KENDRIYA VIDYALAYA SANGATHAN – AHMEDABAD REGION

First Pre-Board Examination – 2021 – 22 (TERM – I)

CLASS: XII – COMMERCE

SUBJECT: ACCOUNTANCY (055)

TIME: 90 Minutes Max – Marks: 40

General Instructions:
Read the following instructions very carefully and strictly follow them:
1. This question paper comprises three PARTS – I and II. There are 55 questions in
the question paper.
2. Part - I -is compulsory for all candidates.
3. Part - II Analysis of Financial Statement.
4. There is an internal choice provided in each Sections.
I. Part-I, contains three Sections -A, B and C. Section A has questions from
1 to 18 and Section B has questions from 19 to 36, you have to attempt
any 15 questions each in both the sections.
II. Part I, Section C has questions from 37 to 41. You have to attempt any
four questions.
III. Part II, contains two Sections – A and B. Section A has questions from 42
to 48, you have to attempt any five questions and Section B has questions
from 49 to 55, you have to attempt any six questions.
5. All questions carry equal marks. There is no negative marking.
6. Specific Instructions related to each Part and subdivisions (Section) is mentioned
clearly before the questions. Candidates should read them thoroughly and attempt
accordingly.

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 Part – I
Section – A

Instructions:
➢ From question number 1 to 18, attempt any 15 questions.

1 Interest on Partner’s loan is ________ to ________ of partner.

A. Debited ; Capital account
B. Credited ; Capital account
C. Credited ; Loan account
D. Appropriated; Profit and loss appropriation account.

2 Alpha Ltd Company issued 4,000 shares of ì 10 each at par payable as under:
On application ì. 3 ; On allotment ì 2 ; On first call ì 4 and on final call ì 1 per share.
Applications were received for 10,000 shares and allotment was made pro-rata to all
applicants. How much amount will be received in cash on allotment?
A. ì 8,000
B. ì 12,000
C. Nil
D. None

3 Angad Ltd, issued a prospectus inviting applications for 25,000 shares. Applications
were received for 40,000 shares and pro- rata allotment was made to the applicants
of 30,000 shares. If Dinesh has been allotted 75 shares, how many shares he must
have applied for?
A. 120
B. 90
C. 75
D. 105

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4 Authorized capital of a Company is divided into 5,00,000 shares of ì 10 each. It
issued 3,00,000 shares. Subscription for 3,60,000 were received. Amount of Issued
Capital will be:
A. ì 30,00,000
B. ì. 50,00,000
C. ì 36,00,000
D. Will depend on number of shares allotted by the company

5 What will be the correct sequence of different kinds of share capital while depicting it
in the Balance sheet?
A. Authorized; Subscribed; Issued; Called up; Paid up
B. Authorized; Issued; Called up; Paid up
C. Authorized; Subscribed; Issued; Paid up; Called up
D. Authorized; Issued; Subscribed; Called up; Paid up

6 Reserves, at the time of change in profit sharing ratio are shared by______ while at
the time of Admission it is shared by_______.
A. Old partners ; all partners
B. All partners ; All partner
C. All Partners ; Sacrificing partners
D. All Partners ; Old partners

7 _________ Capital balance of partners always depict credit balance.

A. Current
B. Fixed
C. Fluctuating
D. B and C above

8 Which of the following is not true?

A. The sacrificing ratio is calculated to find out the compensation payable to

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 sacrificing partner by gaining partner
B. The sacrificing ratio is the mutual old ratio between the sacrificing partners
C. Sacrificing ratio = Old Ratio – New Ratio
D. All are correct

9 Deep, Deepak and Deependra are partners sharing profits in the ratio of 3:2:1. Deep
has given guarantee to Deependra that his share of profit shall not be less than ì
15000. If the firm earned ì 60000 during 2020-21, Deep’s share of profit shall be:
A. ì 30000
B. ì 15000
C. ì 25000
D. ì 20000

10 Consider the following information from the books of Ajay and Balbir who agree to
admit Kamlesh. They share future profits and losses in the ratio of 2:2:1.
Investments 1,00,000
Investment Fluctuation Fund 20,000

Investments were valued at ì 1,05,000 at the time of reconstitution of the firm.

Which of the following treatment is correct with respect to Investment Fluctuation
Fund:
A. Investment Fluctuation Fund DR 5,000
TO Revaluation 5,000
B. Investment Fluctuation Fund DR 20,000
TO Ajay 8,000
TO Balbir 8,000
TO Kamlesh 4,000
C. Investment Fluctuation Fund DR 20,000
TO Ajay 10,000
TO Balbir 10,000

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 D. Ajay DR 12,500
Balbir DR 12,500
TO Investment Fluctuation Fund 25,000

11 Interest on capital will be paid to the partners if provided for in the partnership deed
but only out of:
A. Profits
B. Accumulated profits
C. Reserves
D. Distributable profits

12 If Balance sheet of a reconstituted firm is prepared, assets are shown at their:

A. Historical cost
B. Market value
C. Realizable values
D. Revalued value

13 The net assets of a firm are ì 4,00,000 including ì 20,000 as Profit and Loss
Suspense account. Net liabilities of the firm are ì 80,000 including a current liability
of ì 10,000, and the normal rate of return on capital employed is 10%. If its average
profit earned is ì 40,000, the value of goodwill will be:
A. ì 1,00,000
B. ì 80,000
C. ì 90,000
D. ì 70,000

14 As per SEBI guidelines, the minimum application money payable must be at least
_______ of the issue price of the shares.

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 A. 5%
B. 25%
C. 20%
D. 15%

15 Shares cannot be issued at discount except:

A. When they are issued to vendors
B. Issued by private placement
C. When they are issued as bonus shares
D. When they are issued as sweat equity

16 For what purpose security premium reserve can be utilized?

i) Amortization of preliminary expenses
ii) Issuing bonus shares
iii) Buy-back of shares
iv) Distribution of dividends

A. Only (i) and (ii)

B. Only (i) ; (ii) and (iii)
C. Only (i) ; (iii) and (iv)
D. All four

17 Match the following:

Statement I Statement II
a) Assurance of profit i) Rectifying the past error
b) Manager’s commission ii) Calculated on opening capital
c) Past Adjustment iii) Guarantee of profit
d) Interest on capital iv) Debited to profit & lossA/c

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 A. a) (ii) ; b) (iv) ; c) (i) ; d) (iii)
B. a) (iii) ; b) (iv) ; c) (i) ; d) (ii)
C. a) (i) ; b) (iv) ; c) (ii) ; d) (iii)
D. a) (ii) ; b) (iv) ; c) (iii) ; d) (i)

18 If fixed amount is withdrawn for 6 months in the beginning of each month, interest on
the whole amount will be charged for _______ months.
A. 3
B. 3.5
C. 2.5
D. 6

Part – I
Section – B
Instructions:
From question number 19 to 36, attempt any 15 questions.
19 Given below are two statements, one labelled as Assertion (A) and the other
labelled as Reason (R). You are to examine these two statements carefully and
select the answers using the code given below:
Assertion (A): In case of inadequate profits, interest on capital to partners is
allowed to the extent of current year’s profit.
Reason (R): In case of inadequate profit, interest is paid to partners in their profit
sharing ratio.
A. Both Assertion (A) and Reason (R) are true and (R) is the correct explanation
of (A)
B. Both Assertion (A) and Reason (R) are true and (R) is not correct explanation
of (A)
C. (A) is true but (R) is false
D. (A) is false but (R) is true

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20 Given below are two statements, one labelled as Assertion (A) and the other
labelled as Reason (R). You are to examine these two statements carefully and
select the answers using the code given below:
Assertion (A): While admitting a new partner, Debtors were ì 36,000 and Provision
for Doubtful Debts ì 4,000. If bad debts were ì 2,000 and provision for doubtful debts
is required @ 5%, ì 300 will be credited towards revaluation account.
Reason (R): After bad debts, old provision will be ì 2,000 which will be more by
ì 300 now
A. Both Assertion (A) and Reason (R) are true and (R) is the correct explanation
of (A)
B. Both Assertion(A) and Reason (R) are true and (R) is not correct explanation
of (A)
C. (A) is true but (R) is false
D. (A) is false but (R) is true

21 Mahendra, Narendra and Rajendra are partners. Their capitals on 31-3-2021 stood
at ì 80,000; ì 70,000 and ì 30,000 respectively. The partnership deed provided
i) Interest on capitals be provided @ 10% p.a.
ii) Profit and Loss to be divided in the ratio of 2:2:1.
Without taking into consideration the above points the profits for the year ending on
31-3-2021 ì 30,000 were divided equally.
What will be the adjusting entry to rectify the wrong distribution of profit.

A. Rajendra Dr 4,600
To Mahendra 2,800
To Narendra 1,800
B. Mahendra Dr 3,000
Narendra Dr 2,000
To Rajendra 5,000

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 C. Mahendra Dr 2,800
Narendra Dr 1,800
To Rajendra 4,600
D. Rajendra Dr 5,000
To Mahendra 3,000
To Narendra 2,000

22 Neha and Nehal are partners sharing profits and losses equally. Their capitals were
ì 1,20,000 and ì 80,000 respectively. There was also a balance of ì 60,000 in
General Reserve and Revaluation gain amounted to ì 15,000. They admit their
friend Nirmala with 1/5th share in profits. Nirmala brings ì 90,000 as her capital.
Calculate the amount of goodwill of the firm.
A. ì 85,000
B. ì 1,00,000
C. ì 20,000
D. None of the above

23 Consider the following piece of information, extracted from the books of Vatsin and
Vivek sharing in the ratio of 1:1 decide to admit Saanvi and share future profits in the
ratio of 3:2:1.
Assets Amount ì
Plant and machinery 6,00,000
Land and building 12,00,000

i) Plant and machinery were found to be overvalued by 20%

ii) Land and building were found to be undervalued by 20%
What will be revaluation profit / loss

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 A. Profit ì 1,20,000
B. Loss ì 1,20,000
C. Profit ì 2,00,000
D. Loss ì 2,00,000

24 Avya, Divya and Kavya were equal partners. They decided to change the profit-
sharing ratio to 4:3:2. For this purpose the Goodwill of the firm was valued at
ì 90,000. The journal entry for the treatment of goodwill on change in profit sharing
ratio will be:

A. Kavya's Capital A/c Dr. 10,000

To Avya's Capital A/c. 10,000
B. Divya's Capital A/c Dr. 10,000
To Avya's Capital A/c. 10,000

C. Avya's Capital A/c Dr. 90,000

To Kavya's Capital A/c. 90,000
D. Avya's Capital A/c Dr. 10,000
To Kavya's Capital A/c. 10,000

25 Arun, Balwant and Christopher are partners sharing profits in the ratio of 6:9:5. Their
balance sheet shows machinery at ì 2,00,000; Stock at ì 80,000; Furniture ì 1,60,000
and Debtors at ì 60,000. Danish is admitted and new profit-sharing ratio is agreed at
6:9:5:5. Machinery is revalued at ì 2,60,000; Stock ì 1,20,000 and a provision is
made for doubtful debts @ 5%. Arun's share in profit on revaluation amounted to
ì 20,000. Profit / loss on revaluation of furniture will be:
A. Profit ì 5000
B. Loss ì 5000
C. Profit ì 3000

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 D. Loss ì 3000

26 Xavier, Yasmeen and Zaheer are partners in a firm sharing profits and losses in the
ratio of 5 :3 :2. The partners decide to share future profits and losses in the ratio of 3
:2 :1. Each partner’s gain and sacrifice due to change in the ratio will be:
A. Xavier Sacrifice 1/30 ; Yasmeen Gain 1/30 ; Zaheer Nil
B. Xavier Gain 1/30 ; Yasmeen Nil ; Zaheer Sacrifice 1/30
C. Xavier Nil ; Yasmeen Sacrifice 1/30; Zaheer Gain 1/30
D. Xavier Nil ; Yasmeen Gain 1/30 ;Zaheer Sacrifice 1/30

27 The following is the Balance Sheet of A and B as on 31st March 2021:

BALANCE SHEET
Liabiliteis Amount ì Assets Amount ì
Capitals Building 80000
A 60000 Furniture 30000
B 60000 Debtors 50000
Reserves 30000 Stock 20000
Creditors 50000 Cash 10000
P/L Suspense 10000
200000 200000

The partners share profits in the ratio of 3:2. From 1-4-2021 they agreed to share
future profits equally. For this purpose, the Goodwill was valued at ì 50000.
The partners want to give effect to the above by way of passing a single adjusting
entry. The entry for the same will be:

A. A DR 7,000
TO B 8,000
B. B DR 7,000
TO A 7,000

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 C. A DR 8,000
TO B 8,000
D. B DR 8,000
TO A 8,000

28 Sagar and Saanvi are partners sharing profit in the ratio 2:1, with capitals of
ì 3,00,000 and ì 2,00,000 respectively carrying interest @ 10% p.a. On 31st March
2021, firm’s net profit is ì 2,50,000. The partnership deed provided interest on
drawings of partners which, for the year amounted to ì 6,000 for Sagar and ì 4,000
for Saanvi. Sagar is also entitled to commission @10% on net divisible profits while
Saanvi is entitled to a salary of ì 3000 per quarter. Calculate profit to be transferred
to Partners Capital A/cs.

A. ì 1,80,000
B. ì 1,98,000
C. ì 2,20,000
D. ì 2,10,000

29 Elsa, Anna and Olaf were partners sharing in the ratio of 5:3:2. On 31st March 2021,
their books reflected a net profit of ì 2,10,000. As per the terms of the partnership
deed they were entitled for interest on capital which amounted to ì 1,20,000,
ì 60,000 and ì 60,000 respectively. Besides this a salary of ì 60,000 each was
payable to Elsa and Anna.
Calculate the amount of profit/loss appropriated between Elsa, Anna and Olaf.
A. Loss ì 75,000; ì 45,000; ì 30,000
B. Profit ì 1,05,000; ì 70,000; ì 35,000
C. Profit ì 1,05,000; ì 63,000; ì 42,000
D. Profit ì 70,000 each

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30 Given below are two statements, one labelled as Assertion (A) and the other
labelled as Reason (R). You are to examine these two statements carefully and
select the answers using the code given below:
Assertion (A): Security premium can be used as free reserve by a company.
Reason (R): The excess of issue price of a share over its face value is called shares
issued at a premium.
A. Both Assertion (A) and Reason (R) are true and (R) is the correct explanation
of (A)
B. Both Assertion (A) and Reason (R) are true and (R) is not correct explanation
of (A)
C. (A) is true but (R) is false
D. (A) is false but (R) is true

31 A Company purchased a building for ì 12,00,000 out of which ì 2,00,000 were paid
in cash. Balance amount was paid by issue of equity shares of ì 10 each at a
premium of 25%. How many shares will be issued by the company?
A. 1,00,000 shares
B. 80,000 shares
C. 1,20,000 shares
D. 96,000 shares

32 A company forfeited 700 shares of ì 10 each, on which only ì 5 per share was paid
up. Of these, 200 shares were reissued at ì 9, ì 10 paid up. The amount to be
transferred to capital reserve will be:
A. ì 800
B. ì 200
C. ì 3,500
D. ì 2500

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33 800 shares of ì 10 each issued at 30% premium (to be paid on allotment) were
forfeited for nonpayment of ì 2 per share on first call and ì 2 per share on final call.
Share forfeited account will be credited by:
A. ì 2,400
B. ì 4,800
C. ì 3,200
D. ì 7,200

34 The amount of discount on re-issue of forfeited shares cannot exceed:

A. 5% of face value
B. 10% of par value
C. Total amount forfeited
D. Amount forfeited on shares re-issued.

35 Vivaan Ltd. issued 10,000 equity shares of ì 10 each fully called up and paid except
final call of ì 2 on 500 shares. These 500 shares will be shown in ‘Notes to
Accounts – to- Balance sheet under:
A. Called up capital
B. Subscribed and fully paid
C. Calls in arrears
D. Subscribed and not fully paid

36 Reserve capital is a part of:

A. Paid-up capital
B. Shareholder’s fund
C. Reserves and surplus
D. Capital to be called up on liquidation

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 Part – I
Section – C
Instructions:
➢ From question number 37 to 41, attempt any 4 questions.
Question no.’s 37 and 38 are based on the hypothetical situation given below.
MKVB Limited was registered with an authorized capital of ì 50,00,000 divided into
shares of ì 100. It took over assets of ì 25,00,000 and liabilities of ì 6,00,000 of NN
Limited. It agreed to issue 20,000 shares at the premium of 10% towards purchase
consideration. It also issued 20,000 shares for public subscription at 10 % premium,
payable ì 20 an application ; ì 40 on allotment (including premium) ì 30 on the first
call and the balance on final call. All money is duly received except Aruna who was
allotted 400 shares failed to pay allotment and share first call while Bharti failed to
pay the first call on 200 shares. Final call was not yet made by the company. The
company forfeited the shares of Aruna.

37 The difference between the Net assets acquired and the purchase consideration
paid to NN Limited will be:
A. Capital reserve of ì 3,00,000
B. Goodwill of ì 3,00,000
C. Securities premium ì 1,00,000
D. Reserve Capital of ì 1,00,000

38 The amount to be shown against Security Premium Reserve account shall be:
A. ì 2,00,000
B. ì 1,96,000
C. ì 3,96,000
D. ì 3,94,000

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 Question no.’s 39, 40 and 41 are based on the hypothetical situation given
below.
Anshul and Neeraj are partners in a firm. Anshul contributed ì 3,00,000 and Neeraj
contributed ì 1,00,000 as capitals. The current account of Anshul and Neeraj
showed a balance of ì 30,000 and ì 10,000 (debit) respectively. They had agreed as
per the terms of the partnership deed that interest on capital will be allowed at 10%
per annum. Neeraj is to be allowed as a salary of ì 2,500 per month. Anshul is to be
given a rent of ì 1,000 per month for the use of his premises by the firm. Due to the
pandemic the profits for the firm for the year ended 31st March 2021 was
ì 54,000.
39 The profits between Anshul and Neeraj will be divided between them in the ratio of:
A. Equal
B. 4:3
C. 3:4
D. 3:1

40 The amount of Rent payable should be:’

A. Debited to Profit and loss appropriation account and credited to Anshul’s
capital account.
B. Credited to Profit and loss appropriation account and debited to Anshul’s
current capital account.
C. Debited to Profit and loss account and credited to Anshul’s capital account.
D. Debited to Profit and loss account and credited to Anshul’s current capital.
account.

41 The balance of Neeraj’s current capital account after all appropriations will be:
A. ì 24,000
B. ì 34,000
C. ì 14,000
D. ì 1,34,000

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 Part – II
Section – A
Instructions:
➢ From question number 42 to 48, attempt any 5 questions.
42 Given below are two statements, one labelled as Assertion (A) and the other
labelled as Reason (R). You are to examine these two statements carefully and
select the answers using the code given below:

Assertion (A): Issue of bonus shares reduces the Debt – Equity ratio
Reason (R): Shareholder’s fund will not change.

A. Both Assertion (A) and Reason (R) are true and (R) is the correct explanation
of (A)
B. Both Assertion (A) and Reason (R) are true and (R) is not correct explanation
of (A)
C. (A) is true but (R) is false
D. (A) is false but (R) is true

43 Consider the following statements:

i) Accounting ratios simplify the accounting information.
ii) They assess the operating efficiency of the business.
iii) They help know the profits of a business.
iv) They help to the qualitative characteristics of a business
Which of the above statements in respect to the objectives of Accounting Ratio is
/ are correct?
A. (i) and (ii)
B. (i) ; (ii) and (iii)
C. (ii) ; (iii) and (iv)
D. All four are correct

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44 Which of the following groups of ratios primarily measure the operating efficiency of
the business?
A. Activity and Liquidity ratios
B. Activity, Liquidity and Profitability Ratios
C. Liquidity, Solvency and Profitability Ratios
D. Activity and Profitability Ratios

45 Consider the following statements:

i) Quick ratio measures the relation between Current assets and current
liabilities.
ii) Payment of Bills payable on maturity will reduce the current ratio.
iii) Current ratio will not change with the sale of Non-current investments.
iv) Debt equity ratio will not change on conversion of Debentures into
preference shares.
Which of the above statements in respect to Ratio is / are correct?

A. (i) and (ii)

B. (i) ; (ii) and (iii)
C. (ii) ; (iii) and (iv)
D. None

46 Match the following:

Column I Column II
a) Public deposits i) Shareholder’s fund
b) Calls in advance ii) Long term borrowings
c) Calls in arrears iii) Fixed assets
d) Mining rights iv) Other current liabilities

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 A. a) (ii) ; b) (iv) ; c) (i) ; d) (iii)
B. a) (iii) ; b) (iv) ; c) (i) ; d) (ii)
C. a) (i) ; b) (iv) ; c) (ii) ; d) (iii)
D. a) (ii) ; b) (iv) ; c) (iii) ; d) (i)

47 Which type of Analysis of Financial Statement is known as dynamic?

A. Vertical
B. Horizontal
C. Internal
D. External

48 Ratios may be expressed in ___________ form.

A. Ratio
B. Rate
C. Percentage
D. All of the above

Part – II
Section – B
Instructions:
➢ From question number 49 to 55, attempt any 6 questions.
49 Match the following:
Column I Column II
a) Staff welfare expenses i) Other expenses
b) Interest paid on debentures ii) Amortization and depreciation
c) Discount allowed iii) Employees benefit expenses
d) Writing off of intangible assets iv) Finance cost
A. a) (ii); b) (iv) ; c) (i) ; d) (iii)
B. a) (iii); b) (iv) ; c) (i) ; d) (ii)
C. a) (i); b) (iv) ; c) (ii) ; d) (iii)

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 D. a) (ii); b) (iv) ; c) (iii) ; d) (i)

50 Which of the following statement is FALSE?

A. Share forfeiture amount is added in Subscribed Capital.
B. If operating cycle cannot be identified it is taken as 12 months.
C. Bank overdraft and cash credit in Balance sheet are shown as short-term
borrowings.
D. Calls in arrears is deducted from subscribed and Fully paid capital.

51 If Liquid ratio of a company is 1.5: 1, Current Liabilities are ì 3,00,000 and Inventory
ì 4,50,000, its Current ratio will be:

A. 2.5 : 1
B. 3 : 1
C. 3.5 : 1
D. 2.7 : 1

52 Given below are two statements, one labelled as Assertion (A) and the other
labelled as Reason (R). You are to examine these two statements carefully and
select the answers using the code given below:
Assertion (A): Provision for Bad and Doubtful debts if given in Balance sheet under
Current Liability is excluded from current liability while calculating current ratio.
Reason (R): It should be deducted both from Short Term Provisions and Trade
Receivables.
A. Both Assertion (A) and Reason (R) are true and (R) is the correct explanation
of (A)
B. Both Assertion (A) and Reason (R) are true and (R) is not correct explanation
of (A)
C. (A) is true but (R) is false
D. (A) is false but (R) is true

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53 Given below are two statements, one labelled as Assertion (A) and the other
labelled as Reason (R). You are to examine these two statements carefully and
select the answers using the code given below:
Assertion (A): Current maturity of debentures / bonds is shown under the head,
Current Liability as Other Current Liability.
Reason (R): Debentures is always a long-term borrowing.

A. Both Assertion (A) and Reason (R) are true and (R) is the correct explanation
of (A)
B. Both Assertion (A) and Reason (R) are true and (R) is not correct explanation
of (A)
C. (A) is true but (R) is false
D. (A) is false but (R) is true

54 The Revenue from Operation during current year of A-One Limited is ì 13,00,000. If
it has 30 % Cash Revenue from Operations of its Credit Revenue from Operations,
then its Credit Revenue from Operation will be:
A. ì 3,00,000
B. ì 10,00,000
C. ì 3,90,000
D. ì 9,10,000

55 Find Inventory Turnover Ratio if Revenue from Operations is ì 50,00,000, Gross

Profit Ratio is 25 % on Cost of Revenue from Operations and Inventory is
ì 6,00,000.
A. 6.25 Times
B. 6.67 Times
C. 10.4 Times
D. 5 Times

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