MID TERM EXAMINATION 7/9/2024

ACCOUNTANCY (055)
SET - I
Time allowed: 3 Hours MM: 80
General Instructions:
1. This question paper contains 34 questions. All questions are compulsory.
2. Question Nos. from 1 to 20 carry 1 mark each.
3. Question Nos. from 21 to 26 carry 3 marks each.
4. Question Nos. from 27 to 29 carry 4 marks each.
5. Question Nos. from 30 to 34 carry 6 marks each.
6. 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.
Q1. Which of the following items is not dealt through Profit and Loss Appropriation
Account? (1)
(a) Interest on Partner’s Loan (b) Partner’s Salary
(c) Interest on Partner’s Capital (d) Partner’s Commission.
Q2. Raj and Associates is a partnership firm. Ajay is admitted as a partner. Its goodwill is
to be valued by Average Profit Method. Average business profit for the past 5 years is
1,50,000 and goodwill is being valued at 3 years’ purchase of average business
profit. What will be the value of firm’s goodwill? (1)
(a) 1,50,000 (b) 4,50,000
(c) 3,00,000 (d) 6,00,000
OR
A Partnership firm has capital employed of 8,00,000. Its average profits are 60,000.
The normal rate of return in similar business is 10 %. The amount of super profit is:
(1)
(a) 60,000 (b) 8,000
(c) Nil (d) 52,000

(1)
Q3. Assertion (A) : A retiring partner will not get any share in firm’s goodwill on his
retirement from the firm. (1)
Reason (R) : A retiring partner is entitled to his share in firm’s goodwill since he has
foregone his share in the profits of the firm in favour of other partners.
In context of the above two statements, which of the following is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct
explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct
explanation of Assertion (A).
(c) Assertion (A) is correct but Reason (R) is incorrect.
(d) Assertion (A) is incorrect but Reason (R) is correct.
Q4. Aditya and Shiv were partners in a firm with capitals of 3,00,000 and 2,00,000
respectively. Naina was admitted as a new partner for 1/4th share in the profits of the
firm. Naina brought 1,20,000 for her share of goodwill premium and 2,40,000 for
her capital. The amount of goodwill premium credited to Aditya will be: (1)
(a) 40,000 (b) 30,000
(c) 72,000 (d) 60,000
Q5. Sonu, Monu and Gopal are partners in a firm sharing profit and losses in the ratio
3:2:1. The extract of their Balance Sheet is as follows: (1)

Liabilities Assets
Workmen Compensation Reserve 48,000

At the time of retirement of Sonu, if the liability for Workmen Compensation of

24,000 is to be created, then what amount of Workmen Compensation Reserve will
be shown in the new Balance Sheet?
(a) 48,000 (b) 72,000
(c) 24,000 (d) Not to be shown in the Balance Sheet
OR
The Balance Sheet of Hari, Ram and Sharma showed a debit balance of 12,000 in
the Profit & Loss Account on the retirement of Hari. This balance will be transferred
to which of the following accounts for calculating the amount payable to Hari?
(2)
 (a) To the credit of the Capital Accounts of Hari, Ram and Sharma equally.
(b) To the debit of the Capital Accounts of Hari, Ram and Sharma equally.
(c) To the debit of the Capital Accounts of Ram and Sharma equally.
(d) To the credit of the Capital Accounts of Ram and Sharma equally. (1)
Q6. A, B and C are partners sharing profit and losses in the ratio 2:2:1. B died and the
firm’s goodwill was valued at 30,000. What contribution A and C have to make in
order to pay to B’s Executor? (1)
(a) 20,000 and 10,000 (b) 15,000 and 15,000
(c) 8,000 and 4,000 (d) 6,000 and 6,000
Q7. At the time of dissolution of a firm, its Total Assets were 5,00,000 and Creditors
amounted to 1,00,000. Realisation Expenses amounted to 10,000. The assets
realized 20 % more than the book value and creditors were paid 5% less. Gain/loss
on realization will be: (1)
(a) Gain 95,000 (b) Loss 75,000
(c) Gain 4,95,000 (d) Loss 1,00,000
OR
At the time of a firm’s dissolution, if the realized value of an intangible asset is not
given, the realized value will be taken as: (1)
(a) Book value (b) Realisation Account
(c) Nil (d) None of these
Read the hypothetical situation given below and answer Question no. 8 and 9:
Rudra, Dev and Shiv were partners in a firm sharing profit and losses in the ratio 5:3:2.
Their fixed capitals were 6,00,000, 4,00,000 and 2,00,000 respectively. Besides his capital,
Shiv had given a loan of 75,000 to the firm. Their partnership deed provided for the
following:
(i) Interest on capital @ 9% p.a.
(ii) Interest on partner’s drawings @ 12% p.a.
(iii) Salary to Rudra 30,000 per month and to Dev 40,000 per quarter.
(iv) Interest on Shiv’s loan @ 9% p.a.

(3)
During the year, Rudra withdrew 50,000 at the end of each quarter, Dev withdrew 50,000
in the beginning of each half year and Shiv withdrew 70,000 at the end of each half year.
The profit of the firm for the year ended 31st March, 2022 before allowing interest on Shiv’s
loan was 7,06,750.
Based on the above information you are required to answer the following questions:
Q8. What amount of net profit will be transferred to Profit & Loss Appropriation A/c?
(1)
(a) 7,06,750 (b) 7,02,250
(c) 7,00,000 (d) 7,13,000
Q9. The amount of interest on drawings of the partners will be: (1)
(a) Rudra 2,250, Dev 4,500 and Shiv 2,100.
(b) Rudra 9,000, Dev 9,000 and Shiv 4,200.
(c) Rudra 4,500, Dev 4,500 and Shiv 2,100.
(d) Rudra 24,000, Dev 12,000 and Shiv 16,800.
Q10. Amar and Karam are partners sharing profit and losses in the ratio 3:2 which they
changed to equal with effect from 1st April, 2024. What should be the treatment of
Profit & Loss A/c (Dr) in their Balance Sheet at the time of this change in profit
sharing ratio? (1)
(a) It should be carried forward in the Balance Sheet as it is.
(b) It should be transferred to their respective capital accounts in the ratio 3:2.
(c) It should be transferred to their respective capital accounts in the ratio 1:1.
(d) None of the above.
OR
If the existing profit sharing ratio among A, B and C of 3:2:1 is changed to 1:2:3,
then the Partner(s) whose share will be unaffected is/are: (1)
(a) A (b) C
(c) A and C (d) B

(4)
Q11. Assertion (A) : General Reserve is not distributed among the old partners but is
carried forward in the Balance Sheet prepared after admission of a partner. (1)
Reason (R) : General Reserve is set aside out of past profits and therefore, it is
distributed among old partners.
In context of the above two statements, which of the following is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct
explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct
explanation of Assertion (A).
(c) Assertion (A) is incorrect but Reason (R) is correct.
(d) Assertion (A) is correct but Reason (R) is incorrect.
Q12. Amla, Bimla and Kavita were partners sharing profit and losses in the ratio 4:3:1.
Bimla retires and gives her share of profit to Amla for 3,600 and to Kavita for
3,000. The gaining ratio will be: (1)
(a) 4:5 (b) 2:1
(c) 6:5 (d) 4:1
Q13. On the death of a partner, his share of loss in the firm till the date of his death is
transferred to the (1)
(a) debit of Profit and Loss A/c
(b) credit of Profit and Loss A/c
(c) debit of Profit and Loss Suspense A/c
(d) credit of Profit and Loss Suspense A/c.
OR
Vidit, Sumit and Mita were partners sharing profit and losses in the ratio 4: 3: 1. Mita
died and her entire share was taken up by Vidit. What will be the new profit sharing
ratio? (1)
(a) 1:1 (b) 5:3
(c) 3:5 (d) 5:2

(5)
Q14. Ganga and Jamuna are partners sharing profit and losses in the ratio 2:1. They admit
Saraswati for 1/5th share in future profits. On the date of admission, Ganga’s capital
was 1,02,000 and Jamuna’s capital was 73,000. Saraswati brings 25,000 as her
share of goodwill and she agrees to contribute proportionate capital in the new firm.
How much capital will be contributed by Saraswati? (1)
(a) 43,750 (b) 37,500
(c) 50,000 (d) 40,000
Q15. X and Y are partners sharing profit and losses in the ratio 3:2. They decide to share
future profits in the ratio 2:3. Investment Fluctuation Reserve (IFR) of 50,000
appeared in their Balance Sheet at the time of this change in profit sharing ratio. If no
information is available regarding change in the value of investment, the IFR will
be: (1)
(a) distributed to the partners in the sacrificing ratio.
(b) distributed to the partners in their old profit sharing ratio.
(c) shown in the Balance Sheet of the reconstituted firm.
(b) distributed between partners in their new profit sharing ratio.
Q16. Green and Orange are partners in a partnership firm. Green draws a fixed amount in
the beginning of every month. Interest on drawings is charged @ 8% p.a. The interest
on Green’s drawings amounted to 2,600 at the end of the year. Calculate his monthly
drawings. (1)
(a) 8,000 (b) 60,000
(c) 7,000 (d) 5,000
OR
Vinit and Seema were partners in a firm sharing profit and losses in the ratio 3:2.
Their capitals were 1,20,000 and 2,40,000 respectively. They were entitled to
interest on capital @ 10% p.a. The firm earned a profit of 18,000 during the year.
The interest on Vinit’s capital will be: (1)
(a) 12,000 (b) 10,800
(c) 7,200 (d) 6,000

(6)
Q17. Unrecorded assets or liabilities are transferred to: (1)
(a) Revaluation Account (b) Partners’Capital Accounts
(c) Profit & Loss Account (d) Partners’Current Accounts
OR
On the admission of a partner in a partnership firm, the old partners share the gain or
loss on revaluation of assets and reassessment of liabilities in which of the following
ratio? (1)
(a) Equal ratio (b) Old profit sharing ratio
(c) New profit sharing ratio (d) Sacrificing ratio
Q18. Compensation paid to the sacrificing partner as goodwill is recorded by passing which
of the following journal entry at the time of retirement of a partner from a partnership
firm? (1)

(a) Goodwill A/c Dr

To Retiring Partner’s Capital A/c
(b) Retiring Partner’s Capital A/c Dr
To Gaining Partner’s Capital A/c
(c) Gaining Partner’s Capital A/c Dr
To Goodwill A/c
(d) Gaining Partner’s Capital A/c Dr
To Retiring Partner’s Capital A/c

Q19. Mitu and Sumita are partners in a firm with capitals of 6,00,000 and 4,00,000
respectively.
Keshav was admitted as a new partner for 1/5th share in the profits of the firm. He
brought 3,00,000 as his capital but could not bring his share of premium for goodwill
in cash. Which account should be debited to record Keshav’s share of goodwill
premium? (1)
(a) Goodwill Account (b) Cash Account
(c) Keshav’s Current Account (d) Bank Account
Q20. Statement I - Revaluation of assets and liabilities of the firm is not necessary in case
of retirement of a partner from the firm.
Statement II - Retirement of a partner results in dissolution of the firm.

(7)
 Choose the correct option from the options given below: (1)
(a) Both statements are correct.
(b) Both statements are incorrect.
(c) Statement I is correct and Statement II is incorrect.
(d) Statement I is incorrect and Statement II is correct.
Q21. Ramesh purchased Bharat’s business with effect from 1st April, 2024. It was agreed
that the firm’s goodwill will be valued at two years’ purchase of average normal
business profit of the last three years. Profits for last three years ended 31st March,
were: (3)
2022: 1,00,000 (including abnormal gain of 10,000)
2023: 1,10,000 (after charging abnormal loss of 20,000)
2024: 85,000 (including profit of 5,000 on sale of fixed asset).
Calculate value of the firm’s goodwill.
OR
State any three circumstances when need for valuation of goodwill of a firm may
arise. (3)
Q22. X and Y are partners in a firm sharing profit and losses in the ratio 3:2. On 1st April,
2024, they admit Z as a partner for 3/13th share in the profits. New profit sharing
ratio will be 5:5:3. Z contributed the following assets to his capital and his share of
premium for goodwill: (3)
Stock- 80,000; Debtors- 1,20,000; Land- 2,00,000 and Plant & Machinery-
1,20,000. The goodwill of the firm was valued at 10,40,000 at the time of Z’s
admission.
Pass necessary journal entries in the books of the firm at the time of Z’s admission.
Q23. Karan, Charan and Raman were partners sharing profit and losses in the ratio 3:2:1.
Raman retired from the firm on 1st April, 2024 and the amount due to him towards
capital (after adjustment of Revaluation Loss) was 7,00,000. Karan and Charan
agreed to pay him 7,20,000 in settlement. (3)
Karan and Charan agreed to share future profit and losses in the ratio 2:3. Half of the
amount due to Raman was to be paid immediately and the balance on 31st March,
2025.
Pass the necessary journal entries on Raman’s retirement.

(8)
Q24. Pass necessary journal entries for the following transactions on the dissolution of a
partnership firm of Meera and Neera on 31st March, 2024 assuming that the assets
and third party liabilities have been transferred to the Realisation Account. (3)
(a) Creditors of 90,000 took over Land and Building of 2,00,000 in full settlement
of their claim.
(b) Neera took over debtors amounting to 50,000 at 40,000.
(c) Realisation expenses 1,800 were paid by Neera.
OR
State any three grounds on the basis of which the court may order for dissolution of
a partnership firm. (3)
Q25. Classify the following items under major heads and sub-heads in the Balance Sheet
of a company as Per Schedule III of the Companies Act, 2013: (3)
(a) General Reserve
(b) Bonds
(c) Current Maturity of Long-term Debts.
Q26. Briefly explain the interest of the following stakeholders in the analysis of financial
statements. (3)
(a) Lenders
(b) Management
(c) Potential Investors.
Q27. Samiksha, Ashu and Divya were partners in a firm sharing profit and losses in the
ratio 5:3:2. They agreed to share future profit and losses in the ratio 2:5:3 with effect
from 1st April, 2024. Their Balance Sheet showed a debit balance of 50,000 in
Profit & Loss A/c and 40,000 in Investment Fluctuation Fund. For this purpose, it
was agreed that: (4)
(i) Goodwill of the firm be valued at 3,00,000.
(ii) Investments of book value of 5,00,000 be valued at 4,80,000.
Pass necessary journal entries to record the above transactions in the books of the
firm.

(9)
Q28. Prepare a Comparative Statement of Profit and Loss from the following information
extracted from the Statement of Profit and Loss of Shikha Ltd. for the year ended
31st March, 2022 and 31st March, 2023. (4)

Particulars 2022-23 ( ) 2021-22 ( )

Revenue from operations 32,00,000 20,00,000
Employee benefit expenses 9,60,000 6,00,000
Other expenses 6,40,000 4,00,000

Tax Rate is 50%.

OR
Prepare a Common Size Statement of Profit and Loss of A Ltd. and B Ltd. for the
year ended 31st March, 2024 from the following information: (4)

Particulars A Ltd. B Ltd.

Revenue from operations ( ) 20,00,000 10,00,000
Other income ( ) 3,00,000 80,000
Expenses ( ) 10,40,000 4,80,000
Tax rate 40% 40%

Q29. Pawan, Raman and Sohan were partners in a partnership firm sharing profit and
losses in the ratio 4:3:2. They admitted Rohan as a partner for 1/5th share in the firm
with effect from 1st April, 2024. An extract of their Balance Sheet is as follows: (4)

Liabilities Assets
Investment Fluctuation 36,000 Investment (at cost) 4,00,000
Reserve
Workmen Compensation 1,35,000
Reserve

Show the accounting treatment of the following using the above information:
Case 1- If the market value of investment is 4,00,000.
Case 2- If the market value of investment is 3,46,000.
Case 3- If a claim for workmen is estimated at 45,000.
Case 4- If a claim for workmen is estimated at 1,50,000.
(10)
Q30. A, B and C were partners sharing profit and losses in the ratio 5:3:2. C died on 1st
August, 2023. C had drawn 5,000 during the period from 1st April, 2023 till the
date of his death. The following was agreed between his executors and the remaining
partners: (6)
(i) Goodwill will be valued at 2.5 years’ purchase of average of four completed
years’ profits. Profits for the year ended 31st March were:

Year 2020 2021 2022

Profits ( ) 1,01,000 14,000 16,000

(ii) C’s share of profit from the beginning of the accounting year till the date of
death be calculated on the basis of the average of three completed years’ profit
before death.
(iii) Patents were undervalued by 17,000 and Machinery was overvalued by 3,200.
(iv) Market value of investment on 1st August, 2023 was 4,200.
Their Balance Sheet as on 31st March, 2023 was as follows:

Liabilities Assets
Capital A/cs: Goodwill 5,000
A 67,500 Patents 26,000
B 47,500 Machinery 31,200
C 37,000 1,52,000 Investments 3,000
Investment Fluctuation Stock 10,000
Reserve 3,500 Sundry Debtors 12,000
Workmen Compensation Loan to C 41,000
Reserve 3,500 Bank 5,800
Sundry Creditors 51,000 Deferred Advertisement
Expenditure 1,000
Profit and Loss A/c 75,000
(for 31st March, 2023)
2,10,000 2,10,000

Prepare C’s Capital Account and C’s Executor’s Account.

(11)
Q31. Anil, Bhanu and Karam were partners sharing profit and losses in the ratio 3:1:1.
They decided to dissolve the firm on 31st March, 2024. Their Balance Sheet on that
date was as follows: (6)

Liabilities Assets
Sundry Creditors 60,000 Cash 32,000
Loan by Mrs. Karam 15,000 Sundry Debtors 2,62,000
Loan by Anil 1,00,000 Less: Prov for DD 12,000 2,50,000
Capital A/cs: Stock 78,000
Anil 2,75,000 Furniture 10,000
Bhanu 1,00,000 Computer 80,000
Karam 70,000 4,45,000 Sundry Assets 1,70,000
6,20,000 6,20,000

It was agreed that:

(a) Anil took computer at its book value in settlement of his loan.

(b) Anil took Furniture at 8,000 and Debtors of 2,00,000 at 1,72,000; the
Creditors of 60,000 to be paid by him at this amount.

(c) 50% of the stock was taken over by Bhanu for 40,000, while 10% remaining
stock was not saleable and balance stock realized 110%.

(d) Bhanu took some of the Sundry Assets at 72,000 (being 10% less than the
book value).

(e) Karam took the remaining Sundry Assets at 90 % of the book value, less 1,000
as discount and assumed the liability of Loan by Mrs. Karam together with
accrued interest of 300 which was not recorded in the books.

(f) The expenses of realization were 2,700. The remaining Debtors were sold to
a debt collecting agency for 50% of the book value.

Prepare Realisation Account and Loan by Anil Account.

(12)
Q32. Yuv and Veer were partners sharing profit and losses in the ratio 3:1. Their Balance
Sheet on 31st March, 2024 was as follows: (6)

Liabilities Assets
Creditors 41,000 Plant and Machinery 60,000
General Reserve 80,000 Building 40,000
Outstanding Expenses 12,000 Investments 60,000
Capital A/cs: Stock 50,000
Yuv 79,000 Debtors 38,000
Veer 48,000 1,27,000 Less: Prov for DD 4,000 34,000
Cash 16,000
2,60,000 2,60,000

They decided to admit Yash in the firm on 1st April, 2024 for 1/4th share in profits
on the following terms:
(a) Yash will bring in proportionate capital and 4,000 as his share of goodwill
premium in cash.
(b) Investments were valued at 68,000.
(c) Plant and Machinery was to be depreciated by 10%.
Prepare Revaluation Account and Partners’ Capital Accounts.
OR
Bhumi and Chavi were partners sharing profit and losses in the ratio 5:3. They admitted
Aditi for 1/3rd share in the profits of the firm on 1st April, 2024. Their Balance Sheet
on that date was as follows: (6)

Liabilities Assets
Capital A/cs: Machinery 3,80,000
Bhumi 3,20,000 Furniture 50,000
Chavi 3,40,000 6,60,000 Debtors 2,30,000
General Reserve 80,000 Stock 1,50,000
Bank Loan 60,000 Cash 50,000
Creditors 60,000
8,60,000 8,60,000

(13)
 The following terms were agreed upon:
(a) Aditi will bring 3,00,000 as capital and her share of goodwill premium in
cash.
(b) Goodwill of the firm was valued on the basis of two years’ purchase of average
profit of last three years which amounted to 60,000.
(c) Machinery was revalued at 4,60,000.
(d) The capitals of Bhumi and Chavi were adjusted on the basis of Aditi’s capital
by opening Current Accounts.
Prepare Revaluation Account and Partners’ Capital Accounts.
Q33. P, Q and R were partners in a firm sharing profit and losses in the ratio 3: 2: 1. Their
Balance Sheet on 31st March, 2024 was as follows: (6)

Liabilities Assets
Creditors 13,000 Cash 4,700
Bills Payable 590 Debtors 8,000
Capital A/cs: Stock 11,690
P 15,000 Buildings 23,000
Q 10,000 Profit and Loss A/c 1,200
R 10,000 35,000
48,590 48,590

Q retired on the above-mentioned date on the following terms:

(a) Buildings to be appreciated by 7,000.
(b) A provision for doubtful debts to be made at 5% on debtors.
(c) Goodwill of the firm is valued at 18,000.
(d) 2,800 was to be paid to Q immediately and the balance in his capital account
to be transferred to his loan account carrying interest as per the agreement.
(e) The remaining partners decided to maintain equal capital balances by opening
current accounts.
Prepare Revaluation Account and Partners’ Capital Accounts.
OR

(14)
 L, M and N were partners in a firm sharing profit and losses in the ratio 2:2:3. Their
Balance Sheet on 31st March, 2024 was as follows: (6)

Liabilities Assets
Creditors 80,000 Land and Building 5,00,000
Bank Overdraft 22,000 Machinery 2,50,000
Long-term Debts 2,00,000 Furniture 3,50,000
Capital A/cs: Investments 1,00,000
L 6,25,000 Stock 4,00,000
M 4,00,000 Debtors 2,00,000
N 5,25,000 15,50,000 Bank 20,000
Employees’ Provident Deferred Advertisement
Fund 38,000 Expenditure 70,000
18,90,000 18,90,000

M retired on 31st March, 2024 on the following terms:

(a) Land and Building to be appreciated by 2,40,000 and Machinery be depreciated
by 10%.
(b) 50% of Investments were taken by the retiring partner at book value.
(c) Provision for doubtful debts was to be made @ 5% on debtors.
(d) Stock will be valued at market price which is 1,00,000 less than the book
value.
(e) Goodwill of the firm be valued at 5,60,000. L and N decided to share future
profit and losses in the ratio 2:3.
(f) The total capital of the new firm will be 32,00,000 which will be in proportion
of profit sharing ratio of L and N.
(g) Gain on Revaluation Account amounted to 1,05,000.
Prepare Partners’ Capital Accounts and Balance Sheet of the firm after M’s retirement.
Q34. (a) A and B were partners in a firm sharing profit and losses in the ratio 5:3. Their
fixed capitals on 31st March, 2023 were: A- 60,000 and B- 80,000. They

(15)
 agreed to allow interest on capital @ 12 % p.a. The profit of the firm for the
year ended 31st March, 2024 before allowing interest on capital was 12,600.
Pass necessary journal entries for the above transactions in the books of A and
B. Also, show your working notes clearly. (3)
(b) X, Y and Z were partners in a firm. On 1st April, 2023, their capitals stood at
4,00,000, 3,00,000 and 2,00,000 respectively. Following were the provisions
of the partnership deed: (3)
(1) X was entitled to a salary of 5,000 per month.
(2) Partners were entitled to interest on capital @ 10 % p.a.
The net profit for the year ended 31st March, 2024, 3,00,000 was divided
among the partners without providing for the above items.
Showing your workings clearly, pass an adjustment entry to rectify the above
error.

(16)
 MID TERM EXAMINATION 7/9/2024

ACCOUNTANCY (055)
SET - II
Time allowed: 3 Hours MM: 80
General Instructions:
1. This question paper contains 34 questions. All questions are compulsory.
2. Question Nos. from 1 to 20 carry 1 mark each.
3. Question Nos. from 21 to 26 carry 3 marks each.
4. Question Nos. from 27 to 29 carry 4 marks each.
5. Question Nos. from 30 to 34 carry 6 marks each.
6. 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.
Q1. Interest on Partner’s loan is credited to: (1)
(a) Partner’s Fixed Capital Account (b) Partner’s Current Account
(c) Partner’s Loan Account (d) Partner’s Drawings Account.
Q2. Average capital employed in a firm is 3,00,000. The normal rate of return in the
business is 20% and its average profit is 80,000. Value of goodwill by capitalization
of super profit method is: (1)
(a) 8,00,000 (b) 1,00,000
(c) 2,00,000 (d) 6,00,000
OR
Keshav and Karan were partners in a firm sharing profits and losses equally. The
capitalized value of average profits of the firm was 18,00,000. Assets of the firm
were 20,00,000 (excluding goodwill) and liabilities amounted to 5,00,000. What
will be the value of goodwill of the firm by capitalization of average profits method?
(1)
(a) 2,00,000 (b) 3,00,000
(c) 4,00,000 (d) 3,50,000

(1)
Q3. Assertion (A) : Increase in the value of liabilities on reconstitution of a firm is
debited to Revaluation Account. (1)
Reason (R) : Increase in the value of liabilities is a loss.
In context of the above two statements, which of the following is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct
explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct
explanation of Assertion (A).
(c) Assertion (A) is correct but Reason (R) is incorrect.
(d) Assertion (A) is incorrect but Reason (R) is correct.
Q4. X and Y are partners in a firm with capitals of 18,000 and 20,000 respectively. Z
was admitted as a new partner for 1/3rd in the profits of the firm. Z brings 10,000
for his share of goodwill premium and proportionate capital. The capital contribution
of Z will be: (1)
(a) 24,000 (b) 19,000
(c) 12,667 (d) 14,000
Q5. Nidhi, Kunal and Kabir are partners in a firm sharing profits and losses in the ratio
2:1:2. Kunal retired and the balance in his capital account after making necessary
adjustments on account of reserves, revaluation of assets and reassessment of liabilities
was 80,000. Nidhi and Kabir agreed to pay him 1,00,000 in full settlement of his
claim. Kunal’s share of goodwill of the firm at the time of his retirement was: (1)
(a) 4,000 (b) 20,000
(c) 16,000 (d) 1,80,000
OR
Gopal, Krishna and Govind were partners sharing profit and losses in the ratio 5:4:3.
Krishna retired on 1st April, 2024. Gopal and Govind purchased his share of profit
by giving him 1,20,000 for which Gopal paid 80,000 and Govind paid 40,000.
What is the gaining ratio? (1)
(a) 1:2 (b) 5:3
(c) 1:1 (d) 2:1

(2)
Q6. Loan by the deceased partner to the firm is transferred to: (1)
(a) the debit of his Current Account
(b) the credit of his Capital Account
(c) the debit of Remaining Partners’ Capital Accounts
(d) the credit of Remaining Partners’ Capital Account.
Q7. At the time of dissolution of a firm, an unrecorded furniture of 5,000 was taken by
a partner for 4,300 against payment. Which account will be credited and by what
amount? (1)
(a) Cash Account by 4,300
(b) Realisation Account by 700
(c) Partners’ Capital Accounts by 5,000
(d) Realisation Account by 4,300
OR
At the time of a firm’s dissolution, if the realized value of an intangible asset is not
given, the realized value will be taken as: (1)
(a) Book value (b) Realisation Account
(c) Nil (d) None of these
Read the hypothetical situation given below and answer Question no. 8 and 9:
Keshav and Hitesh are partners sharing profit and losses in the ratio 3:2. On 31st March,
2023 after division of profit of 15,000, their capital accounts stood at 55,000 and 45,000
respectively. Keshav withdrew 1,500 at the beginning of each quarter whereas Hitesh
withdrew 9,000 on 1st November, 2022. After the final accounts have been prepared, it
was discovered that interest on capital @ 5% p.a. and interest on drawings @ 8% p.a. have
not been taken into consideration.
Based on the above information you are required to answer the following questions:
Q8. Opening capital of Keshav was: (1)
(a) 35,000 (b) 39,000
(c) 43,000 (d) 52,000

(3)
Q9. What will be the amount of interest on Hitesh’s drawings? (1)
(a) 225 (b) 4,500
(c) 300 (d) 7,200
Q10. K and R are partners in a partnership firm. They changed their profit-sharing ratio to
2:3 with effect from 1st April, 2024.The assets were revalued and liabilities were
reassessed on that date which resulted in a loss of 80,000. It will be transferred to
their capital accounts by: (1)
(a) debiting K’s Capital Account and R’s Capital Account by 40,000 each.
(b) debiting K’s Capital Account and R’s Capital Account by 80,000 each.
(c) crediting K’s Capital Account and R’s Capital Account by 40,000 each.
(d) crediting K’s Capital Account and R’s Capital Account by 80,000 each.
OR
Raman and Rajan were partners sharing profit and losses in the ratio 3:1. They agreed
to change the ratio to 2:1 with effect from 1st April, 2024. What will be Rajan’s gain/
sacrifice? (1)
(a) Gain 1/12 (b) Sacrifice 1/12
(c) Gain 2/60 (d) Sacrifice 3/60
Q11. Assertion (A) : At the time of admission of a partner, the new partner should bring
his share of goodwill to compensate the sacrificing partner. (1)
Reason (R) : Sacrificing Partners may be compensated by crediting new Partner’s
Current Account and debiting Sacrificing Partners’ Capital Account.
In context of the above two statements, which of the following is correct?
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct
explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct
explanation of Assertion (A).
(c) Assertion (A) is correct but Reason (R) is incorrect.
(d) Assertion (A) is incorrect but Reason (R) is correct.

(4)
Q12. A, B and C are partners sharing profit and losses in the ratio 5:4:3. C retires and is
credited for 9,000 as goodwill. How much will be debited to A’s Capital Account in
respect of goodwill adjustment? (1)
(a) 20,000 (b) 16,000
(c) 5,000 (d) 9,000
Q13. Vidit, Sumit and Mita were partners sharing profit and losses in the ratio 4:3:1. Mita
died and her entire share was taken up by Vidit. What will be the new profit sharing
ratio? (1)
(a) 1:1 (b) 5:3
(c) 3:5 (d) 5:2
OR
On the death of a partner, his share of loss in the firm till the date of his death is
transferred to the: (1)
(a) debit of Profit and Loss A/c
(b) credit of Profit and Loss A/c
(c) debit of Profit and Loss Suspense A/c
(d) credit of Profit and Loss Suspense A/c
Q14. Niyati and Aisha were partners sharing profit and losses in the ratio 4:3. They admitted
Bina as a new partner. Niyati sacrificed 1/4th from her share and Aisha sacrificed
1/7th from her share in favour of Bina. What will be Bina’s share in the profits of the
firm? (1)
(a) 2/7 (b) 11/28
(c) 10/49 (d) 7/16
Q15. Atul, Binay and Chetan are partners sharing profit and losses in the ratio 5:4:3. Chetan
retires and is credited for 36,000 as goodwill. What will be the amount of firm’s
goodwill? (1)
(a) 6,000 (b) 1,80,000
(c) 1,00,000 (d) 1,44,000

(5)
Q16. Mohan, a partner withdraws 20,000 on 1st April, 2023 and 40,000 on 1st October,
2023. Interest on drawings @ 6 % p.a. on 31st March, 2024 will be: (1)
(a) 2,400 (b) 3,600
(c) 1,800 (d) 1,200
OR
Girdhar, a partner withdrew 5,000 in the beginning of each quarter and interest on
drawings was calculated as 1,500 at the end of accounting year 31st March, 2024.
Calculate the rate of interest on drawings. (1)
(a) 6 % p.a. (b) 8 % p.a.
(c) 10 % p.a. (d) 12 % p.a.
Q17. What is the treatment of an unrecorded asset at the time of admission of a partner in
a partnership firm? (1)
(a) Debited to Revaluation Account (b) Credited to Revaluation Account
(c) Debited to Goodwill Account (d) Credited to Partners’Capital Accounts
OR
On the admission of a partner in a partnership firm, the old partners share the gain or
loss on revaluation of assets and reassessment of liabilities in which of the following
ratio? (1)
(a) Equal ratio (b) Old profit sharing ratio
(c) New profit sharing ratio (d) Sacrificing ratio
Q18. A, B and C are partners in a firm sharing profit and losses in the ratio 5:4:1. Machinery
appeared in their Balance Sheet at 48,000. If value of Machinery in the Balance
Sheet is overvalued by 20%, at what value will Machinery be shown in the new
Balance Sheet? (1)
(a) 44,000 (b) 40,000
(c) 32,000 (d) 50,000
Q19. X and Y are partners sharing profit and losses in the ratio 3:2. They admit Z as a
partner and gave him 2/10th share in the profits. The new profit-sharing ratio will be:
(1)
(a) 12:8:5 (b) 3:2:2
(c) 3:2:5 (d) 2:1:2

(6)
Q20. Statement I - Gaining ratio is the ratio of gain among the remaining partners’ share
of profits at the time of retirement of a partner. (1)
Statement II - Goodwill paid to the retiring partner is paid by the gaining partners in
their gaining ratio.
Choose the correct option from the options given below:
(a) Statement I is correct and Statement II is incorrect.
(b) Statement I is incorrect and Statement II is correct.
(c) Both statements are correct.
(d) Both statements are incorrect.
Q21. A business earned an average profit of 2,20,000. Average capital employed by the
firm is 4,00,000. If the goodwill of the firm is valued at 1,20,000 at two years’
purchase of super profit, find the normal rate of return. (3)
OR
State any three circumstances when need for valuation of goodwill of a firm may
arise. (3)
Q22. A and B are partners in a firm sharing profit and losses in the ratio 3:2. On 1st April,
2024, they admit C as a partner for 1/4th share in the profits which he takes 1/6th
from A and 1/12th from B. Goodwill exists in the books at 20,000. C brings 18,000
as goodwill out of his share of 30,000. (3)
Pass necessary journal entries in the books of the firm at the time of C’s admission.
Q23. Sita, Reeta and Geeta are sharing profit and losses in the ratio 5:3:2. They decided to
change the ratio to 2:3:5 with effect from 1st April, 2024. They also decided to record
the effect of the following revaluations without affecting the book values of the
assets and liabilities by passing an adjustment entry. (3)

Book Values ( ) Revised Values ( )

Land and Building 5,00,000 5,50,000
Plant and Machinery 2,50,000 2,40,000
Sundry Creditors 60,000 55,000
Outstanding Expenses 60,000 75,000

Pass the necessary journal entry to give effect to the above arrangement.
(7)
Q24. Pass necessary journal entries for the following transactions on the dissolution of a
partnership firm of Adhiraj and Karan on 31st March, 2024 assuming that the assets
and third party liabilities have been transferred to the Realisation Account. (3)
(a) Furniture of book value 70,000 was sold for 68,000 by auction and
auctioneer’s commission was 2,000.
(b) Adhiraj’s loan of 35,000 was paid.
(c) Realisation expenses of 2,000 were paid by Karan.
OR
Distinguish between dissolution of partnership and dissolution of partnership firm.
(3)
Q25. Classify the following items under major heads and sub-heads in the Balance Sheet
of a company as per Schedule III of the Companies Act, 2013: (3)
(a) Deposit with Customs Authorities
(b) Prepaid Rent
(c) Patents
Q26. What is meant by Analysis of Financial Statements? State its advantages. (3)
Q27. Robin, Tarun and Akhil are partners sharing profits and losses in the ratio 5:3:2.
Their Balance Sheet as at 31st March, 2024 was as follows: (4)

Liabilities Assets

Sundry Creditors 1,90,000 Cash in hand 25,000

General Reserve 80,000 Bank Balance 2,25,000
Profit & Loss A/c 30,000 Sundry Debtors 1,10,000
Capital A/cs: Less: Prov. for DD 10,000 1,00,000
Robin 3,00,000 Stock 2,00,000
Tarun 1,80,000 Furniture 50,000
Akhil 1,20,000 6,00,000 Computers 3,00,000
9,00,000 9,00,000

Profit-sharing ratio among existing partners was agreed to be 2:2:1 w.e.f. 1st April,
2024 with the following terms:

(8)
 (a) Stock to be increased to 2,20,000 and Computers to be reduced to 2,70,000.
(b) Furniture to be reduced by 20% and Provision for doubtful debts to be reduced
by 2,000.
(c) Goodwill of the firm is valued at 1,00,000.
The partners decided to show the assets, liabilities, General Reserve and Profit &
Loss A/c at the same values in the Balance Sheet of the new firm.
Pass an adjustment entry giving effect to the above arrangement.
Q28. Prepare a Comparative Statement of Profit and Loss from the following information
extracted from the Statement of Profit and Loss of Shobha Ltd. for the year ended
31st March, 2022 and 31st March, 2023. (4)

Particulars 2022-23 ( ) 2021-22 ( )

Revenue from operations 15,00,000 10,00,000
Other Income (% of Revenue from operations) 60% 50%
Employee benefit expenses (% of Total Revenue) 40% 30%

Tax Rate is 40%.

OR
Prepare a Common Size Statement of Profit and Loss of A Ltd. and B Ltd. for the
year ended 31st March, 2024 from the following information: (4)

Particulars A Ltd. B Ltd.

Revenue from operations ( ) 20,00,000 10,00,000
Other income ( ) 3,00,000 80,000
Expenses ( ) 10,40,000 4,80,000
Tax rate 40% 40%

Q29. Tanya, Vanya and Sanya were partners in a partnership firm sharing profit and losses
in the ratio 3:2:1. They admitted Soumya as a partner for 1/5th share in the firm with
effect from 1st April, 2024. Their new profit sharing ratio will be 2:1:1:1. An extract
of their Balance Sheet is as follows: (4)

(9)
Liabilities Assets
Investment Fluctuation 30,000 Investment (at cost) 5,00,000
Reserve
Workmen Compensation 80,000
Reserve

Show the accounting treatment of the following using the above information:
Case 1- If the market value of investment is 5,00,000.
Case 2- If the market value of investment is 4,82,000.
Case 3- If a claim for workmen is estimated at 50,000.
Case 4- If a claim for workmen is estimated at 1,10,000.
Q30. (a) A and B were partners in a firm sharing profit and losses in the ratio 5:3. Their
fixed capitals on 31st March, 2023 were: A- 60,000 and B- 80,000. They
agreed to allow interest on capital @ 12% p.a. The profit of the firm for the
year ended 31st March, 2024 before allowing interest on capital was 12,600.
Pass necessary journal entries for the above transactions in the books of A and
B. Also, show your working notes clearly. (3)
(b) X, Y and Z were partners in a firm. On 1st April, 2023, their capitals stood at
4,00,000, 3,00,000 and 2,00,000 respectively. Following were the provisions
of the partnership deed: (3)
(1) X was entitled to a salary of 5,000 per month.
(2) Partners were entitled to interest on capital @ 10% p.a.
The net profit for the year ended 31st March, 2024, 3,00,000 was divided
among the partners without providing for the above items.
Showing your workings clearly, pass an adjustment entry to rectify the above
error.
Q31. A, B and C were partners sharing profit and losses in the ratio 5:3:2. C died on 1st
August, 2023. C had drawn 5,000 during the period from 1st April, 2023 till the
date of his death. The following was agreed between his executors and the remaining
partners: (6)
(i) Goodwill will be valued at 2.5 years’ purchase of average of four completed
years’ profits. Profits for the year ended 31st March were:

(10)
 Year 2020 2021 2022
Profits ( ) 1,01,000 14,000 16,000
(ii) C’s share of profit from the beginning of the accounting year till the date of
death be calculated on the basis of the average of three completed years’ profit
before death.
(iii) Patents were undervalued by 17,000 and Machinery was overvalued by 3,200.
(iv) Market value of investment on 1st August, 2023 was 4,200.
Their Balance Sheet as on 31st March, 2023 was as follows:

Liabilities Assets
Capital A/cs: Goodwill 5,000
A 67,500 Patents 26,000
B 47,500 Machinery 31,200
C 37,000 1,52,000 Investments 3,000
Investment Fluctuation Stock 10,000
Reserve 3,500 Sundry Debtors 12,000
Workmen Compensation Loan to C 41,000
Reserve 3,500 Bank 5,800
Sundry Creditors 51,000 Deferred Advertisement
Expenditure 1,000
Profit and Loss A/c 75,000
(for 31st March, 2023)
2,10,000 2,10,000
Prepare C’s Capital Account and C’s Executor’s Account.
Q32. Yuvika and Veera were partners sharing profit and losses in the ratio 3:1. Their Balance
Sheet on 31st March, 2024 was as follows: (6)

Liabilities Assets
Creditors 41,000 Plant and Machinery 60,000
General Reserve 80,000 Building 40,000
Outstanding Expenses 12,000 Investments 60,000
Capital A/cs: Stock 50,000
Yuvika 79,000 Debtors 38,000
Veera 48,000 1,27,000 Less: Prov for DD 4,000 34,000
Cash 16,000
2,60,000 2,60,000

(11)
 They decided to admit Yashvi in the firm on 1st April, 2024 for 1/4th share in profits
on the following terms:
(a) Yashvi will bring in proportionate capital and 4,000 as her share of goodwill
premium in cash.
(b) Investments were valued at 68,000.
(c) Plant and Machinery was to be depreciated by 10%.
Prepare Revaluation Account and Partners’ Capital Accounts.
OR
Beenu and Cheenu were partners sharing profit and losses in the ratio 5: 3. They
admitted Aditi for 1/3rd share in the profits of the firm on 1st April, 2024. Their
Balance Sheet on that date was as follows: (6)

Liabilities Assets
Capital A/cs: Machinery 3,80,000
Beenu 3,20,000 Furniture 50,000
Cheenu 3,40,000 6,60,000 Debtors 2,30,000
General Reserve 80,000 Stock 1,50,000
Bank Loan 60,000 Cash 50,000
Creditors 60,000
8,60,000 8,60,000

The following terms were agreed upon:

(a) Aditi will bring 3,00,000 as capital and her share of goodwill premium in
cash.
(b) Goodwill of the firm was valued on the basis of two years’ purchase of average
profit of last three years which amounted to 60,000.
(c) Machinery was revalued at 4,60,000.
(d) The capitals of Beenu and Cheenu were adjusted on the basis of Aditi’s capital
by opening Current Accounts.
Prepare Revaluation Account and Partners’ Capital Accounts.

(12)
Q33. X, Y and Z were partners in a firm sharing profit and losses in the ratio 3:2:1. Their
Balance Sheet on 31st March, 2024 was as follows: (6)

Liabilities Assets
Creditors 13,000 Cash 4,700
Bills Payable 590 Debtors 8,000
Capital A/cs: Stock 11,690
X 15,000 Buildings 23,000
Y 10,000 Profit and Loss A/c 1,200
Z 10,000 35,000
48,590 48,590
Y retired on the above-mentioned date on the following terms:
(a) Buildings to be appreciated by 7,000.
(b) A provision for doubtful debts to be made at 5% on debtors.
(c) Goodwill of the firm is valued at 18,000.
(d) 2,800 was to be paid to Y immediately and the balance in his capital account
to be transferred to his loan account carrying interest as per the agreement.
(e) The remaining partners decided to maintain equal capital balances by opening
current accounts.
Prepare Revaluation Account and Partners’ Capital Accounts.
OR
Leena, Meena and Neena were partners in a firm sharing profit and losses in the ratio
2:2:3. Their Balance Sheet on 31st March, 2024 was as follows:

Liabilities Assets
Creditors 80,000 Land and Building 5,00,000
Bank Overdraft 22,000 Machinery 2,50,000
Long-term Debts 2,00,000 Furniture 3,50,000
Capital A/cs: Investments 1,00,000
Leena 6,25,000 Stock 4,00,000
Meena 4,00,000 Debtors 2,00,000
Neena 5,25,000 15,50,000 Bank 20,000
Employees’ Provident Deferred Advertisement
Fund 38,000 Expenditure 70,000
18,90,000 18,90,000

(13)
 Meena retired on 31st March, 2024 on the following terms:
(a) Land and Building to be appreciated by 2,40,000 and Machinery be depreciated
by 10%.
(b) 50% of Investments were taken by the retiring partner at book value.
(c) Provision for doubtful debts was to be made @ 5% on debtors.
(d) Stock will be valued at market price which is 1,00,000 less than the book
value.
(e) Goodwill of the firm be valued at 5,60,000. Leena and Neena decided to
share future profit and losses in the ratio 2:3.
(f) The total capital of the new firm will be 32,00,000 which will be in proportion
of profit sharing ratio of Leena and Neena.
(g) Gain on Revaluation Account amounted to 1,05,000.
Prepare Partners’ Capital Accounts and Balance Sheet of the firm after Meena’s
retirement.
Q34. Anil, Bhanu and Karam were partners sharing profit and losses in the ratio 3:1:1.
They decided to dissolve the firm on 31st March, 2024. Their Balance Sheet on that
date was as follows: (6)

Liabilities Assets
Sundry Creditors 60,000 Cash 32,000
Loan by Mrs. Karam 15,000 Sundry Debtors 2,62,000
Loan by Anil 1,00,000 Less: Prov for DD 12,000 2,50,000
Capital A/cs: Stock 78,000
Anil 2,75,000 Furniture 10,000
Bhanu 1,00,000 Computer 80,000
Karam 70,000 4,45,000 Sundry Assets 1,70,000
6,20,000 6,20,000

It was agreed that:

(a) Anil took computer at its book value in settlement of his loan.
(b) Anil took Furniture at 8,000 and Debtors of 2,00,000 at 1,72,000; the
Creditors of 60,000 to be paid by him at this amount.

(14)
(c) 50% of the stock was taken over by Bhanu for 40,000, while 10% remaining
stock was not saleable and balance stock realized 110%.
(d) Bhanu took some of the Sundry Assets at 72,000 (being 10% less than the
book value).
(e) Karam took the remaining Sundry Assets at 90% of the book value, less 1,000
as discount and assumed the liability of Loan by Mrs. Karam together with
accrued interest of 300 which was not recorded in the books.
(f) The expenses of realization were 2,700. The remaining Debtors were sold to
a debt collecting agency for 50% of the book value.
Prepare Realisation Account and Loan by Anil Account.

(15)