Class XII - Accountancy Sample Paper - 2

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General Instructions:

(i) This question paper contains 34 questions. All questions are compulsory.

(ii) This question paper is divided into two parts, Part A and B.

(iii) Part-A is compulsory for all the candidates

(iv) Part-B has two options i.e., (1) Analysis of financial statement (2) Computerized accounting

Students must attempt only one of the given options as per the subject copied.

(v) Question Nos.1 to 16 and 27 to 30 carries 1 mark each.

(vi) Questions Nos. 17 to 20, 31 and 32 carries 3 marks each.

(vii) Questions Nos. from 21,22 and 33 carries 4 marks each.

(viii) Questions Nos. from 23 to 26 and 34 carries 6 marks each.

(ix) 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.

SECTION-A

(Accounting for Partnership Firms and Companies)

1. On dissolution of a firm, a liability taken over by a partner is credited to:

(A) Realisation Account

(B) Profit and Loss Account

(D) None of these

View Answer

Ans. (C) Partner’s Capital Account

Explanation: The liability taken over by a partner in case of dissolution is credited to the capital account of the partner. Realisation Account is debited for such transaction.

2. In case of retirement, if full or part of the amount payable to the retiring partner still remains to be paid, and there is no agreement among the partners then retiring partner will get:

(i) Interest @ 6% p.a. on the balance amount.

(ii) Share of profit earned proportionate to his amount outstanding to total capital of the firm.

(iii) Interest @ 9% p.a. on the balance amount.

Which out of the following is correct:

(A) (i)

(B) (ii)

(D) Have a choice to get either (i) or (ii)

View Answer

Ans. (D) Have a choice to get either (i) or (ii)

Explanation: In case of no agreement, the retiring partner will either get interest @6% p.a. on the remaining amount or share of profit earned proportionate to the amount outstanding to the total capital of the firm.

A, B and C are partners. C expired on 18th December, 2019 and as per agreement surviving partners A and B directed the accountant to prepare financial statement as on 18th December, 2019 and accordingly the share of profits of C (decreased partner) was calculated as ₹ 2,00,000. Which account will be debited to transfer C’s share of profit:

(A) Profit and Loss Suspense Account

(B) Profit and Loss Appropriation Account

(D) None of these

View Answer

Ans. (B) Profit and Loss Appropriation Account

3. Assertion (A): On 1st October 2020, Kamini extended a loan to his partnership firm (without any agreement) of ₹10,000. His interest for the year ending 31st December, 2020 is ₹150.

Reason (R): In the absence of any agreement/provision in the partnership deed, provisions of Indian Partnership Act, 1932 would apply. Thus, interest on loan would be 6% p.a.

(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).

(D) Assertion (A) is incorrect but Reason (R) is correct.

View Answer

Ans. (A) Both Assertion (A) and Reason (R) are correct, and Reason (R) is the correct explanation of Assertion (A).

4. Aani, Bani and Chani are partners sharing ratio in 2:3:2. Aani guaranteed Chani a profit of ₹5,000. The firm earned ₹14,000. Aani’s share will be:

(A) ₹4,000

(B) ₹3,600

(D) ₹5,000

View Answer

Ans. (C) ₹3,000

If a partner draws a fixed amount on the first day of every month, then for what period the interest on total drawings is calculated?

(A) 5.5 months

(B) 6.5 months

(D) None of these

View Answer

Ans. (B) 6.5 months

5. Which of the following is not incorporated in the Partnership Act:

(A) Profit and loss are to be shared equally.

(B) No interest is to be charged on capital.

(D) All drawings are to be charged interest.

View Answer

Ans. (D) All drawings are to be charged interest.

Explanation: Partnership Act does not provide for charging interest on drawings made by partners. Drawings are the amounts withdrawn by partners from the partnership for personal use, and they are generally considered as a reduction in the partner’s capital or share profits.

6. Globe Ltd. issues 20,000, 9% debentures of ₹100 each at a discount of 5% redeemable at the end of 5 years at a premium of 6%. For what amount ‘Loss on Issue of Debentures Account will be debited?

(A) ₹1,00,000

(B) ₹1,20,000

(D) ₹2,20,000

View Answer

Ans. (D) ₹2,20,000

Explanation: Total loss = Discount on issue + Redemption premium

= ₹1,00,00 + ₹1,20,000

=₹2,20,000

Which of the following statement is incorrect:

(A) A company can issue redeemable debentures.

(B) A company can issue debentures with voting rights.

(D) A company can buy its own debentures and shares.

View Answer

Ans. (B) A company can issue debentures with voting rights.

Explanation: Debentures are a form of long-term debt instrument issued by companies to raise funds. They are essentially loans taken by the company from investors or the general public. While debentures provide a fixed rate of interest and a predetermined repayment period, they do not typically carry voting rights.

7. Assertion (A): Debentures save income tax.

Reason (R): Interest on debenture is a tax-deductible expenditure.

(A) Both assertion (A) and reason (R) are true and reason (R) is the correct explanation of assertion (A).

(B) Both assertion (A) and reason (R) are true but reason (R) is not the correct explanation of assertion (A).

(D) Assertion (A) is false but reason (R) is true.

View Answer

Ans. (A) Both assertion (A) and reason (R) are true and reason (R) is the correct explanation of assertion (A).

8. Roopa and Daya were partners in a firm. They admitted Navin as a new partner for 1/3rd share in the profits. On Navin’s admission, it was found that there was a claim against the firm for damages for which a liability for damages should be created. Which of the following accounts will be debited for creating the liability:

(A) Profit and Loss Appropriation Account

(B) Profit and Loss Account

(D) Profit and Loss Adjustment Account

View Answer

Ans. (C) Revaluation Account

Explanation: Any amount of liability is transferred to the Revaluation Account

At the time of retirement of a partner ‘Loss on Revaluation’ is debited:

(A) Only to the capital account of the retiring partner.

(B) To the capital accounts of all the partners in their old profit-sharing ratio.

(D) To the capital accounts of remaining partners in their old profit sharing ratio.

View Answer

Ans. (B) To the capital accounts of all the partners in their old profit-sharing ratio.

Explanation: Since loss is incurred for the period when retiring partner was also a partner of the firm, therefore, loss on revaluation will be debited to capital accounts of all partners in their old profit sharing ratio.

Read the following hypothetical situation and answer question nos. 9 and 10.

On 1.4.2019, they admitted C as a new partner. A surrendered 1/4th of his share in favour of C and B surrendered 1/9th from his share in favour of C. On 1.4.2020, D was admitted as a new partner for 1/6th share. On 1.4.2021, E was admitted for 1/5 share in the profits and it was decided that all the partners will share the future profits equally.

9. The profit sharing ratio of A, B, and C was:

(A) 9:20:7

(B) 8:21:7

(D) 7:22:7

View Answer

Ans. (A) 9:20:7

10. The profit sharing ratio of A, B, C and D was:

(A) 45:105:30:36

(B) 45:100:35:36

(D) 40:100:40:36

View Answer

Ans. (B) 45:100:35:36

11. When a new partner is admitted, the balance of ‘General Reserve’ appearing in the Balance Sheet is credited to:

(A) Profit and Loss Appropriation Account

(B) Capital Accounts of all partners

(D) Capital Accounts of old partners

View Answer

Ans. (D) Capital Accounts of old partners

Explanation: The amount of ‘General Reserve’ in the Balance Sheet during the restructuring of the firm is transferred to old partners’ capital accounts in their old profit-sharing ratio.

12. Kavita and Karan are partners in a firm sharing profits and losses in the ratio 4:1. On 1st April, 2021, they admitted Mohit for 1/4th share in the profits of the firm. The balance sheet of Kavita and Karan showed stock at ₹45,000. On admission of new partner, the stock was found undervalued by 10%. The Journal entry to give effect to the above adjustment on Mohit’s admission will be:

View Answer

Ans. Option (C)

Explanation: Change in the value of assets and liabilities are done through the revaluation account. As stock is undervalued by 10%, thus x-10% of

X = 45,000

x = 50,000 hence stock is undervalued by 5,000

This increase in stock of 5000 would be credited to revaluation A/c

13. On 1st April 2022, Aaradhya Limited issued 10,000, 8% Debentures of 100 each at a discount of 5%. What will be the total amount of interest for the year ending 31st March, 2023?

(A) ₹76,000

(B) ₹84,000

(D) ₹50,000

View Answer

Ans. (C) ₹80,000

Explanation: Interest = (10000 x ₹100 x 8)/100 = ₹80,000

14. A and B were partners in a firm. Their capitals at the end of the year ending on 31.3.2021 were ₹3,00,000 and ₹1,50,000 respectively. During the year B withdrew ₹10,000, which was debited to his capital account. Profit for the year ended 31st March, 2021 was ₹32,000 which was credited to their capital accounts. During the year B introduced additional capital ₹32,000. What was B’s capital on 1.4.2020?

(A) ₹1,50,000

(B) ₹1,60,000

(D) ₹1,52,000

View Answer

Ans. (C) ₹1,12,000

15. Ram, Siya and Riya are three partners in a firm. They are sharing profit and loss in the ratio of 3:2:1. On 11th Jan Siya died. The firm decided to value goodwill based on 3 years purchase of average of 5 years profit. The trading profit of the firm for the past five years before charging interest on capital was as under:

The capital of the firm stood as ₹1,00,000 and interest on capital of the firm stood ₹1,00,000 and interest on capital is given at 16%. What is Siya’s share of goodwill?

(A) ₹30,000

(B) ₹18,000

(D) ₹15,000

View Answer

Ans. (B) ₹18,000

Explanation: Weighted Average profit = (₹20,000 + ₹18,000 + ₹22,000 + ₹14,000 + ₹16,000)/5

= ₹90,000/5

= ₹18,000

Goodwill = ₹18,000 x 3 = ₹54,000

Siya’s share of goodwill = ₹54,000 x 2/6 = ₹18,000

Jeevan, Praveen and Jayesh are partners in firm sharing profits and losses in the ratio of 6:4:1. Jeevan guaranteed profit of ₹30,000 to Jayesh. Net Profit for the year ending 31st March, 2019 was ₹1,98,000. Jeevan’s share in the profit of the firm will be:

(A) ₹60,000

(B) ₹30,000

(D) ₹90,000

View Answer

Ans. (C) ₹96,000

Explanation: Jayesh’s share = ₹1,98,000 x 1/11 = ₹18,000

Deficiency = ₹30,000 – ₹18,000 = ₹12,000

Jeevan’s share = ₹1,98,000 x 6/11 = ₹1,08,000

After deficiency = ₹1,08,000 – ₹12,000 = ₹96,000

16. Sharma and Verma are partners in a firm. Sharma withdrew ₹1,600 per month at the beginning of every month for 6 months ending on 31st December, 2017. Verma withdrew ₹1,600 per month at the end of every month for 6 months ending on 31st December, 2017. Calculate interest on drawings @15% per annum on 31st December, 2017.

(A) Sharma = 640, Verma= ₹560

(B) Sharma = 360, Verma = ₹440

(D) Sharma = 420, Verma = ₹300

View Answer

Ans. (D) Sharma = 420, Verma = ₹300

17. On April 1, 2018, a firm had assets of ₹1,00,000 excluding stock of ₹20,000. The current liabilities were ₹10,000. If the normal rate of return is 8%, and goodwill of the firm valued at ₹60,000 at four years’ purchase of super profit, find the actual profits of the firm.

View Answer

Ans. Total Assets = ₹1,20,000

Capital Employed = Total Assets – Current Liabilities

= ₹1,20,000 – ₹10,000

= ₹1,10,000

Normal Profits = 8% of ₹1,10,000 = ₹8,800

Goodwill = Super Profits x No of Years Purchase

Super Profits = Actual Average Profits – Normal Profits

Given,

Goodwill = ₹60,000

₹60,000 = 4(Average Actual Profits – Normal Profit)

₹15,000 = Average Actual Profits – ₹8,800

Average Actual Profits = ₹15,500 + ₹8,800

= ₹23,800

18. Rekha, Sunita and Teena are partners in a firm sharing profits in the ratio of 3:2:1. Samiksha joins the firm. Rekha surrenders 1/4th of her share; Sunita surrenders 1/3rd of her share and Teena surrenders 1/5th of her share in favour of Samiksha. Find the new profit-sharing ratio.

View Answer

Ans. Rekha’s surrender for Samiksha = ¼ x 3/6 = 3/24

Sunita’s surrender for Samiksha = 1/3 x 2/6 = 2/18

Teena’s surrender for Samiksha = 1/5 x 1/6 = 1/30

New share of Rekha = 3/6 – 3/24 = 9/24

New share of Sunita = 2/6 – 2/18 = 4/18

New share of Teena = 1/6 – 1/30 = 4/30

Share of Samiksha = 3/24 + 2/18 + 1/30 = 97/360

New Ratio = 9/24: 4/18: 4/30:97/360

= 135:80:48:97

19. King Ltd took over assets of ₹25,00,000 and liabilities of ₹6,00,000 of Queen Ltd. King Ltd paid the purchase consideration by issuing ₹10,000 equity shares of ₹100 each at a premium of 10% and ₹11,00,000 by a Bank Draft. Calculate purchase consideration and pass necessary Journal entries in the books of King Ltd.

View Answer

Ans. Calculation of Purchase Consideration (₹)

Nominal Value of Shares issued

= 10,000 x 100 = 10,00,000

Securities premium Reserve = 1,00,000

Bank draft = 11,00,000

Purchase consideration = 22,00,000

S. Singh Limited obtained a loan of ₹5,00,000 from State Bank of India @ 10% interest. The company issued ₹7,50,000, 10% debentures of ₹100/- each, in favour of State Bank of India as collateral security. Pass necessary journal entries for the above transactions:

(i) When company decided not to record the issue of 10% Debentures as collateral security.

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Ans.

(ii) When company decided to record the issue of 10% Debentures as collateral security.

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Ans.

20. Maanika, Bhavi and Komal are partners sharing profits in the ratio of 6:4:1. Komal is guaranteed a minimum profit of ₹2,00,000. The firm incurred a loss of ₹22,00,000 for the year ended 31st March,2018. Pass necessary journal entry regarding deficiency borne by Maanika and Bhavi and prepare Profit and Loss Appropriation Account.

View Answer

Ans.

Working note:

Loss of the firm = ₹22,00,000

Komal’s share of loss = ₹22,00,000 x 1/11 = ₹2,00,000

Guaranteed minimum profit = ₹2,00,000

Total deficiency to be borne by Maanika and Bhavi i.e., (Share of Loss + share of Guranteed Profit)

= ₹2,00,000 + ₹2,00,000

= ₹4,00,000

The partners of a firm, Alia, Bhanu and Chand distributed the profits for the year ended 31st March, 2017, ₹80,000 in the ratio of 3:3:2 without providing for the following adjustments:

(i) Alia and Chand were entitled to a salary of ₹1,500 each p.m.

(ii) Bhanu was entitled for a salary of ₹4,000 p.a.

Pass the necessary Journal entry for the above adjustments in the books of the firm. Show workings clearly.

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Ans.

21. Bliss Products Ltd. registered with capital of ₹90,00,000 divided into 90,000 equity shares of ₹100 each. The company issued prospectus inviting applications for 50,000 equity shares of ₹100 each payable as ₹20 on application, ₹30 on allotment, ₹20 on first call and balance on second call. Applications were received for ₹40,000 shares. Raman to whom 1600 shares were allotted failed to pay final call money and these shares were forfeited. Of the forfeited shares, 600 shares were reissued to Sukhman, credited as fully paid for ₹90 per share. Present the Share Capital as per Schedule III of Companies Act, 2013.

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Ans.

22. The firm of R, K and S was dissolved on 31.3.2019. Pass necessary journal entries for the following after various assets (other than cash and bank) and the third party liabilities had been transferred to realisation account.

(i) Kagreed to pay off his wife’s loan of ₹6,000.

(ii) Total creditors of the firm were ₹40,000. Creditors worth ₹10,000 were given a piece of furniture costing ₹8,000 in full and final settlement. Remaining creditors allowed a discount of 10%.

(iii) A machine that was not recorded in the books was taken over by K at ₹3,000 whereas its expected value was ₹5,000.

(iv) The firm had a debit balance of ₹15,000 in the Profit and Loss A/c on the date of dissolution.

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Ans.

23. Surya Ltd with a registered capital of 10,00,000 equity shares of ₹10 each, issued 1,00,000 equity shares payable ₹3 on application, ₹2 on allotment, ₹3 on first call and ₹2 on second and final call. The amount due on allotment was duly received except Mr. X holding 6,000 shares. His shares were immediately forfeited. On the first call being made, Mr. Y holding 5,000 equity shares paid the entire balance on his holding. Second call was not made. Pass necessary journal entries to record the transactions.

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Ans.

(i) Nidhi Ltd. issued 2,000 shares of 100 each. All the money was received except on 200 shares on which only ₹90 per share were received. These shares were forfeited and out of the forfeited shares 100 shares were reissued at ₹80 each as fully paid up. Pass necessary Journal entries for the above transactions and prepare Forfeited Share Account.

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Ans.

(ii) Complete the following Journal Entries:

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Ans.

24. Gautam and Yashica are partners in a firm, sharing profits and losses in 3:1 respectively. The balance sheet of the firm as on 31^st March, 2018 was as follows:

Asma admitted as a partner for 3/8th share in the profits with a capital of ₹2,10,000 and ₹50,000 for her share of goodwill. It was decided that:

New profit sharing ratio will be 3:2:3.

Machinery will depreciated by 10% and Furniture by ₹5,000.

Stock was revalued at ₹2,10,000.

Provision for doubtful debts is to be created at 10% of debtors.

The capitals of all the partners were to be in the new profit sharing ratio on the basis of capital of new partner, any adjustment to be done through current accounts.

Prepare Partners Capital Account and the Balance Sheet of the new firm.

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Ans.

X, Y and Z were in partnership sharing profits in proportion to their capitals. Their Balance Sheet as on 31st March, 2018 was as follows:

On the above date, Y retired owing to ill health. The following adjustments were agreed upon for calculation of amount due to Y.

(i) Provision for Doubtful Debts to be increased to 10% of Debtors.

(ii) Goodwill of the firm be valued at ₹36,000 and be adjusted into Capital Accounts of X and Z, who will share profits in future in the ratio of 3:1.

(iii) Included in the value of Sundry Creditors was ₹2,500 for an outstanding legal claim, which will not arise.

(iv) X and Z also decided that the total capital of the new firm will be ₹1,20,000 in their profit sharing ratio. Actual cash to be brought in or to be paid off as the case may be.

(v) Y to be paid ₹9,000 immediately and balance to be transferred to his Loan Account.

Prepare Partner’s Capital Accounts and Balance Sheet of the new firm after Y’s retirement.

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Ans.

25. Danish, Ana and Pranjal are partners in a firm sharing profits and losses in the ratio of 5:3:2. Their books are closed on March 31st every year. Danish died on September 30th, 2019, The executors of Danish are entitled to:

(i) His share of capital i.e. ₹5,00,000 along with his share of goodwill. The total goodwill of the firm was valued at ₹60,000.

(ii) His share of profit up to his date of death on the basis of sales till date of death. Sales for the year ended March 31, 2019 was ₹2,00,000 and profit for the same year was 10% on sales. Sales shows a growth trend of 20% and percentage of profit earning is reduced by 1%.

(iii) Amount payable to Danish was transferred to his executors.

Pass necessary Journal Entries and show the workings clearly.

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Ans.

26. On 1st April, 2016 Tata Ltd. issued ₹10,00,000, 15% Debentures of ₹100 each at 8% discount payable as ₹40 on application and the balance amount on allotment. These debentures were to be redeemed at premium of which 5% after five years. All the debentures were subscribed for by public. You are required to pass the Journal Entries in the first year of debenture issue (including interest on debenture) except the entry for writing off loss on issue of debentures.

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Ans.

SECTION – B

(Analysis of Financial Statements)

27. In which of the following ratios, both figures can be calculated using are from Balance Sheet:

(1) Current Ratio

(2) Quick Ratio

(3) Return on Investment

(4) Operating Ratio

(A) (1) only

(B) (1) and (2) only

(D) (1), (2) and (4) only

View Answer

Ans. (B) (1) and (2) only

Explanation: Both the current ratio and the quick ratio are financial ratios that can be calculated using figures from the balance sheet. Current ratio is calculated by dividing current assets by current liabilities, while the quick ratio (also known as the acid-test ratio) is calculated by dividing quick ratio (current assets excluding inventory) by current liabilities.

Which of the following should be shown in a company’s Balance Sheet first of all as per prescribed order of assets in Companies Act, 2013:

(A) Non-current Assets

(B) Goodwill

(D) Long-term Borrowings

View Answer

Ans. (A) Non-current Assets

Explanation: Non-current assets are long-term assets that are not expected to be converted into cash within one year. These can include property, plant and equipment, intangible assets, investments, etc. Non-current assets should be shown first in a company’s balance sheet, followed by current assets.

28. If the current ratio is 1.6:1, which of the following will result in decrease in this ratio:

(A) Cash paid to trade payables

(B) Purchase of stock in trade on credit

(D) Purchase of a fixed asset by taking a long-term loan

View Answer

Ans. (B) Purchase of stock in trade on credit

Explanation:

Lets say,

Purchase of stock in trade on credit: ₹5,000

Current Assets: ₹16,000

Current liabilities: ₹10,000

Current Ratio = Current Assets/Current Liabilities

= (₹16,000 + ₹5,000)/(₹10,000 + ₹5,000) = ₹21,000/₹15,000

= 1:4:1

29. Statement I: Purchase of computer will be shown as outflow under ‘Cash flows from Operating Activities’.

Statement II: Interest paid on borrowings will be shown as outflow under ‘Cash flows from Investing Activities’.

(A) Both Statements are correct.

(B) Both Statements are incorrect.

(D) Statement I is incorrect and Statement I is correct.

View Answer

Ans. (B) Both Statements are incorrect.

Explanation: Purchase of computer will be shown as outflow under ‘Cash flows from Investing Activities’. Interest paid on borrowings will be shown as outflow under ‘Cash flows from Financing Activities’

Which of the following investing activities will result into inflow of cash:

(A) Proceeds from sale of non-current investments

(B) Purchase of fixed assets

(D) Cash proceeds from issue of bonds

View Answer

Ans. (A) Proceeds from sale of non-current investments

Explanation: When non-current investments are sold, the company receives cash from the buyer, which increases the company’s cash position.

30. From the following information calculate the amount the cash flows from Investing Activities:

Additional Information:

(i) Depreciation charged on Plant and Machinery ₹50,000.

(ii) Plant and Machinery with a book value of ₹60,000 was sold for ₹40,000.

(A) Outflow of ₹2,20,000

(B) Inflow of ₹2,20,000

(D) Inflow of ₹1,50,000

View Answer

Ans. (A) Outflow of ₹2,20,000

31. Classify the following items under Major heads and Sub heads (if any) in the Balance Sheet of a Company as per Schedule III of the Companies Act 2013.