PART A: ACCOUNTING FOR PARTNERSHIP FIRMS
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.
(c) Realization of partnership.
(d) None of the above.
Reconstitution of partnership.
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?.
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
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.
(c) Transferring it to debit side of Bina’s capital account.
(d) Bina paying Anu and Charan privately.
(c) Transferring it to debit side of Bina’s capital account.
between ‘Capital Reserve’ and ‘Reserve 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’
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 on 1st February was:
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. .
State any three purposes for which
securities premium can be utilized. .
The amount received as securities premium can be used for
following purposes (any three):
In purchasing its own shares.
(b) Issuing fully paid bonus shares to the
(c) Writing off preliminary expenses of the company.
Writing off the expenses of, or
the commission paid, or discount allowed on any issue of securities or
debentures of the company.
Providing for the premium payable
on the redemption of any redeemable preferences shares or any debentures of the company.
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 .
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. .
Balance sheet of Newbie Ltd. as at:.
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%
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. .
Value which the company wants to communicate to the society:
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.
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.
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
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
interest on Drawings @6% p.a. .
of Interest on drawings:
(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. .
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
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. .
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:.
Realisation A/c Cr.
Partner’s Capital Accounts
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.
(c) Market value of investment is Rs.4,500.
(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:.
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.
(c) Furniture was taken over by Z for Rs. 14,000.
(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
Revaluation A/c and Partners’
Capital A/c’s. .
REVALUATION A/c Cr.
Partner’s Capital Accounts
REVALUATION A/c Cr.
Partner’s Capital Accounts Cr.
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
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 .
IN THE BOOK OF AMRIT LTD.
In The Books of Velco Ltd.
PART B: ANALYSIS OF FINANCIAL STATEMENTS
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
(c) Cash and Cash equivalents
(d) Operating activities. .
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.
from investing activities - Nil
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. .
(a) CURRENT LIABILITIES
(a) Short term borrowings
(b) Trade payables
(c) Other current liabilities
(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
(v) Helps in forecasting and preparing budgets.
Helps the users
in understanding complicated matter in a simplified manner.
(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.
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. .
Total revenue from operations =Rs. 5,00,000.
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
Inventory = Current
Ans. Current Liabilities =
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.
(a) Calculation of Net Profit Ratio:
Values that Himani Ltd. wants to
communicate to the society:.
Welfare of employees.
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:
paid during the year amounted to Rs. 70,000. .
Provision for Tax A/c
Part B: Computerized Accounting
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].
c. [Home] .
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.
b. Lines bonding the data within table.
Enumerate the basic requirements of computerised accounting
system for a business organization.
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.
The generation of ledger accounts is
not a necessary condition for making trial balance in a computerised
accounting system. Explain.
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
Intentional manipulation of
accounting records is much easier in computerised accounting than in manual accounting. How?.
Intentional manipulation of accounting records is much
easier in computerised accounting due to following:
Defective logical sequence at the
ii. Prone to hacking.
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. .
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
Data Vault: Software provides
additional security through data encryption.