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AHSEC CLASS 12 ACCOUNTANCY SOLVED PAPER 2022
ACCOUNTANCY
Full Marks: 100
Pass Marks: 30
Time: Three hours
The figures in the margin indicate full marks for the questions.
1. (a) Fill in the blanks with appropriate word/words: (any four)
(i) Income and Expenditure Account is prepared on an accrual basis. 1
(ii) Liability of a partner is unlimited. 1
(iii) Annual Report is issued by a company to its Shareholder. 1
(iv) Liquid ratio is the relationship between Liquid Assets and current liabilities. 1
(v) Equity shareholders are members of a company. 1
(b) Choose the correct alternative:
(i) When a new partner is admitted - 1
(a) Consent of all the partners is required.
(b) Consent of majority of the partners is required.
(c) Consent of any one partner is required.
Ans:- (a) Consent of all the partners is required.
(ii) Balance of shares forfeited account after re-issue is transferred to – 1
(a) Reserve Fund
(b) Profit and Loss Account
(c) Capital Reserve
Ans:- (c) Capital Reserve
(c) State whether the following statements are “True” or “False”: (any two)
(i) Outstanding subscription is an asset. 1
Ans:- True.
(ii) A Preference Shareholder gets interest at a fixed rate. 1
Ans:- False.
(iii) Company’s shares are generally transferable. 1
Ans:- True.
(iv) Life membership fee is a capital receipt. 1
Ans:- True.
2. Mention two features of a not-for-profit organisation. 2
Ans:- The main two characteristics of non-profit organizations are:
(i) Main objective is service: Such organizations are set up to provide service to a specific group or public at large either free of cost or at nominal rates and not to earn profit.
(ii) Separate entity: The non-profit organization is treated as a separate entity from its members.
3. What is a Profit and Loss Appropriation Account? 2
Ans:- In partnership, the profit is divided among the partners in a fixed profit sharing ratio, as stated in the partnership deed, after making necessary adjustments such as interest on capital, drawings and loans to partners, salaries, commission, etc. These transactions should not be mixed with other normal business transactions as they are appropriation of profit in the sense that if they are not distributed in the form of salary, interest, commission etc., they are distributed as profit.
4. What is the meaning of Cash Flow from Financing Activities? 2
Ans:- Cash flow from financing activity measures the movement of cash between a firm and its owners, investors and creditors. This report shows the net inflow of funds used to run the company including debt equity and dividends.
5. Mention any two features of a debenture. 2
Ans:- Two Features of debentures:
(i) Acknowledge.
(ii) Holder are creditors.
6. Mention any two rights of a partner. 2
Ans:- Two rights of partners:
(i) The partners are entitled to have access to the books of accounts of the firm and to take copies of the same.
(ii) Every partner has a right to participate in the conduct and management of the business.
7. A and B are partners sharing profit and losses in the ratio 3:2 C is admitted into the partnership. A surrendered 1/3rd of his share and B surrendered 1/4th of his share in favour of C. Determine the new profit-sharing ratio. 3
Or
Write three distinctions between Fixed Capital Account and Fluctuating Capital Account.
Ans:- The differences between fixed and fluctuating capital are:
8. Explain three uses of financial statement. 3
Ans:- Three Uses of Financial Statements:
(i) Determining the financial position of the business: The most important use of financial statements is to provide information about the financial position of the business at a given date. This information is used by various stakeholders to take important decisions regarding the business.
(ii) To obtain credit: Financial statements present the picture of the business to the potential lenders and this information can be used by them to provide additional credit for business expansion or to restrict credit so that recovery starts Could
(iii) Helps investors in taking decisions: Financial statements contain all the necessary information required by the potential investors to determine how much they want to invest in the business. It is also helpful in taking a decision regarding the per share price that investors want to invest in. A good financial statement is the key to getting investments.
9. Mention any three objectives of preparing Comparative Statement. 3
Ans:- Three objectives of preparing comparative statement:
(i) Better understanding: Simple and comparative presentation of data makes the message of financial statements easily understandable to the management.
(ii) Indirect Tendency: The comparative statements give information about the change that affects the financial statements and performance of the firm. It is the indicator of trend which helps the management to predict the future.
(iii) Focus on Strength and Weakness: It focuses on the strengths and weaknesses of the enterprise and draws the attention of the management to take remedial measures for the weak areas.
Or
A company’s stock is Rs. 2,00,000. Total liquid assets are Rs. 8,00,000 and quick ratio is 2:1. Calculate current ratio.
Ans:- Quick ratio = LA/CL
2 = 8,00,000/CL
CL = 4,00,000
Current Assets = 4,00,000+2,00,000=6,00,000
10. Explain the following terms: 3
(i) Capital Fund
Ans:- In the case of non-trading organization, the term capital fund is used instead of capital. It is sometimes called General Fund or Consolidated Fund or Corpus Fund. It is the excess of assets over liabilities on a particular data.
(ii) Life Membership Fee
Ans:- It is a receipt of capital nature as the members will not be required to pay annual fee, so it should be added to the capital fund or shown separately on the liabilities side of the balance sheet.
(iii) Entrance Fee
Ans:- In the absence of any specific direction; Entry fee can be treated as revenue receipt and thus shown on the credit side of the Income and Expenditure Account. However, if any direction is given to treat it as capital gain then it should be shown on the liability side of the Balance Sheet of the current year.
Or
Write three features of Fund Based Accounting.
Ans:- Fund based accounting has three features:
(i) Opening of a separate fund account: When a donation is received for a specific purpose, a separate fund account is created in the name of the specific purpose such as building fund, prize fund, etc. Such fund account is shown on the liabilities side. side of the balance sheet.
(ii) Income received on investment of specific fund: If the money of the fund is invested, the income received from the investment of such fund is credited to that fund account and not to the Income and Expenditure Account.
(iii) New donation relating to a specific fund: Any new donation or receipt on such a specific fund should be deposited in that fund.
Or
Calculate the amount of stationery consumed to be shown in the Income and Expenditure A/c for the year ended 31st December, 2020-
During the year 2020 payment made for stationery was Rs. 40,000.
Ans:-
Stationary consumed to be shown in Income and Expenditure A/c
11. Write three differences between Realisation Account and Revaluation Account. 3
Ans:- Three differences between Realization Account and Revaluation Account:
Or
Write any three uses of Cash Flow Statement.
Ans:- Three uses of Cash Flow Statement are as follows:
(i) Firstly a cash flow statement along with other financial statements provides information that enables users to evaluate changes in an enterprise's net assets, its financial structure (including its liquidity and solvency) and the amount of And has the ability to influence time. cash flow to adapt to changing conditions and opportunities.
(ii) Cash flow information is useful in assessing an enterprise's ability to generate cash and cash equivalents and enables users to develop models to estimate and compare the present value of future cash flows of various enterprises .
(iii) It also enhances the comparability of reporting of operating performance by different enterprises as it eliminates the effects of using different accounting treatments for the same transactions and events.
12. Prepare Income and Expenditure Account from the following Receipts and Payments Account and other details of Surya Club for the year ended 31st December, 2019: 5
Receipts and Payment Account
Other details:
(i) Outstanding Salaries – Rs. 1,000
(ii) Subscription outstanding – Rs. 2,000
(iii) Subscription for 2019 received in 2018 – Rs.200
Ans:-
Surya Club
Income & Expenditure Account
For the year ended 31st Dec 2019
Or
Write five distinctions between Receipts and Payments Account and Income and Expenditure Account. 5
Ans:- Five differences between Receipts and Payments Account and Income and Expenditure Account:
13. Explain the method of calculating “Cash flows from Operating Activities” under direct method. 5
Ans:- Direct method:
Cash sale
Add: collection from customer
Less: cash paid to creditors
Cash paid to employee
Cash paid for other operating expenses
Cash generated from operating activities
Less: Income tax paid
Cash flow before extraordinary items
Add: Extra-ordinary item
Less: Extra ordinary payment
Net cash flow from operating activities
Or
Calculate cash from operating activities from the following information:
Ans:-
14. What is Ratio Analysis? Mention any three limitations of ratio analysis. 2+3=5
Ans:- Ratio analysis is the study of relationships between various financial figures of a business. It uses a qualitative relationship to make a qualitative judgment about solvency. performance and profitability of a firm.
Limitations:
(i) Limitation of Accounting Data: The result of ratio analysis suffers from the limitation of accounting data affected by personal judgement. This is because ratios are based on accounting data.
(ii) Exclusion of Qualitative Aspects: The ratio is a component of qualitative data and excludes the qualitative aspect of business.
(iii) Fixed Money Value: It suffers from the practice of keeping the value of money constant, as the value of money is constantly changing.
Or
Briefly explain the meaning and significance of any two of the following ratios – 2.5x2=5
(i) Debt-Equity Ratio
Ans:- It is the ratio between long-term debt and shareholder's funds. It shows the capital structure of the firm. It also shows the degree of indebtedness of the enterprise with respect to the shareholders' funds and the degree of security of its loans.
(ii) Gross Profit Ratio
Ans:- Gross profit is the difference between revenue divided by revenue and cost of goods sold. The gross profit ratio is usually expressed as a percentage.
(iii) Quick Ratio
Ans:- Gross profit is the difference between revenue divided by revenue and cost of goods sold. The gross profit ratio is usually expressed as a percentage.
(iv) Stock Turnover Ratio
Ans:- The stock turnover ratio formula is the cost of goods sold divided by the average. The stock turnover ratio determines how quickly an enterprise sells its goods and products and turns over its inventory over a specified period of time. This ratio helps in improving inventory management as it tells about the fast or slow flow of inventory being used to make sales.
Or
Cost of Goods Sold – Rs. 3,00,000
Stock Turnover Ratio – 6 times
Find out the value of Opening Stock, if Opening Stock is Rs. 10,000 less than the Closing Stock. 5
15. From the following Income Statement, prepare Common Size Income Statement and give your comments: 5
Ans:-
Or
Give the new format of the Balance Sheet of a company (main headings only) as per the requirements of the revised Schedule-VI of the Companies Act.
Ans:-
Form of the Balance Sheet
Name of the company ………
Balance Sheet as at …….
Or
Give five points of distinctions between under-subscription and over-subscription.
Ans:-
16. A, B and C were in partnership sharing profits and losses in the ratio of 3:2:1. On 1st January, 2020, B retired from the firm. On that date their Balance Sheet was as follows: 2+3=5
Balance Sheet
The terms of the retirement were:
(i) Building is to be appreciated by Rs. 14,000.
(ii) Provision for doubtful debts is to be made at 5% on the debtors.
(iii) The goodwill of the firm is to be valued at Rs. 36,000.
(iv) No cash is to be paid to B immediately and balance of his capital account is to be transferred to his loan account.
Prepare Revaluation Account and Partners’ Capital Account.
Ans:-
Revaluation A/c
Partner’s Capital A/c
Or
Write the uses of securities premium amount.
Ans:- Securities premium can be used for –
(i) To issue fully paid-up bonus shares.
(ii) To write off preliminary expenses.
(iii) To write off expenses like commission on issue of shares and debentures, discount on issue of shares and debentures.
(iv) To provide for premium payable on redemption of shares and debentures.
(v) To buy back its own shares.
17. P, Q and R were in partnership sharing profit and losses in the ratio of 4:3:3. On 31st March, 2020 their Balance Sheet was as follows: 5
Balance Sheet
‘Q’ died on 30.06.2020. Under the partnership agreement the executors of a deceased partner were entitled to:
(a) Amount standing to the credit of deceased partner’s capital account.
(b) Interest on capital @12% p.a.
(c) His share of goodwill. The goodwill of the firm on Q’s death was valued at Rs. 2,70,000.
(d) Share of profit from the closing of the last financial year to the date of death on the basis of last year’s profits.
The profit of the firms for the year ended 31.03.2020 was Rs. 2,40,000.
Prepare Q’s capital account on the date of his death.
Ans:-
Q’s Capital Account
Or
Distinguish between Profit and Loss account and Profit and Loss Appropriation account. 5
Ans:- Difference between profit and loss account and P/L Appropriation account:
18. What is Realisation Account? Write three cases where a partnership firm may be dissolved by a court. 2+3=5
Ans:- Realization Account is a revenue account. It is opened on the dissolution of the firm. All assets except cash in this account are transferred by debiting this account and crediting the assets at their book value. Again, all liabilities except partner's debt are transferred to this account by debiting liabilities and crediting this account at their book value. When the asset is realised, the cash account is debited and the realization account is credited. Then, when liabilities and recovery expenses are paid, the assets recovered and liabilities paid are transferred to capital accounts in their profit-sharing ratios.
A partnership firm can be dissolved in the following manner and under the following circumstances:
(i) By mutual agreement (Section 40) – A firm can be dissolved when all the partners agree to its dissolution.
(ii) Compulsory Dissolution (Section 41) – A firm can be compulsorily dissolved
(a) When all or all the partners except one become insolvent.
(b) When the business of the firm becomes illegal.
(iii) On happening of certain event (Section 42) – A firm may be dissolved on any of the following events, if the partnership deed so provides.
Or
Amal and Bimal are two partners in a firm. They share profits as 3:2. Following is their Balance Sheet as on 31st March, 2021 on which date the firm is dissolved:
Balance Sheet
Fixed Assets are realised at Rs. 28,000. Stock at Rs. 8,000 and Debtors at Rs. 13,000. Expenses on realisation are Rs. 1,500. Creditors are paid at a discount of 10%.
Prepare Realisation Account Partners Capital Account and Cash Account. 2+2+1=5
Ans:-
Realisation Account
Partners’ Capital Account
Cash Account
19. Pradeep and Pranab are partners in a firm. The Trial Balance of the firm as on 31st March, 2020 was as under:
Trial Balance
Prepare Profit and Loss Account, Profit and Loss Appropriation Account and the Balance Sheet of the firm for the year ended 31st March, 2020, after considering the following information:
(i) Write off Rs. 1,000 as Bad Debt and provide a 5% Provision on Sundry Debtors for Doubtful Debts.
(ii) Interest on Investment Accrued Rs. 600.
(iii) Interest on Partner’s capital is allowed @ 5% p.a.
(iv) Create a General Reserve by taking Rs. 5,000 out of profit.
Ans:-
Pradeep & Pranab Firms
Profit and Loss Account for the year ended
31st March 2020
Profit & Loss Appropriation A/c
For the year ended on 31st March, 2020
Balance Sheet an on 31st March 2020
20. (a) Write two differences between Authorized Capital and Issued Capital of a company. 2
Ans:- (i) Capital authorized on the basis of present and future needs but capital used on the basis of present needs.
(ii) Stamp duty paid on authorized capital but not on issued capital.
(b) What is Minimum Subscription? 2
Ans:- The minimum subscription is the subscription to that portion on which the amount received from the shareholders is, in the opinion of the directors, sufficient to meet:
(i) the purchase price of the asset to be acquired or acquired
(ii) Preliminary Expenses.
(iii) Commission on issue of shares.
(iv) repayment of any money borrowed.
(v) To meet the working capital requirement, and
(iv) any other expenditure necessary for the normal conduct of business operations. As per SEBI guidelines, the minimum subscription cannot be less than 90% of the amount issued.
(c) What is Reserve Capital? 2
Ans:- Reserve capital is that part of uncalled capital which can be called up only in the event of winding up of the company for payment to creditors. Under Section 99 of the Companies Act, 1956, a company may, by a special resolution, set aside a portion of its unclaimed capital as reserve capital.
(d) What is Call-in-Arrear? 2
Ans:- Call in arrears means unpaid or outstanding amount due on allotment or call, payable from the shareholders. For example, if the allotment amount is Rs. 5 due on 100 shares is not paid to the holders then the total amount due is Rs. 500 is called the outstanding call.
Or
Arnab Company Ltd. Issued 10,000 equity shares of Rs. 100 each at a premium of 10% payable as under: 8
Rs. 30 on Application
Rs. 60 on Allotment (including premium)
Rs. 20 on call
Kamalesh holding 400 shares failed to pay the allotment and call money and Monalisha holding 700 shares failed to pay the call money.
Show the Entries in the Cash book and Journal of the company for the above transactions.
Ans:-
Arnab Company Ltd.
Journal
Cash Book
21. Give Journal entries for issue and redemption of Debentures in respect of the following: 8
(a) Debentures issued at a discount and redeemable at premium.
(b) Debentures issued at premium and redeemable at premium.
(c) Debentures issued at par and redeemable at par.
(d) Debentures issued at premium and redeemable at par.
Ans:- Accounting treatment of redemption of debentures:
A. Accounting entries in case of payment in lumpsum or by instalments
(i) Profit and Loss Appropriation A/c …..Dr
To Debenture Redemption Reserve A/c
(ii) Debenture A/c …….Dr
Premium on redemption of debenture A/c ……Dr
(if redeemed at premium)
To Debenture holder A/c
(iii) Debenture holder A/c ……..Dr
To Bank A/c
B. Redemption of debenture by open market purchase
(i) If debentures are purchase at par
Debenture A/c ……..Dr
To Bank A/c
(ii) If debentures are purchase at a premium
Debenture holder A/c ……Dr
Loss on cancellation of debenture A/c ……Dr
To Bank A/c
(iii) For writing of loss on cancellation
Profit & Loss or Security premium A/c
To Loss on cancellation of debenture A/c
(iv) If debentures are purchased at a discount
Debenture A/c ……Dr
To Bank A/c
To Profit on cancellation of Debenture A/c
(v) For transfer of profit on cancellation
Profit of cancellation of Debenture A/c
To capital Reserve
(vi) For creation of Debenture Redemption Reserve
Profit and Loss Appropriation A/c ….Dr
To Debenture Redemption Reserve A/c
If purchase for investment:
(i) Investment on own Debenture A/c ……..Dr
To Bank A/c
(ii) Debenture A/c …..Dr
To Investment on own Debenture A/c
(iii) Profit and Loss Appropriation A/c …….Dr
To Debenture Redemption Reserve A/c
C. Redemption of debenture of debenture by conversion.
(i) Debenture issued at par redeemable at par
(a) Debenture A/c ….Dr
To Debenture holder A/c
(b) Debenture holder A/c ……Dr
Discount A/c….Dr
To Share capital/ Debenture A/c
To Securities Premium A/c
(ii) Debentures were issued at par and redeemable at a premium.
(a) Debenture A/c ……Dr
Premium on redemption A/c
To Debenture holder A/c
(b) Debenture holder A/c …..Dr
Share discount A/c …..Dr
To Share Capital A/c
To Security Premium A/c
Or
What are the differences between a shareholder and a debenture holder?
Ans:- Difference between shareholder and debenture holder:
Or
Explain different methods of redemption of debentures.
Ans:- Different methods of redemption of debentures are:
(i) Lump sum payment: The enterprise redeems the debenture holders during maturity by paying the funds in lump sum (round amount) as per the terms and conditions of issue of debentures.
(ii) Payment in Installments: Under this method, usually in the case of debentures the redemption of debentures is made in installments on a particular date during the course of time. The total amount of debenture liability is divided by the total number of years. It is to be noted that redeemable bona fide debentures are recognized by means of drawing the required number of lots from the outstanding debentures for payment.
(iii) Purchase in the open market: When an enterprise purchases its own debentures for the purpose of cancellation, such act of purchase and cancellation of debentures involves redemption of debentures by purchase in the open market.
(iv) Conversion into shares or new debentures: An enterprise may redeem its debentures by converting them into a new class of debentures or shares. If the debenture holders find that the profit is useful to them, they can exercise their right to convert their debentures into new class of debentures or shares. These new shares or debentures can be issued either at a premium, at a discount or at par. It may be noted that this method is applicable only to convertible debentures.
22. Ram and Mohan are partners sharing profit and losses equally. Their Balance Sheet on 1st April, 2021 was follows: 8
Balance Sheet
They decided to admit Sanjoy into partnership for 1/3rd share on the following terms:
(i) Machinery and Building were revalued at Rs. 20,000 and Rs. 42,000 respectively.
(ii) Creditors were reduced by Rs. 2,000.
(iii) Provision for doubtful debts on debtors is to be created at Rs. 1,000.
(iv) Sanjoy is to bring in Rs. 40,000 as his capital and Rs. 24,000 as premium for goodwill.
Pass Journal entries for the above information and prepare Balance Sheet of the firm after the admission of Sanjoy.
Ans:-
Journal
Balance Sheet
Or
(i) Write any three limitations of partnership business. 3
Ans:- Limitations of Partnership Business:
(i) Risk of excess liability.
(ii) Lack of coordination.
(iii) Difficulty in withdrawing investment.
(ii) Explain five factors affecting the goodwill of a firm.
(ii) Explain five factors affecting the goodwill of a firm.
Ans:- Five Factors Affecting the Goodwill of a Firm:
(i) Local Factors: If the firm is centrally located or situated at a very prominent place, it may attract more customers, resulting in increase in turnover. Therefore, locational factor should always be considered while ascertaining the value of goodwill.
(ii) Time Factor: Time dimension is another factor which affects the value of goodwill. The comparatively older firm will enjoy greater business prestige than the other as the older firm is better known to its customers, although both may have similar locational advantages.
(iii) Nature of business: This is another factor which also affects the value of goodwill which includes:
(a) the nature of the goods;
(b) the risk involved;
(c) the monopolistic nature of the business;
(d) the benefits of patents and trademarks; And
(e) Easy access to raw materials etc.
(iv) Capital Requirement: More buyers may be inclined to purchase a business which requires comparatively less capital but has a higher rate of profit making and consequently, increases the value of goodwill. On the contrary, for a business which requires a large amount of capital but the rate of profit making is comparatively low, no buyer would be inclined to do the business and hence, the goodwill of the said firm would get pulled down. Is.
(v) Tendency of profits: The value of goodwill may also be affected due to fluctuations in the amount of profits (i.e. depending upon the rate of return). If the trend of profit is always increasing, undoubtedly the value of goodwill will be high, and vice versa.
Or
Distinguish between dissolution of Partnership and dissolution of Partnership firm. 8
Ans:- Dissolution of partnership is the dissolution of partnership enterprise. It is because of this aspect that when the valid relationship between all the partners comes to an end, and it is called dissolution of an enterprise.
However, when a partner becomes crippled, the partnership between the particular partner and the other partners of the enterprise comes to an end, but the enterprise can continue to function, if the other partners so desire.
Here are some points of difference between dissolution of partnership and dissolution of firm.
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