CBSE Sample Paper 2 For Accounts

Posted on - 07-05-2017

CBSE

PART A: ACCOUNTING FOR PARTNERSHIP FIRMS AND COMPANIES

q1.

Any change in the relationship of existing partners which results in an end of the existing agreement and enforces making of a new agreement is called

(a) Revaluation of partnership.

(b) Reconstitution of partnership.

(d) None of the above.

Solution

(b) Reconstitution of partnership.

q2.

Karan, Nakul and Asha were partners in a firm sharing profits and losses in the ratio 3:2:1. At the time of admission of a partner, the goodwill of the firm was valued at Rs.2,00,000. The accountant of the firm passed the entry in the books of accounts and thereafter showed goodwill at Rs.2,00,000 as an asset in the Balance Sheet. Was he correct in doing so? Why?.

Solution

No, the accountant’s decision is not correct because according to AS-26, goodwill should be recorded in the books only when consideration in money or money’s worth has been paid for it

q3.

Anu, Bina and Charan are partners. The firm had given a loan of Rs.20,000 to Bina. They decided to dissolve the firm. In the event of dissolution, the loan will be settled by:.

(a) Transferring it to debit side of Realization account.

(b) Transferring it to credit side of Realization account.

(d) Bina paying Anu and Charan privately.

Solution

q4.

Differentiate between ‘Capital Reserve’ and ‘Reserve Capital’.

Solution

‘Capital Reserve’ is the reserve that is created out of capital profits/gains whereas, that part of the share capital which has not yet been called up and has been kept as reserve to be called up in the event of the winding up of the company is called ‘Reserve Capital’

q5.

Metacaf Ltd. issued 50,000 shares of Rs. 100 each payable Rs.20 on application (on 1st May 2012); Rs.30 on allotment (on 1st January 2013); Rs.20 on first call (on 1st July 2013) and the balance on final call (on 1st February 2014). Shankar, a shareholder holding 5,000 shares did not pay the first call on the due date. The second call was made and Shankar paid the first call amount along with the second call. All sums due were received.

Total amount received on 1st February was:

(a) Rs.15,00,000.

(b) Rs.16,00,000.

(d) Rs.11,00,000.

Solution

Rs.16,00,000.

q6.

Abha and Beena were partners sharing profits and losses in the ratio of 3:2. On April 1st 2013, they decided to admit Chanda for 1/5th share in the profits. They had a reserve of Rs.25,000 which they wanted.

to show in their new balance sheet. Chanda agreed and the necessary adjustments were made in the books. On October 1st 2013, Abha met with an accident and died. Beena and Chanda decided to admit Abha’s daughter Fiza in their partnership, who agreed to bring Rs.2,00,000 as capital. Calculate Abha’s share in the reserve on the date of her death. .

Solution

Rs.12,000.

q7.

State any three purposes for which securities premium can be utilized. .

Solution

The amount received as securities premium can be used for following purposes (any three):

(a) In purchasing its own shares.

(b) Issuing fully paid bonus shares to the members.

(d) Writing off the expenses of, or the commission paid, or discount allowed on any issue of securities or debentures of the company.

(e) Providing for the premium payable on the redemption of any redeemable preferences shares or any debentures of the company.

q8.

Ankur and Bobby were into the business of providing software solutions in India. They were sharing profits and losses in the ratio 3:2. They admitted Rohit for a 1/5 share in the firm. Rohit, an alumni of IIT, Chennai would help them to expand their business to various South African countries where he had been working earlier. Rohit is guaranteed a minimum profit of Rs.2,00,000 for the year. Any deficiency in Rohit’s share is to be borne by Ankur and Bobby in the ratio 4:1. Losses for the year were Rs.10,00,000. Pass the necessary journal entries .

Solution

Journal

q9.

Newbie Ltd. was registered with an authorized capital of Rs.5,00,000 divided into 50,000 equity shares of.

Rs.10 each. Since the economy was in robust shape, the company decided to offer to the public for subscription 30,000 equity shares of Rs.10 each at a premium of Rs.20 per share. Applications for 28,000 shares were received and allotment was made to all the applicants. All calls were made and duly received except the final call of Rs. 2 per share on 200 shares. Show the ‘Share Capital’ in the Balance Sheet of Newbie Ltd.as per Schedule VI of the Companies Act 1956. Also prepare Notes to Accounts for the same. .

Solution

Balance sheet of Newbie Ltd. as at:.

Notes to Accounts.

q10.

Drumbeats Ltd. had a prosperous shoe business. They were manufacturing shoes in India and exporting to Italy. Being a socially aware organization, they wanted to pay back to the society. They decided to not only supply free shoes to 50 orphanages in various parts of the country but also give employment to children from those orphanages who were above 18 years of age. In order to meet the fund requirements, they decided to raise 50,000 equity shares of Rs. 50 each and 40,000 9% debentures of.

Rs. 40 each. Pass the necessary journal entries for issue of shares and debentures. Also identify one value which the company wants to communicate to the society. .

Solution

Value which the company wants to communicate to the society: (Any one)

· Social responsibility

· Generation of employment opportunities.

q11.

Following is the Balance Sheet of Punita, Rashi and Seema who are sharing profits in the ratio 2:1:2 as on 31st March 2013.

Punita died on 30th September 2013. She had withdrawn 44,000 from her capital on July 1, 2013.

According to the partnership agreement, she was entitled to interest on capital @8% p.a. Her share of profit till the date of death was to be calculated on the basis of the average profits of the last three years. Goodwill was to be calculated on the basis of three times the average profits of the last four years. The profits for the years ended 2009-10, 2010-11 and 2011-12 were Rs.30,000, Rs.70,000 and Rs.80,000 respectively.

Prepare Punita’s account to be rendered to her executors.

Solution

q12.

Kanika and Gautam are partners doing a dry cleaning business in Lucknow, sharing profits in the ratio 2:1 with capitals Rs.5,00,000 and Rs.4,00,000 respectively. Kanika withdrew the following amounts during the year to pay the hostel expenses of her son.

Gautam withdrew Rs.15,000 on the first day of April, July, October and January to pay rent for the accommodation of his family. He also paid Rs.20,000 per month as rent for the office of partnership which was in a nearby shopping complex.

Calculate interest on Drawings @6% p.a. .

Solution

Calculation of Interest on drawings:

Kanika

10,000X12=1,20,000

9,000X10= 90,000

14,000X4= 70,000

5,000X4 =20,000

3,00,000

Goutam

q13.

(a) A firm earned profits of Rs.80,000, Rs.1,00,000, Rs.1,20,000 and Rs.1,80,000 during 2010-11, 2011-12, 2012-13 and 2013-14 respectively. The firm has capital investment of Rs.5,00,000. A fair rate of return on investment is 15% p.a. Calculate goodwill of the firm based on three years’ purchase of average super profits of last four years.

(b) Kabir and Farid are partners sharing profits and losses in the ratio of 7:3. Kabir surrenders 2/10th from his share and Farid surrenders 1/10th from his share in favor of Jyoti, a new partner. Calculate new profit sharing ratio and sacrificing ratio. .

Solution

(a)

(b)

q14.

(a) Sunrise Company Ltd. has an equity share capital of Rs.10,00,000. The company earns a return on investment of 15% on its capital. The company needed funds for diversification. The finance manager had the following options: (i) Borrow Rs.5,00,000 @15% p.a. from a bank payable in four equal quarterly installments starting from the end of the fifth year (ii) Issue Rs.5,00,000, 9% Debentures of Rs. 100 each redeemable at a premium of 10% after five years. To increase the return to the shareholders, the company opted for option (ii). Pass the necessary journal entries for issue of debentures.

(b) Walter Ltd. issued Rs. 6,00,000 8% Debentures of Rs. 100 each redeemable after 3 years either by draw of lots or by purchase in the open market. At the end of three years, finding the market price of debentures at Rs.95 per debenture, it purchased all its debentures for immediate cancellation. Pass necessary journal entries for cancellation of debentures assuming the company has sufficient balance in Debenture Redemption Reserve. .

Solution

(A)

(B)

q15.

Ashish and Neha were partners in a firm sharing profits and losses in the ratio 4:3. They decided to dissolve the firm on 1st May 2014. From the information given below, complete Realisation A/c, Partner’s Capital Accounts and Bank A/c:.

Dr. Realisation A/c Cr.

Dr. Partner’s Capital Accounts Cr.

Dr. Bank A/c Cr.

Solution

Dr. Realisation A/c Cr.

Dr. Partner’s Capital Accounts Cr.

Dr. Bank A/c Cr.

q16.

A and B are partners in a firm sharing profits and losses in the ratio 3:1. They admit C for a ¼ share on 31st March 2014 when their Balance Sheet was as follows:.

The following adjustments were agreed upon:

(a) C brings in Rs.16,000 as goodwill and proportionate capital.

(b) Bad debts amounted to Rs.3,000.

(d) Liability on account of workmen’s compensation reserve amounted to Rs.2,000. Prepare Revaluation A/c and Partner’s Capital A/cs.

X, Y and Z are partners in a firm sharing profits in proportion of 1/2, 1/6 and 1/3 respectively. The Balance Sheet as on April 1, 2014 was as follows:.

Z retires from the business and the partners agree that:

(a) Machinery is to be depreciated by 10%.

(b) Provision for bad debts is to be increased to Rs. 1,500.

(d) Goodwill is valued at Rs. 21,000 on Z’s retirement.

(e) The continuing partners’ have decided to adjust their capitals in their new profit sharing ratio after retirement of Z. Surplus or deficit if any, in their capital accounts will be adjusted through their current accounts.

Prepare Revaluation A/c and Partners’ Capital A/c’s. .

Solution

Dr. REVALUATION A/c Cr.

Dr. Partner’s Capital Accounts Cr.

Dr. REVALUATION A/c Cr.

Dr. Partner’s Capital Accounts Cr.

q17.

Amrit Ltd. issued 50,000 shares of Rs.10 each at a premium of Rs.2 per share payable as Rs.3 on application, Rs.4 on allotment (including premium), Rs.2 on first call and the remaining on second call. Applications were received for 75,000 shares and a pro-rata allotment was made to all the applicants.

All moneys due were received except allotment and first call from Sonu who applied for 1,200 shares. All his shares were forfeited. The forfeited shares were reissued for Rs.9,600. Final call was not made. Pass necessary journal entries.

Velco Ltd. issued 30,000 shares of Rs. 10 each at a discount of Rs.1 per share payable as Rs.3 on application, Rs.2 on allotment, Rs.2 on first Call and Rs.2 on second call.

Applications were received for 40,000 shares and a pro-rata allotment was made to all the applicants.

All money due were received except allotment and first call from Mohit who had applied for 2,000 shares. His shares were forfeited after first call. Subsequently, the second call was duly made and duly received. Thereafter, the forfeited shares were reissued for Rs.9 fully paid. Pass the necessary journal entries .

Solution

IN THE BOOK OF AMRIT LTD.

JOURNAL

In The Books of Velco Ltd.

JOURNAL

PART B: ANALYSIS OF FINANCIAL STATEMENTS

q18.

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

(d) Operating activities. .

Solution

(c)Cash and Cash equivalents

q19.

Finserve Ltd is carrying on a Mutual Fund business. It invested Rs. 30,00,000 in shares and Rs.15,00,000 in debentures of various companies during the year. It received Rs. 3,00,000 as dividend and interest. Find out cash flows from investing activities.

Solution

Cash flows from investing activities - Nil

q20.

(a) Name the sub heads under the head ‘Current Liabilities’ in the Equity and Liabilities part of the Balance Sheet as per Schedule VI of the Companies Act 1956.

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

Solution

(a) CURRENT LIABILITIES

(a) Short term borrowings

(b) Trade payables

(d) Short term provisions

(b) Objectives of Financial Statements Analysis (any two)

(i) Helps in assessing the earning capacity or profitability

(ii) Helps in assessing managerial efficiency

(iii) Helps in assessing the long them and short term solvency of the enterprise.

(iv) Helps in inter-firm comparison.

(v) Helps in forecasting and preparing budgets.

(vi) Helps the users in understanding complicated matter in a simplified manner.

q21.

(a) From the following details, calculate Opening inventory: Closing inventory Rs.60,000; Total Revenue from operations Rs.5,00,000 (including cash revenue from operations Rs.1,00,000); Total purchases.

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

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

Solution

(a)

Total revenue from operations =Rs. 5,00,000.

Gross Profit

Cost of Revenue from operations= Net Revenue from opeartions-Gross Profit

Cost of Revenue from operations = Opening Inventory + Net Purchases – Closing inventory

= Opening inventory + Rs. 3,00,000 –Rs.60,000

Opening inventory

(b)

Inventory = Current Assets-Quick Assets

Ans. Current Liabilities =

q22.

Nimani Ltd. is into the business of back office operations. Honesty and hard work are the two pillars on which the business has been built. It has a good turnover and profits. Encouraged by huge profits, it decided to give the workers bonus equal to two months salary. Following is the Comparative Statement of Profit and Loss of Nimani Ltd. for the years ended 31st March 2013 and 2014.

(a) Calculate Net Profit ratio for the years ending 31st March 2013 and 2014.

(b) Identify any two values which Nimani Ltd. wants to communicate to the society.

Solution

(a) Calculation of Net Profit Ratio:

2012-13

2013-14

Net Profit Ratio=

(b) Values that Himani Ltd. wants to communicate to the society:.

· Social responsibility.

· Welfare of employees.

q23.

Following are the Balance Sheets of Krishna Ltd. as on 31st March 2013 and 2014:.

Notes to Accounts:

Prepare a Cash Flow Statement after taking into account the following adjustment:

(i) Tax paid during the year amounted to Rs. 70,000. .

Solution

Dr. Provision for Tax A/c Cr.

Part B: Computerized Accounting

q18.

While navigating in the workbook, which of the following commands is used to move to the beginning of the Current row:

a. [ ctrl] + [home].

b. [page Up].

c. [Home] .

d. [ctrl] + [Back space].

Solution

c. [Home] .

q19.

Join line in the context of Access table means:

a. Graphical representation of tables between tables.

b. Lines bonding the data within table.

c. Line connecting two fields of a table.

d. Line connecting two records of a table.

Solution

b. Lines bonding the data within table.

q20.

Enumerate the basic requirements of computerised accounting system for a business organization.

Solution

The computerised accounting is one of the database-oriented applications wherein the transaction data is stored in well- organized database. The user operates on such database using the required interface and also takes the required reports by suitable transformations of stored data into information. Therefore, the fundamentals of computerised accounting include all the basic requirements of any database-oriented application in computers.

l Accounting framework.......................................................................................

It is the application environment of the computerised accounting system. A healthy accounting framework in terms of accounting principles, coding and grouping structure is a pre-condition for any computerised accounting system.

l Operating procedure ................................................................................

A well-conceived and designed operating procedure blended with suitable operating environment of the enterprise is necessary to work with the computerised accounting system.

q21.

The generation of ledger accounts is not a necessary condition for making trial balance in a computerised accounting system. Explain.

Solution

In computerised accounting system, every day business transactions are recorded with the help of computer software. Logical scheme is implied for codification of account and transaction. Every account and transaction is assigned a unique code. The grouping of accounts is done from the first stage. [Briefly explaining what is account groups and hierarchy of ledger].The hierarchy of ledger accounts is maintained and the data is transferred into Ledger accounts automatically by the computer. In order to produce ledger accounts the stored transaction data is processed to appear as classified so that same is presented in the form of report. The preparation of financial statements is independent of producing the trial balance.

q22.

Intentional manipulation of accounting records is much easier in computerised accounting than in manual accounting. How?.

Solution

Intentional manipulation of accounting records is much easier in computerised accounting due to following:

i. Defective logical sequence at the programming stage.

ii. Prone to hacking.

q23.

Computerisation of accounting data on one hand stores voluminous data in a systematic and organised manner where as on the other hand suffers from threats of vulnerability and manipulations. Discuss the security measures you would like to employ for securing the data from such threats. .

Solution

Every accounting software ensures data security, safety and confidentiality. Therefore every, software should provide for the following:.

· Password Security: Password is a mechanism, which enables a user to access a system including data. The system facilitates defining the user rights according to organisation policy. Consequently, a person in an organisation may be given access to a particular set of a data while he may be denied access to another set of data.

· Data Audit: This feature enables one to know as to who and what changes have been made in the original data thereby helping and fixing the responsibility of the person who has manipulated the data and also ensures data integrity. Basically, this feature is similar to Audit Trail.

· Data Vault: Software provides additional security through data encryption.