SAGAR PUBLIC SCHOOL, BHOPAL

TERM - II EXAMINATION, 2024 - 25

CLASS - XII
TIME: 03 Hours ACCOUNTANCY (055) M. M.: 80
General Instructions: Total no. of printed pages: 08
1. This question paper contains 34 questions. All questions are compulsory.
2. Question 1 to 20 carries 1 mark each.
3. Questions 21 to 26 carries 3 marks each.
4. Questions from 27 to 29 carries 4 marks each
5. Questions from 30 to 34 carries 6 marks each
6. There is no overall choice. However, internal choices have been provided.
Choose the correct option:
Q. 1 Relationship between the partners is of: 1
a) Close relatives. b) Agent and Principal.
c) Junior-Senior relationship d) Senior-Subordinate relationship
OR
Which one of the following is NOT an essential feature of a partnership?
a) There must be an agreement
b) There must be a business
c) The business must be carried on for profits
d) The business must be carried on by all the partners

Q. 2 The formula for valuing goodwill under the capitalization of Super profit method is: 1
a) Super profit made by the firm multiplied by the Normal rate of return.
b) Capital employed by the firm multiplied by normal rate of return.
c) Capitalised profit of the firm divided by the rate of return.
d) Super profit of the firm divided by the normal rate of return.

Q. 3 X, Y and Z who were sharing profits and losses in the ratio of 5:3:2 decide to share the future 1
profits and losses in the ratio of 2:3:5 with effect from 1st April, 2023. An extract of their Balance
Sheet as at 31st March, 2023 is as follows:
Liabilities Amount Assets Amount
Investment fluctuation reserve 7,500 Investment (at cost) 1,00,000
At the time of reconstitution, a certain amount of loss due to fall in market value of investment
was determined for which Y’s share of loss was ₹ 750. Market value of investments was
a) ₹80,000 b) ₹ 85,000 c) ₹ 95,000 d) ₹ 90,000
OR
A, B and C are in partnership business. A used Rs 2,00,000 belonging to the firm without the
information to other partners and made a profit of Rs 35000 by using this amount. Which decision
should be taken by the firm to rectify this situation?
a) A need to return only Rs 2,00,000 to the firm.
b) A is required to return Rs 35,000 to the firm.
c) A is required to pay back Rs 35000 only equally to B and C
d) A need to return Rs 2,35,000 to the firm.

Q. 4 Niyati and Aisha were partners in a firm sharing profits and losses in the ratio of 4:3. They 1
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 their sacrificing ratio:
a) 2:7 b) 3:2 c) 7:4 d) 4:3

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Q. 5 Given below two sentences labelled Assertion (A) and Reason (R) read the sentences and select 1
the correct option.
Assertion (A): Ram, Rahim and Ron share profits in the ratio 2 : 3 : 5. Ram decides to retire. The
new profit sharing ratio is 3 : 5. If the profit earned was ₹1,50,000 before
retirement. Rahim's share is ₹45,000.
Reason (R): The profits are shared in the new profit sharing ratio.
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.

Q. 6 Assertion (A): Partnership comes to an end with the death of a partner but the firm may continue 1
its business with new partnership agreement.
Reason (R): Death of a partner leads to the restructuring of the firm and not to the dissolution of
the partnership firm.
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.
OR
Assertion (A): At the time of retirement of a partner, the combined profit share of the remaining
or continuing partners increases.
Reason (R): Remaining or Continuing partners take a part of profit share of the retiring partner
as a result their individual profit share increases.
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

Q. 7 At the time of dissolution of a firm, firm's total assets were ₹ 5,00,000, creditors were ₹1,00,000. 1
Realisation expenses amounted to ₹ 10,000. Assets realised 20% more than the book value and
creditors were paid 5% less. Gain/loss on realisation will be:
a) Loss = ₹ 75,000 b) Loss = ₹ 1,00,000
c) Gain = ₹ 4,95,000 d) Gain = ₹ 95,000

Q. 8 Ravi, a partner, withdraws ₹ 20,000 on 1st April, 2022 and ₹ 40,000 on 1st October, 2022. Interest 1
on Drawings @ 6% p.a. on 31st March, 2023 will be:
a) ₹ 1,200 b) ₹ 3,600 c) ₹ 2,400 d) ₹ 1,800
OR
A partner introduced additional capital of Rs. 30,000 and advanced a loan of Rs. 40,000 to the
firm at the beginning of the year. Partner will receive year’s interest:
a) Rs.4,200 b) Rs.2,400 c) Nil d) Rs. 1,800
Read the following text and answer the following questions based thereon:
Seema and Reema befriended each other while doing Bachelors in fashion Designing from a well-
known college in France. After completing their Bachelors in 2018, both returned to India and
opened boutique in Indra Nagar, Bengaluru by investing 50,00,000 each and sharing profits and
losses equally.
After being in business for 6 years, they mutually decided to change their profit-sharing ratio to
2:3 w.e.f. 1st April,2024 and for this purpose goodwill is to be valued at 3 years’ purchase of
average profit of last 5 years which are as follows.

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 2019-20: ₹75,000; 2020-21: ₹1,00,000; 2021-22: 1,25,000; 2022-23: 85,000; 2023-24: 1,15,000.
On 31st March, 2024, workmen compensation reserve and Advertisement Suspense a/c in the
books were 5,00,000 and 2,00,000 respectively. As there is no claim of compensation by
workmen, the partners decided to carry forward the workmen compensation reserve in the balance
sheet of the reconstituted firm.

Q. 9 Journal entry for accounting treatment of workmen compensation reserve will be: 1
a) Reema’s capital a/c Dr. 50,000
To Seema’s capital a/c 50,000
b) Workmen compensation reserve a/c Dr. 5,00,000
To Seema’s Capital a/c 2,50,000
To Reema’s Capital a/c 2,50,000
c) Seema’s capital a/c Dr. 50,000
To Reema’s Capital a/c 50,000
d) Workmen compensation reserve a/c Dr. 5,00,000
To Seema’s Capital a/c 2,00,000
To Reema’s Capital a/c 3,00,000

Q. 10 Journal entry for accounting treatment of Advertisement suspense will be: 1

a) Seema’s capital a/c Dr. 20,000
To Reema’s capital a/c 20,000
b) Advertisement suspense a/c 2,00,000
To Seema’s Capital a/c 80,000
To Reema’s capital a/c 1,20,000
c) Reema’s capital a/c 20,000
To Seema’s capital a/c 20,000
d) Seema’s capital a/c 1,00,000
Reema’s capital a/c 1,00,000
To Advertisement suspense a/c 2,00,000

Q. 11 X, Y and Z started a business in partnership on 1st October 2020. The profit sharing ratio was 1
decided among the partners 2 : 1 : 1. Z was guaranteed a profit of ₹ 28,000 p.a. Deficiency amount
(if any) will be borne by X and Y in the ratio of 3 : 2. The firm earned profit for the year ending
31st March 2021 ₹ 20,000. How much deficiency is borne by X and Y?
a) X ₹ 13,800 and Y ₹ 9,200 b) X ₹ 5,400 and Y ₹ 3,600
c) X ₹ 10,800 and Y ₹ 7,200 d) X ₹ 12,000 and Y ₹ 6,000

Q. 12 Assertion (A): Nisha, Okra and Piya are partners. Nisha retires and her capital account after 1
making adjustment for reserves and profit on revaluation exists at ₹90,000. Okra
and Piya have agreed to pay her ₹1,30,000 in full settlement of his claim. It implies
that ₹ 40,000 (₹ 1,30,000 - ₹90,000) is Nisha's share of goodwill of the firm. This
will be treated by debiting ₹ 40,000 in Okra's and Piya's Capital Accounts in their
gaining ratio and crediting Nisha's Capital A/c.
Reason (R): If the firm has agreed to settle the account of retiring partner by paying him/her a
lump-sum amount, then amount paid to him/her in excess of his adjusted capital
shall be treated as his/ her share of goodwill.
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.

Q. 13 Which account is opened to transfer deceased partner’s share of profit to his capital account? 1
a) P&L Adjustment account b) P&L Appropriation account
c) P&L Suspense account d) None of the above
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Q. 14 Amit and Vinay are partners sharing profits in the ratio of 4 : 3. Their Balance Sheet showed a 1
balance of ₹ 56,000 in the General Reserve Account and a debit balance of ₹ 14,000 in Profit and
Loss Account. They now decided to share the future profits equally. Instead of closing the General
Reserve Account and Profit and Loss Account, it is decided to pass an adjustment entry for the
same. In adjustment entry:
a) Cr. Amit by ₹ 3,000; Dr. Vinay by ₹ 3,000
b) Cr. Amit by ₹ 5,000; Dr. Vinay by ₹ 5,000
c) Dr. Amit by ₹ 5,000; Cr. Vinay by ₹ 5,000
d) Dr. Amit by ₹ 3,000; Cr. Vinay by ₹ 3,000

Q. 15 X and Y are partners in a firm. X is to get a commission of 10% of net profit before charging any 1
commission. Y is to get a commission of 10% on net profit after charging all commissions. Net
profit before charging any commission was ₹ 55,000. Commission of Y will be:
a) 5,500 b) 5,000 c) 4,950 d) 4,500
OR
When partners’ capital accounts are floating, which one of the following items will be written on
the credit side of the partners’ capital accounts?
a) Interest on drawings b) Loan advanced by partner to the firm
c) Partner’s share in the firm’s loss d) Salary to the active partners

Q. 16 Rohit, Mohan and Sohan were partners sharing profits equally. At the time of dissolution of the 1
partnership firm, Rohit’s loan to the firm will be:
a) Credited to Rohan’s Capital Account. B) Debited to Realisation Account.
c) Credited to Realisation Account. D) Credited to Bank Account.

Q. 17 Assertion (A): If the goodwill is not brought in cash, it can be adjusted only through the new 1
partner’s capital account.
Reason (R): The adjustment will reduce the capital of the partner.
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.

Q. 18 How drawing against capital differs from drawings against profit: 1

a) Drawings against capital will not be recorded at all
b) Drawings against capital will reduce the capital
c) Drawings against capital will effect current account
d) Drawings against capital will reduce the profit

Q. 19 Which items are not shown in the credit side of the deceased partner’s capital account during the 1
death of a partner?
a) Share of accumulated reserves b) Share of profit
c) Goodwill share of a deceased partner d) Share of loss of firm

Q. 20 X, Y and Z who are sharing profits and losses in the ratio of 5:3:2, decide to share future profits 1
and losses in the ratio of 2:3:5.w.e.f. 1st April, 2024 after admission of A. An extract of the balance
sheet as at 31st March, 2024 is as follows:
Liabilities Amount ₹ Assets Amount ₹
Creditors 2,00,000 Plant and Machinery 2,00,000
Less: Provision for Depreciation 10,000 1,90,000
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 If plant and Machinery is valued as ₹ 1,71,000, the journal entry will be:
a) Revaluation a/c 19,000
To provision for depreciation on plant and machinery 19,000
b) Plant and machinery a/c 19,000
To Revaluation a/c 19,000
c) Revaluation a/c 19,000
To plant and machinery a/c 19,000
d) Provision for depreciation on plant and machinery 19,000
To Revaluation a/c 19,000

Q. 21 Calculate Goodwill of a firm on the basis of three years’ purchase of the weighted average profits 3
of the last four years. The profits of the last four years were:
Year (ending 31st March) 2020 2021 2022 2023
Amount (₹) 28,000 27,000 46,900 53,810
a) On 1st April, 2020, a major plant repair was undertaken for ₹ 10,000 which was charged to
revenue. The said sum is to be capitalized for goodwill calculation subject to adjustment of
depreciation of 10% on reducing balance method.
b) For the purpose of calculating goodwill, the company decided that the years ending 31st March,
2020 and 31st March, 2021 be weighted as 1 each (being Covid affected) and for the years
ending 31st March, 2022 and 31st March, 2023 weights be taken as 2 and 3 respectively.
OR
On April 1, 2020, a firm had assets of Rs.1,00,000 excluding stock of Rs.20,000. The current
liabilities were Rs.10,000 and the balance constituted Partners’ Capital Accounts. If the normal
rate of return is 8%, the Goodwill of the firm is valued at Rs.60,000 at four years purchase of
super profit, find the actual profits of the firm.

Q. 22 Raka, Seema and Mahesh were partners sharing profits and losses in the ratio of 5 : 3: 2. With 3
effect from 1st April 2019, they mutually agreed to share profits and losses in the ratio of 2 : 2 : 1.
On that date, there was a workmen’s compensation fund of ₹ 90,000 in the books of the firm. It
was agreed that:
i. Goodwill of the firm be valued at ₹ 70,000.
ii. Claim for workmen's compensation amounted to ₹ 40,000.
iii. Profit on revaluation of assets and re-assessment of liabilities amounted to ₹ 40,000.
Pass necessary journal entries for the above transactions in the books of the firm.

Q. 23 A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. C is admitted for the 3
1/5th share of profits of the firm which he acquires equally from A and B. Goodwill of the firm is
valued at ₹ 1,00,000. However, C is unable to bring his share of goodwill in Cash. Pass entries
when goodwill appears in the books at Rs 35,000.

Q. 24 X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On April 1st 2023, Y 3
retires from the firm, X and Z agree that the capital of the new firm shall be fixed at ₹ 2,10,000 in
the profit sharing ratio. The Capital Accounts of X and Z after all adjustments on the date of
retirement showed balances of ₹ 1,45,000 and ₹ 63,000 respectively. State the amount of actual
cash to be brought in or to be paid to the partners

Q. 25 X, Y and Z were partners in a firm sharing profits in the ratio of 3:2:1. The firm closes its books 3
on 31st March every year. On 1st February, 2024, Y died and it was decided that the new profit-
sharing ratio between X and Y will be equal. Partnership deed provided for the following on the
death of a partner.
a) His share of goodwill will be calculated on the basis of half of the profit credited to his account
during the previous four completed years. The firm’s profits for last four years were:
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 Years 2019-20 2020-21 2021-22 2022-23
Profits 1,50,000 1,00,000 50,000 1,00,000
b) His share of profit in the year of his death was to be calculated on the basis of average profit
of past two years. Pass necessary journal entries relating to goodwill and profit to be
transferred to Y’s capital account.
OR
Neema, Diya and Siya were partners in a firm sharing profits and losses in the 3 : 4 : 3. Books
were closed on 31st March every year. Siya died on 1st February, 2023. As per the partnership
deed Siya’s executors are entitled to her share of profit till the date of death on the basis of Sales
turnover. Sales for the year ended 31st March 2022 was ₹ 10,00,000 and profit for the same year
was ₹ 1,20,000. Sales show a positive trend of 20% and percentage of profit earning is reduced
by 2%. Journalise the transaction along with the working notes.

Q. 26 Pass Journal entries for the following: 3

a. Realisation expenses were ₹ 10,000 and paid by the firm on behalf of Arun, a partner, with
whom it was agreed at ₹ 7,500.
b. Building (Book value Rs 1,00,000) is taken by a creditor of Rs 1,20,000.
c. Machinery of Rs 1,00,000 taken by a partner Ramesh in full settlement of his loan of Rs 90,000
to the firm.

Q. 27 Ram, Rohit and Shyam are partners in a firm. Their capital accounts on 1st April, 2022, stood at 4
₹ 1,00,000, ₹ 80,000 and ₹ 60,000 respectively. Each partner withdrew ₹ 5,000 during the
financial year 2022-23. As per the provisions of their partnership deed:
i. Rohit was entitled to a salary of ₹ 1,000 per month.
ii. Interest on capital was to be allowed @10% per annum.
iii. Interest on drawings was to be charged @4% per annum.
iv. Profits and losses were to be shared in the ratio of their capitals.
The net profit of ₹ 75,000 for the year ended 31st March 2023, was divided equally amongst the
partners without providing for the terms of the deed.
You are required to pass a Single Adjusting Journal Entry to rectify the error. Show the working
clearly.

Q. 28 Babita, Kavita and Dinesh were partners in a firm. From 1st April, 2018 they decided to share the 4
profits in the ratio of 2 : 3 : 5. On this date the Balance Sheet of the firm showed a balance of ₹
60,000 in General Reserve and debit balance of ₹ 1,20,000 in Profit and Loss Account. The
Goodwill of the firm was valued at ₹ 3,60,000. Pass necessary journal entries for the above
transactions in the books of the firm. Also show your workings clearly.

Q. 29 Lalit, Pankaj and Rahul are partners sharing profits in the ratio of 40%, 30% and 30% respectively. 4
After all adjustments, on Lalit’s retirement with respect to general reserve, goodwill and
revaluation etc., the balances in their capital accounts stood at Rs.70,000, Rs.60,000 and
Rs.50,000 respectively. It was decided that the amount payable to Lalit will be brought by Pankaj
and Rahul in such a way as to make their capitals proportionate to their profit sharing ratio.
Calculate the amount to be brought by Pankaj and Rahul and record necessary journal entries.
Q. 30 Ahmad, Bheem and Daniel are partners in a firm. On 1st April, 2011 the balance in their capital 6
accounts stood at Rs.8,00,000, Rs.6,00,000 and Rs.4,00,000 respectively. They shared profits in
the proportion of 5 : 3 : 2 respectively. Partners are entitled to interest on capital @ 5% per annum
and salary to Bheem @ Rs. 3,000 per month and a commission of Rs. 12,000 to Daniel as per the
provisions of the partnership deed.
Ahmad’s share of profit, excluding interest on capital, is guaranteed at not less than Rs.25,000
p.a. Bheem’s share of profit, including interest on capital but excluding salary, is guaranteed at
not less than Rs.55,000 p.a. Any deficiency arising on that account shall be met by Daniel. The
profits of the firm for the year ended 31st March 2012 amounted to Rs.2,16,000.
Prepare ‘Profit and Loss Appropriation Account’ for the year ended 31st March 2012.
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Q. 31 A, B and C are partners sharing profit & losses in 2:2:1. B died on 30 June, 2024. Amount due to 6
his executor after all adjustment was Rs 60,400. Firm paid Rs 20,400 on 1st July, 2024 and balance
in 4 equal yearly instalments starting from 30 June, 2025. Prepare B’s executor’s account till it is
finally paid. Accounting year closes on 31st March each year.

Q. 32 X, Y and Z were partners in a firm sharing profits in 5 : 3 : 2 ratio. On 31st March, 2024 Z retired 6
from the firm. On the date of Z’s retirement the Balance Sheet of the firm was as follows :
BALANCE SHEET OF X, Y AND Z as at 31st March, 2024
Liabilities Rs. Assets Rs.
Creditors 27,000 Bank 80,000
Bills Payable 13,000 Debtors 20,000
Outstanding Rent 22,500 Less: Provision for
Provision for Legal Claims 57,500 Doubtful Debts 500 19,500
Capital A/cs: Stock 21,000
X 1,27,000 Furniture 87,500
Y 90,000 Land and Building 2,00,000
Z 71,000 2,88,000
4,08,000 4,08,000
On Z’s retirement it was agreed that:
(i) Land and Building will be appreciated by 5% and furniture will be depreciated by 20%.
(ii) Provision for doubtful debts will be made at 5% on debtors and provision for legal claims
will be made Rs.60,000.
(iii) Goodwill of the firm was valued at Rs.60,000.
(iv) Rs.70,000 from Z’s Capital Account will be transferred to his loan account and the balance
will be paid to him by cheque.
(v) The capital of the new firm is fixed at Rs 2,00,000 to be shared in new profit sharing ratio.
Prepare Revaluation Account, Partner’s Capital Accounts.
OR
X, Y and Z were partners in a firm sharing profits as in the ratio of 5 : 3 : 2. On 31-3-2015 their
Balance Sheet was as follows :
Balance Sheet of X, Y and Z as at 31st March, 2015
Liabilities Rs. Assets Rs.
Creditors 21,000 Land and Building 62,000
Investment Fluctuation Fund 10,000 Motor Vans 20,000
Profit & Loss Account 40,000 Investments 19,000
Capitals: Machinery 12,000
X 50,000 Stock 15,000
Y 40,000 Debtors 40,000
Z 20,000 1,10,000 Less : Provision 3,000 37,000
Cash 16,000
1,81,000 1,81,000
On the above date, Y retired and X and Z agreed to continue the business on the following terms:
1. Goodwill of the firm was valued at Rs.51,000.
2. There was a claim of Rs.4,000 for Workmen’s Compensation.
3. Provision for bad debts was to be reduced by Rs. 1,000.
4. Y will be paid Rs.8,200 in cash and the balance will be transferred in his loan account which
will be paid in four equal yearly instalments together with interest @10% p.a.
5. The new profit sharing ratio between X and Z will be 3 : 2 and their capitals will be in their
new profit sharing ratio. The capital adjustments will be done by opening current accounts.

Prepare Revaluation Account, Partners’ Capital Accounts.

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Q. 33 The following was the Balance Sheet of Anurag and Bhawna, who were sharing profits in the 6
ratio of 2/3 and 1/3 as at 31st March, 2017:-
Liabilities Rs. Assets Rs.
Creditors 65,900 Cash 1,200
Capitals : Sundry Debtors 9,700
Anurag 30,000 Stock 20,000
Bhawna 20,000 Plant & Machinery 35,000
Building 50,000
1,15,900 1,15,900
On 1st April, 2017 they agreed to admit Monika into partnership on the following terms :-
(a) Monika was to be given 1/3 share in profits, and was to bring Rs. 15,000 as capital and
Rs.6,000 as share of goodwill.
(b) That the value of stock and plant & machinery were to be reduced by 10%.
(c) That a provision of 5% was to be created for doubtful debts.
(d) That the building account was to be appreciated by 20%.
(e) Investments worth Rs.1,400 were to be taken into account.
(f) That the amount of goodwill was to be withdrawn by the old partners.
Prepare Revaluation A/c, Capital Accounts of partners.

Q. 34 Pass necessary journal entries on the dissolution of a partnership firm in the following cases: 6
i. Janki, a partner, agreed to look after the dissolution work for a commission of Rs.5,000. Janki
agreed to bear the dissolution expenses. Actual dissolution expenses Rs.5,500 were paid by
Mohan, another partner, on behalf of Janki.
ii. A debtor, Ravinder, for Rs.19,000 agreed to pay the dissolution expenses which were
Rs.18,000 in full settlement of his debt.
iii. Amitesh, an old customer whose account for Rs.60,000 was written off as bad debt in the
previous year, paid 90%.
iv. The firm had stock of Rs.80,000. Ankit took over 50% of the stock at a discount of 20% while
remaining stock was sold off at a profit of 30% on cost.
v. A liability under a suit for damages included in creditors was settled at Rs.32,000 as against
only Rs.13,000 provided in the books. Total creditors of the firm were Rs.50,000.
vi. There was a bill of exchange of Rs. 10,000 under discount. The bill was received from Derek
who became insolvent.
OR
Following was the Balance Sheet of D, G and T as at 29.2.2016 :
Liabilities Amount Assets Amount
Rs. Rs.
Creditors 50,000 Bank 26,000
Bills Payable 10,000 Debtors 30,000
G’s Loan 8,000 Stock 20,000
R’s Loan 12,000 Furniture 15,000
Workmen Compensation Reserve 26,000 Land and Building 2,45,000
Capitals : G’s Capital 20,000
D 1,00,000
T 1,50,000 2,50,000
3,56,000 3,56,000
The firm was dissolved on the above date on the following terms:
(i) Debtors realized Rs.28,000; and creditors and bills payable were paid at a discount of 10%.
(ii) Stock was taken over by T for Rs. 15,000 and furniture was sold to N for Rs.12,000.
(iii) Land and building was sold for Rs.2,80,000.
(iv) R’s loan was paid by a cheque for the same amount,
(v) There was an unrecorded asset of Rs. 1,50,000 which was sold for Rs. 1,00,000.
(vi) Compensation to workmen paid by the firm amounted to Rs.20,000.
Prepare Realisation Account.
(End of the Question Paper)
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