1 - Web viewThe provisions of Indian Partnership Act, 1932 which are applicable in the absence of Partnersship Deed

KENDRIYA VIDYALAYA SANGATHAN HYDERABAD REGION

QUESTION BANK MATERIAL CLASS-XII 2015-16

Class: XII

Sub: ACCOUNTANCY

KENDRIYA VIDYALAYA KHAMMAM

1. ACCOUNTING FOR PARTNERSHIP FIRMS

IMPORTANT MODELS/QUESTION ESPECIALLY FOR SLOW LEARNERS/LOW ACHIEVEERS IN ORDER OF PRIORITY:This chapter is important for slow learners. It requires only understanding of basic concepts only that this chapter carries maxmimum marks of 35 out of 80

The provisions of Indian Partnership Act, 1932 which are applicable in the absence of Partnersship Deed.

Max. no. of partners increased to 50 Past adjustments – writing an adjustment entry involving interest on capital, interest on drawings,

change in profit sharing ratio. Preparation of Profit and Loss Appropriation a/c. Attempting Value base questions . In Admission of a Partner two important models i) Adjustment of old partners’ capitals and ii)

Calculation of new partner’s capital with the help of new ratio and old partners capitals. Question on hidden goodwill. Special focus on WORKMEN COMPENSATION FUND across all the models of partnership accounts. A question on journal entries in dissolution of partnership. A question on preparation of memorandum balance sheet in dissolution of partnership firm. A question on death of a partner for 6 marks. A question on guarantee of profit to a partner A question on goodwill treatment especially in retirement/death of a partner: Continuing Partners

Capital accounts Dr. to Outgoing Partner’s Capital a/c in gaining ratio. ‘Model’

1. Define Partnership.1M

The relation between the partners those who have agreed to share the profits of a business carried on by all or anyone of them acting for all.

2. 1. X, Y and Z were partners sharing profits in the ratio of ½, 3/10 and 1/5. X retired from the firm. Calculate the gaining ratio of the remaining partners.1M

3. Dissolution of partnership does not mean that dissolution of partnership firm. Do you agree? If so why?1M

4. Mr. M is admitted as a new partner for 1/5 share in the profits of a firm by Kumar and Asish . What is the sacrificing Ratio?1M

5. State any one purpose for admitting a new partner in a firm.1M

6. A, B, C and D are partners in a firm sharing profits and losses in the ratio of 5:4:3:2. C retired. Calculate the new as well as gaining ratio of A, B and D in the new firm.1M

7. What do you mean be ‘Gaining Ratio’?1M

8. A partnership deed provides for the payment of interest on capital but there was a loss instead of profits during the year 2010-11. At what rate will the interest on capital be allowed?

1M

9. Give the average period in months for charging interest on drawings for the same amount withdrawn at the beginning of each quarter.1M

11. Where would you record “Interest on Drawings’ when capitals are fluctuating? 1M

12. A and B are partners in a firm. A withdraws Rs.5000 for personal use at the end of every month. The partnership deed is silent regarding the interest on drawings. Calculate interest on drawings. 1M

13. X and Y are partners in a firm. They admitted Z as a new partner for 20% share in profits. Calculate the new profit sharing ratio after Z’s admission. 1M

14. Give one difference between fixed capital account and fluctuating capital account. 1M

15. List two items that may appear on the credit side of Profit and Loss Appropriation A/C

1M

16. Give the formula for calculating ‘gaining share’ of a partner in a partnership firm.

1M

17. A and B are partners in a firm. C is admitted for 25% share . What is the ratio in which A and B will sacrifice their share in favour of C? 1M

18. Distinguish between Dissolution of partnership and Dissolution of Partnership Firm.3M.

19. Mukesh and Rakesh are partners in a firm sharing profits in the ratio of 3:2. They admitted Kumar for 1/6th share in the profits of the firm with a guaranteed profit of Rs.10,000 per annum. On 31 st

March, 2014, the profit of the firm was Rs.54,000. Prepare Profit and Loss Appropriation A/c to show the distribution of profits of the firm.3M

20. A withdraws Rs.1,000 per month on the beginning of every month as drawings whereas B withdraws Rs.1,000 per month at the end of every month. Calculate interest on Drawings of Partners A and B.

3M

21. P and Q are partners in a firm having fixed capitals of Rs.2,00,000 and Rs.3,00,000 respectively. They admitted R as a new partner. R brings in Rs.1,25,000 as his share of capital for 1/6 th share of profits. Calculate the total goodwill of the firm.3M

22. Please mention the provisions of the Indian Partnership Act, 1932 in respect of the following items:

i) Profit-sharing Ratio

ii) Salary to a Partner

iii) Interest on Capital.3M

23. Why do you revalue assets and reassess the value of liabilities at the time of Admission of a Partner?

3M

24. A and B sharing profits and losses in the ratio of 3:2 and they admitted C for 1/5 share in the profits. Calculate new profit sharing ratio of A, B and C.3M

25. A and B are partners in a firm. They admitted C as a new partner of 1/4 th share in the profits. He brought Rs.15,000 as his capital and Rs.10,000 as his share of Goodwill premium. Write journal entries.

3M

26. X,Y and Z are partners in a firm sharing profits and losses equally. X retired. Firm’s goodwill as on that date is Rs.27,000. Pass an adjustment entry for treatment of goodwill without opening a goodwill a/c.

3M

27. M, N and O are partners sharing profits and losses in the ratio of 3:2:1. M retired and the new ratio of N and O is agreed as 1:2. Calculate Sacrificing/Gaining ratio as the case may be.3M

28.

3M

29. Lalan and Balan were partners in a firm sharing profits in the ratio of 3:2. Their fixed capitals on 1-4-2010 were: Lalan Rs.1,00,000 and Balan Rs.2,00,000. They agreed to allow interest on capital @12% per annum and to charge on drawings @15% per annum. The firm earned a profit before all above adjustments of Rs.30,000 for the year ended 31-3-2011. The drawings of Lalan and Balan during the year were Rs.3,000 and Rs.5,000 respectively. Showing your calculations clearly, prepare Profit and Loss Appropriation A/c of Lalan and Balan. The interest on capital will be allowed even if the firm incurs a loss.4M

30. Sun, Earth and Moon are partners in a firm sharing profits and losses equally. Their fixed capital are Rs. 2,00,000, Rs.1,50,000 and Rs.1,00.000 respectively. The net profit earned during the year 2014-15 Rs. 45,000 was distributed without providing interest on capital @8% p.a. Pass an adjustment journal entry .4M

31. A and B entered into partnership on 1st April 2009 without any partnership deed. They introduced capitals of Rs.5,00,000 and Rs.3,00,000 respectively. On 31st October 2009, A advanced Rs.2,00,000 by way of loan to the firm without any agreement as to interest.

The profit and loss account for the year ended 31-3-2010 showed a profit of Rs.4,30,000 but the partners could not agree upon the amount of interest on loan to be charged and the basis of division of profits. Pass a journal entry for the distribution of the profit between the partners and prepare the Capital A/cs of both the partners and Loan A/c of A. 4M

32. A and B are sharing profits and losses in the ratio of 3:2. They admitted C into the firm for 1/6 th share in the profits. C’s share of profit is guaranteed a minimum sum of Rs. 10,000 per annum. The profit for the year ended 31-3-2011 was Rs.54,000. Show the distribution of profits among A, B and C. 4M

33. Kumar and Raja were partners in a firm sharing profits in the ratio of 7:3. Their fixed capitals were Kumar Rs.900,000 and Raja Rs.4,00,000. The partnership deed provided for the following but the profit for the year was distributed without providing for:

a) Interest on capital @9% per annum.

b) Kumar’s salary Rs.50,000 per year and Raja’s salary Rs.3,000 per month.

The profit for the year ended 31-3-2007 was Rs.2,78,000.

Pass the adjustment entry.5M

34. A, B and C were partners in a firm sharing profits in the ratio of 5:3:2 . On1-1-2005 they decided to share the profits equally. It was also agreed that the change be carried out retrospectively for the last 4 years. The profits for the last 5 years were as follows:

2000-Rs.50,000, 2001-Rs.40,000, 2002- Rs.10,000(loss), 2003-Rs.60,000 and

2004-Rs.1,00,000 Pass necessary adjustment entry. 5M

35. On March31st, 2009 after the close of books of accounts , the capital accounts of A,B and C stood at Rs.24,000, Rs.20,000 and Rs.12,000 respectively. The profit for the year Rs.36,000 was distributed equally. Subsequently it was discovered that interest on capital @ 5% p.a had been omitted. Pass an adjustment entry. 4M

36. Singh and Gupta decided to start a partnership firm to manufacture low cost jute bags as plastic bags were creating many environmental problems. They contributed capitals of Rs.1,00,000 and Rs.50,000 on 1st April, 2012 for this. Singh expressed his willingness to admit Shakti as a partner without capital, who is specially abled but a very creative and intelligent friend of his. Gupta agreed to this. The terms of partnership were as follows:

i) Singh and Shakti will share profits in the ratio of 2:2:1.

ii) Interest on capital will be provided @6%p.a.

Due to shortage of capital, Singh contributed Rs.25,000 on 30th September, 2012 and Gupta contributed Rs.10,000 on 1st January, 2013 as additional capital. The profit of the firm for the year ended 31st March, 2013 was Rs.1,68,900.

a) Identify any two values which the firm wants to communicate to the society.b) Prepare Profit and Loss Appropriation Account for the year ending 31 st March, 2013.

4M

37. A, B and C are partners in a firm. They have omitted interest on capital @10% p.a for three years ended 31st March, 2009. Their fixed capitals on which interest was to be calculated throughout

were:

A Rs.1,00,000

B Rs. 80,000

C Rs. 70,000

Give the necessary adjusting journal entry with working notes. 4M

38. Monika, Sonika and Manasa were partners in a firm sharing profits in the ratio of 2:2:1 respectively. On 31st March, 2014 their Balance Sheet was as under:

Liabilities Amount Rs. Assets Amount Rs.

Capitals:

Monica 1,80,000

Sonika 1,50,000

Manasa 90,000

Reserve Fund

Creditors

4,20.000

1,50,000

2,40,000

Fixed Assets

Stock

Debtors

Cash

3,60,000

60,000

1,20,000

2,70,000

8,10,000 8,10,000

Sonika died on 30th June, 2014. It was agreed between her executors and the remaining partners that

a) Goodwill of the firm be valued at 3 years’ purchase of average profits for the last four years. The average profits were Rs.2,00,000.

b) Interest on capital be provided at 12% p.a.

c) Her share in the profits upto the date of death will be calculated on the basis of average profits for the last four years.

Prepare Sonika’s Capital Account as on 30th June, 2014.4M

39. A,B and C were partners in a firm having capitals of Rs.80,000;Rs.80,000 and Rs.40,000 respectively. Their current account balances were A: Rs.10,000; B Rs.5,000 and C Rs.2,000(Dr), According to the partnership deed the partners were entitled to interest on capital @5% p.a. C being the working partner was also entitled to a salary of Rs.6,000 p.a. The profits were to be divided as follows:

(a) The first Rs.20,000 in proportion to their capitals

(b) Next Rs.30,000 in the ratio of 5:3:2

(c ) Remaining profits to be shared equally

The firm made a profit of Rs.1,56,000 before charging any of the above items. Prepare the profit and Loss

Appropriation Account and pass the necessary journal entry for the appropriation of profits.

4M

40. A,B and C were partners in a firm. Their capitals were A Rs.30,000, B Rs.20,000 and C Rs.10,000 respectively. According to the partnership deed, they were entitled to an interest on capital @ 5% p.a.

In addition A was also entitled to draw a salary of Rs.500 per month. B was entitled to a commission of 5% on the profits after charging the interest on capital, but before charging the salary payable to A. The net profits for the year were Rs.30,000 distributed in the ratio of their capital without providing any of the

above adjustments. The profits were to be shared in the ratio of 2:3:5. Pass necessary adjustment entry,

showing your working clearly. 5M

41. A, B and C are partners in a firm sharing profits in the ratio of 5:3:2 respectively. Their Balance Sheet as on 31st March, 2014 was as follows:


CreditorsReserveCapitals:ABC

12,00010,000

30,00020,00015,000

-------------87,000

Cash DebtorsStockMachineryBuildingsPatents

13,0008,000

10,00030,00020,000

6,000------------

87,000

On 1st October, 2014, due to illness B died. It was agreed between the firm and B’s Executors that the amount due to B will be used for construction of a community hall in the village. As per the agreement:

i) Goodwill is to be valued at two years’ purchase of the average profits of previous five years, which were: 2010 Rs.10,000; 2011 Rs.13,000; 2012 Rs.12,000, 2013 Rs.15,000 and 2014

Rs.20,000.

ii) Patents were valued at Rs.8,000; Machinery at Rs.28,000 and Buildings at Rs.30,000.

iii) B’s share of profit till the date of his death will be calculated on the basis of profit of the year 2014.

iv) Interest on capital will be provided at 10% p.a.

v) Amount due to B’s executors will be transferred to Charity Account.

a) Prepare B’s Capital account to be presented to his executor and

b) Identify any one value being highlighted in the question.6M

42. A, B and C were partners in a firm. On 1st April, 2013 their capitals stood as Rs.5,00,000, Rs.2,50,000 and Rs.2,50,000 respectively. As per provisions of the partnership deed:

i) C was entitled for a salary of Rs.5,000 per month.

ii) A was entitled for a commission of Rs.80,000 p.a

iii) Partners were entitled to interest on capital @6% p.a.

iv) Partners will share profits in the ratio of capitals.

Net profits for the year ended 31.03.2014 was Rs.3,00,000 which was distributed equally, without taking into consideration the above provisions. Showing your working clearly, pass an adjustment entry for the above.

6M

43. Write journal entries for the following: G and H are partners in a firm. They admitted I as a partner for 1/4th share.

a) General Reserve appears in the B/S of old firm Rs.20,000

b) Profit and Loss A/c appears on the assets side of the B/S of the firm before admission is Rs.30,000

c) Goodwill appears Rs.10,000 before admission, it needs to be written off6M

44. A and B share profits and losses in the ratio of 5:2. They have decided to dissolve the firm. Assets and external liabilities have been transferred to Realisation A/c. Pass the journal entries to effect the

following:

(a) Bank loan of Rs.12,000 is paid off.

(b) A was to bear all expenses of realization for which he is given a commission of Rs.400

(c) Deferred Advertisement Expenditure A/c appeared in the books at Rs.28,000

(d) Stock worth Rs.1,600 was taken over by B at Rs.1,200

(e) An unrecorded computer realized Rs.7,000

(f) There was an outstanding bill for Rs.2,000 which was paid off. 6M

45. L, M and N were partners in a firm sharing profits in the ratio of 2:1:1. On 1st April,2014 their Balance Sheet was as follows:

Liabilities Amount Rs. Assets Amount Rs.Capitals:L 6,00,000M 4,80,000N 4,80,000General Reserve

15,600004,40000

LandBuildingsFurnitureDebtors 4,00,000

8,00,000

6,00,0002,40,000

Workmen’sCompensation FundCreditos 3,60,000

2,40,000

Less: Provision 20,000StockCash

3,80,0004,40,0001,40,000

26,00,000 26,00,000

On the above date N retired. The following were agreed:

a) Goodwill of the firm was valued at Rs.6,00,000b) Land was to be appreciated by 40% and Building was to be depreciated by Rs.1,00,000c) Furniture was to be depreciated by Rs.30,000d) The liabilities for workmen’s Compensation Fund was determined at Rs.1,60,000.e) Amount payable to N was transferred to his loan account.f) Capitals of L and M were to be adjusted in their new profit sharing ratio and for this purpose

current accounts of the partners will be opened.

Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm.8M

46. Prashant and Rajesh were partners in a firm sharing profits in the ratio of 3:2 . In spite of repeated reminders by the authorities, they kept dumping hazardous material into a nearby river. The Court ordered for the dissolution of their partnership firm on 31st March, 2014. Prashant was deputed to realize the assets and to pay the liabilities. He was paid Rs.1,000 as commission for his services. The financial position of the firm on 31st March 2014 was as follows:

Liabilities Amount Rs. Assets Amount Rs.CreditorsMrs.Prashant’s LoanRajesh’s LoanInvestment Fluctuation FundCapitals:Prashant 42,000Rajesh 42,000

80,00040,00024,000

8,000

84,000

BuildingsInvestmentsDebtors 34,000Less: Provision 4,000Bills ReceivableCash Profit and Loss A/cGoodwill

1,2000030.600

30,00037,400

6,0008,0004,000

2,36,000 2,36,000

Following was agreed upon:

i) Prashant agreed to pay off his wife’s loan.ii) Debtors realized Rs.24,000iii) Rajesh took away all investments at Rs.27,000iv) Buildings realized Rs.1,52,000v) Creditors were payable after 2 months. They were paid immediately at 10 % discount.vi) Bills Receivable were settled at a loss of Rs.1,400vii) Realisation expenses amounted to Rs.2,500.

Prepare Realisation Account, Partners’ Capital Accounts and Cash Account to close the books of the firm identify the valued being conveyed in the question.8M

47. Sarthak and Vansh are partners sharing profits in the ratio of 2:1. Since both of them are specially abled sometimes they find it difficult to run the business on their own. Mansi, a common friend, decides to help them. Therefore they admit her into partnership for 1/3rd share in profits. She brings Rs.60,000 for goodwill and proportionate capital. At the time of admission of Mansi, the Balance Sheet of Sarthak and Vansh was as under:

Liabilities Amount Rs. Assets Amount Rs.Capital Accounts:Sarthak 70,000Vansh 60,000General ReserveBank LoanCreditos

1,30,00018,00018,00072,000

PlantFurnitureInvestmentsStockDebtors 38,000Less: Provision 4,000Cash

66,00030,00040,00046,000

34,00022,000

2,38,000 2,38,000

It was agreed to:

i) Reduce the value of stock by Rs.10,000ii) Plant is to be valued at Rs.80,000iii) An amount of Rs.3,000 included in creditors was not payable.iv) Half of the investments were taken over by Sarthak and remaining were valued at Rs.25,000.

Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of reconstituted firm. Identify the value being conveyed in the question.

8M

48. Alfa and Beta were partners in a firm. They were trading in artificial limbs. On 1 st April, 2014 they admitted Gama, a good friend of Beta into the partnership. Gama lost his one hand in an accident and Alfa and Beta decided to give one artificial hand free of cost to Gama. The Balance Sheet of Alfa and

Beta as at 31st, March, 2014 was as follows:


Provision for Doubtful DebtsWorkmen’s Compensation FundOutstanding ExpensesCreditorsCapitals:Alfa 5,00,000Beta 6,00,000

40,00056,00030,000

3,00,000

11,00,000--------------15,26,000

CashSundry DebtorsStock MachineryProfit and Loss A/c

1,00,0008,00,0002,00,0003,86,000

40,000

------------15,26,000

Gama was admitted in to the firm on the following terms:i) Gama will bring in Rs.4,00,000 as his share of capital, but he was unable to bring any amount for goodwill.ii) The new profit sharing ratio between Alfa, Beta and Gama will be 3:2:1

iii) Claim on account of workmen compensation was Rs.30,000

iv) To write off bad debts amounted to Rs.40,000

v) Creditors were paid Rs.20,000 more.

vi) Outstanding expenses be brought down to Rs.12,000

vii) Rs.20,000 be provided for an unforeseen liability.

viii) Goodwill of the firm was valued at Rs.1,80,000

Prepare Revaluation A/C, Capital Accounts of Partners and the Opening Balance Sheet of the new firm. Also identify any one value which the p0artners wanted to communicate to the society.

8M

49. Kumar, Shyam and Ratan were partners in a firm sharing profits in the ratio of 5:3:2 respectively. They are

dealing with tobacco products, because of which many people are getting mouth cancer. Even the government is making more and more stringent laws day by day to reduce this menace. So, they decided to dissolve the firm with effect from 01.04.2014. On that date the Balance Sheet of the firm was as follows:


Capitals:KumarShyamRatanCreditors

68,00050,00027,000

1,20,000

------------2,65,000

PlantFurnitureMotor VanStockDebtorsCash

80,00045,00025,00030,00071,00014,000

------------265,000

The dissolution resulted in the following:i) Plant of Rs.40,000 was taken over by Kumar at an agreed value of Rs.45,000 and remaining plant realized Rs.50,000ii) Furniture realized Rs.40,000

iii) Motor Van was taken over by Shyam for Rs.30,000

iv) Debtors realized Rs.1,000 less.

v) Creditors for Rs.20,000 were untraceable and the remaining creditors were paid in full.

vi) Realisation expenses amounted to Rs.5,000

50.. Atal and Madan were partners in a firm sharing profits in the ratio of 5:3. On 31.3.2011 they admitted Mehra as a new partner for 1/5th share in the profits. The new profit sharing ratio was 5:3:2. On Mehra’s admission the Balance Sheet of the firm was as follows:

Liabilities AmountRs.

Assets AmountRs.

Capitala:

Atal 1,50,000

Madan 90,000

Provision for bad debts

Creditors

Workmen Compensation Fund

2,40,000

1,200

20,000

32,000

2,93,200

Land and Buildings

Machinery

Patents

Stock

Debtors

Cash

Profit and Loss Account

150,000

40,000

5,000

27,000

47,000

4,200

20,000

2,93,200

On Mehra’s admission it was agreed that

i) Mehra will bring Rs.40,000 as his capital and Rs.16,000 for his share of goodwill premium, half of which was withdrawn by Atal and Madan.

ii) A provision of 2 ½ % for bad and doubtful debts was to be created.

iii) Included in the sundry creditors was an item of Rs.2,500 which was not to be paid.

iv) A provision was to be made for an outstanding bill for electricity Rs.3,000

v) A claim of Rs.325 for damages against the firm was likely to be admitted. Provision for the same was to be made.

After the above adjustments, the capitals of Atal and Madan were to be adjusted on the basis of Mehra’s capital. Actual cash was to be brought in or to be paid off to Atal and Madan as the case may be.

Prepare Revaluation A/c, Capital A/cs and Balance Sheet of the new firm.8M

51. A B and C were in partnership sharing profits in proportion to their capitals. Their Balance Sheet on 31.3.2011 was as follows:

Liabilities Amount

Rs.

Assets Amount

Rs.

Creditors

Reserve

A’s Capital

B’s Capital

C’s Capital

15,600

6,000

90,000

60,000

30,000

2,01,600

Buildings

Machinery

Stock

Debtors 20,000

Less: Provision for DD 400

Cash

1,00,000

48,000

18,000

19,600

16,000

2,01,600

On the above date B retired owing to ill health and the following adjustments were agreed upon:

a) Buildings be appreciated by 10%.

b) Provision for DD be increased to 5% .

c) Machinery be depreciated by 15%

d) Goodwill of the firm be valued at Rs.36,000 and be adjusted into the capital A/c’s of A and C who will share profits in future in the ratio of 3:1.

e) A Provision be made for outstanding repairs bill of Rs.3,000

f) Included in the value of creditors is Rs.1,800 for an outstanding legal claim, which is not likely to arise.

g) Out of the insurance premium paid Rs.2,000 is for the next year. The amout was debited to P&L A/c

h) The partners decide to fix the capital of the new firm as Rs.1,20,000 in the profit sharing ratio.

i) B to be paid Rs.9,000 in cash and the balance to be transferred to his Loan A/c.

Prepare the Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the new firm after B’s retirement.

8M

52. A, B and C were partners in firm sharing profits in 2:2:1 ratio. On 31-3-2010 B retired from the firm. On the date of B’s retirement the B/S of the firm was as follows:


Creditors

Bills Payable

Outstanding Rent

54,000

24,000

4,400

Bank

Debtors 12,000

Less: Provision 800

55,200

11,200

Provision for legal claims

Capitals:

A 92,000

B 60,000

C 40,000

-------------

12,000

1,92,000

2,86,400

----------

Stock

Furniture

Premises

18,000

8,000

1,94,000

2,86400

On B’s retirement it was agreed that :

a) Premises will be appreciated by 5% and furniture will be appreciated by Rs.2,000 . Stock will be depreciated by 10%.

b) Provision for bad debts was to be made at 5% on debtors and provison for legal damages to be made for Rs.14,400.

c) Goodwill of the firm was valued at Rs.48,000

d) Rs.50,000 from B’s capital A/c will be transferred to his loan account and the balance will be paid by cheque.

Prepare revaluation account, partners’ capital accounts and the Balance Sheet of A&C after B’s retirement.

8M

53. P and Q were partners in a firm . On 31st March, 2010 their B/S was as under:


Bills Payable

Creditors

General Reserve

5,000

39,000

16,000

Cash

Stock

Debtors 49,000

15,000

45,000

Capital Accounts

P Rs.2,00,000

Q Rs.1,50,000

------------ 3,50,000

4,10,000

Less: Provision 1,000

----------

Plant and Machinery

Land and Buildings

48,000

1,02,000

2,00,000

4,10,000

On 1st April, 2010 R was admitted as a partner in the firm on the following terms:

a) R brought Rs.1,00,000 as capital for 1/4th share in the profits. He also brought in Rs.5,000 as his share of goodwill.

b) Stock was depreciated by 10% and Provision for bad debts was raised by Rs.1,500.

c) Machinery was depreciated by Rs.2,000 and Land and Buildings was appreciated to Rs.2,04,000.

d) Creditors include Rs.1,000, which were not likely to be paid.

Prepare Revaluation A/C, Partners’ Capital Accounts and the Balance Sheet of the firm on R’s admission.

8M

54. A and B are partners in a firm sharing profits and losses in the ratio of 7:3. Their Balance Sheet as at 31st March, 2009 is as follows:

Liabilities Amount Rs.

Assets Amount Rs.

Creditors

Reserve

Capital Accounts

A Rs.1,00,000

B Rs. 80,000

------------

60,000

10,000

1,80,000

2,50,000

Cash in hand

Cash at Bank

Debtors

Stock

Furniture

36,000

90,000

44,000

50,000

30,000

2,50,000

On 1st April, 2009 , they admitted C on the following terms:

(i) Goodwill is valued at Rs.40,000 and C is to bring in the necessary amount in cash as premium for goodwill and Rs.60,000 as Capital for ¼ share in profits.

(ii) Stock is to be reduced by 40% and furniture is to be reduced to 40%

(iii) Capitals of the partners shall be proportionate to their Profit sharing ratio taking C’s Capital as base. Adjustment of capitals to be made by cash.

Prepare Revaluation A/c, Partners Capital Accouts and Cash A/c. 8M

55. P, Q and R were partners sharing profits and losses in the ratio of 5:3:2 . On 31st March, 2009 their Balance Sheet was as under:


Capitals:

P 1,50,000

Q 1,25,000

R 75,000 ------------

Workmen’s Compensation Reserve

Creditors

3,50,000

30,000

1,55,000

5,35,000

Leasehold

Patents

Machinery

Stock

Cash at Bank

1,25,000

30,000

1,50,000

1,90,000

40,000

5,35,000

R died on 1st August, 2009. It was agreed that

(i) Goodwill of the firm is to be valued at Rs.1,75,000

(ii) Machinery be valued at Rs.1,40,000, Patents at Rs.40,000, Leasehold at Rs.1,50,000 on this date

(iii) For the purpose of calculating R’s share in the profits of 2009-10 , the profits should taken to have accrued on the same scale as in 2008-09 , which were Rs.75,000/

Write Journal entries and also prepare R’s Capital A/c to be rendered to his executors. 8M

@@@@@@@@@@@@@@@@@@@@@@@

ACCOUNTING FOR COMPANIES

MOST IMPORTANT

Change in existing provisons due to replacing existing companies act with Companies Act 2013

Meaning of Private, Public and One Person Company (OPC) Maximum number of members in Private Company extended to 200. Presentation of Share Capital in Company Balance Sheet as per Schedule III. Table F for Articles of Association-Rate of Interest on Calls in Arrears (@10% p.a)

and Calls in Advance (@12% p.a). Section 52 (2) for utilization of Securities Premium Reserve. Section 53 prohibits issuing shares at a Discount, However, Section 54 of the Act

permits a company to issue following shares at a Discount. Sweat Equity Shares.

Private placement of Shares As per provision of section 2(62) of the Companies Act, 2013 “one person company”

means a company which has only one person as member. Only a natural person who is an Indian citizen and resident in India- – shall be eligible to incorporate a One Person Company; – shall be a nominee for the sole member of a One Person Company.

Guidelines for Debenture Redemption Reserve now as 25% of the face value of the Debentures issued before redemption of debentures commences.

The Companies Act, 2013 vide Section 71(4) together with the Companies (Share capital and Debentures) Rules, 2014 requires a company to create Debenture Redemption Reserve (DRR) of an amount that is at least equal to 25% of the total nominal (face) value of debentures that are redeemable by it. Following categories of companies are exempt from creating DRR: 1. All India Financial Institutions (AIFIs) regulated by Reserve Bank of India; 2. Other Financial Institutions regulated by Reserve Bank of India; 3. Banking Companies for both public as well as privately placed debentures; and 4. Housing Finance Companies registered with the National Housing Bank.

Debenture Redemption Investment is to be made before 30th April @15% of debentures to be redeemed up to 31st March of next year.

Every company required to create/maintain DRR shall on or before the 30th April of each year, deposit or invest, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on the 31st day of March next year in any one or more of the following methods, namely: (a) in deposits with any scheduled bank, free from charge or lien (b) in unencumbered securities of the Central Government or of any State Government; (c) in unencumbered securities mentioned in clauses (a) to (d) and (ee) of section 20 of the Indian Trusts Act, 1882; (d) in unencumbered bonds issued by any other company which is notified under clause (fl of section 20 of the Indian Trusts Act, 1882; (v) The amount deposited or invested, as the case may be, above shall not be utilized for any purpose other than for the repayment of debentures maturing during the year referred above, provided that the amount remaining deposited or invested, as the case may be, shall not at any time fall below 15 per cent of the amount of debentures maturing during the 3lst day of March of that year'

Presentation of Balance Sheet as per Schedule III, Part I.

IMPORTANT MODELS/QUESTION ESPECIALLY FOR SLOW LEARNERS/LOW ACHIEVEERS IN ORDER OF PRIORITY:

A Question on Issue of shares at par and at premium Forfeiture and re-issue of shares at par and at premium

A Question on forfeiture, re-issue and transfer of capital gain. A Question on Issue and redemption of debentures A Question on Interest on debentures including TDS A Question on redemption of debentures and creation of DRR out of profits to the extent of 25% A Question on open market purchase for immediate cancellation A Question on Presentation of Share Capital in Schedule III, Part I of the Companies Act, 2013 A question on issue of debentures as collateral security

1. Give the meaning of forfeiture of shares.1M

2. What do you mean by a Debenture/bond?1M

3. What do you mean by Forfeiture of shares? 1M

4. What do you mean by issue of debentures as collateral security? 1M

5. What is meant by Reserve capital? 1M

6. What do you mean by Bonus Shares? 1M

7. Raghv Limited purchased a running business from Krishna Traders for a sum of Rs.15,00,000 , payable Rs.3,00,000 by cheque and for the balance issued 9% Debentures of Rs.100 each at par.

The assets and liabilities consisted of the following:

Plant and Machinery Rs.4,00,000

Buildings Rs.6,00,000

Stock Rs.5,00,000

Sundry Debtors Rs.3,00,000

Sundry Creditors Rs.2,00,000 3M

8. State the exceptions to the creation of Debenture Redemption Reserve as per SEBI Guidelines. 3M

9. Raghv Limited purchased a running business from Krishna Traders for a sum of Rs.15,00,000 , payable Rs.3,00,000 by cheque and for the balance issued 9% Debentures of Rs.100 each at par.

The assets and liabilities consisted of the following:

Plant and Machinery Rs.4,00,000

Buildings Rs.6,00,000

Stock Rs.5,00,000

Sundry Debtors Rs.3,00,000

Sundry Creditors Rs.2,00,000 3M

10. M Ltd bought a machine for Rs.10,00,000 from Kumar Ltd and agreed to issue 14% Debentures of Rs.100 each as purchase consideration. Write journal entries in the following cases:

a) If debentures are issued at par

b) If debentures are issued at a discount of 20%

C) If debentures are issued at a premium of 25% 4M

11. What journal entries should be made for the issue of debentures in the following cases?

i) X limited issued 30,000, 12% Debentures of Rs,100 each at par, redeemable at a premium of 5%.

ii) Y limited issued 50,000, 13% Debentures of Rs.100 each at a premium of 5%, redeemable at par.

3M

12. A company took a loan of Rs.5, 00,000 from State Bank of India and issued 10% debentures of Rs.8,00,000 of Rs.100 each as a collateral security. Explain how you will deal with issue of debentures in the books of the company. 3M

13. Alpha Ltd has 5,000, 8% debentures of Rs.100 each due for redemption on March31, 2009. Assume that Debenture Redemption Reserve has a balance of Rs.1, 90,000 on that date. Record the necessary entries at the time of redemption of debentures.

3M

14. The closing stock of a company is Rs.80,000. Its current ratio is 5:3 and quick ratio is 4:3. Calculate its current assets and current liabilities. 3M

15. ITC Ltd purchased its own 500, 11% debentures of Rs.100 each at Rs.95 for immediate cancellation on 31st March, 2009. Pass journal entries in the books of the company. 3M

16. Write any three differences between a Share and a Debenture. 3M

17. A company converted its 500 14% Debentures of Rs.100 each into Equity shares of Rs.10 each issued at a premium of 25% per share Write Journal Entries in the books of the company.

3M

18. A company has Rs.50,000 in its Debenture Redemption Reserve A/c . On that date the company redeemed 1000 12% Debentures of Rs.200 each at par out of profits. Transfer minimum required to DRR A/c . Write necessary journal entries for redemption of debentures 3M

19. Meera Ltd issued 40,000 shares of Rs.10 each. Payment was made as follows

On application Rs.3 per share on 1st January,2008

On allotment Rs.5 per share on 1st February, 2008

On first and final call Rs2 per share on 1st May,2008

Rama was allotted 1,000 shares failed to pay the call money on the due date. But he paid the unpaid call money on 1st July, 2008 with interest @5% p.a. Calculate interest on calls-in-arrears and

also pass journal entries for the same on 1st July, 2008. 3M

20. MRF Limited forfeited 10 Equity Shares of Rs.10 each (Rs.8 called up) due to non-payment of Rs.3 Allotment money and Rs.2 first call money. Out of these, 5 shares are re-issued at Rs.6 per share

as Rs.8 paid up. Write journal entries in the books of the company. 3M

21. P ltd forfeited 300 shares of Rs.10 each Rs.8 called up, on which application and allotment money of Rs.3 per share received. Out of of these 100 shares were reissued at Rs.6 per share as Rs.8 paid

up. Pass necessary journal entries. 3M

22. Explain the exceptions to creation of Debenture Redemption Reserve.3M

23. Bought machinery for Rs.10,00,000 from L & T Ltd. The purchase consideration was paid as follows:

a) Rs.1,00,000 by accepting a 3 months bills payable.

b) Rs.2,00,00 through a bank Demand Draft

c) Rs.2,00,000 through issue of equity shares of Rs.100 each at a premium of Rs.100 each

d) Rs.5,00,000 through issue of 15% Debentures of Rs.100 each at a premium of 25%4M

24. A Ltd. was registered with an authorized capital of Rs.10,00,000 divided into equity shares of Rs. 10 each.

The company invited applications for the issue of 50,000 shares. Applications for 48,000 shares were received. All calls were made and were duly received except the final call of Rs.2 per share on 1,000 shares. All these shares were forfeited and later on re-issued at Rs.9,000 fully paid-up.

a) Show how ‘Share Capital’ will appear in the Balance Sheet of A Ltd. as per Schedule III, Part I of the Companies Act, 2013.

b) Also prepare ‘Notes to Accounts’ for the same.4M

25. A Ltd. purchased a running business from B Ltd. for a sum of Rs.1,50,000 payable by issue of 10,000 13%

Debentures of Rs.100 each at a premium of Rs.20 per debenture and balance in cash. The assets and liabilities taken over were:

Plant Rs.40,000; Buildings Rs.40,000; Debtors Rs.30,000; Stock Rs.50,000; Furniture Rs.20,000 and Creditors Rs.20,000

You are required to pass necessary Journal entries for the above transactions in the books of A Ltd. 4M

26. Hero Ltd took a loan of Rs.10,00,000 from State Bank of India and issued 12000 16% Debentures of Rs.100 each as Collateral Security to the bank. Show the Accounting treatment under both the methods. 4M

27. Vinod Ltd., decided to redeem Rs.50,000 , 10% debentures. It purchased Rs.40,000 debentures in the open market at Rs.97.50 each. The expenses being Rs.200 and redeemed the balance of Rs.10,000

debentures by draw of lots. Write necessary journal entries. 4M

28. David Ltd. issued Rs.40,00,000 equity shares of Rs.10 each out of its registered capital of Rs.10,00,00,000. The amount payable on these shares was as follows:

On application Rs.1 per share

On allotment Rs.2 per share

On first call Rs.3 per share

On second and final call Rs.4 per share.

All calls were made and were duly received, except the second and final call on 1,000 shares held by Vipul. These shares were forfeited. Present the ‘Share Capital’ in the Balance Sheet of the company

as per Schedule III Part I of Companies Act, 2013. Also prepare ‘Notes to Accounts’. 5M

29. Write journal entries in the following cases for ISSUE OF DEBENTURES:

a) 1,00,000 18% debentures of Rs.100 each issued at a premium of 10% which are redeemable at a Premium of 5%

b) Issued a 14% debenture of Rs.500 each at a discount of 10% which is repayable at par.

c) 5,00,000 11% debentures of Rs.100 each at par which are redeemable at par.

d) 10,000 13% debentures of Rs. 50 each issued at a discount of 5% which are redeemable at a premium

of 10%.

e) 200 18% debentures of Rs.200 each issued at a premium of 10% repayable at par.5M

30. Write Journal entries for REDEMPTION OF DEBENTURES in the following cases:

a) Issued a 15% debenture of Rs.1000 each at par which is repayable at par.

b) Issued 2,500 14% debentures of Rs.100 each issued at a premium of 5% redeemable at 10% premium.

c) Issued 3,000 12% debentures of Rs,100 each issued at par which are redeemable at at a premium of 5%

d) Issued a debenture of Rs.500 each at a discount of 10% which is redeemable at par.

e) issued 200 18% debentures of Rs.100 each at a discount of 5% which are repayable at 10% premium.

5M

31. Write Journal Entries in the following situations for issued of debentures when GMR Limited

issued 14% Debentures of Rs.100 each:

i) Issued at par and which are redeemable at Par.

ii) Issued at a discount of 10% which are redeemable at par

iii) Issued at a Premium of 10% which are redeemable at par

iv) Issued at par which are redeemable at a premium of 10%

v) Issued at a discount of 7% which are redeemable at a premium of 8% 5M

32. X Ltd took the following from Y Ltd for an agreed Purchased consideration of Rs.2,00,000 for which 14% Debentures of Rs.100 each are issued at a discount of 10% if any balance left will be

paid by a cheque. A fraction of debenture cannot be issued. Write journal entries in the books of X Ltd.

Plant Rs.1,00,000

Furniture Rs.50,000

Stock Rs.50,000

Sundry Debtors Rs.24,000

Sundry Creditors Rs.30,000 4M

33. M Ltd bought machinery worth Rs.9,00,000 from K Ltd and payment was done as follows:

Rs.1,10,000 by way of a bank cheque

Rs.5,00,000 by issue of 9% Debentures of Rs.100 each issued at a Premium of 25%

Rs.2,00,000 by way of a three months bills acceptance and

Rs.90,000 by way of issue of equity shares of Rs.10 each issued at a discount of 10%. 6M

34. J K Tyres Ltd. issued Rs.5,00,000 8% debentures of Rs.100 each at a premium of 10% on 1 st April, 2013.

On 31st March, 2014, the Board of Directors decided to cancel its own debentures by purchasing in the open market. On the same day, the company purchased all of its own debentures at Rs.90 each. You

are required to :

a) Write Journal entries for issue of (i Yearly payment of interest on 31 st March after deducting TDS @20%

on interest (ii) Purchasing in the open- market and (iii) Transfer the required amount of profit to Debenture Redemption Reserve A/c and to close the same.6M

35. Luxury Cars Ltd. invited applications for issuing 10,000 equity shares of Rs.50 each at a premium of Rs.100 per share. The amount was payable as follows:

On application Rs.75 per share (including Rs.50 premium)

On allotment ---- the balance

The issue was fully subscribed. A shareholder holding 400 shares paid his entire share money at the time of application. Another shareholder holding 300 shares did not pay the allotment money. His shares

were forfeited. The forfeited shares were later on re-issued for Rs.90 per share as fully paid.

Write journal entries in the books of the company.8M

36. Write necessary journal entries for the issue and redemption of debentures in the following cases: Face Value of a Debenture in all the given cases is Rs.100.

a) 5,000 18% debentures issued at par which are repayable at Rs.110.

b) 3,00,000 12% debentures issued at a discount of Rs.5 per debenture which are redeemable at a premium of Rs.5 per debenture

c) 4,000 14% debentures issued at a premium of Rs.10 per debenture which are repayable at par.

d) 6,000 15 % debentures issued at par which are repayable at par.8M

37. Z Ltd invited applications for 1,00,000 equity shares of Rs.100 each at Rs.110 per share payable as follows:


On allotment Rs.40 per share (including premium Rs.10)

On first call Rs.30 per share

On final cll Rs.20 per share

The company called upto first call money only. All the money was duly received except allotment and first call money on 1,000 shares. These shares were forfeited immediately and out of these 400

shares were re-issued credited to Rs.80 paid for Rs.72 per share. Prepare Cash Book and also give journal entries.

8M

38. A limited company was registered with an authorized capital of Rs.2,00,000 in Rs.10 per share. Of these 8,000 shares were issued to the public and during the first year Rs.5 per share were called up payable as Rs.2 on application, Re.1 on allotment, Re.1 on first call and Re.1 on second call. The amounts received

in respect of these shares were as follows:

On 6,000 share the full amount called

On 1,250 shares Rs.4 per share

On 500 shares Rs.3 per share

On 250 sharesRs.2 per share

The directors forfeited 750 shares on which less than 4 per share had been received. Journalise these transactions in the books of the company.

8 M

39. Software Ltd invited applications for issuing 70,000 equity shares of Rs.10 each on which Rs.7 share were called upwhich were payable as follows:



On first call ---- the balance

The amount was received as follows:

On 40,000 shares Rs. 7 per share

On 20,000 shares Rs. 5 per share

On 10,000 shares Rs.2 per share

The directors forfeited 30,000 shares on which less than Rs.7 per share were received. Later on the forfeited shares were re-issued at Rs.5 per share, as Rs.7 per share paid up.

Pass necessary journal entries for the above transactions in the books of the company.8M

40. R Ltd., invited applications for issuing 10,000 equity shares of Rs.100 each at a discount of Rs.4 per share.

The amount was payable as follows:



On first and final call Rs.46 per share

Applications were received for 9,000 shares and allotment was made to all the applicants. All amounts

due were received except the first and final call on 400 shares. These shares were forfeited. Out of the forfeited shares, 300 shares were re-issued at a payment of Rs.27,000 fully paid-up.

Prepare Bank A/c and also write necessary journal entries.8M

PART B

ANALYSIS OF FINANCIAL STATEMENTS

IMPORTANT MODELS/QUESTION ESPECIALLY FOR SLOW LEARNERS/LOW ACHIEVEERS IN ORDER OF PRIORITY:

A Question on ratio analysis especially on Current Ratio and Quick Ratio A Question on Comparative Statements/Common-size statements especially comparative income-

statement. A Question on Companies Balance Sheet as per Schedule III , Part I of the companies Act, 2013

Major headings and sub-headings. A Question on Cash Flow Statement for 6 marks which will be the last question in the question

paper.

1 List the major heads under which the ‘Equity and Liabilities’ are presented in the Balance Sheet of a company as per Schedule III Part I to the Companies Act 2013.

Solution:

The major heads under which the ‘Equity and Liabilities’ are presented in the Balance

Sheet of a company as per Schedule III Part I to the Companies Act 2013, are listed

below:

(i) Shareholders’ Funds

(ii) Share Application Money pending allotment

(iii) Non-Current liabilities

(iv) Current Liabilities

2. List the major heads under which the assets are presented in the Balance Sheet of a

company as per Schedule III Part I of the Companies Act 2013.

Solution:

The Major heads under which the Assets are presented in the Balance Sheet of

company as per Schedule Schedule III Part I of the Companies Act 2013, are listed

below:

(i) Non-current Assets

(ii) Current Asset

3. Name the sub-heads under the head ‘Non-current assets’ in the Balance Sheet under Schedule Schedule III Part I of the Companies Act 2013.

Solution:

The sub-heads under ‘Non-current assets’ are

(a) Fixed Assets

(b) Non-Current Investments

(c) Deferred Tax Assets (Net)

(d) Long-term loans and advances

(e) Other Non-current Assets 3M

4. Cash deposit with the bank with a maturity date after two months belongs to which of the following

while preparing cash flow statement:

(a) Investing activities

(b) Financing activities

(c) Cash and Cash equivalents

(d) Operating activities. (1)

5. Finserve Ltd is carrying on a Mutual Fund business. It invested ` 30,00,000 in shares and `15,00,000

in debentures of various companies during the year. It received ` 3,00,000 as dividend and interest.

Find out cash flows from investing activities.

(1)

6. (a) Name the sub heads under the head ‘Current Liabilities’ in the Equity and Liabilities part of the Balance Sheet as per Schedule III Part I of the Companies Act 2013.

(b) State any two objectives of Financial Statements Analysis.

(4)

7. (a) From the following details, calculate Opening inventory: Closing inventory `60,000; Total

Revenue

from operations `5,00,000 (including cash revenue from operations `1,00,000); Total purchases

`3,00,000 (including credit purchases `60,000). Goods are sold at a profit of 25% on cost.

(b) Current Assets of a company are `17,00,000. Its current ratio is 2.5 and liquid ratio is 0.95.

Calculate Current Liabilities and Inventory. (4)

8. From the following calculate:

(a) Operating Profit Ratio; and

(b) Working Capital Turnover Ratio.

Amount (Rs.)

(i) Revenue from operations 2,00,000

(ii) Gross Profit 75,000

(iii) Office Expenses 15,000

(iv) Selling Expenses 26,000

(v) Interest on Debentures 5,000

(vi) Accidental Losses 12,000

(vii) Income from Rent 2,500

(viii) Commission Received 2,000

(ix) Current Assets 60,000

(x) Current Liabilities 10,000

9. State under which major headings the following items will be presented in the Balance Sheet of a company as per Schedule III Part I of the Companies Act 2013.

(i) Trade Marks

(ii) Capital Redemption Reserves

(iii) Income received in advance

(iv) Stores and Spares

(v) Office Equipments

(vi) Current Investments

10. Which item is assumed to be 100 while preparing common size Statement of Profit and Loss? 1M

11. Dividend paid by a financial company is classified under which type of activity, while preparing cash flow statement?

1M

12. What is meant by ‘Cash Flow Statement’? 1M

13. While preparing Cash Flow Statement, the accountant of a financing company showed ‘Dividend Received Rs.50,000 on investments’ as an investing activity. Was he correct in doing so? Give reason. 1M

14. Which of the following transactions will result into flow of cash?

i) Deposited Rs.40,000 into bank

ii) Withdrew cash from bank Rs.54,000

iii) Sold marketable securities of Rs.25,000 at par

iv) Sold machinery of book value of Rs.50,000 at a gain of Rs.10,0001M

15. Under which major headings and sub-heading will the following items be shown in the Balance Sheet of a company as per Schedule III Part I of the Companies Act, 2013.

i) Balance of the Statement of Profit and Loss.

ii) Loan of Rs.1,00,000 payable after three years.

iii) Short-term deposits payable on demand.

iv) Loose tools

v) Trademark

vi) Land

vii) Cash at bank

viii) Trade payables3M

16. The current Ratio of a company is 2.1:1.2 State with reasons which of the following transactions will increase, decrease or not change the ratio:

i) Redeemed 9% debentures of Rs.1,00,000 at a premium of 10%

ii) Received from debtors Rs.17,000

iii) Issued Rs.2,00,000 equity shares to the vendors of machinery.

iv) Accepted bills of exchange drawn by the creditors Rs.7,000.4M

17. The motto of ‘Pharma Ltd.’ a company engaged in the manufacturing of low-cost generic

medicines, is Healthy India . Its management and employees are hardworking, honest and

motivated. The net profit of the company doubled during year ended 31.3.2014. Encouraged by

its performance, the company decided to pay bonus to all employees at double the rate than

last year. Following is the Comparative Statement of Profit and Loss of the company for the years ended

31.3.13 and 31.3.2014.

Pharma Ltd.Comparative Statement of Profit and Loss

Particulars Note No. 2012-13 2013-14 Absolute

Change Rs. % Change

Revenue from operations 20,00,000 30,00,000 10,00,000 50Less: Employees benefit expenses 12,00,000 14,00,000 2,00,000 16.67Profit before tax 8,00,000 16,00,000 8,00,000 100Tax at 25% rate 2,00,000 4,00,000 2,00,000 100Profit after tax 6,00,000 12,00,000 6,00,000 100

i) Calculate Net Profit Ratio for the years ending 31st Marth, 2013 and 2014

ii) Identify any two values which ‘Pharma Ltd’ is trying to propagate.4M

18. (a) The quick ratio of a company is 1.5:1 State with reason which of the fo0llowing transactions would i.

increase ii. Decreas or iii. Not change the ratio.

1. Paid rent Rs.3,000 in advance.

2. Trade receivables included a debtor Shri Ashok who paid his entire amount due Rs.9,700

(b) From the following information compute ‘Proprietary Ratio’

Long-term borrowings Rs.2,00,000

Long-term provisions Rs.1,00,000

Current Liabilities Rs.50,000

Non-current Assets Rs.3,60,000

Current Assets Rs,90,0004M

19. Give two examples for cash outflow from investing activities.1M

20. Under which type of activity will you classify ‘Commission and Royalty Received’ while preparing Cash Flow Statement?

21. Give an example of the activity which remains financing activity for every enterprise.

22. State any one limitation of financial statements analysis.

23. Under what heads and sub-heads will the following items appear in the Balance Sheet of a company as per revised schedule VI part I of the companies Act 1956.

1. Debentures;2. Loose tools;3. Calls-in-advance

24.. a. Compute ‘Debtors Turnover Ration’ from the following information:

Total Sales Rs. 5,20,000, Cash Sales 60% of the Credit Sales, Closing Debtors Rs. 80,000,

Openeing Debtors are 3/4th of closing Debtors.

b. Current Liabilities of a company are Rs. 1,60,000. Its Liquid ratio is 1:5:1 and Current ratio

is 2:5:1. Calculate Quick assets and Current assets.

25. From the following Statement of Profit and Loss of Moontract Ltd., for the years ended 31st

March 2011 and 2012, prepare a ‘Comparative Statement of Profit and Loss’.

Particulars Note No. 2011-12Rs.

2010-11Rs.

Revenue from operations 40,00,000 24,00,000Other Incomes 24,00,000 18,00,000Expenses 16,00,000 14,00,000

26. Following is the Balance Sheet of Solar Power Ltd as at 31.3.2015

Particulars Note

No

31.3.2015 31.3.2014

I

2.

3

II

1.

2

Equity and Liabilities

Shareholders’ Funds:

a) Share capital

b) Reserves and Surplus

Non-Current Liabilities:

Long-term Borrowings

Current Liabilities:

a) Trade payables

b) Short-term Provisions

Total

Assets

Non-Current Assets:

a) Fixed Assets

i) Tangible

ii) Intangible

Current Assets:

a) Current Investments

b) Inventories

c) Trade receivables

d) Cash and cash equivalents

1

2

3

24,00,000

6,00,000

4,80,000

3,58,000

1,00,000

-------------

39,38,000

-------------

21,40,000

80,000

4,80,000

2,58,000

3,40,000

6,40,000

22,00,000

4,00,000

3,40,000

4,08,000

1,54,000

--------------

35,02,000

--------------

17,00,000

2,24,000

3,00,000

2,42,000

2,86,000

7,50,000

Total 39,38,000 35,02,000

Notes to Accounts:S No Particulars 31.3.2015 Rs. 31.3.2014 Rs.1 Reserves and Surplus

Surplus (balance in Statement of Profit and Loss) 6,00,000 4,00,000

2 Tangible AssetsMachineryLess: Accumulated Depreciation

25,40,000(4,00,000)

20,00,000(3,00,000)

3 Intangible Assets:Goodwill

80,000 2,24,000

Additional Information:

During the year a piece of machinery costing Rs. 48,000 on which accumulated depreciation was Rs.32,000 was sold for Rs.12,000

Prepare Cash Flow Statement 6M

27.Prepare a Cash Flow Statement from the following Balance Sheet :

ParticularsNote No.

31.3.2013Rs.

31.3.2012Rs.

I – Equity and Liabilities :

1. Shareholder’s Fund :

(a) Share Capital

(b) Reserves and Surplus

2. Current Liabilities :

Trade Payables

II – Assets :

Total

6,00,000 5,00,000

1 4,00,000 2,00,000

2,80,000 1,80,000

12,80,000 8,80,000

1. Non-Current Assets :

(a) Fixed Assets :

Plant and Machinery

Current Assets :

(a) Inventories

(b) Trade Receivables

(c) Cash and Cash Equivalents

5,00,000 3,00,0002.

1,00,000 1,50,000

6,00,000 4,00,000

80,000 30,000

Total 12,80,000 8,80,000

Notes to Accounts

Note No. 1

Particulars31.3.2013

Rs.31.3.2012

Rs.

Reserves and SurplusSurplus (Balance in Statement of Profit & Loss) 4,00,000 2,00,000

Additional Information:

(i) An old machinery having book value of Rs. 50,000 was sold forRs. 60,000.

(ii) Depreciation provided on Machinery during the year was Rs. 30,000.

28. Prepare a Cash Flow Statement on the basis of the information given in the Balance Sheet of Simco Ltd as at 31.3.2015 and 31.3.2014

Particulars Note No 31.3.2015 31.3.2014

I

2.

3

II1.

2

Equity and LiabilitiesShareholders’ Funds:a) Share capitalb) Reserves and SurplusNon-Current Liabilities:Long-term BorrowingsCurrent Liabilities:a) Trade payables

TotalAssetsNon-Current Assets:a) Fixed Assetsi) Tangibleb) Non-Current InvestmentsCurrent Assets:a) Current Investmentsb) Inventoriesc) Trade receivablesd) Cash and cash equivalents

2,00,00090,000

87,500

10,000

-------------3,87,500

-------------

1,87,5001,05,500

12,5004,0009,500

68,500

1,50,00075,000

87,500

76,000

--------------3,88,500

--------------

1,40,0001,02,000

33,5005,500

23,00084,000

Total 3,87,500 3,88,500Notes to Accounts:

Note: 1

Particulars 31.3.2015 31.3.2014

Surplus (Balance in Statement of Profit & Loss) 90,000 75,0006M

29. Following are the Balance Sheets of Krishtec Ltd. for the year ended 31st March 2011 and 2012.

Particulars 2011-12Rs.

2010-11Rs.

I. Equity and Liabilities1. Shareholders’ Funds:

a. Share Capitalb. Reserves and Surplus

(Profit and Loss Balance)2. Non-Current Liabilities:

Long term borrowings3. Current Liabilities:

Trade Payables

Total

II. Assets1. Non-Current Assets:

a. Fixed Assets:i. Tangible Assets

2. Current Assets :a. Inventoriesb. Trade Receivablesc. Cash and Cash equivalents

Total

12,00,000

3,50,000

4,40,000

60,000________20,50,000--------------

12,00,000

2,00,0003,10,0003,40,000

_________20,50,000

8,00,000

4,00,000

3,50,000

50,000________16,00,000-------------

9,00,000

1,00,0002,30,0003,70,000

________16,00,000

Prepare a Cash Flow Statement after taking into account the following adjustments:a. The company paid interest Rs. 36,000 on its long term borrowings.

b. Depreciation charged on tangible fixed assets was Rs. 1,20,000 6M

30. Explain the limitations of Financial analysis. 3M

31. Mention any two tools of analysis of financial statements. 1M

32. Give the meaning of analysis of financial statements. 1M

33. Explain the importance of analysis of financial statements from the point of view of different parties interested in accounting information.

34. What is the ideal current ratio ? 1M

35. What is the ideal quick ratio? 1M

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