Second Pre-Board Examinations 2023-24

Time: - 3 Hrs. Accounts M.M:- 80

Class – 12

General Instructions: -
1. Attempt all the questions of all the Sections A & B
2. Intended Marks for questions or parts of questions are given in brackets.
3. Internal Choices are given for respective questions.
4. The time given at the head of this paper is the time allowed for writing the answers only.
5. Answers to this paper cannot be written on the notebook separately.

Section A (60 Marks)

Q1. In subparts (i) to (iv) choose the correct options and in subparts (v) to (x) answer the
questions as instructed:
(i) Z is admitted in a firm for 1/4th share in the profits for which he brings Rs. 10,000 towards
premium for goodwill. It will be taken by old partners in: (1)
(a) Old Profit-Sharing Ratio (c) Sacrificing Ratio
(b) New Profit-Sharing Ratio (d) Gaining Ratio

(ii) Mita & Rita decided to dissolve their partnership firm. Their books showed Goodwill of Rs.
5,000. How will the Goodwill Account be closed in the dissolution of the firm? (1)
(a) By transferring Rs. 5,000 to the debit side of the Partner’s Capital Account
(b) By transferring Rs. 5,000 to the credit side of the Partner’s Capital Account
(c) By transferring Rs. 5,000 to the debit side of the Realisation Account
(d) By transferring Rs. 5,000 to the credit side of the Realisation Account

(iii) What will be the correct sequence of events? (1)

A. Forfeiture of shares B. Default on calls
C. Re-issue of shares D. Amount transferred to Capital Reserve
(a) A, D, B, C (b) B, A, C, D
(c) B, A, D, C (d) C, D, A, B

(iv) Choose the INCORRECT statement from the following (1)

(a) Shares forfeited by the Company cannot be re-issued at premium
(b) At the time of forfeiture of shares, Securities Premium Account is not debited with the amount
of premium already received
(c) The shares of a company cannot be issued at a discount
(d) Securities Premium cannot be used by the Company to write off discount allowed to the
debtors

(v) Punit, Sujit & Jiten are partners sharing profits & losses in the ratio of 4:3:1. Sujit retires from
the firm, selling his share of profit to Punit & Jiten for Rs. 1,50,000; Rs. 80,000 being paid by Punit
and Rs. 70,000 by Jiten. What is the new profit-sharing ratio? (1)

(vi) Assertion: Goodwill can be calculated only by super profit method

Reason: Super Profit is calculated by subtracting the normal profit from actual average profit
(a) Both Assertion and Reason are true and Reason is the correct explanation of Assertion
(b) Both Assertion and Reason are true and Reason is not the correct explanation of Assertion
(c) Assertion is true but the Reason is false
(d) Assertion is false but the Reason is true (1)

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(vii) Mohan, a partner of a dissolved firm, was to get as his remuneration 1% of value of assets
realised and 10% of the amount distributed to partners. Cash balance after realising assets
(including Cash-in-hand of Rs. 5,000) was Rs. 5,05,000. Creditors were paid Rs. 2,25,000.
You are required to calculate Mohan’s remuneration. (1)

(viii) ‘Listed Company (a Company whose share is freely traded in a stock exchange) is not
required to create any Debenture Redemption Reserve. Unlisted Companies are required to
create DRR equal to at least 10% of Outstanding Debentures out of divisible profits. Hence, they
can redeem 90% of their debentures out of Capital’
Name any one Company that is exempted from creating the Debenture Redemption
Reserve Account as per Companies Rules, 2013. (1)

(ix) What is meant by Operating Cycle? (1)

(x) Gabby Ltd. (a listed NBFC) has 30,000, 5% Debentures of Rs. 100 each due for redemption at
par on 31st March, 2022.
The Debenture Redemption Investment which was purchased on 30th April 2021, was realised on
the date of redemption at 102% less 0.5% brokerage, and the debentures were redeemed.
You are required to calculate the sale price of the Debenture Redemption Investment (1)

Q2. Kavi, Dhruv & Parth are partners in a firm sharing profits & losses in the ratio of 3:1:1 (3)

Balance Sheet of Kavi, Dhruv & Parth (extract)

As at 31st March, 2022
Liabilities Amount (Rs.) Assets Amount (Rs.)
Bank 5,000
On Kavi’s retirement from the firm on 01 April, 2022; the amount due to him is determined at Rs.
st

20,000. The firm took sufficient loan from the bank to pay the amount due to Kavi.
You are required to pass necessary journal entries to pay the amount due to Kavi
Or
Rita, Nina & Mita are partners in a firm sharing profit & losses in the ratio of 3:2:1. Mita dies on 01st
April, 2022. On the date of her death, it was decided to value goodwill on the basis of two year’s
purchase of weighted average profits of the firm for the last three years. The profits of the last
three years and weights assigned were
Year Profit (Rs.) Weight assigned
2019-20 Rs. 30,000 (Including gain from speculation Rs. 10,000) 1
2020-21 Rs. 80,000 2
2021-22 Rs. 1,00,000 3
(i) Calculate the firm’s goodwill on the date of Mita’s death (1)
(ii) Pass Journal entry to credit Mita’s Capital Account with her share of goodwill (2)

Q3. On 01st April, 2020, Venus Ltd. acquired fixed assets of the value of Rs. 7,50,000 and current
liabilities of Rs. 90,000 from Jupiter Ltd., for a purchase consideration of Rs. 6,40,000. Venus Ltd.
met the purchase consideration due to Jupiter Ltd., by issuing to it, 10% Debentures of Rs. 100
each at a discount of 5%. These 10% debentures were redeemable at par on 31 st March, 2025.
You are required to pass journal entries in the books of Venus Ltd. for the year 2020-21.
(Ignore interest on debentures) (3)

Q4. On 31st March, 2021, the books of Pragya Ltd. (an unlisted company) showed the following
closing balances:
7% Debentures (redeemable on 30th September, 2022) Rs. 60,00,000
Debenture Redemption Reserve Rs. 2,00,000

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In order to meet the provisions of the Companies Act, 2013, the Company transferred the required
balance amount to Debenture Redemption Reserve Account on 31st March, 2022; It met the
requirements of Debenture Redemption Investment.
You are required to prepare the Debenture Redemption Reserve Account for the years 2021
to 2023. (3)
Or
Phantom Ltd. (listed NBFC) redeemed its 6,000; 10% debentures of Rs. 100 each in instalments
as follows:
Date of Redemption Debentures to be redeemed
31st March, 2019 3,000
31st March, 2020 1,500
st
31 March, 2021 1,500
On the basis of the above details, you are required to pass journal entries to record the purchase /
sale of Debenture Redemption Investment, from the year of the redemption of the first instalment
of debentures to the date of the redemption of the final instalment. (3)

Q5. Veena & Soma are partners in a firm. They admit Sara on 01st April, 2022 for 1/4th share in the
profits of the firm. On an average, the profits earned by Veena and Soma are Rs. 21,000. The
average capital employed by the firm is Rs. 1,50,000. The normal rate of return in the industry is
10%. It is decided to value goodwill on the basis of four years purchase of profits in excess of
profit @ 10% on the money invested. You are required to:
(i) Calculate the value of goodwill of the firm (1)
(ii) Pass journal entries in the books of the firm (assume Sara brings her share of goodwill
money in cash) (2)

Q6. From the following information of Prudence Ltd. given below, you are required to show how
the relevant items will appear in the Company’s Balance Sheet (an extract) as at 31 st March, 2022
The authorised capital of Prudence Ltd. consisted of 3,000, 10% Preference Shares of Rs. 100
each and 8,000 Equity Shares of Rs. 100 each, out of which:
(i) 1,000, 6% Preference Shares were issued to the public, fully called & paid up
(ii) 3,000 Equity Shares were issued which were fully called up
(iii) There were arrears of Rs. 20 per share on 400 Equity Shares (6)
Particulars Amount (Rs.)
Mortgage Debentures 50,000
Bank Overdraft 25,000
Balance in Statement of P&L (Dr.) 76,000
Freehold Property 50,000

Q7. A and B are partners in the firm sharing profits & losses in the ratio of 3:2. They admit C as a
new partner for 1/5th share. As agreed between themselves, A, B & C decide to share future profits
in the ratio of 13:7:5. The goodwill of the firm is valued at 5 years purchase of super profit based
on average profit of last three years. Average Profit & normal profit are Rs. 1,05,000 & Rs. 90,000
respectively. Goodwill already appears in the books at Rs. 50,000. C brings in 60% of his share in
cash & Rs. 2,50,000 as his capital. The amount of goodwill is withdrawn by the concerned
partners to the extent of 50% of what is credited to them. The profit for the first year of new
partnership amounts to Rs. 2,50,000
Pass necessary journal entries to adjust Goodwill and to distribute profit. (6)

Or

X and Y are partners in the ratio of 3:2. Their Balance Sheet as at 31st March, 2022 was: (6)

3
 Balance Sheet
as at 31st March, 2022
Liabilities Amount (Rs.) Assets Amount (Rs.)
Creditors 56,000 Plant & Machinery 70,000
General Reserve 14,000 Building 98,000
Capital of X 1,19,000 Stock 21,000
Capital of Y 1,12,000 Debtors 42,000
Less: Provision 7,000 35,000
Cash in Hand 77,000
3,01,000 3,01,000
th
Z was admitted for 1/6 share in the following terms:
(a) Z will bring Rs. 56,000 as his share of capital, but was unable to bring any amount to
compensate the sacrificing partners’
(b) Goodwill of the firm is valued Rs. 84,000
(c) Plant & Machinery were found to be undervalued by Rs. 14,000, Building was to be brought up
to Rs. 1,09,000
(d) All debtors were good
(e) Capitals of X & 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 & Partner’s Capital Account.

Q8. Raina & Meena were partners in a firm sharing profits & losses equally. They dissolved their
firm on 31st March, 2018. On this date, the Balance Sheet of the firm, apart from realisable assets
& outside liabilities showed the following balances:
Raina’s Capital Rs. 40,000 (Cr.) Profit & Loss Account Rs. 10,000 (Dr.)
Meena’s Capital Rs. 20,000 (Dr.) Raina’s Loan to the firm Rs. 15,000
Contingency Reserve Rs. 7,000
On the date of dissolution of the firm:
(i) Raina’s Loan was repaid by the firm along with interest of Rs. 500
(ii) The dissolution expenses of Rs. 1,000 were paid by the firm in behalf of Raina who had to bear
these expenses
(iii) An unrecorded asset of Rs. 2,000 was taken over by Meena while Raina discharged an
unrecorded liability of Rs. 3,000.
(iv) The dissolution resulted in a loss of Rs. 60,000 from the realisation of assets & settlement of
liabilities.
You are required to prepare Partner’s Capital Accounts & Raina’s Loan Account (6)

Q9. Rahim & Sudesh are partners in a business on the following terms: (10)
(i) Interest in payable in capital @ 5%.
(ii) Rahim will be entitled to a salary @ Rs. 500 p.m.
(iii) Interest on Loan to be given by the firm to the partners to be charged @ 10% p.a.
(iv) Interest on drawings charged from partners @ 5% p.a.
(v) Sudesh will get commission @ 1% on the sales made during the year.
(vi) Rahim is entitled to a rent of Rs. 25,000 p.a. for allowing the firm to carry on the business in
his premises.
The Net Profit of the firm for the year ended 31st March, 2022 was Rs. 1,80,000 before taking into
account any of the above terms.
Rahim Sudesh
st
Capital Balance as on 01 April, 2021 Rs. 1,50,000 Rs. 1,40,000
Loan Advanced on 01st October, 2021 NIL Rs. 1,00,000
Drawings made during the year Rs. 40,000 Rs. 30,000
During the year 2021-2022, sales of the firm amounted to Rs. 7,00,000.
You are required to prepare Profit & Loss Appropriation Account & Partner’s Capital
Account
4
 Or

X, Y & Z are partners sharing profits & losses in the ratio of 3:2:1. X withdraws Rs. 2,000 at the
beginning of every month, Y withdraws Rs. 1,500 in the middle of every month whereas Z
withdraws Rs. 1,000 at the end of every month. Interest on Capitals & Drawings is to be charged
@ 10% p.a. Z is also allowed a salary of Rs. 800 per month. After deducting salary but before
allowing any type of interest, the profit for the year ending 31st March, 2022 was Rs. 1,22,150.
Prepare from the additional information given below Profit & Loss Appropriation Account,
Partner’s Capital Account, Partner’s Current Account. (10)
Particulars X (Rs.) Y (Rs.) Z (Rs.)
Capital Account as on 01st April, 2021 2,00,000 1,50,000 1,00,000
st
Additional Capital Introduced on 01 July, 2021 50,000 30,000 NIL
Capital Withdrawn on 01st January, 2022 NIL NIL 20,000
Current Accounts on 01st April, 2021 12,200 5,500 4,100 (Dr.)
Loan Accounts on 01st April, 2021 40,000 NIL NIL

Q10. Tapsi Ltd. invited applications from the public for the issue of Rs. 55,000 equity shares of Rs.
10 each payable as: Rs. 3 on Application, Rs. 5 on allotment, Balance on call
The public applied for 50,000 shares which were duly allotted by the company.
Rs. 2,49,000 were received by the company on allotment and Rs. 99,400 on call.
The company forfeited those shares on which both, allotment & calls money was not received.
70% of the forfeited shares were reissued at Rs. 7 per share, fully called up. The company paid
share issue expenses of Rs. 20,000 which were completely written off at the end of the year. The
company had Rs. 15,000 in its Securities Premium Reserve Account
You are required to pass journal entries for the above transactions in the books of the
company. (10)
Or
(1) Navnirman Ltd. issued 4,00,000 equity shares of Rs. 10 each at par. The amount per share
was payable as: Rs. 3 on application, Rs. 2 on allotment, Rs. 2 on 1st Call & Rs. 3 on 2nd & final
call. The issue was fully subscribed and the shares were allotted fully to all applicants. All calls
were made. Mahi, a shareholder holding 6,000 shares paid the final call money along with the 1 st
call. Shrey holding 700 shares did not paid the 1st call on the due date.
Shrey paid the 1st call along with the 2nd & final call. The accountant of the company had correctly
passed the entries till receipt of allotment money After that the following entries were left
incomplete by him. Complete these entries: (8)

Journal of Navnirman Ltd.

Date Particulars L/F Amt (Dr.) Amt (Cr.)
(i) Equity Share First Call A/c. Dr. 8,00,000
To ???? 8,00,000
(1st call due on 4,00,000 shares @ Rs. 2 per share)
(ii) Bank A/c. Dr. ????
???? Dr. ????
To Equity Share 1st Call A/c. ????
To ???? ????
(????)
(iii) Equity Share 2nd & Final Call A/c. Dr. ????
To Equity Share Capital A/c. ????
(Final call due in 4,00,000 shares @ Rs. 3 per share)
(iv) Bank A/c Dr. ????
???? Dr. ????
To Equity Share 2nd & Final call A/c. ????
To Calls in Arrears A/c. ????
(????)
5
(2) Govind Ltd. purchased furniture of Rs. 10,00,000 from Nishant Ltd. and paid 20% of the
amount by accepting a bill of exchange in favour of Nishant Ltd. The remaining amount is paid by
issuing equity shares of Rs. 100 each at a premium of 25% to Nishant Ltd. Showing your workings
clearly, Pass journal entries for the above transactions in the books of Govind Ltd. (2)

Section B (20 Marks)

Q11. In subparts (i) & (ii) choose the correct option & in subparts (iii) to (v) answer the questions
as instructed:
(i) Which one of the following is correct? (1)
(1) Quick Ratio can be more than Current Ratio
(2) 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
(3) Sum of Operating Ratio & Operating Profit ratio is always 100%
(a) All are correct (b) Only 1 & 3 are correct
(c) Only 2 & 3 are correct (d) Ony 1 & 2 are correct

(ii) How are interest paid on debentures considered in a Cash Flow Statement? (1)
(a) As an Operating Activity (b) As a Financing Activity
(c) As an Investing Activity (d) Both Operating & Financing Activity

(iii) Cost of Revenue from Operations = ` 3,00,000;

Inventory Turnover Ratio = 3 Times.
You are required to calculate value of Closing Inventory if Opening Inventory was 3 times
more than the Closing Inventory. (1)

(iv) Read the following information: (1)

Particulars Amount (Rs.)
Credit Revenue from Operations 9,60,000
Gross Debtors 1,90,000
Bills Receivables 50,000
Provision for Doubtful Debts 10,000
You are required to calculate Trade Receivable Turnover Ratio.

(v) State whether declaration of final dividend would result in inflow, outflow or no flow of cash (1)

Q12. Prepare a Comparative Statement of Profit & Loss with the help of following information (3)
Particulars 2022 2023
Revenue from Operations 20,00,000 30,00,000
Expenses 12,00,000 21,00,000
Other Income 4,00,000 3,60,000
Income Tax 50% 50%
Q13. You are required to prepare a Cash Flow Statement (as per AS-3) for the year ending 2021-
22 from the following Balance Sheets: (6)
Balance Sheet of Honesty Ltd.
As at 31st March 2021 & 31st March 2022
S. No Particulars Note No 31-03-2022 31-03-2021
I. EQUITY AND LIABILITIES:
1. Shareholder’s Funds:
(a) Share Capital (Equity Share Capital) 14,00,000 10,00,000
(b) Reserves & Surplus (Statement of Profit & Loss) 5,00,000 4,00,000
2. Non-Current Liabilities:
Long Term Borrowings (10% Debentures) 5,00,000 1,40,000
3. Current Liabilities
6
 (a) Short term borrowings (Bank Overdraft) 20,000 30,000
(b) Trade Payable (Creditors) 1,00,000 60,000
(c) Short Term Provisions 1 60,000 30,000

Total 25,80,000 16,60,000

II. ASSETS:
1. Non-Current Assets:
Property, Plant & Equipments and Intangible Assets
(a) Property, Plant and Equipment 2 16,00,000 9,00,000
(b) Intangible (Goodwill) 1,40,000 2,00,000
Current Assets:
(a) Inventories 2,50,000 2,00,000
(b) Trade Receivables 5,00,000 3,00,000
(c) Cash and Bank Balance (Cash at Bank) 90,000 60,000
.
Total 25,80,000 16,60,000

Notes to Accounts:
Particulars 31-03-2022 31-03-2021
(1) Short Term Provisions:
Provision for Taxation 60,000 30,000

(2) Fixed Assets (Tangible):

Plant & Machinery
17,60,000 10,00,000
Less: Accumulated Depreciation (1,60,000) (1,00,000)
16,00,000 9,00,000
Additional Information:
During the year 2021-22.
(a) A part of the machine costing Rs. 50,000, accumulated depreciation thereon being Rs. 20,000,
was sold for Rs 18,000
(b) Tax paid Rs. 20.000
(c) Interest of Rs. 50,000 was paid in Debentures.

Or
Read the following information available for Purity Ltd.
Particulars 2022 2021
Trade Receivables 17,000 20,000
Inventories 25,000 30,000
Prepaid Expenses 12,000 10,000
Expenses Outstanding 9,000 7,000
Provision for Tax 15,000 10,000
Cash in Hand 50,000 75,000
Furniture (Book Value) 1,20,000 1,60,000
General Reserve 50,000 40,000
10% Debentures 40,000 30,000
Goodwill 60,000 70,000
Trade Payable 21,000 25,000
Balance of Statement of P/L (Cr.) 1,30,000 1,20,000
Proposed Dividend 5,000 4,000
Share Capital 5,00,000 3,00,000
Additional Information:
During the year 2021-22.
(a) A piece of furniture costing Rs. 30,000 (Accumulated Depreciation Rs. 3,000) was sold for Rs. 25,000
(b) Tax of Rs. 9,000 was paid
(c) Interim Dividend of Rs. 4,000 were paid
(d) The company paid Rs. 3,000 as Interest on Debentures
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Answer the following questions:
(a) What is the amount of Net Profit before Tax? (1)
(b) What is the amount of Provision for taxation during the current year? (1)
(c) What is the amount of depreciation charged on furniture? (1)
(d) What is the amount of net operating profit before working capital changes? (1)
(e) What is the amount of cash flow from operating activities? (1)
(f) The board of directors of Purity Ltd. proposed a final dividend of Rs. 6,000 at the end of the year 2021-
22. State with reason, the disclosure / non-disclosure of this proposed dividend in the Cash Flow Statement
of the company for the year ending 2021-22. (1)

Q14. From the following Statement of Profit & Loss of Swatantra Ltd. for the year 2020-21,
Calculate any three of the following ratios (Upto 2 decimal places) (6)
(a) Gross Profit Ratio (c) Operating Profit Ratio
(b) Net Profit Ratio (d) Inventory Turnover Ratio

Statement of Profit & Loss of Swatantra Ltd.

For the year ending 31st March, 2021
Particulars Note No. 2023
Revenue from Operations 5,00,000
Other Income (Profit on sale of Machinery) 40,000
Total Revenue 5,40,000
Expenses:
Purchases 2,50,000
Change in Inventories 1 (10,000)
Employee Benefit Expenses 2 26,000
Depreciation 14,000
Finance Cost (Interest on Debentures) 30,000
Other Expenses 3 20,000
Total Expenses 3,30,000
Profit before Tax 2,10,000
Provision for Tax (84,000)
Profit after Tax 1,26,000

Notes to Accounts:
S. No. Particulars Amount
1 Changes in Inventories:
Opening Inventories 40,000
Closing Inventories 50,000
2 Employee Benefit Expenses:
Wages 16,000
Salaries 10,000
3 Other Expenses:
Carriage Inward 8,000
Loss on Sale of Furniture 12,000