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Class 12 - Accountancy
sample paper 01 (2023-24)

Maximum Marks: 80
Time Allowed: : 3 hours

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

1. Which of the following situation is not acceptable for the continuity of the partnership firm?
a) Retirement and Admission on the same day
b) Death and Admission
c) Admission of two partners on the same day
d) All partners leave the firm together
2. Assertion (A): Partnership firm is a form of organisation where two or more persons carry on some 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 equally.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
3. Pawan Limited forfeited 100 equity shares of ₹ 10 each issued at a premium of 20% for non-payment of final call of ₹ 5
including the premium.
What amount will be shown by Share Forfeiture A/c?
a) Share Forfeiture A/c 500
b) Share Forfeiture A/c 700
c) Share Forfeiture A/c 800
d) Share Forfeiture A/c 600

OR

Issued 5,000, 12% debentures of ₹ 100 each at a discount of 2%, redeemable at a premium of 5%. In such case.
a) Loss on Issue will be debited by ₹ 35,000

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b) Premium on Redemption will be debited by ₹ 25,000
c) Loss on Issue will be Credited by ₹ 10,000
d) Premium on Redemption will be credited by ₹ 35,000
4. Ram and Rohit shared profit and loss in the ratio of 3:2. With effect from 01/04/2012, they agreed to share profits
equally. The goodwill of the firm was valued at 30000. Which partner account should be debited in this case for the
adjustment.
a) Rohit Rs.3,000
b) Both Rohit Rs.3,000 and Ram Rs.1,500
c) Rohit Rs.30,000
d) Ram Rs.3,000

OR

Show the distribution of Profit or loss between X and Y in their ratio 3 : 5:

Net Profit 80,000

Partners salary 60,000

Interest on capital (all partners) 20,000

Interest on drawings 800
Profit/loss distributed among the partners:
a) Profit to X ₹ 240 and Y ₹ 560
b) Profit to X ₹ 300 and Y ₹ 500
c) Profit to X ₹ 500 and Y ₹ 300
d) Profit to X ₹ 400 and Y ₹ 400
5. A, B and C are partners sharing profits in the ratio of 1 : 2 : 3 with a capital of ₹ 5,00,000 each. On 01.08.2020 Mr. A
introduce an additional capital of ₹ 1,00,000 and on 30.09.2021 Mr. A withdrew the amount of additional capital, interest
on capital is to be allowed @ 12% p.a. Interest on capital of Mr. A Rs.________ is to be shown in the ________ side of
partners' capital account:
a) 60,000 / Credit side
b) 60,000 / Debit side
c) 62,000 / Credit side
d) 62,000 / Debit side
6. When a company purchases some assets and not paying cash instead issues debentures as a payment for the purchase,
from the vendors it is known as the issue of:
a) Debentures issued for cash
b) Debentures issued for consideration other than cash
c) Debentures issued as collateral security
d) Debenture issued in consideration of asset

OR

Harry Pens Ltd. issued 10,000, 7% Debentures of ₹ 100 each at a discount of ₹ 4 redeemable at a premium of ₹ 6. It will
write off Loss on Issue of Debentures
a) from General Reserve.
b) from Statement of Profit & Loss.
c) from Securities Premium
d) None of these

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7. Assertion (A): Madhusudan Ltd. issued for subscription 2,00,000 equity shares of ₹ 10 each payable ₹ 3 on application.
It received ₹ 5,40,000 as application money. Full allotment was made to each applicant.
Reason (R): In this case, there is under subscription of shares. However, since minimum subscription of 90% has been
received, full allotment will be made to each applicant.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
8. How to calculate the share of the goodwill of Retiring or deceased partner?
a) Value of the firm’s goodwill × outgoing partner's share of profit
b) Value of the firm’s goodwill × Sacrificing partner’s share
c) Value of the firm’s goodwill × new partner's profit share
d) Value of the firm’s goodwill × Gainer partner’s share

OR

Pick the odd one out:

i. Interest on capital
ii. Salary to partner
iii. Commission to partner
iv. Interest on drawings
a) Option (iii)
b) Option (iv)
c) Option (ii)
d) Option (i)
Question No. 9 to 10 are based on the given text. Read the text carefully and answer the questions:

Ankit, Mohit and Vinod were partners in a firm sharing profits equally. On 1st April, 2020, their capitals stood at ₹
2,00,000, ₹ 1,50,000 and ₹ 1,00,000 respectively. As per the provisions of Partnership Deed:

i. Ankit was entitled to a salary of ₹ 2,500 p.m.

ii. Partners were entitled to interest on capital @ 10% p.a.

The net profit for the year ended 31st March, 2021, ₹ 1,50,000 was distributed among the partners without providing for
the above items.

9. What is the amount of interest on capital of Mohit?

a) ₹ 20,000
b) ₹ 10,000
c) ₹ 15,000
d) ₹ 30,000
10. What is the amount of distributable profit for the partners after providing salary and interest on capital to the partners?
a) ₹ 25,000 each
b) ₹ 15,000 each
c) ₹ 50,000 each
d) ₹ 10,000 each
11. A and B are partners in a firm and sharing the profit & loss equally. Their capitals are ₹ 5,00,000 and ₹ 3,00,000
respectively. Calculate the amount of profit or loss to be distributed among the partner if rent is paid to partner A ₹

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10,000 per month and Profit for the year is ₹ 1,00,000 after providing rent to partner A.
Distribution of Profit/Loss will be as:
a) Loss: A = 10,000 and B = 10,000
b) A = Nil and B = Nil
c) Profit: A = 50,000 and B = 50,000
d) Loss: A = 50,000 and B = 50000
12. X Ltd. purchased Machinery of ₹ 10,00,000 from Y Ltd. and paid 20% of the amount by accepting a bill of exchange in
favour of Y Ltd. The remaining amount was paid by issuing Equity Shares of ₹ 100 each at a premium of 25% to Y Ltd.
Number of Shares to be issued:
a) 6,400
b) 6,300
c) 6,200
d) 6,500
13. Ankit Ltd. purchased a running business of Girish Ltd. consisting Assets of ₹ 30,00,000 and liabilities of ₹ 5,00,000 at a
purchase consideration of ₹ 23,00,000.
Amount of Capital Reserve/Goodwill at the time of purchase of business ________
a) ₹ 5,00,000 Goodwill
b) ₹ 2,00,000 Capital Reserve
c) ₹ 2,00,000 Goodwill
d) ₹ 4,00,000 Capital Reserve
14. Why a partnership firm needs partnership deed?
a) All of these
b) It represents duties and liabilities of partners
c) It acts as a proof in any dispute
d) It regulates rights of partners
3
15. Bina and Ria are partners sharing profits in the ratio of 5 : 3. They admitted Siya as a new partner for th share which
8
2 1
she acquired th from Bina and th from Ria. The new profit sharing ratio of Bina, Ria and Siya will be:
8 8
a) 3 : 2 : 3
b) 5 : 5 : 6
c) 2 : 3 : 3
d) 9 : 1 : 6

OR

1
R and S are partners in a firm sharing profits in the ratio of 3 : 2. They admit T as a new partner. R surrenders 5 th share
2
of his profits and S surrenders 5 th of his share in favour of T. New profit sharing ratio will be:
a) 5 : 3 : 2
b) 12 : 6 : 7
c) 12 : 8 : 5
d) 3 : 2 : 1
16. When a partner capital account shows a debit balance, his loan account should be transferred to his Capital account by
what amount
a) 20% amount
b) 50% amount
c) To the extent of Debit Balance

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d) Whole amount
17. Mita, Geeta and Mohit were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st
April, 2022, they mutually agreed to share profits and losses in the ratio of 2 : 2 : 1. It was agreed that:
i. Goodwill of the firm was valued at ₹ 1,40,000.
ii. Profit on revaluation of assets and re-assessment of liabilities amounted to ₹ 1,20,000.
Pass necessary journal entries for the above transactions in the books of the firm. Show your working notes clearly.
18. A and Bare partners sharing profits and losses equally with capitals of ₹ 3,00,000 and ₹ 2,00,000 respectively. Their
drawings during the year ending on 31st March, 2023 are as follows:
₹

A's drawings on 30-06-2022 20,000

31-07-2022 10,000

01-10-2022 10,000

01-03-2023 16,000

B drew ₹ 6,000 at the end of each month. The deed provides interest on capitals and drawings at 10% p.a. Calculate
interest on capitals and drawings.

OR

Roshan, Mahesh, Gopi and Jai are partners sharing profits and losses in the ratio of 3 : 3 : 2 : 2. The balances of capital
accounts on 1st April, 2015 were: Roshan ₹8,00,000, Mahesh ₹5,00,000, Gopi ₹6,00,000 and Jai ₹6,00,000.
After the accounts for the year ended 31st March, 2016 were prepared, it was discovered that interest on capital @ 10%
per annum as provided in the partnership deed had not been credited to the partners’ capital accounts before the
distribution of profits.
You are required to rectify the error by passing a single adjusting journal entry.
19. Kuber Ltd. purchased assets worth ₹ 10,00,000 and took over liabilities of ₹ 1,00,000 of Amrit Ltd. for a purchase
consideration of ₹ 8,00,000. Kuber Ltd. paid ₹ 2,60,000 through a cheque and the balance was settled by issuing 12%
debentures of ₹ 100 each at a discount of 10%. Pass necessary journal entries in the books of Kuber Ltd. for the above
transactions.

OR

Mega Movers Ltd. has a paid up share capital of ₹ 60,00,000 and a balance of ₹ 15,00,000 in the Securities Premium
Account. The company management do not want to carry over the balance. State the purposes for which the balance can
be utilised.
20. Malhotra and Rana had a firm in which they had invested ₹ 50,000. On an average, the profits were ₹ 16,000. The
normal rate of return in the industry is 15%. Goodwill is to be valued at four years' purchase of profits in excess of
profits @ 15% on the money invested. Calculate the value goodwill.
21. On 1st April, 2012, Janta Ltd. was formed with an authorized capital of 50,00,000 divided into 1,00,000 equity shares of
50 each. The company issued prospectus inviting application for 90,000 Shares. The issue price was payable as under:
On Applicant : Rs. 15
On Allotment : Rs. 20
On call: Balance amount
The issue was fully subscribed and the company allotted shares to all he applicants. The company did not make the call
during the year.
Show the following:

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1. Share capital in the Balance Sheet of the company as per revised schedule - III,Part-I of the companies Act, 2013.
2. Also prepare Notes to Accounts for the same.
22. What journal entries would be recorded for the following transactions on the dissolution of a firm of Arti and Karim after
various assets (other than cash) on the third party liabilities have been transferred to Reliasation account.
i. Arti took over the Stock worth ₹ 80,000 at ₹ 68,000.
ii. There was an unrecorded Bike of ₹ 40,000 which was taken over by Mr. Karim.
iii. The firm paid ₹ 40,000 as compensation to employees.
iv. Sundry creditors amounting to ₹ 36,000 were settled at a discount of 15%.
v. Loss on realisation ₹ 42,000 was to be distributed between Arti and Karim in the ratio of 3 : 4.
23. The Manish Ltd. has authorised capital of ₹ 5,00,000 divided into 50,000 shares of ₹ 10 each. The company issued a
prospectus inviting applications for 30,000 shares of ₹ 10 each at a premium of ₹ 2 per share, payable as follows: On
Application ₹ 3; On Allotment ₹ 5 (including premium); On First Call ₹ 2; On Second and Final Call ₹ 2.
The Company received applications for 45,000 shares and pro-rata allotment was made in respect of applications of
40,000 shares and the remaining applications were rejected. Money overpaid on applications was employed on account
of sums due on allotment. All the calls were made.
B, to whom 300 shares were allotted failed to pay the two calls. The company decided to forfeit the shares allotted to B.
These shares were subsequently re-issued to C as fully paid for ₹ 9 per share.
Pass the necessary journal entries in the books of the company.

OR

A company issued for public subscription 40,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share payable as
under:
On Application ₹ 3 per share
On Allotment ₹ 4 per share (including premium)

On First Call ₹ 2 per share

On Second Call ₹ 3 per share

Applications were received for 70,000 shares. Allotment was made pro-rata to the applicants for 50,000 shares,
the remaining applications being refused. Money overpaid on application was applied towards sum due on allotment. A,
to whom 1,600 shares were allotted failed to pay the allotment and calls money. B, to whom 2,000 shares were allotted
failed to pay the two calls. The shares of A and B were subsequently forfeited after the second call was made. 3,000 of
the forfeited shares were re-issued at ₹ 8 per share fully paid. The re-issued shares included all of A’s shares.
Pass journal entries in the books of the company to record the above transactions.
24. Geeta and Jyoti are partners in a firm, sharing profits and losses in the ratio of 3 : 1. On 31st March, 2022, their Balance
Sheet was as under :

BALANCE SHEET OF GEETA AND JYOTI

as at 31st March, 2022

Liabilities Amount (₹) Assets Amount (₹)

Sundry Creditors 70,000 Plant and Machinery 1,76,000

General Reserve 30,000 Inventory 26,000

Provident Fund 40,000 Sundry Debtors 57,000

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Capital A/cs Less: Provision for Doubtful Debts (3,000) 54,000
Geeta 1,10,000 Cash at Bank 68,000
Jyoti 90,000 2,00,000 Profit & Loss A/c 16,000

3,40,000 3,40,000

1
Kiran was taken as a partner for 4 th share, with effect from 1st April, 2022, subject to the following adjustments:
a. Plant and Machinery was found to be overvalued by ₹ 16,000. It was to be shown in the books at the correct value.
b. Provision for Doubtful Debts was to be reduced by ₹ 2,000.
c. Creditors included an amount of ₹ 2,000 received as commission from Malini. The necessary adjustment was
required to be made.
d. Goodwill of the firm was valued at ₹ 60,000. Kiran was to bring in cash, his share of goodwill along with his capital
of ₹ 1,00,000.
e. Capital Accounts of Geeta and Jyoti were to be readjusted in the new profit-sharing arrangement on the basis of
Kiran’s capital, any surplus to be adjusted through current account and any deficiency through cash.

You are required to prepare:

i. Revaluation Account,
ii. Partner’s Capital Accounts, and
iii. Balance Sheet of the reconstituted firm.

OR

1 1 1
Ankush, Bhuvesh and Mukul were partners in a firm sharing profits in the proportion of , and respectively. Mukul
2 3 6
retired on 1st April, 2023. The balance sheet of the firm on the date of Mukul’s retirement was as follows:

BALANCE SHEET
as on 1st April, 2023

Liabilities Assets
(₹) (₹)

Sundry Creditors 12,600 Bank 4,100

Employee's Provident Fund 3,000 Debtors 30,000
General Reserve 9,000 Less: Provision for Doubtful Debts (1,000) 29,000

Capital A/c's Stock 25,000

Ankush 40,000 Investments 10,000
Bhuvesh 36,500 Patents 5,000

Mukul 20,000 96,500 Machinery 48,000

1,21,100 1,21,100
It was agreed that:
i. Goodwill will be valued at ₹ 27,000.
ii. Depreciation of 10% was to be provided on machinery.
iii. Patents were to be reduced by 20%.

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iv. An old photocopier previously written off was sold for ₹ 600
v. Mukul took over investments for ₹ 15,800.
vi. Ankush and Bhuvesh decided to adjust their capitals in proportion of their profit sharing ratio by opening current
accounts.
Prepare revaluation account and partners’ capital accounts on Mukul’s retirement.
25. A, B and C are partners in a firm, sharing profits and losses as A 1/3,B 1/2, and C 1/6 respectively. The Balance Sheet of
the firm as at 31 st March, 2019 was:
Liabilities ₹ Assets ₹

Capital A/cs: Building 50,000

A 30,000 Plant and Machinery 40,000
B 40,000 Furniture 10,000

C 25,000 95,000 Stock 25,000

General Reserve 16,000 Debtors 18,000
Sundry Reserve 25,000 Less: Provision for Doubtful Debts 500 17,500

Loan Payable 15,000 Cash in Hand 8,500

1,51,000 1,51,000
C retires on 1 st April, 2019 subject to the following adjustments:
i. Goodwill of the firm be valued at ₹ 24,000. C's share of goodwill be adjusted into the accounts of A and B who are
going to share in future in the ratio of 3 :2.
ii. Plant and Machinery to be reduced by 10% and Furniture by 5%
iii. Stock to be appreciated by 15% and Building by 10%.
iv. Provision for Doubtful Debts to be raised to ₹ 2,000.
Pass Journal entries to record the above transactions in the books of the firm and show the Profit and Loss Adjustment
Account, Capital Account of C and the Balance Sheet of the firm after Cs retirement.
26. Pass the necessary journal entries for the issue of 9% debentures in the following cases:
a. Issued ₹ 5,00,000, 9% debentures of ₹ 100 each at par, redeemable at par, after three years.
b. Issued 4,000, 9% debentures of ₹ 100 each at a discount of 3%, redeemable at a premium of 10% after five years.
c. Issued 10,000, 9% debentures of ₹ 100 each issued at a premium of 20%, redeemable at a premium of 10% after five
years.
Part B :- Analysis of Financial Statements
27. Analysis of financial statements is very useful for making qualitative judgment about the.
a) Profitability of the enterprise.
b) Operating Efficiency of the enterprise.
c) Liquidity and long-term solvency of the enterprise.
d) All of these

OR

Interest accrued on investments appear in a company’s balance sheet under the sub-head:
a) Non-current Investments
b) Current Investments
c) Other Non-current Assets
d) Other Current Assets

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28. Debt to Equity Ratio of Vinod Limited is 2:1. Company redeemed its 10,000, 11% Debentures by a lump sum payment.
What will be the effect on ratio?
a) Increase
b) No change
c) Decrease
d) Only debts are increasing
29. Which of the following is not a source of finance?
a) Fixed Assets
b) Debentures
c) Bank Loan
d) Bank Overdraft

OR

Which of the following transaction will result in no flow of cash?

a) Redemption of debentures
b) Purchase of machinery
c) Acquisition of machinery by issue of equity shares
d) Sale of investments
30. How will you deal increase in the balance of Securities Premium Reserve while preparing a Cash Flow Statement?
a) Cash flow from Investing activities
b) Cash Equivalent
c) Cash flow from Financing activities
d) Cash flow from operating activities
31. It is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships
between the various items of the Balance Sheet and the Statement of Profit and Loss. Identify the process and state two
objectives of the process identified.
32. Calculate Working Capital Turnover Ratio from the following:
₹

Cost of Revenue from Operations 18,00,000

Inventory 3,60,000
Trade Receivables 1,70,000

Marketable Securities 50,000

Cash and Bank 20,000
Trade Payables 1,40,000

Provision for Tax 10,000

33. Prepare a Common Size statement of Profit and Loss of Birla Ltd. for the year ended 31st March, 2021 from the
following information :
Particulars 2020-21 (₹) 2019-20 (₹)

Revenue from Operations 20,00,000 10,00,000

Purchase of stock in trade 4,00,000 2,00,000
Other Income 40,000 20,000

Tax Rat @ 50%

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OR

From the following Balance Sheet of Avinash Ltd. as on 31st March, 2021, prepare a Comparative Balance Sheet:

Balance Sheet of Avinash Ltd. as at 31st March, 2021

Particulars Note No. 31.3.2021 ₹ 31.3.2020 ₹

I - Equity and Liabilities:
1. Shareholders' Funds

Share Capital 30,00,000 20,00,000

2. Non-Current Liabilities
Long-term Borrowings - -

3. Current Liabilities
Trade Payables 6,00,000 5,00,000
Total 36,00,000 25,00,000

II Assets:
1. Non-Current Assets
Fixed Assets 24,00,000 15,00,000

2. Current Assets
Inventories 12,00,000 10,00,000
Total 36,00,000 25,00,000
34. Following are the Balance Sheets of Harsh Ltd.:-
Particulars Note No. 31.3.2023 31.3.2022

I. EQUITY AND LIABILITIES: ₹ ₹

(1) Shareholder’s Funds:
(a) Share Capital 3,00,000 2,50,000

(b) Reserve & Surplus 1 2,07,000 1,75,000

(2) Current Liabilities:
(a) Short-term Borrowings 2 20,000 15,000

(b) Trade Payables 31,000 54,000

(c) Short-term Provision 3 84,000 81,000
TOTAL 6,42,000 5,75,000

II. ASSETS:
(1) Non-Current Assets:
(a) Property, Plant and Equipment and Intangible Assets:

(i) Property, Plant and Equipment 4 2,70,000 2,70,000

(ii) Intangible Assets (Goodwill) 50,000 30,000

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(b) Non-Current Investments 45,000 50,000

(2) Current Assets:

(a) Trade Receivables 2,67,000 2,19,000
(c) Cash & Cash Equivalents 10,000 6,000

TOTAL 6,42,000 5,75,000

Notes:-
31.3.2023 31.3.2022
₹ ₹

(1) Reserve & Surplus 1,97,000 1,75,000

Securities Premium 10,000 ____
2,07,000 1,75,000

(2) Short-term Borrowings:

Bank Overdraft 20,000 15,000
(3) Short-term Provision:

Provision for Tax 62,000 65,000

Provision for Doubtful Debts 22,000 16,000
84,000 81,000

(4) Property, Plant and Equipment:

Land 1,50,000 70,000
Machinery 1,20,000 2,00,000

2,70,000 2,70,000
Additional Information:
I. Machinery of the book value of ₹ 60,000 was sold for ₹ 18,000 during the year.
II. Interim Dividend paid during the year ₹ 25,000.
III. During the year Company sold 40% of its original non-current investments at a loss of 20%.
You are required to prepare Cash-Flow Statement.
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Class 12 - Accountancy
sample paper 01 (2023-24)

Solution

Part A:- Accounting for Partnership Firms and Companies

1. (d) All partners leave the firm together
Explanation: If All partners leave the partnership firm it means the partnership is dissolved. A partnership cannot be
continued if all the partners leave the firm. For continuation of a partnership firm, at least 2 partners are required.
2. (c) A is true but R is false.
Explanation: The profit or loss arising from the partnership business is shared by the partners in the agreed ratio.
3. (b) Share Forfeiture A/c 700
Explanation: Share Forfeiture A/c 700 (100 share × 7)

OR

(a) Loss on Issue will be debited by ₹ 35,000

Explanation: Loss on Issue will be debited by ₹ 35,000
4. (a) Rohit Rs.3,000
Explanation: Adjustment of goodwill amount at the time of change in profit sharing ratio:
Old Ratio = 3:2
New Ratio = 1:1
3 1 6−5 1
Ram’s Sacrifice = - = =
5 2 10 10
2 1 4−5 1
Rohit’s Gain = - = =
5 2 10 10
1
Rohit’s share of goodwill amount = 30,000 × 10
= 3,000
Gaining partner will be debited hence Rohit's capital Account will be debited.

OR

(b) Profit to X ₹ 300 and Y ₹ 500

Explanation: Rs. 800 Profit distributed in old ratio X ₹ 300 and Y ₹ 500
Distributable profit = Net profit - Partner’s salary - Interest on capital + Interest on drawings
= 80,000 - 60,000 - 20,000 + 800
= 800
5. (c) 62,000 / Credit side
Explanation: ₹ 62,000 / Credit side
12
₹ 5,00,000 × 100
= ₹ 60,000
+ 1,00,000 X 12/100 X 8/12 = ₹ 8,000
- 1,00,000 X 12/100 X 6/12 = ₹ 6,000
Interest on capital = ₹ 62,000
6. (b) Debentures issued for consideration other than cash
Explanation: When a company purchases some assets and instead of paying cash issue debentures as a payment for the
purchase from the vendors it is known as the issue of debentures for consideration other than cash.
Asset A/c ... Dr.
To vendor A/c

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Vendor A/c ... Dr.
To debentures A/c

OR

(b) from Statement of Profit & Loss.

Explanation: from Statement of Profit & Loss.
7. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Both A and R are true and R is the correct explanation of A.
8. (a) Value of the firm’s goodwill × outgoing partner's share of profit
Explanation: At the time of retirement, the share of goodwill is calculated for the retired or deceased partner as follows:
Value of the firm’s goodwill × His Share of profit

OR

(b) Option (iv)

Explanation: Interest on drawings is the only item which comes on the debit side.
9. (a) ₹ 20,000
Explanation: ₹ 20,000
10. (a) ₹ 25,000 each
Explanation: ₹ 25,000 each
11. (c) Profit: A = 50,000 and B = 50,000
Explanation: Profit: A = 50,000 and B = 50,000
12. (a) 6,400
Explanation: No of shares
800000 ÷ 125
= 6400
13. (b) ₹ 2,00,000 Capital Reserve
Explanation: Amount of Capital Reserve
= Total Asset - Liabilities - Purchase Consideration
= 30,00,000 - 5,00,000 - 23,00,000
Capital Reserve = ₹ 2,00,000
14. (a) All of these
Explanation: All of these
15. (a) 3 : 2 : 3
Explanation: 3 : 2 : 3
New profit sharing ratio
5 2 3
Bina :- − =
8 8 8
3 1 2
Ria :- − =
8 8 8
3
Siya :- 8

OR

(b) 12 : 6 : 7
Explanation: R's sacrifice = 3/5 x 1/5 = 3/ 25
S's sacrifice = 2/5 x 2/5 = 4/25
new share of R = 3/5 - 3/25 = 12/25

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new share of S = 2/5 - 4/25 = 6/25
T's share = 3/25 + 4/25 = 7/25
16. (c) To the extent of Debit Balance
Explanation: In Normal situation, we do not transfer loan account of a partner in his capital account but at the time of
dissolution when his capital account shows the negative balance (at the time of closing the Book of Accounts) in such a
case required amount can be recovered from his loan account and the remaining amount of his loan will be paid back to
him with Interest.

17. Books of Mita, Geeta and Mohit

Journal

Debit Credit
Date Particulars L.F. Amount Amount
(₹) (₹)
2022
Geeta’s Capital A/c Dr. 14,000
April 1

To Mita’s Capital A/c 14,000

(Goodwill adjusted on change in profit sharing ratio)

April 1 Revaluation A/c Dr. 1,20,000

To Mita’s Capital A/c 60,000

To Geeta’s Capital A/c 36,000

To Mohit’s Capital A/c 24,000

(Profit on revaluation of assets and re-assessment of liabilities transferred
to partners in old profit sharing ratio)
Working Notes:-
Calculation of Gain/Sacrifice = Old share - New share
5 2 1
Mita’s share = − = (Sacrifice)
10 5 10
3 2 −1
Geeta’s share = − =( ) (Gain)
10 5 10
2 1
Mohit’s share= 10
− 5
= Nil
18. Calculation of interest on capital and interest on drawings
Interest on Capitals:
A = ₹ 3,00,000 × 10% = ₹ 30,000
B = ₹ 2,00,000 × 10% = ₹ 20,000
Amount Products
Date Period
₹ ₹
30.6.2022 20,000 9 months 1,80,000

31.7.2022 10,000 8 months 80,000

1.10.2022 10,000 6 months 60,000

1.3.2023 16,000 1 month 16,000

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Total 3,36,000

Total of Products Rate of Interest

A's Interest on Drawings = 12
× 100
3 , 36 , 000 10
A= × = ₹ 2,800
12 100
10 5.5
B's Interest on Drawings = 72,000 × × = ₹3,300
100 12

OR

TABLE SHOWING ADJUSTMENT

Roshan Mahesh Gopi Jai

Total
₹ ₹ ₹ ₹
Interest on Capital (Cr.) 80,000 50,000 60,000 60,000 2,50,000

Division of ₹2,50,000 in profit sharing ratio of 3 : 3 : 2 : 2 75,000 75,000 50,000 50,000 2,50,000

Cr. 5,000 Dr. 25,000 Cr. 10,000 Cr. 10,000 -

IN THE BOOKS OF FIRM

JOURNAL ENTRY

Date Particulars L.F. Dr. (₹) Cr. (₹)

2016 April 1 Mahesh's Capital A/c Dr. 25,000

To Roshan's Capital A/c 5,000

To Gopi's Capital A/c 10,000

To Jai's Capital A/c
10,000
(Adjustment in respect of omission of interest on Capital provided)

19. Books of Kuber Ltd.

JOURNAL

Date Particulars L.F Amount (₹) Amount (₹)

Assets A/c Dr. 10,00,000

To Liabilities A/c 1,00,000

To Amrit Ltd. 8,00,000

To Capital Reserve A/c

1,00,000
(business of Amrit Ltd. taken over at ₹ 8,00,000)

Amrit Ltd. Dr. 2,60,000

To Bank A/c
2,60,000
(paid Amrit Ltd ₹ 2,60,000 by cheque)

Amrit Ltd. Dr. 5,40,000

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Discount on Issue of Debentures A/c Dr. 60,000

To 12% Debentures A/c

6,00,000
(6,000, 12% debentures of ₹ 100 each issued at a discount of 10%)
purchase consideration
Number of debenture issued =
issuing price
8 , 00 , 000 − 2 , 60 , 000 5 , 40 , 000
= = = 6, 000 Debentures
100 − 10 90

OR

According to Section 52 (2) of the Companies Act, 2013, the amount of Securities Premium may be utilised for:
i. Buy-back of its own shares or other specified securities (under Section 68),
ii. Issue of fully paid bonus shares,
iii. Write off preliminary expenses of the company,
iv. Write off the expenses or the commission paid on issue of shares/debentures or discount allowed on the issue of
debentures of the company, and
v. Provide for any premium payable on redemption of preference shares or debentures of the company.
20. Goodwill = Super Profit × Number of Years' of Purchase
Normal Rate of Return
Normal Profit = Capital Employed × 100
15
= 50,000 × 100
= ₹ 7,500
Average Profit = ₹ 16,000
Super Profit = Average Profit - Normal Profit
= 16,000 - 7,500 = ₹ 8,500
Number of years' purchase = 4
∴ Goodwill of firm = 8,500 × 4 = ₹ 34,000

21. Balance Sheet of Janta Ltd.

As at.......................

Particulars Note. no. Amount Current Years Amount Previous Years

1. EQUITY AND LIABILITIES :

Shareholders Funds :
(a) Share Capital 1 31,50,000
Notes to Accounts
Particulars (Rs.)

1. Share Capital : ...

Authorised Capital : ...

1,00,000 equity shares of Rs. 50 Each 50,00,000

Issued Capital : ...

90,000 equity shares of Rs. 50 Each 45,00,000

Subscribed capital : ...

Subscribed but not fully paid ...

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90,000 shares of Rs. 50 each Rs. 35 called up Rs. 31,50,000

22. Journal

Particulars L.F. Amount ₹ Amount ₹

1 Arti’s Capital A/c Dr. 68,000

To Realisation A/c 68,000

(Arti took over stock worth ₹ 80,000 at ₹ 68,000)

2. Karim’s Capital A/c Dr. 40,000

To Realisation A/c 40,000

(Karim took over an unrecorded bike of ₹ 40,000)

3. Realisation A/c Dr. 40,000

To Bank A/c 40,000

(Compensation paid to the employees )

4. Realisation A/c Dr. 30,600

To Bank A/c 30,600

(Creditors amounting ₹ 36,000 were settled at a discount of 15%) [36,000 ×
(85/100)]

5. Arti’s Capital A/c Dr. 18,000

Karim’s Capital A/c Dr. 24,000

To Realisation A/c 42,000

(Loss on Realisation transferred to Partners’ Capital Account)

23. JOURNAL

Date Particulars L.F. Dr. (₹) Cr. (₹)

Bank A/c Dr. 1,35,000

To Share Application A/c 1,35,000

(Amount received on 45,000 shares @ ₹ 3 per share)

Share Application A/c Dr. 1,35,000

To Share Capital A/c (30,000 × ₹ 3) 90,000

To Share Allotment A/c (10,000 × ₹ 3) 30,000

To Bank A/c (5,000 × ₹ 3) 15,000

(Application money transferred to Share Capital A/c for 30,000 shares; to

Allotment A/c for 10,000 shares and amount returned on 5,000 shares @ ₹ 3 per
share)

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Share Allotment A/c (30,000 × ₹ 5) Dr. 1,50,000
To Share Capital A/c (30,000 × ₹ 3) 90,000

To Securities Premium Reserve A/c (30,000 × ₹ 2) 60,000

(Allotment due on 30,000 shares @ ₹ 5 per share)

Bank A/c Dr. 1,20,000

To Share Allotment A/c 1,20,000

(Allotment money received; excess received along with application adjusted)

Share First Call A/c Dr. 60,000

To Share Capital A/c 60,000

(First Call due on 30,000 shares @ ₹ 2 per share)

Bank A/c Dr. 59,400

To Share First Call A/c 59,400

(First Call received on 29,700 shares @ ₹ 2 per share)

Share Second and Final Call A/c Dr. 60,000

To Share Capital A/c 60,000

(Final Call due on 30,000 shares @ ₹ 2 per share)

Bank A/c Dr. 59,400

To Share Second and Final Call A/c 59,400

(Second and Final Call received except on 29,700 shares @ ₹ 2 per share)

Share Capital A/c (300 × ₹ 10) Dr. 3,000

To Share First Call A/c 600

To Share Second and Final Call A/c 600

To Share Forfeiture A/c 1,800

(300 shares forfeited for non-payment of First Call and Second and Final Call)

Bank A/c (300 × ₹ 9) Dr. 2,700

Share Forfeiture A/c (300 × ₹ 1) Dr. 300

To Share Capital A/c (300 × ₹ 10) 3,000

(300 shares reissued at ₹ 9 fully paid)

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Share Forfeiture A/c Dr. 1,500

To Capital Reserve A/c 1,500

(Profit on 300 reissued shares transferred to Capital Reserve)

BALANCE SHEET OF THE MANISH LTD.

as at ________

Particulars Note No. Current Year Previous Year

I. EQUITY AND LIABILITIES: ₹ ₹

Shareholder's Funds

(a) Share Capital 1 3,00,000

(b) Reserve and Surplus 2 61,500

3,61,500

II. ASSETS

Current Assets:
Cash and Cash Equivalents 3 3,61,500
Notes to Accounts:
₹

(1) Share Capital:

Authorised Capital:

Issued, Subscribed and Fully Paid Capital:

30,000 Equity Shares of ₹ 10 each 3,00,000

(2) Reserves and Surplus:

Capital Reserve 1,500

Securities Premium Reserve A/c 60,000

61,500

(3) Cash and Cash Equivalents:

Cash at Bank 3,61,500

OR

JOURNAL

Date Particulars L.F. Dr. Cr.

₹ ₹

Bank A/c Dr. 2,10,000

To Share Application A/c
2,10,000
(Amount received on applications)

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Share Application A/c (70,000 × ₹ 3) Dr. 2,10,000
To Share Capital A/c (40,000 × ₹ 3) 1,20,000

To Share Allotment A/c (10,000 × ₹ 3) 30,000

To Bank A/c (20,000 × ₹ 3)

(Amount received on application transferred to Share Capital A/c, Share 60,000
Allotment A/c and excess refunded)

Share Allotment A/c (40,000 × ₹ 4) Dr. 1,60,000

To Share Capital A/c (40,000 × ₹ 2) 80,000

To Securities Premium Reserve A/c (40,000 × ₹ 2)
80,000
(Amount due on allotment including securities premium)

Bank A/c Dr. 1,24,800(1)

To Share Allotment A/c

(Amount received on 38,400 shares and excess received along with application 1,24,800
adjusted)

Share Fires Call A/c Dr. 80,000

To Share Capital A/c

80,000
(Amount due on First Call on 40,000 shares @ ₹ 2)

Bank A/c Dr. 72,800

To Share First Call A/c

72,800
(Amount received on 36,400 shares @, ₹2)
Share Second Call A/c Dr. 1,20,000

To Share Capital A/c

1,20,000
(Amount due on Second Call on 40,000 @ ₹ 3)
Bank A/c Dr. 1,09,200

To Share Second Call A/c

1,09,200
(Amount received on Second Call on 36,400 shares @ ₹ 3)
Share Capital A/c (3,600 × ₹ 10) Dr. 36,000

Securities Premium Reserve A/c (1,600 × ₹ 2) Dr. 3,200

To Share Allotment A/c 5,200

To Share First Call A/c(3,600 × ₹ 2) 7,200

To Share Second Call A/c (3,600 × ₹ 3) 10,800

To Share Forfeiture A/c

(1,600 shares of A forfeited for non-payment of Allotment and Calls money 16,000
and 2,000 shares of B forfeited for non-payment of calls money)

Bank A/c Dr. 24,000

Share Forfeiture A/c Dr. 6,000

To Share Capital A/c
30,000
(3,000 of forfeited shares reissued at ₹ 8 per share fully paid).

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Share Forfeiture A/c Dr. 7,000(2)

To Capital reserve A/c

7,000
(Profit on 3,000 reissued shares transferred to Capital Reserve)
Working Notes:

i. ₹
50 , 000
(A) A must-have applied for × 1, 600 = 2,000 shares
40 , 000

Excess Application money received from A:

2,000 shares - 1,600 shares = 400 shares × ₹ 3 1,200

(B) Amount due from A on allotment: 1,600 shares × ₹ 4 6,400

Less: Excess received from A on application 1,200

Amount not received from A on allotment 5,200

(C) Total amount due on allotment = 40,000 shares × ₹ 4 1,60,000

Less: Excess received on application 30,000

Balance due 1,30,000

Less: Amount not received from A on allotment 5,200

Net amount received on allotment in Cash 1,24,800

ii. 3,000 Re-issued shares include 1,600 shares of A and the balance 1,400 shares of B ₹
Profit on forfeiture of 1,600 shares of A 6,000

(Since he has applied for 2,000 shares and has paid application money of ₹ 3 per share, profit on forfeiture
will be 2,000 × ₹ 3 = ₹ 6,000)
Profit on forfeiture of 1,400 shares of B

B$ has paid application @ ₹ 3 and allotment @ ₹ 2 (excluding premium)

Hence, profit on 1,400 shares of B = 1,400 × ₹ 5 7,000

13,000

Less: Loss on Re-issue: 3,000 shares @, ₹ 2 6,000

Amount transferred to Capital Reserve 7,000

24. REVALUATION A/C

Dr. Cr.

Particulars ₹ Particulars ₹
To Plant & Machinery A/c 16,000 By Provision for Doubtful Debts A/c 2,000

By Creditors A/c 2,000

By Revaluation Loss transferred to:

Geeta's Capital A/c 9,000

Jyoti's Capital A/c 3,000 12,000

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16,000 16,000

PARTNER'S CAPITAL ACCOUNTS

Dr. Cr.

Particulars Geeta Jyoti Kiran Particulars Geeta Jyoti Kiran

₹ ₹ ₹ ₹ ₹ ₹

By Balance b/d 1,10,000 90,000

To Revaluation A/c 9,000 3,000 By General Reserve A/c 22,500 7,500

To Profit & Loss A/c 12,000 4,000 By Bank A/c 1,00,000

To Balance c/d 1,22,750 94,250 1,00,000 By Premium for Goodwill A/c 11,250 3,750

1,43,750 1,01,250 1,00,000 1,43,750 1,01,250 1,00,000

To Current A/c 19,250 By Balance b/d 1,22,750 94,250 1,00,000

To Balance c/d 2,25,000 75,000 1,00,000 By Bank A/c 1,02,250

2,25,000 94,250 1,00,000 2,25,000 94,250 1,00,000

Balance Sheet of Geeta, Jyoti and Kiran

As at 1st April, 2022

Liabilities Amount (₹) Assets Amount (₹)

Sundry Creditors 68,000 Plant and Machinery 1,60,000

Provident Fund 40,000 Inventory 26,000

Capital Account balances: Sundry Debtors 57,000

Geeta 2,25,000 Less: Provision for Doubtful Debts 1,000 56,000

Jyoti 75,000 Cash at Bank 2,85,250

Kiran 1,00,000 4,00,000

Jyoti Current A/c 19,250

5,27,250 5,27,250
W.N.:-
1 1 3
i. Share give to Kiran = ; Remaining Share = 1 - =
4 4 4
3 3 9
Geeta's new share = × =
4 4 16
1 3 3
Jyoti's new share = × =
4 4 16
1 4
Kiran's share = or
4 16
Thus, New Profit sharing ratio = 9 : 3 : 4
4
ii. Based on Kiran's Capital, the total capital of the new firm = 1,00,000 × 1
= ₹ 4,00,000
9
Geeta's Capital in the new firm = 4,00,000 × 16
= 2,25,000
3
Jyoti's Capital in the new firm = 4,00,000 × = 75,000
16

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iii. BANK ACCOUNT OF THE FIRM
Particulars ₹ Particulars ₹
To Balance b/d 68,000 By Balance c/d 2,85,250

To Kiran's Capital A/c 1,00,000

To Premium for Goodwill A/c 15,000

To Geeta's Capital A/c 1,02,250

2,85,250 2,85,250

OR

REVALUATION ACCOUNT

Particulars ₹ Particulars
₹

To Machinery A/c 4,800 By bank 600

To Patent A/c 1,000 By Investment 5,800

To Profit Transferred to Capital A/c:

Ankush 300

Bhuvesh 200

Mukul 100 600

6,400 6,400

PARTNERS' CAPITAL ACCOUNT

Bhuvesh Mukul Ankush Bhuvesh Mukul

Particulars Ankush Particulars
(₹) (₹) (₹) (₹) (₹)
(₹)

To investment A/c 15,800 By Balance b/d 40,000 36,500 20,000

To Mukul's Capital A/c 2,700 1,800 By Revaluation A/c (Profit) 300 200 100

To Mukul's Loan A/c 10,300 By General Reserve 4,500 3,000 1,500

To Bhuvesh Current A/c 5,900 By Ankush's Capital A/c 2,700

By Bhuvesh's Capital A/c 1,800

To balance c/d 48,000 32,000 By Ankush Current A/c 5,900

50,700 39,700 26,100 50,700 39,700 26,100

Working Notes:
One major change in the constitution of a partnership firm may occur if a partner undergoes retirement from the firm or
in the event of his death. In both cases, the partner’s account will have to be settled, and new ratios will have to be
calculated. There is also the issue of treatment of goodwill.
Adjustment for Goodwill

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1
Mukul’s share in goodwill = 27,000 × 6
= ₹ 4,500; to be contributed in gaining ratio i.e., 3 : 2
3
Ankush will pay = 4,500 × 5
= ₹ 2,700
2
Bhuvesh will pay = 4,500 × 5
= ₹ 1,800
Adjustment for Capital
Combined capital ⇒ Ankush’s adjusted capital = ₹ 42,100
Bhuvesh’s adjusted capital = ₹ 37,900
Total capital = ₹ 80,000
New profit sharing ratio = 3 : 2
3
Ankush’s new capital = ₹ 80,000 × 5
= ₹ 48,000
2
Bhuvesh’s new capital =₹ 80,000 × = ₹ 32,000
5

25. IN THE BOOKS OF THE FIRM

JOURNAL ENTRIES

Particulars L.F. Debit ₹ Credit ₹

Profit and Loss Adjustment A/c Dr. 6,000

To Plant and machinery A/c 4,000

To Provision for Doubtful Debts A/c 1,500

To Furniture A/c 500

(Being decrease in value of Assets and provision for doubtful debts transferred to profit
and Loss adjustment Account)

Stock A/c Dr. 3,750

Factory Building A/c Dr. 5,000

To Profit and Loss Adjustment A/c 8,750

(Being increases in Value of Assets transferred to Profit and Loss Adjustment Account)

Profit and Loss Adjustment A/c Dr. 2,750

To A's Capital A/c 917

To B's Capital A/c 1,375

To C's Capital A/c 458

(Being profit distributed among old partners A, B and C in their old profit sharing ratio)
A's Capital A/c Dr. 6,400

To B's Capital A/c 2,400

To C's Capital A/c 4,000

(Being C's Share of goodwill and B's gain in goodwill adjustment)

C's Capital A/c Dr. 32,125

To C's Loan A/c 32,125

(Being loan transfer from bank)

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Reserve Fund A/c Dr. 16,000

To A's Capital A/c 5,333

To B's Capital A/c 8,000

To C's Capital A/c 2,667

(Being Reserve Fund distributed among old partners in their old profit sharing ratio)

Profit and Loss Adjustment Account

Dr. Cr.

Particulars ₹ Particulars ₹

To Plant and machinery A/c (40,000 × 10%) 4,000 By Stock A/c (25,000 × 15%) 3,750

To Furniture A/c (10,000 × 5%) 500 By Factory building A/c (50,000 × 10%) 5,000

To Provision for Doubtful Debts A/c (2,000 - 500) 1,500

To Revaluation Profit transferred to:

A's Capital A/c 917

B's Capital A/c 1,375

C's Capital A/c 458 2,750

8,750 8,750

Partners Capital Account

Dr. Cr.

Particulars A B C Particulars A B C
To B's Capital A/c 2,400 By Balance b/d 30,000 40,000 25,000

To C's Capital A/c 4,000 By Reserve fund A/c 5.333 8,000 2,667

To C's Loan A/c 32,125 By Revaluation A/c 917 1,375 458

To Balance c/d 29,850 51,775 By A's Capital A/c 2,400 4,000

36,250 51,775 32,125 36,250 51,775 32,125

Balance Sheet
as on 1st April 2019 (after C's Retirement)

Liabilities ₹ Assets ₹

Sundry Creditors 25,000 Factory Building 55,000

Loan Payable 15,000 Plant and Machinery 36,000

C's Loan 32,125 Furniture 9,500

A's capital account 29,850 Stock 28,750

B's capital account 51,775 81,625 Debtors 18,000

Less: Provision for Doubtful Debts (2,000) 16,000

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Cash in Hand 8,500

1,53,750 1,53,750
W.N.:
A B C
i. Old Ratio 1 1 1 = 2:3:1
3
:2: 6
C's retired on the firm
A:B = 3:2 (New Ratio)
Gaining Ratio = New Ratio - Old Ratio
3 2 18 10 8
A ′s = − = − = (Gain)
5 6 30 30 30
2 3 12 15 −3
B ′s = − = − = (Sacrifice)
5 6 30 30 30
ii. Goodwill on the firm = ₹24,000
1
C's Share of Goodwill = 24, 000 × 6
= ₹ 4,000
8
A's Share = 24, 000 × 30
( Gain ) = ₹ 4,000
3
B's Share = 24, 000 × 30
(Sacrifice) ₹ 2,400
iii.
1 1 1
A:B:C = : : = 2:3:1 (Old Ratio)
3 2 6
C retired from the firm.
A:B = 2:3 (New Ratio)
Gaining Ratio = New Ratio - Old Ratio
2 2 12 10 2
A ′s = − = − =
5 6 30 30 30
3 3 18 15 3
B ′s = 5
− 6
= 30
− 30
= 30
Gaining Ratio = 2:3
iv.
Adjustment of Goodwill
Goodwill of the firm = ₹ 24,000
1
C's of Goodwill = 24, 000 × = ₹ 4,000
6
C's Share of goodwill is to be distributed between A and B in 2;3
2
A's Goodwill = 4, 000 × 5
= ₹ 1,600 (Sacrifice)
3
B's Goodwill = 4, 000 × 5
= ₹ 2,400 (Sacrifice)
26. case (a)
Particular L.F Dr(₹) Cr(₹)

Bank A/c Dr. 5,00,000

To Debenture Application and Allotment A/c 5,00,000

(Debenture Issued at par)

Debenture Application & Allotment A/c Dr. 5,00,000

To 9% Debenture A/c 5,00,000

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(Debenture amount transferred)

case (b)
Particular L.F Dr(₹) Cr(₹)

Bank A/c Dr. 3,88,000

To Debenture Application & Allotment A/c 3,88,000

(amount received on application and allotment)

Debenture Application & Allotment Dr. 3,88,000

Discount on Issue of Debenture A/c Dr. 12,000

Loss on Issue of Debenture A/c Dr. 40,000

To 9% Debenture A/c 4,00,000

To Premium on Redemption 40,000

(amount transferred to 9% debenture)

case (c)
Particular L.F Dr(₹) Cr(₹)

Bank A/c Dr. 12,00,000

To Debenture Application & Allotment 12,00,000

(amount received on application and allotment)

Debenture Application & Allotment A/c Dr. 12,00,000

Loss on Issue of Debenture A/c Dr. 1,00,000

To 9% Debenture A/c 10,00,000

To Premium on Redemption 1,00,000

To Security Premium 2,00,000

(amount transferred to 9% debenture)

Part B :- Analysis of Financial Statements
27. (d) All of these
Explanation: All of these

OR

(d) Other Current Assets

Explanation: Other Current Assets
28. (c) Decrease
Explanation: Debt Equity Ratio will decrease because there is decrease in debts after the redemption of debentures but
there is no change in equity.

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29. (a) Fixed Assets
Explanation: Following is the source of finance except for fixed assets, these will be shown in financing activity.
i. Bank Loan
ii. Bank Overdraft
iii. Debentures

As fixed assets is an investing activity.

OR

(c) Acquisition of machinery by issue of equity shares

Explanation: Acquisition of machinery by issue of equity shares
30. (c) Cash flow from Financing activities
Explanation: Cash flow from Financing activities
31. the process is Analysis of financial statements.
Objectives of Analysis of financial statements:
i. to assess the current profitability and operational efficiency of the firm as a whole as well as its different departments
so as to judge the financial health of the firm.
ii. to ascertain the relative importance of different components of the financial position of the firm.
32. Current Assets = Inventory + Trade Receivables + Marketable Securities + Cash and Bank
= ₹ 3,60,000 + 1,70,000 + 50,000 + 20,000 = ₹ 6,00,000
Current Liabilities = Trade Payables + Provision for Tax
= 1,40,000 + 10,000 = ₹ 1,50,000
Working Capital = Current Assets - Current Liabilities
= ₹ 6,00,000 - ₹ 1,50,000 = ₹ 4,50,000
Cost of Revenue from Operations
Working Capital Turnover Ratio = Working Capital
₹ 18 , 00 , 000
= ₹ 4 , 50 , 000
= 4 times

33. Birla Ltd.

Common Size Statement of Profit and Loss
for the year ended 31st March, 2021

Particulars Absolute Amounts Percentage of Net Sales

2019-20 (₹) 2020-21 (₹) 2019-20 (%) 2020-21 (%)

Revenue from Operations 10,00,000 20,00,000 100 100

Other income 20,000 40,000 2 2

Total Revenue 10,20,000 20,40,000 102 102

Less:Expenditure

Purchase of Stock 2,00,000 4,00,000 20 20

Profit before Tax 8,20,000 16,40,000 82 82

Less: Tax @50% 4,10,000 8,20,000 41 41

4,10,000 8,20,000 41 41

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OR

Comparative Balance Sheet

31st March, 31st March, Absolute Percentage

Note 2020 2021 Change Change
Particulars
No. C
(A) (B) (C = B - A) (D = × 100)
A

I - Equity and Liabilities:

1. Shareholders' Funds

Share Capital 20,00,000 30,00,000 10,00,000 50

2. Non-Current
Liabilities

Long-term Borrowings - -

3. Current Liabilities

Trade Payables 5,00,000 6,00,000 1,00,000 20

Total 25,00,000 36,00,000 11,00,000 44

II Assets:
1. Non-Current Assets

Fixed Assets 15,00,000 24,00,000 9,00,000 60

2. Current Assets

Inventories 10,00,000 12,00,000 2,00,000 20

Total 25,00,000 36,00,000 11,00,000 44

34. Cash Flows from Operating Activities

for the year 31st March, 2023

Particulars Details Amount (₹)

A. Cash flows from Operating Activities:

Net profit before Tax: 1,09,000

Adjustments for non-cash and non-operating items:

Add: Depreciation on Machinery 20,000

Loss on sale of Machinery 42,000

Loss on sale of Non-current Investments 4,000

Provision for Doubtful Debts 6,000 72,000

Operating Profit before working Capital Charges 1,81,000

Add: Increase in Current Assets:

Trade Receivables 48,000

Less: Decrease in Current Liabilities:

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Trade Payables 23,000 71,000

1,10,000

Less: Paid Tax 65,000

Net Cash from Operating Activities 45,000

B. Cash Flow From Investing Activities:

Sale of Machinery 18,000

Sale of non-current Investments 16,000

Purchase of Non-Current Investments (15,000)

Purchase of Intangible Assets (20,000)

Purchase of Land (80,000) (81,000)

Net Cash from Investing Activities (81,000)

C. Cash Flow from Financing Activities:

Issue of Share Capital 50,000

Premium received on issue of equity Shares 10,000

Interim Dividend paid (25,000)

Proceeds from Bank Overdraft 5,000 40,000

Net Cash from Financing Activities 40,000

Net Increase in cash and cash equivalents 45,000 + (81,000) + 40,000 4,000
Add: Cash and Cash Equivalents in the beginning of the period 6,000

Cash and Cash equivalents at the end of the period 10,000

Working Note:-

1. Calculation of Net Profit before Tax: ₹

Profit and Loss Balance (2023) 1,97,000

Less: Profit and loss (2022) 1,75,000

22,000

Add: Interim Dividend Paid 25,000

Provision for tax made during the current year 62,000

Net Profit before Tax 1,09,000

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