28.
Calculate current ratio from the following information:
Current Assets – ₹ 10,20,000
Working capital – ₹ 4,40,000
Inventory – ₹ 3,00,000
(a) 2 : 1
(b) 1 : 1
(c) 1.7 : 1
(d) 3 : 2 (1)
Answer:
(c) 1.7 : 1

Explanation:
Current Liabilities = Current Assets – Working Capitat
= ₹ 10,20,000 – ₹ 4,40,000
= ₹ 5,80,000

= \(\frac { 10,20,000 }{ 5,80,000}\)
= 1.75 : 1

Question 29.
Which ratio provides the information of business for its long run operations?
(a) Profitability ratio
(b) Liquidity ratio
(c) Activity ratio
(d) Solvency ratio

Long term borrowings ₹ 1,00,000, Long term provisions ₹ 50,000, Current Liabilities ₹ 25,000, Non-Current Assets ₹ 1,80,000, Current Assets ₹ 45,000. The Total Asset to Debt Ratio is:
(a) 2:3
(b) 1:3
(c) 1.5:1
(d) 1:1 (1)
Answer:
(d) Solvency ratio

Explanation: Solvency ratios are the indicators of long term debts and shareholder’s funds. It shows the proportion of funds acquired as long term borrowings in comparison of share capital.

Explanation:
Total Asset to Debt Ratio = (Total Assets)/Debt
Total Assets = Non Current Assets + Current Assets
= ₹ 1,80,000 + ₹ 45,000
= ₹ 2,25,000
Debt = Long Term Borrowings + Long Term
Provisions = ₹ 1,00,000 + ₹ 50,000 = ₹ 1,50,000
Total Assets to Debt Ratio
= ₹ \(\frac { 2,25,000 }{ 1,50,000 }\)
= 1.5 : 1

Question 30.
Which of the following transactions will not result into flow of cash:
(a) Issue of equity shares ₹ 1,00,000
(b) Purchase of machinery ₹ 1,75,000
(c) Redemption of 9% debentures ₹ 3,50,000
(d) Cash deposited into bank ₹ 15,000 (1)
Answer:
(d) Cash deposited into bank ₹ 15,000

Explanation: Deposit of cash into bank involves no flow of cash. This is because it simply . represents the movement between items of cash and cash equivalents.

Question 31.
Following are the items given below of balance sheet, under what headings they will shown:
(a) Unclaimed dividend
(b) Provision for tax
(c) Loose tools
(d) Trade Payables
(e) Preliminary expenses (3)
Answer:

Items	Headings	Sub-Headings
Unclaimed dividend	Current Liabilities	Other Current Liabilities
Provision for tax	Current Liabilities	Short Term Provisions
Loose tools	Current Assets	Inventories
Trade Payables	Current Liabilities	–
Preliminary expenses	Not shown in Balance Sheet	–

Question 32.
Explain the significance of analysis of financial statements for external users. (3)
Answer:
1. Shareholders: Shareholders are the investors of the company who invest their money in the form of shares/capital Following are the importance of analysis of financial statements for shareholders:
(a) To analyze the current and future earning capacity of the company.
(b) To observe the operational efficiency and liquidity of the business.
(c) To make intra-firm and inter firm comparison.

2. Lenders: Lenders are the persons who lend money to the business for the following interest:
(a) To analyze the solvency position of the company so that they get their debts on time.
(b) To judge the earning capacity of the business or profits so they can get regular interest upto the maturity of loan.

3. Taxation Authorities: Taxation authorities analyze the financial statements for knowing that business is maintaining their accounts according to the provisions or not and the calculation of taxes should be according to the figures of books.

Question 33.
Calculate Net Profit Ratio if Gross profit Ratio of a company was 30%. Its credit Revenue from Operations were ₹ 9,00,000 and its cash Revenue from Operations were 5% of the total Revenue from Operations. If the indirect expenses of the Company were ₹ 20,000.

Prepare Balance Sheet as at 31st March, 2021 by the following items:

Trade Receivables	5,00,000
Inventories	12,00,000
Cash	50,000
Marketable Securities	2,00,000
Bank Overdraft	1,00,000

prepare realisation Account. (4)
Answer:
Cash Revenue from Operations were 5% of total Revenue from Operations. In other words, credit Revenue from Operations were 90% of total. Revenue from Operations. Credit Revenue from Operations were ₹ 9,00,000 Total Revenue from Operations.
= \(\frac { 100 }{ 90 }\) x ₹ 9,00,000
= ₹ 1o,oo,ooo
Gross Profit = ₹ 9,00,000 \(\frac { 20 }{ 100 }\) = ₹ 1,80,000
Net Profit = Gross Profit – Indirect Expenses
= ₹ 1,80,000 – 20,000
= ₹ 1,60,000
Net Profit Ratio

= \(\frac { 1,60,000 }{ 10,00,000 }\) x 100 = 16%

Extract of BaLance Sheet
as at 31st March, 2021

Notes to Accounts:

Question 34.
From the following Balance Sheet of Tata Ltd. as at 31st March 2022:
Tata Ltd.
Balance Sheet as at 31st March, 2022

Notes to Accounts:

Additional the year a piece of machinery costing ₹ 48,000 on which accumulated depreciation was ₹ 32,000 was sold for ₹ 12,000. Prepare Cash Flow Statement. Show your workings clearly. (6)
Answer:
Cash flow statement of Tata Ltd.
as at 31st March, 2021

Working Notes:
1. Net profit before tax = Net profit after appropriation + Provision for tax
= 2,00,000 + 1.00.000 = 3,00.000
Machinery A/c

Accumutated Depreciation A/c