Harakchand Jain High School
Total Mark: - 100
Q1: (A) Fill in the blanks with appropriate word: 1x4=4
(i) Income and Expenditure Account records transactions of --------------- nature.
(ii) On admission, unrecorded assets brought into account are credited to ------------- account.
(iii) A company can issue shares at a discount only if at least ------------ year has elapsed since the
company became entitled to commence the business.
(iv) If a partner takes over an asset, such partner’s capital accounts is -------------(B) Choose the correct alternative:
(i) Subscription received in advance is treated as ------(a) An income, (b) An asset, (c) A liability, (d) Capital
(ii) Profit on revaluation of assets and liabilities is shared by the old partners in ----------(a) Sacrificing ratio, (b) New ratio, (c) Old ratio, (d) Gaining ratio
(C) State whether the following statements are true or false.
(i) Dissolution of firm and dissolution of partnership are two distinct legal concepts.
(ii) Discount on reissue of forfeited shares cannot exceed the amount received on forfeited shares.
Q2: Give the adjustment entry required for recording interest on capital when Capital Account is maintained
under Fixed Capital method. (2)
Q3: What is meant by ‘Gaining Ratio ‘on retirement of a partner?
Q4: What is meant by ‘Loss on issue of debenture’?
Q5: What are the types of Financial Statements Analysis?
Q6: What do you mean by Ratio Analysis? (2)
Q7: Mention three Features of Receipts and Payments Accounts.
Q8: Mention three situations when valuation of goodwill becomes necessary.
Q9: Write three points of distinction between Shares and debenture.
Q10: Give three characteristics of an ideal financial statement.
Q11: Give three objectives of Ratio Analysis.
Q12: From the following information, ascertain the amount of subscription to be credited to the Income and
Expenditure Account for the year 2012. (5)
(i) Subscription received during the year Rs 11,750 (including Rs 1000 for 2011 and Rs 500 for 2013)
(ii) Subscription received in 2011 for 2012 Rs 700
(iii) Subscription outstanding on 31st December 2012 Rs 900
Give five points of Distinction Existing between Receipt and Payments Accounts and Income and
Expenditure Account. (5)
Q13: A and B are partners sharing profits in the ratio of 5:4. They admit C in the firm for 1/4 th Share of profit. C
takes 3/16th from B. C brings in Rs 25,000 as capital and Rs 8,000 as premium for goodwill. The
partners withdraw 40% of their respective share of premium.
Pass the necessary Journal entries on C’s admission. (5)
What is super profit? What are the steps to be followed for valuation of goodwill under super profit method?
Q14: Can a company issue shares at a premium? If so, state the purpose for which the share premium account
can be utilised? (5)
Distinguish between Equity share and Preference shares giving five points of differences.
Q15: Show by means of Journal entries how you will record the following issue:
(a) A. Ltd. Issues 6,000, 10% debenture of Rs 100 each at a discount of 5%, redeemable at the end of 5 year
(b) B. Ltd. issue 7,000, 11% debenture of Rs 100 each at par, redeemable at the end of 5 year at a premium
(c) X. Ltd. issue 8,000, 12% debenture of Rs 100 each at a discount of 5%, redeemable at the end of 5 year at
premium of 5%.
What is meant by redemption of debenture? State any three methods of redemption of debenture. (2+3=5)
Q16: Name the major headings under which the liabilities side of a company’s Balance Sheet is organised and
Discuss any five limitations of Financial Statements
Q17: Prepare a comparative income Statements of Sunny Ltd. with the help of the following information. (5)
Cost of Goods sold
40% of sales
20% of gross profit
50% of Sales
15% of gross profit
What do you understand by Financial Statement Analysis? Discuss its importance to management.
(Any four points). (1+4=5)
Q18: Ascertain Cash Flows from operating activities under the Direct Method from the Following data Related
to the accounting year 2010 – 11 (5)
(Cash Rs 4,000, Credit Rs 40,000)
Cash received from customers
Closing Account Receivables
Cash paid to Suppliers
Cash paid to employees
Furniture purchased from (M/s. Decorators on credit)
Income tax paid
Office expenses, total Rs 6,000, paid
What is Cash Flow Statement? Briefly explain any four objectives of preparing a Cash Flow Statement.
Q19: Choudhury and Barua are partners in a firm sharing profit and losses in the ratio 50:50 respectively. The
Trial Balance of the firm as on 31st March, 2011 was as follows:
Provision for doubtful debt
Trading Account(Gross Profit)
Cash in hand
Cash at bank
Prepare Profit and loss Account, Profit and Loss Appropriation Account for the year ended 31 st
March, 2011 and a Balance Sheet as at that date after taking into consideration the following.
(a) Outstanding Expenses – Salaries Rs 300, Interest on Bank overdraft Rs 225
(b) Machine worth Rs 15,000 purchased on 1st Oct, 2010.
(c) Provide depreciation on machinery and furniture @ 10% p.a. and on Building @ 2 1/2 % p.a.
(d) Interest on capital to be allowed @ 10% p.a.
(e) Prepaid Insurance Rs 150.
(f) Partner are entitled to salary of Rs 1,000 per annum each.
Q20: Ashok publications Ltd. issues 3,000 shares of Rs 10 each, payable as follow:
On Application Rs 2
On Allotment Rs 3
On first call Rs 2
And the balance when required
3,200 shares were applied for, application for 3000 was accepted by the Directors and the balance
application was rejected and money returned. Allotment money was duly received and first call was received
on 2950 shares.
Pass journal entries in the books of the company for the above transactions.
What do you mean by ‘forfeiture of share’? Discuss the procedure of forfeiture of share and re-issue of such
Q21: kumar and Guarav are partners sharing profit and losses as three-fourth and one-fourth. They agreed to
dissolve their firm. On the date of dissolution, they have following Balance sheet:
Plant and machinery
Land and Building
Sundry Debtors 22,000
Loan From Mrs.Gaurav
Cash in hand
The Assets Realised as follows:
(i) Land and Building Rs.48, 000
(ii) Sundry Debtors Rs.18, 000
(iii) Goodwill Rs.16, 500
Kumar took over plant and machinery at 5% more than the book value. Gaurav agreed to discharge his
wife’s loan. Creditors are paid Rs.12, 000 in full settlement of their claim and expenses on realisation
amounted to Rs.700.
You are required to show Realisation Account, Cash Account and Capital Accounts of the Partners on
What do you mean by Dissolution of a Firm? Mention Difference Between dissolution of a Firm and
Q22: X, Y and Z were partners in firm Sharing profit in 5:3:2 ratios. On 31st march, 2011 Z retired from the firm.
On the date of Z’s retirement, the Balance Sheet of the Firm Was as Follows: (8)
Balance Sheet of X, Y, Z as at 31st March 2011
Provision for legal claims
Land and Building
On Z’s retirement it was agreed that:
(a) Land and building will be appreciated by 5% and furniture will be depreciated by 20%
(b) Provision for Doubtful debts will be made at 5% on Debtor and provision for legal claim will be made at Rs.
(c) Goodwill of the firm was valued at Rs.60, 000
(d) Rs. 70,000 from Z’s Capital Account will be transferred to his loan account and the balance will be paid to
him by cheque.
Prepare Revaluation Account, Partners Capital Accounts and Balance sheet of X and Y after Z’s Retirement.
Explain the term “Reconstitution of a firm”. Mention the situations when such reconstitution of a firm takes
----------------- Best of Luck ----------------------