myCBSEguide

Class 12 - Accountancy

Sample Paper - 06 (2022-23)

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. Calculate the Interest on Drawings of Ram @10% p.a for the year ended 31st March 2012. If Ram withdraws drawings
Rs. 2000 p.m at the beginning of every month.

a) ₹1,300

b) ₹1,100

c) ₹1,400

d) ₹1,200
2. Assertion (A): It is necessary to ascertain new profit sharing ratio for old partners when a new partner is admitted.

Reason (R): New partner acquires his share from old partners which reduces old partners' share in profits.

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. Calculate the average profit of last four year's profits. The profits of the last four years were:
2008 27000

2009 39000

2010 16000 (loss)

2011 40000
a) ₹10000

b) Rs. 22500

c) ₹30000

d) ₹40000

OR

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

1 / 28
myCBSEguide
Annual profit shown by a business is Rs.20,000. The normal rate of return 10%. Total assets of the business firm
Rs.2,40,000 and liabilities Rs.80,000. Value of Goodwill will be:

a) Rs.40,000

b) Rs.30,000

c) Rs.20,000

d) No Goodwill of Business
4. If a shareholder does not pay his dues on allotment, for the amount due, there will be a:

a) Credit balance in the Shares Allotment Account.

b) Debit balance in the Shares Forfeiture Account.

c) Credit balance in the Shares Forfeiture Account.

d) Debit balance in the Shares Allotment Account.

OR

Balance of forfeiture a/c after the shares have been re-issued is transferred to:

a) securities premium reserve

b) general reserve

c) None of these

d) Capital reserve
5. Sara Limited issued 5000, 10% debentures of Rs.100 each to the bank as collateral security against a loan of Rs.4,00,000
taken from the bank. Record the journal entry of issue of debentures in the books of the company.

a)
Debentures Suspense A/c Dr. 1,00,000  
To 10% Debenture A/c     1,00,000
b)
Debentures Suspense A/c Dr. 5,00,000  

To 10% Debenture A/c     5,00,000

c)
Debentures Suspense A/c Dr. 50,000  
To 10% Debenture A/c     50,000
d)
Debentures Suspense A/c Dr. 4,00,000  
To 10% Debenture A/c     4,00,000
To practice more questions & prepare well for exams, download myCBSEguide App. It provides complete study
material for CBSE, NCERT, JEE (main), NEET-UG and NDA exams. Teachers can use Examin8 App to create similar
papers with their own name and logo.
6. Creditor’s paid 42000 in full settlement of Rs 45000. The Journal entry should be:

a)
Realisation A/c Dr. 42,000  

To Bank A/c     42,000

b)
Realisation A/c Dr. 3,000  
To Bank A/c     3,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

2 / 28
myCBSEguide
c)
Realisation A/c Dr. 45,000  
To Bank A/c     45,000
d)
Realisation A/c Dr. 50,000  
To Bank A/c     50,000

OR

At the time of dissolution, there was an unrecorded asset i.e. Laptop, the market price of which was ₹24,000. This laptop
was taken by a partner (Mohan) at 50% of the market price. Give journal entry for the same.

a)
Mohan's Capital A/c Dr. 12,000  
To Realisation A/c     12,000
b)
Bank A/c Dr. 10,000  

To Office equipment A/c     10,000

c)
Mohan's Capital A/c Dr. 12,000  
To Bank A/c     12,000
d)
Realisation A/c Dr. 12,000  
To Mohan's Capital A/c     12,000
7. The subscribed capital of a company is ₹ 80,00,000 and the nominal value of the share is ₹ 100 each. There were no
calls in arrear till the final call was made. The final call made was paid on 77,500 shares only. The balance in the calls in
arrear amounted to ₹ 62,500. Calculate the final call on share.

a) ₹ 20

b) ₹ 22

c) ₹ 25

d) ₹ 7
8. ABC Ltd. purchased machinery for ₹200000 and issued 9% debentures of ₹100 each to the vendors. Make journal
entries if the debentures were issued at a premium of ₹10. Vendor’s account should be debited by:

a) ₹210000

b) ₹2000000

c) ₹2,00,000

d) ₹190000

OR

Match the following types of debentures

a. Security Debentures (i) Can exchange their debentures for share
b. Priority Debentures (ii) Repaid before the other debenture

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

3 / 28
myCBSEguide
c. Convertibility Debentures (iii) Secured by a fixed charge
a) (a) - (i), (b) - (ii), (c) - (iii)

b) (a) - (ii), (b) - (iii), (c) - (i)

c) (a) - (iii), (b) - (ii), (c) - (i)

d) (a) - (iii), (b) - (i), (c) - (ii)

Question No. 9 to 10 are based on the given text. Read the text carefully and answer the questions:

U, V and W are partners sharing profits in the ratio of 2:2:1. They decided to share future profits in the ratio 5:3:2. On
that date the profit and loss account showed the credit balance of ₹ 90,000. Instead of closing the profit and loss account,
it was decided to record an adjustment entry reflecting the change in profit sharing ratio They also decide to record the
effect of the following revaluations and reassessments without affecting the book values of assets and liabilities by
passing a single adjustment entry:
  Book Value (₹) Revised Value (₹)
Land and Building 2,50,000 3,00,000

Furniture 2,00,000 1,75,000

Sundry Creditors 90,000 75,000

Outstanding Salaries 15,000 25,000
9. The single adjustment entry on revaluations and reassessments without affecting the book values of assets and liabilities
will be:

a) Dr. U capital a/c ₹ 3,000 and Cr. V capital a/c ₹ 3,000

b) Dr. V capital a/c ₹ 30,000 and Cr. U capital a/c ₹ 30,000

c) Dr. W capital a/c ₹ 30,000 and Cr. V capital a/c ₹ 30,000

d) Dr. W capital a/c ₹ 3,000 and Cr. U capital a/c ₹ 3,000

10. Record an adjustment entry reflecting the change in profit sharing ratio when the profit and loss account is not closed:

a) Dr. U capital a/c ₹ 9,000 and Cr. V capital a/c ₹ 9,000

b) Dr. W capital a/c ₹ 9,000 and Cr. U capital a/c ₹ 9,000

c) Dr. W capital a/c ₹ 90,000 and Cr. V capital a/c ₹ 90,000

d) Dr. V capital a/c ₹ 90,000 and Cr. U capital a/c ₹ 90,000

11. Debentures for a longer period which are secured by either fixed charge or floating charge on assets they are called
________.

a) Secured Debentures

b) Unsecured Debentures

c) Un-registered Debentures

d) Bearer Debentures
12. How the net worth will be calculated

a) Net Worth = Profit of partners - Net accumulated Profit

b) Net Worth = Capital of partners + Net accumulated Profit

c) Net Worth = Sacrificing share of Partners - Gross accumulated Profit

d) Net Worth = Investment of partners - Net accumulated Profit

13. Average profit of a business over the last five years was ₹ 60,000. The normal commercial yield on capital invested in
such business is 10% p.a. The net capital invested in the business is ₹ 5,00,000. Amount of goodwill, if it is based on 3
years' purchase of last 5 year's super-profits will be

a) ₹ 1,50,000

b) ₹ 1,00,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

4 / 28
myCBSEguide
c) ₹ 1,80,000

d) ₹ 30,000
14. A and B are partners sharing profit and losses in the ratio of 3:5. On 1st July 2012, A and B advanced loan to the
business of Rs. 40,000 and Rs.20,000 respectively at the agreed @ 5% p.a. Calculate Interest on loan. When accounting
books are closed on 31st December every year and partnership deed allows interest on a loan to the partners.

a) A = Rs.1,000 and B = Rs. 500

b) A = Rs 1,500 and B = Rs 500

c) A = Rs 1,000 and B = Rs 1500

d) A = Rs 2,000 and B = Rs 500

15. Which method is used to calculate the profits up to the date of death through following statement:

For the current year, profits are calculated on the basis of the current year's sales up to the date of death.

a) Time basis

b) Turover basis

c) Super profit method

d) Capitalisation of average profit method

OR

L, M and N are partners sharing ratio 3:2:1. M died and N is of opinion that the profit of the firm is shared between L
and N equally. L does not agree because there is a partnership deed which is showing old profit sharing ratio 3:2:1. What
should be new profit sharing ratio?

a) Distribute profit between L and N in the ratio of 3:2

b) Distribute profit between L and N in the ratio of 1:11

c) Distribute profit between L and N equally

d) Distribute profit between L and N in the ratio of 3:1

16. Ashok and Sudha were partners in a firm sharing profits and losses in the ratio of 3 : 1. They admitted Bani as a new
partner. Ashok sacrificed th of his share and Sudha sacrificed th of her share is favour of Bani. Bani's share in the
1

4
1

profits of the firm will be:

a)

16

b) 1

c)

d)
5

17. X, Y and Z are partners in a firm sharing profits and losses in the ratio of 3 :2 :1. Z retires from the firm on 31st March,
2019. On the date of Zs retirement, the following balances appeared in the books of the firm:

General Reserve ₹ 1,80,000

Profit and Loss Account (Dr.) ₹ 30,000

Workmen Compensation Reserve ₹ 24,000 which was no more required

Employees' Provident Fund ₹ 20,000.

Pass necessary Journal entries for the adjustment of these items on Z's retirement.
18. i. Find the goodwill of a firm on the basis of three years’ purchase of the average profits of the last five years which are
as follows:
Year Profit (Loss) (₹)
2013 10,000

2014 15,000

2015 4,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

5 / 28
myCBSEguide
2016 (5,000)

2017 6,000
ii. The capital of the firm is ₹ 1,00,000 and the normal rate of return is 8%, the average profits for the last 5 years are
₹ 12,000 and goodwill is to be worked out at 3 years' purchase of super profits,
iii. Rama Brothers earn an average profit of ₹ 30,000 with a capital of ₹ 2,00,000. The normal rate of return of the
business is 10%. Using capitalisation of super-profits method work out the value the goodwill of the firm.
19. Traditional Products Ltd. offered 2,00,000, 8% Debentures of ₹500 each at a premium of 10% payable as ₹200 on
application (including premium) and balance on the allotment, redeemable at par after 8 years. But applications are
received for 3,00,000 debentures and the allotment is made on a pro-rata basis. All the money due on application and
allotment is received. Record necessary entries regarding the issue of debentures.
20. P, Q and R are partners sharing profits and losses in the ratio of 5 : 3 : 2.

From 1st April, 2016, they decide to share profits and losses in equal proportions. The partnership deed provides that in
the event of any change in profit sharing ratio, the goodwill should be valued at three year’s purchase of the average of
five year’s profits. The profits and losses of the preceding five years ending 31st March are :

Profits : 2012 : ₹ 60,000, 2013 : ₹ 1,50,000, 2014 : ₹ 1,70,000, 2015 : ₹ 1,90,000.

Loss : 2016 : ₹ 70,000.

Give the necessary journal entry to record the above change.

21. Himmat Ltd has authorised share capital of ₹ 50,00,000 divided into 5,00,000 Equity Shares of ₹ 10 each. It has existing
issued and paid-up capital of ₹ 5,00,000. It further issued to public 1,50,000 Equity Shares at par for subscription
payable as under:
On Application: ₹3

On Allotment: ₹ 4 and
On Call: Balance Amount.
The issue was fully subscribed and allotment was made to all the applicants. Call was made during the year and was duly
received. Show share capital of the company in the Balance Sheet of the Company.
22. Give the necessary journal entries for the following transactions on the dissolution of the firm of Aman and Rajat on 31st
March, 2016, after the transfer of

various assets (other than cash) and the third party liabilities to Realisation Account. They shared profits and losses in
the ratio of 2 : 1.
i. There was a bill of exchange of ₹ 10,000 under discount. The bill was received from Derek who became insolvent.
ii. Bills Payable of ₹ 30,000 falling due on 30th April, 2016 was discharged at ₹ 29,550.
iii. Creditors of ₹ 30,000 took an overstock of ₹ 10,000 at 10% discount and the balance was paid to them in cash.
iv. There was an old typewriter that had been written off completely. It was estimated to realize ₹ 600. It was taken
away by Rajat at 25% less than the estimated price.
v. Aman agreed to take over the responsibility of completing dissolution at an agreed remuneration of ₹ 1,000 and to
bear all realization expenses. Actual realisation expenses ₹ 800 were paid by the firm.
vi. Loss on realization was ₹ 54,000.
23. AB Ltd. invited applications for issuing 75,000 equity shares of Rs. 100 each at a premium of t 30 per share. The amount
was payable as follows

On application and allotment — Rs. 85 per share

On first and final call — The balance amount.

Applications for 1,27,500 shares were received. Applications for 27,500 shares were rejected and shares were allotted on
pro-rata basis to the remaining applicants. Excess money received on application and allotment was adjusted towards
sums due on first and final call. The calls were made. A shareholder,who applied for 1,000 shares, failed to pay the first

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

6 / 28
myCBSEguide
and final call money. His shares were forfeited. All the forfeited shares were reissued at Rs. 150 per share fully paid up.

Pass necessary journal entries for the above transactions in the books of AB Ltd.
24. Anshu, Anju and Anupma are partners in a firm sharing profit in the ratio of 2 : 2 : 1. Their Balance Sheet as at March
31,2019 was as follows:

BALANCE SHEET

as at March 31, 2019

Liabilities   ₹ Assets ₹
Creditors   65,000 Land 2,00,000

Bill Payable   7,000 Building 80,000

General Reserve   48,000 Plant 1,60,000
Capital:     Stock 2,10,000

Anshu 2,40,000   Debtors 50,000

Anju 2,00,000   Cash 20,000
Anupma 1,60,000 6,00,000    

    7,20,000   7,20,000
Anshu, Anju and Anupma decided to share the profit equally, w.e.f. April 1, 2019. For this purpose, it was agreed that:
i. The goodwill of the firm should be valued at ₹ 60,000.
ii. Land should be revalued at ₹ 3,00,000 and building and the plant should be depreciated by 5%. Stock be valued at ₹
2,25,000.
iii. Creditors amounting to ₹ 2,000 were not likely to be claimed and hence should be written off. You are required to:
a. Record the necessary journal entries to give effect to the above agreement, without opening revaluation account;
b. Prepare the capital accounts of the partners; and
c. Prepare the balance sheet of the firm after reconstitution.

Partners decide that General Reserve is to be transferred to Capital Accounts whereas revised values of assets and
liabilities are not to be recorded in the books.
25. L, M and N were partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet as at 1.4.2015 was as
under:
Liabilities   ₹ Assets ₹
Sundry Creditors   20,000 Cash 8,000
Reserves   9,000 Debtors 22,000

Capitals:     Stock 20,000

L 50,000   Machinery 67,000
M 30,000   Investments 12,000

N 20,000 1,00,000    
    1,29,000   1,29,000
N died on 5th November, 2015 and according to the partnership deed his executors were entitled to be paid as under:
i. The capital to his credit at the time of his death and interest thereon @ 8% per annum.
ii. His share of Reserves.

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

7 / 28
myCBSEguide
iii. His share of profits for the intervening period will be based on the sales during that period, which were calculated as
₹ 2,40,000. The rate of profit during past 4 years had been 15% on sales.
iv. Goodwill according to his share of profit to be calculated by taking thrice the amount of the average profit of the last
four years less 25%. The profits of the previous years were:
2012 ₹ 10,500
2013 ₹ 12,000

2014 ₹ 12,500
2015 ₹ 13,000
The investments were sold at par and his executors were paid out. Pass the necessary journal entries and write the
account of the executors of N.
26. Give the journal entries at the time of issue of debentures in the following cases:
i. Issued ₹5,00,000, 12% debentures at par and redeemable at par after 5 years.
ii. Issued ₹8,00,000, 11% debentures at 6% discount, redeemable at par after 4 years.
iii. Issued ₹10,00,000, 14% debentures at 5% premium, redeemable at par after 4 years.
iv. Issued ₹20,00,000, 12% debentures at par, redeemable at 5% premium after 3 years.
v. Issued ₹12,00,000, 13% debentures at 4% discount, redeemable at 6% premium after 3 years.
Part B :- Analysis of Financial Statements
27. A Ltd engaged in the business retailing of Air-Conditioners, invested Rs. 25, 00,000 in the shares of a manufacturing
company. Dividend received on this investment will be:

a) Cash flow from Investing activities

b) Cash flow from operating activities

c) Cash Equivalent

d) Cash flow from Financing activities

OR

As per Accounting Standard-3, Cash Flow is classified into

a) Operating activities and financing activities

b) Investing activities and financing activities

c) Operating activities and investing activities

d) Operating activities, financing activities and investing activities

28. Main limitation of analysis of financial statements is:

a) Affected by window dressing

b) Do not reflect changes in the price level

c) Difficulty in forecasting

d) All of these
29. Payment of the dividend will come under financing activities when it is paid by ________.

a) Manufacturing Company

b) All of these

c) Trading Company

d) Finance Company

OR

Cash Credit is concerned with ________.

a) Cash and Cash Equivalents

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

8 / 28
myCBSEguide
b) Investing Activities

c) Operating Activities

d) Financing Activities
30. Which of the following is not a limitation of financial statement analysis?

a) Qualitative aspect is ignored

b) To assess the financial position and profitability

c) Historical analysis

d) Ignores price level changes

31. State under which major headings the following items will be presented in the balance sheet of a company as per
Schedule III Part I of the Companies Act, 2013.
i. Long-term borrowings
ii. Trade payables
iii. Provision for tax
iv. Securities premium reserve
v. Patents
vi. Accrued incomes
vii. Current investment
32. Ratio of Current Assets (₹6,00,000) to Current Liabilities 4,00,000) is 1.5 :1. The accountant of the firm is interested in
maintaining a Current Ratio of 2: 1, by paying a part of the Current Liabilities. Compute the amount of Current
Liabilities that should be paid, so that the Current Ratio at the level of 2 : 1 may be maintained.
33. Calculate any three of the following ratios with the help of the information given below:
i. Operating Ratio
ii. Gross Profit Ratio
iii. Quick Ratio
iv. Working Capital Turnover Ratio
v. Proprietary Ratio.​​

Information: Equity share capital ₹ 1,00,000; 8% Preference share capital ₹ 80,000; 9% Debentures ₹ 60,000;

General Reserve ₹ 10,000; Revenue from operation ₹ 2,00,000; Opening Inventory ₹ 12,000 Purchases ₹ 1,20,000;
Wages ₹ 8,000; Closing Inventory ₹ 18,000; Selling and Distribution Expenses ₹ 2000;

Other current assets ₹ 50,000; Fixed assets ₹ 2,12,000 and Current Liabilities ₹ 30,000.

OR

The following figures relate to the years ending 31st December, 2017 and 2018. What do they indicate?
31-12-2017
31-12-2018

 
₹ ₹

Revenue from Operations (Sales) 6,00,000 7,00,000

Revenue from Operations Return
60,000 40,000
(Sales Returns)

Gross Profit on Revenue from

20% 25%
Operations

Trade Receivables 59,000 1,06,000

Opening Inventory 1,20,000 —
Closing Inventory 1,60,000 2,40,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

9 / 28
myCBSEguide
In 2017 Trade Receivables increased by ₹ 10,000. Ascertain the Trade Receivables turnover ratio and the Inventory
Turnover Ratio. Give your comments about the company’s performance in 2018.

To practice more questions & prepare well for exams, download myCBSEguide App. It provides complete study
material for CBSE, NCERT, JEE (main), NEET-UG and NDA exams. Teachers can use Examin8 App to create similar
papers with their own name and logo.
34. From the following Balance Sheets of XYL limited, prepare Cash Flow Statement:
31.3.2018 31.3.2017

Particulars Note No.

₹ ₹
I. EQUITY AND LIABILITIES:      
(1) Shareholder’s Funds:      

{a) Share Capital   5,00,000 4,50,000

(b) Reserve and Surplus 1 1,18,000 70,000
(2) Current Liabilities      

(a) Trade Payables   1,49,000 1,17,000

(b) Short term Provisions (Provision for Tax)   50,000 40,000
TOTAL   8,17,000 6,77,000

II. ASSETS:      
(1) Non-Current Assets:      
(a) Fixed Assets      

(0 Tangible Assets 2 3,70,000 2,80,000

(ii) Intangible Assets 3 90,000 1,15,000
(2) Current Assets:      

(a) Inventory   1,09,000 77,000

(b) Trade Receivables   2,30,000 1,80,000
(c) Cash & Cash Equivalents   18,000 25,000

TOTAL   8,17,000 6,77,000

Notes:
31.3.2018
31.3.2017
   
₹ ₹

(1) Reserve & Surplus:    

  General Reserve 70,000 40,000
  Profit & Loss Balance 48,000 30,000
    1,18,000 70,000

(2) Tangible Assets:    

  Land and Building 1,70,000 2,00,000
  Plant 2,00,000 80,000

    3,70,000 2,80,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

10 / 28
myCBSEguide
(3) Intangible Assets:    

  Goodwill 90,000 1,15,000

Additional Information:

a. Contingent Liability 31.3.2018 31.3.2017

Proposed Dividend (₹) 50,000 42,000
b. Depreciation of ₹ 10,000 and ₹ 20,000 has been charged on plant, land and buildings respectively.
c. An interim dividend of ₹ 20,000 has been paid.
d. Income tax of ₹3 5,000 has been paid.
e. Rent Received during the year ₹ 10,000.

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

11 / 28
myCBSEguide

Class 12 - Accountancy

Sample Paper - 06 (2022-23)

Solution

Part A:- Accounting for Partnership Firms and Companies

1. (a) ₹1,300

Explanation: In this case, the partner has withdrawn a fixed amount on a fixed date for the full year. To calculate the
interest on drawings follows these two steps in this situation:

P eriod after 1st installment + period after last installment
Step 1: Average Time Period =  = = = 6.5 months

12+1 13

2 2 2

Step 2: Interest on Drawings = 24,000 × = 1,300

10 6.5
×
100 12

2. (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.

3. (b) Rs. 22500

Explanation: Calculation of Average Profit When loss is given:-

1. Calculation of total profits earned during 4 years:

27,000 + 39,000 – 16,000 + 40,000 = 90,000

2. Average profit = Total Profit / No of Years Purchase = 90,000/4 = 22,500

OR

(a) Rs.40,000

Explanation: Follow these steps to calculate the value of goodwill:

i. Calculation of Capital Employed: Total Assets - Liabilities = 2,40,000 - 80,000 = 1,60,000
ii. Normal Profit = Capital Employed × NRR

100
= 1,60,000 × 10

100
= 16,000
iii. Super Profit = Average Profit - Normal Profit = 20,000 - 16,000 = 4,000
Super profit
iv. Goodwill =   × 100 =  ×  100 = 40,000
4000

NRR 10

4. (d) Debit balance in the Shares Allotment Account.

Explanation: Share Allotment A/c represents collectively the amount due from all the shareholders on account of
Allotment money. Just like when you sell goods on credit, you don't receive money but credit sales, similarly though
allotment money is not received but Share Capital A/c is credited.

OR

(d) Capital reserve

Explanation: Capital reserve

5. (b)
Debentures Suspense A/c Dr. 5,00,000  

To 10% Debenture A/c     5,00,000

Explanation: A debenture Suspense account is an adjustment account which is prepared at the time of issue
of debentures as collateral security. In this case, debentures act as security for taking a loan from the lender. When the
loan is paid back debentures issued as collateral security will be returned back.

The following entry will take place to record the bank loan taken against collateral security:
Debentures Suspense A/c Dr. 5,00,000  

To 10% Debenture A/c     5,00,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

12 / 28
myCBSEguide

To practice more questions & prepare well for exams, download myCBSEguide App. It provides complete study
material for CBSE, NCERT, JEE (main), NEET-UG and NDA exams. Teachers can use Examin8 App to create similar
papers with their own name and logo.
6. (a)
Realisation A/c Dr. 42,000  

To Bank A/c     42,000

Explanation: When liabilities are paid bank account should be credited with the actual amount paid i.e. 42,000 and not
with the total amount of liability i.e. 45,000.

Entry will be:

Realisation A/c Dr. 42,000  
To Bank A/c     42,000

OR

(a)
Mohan's Capital A/c Dr. 12,000  

To Realisation A/c     12,000

Explanation: The market price of Laptop Rs.24,000 and taken by Mohan @ 50% i.e. 12,000 (50,000 × 50%)  Do not
record the market price of the asset in any account. Since the asset is taken over by partner, the partner's capital account
is debited and the realisation account is credited.
Mohan's Capital A/c Dr. 12,000  

To Realisation A/c     12,000

7. (c) ₹ 25

80,00,000
Explanation: Total no of shares: 100
= 80,000

Final calls received on no. of shares: 77,500

No. of Shares on which call money not received = 80,000 - 77,500 = 2,500

Amount of calls in arrears ₹ 62,500/- Call Money =

62,500

2,500
 = 25
8. (c) ₹2,00,000

Explanation: Vendor’s Account should be debited with Rs.2,00,000 since machinery cost is Rs.200000 and the total
amount due to him is Rs.2,00,000.

OR

(c) (a) - (iii), (b) - (ii), (c) - (i)

Explanation:
i. Security debentures are those which are secured by a fixed charge. (i.e. secured on Assets)
ii. Priority Debentures are repaid before the other debentures.
iii. Convertible debentures are those which can be converted into shares.
9. a. (a) Dr. U capital a/c ₹ 3,000 and Cr. V capital a/c ₹ 3,000

Explanation: Dr. U capital a/c ₹ 3,000 and Cr. V capital a/c ₹ 3,000
10. a. (a)
Dr. U capital a/c ₹ 9,000 and Cr. V capital a/c ₹ 9,000

Explanation: Dr. U capital a/c ₹ 9,000 and Cr. V capital a/c ₹ 9,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

13 / 28
myCBSEguide
11. (a) Secured Debentures

Explanation: When a company issue some debentures with the charge of some assets they are called secured
debentures. Such debentures are shown in the balance sheet under the heading of Long Term Borrowings. A charge on
assets of the company is registered with Registrar of companies.
12. (b) Net Worth = Capital of partners + Net accumulated Profit
Explanation: Net worth is the net amount engaged in the business. To find out the net worth of a business following
formula should be used:

Capitals of all old partners including new partner + Reserves and profits - losses (accumulated losses and fictitious
assets) - Fictitious assets - Deferred revenue expenditure.
13. (d) ₹ 30,000

Explanation: ₹ 30,000
14. (a) A = Rs.1,000 and B = Rs. 500

Explanation:

Calculation of Interest on loan:

The loan is given by A = Rs. 40,000

Loan given by B = Rs.20,000

Interest on A’s Loan = 40,000 × = Rs.1,000

5 6
×
100 12

Interest on B’s Loan = 20,000 × 5

100
×
6

12
= Rs. 500

15. (b) Turover basis

Explanation: The method in which the profits up to the date of death for the current year are calculated on the basis of
current year's sales up to the date of death by using the formula is called sale basis method or profit on turnover.

Last year profti
The Formula to calculate profit from starting of the year till the date of death will be:  Last year sale
 ×  Current year sale
till date of death

or Current year sale × % of profit margin over last year

or as provided by the question.

OR

(d) Distribute profit between L and N in the ratio of 3:1

Explanation: The profit should be distributed among the Land N in Ratio 3:1. Profits cannot be shared equally because
there is partnership deed and profit should be distributed accordingly. In case of any information about the new profit
sharing ratio old ratio should be taken.
16. (c) 1

Explanation: Bani's Share will be  1

17. JOURNAL ENTRIES

Particulars   L.F. Debit ₹ Credit ₹

General Reserve A/c Dr.   1,80,000  

Workmen Compensation Reserve A/c Dr.   24,000  

To X's Capital A/c       1,02,000

To Y's Capital Ac       68,000

To Z's Capital A/c       34,000

(Being Accumulated Profit distributed among old partners in old profit sharing ratio)        

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

14 / 28
myCBSEguide

X's Capital A/c Dr.   15,000  

Y's Capital A/c Dr.   10,000  

Z's Capital A/c Dr.   5,000  

To Profit and Loss A/c       30,000

(Being Debit balance in profit and Loss account distributed among old partners in old
       
profit sharing ratio)
W.N:
i. Total Credit Balance of Reserves = General Reserve + Workmen Compensation Reserve = 1,80,000 + 24,000 =
2,04,000
X's Share  Reserve = 2,04,000×  = 1,02,000

Y's Share Reserve = 2,04,000×  = 68,000

2

Z's Share Reserve = 2,04,000 ×  = 34,000

1

ii. Distribution of Debit Balance of Profit and Loss A/c

X's = 30,000 ×  = 15,000

Y's = 30,000 ×  = 10,000

Z's = 30,000 ×  = 5,000

1

18. i. Total Profits = ₹ 10,000 + ₹ 15,000 + ₹ 4,000 + ₹ 6,000 - ₹ 5,000

= ₹ 30,000

Average Profits = ₹
30,000

= ₹ 6,000

Goodwill = Average Profits × 4

= ₹ 6,000 ×  3

= ₹ 18,000
ii. Average Profit = ₹ 12,000

Normal Profit = ₹ 1,00,000 × = ₹ 8,000

100

Super Profit = Average Profit - Normal profit

= ₹ 12,000 - ₹ 8,000

= ₹ 4,000

Goodwill = Super Profit ×  3

= ₹ 4,000 ×  3

= ₹ 12,000
iii. Normal Profit = ₹ 2,00,000 ×

10

100

= ₹ 20,000

Super Profit = Average Profit - Normal Profit

= ₹ 30,0000 - ₹ 20,000

= ₹10,000

Goodwill = Super Profit × 100

Normal Rate of Return

= 10,000 ×

100

10

= ₹ 1,00,000

19. JOURNAL OF TRADITIONAL PRODUCTS LTD.  

Date Particulars   L.F. Dr. (₹) Cr. (₹)

  Bank A/c Dr.   6,00,00,000  

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

15 / 28
myCBSEguide
  To 8% Debenture Application A/c
      6,00,00,000
(Application money received on 3,00,000 debentures @ ₹200 each)

  8% Debenture Application A/c Dr.   6,00,00,000  

  To 8% Debenture A/c       3,00,00,000

  To Securities Premium Reserve A/c       1,00,00,000

To 8% Debenture Allotment A/c

  (Transfer of application money to 8% Debentures A/c and the excess       2,00,00,000

money to Allotment A/c)

  8% Debenture Allotment A/c Dr.   7,00,00,000  

To 8% Debentures A/c

        7,00,00,000
(Allotment due to 2,00,000 debentures @ ₹350 each)
  Bank A/c Dr.   5,00,00,000  

To 8% Debenture Allotment A/c

        5,00,00,000
(Allotment money received)
₹60,000 + 1,50,000 + 1,70,000 + 1,90,000+(−)70,000
20. Average Profit = 5

= ₹ 1,00,000

Goodwill at 3 year's purchase = ₹ 1,00,000 ×  3 = ₹ 3,00,000

Sacrifice or Gain:

Old Ratio of P, Q and R = 5 : 3 : 2

New Ratio of P, Q and R = 1 : 1 : 1

P=  (Sacrifice)

5 1 15 − 10 5
− = =
10 3 30 30
9 − 10
Q=  (Gain)

3 1 1
− = =
10 3 30 30

R =   (Gain)
2 1 6 − 10 4
− = =
10 3 30 30

In the books of firm

JOURNAL

Date Particulars L.F. Dr. ₹ Cr. ₹

2016 April 1 Q's Capital A/c (1/30 of 3,00,000) Dr.   10,000  

  R's Capital A/c (4/30 of 3,00,000) Dr.   40,000  

To P's Capital A/c (5/30 of 3,00,000)

        50,000
(Adjustment for goodwill due to change in profit sharing ratio)

21. Balance Sheet of Himmat Ltd.

Particulars Note No. ₹

I. Equity and Liabilities    

1. Shareholders’ Funds    

a. Share Capital 1 20,00,000

Total   20,00,000

II. Assets    

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

16 / 28
myCBSEguide
2. Current Assets    

a. Cash and Cash Equivalents 2 20,00,000

Total   20,00,000
Notes to Accounts
Particulars ₹

1. Share Capital  
Authorised Share Capital  

5,00,000 Equity Shares of Rs 10 each 50,00,000

Issued Share Capital  

50,000 Equity Shares of Rs 10 each 5,00,000  

1,50,000 Equity Shares of Rs 10 each 15,00,000 20,00,000

Subscribed and Paid-up Share Capital  

50,000 Equity Shares of Rs 10 each 5,00,000  

1,50,000 Equity Shares of Rs 10 each 15,00,000 20,00,000

2. Cash and Cash Equivalents  

Bank 20,00,000

22. Books of Aman and Rajat

JOURNAL

Date Particulars L.F. Dr. (₹) Cr. (₹)

2016 March 31        
(i) Realisation A/c Dr. 10,000  

To Bank A/c

      10,000
(Payment of dishonoured B/R under discount)

(ii) Realisation A/c Dr. 29,550  

To Bank A/c

      29,550
(Bills Payable discharged)

(iii) Realisation A/c Dr. 21,000  

To Bank A/c

      21,000
(Creditors took overstock & balance paid in cash)

(iv) Rajat's Capital A/c Dr. 450  

To Realisation A/c

      450
(Unrecorded old typewriter taken over by Rajat)

(v) Realisation A/c Dr. 1,000  

  To Bank A/c     800

To Aman's Capital A/c

      200
(Remuneration given to Aman and Expenses paid by firm on his behalf)

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

17 / 28
myCBSEguide
(vi) Aman's Capital A/c Dr. 36,000  
  Rajat's Capital A/c Dr. 18,000  

To Realisation A/c

      54,000
(Transfer of loss on realisation in 2 : 1)
23. Working Note 1.
No of No of Excess amount Amount to be Amount to be
Amount
Category Shares shares received on received On First & adjusted on First &
Refunded
Applied Allotted Application Final Call Final Call
25,000 Shares× 85 75,000 shares × 45  
I 1,00,000 75,000   21,25,000
=21,25,000 =33,75,,000 -

             
  27500 Share
II   27,500   Nil - - - × Rs. 85 =   
23,3,7500

Total 1,27,500 75,000     21,25,000 23,37,500

Working Note 2.

No of shares Applied = 1000 shares

No of shares Allotted = 1000 shares × 75,000 share /1,00,000 share = 750 shares

Excess amount on share application received = ( 1000 – 750 ) 150 shares × Rs.85 = Rs.21250

Amount to be received on Allotment = 750 shares × Rs.45 = Rs.33750

Outstanding on allotment = Rs.33750 – Rs.21250 = Rs.12500

Working Note 3.

Amount transfer to Capital Reserve = 62500 -  0   =  Rs.62500

Journal 

Debit ( Rs. Credit (

Date  Particulars   L.F.
) Rs. )
1. Bank A/c Dr.   1,08,37,500  

  To Equity Share Application A/c       1,08,37,500

( Being Amount Received on the application of share @2 per share on

         
1,50,00 shares )

           

2. Equity Share Application A/c Dr.   1,08,37,500  

  To Equity Share Capital A/c       41,25,000

  To Security Premium Reserve  A/c       22,50,000

  To Equity shares First & Final A/c       21,25,000

  To Bank A/c       23,37,500

( Being amount transfer to capital a/c and adjustment of pro-rata

         
made.)
           

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

18 / 28
myCBSEguide

3. Equity Share First & Final call A/c Dr.   33,75,000  

  To Equity share Capital A/c       33,75,000

  ( Being amount Due on 1st & Final Call Recorded )        

           

4. Bank A/c Dr.   12,50,000  

  To Equity Share First & Final call A/c ( 33,75,000 – 21,25,000  )       12,50,000

  ( Being Amount received on First and Final calls )        

           
7. Equity Share Capital A/c Dr.   75,000  

  To Equity Share Forfeited A/c       62,500

  To Equity Share First & Final Call  A/c       12,500

  ( Being shares forfeited on which amount of call not received )        

           

8. Bank A/c Dr.   1,12,500  

  To Equity Share Capital A/c       75,000

  To Security  Premium Reserve A/c       37500

  ( Being shares Forfeited on which amount of call not received )        

           

10. Equity Share Forfeited A/c Dr.   62500  

  To Capital Reserve A/c       62500

( Being amount of share forfeited transfer to  Capital Reserve transfer
         
A/c )

           
24. Calculation of Amount to be adjusted : 
PARTICULARS ₹

Profit due to increase in the value of land 1,00,000

Profit due to decrease in Creditors 2,000

Profit due to increase in Value of Stock 15,000

  1,17,000

(-) Loss due to decrease in the value of Building -4,000

  1,13,000

(-) Loss due to decrease in the value of Plant -8,000

  1,05,000
(+) Adjustment of Goodwill 60,000

Total Amount to be adjusted 1,65,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

19 / 28
myCBSEguide
Old Ratio of Anshu, Anju and Anupma =   2

5
:
2

5
:
1

New Ratio of Anshu, Anju and Anupma =  1

3
:
1

3
:
1

Sacrifice or Gain: Old Share - New Share

Anshu = − = (Sacrifice) 1,65,000 ×  = ₹ 11,000

2 1 6 − 5 1 1
=
5 3 15 15 15

Anju = (Sacrifice) 1,65,000 ×  = ₹ 11,000

2 1 6 − 5 1 1
− = =
5 3 15 15 15

Anupma =  (Gain) } 1,65,000 ×  = ₹ 22,000

1 1 3 − 5 2 2
− = =
5 3 15 15 15

i. JOURNAL

Date Particulars L.F. Dr. ₹ Cr. ₹

2019
General Reserve A/c Dr.   48,000  
April 1

  To Anshu's Capital A/c       19,200

  To Anju's Capital A/c       19,200

        9,600
To Anupma's Capital A/c

(General Reserve transferred to partner's Capital a/c  in their old profit
         
sharing ratio)
  Anupma's Capital A/c Dr.   22,000  

  To Anshu's Capital A/c       11,000

  To Anju's Capital A/c       11,000

(Adjustment for revaluation of assets and liabilities and goodwill on change
         
in profit sharing ratio)

ii. Dr. CAPITAL ACCOUNTS Cr.

Particulars Anshu Anju Anupma Particulars Anshu Anju Anupma

  ₹ ₹ ₹   ₹ ₹ ₹

To Anshu's Capital A/c     11,000 By Balance b/d 2,40,000 2,00,000 1,60,00

To Anju's Capital A/c     11,000 By General Reserve 19,200 19,200 9,600

To Balance c/d 2,70,200 2,30,200 1,47,600 By Anupma's Capital A/c 11,000 11,000  

  2,70,200 2,30,200 1,69,600   2,70,200 2,30,200 1,69,600

iii. BALANCE SHEET

(as at 1st April 2019)

Liabilities   Amount Assets Amount

    ₹   ₹

Creditors   65,000 Land 2,00,000

Bills Payable   7,000 Building 80,000

Capital     Plant 1,60,000

Anshu 2,70,200   Stock 2,10,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

20 / 28
myCBSEguide

Anju 2,30,200   Debtors 50,000

Anupma 1,47,600 6,48,000 Cash 20,000

    7,20,000   7,20,000

25. IN THE BOOKS OF THE FIRM

JOURNAL ENTRIES

Dr. Cr.
Date Particulars   L.F.
(₹) (₹)
2015
Interest on Capital A/c Dr.   960  
Nov. 5

  To N's Capital A/c       960

  (Interest credited to N's Capital Account)        

2015
Reserve A/c Dr.   1,800  
Nov. 5

  To N's Capital A/c       1,800

  (Transfer of N's share of Reserves to N's Capital Account)        

2015
Profit & Loss Suspense A/c Dr.   7,200  
Nov. 5
  To N's Capital A/c       7,200

  (Transfer of  2

10
th  share of profit i.e. ₹ 2,40,000 ×   15

100
 ×   2

10
)        

2015
L's Capital A/c Dr.   3,375  
Nov. 5
  M's Capital A/c Dr.   2,025  

  To N's Capital A/c       5,400

(Adjustment of N's share of goodwill into the Capital Accounts of L and M in

         
their gaining ratio i.e., 5:3)

2015
Bank A/c Dr.   12,000  
Nov. 5
  To Investment A/c       12,000

  (Sale of Investments through bank balance)        

2015
N's Capital A/c Dr.   35,360  
Nov. 5
  To N's Executor's A/c       35,360

  (Amount due to N transferred to his Executor's Account)        

2015
N's Executor's A/c Dr.   35,360  
Nov. 5

  To Bank A/c       35,360

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

21 / 28
myCBSEguide
  (Amount paid to N's Executors through bank)        

N'S CAPITAL ACCOUNT

Dr. Cr.

Date Particulars ₹ Date Particulars ₹

2015 Nov. 5 To N's Executor's A/c 35,360 2015 April 1 By Balance b/d 20,000

      2015 Nov. 5 By Interest on Capital A/c 960

      2015 Nov. 5 By Reserves A/c 1,800

      2015 Nov. 5 By Profit & Loss Suspense A/c 7,200

      2015 Nov. 5 By L's Capital A/c 3,375

      2015 Nov. 5 By M's Capital A/c 2,025

    35,360     35,360

N'S EXECUTOR'S ACCOUNT

Dr. Cr.
Date Particulars ₹ Date Particulars ₹

2015 Nov. 5 To Bank A/c 35,360 2015 Nov. 5 By N's Capital A/c 35,360
W.N.:
i. Number of days from April 1, 2015 to Novemeber 5, 2015 = 219

Interest on Capital = 20, 000 × 219

365
×
8

100
= ₹ 960
10,500+12,000+12,500+13,000
ii. Average Profit =  4
 = 12,000

Less: 25% of 12,000 = 3,000

= 12,000 - 3,000 = 9,000

Goodwill = 9,000 ×  3 = ₹ 27,000

N's share of Goodwill = 27, 000 × 2

10
 = ₹ 5,400
It will be credited to the Capital Account of L and M in their gaining ratio 5 : 3.

26. i. JOURNAL ENTRIES

Date Particulars   L.F. Dr. (₹) Cr. (₹)

  Bank A/c Dr.   5,00,000  

To 12% Debenture Application & Allotment A/c

        5,00,000
(Being Application money received)
  12% Debenture Application & Allotment A/c Dr.   5,00,000  

To 12% Debentures A/c

        5,00,000
(Being Debentures allotted, issued at par, redeemable at par)

ii. JOURNAL ENTRIES

Date Particulars   L.F. Dr. (₹) Cr. (₹)

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

22 / 28
myCBSEguide
  Bank A/c Dr.   7,52,000  

To 11% Debenture Application & Allotment A/c

        7,52,000
(Being Application money received)

  11% Debenture Application & Allotment A/c Dr.   7,52,000  

  Discount on issue of Debentures A/c Dr.   48,000  

To 11% Debentures A/c

  (Being Transfer of application money to Debentures Account, issued at a       8,00,000

discount of 6%, redeemable at par)

iii. JOURNAL ENTRIES

Date Particulars   L.F. Dr. (₹) Cr. (₹)

  Bank A/c Dr.   10,50,000  

To 14% Debenture Application & Allotment A/c

        10,50,000
(Being Application money received)

  14% Debenture Application & Allotment A/c Dr.   10,50,000  

  To 14% debentures A/c       10,00,000

To Securities Premium Reserve A/c

  (Being Transfer of application money to Debentures Account, issued at a       50,000

premium of 5%, redeemable at par)

iv. JOURNAL ENTRIES

Date Particulars   L.F. Dr. (₹) Cr. (₹)

  Bank A/c Dr.   20,00,000  

To 12% Debenture Application & Allotment A/c

        20,00,000
(Being Application money received)

  12% Debenture Application & Allotment A/c Dr.   20,00,000  

  Loss on issue of Debenture a/c     1,00,000  

  To 12% Debentures A/c       20,00,000

To Premium on Redemption A/c

  (Being Transfer of application money to Debentures Account, issued at a       1,00,000

par, but redeemable at a premium of 5%)

v. JOURNAL ENTRIES

Date Particulars   L.F. Dr. (₹) Cr. (₹)

  Bank A/c Dr.   11,52,000  

To 13% Debenture Application & Allotment A/c

        11,52,000
(Being Application money received)

  13% Debenture Application & Allotment A/c Dr.   11,52,000  

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

23 / 28
myCBSEguide
  Loss on issue of Debentures A/c Dr.   1,20,000  

  To 13% Debentures A/c       12,00,000

To Premium on Redemption A/c

  (Being Transfer of application money to Debentures Account, issued at a       72,000

discount of 4% and redeemable at a premium of 6%)
Part B :- Analysis of Financial Statements
27. (a) Cash flow from Investing activities

Explanation: Cash flow from Investing activities

OR

(d) Operating activities, financing activities and investing activities

Explanation: Operating activities, financing activities and investing activities

28. (d) All of these

Explanation: All the options are correct.

29. (b) All of these

Explanation: Dividend paid by any type of company (Manufacturing Company, Finance Company and Trading
Company) will come under financing activities. 

OR

(d) Financing Activities

Explanation: Cash credit is concerned with Financing Activities. It is given in the balance sheet under Current
Liabilities short term borrowings in the liabilities side. Cash credit is a type of loan taken on the stock of the company.
30. (b) To assess the financial position and profitability

Explanation: Statement of profit and loss shows whether the enterprise is earning adequate profits and whether the
profits have increased or decreased as compared to previous years whereas balance sheet shows the position of the
business as regards to the payment of its short term as well as long term liabilities. Different ratios are also calculated.
Hence, to assess the profitability and solvency is one of the objective of the financial statement analysis.

Other options i.e. historical analysis, ignores price level changes, ignores qualitative aspect are the limitations of
financial statement analysis.
31. The following items are arranged as per schedule 3 of the company's act,2013 under the given major headings.
Sl.

Items Major Headings

No
(i) Long-term Borrowings Non-current Liabilities(long term borrowings)

(ii) Trade Payables Current Liabilities (current liabilities)

(iii) Provision for Tax Current Liabilities (other current liabilities)

(iv) Securities Premium Reserve Shareholder's Funds (share capital)

(v) Patents Non-current Assets ( intangible assets)

(vi) Accrued Incomes Current Assets.(other current assets)

(vii) Current Investment Current Assets(investments)
To practice more questions & prepare well for exams, download myCBSEguide App. It provides complete study
material for CBSE, NCERT, JEE (main), NEET-UG and NDA exams. Teachers can use Examin8 App to create similar
papers with their own name and logo.

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

24 / 28
myCBSEguide
32. Current Ratio =   Current Assets 

 Current Liabilities 

₹6,00,000
1.5
=

1 ₹4,00,000
Let the amount paid of Current Liabilities be x

After the payment of Current Liabilities, Cash or Bank (i.e., Current Assets) and Current Liabilities both will reduce by
x. Thus,

6,00,000
2

1
=
4,00,000

₹8,00,000 - 2x = ₹6,00,000 - x

₹8,00,000 - ₹6,00,000 = 2x - x

₹2,00,000 = x

Thus, Current Liabilities that should be paid = ₹2,00,000.

33. Operating ratio shows the efficiency of a company's management by comparing the total operating expense of a
company to net sales.

 Cost of Revenue from Operations + Operating Expenses 

Operating Ratio =  × 100

 Net Revenue from Operations 

Cost of Revenue from Operations = Opening Inventory + Purchases + Wages - Closing Inventory

= ₹ 12,000 + ₹ 1,20,000 + ₹ 8,000 - ₹ 18,000

= ₹ 1,22,000

1,22,000+{2,000( selling expenses) 
Operating Ratio =  2,00,000
× 100  = 62%
Gross profit ratio (GP ratio) is a profitability ratio that shows the relationship between gross profit and total net sales
revenue.

 Gross profit 
Gross Profit Ratio =   Net Revenue from Operations 
× 100

Gross Profit = Net Revenue from Operations - Cost of Revenue from Operations

= ₹ 2,00,000 - ₹ 1,22,000 = ₹ 78,000

78,000
Gross Profit Ratio = 2,00,000
× 100 = 39%

Quick ratio is an indicator of a company’s short-term liquidity position and measures a company’s ability to meet its
short-term obligations with its most liquid assets.

 Liquid Assets 
Quick ratio =   Current Liabilities 

50,000
=
30,000
= 1.67 : 1

Working capital turnover is a ratio that measures how efficiently a company is using its working capital to support a
given level of sales.

Cost of Revenue from Operations

Working Capital Turnover Ratio = Working Capital

Working Capital = Closing Inventory + Other Current Assets - Current Liabilities

= ₹ 18,000 + ₹ 50,000 - ₹ 30,000 = ₹ 38,000

1,22,000
=  38,000
= 3.21 times

Proprietary ratio (also known as the equity ratio) is the proportion of shareholder's equity to total assets.

Proprietary Ratio = 

 Shareholders' Funds 

 Total Assets 

Shareholder’s Funds = Equity Share Capital + Preference Share Capital + General Reserve

= ₹ 1,00,000 + ₹ 80,000 + ₹ 10,000

= ₹ 1,90,000

Total Assets= Closing Inventory + Other Current Assets + Fixed Assets

= ₹ 18,000 + ₹ 50,000 + ₹ 2,12,000

= ₹ 2,80,000

1,90,000
Proprietary Ratio = 2,80,000
× 100 = 67.86%

OR

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

25 / 28
myCBSEguide
YEAR 2017 Closing trade receivables of 2017 were ₹ 10,000 more in comparison to the opening trade receivables of
2017. Therefore, the opening trade receivables of 2017 = ₹ 59,000 - ₹ 10,000 = ₹ 49,000.

 Opening Trade Receivables + Closing  Trade Receivables 

Therefore, Average Trade Receivables = 2

49,000+59,000
=
2
 = ₹ 54,000

 Credit Revenue from Operations 

Trade Receivables Turnover Ratio =  Average Trade Receivables 

5,40,000
=
54,000
 = 10 Times

 Cost of Revenue from Operations 

Inventory Turnover Ratio =

 Average Inventory 

Cost of Revenue from Operations = ₹ 5,40,000 less 20%

= ₹ 5,40,000 - ₹ 1,08,000 = ₹ 4,32,000

₹1,20,000+₹1,60,000
Average Inventory = 2
 = ₹ 1,40,000

4,32,000
∴  Inventory Turnover Ratio = 1,40,000
 = 3.09 times.

Year 2018 Closing trade receivables of 2017 will be treated as the opening trade receivables of 2018. Therefore,

59,000+1,06,000
Average Trade Receivables = 2
= 82, 500

 Credit Revenue from Operations 

Trade Receivables Turnover Ratio =

 Average Trade Receivables 

6,60,000
=
82,500
 = 8 times

 Cost of Revenue from Operations 

Inventory Turnover Ratio =  Average Inventory 

Cost of Revenue from Operations = ₹ 6,60,000 less 25%

= ₹ 6,60,000 - ₹ 1,65,000 = ₹ 4,95,000

1,60,000+2,40,000
Average Inventory = 2
= ₹2, 00, 000

4,95,000
∴  Inventory Turnover Ratio = 2,00,000
 = 2.475 times

34. CASH FLOW STATEMENT OF XYL LIMITED

for the year ended 31st March 2018

Particulars ₹ ₹

A. Cash Flows from Operating Activities: 1,55,000  

Profit before Tax     

Adjustments for non-cash and non-operating items:    

Add: Depreciation on Plant 10,000    

Depreciation on Land and Building 20,000    

Goodwill written off 25,000 55,000  

  2,10,000  

Less: Rent Received 10,000  

Operating profit before working capital changes 2,00,000  

Add: Increase in Current Liabilities:    

Trade Payables 32,000  

  2,32,000  

Less: Increase in Current Assets:    

Inventory 32,000    

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

26 / 28
myCBSEguide
Trade Receivables 50,000 (82,000)  

Cash generated from operating activities 1,50,000  

Less: Income Tax paid (35,000)  

Net Cash from operating activities 1,15,000 1,15,000

B. Cash Flows from Investing Activities:    

Sale of Land and Building 10,000  

Purchase of Plant (1,30,000)  

Rent Received 10,000  

Net Cash used in investing activities (1,10,000) (1,10,000)

C. Cash Flows from Financing Activities:    

Issue of share capital 50,000  

Payment of proposed dividend  (42,000)  

Interim dividend paid (20,000)  

Net Cash used in financing activities (12,000) (12,000)

Net Decrease in cash and cash equivalents   (7,000)

Add: Cash and cash equivalents in the beginning of the period   25,000

Cash and cash equivalents at the end of the period   18,000

Working Notes:
1. Profit before Tax:
  ₹

Profit & Loss Balance on 31st March, 2018 48,000

Less: Profit & Loss Balance on 31st March, 2017 30,000

  18,000

Add: Proposed Dividend for 2017 42,000

Interim Dividend paid 20,000

Transfer to General Reserve 30,000

Provision for Taxation 45,000

  1,55,000
LAND AND BUILDING ACCOUNT

2. Dr.   Cr.

Particulars ₹ Particulars ₹

To Balance b/d 2,00,000 By Statement of P & L  20,000

    By Bank A/c (B/f) 10,000

    By Balance c/d  1,70,000

  2,00,000   2,00,000
3. PLANT ACCOUNT

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

27 / 28
myCBSEguide
Dr.   Cr.
Particulars ₹ Particulars ₹

To Balance b/d 80,000 By Statement of P & L A/c 10,000

To Bank A/c (B/f) 1,30,000 By Balance c/d  2,00,000

  2,10,000   2,10,000
4. PROVISION FOR TAX ACCOUNT
Dr.   Cr.

Particulars ₹ Particulars ₹

To Bank A/c  35,000 By Balance b/d 40,000

To Balance c/d  50,000 By Statement of P & L (B/f) 45,000

  85,000   85,000

Copyright © myCBSEguide.com. Mass distribution in any mode is strictly prohibited.

28 / 28