Subject: ACCOUNTANCY

Practice Accountancy

Time: 3 Hours. M.Mark: 80

General Instructions:
(i) This question paper contains 32 questions. All questions are compulsory.
(ii) Questins no. 1 to 20 and Questions carrying 1 marks each.
(iii) Questins no. 21 to 24 and Questions carrying 3 mark each..
(iv) Questins no. 25 to27 and Questions carrying 4marks each..
(v) Questions no. 28 to 29 and Questions carring 6 marks each.
(vi) Questions no. 30 to 32 and Questions carring 8 marks each.

1. Out of the following, in which situation(s) the reconstitution of a firm takes

place:
(a) At the time of change in profit sharing ratio amongst the partners
(b) At the time of admission of a new partner
(c) Both (a) and (b)
(d) At the time of doing past adjustments

2. Loss on Revaluation at the time of admission of a new partner is borne by:

(a) Old partners in the old ratio
(b) New partner only
(c) All partners in their new ratio
(d) Old partners in their sacrificing ratio

3. W and Q are partners with capitals of Rs.20,00,000 and Rs.16,00,000

respectively. The Partnership Deed provides for interest on capital @ 10% p.a. If
 the firm earned a profit of Rs.2,70,000 for the year ended 31 st March, 2020, then
Interest on Capital respectively credited to the Partners Capital Accounts was:
(a) Rs.2,00,000 and Rs.1,60,000 (b) Rs.1,35,000 and Rs.1,35,000
(c) No interest on capital will be allowed
(d) Rs.1,50,000 and Rs.1,20,000

4. Sita and Geeta are partners in a firm sharing profits and losses in the ratio of 3:1.
On 1st April, 2021, they decided to change their profit sharing ratio to 3:2. On
that date, Plant and Machinery was appearing in the Balance Sheet at Rs.99,000.
At the time of change in profit sharing ratio, it was found to be overvalued by
10%. At what value will Plant and Machinery be shown in the new Balance
Sheet
?
(a) Rs.88,600 (b) Rs.87,800
(c) Rs.90,000 (d) Rs.89,100

5. R, S and T are partners in a firm sharing profits in the ratio of 3:3:2. From 1 st
April, 2021, they decided to share profits in the ratio of 3:2:1. On that date their
Balance Sheet showed Contingency Reserve of Rs.1,92,000. They decided to
show this Contingency Reserve in the new Balance Sheet. The correct
accounting treatment for the above is :
(a) S’s capital account will be debited by Rs.24,000 and R and T’s capital
account will be credited by Rs.8,000 and Rs.16,000 respectively
(b) T’s capital account will be debited by Rs.24,000 and R and S’s capital
account will be credited by Rs.8,000 and Rs.16,000 respectively
(c) R’s capital account will be debited by Rs.24,000 and S and T’s capital
account will be credited by Rs.8,000 and Rs.16,000 respectively
(d) S and T’s capital account will be debited by Rs.8,000 and Rs.16,000
respectively and R’s capital account will be credited by Rs.24,000

6. P, Q and R are partners sharing profits in the ratio of 3:2:1. They admitted U as a

partner for th share. On the date of U’s admission, the Workmen

Compensation Fund as appearing in the books at Rs.72,000. A claim of
Rs.24,000 was accepted against it. The amount of Workmen Compensation Fund
credited to Q’s Capital Account was :
 (a) Rs.16,000 (b) Rs.24,000 (c) Rs.8,000 (d)
Rs.48,000

7. The goodwill of a firm is Rs.1,08,000. It was valued at 4 years purchase of super

profits. The capital employed by the firm is Rs.4,00,000 and the normal rate of
return is 10%. The average profit of the firm is :
(a) Rs.47,000 (b) Rs.67,000
(c) Rs.40,000 (d) Rs.49,000

8. Rajesh and Vikram are partners sharing profit and losses in the ratio of 3:2. They

admitted Varun as a new partner. Rajesh surrendered th of his share and

Vikram th of his share in favour of Varun. The sacrificing ratio will be :

(a) 3:5 (b) 2:3 (c) 1:3 (d) 3:1

9. Santiago Ltd. invited applications for issuing 2,00,000 shares of Rs.10 each
payable Rs.3 per share on application, Rs.5 per share on allotment and Rs.2 per
share on first and final call. The issue was oversubscribed and the company
received Rs.9,60,000 as application money. The company rejected some
applications and pro rata allotment was made to the remaining applicants in the
ratio of 5 : 4. Applications for how many shares were rejected ?
(a) 50,000 (b) 1,30,000 (c) 70,000 (d) 1,20,000

10. Robert and David are partners in a firm having capitals of Rs.10,00,000 and

Rs.8,00,000 respectively. Max was admitted as a new partner for th share in

the profits of the firm. Max brought Rs.6,00,000 as his capital. The goodwill of
the firm was valued at Rs.8,00,000. Max was unable to bring his share of
goodwill premium in cash. It was decided to treat goodwill without raising
goodwill account. The amount of goodwill credited to Robert will be :

(a) Rs.80,000 (b) Rs.1,20,000

(c) Rs.1,60,000 (d) No amount will be

credited
11. L and M are partners in a firm sharing profits and losses in the ratio of 3:2. Their

capitals were Rs.6,40,000 and Rs.4,00,000 respectively. N was admitted for

th share in the profits of the firm. He brought Rs.4,80,000 as his capital. The
goodwill of the firm will be :
(a) Rs.8,80,000 (b) Rs.1,76,000

(c) Rs.13,60,000 (d) Rs.2,72,000

12. Amar and Akbar are partners sharing profits in the ratio of 2:1. They admitted

Anthony as a partner for th share in the profits. On the date of Anthony’s

admission, the Profit and Loss Account showed a debit balance of Rs.90,000.
The journal entry for the accounting treatment of this balance on Anthony’s
admission will be :
(Rs.) (Rs.)
(a) Profit & Loss A/c …………... Dr. 90,000
To Amar’s Capital A/c 60,000
To Akbar’s Capital A/c 30,000
(b) Amar's Capital A/c…………... Dr. 60,000 Akbar's Capital A/c ………….
Dr. 30,000
To Profit & Loss A/c 90,000 (c) Profit &
Loss A/c …………... Dr. 90,000
To Amar's Capital A/c 48,000
To Akbar's Capital A/c 24,000
To Anthony's Capital A/c 18,000
(d) Amar's Capital A/c …………... Dr. 48,000
Akbar's Capital A/c ………….. Dr. 24,000 Anthony's
Capital A/c …….. Dr. 18,000
To Profit & Loss A/c 90,000

13. Which of the following statement(s) is/are not correct ?

 (i) Goodwill is the present value of a firm’s anticipated excess earmings.
(ii) Goodwill is a fictitious asset.
(iii) Goodwill is an intangible asset.
(iv) Goodwill is affected by the location of business.
(a) Only (i) (b) Both (i) and (iii)
(c) Only (ii) (d) Only (iv)

14. Given below are two statements, one labelled as Assertion (A) and the other
labelled as Reason (R ) :
Assertion (A) : Salary allowed to a partner is shown in Profit and Loss Appropriation
A/c.
Reason (R) : Salary is allowed to a partner only when there is a provision for the same
in the partnership deed.
In the context of the above statements, which of the following is correct ?
(a) (A) is correct, but (R) is incorrect.
(b) Both (A) and (R) are correct.
(C) (A) is incorrect, but (R) is correct.
(d) Both (A) and (R) are incorrect.

15. Madhur, Meena and Alka were partners sharing profits and losses in the ratio of
5:3:2. The partners agreed to share future profits in the ratio of 2:2:1. The
sacrifice/gain of the partners will be :

(a) Madhur will sacrifice th and Alka will gain th

(b) Meena will sacrifice th and Alka will gain th

(c) Meena will sacrifice th and Madhur will gain th

(d) Madhur will sacrifice th 10 th and Meena will gain th

16. P and Q were partners sharing profit and losses in the ratio of 2:1. Their capitals
were Rs.12,00,000 and Rs.8,00,000 respectively. They were allowed interest on
capital @ 6% p.a. and interest on drawings was to be charged @ 10% p.a. Their
drawings during the year were P – Rs.2,40,000 and Q – Rs.1,60,000. Q's share of
net divisible profit as per Profit and Loss Appropriation Account amounted to
Rs.1,60,000. Net Profit of the firm before any appropriation was :
(a) Rs.4,00,000 (b) Rs.3,80,000
(c) Rs.5,60,000 (d) Rs.5,80,000
17. Given below are two statements, one labelled as Assertion (A): and the other
labelled as Reason (R ) :
Assertion (A) : Change in the profit sharing ratio among the existing partners results
in a change in their existing agreement.
Reason (R) : Change in the profit sharing ratio among the existing partners results in a
gain of additional share in future profits for some partners
while a loss of a part thereof, for other partners.
In the context of the above statements, which of the following is correct ?
(a) Both (A) and (R) are correct.
(b) (A) is correct, but (R) is incorrect.
(c) Only (R) is correct.
(d) Both (A) and (R) are incorrect.

18. Boyle Ltd. issued 40,000 shares of Rs.10 each. Applications for 2,00,000 shares
were received. Amount per share was payable as follows :
On application – Rs.4
On allotment – Rs.4
On first and final call – Balance
Shares were allotted on pro rata basis to all the applicants. Excess money received with
applications was refunded after adjustment in allotment and first and final call.
For refunding the excess amount, the Bank Account will be credited by :
(a) Rs.4,80,000 (b) Rs.4,00,000
(c) Rs.80,000 (d) Nil
(d) Rs.80,000
19. Banyan Tree Ltd. invited applications for issuing 6,00,000 equity shares of Rs.10
each payable as follows :
On application – Rs.3 per share
On allotment – Rs.5 per share
On 1st and Final call – Balance
The issue was fully subscribed. Ronnie, holding 2,000 shares, and Monty, holding 4000
shares, failed to pay allotment money and their shares were forfeited
immediately after allotment. Afterwards the first and final call was made. The
amount due on first and final call was :
(a) Rs.12,00,000 (b) Rs.11,88,000
(c) Rs.11,96,000 (d) Rs.11,92,000
20. Marco Polo Ltd. forfeited 5,000 equity shares of Rs.10 each issued at a premium
of Rs.10% for non-payment of second and final call of Rs.2 per share. The
minimum amount at which these shares can be reissued as fully paid up will be
:
(a) Rs.5,000 (b) Rs.10,000 (c) Rs.12,000 (d)
Rs.50,000

21 LT Ltd. purchased land from JSS Ltd. The payment was made by issuing a
cheque for Rs. 10,00,000 and by accepting a bill of exchange for 6 months
for Rs. 5,00,000. The balance amount was paid by issuing 5,000, 10%
Debentures of Rs. 100 each at par redeemable at 10% premium after 3 years.
Pass the necessary journal entries in the books of LT Ltd. for the above
transactions[3]
.
22 Pass journal entries relating to issue of debentures for the following
transactions
(a) Issued 8,000, 10% debentures of Rs.100 each at a discount of 10%,
redeemable at 5% premium.
(b) Issued ₹1,00,000, 9% debentures of Rs.100 each at 10% premium
redeemable at 5% Premium.
(c) Issued ₹.5,00,000, 9% debentures of Rs.100 each at 10% premium
redeemable at par.[3]

23 Giriija, Yatin and Zubin were partners sharing profits in the ratio 5 : 3 : 2.
Zubin died on 1st August, 2022. Amount due to Zubin’s executor after all
adjustments was ₹ 90,300. The executor was paid ₹ 10,300 in cash
 immediately and the balance in two equal annual instalments with interest @
6% p.a. starting from 31st March, 2024. Accounts are closed on 31st March
each year. Prepare Zubin’s Executors Account till he is finally paid.[3]

24 Mohan, Girdhari and Shyam were partners in a firm sharing profits and
losses in the ratio of 4:3:2. On 31st March, 2022, Girdhari retired. After
making all adjustments on account of reserves, revaluation of assets and
reassessment of liabilities, the balance in Girdhari’s Capital Account stood at
Rs.5,00,000. Mohan and Shyam agreed to pay Girdhari Rs.5,90,000 in full
settlement of his claim.
Calculate the value of goodwill of the firm and pass the necessary journal entry for the
treatment of goodwill on Girdhari’s retirement without raising goodwill account.
[3]

25. The Balance Sheet of Vijeta, Vaishali and Diksha who were sharing profits in the
ratio of 2 : 2 : 1 as at 31st March, 2022 was as follows :
Balance Sheet of Vijeta, Vaishali and Diksha as at 31st March, 2022
Liabilities Amount(Rs.) Assets Amount (Rs.)
General Reserve 25,000 Fixed Assets 5,50,000
Bills Payable Loan 15,000 Stock 80,000
from Bank 40,000 Debtors 50,000
Capitals: Cash 1,00,000
Vijeta: 3,00,000
Vaishali: 2,50,000
Diksha: 1,50,000 7,00,000
7,80,000 7,80,000
Diksha died on 1 October, 2022. The partnership deed provided for the following on
st

the death of a partner :

(i) Interest on capital was to be provided @ 10% p.a.
(ii) Goodwill of the firm be valued on three years’ purchase of average profits of last
four years.
(iii) The average profits of the last four years were Rs. 20,000.
(iv) The profit for the year ending 31st March, 2022 was Rs. 60,000. Prepare
Diksha’s Capital Account to be rendered to her executors.[4]

26. Alpha India Ltd. was registered with an authorised capital of Rs. 10,00,000
divided into 1,00,000 equity shares of Rs. 10 each. The company offered to the
public for subscription 80,000 equity shares payable per share as : Rs. 3 on
 application, Rs. 2 on allotment, Rs. 3 on first call and the balance on second and
final call. The issue was fully subscribed and all amounts due were received
except the first and final call money on 2,000 shares allotted to Chavi. Her shares
were forfeited.
Present the ‘Share Capital’ in the Balance Sheet of the company as per Schedule III,
Part I of the Companies Act, 2013. Also prepare ‘Notes to Accounts’[4]

27. Asha, Rina and Chahat were partners in a firm sharing P&L in the ratio 2:2:1.
Their Balance Sheet as at 31st March, 2022 was a follows :
Balance Sheet of Asha, Rina and Chahat as at 31st March, 2019
Liabilities Amount Assets Amount
(Rs.) (Rs.)
Creditors 12,00,000 Plant and Machinery 14,80,000
General Reserve Capitals 2,00,000 Stock 2,20,000
: SundryDebtors
Asha 2,60,000
3,00,000 Less:-Provisionfor
Rina 2,00,000 6,00,000 Doubtful debts 2,40,000
Chahat 1,00,000 20000
60,000
Bank
20,00,000 20,00,000
Asha, Rina and Chahat decided to share future profits equally with effect from 1 st April,
2022. For this, it was agreed that :
(i) Goodwill of the firm be valued at Rs.1,50,000.

(ii) Bad debts amounted to Rs.40,000. A provision for doubtful debts was to
be made @5% on debtors.
Pass necessary journal entries to record the above transactions in the books of the firm.
[4]
.
28. Radha and Mudit were partners in a firm sharing profits and losses in the ratio of
3 : 2. The firm was dissolved on 31 st March, 2019. Pass the necessary Journal
entries for the following transactions after various assets (other than cash in hand
and cash at bank) and third party liabilities have been transferred to Realisation
Account :
(i) A creditor of Rs. 70,000 accepted furniture valued at Rs. 1,50,000 and
paid to the firm Rs. 80,000.
(ii) Bank loan of Rs. 90,000 was settled along with interest Rs. 9,000.
(iii) Realisation expenses amounting to Rs. 8,000 were paid by Mudit.
 (iv) Loss on realisation was Rs. 20,000.
(v) A Liability under a suit for damages included in the creditors was settled
as ₹ 32,000 as against only 13000 provided in the books. Total creditors
of the firm were ₹ 50,000
(vi) Radha had given a loan of ₹ 18,000 to the firm which was paid to him.
[6]

29 . Following is the Balance Sheet of Prem and Lata as on 31 st March, 2023 who
shares profits equally.
Liabilities (₹) Assets (₹)
Prem’s Capital 1,00,000 Sundry Assets 1,80,000
Lata’s Capital 70,000 Prem’s Drawing 20,000

Profit & Loss A/c (2022-23) 30,000

2,00,000 2,00,000

During 2022-23, Lata’s drawing were ₹15,000 and profits during 2022-23 was ₹50,000.
While finalizing accounts for 2022-23, interest on capital @ 5% p.a. and interest on
drawing @ 12% p.a. were inadvertently ignored.
Give adjustments entry showing working note clearly.[6]

30. A Ltd. invited applications for issuing 80,000 equity shares of Rs. 10 each at a
premium of Rs. 4 per share. The amount was payable as follows :
On application – Rs. 5 per share
On allotment – Rs. 9 per share (premium included)
Applications were received for 1,40,000 shares and allotment was made to all
applicants on pro-rata basis. Money overpaid on applications was adjusted towards
sum due on allotment. Rajiv, who had applied for 1,400 shares failed to pay the
allotment money. His shares were forfeited.
Later on, these forfeited shares were reissued at Rs. 9 per share as fully paid up.
Pass the necessary journal entries in the books of A Ltd. for the above transactions.
8
OR
 AB Ltd. issued 30,000 shares of Rs. 10 each at par, payable as follows :
Rs. 3 per share – on application
Rs. 3 per share – on allotment
Balance – on first and final call
Applications were received for 50,000 shares. Applications for 10,000 shares were
rejected and allotment was made on pro-rata basis to the remaining applicants.
Excess money received on application was adjusted towards sums due on
allotment. Natasha, who had applied for 1,600 shares, failed to pay the amount due
on allotment and call. The company forfeited her shares. Later on, these forfeited
shares were reissued at Rs. 10 per share as fully paid-up.
Pass the necessary journal entries in the books of AB Ltd. for the above transactions.
8

31. On 31st March, 2019 the Balance Sheet of A and B, who were sharing profits in the
ratio of 3 : 2 was as follows :
Balance Sheet of A and B as at 31st March, 2019
Liabilities Amount(Rs.) Assets Amount (Rs.)
Creditors 30,000 Cash at Bank 20,000
Investment Debtors 85,000
Fluctuation Fund 12,000 Less: Provision for
General Reserve 25,000 bad debts 5,000 80,000
Capitals: Stock 1,30,000
A 1,60,000 B Investments 60,000
1,40,000 3,00,000 Furniture 77,000
3,67,000 3,67,000
On 1st April, 2019, they decided to admit C as a new partner for 1/5 th share in the profits
on the following terms :
(i) C brought Rs. 1,00,000 as his capital and Rs. 50,000 as his share of premium for
goodwill.
(ii) Outstanding salaries of Rs. 2,000 be provided for.
(iii) The market value of investments was Rs. 50,000.
(iv) A debtor whose dues of Rs. 18,000 were written off as bad debts paid Rs.
12,000 in full settlement.
(v) The capitals of the New firm in New Profit Sharing Ratio and adjustment through
Partners Current Accounts .

Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the
new firm.
8

32. Chintan, Ayush and Sudha were partners in a firm sharing profits and losses in
the ratio of 5 : 3 : 2. On 31st March, 2019, their Balance Sheet was as follows :
Balance Sheet of Chintan, Ayush and Sudha as at 31st March, 2019
Liabilities Amount(Rs.) Assets Amount (Rs.)

Capitals : 90,000 1,90,000 Plant and Machinery 90,000

Chintan 60,000 30,000 Furniture 60,000
40,000 20,000 Stock 30,000
Ayush
Sudha 10,000 Debtors 60,000
Provident Fund Less: Provision for
doubtful debts 5,000 55,000
 General Reserve Cash at Bank 15,000
Creditors
2,50,000 2,50,000

Chintan retired on the above date and it was agreed that :

(i) Debtors of Rs. 5,000 were to be written off as bad debts and a provision of 5% on
debtors for bad and doubtful debts was to be created.
(ii) Goodwill of the firm on Chintan’s retirement was valued at Rs. 1,00,000 and
Chintan’s share of the same will be adjusted by debiting the Capital Accounts of
Ayush and Sudha.
(iii) Stock was revalued at Rs. 36,000.
(iv) Furniture was undervalued by Rs. 9,000.
(v) Liability for workmen’s compensation of Rs. 2,000 was to be created.
(vi) Chintan was to be paid Rs. 20,000 by cheque and the balance was to be transferred
to his loan account.
Pass the necessary journal entries in the books of the firm on Chintan’s retirement.
8