Series : ONS/1
ACCOUNTANCY
[Time allowed : 3 hours] [Maximum marks : 80]
General Instructions:
(i) This question paper contains two parts A and B.
(ii) Part A is compulsory for all.
(iii) Part B has two options - Option - I Analysis of Financial Statements and Option - II Computerized
Accounting.
(iv) Attempt only one option of Part B.
(v) All parts of a question should be attempted at one place.
PART-A
(Accounting for Partnership Firms and Companies)
1.What is the maximum number of partners that a partnership firm can have ? Name the Act that
provides for the maximum number of partners in a partnership firm.
Sol. According to section 464 of the companies Act, 2013 has been modified w.e.f. 01.04.2014
wherein sub section (1) provides for maximum number of partners permisible for business firm
at 50.
2.A, B and C were partners in a firm sharing profits in the ratio of 3:2:1. They admitted D as a
new partner for 1/8th share in the profits, which he acquired l/16th from B and l/16th fromC.
Calculate the new profit sharing ratio of A, B, C and D.
New Ratio = 24 : 13 : 5 : 6
3.Distinguish between ‘Dissolution of Partnership’ and ‘Dissolution of Partnership Firm’ on the
basis of ‘Economic Relationship’.
Sol.
4. State the provisions of the Companies Act, 2013 for the creation of ‘Debenture Redemption
Reserve’.
Sol. As per Rule 18(7), the company shall create a DRR with the following conditions:
(a) No DRR is required for debentures issued by RBI and Banking Companies.
(b) For other companies including manufacturing and infrastructure companies, the
adequacy of DRR will be 25% of the value of debentures through public issued.
5. On 1-1-2016 the first call of Rs. 3 per share became due on 1,00,000 equity shares issued by
Kamini Ltd. Karan a holder of 500 shares did not pay the first call money. Arjun a shareholder
holding 1000 shares paid the second and final call of Rs. 5 per share along with the first call.
Pass the necessary journal entry for the amount received by opening ‘Calls-in-arrears’ and
‘Calls-in-advance’ account in the books of the company.
6. Nusrat and Sonu were partners in a firm sharing profits in the ratio of 3:2. During the year
ended 31-3-2015 Nusrat had withdrawn Rs. 15,000. Interest on her drawings amounted to Rs.
300.
Pass necessary journal entry for charging interest on drawings assuming that the capitals ofthe partners were fixed.
8. State any three circumstances other than (i) admission of a new partner; (ii) retirement ofa
partner and (iii) death of a partner, when need for valuation of goodwill of a firm may arise.
Sol. Other three circumstances are:
(i) Change in profit sharing ratio
(ii) Amalgamation of two or more firm
(iii) Dissolution of a firm
9. Sandesh Ltd. took over the assets of Rs. 7,00,000 and liabilities of Rs. 2,00,000 from Sanchar
Ltd. for a purchase consideration of Rs. 4,59,500. Rs. 8,500 were paid by accepting a draft in
favour of Sanchar Ltd. payable after three months and the balance was paid by issue of equity
shares of Rs. 10 each at a premium of 10% in favour of Sanchar Ltd.
Chattisgarh. X Ltd. decided to set-up a power plant. For raising funds the company decided
to issue 7,50,000 equity shares of Rs. 10 each at a premium of 50%. The whole amount was
payable on application. Applications for 20,00,000 shares were received. Applications for
50,000 shares were rejected and shares were allotted to the remaining applicants on pro-rata
basis.
Pass necessary journal entries for the above transactions in the books of the company and
identify any two values which X Ltd. wants to propagate.
11. P and Q were partners in a firm sharing-profits in the ratio of 5:3. On 1-4-2014 they admitted
R as a new partner for l/8th share in the profits with a guaranteed profit of Rs. 75,000. The
new profit sharing ratio between P and Q will remain the same but they agreed to bear any
deficiency on account of guarantee to R in the ratio 3:2. The profit of the firm for the year ended
31-3-2015 was Rs. 4,00,000.
Prepare Profit and Loss Appropriation Account of P, Q and R for the year ended 31-3-201.5.
12. Vikas, Vishal and Vaibhav were partners in a firm sharing profits in the ratio of 2:2:1. The
firm closes its books on 31st March every year. On 31-12-2015 Vaibhav died. On that date his
Capital account showed a credit balance of Rs. 3,80,000 and Goodwill of the firm was valued at
Rs. 1,20,000. There was a debit balance of Rs. 50,000 in the profit and loss account. Vaibhavs
share of profit in the year of his death was to be calculated on the basis of the average profit of
last five years. The average profit of last five years was Rs. 75,000.
Pass necessary journal entries in the books of the firm on Vaibhav’s death.
13. L and M were partners in a firm sharing profits in the ratio of 2:3. On 28-2-2016 the firm was
dissolved. After transferring assets (other than cash) and outsiders’ liabilities to realization
account you are given the following information :
(a) A creditor for Rs. 1,40,000 accepted building valued at Rs. 1,80,000 and paid to the firm
Rs. 40,000.
(b) A second creditor for Rs. 30,000 accepted machinery valued at Rs. 28,000 in full settlement
of his claim.
(c) A third creditor amounting to Rs. 70,000 accepted Rs. 30,000 in cash and investments of
the book value of Rs. 45,000 in full settlement of his claim.
(d) Loss on dissolution was Rs. 4,000.
Pass necessary journal entries for the above transactions in the books of the firm assuming
that all payments were made by cheque
14. Ashok, Bhim and Chetan were partners in a firm sharing profits in the ratio of 3:2:1. Their
Balance Sheet as on 31-3-2015 was as follows
Ashok, Bhim and Chetan decided to share the future profits equally, w.e.f. April 1, 2015. For
this it was agreed that:
(i) Goodwill of the firm be valued at Rs. 3,00,000.
(ii) Land be revalued at Rs. 1,60,000 and building be depreciated by 6%.
(iii) Creditors of Rs. 12,000 were not likely to be claimed and hence be writtenoff.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the reconstituted
firm.
15. On 1-4-2013 JN Ltd. had 10,000, 9% Debentures of Rs. 100 each outstanding.
(i) On 1-4-2014 the company purchased in the open market 2000 of its own debentures for
Rs. 101 each and cancelled the same immediately.
(ii) On 1-4-2015 the company redeemed at par debentures of Rs. 4,00,000 by draw of a lot.
(iii) On 28-2-2016 the remaining debentures were purchased for immediate cancellation for
Rs. 3,97,000.
Pass necessary journal entries for the above transactions in the books of the company ignoring
debenture redemption reserve and interest on debentures.
16. KS Ltd. invented applications for issuing 1,60,000 equity shares of Rs. 10 each at a premium
of Rs. 6 per share. The amount was payable as follows:
On Application Rs. 4 per share (including premium Rs. 1 per share)
On Allotment Rs. 6 per share (including premium Rs. 3 per share)
One First and Final Call – Balance.
Applications for 3,20,000 shares were received. Applications for 80,000 share were rejected and
application money refunded. Shares were allotted on pro-rata basis to the remaining applicants.
Excess money received with applications was adjusted towards sums due on attoment. Jain
holding 800 shares failed to pay the allotment money. His shares were forfeited immediately
after allotment. Afterwords the final call was made. Gupta who had applied for 1200 shares
failed to pay the final call. This shares were also forfeited. Out of the forfeited shares 1000
shares were re-issued at Rs. 8 per share fully paid up. The re-issued shares included all the
forfeited shares of Jain.
Pass necessary journal entries for the above transactions in the books of KS Ltd.
OR
GG Ltd. had issued 50,000 equity shares of Rs. 10 each at a premium of Rs. 2 per share
payable with application money. The incomplete journal entries related to the issue are given
below. You are required to complete these blanks
17. A, B and C were partners in a firm sharing profits in the ratio of 3:2:1. On 31-3-2015 their
Balance Sheet was as follows :
On the above date D was admitted as a new partner and it was decided that:
(i) The new profit sharing ratio between A, B, C and D will be 2:2:1:1.
(ii) Goodwill of the firm was valued at Rs. 90,000 and D brought his share of goodwill premium
in cash.
(iii) The market value of investments was Rs. 24,000.
(iv) Machinery will be reduced to Rs. 29,000.
(v) A creditor of Rs. 3,000 was not likely to claim the amount and hence to be written-off.
(vi) D will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of the
reconstituted firm
OR
X, Y and Z were partners in a firm sharing profit’s in the ratio of 5:3:2. On 31-3-2015 their
Balance Sheet was as follows :
(1) Goodwill of the firm was valued at Rs. 51,000.
(2) There was a claim of Rs. 4,000 for Workmen’s Compensation.
(3) Provision for bad debts was to be reduced by Rs. 1,000.
(4) Y will be paid Rs. 8,200 in cash and the balance will be transferred in his loan account
which will be paid in four equal yearly instalments together with interest @ 10% p.a.
(5) The new profit sharing ratio between X and Z will be 3:2 and their capitals will be in
their new profit sharing ratio. The capital adjustments will be done by opening current
accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the
reconstituted firm.
PART-B
(Analysis of Financial Statements)
18. ‘An enterprise may hold securities and loans for dealing or trading purposes in which case they
are similar to inventory acquired specifically for resale.’ Is the statement correct ? Cash flows
from such activities will be classified under which type of activity while preparing Cash Flow
Statement?
Sol. Yes, Cash flows from such activities are classified under the head operating activities.
19. Give the meaning of ‘Cash Equivalents’ for the purpose of preparing Cash Flow Statemet.
Sol. Cash equivalents are those current assets which can be converted into cash within a short
period without much fall in their values. For example, cheque in hand, marketable security.
20. (a) One of the objectives of ‘Financial Statements Analysis’ is to identify the reasons for change
in the financial position of the enterprise. State two more objectives of this analysis.
(b) Name any two items that are shown under the head ‘Other Current Liabilities’ and any
two items that are shown under the head ‘Other Current Assets’ in the Balance Sheet of
a company as per Schedule III of the Companies Act, 2013.
Sol. (a) Two more objectives are:
(i) To evaluate the business in terms of profit in present and future.
(ii) To evaluate the efficiency of various parts or departments of the business.
(b) Other Current Liabilities:
(i) Unpaid dividend
(ii) Current maturities of long term debt
Other Current Assets:
(i) Discount in issue of debenture (to be written off within 12 months)
(ii) Accrued incomes
21. (a) What is meant by solvency of business ?
(b) From the following details obtained from the financial statements of Jeev Ltd., calcute
interest coverage ratio :
Net Profit after tax Rs. 1,20,000,
12% Long-term Debt Rs. 20,00,000,
Tax Rate 40%.
Sol. (a) Solvency is the ability of a company to meet its long-term financial obligations.
(b) Profit before Interest and Tax = Profit after Interest and Tax + Tax + Interest on debts
ended 31st March,2015:
convey to the society
