Mock Test Paper - Series I: April, 2024 During the next trading period, the following errors were

errors were discovered:

Date of Paper: 29th April, 2024 (i) The total of the Purchases Book of one page, ` 5,615 was carried
Time of Paper: 2 P.M. to 5 P.M. forward to the next page as ` 6,551.
(ii) A sale of ` 462 was entered in the Sales Book as ` 642 and
posted to the credit of the customer.
FOUNDATION COURSE
(iii) A return to creditor, ` 300 was entered in the Returns Inward
PAPER – 1: ACCOUNTING Book; however, the creditor's account was correctly posted.
Question No. 1 is compulsory.
(iv) Cash received from Geet, ` 895 was posted to debit of Meet.
Answer any four questions from the remaining five questions.
(v) Goods worth ` 1,400 were dispatched to a customer before the
Wherever necessary, suitable assumptions should be made and disclosed close of the year but no invoice was made out.
by way of note forming part of the answer.
(vi) Goods worth ` 1,600 were sent on sale or return basis to a
Working Notes should form part of the answer. customer and entered in the Sales Book at the close of the year,
(Time allowed: 3 Hours) (100 Marks) the customer still had the option to return the goods. The gross
1. (a) State with reasons whether the following statements are True or False: profit margin was 20% on Sale.
(vii) ` 500 due from Mr. Manas was omitted to be taken ·to the trial
(i) Accounting Standards for non-corporate entities in India are
balance.
issued by the Central Government.
(viii) Sale of goods to Mr. Deep for ` 6,000 was omitted to be recorded.
(ii) Subsidy received from the government for working capital by a
manufacturing concern is a revenue receipt. You are required to give journal entries to rectify the errors in a way so
as to show the current year's profit or loss correctly (10 Marks)
(iii) Reducing balance method of depreciation is followed to have a
(b) The Bank Pass Book of Account No.7749 of Ms. Tina showed an
uniform charge for depreciation and repairs and maintenance
overdraft of ` 1,34,300 on 31st March 2024. On going through the Pass
together.
Book, the accountant found the following:
(iv) Discount at the time of retirement of a bill is a gain for the drawee. (i) A Cheque of `4,320 credited in the pass book on 28 th March 2024
(v) Business of partnership comes to an end on death of a partner. being dishonoured is debited again in the pass book on
1st April 2024. There was no entry in the cash book about the
(vi) Receipts and Payments Account highlights total income and
dishonour of the cheque until 15 th April 2024.
expenditure. (6 Statements x 2 Marks = 12 Marks)
(ii) Bankers had credited her account with ` 11,200 for interest
(b) Discuss the limitations which must be kept in mind while evaluating the collected by them on her behalf, but the same has not been
Financial Statements. (4 Marks) entered in her cash book.
(c) The balance of Machinery Account of a firm on 1st April, 2023 was (iii) Out of ` 82,000 paid in by Ms. Tina in cash and by cheques on
` 28,54,000. Out of this, a plant having book value of ` 2,16,000 as on 31st March 2024 cheques amounting to ` 30,000 were collected
1st April, 2023 was sold on 1st July, 2023 for ` 82,000. On the same on 7th April, 2024.
date a new plant was purchased for ` 4,58,000 and ` 22,000 was spent (iv) Out of Cheques amounting to ` 31,200 drawn by her on
on its erection. On 1st November, 2023 a new machine was purchased 27th March, 2024 a cheque for ` 10,000 was encashed on 3rd
for ` 5,60,000. Depreciation is written off @ 15% per annum under the April, 2024.
diminishing balance method. Calculate the depreciation for the year
(v) Bankers seems to have given here wrong credit for ` 2,000 paid
ended 31st March, 2024. (4 Marks)
in by her in Account No. 8765 and a wrong debit in respect of a
(12+4+4= 20 Marks) cheque for ` 1,200 against her account No.8765.
2. (a) Mr. Bhatt’s trial balance as on 31st March, 2024 did not agree. The (vi) A cheque for ` 4,000 entered in Cash Book but omitted to be
difference was put to a Suspense Account. banked on 31st March, 2024.

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 (vii) A Bill Receivable for ` 20,800 previously dishonoured (Discount Liabilities Amount Assets Amount
` 800) with the Bank had been dishounoured but advice was Creditors 20,000 Land and Building 1,50,000
received on 1st April, 2024. General Reserve 12,000 Investments 65,000
(viii) A Bill for ` 40,000 was retired /paid by the bank under a rebate of Capital Accounts: Stock in trade 15,000
` 700 but the full amount of the bill was credited in the bank Arun 1,00,000 Trade receivables 35,000
column of the Cash Book. Varun 75,000 Less: Provision for
(ix) A Cheque for ` 9,600 deposited into bank but omitted to be doubtful debt (2,000) 33,000
recorded in Cash Book and was collected by the bank on Tarun 75,000 Cash in hand 7,000
31st March, 2024. Cash at bank 12,000
Prepare Bank Reconciliation Statement as on 31 st March, 2024. 2,82,000 2,82,000
(10 Marks) In order to arrive at the balance due to Tarun, it was mutually agreed
(10 +10 = 20 Marks) that:

3. (a) Lucky does not maintain proper books of accounts. However, he (i) Land and Building be valued at ` 1,75,000
maintains a record of his bank transactions and also is able to give the (ii) Debtors were all good, no provision is required
following information from which you are required to prepare his final
(iii) Stock is valued at ` 13,500
accounts for the year 2023:
(iv) Goodwill will be valued at one Year's purchase of the average
1.1.2023 31.12.2023 profit of the past five years. Tarun's share of goodwill be adjusted
` ` in the account of Arun and Varun.
Debtors 1,02,500 − (v) Tarun's share of profit from 1 st April 2023, to the date of death be
Creditors − 46,000 calculated on the basis of average profit of preceding three years.
Stock 50,000 62,500 (vi) The profit of the preceding five years ended 1 st March were:
Bank Balance − 50,000 2023 2022 2021 2020 2019
Fixed Assets 7,500 9,000 25,000 20,000 22,500 35,000 28,750
Details of his bank transactions were as follows: You are required to prepare:
` (1) Revaluation account
Received from debtors 3,40,000 (2) Capital accounts of the partners and
Additional capital brought in 5,000
(3) Balance sheet of the Firm as at 1 st July, 2023. (10 Marks)
Sale of fixed assets (book value ` 2,500) 1,750
Paid to creditors 2,80,000 (10 + 10 = 20 Marks)
Expenses paid 49,250 4 (a) Amar, Akbar and Antony are in partnership. The following is their
Personal drawings 25,000 Balance Sheet as at March 31, 2024 on which date they dissolved their
Purchase of fixed assets 5,000 partnership. They shared profit in the ratio of 5:3:2.

No cash transactions took place during the year. Goods are sold at Liabilities ` Assets `
cost plus 25%. Cost of goods sold was ` 2,60,000. (10 Marks) Creditors 80,000 Plant and machinery 60,000
(b) Arun, Varun and Tarun are in partnership, sharing profits and losses Loan A/c – Amar 20,000 Premises 80,000
equally. Capital A/cs - Amar 1,00,000 Stock 60,000
Tarun died on 30th June 2023. The Balance Sheet of Firm as at Akbar 30,000 Debtors 1,20,000
31st March 2023 stood as: Antony 90,000
3,20,000 3,20,000

3 4
 It was agreed to repay the amounts due to the partners as and when Sundry Creditors 36,000 Investments 10,800
the assets were realised, viz.
Commission Received 5,400 Cash in Hand 300
April 15, 2024 ` 60,000 Cash at bank 30,300 Motor Cycle 1,03,800
May 1, 2024 ` 1,46,000 Stock on 31st March,
61,500
May 31, 2024 ` 94,000 2024
Prepare a statement showing how the distribution should be made (5 Marks)
under maximum loss method. (b) Attempt any ONE out of the two sub parts i.e. either (i) or (ii).
(10 Marks) (i) Following information is provided for M/s. VS Wires for the year
(b) The following information of M/s. Zara Club are related for the year ended 31st March, 2024:
ended 31st March, 2024: `
(1) Opening Inventory 6,00,000
Balances As on As on Purchases 40,32,000
01-04-2023 31-3-2024
Carriage Inwards 1,80,000
(`) (`)
Wages 3,00,000
Stock of Sports Material 6,75,000 10,12,500
Amount due for Sports Material 6,07,500 8,77,500 Sales 66,00,000
Subscription due 1,01,250 1,48,500 Returns inward 6,00,000
Subscription received in advance 81,000 47,250 Returns outward 4,32,000
(2) Subscription received during the year ` 33,75,000 Closing Inventory 12,00,000
(3) Payments for Sports Material during the year ` 20,25,000 You are required to pass necessary closing entries in the journal
proper of M/s. VS Wires. (5 Marks)
You are required to:
OR
(A) Ascertain the amount of Subscription and Sports Material that will
appear in Income & Expenditure Account for the year ended (ii) Mr. Mandeep runs a factory, which produces detergents.
31.03.2024 and Following details were available in respect of his manufacturing
activities for the year ended 31-03-2024.
(B) Also show how these items would appear in the Balance Sheet as
on 31.03.2024. (10 Marks) Opening work-in-progress (27,000 units) 78,000
(10 + 10 = 20 Marks) Closing work-in-progress (42,000 units) 1,44,000
5. (a) From the following information, draw up a Trial Balance in the books of Opening inventory of Raw Materials 7,80,000
Shri Hari Om as on 31st March,2024: Closing inventory of Raw Materials 9,60,000
Particulars Amount Particulars Amount Purchases 24,60,000
(`) (`) Hire charges of Machinery @ ` 0.70 per unit
Capital 4,20,000 Purchases 1,08,000 manufactured
Discount Allowed 3,600 Carriage Inward 26,100 Hire charges of factory 7,80,000
Carriage Outwards 6,900 Sales 1,80,000 Direct wages-contracted @ ` 0.80 per unit
manufactured
Return Inward 900 Return Outwards 2100
and @ ` 0.40 per unit of closing W.I.P.
Rent and Taxes 3,600 Plant and Machinery 2,42,100
Repairs and maintenance 5,40,000
Stock on 1st April Sundry Debtors
46,500 60,600 Units produced - 15,00,000 units
2023
5 6
 You are required to prepare a Manufacturing Account of Mr. Mandeep 6. (a) Avent Limited is a company with an authorised share capital of
for the year ended 31-03-2024. (5 Marks) ` 1,00,00,000 in equity shares of ` 10 each, of which 6,00,000 shares
had been issued and fully paid up on 31 st March, 2023. The company
(c) Face Ltd. (unlisted company other than AIFI, Banking company, NBFC
proposes to make a further issue of 1,35,000 of these ` 10 shares at a
and HFC) provides thefollowing information as at 31 March, 2023:
price of ` 14 each, the arrangement of payment being :
Particulars ` ` (i) ` 2 per share payable on application, to be received by 31 st May,
Shareholder’s fund 2023;
(a) Authorized Share Capital (ii) Allotment to be made on 10 th June, 2023 and a further ` 5 per
90,000 equity shares of `10 each 9,00,000 share (including the premium to be payable);
fully paid up
(iii) The final call for the balance to be made, and the money received
Issued, Subscribed & Paid up
by 31st December, 2023.
60,000 equity shares of ` 10 each 6,00,000
fully paid up Applications were received for 5,60,000 shares and dealt with as
follows:
(b) Reserve and Surplus
Profit & Loss Account 3,24,000 (1) Applicants for 10,000 shares received allotment in full;
Debenture redemption reserve 36,000 3,60,000 (2) Applicants for 50,000 shares received allotment of 1 share for
Non-current liabilities every 2 applied for; no money was returned to these applicants,
the surplus on application being used to reduce the amount due
(a) Long term borrowings
on allotment;
12% Debentures 3,60,000
(3) Applicants for 5,00,000 shares 'received an allotment of 1 share
Current Liabilities
for every 5 shares applied for; the money due on allotment was
(a) Trade Payable 3,45,000 retained by the company, the excess being returned to the
Total 16,65,000 applicants; and
Non-current Assets (4) The money due on final call was received on the due date.
(a) Property, Plant and Equipment 3,45,000
You are required to record these transactions (including bank
(b) Non-current Investments (DRR 54,000 3,99,000 transactions) in the Journal Book of Avent Limited. (15 Marks)
Investment)
Current Assets (b) Discuss the factors taken into consideration for calculation of
depreciation. (5 Marks)
(a) Inventories 4,05,000
(b) Trade Receivables 2,25,000 Or
(c) Cash in Hand 90,000 Write short notes on Accommodation bill and Renewal of bill. (5 Marks)
(d) Cash at Bank 5,46,000 12,66,000 (15 + 5 = 20 Marks)
Total 16,65,000
At the AGM on 01.04.2023, it was resolved:
(a) To give existing equity shareholders the option to purchase one `
10 share at ` 15 for every four shares (held prior to the bonus
distribution). This option was taken up by all the shareholders.
(b) To issue one bonus share for every five shares held.
(c) To repay the debentures at a premium of 3%.
Give the necessary journal entries for these transactions. (10 Marks)
(5 + 5 + 10 = 20 Marks)

7 8
 Mock Test Paper - Series I: December, 2024 2. (a) Before preparation of the trial balance, the following errors were found
in the books of Saraswat & Sons. Give the necessary entries to correct
Date of Paper: 20th December, 2024
them.
Time of Paper: 10.30 A.M. to 1.30 P.M.
(i) Furniture purchased for office use amounting to ` 20,000 has been
entered in the purchase day book.
FOUNDATION COURSE (ii) An amount of ` 3,000 due from Satyam, which had been written off
PAPER – 1: ACCOUNTING as bad debts in the previous year, recovered in the current year,
Question No. 1 is compulsory. and had been posted to the personal Account of Satyam.
Answer any four questions from the remaining five questions. (iii) Minor Repairs made to the building amounting to ` 18,500 were
debited to the Building Account
Wherever necessary, suitable assumptions should be made and disclosed
by way of note forming part of the answer. (iv) Goods purchased from Ram Singh amounting to ` 18,000 have
remained unrecorded so far.
Working Notes should form part of the answer.
(v) College fees of proprietor's son, ` 15,000 debited to the Audit fees
(Time allowed: 3 Hours) (100 Marks)
Account.
1. (a) State with reasons whether the following statements are True or False:
(vi) Receipt of ` 4,500 from Kanika credited to the Anita.
(i) A claim that an enterprise is pursuing through legal process, where
(vii) Goods amounting to ` 8,900 had been returned by a customer and
the outcome is uncertain, is a contingent liability.
were taken into inventory, but no entry was made in the books.
(ii) If the effect of errors committed cancel out, the errors will be called
(viii) ` 7,500 paid for wages to workmen for making office furniture had
compensating errors and the trial balance will disagree.
been charged to wages account.
(iii) Stock at the end, if appears in the trial balance, is taken only to the
(ix) Salary paid to a clerk ` 18,000 has been debited to his personal
Balance Sheet.
account.
(iv) Re-issue of forfeited shares is allotment of shares but not a sale.
(x) A purchase of goods from Raghav amounting to ` 20,000 has been
(v) Both revenue and capital nature transactions are recorded in the wrongly entered through the sales book. (10 Marks)
Receipts and Payments Account.
(b) S Chand & Associates purchased a machine for ` 3,00,000 on 1.1.2021
(vi) Since company has existence independent of its members, it Another machine costing `4,50,000 was purchased on 1.7.2022. On
continues to be in existence despite the death, insolvency or 31.12.2023 the machine purchased on 1.1.2021 was sold for `1,50,000.
change of members. (6 Statements x 2 Marks = 12 Marks) The company provides depreciation at 15% on Written Down Value
(b) Distinguish between Money Measurement concept and Matching Method. The company closes its accounts on 31st December every year.
concept. (4 Marks) Prepare – (i) Machinery Account, (ii) Machinery Disposal Account and
(iii) Provision for Depreciation Account. (10 Marks)
(c) The following are the details of the spare parts of a Chemical Mill:
(10 +10 = 20 Marks)
1-1-2024 Opening Inventory Nil
3. (a) P, Q, R and S had been carrying on business in partnership sharing
1-1-2024 Purchases 100 units @ ` 300 per unit profits & losses in the ratio of 4:3:2:1. They decided to dissolve the
15-1-2024 Issued for consumption 50 units partnership on the basis of following Balance Sheet as on 30th April,
1-2-2024 Purchases 200 units @ ` 400 per unit 2024:
15-2-2024 Issued for consumption 100 units Liabilities Amount Assets Amount (`)
20-2-2024 Issued for consumption 100 units (`)
Capital Accounts Land & building 2,46,000
Find out the value of Inventory as on 31.3.2024, if the company follows
Weighted Average Method. (4 Marks) P 2,16,000 Furniture & fixtures 65,000
(12+4+4 =20 Marks) Q 1,44,000 3,60,000 Stock 1,00,000
Debtors 72,500
1 2
 Cash in hand 15,500 Output IGST 18,000
Sundry creditors 36,000 Capital overdrawn: 55,59,000 55,59,000
Mortgage loan 1,10,000 R 1,000 Additional information
S 6,000 7,000 (i) Inventory as on 31st march,2024 was ` 5,40,000.
5,06,000 5,06,000
(ii) Furniture is depreciated at 15% per annum.
(i) The assets were realized as under: ` Prepare Trading Account, Profit and Loss Account and Balance Sheet
Land & building 2,30,000 as on 31st March, 2024 of Mr. Dilip. (8 Marks)
Furniture & fixtures 42,000 (12+8 = 20 Marks)
Stock 72,000 4 (a) New State Society showed the following position on 31st March, 2023:
Debtors 65,000 Balance Sheet as on 31st March, 2023
(ii) Expenses of dissolution amounted to ` 7,800. Liabilities ` Assets `
(iii) Further creditors of ` 18,000 had to be met. Capital fund 15,86,000 Electrical fittings 3,00,000
(iv) R became insolvent and nothing was realized from his private Expenses payable 14,000 Furniture 1,00,000
estate.
Books 8,00,000
Applying the principles laid down in Garner Vs. Murray, prepare the
Investment in 3,00,000
Realisation Account, Partners’ Capital Accounts and Cash Account.
securities
(12 Marks)
Cash at bank 50,000
(b) Mr. Dilip furnishes the following trial balance and some other information:
Cash in hand 50,000
Trial Balance as on 31st March, 2024
16,00,000 16,00,000
Particulars ` `
Capital 19,50,000 The receipts and payment account for the year ended on 31st March,
2024 is given below:
Purchases and Sales 12,90,000 29,10,000
Opening Inventory 3,30,000 ` `
Freights Inward 1,20,000 To Balance b/d By Electric charges 14,400
Cash at bank 50,000 By Postage and stationary 10,000
Salaries 6,30,000
Cash in hand 50,000 1,00,000 By Telephone charges 10,000
Administration Expenses 4,50,000
To Entrance fee 60,000 By Books purchased 1,20,000
Furniture 10,50,000
To Membership subscription By Outstanding expenses
Trade receivables and Trade payables 6,30,000 5,70,000 4,00,000 14,000
paid
Returns 60,000 36,000 To Sale proceeds of old By Rent
3,000 1,76,000
Discount allowed and Received 57,000 27,000 papers
Bad Debts 15,000 To Hire of lecture hall By Investment in
40,000 80,000
securities
Investments in Government Securities 3,00,000
To Interest on securities 16,000 By Salaries 1,32,000
Cash in Hand and Cash at Bank 5,67,000
By Balance c/d
Input CGST 30,000
Cash at bank 40,000
Input SGST 30,000
Cash in hand 22,600
Output CGST 24,000
6,19,000 6,19,000
Output SGST 24,000

3 4
 You are required to prepare Income and Expenditure account for the 5. (a) Ali draws a bill for `45,000 on Akbar on 15th April, 2024 for 3 months,
year ended 31st March, 2024 after making the following adjustments: which is returned by Akbar to Ali after accepting the same. Ali gets it
discounted with the bank for ` 44,100 on 18th April, 2024 and remits one-
Membership subscription included ` 20,000 received in advance.
third amount to Akbar. On the due date Ali fails to remit the amount due
Provide for outstanding rent ` 8,000 and salaries ` 6,000. to Akbar, but he accepts bill of ` 52,500 for 3 months, which Akbar
Books to be depreciated @ 10% per annum including additions. The discounts for `51,300 and remits ` 8,475 to Ali.
additions to the books were made on 01.04.2023. Electrical fittings and Pass necessary Journal entries for the above transactions in the books
furniture are also to be depreciated @ 10% per annum. of Ali. (5 Marks)
60% of the entrance fees is to be capitalized. (b) Varun does not maintain proper books of accounts. However, he
Interest on securities is to be calculated @ 15% p.a. including purchases maintains a record of his bank transactions and also is able to give the
made on 1.10.2023 for ` 80,000. (8 Marks) following information from which you are requested to prepare trading
and profit and loss account for the year 2024:
(b) The following is the Balance Sheet of M/s. Krishna Bros as at
31st March, 2024, they share profit and losses equally: 1.1.2024 31.12.2024
Balance Sheet as at 31st March, 2024 ` `
Stock 50,000 62,500
Liabilities ` Assets `
Fixed Assets 7,500 9,000
Capital Amit 24,600 Machinery 30,000
Lalit 24,600 Furniture 16,800 Details of his bank transactions were as follows:
Sumit 27,000 Fixture 12,600 `
General Reserve 9,000 Cash 9,000 Sale of fixed assets (book value ` 2,500) 1,750
Expenses paid 49,250
Trade payables 14,100 Inventories 5,700
Purchase of fixed assets 5,000
Trade receivables 27,000
No cash transactions took place during the year. Goods are sold at cost
Less: Provision for 1,800 25,200 plus 25%. Cost of goods sold was ` 2,60,000. (5 Marks)
Doubtful debts
(c) Following is the extract of the Balance Sheet of Substance Ltd. as at
31st March, 2024
99,300 99,300
Authorised capital: `
Sumit died on 1st April, 2024 and the following agreement was to be put
45,000 12% Preference shares of ` 10 each 4,50,000
into effect.
4,50,000 Equity shares of ` 10 each 45,00,000
(a) Assets were to be revalued: Machinery to ` 35,100; Furniture to
` 13,800; Inventory to ` 4,500. 49,50,000
Issued and Subscribed capital:
(b) Goodwill was valued at ` 18,000 and was to be credited with his
share, without using a Goodwill Account. 36,000 12% Preference shares of ` 10 each fully paid 3,60,000
(c) ` 6,000 is to be paid to the executors of the dead partner on 5th 4,05,000 Equity shares of ` 10 each, ` 8 paid up 32,40,000
April, 2024. Reserves and surplus:
(d) After death of Sumit, Amit and Lalit shares the profit equally. General Reserve 5,40,000
You are required to prepare: Capital Reserve (profit realized on sale of plant) 1,80,000
Securities premium 1,12,500
(i) Journal Entry for Goodwill adjustment.
Profit and Loss Account 9,00,000
(ii) Revaluation Account, Capital Accounts of the partners and Balance
Sheet after the death of Sumit. (12 Marks) On 1st April, 2024, the Company has made final call @ ` 2 each on
4,05,000 equity shares. The call money was received by 20th April, 2024.
(8 +12 = 20 Marks)
Thereafter, the company decided to capitalize its reserves by way of
5 6
 bonus at the rate of one share for every four shares held. Company
decides to use Capital Reserve for bonus issue as it has been realized
in cash.
Show necessary journal entries in the books of the company and prepare
the extract of the Balance Sheet as on 30th April, 2024 after bonus issue.
(10 Marks)
(5+5+10=20 Marks)
6. (a) X Limited issued 2,00,000 Equity shares of, 10 each at a premium of
10%, payable ` 2 on application; ` 4 on allotment (including premium);
` 2 on first call and balance on the final call. All the shares were fully
subscribed. Mr. P who held 20,000 shares paid full remaining amount on
first call itself. The final call which was made after 4 months from the first
call was fully paid except a shareholder having 2,000 shares and one
another shareholder having 1,000 shares. They paid their due amount
after 3 months and 4 months respectively along with interest on calls in
arrears, Company also paid interest on calls in advance to Mr. P. The
Company maintains Calls in Arrear and Calls in Advance A/c. Give
journal entries to record these transactions. Show workings of Interest
calculation. (15 Marks)
(b) From the following particulars, prepare a Bank Reconciliation Statement
on 31st March 2024·
Particulars Amount (`)
Bank balance as per Pass Book 75,00,000
Bills discounted dishonored not recorded in Cash Book 37,50,000
Cheque received entered twice in Cash Book 75,000
Bank charges entered twice in Cash Book 15,000
Insurance premium paid directly by Bank under-
standing instruction 4,50,000
Cheque issued but not presented to Bank for payment 37,50,000
Cheque received, but not sent to Bank 84,00,000
Cheque deposited in Bank, but no entry passed in the 37,50,000
Cash Book
Credit side of the Bank column cast short 15,000
OR
(c) Explain in brief objective and advantages of setting Accounting
Standards. (5 Marks)
(15 + 5 = 20 Marks)

7
 Mock Test Paper - Series II: January,2025 Loan from Bank 2,304
Date of Paper: 31st December, 2024 Trade Expense 6,300
Time of Paper: 10.30 A.M. to 1.30 P.M. Trade Payable 4,752
Bills Payable 900
FOUNDATION COURSE Salaries and Wages 5,400
Cash at Bank 2,034
PAPER – 1: ACCOUNTING
Opening Inventory 2,376
Question No. 1 is compulsory.
Rent and Rates 4,167
Answer any four questions from the remaining five questions.
Sales Return 882
Wherever necessary, suitable assumptions should be made and disclosed 49,086 49,086
by way of note forming part of the answer.
Working Notes should form part of the answer. The closing inventory was ` 5,166. Mr. Govind claims that he has
recorded every transaction correctly as the trial balance is tallied. Check
(Time allowed: 3 Hours) (100 Marks) the accuracy of the above trial balance and give reasons for the errors,
1. (a) State with reasons whether the following statements are True or False: if any. (4 Marks)
i. Depreciation cannot be provided in case of loss, in a financial year. (12 + 4 + 4 = 20 Marks)
ii. At the end of the accounting year, all the nominal accounts of the 2. (a) Sunshine Ltd. keeps no stock records but a physical inventory of stock
ledger book are balanced. is made at the end of each quarter and the valuation is taken at cost.
The company’s year ends on 31 st March, 2024 and their accounts have
iii. Any amount spent for replacement of worn out part of a machine is been prepared to that date. The stock valuation taken on 31 st March,
capital expenditure. 2024 was however, misleading and you have been advised to value the
iv. In case of admission of a new partner in a partnership firm, the closing stocks as on 31st March, 2024 with the stock figure as on 31st
profit/loss on revaluation account is transferred to all partners in December, 2023 and some other information is available to you:
their new profit sharing ratio.
(i) The cost of stock on 31 st December, 2023 as shown by the
v. The debit notes issued are used to prepare Sales Return Book. inventory sheet was ` 80,000.
vi. Debentures Suspense Account appears on the liability side of the (ii) On 31st December, stock sheet showed the following
Balance Sheet of a Company. discrepancies:
(6 Statements x 2 Marks = 12 Marks) (a) A page total of ` 5,000 had been carried to summary sheet as
(b) Explain the objective of “Accounting Standards” in brief. (4 Marks) ` 6,000.
(c) One of your clients Mr. Govind asked you to finalize his account for the (b) The total of a page had been undercast by ` 200.
year ended 31st March,2024. As a basis for audit, Mr. Govind furnished
(iii) Invoice of purchases entered in the Purchase Book during the
you with the following statement:
quarter from January to March, 2024 totalled ` 70,000. Out of this
Dr. Cr. ` 3,000 related to goods received prior to 31 st December, 2023.
Govind 's Capital 14,004 Invoices entered in April 2024 relating to goods received in March,
Govind 's Drawings 5,076 2024 totalled ` 4,000.
Leasehold Premises 6,750 (iv) Sales invoiced to customers totalled ` 90,000 from January to
Sales 24,750 March, 2024. Of this ` 5,000 related to goods dispatched before
31st December, 2023. Goods dispatched to customers before
Due from customers 4,770
31st March, 2024 but invoiced in April, 2024 totalled ` 4,000.
Purchases 11,331
(v) During the final quarter, credit notes at invoiced value of ` 1,000
Purchase Return 2,376
had been issued to customers in respect of goods returned during
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 that period. The gross margin earned by the company is 25% of 13. Bank debited charges ` 400 on 25th March for which no intimation
cost. received till 31 st March (10 Marks)
You are required to prepare a statement showing the amount of stock at (10 +10 = 20 Marks)
cost as on 31st March, 2024. (10 Marks) 3. (a) Summary of Receipts and Payments of Natures Beauty Society for the
(b) Prepare a Bank Reconciliation statement for Ramesh Traders as on 31st year ended 31st March, 2024 are as follows:
March,2024. Receipts Amount Payments Amount
The cash book of Ramesh Traders shows a debit balance of ` 8,24,400 Subscription Received 5,00,000 Payment for Medicine 3,00,000
at bank as on 31st March,2024, but you find that it does not agree with Supply
the balance as per Pass Book. After checking you find the following: Donation Raised for 1,50,000 Honorarium to Doctors 1,00,000
meeting revenue
1. On 12th March, 2024 the payment side of the Cash Book was under expenditure
cast by ` 24,000/- Interest on Investments 90,000 Salaries 2,80,000
2. A cheque of ` 1,70,000 issued on 20th March, 2024 was not taken @ 9% p.a.
in the bank column. Charity Show Collection 1,25,000 Sundry Expenses 10,000
Equipment Purchase 1,50,000
3. On 22nd March, 2024 the debit balance of ` 37,000 as on the
previous day, was brought forwards as credit balance. Charity Show Expenses 15,000

4. Out of the total cheques amounting to ` 84,000 issued in, the last Additional Information:
week of March, 2024, cheques aggregating ` 57,000 were Particulars 01.04.2023 31.03.2024
encashed in March, 2024.
Subscription due 15,000 22,000
5. Dividends of ` 70,000 collected by the Bank and Fire insurance Subscription received in advance 12,000 7,000
premium of ` 40,000 paid by it were not recorded in the cash book. Stock of medicine 1,00,000 1,50,000
6. One cheque issued to a creditor of ` 2,58,000 was recorded twice Amount due for medicine supply 90,000 1,30,000
in the Cash book. Value of equipment 2,10,000 3,00,000
7. A debtor Mr. Sahid has deposited the Cheque for ` 64,000 into the Value of building 5,00,000 4,80,000
bank directly in the month of March, 2024 without intimating to Cash Balance 80,000 90,000
Ramesh Traders and the same cheque was dishonored by the bank Opening Balance of Capital Fund 18,03,000
due to insufficient funds in the month of March itself. You are required to prepare:
8. A cheque from customer for ` 10,000 was deposited in bank on (i) Income and Expenditure Account for the year ended 31 st March,
28th March,2024 but was dishonored and advice received from 2024.
bank on 3rd April, 2024.
(ii) Balance Sheet as on 31 st March, 2024. (10 Marks)
9. Bank paid credit card bill of ` 5,000 which is not recorded in cash
(b) A, B and C shared profits and losses in the ratio of 5:3:2. They took out
book.
a Joint Life Policy in 2020 for ` 50,000, a premium of ` 3,000 being paid
10. Bank wrongly credited cheque of ` 50,000 of other customer in our annually on 10th June. The surrender value of the policy on 31st
account. December of various years was as follows:
11. Bank credited cheque of ` 4,000 in savings account of proprietor of 2020 Nil
Ramesh Traders instead of crediting cheque in current account of
2021 ` 900
Ramesh Traders.
2022 ` 2,000
12. ` 1,000 discount received wrongly entered in bank column in cash
book. 2023 ` 3,600

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 A retired on 15th April, 2024 and the policy was surrendered. You are (d) A provision for doubtful debts to be created at 5% on sundry
required to prepare Joint Life Policy Account from 2020 to 2024 debtors.
(assuming the Policy Account is maintained at surrendered value basis). (e) An unrecorded liability of ` 6,000 for repairs to Buildings would be
(5 Marks) recorded in the books of accounts.

(c) Mr. Nikhil gives the following particulars in respect of business carried (f) Immediately after R’s admission, Goodwill brought by him would be
adjusted among old partners. Thereafter, the capital accounts of
on by him:
old partners would be adjusted through the current accounts of
Particulars Amount (`) partners in such a manner that the capital accounts of all the
Capital Invested in business 9,00,000 partners would be in their profit sharing ratio.
Market rate of interest on investment 8% Prepare revaluation A/c, capital Accounts of the partners, new profit
Rate of risk return on capital invested in business 3% sharing ratio and Balance Sheet of the firm after the admission of R.
Remuneration per annum from alternative (10 Marks)
employment of proprietor if he was not engaged in 36,000
business (b) Sameer Distributors are carrying on the retail business of electrical
goods. They keep their books of account under single entry system. The
The business earned profits of ` 2,40,000, ` 2,16,000 and ` 3,00,000 in Balance Sheet as on 31 stMarch, 2023 was as follows:
the years 2020, 2021 and 2023 respectively but made a loss of ` 36,000
in the year 2022. Liabilities Amount (`) Assets Amount (`)
Capital A/c 18,15,000 Motor Vehicle 3,30,000
Compute the value of Goodwill on the basis of 6 years' purchase of super
profits of the business, calculated on the basis of average profit of last Trade Creditors 2,25,600 Furniture 2,20,500
four years. (5 Marks) Salary payable 27,000 Stock in trade 5,12,400
Trade Debtors 4,36,200
(10 + 5 + 5 = 20 Marks)
6% Investments 1,80,000
4. (a) The Balance Sheet of a Partnership Firm M/s Dutch and Associates Cash in hand & at Bank 3,88,500
consisted of two partners P and Q who were sharing Profits and Losses
20,67,600 20,67,600
in the ratio of 5 : 3 respectively. The position as on 31st March,2024 was
as follows: The summary of Cash and Bank Book for the year ended 31 st March,
2024 was given as below:
Liabilities ` Assets `
P's Capital 4,10,000 Land & Building 3,80,000 Receipts Amount (`) Payments Amount (`)
Q's Capital 3,30,000 Plant & Machinery 1,70,000 Cash in hand & at Cash Purchases 28,45,200
Profit & Loss A/c 1,12,000 Furniture 1,09,480 Bank on 1st Payment to Trade
April,2023 3,88,500 Creditors 2,26,35,000
Trade Creditors 54,800 Stock 1,45,260
Cash Sales 30,67,200 Salaries 12,38,400
Sundry debtors 60,000 Receipts from Rent & taxes 7,54,800
Cash at Bank 42,060 Trade
2,56,56,000 Sundry Expenses 4,15,200
9,06,800 9,06,800 Debtors
Drawings 7,20,000
Interest on
On the above date, R was admitted as a partner on the following terms: 10,800 Cash in hand & at
investments Bank on 31st 5,13,900
(a) R should get 1/5th of share of profits. March,2024
(b) R brought ` 2,40,000 as his capital and ` 32,000 for his share of 2,91,22,500 2,91,22,500
Goodwill.
Additional Information:
(c) Plant and Machinery would be depreciated by 15% and Land &
Buildings would be appreciated by 40%. (i) Gross Profit ratio of 12.5% on Sales is maintained throughout the
year.

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 (ii) During the year, discount allowed to Trade debtors was for ` Carriage Inward 8,10,000
1,87,500 and discount received from Trade Creditors amounted to
Direct Wages 11,91,000
` 1,05,000.
Power & Electricity 5,28,000
(iii) As on 31st March,2024. The closing balances to Trade Debtors and
Trade Creditors were `6,61,500 and ` 3,16,800 respectively. Repairs and Maintenance 7,95,000
Depreciation on Factory Shed 4,32,000
(iv) On 31st March,2024 an amount of ` 44,400 was outstanding
towards Salary. Depreciation on Plant & Machinery 4,86,000
(v) Depreciation @ 10% p.a. to be charged on Motor Vehicle and Sale of scrap 1,08,000
Furniture. You are required to prepare Manufacturing Account for the year ended
You are required to prepare Trading and Profit & Loss account for the 31st March, 2024. (5 Marks)
year ended 31st March,2024 and Balance Sheet on at that date. (c) The books of Rishab Ltd. showed the following balance on 31st
(10 Marks) December, 2024:
(10 + 10 = 20 Marks) 60,000 Equity Shares of ` 10 each fully paid; 36,000 12% Redeemable
Preference Shares of ` 10 each fully paid; 4,000 10% Redeemable
5. (a) M/s. Satya Paul steels were unable to agree the Trial Balance as on
Preference Shares of ` 10 each, ` 8 paid up (all shares issued on 1 st
31st March, 2024 and have raised a suspense account for the difference.
April, 2024).
Next year the following errors were discovered:
Undistributed Reserve and Surplus stood as: Profit and Loss Account
(i) Repairs made during the year were wrongly debited to the building
` 1,60,000; General Reserve ` 2,40,000; Securities Premium Account
A/c - ` 37,500.
` 30,000 and Capital Reserve ` 42,000.
(ii) The addition of the 'Freight' column in the purchase journal was
For redemption, 6,000 equity shares of `10 each are issued at 10%
short by ` 4,500.
premium. At the same time,12% Preference shares are redeemed on 1st
(iii) Goods to the value of ` 3,250 returned by a customer Parth., had January, 2024 at a premium of `2 per share. The whereabouts of the
been posted to the debit of Parth and also to sales returns. holders of 200 shares of `10 each fully paid are not known.
(iv) Sundry items of furniture sold for ` 50,000 had been entered in the A bonus issue of equity share was made at par, two shares being issued
sales book, the total of which had been posted to sales account. for every five held on that date out of the Capital Redemption Reserve
(v) A bill of exchange (received from Comfort & Co.) for ` 60,000 had Account. However, equity shares, issued for redemption are not eligible
been returned by the bank as. dishonoured and had been credited for bonus.
to the bank and debited to bills receivable account. Show the necessary Journal Entries to record the transactions. (Ignore
You are required to pass journal entries to rectify the above mistakes. date column) (10 Marks)

(5 Marks) (5 + 5 + 10 = 20 Marks)

(b) Mr. Sanjay runs a factory which produces tyres. The following details 6. (a) Samuel Limited issued a prospectus inviting applications for 1,20,000
were obtained about his manufacturing expenses for the year ended equity shares of ` 10 each at a premium of ` 2 per share payable as
31st March 2024: follows:
On Application - ` 3 per share
Amount (`)
On Allotment - ` 5 per share (including premium)
Opening Work-in – Progress 18,75,000
Closing Work–in Progress 21,45,000 On First and Final Call - ` 4 per share
Opening Inventory of Raw material 17,55,000 Applications were received for 3,60,000 equity shares. Applications for
80,000 shares were rejected and the money refunded. Shares allotted
Closing Inventory of Raw material 14,10,000
to remaining applications as follows:
Purchases 56,22,000
Purchase Returns 2,85,000

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 Category No. of shares Applied No. of shares Allotted
I 1,60,000 80,000
II 1,20,000 40,000
Excess money received with applications was adjusted towards sums
due on allotment and the balance amount returned to the applicants. All
calls were made duly received except the final call by a shareholder
belonging to Category I who has applied for 680 shares. His shares were
forfeited. The forfeited shares were reissued at ` 13 per share fully paid-
up.
Pass necessary journal entries for the above transactions in the books
of Samuel Ltd. Open call in arrears account whenever required.
(15 Marks)
(b) Write short notes on any two of the following:
(i) Bill of exchange and the various parties to it.
(ii) Retirement of bills of exchange.
OR
What are the advantages of Subsidiary Books? (5 Marks)
(15 + 5 = 20 Marks)