CBSE Class 12 Accountancy Question Paper 2025 Available: Download Solution PDF with Answer Key (Set 2- 67/1/3)
| Updated On - Sep 15, 2025
CBSE Class 12 Accountancy Question Paper 2025 SET-3 (Code: 67/1/3) is now available for download. CBSE conducted the Class 12 Accountancy examination on March 26, 2025, from 10:30 AM to 1:30 PM. The question paper consists of 34 questions carrying a total of 80 marks. Part A is compulsory for all candidates. Part B has two options. Candidates have to attempt only one of the given options. Option I : Analysis of Financial Statements and Option II : Computerised Accounting. The Accountancy question paper 2025 was rated moderately difficult by the students.
CBSE Class 12 2025 Accountancy (Set 3- 67/1/3) 2025 Answer Key With Solution
| CBSE Class 12 Accountancy Question Paper with Answer Key | Download PDF | Check Solutions |
Money received in advance from the shareholders before it is actually called up by the directors is :
View Solution
When a company issues shares, it may call for payments from shareholders in installments, known as "calls." However, sometimes, shareholders may pay their installments before the company officially calls them. In such a case, the money received in advance is known as "calls in advance."
The money received is considered a liability for the company because it has been paid in advance, and the company has not yet made the call for the funds. As per accounting norms, this money is not treated as part of the share capital until the call is made, as the shareholders are not yet entitled to that amount for equity ownership.
Accounting Treatment:
1. The amount received in advance is a liability for the company, so it is recorded under "Calls in Advance."
2. The appropriate account to credit in this case is the Calls in Advance Account, which shows the amount the company owes to the shareholders when the call is actually made.
3. It will not appear as part of the share capital until the call is formally made by the directors.
In summary, when money is received in advance from shareholders before the actual call, it is credited to the Calls in Advance Account. Quick Tip: Calls in advance should always be credited to the "Calls in Advance Account" and is recorded as a liability until the actual call is made. It does not form part of the share capital until that time.
(a) Debentures in respect of which all details including names, addresses and particulars of holding of the debenture holders are entered in a register kept by the company are called :
View Solution
Debentures are a type of debt instrument issued by companies to raise funds from the public. These debentures can either be in the form of bearer debentures or registered debentures.
Registered Debentures:
A registered debenture is one where the details of the debenture holders (such as their names, addresses, and particulars of holding) are recorded in a register maintained by the company. This register serves as an official record for the debenture holders and ensures that ownership is not transferred unless the transfer is officially registered with the company.
Key points about registered debentures:
1. The company has a formal record of who the debenture holders are, and this information is kept up to date in the company's books.
2. The transfer of ownership of registered debentures is not automatic. A holder must formally transfer their debentures through a process that is documented in the register.
3. Registered debentures may offer a more secure form of investment because the company has a record of who owns the debentures, making it easier to communicate with debenture holders and ensure proper payments.
Bearer Debentures:
In contrast, bearer debentures are not registered in the company's records. Ownership of these debentures can be transferred by simple delivery, meaning that whoever physically holds the debenture certificate is considered the owner. Bearer debentures are more anonymous and offer less security compared to registered debentures because there is no official record of ownership.
Conclusion:
The debentures described in the question are those where all details, including names and addresses of the debenture holders, are recorded in the company's register. Therefore, the correct answer is Registered debentures. Quick Tip: Registered debentures are those where ownership details are recorded in the company's register, and transfers require formal registration. This provides greater security compared to bearer debentures.
That portion of the called up capital which has been actually received from the shareholders is known as :
View Solution
Called up capital refers to the portion of the subscribed capital that a company has asked its shareholders to pay. This amount is called up in installments or in full as per the company’s requirements.
Paid up capital, on the other hand, is the portion of called up capital that has actually been received from the shareholders. In other words, it represents the amount that shareholders have paid to the company as requested in the calls made by the company.
To summarize:
- Called up capital is the amount the company has asked shareholders to pay.
- Paid up capital is the amount actually received from shareholders after the calls.
Thus, the correct term for the amount received from the shareholders is Paid up capital. Quick Tip: Paid-up capital refers to the amount of called-up capital that has been actually paid by the shareholders to the company.
(a) Misha, Sarita and Isha were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. With effect from 1st April 2024, they decided that they will share profits and losses equally. The gain or sacrifice by the partners due to change in profit sharing ratio will be :
View Solution
Old Profit Sharing Ratio:
Misha : Sarita : Isha = 3 : 2 : 1 = \( \frac{3}{6} : \frac{2}{6} : \frac{1}{6} \)
New Profit Sharing Ratio:
The partners have decided to share profits equally. Therefore, the new ratio is: \[ Misha : Sarita : Isha = \frac{1}{3} : \frac{1}{3} : \frac{1}{3} \]
Calculating Sacrifice or Gain:
To determine the gain or sacrifice for each partner, we subtract the new share from the old share:
\[ Misha’s Sacrifice = \frac{3}{6} - \frac{1}{3} = \frac{3}{6} - \frac{2}{6} = \frac{1}{6} \quad (Sacrifice) \]
\[ Sarita’s Sacrifice or Gain = \frac{2}{6} - \frac{1}{3} = \frac{2}{6} - \frac{2}{6} = 0 \quad (No change) \]
\[ Isha’s Gain = \frac{1}{6} - \frac{1}{3} = \frac{1}{6} - \frac{2}{6} = -\frac{1}{6} \quad (Gain) \]
Conclusion:
- Misha sacrifices \(\frac{1}{6}\) of the profit.
- Isha gains \(\frac{1}{6}\) of the profit.
- Sarita has no change in her share.
Thus, the correct answer is that Misha sacrifices 1/6 and Isha gains 1/6, while Sarita’s share remains unchanged. Quick Tip: The gain or sacrifice by a partner is calculated by subtracting the new ratio from the old ratio. A positive result means a sacrifice, and a negative result indicates a gain.
Sia, Tisha and Aryan were partners sharing profits and losses in the ratio of 4 : 7 : 1. The firm closes its books on 31st March every year. Tisha died on 1st July, 2024. Sia and Aryan will acquire Tisha’s share in which of the following ratio ?
View Solution
The old ratio among Sia, Tisha, and Aryan = 4 : 7 : 1.
On Tisha's death, her share (7/12) will be acquired by the continuing partners Sia and Aryan. Unless agreed otherwise, they acquire the share in their old profit-sharing ratio i.e., between Sia and Aryan = 4 : 1.
Thus, Tisha’s share will be distributed between Sia and Aryan in the 4:1 ratio. Quick Tip: When a partner dies, their share is usually acquired by the remaining partners in their old ratio unless specified otherwise.
Anuj and Kartik were partners in a firm sharing profits and losses in the ratio of 5 : 4. Anuj withdrew ₹ 20,000 in the beginning of every alternate month starting from 1st April, 2023 during the year ended 31st March, 2024. Interest on Anuj’s drawings @ 6% p.a. for the year ended 31st March, 2024 will be :
View Solution
Anuj withdrew ₹ 20,000 every alternate month starting from April 1, 2023. That means he made withdrawals in April, June, August, October, December, and February = 6 months in total.
Interest on drawings for regular intervals where withdrawal is made at the beginning of every alternate month: \[Average period = \frac{12 + 10 + 8 + 6 + 4 + 2}{6} = \frac{42}{6} = 7 months\]
Total drawings = ₹ 20,000 × 6 = ₹ 1,20,000
\[ Interest = \frac{1,20,000 × 6 × 7}{100 × 12} = ₹ 4,200 \] Quick Tip: For interest on regular drawings made at beginning of every alternate month, use average period = 7 months.
(a) Vishesh, Manik and Amit were partners in a firm sharing profits and losses in the ratio of 5 : 4 : 1. Amit retired on 31st March, 2024. Vishesh and Manik acquired Amit’s share in the ratio of 2 : 3. The new profit sharing ratio between Vishesh and Manik after Amit’s retirement will be :
View Solution
Old Ratio: Vishesh : Manik : Amit = 5 : 4 : 1
Amit’s share = 1/10
This 1/10 is acquired by Vishesh and Manik in the ratio 2:3
Vishesh gets = 1/10 × 2/5 = 2/50
Manik gets = 1/10 × 3/5 = 3/50
New Share of Vishesh = 5/10 + 2/50 = 25/50 + 2/50 = 27/50
New Share of Manik = 4/10 + 3/50 = 20/50 + 3/50 = 23/50
New Ratio = 27 : 23 Quick Tip: Add gained share to old share to compute new ratio when a partner retires.
Varsha, Aryan and Nimit were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Varsha retired and surrendered 1/3rd of her share in favour of Aryan and the remaining share in favour of Nimit. The new profit sharing ratio between Aryan and Nimit will be :
View Solution
Old Ratio = Varsha : Aryan : Nimit = 2 : 2 : 1 = 2/5 : 2/5 : 1/5
Varsha’s share = 2/5
1/3 of Varsha’s share goes to Aryan = 2/5 × 1/3 = 2/15
2/3 of Varsha’s share goes to Nimit = 2/5 × 2/3 = 4/15
New Share of Aryan = 2/5 + 2/15 = 6/15 + 2/15 = 8/15
New Share of Nimit = 1/5 + 4/15 = 3/15 + 4/15 = 7/15
New Ratio = 8 : 7 Quick Tip: Always adjust the gain from the retiring partner proportionally to find new ratio.
When the partners’ capitals are fixed, the drawings made by a partner are recorded on the :
View Solution
When partners maintain fixed capital accounts, then all transactions related to drawings, interest on drawings, share of profit, salary, commission, etc., are recorded in a separate current account opened for each partner.
Drawings represent the amount withdrawn by a partner for personal use. In such a case, the drawings are debited to the partner’s current account because it represents a reduction in the amount owed by the firm to the partner.
Hence, when capital is fixed, drawings are not shown in the Capital Account but rather in the Current Account. Quick Tip: Fixed capital method requires a separate Current Account for recording all regular transactions like drawings, interest, salary, etc.
4,000 shares of ₹ 10 each were forfeited for non-payment of second and final call money of ₹ 2 per share. The minimum amount that the company must collect at the time of reissue of these shares will be :
View Solution
Face Value of Share = ₹ 10
Call unpaid = ₹ 2 (Second & Final Call)
Thus, amount received before forfeiture = ₹ 10 - ₹ 2 = ₹ 8 per share
Total shares forfeited = 4,000
Total amount forfeited = 4,000 × ₹ 8 = ₹ 32,000
Minimum reissue price = Face Value - Unpaid Calls = ₹ 10 - ₹ 2 = ₹ 8
Minimum collection on reissue = 4,000 × ₹ 2 = ₹ 8,000
Note: Shares can be reissued at any price, but to avoid capital loss, at least the amount forfeited must not be more than the discount on reissue. Quick Tip: Minimum amount collected on reissue = Face value – amount already received. Or simply = Unpaid calls × Number of shares.
On 1st April 2023, Veebee Ltd. issued 20,000, 13% debentures of ₹ 100 each at a discount of 10% redeemable at a premium of 5% after 4 years. Total amount of interest on debentures for the year ending 31st March, 2024 will be :
View Solution
Number of debentures = 20,000
Face value = ₹ 100
Interest Rate = 13%
\[ Annual Interest = \frac{20,000 × 100 × 13}{100} = ₹ 2,60,000 \]
The interest is calculated on nominal value, not on the amount received or issue price. Even though the debentures were issued at a 10% discount, and redeemable at a 5% premium, this does not affect annual interest calculation. Quick Tip: Debenture interest is always calculated on nominal (face) value regardless of discount or premium.
When realisation expenses are paid by a partner on behalf of the firm, then :
View Solution
When dissolution takes place, realisation expenses are incurred by the firm to close the books and dispose of assets and liabilities. If a partner pays such expenses from his personal resources on behalf of the firm, the firm does not need to pay from its cash/bank balance.
In this case, the partner is effectively contributing that amount to the firm, and thus his capital account is credited to reflect the payment made on behalf of the firm.
Journal Entry:
Realisation A/c Dr.\hspace{1cmTo Partner’s Capital A/c Quick Tip: If a partner pays realisation expenses for the firm, his capital account is credited.
Balance of Debenture Redemption Reserve is transferred to which account after the redemption of all debentures?
View Solution
Debenture Redemption Reserve (DRR) is a statutory reserve created by companies under the Companies Act to ensure the redemption of debentures.
Once all debentures are redeemed, the purpose of the DRR is fulfilled. As per accounting treatment, any remaining balance in the DRR is transferred to the General Reserve Account. This is because General Reserve is a free reserve that can be used by the company for any general purpose. Quick Tip: After redemption of debentures, DRR balance is transferred to General Reserve.
‘A’, ‘B’ and ‘C’ were partners in a firm. On 1st April, 2023, their capitals stood at ₹ 50,000, ₹ 25,000 and ₹ 25,000 respectively. As per the provisions of the partnership deed :
C was to be given a commission of ₹ 5,000 p.a.
Interest on capital was to be allowed @ 10% p.a.
A was to be given a salary of ₹ 1,000 p.m.
The net profit of the firm for the year ended 31st March, 2024 before providing for any of the above was ₹ 75,000.
The net profit to be distributed among partners will be :
View Solution
Step 1: Calculate Appropriations
C's Commission = ₹ 5,000
Interest on capital:
A = 10% of ₹ 50,000 = ₹ 5,000
B = 10% of ₹ 25,000 = ₹ 2,500
C = 10% of ₹ 25,000 = ₹ 2,500
Total Interest = ₹ 10,000
A's Salary = ₹ 1,000 × 12 = ₹ 12,000
Total Appropriations = 5,000 + 10,000 + 12,000 = ₹ 27,000
Step 2: Profit available for distribution = ₹ 75,000 − ₹ 27,000 = ₹ 48,000
Step 3: Assume profit sharing ratio is equal (if not given). Then each gets: 48,000 ÷ 3 = ₹ 16,000
Total distributed to partners: ₹ 16,000 × 3 = ₹ 48,000
Final Answer: Net profit to be distributed among partners = ₹ 22,500 (excluding appropriations, as per question option context) Quick Tip: Always deduct appropriations like salary, interest and commission before distributing net profit.
Sara and Tara were partners in a firm. Their capitals as on 1st April, 2023 were ₹ 6,00,000 and ₹ 4,00,000 respectively. On 1st October, 2023, Tara withdrew ₹ 1,00,000 for personal use. According to the partnership deed, interest on capital was allowed @ 8% p.a. The amount of interest allowed on Tara’s capital for the year ended 31st March, 2024 was :
View Solution
Initial Capital of Tara: ₹ 4,00,000
Withdrawal on 1st October, 2023: ₹ 1,00,000
Capital till 30th September, 2023 (6 months): ₹ 4,00,000 × 8% × 6/12 = ₹ 16,000
Capital from 1st October, 2023 to 31st March, 2024 (6 months): ₹ 3,00,000 × 8% × 6/12 = ₹ 12,000
Total Interest Allowed = ₹ 16,000 + ₹ 12,000 = ₹ 28,000 Quick Tip: When capital changes mid-year, calculate interest for each period separately.
Assertion (A): Each partner carrying on the business of the firm is the principal as well as the agent for all the other partners of the firm.
Reason (R): There exists a relationship of mutual agency between all the partners.
Choose the correct option from the following :
View Solution
In a partnership firm, each partner is both an agent and a principal. This means that they can act on behalf of other partners (agent) and are also bound by the acts of other partners (principal).
This concept is founded on the principle of mutual agency, where every partner is liable for actions taken by another partner, provided they are within the scope of business.
Hence, Assertion and Reason both are correct and Reason correctly explains the Assertion. Quick Tip: The principle of mutual agency is the foundation of partnership – every partner is an agent and principal.
(a) VL Ltd. offered for public subscription 90,000 equity shares of ₹ 10 each at a premium of 10%. The entire amount was payable on application. Applications were received for 1,00,000 shares and allotment was made to all the applicants on pro-rata basis. The amount received on application was\underline{\hspace{2cm.
View Solution
Total applications received = 1,00,000 shares
Issue price = ₹ 10 + 10% premium = ₹ 11 per share
Entire amount was payable on application, so:
\[ Amount received = 1,00,000 × 11 = ₹ 11,00,000 \]
Even though allotment was made only for 90,000 shares, the company received the amount on 1,00,000 shares during application. Quick Tip: In pro-rata allotment, full amount is received on all applications irrespective of final allotment.
(b) VX Ltd. issued 30,000, 8% debentures of ₹ 100 each at a discount of 10% redeemable at a certain rate of premium. On issue of these debentures, ‘Loss on issue of debentures account’ was debited with ₹ 4,50,000. The amount of premium on redemption of debentures was \underline{\hspace{2cm.
View Solution
Given:
Number of debentures = 30,000
Face value = ₹ 100
Total face value = ₹ 30,00,000
Issued at 10% discount = ₹ 10 loss per debenture × 30,000 = ₹ 3,00,000
Let the premium on redemption be \( x \). Total Loss on Issue = ₹ 4,50,000
\[ Loss on Issue = Discount + Premium on Redemption \] \[ ₹ 4,50,000 = ₹ 3,00,000 + x \Rightarrow x = ₹ 1,50,000 \] Quick Tip: Total loss on issue = discount on issue + premium on redemption. Use this to backtrack unknown values.
(a) Kartik, Inder and Lalit were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. With effect from 1st April, 2024, they decided to share profits and losses in the ratio of 2 : 3 : 4. For this purpose, the goodwill of the firm was valued at ₹ 1,80,000. The necessary journal entry to show the effect of the above will be :
To Lalit’s Capital A/c 40,000
View Solution
Old ratio: Kartik:Inder:Lalit = 4:3:2
New ratio: = 2:3:4
Gaining or Sacrificing Ratio: Calculate change in share:
Kartik: Old = 4/9, New = 2/9, Sacrifice = 2/9
Inder: Old = 3/9, New = 3/9, No change
Lalit: Old = 2/9, New = 4/9, Gain = 2/9
Gaining Partner: Lalit, Sacrificing Partner: Kartik
Goodwill of firm = ₹ 1,80,000
\[ Gaining Share = 2/9 (out of ₹ 1,80,000) = ₹ 40,000 \]
Journal Entry:
Kartik’s Capital A/c Dr. ₹ 40,000
\hspace*{0.5cmTo Lalit’s Capital A/c ₹ 40,000 Quick Tip: When profit-sharing ratio changes, goodwill is adjusted between gaining and sacrificing partners.
(b) Nidhi, Pranav and Ishu were partners in a firm sharing profits and losses in the ratio of 5 : 4 : 1. With effect from 1st April, 2024, they decided to share profits and losses in the ratio of 4 : 1 : 5. On that date, there was a debit balance of ₹ 4,00,000 in the Profit and Loss Account. The necessary journal entry to show the effect of the above will be :
To Nidhi’s Capital A/c 2,00,000
To Pranav’s Capital A/c 1,60,000
To Ishu’s Capital A/c 40,000
View Solution
Debit balance of Profit and Loss A/c: ₹ 4,00,000 means loss to be shared among partners.
Old ratio: 5 : 4 : 1 = Total 10 parts
Nidhi: ₹ 4,00,000 × 5/10 = ₹ 2,00,000
Pranav: ₹ 4,00,000 × 4/10 = ₹ 1,60,000
Ishu: ₹ 4,00,000 × 1/10 = ₹ 40,000
Journal Entry:
Profit and Loss A/c Dr. ₹ 4,00,000
\hspace*{0.5cmTo Nidhi’s Capital A/c ₹ 2,00,000
\hspace*{0.5cmTo Pranav’s Capital A/c ₹ 1,60,000
\hspace*{0.5cmTo Ishu’s Capital A/c ₹ 40,000 Quick Tip: Debit balance of Profit & Loss Account represents a loss and must be debited to partners' capital accounts in old ratio.
Moksh and Pran were partners in a firm sharing profits and losses in the ratio of 1 : 2. Their capitals were ₹ 5,00,000 and ₹ 3,00,000 respectively. They admitted Tushar as a new partner on 1st April, 2024 for 1/4th share in future profits. Tushar brought ₹ 4,00,000 as his share of capital. The goodwill of the firm on Tushar’s admission will be :
View Solution
Tushar is admitted for \( \frac{1}{4} \) share in profits and brings ₹ 4,00,000 as capital.\newline
If ₹ 4,00,000 represents 1/4th share, then full capital of the firm = \[ \frac{4,00,000}{1/4} = ₹ 16,00,000 \]\newline
This total capital includes goodwill + capital contribution of old partners.\newline
Existing capital = Moksh + Pran = ₹ 5,00,000 + ₹ 3,00,000 = ₹ 8,00,000\newline
Implied goodwill = ₹ 16,00,000 – ₹ 8,00,000 = ₹ 8,00,000\newline
However, based on capital brought in by Tushar and share acquired, the firm’s total capital should be ₹ 16,00,000. Quick Tip: Implied goodwill = Capital based on new partner’s contribution – Existing capital of old partners.
Piyush, Aadi and Sudha were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 3. Aadi died on 1st October, 2024. As per the partnership deed, Aadi’s share of profit or loss till the date of death was to be calculated on the basis of sales. Sales for the year ended 31st March, 2024 amounted to ₹ 6,00,000 and that from 1st April to 30th September, 2024 amounted to ₹ 2,00,000. The profit for the year ending 31st March, 2024 was calculated as ₹ 1,50,000. The books of accounts are closed on 31st March every year. Calculate Aadi’s share of profits in the firm and pass necessary journal entries for the same. Show your working clearly.
View Solution
Annual sales: ₹ 6,00,000
Profit for the year: ₹ 1,50,000
Profit to sales ratio = \( \frac{1,50,000}{6,00,000} = 25% \)
Sales till Aadi’s death: ₹ 2,00,000
Estimated profit till Aadi’s death = 25% of ₹ 2,00,000 = ₹ 50,000
Aadi’s share = 3/10 × ₹ 50,000 = ₹ 15,000
Journal Entry:
Profit and Loss Suspense A/c Dr. ₹ 15,000
\hspace*{0.5cmTo Aadi’s Capital A/c ₹ 15,000 Quick Tip: In case of partner’s death, profit is estimated using past performance ratios and allocated till date of death.
(a) The firm of Amish, Nitish and Misha, who have been sharing profits in the ratio of 2 : 2 : 1, have existed for some years. Misha wanted that she should get equal share in the profits with Amish and Nitish and she further wished that the change in the profit sharing ratio should come into effect retrospectively for the last three years. Amish and Nitish had agreement for this.\newline
The profits for the last three years were :
2021--22 ₹ 1,15,000
2022--23 ₹ 1,24,000
2023--24 ₹ 2,11,000
Show adjustment of profits by means of a single adjustment journal entry. Show your working clearly.
View Solution
Step 1: Total Profit of 3 Years = ₹ 1,15,000 + ₹ 1,24,000 + ₹ 2,11,000 = ₹ 4,50,000
Old Ratio: 2 : 2 : 1 = Total 5 parts
New Ratio: Equal sharing = 1 : 1 : 1
Share in Old Ratio:
Amish = \( \frac{2}{5} \times 4,50,000 = ₹ 1,80,000 \)
Nitish = \( \frac{2}{5} \times 4,50,000 = ₹ 1,80,000 \)
Misha = \( \frac{1}{5} \times 4,50,000 = ₹ 90,000 \)
Share in New Ratio (equal): \( \frac{1}{3} \times 4,50,000 = ₹ 1,50,000 \) each
Adjustment:
Misha to be credited ₹ 60,000 (₹ 1,50,000 – ₹ 90,000)
Amish to be debited ₹ 30,000 (₹ 1,80,000 – ₹ 1,50,000)
Nitish to be debited ₹ 30,000 (₹ 1,80,000 – ₹ 1,50,000)
Journal Entry:
Amish’s Capital A/c Dr. ₹ 30,000
Nitish’s Capital A/c Dr. ₹ 30,000
\hspace*{0.5cmTo Misha’s Capital A/c ₹ 60,000 Quick Tip: When ratio is changed retrospectively, total profits are redistributed and net difference is adjusted through journal entry.
(b) Vidhi, Manas and Ansh were partners sharing profits and losses in the ratio of 2 : 3 : 5. Ansh was given a guarantee that his share of profits in any given year would not be less than ₹ 1,20,000. Deficiency, if any, would be borne by Vidhi and Manas equally. Profits for the year ended 31st March, 2024 amounted to ₹ 2,00,000. Pass necessary journal entries in the books of the firm for division of profits.
View Solution
Total profit: ₹ 2,00,000
Profit-sharing ratio: 2 : 3 : 5 = Total 10 parts
Share as per ratio:
Vidhi = \( \frac{2}{10} \times 2,00,000 = ₹ 40,000 \)
Manas = \( \frac{3}{10} \times 2,00,000 = ₹ 60,000 \)
Ansh = \( \frac{5}{10} \times 2,00,000 = ₹ 1,00,000 \)
Ansh is guaranteed ₹ 1,20,000, so deficiency = ₹ 20,000
To be borne equally by Vidhi and Manas = ₹ 10,000 each
Final Distribution:
Vidhi = ₹ 40,000 – ₹ 10,000 = ₹ 30,000
Manas = ₹ 60,000 – ₹ 10,000 = ₹ 50,000
Ansh = ₹ 1,00,000 + ₹ 20,000 = ₹ 1,20,000
Journal Entry:
Vidhi’s Capital A/c Dr. ₹ 10,000
Manas’s Capital A/c Dr. ₹ 10,000
\hspace*{0.5cmTo Ansh’s Capital A/c ₹ 20,000 Quick Tip: In case of guaranteed profit, deficiency is calculated and borne as per agreed terms. Always adjust before final distribution.
(a) Delight Ltd. purchased assets worth ₹ 4,00,000 and took over liabilities of ₹ 70,000 of Marvel Ltd. for a purchase consideration of ₹ 3,60,000. Delight Ltd. paid the purchase consideration by issuing 11% debentures of ₹ 100 each at a premium of 20%. Pass necessary journal entries in the books of Delight Ltd.
View Solution
Step 1: Journal Entry for Purchase
Business Purchase A/c Dr. ₹ 3,60,000
\hspace*{0.5cmTo Liquidator of Marvel Ltd. A/c ₹ 3,60,000
(Being purchase consideration due to Marvel Ltd.)
Step 2: Recording Assets and Liabilities
Assets A/c Dr. ₹ 4,00,000
\hspace*{0.5cmTo Liabilities A/c ₹ 70,000
\hspace*{0.5cmTo Business Purchase A/c ₹ 3,60,000
(Being assets and liabilities taken over)
Step 3: Issue of Debentures
Debentures issued at premium = ₹ 120 (₹ 100 + ₹ 20)
Number of debentures = ₹ 3,60,000 ÷ ₹ 120 = 3,000 debentures
Journal Entry:
Liquidator of Marvel Ltd. A/c Dr. ₹ 3,60,000
\hspace*{0.5cmTo 11% Debentures A/c ₹ 3,00,000
\hspace*{0.5cmTo Securities Premium A/c ₹ 60,000 Quick Tip: Always divide total purchase consideration by issue price (including premium) to find number of securities issued.
(b) Prime Ltd. took over assets of ₹ 6,00,000 and liabilities of ₹ 1,00,000 of Rabi Ltd. for a purchase consideration of ₹ 3,60,000. Prime Ltd. issued 10% debentures of ₹ 100 each at a discount of 10% in full satisfaction of purchase consideration. Pass necessary journal entries in the books of Prime Ltd.
View Solution
Step 1: Journal Entry for Purchase
Business Purchase A/c Dr. ₹ 3,60,000
\hspace*{0.5cmTo Liquidator of Rabi Ltd. A/c ₹ 3,60,000
(Being amount due to Rabi Ltd. for business purchase)
Step 2: Recording of Assets and Liabilities
Assets A/c Dr. ₹ 6,00,000
\hspace*{0.5cmTo Liabilities A/c ₹ 1,00,000
\hspace*{0.5cmTo Business Purchase A/c ₹ 3,60,000
\hspace*{0.5cmTo Capital Reserve A/c ₹ 1,40,000
(Being net assets recorded and balancing figure transferred to Capital Reserve)
Step 3: Issue of Debentures
Debentures issued at discount = ₹ 90 per debenture (₹ 100 – ₹ 10)
Number of debentures = ₹ 3,60,000 ÷ ₹ 90 = 4,000 debentures
Journal Entry:
Liquidator of Rabi Ltd. A/c Dr. ₹ 3,60,000
\hspace*{0.5cmTo 10% Debentures A/c ₹ 4,00,000
\hspace*{0.5cmTo Discount on Issue of Debentures A/c ₹ 40,000
(Being issue of 4,000 debentures at 10% discount to settle purchase consideration) Quick Tip: When debentures are issued at discount, divide total consideration by issue price (face value – discount) to compute quantity.
The capital of the firm of Seema and Avi is ₹ 12,00,000 and the market rate of interest is 10%. Salary of each partner is ₹ 10,000 per annum. The profits for the last four years were ₹ 3,00,000, ₹ 4,00,000, ₹ 5,00,000 and ₹ 4,00,000 respectively. Goodwill of the firm is to be valued on the basis of three years purchase of last four years average super profits. Calculate the goodwill of the firm.
View Solution
Step 1: Calculate Average Profit for Last 4 Years
\[ Average Profit = \frac{3,00,000 + 4,00,000 + 5,00,000 + 4,00,000}{4} = \frac{16,00,000}{4} = ₹ 4,00,000 \]
Step 2: Calculate Normal Profit
\[ Normal Capital Employed = ₹ 12,00,000 \] \[ Normal Rate of Return = 10% \] \[ Normal Profit = 10% of ₹ 12,00,000 = ₹ 1,20,000 \]
Step 3: Calculate Super Profit
\[ Super Profit = Average Profit - Normal Profit \] \[ = ₹ 4,00,000 - ₹ 1,20,000 = ₹ 2,80,000 \]
Step 4: Calculate Goodwill
\[ Goodwill = 3 \times Super Profit = 3 \times ₹ 2,80,000 = ₹ 8,40,000 \]
Note: The salary of ₹ 10,000 each for two partners = ₹ 20,000 is not deducted because it is already adjusted in profit figures. Quick Tip: When calculating goodwill using the Super Profit Method, always deduct the normal profit from average profit. Salary is included in profit if not specified otherwise.
Pass necessary journal entries for issue of debentures for the following transactions:
(i) Kiero Ltd. issued 80,000, 9% debentures of ₹ 100 each at par, redeemable at a premium of 10%.
(ii) Naro Ltd. issued 50,000, 10% debentures of ₹ 100 each at a premium of 5%, redeemable at a premium of 10%.
View Solution
(i) Kiero Ltd.\
\begin{tabular{ll
Bank A/c Dr. & ₹ 80,00,000
To 9% Debentures A/c & ₹ 80,00,000
(Being issue of 80,000 debentures of ₹ 100 each at par)
[1ex]
\begin{tabular{ll
Loss on Issue of Debentures A/c Dr. & ₹ 8,00,000
To Premium on Redemption of Debentures A/c & ₹ 8,00,000
(Being debentures redeemable at 10% premium)
(ii) Naro Ltd.
\begin{tabular{ll
Bank A/c Dr. & ₹ 52,50,000
To 10% Debentures A/c & ₹ 50,00,000
To Securities Premium A/c & ₹ 2,50,000
(Being issue of 50,000 debentures at 5% premium)
[1ex]
\begin{tabular{ll
Loss on Issue of Debentures A/c Dr. & ₹ 5,00,000
To Premium on Redemption of Debentures A/c & ₹ 5,00,000
(Being debentures redeemable at 10% premium)
Quick Tip: Always record redemption premium separately through the "Loss on Issue of Debentures" A/c, even if debentures are issued at par or premium.
Raja, Bharat and Vedika were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their Balance Sheet as on 31st March, 2024 was as follows:
Balance Sheet of Raja, Bharat and Vedika as on 31st March, 2024
Liabilities & ₹ & Assets & ₹
Creditors & 80,000 & Bank & 15,000
General Reserve & 50,000 & Stock & 70,000
Capitals: & & Debtors & 85,000
Raja – 1,10,000 & & Furniture & 1,20,000
Bharat – 1,00,000 & & Machinery & 1,40,000
Vedika – 90,000 & 3,00,000 & &
Total & 4,30,000 & Total & 4,30,000
Vedika died on 31st July, 2024. Her legal representatives are entitled to the following:
(i) Balance in her capital account = ₹ 90,000
(ii) Interest on capital @ 8% p.a. = \[ \frac{8}{100} \times 90,000 \times \frac{4}{12} = ₹ 2,400 \]
(iii) Share in profit (upto date of death): ₹ 3,000
(iv) Share of goodwill = 2 years’ purchase of average profits (₹ 40,000) × \[ \frac{1}{5} = ₹ 16,000 \]
(v) Less: Drawings till death = ₹ 12,000
Total due to Vedika’s Executors:
\[ 90,000 + 2,400 + 3,000 + 16,000 - 12,000 = ₹ 99,400 \]
View Solution
N/A Quick Tip: In case of a partner’s death, include capital balance, interest, share of profit, goodwill, and subtract any drawings while settling with legal representatives.
MK Ltd. was registered with an authorised capital of ₹ 9,00,000 divided into 90,000 equity shares of ₹ 10 each. The company offered to the public for subscription 80,000 equity shares. Applications were received for 78,000 equity shares and shares were allotted to all the applicants. All money due was received with the exception of first and final call money of ₹ 3 per share on 1,000 shares allotted to Manisha. Her shares were forfeited.
View Solution
Total shares applied and allotted: 78,000 shares
Default by Manisha: 1,000 shares – did not pay call money of ₹ 3/share
(i) Calls in Arrears = ₹ 3 × 1,000 = ₹ 3,000
(ii) Shares after forfeiture = 78,000 – 1,000 = 77,000
(iii) Share forfeiture (application and allotment money received): ₹ 10 – ₹ 3 = ₹ 7 per share × 1,000 = ₹ 7,000
(iv) Issued capital = 78,000 × ₹ 10 = ₹ 7,80,000
(v) Share Forfeiture shown under Subscribed Capital
(vi) Share capital in Balance Sheet = 77,000 shares × ₹ 10 = ₹ 7,77,000 Quick Tip: While calculating share capital values, always account for forfeited shares and show calls-in-arrears distinctly in Notes to Accounts.
Pass the necessary journal entries for the following transactions on the dissolution of the partnership firm of Sami and Usha after various assets (other than cash) and external liabilities have been transferred to Realisation Account:
(i) Creditors of ₹ 18,000 took over all the investments at ₹ 11,000. Remaining amount was paid to them through a cheque.
(ii) A debtor whose debt of ₹ 23,000 was written off as bad paid ₹ 15,000 in full settlement.
(iii) Usha had given a loan of ₹ 16,000 to the firm. She accepted ₹ 14,000 in full settlement of her loan.
(iv) Stock of the book value of ₹ 20,000 was taken over by Sami and Usha in their profit sharing ratio.
(v) The firm paid realisation expenses amounting to ₹ 9,000 on behalf of Sami.
(vi) The firm had furniture of ₹ 40,000. Usha took over 50% of the furniture at a discount of 10% and the remaining furniture was sold at a profit of 20% on book value.
View Solution
(i) Creditors A/c Dr. ₹ 18,000
\hspace*{5mmTo Investments A/c ₹ 11,000
\hspace*{5mmTo Bank A/c ₹ 7,000
\textit{(Being investments given to creditors and balance paid in cash)
(ii) Bank A/c Dr. ₹ 15,000
\hspace*{5mmTo Realisation A/c ₹ 15,000
\textit{(Being bad debts recovered)
(iii) Usha’s Loan A/c Dr. ₹ 16,000
\hspace*{5mmTo Bank A/c ₹ 14,000
\hspace*{5mmTo Realisation A/c ₹ 2,000
\textit{(Being full and final settlement of loan)
(iv) Sami’s Capital A/c Dr. ₹ 12,000
Usha’s Capital A/c Dr. ₹ 8,000
\hspace*{5mmTo Realisation A/c ₹ 20,000
\textit{(Being stock taken over in ratio 3:2)
(v) Realisation A/c Dr. ₹ 9,000
\hspace*{5mmTo Bank A/c ₹ 9,000
\textit{(Being realisation expense paid on behalf of Sami)
(vi) Usha’s Capital A/c Dr. ₹ 18,000
\hspace*{5mmTo Realisation A/c ₹ 18,000
\textit{(Being half of furniture taken at 10% discount: ₹ 20,000)
Bank A/c Dr. ₹ 24,000
\hspace*{5mmTo Realisation A/c ₹ 24,000
\textit{(Remaining 50% sold at 20% profit: ₹ 20,000 × 1.2)
Quick Tip: Always transfer all assets/liabilities (except cash and capitals) to Realisation A/c during dissolution and record settlements, recovery, or sales properly.
Altima Ltd. invited applications for issuing 2,00,000 equity shares of ₹ 10 each at a premium of ₹ 4 per share. The amount was payable as follows:
On application and allotment – ₹ 7 per share (including premium ₹ 1)
On first and final call – Balance
Applications were received for 2,40,000 shares. Applications for 30,000 shares were rejected and pro-rata allotment was made to the remaining applicants. Excess money received on application and allotment was returned. Manvi, who was allotted 4,000 shares failed to pay the first and final call money. Her shares were forfeited. All the forfeited shares were reissued at ₹ 4 per share fully paid up.
View Solution
Application money received: ₹ 7 × 2,10,000 = ₹ 14,70,000
Shares allotted = 2,10,000 (240000 - 30000 rejected)
Manvi allotted 4,000 shares failed to pay ₹ 7 per share (final call = ₹ 3 + ₹ 4 unpaid premium?)
Journal Entries:
Bank A/c Dr. ₹ 14,70,000
To Share Application and Allotment A/c ₹ 14,70,000
Share Application and Allotment A/c Dr. ₹ 14,70,000
To Share Capital A/c ₹ 12,60,000
To Securities Premium A/c ₹ 2,10,000
Share First and Final Call A/c Dr. ₹ 8,40,000
To Share Capital A/c ₹ 8,40,000
Share Capital A/c Dr. ₹ 40,000
To Share Forfeiture A/c ₹ 28,000
To Share First and Final Call A/c ₹ 12,000
Bank A/c Dr. ₹ 16,000
Share Forfeiture A/c Dr. ₹ 24,000
To Share Capital A/c ₹ 40,000 Quick Tip: Always use correct figures for amounts unpaid and paid while forfeiting or reissuing shares. Remember that forfeited shares can be reissued at a discount up to the amount forfeited.
Pass necessary journal entries for forfeiture and reissue of forfeited shares in the following cases:
(i) Macil Ltd. forfeited 3,000 shares of ₹ 100 each issued at 20 percent premium for the non-payment of allotment money of ₹ 30 per share and first call of ₹ 40 per share (including premium ₹ 10). The second and final call of ₹ 30 per share (including premium ₹ 10) was not yet called. Out of these, 2,000 shares were reissued at ₹ 80 per share paid up for ₹ 90 per share.
(ii) Avian Ltd. forfeited 10,000 shares of ₹ 10 each on which the first call of ₹ 4 per share was not received and the second and final call of ₹ 1 per share was not yet called. Out of these, 4,000 shares were reissued to Ajay as fully paid up for ₹ 9 per share.
View Solution
(i) Macil Ltd.
Share Capital A/c Dr. ₹ 2,10,000 (3,000 × ₹ 70 paid-up capital)
Securities Premium A/c Dr. ₹ 6,000 (3,000 × ₹ 2 of unpaid premium)
To Share Forfeiture A/c ₹ 1,44,000
To Share Allotment A/c ₹ 90,000
To Share First Call A/c ₹ 60,000
Bank A/c Dr. ₹ 1,60,000 (2,000 × ₹ 80)
Share Forfeiture A/c Dr. ₹ 20,000 (loss on reissue)
To Share Capital A/c ₹ 1,80,000
(ii) Avian Ltd.
Share Capital A/c Dr. ₹ 40,000 (10,000 × ₹ 4 called up)
To Share Forfeiture A/c ₹ 40,000
Bank A/c Dr. ₹ 36,000 (4,000 × ₹ 9)
Share Forfeiture A/c Dr. ₹ 4,000
To Share Capital A/c ₹ 40,000 Quick Tip: While passing entries for forfeiture, remember to reverse only the called-up portion. Uncalled amounts are not part of the forfeiture.
Aryan and Adya were partners in a firm sharing profits and losses in the ratio of 3 : 1. Their Balance Sheet on 31st March, 2024 was as follows:
Balance sheet of Aryan and Adya as at 31st March, 2024
Liabilities & Amount (₹) & Assets & Amount (₹)
Capitals : & & Machinery & 3,90,000
\quad Aryan & 3,20,000 & Furniture & 80,000
\quad Adya & 2,40,000 & Debtors & 90,000
Workmen’s Compensation Reserve & 20,000 & Less: Provision for Doubtful Debts & (1,000)
Bank Loan & 60,000 & & 89,000
Creditors & 48,000 & Stock & 77,000
& & Cash & 32,000
& & Profit & Loss Account & 20,000
Total & 6,88,000 & Total & 6,88,000
Dev was admitted into the firm on 1st April, 2024 for 1/5th share in the profits of the firm on the following terms:
Dev will bring capital proportionate to his share in the profits of the firm.
Goodwill of the firm was valued at ₹ 2,00,000 and Dev will bring his share of goodwill premium in cash.
Machinery was revalued at ₹ 4,50,000.
A provision for doubtful debts was to be created at 5% on debtors.
A liability of ₹ 3,500 included in creditors was not likely to arise.
View Solution
Revaluation Account
Dr. & ₹ & Cr. & ₹
To Provision for Doubtful Debts (5% of ₹ 90,000) & 4,500 & By Increase in Machinery & 60,000
To Decrease in Creditors & & By Liability not likely to arise & 3,500
\quad (written back) & & &
To Profit transferred to: & & &
\quad Aryan (3/4) & 43,875 & &
\quad Adya (1/4) & 14,625 & &
Total & 63,000 & Total & 63,000
Partners' Capital Accounts
\begin{tabular{|l|r|r|r|
Particulars & Aryan (₹) & Adya (₹) & Dev (₹)
To Goodwill A/c & 30,000 & 10,000 & --
To Balance c/d & 4,43,875 & 2,44,625 & 2,22,500
Total & 4,73,875 & 2,54,625 & 2,22,500
By Balance b/d & 3,20,000 & 2,40,000 & --
By Revaluation Profit & 43,875 & 14,625 & --
By Premium for Goodwill & -- & -- & 40,000
By Bank A/c (Capital) & -- & -- & 2,22,500
By Aryan’s Capital A/c & 30,000 & -- & --
By Adya’s Capital A/c & -- & 10,000 & --
Total & 4,73,875 & 2,54,625 & 2,22,500
Quick Tip: Always calculate revaluation and goodwill adjustments before preparing capital accounts during admission. Ensure profit-sharing ratios before and after admission are correctly applied.
Ashish, Vinit and Reema were partners sharing profits and losses in the ratio of 2 : 2 : 1. Their Balance Sheet on 31st March, 2024 was as follows:
Balance sheet of Ashish, Vinit and Reema as at 31st March, 2024
Liabilities & Amount (₹) & Assets & Amount (₹)
Capitals : & & Patents & 80,000
\quad Ashish & 2,00,000 & Furniture & 3,00,000
\quad Vinit & 2,00,000 & Stock & 1,70,000
\quad Reema & 1,00,000 & Debtors & 80,000
General Reserve & 50,000 & Less: Provision for Doubtful Debts & (8,000)
Bills Payable & 80,000 & & 72,000
Creditors & 40,000 & Cash & 48,000
Total & 6,70,000 & Total & 6,70,000
On the above date, Vinit retired on the following terms:
Goodwill of the firm was valued at ₹ 60,000 and the same was adjusted into the capital accounts of Ashish and Reema who will share profits in future in the ratio of 3 : 2.
Value of stock was to be reduced by ₹ 10,000.
Patents were found undervalued by 20%.
Vinit was paid ₹ 20,000 immediately on retirement and the balance was transferred to his loan account carrying interest @ 8% p.a.
View Solution
Revaluation Account
Dr. & ₹ & Cr. & ₹
To Stock (decrease) & 10,000 & By Patents (increase by 20% of ₹ 80,000) & 16,000
To Profit transferred to: & & &
\quad Ashish (2/5) & 2,400 & &
\quad Vinit (2/5) & 2,400 & &
\quad Reema (1/5) & 1,200 & &
Total & 16,000 & Total & 16,000
Partners’ Capital Accounts
\begin{tabular{|l|r|r|r|
Particulars & Ashish (₹) & Vinit (₹) & Reema (₹)
To Vinit’s Capital A/c (Goodwill adj.) & 24,000 & -- & 16,000
To Bank A/c (Cash paid) & -- & 20,000 & --
To Vinit’s Loan A/c & -- & 2,44,800 & --
To Balance c/d & 2,76,400 & -- & 1,21,200
Total & 3,00,400 & 2,64,800 & 1,37,200
By Balance b/d & 2,00,000 & 2,00,000 & 1,00,000
By General Reserve & 20,000 & 20,000 & 10,000
By Revaluation Profit & 2,400 & 2,400 & 1,200
By Ashish’s Capital A/c (Goodwill adj.) & -- & 24,000 & --
By Reema’s Capital A/c (Goodwill adj.) & -- & 16,000 & --
Total & 3,00,400 & 2,64,800 & 1,37,200
Journal Entries
Revaluation Account Dr. ₹ 10,000
\hspace*{0.5cm To Stock A/c ₹ 10,000
Patents A/c Dr. ₹ 16,000
\hspace*{0.5cm To Revaluation Account ₹ 16,000
Revaluation Profit transferred:
\hspace*{0.5cm Revaluation A/c Dr. ₹ 6,000
\hspace*{0.5cm To Ashish’s Capital A/c ₹ 2,400
\hspace*{0.5cm To Vinit’s Capital A/c ₹ 2,400
\hspace*{0.5cm To Reema’s Capital A/c ₹ 1,200
General Reserve transferred:
\hspace*{0.5cm General Reserve A/c Dr. ₹ 50,000
\hspace*{0.5cm To Ashish’s Capital A/c ₹ 20,000
\hspace*{0.5cm To Vinit’s Capital A/c ₹ 20,000
\hspace*{0.5cm To Reema’s Capital A/c ₹ 10,000
Ashish’s Capital A/c Dr. ₹ 24,000
\hspace*{0.5cm Reema’s Capital A/c Dr. ₹ 16,000
\hspace*{0.5cm To Vinit’s Capital A/c ₹ 40,000 (Goodwill adjustment)
Vinit’s Capital A/c Dr. ₹ 20,000
\hspace*{0.5cm To Bank A/c ₹ 20,000
Vinit’s Capital A/c Dr. ₹ 2,44,800
\hspace*{0.5cm To Vinit’s Loan A/c ₹ 2,44,800 Quick Tip: Always adjust goodwill among continuing partners in gaining ratio. Revaluation profit/loss is shared in old ratio. Retirement amount payable may be partly in cash and partly as a loan.
Which of the following are operating activities for the purpose of preparing cash flow statement ?
(i) Cash payments to suppliers for goods and services.
(ii) Dividend received from investments in other enterprises.
(iii) Cash receipts from royalties, fees, commissions and other revenues.
(iv) Cash repayments of amounts borrowed.
View Solution
Operating activities include all principal revenue-generating activities of the business.
(i) Cash payments to suppliers – Operating Activity
(ii) Dividend received – Investing Activity
(iii) Cash receipts from royalties, fees, etc. – Operating Activity
(iv) Cash repayments of borrowed amounts – Financing Activity
Hence, only (i) and (iii) are operating activities. Quick Tip: Only core business-related cash inflows/outflows are classified as operating activities. Cash from investments or borrowings falls under investing or financing.
Which of the following statements is incorrect ?
View Solution
Interest and dividend received are classified under investing activities (not financing).
Thus, (C) is an incorrect statement. Quick Tip: Classify income based on nature — receiving money from investments is investing activity, not financing.
Statement I: Investing activities are the acquisition and disposal of long term assets and other investments not included in cash equivalents.
Statement II: Cash payments to acquire fixed assets including intangibles and capitalised research and development results in cash outflow from investing activities.
Choose the correct option from the following:
View Solution
Statement I correctly defines investing activities. Statement II accurately describes a type of investing cash outflow.
Therefore, both statements are true. Quick Tip: Investing activities involve long-term assets and investment outflows/inflows like purchase or sale of assets.
The tool of analysis of financial statements which indicates the trend and direction of financial position and operating results is \underline{\hspace{3cm.
View Solution
Comparative statements help assess changes in financial data over time and indicate the trend in financial performance. Quick Tip: Comparative analysis = year-to-year trend comparison; Common-size = percentage analysis.
Ratios that are calculated for measuring the efficiency of operations of the business based on effective utilization of resources are known as \underline{\hspace{3cm.
View Solution
Turnover ratios help assess how effectively resources like inventory, receivables, and assets are being used in generating sales. Quick Tip: Turnover = Efficiency. High turnover = better use of business assets.
The Debt Equity Ratio of Manak Enterprises is 2.5 : 1. Which of the following transaction will result in increase in this ratio ?
View Solution
Debt Equity Ratio = Total Debt / Shareholders' Equity.
Issuing debentures increases total debt while equity remains the same, thereby increasing the ratio. Quick Tip: Debt increases numerator of Debt-Equity Ratio. Look for transactions that increase debt or reduce equity.
Classify the following items under major heads and sub-heads (if any) in the balance sheet of the company as per Schedule-III, Part-I of the Companies Act, 2013:
(i) Calls in advance
(ii) Licences and Franchise
(iii) Prepaid Insurance
View Solution
As per Revised Schedule III:
Calls in advance is a liability as it's received before due, shown under Other Current Liabilities.
Licences and franchise represent intangible resources, hence classified under Intangible Assets.
Prepaid insurance is an expense paid in advance, hence an asset under Other Current Assets. Quick Tip: Always match classification to nature and timing — prepaid = asset, advances = liability.
From the following information of NK Ltd., prepare a common size Statement of Profit and Loss for the years ended 31st March, 2023 and 31st March, 2024:
\begin{tabular{|l|c|c|
Particulars & 2023-24 (₹) & 2022-23 (₹)
Revenue from operations & 20,00,000 & 10,00,000
Cost of materials consumed & 5,00,000 & 3,00,000
Employee benefit expenses & 2,00,000 & 1,00,000
Income Tax @ 40% & &
View Solution
Common Size analysis presents items as a percentage of total revenue:
Cost of materials consumed:
- 2023-24: (5,00,000 / 20,00,000) × 100 = 25%
- 2022-23: (3,00,000 / 10,00,000) × 100 = 30%
Employee benefit expenses:
- 2023-24: (2,00,000 / 20,00,000) × 100 = 10%
- 2022-23: (1,00,000 / 10,00,000) × 100 = 10%
Income tax can be calculated after deriving profit before tax (not directly given). Quick Tip: In common-size statements, divide all items by revenue from operations to evaluate vertical performance.
Calculate opening and closing Trade Payables from the following information :
Total purchases ₹ 15,00,000;
Cash purchases are 25% of credit purchases;
Trade payables turnover ratio is 4 times;
Closing trade payables are two times of opening trade payables.
View Solution
Let Credit Purchases = \( x \)
Given that 25% of credit purchases are cash,
\( 0.25x + x = 15,00,000 \Rightarrow 1.25x = 15,00,000 \Rightarrow x = 12,00,000 \)
So, Credit Purchases = ₹ 12,00,000
Trade Payables Turnover Ratio = \( \dfrac{Net\ Credit\ Purchases}{Average\ Trade\ Payables} = 4 \)
Average Trade Payables = \( \dfrac{12,00,000}{4} = 3,00,000 \)
Let Opening = \( x \), Closing = \( 2x \),
Average = \( \dfrac{x + 2x}{2} = 1.5x \)
\( 1.5x = 3,00,000 \Rightarrow x = 2,00,000 \)
Opening = ₹ 1,25,000; Closing = ₹ 2,50,000 Quick Tip: Always express average in terms of opening and closing when using turnover ratios.
From the following information, calculate Return on Investment :
Shareholders’ Funds ₹ 16,00,000
10% Debentures ₹ 8,00,000
Current Liabilities ₹ 2,00,000
Current Assets ₹ 5,00,000
Non-Current Assets ₹ 21,00,000
Net profit after tax was ₹ 3,00,000 and the tax amounted to ₹ 1,00,000.
View Solution
Return on Investment = \( \dfrac{Net\ Profit\ before\ Interest\ and\ Tax}{Capital\ Employed} \times 100 \)
Net Profit before Tax = ₹ 3,00,000 + ₹ 1,00,000 = ₹ 4,00,000
Capital Employed = Shareholders’ Funds + Long Term Debt = ₹ 16,00,000 + ₹ 8,00,000 = ₹ 24,00,000
ROI = \( \dfrac{4,00,000}{24,00,000} \times 100 = 16.67% \) Quick Tip: Always add back interest and tax to Net Profit if formula requires EBIT.
From the following information, calculate Cash Flows from Investing Activities :
\begin{tabular{|l|c|c|
Particulars & 31--3--2024 (₹) & 31--3--2023 (₹)
Machinery (at cost) & 3,80,000 & 3,00,000
Accumulated Depreciation & 62,000 & 45,000
Additional Information :
A machine costing ₹ 50,000 on which accumulated depreciation was ₹ 20,000 was sold at a profit of 10%.
View Solution
Sale Proceeds = ₹ 50,000 + 10% of 50,000 = ₹ 55,000
Purchase of Machinery = Closing Balance + Cost of Sold Machinery - Opening Balance
= ₹ 3,80,000 + ₹ 50,000 - ₹ 3,00,000 = ₹ 1,30,000
Net Cash Flow from Investing = Inflow ₹ 55,000 - Outflow ₹ 1,30,000 = ₹ (75,000) Quick Tip: Add back sale proceeds and subtract actual purchase value for net investing cash flow.
From the following information, calculate Cash flows from Financing Activities :
\begin{tabular{|l|c|c|
Particulars & 31--3--2024 (₹) & 31--3--2023 (₹)
Equity Share Capital & 12,00,000 & 8,00,000
11% Debentures & 3,00,000 & 4,00,000
Securities Premium & 1,40,000 & 1,00,000
Additional Information :
Interest paid on debentures amounted to ₹ 40,000.
View Solution
Proceeds from issue of share capital = ₹ 4,00,000 (12,00,000 - 8,00,000)
Securities premium received = ₹ 40,000
Redemption of debentures = ₹ (1,00,000)
Interest paid = ₹ (40,000)
Net cash flow = ₹ 4,00,000 + ₹ 40,000 - ₹ 1,00,000 - ₹ 40,000 = ₹ 3,00,000 Quick Tip: Interest paid is shown as cash outflow in financing. Issue/redemption impacts net cash flow.
To safeguard assets and optimise the use of resources of a business:
View Solution
Internal checks and controls help prevent misuse or fraud, and ensure efficient and effective utilisation of resources. Simply securing assets or keeping records accurate does not address optimisation. Quick Tip: Internal controls are the foundation of safeguarding and optimal resource utilisation in any business.
Which of the following item is not included in Account group–loans (liabilities) in the Account group of Balance Sheet?
View Solution
Sundry creditors are classified under current liabilities and not under the loan category in balance sheets. Bank overdraft, secured and unsecured loans are all considered loan liabilities. Quick Tip: Account groups are predefined categories; creditors are not loans—they are trade liabilities.
Which of the following is an adjustment voucher normally used for non-cash transaction?
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Journal vouchers are used for transactions which do not involve cash or bank, such as depreciation, provisions, etc. Contra is used for cash and bank movement within the organisation. Quick Tip: Non-cash adjustments like depreciation, provisions or rectifications are recorded via journal vouchers.
Which of the following is not an advantage of Computerised Accounting System?
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Statement (B) is a limitation, not an advantage. Computerised systems typically generate predefined reports efficiently, but may not easily handle custom unprogrammed ones. Quick Tip: Understand the difference between advantages and limitations to evaluate software effectiveness.
The need for codification is for:
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Codification in accounting helps in assigning mnemonic codes to accounts which makes recording and retrieval of data easier. Quick Tip: Codification helps quick identification and processing through predefined symbols or codes.
To see all the available shape styles, which of the following button is to be clicked?
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In applications like MS Excel or Word, the 'More' option under shape styles reveals the complete list of available formatting options for shapes. Other options like 'Picture' or 'Chart root' are not relevant to style viewing. Quick Tip: Always explore the full style gallery by clicking the 'More' button, typically represented by a downward arrow with a line.
What is meant by ‘Data’, ‘Information’ and ‘Transaction’?
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Data becomes useful when processed into information. Transactions are recorded occurrences involving monetary value that affect accounting records. Quick Tip: Remember: Data is input, information is processed output, and transaction is the event that triggers both.
List six features of an Accounting Software.
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Accounting software facilitates the automation of books of accounts, ensuring high accuracy and speed. It allows custom reports, secures data, and helps with decision-making via analytics. Quick Tip: Always mention features that reflect speed, automation, and reliability while writing on software tools.
Each and every data from Notepad file can be saved as an Excel data file. This provides a lead that Excel worksheet consists of four types of data in cell. Name and state these data types.
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In Microsoft Excel, a cell is the basic unit of data storage. Each cell can contain one of four primary data types that define the kind of information and operations that can be performed:
1. Text: Used to store labels, names, or any non-numeric input. Text data cannot be used for arithmetic but helps identify rows or columns. For example, "John", "Sales", or "North Region".
2. Numbers: Include integers, decimals, and currency. These can be used for calculations. For example, 150, 10.75, or \₹5000.
3. Formulas: These allow Excel to perform calculations dynamically. A formula starts with an equals sign `=` followed by expressions like `=A1+B1`, or functions such as `=SUM(A1:A5)`.
4. Date/Time: Excel recognizes inputs such as "01/01/2025" or "12:30 PM" as temporal data. These can be used to calculate intervals, age, scheduling events, etc.
Together, these four types make Excel a flexible data analysis tool, capable of handling both qualitative and quantitative data effectively. Quick Tip: Always remember: Text aligns left, numbers align right, formulas begin with '=', and dates can be formatted and calculated using time functions.
What is meant by ‘Data Validation’? What is facilitated by ‘Error Alert Tab’?
\textbf{Data Validation:} It is a feature in MS Excel that restricts the type or range of data that can be entered in a cell.
\textbf{Error Alert Tab:} It allows users to set messages that warn or stop incorrect entries when data does not match the validation rule.
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Data Validation is a powerful feature of Excel used for improving data accuracy by controlling the input type. For example, if a user should only enter a date between January and December 2025, or restrict a score entry to only integers between 0 and 100, Data Validation ensures such rules are followed.
Steps to apply Data Validation:
Select the cell or range.
Go to Data Tab → Data Validation.
Under the Settings tab, define criteria (e.g., Whole number between 1 and 100).
Use Input Message tab to provide guidance.
Use Error Alert tab to define messages on wrong input.
Error Alert Tab has 3 alert types:
Stop: Prevents entry of invalid data.
Warning: Allows entry with a caution message.
Information: Simply informs about the invalid entry.
It ensures that users understand what kind of values are acceptable, thereby reducing errors and improving spreadsheet reliability. Quick Tip: Always define clear rules using Data Validation for error-free entries and set meaningful Error Alerts to guide users.
If a user wishes to change a ‘Text Option’ as an element of chart, how can he/she do so? Explain.
Right-click on the text element → Select ‘Format Text’ or ‘Format Chart Title’ → Open ‘Text Options’ → Modify font, fill, outline, shadow, and alignment.
View Solution
Charts in MS Excel consist of multiple elements like chart title, axis title, data labels, etc., all of which contain text. Excel allows detailed customization of these elements through the 'Text Options' pane.
Steps to modify Text Option:
Click or right-click on the desired text element (e.g., chart title).
Choose ‘Format Chart Title’ or ‘Format Axis Title’.
A side panel opens with ‘Text Options’.
There are three icons under Text Options:
Text Fill & Outline: Change font color, add border or outline.
Text Effects: Apply shadow, reflection, glow, or 3D effects.
Text Box: Adjust alignment, margins, text direction.
Apply desired changes and close the panel.
This functionality helps users improve chart readability, aesthetics, and makes presentations more impactful. Quick Tip: Use ‘Text Options’ to professionally format chart labels and titles—especially for reports and presentations.
*The article might have information for the previous academic years, please refer the official website of the exam.