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TABLE OF CONTENTS, I, , CASE STUDY BASED QUESTIONS, , PAGE NO. 3- 96, , II, , ASSERTION - REASON BASED QUESTIONS, , PAGE NO.97- 119, , III, , ADDITONAL QUESTIONS, , PAGE NO.120- 152, , MATCH THE FOLLOWING, ARRANGE IN SEQUENCE, , Page 2 of 152

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CASE STUDEY BASED QUESTIONS, CHAPTER 1, PARTNERSHIP ACCOUNTS FUNDAMENTALS OF PARTNERSHIP, CASE 1, , Read the hypothetical text and answer the following questions., Arun, Varun and Tarun were partners in a firm sharing profits equally. On 1 st April, 2020,, their capitals stood at ₹ 2, 00,000, ₹ 1, 50,000 and ₹ 1, 00,000 respectively. As per the, provisions of Partnership Deed:, 1) Arun was entitled to a salary of ₹ 2,500 p.m., 2) Partners were entitled to interest on capital @ 10% p.a., The net profit for the year ended 31st March, 2021, ₹ 1,50,000 was distributed among the, partners without providing for the above items., Q1.What is the amount of interest on capital of Varun?, a), b), c), d), , ₹ 20,000, ₹ 15,000, ₹ 10,000, ₹ 30,000, , Q2. What is the amount of distributable profit for the partners after providing salary and, interest on capitals to the partners?, a), b), c), d), , ₹ 50,000 each, ₹ 25,000 each, ₹ 10,000 each, ₹ 15,000 each, , Q3. Arun’s Capital A/c will be credited with Rs…………….for giving the adjustment to above, omissions., a), b), c), d), , ₹ 20,000, ₹ 15,000, ₹ 25,000, ₹ 10,000, , Q4. Capital Account/Accounts of …………………… will be debited to give the effect of above, adjustments., a), b), c), d), , Varun, Tarun and Arun, Arun and Varun, Varun and Tarun, , Page 3 of 152

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CASE 2, , Read the hypothetical text and answer the following questions ., Sonu and Monu are partners sharing profits and losses in the ratio of 2:1. Their capital, Accounts as at 1st April, 2015 were ₹ 10,00,000 and ₹ 8,00,000 respectively. The partners, are allowed interest on capital @ 5% p.a. Drawings of the partners during the year ended, 31st March, 2016 were ₹ 1,44,000 and ₹ 1,00,000 respectively. Monu is entitled to get a, salary of ₹ 10,000 p.m., Profit for the year before allowing interest on capital and salary was ₹ 16,00,000. 10% of the, net profit is to be transferred to General Reserve., 1) Find the amount which is to be transferred to General Reserve Account?, a), b), c), d), , ₹ 80,000, ₹ 1,20,000, ₹ 1,60,000, ₹ 2,00,000, , Q2. What is the distributable amount of profit which is to be credited to Partners’ Capital, Accounts?, a), b), c), d), , ₹ 16,00,000, ₹ 14,40,000, ₹ 12,30,000, ₹ 10,00,000, , Q3. Find the closing capital of Sonu?, a), b), c), d), , ₹ 12,70,000, ₹ 17,26,000, ₹ 16,00,000, ₹ 10,00,000, , Q4. What is the share of Monu’s profit to be credited to his Capital Account?, a), b), c), d), CASE3, , ₹ 14,40,000, ₹ 12,30,000, ₹ 4,10,000, ₹ 8,20,000, , Read the hypothetical text and answer the following questions., Mahesh, Dinesh and Suresh are equal partners with capitals of ₹ 5,00,000, ₹ 3,00,000 and ₹, 2,00,000 respectively. Mahesh withdrew ₹ 60,000 in the beginning of each quarter for the, year ended 31st March, 2020. Dinesh withdrew ₹ 60,000 at the end of each quarter for the, year ended 31st March,2020. Suresh withdrew ₹ 90,000 in the middle of each quarter for, the year ended 31st March,2020. Interest on drawings is charged @ 10% p.a., Q1. What is the total amount of drawings of all the partners?, a) ₹ 9,00,000, Page 4 of 152

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b) ₹ 8,40,000, c) ₹ 8,60,000, d) ₹ 9,20,000, Q2. What is the average period of Dinesh’s drawings?, a), b), c), d), , 4.5 months, 6 months, 7.5 months, 12 months, , Q3. Mahesh’s interest on drawings is…………………………., a), b), c), d), , ₹ 12,000, ₹ 13,500, ₹ 10,000, ₹ 15,000, , Q4. What is the total amount of interest on drawings of all the partners?, a) ₹ 42,000, b) ₹ 40,000, c) ₹ 45,000, d) ₹ 48,000, CASE 4, , Read the hypothetical text and answer the following questions ., Anil and Sunil started a firm on 1st April, 2020 sharing profits equally. Anil withdrew, regularly ₹ 2,000 in the beginning of every month for the year ended 31St March, 2021, and Sunil withdrew the amount as follows., On 1st July,2020: ₹ 8,000, On 1st October, 2020: ₹ 10,000, On 1St February, 2021: ₹ 6,000, As per Partnership Deed, interest on drawings is to be charged @ 10% p.a., Q1. What is the total amount of drawings of Anil and Sunil?, a), b), c), d), , ₹ 46,000, ₹ 48,000, ₹ 50,000, ₹ 52,000, , Q2. Anil’s interest on drawings is ………………….., a) ₹ 1,100, b) ₹ 1,200, c) ₹ 1,300, Page 5 of 152

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d) ₹ 1,400, Q3. Sunil’s interest on drawings is …………………., a), b), c), d), , ₹ 1,000, ₹ 1,200, ₹ 1,400, ₹ 1,600, , Q4. What is the average time period of Anil’s drawings?, a), b), c), d), CASE 5, , 5.5 months, 6 months, 6.5 months, 12 months, , Read the hypothetical text and answer the following questions., Amar, Saleem and John are partners without a Partnership Deed. On 1 st April, 2020, their, capitals were ₹ 3,00,000, ₹ 2,00,000 and ₹ 1,00,000 respectively. During the year, they, withdrew ₹ 30,000, ₹ 20,000 and ₹ 10,000 respectively., On 1st October, 2020, Saleem gave a loan of ₹ 50,000 to the firm and demands interest on, loan @ 10% p.a. for the year ended 31st March, 2021., John wants to admit a new partner, Vinod but Amar and Saleem do not agree for it., Amar demands a salary of ₹ 1,000 p.m. for the year for taking part in business of the firm., For the year ended 31st March, 2021, the firm earned a profit of ₹ 60,000., Q1. Interest on Saleem’s loan is ………………………, a) ₹ 5,000, b) ₹ 2,500 c) ₹ 3,000 d) ₹ 1,500, Q2. Find the amount to be given to Amar as salary., a) ₹ 10,000 b) ₹ 12,000 c) ₹ 9,000 d) No salary will be given, Q3. What is the distributable profit for each partner?, a) ₹ 20,000 each, b) ₹ 19,500 each c) ₹ 30,000, ₹ 20,000 and ₹ 10,000, b) d) ₹ 30,000, ₹ 15,000 and ₹ 15,000, Q4. Vinod can be admitted as a new partner in the firm when……………………., a), b), c), d), , CASE 6, , John agrees to admit him as a new partner., John and Saleem agree to admit him as a new partner., All the existing partners agree to admit him as a new partner., There is no need of other partners’ consent., , Read the hypothetical text and answer the following questions., Umesh and Mahesh are partners in a firm. On 1st April, 2020, their capitals were ₹ 4,00,000, Page 6 of 152

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and ₹ 6,00,000. The profit for 2020-21 was ₹ 5,24,000. Partnership Deed provided that, interest on drawings/capital to be calculated @ 10%, Mahesh had withdrawn ₹ 1,00,000 on, 31st December,2020. In addition to it, rent (in case of any partner providing his premises for, business) for premises decided to be ₹ 8,000 per month. Due to lockdown during pandemic,, the partners decided to shut down the factory and shifted to Umesh’s farmhouse on 1 st, August, 2020., Q1. What amount is to be transferred to Profit and Loss Appropriation Account?, , CASE 7, , a) ₹ 5,24,000 b) ₹ 5,00,000 c) ₹ 4,88,000 d) ₹ 4,60,000, Q2. What is the interest on drawings of Mahesh?, a) ₹ 10,000, b) ₹ 7,500, c) ₹ 2,500, d) ₹ 3,000, Q3. What is total interest on capitals of both partners?, a) ₹ 1,00,000, b) ₹ 50,000 c) ₹ 2,00,000 d) ₹ 1,25,000, Q4. What is net distributable profit?, a) ₹ 5,00,000, b) ₹ 3,62,500 c) ₹ 5,02,500 d) ₹ 4,02,500, Read the hypothetical text and answer the following questions., Mohan and Sohan are equal partner Their capitals as on 1St April,2020 are 1,00,000 and, 2,00,000 respectively. Profits for the year 2020-21 were ₹ 90,000. As per the agreement,, interest on capitals was ₹ 10,000 and ₹ 20,000 respectively and interest on drawings was ₹, 6,000 and ₹ 10,000 respectively. Mohan’s salary was ₹ 2,000 p.m. and Sohan’s salary was ₹, 5,000 p.a., Accountant, however, committed the mistake and credited the profit in the capital ratio,, Without interest on capitals, drawings and salary., Q1. With what amount was Sohan’s account credited with initially?, a) ₹ 30,000, b) ₹ 45,000 c) ₹ 60,000, d) 90,000, Q2. What was the total salary required to be credited?, a) ₹ 70,000, b) ₹ 84,000 c) ₹ 29,000, d) 48,000, Q3. What was the rate of interest on capital?, a) 5%, b) 10%, c) 15%, d) 20%, Q4. What was the amount of past adjustment entry?, a) ₹ 20,500, b) ₹ 21,500 c) ₹23,500, d) ₹ 22,500, , CASE 8, , Read the hypothetical text and answer the following questions., :, X and Y are partners in a firm sharing profits equally. On 1 st April, 2020, the capitals of the, partners were ₹ 2,00,000 and ₹ 1,50,000 respectively. The Profit and Loss Appropriation, Account of the firm showed a net profit of ₹ 3,75,000 for the year ended 31 st March, 2021., The Partnership Deed provided the following:, i), ii), , Transfer 10% of distributable profit to Reserve Fund., Interest on capital @ 6% p.a., Page 7 of 152

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iii), , CASE9, , Interest on drawings @ 6% p.a. Drawings for X and Y were ₹ 40,000 and ₹ 30,000, respectively., , Q1. What is the average period for which interest on drawings will be calculated?, a) 3 months, b) 6 months c) 9 months d) 12 months, Q2. Total interest on capital provided is ……………………….., a) ₹ 9,000, b) ₹ 12,000 c) ₹ 21,000, d) ₹ 18,000, Q3. The lesser interest on drawings charged is …………………., a) ₹ 900, b) ₹ 1,200, c) ₹ 2,100, d) ₹ 1,500, Q4. The amount is to be transferred to Reserve Fund is ………………, a) ₹ 37,500, b) ₹ 35,610 c) ₹ 37,710, d) ₹ 36,400, Read the hypothetical text and answer the following questions., :, M, N and O entered into partnership firm on 1st July, 2018 and decided to share profits and, losses in the ratio of 3:2:1. M guaranteed that O’s share of profit after charging interest on, capitals @ 6% p.a. would not be less than ₹ 36,000 p.a. The capital contributed by M: ₹, 2,00,000, N: ₹ 1,00,000 and O: ₹ 1,00,000 respectively. Profit for the year ended 31st March,, 2019 was ₹ 1,38,000., , CASE 10, , Q1. What is the total amount of interest on capital?, a) ₹ 9,000, b) ₹ 12,000 c) ₹ 18,000, d) ₹ 24,000, Q2. What is the distributable amount of profit?, a) ₹ 1,00,000, b) ₹ 1,20,000 c) ₹ 1,10,000 d) ₹ 90,000, Q3. What is the share of profit of O?, a) ₹ 27,000, b) ₹ 36,000 c) ₹ 18,000, d) ₹ 9,000, Q4. What is deficiency amount to be borne by M?, a) ₹ 16,000, b) ₹ 7,000, c) 12,000, d) ₹ 15,000, Read the hypothetical text and answer the following questions., Luv and Kush formed a partnership to sell low sodium, plant based vegan snacks. Since both, of them had a family, they decided to withdrew a salary of ₹ 12,000 per quarter. Luv also, withdrew ₹ 1,00,000 on 31st December,2020 to get his wife treated for Covid 19., The partnership deed provided for 10% interest on drawings., Kush introduced ₹ 50,000 as additional capital on 31 st January,2021. The net distributable, profit was ₹ 2,00,000 which was divided by the partners after providing 25% to General, Reserve., Q1. Total amount of salary credited to partners’ account is………………………., a) ₹ 12,000, b) ₹ 48,000 c) ₹ 96,000, d) ₹ 24,000, Q2. Interest on Luv’s drawings will be ……………………………, a) ₹ 2,500, b) ₹ 5,000, c) ₹ 7,500, d) ₹ 10,000, Q3. Interest on Kush’s capital will be…………………………., a) ₹ 5,000, b) ₹ 10,000 c) ₹ 20,000, d) None of these, Q4. What was the amount to be transferred to General Reserve?, Page 8 of 152

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a) ₹ 25,000, CASE11, , b) ₹ 50,000, , c) ₹ 75,000, , d) ₹ 1,00,000, , Read the hypothetical text and answer the following questions., S and P are two partners in a firm sharing profit and losses in the ratio of 3:2. At the time of, distributing the net profit between the partners, interest on capital was credited @ 18%, instead of 8% wrongly. Partners’ capitals are given on 1st April, 2018 as ₹ 5,00,000 and ₹, 3,00,000 respectively. Profit on 31st March, 2019 is ₹ 2,00,000., Q1. The excess interest on capital provided to S which is to be debited now is ………………, a) ₹ 40,000, b) ₹ 50,000 c) ₹ 90,000, d) ₹ 30,000, Q2. The excess interest on capital provided to P which is to be debited now is ………………, a) ₹ 24,000, b) ₹ 30,000 c) ₹ 54,000, d) ₹ 50,000, Q3. The aggregate excess profit generated to distribute further is ………………………., a) ₹ 1,20,000, b) ₹ 1,44,000 c) ₹ 80,000, d) ₹ 84,000, Q4. Whose account will be benefitted by this past adjustment?, a) P, b) S, c) Both of these, d)None of the above, , CASE 12, , Read the hypothetical text and answer the following questions., P, Q and R are partners in a firm. Their capitals are ₹ 30,000, ₹ 20,000 and ₹ 10,000, respectively. As per partnership deed,, i) R is to be allowed remuneration of ₹ 3,000 p.a., ii) Interest on capital @ 5% p.a., iii) Profits should be distributed in the ratio of 2:2:1., Ignoring the above terms, net profit of ₹ 18,000 was distributed among the partners, equally., Q1. How much interest on capital is to be credited to the partner P?, a), b), c), d), , ₹ 1,500, ₹ 1,000, ₹ 900, ₹ 800, , Q2. How much profit is to be credited to the Partner Q after all adjustments?, a), b), c), d), , ₹ 2,400, ₹ 4,800, ₹ 1,000, ₹ 1,200, , Page 9 of 152

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Q3. What is the total profit to be credited to P, Q and R after all adjustments?, a), b), c), d), , ₹ 12,000, ₹ 8,000, ₹ 9,000, ₹ 10,000, , Q4. What is the amount of the past adjustment entry?, a), b), c), d), CASE 13, , ₹ 350, ₹ 450, ₹ 250, ₹ 550, , Read the hypothetical text and answer the following questions ., A,B and C are partners in a firm sharing profits and losses in the ratio of 2:2:1. Their, capitals(Fixed) are ₹ 1,00,000, ₹ 80,000 and ₹ 70,000 respectively. For the year 2018-19,, interest on capital was to be credited to them @ 9% p.a. instead of 12%, Q1. What was the net amount should be credited to partner B?, , CASE 14, , a) ₹ 1,500, b) ₹ 2,400, c) ₹ 1,800, d) ₹1,200, Q2. What was the net amount should be credited to partner C?, a) ₹ 1,800, b) ₹ 2,000, d) ₹ 2,100, d) ₹ 1,700, Q3. What was the amount that debited to partner B?, a) ₹ 1,500, b) ₹ 2,000, c) ₹ 3,000, d) ₹ 4,000, Q4. What was the amount of past adjustment entry?, a) ₹ 400, b) ₹ 300, c) ₹ 600, d) ₹ 500, Read the hypothetical text and answer the following questions .:, P and Q were partners in a firm sharing profits and losses equally. Their fixed capitals were, ₹ 1,00,000 and ₹ 50,000 respectively. The partnership deed provided that interest on capital, is to be given @ 10% p.a. For the year ended 31.03.2016, the profits of the year were, distributed without providing interest on capital., Q1. How much amount is already debited to P’s current account?, , CASE 15, , a) 2,500, b) ₹ 3,000, c) ₹ 7,500, d) ₹ 1,500, Q2. How much amount should be credited to P’s current account for Interest on capital?, a) ₹ 8,000, b) ₹ 10,000 c) ₹ 9,000, d) ₹ 7,000, Q3. How much amount should be credited to Q’s current account for interest on capital?, a) ₹ 2,000, b) ₹ 3,000, c) ₹ 5,000, d) ₹4,000, Q4. What was the amount of past adjustment entry?, a) ₹ 2,500, b) ₹ 1,500, c) ₹ 1,200, d) ₹ 1,600, Read the hypothetical text and answer the following questions., Aman and Boman are partners sharing profits equally. Business is being carried from the, property owned by Aman on a yearly rent of ₹ 24,000. Aman is to get salary of ₹ 1,20,000, p.a. and Boman is to get commission @ 5% on net sales, which during the was ₹ 30,00,000., Page 10 of 152

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Profits for the year ended 31st March, 2019 before providing rent was ₹ 5,00,000., Q1. What is the amount of commission payable to Boman?, , CASE 16, , CASE 17, , a) ₹ 1,50,000, b) ₹ 2,00,000 c) ₹ 1,20,000, d) ₹ 1,00,000, Q2. What is the profit after charging rent?, a) ₹ 4,00,000, b) ₹ 3,00,000 c) ₹ 4,76,000, d) ₹5,00,000, Q3. What is the total distributable profit?, a) ₹ 1,06,000, b) ₹ 2,06,000 c) ₹ 1,00,000, d) ₹ 2,00,000, Q4. What is the amount of profit to be credited to Aman’s capital account?, a) ₹ 1,00,000, b) ₹ 1,03,000 c) ₹ 1,02,000, d) ₹ 1,05,000, Read the hypothetical text and answer the following questions .:, Amit, Bimal and Chaman are sharing profits and losses equally. Amit and Chaman have, given loan to the firm on 1st October, 2018 of ₹ 1,00,000 and ₹ 1,50,000 respectively. It is, agreed that interest @ 9% p.a. will be paid on loan. Books of account of the firm are closed, on 31st March, every year. Interest on loan is yet to be paid as on 31 st March, 2019., Q1. How much interest the partner Amit will get on his loan amount?, a) ₹ 4,500, b) ₹3,000, c) ₹ 2,500, d) ₹ 1,500, Q2. How much interest the partner Chaman will get on his loan amount?, a) ₹ 4,500, b) ₹ 6,750, c) ₹ 6,000, d) ₹ 5,500, Q3. What is the credit balance of Amit’s loan account after adjustments?, a) ₹ 1,00,000, b) ₹ 1,02,500 c) ₹ 1,04,000, d) ₹ 1,04,500, Q4. What is the total amount of interest on loan of both the partners?, a) ₹ 10,250 b) ₹ 11,250, c) ₹ 12,250, d) ₹13,750, Read the hypothetical text and answer the following questions., X and Y started business on 1St April, 2020 with capitals of ₹ 5,00,000 each. As per the, partnership Deed, both X and Y are to get monthly salary of ₹ 10,000 each and interest on, capital is ₹ 50,000 each. Interest on drawings are as follows, X : ₹ 3,000 and Y: ₹ 5,000., During the year, the firm incurred a loss of ₹ 2,00,000., , CASE 18, , Q1. What is the amount to be transferred to Profit and Loss Appropriation Account?, a) ₹ 5,00,000, b) ₹ 2,00,000 c) ₹ 3,00,000, d) ₹ 1,50,000, Q2. What is the total amount of salary to be credited to Partners’ capital account?, a) ₹ 1,20,000, b) ₹ 2,40,000 c) ₹ 1,80,000, d) No salary will be given, Q3. What amount of loss is to be transferred to the capital account of the both partners?, a) ₹ 1,92,000, b) ₹ 2,00,000 c) ₹ 1,96,000, d) ₹ 1,80,000, Q4. What is the share of loss of X?, a) ₹ 1,00,000, b) ₹ 96,000, c) ₹ 98,000, d) ₹ 90,000, Read the hypothetical text and answer the following questions., , Page 11 of 152

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Ajay and Vijay are partners sharing profits in the ratio of 3:2. Ajay is a non-working partner, and contributes ₹ 20,00,000 as his capital. Vijay is a working partner of the firm. The, Partnership Deed provides for interest on capital @ 8% p.a. and salary to every working, partner @ ₹ 8,000 p.m. Profit before providing for interest on capital and partner’s salary, for the year ended 31st March, 2021, was ₹ 80,000., Q1. How much interest on capital is payable to Ajay?, , CASE 19, , a) ₹ 50,000, b) ₹ 1,60,000 c) ₹80,000, d) ₹ 1,00,000, Q2. What is the amount of salary payable to Vijay?, a) ₹ 96,000, b) ₹ 30,000, c) ₹ 60,000, d) ₹ 80,000, Q3. What is the amount of net profit to be transferred to Profit and Loss Appropriation, account?, a) ₹ 50,000, b) ₹ 30,000, c) ₹ 80,000, d) ₹ 60,000, Q4. What is the amount of profit to credited to Ajay’s capital account?, a) ₹ 40,000 b) ₹ 60,000 c) ₹ 80,000, d) None of these, Read the hypothetical text and answer the following questions., X and Y are partners sharing profits and losses in the ratio of 7:3. Their capital accounts as at, 1st April, 2018 stood at X: ₹ 5,00,000 and Y: ₹ 4,00,000. Partners are allowed interest on, capital @ 5% p.a. Drawings of the partners during the year ended 31 st March, 2019 were ₹, 72,000 and ₹ 50,000 respectively. Profit for the year before allowing interest on capital and, salary to Y @ ₹ 5,000 p.m. was ₹ 8,00,000. 10% of the net profit is to be transferred to, General Reserve., Q1. What is the amount to be transferred to General reserve?, , CASE 20, , a) ₹ 1,60,000, b) ₹ 80,000 c) ₹ 40,000, d) ₹ 2,00,000, Q2. How much amount of interest on capital payable to both the partners?, a) ₹ 45,000, b) ₹ 60,000 c) ₹ 75,000, d) ₹1,00,000, Q3. What is the amount of salary payable to Y?, a) ₹ 90,000, b) ₹ 1,20,000 c) ₹ 60,000, d) 75,000, Q4. What is the share of X in distributable profit?, a) ₹ 4,20,500, b) ₹ 4,30,500 c) ₹ 4,25,500, d) ₹ 4,10,500, Read the hypothetical text and answer the following questions., A, B and C started a firm on 1st October, 2020 sharing profits equally. A drew regularly ₹, 4,000 in the beginning of every month for the six months ended 31 st March, 2021. B drew, regularly ₹ 4,000 at the end of every month for the six months ended 31 st March, 2021. C, drew regularly ₹ 4,000 in the middle of every month for the six months ended 31 st March,, 2021. IOD is charged at 5% p.a, Q1. What the total amount of drawings of the partners?, a) ₹ 1,44,000, b) ₹ 72,000 c) ₹ 24,000, Q2. What is the interest on drawings of B?, Page 12 of 152, , d) 96,000

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a) ₹ 350, b) ₹ 300, c) ₹ 200, d) ₹ 250, Q3. What is the interest on drawings of A?, a) ₹ 300, b) ₹ 250, c) ₹ 350, d) ₹ 400, Q4. What is the total amount of interest on drawings of the partners?, a) ₹ 1,200, b) ₹1,500, c) ₹ 600, d) ₹ 900., , ANSWERS, CASE1, , 1, , a, , 2, , b, , 3, , c, , 4, , d, , CASE2, , 1, , c, , 2, , c, , 3, , b, , 4, , c, , CASE3, , 1, , b, , 2, , a, , 3, , d, , 4, , a, , CASE4, , 1, , b, , 2, , c, , 3, , b, , 4, , c, , CASE5, , 1, , d, , 2, , d, , 3, , b, , 4, , c, , CASE6, , 1, , d, , 2, , c, , 3, , a, , 4, , b, , CASE7, , 1, , c, , 2, , c, , 3, , b, , 4, , b, , CASE8, , 1, , b, , 2, , c, , 3, , a, , 4, , b, , CASE9, , 1, , c, , 2, , b, , 3, , a, , 4, , b, , CASE10, , 1, , c, , 2, , a, , 3, , d, , 4, , b, , CASE11, , 1, , b, , 2, , b, , 3, , c, , 4, , a, , CASE12, , 1, , a, , 2, , b, , 3, , a, , 4, , b, , CASE13, , 1, , b, , 2, , c, , 3, , c, , 4, , c, , CASE14, , 1, , c, , 2, , b, , 3, , c, , 4, , a, , CASE15, , 1, , a, , 2, , c, , 3, , b, , 4, , b, , CASE16, , 1, , a, , 2, , b, , 3, , d, , 4, , b, , CASE17, , 1, , b, , 2, , d, , 3, , a, , 4, , b, , CASE18, , 1, , a, , 2, , b, , 3, , c, , 4, , d, , CASE19, , 1, , b, , 2, , a, , 3, , c, , 4, , b, , CASE20, , 1, , b, , 2, , d, , 3, , c, , 4, , d, , Page 13 of 152

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CASE STUDY BASED QUESTIONS, CHAPTER 2, CHANGE IN PROFIT SHARING RATIO, CASE 1, , A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance Sheet, as at 31st March, 2019 stood as follows:, Liabilities, , Amount, , Capital A/cs:, , Assets, , Amount, , Land and Building, , 3,50,000, , A, , 2,50,000, , Machinery, , 2,40,000, , B, , 2,50,000, , Computers, , 70,000, , C, , 2,00,000 7,00,000 Investments (Market, value ₹ 90,000), , 1,00,000, , General Reserve, , 60,000, , Sundry Debtors, , 50,000, , Investments, Fluctuation Reserve, , 30,000, , Cash in Hand, , 10,000, , Sundry Creditors, , 90,000, , Cash at Bank, , 55,000, , Advertisement Suspense, , 5,000, , 8,80,000, , 8,80,000, , They decided to share profits equally w.e.f. 1st April, 2019. They also agreed that:, (i) Value of Land and Building be decreased by 5%., (ii) Value of Machinery be increased by 5%., (iii) A Provision for Doubtful Debts be created @ 5% on Sundry Debto₹, (iv) A Motor Cycle valued at ₹ 20,000 was unrecorded and is now to be recorded in the, books., (v) Out of Sundry Creditors, ₹ 10,000 is not payable., (vi) Goodwill is to be valued at 2 years' purchase of last 3 years profits. Profits being for, 2018-19 − ₹ 50,000 (Loss); 2017-18 − ₹ 2,50,000 and 2016-17 − ₹ 2,50,000., (vii) C was to carry out the work for reconstituting the firm at a remuneration (including, expenses) of ₹ 5,000. Expenses came to ₹ 3,000., Answer the following questions:, , Page 14 of 152

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i., , Remuneration expenses will be:, , (a), (b), (c), (d), , ₹ 3000 Debited to Revaluation A/c, ₹ 5000 Debited to Revaluation A/c, ₹3000 Shown on Liability side of the Balance Sheet, ₹3000 Shown on Asset side of the Balance Sheet, , ii., , What journal entry will be passed for Investment Fluctuation Reserve?, , (a), Dr. Investment Fluctuation Reserve A/c ₹ 30,000, Cr. Investment ₹ 10,000; Cr. A’s, Capital A/c ₹ 10,000; Cr. B’s Capital A/c ₹ 6,000; Cr. C’s Capital A/c ₹ 4,000, (b), Dr. Investment Fluctuation Reserve A/c ₹ 30,000, Cr. A’s Capital A/c ₹ 10,000; Cr. B’s, Capital A/c ₹ 10,000; Cr. C’s Capital A/c ₹ 10,000, (c), Dr. A’s Capital A/c ₹ 10,000; Dr. B’s Capital A/c ₹ 10,000; Dr. Investment ₹ 10,000; Cr., Workmen’s Compensation Reserve A/c ₹ 30,000, (d), Dr. Revaluation ₹ 10,000; Cr. Investment ₹ 10,000, iii., , What journal entry is passed for goodwill?, , (a), B’s Capital A/c Dr.10,000; C ’s Capital A/c Dr.40,000; A’s Capital A/c Cr. 50,000, (b), Dr. Goodwill A/c ₹ 3,00,000; Cr. A’s Capital A/c ₹ 1,50,000; Cr. B’s Capital A/c ₹, 90,000; Cr. C’s Capital A/c ₹ 60,000, (c), A’s Capital A/c Cr.50,000; B’s Capital A/c Cr.10,000; C ’s Capital A/c Dr.60,000;, (d), Dr. Goodwill A/c ₹ 50,000; Cr. Revaluation A/c ₹ 50,000, iv., , Profit (gain) on Revaluation of Assets and Reassessment of Liabilities is:, , (a) ₹ 17,000 (b) ₹ 22,000 (c) ₹ 57,000 (d) ₹ 2,000, CASE 2, , Balance Sheet of X and Y, who share profits and losses as 5 : 3, as at 1st April, 2019 is:, Liabilities, , Amount, , Assets, , Amount, , X's Capital, , 52,000, , Goodwill, , 8,000, , Y's Capital, , 54,000, , Machinery, , 38,000, , General Reserve, , 4,800, , Furniture, , 15,000, , Sundry Creditors, , 5,000, , Sundry Debtors, , 33,000, , Employees' Provident Fund, , 1,000, , Stock, , 7,000, , Workmen Compensation, Reserve, , 10,000, , Bank, , 25,000, , Advertisement Suspense, A/c, , Page 15 of 152, , 800

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1,26,800, , 1,26,800, , On the above date, they decided to change their profit-sharing ratio to 3 : 5 and agreed, upon the following:, (a) Goodwill be valued on the basis of two years' purchase of the average profit of the last, three yea₹ Profits for the years ended 31st March, are: 2016-17 − ₹ 7,500; 2017-18 − ₹, 4,000; 2018-19 − ₹ 6,500., (b) Machinery and Stock be revalued at ₹ 45,000 and ₹ 8,000 respectively., (c) Claim on account of workmen compensation is ₹ 6,000., Answer the following questions:, i., , Advertisement suspense a/c of ₹ 800 will be:, , (a), (b), (c), (d), , Debited to Revaluation A/c, Credited to Revaluation A/c, Debited to Partners capital A/c, Credited to Partners capital A/c, , ii., , Employees' Provident Fund of ₹ 1,000 to be:, , (a), (b), (c), (d), , Debited to Revaluation A/c, Credited to Revaluation A/c, Shown on Liability side of the Balance Sheet, Credited to Partners capital A/c, , iii., , What journal entry will be passed for Workmen’s Compensation Fund?, , (a), Dr. Workmen’s Compensation Fund ₹ 10,000, Cr. Claim for Workmen’s, Compensation ₹ 6,000; Cr. X’s Capital A/c ₹ 2,500; Cr. Y’s Capital A/c ₹ 1,500, (b), Dr. Workmen’s Compensation Fund ₹ 10,000; Cr. X’s Capital A/c ₹ 6,250; Cr. Y’s, Capital A/c ₹ 3,750, (c), Dr. X’s Capital A/c ₹ 1,500; Dr. Y’s Capital A/c ₹ 2,500; Dr. Claim for Workmen’s, Compensation ₹ 6,000; Cr. Workmen’s Compensation Reserve A/c ₹ 10,000, (d), Dr. Revaluation ₹ 4,000; Cr. Claim for Workmen’s Compensation ₹ 4,000, , CASE 3, , iv., , What journal entry is passed for goodwill?, , (a), (b), (c), (d), , Y’s Capital A/c Dr.3,000; X’s Capital A/c Cr.3,000, Dr. Goodwill A/c ₹ 12,000; Cr. X’s Capital A/c ₹ 6,000; Cr. Y’s Capital A/c ₹ 6,000, Y’s Capital A/c Cr.3,000; X’s Capital A/c Cr.3,000, Dr. Goodwill A/c ₹ 12,000; Cr. Revaluation A/c ₹ 12,000, , X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. From 1st April,, 2018, they decided to share profits and losses equally. The profit and loss account showed a, Page 16 of 152

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debit balance of ₹10,000. The Partnership Deed provides that in the event of any change in, the profit-sharing ratio, the goodwill should be valued at two years' purchase of the average, profit of the preceding five yea₹ The profits and losses of the preceding years ended 31st, March, are:, Year, , 2013-14 2014-15 2015-16, , Profits (₹), , 70,000, , 85,000, , 45,000, , 2016-17, , 2017-18, , 35,000, , 10,000 (Loss), , Answer the following questions:, i Change in the existing agreement of profit sharing ratio is considered as, (a), (b), (c), (d), , Reconstitution of a partnership firm, Revaluation of a partnership firm, Dissolution of a partnership firm, None of the above, , ii State the ratio in which the partners share the accumulated profits when there is, a change in the profit sharing ratio amongst existing partne₹, (a), (b), (c), (d), , Old ratio, New ratio, Equal ratio, Sacrificing ratio, , iii How is the sacrificing ratio determined?, (a), (b), (c), (d), , Old ratio – New ratio, New ratio – old ratio, Old ratio + New ratio, None of the above, , iv) What is the amount of Goodwill credited to X Capital A/c?, (a) ₹ 15,000 (b) ₹ 90,000 (c) ₹ 12,000 (d) ₹ 3,000, CASE 4, , U, V and W are partners sharing profits in the ratio of 2:2:1. They decided to share future, profits in the ratio 5:3:2. On that date the profit and loss account showed the credit balance, of ₹ 90,000. Instead of closing the profit and loss account, it was decided to record an, adjustment entry reflecting the change in profit sharing ratio They also decide to record the, effect of the following revaluations and reassessments without affecting the bookvalues of, assets and liabilities by passing a single adjustment entry:, BookValue(Rs, , RevisedValue(Rs), , Land and Building, , 2,50,000, , 3,00,000, , Furniture, , 2,00,000, , 1,75,000, , Page 17 of 152

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Sundry Creditors, , 90,000, , 75,000, , Outstanding Salaries, , 15,000, , 25,000, , Answer the following questions:, i The single adjustment entry on revaluations and reassessments without affecting the, bookvalues of assets and liabilities will be, (a) Dr.W capital a/c ₹3,000 and Cr.U capital a/c ₹3,000, (b) Dr.U capital a/c ₹3,000 and Cr.V capital a/c ₹3,000, (c) Dr.V capital a/c ₹ 30,000 and Cr.U capital a/c ₹30,000, (d) Dr.W capital a/c ₹ 30,000 and Cr.V capital a/c ₹30,000, ii Record an adjustment entry reflecting the change in profit sharing ratio when the profit, and loss account is not closed, (a) Dr.W capital a/c ₹9,000 and Cr.U capital a/c ₹9,000, (b) Dr.U capital a/c ₹9,000 and Cr.V capital a/c ₹9,000, (c) Dr.V capital a/c ₹ 90,000 and Cr.U capital a/c ₹90,000, (d) Dr.W capital a/c ₹ 90,000 and Cr.V capital a/c ₹90,000, iii, , Calculate U’s gain or sacrifice., , (a) 1/10(sacrifice), (b) 1/10(gain), (c) 1/30(Gain), (d) 1/30(sacrifice), iv In case of change in profit-sharing ratio, the gaining partner must compensate the, sacrificing partners by paying the proportional amount of, (a) Capital, CASE 5, , (b) Cash (c) Goodwill (d) None of the above, , R, S and T are sharing profits and losses in the ratio of 1:2:3, decided to share future profit, and losses equally. The sacrificing and gaining ratio was calculated. The asset and liabilities, were revalued and reassessed respectively. The Capital accounts of partners was prepared., Answer the following questions:, i The ratio in which a partner surrenders his share in favour of a partner is known as:, (a) New profit-sharing ratio (b) Sacrificing Ratio (c) Gaining Ratio (d) Capital Ratio, ii The ratio in which a partner receives a rise in his share of profits is known as:, (a) New Ratio (b) Sacrificing Ratio (c) Capital Ratio (d) Gaining Ratio, iii Increase and decrease in the value of assets and liabilities are recorded through, (a) Partners' Capital Account, Page 18 of 152

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(b) Revaluation Account, (c) Profit and Loss Appropriation Account, (d) Balance Sheet, iv Partner's capital account is credited when there is, (a) Profit on revaluation, (b) Transfer of general reserve, (c) Transfer of accumulated profits, (d) All of the above, CASE 6, , A, B and C are partners sharing profits and losses in the ratio of 5 : 4 : 1. they decided to, change their future profit-sharing ratio and agreed upon C acquiring 1/10th share of A and, 1/2 share of B., Answer the following questions:, i Calculate C’s gain, (a) 7/20, (b) 5/20, (c) 1/20, (d) 4/20, ii Calculate A’s sacrifice, (a) 7/20, (b) 5/20, (c) 1/20, (d) 4/20, iii Calculate B’s sacrifice, (a) 7/20, (b) 5/20, (c) 1/20, (d) 4/20, iv Calculate New Profit Sharing Ratio, , CASE 7, , (a) 7:4:9, (b) 4:9:7, (c) 4:7:9, (d) 9:4:7, X, Y and Z who are sharing profits in the ratio of 5 : 3 : 2, decide to share profits in the ratio, of 2 : 3 : 5 with effect from 1st April, 2019. Workmen Compensation Reserve appears at, ₹1,20,000 in the Balance Sheet as at 31st March, 2019., Answer the following questions:, , Page 19 of 152

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i Workmen Compensation Claim is estimated at ₹1,50,000., (a), (b), (c), (d), , Debited to Revaluation A/c ₹1,50,000, Credited to Revaluation A/c ₹1,20,000, Shown on Liability side of the Balance Sheet ₹1,50,000, Credited to Partners Capital A/c ₹1,20,000, , ii Workmen Compensation Claim is estimated at ₹80,000., (a), (b), (c), (d), , Debited to Revaluation A/c ₹80,000, Credited to Revaluation A/c ₹ 1,20,000, Shown on Liability side of the Balance Sheet ₹1,20,000, Credited to Partners Capital A/c ₹40,000, , iii There is no Workmen Compensation Claim, (a), (b), (c), (d), , Debited to Revaluation A/c ₹1,20,000, Credited to Revaluation A/c ₹ 1,20,000, Shown on Liability side of the Balance Sheet ₹1,20,000, Credited to Partners Capital A/c ₹1,20,000, , iv Workmen Compensation Claim is estimated at ₹1,30,000., (a), (b), (c), (d), CASE8, , Debited to Revaluation A/c ₹10,000, Credited to Revaluation A/c ₹ 1,30,000, Shown on Liability side of the Balance Sheet ₹1,20,000, Credited to Partners Capital A/c ₹10,000, , Chabi and Tanya were partners sharing Profit and Losses in 3 : 2 with affect from 1st, April 2021, they decided to share future profits equally., Answer the following questions:, i On that date, following journal entry was passed by the firm:, , Date, , L.F., Particulars, Chabi’s Capital A/c, To Tanya’s Capital A/c, , Dr., , Cr., Amou, nt (₹), , Amou, nt (₹), , 30,000, Dr., 30,000, , Which of the following balance was existing in the books of the firm on the, date of reconstitution?, (a) Contingency Reserve ₹ 3,00,000, , Page 20 of 152

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(b) Profit and Loss (Dr.) Balance ₹ 3,00,000, (c) Profit and Loss (Cr.) Balance ₹ 3,00,000, (d) Advertisement Suspense Account ₹ 2,00,000, , ii, , On that date, following journal entry was passed by the firm:, , Date, , Dr., , L.F., , Amou, nt (₹), , Particulars, Tanya’s Capital A/Dr., , Cr., Amou, nt (₹), , 30,000, 30,000, , To Chabi’s Capital A/c, , Which of the following balance was existing in the books of the firm on the, date of reconstitution?, a), b), c), d), iii, , Contingency Reserve ₹ 3,00,000, Goodwill ₹ 3,00,000, Profit and Loss (Cr.) Balance ₹ 3,00,000, Advertisement Suspense Account ₹ 2,00,000, , On that date, following journal entry was passed by the firm:, , Date, , L.F., , Dr., Amou, nt (₹), , Particulars, Tanya’s Capital A/c, , Cr., Amou, nt (₹), , 30,000, Dr., , To Chabi’s Capital A/c, , 30,000, , Which of the following balance was existing in the books of the firm on the, date of reconstitution?, a. Contingency Reserve ₹ 3,00,000, b. Gain on Revaluation ₹3,00,000, c. Profit and Loss (Cr.) Balance ₹ 3,00,000, d. Advertisement Suspense Account ₹ 2,00,000, iv Tanya is a ____________________., , CASE 9, , a) New partner, b) Sacrificing partner, c) Gaining partner, d) Neither gaining nor sacrificing, Ashish, Aakash and Amit are partners sharing profits and losses equally. The Balance, Sheet as at 31st March, 2019 was as follows:, Page 21 of 152

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Liabilities, Sundry Creditors, General Reserve, Capital A/cs:, Ashish, Aakash, Amit, , 3,00,000, 3,00,000, 2,75,000, , Amount, Assets, (₹), 75,000 Cash in Hand, 90,000 Cash at Bank, Sundry Debtors, Stock, Land and Building, 8,75,000 Machinery, Advertisement Suspense, 10,40,000, , Amount, (₹), 24,000, 1,40,000, 80,000, 1,40,000, 4,00,000, 2,50,000, 6,000, 10,40,000, , The partners decided to share profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. They, also decided that:, Answer the following questions:, i Value of stock to be reduced to ₹ 1,25,000., a) Debit Revaluation a/c ₹15,000, b) Credit Revaluation a/c ₹15,000, c) Stock will be shown in Balance Sheet ₹15,000, d) Credit Revaluation a/c ₹1,25,000, ii Value of machinery to be decreased by 10%., a) Debit Revaluation a/c ₹25,000, b) Credit Revaluation a/c ₹1,25,000, c) Machinery will be shown in Balance Sheet ₹25,000, d) Credit Revaluation a/c ₹25,000, iii Land and Building to be appreciated by ₹ 62,000., a) Debit Revaluation a/c ₹62,000, b) Credit Revaluation a/c ₹62,000, c) Land and Building will be shown in Balance Sheet ₹62,000, d) Credit Revaluation a/c ₹4,62,000, iv Provision for Doubtful Debts to be made @ 5% on Sundry Debto₹, , CASE 10, , a) Debit Revaluation a/c ₹4,000, b) Credit Revaluation a/c ₹4,000, c) Sundry Debtors will be shown in Balance Sheet ₹84,000, d) Debit Revaluation a/c ₹40,000, Nitin, Tarun and Amar are partners sharing profits equally and decide to share profits in, the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. The extract of their Balance Sheet as at 31st, March, 2019 is as follows:, , Page 22 of 152

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Liabilities, ₹, Investments Fluctuation, 60,000, Reserve, Answer the following questions:, , Assets, Investments (At, Cost), , ₹, 4,00,000, , i On that date, following journal entry was passed by the firm:, Date, , April, 2019, , Particulars, , Investment Fluctuation, Reserve A/c Dr., , Debit, , Credit, , (₹), , (₹), , 60,000, , To Nitin’s Capital A/c, , 20,000, , To Tarun’s Capital A/c, , 20,000, , To Amar’s Capital A/c, , 20,000, , Which of the following adjustment was existing in the books of the firm on the date of, reconstitution?, (a) When its Market Value is not given, (b) When its Market Value is ₹ 3,10,000, (c) When its Market Value is ₹ 4,24,000, (d) When its Market Value is ₹ 3,70,000, ii On that date, following journal entry was passed by the firm:, Date, , April, 2019, , Particulars, , Investment Fluctuation, Reserve A/c Dr., , Debit, , Credit, , (₹), , (₹), , 60,000, , To Investment A/c, , 30,000, , To Nitin’s Capital A/c, , 10,000, , To Tarun’s Capital A/c, , 10,000, , To Amar’s Capital A/c, , 10,000, , Which of the following adjustment was existing in the books of the firm on the date of, reconstitution?, (a) When its Market Value is ₹ 4,00,000, (b) When its Market Value is ₹ 4,24,000, Page 23 of 152

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(c) When its Market Value is ₹ 3,70,000, (d) When its Market Value is ₹ 3,10,000, iii On that date, following journal entry was passed by the firm:, Date, , April, 2019, , Particulars, , Debit, , Credit, , (₹), , (₹), , Investment Fluctuation, Reserve A/c Dr., , 60,000, , Revaluation A/c Dr., , 30,000, , To Investment A/c, , 90,000, , Which of the following adjustment was existing in the books of the firm on the, date of reconstitution?, (a) When its Market Value is not given, (b) When its Market Value is ₹ 3,10,000, (c) When its Market Value is ₹ 4,24,000, (d) When its Market Value is ₹ 3,70,000, iv On that date, following journal entry was passed by the firm:, Date, , April, 2019, , Particulars, , Investment A/c Dr., , Debit, , Credit, , (₹), , (₹), , 24,000, , To Revaluation A/c, , 24,000, , Which of the following adjustment was existing in the books of the firm on the, date of reconstitution?, (a) When its Market Value is not given, (b) When its Market Value is ₹ 3,10,000, (c) When its Market Value is ₹ 4,24,000, (d) When its Market Value is ₹ 3,70,000, CASE 11, , Jatin, Vimal and Kumar are partners sharing profits equally and decide to share profits, in the ratio of 3 : 2 : 1 w.e.f. 1st April, 2019. Their existing agreement came to an end, and a new agreement came into existence. They computed the sacrifice and gain made, by each partner., , Page 24 of 152

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Answer the following questions:, i A change in profit sharing ratio amounts to, a. Dissolution of a firm, b. Dissolution of partnership, c. Both a. and b., d. None of the above, ii Why is it important to compute the sacrifice and gain made by each partner at the, time of change in profit sharing ratio., a. Because sacrificing partner compensates the gaining partner, b. Because gaining partner compensates the sacrificing partner, c. Both a. and b., d. None of the above, iii At the time of change in profit sharing ratio between partners, which statement is, true., a. The gain made by one/more partner/s equals the sacrifice made by, another/other partners, b. The gain made by one/more partner/s less than the sacrifice made by, another/other partners, c. The gain made by one/more partner/s more than the sacrifice made by, another/other partners, d. None of the above is true, iv At the time of change in profit sharing ratio between partners in the case, whose, share of profit is not affected., a., b., c., d., CASE 12, , J, V, K, J and K, , Raja and Suraj were partners sharing Profit and Losses in 3 : 2 with affect from 1st April, 2021, they decided to share future profits equally. The goodwill was adjusted at the, time of change in profit sharing ratio between partne₹, Answer the following questions:, i State the need for treatment of goodwill on change in profit sharing ratio., a., b., c., d., , The gaining partner is required to compensate the sacrificing partner., The sacrificing partner is required to compensate the gaining partner., Both a. and b., None of the above, , ii Which partner’s capital account is debited at the time of adjusting goodwill through, capital accounts?, Page 25 of 152

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a., b., c., d., , Gaining partner’s capital account, Sacrificing partner’s capital account, All partner’s capital account, None of the above, , iii In which ratio is goodwill already existing in the books of account written-off?, a., b., c., d., , Sacrificing ratio, New ratio, Old ratio, Gaining ratio, , iv Goodwill can be recorded in the books only when, a., b., c., d., CASE 13, , It is internally generated, It is purchased, Both a. and b., None of the above, , A,B and C are partners sharing profits and losses in the ratio of 5:4:1. C acquires 1/5 th, share from A. There is an accumulated profit or losses of ₹90,000. The assets have to be, revalued and liabilities reassessed. They decided not to record the revised values of, assets and liabilities in the books., Answer the following questions:, i In case of change in profit sharing ratio, the question is silent, then accumulated, profit or losses of ₹90,000 are, a., b., c., d., , Distributed, Not distributed, Adjusted, None of these, , ii Revaluation account is prepared …………… the value of assets., a., b., c., d., , To revise, Not to revise, To distribute, None of these, , iii The steps to be followed in case of change in profit sharing ratio, when revised, values are not to be recorded in the books are, 1. Pass a single adjustment entry, 2. To find share of sacrifice/gain of partners, 3. Calculation of the net effect of revaluation, 4. Calculation of proportional amount of net effect of revaluation., The options are, Page 26 of 152

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a. 2,3,4,1, b. 3,2,4,1, c. 4,3,2,1, d. None of these, iv Calculate new profit sharing ratio, a., b., c., d., CASE 14, , 5:4:2, 5:4:1, 3:4:3, None of these, , A, B and C are partners sharing Profit and losses in the ratio 3:2:1. From 1st April 2018, A,B and, C decided to share profit and losses equally. This may result in the gain to a few partners and, loss to othe₹, Answer the following questions:, i From 1st April 2018, A,B and C decided to share profit and losses equally. It is a, a., b., c., d., , Revaluation of the firm, Dissolution of the firm, Reconstitution of the firm, None of the above, , ii As there is a change in profit sharing ratio. Which of the following is calculated?, a., b., c., d., , Sacrificing ratio, Gaining ratio, Both a. and b., None of the above, , iii What is the formula of Sacrificing Ratio., a., b., c., d., , Sacrificing ratio = Old ratio – New ratio, Sacrificing ratio = Old ratio +New ratio, Sacrificing ratio = New ratio – Old ratio, None of the above, , iv What is the formula of Gaining Ratio., a., b., c., d., CASE15, , Gaining Ratio = Old ratio – New ratio, Gaining Ratio = Old ratio +New ratio, Gaining Ratio = New ratio – Old ratio, None of the above, , Tina and Mira were partners sharing Profit and Losses in 5 : 2 with affect from 1st April, 2021, they decided to share future profits equally. There was an unrecorded liability, and an unrecorded asset. Expenses were incurred by the firm to give effect to the, change in profit sharing ratio. The partner Tina had to be paid remuneration for the, Page 27 of 152

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services rendered by her relating to reconstitution of the firm ., Answer the following questions:, i., , When remuneration is paid by the firm to Tina and expenses are borne by, the firm, which of the following journal is correct., a. Revaluation a/c Dr. ; Tina’s capital a/c Cr., b. Tina’s capital a/c Dr.; Revaluation a/c Cr., c. Cash a/c Dr.; Tina’s capital a/c Cr., d. None of these, , ii When expenses were to be borne by Tina but are paid by the firm, which of, the following journal is correct., a. Revaluation a/c Dr.; Tina’s capital a/c Cr., b. Tina’s capital a/c Dr.; Cash/Bank a/c Cr., c. Cash/Bank a/c Dr.; Tina’s capital a/c Cr, d. None of these, iii When expenses are incurred and paid by the firm, which of the following, journal is correct., a., b., c., d., , Revaluation a/c Dr.; Tina’s capital a/c Cr., Tina’s capital a/c Dr.; Cash/Bank a/c Cr., Revaluation a/c Dr.; Cash/Bank a/c Cr., None of these, , iv Unrecorded liabilities and Unrecorded assets are recorded in, a., b., c., d., CASE 16, , Revaluation a/c ;where they are credited and debited respectively, Revaluation a/c ;where they are debited and credited respectively, Partners capital a/c ; where they are credited and debited respectively, Partners capital a/c ; where they are credited and debited respectively, , X, Y and Z are sharing profits and losses in the ratio of 3 : 2 : 1. They decide to share, future profits and losses in the ratio of 5 : 3 : 2 with effect from 1st April, 2019. On this, date, the Balance sheet showed Contingency Reserve ₹ 9,000 and Deferred, Advertisement Expenditure ₹30,000., Goodwill was valued at ₹ 4,80,000., Answer the following questions:, i What is the journal entry for Deferred Advertisement Expenditure ₹30,000, a. Dr. X Capital a/c ₹15,000; Dr. Y Capital a/c ₹10,000; Dr. Z Capital a/c ₹5,000; Cr., Deferred Advertisement Expenditure a/c ₹ 30,000, b. Dr. X Capital a/c ₹15,000; Dr. Y Capital a/c ₹9,000; Dr. Z Capital a/c ₹6,000; Cr., Deferred Advertisement Expenditure a/c ₹ 30,000, Page 28 of 152

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c. Dr. Z Capital a/c ₹10,000; Cr. Y Capital a/c ₹10,000, d. None of the above, ii What is the journal entry for Contingency Reserve ₹ 9,000, a. Dr. Contingency Reserve a/c ₹9,000; Cr. X Capital a/c ₹4,500; Cr. Y Capital a/c, ₹3,000; Cr. Z Capital a/c ₹ 1,500, b. Dr. Contingency Reserve a/c ₹9,000; Cr. X Capital a/c ₹4,500; Cr. Y Capital a/c, ₹2,700; Cr. Z Capital a/c ₹ 1,800, c. Dr. Z Capital a/c ₹300; Cr. Y Capital a/c ₹300, d. None of the above, iii What is the journal entry for Goodwill was valued at ₹ 4,80,000., a., b., c., d., , Dr Goodwill a/c ₹ 16,000; Cr. Y Capital a/c ₹ 16,000, Dr. Y Capital a/c ₹ 16,000; Cr. Z Capital a/c ₹ 16,000, Dr. Z Capital a/c ₹ 16,000; Cr. Y Capital a/c ₹16,000, None of the above, , iv The partner(s) whose share will be unaffected, a., b., c., d., CASE17, , Y, Z, X, Z and Y, , R, K and S are sharing profits and losses in the ratio of 5 : 4 : 1. They decide to share, future profits and losses in the ratio of 1 : 4 : 5 with effect from 1st April, 2019. On that, date, they revalued their assets and reassessed their liabilities. They had an unrecorded, asset., Answer the following questions:, i Revaluation a/c is a, a., b., c., d., , Real a/c, Nominal a/c, Personal a/c, None of the above, , ii Revaluation of assets is necessary because their present value may be different, from their ……………………….., a., b., c., d., , Book value, Market value, Both a. and b., None of the above, , iii What is unrecorded asset?, a. Assets which physically exist but not shown in the Balance sheet, Page 29 of 152

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b. Assets which physically do not exist and not shown in the Balance sheet, c. Assets which physically exist but shown in the Balance sheet, d. None of the above, iv The partner(s) who will share Gain or loss on revaluation are, a., b., c., d., CASE 18, , R,K,S, Both R and S, Only S, Only R, , A and B are partners in a firm sharing profits in the ratio of 2 : 1. They decided with, effect from 1st April, 2018, that they would share profits in the ratio of 3 : 2. But,, this decision was taken after the profit for the year ended 31st March,, 2019 of ₹ 90,000 was distributed in the old ratio., Firm’s goodwill was valued on the basis of aggregate of two years profits preceding, the date decision became effective., The profits for the year ended 31st March, 2017 and 2018 were ₹ 60,000, and ₹ 75,000 respectively. It was decided that Goodwill Account will not be opened, in the books of the firm and necessary adjustment be made through Capital, Accounts which on 31st March, 2019 stood at ₹ 1,50,000 for A and ₹ 90,000 for B., Answer the following questions:, i In adjustment of profit for 2018-19 on change in profit sharing ratio, the journal, entry is, a., b., c., d., , Dr. A’s Capital A/c ₹6,000; Cr. B’s Capital A/c ₹ 6,000, Cr. A’s Capital A/c ₹6,000; Dr. B’s Capital A/c ₹ 6,000, Dr. A’s Capital A/c ₹90,000 ;Cr. B’s Capital A/c ₹ 90,000, Cr. A’s Capital A/c ₹90,000; Dr. B’s Capital A/c ₹ 90,000, , ii Adjustment of goodwill made on change in profit sharing ratio, the journal entry is, a., b., c., d., , Dr. A’s Capital A/c ₹9,000; Cr. B’s Capital A/c ₹ 9,000, Cr. A’s Capital A/c ₹9,000 ;Dr. B’s Capital A/c ₹ 9,000, Dr. A’s Capital A/c ₹1,35,000; Cr. B’s Capital A/c ₹ 1,35,000, Cr. A’s Capital A/c ₹ 1,35,000; Dr. B’s Capital A/c ₹ 1,35,000, , iii Calculate New Goodwill., a., b., c., d., , ₹ 60,000, ₹ 75,000, ₹ 1,35,000, ₹ 67,500, , iv What is the closing balance of Partners Capital accounts?, Page 30 of 152

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CASE 19, , a. A-₹1,53,000; B-₹87,000, b. A-₹1,59,000; B-₹96,000, c. A-₹1,44,000; B-₹81,000, d. A-₹1,24,000; B-₹89,000, Amar and Akbar are partners sharing profits in the ratio of 2 : 1. On 31st March, 2019,, their Balance Sheet showed General Reserve of ₹ 60,000. It was decided that in future, they will share profits and losses in the ratio of 3 : 2., Answer the following questions:, i When General Reserve is not to be shown in the new Balance Sheet. Pass necessary, Journal entry., a. Dr. General Reserve A/c ₹ 60,000; Cr. Amar’s Capital A/c ₹40,000; Cr., Akbar’s Capital A/c ₹20,000, b. Dr. Amar’s Capital A/c ₹40,000; Dr. Akbar’s Capital A/c ₹20,000; Cr. General, Reserve A/c ₹ 60,000, c. Cr. Amar’s Capital A/c ₹60,000; Dr. Akbar’s Capital A/c ₹60,000, d. None of the above, ii When General Reserve is to be shown in the new Balance Sheet. Pass necessary, Journal entry., a. Dr. General Reserve A/c ₹ 60,000; Cr. Amar’s Capital A/c ₹40,000; Cr. Akbar’s, Capital A/c ₹20,000, b., Dr. Amar’s Capital A/c ₹40,000; Dr. Akbar’s Capital A/c ₹20,000; Cr. General, Reserve A/c ₹ 60,000, c., Cr. Amar’s Capital A/c ₹4,000; Dr. Akbar’s Capital A/c ₹4,000, d., None of the above, iii Calculate the sacrificing share?, a., b., c., d., , CASE 20, , 1/15, 2/15, 1/30, None, , A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. Their Balance, Sheet as on 31st March, 2015 was as follows:, , Liabilities, Creditors, Bills Payable, General Reserve, Capital A/cs:, A, B, , Amount, ( ₹), 50,000, 20,000, 30,000, 1,00,000, 50,000, , Assets, Land, Building, Plant, Stock, Debtors, Bank, , Page 31 of 152, , Amount, ( ₹), 50,000, 50,000, 1,00,000, 40,000, 30,000, 5,000

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C, , 25,000, , 1,75,000, 2,75,000, , 2,75,000, , From 1st April, 2015, A, B and C decided to share profits equally. For this it was agreed, that:, (i) Goodwill of the firm will be valued at ₹ 1,50,000., (ii) Land will be revalued at ₹ 80,000 and building be depreciated by 6%., (iii) Creditors of ₹ 6,000 were not likely to be claimed and hence should be written off., Answer the following questions:, I Calculate the gain on Revaluation?, a., b., c., d., , ₹ 33,000, ₹ 36,000, ₹ 30,000, None of the above, , ii What will be the Land value shown in new Balance sheet?, a., b., c., d., , ₹ 30,000, ₹ 50,000, ₹ 80,000, ₹ 1,30,000, , iii What will be the Creditors value shown in new Balance sheet?, a., b., c., d., , ₹ 44,000, ₹ 50,000, ₹ 56,000, ₹ 6,000, , iv What will be the journal entry for Goodwill?, a. Dr. C’s capital a/c ₹25,000; Cr. A’s capital a/c ₹ 25,000, b. Cr. C’s capital a/c ₹25,000; Dr. A’s capital a/c ₹ 25,000, c. Dr. C’s capital a/c ₹1,50,000; Cr. A’s capital a/c ₹ 1,50,000, d. Cr. C’s capital a/c ₹1,50,000; Dr. A’s capital a/c ₹ 1,50,000, **************************, , Page 32 of 152

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ANSWERS, CASE1, , I, , b, , II, , a, , III, , a, , IV, , a, , CASE2, , I, , c, , II, , c, , III, , a, , IV, , a, , CASE3, , I, , a, , II, , a, , III, , a, , IV, , a, , Case4, , I, , b, , II, , b, , III, , b, , IV, , c, , Case5, , I, , b, , II, , d, , III, , b, , IV, , d, , Case6, , I, , b, , II, , c, , III, , d, , IV, , d, , Case7, , I, , c, , Ii, , d, , Iii, , d, , Iv, , a, , Case8, , I, , b, , Ii, , b, , Iii, , b, , Iv, , c, , Case9, , I, , a, , Ii, , a, , Iii, , b, , Iv, , a, , Case10, , I, , a, , Ii, , c, , Iii, , b, , Iv, , c, , Case11, , I, , b, , Ii, , b, , Iii, , a, , Iv, , b, , Case12, , I, , a, , Ii, , a, , Iii, , c, , Iv, , b, , Case13, , I, , a, , Ii, , a, , Iii, , b, , Iv, , c, , Case14, , I, , c, , Ii, , c, , Iii, , a, , Iv, , c, , Case15, , I, , a, , Ii, , b, , Iii, , c, , Iv, , b, , Case16, , I, , a, , Ii, , a, , Iii, , c, , Iv, , c, , Case17, , I, , b, , Ii, , a, , Iii, , a, , Iv, , a, , Case18, , I, , a, , Ii, , b, , Iii, , c, , Iv, , a, , Case19, , I, , a, , Ii, , c, , Iii, , a, , Iv, , -, , Case20, , I, , a, , ii, , c, , Iii, , a, , Iv, , a, , Page 33 of 152

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CASE STUDY BASED QUESTIONS, CHAPTER 3, ADMISSION OF A PARTNER, CASE 1, , Read the following hypothetical text and answer the given questions on the basis of the, same:, Jacob and Joseph are friends and they are doing manufacturing toys car. Their profitsharing ratio was 3:2. They got a new project of making electronic toys and they needed, additional fund for doing that project. So, they decided to admit their common friend,, James for raising the additional fund and he brought ₹5, 00,000 as capital for 2/7 th share., The goodwill of the firm is valued at ₹14, 00,000., , At the time of James admission their balance sheet as follows:, Liabilities, Creditors, Capitals, Jacob, Joseph, , Amount, Assets, 350,000 Cash at Bank, Debtors, 5,00,000 Less Prov for Bad debts, 5,00,000 Stock, Plant & Machinery, Building, 1350,000, , Amount, 7,0000, 21,000, 1,000, , 20,000, 5,80,000, 5,00,000, 1,80,000, 135,000, , At the time of revaluation of assets and reassessment of liabilities the following, things was found:, a) Provision for bad and doubtful debts should be increased to ₹3,000, Unexpired insurance of ₹1, 500 should be brought into record, 1. What will be the amount of premium or goodwill is credited to Joseph’s A/c, a)4,00,000 b) 2,40,000 c)1,60,000 d)7,00,000, 2. What will be the correct journal entry for unexpired insurance brought into record?, a) Unexpired Insurance A/c Dr, 1500, To Revaluation A/c, 1500, b) Revaluation A/c Dr, 1500, To Unexpired Insurance A/c, 1500, c) Revaluation A/c Dr, 1500, To Insurance, 1500, d) Insurance A/c, Dr, 1500, To Revaluation A/c, 1500, 3. What is the treatment of Provision for doubtful debts at the time of James, admission?, Page 34 of 152

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CASE 2, , a) ₹3000 debited to Revaluation A/c, b) ₹2000 debited to Revaluation A/c, c)₹1000 debited to Revaluation A/c, d)₹4000 debited to Revaluation A/c, 4. What will be the new ratio between Jacob, Joseph and James, a) 3:2:2 b) 1:1:1 c) 5:3:2 d) 15:10:5, Read the following hypothetical text and answer the given questions on the basis of the, same:, , After completing MBA Ram and Rahim started a new business. Their profit-sharing ratio was, 3:2. They are running the business very successfully. One day they met their friend Vimal, and they are engaged in a friendly talk Vimal said he also wants to join with Ram and Rahim., They admitted Vimal as a new partner for 3/13th share in the profits. Their new profitsharing ratio will be 5:5:3. On the date of admission the goodwill of the firm valued at ₹5,, 20,000. Vimal brought his share of Capital ₹2, 50,000 and premium for goodwill in cash., There was a Workmen Compensation Reserve at Ram and Rahim’s Balance sheet ₹1,, 00,000. There was a claim against workmen compensation amounted to ₹ 1, 10,000. At the, time of admission of Vimal they found that there was an unrecorded Computer and they, brought into account., Based on above information answer the following, 1. What will be the sacrificing ratio among Ram and Rahim?, a) 1:14 b) 14:1 c) 3:2 d) 1:1, 2. What is the amount of goodwill brought in by Vimal?, a) ₹2,50,000 b) ₹5,20,000 c) ₹1,20,000 d) ₹1,12,000, 3. How much amount of Workmen compensation is distributed among the partners?, a) 1,00,000 b) 1,10,000 c)10,000 d) None of these, 4. What will be the treatment of unrecorded computer?, a) Debited to Revaluation A/c, b) Credited to Revaluation A/c, c) Transferred to Debit side of Partners’ capital a/c, d) Transferred to Credit side of Partners’ capital a/c, CASE 3, , Read the following text and answer the following, Rekha, Sunita and Teena are doing paper business in Ludhiyana. They used to share profits, in the ratio of 3:2:1. They decided to provide note books to students of rural area at free of, cost. Sunitha wants to admit her friend Samiksha in their firm. All others are agreed with, Sunitha and Rekha surrenders 1/4th of her share; Sunita surrenders 1/3rd of her share and, Teena 1/5th of her share in favour of Samiksha., Samiksha brought ₹ 50,000 as capital and ₹ 20000 as goodwill. In the old partners’ balance, sheet there was an existing goodwill ₹25,000. There was an Investment fluctuation, Reserve of ₹15000 and investment (book value) ₹30,000. At the time of admission of, Samiksha all assets are revalued and liabilities are reassessed and found that market value, of investment is ₹25,000., , Page 35 of 152

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1. What will be the new ratio?, a) 45:40:12:6, b) 135:80:48:97 c) 6:4:2:1 d) 24:18:30:45, 2. What will be the ratio of Samiksha?, a)3/12 b)6/12 c)97/360 d)45/ 150, 3. What will be the journal entry for existing goodwill?, a) Goodwill A/c Dr, 25,000, To Rekha’s Capital A/c, 6250, To Sunitha’s Capital A/c, 6250, To Teena’s Capital A/c, 6250, To Samiksha’s Capital A/c 6250, (Being ……………………………………), b) Goodwill A/c Dr, 25,000, To Rekha’s Capital A/c, 12500, To Sunitha’s Capital A/c, 8333, To Teena’s Capital A/c, 4167, (Being ……………………………………), c) Rekha’s Capital A/c, 6250, Sunitha’s Capital A/c, 6250, Teena’s Capital A/c, 6250, Samiksha’s Capital A/c 6250, To Goodwill A/c, 25000, (Being ……………………………………), d) Rekha’s Capital A/c, 12500, Sunitha’s Capital A/c, 8333, Teena’s Capital A/c, 4167, To Goodwill A/c, , 25000, , (Being ……………………………………), 4. What will be the treatment of Investment Fluctuation Reserve?, a) Investment Fluctuation Reserve, A/c, Dr 15,000, To Rekha ‘s Capital A/c, 7500, To Sunitha’s Capital A/c, 5000, To Teena’s Capital A/c, 2500, (Being ……………………………………), b) Investment Fluctuation Reserve A/c, To Investment A/c, To Rekha ‘s Capital A/c, To Sunitha’s Capital A/c, To Teena’s Capital A/c, (Being ……………………………………), , Page 36 of 152, , Dr 15000, 5000, 5000, 3333, 1667

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c) Revaluation A/c, To Investment A/c, , Dr, , 5,000, 5,000, , (Being ……………………………………), d) Investment A/c, Dr, To Revaluation A/c, , 25,000, 25000, , (Being ……………………………………), CASE:4, , Madan and Mohan who share profits and losses in the ratio of 3 : 2 . Their Balance, sheet was as follows as on 31-03-2020, , Amount, (₹), , Liabilities, Creditors, , 28,000, , Cash at Bank, , General Reserve, , 10,000, , Debtors, , Employees, Provident Fund, , 22,000, , Capitals:, Madan, , 60,000, , Mohan, , 40,000, , Amount, (₹), , Assets, , 10,000, 65,000, , Less: P r o vis i o n for, Doubtful debts, 5,000, Stock, , 60,000, , Patents, , 57,000, , 33,000, , 1,00,000, , 1,60,000, , 1,60,000, , They decided to admit Gopal on 1st April, 2020 for 1/5th share which Gopal, acquired wholly from Mohan on the following terms:, (i), Gopal shall bring ₹10,000 as his share of premium for Goodwill., (ii), Create provision for doubtful debts @10%., (iii), (iii) A claim of ₹5,000 on account of workmen’s compensation was to be, provided for., (iv), Patents were undervalued by ₹ 2,000. Stock in the books was valued 10%, more than its market value., What will be the treatment of Workmen Compensation Reserve at the time of, admission of Gopal?, a) Debited to Partners Capital A/c b) Credited to Old partners’ capital A/c c), Debited to Revaluation A/c d) Credited to Revaluation A/c, Page 37 of 152

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2. What will be the treatment of provision for doubtful debts in Revaluation A/c?, a) ₹ 6500 debited to Revaluation A/c b) ₹ 6500 credited to Revaluation A/c c) ₹, 1500 debited to Revaluation A/c d) ₹1500 credited to Revaluation A/c, 3. What is the journal entry for the treatment of goodwill?, a) Premium for Goodwill A/c Dr, To Madan’s Capital A/c, , 10000, , To Mohan’s Capital A/c, , 6000, 4000, , b) Premium for Goodwill A/c Dr 10000, To Madan’s Capital A/c, 5000, To Mohan’s Capital A/c, 5000, c) Premium for Goodwill A/c Dr 10000, To Madan’s Capital A/c, 10000, d) Premium for Goodwill A/c Dr 10000, To Mohan’s Capital A/c, 10000, 4. What will be the treatment for Employee Provident Fund?, Credited to Partners Capital A/c, a) Debited to Partners Capital A/c, b) Transferred to Revaluation A/c, c) Transferred to Liability side of Balance Sheet, CASE:5, , Haritha and Bobby were partners in a firm sharing profits and losses in the ratio, of 3:1. On 31st March, 2019, their balance sheet was as follows:, Amount, , Liabilities, Creditors, General Reserve, Workmen's compensation, reserve, Capitals :, 4,00,000, Haritha, 2,00,000, Bobby, , 1,10,000, 40,000, 50,000, , Assets, Cash at bank, Debtors, Stock, Furniture, Land & Building, , Amount, 60,000, 40,000, 45,000, 1,55,000, 5,00,000, , 6,00,000, 8,00,000, 8,00,000, They admitted Vihaan as a new partner for 1/5th share in the profits of the firm, on the following terms:, (a) Vihaan brought ₹1, 00,000 as his capital., b) Goodwill of the firm was valued at ₹4, 00,000. Vihaan brought the necessary, amount in cash for his share of goodwill premium, half of which was withdrawn, by the old partner, (c) Liability on account of workmen’s compensation amounted to ₹ 80,000., Page 38 of 152

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(d) Haritha took over stock at ₹ 35,000., On the basis of above information answer the following., 1. What will be the correct treatment of stock at the time of admission?, a) ₹10,000 debited to Revaluation A/c and ₹35000 debited to Haritha’s, capital A/c, b) ₹10,000 credited to Revaluation A/c, c) ₹10,000 debited to Revaluation A/c, d) ₹45,000 credited to Haritha’s capital A/c and ₹10,000 credited to, Revaluation A/c, 2. What will be the correct journal entry of Workmen compensation reserve?, a) Workmen compensation reserve A/c, Dr 50,000, To Haritha’s Capital A/c, 37,500, To Bobby’s Capital A/c, 12,500, (Being ……………………………………), b) Workmen compensation reserve, To Haritha’s Capital A/c, To Bobby’s Capital A/c, , A/c, , Dr 80000, 60,000, 20,000, , (Being ……………………………………), c) Workmen compensation reserve A/c, Dr 80,000, To workmen compensation claim A/c, 30,000, To Haritha’s Capital A/c, 37,500, To Bobby’s Capital A/c, 12,500, (Being ……………………………………), Revaluation A/c, Dr, To workmen compensation claim A/c, , 30,000, 30000, , (Being ……………………………………), 3. What will be the amount of goodwill premium brought by Vihan?, a) 80,000 b) 40,000 c)4,00,000 d) 1,00,000, 4. What is the treatment of General Reserve at the time of admission?, a) Debited to all partners’ capital A/c, b) Debited to old partners’ capital A/c, c) Credited to old partners’ capital A/c, d) Shown on the liability side of balance sheet., , Page 39 of 152

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CASE:6, , Mayank and Ayush are planning to manufacture stuffed toys for utilizing waste material of, one of their garment’s factories. They decided that this manufacturing unit will be set up in, a rural area, so that people living in rural areas can have job opportunities., Their capital contributions were ₹ 5, 00,000 and ₹4, 00,000. Their profit sharing ratio is 5:3., For starting new venture they need of some additional fund. For meeting the additional, fund, they decided to admit Vishal as a new partner. Mayank and Ayush sacrificed their, share of profit in favour of Vishal. Mayank forgo ¼ th of his share and Ayush forgo 2/5 th of, his share. Vishal is admitted as per the agreement and he brought ₹200000 as his capital, and ₹40000 as goodwill premium., At the time of admission of Vishal the old balance sheet of Mayank and Ayush had, Advertisement Suspense A/c of ₹30,000 on the assets side and Profit and Loss A/c on, liability side., Based on above text answer the following, 1. What will be the new ratio?, a) 5:3:3, b) 20:12:8 c) 1:1:1, , d) 4:2:3, , 2. What is the goodwill of the firm?, a) 40,000 b) 2,00,000 c) 50,000 d) 60,000, 3. What is the correct entry of Advertisement Suspense A/c?, a) Advertisement Suspense A/c, Dr 30000, To Mayank’s capital A/c, 10000, To Ayush’s capital A/c, 10000, To Vishal’s capital A/c, 10000, (Being ……………………………………), b) Advertisement Suspense A/c Dr, To Mayank’s capital A/c, To Ayush’s capital A/c, (Being ……………………………………), c) Mayank’s capital A/c Dr, Ayush’s capital A/c Dr, To Advertisement Suspense A/c, , 30000, 15000, 15000, , 18750, 11250, 30,000, , (Being ……………………………………), There is no treatment at the time of admission, 4. What is the treatment of Profit and Loss A/c, a) Credited to all partners’ capital A/c, b) Credited to old partners’ capital A/c, c) Credited to old partners’ capital A/c in their sacrificing ratio, Page 40 of 152

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d) Debited to old partners’ capital A/c, CASE 7, , Ashish and Nimish were partners in a firm sharing profits and losses in the ratio of 3: 2., Balance sheet of Ashish and Nimish was as follows., Liabilities, , ₹, , Capital Accounts:, Ashish 3,10,000, Nimish, , 2,90,000, , Assets, Plant & Machinery, , 2,90,00, , Land &Building, , 2,20000, , 6,00,000 Debtors, , General Reserve, , 50,000 Less: Provision for, , Workmen’s, compensation fund, , 20,000 Bad and doubtful, 1,10,000 debts, , Creditors, , ₹, , 90,000, , (1000), , 89,000, , Stock, , 1,40,000, , Cash, , 41,000, , 780000, , 780000, , Geeta was admitted into the partnership for ¼ th share in the profits on the following, terms:, (i) Goodwill of the firm was valued at ₹2, 00,000., (ii) Geeta brought ₹ 3, 00,000 as her capital and her share of goodwill premium in cash., (iii) Bad debts amounted to ₹ 1,000. Create a provision for doubtful debts @ 5% on debtor, (iv) The liability against workmen’s compensation fund was determined at ₹30,000., Based on above information answer the following;, 1. What will be the new ratio?, a) 3:2:1, b) 3:2:5, c) 9:6:5, d) 5:3:2, 2. What is the amount of provision for doubtful debts to be created?, a)4500 b)4450 c)4400 d) 4550, 3. What is the amount of premium contributed by Geeta?, a) 2,00,000, b) 50,000, Page 41 of 152

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c) 3,00,000, d) 5,000, 4. Which amount will be debited to revaluation a/c as workmen compensation claim, a) 20,000, b) 30,000, c) 50,000, d) 10,000, CASE 8, , William and Rayan are the partners in a firm sharing profits in the ratio of 3:2. Their Balance, sheet as at 31st March, 2020 was as follows:, Liabilities, , Amount, , Assets, , Amount, , Sundry Creditors, , 20,000, , Cash, , 12,000, , Provision for Bad Debts, , 2,000, , Debtors, , 18,000, , Outstanding Salary, , 3,000, , Stock, , 20,000, , General Reserve, , 5,000, , Furniture, , 40,000, , Plant & Machinery, , 40,000, , Capitals, William, , 60,000, , Rayan, , 40,000, , 1,00,000, 1,30,000, , 1,30,000, , On the above date, Clement was admitted for 1/5th share in the profits which he acquired, equally from William and Rayan on the following terms:, (i), (ii), (iii), , Clement will bring ₹ 30,000 as his capital and ₹10,000 for his share of goodwill, premium., Investments of ₹ 2,500 not mentioned in the Balance Sheet were to be taken in, to account., A creditor of ₹ 2,100 not likely to claim, Based on above information answer the following., 1. What will be the new ratio?, a) 3:2:1 b) 5:3:2 c) 6:4:2 d) 2:2:1, 2. What is the correct treatment of Investments?, , Page 42 of 152

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a) Debited to Revaluation A/c, b) Credited to Revaluation A/c, c) Debited to Partners’ capital A/c, d) There is no treatment at the time of admission, 3. How much amount will record as creditors in new Balance sheet?, a) 2100, b) 22,100, c) 18,900, d) 17,900, 4 . What is the share of General Reserve for Clement?, a) 1,000, b) 5,000, c) 2000, d) No share in General Reserve, CASE 9, , Amit and Rijith are equal partners started the business of preparation and supplying sweets, through home delivery at a production cum show-room ‘Express Sweets’ at Bangalore., They wanted to extend their business operation to Hyderabad. Due to some personal, reasons Rijith can’t contribute additional capital for the expansion of the business. So Rijith, introduced his friend Kamal to Amit and he is ready to invest in their business. They decided, to share the future profits in the ratio of 5:3:2., Kamal brought ₹1, 00,000 as capital and his share of goodwill in cash. The goodwill of the, firm is valued at 2 years purchase of previous 3 years profit. Profit for the year ended 2018, and 2019 were ₹ 1, 40,000 and ₹2, 00,000 respectively., Balance Sheet as on 31-03-2020 as follows, Liabilities, , Amount, , Capitals :, Amit, , 1,00,000, , Rijith, , 80,000, , Creditors, , 2,10,000, , Workmen, , Page 43 of 152, , Assets, , Amount, , Cash in hand, , 1,40,000, , Debtors, , 1,60,000, , Stock, , 1,20,000, , Machinery, , 1,00,000, , Building, , 2,80,000

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Compensation, , 2,50,000, , Fund, Profit and Loss A/c, , 2,60,000, 8,00,000, , 8,00,000, , Based on above details answer the following:, 1. What will be the ratio of new Partner Kamal, a) 2/10, b) 5/10, c) 3/10, d) ½, 2. What is the amount of firm’s goodwill?, a) 2, 00,000, b) 4, 00,000, c) 3, 40,000, d) 6, 00,00, 3. What is the amount of premium brought in by Kamal, a) 1,60,000, b) 80,000, c) 40,000, d) 2,00,000, 4. What is the treatment of Profit & Loss A/c shown in the Balance Sheet?, a) Distributed among all partners in new profit sharing ratio., b) Distributed among old partners in their new ratio., c) Distributed among old partners in their old ratio., d) Transferred to revaluation a/c., CASE 10, , Abhijith and Binoy are college mates after completion of their studies they started a, business of manufacturing pickles. They are sharing profits in the ratio of 3:1. Their, balance sheet as at 31st March 2020 was as follows., Liabilities, , Amount, , Assets, , Amount, , Creditors, , 1,82,600, , Land, , 3,30,000, , Capital, Abhijith, , Furniture, 3,52,000, , Stock, , Page 44 of 152, , 49,000, 2,64,000

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Binoy, , 2,90,400, , Debtors, , 70,000, , Bills Receivables, , 57,000, , Cash, , 55,000, , 8,25,000, , 8,25,000, , On this date Chandru was admitted in to partnership for 1/8 th share in profits. He, brought Capital and goodwill premium in cash. At the time of admission of Chandru the, firm revalued the assets and reassessed the liabilities and found the following., 1. Stock was overvalued by ₹4,000, 2. Furniture is to be depreciated by 10% and Land to be appreciated by 20%. Provision for, doubtful debts is to be created @5% on debtor, 3. Provision for damages is to be made at ₹3, 000., Based on above information answer the following:, 1. What will be the result of revaluation A/c, a) Gain on revaluation ₹ 68,400, b) Gain on revaluation ₹ 48600, c) Gain on revaluation ₹ 50,600, d) Gain on revaluation ₹ 66,000, 2. What is the correct treatment entry of provision for damages?, a) Revaluation A/c, Dr, 3,000, To Provision for damages A/c, 3,000, b) Provision for damages A/c Dr 3,000, To Revaluation A/c, 3,000, c) Liability A/c, Dr, 3,000, To Revaluation A/c, 3,000, d) Liability A/c Dr, 3,000, To Provision for damages, 3,000, 3. What is the amount of stock will show in the new Balance Sheet?, a) 2,68,000, b) 2,64,000, c) 2,60,000, d) 2,72,000, 4. What will be the new ratio?, a) 3:7:4, b) 7:21:3, c) 1:1:1, d) 21:7:4, CASE 11, , DIRECTION: READ THE FOLLOWING CASE , ANSWER THE QUESTIONS FROM 1, Page 45 of 152

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TO 4 ON THE BASIS OF THE SAME., 1. Chander and Moini are partners sharing profits in the ratio of 3 ; 2 Their Balance, Sheet as at 31st March, 2018 is given below, , Liabilities, Chander’s Capital, Mohini’s Capital, Workmen’s, Compensation Reserve, Creditors, , Amount, ₹, 11,40,000, 7,00,000, 60,000, 1,00.000, , Assets, Land & Building, Plant & Machinery, Stock, Sundry Debtors 6,00,000, Less Provision, 20,000, Bank, , 20,00,000, =========, , Amount, ₹, 5,60,000, 6,00,000, 1,60,000, 5,80,000, 1,00,000, 20,00,000, =========, , They decide to admit Shikha as a new partner from 1st April,2018. Their new profit sharing, ratio was 3:2:5. Shikha brought in ₹ 6,00,000 as her capital and her share of goodwill, premium in cash., (a), (b), (c), (d), (e), , Shikha’s share of goodwill premium was valued at ₹30,000., Plant and Machineruy was found under valued buy 20%., Creditors were unrecorded to the extent of ₹20,000, Claim on account of workmen compensation was ₹40,000., Bad debts amounted to ₹30,000, , 1) What was loss/profit on revaluation and by how much amount?, (a) Loss ₹ 1,20,000 (b) profit ₹1,20,000, (c ) Loss by ₹ 1,00,000 ( c) profit ₹ 1,00.,000, 2) From whioch item did parnters benefited at time of revaluation of assets., (a) Plant & Machinery, (b) Land & Building (c) Stock, (d) Sundry, Debtors, 3) What was the amount of Goodwill of the firm., (a) ₹ 50,000 (b) ₹ 40,000 (c) ₹ 60,000 (d) ₹30,000, 4) Workmen Compensation Reserve giiven in the balance sheet will be distributed, among ----- partners in ------ ratio., (a) New, New (b) old : New (c) Sacrificing : old, (d) old : old, , Page 46 of 152

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CASE 12, , DIRECTION : READ THE FOLLOWING CASE STUDY AND ANSWER THE QUESTIONS 1 TO 4 ON, THE BASIS OF THE SAME., On 31st March, 2019 the Balance Sheet of Madan and Mohan who share profits and losses, in the ratio of 3:2 was as follows:, , Balance Sheet of Madan and Mohan as at 31st March, 2019, Liabilities, , Amount, , Assets, , Amount, , ₹, , ₹, , Creditors, , 28,000 Cash at Bank, , General Reserve, , 10,000 Debtors, , Emplouyees Provident Fund, , 22,000 Less: Provison for, , Capitals, , Doubful debts, , Madan, , 60,000, , Mohan, , 40,000, -----------, , 10,000, 65,000, , 5,000, , 60,000, , --------1,00,000 Stock, , 33,000, , ------------ Patents, , 57,000, , 1,60,000, 1,60,000, , They decided to admit Gopal on 1st April, 2019 for 1/5th share which Gopal acquired wholly, from Mohan on the following terms :, (i), (ii), (iii), (iv), (v), , Gopal shall bring ₹ 10,000 as his share of premium for Goodwill., A debtor whose dues of ₹ 3,000 were written off as bad debt paid ₹ 2,000 in full, settlement., A Claim of ₹ 5,000 on account of workmen’s compensation was to be provided, for., Patents were undervalued by ₹ 2,000. Stock in the books was valued 10% more, than its market value., Gopal was to bring in capital equal to 20% of the combined capitals of Madan, and Mohan after all adjustments., , (1) What is Madan’s Share of profit/loss on revaluation?, (a) profit ₹ 2,400, , (b) ₹ 1,600 loss (c) loss ₹ 2,400 (d) profit ₹1,600, Page 47 of 152

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2) What is the scarifying ratio of Madan and Mohan, (a) 3:2, (b) 2:3, (c) 0:1, (d) 1:2, 3) What is the cash balance available after the admission of Gopal, (a) Rs,. 45,000, (b) ₹ 54,000 (c) ₹ 24,200, (d) ₹45,200, 4) What is the closing capital of Mohan., (a) ₹63,600 (b) ₹52,400 (c) ₹ 23,200, CASE 13, , (d) ₹ 51,000, , DIRECTION Analyse the following case study and answer the questions 1 to 4 on the basis of, the same., Ram and Laxman are partners in a firm with equal ratio., Balance Sheet, As at 31st March, 2019, Liabilities, Amt(₹), Assets, Amt (₹), Creditors, 2,00,000 Bank, 80,000, Bills Payable, 1,20,000 Debtors, 1,20,000, General Reserve, 80,000 Building, 4,00,000, Capital A/c, Machinery, 2,00,000, Ram, 4,00,000, Investment, 80,000, Laxman, 2,00,000, 6,00,000 Patents, 40,000, Furniture, 40,000, Goodwill, 40,000, 10,00,000, 10,00,000, , Adjustments, (i), Bharat comes for 1/5th share and brings capital ₹ 2,00,000 and premium ₹, 40,000 out of ₹ 60,000., (ii), New ration 2:2:1., (iii), ₹ 20,000 included in creditors are not likely to be paid., (iv), Patents are valueless., (v), 10% provision for doubtful debts on debtors out of general reserve., (1) What is the profit/loss of revaluation account ?, (a) Profit ₹ 60,000, (b) Loss ₹ 60,000, (c) Profit ₹ 20,000, , (d) Loss ₹ 20,000, , 2. If the old ratio is equal and new ratio (between old partners) is also equal, then what, would be the sacrificing ratio?, (a) 1:2, (b) 2:1, (c) 1:1, (d) Can’t be determined, 3. What was the total of bank account at the end of transactions?, (a) ₹ 3,40,000, (b) ₹ 3,20,000 (c) ₹ 2,80,000(d) Can’t be determined, 4. By how much amount was Laxman’s capital credited on account of General Reserve ?, Page 48 of 152

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(a) ₹ 80,000, CASE 14, , (b) ₹ 68,000, , (c) ₹ 40,000, , (d) ₹ 34,000, , DIRECTION: Analyses the following case study and answer the questions 1 to 4 the basis of, the same., R and S are partners in a firm sharing profits in the ratio of 3:2 they admit T as new partner, the new profit sharing ratio of R, S and T will be 5:5:3 T contributed the following assets, towards his capital and for his share of Goodwill., Stock ₹ 1,67,000 debtors ₹1,40,000 (Less Provision for doubtful debts of 5%) and land ₹, 1,00,000 Plant & Machinery ₹1,80,000. On the date of admission of T, the Goodwill of the, firm was valued at ₹13,00,000., 1. What could be the purpose of admitting T in the firm?, (a) Acquiring additional managerial skills, (c) Enhancing efficiency of operations, , (b) Procuring additional capital, (d) None of the above, , 2. What was the amount of capital brought in by T?, (a) ₹ 5,80,000 (b) ₹ 3,00,000 (c) ₹ 2,85,000 (d) ₹ 2,80,000, 3. What is the sacrificing ratio of R and S?, (a) 2:3, (b) 3:2, (c) 1:1, , (d) None of the above, , 4. What share of goodwill did R get?, (a) ₹ 6,50,000 (b) ₹ 1,50,000 (c) ₹ 2,80,000 (d) None of these, CASE 15, , DIRECTION Read the following case study and answer the questions. 1 to 4 on the basis of, the same., U and V were partners sharing profits and losses in the proportion of 2:3 the following in, the Balance Sheet of U and V on 31st March,2018, Balance Sheet, As at 31st March,2018, Liabilities, Amt(₹), Assets, Amt (₹), Bills Payable, 10,000 Cash, 10,000, Workmen Compensation, Debtors, 15,000, Reserve, 15,000 Bills receivable, 15,000, General Reserve, Stock, 10,000, Capital A/c, 30,000 Fixtures, 20,000, U, 20,000, Premises, 30,000, V, 25,000, 45,000, 1,00,000, 1,00,000, They admit Z for 1/5th share into partnership on 1st April, 2018, on the following terms., (i), Z brings ₹ 30,000 as capital, (ii), Goodwill of the firm is valued on the basis of Z’s share in profit and capital, contributed by him., (iii), The provision on debtors is to be created @5%., (iv), Fixtures and stock are to be decreased by 10%., (v), The value of premises be appreciated by 10%, Page 49 of 152

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1. What was loss/profit on the revaluation and by how much amount?, (a) Loss ₹ 1,500, (b) Loss ₹ 750 (c) Profit ₹ 1,500, (d) Profit ₹ 750, 2.What was the amount of total capital of firm according to Z’s share ?, (a) ₹ 30,000, (b) ₹ 90,750, (c) ₹1,50,000, (d) ₹ 750, 3.What was the amount of goodwill of the firm ?, (a) ₹ 6,150, (b) ₹ 30,750 (c) ₹ 60,750 (d) Can’t be determined, , CASE 16, , 4.General reserve given in the balance sheet will be distributed among ……… partners in, …….ratio., (a) new, new (b) old, old, (c) old, sacrificing, (d) old, new, DIRECTION read the following case study and answer the 1 to 4 questions on the basis of, the same., Rachit and Madhur were partners in a firm sharing profits and losses in the ratio of 4 : 3., The following is the balance sheet of the firm as on 31 st December, 2019., Balance Sheet, As at 31st December,2019, Liabilities, Amt(₹), Assets, Amt (₹), Sundry Creditors, 20,000 Cash, 14,800, Bills Payable, 3,000 Debtors, 20,500, Bank Overdraft, 17,000 (-) Provision for, Capital A/c s, Doubtful Debts, (300), 20,200, Rachit, 70,000, ---------Madhur, 60,000, Stock, 20,000, ----------- 1,30,000 Plant, 40,000, Building, 75,000, 1,70,000, , 1,70,000, , They agreed to admit Rishant as a partner with effect from 1st January,2020 for 1/4th share, in profits on the following terms., (i), Rishant will bring to ₹ 47,183 as his capital., (ii), Building is to be appreciated by ₹ 14,000 and plant to be depreciated by ₹7,000., (iii), The provision on debtors is to be raised to ₹ 1,000, (iv), The goodwill of the firm has been valued to ₹ 21,000., 1. What will be the net amount of debtors in new balance sheet?, (a) ₹ 20,500 (b) ₹ 20,200 (c) ₹ 19,500 (d) ₹ 19,200, 2. What is the profit /loss revaluation and by what amount?, (a) Profit ₹ 7,000, (b) Profit ₹ 6,300, (c) Loss ₹ 7,000, , (d) Loss ₹ 6,300, , 3. What is the sacrificing ratio of Rachit and Madhur?, (a) 1:1, (b) 3:4, (c) 4:3, (d) Can’t be determined, Page 50 of 152

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4. In general Goodwill adjustment is done in accounts of old partners in ……….. ratio, (a) old profit sharing (b) sacrificing ratio (c) both (a) and (b) (d) new profit sharing ratio, CASE 17, , DIRECTION Analyze the following case study and answer the questions 1 to 4 on the basis of, the same., Given below is the balance sheet of A and B who are partners in a firm sharing profits in the, ratio of 3:2, , Balance Sheet, as at 1st April, 2019, Amt(Rs), Assets, , Liabilities, , Amt(Rs), , Sundry Creditors, , 3,00,000 Land and Buildings, , 4,00,000, , Profit and Loss A/C, , 1,00,000 Plant and Machinery, , 3,00,000, , Capital A/Cs, , Stock, , A, , 4,00,000, , B, , 2,00,000, , 70,000, , Debtors, , 1,80,000, , 6,00,000 Bank, , 50,000, , 10,00,000, , 10,00,000, , On the same date, C is admitted as a partner on the following terms., (i) A gives 1/3rd of his share , while B gives 1/10 th from his share to C, (ii) Goodwill is valued at 2 years purchase of the average profits of the last 5 years,, which were Rs 50,000(loss); Rs 1,20,000; Rs 10,000(loss); Rs 3,00,000 and Rs, 3,40,000 respectively. C does not bring his share of goodwill in cash., 1. What was the sacrificing ratio of A and B?, (a)1:1, (b) 3:10, (c) 3:2, , (d)2:1, , 2. What was the amount of firm’s goodwill?, (a) Rs 84,000, (b) Rs 1,40,000, (c) Rs 1,64,000, , (d) Rs 2,80,000, , 3. What was C’s share of goodwill?, (a) Rs 84,000, (b) Rs 1,40,000, , (d) Rs 2,80,000, , (c) Rs 1,64,000, , 4. Name the account which will be debited for adjustment of goodwill., (a)A’s and B’s capital a/c (b) C’s capital a/c (c) cash account (d) premium and goodwill, CASE 18, , DIRECTION Analyze the following case study and answer the questions 1 to 4 on the basis, of the same., Page 51 of 152

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Rahul and Modi are two partners into a firm sharing profits equally . On 1st January , 2020,, they decided to admit Vikas as a new partner into the firm for 1/5 th share. Vikas brings Rs, 10,00,000 for his share to capital and premium of goodwill in cash . Half goodwill is, withdrew by the old partne₹ Goodwill of the firm is valued on the basis of one year, purchase of profits or losses of preceding last 3 yea₹ Profits of last four years are Rs, 6,00,000 in 2016; Rs 7,00,000 in 2017; Rs 8,00,000 in 2018 and Rs 15,00,000 in 2019., 1. What was the value of goodwill of the firm?, (a)Rs 7,00,000 (b) Rs 8,00,000 (c) Rs 9,00,000, , (d) Rs 10,00,000, , 2. What was the amount of capital brought in by Vikas?, (a) Rs 2,00,000 (b) Rs 8,00,000, (c) Rs 10,00,000, , (d) Can’t be determined, , 3. What was the goodwill share given to Modi?, (a) Rs 1,00,000 (b) Rs 2,00,000, (c) Rs 4,00,000, , (d) Can’t be determined, , 4. Which account is debited when the goodwill is withdrawn by partners?, (a) goodwill a/c (b) premium for goodwill a/c (c) partner’s capital a/c (d) cash/bank a/c, CASE19, , DIRECTION Sainath enterprises is a partnership business with Amar, Akbar and Anthony as, partners engaged in the production and sales of home appliances. Their capital, contributions were Rs 50,00,000, Rs 50,00,000 and Rs 80,00,000 respectively with the profit, sharing ratio of 5:5:8., As they are now looking forward to expanding their business it was decided that they would, bring in sufficient cash to double the respective capitals. This was duly followed by Amar, and Akbar but due to unavoidable reasons Anthony could not do so and ultimately it was, agreed that to bridge the shortfall in the required capital a new partner should be admitted, who would bring in the amount that Anthony could not bring and that partner would get, share of profits equal to half of Anthony’s shares which would be sacrificed by Anthony, only., Consequent to this agreement, Mahesh was admitted and he bought in the required capital, and Rs 30,00,000 as premium for goodwill., Based on the above information you are required to answer the following questions:, 1. What will be the new profit sharing ratio of Amar, Akbar, Anthony and Mahesh?, (a) 1:1:1:1, (b) 5:5:8:8, (c) 5:5:4:4, (d) None of the above, 2. What is the amount of capital brought in by the new partner, Mahesh?, (a) Rs 50,00,000, (b) Rs 80,00,000, (c) Rs 40,00,000, (d) Rs 30,00,000, 3. What is the value of goodwill of the firm?, (a) Rs 1,35,00,000, (b) Rs 30,00,000, (c) Rs 1,50,00,000, , (d) Rs 1,00,00,000, , 4. What will be the correct journal entry for the distribution of premium for goodwill, brought in by Mahesh?, (a) Mahesh capital a/c Dr 30,00,000, (b) Premium for goodwill a/c Dr, 30,00,000, Page 52 of 152

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To Anthony’s capital a/c 30,00,000, (Being ………………..), (c) Premium for goodwill a/c Dr 30,00,000, 30,00,000, To Amar’s capital a/c 10,00,000, To Akbar’s capital a/c 10,00,000, To Mahesh’s capital a/c 10,00,000, (Being ……………………), , CASE20, , To Anthony’s capital a/c 30,00,000, (Being ………………..), (d) Premium for goodwill a/c Dr, To Amar’s capitals a/c 8,33,333, To Akbar’s capitals a/c 8,33,333, To Mahesh’s capital a/c 13,33,333, (Being……………..), , Amit and Mahesh were partners in a fast food corner sharing profits and losses in the ratio, 3:2 .They sold fast food items across the continent and home delivery too.Their initial fixed, capital contribution was Rs 1,20,000 and Rs 80,000 respectively., At the end of first year their profit was Rs 1,20,000 before allowing the remuneration of Rs, 3,000 per quarter to Amit and Rs 2,000 per half year to Mahesh. Such a promising, performance for the first year was encouraging, therefore, they decided to expand the area, of operations., For this purpose they needed a delivery Van, a few bikes and an additional person to, support. Six months into the accounting year, they decided to admit Sundaram as a new, partner and offered him 20% as a share of profits along with monthly remuneration of, rupees ₹ 2,500. Sundaram was asked to introduce ₹ 1,30,000 for capital and ₹70,000 for, premium for Goodwill. Additionally, Sundaram was required to provide ₹ 1,00,000 as loan, for two year Sundaram readily accepted the offer and the terms of the offer were duly, executed and he was admitted as a partner., 1. Remuneration will be transferred to _________ of Amit and Mahesh at the end of the, accounting period, (a) capital account (b) loan account (c) current account (d) none of the above, 2. Upon the admission of Sundaram the sacrifice for providing his share of profits would be, done:, (a) by Amit only, (b) by Mahesh only, (c) by Amit and Mahesh equally, (d) by Amit and Mahesh in the ratio of, 3:2, 3. Sundaram will be entitled to a remuneration of _______ at the end of the year, (a) ₹ 15,000 (b) ₹ 20,000, (c) ₹ 40,000 (d) ₹ 30,000, 4. While talking up the accounting procedure for the reconstitution the accountant of the, firm Mr Suraj Marwaha faced a difficulty. Solve it by answering the following., For the amount of loan that Sundaram has agreed to provide he is entitled in the, interest thereon at the rate of, (a) 6% p.a, (b) 7% p.a, (c) 8% p.a, (d) 9% p.a, , Page 53 of 152

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ANSWERS, CASE1, , 1, , c, , 2, , a, , 3, , b, , 4, , a, , CASE2, , 1, , b, , 2, , c, , 3, , d, , 4, , b, , CASE3, , 1, , b, , 2, , c, , 3, , d, , 4, , b, , Case4, , 1, , c, , 2, , c, , 3, , d, , 4, , d, , Case5, , 1, , a, , 2, , d, , 3, , a, , 4, , c, , Case6, , 1, , b, , 2, , b, , 3, , c, , 4, , d, , Case7, , 1, , c, , 2, , a, , 3, , b, , 4, , d, , Case8, , 1, , b, , 2, , b, , 3, , c, , 4, , d, , Case9, , 1, , a, , 2, , b, , 3, , b, , 4, , c, , Case10, , 1, , c, , 2, , a, , 3, , c, , 4, , d, , Case11, , 1, , b, , 2, , b, , 3, , c, , 4, , d, , Case12, , 1, , c, , 2, , c, , 3, , d, , 4, , b, , Case13, , 1, , d, , 2, , c, , 3, , b, , 4, , d, , Case14, , 1, , b, , 2, , d, , 3, , d, , 4, , c, , Case15, , 1, , b, , 2, , c, , 3, , b, , 4, , b, , Case16, , 1, , c, , 2, , b, , 3, , c, , 4, , b, , Case17, , 1, , d, , 2, , d, , 3, , a, , 4, , b, , Case18, , 1, , d, , 2, , b, , 3, , a, , 4, , c, , Case19, , 1, , c, , 2, , c, , 3, , a, , 4, , b, , Case20, , 1, , c, , 2, , d, , 3, , a, , 4, , a, , Page 54 of 152

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QNo, , CASE STUDY QUESTIONS, CHAPTER 4, SHARE CAPITAL, , Case1, , Read the following text. Based on the information given ,you are required to answer, Q.No.1 to Q No.4:, Janta Ltd. had an authorized capital of 2,00,000 equity shares of ₹ 10 each. The, company offered to the public for subscription 1,00,000 shares. Applications were, received for 97,000 shares. The amount was payable as follows on application was, ₹ 2 per share, ₹ 4 was payable each on allotment and first and final call. Shankar, a, shareholder holding 600 shares failed to pay the allotment money. His shares were forfeited., The company did not make the first and final call., 1. Name the type of share capital which is shown in the Memorandum of Association of, the company(A) Issued capital, (B) Subscribed Capital, (C) Authorised Capital, (D) Paid up capital, 2. The amount forfeited on forfeiture of Shankar’s shares is --(A) ₹6,000, (B)₹1,200, (C)₹3,600, (D)₹2,400, 3. Janta Ltd is--(A)Private Company, (B)Public Company, (C)Government Company, (D)Public Corporation, 4.When shares are forfeited, the Share Capital Account is debited with ___________ and, the, Share Forfeiture Account is credited with ____________., , Page 55 of 152

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(A) Paid up capital of shares forfeited; Called up capital of shares forfeited, (B) Called up capital of shares forfeited; Calls in arrear of shares forfeited, (C) Called up capital of shares forfeited; Amount received on shares forfeited, (D) Calls in arrears of shares forfeited; Amount received on shares forfeited, Case 2, , Read the following text. Based on the information given , you are required to answer, Q.No.5 to Q No.8:, X Ltd. invited applications for issuing 80,000 equity shares of ₹ 10 each at a premium of, 20%. The amount was payable as follows:, On application ₹ 6 (including premium) per share., On allotment ₹ 3 per share and, The balance on first and final call., Applications for 90,000 shares were received. Applications for 5,000 shares were rejected, and pro-rata allotment was made to the remaining applicants. Over payments received on, application was adjusted towards sums due on allotment. All Calls were made and were, duly received except the allotment and first and final call on 1,600 shares allotted to Vijay., These shares were forfeited and the forfeited shares were re-issued for ₹ 18,400 fully paid, up., 5. Name the kind of subscription in the above case., (A)Minimum subscription, (B)Under subscription, (C)Over subscription, (D)Full subscription, 6. State the total overpayments received on application adjusted towards sums due on, allotment(A)₹60,000, (B) ₹30,000, (C) ₹15,000, (D) ₹50,000, 7. Number of shares applied by Vijay is(A) 2000, (B) 1600, (C) 1800, (D) 1700, , Page 56 of 152

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8. How much is the share forfeited amount transferred to Capital Reserve?, (A) ₹2,400, (B) ₹7,000, (C) ₹6,400, (D) ₹18,400, Case 3, , Read the following text. Based on the information given , you are required to answer, Q.No.9 to Q No.12:, Jk Ltd invited applications for issuing 50,000 equity shares of ₹10 each at par. The amount was, payable as follows:, On Application: ₹2 per share, ON Allotment: ₹4 per share, On First and Final Call: Balance amount, The issue was oversubscribed three times. Applications for 30% shares were rejected and money, was refunded. Allotment was made to the remaining applicants as follows:, Category I Applicants for 80,000 allotted 40,000, Category II Applicants for 25,000 allotted 10,000, Excess application paid by the applicants who were allotted shares adjusted towards the sums due, on allotment., Deepak a shareholder belonging to category I who had applied for 1,000 shares failed to pay the, allotment money. Raju a shareholder holding 100 shares also failed to pay the allotment money,, belonged to the category II. Shares of both were forfeited immediately after allotment., Afterwards, First and final call was made and was duly received. The forfeited shares of Deepak, and Raju were reissued at ₹11 per share fully paid up., , 9, , 9. How many shares applied by public were rejected?, (A) 50000, (B) 45000, (C) 55000, (D) 100000, 10. What is the amount unpaid by Deepak on allotment?, (A)₹2000, (B)₹4,000, (C)₹500, (D)₹1,000, 11. Number of shares applied by Raju was(A) 210, (B) 250, , Page 57 of 152

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(C) 300, (D) 150, 12. The total amount received on allotment was(A)₹2,00,000, (B)₹90,000, (C) ₹88,900, (D) ₹85,600, Case 4, , Read the following text. Based on the information given , you are required to answer, Q.No.13 to Q No.16:, Manvet Ltd. invited applications for issuing 10,00,000 equity shares of 10 each payable as, follows :, On application and allotment 4 per share (including premium 1), On first call 4 per share,, On second and final call 3 per share., Applications for 15,00,000 shares were received and pro-rata allotment was made to all, the applicants. Excess application money was adjusted on the sums due on calls. A, shareholder who had applied for 6,000 shares did not pay the first, and the second and, final call. His shares were forfeited. 90% of the forfeited shares were reissued at 8 per, share fully paid up., 13. The amount credited to Securities Premium Reserve is----(A) ₹15,00,000, (B) ₹5,00,000, (C) ₹10,00,000, (D) ₹40,00,000, 14. The total amount of calls in arrear is -----------(A)₹28,000, (B)₹20,000, (C)₹8,000, (D)₹42,000, 15. How many shares were reissued?, (A) 4,000, , Page 58 of 152

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(B) 6,000, (C) 3,600, (D) 3,200, 16. The balance left in forfeiture account after reissue of shares is -------(A)₹7,200, (B)₹20,000, (C)₹10,800, (D)₹2,000, Case 5, , Read the following text. Based on the information given , you are required to answer, Q.No.17 to Q No.20:, Rohit Ltd. Invited applications for 30,000 equity shares of ₹100 each, at a premium of ₹20 per share. The amount was payable as follows :, On Application ₹40 (including ₹10 as premium), On Allotment ₹40 (including ₹10 as premium), On First call ₹20, On Second and Final call Rs,20, Applications for 40,000 shares received and pro-rata allotment was made on the, applications for 35,000 shares. Excess application money is to be utilized towards, allotment., Rohan to whom 600 shares were allotted failed to pay the allotment money and his shares, were forfeited after allotment,, Aman who applied for 1,050 shares failed to pay the first call and his shares were forfeited, after first call., The second and final call was not yet made. Of the shares forfeited 1,000 shares were, reissued as fully paid for ₹80 per share which included whole of Rohan’s shares., 17. Application money transferred to Share Capital A/c is-----(A)₹9,00,000, (B)₹12,00,000, (C)₹16,00,000, (D)₹3,00,000, 18. Excess application money utilized towards allotment is ----------, , Page 59 of 152

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(A) ₹4,00,000, (B) ₹2,00,000, (C) ₹1,50,000, (D) ₹1,00,000, 19. The amount debited to securities premium reserve account on forfeiture of Rohan’s, shares is -------(A)₹12,000, (B)₹,7,000, (C)₹6,000, (D)₹3,00,000, 20. The amount transferred to Capital Reserve on reissue of is -------(A)₹24000, (B)₹22,000, (C)₹10,000, (D)₹34000, Case 6, , Read the following text. Based on the information given , you are required to answer, Q.No.21 to Q No.24:, Y Ltd. invited applications tor issuing 15.000 equity shares of ₹ 10 each on which ₹6 per, share were called up which were payable as follows:, On application ₹ 2 per shale, On allotment ₹1 per share, On first call ₹ 3 per share, The Issue was fully subscribed and the amount was received as follows:, On 10,000 shares ₹ 6 per share, On 3,000 shares ₹ 3 per share, On 2,000 shares ₹ 2 per share, The directors forfeited those shares on which less than ₹6 per share received. The, forfeited shares were reissued at ₹9 per share as ₹6 per share paid up., 21. Amount received on allotment is ---(A) ₹12,000, (B) ₹10,000, Page 60 of 152

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(C) ₹ 15000, (D)₹13,000, 22. Amount Received on first call is -----(A) ₹45,000, (B) ₹30,000, (C)₹39,000, (D) ₹36,000, 23. Number of shares forfeited is ----(A) 2000, (B) 3000, (C) 5000, (D) 10000, 24. Amount credited to capital reserve on reissue of shares is ----(A) ₹7,000, (B) ₹13,000, (C) ₹15,000, (D) ₹6,000, Case 7, , Read the following text. Based on the information given , you are required to answer, Q.No.25 to Q No.28:, Khyati Ltd. issued a prospectus inviting applications for 80,000 equity shares of ₹10, each payable as follows:, ₹2 on application, ₹3 on allotment, ₹2 on first call, ₹3 on final call, Applications were received for 1,20,000 equity shares. It was decided to adjust, the excess amount received on account of over subscription till allotment only., Hence allotment was made as under:, (i) To applicants for 20,000 shares – in full, (ii) To applicants for 40,000 shares – 10,000 shares, Page 61 of 152

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(iii) To applicants for 60,000 shares – 50,000 shares, Allotment was made and all shareholders except Tammana, who had applied for 2,400, shares out of the group (iii), could not pay allotment money. Her shares were forfeited, immediately, after allotment. Another shareholder Chaya , who was allotted 500 shares, out of group (ii), failed to pay first call. 50% of Tamanna’s shares were reissued to, Satnaam as ₹ 7 paid up for payment of ₹ 9 per share., 25. What is the amount of application money refunded?, (A)₹30,000, (B) ₹80,000, (C) ₹60,000, (D) Nil, 26. What is the amount unpaid on allotment by Tammana?, (A)₹7,200, (B)₹6,000, (C) ₹5,200, (D)₹800, 27. Which account is to be debited on forfeiture of Tammana’s Shares?, (A)Bank A/c, (B)Calls in Arrear, (C) Share capital A/c, (D)Share Forfeiture A/c, 28. What is the amount due on first call debited to Share first Call A/c?, (A)₹1,60,000, (B)₹1,56,000, (C)₹1,55,200, (D)₹1,55,000, Case 8, , Read the following text. Based on the information given , you are required to answer, Q.No.29 to Q No.32:, X Ltd. invited applications for issuing 50,000 equity shares of ₹ 10 each. The amount was, payable as follows:, On Application: ₹ 2 per share, Page 62 of 152

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On Allotment: ₹ 2 per share, On First Call: ₹ 3 per share, On Second and Final Call: Balance amount, Applications for 70,000 shares were received. Applications for 10,000 shares were rejected, and the application money was refunded., Shares were allotted to the remaining applicants on a pro-rata basis and excess money, received with applications was transferred towards sums due on allotment and calls, if any., Gopal, who applied for 600 shares, paid his entire share money with application. Ghosh, who, had applied for 6,000 shares, failed to pay the allotment money and his shares were, immediately forfeited. These forfeited shares were re-issued to Sultan for ₹ 20,000; ₹ 4 per, share paid up. The first call money and the second and final call money was called and duly, received., , 29. Which account is debited when application money refunded?, (A)Bank A/c, (B)Share Capital A/c, (C)Share allotment A/c, (D)Share application A/c, 30. What is the amount of application money transferred to Calls in Advance (from Gopal)?, (A)₹4,800, (B)₹4,000, (C)₹800, (D)₹6000, 31. For calls in advance adjusted ---(A) Calls in arrear A/c is debited, (B)Call in advance is debited, (C)Calls in advance A/c is Credited, (D)Bank a/c is debited, 32. After reissue of shares , for transfer of balance in Share forfeiture A/c --(A) Bank a/c is Credited, (B) Share forfeiture is credited, (C) Capital Reserve A/c is credited, (D)Capital Reserve A/c is debited, Case 9, , Read the following text. Based on the information given , you are required to answer, Page 63 of 152

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Q.No33 to Q No.36:, Megha Ltd. invited applications for issuing 90,000 equity shares of ₹ 100 each at a, premium of ₹ 60 per share. The amount was payable as follows:, On Application – ₹ 30 per share (including premium ₹ 10), On Allotment – ₹ 70 per share (including premium ₹ 50), On First and Final Call – Balance amount, Applications for 1,00,000 shares were received. Shares were allotted on pro-rata basis to, all the applicants. Excess money received with application was adjusted towards sums due, on allotment. Sudha, a shareholder holding 4,500 shares, failed to pay the allotment, money. Her, shares were forfeited immediately after allotment. Afterwards the first and final call was, made. Rajat, a holder of 3,600 shares, failed to pay the first and final call. His shares were, also forfeited. All the forfeited shares were re-issued for ₹ 90 per share fully paid up., 33. Amount of application money transferred to share allotment is --(A) ₹9,00,000, (B) ₹30,00,000, (C) ₹3,00,000, (D) ₹2,00,000, 34. Amount of application money transferred to securities premium reserve is --(A) ₹9,00,000, (B) ₹10,00,000, (C) ₹54,00000, (D) ₹60,00,000, 35. Amount debited to securities premium reserve debited on forfeiture of Sudha’s shares, is --(A)₹2,70,000, (B) ₹2,25,000, (C) ₹45,000, (D) ₹3,00,000, 36. Amount due on first and final call is ---(A) ₹54,00,000, , Page 64 of 152

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(B) ₹60,00,000, (C) ₹51,30,000, (D) ₹49,14,000, Case 10, , Read the following text. Based on the information given , you are required to answer, Q.No.37 to Q No.40:, Sunstar 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 – ₹ 10 per share, On First and Final Call – ₹ 25 per share, Applications for 3,00,000 shares were received. Allotment was made to the applicants as, follows :, Category, , No. of Shares Applied, , No. of Shares Allotted, , I, , 2,00,000, , 1,50,000, , II, , 1,00,000, , 50,000, , Excess money received with applications was adjusted towards sums due on allotment and, calls. Namita, a shareholder of Category I, holding 3,000 shares failed to pay the allotment, money. Her shares were forfeited immediately after allotment. Manav, a shareholder of, Category II, who had applied for 1,000 shares failed to pay the first and final call. His, shares were also forfeited. All the forfeited shares were reissued at ₹ 60 per share fully, paid up., 37. Excess application money adjusted towards allotment is, (A) ₹5,00,000, (B) ₹7,50,000, (C) ₹12,50,000, (D) ₹15,00,000, 38. Amount unpaid by Namita on allotment is ---(A) ₹3,000, (B) ₹15,000, (C) ₹30,000, (D)₹60,000, 39.Forfeited Shares were reissued at, Page 65 of 152

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(A) par, (B) discount, (C) premium, (D) loss, 40. No of shares reissued is ---(A)3000, (B)1000, (C)4000, (D)3500, CASE 11, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTIONS:, Based on the information given , you are required to answer Q.No.41 to Q No.44:, Raghuram Limited company has an Authorized capital of 1, 00,000 shares of ₹10, each as per the Capital clause of the Memorandum of Association of the, company., The company issued 5,000 shares to the promoters of the company in, consideration for their services., The company further issued 10,000 shares to the vendors for the purchase of, Machinery costing ₹1, 20,000. The remaining shares are issued at ₹10 each at a, premium of ₹2 and shares are fully subscribed., A shareholder holding 500 shares failed to pay the first and final call. His shares were, forfeited and later on re issued at ₹8 per share fully paid up., 41. Which one of the following is the registered capital of the company?, a. Paid up capital, b. Uncalled capital, c. Authorized capital, d. Issued capital, 42. The company issued ₹1,00,000 worth of shares towards the purchase price of, machinery costing ₹90,000. The excess of ₹20000 is transferred to, a. Share capital a/c, b. Capital reserve a/c, c. Securities premium reserve a/c, d. Cash a/c, 43. What entry you will pass if asset is purchased and shares are issued at, premium., a. Vendor a/c Dr To share capital, b. Assets a/c Dr To share capital To share premium, c. Vendor a/c Dr share premium a/c Dr To Share capital, d. Vendor a/c Dr To share capital To share premium, Page 66 of 152

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44. If Shares are issued to promoters for their services then the account debited, will be, a. Goodwill a/c, b. Promoters a/c, c. Asset a/c, d. Expenses a/c, CASE 12, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTIONS:, Based on the information given , you are required to answer Q.No.45 to Q, No.48, A company issued 25,000 equity shares of ₹10 each at a premium of ₹3 per share, payable as follows:, On Application ₹2 On Allotment ₹5(including premium), On First call ₹1 Balance on final call, The company received ₹ 1,00,000 towards application money. Of which 10000, applications are rejected and the remaining applications are adjusted towards, allotment. A shareholder holding 3000 shares paid the first call and final call along, with allotment money., 45., , How many applications are received by the company?, a., b., c., d., , 46., , How much application money is adjusted towards allotment?, a., b., c., d., , 47., , 30,000, 40,000, 15,000, 10,000, , After allotment how much net allotment money is received by the company?, a., b., c., d., , 48., , 25,000, 50,000, 75,000, 1,00,000, , 1,13,000., 1,25,000, 1,40,000, 95,000, , What journal entry you will pass for excess application rejected?, a., b., c., d., , Share application a/c Dr to Bank, Share application a/c Dr to Share allotment, Share application a/c Dr to Share capital, Share application a/cDr to Share first call, , Page 67 of 152

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CASE :13, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTIONS:, Based on the information given , you are required to answer Q.No.49 to Q, No.52, Mr. Ramesh worked as a Lower division clerk in a state government office in the state of, Telangana. He is very much interested in investing his savings in shares of limited, companies. He applied for 300 shares from Reliance Industries ltd. He was allotted all, shares. Due to some financial constraints he failed to pay the allotment money of ₹5(, including premium of ₹2) and first and final call of ₹3. The company after giving due, notices, forfeited all the shares of Rs10 each issued at a premium of ₹2. 1/3rd of the, forfeited shares were reissued at 11 per share fully paid up to Mr. Ram, 49. The total amount debited to share capital account while forfeiting the shares is, a. ₹2,500, b. ₹3,000, c. ₹4,000, d. ₹5,000, 50. What entry will you pass to transfer forfeiture a/c to Capital reserve?, a. Share forfeiture a/cDr 400 To Capital reserve a/c 400, b. Share forfeiture a/f Dr 450 To Capital reserve a/c450, c. Share forfeiture a/c Dr 600 To Capital reserve a/c 600, d. Share forfeiture a/c Dr 360 To Capital reserve a/c 360, 51. How much amount is received on reissue of forfeited shares?, a. ₹3,000, b. ₹3,300, c. ₹3,600, d. ₹1,100, 52. How much amount is shown in the Balance sheet under share forfeiture, account?, a. ₹800, b. ₹880, c. ₹400, d. ₹650, , CASE : 14, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTIONS:, Based on the information given , you are required to answer Q.No53 to Q No.56, A MBA graduate from IIT Kharagpur instead of going to America and Canada, decided to become an entrepreneur in India and decided to start a Public Limited, Company in the city of Kolkota. After preparing the Memorandum of Association, for the company he got the permission from the Comptroller of Capital Issues to, issue 1,00,000 Equity shares of ₹10 each at a premium of ₹2. The pubic, subscribed for 95000 applications. The company decided to allot the shares on 14-2021. The company made all the calls and all the money is received except on, Page 68 of 152

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2000 shares which are forfeited and later on reissued at ₹9 per share fully paid up., 53. Minimum subscription amount of 90% is related to which share capital., a. Authorised capital, b. Issued capital, c. Paid up capital, d. Reserve capital, 54. As per SEBI guidelines, Application money should not be less than ……. Of the, issue price of each share, a. 10% of the issue price, b. 15% of the issue price, c. 25% of the issue price, d. 50% of the issue price, 55. Which clause in the Memorandum of Association states about Authorized, capital of the company?, a. Name clause, b. Object clause, c. Capital clause, d. Association clause, 56. If the shares are forfeited how much money should be returned to the, defaulting shareholders?, a. Nothing, b. All calls paid, c. Only application money, d. Application and allotment money., CASE : 15, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTIONS:, Based on the information given , you are required to answer Q.No.57 to Q No60, Soon after incorporation of Arvind Ltd. decided to issue 80,000 equity shares of, ₹10 each at a premium of ₹5 per share. Instead of collecting all the capital in the, form of cash/bank they have decided to go for the purchase of assets in return pay, them in the form of issue of shares. They approached a businessman who sells, machinery which is very must useful in production of that material. The company, purchased Machinery worth ₹5,50,000 and in return they issued equity shares of, ₹10 each at a premium of 10%. Further they issued shares to the public for, subscription. The issue is oversubscribed to the extent of 10%. To the surprise one, shareholder who got 1000 shares paid all the money due on allotment ₹3 and call, money ₹2 along with allotment money., 57. Select the type of allotment of shares made to the company against the, purchase of Machinery., a. Issue against consideration other than cash, b. Initial public offer, Page 69 of 152

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c. Issue for cash, d. Preferential allotment., 58. If the shares are issued at premium of 10% against the purchase of an asset,, then how many shares are issued?, a. 45,000 shares, b. 55,000 shares, c. 45,000 shares, d. 50,000 shares, 59. Which option is not available to adjust the excess applications received on, issue of equity shares?, a. Excess applications can be rejected, b. Excess applications can be adjusted towards allotment., c. Excess applications can be partly rejected and partly adjusted towards, allotment., d. Excess applications can be allotted with preference shares, 60. How much amount is received as calls in advance?, a. ₹5000, b. ₹3000, c. ₹2000, d. ₹1000, CASE:16, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTIONS:, Based on the information given , you are required to answer Q.No.61 to Q, No.64, Ravi Industries Ltd. A company in the manufacture of computers decided to issue for, public subscription 40000 equity shares of ₹10 each at a premium of ₹2 payable as :, On Application –₹2 per share On Allotment _ ₹ 5 per share(including premium), On first call _ ₹2 per share On Second and final call _ ₹3 per share,, Applications were received for 60000 shares. Allotment was made on pro rata, basis to the applicants for 48000 shares, the remaining applications being, refused. Money overpaid on applications was utilized towards sum due on, allotment. Ram applied for 2400 shares failed to pay the allotment money due, and shyam to whom 2000 shares were allotted filed to pay the two calls., These shares were subsequently forfeited after the second and final call was, made. All the forfeited shares were reissued as fully paid at ₹8 per share., 61. The excess applications and application money adjusted towards allotment is :, a. 8000, ₹16000, b. 12000,₹24000, c. 20000,₹40000, d. 16000,₹32000, 62. How many applications are rejected and how much money is returned?, Page 70 of 152

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a., b., c., d., , 12000, ₹24000, 8000,₹16000, 20000,₹40000, 16000,₹32000, , 63. How many shares are allotted to Ram?, a. 2000 shares, b. 2400 shares, c. 600 shares, d. 1800 shares, 64. The total forfeiture amount before reissue of forfeited shares is:, a. ₹14800, b. ₹18400, c. ₹16400, d. ₹14600, CASE:17, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTIONS:, Based on the information given , you are required to answer Q.No.65 to Q, No.68, Ambala Ltd. Was registered with an authorized capital of ₹2,00,000 in ₹10 per equity, share, of these 6000 equity shares of ₹10 each issued as fully paid to the vendor for, purchase of building, at a premium of ₹2 per share. 8000 equity shares were issued for, subscription and during the first year ₹5 per equity share were called-up, payable ₹2 on, application, ₹1 on allotment, Rs,1 on first call and ₹1 on final call. The amount received in, respect of these shares was:, On 6000 Equity shares the full amount was received., On 1250 shares ₹4 per Equity share,, On 500 shares ₹3 per Equity share,, On250 shares ₹2 per Equity share, The company forfeited 750 equity shares on which less than ₹4 per share has, been paid., 65. What is the price of the building purchased against issue of equity shares?, a. ₹72000, b. ₹60000, c. ₹75000, d. ₹66000, 66. How many shares are not still issued by the company?, a. 6000, b. 5000, c. 7000, d. 10000, Page 71 of 152

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e., 67. How many shareholders did not pay the first call and final call money only?, a. 750, b. 2000, c. 1250, d. 500, 68. On forfeiture how much money is credited to share forfeiture account?, a. ₹2000, b. ₹250, c. ₹500, d. ₹750, CASE 18, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTION, Based on the information given , you are required to answer Q.No69 to Q No72, Raman a shareholder who works in a Maruti Udyog Ltd. Which is a pioneer in, manufacturing small cars got an invitation from the company to buy shares issued, by the company under the Employees Stock Option Plan. At first he is not, interested in buying the shares but after compulsion from his friends he exercised, his option to buy shares from the company. Afterwards he came to know this type, of issue can be made to the promoters of the company for the services rendered by, them to the company. He purchased 200 shares of ₹10 each at a premium of, ₹25 whereas the current market value of the share is ₹150., 69. The shares issued to the employees of the company are called as, a. ESOP, b. IPO, c. Preferential allotment, d. Public issue, 70. What type of shares can be issued under ESOP?, a. It should of the same class of shares already issued, b. It should be a new issue of shares, c. It should be of preference shares only, d. It can of any type of shares., 71. The value of option is :, a. The issue price of the shares, b. The market price of the shares, c. The difference between market price and issue price of the share, d. The face or par value of the shares, 72. What name is given for the shares issued to the promoters of the company as, remuneration for incorporation of the company?, a. Sweat Equity, Page 72 of 152

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b. Salary shares, c. Remuneration shares, d. Normal issue of shares, CASE:19, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTIONS:, Based on the information given , you are required to answer Q.No73 to Q 76, Nitro Paints Ltd. Invited applications for issuing 1,60,000 equity shares of ₹10 each at a, premium of ₹3 per share. The amount payable as follows:, On Application ₹6 per share (including premium ₹1), On Allotment ₹3 per share (including premium ₹1);, The Balance on First and Final call., Applications for 1,80,000 shares were received. Applications for 10,000 shares were, rejected and pro rata allotment was made to the remaining applications. Over payment, received on application was adjusted towards sum due on allotment and calls. All calls, were made and duly received except allotment and final call from Aditya who was allotted, 3200 shares. His shares were forfeited. Half of the forfeited shares were reissued for, ₹43000 as fully paid up., 73. How many shares were applied by Aditya to get 3200 shares allotted?, a. 3400, b. 4300, c. 2300, d. 3400, 74. How much allotment money is in arrears on Aditya’s default?, a. ₹8400, b. ₹4800, c. ₹6400, d. ₹4600, 75. What amount of the forfeited shares is transferred to capital reserve?, a. ₹8600, b. ₹6800, c. ₹7800, d. ₹8700, 76. Mention the total amount of premium to be shown in the Balance sheet?, a. ₹500600, b. ₹600500, c. ₹650500, d. ₹560600, , Page 73 of 152

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CASE”20, , READ THE FOLLOWING TEXT AND ANSWER THE QUESTIONS:, Based on the information given , you are required to answer Q.No.77 to Q 80, Max Ltd., invited applications for2,00,000 Equity shares of ₹10 each to be issued at 20%, premium. The money payable per share was: On Application ₹5,on allotment, ₹4(including premium of ₹2) , First call ₹2 and Final call ₹1.Applications were received for, 2,40,000 shares and allotment was made as:, i., To applicants for 1,00,000 shares in FULL, ii., To applicants for 80,000 shares –60,000 shares,, iii., To applicants for 60,000 shares—40,000 shares., Applications of 1000 shares falling in category (i) and applicants of 1200 shares, falling in category (ii) failed to pay allotment money. These shares were, forfeited on failure to pay the first call. Holders of 1200 shares failing in, category (iii) failed to pay the first and final call and these shares were, forfeited after final call. 1300 shares (1000 of category (i) and 300 of, category(ii) were reissued at ₹8 per share as fully paid up., 77. How much is the total forfeited money on all categories of shares?, a. ₹19,400, b. ₹11,000, c. ₹8,400, d. ₹20,000, 78. Mention the paid up capital of the company after all the calls is made., a. ₹19,94,400, b. ₹19,00,000, c. ₹20,00,000, d. ₹20,94,400, 79. How much balance is shown in the balance sheet under the head shareholders, funds?, a. ₹23,95,000, b. ₹24,95,000, c. ₹25,95,000, d. ₹2,95,000, 80. The journal entry for allotment money received is:, a. Bank a/c Dr 5,93,900 To Share allotment a/c 5,93,900, b. Bank a/c Dr6,00,000 To share allotment a/c 6,00,000, c. Bank a/c Dr5,95,000 To Share allotment a/c 5,95,000, d. Bank a/c Dr6,05,000 To share allotment a/c 6,05,000, , Page 74 of 152

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ANSWERS, Case1, Case2, Case3, Case4, Case5, Case6, Case7, Case8, Case9, Case10, Case11, Case12, Case13, Case14, Case15, Case16, Case17, Case18, Case19, Case20, , 1, 5, 9, 13, 17, 21, 25, 29, 33, 37, 41, 45, 49, 53, 57, 61, 65, 69, 73, 77, , C, C, B, C, A, D, A, D, C, C, C, B, B, B, A, A, A, A, A, A, , 2, 6, 10, 14, 18, 22, 26, 30, 34, 38, 42, 46, 50, 54, 58, 62, 66, 70, 74, 78, , B, B, D, B, B, C, C, B, A, B, C, A, A, C, D, A, A, A, A, A, , Page 75 of 152, , 3, 7, 11, 15, 19, 23, 27, 31, 35, 39, 43, 47, 51, 55, 59, 63, 67, 71, 75, 79, , B, D, B, C, C, C, C, B, B, C, D, A, D, C, D, A, A, C, A, A, , 4, 8, 12, 16, 20, 24, 28, 32, 36, 40, 44, 48, 52, 56, 60, 64, 68, 72, 76, 80, , C, B, C, D, D, B, B, C, C, D, A, A, A, A, A, A, A, A, A, A

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MCQ BASED QUESTIONS ON CASE STUDIES, CHAPTER 5 FINANCIAL STATEMENTS OF A COMPANY, CASE 1, , 1., , Read the hypothetical text and answer the following questions ., Dinakar Ltd was incorporated on 1st April 2015 with an authorised capital of ₹, 50,00,00,000 divided into equity shares of ₹ 100 each. The company was in, need of large funds to invest in Plant & Machinery, it invited applications for, 4,00,000 shares, applications for 3,80,000 shares were received. All calls were, made and duly received except for 5000 shares on which the final call of ₹ 20, was not received. The company forfeited 200 shares on which final call was, not received., The minimum subscription on this issue of shares is, a) 3,60,000 shares, b) ₹3,60,000, c) 4,00,000 shares, d) ₹4,00,000, , 2., , The shareholders’ funds to be shown in the face of Balance sheet will be, a) ₹3,80,00,000, b) ₹3,79,00,000, c) ₹50,00,00,000, d) ₹4,00,00,000, , 3, , The authorized capital of Dinkar Ltd will be shown in----------------------a) Articles of Association, b) Prospectus, c) Memorandum of Association, d) Table F of Companies Act 2013., , 4, , How will you show the Calls in arrears in the Balance sheet of a company?, a) As a deduction from Called up capital in the Notes to Accounts to Share, capital, b) As a deduction from Shareholders’ funds in the Balance sheet, c) As a deduction from the Reserves & Surplus, d) As a deduction from the Sundry creditor, , CASE2, Amba Ltd is a leading consumer goods chain with a network of 46 stores, primarly across Mumbai, Delhi and Pune.The balance sheet of the company, as on March 31, 2020 gives you the following Information:, 8% Debentures 10,00,00,000, Equity share capital 50,00,00,000, Securities premium 2,00,000, Page 76 of 152

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Preliminary expenses 4,00,000, Statement of Profit & Loss (cr.) 1,50,000, Loose tools 2,00,000, Bank balance 6,00,000, Cash in hand 38,000, Answer the following questions based on the above information:, 1., , The Reserves & surplus of the Company to be shown in the Balance sheet is, a) ₹(50,000), b) ₹2,00,000, c) ₹1,50,000, d) ₹4,00,000, , 2, , Loose tools will be shown under the heading-------------------------------a) Noncurrent assets, b) Current assets, c) Inventories, d) Intangible assets, , 3, , Cash & Cash equivalents of the company is------------------a) ₹6,00,000, b)₹38,000, c) ₹6,38,000, d) ₹5,62,000, , 4, , Long term borrowings of the company is, a) ₹10,00,00,000, b) ₹50,00,00,000, c) ₹4,00,000, d) ₹1,50,000, , CASE3, Read the following Arun is appointed as Accountant in a leading company, manufacturing consumer products. For all these years he served as an, accountant in a partnership firm. He come across a company’s Balance, sheet and he find to it difficult to understand which item will come in the, balance sheet under major head and sub head. He took the format of a, balance sheet as per schedule III of the companies Act 2013. He come across, some items. You are required to inform him the major heads and sub heads, to enter the items in the company’s balance sheet. Answer the following, questions., 1., , The Long term borrowings of the company will appear under the major head ---------------------a) Non -current liabilities, b) current liabilities, c) shareholders’ funds, Page 77 of 152

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d)other non-current liabilities, 2, , The debentures will appear under sub head ------------------------------a) long term borrowings, b) long term provisions, c) other long term liabilities, d) deferred tax liabilities, , 3, , Goodwill will appear under the sub head___________________, a) Intangible assets, b) Tangible assets, c) Fixed assets, d) Noncurrent assets, , 4, , Current investments will come under the major head_______________, a)current assets, b) fixed assets, c) tangible assets, d) intangible assets, , CASE4, Best Bulbs Pvt. Ltd was manufacturing good quality LED bulbs and catering, the needs of local market. The current production of the company is 800, bulbs per day. Sumit, the Marketing manager of the company gives you the, following information:, The operating cycle of the company is 12 months and Trade Receivables, expected to realize within 18 months., Public Deposits ₹10,00,00,000, 12% Debentures repayable after 4 years- 10,00,00,000, Interest accrued and due on 12% Debentures- ₹30,00,000, Employee Provident fund payable-₹20,00,000, Premium payable on Redemption of Debentures-₹10,00,000, Proposed dividend –₹25,00,00,000, Computer software-₹35,00,00,000, Stores and spares-₹5,00,000, Answer the following, 1, , Operating cycle means-------------------------a) The time between two balance sheet dates, b) The time between the acquisition of an asset and obsolescence, c) The time between the acquisition of an asset for processing and its, realization in to cash & cash equivalents., d) The time between the disposal of an asset and the realization of its value, , 2, , Premium payable on Redemption of Debentures-₹10,00,000 will be shown, under which main head and subhead of the Balance sheet?, Page 78 of 152

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a), Item, Premium payable on, Redemption of, Debentures-₹10,00,000, , Main head, , Sub head, Other current assets, , Item, Premium payable on, Redemption of, Debentures-₹10,00,000, , Main head, Noncurrent liability, , Sub head, Other long term, liabilities, , Item, Premium payable on, Redemption of, Debentures-₹10,00,000, , Main head, Share holders’ funds, , Sub head, Reserves & Surplus, , Non-current assets, , b), , c), , d), , 3, , Item, Main head, Sub head, Premium payable on, Current liabilities, Other current, Redemption of, liabilities, Debentures-₹10,00,000, Identify the main head and subhead of the Balance sheet under which, Computer software-₹35,00,00,000 will be shown, a), Item, Main head, Sub head, Computer softwareNoncurrent assets, Fixed assets₹35,00,00,000, Intangible, b), Item, Computer software₹35,00,00,000, , Main head, Noncurrent assets, , Sub head, Fixed assetsTangible, , Item, Computer software₹35,00,00,000, , Main head, Noncurrent assets, , Sub head, Other Noncurrent, assets, , c), , d), , 4, , Item, Main head, Sub head, Computer softwareNoncurrent Assets, Noncurrent, ₹35,00,00,000, investments, Interest accrued and due on 12% Debentures- ₹30,00,000 will be shown, under which Main head and subhead of the Balance sheet?, a), Item, Main head, Sub head, Interest accrued and due Current liabilities, Other current, on 12% Debenturesliabilities, ₹30,00,000, Page 79 of 152

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b), Item, Main head, Interest accrued and due, on 12% DebenturesCurrent liabilities, ₹30,00,000, , Sub head, Short term provisions, , Item, Main head, Interest accrued and due Current liabilities, on 12% Debentures₹30,00,000, , Sub head, Trade payables, , Item, Main head, Interest accrued and due Current liabilities, on 12% Debentures₹30,00,000, , Sub head, Short term, borrowings, , c), , d), , CASE5, Moon India Ltd produces and distributes green energy in the backward areas, of India. It has also taken up a project of giving vocational training to girls, belonging to backward areas of Rajasthan. The company presents you the, following statement of Profit & Loss for the year ended 31 st March 2021., Particulars, Note Amount (31st, No, March 2021, Revenue from Operation, 50,00,000, Other Income, 2,00,000, Employee benefit Expenses, 60% of total, revenue, Other Expenses, 10% of employee, benefit expenses, Tax rate, 50%, On the basis of above information, Answer the following questions, 1., , The total revenue of the company is, a) ₹52,00,000, b) ₹50,00,000, c) ₹2,00,000, d) ₹26,00,000, , 2, , Employee benefit expenses of the company is, a) ₹31,20,000, b) ₹30,00,000, c) ₹1,20,000, d) ₹15,60,000, , 3, , Profit before tax of the company is, a) ₹34,32,000, b) ₹30,00,000, Page 80 of 152

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c) ₹17,68,000, d) ₹26,00,000, 4, , Total expenses of the company is, a) ₹31,20,000, b) ₹3,12,000, c) ₹15,60,000, d) ₹34,32,000, , CASE6, Read the text given below:, Financial statements are the basic sources of information to the shareholders, and other external parties for understanding the profitability and financial, position of any business concern. They provide information about the results, of the business concern during a specified period of time in terms of assets, and liabilities, which provide the basis for taking decisions. Thus, the primary, objective of financial statements is to assist the users in their decision-making., Financial statements provide the necessary information about the, performance of the management to those parties interested in the, organisation and help in taking appropriate economic decisions. It may be, noted that the financial statements constitute an integral part of the annual, report of the company in addition to the directors report, auditors report,, corporate governance report, and management discussion and analysis., Though utmost care is taken in the preparation of the financial statements, and provide detailed information to the users, they are not free from, limitations., Answer the following questions:, 1., , The interested parties of accounting information include, a) Share holders, b) Government, c) Prospective investors, d) All the above, , 2, , The primary objective of financial statements is to assist the users in their, decision-making. The other objective of financial statements is, a) To abide by the Laws of the country, b) To follow the Accounting standards, c) To provide the information about the earning capacity of business., d) To learn the nature, objectives and types of financial statements it has to, prepare including their contents, format, uses etc, , 3, , The major limitations of financial statements are, a) Aids trade associations in helping their members, b) Guide to the value of the investment already made:, c) Do not reflect current situation, d) Report on stewardship function, Page 81 of 152

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4, , Internal users of financial statements constitute, a) Owners, b) Employees, c) Investors, d) Government and tax authorities, , CASE7, Read the following text:, The American Institute of Certified Public Accountants states the nature of, financial statements as, “the statements prepared for the purpose of, presenting a periodical review of report on progress by the management and, deal with the status of investment in the business and the results achieved, during the period under review. They reflect a combination of recorded facts,, accounting principles and personal judgements”., Thus, financial statements are the summarized reports of recorded facts and, are prepared the following accounting concepts, conventions, postulates,, accounting policies, accounting standards and requirements of Law., Based on the above, answer the following questions:, 1, , While, preparing statement of profit and loss the revenue is included in the, sales of the year in which the sale was undertaken even though the sale price, may be received over a number of yea₹, This is based on which postulates of accounting?, a) Going concern concept, b) Realisation, c)Money measurement, d) Materiality, , 2, , Small items like pencils, pens, postage stamps, etc.are named as stationery, and are treated as expenditure in the year in which they are purchased even, though they are assets in nature. This is based on the principle of, a) Going concern concept, b) Realisation, c)Money measurement, d) Materiality, , 3, , Every company registered under The Companies Act 2013 shall prepare its, balance sheet, statement of profit and loss and notes to account thereto in, accordance with the manner prescribed by Companies Act, 2013 to, harmonise the disclosure requirement with the accounting standards and to, converge with new reforms as per, a) Schedule VI, Part I& II of Companies Act 2013, b) Schedule III, Part I &IIof Companies Act 2013, c) The provisions of Memorandum of Association, b) As per Table F of Companies Act 2013., , 4, , Balance sheet and Statement of Profit & Loss are supported by Notes to, Accounts., Page 82 of 152

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What do toy mean by Notes to Accounts?, a) Details of items given in the Balance sheet and Statement of Profit & Loss, b) Abstract of Memorandum of Association of a company, c) Provisions of Table F of Companies Act 2013, d) Provisions of Companies Act 2013, CASE8, , 1, , 2, , Read the following hypothetical extract of the Balance sheet of Ramnath, Ltd and answer the questions given below, Balance sheet as per Schedule III Part I of Companies Act 2013, Particulars, Note Amount(Rs) Amount(Rs), No, 2020-21, 2019-20, I. Equity & Liabilities, (1) Share holders’funds, (a) Share Capital, 12,00,000 11,00,000, (b) Reserves & Surplus, 3,00,000, 2,00,000, (2) Noncurrent liabilities, Long term borrowings, 2,40,000, 1,70,000, (3) Current Liabilities, (a) Trade payables, 1,79,000, 2,04,000, (b) Short- term provisions, 50,000, 77,000, Total, 19,69,000, 17,51,000, II Assets, (1) Noncurrent Assets, (a) Fixed Assets, (i) Tangible, 10,70,000, 8,50,000, (ii) Intangible, 40,000, 1,12,000, (2) Current Assets, (a) Current Investments, 2,40,000, 1,50,000, (b) Inventories, 1,29,000, 1,21,000, (c) Trade Receivables, 1,70,000, 1,43,000, (d) Cash & Cash equivalents, 3,20,000, 3,75,000, Total, 19,69,000, 17,51,000, Reserves & Surplus does not include, a) Capital Reserve, b) Capital Redemption Reserve, c) Reserve Capital, d) Revaluation Reserve, Which of the following does not constitute Current liabilities as the operating, cycle of the company is 12 months, a) Trade payables expected to repay within 12 months, b) Trade payables expected to repay after 24 months, c) Trade payables expected to repay within 3 months, d) Trade payables expected to repay within 6 months, , Page 83 of 152

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3, , 4, , Short term provisions include, a) Provision for Tax & Proposed dividend, b) Proposed dividend Provision for Depreciation, c) Provision for Tax & Provision for Depreciation, d) Sundry creditors & Proposed dividend, Example for Intangible asset is, a) Furniture, b) Mastheads & Publishing titles, c) Investments in other companies, d) Public deposits, , CASE9, , 1, , 2, , Ramnath Ltd is dealing in import ofnorganic food items in bulk. The company, sells the items in smaller quantities in attractive packages. Performance of the, company has been up to the expectations in the past. Keeping up with the, latest packaging technology, the company decided to upgrade its machinery., For this , the finance manager of the company was asked to present the, financial statements . He furnished the following particulars before you., Capital advances, ₹25,00,000, Capital work in progress, ₹1,50,00,000, Bank overdraft, ₹56,00,000, Unclaimed dividend, ₹35,000, Outstanding salary, ₹40,000, Trade payables, ₹48,000, Computer software, ₹50,00,000, Cheques in hand, ₹48,000, General Reserve, ₹38,00,000, Public deposits, ₹80,00,000, Patents, ₹38,00,000, Answer the following questions., Under which major heading and sub heading will Capital advances be, presented in the Balance sheet of the company as per Schedule III Part I of, Companies Act 2013, a) Noncurrent asset –Long term loans & advances, b) Noncurrent asset- fixed asset (Tangible), c) Noncurrent asset-long term borrowings, d) Noncurrent asset- Fixed asset (Intangible), Under which major heading and sub heading will Unclaimed dividend be, presented in the Balance sheet of the company as per Schedule III Part I of, Companies Act 2013, a) Current liabilities- Short term provisions, b) Current liabilities- Short term borrowings, c) Current liabilities- Other Current liabilities, d) Current liabilities- Trade payables, , Page 84 of 152

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3, , Under which major heading and sub heading will Cheques in hand be, presented in the Balance sheet of the company as per Schedule III Part I of, Companies Act 2013, a) Current Assets- Other current assets, b) Current assets- Cash & Cash equivalents, c) Current Assets- Inventories, d) Current Assets- Current investments, , 4, , Under which major heading and sub heading will Public deposits be, presented in the Balance sheet of the company as per Schedule III Part I of, Companies Act 2013, a) Noncurrent liabilities- Long term borrowings, b) Noncurrent assets- Noncurrent investments, c) Noncurrent liabilities- Long term provisions, d) Noncurrent Liabilities- Other noncurrent liabilities, , CASE10, , 1, , 2, , Pharma Ltd is engaged in the manufacturing of low cost generic medicines. Its, management and employees are hardworking and motivated. The net profit, of the company increased during the year ended 31 st March 2020., Encouraged by its performance, the company decided to pay bonus to all, employees at a higher rate., Following is the Statement of Profit & Loss for the year ended 31 st, March 2020, Statement of Profit & Loss for the year ended 31 st March 2020, Particulars, Note 31st March, 31st March, no, 2020, 2019, Revenue from operation, 30,00,000, 20,00,000, Less: Employee benefit expenses, (10,00,000), 12,00,000, Finance cost, (4,00,000), -----------Profit Before Tax, 16,00,000, 8,00,000, Tax@25%, 4,00,000, 2,00,000, Profit after Tax, 12,00,000, 6,00,000, Answer the following questions, Under which head the Profit on sale of asset will be shown in the Statement, of Profit & Loss as per Companies Act 2013?, a) Revenue from Operation, b) Other income, c) Finance cost, d) Other expenses, Employee Benefit expenses does not include which of the following/, a) Wages, b) Conveyance expenses, c) Salaries, d) Bonus, Page 85 of 152

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3, , Finance cost includes which of the following?, a) Discount on issue of debentures & premium payable on redemption of, debentures, b) Interest received on fixed deposits, c) Bank charges, d) Repayment of loan, , 4, , Under which schedule of Companies Act 2013, the Statement of Profit & Loss, is prepared?, a) Schedule III Part I Of Companies Act 2013, b) Schedule VI of Companies Act 2013, c) Schedule III Part II of Companies Act 2013, d) Section 52 of Companies Act 2013., , Page 86 of 152

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ANSWER KEY, Case 1, 1., Case 2, 1, Case 3, 1, Case 4, 1, Case 5, 1, Case6, 1, Case 7, 1, Case 8, 1, Case 9, 1, Case 10, 1, , a, , 2, , b, , 3, , c, , 4, , a, , a, , 2, , c, , 3, , c, , 4, , a, , a, , 2, , a, , 3, , a, , 4, , a, , c, , 2, , b, , 3, , a, , 4, , a, , a, , 2, , a, , 3, , c, , 4, , d, , d, , 2, , c, , 3, , c, , 4, , b, , b, , 2, , d, , 3, , b, , 4, , a, , c, , 2, , b, , 3, , a, , 4, , b, , a, , 2, , c, , 3, , b, , 4, , a, , b, , 2, , b, , 3, , a, , 4, , c, , Page 87 of 152

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CASE STUDY BASED QUESTIONS, CHAPTER 6, CASE 1, , RATIO ANALYSIS, Read the following and answer the questions give below, Particulars, 31 Mar 2020, (₹), , 1, , I. Revenue from Operations, II. Expenses, a) Employees benefit expenses, b) Depreciation & Amortisation, expenses, c) Other expenses, Total Expenses, III. Profit before tax (I – II), Less Tax @ 30%, IV. Profit after Tax, Answer the following questions, Operating Ratio for the year 31st March 2021 is, i), 55%, ii), 52%, iii), 55.05%, iv), 54.85, , 31 Mar 2021, (₹), , 32,00,000, , 40,00,000, , 16,00,000, 40,000, 3,60,000, , 20,00,000, 50,000, 1,50,000, , 20,00,000, 12,00,000, 3,60,000, 8,40,000, , 22,00,000, 18,00,000, 5,40,000, 12,60,000, , 2, , Net profit ratio for the year 31st March 2020 is, i), 28.25%, ii), 26.25%, iii), 26%, iv), 26.50%, , 3, , State True or False. A higher Operating Profit Ratio is better for the firm., i), True, ii), False, , 4, , If the operating ratio is 50%, which of the following will lead to increase in ratio?, i), Building sold for ₹ 2,00,000, ii), Payment to creditors ₹ 500, iii), Purchase return ₹ 200, iv), Office expenses paid ₹ 5000, , Page 88 of 152

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CASE STUDY-2, Read the following and answer the questions give below:, Absolute Amount, 31 March 2020, 31st March 2021, (₹), (₹), st, , Particulars, , 1, , I. EQUITY & LIABILITIES, 1. Share holders’ Funds, a) Share Capital, 5,00,000, b) Reserve and Surplus, 3,00,000, 2. Noncurrent Liabilities, Long Term Borrowings, 5,00,000, 3. Current Liabilities, Trade Payables, 2,00,000, Total, 15,00,000, II. ASSETS, 2. Non-Current Assets, Property, Plant & Equipment, (Fixed Assets)-Tangible Assets, 10,00,000, 2. Current Assets, Cash & Cash equivalent, 5,00,000, Total, 15,00,000, Answer the following, Current ratio for the year ending 31 March 2020 and 31 March 2021., i), 2.25 : 1 and 2.50 : 1, ii), 2.25 : 1 and 2.25 : 1, iii), 2.50 : 1 and 2.25 : 1, iv), 2.50 : 1 and 2.50 : 1, , 10,00,000, 2,00,000, 8,00,000, 4,00,000, 24,00,000, , 15,00,000, 9,00,000, 24,00,000, , 2, , When current ratio 1 : 1, which of the following will improve the ratio?, i), Sales of goods for ₹ 25,000 (cost ₹ 20,000), ii), Bill payable discharged ₹ 1000., iii), Purchased goods for cash ₹ 3500, iv), Cash paid to creditors ₹ 500, , 3, , Find propriety ratio for the year ending 31 March 2020 & 31 March 2021, i), 0.53 : 1 and 0.50 : 1, ii), 0.50 : 1 and 0.53 : 1, iii), 0.55 ; 1 and 0.50 : 1, iv), 0.50 : 1 and 0.50 : 1, , 4, , Which year has higher quick ratio?, i), 2020, Page 89 of 152

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ii), iii), iv), , 1, , 2021, Both are equal (neither), Neither 2020 nor 2021, , CASE STUDY-3, A firm had a Current Assets of ₹ 4,00,000. It then paid a current liability of ₹, 80,000. After this payment the current ratio was 2 :1., Answer the following, How much is Current liabilities after payment of ₹ 80,000?, i), ₹ 3,20,000, ii), ₹ 1,60,000, iii), ₹ 80,000, iv), ₹ 2,00,000, , 2, , Determine working capital before and after payment of ₹ 80,000?, i) ₹ 3,20,000 and ₹ 1,60,000, ii) ₹ 3,20,000 and ₹ 3, 20,000, iii) ₹ 1,60,000 and ₹ 1,60,000, iv) ₹ 2,40,000 and ₹ 1,60,000, , 3, , Liquid asset does not include the following, i), Trades receivables, ii), Short term loans and advances, iii), Inventory and pre-paid expenses, iv), Current investments, , 4, , What is the ideal current ratio and quick ratio?, i), 3 : 1 and 2 : 1, ii), 2 : 1 and 1 : 1, iii), 1 : 1 and 2 : 1, iv), 2 : 1 and 2 : 1, CASE STUDY-4, Read the following and answer the questions give below:, , 1, , Particulars, Equity Share capital, Preference Share Capital, General Reserves, Securities Premium, Profit & Loss Balance, 10% Debentures, Loan from Bank, Current Liabilities, How much is the long-term debts?, i), ₹ 8,00,000, Page 90 of 152, , ₹, 2,50,000, 1,30,000, 1,50,000, 40,000, 70,000, 5,00,000, 3,00,000, 20,000

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2, , ii), ₹ 5,00,000, iii), ₹ 3,00,000, iv), ₹ 8,70,000, Find the value of share holders’ fund?, i), ₹ 5,30,000, ii), ₹ 3,80,000, iii), ₹ 6,40,000, iv), ₹ 6,00,000, , 3, , What will be Debt Equity ratio?, i), 0.83 : 1, ii), 1.33 : 1, iii), 1.25 : 1, iv), 2:1, , 4, , State True or False. In the above case the Debt Equity ratio shows a risky financial, position of the company., i), True, ii), False, CASE STUDY-5, Following information is available for the year ending 31st March 2020, , 1, , ₹, Cash revenue from operation (cash sales), 3,00,000, Purchases :, Cash, 1,50,000, :, Credit, 4,50,000, Carriage inwards, 16,000, Salaries, 75,000, Decrease in inventory, 80,000, Return outwards, 20,000, Wages, 40,000, Ratio of Cash revenue from operations & credit revenue from operation is 1 ; 4, . Find revenue from operation?, i), ₹ 12,00,000, ii), ₹ 15,00,000, iii), ₹ 16,00,000, iv), ₹ 3,00,000, , 2, , Find cost of revenue from operations?, i), ₹ 6,36,000, ii), ₹ 7,00,000, iii), ₹ 6,20,000, iv), ₹ 7,16,000, , 3, , Find gross profit ratio?, i), 52.26%, ii), 40.33%, Page 91 of 152

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4, , iii), 48.85%, iv), 58.33%, How much will be the gross profit, if selling price is 25% above cost?, i), ₹ 5,72,800, ii), ₹ 8,95,000, iii), ₹ 1,79,000, iv), ₹ 8,75,000, , CASE STUDY-6, Read the following and answer the questions give below:, , 1, , 2019-20, ₹, st, Inventory on 31 March, 7,00,000, Revenue from Operations, 50,00,000, Gross profit 25% on cost of revenue from operations, In the year 2019-20, inventory increased by ₹2,00,000, Calculate inventory turnover ratio for the year 2019-20?, i), 6.07 times, ii), 6.67 times, iii), 5 times, iv), 8.33 times, , 2020-21, ₹, 17,00,000, 75,00,000, , 2, , Find cost of revenue from operations for the year 2020-21?, i), ₹ 40,00,000, ii), ₹ 50,00,000, iii), ₹ 75,00,000, iv), ₹ 60,00,000, , 3, , Inventory turnover ratio is a part of, i), Solvency ratio, ii), Liquidity ratio, iii), Activity ratio, iv), Profitability ratio, , 4, , Which years inventory ratio is better for the above firm?, i), 2019-20, ii), 2020-21, iii), Both are equal, iv), Neither 2019-20 nor 2020-21, , Page 92 of 152

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CASE STUDY-7, , 1, , Read the following and answer the questions give below, Particulars, Opening Inventory, Closing inventory, Purchase, Wages, Carriage inwards, Administrative expenses, Selling expenses, Income tax, Profit on sale of fixed asset, Revenue from operations (sales), Find operating ratio?, i), 60%, ii), 81.66%, iii), 66.6%, iv), 72%, , ₹, 3,20,000, 4,00,000, 14,00,000, 3,70,000, 1,50,000, 80,000, 40,000, 1,00,000, 20,000, 24,00,000, , 2, , How much is the operating profit ratio?, i), 18.34%, ii), 24%, iii), 20%, iv), 30%, , 3, , How much should be total of operating ratio and operating profit ratio?, i), They are not related to each other., ii), Total can be any value., iii), 100%, iv), 120%, , 4, , What is the amount of net profit?, i), ₹ 4,00,000, ii), ₹ 4,80,000, iii), ₹ 3,80,000, iv), ₹ 5,00,000, CASE STUDY-8, , 1, , Cash revenue from Operations ₹ 1,00,000; Credit Revenue from Operations ₹, 3,00,000. Gross profit 30% on Revenue from Operations; Inventory turnover Ratio, = 2 times. If the opening Inventory is 75% of Closing Inventory and Closing, Inventory is 30% of Revenue from Operations, Calculate the cost of Revenue from Operations?, i), ₹ 3,00,000, ii), ₹ 1,20,000, iii), ₹ 4,00,000, Page 93 of 152

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iv), , ₹ 2,80,000, , 2, , Find Average Inventory?, i), ₹ 2,00,000, ii), ₹ 60,000, iii), ₹ 1,05,000, iv), ₹ 1,50,000, , 3, , What is effect of increase in value of closing inventory by ₹ 20,000, If the inventory, turnover ratio is three times?, i), Increase, ii), Decrease, iii), Neither increase nor decrease, iv), May or may not increase, , 4, , Find the opening inventory and closing inventory if opening inventory is 75% of, closing inventory and closing inventory is 30% of revenue from operations., i), ₹ 90,000 & ₹ 1,20,000, ii), ₹ 1,20,000 & ₹ 90,000, iii), ₹ 3,00,000 & ₹ 1,00,000, iv), ₹ 1,00,000 & ₹ 2,00,000, , CASE STUDY-9, Read the following and answer the questions give below:, Cost of Revenue from Operations - ₹ 3,00,000, Opening Debtors ₹ 50,000, (Cost of Goods Sold), Closing Debtors ₹ 1,00,000, Gross Profit on Cost –, 25%, Opening Creditors₹ 1,20,000, Cash Sales –, 20% of Total Sales, Closing Creditors ₹ 1,60,000, Total Purchases, ₹ 8,50,000, Cash Purchases, ₹ 1,00,000, Purchase Return, ₹ 50,000, , 1, , How much is Credit Revenue from Operations?, i), ₹ 3,75,000, ii), ₹ 3,00,000, iii), ₹ 1,50,000, iv), ₹ 75,000, , 2, , Find Average Collection Period?, i), 3 months, ii), 4 months, iii), 2 months, Page 94 of 152

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iv), , 3.5 months, , 3, , Find Trade Payable Turnover Ratio?, i), 6.5 times, ii), 5.5 times, iii), 5 times, iv), 5.25 times, , 4, , Calculate Average Payable Period?, i), 56 days, ii), 73 days, iii), 66 days, iv), 69 days, CASE STUDY-10, Read the following and answer the questions give below:, , 1, , Amount, ₹, 10,00,000, 6,00,000, 3,70,000, 1,50,000, 4,50,000, 90,000, 3,40,000, 10,00,000, 6,20,000, , Plant & Machinery, Land & Building, Motor Car, Furniture, Stock, Debtors, Cash a t Bank, Non-Current Liabilities, Current Liabilities, Calculate Proprietary Ratio?, i), 0.33, ii), 0.46, iii), 0.67, iv), 0.51, , 2, , How much is the Total Assets?, i), ₹ 21,00,000, ii), ₹ 26,60,000, iii), ₹ 30,00,000, iv), ₹ 25,30,000, , 3, , What is effect of Issue of new equity shares against purchase of machinery, when, proprietary ratio is 0.6 : 1?, , 4, , proprietary ratio indicates the proportion of total assets funded by _________., i), Creditors, ii), Borrowed funds, iii), Share Holders funds, Page 95 of 152

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iv), v), , Total debts, , ANSWERS, , 1, 2, 3, 4, 5, 6, 7, 8, 9., 10, , 1. (i), 1. (iii), 1. (ii), 1. (i), 1. (ii), 1. (ii), 1. (ii), 1. (iv), 1. (ii), 1. (ii), , 2.(ii), 2. (i), 2. (iii), 2. (iii), 2. (iii), 2. (iv), 2. (i), 2. (iii), 2.(i), 2. (iii), , ., , Page 96 of 152, , 3.(ii), 3. (i), 3. (iii), 3. (iii), 3. (i), 3. (iii), 3. (iii), 3. (ii), 3. (iii), 3. (i), , 4 (iv), 4. (i), 4.(ii), 4.(ii), 4. (ii), 4. (i), 4. (i), 4. (i), 4. (ii), 4.(iii)

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ASSERTION REASON QUESTIONS, CHAPTER 1, Accounting for a Partnership Firms- Fundamentals, 1, , Assertion: Salary paid to a partner is debited to Profit & Loss Account., Reason: Salary paid to a partner is an appropriation of profit., a) Assertion is wrong but Reason is correct., b) Assertion is correct but Reason is wrong., c) Both assertion and reason are correct., d) Both assertion and reason are wrong., , 2, , Assertion: A and B, the partners of a firm want to share profit of a firm equally., Reason: They can share profit of the firm equally if they do not have Partnership Deed., a) Assertion is wrong but Reason is correct., b) Assertion is correct but Reason is wrong., c) Both assertion and reason are correct., d) Both assertion and reason are wrong., , 3, , Assertion: Manager’s commission is transferred to Profit and Loss Account., Reason: Manager’s commission is a charge against profit., a) Assertion is wrong but Reason is correct., b) Assertion is correct but Reason is wrong., c) Both assertion and reason are correct., d) Both assertion and reason are wrong., , 4, , Assertion: In a partnership firm, maximum 50 persons can become the partners., Reason: The Central Government has prescribed maximum number of partners in a firm to, be 50 vide rule 10 of Companies Rules, 2014., a) Assertion is correct but Reason is wrong., b) Assertion is wrong but Reason is correct., c) Both assertion and reason are wrong., d) Both assertion and reason are correct., , 5, , Assertion: Gopal and Mohan are partners in a firm without a partnership deed. Mohan, gave a loan of ₹ 1,00,000 to the firm and demanded interest on loan @ 10% p.a., Reason: He will receive interest on loan @ 6% p.a. in the absence of Partnership Deed, a) Assertion is correct but Reason is wrong., b) Assertion is wrong but Reason is correct., c) Both assertion and reason are wrong., d) Both assertion and reason are correct., , 6, , Assertion: Reeta and Geeta are partners in a firm sharing profits and losses in the ratio of, 3:2. Geeta withdrew ₹ 50,000 during the year. Interest on drawings was calculated as, ₹ 5,000 @ 10% p.a., Reason: interest on total drawings for the year is calculated for 6 months on average basis, Page 97 of 152

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if the date of withdrawal is not given. Hence interest on Geeta’s drawings will be Rs.2500, a) Assertion is correct but Reason is wrong., b) Assertion is wrong but Reason is correct., c) Both assertion and reason are wrong., d) Both assertion and reason are correct., 7, , Assertion: Ajay and Vijay are partners sharing profits and losses in the ratio of 3:2, having, fixed capitals of ₹ 6,00,000 and ₹ 4,00,000 respectively. According to Partnership Deed,, Ajay and Vijay are entitled to get annual salary of ₹ 30,000 and ₹ 20,000 respectively. Vijay, advised that their salary should be credited in their capital accounts., Reason: In case of fixed capital accounts, remuneration of the partners is credited to their, Current Accounts., a) Assertion is correct but Reason is wrong., b) Assertion is wrong but Reason is correct., c) Both assertion and reason are wrong., d) Both assertion and reason are correct., , 8, , Assertion: Aman and Vikas are partners sharing profits and losses in the ratio of 3:2. They, do not have Partnership Deed. At the end of the year, Vikas demanded interest on capital, @ 10 p.a., Reason: In the absence of Partnership Deed, interest on capital is not allowed, a) Assertion is correct but Reason is wrong., b) Assertion is wrong but Reason is correct., c) Both assertion and reason are wrong., d) Both assertion and reason are correct., , 9, , Assertion: Dinesh and Suresh are partners sharing profits equally but they do not have, Partnership Deed. For the ended 31st March, 2020, Suresh demands salary @ 2,500 p.m., for looking after the business of the firm., Reason: Dinesh does not agree with Suresh and tells him that salary can be paid @ 1,000, p.m. only if Partnership Deed does not exist., a) Assertion is correct but Reason is wrong., b) Assertion is wrong but Reason is correct., c) Both assertion and reason are wrong., d) Both assertion and reason are correct, , 10 Assertion: In a Partnership firm, business can be carried on by all partners or any of the, , partners acting for all., Reason: The partners are agents as well as the principals. As an agent, the partner, represents the other partners and as a principal, the partner is bound by the act of other, partners., a) Assertion is correct but Reason is wrong., b) Assertion is wrong but Reason is correct., c) Both assertion and reason are wrong., d) Both assertion and reason are correct., 11 Assertion (A): A Firm should have a Partnership Deed., Page 98 of 152

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Reason (R) : In case of dispute or any misunderstanding among partners , partnership deed, acts as an evidence in the court of law., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, c) A is true , but R is false, d) A is false , but R is true, 12 Assertion (A) : In absence of a deed , a sleeping partner who contributed 75% of total, , capital would get 75% of the profit earned., Reason (R) : A sleeping partner , in absence of a deed , gets equal share of profit ,, irrespective of his capital share., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, c) A is true , but R is false, d) A is false , but R is true, 13 Assertion (A) : Fixed Capital Accounts of a partner never shows a debit balance inspite of, , regular and consistent losses year after year., Reason (R) : When Capital Accounts are fixed , losses are recorded in Partners’ Current, Account., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, c) A is true , but R is false, d) A is false , but R is true, 14 Assertion (A) : A firm can change its existing agreement., , Reason (R) : Any change in its partnership agreement, will be treated as punishable, offence., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, c) A is true , but R is false, d) A is false , but R is true, 15 Assertion (A) : In order to compensate a partner for contributing capital to the firm in, , excess of the profit sharing ratio , firm pays such interest on Partners’ Capital., Reason (R) : Interest on Capital is treated as a charge against profits., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, c) A is true , but R is false, d) A is false , but R is true, 16 Assertion (A): Profit and Loss Adjustment account is required for rectification of errors or, , omissions., Reason (R) : This account is prepared to rectify those errors and omissions which are left, while preparing final accounts and found after distribution of profits among partners., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, Page 99 of 152

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c) A is true , but R is false, d) A is false , but R is true, 17 Assertion (A) : Interest on capital to a partner is payable only out of profits., , Reason (R): Interest on capital is an appropriation of profits which is required irrespective, of profits or loss., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, c) A is true , but R is false, d) A is false , but R is true, 18 Assertion (A): It is considered desirable to have a partnership deed in writing., , Reason (R): It helps in settling any disputes with regard to the terms of partnership and act, as an evidence in the court of law., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, c) A is true , but R is false, d) A is false , but R is true, 19 Assertion (A): The capital account of a partner does not show a debit balance inspite of, , regular and consistent losses year after year., Reason (R): All transactions relating to profit or loss, drawings, salaries etc. are shown in, current not in capital account in case of the fixed capitals., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, c) A is true , but R is false, d) A is false , but R is true, 20 Assertion (A) : Rent paid to a partner is debited to profit and loss account., , Reason (R): Rent paid to a partner is an appropriation of profit., Both A and R are true and R is the correct explanation of A, b) Both A and R are true and R is not the correct explanation of A, c) A is true , but R is false, d) A is false , but R is true, , ANSWERS, 1, a, 6, b, 11, d, 16, a, , 2, 7, 12, 17, , c, b, d, d, , 3, 8, 13, 18, , c, b, b, a, , Page 100 of 152, , 4, 9, 14, 19, , c, d, c, a, , 5, 10, 15, 20, , a, d, c, c

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ASSERTION REASON QUESTIONS, CHAPTER 2, ADMISSION OF A PARTNER, 1, , Assertion (A): A newly admitted partner has the right to share the assets of the, partnership firm., Reason (R): As per the provisions of the Partnership deed, the new partner has to bring, some amount as Capital which can be in cash or in kind of assets to get rights in the assets, and future profits of the firm., , 2, , 3, , 4, , 5, , a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., Assertion (A): At the time of admission of a new partner he is required to bring premium or, goodwill., Reason (R) : Due to admission of a new partner , the existing partner’s sacrifice their share, of profits in favour of new partner. So, he has to compensate the existing partners for loss, of their share in super profits of the firm., a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., Assertion (A): The amount of premium brought in by the new partner is shared by the, existing partners in their ratio of Sacrifice., Reason (R): Because the old partners sacrifice their share of profits in favour of new, partner., a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., Assertion (A): At the time of admission of a new partner unrecorded liability are debited to, Revaluation account., Reason(R): Unrecorded liabilities are the gain for the partnership firm., a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., Assertion (A): At the time of admission of a partner the goodwill already existing in the, book of accounts, the goodwill is written off by all partners including new partner., Reason(R): When goodwill already exists in books at the time of admission, the existing, goodwill must be written off by debiting the old partners in their old profit sharing ratio., a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., Page 101 of 152

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6, , 7, , 8, , 9, , c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., Assertion (A): At the time of admission of a new partner, general reserve, appearing in the old balance sheet is transferred to all partner’s capital, account., Reason(R): The new partner is not entitled to have any share in general reserve, (accumulated profits). These are transferred to old partner’s capital accounts in, old profit-sharing ratio., a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., Assertion (A): At the time of admission of a new partner, advertisement, suspense account is transferred to old partner’s capital account in their old, profit-sharing ratio, Reason(R): Advertisement suspense account is a part of accumulated losses, therefore like any other losses it should be transferred to old partners’ capital, account., a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., Assertion (A): At the time of admission, the gain or loss on revaluation is, transferred to all partner’s capital account in their new profit-sharing, Reason (R): All partners have the right to share the assets and liabilities of the, partnership firm., a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., Assertion (A): Unrecorded assets are credited to revaluation account at the time, of admission of a new partner., Reason (R): Unrecorded assets are gain for the partnership firm because it, increases the value of assets., , a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., Assertion (A): The revaluation account is prepared for the purpose of, 10 transferring the profit or loss arising out of increase or decrease in the book, value of assets or liabilities of the partnership at the time of admission of a new, partner., Reason (R): At the time of admission of a new partner, it is always desirable to, ascertain whether the assets of a firm are shown in books at their current, values. In case the assets are overstated or understated, these are revaluated., Page 102 of 152

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a) Both Assertion (A) and Reason (R) are true., b) Both Assertion (A) and Reason (R) are false., c) Assertion (A) is true and Reason (R) is false., d) Assertion (A) is false and Reason (R) is true., 11 ASSERTION (A) :When the new partner brings his share of Goodwill in cash and it is to be, paid to the existing partners privately, no entry is passed in the books., REASON (R): The intention of the partners is not to show amount/transaction relating to, Goodwill for any of the reasons., Choose the correct answer, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct, explanation of Assertion (A), (b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is not the, correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, 12 ASSERTION (A) : New profit sharing ratio is the ratio in which the old partner including the, new partner share profits or losses of the firm, REASON (R) : When new partner is admitted to the firm it is necessary to calculate the new, profit sharing ratio with help of the share agreed to forgo by the old partners., (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the, correct explanation of Assertion (A), (b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is not, the correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, 13 ASSERTION (A ): A new partner can be admitted into a partnership firm with consent of the, existing partners., REASON (R) : According to section 31 of the Indian Partnership Act, 1932, new partner shall, not be introduced into firm without consent of all the existing partners. Unless it is agreed, otherwise by the partners and partnership deed., (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct, explanation of Assertion (A), (b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is not, the correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, 14 ASSERTION (A): it is right of the new partner on the firm’s Assets and Labilities, REASON (R ): Old partners of the firm sacrifice some profit according to the new profit, sharing ratio in favour of incoming partner., Choose the correct answer, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the, correct explanation of Assertion (A), Page 103 of 152

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(b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is not, the correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, 15 ASSERTION (A): On admission of new partner, Assets and Liabilities are revalued and, reassessed, REASON (R) : The Assets and Liabilities are revalued and reassessed as to show the proper, financial position of the firm and capital held by the partners at the time of admission., Choose the correct answer, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the, correct explanation of Assertion (A), (b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is, not the correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, 16 ASSERTION (A) : Profit or loss on revalution of assets and reassessment of liabilities is, transferred to the old partners’ Capital account/Current account in old profit sharing ratio., REASON (R) : All the accumulated profits or losses and reserves are transferred to old, partners’ capital account/current account in the old profit sharing ratio, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the, correct explanation of Assertion (A), (b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is, not the correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, 17 ASSERTION (A) : Whenever new partner brings Goodwill in cash he should bring the, amount of Goodwill only for his share ., REASON (R ) : It is common rule that the gaining partner should compensate the sacrificing, partner, to extent of his gain., (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct, explanation of Assertion (A), (b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is not the, correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, 18 ASSERTION (A): The treatment of revaluation of assets and reassessment of liabilities is, done in the same manner as done in case of change in profit sharing ratio., REASON (R): Revaluation of assets and liabilities is only done when new partner is, admitted., (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct, explanation of Assertion (A), (b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is not the, correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, Page 104 of 152

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19 ASSERTION (A): At the time of admission of partners if there is any general reserve, reserve, , fund or the balance of profit & loss account appearing in the balance sheet, it should be, transferred to old partners’ capital/current accounts in their old profit sharing ratio., REASON (R) : The general reserve, reserve fund or the balance of profit & loss account are, the result of the past profits when the new partner was not admitted., (a) Both Assetion (A) and Reason (R) are true, and Reason (R) is the correct, explanation of Assertion (A), (b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is not the, correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, 20 ASSERTION (A) ; If the goodwill is not brought in cash, it can be adjusted only through the, new partner’s capital account., REASON (R) : The adjustment will reduce the capital of the partner., Choose the correct answer, (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct, explanation of Assertion (A), (b) Both Assertion (A) and the reason (R) are true, but the reason (R ) is not the, correct explanation of Assertion (A), (c) Assertion (A) is true, but Reason ( R) is false, (d) Assertion (A) is false, but Reason (R) is True, ANSWERS, , 1, , a, , 2, , c, , 3, , c, , 4, , c, , 5, , a, , 6, , b, , 7, , b, , 8, , b, , 9, , d, , 10, , d, , 11, , d, , 12, , d, , 13, , b, , 14, , c, , 15, , c, , 16, , a, , 17, , d, , 18, , a, , 19, , a, , 20, , c, , Page 105 of 152

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1, , 2., , 3., , 4., , 5., , 6., , ASSERTION REASON QUESTIONS, CHAPTER 3, CHANGE IN PROFIT SHARING RATIO, Assertion (A): Any change in existing agreement among partners brings a, reconstitution of partnership firm, Reason(R): Whenever there is any change in partnership agreement, then the existing, agreement comes to an end and a new agreement comes to an existence., a. Assertion is correct and reason is also correct, b. Assertion is correct but reason is not correct, c. Assertion is wrong but reason is correct, d. Assertion and reason both are Incorrect, Assertion (A): When there is a change in profit sharing ratio of existing partners then, the assets and liabilities of the firm are revalued., Reason (R): They are revalued because if there is any change in the value of assets and, liabilities then such change belongs to the period prior to change in profit sharing ratio, a. Both A and R are correct, b. Both A and R are incorrect, c. A is true but R is not correct explanation of A, d. A is incorrect but R is correct, Assertion (A): Accumulated profits appearing in the balance sheet on date of change in, profit sharing ratio is to be distributed among existing partners in their old ratio., Reason (R): Accumulated profits had been owned before the reconstitution of the firm, by the partners, a. Both A and R are correct, b. Both A and R are incorrect, c. A is true but R is not correct explanation of A, d. A is incorrect but R is correct, Assertion (A): At time of change in profit sharing ratio goodwill appears in the books is, written off among existing partners in their old profit sharing ratio, Reason (R): Goodwill Cannot be raised in the books of the firm unless no consideration, in money has been paid for it, a. Both A and R are correct, b. Both A and R are incorrect, c. A is true but R is not correct explanation of A, d. A is incorrect but R is correct, Assertion (A): Increase in Accrued Income is Credited to Revaluation Account., Reason (R): Accrued Income is a liability., a) Both Assertion and Reason are correct, b) Both Assertion and Reason are incorrect, c) Assertion is correct but Reason is wrong, d) Assertion is wrong but Reason is correct, Assertion (A): Gaining ratio is calculated to determine the amount of compensation to, be paid by gaining partner to the sacrificing partner., Reason (R): Gaining ratio is excess of old ratio over new ratio, a) Both Assertion and Reason are correct, b) Both Assertion and Reason are incorrect, c) Assertion is correct but Reason is wrong, Page 106 of 152

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7., , 8., , 9., , 10., , 11., , 12., , 13., , d) Assertion is wrong but Reason is correct, Assertion(A): Assets and liabilities are revalued when there is change in profit sharing, ratio of existing partners, Reason (R): It is to ensure that no partner is at an advantage or disadvantage due to, change in the value of assets and liabilities, a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): At time of change in profit sharing ratio among partners goodwill is not, recognised in the book of the firm., Reason (R): As per AS- 26, intangible assets should be recognised in the books only, when consideration in money or money’s worth has been paid for it., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Change in profit sharing ratio does not change the relationship among, the existing partners., Reason (R): Change in profit sharing ratio leads to dissolution of partnership., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Workmen compensation reserve is credited to partners’ capital or, current accounts in their old profit sharing ratio., Reason (R): Reserves exist in the books of firm, transferred to Partners’ Capital, Accounts only., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Workmen Compensation Claim in excess of Workmen Compensation, Reserve is debited to Revaluation Account., Reason (R): The loss will be borne by all the partners in their new profit sharing ratio., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Advertisement suspense existing in Assets side of Balance Sheet should, be debited to partners’ capital a/c., Reason (R): Advertisement suspense a/c is Accumulated profit., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Investments are recorded in the books of the firm at cost., Page 107 of 152

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14., , 15., , 16., , 17., , 18., , 19., , Reason (R): Market value of investment may be equal to or lower or higher than its, book value., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Reserves cannot appear at the same amount in the Balance Sheet of the, reconstituted firm., Reason (R): Reserves are to be distributed among partners in their old ratio., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Unrecorded assets are credited to revaluation account., Reason (R): Increase in value of asset is gain., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Firm is reconstituted in the event of change in profit sharing ratio among, the existing partners only., Reason (R): Any change in existing agreement of partnership is reconstitution of the, firm., a. Both A and R are and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Workmen compensation reserve is created out of firms’ profit to meet, possible liability on account of compensation to employees, if it arises., Reason (R): Workmen compensation reserve existing in balance sheet against which, no liabilities exists, is transferred to capital accounts of partners in their sacrificing, ratio., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): The partners whose profit shares have increased as result of change in, profit sharing ratio are known as gaining partners., Reason(R): Gaining ratio = new ratio - old ratio, a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct., Assertion (A): Increase in value of assets and decrease in amount of liabilities are, credited to revaluation account., Reason (R): Revaluation is a nominal account., a. Both A and R are correct and R is the correct explanation of A., Page 108 of 152

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b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct, 20. Assertion (A): Reserves and accumulated profits and losses will continue to be shown, at their old values in balance sheet of new firm., Reason (R): Reserves and Accumulated profits and losses are adjusted through, Partners’ Capital A/c., a. Both A and R are correct and R is the correct explanation of A., b. Both A and R are correct but R is not the correct explanation of A., c. A is correct but R is wrong, d. A is wrong but R is correct, ANSWERS, 1, a, 2, a, 3, a, 4, c, 5, c, 6, c, 7, a, 8, a, 9, d, 10, c, 11, c, 12, c, 13, b, 14, d, 15, a, 16, d, 17, c, 18, a, 19, a, 20, a, , Page 109 of 152

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QNo, , 1, 2, , 3, , ASSERTION-REASON TYPE QUESTIONS, CHAPTER 4, SHARE CAPITAL, Read the following statements - Assertion (A) and Reason (R). Choose one of the correct, alternatives given below :, (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of, Assertion (A), (B) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation, of Assertion (A), (C) Assertion (A) is true but Reason (R) is false., (D) Assertion (A) is false but Reason (R) is true., Read the following text. Based on the information given,, Akhil Ltd purchased a running business from Sunny Ltd for a sum of Rs 22,00,000 by issuing, 20,000 fully paid equity shares of Rs 100 each at a premium of 10%. The assets and liabilities, consisted of the following : Machinery Rs 7,00,000, debtors Rs 2,50,000, stock Rs 5,00,000,, building Rs 11,50,000 and bills payable Rs 2,50,000., Assertion (A): Akhil Ltd issued equity shares to Sunny Ltd for consideration other than cash., Reason (R): Akhil Ltd did not receive cash from Sunny Ltd for issue of shares on purchase of, running business., Assertion (A): The net assets purchased from Sunny Ltd was Rs.23,50,000 and Akhil Ltd, issued in return its equity shares at a premium of 10% for a sum of Rs.22,00,000, the, difference being capital profit., Reason (R): The difference Rs.1,50,000 is credited to statement of Profit &Loss., Read the following text., Starplus Ltd issued for public subscription 1,50,000 shares of the value of Rs.100 each at a, premium of Rs.20 per share payable as follows., On application -Rs.20(including premium of Rs.5 per share), On allotment -Rs.60(including premium of Rs.15 per share), On First & final call- The balance., The company received applications for 3,00,000 shares and allotment was made as, follows., a), To the applicants of 30,000 shares, -10,000 shares., b), To the applicants of 1,40,000 shares, -80,000 shares., c), To the remaining applicants, -60,000 shares., Hari, a shareholder who had applied for 7,000 shares of group (b) failed to pay allotment and, call money. Rohan, a shareholder, who was allotted 1,000 shares of group (a) paid the full, amount along with allotment., Hari’s shares were forfeited after the call has been made. Of these 3,000 shares were, reissued to Suman for Rs.150 per share as fully paid., Assertion (A): Star plus Ltd can use Securities Premium received is capital profit and can be, transferred to Capital Reserve., Reason (R): Companies Act, 2013 specified the specific purposes for which securities, Page 110 of 152

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4, 5, 6, , premium reserve can be utilised., Assertion (A):Hari got allotment of 4000 shares on pro-rata basis under group (b), Reason (R):Hari failed to pay Rs.24,000(=Rs.60x4000) on allotment, Assertion (A): Rohan need not to pay when First & final call made., Reason (R):Rohan paid full amount of Rs.60000 along with allotment ., Assertion (A): Amount forfeited on Hari’s shares is Rs.1,20,000, Reason (R): Profit on reissue of Hari’s shares is transferred to capital reserve., , Read the following text., , 7, 8, 9, 10, 11, , 12, , Zocon Ltd. issued a prospectus inviting applications for 5,00,000 equity shares of Rs.10 each, issued at a premium of 10% payable as:, Rs.3 on Application, Rs.5 on Allotment (including premium), and Rs.3 on call., Applications were received for 6, 60,000 shares., Allotment was made as follows:, (a) Applicants of 4, 00,000 shares were allotted in full., (b) Applicants of 2, 00,000 shares were allotted 50% on pro rata basis., (c) Applicants of 60,000 shares were issued letters of regret., A shareholder to whom 500 shares were allotted under category (a) paid full amount on, shares allotted to him along with allotment money. Another shareholder to whom 1,000, shares were allotted under category (b) failed to pay the amount due on allotment. His, shares were immediately forfeited. These shares were then reissued at Rs.14 per share as, Rs.7 paid up. Call has not yet been made., Assertion (A): There was oversubscription for shares of the company., Reason (R):The applicants for 1,60,000 shares were not allotted and their application money, refunded., Assertion (A):Amount unpaid on allotment is Rs.2,000., Reason (R):Excess application money under category (b) was adjusted towards allotment., Assertion (A):The forfeited shares were reissued at a premium of Rs.4 per share., Reason (R):The total of forfeited amount was transferred to capital reserve., Assertion (A):The amount credited to calls in advance was Rs.1,500, Reason (R):If authorized by Articles of Association, A Company may accept call in advance, from its shareholders., ASSERTION: Underwriters usually agrees for commission to take shares not, subscribed by the public., REASONING: The cash / shares paid to the underwriters should be written off in the, year from Securities premium Reserve or Statement of Profit and loss., (i), Both A and R are correct, (ii), Both A and R are in correct, (iii), A is correct but R is not correct explanation of A, (iv), A is incorrect by R is correct., ASSERTION: According to Sec 39(2) of the Companies Act, 2013, minimum application, money should be 5% of the nominal (face) value of the share or such other, percentage or amount as may be prescribed by Securities Exchange Board of, India(SEBI), Page 111 of 152

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REASON: SEBI prescribes that application money should not be less than 25% of the, issue price., (i), Both A and R are correct, (ii), (ii)Both A and R are in correct, (iii), A is correct but R is not correct explanation of A, (iv), A is incorrect by R is correct., , 13, , ASSERTION: Reserve capital is part of issued share capital that a company resolves, not to call except in the event of it being wound up., REASON: Reserve capital is the part of issued capital which is shown in the Balance, Sheet of the company., (i), Both A and R are correct, (ii), Both A and R are in correct, (iii), A is correct but R is incorrect, (iv), A is incorrect by R is correct., , 14, , ASSERTION: Sec2(62) of the Companies Act, 2013 defines One person company as, “One person company means a company which has only one person as member”, REASON: It can be formed for charitable purpose also., (i), Both A and R are correct, (ii), Both A and R are in correct, (iii), A is correct but R is not correct explanation of A, (iv), A is incorrect by R is correct., , 15, , ASSERTION: if a shareholder does not pay the call amount due on allotment or on, any calls according to the terms, the amount so not received is called call in arrears., REASON: Table F of the companies Act, shall apply which provides for interest on calls, in arrears 10% p.a., (i), (ii), (iii), (iv), , Both A and R are correct, Both A and R are in correct, A is correct but R is not correct, A is incorrect by R is correct., , 16, , ASSERTION: SEBI the Regulatory authority for listed companies prescribes that the, company must receive minimum subscription of 90% of the shares issued for, subscription before it allots the shares., REASON: If minimum subscription is not received within the specified period,, application money shall be refunded with 14 days from the closure of the issue., (i), Both A and R are correct, (ii), Both A and R are in correct, (iii), A is correct but R is not correct, (iv), A is incorrect by R is correct., , 17, , ASSERTION: When some of the forfeited shares are reissued, gain(profit) on reissued, Page 112 of 152

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shares is transferred to Capital Reserve., REASON: Gain or profit on re issued shares is calculated as follows:, = total amount forfeited x no. of shares re issued-reissue discount, No. of shares forfeited, (i), Both A and R are correct, (ii), Both A and R are in correct, (iii), A is correct but R is not correct explanation of A, (iv), A is incorrect by R is correct, , 18, , ASSERTION: According to sec 42 of the companies act, 2013, private placement, means any offer of securities or invitation to subscribe to a selected group of persons., REASON: Employees Stock Option Plan is also a type of private placement of shares., (i), Both A and R are correct, (ii), Both A and R are in correct, (iii), A is correct but R is not correct, (iv), A is incorrect by R is correct, , 19, , ASSERTION: Pro rata allotment is a type of allotment of shares in which the excess, application money received over and above the actual application money is adjusted, towards allotment money due., REASON: Pro rata ratio enable to find out the actual applications made and actual, shares allotted., (i), Both A and R are correct, (ii), Both A and R are in correct, (iii), A is correct but R is not correct explanation of A, (iv), A is incorrect by R is correct, , 20, , ASSERTION: Section 52(2) of the Companies Act,2013 restricts the use of the, amounts received as share premium on securities for specified purposes., REASON: Securities premium reserve can be used to write off preliminary expenses of, the company., (i), Both A and R are correct, (ii), Both A and R are in correct, (iii), A is correct but R is not correct explanation of A, (iv), A is incorrect by R is correct, , Page 113 of 152

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ANSWERS, , A-R Type Questions, , 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, , A, C, D, C, A, B, C, A, D, B, , A-R Type Questions, , 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, , i, iii, iii, iii, i, iii, i, iii, iv, i, , Page 114 of 152

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1, , 2, , 3, , 4, , 5, , ASSERTION- REASON BASED QUESTIONS, CHAPTER 5, FINANCIAL STATEMENTS OF A COMPANY, Assertion: Financial statements need to be arranged in a proper form with suitable, contents so that the shareholders and other users of financial statements can easily, understand and use them in their economic decisions in a meaningful way., Reason: The financial statements are the outcome of the summarizing process of, accounting and are, therefore, the sources of information on the basis of which, conclusions are drawn about the profitability and the financial position of a company, a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion: Financial statements reflect a combination of recorded facts, accounting, principles and personal judgements”., Reason: Personal opinion, judgements and estimates are made while preparing the, financial statements to avoid any possibility of over statement of assets and liabilities,, income and expenditure, keeping in mind the convention of conservatism, a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion: Financial statements are the basic sources of information to the, shareholders and other external parties for understanding the profitability and, financial position of any business concern, Reason: the primary objective of financial statements is to assist the users in their, decision-making., a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion: Money received against share warrants’ to be disclosed as a separate line, item under ‘shareholder’s fund’., Reason: It is the amount received by the company which are converted into shares, at a specified date on a specified rate, a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion: Preliminary expenses, discount on issue of debentures, share issue, expenses etc are to be written off in the year in which such expenses are incurred first, from security premium Reserve and the balance if any, from statement of profit &, loss., Reason: According to Section 52 of Companies Act 2013, securities premium can not, be used for the following purposes: For the issue of fully paid bonus share capital. For, meeting the preliminary expenses incurred by the company. For meeting the, Page 115 of 152

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6, , 7, , 8, , 9, , 10, , expenses, commission or discount incurred concerning securities previously issued by, the company., a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion: Since declaration of proposed (final) dividend is contingent upon, shareholders’ approval, Proposed dividend is shown as contingent liability., Reason: proposed dividend of previous year will be accounted in the current year, before it is declared (approved) by the shareholders in their annual general meeting., a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion: financial statements do not reflect current situation:, Reason: Financial statements are prepared on the basis of historical cost. Since the, purchasing power of money is changing, the values of assets and liabilities shown in, financial statement do not reflect current market situation., a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion; A Ltd issued 5,00,000, 9% Debentures of Rs.100 each on 1st April, 2016,redeemable in 5 equal yearly instalments starting from 31st March2017., Rs.4,00,00,000 Debentures will be shown under Noncurrent liabilities and, Rs.1,00,00,000 Debentures will be shown under Current liabilities, Reason: Rs.1,00,00,000 Debentures are to be redeemed after the operating cycle of, the company and will be classified as “Current maturities of long term borrowings., a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion: A trading company sells its fixed assets through an agent. The agent is to be, paid Rs.50,000 as fee which can be shown as Trade payables in the Balance sheet, Reason: Trade payables are defined as the amount payable against purchase of goods, or services taken in the normal course of business and includes both sundry creditors, and bills payable., a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion: Amount received by the company as share application and against which, the company will certainly allot shares should be shown under the head Share, application money pending allotment, Reason: The application money is received before the Balance sheet date and, allotment will be made after the Balance sheet date., a) Both A and R are correct, Page 116 of 152

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b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Answers, 1. a, 2. b, 3. a, 4. a, 5. b, 6. b, 7. a, 8. b, 9. c, 10. a, , Page 117 of 152

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ASSERTION- REASON BASED QUESTIONS, CHAPTER 6, RATIO ANALYSIS, , 1, , 2, , 3, , 4, , 5, , 6, , 7, , Assertion (A): Accounting ratio is an arithmetic relationship between two independent, variables., Reason (R): Accounting ratios can be expressed in pure form, percentage, times or, fraction., e), Both A and R are correct, f), A is correct, but R is wrong, g), A is wrong, but R is correct, h), Both A and R are wrong, Assertion (A): Ratio analysis helps to simplify accounting information for various users., Reason (R): Various types of ratios helps to make comparative analysis., a), Both A and R are correct, b), A is correct, but R is wrong, c), A is wrong, but R is correct, d), Both A and R are wrong, Assertion (A): An ideal current ratio of 2: 1 indicates good financial health of a company., Reason (R): Increased current ratio is an indicator of ideal funds., a) Both A and R are correct, b) A is correct, but R is wrong, c) A is wrong, but R is correct, d) Both A and R are wrong, Assertion (A): An ideal quick ratio is 1: 1., Reason (R) : Quick asset does not include inventory., a), Both A and R are correct, b), A is correct, but R is wrong, c), A is wrong, but R is correct, d), Both A and R are wrong, Assertion (A): A lower trade receivables turnover ratio is preferred by company., Reason (R) : Trade receivables turnover ratio is an indicator of how promptly company, collects its debts., a), Both A and R are correct, b), A is correct, but R is wrong, c), A is wrong, but R is correct, d), Both A and R are wrong, Assertion (A): Firms ability to meet long term obligation is assessed through solvency, ratio., Reason (R): Solvency ratio establishes relation between various variables like debt, share, holders’ fund, asset and interest coverage., a), Both A and R are correct, b), A is correct, but R is wrong, c), A is wrong, but R is correct, d), Both A and R are wrong, Assertion (A): Return on investment is a significant ratio to find overall performance of an, enterprise., Reason (R): For determining return on investment, net profit after tax is taken., Page 118 of 152

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8, , 9, , 10, , a), Both A and R are correct, b), A is correct, but R is wrong, c), A is wrong, but R is correct, d), Both A and R are wrong, Assertion (A): Operating profit ratio and operating ratio are complementary to each other., Reason (R): A higher operating ratio indicates decline in efficiency., a), Both A and R are correct, b), A is correct, but R is wrong, c), A is wrong, but R is correct, d), Both A and R are wrong, Assertion (A): A low inventory turnover ratio means inefficient use of investment in, inventory and accumulation of inventory., Reason (R) ; An increase in closing inventory leads to decrease in inventory ratio., a), Both A and R are correct, b), A is correct, but R is wrong, c), A is wrong, but R is correct, d), Both A and R are wrong, Assertion (A): Activity ratio is directly related to profitability ratio., Reason (R): All the turnover ratio measure how well the resources have been used by the, enterprises., a), Both A and R are correct, b), A is correct, but R is wrong, c), A is wrong, but R is correct, d), Both A and R are wrong, ANSWERS, , 1., 2., 3., 4., 5., 6., 7., 8., 9., 10., , c, a, b, b, c, a, b, b, a, a, , Page 119 of 152

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ADDITIONAL MCQ ON THE BASIS OF CBSE’S SAMPLE PAPER, CHAPTER 1 PARTNERSHIP FUNDAMENTALS, 1, , Ram, Raghav and Raghu are partners in a firm sharing profits in the ratio of 5:3:2. As, per Partnership Deed, Raghu is to get a minimum amount of ₹ 10,000 as profit. Net, profit for the year is ₹ 40,000., Find the deficiency amount in the above case., a), b), c), d), , 2, , A, B and C are partners sharing profits equally. A drew regularly ₹ 4,000 in the, beginning of every month for six months ended 30th September, 2020. Calculate, interest of A’s drawing @ 5% p.a., a), b), c), d), , 3, , 5.5 months, 6 months, 4.5 months, 7.5 months, , In the context of debit side of Profit and Loss Appropriation Account, pick out the odd, one:, a), b), c), d), , 5, , ₹ 200, ₹ 1,200, ₹ 350, ₹ 700, , If a partner withdraws equal amount at the end of each quarter then average period, for calculation of interest on drawings will be ………………….., a), b), c), d), , 4, , ₹ 750, ₹ 1,000, ₹ 1,500, ₹ 2,000, , Interest on capital, Salary of partner, Interest on drawings, Commission of partner, , Which of the following is not a right of a partner?, a) Right to inspect the books of accounts, b) Right to take part in the management of the firm, c) Right to share the profits/losses with other partners in agreed ratio, d) Right to receive salary at the end of every year., Page 120 of 152

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6, , On 1st April 2018, a partner introduced additional capital of ₹ 50,000 in the firm but, Partnership Deed is silent. The partner demands interest on capital @ 5% p.a. How, much interest on capital will be payable to the partner:, a) ₹ 3,000, b) Interest on capital will not be allowed, c) ₹ 2,500, d) ₹ 1,800, , 7, , Do all partnership firms need a Deed and registration?, a), b), c), d), , 8, , Yes, No, It is Compulsory, Its optional but it is better to have a registered firm to avoid any kind of, conflict, , Interest on partner’s drawings will be credited to –, a) Profit and Loss Account, b) Profit and Loss Appropriation Account, c) Partner’s Capital Account, d) Partner’s Current Account, , 9, , A, B and C are partners sharing profits in the ratio of 5:3:2. Before B’s salary of ₹, 17,000, firm’s profit is ₹ 97,000. How much in total B will receive from the firm?, a), b), c), d), , 10, , Anil and Vimal are partners in a partnership firm without any agreement. Anil devotes, more time for the firm as compared to Vimal. Anil demands that he should be given, commission in addition to profit in the firm’s profit. Which one of the following is, correct in above case?, a), b), c), d), , 11, , ₹ 17,000, ₹ 40,000, ₹ 24,000, ₹ 41,000, , 6% of profit, 4% of profit, 5% of profit, No commission is to be provided, , Match the following:, A), Rent payable to partner, B), In the absence partnership Deed,, Page 121 of 152, , i) Unlimited, ii) Equally

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Profits and Losses will be shared by Partners, C), , Under fixed capital method,, salary payable to a partner will be, , iii) Charge against profit, , D), , Liability of a partner in a partnership firm is, , iv)Credited to partner’s, current Account, , A, , B, , a) (i), , 12, , C, , D, , (ii) (iii), , (iv), , b) (i) (iv) (ii), , (iii), , c) (iii) (ii) (iv), d) (iv) (iii) (ii), , (i), (i), , Match the following., A) Partnership Deed, , i) 50, , B) Maximum number of partners in, , ii) 6% p.a., , a partnership firm, C) Interest on Partners’ Loan, , iii) A Statement, , D) Balance Sheet, , iv) Written Agreement, , A, a), b), c), d), 13, , (i), (iv), (iii), (iv), , B, (ii), (i), (ii), (iii), , C, , D, , (iii) (iv), (ii) (iii), (iv) (i), (ii) (i), , Match the following:, A) When drawings are made in the beginning of every quarter, B) When drawings are made in the middle of every month, Months, C) When drawings are made at the end of every quarter, D) When drawings are made at the end of every month, A, B, C, D, a), b), c), d), , (i), (iv), (iii), (iii), , (ii), (i), (ii), (i), , (iii), (ii), (iv), (ii), , (iv), (iii), (i), (iv), , Page 122 of 152, , i) 6 Months, ii) 4.5, iii) 7.5 Months, iv) 5.5 Months

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14, , Q14. Match the following:, Column I (In absence of Partnership Deed), A), , Interest on Capital, , B), C), , Interest on Partner’s Loan, Profits/Losses, , D), , Partners allowed to withdraw amount, , A B C, , Column II (Provisions), i) Allowed, ii) Equally, iii) 6% p.a., iv) Not allowed, , D, , a) (i) (ii) (iii) (iv), b) (i) (iv) (ii) (iii), c) (ii) (iii) (iv) (i), d) (iv) (iii) (ii) (i), 15, , Q15. Match the following:, Column I, A), , Interest on drawings, , B), , Commission to a Partner, , C), , Interest on Partner’s Loan, , D), , Interest on capital of, partners, , A B C, , 16, , Column II, i) Credit side, Partners’ capital, Account, ii) Credit side, Profit and Loss, Appropriation Account, iii) Debit side, Profit and Loss, Appropriation Account, iv) Debit side, Profit and Loss Account, , D, , a), , (i) (ii) (iii) (iv), , b), , (i) (iv) (ii) (iii), , c), , (ii) (iii) (iv) (i), , d), , (iv) (iii) (ii) (i), Q16. Match the following:, Column I, , Column II, , A) Registration of Partnership Firm, B) Agreement among partners, , Page 123 of 152, , i) Capital A/c and Current A/c, ii) Interest on drawings

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C) Fixed Capital Method consist of, D) Product method is used for, A B C, , 17, , (iv) (iii) (i) (ii), , b), , (i) (ii) (iii) (iv), , c), , (ii) (iii) (iv) (i), , d), , (iv) (iii) (ii) (i), , Steps involved in distribution of profit under minimum guarantee to partner will, be………………….., , iv), a), b), c), d), , ii), i), iii), iv), , Calculate the amount of deficiency, Calculate distributable profit between/among the partners, Distribute the amount of deficiency between/among the partners who, have given the guarantee, Calculate the actual share of profit of each partner, iv), i), iii), ii), iii), iv), ii), iv), i), iii), ii), i), , Steps involved in calculation of opening capital of a partner are given below. Select the, correct order:, i), ii), iii), iv), a), b), c), d), , 19, , iv) is not compulsory, , D, , a), , i), ii), iii), , 18, , iii) Written or Oral, , i), ii), iii), iv), , Closing Capital, Add: Drawings of the partner, Less: Net Profit, Less: Additional Capital introduced by the partner, ii), iii), iv), iii), i), iv), iv), ii), i), iii), ii), i), , Which one of the following is the correct order for preparing the Financial Statements, of a Partnership Firm?, i), ii), iii), iv), a) i), b) iv), , Partners’ Capital Accounts, Profit and Loss Account, Profit and Loss Appropriation Account, Balance Sheet of the firm, ii), iii), , iii), ii), , iv), i), Page 124 of 152

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c) ii), d) i), 20, , iii), iii), , i), iv), , iv), ii), , Steps involved in recording of past adjustment journal entry are given below. Arrange, the steps in correct order and select the correct option:, i), ii), iii), iv), a), b), c), d), , i), i), iv), iv), , Calculation of correct amount to be distributed, Ascertaining the partners to be debited and credited, Calculation of profit already distributed between/among the partners, Pass the adjustment journal entry, ii), iii), iv), iii), ii), iv), iii), ii), i), iii), i), ii), , ANSWERS:, Q1. D, , Q2. C, , Q3. C, , Q4. C, , Q5. D, , Q6. B, , Q7. D, , Q8. B, , Q9. D, , Q10. D, , Q11. C, , Q12. B, , Q13.D, , Q14.D, , Q15.C, , Q16.A, , Q17. A, , Q18.A, , Q19. C, , Q20. B, , Page 125 of 152

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CHAPTER 2 CHANGE IN PROFIT SHARING RATIO, 1, , At the time of change in the profit-sharing ratio, when revised values of Assets &, Liabilities are not to be recorded (Assets & Liabilities will appear in Balance Sheet at old value)., Calculate the net effect of revaluation Gain/Loss:, i a. Add: Increase in the value of Assets, b. Add: Decrease in the value of liabilities, c. Less: Decrease in the value of Assets, d. Less: Increase in the value of liabilities, ii a. Add: Increase in the value of liabilities, b. Add: Decrease in the value of Assets, c. Less: Increase in the value of Assets, d. Less: Decrease in the value of liabilities, iii a. Add: Decrease in the value of Assets, b. Add: Increase in the value of liabilities, c. Less: Decrease in the value of Assets, d. Less: Increase in the value of Assets, , iv None of the above, 2, , Revaluation account is a _______________ Account., i Real, ii Nominal, iii Personal, iv None of the above, , 3, , Mira, Sita and Priya were sharing profits I the ratio of 2:2:1. They decided to share, future profits in the ratio of 7:5:3. Their Balance Sheet showed a balance of Rs. 45,000, in Advertisement Account. The amount to be debited respectively to the Capital, accounts of Mira, Sita and Priya for writing off the amount in Advertisement, Suspense account will be, i Rs.15,000, Rs.15,000, Rs.15,000, ii Rs.22,500, Rs.22,500, Nil, iii Rs.18,000, Rs.18,000, Rs.9,000, iv Rs.21,000, Rs.15,000, Rs.9,000, , 4, , . Which of the following is NOT true in relation to goodwill?, i It is an intangible asset, ii It is fictitious asset, Page 126 of 152

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iii It has a realisable value, iv None of the above, 5, , . X Y and Z are partners sharing profits and losses in the ratio 5 : 3 : 2. They decide to, share the future profits in the ratio 3 : 2 : 1. Workmen compensation reserve, appearing in the balance sheet on the date, if no information is available for the, same,will be :, i Distributed to the partners in old profit sharing ratio, ii Distributed to the partners in new profit sharing ratio, iii Distributed to the partners in capital ratio, iv Carried forward to new balance sheet without any adjustment, , 6, , On the reconstitution of a firm change in the value of assets is called ___, A., B., C., D., , 7, , Accounting Standard ____ requires goodwill should be recorded in the books, of accounts only when some money or money’s worth is paid for it., A., B., C., D., , 8, , 26, 23, 27, 10, Which adjustment is not required when existing partners decide to change, their profit sharing ratio:, , A., B., C., D., 9, , Revaluation of assets, Reassessment of assets, Devaluation of assets, Reassessment of liabilities, , Reserves, Accumulated profits, Employee Provident Fund, Goodwill, Arun, Beena and Chandani are sharing profits in the ratio of 2:1:1. They have, decided to share future profits in the ratio of 3:2:1. Find out the gaining, partner., a. Both Arun and Chandani are the gaining partner., b. Chandani is the gaining partner, c. Beena is the gaining partner, d. Arun is the gaining partner, , 10, , The Excess amount which the firm can get on selling its assets over and above, the saleable value of its assets while business purchases is called :, Page 127 of 152

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a., b., c., d., 11, , 12, , A, B and C shared profit and losses in the ratio of 3:2:1 respectively. With effect, from 1st April, 2016, they agreed to share profit equally. The goodwill of the, firm was valued at Rs.36,000. Pass necessary journal entry., a. A’s capital a/c ………………Dr 6,000, To B’s capital a/c, 6,000, b. B’s capital a/c ………………Dr 6,000, To A’s capital a/c, 6,000, c. B’s capital a/c ………………Dr 6,000, To C’s capital a/c, 6,000, d. C’s capital a/c ………………Dr 6,000, To A’s capital a/c, 6,000, A and B were partners in a firm sharing profits or loss equally. With effect from –1-42021 they agreed to share profits in the ratio 5:3. Due to change in profit sharing ratio, B’s gain or sacrifice will be:, a), b), c), d), , 13, , 14, , Surplus, Super profits, Resereve, Goodwill, , Gain 1/8., Sacrifice 1/8, Gain 1/10, Sacrifice 1/10, , 1. WCR = 30,000 and there is no claim against WCR. What journal entry would be passed, in case when X,Y and Z decide to change profit sharing ratio from 2:1:2 to 5:3:2a. Workmen Compensation Reserve A/c Dr 30,000, To Provision for workmen compensation claim 10,000, To X’ Capital or current A/c, 8,000, To Y’ Capital or current A/c, 4,000, To Z’ Capital or current A/c, 8,000, b. Workmen Compensation Reserve A/c Dr30,000, Revaluation a/c…………………………………..Dr 10,000, To Provision for workmen compensation claim 40,000, c. Workmen Compensation Reserve A/c Dr 30,000, To X’ Capital or current A/c, 12,000, To Y’ Capital or current A/c, 6,000, To Z’ Capital or current A/c, 12,000, d. Workmen Compensation Reserve A/c Dr 30,000, To X’ Capital or current A/c, 15,000, To Y’ Capital or current A/c, 9,000, To Z’ Capital or current A/c, 6,000, , Arrange in a proper sequence to determine the goodwill in case of superprofit, method., , Page 128 of 152

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1. Goodwill = super profit* no.of years of purchase., 2. Calculate the super profit., 3. Calculate the capital employed in the business and normal profit, 4. calculate/find out the average profit or actual profit., a. 1,2,3,4, b. 2,4,1,3, c. 4,1,2,3, d. 4,3,2,1, 15, MATCH THE FOLLOWING: Investment shown in the Balance Sheet is Rs.20000, (i)When Investment Fluctuation Reserve, is Rs.5000 whereas the Market value of, Investment is Rs.10000, , (a)Revaluation a/c Dr 4000, To Investment a/c, , 4000, , (ii)When Investment Fluctuation Reserve (b)Investment Fluctuation reserve a/c Dr, is Rs.5000 whereas the Market value of, 5000, Investment is Rs.20000, To Investment a/c, 2000, To Partners capital a/c, (iii)When Investment Fluctuation, Reserve is Rs.5000 whereas the Market, value of Investment is Rs.18000, , 3000, , (c)Investment fluctuation reserve a/c Dr, 5000, To partners’ capital a/c, , (iv)When Investment Fluctuation, Reserve is NIL whereas the Market, value of Investment is Rs.16000, , (d)Partners’ capital a/c Dr5000, Revaluation a/c, To Investments a/c, , A., B., C., D., , (i)-(d), (i)-(a), (i)-(a), (i)-(c), , (ii)-(c ) (iii) (b), (ii)-(b ) (iii) (c), (ii)-(b ) (iii) (d), (ii)-(d ) (iii) (a), , 5000, , (iv)-(a), (iv)-(d), (iv)-(c), (iv)-(b), , 16, , Page 129 of 152, , Dr 5000, 10000

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MATCH THE FOLLOWING:, (i) When WCR is Rs.20000 whereas the, claim on WCR is Rs.10000, , (a)WCR a/s Dr, , (ii)When WCR is Rs.20000 whereas the, claim on WCR is Rs.25000, , (b)WCR a/c Dr 20000, , (iii)When WCR is Rs.20000 whereas the, claim on WCR is NIL, , 20000, , To claim on WCR a/c, , 20000, , To claim on WCR a/c, , 10000, , To Partner’s capital a/c, , 10000, , ( c)WCR a/s Dr, , 20000, , Revaluation a/c Dr 5000, To claim on WCR a/c, , (iv)When WCR is Rs.20000 whereas the, claim on WCR is Rs.20000, , A., B., C., D., 17, , (i)-(b), (i)-(a), (i)-(a), (i)-(c), , (ii)-(c ) (iii) (d), (ii)-(b ) (iii) (c), (ii)-(b ) (iii) (d), (ii)-(d ) (iii) (a), , (d)WCR a/s Dr, , 25000, 20000, , To partners’ capital a/c, , (iv)-(a), (iv)-(d), (iv)-(c), (iv)-(b), , In the following cases, what is the gaining share of the gaining partner, i, , A,B,C are partners sharing profits a, in the ratio of 5:3:2. They decided, to share future profits in the ratio, of 2:3:5., , Gain 1/12, , ii, , R and G are partners sharing, profits in the ratio of 2:1. They, decided to share future profits in, the ratio of 1:1., , b, , Gain 3/10, , iii, , V and Ware partners sharing, profits in the ratio of 3:1. They, decided to share future profits in, the ratio of 2:1., , c, , Gain 1/18, , iv, , M and N are partners sharing, profits in the ratio of 5:4. They, , d, , Gain 1/6, , Page 130 of 152, , 25000

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decided to share future profits in, the ratio of 1:1., , 18, , 1) i-c, ii-a, iii-d, iv-b, 2) i-a, ii-b, iii-c, iv-d, 3) i-b, ii-d, iii-a, iv-c, 4) i-d, ii-c, iii-b, iv-a, 7. Nitin, Tarun and Amar are partners sharing profits equally and decide to share, profits in the ratio of 2 : 2 : 1 w.e.f. 1st April, 2019. The extract of their Balance, Sheet as at 31st March, 2019 is as follows:, Liabilities, Investments Fluctuation, Reserve, , Rs., , Assets, , 60,000 Investments (At Cost), , Rs., 4,00,000, , Give the Journal entries in each of the following cases:, When its Market Value, I, a, Investment Fluctuation Reserve, is Rs. 4,00,000, A/c Dr.60,000, Revaluation A/c Dr.30,000, To Investment A/c 90,000, (Decrease in investments set off, against IFR and balance debited to, Revaluation A/c), When its Market Value, Ii, b, Investment Fluctuation Reserve, is Rs. 4,24,000, A/c Dr. 60,000, To Investment A/c 30,000, To Nitin’s Capital A/c 10,000, To Tarun’s Capital A/c 10,000, To Amar’s Capital A/c 10,000, (Being Investment Fluctuation, Reserve distributed), When its Market Value, Iii, c, Investments A/c Dr.24,000, is Rs. 3,70,000, To Revaluation A/c 24,000, (Being Investments revalued), When its Market Value, Iv, d, Investment Fluctuation Reserve, is Rs. 3,10,000., A/c Dr.60,000, To Nitin’s Capital A/c 20,000, To Tarun’s Capital A/c 20,000, To Amar’s Capital A/c 20,000, (Being Investment Fluctuation, Reserve distributed), 1) i-c, ii-a, iii-d, iv-b, 2) i-a, ii-b, iii-c, iv-d, Page 131 of 152

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3) i-b, ii-c, iii-a, iv-d, 4) i-d, ii-c, iii-b, iv-a, , 19, , Match the following:, A, B and C are partners sharing profits and losses in the ratio of 5 : 4 : 1., Calculate new profit-sharing ratio, sacrificing ratio and gaining ratio in each, of the following cases:, I, C acquires 1/5th share, a, A:B:C=4:3:3, from A, Ii, , C acquires 1/5th share, equally form A and B., , b, , A:B:C=9:4:7, , Iii, , A and B sacrifice 5/30 and, 2/30 ; C gains 7/30, , c, , A:B:C=3:4:3, , Iv, , C acquires 1/10th share, of A and 1/2 share of B., , d, , A:B:C=1:1:1, , 1), 2), 3), 4), 20., , i-c, ii-a, iii-d, iv-b, i-a, ii-b, iii-c, iv-d, i-b, ii-c, iii-a, iv-d, i-d, ii-a, iii-b, iv-c, , 1. Match the following:-, , 1.Accumulated profits, , a. means change in value of assets, ie.,, present value being different from that, of book value., , 2.reserve, , b. means amount set aside out of profits, to meet a contingency or to strengthen, the financial position of the firm., , 3.Revalualtion of assets, , c. means re assessing the liabilities ie.,, whether the liability is more or less than, that shown in the books of accounts, , 4.Re assessment of liabilities, , d. means profits of the firm that have, not been distributed among the, partners., , e. 1.d;2.b;3.a;4.c, f. 1.a;2.c;3.d;4.b, g. 1.b;2.d;3.a;4.c, , Page 132 of 152

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h. 1.c;2.a;3.b;4.d, , AN, S, , 1i, , 2 ii, , 3 iii, , 4 ii, , 5i, , 6a, , 7a, , 8c, , 9c, , 10 d, , 11 d, , 12 b, , 13 c, , 14 d, , 15 a, , 16 a, , 17 3, , 18 4, , 19 1, , 20 a, , Page 133 of 152

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CHAPTER 3 ADMISSION OF A PARTNER, 1, , Share of goodwill brought by new partner in cash is shared by old partners in”, a) Ratio of sacrifice, b) Old profit sharing ratio, c) New profit sharing ratio, d) None of these, , 2, , A new partner can be admitted only when:, a) Majority decision, b) Consent of managing partner, c) Approval of Registrar of firm, d) Existing partners unanimously agree for it, , 3, , Increase in the value of assets at the time of admission of a partner is:, a) Debited to Revaluation A/c, b) Credited to Partners’ capital A/c, c) Credited to Revaluation A/c, d) Debited to Profit and Loss Appropriation A/c, , 4, , Admission of a partner results in:, a) Revaluation of partnership, b) Realization of partnership, c) Reconstitution of partnership, d) None of these, , 5, , At the time of admission existing Profit and Loss A/c is distributed among the partners, in the:, a) Sacrificing ratio, b) Gaining ratio, c) Old profit sharing ratio, d) New profit sharing ratio, , 6, , 7, , If, at the time of admission , the revaluation A/c shows a profit, it should be, credited to :, (A) Old partners capital account in the old profit sharing ratio., (B) All partners capital accounts in the new profit sharing ratio., (C) Old partners capital accounts in the new profit sharing ratio., (D) Old partners capital accounts in the sacrificing ratio., A and B are partners of partnership firm sharing profits in the ratio of 3:2, respectively. C was admitted for 1/5th share of profit. Machinery would be, appreciated by 10% (book value Rs.80,000) and building would be depreciate, by 20%( Rs.2,00,000). Unrecorded debtors of Rs.1,250 would be brought into, books now and a creditor amounting to Rs.2,750 died and need not part, anything on this account. What will be profit/loss on revaluation?, (A) Loss Rs.28,000, (B) Loss Rs.40,000, Page 134 of 152

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( C) Profits Rs.28,000, , 8, , A and B are in partnership sharing profits in the ratio of 3: 2. They take a new, partner. Goodwill of the firm is valued at Rs. 3,00,000 and C bring Rs.30,000 as, his share of goodwill in cash which is entirely credited to Capital Account of A., New Profit sharing ratio will be:, (A) 3 : 2: 1, (B) 6 : 3 :1, (C ) 5 : 4 : 1, , 9, , (D) 4 : 5 : 1, , A, B and C are partners sharing profits in ratio of 3 : 2 : 1. They agree to admit, D into the firm. A , B and C agreed to give 1/3rd , 1/6th ,1/9th share of their, profit. The share of profit of D will be :, (A) 1/10, (B) 11/54, ( C) 12/54, , 10, , (D) Profits Rs.40,000, , (D) 13/5, , 1. A and B are partners sharing profits and losses in the ratio of 5 : 3 . On, admission, C brings Rs.70,000 as cash and Rs.43,000 against Goodwill. New, profit ratio between A, B and C is 7 : 5 : 4. The sacrificing ratio of A and B is :, (A) 3 : 1, (B) 1 : 3, (C ) 4 : 5, , (D) 5 : 9, , 11, , At the time of admission profit on revaluation of assets and reassessment of liabilities, is transferred to:, a) Capital A/c of all partners, b) Capital A/c of old partners, c) Capital A/c of new partners, d) Liability side of balance sheet, , 12, , Arrange in correct sequence the treatment of admission of a partner., i) Preparation of partners’ capital A/c, ii) Calculation of sacrificing ratio, iii) Adjustment of goodwill, iv) preparation of revaluation A/c, a) iii , I , ii , iv, b) ii , iii , iv , i, c) I , ii, iv, iii, , 13, , Match the following items at the time of admission:, , i), , Increase in value of machinery, , a), , Dr. to Partners’ capital A/c, , ii), , Unrecorded outstanding repair, bill, , b), , Cr. To partners ‘capital A/c, , iii), , General reserve, , c), , Dr. to Revaluation A/c, , Page 135 of 152

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iv, , 14, , Profit and Loss A/c(Dr), , a), , i)- c ii)- a iii) – b iv) –d, , b), , i) – d ii) – c iii) – a iv) – b, , c), , i) – d ii)- c iii) – b iv) – a, , d), , i) – b ii) – d iii) a iv)- c, , 1. Match the following items :, a), Revaluation A/c, , 15, , i), , Personal A/c, , Partners’ Capital A/c, , ii), , Real A/c, , c), , Goodwill, , iii), , Revaluation A/c, , iv), , Nominal A/c, , Profit and loss, adjustment A/c, a-ii) b- iv) c - i) d – iii), a- iv) b – iii) c – i) d – i), a – iv) b – i) c – ii) d – iii), a- iii) b – i) c – iv) d – ii), , 10. Match the following items :, a), Goodwill appearing in the, books at the time of, admission, , i), , New partner’s, Capital A/c Dr., To Sacrificing, Partners’ capital A/c, , b), , When new partner brings, his/her share of goodwill in, cash, , ii), , No entry passed in, the books of, accounts, , c), , When new partner is, unable to bring his/her, share of goodwill in cash, , iii), , Premium for, goodwill A/c Dr., To sacrificing, partners’ capital A/c, , iv), , Written off in old, profit sharing ratio, , d), , a), b), c), d), , 16, , Cr. To Revaluation A/c, , b), , d, , a), b), c), d), , d), , When new partner brings, his/her share of goodwill in, cash and paid privately, a- iii) b- i) c- ii) d – iv), a- iv) b – iii) c – i) d – ii), a – iv ) b – iii) c – ii) d – i), a – ii) b – iv) c – i) d – iii), , 1. Match the columns (at the time of admission of partners situations), Column I (Items/Transaction), , Page 136 of 152, , Column II (Entry)

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(i) Credit – Revaluation Account, (ii) Credit – Partner’s Capital, Account, (iii) Debit – Revaluation Account, (iv) Debit – Partners’ Capital, Account, , A. Increase in Liabilities, B. Bad Debts recovered, C. Accumulated losses, D. Profit and loss ( Cr), , 17, , A, B, C, D, (a), (iii), (i), (ii), (iv), (b), (i), (iii), (iv) (ii), (c), (i), (iii) (ii), (iv), (d), (iii), (i), (iv), (ii), Match the columns for situations at the time of admission of new partners., , Column I (Items/Transaction), A. Future Profits, , (i) Old ratio, , B. General reserve, , (ii) New ratio, , C. Employee provident fund, , (iii) Sacrificing ratio, , D.Goodwill of incoming partner, , (iv) Not distributed, , A, , 18, , Column II (distribution), , B, , C, , D, , a., (i), (ii), (iii) (iv), b. (i), (ii), (iv) (iii), c. (ii), (i), (iv), (iii), d. (ii), (i), (iii) (iv), Match the following: for situations at the time of admission of new partners., , Column I (Items/Transaction), , Column II (distribution), , i) Sacrificing Ratio, , A. Nominal account, , ii) Gaining Ratio, , B. Reconstitution of Partnership, , iii)Revaluation Account, , C. New Ratio – Old Ratio, , iv)Admission of Partner, , D. Old Ratio – New Ratio, , a), b), c), d), , i-B,, i-D,, i-D,, i-D,, , ii-C,, ii-B, ii-C,, ii-C,, , iii-A,, iii-A,, iii-A,, iii-B,, Page 137 of 152, , iv-D, iv-C, iv-B, iv-A

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Sacrificing ratio use to distribute –---------- in case of admission of a partner, (A) Reserves, (B) Goodwill, , 19, , (c ) Revaluation profit, 20., , (D) Balance in profit and loss account, , Arrange in correct sequence:, Following steps arrange in the sequence for calculation of hidden Goodwill of, the firm., (1) Calculate total capital of the new firm on the basis of capital brought in by, new partner., (2) Existing Partners total capital, (3) Deduct existing total capital of the partners from total capital of the new, firm is hidden Goodwill of the firm., (a) 3 ,1, 2 (b) 1 , 2, 3, (c) 2, 2, 1, (d) 1, 3, 2, , AN, S, , ANSWERS, , 1.a, , 2.d, , 3.c, , 4.c, , 5.c, , 6.a, , 7.a, , 8.c, , 9.d, , 10.a, , 11.b, , 12.c, , 13.c, , 14.c, , 15.b, , 16.d, , 17.c, , 18.c, , 19.b, , 20.b, , Page 138 of 152

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., CHAPTER 4 SHARE CAPITAL, 1, , A company invited applications for 25,000 equity shares of 10 each and received 30,000, applications along with the application money of 4 per share. Which of the following, alternatives can be followed?, I. Refund the excess applications, II. Make pro rata allotment to all the applicants, and refund the excess application money, III. Not to allot any shares to some applicants, full allotment to some of the applicants, and pro rata allotment to the rest of the applicants., IV. Not to allot any shares to some applicants & make pro rata allotment to other applicants., V. Make pro rata allotment to all the applicants and adjust the excess money received, towards call money., (a) Only (II) above, (b) Both (I) and (IV) above, (c) All (I), (II), (III), (IV) and (V) above, (d) Only (III) above, , 2, , At the time of forfeiture of shares which were originally issued at a discount, the, accounting entry involves _______________., I. A debit to Share Capital Account with the called up value of shares forfeited, II. A credit to Share Forfeiture Account with the amount received on forfeited shares, III. A credit to discount on issue of shares with the amount of discount allowed on, forfeited shares, IV. A credit to calls in arrears with the amount due but not paid on forfeited shares, (a) Both (I) and (IV) above (b) Both (IV) and (III) above, (c) Both (I) and (II) above (d) (I), (II), (III) and (IV) above, , 3, , Arrange the following sentences in sequence:, (i)Receiving calls amount, (ii)Receiving applications, (iii)Issuing prospectus, (iv)Allotment of shares, (a)I,ii,iii,iv, (b)ii,iii,iv,I, (c)iii,ii,iv,i, , (d)iii,iv,ii,i, , 4, , 4,000 Equity Shares of Rs. 10 each were issued at 8% premium to the promoters, of a company for their services. Goodwill Account/ incorporation Cost Account will be debited, with ?, (A) Rs.40,000, (B) Rs.43,200, (C) Rs.3,200, (D) Rs.36,800, , 5, , A Company issued 50,000 shares of 20 each at 5% premium,10 were payable on application, and balance on allotment. What will be the allotment amount?, (A) Rs.500,000, (B) Rs.4,75,000, (C) Rs.550000, (D) Rs.5,25,000, , 6, , The subscribed capital of a company is Rs.80,00,000 and the nominal value of the share is 100, each. There were no calls in arrear till the final call was made. The final call made was paid on, 77,500 shares only. The balance in the calls in arrear amounted to 62,500. Calculate the final, call on share., Page 139 of 152

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(A) 27, (C) 22, (B) 20, (D) 25, , 7, , A Company invited applications for 1,00,000 shares and it received, applications for 1,50,000 shares. Applications for 30,000 shares were rejected, and the remaining were allotted shares on prorata basis. How many shares an, applicant for 3,000 shares will be allotted, (A) 2,500 Shares, (C) 4,500 Shares, (B) 3,600 Shares, (D) 2,000 Shares, , 8, , If a share of ₹10 issued at a premium of ₹3 on which the full amount has been called, and ₹8 (including premium) paid is forfeited the capital account should be debited, with:, (A) ₹5, (B) ₹8, (C) ₹10, (D) ₹13, , 9, , 10, , 11, , 12, , According to Section 52 of the Companies Act, the amount in the Securities Premium, Account cannot be used for the purpose of:, (a) Issue of fully Paid Bonus Shares, (b) Writing Off Losses of the Company, (c) Writing off Preliminary Expenses, (d) Writing Off Commission or Discount on Issue of Shares., Rights Issue are the shares, which :, (a) Are issued to the Direction of the company, (b) Are issued to existing shareholders of the company, (c) Are issued to promoters in consideration of their services, (d) Are issued to the vendors for purchasing assets., If vendors are issued fully paid shares of ₹ 1,00,000 in consideration of net assets of ₹, 1,20,000 the balance of ₹ 20,000 will be credited to :, (a) Goodwill Account, (b) Securities premium account, (c) Vendor’s Account, (d) Profit & Loss Account, , A company is registered with a share capital of ₹ 1,00,000 divided into ₹ 10,000, shares of ₹ 10 each. Of these shares 9,990 shares are held by Rajeev and 10 Shares are, held by Sanjay. In the eye of law it is treated as:, Page 140 of 152

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(a) Partnership, (b) Private Company, (c) Public Company, (d) Government Company, 13, , Match the following:, A) Minimum Subscription, B)Over subscription, , i. Pro-rata allotment, ii. The number of shares applied for, is, equal to the number of shares offered for, subscription, iii. The number of shares applied for, is, less than the number of shares offered for, subscription, iv. It is the amount stated in the, prospectus as the minimum amount that, must be subscribed, , C) Full Subscription, , D)Under subscription, , (a), (b), (c), (d), , 14, , A-iv,B-ii,C-iii D-i, A-ii,B-i,C-iv D-iii, A-iii,B-ii,C-i D-iv, A-iv,B-i,C-ii D-iii, , Match the following:, A) Issue shares to promoters, , B) Reissue of shares, C)Forfeiture of shares, D) Issue shares for consideration other than, cash, , i. Bank A/c, Dr, Share Forfeiture A/c Dr, To Share Capital A/c, ii.Goodwill A/c, Dr, To Share capital, iii.Vendor A/c, Dr, To Share capital, iv.Share capital A/c Dr, To Share forfeiture A/c, To Calls in arrear, , (a)A-i,B-ii,C-iii,D-iv, (b) A-ii,B-i,C-iv,D-iii, (c) A-ii,B-iv,C-i,D-iii, (d) A-ii,B-iii,C-iv,D-i, , 15, , A company purchased a machinery of Rs.2,75,000 from a vendor and issued shares of Rs.10, each to the vendor. Match the following:, Shares issued at, , No of shares issued, , A) par, , i.34,375, , B) premium of 10%, , ii. 22,000, , Page 141 of 152

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C) discount of 20%, , iii.27,500, , D) premium of Rs. 2.50, , iv.25,000, , (a)-iii,B-iv,C-i,D-ii, (b) A-iii,B-i,C-iv,D-ii, (c) A-iv,B-ii,C-i,D-iii, (d) A-iii,B-i,C-ii,D-iv, , 16, , A company issued 10000 shares of ₹10 each payable ₹3 on application, ₹4 on, allotment, ₹3 on first call and the balance on final call., MATCH THE FOLLOWING:, GROUP A, (i), OVER SUBCRIPTION, (ii), , UNDER SUBSCRIPTION, , (iii), , NORMAL SUBSCRIPTION, , (iv), , MINUMUM SUBSCRIPTION, , GROUP B, (A) The company received Rs.29400, towards application money., (B) the company received 10000, applications, ( C )The company received ₹60000 as, application money, (D )The company received 9000, applications only, , Choose the correct option:, 1. (i)-(C), (ii) -(A), (iii)-(B), (iv)-(D), 2. (i)-(A), (ii) -(B), (iii)-(C), (iv)-(D), 3. (i)-(D), (ii) -(C), (iii)-(A), (iv)-(B), 4. (i)-(B), (ii) -(D), (iii)-(B), (iv)-(A), 17, , MATCH THE FOLLOWING:, A, , B, , (i), , Amount called but not, paid by the shareholders, , (A) Calls in advance, , (ii), , Amount not called up but, paid by the share holder, , (B) Calls in arrears, , (iii), , Amount called and paid, by the share holder, Amount not called and, not paid by the, shareholder, , ( C) Reserve capital, , (iv), , ( D ) Paid up capital, , Page 142 of 152

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, 1., 2., 3., 4., , Choose the correct option:, (i)-(B), (ii) -(A), (iii)-(D), (iv)-(C), (i)-(A), (ii) -(B), (iii)-(C), (iv)-(D), (i)-(D), (ii) -(C), (iii)-(A), (iv)-(B), (i)-(B), (ii) -(D), (iii)-(B), (iv)-(A), , 18, MATCH THE FOLLOWING, A, , B, , (i), , 19, , Cumulative preference, (A) Repaid after some time, shares, (ii), Participating preference, (B) Converts into equity shares, shares, (iii), Redeemable preference, (C) Dividend accumulates if not, shares, paid, (iv), Convertible preference, (D) Get share in surplus profit., shares, 1. (i)-(B), (ii) -(A), (iii)-(C), (iv)-(D), 2. (i)-(C), (ii) -(D), (iii)-(A), (iv)-(B), 3. (i)-(C), (ii) -(D), (iii)-(B), (iv)-(A), 4. (i)-(B), (ii) -(D), (iii)-(C), (iv)-(A), B Limited was registered with the share capital of ₹ 1 crore divided into equity shares, of ₹ 10 each. It issued 9,00,000 equity shares to the general public at par payable as, to ₹3 an application ₹3 allotment and balance in two equal calls.. The public had, subscribed for 8, 50,000 shares. Till 31st March 2021 only first call had been made. All, the money on the shares were received except from Mr. C a holder of 25,000 shares, who did not pay call., MATCH THE FOLLOWING:, , (i), (ii), (iii), (iv), , A, AUTHORISIED CAPITAL, ISSUED CAPTIAL, SUBSCRIBED CAPITAL, FULLY PAID UP, SUBSCRIBED NOT FULLY, PAID UP, , (A), (B), (C ), ( D), , Choose the correct option:, 1. (i)-(D), (ii) -(C), (iii)-(B), (iv)-(A), 2. (i)-(A), (ii) -(B), (iii)-(C), (iv)-(D), 3. (i)-(D), (ii) -(C), (iii)-(A), (iv)-(B), Page 143 of 152, , B, ₹ 1,50,000, ₹ 66,00,000, ₹ 90,00,000, ₹1,00,00,000

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4. (i)-(B), (ii) -(D), (iii)-(B), (iv)-(A), 20, , If the applications are oversubscribed then allotment can be made as follows:, 1. Excess application will be rejected., 2. Excess application will be fully adjusted towards allotment and calls, 3. Excess applications will be partially rejected and partially adjusted towards, allotment and calls., 4. Excess applications will be allotted in full without rejecting., a. All 1,2,3 and 4 are correct, b. 1,2,3 are correct and the 4 is incorrect., c. Only 1 and 2 are correct remaining 3 and 4 are incorrect, Only 2 and 3 are correct remaining are incorrect, , 21, , If the shareholder fails to pay the call money then his/her shares will be forfeited and, the Directors after passing a resolution in the board meeting the forfeited shares can, be reissued if authorized by its Articles of Association of the company., 1., 2., 3., 4., , 22, , Forfeited shares can be reissued at discount, Forfeited shares can be reissued at premium, Forfeited shares can be reissued at par, Forfeited shares cannot be reissued, a. All 1,2,3 and 4 are correct, b. 1,2,3 are correct and the 4 is incorrect., c. Only 1 and 2 are correct remaining 3 and 4 are incorrect, d. Only 2 and 3 are correct remaining are incorrect, , What is the correct sequence of events?, 1., 2., 3., 4., , The company forfeited shares for non-payment of final call., The company allotted the shares on pro rata basis., The company reissued the forfeited shares at discount/par/premium., The company issued equity shares of ₹10 payable as follows: application (A), ₹2, allotment (A), ₹3 and the balance on calls., a. 4,2,1,3, b. 1,2,3,4, c. 3,2,1,4, d. 1,3,4,1, , Page 144 of 152

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AN, S, , Q, , Answer Key, , 1, , (c) All (I), (II), (III), (IV) and (V) above, , 2, , d) (I), (II), (III) and (IV) above, , 3, , (c)iii, ii, iv, i, , 4, , (B) Rs.43,200, , 5, , (C) Rs.550000, , 6, , (D) 25, , 7, , (A) 2,500 Shares, , 8, , (C), , 9, , B) Writing Off Losses of the Company, , 10, , (b) Are issued to existing shareholders of, the company, , 11, , (b) Securities premium account, , 12, , (b) Private Company, , 13, , (d) A-iv,B-i,C-ii D-iii, , 14, , (b) A-ii,B-i,C-iv D-iii, , 15, , (a), , A-iii,B-iv,C-i,D-ii, , 16, , 1., , (i)-(C), (ii) -(A), (iii)-(B), (iv)-(D), , 17, , 1., , (i)-(B), (ii) -(A), (iii)-(D), (iv)-(C), , 18, , 2., , (i)-(C), (ii) -(D), (iii)-(A), (iv)-(B), , 19, , 1., , (i)-(D), (ii) -(C), (iii)-(B), (iv)-(A), , 20, , a., 1,2,3 are correct and the 4 is, incorrect., , 21, , b., 1,2,3 are correct and the 4 is, incorrect., , 22, , a., , ₹10, , 4,2,1,3, , Page 145 of 152

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CHAPTER 5 ANALYSIS OF FINANCIAL STATEMENTS, 1, , A company has an operating cycle of 12 months. It has accounts payable amounting to, ₹10,00,000 out of which ₹7,00,000 have a maturity period of 15 months. How would, this information be presented in the Balance sheet?, a) ₹7,00,000 as current liabilities and ₹3,00,000 as non-current liabilities, b) ₹3,00,000 as current liabilities and ₹7,00,000 as non-current liabilities, c) ₹10,00,000 as non-current liabilities, d) ₹10,00,000 as non-current liabilities, , 2, , Debit Balance of Profit & Loss Statement will be shown on:, (a) Assets Side of Balance Sheet, (b) Liabilities Side of Balance Sheet, (c) Under the head Reserve & Surplus, (d) Under the head Reserves and Surplus as a negative item, , 3, , Contingent Liabilities are exhibited under the heading:, (a) Non-current Liabilities, (b) Current Liabilities, (c) In the Notes to Accounts, (d) Current assets, , 4, , Dividend is usually paid :, (a) On Authorised Capital, (b) On Issued Capital, (c) On Paid-up Capital, (d) On Called-up Capital, , 5, , With the permission of Registrar of Companies,, accounting period can be extended up, to, a) 12 months, b) 15 months, c) 15 months, d) 18 months, , 6, , Match the items given in Column I with the headings/ subheadings (Balance sheet) as, defined in Schedule III of Companies Act2013., Column I, (i)Loose tools, (ii)Cheque in hand, , Column II, (a)Long term borrowings, (b)Fixed assets- Intangible, Page 146 of 152

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(iii)Term loan from Bank, (iv)Computer software, Choose the correct option:, , (c )Inventories, (d)Cash & Cash equivalents, , a) (i)-(c ),(ii)-(d),(iii)- (a ), (iv)-(b), b) (i)-(d), (ii)-(c),(iii)- (b), (iv)- (a), c) (i)-(a),(ii)-(b),(iii)-(c) ,(iv)-(d), d) (i)-(b),(ii)-(a),,(iii)-(d), (iv)-(c ), 7, , Match the items given in Column I with the headings/ subheadings (Statement of, Profit & Loss) as defined in Schedule III of Companies Act2013., Column I, (i) Sale of goods, (ii) Interest earned, (iii) Salaries & wages, (iv) Goodwill written off, Choose the correct option:, , Column II, (a)Depreciation & amortisation, (b)Finance cost, (c ) Revenue from operation, (d) Other income, , a) (i)-(a),(i)- (b), (iii)-(c ), (iv)- (d), b) (i)-(c ),(ii)-(d), (iii)-(b), (iv)- (a), c) (i)- (d),(ii)-(c),(iii)-(a) ,(iv)- (b), (i)-(b) ,(ii)- (a),(iii)-(d), (iv)-(c), 8, , Match the items given in Column I with the headings/ subheadings ( Balance sheet &, Statement of Profit & Loss) as defined in Schedule III of Companies Act2013., Column I, (i)Commission paid on deposit, mobilization, (ii)Un amortised loss on issue of, debentures (to be written off within 12, months of the date of Balance sheet), (iii) Loss on sale of Vehicles, (iv)Profit on sale of investments, Choose the correct option:, a) (i)-(b),(ii)-(a) ,(iii)- (d), (iv)-(c ), b) (i)-(a),(ii)-)b), (iii)-(c ), (iv)- (d), c) (i)-(d), (ii)- (c ),(iii)-(b), (iv)- (a), , Page 147 of 152, , Column II, a)Other current assets, (b)Other income, , c) Finance cost, (d) Other Expenses

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(i)-(c),(ii)- (a) ,(iii)-(d) ,(iv)-(b), 9, , What will be the correct sequence of arrangement of items in the Notes to Accounts, , 10, , (i)Subscribed but not fully paid up capital, (ii) Authorised Capital, (iii) Subscribed and fully paid up capital, (iv)Issued capital, Options:, a) (ii),(iv),(iii), (i), b) (i) ,(ii),(iii), (iv), c) (iii),(i),(iv), (iii), (iv),(ii),(i), (iii), What will be the correct sequence of arrangement of items, (i), Profit before tax, (ii), Revenue from operations, (iii), Profit after tax, (iv), Expenses, Options:, a) (i),(ii),(iii),(iv), b) (ii),(i),(iv),(iii), c) (ii),(iv),(i),(iii), d) (iv), (iii),(ii),(i), , ANSWERS, 1., , b)₹3,00,000 as current liabilities and ₹7,00,000 as non-current liabilities, , 2, , d)Under the head Reserves and Surplus as a negative item, , 3, , (c) In the Notes to Accounts, , 4, , (c) On Paid-up Capital, , 5, , d) 18 months, , 6, , a) (i)-(c ),(ii)-(d),(iii)- (a ), (iv)-(b), , 7, , b) (i)-(c ),(ii)-(d), (iii)-(b), (iv)- (a), , 8, , d)(i)-(c),(ii)- (a) ,(iii)-(d) ,(iv)-(b), , 9, , a) (ii),(iv),(iii), (i), , 10, , c)(ii),(iv),(i),(iii), , Page 148 of 152

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CHAPTER 6 RATIO ANALYSIS, 1, , Match the following:, i), , Current Liabilities, + Working Capital, , (a), , Capital Employed, , (ii), , Total Assets Current Liabilities, , (b), , Share Holders, Funds, , (iii), , Share Capital +, Reserves &, Surplus, , (c), , Current Assets, , 1. (i)(a) (ii)(c) (iii)(b), 2. (i)(b) (ii)(a) (iii)(c), 3. (i)(c) (ii)(a) (iii)(b), 4. (i)(c) (ii)(b) (iii)(a), 2, , Proprietary ratio is 0.4: 1. What will be the impact on the following:, (i), , Issue of equity shares against purchase of machinery (a), , no change, , (ii), , Issue of debentures against purchase of machinery, , (b), , decrease, , (iii), , Sale of fixed assets costing ₹ 5,00,000 for ₹ 4,00,000 (c), , increase, , 1. (i)(b) (ii)(c) (iii)(c), 2. (i)(a) (ii)(c) (iii)(a), 3. (i)(c) (ii)(a) (iii)(b), 4. (i)(b) (ii)(b) (iii)(a), 3, , Quick asset does not include:, a) Cash in Hand, b) Prepaid Expenses, c) Marketable Securities, d) Trade and Receivables, i) (a), (b), (d), ii) only (c), iii) only (b), , Page 149 of 152

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iv) (b) & (c), , 4, , If the inventory turnover ratio is divided by 365, it becomes a measure of:, a) Self Sufficiency, b) Average Age of Inventory, c) Sales Turnover, d) Average Collection Period, (i) (a), (d), (ii) only (c), (iii) (b), (c), (iv) only (d), , 5, , Following extract belongs to a company., Inventory in the beginning of the Year ₹ 60,000., Inventory at the end of the year ₹ 1,00,000., Inventory turnover ratio 8 times., Selling price 25% above cost., Compute gross profit?, , 6, , a) ₹ 12,00,000, b) ₹ 1,60,000, c) ₹ 2,00,000, d) ₹ 1,80,000, Z Ltd liquidity ratio is 2.5 : 1. inventory is ₹ 6,00,000. current ratio 2.5 : 1. find current, liabilities., a) ₹ 4,00,000, b) ₹ 6,00,000, c) ₹ 2,50,000, ₹ 4,50,000, , 7, , Debt equity ratio is 2 ; 1, which of the following will decrease this:, a) Issue of new shares for cash, b) Conversion of debentures into equity shares, c) Sale of fixed asset at a profit, d) Purchase of fixed asset on long term referred payment basis., i) a, b, c, d, ii) only a & b, , Page 150 of 152

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iii) only a, b, c, iv) only d, 8, , Calculate cost of revenue from operations from the following:, Revenue from operations ₹ 12,00,000., Operating ratio 75%., Operating expense ₹ 1,00,000., , 9, , a) ₹ 11,00,000, b) ₹ 10,50,000, c) ₹ 7,50,000, d) ₹ 8,00,000, A company has a capital employed ₹ 12,00,000., Net fixed asset ₹ 8,00,000., Cost of goods sold ₹ 40,00,000., Gross profit is 20% on cost., Compute working capital turnover ratio?, , 10, , a) 16 times, b) 12 times, c) 10 times, d) 18 times, A company's current ratio is 3 : 1 and liquidity ratio is 1.2 : 1. If its current, liability are ₹ 2,00,000. What will be the value of inventory?, a), b), c), d), , ₹ 2,40,000, ₹ 3,60,000, ₹ 4,00,000, ₹ 40,000, Answers, , 1, , 3, , 2, , 1, , 3, , Iii, , 4, , Iv, , 5, , B, , 6, , a, , 7, , Iii, Page 151 of 152

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8, , d, , 9, , b, , 10, , B, , Page 152 of 152