Model Test Paper 1

Time Allowed: 3 Hours Max. Marks: 80

General Instructions:
1. This question paper contains two Parts A and B.
2. Part A is compulsory for all.
3. Part B has two options—Option I Analysis of Financial Statements and Option—II
Computerised Accounting.
4. Attempt only one option of Part B.
5. All parts of a question should be attempted at one place.

PART A
ACCOUNTING FOR NOT-FOR-PROFIT ORGANISATIONS,
PARTNERSHIP FIRMS AND COMPANIES

Fill in the blanks with appropriate words:

1. Subscriptions received by a club is a _______________ receipt. (1)
2. At least _________ persons are necessary to form a partnership. (1)
3. At the time of admission of a partner, profit or loss on revaluation of assets and
reassessment of liabilities is shared by the old partners in their _________ ratio. (1)
4. If at the time of retirement of a partner, goodwill exists in the books, it is written off
among _______________ partners in their _______________ ratio. (1)
5. Unrecorded liability paid at the time of dissolution is debited to _______________
Account. (1)

State whether the following statements are True or False:

6. Loan by Partners have to be paid at the time of dissolution of partnership firm before
repayment of capital. (1)
7. Interest on debentures is a charge against profit and not an appropriation. (1)
8. Securities Premium Reserve Account can be used for buy-back of own securities. (1)
9. Goodwill is an intangible asset and not a fictitious asset. (1)
10. Interest on Loan by Partner is allowed @ 10% p.a. if partnership deed is silent about
the rate. (1)

Select the correct choice to answer the following questions:

11. When a new partner is admitted, he is entitled to share of
(a) past profits. (b) present profits.
(c) future profits. (d) reserve appearing in the balance sheet of the firm. (1)
M.2 An Aid to Accountancy—CBSE XII

12. Gaining ratio is calculated at the time of

(a) retirement of a partner only.
(b) death of a partner only.
(c) admission of a partner only.
(d) change in profit-sharing ratio/retirement/death of a partner. (1)
13. Mother Ltd. forfeited 300 shares of ` 10 each, fully called-up, held by Ram for
non-payment of allotment money of ` 3 per share and final call money of ` 4 per share.
Out of these shares, 250 shares were reissued to Shyam for ` 2,000 as fully paid-up.
The gain on reissue is
(a) ` 900. (b) ` 400.
(c) ` 750. (d) ` 250. (1)
14. In the Balance Sheet of a company, interest accrued and due on debentures is shown
under the head
(a) Share capital. (b) Reserves and Surplus.
(c) Current Liabilities. (d) Non-current Liabilities. (1)
15. Show how will be the following items dealt while preparing final accounts of Queen’s
Club for the year ending 31st March, 2019:
Expenditure on construction of Building ` 3,60,000. The construction work is in progress
and has not yet completed.
Opening Capital Fund : ` 10,80,000
Opening Building Fund : ` 4,80,000
Donation received for Building : ` 6,00,000
Opening 10% Building Fund Investments : ` 4,80,000
Interest received on Building Fund Investments : ` 48,000 (3)
16. A, B, and C were partners sharing profits and losses in the ratio of 4 : 3 : 2
respectively. B retired when the capitals of A, B and C before the adjustments were
` 2,19,500, ` 1,14,000 and ` 1,16,500 respectively. On the date of retirement, firm’s
goodwill was valued at ` 2,16,000 and Loss on Revaluation of Assets and Reassessment
of Liabilities was ` 27,000, General Reserve ` 63,000 and the Cash and Bank Balance
on that date was ` 1,86,000. B was to be paid through amount brought by A and C in
a manner that their capitals become proportionate to their new profit-sharing ratio
of 5 : 3. Calculate the amount to be paid or to be brought by the continuing partners if
minimum Cash and Bank Balance of ` 1,00,000 was to be maintained. All transactions
are through Bank. Pass the necessary Journal entries. (3)
17. Sure Ltd. has an authorised capital of ` 20,00,000 divided into equity shares of ` 10
each. The company invited applications for 60,000 shares. Applications were received
for 58,000 shares.
All calls were made and were duly received except the final call of ` 3 per share on
2,000 shares. These shares were forfeited.
Present the share capital in the Balance Sheet of the company as per Schedule III of
the Companies Act, 2013.
Model Test Papers M.3

Or
State Bank of India issued 6,000; 10% Debentures of ` 100 each at a premium of 5%

on 1st June, 2019 redeemable on 31st August, 2020. The issue was fully subscribed.
Pass the necessary entries for issue and redemption of debentures. (4)
18. On 1st June, 2018, Max Ltd. issued 6,000; 10% Debentures of ` 100 each at a discount
of 6% redeemable at a premium of 4%. It has a balance of ` 40,000 in Securities
Premium Reserve. Pass the Journal entries for issue of debentures and writing off
loss and prepare Loss on Issue of Debentures Account. (4)
19. (a) Kumar and Raja are partners in a firm sharing profits in the ratio of 7 : 3. Their
fixed capitals were: Kumar ` 9,00,000 and Raja ` 4,00,000. The Partnership Deed
provided following:
(i) Interest on Capital @ 9% per annum.
(ii) Kumar’s salary ` 50,000 per year and Raja’s salary ` 3,000 per month.
But the profit for the year was distributed without providing for the above.
Profit for the year ended 31st March, 2019 was ` 2,78,000. Pass adjustment entry.
(b) Give any one distinction between sacrificing ratio and gaining ratio. (3 + 1)
20. X and Y were partners in a firm, sharing profits in the ratio of 2 : 3. On 31st March,
2019, their Balance Sheet was as follows:
`
Liabilities Assets `
Creditors 1,05,000 Bank 1,55,000
Workmen Compensation Reserve 1,00,000 Stock 1,00,000
Capital A/cs: Furniture 1,00,000
X 2,00,000 Computers 50,000
Y 3,00,000 5,00,000 Land and Building 3,00,000
7,05,000 7,05,000

The partners decided to dissolve the firm on 1st April, 2019. The assets and liabilities
were settled as follows:
(i) X agreed to take Land and Building at ` 3,50,000 against payment.
(ii) Stock was sold for ` 90,000.
(iii) Creditors accepted furniture and computers in full settlement of their claims.
Pass necessary Journal entries for dissolution of the firm.
Or
Ram and Shyam are partners in a firm sharing profits in the ratio of 2 : 3. They decided
to dissolve the firm. On 31st March, 2019, their Balance Sheet was as follows:
BALANCE SHEET as on 31st March, 2019
`
Liabilities Assets `
Creditors 65,000 Land 1,20,000
Bills Payable 35,000 Machinery 65,000
Capital A/cs: Goodwill 10,000
Ram 75,000 Stock 25,000
Shyam 75,000 1,50,000 Debtors 20,000
Bank 10,000
2,50,000 2,50,000
M.4 An Aid to Accountancy—CBSE XII

Ram paid creditors the amount due less 15% and Shyam paid bills payable in full.

Assets realised as follows: Land ` 96,000; Machinery ` 35,000; Stock 25% less and
Debtors ` 12,500. Expenses on realisation ` 1,750 were paid by Shyam.
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account. (6)

21. Following is the Receipts and Payments Account of Literacy Club for the year ended
31st March, 2019:

Dr. RECEIPTS AND PAYMENTS ACCOUNT for the year ended 31st March, 2019 Cr.
` Payments `
Receipts
To Balance b/f 20,000 By Building 1,08,000
To Donation 1,00,000 By Match Expenses 900
To Life Membership Fees 8,000 By Furniture 5,100
To Receipts from Matches 16,000 By 10% Investments 32,000
To Subscriptions 10,400 By Salaries: Y/E 31st March, 2018 4,000
To Lockers’ Rent 800 Y/E 31st March, 2019 10,000 14,000
To Interest on Investments 480 By Insurance 700
To Sale of Furniture (Book Value ` 1,600) 2,000 By Sundry Expenses 1,940
To Entrance Fees 6,000 By Balance c/f 1,040
1,63,680 1,63,680

Additional Information:
(i) Subscriptions outstanding on 31st March, 2018 were ` 200 and on 31st March,
2019 were ` 1,380.
(ii) Outstanding salaries for the year ended 31st March, 2019 were ` 800 and
outstanding sundry expenses were ` 600.
(iii) Donation includes ` 20,000 for general donations and balance for building.
(iv) 10% Investments were purchased on 1st July, 2018.
Prepare Income and Expenditure Account of the Club for the year ended
31st March, 2019. (6)

22. A, B and C are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1.
Their Balance Sheet as at 31st March, 2019 is as under:
`
Liabilities Assets `
Creditors 30,000 Cash in Hand 18,000
Bills Payable 16,000 Debtors 25,000
General Reserve 12,000 Less:  Provision for Doubtful Debts 3,000 22,000
Capital A/cs: Stock 18,000
A 40,000 Furniture 30,000
B 40,000 Machinery 68,000
C 30,000 1,10,000 Goodwill 12,000
1,68,000 1,68,000
Model Test Papers M.5

B retired on 1st April, 2019 on the following terms:

(i) Provision for Doubtful Debts will be raised by ` 1,000.
(ii) Stock will be reduced by 10% and Furniture by 5%.
(iii) There is an outstanding claim for damages of `1,100 and it is to be provided in
the books.
(iv) Creditors will be written back by ` 6,000.
(v) Machinery be reduced by 5%.
(vi) Out of the fire insurance premium paid during the year, ` 3,400 be carried forward
as prepaid.
(vii) Goodwill of the firm is valued at ` 24,000.
(viii) B is paid his dues with the amount brought in by A and C in a manner that their
capitals are in proportion to their new profit-sharing ratio of 3 : 2.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of
the New Firm. An adjustment for goodwill is made at the time of retirement of B.
Or
A and B are partners in a firm sharing profits in the ratio of 3 : 2. Their Balance Sheet
as at 31st March, 2019 stood as under:
`
Liabilities Assets `
Capital A/cs: Machinery 33,000
A 35,000 Furniture 15,000
B 30,000 65,000 Investments 20,000
General Reserve 10,000 Stock 23,000
Bank Loan 9,000 Debtors 19,000
Creditors 36,000 Less:  Provision for Doubtful Debts 2,000 17,000
Cash 12,000
1,20,000 1,20,000

On 1st April, 2019, they admitted C into partnership for 1/4th share in the profits on
the following terms:
(i) C brings capital proportionate to his share. He brings ` 7,000 in cash as his share
of goodwill.
(ii) All debtors are good.
(iii) Depreciate stock by 5% and furniture by 10%.
(iv) An outstanding bill for repairs ` 1,000 will be brought in the books.
(v) Half of the investments were to be taken over by A and B in their profit-sharing
ratio at book value.
(vi) Bank loan is paid off.
(vii) Partners agreed to share future profits in the ratio of 3 : 3 : 2.
(viii) A and B decided to allow a salary of ` 50,000 per annum for the extra efforts and
time devoted by him to the business.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet after
admission of C into the partnership. (8)
M.6 An Aid to Accountancy—CBSE XII

23. Sun Ltd. invited applications for 2,00,000 Equity Shares of ` 100 each at a premium
of ` 10 per share. The amount was payable as follows:
On application ` 40 per share (including premium), on allotment ` 30 per share and

the balance on first and final call.
Applications for 3,00,000 shares were received. Applications for 40,000 shares were
rejected and pro rata allotment was made to the remaining applicants. Ramesh who was
allotted 2,000 shares, failed to pay the allotment and first and final call money. His shares
were forfeited. The forfeited shares were reissued at ` 90 per share as fully paid-up.
Pass necessary Journal entries in the books of company.
Or
Sangam Ltd. invited applications for 80,000 equity shares of ` 10 each at par. The

amount was payable as follows:
On Application : ` 2;
On Allotment : ` 4; and
On First and Final Call : ` 4.
Applications for 1,00,000 shares were received. Allotment was made on pro rata basis

to all the applicants. Excess money received on applications was adjusted on sums due
on allotment. Satnam, who had applied for 1,000 shares, failed to pay the allotment
money and his shares were immediately forfeited. Harnam did not pay the first and
final call on 800 shares allotted to him. His shares were also forfeited. All the forfeited
shares were reissued at ` 12 per share as fully paid-up.
Pass necessary Journal entries in the books of Sangam Ltd. for the above transactions.
Also show your workings. (8)

PART B
ANALYSIS OF FINANCIAL STATEMENTS

Fill in the blanks with appropriate words:

24. Cash Flows are inflows and outflows of Cash and _______________. (1)
25. The principle revenue producing activities of the enterprise are known as ______________
activities. (1)

State whether the following statements are True or False:

26. Ratio analysis ignores qualitative factors. (1)
27. Vertical analysis is conducted for two or more accounting periods. (1)

Select the correct choice to answer the following questions:

28. Comparison of values of one period with those of another period for the same firm is
(a) Intra-firm comparison. (b) Inter-firm comparison.
(c) Pattern comparison. (d) Trend comparison. (1)
Model Test Papers M.7

29. While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed
as % of
(a) Non-current Assets. (b) Current Assets.
(c) Non-current Liabilities. (d) Total Assets. (1)
30. (a) Calculate values of Opening and Closing Inventories from the following information:
Revenue from Operations: ` 6,00,000; Gross Profit Ratio = 25%. Inventory Turnover
Ratio = 5 Times. Closing Inventory is ` 12,000 more than the Opening Inventory.
(b) Net profit after interest and tax ` 1,00,000; Current Assets ` 4,00,000; Current
Liabilities ` 2,00,000; Tax Rate 20%; Fixed Assets ` 6,00,000; 10% Long-term debt
` 4,00,000.
Calculate Return on Investment. (4)

31. (a) Which item is assumed to be 100 in case of Common-size Statement of Profit
and Loss?
(b) Prepare Common-size Balance Sheet from the following information:

31st March, 31st March,

2019 (`) 2018 (`)

Shareholders’ Funds 9,00,000 6,00,000
Non-current Liabilities 3,00,000 3,00,000
Current Liabilities 3,00,000 1,00,000
Non-current Assets 10,50,000 7,00,000
Current Assets 4,50,000 3,00,000
Or
(a) State any two tools of Financial Analysis.
(b) From the following Statement of Profit and Loss of the Sakhi Ltd. for the year ended
31st March, 2019, prepare Comparative Statement of Profit and Loss:

STATEMENT OF PROFIT AND LOSS

for the year ended 31st March, 2019
Particulars 31st March, 31st March,
2018 (`) 2019 (`)
I. Revenue from Operations 25,00,000 40,00,000
II. Expenses:
Employee Benefit Expenses (5% of Revenue from Operations) ... ...
Other Expenses 5,90,000 6,80,000
III. Rate of Tax 35% ... ...

(1 + 3)
M.8 An Aid to Accountancy—CBSE XII

32. (a) From the following information, calculate Cash Flow from Investing Activities:

Particulars Closing (`) Opening (`)

Machinery (At cost) 4,20,000 4,00,000

Accumulated Depreciation 1,10,000 1,00,000
Patents 1,60,000 2,80,000

Additional Information:
(i) During the year, a machine costing ` 40,000 with its accumulated depreciation of
` 24,000 was sold at a profit of 25% of book value.
(ii) Patents were written off to the extent of ` 40,000 and some patents were sold at
a profit of ` 20,000.
(b) From the following information, calculate Cash Flow from Financing Activities:

Particulars 31st March, 31st March,

2019 (`) 2018 (`)

Equity Share Capital 15,00,000 10,00,000

10% Debentures ... 1,00,000
8% Debentures 2,00,000 ...

Additional Information:
(i) Interest paid on Debentures ` 10,000.
(ii) Dividend paid ` 50,000.
(iii) During the year 2018–19, company issued bonus shares in the ratio of 2 : 1 by
capitalising reserve. (3 + 3)