Accountancy · Sample Paper 3

General instructions

Section A · Part A — Partnership and Company Accounts

1. Question 11 mark

   In the absence of a partnership deed, interest on capital is

   1. A.allowed at 6% p.a.
   2. B.not allowed
   3. C.allowed at 12% p.a.
   4. D.allowed at bank rate
2. Question 21 mark

   Under the fluctuating capital method, drawings are debited to the

   1. A.current account
   2. B.capital account
   3. C.P&L account
   4. D.loan account
3. Question 31 mark

   A partner withdrew ₹6 000 on the first day of every quarter. Interest on drawings at 10% p.a. is

   1. A.₹1 500
   2. B.₹1 200
   3. C.₹900
   4. D.₹1 800
4. Question 41 mark

   At the time of admission, the balance of general reserve is transferred to

   1. A.all partners in the new ratio
   2. B.old partners in the old ratio
   3. C.the new partner only
   4. D.P&L appropriation
5. Question 51 mark

   X and Y share 3 : 2. Z joins for 1/5 share which he takes entirely from X. The new ratio is

   1. A.2 : 2 : 1
   2. B.3 : 2 : 1
   3. C.11 : 8 : 5
   4. D.2 : 1 : 1
6. Question 61 mark

   Hidden goodwill arises when the new partner's capital is

   1. A.more than his share of total capital
   2. B.less than the old partners' capital
   3. C.not brought in
   4. D.brought in kind
7. Question 71 mark

   Amount due to a retiring partner, if not paid, is transferred to his

   1. A.capital account
   2. B.loan account
   3. C.current account
   4. D.drawings account
8. Question 81 mark

   A, B and C share 4 : 3 : 2. B retires. The new ratio of A and C if they keep their mutual ratio is

   1. A.4 : 2
   2. B.2 : 1
   3. C.1 : 1
   4. D.3 : 2
9. Question 91 mark

   On dissolution, assets are transferred to the Realisation Account at their

   1. A.market value
   2. B.book value
   3. C.replacement value
   4. D.scrap value
10. Question 101 mark

    The balance of the Realisation Account (profit or loss) is transferred to

    1. A.partners' capital accounts in profit-sharing ratio
    2. B.the P&L account
    3. C.cash account
    4. D.the creditors
11. Question 111 mark

    The minimum subscription for a public issue as per SEBI is

    1. A.50% of the issue
    2. B.90% of the issue
    3. C.100% of the issue
    4. D.25% of the issue
12. Question 121 mark

    Amount received on shares in excess of their face value is credited to

    1. A.share capital
    2. B.securities premium
    3. C.general reserve
    4. D.capital reserve
13. Question 131 mark

    Shares issued to promoters for their services are

    1. A.rights shares
    2. B.bonus shares
    3. C.shares issued for consideration other than cash
    4. D.preference shares
14. Question 141 mark

    Debentures that can be converted into equity shares are

    1. A.redeemable debentures
    2. B.convertible debentures
    3. C.secured debentures
    4. D.registered debentures
15. Question 151 mark

    When debentures are issued at par and redeemable at a premium, the premium on redemption is credited to

    1. A.securities premium
    2. B.premium on redemption of debentures (a liability)
    3. C.P&L
    4. D.debentures account
16. Question 161 mark

    Under Schedule III, trade receivables are shown under

    1. A.non-current assets
    2. B.current assets
    3. C.current liabilities
    4. D.shareholders' funds
17. Question 173 marks

    P and Q are partners with capitals of ₹1 00 000 and ₹60 000, sharing profits 3 : 2. The deed allows interest on capital at 8% p.a. and a salary of ₹1 000 per month to Q. Profit for the year before these adjustments is ₹62 800. Show the distribution of profit.

18. Question 183 marks

    Calculate goodwill as 3 years' purchase of the average profits of the last four years: ₹40 000, ₹50 000, ₹(10 000) loss, ₹60 000.

19. OR

    Question 183 marks

    A and B share 5 : 3. C is admitted for 1/4 share. C acquires 3/16 from A and 1/16 from B. Calculate the new profit-sharing ratio.

20. Question 193 marks

    A company forfeited 300 shares of ₹10 each issued at a premium of ₹2, on which the applicant had paid ₹3 on application only; the allotment money of ₹5 (including premium) and the first call of ₹4 were unpaid. Pass the forfeiture entry, assuming the first call was made.

21. Question 203 marks

    A company issued 5 000, 8% debentures of ₹100 each at a discount of 4%, redeemable at par after 5 years. Pass the journal entries for the issue and write off the discount in the first year from securities premium of ₹10 000.

22. Question 214 marks

    X and Y share profits 3 : 1 with capitals ₹60 000 and ₹40 000. Z is admitted for 1/4 share and brings ₹50 000 as capital. Calculate hidden goodwill and pass the entry for Z's share of goodwill (Z doesn't bring goodwill in cash).

23. Question 224 marks

    On dissolution of the firm of A and B (sharing equally): assets realised ₹1 20 000; creditors ₹40 000 were paid ₹38 000 in full settlement; realisation expenses ₹2 000 were paid by A. Book value of assets was ₹1 10 000. Prepare the Realisation Account.

24. OR

    Question 224 marks

    A, B and C share 2 : 2 : 1. C retires and his share is taken by A and B in the ratio 3 : 2. Calculate the new ratio and the gaining ratio.

25. Question 236 marks

    A and B are partners sharing profits 3 : 2. C was admitted for 1/5 share with a guarantee that his share of profit will not be less than ₹20 000. Any deficiency is to be borne by A and B in the ratio 2 : 1. The firm's profit for the year was ₹80 000. Prepare the Profit and Loss Appropriation Account.

26. Question 246 marks

    X, Y and Z share 3 : 2 : 1. Y retires. On his retirement: goodwill of the firm is valued at ₹60 000; buildings are revalued upward by ₹18 000; stock reduced by ₹6 000. Y's capital is ₹50 000 and general reserve is ₹24 000. Pass journal entries for goodwill, revaluation, reserve and calculate the amount due to Y.

27. Question 256 marks

    Z Ltd. issued 20 000 shares of ₹10 each at par, payable ₹2 on application, ₹3 on allotment, ₹5 on first and final call. Applications were received for 25 000 shares; applications for 5 000 shares were rejected and money refunded. All money was received except the call on 1 000 shares, which were forfeited. Pass the journal entries.

28. OR

    Question 256 marks

    What is reissue of forfeited shares? 500 shares of ₹10 each, on which ₹6 had been paid, were forfeited. 400 of these were reissued at ₹8 per share as fully paid. Pass the entries for reissue and transfer to capital reserve.

29. Question 266 marks

    Show the following in the balance sheet of a company under proper heads and sub-heads, with notes: Equity share capital ₹10 00 000; Securities premium ₹1 00 000; Surplus (P&L) ₹50 000; 9% debentures ₹4 00 000; Trade payables ₹1 50 000; Land and building ₹8 00 000; Inventories ₹3 00 000; Cash ₹6 00 000.

Section B · Part B — Analysis of Financial Statements

1. Question 271 mark

   Which is a tool of financial statement analysis?

   1. A.ratio analysis
   2. B.budgeting
   3. C.costing
   4. D.auditing
2. Question 281 mark

   The current ratio is

   1. A.current assets ÷ current liabilities
   2. B.current liabilities ÷ current assets
   3. C.liquid assets ÷ current liabilities
   4. D.total assets ÷ total liabilities
3. Question 291 mark

   Depreciation is added back to net profit while calculating cash from operating activities because it is a

   1. A.cash expense
   2. B.non-cash expense
   3. C.financing item
   4. D.investing item
4. Question 301 mark

   Proceeds from the issue of shares are

   1. A.operating cash inflow
   2. B.investing cash inflow
   3. C.financing cash inflow
   4. D.not shown
5. Question 313 marks

   Calculate the current ratio and the quick ratio: inventories ₹50 000; trade receivables ₹40 000; cash ₹30 000; prepaid expenses ₹10 000; current liabilities ₹65 000.

6. Question 323 marks

   Explain three limitations of financial statement analysis.

7. Question 334 marks

   From the following, calculate the trade receivables turnover ratio and average collection period: credit revenue from operations ₹3 60 000; opening trade receivables ₹40 000; closing trade receivables ₹50 000. (Take 360 days.)

8. Question 346 marks

   Calculate cash flow from operating activities: net profit after tax ₹80 000; income tax paid ₹20 000 (provision for tax ₹20 000); depreciation ₹15 000; loss on sale of machinery ₹5 000; increase in trade receivables ₹10 000; decrease in inventories ₹8 000; increase in trade payables ₹6 000.

9. OR

   Question 346 marks

   Prepare a common-size balance sheet from: Share capital ₹4 00 000; Reserves ₹1 00 000; Long-term borrowings ₹3 00 000; Current liabilities ₹2 00 000; Non-current assets ₹6 00 000; Current assets ₹4 00 000.