Delhi Public School, Jammu Question Bank ( )

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1 Delhi Public School, Jammu Question Bank ( ) Class:XII Subject: Accountancy 1. Six friends started a partnership business by investing Rs. 2,00,000 each. They decided to share profit equally. Name the terms by which they will be called individually and collectively. Sol. Individually: Partners; Collectively: Firm 2. A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. B was guaranteed a profit of Rs. 2,00,000. During the year the firm earned a profit of Rs. 84,000. Calculate the net amount of Profit / Loss transferred to the capital accounts of A and C. Sol. Net Amount of Loss transferred to: A s Capital Account: Rs. 87,000 C s Capital Account: Rs. 29, H, P and S were partners in a firm sharing profits in the ratio of 4 : 3 : 3. On August 1, 2017, P died. His 20 % share was acquired by H and remaining by S. Calculate the new profit sharing ratio. Sol. Ratio of H, P and S is 4 : 3 : 3 H s Gain = 3/10 X 20 /100 = 3 /50 H s new share = H s old share + H s Gain = 4/10 + 3/50 = 23/50 S s Gain = 3/10 X 80 /100 = 12 /50 S s new share = S s old share + S s Gain = 3/ /50 = 27/50 New Profit sharing Ratio of H and S is 23 : How is dissolution of partnership different from dissolution of partnership firm? In case of dissolution of partnership, the firm continue to do business but with a changed agreement. In case of dissolution of partnership firm, the firm ceases to exist, the assets of the firm are realized and its liabilities are discharged. 5. L, M and N are partners in a firm sharing profits & losses in the ratio of 2 : 3 : 5. On April 1, 2016 their fixed capitals were Rs. 2,00,000, Rs. and Rs. 4,00,000 respectively. Their partnership deed provided for the following: (i) Interest on 9% per annum. (ii) Interest on 12% per annum. (iii) Interest on partners 12% per annum. On July 1, 2016, L brought Rs. 1,00,000 as additional capital and N withdrew Rs. 1,00,000 from his capital. During the year L, M and N withdrew Rs. 12,000, Rs. 18,000 and Rs. 24,000 respectively for their personal use. On January 1, 2017 the firm obtained a Loan of Rs.1,50,000 from M. The Net profit of the firm for the year ended March 31, 2017 after charging interest on M s Loan was Rs. 85,000. Prepare Profit & Loss Appropriation Account and Partners Capital Account. Page 1

2 Sol. Dr. Profit & Loss Appropriation A/c Cr. Particulars Amount (Rs.) Particulars Amount (Rs.) To interest on capital By P& L A/c 85,000 L s Capital A/c 24,750 By Interest on drawings M s Capital A/c 27,000 L s Capital A/c 720 N s Capital A/c 29,250 81,000 M s Capital A/c 1,080 To Profit transferred to: Ns Capital A/c 1,440 3,240 L s Capital A/c 1,448 M s Capital A/c 2,172 Ns Capital A/c 3,620 7,240 88,240 88,240 Dr. Partners Capital A/c Cr. Particulars L(Rs.) M(Rs.) N(Rs.) Particulars L(Rs.) M(Rs.) N(Rs.) To Bank A/c To Bal. c/d.. 1,00,000 By Bal. b/d 2,00,000 4,00,000 By Bank A/c 1,00,000 4,00,000 4,00, M M Limited is registered with an Authorised capital of Rs. 200 Crores divided into equity shares of Rs. 100 each. The Subscribed and Called up capital of the company is Rs. 10,00,00,000. The company decided to help the unemployed youth of the naxal affected areas of Andhra Pradesh, Chhattisgarh and Odisha by opening 100 Skill Development Centres. The company also decided to provide free medical services to the villagers of these states by starting mobile dispensaries. To meet the capital expenditure of these activities the company issued 1,00,000 equity shares. These shares were fully subscribed and paid. Present the share capital of the company in its Balance Sheet. Also identify any two values that the company wants to propagate. MM Ltd. Balance Sheet as at.. Particulars Note No. Amount(Rs. In crores) Equity & Liabilities Shareholders Funds Share Capital 1 10 Notes to accounts: Particulars Share Capital: Authorized Capital 2,00,00,000 Equity Shares of Rs.100 each Issued Capital Amount(Rs. In crores) 200 Page 2

3 10,00,000 Equity Shares of Rs.100 each Subscribed Capital Subscribed and fully paid 10,00,000 Equity Shares of Rs.100 each Give any two examples of cash inflows from operating activities other than cash receipts from sale of goods & rendering of services. Any two of the followings: (i) Royalties (ii) Commission Received (iii) Any other revenue receipts 8. For the year ended March 31, 2017, Net Profit after tax of K X Limited was Rs. 6,00,000. The company has Rs. 40,00,000 12% Debentures of Rs. 100 each. Calculate Interest Coverage Ratio assuming 40 % tax rate. State its significance also. Will the Interest Coverage Ratio change if during the year , the company decides to redeem debentures of Rs. 5,00,000 and expects to maintain the same rate of Net Profit and assume that the Tax rate will not change. Interest Coverage Ratio= Net Profit before Interest and Tax/ Interest on Long Term Debts Net Profit after Tax = Rs. 6,00,000, Tax Rate = 40 % Net Profit before tax = 100/(100 Tax) X Net Profit after tax= 100/ 60 X 6,00,000 = 10,00,000 Interest Coverage Ratio= Net Profit before Interest and Tax / Interest on Long Term Debts = 10,00,000 /4,80,000 = 2.08 Times Significance of Interest Coverage Ratio: It reveals the number of times Interest on Long Term Debts is covered by the profits available. A higher ratio ensures safety of interest on Long Term Debts. The Interest coverage ratio will improve if the company decides to redeem Rs. 5,00,000 debentures assuming that Net Profit after interest and the tax rate will be same. 9. X, Y and Z are partners sharing profits in the ratio 3:2. They admit Z into the partnership, who acquires 1/4 th of his share from X and 3/16 share from Y. You are required to calculate the new profit sharing ratio and sacrificing ratio. Since Z acquires 1/4 th of his share from X, it means he acquires 3/4 th of his share from Y. If 3/4 th share of Z = 3/16 (from Y); Z s share =3/16x 4/3 =1/4 Calculation of New Share: Share acquired by Z from X= 1/4x 1/4 =1/16; from Y =3/16 X s New Share =3/5-1/16= (48-5)/80 = 43/80 Y s share = 2/5-3/16 = (32-15)/80 = 17/80 Z s share = ¼ or 20/80 New Profit sharing ratio: 43:17:20 Sacrificing Ratio of X and Y = 1:3 10. A and B were partners in a firm. They admitted C as a new partner for 20% share in the profits. After all adjustments regarding general reserve, goodwill, gain or loss on revaluation, the balances in capital accounts of A and B were 3,85,000 and 4,15,000 respectively. C brought proportionate capital so as to give him 20% share in the profits. Calculate the amount of capital to be brought byc. Page 3

4 Sol: Combined capital of A and B = 3,85,000+ 4,15,000= 8,00,000 th C s Share=oftotalcapital1/5 Remaining share= 1-1/5=4/5 4/5= 8,00,000 C s capital=8,00,000x5/4x1/5= 2,00, Under what heads and sub heads will the following items appear in the Balance Sheet of a company as per Schedule III, Part I of the Companies Act, Debentures; Loose Tools; Calls in advance Non Current Liabilities ----Long term Borrowings Current Assets----- Inventories Current Liabilities ----Other Current Liabilities. 12. Simran and Reema are partners are sharing profits in the ratio 2:1. They acquire running business with assets and liabilities valued at Rs.5,00,000 and Rs. respectively paying Rs.4,00,000. The accountant debited the difference of Rs.2,00,000 to Goodwill account. Is he correct? Yes, the accountant is correct. It is a case of purchased goodwill and AS-26, Intangible Assets allows recording of purchased goodwill in the books of accounts. 13. Mona, Nisha and Priyanaka are partners in a firm. They contributed Rs.50,000 each as capital three years ago. At that time Priyanka agreed to look after the business as Mona and Nisha were busy. The profits for the past three years Rs.15,000; Rs.25,000 and Rs.50,000 respectively. While going through the books of accounts, Mona noticed that profit had been distributed in the ratio of 1:1:2. When she enquired from Priyanka for this, Priyanaka replied that since she looked after the business she should get more profit. Mona disagreed and it was decided to distribute profits equally, retrospectively. You are required to make necessary corrections in the books of the firm by passing an adjustment entry. Also Identify the values in the above case. Priyanka s Capital A/c Dr. To Mona s Capital A/c To Nisha s Capital A/c (Being adjustment of profit divided in wrong ratio) 15,000 Adjustment Table Particulars Mona Nisha Priyanka Profit already distributed (1:1:2) Profit actually to be distributed (1:1:1) b) Values : Integrity and Honesty 22,500 30,000 7,500 (Cr.) 22,500 30,000 7,500 (Cr.) 7,500 7,500 45,000 30,000 15,000 (Dr.) 14. A, B and C are partners sharing profits in the ratio of 3:2. C is admitted as a new partner. A sacrificed 1/6 th share and B sacrificed 1/8 th from his share. Find new profit sharing ratio. A s sacrifice 1/6x 3/5= 3/30 or 1/10 B s sacrifice =1/8 Hence, Sacrificing Ratio of A and B = 1/10:1/8 or 4:5. Page 4

5 A s new share 3/5-1/10 =5/10 or 20/40 B s new share 2/5-1/8 = 11/40 C s new share 1/10 + 1/8= 9/40 Hence New ratio is 20:11: A, B and C are partners sharing profits in the ratio 14:5:6. B retires and surrenders his share in favour of A. Goodwill of the firm is valued at 2 years purchase of super profits based on average profits of last three years. Profits for last three years are Rs.50,000; Rs.55,000 and Rs.60,000. The normal profits for the similar firm are Rs.30,000. Goodwill already appears in the books of the firm at Rs.75,000. The profit for the year after B s retirement was Rs.1,00,000. Give necessary journal entries. A s Capital A/c..Dr. B s Capital A/c Dr. C s Capital A/c.Dr. To Goodwill A/c (Being existing goodwill written off) A s Capital A/c Dr. To B s Goodwill (Being the amt. of B s share of Goodwill adjusted by debiting A s cap. a/c and crediting B s cap. a/c) 42,000 15,000 18,000 75,000 P & L Appropriation A/c..Dr. 1,00,000 To A s Capital A/c 76,000 To C s Capital A/c 24,000 (Being the profit distributed) 16. Identify the purposes of utilizing the Securities Premium Reserve that would maximize the return to shareholders. i) The utilization of securities premium reserve by a company for buy back of its own shares. ii) writing off discount on issue of debentures iii) writing off discount 17. Give the journal entries General Reserve of Rs.60,000 at the time of admission of C, when 40% of General Reserve is to be transferred to Provision for Doubtful Debts. The firm has two partners A and B. General Reserve A/c Dr. To Provision for D.D To A s Capital A/c To B s Capital A/c (Being adjustment of Gen. Reserve at the time of admission) 60,000 24,000 18,000 18,000 Page 5

6 18. X Ltd. paid Rs.4,00,000 to acquire 30,000 shares of Rs.10 each in another Company and received a dividend of 10% on such shares after acquisition. How will you show it in a Cash Flow Statement? Cash Flow from Investing Activities: Investments purchased (4,00,000) Dividend received 30,000 Cash Used in Investing Activities (3,70,000) 19. G. Ltd. is carrying on a paper manufacturing business. In the current year, it purchased machinery for Rs.; it paid salaries of Rs.60,000 to its employees; it required funds for expansion and therefore, issued shares of Rs.20,00,000. It earned a profit of Rs.9,00,000 for the current year. Find out the Cash Flow from Operating Activities. Profit earned during the year Rs.9,00,000 will be Cash Flow from Operating Activities. 20. a) Green Valley Ltd. offered 5,00,000 shares to public for subscription. Applications were received for 7,50,000 shares and pro-rata allotment was made to the applicants of 6,00,000 shares. Arushi applied for 4800 shares and Navya was allotted 3,000 shares. From the above information calculate: i) How many applications have been rejected altogether? ii) What is the pro rata ratio? iii) How many shares were allotted to Arushi? iv) How many shares were applied by Navya? b) Which value has been affected by rejecting the 1,50,000 applications. Suggest better alternative for the same. i) Applications for 1,50,000 shares have been rejected. ii) Pro-rata ratio= No. of shares allotted : No. of shares applied i.e; 5,00,000:6,00,000 iii) No. shares allotted to Arushi: 5/6x4,800=4,000 iv) No. of shares applied by Navya: 6/5x 3,000= 3,600 b) i) Value of equality has not been followed. ii) Better alternative was to make pro-rata allotment. 21. Complete the missing figures: Share Capital A/c..Dr. A/c Dr. To.. To Share Forfeited A/c (Being forfeiture of shares of Rs.100 each, 60 called up issued at a premium of Rs.10, on which only application money of Rs.25 per share is paid) 23,000 Bank A/c... Dr...A/c.. Dr To.A/c ( shares issued for Rs.8 per share, fully paid) Page 6

7 Share Forfeited A/c..Dr. To A/c (Being proportionate amount of gain on reissue transferred to...) Share Capital A/c..Dr. 24,000 Securities A/c Dr. 4,000 To Calls in arrears To Share Forfeited A/c 18,000 (Being forfeiture of 400 shares of Rs.100 each, 60 called up issued at a premium of Rs.10, on which only application money of Rs.25 per share is paid) Bank A/c... Dr. Share forfeited A/c.. Dr To Share Cap A/c (250 shares issued for Rs.8 per share, fully paid) Share Forfeited A/c..Dr. To capital reserve A/c (Being proportionate amount of gain on reissue transferred to capital reserve) 23,000 2,000 4,250 25,000 4, Fine Garments Ltd.is engaged in the export of readymade garments. The company purchased a machinery of Rs.10,00,000 for the use in packaging of such garments. State giving reason whether the cash flow due to the purchase of machinery will be cash flow from operating activities, investing activities or financing activities. Fine Garments Ltd. is engaged in Investing Activities as the company has purchased the machinery. 23. From the following calculate Return On Investment: S.No Items Amount Share Capital Reserves & Surplus 8% Long term Borrowings Current Liabilities Net Fixed Assets Non Current Investments Current Investments 12,00,000 5,00,000 2,00,000 16,00,000 2,00,000 4,00,000 Net Profit before tax Rs.2,00,000 Return On Investment: Net Profit before interest and tax/capital Employed X 100 Net Profit tax =2,00,000 Add Int.: 8% on 5,00,000 = 40, Page 7

8 Net profit before int and tax =2,40,000 ======== Capital Empoyed = Share capital + Resreves & Surplus+ 8% Long term borrowings = 12,00,000++5,00,000=Rs20,00,000 ROI= Rs.2,40,000/20,00,000x 100= 12% 24. What do you mean by One Person Company? Can it be formed for a charitable purpose? Sol. One person company means a private limited company with only one person as its member. It cannot be formed for charitable purpose. 25. Give journal entry for the receipt of calls in arrears of allotment at the time of receipt of first call. Bank A/c Dr. To Share First Call A/c To Calls In arrears A/c (Being cash received for share first call as well share allotment) Page 8

Sample Question Paper. Accountancy (055): Class XII:

Sample Question Paper. Accountancy (055): Class XII: Sample Question Paper Accountancy (055): Class XII: 2017-18 Time: 3 Hours Maximum Marks: 80 General Instructions: 1) This question paper contains two parts- A and B. 2) Part A is compulsory for all. 3)