Model Paper-3 Acountancy

Class XII
MID TERM EXAMINATION- SEPTEMBER-2023
1. Capital employed in a business is Rs. 2,00,000. Normal Rate of Return on capital employed is 15%. During
the year, the firm earned a profit of Rs. 48,000. Calculate goodwill on the basis of 3 years’ purchase of
Super Profit.
(A) Rs. 54,000
(B) Rs. 60,000
(C) Rs. 50,000
(D) None of these (1)

2. The rate of interest on loan in the absence of partnership deed: (1)

(a) 10%
(b) (b) 12%
(c) (c) 6%
(d) (d) 8%

3. The Goodwill distribution at the time of admission will be: (1)

(a) Old Ratio
(b) New Ratio
(c) Sacrificing ratio
(d) Gaining Ratio

4. A, B and C are partners sharing profits and losses in the ratio 3:2:1. D is admitted for a 4th share and the
partners decided to share profits equally in the future. How much A gains from this adjustment?
(1)
(a) 3/12
(b) 2/12
(c) 1/12
(d) 4/12

5. A,B and C were partners sharing profits and losses in the ratio 5:3:2. B retired and the new profit sharing
ratio will be 3:2. What is the gaining new ratio? (1)

(a) 2:1
(b) 1:2
(c) 3:2
(d) 5:3

6. Interest on Partner’s Loan will be credited to: (1)

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 a) Partner’s Loan A/c
b) Partner’s Capital A/c
c) Profit and Loss A/c
d) None of the above.

7. If, at the time of admission, the revaluation A/c shows a profit, it should be credited to:
(A) Old partners’ capital accounts in the old profit-sharing ratio.
(B) All partners’ capital accounts in the new profit-sharing ratio.
(C) Old partners’ capital accounts in the new profit-sharing ratio.
(D) Old partners’ capital accounts in the sacrificing ratio. (1)

8. Sacrificing ratio is the difference between: (1)

A. New ratio and old ratio

B. Old ratio and new ratio
C. New ratio and gaining ratio
D. Old ratio and gaining ratio

9. If Goodwill is appearing in the balance sheet it will be debited to: (1)

(A) Gaining partner

(B) Retiring partners
(C) All partners
(D) Remaining

10. If the Partners are maintaining the capital account on Fixed basis, partner’s capital account will have:
(1)

(A) Credit balance.

(B) Debit balance.
(C) Credit or Debit balance.
(D) May have Nil balance

11. P, Q, and R are partners in 6: 4: 2. R is guaranteed that his share of profit will not be less than Rs.70,000.
Any deficiency will be borne by P and Q in the ratio of 4: 2. Firm’s profit was Rs.2,40,000. Share of P will
be: (1)

A. Rs.1,00,000
B. Rs.1,10,000
C. Rs.1,20,000
D. Rs.1,02,000

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 12. At what rate is interest payable on the amount remaining unpaid to the executer of deceased partner, In
the absence of any agreement among partners, when he opts for interest and not share of profit:
(1)

(A) 6%
(B) 12%
(C) 7.5%
(D) 8%

13. In case of admission of a partner, the entry for unrecorded investments will be:
(A) Debit Partners Capital A/cs and Credit Investments A/c
(B) Debit Revaluation A/c and Credit Investment A/c
(C) Debit Investment A/c and Credit Revaluation A/c
(D) None of the above (1)

Read the following hypothetical paragraph and answer the questions from 14-17
Abhishek and Aishwarya were partners in a fast-food corner. They sold fast food items across the counter and did
home delivery too. For this purpose, they needed a delivery van, a few scooties and an additional person to
support. Their initial fixed capital contribution was 3,50,000 and 2,00,000 respectively. Abhishek spends twice
time that of Aishwarya to the business. He wants a salary of Rs. 10,000 per month for extra time spend by him.
Aishwarya has advanced 1,00,000 to the firm and want 6% interest per annum. They both have withdrawn 20,000
from the business for personal use for which Abhishek was asking to interest on drawing @ 5% to the business.
They earned annual profit of Rs. 2,00,000.

14. Interest on drawing charged to Abhishek and Aishwarya are: (1)

A) 5%
B) 6%
C) 1000 each
D) No interest on drawing will be charged

15. Profit shared by Abhishek and Aishwarya are: (1)

A) 1,00,000 each
B) Equally
C) 50,000 each
D) None of the above

16. Abhishek spends twice time that of Aishwarya to the business”, for this purpose
Abhishek will be given a salary of : (1)
A) 10,000 per month
B) Equal for both of them
C) No salary will be given
D) 5,000 per month

17. “Aishwarya has advanced 1,00,000 to the firm and want 6% interest per annum”,
interest received by Aishwarya on advances will be : (1)
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 A) 6,000
B) 7,000
C) 8,000
D) 9,000

18. Assertion (A): During dissolution of a Firm, first Third Party Liabilities should be paid.
Reason(R): This rule is applicable according to Sec.48 of Indian partnership Act, 1932.

a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A)
c) (A) is true, bur (R) is false
d) (A) is false, but (R) is true. (1)

19. Assertion (A): Personal properties of a partner may also be used to pay off the firm’s debts.
Reason(R): All partners have limited liability in the firm.
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A)
c) (A) is true, but (R) is fals
d) (A) is false, but (R) is true. (1)

20. Assertion (A): Partnership firm is a form of organisation where two or more persons carry on business
activity on the basis of agreement among them.
Reason(R): The profit or loss arising from the partnership business is shared by the partners in the agreed
ratio.
a) Both (A) and (R) are true and (R) is the correct explanation of (A)
b) Both (A) and (R) are true and (R) is not the correct explanation of (A)
c) (A) is true, but (R) is false
d) (A) is false, but (R) is true. (1)

21. Nitin, Tarun and Amar are partners sharing profits equally and decide to share profits in the ratio
of 2 : 2 : 1 w.e.f. 1st April, 2023. The extract of their Balance Sheet as at 31st March, 2023 is as
follows:
Liabilities ₹ Assets ₹
Investments Fluctuation Reserve 60,000 Investments 4,00,000
(At Cost)
Pass the Journal entries in each of the following situations:
(i) When its Market Value is not given;
(ii) When its Market Value is ₹ 4,24,000;
(iii) When its Market Value is ₹ 3,70,000; (3)

22. A, B and C were Partners in a firm, sharing profits and losses in the Ratio 2:2:1. On 1 st April, 2023, they
have decided to change the profit sharing ratio into 1:1:1. Pass an adjustment entry from the following for
the revaluation of assets and Reassessments of Liabilities. (3)

Name of items Original Value Revised Value

Plant and Machinery 2,40,000 2,00,000
Land and Building 3,60,000 4,20,000

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 Creditors 1,20,000 1,10,000
Stock 1,80,000 2,20,000
Debtors 2,00,000 1,90,000
Investments 4,00,000 4,60,000

(3)

23. A and B contribute `80,000 and `40,000 respectively. They decide to allow interest on capital @6% p.a.
Their respective share of profits is 2:3 and the business profit before interest on Capital for the year is
`3,000. Show the distribution of profit

a. If the Partnership Deed provides for Interest on Capitals,

b. If the Partnership Deed provides for interest as a Charge (3)

24. Basit and Chandu are equal Partners and the capital of the firm of Basit and chandu is ` 2,00,000 and the
market rate of interest is 20%. Annual salary to partners is ` 5,000 each. The profits for the last 3 years
were ` 60,000; ` 70,000 and ` 80,000. Goodwill is to be valued at 2 years purchase of the last 3 years’
average super profits. Pass journal entry for the treatment of Goodwill when they admit David as a 3 rd
partner. (3)

25. Harshad, Kohli and Manish are partners in a firm sharing profits in the ratio of 3:2:1 .On Feb 1 ,2018, they
admitted Harish as a new partner. The new profit sharing ratio of Harshad, Kohli, Manish and Harish will
be equal. Harish brought ` 1,50,000 for his capital and `30,000 as his share of goodwill. Record necessary
journal entries on Harish’s admission.
(3)
26. A, B and C are the partners sharing profits and losses equally. They have admitted D for 1/4 th share in
profits. To get this share, he has to contribute Rs. 80,000 for capital and Rs. 40,000 for his share of
goodwill, half the amount was brought in cash. At the time of D’s admission, there was a General Reserve
of `30,000. Pass necessary journal entries in the books of the firm and also calculate the new profit
sharing ratio. (3)

27. Iqbal and Kapoor are in partnership sharing profits and losses in 3 : 2. Kapoor died three months after the
date of the last Balance Sheet. According to the Partnership Deed, the legal heir is entitled to the
following:
(a) His capital as per the last Balance Sheet.
(b) Interest on above capital @ 3% p.a. till the date of death.
(c) His share of profits till the date of death calculated on the basis of last year's
profits.
His drawings are to bear interest at an average rate of 2% on the amount irrespective of the period.
Kapoor's capital as per Balance Sheet was ₹ 40,000 and his drawings till the date of death were ₹ 5,000.
Draw Kapoor's Capital Account to be rendered to his representatives. (4)

28. A,B and C were partners in a firm sharing profits and losses in the ratio 3:2:1. B died on 31 st May, 2022
and his Capital, goodwill and all other benefits at the time of death were `40,000. A and C paid to the
executors of B `10,000 immediately and the balance amount paid into 3 equal installments. Accounts

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 were closed on 31st March every year. Prepare B’s Executors account till it is finally paid.
(4)
29. L and M share profits of a business in the ratio of 5:3. They admit N into the firm for a fourth share in the
profits to be contributed equally by L&M. On the date of admission the Balance Sheet of L&M is as follows
:
BALANCE SHEET as at 31st March 2023

Liabilities Rs Assets Rs
L’s Capital 30,000 Machinery 26,000
M’s Capital 20,000 Furniture 18,000
Reserve Fund 4,000 Stock 10,000
Bank Loan 12,000 Debtors 8,000
Creditors 2,000 Cash 6,000
68,000 68,000
Terms of N’s admission were as follows :

i) N will bring Rs. 25,000 as his capital.

ii) Goodwill of the firm is to be valued at 4 years purchase of the average super profits of the last
three years. Average profits of the last three years are Rs. 20,000; while the normal profits that
can be earned on the capital employed are Rs. 12,000.

iii) Furniture is to be appreciated to Rs. 24,000 and the value of stock into by
20%. Pass Journal entries. (4)

30. A,B and C are three partners sharing profits in the ratio of 3:1:1. On 31st March , 2023 , they decided to
dissolve their firm. On that date their balance sheet was as under:
` `
Creditors 6,000 Cash 3,200
Loan 1,500 Debtors 24,200
Capital A/cs: Less: Provision 1,200 23,000
A 27,500
B 10,000 Stock in trade 7,800
C 7,000 44,500 Furniture 1,000
Sundry Assets 17,000
52,000 52,000
It is agreed that:
(i) A is to take over Furniture at ` 800 and Debtors amounting to ` 20,000 at Rs.17,200 ; the Creditors
of ` 6,000 to be paid by him at this figure.
(ii) B is to take over all the Stock in Trade at ` 7,000 and some of the Sundry
Assets at Rs.7,200(being 10% less than book value).
(iii) C is to take over the remaining Sundry Assets at 90% of the book value, less ` 100 as discount and
assume the responsibility for the discharge of the loan together with accrued interest of ` 30
which has not been recorded in the books.
(iv) The expenses of dissolution were ` 270 . The remaining debtors were sold to a debt collecting
agency for 50% of the book value.
Pass Journal entries. (6)

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 31. Asha, Nisha and Jagat are partners in a firm. On 1st April, 2022, the balance in their capital accounts stood
at `8,00,000, `6,00,000 and `4,00,000 respectively. They share profits in the proportion 3:2:1. Partners are
entitled to interest on capital @6% p.a and salary to Asha @ `4,000 per month and a commission of `6,000
per quarter to Jagat as per the provisions of the deed.
Asha’s share of profit excluding interest on capital and including salary is guaranteed at `60,000 p.a.
Jagat’s share of profit including interest on capital but excluding Commission is guaranteed at `50,000 p.a.
Any deficiency arising on that account shall be met by Nisha. The profits of the firm for the year ended
31st March, 2023 amounted to `3,00,000. Prepare profit and Loss Appropriation account.
(6)

32. The following is the Balance Sheet of A,B and C who share profits in the ratio of
3:2:1. as on 31st March 2022.
Liabilities Rs. Assets Rs.
Bank Overdraft 2,000 Debtors 40,000 36,400
Less: Provision 3,600
Reserve Fund 10,000
Sundry Creditors 20,000 Stock 20,000
Capitals :A 40,000 Building 25,000
B 30,000 Patents 2,000
C 15,000 Machinery 33,600
1,17,000 1,17,000
Partners decided to share future profits in the ratio 1:1:1.
(i) Provision for doubtful debts is to be reduced by Rs. 3,000.
(ii) Patents have become valueless.
(iii) Creditors are not likely to be claimed Rs. 1,000.
(iv) Building appreciated by Rs. 10,000
(v)Goodwill is valued at Rs. 60,000.
Prepare Revaluation account, capital Account and Balance sheet after all adjustment.
(6)

33. X and Y are in partnership sharing profits and losses in the ratio of 3:2. Their balance sheet as on 31st
March,2023 was as under:
Liabilities ` Assets `
Creditors 30,000 Bank 10,000
General Reserve 24,000 Debtors 40,000
Capital Accounts: Less :Provision 1600 38,400
X 120,000 Patents 19,600
Y 60,000 Investments 16,000
Profit and Loss a/c 20,000 Fixed Assets 144,000
Salary Outstanding 4,000 Goodwill 20,000
Advertisement Suspense A/c 10,000
258,000 258,000

They admit Z for 2/7th share on the following terms:

(i) A provision of 5% is to be created on Debtors.

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 (ii) That out of the amount of insurance which was debited entirely to profit and loss account, `2400
be carried forward as unexpired insurance in the books.
(iii) ` 10,000 are outstanding for salaries.
(iv) Present market value of Investments is ` 12,000. X takes over the Investments at this value.
(v) Z will bring `30,000 as his share of goodwill.
(vi) Z will bring proportionate capital
Prepare Revaluation a/c and Capital accounts of all the partners. (6)

34. A,B and C are in partnership sharing profits in the ratio of 5:3:2. The Balance Sheet of the firm as on
March 31,2022 was as follows :
Balance Sheet of A, B and C as at March 31,2022

Liabilities Amount (`) Assets Amount (`)

Capital Accounts: Bills Receivable 15,000
A 40,000 Machinery 82,000
B 61,000 Furniture 4,000
C 24,000 1,25,000 Sundry Debtors 70,000
Reserve 30,000 Less:Provision for 3,000 67,000
Sundry Creditors 50,000 Doubtful debts
Profit and Loss a/c 28,000 Stock 40,000
Bills Payable 5,000 Cash at Bank 30,000
2,38,000 2,38,000
On April 1,2022 ,B retires due to his foreign assignment and A and C continued in partnership sharing
profits and losses in the ratio of 3:2. It was agreed that following adjustments were to be made on the
retirement of B:
(i) The machinery was to be revalued at ` 85,000
(ii) The stock was to be reduced by ` 1,000.
(iii) The furniture was to be reduced to ` 1,600.
(iv) The provision for doubtful debts would be 6%.
(v) A provision of ` 800 was to be made of outstanding expenses.
(vi) liability on account of damages of ` 7,000 included in creditors is settled at ` 12,000.
(Vii) The partnership agreement provides that in case of retirement of a partner goodwill was to be
valued at three year’s purchase of average profits, which are `10,000.
B was paid off in full. A and C were to deposit such an amount in bank so as to make their capital
in proportionate to the new profit sharing ratio, subject to the condition that a bank balance of `
40,000 was to be maintained as working capital. Prepare Revaluation account and Capital
Account of all the Partners.
(6)
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