ACCOUNTANCY CLASS 12

SET - 1

Class- 12
Accountancy
Sample Paper 2020-2021

Time allowed: 3 hours Maximum Marks: 80

General Instructions:
1. This question paper comprises two Parts – A and B. There are 32 questions in the question
paper. All questions are compulsory.
2. Part A is compulsory for all candidates.
3. Part B has two options i.e. (1) Analysis of Financial Statements and (2) Computerised Accounting.
You have to attempt only one of the given options.
4. Question nos. 1 to 13 and 23 to 29 are very short answer type questions carrying 1 mark each.
5. Question nos. 14 and 30 are short answer type–I questions carrying 3 marks each.
6. Question nos. 15 to 18 and 31 are short answer type–II questions carrying 4 marks each.
7. Question nos. 19, 20 and 32 are long answer type–I questions carrying 6 marks each.
8. Question nos. 21 and 22 are long answer type–II questions carrying 8 marks each.
9. There is no overall choice. However, an internal choice has been provided in 2 questions of three
marks, 2 questions of four marks and 2 questions of eight marks.

Part - A
(Accounting for Not-For-Profit-Organisation, Partnership Firm and Companies)

1. Ankur and Kunal are partners sharing profit in the ratio of 3:2. Their capitals were ₹1,40,000 and
₹1,20,000 respectively. They admitted Pawan for 1/4 share in the profits. Pawan brought
₹1,60,000 as his capital. Calculate the value of the firm's goodwill. 1
 ACCOUNTANCY CLASS 12

Solution:
Amount (₹)
Total Capital of the new firm (on the basis of Pawan’s capital) 6,40,000
(1,60,000 x 4/1)
Less: Actual Total Capital of the firm (Ankur + Kunal + Pawan) 4,20,000
(1,40,000 + 1,20,000 + 1,60,000)
Goodwill of the firm 2,20,000

2. In case of dissolution of a firm, which liabilities are to be paid first? 1

Solution:
The debts of the firm to the third parties are to be paid first.
At the time of dissolution of a firm, the balance of partners’ capital is paid after payment of
outsiders’ liabilities and partner’s loan.

3. Which of the following is not a revenue receipt? 1

(a) Entrance Fee
(b) Corpus Donation
(c) Sale of Old Newspaper
(d) Rent Received

Solution: Corpus Donation is not a revenue receipt, Hence, the correct answer is option (b).

4. Jatin, Amit, and Shankar were partners and were sharing profits and losses in the ratio
of 4 : 3 : 2. Shankar retired and his share was taken over by Jatin and Amit in ratio 4 : 3.
Calculate the gaining ratio of Jatin and Amit. 1

Solution:

Jatin’s gain = 2/9 x 4/7 = 8/63

Amit’s gain = 2/9 x 3/7 = 6/63
Gaining Ratio = 8:6
=4:3

5. Give two items which may appear on the credit side of a partner’s current account. 1

Solution:
(a) Interest on capital
(b) Remuneration (salary and commision)
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6. What is meant by ‘Minimum Subscription’? 1

Solution:
Minimum subscription is the minimum amount which must be subscribed by the public. According to
Companies Act, 2013 minimum subscription has been fixed at 90 % of the issued amount. If this
condition is not satisfied, the company can not allot the share.

7. Under which type of activity will you classify ‘issue of 12% debentures’ while preparing the
cash flow statement. 1

Solution: Issue if 12% debentures will be shown under ‘financing activity’.

8. ‘Deposit of cash into bank’ will result in inflow, outflow or no flow of cash. State with
reason.
Solution:
‘Deposit of cash into bank’ does not result in cash flow because it is simply a movement
between cash and cash equivalents

9. The firm Monoic earned a profit of ₹3,00,000 during the year ending on 31st March, 2020.
20% of the net profit was to be transferred to general reserve. Pass the necessary journal
entry. 1

Solution:
Journal
Date Particulars L.F Debit (₹) Credit (₹)

2020
March 31 Profit and Loss Appropriation A/c Dr. 60,000
To General Reserve A/c 60,000
(20% of the net profit transferred to general
reserve)

10. Can a partner be exempted from sharing the loss in a firm? If yes, under what
circumstances? 1

Solution: As per Indian Partnership Act, 1932, if a partner is a minor, then he is exempted from
sharing the losses in a firm.

11. ___________ is a written agreement between the partners which contains the terms and
conditions of the partnership. 1
(a) Partnership Act, 1932
(b) Partnership Law
(c) Partnership deed
(d) Limited Liability Partnership
 ACCOUNTANCY CLASS 12

Solution: Partnership deed

12. Interest on partner’s capital and interest on drawings are recorded through ________
account. 1
(a) Trading account
(b) Profit and loss account
(c) Profit and loss appropriation account
(d) Partner’s capital account

Solution: (c) Profit and loss appropriation account

13. Securities premium can be utilised by the company: 1

(a) To writing off the expenses like commission paid or discount allowed
(b) To provide the premium payable on the redemption of preference share
(c) To issue of bonus shares
(d) All of the above

Solution: (d) All of the above

14. Show the accounting treatment of the following items by a Not-for-Profit organisation in
the receipts and payments account as well as income and expenditure account. 3
(i) Annual Subscription
(ii) Sale of Old Periodicals
(iii) Sale of Sports Materials

OR

From the following information calculate the amount of subscriptions to be credited to the
Income & Expenditure Account for the year 2017-18:
(₹)

Subscriptions received during the year 1,60,000

Subscriptions outstanding on 31st March, 2017 52,000
Subscriptions outstanding on 31st March, 2018 12,000
Subscriptions received in Advance on 31-3-2017 30,000
Subscriptions received in Advance on 31-3-2018 20,000
Subscriptions of Rs 4,000 are still in arrears for the year 2016-17

Solution:
(i) Annual Subscription:
(a) Subscriptions received whether they relate to current, previous or next year, is shown
on the debit side of the Receipts and Payments Account.
(b) Subscriptions relating to the current year whether received or not, are shown on the
 ACCOUNTANCY CLASS 12

credit side of the Income and Expenditure Account.

(ii) Sale of Old Periodicals:

(a) The amount received from the sale of old periodicals are shown on the debit side of
the Receipts and Payments Account.
(b) As the sale or old periodicals by any organisation is considered as revenue receipts.
So it is shown on the credit side of the Income and Expenditure Account.

(ii) Sale of Sports Materials:

(a) The amount received from the sale of sport materials are debited to the Receipts and
Payments Account.
(b) As the sale of sports materials by any sports club is considered as revenue income. So
it is shown on the credit side of the Income and Expenditure Account.

OR

Income and Expenditure Account

for the year ending on 31st March, 2018
Dr. Cr.
Expenditure Amount Income Amount (₹)
(₹)

Subscription 1,60,000
Less: Received
subscription on 31st
March, 2017
(₹52,000 - ₹4,000) 48,000
1,12,000
Add: Outstanding
for 2017-18 8,000
1,20,000
Add: Received in advance
on 31st March, 2017 30,000
1,50,000
Less: Received in advance
on 31st March, 2018 20,000 1,30,000

15. Gautam and Shekhar are partners sharing profits and losses equally. They decided to admit
Anil for an equal share in the profits. For this purpose the goodwill of the firm was to be
valued at four years’ purchase of super profits.
The balance sheet of the firm on Anil’s admission was as follows : 4
 ACCOUNTANCY CLASS 12

Capital and Liabilities Amount (₹) Assets Amount (₹)

Capitals : Building 1,20,000

Gautam 1,30,000 Machinery 80,000
Shekhar 50,000 1,80,000 Stock 40,000
Reserve 40,000 Sundry Debtors 36,000
Bank Loan 45,000 Cash 14,000
Sundry Creditors 25,000

2,90,000 2,90,000

The normal rate of return is 10% per annum. Average profit of the firm for the last four years was
₹49,000. Calculate Anil’s share of goodwill.

OR

(a) P, Q, and R are partners sharing profits in the ratio of 12:10:8 respectively. R retired
surrendering 1/4th of his shares in favour of P and remaining in favour of Q.
Calculate new profit-sharing ratio of P and Q
(b) X, Y, and Z are partners sharing profits in the ratio of 8/20, 6/20 and 6/20 respectively. Z retired
and his share was taken over by the remaining partners equally. Calculate gaining ratio of X and
Y. 4

Solution:
Capital Employed = Total Assets - Outsiders Liabilities (Bank Loan + Creditors)
= ₹2,90,000 - ₹45,000 - ₹25,000
= ₹2,20,000

Normal Profit = Capital Employed x Normal Rate of Return

= ₹2,20,000 x 10/100
= ₹22,000
Average Profit = ₹49,000
Super Profit = ₹49,000 - ₹22,000
= ₹27,000
Goodwill = ₹27,000 x 4 = ₹1,08,000
Anil’s Share of Goodwill = ₹1,08,000 x 1/3
= ₹36,000

OR

(a) Share surrendered by R in favour of P = 8/30 x 1/4 = 2/30

Share surrendered by R in favour of Q = 8/30 x (1 - 1/4)

= 8/30 x 3/4
 ACCOUNTANCY CLASS 12

= 6/30

New share = Old share + Share acquired

P’s new share = 12/30 + 2/30 = 14/30
Q’s new share = 10/30 + 6/30 = 16/30

New ratio of P and Q = 14:16

(b) New share = Old share + Share acquired

X’s new share = 8/20 + 6/40
= 16 + 6
40
= 22/40

Y’s new share = 6/20 + 6/40

= 12 + 6
40
= 18/40
16. Phone Ltd. took over the assets of ₹28,00,000 and liabilities of ₹8,00,000 from Moto Ltd. for
a purchase consideration of ₹18,38,000. Phone Ltd. issued a promissory note of ₹34,000
payable after 60 days in favour of Moto Ltd. and the balance amount was paid by issue of
equity shares of ₹100 each at a premium of ₹10 per share. 4

From the following information complete journal entries.

Journal
Date Particulars L.F Debit (₹) Credit (₹)

(i) Sundry assets A/c Dr. 28,00,000

To Sundry liabilities A/c 8,00,000
To Moto Ltd. A/c (Purchase consideration) ________
To ____________ (Balancing figure) 1,62,000
(Assets and liabilities acquired)

(ii) ___________ A/c Dr. 18,38,000

To Bills Payable A/c 34,000
To ________________ A/c (16,400 x 100) ________
To ________________ A/c (16,400 x 10) 1,64,000
(Bills accepted and 16,400 equity shares issued at a
premium of ₹10 per shares)
 ACCOUNTANCY CLASS 12

Solution:
Journal
Date Particulars L.F Debit (₹) Credit (₹)

(i) Sundry assets A/c Dr. 28,00,000

To Sundry liabilities A/c 8,00,000
To Moto Ltd. A/c (Purchase consideration) 18,38,000
To Capital reserve A/c (Balancing figure) 1,62,000
(Assets and liabilities acquired)

(ii) Moto Ltd. A/c Dr. 18,38,000

To Bills Payable A/c 34,000
To Equity share capital A/c (16,400 x 100) 16,40,000
To Securities premium A/c (16,400 x 10) 1,64,000
(Bills accepted and 16,400 equity shares issued at a
premium of ₹10 per shares)

Working note:
(a) Phone Ltd. took over the assets and liabilities of Moto Ltd.
Value of assets = ₹28,00,000
(-) value of liabilities = ₹8,00,000
₹20,00,000
(-) Purchase consideration ₹18,38,000
Gain ₹1,62,000
* Gain of ₹1,62,000 is an extraordinary item and it will be treated as a capital reserve.

(b) Total purchase consideration ₹18,38,000

(-) Promissory note ₹(34,000)
Balance purchase consideration ₹18,04,000
for which equity shares need to be
Issued.

Face value per equity share = ₹100

(+) Premium per share =₹10
₹110

No of Equity shares to be issued = ₹18,04,000

110
= 16,400 shares
17. Record journal entries for the following transactions on the dissolution of a firm ? 4
(a) Payment of unrecorded liabilities of ₹6,400.
(b) Stock worth ₹15,000 is taken by a partner Mohit.
(c) Profit on Realisation amounting to ₹18,000 is to be distributed between the partners
Amit and Sumit in the ratio of 5 : 7.
(d) An unrecorded asset realised ₹11,000.
 ACCOUNTANCY CLASS 12

Solution:
Journal
Date Particulars L.F Debit (₹) Credit (₹)

(a) Realisation A/c Dr. 6,400

To Bank A/c 6,400
(Unrecorded liabilities paid)

(b) Mohit’s Capital A/c Dr. 15,000

To Realisation A/c 15,000
(Stock taken over by partner)
(c) Realisation A/c Dr. 18,000
To Amit’s capital A/c 7,500
To Sumit’s capital A/c 10,500
(Profit on realisation transferred to partners capital
account)
(d)
Bank A/c Dr. 11,000
To Realisation A/c 11,000
(Unrecorded asset sold)

18. Nitin purchased Gaurav's business from 1st April, 2019. The Profits disclosed by Gaurav's
Business for the last three years were as follows :
Year ending 31st March 2017 - ₹80,000 (Including an Abnormal gain of ₹10,000)
Year ending 31st March 2018 - ₹1,00,000 (After charging an Abnormal Loss of ₹20,000)
Year ending 31st March 2019 - ₹90,000 (Excluding ₹10,000 as annual Insurance Premium of firm's
Property now Insured)
Calculate the Value of the firm's goodwill on the basis of 2 years Purchase of the average Profit for
the last three years. 4
 ACCOUNTANCY CLASS 12

Solution:
Valuation of Goodwill
Amount (₹)

Profit for the year ending 31st March,2017 80,000

Less: Abnormal gain (10,000) 70,000
Profit for the year ending 31st March,2018 1,00,000
Add: Abnormal loss 20,000 1,20,000
Profit for the year ending 31st March,2018 90,000
Total Profit 2,80,000
Average profit = 2,80,000/3 93,333
Less: Annual insurance premium 10,000
83,333

Goodwill at 2 year's purchase = ₹83,333 x 2 = ₹1,66,666

Note: Insurance Premium of ₹10,000 is recurring expenses. It is to be paid in future also. Hence,
it is deducted from average profits.

19. Following is the receipts and payments account of the Stream Club for the year ended 31st March,
2019. 6
Stream Club
Receipts and Payments Account
Dr. For the year ended 31st March, 2019 Cr.
Receipts Amount Payments Amount
(₹) (₹)

Balance b/d : Honorarium 4,000

Cash 20,000 Newspapers 1,500
Bank 35,000 55,000 Salaries:
Subscriptions 89,000 2017-18 16,000
Legacies 30,000 2018-19 32,000 48,000
Entrance Fees 15,000 8% Investment 80,000
Locker Rent Collection 4,000 (Purchased on 30.09.2018)
Sale of Furniture 15,000 Stationery 2,400
(Book value Rs. 17,000) Balance c/d:
Cash 6,000
Bank 66,100 72,100

_______ _______
2,08,000 2,08,000
 ACCOUNTANCY CLASS 12

The following additional information is provided:

i. Subscriptions received in advance on 31st March, 2018 were ₹7,000.
ii. Subscription outstanding as on 31st March, 2018 was ₹23,000 and on 31st March, 2019 was
₹25,000.

Prepare income and expenditure account for the year ended 31st March, 2019 from the above
information.

Solution:

Stream Club
Income and Expenditure Account
Dr. for the year ended 31st March, 2019 Cr.
Expenditure Amount Income Amount
(Rs.) (Rs.)

Salaries 32,000 Interest on Investments 3,200

Honorarium 4,000 (80,000 * 6/12 * 8/100)
Newspapers 1,500 Subscriptions 98,000
Stationery 2,400 Locker Rent Collection 4,000
Loss on Sale of Furniture 2,000 Entrance Fees 15,000
Surplus 78,300
_______ _______
1,20,200 1,20,200

Notes:

1. Calculation of subscription to be shown in income and expenditure account.

Particulars Amount (Rs.)

Subscription received during the year 89,000

(+) Subscriptions outstanding at the end of the year 25,000
(+) Subscriptions received in advance at the beginning of the year 7,000
(-) Subscriptions outstanding at the beginning of the year
(-) Subscriptions received in advance at the end of the year (23,000)
Subscriptions to be shown in the Income and Expenditure NIL
Account 98,000

2. Opening and closing cash and bank balance will appear in the opening and closing
balance sheet respectively.
3. Legacies being capital income will be reflected in the balance sheet.
4. Loss on sale of furniture = 17,000 - 15,000 = Rs. 2,000
 ACCOUNTANCY CLASS 12

5. Salary related to current accounting year i.e. 2018-19 will only be reflected in income and
expenditure account.
6. Purchase of investment being capital expenditure will be reflected in the balance sheet.

20. Fortune Ltd. issued 30,000 equity shares of ₹40 each payable as follows:
₹15 on Application,
₹10 on Allotment and
₹15 on First and Final Call
Applications were received for 35,000 shares Excess applications were rejected fully. One
Shareholder, who was allotted 500 shares, paid first and final call with allotment money and
another shareholder who was allotted 400 shares did not pay allotment and paid it with first and
final call.
Pass necessary journal entries. 6
 ACCOUNTANCY CLASS 12

Solution:
In the books of Fortune Ltd.
Journal
Date Particulars Debit Credit
(₹) (₹)

On Bank A/c Dr. 5,25,000

Application To Equity Share Application A/c 5,25,000
(The amount received on Application)

Equity Share Application A/c Dr. 5,25,000

To Equity Share Capital A/c 4,50,000
To Bank Account A/c 75,000
(Application amount transferred to Equity share
capital Account)

On Bank A/c Dr. 3,03,500

Allotment Calls-in-Arrears A/c Dr. (400 x 10) 4,000
To Equity Share Allotment A/c 3,00,000
To Calls-in-Advance A/c (500 x 15) 7,500
(Amount received on allotment except 400 shares)

Equity Share Allotment A/c Dr. 3,00,000

To Equity Share Capital A/c 3,00,000
(Allotment amount transferred to Equity share capital)

On First and Bank A/c Dr. 4,46,500

Final Call Calls-in-Advance A/c Dr (500 x 15) 7,500
To Equity Share First and Final Call A/c 4,50,000
To Calls-in-Arrears A/c (400 x 10) 4,000
(Amount received on first and final call)

Equity Share First and Final Call A/c Dr. 4,50,000

To Equity Share Capital A/c 4,50,000
(First and final call amount transferred to share capital
account)
 ACCOUNTANCY CLASS 12

21. Chandan and Dhruv were partners in a firm sharing profits and losses equally. On 31st
March, 2017 their Balance Sheet was as follows:

Balance Sheet of Chandan and Dhruv

as on 31.3.2017

Capital and Liabilities Amount (₹) Assets Amount (₹)

Sundry Creditors 2,08,000 Cash at Bank 60,000

Capitals: Bills Receivable 90,000
Chandan 5,00,000 Debtors 1,50,000
Dhruv 4,32,000 9,32,000 Furniture 2,20,000
Land and Building 6,20,000

11,40,000 11,40,000

On 1.4.2017, they admitted Eeshwar as a new partner for 1/3rd share in the profits on the
following conditions:
(i) Eeshwar will bring ₹6,00,000 as his capital and ₹1,00,000 as his share of goodwill, half of
which will be withdrawn by Chandan and Dhruv.
(ii) Debtors to the extent of ₹10,000 were unrecorded
(iii) Furniture will be reduced by 10% and 5% provisions for bad and doubtful debts will be
created on bills receivable and debtors.
(iv) Value of land and building will be appreciated by 20%.
(v) There being a claim against the firm for damages, a liability to the extent of ₹16,000 will be
created for the same.
Prepare Revaluations Account and Partner's Capital Accounts. 8

Or

Bony, Sunil, and Indra were partners in a firm sharing profit in the ratio 3:2:1. On 30th June, 2014, they
decided to dissolve the firm. Following was the balance sheet of the firm on that date:
 ACCOUNTANCY CLASS 12

Balance Sheet
Capital and Liabilities Amount (₹) Assets Amount (₹)

Sundry Creditors 1,00,800 Cash at Bank 27,400

Investment fluctuation fund 20,000 Stock 40,200
Reserve fund 24,000 Sundry Debtors 1,25,200
Capitals: Investments 32,000
Bony 60,000 Furniture 40,000
Sunil 40,000
Indra 20,000 1,20,000

2,64,800 2,64,800

The assets were realised and the liabilities were paid off as follows:
(a) Investments were taken over by Bony for ₹36,000
(b) Stock was taken over by Sunil for ₹35,000 and furniture was taken over by Indra at book value.
(c) ₹1,21,000 were realised from the debtors.
(d) Sundry Creditors were settled in full and realisation expenses were ₹9,000.
Prepare realisation account and partner’s capital accounts. 8

Solution:
Revaluation A/c
Particulars Amount Particulars Amount
(₹) (₹)

Furniture A/c 22,000 Debtors A/c 10,000

Provision for doubtful debts on 8,000 Land and Building A/c 1,24,000
debtors A/c (5 % x 1,60,000)
Provision for doubtful debts on 4,500
B/R A/c
Claim for damages A/c 16,000
Profit transferred to Partners'
Capital A/cs
Chandan 41,750
Dhruv 41,750 83,500

1,34,000 1,34,000
 ACCOUNTANCY CLASS 12

Dr. Partners’ Capital Account Cr.

Particulars Chandan Dhruv Eeshwar Particulars Chandan Dhruv Eeshwar

Chandan‘s capital A/c - - 50,000 Balance b/d 5,00,000 4,32,000 -

Dhruv’s capital A/c Eeshwar’s capital -
Bank A/c (G/w - - 50,000 A/c 50,000 50,000
withdrawn) 25,000 25,000 Bank A/c - - 7,00,000
Balance c/d Revaluation A/c
5,66,750 4,98,750 6,00,000 41,750 41,750 -

5,91,750 5,23,750 7,00,000 5,91,750 5,23,750 7,00,000

Working note:
(i) Calculation of new profit sharing ratio:
Old profit sharing ratio of Chandan and Dhruv = 1:1
Eeshwar’s share of profit = 1/3

Remaining share = 1 - 1/3

= 2/3

Chandan’s share = 2/3 x 1/2

= 1/3
Dhruv’s share = 2/3 x 1/2
=1/3
New profit sharing ratio of Chandan, Dhruv and Eeshwar = 1:1:1

(ii) Calculation of goodwill:

For 1/3rd share in profit, goodwill = 1,00,000
Value of firm’s goodwill = 1,00,000 x 3/1 = 3,00,000
Old ratio between Chandan and Dhruv = 1:1
New ratio between Chandan, Dhruv and Eeshwar = 1:1:1

Particulars Chandan Dhruv Eeshwar

Before admission (I) (1:1) 1,50,000 1,50,000 -

After admission (II) (1:1:1) 1,00,000 1,00,000 1,00,000

Gain / (Loss) (I - II) (50,000) (50,000) 1,00,000

 ACCOUNTANCY CLASS 12

Or

Realisation Account
Particulars Amount Particulars Amount
(₹) (₹)

Stock A/c 40,200 Sundry creditors A/c 1,00,800

Sundry debtors A/c 1,25,200 Investment fluctuation fund A/c 20,000
Investments A/c 32,000 Bony’s capital A/c (Investment) 36,000
Furniture A/c 40,000 Sunil’s capital A/c (Stock) 35,000
Cash A/c: Indra’s capital A/c (Furniture) 40,000
Sundry creditors 1,00,800 Cash A/c (Sundry Debtors) 1,21,000
Expenses 9,000 1,09,800
Profit transferred to:
Bony’s capital A/c 2,800
Sunil’s capital A/c 1,867
Indra’s capital A/c 933 5,600

3,52,800 3,52,800

Dr. Partners’ Capital Account Cr.

Particulars Bony Sunil Indra Particulars Bony Sunil Indra

Realisation A/c 36,000 35,000 40,000 Balance b/d 60,000 40,000 20,000
(Assets taken Reserve fund A/c 12,000 8,000 4,000
over) Realisation A/c (Profit)
Cash A/c 38,800 14,867 - Cash A/c 2,800 1,867 933
(Balancing (Balancing figure)
figure) - - 15,067

74,800 49,867 40,000 74,800 49,867 40,000

Cash A/c
Particular Amount (₹) Particular Amount (₹)

Balance b/d 27,400 Realisation A/c:

Realisation A/c (Sundry Debtors) 1,21,000 Sundry Debtors 1,00,800
Indra’s capital A/c 15,067 Expenses 9,000 1,09,800
Bony’s capital A/c 38,800
Suni’s capital A/c 14,867

1,63,467 1,63,467
 ACCOUNTANCY CLASS 12

22. Krishna Ltd. invited applications for issuing 2,00,000 equity shares of ₹50 each. The
amount was payable as follows:
On Application - ₹15 per share,
On Allotment - ₹25 per share,
On First and Final Call - ₹10 per share.
Applications for 3,00,000 shares were received and pro rata allotment was made to all the
applicants on following basis:
Applicants for 2,00,000 shares were allotted 1,50,000 shares.
Applicants for 1,00,000 shares were allotted 50,000 shares.
It was decided that excess amount received on applications will be adjusted towards sums due
on allotment and surplus if any will be refunded. Viraj, who was allotted 3,000 shares out of
the group applying for 2,00,000 shares did not pay the allotment money and his shares were
forfeited immediately. Afterwards, these forfeited shares were reissued at ₹30 per share fully
paid-up. Later on, the first and final call was made. Suraj, who had applied for 1,000 shares out
of the group applying for 1,00,000 shares failed to pay first and final call and his shares were
also forfeited. These shares were afterwards reissued at ₹60 per share fully paid-up.
Pass necessary Journal entries in the books of Krishna Ltd. for the above transactions. 8

Or

Sangam Ltd.invited applications to issue 40,000 equity shares of ₹100 each at a premium of ₹20 per
share .
The amount was payable as follows:
On application ₹20 per share
On allotment ₹60 (including premium) per share
On first and final call ₹40 per share
Applications for 60,000 shares were received. Allotment was made on a pro rata basis to all the
applicants. Excess money received on applications was adjusted on sums due on allotment. Surya,
who had applied for 3,000 shares, failed to pay the allotment money and Hariom did not pay first
and final call on 400 shares allotted to him. The shares of Surya and Hariom were forfeited. 2,100 of
these shares were reissued for ₹100 per share as fully paid up. The reissued shares included all the
forfeited shares of Hariom.
Pass journal entries for the above transactions in the books of Sangam Ltd. 8
 ACCOUNTANCY CLASS 12

Solution:

Journal of Krishna Ltd.

Date Particulars L.F Debit Credit
(₹) (₹)

(i) Bank A/c (3,00,000 x 15) Dr. 45,00,000

To equity Share Application A/c 45,00,000
(Application money received on 3,00,000 equity
shares)

(ii) 30,00,000
Equity Share Application A/c Dr. 30,00,000
To Equity Share Capital A/c (2,00,000 x 15)
(Application money transferred to share capital
account)
(iii) 34,40,000
Bank A/c Dr. 60,000
Calls in arrears A/c Dr. 15,00,000
Equity share application A/c Dr. 50,00,000
To Share allotment A/c (2,00,000 x 25)
(iv) (Allotment money received)
50,00,000
50,00,000
Equity share application A/c (2,00,000 x 25) Dr.
(v) To Equity share capital A/c
(Share allotment made transferred) 1,20,000
60,000
Equity share capital A/c [3,000 x (25 + 15) Dr. 60,000
To Calls in arrears A/c
(vi) To Share forfeiture A/c
(3,000 shares forfeited) 90,000
60,000
Bank A/c (3,000 x 30) Dr. 1,50,000
Share forfeiture A/c (3,000 x 20) Dr.
(vi) To Equity share capital A/c (3,000 x 50)
(3,000 shares reissued) 19,65,000
5,000
Calls in arrears A/c (500 x 10) Dr. 19,70,000
To Equity share first and final call A/c
(vii) [(2,00,000 - 3,000) x10]
(Shares first and final call money received) 19,70,000
19,70,000
Equity share first and final call A/c Dr.
(viii) To Equity share capital A/c 25,000
(Share first and final call money transferred) 5,000
20,000
Equity share capital A/c (500 x 50) Dr.
(ix) To Calls in arrears A/c
To Share forfeiture A/c
 ACCOUNTANCY CLASS 12

(500 shares forfeited) 30,000

25,000
5,000
Bank A/c (60 x 500) Dr.
To Equity share capital A/c (50 x 500)
To Securities premium A/c (10 x 500)
(x)
(500 share re-issued)
20,000
Share forfeiture A/c Dr. 20,000
To Capital reserve A/c
(Gain on re-issue of forfeited shares transferred to
capital reserve)

Working note:
(i) Number of shares applied by Viraj = 3,000 x 2,00,000
1,50,000
= 4,000 shares
Money paid by Viraj on application (4,000 x 15) = 60,000
Less: Amount adjusted with application (3,000 x 15) = 45,000
Excess money adjusted on allotment 15,000

Money due on allotment (3,000 x 25) = 75,000

Less: Excess application money adjusted = 15,000
Money not paid by Viraj on allotment 60,000

For 3,000 share forfeited of Viraj

Received Not Received

Share capital
3,000 x 15 + 15,000 3,000 x 25 - 15,000 =
= 60,000 60,000

Share forfeiture Calls-in arrears

(ii) Number of share allotted ot Suraj = 1,000 x 50,000 = 500 shares

1,00,000
For 500 share forfeited of Suraj
 ACCOUNTANCY CLASS 12

Received Not Received

Share capital
500 x (15 + 25) 500 x 10 = 5,000
= 20,000

Share forfeiture Calls-in arrears

Or

Date Particulars L.F Debit Credit

(₹) (₹)

(i) Bank A/c Dr. 12,00,000

To Equity share application A/c 12,00,000
(Application money @ ₹20 received on 60,000 shares)

Equity share application A/c (40,000 x 20) Dr.

(ii) To Equity share capital A/c 800,000
(Application money transferred) 8,00,000
Bank A/c Dr.
(iii) Equity share application A/c (12,00,000 - 8,00,000) 19,00,000
Call in arrears A/c (w.note) Dr. 4,00,000
To Equity share allotment A/c (40 x 40,000) 1,00,000
To Security premium A/c (20 x 40,000) 16,00,000
(Amount received for allotment) 8,00,000
Equity share allotment A/c Dr.
(iv) To Equity share capital A/c 16,00,000
(Allotment money transferred) 16,00,000
Bank A/c Dr.
Call in arrears A/c (2,000 + 400 x 40) Dr.
(v) 15,04,000
To Equity share first and final call A/c
96,000
(40,000 x 40)
16,00,000
(Money received on first and final call on 37,600 shares)

Equity share first and final call A/c

To Equity share capital A/c
(vi) (First and final call money received)
16,00,000
Equity share capital A/c [(2,000 + 400) x 100] Dr. 16,00,000
Securities premium A/c (48,000 - 8,000) Dr.
(vii) To Calls in arrears A/c
To Share forfeited A/c (92,000 - 8,000) 2,40,000
(Share forfeited) 40,000
 ACCOUNTANCY CLASS 12

Bank A/c Dr. (2,100 x 100) 1,96,000

To Equity share capital A/c 84,000
(Forfeited shares reissued)
(viii)
Share forfeiture A/c Dr. 2,10,000
To Capital Reserve A/c 2,10,000
(Gain on reissue of forfeited share transferred to capital
(ix) reserve) 75,000
75,000

Working note:
(i) Calculation of premium amount per share at allotment stage:
Price at which share issued 120 (20 + 60 + 40)
Less: Face value of share 100
Securities premium 20

(ii) Calculation of allotment money not yet paid by Surya:

(a) Number of shares allotted to Surya = 3,000 x 40,000 = 2,000 shares
60,000
(b) Money not paid on allotment by Surya:
Money paid on application (3,000 x 20) = 60,000
Less: Amount transferred to share capital (2,000 x 20) = 40,000
Excess application money adjusted on allotment = 20,000
Money due on allotment (2,000 x 60) = 1,20,000
Less: Excess application money adjusted = 20,000
Money not paid by Surya on allotment = 1,00,000

(iii) Shares of Surya and Hariom forfeited

Received Not Received

Share capital
Surya 2,000 x 20 + 20,000 2,000 x 80 - 20,000
= 60,000 = 1,40,000
Hariom 400 x 60 = 24,000 400 x 40 = 16,000
84,000 1,56,000
Securities
premium 400 x 20 = 8,000 2,000 x 20 = 40,000
92,000 1,96,000

Share forfeiture Calls in arrear

(iv) Calculation of profit on reissue to be transferred to capital reserve:

 ACCOUNTANCY CLASS 12

Amount forfeited on reissue of Surya 1,700 shares = 60,000 x 1,700

2,000
= 51,000
Hariom 800 shares = 24,000
Total gain on reissue to be transferred to capital reserve = 75,000

PART - B
OPTION - I

23. ‘Proceeds from issue of share capital by a company will be considered, as which type of
activity while preparing cash flow statements. 1

Solution: Financing Activity

24. State the primary objective of preparing the cash flow statement. 1

Solution:
The primary objective of a cash flow statement is to provide useful information about cash inflows and
outflows of an enterprise during a particular period under various
heads i.e. operating activities, investing activities, and financing activities.

25. _________ shows the financial position of an organisation.

(a) Income statement

(b) Comparative income statement
(c) Balance sheet
(d) Common size balance sheet

Solution: Balance sheet

26. Why is depreciation added back to net profit while preparing ‘cash flow statement’? 1
Solution: Depreciation is added back because it is a non-cash expense and it does not involve
any outflow of cash but it decreases the net profit.

27.What will be the operating profit ratio, if the operating ratio is 79.10%? 1

Solution: Operating ratio + Operating profit ratio = 100

Operating profit ratio = 100 - 79.10 = 20.9%

28. What is the main objective of preparation of a comparative balance sheet? 1

 ACCOUNTANCY CLASS 12

Solution: Comparative balance sheet is prepared to analyse the change in the financial position
of an organisation.

29. __________ ratio indicates the relationship between the external equities or outsiders funds
and the internal equities or shareholders funds. 1
(a) Total assets to debt
(b) Debt equity
(c) Fixed Assets to Proprietor’s Fund
(d) Interest Coverage
Solution: Debt equity

30 Calculate Current Ratio if Stock is ₹3,00,000; Liquid Assets ₹12,00,000;

Quick Ratio 2 : 1. 3

Or
Compute stock turnover ratio from the following information:
Items Amount (₹)

Net Sales 4,00,000

Gross Profit 1,00,000
Closing Stock 1,20,000
Excess of Closing Stock over Opening Stock 40,000

Solution:
Quick Ratio = 2 : 1
Let Current Liabilities = x
Then Quick Assets = 2x
Or, 12,00,000 = 2x
x = 12,00,000 = 6,00,000 = Current Liabilities
2
Current Assets = Quick Assets + Stock
= ₹12,00,000 + ₹3,00,000
= ₹15,00,000
Current Ratio = Current Assets
Current Liabilities
= 15,00,000
6,00,000
= 2.5 : 1

Or

(i) Stock Turnover Ratio = Cost of goods sold

Average stock

Cost of goods sold = Net sales – Gross profit

 ACCOUNTANCY CLASS 12

= ₹4,00,000 – ₹1,00,000
= ₹3,00,000

Average stock = Opening stock + Closing stock

Opening Stock = Closing Stock - 40,000

= ₹1,20,000 – ₹20,000
= ₹80,000
Average Stock = ₹80,000 + ₹1,20,000
2
=₹1,00,000

Stock Turnover Ratio = ₹3,00,000

₹1,00,000

= 3 times

31. From the following information, prepare a comparative statement of profit and loss
for the years 2018 and 2019.

Particulars 2018 (₹) 2019 (₹)

Revenue from operations 3,50,000 4,25,000

Material consumed 1,65,000 2,10,000
Manufacturing and office expenses 1,20,000 1,30,000
Other incomes 15,000 15,000
Other information:
(i) Income tax is calculated @50%
(ii) Manufacturing expenses are 50% of the total of that category. 4

Or

From the following income statement, prepare a common size statement of profit and loss
of Janki Ltd. for the year ended 31st March, 2020.
 ACCOUNTANCY CLASS 12

Particulars Amount (₹)

Revenue from operations (sales) 12,69,000

(+) Other income 19,000

Total Income 12,88,000

Expenses:
Cost of revenue from operations 7,00,000
Operating expenses 2,50,000

Total expenses 9,50,000

Profit before tax 3,38,000

(-) Income tax 1,69,000
Profit after tax
1,69,000

Solution:

Comparative statement of Profit and Loss

for the year ended 31st March 2018 and 2019
Particulars (₹) (₹) (₹) (₹) (%)
31st March, 31st March, Absolute Percentage
2018 2019 change change

I. Revenue from operations 3,50,000 4,25,000 75,000 21.43

(sales)
II. Other income 15,000 15,000 - -

III. Total revenue (I + II) 3,65,000 4,40,000 75,000 20.55

Iv. Expenses
(a) Material consumed
(b) Manufacturing expenses 1,65,000 2,10,000 45,000 27.27
(c) Other expenses 60,000 65,000 5,000 8.33
60,000 65,000 5,000 8.33

2,85,000 3,40,000 55,000 19.30

V. Profit before tax (III - IV)
(-) Tax @ 50%
80,000 1,00,000 20,000 25.00
VI. Profit after tax 40,000 50,000 10,000 25.00

40,000 50,000 10,000 25.00

 ACCOUNTANCY CLASS 12

Working note:
(a) Calculation of percentage change:
Percentage change = Absolute change x 100
Previous year amount
For example = 75,000 x 100
3,50,000
= 21.43
(b) Other expenses is shown as a 50% of the manufacturing and office expenses.

Or

Common-size statement of Profit and Loss

for the year ended 31st March 2020
Particulars Amount (₹) Percentage of
sales

I. Revenue from operation (sales) 12,69,000 100.00

II. Other income 19,000 1.50

III. Total income 12,88,000 101.50

IV. Expenses:
(a) Cost of revenue from operations 7,00,000 55.16
(b) Operating expenses 2,50,000 19.70

Total expenses 9,50,000 74.86

V. Profit before tax 3,38,000 26.64

(-) Tax 1,69,000 13.32

VI. Profit after tax 1,69,000 13.32

 ACCOUNTANCY CLASS 12

32. Following are the Balance Sheets of Prabhu Ltd., as on 31st March 2019 and 2020: 6

Particulars Note 2019 - 2020 2018 - 2019

No. (₹) (₹)

1. EQUITY AND LIABILITIES

(i) Shareholders Funds
(a) Share Capital 6,00,000 4,00,000
(b) Reserves and Surplus 1,75,000 2,00,000
(Balance in statement of profit
and loss)
(ii) Non-current Liabilities
Long-term Borrowings 2,20,000 1,75,000
(iii) Current Liabilities
Trade Payables 30,000 25,000

Total 10,25,000 8,00,000

1. ASSETS
(i) Non-current Assets
(a) Fixed assets
Tangible assets 6,00,000 4,50,000
(b) Current Assets
Inventories 1,00,000 50,000
Trade Receivables 1,55,000 1,15,000
Cash and Cash equivalents 1,70,000 1,85,000

Total 10,25,000 8,00,000

Additional Information:
Prepare a cash flow statement after taking into account the following adjustments:
(a) The company paid interest ₹18,000 on its long-term borrowings.
(b) Depreciation provided on tangible fixed assets during the year ₹60,000.
 ACCOUNTANCY CLASS 12

Solution:
Cash Flow Statement for the year ended 31st, March 2020

Particulars Amount (₹) Amount (₹)

I. Cash flow from operating activities:

Net profit before tax and extraordinary items (1,75,000 - (25,000)
2,00,000)
Adjustment for non-operating items:
(+) Interest paid 18,000
Adjustment for non-cash items:
(+) Depreciation 60,000
Net profit before working capital changes
Changes in working capital: 53,000
(+) Increase in trade payables 5,000
(30,000 - 25,000)
(-) Increase in inventories (50,000)
(1,00,000 - 50,000)
(-) Increase in trade receivables (40,000) (85,000)
(1,55,000 - 1,15,000)
Net cash flow from operating activities (32,000)
II. Cash flow from investing activities:
Purchase of tangible assets (W. note) (2,10,000)
Net cash used in investing activities (2,10,000)
III. Cash flow from financing activities
Interest paid on long term borrowing (18,000)
Proceed from issue of share capital 2,00,000
(6,00,000 - 4,00,000)
Proceed from long-term borrowings 45,000
(2,20,000 - 1,75,000)
Net cash flow from financing activities 2,27,000

IV. Net decrease in cash and cash equivalents (I + II + III)

V. Cash cash equivalents in the beginning of the year (15,000)
VI. Cash cash equivalents in the end of the year
1,85,000

1,70,000
 ACCOUNTANCY CLASS 12

Working note:
Dr. Fixed assets account Cr.
Particulars Amount (₹) Particulars Amount (₹)

Balance b/d 4,50,000 Depreciation A/c 60,000

Bank a/c (purchase) 2,10,000 Balance c/d 6,00,000
(Balancing figure)

6,60,000 6,60,000

Part – B
(Computerised Accounting)

23. Give two languages used by the computer. 1

Solution: The two languages used by the computer are.
(a) BASIC
(b) COBOL

24. Which of the following is an information system used in an organisation? 1

(a) Pay-roll accounting
(b) Sales Order Processing
(c) Executive Support System
(d) Both (b) and (c)
Solution: (c) Executive Support System

25. What is meant by the term ‘Front End’ database? 1

Solution:
Front end database: It is the user application which enables accessing tabular, structured or
raw data stored within it. It holds the entire application programming utility for data,
requests input and sends it to the data back end.

26. Give the two attributes of information to be stored in the payroll database.
Solution: 1
There are two attributes of information to be stored in the payroll database
(a) Name (b) Designation

27. What is the activity sequence of the basic information processing mode? 1
Solution:
The activity sequence of the basic information mode is collect data, organise and, process it and,
then communicate the information extracted.

28. Differentiate between generic software and specific software on basis of cost of
installation and maintenance. 1
Solution:
 ACCOUNTANCY CLASS 12

Cost of installation and maintenance is generally low with generic software and is relatively high
with specific software.

29. Which of the following situations may not require the use of null value? 1
(a) When a particular attribute does not apply to an entity.
(b) Value of an attribute is unknown, although it exist;
(c) Unknown because it does not exist.
(d) Multi value attributes may be nested (or grouped) to constitute complex ones.
Solution:
(d) Multi value attributes may be nested (or grouped) to constitute complex ones.

30. Explain adjusting entries. 3

Or

Explain ‘Transparency control’ and ‘Scalability’ as features of Computerised

Accounting System. 3

Solution:
The Adjusting entry is recorded to relate the figures to the trading period. Suppose, premises
have been sublet on March 31, and three months’ rent, has been received in advance amounting
to Rs. 12,000. While preparing accounts up to 31st March, one should take into account only one
month’s rent for preparing the profit and loss account (accounting period concept); the rest two
month’s rent, already received, is for the next year and will be credited in the profit and loss
account next year. The adjusting entry will be:

Rent A/c Dr

To Advance Rent A/c

Rent Received in advance account is a ‘Liability’ and is shown in the balance sheet.

Or

Transparency and control CAS provides sufficient time to plan, increases data accessibility and
enhances user satisfaction. With computerised accounting, the organisation will have greater
transparency for day to day business operations and access to the vital information. Scalability
CAS enables in changing the volume of data processing in tune with the change in the size of the
business. The software can be used for any size of the business and type of the organisation.

31. Name and explain the function which returns the future value of an investment which
has constant payment and interest. 4

Solution:

PMT :- The PMT function calculates the periodic payment for an annuity assuming equal
 ACCOUNTANCY CLASS 12

payments and a constant rate of interest.

The syntax of PMT function is as follows:
= PMT (rate, nper, pv, [fv], [type])

where rate is the interest rate per period,

Nper is the number of periods,
Pv is the present value or the amount the future payments are worth presently,
future value or cash balance that after the last payment is made (a future value of zero when we
omit this optional argument)

Type is the value 0 for payments made at the end of the period or the value 1 for payments made
at the beginning of the period. The PMT function is often used to calculate the payment for
mortgage loans that have a fixed rate of interest

32. What is meant by conditional formatting? Give its two uses and three benefits. 6

Solution:
A format change, such as background cell shading or font colour that is applied to a cell when a
specified condition for the data in the cell is true. Conditional formatting
is often applied to worksheets to find:

(a) Data that is above or below a certain value. Duplicate data values.
(b) Cells containing specific text. Data that is above or below average.
(c) Data that falls in the top ten or bottom ten values.

Benefits of using conditional formatting:

(a) Helps in answering questions which are important for taking decisions.
(b) Guides with help of using visuals.
(c) Helps in understanding distribution and variation of critical data.