PRACTICE QUESTIONS (2022-23)

SUBJECT ACCOUNTANCY 055

CLASS XII
TIME 3 HOURS MAX. MARKS 80
GENERAL INSTRUCTIONS:
1. This question paper contains 34 questions. All questions are compulsory.
2. This question paper is divided into two parts, Part A and B.
3. Part - A is compulsory for all candidates.
4. Part - B has two options i.e. (i) Analysis of Financial Statements and (ii) Computerised
Accounting. Students must attempt only one of the given options.
5. Question 1 to 16 and 27 to 30 carries 1 mark each.
6. Questions 17 to 20, 31and 32 carries 3 marks each.
7. Questions from 21 ,22 and 33 carries 4 marks each
8. Questions from 23 to 26 and 34 carries 6 marks each
9. 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
(Accounting for Partnership Firms and Companies)

S.No. Question Marks

Part A :- Accounting for Partnership Firms and Companies
1. Navya and Radhey were partners sharing profits and losses in the ratio of 3: 1. 1
Shreya was admitted for 1/5th share in the profits. Shreya was unable to bring
her share of goodwill premium in cash. The journal entry recorded for goodwill
premium is given below:
Date Particular LF Debit Credit
(₹) (₹)
Shreya’s Current A/c. Dr. 24,000
To Navya’s Capital A/c. 8,000
To Radhey’s Capital A/c 16,000
(Being entry for goodwill treatment passed)

The new profit-sharing ratio of Navya, Radhey and Shreya will be:
a) 41: 7: 12
b) 13:12: 10
c) 3:1: 1
d) 5:3: 2
2. Assertion (A):- Commission provided to partner is shown in Profit and Loss A/c. 1
Reason (R):- Commission provided to partner is charge against profits and is to
be provided at fixed rate.
a) (A) is correct but (R) is wrong
b) Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
c) Both (A) and (R) are incorrect.
d) Both (A) and (R) are correct, and (R) is the correct explanation of (A)

3. A share of ₹ 10 each, issued at ₹ 4 premium out of which ₹ 7 (including ₹ 1 1

premium) was called up and paid up. The uncalled Capital will be ___________.
a) ₹ 7 per share b) ₹ 4 per share
c) ₹ 8 per share d) ₹ 3 per share
OR
While issuing ___________ type of Debentures, company doesn’t give any
undertaking for the repayment of money borrowed by issuing such
debentures.
a) Zero Coupon Rate Debentures b) Non-Convertible Debentures
c) Secured Debentures d) Non-Redeemable Debentures

4. Samiksha, Arshiya and Divya were partners in a firm sharing profits and losses 1
in the ratio of 5: 3: 2. With effect from 1st April 2022, they agreed to share
future profits and losses in the ratio of 2: 5: 3. Their Balance Sheet showed a
debit balance of ₹ 50,000 in the Profit and Loss Account and a balance of ₹
40,000 in the Investment Fluctuation Fund. The market value of an investment
is ₹30,000 against the book value of ₹50,000. Partners have decided, not to
show revised valued in the balance sheet and to pass an adjusting entry for it.
Which of the following is the correct treatment of the above?
a) Samiksha’s Capital A/c. Dr. 9,000
To Arshiya’s Capital A/c. 6,000
To Divya’s Capital A/c 3,000
b) Arshiya’s Capital A/c. Dr. 5,000
To Samiksha’s Capital A/c. 2,000
To Divya’s Capital A/c. 3,000
c) Arshiya’s Capital A/c. Dr. 2,000
Divya’s Capital A/c. Dr. 1,000
To Samiksha’s Capital A/c 3,000
d) Arshiya’s Capital A/c. Dr. 6,000
Divya’s Capital A/c. Dr. 3,000
To Samiksha’s Capital A/c 9,000

Or

Sohan and Mohan are partners sharing profits and losses in the ratio of 2:3
with the capitals of ₹ 5,00,000 and ₹ 6,00,000 respectively. On 1st January
2022, Sohan and Mohan granted loans of ₹ 20,000 and ₹ 10,000 respectively to
 the firm. Determine the amount of loss to be borne by each partner for the
year ended 31st March 2022 if the loss before interest for the year amounted
to ₹ 2,500.
a) Share of Loss Sohan –₹ 1,250 Mohan – ₹ 1,250
b) Share of Loss Sohan –₹ 1,000 Mohan – ₹ 1,500
c) Share of Loss Sohan –₹ 820 Mohan – ₹ 1,230
d) Share of Loss Sohan –₹ 1,180 Mohan – ₹ 1,770

5. Vihaan and Mann are partners sharing profits and losses in the ratio of 3:2. The 1
firm maintains fluctuating capital accounts and the balance of the same as on
31st March 2022 is ₹ 4,00,000 and ₹ 4,65,000 for Vihaan and Mann
respectively. Drawings during the year were ₹ 65,000 each. As per the
partnership Deed, Interest on capital @ 10% p.a. on Opening Capital has been
allowed to them. Calculate the opening capital of Vihaan given that the
divisible profits during the year 2021-22 was ₹ 2,25,000.
a) ₹ 3,30,000
b) ₹ 4,40,000
c) ₹ 4,00,000
d) ₹ 3,00,000

6. Savitri Ltd. issued 50,000, 8% Debentures of ₹ 100 each at certain rate of 1

premium and to be redeemed at 10% premium. At the time of writing off Loss
on Issue of Debentures, Statement of Profit and Loss was debited with ₹
2,00,000. At what rate of premium, these debentures were issued?
a) 10% b) 16%
c) 6% d) 4%

Or

Durga Ltd. issued 80,000, 10% Debentures of ₹ 100 each at certain rate of
discount and were to be redeemed at 20% premium. Existing balance of
Securities Premium before issuing of these debentures was ₹ 25,00,000 and
after writing off Loss on Issue of Debentures, the balance in Securities Premium
was ₹ 5,00,000. At what rate of discount, these debentures were issued?
a) 10% b) 5%
c) 25% d) 15%

7. Attire Ltd, issued a prospectus inviting applications for 12,000 shares of ₹10 1
each payable ₹3 on application, ₹ 5 on allotment and balance on call. Public
had applied for certain number of shares and application money was received.
Which of the following application money, if received restricts the company to
proceed with the allotment of shares, as per SEBI guidelines?
a) ₹ 36,000 b) ₹ 45,000
c) ₹ 30,000 d) ₹ 32,400

8. Amay, Bina and Chander are partners in a firm with capital balances of ₹ 1
50,000, ₹ 70,000 and ₹ 80,000 respectively on 31st March, 2022. Amay decides
 to retire from the firm on 31st March, 2022. With the help of the information
provided, calculate the amount to be paid to Amay on his retirement.
There existed a general reserve of ₹ 7,500 in the balance sheet on that date.
The goodwill of the firm was valued at ₹ 30,000.
Gain on revaluation was ₹24,000.
a) ₹ 88,500 b) ₹ 90,500
c) ₹ 65,375 d) ₹ 70,500

Or

A, B and C are partners. A‘s capital is ₹ 3,00,000 and B‘s capital is ₹1,00,000. C
has not invested any amount as capital but he alone manages the whole
business. C wants 30,000 p.a. as salary, though the deed is silent. Firm earned a
profit of ₹1,50,000. How much will each partner receives as an appropriation of
profits?
a) A ₹ 60,000; B ₹ 60,000; C ₹ 30,000
b) A ₹ 90,000; B ₹ 30,000; C ₹ 30,000
c) A ₹ 40,000; B ₹ 40,000 and C ₹ 70,000
d) A ₹ 50,000; B ₹ 50,000 and C ₹ 50,000

Read the following hypothetical situation, Answer Question No. 9 and 10

Puneet and Raju are partners in a clay toys making firm. Their capitals were ₹
5,00,000 and ₹ 10,00,000 respectively. The firm allowed Puneet to get a
commission of 10% on the net profit before charging any commission and Raju
to get a commission of 10% on the net profit after charging all commission.
Following is the Profit and Loss Appropriation Account for the year ended 31st
March 2022.
Dr. Profit and Loss Appropriation Account for the year ended 31st March 2022 Cr .
Particulars Amount Particulars Amount (₹)
(₹)
To Puneet’s Capital A/c By Profit and Loss ……………
(Commission) 44,000 a/c
(------ x10/100)
To Raju’s Capital A/c -----------
(Commission)
To Profit share transferred
to :-
Puneet’s Capital A/c -----------
Raju’s Capital A/c ------------
========= ==========

9. Raju’s commission will be:- 1

a) ₹ 40,000 b) ₹ 44,000
 c) ₹ 36,000 d) ₹ 36,440
10. Puneet’s share of profit will be :- 1

a) ₹ 1,80,000 b) ₹ 1,44,000
c) ₹ 2,16,000 d) ₹ 1,60,000

11. Choose the correct sequence of the following transactions in context of 1

Division of Profits.
(i) Guarantee by Firm to Partners
(ii) Guarantee by Partners to Firm
(iii) Transfer of Profits to Profit and Loss Appropriation Account
(iv) Guarantee by Partner to Partner
a) (i); (iii) ; (iv) ; (ii) b) (iii); (i) ; (ii) ; (iv)
c) (iii) ; (ii) ; (i); (iv) d) (ii); (iii); (iv); (i)

12. If 10,000 shares of ₹10 each were forfeited for non-payment of final call money 1
of ₹ 3 per share and only 7,000 shares were re-issued @ ₹ 11 per share as fully
paid up, then what is the amount of maximum possible discount that company
can allow at the time of re-issue of the remaining 3,000 shares?
a) ₹ 28,000 b) ₹ 21,000
c) ₹ 9,000 d) ₹ 16,000

13. As per Companies Act 2013, Securities Premium Balance can be utilised for 1
which of the following purpose?
a) Issuing bonus to existing b) Providing for Premium payable
shareholders to convert partly on Redemption of Debentures.
paid up into fully paid-up
bonus shares.
c) Writing off all Capitalised d) Buy Back of Debentures
Expenditures

14. Ganga and Jamuna are partners sharing profits in the ratio of 2:1. They admit 1
Saraswati for 1/5th share in future profits. On the date of admission, Ganga’s
capital was ₹ 1,02,000 and Jamuna’s capital was ₹ 73,000. Saraswati brings ₹
25,000 as her share of goodwill and she agrees to contribute proportionate
capital of the new firm. How much capital will be brought by Saraswati?
a) ₹ 43,750
b) ₹ 37,500
c) ₹ 50,000
d) ₹ 40,000

15. Green and Orange are partners. Green draws a fixed amount at the beginning 1
of every month. Interest on drawings is charged @8% p.a. At the end of the
year interest on Green's drawings amounts to ₹ 2,600. Monthly drawings of
Green were:
a) ₹ 8,000
 b) ₹ 60,000
c) ₹ 7,000
d) ₹ 5,000

Or

Girdhar, a partner withdrew ₹ 5,000 in the beginning of each quarter and

interest on drawings was calculated as ₹ 1,500 at the end of accounting year 31
March 2022. What is the rate of interest on drawings charged?
a) 6% p.a.
b) 8% p.a.
c) 10% p.a.
d) 12% p.a.

16. At the time of dissolution of a firm, Creditors are ₹ 70,000; Firm’s Capital is ₹ 1
1,20,000; Cash Balance is ₹ 10,000. Other assets realised ₹ 1,50,000. Gain/Loss
in the realisation account will be:
a) ₹ 30,000 (Gain)
b) ₹ 40,000 (Gain)
c) ₹ 40,000 (Loss)
d) ₹ 30,000 (Loss)

17. Nirmala, Divisha and Sara were partners in a firm sharing profits and losses in 3
the 3:4:3. Books were closed on 31st March every year. Sara died on 1st
February, 2022. As per the partnership deed Sara's executors are entitled to
her share of profit till the date of death on the basis of Sales turnover. Sales for
the year ended 31st March 2021 was ₹ 10,00,000 and profit for the same year
was ₹ 1,20,000. Sales show a positive trend of 20% and percentage of profit
earning is reduced by 2%.
Journalise the transaction along with the working notes.

18. Amay, Anmol and Rohan entered into partnership on 1st July, 2021 to share 3
profits and losses in the ratio of 3:2:1. Amay guaranteed that Rohan’s share of
profit after charging interest on capital @ 6% p.a would not be less than ₹
36,000 p.a. Their fixed capital balances are: ₹ 2,00,000, ₹ 1,00,000 and ₹
1,00,000 respectively. Profit for the year ended 31st March, 2022 was
₹1,38,000.
Prepare Profit and Loss Appropriation A/c.

Or

Ajay, Manish and Sachin were partners sharing profits in the ratio 5:3:2. Their
Capitals were ₹ 6,00,000; ₹ 8,00,000 and ₹ 11,00,000 as on April 01, 2021. As
per Partnership deed, Interest on Capitals were to be provided @ 10% p.a. For
the year ended March 31, 2022, Profits of ₹ 2,00,000 were distributed without
providing for Interest on Capitals.
Pass an adjustment entry and show the workings clearly.
19. Anthony Ltd. issued 20,000, 9% Debentures of ₹ 100 each at 10% discount to 3
Mithoo Ltd. from whom Assets of ₹ 23,50,000 and Liabilities of ₹ 6,00,000 were
taken over. Pass entries in the books of Anthony Ltd. if these debentures were
to be redeemed at 5% premium.

Or

Random Ltd. took over running business of Mature Ltd. comprising of Assets of
₹ 45,00,000 and Liabilities of ₹ 6,40,000 for a purchase consideration of ₹
36,00,000. The amount was settled by bank draft of ₹ 1,50,000 and balance by
issuing 12% preference shares of ₹ 100 each at 15% premium. Pass entries in
the books of Random Ltd.

20. Doremon, Shinchan and Nobita are partners sharing profits and losses in the 3
ratio of 3:2:1. With effect from 1st April, 2022 they agree to share profits
equally. For this purpose, goodwill is to be valued at two year’s purchase of the
average profit of last four years which were as follows:
Year ending on 31st March,2019 ₹ 50,000 (Profit)
Year ending on 31st March,2020 ₹ 1,20,000 (Profit)
Year ending on 31st March,2021 ₹ 1,80,000 (Profit)
Year ending on 31st March,2022 ₹ 70,000 (Loss)

On 1st April, 2021 a Motor Bike costing ₹ 50,000 was purchased and debited to
travelling expenses account, on which depreciation is to be charged @ 20% p.a
by Straight Line Method. The firm also paid an annual insurance premium of ₹
20,000 which had already been charged to Profit and Loss Account for all the
years.
Journalise the transaction along with the working notes.

21. Altaur Ltd. was registered with an authorised Capital of ₹ 4,00,00,000 divided in 4
25,00,000 Equity Shares of ₹ 10 each and 1,50,000, 9% Preference Shares of ₹
100 each. The company issued 8,00,000 Equity Shares for public subscription at
20% premium, payable ₹ 3 on application; ₹ 7 on allotment (including
premium) and balance on call. Public had applied for 10,00,000 shares. Excess
Applications were sent letters of regret.

All the dues on allotment received except on 15,000 shares held by Sanju.
Another shareholder Rocky paid his call dues along with allotment on his
holding of 25,000 shares. You are required to prepare the Balance Sheet of the
company as per Schedule III of Companies Act, 2013, showing Share Capital
balance and also prepare Notes to Accounts.

22. Charu, Dhwani, Iknoor and Paavni were partners in a firm. They had entered 4
into partnership firm last year only, through a verbal agreement. They
contributed Capitals in the firm and to meet other financial requirements, few
partners also provided loan to the firm. Within a year, their conflicts arisen due
 to certain disagreements and they decided to dissolve the firm. The firm had
appointed Ms. Kavya, who is a financial advisor and legal consultant, to carry
on the dissolution process. In the first instance, Ms. Kavya had transferred
various assets and external liabilities to Realisation A/c. Due to her busy
schedule; Ms. Kavya has delegated this assignment to you, being an intern in
her firm. On the date of dissolution, you have observed the following
transactions:
(i) Dhwani’s Loan of ₹ 50,000 to the firm was settled by paying ₹ 42,000.
(ii)Paavni’s Loan of ₹ 40,000 was settled by giving an unrecorded asset of ₹
45,000.
(iii)Loan to Charu of ₹ 60,000 was settled by payment to Charu’s brother
loan of the same amount.
(iv)Iknoor’s Loan of ₹ 80,000 to the firm and she took over Machinery of ₹
60,000 as part payment.

You are required to pass necessary entries for all the above mentioned
transactions.

23. OTUA Ltd. was registered with an authorised capital of 2,00,000 equity shares 6
of ₹ 100 each. The company offered 60,000 shares for public subscription at
25% premium. The share was payable as ₹ 40 on application and balance on
allotment, with premium. Public had applied for 85,000 shares. Pro-rata
allotment was made in the ratio of 5:4 and remaining applications were sent
letters of regret.

Mr. Anand holding 4,000 shares failed to pay allotment money and his shares
were forfeited. Out of these 3,000 shares were re-issued at a discount of ₹ 20
per share. Pass necessary entries in the books of the OTUA Ltd.

Or

Pass entries for forfeiture and re-issue in both the following cases.
(a) Vikram Ltd. forfeited 5,000 shares of Rahul, who had applied for 6,000
shares for non-payment of allotment money of ₹ 5 per share and first
and final call of ₹ 2 per share. Only application money of ₹ 3 was paid by
him. Out of these 3,000 shares were re-issued @ ₹ 12 per share as fully
paid.

(b) Ratan Ltd. forfeited 3,000 shares of ₹ 10 each (issued at ₹ 2 premium)

for non-payment of first call of ₹ 2 per share. Final call of ₹ 3 per share
was not yet made. Out of these 2,000 shares were re-issued at ₹ 10 per
share as fully paid.

24. X and Y were partners in the profit-sharing ratio of 3: 2. Their balance sheet as 6
at March 31, 2022 was as follows:
 Balance Sheet as at March 31, 2022
Liabilities Amount (₹) Assets Amount (₹)
Creditors 56,000 Plant and Machinery 70,000
General Reserve 14,000 Buildings 98,000
Capital Accounts: Stock 21,000
X 1,19,000 Debtors 42,000
Y 1,12,000 2,31,000 (-)Provision 7,000 35,000
Cash in Hand 77,000
3,01,000 3,01,000
Z was admitted for 1/6th share on the following terms:
(i) Z will bring ₹ 56,000 as his share of capital, but was not able to bring any
amount to compensate the sacrificing partners.
(ii) Goodwill of the firm is valued at ₹. 84,000.
(iii)Plant and Machinery were found to be undervalued by ₹ 14,000 Building
was to brought up to ₹ 1,09,000.
(iv) All debtors are good.
(v) Capitals of X and Y will be adjusted on the basis of Z’s share and
adjustments will be done by opening necessary current accounts.
You are required to prepare revaluation account and partners’ capital account.

Or

P, Q and R were partners in a firm sharing profits in the ratio of 3:2:1

respectively. On March 31st, 2022, the balance sheet of the firm stood as
follows:
Balance Sheet
Liabilities Amount (₹) Assets Amount (₹)
Creditors 13,000 Cash 4,700
Bills Payable 590 Debtors 8,000
Capital Accounts: Stock 11,690
P 15,000 Buildings 23,000
Q 10,000 Profit and Loss Account 1,200
R 10,000 35,000
48,590 48,590

Q retired on the above-mentioned date on the following terms:

(i) Buildings to be appreciated by ₹7,000
(ii) A provision for doubtful debts to be made at 5 % on debtors.
(iii)Goodwill of the firm is valued at ₹ 18,000 and adjustment to be made by
raising and writing off the goodwill.
(iv) ₹ 2,800 was to be paid to Q immediately and the balance in his capital
account to be transferred to his loan account carrying interest as per the
agreement.
(v) Remaining partner decided to maintain equal capital balances, by
opening current account.
 Prepare the revaluation account and partner’s capital accounts.
25. A, B and C were partners sharing P&L in the ratio 5:3:2. A died on 30th June, 6
2019. Entry for treatment of goodwill after his death was passed as follows:-

Date Particulars L.F Debit Credit

(₹) (₹)
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 account till final settlement.
26. Health2Wealth Ltd. had share capital of ₹ 80,00,000 divided in shares of ₹ 100 6
each and 20,000, 8% Debentures of ₹ 100 each as part of capital employed.
The company need additional funds of ₹ 55,00,000 for which they decided to
issue debentures in such a way that they got required funds after issuing
debentures of the same class as earlier, at 10% premium. These debentures
were to be redeemed at 20% premium after 4 years. These debentures were
issued on 01 October, 2021.
You are required to

(a) Pass entries for issue of Debentures.

(b) Prepare Loss on Issue of Debentures Account assuming there was
existing balance of Securities Premium Account of ₹ 2,80,000.
(c) Pass entries for Interest on debentures on March 31, 2022 assuming
interest is payable on 30 September and 31 March every year.

Part B :- Analysis of Financial Statements

(Option – I)

27. Financial statements are prepared on certain basic assumptions (pre-requisites) 1

known as___________.
a) Provision of Companies Act,2013 b) Accounting Standards
c) Postulates d) Basis of Accounting

Or

Which one of the following is correct?

 (i) Quick Ratio can be more than Current Ratio.
(ii) High Inventory Turnover ratio is good for the organisation, except when
goods are bought in small lots or sold quickly at low margins to realise
cash.
(iii) Sum of Operating Ratio and Operating Profit ratio is always 100%.
a) All are correct. b) Only (i) and (iii) are correct.

c) Only (ii) and (iii) are d) Only (i) and (ii) are correct
correct.
28. From the following calculate Interest coverage ratio 1
Net profit after tax Rs 12,00,000; 10% debentures Rs 1,00,00,000; Tax Rate 40%

a) 1.2 times b) 3 times

c) 2 times d) 5 times

29. Insurance Claim received by Albert Co. Ltd. of ₹ 5,00,000 for Loss of Machinery 1
due to theft will be recorded in Cash Flow Statement in which of the following
manner?
a) Added under Operating b) Subtracted under Operating
Activities as Extraordinary Activities as Extraordinary Item
Item and Subtracted from and Added to Operating
Operating Activities also. Activities also.
c) Added under Operating d) Subtracted under Operating
Activities as Extraordinary Activities as Extraordinary Item
Item and Outflow under and Inflow under Investing
Investing Activity also. Activities also.

Or

A company issued 20,000; 9% Debentures of ₹ 100 each at 10% Discount. These

debentures were to be redeemed at 15% Premium at the end of 5 years. The
balance in Securities Premium Account as on the date of Issue was ₹ 3,70,000.
How this transaction will be reflected in Cash Flow Statement?

a) Added ₹ 1,30,000 under b) Added ₹ 5,00,000 under

Operating Activities as Loss on Operating Activities as Loss on
Issue of Debentures written Issue of Debentures written
off and Inflow of ₹ 20,00,000 off and Inflow of ₹ 18,00,000
under Financing Activities. under Financing Activities.
c) Added ₹ 1,30,000 under d) Added ₹ 5,00,000 under
Operating Activities as Loss on Operating Activities as Loss on
Issue of Debentures written Issue of Debentures written
off and Inflow of ₹ 18,00,000 off and Inflow of ₹ 20,00,000
under Financing Activities. under Financing Activities.

30. From the following information find out the inflow of Cash by sale of Office 1
 equipment’s
31st March, 2022 31st March, 2021
Office Equipment ₹ 2,00,000 ₹ 3,00,000

Additional Information:
Depreciation for the year 2021-22 was Rs. 40,000
Purchase of Office Equipment purchased during the year Rs. 30,000
Part of Office Equipment sold at a profit of Rs. 12,000
a) ₹ 1,00,000 b) ₹ 1,02,000
c) ₹ 90,000 d) ₹ 1,12,000

31. Classify the following items under Major heads and Sub-head (if any) in the 3
Balance Sheet of a Company as per schedule III of the Companies Act 2013.
(i) Current maturities of long term debts
(ii) Furniture and Fixtures
(iii) Provision for Warranties
(iv) Income received in advance
(v) Capital Advances
(vi) Advances recoverable in cash within the operation cycle

32. Lala Ltd. and Bala Ltd. use different accounting policies for inventory valuation. 3
These variations leave a big question mark on the cross-sectional analysis and
comparison of these two firms was not possible.

Identify the limitation of Ratio Analysis highlighted in the above situation. Also
explain any two other limitations of Ratio Analysis apart from the identified
above.

33. Determine Return on Investment and Net Assets Turnover ratio from the 4
following information:-

Profits after Tax were ₹ 6,00,000; Tax rate was 40%; 15% Debentures were of
₹20,00,000; 10% Bank Loan was ₹ 20,00,000; 12% Preference Share Capital ₹
30,00,000; Equity Share Capital ₹ 40,00,000 ; Reserves and Surplus were ₹
10,00,000; Sales ₹ 3,75,00,000 and Sales Return ₹ 15,00,000.

Or

Debt to Capital Employed ratio is 0.3:1. State whether the following

transactions, will improve, decline or will have no change on the Debt to
Capital Employed Ratio. Also give reasons for the same.
(i) Sale of Equipments costing ₹ 10,00,000 for ₹ 9,00,000.
(ii) Purchased Goods on Credit for ₹ 1,00,000 for a credit of 15 months,
assuming operating cycle is of 18 months.
(iii) Conversion of Debentures into Equity Shares of ₹ 2,00,000.
 (iv) Tax Refund of ₹ 50,000 during the year.

34. Read the following hypothetical text and answer the given questions on the basis of the 6
same:
Aashna, an alumnus of CBSE School, initiated her start up Smartpay, in 2015.
Smartpay is a service platform that processes payments via UPI and POS, and
provides credit or loans to their clients.. During the year 2021-22, Smartpay issued
bonus shares in the ratio of 5:1 by capitalising reserves. The profits of Smartpay in the
year 2021-22 after all appropriations was ₹ 7,50,000. This profit was arrived after
taking into consideration the following items: -

Particulars Amount (₹)

Interim Dividend paid during the year 90,000
Depreciation on Machinery 40,000
Loss of Machinery due to fire 20,000
Insurance claim received for Loss of Machinery 10,000
due to Fire
Interest on Non-Current Investments received 30,000
Tax Refund 20,000

Additional Information:
Particulars 31.3.22 (₹) 31.3. 21(₹)
Equity Share Capital 12,00,000 10,00,000
Securities Premium Account 3,00,000 5,00,000
General Reserve 1,50,000 1,50,000
Investment in Marketable Securities 1,50,000 1,00,000
Cash in hand 2,00,000 3,00,000
Machinery 3,00,000 2,00,000
10% Non-Current Investments 4,00,000 3,00,000
Bank Overdraft 2,50,000 2,00,000
Goodwill 30,000 80,000
Provision for Tax 80,000 60,000

(i) Goodwill purchased during the year was ₹ 20,000.

(ii) Proposed Dividend for the year ended March 31, 2021 was ₹ 1,60,000 and for
the year ended March 31,2022 was ₹ 2,00,000.

You are required to:

1. Calculate Net Profit before tax and extraordinary items.
2. Calculate Operating profit before working capital changes.
3. Calculate Cash flow from Investing activities.
4. Calculate Cash flow from Financing activities.
5. Calculate closing cash and cash equivalents.
 Part B :- Computerised Accounting
(Option – II)

27. The syntax of PMT Function is ___________ 1

(a) PMT (rate, pv, nper, [fv], [type])
(b) PMT (rate, nper, pv, [fv], [type])
(c) PMT (rate, pv, nper, [type], [fv])
(d) PMT (rate, nper, pv, [type], [fv])

Or

In Excel, the chart tools provide three different options _________, _________ and
__________ for formatting.

(a) Layout, Format, DataMaker

(b) Design, Layout, Format
(c) Format, Layout, Label
(d) Design, DataMaker, Layout

28. Which formulae would result in TRUE if C4 is less than 10 and D4 is less than 100? 1
(a) =AND(C4>10, D4>10)
(b) =AND(C4>10, C4<100).
(c) =AND(C4>10, D4<10).
(d) =AND (C4<10, D4,100)

29. Which function results can be displayed in Auto Calculate? 1

(a) SUM and AVERAGE
(b) MAX and LOOK
(c) LABEL and AVERAGE
(d) MIN and BLANK
Or

When navigating in a workbook, which command is used to move to the beginning of

the current row?
(a) [Ctrl]+[Home]
(b) [Page Up]
(c) [Home]
(d) [Ctrl]+[Backspace]

30. What category of functions is used in this formula: =PMT (C10/12, C8, C9,1) 1
(a) Logical
(b) Financial
 (c) Payment
(d) Statistical

31. State any three types of Accounting Vouchers used for entry in Tally software. 3

32. State any three requirements which should be considered before making an investing 3
decision to choose between ‘Desktop database’ or ‘Server database’.

33. State the features of Computerized Accounting system. 4

Or

Explain the use of ‘Conditional Formatting’.

34. Describe two basic methods of charging depreciation. Differentiate between both of 6
them.
 Practice Questions - ANSWER KEY
2022-23
SUBJECT ACCOUNTANCY 055
CLASS XII

Q.N Mar
Question
o ks

Part A

(Accounting for Partnership Firms and Companies)

Q.1 D. Ostensible Partner 1

Q.2 A. A Debit of Rs.6,00,000 towards Alex’s salary. 1

Q.3 C. Observations 1 & 2 1

Q.4 A. Goodwill is to be calculated for Incident 1, Incident 2 and Incident 3. 1

Q.5 A. Offer 1 1

Q.6 B. Poornima’s share of profits in both the firms is equal 1

Q.7 A. Rs.12,00,000 , Rs.28,00,000 Rs.10,00,000 1

Q.8 B. Rs.2.16,000 & Rs,1,44,000 1

Q.9 C. 1, 2 & 2 1

Q.1 A. Rs.1,60,000 , Rs.80,000 & Rs.60,000 1

0
Q.1 A. Debit of Rs.4,500 each in Anusha and Vasu Capital accounts. 1
1

Q.1 A. She can be assured of interest on loan even case of loss. 1

2

Q.1 A. Rs.4,000 and Rs.20,000 respectively 1

3

Q.1 D. Reject some of the applications, allot in full to some of the applications and make pro-rata allotment to remaining applicants 1
4

Q.1 A. Increase in capital redemption reserve by Rs.75,000 1

5
OR

A. The amount of application money received is at least Rs.500

Q.1 B. 300 1
6

Q.1 3
7
Sl.No. Particulars Apoorva Sindhu
A Their existing shares 1/2 1/5
2/3 x 3/10 = 1/3 x 3/10 =
B Share acquired by remaining partners 2/10 1/10
New shares of remaining partners (c= a +
C b) 7/10 3/10
D Share gifted by Apoorva 1/2 x 1/4 = 1/8 0
E Share acquired by Aarush (other than gift) 1/2 x 1/8 = 1/16 1/2 x 1/8 = 1/16
F New Shares (c – d - e) 41/80 19/80
New ratio of Apoorva , Sindhu and 41/80 : 19/80 : 20/80 = 41 : 19 :
Aarush 20
 Apoorva’s share of profit in the original partnership = 0.5

Apoorva’s share of profits in the new partnership = 0.51

There is a negligible change in Apoorva’s share of profit as compared to the original profit sharing ratio and hence, Sindhu’ s claim is incorrect.

Q.1 - All the partners are jointly and severally responsible. Hence all the partners are responsible to pay for the compensation. – Mutual agency 3
8
There is no distinction between the partners and the partnership firm (No separate legal entity), unlike the company and its shareholders. Since
the total assets of the firm (total of capitals) is insufficient to cover the compensation in full, the shortfall shall be met using personal assets of
the partners.

OR Journals for 3

1.Transfer of assets

2. transfer of liabilities

3. Realisation of assets

4. settlement of liabilities

5. Transfer of loss

6. Transfer of general reserve to partners capital account in profit sharing ratio.

Q.1 3
9
Presentation under fluctuating capital system
Fluctuating capital system
Capital account
 Dr Cr
Date Particulars Rashmi Hari Maya Date Particulars Rashmi Hari Maya
Rs Rs Rs Rs Rs Rs
Withdrawal Opening
XX of capital - - 55,000 XX capital 2,50,000 1,35,000 3,50,000
Share of Addition of
XX profits 28,000 28,000 28,000 XX capital 25,000 35,000 -
XX Balance c/f 2,47,000 1,42,000 2,67,000
2,75,000 1,70,000 3,50,000 2,75,000 1,70,000 3,50,000

The balances of all the partners shall be presented on the liabilities side of the balance sheet under the head partners capital.
Fixed capital
System
Fixed capital account
Dr Cr
Date Particulars Rashmi Hari Maya Date Particulars Rashmi Hari Maya
Rs Rs Rs Rs Rs Rs
Withdrawal Opening
XX of capital - - 55,000 XX capital 2,50,000 1,35,000 3,50,000
Addition of
XX Balance c/f 2,75,000 1,70,000 2,95,000 XX capital 25,000 35,000 -
XX

2,75,000 1,70,000 3,50,000 2,75,000 1,70,000 3,50,000

Current capital account

Dr Cr
Date Particulars Rashmi Hari Maya Date Particulars Rashmi Hari Maya
Rs Rs Rs Rs Rs Rs
Share of
XX profits 28,000 28,000 28,000 XX Balance c/f 28,000 28,000 28,000
 28,000 28,000 28,000 28,000 28,000 28,000
The fixed capital of all the partners shall be presented on the liabilities side of the balance sheet under the head partners fixed capital. The current
capital of all the partners shall be presented on the asset side of the balance sheet under the head Partners’ current capital.

OR The account is not correct as the rate of interest used by her in the calculations are not in line with the rates of interest prescribed in Table F 3

As per table F, rate of interest on calls in arrears is 12%.

As per Table F, rate of interest on calls in advance is 10%

Interest on calls in arrears – Rs. 840

Interest on calls in advance – Rs. 3,292

Q.2 Sl.no Particulars Case 1 Case 2 Case 3 3

0
A Minimum issue 19,500 19,500 19,500
65,000-45,500
Premium receivable on minimum issue (If
B any) 5,850 - -

C Existing Securities premium 1,000 1,000 1,000

D Total Securities premium 6,850 1,000 1,000

E Premium payable on redemption 6,500 6,500 6,500

F Difference (E-D) -350 5,500 5,500

Number of shares to be issued =
(A+B+F)/Issue price 1,923 3,125 2,500
Q.2 Balance Sheet of Lazada ltd. 4
1 Liabilities Rs Assets Rs
Reserves & Surplus Current Assets
Securities premium 72,000 Cash at bank 12,72,000

Secured loans Miscellaneous expenditure

12% debentures 12,00,000 Loss on issue of debentures 72,000
Debentures redemption premium 72,000
13,44,000 13,44,000
Q.2 Revaluation account 4
2 Amount
Debit Amount (Rs.) Credit (Rs.)
To Furniture 18870 By Buildings 16850
To Inventory 1284 By Trade payables 3804
To Provision for doubtful
debts 500

20,654 20,654

Q.2 Computing Income from Skyline – 1 mark 6

3
Compute Monica’s share of profit – Rs.3,59,559

Compute interest on Monica’s balance – Rs.22,032

The higher of the two shall be her income.

Journal in Skyline books – 1 mark

Monica A/c – 3,59,559

To Bank - 3,59,559
 (Being Monica’s share of profit paid)

Balance to be funded by drawings/Loan = Rs.2,40,441 – 0.5 marks

Interest on drawings = Rs.5,410 – 1 mark

Interest on Loan = Rs.6,411.75 – 0.5 marks

Drawings is a more economical alternative

Journal entry for Drawings and interest on drawings – 2 marks

OR Profit and loss Appropriation Account 6

Dr Cr
Particulars Rs Particulars Rs

To Interest on capital 40,500 By Net Profit 5,49,091

By Interest on drawings
Ramesh – 21,500 (Ramesh) 780
Shekar - 19,000

To Salary (Ramesh) 3,36,000

To commission
(Ramesh) 43,927
To Commission
(Shekar) 11,697
To Profit transferred
to 117,747
Ramesh – 58,873
Shekar – 58,874
Computation of net profit – 1 mark
 Amount
Particulars (Rs.)
Net profit before
adjustments 10,00,000

Less: Manager's Salary 2,16,000

Less: Rent 1,80,000

Less: Manager's
Commission 54,909
Profit to be transferred to
P&L appropriation account 5,49,091

Computation of net profit. Manager’s salary, Commission and Rent are charges against the profit and not appropriations out of profits. Hence these
items have been taken to compute net profit and not debited under the P&L Appropriation account.

Q.2 1 mark for each classification with appropriate explanation. 6

4
1. – Dissolution of partnership – Insolvency of a partner OR Subject to contract between the partners, this could also result in dissolution of the
firm – On the happening of certain contingencies. Students can choose either of the views.

2. – Dissolution of the firm – Compulsory dissolution, when the business of the firm becomes illegal.

3. - Dissolution of partnership – Completion of venture

4. - Dissolution of partnership – Death of a partner OR Subject to contract between the partners, this could also result in dissolution of the firm –
On the happening of certain contingencies. Students can choose either of the views.

2 marks for stating any 2 distinctions.

Termination of business

Settlement of assets and liabilities

 Court’s intervention

Any other suitable distinction.

Q.2 Working note 6

5 Shareholders Money received on Money not received on
First Final First Final
Application Allotment call call Allotment call call
Fall 2,000 0 0 0 2,000 2,000 2,000
Winter 4,000 4,000 0 0 0 4,000 4,000
Spring 3,000 3,000 3,000 0 0 0 3,000
Total 9,000 7,000 3,000 0 2,000 6,000 9,000
Money 4 6 6 4 6 6 4
Receivable 36,000 42,000 18,000 0 12,000 36,000 36,000

Q.2 In the books of Success Ltd. 6

6 Journal entries
Date Particulars Dr.(Rs.) Cr.(Rs.)
A Bank A/c 22,50,000
To Debenture application A/c 22,50,000
(Being the application money received on
10,000 debentures @ Rs.225 each)

Debentures Application A/c 22,50,000

Discount on issue of Debentures A/c 2,50,000
To 6% Debentures A/c 25,00,000
(Being the issue of 10,000 6% Debentures @
90%)

B Fixed asset A/c 8,00,000

 To Vendor A/c 8,00,000
(Being the purchase of fixed assets from
vendor)

Vendor A/c 8,00,000

Discount on Issue of Debentures A/c 4,50,000
To 6% Debentures A/c 12,50,000
(Being the issue of debentures of Rs. 12,50,000
to vendor to satisfy his claim)

C Bank A/c 12,00,000

To Bank loan A/c 12,00,000
(Being a loan of Rs.12,00,000 taken from bank
by issuing debentures of
Rs.12,50,000 as collateral security)

No entry is made in the books of account of the company at the time of making issue of such debentures. In the Balance Sheet the fact that the
debentures being issued as collateral security and outstanding are shown under the respective liability

or Working notes 6
1 Total number of shares applied by Alex 8000*80000/70000=9143

2 Amount due but not paid by Alex

Application money received 9143*6=54858
Application money due on share allotted 48000
Excess application money 6858
Allotment money due on shares allotted 48000
 Allotment money due but not received 41142

3 Calculation of allotment money received later on

Total allotment money due 240000
Less: money already received during application
stage 60000
Less: Allotment money not received from Alex 41142
138858
Part B :- Analysis of Financial Statements Option -I

Q.2 A. Cash from Operating activity 1

7

OR A. Cash and cash equivalents decreased by Rs.17,10,000 1

Q28 A. Quick ratio can be different from current ratio due to the presence of advance income tax payment 1

Q.2 A. Obtain discount from vendors 1

9

Q.3 C. Zeus and Thor both are correct 1

0
OR

A. Decrease in inventory by Rs.25,000

Q.3 A. Food sells more quickly than luxury watches and belts 3
1
OR Food is in greater demand than luxury watches and belts
OR Food store will probably have a lower value of inventory due as it is perishable in nature OR Food is cheaper than clothing
OR other reasonable answer
 B. Different type of goods EITHER Food has a lower gross profit margin than luxury watches and belts
OR The food store is cutting prices to sell more goods
OR other reasonable answer

C. different accounting policies

different size of business
different type of goods sold
other reasonable answer

Q32 3

1. Cashflow from Operating Activities 2635

2. Cash flow from Investing activities 105
3. Cash flow used in financing activities -820
4. Cash and cash equivalents at the end of the
period 2080

Adjustments to be made for

Depreciation
Flood relief
Income tax
paid
Interest paid
Dividend paid
Share capital
Q.3 1. A cash flow statement when used along with other financial statements provides information that enables users to evaluate changes in net 4
3 assets of an enterprise, its financial structure (including its liquidity and solvency) and its ability to affect the amounts and timings of cash flows in
order to adapt to changing circumstances and opportunities.

2. Cash flow information is useful in assessing the ability of the enterprise to generate cash and cash equivalents and enables users to develop
models to assess and compare the present value of the future cash flows of different enterprises.

3. It also enhances the comparability of the reporting of operating performance by different enterprises because it eliminates the effects of using
different accounting treatments for the same transactions and events.

4. It also helps in balancing its cash inflow and cash outflow, keeping in response to changing condition. It is also helpful in checking the accuracy
of past assessments of future cash flows and in examining the relationship between profitability and net cash flow and impact of changing prices

OR

Neena should choose company A. Higher equity and lower debt indicates safety for the investor. A higher interest coverage ratio indicates higher
safety of interest.

Most suitable workings – Debt-equity ratio & Interest coverage ratio.

Alternate workings - Total Assets to Debt ratio or proprietary ratio or Debt to capital employed and Interest coverage ratio

Working notes

Company A Company B
Particulars (Rs.) (Rs.)
Debt-equity ratio 1.5 : 1 2.85 : 1
Total Assets to Debt ratio 1.73 : 1 1.37 : 1
proprietary ratio 0.38 : 1 0.26 : 1
Debt to capital employed ratio 0.6 : 1 0.74 : 1
Interest coverage ratio 4 times 1.35 times
Q.3 6
4

Percentage of
Revenue from
operations
Particulars 2019 (Rs. '000) 2020 (Rs. '000) 2019 2020
Revenue from Operations 480000 760000 100% 100%
Direct expenses 192000 311600 40% 41%
Gross profit 288000 448400 60% 59%
Salary & Bonus 108000 201000 23% 26%
Freight cost 57600 212800 12% 28%
Other indirect costs 14400 22420 3% 3%
Net Profit 108000 12180 23% 2%

There is a profitability issue as the profit margins in 2020 is lower than the profit margins in 2019.
Therefore, the profit is less than budgeted.
The Gross profit has decreased by 1% in 2020 vis-à-vis 2019, this decrease is marginal and hence
negligible.
Therefore, the profitability issue is not due to the increase in Direct cost. However, The direct costs
should be monitored closely to avoid further decrease in Gross profit
The Net Profit has fallen sharply by 21% in 2020 vis-à-vis 2019.
The main cause for a sharp decline in net profit can be attributed to increase in indirect costs such as
Freight Cost and Salary & Bonus.
The increase in Salary and Bonus in 2020 could be due to the bonus distributed to Mr.Sanjeeb, which
sums upto 10%of the revenue
The freight cost has increased by 16% in 2020 vis-à-vis 2019 becoming the main reason for GAAL's
profitability issues.

Solution
 Award bonus to Mr.Sanjeeb based on Net profit of the company instead of revenue.
Identify reasons for increase in Freight cost and renegotiate the freight charges with the vendors.
Quarterly/Monthly review of financial performance to identify deviations from the budget.

Part B :- Computerised Accounting

Q27 1

A.
Q28 A. =COUNTIF(C10:G10,">9:15") 1
.

Q29 A. =IF(A1<=150,A1*500,(((A1-150)*800)+75000)) 1
 OR

A. #VALUE!

Q30 B. =SUM(A1:A5)/(10-10) 1
.
OR
A. A foreign key of a table should be the primary key of another table.

Q31 Sl.No A B 3
I am used to avoide changes in row or
column references when a formula is moved
or copied from one cell to another. Who am
1 I? Dollar ($) - Absolute
A numerical value will be treated as text if
2 the number is preceeded by me Apostrophe ( ‘ )
I can be used to join text items to achieve
the same result as a =CONCATENATE
3 function Ampersand ( & )
I am a friend to an investor looking forward
4 to collect his periodic interest ACCRINT
I make it easy for you to calculate your
5 periodic payment for an annuity PMT
I am a friend to an investor looking to
6 estimate his cumulative interest CUMIPMT

Q32 Every accounting software ensures data security, safety and confidentiality. Therefore every, software should provide the following: 3
 1.Password Security

2. Data Audit

3. Data Vault Password

Security: Password is a mechanism, which enables a user to access a system including data. The system facilitates defining the user rights
according to organisation policy. Consequently, a person in an organisation may be given access to a particular set of a data while he may be
denied access to another set of data. Password is the key (code) to allow the access to the system.

Data Audit: This feature enables one to know as to who and what changes have been made in the original data thereby helping and fixing the
responsibility of the person who has manipulated the data and also ensures data integrity.

Data Vault: Software provides additional security through data encryption

Q33 DATA VALIDATION feature can be implemented in the Time Tracking sheets to resolve the above issue. 4
.
Data validation is a feature to define restrictions on type of data entered into a cell. It can be used to configure data validation rules for cells data
that will not allow users to enter invalid data, There may be warning messages when users tries to type wrong data in the cell. The messages also
guide users to what input is expected for the cell, and instructions to correct any errors.

This results in the data being accurate and consistent with the Billing database.

A drop-down list can be created by predefining the Names of the employees, projects and clients, this ensures that the employees enter/choose
accurate names thereby reducing inconsistencies.

A Date and time validation feature can be introduced to ensure that the date and time is recorded only in the accepted date format.

Hence, the Data Validation feature of excel can be used to resolve the inconsistency issues faced by the Billing department

OR

any 3
 A PivotTable report is an interactive way to quickly summarise large amounts of data. Use a PivotTable report to analyse numerical data in depth
and to answer unanticipated questions about data. A PivotTable report designed for:

1. Querying large amounts of data in user-friendly ways. Sub totalling and aggregating numeric data, summarising data by categories and
subcategories, and creating custom calculations and formulas.
2. Expanding and collapsing levels of data to focus on results, and providing from details to the summary of data for areas of interest.
3. Moving rows to column or columns to rows (or “pivoting”) to see different summaries of the source data.
4. Filtering, sorting, grouping, and conditionally formatting the most useful and the interesting subset of data to enable us to focus on the
information that we want.
5. Presenting concise, attractive, and annotated online or printed reports.
6. The use of a PivotTable report is to analyse related totals, when we have a long list of figures to sum and to compare several facts about
each figure.

Q34 A good and reliable CAS software should have the following 5 salient features 6

1 SIMPLE AND INTEGRATED CAS

CAS designed to automate and integrate all the business operations. The CAS should be integrated with enhanced MIS (Management Information
System), Multi-lingual and Data Organisation capabilities to simplify all the business processes of the organisation easily and cost-effectively

It may be simple for individual process but due to the lack of uniformity and compatibility with one another the overall CAS software is not
simple and it cannot be integrated.

2 TRANSPARENCY AND CONTROL

CAS should increase data accessibility and enhances user satisfaction. With computerised accounting, the organisation should greater
transparency for day-to-day business operations and access to the vital information.

However, in this case CAS is accessible only by 5 employees, this severely restricts data accessibility and transparency

3 ACCURACY AND SPEED

CAS must provide user-definable templates (data entry screens or forms) for fast, accurate data entry of the transactions. It also helps in
generalising desired documents and reports. In this case the new CAS is ensuring accuracy and speed individually for that particular business
process.

4 SCALABILITY

CAS should enable change in the volume of data processing in tune with the change in the size of the business. The software can be used for any
size of the business and type of the organisation. There is no clarity regarding the scalability of the CAS. In the light of restricted number of users,
it can be assumed that the increase in volume of data processing could lead to additional costs of running the CAS therefore increasing the
overall cost of CAS.

5 RELIABILITY

CAS has to make sure that the generalised critical financial information is accurate, controlled and secured. In this case, since the CAS cannot be
integrated and there is a severe restriction on its access and transparency, the financial information provided cannot be reliable as it cannot be
vouched for its accuracy, control and security.