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# Board Paper of Class 12-Commerce 2020 Accountancy All India(Set 2) - Solutions

General Instructions:
(i) This question paper comprises two · PARTS - A and B. There are 32 questions in the question paper. All questions are compulsory.
(ii) Part - A is compulsory for all candidates.
(iii) Part - B has two options i.e. (i) Analysis of Financial Statement and
(ii) Computerized Accounting. You have to attempt only one of the given OPTIONS.
(iv) Heading of the option opted must be written on the Answer-Book before attempting the questions of that particular OPTION.
(v) Question number 1 to 13 and 23 to 29 are very short answer type questions carrying 1 mark each.
(vi) Question number 14 and 30 are short answer type-I questions carrying 3 marks each.
(vii) Question number 15 to 18 and 31 are short answer type-II questions carrying 4 marks each.
(viii) Question number 19 to 20 and 32 are also long answer type-I questions carrying 6 marks each.
(ix) Question number 21 and 22 are long answer type-II questions carrying 8 marks each.
(x) Answer should be brief and to the point. The answer of each part should be written at one place.
(xi) There is no overall choice. However, an internal choice has been provided in 2 questions of three marks, 2 questions of four marks, 1 question of six marks and 2 questions of  eight marks. You have to attempt only one of the choices in such questions.
(xii) However, separate instructions are given with each section and question, wherever necessary.

• Question 1
Why does the Fixed Capital Account of partners show credit balance even when the firm suffers losses year after year? VIEW SOLUTION

• Question 2
Milan, Khilan and Silam were partners sharing profits in the ratio of 2 : 2 : 1. They decided to share future profits in the ratio of 7 : 5 : 3 with effect from 1st April, 2019. After the revaluation of assets and re-assessment of liabilities, Revaluation Account showed a loss of ₹ 15,000. The amount to be debited in the capital account of Milan because of loss on revaluation will be:
(A) ₹ 15,000
(B) ₹ 6,000
(C) ₹ 7,000
(D) ₹ 5,000 VIEW SOLUTION

• Question 3
Name an item which is transferred to credit side of Realisation Account at the time of dissolution of partnership firm, but does not involve cash payment. VIEW SOLUTION

• Question 4
Which of the following statements does not relate to 'Reserve Capital':
(A) It is part of uncalled capital of a company.
(B) It cannot be used during the lifetime of a company.
(C) It can be used for writing off capital losses.
(D) It is part of subscribed capital. VIEW SOLUTION

• Question 5
P and Q were partners in a firm sharing profits in the ratio of 5 : 3. R was admitted for ${\frac{1}{4}}^{\mathrm{th}}$ share in the profits, of which he took 75% from P and the remaining from Q. Calculate the sacrificing ratio of P and Q. VIEW SOLUTION

• Question 6
Excess of issue price of a debenture over its face value is called ________________. VIEW SOLUTION

• Question 7
A, B and C were partners in a firm sharing profits in the ratio of 2 : 2 : 1. C retired. The balance in this capital account after adjustments regarding reserves, accumulated profits/loss and revaluation of assets and liabilities was 4,40,000. C was paid 5,00,000 including his share of goodwill. The amount that was credited to his capital account on account of goodwill was:
(A) 60,000
(B) 3,00,000
(C) 1,00,000
(D) 12,000 VIEW SOLUTION

• Question 8

Rohan, Mohan and Sohan were partners sharing profits equally. At the time of dissolution of the partnership firm, Rohan's loan to the firm will be :
(A) Credited to Rohan's Capital Account.
(B) Debited to Realisation Account.
(C) Credited to Realisation Account.
(D) Credited to Bank Account.

VIEW SOLUTION

• Question 9
Rahul, Sahil and Jatin were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 2. Rahul died on 15th October, 2017. At that time, the capitals of Sahil and Jatin after all the adjustments were ₹ 3,56,000 and ₹ 2,44,000 respectively. Sahil and Jatin decided to adjust their capital according to their new profit sharing ratio by opening current accounts. Calculate the new capitals of Sahil and Jatin. VIEW SOLUTION

• Question 10
Name an item that is never shown on the payment side of Receipts and Payments Account, but is shown on the debit side of the Income and Expenditure Account. VIEW SOLUTION

• Question 11
Diya, Riya and Tiya were partners sharing profits and losses in the ratio of 2 : 3 : 5. Tiya died on 28th November, 2019. Her share of profit was taken equally by Diya and Riya. Diya's share of profit in the new firm will be __________. VIEW SOLUTION

• Question 12
Mona and Tina were partners in a firm sharing profits in the ratio of 3 : 2. Naina was admitted with $\frac{1}{6}$th share in the profits of the firm. At the time of admission, Workmen's Compensation Reserve appeared in the Balance Sheet of the firm at 32,000. The claim on account of workmen's compensation was determined at 40,000. Excess of claim over the reserve will be:
(A) Credited to Revaluation Account.
(B) Debited to Revaluation Account.
(C) Credited to old partner's Capital Account.
(D) Debited to old partner's Capital Account. VIEW SOLUTION

• Question 13
Sun and Star were partners in a firm sharing profits in the ratio of 2 : 1. Moon was admitted as a new partner in the firm. New profit sharing ratio was 3 : 3 : 2. Moon brought the following assets towards his share of goodwill and his capital :  ₹ Machinery 2,00,000 Furniture 1,20,000 Stock 80,000 Cash 50,000

If his capital is considered as ₹ 3,80,000, the goodwill of the firm will be:
(A) ₹ 70,000
(B) ₹ 2,80,000
(C) ₹ 4,50,000
(D) ₹ 1,40,000 VIEW SOLUTION

• Question 14
How would the following items be treated while preparing the financial statements of a sports club?
 Particulars Amount (₹) Prize Fund 44,000 Interest on Prize Fund Investments 6,000 Prizes Awarded 46,000 Match Expenses 64,000 Prize Fund Investments 44,000

OR

From the following information of a charitable dispensary, calculate the amount of medicines consumed during the year that would appear in the Income and Expenditure Account for the year ending 31st March, 2019:
 Particulars Amount (₹) Stock of medicines on 1.4.2018 60,000 Creditors for medicines 1.4.2018 40,000 Stock of medicines 31.3.2019 10,000 Creditors for medicines 31.3.2019 25,000 Advances for medicines 31.3.2019 22,000 Credit purchases of medicines during the year 2,76,000 Cash purchases of medicines during the year 46,500
VIEW SOLUTION

• Question 15
Raunit Styles Ltd. was registered with a capital of ₹ 85,00,000 divided into equity shares of ₹ 100 each. The company invited applications for issuing 45,000 shares.
The amount was payable as ₹ 25 on application, ₹ 35 on allotment, ₹ 25 on first call and balance on final call.
Applications were received for 42,000 shares and allotment was made to all the applicants. Kavi, to whom 3,300 shares were alloted, failed to pay both the calls. His shares were forfeited.
Present the Share Capital in the Balance Sheet of the company as per Schedule III of the Companies Act, 2013. VIEW SOLUTION

• Question 16
Manu, Sonu and Tony were partners in a firm sharing profits in the ratio of 5 : 3 : 2. The firm closes its books on 31st March every year. Manu died on 31st July, 2019. His executor is entitled to:
(i) His capital ₹ 4,00,000 and his share of goodwill. Goodwill of the firm was valued at ₹ 96,000.
(ii) His share of profit till the date of his death which will be calculated on the basis of average profits of last 3 years.
(iii) Average profits of last 3 years were ₹ 78,000.
(iv) Interest on capital @ 6% p.a.
(v) His drawings till the date of death were ₹ 21,000.
Prepare Manu's Capital Account to be rendered to his executors. VIEW SOLUTION

• Question 17
Ram, Mohan and Sohan were partners sharing profits in the ratio of 2 : 1 : 1. Ram withdrew 3,000 every month and Mohan withdrew 4,000 every month. Interest on drawings @ 6% p.a. was charged, whereas the partnership deed was silent about interest on drawings.
Showing your working clearly, pass the necessary adjustment entry to rectify the error.

OR

Yadu, Vidu and Radhu were partners in a firm sharing profits in the ratio of 4 : 3 : 3. Their fixed capitals on 1st April, 2018 were 9,00,000, 5,00,000 and 4,00,000 respectively. On 1st November, 2018, Yadu gave a loan of 80,000 to the firm. As per the partnership agreement:
(i) The partners were entitled to an interest on capital @ 6% p.a.
(ii) Interest on partners' drawings was to be charged @ 8% p.a.
The firm earned profits of  2,53,000 (after interest on Yadu's loan) during the year 2018 – 19. Partners' drawings for the year amounted to Yadu: 80,000, Vidu : 70,000 and Radhu : 50,000.
Prepare Profit and Loss Appropriation Account for the year ending 31st March, 2019. VIEW SOLUTION

• Question 18
Rakesh, Ram and Rohan were partners sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2018, their Balance Sheet was as follows:
 Balance Sheet of Rakesh, Ram and Rohan as at 31st March, 2018 Liabilities Amount (₹) Assets Amount (₹) Sundry Creditors 70,000 Land and Building 3,50,000 Rohan's Loan 20,000 Stock 3,00,000 Mrs. Rohan's Loan 20,000 Debtors 2,00,000 Less: Provision for doubtful debts 10,000 1,90,000 Capitals : Rakesh 4,00,000 Cash 70,000 Ram 3,00,000 Rohan 1,00,000 8,00,000 9,10,000 9,10,000

The firm was dissolved on the above date on the following terms:
(i) Land and building and stock were sold for ₹ 6,00,000. Debtors were realised at 10% less than the book value.
(ii) Mrs. Rohan's loan was settled by giving her an unrecorded computer of ₹ 22,000.
(iii) Rakesh paid off one of the creditors ₹ 20,000 in settlement of ₹ 30,000.
(iv) Rohan's loan was fully settled at ₹ 18,500.
Prepare Realisation Account. VIEW SOLUTION

• Question 19
From the following Receipts and Payments Account of Vista Club, prepare an Income and Expenditure Account for the year ended 31st March, 2019:
 Receipts and Payments Account of Vista Club for the year ended 31st March, 2019 Receipts Amount (₹) Payments Amount (₹) To Balance b/d 5,000 By Salaries 31,000 To Subscriptions: By Electricity Expenses 14,500 2017 – 18 11,600 By Machinery (01.07.2018) 40,000 2018 – 19 73,000 By 8% Investments 30,000 2019 – 20 8,000 92,600 By Balance c/d 5,100 To Sale of old furniture (Book value of ₹ 2,000) 800 To Entrance Fees 22,000 To Interest on Investment 200 1,20,600 1,20,600

(i) The club had 50 members each paying an annual subscription of ₹ 1,500. Subscriptions in arrears on 31st March, 2018, were ₹ 15,000.
(ii) On 31st March, 2019, outstanding salaries were ₹ 4,000.
(iii) 8% Investments were made on 31st December, 2018.
(iv) The club owned machinery of ₹ 1,00,000 on 1st April, 2018. Depreciate machinery @ 6% p.a.

VIEW SOLUTION

• Question 20
(i) Vayee Ltd. purchased the following assets of E.X. Ltd. :
Land and Building of 60,00,000 at 84,00,000; Plant and Machinery of 40,00,000 at 36,00,000.
The purchase consideration was 1,10,00,000. Payment was made by accepting a Bill of Exchange in favour of E.X. Ltd. of 20,00,000 and remaining by issue of 8% debentures of 100 each at a premium of 20%.
Record the necessary journal entries for the above transactions in the books of Vayee Ltd.
(ii) Zed Ltd. issued 2,00,000, 8% debentures of 100 each at a discount of 6% redeemable at a premium of 10% after 5 years. The amount was payable as follows:
On application – 50 per debenture and
On allotment – balance
Record the necessary journal entries for the issue of debentures in the books of Zed Ltd.

OR

Mahesh Ltd. had issued 20,000, 10% debentures of 100 each. 8,000, 10% debentures were due for redemption on 31st March, 2019. The company had a balance of 4,40,000 in the Debenture Redemption Reserve Account on 31st March, 2018. The company invested the required amount in the Debenture Redemption Investment on 1st April, 2018.
Pass the necessary journal entries for redemption of debentures. Ignore the entries for interest on debentures. VIEW SOLUTION

• Question 21
(i) R.P. Ltd. forfeited 1,500 shares of Rahim of 10 each issued at a premium of 3 per share for non-payment of allotment and first call money. Rahim had applied for 3,000 shares. On these shares, amount was payable as follows:
 On application – ₹ 3 per shares On allotment (including premium) – ₹ 5 per shares On first call – ₹ 3 per shares On final call – Balance

Final call has not been called up. 1,000 of the forfeited shares were reissued for 8,500 as fully paid-up.
Record the necessary journal entries for the above transactions in the books of R.P. Ltd.
(i) Max Ltd. forfeited 500 shares of  100 each for non-payment of first call of 20 per share and final call of 25 per share. 250 of these shares were re-issued at 50 per share fully paid-up.
Pass the necessary journal entries in the books of Max Ltd. for forfeiture and re-issue of shares. Also prepare the Share Forfeiture Account.

OR

Karur Ltd. invited applications for issuing 2,40,000 equity shares of  10 each at a premium of 4 per share. The amount was payable as under:
 On application – ₹ 4 per share (including premium ₹ 2) On allotment – ₹ 4 per share On first and final call – ₹ 6 per share (including premium ₹ 2)

Applications for 3,00,000 shares were received and pro-rata allotment was made to all the applicants. Excess application money received on application was adjusted towards sums due on allotment. All calls were made and were duly received except from Rohini, who failed to pay allotment and first and final call on 7,500 shares applied by her. These shares were forfeited. Afterwards, 40% of the forfeited shares were re-issued at 11 per share as fully paid-up.
Pass the necessary journal entries in the books of Karur Ltd. Open call-in-arrears and call-in-advance accounts wherever necessary. VIEW SOLUTION

• Question 22
Badal and Bijli were partners in a firm sharing profits in the ratio 3 : 2. Their Balance Sheet as at 31st March, 2019 was as follows:
 Balance Sheet of Badal and Bijli as at 31st March, 2019 Liabilities Amount (₹) Assets Amount (₹) Capitals : Building 1,50,000 Badal 1,50,000 Investments 73,000 Bijli 90,000 2,40,000 Stock 43,000 Badal's Current A/c 12,000 Debtors 20,000 Investment Fluctuation Reserve 24,000 Cash 22,000 Bills Payable 8,000 Bijli's Current A/C 2,000 Creditors 26,000 3,10,000 3,10,000

Raina was admitted on the above date as a new partner for ${\frac{1}{6}}^{\mathrm{th}}$ share in the profits of the firm. The terms of agreement were as follows:

(i) Raina will bring ₹ 40,000 as her capital and capitals of Badal and Bijli will be adjusted on the basis of Raina's capital by opening current accounts.

(ii) Raina will bring her share of goodwill premium for ₹ 12,000 in cash.

(iii) The building was overvalued by ₹ 15,000 and stock by ₹ 3,000.

(iv) A provision of 10% was to be created on debtors for bad debts.

Prepare the Revaluation Account and Current and Capital Accounts of Badal, Bijli and Raina.

OR

Prem, Kumar and Aarti were partners sharing profits in the ratio of 5 : 3 : 2. Their Balance Sheet as at 31st March, 2019 was as under:
 Balance Sheet of Prem, Kumar and Aarti as at 31st March, 2019 Liabilities Amount (₹) Assets Amount (₹) Capitals : Building 25,000 Prem 30,000 Plant and Machinery 15,000 Kumar 20,000 Investment 10,000 Aarti 20,000 70,000 Debtors 10,000 General Reserve 8,000 Stock 5,000 Investment Fluctuation Reserve 2,000 Cash 25,000 Bills Payable 8,000 Sundry Creditors 10,000 90,000 90,000

On the above date, Kumar retired. The terms of retirement were:
(i) Kumar sold his share of goodwill to Prem for ₹ 8,000 and to Aarti for ₹ 4,000.
(ii) Stock was found to be undervalued by ₹ 1,000 and building by ₹ 7,000.
(iii) Investments were sold for ₹ 11,000.
(iv) There was an unrecorded creditor of ₹ 7,000.
(v) An amount of ₹ 30,000 was paid to Kumar in cash which was contributed by Prem and Aarti in the ratio of 2 : 1. The balance amount of Kumar was settled by accepting a Bill of Exchange in favour of Kumar.
Prepare the Revaluation Account, Capital Accounts of partners and the Balance Sheet of the reconstituted firm. VIEW SOLUTION

• Question 23
Which of the following is not an objective of Analysis of Financial Statements :
(A) To judge the financial health of the firm.
(B) To judge the short-term and long-term liquidity position of the firm.
(C) To judge the reasons for change in the profitability of the firm.
(D) To judge the variations in the accounting practices of the business followed by different enterprises. VIEW SOLUTION

• Question 24
What will be the impact of issuing 5,00,000 equity shares to vendors of machinery on the Debt-Equity Ratio of 2 : 1? VIEW SOLUTION

• Question 25
Total amount of Trade Receivables of Ashoka Ltd. as on 31st March, 2019 were 3,00,000. It had created a provision of 5% for bad and doubtful debts. What amount of Trade Receivables will be taken to calculate Trade Receivables Turnover Ratio? VIEW SOLUTION

• Question 26
An investment normally qualifies as cash-equivalent only when from the date of acquisition it has a short maturity period of :
(A) One month or less
(B) Three months or less
(C) Three months or more
(D) One year or less VIEW SOLUTION

• Question 27
On 1.10.2018, Micro Ltd. issued 20,000, 8% debentures of 100 each and paid interest of 80,000 on these debentures on 31st March, 2019. Calculate the cash flow from financing activities for the period ending 31st March, 2019. Calculate the cash flow from financing activities for the period ending 31st March, 2019. VIEW SOLUTION

• Question 28
Give an example of an activity which is always financing with regards to the Cash Flow Statement. VIEW SOLUTION

• Question 29
State whether the following statement is true or false.
'Inventory Turnover Ratio measures the level of financial leverage.' VIEW SOLUTION

• Question 30
Under which major head/sub-head will the following items be presented in the Balance Sheet of a company as per Schedule III Part I of the the Companies Act, 2013?
(iii) Capital work-in-progress
(iv) Motor vehicles
(v) Stores and spare parts
(vi) 9% Debentures

OR

Opening inventory is 60,000, closing inventory is 1·5 times of opening inventory. Inventory Turnover Ratio is 6 times. Selling price is $33\frac{1}{3}%$ above cost. Calculate the Gross Profit Ratio. VIEW SOLUTION

• Question 31
Prepare a common size Balance Sheet of L.X. Ltd. from the following information:  Particulars Note No. 31-03-2019 (₹) 31-03-2018 (₹) I. Equity and Liabilities: ​ 1. Shareholders Funds 20,00,000 10,00.000 2. Non-Current 20,00,000 5,00.000 3. Current Liabilities 10,00,000 5,00.000 Total 50,00,000 50,00,000 II. Assets 1. Non-Current Assets 30,00,000 12,50,000 2. Current Assets 20,00,000 7,50,000 Total 50,00,000 20,00,000

OR

From the following information, prepare Comparative Statement of Profit and Loss :
 Particulars 31.3.2018 ₹ 31.3.2019 ₹ Revenue from operations 4,00,000 3,00,000 Other Income 80,000 40,000 Expenses - 50% of Revenue from operations Income Tax Rate 40%
VIEW SOLUTION

• Question 32
(i) From the following information of Nova Ltd., calculate the cash flow from investing activities:
 Particulars 31.3.2019 (₹) 31.3.2018 (₹) Machinery (At cost) 5,00,000 3,00,000 Accumulated Depreciation on machinery 1,00,000 80,000 Goodwill 1,50,000 1,00,000 Land 70,000 1,00,000

During the year, a machine costing ₹ 50,000 on which the accumulated depreciation was ₹ 35,000, was sold for ₹ 12,000.

(ii) The profit of Jova Ltd. for the year ended 31st March, 2019 after appropriation was ₹ 2,50,000.
 S.No. Particulars Amount (₹) 1. Depreciation of Machinery 20,000 2. Goodwill written off 9,000 3. Loss on sale of Furniture 2,000 4. Transfer to General Reserve 22,500

The following was the position of its Current Assets and Current Liabilities as at 31st March, 2018 and 2019.
 Particulars 31.3.2018 (₹) 31.3.2019 (₹) Income Received in Advance 8,000 – Inventory 12,000 8,000

Calculate the Cash flow from operating activities.
VIEW SOLUTION
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